FORM 10-QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(Mark One)
[X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
----------- ------------
COMMISSION FILE NUMBER: 033-76832
---------
MCB FINANCIAL CORPORATION
-------------------------
(exact name of small business issuer)
CALIFORNIA 68-0300300
---------- ----------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1248 FIFTH AVENUE, SAN RAFAEL, CALIFORNIA 94901
-----------------------------------------------
(Address of principal executive offices)
(415) 459-2265
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
YES X NO
----- ------
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: November 13, 2000
CLASS
Common stock, no par value 2,000,449
1
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS:
<TABLE>
<CAPTION>
MCB FINANCIAL CORPORATION
CONDENSED CONSOLIDATED BALANCE SHEETS
Dollar amounts in thousands December 31, September 30,
1999 2000
------------ ------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $6,556 $12,476
Federal funds sold 10,400 6,350
------------ ------------
Total cash and cash equivalents 16,956 18,826
Interest-bearing deposits with banks 286 286
Investment securities available for sale at fair value 34,118 24,515
Investment securities held to maturity at cost; fair values
of $1,979 in 1999 and $1,983 in 2000 2,000 2,000
Loans held for investment (net of allowance for possible
credit losses of $1,492 in 1999 and $1,849 in 2000) 136,474 154,570
Premises and equipment, net 2,791 3,097
Accrued interest receivable 1,077 1,155
Deferred income taxes 1,068 916
Other assets 1,349 844
------------ ------------
Total assets $196,119 $206,209
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Noninterest-bearing $41,011 $53,092
Interest-bearing:
Transaction accounts 112,742 101,230
Time certificates, $100,000 and over 14,471 19,133
Savings and other time deposits 11,560 10,972
------------ ------------
Total interest-bearing deposits 138,773 131,335
------------ ------------
Total deposits 179,784 184,427
Other borrowings 750 750
Accrued interest payable and other liabilities 1,188 1,619
------------ ------------
Total liabilities 181,722 186,796
Company obligated mandatorily redeemable cumulative
trust preferred securities of subsidiary trust
holding soley junior subordinated debentures 3,000
SHAREHOLDERS' EQUITY
Preferred stock, no par value: authorized 20,000,000
shares; none issued or outstanding
Common stock, no par value: authorized 20,000,000
shares; issued and outstanding 2,078,501 shares in
1999 and 2,046,506 shares in 2000 10,750 10,587
Accumulated other comprehensive loss (518) (303)
Retained earnings 4,165 6,129
------------ ------------
Total shareholders' equity 14,397 16,413
------------ ------------
Total liabilities and shareholders' equity $196,119 $206,209
============ ============
</TABLE>
See notes to condensed consolidated financial statements.
2
<PAGE>
<TABLE>
<CAPTION>
MCB FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended Nine Months Ended
Dollar amounts in thousands, except per share amounts September 30, September 30,
----------------------- --------------------------
1999 2000 1999 2000
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans, including fees $ 3,336 $ 4,167 $ 9,365 $ 11,554
Federal funds sold 185 156 274 473
Investment securities 387 414 1,342 1,331
----------- ---------- ------------- ----------
Total interest income 3,908 4,737 10,981 13,358
----------- ---------- ------------- ----------
INTEREST EXPENSE:
Interest-bearing transaction, savings and other
time deposits 990 1,175 2,755 3,364
Time certificates, $100,000 and over 167 232 472 611
Other interest 7 30 30 46
----------- ---------- ------------- ----------
Total interest expense 1,164 1,437 3,257 4,021
----------- ---------- ------------- ----------
NET INTEREST INCOME 2,744 3,300 7,724 9,337
----------- ---------- ------------- ----------
PROVISION FOR POSSIBLE CREDIT LOSSES 120 100 245 320
----------- ---------- ------------- ----------
NET INTEREST INCOME AFTER PROVISION FOR
POSSIBLE CREDIT LOSSES 2,624 3,200 7,479 9,017
----------- ---------- ------------- ----------
OTHER INCOME:
Gain on sale of loans 5 12 87 47
Service fees on deposit accounts 149 111 465 356
Loan servicing fees 14 14 40 41
Gain (loss) on sale of investment securities 12 (2)
Other 77 57 174 200
----------- ---------- ------------- ----------
Total other income 245 194 778 642
----------- ---------- ------------- ----------
OTHER EXPENSES:
Salaries and employee benefits 1,006 1,096 3,018 3,283
Occupancy expense 265 273 730 800
Furniture and equipment expense 107 119 306 343
Professional services 62 107 236 233
Supplies 67 68 201 218
Promotional expenses 58 69 226 217
Data processing fees 85 93 280 270
Regulatory assessments 12 16 31 46
Other 119 134 311 417
----------- ---------- ------------- ----------
Total other expenses 1,781 1,975 5,339 5,827
----------- ---------- ------------- ----------
INCOME BEFORE INCOME TAXES 1,088 1,419 2,918 3,832
INCOME TAX PROVISION 448 580 1,202 1,579
----------- ---------- ------------- ----------
NET INCOME $ 640 $ 839 $ 1,716 $ 2,253
=========== ========== ============= ==========
BASIC EARNINGS PER SHARE $ 0.31 $ 0.41 $ 0.83 $ 1.10
=========== ========== ============= ==========
DILUTED EARNINGS PER SHARE $ 0.30 $ 0.39 $ 0.79 $ 1.05
=========== ========== ============= ==========
</TABLE>
See notes to condensed consolidated financial statements.
3
<PAGE>
<TABLE>
<CAPTION>
MCB FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
Three Months Ended Nine Months Ended
Dollar amounts in thousands September 30, September 30,
---------------------- -----------------------
1999 2000 1999 2000
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Net income $ 640 $ 839 $ 1,716 $ 2,253
Other comprehensive income (loss)
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising during
period, net of tax 18 175 (566) 216
Reclassification adjustment for gains (losses)
included in net income, net of tax 7 (1)
---------- ---------- ---------- ----------
Other comprehensive income (loss) 18 175 (559) 215
---------- ---------- ---------- ----------
Comprehensive income $ 658 $ 1,014 $ 1,157 $ 2,468
========== ========== ========== ==========
</TABLE>
See notes to condensed consolidated financial statements.
4
<PAGE>
<TABLE>
<CAPTION>
MCB FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months
Dollar amounts in thousands Ended September 30,
----------------------------
1999 2000
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,716 $ 2,253
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for possible credit losses 245 320
Depreciation and amortization 372 288
(Gain) loss on sale of investment securities, net (12) 2
Deferred income taxes 89
Changes in:
Accrued interest receivable 158 (78)
Other assets (171) 505
Accrued interest payable and other liabilities 337 447
------------ ------------
Net cash provided by operating activities 2,734 3,737
CASH FLOWS FROM INVESTING ACTIVITIES:
Held to maturity securities:
Calls 4,055
Available for sale securities:
Maturities 1,076 5,000
Purchases (14,913) (6,925)
Sales 11,183 11,957
Net increase in loans held for investment (19,970) (18,416)
Purchases of premises and equipment, net (873) (671)
------------ ------------
Net cash used in investing activities (19,442) (9,055)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in noninterest-bearing demand deposits 7,407 12,081
Net increase (decrease) in interest-bearing transaction,
savings and other time deposits 12,458 (7,438)
Net increase in other borrowings 394
Company obligated mandatorially redeemable preferred securities
of subsidiary trust holding solely junior subordinated debentures issued 3,000
Cash dividends paid (19) (61)
Payment for fractional shares resulting from stock dividend (2)
Proceeds from the exercise of stock options 282 87
Repurchases of common stock (632) (481)
------------ ------------
Net cash provided by financing activities 19,888 7,188
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 3,180 1,870
CASH AND CASH EQUIVALENTS:
Beginning of period 12,004 16,956
------------ ------------
End of period $ 15,184 $ 18,826
============ ============
CASH PAID DURING THE PERIOD FOR:
Interest on deposits and other borrowings $ 3,312 $ 3,941
Income taxes $ 1,088 $ 1,575
NONCASH INVESTING AND FINANCING ACTIVITIES:
Stock dividends paid on common stock $ 867
</TABLE>
See notes to condensed consolidated financial statements.
5
<PAGE>
MCB FINANCIAL CORPORATION
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
1. BASIS OF PRESENTATION - The unaudited condensed consolidated financial
information included herein has been prepared in conformity with generally
accepted accounting principles and practices in MCB Financial Corporation's
(the "Company") consolidated financial statements included in the Annual
Report on Form 10-KSB for the year ended December 31, 1999. The interim
condensed consolidated financial statements contained herein are unaudited.
However, in the opinion of the Company, all adjustments, consisting only of
normal recurring items necessary for a fair presentation of the operating
results for the periods shown, have been made. The results of operations
for the three and nine months ended September 30, 2000 should not be
considered indicative of operating results to be expected for the year
ending December 31, 2000. Certain prior year and prior quarter amounts have
been reclassified to conform to current classifications. Cash and cash
equivalents consists of cash, due from banks, and federal funds sold.
2. EARNINGS PER SHARE - Basic earnings per share is computed by dividing net
income by the number of weighted average common shares outstanding. Diluted
earnings per share reflects potential dilution from outstanding stock
options, using the treasury stock method. The number of weighted average
shares used in computing basic and diluted earnings per share are as
follows:
<TABLE>
<CAPTION>
In thousands THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------------------
1999 2000
-------------------- ----------------------
<S> <C> <C>
Basic shares 2,068 2,040
Dilutive effect of stock options 101 86
--------------------------------------------
Diluted shares 2,169 2,126
============================================
</TABLE>
<TABLE>
<CAPTION>
In thousands NINE MONTHS ENDED SEPTEMBER 30,
--------------------------------------------
1999 2000
-------------------- ----------------------
<S> <C> <C>
Basic shares 2,076 2,041
Dilutive effect of stock options 99 99
--------------------------------------------
Diluted shares 2,175 2,140
============================================
</TABLE>
3. RECENTLY ISSUED ACCOUNTING STANDARDS - Statement of Financial Accounting
Standards (SFAS) No. 133,"Accounting for Derivative Instruments and Hedging
Activities," was issued June 1998 and amended by SFAS No. 138, issued in
June 2000. The standard defines derivatives, requires that all derivatives
be carried at fair value, and provides for hedge accounting when certain
conditions are met. The requirements of SFAS No. 133 as amended by SFAS No.
138 will be effective for the Company in the first quarter of the fiscal
year beginning January 1, 2001. Management does not expect the adoption of
SFAS No. 133 as amended by SFAS No. 138 to have a significant impact on the
Company's financial statements.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
The condensed consolidated financial statements include the accounts of
MCB Financial Corporation (the "Company" on a consolidated basis) and its wholly
owned subsidiaries, Metro Commerce Bank and MCB Statutory Trust I (the "Trust").
This discussion focuses primarily on the results of operations of the Company on
a consolidated basis for the three and nine months ended September 30, 2000 and
the financial condition of the Company as of that date.
The following discussion presents information pertaining to the
financial condition and results of operations of the Company and its
subsidiaries and should be read in conjunction with the financial statements and
notes thereto presented in this 10-QSB. Average balances, including balances
used in calculating certain financial ratios, are generally comprised of average
daily balances.
Certain matters discussed in this report are forward-looking statements
that are subject to risks and uncertainties that could cause actual results to
differ materially from those projected in the forward-looking statements. Such
risks and uncertainties include, but are not limited to, the competitive
environment and its impact on the Company's net interest margin, changes in
interest rates, asset quality risks, concentrations of credit and the economic
health of the San Francisco Bay Area and Southern California, volatility of rate
sensitive deposits, asset/liability matching risks, the dilutive impact which
might occur upon the issuance of new shares of common stock and liquidity risks.
Therefore, the matters set forth below should be carefully considered when
evaluating the Company's business and prospects. For additional information
concerning these risks and uncertainties, please refer to the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1999.
OVERVIEW
EARNINGS SUMMARY. The Company reported net income of $839,000, or $0.41
per share basic and $0.39 per share diluted, for the third quarter of 2000. This
compares to net income of $640,000, or $0.31 per share basic and $0.30 per share
diluted, for the same period in 1999.
For the nine months ended September 30, 2000, the Company reported net
income of $2,253,000, or $1.10 per share basic and $1.05 per share diluted. This
compares to net income of $1,716,000, or $0.83 per share basic and $0.79 per
share diluted for the same period in 1999. For the nine months ended September
30, 2000, growth in average loans as a percentage of earning assets contributed
to a 22% increase in interest income and an increase in the net interest margin
to 6.64%. The growth in average loans was largely due to the continuation of
favorable economic conditions in the Company's market areas.
7
<PAGE>
Return on average assets and return on average equity for the third
quarter of 2000 were 1.64% and 20.85%, respectively, as compared to 1.39% and
18.66%, respectively, for the same period of 1999. Return on average assets and
return on average equity for the nine months ended September 30, 2000 were 1.50%
and 19.66%, respectively, as compared to 1.32% and 17.06%, respectively, for the
same period of 1999.
FINANCIAL CONDITION
SUMMARY. Total assets of the Company increased by $10.1 million, or
5.1%, from the end of 1999 to reach $206.2 million at September 30, 2000.
LOANS HELD FOR INVESTMENT. Net loans held for investment increased by
$18.1 million, or 13.3%, during the first nine months of 2000 as demand for
commercial real estate loans increased. The following table sets forth the
amount of total loans outstanding by category as of the dates indicated (dollar
amounts in thousands):
<TABLE>
<CAPTION>
TOTAL LOANS DECEMBER 31, SEPTEMBER 30,
1999 2000
----------------- -----------------
<S> <C> <C>
Commercial $ 23,413 $ 23,947
Real estate:
Commercial 83,737 102,663
Construction 23,546 23,658
Land 4,440 2,974
Home equity 1,289 1,519
Loans to consumers and individuals 1,672 1,826
----------------- -----------------
Total 138,097 156,587
Deferred loan fees (131) (168)
Allowance for possible credit losses (1,492) (1,849)
----------------- -----------------
Total net loans $ 136,474 $ 154,570
================= =================
</TABLE>
In the normal practice of extending credit, the Company accepts real
estate collateral for loans which have primary sources of repayment from
commercial operations. The total amount of loans secured by real estate equaled
$131.0 million, or 83.7% of the total portfolio as of September 30, 2000. Due to
the Company's limited marketing areas, its real estate collateral is primarily
concentrated in the San Francisco Bay Area and Southern California. The Company
believes that its underwriting standards for real estate secured loans are
prudent and provide an adequate safeguard against declining real estate prices
which may effect a borrower's ability to liquidate the property and repay the
loan. However, no assurance can be given that real estate values will not
decline and impair the value of the security for loans held by the Company.
The Company focuses its portfolio lending on commercial, commercial
real estate, and construction loans. These loans generally carry a higher level
of risk than conventional real estate loans; accordingly, yields on these loans
are typically higher than those of other loans. The performance of commercial
and construction loans is generally dependent upon future cash flows from
8
<PAGE>
business operations (including the sale of products, merchandise and services)
and the successful completion or operation of large real estate projects. Risks
attributable to such loans can be significantly increased, often to a greater
extent than other loans, by regional economic factors, real estate prices, the
demand for commercial and retail office space, and the demand for products and
services of industries which are concentrated within the Company's loan
portfolio. As of September 30, 2000 the two largest industry concentrations
within the loan portfolio were real estate and related services at 30.8% and the
services - personal/business industry at 24.0% of the portfolio. Because credit
concentrations increase portfolio risk, the Company places significant emphasis
on the purpose of each loan and the related sources of repayment. The Company
generally limits unsecured commercial loans to maturities of three years and
secured commercial loans to maturities of five years.
NONPERFORMING ASSETS. The Company carefully monitors the quality of its
loan portfolio and the factors that affect it, including regional economic
conditions, employment stability, and real estate values. The accrual of
interest on loans is discontinued when the payment of principal or interest is
considered to be in doubt, or when a loan becomes contractually past due by 90
days or more with respect to principal or interest, except for loans that are
well secured and in the process of collection.
As of September 30, 2000, the Company had nonperforming assets in the
amount of $78,000. The following table sets forth the balance of nonperforming
assets as of the dates indicated (dollar amounts in thousands):
<TABLE>
<CAPTION>
NONPERFORMING ASSETS DECEMBER 31, SEPTEMBER 30,
1999 2000
------------------ ------------------
<S> <C> <C>
Nonaccrual loans $ 1,707 $ 0
Loans 90 days or more past due and still accruing 40 78
------------------ ------------------
$ 1,747 $ 78
================== ==================
As a percent of total loans 1.27% 0.05%
As a percent of total assets 0.89% 0.04%
</TABLE>
Nonaccrual loans decreased by $1.7 million during the nine
months ended September 30, 2000. The decrease was due to the sale of a property
securing one of the loans. No specific allowance for possible credit losses was
applied to the nonaccrual loans at December 31, 1999 because they were
adequately collateralized.
At September 30, 2000, the Company had loans identified as impaired in
the amount of $78,000. At September 30, 2000, no specific allowance for possible
credit losses was required for these impaired loans because they were adequately
collateralized.
9
<PAGE>
ALLOWANCE FOR POSSIBLE CREDIT LOSSES. The Company maintains an
allowance for possible credit losses ("APCL") which is reduced by credit losses
and increased by credit recoveries and by the provision to the APCL which is
charged against operations. Provisions to the APCL and the total of the APCL are
based, among other factors, upon the Company's credit loss experience, current
economic conditions, the performance of loans within the portfolio, evaluation
of loan collateral value, and the prospects or worth of respective borrowers and
guarantors.
In determining the adequacy of its APCL and after carefully analyzing
each loan individually, the Company segments its loan portfolio into pools of
homogeneous loans that share similar risk factors. Each pool is given a risk
assessment factor which largely reflects the expected future losses from each
category. These risk assessment factors change as economic conditions shift and
actual loan losses are recorded. As of September 30, 2000, the APCL of
$1,849,000, or 1.18% of total loans, was determined by management to be adequate
against foreseeable future losses. No assurance can be given that nonperforming
loans will not increase or that future losses will not exceed the amount of the
APCL.
The following table summarizes, for the periods indicated, loan
balances at the end of each period and average balances during the period,
changes in the APCL arising from credit losses, recoveries of credit losses
previously incurred, additions to the APCL charged to operating expense, and
certain ratios relating to the APCL (dollar amounts in thousands):
<TABLE>
<CAPTION>
AT AND FOR AT AND FOR THE
THE YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, SEPTEMBER 30,
1999 2000
-------------- ---------------------
<S> <C> <C>
BALANCES:
Average loans during period $ 125,035 $ 146,676
Loans at end of period 137,966 156,419
ALLOWANCE FOR POSSIBLE CREDIT LOSSES:
Balance at beginning of period 1,117 1,492
Actual credit losses:
Commercial 62
-------------- ---------------------
Total 62 0
Actual credit recoveries:
Commercial 72 37
-------------- ---------------------
Total 72 37
-------------- ---------------------
Net credit losses (recoveries) (10) (37)
-------------- ---------------------
Provision charged to operating expense 365 320
-------------- ---------------------
Balance at end of period $ 1,492 $ 1,849
============== =====================
RATIOS:
Net credit losses (recoveries) to average loans -0.01% -0.03%
Allowance for possible credit losses to loans at end of period 1.08% 1.18%
Net credit losses (recoveries) to beginning of period allowance
for credit losses -0.90% -2.48%
</TABLE>
10
<PAGE>
The Company provided $100,000 to the allowance for possible credit
losses during the third quarter of 2000 as compared to $120,000 during the third
quarter of 1999. For the nine months ended September 30, 2000, the Company
provided $320,000 to the allowance for possible credit losses as compared to
$245,000 during the same period of 1999. The provisions during both periods were
recorded as a prudent measure, based upon growth in the loan portfolio.
The following table sets forth the allocation of the APCL as of the
dates indicated (dollar amounts in thousands):
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, SEPTEMBER 30,
1999 1999 2000
---------------------------- ---------------------------- ----------------------------
% of % of % of
Category Category Category
to Total to Total to Total
APCL Loans APCL Loans APCL Loans
<S> <C> <C> <C> <C> <C> <C>
Commercial loans $ 904 48.48% $ 904 47.87% $ 660 43.72%
Real estate loans 260 46.74% 260 48.98% 315 53.09%
Consumer loans 41 4.78% 30 3.15% 33 3.19%
Not allocated 201 N/A 298 N/A 841 N/A
------------ ------------ ------------ ------------ ------------ ------------
Total $ 1,406 100.00% $ 1,492 100.00% $ 1,849 100.00%
============ ============ ============ ============ ============ ============
</TABLE>
The APCL is available to absorb losses from all loans, although
allocations have been made for certain loans and loan categories. The allocation
of the APCL as shown above should not be interpreted as an indication that
charge-offs in future periods will occur in these amounts or proportions, or
that the allocation indicates future charge-off trends. In addition to the most
recent analysis of individual loans and pools of loans, management's methodology
also places emphasis on historical loss data, delinquency and nonaccrual trends
by loan classification category and expected loan maturity. This analysis,
management believes, identifies potential losses within the loan portfolio and
therefore results in allocation of a large portion of the allowance to specific
loan categories.
11
<PAGE>
INVESTMENTS. The following tables set forth the amortized cost and
approximate market value of investment securities as of the dates indicated
(dollar amounts in thousands):
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR CARRYING
SEPTEMBER 30, 2000: COST GAINS LOSSES VALUE VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Held to maturity securities:
U.S. Government agencies $ 2,000 $ (17) $ 1,983 $ 2,000
-------- ------- -------- -------- --------
Total held to maturity 2,000 (17) 1,983 2,000
-------- ------- -------- -------- --------
Available for sale securities:
U.S. Treasury 13,985 $ 75 (181) 13,879 13,879
U.S. Government agencies 9,114 (396) 8,718 8,718
Corporate securities 1,934 (16) 1,918 1,918
-------- ------- -------- -------- --------
Total available for sale 25,033 75 (593) 24,515 24,515
-------- ------- -------- -------- --------
Total investment securities $ 27,033 $ 75 $ (610) $ 26,498 $ 26,515
======== ======= ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED FAIR CARRYING
DECEMBER 31, 1999 COST GAINS LOSSES VALUE VALUE
-----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Held to maturity securities:
U.S. Government agencies $ 2,000 $ (21) $ 1,979 $ 2,000
-------- ------- -------- -------- --------
Total held to maturity 2,000 (21) 1,979 2,000
-------- ------- -------- -------- --------
Available for sale securities:
U.S. Treasury 21,920 (320) 21,600 21,600
U.S. Government agencies 11,134 (537) 10,597 10,597
Corporate securities 1,950 (29) 1,921 1,921
-------- ------- -------- -------- --------
Total available for sale 35,004 (886) 34,118 34,118
-------- ------- -------- -------- --------
Total investment securities $ 37,004 $ $ (907) $ 36,097 $ 36,118
======== ======= ======== ======== ========
</TABLE>
12
<PAGE>
DEPOSITS. Total consolidated deposits increased by $4.6 million, or
2.6%, during the nine months ended September 30, 2000.
Rates paid on deposits increased during the nine months ended September
30, 2000 contributing to the increase in the cost of funds to 2.90% for the nine
months ended September 30, 2000 as compared to 2.73% for the year ended December
31, 1999. The following table summarizes the distribution of average deposits
and the average rates paid for the periods indicated (dollar amounts in
thousands):
<TABLE>
<CAPTION>
YEAR ENDED NINE MONTHS ENDED
DECEMBER 31, 1999 SEPTEMBER 30, 2000
---------------------------------- -------------------------------
Average Average Average Average
Balance Rate Balance Rate
-------------- ---------------- ------------ ---------------
<S> <C> <C> <C> <C>
Noninterest-bearing demand deposits $ 40,290 $ 46,843
Interest-bearing demand deposits (includes
money market deposit accounts) 98,954 3.42% 109,469 3.65%
Savings deposits 2,259 1.90% 2,094 1.93%
Time deposits, $100,000 and over 13,477 4.85% 15,379 5.30%
Other time deposits 8,816 4.41% 9,216 4.82%
-------------- ---------------- ------------ ---------------
Total interest-bearing 123,506 3.62% 136,158 3.89%
-------------- ---------------- ------------ ---------------
Total deposits $ 163,796 2.73% $ 183,001 2.90%
============== ================ ============ ===============
</TABLE>
The following table sets forth the time remaining to maturity of the
Company's time deposits in amounts of $100,000 or more as of the dates indicated
below (dollar amounts in thousands):
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
TIME REMAINING TO MATURITY 1999 2000
----------------- -----------------
<S> <C> <C>
Three months or less $ 5,719 $ 8,822
After three months to six months 3,229 4,287
After six months to one year 4,766 5,222
After twelve months 757 802
----------------- -----------------
Total $ 14,471 $ 19,133
================= =================
</TABLE>
13
<PAGE>
RESULTS OF OPERATIONS
NET INTEREST INCOME / NET INTEREST MARGIN. Net interest income for the
quarter ended September 30, 2000 was $3,300,000, an increase of 20.3% over the
net interest income of $2,744,000 during the same period of 1999. Net interest
income for the nine months ended September 30, 2000 was $9,337,000, an increase
of 20.9% over the net interest income of $7,724,000 during the same period of
1999. The increase was primarily due to the growth in average loans, largely due
to the continuation of favorable economic conditions in the Company's market
areas.
The following table sets forth average assets, liabilities, and
shareholders' equity; the amount of interest income or interest expense; and the
average yield or rate for each category of interest-bearing assets and
interest-bearing liabilities and the net interest margin (net interest income
divided by average earning assets) for the periods indicated (dollar amounts in
thousands):
<TABLE>
<CAPTION>
FOR THE QUARTER ENDED SEPTEMBER 30,
---------------------------------------------------------------------------
1999 2000
----------------------------------- -----------------------------------
AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Federal funds sold $ 14,702 $ 185 5.03% $ 9,563 $ 156 6.53%
Interest-bearing deposits with banks 286 4 5.59% 286 4 5.59%
Investment securities 27,782 383 5.51% 27,572 410 5.95%
Loans (1) 129,241 3,336 10.32% 153,272 4,167 10.87%
---------- ---------- --------- ---------- ---------- ---------
Total earning assets 172,011 3,908 9.09% 190,693 4,737 9.94%
Total non-earning assets 12,649 13,637
---------- ----------
Total assets $ 184,660 $ 204,330
========== ==========
LIABILITIES & SHAREHOLDERS' EQUITY
Demand deposits $ 42,035 $ 48,338
Interest-bearing transaction accounts 101,140 $ 879 3.48% 108,933 $ 1,050 3.86%
Time deposits, $100,000 or more 14,181 167 4.71% 16,541 232 5.61%
Savings and other time 11,337 111 3.92% 11,176 125 4.47%
---------- ---------- --------- ---------- ---------- ---------
Total interest-bearing deposits 126,658 1,157 3.65% 136,650 1,407 4.12%
---------- ---------- --------- ---------- ---------- ---------
Other borrowings 593 7 4.72% 1,274 30 9.42%
---------- ---------- --------- ---------- ---------- ---------
Total interest-bearing liabilities 127,251 1,164 3.66% 137,924 1,437 4.17%
Other liabilities 1,645 1,972
Shareholders' equity 13,729 16,096
Total liabilities
---------- ----------
and shareholders' equity $ 184,660 $ 204,330
========== ==========
---------- ----------
Net interest income $ 2,744 $ 3,300
========== ==========
Net interest margin 6.38% 6.92%
<FN>
(1) Nonaccrual loans are included in the average balance.
</FN>
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
FOR THE NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------------------------------------
1999 2000
----------------------------------- -----------------------------------
AVERAGE AVERAGE
BALANCE INTEREST RATE BALANCE INTEREST RATE
---------- ---------- --------- ---------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Federal funds sold $ 7,532 $ 274 4.85% $ 10,268 $ 473 6.14%
Interest-bearing deposits with banks 286 11 5.13% 286 12 5.59%
Investment securities 32,195 1,331 5.52% 30,173 1,319 5.83%
Loans (1) 121,934 9,365 10.24% 146,676 11,554 10.50%
---------- ---------- --------- ---------- ---------- ---------
Total earning assets 161,947 10,981 9.04% 187,403 13,358 9.50%
Total non-earning assets 11,745 13,398
---------- ----------
Total assets $ 173,692 $ 200,801
========== ==========
LIABILITIES & SHAREHOLDERS' EQUITY
Demand deposits $ 38,413 $ 46,843
Interest-bearing transaction accounts 95,603 $ 2,437 3.40% 109,469 $ 3,001 3.66%
Time deposits, $100,000 or more 13,004 472 4.84% 15,379 611 5.30%
Savings and other time 10,892 318 3.89% 11,310 363 4.28%
---------- ---------- --------- ---------- ---------- ---------
Total interest-bearing deposits 119,499 3,227 3.60% 136,158 3,975 3.89%
---------- ---------- --------- ---------- ---------- ---------
Other borrowings 881 30 4.54% 837 46 7.33%
---------- ---------- --------- ---------- ---------- ---------
Total interest-bearing liabilities 120,380 3,257 3.61% 136,995 4,021 3.91%
Other liabilities 1,482 1,683
Shareholders' equity 13,417 15,280
Total liabilities
---------- ----------
and shareholders' equity $ 173,692 $ 200,801
========== ==========
---------- ----------
Net interest income $ 7,724 $ 9,337
========== ==========
Net interest margin 6.36% 6.64%
<FN>
(1) Nonaccrual loans are included in the average balance.
</FN>
</TABLE>
The net interest margin increased to 6.92% during the third quarter of
2000 from 6.38% in the same quarter of 1999. For the nine months ended September
30, 2000, the net interest margin increased to 6.64% from 6.36% during the same
period of 1999. The increase was primarily attributable to growth in average
earning assets exceeding growth in average interest-bearing liabilities.
The following table presents the dollar amount of changes in interest
earned and interest paid for each major category of interest-earning asset and
interest-bearing liability and the amount of change attributable to average
balances (volume) fluctuations and average rate fluctuations for the periods
indicated. The variance attributable to both balance and rate fluctuations is
allocated to a combined rate/volume variance (dollar amounts in thousands):
15
<PAGE>
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30, 1999 NINE MONTHS ENDED SEPTEMBER 30, 1999
COMPARED TO COMPARED TO
QUARTER ENDED SEPTEMBER 30, 2000 NINE MONTHS ENDED SEPTEMBER 30, 2000
CHANGE IN CHANGE IN
--------------------------------------------- ------------------------------------------
RATE/ RATE/
VOLUME RATE VOLUME TOTAL VOLUME RATE VOLUME TOTAL
--------------------------------------------- ------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INTEREST INCOME:
Federal funds sold ($65) $55 ($19) ($29) $100 $73 $26 $199
Interest-bearing deposits with banks 0 0 0 0 0 1 0 1
Investment securities (3) 30 0 27 (82) 75 (5) (12)
Loans 620 178 33 831 1,903 238 48 2,189
--------------------------------------------- ------------------------------------------
Total Interest Income 552 263 14 829 1,921 387 69 2,377
--------------------------------------------- ------------------------------------------
INTEREST EXPENSE:
Interest-bearing transaction accounts 68 96 7 171 351 186 27 564
Time deposits, $100,000 or more 28 32 5 65 86 45 8 139
Savings and other time (2) 16 0 14 12 32 1 45
Other borrowings 8 7 8 23 (1) 18 (1) 16
--------------------------------------------- ------------------------------------------
Total Interest Expense 102 151 20 273 448 281 35 764
--------------------------------------------- ------------------------------------------
NET INTEREST INCOME $450 $112 ($6) $556 $1,473 $106 $34 $1,613
============================================= ==========================================
</TABLE>
NONINTEREST INCOME. The following table summarizes noninterest income
for the periods indicated and expresses the amounts as a percentage of average
assets (dollar amounts in thousands):
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
---------------------------------- -----------------------------------
COMPONENTS OF NONINTEREST INCOME 1999 2000 1999 2000
---------------------------------------------------- -------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Gain on sale of loans $ 5 $ 12 $ 87 $ 47
Service fees on deposit accounts 149 111 465 356
Loan servicing fees 14 14 40 41
Gain (loss) on sale of investment securities - net 12 (2)
Other 77 57 174 200
-------------- --------------- --------------- ---------------
Total $ 245 $ 194 $ 778 $ 642
============== =============== =============== ===============
AS A PERCENTAGE OF AVERAGE ASSETS (ANNUALIZED)
----------------------------------------------------
Gain on sale of loans 0.01% 0.02% 0.07% 0.03%
Service fees on deposit accounts 0.32% 0.22% 0.36% 0.24%
Loan servicing fees 0.03% 0.03% 0.03% 0.03%
Gain (loss) on sale of investment securities - net 0.01% 0.00%
Other 0.17% 0.11% 0.13% 0.13%
-------------- --------------- --------------- ---------------
Total 0.53% 0.38% 0.60% 0.43%
============== =============== =============== ===============
</TABLE>
16
<PAGE>
NONINTEREST EXPENSE. The following table summarizes noninterest
expenses and the associated ratios to average assets for the periods indicated
(dollar amounts in thousands):
<TABLE>
<CAPTION>
QUARTER ENDED SEPTEMBER 30, NINE MONTHS ENDED SEPTEMBER 30,
------------------------------------- ------------------------------------
COMPONENTS OF NONINTEREST EXPENSE 1999 2000 1999 2000
------------------------------------------------- ----------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Salaries and employee benefits $ 1,006 $ 1,096 $ 3,018 $ 3,283
Occupancy expense 265 273 730 800
Furniture and equipment expense 107 119 306 343
Professional services 62 107 236 233
Supplies 67 68 201 218
Promotional expenses 58 69 226 217
Data processing fees 85 93 280 270
Regulatory assessments 12 16 31 46
Other 119 134 311 417
----------------- ----------------- ---------------- ----------------
Total $ 1,781 $ 1,975 $ 5,339 $ 5,827
================= ================= ================ ================
Average full-time equivalent employees 57 58 56 58
AS A PERCENTAGE OF AVERAGE ASSETS (ANNUALIZED)
-------------------------------------------------
Salaries and employee benefits 2.18% 2.15% 2.32% 2.18%
Occupancy expense 0.57% 0.54% 0.56% 0.53%
Furniture and equipment expense 0.23% 0.23% 0.24% 0.23%
Professional services 0.13% 0.21% 0.18% 0.15%
Supplies 0.15% 0.13% 0.15% 0.14%
Promotional expenses 0.13% 0.14% 0.17% 0.14%
Data processing fees 0.18% 0.18% 0.22% 0.18%
Regulatory assessments 0.03% 0.03% 0.02% 0.03%
Other 0.26% 0.26% 0.24% 0.28%
----------------- ----------------- ---------------- ----------------
Total 3.86% 3.87% 4.10% 3.87%
================= ================= ================ ================
</TABLE>
Noninterest expense increased to $2.0 million during the third quarter
of 2000 from $1.8 million during the same period of the prior year. For the nine
months ended September 30, 2000, noninterest expense increased to $5.8 million
from $5.3 million during the same period of the prior year. Growth in existing
operations and the addition of the Petaluma branch office in July 1999
contributed to the increase.
INCOME TAXES. The Company's effective tax rate was 40.9% for the
quarter ended September 30, 2000 compared to 41.2% in the same period of the
prior year. For the nine months ended September 30, 2000, the effective tax rate
was 41.2% compared to 41.2% in the same period of the prior year.
LIQUIDITY AND ASSET/LIABILITY MANAGEMENT. Liquidity is the Company's
ability to absorb fluctuations in deposits while simultaneously providing for
the credit needs of its borrowers. The objective in liquidity management is to
balance the sources and uses of funds. Primary sources of liquidity for the
Company include payments of principal and interest on loans and investments,
proceeds from the sale or maturity of loans and investments, growth in deposits,
17
<PAGE>
and other borrowings. The Company holds overnight federal funds as a cushion for
temporary liquidity needs. During the nine months ended September 30, 2000,
federal funds sold averaged $10.3 million, or 5.1% of total assets. In addition
to its federal funds, the Company maintains various lines of credit with
correspondent banks, the Federal Reserve Bank of San Francisco, and the Federal
Home Loan Bank of San Francisco.
At September 30, 2000, the Company had cash, time deposits with banks,
federal funds sold, and unpledged investment securities of approximately $37.1
million, or 18.0% of total assets. This represented all available liquid assets,
excluding other assets.
Several methods are used to measure liquidity. One method is to measure
the balance between loans and deposits (gross loans divided by total deposits).
In general, the closer this ratio is to 100%, the more reliant an institution
becomes on its illiquid loan portfolio and its securities portfolio to absorb
temporary fluctuations in deposit levels. At September 30, 2000, the
loan-to-deposit ratio was 84.8% as compared to 76.7% at December 31, 1999.
Another frequently used method is the relationship between short-term
liquid assets (federal funds sold and investments maturing within one year) and
short-term liabilities (total deposits and other borrowings), or the liquidity
ratio. The Company targets a minimum ratio of 5%. At September 30, 2000, this
ratio was 4.0% as compared to 15.2% at December 31, 1999.
As of September 30, 2000, the Company had no material commitments that
were expected to adversely impact liquidity.
Net interest income and the net interest margin are largely dependent
on the Company's ability to closely match interest-earning assets with
interest-bearing liabilities. As interest rates change, the Company must
constantly balance maturing and repricing liabilities with maturing and
repricing assets. This process is called asset/liability management and is
commonly measured by the maturity/repricing gap. The maturity/repricing gap is
the dollar difference between maturing or repricing assets and maturing or
repricing liabilities at different intervals of time.
The following table sets forth rate sensitive interest-earning assets
and interest-bearing liabilities as of September 30, 2000, the interest rate
sensitivity gap (i.e. interest sensitive assets minus interest sensitive
liabilities), the cumulative interest rate sensitivity gap, the interest rate
sensitivity gap ratio, and the cumulative interest rate sensitivity gap ratio.
For the purposes of the following table, an asset or liability is considered
rate sensitive within a specified period when it matures or can be repriced
within that period pursuant to its original contractual terms (dollar amounts in
thousands):
18
<PAGE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 2000 OVER 90 OVER 180 AFTER ONE AFTER
90 DAYS DAYS TO DAYS TO YEAR TO FIVE
OR LESS 180 DAYS 365 DAYS FIVE YEARS YEARS TOTAL
----------- ----------- ------------ ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
EARNING ASSETS (RATE SENSITIVE):
Federal funds sold $ 6,350 $ 6,350
Interest-bearing deposits with other
banks 196 $ 90 286
Investment securities 2,000 $ 20,011 $ 5,022 27,033
Loans, excluding allowance for possible
losses 78,611 2,585 $ 2,571 55,531 17,289 156,587
----------- ----------- ------------ ----------- ----------- -----------
Total 87,157 2,675 2,571 75,542 22,311 190,256
----------- ----------- ------------ ----------- ----------- -----------
INTEREST-BEARING LIABILITIES (RATE SENSITIVE):
Interest-bearing transaction deposits 46,024 55,206 101,230
Time deposits, $100,000 or more 8,822 4,287 5,222 802 19,133
Savings and other time deposits 3,009 2,016 375 5,572 10,972
Other borrowings 750 3,000 3,750
----------- ----------- ------------ ----------- ----------- -----------
Total 12,581 6,303 51,621 61,580 $ 135,085
----------- ----------- ------------ ----------- ----------- -----------
Period GAP $ 74,576 $ (3,628) $ (49,050) $ 13,962 $ 22,311
=========== =========== ============ =========== ===========
Cumulative GAP $ 74,576 $ 70,948 $ 21,898 $ 35,860 $ 58,171
=========== =========== ============ =========== ===========
Interest Sensitivity GAP Ratio 85.57% (135.63%) (1907.82%) 18.48% 100.00%
=========== =========== ============ =========== ===========
Cumulative Interest Sensitivity 85.57% 78.98% 23.70% 21.35% 30.58%
=========== =========== ============ =========== ===========
</TABLE>
The Company classifies its interest-bearing transaction accounts and
savings accounts into the over 180 days to 365 days time period as well as the
after one year to five years time period. This is done to adjust for the
insensitivity of these accounts to changes in interest rates. Although rates on
these accounts can contractually be reset at the Company's discretion,
historically these accounts have not demonstrated strong correlation to changes
in the prime rate. Generally, a positive gap at one year indicates that net
interest income and the net interest margin will increase if interest rates rise
in the future. A negative gap at one year indicates that net interest income and
the net interest margin will decrease if interest rates rise in the future. The
Company neither currently utilizes financial derivatives to hedge its
asset/liability position nor has any plans to employ such strategies in the near
future.
The maturities and weighted average yields of investment securities at
September 30, 2000 are presented in the following table (at amortized cost)
(dollar amounts in thousands):
<TABLE>
<CAPTION>
AFTER 1 YEAR AFTER 5 YEARS
WITHIN 1 YEAR WITHIN 5 YEARS WITHIN 10 YEARS TOTAL
--------------------- --------------------- ------------------- --------------------
Amount Yield Amount Yield Amount Yield Amount Yield
<S> <C> <C> <C> <C> <C> <C> <C> <C>
U.S. Treasury and other
U.S. government agencies $1,000 5.98% $19,077 5.67% $5,022 5.80% $25,099 5.71%
Corporate securities 1,934 6.32% 1,934 6.32%
---------- --------- ---------- --------- ---------- -------- ---------- --------
Total $1,000 5.98% $21,011 5.73% $5,022 5.80% $27,033 5.75%
========== ========= ========== ========= ========== ======== ========== ========
</TABLE>
19
<PAGE>
Maturities of Loans at September 30, 2000 (dollar amounts in thousands):
<TABLE>
<CAPTION>
TIME REMAINING TO MATURITY FIXED RATE ADJUSTABLE RATE TOTAL
------------ ---------------- ------------
<S> <C> <C> <C>
One year or less $ 8,079 $ 37,232 $ 45,311
After one year to five years 55,159 18,083 73,242
After five years 17,288 20,746 38,034
------------ ---------------- ------------
Total $ 80,526 $ 76,061 $ 156,587
============ ================ ============
</TABLE>
As of September 30, 2000, the percentage of loans held for investment
with fixed and floating interest rates was 51.4% and 48.6%, respectively.
CAPITAL RESOURCES. The principal source of capital for the Company is
and will continue to be the retention of operating profits. The ratios of
average equity to average assets for the periods indicated are set forth below.
NINE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1999 SEPTEMBER 30, 2000
------------------------------ -----------------------------
7.72% 7.61%
On September 7, 2000, the Company completed an offering of 10.60%
capital securities in an aggregate amount of $3.0 million through the Trust, a
wholly owned trust subsidiary formed for the purpose of the offering. The
securities issued in the offering were sold by the Trust in a private
transaction pursuant to an applicable exemption from registration under the
Securities Act. The entire proceeds of the issuance were invested by the Trust
in $3,000,000 of 10.60% Junior Subordinated Deferrable Interest Debentures due
2030 issued by the Company under a similar exemption from registration. The
debentures represent the sole assets of the Trust. Interest on the debentures is
payable semi-annually and the principal is redeemable by the Company at a
premium beginning on or after September 7, 2010 through September 6, 2020 plus
any accrued and unpaid interest to the redemption date. On or after September 7,
2020, the principal is redeemable by the Company at 100% of the principal
amount. The trust preferred securities are subject to mandatory redemption to
the extent of any early redemption of the debentures and upon maturity of the
debentures on September 7, 2030. The debentures bear the same terms and interest
rates as the trust preferred securities.
The Company has guaranteed, on a subordinated basis, distributions and other
payments due on the trust preferred securities.
20
<PAGE>
The debentures and related Trust investment in the debentures have been
eliminated in consolidation and the trust preferred securities are reflected as
outstanding in the accompanying condensed consolidated financial statements.
Under applicable regulatory guidelines, the trust preferred securities currently
qualify as Tier 1 capital up to a maximum of 25% of Tier I capital. Any
additional portion of trust preferred securities would currently qualify as Tier
2 capital. As of September 30, 2000, the entire $3.0 million outstanding of
trust preferred securities qualified as Tier I capital.
Regulatory authorities have issued guidelines to implement risk-based
capital requirements. The guidelines establish a systematic analytical framework
that makes regulatory capital requirements more sensitive to differences in risk
profiles among banking organizations. Total capital is classified into two
components: Tier 1 (primarily shareholder's equity) and Tier 2 (supplementary
capital including allowance for possible credit losses, certain preferred stock,
eligible subordinated debt, and other qualifying instruments). The guidelines
require that total capital be 8% of risk-based assets, of which at least 4% must
be Tier 1 capital. As of September 30, 2000, the Company's total capital was
12.80% and its Tier 1 capital ratio was 11.69%. In addition, the Company, under
the guidelines established for adequately capitalized institutions, must also
maintain a minimum leverage ratio (Tier 1 capital divided by total assets) of
4%. As of September 30, 2000, the Company's leverage ratio was 9.44%. It is the
Company's intention to maintain risk-based capital ratios at levels
characterized as "well-capitalized" for banking organizations: Tier 1 risk-based
capital of 6 percent or above and total risk-based capital at 10 percent or
above.
21
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits: The Exhibit Index is incorporated by reference.
(b) Reports on Form 8-K. The Company filed the following Current Reports
on Form 8-K:
None
22
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
MCB FINANCIAL CORPORATION
-------------------------
(REGISTRANT)
Date: November 14, 2000 /s/ PATRICK E. PHELAN
-----------------------------------------
Patrick E. Phelan
Chief Financial Officer
(Principal Accounting Officer and officer
authorized to sign on behalf of the
registrant)
23
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
------- -----------
4.1 Amended and Restated Declaration of Trust dated as of September
7, 2000
4.2 Indenture, dated as of September 7, 2000, between MCB Financial
Corporation and State Street Bank and Trust Company, as trustee
4.3 Guarantee Agreement, dated as of September 7, 2000, between
MCB Financial Corporation and State Street Bank and Trust
Company, as trustee
4.4 Placement Agreement dated as of August 31, 2000
4.5 Subscription Agreement dated as of September 7, 2000
10 Hayward Office Lease (B Street Marketplace), dated as of
September 7, 2000, between the Redevelopment Agency of the
City of Hayward and Metro Commerce Bank
27 Financial Data Schedule
24
