<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED MARCH 31, 2000
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _____________
Commission file number 0-22732
PACIFIC CREST CAPITAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 95-4437818
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
30343 CANWOOD STREET
AGOURA HILLS, CALIFORNIA 91301
(Address of principal executive offices) (Zip Code)
(818) 865-3300
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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
--- ---
The number of shares outstanding of issuer's $ .01 par value common stock as of
April 30, 2000, was 2,508,240.
9.375% Cumulative Trust Preferred Securities of PCC Capital I
Guarantee of Pacific Crest Capital, Inc. with respect to the
9.375% Cumulative Trust Preferred Securities of PCC Capital I
<PAGE>
PACIFIC CREST CAPITAL, INC.
MARCH 31, 2000 FORM 10-Q
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE NO.
Part I.FINANCIAL INFORMATION
<S> <C>
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets
March 31, 2000 and December 31, 1999.................................. 1
Consolidated Statements of Income
Three Months Ended March 31, 2000 and 1999............................ 2
Consolidated Statements of Shareholders' Equity
Three Months Ended March 31, 2000 and 1999............................ 3
Consolidated Statements of Cash Flows
Three Months Ended March 31, 2000 and 1999............................ 4
Notes to Consolidated Financial Statements............................ 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.............................................. 9
Selected Financial Data........................................ 9
General........................................................ 10
Results of Operations.......................................... 11
Financial Condition............................................ 17
Non-Performing Assets.......................................... 19
Liquidity...................................................... 19
Dividends...................................................... 20
Capital Resources.............................................. 20
Item 3. Quantitative and Qualitative Disclosures About Market Risk............. 20
PartII. OTHER INFORMATION
Item 1. Legal Proceedings...................................................... 23
Item 2. Changes in Securities.................................................. 23
Item 3. Defaults Upon Senior Securities........................................ 23
Item 4. Submission of Matters to a Vote of Security Holders.................... 23
Item 5. Other Information...................................................... 23
Item 6. Exhibits and Reports on Form 8-K....................................... 23
</TABLE>
<PAGE>
PACIFIC CREST CAPITAL, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
-------------- --------------
ASSETS (Unaudited) (Audited)
<S> <C> <C>
Cash $ 919 $ 1,282
Securities purchased under resale agreements 100 3,501
-------------- --------------
Cash and cash equivalents 1,019 4,783
-------------- --------------
Investment securities available for sale, at market Loans: 240,477 240,760
Commercial real estate 368,397 357,312
Single-family residential 570 571
Commercial business/SBA/other 5,617 5,181
SBA loans held for sale, at lower of cost or market 4,451 3,269
-------------- --------------
Gross loans 379,035 366,333
Less: deferred loan fees (471) (381)
Less: allowance for loan losses (6,711) (6,450)
-------------- --------------
Net loans 371,853 359,502
-------------- --------------
Accrued interest receivable 6,652 6,604
Prepaid expenses and other assets 1,452 2,154
Deferred income taxes, net 9,799 8,600
Other real estate owned - -
Premises and equipment 903 857
-------------- --------------
Total assets $632,155 $623,260
============== ==============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Savings accounts $176,478 $196,368
Certificates of deposit 280,572 269,233
Money market checking accounts 16,589 18,783
-------------- --------------
Total deposits 473,639 484,384
-------------- --------------
Borrowings:
Securities sold under repurchase agreements 51,100 30,500
Borrowings from State of California 25,000 20,000
Term borrowings 30,000 40,000
Company obligated mandatorily redeemable preferred securities of
subsidiary trust holding solely junior subordinated debentures
("Trust preferred securities") 17,250 17,250
-------------- --------------
Total borrowings 123,350 107,750
-------------- --------------
Total interest-bearing liabilities 596,989 592,134
Accrued interest payable and other liabilities 9,662 5,577
-------------- --------------
Total liabilities 606,651 597,711
============== ==============
SHAREHOLDERS' EQUITY
Common stock, $.01 par value (10,000,000 shares authorized, 2,986,530
shares issued at March 31, 2000 and December 31, 1999) 30 30
Additional paid-in capital 27,831 27,885
Retained earnings 11,165 9,978
Accumulated other comprehensive loss (6,517) (6,355)
Common stock in treasury, at cost (478,290 shares at
March 31, 2000 and 384,806 shares at December 31, 1999) (7,005) (5,989)
-------------- --------------
Total shareholders' equity 25,504 25,549
-------------- --------------
Total liabilities and shareholders' equity $632,155 $623,260
============== ==============
Book value per common share $ 10.17 $ 9.82
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
1
<PAGE>
PACIFIC CREST CAPITAL, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2000 1999
-------------- ---------------
<S> <C> <C>
INTEREST INCOME:
Loans $ 8,744 $ 7,505
Securities purchased under resale agreements 3 211
Investment securities available for sale 4,110 4,733
-------------- ---------------
Total interest income 12,857 12,449
-------------- ---------------
INTEREST EXPENSE:
Deposits:
Savings accounts 2,191 3,107
Certificates of deposit 3,929 2,430
Money market checking accounts 198 257
-------------- ---------------
Total interest expense on deposits 6,318 5,794
-------------- ---------------
Borrowings:
Securities sold under repurchase agreements 641 354
Borrowings from State of California 317 -
Term borrowings 452 1,094
Trust preferred securities 404 405
-------------- ---------------
Total interest expense on borrowings 1,814 1,853
-------------- ---------------
Total interest expense 8,132 7,647
-------------- ---------------
Net interest income 4,725 4,802
Provision for loan losses 250 660
-------------- ---------------
Net interest income after provision for loan losses 4,475 4,142
-------------- ---------------
NON-INTEREST INCOME:
Loan prepayment and late fee income 102 99
Gain on sale of investment securities - 515
Gain on sale of SBA loans - 96
Gain on sale of other real estate owned 115 -
Other income 156 261
-------------- ---------------
Total non-interest income 373 971
-------------- ---------------
NON-INTEREST EXPENSE:
Salaries and employee benefits 1,498 1,740
Net occupancy expenses 386 442
Communication and data processing 220 212
Advertising and promotion 68 192
FDIC insurance premiums 26 12
Credit and collection expenses 2 10
Other real estate owned expenses 2 18
Valuation adjustments to other real estate owned - 43
Other expenses 304 267
-------------- ---------------
Total non-interest expense 2,506 2,936
-------------- ---------------
Income before income taxes 2,342 2,177
Income tax provision 976 849
-------------- ---------------
Net income $ 1,366 $ 1,328
============== ===============
EARNINGS PER COMMON SHARE:
Basic $ 0.53 $ 0.49
Diluted $ 0.52 $ 0.47
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
2
<PAGE>
PACIFIC CREST CAPITAL, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(UNAUDITED)
(DOLLARS AND SHARES IN THOUSANDS)
<TABLE>
<CAPTION>
COMMON STOCK
COMMON STOCK IN TREASURY
------------------------ ADDITIONAL ------------------------ RETAINED
SHARES AMOUNT PAID-IN CAPITAL SHARES AMOUNT EARNINGS
----------- ----------- ---------------- ---------- ------------- ----------
<S> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1998 2,986 $ 30 $ 28,057 (296) $ (4,705) $ 5,559
Comprehensive income (loss):
Net income - - - - - 1,328
Unrealized loss on investment
securities available for sale,
net of tax - - - - - -
Total comprehensive loss
Issuances of common stock in treasury:
Employee stock purchase plan - - (12) 4 66 -
Non-employee directors'
stock purchase plan - - - 1 10 -
Employee stock option plan - - (49) 5 74 -
Purchase of common stock in treasury - - - (15) (227) -
Cash dividends paid - - - - - (134)
----------- ----------- ---------------- ---------- ------------- ----------
Balances at March 31, 1999 2,986 $ 30 $ 27,996 (301) $ (4,782) $ 6,753
=========== =========== ================ ========== ============= ==========
Balances at December 31, 1999 2,986 $ 30 $ 27,885 (385) $ (5,989) $ 9,978
Comprehensive income (loss):
Net income - - - - - 1,366
Unrealized loss on investment
securities available for sale,
net of tax - - - - - -
Total comprehensive income
Issuances of common stock in treasury:
Employee stock purchase plan - - (14) 4 55 -
Non-employee directors'
stock purchase plan - - (5) 1 17 -
Employee stock option plan - - (35) 4 61 -
Purchase of common stock in treasury - - - (102) (1,149) -
Cash dividends paid - - - - - (179)
----------- ----------- ---------------- ---------- ------------- ----------
Balances at March 31, 2000 2,986 $ 30 $ 27,831 (478) $ (7,005) $11,165
=========== =========== ================ ========== ============= ==========
</TABLE>
<TABLE>
ACCUMULATED
OTHER TOTAL
COMPREHENSIVE SHAREHOLDERS'
INCOME (LOSS) EQUITY
------------------ -----------------
<S> <C> <C>
Balances at December 31, 1998 $ 1,199 $ 30,140
Comprehensive income (loss):
Net income - 1,328
Unrealized loss on investment
securities available for sale,
net of tax (1,685) (1,685)
-----------------
Total comprehensive loss (357)
Issuances of common stock in treasury:
Employee stock purchase plan - 54
Non-employee directors'
stock purchase plan - 10
Employee stock option plan - 25
Purchase of common stock in treasury - (227)
Cash dividends paid - (134)
------------------ -----------------
Balances at March 31, 1999 $ (486) $ 29,511
================== =================
Balances at December 31, 1999 $(6,355) $ 25,549
Comprehensive income (loss):
Net income - 1,366
Unrealized loss on investment
securities available for sale,
net of tax (162) (162)
-----------------
Total comprehensive income 1,204
Issuances of common stock in treasury:
Employee stock purchase plan - 41
Non-employee directors'
stock purchase plan - 12
Employee stock option plan - 26
Purchase of common stock in treasury - (1,149)
Cash dividends paid - (179)
------------------ -----------------
Balances at March 31, 2000 $(6,517) $ 25,504
================== =================
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
PACIFIC CREST CAPITAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 1,366 $ 1,328
Adjustments to reconcile net income
to net cash provided by operating activities:
Provision for loan losses 250 660
Gain on sale of investment securities - (515)
Gain on sale of SBA loans - (96)
Gain on sale of other real estate owned (115) -
Valuation adjustments to other real estate owned - 43
Depreciation and amortization of premises and equipment 84 77
Accretion of deferred loan fees (98) (128)
Accretion of discount on investment securities (10) (19)
Deferred income tax (benefit) expense (1,081) 435
Changes in operating assets and liabilities:
Accrued interest receivable (48) 1,948
Prepaid expenses and other assets 702 (193)
Accrued interest and other liabilities 4,085 1,032
-------------- --------------
Net cash provided by operating activities 5,135 4,572
============== ==============
INVESTING ACTIVITIES:
Purchases of investment securities
available for sale - (3,000)
Proceeds from sales and calls of investment securities
available for sale - 85,201
Principal payments on investment securities 12 3
Loan originations (23,817) (52,842)
Purchases of loans - (9,017)
Proceeds from sales of SBA loans - 1,381
Principal payments on loans 11,354 10,833
Proceeds from sales of other real estate owned 75 28
Purchases of premises and equipment, net (129) (115)
-------------- --------------
Net cash (used in) provided by investing activities (12,505) 32,472
============== ==============
FINANCING ACTIVITIES:
Net decrease in savings accounts (19,890) (17,570)
Net increase (decrease) in certificates of deposit 11,339 (10,110)
Net decrease in money market checking accounts (2,194) (75)
Net increase (decrease) in securities sold under repurchase agreements 20,600 (24,279)
Net increase in borrowings from State of California 5,000 -
Net decrease in term borrowings (10,000) (5,500)
Purchase of common stock in treasury, at cost (1,149) (227)
Cash dividends paid (179) (134)
Proceeds from exercise of stock options 26 25
Proceeds from employees and directors stock purchase plans 53 64
-------------- --------------
Net cash provided by (used in) financing activities 3,606 (57,806)
============== ==============
Net decrease in cash and cash equivalents (3,764) (20,762)
Cash and cash equivalents at beginning of period 4,783 25,640
-------------- --------------
Cash and cash equivalents at end of period $ 1,019 $ 4,878
============== ==============
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
PACIFIC CREST CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The interim consolidated financial statements included herein have been
prepared by Pacific Crest Capital, Inc., without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission ("SEC"). Pacific Crest
Capital, Inc., ("Pacific Crest" or the "Parent"), together with its wholly owned
subsidiaries, Pacific Crest Bank (the "Bank") and PCC Capital I ("PCC Capital"),
is referred to as the "Company." Certain information and footnote disclosures,
normally included in financial statements prepared in accordance with accounting
principles generally accepted in the United States of America, have been
condensed or omitted pursuant to such SEC rules and regulations; nevertheless,
the Company believes that the disclosures are adequate to make the information
presented not misleading.
In the opinion of management, all adjustments have been included,
including normal recurring adjustments necessary to present fairly the financial
position of the Company and the results of its operations for the interim period
ended March 31, 2000. Certain reclassifications have been made to prior year
amounts to conform to the 2000 presentation. The results of operations for
interim periods are not necessarily indicative of results for the full year.
These consolidated financial statements should be read in conjunction
with the audited consolidated financial statements and notes thereto, which are
included in the Company's 1999 Annual Report on Form 10-K.
NOTE 2. INVESTMENT SECURITIES
Investment securities have been classified in the Consolidated Balance
Sheets according to management's intent and ability. Securities classified as
available for sale are recorded at market value. Unrealized gains or losses on
securities available for sale are excluded from earnings and reported in
"Accumulated other comprehensive loss," net of tax effect, as a separate
component of Shareholders' Equity. The following tables present the amortized
cost and estimated fair values of investment securities available for sale as of
the dates indicated (in thousands):
<TABLE>
<CAPTION>
GROSS UNREALIZED WEIGHTED
AMORTIZED --------------------------- ESTIMATED AVERAGE
MARCH 31, 2000 COST GAINS LOSSES FAIR VALUE COUPON
- ---------------------- ------------ ------------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C>
Investment securities available for sale:
U.S. government sponsored agency securities:
Callable bonds $ 243,633 $ - $ (10,867) $ 232,766 6.48%
Mortgage-backed securities 3,983 - (158) 3,825 7.13%
Corporate debt securities 4,098 3 (215) 3,886 7.20%
------------ ------------- ------------ ------------- ------------
Total investment securities $ 251,714 $ 3 $ (11,240) $ 240,477 6.50%
============ ============= ============ ============= ============
DECEMBER 31, 1999
- ----------------------
Investment securities available for sale:
U.S. government sponsored agency securities:
Callable bonds $ 243,626 $ - $ (10,555) $ 233,071 6.48%
Mortgage-backed securities 3,996 - (140) 3,856 7.13%
Corporate debt securities 4,094 2 (263) 3,833 7.36%
------------ ------------- ------------ ------------- ------------
Total investment securities $ 251,716 $ 2 $ (10,958) $ 240,760 6.51%
============ ============= ============ ============= ============
</TABLE>
U.S. government sponsored agency securities with market values totaling
$114.1 million and $98.7 million were pledged to secure borrowings aggregating
$106.1 million and $90.5 million at March 31, 2000 and December 31, 1999,
respectively.
5
<PAGE>
PACIFIC CREST CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
The Company's investment securities portfolio at March 31, 2000
consisted of fixed rate investments in U.S. government sponsored agency callable
bonds and mortgage-backed securities issued by Fannie Mae, Freddie Mac, the
Federal Home Loan Bank and the Government National Mortgage Association, as well
as variable rate investments in investment grade corporate debt securities. The
callable bonds have call features that allow the issuer to retire (call) an
individual security prior to that security's stated maturity date. As of March
31, 2000, the Company's callable bond portfolio had call dates ranging between
one month and 16 months. The following table reflects the scheduled maturities
in Company's investment securities portfolio at March 31, 2000 (dollars in
thousands):
<TABLE>
<CAPTION>
WEIGHTED
AMORTIZED ESTIMATED AVERAGE
COST FAIR VALUE YIELD
------------ ------------ ------------
<S> <C> <C> <C>
Due in one to five years $ 76,358 $ 74,629 6.02%
Due in six to ten years 147,274 139,531 6.67%
Due over ten years 28,082 26,317 6.88%
------------ ------------ ------------
Total investment securities $251,714 $240,477 6.50%
============ ============ ============
</TABLE>
NOTE 3. BORROWINGS FROM STATE OF CALIFORNIA
The State of California Treasurer's Office has a fixed rate lending
program whereby an eligible bank may borrow an amount not to exceed its total
shareholders' equity. Borrowing maturity dates under this program cannot exceed
one year. The State of California requires collateral with a market value of at
least 110% of the outstanding borrowing amount. The Bank has pledged specific
amounts of certain U.S. government sponsored agency securities to meet this
collateral requirement. As of March 31, 2000, the Bank's total shareholder's
equity was $38.4 million, against which the Bank had borrowed $25.0 million,
leaving approximately $13.4 million in availability under this borrowing
program.
The table below describes the attributes of the Bank's borrowings from
the State of California as of the dates indicated (dollars in thousands):
<TABLE>
<CAPTION>
MARCH 31, 2000
-------------------------------------------------
BORROWING DATE AMOUNT RATE MATURITY DATE
- ------------------------------- ------------ ------------- ----------------
<S> <C> <C> <C>
October 1999 $ 5,000 5.18% April 2000
October 1999 5,000 5.39% October 2000
November 1999 5,000 5.74% December 2000
December 1999 5,000 5.98% December 2000
February 2000 5,000 5.83% June 2000
------------ -------------
Total State of California borrowings $25,000 5.63%
============ =============
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-------------------------------------------------
BORROWING DATE AMOUNT RATE MATURITY DATE
- ------------------------------- ------------ ------------- ----------------
<S> <C> <C> <C>
October 1999 $ 5,000 5.18% April 2000
October 1999 5,000 5.39% October 2000
November 1999 5,000 5.74% December 2000
December 1999 5,000 5.98% December 2000
------------ -------------
Total State of California borrowings $ 20,000 5.57%
============ =============
</TABLE>
6
<PAGE>
PACIFIC CREST CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE 4. TERM BORROWINGS
The Company had fixed rate, long-term borrowings through one broker
which totaled $30.0 million and $40.0 million at March 31, 2000 and December 31,
1999, respectively. These borrowings have call features that allow the lender to
call the debt prior to the stated maturity date. This debt is secured by
pledging specific amounts of certain U.S. government sponsored agency
securities.
The tables below reflect the attributes of the Company's term
borrowings as of the dates indicated (dollars in thousands):
<TABLE>
<CAPTION>
MARCH 31, 2000
--------------------------------------------------------------------
MATURITY
BORROWING TYPE AMOUNT RATE CALL DATE DATE
- ---------------------------- ------------ ------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Three-year borrowing $ 20,000 5.75% September 2000 September 2002
Three-year borrowing 10,000 5.95% October 2000 October 2002
------------ ------------
Total term borrowings $ 30,000 5.82%
============ ============
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1999
--------------------------------------------------------------------
Maturity
BORROWING TYPE AMOUNT RATE CALL DATE DATE
- ---------------------------- ------------ ------------ ---------------- ----------------
<S> <C> <C> <C> <C>
Five-year borrowing $ 10,000 5.48% January 2000 January 2003
Three-year borrowing 20,000 5.75% September 2000 September 2002
Three-year borrowing 10,000 5.95% October 2000 October 2002
------------ ------------
Total term borrowings $ 40,000 5.73%
============ ============
</TABLE>
NOTE 5. COMPUTATION OF BOOK VALUE PER COMMON SHARE
Book value per common share was calculated by dividing total
shareholders' equity by the number of common shares issued less common shares
held in treasury. The tables below present the computation of book value per
common share as of the dates indicated (dollars in thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
---------------- ----------------
<S> <C> <C>
Total shareholders' equity $ 25,504 $ 25,549
---------------- ----------------
Common shares issued 2,986,530 2,986,530
Less: common shares held
in treasury (478,290) (384,806)
---------------- ----------------
Common shares outstanding 2,508,240 2,601,724
================ ================
Book value per common share $ 10.17 $ 9.82
---------------- ----------------
</TABLE>
7
<PAGE>
PACIFIC CREST CAPITAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
NOTE 6. COMPUTATION OF EARNINGS PER COMMON SHARE
Basic and diluted earnings per common share were determined by dividing
net income by the applicable basic and diluted weighted average common shares
outstanding. For the diluted earnings per share computation, the weighted
average common shares outstanding were adjusted to reflect the number of common
stock equivalents outstanding based on the number of outstanding stock options
issued by the Company utilizing the treasury stock method.
The tables below present the basic and diluted earnings per common
share computations for the periods indicated (dollars and shares in thousands,
except per share data):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2000 1999
-------------- ---------------
<S> <C> <C>
Net income $ 1,366 $ 1,328
============== ===============
Basic weighted average common
shares outstanding 2,566 2,691
Dilutive effect of stock options 81 132
-------------- ---------------
Diluted weighted average common
shares outstanding 2,647 2,823
============== ===============
Earnings per common share:
Basic $ 0.53 $ 0.49
Diluted $ 0.52 $ 0.47
-------------- ---------------
</TABLE>
NOTE 7. SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
For purposes of the Consolidated Balance Sheets and Consolidated
Statements of Cash Flows, cash and cash equivalents include "Cash" and
"Securities purchased under resale agreements." Supplemental disclosure of cash
flow information is as follows for the periods indicated (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
2000 1999
-------------- --------------
<S> <C> <C>
Cash paid during the period for:
Interest $ 8,258 $ 7,803
Income taxes $ 350 $ -
Non-cash investing and financing activities:
Transfers from loans to other real estate owned $ 210 $ -
Loans to facilitate the sale of other real estate owned $ 250 $ 225
</TABLE>
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
The following is management's discussion and analysis of the major
factors that influenced the consolidated results of operations and financial
condition of the Company for the period ended March 31, 2000. This analysis
should be read in conjunction with the Company's 1999 Annual Report on Form 10-K
and with the unaudited financial statements and notes as set forth in this
report.
SELECTED FINANCIAL DATA
The following table sets forth certain selected financial data
concerning the Company as of the dates or for the periods indicated (dollars in
thousands):
<TABLE>
<CAPTION>
AT OR FOR THE THREE MONTHS ENDED
------------------------------------------------------------------------
MARCH 31, DECEMBER 31, SEPTEMBER 30, JUNE 30, MARCH 31,
2000 1999 1999 1999 1999
-------------- -------------- ------------- ------------- --------------
<S> <C> <C> <C> <C> <C>
AVERAGE BALANCES:
Average loans $ 371,258 $ 364,959 $ 360,404 $ 345,237 $ 315,498
Average investment securities 251,716 249,127 236,968 214,029 283,760
Average interest-earning assets 623,202 615,366 602,034 570,292 615,708
Average total assets 622,416 617,669 605,856 576,889 626,086
Average deposits 477,648 487,964 490,966 456,156 467,770
Average borrowings 111,952 95,775 79,514 86,041 121,255
Average shareholders' equity 24,725 26,984 29,057 28,730 30,013
PERFORMANCE RATIOS:
Return on average shareholders' equity (1), (2) 17.22% 16.26% 16.11% 16.12% 18.20%
Return on average total assets (1) 0.88% 0.83% 0.82% 0.84% 0.85%
Net interest rate spread (3) 2.75% 2.80% 2.92% 3.10% 2.93%
Net interest margin (3) 3.05% 3.07% 3.19% 3.35% 3.16%
Operating expense to average total assets (4) 1.61% 1.77% 1.84% 2.06% 1.83%
Efficiency ratio (5) 50.21% 54.13% 52.58% 55.91% 54.49%
CAPITAL RATIOS (6):
Leverage ratio (7) 7.33% 7.19% 7.20% 7.36% 6.83%
Tier 1 risk-based capital ratio 10.51% 10.38% 10.31% 10.35% 10.46%
Total risk-based capital ratio 11.76% 11.64% 11.56% 11.60% 11.71%
ASSET QUALITY RATIOS:
Total non-performing assets to total assets (8) - 0.03% 0.04% - 0.52%
Allowance for loan losses to total loans 1.77% 1.76% 1.71% 1.71% 1.68%
Allowance for loan losses to non-accrual loans - 3071.43% 2660.43% - 225.25%
LOAN VOLUME:
Loan originations $ 23,817 $ 15,666 $ 27,129 $ 36,016 $ 52,842
Loan purchases - - - - 9,017
Loan sales - SBA - 1,838 - 1,655 1,285
- -----------------------------------------
</TABLE>
(1) Calculation is based upon annualized net income.
(2) Calculation excludes average accumulated comprehensive loss from average
shareholders' equity.
(3) Defined under "Results of Operations - Net Interest Income."
(4) Operating expense is defined as total non-interest expense less valuation
adjustments to OREO, other OREO expenses and credit and collection
expenses. Calculation is based on annualized operating expense.
(5) Efficiency ratio is defined as operating expense divided by the sum of
net interest income, loan prepayment and late fee income, gain on sale of
SBA loans and other income.
(6) Capital ratios of Pacific Crest Bank only. The required ratios for a
"well-capitalized" institution are 5% leverage capital, 6% Tier 1
risk-based capital and 10% total risk-based capital.
(7) Calculation is based on average quarterly total asset balances of Pacific
Crest Bank.
(8) Non-performing assets consist of non-accrual loans and OREO.
9
<PAGE>
GENERAL
FORWARD-LOOKING INFORMATION
Certain matters discussed under this caption may constitute
forward-looking statements under Section 27A of the Securities Act and Section
21E of the Securities Exchange Act. There can be no assurance that the results
described or implied in such forward-looking statements will, in fact, be
achieved and actual results, performance, and achievements could differ
materially because the business of the Company involves inherent risks and
uncertainties. Risks and uncertainties include possible future deteriorating
economic conditions in the Company's areas of operation; interest rate risk
associated with volatile interest rates and related asset/liability matching
risks; liquidity risks; risk of significant non-earning assets and net credit
losses that could occur, particularly in times of weak economic conditions or
times of rising interest rates; risk of available for sale securities declining
significantly in value as interest rates rise; and regulatory risks associated
with the variety of current and future regulations to which the Company is
subject. Risk factors are also discussed in detail in the Company's 1999 Annual
Report on Form 10-K filed with the Securities and Exchange Commission.
EARNINGS PERFORMANCE
Net income was $1.4 million (or $0.52 per common share on a diluted
basis) for the three months ended March 31, 2000, compared to $1.3 million (or
$0.47 per common share on a diluted basis) for the corresponding period in 1999.
Pre-tax income was $2.3 million compared to $2.2 million for the three months
ended March 31, 2000 and 1999, respectively. The increase in pre-tax income was
primarily due to decreases of $430,000 and $410,000 in non-interest expense and
provision for loan losses, respectively, partially offset by decreases of
$598,000 and $77,000 in non-interest income and net interest income,
respectively.
CAPITAL
As of March 31, 2000, Pacific Crest's leverage ratio, Tier 1 risk-based
capital ratio and total risk-based capital ratio were 6.86%, 9.94%, and 12.72%,
respectively. Pacific Crest Bank's leverage capital ratio, tier 1 risk-based
capital ratio and total risk-based capital ratio were 7.33%, 10.51% and 11.76%,
respectively. These ratios placed Pacific Crest and the Bank in the
"well-capitalized" category as defined by federal regulations, which require
corresponding capital ratios of 5%, 6% and 10%, respectively, to qualify for
that designation.
DIVIDENDS
On February 2, 2000, the Company announced that the Board of Directors
had declared a $0.07 per common share cash dividend for the first quarter of
2000. The dividend was payable to shareholders of record at the close of
business on March 1, 2000 and was paid on March 15, 2000. The total amount of
these dividends was approximately $179,000.
STOCK REPURCHASE PLAN
As of March 31, 2000, the Company had 39,000 shares authorized for
repurchase under its common stock repurchase program. During the three months
ended March 31, 2000, the Company repurchased 102,000 shares of its common stock
for a total cost of approximately $1,149,000, which resulted in an average cost
per share of $11.27. During the same period, the Company utilized repurchased
shares for all of its common stock issuances under the Company's employee stock
purchase plan, non-employee directors stock purchase plan, and employee stock
option plan, which totaled 8,516 shares.
SALE OF INTEREST RATE CAP AGREEMENT
On February 8, 2000, the Company sold its interest rate cap agreement
for $2.5 million and recognized a deferred gain of $1.8 million. The interest
rate cap agreement had originally been purchased on June 8, 1998, for a premium
of $925,000. The deferred gain will be amortized as a credit to "Interest
expense - deposits" over the remaining life of the original interest rate cap
agreement, which had a maturity date of June 8, 2003. During the three months
ended March 31, 2000, the amount of deferred gain amortization totaled $78,000,
which resulted in a reduction in interest expense on deposits. Conversely,
during the three months ended March 31, 1999, the amount of premium amortization
totaled $46,000, which resulted in an increase in interest expense on deposits.
As of March 31, 2000, the remaining deferred gain resulting from the sale of the
interest rate cap will be amortized as follows: $416,000 for the last nine
months of 2000, $554,000 for 2001, $554,000 for 2002, and $242,000 for 2003.
10
<PAGE>
RESULTS OF OPERATIONS
NET INTEREST INCOME
NET INTEREST INCOME ANALYSES
THREE MONTHS ENDED MARCH 31, 2000 VS. THREE MONTHS ENDED MARCH 31, 1999
The following table present the Company's consolidated average balance
sheets, together with the total dollar amounts of interest income and interest
expense and the weighted average interest yields/rates for the periods
presented. All average balances are daily average balances (dollars in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
------------------------------------------------------------------------
2000 1999
------------------------------------- ----------------------------------
INTEREST AVERAGE INTEREST AVERAGE
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
----------- ------------ ------------ ----------- ------------ ---------
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans (1) $371,258 $ 8,744 9.47% $315,498 $ 7,505 9.65%
Securities purchased under resale agreements 228 3 5.29% 16,450 211 5.20%
Investment securities available for sale (2):
U.S. government sponsored agency securities:
Callable bonds 243,630 3,954 6.49% 272,232 4,554 6.69%
Mortgage-backed securities 3,990 70 7.02% 1,612 26 6.45%
Corporate debt securities 4,096 86 8.40% 9,916 153 6.17%
----------- ------------ ------------ ----------- ------------ ---------
Total investment securities 251,716 4,110 6.53% 283,760 4,733 6.67%
----------- ------------ ------------ ----------- ------------ ---------
Total interest-earning assets 623,202 12,857 8.30% 615,708 12,449 8.20%
------------ ------------ ------------ ---------
Non-interest-earning assets 5,822 15,692
Less: allowance for loan losses (6,608) (5,314)
------------ -----------
Total assets $622,416 $626,086
============ ===========
INTEREST-BEARING LIABILITIES:
Savings accounts $182,593 $ 2,191 4.83% $264,228 $ 3,107 4.77%
Certificates of deposit 276,925 3,929 5.71% 179,803 2,430 5.48%
Money market checking accounts 18,130 198 4.39% 23,739 257 4.39%
----------- ------------ ------------ ----------- ------------ ---------
Total deposits 477,648 6,318 5.32% 467,770 5,794 5.02%
----------- ------------ ------------ ----------- ------------ ---------
Securities sold under repurchase agreements 41,680 641 6.19% 26,266 354 5.47%
Borrowings from State of California 22,363 317 5.61% - - -
Term borrowings 30,659 452 5.83% 77,739 1,094 5.63%
Trust preferred securities 17,250 404 9.37% 17,250 405 9.39%
----------- ------------ ------------ ----------- ------------ ---------
Total borrowings 111,952 1,814 6.47% 121,255 1,853 6.13%
----------- ------------ ------------ ----------- ------------ ---------
Total interest-bearing liabilities 589,600 8,132 5.55% 589,025 7,647 5.27%
------------ ------------ ------------ ---------
Non-interest-bearing liabilities 8,091 7,048
Shareholders' equity 24,725 30,013
------------ -----------
Total liabilities and shareholders' equity $622,416 $626,086
============ ===========
Net interest-earning assets $ 33,602 $ 26,683
============ ===========
Net interest income $ 4,725 $ 4,802
============= ============
Net interest rate spread (3) 2.75% 2.93%
============ =========
Net interest margin (4) 3.05% 3.16%
============ =========
Average interest-earning assets to
average interest-bearing liabilities 105.7% 104.5%
- ------------------------------------------------ ============ ===========
</TABLE>
(1) Average balances of loans are calculated net of deferred loan fees, but
include non-accrual loans which have a zero yield.
(2) Average balances of investment securities available for sale are presented
on a historical amortized cost basis, without the effects of fair value
adjustments.
(3) Net interest rate spread represents the yield earned on average total
interest-earning assets less the rate paid
on average total interest-bearing liabilities.
(4) Net interest margin is computed by dividing annualized net interest income
by average total interest-earning assets.
11
<PAGE>
The following table sets forth the composition of average
interest-earning assets and average interest-bearing liabilities by category and
by the percentage of each category to the total for the periods indicated,
including the change in average balance and yield/rate between these respective
periods (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------------------------------------------
2000 1999
-------------------------------- -------------------------------
% AVERAGE % AVERAGE
AVERAGE OF YIELD/ AVERAGE OF YIELD/
BALANCE TOTAL RATE BALANCE TOTAL RATE
------------ --------- --------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans $ 371,258 59.6% 9.47% $ 315,498 51.2% 9.65%
Securities purchased under resale agreements 228 0.0% 5.29% 16,450 2.7% 5.20%
Investment securities available for sale:
U.S. government sponsored agency securities:
Callable bonds 243,630 39.1% 6.49% 272,232 44.2% 6.69%
Mortgage-backed securities 3,990 0.6% 7.02% 1,612 0.3% 6.45%
Corporate debt securities 4,096 0.7% 8.40% 9,916 1.6% 6.17%
------------ --------- ----------- --------
Total investment securities 251,716 40.4% 6.53% 283,760 46.1% 6.67%
------------ --------- ----------- --------
Total interest-earning assets $ 623,202 100.0% 8.30% $ 615,708 100.0% 8.20%
============ ========= =========== ========
INTEREST-BEARING LIABILITIES:
Savings accounts $ 182,593 31.0% 4.83% $ 264,228 44.9% 4.77%
Certificates of deposit 276,925 47.0% 5.71% 179,803 30.5% 5.48%
Money market checking accounts 18,130 3.0% 4.39% 23,739 4.0% 4.39%
------------ --------- ----------- --------
Total deposits 477,648 81.0% 5.32% 467,770 79.4% 5.02%
------------ --------- ----------- --------
Securities sold under repurchase agreements 41,680 7.1% 6.19% 26,266 4.5% 5.47%
Borrowings from State of California 22,363 3.8% 5.61% - -
Term borrowings 30,659 5.2% 5.83% 77,739 13.2% 5.63%
Trust preferred securities 17,250 2.9% 9.37% 17,250 2.9% 9.39%
------------ --------- ----------- --------
Total borrowings 111,952 19.0% 6.47% 121,255 20.6% 6.13%
------------ --------- ----------- --------
Total interest-bearing liabilities $ 589,600 100.0% 5.55% $ 589,025 100.0% 5.27%
============ ========= =========== ========
Net interest-earning assets $ 33,602 $ 26,683
Net interest rate spread 2.75% 2.93%
Net interest margin 3.05% 3.16%
</TABLE>
<TABLE>
<CAPTION>
----------------------------
NET CHANGE
----------------------------
% AVERAGE
AVERAGE OF YIELD/
BALANCE TOTAL RATE
--------- -------- ---------
<S> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans $ 55,760 8.4% -0.18%
Securities purchased under resale agreements (16,222) -2.7% 0.09%
Investment securities available for sale:
U.S. government sponsored agency securities:
Callable bonds (28,602) -5.1% -0.20%
Mortgage-backed securities 2,378 0.3% 0.57%
Corporate debt securities (5,820) -0.9% 2.23%
----------- --------
Total investment securities (32,044) -5.7% -0.14%
----------- --------
Total interest-earning assets $ 7,494 0.10%
===========
INTEREST-BEARING LIABILITIES:
Savings accounts $(81,635) -13.9% 0.06%
Certificates of deposit 97,122 16.4% 0.23%
Money market checking accounts (5,609) -1.0% 0.00%
----------- --------
Total deposits 9,878 1.6% 0.30%
----------- --------
Securities sold under repurchase agreements 15,414 2.6% 0.72%
Borrowings from State of California 22,363 3.8% 5.61%
Term borrowings (47,080) -8.0% 0.20%
Trust preferred securities - 0.0% -0.02%
----------- --------
Total borrowings (9,303) -1.6% 0.34%
----------- --------
Total interest-bearing liabilities $ 575 0.28%
===========
Net interest-earning assets $ 6,919
Net interest rate spread -0.18%
Net interest margin -0.11%
</TABLE>
12
<PAGE>
The following table presents the dollar amount of changes in interest
income and interest expense due to changes in average balances of
interest-earning assets and interest-bearing liabilities and changes in interest
rates. For each category of interest-earning assets and interest-bearing
liabilities, information is provided on changes attributable to: (i) changes in
volume (i.e. changes in average balance multiplied by prior period rate) and
(ii) changes in rate (i.e. changes in rate multiplied by prior period average
balance). For purposes of this table, changes attributable to both rate and
volume which cannot be segregated have been allocated proportionately based on
the absolute dollar amounts of the changes due to volume and rate (dollars in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
2000 VS. 1999
--------------------------------------
INCREASE (DECREASE) DUE TO
--------------------------------------
VOLUME RATE TOTAL
------------- ----------- ------------
<S> <C> <C> <C>
INTEREST INCOME:
Loans $ 1,376 $ (137) $ 1,239
Securities purchased under resale agreements (212) 4 (208)
Investment securities available for sale:
U.S. government sponsored agency securities:
Callable bonds (467) (133) (600)
Mortgage-backed securities 41 3 44
Corporate debt securities (110) 43 (67)
------------- ----------- ------------
Total investment securities (536) (87) (623)
------------- ----------- ------------
Total interest income $ 628 $ (220) $ 408
------------- ----------- ------------
INTEREST EXPENSE:
Savings accounts $ (956) $ 40 $(916)
Certificates of deposit 1,391 108 1,499
Money market checking accounts (59) - (59)
------------- ----------- ------------
Total deposits 376 148 524
------------- ----------- ------------
Securities sold under repurchase agreements 235 52 287
Borrowings from State of California 317 - 317
Term borrowings (679) 37 (642)
Trust preferred securities - (1) (1)
------------- ----------- ------------
Total borrowings (127) 88 (39)
------------- ----------- ------------
Total interest expense $ 249 $ 236 $ 485
------------- ----------- ------------
Net interest income $ 379 $ (456) $ (77)
============= =========== ============
</TABLE>
NET INTEREST INCOME
Net interest income decreased by $77,000, to $4.7 million, during the
three months ended March 31, 2000 compared to the same period in 1999, and was
comprised of a $456,000 decrease attributable to changes in interest rates,
partially offset by a $379,000 increase attributable to changes in volume. This
was primarily due to the reduction in the net interest rate spread of 18 basis
points, to 2.75%, partially offset by the increase in the Company's net
interest-earning assets of $6.9 million, to $33.6 million, during the first
quarter of 2000 compared to the same period in 1999.
The reduction in the net interest rate spread was principally due to an
increase of 28 basis points, to 5.55%, in the rate paid on average total
interest-bearing liabilities, partially offset by an increase of 10 basis
points, to 8.30%, in the yield on average total interest-earning assets. The
rate paid on average total interest-bearing liabilities increased primarily due
to the rise in interest rates during the second half of 1999. The yield on
average total interest-earning assets increased, despite lower yields earned on
loans and investment securities in 2000 compared to 1999, principally due to a
shift in the mix of average total interest-earning assets from lower yielding
securities to higher yielding loans. The growth in net interest-earning assets
was primarily due to an increase of $7.5 million, to $623.2 million, in average
total interest-earning assets, partially offset by an increase of $0.6 million,
to $589.6 million, in average total interest-bearing liabilities.
13
<PAGE>
TOTAL INTEREST INCOME
Total interest income increased by $408,000, to $12.9 million, during
the three months ended March 31, 2000 compared to the same period in 1999. This
was primarily due to the growth in average total interest-earning assets, which
contributed $628,000 to interest income, partially offset by the reduction in
yields earned on loans and investment securities during 2000 compared to 1999,
which reduced interest income by $220,000.
The growth in average total interest-earning assets of $7.5 million
during the first quarter of 2000 compared to the same period in 1999, was
principally due to an increase in average loans of $55.8 million, to $371.3
million, partially offset by a decrease of $32.0 million, to $251.7 million, in
average investment securities, and a decrease of $16.2 million, to $228,000, in
average securities purchased under resale agreements. This reflected the
Company's liquidation of a portion of its securities portfolio in order to fund
loan growth and pay down borrowings. The growth in average loans and the
reduction in average securities resulted in a shift in the mix of average total
interest-earning assets from lower yielding securities to higher yielding loans.
The percentage of average loans to average total interest-earning assets
increased to 59.6% in the first quarter of 2000 from 51.2% in the first quarter
of 1999.
The overall yield on average total interest-earning assets increased by
10 basis points, to 8.30%, during the three months ended March 31, 2000 compared
to the same period in 1999, primarily due to the above mentioned shift in the
mix of average total interest-earning assets from lower yielding securities to
higher yielding loans. However, the yield on average loans declined by 18 basis
points, to 9.47%, and the yield on investment securities decreased by 14 basis
points, to 6.53%. The decline in the yield on average loans was primarily
attributable to the following factors:
- - The loans that the Company originated during the first quarter of 2000 had
lower overall yields than those originated prior to October 1998.
- - The loans that paid off during the first quarter of 2000 and the year ended
December 31, 1999 had higher yields than the yields on the loans originated
during these periods.
Partially offsetting the above factors for the decline in the yield on
average loans was the increase of 75 basis points, to 5.50%, in the federal
funds rate by the Board of Governors of the Federal Reserve System (the "Federal
Reserve"), which took place during the second half of 1999, and the additional
increase of 50 basis points, to 6.00%, which took place during the first quarter
of 2000. The impact of these increases in the federal funds rate caused upward
repricing on the Company's variable rate loans, especially those tied to the
prime rate. The federal funds rate is the rate at which banks lend to each other
in the overnight market. Increases in the federal funds rate generally result in
increases of the prime rates offered by major banks, including Bank of America.
The decrease in the yield on average investment securities during the
three months ended March 31, 2000 compared to the same period last year, was
primarily due to the calls and sales in 1999 of $148.0 million of higher
yielding callable bonds with a weighted average coupon rate of 6.71%, which were
partially replaced by the purchases of $85.8 million of lower yielding, shorter
maturity, callable bonds with a weighted average coupon rate of 6.23%. Partially
offsetting this factor were the purchases in the fourth quarter of 1999 of
higher yielding corporate debt securities and mortgage-backed securities.
TOTAL INTEREST EXPENSE
Total interest expense increased by $485,000, to $8.1 million, during
the three months ended March 31, 2000 compared to the same period in 1999. This
was due to the growth in average interest-bearing liabilities and to the
increase in rate on these liabilities, which contributed $249,000 and $236,000,
respectively, to interest expense.
The growth in average total interest-bearing liabilities of $0.6
million during the first quarter of 2000 compared to the same period in 1999,
was primarily due to an increase in average deposits of $9.9 million, to $477.6
million, partially offset by a decrease in average borrowings of $9.3 million,
to $112.0 million. The increase in average deposits was principally due to an
increase in average certificates of deposit of $97.1 million, partially offset
by decreases of $81.6 million and $5.6 million in average savings accounts and
average money market checking accounts, respectively. The decrease in average
borrowings was principally due to the reduction in average term borrowings of
$47.0 million. This was partially offset by increases of $22.4 million and $15.4
million in average borrowings from the State of California and average
securities sold under repurchase agreements, respectively. The growth in average
deposits and the reduction in
14
<PAGE>
average borrowings resulted in a shift in the mix of average total
interest-bearing liabilities from higher rate borrowings to lower rate deposits.
The percentage of average deposits to average total interest-bearing liabilities
increased to 81.0% during the first three months of 2000 from 79.4% during the
same period last year.
The aforementioned changes in the average balances of the Company's
deposit products during the three months ended March 31, 2000 compared to the
same period in 1999 were primarily attributable to management's deposit strategy
in 1999. Management reduced the rates on all of the Company's deposit products
in January 1999 and later started raising the rates only on its one-to five-year
certificates of deposit, beginning in the second quarter of 1999. Rates on
savings accounts and money market checking accounts were not raised during 1999,
despite the rising interest rate environment which started in the second half of
1999. This strategy served to lock in long-term deposits with fixed rates, while
maintaining constant rates on short-term and liquid deposits. As a result, the
balances of certificates of deposit increased, while the balances of savings
accounts and money market accounts decreased, thus changing the mix of deposits
from savings/money market checking accounts to certificates of deposit. The
percentage of average certificates of deposit to average total deposits
increased to 58.0% during the first quarter of 2000 from 38.4% during the first
quarter of 1999. In February 2000, the Company raised the rates on its savings
accounts in response to deposit runoff and the increase in market interest
rates.
The increase in the rate on average total interest-bearing liabilities of
28 basis points during the three months ended March 31, 2000 compared to the
same period in 1999, was principally due to the increase of 34 basis points, to
6.47%, in the rate on average borrowings, as well as the increase of 30 basis
points, to 5.32%, in the rate on average deposits, partially offset by the
previously mentioned shift in the mix of average total interest-bearing
liabilities from higher rate borrowings to lower rate deposits. The increase in
the rate on average borrowings was primarily due to the following factors:
- - Interest rates started to rise in the second half of 1999 and continued to
rise through the first quarter of 2000 due to the increases in the federal
funds rate by the Federal Reserve, as described above. This served to raise
the rates on the Company's available borrowing facilities, especially the
short-term borrowing lines. The rate on average securities sold under
agreements to repurchase increased by 72 basis points, to 6.19%, during the
three months ended March 31, 2000 compared to the same period in 1999.
- - In April 1999, a $24.5 million callable term borrowing, bearing interest at
a lower rate of 5.64%, was called by the lender. The Company paid this debt
with proceeds from the liquidation of its securities mentioned above.
- - During the first quarter of 2000, a $10.0 million callable term borrowing,
bearing interest at a lower rate of 5.48%, was called by the lender and was
partially replaced by a $5.0 million State of California borrowing, bearing
interest at a higher rate of 5.83% and maturing in June 2000.
Partially offsetting the increase in the rate on average borrowings was the
replacement in the fourth quarter of 1999 of $20.0 million of higher rate 5.71%
term borrowings with $20.0 million of lower rate 5.57% State of California
borrowings.
The increase in the rate on average deposits during the first quarter
of 2000 compared to the same period last year was primarily due to the following
factors:
- - The Company started raising the interest rates on its one-to five-year
certificates of deposit beginning in the second quarter of 1999, after
having reduced the rates in January 1999.
- - In February 2000, the Company raised the rates on its savings accounts,
which had not been increased during 1999.
- - The mix of average deposits shifted from lower rate savings/money market
accounts to higher rate certificates of deposit.
PROVISION FOR LOAN LOSSES
During the three months ended March 31, 2000, the Company's provision
for loan losses decreased by $410,000, to $250,000, compared to the same period
in 1999. The decrease in the provision is the result of management's evaluation
of the loan portfolio and economic conditions. See "Financial Condition -
Allowance for Loan Losses."
15
<PAGE>
NON-INTEREST INCOME
The following table sets forth certain information with respect to the
Company's non-interest income for the periods indicated (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------------------
AMOUNTS NET CHANGE
----------------------------------------
2000 1999 $ %
--------- ---------- --------- --------
<S> <C> <C> <C> <C>
Loan prepayment and late fee income $ 102 $ 99 $ 3 3.0%
Gain on sale of investment securities - 515 (515) (100.0%)
Gain on sale of SBA loans - 96 (96) (100.0%)
Gain on sale of other real estate owned 115 - 115 100.0%
Other income 156 261 (105) (40.2%)
--------- ---------- --------- --------
Total non-interest income $ 373 $ 971 $ (598) (61.6%)
========= ========== ========= ========
</TABLE>
Non-interest income for the quarter ended March 31, 2000 decreased by $598,000,
to $373,000, compared to the same period in 1999. This was primarily due to
decreases of $515,000 and $96,000 in gain on sale of investment securities and
gain on sale of SBA loans, respectively, partially offset by an increase of
$115,000 in gain on sale of OREO.
NON-INTEREST EXPENSE
The following table sets forth certain information with respect to the
Company's non-interest expense for the periods indicated (dollars in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31,
----------------------------------------
AMOUNTS NET CHANGE
----------------------------------------
2000 1999 $ %
--------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Salaries and employee benefits $1,498 $1,740 $ (242) (13.9)%
Net occupancy expenses 386 442 (56) (12.7)%
Communication and data processing 220 212 8 3.8 %
Advertising and promotion 68 192 (124) (64.6)%
FDIC insurance premiums 26 12 14 116.7 %
Credit and collection expenses 2 10 (8) (80.0)%
Other real estate owned expenses 2 18 (16) (88.9)%
Valuation adjustments to other real estate owned - 43 (43) (100.0)%
Other expenses 304 267 37 13.9 %
--------- ---------- --------- --------
Total non-interest expense $2,506 $2,936 $ (430) (14.6)%
========= ========== ========= ========
</TABLE>
Non-interest expense for the three months ended March 31, 2000
decreased by $430,000, to $2.5 million, compared to the same period in 1999.
This was primarily due to decreases of $242,000, $124,000, and $56,000 in
salaries and employee benefits, advertising and promotion, and net occupancy
expenses, respectively.
Salaries and employee benefits for the three months ended March 31,
2000 decreased by $242,000, to $1.5 million, as compared to the same period in
1999. The decrease was primarily due to the elimination during the fourth
quarter of 1999 of the Company's five loan production offices located outside of
Southern California. These loan production offices had each been staffed with
one loan production officer. Partially offsetting the decrease was the
approximate 4% increase to employee base salaries in January 2000.
Net occupancy expenses decreased by $56,000, to $386,000, for the
current quarter compared to the same period last year. This decrease was
primarily due to the aforementioned closure of the five loan production offices
located outside of Southern California during the fourth quarter of 1999.
Advertising and promotion costs decreased by $124,000, to $68,000, for
the three months ended March 31, 2000, compared to the same period in 1999. The
Company started reducing the level of advertising and promotion in the third
quarter of 1999.
16
<PAGE>
INCOME TAX PROVISION
For the three months ended March 31, 2000 and 1999, the Company's
provision for income taxes was $976,000 and $849,000, respectively, which
resulted in effective tax rates of 41.7% and 39.0%, respectively. The difference
between the effective tax rates for the three months ended March 31, 2000 and
1999 is the result of adjustments made to the tax valuation reserves for the
quarter ended March 31, 1999, as a result of settlements made with the IRS on
prior year tax returns.
FINANCIAL CONDITION
BALANCE SHEET ANALYSIS
The following table presents condensed balance sheets as of the dates
indicated and the dollar and percentage changes between the periods (in
thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, NET CHANGE
--------------- -------------- --------------- --------------
2000 1999 $ %
--------------- -------------- --------------- --------------
<S> <C> <C> <C> <C>
ASSETS
Cash and cash equivalents $ 1,019 $ 4,783 $ (3,764) (78.70)%
Investment securities available for sale, at market 240,477 240,760 (283) (0.12)%
Net loans 371,853 359,502 12,351 3.44 %
Other assets 18,806 18,215 591 3.24 %
--------------- -------------- --------------- --------------
Total assets $632,155 $623,260 $ 8,895 1.43 %
=============== ============== =============== ==============
LIABILITIES
Savings accounts $176,478 $196,368 $(19,890) (10.13)%
Certificates of deposit 280,572 269,233 11,339 4.21 %
Money market checking accounts 16,589 18,783 (2,194) (11.68)%
--------------- -------------- --------------- --------------
Total deposits 473,639 484,384 (10,745) (2.22)%
--------------- -------------- --------------- --------------
Securities sold under repurchase
agreements 51,100 30,500 20,600 67.54 %
Borrowings from State of California 25,000 20,000 5,000 25.00 %
Term borrowings 30,000 40,000 (10,000) (25.00)%
Trust preferred securities 17,250 17,250 - 0.00 %
--------------- -------------- --------------- --------------
Total borrowings 123,350 107,750 15,600 14.48 %
--------------- -------------- --------------- --------------
Total interest-bearing liabilities 596,989 592,134 4,855 0.82 %
Other liabilities 9,662 5,577 4,085 73.25 %
--------------- -------------- --------------- --------------
Total liabilities 606,651 597,711 8,940 1.50 %
=============== ============== =============== ==============
Shareholders' Equity
Common stock and additional paid-in capital 27,861 27,915 (54) (0.19)%
Retained earnings 11,165 9,978 1,187 11.90 %
Accumulated other comprehensive loss (6,517) (6,355) (162) 2.55 %
Common stock in treasury, at cost (7,005) (5,989) (1,016) 16.96 %
--------------- -------------- --------------- --------------
Total shareholders' equity 25,504 25,549 (45) (0.18)%
--------------- -------------- --------------- --------------
Total liabilities and
shareholders' equity $ 632,155 $ 623,260 $ 8,895 1.43 %
=============== ============== =============== ==============
</TABLE>
17
<PAGE>
Total assets increased by $8.9 million, to $632.2 million, during the
three months ended March 31, 2000, primarily due to a $12.4 million increase in
net loans, partially offset by a decrease of $3.8 million in cash and cash and
cash equivalents. The increase in net loans was principally due to $23.8 million
of originations, partially offset by $11.4 million of principal payments. The
decrease in cash and cash equivalents was used to fund loan growth during the
quarter. Investment securities available for sale decreased by $283,000, to
$240.5 million, primarily due to a decline in fair value.
Total liabilities increased by $8.9 million, to $606.7 million, during
the three months ended March 31, 2000, primarily due to an increase in
borrowings of $15.6 million, partially offset by a decrease in deposits of $10.7
million. This resulted in a shift in the mix of total interest-bearing
liabilities from lower rate deposits to higher rate borrowings and contributed
to the increase in total interest expense for the first three months of 2000
compared to the same period in 1999. Borrowings as a percentage of total
interest-bearing liabilities increased to 20.7% at March 31, 2000 from 18.2% at
December 31, 1999.
The $15.6 million increase in borrowings during the first quarter of
2000 was principally due to increases of $20.6 million and $5.0 million in
securities sold under repurchase agreements and borrowings from the State of
California, respectively, partially offset by a principal payment of $10.0
million on a term borrowing, which was called by the lender. The increases in
securities sold under repurchase agreements and State of California borrowings
were used to pay down term borrowings, fund loan growth and cover deposit
runoff.
The $10.7 million decrease in deposits during the first quarter of 2000
was primarily due to a decrease of $19.9 million in savings accounts, as well as
a decrease of $2.2 million in money market checking accounts. This was partially
offset by an increase of $11.3 million in certificates of deposit. Management
believes that the overall decrease in deposits of $10.7 million reflected the
transfer of customer deposits primarily into the stock market and higher rate
certificates of deposit offered by competitor savings institutions. The changes
in the balances of the Company's deposit products during the first quarter of
2000 resulted in a shift in the mix of deposits from lower yielding
savings/money market accounts to higher yielding certificates of deposit. The
percentage of certificates of deposit to total deposits increased to 59.2% at
March 31, 2000 from 55.6% at December 31, 1999 and contributed to the increase
in interest expense for the first three months of 2000 compared to the same
period in 1999.
Shareholders' equity decreased by $45,000, to $25.5 million, during the
three months ended March 31, 2000. Changes to shareholders' equity were due to
the following factors:
- - The Company recorded $1.4 million of net income for the first three
months of 2000.
- - The Company declared and paid cash dividends of $179,000 for the first
three months of 2000.
- - Accumulated other comprehensive loss increased by $162,000 during the first
three months of 2000, as the Company's predominantly fixed rate investment
securities available for sale declined in value primarily due to an
increase in market interest rates.
- - Common stock in treasury increased by $1.0 million during the first three
months of 2000, primarily due to the $1.1 million purchase of 102,000
shares of the Company's common stock under its stock repurchase plan.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses at March 31, 2000 increased by $261,000
from the level at December 31, 1999, primarily due to $250,000 in provision for
loan losses recorded during the first three months of 2000. The calculation of
the adequacy of the allowance for loan losses is based on a variety of factors,
including growth in the Company's loan portfolio, the adequacy of collateral
securing the loans in the loan portfolio, current delinquency trends, historical
loan loss experience, regional real estate economic conditions, and overall
economic trends impacting the Company's real estate lending portfolio.
Commercial real estate serves as collateral for virtually all of the Company's
loan portfolio. The allowance for loan losses as a percentage of loans stood at
1.77% at March 31, 2000, compared to 1.76% at December 31, 1999.
18
<PAGE>
Although the Company maintains its allowance for loan losses at a level
which it considers to be adequate to provide for potential losses, there can be
no assurance that such losses will not exceed the estimated amounts, thereby
adversely affecting future results of operations.
The following table sets forth certain information with respect to the
Company's allowance for loan losses for the periods indicated (dollars in
thousands):
<TABLE>
<CAPTION>
THREE MONTHS TWELVE MONTHS
ENDED ENDED
MARCH 31, DECEMBER 31,
2000 1999
----------------- -----------------
<S> <C> <C>
Balance at beginning of period $ 6,450 $ 5,024
Commercial real estate:
Provision for loan losses 250 1,677
Charge-offs - (287)
Recoveries 11 36
----------------- -----------------
Balance at end of period $ 6,711 $ 6,450
================= =================
</TABLE>
NON-PERFORMING ASSETS
The following table sets forth non-accrual loans, OREO and restructured
loans as of the dates indicated (dollars in thousands):
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
2000 1999
--------------- ---------------
<S> <C> <C>
Non-accrual loans $ - $ 210
OREO - -
--------------- ---------------
Total non-performing assets $ - $ 210
--------------- ---------------
Total non-performing assets to total assets 0.00% 0.03%
--------------- ---------------
Restructured loans $ - $ -
=============== ===============
</TABLE>
During the three months ended March 31, 2000, the non-accrual loan of
$210,000 at December 31, 1999 was transferred to OREO and sold for a gain of
$115,000.
LIQUIDITY
The Company's primary sources of funds are deposits, borrowings, and
payments of principal and interest on loans and investment securities. While
maturities and scheduled principal amortization on loans are a reasonably
predictable source of funds, deposit flows and mortgage loan prepayments are
greatly influenced by the level of interest rates, economic conditions, and
competition. As a measure of protection against these uncertainties, the Company
maintains borrowing relationships with several brokers, whereby the Company is
able to borrow funds that are secured by pledging specific amounts of certain
U.S. government sponsored agency securities. The Company is generally able to
borrow up to 98% of the market value of these securities. As of March 31, 2000,
the market values of U.S. government sponsored agency securities that were
available for collateral purposes totaled $122.5 million.
The Bank also has a medium-term borrowing facility with the State of
California Treasurer's Office under which the Bank can borrow an amount not to
exceed its total shareholder's equity. Borrowing maturity dates under this
program cannot exceed one year. As of March 31, 2000, the Bank's total
shareholder's equity was $38.4 million and the Bank's outstanding borrowings
from the State of California totaled $25.0 million.
19
<PAGE>
DIVIDENDS
As a Delaware corporation, Pacific Crest may pay common dividends out
of surplus or, if there is no surplus, from net profits for the current and
preceding fiscal year. The Parent, on an unconsolidated basis, had approximately
$3.2 million in cash and investments less current liabilities and short-term
debt at March 31, 2000. These funds are necessary to pay future operating
expenses of the Parent, service all outstanding debt, including the $17.25
million junior subordinated debentures payable to PCC Capital, and fund possible
future capital infusions into the Bank. Without dividends from the Bank, the
Parent must rely solely on existing cash, investments, and the ability to secure
borrowings.
The Bank's ability to pay dividends to the Parent is restricted by
California state law, which requires that sufficient retained earnings are
available to pay the dividend. The Bank declared and paid dividends to the
Parent in the amount of $400,000 for the first quarter of 2000. At March 31,
2000, the Bank had retained earnings of $15.0 million that may be available for
dividend payments. The Bank anticipates that it will continue to declare and pay
quarterly dividends to the Parent.
CAPITAL RESOURCES
The Company's objective is to maintain a level of capital that will
support sustained asset growth and anticipated credit risks and will ensure that
regulatory guidelines and industry standards are met. Pacific Crest and the Bank
are subject to certain minimum capital adequacy and minimum well capitalized
category guidelines adopted by the Federal Reserve and the FDIC. These
guidelines relate primarily to the leverage ratio, the Tier 1 risk-based capital
ratio, and the total risk-based capital ratio. At March 31, 2000, Pacific Crest
and the Bank were in compliance with all such capital requirements.
The following table sets forth the regulatory capital ratios of Pacific Crest
and the Bank as of the dates indicated:
<TABLE>
<CAPTION>
TIER 1 TOTAL
RISK-BASED RISK-BASED
LEVERAGE CAPITAL CAPITAL
ACTUAL RATIO RATIO RATIO
- --------- -------------- --------------- ---------------
<S> <C> <C> <C>
Pacific Crest Capital, Inc.
March 31, 2000 6.86% 9.94% 12.72%
December 31, 1999 6.89% 10.18% 13.02%
Pacific Crest Bank
March 31, 2000 7.33% 10.51% 11.76%
December 31, 1999 7.19% 10.38% 11.64%
REQUIREMENTS
- ----------------
Minimun Well Capitalized 5.00% 6.00% 10.00%
Minimum Capital Adequacy 4.00% 4.00% 8.00%
</TABLE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's primary market risk is interest rate risk. Interest rate
risk is the potential of economic losses due to future interest rate changes.
These economic losses can be reflected as a loss of future net interest income
and/or a loss of current fair market values. The objective is to measure the
effect on net interest income and to adjust the balance sheet to minimize the
inherent risk while at the same time to maximize income. Management realizes
certain risks are inherent and that the goal is to identify and minimize the
risks. The Company's exposure to market risk is reviewed on a regular basis by
the Asset/Liability committee. Tools used by management include an interest rate
shock analysis and, to a lesser extent, the standard GAP report, which measures
the estimated difference between the amount of interest-earning assets and
interest-bearing liabilities anticipated to mature or reprice during future
periods, based on certain assumptions. The Company has no market risk sensitive
instruments held for trading purposes and is not currently engaged in
transactions involving derivative financial instruments. Management believes
that the Company's market risk is reasonable at this time.
20
<PAGE>
The table below provides information about the Company's balance sheet
non-derivative financial instruments at March 31, 2000 that are sensitive to
changes in interest rates. For all financial instruments, the table presents the
outstanding principal balance and the weighted average interest yield/rate of
the instruments by either the date that the instrument can be repriced, for
variable rate financial instruments, or the expected maturity date, for fixed
rate financial instruments (dollars in thousands):
<TABLE>
<CAPTION>
EXPECTED MATURITY DATE OR REPRICING DATE
------------------------------------------------------------------------------
OVER OVER OVER ESTIMATED
WITHIN 3 TO 12 1 TO 3 3 TO 5 OVER FAIR
AT MARCH 31, 2000 3 MONTHS MONTHS YEARS YEARS 5 YEARS TOTAL VALUE
-------- -------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST-SENSITIVE ASSETS:
Securities purchased under resale
agreements (1) $ 100 $ - $ - $ - $ - $ 100 $ 100
average yield (variable rate) 6.00% - - - - 6.00%
U.S. government sponsored
agency callable bonds
available for sale (2) - - 50,044 24,585 158,137 232,766 232,766
average yield (fixed rate) - - 5.65% 6.86% 6.68% 6.48%
U.S. government sponsored
agency mortgage-backed
securities available for sale (2) - - - - 3,825 3,825 3,825
average yield (fixed rate) - - - - 7.10% 7.10%
Corporate debt securities
available for sale (2) 3,886 - - - - 3,886 3,886
average yield (variable rate) 7.89% - - - - 7.89%
Loans, gross (3) 126,424 36,008 79,192 70,426 66,985 379,035 383,583
average yield 10.30% 10.44% 8.54% 8.52% 8.41% 9.28%
-------- -------- -------- ------- -------- -------- -------
Total interest-sensitive assets $130,410 $ 36,008 $129,236 $95,011 $228,947 $619,612 $624,160
======== ======== ======== ======= ======== ======== ========
INTEREST-SENSITIVE LIABILITIES:
Savings accounts (1) $176,478 $ - $ - $ - $ - $176,478 $176,478
average rates (variable rate) 5.30% - - - - 5.30%
Certificates of deposit (4) 53,501 141,017 67,622 17,673 758 280,571 279,169
average rates (fixed rate) 5.26% 5.88% 5.86% 6.08% 6.33% 5.77%
Money market checking accounts (1) 16,589 - - - - 16,589 16,589
average rates (variable rate) 4.23% - - - - 4.23%
Securities sold under
repurchase agreements (1) 51,100 - - - - 51,100 51,100
average rates (variable rate) 6.40% - - - - 6.40%
Borrowings from State of
California (5) 10,000 15,000 - - - 25,000 24,947
average rate (fixed rate) 5.50% 5.70% - - - 5.63%
Term borrowings (5) - 30,000 - - - 30,000 29,911
average rates (fixed rate) - 5.82% - - - 5.82%
Trust preferred securities (2) - - - - 17,250 17,250 13,380
average rates (fixed rate) - - - - 9.38% 9.38%
-------- -------- -------- ------- -------- -------- -------
Total interest-sensitive liabilities $307,668 $186,017 $ 67,622 $17,673 $ 18,008 $596,988 $591,574
======== ======== ======== ======= ======== ======== ========
</TABLE>
21
<PAGE>
The fair value balances reflected in the table were derived as follows:
(1) For financial instruments that mature or reprice within 90 days, the
carrying amounts and the fair values are considered identical due to the
short term repricing of the financial instruments.
(2) Fair value of investment securities and the trust preferred securities is
based on the quoted market price of these securities by broker dealers
making a market for these securities on a national exchange.
(3) Fair value of loans is based on the value the Company could receive on
the loans in a loan sale. The Company estimates that it could sell a
majority of its loans at a premium of between 0.0% and 3.0%.
(4) Fair value of certificates of deposit, which have a fixed maturity, is
estimated using rates currently offered for deposits of similar remaining
maturities.
(5) Fair values of borrowings from the State of California and term
borrowings are estimated using discounted cash flow analysis based on the
Company's current incremental borrowing rates for similar types of
borrowing arrangements.
22
<PAGE>
Part II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES
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
27.1 Financial Data Schedule
(b) REPORTS ON FORM 8-K
The Company filed no reports on Form 8-K during the quarter
ended March 31, 2000.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Security Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PACIFIC CREST CAPITAL, INC.
Date: May 15, 2000 /s/GARY WEHRLE
-------------- ------------------------------------------------
Gary Wehrle
President and Chief Executive Officer
Date: May 15, 2000 /s/ROBERT J. DENNEN
-------------- ------------------------------------------------
Robert J. Dennen
Senior Vice President, Chief Financial Officer
Corporate Secretary
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 919
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 100
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 240,477
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 378,564
<ALLOWANCE> 6,711
<TOTAL-ASSETS> 632,155
<DEPOSITS> 473,639
<SHORT-TERM> 51,000
<LIABILITIES-OTHER> 9,662
<LONG-TERM> 72,250
0
0
<COMMON> 30
<OTHER-SE> 27,831
<TOTAL-LIABILITIES-AND-EQUITY> 632,155
<INTEREST-LOAN> 8,744
<INTEREST-INVEST> 4,110
<INTEREST-OTHER> 3
<INTEREST-TOTAL> 12,857
<INTEREST-DEPOSIT> 6,318
<INTEREST-EXPENSE> 8,132
<INTEREST-INCOME-NET> 4,725
<LOAN-LOSSES> 250
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,506
<INCOME-PRETAX> 2,342
<INCOME-PRE-EXTRAORDINARY> 2,342
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,055
<EPS-BASIC> 0.53
<EPS-DILUTED> 0.52
<YIELD-ACTUAL> 3.05
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 3,169
<ALLOWANCE-OPEN> 6,450
<CHARGE-OFFS> 0
<RECOVERIES> 11
<ALLOWANCE-CLOSE> 6,711
<ALLOWANCE-DOMESTIC> 6,711
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
