SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended September 30, 1999 .
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File No. 0-25418 .
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CENTRAL COAST BANCORP
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 77-0367061
- ------------------------------- -----------------------
(State or other jurisdiction of (IRS Employer ID Number)
incorporation or organization)
301 Main Street, Salinas, California 93901
- --------------------------------------- -----------
(Address of principal executive offices) (Zip code)
(831) 422-6642
------------------------------
(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 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____
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date:
No par value Common Stock - 6,429,256 shares outstanding at October 29, 1999.
Page 1 of 25
The Index to the Exhibits is located at Page 23
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<CAPTION>
PART 1-FINANCIAL INFORMATION
Item 1.FINANCIAL STATEMENTS:
CENTRAL COAST BANCORP AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
September 30, December 31,
(In thousands) 1999 1998
------------ -----------
<S> <C> <C>
Assets
Cash and due from banks $ 38,668 $ 44,684
Federal funds sold 6,000 4,202
------- -------
Total cash and equivalents 44,668 48,886
Available-for-sale securities 150,368 170,387
Loans:
Commercial 151,041 139,253
Real estate-construction 35,901 19,929
Real estate-other 186,805 148,285
Installment 9,592 11,545
Deferred loan fees, net (813) (674)
------- -------
Total loans 382,526 318,338
Allowance for loan losses (5,291) (4,352)
------- -------
Net Loans 377,235 313,986
------- -------
Premises and equipment, net 3,751 3,069
Accrued interest receivable and other assets 11,507 7,605
------- -------
Total assets $ 587,529 $ 543,933
======= =======
Liabilities and Shareholders' Equity
Deposits:
Demand, noninterest bearing $ 128,248 $ 149,757
Demand, interest bearing 115,442 98,226
Savings 106,732 104,447
Time 165,686 136,762
------- -------
Total Deposits 516,108 489,192
Accrued interest payable and other liabilities 20,122 3,542
------- -------
Total liabilities 536,230 492,734
------- -------
Commitments and contingencies (Note 2)
Shareholders' Equity:
Preferred stock-no par value; authorized
1,000,000 shares; no shares issued
Common stock - no par value; authorized 25,000,000 shares;
issued and outstanding: 6,440,257 shares at September 30, 1999
and 6,112,045 shares at December 31, 1998 39,521 41,103
Shares held in deferred compensation trust (247,148 at September 30, 1999
and 71,949 at December 31,1998), net of deferred obligation - -
Retained earnings 15,454 9,733
Accumulated other comprehensive income - net of
taxes of $2,554,000 at September 30, 1999 and $254,000 at December 31, 1998 (3,676) 363
------- -------
Shareholders' equity 51,299 51,199
------- -------
Total liabilities and shareholders' equity $ 587,529 $ 543,933
======= =======
See Notes to Consolidated Condensed Financial Statements
</TABLE>
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<TABLE>
<CAPTION>
CENTRAL COAST BANCORP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands) 1999 1998 1999 1998
----- ----- ------ ------
<S> <C> <C> <C> <C>
Interest Income
Loans (including fees) $ 8,457 $ 7,040 $ 23,284 $ 19,976
Investment securities 2,273 1,853 6,864 5,660
Other 25 690 100 2,220
----- ----- ------ ------
Total interest income 10,755 9,583 30,248 27,856
----- ----- ------ ------
Interest Expense
Interest on deposits 3,402 3,358 9,668 10,109
Other 123 - 299 -
----- ----- ------ ------
Total interest expense 3,525 3,358 9,967 10,109
----- ----- ------ ------
Net Interest Income 7,230 6,225 20,281 17,747
Provision for Loan Losses 418 40 955 81
----- ----- ------ ------
Net Interest Income after
Provision for Loan Losses 6,812 6,185 19,326 17,666
----- ----- ------ ------
Noninterest Income 529 490 1,662 1,415
----- ----- ------ ------
Noninterest Expenses
Salaries and benefits 2,294 2,074 6,875 6,281
Occupancy 300 222 877 714
Furniture and equipment 320 241 905 671
Other 1,197 777 3,101 2,558
----- ----- ------ ------
Total noninterest expenses 4,111 3,314 11,758 10,224
----- ----- ------ ------
Income Before Income Taxes 3,230 3,361 9,230 8,857
Provision for Income Taxes 1,227 1,391 3,508 3,664
----- ----- ------ ------
Net Income $ 2,003 $ 1,970 $ 5,722 $ 5,193
===== ===== ====== ======
Basic Earnings per Share $ 0.31 $ 0.33 $ 0.89 $ 0.86
Diluted Earnings per Share $ 0.30 $ 0.30 $ 0.86 $ 0.79
See Notes to Consolidated Condensed Financial Statements
</TABLE>
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<TABLE>
<CAPTION>
CENTRAL COAST BANCORP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
(In thousands)
Nine months ended September 30, 1999 1998
------- ------
<S> <C> <C>
Cash Flows from Operations:
Net income $ 5,722 $ 5,193
Reconciliation of net income to net cash provided
by operating activities:
Provision for loan losses 955 81
Net (gain) loss on sale of fixed assets 107 (1)
Depreciation 607 414
Amortization and accretion 81 22
(Increase) decrease in accrued interest receivable and other assets (1,108) 721
Increase in accrued interest payable and other liabilities 2,347 1,269
Increase in deferred loan fees 139 60
------- ------
Net cash provided by operations 8,850 7,759
------- ------
Cash Flows from Investing Activities:
Purchases of investment securities (89,431) (72,512)
Proceeds from maturities
of investment securities 96,728 95,160
Proceeds from sale of investment securities 5,988 -
Net increase in loans (64,343) (40,797)
Proceeds from sale of fixed assets 17 1
Capital expenditures (1,593) (847)
------- ------
Net cash used in investing activities (52,634) (18,995)
------- ------
Cash Flows from Financing Activities:
Net increase in deposit accounts 26,915 (5,054)
Net increase (decrease) in short-term borrowings 14,233 (124)
Proceeds from sale of stock 1,098 163
Shares repurchased (2,680) (12)
------- ------
Net cash provided (used) by financing activities 39,566 (5,027)
------- ------
Net decrease in cash and equivalents (4,218) (16,263)
Cash and equivalents, beginning of period 48,886 104,597
------- ------
Cash and equivalents, end of period $44,668 $88,334
======= ======
Other Cash Flow Information:
Interest paid $ 9,856 $ 9,762
Income taxes paid 2,289 3,210
See Notes to Consolidated Condensed Financial Statements
</TABLE>
<PAGE>
CENTRAL COAST BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
September 30, 1999 (Unaudited)
1. CONSOLIDATED FINANCIAL STATEMENTS
In the opinion of Management, the unaudited consolidated condensed financial
statements contain all adjustments (consisting of only normal recurring
adjustments) necessary to present fairly the Company's consolidated financial
position at September 30, 1999 and December 31, 1998, the results of
operations for the three and nine month periods ended September 30, 1999 and
1998 and cash flows for the nine month periods ended September 30, 1999 and
1998.
Certain disclosures normally presented in the notes to the annual financial
statements prepared in accordance with generally accepted accounting
principles have been omitted. These interim consolidated condensed financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto included in the Company's 1998 Annual Report to
Shareholders. The results of operations for the three and nine month periods
ended September 30, 1999 and 1998 may not necessarily be indicative of the
operating results for the full year.
In preparing such financial statements, management is required to make
estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheet and revenues and expenses for
the period. Actual results could differ significantly from those estimates.
Material estimates that are particularly susceptible to significant changes
in the near term relate to the determination of the allowance for loan losses
and the carrying value of other real estate owned. Management uses
information provided by an independent loan review service in connection with
the determination of the allowance for loan losses.
2. COMMITMENTS AND CONTINGENCIES
In the normal course of business there are outstanding various commitments to
extend credit which are not reflected in the financial statements, including
loan commitments of approximately $127,884,000 and standby letters of credit
of $2,621,000 at September 30, 1999. However, all such commitments will not
necessarily culminate in actual extensions of credit by the Company during
1999.
Approximately $26,451,000 of loan commitments outstanding at September 30,
1999 relate to real estate construction loans and are expected to fund within
the next twelve months. The remainder relate primarily to revolving lines of
credit or other commercial loans, and many of these commitments are expected
to expire without being drawn upon. Therefore, the total commitments do not
necessarily represent future cash requirements. Each potential borrower and
the necessary collateral are evaluated on an individual basis. Collateral
varies, but may include real property, bank deposits, debt or equity
securities or business assets.
Stand-by letters of credit are commitments written to guarantee the
performance of a customer to a third party. These guarantees are issued
primarily relating to purchases of inventory by commercial customers and are
typically short-term in nature. Credit risk is similar to that involved in
extending loan commitments to customers and accordingly, evaluation and
collateral requirements similar to those for loan commitments are used.
Virtually all such commitments are collateralized.
<PAGE>
3. EARNINGS PER SHARE COMPUTATION
Basic earnings per share is computed by dividing net income by the weighted
average common shares outstanding for the period (6,457,000 and 6,426,000 for
the three and nine month periods ended September 30, 1999, and 6,053,000 and
6,029,000 for the three and nine month periods ended September 30, 1998).
Diluted earnings per share reflects the potential dilution that could occur
if outstanding stock options and stock purchase warrants were exercised.
Diluted earnings per share is computed by dividing net income by the weighted
average common shares outstanding for the period plus the dilutive effect of
options and warrants (176,000 and 231,000 for the three and nine month
periods ended September 30, 1999 and 491,000 and 515,000 for the three and
nine month periods ended September 30, 1998).
4. COMPREHENSIVE EARNINGS
In 1998, Central Coast Bancorp adopted Statement of Financial Accounting
Standards No. 130,"Reporting Comprehensive Income", which requires that an
enterprise report, by major components and as a single total, the change in
net assets during the period from nonowner sources. Such amounts are as
follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
(In thousands) 1999 1998 1999 1998
------ ----- ----- -----
<S> <C> <C> <C> <C>
Net Earnings $2,003 $ 1,970 $ 5,722 $ 5,193
Other comprehensive income (loss)- Net unrealized
gains (losses) on available-for-sale securities (1,751) 448 (4,047) 563
Reclassification adjustment for gains included in
income, net of taxes of $5,000
for the nine month period ended
September 30, 1999. - - 8 -
------ ----- ----- -----
Total comprehensive earnings $ 252 $ 2,418 $ 1,683 $ 5,756
====== ===== ===== =====
</TABLE>
5. STOCK SPLIT
On January 25, 1999, the Board of Directors declared a five-for-four stock
split, which was distributed on February 26, 1999, to shareholders of record
as of February 8, 1999. All share and per share data have been retroactively
adjusted to reflect the stock split.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In addition to the historical information contained herein, this report on
Form 10-Q contains certain forward-looking statements. The reader of this
report should understand that all such forward-looking statements are subject
to various uncertainties and risks that could affect their outcome. The
Company's actual results could differ materially from those suggested by such
forward-looking statements. Changes to such risks and uncertainties, which
could impact future financial performance, include, among others: (1)
competitive pressures in the banking industry; (2) changes in the interest
rate environment; (3) general economic conditions, nationally, regionally and
in the operating market areas of the Company and the Bank (4) changes in the
regulatory environment; (5) changes in business conditions and inflation; (6)
changes in securities markets; and (7) effects of possible Year 2000
problems. This entire report should be read to put such forward-looking
statements in context. To gain a more complete understanding of the
uncertainties and risks involved in the Company's business this report should
be read in conjunction with Central Coast Bancorp's annual report on Form
10-K for the year ended December 31, 1998.
Interest income and net interest income are presented on a fully taxable
equivalent basis (FTE) within the Management's Discussion and Analysis.
Business Organization
Central Coast Bancorp (Nasdaq symbol CCBN) (the"Company") is a California
corporation organized in 1994, and is the parent company of Community Bank of
Central California, a state-chartered bank, headquartered in Salinas,
California (the"Bank"). On July 9, 1999, Cypress Bank, which was a wholly
owned subsidiary of the Company, was merged into Bank of Salinas whose name
was then changed to Community Bank of Central California. Other than its
investment in the Bank, the Company currently conducts no other significant
business activities, although it is authorized to engage in a variety of
activities which are deemed closely related to the business of banking upon
prior approval of the Board of Governors of the Federal Reserve System (the
"FRB"), the Company's principal regulator.
The Bank offers a full range of commercial banking services, including a
diverse range of traditional banking products and services to individuals,
merchants, small and medium-sized businesses, professionals and agribusiness
enterprises located in the Salinas Valley and Monterey Peninsula.
Overview
The Company reported record quarterly net income of $2,003,000 for the
quarter ended September 30, 1999 versus $1,970,000 reported for the same
period of 1998. Diluted earnings per share for the respective quarters were
$0.30 for both. The return on equity (ROE) and the return on assets (ROA)
for the third quarter 1999 were 15.4% and 1.38% as compared to 16.1% and
1.55% for the same period in 1998.
Net income for the nine months ended September 30, 1999 and 1998 was
$5,722,000 and $5,193,000 with diluted earnings per share of $0.86 and $0.79,
respectively. For the first nine months of 1999 ROE was 14.7% and ROA was
1.38%, as compared to 14.9% and 1.41% for the same period in 1998. The
earnings per share for the 1998 periods have been adjusted for the 5 for 4
stock split distributed on February 26, 1999.
Year over year internal growth continues to be strong, as assets of the
Company increased $87,857,000 (17.6%) to total $587,529,000 at September 30,
1999. Loans totaled $382,526,000, up $84,922,000 (28.4%) from the ending
balances on September 30, 1998. Deposit growth in the like period, excluding
$20,000,000 of State of California certificate of deposits, was 11.4% with
ending deposit balances of $516,108,000.
While third quarter earnings were a record, they were adversely impacted by
one time costs of approximately $190,000 related to combining the Bank of
Salinas and Cypress Bank into a single bank, Community Bank of Central
California. Also, as a result of the continuing growth in the loan portfolio,
the Bank provided $378,000 more for loan losses in the third quarter of 1999
versus the third quarter last year. Helping to offset these expenses, two
recent Federal Reserve Board actions have increased interest rates a total of
50 basis points.
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<CAPTION>
The following table provides a summary of the major elements of income and
expense for the periods indicated.
Condensed Comparative Income Statement (Unaudited)
Percentage Percentage
Three Month Ended Change Nine Month Ended Change
September 30, Increase September 30, Increase
(In thousands) 1999 1998 (Decrease) 1999 1998 (Decrease)
------ ----- ---------- ------ ------ ----------
<S> <C> <C> <C> <C> <C> <C>
Interest income (1) $ 10,951 $ 9,597 14% $ 30,818 $27,900 10%
Interest expense 3,525 3,358 5% 9,967 10,109 -1%
------ ----- ----- ------ ------ -----
Net interest income 7,426 6,239 19% 20,851 17,791 17%
Provision for loan losses 418 41 920% 955 81 1079%
------ ----- ----- ------ ------ -----
Net interest income after
provision for loan losses 7,008 6,198 13% 19,896 17,710 12%
Noninterest income 529 490 8% 1,662 1,415 17%
Noninterest expense 4,111 3,314 24% 11,758 10,224 15%
------ ----- ----- ------ ------ -----
Net income before income taxes 3,426 3,374 2% 9,800 8,901 10%
Income taxes 1,227 1,391 -12% 3,508 3,664 -4%
Tax equivalent adjustment 196 13 1408% 570 44 1195%
------ ----- ----- ------ ------ -----
Net income $ 2,003 $ 1,970 2% $ 5,722 $ 5,193 10%
====== ===== ===== ====== ====== =====
1) Interest on tax-free securities is reported on tax equivalent basis.
</TABLE>
<PAGE>
Net interest income / net interest margin
Net interest income, the difference between interest earned on loans and
investments and interest paid on deposits and other borrowings, is the
principal component of the Banks' earnings. Net interest margin is net
interest income expressed as a percentage of average earning assets.
Third quarter 1999 net interest income of $7,426,000 was a 19.0% increase of
$1,187,000 over the same period in 1998. Interest income was up $1,354,000
(14.1%). Average loan balances were $83,614,000 (29.7%) higher in the third
quarter of 1999 versus the year earlier period. This volume difference added
$2,086,000 to interest income. It was offset in part by a 70 basis point
decrease in loan yields, which reduced interest income by $669,000. The rate
decrease was the result of the three 25 basis point downward adjustments in
the fourth quarter of 1998, which were offset in part by the 25 basis point
increases on July 1 and August 25 this year. Average balances for investment
securities and Federal funds sold decreased $12,052,000 to $159,642,000.
Interest income related to investments and Federal Funds sold decreased
$63,000 in the third quarter of 1999 versus the year earlier period.
For the three months ended September 30, 1999, interest expense was up
$167,000 (5.0%) on a quarter over quarter basis as average interest-bearing
liabilities increased $55,757,000(16.7%). The increase in interest expense, due
to higher average balances in interest bearing liabilities, was offset in part
bya 40 basis point decrease in rates paid. Net interest margin for the third
quarters of 1999 and 1998 were 5.6% and 5.5%, respectively.
For the first nine-month period of 1999, interest income increased $2,918,000
to $30,818,000. Average balances of both loans and investment securities
were higher in 1999. These higher balances added $7,476,000 to interest
income. The average balance in Federal funds sold was lower by $51,545,000
in the first nine months of 1999 versus the prior year. Interest income
derived from Federal funds sold consequently was $2,120,000 lower in the
period. The average yield on loans was 90 basis points lower in the 1999
nine-month period due to the downward rate adjustments in the fourth quarter
of last year as discussed in the quarterly results paragraph above. The
lower yields reduced interest income by $2,278,000. The average yields
received on all earning assets for the first nine months of 1999 was 8.3% as
compared to 8.4% for the same period in 1998.
Interest expense for the nine-month period decreased $142,000 (1.4%) from the
expense in the same 1998 period. Volume increases in deposits and borrowings
added $1,170,000 of interest expense. The volume increases were more than
offset by lower rates. Overall average rates paid on interest-bearing
liabilities in the first nine months of 1999 decreased 50 basis points to
3.6% from the same period in 1998. The decrease attributable to the lower
rates was $1,312,000.
The combined effect of the increase in interest income coupled with the
decrease in interest expense for the nine-month period ending September 30,
1999, resulted in an increase in net interest income of $3,060,000 or 17.2%
as compared to the first nine months of 1998. Net interest margin rose 20
basis points to 5.6%.
The first two following tables provide a summary of the components of net
interest income and the changes within the components for the periods
indicated. The second two tables set forth a summary of the changes in
interest income and interest expense from changes in average asset and
liability balances (volume) and changes in average interest rates.
<PAGE>
<TABLE>
<CAPTION>
(Unaudited)
Three months ended September 30 ,
(Taxable Equivalent Basis) 1999 1998
Avg. Avg. Avg. Avg.
(In thousands, except percentages) Balance Interest Yield Balance Interest Yield
------- ------ ---- ------- ----- ----
<S> <C> <C> <C> <C> <C> <C>
Assets:
Earning Assets
Loans (1) (2) $ 364,740 $ 8,457 9.2% $ 281,126 $ 7,040 9.9%
Taxable investments 121,794 1,881 6.1% 119,636 1,825 6.1%
Tax-exempt securities 35,881 588 6.5% 2,043 42 8.1%
Federal funds sold 1,967 25 5.0% 50,015 690 5.5%
-------- ------ ----- ------- ----- ----
Total Earning Assets 524,382 $10,951 8.3% 452,820 $9,597 8.4%
------ -----
Cash & due from banks 42,086 39,311
Other assets 8,762 10,928
------- -------
$575,230 $503,059
======= =======
Liabilities & Shareholders' Equity:
Interest bearing liabilities:
Demand deposits $110,659 $ 503 1.8% $90,110 $ 445 2.0%
Savings 105,693 863 3.2% 103,828 997 3.8%
Time deposits 163,833 2,036 4.9% 139,847 1,916 5.4%
Other borrowings 9,357 123 5.2% - - n/a
------- ------ ----- ------- ----- ----
Total interest bearing liabilities 389,542 3,525 3.6% 333,785 3,358 4.0%
------ -----
Demand deposits 128,831 116,278
Other Liabilities 5,266 4,554
------- -------
Total Liabilities 523,639 454,617
Shareholders' Equity 51,591 48,442
------- -------
$575,230 $503,059
======= =======
Net interest income & margin (3) $ 7,426 5.6% $6,239 5.5%
====== ===== ===== ====
(1) Loan interest income includes fee income of $268,000 and $241,000 for the three month periods
ended September 30, 1999 and 1998, respectively.
(2) Includes the average allowance for loan losses of $5,039,000 and $4,302,000 and average deferred
loan fees of $845,000 and $622,000 for the three months ended September 30, 1999 and 1998, respectively.
(3) Net interest margin is computed by dividing net interest income by the total average earning assets.
</TABLE>
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<TABLE>
<CAPTION>
(Unaudited)
Nine months ended Setember 30 ,
(Taxable Equivalent Basis) 1999 1998
Avg Avg Avg Avg
(In thousands, except percentages) Balance Interest Yield Balance Interest Yield
------- ------ ---- ------- ------ -----
<S> <C> <C> <C> <C> <C> <C>
Assets:
Earning Assets
Loans (1) (2) $337,775 $23,284 9.2% $263,830 $19,976 10.1%
Taxable investments 125,241 5,726 6.1% 123,744 5,573 6.0%
Tax-exempt securities 34,712 1,708 6.6% 2,073 131 8.4%
Federal funds sold 2,829 100 4.7% 54,374 2,220 5.5%
------- ------ ---- ------- ------ -----
Total Earning Assets 500,557 $30,818 8.2% 444,021 $27,900 8.4%
------ ------
Cash & due from banks 41,835 38,516
Other assets 10,287 10,452
------- -------
$552,679 $492,989
======= =======
Liabilities & Shareholders' Equity:
Interest bearing liabilities:
Demand deposits $102,249 $1,315 1.7% $ 87,707 $ 1,282 2.0%
Savings 105,168 2,569 3.3% 100,290 2,864 3.8%
Time deposits 155,712 5,783 5.0% 143,455 5,963 5.6%
Other borrowings 7,984 300 5.0% - - n/a
------- ------- ---- ------- ------ -----
Total interest bearing liabilities 371,113 9,967 3.6% 331,452 10,109 4.1%
------ -------
Demand deposits 125,049 111,017
Other Liabilities 4,538 3,996
------- --------
Total Liabilities 500,700 446,465
Shareholders' Equity 51,979 46,524
------- --------
$552,679 $492,989
======= ========
Net interest income & margin (3) $20,851 5.6% $17,791 5.4%
====== ==== ====== =====
(1) Loan interest income includes fee income of $816,000 and $747,000 for the nine month
periods ended September 30, 1999 and 1998, respectively
(2) Includes the average allowance for loan losses of $4,650,000 and $4,239,000 and average deferred
loan fees of $806,000 and $566,000 for the nine months ended September 30, 1999 and 1998, respectively.
(3) Net interest margin is computed by dividing net interest income by the total average earning assets.
</TABLE>
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<TABLE>
<CAPTION>
(Unaudited)
Volume/Rate Analysis (Unaudited)
(in thousands) Three Months Ended September 30, 1999 over 1998
Increase (decrease) due to change in:
Net
Interest-earning assets: Volume Rate (4) Change
<S> <C> <C> <C>
Net Loans (1)(2) $2,086 $ (669) $1,417
Taxable investment securities 33 23 56
Tax exempt investment securities (3) 691 (145) 546
Federal funds sold (666) 1 (665)
------- -------- -------
Total 2,144 (790) 1,354
------- -------- -------
Interest-bearing liabilities:
Demand deposits 104 (46) 58
Savings deposits 18 (152) (134)
Time deposits 326 (206) 120
Other borrowings 122 1 123
------- -------- -------
Total 570 (403) 167
------- -------- -------
Interest differential $1,574 $ (387) $1,187
======= ======== =======
(1 The average balance of non-accruing loans is immaterial as a percentage of
total loans and, as such, has been included in net loans.
(2) Loan fees of $268,000 and $241,000 for the quarters ended September 30, 1999 and 1998, respectively have
been included in the interest income computation.
(3) Includes taxable-equivalent adjustments that relate to income on certain securities that is exempt from
federal income taxes. The effective federal statutory tax rate was 34% for 1999 and 1998.
(4) The rate / volume variance has been included in the rate variance.
</TABLE>
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<TABLE>
<CAPTION>
Volume/Rate Analysis (Unaudited)
(in thousands) Nine Months Ended September 30, 1999 over 1998
Increase (decrease) due to change in:
Net
Interest-earning assets: Volume Rate (4) Change
<S> <C> <C> <C>
Net Loans (1)(2) $ 5,586 $ (2,278) $ 3,308
Taxable investment securities 67 86 153
Tax exempt investment securities (3) 2,051 (474) 1,577
Federal funds sold (2,120) - (2,120)
-------- --------- ------
Total 5,584 (2,666) 2,918
-------- --------- ------
Interest-bearing liabilities:
Demand deposits 218 (185) 33
Savings deposits 139 (434) (295)
Time deposits 513 (693) (180)
Other borrowings 300 - 300
-------- ------- -------
Total 1,170 (1,312) (142)
-------- ------- -------
Interest differential $ 4,414 $ (1,354) $ 3,060
======== ======= =======
(1) The average balance of non-accruing loans is immaterial as a percentage of total loansand,as such,
has been included in net loans.
(2) Loan fees of $816,000 and $747,000 for the nine months ended September 30, 1999 and 1998, respectively, have
been included in the interest income computation.
(3) Includes taxable-equivalent adjustments that relate to income on certain securities that is exempt from
federal income taxes. The effective federal statutory tax rate was 34% for 1999 and 1998.
(4) The rate / volume variance has been included in the rate variance.
</TABLE>
Provision for Loan Losses
The Bank provided $418,000 for loan losses in the third quarter of 1999
versus $40,000 in 1998. The Bank had net loan charge-offs of $9,000 in the
third quarter of 1999 versus a net recovery of $78,000 in the year earlier
period. The additional provision in 1999 was made primarily as a result of
increases in loan balances. For the nine-month period ended September 30,
1999, the Bank has provided $955,000 for loan losses versus $81,000 in the
year earlier period. In this nine-month period, the Bank has recorded net
loan charge-offs of $16,000 as compared to a net recovery of $42,000 in the
first nine months of 1998.
Noninterest Income
Noninterest income consists primarily of service charges on deposit accounts
and fees for miscellaneous services. Noninterest income totaled $529,000 in
the third quarter of 1999, which was up $39,000 (8.0%) over the same period
in 1998. Most of the increase was due to higher volumes. Fees from mortgage
originations were down $12,000 (19.3%) in the third quarter of 1999 as the
higher interest rates slowed home refinancings.
For the first nine-months of 1999, noninterest income was $1,662,000, which
reflected a 17.5% increase over the same period last year. Service charges
on deposits were up $93,000 (10.6%) due to higher volumes and some selective
fee increases implemented in the fourth quarter in 1998. Other service
charges and fees were up $117,000 (31.3%) mostly due to new fee structures on
several services that were implemented in the fourth quarter of 1998.
Included in the increase in Other service charges, fees from mortgage
originations increased $50,000 (32%) as activity levels were higher in the
first half of 1999.
Noninterest Expense
Third quarter 1999 noninterest expense increased $797,000 (24.0%) to
$4,111,000 from the 1998 third quarter. Salary and employee benefits
increased $220,000 (10.6%) due to increased staff for the Westridge branch,
which opened in December 1998, additional staff due to growth, higher benefit
costs, and normal salary increases. On a quarter over quarter basis, premise
and fixed asset expenses were higher by $157,000 (33.9%). Costs associated
with the Westridge branch, the new computer system and network upgrades
installed in the second half of 1998 were the major factors contributing to
the increased premise and fixed asset expenses. Other expenses for the third
quarter of 1999 were $1,197,000 for an increase of $420,000 over the prior
year. One time costs of approximately $190,000 were incurred in the quarter
for the combination of Bank of Salinas and Cypress Bank. The overhead
efficiency ratio for the third quarter of 1999 was 53.0% as compared to 49.4%
in the same quarter of 1998.
Noninterest expenses for the nine-month period ending September 30, 1999 were
$11,758,000 versus $10,224,000 for the same period in 1998. Salaries and
benefits increased $594,000 (9.5%) due to increased staffing levels, normal
salary progressions and higher commissions on mortgage originations. Premise
and fixed asset expenses were up $397,000 (28.7%) due to the items as
detailed in the previous paragraph. Other costs increased $543,000 (21.2%)
that included $284,000 of one-time costs associated with merging Cypress
Bank into Bank of Salinas and changing the Bank's name. $73,000 was charged
against OREO property market valuation in the first nine-months of 1999
versus none in the prior year. The overhead efficiency ratio for the first
nine-months of 1999 was 53.6% as compared to 53.4% in the same period of 1998.
Provision for Income Taxes
As a result of investments in tax qualified municipal bonds, the Company
revised its estimated income tax rate during the period ended June 30, 1999.
The effective tax rate for the third quarter and nine-months of 1999 was
38.0% versus 41.4% in the same two periods of 1998.
Securities
At September 30, 1999 available-for-sale securities had a market value of
$150,368,000 with a cost basis of $156,598,000. The unrealized losses of
$6,230,000 at September 30, 1999 were an increase of $2,967,000 from the
ending balance at June 30, 1999. The higher unrealized losses was the result
of continuing increases in interest rates and widening spreads in the
securities market during the third quarter. The Bank was not active in the
securities market during the third quarter. The Company does not anticipate
selling any of these securities for liquidity needs in the immediate future.
Loans
Ending loan balances at September 30, 1999 were $382,526,000, which was an
increase of $64,188,000 (20.2%) from year-end 1998 balances and $84,922,000
(28.5%) from September 30, 1998 balances. With the exception of installment
loans, all other categories of loans were higher on a year over year basis.
Loan demand has remained strong through the third quarter of 1999 and heading
into the fourth quarter.
Nonperforming Assets
Nonperforming assets are comprised of loans delinquent 90 days or more with
respect to interest or principal, loans for which the accrual of interest has
been discontinued, and other real estate which has been acquired through
foreclosure and is awaiting disposition.
Unless well secured and in the process of collection, loans are placed on
nonaccrual status when a loan becomes 90 days past due as to interest or
principal, when the payment of interest or principal in accordance with the
contractual terms of the loan becomes uncertain or when a portion of the
principal balance has been charged off. When a loan is placed on nonaccrual
status, the accrued and unpaid interest receivable is reversed and the loan
is accounted for on the cash or cost recovery method thereafter, until
qualifying for return to accrual status. Generally, a loan may be returned
to accrual status when all delinquent interest and principal become current
in accordance with the terms of the loan agreement and remaining principal
is considered collectible or when the loan is both well secured and in process
of collection.
<PAGE>
Real estate and other assets acquired in satisfaction of indebtedness are
recorded at the lower of estimated fair market value net of anticipated
selling costs or the recorded loan amount, and any difference between this
and the amount is treated as a loan loss. The costs of maintaining other
real estate owned and gains or losses on the subsequent sale are reflected in
current earnings.
The following is a summary of nonperforming assets:
<TABLE>
<CAPTION>
(In thousands) September 30, December 31,
1999 1998
------------ -----------
<S> <C> <C>
Past due 90 days or more and still accruing :
Real estate $ - $ 1,174
Commercial - 73
Installment and other - -
----------- ----------
- 1,247
----------- ----------
Nonaccrual:
Real estate 302 543
Commercial 1,737 333
Installment and other - -
----------- ----------
2,039 876
----------- ----------
Total nonperforming loans 2,039 2,123
----------- ----------
Other real estate owned 180 -
----------- ----------
Total nonperforming assets $2,219 $ 2,123
=========== ==========
Allowance for loan losses as a percentage of nonperforming loans 259% 205%
Nonperforming loans to total loans 0.53% 0.68%
</TABLE>
Nonperforming loans have decreased slightly during the first nine months of
1999. Coverage ratio of the allowance for loan losses to nonperforming loans
has risen from 205% at year-end to 259%. Overall loan quality has remained
high during 1999.
Allowance for Loan Losses
The allowance for loan losses reflects management's judgement as to the level
considered adequate to absorb probable losses inherent in the loan
portfolio. The allowance is increased by provisions charged to expense and
reduced by loan charge-offs net of recoveries. Management determines an
appropriate provision based upon information currently available to analyze
loan loss potential, including (1) the loan portfolio balance in the period;
(2) a comprehensive grading and review of new and existing loans outstanding;
(3) actual previous charge-offs; and, (4) changes in economic conditions.
In determining the provision for estimated losses related to specific major
loans, management evaluates its allowance on an individual loan basis,
including an analysis of the creditworthiness, cash flows and financial
status of the borrower, and the condition and the estimated value of the
collateral. Specific valuation allowances for secured loans are determined by
the excess of recorded investment in the loan over the fair market value or
net realizable value where appropriate, of the collateral. In determining
overall general valuation allowances to be maintained and the loan loss
allowance ratio, management evaluates many factors including prevailing and
forecasted economic conditions, regular reviews of the quality of loans,
industry experience, historical loss experience, composition and geographic
concentrations of the loan portfolio, the borrowers' ability to repay and
repayment performance and estimated collateral values.
Management believes that the allowance for loan losses at September 30, 1999
is adequate, based on information currently available. However, no
prediction of the ultimate level of loans charged off in future years can be
made with any certainty.
<PAGE>
The following table summarizes activity in the allowance for loan losses for
the periods indicated:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
(In thousands) 1999 1998 1999 1998
------ ------ ----- ------
<S> <C> <C> <C> <C>
Beginning balance $ 4,882 $ 4,228 $ 4,352 $ 4,223
Provision charged to expense 418 40 955 81
Loans charged off (23) (4) (150) (94)
Recoveries 14 82 134 136
-------- ------- ------- -------
Ending balance $ 5,291 $ 4,346 $ 5,291 $ 4,346
======== ======= ======= =======
Ending loan portfolio $382,526 $297,604
======= =======
Allowance for loan losses as percentage of
ending loan portfolio 1.38% 1.46%
</TABLE>
Liquidity
Liquidity management refers to the Company's ability to provide funds on an
ongoing basis to meet fluctuations in deposit levels as well as the credit
needs and requirements of its clients. Both assets and liabilities
contribute to the Company's liquidity position. Federal funds lines,
short-term investments and securities, and loan repayments contribute to
liquidity, along with deposit increases, while loan funding and deposit
withdrawals decrease liquidity. The Bank assesses the likelihood of
projected funding requirements by reviewing historical funding patterns,
current and forecasted economic conditions and individual client funding
needs. Commitments to fund loans and outstanding standby letters of credit
at September 30,1999 were approximately $127,884,000 and $2,621,000,
respectively. Such loan commitments relate primarily to revolving lines of
credit and other commercial loans, and to real estate construction loans.
The Company's sources of liquidity consist of its deposits with other banks,
overnight funds sold to correspondent banks, unpledged short-term, marketable
investments and loans available for sale. On September 30, 1999,
consolidated liquid assets totaled $165.6 million or 28.2% of total assets as
compared to $153.5 million or 28.2% of total consolidated assets on December
31, 1998. In addition to liquid assets, the Bank maintains lines of credit
with correspondent banks for up to $80,000,000 available on a short-term
basis. Informal agreements are also in place with various other banks to
purchase participations in loans, if necessary. The Company serves primarily
a business and professional customer base and, as such, its deposit base is
susceptible to economic fluctuations. Accordingly, management strives to
maintain a balanced position of liquid assets to volatile and cyclical
deposits.
Capital Resources
The Company's total shareholders' equity was $51,299,000 at September 30,
1999 compared to $51,199,000 at December 31, 1998.
The Company and the Bank are subject to regulations issued by the Board of
Governors and the FDIC which require maintenance of a certain level of
capital. A banking organization's total qualifying capital includes two
components, core capital (Tier 1 capital) and supplementary capital (Tier 2
capital). Core capital, which must comprise at least half of total capital,
includes common shareholders' equity, qualifying perpetual preferred stock,
trust preferred securities and minority interests, less goodwill.
Supplementary capital includes the allowance for loan losses (subject to
certain limitations), other perpetual preferred stock, trust preferred
securities, certain other capital instruments and term subordinated debt.
The Company's major capital components are shareholders' equity in core
capital, and the allowance for loan losses in supplementary capital.
<PAGE>
The following table shows the Company's actual capital amounts and ratios at
September 30, 1999 and December 31, 1998 as well as the minimum capital
ratios for capital adequacy under the regulatory framework:
<TABLE>
<CAPTION>
For captial
Actual Adequacy Purposes
Amount Ratio Amount Ratio
---------------------- ---------------------
<S> <C> <C> <C> <C>
As of September 30, 1999
Total Capital (to Risk Weighted Assets): $59,133,000 13.0% $36,364,000 8.0%
Tier 1 Capital (to Risk Weighted Assets): 53,842,000 11.8% 18,182,000 4.0%
Tier 1 Capital (to Average Assets): 53,842,000 9.4% 23,009,000 4.0%
As of December 31, 1998
Total Capital (to Risk Weighted Assets): 53,588,000 14.8% 29,004,000 8.0%
Tier 1 Capital (to Risk Weighted Assets): 49,326,000 13.6% 14,502,000 4.0%
Tier 1 Capital (to Average Assets): 49,326,000 9.9% 19,935,000 4.0%
</TABLE>
Year 2000
As the year 2000 approaches, a critical issue has emerged regarding how
existing application software programs and operating systems can accommodate
this date value. In brief, many existing application software products in
the marketplace were designed to only accommodate a two digit date position
which represents the year (e.g., "95" is stored on the system and represents
the year 1995). As a result, the year 1999 (i.e., "99") could be the maximum
date value these systems will be able to accurately process. This is not
just a banking problem, as corporations around the world and in all
industries are similarly impacted.
The Company is uncertain regarding the consequences of the Year 2000 (Y2K)
issue on the future results of operations, liquidity and financial condition;
but believes that failure to ensure that its systems are in compliance with
Y2K requirements could have a material adverse effect on its business. As a
result, the Company has made addressing Y2K issues a priority of management
and the Board. Based upon actions implemented to date, the Company currently
anticipates that it will be successful in addressing Y2K issues and
anticipates no materially adverse processing problems. The Company is
subject to examination by the Federal Deposit Insurance Corporation and the
Federal Reserve Bank under their Y2K Phase I and Phase II programs.
Management is not currently aware of any conditions cited as unsatisfactory
by such federal bank regulatory agencies.
All mission critical systems have been identified by the Company, and the
Company has tested and developed contingency plans, for each. The term
"mission critical" refers to an application or system that is vital to the
successful continuance of core business activity. Significantly all mission
critical hardware and software utilized by the Company are provided by third
parties. This requires that the Company be in close contact with relevant
vendors and contractors as it conducts testing and contingency planning.
Testing on the Company's mission critical systems is substantially complete
and monitoring of vendor and customer relationships is ongoing.
The Company has made disclosures to all existing and new customers regarding
the importance of the Y2K issue and its relevance to the Company and the
customer. The Company is conducting an ongoing effort to identify customers
that represent material risk exposure to the institution, to evaluate their
Y2K preparedness and risk to the Company and to implement appropriate risk
controls.
The Company also continues to evaluate the cost to address Y2K issues. Most
costs incurred to date are in conjunction with the planned replacement of
systems. The cost of system replacements accelerated to meet Y2K
requirements and Y2K project specific costs have not been significant to the
operations of the Company as a whole. Management estimates that the
incremental cost of mitigating Year 2000 risk exclusive of management time
that has been redirected to focus on this matter will be approximately
$171,000.
Despite efforts undertaken to date and as projected, there can be no
assurance that problems will not arise which could have an adverse impact
upon the Company due, among other matters, to the complexities involved in
computer programming related to resolution of Year 2000 problems and the fact
that the systems of other companies on which Central Coast Bancorp and its
subsidiary, Community Bank, may rely must also be corrected on a timely
basis. Many phases of the Company's Y2K preparedness plan have been
completed: the Company has identified, assessed and prioritized mission
critical systems; developed Year 2000 testing strategies and plans;
implemented a customer due diligence program; and tested most mission
critical systems. But, delays, mistakes or failures in correcting Y2K
system problems by other companies on which Central Coast Bancorp and its
subsidiary may rely, could have a significant adverse impact upon Central
Coast Bancorp and its subsidiary, Community Bank, and their ability to
mitigate the risk of adverse impact of Y2K problems for their customers.
The disclosure set forth above contains forward-looking statements.
Specifically, such statements are contained in sentences including the words
"expect" or "anticipate" or "could" or "should". Such forward-looking
statements are subject to inherent risks and uncertainties that may cause
actual results to differ materially from those contemplated by such
forward-looking statements. The factors that may cause actual results to
differ materially from those contemplated by the forward-looking statements
include the failure by third parties to remedy Y2K issues or the inability of
the Company to complete testing software changes on the time schedules
currently expected. Nevertheless, the Company currently expects that its Y2K
compliance efforts will be successful without material adverse effects on its
business.
Item 3. MARKET RISK MANAGEMENT
The reader is referred to Item 7A of the Company's 1998 Annual Report on Form
10-K for information on market risk. There have been no significant changes
since December 31, 1998.
<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
(2.1) Agreement and Plan of Reorganization and Merger by and
between Central Coast Bancorp, CCB Merger Company and
Cypress Coast Bank dated as of December 5, 1995,
incorporated by reference from Exhibit 99.1 to Form 8-K
filed with the Commission on December 7, 1995.
(3.1) Articles of Incorporation, incorporated by reference from
Exhibit 4.8 to Registration Statement on Form S-8 No.
33-89948, filed with the Commission on March 3, 1995.
(3.2) Bylaws, as amended, incorporated by reference from the
Company's 1998 Annual Report on Form 10K filed with the
Commission on March 29,1999.
(4.1) Specimen form of Central Coast Bancorp stock certificate
incorporated by reference from the Company's 1994 Annual
Report on Form 10K filed with the Commission on March 31,
1995.
(10.1) Lease agreement dated December 12, 1994, related to 301
Main Street, Salinas, California incorporated by
reference from the Company's 1994 Annual Report on Form
10K filed with the Commission on March 31, 1995.
(10.2) King City Branch Lease incorporated by reference from
Exhibit 10.3 to Registration Statement on Form S-4 No.
33-76972, filed with the Commission on March 28, 1994.
(10.3) Amendment to King City Branch Lease incorporated by
reference from Exhibit 10.4 to Registration Statement on
Form S-4 No. 33-76972, filed with the Commission
on March 28, 1994.
*(10.4) 1982 Stock Option Plan, as amended, incorporated by
reference from Exhibit 4.2 to Registration Statement on
Form S-8 No. 33-89948, filed with the Commission on March
3, 1995.
*(10.5) Form of Nonstatutory Stock Option Agreement under the
1982 Stock Option Plan incorporated by reference from
Exhibit 4.6 to Registration Statement on Form S-8 No.
33-89948, filed with the Commission on March 3, 1995.
*(10.6) Form of Incentive Stock Option Agreement under the 1982
Stock Option Plan incorporated by reference from Exhibit
4.7 to Registration Statement on Form S-8 No. 33-89948,
filed with the Commission on March 3, 1995.
*(10.7) 1994 Stock Option Plan incorporated by reference from
Exhibit 4.1 to Registration Statement on Form S-8 No.
33-89948, filed with the Commission on March 3, 1995.
*(10.8) Form of Nonstatutory Stock Option Agreement under the
1994 Stock Option Plan incorporated by reference from
Exhibit 4.3 to Registration Statement on Form S-8 No.
33-89948, filed with Commission on March 3, 1995.
*(10.9) Form of Incentive Stock Option Agreement under the 1994
Stock Option Plan incorporated by reference from Exhibit
4.4 to Registration Statement on Form S-8 No. 33-89948,
filed with the Commission on March 3, 1995.
*(10.10) Form of Director Nonstatutory Stock Option Agreement
under the 1994 Stock Option Plan incorporated by
reference from Exhibit 4.5 to Registration Statement on
Form S-8 No. 33-89948, filed with the Commission on March
3, 1995.
*(10.11) Form of Bank of Salinas Indemnification Agreement for
directors and executive officers incorporated by
reference from Exhibit 10.9 to Amendment No. 1 to
Registration Statement on Form S-4 No. 33-76972, filed
with the Commission on April 15, 1994.
*(10.12) 401(k) Pension and Profit Sharing Plan Summary Plan
Description incorporated by reference from Exhibit 10.8
to Registration Statement on Form S-4 No. 33-76972, filed
with the Commission on March 28, 1994.
*(10.13) Form of Employment Agreement incorporated by reference
from Exhibit 10.13 to the Company's 1996 Annual Report on
Form 10K filed with the Commission on March 31, 1997.
*(10.14) Form of Executive Salary Continuation Agreement
incorporated by reference from Exhibit 10.14 to the
Company's 1996 Annual Report on Form 10K filed with the
Commission on March 31, 1997.
*(10.15) 1994 Stock Option Plan, as amended, incorporated by
reference from Exhibit A to the Proxy Statement filed
with the Commission on September 3, 1996 in connection
with Central Coast Bancorp's 1996 Annual Shareholders'
Meeting held on September 23, 1996.
*(10.16) Form of Indemnification Agreement, incorporated by
reference from Exhibit D to the Proxy Statement filed
with the Commission on September 3, 1996 in connection
with Central Coast Bancorp's 1996 Annual Shareholders'
Meeting held on September 23, 1996.
(10.17) Purchase and Assumption Agreement for the Acquisition of
Wells Fargo Bank Branches incorporated by reference from
Exhibit 10.17 to the Company's 1996 Annual Report on Form
10K filed with the Commission on March 31, 1997.
*(10.18) Employee Stock Ownership Plan and Trust Agreement
incorporated by reference from Exhibit 10.18 to the
Company's 1996 Annual Report on Form 10K filed with the
Commission on March 31, 1997.
(10.19) Lease agreement dated March 7, 1997, related to
484 Lighthouse Avenue, Monterey, California incorporated
by reference from Exhibit 10.19 to the Company's 1997
Annual Report on Form 10K filed with the Commission on
March 27, 1998.
(21.1) The Registrant's only subsidiary is its
wholly-owned subsidiary, Community Bank Of Central
California.
(27.1) Financial Data Schedule
*Denotes management contracts, compensatory plans or arrangements.
(b) Reports on Form 8-K - None
<PAGE>
SIGNATURES
- -------------------------------------------------------------------------------
Pursuant to the requirements of the Securities and Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
October 29, 1999 CENTRAL COAST BANCORP
By: /S/ROBERT M.STANBERRY
______________________________
Robert M. Stanberry
(Chief Financial Officer,
Principal Accounting Officer)
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Page
27.1 Financial Data Schedule 24
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This Schedule Contains Summary Financial Information Extracted >From
(a) Item 7 - 'Financial Statements And Supplementary Data" And Is Qualified
In Its Entirety By Reference To Such (b) Financial Statements Included In
This Report And Incorporated Herein By Reference.
</LEGEND>
<CIK> 0000921085
<NAME> CENTRAL COAST BANCORP
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> Jul-01-1999
<PERIOD-END> Sep-30-1999
<CASH> 38,668
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 150,368
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 382,526
<ALLOWANCE> 5,291
<TOTAL-ASSETS> 587,529
<DEPOSITS> 516,108
<SHORT-TERM> 9,897
<LIABILITIES-OTHER> 5,869
<LONG-TERM> 4,356
0
0
<COMMON> 39,521
<OTHER-SE> 11,778
<TOTAL-LIABILITIES-AND-EQUITY> 587,529
<INTEREST-LOAN> 8,457
<INTEREST-INVEST> 2,273
<INTEREST-OTHER> 25
<INTEREST-TOTAL> 10,755
<INTEREST-DEPOSIT> 3,402
<INTEREST-EXPENSE> 3,525
<INTEREST-INCOME-NET> 7,230
<LOAN-LOSSES> 418
<SECURITIES-GAINS> 45
<EXPENSE-OTHER> 4,111
<INCOME-PRETAX> 3,230
<INCOME-PRE-EXTRAORDINARY> 3,230
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,003
<EPS-BASIC> 0.31
<EPS-DILUTED> 0.30
<YIELD-ACTUAL> 5.6
<LOANS-NON> 2,039
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 4,882
<CHARGE-OFFS> 23
<RECOVERIES> 14
<ALLOWANCE-CLOSE> 5,291
<ALLOWANCE-DOMESTIC> 5,291
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
