12
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 June 30, 2000 .
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-25418 .
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 - 6,903,379 shares outstanding at August 7, 2000.
Page 1 of 24
The Index to the Exhibits is located at Page 22
1
<PAGE>
<TABLE>
<CAPTION>
PART 1-FINANCIAL INFORMATION
Item 1.FINANCIAL STATEMENTS:
CENTRAL COAST BANCORP AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS (Unaudited)
June 30, December 31,
(In thousands, except for share data) 2000 1999
---- ----
<S> <C> <C>
Assets
Cash and due from banks $ 41,505 $ 39,959
Federal funds sold 22,973 -
----------------- ---------------
Total cash and equivalents 64,478 39,959
Available-for-sale securities 148,056 145,435
Loans:
Commercial 159,458 159,385
Real estate-construction 37,429 35,330
Real estate-other 219,315 188,600
Consumer 10,600 13,003
Deferred loan fees, net (729) (721)
----------------- ---------------
Total loans 426,073 395,597
Allowance for loan losses (7,018) (5,596)
----------------- ---------------
Net Loans 419,055 390,001
----------------- ---------------
Premises and equipment, net 3,848 3,888
Accrued interest receivable and other assets 13,380 14,162
----------------- ---------------
Total assets $ 648,817 $ 593,445
================= ===============
Liabilities and Shareholders' Equity
Deposits:
Demand, noninterest bearing $ 153,070 $ 141,389
Demand, interest bearing 94,849 100,871
Savings 106,628 97,833
Time 229,404 178,096
----------------- ---------------
Total Deposits 583,951 518,189
Accrued interest payable and other liabilities 9,679 21,951
----------------- ---------------
Total liabilities 593,630 540,140
----------------- ---------------
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: 6,919,115 shares at June 30, 2000
and 6,440,257 shares at December 31, 1999 47,892 40,223
Shares held in deferred compensation trust (271,862 at June 30, 2000
and 247,148 at December 31, 1999), net of deferred obligation - -
Retained earnings 11,837 17,784
Accumulated other comprehensive loss - net of
taxes of $3,157 at June 30, 2000 and $3,267 at December 31,1999 (4,542) (4,702)
----------------- ---------------
Shareholders' equity 55,187 53,305
----------------- ---------------
Total liabilities and shareholders' equity $ 648,817 $ 593,445
================= ===============
See Notes to Consolidated Condensed Financial Statements
</TABLE>
2
<PAGE>
<TABLE>
<CAPTION>
CENTRAL COAST BANCORP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)
Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest Income
Loans (including fees) $ 10,150 $ 7,686 $ 19,363 $ 14,827
Investment securities 2,197 2,343 4,433 4,591
Other 271 2 387 75
--------------- -------------- ----------------- -----------------
Total interest income 12,618 10,031 24,183 19,493
--------------- -------------- ----------------- -----------------
Interest Expense
Interest on deposits 4,365 3,180 8,279 6,266
Other 72 149 220 176
--------------- -------------- ----------------- -----------------
Total interest expense 4,437 3,329 8,499 6,442
--------------- -------------- ----------------- -----------------
Net Interest Income 8,181 6,702 15,684 13,051
Provision for Loan Losses 800 410 1,326 537
--------------- -------------- ----------------- -----------------
Net Interest Income after
Provision for Loan Losses 7,381 6,292 14,358 12,514
--------------- -------------- ----------------- -----------------
Noninterest Income 631 591 1,177 1,133
--------------- -------------- ----------------- -----------------
Noninterest Expenses
Salaries and benefits 2,467 2,250 4,847 4,581
Occupancy 345 297 678 577
Furniture and equipment 412 294 800 585
Other 1,112 983 2,131 1,904
--------------- -------------- ----------------- -----------------
Total noninterest expenses 4,336 3,824 8,456 7,647
--------------- -------------- ----------------- -----------------
Income Before Income Taxes 3,676 3,059 7,079 6,000
Provision for Income Taxes 1,433 1,065 2,760 2,281
--------------- -------------- ----------------- -----------------
Net Income $ 2,243 $ 1,994 $ 4,319 $ 3,719
=============== ============== ================= =================
Basic Earnings per Share $ 0.32 $ 0.28 $ 0.62 $ 0.53
Diluted Earnings per Share $ 0.31 $ 0.27 $ 0.60 $ 0.51
See Notes to Consolidated Condensed Financial Statements
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
CENTRAL COAST BANCORP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWES (Unaudited)
(In thousands)
Six months ended June 30, 2000 1999
---- ----
<S> <C> <C>
Cash Flows from Operations:
Net income $ 4,319 $ 3,719
Reconciliation of net income to net cash provided
by operating activities:
Provision for loan losses 1,326 537
Net (loss) on sale of fixed assets 18 61
Depreciation 592 403
Amortization and accretion 102 3
Decrease in accrued interest receivable and other assets 544 26
Increase in accrued interest payable and other liabilities 528 965
Increase in deferred loan fees 8 240
-------------- --------------
Net cash provided by operations 7,437 5,954
-------------- --------------
Cash Flows from Investing Activities:
Purchases of investment securities (10,209) (88,912)
Proceeds from maturities of investment securities 7,884 92,854
Proceeds from sale of investment securities - 5,987
Net decrease in loans held for sale - 844
Net increase in loans (30,388) (43,165)
Purchases of premises and equipment (571) (821)
-------------- --------------
Net cash used in investing activities (33,284) (33,213)
-------------- --------------
Cash Flows from Financing Activities:
Net increase in deposit accounts 65,762 14,979
Net increase (decrease) in short-term borrowings (12,662) 12,408
Net decrease in long-term borrowings (138) -
Proceeds from issuance of stock 58 1,098
Shares repurchased (2,654) (2,060)
-------------- --------------
Net cash provided by financing activities 50,366 26,425
-------------- --------------
Net increase (decrease) in cash and equivalents 24,519 (834)
Cash and equivalents, beginning of period 39,959 48,886
-------------- --------------
Cash and equivalents, end of period $ 64,478 $ 48,052
============== ==============
Other Cash Flow Information:
Interest paid $ 8,109 $ 6,417
Income taxes paid 3,410 1,589
See Notes to Consolidated Condensed Financial Statements
</TABLE>
4
<PAGE>
CENTRAL COAST BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
June 30, 2000 (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 Central
Coast Bancorp's (the "Company's") consolidated financial position at
June 30, 2000 and December 31, 1999, the results of operations for the
three and six month periods ended June 30, 2000 and 1999 and cash
flows for the six month periods ended June 30, 2000 and 1999.
Certain disclosures normally presented in the notes to the 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 1999 Annual Report to Shareholders. The results of
operations for the three and six month periods ended June 30, 2000 and
1999 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.
Management has determined that since all of the commercial banking
products and services offered by the Company are available in each
branch of the Community Bank of Central California, its bank
subsidiary (the "Bank"), all branches are located within the same
economic environment and management does not allocate resources based
on the performance of different lending or transaction activities, it
is appropriate to aggregate the Bank branches and report them as a
single operating segment.
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 $120,725,000
and standby letters of credit of $1,881,000 at June 30, 2000.
However, all such commitments will not necessarily culminate in actual
extensions of credit by the Company during 2000.
Approximately $21,809,000 of loan commitments outstanding at June 30,
2000 are for real estate construction loans and are expected to fund
within the next twelve months. The remaining commitments primarily
relate to revolving lines of credit or other commercial loans, and
many of these 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.
5
<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 (6,967,000
and 7,018,000 for the three and six month periods ended June 30, 2000,
and 7,142,000 and 7,051,000 for the three and six month periods ended
June 30, 1999). Diluted earnings per share reflect 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 (192,000 and 195,000 for the three and six month periods
ended June 30, 2000 and 204,000 and 281,000 for the three and six
month periods ended June 30, 1999).
4. COMPREHENSIVE EARNINGS
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
(In thousands) 2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Earnings $ 2,243 $ 1,994 $ 4,319 $ 3,719
Other comprehensive income (loss)- Net unrealized
gain (loss) on available-for-sale securities 216 (1,504) 160 (2,296)
Reclassification adjustment for gains included in
income, net of taxes of $4 and $(13)
for the three and six month periods ended
June 30, 1999 - (5) - 8
-------------- -------------- ------------- --------------
Total comprehensive earnings $ 2,459 $ 485 $ 4,479 $ 1,431
============== ============== ============= ==============
</TABLE>
5. STOCK DIVIDEND
On January 31, 2000, the Board of Directors declared a ten percent
stock dividend, which was distributed on February 28, 2000, to
shareholders of record as of February 14, 2000. All share and per
share data have been retroactively adjusted to reflect the stock
dividend.
6
<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.
Factors that could cause or contribute to such differences include,
but are not limited to, variances in the actual versus projected
growth in assets, return on assets, loan losses, expenses, rates
charged on loans and earned on securities investments, rates paid on
deposits, competition effects, fee and other noninterest income
earned, general economic conditions, nationally, regionally and in the
operating market areas of the Company and the Bank, changes in the
regulatory environment, changes in business conditions and inflation,
changes in securities markets, as well as other factors. 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, 1999.
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 (the "Company") is a California corporation
organized in 1994, and is the parent company for Community Bank of
Central California, a state-chartered bank, headquartered in Salinas,
California (the "Bank"). 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 federal 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 Salinas Valley,
Pajaro Valley and the Monterey Peninsula areas.
Overview
--------
Central Coast Bancorp recorded net income of $2,243,000 for the
quarter ended June 30, 2000, which was a 12.5% increase over the
$1,994,000 reported for the same period of 1999. Diluted earnings per
share for the second quarter of 2000 was $0.31 versus $0.27 reported
in the year earlier period. The return on equity (ROE) and the return
on assets (ROA) for the second quarter of 2000 were 16.5% and 1.45% as
compared to 15.2% and 1.45% for the same period in 1999.
Net income for the six months ended June 30, 2000 and 1999 was
$4,319,000 and $3,719,000 with diluted earnings per share of $.60 and
$.51, respectively. For the first six months of 2000, ROE was 16.0%
and ROA was 1.42% as compared to 14.4% and 1.39% for the same period
in 1999. The earnings per share for the 1999 periods have been
adjusted for the 10% stock dividend distributed in February 2000.
The Company continued to achieve good year over year internal growth
as assets increased $76,064,000 (13.3%) to total $648,817,000 at June
30, 2000. Loans totaled $426,073,000, up $65,661,000 (18.2%) from the
ending balances on June 30, 1999. Deposit balances at quarter-end
totaled $583,951,000 up $79,779,000 (15.8%) from the year earlier
balances. The deposit growth included $20,000,000 of State of
California certificates of deposit placed in the Bank in February
2000.
Central Coast Bancorp ended the second quarter of 2000 with a Tier 1
capital ratio of 11.8% and a total risk-based capital ratio of 13.1%
versus 13.0% and 14.2%, respectively, at the end of the second quarter
of 1999.
7
<PAGE>
In October 1998, the Company announced a 5% stock repurchase plan the
purpose of which was to aid in the management of the Company's
capital. The last purchase of stock under this plan was made on May
22, 2000. Under this plan, the Company purchased 337,150 shares at
an average price of $14.98 and with a total value of $5,052,000. In
the second quarter of 2000, the Board of Directors authorized a second
stock repurchase plan for an additional 5% of the then outstanding
shares. Under this plan, the Company may repurchase up to
approximately 348,000 shares, and as of June 30, 2000, the Company had
repurchased 41,935 shares with a total value of $643,000.
The following table provides a summary of the major elements of income
and expense for the periods indicated.
<TABLE>
<CAPTION>
Condensed Comparative Income Statement
Percentage Percentage
Three Months Ended Change Six Months Ended Change
June 30, Increase June 30, Increase
(In thousands, except percentages) 2000 1999 (Decrease) 2000 1999 (Decrease)
---- ---- ---------- ---- ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Interest Income (1) $ 12,815 $ 10,229 25% $ 24,575 $ 19,867 24%
Interest Expense 4,437 3,329 33% 8,499 6,442 32%
---------- ---------- ---------- --------- --------- ---------
Net interest income 8,378 6,900 21% 16,076 13,425 20%
Provision for Loan Losses 800 410 95% 1,326 537 147%
---------- ---------- ---------- --------- --------- ---------
Net interest income after
provision for loan losses 7,578 6,490 17% 14,750 12,888 14%
Noninterest Income 631 591 7% 1,177 1,133 4%
Noninterest Expense 4,336 3,824 13% 8,456 7,647 11%
---------- ---------- ---------- --------- --------- ---------
Income before income taxes 3,873 3,257 19% 7,471 6,374 17%
Income Taxes 1,433 1,065 35% 2,760 2,281 21%
Tax Equivalent Adjustment 197 198 -1% 392 374 5%
---------- ---------- ---------- --------- --------- ---------
Net income $ 2,243 $ 1,994 12% $ 4,319 $3,719 16%
========== ========== ========== ========= ========= =========
1) Interest on tax-free securities is reported on tax equivalent basis.
</TABLE>
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 Bank's earnings. Net interest margin
is net interest income expressed as a percentage of average earning
assets.
Second quarter 2000 net interest income of $8,378,000 was a 21.4%
increase of $1,478,000 over the same period in 1999. The interest
income component was up $2,586,000 (25.3%). Average loan balances
were $73,341,000 (21.7%) higher in the second quarter of 2000 versus
the year earlier period. This volume difference added $1,668,000 to
interest income. The average loan yield for the second quarter of
2000 was 80 basis points higher than the average yield in the year
earlier quarter. The higher yield increased interest income by
$796,000. There have been six rate increases implemented by the Bank
in the past twelve months as a result of the rate tightening by the
Federal Reserve Board. For the past year, as investment securities
have matured or been reduced by principal payments the funds have been
allocated to loans and/or overnight Federal funds sold. The average
balance of investment securities in the second quarter of 2000 was
lower by $14,310,000 (8.8%) over the second quarter of 1999. Average
balances for Federal funds sold for these two periods increased
$16,451,000 to $16,787,000. Interest income for the investing
activities increased $122,000 on a period over period basis.
Interest expense was up $1,108,000 (33.3%) on a quarter over quarter
basis. The average balances on interest bearing liabilities were
$50,768,000 (13.6%) higher in the second quarter of 2000 versus the
same quarter in 1999. The higher balances accounted for $669,000 of
the increase in interest expense. Rates paid on interest bearing
liabilities increased 63 basis points on a quarter over quarter basis
and accounted for $439,000 of the interest expense increase.
8
<PAGE>
Net interest margin for the second quarters of 2000 and 1999 were
5.85% and 5.52%, respectively.
For the six-month period ending June 30, 2000, net interest income
increased $2,651,000 (19.7%) over the first six months of 1999. The
interest income component increased $4,708,000 to $24,575,000.
Average balances of earning assets were $74,841,000 (15.3%) higher in
the first six months of 2000 than the same period in 1999. The
average balance of loans was $76,457,000 higher, which accounted for
$3,519,000 of the increase in interest income. The average yield
received on loans in the first six months of 2000 was 49 basis points
higher than the 9.23% received in the year earlier period. The higher
yield on loans added $1,017,000 to interest income. The average
balance of investment securities in the first six months of 2000 was
lower by $10,910,000 (6.8%) over the year earlier period. Average
balances for Federal funds sold for these two periods increased
$9,294,000 to $12,561,000. Interest income for the investing
activities increased $172,000 on a period over period basis. As
mentioned in the quarterly analysis above, Federal funds interest
rates were increased six times for a total of 150 basis points since
June 30, 1999. As a result, the average yield of 8.77% received on
all earning assets in the six months ended June 30, 2000 was 57 basis
points higher than the yield received in the first six months of 1999.
Interest expense for the six-month period increased $2,057,000 (31.9%)
from the expense in the same 1999 period. Volume increases in
deposits and borrowings added $1,358,000 of interest expense. Overall
average rates paid on interest-bearing liabilities in the first six
months of 2000 increased 54 basis points to 4.13% from the same period
in 1999. The interest expense increase attributable to the higher
rates was $699,000.
Net interest margin for the first six months of 2000 was 5.74% versus
5.54% in the year earlier period.
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.
9
<PAGE>
<TABLE>
<CAPTION>
(Unaudited)
Three months ended June 30,
(Taxable Equivalent Basis) 2000 1999
------------------------------------ ------------------------------------
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) $ 411,435 $ 10,150 9.92% $ 338,094 $ 7,686 9.12%
Taxable investments 112,353 1,805 6.46% 126,560 1,951 6.18%
Tax-exempt securities (tax equiv. basis) 35,800 588 6.61% 35,903 590 6.59%
Federal funds sold 16,787 272 6.52% 336 2 2.39%
------------ ----------- ------------ ------------
Total Earning Assets 576,375 $ 12,815 8.94% 500,893 $10,229 8.19%
----------- ------------
Cash & due from banks 38,201 41,023
Other assets 7,615 11,186
------------ ------------
$ 622,191 $ 553,102
============ ============
Liabilities & Shareholders' Equity:
Interest bearing liabilities:
Demand deposits $ 97,755 $ 392 1.61% $ 102,864 $ 457 1.78%
Savings 99,037 856 3.48% 101,001 816 3.24%
Time deposits 221,695 3,117 5.65% 156,071 1,907 4.90%
Other borrowings 4,481 72 6.46% 12,264 149 4.87%
------------ ----------- ------------ ------------
Total interest bearing liabilities 422,968 4,437 4.22% 372,200 3,329 3.59%
----------- ------------
Demand deposits 139,707 123,985
Other Liabilities 5,028 4,311
------------ ------------
Total Liabilities 567,703 500,496
Shareholders' Equity 54,488 52,606
------------ ------------
$ 622,191 $ 553,102
============ ============
Net interest income & margin (3) $ 8,378 5.85% $ 6,900 5.52%
=========== ========= ============ =========
---------------------------------------------------------------------------------------------------------------------------
1 Loan interest income includes fee income of $238,000 and $307,000 for the three month periods
ended June 30, 2000 and 1999, respectively.
2 Includes the average allowance for loan losses of $6,422,000 and $4,536,000 and average deferred
loan fees of $738,000 and $853,000 for the three months ended June 30, 2000 and 1999, respectively.
3 Net interest margin is computed by dividing net interest income by the total average earning assets.
4 Includes the unrealized loss on available-for-sale securities.
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
(Unaudited)
Six months ended June 30,
(Taxable Equivalent Basis) 2000 1999
------------------------------- -------------------------------
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) $400,526 $19,363 9.72% $324,069 $14,827 9.23%
Taxable investments 114,387 3,650 6.42% 126,992 3,844 6.10%
Tax-exempt securities (tax equiv. basis) 35,813 1,175 6.60% 34,118 1,121 6.62%
Federal funds sold 12,561 387 6.20% 3,267 75 4.63%
------------ ---------- ------------ -----------
Total Earning Assets 563,287 $24,575 8.77% 488,446 $19,867 8.20%
---------- -----------
Cash & due from banks 37,704 41,708
Other assets (4) 7,829 11,062
------------ ------------
$608,820 $541,216
============ ============
Liabilities & Shareholders' Equity:
Interest bearing liabilities:
Demand deposits $97,221 $ 797 1.65% $97,974 $ 812 1.67%
Savings 100,620 1,731 3.46% 104,901 1,706 3.28%
Time deposits 209,445 5,751 5.52% 151,585 3,748 4.99%
Other borrowings 6,976 220 6.34% 7,222 176 4.91%
------------ ---------- ------------ -----------
Total interest bearing liabilities 414,262 8,499 4.13% 361,682 6,442 3.59%
---------- -----------
Demand deposits 135,172 123,125
Other Liabilities 5,192 4,232
------------ ------------
Total Liabilities 554,626 489,039
Shareholders' Equity 54,194 52,177
------------ ------------
$608,820 $541,216
============ ============
Net interest income & margin (3) $16,076 5.74% $13,425 5.54%
========== ======== =========== ========
----------------------------------------------------------------------------------------------------------------------------
1 Loan interest income includes fee income of $474,000 and $548,000 for the six month
periods ended June 30, 2000 and 1999, respectively
2 Includes the average allowance for loan losses of $6,110,000 and $4,452,000 and average deferred
loan fees of $712,000 and $786,000 for the six months ended June 30, 2000 and 1999, respectively.
3 Net interest margin is computed by dividing net interest income by the total average earning assets.
4 Includes the unrealized loss on available-for-sale securities.
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Volume/Rate Analysis
(in thousands) Three Months Ended June 30, 2000 over 1999
Increase (decrease) due to change in:
Net
Volume Rate (5) Change
------- --------- -------
<S> <C> <C> <C>
Interest-earning assets:
Net Loans (1)(2) $ 1,668 $ 796 $2,464
Taxable investment securities (219) 73 (146)
Tax exempt investment securities (4) (2) - (2)
Federal funds sold 98 172 270
----------- ------------ ----------
Total 1,545 1,041 2,586
----------- ------------ ----------
Interest-bearing liabilities:
Demand deposits (23) (42) (65)
Savings deposits (16) 56 40
Time deposits 802 408 1,210
Other borrowings (94) 17 (77)
----------- ------------ ----------
Total 669 439 1,108
----------- ------------ ----------
Interest differential $ 876 $ 602 $1,478
=========== ============ ==========
</TABLE>
<TABLE>
<CAPTION>
Volume/Rate Analysis
(in thousands) Six Months Ended June 30, 2000 over 1999
Increase (decrease) due to change in:
Net
Volume Rate (5) Change
------ -------- ------
<S> <C> <C> <C>
Interest-earning assets:
Net Loans (1)(3) $ 3,519 $1,017 $4,536
Taxable investment securities (383) 189 (194)
Tax exempt investment securities (4) 56 (2) 54
Federal funds sold 215 97 312
------------- ------------ ------------
Total 3,407 1,301 4,708
------------- ------------ ------------
Interest-bearing liabilities:
Demand deposits (6) (9) (15)
Savings deposits (70) 95 25
Time deposits 1,440 563 2,003
Other borrowings (6) 50 44
------------- ------------ ------------
Total 1,358 699 2,057
------------- ------------ ------------
Interest differential $ 2,049 $ 602 $2,651
============= ============ ============
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 $238,000 and $307,000 for the quarters ended June 30, 2000 and 1999, respectively, have
been included in the interest income computation.
3. Loan fees of $474,000 and $548,000 for the six months ended June 30, 2000 and 1999, respectively, have
been included in the interest income computation.
4. 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 2000 and 1999.
5. The rate / volume variance has been included in the rate variance.
</TABLE>
12
<PAGE>
Provision for Loan Losses
-------------------------
The provision for loan losses was $800,000 in the second quarter of
2000 as compared to $410,000 in the second quarter of 1999 and
$526,000 in the first quarter of 2000. For the six-month period ended
June 30, 2000, the Bank provided $1,326,000 versus $537,000 in the
year earlier period. Loan balances increased $30,144,000 in the second
quarter of 2000 and are up $65,661,000 on year over year basis. In
addition to these new, unseasoned loans, several ongoing economic
forces have caused management to increase its provision for loan
losses. Among these are continued pressure on the Salinas Valley
agricultural industry due to poor market prices. In addition, as the
Federal Reserve Board's program to slow down consumer spending takes
effect, the tourism industry will be impacted. Together, customers in
the agriculture and tourism industries represent 36% of the Bank's
total loans and loan commitments outstanding as of June 30, 2000. At
June 30, 2000 and 1999, non-performing assets were $796,000 and
$3,490,000, respectively. The ratios of the allowance for loan losses
to total loans on those two dates were 1.65% and 1.35%, respectively.
Noninterest Income
------------------
Noninterest income consists primarily of service charges on deposit
accounts and fees for miscellaneous services. Noninterest income
totaled $631,000 in the second quarter of 2000, which was up $40,000
(6.8%) over the same period in 1999. Income from service charges on
deposit accounts was $99,000 higher mostly due to higher volumes and
new business account fees. This increase was partially offset by the
fact that in the second quarter of 1999, the Company realized a gain
of $45,000 from the sale of investment securities versus no gains in
2000.
For the first six-months of 2000, noninterest income was $1,177,000
versus $1,133,000 in the same period last year. Service charges on
deposits were up $139,000 (21.2%) due to higher volumes and new
business account fees. As the interest rates rose, the activity in
residential mortgage lending slowed significantly in the first half of
2000. Consequently, the fees generated from mortgage originations
decreased $80,000 (46.2%) in the first six months of 2000 as compared
to the same period in 1999. As reported in the quarterly analysis in
the preceding paragraph, a gain of $45,000 was recognized on the sale
of investment securities in the second quarter of 1999 versus no gains
in 2000.
Noninterest Expense
-------------------
Noninterest expenses increased $512,000 (13.4%) to a total of
$4,336,000 in the second quarter of 2000 versus the second quarter of
1999. Salary and employee benefits increased $217,000 (9.6%) because
of additional staff due to growth, higher benefit costs, and normal
salary increases. On a quarter over quarter basis, premises and fixed
asset expenses were higher by $166,000 (28.1%). Ongoing costs
associated with two branch relocations and remodel of office space in
the second half of 1999 were the major factors contributing to the
increased premises and fixed asset expenses. Other expenses for the
second quarter of 2000 were $1,112,000 for an increase of $129,000
over the prior year quarter. Various items related to higher business
volume and some price increases contributed to the increase. The
overhead efficiency ratios (fully tax equivalent) for the 2000 and
1999 second quarters were 48.1% and 51.0%, respectively.
Noninterest expenses for the six-month period ending June 30, 2000
were $8,456,000 versus $7,647,000 for the same period in 1999.
Salaries and benefits increased $266,000 (5.8%) due to increased
staffing levels, higher benefit costs and normal salary progressions.
Premises and fixed asset expenses were up $316,000 (27.2%) due to the
items as detailed in the previous paragraph. Other expenses increased
$227,000 (11.9%). Factors contributing to the increase were as
discussed above. The overhead efficiency ratio (fully tax equivalent)
for the first six-months of 2000 was 49.0% as compared to 52.5% in the
same period of 1999.
Provision for Income Taxes
--------------------------
The effective tax rate for the second quarter and first six-months of
2000 was 39.0% for both periods versus 34.8% and 38.0% in the same two
periods of 1999.
13
<PAGE>
Securities
----------
At June 30, 2000, available-for-sale securities had a market value of
$148,056,000 with an amortized cost basis of $155,755,000. The
unrealized loss of $7,699,000 at June 30, 2000 was a decrease of
$366,000 from the unrealized loss at March 31, 2000. The slightly
lower unrealized loss was the result of a leveling of interest rates
in the securities markets in the second quarter. Other than for short
term funds management, the Bank did not purchase securities during the
second quarter of 2000.
Loans
-----
Ending loan balances at June 30, 2000 were $426,073,000, which was an
increase of $30,476,000 (7.7%) from year-end 1999 balances and
$65,661,000 (18.2%) from June 30, 1999 balances. With the exception of
consumer loans, all other categories of loans were higher on a year
over year basis. Loan demand has remained brisk and the current
pipeline would indicate that the demand is continuing into the third
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.
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, except percentages) June 30, December 31,
2000 1999
-------------- ---------------
<S> <C> <C>
Past due 90 days or more and still accruing :
Real estate $ 102 $ 303
Commercial 59 51
Consumer and other 50 -
-------------- ----------------
211 354
-------------- ----------------
Nonaccrual:
Real estate - 1,565
Commercial 443 11
Consumer and other 44 -
-------------- ----------------
487 1,576
-------------- ----------------
Total nonperforming loans 698 1,930
-------------- ----------------
Other real estate owned 100 180
-------------- ----------------
Total nonperforming assets $ 798 $ 2,110
============== ================
Allowance for loan losses as a percentage of nonperforming loans 1005% 290%
Nonperforming loans to total loans 0.16% 0.49%
</TABLE>
14
<PAGE>
Nonperforming loans decreased $1,234,000 during the first six months
of 2000 with $326,000 of that in the second quarter. This decrease
coupled with the year-to-date increase of the provision for the
allowance for loan losses resulted in improvement in the coverage
ratio of the allowance for loan losses to nonperforming loans from
290% at year-end to 1005%.
At June 30, 2000, the recorded investment in loans that are considered
impaired under SFAS No. 114 was $2,073,000 of which $487,000 are
included in nonaccrual loans above. Such impaired loans had valuation
allowances totaling $617,000 based on the estimated fair value of the
collateral.
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 June 30,
2000 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.
The following table summarizes activity in the allowance for loan
losses for the periods indicated:
<TABLE>
<CAPTION>
Three months ended June 30, Six months ended June 30,
(In thousands, except percentages) 2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Beginning balance $ 6,136 $ 4,398 $ 5,596 $ 4,352
Provision charged to expense 800 410 1,326 537
Loans charged off (3) (37) (19) (127)
Recoveries 85 111 115 120
-------------- ------------- ------------- -------------
Ending balance $ 7,018 $ 4,882 $ 7,018 $ 4,882
============== ============= ============= =============
Ending loan portfolio $426,073 $360,412
============= =============
Allowance for loan losses as percentage of
ending loan portfolio 1.65% 1.35%
</TABLE>
15
<PAGE>
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 June 30, 2000 were
approximately $120,725,000 and $1,881,000, 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
June 30, 2000, consolidated liquid assets totaled $90.0 million or
13.9% of total assets as compared to $91.1 million or 15.4% of total
consolidated assets on December 31, 1999. 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 $55,187,000 at June 30,
2000 compared to $53,305,000 at December 31, 1999.
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.
The following table shows the Company's actual capital amounts and
ratios at June 30, 2000 and December 31, 1999 as well as the minimum
capital ratios for capital adequacy under the regulatory framework:
<TABLE>
<CAPTION>
For Capital
Actual Adequacy Purposes:
Amount Ratio Amount Ratio
------ ----- ------ -----
<S> <C> <C> <C> <C>
As of June 30, 2000
Total Capital (to Risk Weighted Assets): $ 64,975,000 13.1% $ 39,811,000 8.0%
Tier 1 Capital (to Risk Weighted Assets): 58,788,000 11.8% 19,905,000 4.0%
Tier 1 Capital (to Average Assets): 58,788,000 9.5% 24,888,000 4.0%
As of December 31, 1999
Total Capital (to Risk Weighted Assets): $ 62,489,000 13.8% $ 36,125,000 8.0%
Tier 1 Capital (to Risk Weighted Assets): 56,938,000 12.6% 18,062,000 4.0%
Tier 1 Capital (to Average Assets): 56,938,000 9.7% 23,593,000 4.0%
</TABLE>
16
<PAGE>
Year 2000
---------
During 1998 and 1999, management of the Company focused the
appropriate resources to address the potential problems that could
arise regarding the Year 2000 (Y2K) century date change. The
Company's mission critical systems were evaluated, modified as required
and contingency plans were put into place should the systems have
experienced any failures. The Y2K readiness of vendors and customers
was also evaluated and monitored. The century date change passed
without any operational difficulties for the Company, its vendors or
its customers. There are certain dates within the year 2000 that have
been identified as critical processing dates. The first was January
31, the end of the first month of the year. The second was February
29, leap year day. The third was March 31, the end of the first
quarter. The Company did not experience any processing problems on
those dates. Upcoming dates during the year are October 10, the first
date to require an 8-digit field (10/10/2000) and December 31, the end
of the year. Those dates were tested as part of the Y2K project. The
Company does not anticipate having any processing problems on those
dates, however failure by third parties to adequately remediate Y2K
issues could have an impact upon Central Coast Bancorp, which is
impossible to quantify. 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
Overview. The goal for managing the assets and liabilities of the
Bank is to maximize shareholder value and earnings while maintaining a
high quality balance sheet without exposing the Bank to undue interest
rate risk. The Board of Directors has overall responsibility for the
Company's interest rate risk management policies. The Bank has an
Asset and Liability Management Committee (ALCO) which establishes and
monitors guidelines to control the sensitivity of earnings to changes
in interest rates.
Asset/Liability Management. Activities involved in asset/liability
management include but are not limited to lending, accepting and
placing deposits, investing in securities and issuing debt. Interest
rate risk is the primary market risk associated with asset/liability
management. Sensitivity of earnings to interest rate changes arises
when yields on assets change in a different time period or in a
different amount from that of interest costs on liabilities. To
mitigate interest rate risk, the structure of the balance sheet is
managed with the goal that movements of interest rates on assets and
liabilities are correlated and contribute to earnings even in periods
of volatile interest rates. The asset/liability management policy
sets limits on the acceptable amount of variance in net interest
margin and market value of equity under changing interest
environments. The Bank uses simulation models to forecast earnings,
net interest margin and market value of equity.
Simulation of earnings is the primary tool used to measure the
sensitivity of earnings to interest rate changes. Using computer
modeling techniques, the Company is able to estimate the potential
impact of changing interest rates on earnings. A balance sheet
forecast is prepared using inputs of actual loan, securities and
interest bearing liabilities (i.e. deposits/borrowings) positions as
the beginning base. The forecast balance sheet is processed against
three interest rate scenarios. The scenarios include a 200 basis
point rising rate forecast, a flat rate forecast and a 200 basis point
falling rate forecast which take place within a one year time frame.
The net interest income is measured during the first year of the rate
changes and in the year following the rate changes. Based on a
forecast using May 31, 2000 balances and measuring against a flat rate
environment, in a one-year horizon an increase in interest rates of
200 basis points would result in an increase of $1,980,000 in net
interest income. Conversely, a 200 basis point decrease would result
in a decrease of $2,470,000 in net interest income.
The simulations of earnings do not incorporate any management actions,
which might moderate the negative consequences of interest rate
deviations. Therefore, they do not reflect likely actual results, but
serve as conservative estimates of interest rate risk.
17
<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.
THE FOLLOWING ARE THE VOTING RESULTS OF THE REGISTRANTS'S ANNUAL
MEETING OF THE SHAREHOLDERS HELD ON MAY 25, 2000:
PROPOSAL NO. 1: ELECTION OF DIRECTORS
Number of Affirmative Votes
---------------------------
C. EDWARD BOUTONNET 5,491,981
BRADFORD G. CRANDALL 5,491,932
ALFRED P. GLOVER 5,494,221
MICHAEL T. LAPSYS 5,494,101
DUNCAN L. McCARTER 5,493,765
ROBERT M. MRAULE, D.D.S., M.D. 5,494,150
LOUIS M. SOUZA 5,494,101
MOSE E. THOMAS, JR. 5,494,101
NICK VENTIMIGLIA 5,494,150
PROPOSAL NO. 2: APPROVAL OF DELOITTE & TOUCHE LLP
AS INDEPENDENT PUBLIC ACCOUNTANTS FOR THE
2000 FISCAL YEAR.
Number of Shares
Number of Number of Indicated As
Votes Cast For Votes Cast Against Abstentions
-------------- ------------------ -----------
5,421,052 6,180 72,451
TOTAL NUMBER OF SHARES VOTED: 5,499,683.
Item 5. Other information.
None.
18
<PAGE>
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 Registrant's 1998 Annual Report on Form
10-K filed with the Commission on March 29,1999.
(4.1) Specimen form of Central Coast Bancorp stock
certificate incorporated by reference from the
Registrant's 1994 Annual Report on Form 10-K
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 Registrant's
1994 Annual Report on Form 10-K 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.
19
<PAGE>
*(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 10-K 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 10-K
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 Registrant'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 Registrant'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
Registrant's 1996 Annual Report on Form 10-K
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 Registrant's 1996 Annual Report on Form
10-K 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
Registrant's 1997 Annual Report on Form 10-K
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 - A current report on Form 8-K was filed
with the Commission on May 17, 2000 to report the Board of
Directors' authorization of a stock repurchase program of up to
five percent of the Registrant's outstanding shares. This followed
the completion of the previous five percent repurchase plan
authorized in October, 1998.
20
<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.
July 28, 2000 CENTRAL COAST BANCORP
By: /S/ ROBERT M. STANBERRY
--------------------------
Robert M. Stanberry
(Chief Financial Officer,
Principal Financial and
Accounting Officer)
21
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description Page
------ ----------- ----
27.1 Financial Data Schedule 23
22
