UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For Quarter Ended JuneSeptember 30, 2000
Commission File Number: 1-9383
WESTAMERICA BANCORPORATION
(Exact Name of Registrant as Specified in its Charter)
CALIFORNIA 94-2156203
(State or other jurisdiction oof (I.R.S. Employer
incorporation or organization) Identification No.)
1108 Fifth Avenue, San Rafael, California 94901
(Address of Principal Executive Offices) (Zip Code)
Registrant's Telephone Number, including Area Code
(415) 257-8000
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d)
of the Securities Exchange Act of 1934 during the preceding
12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject
to such filing requirements for the past 90 days.
Yes [ x ] No [ ]
Indicate the number of shares outstanding of each of the
registrant classes of common stock, as of the latest
practicable date:
Title of Class Shares outstanding as of JulyOctober 31, 2000
Common Stock, 36,051,95236,481,659
No Par Value
WESTAMERICA BANCORPORATION
CONSOLIDATED BALANCE SHEETS
---------------------------
(In thousands)
- --------------------------------------------------------------------------
At June 30, At December 31,
2000 1999 1999
- --------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $248,471 $191,760 $255,738
Money market assets 250 250 250
Investment securities available for sale 939,209 1,012,175 982,337
Investment securities held to maturity,
with market values of:
$231,792 at June 30, 2000
$236,771 at June 30, 1999
$235,147 at December 31, 1999 234,523 236,413 237,154
Loans, gross 2,358,393 2,300,644 2,320,846
Allowance for loan losses (52,121) (51,720) (51,574)
- --------------------------------------------------------------------------
Loans, net of allowance for loan losses 2,306,272 2,248,924 2,269,272
Other real estate owned 2,062 3,065 3,269
Premises and equipment, net 42,429 44,562 44,016
Interest receivable and other assets 105,299 133,123 101,151
- --------------------------------------------------------------------------
Total assets $3,878,515 $3,870,272 $3,893,187
==========================================================================
Deposits:
Non-interest bearing $961,111 $814,496 911,556
Interest bearing:
Transaction 501,820 548,300 485,860
Savings 832,850 880,894 840,644
Time 838,090 836,803 827,284
- --------------------------------------------------------------------------
Total deposits 3,133,871 3,080,493 3,065,344
Short-term borrowed funds 391,875 371,149 462,345
Liability for interest, taxes and
other expenses 20,620 32,490 23,406
Notes payable 38,036 46,500 41,500
- --------------------------------------------------------------------------
Total liabilities 3,584,402 3,530,632 3,592,595
- --------------------------------------------------------------------------
Authorized - 150,000 shares of common stock
Issued and outstanding:
36,011 at June 30, 2000
38,722 at June 30, 1999
37,125 at December 31, 1999 183,301 194,128 186,435
Accumulated other comprehensive income:
Unrealized (loss) gain on securities
available for sale (6,996) 6,667 (4,521)
Retained earnings 117,808 138,845 118,678
- --------------------------------------------------------------------------
Total shareholders' equity 294,113 339,640 300,592
- --------------------------------------------------------------------------
Total liabilities and
shareholders' equity $3,878,515 $3,870,272 $3,893,187
==========================================================================
WESTAMERICA BANCORPORATION
CONSOLIDATED BALANCE SHEETS
(In thousands)
- ---------------------------------------------------------------------------------------------
At September 30, At December 31,
2000 1999 1999
- ---------------------------------------------------------------------------------------------
ASSETS
Cash and cash equivalents $232,876 $212,122 $255,738
Money market assets 250 250 250
Investment securities available for sale 939,672 1,014,018 982,337
Investment securities held to maturity,
with market values of:
$231,138 at September 30, 2000
$239,914 at September 30, 1999
$235,147 at December 31, 1999 231,330 240,360 237,154
Loans, gross 2,464,658 2,322,885 2,320,846
Allowance for loan losses (52,182) (51,645) (51,574)
- ---------------------------------------------------------------------------------------------
Loans, net of allowance for loan losses 2,412,476 2,271,240 2,269,272
Other real estate owned 2,017 2,189 3,269
Premises and equipment, net 42,416 44,351 44,016
Interest receivable and other assets 119,494 107,332 101,151
- ---------------------------------------------------------------------------------------------
Total assets $3,980,531 $3,891,862 $3,893,187
=============================================================================================
LIABILITIES
Deposits:
Non-interest bearing $974,548 $912,013 911,556
Interest bearing:
Transaction 524,550 461,583 485,860
Savings 885,973 876,945 840,644
Time 867,845 830,019 827,284
- ---------------------------------------------------------------------------------------------
Total deposits 3,252,916 3,080,560 3,065,344
Short-term borrowed funds 334,812 416,792 462,345
Liability for interest, taxes and
other expenses 30,463 31,575 23,406
Notes payable 31,036 46,500 41,500
- ---------------------------------------------------------------------------------------------
Total liabilities 3,649,227 3,575,427 3,592,595
- ---------------------------------------------------------------------------------------------
SHAREHOLDERS' EQUITY
Authorized - 150,000 shares of common stock
Issued and outstanding:
36,653 at September 30, 2000
37,770 at September 30, 1999
37,125 at December 31, 1999 206,912 189,689 186,435
Accumulated other comprehensive income:
Unrealized (loss) gain on securities
available for sale (1,546) 1,732 (4,521)
Retained earnings 125,938 125,014 118,678
- ---------------------------------------------------------------------------------------------
Total shareholders' equity 331,304 316,435 300,592
- ---------------------------------------------------------------------------------------------
Total liabilities
and shareholders' equity $3,980,531 $3,891,862 $3,893,187
=============================================================================================
WESTAMERICA BANCORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
- ----------------------------------------------------------
(InIn thousands, except per share data)
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Three months ended SixNine months ended
JuneSeptember 30, JuneSeptember 30,
2000 1999 2000 1999
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
INTEREST INCOME
Loans $48,601 $46,383 $95,828 $92,622$51,217 $46,995 $147,045 $139,617
Money market assets and funds sold 29 -- 614 --
Investment securities available for sale
Taxable 11,385 11,683 23,034 23,18111,098 11,806 34,665 34,986
Tax-exempt 2,847 2,625 5,699 5,1402,900 2,765 8,067 7,906
Investment securities held to maturity
Taxable 1,274 1,340 2,519 2,7721,277 1,277 3,800 4,048
Tax-exempt 2,082 1,978 4,151 3,9282,053 2,056 6,200 5,985
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total interest income 66,191 64,009 131,237 127,64368,554 64,899 199,791 192,542
INTEREST EXPENSE
Transaction deposits 1,043 988 1,959 1,9371,102 930 3,061 2,867
Savings deposits 4,390 4,845 8,893 9,8974,848 4,843 13,741 14,740
Time deposits 10,836 9,271 21,286 18,73211,838 9,313 33,124 28,045
Short-term borrowed funds 5,145 3,434 9,654 6,0934,548 3,893 14,202 9,986
Debt financing and notes payable 679 822 1,371 1,651582 817 1,953 2,468
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total interest expense 22,093 19,360 43,163 38,31022,918 19,796 66,081 58,106
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME 44,098 44,649 88,074 89,33345,636 45,103 133,710 134,436
Provision for loan losses 925905 1,195 1,870 2,3902,775 3,585
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 43,173 43,454 86,204 86,94344,731 43,908 130,935 130,851
NON-INTEREST INCOME
Service charges on deposit accounts 5,342 4,991 10,563 9,7965,271 5,101 15,835 14,897
Merchant credit card 1,017 822 1,956 1,6661,049 984 3,005 2,650
Financial services commissions 475 821 888 1,386388 798 1,276 2,184
Mortgage banking 212 165 422 397198 158 620 555
Trust fees 179 171 341 344156 520 500
Other 3,243 2,670 6,253 5,1983,672 2,744 9,924 7,942
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total non-interest income 10,468 9,640 20,423 18,78710,757 9,941 31,180 28,728
NON-INTEREST EXPENSE
Salaries and related benefits 12,865 12,555 25,202 25,47312,942 12,500 38,144 37,973
Occupancy 2,874 3,021 5,933 5,9632,856 3,040 8,789 9,003
Equipment 1,539 1,713 3,160 3,4541,739 1,717 4,899 5,171
Data processing 1,506 1,496 3,048 2,9601,503 1,485 4,551 4,445
Professional fees 438 330 798 743522 395 1,319 1,138
Other real estate owned 75 155 104 189316 20 421 209
Other 5,371 5,457 10,845 10,9185,719 5,601 16,564 16,520
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Total non-interest expense 24,668 24,727 49,090 49,70025,597 24,758 74,687 74,459
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 28,973 28,367 57,537 56,03029,891 29,091 87,428 85,120
Provision for income taxes 9,306 9,498 18,644 18,7579,746 9,802 28,390 28,558
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
NET INCOME $19,667 $18,869 $38,893 $37,273
====================================================================================$20,145 $19,289 $59,038 $56,562
============================================================================================================
Comprehensive income:
Change in unrealized (loss) gain on
securities available for sale, net (411) (9,398) (2,475) (13,517)5,450 (4,935) 2,975 (18,452)
- ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
COMPREHENSIVE INCOME $19,256 $9,471 $36,418 $23,756
====================================================================================$25,595 $14,354 $62,013 $38,110
============================================================================================================
Average shares outstanding 36,220 39,046 36,423 39,33736,365 38,266 36,404 38,976
Diluted average shares outstanding 36,714 39,674 36,886 39,97136,906 38,872 36,893 39,601
PER SHARE DATA
Basic earnings $0.54 $0.48 $1.07 $0.95$0.55 $0.50 $1.62 $1.45
Diluted earnings 0.54 0.48 1.05 0.930.55 0.50 1.60 1.43
Dividends paid 0.180.19 0.16 0.36 0.320.55 0.48
============================================================================================================
WESTAMERICA BANCORPORATION
STATEMENTS OF CASH FLOWS
- ------------------------
(In thousands)
- --------------------------------------------------------------------------
For the six months
ended June 30, 2000
2000 1999
- --------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $38,893 $37,273
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 3,825 4,174
Loan loss provision 1,870 2,390
Amortization of deferred net loan (cost)/fees 159 724
Increase in interest income receivable (461) (767)
(Increase)/decrease in other assets (3,882) 1,081
Increase in income taxes payable 1,041 1,162
Increase in interest expense payable 1,353 163
(Decrease)/increase in other liabilities (3,508) 3,874
Write-down/(gain on sales) of equipment 30 (46)
Originations of loans for resale (1,480) (16,569)
Proceeds from sale of loans originated for resale 1,480 14,376
Net gain on sale of property acquired
in satisfaction of debt (333) (274)
Write-down on property acquired in
in satisfaction of debt 64 88
- --------------------------------------------------------------------------
Net cash provided by operating activities 39,051 47,649
- --------------------------------------------------------------------------
INVESTING ACTIVITIES
Net disbursements of loans (39,547) (3,564)
Purchases of investment securities available for sale (24,776) (238,660)
Purchases of investment securities held to maturity (1,867) (20,833)
Purchases of property, plant and equipment (890) (1,351)
Proceeds from maturity of securities available for sale 62,846 190,477
Proceeds from maturity of securities held to maturity 4,498 11,413
Proceeds from sale of securities available for sale 788 344
Proceeds from sale of property and equipment 20 46
Proceeds from property acquired in satisfaction
of debt 1,994 1,748
- --------------------------------------------------------------------------
Net cash provided by (used in)
investing activities 3,066 (60,380)
- --------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase/(decrease) in deposits 68,527 (137,312)
Net (decrease)/increase in short-term borrowings (70,470) 167,478
Repayments of notes payable (3,464) (1,000)
Exercise of stock options/issuance of shares 2,236 3,976
Repurchases/retirement of stock (33,035) (45,725)
Dividends paid (13,178) (12,660)
- --------------------------------------------------------------------------
Net cash used in financing activities (49,384) (25,243)
- --------------------------------------------------------------------------
Net decrease in cash and cash equivalents (7,267) (37,974)
Cash and cash equivalents at beginning of period 255,738 229,734
- --------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $248,471 $191,760
==========================================================================
Supplemental disclosure of non-cash activities:
Loans transferred to other real estate owned $518 $312
Supplemental disclosure of cash flow activity:
Unrealized (loss) gain on securities
available for sale (2,475) (13,517)
Interest paid for the period 41,810 38,148
Income tax payments for the period 18,350 17,596
WESTAMERICA BANCORPORATION
STATEMENTS OF CASH FLOWS
(In thousands)
- ---------------------------------------------------------------------------------------------
For the nine months
ended September 30,
2000 1999
- ---------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net income $59,038 $56,562
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 5,873 6,265
Loan loss provision 2,775 3,585
Amortization of deferred net loan (cost)/fees 381 1,155
Increase in interest income receivable (2,758) (1,101)
(Increase)/decrease in other assets (2,159) 415
Increase/(decrease) in income taxes payable 3,193 (261)
Increase/(decrease) in interest expense payable 753 (770)
(Decrease)/increase in other liabilities 1,757 6,336
Write-down/(gain on sales) of equipment 35 (43)
Originations of loans for resale (1,931) (17,850)
Proceeds from sale of loans originated for resale 1,696 17,133
Net loss on sale of loans originated for resale 18 161
Net gain on sale of property acquired
in satisfaction of debt (671) (298)
Write-down on property acquired in satisfaction of debt 442 88
- ---------------------------------------------------------------------------------------------
Net cash provided by operating activities 68,442 71,377
- ---------------------------------------------------------------------------------------------
INVESTING ACTIVITIES
Net cash obtained in acquisitions 3,034 --
Net disbursements of loans (78,745) (29,184)
Purchases of investment securities available for sale (48,711) (327,557)
Purchases of investment securities held to maturity (3,078) (29,579)
Purchases of property, plant and equipment (1,638) (2,513)
Proceeds from maturity of securities available for sale 110,254 268,788
Proceeds from maturity of securities held to maturity 8,904 16,212
Proceeds from sale of securities available for sale 1,172 572
Proceeds from sale of property and equipment 20 46
Proceeds from property acquired in satisfaction
of debt 3,382 2,850
- ---------------------------------------------------------------------------------------------
Net cash used in investing activities (5,406) (100,365)
- ---------------------------------------------------------------------------------------------
FINANCING ACTIVITIES
Net increase/(decrease) in deposits 107,320 (108,445)
Net (decrease)/increase in short-term borrowings (127,933) 213,121
Repayments of notes payable (10,464) (1,000)
Exercise of stock options/issuance of shares 4,483 4,139
Repurchases/retirement of stock (39,267) (77,627)
Dividends paid (20,037) (18,812)
- ---------------------------------------------------------------------------------------------
Net cash provided by financing activities (85,898) 11,376
- ---------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents (22,862) (17,612)
Cash and cash equivalents at beginning of period 255,738 229,734
- ---------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $232,876 $212,122
=============================================================================================
Supplemental disclosure of non-cash activities:
Loans transferred to other real estate owned $1,750 $514
Fixed asset charge-offs and depreciation expense
applied against reserves 186 37
The acquisition of First Counties Bank
involved the following:
Common stock issued 19,723 --
Liabilities assumed 82,356 --
Fair value of assets acquired, other than cash
and cash equivalents (86,671) --
Goodwill (9,577) --
Core deposit intangible (2,797) --
- ---------------------------------------------------------------------------------------------
Net cash and cash equivalents received $3,034 $--
- ---------------------------------------------------------------------------------------------
Supplemental disclosure of cash flow activity:
Unrealized (loss) gain on securities available for sale $2,975 ($18,452)
Interest paid for the period 64,920 58,877
Income tax payments for the period 25,938 28,790
Tax benefit from stock options exercised 2,910 2,029
=============================================================================================
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
- ---------------------------------------
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- ---------------------------------------------
In addition to historical information, this discussion includes
certain forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. The Company'sWestamerica
Bancorporation (the "Company") actual results may differ materially
from those included in the forward-looking statements. The
forward-looking statements involve risks and uncertainties which
include, but are not limited to, changes in general economic
conditions; competitive conditions in the geographic and business
areas in which the Company conducts its operations; regulatory or
tax changes that affect the cost of or demand for the Company's
products; the resolution of legal proceedings and related matters.
The reader is directed to Westamerica Bancorporation's annual
report on Form 10-K for the year ended December 31, 1999,
particularly the section entitled "Cautionary Statement," for the
purpose of the Safe Harbor provisions of the Private Securities
Litigation Reform Act of 1995 for a discussion of factors which
could affect the Company's business and cause actual results to
differ materially from those expressed in any forward-looking
statement made in this report. For further information on the
subject, please refer to the "Forward-Looking Statement Disclosure"
section of this report.
On July 31, 2000, the Company opened for business three Money
Outlet Inc., stores, a newly created subsidiary engaged in, but not
limited to, the business of selling checks, drafts, or money
orders, or receiving money as agent of an obligor for the purpose
of paying bills of such obligor or to receive money for the purpose
of forwarding it to others in payment of utility bills and other
obligations.
On August 17, 2000, the Company finalized the acquisition of First
Counties Bank ("FCB"), a five-branch financial institution
headquartered in Lake County, California. At the time of the
acquisition, FCB had approximately total assets of $90 million,
total loans of $70 million and total deposits of $80 million.
Pursuant to the terms of the merger agreement, each outstanding
share of FCB's common stock was exchanged for .8035 shares of the
Company's common stock. Based on the closing price of $29.38 of the
Company's common stock on August 16, 2000, the acquisition was
valued at approximately $19.7 million. The acquisition was recorded
under the purchase method of accounting. Under purchase accounting
the Company recorded goodwill and a core deposit intangible of $9.6
million and $2.8 million, respectively. The goodwill is being
amortized over a period of 25 years and the core deposit intangible
is being amortized over a period that approximates the runoff of
FCB's deposit base. Subsequent to the acquisition, FCB became a
subsidiary of the Company. For more information on the subject,
please refer to report on Form 8-K on the subject, filed by the
Company on August 22, 2000.
During the third quarter of 2000, the Company merged its subsidiary
banks with and into Westamerica Bank, as follows: Bank of Lake County
on August 18, and FCB on September 15.
General
Westamerica Bancorporation, (the "Company"), parent company of Westamerica Bank,
Bank of Lake County, Community Banker Services Corporation, and Westamerica Commercial
Credit, Inc., and Money Outlet, Inc., reported secondthird quarter 2000
net income of $19.7$20.1 million or $.54$.55 diluted earnings per share.
These results compare to net income of $18.9$19.3 million or $.48 diluted$.50
earnings per share for the firstthird quarter of 1999. On a year-to-date
basis, the Company reported net income of $38.9$59.0 million
representing $1.05 diluted$1.60 earnings per share, compared to $37.3$56.6 million or
$.93$1.43 per share for the same period of 1999.
Following is a summary of the components of net income for
the periods indicated:
- ------------------------------------------------------------------------------------
For the three For the six
months ended months ended
June 30, June 30,
-------------------------------------------
(In millions) 2000 1999 2000 1999
- ------------------------------------------------------------------------------------
Net interest income* $47.6 $47.7 $94.9 $95.3
Provision for loan losses (0.9) (1.2) (1.9) (2.4)
Non-interest income 10.5 9.6 20.4 18.8
Non-interest expense (24.7) (24.7) (49.1) (49.7)
Provision for income taxes* (12.8) (12.5) (25.4) (24.7)
- ------------------------------------------------------------------------------------
Net income $19.7 $18.9 $38.9 $37.3
====================================================================================
Average total assets $3,840.1 $3,816.8 $3,831.3 $3,795.6
Net income (annualized) as
a percentage of average
total assets 2.06% 1.98% 2.04% 1.98%
====================================================================================- -------------------------------------------------------------------------------
For the three For the nine
months ended months ended
September 30, September 30,
-------------------------------------------------
(In millions) 2000 1999 2000 1999
- -------------------------------------------------------------------------------
Net interest income* $49.2 $48.3 $144.1 $143.6
Provision for loan losses (0.9) (1.2) (2.8) (3.6)
Non-interest income 10.8 9.9 31.2 28.7
Non-interest expense (25.6) (24.8) (74.7) (74.5)
Provision for income taxes* (13.4) (12.9) (38.8) (37.6)
- -------------------------------------------------------------------------------
Net income $20.1 $19.3 $59.0 $56.6
===============================================================================
Average total assets $3,913.4 $3,839.0 $3,858.7 $3,810.1
Net income (annualized) as
a percentage of average
total assets 2.05% 1.99% 2.04% 1.98%
===============================================================================
* Fully taxable equivalent basis (FTE)
During the secondthird quarter of 2000, the Company's net income was
$19.7$20.1 million, $800 thousand higher than the same period in 1999.
Improvements in non-interestnet interest income, and a lower loan loss provision
from continued improvements in credit quality and higher
non-interest income were partially offset by small reductionan increase in
non-interest expense. All of these changes include the effect of
FCB's acquisition, as increases in earning assets and deposits are
reflected in the improved net interest income, mainly resulting from
increased cost of fundsa larger deposit
based resulted in connection with increaseshigher service charge income, and additional
personnel and facilities costs inflated non-interest expenses.
One-time merger-related costs are also included in higher-costing short-term borrowings and interest-bearing
liabilities rate, partially offset by higher earning-asset volume
and yields and higher volume of non-interest bearing demand
deposits.the current
quarter.
Comparing the first sixnine months of 2000 to the prior year, net
income increased $1.6$2.4 million. Included in this change are higher
service fees and feeother non-interest income, lower operating costsincreased net interest
income from increases in earning assets and low-cost deposits
volume partially offset by a larger increase in the cost of funds
than asset yields, and lower loan loss provision, partially offset
by lower net interest income primarily
due to ana small increase in high-cost sort-term borrowed funds partially
offset by higher earning-asset and non-interest bearing demand
deposit average balances.expense.
Higher income tax provisions in the secondthird quarter and the first
sixnine months of 2000 compared to the same periods in 1999 are mainly
a result of higher pretax earnings.
Net Interest Income
- -------------------
Following is a summary of the components of net interest income
for the periods indicated:
- ------------------------------------------------------------------------------------
For the three For the six
months ended months ended
June 30, June 30,
-------------------------------------------
(In millions) 2000 1999 2000 1999
- ------------------------------------------------------------------------------------
Interest income 66.2 64.0 131.2 127.6
Interest expense (22.1) (19.4) (43.2) (38.3)
FTE adjustment 3.5 3.1 6.9 6.0
- ------------------------------------------------------------------------------------
Net interest income (FTE) $47.6 $47.7 $94.9 $95.3
====================================================================================
Net interest margin (FTE) 5.42% 5.45% 5.41% 5.49%
====================================================================================
Net Interest Income
Following is a summary of the components of net interest income
for the periods indicated:
- -------------------------------------------------------------------------------
For the three For the nine
months ended months ended
September 30, September 30,
-------------------------------------------------
(In millions) 2000 1999 2000 1999
- -------------------------------------------------------------------------------
Interest income 68.6 $64.9 199.8 $192.5
Interest expense (22.9) (19.8) (66.1) (58.1)
FTE adjustment 3.5 3.2 10.4 9.2
- -------------------------------------------------------------------------------
Net interest income (FTE) $49.2 $48.3 $144.1 $143.6
===============================================================================
Net interest margin (FTE) 5.48% 5.45% 5.43% 5.48%
===============================================================================
The Company's primary source of revenue is net interest income, or
the difference between interest income on earning assets and
interest expense on interest-bearing liabilities. Net interest
income (FTE) during the secondthird quarter of 2000 decreased $100increased $900 thousand
from the same period in 1999 to $47.6$49.2 million. Comparing the first sixnine
months of 2000 with the previous year, net interest income
(FTE) decreased $400increased $500 thousand.
Interest Income
During the secondthird quarter of 2000 interest income (FTE) increased
$2.6$3.7 million from the same period in 1999. Higher earning-asset
yields and average balances were the primary reasons for the change.
Loan yields increased 29 basis points1999 resulting from prior year, mostly in
categories where loans are tied to the prime rate which, on average,
rose 150 basis points from the second quarter of 1999. In addition,
following market trends, investment securities yields rose 19 basis
points from 1999. Adding to the
favorable impact of increased earning-asset volume combined with
higher yields,
averageyields. rates, in part offset by increased earning-asset
yields. Average earning-asset balances increased $22.0$57.8 million from
the secondthird quarter of 1999, as an increase in average loans of
$32.5$112.3 million, particularly in the indirect consumer lending and
commercial categories, was partially offset by a $10.5decrease of $54.5
million decrease in average investment securities balances. TheAdding to the
favorable impact of higher volumes, loan yields increased 35 basis
points from the third quarter of 1999. All categories of loans
benefited from higher market rates, particularly those carrying
shorter terms and tied to the prime rate which, on average, rose
140 basis points from the third quarter of 1999. In addition,
reflecting market trends, investment securities yields rose 22
basis points from 1999; however, the favorable effect of this
increase was impacted unfavorably by the decline in loanaverage
balances, was
mainly concentrated in the sought-after indirect lending and
commercial loans with real estate collateral categories, partially
offset by decreases in commercial, construction, real estate
residential and direct consumer loans. The decrease in the
investment securities portfolio is the result of runoffs in U.S.
Treasury, participation certificates, asset backedasset-backed and corporate securities, partially offset by increases in U.S. Agency and
tax-free securities.
Comparing the first sixnine months of 2000 with the same period in
1999, interest income (FTE) increased $4.5$7.3 million. The effect of a
1521 basis point increase in average yields combined with a $41.7$47.1
million increase in earning-assets average balances and a $55.4
million reduction in interest-bearing liabilities average balances,
was partially offset by a 24 basis point increase in the cost of
funds, reflective of thebalances. The rising
rate environment experienced during the first sixnine months of 2000. This trend was followed by2000
resulted in a 127 basis point increase in the Company's average
index rate which increased 121 basis points from the first sixnine months of 1999. Higher earning-asset
average balances were comprised ofincluded a $26.4$55.1 million increase in average loan
balances, particularly in commercial real estate and indirect
consumer lending, partially offset by decreases in the commercial,
real estate and other consumer categories, and a $15.3categories. The increase in loans
was in part offset by an $8.0 million increasenet decrease in investment
securities average balances, withas balance run-offs in asset-backed,
corporate, U.S. Treasury and participation certificates were
partially offset by increases in U.S. AgencyAgencies and tax-free
securities, in part offset by runoffs
in U.S. Treasury, participation certificates, asset-backed and
corporate securities.
Interest Expense
For the secondthird quarter of 2000 interest expense was $2.7$3.1 million
higher than the secondthird quarter of 1999. Following a general increase
in rates paid on deposits and borrowed funds reflective of a general increaserising
market rates,rate environment, total interest-bearing liability rates
increased 5248 basis points from the secondthird quarter of 1999. The
adverse effect onA small
net interest incomeincrease in the average balance of interest-bearing liabilities
rate increases wasresulted from a $19.1 million increase in lower-costing
interest-bearing deposits partially offset by a $84.6an $18.7 million
reductiondecrease in the corresponding average balances, including a
reduction of $142.6 million in interest-bearing deposits, and
smaller reductions inhigher-costing short-term borrowings, debt financing
and long-term debt of $5.0
million and $4.0 million, respectively, partially offset by an
increase of $66.9 million in short-term borrowed funds.debt. In addition, interest-free demand deposits
increased $143.1$76.0 million from 1999, largely the second quarterresult of 1999, which includes the
transfer, during the third quarter of 1999, of certain
interest-bearing transaction deposits into the non-interest bearing
category.
Interest expense increased $4.9$8.0 million from the first sixnine months
of 1999, as an increase of 4344 basis points on the rates paid on
interest-bearing liabilities was partially offset by a $55.4$36.8
million decrease in interest-bearing liability average balances and
a $132.2$113.5 million increase in interest-free demand deposits, which
includes the above-mentioned transfer of certain interest-bearing
transaction deposits into the non-interest bearing category. The
decrease in the average balance of interest-bearing liabilities
includes a reduction of $136.2$84.4 million in deposits, reductionsa combined
reduction in debt financing and long-term debt of $5$10.5 million and $3.7 million,
respectively, in
part compensated by an increase in short-term fundings of $89.5$58.1
million. Reflecting market conditions, rates paid on deposits and
borrowed funds increased in almost all categories, with the
exception of long-term certificates of deposits and core savings
and other money market saving deposits.
In all periods, the Company has attempted continuously to reduce
high-rate time deposits while increasing the balances of more
profitable, lower-cost transaction accounts minimizing the effect
of adverse cyclical quarterly trends.
Net Interest Margin (FTE)
- -------------------------
The following summarizes the components of the Company's net
interest margin for the periods indicated:
- ------------------------------------------------------------------------------------
For the three For the six
months ended months ended
June 30, June 30,
-------------------------------------------
(In millions) 2000 1999 2000 1999
- ------------------------------------------------------------------------------------
Yield on earning assets 7.93% 7.67% 7.86% 7.71%
Rate paid on interest-bearing
liabilities 3.44% 2.92% 3.36% 2.93%
- ------------------------------------------------------------------------------------
Net interest spread 4.49% 4.75% 4.50% 4.78%
Impact of all other net
non-interest bearing funds 0.93% 0.70% 0.91% 0.71%
- ------------------------------------------------------------------------------------
Net interest margin 5.42% 5.45% 5.41% 5.49%
====================================================================================
Distribution of assets, liabilities and shareholders' equity:
For the three months ended
June 30, 2000
- ------------------------------------------------------------------------------------
Interest Rates
Average income/ earned/
(Dollars in thousands) balance expense paid
- ------------------------------------------------------------------------------------
Assets
Money market assets and funds sold $411 $2 2.14 %
Investment securities:
Available for sale
Taxable 749,045 11,385 6.11
Tax-exempt 221,232 4,238 7.70
Held to maturity
Taxable 80,270 1,274 6.38
Tax-exempt 155,479 3,096 8.01
Loans:
Commercial 1,485,258 32,645 8.84
Real estate construction 43,705 1,381 12.71
Real estate residential 331,997 5,750 6.97
Consumer 457,800 9,893 8.69
- --------------------------------------------------------------------------
Earning assets 3,525,197 69,664 7.93
Other assets 314,906
- ---------------------------------------------------------------
Total assets $3,840,103
===============================================================
Liabilities and shareholders' equity
Deposits:
Non-interest bearing demand $937,523 $-- -- %
Savings and interest-bearing
transaction 1,322,227 5,434 1.65
Time less than $100,000 383,091 4,720 4.96
Time $100,000 or more 444,221 6,115 5.54
- --------------------------------------------------------------------------
Total interest-bearing deposits 2,149,539 16,269 3.04
Short-term borrowed funds 385,736 5,145 5.36
Debt financing and notes payable 38,036 679 7.17
- --------------------------------------------------------------------------
Total interest-bearing liabilities 2,573,311 22,093 3.44
Other liabilities 31,184
Shareholders' equity 298,085
- ---------------------------------------------------------------
Total liabilities and shareholders' equity $3,840,103
===============================================================
Net interest spread (1) 4.49 %
Net interest income and interest margin (2) $47,571 5.42 %
====================================================================================Net Interest Margin (FTE)
The following summarizes the components of the Company's net
interest margin for the periods indicated:
- -------------------------------------------------------------------------------
For the three For the nine
months ended months ended
September 30, September 30,
-------------------------------------------------
(In millions) 2000 1999 2000 1999
- -------------------------------------------------------------------------------
Yield on earning assets 8.02% 7.68% 7.91% 7.70%
Rate paid on interest-bearing
liabilities 3.50% 3.02% 3.41% 2.96%
- -------------------------------------------------------------------------------
Net interest spread 4.52% 4.66% 4.50% 4.74%
Impact of all other net
non-interest bearing funds 0.96% 0.79% 0.93% 0.74%
- -------------------------------------------------------------------------------
Net interest margin 5.48% 5.45% 5.43% 5.48%
===============================================================================
During the third quarter of 2000, and benefiting from a strong
increase in net non-interest bearing funds, the Company's net
interest margin increased 3 basis points when compared to the third
quarter of 1999. The unfavorable impact of a 48 basis point
increase in the average rate paid on interest bearing liabilities,
triggered by market trends, was partially offset by the effect of
an increase of 34 basis points in earning-asset yields. In
addition, the net interest margin was favorably impacted by the
effect of a 17 basis points increase resulting from higher volume
of net non-interest bearing funds. This change reflects mostly a
$76.0 million increase in interest-free demand deposit accounts,
partially offset by the effect of a $4.2 million decrease in
average equity capital from the third quarter of 1999. The decrease
in equity was the net result of the Company's share repurchase
programs which more than offset capital contributions resulting
from FCB's acquisition and higher net income.
On a year-to-date basis, the net interest margin decreased 5 basis
points when compared to the same period in 1999. The net effect of
a more rapid rise in the cost of funds than the yield on earning
assets - a 45 basis point increase in the rates paid on
interest-bearing liabilities and a 21 basis point increase in
earning-asset yields - was partially offset by the favorable impact
on the interest margin resulting from higher average balances
of net non-interest bearing funds combined with higher market
rates.
Summary of Average Balances, Yields/Rates and Interest Differential
The following tables present, for the periods indicated,
information regarding the Company's consolidated average assets,
liabilities and shareholders' equity, the amounts of interest
income from average earning assets and the resulting yields, and
the amount of interest expense paid on interest-bearing
liabilities. Average loan balances include non-performing loans.
Interest income includes proceeds from loans on non-accrual status
only to the extent cash payments have been received and applied as
interest income. Yields on securities and certain loans have been
adjusted upward to reflect the effect of income thereon exempt from
federal income taxation at the current statutory tax rate.
Distribution of assets, liabilities and shareholders' equity:
- -------------------------------------------------------------------------------
For the three months ended
September 30, 2000
- -------------------------------------------------------------------------------
Interest Rates
Average income/ earned/
(Dollars in thousands) balance expense paid
- -------------------------------------------------------------------------------
Assets
Money market assets and cash equivalent $803 $9 4.46 %
Investment securities:
Available for sale
Taxable 723,950 11,098 6.10
Tax-exempt 223,571 4,317 7.68
Held to maturity
Taxable 78,897 1,276 6.43
Tax-exempt 153,225 3,053 7.93
Loans:
Commercial
Taxable 1,346,759 30,361 8.97
Tax-exempt 180,640 3,469 7.64
Real estate construction 52,107 1,606 12.26
Real estate residential 343,648 6,222 7.20
Consumer 483,128 10,692 8.80
- -----------------------------------------------------------------
Earning assets 3,586,728 72,103 8.02
Other assets 326,637
- -----------------------------------------------------
Total assets $3,913,365
=====================================================
Liabilities and shareholders' equity
Deposits:
Non-interest bearing demand $964,928 $-- -- %
Savings and interest-bearing
transaction 1,371,649 5,950 1.73
Time less than $100,000 390,340 5,094 5.19
Time $100,000 or more 468,588 6,744 5.73
- -----------------------------------------------------------------
Total interest-bearing deposits 2,230,577 17,788 3.17
Short-term borrowed funds 336,524 4,548 5.38
Debt financing and notes payable 32,391 582 7.15
- -----------------------------------------------------------------
Total interest-bearing liabilities 2,599,492 22,918 3.50
Other liabilities 32,032
Shareholders' equity 316,913
- -----------------------------------------------------
Total liabilities and
shareholders' equity $3,913,365
=====================================================
Net interest spread (1) 4.52 %
Net interest income and interest margin (2) $49,185 5.48 %
===============================================================================
(1) Net interest spread represents the average yield earned on
interest-earning assets less the average rate paid on
interest-bearing liabilities.
(2) Net interest margin is computed by calculating the difference
between the weighted average yields on earning assets less the
interest expense (annualized) divided by the average balance of
earning assets.
Distribution of assets, liabilities and shareholders' equity:
For the three months ended
June 30, 1999
- ------------------------------------------------------------------------------------
Interest Rates
Average income/ earned/
(Dollars in thousands) balance expense paid
- ------------------------------------------------------------------------------------
Assets
Money market assets and funds sold $250 $-- -- %
Investment securities:
Available for sale
Taxable 780,858 11,683 6.00
Tax-exempt 200,448 3,759 7.52
Held to maturity
Taxable 88,014 1,340 6.11
Tax-exempt 147,333 2,823 7.69
Loans:
Commercial 1,495,161 31,673 8.50
Real estate construction 51,793 1,440 11.15
Real estate residential 356,681 6,131 6.89
Consumer 382,614 8,195 8.59
- --------------------------------------------------------------------------
Earning assets 3,503,152 67,044 7.67
Other assets 313,653
- ---------------------------------------------------------------
Total assets $3,816,805
===============================================================
Liabilities and shareholders' equity
Deposits:
Non-interest bearing demand $794,454 $-- -- %
Savings and interest-bearing
transaction 1,448,778 5,833 1.61
Time less than $100,000 414,044 4,481 4.34
Time $100,000 or more 429,267 4,790 4.48
- --------------------------------------------------------------------------
Total interest-bearing deposits 2,292,089 15,104 2.64
Short-term borrowed funds 318,798 3,434 4.32
Debt financing and notes payable 47,050 822 7.01
- --------------------------------------------------------------------------
Total interest-bearing liabilities 2,657,937 19,360 2.92
Other liabilities 28,717
Shareholders' equity 335,697
- ---------------------------------------------------------------
Total liabilities and shareholders' equity $3,816,805
===============================================================
Net interest spread (1) 4.75 %
Net interest income and interest margin (2) $47,684 5.45 %
====================================================================================Distribution of assets, liabilities and shareholders' equity:
- -------------------------------------------------------------------------------
For the three months ended
September 30, 1999
- -------------------------------------------------------------------------------
Interest Rates
Average income/ earned/
(Dollars in thousands) balance expense paid
- -------------------------------------------------------------------------------
Assets
Money market assets and funds sold $311 $-- 0.00 %
Investment securities:
Available for sale
Taxable 782,479 11,806 5.99
Tax-exempt 214,202 3,972 7.36
Held to maturity
Taxable 85,278 1,277 5.94
Tax-exempt 152,663 2,943 7.65
Loans:
Commercial
Taxable 1,350,466 29,132 8.56
Tax-exempt 152,825 3,140 8.15
Real estate construction 51,833 1,438 11.01
Real estate residential 341,335 5,872 6.83
Consumer 397,547 8,512 8.50
- -----------------------------------------------------------------
Earning assets 3,528,939 68,092 7.68
Other assets 310,066
- -----------------------------------------------------
Total assets $3,839,005
=====================================================
Liabilities and shareholders' equity
Deposits:
Non-interest bearing demand $888,966 $-- -- %
Savings and interest-bearing
transaction 1,380,415 5,773 1.66
Time less than $100,000 404,576 4,415 4.33
Time $100,000 or more 426,501 4,898 4.56
- -----------------------------------------------------------------
Total interest-bearing deposits 2,211,492 15,086 2.71
Short-term borrowed funds 341,135 3,893 4.53
Debt financing and notes payable 46,500 817 6.97
- -----------------------------------------------------------------
Total interest-bearing liabilities 2,599,127 19,796 3.02
Other liabilities 29,810
Shareholders' equity 321,102
- -----------------------------------------------------
Total liabilities and
shareholders' equity $3,839,005
=====================================================
Net interest spread (1) 4.65 %
Net interest income and interest margin (2) $48,296 5.45 %
===============================================================================
(1) Net interest spread represents the average yield earned on
interest-earning assets less the average rate paid on
interest-bearing liabilities.
(2) Net interest margin is computed by calculating the difference
between the weighted average yields on earning assets less the
interest expense (annualized) divided by the average balance of
earning assets.
Distribution of assets, liabilities and shareholders' equity:
For the six months ended
June 30, 2000
- ------------------------------------------------------------------------------------
Interest Rates
Average income/ earned/
(Dollars in thousands) balance expense paid
- ------------------------------------------------------------------------------------
Assets
Money market assets and funds sold $439 $6 2.83 %
Investment securities:
Available for sale
Taxable 758,358 23,034 6.11
Tax-exempt 220,941 8,430 7.67
Held to maturity
Taxable 81,057 2,519 6.25
Tax-exempt 155,369 6,131 7.94
Loans:
Commercial 1,484,251 64,688 8.76
Real estate construction 45,242 2,702 12.01
Real estate residential 333,720 11,529 6.95
Consumer 445,396 19,059 8.61
- --------------------------------------------------------------------------
Earning assets 3,524,773 138,098 7.86
Other assets 306,574
- ---------------------------------------------------------------
Total assets $3,831,347
===============================================================
Liabilities and shareholders' equity
Deposits:
Non-interest bearing demand $926,838 $-- -- %
Savings and interest-bearing
transaction 1,324,363 10,852 1.65
Time less than $100,000 387,655 9,331 4.84
Time $100,000 or more 447,880 11,955 5.37
- --------------------------------------------------------------------------
Total interest-bearing deposits 2,159,898 32,138 2.99
Short-term borrowed funds 377,847 9,654 5.14
Debt financing and notes payable 38,605 1,371 7.14
- --------------------------------------------------------------------------
Total interest-bearing liabilities 2,576,350 43,163 3.36
Other liabilities 31,437
Shareholders' equity 296,722
- ---------------------------------------------------------------
Total liabilities and shareholders' equity $3,831,347
===============================================================
Net interest spread (1) 4.50 %
Net interest income and interest margin (2) $94,935 5.41 %
====================================================================================Distribution of assets, liabilities and shareholders' equity:
- -------------------------------------------------------------------------------
For the nine months ended
September 30, 2000
- -------------------------------------------------------------------------------
Interest Rates
Average income/ earned/
(Dollars in thousands) balance expense paid
- -------------------------------------------------------------------------------
Assets
Money market assets and funds sold $560 $15 3.58 %
Investment securities:
Available for sale
Taxable 746,889 34,665 6.20
Tax-exempt 221,818 12,212 7.35
Held to maturity
Taxable 80,337 3,800 6.32
Tax-exempt 154,654 9,181 7.93
Loans:
Commercial
Taxable 1,327,718 88,567 8.91
Tax-exempt 170,916 9,952 7.78
Real estate construction 47,530 4,307 12.10
Real estate residential 337,029 17,750 7.03
Consumer 457,974 29,751 8.68
- -----------------------------------------------------------------
Earning assets 3,545,425 210,200 4.20
Other assets 313,262
- -----------------------------------------------------
Total assets $3,858,687
=====================================================
Liabilities and shareholders' equity
Deposits:
Non-interest bearing demand $939,535 $-- -- %
Savings and interest-bearing
transaction 1,340,125 16,802 1.67
Time less than $100,000 388,550 14,424 4.96
Time $100,000 or more 454,782 18,700 5.49
- -----------------------------------------------------------------
Total interest-bearing deposits 2,183,457 49,926 3.05
Short-term borrowed funds 364,073 14,202 5.21
Debt financing and notes payable 36,534 1,953 7.14
- -----------------------------------------------------------------
Total interest-bearing liabilities 2,584,064 66,081 3.41
Other liabilities 31,635
Shareholders' equity 303,453
- -----------------------------------------------------
Total liabilities and
shareholders' equity $3,858,687
=====================================================
Net interest spread (1) 0.79 %
Net interest income and interest margin (2) $144,119 5.43 %
===============================================================================
(1) Net interest spread represents the average yield earned on
interest-bearing liabilities.
(2) Net interest margin is computed by calculating the difference
between the weighted average yields on earning assets less the
interest expense (annualized) divided by the average balance of
earning assets.
Distribution of assets, liabilities and shareholders' equity:
For the six months ended
June 30, 1999
- ------------------------------------------------------------------------------------
Interest Rates
Average income/ earned/
(Dollars in thousands) balance expense paid
- ------------------------------------------------------------------------------------
Assets
Money market assets and funds sold $250 $-- -- %
Investment securities:
Available for sale
Taxable 769,766 23,181 6.07
Tax-exempt 195,992 7,352 7.56
Held to maturity
Taxable 88,426 2,772 6.32
Tax-exempt 146,456 5,599 7.71
Loans:
Commercial 1,483,719 62,729 8.53
Real estate construction 53,967 2,929 10.94
Real estate residential 364,843 12,648 6.99
Consumer 379,647 16,357 8.69
- --------------------------------------------------------------------------
Earning assets 3,483,066 133,567 7.71
Other assets 312,570
- ---------------------------------------------------------------
Total assets $3,795,636
===============================================================
Liabilities and shareholders' equity
Deposits:
Non-interest bearing demand $794,606 $-- -- %
Savings and interest-bearing
transaction 1,449,798 11,834 1.65
Time less than $100,000 419,014 9,208 4.43
Time $100,000 or more 427,296 9,524 4.49
- --------------------------------------------------------------------------
Total interest-bearing deposits 2,296,108 30,566 2.68
Short-term borrowed funds 288,326 6,093 4.26
Debt financing and notes payable 47,297 1,651 7.04
- --------------------------------------------------------------------------
Total interest-bearing liabilities 2,631,731 38,310 2.93
Other liabilities 30,016
Shareholders' equity 339,283
- ---------------------------------------------------------------
Total liabilities and shareholders' equity $3,795,636
===============================================================
Net interest spread (1) 4.78 %
Net interest income and interest margin (2) $95,257 5.49 %
====================================================================================Distribution of assets, liabilities and shareholders' equity:
- -------------------------------------------------------------------------------
For the nine months ended
September 30, 1999
- -------------------------------------------------------------------------------
Interest Rates
Average income/ earned/
(Dollars in thousands) balance expense paid
- -------------------------------------------------------------------------------
Assets
Money market assets and funds sold $271 $-- 0.00 %
Investment securities:
Available for sale
Taxable 774,003 34,986 6.04
Tax-exempt 202,062 11,325 7.49
Held to maturity
Taxable 87,377 4,048 6.19
Tax-exempt 148,525 8,542 7.69
Loans:
Commercial
Taxable 1,341,120 86,026 8.58
Tax-exempt 149,123 8,975 8.05
Real estate construction 53,255 4,367 10.96
Real estate residential 357,007 18,520 6.94
Consumer 385,614 24,870 8.62
- -----------------------------------------------------------------
Earning assets 3,498,357 201,659 4.07
Other assets 311,735
- -----------------------------------------------------
Total assets $3,810,092
=====================================================
Liabilities and shareholders' equity
Deposits:
Non-interest bearing demand $826,059 $-- -- %
Savings and interest-bearing
transaction 1,426,670 17,607 1.65
Time less than $100,000 414,201 13,622 4.40
Time $100,000 or more 427,031 14,423 4.52
- -----------------------------------------------------------------
Total interest-bearing deposits 2,267,902 45,652 2.69
Short-term borrowed funds 305,929 9,986 4.36
Debt financing and notes payable 47,032 2,468 7.02
- -----------------------------------------------------------------
Total interest-bearing liabilities 2,620,863 58,106 2.96
Other liabilities 29,947
Shareholders' equity 333,223
- -----------------------------------------------------
Total liabilities and
shareholders' equity $3,810,092
=====================================================
Net interest spread (1) 1.11 %
Net interest income and interest margin (2) $143,553 5.48 %
===============================================================================
(1) Net interest spread represents the average yield earned on
interest-earning assets less the average rate paid on
interest-bearing liabilities.
(2) Net interest margin is computed by calculating the difference
between the weighted average yields on earning assets less the
interest expense (annualized) divided by the average balance of
earning assets.
Rate and volume variances.variances
The following 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
for the periods indicated. Changes not solely attributable to
volume or rates have been allocated in proportion to the respective
volume and rate components.
- ------------------------------------------------------------------------------------
(In thousands) Three months ended
June 30, 2000
compared with three months
ended June 30, 1999
---------------------------
Volume Rate Total
- ------------------------------------------------------------------------------------
Increase (decrease) in
interest and fee income:
Money market assets and funds sold $0 $2 $2
Investment securities:
Available for sale
Taxable (550) 252 (298)
Tax-exempt 388 91 479
Held to maturity
Taxable (136) 70 (66)
Tax-exempt 155 118 273
Loans:
Commercial (191) 1,163 972
Real estate construction (561) 502 (59)
Real estate residential (448) 67 (381)
Consumer 1,603 95 1,698
- ------------------------------------------------------------------------------------
Total increase
in loans 403 1,827 2,230
- ------------------------------------------------------------------------------------
Total increase in interest
and fee income 260 2,360 2,620
- ------------------------------------------------------------------------------------
Increase (decrease) in interest expense:
Deposits:
Savings/interest-bearing (546) 147 (399)
Time less than $100,000 (268) 507 239
Time $100,000 or more 170 1,155 1,325
- ------------------------------------------------------------------------------------
Total (decrease) increase in
interest-bearing deposits (644) 1,809 1,165
- ------------------------------------------------------------------------------------
Short-term borrowed funds 795 916 1,711
Debt financing and notes payable (164) 21 (143)
- ------------------------------------------------------------------------------------
Total (decrease) increase in
interest expense (13) 2,746 2,733
- ------------------------------------------------------------------------------------
Increase (decrease) in
net interest income $273 ($386) ($113)
====================================================================================
- -------------------------------------------------------------------------------
Three months ended
September 30, 2000
compared with three months
ended September 30, 1999
----------------------------------------
(In thousands) Volume Rate Total
- -------------------------------------------------------------------------------
Increase (decrease) in
interest and fee income:
Money market assets and funds sold $4 $5 $9
Investment securities:
Available for sale
Taxable (946) 238 (708)
Tax-exempt 172 173 345
Held to maturity
Taxable 9 (10) (1)
Tax-exempt 10 100 110
Loans:
Commercial
Taxable (75) 1,304 1,229
Tax-exempt 502 (173) 329
Real estate construction 7 161 168
Real estate residential 38 312 350
Consumer 1,864 316 2,180
- -------------------------------------------------------------------------------
Total increase in loans 2,336 1,920 4,256
- -------------------------------------------------------------------------------
Total increase in interest
and fee income 1,585 2,426 4,011
- -------------------------------------------------------------------------------
Increase (decrease) in interest expense:
Deposits:
Savings/interest-bearing (33) 210 177
Time less than $100,000 (146) 825 679
Time $100,000 or more 513 1,333 1,846
- -------------------------------------------------------------------------------
Total decrease in
interest-bearing deposits 334 2,368 2,702
- -------------------------------------------------------------------------------
Short-term borrowed funds (51) 706 655
Debt financing and notes payable (257) 22 (235)
- -------------------------------------------------------------------------------
Total increase in
interest expense 26 3,096 3,122
- -------------------------------------------------------------------------------
Increase (decrease) in
net interest income (1) $1,559 ($670) $889
===============================================================================
(1) Amounts calculated on a fully taxable equivalent basis
using the current statutory federal tax rate.
Rate and volume variances.
- ------------------------------------------------------------------------------------
(In thousands) Six months ended
June 30, 2000
compared with six months
ended June 30, 1999
---------------------------
Volume Rate Total
- ------------------------------------------------------------------------------------
Increase (decrease) in
interest and fee income:
Money market assets and funds sold $0 $6 $6
Investment securities:
Available for sale
Taxable (242) 95 (147)
Tax-exempt 969 109 1,078
Held to maturity
Taxable (223) (30) (253)
Tax-exempt 359 173 532
Loans:
Commercial 25 1,934 1,959
Real estate construction (570) 343 (227)
Real estate residential (1,043) (76) (1,119)
Consumer 2,860 (158) 2,702
- ------------------------------------------------------------------------------------
Total increase in loans 1,272 2,043 3,315
- ------------------------------------------------------------------------------------
Total increase in interest
and fee income 2,135 2,396 4,531
- ------------------------------------------------------------------------------------
Increase (decrease) in interest expense:
Deposits:
Savings/interest-bearing (996) 14 (982)
Time less than $100,000 (527) 650 123
Time $100,000 or more 483 1,948 2,431
- ------------------------------------------------------------------------------------
Total (decrease) increase in
interest-bearing deposits (1,040) 2,612 1,572
- ------------------------------------------------------------------------------------
Short-term borrowed funds 2,143 1,418 3,561
Debt financing and notes payable (304) 24 (280)
- ------------------------------------------------------------------------------------
Total increase in
interest expense 799 4,054 4,853
- ------------------------------------------------------------------------------------
Increase (decrease) in
net interest income $1,336 ($1,658) ($322)
====================================================================================
Rate and volume variances.
- -------------------------------------------------------------------------------
Nine months ended
September 30, 2000
compared with nine months
ended September 30, 1999
----------------------------------------
(In thousands) Volume Rate Total
- -------------------------------------------------------------------------------
Increase (decrease) in
interest and fee income:
Money market assets and funds sold $7 $8 $15
Investment securities:
Available for sale
Taxable (1,225) 904 (321)
Tax-exempt 1,096 (209) 887
Held to maturity
Taxable (330) 82 (248)
Tax-exempt 364 275 639
Loans:
Commercial
Taxable (876) 3,417 2,541
Tax-exempt 1,267 (290) 977
Real estate construction (1,864) 1,804 (60)
Real estate residential (1,034) 264 (770)
Consumer 4,722 159 4,881
- -------------------------------------------------------------------------------
Total increase in loans 2,215 5,354 7,569
- -------------------------------------------------------------------------------
Total increase in interest
and fee income 2,127 6,414 8,541
- -------------------------------------------------------------------------------
Increase (decrease) in interest expense:
Deposits:
Savings/interest-bearing (1,069) 264 (805)
Time less than $100,000 (755) 1,557 802
Time $100,000 or more 988 3,289 4,277
- -------------------------------------------------------------------------------
Total (decrease) increase in
interest-bearing deposits (836) 5,110 4,274
- -------------------------------------------------------------------------------
Short-term borrowed funds 2,088 2,128 4,216
Debt financing and notes payable (560) 45 (515)
- -------------------------------------------------------------------------------
Total increase in
interest expense 692 7,283 7,975
- -------------------------------------------------------------------------------
Increase (decrease) in
net interest income $1,435 ($869) $566
===============================================================================
(1) Amounts calculated on a fully taxable equivalent basis
using the current statutory federal tax rate.
Provision for Loan Losses
- -------------------------
The level of the provision for loan losses during each of the
periods presented reflects the Company's continued efforts to
reduce credit costs by enforcingenforcement of
underwriting and administration proceduresstandards and aggressively pursuingaggressive collection
efforts with troubled debtors. The Company provided $925$905 thousand
for loan losses in the secondthird quarter of 2000, $270$290 thousand lower
than the same period of 1999; for the first sixnine months of 2000,
$1.9$2.8 million were provided, representing $520$810 thousand less than
the same period of 1999. For further information regarding net
credit losses and the reserveallowance for loan losses, see the "Asset
Quality" section of this report.
Non-interest Income
- -------------------
The following table summarizes the components of non-interest
income for the periods indicated.
- ------------------------------------------------------------------------------------
For the three For the six
months ended months ended
June 30, June 30,
-------------------------------------------
(In millions) 2000 1999 2000 1999
- ------------------------------------------------------------------------------------
Service charges on deposit
accounts $5.34 $4.99 $10.56 $9.80
Merchant credit card 1.02 0.82 1.96 1.67
Financial services
commissions 0.47 0.82 0.89 1.39
Debit card fees 0.35 0.07 0.56 0.07
Mortgage banking income 0.21 0.17 0.42 0.40
Trust fees 0.18 0.17 0.34 0.34
Other non-interest income 2.90 2.60 5.69 5.12
- ------------------------------------------------------------------------------------
Total $10.47 $9.64 $20.42 $18.79
====================================================================================
The $830following table summarizes the components of non-interest
income for the periods indicated.
- -------------------------------------------------------------------------------
For the three For the nine
months ended months ended
September 30, September 30,
-------------------------------------------------
(In millions) 2000 1999 2000 1999
- -------------------------------------------------------------------------------
Service charges on deposit
accounts $5.27 $5.10 $15.83 $14.90
Merchant credit card 1.05 0.98 3.01 2.65
Financial services
commissions 0.39 0.80 1.28 2.18
Debit card fees 0.27 0.16 0.83 0.23
Mortgage banking income 0.20 0.16 0.62 0.56
Trust fees 0.18 0.16 0.52 0.50
Other non-interest income 3.40 2.58 9.09 7.71
- -------------------------------------------------------------------------------
Total $10.76 $9.94 $31.18 $28.73
===============================================================================
The $820 thousand increase in non-interest income during the secondthird
quarter of 2000 compared to the secondthird quarter of 1999, was comprised primarilydue to
increases in all non-interest income categories, with the exception
of $350financial services commissions. The quarter year-to-year change
includes $170 thousand higher service charges on deposit accounts
including higher overdraft and returned item charges primarily due
to the effect of a program implemented in the third quarter of 1999
through which charges escalate following a tiered system based on
number of occurrences, $280occurrences; $110 thousand in higher debit card fees as
the new product, was launched in the second quarter of 1999, had not
yet reached full maturity during the third quarter of 1999; and it has yielded increasingly higher fees
since its implementation due to increasing usage, and $200$70
thousand higher merchant credit card income primarily due to
increased sales volume and fee repricing. In addition, mortgage
banking income increased $40 thousand from the $300same quarter of 1999
due to higher net gains on sales of loans in the secondary markets
and trust fees were $20 thousand higher than 1999. The $820
thousand higher other non-interest income includes $99$315 thousand
higher gains on sale of properties acquired in satisfaction of
debt, a $250 thousand recorded gain realized on the repurchase of
long-term indebtedness, $98 thousand higher safe deposit box fee
income, $81$69 thousand increased fees from issuing official checks
$72and $63 thousand higher settlement fees from ATM network servicers and $29 thousand higher gains on the sale of properties
acquired in satisfaction of debt.servicers.
Partially offsetting these changes, financial services commissions
were $350$410 thousand lower than the secondthird quarter of 1999, primarily
due to lower sales volumes.
Comparing the first sixnine months of 2000 to the same period in 1999,
non-interest income decreased $1.63increased $2.45 million. The largest single
contributor to this change is deposit accounts service fees, $760$930
thousand higher than prior year, in part due to the new overdraft
and returned item fee program put in effect during the third
quarter of 1999. In addition, other non-interest income was $570debit card fees were $600 thousand
higher than 1999, including $202 thousand higher safe
deposit box rental income, $146 thousand higher gains on the sale
of official checks due to increased commissions from changing to an
outside servicer, $135 thousand higher ATM related fees primarily
due to higher volume of activity and $52 thousand higher gains on
sales of properties acquired in satisfaction of debt. Completing
the year-to-date change from 1999, debit card income was $490
thousand higher than prior year as the new product was introducedlaunched during the second
quarter of 1999 and had not yet reached its full potential by the
third quarter of 1999; merchant credit card income was $290$360
thousand higher than the first sixnine months of 1999in the prior year due to
higherincreased volume of activity and fee repricing; and mortgage banking
income was $20$60 thousand higher than prior year1999 mainly due to $107$140
thousand higher net gains on the sale of loans in the secondary
markets, partially offset by $50 thousand lower retained servicing
fees and $32$30 thousand lower mortgage banking income due to
decreased refinancing volume.
Non-interest Expense
- --------------------
The following table summarizes the components of non-interest
expense for the periods indicated.
- ------------------------------------------------------------------------------------
For the three For the six
months ended months ended
June 30, June 30,
-------------------------------------------
(In millions) 2000 1999 2000 1999
- ------------------------------------------------------------------------------------
Salaries and incentives $10.11 $9.86 $19.68 $19.87
Other personnel 2.76 2.69 5.52 5.60
Occupancy 2.87 3.02 5.93 5.96
Equipment 1.54 1.71 3.16 3.45
Data processing services 1.51 1.50 3.05 2.96
Courier service 0.86 0.80 1.69 1.66
Postage 0.48 0.50 1.03 1.12
Professional fees 0.44 0.33 0.80 0.74
Merchant credit card 0.37 0.36 0.78 0.67
Stationery and supplies 0.33 0.39 0.73 0.76
Advertising/public relations 0.30 0.36 0.58 0.66
Loan expense 0.28 0.36 0.54 0.71
Operational losses 0.21 0.33 0.50 0.55
Other real estate owned 0.07 0.16 0.10 0.19
Other non-interest expense 2.54 2.36 5.00 4.80
- ------------------------------------------------------------------------------------
Total $24.67 $24.73 $49.09 $49.70
====================================================================================
Average full time equivalent staff 1,076 1,100 1,076 1,109
Non-interest expense to revenues
("efficiency ratio")(FTE) 42.50% 43.14% 42.55% 43.58%
====================================================================================
volume, and trust fees were $20 thousand
higher than the prior year. The $1.38 million increase in other
non-interest income category includes $370 thousand higher gains on
sales of properties acquired in satisfaction of debt, $300 thousand
higher safe deposit fee income, a $250 thousand recorded gain
realized on the repurchase of long-term indebtedness; $200 thousand
higher gains on the sale of official checks due to increased
commissions from changing to an outside servicer, and $200 thousand
higher income from ATM servicers primarily due to increased volume
of activity. Completing the changes from the first nine months of
2000 compared to the same period in 1999, financial services
commissions decreased $900 thousand mainly due to reduced sales
volumes.
Non-interest Expense
The following table summarizes the components of non-interest
expense for the periods indicated.
- -------------------------------------------------------------------------------
For the three For the nine
months ended months ended
September 30, September 30,
-------------------------------------------------
(In millions) 2000 1999 2000 1999
- -------------------------------------------------------------------------------
Salaries and incentives $10.24 $9.88 $29.91 $29.74
Other personnel 2.71 2.62 8.23 8.23
Occupancy 2.86 3.04 8.79 9.00
Equipment 1.74 1.72 4.90 5.17
Data processing services 1.50 1.49 4.55 4.45
Courier service 0.90 0.84 2.59 2.50
Postage 0.50 0.52 1.53 1.64
Professional fees 0.52 0.40 1.32 1.14
Merchant credit card 0.41 0.40 1.20 1.07
Stationery and supplies 0.43 0.42 1.16 1.18
Advertising/public relations 0.35 0.31 0.93 0.96
Loan expense 0.26 0.28 0.81 0.99
Operational losses 0.14 0.28 0.64 0.83
Other real estate owned 0.32 0.02 0.42 0.21
Other non-interest expense 2.72 2.54 7.71 7.35
- -------------------------------------------------------------------------------
Total $25.60 $24.76 $74.69 $74.46
===============================================================================
Average full time equivalent s 1,078 1,088 1,077 1,102
Non-interest expense to revenues
("efficiency ratio")(FTE) 42.70% 42.51% 42.61% 43.22%
===============================================================================
Non-interest expense of $24.67$25.60 million in secondthird quarter of 2000 was
$60$840 thousand lowerhigher than the same quarter in 1999, as1999. Although the
Company continued to control costs through efficiencies and
consolidation of operations, reflectedthe current quarter was impacted by
one-time costs associated to the acquisition of FCB. Included in
the continued improvements in the
efficiency ratio. Included in this change are $170$450 thousand lower
equipment expense, a result of lower depreciation costs mainly
because equipment acquired through mergers reached fully
depreciated lives, and lower service maintenance costs primarily
due renegotiated contracts, partially offset by increased repair
and maintenance costs; $150 thousand lower occupancy costs,higher employee related expenses
primarily due to lower rentaltermination agreements; $300 thousand higher
write-downs of properties acquired in satisfaction of debt to
reflect current market values; $120 thousand higher professional
fees, including higher legal expenses particularly concentrated
around problem credit issues; $60 thousand higher courier service
costs mostly due to reconfiguration
of facilities partially offset by increased leaseactivity to service additional branches; and
$40 thousand higher advertising/public relations expense lower
depreciationprimarily
due to increased advertising expenses related to assets reaching fully depreciated
lives and increased utilities and real estate taxes. Also includedthe Money Outlet,
Inc., the Company's new subsidiary, primarily engaged in this change are $120 thousand lower operational losses, mainly
due to controlled sundry lossesadvancing
cash in connection with fraudulent
activity at the branches; $90 thousand lower other real estate
owned costs, as properties continue to be sold and write-downs have
also decreased; $80 thousand lower loanexchange for postdated paychecks. In addition, equipment
expense due to the
implementation of stricter controls related to costs charged back
to customers; and $60 thousand, $30 thousand andwas $20 thousand lower
stationery and supplies costs, advertising/public relations
expenses and postage, respectively, primarily due to continuing
costs controls implemented by the Company. Partially offsetting
these changes, employee related costs were $320 thousand higher than the secondthird quarter of 1999,
primarily due to increased maintenance costs to upgrade hardware
and software to accommodate the merger of bank subsidiaries
partially offset by lower depreciation costs as certain assets,
after the mergers, became obsolete; and data processing, merchant
credit card and stationery and supplies expenses were $10 thousand,
each, higher than the same quarter in the prior year primarily due
to increased executive bonus accruals in anticipation of year-end 2000
payouts, and reduced deferralscosts related to costs originating new
loans; professional fees were $110additional programming efforts, volume, and
charge-offs of inventories, respectively, due to the recent
subsidiary bank mergers. The $180 thousand increase in other
non-interest expense includes $106 thousand higher amortization of
intangibles and $64 thousand increased assessments associated with
higher level of deposits: both changes are due to the acquisition
of FCB. Partially offsetting these changes, occupancy expense was
$180 thousand lower than the second
threefirst nine months of 1999 mostly from higher legal fees,primarily
due to increased mergerreduced rental of bank premises, mainly due to lease
expirations, and acquisitions related costslower depreciation expense, and expenses
resulting from problem credits; and courier costsoperational losses
were $60$140 thousand higher than the comparable period of prior year. Included in the
Other non-interest expense category, are higher customers checks
costslower, primarily due to lower rebatessundry losses
related to fraudulent activity at the branches and write-offs of
accounting differences. Completing the favorable changes from the issuer, higher seminarsprior
year, postage and employee education costs and higher costs incurred in the launching
of new products (debit card).
loan expense were $20 thousand, each, lower than
1999.
Comparing the first sixnine months of 2000 with 1999, non-interest
expense decreased $610increased $230 thousand. Equipment expense decreased $290Costs related to properties
acquired in satisfaction of debt were $210 thousand higher than
prior year primarily due to reduced depreciation costs as assets
added through acquisitions reach fully depreciated lives and lower
lease/maintenance costshigher write-downs resulting from
recent appraisals to adjust to current market values; professional
fees were $180 thousand higher primarily due to renegotiated contracts;increased legal
fees in connection with problem credits and the formation of the
Company's new subsidiary, Money Outlet, Inc., and higher accounting
and consulting costs associated with mergers and acquisitions;
employee related costs were lower by $270$170 thousand mainlyhigher, in part due to
reducedincreased employee benefits related to a new program implemented at
the beginning of 2000 and higher salaries including termination
agreements honored in 2000 associated with the acquisition of FCB,
partially offset by lower bonus accruals in 2000 as 1999 included an
adjustment to correct prior year's underaccruals, lower incentive payouts, lower payroll
taxes and lower expenses related to employer contributions and
administration of retirement and pension plans, partially offset by
increased group insurance costs and other performance-based
supplemental retirement program costs as well as lower deferrals in
connection with costs associated with originating new loans. In
addition, loan expense was $170 thousand lower than the first six
months of 1999, mostly due to lower appraisal fees, commissions and
repossession costs in part offset by increased credit report
expenses; postage was $90 thousand lower than 1999; and other real
estate owned expenses were also $90 thousand lower than prior year,
primarily due to lower write-downs and maintenance costs due to
fewer number of properties as the Company actively pursues to
reduce its number through sales. Other non-interest expense
categories lower than prior year include $80 thousand lower
advertising/public relations costs primarily due to reduced
expenses recorded in the first six months of 2000 related to the
production and distribution of shareholders' reports; $50 thousand
lower operational losses mostly due to reduced fraudulent activity
and sundry losses pending resolution, and $30 thousand, each, lower
occupancy and stationery and supplies costs, mostly due to lower
depreciation costs and purchases and usage of inventories,
respectively. Partially offsetting these changes from the first six
months of 1999,underaccruals; merchant credit
card expenses increased $110costs were $130 thousand primarilyhigher mainly due to higher volume
and fee restructuring; data processing servicescosts increased $90$100
thousand mainlyin part due to contract renegotiations with the Company's
principalprimary servicer; professional feesand courier costs were $60$90 thousand higher mostly fromthan
the first nine months of 1999 including costs related to servicing
higher legal
fees,number of branches. Included in the $360 thousand increase
in the other non-interest expense category, are $210 thousand
higher assessments primarily due to increased level of deposits,
and $106 thousand higher amortization of intangible assets,
resulting from the acquisition of FCB. Partially offsetting these
changes, equipment expense was $270 thousand lower than the first
nine months of 1999 primarily due to lower depreciation as assets
added through prior years' mergers reached fully depreciated lives;
occupancy costs were $210 thousand lower in part due to lower
depreciation expense, lower rental expense due to termination of
leases, and acquisitions related costsincreased sublease income mainly due to applied lease
cancellation charges and other corporate matters, includingManagement's increased efforts to sublet
properties tied to strict lease agreements; operational losses were
$190 thousand lower primarily due to reduced fraudulent activities
at the formationbranches and sundry losses pending resolution; and loan
expense was $180 thousand lower than the first nine months of 1999
primarily due lower appraisal and foreclosure charges partially
offset by higher credit report costs. Completing the Company's
new subsidiaries; andyear-to-date,
year-to-year non-interest expense changes, postage expense was $110
thousand lower than 1999; advertising/public relations expenses
were $30 thousand higher courier expenses.
Included inlower, primarily due to lower costs associated
with the $200 higher other non-interestpublication and mailing of shareholders' reports partially
offset by increased advertising costs related to Money Outlet,
Inc., and $20 thousand lower stationery and supplies expense
are
increased seminarsprimarily due to lower purchases and education costs and higher expenses in
connection with printing customers checks.usage of inventories.
Provision for Income Tax
- ------------------------
During the secondthird quarter of 2000, the Company recorded income tax
expense of $9.3$9.8 million, $200$55 thousand lowerhigher than the secondthird quarter
of 1999; on a year-to-date basis, income tax expense was $18.6$28.4
million for 2000 compared to $18.8$28.6 million in 1999. The current
provision represents an effective tax rate of 32.132.6 percent,
compared to 33.533.7 percent, for the secondthird quarter of 1999; for the
first sixnine months of 2000, the effective tax rate was 32.432.5 percent,
compared to 33.533.6 recorded in 1999. The provision for income taxes
for all periods presented is primarily attributable to the
respective level of earnings and the incidence of allowable
deductions, particularly higher revenues recognized from tax-exempt
loans and state and municipal securities.
Asset Quality
- -------------
The Company closely monitors the markets in which it conducts its
lending operations and continues its strategy to control exposure
to loans with high credit risk and increase diversification of
earning assets into less risky investments. Asset reviews are
performed using grading standards and criteria similar to those
employed by bank regulatory agencies. Assets receiving lesser
grades fall under the "classified assets" category, which includes
all non-performing assets and potential problem loans, and receive
an elevated level of attention to ensure collection.
The following is a summary of classified assets on the dates
indicated:
- -------------------------------------------------------------------------------------------------------------------------------------------
At
At JuneSeptember 30,December 31,
---------------- ----------------------------------------
(In millions) 2000 1999 1999
- -------------------------------------------------------------------------------------------------------------------------------------------
Classified loans $38.0 $45.7$37.3 $45.0 $41.3
Other classified assets 2.1 3.12.0 2.2 3.3
- -------------------------------------------------------------------------------------------------------------------------------------------
Total classified assets $40.1 $48.8$39.3 $47.2 $44.6
===========================================================================================================================================
Allowance for loan losses
as a as a percentage of
classified loans 137% 113%140% 115% 125%
===========================================================================================================================================
Classified loans at JuneSeptember 30, 2000, decreased $7.7 million or
17 percent to $38.0$37.3 million from JuneSeptember 30, 1999, reflecting the
continued enforcing of the Company's strict credit standards and a
continuing stronger economy. The decrease was principally due to
reductions of classified commercial and commercial real estate
loans. Other classified assets decreased $1.0 million$200 thousand from
JuneSeptember 30, 1999, due to sales and write-downs of properties
acquired in satisfaction of debt ("other real estate owned")
partially offset by new foreclosures on loans with real estate
collateral. The $3.3$4.0 million decrease in classified loans from
December 31, 1999, was principally due to reductions in commercial
and commercial real estate loans. The $1.2$1.3 million reduction in
other classified assets from December 31, 1999, was mainly due to
sales and write-downs of other real estate owned properties.
Non-performing Assets
- ---------------------
Non-performing assets include non-accrual loans, loans 90 days past
due as to principal or interest and still accruing, and other real
estate owned. Loans are placed on non-accrual status when reaching
90 days or more delinquent, unless the loan is well secured and in
the process of collection. Interest previously accrued on loans
placed on non-accrual status is charged against interest income. In
addition, loans secured by real estate with temporarily impaired
values and commercial loans to borrowers experiencing financial
difficulties are placed on non-accrual status even though the
borrowers continue to repay the loans as scheduled. Such loans are
classified as "performing non-accrual" and are included in total
non-performing assets. When the ability to fully collect
non-accrual loan principal is in doubt, cash payments received are
applied against the principal balance of the loan until such time
as full collection of the remaining recorded balance is expected.
Any subsequent interest received is recorded as interest income on
a cash basis.
The following is a summary of non-performing assets on the dates
indicated:
- -------------------------------------------------------------------------------------------------------------------------------------------
At
At JuneSeptember 30,December 31,
---------------- ----------------------------------------
(In millions) 2000 1999 1999
- -------------------------------------------------------------------------------------------------------------------------------------------
Performing non-accrual loans $6.61 $1.93$3.65 $3.08 $3.46
Non-performing,
non-accrual loans 2.05 7.375.19 6.63 5.50
- -------------------------------------------------------------------------------------------------------------------------------------------
Total non-accrual loans 8.66 9.308.84 9.71 8.96
Loans 90 days past due and
still accruing 0.21 0.420.53 0.52 0.58
- -------------------------------------------------------------------------------------------------------------------------------------------
Total non-performing loans 8.87 9.729.37 10.23 9.54
- -------------------------------------------------------------------------------------------------------------------------------------------
Restructured loans -- -- --
Other real estate owned 2.06 3.072.02 2.19 3.27
- -------------------------------------------------------------------------------------------------------------------------------------------
Total non-performing assets $10.93 $12.79$11.39 $12.42 $12.81
===========================================================================================================================================
Allowance for loan losses
as a percentage of
non-performing loans 588% 532%557% 505% 540%
==========================================================================
=================================================================
Performing non-accrual loans increased $4.68 million$570 thousand to $6.61$3.65
million at JuneSeptember 30, 2000, from $1.93$3.08 million at JuneSeptember 30,
1999, and $3.15 million$190 thousand from $3.46 million outstanding at December
31, 1999. Non-performing, non-accrual loans of $2.05$5.19 million at
JuneSeptember 30, 2000, decreased $5.32$1.4 million from JuneSeptember 30, 1999,
and $3.45 million$310 thousand from December 31, 1999. The increases in
performing non-accrual loans from prior periods presented resulted
primarily from the addition of commercial real estate loans, while the decrease
in non-performing non-accrual loans from prior year and prior
quarter-end reflects payoffs and sales of commercial and commercial
real estate loans. The $1.01 million and $1.21 million decreases
in other real estate owned balances from JuneSeptember 30 and December
31, 1999, respectively, were due to write-downs and liquidations
net of foreclosures of real estate properties acquired in
satisfaction of debt.
The amount of gross interest income that would have been recorded
for non-accrual loans for the three and sixnine months ended
June,September, 2000, if all such loans had been current in accordance
with their original terms, was $211$208 thousand and $440$373 thousand,
respectively, compared to $199$187 thousand and $351$538 thousand,
respectively, for the first three and sixnine months ended September of
1999. The amount of interest income that was recognized on
non-accrual loans from all cash payments, including those related
to interest owed from prior years, made during the three and sixnine
months ended JuneSeptember 30, 2000, totaled $252$160 thousand and $624$368
thousand, respectively, compared to $370$369 thousand and $482$851
thousand, respectively, for the comparable periods in 1999. These cash
payments represent annualized yields of 12.08 percent and 15.61
percent, respectively, for the first quarter and the first six
months of 2000 compared to 15.66 percent and 11.51 percent,
respectively, for the first three and six months of 1999. Total
cash payments received, including those recorded in prior years,periods,
which were applied against the book balance of non-accrual loans
outstanding at JuneSeptember 30, 2000, totaled approximately $401$563
thousand.
The overall credit quality of the loan portfolio continues to be
strong and improving; however, the total non-performing assets
could fluctuate from period to period. The performance of any
individual loan can be impacted by external factors such as the
interest rate environment or factors particular to the borrower.
The Company expects to maintain the level of non-performing assets;
however, the Company can give no assurance that additional
increases in non-accrual loans will not occur in the future.
Allowance for Loan Losses
- -------------------------
The Company's allowance for loan losses is maintained at a level
estimated to be adequate to provide for losses that can be
estimated based upon specific and general conditions. These include
credit loss experience, the amount of past due, non-performing and
classified loans, recommendations of regulatory authorities,
prevailing economic conditions and other factors. The allowance is
allocated to segments of the loan portfolio based in part on
quantitative analyses of historical credit loss experience, in
which criticized and classified loan balances are analyzed using a
linear regression model to determine standard allocation
percentages. The results of this analysis are applied to current
criticized and classified loan balances to allocate the reserve to
the respective segments of the loan portfolio. In addition, loans
with similar characteristics not usually criticized using
regulatory guidelines due to their small balances and numerous
accounts, are analyzed based on the historical rate of net losses
and delinquency trends, grouped by the number of days the payments
on these loans are delinquent. A portion of the allowance is also
allocated to impaired loans. Management considers the $52.1$52.2 million
allowance for loan losses, which constituted 2.212.12 percent of total
loans at JuneSeptember 30, 2000, to be adequate as a reserve against
inherent losses. However, while the Company's policy is to charge
off in the current period those loans on which the loss is
considered probable, the risk exists of future losses which cannot
be precisely quantified or attributed to particular loans or
classes of loans. Management continues to evaluate the loan
portfolio and assess current economic conditions that will dictate
future required allowance levels.
The following table summarizes the loan loss provision, net credit
losses and allowance for loan losses for the periods indicated:
- ------------------------------------------------------------------------------------
For the three For the six
months ended months ended
June 30, June 30,
-------------------------------------------
(In millions) 2000 1999 2000 1999
- ------------------------------------------------------------------------------------
Balance, beginning
of period $52.0 $51.7 $51.6 $51.3
Loan loss provision 0.9 1.2 1.9 2.4
Loans charged off (1.5) (2.3) (3.4) (3.7)
Recoveries of previously
charged-off loans 0.7 1.1 2.0 1.7
- ------------------------------------------------------------------------------------
Net credit losses (0.8) (1.2) (1.4) (2.0)
- ------------------------------------------------------------------------------------
Balance, end of period $52.1 $51.7 $52.1 $51.7
====================================================================================
Allowance for loan losses
as a percentage
of loans outstanding 2.21% 2.25%
===============================================================
- -------------------------------------------------------------------------------
For the three For the nine
months ended months ended
September 30, September 30,
-------------------------------------------------
(In millions) 2000 1999 2000 1999
- -------------------------------------------------------------------------------
Balance, beginning
of period $52.1 $51.7 $51.6 $51.3
Loan loss provision 0.9 1.2 2.8 3.6
Loans charged off (2.7) (2.3) (6.1) (6.1)
Recoveries of previously
charged-off loans 0.9 1.0 2.9 2.8
- -------------------------------------------------------------------------------
Net credit losses (1.8) (1.3) (3.2) (3.3)
FCB acquisition 1.0 -- 1.0 --
- -------------------------------------------------------------------------------
Balance, end of period $52.2 $51.6 $52.2 $51.6
===============================================================================
Allowance for loan losses
as a percentage
of loans outstanding 2.12% 2.22%
=====================================================
Asset and Liability Management
- ------------------------------
The fundamental objective of the Company's management of assets and
liabilities is to maximize economic value while maintaining
adequate liquidity and a conservative level of interest rate risk.
The primary analytical tool used by the Company to gauge interest
rate risk is a simulation model to project changes in net interest
income ("NII") that result from forecast changes in interest rates.
The analysis calculates the difference between a NII forecast over
a 12-month period using a flat interest rate scenario, and a NII
forecast using a rising or falling rate scenario where the Fed
Funds rate is made to rise or fall evenly by 200 basis points over
the 12-month forecast interval triggering a response in the other
forecasted rates. It is the policy of the Company to require that
such simulated NII changes should be always less than 10 percent or
steps must be taken to reduce interest-rate risk. According to the
same policy, if the simulated changes in NII reach 7.5 percent, a
closer look at the risk will be put in place to determine what
steps could be taken to control risk should it grow worse. The
results of the model indicate that the mix of interest rate
sensitive assets and liabilities at JuneSeptember 30, 2000 would not
result in a fluctuation of NII that would exceed the parameters
established by Company policy.
At JuneSeptember 30, 2000 and 1999, the Company had no derivative
financial instruments outstanding. As the Company believes that the
derivative financial instrument disclosures contained within the
notes to the financial statements of its 1999 Form 10-K
substantially conform with the accounting policy requirements of
these rule amendments, no further interim disclosure has been
provided. The rule amendments that require expanded disclosure of
quantitative and qualitative information about market risk were
effective with the 1997 Form 10-K. At JuneSeptember 30, 2000, there
were no substantial changes in the information on market risk that
was disclosed in the Company's Form 10-Ks since 1997.
Liquidity
- ---------
The Company's principal source of asset liquidity is marketable
investment securities available for sale. At JuneSeptember 30, 2000,
investment securities available for sale totaled $939$940 million,
representing a decrease of $73.0$74.0 million from JuneSeptember 30, 1999.
In addition, the Company generates significant liquidity from its
operating activities. The Company's profitability during the first
sixnine months of 2000 and 1999 generated substantial cash flows,
which are included in the totals provided from operations of $39.1$68.4
million and $47.6$71.4 million, respectively. Additional cash flows may
be provided by financing activities, primarily the acceptance of
deposits and borrowings from banks.
During the first sixnine months of 2000, the effect of the Company's
stock repurchase programs and dividends paid to shareholders were
$33.0 million and $13.2 million, respectively. These cash outflows,
added toCompany experienced a
$70.5 million reduction in short-term borrowed funds and
a $3.5 million reduction in long-term debt partially offset by a
$68.5$107.3 million increase in deposits andwhich, added to a $2.2$4.5 million
increase resulting from the issuance of new shares of common stock
primarily to meet stock option program requirements, are includedaccount for
cash provided by the Company's financing activities. These cash
inflows were offset by decreases in short- and long-term debt of
$127.9 million and $10.5 million, respectively, and the net
cash used in financing activities during the first six monthseffect of
2000, totaling $49.4 million. This compares to the first six months
of 1999, when the cash used in financing activities totaled $25.2
million. This amount includes cash outflows related to the
Company's
stock repurchase programs and dividends paid to shareholders of
$45.7$39.3 million and $12.7$20.0 million, respectively, in
addition to a $137.3 million reduction in deposit balances. These
uses of funds were partially offset by a $167.5 million increase in
short-term borrowings and a $4.0 million increase in equity from
the issuance of stock resulting from option exercises.respectively.
The Company uses cash flows from operating and financing activities
primarily to invest in loans and investment securities. Purchases
of investment securities net of maturities decreased $41.5$68.5 million
during the first sixnine months of 2000 compared to an increase of
$57.3$71.6 million during the comparable period in 1999. NetThe Company's
more aggressive loan marketing strategies resulted in increased net
loan disbursements, of loanswhich totaled $39.5$78.7 million and $3.6$29.2 million for
the first sixnine months of 2000 and 1999, respectively.
The Company anticipates increasing its cash level from operations
through 2000 due to increased profitability and retained earnings.
For the same period, it is anticipated that demand for loans will
continue to increase, particularly in the commercial and real
estate categories. The growth in deposit balances is expected to
follow the anticipated growth in loan balances.
Line of Credit
- --------------
On July 31, 1998, the Company entered into an agreement with a
well-established financial institution, establishing a line of
credit for general corporate purposes including the repurchase of
stock. The line of credit, which had a one-year term and an
available commitment ranging from $60.0 million to $37.5 million,
was canceled in the third quarter of 1999. The Company replaced this
available source of cash inflow with increased cash dividends from
its affiliates.
Capital Resources
- -----------------
The current and projected capital position of the Company and the
impact of capital plans and long-term strategies is reviewed
regularly by Management.
Since the beginning of 1994 and through JuneSeptember 30, 2000, the
Board of Directors of the Company has authorized the repurchase of
5,252,1508.0 million shares of the Company's common stock from time to time,
subject to appropriate regulatory and other accounting
requirements. The Company acquired 500,000628,000 shares of its common
stock in the open market during the first sixnine months of 2000,
(250,000(128,000 in the secondthird quarter), at an average price of approximately
of $27 per share, 1,000,000 in 1999, 996,000 in 1998, 1,040,886 in
1997, and 1,207,800, 721,350 and 93,000 in 1996, 1995 and 1994,
respectively. So far, these repurchases have been made periodically
in the open market with the intention to lessen the dilutive impact
of issuing new shares to meet stock performance, option plans,
acquisitions and other requirements.
In addition to these systematic repurchases, a new plan to
repurchase up to 1,750,000 of the Company's shares of common stock
(the "Program") was approved by the Board of Directors on August
26, 1999.24, 2000. The Company's strong capital position and healthy
profitability contributed to the initiationapproval of the Program, which
was being implemented to optimize the Company's use of equity
capital and enhance shareholder value. Pursuant toThe Program supercedes a
similar program previously in place as approved by the Program, the
Company repurchased 797,261Board of
Directors on August 26, 1999, under which 1,507,261 shares of its common stock during 1999 at an
average price of approximately $31$29 per share (40,000 for the third
quarter and 670,000
during710,000 for the first two quartersnine months of 2000) were
purchased in open market transactions. As of September 30, 2000,
(200,500 inthere had been no market share repurchases pursuant to the second
quarter), at an average price of approximately $26 per share.Program.
The Company's capital position represents the level of capital
available to support continued operations and expansion. The
Company's primary capital resource is shareholders' equity, which
was $294.1$331.3 million at JuneSeptember 30, 2000. This amount which is
reflectivereflects the
issuance of approximately 671,000 shares of common stock totaling
$19.7 million associated with the acquisition of FCB and the
generation and retention of earnings, partially offset by the
effect of common stock repurchases and dividends paid to shareholders partially offset by the generation and
retentionshareholders. The
level of earnings,equity at September 30, 2000 represents a decreasean increase of
$45.5$14.9 million or 135 percent from JuneSeptember 30, 1999, and a decreasean increase
of $6.5$30.7 million, or 210 percent, from December 31, 1999. As a
consequence of the decreaseincrease in shareholders' equity, the Company's
ratio of equity to total assets decreasedincreased to 7.588.32 percent at
JuneSeptember 30, 2000, from 8.788.13 percent and 7.72 percent at JuneSeptember
30 and December 31, 1999, respectively. The ratio of Tier I capital
to risk-adjusted assets was 9.8710.35 percent at JuneSeptember 30, 2000,
compared to 10.9510.24 percent at JuneSeptember 30, 1999, and 9.82 percent
at December 31, 1999. Total capital to risk-adjusted assets was
11.5111.76 percent at JuneSeptember 30, 2000, compared to 12.8712.16 percent at
JuneSeptember 30, 1999, and 11.75 percent at December 31, 1999.
The following summarizes the ratios of capital to risk-adjusted
assets for the periods indicated:
- ------------------------------------------------------------------------------------
At Minimum
At June 30, December 31, Regulatory
------------------- ------------ Capital
2000 1999 1999 Requirements
- ------------------------------------------------------------------------------------
Tier I Capital 9.87% 10.95% 9.82% 4.00%
Total Capital 11.51% 12.87% 11.75% 8.00%
Leverage ratio 7.60% 8.61%The following summarizes the ratios of capital to risk-adjusted
assets for the periods indicated:
- -----------------------------------------------------------------
At Minimum
At September 30, December 31, Regulatory
------------------ ------------- Capital
2000 1999 1999 Requirements
- -----------------------------------------------------------------
Tier I Capital 10.35% 10.24% 9.82% 4.00%
Total Capital 11.76% 12.16% 11.75% 8.00%
Leverage ratio 8.04% 7.96% 7.48% 4.00%
The risk-based Tier I capital ratios decreasedratio increased at JuneSeptember 30,
2000, compared to JuneSeptember 30 and December 31, 1999, primarily due
to the decreaseincrease in the total level of shareholders' equity due to
the Company'sFCB's acquisition and the generation and retention of earnings,
partially offset by common stock repurchases and dividends paid to
shareholders, partially offset by
increased net income. From December 31, 1999, the Tier I capital
ratio increased, as the favorable effect of net income and issuance
of stock due to option exercises, was partially offset by the
reduction in equity due to common stock repurchases and dividends
paid to shareholders; theshareholders. The reduction in the Total Capital ratio from
DecemberSeptember 31, 1999, includes a reduction in the allowable portion
of a subordinated capital note issued by Westamerica Bank, which is
discounted, for regulatory capital purposes, as it approaches
maturity. Capital ratios are reviewed by Management on a regular
basis to ensure that capital exceeds the prescribed regulatory
minimums and is adequate to meet the Company's future needs. As
shown in the table above, all ratios are in excess of the
regulatory definition of "well capitalized".
Forward-Looking Statement Disclosure
- ------------------------------------
Readers are cautioned that forward-looking statements contained in
this report should be read in conjunction with the Company's
disclosures under the heading "Cautionary Statement for the
Purposes of the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995."
Cautionary Statement for the Purposes of the Safe Harbor Provisions
of the Private Securities Litigation Reform Act of 1995."
The Company is including the following cautionary statement to take
advantage of the "Safe Harbor" provisions of the Private Securities
Litigation Reform Act of 1995 for any forward-looking statement
made by, or on behalf of, the Company. The factors identified in
this cautionary statement are important factors (but not
necessarily all important factors) that could cause actual results
to differ materially from those expressed in any forward-looking
statement made by, or on behalf of, the Company.
Where any such forward-looking statement includes a statement of
the assumptions of bases underlying such forward-looking statement,
the Company cautions that, while it believes such assumptions or
bases to be reasonable and makes them in good faith, assumed facts
or bases almost always vary from actual results, and the
differences between assumed facts or bases and actual results can
be material, depending on the circumstances. Where, in any
forward-looking statement, the Company, expresses an expectation or
belief as to future results, such expectation or belief is
expressed in good faith and believed to have a reasonable basis,
but there can be no assurance that the statement of expectation or
belief will result, or be achieved or accomplished.
Interim Periods
- ---------------
In June, 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 133 "Accounting for
Derivative Instruments and Hedging Activities" ("SFAS 133"), which
amends the disclosure requirements of Statement No. 52, "Foreign
Currency Translations" and of Statement No. 107, "Disclosures about
Fair Value of Financial Instruments." Under the provisions of SFAS
133, the Company is required to recognize all derivatives as either
assets or liabilities in the statement of financial condition and
measure those instruments at fair value. If certain conditions are
met, a derivative may be specifically designated as (a) a hedge of
the exposure to changes in the fair value of a recognized asset or
liability or an unrecognized firm commitment, (b) a hedge of the
exposure to variable cash flows of a forecasted transaction, or (c)
a hedge of the foreign currency exposure of a net investment in a
foreign operation, an unrecognized firm commitment, an
available-for-sale security or a foreign-currency-denominated
forecasted transaction. The accounting for changes in the fair
value of a derivative (that is, gain and losses) depends on the
intended use of the derivative and the resulting operation. SFAS
No. 133 would have been effective for all fiscal years beginning
after June 15, 1999, except that SFAS No. 137 ("Accounting for
Derivative Instruments and Hedging Activities -- Deferral of the
Effective Date of SFAS No. 133") delayed the effective date of SFAS
No. 133 for one year. The effective date is for all fiscal quarters
beginning after all fiscal years after June 30, 2000. Earlier
application is permitted. Certain sections of SFAS No. 133 were
amended in June, 2000, when the FASB issued SFAS No. 138, an
amendment of SFAS No. 133, which nullifies or modifies the
consensuses reached in a number of issues addressed by the emerging
issues task force. Retroactive application of SFAS No. 133 is not
permitted. The Company does not believe that the adoption of SFAS
133 will have a material impact on its financial statements.
On March 31, 2000, the Financial Accounting Standards Board
("FASB") issued FASB Interpretation No. 44, "Accounting for Certain
Transactions Involving Stock Compensation - an interpretation of
APB Opinion No. 25." This Interpretation provides guidance for
issues that have arisen in applying APB Opinion No. 25 Accounting
for Stock Issued to Employees. FIN 44 applies prospectively to new
awards, exchanges of awards in a business combination,
modifications to outstanding awards, and changes in grantee status
that occur on or after July 1, 2000, except for the provisions
related to repricing and the definition of an employee which apply
to awards issued after December 15, 1998. The provisions related to
modifications to fixed stock option awards are effective for awards
modified after January 12, 2000.
Forward-Looking Statement Disclosure
Readers are cautioned that forward-looking statements contained in
this report should be read in conjunction with the Company's
disclosures under the heading "Cautionary Statement for the
Purposes of the Safe Harbor Provisions of the Private Securities
Litigation Reform Act of 1995."
Cautionary Statement for the Purposes of the Safe Harbor Provisions
of the Private Securities Litigation Reform Act of 1995."
The Company is including the following cautionary statement to take
advantage of the "Safe Harbor" provisions of the Private Securities
Litigation Reform Act of 1995 for any forward-looking statement
made by, or on behalf of, the Company. The factors identified in
this cautionary statement are important factors (but not
necessarily all important factors) that could cause actual results
to differ materially from those expressed in any forward-looking
statement made by, or on behalf of, the Company.
Where any such forward-looking statement includes a statement of
the assumptions of bases underlying such forward-looking statement,
the Company cautions that, while it believes such assumptions or
bases to be reasonable and makes them in good faith, assumed facts
or bases almost always vary from actual results, and the
differences between assumed facts or bases and actual results can
be material, depending on the circumstances. Where, in any
forward-looking statement, the Company, expresses an expectation or
belief as to future results, such expectation or belief is
expressed in good faith and believed to have a reasonable basis,
but there can be no assurance that the statement of expectation or
belief will result, or be achieved or accomplished.
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 hereunto duly
authorized.
WESTAMERICA BANCORPORATION
(Registrant)
Date: JulyOctober 31, 2000 /s/ DENNIS R. HANSEN
--------------------
Dennis R. Hansen
Senior Vice President
and Controller
Chief Accounting Officer
PART II - OTHER INFORMATION
- ---------------------------
Item 1 - Legal Proceedings
Due to the nature of the banking business, the
Subsidiary Banks are at times party to various legal
actions; all such actions are of a routine nature and
arise in the normal course of business of the
Subsidiary Banks.
Item 2 - Changes in Securities
None
Item 3 - Defaults upon Senior Securities
None
Item 4 - Submission of Matters to a Vote of Security Holders
Proxies for the Annual Meeting of shareholders held on April 27,
2000, were solicited pursuant Regulation 14A of the Securities
Exchange Act of 1934. The Report of Inspector of election
indicates that 28,343,279 shares of the Common Stock of the
Company, out of 36,574,930 shares outstanding, were present at the
meeting. The following matters were submitted to a vote of the
shareholders:
1.- Election of directors:
Withheld/
For Exceptions
------ ------
Etta Allen 27,886,267 457,012
Louis E. Bartolini 27,790,950 552,329
Don Emerson 27,968,798 374,481
Louis H. Herwaldt 28,056,059 287,220
Arthur C. Latno, Jr. 27,804,748 538,531
Patrick D. Lynch 27,796,180 547,099
Catherine C. MacMillan 27,841,938 501,341
Patrick J. Mon Pere 27,691,352 651,927
Ronald A. Nelson 28,060,234 283,045
Carl R. Otto 27,923,816 419,463
David L. Payne 25,704,382 2,638,897
Michael J. Ryan 27,763,996 579,283
Edward B. Sylvester 28,000,356 342,923
2.- Ratification of independent certified public accountant firm.
A proposal to ratify the selection of KPMG LLP as independent
certified public accountants for the Company for 2000.
For : 27,994,018
Against : 39,055
Abstain : 310,206None
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibit 11: Computation of Earnings Per
Share on Common and Common Equivalent Shares
and on Common Shares Assuming Full Dilution
(b) Exhibit 27 : Financial Data Schedule
(c) Reports on Form 8-K
NoneOn August 17, 2000, the Company filed a
report on Form 8-K announcing that the
acquisition of First Counties Bank had been
finalized as of that day. The acquisition
had been approved by First Counties Bank
shareholders on June 22, 2000, and by the
Federal Reserve Bank Board on August 2, 2000.
On August 24, 2000, the Company filed a
report on Form 8-K in connection with an
open ended stock repurchase plan whereby the
Board of Directors of the Company authorized
the Company to repurchase, as conditions
warrant, up to an aggregate of 2,750,000
shares of its common stock through
open-market and privately negotiated
transactions.