UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
FORM 10-K
[X] | ANNUAL REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Fiscal Year Ended December 31, 2004
[ ] | TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the Transition Period From ____________ to ____________
Commission File Number: 0-27384
CAPITAL CORP OF THE WEST
(Exact name of registrant as specified in its charter)
California | 77-0405791 | |||||
(State or other jurisdiction of incorporation or organization) | (I.R.S. Employer Identification No.) | |||||
550 West Main Street, Merced, California | 95340 | |||||
(Address of principal executive offices) | (Zip Code) | |||||
(209) 725-2269 | ||||||
(Registrant’s telephone number, including area code) | ||||||
Securities registered under Section 12(b) of the Act: | ||||||
None | ||||||
Securities registered under Section 12(g) of the Act (Title of Class): | ||||||
Common Stock, no par value; Preferred Share Purchase Rights |
Documents incorporated by reference:
Portions of the definitive proxy statement for the 2005 Annual Meeting of Shareholders to be filed with the Securities and Exchange Commission pursuant to Regulation 14A are incorporated by reference in Part III, Items 10 through 14 and portions of the Annual Report to Shareholders for 2004 are incorporated by reference in Part II, Item 5 through 8.
Capital Corp of the West
Table of Contents
Page | Reference | ||||||||
---|---|---|---|---|---|---|---|---|---|
PART I | |||||||||
ITEM 1. | BUSINESS | 3 | |||||||
ITEM 2. | PROPERTIES | 23 | |||||||
ITEM 3. | LEGAL PROCEEDINGS | 23 | |||||||
ITEM 4. | SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS | 23 | |||||||
PART II | |||||||||
ITEM 5. | MARKET FOR THE REGISTRANT’S COMMON EQUITY AND ISSUER PURCHASES OF EQUITY SECURITIES. | 24 | Page 48 of 2004 Annual Report | ||||||
ITEM 6. | SELECTED FINANCIAL DATA | 24 | Page 35 of 2004 Annual Report | ||||||
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS | 24 | Pages 36 through 48 of 2004 Annual Report | ||||||
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK | 24 | Pages 36 through 48 of 2004 Annual Report | ||||||
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA | 24 | Pages 52 through 80 of 2004 Annual Report | ||||||
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE | 25 | |||||||
ITEM 9A. | CONTROLS AND PROCEDURES | 25 | Proxy Statement for 2005 Annual Meeting | ||||||
ITEM 9B. | OTHER INFORMATION | 25 | N/A | ||||||
PART III | |||||||||
ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT | 26 | Proxy Statement for 2005 Annual Meeting | ||||||
ITEM 11. | EXECUTIVE COMPENSATION | 26 | Proxy Statement for 2005 Annual Meeting | ||||||
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT | 26 | Proxy Statement for 2005 Annual Meeting | ||||||
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS | 26 | Proxy Statement for 2005 Annual Meeting | ||||||
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES | 26 | Proxy Statement for 2005 Annual Meeting | ||||||
PART IV | |||||||||
ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES | 27 | |||||||
SIGNATURES | 28 | ||||||||
EXHIBIT INDEX | E-1 |
2
PART I
ITEM 1. BUSINESS
Forward-Looking Statements
General Development of the Company
General
3
Information about Commercial Banking & General Business of the Company and its Subsidiaries
Industry & Market Area
Competition
4
Bank’s Services and Markets
Bank
Bank’s Real Estate Subsidiary (MAID)
County Investment Trust (REIT)
5
Employees
6
REGULATION AND SUPERVISION
REGULATORY ENVIRONMENT
BANK HOLDING COMPANY ACT
COUNTY BANK
7
DIVIDENDS
REGULATORY CAPITAL REQUIREMENTS
8
Prompt Corrective Action
9
Federal Reserve Borrowings
Acquisitions of Control
Consumer Laws and Regulations
Exposure to and Management of Risk
10
Safety and Soundness Standards
Legislation and Proposed Changes
LIMITATIONS ON ACTIVITIES
11
TIE-IN ARRANGEMENTS AND TRANSACTIONS WITH AFFILIATED PERSONS
CROSS-INSTITUTION ASSESSMENTS
INSURANCE PREMIUMS AND ASSESSMENTS
12
AUDIT REQUIREMENTS
COMMUNITY REINVESTMENT ACT
BANK SECRECY ACT
SECURITIES AND EXCHANGE COMMISSION FILINGS
POTENTIAL ENFORCEMENT ACTIONS
INTERSTATE BANKING
13
FINANCIAL SERVICES MODERNIZATION LEGISLATION
14
INTERNATIONAL MONEY LAUNDERING ABATEMENT AND FINANCIAL ANTI-TERRORISM ACT OF 2001
SARBANES-OXLEY ACT OF 2002
15
REGULATION W
CONCLUSIONS
16
Selected Statistical Information
Interest Rates and Margins:
For the years ended December 31, | |||||||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 | 2003 | 2002 | |||||||||||||||||||||||||||||||
(Dollars in thousands) | Average Balance | Interest | Rate | Average Balance | Interest | Rate | Average Balance | Interest | Rate | ||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||||||
Federal funds sold | $ | 16,604 | $ | 266 | 1.60 | % | $ | 26,673 | $ | 274 | 1.03 | % | $ | 21,244 | $ | 337 | 1.59 | % | |||||||||||||||
Time deposits at other financial institutions | 670 | 15 | 2.24 | 504 | 8 | 1.59 | 500 | 10 | 2.00 | ||||||||||||||||||||||||
Nontaxable investment securities(1) | 56,057 | 2,937 | 5.24 | 30,946 | 1,793 | 5.79 | 28,936 | 1,717 | 5.93 | ||||||||||||||||||||||||
Taxable investment securities(1) | 325,933 | 12,908 | 3.96 | 287,158 | 11,965 | 4.17 | 258,049 | 13,797 | 5.35 | ||||||||||||||||||||||||
Loans, gross (2) | 813,050 | 55,303 | 6.80 | % | 687,419 | 48,948 | 7.12 | 576,156 | 43,503 | 7.55 | |||||||||||||||||||||||
Total interest-earning assets | 1,212,314 | 71,429 | 5.89 | 1,032,700 | 62,988 | 6.10 | 884,885 | 59,364 | 6.71 | ||||||||||||||||||||||||
Allowance for loan losses | (14,001 | ) | (13,413 | ) | (11,232 | ) | |||||||||||||||||||||||||||
Cash and due from banks | 40,475 | 35,454 | 30,372 | ||||||||||||||||||||||||||||||
Premises and equipment, net | 18,881 | 15,069 | 13,551 | ||||||||||||||||||||||||||||||
Interest receivable and other assets | 51,854 | 42,379 | 38,852 | ||||||||||||||||||||||||||||||
Total assets | $ | 1,309,523 | $ | 1,112,189 | $ | 956,428 | |||||||||||||||||||||||||||
Liabilities and shareholders’ equity | |||||||||||||||||||||||||||||||||
Negotiable orders of withdrawal | $ | 148,951 | $ | 70 | 0.05 | % | 122,927 | 57 | 0.05 | % | $ | 103,209 | $ | 189 | 0.18 | % | |||||||||||||||||
Savings deposits | 350,270 | 3,165 | 0.90 | 274,988 | 2,691 | 0.98 | 218,788 | 3,172 | 1.45 | ||||||||||||||||||||||||
Time deposits | 356,184 | 8,053 | 2.26 | 349,223 | 8,503 | 2.43 | 311,583 | 10,264 | 3.29 | ||||||||||||||||||||||||
Subordinated Debentures | 16,496 | 1,152 | 6.98 | 6,607 | 648 | 9.81 | 6,186 | 631 | 10.20 | ||||||||||||||||||||||||
Other borrowings | 121,585 | 4,657 | 3.83 | 104,920 | 4,354 | 4.15 | 109,742 | 4,598 | 4.19 | ||||||||||||||||||||||||
Total interest-bearing liabilities | 993,486 | 17,097 | 1.72 | 858,665 | 16,253 | 1.89 | 749,508 | 18,854 | 2.52 | ||||||||||||||||||||||||
Noninterest-bearing deposits | 213,864 | 164,919 | 131,367 | ||||||||||||||||||||||||||||||
Accrued interest, taxes and other liabilities | 5,081 | 5,607 | 5,798 | ||||||||||||||||||||||||||||||
Total liabilities | 1,212,431 | 1,029,191 | 886,673 | ||||||||||||||||||||||||||||||
Total shareholders’ equity | 97,092 | 82,998 | 69,755 | ||||||||||||||||||||||||||||||
Total liabilities and shareholders’ equity | $ | 1,309,523 | $ | 1,112,189 | $ | 956,428 | |||||||||||||||||||||||||||
Net interest income and margin (3) | $ | 54,332 | 4.49 | % | $ | 46,735 | 4.53 | % | $ | 40,510 | 4.58 | % |
(1) | Tax-equivalent adjustments recorded at the statutory rate of 35% that are included in nontaxable investment securities income totaled $726,000, $442,000, and $408,000 in 2004, 2003, and 2002, respectively. Tax equivalent income adjustments included in the nontaxable investment securities income were derived from nontaxable municipal interest income. Tax equivalent income adjustments recorded at the statutory federal rate of 35% that are included in taxable investment securities income were created by a dividends received deduction of $132,000, $133,000, and $145,000 in 2004, 2003, and 2002, respectively. |
(2) | Interest on non-accrual loans is recognized into income on a cash received basis. |
(3) | Net interest margin is computed by dividing net interest income by total average interest-earning assets. |
17
2004 Compared to 2003 | 2003 Compared to 2002 | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | Volume | Rate | Total | Volume | Rate | Total | |||||||||||||||||||
Net Interest Income Variance Analysis | |||||||||||||||||||||||||
Increase (decrease) in interest income: | |||||||||||||||||||||||||
Loans | $ | 6,903 | $ | (548 | ) | $ | 6,355 | $ | 8,031 | $ | (2,586 | ) | $ | 5,445 | |||||||||||
Taxable investment securities | 1,091 | (148 | ) | 943 | 1,440 | (3,272 | ) | (1,832 | ) | ||||||||||||||||
Nontaxable investment securities | 1,187 | (43 | ) | 1,144 | 117 | (41 | ) | 76 | |||||||||||||||||
Federal funds sold | (34 | ) | 26 | (8 | ) | 73 | (136 | ) | (63 | ) | |||||||||||||||
Time deposits at other institutions | 3 | 4 | 7 | — | (2 | ) | (2 | ) | |||||||||||||||||
Total | 9,150 | (709 | ) | 8,441 | 9,661 | (6,037 | ) | 3,624 | |||||||||||||||||
Increase (decrease) in interest expense: | |||||||||||||||||||||||||
Interest-bearing demand deposits | 13 | — | 13 | 31 | (163 | ) | (132 | ) | |||||||||||||||||
Savings deposits | 526 | (52 | ) | 474 | 698 | (1,179 | ) | (481 | ) | ||||||||||||||||
Time deposits | 42 | (492 | ) | (450 | ) | 1,138 | (2,899 | ) | (1,761 | ) | |||||||||||||||
Subordinated Debentures | 588 | (84 | ) | 504 | 42 | (25 | ) | 17 | |||||||||||||||||
Other borrowings | 350 | (47 | ) | 303 | (200 | ) | (44 | ) | (244 | ) | |||||||||||||||
Total | 1,519 | (675 | ) | 844 | 1,709 | (4,310 | ) | (2,601 | ) | ||||||||||||||||
Increase (decrease) in net interest income | $ | 7,631 | $ | (34 | ) | $ | 7,597 | $ | 7,952 | $ | (1,727 | ) | $ | 6,225 |
Investment Portfolio Maturities
Within One Year | One to Five Years | Five to Ten Years | Over Ten Years | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | Amount | Yield | Amount | Yield | Amount | Yield | Amount | Yield | Total | ||||||||||||||||||
Available for sale debt securities: | |||||||||||||||||||||||||||
U.S. Treasury and U.S. Government agencies | $ | 4,979 | 2.50 | % | $ | 20,149 | 3.05 | % | $ | — | —% | $ | — | — | % | $ | 25,128 | ||||||||||
State and political subdivisions | — | — | — | — | 261 | 3.38 | 1,064 | 3.37 | 1,325 | ||||||||||||||||||
Mortgage-backed securities | — | — | 9,744 | 3.83 | 63,702 | 4.05 | 64,635 | 4.45 | 138,081 | ||||||||||||||||||
Collateralized Mortgage Obligations | — | — | — | — | — | — | 61,882 | 3.47 | 61,882 | ||||||||||||||||||
Corporate debt securities | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
Held to maturity debt securities: | |||||||||||||||||||||||||||
U.S. Treasury and U.S. Government agencies | — | — | — | — | — | — | — | — | — | ||||||||||||||||||
State and political subdivisions | — | — | 3,920 | 4.20 | 23,315 | 4.32 | 42,659 | 3.75 | 69,894 | ||||||||||||||||||
Mortgage-backed securities | — | — | — | — | 876 | 7.40 | 71,837 | 4.98 | 72,713 | ||||||||||||||||||
Collateralized Mortgage Obligations | — | — | — | — | — | — | 24,380 | 3.85 | 24,380 | ||||||||||||||||||
Total debt securities | $ | 4,979 | 2.50 | % | $ | 33,813 | 3.41 | % | $ | 88,154 | 4.15 | % | $ | 266,457 | 5.86 | % | $ | 393,403 |
18
Asset/Liability Repricing
By Repricing Interval As of December 31, 2004 | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | Within three months | After three months, within one year | After one year, within five years | After five years | Noninterest- bearing Funds | Total | ||||||||||||||||
Assets | ||||||||||||||||||||||
Federal funds sold | $ | 17,365 | $ | — | $ | — | $ | — | $ | — | $ | 17,365 | ||||||||||
Time deposits at other institutions | 3,000 | 250 | 100 | — | — | 3,350 | ||||||||||||||||
Investment securities | 15,722 | 4,979 | 23,945 | 382,480 | 9,050 | 436,176 | ||||||||||||||||
Loans | 118,772 | 202,247 | 200,122 | 363,952 | — | 885,093 | ||||||||||||||||
Noninterest-earning assets and allowance for loan losses | — | — | — | — | 105,784 | 105,784 | ||||||||||||||||
Total assets | $ | 154,859 | $ | 207,476 | $ | 224,167 | $ | 746,432 | $ | 114,834 | $ | 1,447,768 | ||||||||||
Liabilities and shareholders’ equity | ||||||||||||||||||||||
Demand deposits | $ | — | $ | — | $ | — | $ | — | $ | 262,315 | $ | 262,315 | ||||||||||
Savings, money market & NOW deposits | 531,189 | — | — | — | — | 531,189 | ||||||||||||||||
Time deposits | 136,421 | 140,763 | 83,347 | 122 | — | 360,653 | ||||||||||||||||
Other interest-bearing liabilities | 22,853 | 42,900 | 75,426 | 22,940 | — | 164,119 | ||||||||||||||||
Subordinated Debentures | — | — | — | 16,496 | — | 16,496 | ||||||||||||||||
Other liabilities and shareholders’ equity | — | — | — | — | 112,996 | 112,996 | ||||||||||||||||
Total liabilities and shareholders’ equity | $ | 690,463 | $ | 183,663 | $ | 158,773 | $ | 39,558 | $ | 375,311 | $ | 1,447,768 | ||||||||||
Interest rate sensitivity gap | $ | (535,604 | ) | $ | 23,813 | $ | 65,394 | $ | 706,874 | $ | (260,477 | ) | ||||||||||
Cumulative interest rate sensitivity gap | $ | (535,604 | ) | $ | (511,791 | ) | $ | (446,397 | ) | $ | 260,477 | $ | — |
19
Loan Portfolio
(Dollars in thousands) | December 31, | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||
Amount | Amount | Amount | Amount | Amount | |||||||||||
Commercial, financial and agricultural | $ | 298,122 | $ | 288,138 | $ | 242,157 | $ | 215,115 | $ | 155,952 | |||||
Real estate —construction | 97,396 | 89,652 | 78,064 | 57,989 | 30,133 | ||||||||||
Real estate — mortgage | 416,385 | 318,624 | 244,468 | 187,586 | 141,575 | ||||||||||
Consumer installment | 73,190 | 67,838 | 69,084 | 71,730 | 85,004 | ||||||||||
Total | $ | 885,093 | $ | 764,252 | $ | 633,773 | $ | 532,420 | $ | 412,664 |
December 31, 2004 | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | Within One Year | One to Five Years | Over Five Years | Total | ||||||||
Commercial and agricultural | ||||||||||||
Loans with floating rates | $ | 150,871 | $ | 71,395 | $ | 15,237 | $ | 237,503 | ||||
Loans with predetermined rates | 25,158 | 24,465 | 10,996 | 60,619 | ||||||||
Subtotal | 176,029 | 95,860 | 26,233 | 298,122 | ||||||||
Real Estate — Construction | ||||||||||||
Loans with floating rates | 80,478 | 10,015 | 28 | 90,521 | ||||||||
Loans with predetermined rates | 6,549 | 326 | — | 6,875 | ||||||||
Subtotal | 87,027 | 10,341 | 28 | 97,396 | ||||||||
Real Estate — Mortgage | ||||||||||||
Loans with floating rates | 21,560 | 41,621 | 249,254 | 312,435 | ||||||||
Loans with predetermined rates | 2,550 | 38,246 | 63,154 | 103,950 | ||||||||
Subtotal | 24,110 | 79,867 | 312,408 | 416,385 | ||||||||
Consumer installment | ||||||||||||
Loans with floating rates | 252 | 452 | 49,694 | 50,398 | ||||||||
Loans with predetermined rates | 1,873 | 13,598 | 7,321 | 22,792 | ||||||||
Subtotal | 2,125 | 14,050 | 57,015 | 73,190 | ||||||||
Total | $ | 289,291 | $ | 200,118 | $ | 395,684 | $ | 885,093 |
All Cash Reserve loans that do not have a maturity date are included in “Over Five Years” category.
20
responsibility of the Company’s credit administration staff. However, certain problem loans may be dealt with by the originating loan officer. The Directors Loan Committee reviews the status of delinquent and problem loans on a monthly basis. The Company’s underwriting and review practices notwithstanding, in the normal course of business, the Company expects to incur loan losses in the future.
Nonaccrual, Past Due and Restructured Loans
(Dollars in thousands) | December 31, | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 Amount | 2003 Amount | 2002 Amount | 2001 Amount | 2000 Amount | ||||||||||||||||
Nonaccrual loans | $ | 4,394 | $ | 3,987 | $ | 2,381 | $ | 4,247 | $ | 2,243 | ||||||||||
Accruing loans past due 90 days or more | — | — | 2 | 609 | 97 | |||||||||||||||
Total nonperforming loans | $ | 4,394 | $ | 3,987 | $ | 2,383 | $ | 4,856 | $ | 2,340 | ||||||||||
Other real estate owned | 60 | 60 | 60 | 472 | 248 | |||||||||||||||
Total nonperforming assets | $ | 4,454 | $ | 4,047 | $ | 2,443 | $ | 5,328 | $ | 2,588 | ||||||||||
Nonperforming loans to total loans | 0.50 | % | 0.52 | % | 0.38 | % | 0.91 | % | 0.57 | % | ||||||||||
Nonperforming assets to total assets | 0.30 | % | 0.33 | % | 0.24 | % | 1.00 | % | 0.38 | % |
Allocation of the Allowance for Loan Losses
(Dollars in thousands) | December 31, | |||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 | 2003 | 2002 | 2001 | 2000 | ||||||||||||||||||||||||||
Amount | Loans % to total loans | Amount | Loans % to Total loans | Amount | Loans % to total loans | Amount | Loans % to total loans | Amount | Loans % to Total loans | |||||||||||||||||||||
Commercial, financial and agricultural | $ | 5,497 | 34 | % | $ | 7,295 | 38 | % | $ | 6,674 | 38 | % | $ | 6,029 | 40 | % | $ | 4,186 | 38 | % | ||||||||||
Real estate —construction | 1,056 | 11 | 1,052 | 12 | 971 | 12 | 676 | 11 | 451 | 7 | ||||||||||||||||||||
Real estate — mortgage | 7,047 | 47 | 3,808 | 41 | 3,397 | 39 | 2,187 | 35 | 2,076 | 34 | ||||||||||||||||||||
Installment | 684 | 8 | 1,108 | 9 | 1,092 | 11 | 851 | 14 | 1,494 | 21 | ||||||||||||||||||||
Total | $ | 14,284 | 100 | % | $ | 13,263 | 100 | % | $ | 12,134 | 100 | % | $ | 9,743 | 100 | % | $ | 8,207 | 100 | % |
21
Other Interest-Bearing Assets
December 31 | ||||||
---|---|---|---|---|---|---|
(Dollars in thousands) | 2004 | 2003 | 2002 | |||
Cash surrender value of life insurance | $28,362 | $24,138 | $17,240 |
Deposits
Deposits
For the Year Ended December 31, | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 | 2003 | 2002 | ||||||||||||||||||||||
(Dollars in thousands) | Amount | Yield | Amount | Yield | Amount | Yield | ||||||||||||||||||
Noninterest-bearing demand deposits | $ | 213,864 | — | % | $ | 164,919 | — | % | $ | 131,367 | — | % | ||||||||||||
Interest-bearing demand deposits | 148,951 | 0.05 | 122,927 | 0.05 | 103,209 | 0.18 | ||||||||||||||||||
Savings deposits | 350,270 | 0.90 | 274,988 | 0.99 | 218,788 | 1.45 | ||||||||||||||||||
Time deposits under $100,000 | 182,016 | 2.35 | 171,045 | 2.58 | 161,810 | 3.44 | ||||||||||||||||||
Time deposits $100,000 and over | 174,168 | 2.17 | 178,178 | 2.30 | 149,773 | 3.14 |
Maturities of Time Certificates of Deposits of $100,000 or More
(Dollars in thousands) | ||
---|---|---|
Three months or less | $ | 77,105 |
Over three to six months | 20,366 | |
Over six to twelve months | 38,086 | |
Over twelve months | 31,183 | |
Total | $ | 166,740 |
22
Return on Equity and Assets
Return on Average Equity and Assets
For the year ended December 31, | |||||||||
---|---|---|---|---|---|---|---|---|---|
2004 | 2003 | 2002 | |||||||
Return on average assets | 0.94 | % | 1.23 | % | 1.09 | % | |||
Return on average equity | 12.69 | 16.43 | 14.94 | ||||||
Average equity to average assets | 7.41 | 7.46 | 7.29 | ||||||
Dividend payout ratio | 9.4 | % | 0 | % | 0 | % |
ITEM 2. PROPERTIES
ITEM 3. LEGAL PROCEEDINGS
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
23
PART II
ITEM 5. | MARKET FOR REGISTRANT’S COMMON EQUITY AND RELATED SHAREHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES |
Market for Company’s Common Stock and Related Stock Matters
2004 | High | Low | ||||
---|---|---|---|---|---|---|
4th quarter | $ | 51.75 | $ | 41.97 | ||
3rd quarter | 43.75 | 35.06 | ||||
2nd quarter | 40.50 | 32.98 | ||||
1st quarter | 40.07 | 37.45 |
2003 | High | Low | ||||
---|---|---|---|---|---|---|
4th quarter | $ | 41.25 | $ | 32.32 | ||
3rd quarter | 35.30 | 24.34 | ||||
2nd quarter | 26.58 | 23.83 | ||||
1st quarter | 26.31 | 22.30 |
ITEM 6. | SELECTED FINANCIAL DATA |
ITEM 7. | MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS |
ITEM 7A. | QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK |
ITEM 8. | FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA |
24
ITEM 9. | CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE |
ITEM 9A. | CONTROLS AND PROCEDURES |
EVALUATION OF DISCLOSURE CONTROLS AND PROCEDURES
Management’s Report on Internal Control over Financial Reporting.
ITEM 9B. | OTHER INFORMATION |
25
PART III
ITEM 10. | DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT |
ITEM 11. | EXECUTIVE COMPENSATION |
ITEM 12. | SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
Securities authorized for issuance under equity compensation plans.
(a) | The information in the following table is provided as of the end of the fiscal year ended December 2004 with respect to compensation plans (including individual compensation arrangements) under which equity securities are issuable: |
Equity Compensation Plan Information
(a) | (b) | (c) | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Plan category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted-average exercise price of outstanding options, warrants and rights | Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column A) | |||||||||
Equity compensation plans approved by security holders | 373,364 | $ | 22.00 | 301,636 | ||||||||
Equity compensation plans not approved by security holders | — | — | — | |||||||||
Total | 373,364 | $ | 22.00 | 301,636 |
ITEM 13. | CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS |
ITEM 14. | PRINCIPAL ACCOUNTING FEES AND SERVICES |
26
PART IV
ITEM 15. | EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K. |
(a) | Financial Statements and Schedules |
An index of all financial statements and schedules filed as part of this Form 10-K appears below and the material which begins on the pages of the Company’s Annual Report to Shareholders for the year ended December 31, 2004 listed, are incorporated herein by reference in response to Item 8 of this report. |
Financial Statements: | Page* | |
---|---|---|
Management report on internal control over financial reporting | 49 | |
Report of Independent Registered Public Accounting Firm Regarding Internal Controls | 50 | |
Report of Independent Registered Public Accounting Firm on Financial Statements | 51 | |
Consolidated Balance Sheets at December 31, 2004 and 2003 | 52 | |
Consolidated Statements of Income and Comprehensive Income for the years ended December 31, 2004, 2003 and 2002 | 53 | |
Consolidated Statements of Shareholders’ Equity for the years ended December 31, 2004, 2003 and 2002 | 54 | |
Consolidated Statements of Cash Flows for the years ended December 31, 2004, 2003 and 2002 | 55 | |
Notes to Consolidated Financial Statements | 56 | |
*Incorporated by reference from the indicated pages of the 2004 Annual Report. | ||
Schedules: | ||
None |
(b) | Exhibits (Numbered in accordance with Item 601 of Regulation S-K) |
(c) | Financial Statement Schedules |
All other supporting schedules are omitted because they are not applicable, not required, or the information required to be set forth therein is included in the financial statements or notes thereto incorporated herein by reference. |
27
SIGNATURES
CAPITAL CORP OF THE WEST | ||||
Date: March 11, 2005 | By: | /s/ Thomas T. Hawker | ||
THOMAS T. HAWKER President and Chief Executive Officer (Principal Executive Officer) | ||||
Date: March 11, 2005 | By: | /s/ R. Dale McKinney | ||
R. DALE MCKINNEY Executive Vice President and Chief Financial Officer and Principal Accounting Officer (Principal Financial and Accounting Officer) |
Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
Signature | Capacity | Date | ||||||
---|---|---|---|---|---|---|---|---|
/s/ Dorothy L. Bixxizi DOROTHY L. BIZZINI | Director | March 11, 2005 | ||||||
/s/ Jerry E. Callister JERRY E. CALLISTER | Director | March 11, 2005 | ||||||
/s/ John Fawcett JOHN FAWCETT | Director | March 11, 2005 | ||||||
/s/ G. Michael Graves G MICHAEL GRAVES | Director | March 11, 2005 | ||||||
/s/ Thomas T. Hawker THOMAS T. HAWKER | Director/CEO and Principal Executive Officer | March 11, 2005 | ||||||
/s/ R. Dale McKinney R. DALE MCKINNEY | Chief Financial Officer Principal Financial and Accounting Officer | March 11, 2005 | ||||||
/s/ Curtis Riggs CURTIS RIGGS | Director | March 11, 2005 | ||||||
/s/ Jerry Tahajian JERRY TAHAJIAN | Director | March 11, 2005 | ||||||
/s/ Curtis R. Grant CURTIS R. GRANT | Director | March 11, 2005 | ||||||
/s/ Roberto Salazar ROBERTO SALAZAR | Director | March 11, 2005 | ||||||
/s/ Tom A. L. Van Groningen TOM A.L. VAN GRONINGEN | Chairman of the Board of Directors | March 11, 2005 |
28
Exhibit Index
Exhibit Number | Exhibit | |||||
---|---|---|---|---|---|---|
3.1 | Articles of Incorporation as in effect on December 31, 2003 (incorporated by reference to Exhibit 3.1 of the registrant’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003). | |||||
3.2 | Bylaws (incorporated by reference to Exhibit 3.2 of the registrant’s Quarterly Report on Form 10-Q for the quarter ended September 30, 1996) | |||||
3.3 | Rights Agreement between Capital Corp of the West and Harris Trust Company of California dated as of September 26, 1997, including Form of Right Certificate attached thereto as Exhibit B (incorporated by reference to Exhibit 4 to the registrant’s Registration Statement on Form 8-A filed with the SEC on October 1, 1997). | |||||
4.1 | Indenture, dated as of February 22, 2001 between Capital Corp of the West, as Issuer, and State Street Bank and Trust Company of Connecticut, National Association, as Trustee (incorporated by reference to Exhibit 4.1 to Quarterly Report on Form 10-Q of the registrant for the quarter ended September 30, 2003) | |||||
4.2 | Amended and Restated Declaration of Trust by and between State Street Bank and Trust Company of Connecticut, National Association, as Trustee, and Capital Corp of the West, as Sponsor (incorporated by reference to Exhibit 4.2 to Quarterly Report on Form 10-Q of the registrant for the quarter ended September 30, 2003) | |||||
4.3 | Indenture, dated as of December 17, 2003 between Capital Corp of the West, as Issuer, and U S. Bank National Association as Trustee (incorporated by reference to Exhibit 4.3 to Annual Report on Form 10-K of the registrant for the year ended December 31, 2003) | |||||
4.4 | Amended and Restated Declaration of Trust by and among U. S. Bank National Association, as Institutional Trustee, and Capital Corp of the West, as Sponsor and Kenneth K. Lee, Janey Cabral, and David Curtis, as Administrators, dated as of December 17, 2003 (incorporated by reference to Exhibit 4.4 to Annual Report on Form 10-K of the registrant for the year ended December 31, 2003) | |||||
10.1 | Employment Agreement between Thomas T. Hawker and Capital Corp. of the West dated January 1, 2002 (incorporated by reference to Exhibit 10 to Quarterly Report on Form 10-Q of the registrant for the Quarter Ended March 31, 2004) | * | ||||
10.2 | Employment Agreement between Thomas T. Hawker and Capital Corp. of the West dated January 1, 2005 (incorporated by reference to Exhibit 10 to Current Report on Form 8-K of the registrant dated November 4, 2004) | * | ||||
10.3 | Form of Severance Agreement for certain executive officers of the registrant (incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K of the registrant dated December 27, 2004) | * | ||||
10.4 | Director Elective Income Deferral Agreement (incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K of the registrant dated December 23, 2004) | * | ||||
10.5 | Director Deferred Compensation Elections (incorporated by reference to Exhibit 99.2 to Current Report on Form 8-K of the registrant dated December 23, 2004) | * | ||||
10.6 | 1992 Stock Option Plan (incorporated by reference to Exhibit 10.6 of the Annual Report on Form 10-K of the registrant for the year ended December 31, 1995). | * |
29
Exhibit Number | Exhibit | ||||||
---|---|---|---|---|---|---|---|
10.7 | 2002 Stock Option Plan (incorporated by reference to Exhibit A to the registrant’s proxy statement dated March 13, 2002) | * | |||||
10.8 | 401(k) Plan (incorporated by reference to Exhibit 10.7 of the Annual Report on Form 10-K of the registrant). | ||||||
10.9 | Employee Stock Ownership Plan (incorporated by reference to Exhibit 10.8 of the Annual Report on Form 10-K of the registrant for the year ended December 31, 1995). | ||||||
10.10 | Change-in-Control Agreement between R. Dale McKinney and Capital Corp of the West (filed as Exhibit 10.6 of the Annual Report on Form 10-K of the registrant for the year ended December 31, 1999). | * | |||||
10.11 | Deferred Compensation Agreement between members of the board of directors and Capital Corp of the West (filed as exhibit 10.7 of the Annual Report on Form 10-K of the registrant for the year ended December 31, 1999). | * | |||||
10.12 | Amended Executive Salary Continuation Agreement between senior executive management and Capital Corp of the West. (incorporated by reference to Exhibit 10.10 to Quarterly Report on Form 10-Q of the registrant for the quarter ended September 30, 2003). | * | |||||
11 | Statement Regarding the Computation of Earnings Per Share (incorporated herein by reference from Note 1 of the Company’s Consolidated Financial Statements, filed as Exhibit 13 to this report). | ||||||
13 | Annual Report to Security Holders for 2004. | ||||||
14 | Code of Ethics (incorporated by reference to Exhibit 99.1 to Current Report on Form 8-K of the registrant dated December 7, 2004). | ||||||
21 | List of Subsidiaries | ||||||
23.1 | Independent Registered Public Accounting Firm’s Consent Regarding Financial Statements | ||||||
23.2 | Independent Registered Public Accounting Firm’s Consent Regarding Internal Control | ||||||
31.1 | Certification of Registrant’s Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | ||||||
31.2 | Certification of Registrant’s Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 | ||||||
32.1 | Certification of Registrant’s Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 | ||||||
32.2 | Certification of Registrant’s Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 |
* | Denotes management contract or compensatory plan arrangement. |
30
Capital Corp of the West
Selected Financial Data
(Amounts in thousands, except per share data) | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Summary income data: | ||||||||||||||||||||
Interest income | $ | 70,571 | $ | 62,413 | $ | 58,811 | $ | 58,167 | $ | 50,888 | ||||||||||
Interest expense | 17,097 | 16,253 | 18,854 | 23,240 | 20,768 | |||||||||||||||
Net interest income | 53,474 | 46,160 | 39,957 | 34,927 | 30,120 | |||||||||||||||
Provision for loan losses | 2,671 | 2,455 | 4,151 | 4,115 | 3,286 | |||||||||||||||
Noninterest income | 6,405 | 10,177 | 8,164 | 6,290 | 5,172 | |||||||||||||||
Noninterest expense | 37,735 | 35,385 | 31,087 | 26,372 | 22,539 | |||||||||||||||
Income before provision for income taxes | 19,473 | 18,497 | 12,883 | 10,730 | 9,467 | |||||||||||||||
Provision for income taxes | 7,150 | 4,857 | 2,455 | 2,819 | 2,761 | |||||||||||||||
Net income | $ | 12,323 | $ | 13,640 | $ | 10,428 | $ | 7,911 | $ | 6,706 | ||||||||||
Share Data: | ||||||||||||||||||||
Average common shares outstanding | 5,735 | 5,612 | 5,538 | 5,345 | 5,244 | |||||||||||||||
Basic earnings per share | $ | 2.15 | $ | 2.43 | $ | 1.88 | $ | 1.48 | $ | 1.28 | ||||||||||
Diluted earnings per share | 2.06 | 2.34 | 1.83 | 1.44 | 1.25 | |||||||||||||||
Book value per share | 17.86 | 15.82 | 14.49 | 12.39 | 10.65 | |||||||||||||||
Tangible book value per share | $ | 17.60 | $ | 15.36 | $ | 13.87 | $ | 11.72 | $ | 9.80 | ||||||||||
Balance Sheet Data: | ||||||||||||||||||||
Total assets | $ | 1,447,768 | $ | 1,234,542 | $ | 1,034,396 | $ | 894,327 | $ | 683,021 | ||||||||||
Total securities | 436,176 | 372,015 | 287,020 | 271,411 | 191,052 | |||||||||||||||
Total loans | 885,093 | 764,252 | 633,773 | 532,420 | 412,664 | |||||||||||||||
Total deposits | 1,154,157 | 1,028,808 | 834,379 | 732,641 | 601,498 | |||||||||||||||
Shareholders’ equity | $ | 103,481 | $ | 89,485 | $ | 77,169 | $ | 64,120 | $ | 53,451 | ||||||||||
Operating Ratios: | ||||||||||||||||||||
Return on average equity | 12.69 | % | 16.43 | % | 14.94 | % | 13.40 | % | 14.33 | % | ||||||||||
Return on average assets | 0.94 | 1.23 | 1.09 | 1.03 | 1.09 | |||||||||||||||
Average equity to average assets ratio | 7.41 | 7.46 | 7.29 | 7.69 | 7.64 | |||||||||||||||
Net interest margin | 4.49 | 4.53 | 4.58 | 5.04 | 5.46 | |||||||||||||||
Credit Quality Ratios: | ||||||||||||||||||||
Nonperforming loans to total loans (1) | 0.50 | % | 0.52 | % | 0.38 | % | 0.91 | % | 0.57 | % | ||||||||||
Allowance for loan losses to total loans | 1.61 | 1.74 | 1.91 | 1.83 | 1.99 | |||||||||||||||
Allowance for loan losses to nonperforming loans | 325.06 | 332.70 | 509.15 | 200.65 | 350.66 | |||||||||||||||
Capital Ratios: | ||||||||||||||||||||
Risk-based tier 1 capital | 10.30 | % | 10.31 | % | 9.49 | % | 9.49 | % | 9.66 | % | ||||||||||
Total risk-based capital | 11.55 | 11.57 | 10.74 | 10.74 | 10.92 | |||||||||||||||
Leverage ratio | 8.46 | 8.55 | 7.68 | 7.72 | 7.56 | |||||||||||||||
Dividend payout ratio | 9 | % | —% | —% | —% | —% |
(1) | Nonperforming loans consist of loans on nonaccrual, loans past due 90 days or more and restructured loans. |
35
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Forward-Looking Statements
36
Critical Accounting Policies and Estimates
Overview
37
Results of Operations
38
Provision for Loan Losses
Noninterest Income
(Dollars in thousands) | 2004 | 2003 | 2002 | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Noninterest Income: | ||||||||||
Deposit service charges | $ | 6,134 | $ | 5,480 | $ | 5,076 | ||||
Income from sale of real estate | — | 608 | 33 | |||||||
Earnings on bank owned insurance | 1,066 | 1,003 | 994 | |||||||
Loan packaging fees | 398 | 538 | 206 | |||||||
Gain on sale of loans | 251 | 296 | 141 | |||||||
Retail investment income | 873 | 914 | 538 | |||||||
(Loss) gain on sale or impairment of securities | (3,665 | ) | — | 180 | ||||||
Other | 1,348 | 1,338 | 996 | |||||||
Total noninterest income | $ | 6,405 | $ | 10,177 | $ | 8,164 |
39
Noninterest Expense
(Dollars in thousands) | 2004 | 2003 | 2002 | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Noninterest Expense: | ||||||||||||||
Salaries and benefits | $ | 20,697 | $ | 19,071 | $ | 16,674 | ||||||||
Premises and occupancy | 3,446 | 2,946 | 2,526 | |||||||||||
Equipment | 3,186 | 3,335 | 2,954 | |||||||||||
Professional fees | 1,671 | 1,662 | 1,177 | |||||||||||
Supplies | 873 | 794 | 780 | |||||||||||
Marketing Expense | 1,062 | 963 | 900 | |||||||||||
Intangible Amortization | 655 | 676 | 680 | |||||||||||
Other | 6,145 | 5,938 | 5,396 | |||||||||||
Total noninterest expense | $ | 37,735 | $ | 35,385 | $ | 31,087 |
40
Provision for Income Taxes
Financial Condition
41
Securities
(Dollars in thousands) | 2004 | 2003 | 2002 | ||||||
---|---|---|---|---|---|---|---|---|---|
U.S. Treasury & U.S. Government agencies | $ | 25,128 | $ | 55,269 | $ | 66,130 | |||
State and political subdivisions | 1,325 | 1,073 | 25,619 | ||||||
Mortgage-backed securities | 138,081 | 130,182 | 64,655 | ||||||
Collateralized mortgage obligations | 61,882 | 45,267 | 40,952 | ||||||
Corporate securities | — | 3,078 | 3,559 | ||||||
Total debt securities | 226,416 | 234,869 | 200,915 | ||||||
Agency preferred stock | 18,001 | 13,008 | 14,613 | ||||||
Trust preferred stock | — | 5,023 | 4,927 | ||||||
Equity securities | 24,772 | 22,503 | 10,937 | ||||||
Total carrying value and fair value | $ | 269,189 | $ | 275,403 | $ | 231,392 |
(Dollars in thousands) | 2004 | 2003 | 2002 | ||||||
---|---|---|---|---|---|---|---|---|---|
U.S. Treasury and U.S. Government agencies | $ | — | $ | — | $ | 4,629 | |||
State and political subdivisions | 69,894 | 42,482 | 4,347 | ||||||
Mortgage-backed securities | 72,713 | 40,185 | 46,652 | ||||||
Collateralized mortgage obligations | 24,380 | 13,945 | — | ||||||
Carrying amount (amortized cost) | $ | 166,987 | $ | 96.612 | $ | 55,628 | |||
Fair value | $ | 168,265 | $ | 97,295 | $ | 57,905 |
Loans
42
Credit Risk Management and Asset Quality
Allowance for Loan Losses
43
(Dollars in thousands) | 2004 | 2003 | 2002 | 2001 | 2000 | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Allowance for loan losses: | ||||||||||||||||||||
Balance at beginning of year | $ | 13,263 | $ | 12,134 | $ | 9,743 | $ | 8,207 | $ | 6,542 | ||||||||||
Provision for loan losses | 2,671 | 2,455 | 4,151 | 4,115 | 3,286 | |||||||||||||||
Charge-offs: | ||||||||||||||||||||
Commercial and agricultural | 1,860 | 1,010 | 1,504 | 864 | 423 | |||||||||||||||
Real-estate — mortgage | — | 29 | — | — | — | |||||||||||||||
Consumer | 436 | 956 | 1,085 | 2,288 | 1,971 | |||||||||||||||
Total charge-offs | 2,296 | 1,995 | 2,589 | 3,152 | 2,394 | |||||||||||||||
Recoveries: | ||||||||||||||||||||
Commercial and agricultural | 344 | 302 | 233 | 159 | 410 | |||||||||||||||
Real-estate — mortgage | 12 | — | — | — | — | |||||||||||||||
Consumer | 290 | 367 | 596 | 414 | 363 | |||||||||||||||
Total recoveries | 646 | 669 | 829 | 573 | 773 | |||||||||||||||
Net charge-offs | 1,650 | 1,326 | 1,760 | 2,579 | 1,621 | |||||||||||||||
Balance at end of year | $ | 14,284 | $ | 13,263 | $ | 12,134 | $ | 9,743 | $ | 8,207 | ||||||||||
Loans outstanding at year-end | $ | 885,093 | $ | 764,252 | $ | 633,773 | $ | 532,420 | $ | 412,664 | ||||||||||
Average loans outstanding | 813,050 | 687,419 | 576,156 | 453,503 | $ | 369,367 | ||||||||||||||
Net charge-offs to average loans | 0.20 | % | 0.19 | % | 0.31 | % | 0.57 | % | 0.44 | % | ||||||||||
Allowance for loan losses | ||||||||||||||||||||
To total loans | 1.61 | % | 1.74 | % | 1.91 | % | 1.83 | % | 1.99 | % | ||||||||||
To nonperforming loans | 325.06 | % | 332.70 | % | 509.15 | % | 200.65 | % | 350.66 | % | ||||||||||
To nonperforming assets | 320.66 | % | 327.74 | % | 496.56 | % | 182.85 | % | 317.12 | % |
Liquidity
44
Contractual Obligations
At December 31, 2004 (Dollars in thousands) | Within One Year | One to Three Years | Three To Five Years | After Five Years | Total | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Borrowings | $ | 68,025 | $ | 63,826 | $ | 10,416 | $ | 21,852 | $ | 164,119 | |||||
Junior subordinated debentures | — | — | — | 16,496 | 16,496 | ||||||||||
Operating leases | 1,237 | 1,804 | 1,467 | 3,397 | 7,905 | ||||||||||
Purchase obligations | 380 | — | — | — | 380 | ||||||||||
$ | 69,642 | $ | 65,630 | $ | 11,883 | $ | 41,745 | $ | 188,900 |
Market and Interest Rate Risk Management
45
Earnings Sensitivity
Change in interest rates (In basis points) | Change in net interest Income(1) | Percentage change in net interest income | ||||||
---|---|---|---|---|---|---|---|---|
+200 | $ | 536,000 | 0.95 | % | ||||
–100 | $ | (1,002,000 | ) | (1.78 | )% |
(1) | The amount in this column represents the change in net interest income for 12 months in a stable interest rate environment versus the net interest income in the various rate scenarios. |
December 31, 2003
Change in interest rates (In basis points) | Change in net interest Income(1) | Percentage change in net interest income | ||||||
---|---|---|---|---|---|---|---|---|
+200 | $ | 173,000 | 0.3 | % | ||||
–100 | $ | (1,257,000 | ) | (2.5 | )% |
(1) | The amount in this column represents the change in net interest income for 12 months in a stable interest rate environment versus the net interest income in the various rate scenarios. |
46
Off-Balance Sheet Arrangements
Capital Resources
Impact of Inflation
47
Market for Company’s Common Stock and Related Stock Matters
2004 | High | Low | Dividends | ||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
4th quarter | $ | 51.75 | $ | 41.97 | $ | 0.05 | |||||
3rd quarter | 43.75 | 35.06 | $ | 0.05 | |||||||
2nd quarter | 40.50 | 32.98 | $ | 0.05 | |||||||
1st quarter | 40.07 | 37.45 | $ | 0.05 | |||||||
2003 | High | Low | Dividends | ||||||||
4th quarter | $ | 41.25 | 32.32 | — | |||||||
3rd quarter | 35.30 | 24.34 | — | ||||||||
2nd quarter | 26.58 | 23.83 | — | ||||||||
1st quarter | 26.31 | 22.30 | — |
48
CAPITAL CORP OF THE WEST AND SUBSIDIARIES
MANAGEMENT’S REPORT ON INTERNAL CONTROL OVER FINANCIAL REPORTING
/s/ Thomas T. Hawker THOMAS T. HAWKER | Director/CEO and Principal Executive Officer | March 11, 2005 | ||||||||
/s/ R. Dale McKinney R. DALE MCKINNEY | Chief Financial Officer Principal Financial and Accounting Officer | March 11, 2005 |
49
Report of Independent Registered Public Accounting Firm
To the Board of Directors and Shareholders of
Capital Corp of the West:
March 11, 2005
50
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Capital Corp of the West:
We have audited the accompanying consolidated balance sheets of Capital Corp of the West and subsidiaries (the Company) as of December 31, 2004 and 2003, and the related consolidated statements of income and comprehensive income, shareholders’ equity, and cash flows for each of the years in the three year period ended December 31, 2004. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Capital Corp of the West and subsidiaries as of December 31, 2004 and 2003 and the results of their operations and their cash flows for each of the years in the three year period ended December 31, 2004, in conformity with U.S. generally accepted accounting principles.
Sacramento, California
March 11, 2005
51
CAPITAL CORP OF THE WEST
CONSOLIDATED BALANCE SHEETS
As of December 31, | ||||||||
---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2004 | 2003 | ||||||
Assets | ||||||||
Cash and noninterest-bearing deposits in other banks | $ | 40,454 | $ | 44,292 | ||||
Federal funds sold | 17,365 | 1,190 | ||||||
Time deposits at other financial institutions | 3,350 | 350 | ||||||
Investment securities available for sale, at fair value | 269,189 | 275,403 | ||||||
Investment securities held to maturity, at cost; market value of $168,265 and $97,295 in 2004 and 2003 | 166,987 | 96,612 | ||||||
Loans, net of allowance for loan losses of $14,284 and $13,263 at December 31, 2004 and December 31, 2003 | 870,809 | 750,989 | ||||||
Interest receivable | 5,979 | 6,045 | ||||||
Premises and equipment, net | 22,426 | 16,557 | ||||||
Goodwill | 1,405 | 1,925 | ||||||
Other intangibles | 69 | 724 | ||||||
Cash value of life insurance | 28,362 | 24,138 | ||||||
Investment in housing tax credit limited partnerships | 8,623 | 8,717 | ||||||
Other assets | 12,750 | 7,600 | ||||||
Total assets | $ | 1,447,768 | $ | 1,234,542 | ||||
Liabilities | ||||||||
Deposits: | ||||||||
Noninterest-bearing demand | $ | 262,315 | $ | 206,709 | ||||
Negotiable orders of withdrawal | 170,870 | 136,975 | ||||||
Savings | 360,319 | 330,023 | ||||||
Time, under $100,000 | 193,913 | 182,363 | ||||||
Time, $100,000 and over | 166,740 | 172,738 | ||||||
Total deposits | 1,154,157 | 1,028,808 | ||||||
Other borrowings | 164,119 | 92,817 | ||||||
Junior subordinated debentures | 16,496 | 16,496 | ||||||
Accrued interest, taxes and other liabilities | 9,515 | 6,936 | ||||||
Total liabilities | 1,344,287 | 1,145,057 | ||||||
Shareholders’ Equity | ||||||||
Preferred stock, no par value; 10,000,000 shares authorized; none outstanding none outstanding | — | — | ||||||
Common stock, no par value; 30,000,000 shares authorized; 5,794,308 and 5,660,739 issued and outstanding at December 31, 2004 and 2003 | 57,139 | 54,228 | ||||||
Retained earnings | 45,981 | 34,816 | ||||||
Accumulated other comprehensive income, net | 361 | 441 | ||||||
Total shareholders’ equity | 103,481 | 89,485 | ||||||
Total Liabilities and Shareholders’ Equity | $ | 1,447,768 | $ | 1,234,542 |
See accompanying notes to consolidated financial statements.
52
CAPITAL CORP OF THE WEST
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
Years Ended December 31, | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands, except per share data) | 2004 | 2003 | 2002 | ||||||||||
Interest income: | |||||||||||||
Interest and fees on loans | 55,303 | $ | 48,948 | $ 43,503 | |||||||||
Interest on deposits with other financial institutions | 15 | 8 | 10 | ||||||||||
Interest on investment securities held to maturity: | |||||||||||||
Taxable | 2,488 | 2,756 | 3,561 | ||||||||||
Non-taxable | 2,167 | 800 | 220 | ||||||||||
Interest on investment securities available for sale: | |||||||||||||
Taxable | 10,288 | 9,076 | 10,091 | ||||||||||
Non-taxable | 44 | 551 | 1,089 | ||||||||||
Interest on federal funds sold | 266 | 274 | 337 | ||||||||||
Total interest income | 70,571 | 62,413 | 58,811 | ||||||||||
Interest expense: | |||||||||||||
Deposits: | |||||||||||||
Negotiable orders of withdrawal | 70 | 57 | 189 | ||||||||||
Savings | 3,165 | 2,691 | 3,172 | ||||||||||
Time, under $100,000 | 4,426 | 4,413 | 5,560 | ||||||||||
Time, $100,000 and over | 3,627 | 4,090 | 4,704 | ||||||||||
Total interest on deposits | 11,288 | 11,251 | 13,625 | ||||||||||
Interest on Subordinated Debentures | 1,152 | 648 | 631 | ||||||||||
Other borrowings | 4,657 | 4,354 | 4,598 | ||||||||||
Total Interest Expense | 17,097 | 16,253 | 18,854 | ||||||||||
Net interest income | 53,474 | 46,160 | 39,957 | ||||||||||
Provision for loan losses | 2,671 | 2,455 | 4,151 | ||||||||||
Net interest income after provision for loan losses | 50,803 | 43,705 | 35,806 | ||||||||||
Noninterest income: | |||||||||||||
Service charges on deposit accounts | 6,134 | 5,480 | 5,076 | ||||||||||
(Loss) gain on sale or impairment of available for sale securities | (3,665 | ) | — | 180 | |||||||||
Gain from sale of real estate | — | 608 | 33 | ||||||||||
Increase in cash surrender value of life insurance policies | 1,066 | 1,003 | 994 | ||||||||||
Other | 2,870 | 3,086 | 1,881 | ||||||||||
Total noninterest income | 6,405 | 10,177 | 8,164 | ||||||||||
Noninterest expenses: | |||||||||||||
Salaries and related benefits | 20,697 | 19,071 | 16,674 | ||||||||||
Premises and occupancy | 3,446 | 2,946 | 2,526 | ||||||||||
Equipment | 3,186 | 3,335 | 2,954 | ||||||||||
Professional fees | 1,671 | 1,662 | 1,177 | ||||||||||
Supplies | 873 | 794 | 780 | ||||||||||
Marketing | 1,062 | 963 | 900 | ||||||||||
Intangible amortization | 655 | 676 | 680 | ||||||||||
Other | 6,145 | 5,938 | 5,396 | ||||||||||
Total noninterest expenses | 37,735 | 35,385 | 31,087 | ||||||||||
Income before provision for income taxes | 19,473 | 18,497 | 12,883 | ||||||||||
Provision for income taxes | 7,150 | 4,857 | 2,455 | ||||||||||
Net income | $ | 12,323 | $ | 13,640 | $ 10,428 | ||||||||
Comprehensive income: | |||||||||||||
Unrealized (loss) gain on securities arising during the year, net | (80 | ) | (2,468 | ) | 1,250 | ||||||||
Comprehensive income | $ | 12,243 | $ | 11,172 | $ 11,678 | ||||||||
Basic earnings per share | $ | 2.15 | $ | 2.43 | $ 1.88 | ||||||||
Diluted earnings per share | $ | 2.06 | $ | 2.34 | $ 1.83 |
See accompanying notes to consolidated financial statements.
53
CAPITAL CORP OF THE WEST
CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY
Common Stock | ||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(In thousands) | Number of shares | Amounts | Retained Earnings | Accumulated Other Comprehensive Income (Loss), Net | Total | |||||||||||||||
Balance, December 31, 2001 | 4,927 | $ | 40,089 | $ | 22,372 | $ | 1,659 | $ | 64,120 | |||||||||||
Exercise of stock options, including tax benefit | 116 | 846 | — | — | 846 | |||||||||||||||
Issuance of shares pursuant to 401K and ESOP plans | 35 | 537 | — | — | 537 | |||||||||||||||
Net change in fair market value of investment securities, net of tax effect of $840 | — | — | — | 1,250 | 1,250 | |||||||||||||||
5% stock dividend, including cash payment for fractional shares | 247 | 4,964 | (4,976 | ) | — | (12 | ) | |||||||||||||
Net income | — | — | 10,428 | — | 10,428 | |||||||||||||||
Balance, December 31, 2002 | 5,325 | $ | 46,436 | $ | 27,824 | $ | 2,909 | $ | 77,169 | |||||||||||
Exercise of stock options, including tax benefit | 63 | 934 | — | — | 934 | |||||||||||||||
Issuance of shares pursuant to 401K and ESOP plans | 7 | 226 | — | — | 226 | |||||||||||||||
Net change in fair market value of investment securities, net of tax effect of $1,613 | — | — | — | (2,468 | ) | (2,468 | ) | |||||||||||||
5% stock dividend, including cash payment for fractional shares | 266 | 6,632 | (6,648 | ) | — | (16 | ) | |||||||||||||
Net income | — | — | 13,640 | — | 13,640 | |||||||||||||||
Balance, December 31, 2003 | 5,661 | $ | 54,228 | $ | 34,816 | $ | 441 | $ | 89,485 | |||||||||||
Exercise of stock options, including tax benefit (includes tax effect of $814) | 116 | 2,287 | — | — | 2,287 | |||||||||||||||
Issuance of shares pursuant to 401K and ESOP plans | 17 | 624 | — | — | 624 | |||||||||||||||
Net change in fair market value of investment securities, net of tax effect of $49 | — | — | — | (80 | ) | (80 | ) | |||||||||||||
Cash dividends | (1,158 | ) | (1,158 | ) | ||||||||||||||||
Net income | 12,323 | 12,323 | ||||||||||||||||||
Balance, December 31, 2004 | 5,794 | $ | 57,139 | $ | 45,981 | $ | 361 | $ | 103,481 |
See accompanying notes to consolidated financial statements.
54
CAPITAL CORP OF THE WEST
CONSOLIDATED STATEMENTS OF CASH FLOWS
Years Ended December 31, | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2004 | 2003 | 2002 | |||||||
Operating activities: | ||||||||||
Net income | $ | 12,323 | $ | 13,640 | $ 10,428 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||||
Provision for loan losses | 2,671 | 2,455 | 4,151 | |||||||
Increase in cash surrender value of life insurance policies, net of mortality expense | (1,066 | ) | (1,003 | ) | (994) | |||||
Depreciation, amortization and accretion, net | 6,520 | 5,457 | 3,851 | |||||||
Benefit from deferred income taxes | (552 | ) | (1,582 | ) | (2,097) | |||||
Loss (gain) on sale or impairment of available for sale investment securities | 3,665 | — | (180) | |||||||
Gain on sale of real estate | — | (608 | ) | (33) | ||||||
Net increase in interest receivable & other assets | (5,038 | ) | (1,200 | ) | 16 | |||||
Net increase (decrease) in accrued interest payable & other liabilities | 2,579 | 478 | (2,148) | |||||||
Net cash provided by operating activities | $ | 21,102 | $ | 17,637 | $ 12,994 | |||||
Investing activities: | ||||||||||
Investment security purchases — available for sale securities | (10,076 | ) | (47,757 | ) | (15,625) | |||||
Investment security purchases — held to maturity securities | (27,310 | ) | (14,400 | ) | — | |||||
Investment security purchases — mortgage-backed securities and collateralized mortgage obligations-available for sale | (74,080 | ) | (129,084 | ) | (57,500) | |||||
Investment security purchases — mortgage-backed securities and collateralized mortgage obligations — held to maturity | (53,047 | ) | (35,305 | ) | (28,029) | |||||
Proceeds from maturities of available for sale investment securities | 22,306 | 45,417 | 23,736 | |||||||
Proceeds from maturities of held to maturity investment securities | 15 | 5,515 | — | |||||||
Proceeds from maturities of mortgage-backed securities and collateralized mortgage obligations — available for sale | 47,828 | 56,942 | 33,281 | |||||||
Proceeds from maturities of mortgage-backed securities and collateralized mortgage obligations — held to maturity | 8,542 | 27,827 | 13,961 | |||||||
Proceeds from sales of available for sale investment securities | 15,974 | — | 7,952 | |||||||
Proceeds from sales of mortgage-backed securities and collateralized mortgage obligations — available for sale | 595 | — | 8,048 | |||||||
Net (increase) decrease in time deposits in other financial institutions | (3,000 | ) | 150 | — | ||||||
Proceeds from sales of commercial and real estate loans | 2,959 | 4,026 | 2,246 | |||||||
Origination of loans | (650,229 | ) | (567,501 | ) | (445,741) | |||||
Proceeds from repayment of loans | 522,595 | 429,655 | 339,242 | |||||||
Purchases of premises and equipment | (7,586 | ) | (3,960 | ) | (2,702) | |||||
Proceeds from sales of real estate | — | 832 | 275 | |||||||
Purchase of bank owned life insurance | (3,175 | ) | (6,000 | ) | (172) | |||||
Sale (purchase) of subsidiary | 520 | — | (520) | |||||||
Net cash used in investing activities | $ | (207,169 | ) | $ | (233,643 | ) | $(121,548) | |||
Financing activities: | ||||||||||
Net increase in demand, NOW and savings deposits | 119,797 | 165,002 | 70,433 | |||||||
Net increase in certificates of deposit | 5,552 | 29,427 | 31,305 | |||||||
Proceeds from borrowings | 96,900 | 5,000 | 29,519 | |||||||
Repayment of borrowings | (25,598 | ) | (22,387 | ) | — | |||||
Issued shares for benefit plan purchases | 624 | 226 | 537 | |||||||
Payment for fractional shares | — | (16 | ) | (12) | ||||||
Issuance of Junior Subordinated Debentures | — | 10,310 | — | |||||||
Cash dividends paid | (1,158 | ) | — | — | ||||||
Exercise of stock options, net | 2,287 | 743 | 667 | |||||||
Net cash provided by financing activities | $ | 198,404 | $ | 188,305 | $ 132,449 | |||||
Net increase (decrease) in cash and cash equivalents | 12,337 | (27,701 | ) | 23,895 | ||||||
Cash and cash equivalents at beginning of year | 45,482 | 73,183 | 49,288 | |||||||
Cash and cash equivalents at end of year | $ | 57,819 | $ | 45,482 | $ 73,183 | |||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||||
Investment securities unrealized (losses) gains, net of taxes | $ | (80 | ) | $ | (2,468 | ) | $1,250 | |||
Interest paid | 16,900 | 16,054 | 18,436 | |||||||
Income tax payments | 10,271 | 4,355 | 4,531 | |||||||
Transfer of securities from available for sale to held to maturity | — | 24,557 | — | |||||||
Loans transferred to other real estate owned | $ | — | $ | 224 | $— |
See accompanying notes to consolidated financial statements.
55
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1. Summary of Significant Accounting Policies
56
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
57
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
58
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
59
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
For The Twelve Months Ended December 31, | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands, except per share data) | 2004 | 2003 | 2002 | |||||||||
Basic EPS computation: | ||||||||||||
Net income | $ | 12,323 | $ | 13,640 | $ | 10,428 | ||||||
Average common shares outstanding | 5,735 | 5,612 | 5,538 | |||||||||
Basic EPS | $ | 2.15 | $ | 2.43 | $ | 1.88 | ||||||
Diluted EPS computations: | ||||||||||||
Net income | $ | 12,323 | $ | 13,640 | $ | 10,428 | ||||||
Average common shares outstanding | 5,735 | 5,612 | 5,538 | |||||||||
Effect of stock options | 240 | 224 | 152 | |||||||||
Total weighted average shares and common stock equivalents | 5,975 | 5,836 | 5,690 | |||||||||
Diluted EPS | $ | 2.06 | $ | 2.34 | $ | 1.83 |
60
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Years Ended December 31, | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2004 | 2003 | 2002 | |||||||||
Net income | ||||||||||||
As reported net income | $ | 12,323 | $ | 13,640 | $ | 10,428 | ||||||
Stock option compensation, net of income tax effect | 876 | 582 | 424 | |||||||||
Proforma net income | 11,447 | 13,058 | 10,004 | |||||||||
Basic earnings per share | ||||||||||||
As reported | 2.15 | 2.43 | 1.88 | |||||||||
Proforma | 2.00 | 2.33 | 1.80 | |||||||||
Diluted earnings per share | ||||||||||||
As reported | 2.06 | 2.34 | 1.83 | |||||||||
Proforma | 1.92 | 2.24 | 1.75 |
61
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 2. Investment Securities
(Dollars in thousands) | Amortized Cost | Gross Unrealized Gains | Gross Unrealized Losses | Estimated Fair Value | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 | ||||||||||||||||
Available for sale securities: | ||||||||||||||||
U.S. Treasury and U.S. Government agencies | $ | 25,309 | $ | 18 | $ | 199 | $ | 25,128 | ||||||||
State & political subdivisions | 1,312 | 13 | — | 1,325 | ||||||||||||
Mortgage-backed securities | 137,868 | 914 | 701 | 138,081 | ||||||||||||
Collateralized mortgage obligations | 62,340 | 39 | 497 | 61,882 | ||||||||||||
Total debt securities | 226,829 | 984 | 1,397 | 226,416 | ||||||||||||
Agency preferred stock | 18,001 | — | — | 18,001 | ||||||||||||
Equity securities | 25,050 | — | 278 | 24,772 | ||||||||||||
Total available for sale securities | $ | 269,880 | $ | 984 | $ | 1,675 | $ | 269,189 | ||||||||
Held to maturity securities: | ||||||||||||||||
State and political subdivisions | $ | 69,894 | $ | 1,394 | $ | 304 | $ | 70,984 | ||||||||
Mortgage-backed securities | 72,713 | 732 | 363 | 73,082 | ||||||||||||
Collateralized mortgage obligations | 24,380 | — | 181 | 24,199 | ||||||||||||
Total held to maturity securities | $ | 166,987 | $ | 2,126 | $ | 848 | $ | 168,265 | ||||||||
2003 | ||||||||||||||||
Available for sale securities: | ||||||||||||||||
U.S. Treasury and U.S. Government agencies | $ | 55,029 | $ | 478 | $ | 238 | $ | 55,269 | ||||||||
State & political subdivisions | 1,068 | 6 | 1 | 1,073 | ||||||||||||
Mortgage-backed securities | 129,196 | 1,329 | 343 | 130,182 | ||||||||||||
Collateralized mortgage obligations | 45,356 | 242 | 331 | 45,267 | ||||||||||||
Corporate debt securities | 3,018 | 60 | — | 3,078 | ||||||||||||
Total debt securities | 233,667 | 2,115 | 913 | 234,869 | ||||||||||||
Agency preferred stock | 14,832 | — | 1,824 | 13,008 | ||||||||||||
Trust preferred stock | 5,533 | — | 510 | 5,023 | ||||||||||||
Equity securities | 22,600 | — | 97 | 22,503 | ||||||||||||
Total available for sale securities | $ | 276,632 | $ | 2,115 | $ | 3,344 | $ | 275,403 | ||||||||
Held to maturity securities: | ||||||||||||||||
State and political subdivisions | $ | 42,482 | $ | 420 | $ | 247 | $ | 42,655 | ||||||||
Mortgage-backed securities | 40,185 | 1,028 | 419 | 40,794 | ||||||||||||
Total held to maturity securities | 13,945 | 16 | 115 | 13,846 | ||||||||||||
$ | 96,612 | $ | 1,464 | $ | 781 | $ | 97,295 |
62
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
for sale securities of $50,000, $0, and $279,000 were recognized in 2004, 2003, and 2002. Gross losses on sale of available for sale securities were $3,715,000, $0, and $0 in 2004, 2003, and 2002. The gross losses on sale of available for sale securities in 2004 is composed of an unrealized other-than-temporary impairment loss of $3,709,000 and a realized loss of $6,000 on the sale of available for sale securities.
(Dollars in thousands) | Amortized Cost | Estimated Fair Value | ||||||
---|---|---|---|---|---|---|---|---|
Available for sale debt securities: | ||||||||
One year or less | $ | 5,000 | $ | 4,979 | ||||
One to five years | 20,273 | 20,112 | ||||||
Five to ten years | 295 | 298 | ||||||
Over ten years | 1,053 | 1,064 | ||||||
Mortgage-backed securities and CMOs | 200,208 | 199,963 | ||||||
Total available for sale debt securities | $ | 226,829 | $ | 226,416 | ||||
Held to maturity debt securities: | ||||||||
One year or less | $ | — | $ | — | ||||
One to five years | 3,707 | 3,878 | ||||||
Five to ten years | 22,434 | 23,214 | ||||||
Over ten years | 43,753 | 43,892 | ||||||
Mortgage-backed securities and CMOs | 97,093 | 97,281 | ||||||
Total held to maturity debt securities | $ | 166,987 | $ | 168,265 |
63
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Less than 12 months | 12 months or more | Total | |||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | Unrealized Losses | Fair Value | |||||||||||||||||||
Available for sale: | |||||||||||||||||||||||||
U.S. government agencies | $ | 70 | $ | 9,930 | $ | 129 | $ | 9,876 | $ | 199 | $ | 19,806 | |||||||||||||
State and political subdivisions | — | — | — | — | — | — | |||||||||||||||||||
Mortgage-backed securities | 605 | 76,754 | 96 | 7,283 | 701 | 84,037 | |||||||||||||||||||
Collateralized mortgage Obligations | 471 | 47,239 | 26 | 5,058 | 497 | 52,297 | |||||||||||||||||||
Equity securities | 17 | 2,983 | 261 | 12,738 | 278 | 15,721 | |||||||||||||||||||
$ | 1,163 | $ | 136,906 | $ | 512 | $ | 34,955 | $ | 1,675 | $ | 171,861 | ||||||||||||||
Held to maturity securities: | |||||||||||||||||||||||||
State and political subdivisions | $ | 304 | $ | 23,448 | $ | — | $ | — | $ | 304 | $ | 23,448 | |||||||||||||
Mortgage-backed securities | 10 | 2,786 | 353 | 12,487 | 363 | 15,273 | |||||||||||||||||||
Collateralized mortgage Obligations | 181 | 24,199 | — | — | 181 | 24,199 | |||||||||||||||||||
$ | 495 | $ | 50,433 | $ | 353 | $ | 12,487 | $ | 848 | $ | 62,920 |
64
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 3. Loans
(Dollars in thousands) | 2004 | 2003 | ||||||
---|---|---|---|---|---|---|---|---|
Commercial | $ | 217,524 | $ | 195,588 | ||||
Agricultural | 80,598 | 92,550 | ||||||
Real estate—mortgage | 416,385 | 318,624 | ||||||
Real estate — construction | 97,396 | 89,652 | ||||||
Consumer | 73,190 | 67,838 | ||||||
Gross loans | 885,093 | 764,252 | ||||||
Less allowance for loan losses | (14,284 | ) | (13,263 | ) | ||||
Net loans | $ | 870,809 | $ | 750,989 |
65
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands) | 2004 | 2003 | ||||||
---|---|---|---|---|---|---|---|---|
Commercial | $ | 3,966 | $ | 3,477 | ||||
Agricultural | 382 | 448 | ||||||
Consumer and other | 46 | 62 | ||||||
$ | 4,394 | $ | 3,987 |
(Dollars in thousands) | 2004 | 2003 | 2002 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Balance at beginning of year | $ | 13,263 | $ | 12,134 | $ | 9,743 | ||||||
Loans charged-off | (2,296 | ) | (1,995 | ) | (2,589 | ) | ||||||
Recoveries of loans previously charged-off | 646 | 669 | 829 | |||||||||
Provision for loan losses | 2,671 | 2,455 | 4,151 | |||||||||
Balance at end of year | $ | 14,284 | $ | 13,263 | $ | 12,134 |
(Dollars in thousands) | 2004 | 2003 | ||||||
---|---|---|---|---|---|---|---|---|
Balance at beginning of year | $ | 2,452 | $ | 2,173 | ||||
Loan advances and renewals | 190 | 835 | ||||||
Loans matured or collected | (509 | ) | (556 | ) | ||||
Balance at end of year | $ | 2,133 | $ | 2,452 |
66
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 4. Premises and Equipment
(Dollars in thousands) | 2004 | 2003 | ||||||
---|---|---|---|---|---|---|---|---|
Land | $ | 3,104 | $ | 2,553 | ||||
Buildings | 16,701 | 12,686 | ||||||
Leasehold improvements | 2,827 | 2,045 | ||||||
Furniture and equipment | 16,310 | 14,203 | ||||||
Subtotal | $ | 38,942 | $ | 31,487 | ||||
Less accumulated depreciation and amortization | 16,516 | 14,930 | ||||||
Premises and equipment, net | $ | 22,426 | $ | 16,557 |
NOTE 5. Other Borrowings
As of December 31,
(Dollars in Millions) | 2004 | 2003 | 2002 | |||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amount | Interest Rate(s) | Amount | Interest Rate(s) | Amount | Interest Rate(s) | |||||||||||||||||||
Treasury Tax Loan (1) | $ | 5,853 | 1.87 | % | $ | 6,467 | .98 | % | $ | 6,303 | .98 | % | ||||||||||||
FHLB advances | 59,900 | 2.18–6.83% | 18,175 | 1.0–5.09% | 23,700 | 1.37–4.47% | ||||||||||||||||||
Total short term borrowings | $ | 65,753 | $ | 24,642 | $ | 30,003 |
(1) | The Treasury tax loan is a variable rate product that reprices weekly based on the Federal Funds rate. The account is payable on a daily basis. |
(Dollars in millions) | 2004 | 2003 | 2002 | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Weighted Average Interest Rate(s) | Maturity Dates | Amount | Amount | Amount | ||||||||||||||||
Mortgage note | 7.80% | 2007 | $ | 2,940 | $ | 3,004 | $ | 3,060 | ||||||||||||
FHLB advances | 5.09% | 2006–2011 | 95,426 | 65,171 | 77,141 | |||||||||||||||
Total long term borrowings | $ | 98,366 | $ | 68,175 | $ | 80,201 |
67
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Years ended December 31, (Dollars in thousands) | ||||
---|---|---|---|---|
2005 | $ | 68,025 | ||
2006 | 37,108 | |||
2007 | 26,718 | |||
2008 | 212 | |||
2009 | 10,204 | |||
Thereafter | 21,852 | |||
Total borrowed funds | $ | 164,119 |
NOTE 6. Junior Subordinated Debentures
68
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 7. Income Taxes
(Dollars in thousands) | Federal | State | Total | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
2004 | ||||||||||||
Current | $ | 3,528 | $ | 4,174 | $ | 7,702 | ||||||
Deferred | (256 | ) | (296 | ) | (552 | ) | ||||||
$ | 3,272 | $ | 3,878 | $ | 7,150 | |||||||
2003 | ||||||||||||
Current | $ | 4,906 | $ | 1,533 | $ | 6,439 | ||||||
Deferred | (767 | ) | (815 | ) | (1,582 | ) | ||||||
$ | 4,139 | $ | 718 | $ | 4,857 | |||||||
2002 | ||||||||||||
Current | $ | 4,416 | $ | 136 | $ | 4,552 | ||||||
Deferred | (1,124 | ) | (973 | ) | (2,097 | ) | ||||||
$ | 3,292 | $ | (837 | ) | $ | 2,455 |
(Dollars in thousands) | 2004 | 2003 | ||||||
---|---|---|---|---|---|---|---|---|
Deferred tax assets: | ||||||||
Allowance for loan losses | $ | 6,006 | $ | 5,576 | ||||
Other than temporary impairment of equity securities | 1,560 | — | ||||||
Deferred compensation | 1,512 | 1,314 | ||||||
Intangible amortization | 904 | 918 | ||||||
Nonaccrual interest | 83 | 319 | ||||||
Fixed assets | — | 146 | ||||||
Other | 723 | 612 | ||||||
Total gross deferred tax assets | 10,788 | 8,885 | ||||||
Less valuation allowance | (424 | ) | (20 | ) | ||||
Deferred tax assets | 10,364 | $ | 8,865 | |||||
Deferred tax liabilities: | ||||||||
Investment in partnerships | 657 | 559 | ||||||
FHLB stock dividends | 292 | 251 | ||||||
Capitalization of loan costs and prepaid assets | 531 | — | ||||||
Investment securities unrealized gain | 217 | 266 | ||||||
Fixed assets | 140 | — | ||||||
Insurance accrual | 53 | 44 | ||||||
Other | 128 | — | ||||||
Total gross deferred tax liabilities | 2,018 | 1,120 | ||||||
Net deferred tax assets | $ | 8,346 | $ | 7,745 |
69
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands) | 2004 | 2003 | 2002 | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
Statutory federal income tax rate due, computed at an effective tax rate of 35% in 2004 and 2003 and 34% in 2002 | $ | 6,815 | $ | 6,474 | $ | 4,380 | ||||||
State franchise tax, at statutory rate, net of federal income tax benefit | 2,521 | 467 | (552 | ) | ||||||||
Tax exempt interest income, net | (726 | ) | (442 | ) | (407 | ) | ||||||
Housing tax credits | (1,028 | ) | (975 | ) | (750 | ) | ||||||
Dividends received deduction | (112 | ) | (134 | ) | (168 | ) | ||||||
Increase in tax valuation allowance | 404 | — | — | |||||||||
Cash surrender value life insurance | (367 | ) | (314 | ) | (309 | ) | ||||||
Other | (357 | ) | (219 | ) | 261 | |||||||
Provision for income taxes | $ | 7,150 | $ | 4,857 | $ | 2,455 |
NOTE 8. Regulatory Matters
70
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
71
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands) | Actual | For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||
The Company: | |||||||||||||||||||||||||
Total capital (to risk weighted assets) | 131,743 | 11.55 | % | 91,287 | 8 | % | 114,108 | 10 | % | ||||||||||||||||
Tier I capital (to risk weighted assets) | 117,479 | 10.30 | % | 45,643 | 4 | % | 68,465 | 6 | % | ||||||||||||||||
Leverage ratio(1) | 117,479 | 8.46 | % | 55,574 | 4 | % | 69,467 | 5 | % | ||||||||||||||||
The Bank: | |||||||||||||||||||||||||
Total capital (to risk weighted assets) | 119,253 | 10.47 | % | 91,081 | 8 | % | 113,851 | 10 | % | ||||||||||||||||
Tier I capital (to risk weighted assets) | 105,021 | 9.22 | % | 45,541 | 4 | % | 68,311 | 6 | % | ||||||||||||||||
Leverage ratio(1) | 105,021 | 7.58 | % | 55,440 | 4 | % | 69,300 | 5 | % |
(1) | The leverage ratio consists of Tier 1 capital divided by quarterly average assets. The minimum leverage ratio is 3 percent for banking organizations that do not anticipate significant growth and that have well diversified risk, excellent asset quality and in general, are considered top-rated banks. |
(Dollars in thousands) | Actual | For Capital Adequacy Purposes | To Be Well Capitalized Under Prompt Corrective Action Provisions | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Amount | Ratio | Amount | Ratio | Amount | Ratio | ||||||||||||||||||||
The Company: | |||||||||||||||||||||||||
Total capital (to risk weighted assets) | 113,543 | 11.57 | % | 78,536 | 8 | % | 98,170 | 10 | % | ||||||||||||||||
Tier I capital (to risk weighted assets) | 101,259 | 10.31 | % | 39,268 | 4 | % | 58,902 | 6 | % | ||||||||||||||||
Leverage ratio(1) | 101,259 | 8.55 | % | 47,364 | 4 | % | 59,205 | 5 | % | ||||||||||||||||
The Bank: | |||||||||||||||||||||||||
Total capital (to risk weighted assets) | 102,842 | 10.50 | % | 78,325 | 8 | % | 97,907 | 10 | % | ||||||||||||||||
Tier I capital (to risk weighted assets) | 90,591 | 9.25 | % | 39,163 | 4 | % | 58,744 | 6 | % | ||||||||||||||||
Leverage ratio(1) | 90,591 | 7.66 | % | 47,305 | 4 | % | 59,131 | 5 | % |
(1) | The leverage ratio consists of Tier 1 capital divided by quarterly average assets. The minimum leverage ratio is 3 percent for banking organizations that do not anticipate significant growth and that have well diversified risk, excellent asset quality and in general, are considered top-rated banks. |
72
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 9. Commitments and Financial Instruments With Off-Balance Sheet Credit Risk
Years ended December 31, (Dollars in thousands) | |||
---|---|---|---|
2005 | $ | 1,237 | |
2006 | 1,016 | ||
2007 | 788 | ||
2008 | 765 | ||
2009 | 702 | ||
Thereafter | 3,397 | ||
Total minimum lease payments | $ | 7,905 |
As of December 31, | ||||||||
---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2004 | 2003 | ||||||
Commitments to extend credit | $ | 393,039 | $ | 348,282 | ||||
Standby letters of credit | 13,875 | 7,380 |
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CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Note 10. Time Deposits
Years ended December 31, (Dollars in thousands) | |||
---|---|---|---|
2005 | $ | 277,184 | |
2006 | 18,316 | ||
2007 | 31,348 | ||
2008 | 4,774 | ||
2009 | 28,909 | ||
Thereafter | 122 | ||
Total time deposits | $ | 360,653 |
NOTE 11. Employee and Director Benefit Plans
74
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 12. Stock Option Plan
2004 | 2003 | 2002 | ||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Number of shares | Weighted average exercise price | Number of shares | Weighted average exercise price | Number of shares | Weighted average exercise price | |||||||||||||||||||
Outstanding at beginning of year | 388,877 | $ | 14.67 | 378,785 | $ | 11.73 | 434,915 | $ | 8.84 | |||||||||||||||
Granted | 106,500 | 38.82 | 79,825 | 26.40 | 89,531 | 16.93 | ||||||||||||||||||
Exercised | (116,075 | ) | 12.69 | (63,421 | ) | 11.73 | (119,898 | ) | 5.46 | |||||||||||||||
Forfeited | (5,938 | ) | 25.20 | (6,312 | ) | 16.42 | (25,763 | ) | 10.15 | |||||||||||||||
Outstanding at end of year | 373,364 | $ | 22.00 | 388,877 | $ | 14.67 | 378,785 | $ | 11.73 | |||||||||||||||
Options exercisable at end of year | 239,269 | $ | 16.17 | 269,886 | $ | 11.94 | 251,206 | $ | 10.55 |
Options Outstanding | Options exercisable | |||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Range of exercise prices | Number of shares outstanding | Weighted remaining contractual life | Weighted average exercise price | Number exercisable | Weighted average exercise price | |||||||||||||||
$ 6–15 | 178,812 | 5.40 | Years | $ | 10.98 | 170,412 | $ | 10.81 | ||||||||||||
15–24 | 57,227 | 7.85 | 20.98 | 29,907 | 20.69 | |||||||||||||||
24–33 | 21,950 | 8.51 | 28.42 | 8,450 | 29.18 | |||||||||||||||
33–42 | 106,375 | 9.08 | 37.71 | 28,250 | 37.48 | |||||||||||||||
42–49 | 9,000 | 9.84 | 46.25 | 2,250 | 46.25 | |||||||||||||||
$ 6–49 | 373,364 | 7.11 | Years | $ | 22.00 | 239,269 | $ | 16.17 |
75
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 13. Fair Value of Financial Instruments
Financial Assets:
Financial Liabilities:
76
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
(Dollars in thousands) | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
2004 | Carrying Amount | Fair Value | ||||||||
Financial assets: | ||||||||||
Cash and cash equivalents | $ | 40,454 | $ | 40,454 | ||||||
Federal funds sold | 17,365 | 17,365 | ||||||||
Time deposits at other financial institutions | 3,350 | 3,350 | ||||||||
Available for sale investment securities | 269,189 | 269,189 | ||||||||
Held to maturity investment securities | 166,987 | 168,265 | ||||||||
Interest receivable | 5,979 | 5,979 | ||||||||
Bank owned life insurance | 28,362 | 28,362 | ||||||||
Net loans | 870,809 | 870,124 | ||||||||
Financial liabilities | ||||||||||
Noninterest-bearing demand | 262,315 | 262,315 | ||||||||
Negotiable orders of withdrawal | 170,870 | 170,870 | ||||||||
Savings | 360,319 | 360,319 | ||||||||
Time deposits | 360,653 | 360,653 | ||||||||
Borrowings | 164,119 | 164,995 | ||||||||
Subordinated debentures | 16,496 | 19,690 | ||||||||
Contract Amount | ||||||||||
Off-balance sheet: | ||||||||||
Loan commitments | $ | 393,039 | $ | 2,948 | ||||||
Standby letters of credit | 13,875 | 1,388 |
(Dollars in thousands) | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|
2003 | Carrying Amount | Fair Value | ||||||||
Financial assets: | ||||||||||
Cash and cash equivalents | $ | 44,292 | $ | 44,292 | ||||||
Federal funds sold | 1,190 | 1,190 | ||||||||
Time deposits at other financial institutions | 350 | 350 | ||||||||
Available for sale investment securities | 275,403 | 275,403 | ||||||||
Held to maturity investment securities | 96,612 | 97,295 | ||||||||
Interest receivable | 6,045 | 6,045 | ||||||||
Bank owned life insurance | 24,138 | 24,138 | ||||||||
Net loans | 750,989 | 751,128 | ||||||||
Fair value of interest rate swap | 418 | 418 | ||||||||
Financial liabilities | ||||||||||
Noninterest-bearing demand | 206,709 | 206,709 | ||||||||
Negotiable orders of withdrawal | 136,975 | 136,975 | ||||||||
Savings | 330,023 | 330,023 | ||||||||
Time deposits | 355,101 | 357,016 | ||||||||
Borrowings | 92,817 | 96,723 | ||||||||
Subordinated debentures | $ | 16,496 | $ | 17,760 | ||||||
Contract Amount | ||||||||||
Off-balance sheet: | ||||||||||
Loan commitments | $ | 348,282 | $ | 2,612 | ||||||
Standby letters of credit | 7,380 | 738 | ||||||||
Borrowed funds commitment | 20,000 | 0 |
77
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 14. Parent Company Only Financial Information
Condensed balance sheets
December 31, | ||||||||
---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2004 | 2003 | ||||||
Assets | ||||||||
Cash and short-term investments | $ | 10,397 | $ | 8,836 | ||||
Investment in County Bank | 107,023 | 94,297 | ||||||
Investment in Regency Investment Advisors | — | 609 | ||||||
Net premises and equipment | 765 | 796 | ||||||
Other assets | 3,695 | 2,858 | ||||||
Total assets | $ | 121,880 | $ | 107,396 | ||||
Liabilities and shareholders’ equity | ||||||||
Liabilities | ||||||||
Subordinated debentures | $ | 16,496 | $ | 16,496 | ||||
Capitalized lease | 724 | 1,086 | ||||||
Other liabilities | 1,179 | 329 | ||||||
Total liabilities | 18,399 | $ | 17,911 | |||||
Total shareholders’ equity | 103,481 | 89,485 | ||||||
Total liabilities and shareholders’ equity | $ | 121,880 | $ | 107,396 |
Condensed statements of income
Years Ended December 31, | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2004 | 2003 | 2002 | |||||||||
Income | ||||||||||||
Interest | $ | 107 | $ | 10 | $ | 31 | ||||||
Lease income | — | — | 45 | |||||||||
Management fees from subsidiaries | 12,337 | 8,717 | 6,556 | |||||||||
Other noninterest income | 109 | 45 | 19 | |||||||||
Total income | 12,553 | 8,772 | 6,651 | |||||||||
Expenses | ||||||||||||
Interest on borrowings | 1,088 | 648 | 631 | |||||||||
Capitalized lease interest | 72 | 83 | 45 | |||||||||
Salaries and related benefits | 5,506 | 4,701 | 3,928 | |||||||||
Other noninterest expense | 6,704 | 4,091 | 2,902 | |||||||||
Total other expenses | 13,370 | 9,523 | 7,506 | |||||||||
Loss before income taxes and equity in undistributed earnings of subsidiaries | (817 | ) | (751 | ) | (855 | ) | ||||||
Income tax benefit | 290 | 290 | 333 | |||||||||
Equity in undistributed income of subsidiaries | 12,850 | 14,101 | 10,950 | |||||||||
Net income | $ | 12,323 | $ | 13,640 | $ | 10,428 |
78
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
Condensed statements of cashflows
Years Ended December 31, | ||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | 2004 | 2003 | 2002 | |||||||||
Operating activities: | ||||||||||||
Net income | $ | 12,323 | $ | 13,640 | $ | 10,428 | ||||||
Adjustments to reconcile net income to net cash used in operating activities: | ||||||||||||
Depreciation of fixed assets | 344 | 337 | 416 | |||||||||
Equity in undistributed earnings of subsidiaries | (12,850 | ) | (14,101 | ) | (10,950 | ) | ||||||
Increase in other assets | (793 | ) | (704 | ) | (602 | ) | ||||||
Increase (decrease) in other liabilities | 850 | (419 | ) | (218 | ) | |||||||
Net cash used in operating activities | (126 | ) | (1,247 | ) | (926 | ) | ||||||
Investing activities: | ||||||||||||
Capital contribution to subsidiary bank | — | (2,184 | ) | — | ||||||||
Sale (purchase) of subsidiary plus additional capital contributions | 609 | — | (645 | ) | ||||||||
Purchase of premises and equipment | (313 | ) | (263 | ) | (609 | ) | ||||||
Net cash provided by (used in) investing activities | 296 | (2,447 | ) | (1,254 | ) | |||||||
Financing activities: | ||||||||||||
Issuance of Junior Subordinated Debentures | — | 10,310 | — | |||||||||
Net (decrease) increase in other borrowings and capitalized lease | (362 | ) | 765 | (322 | ) | |||||||
Issuance of common stock related to exercise of stock options and employee benefit plans | 2,911 | 969 | 1,204 | |||||||||
Cash dividends and fractional shares | (1,158 | ) | (16 | ) | (12 | ) | ||||||
Net cash provided by financing activities | 1,391 | 12,028 | 870 | |||||||||
Increase (decrease) in cash and cash equivalents | 1,561 | 8,334 | (1,310 | ) | ||||||||
Cash and cash equivalents at beginning of year | 8,836 | 502 | 1,812 | |||||||||
Cash and cash equivalents at end of year | $ | 10,397 | $ | 8,836 | $ | 502 |
79
CAPITAL CORP OF THE WEST
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (continued)
NOTE 15. Quarterly Results of Operations (Unaudited)
2004 Quarter Ended | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | Dec 31 | Sept 30 | June 30 | Mar 31 | ||||||||||||
Interest income | $ | 18,784 | $ | 17,587 | $ | 17,294 | $ | 16,906 | ||||||||
Interest expense | 4,586 | 4,256 | 4,136 | 4,119 | ||||||||||||
Net interest income | 14,198 | 13,331 | 13,158 | 12,787 | ||||||||||||
Provision for loan losses | 670 | 760 | 621 | 620 | ||||||||||||
Other income | (1,245 | ) | 2,619 | 2,591 | 2,440 | |||||||||||
Other expenses | 9,856 | 9,165 | 9,388 | 9,326 | ||||||||||||
Income before income taxes | 2,427 | 6,025 | 5,740 | 5,281 | ||||||||||||
Income taxes | 1,611 | 2,042 | 1,860 | 1,637 | ||||||||||||
Net income | 816 | 3,983 | 3,880 | 3,644 | ||||||||||||
Basic earnings per share (1) | $ | 0.14 | $ | 0.69 | $ | 0.68 | $ | 0.64 | ||||||||
Diluted earnings per share (1) | $ | 0.14 | $ | 0.67 | $ | 0.66 | $ | 0.62 |
2003 Quarter Ended | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
(Dollars in thousands) | Dec 31 | Sept 30 | June 30 | Mar 31 | ||||||||||||
Interest income | $ | 16,217 | $ | 16,052 | $ | 15,501 | $ | 14,643 | ||||||||
Interest expense | 3,926 | 4,142 | 4,173 | 4,012 | ||||||||||||
Net interest income | 12,291 | 11,910 | 11,328 | 10,631 | ||||||||||||
Provision for loan losses | 551 | 751 | 482 | 671 | ||||||||||||
Other income | 2,896 | 2,549 | 2,401 | 2,331 | ||||||||||||
Other expenses | 9,191 | 8,996 | 8,838 | 8,360 | ||||||||||||
Income before income taxes | 5,445 | 4,712 | 4,409 | 3,931 | ||||||||||||
Income taxes | 1,855 | 1,084 | 1,014 | 904 | ||||||||||||
Net income | $ | 3,590 | $ | 3,628 | $ | 3,395 | $ | 3,027 | ||||||||
Basic earnings per share (1) | $ | 0.64 | $ | 0.65 | $ | 0.61 | $ | 0.54 | ||||||||
Diluted earnings per share (1) | $ | 0.61 | $ | 0.62 | $ | 0.59 | $ | 0.52 |
(1) | Basic and diluted earnings per share calculations are based upon the weighted average number of shares outstanding during each period. Full year weighted average shares differ from quarterly weighted average shares and, therefore, annual earnings per share may not equal the sum of the quarters. |
80