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Exhibit 99.2
FIRST NATIONAL BANK
Unaudited Consolidated Balance Sheets
(dollars in thousands)
| March 31, 2002 | December 31, 2001 | ||||||||
---|---|---|---|---|---|---|---|---|---|---|
Assets | ||||||||||
Cash and due from banks | $ | 31,052 | $ | 46,579 | ||||||
Federal funds sold | 22,000 | 80,000 | ||||||||
Money market mutual funds | 32,027 | 66,704 | ||||||||
Total cash and cash equivalents | 85,079 | 193,283 | ||||||||
Securities available-for-sale | 136,540 | 96,638 | ||||||||
Loans, net | 407,197 | 405,826 | ||||||||
Allowance for loan losses | (10,239 | ) | (10,668 | ) | ||||||
Net loans | 396,958 | 395,158 | ||||||||
Federal Reserve Bank and Federal Home Loan Bank stock | 5,446 | 5,446 | ||||||||
Premises and equipment, net | 5,507 | 5,847 | ||||||||
Deferred income taxes | 7,906 | 7,879 | ||||||||
Accrued interest and other assets | 11,695 | 9,769 | ||||||||
Total assets | $ | 649,131 | $ | 714,020 | ||||||
Liabilities and Shareholders' Equity | ||||||||||
Noninterest bearing deposits | $ | 144,448 | $ | 150,561 | ||||||
Interest bearing deposits | 380,506 | 438,154 | ||||||||
Total deposits | 524,954 | 588,715 | ||||||||
Borrowings | 68,000 | 68,268 | ||||||||
Accrued expenses and other liabilities | 4,601 | 5,512 | ||||||||
Total liabilities | 597,555 | 662,495 | ||||||||
Commitments and contingencies | ||||||||||
Shareholders' equity: | ||||||||||
Common stock, $1 par value, authorized 60,000,000 shares; issued and outstanding 9,803,732 shares in 2002 and 9,664,472 shares in 2001 | 9,804 | 9,665 | ||||||||
Preferred Stock, $1 par value, authorized 5,000,000 shares; issued and outstanding 1,412,202 shares in 2002 and 1,392,600 shares in 2001 | 1,412 | 1,393 | ||||||||
Additional paid-in capital | 45,947 | 45,351 | ||||||||
Accumulated deficit, since July 1, 2000; ($29,274 eliminated July 1, 2000 in connection with quasi reorganization) | (5,720 | ) | (5,367 | ) | ||||||
Accumulated other comprehensive income-unrealized gains on securities available-for-sale, net | 133 | 483 | ||||||||
Total shareholders' equity | 51,576 | 51,525 | ||||||||
Total liabilities and shareholders' equity | $ | 649,131 | $ | 714,020 | ||||||
See accompanying notes to unaudited consolidated financial statements.
1
FIRST NATIONAL BANK
Unaudited Condensed Consolidated Statements of Income
(dollars in thousands except per share data)
| Three months ended March 31, | |||||||||
---|---|---|---|---|---|---|---|---|---|---|
| 2002 | 2001 | ||||||||
Interest income | $ | 9,020 | $ | 13,943 | ||||||
Interest expense | 2,940 | 6,453 | ||||||||
Net interest income | 6,080 | 7,490 | ||||||||
Provision for loan losses | 900 | 1,125 | ||||||||
Net interest income after provision for loan losses | 5,180 | 6,365 | ||||||||
Noninterest income: | ||||||||||
Data processing fees | 639 | 628 | ||||||||
Service charges on deposit accounts | 564 | 316 | ||||||||
Merchant processing fees | 117 | 133 | ||||||||
Other income | 613 | 1,019 | ||||||||
Total noninterest income | 1,933 | 2,096 | ||||||||
Noninterest expenses: | ||||||||||
Salaries and benefits | 3,327 | 3,972 | ||||||||
Occupancy | 1,302 | 1,382 | ||||||||
Professional services | 291 | 211 | ||||||||
Merchant Processing | 78 | 99 | ||||||||
Software expense | 184 | 129 | ||||||||
Supplies | 102 | 141 | ||||||||
Bank charges | 122 | 173 | ||||||||
Other | 1,167 | 1,187 | ||||||||
Total noninterest expense | 6,573 | 7,294 | ||||||||
Income before income tax | 540 | 1,167 | ||||||||
Income tax expense | 228 | 467 | ||||||||
Net income from continuing operations | 312 | 700 | ||||||||
Loss from discontined operations, net of tax benefit of $3 in 2002 and $87 in 2001 | (4 | ) | (130 | ) | ||||||
Net income | $ | 308 | $ | 570 | ||||||
Basic net income per common share: | ||||||||||
Income from continuing operations | $ | 0.03 | $ | 0.08 | ||||||
Discontinued operations | — | (0.02 | ) | |||||||
Basic net income per common share | $ | 0.03 | $ | 0.06 | ||||||
Diluted net income per common share: | ||||||||||
Income from contining operations | $ | 0.03 | $ | 0.07 | ||||||
Discontinued operations | — | (0.01 | ) | |||||||
Diluted net income per share | $ | 0.03 | $ | 0.06 | ||||||
See accompanying notes to unaudited consolidated financial statements.
2
FIRST NATIONAL BANK
Unaudited Consolidated Statements of Changes in Shareholders' Equity
(dollars in thousands)
| | | | | | Accumulated Deficit Since July 1, 2000 in Connection with Quasi- Reorganization | | | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Common Stock | Preferred Stock | | Accumulated Other Comprehensive Income (Loss) | | ||||||||||||||||||||
| Additional Paid-in Capital | | |||||||||||||||||||||||
| Shares | Amount | Shares | Amount | Total | ||||||||||||||||||||
Balance at December 31, 2001 | 9,664,472 | $ | 9,665 | 1,392,600 | $ | 1,393 | $ | 45,351 | $ | (5,367 | ) | $ | 483 | $ | 51,525 | ||||||||||
Issuance of Preferred stock | 19,602 | 19 | 74 | 93 | |||||||||||||||||||||
Issuance of Common shares | 139,260 | 139 | 522 | (661 | ) | — | |||||||||||||||||||
Comprehensive loss: | |||||||||||||||||||||||||
Net income | 308 | 308 | |||||||||||||||||||||||
Unrealized loss on securities, net of taxes of $234 | (350 | ) | (350 | ) | |||||||||||||||||||||
Total comprehensive loss | (42 | ) | |||||||||||||||||||||||
Balance at March 31, 2002 | 9,803,732 | $ | 9,804 | 1,412,202 | $ | 1,412 | $ | 45,947 | $ | (5,720 | ) | $ | 133 | $ | 51,576 | ||||||||||
See accompanying notes to unaudited consolidated financial statements.
3
FIRST NATIONAL BANK
Unaudited Consolidated Statements of Cash Flows
(dollars in thousands)
| Period ended March 31, | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|
| 2002 | 2001 | |||||||||
Operating activities: | |||||||||||
Net income | $ | 308 | $ | 570 | |||||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||||
Provision for loan losses | 900 | 1,125 | |||||||||
Deferred income tax expense | 207 | — | |||||||||
Depreciation and amortization | 674 | 557 | |||||||||
Net gain on sale of securities available-for-sale | — | (21 | ) | ||||||||
Gain on sale of loans | — | (389 | ) | ||||||||
Federal Home Loan Bank stock dividends | — | (100 | ) | ||||||||
Decrease (increase) in accrued interest and other assets | (2,059 | ) | 2,246 | ||||||||
Decrease in accrued expenses and other liabilities | (911 | ) | (2,182 | ) | |||||||
Net cash provided by (used in) operating activities | (881 | ) | 1,806 | ||||||||
Investing activities: | |||||||||||
Purchases of securities available-for-sale | (50,234 | ) | (12,788 | ) | |||||||
Proceeds from sales of securities available-for-sale | — | 17,206 | |||||||||
Proceeds from maturities of securities available-for-sale | 9,621 | 21,304 | |||||||||
Proceeds from sale of loans | — | 7,046 | |||||||||
Net increase in loans made to customers | (2,700 | ) | (5,663 | ) | |||||||
Redemptions of Federal Home Loan Bank and Federal Reserve Bank stock, net of purchases | — | 259 | |||||||||
Purchases of premises and equipment | (74 | ) | (767 | ) | |||||||
Net cash provided by (used in) investing activities | (43,387 | ) | 26,597 | ||||||||
Financing activities: | |||||||||||
Net decrease in deposits | (63,761 | ) | (13,944 | ) | |||||||
Net decrease in borrowings | (268 | ) | (2,583 | ) | |||||||
Proceeds from issuance of Preferred stock, net of expenses | 93 | 1,393 | |||||||||
Proceeds from exercise of stock options | — | 5,373 | |||||||||
Net cash provided by financing activities | (63,936 | ) | (9,761 | ) | |||||||
Net increase (decrease) in cash and cash equivalents | (108,204 | ) | 18,642 | ||||||||
Cash and cash equivalents at beginning of period | 193,283 | 102,460 | |||||||||
Cash and cash equivalents at end of period | $ | 85,079 | $ | 121,102 | |||||||
Supplemental disclosure of cash flow information: | |||||||||||
Interest paid | $ | 2,670 | $ | 6,870 | |||||||
Income taxes paid | $ | — | $ | — | |||||||
Supplemental disclosures of noncash financing activities: | |||||||||||
Common Stock issued as preferred stock dividend | $ | 661 | $ | — |
See accompanying notes to unaudited consolidated financial statements.
4
FIRST NATIONAL BANK
Notes to Unaudited Consolidated Financial Statements
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements reflect all adjustments, consisting only of normal recurring adjustments, which are, in the opinion of management, necessary to present a fair statement of the results for the interim periods indicated. Certain information and note disclosures normally included in consolidated financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted. The results of operations for the interim periods presented are not necessarily indicative of the results of operation to be expected for the remainder of the year.
(2) Proposed Merger
On April 29, 2002, First National Bank announced a pending merger based on an agreement that provides for First Community Bancorp to acquire all of the outstanding common and preferred stock of the Bank.
The agreement provides that each First National Bank shareholder will have the right to elect to receive for each share of First National Bank common or preferred stock either $10.00 in cash or 0.5008 of a share of First Community Bancorp common stock, provided that at least and no more than 45% of the total consideration shall be in the form of First Community Bancorp common stock. The pending merger is subject to standard conditions, including the approval of the shareholders of First National Bank and bank regulatory agencies. Upon receipt of the approvals and satisfaction or waiver of other conditions the transaction is expected to close in the third quarter of 2002, at which time First National Bank will merge into Rancho Santa Fe National Bank, a subsidiary of First Community Bancorp, and the resulting bank will operate as First National Bank.
(3) Sale of Trust Business
On April 29, 2002, the Bank and its wholly-owned subsidiary, Generations Trust Bank, N.A., entered into an Asset Purchase Agreement (the Agreement) with Union Bank of California to sell the Bank's Trust Business, as defined in the Agreement. The sales price was 1.33 times annualized revenue for the first quarter of the year 2002 (the Base Fiscal Quarter), as defined in the Agreement. The transaction closed on May 30, 2002 at which time 75% of the sales price (the Closing Payment), approximately $1,400,000, was received and the Bank recorded a gain of approximately $760,000, after deducting estimated costs. The Closing Payment amount is subject to adjustment based upon the final determination of amounts used in the calculation. The remaining 25% of the sales price (the Second Payment) is payable in the year 2003, provided the annualized revenue from the business sold for the first quarter of the year 2003 (the Anniversary Fiscal Quarter) is at least equal to the annualized revenue for the Base Fiscal Quarter. If the annualized revenue for the Anniversary Fiscal Quarter is less than for the Base Fiscal Quarter, the Second Payment will be reduced by the amount of the decrease in annualized revenue times 1.33, but not below zero.
In accordance with Statement of Financial accounting Standards No 144, "Accounting for the Impairment of Long-lived Assets," the Bank has reported the results of operations of the related Trust Business as discontinued operations for all periods presented in the accompanying unaudited consolidated condensed statements of income.
5
(4) Net Income Per Share
The following is a summary of the calculation of basic and diluted net income per share for the three months ended March 31, 2002 and 2001:
| Earnings (numerator) | Shares (denominator) | Per Share Amount | |||||
---|---|---|---|---|---|---|---|---|
| (In thousands, except per share amounts) | |||||||
March 31, 2002 | ||||||||
Basic EPS: | ||||||||
Income from continuing operations | $ | 312 | 9,711 | $ | 0.03 | |||
Effect of convertible preferred stock | 1,399 | — | ||||||
Effect of dilutive stock options and warrants | 155 | — | ||||||
Diluted EPS | $ | 312 | 11,265 | $ | 0.03 | |||
March 31, 2001 | ||||||||
Basic EPS | ||||||||
Income from continuing operations | $ | 700 | 9,123 | $ | 0.08 | |||
Effect of convertible preferred stock | 913 | .01 | ||||||
Effect of dilutive stock options and warrants | 190 | — | ||||||
Diluted EPS | $ | 700 | 10,226 | $ | 0.07 | |||
The effect of dilutive stock options and warrants above excludes 1,726,920 and 2,584,232 shares for 2002 and 2001, respectively, because their impact would be anti-dilutive.
6
FIRST NATIONAL BANK Unaudited Consolidated Balance Sheets (dollars in thousands)
FIRST NATIONAL BANK Unaudited Condensed Consolidated Statements of Income (dollars in thousands except per share data)
FIRST NATIONAL BANK Unaudited Consolidated Statements of Changes in Shareholders' Equity (dollars in thousands)
FIRST NATIONAL BANK Unaudited Consolidated Statements of Cash Flows (dollars in thousands)
FIRST NATIONAL BANK Notes to Unaudited Consolidated Financial Statements