1
EXHIBIT 99.1
FOOTHILL INDEPENDENT BANK
PARTNERS IN YOUR FUTURE
401(K) PROFIT SHARING PLAN
DECEMBER 31, 1997 AND 1996
TABLE OF CONTENTS
INDEPENDENT AUDITORS' REPORT.......................................................................1
FINANCIAL STATEMENTS
Statements of Net Assets Available for Benefits
December 31, 1997 and 1996.....................................................................2
Statements of Changes in Net Assets Available for Benefits
For the Year Ended December 31, 1997 and 1996..................................................3
Notes to Financial Statements..................................................................4
SUPPLEMENTARY INFORMATION
Schedule of Assets Held for Investment Purposes................................................8
2
INDEPENDENT AUDITORS' REPORT
Foothill Independent Bank
Partners In Your Future 401(K) Profit Sharing Plan
Glendora, California
We have audited the accompanying statements of net assets available for benefits
of the Foothill Independent Bank Partners In Your Future 401 (K) Profit Sharing
Plan as of December 31, 1997 and 1996, and the related statements of changes in
net assets available for benefits for the years then ended. These financial
statements are the responsibility of the Plan's management. Our responsibility
is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatements. 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 financial statements referred to above present fairly, in
all material respects, the net assets available for benefits of the Foothill
Independent Bank Partners In Your Future 401 (K) Profit Sharing Plan at December
31, 1997 and 1996, and the changes in its net assets available for benefits for
the years then ended in conformity with generally accepted accounting
principles.
Our audits were conducted for the purpose of forming an opinion on the basic
financial statements taken as a whole. The supplemental Schedule of Assets Held
for Investment Purposes is presented for the purpose of additional analysis and
is not a required part of the basic financial statements, but is supplementary
information required by the Department of Labor's Rules and Regulations for
Reporting and Disclosure under the Employee Retirement Income Security Act of
1974. The supplemental schedule has been subjected to the auditing procedures
applied in the audits of the basic financial statements and, in our opinion, is
fairly stated in all material respects in relation to the basic financial
statements taken as a whole.
Rancho Cucamonga, California
March 10, 1998
-1-
3
FOOTHILL INDEPENDENT BANK
PARTNERS IN YOUR FUTURE
401(K) PROFIT SHARING PLAN
STATEMENTS OF NET ASSETS AVAILABLE FOR BENEFITS
DECEMBER 31, 1997 AND 1996
ASSETS
1997 1996
---------- ----------
INVESTMENTS AT FAIR MARKET VALUE
Mutual funds $1,177,270 $ 876,302
Foothill Independent Bank stock 2,195,789 1,064,272
Money market funds 201,544 176,267
Loan funds 73,041 24,835
---------- ----------
Total Investments (Note #3) 3,647,644 2,141,676
CASH 289
RECEIVABLES (Note #4) 25,179 18,648
---------- ----------
Total Assets 3,672,823 2,160,613
LIABILITIES
Benefits payable (Note #5) 61,590 45,123
---------- ----------
NET ASSETS AVAILABLE FOR BENEFITS $3,611,233 $2,115,490
========== ==========
The accompanying notes are an integral part of these financial statements.
-2-
4
FOOTHILL INDEPENDENT BANK
PARTNERS IN YOUR FUTURE
401(K) PROFIT SHARING PLAN
STATEMENTS OF CHANGES IN NET ASSETS AVAILABLE FOR BENEFITS
FOR THE YEAR ENDED DECEMBER 31, 1997 AND 1996
1997 1996
----------- -----------
Additions To Net Assets Attributed To
Net unrealized appreciation in fair value of assets $ 703,197 $ 321,484
Interest 10,487 8,096
Dividends 23,180 97,180
Realized gain on sale of assets 230,327 13,172
Other income 2,760 41,732
----------- -----------
Total Investment Income 969,951 481,664
----------- -----------
Contributions
Employee 487,898 444,768
Employer 285,186 137,763
----------- -----------
Total Contributions 773,084 582,531
----------- -----------
Total Additions to Net Assets 1,743,035 1,064,195
Deduction From Net Assets Attributed To
Benefits paid directly to participants (233,934) (193,154)
Forfeitures (13,358)
----------- -----------
Total Deductions from Net Assets (247,292) (193,154)
----------- -----------
Net Increase in Net Assets 1,495,743 871,041
Net Assets Available for Benefits, Beginning of year 2,115,490 1,244,449
----------- -----------
Net Assets Available for Benefits, End of year $ 3,611,233 $ 2,115,490
=========== ===========
The accompanying notes are an integral part of these financial statements.
-3-
5
FOOTHILL INDEPENDENT BANK
PARTNERS IN YOUR FUTURE
401(K) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
Note #1 - Description of Plan
The following description of the Foothill Independent Bank Partners in Your
Future 401(K) Profit Sharing Plan provides only general information.
Participants should refer to the Plan agreement for a more complete description
of the Plan's provisions.
A. General
The Plan is a defined contribution plan covering all full-time employees of
Foothill Independent Bank (FIB). There is no age or service requirement. It
is subject to the provisions of the Employee Retirement Income Security Act
of 1974 (ERISA). FIB adopted the Plan effective January 1, 1994.
B. Contributions
Each year, FIB contributes to the Plan matching contributions equal to a
discretionary percentage, to be determined by the Employer, of the
participant's salary reductions. Participants may contribute up to 10
percent of their annual wages before bonuses and overtime.
C. Participant Accounts
Each participant's account is credited with the participant's contribution
and allocation of (a) the FIB contributions, and (b) Plan earnings.
Allocations are based on participant earnings or account balances, as
defined. The benefit to which a participant is entitled is the benefit that
can be provided from the participant's account.
D. Vesting
Participants are vested in FIB contributions according to the following
schedule:
Year of
Service Percentage
- ------- ----------
1 Year 25%
2 Years 50%
3 Years 100%
Employee contributions, deferrals and rollovers are immediately 100% vested.
No vested benefit may be forfeited.
-4-
6
FOOTHILL INDEPENDENT BANK
PARTNERS IN YOUR FUTURE
401(K) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE #1 - DESCRIPTION OF PLAN, CONTINUED
E. Payment of Benefits
On termination of service, a participant may receive a lump-sum amount equal
to the value of his or her account or may rollover the value of his or her
account to another plan.
F. Loans to Participants
Participants may apply for a loan of up to one-half of total prior
contributions. The loans are secured by the accounts of the participant. The
loans are available to all participants and bear a reasonable rate of
interest.
G. Forfeited Accounts
At December 31, 1997, forfeited nonvested accounts totaled $13,358. These
accounts will be used to reduce future employer contributions.
NOTE #2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Accounting
The financial statements of the Plan are prepared using the accrual method of
accounting.
Estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires the plan administrator to make estimates and
assumptions that affect certain reported amounts and disclosures. Accordingly,
actual results may differ from those estimates.
Valuation of Assets
If available, quoted market prices are used to value investments. Many factors
are considered in arriving at fair value. Mutual funds are valued based upon the
market unit value of the fund as a whole and not on individual investments of
the fund.
Tax Status
The Trust established under the Plan to hold the Plan's assets is qualified
under the appropriate section of the Internal Revenue Code. Accordingly, the
Plan's net investment income is exempt from income taxes. The Plan has received
a favorable tax determination letter from the Internal Revenue Service and the
Plan sponsor believes that the Plan continues to qualify and operate as
designed.
-5-
7
FOOTHILL INDEPENDENT BANK
PARTNERS IN YOUR FUTURE
401(K) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE #2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES, CONTINUED
Administration of Plan Assets
Contributions made by FIB and its employees are held and managed by a Trustee,
which invests the cash received, interest and dividends in accordance with
participant's instructions. Distributions to participants are made by the
Trustee. The Trustee also administers the payment of principal and interest on
participant loans.
Certain administrative functions are performed by officers or employees of FIB.
No such officer or employee receives additional compensation from the Plan. The
administrative and Trustee fees associated with the Plan are paid by FIB and not
from the Plan assets.
Note #3 - Investments
The Plan's investments are held by a bank administered trust fund. The following
table presents the fair values of investments. Investments that represent five
percent or more of the Plan's net assets are separately identified.
December 31, 1997 December 31, 1996
------------------------- -------------------------
Cost Basis Fair Value Cost Basis Fair Value
---------- ---------- ---------- ----------
Fair Value of Investments
Mutual funds
Growth equity fund $ 564,182 $ 555,967 $ 325,590 $ 373,010
Intermediate term bond fund 167,759 169,256 155,256 154,868
Balanced fund 380,633 452,047 308,001 348,424
Foothill Independent Bank stock 1,343,549 2,195,789 802,999 1,064,272
Money market funds 201,544 201,544 176,267 176,267
Loan funds 73,041 73,041 24,835 24,835
---------- ---------- ---------- ----------
Total Investments $2,730,708 $3,647,644 $1,792,948 $2,141,676
========== ========== ========== ==========
During 1997 and 1996, the Plan's investments (including investments bought, sold
and held during the year) appreciated in value by $703,197 and $321,484 during
1997 and 1996, respectively, as follows:
1997 1996
-------- --------
Net change in Fair Value
Mutual funds $ 84,491 $ 38,627
Foothill Independent Bank stock 616,708 282,857
-------- --------
Net Change in Fair Value $703,197 $321,484
======== ========
-6-
8
FOOTHILL INDEPENDENT BANK
PARTNERS IN YOUR FUTURE
401(K) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE #4 - RECEIVABLES
Receivables at December 31, consist of the following:
1997 1996
------- -------
Contributions
Employer $10,028 $ 4,560
Employee 15,151 14,088
------- -------
Total Receivables $25,179 $18,648
======= =======
-7-
9
FOOTHILL INDEPENDENT BANK
PARTNERS IN YOUR FUTURE
401(K) PROFIT SHARING PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1997 AND 1996
NOTE #5 - PENDING BENEFITS PAYABLE
As of December 31, payments to participants who have withdrawn from the Plan,
but have not yet been paid totaled $61,590 and $45,123 for 1997 and 1996,
respectively.
NOTE #6 - TERMINATION OF PLAN
Although it has not expressed any intent to do so, FIB has the right under the
Plan to discontinue its contributions at any time and to terminate the Plan,
subject to provisions of ERISA. In the event of Plan termination, participants
will become 100% vested in their accounts.
-8-
10
FOOTHILL INDEPENDENT BANK
PARTNERS IN YOUR FUTURE
401(K) PROFIT SHARING PLAN
SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1997
FORM 5500 - SCHEDULE G
Identity of Issue, Borrower, Current
Lessor or Similar Party Description of Investment Cost Value
---------------------------- ------------------------- ---------- ----------
Foothill Independent Bank Common stock 131,091 shares $1,343,549 $2,195,789
Union Bank Money Market Fund Money market funds 201,544 units 201,544 201,544
Union Bank Intermediate Term
Bond Fund Mutual funds 16,465 units 167,759 169,256
Union Bank Balanced Fund Mutual funds 27,750 units 380,633 452,047
Union Bank Growth Equity Fund Mutual funds 39,180 units 564,182 555,967
Participant Loans Various loans at 8.25% to
10.43% interest 73,041 73,041
---------- ----------
$2,730,708 $3,647,644
========== ==========
-9-