UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) July 16, 1997
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California Independent Bancorp
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Exact name of registrant as specified in its charter)
California 0-26552 68-0349947
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(State of Incorporation) Commission File Number) (IRS Employer
Identification No.)
1227 Bridge Street, Suite C, Yuba City, California 95991
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(Address of principal executive offices)
Registrant's telephone number, including area code (916) 674-4444
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(Former name or former address, if changed since last report.)
ITEM FIVE
REGARDING: Form 8-K California Independent Bancorp, July 16, 1997
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Management of California Independent Bancorp ("CIBN") and its subsidiary,
Feather River State Bank ("Bank"), has determined that additional provisions
to the Loan Loss Reserve will be required and reported in the second quarter
of 1997 consolidated financial statements. This action is the result of
recently identified increased risk exposure for a small number of sizable
credits. These additional provisions will result in an operating loss for
the second quarter of 1997. Depending on the magnitude of the final
adjustment, it is possible that for the first half of 1997 CIBN will also
report an operating loss.
Management believes that the existing loan loss reserve of $4,126,000 is more
than adequate to cover any anticipated losses from these credits. In an
abundance of caution, however, and based upon management's analysis of the
inherent risks in the loan portfolio, additional provisions to the loan loss
reserve of between $2.5 and $3.5 million are contemplated to be reported in
the second quarter consolidated financial statements. These additional
provisions will restore the loan loss reserve to 2.46 percent of year-to-date
average loans outstanding and will replenish the reserve to a level that
management believes is commensurate with the inherent risks of the loan
portfolio. CIBN has decided to delay to mid-August the filing of its second
quarter 10-Q to more accurately determine the extent of losses in these
credits and the precise amount necessary to replenish the loan loss reserve.
Robert Mulder, President and Chief Executive Officer of CIBN states:
"We believe that the anticipated losses in our loan portfolio are one-
time occurrences based in large part upon poor agricultural crop results
and events beyond the control of CIBN. The conditions or events leading
to the possible losses are not indicative of the overall quality of the
loan portfolio and appear isolated to these few credits. We have been
very conservative with our assessment of this problem and have structured
our actions based upon our estimate of a worst-case scenario. We believe
that a gradual rebuilding of our loan loss reserve is not in the best
interests of CIBN and our shareholders. Instead, we have elected to make
this adjustment in one step, so that CIBN can concentrate all of its
resources and energy on the continual improvement of the entire loan
portfolio.
Absent the additional provisions to the loan loss reserve, second quarter
and year-to-date earnings would have exceeded last year's earnings.
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Management's analysis and assessment of earnings for the remainder of
1997 indicates that CIBN will show a profit, and it is not anticipated
that the additional provisions will jeopardize the continued
distribution of prudent dividends to our shareholders. It is CIBN's
goal to resume its 20-year pace of sustained earnings growth.
Finally, management has analyzed and assessed the impact of the
additional provisions upon the Bank's capital ratios. We have
determined that the Bank should still be considered a "well-capitalized"
institution pursuant to FDIC regulatory standards."
The future of CIBN's operations, the necessity of further provisions for its
loan loss reserve, quality of its loan portfolio, and the ability to pay
future dividends constitute "forward-looking" information as defined by the
Private Litigation Reform Act of 1995 (the "Act") and releases made by the
Securities and Exchange Commission. This cautionary statement is being made
with the express intention of obtaining the benefits of the Act's "safe
harbor" provisions. Investors are cautioned that any forward-looking
statements made by CIBN and its management are not guarantees of future
performance and that actual results may differ materially from those in the
forward-looking statements as a result of, but not limited to, the following
factors: The economic environment, particularly in the region in which CIBN
operates; competitive products and pricing; fiscal and monetary policies of
the federal government; changes in government regulations affecting financial
institutions including regulatory fees and capital requirements; changes in
prevailing interest rates; acquisitions and the integration of acquired
businesses; credit risk management and asset/liability management; the
financial and securities markets; and the availability of and costs
associated with sources of liquidity.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
California Independent Bancorp
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(Company)
Date: July 17, 1997 By: /s/ ROBERT MULDER
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Robert Mulder
President and Chief Executive Officer
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