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FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
Quarter Ended March 31, 2000
------------------------------------------------------------------
Commission File Number 0-10232
---------------------------------------------------------
FIRST REGIONAL BANCORP
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
California 95-3582843
- --------------------------------------------------------------------------------
State or other jurisdiction of IRS Employer
incorporation or organization Identification Number
1801 Century Park East, Los Angeles, California 90067
- --------------------------------------------------------------------------------
Address of principal executive offices Zip Code
(310) 552-1776
- --------------------------------------------------------------------------------
Registrant's telephone number, including area code
Not applicable
- --------------------------------------------------------------------------------
Former name, former address, and former fiscal year, if changed since last
report
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
----- -----
APPLICABLE ONLY TO CORPORATE ISSUERS
Indicate the number of shares outstanding in each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock, No Par Value 2,844,997
-------------------------- -----------------------------
Class Outstanding on April 18, 2000
2
FIRST REGIONAL BANCORP
----------------------
INDEX
-----
Page
----
Part I - Financial Information
Item 1. Financial Statements
Consolidated Statements of Financial
Condition.................................... 3
Consolidated Statements of Income............ 5
Consolidated Statements of Cash Flows........ 7
Notes to Consolidated Financial
Statements................................... 9
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations................................ 11
Part II - Other Information
Item 1. Legal Proceedings............................ 18
Item 4. Submission of Matters to a Vote of
Security Holders............................. 18
Item 6. Exhibits and Reports on Form 8-K............. 18
Signatures.................................................. 19
3
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
-----------------------------
FIRST REGIONAL BANCORP AND SUBSIDIARY
-------------------------------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
(In Thousands)
(unaudited)
March 31, December 31,
2000 1999
---------- -----------
ASSETS
------
Cash and due from banks $ 13,436 $ 10,074
Federal Funds Sold 29,715 37,090
-------- --------
Cash and Cash equivalents 43,151 47,164
Investment securities 41,577 52,789
Interest-bearing deposits in financial
institutions 4,158 6,923
Government guaranteed loans 10,623 5,084
Loans, net of allowance for losses of
$2,460,000 in 2000 and $2,300,000 in 1999 130,016 116,732
Premises and equipment, net of accumulated
depreciation 1,154 1,172
Accrued interest receivable and other assets 4,008 3,169
-------- --------
Total Assets $234,687 $233,033
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Deposits:
Noninterest bearing $ 76,395 $ 65,405
Interest bearing:
Savings deposits 9,650 8,605
Money market deposits 85,546 87,670
Time deposits 36,832 44,052
-------- --------
Total deposits 208,423 205,732
Note payable 1,275 1,313
Accrued interest payable and other liabilities 3,784 5,285
-------- --------
Total Liabilities 213,482 212,330
4
March 31, December 31,
2000 1999
--------- ------------
Shareholders' Equity:
Common Stock, no par value, 50,000,000 shares
authorized; 2,845,000 and 2,809,000 shares
outstanding in 2000 and 1999, respectively 14,427 14,410
Less: Unearned ESOP shares; 127,000 and 132,000
outstanding in 2000 and 1999, respectively (1,208) (1,244)
Total common stock, no par value; -------- --------
outstanding 2,717,000 (2000) and
2,677,000 (1999) shares 13,219 13,166
Retained earnings 7,988 7,538
Accumulated other comprehensive income (2) (1)
-------- --------
Total Shareholders' Equity 21,205 20,703
-------- --------
Total Liabilities and Shareholders' Equity $234,687 $233,033
======== ========
The accompanying notes are an integral part of these statements.
5
FIRST REGIONAL BANCORP AND SUBSIDIARY
-------------------------------------
CONSOLIDATED STATEMENTS OF INCOME
---------------------------------
(In Thousands Except Per Share Amounts)
(Unaudited)
Three Months Ended
March 31,
-------------------
2000 1999
REVENUE FROM EARNING ASSETS:
Interest on loans $ 3,393 $ 2,312
Interest on deposits in financial institutions 92 154
Interest on investment securities 688 687
Interest on federal funds sold 457 410
------- ------
Total interest income 4,630 3,563
COST OF FUNDS:
Interest on deposits 1,079 1,126
Interest on other borrowings 5 1
------- ------
Total interest expense 1,084 1,127
------- ------
Net interest income 3,546 2,436
PROVISION FOR LOAN LOSSES 150 (220)
------- ------
Net interest income after provision
for loan losses 3,396 2,656
OTHER OPERATING INCOME 461 366
------- ------
OPERATING EXPENSES:
Salaries and related benefits 1,683 1,205
Occupancy expense 202 156
Equipment expense 123 85
Promotion expense 50 27
Professional service expense 292 295
Customer service expense 161 209
Supply/communication expense 109 89
Other expenses 364 266
------- ------
Total operating expenses 2,984 2,332
------- ------
Income before provision for income taxes 873 690
PROVISION FOR INCOME TAXES 360 281
------- ------
6
Three Months Ended
March 31,
------------------------
2000 1999
------ ------
NET INCOME $ 513 $ 409
====== ======
EARNINGS PER SHARE (Note 2)
Basic $ 0.19 $ 0.14
Diluted $ 0.19 $ 0.14
The accompanying notes are an integral part of these statements.
7
FIRST REGIONAL BANCORP AND SUBSIDIARY
-------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(In Thousands)
(Unaudited)
Three Months Ended
March 31,
------------------
2000 1999
---- ----
OPERATING ACTIVITIES
Net Income $ 513 $ 409
Adjustments to reconcile net income to
net cash (used in) provided by
operating activities:
Provision for loan losses 150 (220)
Provision for depreciation and
amortization 55 97
Amortization of investment security
and guaranteed loan premiums 73 0
Accretion of investment security
discounts (32) (136)
Increase in interest receivable (66) (20)
(Decrease) increase in interest payable (27) 27
Increase in taxes payable 362 83
Net increase (decrease) in other
liabilities (2,785) 562
-------- --------
Net cash (used in) provided by
operating activities $ (1,757) $ 802
INVESTING ACTIVITIES
Decrease (increase) in investments in time
deposits with other financial institutions $ 2,765 $ (1,775)
Decrease (increase) in investment securities 11,234 (15,571)
(Increase) decrease in guaranteed loans (5,603) 4
Net increase in other loans (13,434) (7,864)
Increase in premises and equipment (37) (278)
Decrease in other real estate owned 0 (84)
Net increase in other assets (773) (819)
-------- --------
Net cash used in investing activities $ (5,848) $(26,387)
8
Three Months Ended
March 31,
--------------------------------
2000 1999
---- ----
FINANCING ACTIVITIES
Net increase in noninterest bearing deposits,
money market deposits, and other deposits $ 9,911 $ 36,127
Net decrease in time deposits (7,220) (4,128)
Decrease in note payable (38) (38)
Increase in securities sold under agreement
to repurchase 949 450
(Decrease) increase in shareholders' equity (10) 363
------- -------
Net cash provided by
financing activities $ 3,592 $ 32,774
Increase in cash and cash equivalents $ 4,013 $ 7,189
Cash and cash equivalents, beginning of
period 47,164 41,177
------- -------
Cash and cash equivalents, end of period $43,151 $48,366
======= =======
The accompanying notes are an integral part of these statements.
9
FIRST REGIONAL BANCORP AND SUBSIDIARY
-------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
March 31, 2000
(Unaudited)
NOTE 1 - The consolidated financial statements include the accounts of First
Regional Bancorp (the Company), a bank holding company, and its
wholly-owned subsidiary, First Regional Bank (the Bank). Certain
amounts in the 1999 financial statements have been reclassified to be
comparable with the classifications used in the 2000 financial
statements.
In the opinion of the Company, the accompanying consolidated financial
statements contain all adjustments (which consist only of normal
recurring adjustments) necessary to present fairly the financial
position as of March 31, 2000 and December 31, 1999 and the results of
operations for the three month periods ended March 31, 2000 and 1999.
While the Company believes that the disclosures presented are adequate
to make the information not misleading, it is suggested that these
financial statements be read in conjunction with the financial
statements and the notes included in the Company's 1999 annual report.
NOTE 2 - Basic earnings per share are computed by dividing income available to
common shareholders by the weighted average number of common shares
outstanding during each period. The computation of diluted earnings
per share also considers the number of shares issuable upon the
assumed exercise of outstanding common stock options. All earnings
per common share amounts presented have been restated in accordance
with the provisions of this statement. A reconciliation of the
numerator and the denominator used in the computation of basic and
diluted earnings per share is:
Three Months Ended March 31, 2000
---------------------------------------
Weighted
Average
Income Shares Per Share
(Numerator) (Denominator) Amount
----------- ------------- ---------
Basic EPS
---------
Income available to
common shareholders $513,000 2,713,525 $0.19
Effect of Dilutive
Securities
----------
10
Incremental shares from
assumed exercise of
outstanding options 15,873 (0.00)
----------- ------------- ---------
Diluted EPS
-----------
Income available to
common shareholders $513,000 2,729,398 $ 0.19
============ ========= ========
Three Months Ended March 31, 1999
----------------------------------------
Weighted
Average
Income Shares Per Share
(Numerator) (Denominator) Amount
--------- ------------ ---------
Basic EPS
---------
Income available to
common shareholders $409,000 2,863,558 $ 0.14
Effect of Dilutive
Securities
------------------
Incremental shares from
assumed exercise of
outstanding options 131,467 (0.00)
---------- ------------ --------
Diluted EPS
-----------
Income available to
common shareholders $409,000 2,995,025 $ 0.14
----------- ------------ --------
NOTE 3 - As of March 31, 2000 the Bank had a total of $1,156,000 in standby
letters of credit outstanding. No losses are anticipated as a result
of these transactions.
NOTE 4 - The Company's comprehensive income includes all items which comprise
net income plus the unrealized holding gains on available-for-sale
securities. For the three month periods ended March 31, 2000 and 1999,
the Company's comprehensive income was as follows:
Three Months Ended
---------------------------
March 31, March 31,
2000 1999
---------------------------
(in thousands)
Net Income $ 513 $ 409
Other comprehensive income (2) (2)
----- -----
Total comprehensive income $ 511 $ 407
===== =====
11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
SUMMARY
- -------
First Regional Bancorp did not conduct any significant business activities
independent of First Regional Bank. The following discussion and analysis
relates primarily to the Bank.
As of March 31, 2000 total assets were $234,687,000 compared to
$233,033,000 at December 31, 1999, an increase of $1,654,000 or .7%. Since a
modest decline in asset levels is customary in the first quarter of each year,
the slight growth achieved in the first three months of 2000 is a positive
event. Moreover, the March 31, 2000 asset level represents an improvement over
the $227,736,000 that existed on the same date in 1999. The 2000 asset growth
reflects a corresponding increase in total deposits of $2,691,000 or 1.3%, from
$205,732,000 at the end of 1999 to $208,423,000 at March 31, 2000. While
overall deposits remained substantially constant, the deposit growth was
centered noninterest bearing deposits, savings deposits increased slightly and
money market deposits and time deposits experienced some decline. There were
several changes in the composition of the Bank's assets during the first
quarter. The Bank's core loan portfolio actually grew significantly by
$18,823,000 during the three month period bringing the Bank's total loans to
$140,639,000 at March 31, 2000 from the December 31, 1999 total of $121,816,000.
The combined effect of the substantial increase in loans and the slight growth
in deposits was a decrease in the level of total liquid assets. Of particular
note, investment securities decreased by approximately $11.2 million and time
deposits with other financial institutions decreased by $2.8 million. Funds
sold decreased by $7.4 million in order to accommodate the changes that took
place in the rest of the balance sheet.
The Company earned a profit of $513,000 in the first quarter of 2000,
compared to earnings of $409,000 in the three months ended March 31, 1999.
NET INTEREST INCOME
- -------------------
Total interest income rose by $1,067,000 (29.9%) for the three months ended
March 31, 2000 compared to the same period in 1999 although total earning assets
were only slightly higher (2.1%) in 2000 than in 1999. The majority of the
increase in interest income arises from a substantial increase of $1,081,000
(46.7%) in interest on loans from $2,312,000 for the three months ended March
31, 1999 compared to $3,393,000 for the same period in 2000. This increase in
interest income on loans corresponds to an increase core loan portfolio of
$41,858,000 (41%) from March 31, 1999 to March 31, 2000. For the three months
ended March 31, 1999 interest expense decreased by $43,000 (3.8%), to $1,084,000
from the 1999 level of
12
$1,127,000 as total deposits increased only slightly and the increases were in
noninterest and lower interest bearing accounts as compared to the same period
in 1999. The net result was an increase in net interest income of $1,110,000
(45%), from $2,436,000 in the first quarter of 1999 to $3,546,000 for the first
three months of 2000.
OPERATING INCOME
- ----------------
Other operating income rose to $461,000 in the first quarter of 2000 from
$366,000 in the three months ended March 31, 1999. The Bank's merchant
services operation, which provides credit card deposit and clearing services to
retailers and other credit card accepting businesses, had revenue that totaled
$159,000 for the three months ended March 31, 2000 in contrast with $105,000 in
the corresponding period of 1999. The Bank' Trust Administration Services Corp.
(TASC), a wholly owned subsidiary that provides administrative and custodial
services to self-directed retirement plans, had revenue that which increased
from $77,000 in first quarter of 1999 to $161,000 in the first quarter of 2000.
Offsetting these income increases in part was the decrease in gains realized on
the sale of land, which fell from $60,000 in the first quarter of 1999 to $2,000
in the same period of 2000. No gains or losses on securities sales were realized
in the first quarter of 2000 or 1999.
LOAN PORTFOLIO AND PROVISION FOR LOAN LOSSES
- ---------------------------------------------
The loan portfolio consisted of the following at March 31, 2000 and December
31, 1999:
March 31, December 31,
2000 1999
----------------------
(Dollars in Thousands)
Commercial loans........................... $ 44,669 $ 42,789
Real estate construction loans 24,099 19,267
Real estate loans. 63,560 56,741
Other loans....... 925 961
-------- --------
Total loans.......................... $ 133,253 $119,758
Less - Allowances for loan losses 2,460 2,300
- Deferred loan fees 777 726
-------- --------
Net loans............................ $130,016 $116,732
========
Government guaranteed loans held for sale $ 10,623 $ 5,084
======== =======
13
The allowance for possible loan losses is intended to reflect the known and
unknown risks which are inherent in a loan portfolio. The adequacy of the
allowance for possible loan losses is continually evaluated in light of many
factors, including loan loss experience and current economic conditions. The
allowance for loan losses is increased by provisions for loan losses, and is
decreased by net chargeoffs. Management believes the allowance for possible
loan losses is adequate in relation to both existing and potential risks in the
loan portfolio.
The Bank has historically evaluated the adequacy of its allowance for
possible loan losses on an overall basis rather than by specific categories of
loans. In determining the adequacy of the allowance for possible loan losses,
management considers such factors as historical loan loss experience, known
problem loans, evaluations made by bank regulatory authorities, assessment of
economic conditions and other appropriate data to identify the risks in the loan
portfolio.
The allowance for possible losses was $2,460,000 and $2,300,000 (or 1.72%
and 1.85% of gross outstanding loans) at March 31, 2000 and December 31, 1999
respectively. Reflecting the Company's ongoing analysis of the risks presented
by its loan portfolio, provisions for possible losses were $150,000 for the
three month period ended March 31, 2000, compared to $(220,000) in the first
quarter of 1999. For the three months ended March 31, 2000 and 1999, the
Company generated net loan recoveries of $10,000 and $11,000.
For the quarter ended March 31, 2000, the Company identified loans having
an aggregate average balance of $114,000 which it concluded were impaired under
SFAS No. 114. The Company's policy is to discontinue the accrual of interest
income on impaired loans, and to recognize income on such loans only after the
loan principal has been repaid in full. Pursuant to this policy, the Company had
already ceased to accrue interest on the impaired loans, and had established a
general loss reserve for each of the loans which at March 31, 2000 totaled
$55,000 for the loans as a group.
OTHER OPERATING EXPENSES
- ------------------------
Overall operating expenses increased in the first quarter of 2000 compared
to the same period of 1999, although some categories of expense actually
decreased from the levels of previous periods. Operating expenses rose to a
total of $2,984,000 for the first quarter of 2000 from $2,332,000 for the three
months ended March 31, 1999.
Salary and related benefits increased by $478,000, rising from a total of
$1,205,000 for the first quarter of 1999 to $1,683,000 for the same period in
2000. The increase principally reflects increases in staffing which took place
during 1999 due to staffing in the new regional offices. The increase also
reflects employee salary adjustments. Occupancy expense
14
rose to $202,000 for the three months ended March 31, 2000 from $156,000 in the
first quarter of 1999, the increase reflects the rent paid on the various
facilities which house the Bank's new regional offices. Total other operating
expenses rose in 2000 compared to the prior year, increasing from $971,000 for
the first quarter of 1999 to $1,099,000 for the first three months of 2000.
The combined effects of the above-described factors resulted in income
before taxes of $873,000 for the three months ended March 31, 2000 compared to
$690,000 for the first quarter of 1999. In the first quarter, the Company's
provision for taxes rose from $281,000 in 1999 to $360,000 in 2000. This
brought Net Income for the first quarter of 2000 to $513,000 compared to
$409,000 for the same period in 1999.
LIQUIDITY, SOURCES OF FUNDS, AND CAPITAL RESOURCES
- --------------------------------------------------
The Company's financial position remains highly liquid. Total liquid
assets (cash and due from banks, interest-bearing deposits in financial
institutions, investment securities, and federal funds sold) stood at 45.65% of
total deposits at March 31, 2000. This level represents a slight decrease from
the 51.95% liquidity level which existed on December 31, 1999. In addition, at
March 31, 2000 some $10.6 million of the Bank's total loans consisted of
government guaranteed loans, which represent a significant sources of liquidity
due to the active secondary markets which exist for these assets. The ratio of
net loans (including bankers acceptances and government guaranteed loans) to
deposits was 67.5% and 59.2% as of March 31, 2000 and December 31, 1999,
respectively.
Because customer deposits are the Company's principal funding source
outside of its capital, management has attempted to match rates and maturities
of its deposits with its investment and loan portfolios as part of its liquidity
and asset and liability management policies. The objective of these policies is
to limit the fluctuations of net interest income resulting from interest rate
changes. The table which follows indicates the repricing or maturity
characteristics of the major categories of the Bank's assets and liabilities as
of March 31, 2000, and thus the relative sensitivity of the Bank's net interest
income to changes in the overall level of interest rates. A positive "gap" for
a period indicates that an upward or downward movement in the level of interest
rates would cause a corresponding change in net interest income, while a
negative "gap" implies that an interest rate movement would result in an inverse
change in net interest income.
15
One month Six months One year Non-interest
Floating Less than but less than but less than but less than Five years earning
Category Rate one month six months one year five years or more or bearing Total
======== ======== ========= ========== ======== =========== ========== =========== =======
Fed funds sold 29,715 0 0 0 0 0 0 29,715
Time deposits with other bank 0 2,772 1,386 0 0 0 0 4,158
Investment securities 0 17,950 19,757 3,870 0 0 0 41,577
------- ------ ------ ------ ------ ------ ------- -------
Subtotal 29,715 20,722 21,143 3,870 0 0 0 75,450
Loans 138,975 0 689 892 83 0 0 140,639
------- ------ ------ ------ ------ ------ ------- -------
Total earning assets 168,690 20,722 21,832 4,762 83 0 0 216,089
Cash and due from banks 0 0 0 0 0 0 13,436 13,436
Premises and equipment 0 0 0 0 0 0 1,154 1,154
Other real estate owned 0 0 0 0 0 0 0 0
Other assets 0 0 0 0 0 0 4,008 4,008
------- ------ ------ ------ ------ ------ ------- -------
Total non-earning assets 0 0 0 0 0 0 18,598 18,598
------- ------ ------ ------ ------ ------ ------- -------
Total assets 168,690 20,722 21,832 4,762 83 0 18,598 234,687
Funds purchased 0 0 0 0 0 0 0 0
Repurchase agreements 0 0 0 0 0 0 0 0
------- ------ ------ ------ ------ ------ ------- -------
Subtotal 0 0 0 0 0 0 0 0
Savings deposits 9,650 0 0 0 0 0 0 9,650
Money market deposits 85,546 0 0 0 0 0 0 85,546
Time deposits 0 17,230 13,396 6,027 179 0 0 36,832
------- ------ ------ ------ ------ ------ ------- -------
Total bearing liabilities 95,196 17,230 13,396 6,027 179 0 0 132,028
Demand deposits 0 0 0 0 0 0 76,395 76,395
Other liabilities 0 0 0 0 0 0 5,059 5,059
Equity capital 0 0 0 0 0 0 21,205 21,205
------- ------ ------ ------ ------ ------ ------- -------
Total non-bearing liabilities 0 0 0 0 0 0 102,659 102,659
------- ------ ------ ------ ------ ------ ------- -------
Total liabilities 95,196 17,230 13,396 6,027 179 0 102,659 234,687
GAP 73,494 3,492 8,436 (1,265) (96) 0 (84,061) 0
Cumulative GAP 73,494 76,986 85,422 84,157 84,061 84,061 0 0
As the table indicates, the vast majority of the Company's assets are
either floating rate or, if fixed rate, have extremely short maturities. Since
the yields on these assets quickly adjust to reflect changes in the overall
level of interest rates, there are no significant unrealized gains or losses
with respect to the Company's assets, nor is there much likelihood of large
realized or unrealized gains or losses developing in the future. For this
reason, realized or unrealized gains or losses are not expected to have any
significant impact on the Company's future operating results or liquidity.
16
The Bank's investment portfolio continues to be composed of high quality,
low risk securities, primarily U.S. Agency securities and commercial papers. As
mentioned above, no gains or losses were recorded on securities sales in the
first quarter of 2000. As of both March 31, 2000 and 1999 the Company's
investment portfolio contained gross unrealized losses of $3,000 and no
unrealized gains. The Company adopted SFAS No. 115 in 1994, with the result
that the unrealized net loss (adjusted for taxes) of $2,000 at both March 31,
2000 and 1999 gave rise to a $2,000 decrease in the Company's shareholders'
equity as of those dates. Because the Company's holdings of securities are
intended to serve as a source of liquidity should conditions warrant, the
securities have been classified by the Company as "available for sale."
The Company continues to enjoy a strong capital position. Total capital
was $21,205,000 and $20,703,000 as of March 31, 2000 and December 31, 1999,
respectively. The Company's capital ratios for those dates in comparison with
regulatory capital requirements were as follows:
3-31-00 12-31-99
------- --------
Leverage Ratio (Tier I Capital
to Assets):
Regulatory requirement 4.00% 4.00%
First Regional Bancorp 9.09% 8.90%
The "regulatory requirement" listed represents the level of capital required for
Adequately Capitalized status.
In addition, bank regulators have issued risk-adjusted capital guidelines
which assign risk weighting to assets and off-balance sheet items and place
increased emphasis on common equity. The Company's risk adjusted capital ratios
for the dates listed in comparison with the risk adjusted regulatory capital
requirements were as follows:
3-31-00 12-31-99
------- --------
Tier I Capital to Assets:
Regulatory requirement 4.00% 4.00%
First Regional Bancorp 10.65% 10.50%
3-31-00 12-31-99
------- --------
Tier I + Tier II Capital to Assets:
Regulatory requirement 8.00% 8.00%
First Regional Bancorp 11.90% 11.70%
17
The Company believes that it will continue to meet all applicable capital
standards.
INFLATION
- ---------
The impact of inflation on the Company differs significantly from other
industries, since virtually all of its assets and liabilities are monetary.
During periods of rising inflation, companies with net monetary assets will
always experience a reduction in purchasing power. Inflation continues to have
an impact on salary, supply, and rent expenses, but the rate of inflation in
general and its impact on these expenses in particular has remained moderate in
recent years.
18
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- --------------------------
Litigation
- ----------
In the normal course of business, the Company and the Bank are involved in
litigation. Management does not expect the ultimate outcome of any pending
litigation to have a material effect on the Company's financial position or
results of operations.
During 1999, the Company settled a suit filed in 1998 by a former director
of the Company. The effect on the Company's financial results was not material.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
No items were submitted to a vote of the Company's shareholders during the first
quarter of 2000.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
Exhibits
- --------
There are no exhibits to this report.
Reports on Form 8-K
- -------------------
No reports on Form 8-K were filed during the first quarter of 2000.
19
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST REGIONAL BANCORP
Date: April 28, 2000 /s/ Jack A. Sweeney
--------------------------------------
Jack A. Sweeney, Chairman of the Board
and Chief Executive Officer
Date: April 28, 2000 /s/ Thomas McCullough
--------------------------------------
Thomas McCullough, Chief Financial Officer