EXHIBIT 99.13
QUARTERLY REPORT OF
CAPITOLBANK SACRAMENTO
PURSUANT TO SECTION 13 OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED SEPTEMBER 30, 1994
FDIC CERTIFICATE #22260-7
CAPITOLBANK SACRAMENTO
AND SUBSIDIARIES
300 CAPITOL MALL
SACRAMENTO, CALIFORNIA 95814
IRS EMPLOYER IDENTIFICATION NUMBER: 94-2319513
TELEPHONE NUMBER: (916) 449-8300
HAS THE BANK (1) FILED ALL REPORTS REQUIRED TO BE FILED BY SECTION 13 OF THE
SECURITIES AND EXCHANGE ACT OF 1934 DURING THE PRECEDING 12 MONTHS; AND (2) BEEN
SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS?
YES X NO
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AS OF SEPTEMBER 30, 1994, THE BANK HAD 4,080,302 SHARES OF COMMON STOCK WHICH IS
ALL ONE CLASS.
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
PAGE
1. Consolidated Statements of Condition
2. Consolidated Statement of Income (Y-T-D)
3. Consolidated Statement of Income (Quarter)
4. Consolidated Statement of Cash Flows
5. Consolidated Statement of Changes in Stockholders' Equity
6. Analysis of Reserve for Loan Losses
7. Computation of Per Share Earnings
ITEM 2. 8. & 9. Management's Discussion and Analysis
ITEM 3. 10. Statements
CAPITOLBANK SACRAMENTO AND SUBSIDIARIES
Consolidated Statement of Condition
(000's Omitted)
Sept 30, December 31,
1994 1993
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ASSETS
- - ------
Cash and due from banks $ 8,495 $ 6,456
Interest-bearing deposits in banks 0 398
Investment securities 17,606 34,342
Federal funds sold 21,500 4,820
Loans, net of reserve for loan losses 87,511 74,503
Premises and equipment, net 1,294 1,484
Interest receivable and other assets 1,563 1,390
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TOTAL ASSETS $137,969 $123,393
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LIABILITIES
- - -----------
Deposits:
Demand accounts $ 32,868 $ 28,439
Money market accounts 72,616 63,219
Time and savings accounts 20,542 19,405
-------- --------
Total deposits 126,026 111,063
Short-term borrowings 1,719 2,734
Other liabilities 952 378
-------- --------
Total liabilities 128,697 114,175
STOCKHOLDERS' EQUITY
- - --------------------
Common stock, par value $1.5625
Authorized--10,000,000 shares
Issued and outstanding--4,080,302 shares
in 1994 and 4,080,302 in 1993 6,375 6,375
Paid in surplus 5,745 5,745
FASB 115 Adjustment (227) 0
Undivided Profits (2,621) (2,902)
-------- --------
Total shareholders' equity 9,272 9,218
-------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $137,969 $123,393
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CAPITOLBANK SACRAMENTO AND SUBSIDIARIES
Consolidated Statement of Income
For Nine Months Ended September 30, 1994 and 1993
(000's Omitted)
1994 1993
------ ------
INTEREST INCOME:
Interest and fees on loans $6,032 $4,866
Interest on federal funds sold 193 124
Interest on investment securities 1,275 1,632
------ ------
Total interest income 7,500 6,622
------ ------
INTEREST EXPENSE:
Interest on deposits 1,827 2,005
Interest on short-term borrowings 41 32
------ ------
Total interest expense 1,868 2,037
------ ------
NET INTEREST INCOME 5,632 4,585
Provision for loan losses 285 336
------ ------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 5,347 4,249
------ ------
NON-INTEREST INCOME:
Income from fiduciary activity 547 496
Service charges on deposit accounts 74 97
Other revenue 75 99
------ ------
Total non-interest income 696 692
------ ------
Gains on securities transactions 82 283
NON-INTEREST EXPENSE:
Salaries and related expenses 2,998 2,560
Net occupancy 1,135 1,053
Other expense 1,656 1,421
------ ------
Total non-interest expense 5,789 5,034
INCOME BEFORE INCOME TAXES 336 190
Income tax expense 55 26
------ ------
NET INCOME $ 281 $ 164
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NET INCOME PER SHARE $0.07 $0.04
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CAPITOLBANK SACRAMENTO AND SUBSIDIARIES
Consolidated Statement of Income
For the Quarter Ended September 30, 1994 and 1993
(000's Omitted)
1994 1993
------ ------
INTEREST INCOME:
Interest and fees on loans $2,252 $1,853
Interest on federal funds sold 163 43
Interest on investment securities 298 461
------ ------
Total interest income 2,713 2,357
------ ------
INTEREST EXPENSE:
Interest on deposits 661 624
Interest on short-term borrowings 13 12
------ ------
Total interest expense 674 636
------ ------
NET INTEREST INCOME 2,039 1,721
Provision for loan losses 55 175
------ ------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 1,984 1,546
------ ------
NON-INTEREST INCOME:
Income from fiduciary activity 184 158
Service charges on deposit accounts 19 32
Other revenue 23 72
------ ------
Total non-interest income 226 262
------ ------
Gains on securities transactions 0 40
NON-INTEREST EXPENSE:
Salaries and related expenses 902 846
Net occupancy 398 355
Other expense 676 506
------ ------
Total non-interest expense 1,976 1,707
------ ------
INCOME BEFORE INCOME TAXES 234 141
Income tax expense 15 19
------ ------
NET INCOME $ 219 $ 122
====== ======
NET INCOME PER SHARE $0.05 $0.03
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CAPITOLBANK SACRAMENTO AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(000's omitted)
For the periods ended September 30, 1994 1993
- - --------------------------------------------------------------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Reconciliation of net income to net cash
provided by operating activities:
Net income $ 281 $ 164
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for possible loan losses 285 336
Depreciation and amortization 302 284
Net change in operating assets
and liabilities:
Interest receivable and other assets (141) 301
Interest payable and other
liabilities 574 106
------- -------
Total adjustments 1,020 1,027
Net cash provided by operating activities 1,301 1,191
CASH FLOWS FROM INVESTING ACTIVITIES:
FASB 115 Adjustment (227) 0
Purchase of investment securities 16,736 (12,226)
Proceeds from sale or maturity of
investment securities 398 20,103
Loans originated and principal collected, net (13,293) (12,473)
Additions to premises and equipment (111) (58)
Net change in other real estate owned (33) 324
------- -------
Net cash provided by investing activities 3,470 (4,330)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits 14,963 2,564
Net increase (decrease) in short-term
borrowings (1,015) (182)
------- -------
Net cash provided by financing activities 13,948 2,382
------- -------
Increase (decrease) in cash and
cash equivalents 18,719 (757)
Cash and cash equivalents, at
beginning of year 11,276 13,542
------- -------
Cash and cash equivalents, at end of year $29,995 $12,785
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- - --------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURES:
Cash paid for interest $ 1,868 $ 2,012
Cash paid for taxes $ 55 $ 8
Total gross additions to other real estate $ 63 $ 1,359
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CAPITOLBANK SACRAMENTO AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
As of September 30, 1994 and 1993
(000's Omitted)
# of Common Paid-in FASB 115 Undivided
Shares Stock Surplus Adjustment Profits Totals
-------------------------------------------------------
Balance, December 31, 1992 4,080 $6,375 $5,745 $ 0 $(3,218) $8,902
Net Income 164 164
FASB 115 Adjustment 0 0
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Balance, September 30, 1993 4,080 $6,375 $5,745 $ 0 $(3,054) $9,066
=======================================================
# of Common Paid-in FASB 115 Undivided
Shares Stock Surplus Adjustment Profits Total
---------------------------------------------------------
Balance, December 31, 1993 4,080 $6,375 $5,745 $ 0 $(2,902) $9,218
Net Income 281 281
FASB 115 Adjustment (227) (227)
---------------------------------------------------------
Balance, September 30, 1994 4,080 $6,375 $5,745 $(227) $(2,621) $9,272
========================================================
CAPITOLBANK SACRAMENTO AND SUBSIDIARIES
LOAN LOSSES AND RECOVERIES
For Nine Months Ended September 30, 1994 and 1993
(000's OMITTED)
1994 1993
------ ------
Balance end of previous year $1,406 $1,170
Recoveries credited to allowance 136 146
Provision for possible loan losses 285 336
Less: losses charged to allowance 15 331
------ ------
Balance end of current period $1,812 $1,321
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CAPITOLBANK SACRAMENTO AND SUBSIDIARIES
COMPUTATION OF PER SHARE EARNINGS
For Periods Ended September 30, 1994 and 1993
(000's Omitted)
NINE MONTHS
1994 1993
------ ------
Net Income $ 281 $ 164
====== ======
Weighted Average Common Shares 4,080 4,080
Weighted Average Common Stock Equivalents 0 0
Maximum potential shares included in
per share computation 4,080 4,080
====== ======
Net Income Per Share $ 0.07 $ 0.04
====== ======
MANAGEMENT'S DISCUSSION & ANALYSIS OF OPERATIONS
EARNINGS
Income for the month of September, 1994 was $49,000. This brought the year-to-
date net income to $281,000. This compares favorably to net income of $164,000
for the nine months ended 9/30/93. In both 1994 and 1993 there was a gain on
the sale of investment securities of $82,000 and $283,000, respectively. Net
income per share increased from $0.04 for the nine months ended 9/30/93 to $0.07
for the nine months ended 9/30/94.
Net profit for the quarter ended September 30, 1994 was $219,000 compared to net
income of $122,000 for the quarter ended September 30, 1993. Legal fees paid in
connection with a lawsuit, known as Tyler v. Wickland, were $161,000 for the
quarter ended September 30, 1994. The Tyler v. Wickland lawsuit is a class
action lawsuit brought by certain CapitolBank Sacramento (CBS) stockholders
against four CBS directors. Although CBS itself is not a named party to the
lawsuit, CBS has indemnification agreements with the four named directors and
is, therefore, responsible for the payment of the legal fees for those
directors. CBS is obligated under the terms of the Directors and Officers
Liability (D&O) insurance policy to pay the first $250,000 of expenses incurred
in defense of any suit for which D&O coverage is applicable. This $250,000
deductible requirement is the reason for the current $161,000 spent. Of the
$161,000 spent, $14,000 is not counted toward the deductible. The $14,000 was
incurred in defense of former CBS directors not named in the lawsuit. Since CBS
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also has indemnification agreements with those former directors not named in the
lawsuit, CBS is also responsible for their legal fee expenses.
Net interest income for the quarter ended September 30, 1994 was $2,039,000
compared to $1,721,000 for the same period in 1993. The average loan balance
for the third quarter of 1994 was $84,646,000 compared to $73,864,000 in 1993,
an increase of 15%. Year-to-date net interest income for the period ended
September 30, 1994 was $5,632,000 compared to $4,585,000 for the same period in
1993. The average loan balance for year-to-date 1994 was $79,964,000 compared
to $68,770,000 for year-to-date 1993. The increase in interest income is
primarily due to the increase in loan volume and a higher prime rate.
Non-interest expense increased from $1,707,000 for the third quarter in 1993 to
$1,976,000 for the third quarter in 1994. The majority of this increase was due
to the $161,000 in legal fees incurred in connection with the lawsuit noted
above. The professional services fees category was primarily higher for 1994
due to $48,000 in payments made to a bank consultant and $30,000 in payments
made to an investment advisor. The bank consultant has been used in various
capacities within the bank and currently continues to be used by CBS. The
investment advisor was used for investment advice on
CBS's investment portfolio, however, the investment consultant is no longer
engaged by CBS. A detailed schedule of the major non-interest expenses is
outlined as follows:
Y-T-D Y-T-D
Description Sept 1994 Sept 1993 $ Variance
- - ----------- --------- --------- -----------
Legal Fees $138,776 $148,741 $ (9,965)
Lawsuit Fees 161,218 0 161,218
FDIC Fees 197,178 209,106 (11,928)
Professional Services 188,336 117,262 71,074
Supplies 93,523 79,062 14,461
Insurance 87,518 72,415 15,103
BALANCE SHEET
- - -------------
The balance sheet reflects substantial growth in 1994. Since the beginning of
1994, the loan portfolio has increased $13 Million or 17.5%; deposits have
increased $15 Million or 13.5%; and total assets have increased $15 Million or
12%.
Stockholders' equity increased by $54,000. Year-to-date income of $281,000 was
offset by a FASB 115 loss adjustment of $227,000.
The loan loss reserve was $1,812,000 at September 30, 1994. This represents a
2.0% reserve to outstanding loans. The loan to deposit ratio was 69% at
September 30, 1994. The Bank's primary capital was $11,084,000 or 8.03% at
September 30, 1994. The Bank's core capital ratio was 6.72% at September 30,
1994.
Asset Quality
- - -------------
Asset quality continues, as it has for the last four quarters, to remain at a
relatively high level of quality. CBS has $2.1 Million in loans on non-accrual,
$103 Thousand of Other Real Estate Owned (OREO), and a loan loss reserve to
total loans of 2%.
STATEMENTS
ALL NECESSARY ADJUSTMENTS FOR A FAIR STATEMENT OF RESULTS FOR THE QUARTER ENDED
SEPTEMBER 30, 1994 HAVE BEEN REFLECTED ON THE FINANCIAL STATEMENTS.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES EXCHANGE ACT OF 1934, THE BANK
HAS DULY CAUSED THIS REPORT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED
THEREUNTO DULY AUTHORIZED.
CAPITOLBANK SACRAMENTO
BY /s/ Lawrence D. McGovern
---------------------------------
Lawrence D. McGovern, Senior Vice
President/Chief Financial Officer
BY /s/ William J. Martin
------------------------------------
William J. Martin, President & Chief
Operating Officer