1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________ to __________
Commission file number 0-25135
REDDING BANCORP
(Exact name of Registrant as specified in its charter)
California 94-2823865
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification No.)
1951 Churn Creek Road
Redding, California 96002
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (530) 224-3333
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value per share
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 [ ]
Indicate the number of shares outstanding of each of the issuer's class
of common stock, as of the latest practicable date. June 30, 1999:
2,650,828
2
REDDING BANCORP
AND
SUBSIDIARIES
INDEX
- --------------------------------------------------------------------------------
PART I. Financial Information Page:
Item 1. Financial Statements
Consolidated Statements of Operations
Three and six months ended June 30, 1999 and 1998....................... 3
Consolidated Balance Sheets
June 30, 1999 and December 31, 1998..................................... 4
Consolidated Statements of Cash Flows
Six months ended June 30, 1999 and 1998................................. 5
Notes to Consolidated Financial Statements.............................. 6
Item 2. Management's Discussion and Analysis
Of Financial Condition and Results of Operations................ 8
Item 3. Quantitative and Qualitative Disclosure about Market
Risk............................................................ 18
PART II. Other Information
Item 1. Legal proceedings............................................... 20
Item 2. Changes in Securities and use of proceeds....................... 20
Item 3. Defaults Upon Senior Securities................................. 20
Item 4. Submission of Matters to a Vote of Security Holders............. 20
Item 5. Other Information............................................... 21
Item 6. Exhibits and Report on Form 8-K................................. 21
SIGNATURES...................................................................... 21
2
3
PART 1. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
REDDING BANCORP & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT EARNINGS PER SHARE DATA)
(UNAUDITED)
Three months Three months Six months Six months
Ended Ended Ended Ended
June 30, 1999 June 30, 1998 June 30, 1999 June 30, 1998
------------- ------------- ------------- -------------
Interest Income:
Interest & Fees on Loans $3,526 $3,107 $6,907 $6,084
Interest on Investments $ 528 $ 776 $1,037 $1,629
Interest on Fed Funds Sold $ 122 $ 136 $ 311 $ 217
------ ------ ------ ------
Total Interest Income $4,176 $4,019 $8,255 $7,930
------ ------ ------ ------
Interest Expense:
Interest on Checking $ 226 $ 274 $ 345 $ 390
Interest on Savings $ 19 $ 9 $ 181 $ 176
Interest on Time Deposits $1,222 $1,162 $2,419 $2,323
------ ------ ------ ------
Total Interest Expense $1,467 $1,445 $2,945 $2,889
------ ------ ------ ------
Net Interest Income: $2,709 $2,574 $5,310 $5,041
Provision for Loan Loss: $ 15 $ 0 $ 40 $ 145
------ ------ ------ ------
Net Interest Income After
Provision $2,694 $2,574 $5,270 $4,896
------ ------ ------ ------
Noninterest Income:
Service Charges $ 72 $ 53 $ 145 106
Credit Card Income, net $ 471 $ 439 $ 886 $ 889
Other Income $ 225 $ 54 $ 418 $ 227
------ ------ ------ ------
Total Other Income $ 768 $ 546 $1,449 $1,222
------ ------ ------ ------
Noninterest Expense:
Salaries & Benefits $ 892 $ 830 $1,855 $1,650
Occupancy & Equipment $ 219 $ 211 $ 448 $ 415
DP & Other Professional $ 142 $ 19 $ 365 $ 187
Other Expense $ 405 $ 326 $ 758 $ 633
------ ------ ------ ------
Total Other Expense $1,658 $1,386 $3,426 $2,885
------ ------ ------ ------
Income before Income Taxes $1,804 $1,733 $3,293 $3,233
Provision for Income Taxes $ 670 $ 646 $1,260 $1,194
------ ------ ------ ------
Net Income $1,134 $1,088 $2,033 $2,039
====== ====== ====== ======
Basic Earnings Per Share $ 0.43 $ 0.41 $ 0.77 $ 0.76
Weighted Average Shares 2,651 2,684 2,650 2,684
Diluted Earnings Per Share $ 0.40 $ 0.40 $ 0.71 $ 0.76
Weighted Average Shares 2,856 2,741 2,855 2,690
3
4
REDDING BANCORP & SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
June 30, 1999 December 31, 1998
------------- -----------------
Assets:
Cash & Due From Banks $ 10,206 $ 10,010
Federal Funds Sold 8,630 16,790
--------- ---------
Cash and cash equivalents 18,836 26,800
Investment Securities:
Available for sale (amortized cost
$31,396 and $45,721) 31,117 24,519
Held to maturity (market value of
$6,529 and $8,835) 6,480 8,038
--------- ---------
37,597 32,557
Portfolio Loans:
Real Estate - Construction 29,678 29,470
Real Estate - Commercial 76,937 69,742
Commercial & Financial 52,699 46,890
Installment Loans 291 298
Other Loans 1,223 2,225
--------- ---------
Total Gross Loans 160,828 148,625
Deferred loan fees (367) (423)
Less allowance for loan losses (3,276) (3,235)
--------- ---------
Net Loans 157,185 144,967
Premise & Equipment 5,603 5,604
Other Assets 5,109 6,157
--------- ---------
Total Assets $ 224,330 $ 216,085
========= =========
Liabilities:
Demand Accounts $ 45,493 $ 39,709
NOW & Money Market 39,682 42,810
Savings Accounts 11,116 13,083
Time Accounts 99,605 93,019
--------- ---------
Total Deposits 195,896 188,621
Other Liabilities 2,844 2,810
--------- ---------
Total Liabilities 198,740 191,431
--------- ---------
Shareholders Equity:
Common Stock 3,918 4,714
Retained Earnings 21,251 19,818
Accumulated other comprehensive income (179) 122
--------- ---------
Total Shareholders Equity 25,590 24,654
--------- ---------
Total Liabilities & Equity $ 224,330 $ 216,085
========= =========
See notes to financial statements.
4
5
REDDING BANCORP & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (DOLLARS IN THOUSANDS)
(UNAUDITED)
June 30, 1999 June 30, 1998
------------- -------------
Cash flows from operating activities:
Net Income $ 2,033 $ 2,039
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 40 145
Provision for depreciation 226 217
Compensation associated with stock options -- --
Amortization of investment premiums and
Accretion of discounts, net (63) (35)
Gain on sale of loans (113) (11)
Proceeds from sales of loans 3,752 886
Loans originated for sale (3,639) (875)
Decrease in other assets 1,048 486
Increase in deferred loan fees (55) 76
Increase in other liabilities 34 (104)
-------- --------
Net cash provided by operating activities 1,230 785
-------- --------
Cash flows from investing activities:
Proceeds from maturities of
available for sale securities 13,023 11,425
Purchases of available for sale securities (18,301) (1,019)
Loan origination's, net of principal
repayments (12,203) (9,760)
Purchases of premises and equipment (241) (41)
Proceeds from sale of equipment 16 --
-------- --------
Net cash used by investing activities (17,706) (605)
-------- --------
Cash flows from financing activities:
Net increase in demand deposits and savings 689 496
Net (decrease) increase in certificates of deposit 6,586 0
Cash dividends -- --
Common stock repurchase transactions (832) --
Common stock options exercised 36 --
-------- --------
Net cash provided by financing activities 6,479 496
-------- --------
Net (decrease) increase in cash and cash equivalents (7,964) 3,925
Cash and cash equivalents at beginning of year 26,800 18,331
-------- --------
Cash and case equivalents at end of year $ 18,836 $ 22,256
======== ========
Supplemental disclosures:
Cash paid during the period for:
Income taxes 925 1,155
Interest 2,964 2,891
Non-cash investing and financing activities:
Transfer from loans to other real estate owned 212 53
5
6
REDDING BANCORP & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements should be read in
conjunction with the financial statements and related notes contained in Redding
Bancorp's 1998 Annual Report to Shareholders. The statements include the
accounts of Redding Bancorp ("Redding"), and its wholly owned subsidiary,
Redding Bank of Commerce ("RBC"). All significant inter-company balances and
transactions have been eliminated. The financial information contained in this
report reflects all adjustments that in the opinion of management are necessary
for a fair presentation of the results of the interim periods. All such
adjustments are of a normal recurring nature. The results of operations and cash
flows for the six months ended June 30, 1999 are not necessarily indicative of
the results that may be expected for the year ending December 31, 1999.
For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, amounts due from banks, federal funds sold and repurchase agreements.
Federal funds sold and repurchase agreements are generally for one day periods.
2. EARNINGS PER SHARE
Basic earnings per share excludes dilution and is computed by dividing net
income by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. The following table displays the
computation of earnings per share for the three and six months ended June 30,
1999 and 1998.
Three months ended Six months ended
June 30, June 30,
-------------------------- --------------------------
Basic EPS Calculation: 1999 1998 1999 1998
---------- ---------- ---------- ----------
Numerator (net income) $ 1,134 $ 1,088 $ 2,033 $ 2,039
Denominator (average common
Shares outstanding) 2,650,828 2,684,103 2,655,828 2,684,103
Basic Earnings per share $ 0.43 $ 0.41 $ 0.77 $ 0.76
Diluted EPS Calculation:
Numerator (net income) $ 1,134 $ 1,088 $ 2,033 $ 2,039
Denominator:
Average common shares
outstanding 2,650,828 2,684,103 2,655,828 2,684,103
Options 204,893 57,021 219,164 6,000
---------- ---------- ---------- ----------
Diluted Earnings per share $ 0.40 $ 0.40 $ 0.71 $ 0.76
6
7
3. COMPREHENSIVE INCOME
The Company's total comprehensive earnings were as follows:
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ---------------------
1999 1998 1999 1998
------- ------- ------- -------
Net Income as reported $ 1,134 $ 1,088 $ 2,033 $ 2,039
Other comprehensive income
(net of tax):
Change in unrealized holding
gain (loss) on available for sale securities (88) (8) (301) (19)
Reclassification adjustment --
------- ------- ------- -------
Total comprehensive income $ 1,046 $ 1,080 $ 1,732 $ 2,020
======= ======= ======= =======
4. COMMON STOCK DIVIDEND
No dividends were declared in the first or second quarter of 1999. The last
dividend the Board of Directors declared was on September 15, 1998. An annual
cash dividend of 50 cents per share on the Company's Common Stock was paid to
shareholders of record as of October 1, 1998 and was paid on October 22, 1998.
5. SEGMENT REPORTING
The Company has two reportable segments: commercial banking and credit card
services. The Company conducts a general commercial banking business in the
counties of Butte, El Dorado, Placer, Shasta, and Sacramento, California. The
principal commercial banking activities include a full-array of deposit accounts
and related services and commercial lending for businesses and their interests.
Credit card services are limited to those revenues and data processing costs
associated with its agreement with an ISO, pursuant to which the Bank provides
credit and debit card processing services for merchants solicited by the ISO or
the Bank who accept credit and debit cards as payments for goods and services.
The following table presents financial information about the
Company's reportable segments:
Three months ended Six months ended
June 30, June 30,
------------------- ------------------
Net income before taxes 1999 1998 1999 1998
------ ------ ------ ------
Net income before taxes allocated to:
Commercial Banking $ 663 $ 649 $1,147 $1,150
Credit card services 471 439 886 889
------ ------ ------ ------
$1,134 $1,088 $2,033 $2,039
6. NEW ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
Accounting for Derivative Instruments and hedging activities. The statement
establishes accounting and reporting standards for derivative instruments and
hedging activities. The effective date for the statement has been postponed
until the year 2001. The Company is in the process of determining the impact of
SFAS No. 133 on the Company's financial statements.
7
8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS PRIVATE SECURITIES LITIGATION REFORM ACT
SAFE HARBOR STATEMENT.
This quarterly report on Form 10-Q includes forward-looking information, which
is subject to the "safe harbor" created by the Securities Act of 1933, and
Securities Act of 1934. These forward-looking statements (which involve the
Company's plans, beliefs and goals, refer to estimates or use similar terms)
involve certain risks and uncertainties that could cause actual results to
differ materially from those in the forward-looking statements. Such risks and
uncertainties include, but are not limited to, the following factors:
~ Competitive pressure in the banking industry and changes in the
regulatory environment.
~ Changes in the interest rate environment and volatility of rate
sensitive deposits.
~ The health of the economy declines nationally or regionally which
could reduce the demand for loans or reduce the value of real estate
collateral securing most of the Company's loans.
~ Credit quality deteriorates which could cause an increase in the
provision for loan losses.
~ Losses in the Company's merchant credit card processing business.
~ Asset/Liability matching risks and liquidity risks.
~ Changes in the securities markets.
For additional information concerning risks and uncertainties related to the
Company and its operations please refer to the Company's Annual Report on Form
10-K for the year ended December 31, 1998 under the heading "Risk factors that
may affect results". Readers are cautioned not to place undue reliance on these
forward-looking statements, which speak only as of the date hereof. The Company
undertakes no obligation to revise or publicly release the results of any
revision to these forward-looking statements to reflect events or circumstances
after the date hereof or to reflect the occurrence of unanticipated events.
The following sections discuss significant changes and trends in financial
condition, capital resources and liquidity of the Company from December 31, 1998
to June 30, 199. Also discussed are significant trends and changes in the
Company's results of operations for the six months ended June 30, 1999, compared
to the same period in 1998. The financial statements and related notes appearing
elsewhere in this report are condensed and unaudited.
GENERAL
The Company is a bank holding company with its principal offices in
Redding, California. The Company engages in a general commercial banking
business in Redding and the counties of Butte, El Dorado, Placer, Shasta, and
Sacramento, California. The Company considers Shasta County to be the Company's
major market area. The Company conducts its business through the Bank, its
principal subsidiary. The services offered by the Company include those
traditionally offered by commercial banks of similar size and character in
California, such as checking, interest-bearing checking ("NOW") and savings
accounts, money market deposit accounts, commercial, construction, real estate,
personal, home improvement, automobile and other installment and term loans,
travelers checks, safe deposit boxes, collection services, and telephone
transfers. The primary focus of the Company is to provide service to the
business and professional community of its major market area including Small
Business Administration ("SBA") loans, and payroll and accounting packages and
billing programs. The Company does not offer trust services or international
banking services and does not plan to do so in the near future.
The Company derives its income from two principal sources: (i) net
interest income, which is the difference between the interest income it receives
on interest-earning assets and the interest expense it pays on interest-bearing
liabilities, and (ii) fee income, which includes fees earned on deposit
services, income from SBA lending, electronic-based cash management services and
merchant credit card processing services.
8
9
Management considers the business of the Company to be divided into two
segments: (i) commercial banking and (ii) credit card services. Credit card
services are limited to those revenues, net of related data processing costs,
associated with the Merchant Services Agreement and the Bank's agreement to
provide credit and debit card processing services for merchants solicited by the
Bank who accept credit and debit cards as payments for goods and services.
RESULTS OF OPERATIONS
The company reported net income of $1,134,000 ($0.43 per share, diluted)
for the three months ended June 30, 1999, compared to $1,088,000 ($0.38 per
share, diluted) for the same period in 1998. Net income for the six months ended
June 30, 1999, was $2,033,000 ($0.71 per share, diluted), compared to $2,039,000
($0.76 per share, diluted) for the six months ended June 30, 1998. The decrease
in the second quarter and first half of 1999 compared to the prior year can be
attributed to the addition of staff in the Company's accounting and loan
production offices, coupled with professional fee expenses related to the filing
of our registration statement and preparation of Form 10-K with the Securities
and Exchange Commission.
NET INTEREST INCOME
The primary source of income for the Bank is derived from net interest
income, which is the difference between the interest earned from loans and
investments less the interest paid on deposit accounts and borrowings. Net
interest income increased from $5.0 million in the six months of 1998 to $5.3
million in the six months of 1999, representing a 5.3% increase.
Net interest income increased $135,000 or 5.24% in the second quarter
of 1999 over the first quarter 1999. Net interest income of $5.3 million for the
six months ended June 30, 1999 represents a $269,000 dollar increase or 5.3%
over the same period a year ago. Net interest income increases in 1999 over 1998
were primarily the result of loan growth, which increased the volume of earning
assets and improved the Bank's interest income through reinvestment of maturing
securities into higher yielding loans. Quarter to quarter comparison of net
interest income during 1999 was $2.7 million in the second quarter, versus $2.6
million in the first quarter, representing a 5.1% increase.
Total interest expense increased $56,000 from $2.8 million in the first
six months of 1998 to $2.9 million in the first six months of 1999, a 1.9%
increase. Interest expense for the second quarter 1999 increased a moderate
$22,000 or a 1.5% increase over the prior quarter. The increase in total
interest expense in the first six months 1999 is attributed to the deposit
growth in higher yielding time certificates of deposit.
The Company's net interest margin (net interest income divided by
average earning assets) was 5.22% in the first six months of 1999, versus 5.53%
for the first six months of 1998. The decrease in the Company's net interest
margin for the first six months of 1999 versus 1998 can be directly attributed
to an increasing competitive pricing market for loan production as represented
in the drop in yield on portfolio loans to 9.13% from 10.28% a year ago. This
highly competitive environment, both banking and non-banking, is expected to
continue.
9
10
The following is an analysis of net interest margin for the periods indicated:
June 30, 1999 June 30, 1998
-------------------------------- --------------------------------
(Dollars in thousands) Average % Average %
Balance Interest Yield Balance Interest Yield
---------- -------- ----- -------- -------- -----
Earning assets(1) $ 205,081 $ 8,255 8.12% $183,741 $ 7,930 8.70%
Interest bearing $ 152,432 $ 2,945 3.90% $141,417 $ 2,889 4.12%
------- --------
liabilities
Net interest income $ 5,310 $ 5,041
Net interest income to 5.22% 5.53%
earning assets
The following table sets forth the Company's daily average balance sheet,
related interest income or expense and yield or rate paid for the periods
indicated. The yield on tax-exempt securities has not been adjusted to a
tax-equivalent yield basis.
AVERAGE BALANCES, INTEREST INCOME/EXPENSE AND YIELDS/RATES PAID
SIX MONTHS ENDED
JUNE 30, JUNE 30,
(Dollars in thousands) 1999 1998
---------------------------------- -----------------------------------
Average Yield/ Average Yield/
Balance Interest Rate Balance Interest Rate
-------- --------- ------ --------- -------- ------
EARNING ASSETS
Portfolio Loans $152,603 $ 6,907 9.13% $119,385 $ 6,084 10.28%
Tax Exempt Securities 5,751 123 4.31% 10,414 205 3.97%
US Government 24,257 648 5.39% 35,060 1,092 6.28%
Federal Funds Sold 13,526 311 4.64% 8,710 216 5.00%
Other Securities 8,944 266 6.00% 10,172 333 6.60%
-------- -------- ---- -------- -------- -----
Average Earning Assets $205,081 $ 8,255 8.12% $183,741 $ 7,930 8.70%
-------- --------
Cash & Due From Banks $ 9,588 $ 10,570
Bank Premises 5,651 5,751
Allowance for Loan Losses (3,248) (2,916)
Other Assets 4,870 4,969
-------- --------
Average Total Assets $221,942 $202,115
======== ========
INTEREST BEARING LIABILITIES
Demand Interest Bearing $ 40,494 $ 345 1.72% $ 41,913 $ 390 1.88%
Savings Deposits 13,464 181 2.7 12,839 176 2.76%
Certificates of Deposit 98,474 2,419 4.95% 86,665 2,323 5.47%
-------- -------- ---- -------- -------- -----
152,432 2,945 3.90% 141,417 2,889 4.12%
-------- --------
Non interest Demand 42,340 36,605
Other Liabilities 2,624 2,197
Shareholder Equity 24,546 21,896
-------- --------
Average Liabilities and
Shareholders Equity $221,942 $202,115
======== ========
Net Income and Net Interest
Margin $ 5,310 5.22% $ 5,041 5.53%
======== ========
- --------------
(1) Nonaccrual loans are included in the calculation of average balance of
earning assets, and interest is not included in the earnings.
10
11
The Company's average total assets increased to $221.9 million in
the first six months of 1999 from $202.1 million in the first six months of
1998, representing a 9.8% increase. In the second quarter of 1999, the Company's
average loan portfolio increased by $21.3 million, an 11.6% increase over the
second quarter 1998.
The Company's net interest margin (net interest income divided by
average earning assets) was 5.22% in the first six months of 1999, versus 5.53%
for the first six months of 1998. The decrease in the Company's net interest
margin for the first six months of 1999 versus 1998 can be directly attributed
to an increasing competitive pricing market for loan production as represented
in the drop in yield on portfolio loans to 9.13% from 10.28% a year ago. The
increase in average portfolio loans has been funded from maturing investment
securities.
US Government agency investments with higher yielding call
features have been called by the issuer. These investment securities have not
been reinvested in the bond market, resulting in a drop in yield to 5.39% at
June 30, 1999 versus 6.28% a year ago.
The Company's average noninterest-bearing demand deposits
increased from $36.6 million in 1998 to $42.3 million in the first six months of
1999, representing an 15.7% increase over the like period in 1998. This increase
in demand deposits coupled with a drop in interest rates on certificates of
deposit resulted in a reduction in the cost of funds to 3.20% at June 30, 1999
versus 4.12% a year ago.
The following tables set forth changes in interest income and expense for each
major category of earning assets and interest-bearing liabilities, and the
amount of change attributable to volume and rate changes for the periods
indicated. Changes attributable to rate/volume have been allocated to volume
changes.
ANALYSIS OF CHANGES IN
NET INTEREST INCOME
(Dollars in thousands) JUNE 30, 1999 OVER JUNE 30, 1998
------------- ---- -------------
Volume Rate Total
------ ---- -----
Increase(Decrease) In
Interest Income
Portfolio loans $ 2,195 ($1,373) $ 822
Tax exempt securities (118) 38 (80)
US Government securities (131) (313) (444)
Federal Funds Sold 128 (34) 94
Other Securities (6) (61) (67)
------- ------- -------
Total Increase/(Decrease) $ 2,068 ($1,743) $ (325)
------- ------- -------
Increase(Decrease) In
Interest Expense
Interest Bearing Demand $ 21 $ (67) $ (46)
Savings Deposits 12 (7) 5
Certificates of Deposit 488 (391) 97
------- ------- -------
Total Increase/(Decrease) $ 521 $ (465) $ 56
------- ------- -------
Net Increase/(Decrease) $ 1,547 $(1,278) $ 269
======= ======= =======
NONINTEREST INCOME
The Company's noninterest income consists primarily of service charges
on deposit accounts and processing fees for merchants who accept credit and
debit cards as payment for goods and services. Noninterest income also includes
ATM fees earned at various locations. For the period ended June 30, 1999,
noninterest income represented 14.9% of the Company's revenues, versus 13.3% for
the same period in 1998.
11
12
Service charge income increased 36.7% over the like period in 1998 due to
increased volume in demand accounts and an adjustment in the overdraft fee
schedule. Other income increased by $191 thousand or 84.1% over the like period
in 1998. During the second quarter of 1999, SBA loans were sold resulting in an
immediate gain on sale of $77 thousand. Also during the second quarter of 1999,
two additional offsite ATM machines were installed and transaction fees were
increased. Mortgage loan interest rates spurred some refinance activity
resulting in an increase in mortgage premium fees from loans sold during the
second quarter of 1999.
The following table sets forth a summary of noninterest income for the periods
indicated.
(Dollars in thousands) Three Months Ended Six Months Ended
June 30, June 30,
----------------------- ---------------------
Noninterest Income 1999 1998 1999 1998
-------- --------- -------- -------
Service Charges $ 72 $ 53 $ 145 $ 106
Credit Card Income, net 471 439 886 889
Other Income 225 54 418 227
------- -------- ------- -------
Total noninterest income $ 768 $ 546 $ 1,449 $ 1,222
- -------------------------------------------------------------------------------------
NONINTEREST EXPENSE
Noninterest expense consists of salaries and related employee benefits,
occupancy and equipment expense and other operating expenses. For the period
ended June 30, 1999, noninterest expense totaled $3.4 million versus $2.9
million for the same period in 1998 or an 18.7% increase.
The increase in noninterest expense is attributable to the expenses related to
the Company's decision to register its Common Stock under the Exchange Act in
order to increase shareholder value by improving liquidity and increasing public
information about the Company. Professional fees were incurred during the
preparation of the Company's first Form 10-K filing. These professional fees
totaled $113,000 in the first quarter of 1999 and $87,000 for the second quarter
of 1999. During 1998, and early 1999 additional staff was added to expand the
accounting team and the loan production office in Roseville, representing a
12.4% increase in salaries and benefits.
The following table sets forth a summary of noninterest expense for the
periods indicated.
Three months ended Six months ended
June 30, June 30,
----------------------- ---------------------
Noninterest Expense 1999 1998 1999 1998
-------- --------- -------- -------
Salaries and Benefits $ 892 $ 830 $ 1,855 $1,650
Occupancy & Equipment 219 211 448 415
DP & Professional fees 142 19 365 187
Other Expenses 405 326 758 633
------- ------- ------- ------
Total Noninterest expense $ 1,658 $1,386 $3,426 $2,885
- -------------------------------------------------------------------------------------
INCOME TAXES
The Company's provision for income taxes includes both federal and state
income taxes and reflects the application of federal and state statutory rates
to the Company's net income before taxes. The principal difference between
statutory tax rates and the Company's effective tax rate is the benefit derived
from investing in tax-exempt securities. Increases and decreases in the
provision for taxes reflect changes in the Company's net income before tax.
12
13
The following table reflects the Company's tax provision and the related
effective tax rate for the periods indicated.
Three months ended Six months ended
June 30, June 30,
------------------------- -----------------------
1999 1998 1999 1998
----------- ---------- ---------- ---------
Tax provision $ 670 $ 646 $ 1,260 $ 1,194
Effective tax rate 37.1% 37.2% 38.2% 36.9%
- -------------------------------------------------------------------------------------
The Company's effective tax rate varies with changes in the relative
amounts of its non-taxable income and non-deductible expenses. The increase in
the Company's tax provision is attributable to increases in the Company's net
income, the non-deductibility of certain professional fees in connection with
the preparation of the Company's registration statement, and a 39% reduction in
investments held in the tax-exempt municipal securities portfolio.
ASSET QUALITY
The Company concentrates its lending activities primarily within Shasta
County, California, and the location of the Bank's two full service branches.
The Company also makes loans to borrowers in Butte, El Dorado, Placer,
Sacramento and Tehama counties through its loan production offices. Portfolio
loans have increased $2.6 million in the first half of 1999, or 1.8%. The
increases are primarily in the commercial & financial and commercial real estate
segments.
The following table sets forth the amounts of loans outstanding by
category as of the dates indicated:
(Dollars in thousands)
June 30, 1999 December 31, 1998
------------- -----------------
Commercial & Financial $ 52,699 $ 46,890
Real Estate-Construction 29,678 29,470
Real Estate-Commercial 76,937 69,742
Installment 291 298
Other Loans 1,223 2,225
Less:
Deferred Loan Fees and Costs (367) (423)
Allowance for Loan Losses (3,276) (3,235)
--------- ---------
Total Net Loans $ 157,185 $ 144,967
========= =========
The Company's practice is to place an asset on nonaccrual status when
one of the following events occurs: (i) any installment of principal or interest
is 90 days or more past due (unless in management's opinion the loan is well
secured and in the process of collection). (ii) Management determines the
ultimate collection of principal or interest to be unlikely or (iii) the terms
of the loan have been renegotiated due to a serious weakening of the borrower's
financial condition.
Nonperforming loans are loans that are on nonaccrual, are 90 days past
due and still accruing or have been restructured.
13
14
The following table sets forth a summary of the Company's nonperforming
assets as of the dates indicated:
(Dollars in thousands)
June 30, 1999 December 31, 1998
------------- -----------------
Nonaccrual loans $ 982 $ 942
90 days and still accruing 0 46
Restructured loans in compliance
with modified terms - -
Other Real Estate Owned 0 66
The Company's nonaccrual loans increased from $942 thousand to $982
thousand in the first six months of 1999, a 4.2% decrease. OREO properties
decreased to zero in the same period. The decrease in OREO properties is
attributable to one property that has been sold.
ALLOWANCE FOR LOAN AND LEASE LOSSES (ALLL)
The Company makes provisions to the ALLL on a regular basis through
charges to operations that are reflected in the Company's statements of income
as a provision for loan losses. When a loan is deemed uncollectible, it is
charged against the allowance. Any recoveries of previously charged-off loans
are credited back to the allowance. There is no precise method of predicting
specific losses or amounts that ultimately may be charged-off on particular
categories of the loan portfolio.
Similarly, the adequacy of the ALLL and the level of the related
provision for possible loan losses is determined on a judgment basis by
management based on consideration of (i) economic conditions, (ii) borrowers'
financial condition, (iii) loan impairment, (iv) evaluation of industry trends,
(v) industry and other concentrations, (vi) loans which are contractually
current as to payment terms but demonstrate a higher degree of risk as
identified by management, (vii) continuing evaluation of the performing loan
portfolio, (viii) monthly review and evaluation of problem loans identified as
having loss potential, (ix) quarterly review by the Board of Directors, (x) off
balance sheet risks and (xi) assessments by regulators and other third parties.
Management and the Board of Directors evaluate the allowance and determine its
desired level considering objective and subjective measures, such as knowledge
of the borrowers' business, valuation of collateral, the determination of
impaired loans and exposure to potential losses.
The ALLL is a general reserve available against the total loan portfolio
and off balance sheet credit exposure. It is maintained without any
interallocation to the categories of the loan portfolio, and the entire
allowance is available to cover loan losses. While management uses available
information to recognize losses on loans, future additions to the allowance may
be necessary based on changes in economic conditions. In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review the Bank's ALLL. Such agencies may require the Bank to
provide additions to the allowance based on their judgment of information
available to them at the time of their examination. There is uncertainty
concerning future economic trends. Accordingly, it is not possible to predict
the effect future economic trends may have on the level of the provision for
possible loan losses in future periods.
The ALLL should not be interpreted as an indication that charge-offs in
future periods will occur in the stated amounts or proportions.
The adequacy of the ALLL is measured: in part by an internal grading system.
Each loan being originated or renewed is assigned a grade with a risk-weight
factor. Careful analysis, coupled with discussions with Officers and Directors
enable the Bank to pinpoint loans that need strengthening and careful
management if they are to be collected. Assets are assigned a risk rating based
on the Bank's best judgement concerning the degree of risk and the likelihood
of orderly collection. On a monthly basis, trial balances sorted by grade are
generated. Specific credits which have deteriorating trends are identified,
reclassified to a new grade, or assigned a specific risk-weight based on
management judgement and understanding of the risk of the borrower and to asses
the inherent risks associated with the credit.
14
15
The risk-weight factor applied is then applied to the grade to determine
the funding requirements of the ALLL. The Bank's ALLL increased to $3,276,000 in
the first six months of 1999 from $3,235,000 at December 1998. At December 31,
1998, the Allowance for Loan and Lease Losses was over-funded by the calculation
of the risk-weight factor by grade, approximately $187,000. This over-funding
has allowed for the rapid growth of the loan portfolio without additional
provision being charged to expense. At June 30, 1999, the ALLL was over-funded
by the calculation of risk-weight factor by grade, approximately $5,000. The
allowance for loan losses as a percentage of portfolio loans decreased from
2.40% at June 30, 1998 to 2.04% at June 30, 1999. The decrease as a percentage
reflects the use of the $187,000 over-funding applied towards the growth of the
portfolio. Management expects to see additional charges to the provision to fund
the growth in the loan portfolio for the second half of 1999.
The following table summarizes the activity in the ALLL reserves for the
periods indicated.
Three months ended Six months ended
June 30, June 30,
----------------------- -----------------------
1999 1998 1999 1998
------- ------- ------- -------
Beginning balance for Loan Losses $ 3,210 $ 2,939 $ 3,235 $ 2,819
Provision for Loan Losses 15 0 40 145
Charge offs:
Commercial (0) (32) (0) (40)
Real Estate (0) (6) (33) (22)
Other (0) (11) (22) (19)
------- ------- ------- -------
Total Charge offs (0) (49) (55) (81)
Recoveries:
Commercial 0 50 5 53
Real Estate 40 5 40 5
Other 11 13 11 17
------- ------- ------- -------
Total Recoveries 51 68 56 75
Ending Balance $ 3,276 $ 2,958 $ 3,276 $ 2,958
ALLL to total loans 2.04% 2.40% 2.04% 2.40%
Net Charge offs to average loans 0.00% 0.00% 0.00% 0.00%
- ------------------------------------------------------------------------------------------------
INVESTMENT PORTFOLIO
Total investment securities increased 5.0 million in the first six
months of 1999 or 15.5%. The increase is primarily in US Government and Agency
securities and can be directly attributed to the increase in deposits during
this same period.
LIQUIDITY
With respect to assets, liquidity is provided by cash and money market
investments such as interest-bearing time deposits, federal-funds sold,
investment securities available-for-sale and principal and interest payments on
loans. With respect to liabilities, the Company's core deposits, shareholders'
equity and the ability of the Bank to borrow funds and to generate deposits,
provide asset funding.
Because estimates of the Bank's liquidity needs may vary from actual
needs, the Bank maintains a substantial amount of liquid assets to absorb short
term increases in loans or reductions in deposits. The Company's liquid assets
(cash and due from banks, federal funds sold and available-for-sale investment
securities) totaled $49.9 million, or 22.2% of total assets, at June 30, 1999
compared to $51.3 million or 23.8% of total assets at December 31, 1998.
15
16
CAPITAL ADEQUACY
Overall capital adequacy is monitored on a day-to-day basis by the
Company's management and reported to the Company's Board of Directors on a
monthly basis. The Bank's regulators measure capital adequacy by using a
risk-based capital framework and by monitoring compliance with minimum leverage
ratio guidelines. Under the risk-based capital standard, assets reported on the
Company's balance sheet and certain off-balance sheet items are assigned to risk
categories, each of which is assigned a risk weight.
This standard characterizes an institution's capital as being "Tier 1" capital
(defined as principally comprising shareholders' equity) and "Tier 2" capital
(defined as principally comprising the qualifying portion of the ALLL).
The minimum ratio of total risk-based capital to risk-adjusted assets,
including certain off-balance sheet items, is 8%. At least one-half (4%) of the
total risk-based capital (Tier 1) is to be comprised of common equity; the
balance may consist of debt securities and a limited portion of the ALLL.
The following table sets forth the Bank's capital ratios as of the
second quarter 1999.
June 30, 1999 December 31, 1998
------------- -----------------
Total Risk-Based Capital 16.17% 15.58%
Tier 1 Capital to Risk-Based Assets 14.91% 14.33%
Tier 1 Capital to Average Assets 11.31% 10.95%
(Leverage ratio)
YEAR 2000
Redding Bank of Commerce recognized the critical importance of Year 2000 system
compliance and began addressing this issue in 1996. A Y2K Contingency team was
formed comprised of senior management, operating officers and selected
representatives. This team serves as the formal sponsor of the Year 2000
project, providing financial and operational support. Results are regularly
reported to the Board of Directors.
YEAR 2000 OVERVIEW
Thirty years ago, computer memory was costly. To conserve space, computer
programmers used only two digits to record dates. On December 31, 1999, when
"99" rolls over to "00" on January 1, 2000, systems that have not been fixed
could create service interruptions or errors because they could read "00" as
1900 instead of 2000. Programmers worldwide are working on the Year 2000
challenge to allow computer systems to move effortlessly from December 31, 1999
to January 1, 2000.
YEAR 2000 STRATEGY
The Y2K Contingency Team has developed a comprehensive plan for achieving
compliance. The five-step process consists of the following:
~ Awareness - creating and maintaining awareness of the Bank's Year 2000
effort at all levels of the company. This step has been completed.
~ Assessment - Determining which operating systems, computers, applications
and facilities need to be fixed and prioritizing remediation efforts. This
step has been completed.
~ Renovation - The "fix-it" stage of the process. This step has been completed
for all of the Company's mission critical software systems.
~ Validation - The testing and certification stage of the process. Testing of
our mission-critical systems was substantially completed in 1998.
~ Implementation - Renovated and validated fixes will be put into production
well before 2000 so that we can test interfaces with customers, business
partners, government institutions and others.
16
17
Redding Bank of Commerce's Year 2000 efforts is managed from the top. The Y2K
team is headed by an Executive Vice President and key Senior Management. Regular
reports on the status of the Bank's Year 2000 efforts are provided to the Board
of Directors.
SCOPE
A complete inventory of the Banks hardware, software, telecommunications
resources, including mainframe and personal computers, ATM's and servers has
been completed. Our inventory of software covers our operating systems, network
systems, application software and data storage systems. In addition to our own
internal systems, our inventory process includes all hardware and software
vendors and service providers to determine their Year 2000 compliance status,
testing timeframes and expected Year 2000 readiness dates.
We have also inventoried our environmental systems such as elevators, vault
timers, security systems, and climate control systems. Vendors have been
contacted and Year 2000 compliance has been retrofitted and tested on internal
environmental systems.
RENOVATION AND TESTING FOR YEAR 2000
Renovation and testing efforts were substantially completed by December 31,
1998. The testing of the mission critical system applications for core banking
product provided by the Bank's primary vendor was completed and results
certified during November and December 1998.
BUSINESS RESUMPTION CONTINGENCY PLANS
Attaining Year 2000 readiness is one of the most complex and challenging issues
facing financial institutions. Substantial resources and time were expended to
renovate or replace mission-critical systems, yet despite this effort and
commitment, the risk of disruption to business processes remains. A Business
Resumption Plan is needed to provide assurance that the mission critical
functions will continue if one or more systems fail.
The Company has already established a Y2K Action Team comprised of an Executive
Division that includes directors and senior management as well as management
representatives from all major business. This team has and will continue to
discuss issues, which might impact the Bank's ability to conduct business in a
convenient fashion, as a result of a Y2K failure. The Y2K Action Team has
identified the Company's core business processes as follows:
A. Accepting deposits and paying withdrawals
B. Purchasing and selling securities and Federal Funds
C. Making, selling and administering loans
D. Conducting in-house data processing
E. Conducting item processing
F. Sending and receiving wire transfers and ACH transactions
G. Maintaining liquidity and cash availability
H. Clearing check items for customers and paying "on-us" checks
I. Providing customer service, including account information
J. Providing payroll services and merchant bankcard services
The Bank has identified ten MISSION CRITICAL vendors. They are Pacific Bell
Telephone Company (Pacific Bell), City of Redding Electric Utilities, the
Federal Reserve Bank, Peerless Group Inc., Document Solutions Inc. (DSI), Deluxe
Data (Deluxe), CFI Pro Services (CFI), ACCPAC International (payroll services),
First Data Resources (FDR) and Cardservice International (merchant bankcard
services). The Bank has successfully tested Federal Reserve applications on-line
with the Federal Reserve Bank of San Francisco while also testing Peerless/DSI
applications in-house. Deluxe, CFI and ACCPAC have all been tested successfully
in-house. FDR (our Visa/MasterCard processor) has successfully done end point
testing directly with Visa and MasterCard. No testing is available for Pacific
Bell or City of Redding Utilities. The Bank is totally dependent upon public
announcements made by Pacific Bell and City of Redding Utilities as to their
respective Y2K readiness.
17
18
The Company has determined that merchant bankcard services including ACH
origination, wire transfer, settlement and balancing can be processed manually
through the use of paper reports provided by FDR. Cardservice International's
internal network access system (CAN) is at 75% completion of the renovation
phase according to the latest report that was received dated April 1999. The CAN
system is not considered a mission critical system to the Company's processing.
The Company has established the Y2K Action Team to implement the required Y2K
actions. The Y2K Team is responsible for developing and monitoring the
implementation and testing of the Y2K Contingency Plan. Management is
responsible for directing the activities of the Committee and reporting to the
Board of Directors on the progress in the development and implementation of the
Y2K Contingency Plan.
The Company's Y2K Contingency Plan will be reviewed, updated and validated on a
continuous basis by the Y2K Action Team.
Manual testing of each core business process has been completed. Testing and
refining of manual systems will continue up to and into the new millennium.
A test with Peerless Recovery was executed on May 26, 1999. This was to test the
re-routing of the ACH and MICR files from San Francisco Federal Reserve to the
Dallas Fed Peerless Recovery was able to pick up the files and turn a complete
cycle of all of Redding Bank of Commerce's applications.
READINESS STATEMENT
Redding Bank of Commerce is ready for the Year 2000. The company recognized the
critical importance of Year 2000 system compliance and began addressing this
issue in 1996. The company has completed the full integration of systems
identified as mission critical. Each system that supports and maintains customer
accounts has been tested and where necessary, replaced or upgraded to recognize
the Year 2000. The company has successfully met the June 30, 1999 goal for
testing key business processes and technology and has met federal regulatory
requirements. The company will continue to test systems, refine contingency
plans and monitor the readiness of vendors and suppliers. These ongoing security
efforts will ensure business as usual into the new millennium.
The testing of the hardware and software that the Bank categorizes as mission
critical has been completed. A "Year 2000 compliant" product, when used in
accordance with its product documentation, in all material respects accurately
processes date-data (calculating, comparing and sequencing dates) from 1999 to
2000, and leap year calculations, provided all other products used in
combination with the product properly exchange data with it and are themselves
Year 2000 compliant in exchanging date-data in a four-year-digit format.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company's primary component of market risk is interest rate
volatility. Fluctuation in interest rates will ultimately impact both the level
of interest income and interest expense recorded on a large portion of the
Company's assets and liabilities, and the fair market value of interest earning
assets and interest-bearing liabilities, other than those which possess a short
term to maturity. Because the Company's interest-bearing liabilities and
interest-earning assets are with the Bank, the Company's interest rate risk
exposure is in connection with the Bank's operations. As a result, all
significant interest rate risk management procedures are performed at the Bank
level.
Based upon the nature of its operations, the Bank is not subject to
foreign currency exchange or commodity price risk. The fundamental objective of
the Company's management of its assets and liabilities is to enhance the
economic value of the Company while maintaining adequate liquidity and an
exposure to interest rate risk deemed acceptable by the Company's management.
The Company manages its exposure to interest rate risk through adherence
to maturity, pricing and asset mix policies and procedures designed to mitigate
the impact of changes in market interest rates. The Bank's profitability is
dependent to a large extent upon its net interest income, which is the
difference between its interest income on interest-earning assets, such as loans
and securities, and its interest expense on interest-bearing liabilities, such
as deposits and borrowings.
18
19
The formal policies and practices adopted by the Bank to monitor and
manage interest rate risk exposure measure risk in two ways: (i) repricing
opportunities for earning assets and interest-bearing liabilities and (ii)
changes in net interest income for declining interest rate shocks of 100 and 200
basis points.
Because of the Bank's capital position and noninterest-bearing demand
deposit accounts, the Bank is asset sensitive. As a result, management
anticipates that, in a declining interest rate environment, the Company's net
interest income and margin would be expected to decline, and, in an increasing
interest rate environment, the Company's net interest income and margin would be
expected to increase. However, no assurance can be given that under such
circumstances the Company would experience the described relationships to
declining or increasing interest rates.
Because the Bank is asset sensitive, the Company is adversely affected
by declining rates rather than rising rates. This effect is partially offset in
the short-term by the fact that the Company is liability sensitive through the
cumulative GAP period of one year or less. During a period of declining rates,
such liabilities may be repriced to provide a short-term advantage to the
Company; however, this benefit may not be sustainable over the long-term.
To estimate the effect of interest rate shocks on the Company's net
interest income, management uses a model to prepare an analysis of interest rate
risk exposure. Such analysis calculates the change in net interest income given
a change in the federal funds rate of 100 basis points up or down. All changes
are measured in dollars and are compared to projected net interest income. At
June 30, 1999 the estimated annualized reduction in net interest income
attributable to a 100 basis point decline in the federal funds rate was $389,000
with a similar and opposite result attributable to a 100 basis point increase in
the federal funds rate. At December 31, 1998, the estimated annualized reduction
in net interest income attributable to a 100 basis point decline in the federal
funds rate was $543,000 with a similar and opposite result attributable to a 100
basis point increase in the federal funds rate. Management does not believe that
the change from in the first quarter is significant or represents a known trend
toward more interest rate risk sensitivity in the Company's financial position.
The model utilized by management to create the analysis described in the
preceding paragraph uses balance sheet simulation to estimate the impact of
changing rates on the annual net interest income of the Bank. The model
considers a number of factors, including (i) change in customer and management
behavior in response to the assumed rate shock, (ii) the ratio of the amount of
rate change for each interest-bearing asset or liability to assumed changes in
the federal funds rate based on local market conditions for loans and core
deposits and national market conditions for other assets and liabilities and
(iii) timing factors related to the lag between the rate shock and its effect on
other interest-bearing assets and liabilities. Actual results will differ when
actual customer and management behavior and ratios differ from the assumptions
utilized by management in its model. In addition, the model has limited
usefulness for the measurement of the effect on annual net interest income
resulting from rate changes other than 100 basis points. Management believes
that the short duration of its rate-sensitive assets and liabilities contributes
to its ability to reprice a significant amount of its rate-sensitive assets and
liabilities and mitigates the impact of rate changes in excess of 100 basis
points. The model's primary benefit to management is its assistance in
evaluating the impact that future strategies with respect to the Bank's mix and
level of rate-sensitive assets and liabilities will have on the Company's net
interest income.
19
20
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
The Company and its subsidiaries are involved in various legal actions arising
in the ordinary course of business. The Company believes that the ultimate
disposition of all currently pending matters will not have a material adverse
effect on the Company's financial condition or results of operations.
ITEM #2. CHANGES IN SECURITIES AND USE OF PROCEEDS
During the second quarter of 1999, the Board of Director's of Redding Bancorp
approved a repurchase program for Redding Bancorp stock. The purpose of the
Treasury Stock Repurchase program is to provide greater liquidity for investor's
and to mitigate the dilution effects of the Redding Bancorp 1998 Stock Option
Plan. The program establishes a systematic buyback approach using a seven-year
ramp. The program authorized the buyback of up to 50,000 shares of the Company's
stock during 1999. As of June 30, 1999 the Company has repurchased 39,575
shares. These shares have been retired. The authorized Common Stock of the
Company consists of 10,000,000 shares no par value. As of June 30, 1999 there
were issued and outstanding 2,650,828 shares of Common Stock.
ITEM #3. DEFAULTS UPON SENIOR SECURITIES
N/A.
ITEM #4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The annual shareholders meeting of the Company was held on Tuesday, April
20, 1999, in the lobby of the Redding Bank of Commerce located at 1951 Churn
Creek Road, Redding, California 96002. There were six items of business brought
before shareholders for approval.
(b) Proxies for the Annual meeting were solicited pursuant to Regulation 14
under the Securities Exchange Act of 1934. 82.2% of the outstanding voting stock
of the company was present by proxy or in person. There were no solicitations in
opposition to management's nominees for directors as listed in the Company's
proxy statement for the annual meeting, and all such nominees were elected.
- -------------------------------------------------------------------------------------------
Nominee For Against Abstain Broker
Non-Votes
- ----------------------- --------------- --------------- -------------- ---------
Robert C. Anderson 2,218,278 10,317 0 0
Russell L. Duclos 2,218,278 10,317 0 0
Welton L. Carrel 2,218,278 10,317 0 0
John C. Fitzpatrick 2,218,278 10,317 0 0
Kenneth R. Gifford Jr. 2,218,278 10,317 0 0
Harry L. Grashoff, Jr. 2,218,278 10,317 0 0
Eugene L. Nichols 2,218,278 10,317 0 0
David H. Scott 2,218,278 10,317 0 0
- -------------------------------------------------------------------------------------------
Proposal #2: Amendment of Articles of Incorporation concerning authorization of
preferred stock.
- -------------------------------------------------------------------------------------------
For Against Abstain Broker Non-votes
- --------------------- ---------------- ------------------ ----------------
1,799,665 149,103 0 245,147
- -------------------------------------------------------------------------------------------
Proposal #3: Amendment of Articles of Incorporation concerning supermajority
voting and fair price provision.
- -------------------------------------------------------------------------------------------
For Against Abstain Broker Non-votes
- --------------------- ---------------- ------------------ ----------------
1,818,391 123,291 0 245,147
- -------------------------------------------------------------------------------------------
20
21
Proposal #4: Amendment of Articles of Incorporation concerning action by written
consent of shareholders.
- -------------------------------------------------------------------------------------------
For Against Abstain Broker Non-votes
- --------------------- ---------------- ------------------ ----------------
1,818,391 104,967 0 245,147
- -------------------------------------------------------------------------------------------
Proposal #5: Amendment of Articles of Incorporation concerning limitation of
Director liability and Indemnification of agents.
- -------------------------------------------------------------------------------------------
For Against Abstain Broker Non-votes
- --------------------- ---------------- ------------------ ----------------
1,940,541 97,059 0 146,265
- -------------------------------------------------------------------------------------------
Proposal #6: Ratification of the appointment of Independent Auditors.
- -------------------------------------------------------------------------------------------
For Against Abstain Broker Non-votes
- --------------------- ---------------- ------------------ ----------------
2,195,388 9,000 0 0
- -------------------------------------------------------------------------------------------
ITEM #5. OTHER INFORMATION
N/A.
ITEM #6A. EXHIBITS
Ex-27.1. Financial Data table for the periods ended June 30, 1999 and June 30,
1998.
ITEM #6B. REPORTS ON FORM 8-K
Form 8-K dated April 30, 1999 announcing results of annual shareholders meeting.
Form 8-K dated May 20, 1999 announcing Redding Bancorp Treasury Stock Repurchase
program.
Form 8-K dated July 2, 1999 announcing second quarter 1998 earnings.
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.
REDDING BANCORP
(Registrant)
Date: July 29, 1999 /s/ Linda J. Miles
Linda J. Miles
Executive Vice President &
Chief Financial Officer
21
22
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
27.1. Financial Data table for the periods ended June 30, 1999 and June 30, 1998.
22