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, 1998 / / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from.......................... Commission file number 333-16951 BSM BANCORP (Exact name of registrant as specified in its charter) CALIFORNIA NO. 77-0442667 (State or other jurisdiction (IRS Employer of incorporation) Identification No.) 2739 Santa Maria Way, Santa Maria, California 93455 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (805) 937-8551 Not applicable (Former name or former address, 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(c) of the Securities Exchange Act of 1934 during the preceding 12 months (of shorter period that the registrant was required to file such reports) Yes /X/ and (2) has been subject to such filing requirements for the past 90 days. Yes/ / No/X/ APPLICABLE ONLY TO CORPORATE ISSUERS On July 10, 1998, there were 3,062,339 shares of BSM Bancorp Common Stock outstanding. 1 BSM BANCORP June 30, 1998 INDEX PAGE PART I - FINANCIAL INFORMATION Item 1 - Financial Statements Consolidated Balance Sheets as of June 30, 1998 and December 31, 1997 3 Consolidated Statements of Income for the six months ended June 30, 1998 and 1997............................................. 4 Consolidated Statements of Changes in Financial Position for the six months ended June 30, 1998 and 1997................................ 5 Notes to Consolidated Financial Statements........................... 6 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.......................................... 8 PART II - OTHER INFORMATION Item 4 - Submission of Matters to a Bote of Security Holders............. 10 Item 5 - Other Information............................................... 10 Item 6 - Exhibits and Reports on Form 8-K................................ 11 2 PART I - FINANCIAL INFORMATION ITEM 1 - FINANCIAL STATEMENTS BSM BANCORP AND SUBSIDIARY CONSOLIDATED BALANCE SHEETS (UNAUDITED) ASSETS JUNE 30, 1998 DECEMBER 31, 1997 ------------- ----------------- Cash and due from banks $ 21,511,762 $ 18,472,719 Federal funds sold 20,245,000 7,461,000 ------------ ------------ Cash and cash equivalents 41,756,762 25,933,719 Investments: Securities available-for-sale 36,062,016 46,143,134 Securities held-to-maturity (market value of 58,303,217 62,767,464 $58,673,164 and $63,074,004, respectively) Loans, net of unearned income 185,907,427 191,345,824 Allowance for loan losses (2,258,374) (2,114,684) ------------ ------------ Net loans 183,649,053 189,231,140 Premises and equipment 12,166,487 12,709,127 Accrued interest receivable and other assets 6,554,631 7,261,032 ------------ ------------ Total Assets $338,492,166 $344,045,616 ------------ ------------ ------------ ------------ LIABILITIES Deposits: Noninterest-bearing demand $ 74,601,102 $ 74,450,817 Interest-bearing demand and savings 108,037,163 114,900,337 Time deposits under $100,000 76,731,828 78,951,276 Time deposits $100,000 or more 40,125,565 37,989,170 ------------ ------------ Total deposits 299,495,658 306,291,600 Accrued interest payable and other liabilities 429,919 1,691,788 ------------ ------------ Total liabilities 299,925,577 307,983,388 ------------ ------------ Shareholders' equity: Common stock, 50,000,000 authorized; Issued and outstanding 3,061,839 as of June 30, 1998 2,975,139 as of December 31, 1997 12,679,014 11,636,514 Undivided profits 25,744,617 24,339,778 Valuation of securities available-for-sale, net of tax 142,958 85,936 ------------ ------------ Total capital 38,566,589 36,062,228 ------------ ------------ Total Liabilities & Capital $338,492,166 $344,045,616 ------------ ------------ ------------ ------------ 3 BSM BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) THREE MONTH PERIOD SIX MONTH PERIOD ENDED JUNE 30, ENDED JUNE 30, ------------------------- --------------------------- 1998 1997 1998 1997 ---------- ---------- ----------- ------------ INTEREST INCOME: Interest and fees on loans $4,994,077 $4,548,060 $ 9,849,598 $ 9,157,101 Interest on investment securities-taxable 957,511 1,147,064 2,055,962 2,280,650 Interest on investment securities-nontaxable 357,754 206,224 690,831 370,258 Other interest income 171,192 136,975 270,941 271,514 ---------- ---------- ----------- ----------- TOTAL INTEREST INCOME 6,480,534 6,038,323 12,867,332 12,079,523 ---------- ---------- ----------- ----------- INTEREST EXPENSE: Interest on demand and savings deposits 575,108 597,278 1,182,156 1,179,356 Interest on time deposits 1,563,613 1,480,101 3,129,017 2,910,271 ---------- ---------- ----------- ----------- TOTAL INTEREST EXPENSE 2,138,721 2,077,379 4,311,173 4,089,627 NET INTEREST INCOME BEFORE PROVISION 4,341,813 3,960,944 8,556,159 7,989,896 ---------- ---------- ----------- ----------- Less: Provision for loan losses 150,000 0 300,000 30,000 ---------- ---------- ----------- ----------- NET INTEREST INCOME AFTER PROVISION 4,191,813 3,960,944 8,256,159 7,959,896 OTHER OPERATING INCOME: Service charges and fees 485,906 511,624 973,083 992,799 Other noninterest income 408,788 364,617 880,630 719,564 ---------- ---------- ----------- ----------- TOTAL OTHER OPERATING INCOME 894,694 876,241 1,853,713 1,712,363 ---------- ---------- ----------- ----------- OTHER OPERATING EXPENSES: Salaries and employee benefits 1,718,336 1,797,672 3,629,934 3,639,114 Occupancy expenses 231,527 245,943 487,131 485,457 Furniture and equipment 303,135 362,435 649,299 722,741 Advertising and promotion 131,673 201,451 300,624 353,907 Professional expenses 56,654 88,319 129,061 168,949 Office expenses 171,220 236,693 371,763 501,708 Merchant processing costs 170,347 137,904 312,145 256,492 Other expenses 278,354 239,665 632,045 549,025 ---------- ---------- ----------- ----------- TOTAL OTHER OPERATING EXPENSES 3,061,246 3,310,082 6,512,002 6,677,393 ---------- ---------- ----------- ----------- Income before taxes 2,025,261 1,527,103 3,597,870 2,994,866 Provision for income taxes 730,000 592,000 1,292,000 1,144,800 ---------- ---------- ----------- ----------- NET INCOME $1,295,261 $ 935,103 $ 2,305,870 $ 1,850,066 ---------- ---------- ----------- ----------- ---------- ---------- ----------- ----------- EARNING PER SHARE - BASIC $ 0.44 $ 0.32 $ 0.77 $ 0.62 EARNING PER SHARE - DILUTED $ 0.43 $ 0.31 $ 0.75 $ 0.61 4 BSM BANCORP AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CHANGES IN FINANCIAL POSITION (UNAUDITED) THREE MONTH PERIOD SIX MONTH PERIOD ENDED JUNE 30, ENDED JUNE 30, ------------------------------ ------------------------------ 1998 1997 1998 1997 ------------ ----------- ------------ ------------ OPERATING ACTIVITIES Net income $ 1,295,261 $ 935,103 $ 2,305,870 $ 1,850,066 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 283,620 317,979 577,563 612,803 Provision for credit losses 150,000 0 300,000 30,000 Net amortization of premium/discounts- investments 48,608 112,750 93,662 211,640 Net loss (gain) from sale of fixed assets 0 (355) (80) (45,937) Net loss (gain) from sale other real estate loans 229,633 (12,802) 248,062 35,385 Net change in accrued interest, other assets and other liabilities (1,318,017) (261,350) (664,329) (224,278) ----------- ----------- ------------ ----------- Net cash provided by operating activities 689,105 1,091,325 2,860,748 2,469,679 INVESTING ACTIVITIES Proceeds from maturities of securities held to maturity 4,028,440 3,401,999 8,868,902 9,860,077 Proceeds from maturities of securities available for sale 2,000,000 5,000,000 10,500,000 7,173,000 Purchases of held-to-maturity securities (2,595,955) (3,739,235) (4,523,287) (8,181,594) Purchases of available-for-sale securities 0 (4,181,623) (300,000) (9,158,586) Net decrease in loans 3,615,539 (3,880,560) 4,246,749 1,675,100 Purchases of premises and equipment (2,401) (116,226) (36,666) (1,159,498) Proceeds from the sale of other real estate owned 741,834 327,381 860,990 702,596 Proceeds for the sale of equipment 0 355 80 49,740 Net cash provided (used) by investing activities 7,787,457 (3,187,909) 19,616,768 960,835 FINANCING ACTIVITIES Net decrease in demand and savings deposits (7,000,592) 6,203,775 (16,085,699) (4,647,798) Net increase in time deposits 8,091,601 1,921,212 9,289,757 3,119,368 Payments for dividends/distributions 0 0 (901,031) (446,002) Proceeds from the exercise of stock options 925,150 13,449 1,042,500 45,650 ----------- ----------- ------------ ----------- Net cash provided (used) by financing activities 2,016,159 8,138,436 (6,654,473) (1,928,782) ----------- ----------- ------------ ----------- NET INCREASE IN CASH AND CASH EQUIVALENTS 10,492,721 6,041,852 15,823,043 1,501,732 ----------- ----------- ------------ ----------- CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 31,264,041 27,023,433 25,933,719 31,563,554 ----------- ----------- ------------ ----------- CASH AND CASH EQUIVALENTS, MARCH 31, $41,756,762 $33,065,285 $ 41,756,762 $33,065,286 ----------- ----------- ------------ ----------- ----------- ----------- ------------ ----------- Cash paid during the year for interest 2,432,475 2,529,823 4,503,162 4,568,471 Cash paid during the year for income taxes 906,103 1,115,134 906,103 1,116,077 5 BSM BANCORP AND SUBSIDIARY NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 1 - BASIS OF PRESENTATION AND MANAGEMENT REPRESENTATION BSM Bancorp (the "Company") was incorporated on November 12, 1996, for the sole purpose of becoming a bank holding company for Bank of Santa Maria (the "Bank"). Following regulatory consent and with the approval of the Bank's shareholders, the Bank merged with BSM Merger Company (a wholly-owned subsidiary of the Company) (the "Merger"), as of the close of business on March 11, 1997, and thereby became a wholly-owned subsidiary of the Company. As of December 31, 1996, the Company had only one shareholder and it had no SEC nor Federal Reserve Bank reporting requirements. Following completion of the Merger, the Company is required to file periodic reports under section 15(d) of the Exchange Act. A quarterly report on Form 10Q was filed on March 31, 1997, for the first time. As the Merger was recorded using the pooling of interest method, restatement of prior balances was necessary to meet accounting standards. Accordingly, the financial statements herein contain balances prior to the actual existence of the Company which reflect what the "consolidated" entity would have reported as restated for all acquisitions, either recorded by pooling or purchase accounting. The unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles and with the instructions to Form 10-Q. On March 18, 1998, the Company filed a Form 8-A to register the Company Common Stock pursuant to 12(g) of the Exchange Act of 1934, thereby becoming subject to its requirements. The accompanying consolidated balance sheets, consolidated statements of income, and consolidated statements of changes in financial position (as restated subsequent to Merger of the Bank of Santa Maria by the Company), reflect all material adjustments necessary for fair presentation of the Company's financial position as of June 30, 1998, and December 31, 1997, and the results of operations for the six months ended June 30, 1998 and 1997. All such adjustments were of a normal recurring nature. NOTE 2 - EARNINGS PER SHARE The following is a reconciliation of net income and shares outstanding to the income and number of shares used to compute Earnings Per Share (EPS). Three Month Period Ended Three Month Period Ended June 30, 1998 June 30, 1997 Income Shares Income Shares ---------- --------- -------- --------- Net income as reported $1,295,261 $935,103 Shares outstanding at period end 3,061,839 2,978,139 Impact of weighted shares purchased during three month period (50,293) (2,505) ---------- --------- -------- --------- Used in basis EPS 1,295,261 3,011,546 935,103 2,975,634 Dilutive effect of stock options 35,450 48,659 ---------- --------- -------- --------- Used in dilutive EPS $1,295,261 3,046,996 $935,103 3,024,293 ---------- --------- -------- --------- ---------- --------- -------- --------- 6 NOTE 3 - NEW ACCOUNTING PRONOUNCEMENT In 1998, the Company adopted Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting Comprehensive Income," which requires companies to report all changes in equity during a period, except those resulting from investment by owners and distribution to owners, in a financial statement for the period in which they are recognized. Comprehensive Income, which encompasses net income and unrealized gains (losses) on available for sale securities adjustments, is presented below. Three Month Period Ended, June 30, 1998 June 30, 1997 ------------- ------------- Net Income $1,295,261 $ 935,103 Othe Comprehensive Income - unrealized gain (loss) on available for sale securities, net of tax expense of $27,374 and $74,270 for the three monthsended June 30, 1998 and 1997, respectively 41,061 111,405 --------- ---------- Comprehensive Income $1,336,322 $1,046,508 --------- ---------- --------- ---------- Six Month Period Ended, June 30, 1998 June 30, 1997 ------------- ------------- Net Income $2,305,870 $1,850,066 Othe Comprehensive Income - unrealized gain (loss) on available for sale securities, net of tax expense (credit) of $38,015 and (3,664) for the threemonths ended June 30, 1998 and 1997, respectively 57,022 (5,496) --------- ---------- Comprehensive Income $2,362,892 $1,844,570 --------- ---------- --------- ---------- NOTE 4 - SUBSEQUENT EVENT - MERGER WITH MID-STATE BANK As reported in the Company's most recent Reports on Form 10-K and Form 8-K, the Company entered into an Agreement to Merge and Plan of Reorganization (the "agreement") dated January 29, 1998 and amended on March 27, 1998 by and among the Company, Bank of Santa Maria and Mid-State Bank. This matter was submitted to a vote of the shareholders at its Annual Meeting on June 18, 1998. The matter was also submitted to a vote of the shareholders of Mid-State Bank on June 17, 1998. The shareholders of both organizations approved the merger. A pro forma statement of financial position of the combined organization is shown in Part II, Item 5, "Other Information", as of June 30, 1998. 7 ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW For the six months ended June 30, 1998, the Company reported net income of $2,305,870, or $.77 per share compared to a net income of $1,850,066, or $.62 per share for the same six month period in 1997. The annualized return on average assets was 1.39% for the first half of 1998, compared to 1.20% for the first half of 1997. Annualized return on average shareholders' equity for 1998 and 1997, was 12.82% and 10.92% respectively. On January 30, 1998, the Company and Mid-State Bank announced the signing of an Agreement to Merge and Plan of Reorganization on January 29, 1998 (as amended on March 18, 1998), pursuant to which the Bank of Santa Maria, the Company's wholly-owned subsidiary, would be merged with and into Mid-State Bank and become the subsidiary of the Company. Upon consummation of the merger, Mid-State will become the surviving bank and the name of the Company will be changed from BSM Bancorp to Mid-State Bancshares. As part of the Agreement, three of the existing directors of the Company/Bank, including the Company's Chairman and President, will continue as directors of the Company and have been appointed as directors of Mid-State Bank. The remaining directors of the Company have resigned with the vacancies to be filled by the seven existing directors of Mid-State Bank. The Company President has been named as an Executive Vice President of the merged bank as well as an Executive Vice President of the Company. The Executive Officers of Mid-State have been appointed as the Executive Officers of both the Company and the Bank following the resignation of the Company/Bank's current executive officers. The signing of this Agreement, along with the Agreement itself, were reported to the SEC on February 4, 1998, on a Form 8-K. On March 18, 1998, the Company filed (with the SEC) a registration statement on Form S-4, which was declared effective on May 14, 1998. The Company held its 1998 Annual Shareholders Meeting on June 18,1998. The merger is intended to close during the third quarter of 1998 and has been approved by the government regulatory agencies and the shareholders of both the Company and Mid-State Bank. FINANCIAL CONDITION Total assets for the first half of 1998, increased 5.6% to $338.5 million in comparison to total assets of $320.5 million for the first half of 1997. Cash and cash equivalents increased by $8.6 million with funds provided primarily by the maturation of investment securities. Total investment dollars decreased by 16.0% to $94.3 million as of June 30, 1998. Loans declined by $5.6 million during the first six months of 1998, compared to a $2.5 million decline during the same period in 1997. The percentage of decline was 3.0% for 1998, versus a decline of 1.5% for 1997. There were no material purchases of fixed assets during the first half of 1998. The Bank's cash flow continues to benefit from several sales of other real estate owned properties during the first and second quarters. Deposits decreased by $6.8 million during the first six months of 1998, in comparison to a $1.5 million decline during the same period in 1997. The percentage of decrease was 2.3% for 1998, versus .5% decline in 1997. The larger 1998 decline appears to be attributable to the runoff of deposit dollars associated with the acquisition of El Camino National Bank in January of 1997. A certain level of runoff was anticipated by Company management. The Bank, prior to its acquisition by the Company, paid semi-annual dividends, a policy which was first implemented in mid 1996. During the first quarter of 1996, the Directors of the Bank paid a $.20 per share annual cash dividend which was augmented in August of 1996, with the first semi-annual dividend of $.15 per share. In January of 1997, the Bank again paid a $.15 per share cash dividend. The Company was the beneficiary of two organizational dividends from the Bank during 1997. A dividend in the amount of $150,000 payable in March, 1997, and a dividend in the amount of $700,000 payable in August, 1997. With the Company now fully organized, a $.20 per share cash dividend was declared in July, 1997, payable on August 15, 1997. In January 1998, the Company declared a $.30 per share cash dividend, payable in February of 1998. The Bank declared a $800,000 cash dividend to provide cash for the Company's dividend as well as operating capital. In addition, the exercise of stock options by Bank employees, provided approximately $767,500 in cash to the Company. Both the Bank and the Company maintain strong liquidity positions. A provision of the merger Agreement limits the amount of any mid-year dividend, if any, by the Company to $.10 per share. Due to the consummation of the merger on July 14, 1998, a mid-year dividend will not be declared. 8 RESULTS OF OPERATIONS Interest income on loans was up by $692,000 in the first half of 1998, compared with the same period during 1997. The increase in interest income was primarily attributable to the increase in average outstanding loans, which were up by $15.2 million. The effective yield on the loan portfolio declined by approximately .18 basis points. Interest income on investments, including Federal funds transactions, increased by $95,000 during the first half of 1998, over the comparable period in 1997. This increase, as with loans, was primarily attributable to the increase in funds available for investment, which was up by $9.4 million. The effective yield decreased .25 basis points. Interest expense on interest-bearing deposits was up by $222,000 in the first half of 1998, compared with the first half of 1997. The increase in interest expense was attributable to the increase in average interest-bearing deposits which were up by $9.0 million. The effective rate decreased by 5 basis points. Net interest margin declined from 5.83% for the first half of 1997, to 5.75% for the same period in 1998. The decline in interest income to earning assets, by 7 basis points, against a modest 5 basis point decline in interest expense to earning assets, tighten the company's overall spread. The provision for loan losses of $300,000 is sufficient to bring the allowance for loan losses to a balance considered to be adequate to absorb potential losses in the portfolio. Management's determination of the adequacy of the allowance is based upon a detailed evaluation of the portfolio, current economic conditions and trends, historical loan loss experience and other risk factors. Noninterest income increased $141,000 or 8.3% to $1,854,000 as of June 30, 1998. This increase is primarily the results of increased activity in the mortgage banking functions of the Bank. Non interest expenses decreased $165,000 or 2.5% to $6,512,000 as of June 30, 1998. While there are some fluctuations in operating expenses due to the El Camino merger and the opening of the Atascadero Branch in the first half of 1997, the primarily reason for the decrease in 1998 is due to recurring expenses no longer paid by the Company due to the merger with Mid-State Bank. CAPITAL RESOURCES The Company and its bank subsidiary are subject to risk-based capital regulations adopted by the federal banking regulators. These guidelines are used to evaluate capital adequacy and are based upon an institution's asset risk profile and off-balance sheet exposures, such as unused loan commitments and letters of credit. The following table sets forth the Company's and the Bank's leverage and risk-based capital ratios at June 30, 1998: (In thousands) COMPANY BANK ----------------- ----------------- Amount % Amount % ------- ------ ------- ------ LEVERAGE RATIO $36,678 10.96% $35,628 10.70% Regulatory minimum $13,381 4.00% $13,315 4.00% Excess $23,297 6.96% $22,313 6.70% RISKED-BASED RATIOS Tier 1 capital $36,678 16.10% $35,628 15.67% Tier 1 minimum $ 9,111 4.00% $ 9,097 4.00% Excess $27,567 12.10% $26,531 11.67% Total capital $38,936 17.09% $37,886 16.66% Total capital minimum $18,223 8.00% $18,194 8.00% Excess $20,713 9.09% $19,692 8.66% The management of the Company is not aware of any trends, events, uncertainties or recommendations by regulatory authorities that will have or that are reasonably likely to have material effect on the liquidity, capital resources or operations of the Company with the exception of the proposed merger with Mid-State Bank. The effects of this merger will be accretive to earnings in 1999, and should have positive effects to both capital resources and liquidity during 1998. 9 PART II - OTHER INFORMATION ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The following is a summary of matters submitted to vote at the Annual Meeting of Shareholders of BSM Bancorp: a) The Annual Meeting of Shareholders was held on June 18, 1998. b) The meeting involved the approval of merger agreement, election of directors and approval of proposed amendments to 1996 stock option plan. With shares represented totaling 2,300,669 of the 3,008,639 outstanding, the merger was approved by a vote of 2,238,853 in favor to 61,816 against. The proposed amendments to the 1996 stock option plan were approved with 2,159,207 votes in favor to 141,462 against. Proxies were solicited by BSM Bancorp's management pursuant to Regulation 14A under the Securities Exchange Act of 1934. There was no solicitation in opposition to management's nominees as listed in the proxy statement and all such nominees were elected pursuant to the vote of the shareholders as indicated in the proxy statement. The name of each director elected is listed in item (c) below. c) The results of the election of the directors were as follows: For Authority Withheld --------- ------------------ Armand Acosta 2,566,432 28,682 Richard E. Adam 2,565,232 29,882 Fred L. Crandall, Jr. 2,566,432 28,682 A. J. Diani 2,566,432 28,682 William A. Hares 2,565,232 29,882 Roger A. Ikola 2,566,432 28,682 Toshiharu Nishino 2,566,432 28,682 Joseph Sesto, Jr. 2,566,432 28,682 William A. Snelling 2,565,472 29,642 Mitsuo Taniguchi 2,566,432 28,682 Joseph Ziemba 2,566,432 28,682 d) The above directors, with the exeption of A. J. Diani, William A. Hares and William A. Snelling, have resigned their positions as directors of the Company. ITEM 5 - OTHER INFORMATION The proposed merger, referenced in item 4 above, received all requisite approvals from the Company's regulatory agencies and from the shareholders of BSM Bancorp. Presented below is a pro forma (unaudited) Statement of Financial Position for the consolidated entity as of June 30, 1998. The merger became effective July 10, 1998. (in thousands) BSM Bancorp Mid-State Bank Consolidated ----------- -------------- ------------ Cash and Due From Banks $ 21,512 $ 60,941 $ 82,453 Fed Funds Sold 20,245 14,000 34,245 Investment Securities Available for Sale 36,062 397,993 434,055 Held to Maturity 58,303 0 58,303 Net Loans 183,649 344,839 528,488 Other Assets 18,721 50,003 68,724 -------- -------- ---------- TOTAL ASSETS $338,492 $867,776 $1,206,268 -------- -------- ---------- -------- -------- ---------- Non-interest bearing demand $ 74,601 $139,223 $ 213,824 Interest bearing NOW, Savings and Money Market 108,037 411,057 519,094 Time Deposits 116,857 216,254 333,111 -------- -------- ---------- Total Deposits 299,495 766,534 1,066,029 Other Liabilities 430 16,841 17,271 Total Equity Capital 38,567 84,401 122,968 -------- -------- ---------- ------------------------------------------ TOTAL LIABILITIES AND EQUITY $338,492 $867,776 $1,206,268 -------- -------- ---------- -------- -------- ---------- 10 ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K A) Exhibits Exhibit No. Exhibit -------------------------------------------------------------------------- 2.1 Plan of Reorganization and Merger Agreement dated November 20, 1996 - Annex 1 of Written Consent Statement/Prospectus* 2.2 Plan of Reorganization and Merger Agreement dated January 29, 1997 and amended on March 18, 1998, by and between Company, The Bank and Mid-State Bank*** 3.1 Articles of Incorporation of Registrant* 3.2 Amendment to Articles of Incorporation of Registrant* 3.3 Amendment to Articles of Incorporation of Registrant* 3.4 Bylaws of the Registrant* 10.1 Form of Indemnification Agreement* 10.2 BSM Bancorp 1996 Stock Option agreement as approved by California Department of Corporations** 10.4 Nipomo Branch Land Lease* 10.5 Lompoc Branch Lease* 10.6 Form of "Change in Control" Employment Contract** 27 Financial Data Schedule (for SEC use only) *All documents listed are incorporated by reference and can be found in the Registration Statement of the Company filed on Form S-4 (Commission File No 333-16951). The effective date was January 29, 1997 **This exhibit is contained in BSM Bancorp's Quarterly Report on Form 10-Q for the period ended March 31, 1997, filed with the Commission on May 15, 1997 (Commission File No. 333-16951), and incorporated by reference. ***Document listed is incorporated by reference and can be found in the BSM Bancorp's Registration Statement on Form S-4 (File No. 333-48181) B) Reports on Form 8-K During the first quarter of 1998, the Company filed two Current Reports on Form 8-K, one as of January 16, 1998, and the second as of February 3, 1998. Both reports were filed pursuant to Item 5 and related to the Agreement to Merge and Plan of Reorganization by and among the Company, Mid-State Bank and Bank of Santa Maria. On July 20, 1998, the Company filed an additional report related to the Agreement to Merge and Plan of Reorganization by an among the Company, Mid-State Bank and Bank of Santa Maria. That report indicated that the merger transaction contemplated by this Agreement had been completed as of close of business on July 10, 1998. 11 SIGNATURES Pursuant to the requirement of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BSM Bancorp (Registrant) /s/ William A. Hares ---------------------- Date: July 10, 1998 William A. Hares President and Chief Executive Officer /s/ Susan Forgnone ---------------------- Date: July 10, 1998 Susan Forgnone Executive Vice President and Loan Administrator 12