1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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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, 2001
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OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-11337
FOOTHILL INDEPENDENT BANCORP
(Exact name of Registrant as specified in its charter)
Delaware 95-3815805
--------------------------------- ----------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
510 South Grand Avenue, Glendora, California 91741
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(Address of principal executive offices) (Zip Code)
(626) 963-8551 or (909) 599-9351
--------------------------------
(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal
year, if changed, since last year)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports); and (2) has been subject to such
filing requirements for the past 90 days. YES [X]. NO [ ].
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
5,499,669 shares of Common Stock
as of July 27, 2001
2
FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(dollars in thousands)
JUNE 30, 2001 DECEMBER 31, 2000
------------- -----------------
ASSETS
Cash and due from banks $ 28,775 $ 26,186
Federal funds sold 27,500 12,000
--------- ---------
Total Cash and Cash Equivalents 56,275 38,186
--------- ---------
Interest-bearing deposits in other financial institutions 12,239 8,005
--------- ---------
Investment Securities Held-To-Maturity (approximate market
value $11,332 in 2001 and $20,699 in 2000
U.S. Treasury 349 999
U.S. Government Agencies 7,537 16,379
Municipal Agencies 1,053 1,053
Other Securities 2,311 2,311
--------- ---------
Total Investment Securities Held-To-Maturity 11,250 20,742
--------- ---------
Investment Securities Available-For-Sale 45,825 50,074
--------- ---------
Loans, net of unearned discount and prepaid points and fees 367,685 367,310
Direct lease financing 720 1,164
Less reserve for possible loan and lease losses (3,939) (3,692)
--------- ---------
Total Loans & Leases, net 364,466 364,782
--------- ---------
Bank premises and equipment 6,324 7,013
Accrued interest 2,444 3,247
Other real estate owned, net of allowance for possible
losses of $-0- in 2001 and in 2000 2,262 2,164
Cash surrender value of life insurance 5,863 5,639
Prepaid expenses 1,076 2,785
Deferred tax asset 1,919 1,801
Federal Home Loan Bank stock, at cost 429 415
Federal Reserve Bank stock, at cost 229 229
Other assets 545 743
--------- ---------
TOTAL ASSETS $ 511,146 $ 505,825
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Demand deposits $ 158,774 $ 146,868
Savings and NOW deposits 109,847 106,618
Money market deposits 86,753 74,424
Time deposits in denominations of $100,000 or more 41,254 54,939
Other time deposits 62,334 71,192
--------- ---------
Total deposits 458,962 454,041
--------- ---------
Accrued employee benefits 2,303 2,197
Accrued interest and other liabilities 963 1,324
Short-term debt -- --
Long-term debt -- --
--------- ---------
Total Liabilities 462,228 457,562
--------- ---------
Stockholders' Equity
Stock dividend to be distributed
Contributed capital
Capital stock -- authorized: 25,000,000 shares $.001 par value;
issued and outstanding 5,499,669 shares at June 30, 2001
and 5,610,355 at December 31, 2000 6 5
Additional Paid-in Capital 42,547 37,754
Retained Earnings 6,434 10,746
Accumulated Other Comprehensive Income (69) (242)
--------- ---------
Total Stockholders' Equity 48,918 48,263
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 511,146 $ 505,825
========= =========
See accompanying notes to financial statements
2
3
FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
(dollars in thousands)
Six Months Ended June 30, Three Months Ended June 30,
-------------------------- ---------------------------
2001 2000 2001 2000
------- ------- ------- --------
INTEREST INCOME
Interest and fees on loans $16,023 $16,677 $ 7,796 $ 8,255
Interest on investment securities
U.S. Treasury 20 48 7 13
Obligations of other U.S. government agencies 1,088 1,250 487 609
Municipal agencies 130 161 61 79
Other securities 486 485 203 316
Interest on deposits 266 94 141 34
Interest on Federal funds sold 485 274 240 163
Lease financing income 23 46 11 19
------- ------- ------- -------
Total Interest Income 18,521 19,035 8,946 9,488
------- ------- ------- -------
INTEREST EXPENSE
Interest on savings & NOW deposits 724 777 320 389
Interest on money market deposits 1,378 1,473 667 757
Interest on time deposits in
denominations of $100,000 or more 1,402 1,212 572 657
Interest on other time deposits 1,797 1,586 813 909
Interest on borrowings -- 48 -- 4
------- ------- ------- -------
Total Interest Expense 5,301 5,096 2,372 2,716
------- ------- ------- -------
Net Interest Income 13,220 13,939 6,574 6,772
PROVISION FOR LOAN AND LEASE LOSSES 225 475 100 455
------- ------- ------- -------
Net Interest Income After Provisions for
Loan and Lease Losses 12,995 13,464 6,474 6,317
------- ------- ------- -------
OTHER INCOME
Fees and service charges 2,576 2,140 1,336 1,139
Gain on sale SBA loans 2 6 1 4
Other 87 56 10 29
------- ------- ------- -------
Total other income 2,665 2,202 1,347 1,172
------- ------- ------- -------
OTHER EXPENSES
Salaries and benefits 4,809 5,026 2,387 2,331
Occupancy expenses, net of revenue of
$102 in 2001 and $94 in 2000 1,225 1,114 629 571
Furniture and equipment expenses 773 777 375 390
Other expenses (Note 2) 3,638 3,639 1,837 1,618
------- ------- ------- -------
Total Other Expenses 10,445 10,556 5,228 4,910
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 5,215 5,110 2,593 2,579
------- ------- ------- -------
PROVISION FOR INCOME TAXES 1,909 1,888 945 953
------- ------- ------- -------
NET INCOME $ 3,306 $ 3,222 $ 1,648 $ 1,626
======= ======= ======= =======
EARNINGS PER SHARE OF COMMON STOCK
Basic $ 0.60 $ 0.54 $ 0.30 $ 0.28
------- ------- ------- -------
Diluted $ 0.56 $ 0.51 $ 0.28 $ 0.27
------- ------- ------- -------
(Note 3)
See accompanying notes to financial statements
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4
FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
(dollars in thousands)
SIX MONTHS ENDED JUNE 30, 2001 AND 2000
ACCUMULATED
NUMBER OF ADDITIONAL OTHER
SHARES CAPITAL PAID-IN COMPREHENSIVE RETAINED COMPREHENSIVE
OUTSTANDING STOCK CAPITAL INCOME EARNINGS INCOME TOTAL
----------- ----------- ----------- ------------- ----------- ------------- -----------
BALANCE, January 1, 2000 5,772,614 $ 6 $ 37,372 $ 11,898 $ (837) $ 48,439
----------- ----------- ----------- ----------- ----------- ----------- -----------
Cash dividend (852) (852)
Fractional shares of stock
dividend paid in cash --
Exercise of stock options 4,048 24 24
Common stock issued under
employee benefit and
dividend reinvestment
plans 14,678 142 142
Common stock repurchased,
cancelled and retired (453,479) (5,226) (5,226)
COMPREHENSIVE INCOME
Net Income 3,222 3,222 3,222
Unrealized security holding losses
(Net of taxes $134) 292 292 292
-----------
Total Comprehensive Income $ 3,514
=========== =========== =========== =========== ----------- ----------- -----------
BALANCE, June 30, 2000 5,337,861 $ 6 $ 37,538 $ 9,042 $ (545) $ 46,041
=========== =========== =========== =========== =========== ===========
BALANCE, January 1, 2001 5,243,863 5 37,754 10,746 (242) 48,263
7% Stock Dividend 361,421 1 4,626 (4,627)
Cash Dividend (1,083) (1,083)
Exercise of stock options 35,277 -- 33 33
Common stock issued under
employee benefit and dividend
reinvestment plans 10,576 -- 134 134
Common stock repurchased,
cancelled and retired (151,468) -- -- (1,908) (1,908)
COMPREHENSIVE INCOME
Net Income 3,306 3,306 3,306
Unrealized security holding gains
(Net of taxes $118) 173 173 173
-----------
Total Comprehensive Income $ 3,479
===========
----------- ----------- ----------- ----------- ----------- -----------
BALANCE, June 30, 2001 5,499,669 $ 6 $ 42,547 $ 6,434 $ (69) $ 48,918
=========== =========== =========== =========== =========== ===========
See accompanying notes to financial statements
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5
FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(dollars in thousands)
SIX MONTHS ENDED JUNE 30, 2001 AND 2000
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 2001 2000
---------- ----------
Cash Flows From Operating Activities:
Interest and fees received $ 19,510 $ 19,097
Service fees and other income received 2,371 1,872
Financing revenue received under leases 23 46
Interest paid (5,553) (4,861)
Cash paid to suppliers and employees (7,984) (10,126)
Income taxes paid (1,784) (1,891)
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Net Cash Provided (Used) by Operating Activities 6,583 4,137
---------- ----------
Cash Flows From Investing Activities:
Proceeds from maturity of investment securities (AFS) 1,775,111 832,832
Purchase of investment securities (AFS) (1,771,027) (838,198)
Proceeds from maturity of investment securities (HTM) 11,805 2,140
Purchase of investment securities (HTM) (2,316) (1)
Net (increase) decrease in deposits in other financial institutions (4,234) 5,940
Net (increase) decrease in credit card and revolving credit receivables (179) 8
Recoveries on loans previously written off 112 (25)
Net (increase) decrease in loans (240) (18,106)
Net (increase) decrease in leases 444 1,040
Proceeds from property, plant & equipment 1,081 20
Capital expenditures (1,101) (1,420)
Proceeds from sale of other real estate owned -- --
Stock repurchased and retired (1,908) (5,226)
---------- ----------
Net Cash Provided (Used) in Investing Activities 7,548 (20,996)
---------- ----------
Cash Flows From Financing Activities:
Net increase (decrease) in demand deposits, NOW accounts, savings
accounts, and money market deposits 27,417 14,092
Net increase (decrease) in certificates of deposit with maturities of three
months or less (5,891) 2,257
Net increase (decrease) in certificates of deposit with maturities of more
than three months (16,652) 21,936
Net increase (decrease) in short term borrowing -- (8,800)
Proceeds from exercise of stock options 33 24
Proceeds from stock issued under employee benefit and dividend
reinvestment plans 134 142
Principal payment on long term debt -- (19)
Dividends paid (1,083) (852)
---------- ----------
Net Cash Provided by Financing Activities 3,958 28,780
---------- ----------
Net Increase (Decrease) in Cash and Cash Equivalents 18,089 11,921
Cash and Cash Equivalents at Beginning of Year 38,186 26,862
---------- ----------
Cash and Cash Equivalents at June 30, 2001 & 2000 $ 56,275 $ 38,783
========== ==========
See accompanying notes to financial statements
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FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
(dollars in thousands)
SIX MONTHS ENDED JUNE 30, 2001 AND 2000
RECONCILIATION OF NET INCOME TO NET CASH
PROVIDED BY OPERATING ACTIVITIES
2001 2000
------- -------
Net Income $ 3,306 $ 3,222
Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities
Depreciation and amortization 681 657
Provision for possible credit losses 225 475
Provision for possible OREO losses 42
(Gain)/loss on sale of equipment (70) 2
Provision for deferred taxes (118) 135
Increase/(decrease) in taxes payable 243 (138)
(Increase)/decrease in other assets 204 30
(Increase)/decrease in interest receivable 803 170
Increase/(decrease) in discounts and premiums 209 (62)
Increase/(decrease) in interest payable (252) 235
(Increase)/decrease in prepaid expenses 1,709 543
Increase/(decrease) in accrued expenses and other liabilities (133) (842)
Gain on sale of other real estate owned --
Increase in cash surrender value of life insurance (224) (332)
(Gain)/loss on sale of investments and other assets -- --
------- -------
Total Adjustments 3,277 915
------- -------
Net Cash Provided (Used) by Operating Activities $ 6,583 $ 4,137
======= =======
DISCLOSURE OF ACCOUNTING POLICY
For purposes of reporting cash flows, cash and cash equivalents include cash on
hand, amounts due from banks and Federal funds sold. Generally, Federal funds
are purchased and sold for one-day periods.
See accompanying notes to financial statements
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FOOTHILL INDEPENDENT BANCORP AND SUBSIDIARIES
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(dollars in thousands)
JUNE 30, 2001 AND 2000
NOTE #1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments considered necessary for a fair
statement of the results for the interim periods presented have been included.
For further information, refer to the financial statements and footnotes thereto
included in the Company's Annual Report on Form 10-K for the year ended December
31, 2000.
NOTE #2 - OTHER EXPENSES
The following is a breakdown of other expenses for the six and three
month periods ended June 30, 2001 & 2000.
Six Months Ended June 30, Three Months Ended June 30,
----------------------------- -----------------------------
2001 2000 2000 1999
------- ------- ------- -------
Data processing $ 608 $ 533 $ 310 $ 280
Marketing expenses 524 564 260 290
Office supplies, postage and telephone 509 509 301 240
Bank Insurance 243 239 121 101
Supervisory Assessments 63 62 36 31
Professional Expenses 726 765 320 433
Provision for Y2K Expense -- (285) -- (285)
Other Expenses 965 1,252 489 528
------- ------- ------- -------
Total Other Expenses $ 3,638 $ 3,639 $ 1,837 $ 1,618
======= ======= ======= =======
NOTE #3 - 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 (amounts
in thousands):
Six Months Ended June 30, Three Months Ended June 30,
---------------------------------------- ----------------------------------------
2001 2000 2001 2000
------------------ ------------------ ------------------ ------------------
Income Shares Income Shares Income Shares Income Shares
------- ------- ------- ------- ------- ------- ------- -------
Net income as reported $ 3,306 $ 3,222 $ 1,648 $ 1,626
Shares outstanding at period end 5,500 5,711 5,500 5,711
Impact of weighting shares purchased
during the period 57 111 19 (7)
------- ------- ------- ------- ------- ------- ------- -------
Used in Basic EPS 3,306 5,557 3,222 5,822 1,648 5,519 1,626 5,704
Dilutive effect of
outstanding stock options 352 390 330 379
------- ------- ------- ------- ------- ------- ------- -------
Used in Dilutive EPS $ 3,306 5,909 $ 3,222 6,212 $ 1,648 5,849 $ 1,626 6,083
======= ======= ======= ======= ======= ======= ======= =======
7
8
Notes to Condensed Consolidated Financial Statements (continued)
NOTE #4 - INCOME TAXES
The Bank adopted Statement No. 109 of the Financial Accounting Standards
Board, Accounting for Income Taxes, commencing January 1, 1993. This new
statement supersedes Statement No. 96 and among other things, changes the
criteria for the recognition and measurement of deferred tax assets. This
adoption does not create a material change in the financial statements of the
Bank or the Company.
NOTE #5 - DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS
Financial Accounting Standards Board Statement 107 is effective for
financial statements for fiscal years ending after December 15, 1992. The
Statement considers the fair value of financial instruments for both assets and
liabilities.
The following methods and assumptions were used to estimate the fair
value of financial instruments.
Investment Securities
For U.S. Government and U.S. Agency securities, fair values are based on
market prices. For other investment securities, fair value equals quoted market
price if available. If a quoted market price is not available, fair value is
estimated using quoted market prices for similar securities as the basis for a
pricing matrix.
Loans
The fair value for loans with variable interest rates is the carrying
amount. The fair value of fixed rate loans is derived by calculating the
discounted value of the future cash flows expected to be received by the various
homogeneous categories of loans. All loans have been adjusted to reflect changes
in credit risk.
Deposits
The fair value of demand deposits, savings deposits, savings accounts
and NOW accounts is defined as the amounts payable on demand at June 30, 2001.
The fair value of fixed maturity certificates of deposit is estimated based on
the discounted value of the future cash flows expected to be paid on the
deposits.
Notes Payable
Rates currently available to the Bank for debt with similar terms and
remaining maturities are used to estimate the fair value of existing debt.
Commitments to Extend Credit and Standby Letter of Credit
The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the remaining
terms of the agreements and the present creditworthiness of the parties
involved. For fixed-rate loan commitments, fair value also considered the
difference between current levels of interest rates and committed rates.
The fair value of guarantees and letters of credit are based on fees
currently charged for similar agreements or on the estimated cost to terminate
them or otherwise settle the obligations with parties involved at June 30, 2001.
8
9
Notes to Condensed Consolidated Financial Statements (continued)
Note #5 - Disclosures about Fair Value of Financial Instruments (continued)
The estimated fair value of the Bank's financial instruments are as
follows:
June 30, 2001
----------------------------
Carrying Amount Fair Value
--------------- ----------
(dollars in thousands)
Financial Assets
Cash and cash equivalents $ 56,275 $ 56,275
Investment securities and deposits 69,314 67,730
Loans 367,809 372,154
Direct lease financing 720 715
Financial Liabilities
Deposits 458,962 459,724
Short term debt 0 0
Long term debt 0 0
Unrecognized Financial Instruments
Commitments to extend credit 43,465 43,465
Standby letters of credit 1,538 1,538
NOTE #6 - NON-PERFORMING LOANS
The following table sets forth information regarding the Bank's
non-performing loans at June 30, 2001 and December 31, 2000.
(dollars in thousands) June 30, December 31,
2001 2000
-------- ------------
Accruing Loans More Than 90 Days Past Due(1)
Aggregate Loan Amounts
Commercial, financial and agricultural -- --
Real Estate 232 --
Installment loans to individuals 4 17
Aggregate Leases -- --
----- -----
Total Loans Past Due More Than 90 Days 236 17
Troubled Debt Restructurings(2) 2,121 858
Non-accrual loans(3) 2,850 2,319
----- -----
Total Non-Performing Loans 5,207 3,194
===== =====
----------
(1) Reflects loans for which there has been no payment of interest
and/or principal for 90 days of more. Ordinarily, loans are
placed on non-accrual status (accrual of interest is
discontinued) when the Bank has reason to believe that continued
payment of interest and principal is unlikely.
(2) Renegotiated loans are those which have been renegotiated to
provide a deferral of interest or principal.
(3) There were 7 loans on non-accrual status totaling approximately
$2,851,000 at June 30, 2001 and 6 loans totaling approximately
$2,319,000 at December 31, 2000.
9
10
Notes to Condensed Consolidated Financial Statements (continued)
NOTE #6 - NON-PERFORMING LOANS (continued)
The policy of the Company is to review each loan in the loan portfolio
to identify problem credits. In addition, as an integral part of its review
process of the Bank, the Federal Reserve Bank and the California Department of
Financial Institutions also classifies problem credits. There are three
classifications for problem loans: "substandard", "doubtful", and "loss".
Substandard loans have one defined weaknesses and are characterized by the
distinct possibility that the Bank will sustain some loss if the deficiencies
are not corrected. Doubtful loans have the weaknesses of substandard loans with
the additional characteristic that the weaknesses make collection or liquidation
in full, on the basis of currently existing facts, conditions, and values,
questionable. A loan classified as "loss" is considered uncollectible and of
such little value that the continuance as an asset of the institution is not
warranted. Another category designated "special mention" is maintained for loans
which do not currently expose the Bank to a significant degree of risk to
warrant classification as substandard, doubtful or loss, but do possess credit
deficiencies or potential weaknesses deserving management's close attention.
As of June 30, 2001, the Bank's classified loans consisted of
approximately $8,878,000 of loans classified as substandard. There were no loans
classified as doubtful. The Bank's $8,878,000 of loans classified as substandard
consisted of approximately $6,027,000 of performing and accruing loans and
approximately $2,851,000 of non-accrual loans.
NOTE #7 - RESERVE FOR LOAN AND LEASE LOSSES
The reserve for loan and lease losses is a general reserve established
by Management to absorb potential losses inherent in the entire portfolio. The
level of and ratio of additions to the reserve are based on a continuous
analysis of the loan and lease portfolio and, at June 30, 2001, reflected an
amount which, in Management's judgement, was adequate to provide for known and
inherent loan losses. In evaluating the adequacy of the reserve, Management
gives consideration to the composition of the loan portfolio, the performance of
loans in the portfolio, evaluations of loan collateral, prior loss experience,
current economic conditions and the prospects or worth of respective borrowers
or guarantors. In addition, the Federal Reserve Bank or Department of Financial
Institutions, as an integral part of their examination process, periodically
reviews the Bank's allowance for possible loan and lease losses. The examiners
may require the Bank to recognize additions to the allowance based upon their
judgement of the information available to it at the time of its examination. The
Bank was most recently examined by the Department of Financial Institutions as
of March 31, 2001.
The reserve for loan and lease losses at June 30, 2001, was $3,939,000
or 1.07% of total loans and leases. Additions to the reserve are effected
through the provision for loan losses which is an operating expense of the
Company.
10
11
Notes to Condensed Consolidated Financial Statements (continued)
NOTE #7 - RESERVE FOR LOAN AND LEASE LOSSES (continued)
The following table provides certain information with respect to the
Company's allowance for loan losses as well as charge-off and recovery activity.
June 30, December 31,
(Dollars in Thousands) 2001 2000
-------- ------------
Allowance for Loan Losses $ 3,692 $ 6,102
Balance, Beginning of period
Charge-Offs
Commercial, financial and agricultural (22) (3,762)
Real estate -- construction -- --
Real estate -- mortgage -- --
Consumer loans (16) (30)
Lease Financing -- --
Other -- --
------- -------
Total Charge-Offs (38) (3,792)
------- -------
Recoveries
Commercial, financial and agricultural 42 134
Real estate -- construction 9 --
Real estate -- mortgage 7 170
Consumer loans 2 8
Lease Financing -- --
Other -- --
------- -------
Total Recoveries 60 312
------- -------
Net Recoveries (Charge-Offs) 22 (3,480)
Provision Charged to Operations 225 1,070
------- -------
Balance, End of period $ 3,939 $ 3,692
======= =======
Net Charge-Offs During the Period to Average Loans Outstanding
during the Period Ended -0.01% 0.96%
======= =======
Allowance for Loan Losses to Total Loans 1.07% 1.00%
======= =======
In accordance with SFAS No. 114 (as amended by SFAS No. 118),
"Accounting by Creditors for Impairment of a Loan", loans identified as
"impaired" are measured on the present value of expected future cash flows
discounted at the loan's effective interest rate, except that as a practical
expedient, a creditor may measure impairment based on a loan's observable market
price, or the fair value of the collateral if the loan is collateral dependent.
A loan is impaired when it is probable the creditor will not be able to collect
all contractual principal and interest payments due in accordance with the terms
of the loan agreement. Loan impairment is evaluated on a loan-by-loan basis as
part of normal loan review procedures of the Bank.
11
12
Notes to Condensed Consolidated Financial Statements (continued)
NOTE #8 - MARKET RISK
The Company's management utilizes the results of a dynamic simulation
model to quantify the estimated exposure of net interest income to sustained
interest rate changes. The simulation model estimates the impact of changing
interest rates on the interest income from all interest earning assets and the
interest expense paid on all interest bearing liabilities reflected on the
Company's balance sheet. This sensitivity analysis is compared to policy limits
which specify maximum tolerance level for net interest income exposure over a
one year horizon assuming no balance sheet growth, given both a 100 and 300
basis point upward and downward shift in interest rates. A parallel and pro rata
shift in rates over a 12-month period is assumed.
The Company does not engage in any hedging activities and does not have
any derivative securities in its portfolio.
The following reflects the Company's net interest income sensitivity
analysis as of June 30, 2001:
(Dollars in Thousands)
ESTIMATED NET MARKET VALUE
SIMULATED INTEREST INCOME --------------------------------
RATE CHANGES SENSITIVITY ASSETS LIABILITIES
------------ --------------- -------- -----------
+100 basis points -1.37% $514,699 $460,349
+300 basis points -4.13% $500,263 $459,271
- -100 basis points 0.55% $530,999 $461,449
- -300 basis points -5.04% $549,592 $462,573
12
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Forward Looking Statements
Certain statements in this Report contain "forward-looking" information,
such as statements setting forth our expectations or beliefs regarding our
future financial performance. Such forward-looking information is subject to
risks and uncertainties that could cause our actual financial performance to
differ, possibly significantly, from our expected future financial performance.
A discussion of those risks and uncertainties follows Item 3 below and readers
of this Report are urged to review that discussion.
General
Our principal operating subsidiary, Foothill Independent Bank, which is
a California state chartered bank (the "Bank"), accounts for substantially all
of our revenues and income. Accordingly, the following discussion focuses
primarily on its operations and financial condition.
Results of Operations
Overview. During the first half of 2001, we generated net earnings of
$3,306,000, which represented an increase of $84,000, or 3%, over net earnings
in the first half of 2000. That increase was primarily due to an increase in
non-interest income and a reduction in non-interest expense, which largely
offset a 5% decline in net interest income. Net interest income has declined
largely due to declining market rates of interest which have operated to reduce
the interest rates on our variable rate loans. Although declines in market rates
of interest also generally lead to reductions in interest paid on
interest-bearing deposits, reductions in time deposits do not occur as quickly
as reductions in interest rates on variable rate loans.
Net earnings for the six months ended June 30, 2001 represent an
annualized return on average assets of 1.31% and an annualized return on average
equity of 13.62%, as compared to 1.37% and 13.85%, respectively, for the same
six months of 2000. On a fully diluted per share basis, net earnings per share
increased by 10% to $0.56 for the six months ended June 30, 2001, from $0.51 for
the same period of 2000, due primarily to a reduction in the weighted average
number of shares outstanding to 5,557,000 for the six months ended June 30,
2001, from 5,822,000 shares for the same six months of 2000. That reduction was
due to stock repurchases that we made in our open market and private stock
purchase program between July 1, 2000 and June 30, 2001.
Net Interest Income. Net interest income is a principal determinant of a
bank's earnings. Net interest income represents the difference or "spread"
between the interest earned on interest-earning assets, such as loans and
investment securities, and the interest paid on interest-bearing liabilities,
principally deposits. Net interest income declined by $719,000, or 5% in the six
month period ended June 30, 2001 as compared to the same period in 2000,
primarily as a result of a $514,000, or 2.7%, decrease in interest income and a
$205,000, or 4.0%, increase in interest expense. In the second quarter of 2001,
net interest income declined by $198,000, or 2.9%, compared to the second
quarter of 2000, primarily as a result of a $542,000, or 5.7%, decrease in
interest income which was partially offset by a $344,000, or 12.7%, decrease in
interest expense. The decreases in interest income were attributable primarily
to decreases in interest charged on loans in response to decreases in market
rates of interest. The decrease in interest expense during the second quarter of
2001 was due primarily to decreases in the volume of time certificates of
deposits ("time deposits") during that quarter, including those in denominations
of $100,000 or more ("TCDs"), on which the Bank pays its highest rates of
interest, compared to the volume of such deposits at the Bank during the quarter
ended June 30, 2000.
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Rate Sensitivity and Net Interest Margin
Rate Sensitivity. Like other banks and bank holding companies, our
margins (that is, the difference between yields we are able to realize on loans
and on other interest earning assets and the interest we pay on deposits) are
affected by a number of factors, including the relative percentages or the "mix"
of:
- our assets, between loans, on the one hand, on which we are able
to charge higher rates of interest, and investment securities,
federal funds sold and funds held in interest-bearing deposits
with other financial institutions, on the other hand, on which
yields are generally lower;
- variable and fixed rate loans in our loan portfolio; and
- demand and savings deposits, on the one hand, and time deposits,
on the other hand.
As a general rule, a bank with a relatively high percentage of
fixed-rate loans will experience a decline in interest income during a period of
increasing market rates of interest, because it will be unable to "reprice" its
fixed rate loans to fully offset the increase in the rates of interest it must
offer to retain maturing time deposits and attract new deposits. Similarly, a
bank with a high percentage of time deposits generally will experience greater
increases in interest expense, and therefore, a decrease in net interest income,
during a period of increasing market rates of interest than a bank with a
greater percentage of demand and savings deposits which are less sensitive to
changes in market rates of interest. By contrast, during a period of declining
market rates of interest, a bank with a higher percentage of variable loans, as
a general rule, will experience a decline in net interest income because such
loans usually contain automatic repricing provisions that are "triggered" by
declines in market rates of interest; whereas offsetting reductions in the rates
of interest paid on time deposits cannot be implemented until they mature, at
which time a bank can seek their renewal at lower rates of interest or allow
such deposits to be withdrawn in order to reduce interest expense. However, the
impact of changes in interest rates on net interest income can be affected by
changes in the volume of loans or interest bearing deposits. In the case of the
first six months of 2001, changes in prevailing rates of interest were the
primary cause of the decline in net interest income, rather than increases in
the volume of interest bearing deposits.
Net Interest Margin. We attempt to reduce our exposure to market risks
associated with interest rate fluctuations and, thereby, at least to maintain
and, if possible, to increase, our net interest margin or spread by seeking (i)
to attract and maintain a significant volume of demand and savings deposits that
are not as sensitive to interest rate fluctuations as are TCDs and other time
deposits, and (ii) to match opportunities to "reprice" earning assets,
particularly loans, in response to changes in market rates of interest which
require or cause repricing of deposits. Last year we initiated new loan programs
to increase loan volume and, at the same time, we increased the volume of TCDs
and other time deposits, by offering higher rates of interest on such deposits,
primarily to fund the increase in loan volume. We were somewhat able to mitigate
the effect on our net interest margin of the increase in TCDs and other time
deposits by also continuing to actively seek and obtain additional demand and
savings deposits. At the beginning of the current fiscal year, we decided not to
actively seek renewals of maturing TCDs and other time deposits and, during the
second quarter of 2001, a significant portion of those TCDs matured and we
choose not to renew them. As a result, for the six months ended June 30, 2001,
the average volume of demand, savings and money market deposits represented 76%
and time deposits, including TCDs, represented 24% of average total deposits, as
compared to 74% and 26%, respectively, for the quarter ended June 30, 2000. We
currently expect that, as a percentage of total deposits, time deposits should
remain at about the same levels during the balance of the current fiscal year.
The Bank's net interest margin (i.e., tax-adjusted net interest income
stated as a percentage of average interest-earning assets) decreased in the
quarter and six months ended June 30, 2001 to 5.81% and 5.84%, respectively,
from 6.30% and 6.55%, respectively, for the same periods of 2000. These
decreases were primarily due to declining market rates of interest, which
reduced our yields on loans and other variable rate earning assets. While we
were able to offset some of the decline in interest income by allowing TCDs and
time deposits to "roll-off" at their maturity dates, due to the maturity of the
remaining TCDs and time deposits we were not able to implement reductions in
interest rates on such deposits as rapidly as the reduction in rates on our
variable rate interest earning assets. However, we believe that our net interest
margin continues to exceed the average net interest margin for California-based,
publicly traded banks and bank holding companies with assets ranging from
$250-to-$750 million (the "Peer Group Banks").
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The ability to maintain our net interest margin is not entirely within
our control because the interest rates we are able to charge on loans and the
interest rates we must offer to maintain and attract deposits are affected by
national monetary policies established and implemented by the Federal Reserve
Board and by competitive conditions in our service areas. In addition, the
effect on a bank's net interest margin of changes in market rates of interest
will depend on the types and maturities of its deposits and earning assets. For
example, a change in interest rates paid on deposits in response to changes in
market rates of interest can be implemented more quickly in the case of savings
deposits and money market accounts than with respect to time deposits as to
which a change in interest rates generally cannot be implemented until such
deposits mature. In addition, a change in rates of interest paid on deposits can
and often does lead consumers to move their deposits from one type of deposit to
another or to shift funds from deposits to non-bank investments or from such
investments to bank deposit accounts or instruments, which also will affect a
bank's net interest margin. So far during 2001, the Federal Reserve Board has
been attempting to decrease market rates of interest as a means of stimulating
the economy. As a result, we expect that interest on loans will decrease during
the remainder of 2001, which could result in reductions in our net interest
margin during that period. However, we also expect that the cost of deposits
will decrease, which should lessen the overall effect that such decreases in
interest income will have on our net interest margins.
Provision for Loan Losses. We follow the practice of maintaining a
reserve for possible losses on loans that occur from time to time as an
incidental part of the banking business. Charge-offs (essentially reductions in
the carrying values) of non-performing loans due to possible losses on their
ultimate recovery are applied against this reserve (the "Loan Loss Reserve").
That Reserve is adjusted periodically to reflect changes in (i) the volume of
outstanding loans, (ii) the risk of potential losses due to a deterioration in
the condition of borrowers or in the value of property securing non-performing
loans or changes in economic conditions, and (iii) reductions in the amount of
the Reserve due to loan charge-offs that occur from time to time. Additions to
the Loan Loss Reserve are made through a charge against income referred to as
the "provision for loan losses." We made provisions for potential loan losses of
$100,000 and $255,000, respectively, in the three and six month periods ended
June 30, 2001, as compared to $455,000 and $475,000, respectively, for the
corresponding periods of 2000. At June 30, 2001, the Loan Loss Reserve was
approximately $3,939,000 or 1.07% of total loans outstanding, compared to
approximately $3,702,000 or 1.03% of total loans outstanding at June 30, 2000.
Recoveries of previously "charged off" loans exceeded loan charge-offs by
$22,000 in the first six months of 2001. By comparison, in the same six months
of 2000, net charge-offs aggregated $2,875,000. See Note 7 to our Condensed
Consolidated Financial Statements contained in Part I of this Report for further
information with respect to an analysis of our loan and lease loss experience
for the six months ended June 30, 2001 and the fiscal year ended December 31,
2000.
Other Income. Other income increased by $175,000, or 14.9%, and
$463,000, or 21.0%, in the quarter and six-month periods ended June 30, 2001,
compared to the same periods of 2000, due primarily to increases in transaction
fees and service charges collected on deposits and other banking transactions.
Also contributing to the increase in other income for the six months ended June
30, 2001 was a one-time $72,000 gain on the sale of a parcel of real property in
the first quarter of 2001 that the Bank had been using as a parking lot, but
which it no longer needed.
Other Expense. Other expense (also known as "non-interest expense"),
consists primarily of (i) salaries and other employee expenses, (ii) occupancy
and furniture and equipment expenses, and (iii) other operating and
miscellaneous expenses that include insurance premiums, marketing expenses, data
processing costs, and professional expenses.
In order to attract a higher volume of non-interest bearing demand and
lower cost savings and money market deposits as a means of maintaining the
Bank's net interest margin, it has been our policy to provide a much higher
level of personal service to our customers than the level of services that is
provided by many of our competitors. As a result, our net interest margin has
usually exceeded the average net interest margin of the Peer Group Banks and
more than offset the adverse effects that the higher costs of providing such
services would otherwise have had on our profitability.
Non-interest expense increased approximately $318,000, or 6.5%, in the
quarter ended June 30, 2001, compared to same quarter of 2000, primarily due to
additional occupancy and other expense resulting from the opening of our 12th
branch office in late December of 2000. However, in the six-month period ended
June 30, 2001, non-interest expenses decreased $111,000, or 1.1%, as compared to
the same period of 2000. Our efficiency
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ratio (that is, basically, the ratio of non-interest expense to the sum of our
net interest income and other income, as adjusted to eliminate non-recurring
expenses and income) increased to 67.0% and 66.6%, respectively, for the three
and six-month periods ended June 30, 2001 from 65.3% and 64.7%, respectively,
for the same periods of 2000. The increase in our efficiency ratio was primarily
due to the decline in net interest income during the quarter and six-months
ended June 30, 2001, and to a lesser extent, the increased expenses associated
with the opening of our new banking office.
Income Taxes. Income taxes decreased by approximately $8,000 or 0.8%
during the three-month period ended June 30, 2001 compared to the same period of
2000, primarily as a result of an increase in non-taxable income.
Notwithstanding that increase in non-taxable income, income taxes increased
approximately $21,000, or 1.1%, in the six-month period ended June 30, 2001,
primarily as a result of increases in taxable income.
FINANCIAL CONDITION
Our total assets increased during the six months ended June 30, 2001 by
$5,321,000 or 1.1%, when compared to total assets at December 31, 2000. Average
assets at June 30, 2001 were $2,554,000, or 0.5%, higher than total average
assets at December 31, 2000. At June 30, 2001, the volume of demand and savings
deposits at the Bank was $27,464,000, or 8.4%, higher than at December 31, 2000,
while the volume of time deposits, including TCDs, was $22,543,000, or 17.9%,
lower than at December 31, 2000, reflecting our decision, made at the beginning
of the current fiscal year, to allow TCDs to "run off" rather than attempt to
retain them.
Liquidity Management. Liquidity management policies attempt to achieve a
matching of sources and uses of funds in order to enable us to fund our
customers' requirements for loans and for deposit withdrawals. In conformity
with those policies, we maintain a number of short-term sources of funds to meet
periodic increases in loan demand and deposit withdrawals and maturities. At
June 30, 2001, the principal sources of liquidity consisted of $28,775,000 of
cash and demand balances due from other banks; $27,500,000 in Federal funds
sold; and $15,000,000 in an overnight repurchase agreement, which, together,
totaled $71,275,000, as compared to $38,186,000 at December 31, 2000. Other
sources of liquidity include $30,825,000 in securities available-for-sale, of
which approximately $2,295,000 mature within one year; and $12,239,000 in
interest bearing deposits at other financial institutions, which mature in 6
months or less. We also have established facilities enabling us to borrow up to
$13,000,000 of Federal funds from other banks and we have an unused $21,727,000
line of credit with the Federal Home Loan Bank. We also have approval from the
Federal Reserve Bank of San Francisco to establish an account that will also
allow us to borrow at its discount window should the need arise. Additionally,
substantially all of our installment loans and leases, the amount of which
aggregated $6,211,000 at June 30, 2001, require regular installment payments
from customers, providing us with a steady flow of cash funds. Accordingly, we
believe that we have adequate cash and cash equivalent resources to meet any
increases in demand for loans-and leases and any increase in deposit withdrawals
that might occur in the foreseeable future.
Capital Resources. Between late 1998 and June 30, 2001, we purchased a
total of 976,588 shares of our common stock, in open market and private
transactions, for an aggregate price of approximately $11,970,000. In addition,
in September of 1999 our Board of Directors adopted a cash dividend policy which
provides for the Company to pay quarterly cash dividends, currently $.10 per
share. We declared our eighth consecutive quarterly cash dividend, pursuant to
that policy, in July 2001 which will be paid on August 24, 2001 to shareholders
of record as of August 3, 2001.
It has been and continues to be the objective of our Board of Directors
to retain earnings to meet capital requirements under applicable government
regulations and to support our growth. As a result, the Board may change the
amount or frequency of cash dividends to the extent that it deems necessary or
appropriate to achieve these objectives. For example the retention of earnings
in previous years enabled us to fund the opening of four new banking offices and
extend the Bank's market areas, all of which have contributed to our increased
profitability and the maintenance of our capital adequacy ratios well above
regulatory requirements.
We continue to evaluate and explore opportunities to expand our market
into areas such as eastern Los Angeles County, western San Bernardino County,
north Orange County and northern Riverside County, all of which are contiguous
to our existing markets. We believe that the mergers and consolidations of
independent banks that have occurred have created opportunities for us to
increase our market share in those areas. We have taken advantage of those
opportunities within our existing market areas and have established a
substantial number of new
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customer relationships and increased the volume of our demand, savings and money
market deposit balances obtained largely from customers of the merged banks who
we disaffected by the quality of services they were receiving. We also opened a
branch banking office in the city of Temecula, California, in December of 2000,
which is our 12th banking office, and we believe that there are still additional
expansion and growth opportunities that we will seek to take advantage of in
2001.
At June 30, 2001, the Bank's Tier 1 leverage ratio and Tier 1 risk-based
capital ratio were 9.52% and 11.90%, respectively, which were in excess of
minimum bank regulatory requirements and categorize the bank as "Well
Capitalized". Our consolidated Tier 1 risk-based capital ratio was 12.00%. The
risk-based capital ratio is determined by weighting our assets in accordance
with certain risk factors and, the higher the risk profile of the assets, the
greater is the amount of capital that is required to maintain an adequate
risk-based capital ratio, which generally is at least 8%. The Tier 1 capital and
Tier 1 risk-based capital ratios of the Bank compare favorably with those of the
Peer Group Banks.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
Market risk is the risk of loss to future earnings, to fair values of
assets or to future cash flows that may result from changes in the price or
value of a financial instrument. The value of a financial instrument may change
as a result of changes in interest rate and other market conditions. Market risk
is attributed to all market risk sensitive financial instruments, including loan
and investment securities, deposits and borrowings. We do not engage in trading
activities or participate in foreign currency transactions for our own account.
Accordingly, our exposure to market risk is primarily a function of our asset
and liability management activities and of changes in market rates of interest
that can cause or require increases in the rates we pay on deposits that may
take effect more rapidly or may be greater than the increases in the interest
rates we are able to charge on loans and the yields that we can realize on our
investments. The extent of that market risk, depends on a number of variables,
including the sensitivity to changes in market interest rates and the maturities
of our interest earning assets and our deposits. See "Rate Sensitivity" above.
We use a dynamic simulation model to forecast the anticipated impact of
changes in market interest rates on our net interest income. That model is used
to assist management in evaluating, and in determining and adjusting strategies
designed to reduce, our exposure to these market risks, which may include, for
example, changing the mix of earning assets or interest-bearing deposits. See
Note 8 to our Condensed Consolidated Financial Statements contained in Part I of
this Report for further information with respect to that dynamic simulation
model that, based on certain assumptions, attempts to quantify the impact that
simulated upward and downward interest rate changes would have on our net
interest income.
FORWARD LOOKING INFORMATION AND UNCERTAINTIES REGARDING FUTURE PERFORMANCE
This Report, including the Section entitled "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contains statements
regarding our expectations or beliefs about our future financial performance
(including statements concerning business trends) that are "forward-looking
statements" as defined in the Private Securities Litigation Reform Act of 1995.
Our actual financial results in future periods may differ, possibly materially,
from those forecast in this Report due to a number of risks and uncertainties.
Those risks and uncertainties include, but are not limited to, the following:
INCREASED COMPETITION. Increased competition from other financial
institutions, mutual funds and securities brokerage and investment banking firms
that offer competitive loan and investment products could require us to reduce
interest rates and loan fees to attract new loans or to increase interest rates
that we offer on time deposits, either or both of which could, in turn, reduce
our interest income and net interest margins.
POSSIBLE ADVERSE CHANGES IN LOCAL ECONOMIC CONDITIONS. Adverse changes
in local economic conditions could (i) reduce loan demand which could, in turn,
reduce interest income and net interest margins; (ii) adversely affect the
financial capability of borrowers to meet their loan obligations which, in turn,
could result in increases in loan losses and require increases in reserves for
possible loan losses, thereby adversely affecting earnings; and (iii) lead to
reductions in real property values that, due to our reliance on real property to
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secure many of our loans, could make it more difficult for us to prevent losses
from being incurred on non-performing loans through the sale of such real
properties.
POSSIBLE ADVERSE CHANGES IN NATIONAL ECONOMIC CONDITIONS AND CHANGES IN
FEDERAL RESERVE BOARD MONETARY POLICIES. Changes in national economic
conditions, such as increases in inflation or declines in economic output often
prompt changes in Federal Reserve Board monetary policies that could increase
the cost of funds to us or reduce yields on interest earning assets and,
thereby, reduce net interest margins. As is discussed above in this Report, so
far in 2001 the Federal Reserve Board has been lowering market rates of interest
to stimulate the national economy. Those reductions already have caused a
decline in our net interest margins and could continue to do so in the future.
CHANGES IN REGULATORY POLICIES. Changes in federal and state bank
regulatory policies, such as increases in capital requirements or in loan loss
reserves, or changes in required asset/liability ratios, could adversely affect
earnings by reducing yields on earning assets or increasing operating costs.
EFFECTS OF GROWTH. It is our intention to take advantage of
opportunities to increase our business, either through acquisitions of other
banks, the establishment of new banking offices or the offering of new products
or services to our customers. If we do acquire any other banks or open any
additional banking offices or begin offering new products or services, we are
likely to incur additional operating costs that may adversely affect our income,
at least on a short term basis.
ELECTRICITY CRISIS IN CALIFORNIA. California is currently experiencing a
tightening in the supply of electricity to the state and there have been a few
rolling power outages or "blackouts" in the past few months and there may be
more during the rest of the summer months when electricity usage is typically at
its peak. Power outages could disrupt our operations, increase our operating
costs and reduce the productivity of staff and operations. Among other things,
power outages could cause a slowdown and delays in processing banking
transactions, which are heavily dependent on the continued functioning of
electronic and automated systems; and abrupt and unscheduled power outages could
result in the shut down of information systems that could cause financial data
to be lost. We have developed contingency plans to deal with such power outages
that include the use of alternative energy generating equipment to provide power
to essential systems and the use of back up systems at other locations to
effectuate banking transactions during power outages in our service areas.
However, we do not know and cannot predict the frequency or duration of the
power outages that may occur and, therefore, despite our contingency plans, such
outages could adversely affect our future operating results. We also expect the
cost of the electricity we use in our operations to increase, even though we
have instituted many energy conservation measures.
Due to these and other possible uncertainties and risks, readers are
cautioned not to place undue reliance on the forward-looking statements, which
speak only as of the date of this Quarterly Report. The Company undertakes no
obligation to update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise.
PART II - OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Our Annual Meeting of Shareholders was held on May 8, 2001. The only
matter voted on at the Annual Meeting was the election of three Class III
Directors for a term of three years ending at the Annual Meeting of Stockholders
to be held in 2004. The only persons nominated at the Annual Meeting for
election as Class III Directors were the nominees of the Board of Directors, who
are identified below.
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Directors Elected at Annual Meeting. Set forth below is the name of the
Class III Directors that were elected at the Annual Meeting and the respective
numbers of votes cast for their election and the respective number of votes
withheld. As the election was uncontested, there were no broker non-votes.
CLASS III NOMINEES AND DIRECTORS VOTES "FOR" VOTES "WITHHELD"
-------------------------------- ----------- ----------------
Richard Galich 4,106,880 186,656
William V. Landecena 4,106,937 186,599
O. L. Mestad 4,104,073 186,463
Directors Continuing in Office. The terms of office of the following
incumbent Class I and Class II directors extend to 2002 and 2003, respectively
and, therefore, they did not stand for re-election at the 2001 Annual Meeting:
CLASS I DIRECTORS CLASS II DIRECTORS
----------------- ------------------
George Langley Donna Miltenberger
Max Williams George Sellers
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits:
None.
(b) Reports on Form 8-K:
None
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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.
Date: August 13, 2001 FOOTHILL INDEPENDENT BANCORP
By: /s/ CAROL ANN GRAF
-------------------------------------
Carol Ann Graf,
Senior Vice President,
Chief Financial Officer and Secretary
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