SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K/A
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) January 14, 2003
SUTTER HOLDING COMPANY, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 001-15733 59-2651232
- ---------------------------- ----------------- -------------------------
(State or Other Jurisdiction (Commission File (IRS Employer
of Incorporation) Number) Identification No.)
150 Post Street, Suite 405, San Francisco, California 94108
-------------------------------------------------------------- ----------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (415) 788-1441
(Former Name or Former Address, if Changed Since Last Report)
ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
This Form 8-K/A amends the current report on Form 8-K dated January 14, 2003
(filed January 17, 2003) to include Item 7 Financial Statements of Business
Acquired.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(a) Financial Statements of Businesses Acquired.
INDEPENDENT AUDITORS' REPORT
BOARD OF DIRECTORS
RCH, LLC
We have audited the accompanying Consolidated Statements of Financial Condition
of RCH, LLC and its subsidiary, EASTON MORTGAGE CORPORATION, as of December 31,
2002 and 2001 and the related Statements of Income (Loss), Retained Earnings
(Deficit), and Cash Flows for the years then ended. These financial statements
are the responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the company, as of December 31,
2002 and 2001, the results of its operations and its cash flows for the years
then ended, in conformity with generally accepted accounting principles.
COLABELLA & COMPANY
February 28, 2003
New York, New York
RCH, LLC
AND SUBSIDIARY
EASTON MORTGAGE CORPORATION
STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31,
---------- ----------
2002 2001
ASSETS
CURRENT ASSETS:
Cash and cash equivalents $ 945,681 $ 919,217
Mortgages held for resale 3,816,500 5,737,850
Fees & interest receivable 19,808 42,750
Other current assets 6,162 16,526
---------- ----------
Total 4,788,151 6,716,343
LONG LIVED ASSETS:
Property, Plant & Equipment - net 29,095 37,278
Goodwill 1,909,761 1,909,761
Other assets 13,944 219,674
---------- ----------
Total 1,952,800 2,166,713
---------- ----------
TOTAL ASSETS $6,740,951 $8,883,056
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable $ 477,933 $ 207,266
Income taxes payable 9,676 161,598
Warehouse line of credit 3,765,358 5,470,708
Funds held in escrow 25,000 0
---------- ----------
Total 4,277,967 5,839,572
========== ==========
LONG TERM LIABILITIES:
Deferred income taxes 52,514 209,471
Subordinated notes payable 519,820 551,701
Due to affiliate 0 544,000
---------- ----------
Total 572,334 1,305,172
---------- ----------
TOTAL LIABILITIES 4,850,301 7,144,744
---------- ----------
STOCKHOLDERS' EQUITY:
Common stock - 1,000 shares issued & outstanding 50,000 50,000
Additional paid in capital 1,261,559 1,261,559
Retained earnings (deficit) 579,091 426,753
---------- ----------
Total Stockholders' Equity 1,890,650 1,738,312
---------- ----------
Total Liabilities and Stockholders' Equity $6,740,951 $8,883,056
========== ==========
SEE AUDITOR'S REPORT AND NOTES TO FINANCIAL STATEMENTS
RCH, LLC
AND SUBSIDIARY
EASTON MORTGAGE CORPORATION
STATEMENTS OF INCOME (LOSS)
FOR THE YEAR ENDED DECEMBER 31,
------------- -------------
2002 2001
REVENUES:
Loan sales and fees $ 102,845,028 $ 107,777,422
Cost of loans sold 100,550,955 105,664,344
------------- -------------
Gross Profit 2,294,073 2,113,078
------------- -------------
OPERATING EXPENSES:
Salaries and commissions 86,327 663,336
Selling, general and administrative expenses 553,190 575,689
Amortization and depreciation 17,354 162,750
Interest expense 27,249 94,344
------------- -------------
TOTAL 1,484,120 1,496,119
------------- -------------
INCOME (LOSS) FROM OPERATIONS 809,953 616,959
OTHER INCOME (EXPENSE) (555,700) 0
------------- -------------
INCOME (LOSS) BEFORE TAXES 254,253 616,959
PROVISION FOR FEDERAL AND STATE INCOME TAXES (101,914) (164,609)
------------- -------------
NET INCOME (LOSS) $ 152,339 $ 452,350
============= =============
SEE AUDITOR'S REPORT AND NOTES TO FINANCIAL STATEMENTS
RCH, LLC
AND SUBSIDIARY
EASTON MORTGAGE CORPORATION
SCHEDULE OF SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
FOR THE YEAR ENDED DECEMBER 31,
-------- --------
2002 2001
Promotional expenses $ 133,801 $ 149,253
Professional and legal fees 98,109 94,373
Rent 76,804 79,435
Service charges and miscellaneous fees 7,971 56,702
Postage 71,040 44,563
Office supplies and expenses 26,446 42,336
Travel and entertainment 54,247 40,272
Telephone 41,540 27,823
Equipment rental 21,945 16,390
Insurance 11,247 16,193
Licenses and fees 1,624 6,668
Repairs, Maintenance and Utilities 8,416 1,681
-------- --------
TOTAL $553,190 $575,689
======== ========
SEE AUDITOR'S REPORT AND NOTES TO FINANCIAL STATEMENTS
RCH, LLC
AND SUBSIDIARY
EASTON MORTGAGE CORPORATION
STATEMENTS OF RETAINED EARNINGS (DEFICIT)
FOR THE YEAR ENDED DECEMBER 31,
--------- ---------
2002 2001
RETAINED EARNINGS (DEFICIT) - (BEG) $ 426,752 $ (25,597)
Net Income (Loss) 152,339 452,350
--------- ---------
RETAINED EARNINGS (DEFICIT) - (END) $ 579,091 $ 426,752
========= =========
SEE AUDITOR'S REPORT AND NOTES TO FINANCIAL STATEMENTS
RCH, LLC
AND SUBSIDIARY
EASTON MORTGAGE CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31,
----------- -----------
2002 2001
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 152,339 $ 452,350
Adjustments to reconcile net income to net cash
provided (used)by operating activities:
Depreciation and amortization 17,354 162,750
(Increase) decrease in accounts receivable 540,000 30,715
(Increase) decrease in fees & interest receivable 22,942 0
Increase (decrease) in warehouse line of credit (1,705,350) 1,427,855
(Increase) decrease in mortgages held for resale 1,921,350 (1,643,785)
(Increase) decrease in Long Lived Assets - other assets 204,080 (35,635)
Increase (decrease) in accounts payable 270,667 184,654
Increase (decrease) in deferred income taxes (156,957) 3,011
(Increase) decrease in other current assets 10,364 (3,335)
Increase (decrease) in notes payable 0 (69,381)
Increase(decrease) in income taxes payable (151,923) 161,598
Increase (decrease) in subordinated notes payable (31,881) 27,249
----------- -----------
Total adjustments 940,646 245,696
----------- -----------
NET CASH PROVIDED (USED) BY OPERATING ACTIVITIES 1,092,985 698,046
----------- -----------
CASH FLOW FROM FINANCING ACTIVITIES:
Increase (decrease) in due to stockholders 25,000 (289,298)
Increase (decrease) in due to affiliate (544,000) 0
Proceeds from issuance of long-term debt 0 229,000
----------- -----------
NET CASH PROVIDED (USED) BY FINANCING ACTIVITIES (519,000)
----------- -----------
CASH FLOW FROM INVESTING ACTIVITIES:
Cash payments for the purchase of property (7,521) (23,918)
----------- -----------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (7,521)
----------- -----------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 566,464 613,831
CASH AND EQUIVALENTS, BEGINNING OF YEAR 379,217 305,386
----------- -----------
CASH AND EQUIVALENTS, END OF YEAR $ 945,681 $ 919,217
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the year
for:
Interest expense $ 15,972 $ 402,697
----------- -----------
Income Tax $ 206,713 $ 2,159
----------- -----------
SEE AUDITOR'S REPORT AND NOTES TO FINANCIAL STATEMENTS
RCH, LLC
AND SUBSIDIARY
EASTON MORTGAGE CORPORATION
NOTES TO FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
- ---------------------------------------------------
BUSINESS
RCH, LLC (RCH), a California corporation established in 1999, was formed for the
sole purpose of acquiring Easton Mortgage Corporation (EMC), hereinafter known
as the Company, a California corporation established in 1988. The Company serves
prospective mortgagor clients throughout the states of California and Colorado.
It engages approximately 700 loan agents to accomplish this end. The Company is
a licensed mortgage banker in the States of California and Colorado and is a HUD
approved title lender. RCH acts as a holding company and does not conduct any
other business.
BASIS OF PRESENTATION AND PRINCIPLES OF CONSOLIDATION
The consolidated financial statements have been prepared in United States
Dollars in accordance with generally accepted accounting principles in the
United States. On September 1, 1999, pursuant to the acquisition of the Company
by RCH, LLC, it became a wholly owned subsidiary of RCH. Subsequent to that
date, RCH sold 10% of its common stock to other investors. As of December 31,
2001 and 2002, RCH was owner of 90% of the issued and outstanding shares of the
Company. RCH is a holding company and has no operating results. Operating
results are presented herein for the full calendar year of the Company. All
inter-company accounts have been eliminated in the presentation.
REVENUE RECOGNITION
The Company records certain fee income when a loan commitment is funded and the
remainder of its income at the time an investor purchases the loan. At the time
the loan is purchased by an investor, all of the Company's responsibilities for
placing the loan have been performed and, therefore, all of the fee income has
been earned. Consideration due to a loan agent is paid directly to the
individual loan agent at the time of funding.
CASH EQUIVALENTS
All highly liquid investments purchased with a maturity of three months or less
are treated as cash equivalents. Amounts on deposit with RCH were escrowed for
the Company by written agreement and were considered cash equivalents.
WAREHOUSE LINES OF CREDIT
The Company maintains two warehouse lines of credit with a financial institution
for contractual amounts of $8,000,000 and $250,000; the smaller line is
restricted to second mortgages, which can only be sold to the financial
institution. The line of credit is secured by RCH as guarantor and the personal
guarantees of certain stockholders of RCH.
CONCENTRATION OF CREDIT RISK
The Company maintains two cash accounts at one bank. These cash accounts are
FDIC insured up to $100,000 and occasionally exceed those limits. The Company's
cash balances as of December 31, 2002, exceeded the insured limits in one of the
banks. Additionally, the Company maintains a money market account with a
financial institution. Amounts in this account are SIPC insured up to $500,000
per client for securities (including up to $100,000 for cash). As of December
31, 2002, these balances did not exceed that maximum.
FEES RECEIVABLE
A provision for doubtful accounts is provided when fees for loan commitments
remain unfunded for more than 90 days. Fees determined to be uncollectible are
written off against the allowance. For the periods ended December 31, 2002 and
December 31, 2001, no allowance was required.
PROPERTY AND EQUIPMENT
Property and equipment is principally recorded at cost less accumulated
depreciation. Maintenance and repair expenditures and certain software costs are
charged to expense when incurred. Depreciation and amortization is computed
using the straight-line method over the estimated useful lives of five to ten
years, except for intangibles. Depreciation expense for the years ended December
31, 2002 and 2001 amounted to $15,704 and $10,259 respectively.
GOODWILL
Goodwill of $2,261,559 pursuant to the acquisition of Easton Mortgage
Corporation in 1999 was being amortized on a straight-line basis over fifteen
years. Expense for the year ended December 31, 2001, amounted to $150,777, and
the unamortized balance of goodwill on that date was $1,909,761. The Company
adopted SFAS 142 for the year ended December 31, 2002. Under SFAS 142, goodwill
is no longer amortized. Instead, it is evaluated at least annually for
impairment, and it is reduced and any impairment loss recognized at the time of
evaluation. Consequently, RCH has recorded no goodwill amortization for 2002.
The annual evaluation of goodwill for the year ended December 21, 2002,
reflected no impairment. Amortization of goodwill is still deductible for tax
purposes.
INCOME TAXES
The provision for income taxes is based on elements of revenue and expense, as
reported in the Statement of Income/(Loss) and Retained Earnings/(Deficit).
Deferred income taxes are provided for timing differences between tax and
financial reporting attributable to the Company using the cash basis of
accounting for tax purposes and different depreciation methods, and the accrual
basis for financial reporting purposes subsequent to 1999. (See Note C).
USE OF ESTIMATES
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
reported amounts of revenues and expenses during the reporting period. Actual
results could differ from those estimates.
NOTE B - LEASE COMMITMENTS
- ----------------------------
REAL PROPERTY
The Company entered into a three-year non-cancelable operating lease for office
space in San Francisco, California, on May 15, 2001, which expires on April 30,
2004.Future minimum annual rental payments under this lease are $76,314 for the
year ending December 31, 2003, and $28,618 for the year ended December 31, 2004.
Rent expense and related charges under these and prior leasing
arrangements for the years ended December 31, 2002 and 2001 were $76,313 and
$77,450 respectively.
EQUIPMENT
The Company has entered into various non-cancelable operating leases for office
equipment. The future minimum annual payments required under those leases are as
follows:
2003 $15,135
2004 6,100
2005 3,558
-------
Total $24,793
=======
NOTE C - DEFERRED INCOME TAXES
- --------------------------------
The Company prepares its income tax returns on the accrual basis of accounting.
Prior to 1999, the Company prepared its tax return on the cash basis of
accounting. Under Sections 1504 and 446(e) of the Internal Revenue Code, the
subsidiary was required to change its method of accounting to conform to the
accrual basis of accounting adopted by the consolidated group. Accordingly, the
prior cash basis of accounting gave rise to timing differences of $408,160
between the financial statements and the income tax returns prepared by the
subsidiary, which resulted in tax refunds and a deferred tax asset, is now
changed.
As of December 31, 1999, the subsidiary incurred accrual basis losses that would
ordinarily give rise to additions to the deferred tax asset account. However,
for the periods ended December 31, 1999 and 2000, no deferred tax asset was
recorded due to inherent uncertainties as to the use of the NOLs pursuant to
adjustments required to conform to the accrual basis of accounting.
For the year 2001, the Company had enough taxable income to absorb all prior net
operating losses, thereby utilizing any deferred tax assets. Accordingly, a
provision, net of deferred tax assets of $164,609, was recognized. In 2002, an
income tax provision of $101,914 was recognized. Deferred income taxes were
booked for the balance of the Code Section 481(a) adjustment. Net timing
differences due to differences between book and taxable income for the current
year and prior year were $20,899 and $20,408 respectively.
NOTE D - SUBORDINATED NOTES PAYABLE
- ------------------------------------
During the year 2000, certain stockholder loan agreements were converted to
notes payable in order to formalize interest and repayment terms. The loans and
notes bear interest at a rate of 5 percent per annum with varying repayment
terms. All stockholder loans (including those converted to notes payable) are
subordinated to the warehouse line of credit. Subordinated notes were $519,820,
including accrued interest of $27,229, and $551,701, including accrued interest
of $65,999 for the periods December 31, 2002, and December 31, 2001.
NOTE E - DUE TO AFFILIATE
- -------------------------
The Company was a maker of an additional subordinated promissory note on March
28, 2001, in the amount of $225,000, with an affiliate of a shareholder of the
Company. The note bears interest at a rate of 7% per annum and was due on April
2, 2002. The principal amount of the note was deposited into an account of the
Company on March 29, 2001. This note, plus the previous $315,000 note due and
$4,000 of accrued interest, brought the balance due to affiliates to $544,000 at
December 31, 2001. This obligation, including the interest accrued to the
settlement date, was fully satisfied on June 30, 2002.
NOTE F - CONTINGENCIES
- ----------------------
Loans sold under FHA or investor programs are subject to repurchase if they fail
to meet the origination criteria of those programs. In addition, certain loans
may subsequently be refinanced and loans that are sold to investors are subject
to repurchase or indemnification if the loan is two or three months delinquent
during a set period. This usually varies from the first six months to a year
after the loan is sold. In such cases part of the income recognized on the loan
would be refundable. As of the balance sheet date, there are no loans pending
repurchase, refinance or indemnification. The Company made no FHA loans during
the respective accounting periods.
NOTE G - SUBSEQUENT EVENTS
- --------------------------
In January, 2003, the Board of Directors of RCH and the two minority
stockholders sold all of the outstanding shares in Easton Mortgage Corporation
to Sutter Holding Company, Inc. The sale is valued at approximately $3.75
million, subject to adjustments dependent upon the subsequent performance of the
Company. The consideration includes $1 million in cash, $25,000 of which was
received in 2002 and $975,000 of which was received in January, 2003, and
promissory notes payable to the shareholders in the aggregate amount of $2.75
million. Payment of the notes is secured by a pledge agreement, a guaranty by
the Company, and a security
agreement. In addition, Sutter Holding Company, Inc., will issue warrants for
the purchase of 60,000 shares of its common stock at an exercise price of $11
per share, exercisable for five years, to specified stockholders and/or officers
of RCH and the Company.
In February, 2003, subsequent to completion of the sale, the Board of Directors
of the Company unanimously consented to continue serving in their current
capacities.
Legal and professional fees of $555,700 incurred in planning and processing this
agreement are shown separately in the non-operating Other Expenses section of
the Income Statement.
(b) Pro Forma Financial Information.
On January 14, 2003, Sutter Holding acquired all of the outstanding shares of
Easton Mortgage Corporation ("EMC"), a California corporation. EMC is a mortgage
broker licensed in the states of California.
The purchase price is valued at approximately $3,750,000, subject to adjustments
dependent upon the subsequent performance of EMC. Adjustments to the purchase
price will be downward only, and will be a multiple of any decline in the
earnings of EMC from targeted levels over the next two years. Any adjustment, if
necessary, will be
in the form of a reduction in the face value of the promissory notes issued to
the selling shareholders. Sutter Holding paid $1,000,000 cash, $25,000 of which
was paid in 2002, and $975,000 of which was paid on January 14, 2003, and issued
promissory notes payable to the shareholders in the aggregate amount of
$2,750,000. The notes bear interest at 4% per annum, and are secured by a pledge
agreement, a guaranty by EMC, and a security agreement. In addition, Sutter
Holding issued warrants for the purchase of 60,000 shares of its common stock at
an exercise price of $11 per share, exercisable for five years, to specified
stockholders of EMC.
The following Unaudited Pro Forma Consolidated Balance Sheet and accompanying
Unaudited Pro Forma Consolidated Income Statement were prepared to show what the
financial statements of the companies would look like on a consolidated basis as
though the acquisition had been consummated on January 1, 2002. Both Sutter
Holding's and Easton's balance sheets were as of December 31, 2002. However, due
to a change in Sutter Holding's fiscal year end, Sutter Holding's income
statement covers the eleven month period February 1, 2002 through December 31,
2002, while Easton's income statement covers the twelve month period January 1,
2002 through December 31, 2002. This slight difference in periods resulted from
Sutter Holding's changed fiscal year end from January 31 to December 31 and does
not have a significant impact on the Unaudited Pro Forma Consolidated Financial
Statements presented.
UNAUDITED PRO FORMA CONSOLIDATED BALANCE SHEET
(in US dollars)
PRO FORMA
------------------------------------------
SRHI
As of December 31, 2002 SRHI EASTON ADJUSTMENTS CONSOLIDATED
------------------ ----------------- ------------------ ------------------
ASSETS
Cash & Cash Equivalents $625,491 $945,681 ($1,538,281) (1) $32,891
Accounts Receivable 8,528 19,808 28,336
Note Receivable, net 100,000 - 100,000
Mortgages Held For Sale - 3,816,500 3,816,500
Other Assets 5,835 6,162 11,997
------------------ ----------------- ------------------ ------------------
Total Current Assets $739,854 $4,788,151 ($1,538,281) $3,989,724
------------------ ----------------- ------------------ ------------------
Investments, at fair value $260,347 - $260,347
Investments, at cost 964,199 - 964,199
Fixed Assets 1,246 29,095 30,341
Goodwill - 1,909,761 1,836,878 (2) 3,746,639
Other Assets 98,542 13,944 112,486
------------------ ----------------- ------------------ ------------------
TOTAL ASSETS $2,064,188 $6,740,951 $298,597 $9,103,736
================== ================= ================== ==================
LIABILITIES & EQUITY:
LIABILITIES
Accounts Payable & Accrued Exp. $30,141 $477,933 ($390,933) (3) $117,141
Federal Taxes Payable 800 9,676 10,476
Warehouse Line of Credit - Flagstar - 3,765,358 3,765,358
Funds Held in Escrow - 25,000 ($25,000) (4) -
Interest Payable 28,232 - 28,232
------------------ ----------------- ------------------ ------------------
Total Current Liabilities $59,173 $4,277,967 ($415,933) $3,921,207
Deferred Income Taxes - $52,514 $52,514
Notes Payable 1,008,376 519,820 2,605,180 (5) 4,133,376
------------------ ----------------- ------------------ ------------------
TOTAL LIABILITIES $1,067,549 $4,850,301 $2,189,247 $8,107,097
------------------ ----------------- ------------------ ------------------
STOCKHOLDERS' EQUITY
Common Stock, ($0.0001 par value) $24 $50,000 ($50,000) $24
Warrants 103,030 - 103,030
Additional Paid-In Capital 3,266,157 1,261,559 (1,261,559) 3,266,157
Treasury Stock (333,427) - (333,427)
Unrealized Investment Loss Reserve (62,500) - (62,500)
Retained Earnings / (Accum. Deficit) (1,976,645) 579,091 (579,091) (1,976,645)
------------------ ----------------- ------------------ ------------------
TOTAL STOCKHOLDERS' EQUITY $996,639 $1,890,650 ($1,890,650) $996,639
------------------ ----------------- ------------------ ------------------
TOTAL LIABILITIES & EQUITY $2,064,188 $6,740,951 $298,597 $9,103,736
================== ================= ================== ==================
Notes:
Based on audited balance sheets for each company at December 31, 2002.
Assumes the disposition of SSI Securities, which was a wholly owned
subsidiary of SRHI, and the acquisition of Easton were effected January 1,
2002.
(1) Reflects various adjustments to cash in connection with the Easton
acquisition and the payment of various accrued expenses at Easton prior to
its acquisition by SRHI.
(2) Reflects net amount of new goodwill resulting from the Easton
acquisition.
(3) Reflects payment of accrued expenses at Easton and concurrent
reduction in its cash position prior to its acquisition by SRHI.
(4) Reflects portion of purchase price as a good faith deposit to Easton
by SRHI in connection with the acquisition.
(5) Reflects retirement of notes payable to Easton's former noteholders,
and the issuance of new notes payable to fund a portion of Easton's
acquisition by SRHI.
UNAUDITED PRO FORMA CONSOLIDATED INCOME STATEMENT
(in US dollars)
PRO FORMA
-------------------------------------------
SRHI
For the period ended December 31, 2002 (1) SRHI EASTON ADJUSTMENTS CONSOLIDATED
------------ --------------- ----------------- -------------------
Revenue:
Commission Income $2,894 $0 $2,894
Mortgage Sales, Net (2) - 2,294,073 2,294,073
Interest/Investment Income 799 - 799
Other Income 4,295 - 4,295
------------ --------------- ----------------- -------------------
Total Revenue $7,988 $2,294,073 $0 $2,302,061
Expenses:
Salaries, Commissions & Wages, etc. 125,910 886,327 1,012,237
Selling, General & Administrative 58,251 553,190 611,441
Depreciation & Amortization 748 17,354 18,102
Interest Expense 53,190 27,249 100,833 (3) 181,272
Professional Fees 58,095 - 58,095
Other 22,039 - 22,039
------------ --------------- ----------------- -------------------
Total Expenses $318,233 $1,484,120 $100,833 $1,903,186
Earnings Before Taxes ($310,245) $809,953 ($100,833) $398,874
Income Taxes - 101,914 (101,914) (4) -
------------ --------------- ----------------- -------------------
Net Income (Loss) ($310,245) $708,039 $1,081 $398,874
============ =============== ================= ===================
Net Income (Loss) Per Share (5) ($1.25) $1.61
- -------------------------------------------------
Notes:
Excludes all one-time expenses, including those associated with the
disposition of SSI Securities, which was a wholly owned subsidiary of
SRHI, and the acquisition of Easton, both of which are assumed to have
been effected January 1, 2002.
(1) Due to the change in the fiscal year end of SRHI, the pro forma
numbers provided above are based on audited financial statements for the
eleven month period February 1, 2002 through December 31, 2002 with
respect to SRHI, and for the twelve month period January 1, 2002 through
December 31, 2002 with respect to Easton.
(2) Gross mortgage sales for the period amounted to $102,845,028 and the
cost of these mortgage sales amounted to $100,550,955.
(3) Additional interest expense incurred on a note payable originated in
conjunction with the acquisition of Easton.
(4) Application of accumulated net operating losses ("NOLs") at SRHI in
accordance with IRS Code 382 Limitations results in no income taxes due on
a consolidated basis.
(5) Based on Basic and Diluted common shares outstanding as of March 28,
2003.
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 hereunto duly authorized.
March 31, 2003 SUTTER HOLDING COMPANY, INC.
By: s/ ROBERT E. DIXON
--------------------------------------------
Robert E. Dixon, Co-Chief Executive
Officer