Attached files
Exhibit 99.2
UNAUDITED FINANCIAL STATEMENTS FOR SANTA LUCIA BANCORP AND SUBSIDIARY
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Santa Lucia Bancorp
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Consolidated Balance Sheets
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(dollars in thousands)
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Assets
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30-Sep-11
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31-Dec-10
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||||||
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(unaudited)
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||||||||
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Cash and due from banks
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$ | 11,851 | $ | 4,920 | ||||
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Interest bearing deposits
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37,900 | 15,499 | ||||||
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Total cash and cash equivalents
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49,751 | 20,419 | ||||||
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Securities available for sale
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21,700 | 32,542 | ||||||
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Loans, net
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141,976 | 176,750 | ||||||
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Premises and equipment, net
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7,389 | 7,735 | ||||||
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Deferred income tax asset
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- | 273 | ||||||
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Cash surrender value of life insurance
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4,678 | 4,566 | ||||||
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Federal Reserve Bank and
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||||||||
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Federal Home Loan Bank stock, at cost
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1,419 | 1,531 | ||||||
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Other Real Estate Owned
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3,416 | 2,123 | ||||||
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Accrued interest and other assets
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2,110 | 3,862 | ||||||
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Total Assets
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$ | 232,439 | $ | 249,801 | ||||
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Liabilities and Shareholders' Equity
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Deposits:
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Noninterest-bearing demand
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$ | 71,969 | $ | 68,328 | ||||
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Interest-bearing demand and NOW accounts
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13,592 | 13,089 | ||||||
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Money market
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42,747 | 41,758 | ||||||
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Savings
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28,239 | 28,112 | ||||||
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Time certificates of deposit of $100,000 or more
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35,915 | 51,195 | ||||||
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Other time certificates
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25,503 | 31,385 | ||||||
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Total Deposits
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217,965 | 233,867 | ||||||
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Short-term borrowings
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- | - | ||||||
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Long-term debt
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5,155 | 5,155 | ||||||
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Accrued interest and other liabilities
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2,113 | 3,234 | ||||||
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Total Liabilities
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225,233 | 242,256 | ||||||
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Commitments and contingencies
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- | - | ||||||
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Shareholders' equity
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||||||||
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Preferred Stock - Series A
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3,909 | 3,879 | ||||||
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Common stock - no par value; authorized 20,000,000 shares;
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Issued and outstanding, 2,003,131 shares at
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September 30, 2011 and at December 31, 2010
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10,665 | 10,665 | ||||||
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Additional Paid-in Capital
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1,131 | 956 | ||||||
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Retained earnings (Accumulated Deficit)
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(8,809 | ) | (7,613 | ) | ||||
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Accumulated other comprehensive income-net unrealized
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gains/(losses) on available-for-sale securities, net of taxes
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310 | (342 | ) | |||||
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Total shareholders' equity
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7,206 | 7,545 | ||||||
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Total liabilities and shareholders' equity
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$ | 232,439 | $ | 249,801 | ||||
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The accompanying notes are an integral part of these financial statements
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Santa Lucia Bancorp
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Consolidated Statements of Income
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(in thousands except per share data)
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For the three month period ending
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For the nine month period ending
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30-Sep-11
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30-Sep-10
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30-Sep-11
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30-Sep-10
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(unaudited)
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(unaudited)
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(unaudited)
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(unaudited)
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Interest Income
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Interest and fees on loans
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$2,213
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$2,808
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$7,038
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$8,732
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Federal funds sold/EIB
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23
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1
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50
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4
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Investment securities
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151
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245
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549
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865
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2,387
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3,054
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7,637
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9,601
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Interest expense
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Interest-bearing demand deposits
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3
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7
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9
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28
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Money Market
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56
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138
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177
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471
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Savings
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7
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18
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24
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52
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Time certificates of deposit
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181
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360
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655
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1,197
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Short-term borrowings
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-
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-
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-
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-
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Long-term debt
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22
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35
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69
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102
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269
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558
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934
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1,850
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Net interest income
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2,118
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2,496
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6,703
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7,751
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Provision for credit losses
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-
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4,700
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530
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13,448
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Net interest income after
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provision for loan losses
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2,118
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(2,204)
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6,173
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(5,697)
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Noninterest income
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Service charges and fees
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76
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117
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257
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358
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Gain on sale of investment securities
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-
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-
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105
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215
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Other income
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26
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111
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189
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340
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102
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228
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551
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913
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Noninterest expense
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Salaries and employee benefits
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1,084
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1,231
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3,537
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3,887
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Occupancy
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186
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164
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496
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483
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Equipment
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142
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145
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411
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430
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Professional services
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409
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212
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1,153
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544
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Data processing
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117
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119
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368
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362
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Office related expenses
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94
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107
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313
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315
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Marketing
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50
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106
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183
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280
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Regulatory assessments
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30
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306
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493
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533
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Directors' fees and expenses
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7
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93
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100
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269
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Other real estate owned expenses
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40
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77
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86
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575
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Other
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164
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81
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326
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291
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2,323
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2,641
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7,466
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7,969
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(Loss) before income taxes
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(103)
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(4,617)
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(742)
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(12,753)
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Income tax expense
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1
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-
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274
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807
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Net (Loss)
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$(104)
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$(4,617)
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$(1,016)
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$(13,560)
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Dividends and Accretion on Preferred Stock
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$60
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$60
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$180
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$180
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Net (Loss) Applicable to Common Shareholders
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$(164)
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$(4,677)
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$(1,196)
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$(13,740)
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Per Share Data
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Net (loss) - basic
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$(0.08)
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$(2.33)
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$(0.60)
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$(6.86)
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Net (loss) - diluted
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$(0.08)
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$(2.33)
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$(0.60)
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$(6.86)
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The accompanying notes are an integral part of these financial statements
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Santa Lucia Bancorp
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Consolidated Statements of Cash Flows
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(dollars in thousands)
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(For the nine month period ended)
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30-Sep-11
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30-Sep-10
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(unaudited)
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(unaudited)
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Cash flows from operating activities:
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Net (loss)
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$ | (1,016 | ) | $ | (13,560 | ) | ||
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Adjustments to reconcile net earnings to net cash
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provided by operating activities:
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Depreciation and amortization
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491 | 411 | ||||||
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Provision for loan losses
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530 | 13,448 | ||||||
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Write down on other real estate owned
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187 | 321 | ||||||
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Stock-based compensation expense
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175 | 106 | ||||||
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Loss on sale of other real estate owned
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107 | - | ||||||
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Gain on sale of investment securities
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(105 | ) | (215 | ) | ||||
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Other items, net
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1,342 | 560 | ||||||
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Net cash provided by operating activities
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1,711 | 1,071 | ||||||
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Cash flows from investing activities:
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Proceeds from principal reductions and maturities
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of investment securities
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3,671 | 16,873 | ||||||
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Proceeds from sale of investment securities
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7,156 | 2,793 | ||||||
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Proceeds from sale of other real estate owned
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1,293 | - | ||||||
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Purchases of investment securities
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- | (11,686 | ) | |||||
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Redemption of FHLB/FRB stock
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107 | - | ||||||
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Net change in loans
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31,471 | (2,490 | ) | |||||
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Purchases of bank premises and equipment
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(25 | ) | (49 | ) | ||||
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Net cash provided (used) by investing activities
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43,673 | 5,441 | ||||||
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Cash flows from financing activities:
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Net change in deposits
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(15,902 | ) | 8,377 | |||||
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Net change in borrowings
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- | (501 | ) | |||||
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Dividends paid on Preferred Stock
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(150 | ) | (150 | ) | ||||
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Cash dividends paid
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- | (1 | ) | |||||
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Net cash (used) provided by financing activities
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(16,052 | ) | 7,725 | |||||
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Net increase in cash and cash equivalents
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29,332 | 14,237 | ||||||
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Cash and cash equivalents at beginning of year
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20,419 | 9,088 | ||||||
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Cash and cash equivalents at end of period
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$ | 49,751 | $ | 23,325 | ||||
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Supplemental disclosure of cash flow information:
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Interest paid
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$ | 620 | $ | 1,850 | ||||
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Income taxes paid
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$ | - | $ | 45 | ||||
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Transfer of loans to Other Real Estate Owned
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$ | 2,773 | $ | 1,765 | ||||
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The accompanying notes are an integral part of these financial statements
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NOTES TO CONDENSED FINANCIAL STATEMENTS (Unaudited)
Note 1 Basis of Presentation:
The accompanying unaudited condensed consolidated financial statements of Santa Lucia Bancorp (the “Company”) and its subsidiary Santa Lucia Bank (the ”Bank”) have been prepared pursuant to the rules and regulations of the Securities and Exchange Commission (the “SEC). Certain information and footnote disclosures, normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted pursuant to such SEC rules and regulations. Nevertheless, the Company believes that the disclosures are adequate to make the information presented not misleading. These interim condensed consolidated financial statements should be read in conjunction with the audited financial statements and notes thereto included in the Company’s 2010 Annual Report as filed on Form 10K, as amended.
In the opinion of management, all adjustments, including normal recurring adjustments necessary to present fairly the financial position of the Company with respect to the interim consolidated financial statements and the results of its operations for the interim period ended September 30, 2011, have been included. The results of operations for interim periods are not necessarily indicative of the results for a full year. Certain reclassifications were made to prior year’s presentations to conform to the current year. These reclassifications had no material impact on the Company’s previously reported financial statements.
Note 2 Loans and Related Allowance for Loan Losses:
A summary of loans as of September 30, 2011 and December 31, 2010 is as follows:
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(dollars in thousands)
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As % Gross Loans
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30-Sep-11
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31-Dec-10
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30-Sep-11
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31-Dec-10
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Real estate - construction
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$ | 23,726 | $ | 38,143 | 15.6 | % | 20.2 | % | ||||||||
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Real estate - other
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100,904 | 114,332 | 66.4 | % | 60.7 | % | ||||||||||
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Commercial
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25,939 | 34,232 | 17.1 | % | 18.2 | % | ||||||||||
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Consumer
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1,390 | 1,663 | 0.9 | % | 0.9 | % | ||||||||||
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Gross Loans
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151,959 | 188,370 | 100.0 | % | 100.0 | % | ||||||||||
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Deferred loan fees
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(510 | ) | (621 | ) | ||||||||||||
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Allowance for loan losses
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(9,473 | ) | (10,999 | ) | ||||||||||||
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Net Loans
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$ | 141,976 | $ | 176,750 | ||||||||||||
The Bank’s loan portfolio consists primarily of loans to borrowers within the San Luis Obispo and northern Santa Barbara Counties, California. Although the Bank seeks to avoid concentrations of loans to a single industry or based upon a single class of collateral, real estate and real estate associated businesses are among the principal industries in the Bank’s market areas. As a result, the Bank’s loan and collateral portfolios are, to some degree, concentrated in those industries. When real estate is taken as collateral, advances are generally limited to a certain percentage of the appraised value of the collateral at the time the loan is made, depending on the type of loan, the underlying property and other factors.
The following table shows the changes in the allowance for loan losses during the periods indicated:
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Three Months Ended
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Nine Months Ended
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September 30,
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September 30,
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2011
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2010
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2011
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2010
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(dollars in thousands)
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(dollars in thousands)
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Allowance, beginning of period
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$ | 9,364 | $ | 7,729 | $ | 10,999 | $ | 3,386 | ||||||||
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Provision for loan loss
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- | 4,700 | 530 | 13,448 | ||||||||||||
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Recoveries on Loans Charged Off
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272 | 23 | 1,220 | 77 | ||||||||||||
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Loans Charged Off
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163 | 2,737 | 3,276 | 7,196 | ||||||||||||
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Allowance, End of Period
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$ | 9,473 | $ | 9,715 | $ | 9,473 | $ | 9,715 | ||||||||
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Ratios:
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Net loan charge-offs (recoveries) to average loans
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-0.07 | % | 1.35 | % | 1.20 | % | 3.52 | % | ||||||||
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Allowance for loan losses to end of period loans
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6.24 | % | 4.95 | % | 6.24 | % | 4.95 | % | ||||||||
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Net loan charge-offs (recoveries) to allowance
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for loan losses
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-1.15 | % | 27.94 | % | 21.70 | % | 73.28 | % | ||||||||
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Net loan charge-offs (recoveries) to provision
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charged to operating expense
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n/a | 57.74 | % | 387.92 | % | 52.94 | % | |||||||||
Note 3 Investment Securities:
The amortized cost, carrying value and estimated fair values of investment securities available for sale as of September 30, 2011 and December 31, 2010 are as follows:
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September 30, 2011
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Amortized
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Unrealized
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Unrealized
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Estimated
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|||||||||||||
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cost
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gains
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losses
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fair value
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(dollars in thousands)
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Securities Available for Sale:
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U.S. government and
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agency securities
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$ | 5,888 | $ | 68 | $ | - | $ | 5,956 | ||||||||
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States and political
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subdivisions
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1,514 | 47 | - | 1,561 | ||||||||||||
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SBA Cert of Participation
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7,314 | 206 | - | 7,520 | ||||||||||||
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Mortgage-backed securities
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6,674 | 10 | (21 | ) | 6,663 | |||||||||||
| $ | 21,390 | $ | 331 | $ | (21 | ) | $ | 21,700 | ||||||||
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December 31, 2010
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Amortized
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Unrealized
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Unrealized
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Estimated
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|||||||||||||
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cost
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gains
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losses
|
fair value
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Securities Available for Sale:
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U.S. government and
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agency securities
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$ | 10,212 | $ | 28 | $ | (198 | ) | $ | 10,042 | |||||||
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States and political
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subdivisions
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1,818 | 9 | (28 | ) | 1,799 | |||||||||||
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SBA Cert of Participation
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7,793 | - | (177 | ) | 7,616 | |||||||||||
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Mortgage-backed securities
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13,062 | 103 | (80 | ) | 13,085 | |||||||||||
| $ | 32,885 | $ | 140 | $ | (483 | ) | $ | 32,542 | ||||||||
The carrying value of investment securities pledged to secure public funds, borrowings and for other purposes as required or permitted by law amounts to approximately $11.4 million at September 30, 2011 and $29.6 million at December 31, 2010. During 2010 the Company had proceeds from the sale of approximately $19.8 million securities and gross gains of $588 thousand. The Company had proceeds from the sale of approximately $7.2 million securities and gross gains of $105 thousand during the second quarter of 2011 and for the year to date 2011.