-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SToyA/+KKJTAtNKMpa8PK1vOb/ZX+WPsmOsxiEsJ7kYajzWyD755fZW4LceswIJt nSDjT33tfZUVwBVhi7yUzg== 0000351710-97-000008.txt : 19970912 0000351710-97-000008.hdr.sgml : 19970912 ACCESSION NUMBER: 0000351710-97-000008 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970630 FILED AS OF DATE: 19970813 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: GBC BANCORP CENTRAL INDEX KEY: 0000351710 STANDARD INDUSTRIAL CLASSIFICATION: 6022 IRS NUMBER: 953586596 STATE OF INCORPORATION: CA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 001-10731 FILM NUMBER: 97658639 BUSINESS ADDRESS: STREET 1: 800 W. 6TH STREET STREET 2: 15TH FLOOR CITY: LOS ANGELES STATE: CA ZIP: 90017 BUSINESS PHONE: 2139724172 MAIL ADDRESS: STREET 1: 800 W. 6TH ST STREET 2: 15TH FL CITY: LOS ANGELES STATE: CA ZIP: 90017 10-Q 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 Quarterly Report Under Section 13 or 15(d) of The Securities Exchange Act of 1934 For Quarter Ended June 30, 1997 Commission file number 0-16213 ----------- GBC BANCORP - - ------------------------------------------------------------------- (Exact name of registrant as specified in its charter) California 95-3586596 -------------- ------------- (State or other jurisdiction of (I.R.S. Employer Identification No.) incorporation or organization) 800 West 6th Street, Los Angeles, California 90017 - - --------------------------------------------------------------------- (Address of principal executive offices) (Zip code) Registrant's telephone number, including area code 213/972-4172 -------------- Former name address and former fiscal year, if changed since last report. Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No _______ ----------- Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the close of the period covered by this report. Common stock, no par value, 6,794,199 shares issued and ----------- outstanding as of June 30, 1997. ----------------- TABLE OF CONTENTS PART I FINANCIAL INFORMATION ............................. Item 1. Financial Statements .............................. Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ... PART II OTHER INFORMATION ................................. Item 1. Legal Proceedings ................................. Item 2. Changes In Securities ............................. Item 3. Default Upon Senior Securities .................... Item 4. Submission Of Matters To A Vote Of Securities Holders ........................................... Item 5. Other Information ................................. Item 6. Exhibits And Reports On Form 8-K .................. PART III- SIGNATURES ...................................... PART I - FINANCIAL INFORMATION GBC Bancorp and Subsidiaries Consolidated Statement of Financial Condition June 30, December 31, (In Thousands, Except Share Data) 1997 1996 - - -------------------------------------------------------------------------- (Unaudited) ASSETS Cash and Due From Banks $47,641 $46,809 Federal Funds Sold and Securities Purchased Under Agreements to Resell 115,000 140,200 Securities Available for Sale at Fair Value (Amortized Cost of $562,634 and $518,701 at June 30, 1997 and December 31, 1996, respectively) 562,706 519,821 Securities Held to Maturity (Fair Value of $54,596 and $12,463 at June 30,1997 and December 31, 1996, respectively) 54,461 12,274 Loans and Leases 610,141 602,354 Less: Allowance for Credit Losses (14,936) (16,209) Deferred Loan Fees (3,520) (3,638) --------- --------- Loans and Leases, Net 591,685 582,507 Bank Premises and Equipment, Net 5,726 5,806 Other Real Estate Owned, Net 15,051 12,988 Due From Customers on Acceptances 8,190 6,535 Real Estate Held for Investment 9,023 9,686 Accrued Interest Receivable and Other Assets 14,889 15,489 ---------- ---------- Total Assets $1,424,372 $1,352,115 ========== ========== LIABILITIES AND STOCKHOLDERS' EQUITY Deposits: Demand $148,082 $158,728 Interest Bearing Demand 232,415 213,697 Savings 108,195 119,315 Time Deposits of $100,000 or More 588,287 545,578 Other Time Deposits 181,542 164,195 --------- --------- Total Deposits 1,258,521 1,201,513 Federal Funds Purchased and Securities Sold Under Repurchase Agreements - - Subordinated Debt 15,000 15,000 Acceptances Outstanding 8,190 6,535 Accrued Expenses and Other Liabilities 15,398 12,431 -------- -------- Total Liabilities $1,297,109 $1,235,479 Stockholders' Equity: Common Stock, No Par or Stated Value; 20,000,000 Shares Authorized; 6,794,199 and 6,766,469 Shares Outstanding at June 30, 1997 and December 31, 1996, respectively $47,938 $47,281 Securities Valuation Allowance, Net of Tax 42 646 Retained Earnings 79,290 68,716 Foreign Currency Translation Adjustments (7) (7) ---------- ---------- Total Stockholders' Equity 127,263 116,636 ---------- ---------- Total Liabilities and Stockholders' Equity $1,424,372 $1,352,115 ========== ==========
See Accompanying Notes to Consolidated Financial Statements GBC Bancorp and Subsidiaries Consolidated Statement of Income (Unaudited) Three Months Ended Six Months Ended June 30, June 30, (In Thousands, Except Per Share Data) 1997 1996 1997 1996 - - ----------------------------------------------------------------------------------- INTEREST INCOME Loans and Leases $15,677 $12,989 $30,970 $25,268 Securities Available for Sale 8,801 9,208 17,089 17,325 Securities Held to Maturity 505 577 764 1,225 Federal Funds Sold and Securities Purchased under Agreements to Resell 2,176 1,721 4,070 3,961 ------- ------- ------- ------- Total Interest Income 27,159 24,495 52,893 47,779 INTEREST EXPENSE Interest Bearing Demand 1,319 1,111 2,477 2,255 Savings 799 950 1,563 1,881 Time Deposits of $100,000 or More 7,311 6,259 14,088 11,937 Other Time Deposits 2,121 2,140 4,071 4,318 Federal Funds Purchased and Securities Sold under Repurchase Agreements - 333 2 669 Subordinated Debt 399 399 798 798 ------- ------- ------- ------- Total Interest Expense 11,949 11,192 22,999 21,858 Net Interest Income 15,210 13,303 29,894 25,921 Provision for Credit Losses - 1,000 1,000 2,500 ------- ------- ------- ------- Net Interest Income after Provision for Credit Losses 15,210 12,303 28,894 23,421 NON-INTEREST INCOME Service Charges and Commissions 1,424 1,257 2,766 2,805 Gain on Sale of Loans, Net 24 16 74 101 Gain on Sale of Fixed Assets - 8 - 8 Gain on Sale of Real Estate Investment - - - 101 Other 153 121 285 219 ------- ------- ------- ------- Total Non-Interest Income 1,601 1,402 3,125 3,234 NON-INTEREST EXPENSE Salaries and Employee Benefits 4,032 3,440 7,801 6,826 Occupancy Expense 714 687 1,408 1,362 Furniture and Equipment Expense 453 395 873 791 Net Other Real Estate Owned Expense 236 419 479 906 Other 1,387 1,802 3,051 3,446 ------- ------- ------- ------- Total Non-Interest Expense 6,822 6,743 13,612 13,331 Income before Income Taxes 9,989 6,962 18,407 13,324 Provision for Income Taxes 3,529 2,300 6,203 4,353 ------- ------- -------- ------- Net Income $6,460 $4,662 $12,204 $8,971 ======= ======= ======== ======= Earnings Per Share $0.92 $0.66 $1.75 $1.27
See Accompanying Notes to Consolidated Financial Statements GBC Bancorp and Subsidiaries Consolidated Statement of Cash Flows (unaudited) For the Six Months Ended June 30, (In Thousands, Except Per Share Data) 1997 1996 - - ----------------------------------------------------------------------- OPERATING ACTIVITIES: Net Income $12,204 $8,971 Adjustments to Reconcile Net Income to Net CashProvided by Operating Activities: Depreciation 584 556 Net Accretion of Discounts on Securities (127) (1,186) Writedown on Real Estate Held for Investment 663 761 Provision for Credit Losses 1,000 2,500 Provision for Losses on Other Real Estate Owned - 554 Amortization of Deferred Loan Fees (1,137) (1,136) Gain on Sale of Loans (74) (101) Gain on Sale of Real Estate Investment - (101) Loss on Sale of Other Real Estate Owned 10 2 Gain on Sale of Fixed Assets - (8) Loans Originated for Sale (14,369) (18,125) Proceeds from Sales of Loans Originated for Sale 15,596 23,755 Net Decrease/(Increase) in Accrued Interest Receivable and Other Assets 1,044 (48) Net Increase/ (Decrease) in Accrued Expenses and Other Liabilities 2,829 (1,646) Other, Net - (2) -------- --------- NET CASH PROVIDED BY OPERATING ACTIVITIES $18,223 $14,746 -------- --------- INVESTING ACTIVITIES: Purchases of Securities Available for Sale (246,952) (454,068) Proceeds from Maturities of Securities Available for Sale 203,118 384,059 Purchases of Securities Held to Maturity (42,940) - Proceeds from Maturities of Securities Held to Maturity 781 9,580 Net Increase in Loans and Leases (13,895) (62,049) Proceeds from Sales of Other Real Estate Owned 1,996 1,522 Capitalized Costs of Other Real Estate Owned (368) - Proceeds from Sales of Real Estate Investments - 1,134 Purchases of Premises and Equipment (505) (631) Proceeds from Sales of Bank Premises and Equipment - 19 -------- -------- NET CASH USED BY INVESTING ACTIVITIES $(98,765) $(120,434) -------- -------- FINANCING ACTIVITIES: Net (Decrease)/Increase in Demand, Interest Bearing Demand and Saving Deposits (3,048) 13,659 Net Increase in Time Certificates of Deposits 60,056 101,133 Cash Dividend Paid (1,491) (1,074) Proceeds from Exercise of Stock Options 657 784 -------- -------- NET CASH PROVIDED BY FINANCING ACTIVITIES $56,174 $114,502 NET CHANGE IN CASH AND CASH EQUIVALENTS (24,368) 8,814 Cash and Cash Equivalents at Beginning of Period 187,009 163,837 --------- -------- Cash and Cash Equivalents at End of Period $162,641 $172,651 --------- -------- Supplemental Disclosures of Cash Flow Information: Cash Paid During This Period Interest $23,075 $21,797 Income Taxes 920 4,180 --------- -------- Noncash Investing Activities: Loans Transferred to Other Real Estate Owned at Fair Value $3,862 $10,180 Loans to Facilitate the Sale of Other Real Estate Owned - 262 --------- --------
See Accompanying Notes to Consolidated Financial Statements. GBC Bancorp and Subsidiaries NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) In the opinion of management, the consolidated financial statements of GBC Bancorp and its subsidiaries (the "Company") as of June 30, 1997 and December 31, 1996, and the six and three months ended June 30, 1997 and 1996, reflect all adjustments (which consist only of normal recurring adjustments) necessary for a fair presentation. In the opinion of management, the aforementioned consolidated financial statements are in conformity with generally accepted accounting principles. Earnings Per Share Earnings per share are computed based on the weighted average shares outstanding including common stock equivalents for the periods disclosed. Consolidated Statements of Cash Flows Cash and cash equivalents consist of cash and due from banks, and federal funds sold and securities purchased under agreements to resell. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS OVERVIEW Net income for the second quarter of 1997 was $6,460,000, or $0.92 per share, compared to $4,662,000, or $0.66 per share, for the corresponding period of 1996, representing the sixth consecutive record setting quarterly net income for the Company. The increase in the net income for the second quarter was primarily the result of an increase in net interest income and a reduced provision for credit losses. For the six months ended June 30, 1997, net income totaled $12,204,000, an increase of $3,233,000, or 36.0%, from the $8,971,000 earned during the corresponding period of 1996. Earnings per share for the six months ended June 30, 1997 were $1.75 compared to $1.27 for the same period of 1996. The increase in net income was primarily due to an increase in net interest income combined with a lower provision for credit losses. The increase in net interest income is due to an increase in the net interest spread and an increase in average interest earning assets. The decline in the provision for credit losses in 1997 primarily reflects a reduction in non-accrual loans. Non-accrual loans decreased to $9.6 million as of June 30, 1997, compared to $19.0 million as of June 30, 1996. The decline in non-accrual loans is a reflection of the improvement of the Southern California economy, in general, and the quality of the Bank's real estate loan portfolio, in particular. For the quarter ended June 30, 1997 and 1996, the return on average assets ("ROA") was 1.87% and 1.41%, respectively, and the return on average stockholders' equity ("ROE") was 21.22% and 18.16%, respectively. The improvement of these ratios is as explained above. For the six months ended June 30, 1997 and 1996, the ROA was 1.80% and 1.39%, respectively. For the six months ended June 30, 1997 and 1996, the ROE was 20.40% and 17.61%, respectively. The improvement of these ratios is as explained above. Recent Developments On July 28, 1997, GBC Bancorp announced the issuance of $40 million of 8.375% subordinated notes due August 1, 2007. The net proceeds to GBC Bancorp from the sale of the notes (after deducting the underwriting discount and the estimated expenses of the offering) are estimated to be $38,390,000. GBC Bancorp intends to use a portion of the net proceeds for general corporate purposes, which may include the repayment of it's $15 million of outstanding subordinated debentures, repurchases of it's common stock and possible future acquisitions. GBC Bancorp's $15 million outstanding subordinated debentures have a stated maturity of September 1, 2000 and bear interest at a rate of 10.52%. Although GBC Bancorp has no contractual right to prepay the subordinated debentures, it is currently negotiating prepayment with the holder of such debentures. Any such prepayment would require a prepayment premium which would be paid with a portion of the net proceeds. Pending their ultimate application, the net proceeds may be loaned to the Bank or invested in short term investment grade financial instruments. The notes are expected to be treated as Tier 2 capital for regulatory purposes. As Tier 2 capital, they will help to strengthen further the capital structure of the Company. RESULTS OF OPERATIONS Net Interest Income For the quarter ended June 30, 1997 and 1996, net interest income before the provision for credit losses was $15,210,000 and $13,303,000, respectively, representing an increase of $1,907,000, or 14.3%. The components describing this change are described below. Total interest income for the quarter ended June 30, 1997 was $27,159,000, representing a $2,664,000, or 10.9%, increase over the corresponding quarter of a year ago. The increase was due to a growth of $43.3 million, or 3.4%, of average interest earning assets, and a 54 basis point increase on the yield on interest earning assets. For the quarter ended June 30, 1997 and 1996, the yield on interest earning assets was 8.33% and 7.79%, respectively. The yield increase reflects an improvement in the percentage of the balance of average accruing loans to average interest earning assets, a decline in non-accrual loans, and an increase in the yield on securities. For the quarter ended June 30, 1997, average accruing loans to average interest earning assets was 45%, average nonaccrual loans were $9 million, and the yield on securities was 6.62%, compared to 37%, $31 million, and 6.20%, respectively, for the quarter ended June 30, 1996. Total interest expense for the quarter ended June 30, 1997 was $11,949,000, representing a $757,000, or 6.8%, increase over the corresponding quarter of a year ago. The increase was due to a growth of $22.6 million of interest bearing liabilities, and an increased cost of funds. For the quarter ended June 30, 1997 and 1996, the cost of funds was 4.33% and 4.15%, respectively. For the six months ended June 30, 1997, net interest income before the provision for credit losses was $29,894,000, an increase of $3,973,000, or 15.3%, compared to the corresponding period of 1996. The components describing this change are described below. Total interest income for the six months ended June 30, 1997 was $52,893,000 compared to $47,779,000 for the corresponding period of a year ago. The $5,114,000, or 10.7%, increase is primarily the result of both an increase in the balance of average interest earning assets and in the yield on average interest earning assets. Average interest earning assets increased to $1,292.2 million for the six months ended June 30, 1997 from $1,229.8 million for the corresponding period of a year ago, representing a $62.4 million, or 5.1%, increase. This growth was primarily the result of a $110.7 million increase in the average balance of loans and leases partially offset by a reduction of $49.2 million in the average balance of securities. There was also a $0.9 million increase of federal funds sold & securities purchased under agreements to resell. The yield on interest earning assets increased to 8.25% for the six months ended June 30, 1997, from 7.81% for the corresponding period of a year ago, representing a 44 basis point increase. The yield improvement is due to the increase in the average balance of accruing loans as a percentage of average interest earning assets (45% in 1997 from 36% in 1996), a decline in the balance of average non-accrual loans to $11 million in 1997 from $38 million in 1996, and an increase in the yield on securities to 6.55% in 1997 from 6.23% in 1996. Total interest expense for the six months ended June 30, 1997, was $22,999,000 compared to $21,858,000 for the corresponding period of a year ago. The increase of $1,141,000, or 5.2%, was due to an increase in the average balance of interest bearing deposits and an increase in the cost of funds. For the six months ended June 30, 1997 and 1996, the balance of average interest bearing deposits was $1,074.1 million and $1,009.1 million, respectively, an increase of $65.0 million, or 6.4%. There was also a slight increase in the cost of funds to 4.26% for the six months ended June 30, 1997 from 4.19% for the corresponding period of the prior year. While rates paid for the certificates of deposits declined in 1997 compared to 1996, this higher costing deposit product comprised a larger percentage of the balance of average interest bearing deposits in 1997 compared to 1996, which, accordingly, increased the cost of funds. The net interest spread is defined as the yield on interest earning assets less the rates paid on interest bearing liabilities. For the six months ending June 30, 1997 and 1996, the net interest spread was 3.99% and 3.62%, respectively. The increase in the spread is due to the reasons explained above. The net interest margin is defined as the annualized difference between interest income and interest expense divided by average interest earning assets. For the six months ended June 30, 1997 and 1996, the net interest margin was 4.67% and 4.24%, respectively. The increase in the margin is primarily the result of the improved yield on interest earning assets. Provision for Credit Losses For the quarter ended June 30, 1997, there was no provision for credit losses compared to $1,000,000 for the corresponding period a year ago. For the six months ended June 30, 1997, the provision for credit losses was $1,000,000, compared to $2,500,000 for the same period of 1996, a decrease of $1,500,000, or 60.0%. The decline in the provision for credit losses primarily reflects the reduction in non-accrual loans. As of June 30, 1997, non-accrual loans totaled $9.6 million compared to $11.7 million and $19.0 million as of December 31, 1996 and June 30, 1996, respectively. The combination of loans returned to accrual status, repayments, transfers to OREO and charge-offs, significantly impacted the reduction of non-accrual loans. The decline in non-accrual loans and the corresponding decrease in the provision is also a reflection of the continued improvement of the Southern California economy, in general, and the quality of the Bank's real estate loan portfolio, in particular. The amount of the provision for credit losses is determined by management and is based upon the quality of the loan portfolio, management's assessment of the economic environment, evaluations made by regulatory authorities, historical loan loss experience, collateral values, assessment of borrowers' ability to repay, and estimates of potential future losses. Please refer to the discussion "Allowance for Credit Losses", following. Non-Interest Income Non-interest income for the quarter ended June 30, 1997 totaled $1,601,000, representing a $198,000, or 14.1%, increase compared to $1,403,000 for the quarter ended June 30, 1996. The increase was primarily the result of a $167,000 increase in service charges and commissions due in large measure to increased commissions earned by the Bank's International Department and increased service charges on deposit accounts. For the six months ended June 30, 1997, non-interest income totaled $3,125,000 representing a $109,000, or 3.4%, decrease compared to $3,234,000 for the six months ended June 30, 1996. The net decrease was primarily due to the receipt of a $400,000 fee in exchange for which the Bank released a guarantor of a real estate loan, in the first quarter of 1996. Non-Interest Expense For the three months ended June 30, 1997, non-interest expense was $6,822,000, representing a $79,000, or 1.2%, increase over $6,743,000 for the corresponding period of a year ago. For the six months ended June 30, 1997, non-interest expense was $13,612,000, representing a $281,000, or 2.1%, increase over $13,331,000 reported for the corresponding period of a year ago. The net increase was due to a $975,000, or 14.3%, increase in salaries and employee benefits, partially offset by decreases in net other real estate owned expense and other expense of $427,000 and $395,000, respectively. The increase in salaries and employee benefits was caused primarily by higher level of pre-tax income. The reduced net other real estate owned expense is primarily the result of no required provision for OREO valuation in 1997 compared to $554,000 in 1996. The decline of other expense was primarily the result of reduced legal fees. For the six months ended June 30, 1997, the Company's efficiency ratio, defined as non-interest expense divided by the sum of net interest income plus non-interest income, declined to 41.2%, comparing favorably to 45.7% for the corresponding period of 1996. Provision for Income Taxes For the quarter ended June 30, 1997 and 1996, the provision for income taxes was $3,529,000 and $2,301,000, respectively, representing effective tax rates of 35.3% and 33.0%. For the six months ended June 30, 1997, the provision for income taxes was $6,203,000, representing 33.7% of pre- tax income. The provision for the six months ended June 30, 1996, was $4,353,000, representing 32.7% of pre-tax income. FINANCIAL CONDITION Total assets as of June 30, 1997 were $1,424.4 million, an increase of $72.3 million from total assets of $1,352.1 million as of December 31, 1996. The increase was mainly due to a growth of deposits that was invested primarily in investment securities. As of June 30, 1997 and December 31, 1996, total deposits were $1,258.5 million and $1,201.5 million, respectively. Loans As of June 30, 1997, loans and leases totaled $610.1 million, representing a $7.7 million, or 1.3%, increase from the balance of $602.4 million as of December 31, 1996. Growth in the commercial loan portfolio representing $42.5 million was primarily in the trade-financing area which increased $34.9 million. The growth of this category of loan reflects the growth in international trade and new customer relationships. In addition, there was an increase of $11.4 million of real estate - construction. Partially offsetting the above were decreases of $19.7 million and $30.0 million in the real estate - conventional and term federal funds sold loan categories, respectively. The following table sets forth the amount of loans and leases outstanding by category and the percentage of each category to the total loans and leases outstanding: - - ---------------------------------------------------------------------- June 30, 1997 December 31, 1996 (DOLLARS IN THOUSANDS) Amount Percentage Amount Percentage - - ---------------------------------------------------------------------- Commercial $225,789 37.00% $183,268 30.43% Real Estate - Construction 77,975 12.78% 66,572 11.05% Real Estate - Conventional 253,382 41.53% 273,081 45.34% Installment 70 0.01% 86 0.01% Other Loans 25,414 4.17% 22,361 3.71% Leveraged Leases 7,511 1.23% 6,986 1.16% Term Fed Funds Sold 20,000 3.28% 50,000 8.30% - - ---------------------------------------------------------------------- Total $610,141 100.00% $602,354 100.00% - - ----------------------------------------------------------------------
Non-Performing Assets A certain degree of risk is inherent in the extension of credit. Management has credit policies in place to minimize the level of loan losses and non-performing loans. The Company performs a quarterly assessment of the credit portfolio to determine the appropriate level of the allowance. Included in the assessment is the identification of loan impairment. A loan is identified as impaired when it is probable that interest and principal will not be collected according to the contractual terms of the loan agreement. Loan impairment is measured by estimating the expected future cash flows and discounting them at the respective effective interest rate or by valuing the underlying collateral. The Company has a policy of classifying loans (including an impaired loan) which are 90 days past due as to principal and/or interest as non-accrual loans unless management determines that the fair value of underlying collateral is substantially in excess of the loan amount or other circumstances justify treating the loan as fully collectible. After a loan is placed on non-accrual status, any interest previously accrued, but not yet collected, is reversed against current income. A loan is returned to accrual status only when the borrower has demonstrated the ability to make future payments of principal and interest as scheduled, and the borrower has demonstrated a sustained period of repayment performance in accordance with the contractual terms. Interest received on non-accrual loans generally is either applied as principal reduction or reported as recoveries on amounts previously charged-off, according to management's judgment as to the collectability of principal. The following table provides information with respect to the Company's past due loans, non-accrual loans, restructured loans and other real estate owned, net, as of the dates indicated: - - ------------------------------------------------------------------- (IN THOUSANDS) June 30, 1997 December 31, 1996 - - ------------------------------------------------------------------- Loans 90 Days or More Past Due and Still Accruing $400 $6,779 Non-accrual Loans 9,586 11,719 -------- -------- Total Past Due Loans 9,986 18,498 Restructured Loans 20,837 23,125 -------- -------- Total Non-performing Loans 30,823 41,623 Other Real Estate Owned, Net 15,051 12,988 -------- -------- Total Non-Performing Assets $45,874 $54,611 -------- --------
Total non-performing assets decreased to $45.9 million, as of June 30, 1997, from $54.6 million, as of December 31, 1996, representing an $8.7 million, or 15.9%, reduction. The net decrease was due to reductions in all categories of non-performing loans, partially offset by an increase of other real estate owned, net. Non-accrual loans declined to $9.6 million as of June 30, 1997, from $11.7 million, as of December 31, 1996, a reduction of $2.1 million, or 17.9%. The following table analyzes the decline in non-accrual loans during the six months ended June 30, 1997: - - ---------------------------------------------------- (IN THOUSANDS) - - ---------------------------------------------------- Balance, December 31, 1996 $11,719 --------- Add: Loans placed on non-accrual 8,534 Less: Charge-offs (2,055) Returned to accrual status (2,177) Repayments (2,777) Transfer to OREO (3,658) --------- Balance, June 30, 1997 $9,586 ---------
The following table breaks out the Company's non- accrual loans by category as of June 30, 1997 and December 31, 1996: - - -------------------------------------------------------------- (IN THOUSANDS) June 30, 1997 December 31, 1996 - - -------------------------------------------------------------- Commercial $4,047 $3,219 Real Estate- Construction 455 477 Real Estate- Conventional 5,057 8,023 Other Loans 27 - --------- --------- Total $9,586 $11,719 --------- ---------
The balance of restructured loans as of June 30, 1997 was $20.8 million compared to $23.1 million as of December 31, 1996, representing a $2.3 million, or 10.0%, decrease. A loan is categorized as restructured if the original interest rate on such loan, the repayment terms, or both, are modified due to a deterioration in the financial condition of the borrower. Restructured loans may also be put on a non-accrual status in keeping with the Bank's policy of classifying loans which are 90 days past due as to principal and/or interest. Restructured loans which are non- accrual loans are not included in the balance of restructured loans. As of June 30, 1997, restructured loans consisted of fifteen real estate credits. This compares to sixteen real estate credits as of December 31, 1996. The weighted average yield of the restructured loans as of June 30, 1997, was 10.21%. All restructured loans are performing pursuant to the terms and conditions of the restructuring. The following table breaks out the restructured loans by accrual status as of the dates indicated: - - ------------------------------------------------------------- (IN THOUSANDS) June 30, 1997 December 31, 1996 - - ------------------------------------------------------------- On Accrual Status $20,837 $23,125 On Non-accrual Status 223 2,820 -------- -------- Total $21,060 $25,945 -------- --------
There are no commitments to lend additional funds on any of the restructured loans. As of June 30, 1997, other real estate owned ("OREO"), net of valuation allowance of $1.5 million, totaled $15.1 million, representing an increase of $2.1 million, or 16.2%, from the net balance of $13.0 million, net of valuation allowance of $1.8 million, as of December 31, 1996. As of June 30, 1997 and December 31, 1996, OREO consisted of 26 properties. The outstanding OREO properties are all included in the Bank's market area. They include single family residences, condominiums, commercial buildings, and land both for commercial and residential improvement. Seven properties comprise the land category of OREO. The Company does not intend to develop these properties; rather, it will sell the land undeveloped. The following table sets forth OREO by property type for the dates as indicated: - - ---------------------------------------------------------------- (IN THOUSANDS) June 30, 1997 December 31, 1996 - - ---------------------------------------------------------------- PROPERTY TYPE Single-Family Residential $701 $901 Condominium 4,051 6,284 Multi-Family Residential 220 - Land for Residential 3,614 1,413 Land for Commercial 735 735 Retail Facilities 7,196 5,228 Office 34 250 Less: Valuation Allowance (1,500) (1,823) ---------- ----------- Total $15,051 $12,988 ---------- -----------
In accordance with SFAS 114, "Accounting by Creditors for Impairment of a Loan," as amended by SFAS 118, a loan is identified as impaired when it is probable that interest and principal will not be collected according to the contractual terms of the loan agreement. Loan impairment is measured by estimating the expected future cash flows and discounting them at the respective effective interest rate, or by valuing the underlying collateral. The following table discloses pertinent information as it relates to the Company's impaired loans as of the dates indicated: - - ------------------------------------------------------------------------- (IN THOUSANDS) June 30, 1997 Dec. 31, 1996 - - ------------------------------------------------------------------------- Recorded Investment with Related Allowance $19,436 $21,210 Recorded Investment with no Related Allowance 3,147 2,303 ------- ------- Total Recorded Investment 22,583 23,513 ------- ------- Allowance for Impaired Loans 1,705 2,011 ------- -------
The average balance of impaired loans before the allowance was $24.4 million for the six months ended June 30, 1997 and $35.7 million for the twelve months ended December 31, 1996. Income recognition on impaired loans uses methods existing for non-accrual loans but can include the accrual of interest. While a loan is in non-accrual status, some or all of the cash payments received may be treated as interest income on a cash basis as long as the remaining book balance of the loan (i.e. after charge-off of identified losses, if any) is deemed to be fully collectible. The Bank's determination as to the ultimate collectibility of the loan's remaining book balance must be supported by a current, well documented credit evaluation of the borrower's financial condition and prospects for repayment, including consideration of the borrower's historical repayment performance and other relevant factors. For the six months ended June 30, 1997 and 1996, interest income recognized on impaired loans was $832,000 and $1,472,000, respectively. Of the amount of interest income recognized during the six months ended June 30, 1997 and 1996, no interest was recognized under the cash basis method. Management cannot predict the extent to which the current economic environment, including the real estate market, may improve or worsen, or the full impact such environment may have on the Bank's loan portfolio. Furthermore, as the Bank's primary regulators review the loan portfolio as part of their routine, periodic examinations of the Bank, their assessment of specific credits may affect the level of the Bank's non-performing loans. Accordingly, there can be no assurance that other loans will not be placed on non-accrual, become 90 days or more past due, have terms modified in the future, or become OREO. Allowance for Credit Losses As of June 30, 1997, the balance of the allowance for credit losses was $14.9 million, representing 2.44% of outstanding loans and leases. This compares to an allowance for credit losses of $16.2 million as of December 31, 1996, representing 2.69% of outstanding loans and leases. The table below summarizes the activity in the total allowance for credit losses (which amount includes the allowance on impaired loans) for the six month periods ended as indicated: - - ------------------------------------------------------------- (IN THOUSANDS) June 30, 1997 June 30, 1996 - - ------------------------------------------------------------- Balance, Beginning of Period $16,209 $16,674 --------- --------- Provision for Credit Losses 1,000 2,500 --------- --------- Charge-offs (3,622) (4,008) Recoveries 1,349 1,510 --------- --------- Net Charge-offs (2,273) (2,498) --------- --------- Balance, End of Period $14,936 $16,676 --------- ---------
As of June 30, 1997, the allowance represents 48.5% and 156% of non-performing loans and of non-accrual loans, respectively. As of December 31, 1996, the allowance represented 38.9% and 138% of non-performing loans and of non-accrual loans, respectively. Management believes that the allowance for credit losses is adequate to cover known and inherent losses related to loans and leases outstanding as of June 30, 1997. Securities The Company classifies its securities as held to maturity or available for sale. Securities classified as held to maturity are those that the Company has the positive intent and ability to hold until maturity. These securities are carried at amortized cost. Securities that could be sold in response to changes in interest rates, increased loan demand, liquidity needs, capital requirements or other similar factors, are classified as securities available for sale. These securities are carried at fair value, with unrealized gains or losses reflected net of tax in stockholders' equity. As of June 30, 1997, the Company recorded gross unrealized gains of $72,000 on its available-for-sale portfolio and the inclusion as a separate deduction of stockholders' equity of $42,000, representing the unrealized holding gain, net of tax. The amortized cost, gross unrealized gains, gross unrealized losses and fair value of securities at June 30, 1997 and December 31, 1996 were as follows: - - ------------------------------------------------------------------------------------ Gross Gross (In Thousands) Amortized Unrealizd Unrealiz Fair June 30, 1997 Cost Gains Losses Value - - ------------------------------------------------------------------------------------ Securities Held to Maturity State and Municipal Securities $1,475 $8 $- $1,483 U.S. Government Agencies 42,945 71 - 43,016 Collateralized Mortgage Obligations 51 - - 51 Asset Backed Securities 9,990 56 - 10,046 -------- ----- ------ ------- Total Securities Held to Maturity $54,461 $135 $- $54,596 -------- ----- ------ ------- Securities available for sale U. S. Treasuries 6,905 - (4) 6,901 U.S. Government Agencies 172,789 - (145) 172,644 Mortgage Backed Securities 55,143 - (255) 54,888 Corporate Notes 16,006 341 - 16,347 Collateralized Mortgage Obligations 177,416 - (255) 177,161 Asset Backed Securities 89,960 390 - 90,350 Auctioned Preferred Stock 33,900 - - 33,900 Other Securities 10,515 - - 10,515 -------- ----- ------ -------- Total Securities Available for Sale $562,634 $731 $(659) $562,706 -------- ----- ------ --------
- - ------------------------------------------------------------------------------------ Gross Gross (In Thousands) Amortized Unrealizd Unrealiz Fair December 31, 1996 Cost Gains Losses Value - - ------------------------------------------------------------------------------------ Securities Held to Maturity State and Municipal Securities $2,222 $28 $- $2,250 Collateralized Mortgage Obligations 56 6 - 62 Asset Backed Securities 9,996 155 - 10,151 -------- ----- ------ -------- Total Securities Held to Maturity $12,274 $189 $- $12,463 -------- ----- ------ -------- Securities available for sale U. S. Treasuries 1,918 - (27) 1,891 U.S. Government Agencies 160,718 - (52) 160,666 Mortgage Backed Securities 51,503 - (247) 51,256 Corporate Notes 19,014 580 - 19,594 Collateralized Mortgage Obligations 165,517 281 - 165,798 Asset Backed Securities 37,474 460 - 37,934 Auctioned Preferred Stock 72,450 - 72,450 Other Securities 10,107 125 - 10,232 -------- ------ ------ -------- Total Securities Available for Sale $518,701 $1,446 $(326) $519,821 -------- ------ ------ --------
There were no sales of securities available for sale during the six months ended June 30, 1997 and 1996. There were no sales of securities held to maturity for the six months ended June 30, 1997 and 1996. Deposits The Company's deposits totaled $1,258.5 million as of June 30, 1997, representing a $57.0 million, or 4.7%, increase from total deposits of $1,201.5 million as of December 31, 1996. The net growth was primarily due to increases in time deposits, which increased $60.0 million, or 8.5%. Interest-bearing demand also increased $18.7 million, with decreases in demand and savings of $10.6 million and $11.1 million, respectively, partially offsetting the total deposit increase. There are no brokered deposits outstanding. The Company believes that the majority of its deposit customers have strong ties to the Bank. Although the Company has a significant amount of time deposits of $100,000 or more having maturities of one year or less, historically, the depositors have generally renewed their deposits at their maturity. Accordingly, the Company believes its deposit source to be stable. The maturity schedule of time certificates of deposit of $100,000 or more, as of June 30, 1997, is as follows: - - ------------------------------------------------------ (IN THOUSANDS) - - ------------------------------------------------------ 3 Months or Less $289,635 Over 3 Months Through One Year 296,631 Over One Year through 5 Years 2,021 ---------- Total $588,287 ----------
Other Borrowings On August 31, 1990, the Company issued $15.0 million of subordinated debentures through private placement with an annual interest rate of 10.52% and stated maturity of September 1, 2000. The table below is a summary of the required repayment schedule, as specified in the Debenture Purchase Agreement ("the Agreement"). - - ------------------------------------------------------ (IN THOUSANDS) - - ------------------------------------------------------ September 1, 1997 $3,750 September 1, 1998 $3,750 September 1, 1999 $3,750 September 1, 2000 $3,750 ---------- Total $15,000 ----------
The Agreement includes several covenants which restrict the payment of dividends, amount of indebtedness, certain acquisitions and the sale of assets. In the opinion of management, the Company was in compliance with the provisions of the Agreement as of June 30, 1997. Regulatory Matters During the first quarter of 1997, the annual safety and soundness examination was conducted by the Federal Deposit Insurance Corporation ("FDIC") and the State Banking department. Reports have been received by the Bank from both agencies with no material adverse findings noted. Capital Resources As of June 30, 1997, stockholders' equity totaled $127.3 million, an increase of $10.6 million, or 9.1%, from $116.6 million as of December 31, 1996. The increase was due primarily to net income of $12.2 million, less cash dividends declared to stockholders of $1.6 million, less the net change in the securities valuation allowance, net of tax, of $0.6 million, for the six months ended June 30, 1997. Additionally, approximately $0.6 million of the net increase resulted from the exercise of stock options and related tax benefits. Capital ratios for the Company and for the Bank were as follows as of the dates indicated: - - -------------------------------------------------------------------------- Well-Capitalized June 30, December 31, Standards 1997 1996 - - -------------------------------------------------------------------------- GBC Bancorp Tier 1 Leverage Ratio 5% 9.14% 8.74% Tier 1 Risk-Based Capital Ratio 6% 12.89% 11.97% Total Risk-Based Capital Ratio 10% 14.60% 13.69% General Bank Tier 1 Leverage Ratio 5% 8.62% 8.61% Tier 1 Risk-Based Capital Ratio 6% 12.17% 11.81% Total Risk-Based Capital Ratio 10% 13.42% 13.06%
Liquidity and Interest Rate Sensitivity Liquidity measures the ability of the Company to meet fluctuations in deposit levels, to fund its operations and to provide for customers' credit needs. Asset liquidity is provided by cash and short-term financial instruments which include federal funds sold and securities purchased under agreements to resell, unpledged securities held to maturity maturing within one year and unpledged securities available for sale. These sources of liquidity amounted to $732.5 million, or 51.4% of total assets, as of June 30, 1997, compared to $717.0 million, or 53.0% of total assets, as of December 31, 1996. To further supplement its liquidity, the Company has established federal funds lines with correspondent banks and three master repurchase agreements with major brokerage companies. In August, 1992, the Federal Home Loan Bank of San Francisco ("FHLB") granted the Bank a line of credit currently equal to 25 percent of assets with terms up to 360 months. As of June 30, 1997, the Company has no borrowing outstanding under this financing facility with the FHLB. Management believes its liquidity sources to be stable and adequate. As of June 30, 1997, total loans and leases represented 48.5% of total deposits. This compares to 50.1% as of December 31, 1996. As of June 30, 1997, management is not aware of any information that would result in or that was reasonably likely to have a material effect on the Company's liquidity and capital resources. The liquidity of the parent company, GBC Bancorp, is primarily dependent on the payment of cash dividends by its subsidiary, General Bank, subject to the limitations imposed by the Financial Code of the State of California. For the six months ended June 30, 1997, General Bank paid/declared $6.6 million of cash dividends to GBC Bancorp. Effective asset/liability management includes maintaining adequate liquidity and minimizing the impact of future interest rate changes on net interest income. The Company attempts to manage its interest rate sensitivity on an on-going basis through the analysis of the repricing characteristics of its loans, investments, and deposits, and managing the estimated net interest income volatility by adjusting the terms of its interest-earning assets and liabilities, and through the use of derivatives as needed. The Company has only limited involvement with derivative financial instruments and does not use them for trading purposes. As of June 30, 1997, three contracts totaling $2 million were outstanding. These instruments are used to manage the interest rate risk from the origination of fixed rate residential mortgage loans for sale in the secondary markets. The Company utilizes Treasury note futures and forward sales of mortgage-backed securities to hedge interest rate risk associated with its residential mortgage banking activities. Futures and forward sale contracts provide for sale of the underlying securities, including mortgage-backed securities, at a specified future date, at a specified price or yield. The amount of the futures and forward sale contracts is determined by the aggregate amount of fixed rate commitments for mortgage loans that are expected to be funded plus the amount of fixed rate residential mortgages categorized as being held for sale that have not been sold. The fair value of the underlying futures and forward sale contracts is expected to move inversely to the change in fair value of the mortgage loans. The Company never intends to deliver the underlying securities that the futures and forward sale contracts commit to sell, rather it purchases offsetting contracts to eliminate the obligation. The Company is exposed to the risk that the fair value of futures contracts, being based on the value of the Treasury note will not move proportionately with the change in value of the mortgage loans being hedged. This basis risk is unpredictable and can result in economic loss to the Company. There is no basis risk related to the use of forward sale contracts on mortgage-backed securities since their fair value is based on similar mortgage loans. However, a gain or loss will arise from the difference between the fair value and the forward sale price of the mortgage-backed security. At the time the obligation of the forward sales contract or treasury note future is eliminated, a resulting gain or loss is included in the computation of the gain/loss on sale of loans, net, and accordingly, is included in non-interest income. In addition, as of month-end, unrealized gains/losses on outstanding contracts are recorded and included in gain/loss on sale of loans, net. As of June 30, 1997 and December 31, 1996, there were outstanding fixed rate mortgages held for sale of $0.8 million and $1.9 million, and a notional value of derivative instruments of $2.0 million and $0.5 million, respectively. For the six months ended June 30, 1997 and 1996, the Company had realized net losses of $4,000 and $11,000, respectively, related to its hedging activities. There was a $5,000 unrealized loss related to hedging activities as of June 30, 1997. There was no unrealized gain/loss related to hedging activities as of June 30, 1996. Initial margin requirements and daily calls on futures contracts are met in cash. There are no margin requirements nor daily calls on forward sale contracts since whole loans are expected to be delivered to fulfill the commitment. While no single measure can completely identify the impact of changes in interest rates on net interest income, one gauge of interest rate sensitivity is to measure, over various time periods, the differences in the amounts of the Company's rate sensitive assets and rate sensitive liabilities. These differences, or "gaps", provide an indication of the extent that net interest income may be affected by future changes in interest rates. However, these "gaps" do not take into account timing differences between the repricing of assets and the repricing of liabilities. A positive gap exists when rate sensitive assets exceed rate sensitive liabilities and indicates that a greater volume of assets than liabilities will reprice during a given period. This mismatch may enhance earnings in a rising rate environment and may inhibit earnings when rates decline. Conversely, when rate sensitive liabilities exceed rate sensitive assets, referred to as a negative gap, it indicates that a greater volume of liabilities than assets will reprice during the period. In this case, a rising interest rate environment may inhibit earnings and declining rates may enhance earnings. "Gap" reports originated as a means to provide management with a tool to monitor repricing differences, or "gaps", between assets and liabilities repricing differences, or "gaps", between assets and liabilities repricing in a specified period, based upon their underlying contractual rights. The use of "gap" reports is thus limited to a quantification of the "mismatch" between assets and liabilities repricing within a unique specified timeframe. "Gap" reports cannot be used to quantify exposure to interest rate changes because they do not take into account timing differences between repricing assets and liabilities, and changes in the amount of prepayments. The Company uses a simulation analysis to attempt to predict changes in the yields earned on different asset categories and the rates paid on liabilities in relation to changes in market interest rates. The analysis has concluded that the Bank's liabilities reprice more slowly than it's assets, and the Company's balance sheet has a positive gap when the timing of repricing is taken into account. This results in an interest rate sensitivity profile for the Company where it has exposure to a downward shift in interest rates. The Company has established an internal policy to manage its net interest income volatility to a change of 10% when the simulation is using an assumed instant change of money market rates of 100 basis points and to a change of 15% when the assumed rate change is 200 basis points. As of June 30, 1997, the Company was well within the policy limits. As of June 30, 1997, there was a cumulative one year negative "gap" of $446.7 million, up from $311.4 million as of December 31, 1996. The $135.3 million increase in the gap was caused by the purchase of intermediate maturity investment securities and loan activity. The negative gaps would appear to be predictive of an increase in the net interest margin if interest rates were to fall significantly. However, as discussed above, due to the lag in the downward repricing of the rates paid on liabilities versus the immediate downward repricing of its assets, the Company would not anticipate a corresponding increase in the net interest margin should rates decline. The following table indicates the Company's interest rate sensitivity position as of June 30, 1997, and may not be reflective of positions in subsequent periods: JUNE 30, 1997 INTEREST SENSITIVITY PERIOD - - ------------------------------------------------------------------------------------------------------ 0 to 90 91 to 365 Over 1 Year Over Non-Interest (In Thousands) Days Days to 5 Years 5 Years Erng/Bearing Total - - ------------------------------------------------------------------------------------------------------ Securities Available for Sale $57,242 $21,337 $173,628 $310,499 $- $562,706 Securities Held to Maturity 6,488 975 33,121 13,877 - 54,461 Federal Funds Sold & Securities Purchased Under Agreements to Resell 115,000 - - - - - Loans and Leases (1) (2) 409,543 33,859 69,766 67,387 - 580,555 Loans to Depository Institution 20,000 - - - - 20,000 Non-Earning Assets (2) - - - - 91,650 91,650 -------- ------- -------- -------- ------- ---------- Total Assets $608,273 $56,171 $276,515 $391,763 $91,650 $1,424,372 -------- ------- -------- -------- ------- ---------- Source of Funds for Assets: Deposits: Demand $- $- $- $- $148,082 $148,082 Interest Bearing Demand 232,415 - - - - 232,415 Savings 108,195 - - - - 108,195 TCD'S Under $100,000 85,757 94,793 992 - - 181,542 TCD'S $100,000 and Over 292,836 293,430 2,021 - - 588,287 -------- ------- -------- -------- -------- ---------- Total Deposits $719,203 $388,223 $3,013 $- $148,082 $1,258,521 -------- ------- -------- -------- ------- ---------- Subordinated Debt $3,750 $- $11,250 $- $- $15,000 Other Liabilities - - - - 23,588 23,588 Stockholders' Equity - - - - 127,263 127,263 -------- ------- -------- -------- ------- ---------- Total Liabilities and Stockholders' Equity $722,953 $388,223 $14,263 $- $298,933 $1,424,372 -------- ------- -------- -------- ------- ---------- 2 Interest Sensitivity Gap ($114,680) ($332,052) $262,252 $391,763 ($207,283) Cumulative Interest Sensitivity Gap ($114,680) ($446,732) ($184,480) $207,283 - Gap Ratio (% of Total Assets) -8.1% -23.3% 18.4% 27.5% -14.6% Cumulative Gap Ratio -8.1% -31.4% -13.0% 14.6% 0.0%
(1) Loans and leases are before unamortized deferred loan fees and allowance for credit losses. (2) Nonaccrual loans are included in non-earning assets. Forward-Looking Statements Certain statements contained herein, including, without limitation, statements containing the words "believes," "intends," "expects" and words of similar import, constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results, performance or achievements of the Company to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Such factors include, among others, the following: general economics and business conditions in those areas in which the Company operates; demographic changes; competition; fluctuations in interest rates; changes in business strategy or development plans; changes in governmental regulation; credit quality; and other factors referenced herein, including, without limitation, under the captions Provision for Credit Losses, Non- Performing Assets, Allowance for Credit Losses, and Liquidity and Interest Rate Sensitivity. Given these uncertainties, the reader is cautioned not to place undue reliance on such forward-looking statements. The Company disclaims any obligation to update any such factors or to publicly announce the results of any revisions to any of the forward-looking statements contained herein to reflect future events or developments. Recent Accounting Developments In February 1997, the FASB issued Statement of Financial Accounting Standards (SFAS) No. 128, "Earnings per share". SFAS 128 establishes standards for computing and presenting basic and diluted earnings per share and is effective for financial statement periods ending after December 15, 1997. Earlier application is not permitted. SFAS 128 replaces the presentation of primary earnings per share with a presentation of basic earnings per share. Diluted earnings per share is computed similarly to fully diluted earnings per share pursuant to SFAS 15. Implementation of SFAS 128 will not have a material adverse effect on the Company's financial condition or results of operations. In February, 1997, the FASB issued SFAS 129, "Disclosure of Information about Capital Structure". This statement was issued in connection with SFAS 128. The statement lists required disclosures about capital structure that had been included in a number of previously existing separate statements and opinions. Whereas SFAS 128 applies only to public entities, the guidance relative to SFAS 129 is applicable to both public and non-public entities. SFAS 129 is effective for financial statements for periods ending after December 15, 1997. Implementation of SFAS 129 will not have a materiel adverse effect on the Company's financial condition or results of operations. In June 1997, the FASB issued SFAS 130, "Reporting Comprehensive Income". Comprehensive income represents the change in equity of the Company during a period from transactions and other events and circumstances from non- owner sources. It includes all changes in equity during a period except those resulting from investments by owners and distributions to owners. SFAS 130 establishes standards for reporting and display of comprehensive income and its components in a full set of general purpose financial statements. It does not, however, specify when to recognize or how to measure items that make up comprehensive income. This statement requires all items that are required to be recognized under accounting standards as components of comprehensive income be reported in a financial statement that is displayed in equal prominence with the other financial statements. It does not require a specific format for that financial statement, but will require the Company to display an amount representing total comprehensive income for the period in that financial statement. SFAS 130 is effective for both interim and annual periods beginning after December 15, 1997. Implementation of SFAS 130 will not have a material adverse effected on the Company's financial condition or results of operations. In June 1997, the FASB issued SFAS 131, "Disclosures about Segments of an Enterprise and Related Information". This statement establishes standards for the way public business enterprises are to report information about operating segments in annual financial statements and requires those enterprises to report selected information about operating segments in interim financial reports issued to shareholders. It also establishes standards for related disclosures about products and services, geographic areas, and major customers. SFAS 131 supersedes SFAS 14, "Financial Reporting for Segments of a Business Enterprise", but retains the requirement to report information about major customers. SFAS 131 is effective for financial statements for periods beginning after December 15, 1997. Implementation of SFAS 131 will not have a materiel adverse effect on the Company's financial condition or results of operations. PART II - OTHER INFORMATION Item 1. LEGAL PROCEEDINGS The Bank is a defendant in various lawsuits arising from the normal course of business. No material legal proceedings to which the Registrant or its subsidiaries is a party have been initiated or terminated during the quarter ended June 30, 1997. There have been no significant developments in any material pending legal proceedings involving the Registrant or its subsidiaries during this same quarter. Item 2. CHANGES IN SECURITIES There have been no changes in the securities of the Registrant during the quarter ended June 30, 1997. Item 3. DEFAULT UPON SENIOR SECURITIES This item is not applicable. Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS At the Annual Meeting of Shareholders held on April 24, 1997, a proposal to elect seventeen directors to the Board of Directors of the Registrant to hold office until the next meeting and until their successors are elected and qualified was approved by shareholders. This proposal received the following votes: For Withheld ----------- --------- Eric W. Chang 5,513,704 17,182 Helen Y. Chen 5,513,704 17,182 Thomas C. T. Chiu 5,513,704 17,182 Stephen Huang 5,513,704 17,182 Chuang-I Lin 5,513,704 17,182 Ko-Yen Lin 5,513,704 17,182 Ting Yung Liu 5,513,704 17,182 Alan Thian 5,513,704 17,182 John Wang 5,513,704 17,182 Kenneth Wang 5,513,704 17,182 Chien-Te Wu 5,513,704 17,182 Julian Wu 5,513,704 17,182 Li-Pei Wu 5,513,704 17,182 Peter Wu 5,513,704 17,182 Ping C. Wu 5,513,704 17,182 Walter Wu 5,513,704 17,182 Chin-Liang Yen 5,513,704 17,182
Item 5. OTHER INFORMATION There are no events to be reported under this item. Item 6. EXHIBITS AND REPORTS ON FORM 8-K a) Exhibits: None. b) Reports on Form 8-K: None. PART III - SIGNATURES 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. GBC Bancorp (Registrant) Dated: __________________ s/ ______________________ Li-Pei Wu, Chairman, President and Chief Executive Officer Dated: ___________________ s/ _______________________ Peter Lowe, Executive Vice President and Chief Financial Officer EX-27 2
9 1,000 6-MOS DEC-31-1997 JAN-01-1997 JUN-30-1997 47,641 0 115,000 0 562,706 54,461 54,596 601,141 14,936 1,424,372 1,258,521 0 27,338 11,250 47,938 0 0 79,325 1,424,372 30,970 21,923 0 52,893 22,199 22,999 29,894 1,000 0 13,612 18,407 18,407 0 0 12,204 1.75 1.74 4.67 9,586 400 20,837 0 16,209 3,622 1,349 14,936 14,936 0 0
-----END PRIVACY-ENHANCED MESSAGE-----