-----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, AzYmCc2R64//6X0nAUgspgJRmEvTdvvBwghNX/z4eRM27Qirg5S8bDjCIlKnYsZ7 AovOubkV6XHxeNkXgjWW2w== 0000910117-00-000061.txt : 20000515 0000910117-00-000061.hdr.sgml : 20000515 ACCESSION NUMBER: 0000910117-00-000061 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000512 FILER: COMPANY DATA: COMPANY CONFORMED NAME: CENTENNIAL BANCORP CENTRAL INDEX KEY: 0000702430 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 930792841 STATE OF INCORPORATION: OR FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-10489 FILM NUMBER: 626948 BUSINESS ADDRESS: STREET 1: BENJAMIN FRANKLIN PLZ STREET 2: ONE SW COLUMBIA ST SUITE 900 CITY: PORTLAND STATE: OR ZIP: 97258 BUSINESS PHONE: 5039735556 MAIL ADDRESS: STREET 1: BENJAMIN FRANKLIN PLZ STREET 2: ONE SW COLUMBIA ST SUITE 900 CITY: PORTLAND STATE: OR ZIP: 97258 FORMER COMPANY: FORMER CONFORMED NAME: VALLEY WEST BANCORP DATE OF NAME CHANGE: 19900812 10-Q 1 PERIOD ENDED MARCH 31, 2000 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM 10-Q (Mark One) /X/ Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended March 31, 2000 -------------- OR / / Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 For the transition period from to ---------- ---------- Commission File Number 0-10489 ----------- CENTENNIAL BANCORP (Exact name of registrant as specified in its charter) OREGON 93-0792841 (State of Incorporation) (I.R.S. Employer Identification Number) One S.W. Columbia St. Portland, Oregon 97258 (Address of principal executive offices) (Zip Code) (503) 973-5556 (Registrant's telephone number, including area code) 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 latest practicable date: 19,712,312 shares as of April 30, 2000. 2 CENTENNIAL BANCORP FORM 10-Q MARCH 31, 2000 INDEX ----- Page PART I - FINANCIAL INFORMATION Reference - ------------------------------ --------- Condensed Consolidated Balance Sheets as of March 31, 2000 and December 31, 1999 4 Condensed Consolidated Statements of Income for the three months ended March 31, 2000 and 1999 5 Condensed Consolidated Statements of Changes in Shareholders' Equity for the three months ended March 31, 2000 and 1999 6 Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2000 and 1999 7 Notes to Condensed Consolidated Financial Statements 8 Management's Discussion and Analysis of Financial Condition and Results of Operations: Overview 13 Material Changes in Financial Condition 14 Material Changes in Results of Operations 15 Market Risk 16 Liquidity and Capital Resources 16 Effects of the Year 2000 17 PART II - OTHER INFORMATION - --------------------------- Item 6 - Exhibits and Reports on Form 8-K 19 Signatures 20 3 CENTENNIAL BANCORP CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)
March 31, December 31, 2000 1999 ------------- ------------- ASSETS - ------ Cash and cash equivalents: Cash and due from banks $ 35,682,367 $ 29,934,856 Federal funds sold 1,130,000 -- ------------ ------------ Total cash and cash equivalents 36,812,367 29,934,856 Securities available-for-sale 59,176,181 59,358,757 Mortgage loans held for sale 5,467,552 6,155,343 Loans, net 624,846,682 587,507,784 Federal Home Loan Bank stock 5,557,182 5,468,800 Premises and equipment, net 15,927,719 15,911,497 Other assets 21,083,369 22,400,675 ------------ ------------ $768,871,052 $726,737,712 ============ ============ LIABILITIES AND SHAREHOLDERS' EQUITY - ------------------------------------ Liabilities: Deposits: Demand $110,448,117 $106,113,028 Interest-bearing demand 266,131,022 246,690,606 Savings 22,083,876 33,320,788 Time 216,563,782 186,917,061 ------------ ------------ Total deposits 615,226,797 573,041,483 Short-term borrowings 70,081,950 74,553,967 Accrued interest and other liabilities 5,672,820 4,813,501 ------------ ------------ Total liabilities 690,981,567 652,408,951 Shareholders' equity: Preferred stock -- -- Common stock, 19,709,982 issued and outstanding (19,645,891 at December 31, 1999) 30,601,308 30,390,824 Retained earnings 48,878,567 45,624,007 Accumulated other comprehensive loss (1,590,390) (1,686,070) ------------ ------------ Total shareholders' equity 77,889,485 74,328,761 ------------ ------------ $768,871,052 $726,737,712 ============ ============
See accompanying notes. 4 CENTENNIAL BANCORP CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
Three Months Ended March 31, -------------------------- 2000 1999 ----------- ---------- INTEREST INCOME Interest and fees on loans $16,933,751 $11,655,136 Interest on investment securities 945,935 1,173,474 Other interest income 7,293 65,255 ---------- ---------- Total interest income 17,886,979 12,893,865 INTEREST EXPENSE Interest on deposits 4,937,332 3,662,862 Interest on short-term borrowings 1,193,162 170,318 ---------- ---------- Total interest expense 6,130,494 3,833,180 ---------- ---------- NET INTEREST INCOME 11,756,485 9,060,685 Loan loss provision 750,000 500,000 ---------- ---------- Net interest income after loan loss provision 11,006,485 8,560,685 NONINTEREST INCOME Service charges 378,815 321,870 Other 290,007 185,666 Net gains on sales of mortgage loans 196,320 375,356 Net gains on sales of securities -- 165,806 ---------- --------- Total noninterest income 865,142 1,048,698 NONINTEREST EXPENSES Salaries and employee benefits 4,173,515 3,277,367 Premises and equipment 979,507 739,186 Legal and professional 150,583 131,438 Advertising 231,118 143,029 Amortization of goodwill 172,107 21,447 Other 924,017 702,108 ---------- ---------- Total noninterest expenses 6,630,847 5,014,575 ---------- ---------- Income before income taxes 5,240,780 4,594,808 Provision for income taxes 1,986,220 1,635,050 ---------- ---------- NET INCOME $3,254,560 $2,959,758 ========== ========== Earnings per share of common stock: Basic $ .17 $ .15 Diluted $ .16 $ .15 Weighted average shares outstanding: Basic 19,661,578 19,546,536 Diluted 20,111,786 20,345,523
See accompanying notes. 5
CENTENNIAL BANCORP CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (Unaudited) Accumulated Other Total Comprehensive Number of Common Retained Comprehensive Shareholders' Income Shares Stock Earnings Income/(Loss) Equity ------ ------ ----- -------- ------------- ------ Balance at December 31, 1998 19,484,114 $29,690,949 $33,517,242 $508,950 $63,717,141 Comprehensive Income: Net Income $2,959,758 2,959,758 2,959,758 Other comprehensive income, net of tax: Unrealized loss on available-for-sale securities (31,624) (31,624) (31,624) Reclassification adjustment for net gains on sales of securities included in net income (106,116) (106,116) (106,116) ---------- Comprehensive Income $2,822,018 ========== Stock options exercised 97,068 216,667 216,667 Tax benefit of stock options exercised 176,619 176,619 ---------- ----------- ----------- -------- ----------- Balance at March 31, 1999 19,581,182 $30,084,235 $36,477,000 $371,210 $66,932,445 ========== =========== =========== ======== =========== Balance at December 31, 1999 19,645,891 $30,390,824 $45,624,007 $(1,686,070) $74,328,761 Comprehensive Income: Net Income $3,254,560 3,254,560 3,254,560 Other comprehensive income, net of tax: Unrealized loss on available-for-sale securities 95,680 95,680 95,680 ---------- Comprehensive Income $3,350,240 ========== Stock options exercised 64,091 129,762 129,762 Tax benefit of stock options exercised 80,722 80,722 ---------- ----------- ----------- ------------ ----------- Balance at March 31, 2000 19,709,982 $30,601,308 $48,878,567 $(1,590,390) $77,889,485 ========== =========== =========== ============ ===========
6 CENTENNIAL BANCORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
Three Months Ended March 31, -------------------------- 2000 1999 ------------ ------------ Net cash provided by operating activities $ 6,946,241 $5,060,713 Cash flows from investing activities: Net increase in loans (38,088,898) (10,832,140) Proceeds from investment securities: Maturities 523,613 606,584 Sales -- 15,244,725 Purchases of premises and equipment (427,226) (356,750) ----------- ----------- Net cash provided by (used in) investing activities (37,992,511) 4,662,419 Cash flows from financing activities: Net increase in deposits 42,185,314 4,262,860 Net decrease in short-term borrowings (4,472,017) (7,713,055) Proceeds from issuance of common stock 210,484 393,286 ----------- ----------- Net cash provided by (used in) financing activities 37,923,781 (3,056,909) ----------- ----------- Net increase in cash and cash equivalents 6,877,511 6,666,223 Cash and cash equivalents at beginning of period 29,934,856 41,841,367 ----------- ----------- Cash and cash equivalents at end of period $36,812,367 $48,507,590 =========== ===========
See accompanying notes. 7 CENTENNIAL BANCORP NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation --------------------- The interim condensed consolidated financial statements include the accounts of Centennial Bancorp, a bank holding company ("Bancorp"), and its wholly owned subsidiaries, Centennial Bank ("Bank") and Centennial Mortgage Co. ("Mortgage Co."). The Bank is an Oregon state-chartered bank which provides commercial banking services. The Mortgage Co. provides a variety of residential and commercial real estate financing services. The interim condensed consolidated financial statements are unaudited, but include all adjustments, consisting only of normal accruals, which Bancorp considers necessary for a fair presentation of the results of operations for such interim periods. All significant intercompany balances and transactions have been eliminated in consolidation. The interim condensed consolidated financial statements should be read in conjunction with the consolidated financial statements, including the notes thereto, included in Bancorp's 1999 Annual Report to Shareholders. Certain amounts for 1999 have been reclassified to conform with the 2000 presentation. 8 2. Securities Available-for-Sale ----------------------------- Securities available-for-sale consisted of the following at March 31, 2000 and December 31, 1999: Gross Gross Estimated Amortized Unrealized Unrealized Fair Cost Gains Losses Value ---- ----- ------ ----- March 31, 2000: U.S. Treasuries $ 1,401,394 $ 2,718 $ 8,044 $ 1,396,068 U.S. Government agencies 27,989,416 -- 1,523,138 26,466,278 Obligations of states and political subdivisions 28,472,590 57,857 970,300 27,560,147 Corporate bonds 2,278,658 -- 92,396 2,186,262 Mortgage-backed securities 1,411,673 -- 31,838 1,379,835 Equity securities 188,261 -- 670 187,591 ----------- -------- ---------- ----------- Total $61,741,992 $ 60,575 $2,626,386 $59,176,181 =========== ======== ========== =========== December 31, 1999: U.S. Treasuries $ 1,400,808 $ 4,759 $ 6,325 $ 1,399,242 U.S. Government agencies 27,988,761 -- 1,454,349 26,534,412 Obligations of states and political subdivisions 28,468,534 79,235 1,232,228 27,315,541 Corporate bonds 2,284,118 120 79,123 2,205,115 Mortgage-backed securities 1,936,017 -- 31,570 1,904,447 ----------- ---------- ---------- ----------- Total $62,078,238 $ 84,114 $2,803,595 $59,358,757 =========== ========== ========== =========== 9 3. Loans and Allowance for Loan Losses ----------------------------------- The composition of the loan portfolio was as follows: March 31, December 31, 2000 1999 ------------ ------------ Real estate -- mortgage $141,231,506 $129,220,429 Real estate -- construction 241,213,065 227,387,353 Commercial 231,629,320 219,588,355 Installment 8,656,759 8,409,380 Lease financing 4,941,218 4,867,834 Other 4,084,095 4,198,940 ------------ ------------ 631,755,963 593,672,291 Allowance for loan losses (6,909,281) (6,164,507) ------------ ------------ $624,846,682 $587,507,784 ============ ============ Transactions in the allowance for loan losses were as follows for the three months ended March 31: 2000 1999 ----------- ----------- Balance at beginning of period $6,164,507 $4,450,614 Provision charged to operations 750,000 500,000 Recoveries 3,267 9,893 Loans charged off (8,493) (37,191) ---------- ---------- Balance at end of period $6,909,281 $4,923,316 ========== ========== At March 31, 2000 and December 31, 1999, Bancorp had approximately $7,637,000 and $5,833,000, respectively, in impaired loans. The specific valuation allowance related to these loans was approximately $842,000 and $465,000 at March 31, 2000 and December 31, 1999, respectively. 10 It is Bancorp's policy to place loans on nonaccrual status whenever the collection of all or a part of the principal balance is in doubt. Loans placed on nonaccrual status may or may not be contractually past due at the time of such determination, and may or may not be secured by collateral. Loans on nonaccrual status at March 31, 2000 and December 31, 1999 were approximately $4,238,000 and $579,000, respectively. The increase in nonaccrual totals during the quarter was concentrated in one account which was well secured and subject to an established programmed pay-out. Loans past due 90 days or more on which Bancorp continued to accrue interest were approximately $2,759,000 at March 31, 2000, and approximately $2,163,000 at December 31, 1999. Bancorp had no restructured loans at March 31, 2000 or December 31, 1999. 4. Short-Term Borrowings --------------------- Short-term borrowings consisted of the following: March 31, 2000 December 31, 1999 -------------- ----------------- Securities sold under agreement to repurchase $ 4,139,950 $ 8,213,967 Federal funds purchased 14,200,000 19,600,000 FHLB cash management advance program 30,742,000 25,740,000 FHLB borrowings under promissory notes 21,000,000 21,000,000 ------------ ----------- $70,081,950 $74,553,967 =========== =========== 11 5. Earnings per Share of Common Stock ---------------------------------- A reconcilement of the weighted average shares used to compute basic and diluted earnings per share is as follows: Three Months Ended March 31, ---------------------------- 2000 1999 ---- ---- Weighted average shares outstanding -- basic 19,661,578 19,546,536 Incremental shares from stock options 450,208 798,987 ---------- ---------- Weighted average shares outstanding -- diluted 20,111,786 20,345,523 ========== ========== The weighted average number of common shares outstanding used to calculate earnings per share of common stock and the number of shares outstanding in the accompanying condensed consolidated statements of changes in shareholders' equity reflects the retroactive effect of stock splits and stock dividends. 12 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS THIS QUARTERLY REPORT CONTAINS CERTAIN FORWARD-LOOKING STATEMENTS, WHICH ARE MADE PURSUANT TO THE SAFE HARBOR PROVISIONS OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995. STATEMENTS THAT EXPRESSLY OR IMPLICITLY PREDICT FUTURE RESULTS, PERFORMANCE OR EVENTS ARE FORWARD-LOOKING. IN ADDITION, THE WORDS "ANTICIPATE," "BELIEVE," "INTEND," "EXPECT" AND SIMILAR EXPRESSIONS IDENTIFY FORWARD-LOOKING STATEMENTS. SUCH STATEMENTS ARE SUBJECT TO CERTAIN RISKS AND UNCERTAINTIES THAT COULD CAUSE ACTUAL RESULTS TO DIFFER MATERIALLY FROM THOSE ANTICIPATED. FACTORS THAT COULD CAUSE OR CONTRIBUTE TO SUCH DIFFERENCES INCLUDE, BUT ARE NOT LIMITED TO, THE FOLLOWING: (1) POTENTIAL DELAYS OR OTHER PROBLEMS IN IMPLEMENTING BANCORP'S GROWTH AND EXPANSION STRATEGY; (2) THE ABILITY TO ATTRACT NEW DEPOSITS AND LOANS; (3) INTEREST RATE FLUCTUATIONS; (4) COMPETITIVE FACTORS AND PRICING PRESSURES; (5) GENERAL ECONOMIC CONDITIONS, EITHER NATIONALLY OR REGIONALLY, THAT COULD RESULT IN INCREASED LOAN LOSSES; (6) CHANGES IN LEGAL AND REGULATORY REQUIREMENTS; AND (7) CHANGES IN TECHNOLOGY, AS WELL AS OTHER FACTORS DESCRIBED IN THIS AND OTHER BANCORP REPORTS AND STATEMENTS, INCLUDING, BUT NOT LIMITED TO, EXHIBIT 99.1 TO BANCORP'S FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999, WHICH IS INCORPORATED HEREIN BY REFERENCE. READERS ARE CAUTIONED NOT TO PLACE UNDUE RELIANCE ON THESE FORWARD-LOOKING STATEMENTS, WHICH SPEAK ONLY AS OF THE DATE HEREOF. BANCORP DOES NOT INTEND TO UPDATE ITS FORWARD-LOOKING STATEMENTS. OVERVIEW - -------- Centennial Bancorp, an Oregon corporation, was organized in 1981 as a bank holding company and has two wholly owned subsidiaries: Centennial Bank and Centennial Mortgage Co. Bancorp primarily serves the Portland, Oregon and Eugene, Oregon markets. Unless the context clearly suggests otherwise, references in this Quarterly Report to "Bancorp" include Centennial Bancorp and its subsidiaries. At March 31, 2000, Centennial Bank operated 15 full-service and five limited-service branches, including the new full-service Mill Plain Office in Vancouver, Washington, which opened in February 2000. At March 31, 2000, Centennial Mortgage had two Eugene and two Portland-area offices. 13 Bancorp reported net income of $3.3 million, or $.17 per basic share, for the three months ended March 31, 2000. This represented a 10% increase in net income as compared to $3.0 million, or $.15 per basic share, for the three months ended March 31, 1999. The increased earnings primarily reflected the expansion of Bancorp's interest-earning assets and increased net interest income. At March 31, 2000, Bancorp recognized a 34.6% increase in total assets and 33.9% increase in interest-earning assets as compared to March 31, 1999. MATERIAL CHANGES IN FINANCIAL CONDITION - --------------------------------------- Material changes in financial condition for the three months ended March 31, 2000 included continued substantial loan growth, increased cash balances, strong deposit growth and a significant decrease in short-term borrowings. At March 31, 2000, total assets of $768.9 million represented a 5.8% increase from the $726.7 million total at December 31, 1999. Loans and loans held for sale of $630.3 million at March 31, 2000 increased $36.7 million, or 6.2%, as compared to $593.7 million at December 31, 1999, mainly due to commercial and real estate loan growth. Cash and cash equivalents, including cash and due from banks and federal funds sold, increased $6.9 million to $36.8 million at March 31, 2000 as compared to $29.9 million at December 31, 1999. Cash and due from banks can fluctuate significantly on a daily basis due to normal loan and deposit activity, funds transfers and inter-bank clearing of cash items. Federal funds sold represent excess funds, which are sold overnight to other financial institutions, and their levels can also fluctuate significantly on a daily basis. Total deposits increased $42.2 million, or 7.4%, to $615.2 million at March 31, 2000 as compared to December 31, 1999. The increase was centered in time and interest-bearing demand deposits. At March 31, 2000, short-term borrowings totaled $70.1 million, a $4.5 million decrease from the $74.6 million outstanding at December 31, 1999. Although short-term borrowings were the primary support for loan growth during much of the quarter, an acceleration of deposit growth in March allowed the reduced borrowing levels by quarter end. 14 Remaining asset and liability category changes during the first quarter of 2000 were comparatively modest. March 31, 2000 shareholders' equity was $77.9 million, a $3.6 million increase over December 31, 1999. The increase resulted from earnings and the exercise of stock options. MATERIAL CHANGES IN RESULTS OF OPERATIONS - ----------------------------------------- Mainly as a result of continuing loan growth, total interest income increased $5.0 million, or 38.7%, for the quarter ended March 31, 2000 when compared to the quarter ended March 31, 1999. Total interest expense increased $2.3 million, or 59.9%, for the three months ended March 31, 2000 as compared to the same period in 1999. This increase was due to the growth of interest-bearing deposits and substantially higher levels of short-term borrowings. The increase in interest earned, partially offset by the increase in interest expense, served to increase Bancorp's net interest income by $2.7 million, or 29.8%, over the first quarter of 1999. During the three months ended March 31, 2000, Bancorp charged a $750,000 loan loss provision to operations as compared to $500,000 during the three months ended March 31, 1999. The increase in the loss provision was primarily due to the assumed or "inherent" risk of Bancorp's increasing loan totals. At March 31, 2000, Bancorp's allowance for loan losses was $6.9 million, as compared to $6.2 million and $4.9 million at December 31, 1999 and March 31, 1999, respectively. Management believes that the allowance is adequate for potential loan losses, based on management's assessment of various factors, including present delinquent and non-performing loans, past history of industry loan loss experience, and present economic trends impacting the areas and customers served by Bancorp. The allowance is based on estimates, and actual losses may vary from those currently estimated. Noninterest income decreased $183,600 for the three months ended March 31, 2000 as compared to the same period in 1999. The decrease was the result of lower gains on sales of loans and the absence of securities sales during the quarter. 15 Noninterest expense increased $1.6 million during first quarter 2000 as compared to first quarter 1999. The increase, mainly in salaries and benefits, premises and equipment costs and goodwill amortization, was primarily the result of Bancorp's continuing growth and expansion. During the quarter ended March 31, 2000, the provision for income taxes was $2.0 million, an increase of $351,200 over the provision during the quarter ended March 31, 1999. The increase primarily resulted from Bancorp's increased pre-tax income. MARKET RISK - ----------- Market risk is the risk of loss from adverse changes in market prices and rates. Bancorp's primary market risk is the interest rate risk associated with its investing, lending, deposit and borrowing activities. Other types of market risk, such as foreign currency exchange rate risk and commodity price risk, do not materially affect or are not part of Bancorp's normal business activities. Management actively monitors and manages Bancorp's interest rate risk with the overall objective of achieving satisfactory and consistent profitability while maintaining interest rate sensitivity within formal policy guidelines established by the Board of Directors. Bancorp did not experience a material change in market risk at March 31, 2000 as compared to December 31, 1999. LIQUIDITY AND CAPITAL RESOURCES - ------------------------------- Bancorp's principal subsidiary, Centennial Bank, has adopted policies to maintain a relatively liquid position to enable it to respond to changes in the Bank's needs and financial environment. Currently, the Bank's main sources of liquidity are customer deposits, short-term borrowings, loan repayments, sales of loans and net cash provided by operating activities. Although sales of investment securities were a significant funding source in 1999, the investment portfolio is currently a less effective source of immediate liquidity due to unrealized losses resulting from recent interest rate increases. Scheduled loan repayments are a relatively stable source of funds, while deposit inflows and unscheduled loan prepayments, which are influenced by general interest rate levels, interest rates available on other investments, competition, economic conditions and other factors, are not. 16 The Bank maintains, on an unsecured basis, federal funds lines with correspondent banks as a back-up source of temporary liquidity. At March 31, 2000, the Bank had federal funds lines of $42 million available with $14.2 million outstanding. The Bank also maintains a cash management advance line of credit with the Federal Home Loan Bank of Seattle which allows temporary borrowings for liquidity. At March 31, 2000, the line was fully utilized with $30.7 million outstanding. At March 31, 2000, Bancorp's Tier 1 and total risk-based capital ratios under the Federal Reserve Board's ("FRB") risk-based capital guidelines were 9.15% and 10.05%, respectively. The FRB's minimum risk-based capital ratio guidelines for Tier 1 and total capital are 4% and 8%, respectively. At March 31, 2000, Bancorp's capital-to-assets ratio under leverage ratio guidelines was 9.45%. The FRB's current minimum leverage capital ratio guideline is 3%. During the quarter, Bancorp's Board of Directors approved a stock repurchase program authorizing the repurchase of up to 5% of outstanding shares over a two-year period. Repurchase activity began subsequent to quarter end and, at April 30, 2000, a total of 23,500 shares had been repurchased at a cost of approximately $214,000. EFFECTS OF THE YEAR 2000 - ------------------------ Some computers and computer software programs are unable to accurately recognize, for years after 1999, dates which are often expressed as a two digit number. This inability to recognize date information accurately could potentially affect computer operations and calculations, or could cause computer systems to not operate at all. Bancorp is heavily reliant on computers for accounting for customer records and transactions, as well as operating performance. Prior to December 31, 1999, Bancorp initiated and completed a comprehensive Year 2000 audit program, primarily directed by a task force organized by management in early 1997. Bancorp also prepared contingency plans to minimize disruptions to its operations due to Year 2000 issues. Among other criteria, Bancorp's Year 2000 programs were designed to comply with guidance provided by federal banking regulators to financial institutions with respect to becoming Year 2000 compliant. 17 To date, Bancorp has not, nor to management's knowledge has any third party vendor or service provider on which Bancorp relies, experienced any material problems related to the Year 2000. However, Bancorp cannot determine if it will be subject to Year 2000 compliance problems in the future, or if Year 2000 problems have arisen that management has failed to detect. Bancorp will continue to monitor its business applications and maintain contact with significant third parties to resolve any Year 2000 problems that may arise in the future. Management believes that its efforts to achieve Year 2000 compliance and the impact of the Year 2000 problem will not have a material effect on Bancorp's operations. 18 PART II - OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K. - ------------------------------------------ (a) Exhibits 27 Financial Statement Schedule (b) Reports on Form 8-K. None 19 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. CENTENNIAL BANCORP Dated: May 10, 2000 /s/ Richard C. Williams ----------------------------------- Richard C. Williams President & Chief Executive Officer Dated: May 10, 2000 /s/ Michael J. Nysingh ----------------------------------- Michael J. Nysingh Chief Financial Officer EX-27 2 ART. 9 FDS FOR 1ST QUARTER 10-Q
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM CENTENNIAL BANCORP'S CONSOLIDATED FINANCIAL STATEMENTS CONTAINED IN ITS QUARTERLY REPORT ON FORM 10-Q FOR THE PERIOD ENDED MARCH 31, 2000 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 36,812,367 0 1,130,000 0 59,176,181 0 0 631,755,963 6,909,281 768,871,052 615,226,797 70,081,950 5,672,820 0 0 0 30,601,308 47,288,177 768,871,052 16,933,751 945,935 7,293 17,886,979 4,937,332 6,130,494 11,756,485 750,000 0 6,630,847 5,240,780 5,240,780 0 0 3,254,560 .17 .16 0 4,238,000 2,759,000 0 0 6,164,507 8,493 3,267 6,909,281 6,909,281 0 0 INFORMATION NOT CALCULATED FOR INTERIM REPORTS.
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