PLACER SIERRA BANCSHARES - 10-Q Quarterly Report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

x	QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended June 30, 2004

¨	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:

000-50652

PLACER SIERRA BANCSHARES

(Exact name of registrant as specified in its charter)


CALIFORNIA		94-3411134
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification Number)

525 J Street, Sacramento, California		95814
(Address of principal executive offices)		(Zip Code)

(916) 554-4750

(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, as amended 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 ¨ No x

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes ¨ No x

As of September 17, 2004 there were 14,635,995 shares of the registrant’s common stock outstanding.

TABLE OF CONTENTS


		Page
PART I—FINANCIAL INFORMATION

ITEM 1.	Unaudited Consolidated Financial Statements	3

	Unaudited Consolidated Balance Sheet	3

	Unaudited Consolidated Statement of Income	4

	Unaudited Consolidated Statement of Changes in Shareholders’ Equity and Comprehensive Income	5

	Unaudited Consolidated Statement of Cash Flows	6

	Notes to Unaudited Consolidated Financial Statements	7

ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	13

ITEM 3.	Quantitative and Qualitative Disclosure about Market Risk	34

ITEM 4.	Controls and Procedures	34

PART II—OTHER INFORMATION

ITEM 1.	Legal Proceedings	35

ITEM 2.	Changes in Securities	35

ITEM 3.	Defaults Upon Senior Securities	35

ITEM 4.	Submission of Matters to a Vote of Security Holders	35

ITEM 5.	Other Information	36

ITEM 6.	Exhibits and Reports on Form 8-K	36

SIGNATURES		37

PART I—FINANCIAL INFORMATION

ITEM 1.

Unaudited Consolidated Financial Statements

PLACER SIERRA BANCSHARES AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

June 30, 2004 and December 31, 2003

(Dollars in thousands)

(UNAUDITED)


	June 30, 2004			December 31, 2003
ASSETS
Cash and due from banks	$	66,319		$	55,776
Federal funds sold		103,935			32,729
Investment securities available-for-sale		126,097			219,302
Federal Reserve Bank and Federal Home Loan Bank stock		9,294			7,286
Loans held for sale		181			67
Loans and leases held for investment, net of allowance for loan and lease losses of $13,164 at June 30, 2004 and $13,343 at December 31, 2003		990,838			939,455
Premises and equipment, net		19,013			20,055
Cash surrender value of life insurance		27,406			26,834
Other real estate		805			805
Goodwill		72,731			72,639
Other intangible assets		7,787			8,760
Accrued interest receivable and other assets		12,307			13,238

Total assets	$	1,436,713		$	1,396,946

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing	$	404,747		$	378,611
Interest bearing		795,356			758,549

Total deposits		1,200,103			1,137,160
Short-term borrowings		14,422			41,221
Accrued interest payable and other liabilities		14,268			15,525
Junior subordinated deferrable interest debentures		38,146			38,146

Total liabilities		1,266,939			1,232,052
Commitments and contingencies
Shareholders’ equity:
Common stock, no par value; 100,000,000 shares authorized; 13,826,152 and 13,683,493 shares issued and outstanding at June 30, 2004 and December 31, 2003, respectively		144,081			142,777
Retained earnings		25,700			21,049
Accumulated other comprehensive (loss) income		(7	)		1,068

Total shareholders’ equity		169,774			164,894

Total liabilities and shareholders’ equity	$	1,436,713		$	1,396,946

The accompanying notes are an integral part of these unaudited consolidated financial statements.

PLACER SIERRA BANCSHARES AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF INCOME

For the Three Months and Six Months Ended June 30, 2004 and 2003

(Dollars in thousands, except per share data)

(UNAUDITED)


	Three Months Ended June 30,					Six Months Ended June 30,
	2004			2003		2004			2003
Interest income:
Interest and fees on loans and leases held for investment	$	14,930		$	14,379	$	29,999		$	29,097
Interest on loans held for sale		—			82		3			169
Interest and dividends on investment securities:
Taxable		1,790			1,830		4,002			3,914
Tax-exempt		132			136		264			272
Interest on federal funds sold		125			377		198			643

Total interest income		16,977			16,804		34,466			34,095

Interest expense:
Interest on deposits		1,615			2,369		3,139			4,863
Interest on short-term borrowings		28			27		117			46
Interest on junior subordinated deferrable interest debentures		446			392		892			879

Total interest expense		2,089			2,788		4,148			5,788

Net interest income		14,888			14,016		30,318			28,307
Provision for (credit to) the allowance for loan and lease losses		40			240		560			(70	)

Net interest income after provision for (credit to) the allowance for loan and lease losses		14,848			13,776		29,758			28,377

Non-interest income:
Service charges and fees on deposit accounts		1,614			1,791		3,179			3,439
Referral and other loan-related fees		703			408		1,324			788
Loan servicing income		78			92		171			203
Gain on sale of loans, net		106			262		176			445
Revenues from sales of investment products		154			162		372			344
(Loss) gain on sale of investment securities available-for-sale, net		(3,542	)		220		(3,336	)		307
Increase in cash surrender value of life insurance		308			322		627			637
Other		706			274		1,665			544

Total non-interest income		127			3,531		4,178			6,707

Non-interest expense:
Salaries and employee benefits		6,236			5,426		12,664			11,358
Occupancy and equipment		1,735			1,761		3,422			3,584
Merger		2,142			—		2,142			—
Other		4,091			4,443		8,585			9,148

Total non-interest expense		14,204			11,630		26,813			24,090

Income before income taxes		771			5,677		7,123			10,994
Provision for income taxes		300			2,206		2,472			4,259

Net income	$	471		$	3,471	$	4,651		$	6,735

Earnings per share:
Basic	$	0.03		$	0.26	$	0.34		$	0.50
Diluted	$	0.03		$	0.26	$	0.33		$	0.50

The accompanying notes are an integral part of these unaudited consolidated financial statements.

PLACER SIERRA BANCSHARES AND SUBSIDIARIES

CONSOLIDATED STATEMENT OF CHANGES IN

SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

For the Six Months Ended June 30, 2004 and 2003

(Dollars in thousands)

(UNAUDITED)


	2004
	Common Stock				Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
	Shares		Amount		Retained Earnings		Accumulated Other Comprehensive Income (Loss)			Total Shareholders’ Equity
Balance, December 31, 2003	13,683,493		$	142,777	$	21,049	$	1,068		$	164,894
Comprehensive income:
Net income						4,651					4,651
Net change in unrealized gain on investment securities available-for-sale, net of tax								(1,075	)		(1,075	)

Total comprehensive income											3,576

Stock options exercised	144,405			1,206							1,206
Stock issued in connection with acquisition of minority interest				92							92
Repurchase of shares of dissenting minority shareholder	(1,746	)

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