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 September 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:

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 November 1, 2004 there were 14,736,760 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 Disclosures about Market Risk	35

ITEM 4.	Controls and Procedures	35

PART II—OTHER INFORMATION

ITEM 1.	Legal Proceedings	36

ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	36

ITEM 3.	Defaults Upon Senior Securities	36

ITEM 4.	Submission of Matters to a Vote of Security Holders	36

ITEM 5.	Other Information	36

ITEM 6.	Exhibits	37

SIGNATURES		38

PART I—FINANCIAL INFORMATION

ITEM 1.

Unaudited Consolidated Financial Statements

PLACER SIERRA BANCSHARES AND SUBSIDIARIES

UNAUDITED CONSOLIDATED BALANCE SHEET

September 30, 2004 and December 31, 2003

(Dollars in thousands)


	September 30, 2004		December 31, 2003
ASSETS
Cash and due from banks	$	68,711	$	55,776
Federal funds sold		171,243		32,729
Investment securities available-for-sale		72,006		219,302
Federal Reserve Bank and Federal Home Loan Bank stock		9,343		7,286
Loans held for sale		—		67
Loans and leases held for investment, net of allowance for loan and lease losses of $12,762 at September 30, 2004 and $13,343 at December 31, 2003		1,038,237		939,455
Premises and equipment, net		18,782		20,055
Cash surrender value of life insurance		27,686		26,834
Other real estate		657		805
Goodwill		72,731		72,639
Other intangible assets		7,299		8,760
Accrued interest receivable and other assets		11,568		13,238

Total assets	$	1,498,263	$	1,396,946

LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits:
Non-interest bearing	$	424,465	$	378,611
Interest bearing		824,489		758,549

Total deposits		1,248,954		1,137,160
Short-term borrowings		13,248		41,221
Accrued interest payable and other liabilities		12,809		15,525
Junior subordinated deferrable interest debentures		38,146		38,146

Total liabilities		1,313,157		1,232,052
Commitments and contingencies
Shareholders’ equity:
Preferred stock, shares authorized: 25,000,000; issued and outstanding: none at September 30, 2004 and December 31, 2003		—		—
Common stock, no par value, shares authorized: 100,000,000; issued and outstanding: 14,667,142 at September 30, 2004 and 13,683,493 at December 31, 2003		154,822		142,777
Retained earnings		29,587		21,049
Accumulated other comprehensive income		697		1,068

Total shareholders’ equity		185,106		164,894

Total liabilities and shareholders’ equity	$	1,498,263	$	1,396,946

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

PLACER SIERRA BANCSHARES AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENT OF INCOME

For the Three Months and Nine Months Ended September 30, 2004 and 2003

(Dollars in thousands, except per share data)


	Three Months Ended September 30,					Nine Months Ended September 30,
	2004		2003			2004			2003
Interest income:
Interest and fees on loans and leases held for investment	$	15,780	$	14,332		$	45,779		$	43,429
Interest on loans held for sale		6		23			9			192
Interest on deposits with other banks		1		—			1			—
Interest and dividends on investment securities:
Taxable		1,496		2,141			5,498			6,055
Tax-exempt		130		136			394			408
Interest on federal funds sold		388		308			586			951

Total interest income		17,801		16,940			52,267			51,035

Interest expense:
Interest on deposits		1,930		1,886			5,069			6,749
Interest on short-term borrowings		25		24			142			70
Interest on junior subordinated deferrable interest debentures		490		441			1,382			1,320

Total interest expense		2,445		2,351			6,593			8,139

Net interest income		15,356		14,589			45,674			42,896
Provision for (credit to) the allowance for loan and lease losses		—		(146	)		560			(216	)

Net interest income after provision for (credit to) the allowance for loan and lease losses		15,356		14,735			45,114			43,112

Non-interest income:
Service charges and fees on deposit accounts		1,531		1,776			4,710			5,215
Referral and other loan-related fees		808		653			2,132			1,441
Loan servicing income		71		98			242			301
Gain on sale of loans, net		3		118			179			563
Revenues from sales of investment products		125		154			497			498
Gain (loss) on sale of investment securities available-for-sale, net		1		433			(3,335	)		740
Increase in cash surrender value of life insurance		291		311			918			948
Other		334		542			1,999			1,086

Total non-interest income		3,164		4,085			7,342			10,792

Non-interest expense:
Salaries and employee benefits		6,125		5,651			18,789			17,009
Occupancy and equipment		1,747		1,874			5,169			5,458
Merger		177		—			2,319			—
Other		4,199		4,430			12,784			13,578

Total non-interest expense		12,248		11,955			39,061			36,045

Income before income taxes		6,272		6,865			13,395			17,859
Provision for income taxes		2,385		2,676			4,857			6,935

Net income	$	3,887	$	4,189		$	8,538		$	10,924

Earnings per share:
Basic	$	0.27	$	0.31		$	0.61		$	0.81
Diluted	$	0.27	$	0.31		$	0.60		$	0.81

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

PLACER SIERRA BANCSHARES AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENT OF CHANGES IN

SHAREHOLDERS’ EQUITY AND COMPREHENSIVE INCOME

For the Nine Months Ended September 30, 2004 and 2003

(Dollars in thousands)


	2004
	Common Stock			Retained Earnings		Accumulated Other Comprehensive Income			Total Shareholders’ Equity
	Shares	Amount		Retained Earnings		Accumulated Other Comprehensive Income			Total Shareholders’ Equity
Balance, December 31, 2003	13,683,493	$	142,777	$	21,049	$	1,068		$	164,894
Comprehensive income:
Net income					8,538					8,538
Net change in unrealized gain on investment securities available-for-sale, net of tax							(371	)		(371	)

Total comprehensive income										8,167

Stock options exercised, including tax benefit	417,201		4,685							4,685
Initial public offering, net of issuance costs	568,194		7,262							7,262
Stock issued in connection with acquisition of minority interest			92							92
Repurchase of shares of dissenting minority shareholder	(1,746

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