<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
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:33-302132
TRI-STATE, 1ST BANK, INC.
(Exact Name of small business issuer as specified in its charter)
OHIO 34-1824708
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
16924 St. Clair Avenue
P.O. Box 796
East Liverpool, Ohio 43920
(Address of Principal Executive Offices)(Zip code)
(330)385-9200
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the registrant was required to file such
reports), and (2) has been subject to such filing requirement for the
past 90 days.
Yes X No
--- ---
As of May 3, 1999 there were 453,244 shares outstanding of the issuer's
class of common stock.
<PAGE>
TRI-STATE, 1ST BANK, INC.
INDEX TO QUARTERLY REPORT ON FORM 10-QSB
Page
Reference
-------------
Part I - Financial Information
Item 1. Financial Statements (unaudited)
Consolidated Balance Sheet 3
Consolidated Statement of Income 4
Consolidated Statement of Changes in Stockholders'
Equity 5
Consolidated Statement of Cash Flows 6
Notes to Consolidated Financial Statements 7-8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9-13
Part II Other Information 14
Signatures 15
<PAGE>
TRI-STATE 1ST BANK, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
-------- --------
(In thousands)
<S> <C> <C>
ASSETS
Cash and due from banks $ 3,442 $ 4,319
Interest-bearing deposits with other banks 52 80
Federal funds sold 6,000 1,100
Investment securities available for sale 20,005 19,958
Investment securities held to maturity
(estimated market value of $1,737 and $1,765) 1,684 1,700
Loans 28,989 28,939
Less allowance for loan losses 342 340
-------- --------
Net Loans 28,647 28,599
Premises and equipment 1,953 1,850
Accrued interest and other assets 882 697
-------- --------
TOTAL ASSETS $ 62,665 $ 58,303
======== ========
LIABILITIES
Deposits:
Noninterest - bearing demand $ 8,620 $ 8,362
Interest - bearing demand 12,316 12,088
Money market 4,750 4,599
Savings 11,048 10,297
Time 18,180 16,003
-------- --------
Total deposits 54,914 51,349
Securities sold under agreement to repurchase 2,266 1,500
Other borrowings 39 67
Accrued interest and other liabilities 318 309
-------- --------
TOTAL LIABILITIES 57,537 53,225
-------- --------
STOCKHOLDERS' EQUITY
Common stock, no par value; 1,000,000 shares
authorized; 453,244 and 451,869 issued
and outstanding 3,917 3,890
Retained earnings 1,126 990
Accumulated other comprehensive income 85 198
-------- --------
TOTAL STOCKHOLDERS' EQUITY 5,128 5,078
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 62,665 $ 58,303
======== ========
</TABLE>
See accompanying unaudited notes to the consolidated financial statements.
3
<PAGE>
TRI-STATE 1ST BANK, INC.
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------
1999 1998
--------- ---------
(In thousands)
<S> <C> <C>
INTEREST INCOME
Interest and fees on loans $ 667 $ 643
Interest-bearing deposits with other banks 1 1
Federal funds sold 43 57
Investment securities:
Taxable 177 146
Tax exempt 109 70
--------- ---------
Total interest income 997 917
--------- ---------
INTEREST EXPENSE
Deposits 387 360
Other borrowings 20 12
--------- ---------
Total interest expense 407 372
--------- ---------
NET INTEREST INCOME 590 545
Provision for loan losses 15 23
--------- ---------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 575 522
--------- ---------
NONINTEREST INCOME
Service fees on deposit accounts 78 68
Other 52 56
--------- ---------
Total noninterest income 130 124
--------- ---------
NONINTEREST EXPENSE
Salaries and employee benefits 269 231
Occupancy 64 45
Furniture and equipment 42 36
Other 170 165
--------- ---------
Total noninterest expense 545 477
--------- ---------
INCOME BEFORE INCOME TAXES 160 169
Income taxes 23 35
--------- ---------
NET INCOME $ 137 $ 134
========= =========
EARNINGS PER SHARE:
Basic $ 0.30 $ 0.30
Diluted 0.30 0.30
</TABLE>
See accompanying unaudited notes to the consolidated financial statements.
4
<PAGE>
TRI-STATE 1ST BANK, INC.
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Other
Common Retained Comprehensive
Stock Earnings Income Total
---------- ---------- ---------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Balance, December 31, 1998 $ 3,890 $ 989 $ 198 $ 5,077
Comprehensive Income:
Net income 137 137
Other comprehensive income:
Unrealized loss on securities (113) (113)
----------
Total comprehensive income 24
Stock options exercised (1,375
Shares) 27 27
--------- ---------- ---------- ----------
Balance, March 31, 1999 $ 3,917 $ 1,126 $ 85 $ 5,128
========= ========== ========== ==========
</TABLE>
See accompanying unaudited notes to the consolidated financial statements.
5
<PAGE>
TRI-STATE 1ST BANK, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
----------------------
1999 1998
--------- ---------
(In thousands)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 137 $ 134
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 15 23
Depreciation, amortization, and accretion, net 47 38
Decrease (increase) in accrued interest receivable (55) (51)
Increase (decrease) in accrued interest payable 58 62
Other, net (122) 22
--------- ---------
Net cash provided by operating activities 80 228
--------- ---------
INVESTING ACTIVITIES
Investment securities available for sale:
Proceeds from maturities and repayments 1,500 1,494
Purchases (1,729) (2,462)
Investment securities held to maturity:
Proceeds from maturities and repayments 11 126
Net increase in loans (53) (704)
Purchases of premises and equipment (144) (29)
--------- ---------
Net cash used for investing activities (415) (1,575)
--------- ---------
FINANCING ACTIVITIES
Net increase in deposits 3,565 4,775
Increase in securities sold under agreement to
repurchase 766 697
Principal payments on other borrowings (28) (27)
Stock options exercised 27 -
--------- ---------
Net cash provided by financing activities 4,330 5,445
--------- ---------
Increase (decrease) in cash and
Cash equivalents 3,995 (4,098)
CASH AND CASH EQUIVALENTS AT
BEGINNING OF PERIOD 5,499 5,683
--------- ---------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 9,494 $ 9,781
========= =========
</TABLE>
See accompanying unaudited notes to the consolidated financial statements.
6
<PAGE>
Tri-State 1st Bank, Inc. and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
- ---------------------------
The consolidated financial statements of Tri-State 1st Bank, Inc., (the
"Company"), includes its wholly-owned subsidiary, 1st National Community Bank
(the "Bank"). All significant intercompany balances and transactions have
been eliminated.
Basis of Presentation
- ---------------------
The accompanying unaudited consolidated financial statements have been
prepared in accordance with instructions to Form 10-QSB and, therefore, do not
necessarily include all information which would be included in audited
financial statements. The information furnished reflects all normal recurring
adjustments which are, in the opinion of management, necessary for the fair
statement of the results of the period. The results of operations for the
interim periods are not necessarily indicative of the results to be expected
for the full year.
Nature of Operations
- --------------------
Tri-State 1st Bank, Inc. (the "Company") is the parent company for 1st National
Community Bank (the "Bank"). The Company was formed as an Ohio corporation on
April 24, 1996, to own and control all of the capital stock of the Bank, a
national banking association. The Company is a bank holding company which,
under existing laws, is restricted to activities generally relating to
banking. The Company's primary regulator is the Board of Governors of the
Federal Reserve System.
The Bank was chartered as a national banking association in June 1987,
headquartered near East Liverpool, Ohio. Business is conducted through its
four full service offices located in Columbiana County, Ohio, and one full
service office in Hancock County, West Virginia. The Bank operates a full
service community bank, offering a variety of financial services to meet the
needs of its market area. Services include: accepting demand and time
deposits from the general public and together with borrowings and other funds,
using the proceeds to originate secured and unsecured commercial and consumer
loans and provide construction and mortgage loans, as well as home equity and
personal lines of credit. In addition, funds are also used to purchase
investment securities. The Bank's deposits are insured to the legal maximum
amount by the Federal Deposit Insurance Corporation.
Stock Dividend
- --------------
On May 28, 1998, the Board of Directors declared a 10% stock dividend to
stockholders of record on June 26, 1998, payable on July 10, 1998. As a result
of this dividend, 41,069 shares of Tri-State 1st Bank stock were issued.
Fractional shares were paid in cash. All references to the number of average
common shares and per share amounts for 1998 have been restated to reflect the
stock dividend.
7
<PAGE>
NOTE 1 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Recent Accounting Pronouncements
- --------------------------------
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivative Instruments
and Hedging Activities." The statement provides accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, by requiring the recognition of those items as
assets or liabilities in the statement of financial position,
recorded at fair value. Statement No. 133 precludes a held-to-maturity
security from being designated as a hedged item, however, at the date of
initial application of this statement, an entity is permitted to transfer any
held-to-maturity security into the available-for-sale or trading categories.
The unrealized holding gain or loss on such transferred securities shall be
reported consistent with the requirements of Statement No. 115, "Accounting
for Certain Investments in Debt and Equity Securities." Such transfers do not
raise an issue regarding an entity's intent to hold other debt securities to
maturity in the future. This statement applies prospectively for all fiscal
quarters of all years beginning after June 15, 1999.
NOTE 2 EARNINGS PER SHARE
The following table sets forth the comparison of Basic and Diluted earnings
per share. There were no convertible securities which would effect the
numerator in calculating Basic and Diluted earnings per share: therefore, net
income as presented on the Consolidated Statement of Income will be used as
the numerator. The following table sets forth a reconciliation of the
denominator of the Basic and Diluted earnings per share computation.
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
--------- ---------
<S> <C> <C>
Weighted average common shares used
to calculate basic earnings per share 451,884 451,869
Common stock equivalents (stock
options) used to calculate diluted
earnings per share 9,233 1,543
--------- ---------
Weighted average common shares and
Common stock equivalents used to
calculate diluted earnings per share 461,117 453,412
========= =========
</TABLE>
NOTE 3 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
--------- ---------
<S> <C> <C>
Cash paid during the period for:
Interest $349 $310
Income taxes - 15
</TABLE>
8
<PAGE>
Tri-State 1st Bank, Inc. and Subsidiary
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Summary of Financial Condition
- ------------------------------
The consolidated assets of Tri-State 1st Bank were $62,665,000 at March 31,
1999, an increase of $4,362,000 or 7.5% over assets at December 31, 1998. The
asset growth for the first quarter of 1999 was substantiated by the Company's
deposit growth, which increased $3,565,000 or 6.9% during the same period.
Total earning assets which principally include loans, investment securities
and federal funds sold equaled $56,730,000 at March 31, 1999 and represented
an increase of $4,953,000 or 9.6% over total earning assets at December 31,
1998. Total stockholders' equity increased by $50,000 or 1.0% and was mostly
due to net income retained for the quarter offset by a decrease in the net
unrealized gain on investment securities available for sale.
Federal Funds Sold and Investment Securities
- --------------------------------------------
Federal funds sold and investment securities available for sale serve a
primary role in the overall context of balance sheet management by the
Company. The decision to purchase or sell securities is based upon the
current assessment of economic and financial conditions, including the
interest rate environment and other on and off-balance sheet positions.
Federal funds sold at March 31, 1999 were $6,000,000 or 445.5% over the
federal funds sold at year-end 1998. The balance at March 31st is higher than
normal and was attributable to the rapid growth in deposits during the
quarter. This deposit growth was not matched by similar growth in loans and
security investments and therefore placed in federal funds sold awaiting
reinvestment into securities or loans.
The investment securities available for sale portfolio was $20,005,000 at
March 31, 1999 compared to $19,958,000 at December 31, 1998, an increase of
$47,000 or .2%. The increase was attributable to securities purchased
totaling $1,729,000, offset by regular pay downs, calls and maturities
totaling $1,500,000, and to a lessor extent, a decrease in the market value in
the portfolio. Management's overall investment strategy is to invest funds in
the investment portfolio methodically in order to employ funds not required
for loan demand in a manner which will provide safety, liquidity and improved
earnings potential.
Investment securities held to maturity decreased $16,000 or .9% in the first
quarter of 1999 when compared to the prior year-end. This decrease was
attributable to scheduled principal repayments as there were no additions to
the held to maturity portfolio during the first quarter of 1999.
Loans
- -----
Loans receivable at March 31, 1999 were $28,989,000 and represented an
increase of $50,000 or .17% when compared to December 31, 1998. Total loans
originated for the quarter approximated $4,100,000 but were offset by a
notable amount of pay-offs experienced by the Bank during the same period.
While the Bank maintains competitive rates, many consumers are taking
advantage of the current interest rate environment and refinancing their
current debts at lower rates. It is Management's desire to grow the loan
portfolio without sacrificing quality or negatively impacted earnings with
much lower yielding loans. In mid-1998, the bank hired a Business
Development Officer to assist in new loan originations. Management will
continue to focus on new loan origination efforts throughout 1999.
Allowance for Loan Losses
- -------------------------
The Company's allowance for loan losses was $342,000 at March 31, 1999
compared to $340,000 at December 31, 1998. This represents a $2,000 or .6%
increase over December 31, 1998. Constituting the increase was a $15,000 loan
loss provision charged to operations during the first quarter of 1999 offset
by net charge-offs of $13,000.
9
<PAGE>
Allowance for Loan Losses (Continued)
- ------------------------------------
The following table illustrates the activity in the allowance for loan losses:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
1999 1998
--------- ---------
<S> <C> <C>
Balance, beginning of period $ 340 $ 309
Charge-offs:
Real estate loans - 5
Installment loans 15 13
Commercial loans - -
--------- ---------
Total charge-offs 15 18
--------- ---------
Recoveries:
Real estate loans - -
Installment loans 2 1
Commercial loans - -
--------- ---------
Total recoveries 2 1
--------- ---------
Net charge-offs 13 17
--------- ---------
Provision charged to operations 15 23
--------- ---------
Balance, end of period $ 342 $ 315
========= =========
</TABLE>
The Company believes that the allowance for loan losses at March 31, 1999 of
$342,000 is adequate to cover losses inherent in the portfolio as of such
date. However, there can be no assurance that the Company will not sustain
losses in future periods, which could be substantial in relation to the size
of the allowance at March 31, 1999.
Non-Performing Assets
- ---------------------
On March 31, 1999, non-performing loans, which are comprised of commercial and
consumer loans contractually past due 90 days or more as to interest or
principal payments but not on non-accrual status because of collateral
considerations or collection status, and non-accrual commercial loan types
which are not considered impaired, amounted to $201,000, an increase of
$22,000 or 12.3% from December 31, 1998 totals. There were 6 loans classified
as non-performing, 3 of which are secured by real estate and have a combined
loan balance of $172,000 or 85.6% of the total non-performing loans.
The following presents the non-performing assets at March 31, 1999, and
December 31, 1998.
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
---------- ----------
(In thousands)
<S> <C> <C>
Non-accrual loans $ - $ -
Loans past due 90 days or more 201 179
Restructured loans - -
---------- ----------
Total non-performing loans 201 179
Other real estate owned - -
---------- ----------
Total non-performing assets $ 201 $ 179
========== ==========
Non-performing loans as a percentage
of total loans .70% .62%
Non-performing assets as a percentage
of total assets .32% .31%
Non-performing assets as a percentage
of allowance for loan losses 58.78% 52.65%
</TABLE>
<PAGE>
Deposits
- --------
Deposits continue to be 1st National Community Bank's primary source for
funding its earning assets. The Bank offers a wide variety of products
designed to attract and retain its customers. Total deposits increased
$3,565,000 or 6.94% when compared to total deposits at December 31, 1998. The
increase resulted from a general across-the-board growth of all types of
deposits. The overall growth in deposits during the first quarter of 1999
corresponds to the addition of the New Cumberland and Wal-Mart offices as well
as 1st National Community Bank's ongoing commitment to provide exceptional
deposit services at a competitive rate.
Borrowings
- ----------
The Company from time to time uses various funding sources other than deposits
to provide the funds necessary for the loan and investment securities
portfolios. Total borrowings, which consist of repurchase agreements and
advances with the Federal Home Loan Bank of Cincinnati, increased $738,000 or
47.1% at March 31, 1999 from year-end 1998. Securities sold under repurchase
agreements increased $766,000 or 51.1%. Other borrowings decreased $28,000 or
41.8% as a result of scheduled principal and interest pay-downs on two
advances with the Federal Home Loan Bank of Cincinnati. Both advances are
scheduled to mature in mid 1999.
Summary of Earnings
- -------------------
Net income for the three months ended March 31, 1999 was $137,000 or $0.30 per
basic and diluted shares. This compares to net income of $134,000 or $0.30
per basic and diluted share amounts earned in the first quarter of 1998. The
increase in net income for 1999 was achieved through increases in net interest
income and noninterest income, offset by increases in noninterest expenses.
Interest Income
- ---------------
Interest income on loans increased $24,000 or 3.7% during the first three
months of 1999 when compared to the same prior year period. This increase was
a result of a $1,586,000 or 5.8% increase in the average loan balance
outstanding during the 1999 period offset by a slight decrease on the yield
earned.
Interest income on federal funds sold decreased $14,000 or 24.6% during the
first quarter of 1999 when compared to the first quarter of 1998. This
decrease was a result of a $756,000 or 18.1% decrease in the average balance
outstanding during the 1999 period as well as a 48 basis point decrease in the
yield earned.
Interest income earned on investment securities increased during the first
three months of 1999 by $70,000 or 32.4% from the same prior year period. This
increase was a result of an increase of $3,661,000 or 21.1% in the average
balance outstanding as well as a slight increase in the yield earned on the
investment portfolio.
Interest Expense
- ----------------
Interest expense on deposits during the first quarter of 1999 increased
$27,000 or 7.5% over the same prior year period. This increase was due to a
$4,746,000 or 11.4% increase in total average interest-bearing deposits
outstanding offset by a decrease of 10 basis points in the cost of funds paid
on these deposits during the same period.
Interest expense on repurchase agreements and other borrowings increased
$8,000 or 66.7% in the first quarter of 1999 when compared to the same prior
year period. This increase was due to an increase of $886,000 or 71.9% in the
average balance of borrowed funds outstanding, offset by a decrease in the
rate paid on these funds.
11
<PAGE>
Net Interest Income
- -------------------
Net interest income is the amount that interest income generated by earning
assets, including securities and loans, exceeds interest expense associated
with interest-bearing liabilities, including deposits and borrowed funds. Net
interest income for the first quarter of 1999 totaled $590,000, an increase of
$45,000, or 8.3%, over the same prior year period. The increase in net
interest income was the result of an increase in Tri-State's average earning
assets offset by lessor increases in the average balance and cost of funds on
interest-bearing liabilities.
Provision and Allowance for Loan Losses
- ---------------------------------------
The provision for loan losses charged to operations in the first quarter of
1999 was $15,000, a decrease of $8,000 or 34.8% from the prior year period.
The amount of the provision for both periods was based on such factors as the
credit risks inherent in the loan portfolio, increase in the balance of the
loan portfolio outstanding and Management's ongoing analysis of the adequacy
of the allowance for loan losses.
Noninterest Income
- ------------------
Total noninterest income increased $6,000 or 4.8% in the first quarter of 1999
compared to the same prior year period. Other income decreased $4,000 or 7.1%.
Service fees on deposit accounts increased $10,000 or 14.7% relating to the
increase in the number of deposit accounts serviced by the bank.
Noninterest Expense
- -------------------
Total salary and employee benefits increased $38,000 or 16.5% in the first
quarter of 1999. Salaries and wages increased primarily due to the hiring of
additional personnel throughout the past twelve months ended March 31, 1999,
and to a lessor extent, normal merit increases relating to existing employees.
Total full-time equivalent employees increased by 26% from March 31, 1998 to
March 31, 1999 as a result of increased staffing level needs and the opening
of the new Wal-Mart in-store branch. Total employee benefit costs also
increased in the first quarter of 1999 with much of the increase stemming from
increased health insurance costs.
Net occupancy expense increased $19,000 or 42.2% in the first quarter of 1999
and was primarily associated with the addition of the Wal-Mart in-store branch
office as well as an overall general increase in occupancy costs.
Furniture and equipment expense increased $5,000 or 13.5% in the first quarter
of 1999 when compared to the same prior year period. This increase is
attributable to increases in capital investments relating to new equipment and
furniture, and resulted in higher depreciation costs.
Other expenses increased $6,000 or 3.7%, in the first three months of 1999 due
to increases in overall general and administrative expenses such as,
stationery and printing, postage and telephone costs and MAC expenses.
The provision for income tax was $23,000 in the first quarter of 1999 compared
to $35,000 in the same prior year period. This represents a decrease of
$12,000 or 34.3% and is due to an increase in tax exempt income.
12
<PAGE>
Liquidity
- ---------
The liquidity of a banking institution reflects its ability to provide funds
to meet loan requests, to accommodate the possible outflows of deposits and to
take advantage of interest rate market opportunities. It requires continuous
analysis by management in order to match the maturaties of short-term loans
and investments with the various types of deposits and borrowings. Bank
liquidity is normally considered in terms of the nature and the mix of the
Bank's sources and uses of funds.
Management is not aware of any known trends, events or uncertainties that
would have a material effect on the liquidity, capital resources or operations
of the Corporation. Management is not aware of any current recommendations by
the regulatory authorities, which, if implemented, would have a material
effect on the liquidity, capital resources or operations of the Company.
Year 2000 Compliance
- ------------------
As a financial institution holding company, Tri-State is highly dependent upon
computers and computer programs and the accuracy of these computer programs is
critical to Tri-State's operations. The approach of the year 2000 presents
the possibility that the Bank or its customers, suppliers or correspondent
banks may be subject to errors caused by computer programs not correctly
recognizing the year 2000 and making inaccurate calculations.
The Company has been actively working on the Year 2000 computer problem and
has established an overall integral plan to address system-related Year 2000
issues. The plan calls for either the modification to, or replacement of some
of the Company's business system applications. The Company in conjunction
with its vendors, has tested all of its mission critical systems and has
required representations from its vendors that the products are or will be
Year 2000 compliant. The Company has given Year 2000 activities highest
priority throughout 1998 and 1999 and is scheduled to have all major systems
ready for the Year 2000 by mid 1999. In addition, the Company has established
a contingency and business resumption plan in the unlikely event that the
systems tested do not, in fact, operate properly when the year 2000 does
arrive. The business resumption plan focuses on steps needed to maintain the
Bank's customer accounts, deposit and loans, as well as accounting systems on
a manual basis, if needed, to ensure business continuation while systems are
being corrected.
The ability of the Bank's loan customers to repay their obligations could also
be affected by business interruptions caused by Year 2000 data processing
problems. The Bank has established and put into place an on-going monitoring
system to assess its largest borrowers and their Year 2000 readiness in
relation to their ability to repay their obligations to the Bank.
The Company does not anticipate any significant additional costs to insure
Tri-State's readiness for the Year 2000 beyond regularly scheduled software
and hardware upgrades.
13
<PAGE>
TRI-STATE 1ST BANK, INC.
FORM 10-QSB
OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in rights of the Company's security holders
None
Item 3. Defaults by the Company on its senior securities
None
Item 4. Results of votes of security holders
None
Item 5. Other information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27 Financial Data Schedule, filed herewith
(b) Reports on Form 8-K
None
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned and thereunto duly authorized.
Tri-State 1st Bank, Inc.
(Registrant)
Date: By: /s/ Charles B. Lang
----------------------------------
May 3, 1999 Charles B. Lang
President and Chief Executive Officer
Date: By: /s/ Keith R. Clutter
----------------------------------
May 3, 1999 Keith R. Clutter
Secretary
15
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1999
<CASH> 3,442
<INT-BEARING-DEPOSITS> 52
<FED-FUNDS-SOLD> 6,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 20,005
<INVESTMENTS-CARRYING> 1,684
<INVESTMENTS-MARKET> 1,737
<LOANS> 28,939
<ALLOWANCE> 342
<TOTAL-ASSETS> 62,665
<DEPOSITS> 54,914
<SHORT-TERM> 2,305
<LIABILITIES-OTHER> 318
<LONG-TERM> 0
0
0
<COMMON> 3,917
<OTHER-SE> 1,211
<TOTAL-LIABILITIES-AND-EQUITY> 62,665
<INTEREST-LOAN> 667
<INTEREST-INVEST> 286
<INTEREST-OTHER> 44
<INTEREST-TOTAL> 997
<INTEREST-DEPOSIT> 387
<INTEREST-EXPENSE> 407
<INTEREST-INCOME-NET> 590
<LOAN-LOSSES> 15
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 545
<INCOME-PRETAX> 160
<INCOME-PRE-EXTRAORDINARY> 160
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 137
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
<YIELD-ACTUAL> 4.48
<LOANS-NON> 0
<LOANS-PAST> 201
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 340
<CHARGE-OFFS> 15
<RECOVERIES> 2
<ALLOWANCE-CLOSE> 342
<ALLOWANCE-DOMESTIC> 342
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
