U.S. SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-QSB
(Mark One)
|X| Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act
of 1934 for the quarterly period ended September 30, 2000.
| | Transition Report Under Section 13 or 15(d) of the Exchange Act for the
transition period from ____ to _____
Commission File Number 0-20899
FIRST LANCASTER BANCSHARES, INC.
-----------------------------------
(Exact Name of Small Business Issuer as Specified in its Charter)
DELAWARE 61-1297318
----------------------------- ---------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
208 LEXINGTON STREET, LANCASTER, KENTUCKY 40444-1131
----------------------------------------------------
(Address of Principal Executive Offices)
(859) 792-3368
-----------------------------------------------------------------
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 requirements for the past 90 days. Yes X No
--- ---
As of November 2, 2000, the issuer had 840,328 shares of Common Stock issued and
outstanding.
Transitional Small Business Disclosure Format (check one):
Yes No X
--- ---
<PAGE>
CONTENTS
PART 1. FINANCIAL INFORMATION PAGE
--------------------- ----
Item 1. Financial Statements
Consolidated Balance Sheets as of September
30, 2000 (unaudited) and June 30, 2000 2
Consolidated Statements of Income and Comprehensive
Income for the Three Months Ended September 30, 2000
and 1999 (unaudited) 3
Consolidated Statements of Cash Flows for the Three Months
Ended September 30, 2000 and 1999 (unaudited) 4
Notes to Consolidated Financial Statements 5-7
Item 2. Management's Discussion and Analysis or Plan of Operation 8-11
PART II. OTHER INFORMATION
-----------------
Item 1. Legal Proceedings 12
Item 2. Changes in Securities and Use of Proceeds 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
EXHIBIT 27 14
1
<PAGE>
FIRST LANCASTER BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
ASSETS SEPTEMBER 30, JUNE 30,
2000 2000
(Unaudited)
<S> <C> <C>
Cash $ 490,414 $ 494,317
Interest-bearing cash deposits in other depository institutions 1,527,161 1,450,316
Investment securities available-for-sale, at market value (amortized cost
$24,158 at September 30, 2000 and June 30, 2000) 1,333,768 999,216
Mortgage-backed securities, held to maturity 239,457 255,488
Income tax receivable -- 45,633
Investments in nonmarketable equity securities, at cost 847,900 832,500
Loans receivable, net 50,680,606 49,373,865
Real estate acquired by foreclosure 1,127,292 952,333
Accrued interest receivable 380,545 341,453
Office property and equipment, at cost, less accumulated depreciation 387,848 393,538
Other assets 110,546 82,548
------------- -------------
Total assets $ 57,125,537 $ 55,221,207
============= =============
LIABILITIES
Savings accounts and certificates $ 28,323,959 $ 29,078,551
Advance payments by borrowers for taxes and insurance 38,373 29,976
Accrued interest payable 86,032 72,003
Federal Home Loan Bank advances 15,208,503 12,835,361
Accounts payable and other liabilities 417,326 421,557
Income tax payable 12,450 --
Deferred income tax payable 284,074 168,160
------------- -------------
Total liabilities 44,370,717 42,605,608
------------- -------------
Common stock owned by ESOP subject to put option 371,732 386,949
------------- -------------
STOCKHOLDERS' EQUITY
Preferred stock, 500,000 shares authorized
Common stock, $.01 par value;
3,000,000 shares authorized; 783,388 and 780,087 shares
issued and outstanding at September 30, 2000 and June 30, 2000, respectively 9,588 9,588
Additional paid-in capital 9,205,681 9,204,136
Treasury stock (137,782 and 138,338 shares at September 30, 2000
and June 30, 2000, respectively) (1,785,194) (1,793,951)
Unearned employee stock ownership plan shares (376,421) (403,871)
Common stock owned by ESOP subject to put option (371,732) (386,949)
Accumulated comprehensive income 864,343 643,538
Retained earnings, substantially restricted 4,836,823 4,956,159
------------- -------------
Total stockholders' equity 12,383,088 12,228,650
------------- -------------
Total liabilities and stockholders' equity $ 57,125,537 $ 55,221,207
============= =============
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
2
<PAGE>
FIRST LANCASTER BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
for the three months ended September 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
-------------- -----------------
<S> <C> <C>
Interest on loans and mortgage-backed securities $ 1,116,864 $ 965,193
Interest and dividends on investments and deposits in
other depository institutions 43,487 38,897
------------- -----------
Total interest income 1,160,351 1,004,090
------------- -----------
Interest on savings accounts and certificates 400,954 375,557
Interest on other borrowings 238,547 121,619
------------- -----------
Total interest expense 639,501 497,176
------------- -----------
Net interest income 520,850 506,914
Provision for loan losses 10,000 10,000
------------- -----------
Net interest income after provision for loan losses 510,850 496,914
------------- -----------
Non-interest income:
Service charges and fees 8,944 9,951
Other 1,031 1,138
------------- -----------
Total non-interest income 9,975 11,089
Non-interest expenses:
Compensation 120,076 96,577
Employee retirement and other benefits 61,876 64,799
State franchise taxes 13,478 13,725
SAIF deposit insurance premium 13,219 10,207
Loss on real estate acquired by foreclosure 7,667 7,626
Occupancy expense 19,543 17,857
Data processing 23,922 16,708
Other 84,285 73,338
------------- -----------
Total non-interest expenses 344,066 300,837
------------- -----------
Income before income taxes 176,759 207,166
Provision for income taxes 60,248 70,092
------------- -----------
Net income 116,511 137,074
Other comprehensive income, net of income tax:
Unrealized gain (loss) on securities available for sale
arising in period 220,805 (97,701)
------------- -----------
Comprehensive income $ 337,316 $ 39,373
============= ===========
Weighted shares outstanding for basic earnings
per share 781,273 832,882
Basic earnings per share $ 0.15 $ 0.16
Weighted shares outstanding for diluted earnings
per share 789,763 845,005
Diluted earnings per share
$ 0.15 $ 0.16
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE>
FIRST LANCASTER BANCSHARES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
for the three months ended September 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
2000 1999
-------------- ---------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 116,511 $ 137,074
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation 11,061 8,359
Provision for loan losses 10,000 10,000
Stock dividend, Federal Home Loan Bank stock (15,400) (13,900)
Deferred income taxes 2,167 34,776
Net loan origination fees 325 (6,140)
Employee Stock Ownership Plan benefit expense 28,995 20,248
Management Retirement Plan benefit expense 25,288 27,053
Loss on sale of real estate acquired by foreclosure -- --
Change in assets and liabilities:
Accrued interest receivable (39,092) 51,600
Other assets (27,998) (3,158)
Accrued interest payable 14,029 3,011
Accounts payable and other liabilities (21,934) 26,679
Income tax payable 58,083 35,315
------------- --------------
Net cash provided by operating activities 162,035 330,917
------------- --------------
Cash flows from investing activities:
Improvements on real estate acquired by foreclosure (125,000) --
Purchase of property and equipment (5,371) (17,435)
Mortgage-backed securities principal repayments 16,031 22,054
Net (increase) decrease in loans receivable (1,367,025) 333,337
------------- -------------
Net cash (used in) provided by investing activities (1,481,365) 337,956
------------- --------------
Cash flows from financing activities:
Net decrease in savings accounts and certificates (754,592) (898,370)
Net increase in advance payments by borrowers for taxes and insurance 8,397 5,951
Purchase of treasury stock -- (172,500)
Dividends paid (234,675) (250,430)
Federal Home Loan Bank advances 2,700,000 662,500
Federal Home Loan Bank advances principal repayments (326,858) (502,097)
------------- --------------
Net cash provided by (used in) financing activities 1,392,272 (1,154,946)
------------- -------------
Net increase (decrease) in cash and cash equivalents 72,942 (486,073)
Cash and cash equivalents at beginning of period 1,944,633 2,705,622
------------- --------------
Cash and cash equivalents at end of period $ 2,017,575 $ 2,219,549
============= ==============
Supplemental disclosure of non-cash investing and financing activities:
Unrealized gain (loss) on securities available for sale, net of deferred tax
liability (benefit) of $113,747 and ($50,331) at September 30, 2000 and
1999, respectively $ 220,805 $ (97,701)
Renewed Federal Home Loan Bank advances $ 6,900,000 $ 2,250,000
Real estate owned through foreclosure $ 49,959 --
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE>
FIRST LANCASTER BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. GENERAL:
The accompanying unaudited consolidated financial statements of First
Lancaster Bancshares, Inc. and Subsidiary (the Company) have been
prepared in accordance with the instructions for Form 10-QSB and
therefore do not include certain information or footnotes necessary for
the presentation of complete consolidated financial statements in
accordance with generally accepted accounting principles. However, in the
opinion of management, the consolidated financial statements reflect all
adjustments (which consist of normal, recurring accruals) necessary for a
fair presentation of the results for the unaudited periods. The results
of the operations for the three months ended September 30, 2000 are not
necessarily indicative of the results which may be expected for the
entire year. The consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and the
notes thereto for the year ended June 30, 2000.
2. INVESTMENT SECURITIES:
Investment securities are summarized as follows:
<TABLE>
<CAPTION>
GROSS GROSS ESTIMATED
AMORTIZED UNREALIZED UNREALIZED MARKET
SEPTEMBER 30, 2000 COST GAINS LOSSES VALUE
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Available-for-Sale Equity Securities:
Federal Home Loan Mortgage Corporation
Common stock - 24,672 shares $ 24,158 $ 1,917,158 $ (607,548) $ 1,333,768
========== =========== ========= ===========
JUNE 30, 2000
Available-for-Sale Equity Securities:
Federal Home Loan Mortgage Corporation
Common stock - 24,672 shares $ 24,158 $ 1,582,606 $ (607,548) $ 999,216
========== =========== ========= ===========
</TABLE>
3. ALLOWANCE FOR LOAN LOSSES:
An analysis of the changes in the loan loss allowance for the three
months ended September 30 follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED
2000 1999
------------- --------------
<S> <C> <C>
Balance at beginning of period $ 331,445 $ 551,000
Provision charged to operations 10,000 10,000
Loans charged off (5,197) (120,000)
----------- ------------
Balance at end of period $ 336,248 $ 441,000
=========== ===========
</TABLE>
Nonaccrual loans amounted to $228,930 and $314,167 at September 30, 2000
and June 30, 2000, respectively.
5
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, continued
4. FEDERAL HOME LOAN BANK ADVANCES:
Federal Home Loan Bank advances at September 30, 2000 and June 30, 2000 are
as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
2000 2000
------------ ---------
DATE OF INTEREST
ISSUE YEAR OF MATURITY AMOUNT AMOUNT RATE
<S> <C> <C> <C> <C>
1/31/95 1/30/15 650,000 650,000 6.65
1/28/98 2/01/08 71,915 73,798 6.37
7/02/99 8/01/19 142,268 159,124 6.55
7/30/99 7/28/00 - 500,000 5.96
8/13/99 8/11/00 - 500,000 6.18
8/24/99 8/24/00 - 500,000 6.06
9/20/99 9/20/00 - 750,000 6.12
11/08/99 12/01/04 945,384 963,885 6.50
12/20/99 1/01/03 772,601 787,209 6.93
12/20/99 1/01/05 501,335 506,345 7.08
12/20/99 12/20/00 1,175,000 1,175,000 6.59
3/17/00 9/13/00 - 750,000 6.43
3/24/00 9/20/00 - 2,500,000 6.48
4/21/00 10/18/00 1,000,000 1,000,000 6.57
5/17/00 11/13/00 350,000 350,000 7.06
6/15/00 7/05/00 - 250,000 6.73
6/16/00 9/14/00 - 270,000 7.35
6/16/00 9/14/00 - 1,150,000 6.78
7/5/00 10/03/00 250,000 - 6.69
7/28/00 10/26/00 1,100,000 - 6.75
8/11/00 2/06/01 500,000 - 6.84
8/17/00 12/15/00 550,000 - 6.76
8/24/00 10/23/00 500,000 - 6.70
9/08/00 10/06/00 200,000 - 6.72
9/13/00 11/10/00 750,000 - 6.67
9/14/00 11/13/00 1,150,000 - 6.67
9/20/00 10/20/00 950,000 - 6.87
9/20/00 11/17/00 3,250,000 - 6.87
9/26/00 11/24/00 400,000 - 6.67
--------------- ---------------
$ 15,208,503 $ 12,835,361
=============== ===============
</TABLE>
5. EFFECT OF IMPLEMENTING NEW ACCOUNTING STANDARDS:
On June 15, 1998, the FASB issued SFAS No. 133, "Accounting for Derivative
Instruments and Hedging Activities" (as amended by SFAS No. 137). SFAS No.
133 established a new model for accounting for derivatives and hedging
activities and supersedes and amends a number of existing standards. SFAS
No. 133 is effective for fiscal years beginning after June 15, 2000, but
earlier application is permitted as of the beginning of any fiscal quarters
subsequent to June 15, 1998. Upon the statement's initial application, all
derivatives are required to be recognized in the statement of financial
position as either assets or liabilities and
6
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
5. EFFECT OF IMPLEMENTING NEW ACCOUNTING STANDARDS, CONTINUED:
measured at fair value. In addition, all hedging relationships must be
designated, reassessed and documented pursuant to the provisions in SFAS
No. 133. On July 1, 2000, adoption of SFAS No. 133 did not have a material
financial statement impact on the Company's financial condition or
operating results. The Company does not hold derivative securities.
6. EARNINGS PER SHARE:
<TABLE>
<CAPTION>
For the three months ended September 30, 2000 For the three months ended September 30, 1999
---------------------------------------------- ---------------------------------------------
Income Shares Per Share Income Shares Per Share
(Numerator) (Denominator) Amount (Numerator) (Denominator) Amount
<S> <C> <C> <C> <C> <C> <C>
Basic earnings per share
Income available to common
Shareholders $116,511 781,273 $0.15 $137,074 832,882 $0.16
Effect of dilutive
securities
Stock options -- 28
Management recognition plan 8,490 12,095
Diluted earnings per share
Income available to common
Shareholders plus
assumed Conversions $116,511 789,763 $0.15 $137,074 845,005 $0.16
</TABLE>
There were no preferred dividends that would effect the computation of earnings
per share.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
GENERAL
The Company's consolidated results of operations are dependent primarily on net
interest income, which is the difference between the interest income earned on
interest-earning assets, such as loans and securities, and the interest expense
incurred on interest-bearing liabilities, such as deposits and borrowings. The
Company's operating expenses consist primarily of employee compensation,
occupancy expenses, federal deposit insurance premiums and other general and
administrative expenses. The Company's results of operations are significantly
affected by general economic and competitive conditions, particularly changes in
market interest rates, government policies and actions of regulatory agencies.
FORWARD-LOOKING STATEMENTS
When used in this Form 10-QSB, the words or phrases "will likely result," "are
expected to" "will continue," "is anticipated," "estimate," "project" or similar
expressions are intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
are subject to certain risks and uncertainties including changes in economic
conditions in the Company's market area, changes in policies by regulatory
agencies, fluctuations in interest rates, demand for loans in the Company's
market area, and competition that could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected. The Company wishes to caution readers not to place undue reliance on
any such forward-looking statements, which speak only as of the date made. The
Company wishes to advise readers that the factors listed above could affect the
Company's financial performance and could cause the Company's actual results for
future periods to differ materially from any opinions or statements expressed
with respect to future periods in any current statements.
The Company does not undertake, and specifically disclaims any obligation, to
publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 2000 AND JUNE 30, 2000
The Company's total assets increased approximately $1.9 million, or 3.4%, from
$55.2 million at June 30, 2000 to $57.1 million at September 30, 2000. This
increase was the combined result of several increases within assets. Investment
securities increased $335,000, or 33.5%, due to an increased market value on the
securities. Net loans receivable increased $1.3 million, or 2.6%, from $49.4
million at June 30, 2000 to $50.7 million at September 30, 2000. This increase
was primarily due to the Company's continued focus on loan growth. Real estate
acquired by foreclosure increased $175,000, from $952,000 at June 30, 2000 to
$1.1 million at September 30, 2000, primarily due to capitalization of
construction costs on one of the properties. The Company's total liabilities
increased approximately $1.8 million, or 4.1%, from $42.6 million at June 30,
2000 to $44.4 million at September 30, 2000. This increase was primarily due to
an increase in Federal Home Loan Bank ("FHLB") advances of $2.4 million, or
18.5%, offset slightly by a decrease in deposits of approximately $755,000, or
2.6%. The increase in FHLB advances was primarily used to fund increasing loans.
Accumulated comprehensive income increased $221,000, or 34.3%, due to the
unrealized gain associated with the increased market value of the investment
securities available-
8
<PAGE>
for-sale from June 30, 2000 to September 30, 2000.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000
AND 1999
NET INCOME/LOSS: The Company's net income decreased approximately $20,000, or
15.0%, from $137,000 for the quarter ended September 30, 1999 to $117,000 for
the quarter ended September 30, 2000. This decrease was primarily due to an
increase in non-interest expenses offset slightly by an increase in net interest
income.
NET INTEREST INCOME: Net interest income increased by $14,000, or 2.7%, from
$507,000 for the quarter ended September 30, 1999 to $521,000 for the quarter
ended September 30, 2000. This increase was attributed to an increase in
interest income of $156,000, which was offset by an increase in interest expense
of $142,000. The increase in interest income was caused by a combination of
higher average loan balances and higher average effective rates for these loans.
The increase in interest expense was caused by higher average FHLB advances and
higher average effective rates for FHLB advances and deposits.
INTEREST INCOME: Total interest income increased by $156,000, or 15.6%, to $1.2
million for the quarter ended September 30, 2000 from $1.0 million for the
quarter ended September 30, 1999. This increase was primarily attributable to
interest on loans. Interest on loans increased by $152,000, or 15.7%, during the
quarter ended September 30, 2000, as compared to the quarter ended September 30,
1999. The average loan balance increased from $46.8 million in the quarter ended
September 30, 1999 to $50.7 million in the quarter ended September 30, 2000. The
average effective interest rate earned on these loans also increased
approximately 37 basis points from the quarter ended September 30, 1999 to the
quarter ended September 30, 2000.
INTEREST EXPENSE: Total interest expense increased approximately $142,000, or
28.6%, to approximately $639,000 for the quarter ended September 30, 2000 from
$497,000 for the quarter ended September 30, 1999. Interest on savings accounts
and certificates increased by $25,000, or 6.8%, to $401,000 for the quarter
ended September 30, 2000 from $376,000 for the quarter ended September 30, 1999.
The average deposit balance decreased from $29.4 million in the quarter ended
September 30, 1999 to $28.4 million in the quarter ended September 30, 2000;
however, the average effective rate on certificates of deposit increased from
5.41% to 6.11% for the respective quarters causing the overall increase in this
interest expense. Interest expense on FHLB advances increased by $117,000. This
increase was due to a higher average balance of FHLB advances; which increased
from $8.7 million in the quarter ended September 30, 1999 to $14.3 million in
the quarter ended September 30, 2000. The average effective rate on these FHLB
advances also increased from approximately 5.6% for the quarter ended September
30, 1999 to 6.7% for the quarter ended September 30, 2000. These increases in
average effective rates are parallel to the increase in market interest rates
over the past year.
PROVISION FOR LOAN LOSSES: The Bank recorded loan loss provisions of $10,000 in
the quarters ended September 30, 2000 and 1999. The Bank's provision for loan
losses is based on management's assessment of specific risk and general risk
inherent in the loan portfolio based on all relevant factors and conditions
including the general increases and decreases in the overall loan balance,
historical data, substandard loans and special mention loans. Management
believes the allowance for loan losses as of September 30, 2000 was adequate to
absorb any potential losses in the loan portfolio.
9
<PAGE>
NON-INTEREST INCOME: Total non-interest income decreased approximately $1,000
from $11,000 for the quarter ended September 30, 1999 to $10,000 for the quarter
ended September 30, 2000. This slight decrease was primarily due to a decrease
in service charges and fees on loans. Fewer loan applications were submitted in
the quarter ended September 30, 2000 as compared to the quarter ended September
30, 1999 due to the higher interest rates.
NON-INTEREST EXPENSE: Total non-interest expenses increased by approximately
$43,000, or 14.4%, from $301,000 for the quarter ended September 30, 1999 to
$344,000 for the quarter ended September 30, 2000. This increase was primarily
attributable to increases in compensation, data processing fees and other
expenses. Compensation increased primarily due to a decrease in the deferred
compensation related to loan originations. Data processing fees increased due to
an annual increase in fees from the Company's service provider in 2000 and
additional services being provided related to the ATM machine put into place in
December 1999. Other expenses increased due to fees associated with a consulting
project in the current quarter.
INCOME TAX: The effective tax rates for the quarters ended September 30, 2000
and 1999 were 34.1% and 33.8%, respectively. The provision for income taxes
decreased by $10,000 as a result of the decrease in income before taxes.
OTHER COMPREHENSIVE INCOME: During the quarter ended September 30, 2000, there
was an unrealized gain on securities of $221,000, net of income tax liability.
This gain was in contrast to an unrealized loss on securities of $98,000, net of
income tax benefit, for the quarter ended September 30, 1999. The current
quarter's gain was due to the market price of available-for-sale securities
increasing at September 30, 2000 as compared to the market price at June 30,
2000. In the prior year, the market price decreased.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds are deposits, principal and interest
payments on loans and mortgage-backed securities, proceeds from the sale of
available-for-sale securities, proceeds from maturing debt securities, advances
from the FHLB and other borrowed funds. While scheduled maturities of securities
and amortization of loans are predictable sources of funds, deposit flows and
prepayments on mortgage loans and mortgage-backed securities are greatly
influenced by the general level of interest rates, economic conditions and
competition.
On March 5, 1999, First Lancaster Bancshares, Inc. entered into a line of credit
for $2.5 million to be used for general funding needs. As of September 30, 2000
there had been no draws on this line of credit.
The Bank is required to maintain an average daily balance of liquid assets
(generally cash, certain time deposits, bankers' acceptances, highly rated
corporate debt and commercial paper, securities of certain mutual funds, and
specified United States government, state or federal agency obligations) equal
to 4% of its net withdrawal accounts plus short term borrowings either at the
end of the preceding calendar quarter or on an average daily basis during the
preceding quarter. The Bank is also required to maintain sufficient liquidity to
ensure its safe and sound operation. Monetary penalties may be imposed for
failure to meet liquidity requirements. The average daily percentage of liquid
assets for the quarter ended September 30, 2000 was 5.7%.
10
<PAGE>
At September 30, 2000, the Company had outstanding commitments to originate
first mortgage loans totalling $818,800. The Company anticipates that it will
have sufficient funds to meet its current origination commitments.
The Bank is required by federal regulations to maintain minimum amounts and
ratios of capital. At September 30, 2000, the Bank met all capital adequacy
requirements to which it is subject.
11
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is filed herewith:
Exhibit 27 Financial Data Schedule
(b) No Reports on Form 8-K were filed during the quarter
ended September 30, 2000.
12
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRST LANCASTER BANCSHARES, INC.
Date: November 2, 2000 /s/ Virginia R.S. Stump
-------------------------------------
Virginia R.S. Stump
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 2, 2000 /s/ Julia G. Taylor
-------------------------------------
Julia G. Taylor, CPA
Chief Financial Officer
(Principal Financial Officer)
13
