UNITED STATES
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 SEPTEMBER 30, 1997
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 0-28106
FIRSTBANCORPORATION, INC.
-------------------------
(Exact name of registrant as specified in its charter)
South Carolina 57-1033905
-------------- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
1121 Boundary Street P.O. Box 2147, Beaufort, S.C. 29901-2147
-------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 803-521-5600
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 [ ]
The number of outstanding shares of the issuer's $.01 par value common stock as
of October 31, 1997 is 690,323.
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INDEX FORM 10-QSB
Part I
Page
Item 1. Financial Statements and Related Notes---------- 3-6
Item 2. Management's Discussion and
Analysis of Financial Condition and
Results of Operations ---------------------------7-13
Part II
Item 1. Legal Proceedings ------------------------------ 14
Item 2. Changes in Securities -------------------------- 14
Item 3. Defaults upon Senior Securities ---------------- 14
Item 4. Submission of Matters to a Vote
of Security Holders --------------------------- 14
Item 5. Other Information ------------------------------ 14
Item 6. Exhibits and Reports on Form 8-K --------------- 14
Signatures ------------------------------------- 15
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PART 1. FINANCIAL INFORMATION
ITEM 1: FINANCIAL STATEMENTS AND RELATED NOTES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
(DOLLARS IN THOUSANDS)
SEPTEMBER 30, DECEMBER 31,
1997 1996
ASSETS
Cash and amounts due from banks $ 2,440 $ 4,721
Interest bearing overnight deposits 4,208 3,150
Interest bearing time deposits with banks 99 199
Securities available for sale 2,278 2,485
Loans available for sale 612 663
Loans 79,814 78,780
Less allowance for loan losses (707) (630)
-------- --------
Net loans 79,107 78,150
------- -------
Premises and equipment 1,286 1,147
Accrued interest receivable 580 502
Real estate owned-acquired through foreclosure 158 228
Deferred organizational costs 126 135
Other assets 398 353
------- -------
Total assets $91,292 $91,733
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits $79,753 $78,300
Federal Home Loan Bank Advances 2,900 5,600
Amounts due depository institutions 98 200
Accrued interest payable 227 119
Advances from borrowers for taxes and insurance 157 76
Other liabilities 395 393
------- -------
Total liabilities $83,530 $84,688
------- -------
Stockholders' Equity
Preferred stock - $.01 par value; shares
authorized - 1,000,000, issued and
outstanding - none
Common stock - $.01 par value; shares
authorized - 3,000,000, issued and
outstanding - 690,323 - 9/30/97;
627,587 - 12/31/96. $ 7 6
Additional paid-in capital 6,256 5,441
Retained earnings 1,507 1,608
Unrealized gain (loss) on securities available-for-
sale, net of applicable deferred income taxes (8) (10)
------- --------
Total stockholders' equity $ 7,762 $ 7,045
------- -------
Total liabilities and stockholders' equity $91,292 $91,733
======= =======
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CONSOLIDATED STATEMENTS OF INCOME FOR THE PERIODS ENDED SEPTEMBER 30, 1997 AND
1996 (UNAUDITED) (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE THREE NINE NINE
MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
9/30/97 9/30/96 9/30/97 9/30/96
Interest income
Interest on mortgage loans $1,147 $1,287 $3,563 $3,717
Interest on other loans 688 416 1,776 1,160
Interest on investments 67 70 196 221
------ ------ ----- ------
Total interest income 1,902 1,773 5,535 5,098
------ ------ ----- ------
Interest expense
Interest on deposits 821 777 2,398 2,324
Interest on FHLB advances 46 59 173 102
------ ------ ----- ------
Total interest expense 867 836 2,571 2,426
------ ------ ------ ------
Net interest income 1,035 937 2,964 2,672
------ ------ ------ ------
Provision for loan losses 60 30 120 132
------ ------ ------ ------
Net interest income after
provision for loan losses 975 907 2,844 2,540
--- ------ ------ ------
Non interest income
Service charges on deposit accounts 157 122 417 327
Other non interest income 132 68 303 232
------ ------ ------ ------
Total non interest income 289 190 720 559
Non interest expense
Compensation and benefits 419 399 1,224 1,136
Occupancy 131 108 378 323
Data processing 29 39 106 116
Other non interest expense 239 659 680 1,078
------- ------ ------ ------
Total non interest expense 818 1,205 2,388 2,653
------- ------- ------ ------
Income (loss) before income taxes 446 (108) 1,176 446
Income tax expense (benefit) 170 (32) 448 181
------- ------- ------ ------
Net income (loss) $ 276 $ (76) $728 $265
======= ======= ====== ======
Net income (loss) per primary share $ 0.37 $(0.11) $ 0.97 $0.36
======= ======= ====== =====
Net income (loss) per fully
diluted share $ 0.37 $(0.11) $ 0.97 $0.36
======= ======= ====== =====
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CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE PERIODS ENDED
SEPTEMBER 30, 1997 AND 1996 (UNAUDITED)
NINE MONTHS NINE MONTHS
(DOLLARS IN THOUSANDS) ENDED ENDED
9/30/97 9/30/96
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 728 $ 265
Adjustments to reconcile net income to cash
provided by operating activities:
Depreciation and amortization 193 136
Provision for loan losses 120 132
Gain on sale of loans held for sale (85) 0
(Gain) loss on sale of foreclosed property 1 (50)
Property acquired through foreclosure (43) (37)
Decrease (increase) in interest receivable (78) (19)
Decrease (increase) in other assets (45) 38
Originations of loans sold to investors (6,644) (5,493)
Proceeds from loans sold to investors 6,780 5,493
Increase (decrease) in accrued interest payable 108 46
Increase (decrease) in other liabilities 2 (658)
------- --------
Net cash provided by operating activities 1,037 (147)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of securities available for sale (94) (24)
Maturities of securities available for sale 100 0
Maturities of time deposits 100 0
Principal repayments of mortgage-backed securities 205 282
Purchase of Federal Home Loan Bank/Federal Reserve
Bank stock and dividends received 0 (70)
Loans originated or acquired, net (1,094) (7,316)
Capital expenditures (321) (130)
Proceeds from sales of real estate owned 112 530
------- -------
Net cash used for investing activities (992) (6,728)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in non interest bearing demand
accounts 364 658
Increases (decrease) in Now, Money Market and
Savings accounts 982 822
(Increase) decrease in certificates of deposit, net 107 33
Proceeds from Federal Home Loan Bank Advances 10,250 10,500
Repayment of Federal Home Loan Bank Advances (12,950) (5,950)
(Decrease) increase in amounts due to depositories (102) 49
Increase in advances from borrowers for taxes
and insurance 81 104
Proceeds from stock options exercised 0 18
-------- --------
Net cash provided by financing activities (1,268) 6,234
-------- --------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS (1,223) (641)
CASH & CASH EQUIVALENTS, BEGINNING OF PERIOD 7,871 5,546
------- -------
CASH & CASH EQUIVALENTS, END OF PERIOD $6,648 $ 4,905
======= =======
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS
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NOTES TO FINANCIAL STATEMENTS (UNAUDITED)
FOR THE PERIOD ENDED SEPTEMBER 30, 1997
1. On October 31, 1995, FirstBank, N.A. ("Bank"), (formerly the Savings Bank of
Beaufort County, FSB) reorganized as a wholly-owned subsidiary of
FirstBancorporation, Inc. ("Company"). Aa a result of the reorganization, each
issued and outstanding share of common stock, $5.00 par value per share, of the
Bank was converted into one share of common stock, $.01 par value per share, of
the Company. On April 15, 1997, Firstbank began operations of First Securities
Corporation for the purpose of selling mutual funds and other alternative
investment products to customers in its market area. First Securities
Corporation is a wholly owned subsidiary of the Firstbank. First Securities
offers mutual funds and other alternative investments to customers within the
Bank's market area. FirstBancorporation's principal business is its investment
in the Bank and therefore, the assets and liabilities of the company on a
consolidated basis are substantially those of the Bank and its subsidiary.
2. The unaudited interim financial statements reflect all adjustments which are,
in the opinion of management, necessary to a fair presentation of the results
for the reported interim periods. Such adjustments are of a normal recurring
nature. The interim financial statements, including related notes, should be
read in conjunction with the financial statements for the year ended December
31, 1996 appearing in the 1996 annual report of FirstBancorporation, Inc. The
results of operations for the periods ended September 30, 1997 are not
necessarily indicative of the results of operations for the full year.
3. Earnings Per Share - Primary earnings per share are based on the weighted
average number of shares outstanding, giving retroactive effect to stock
dividends and the assumed exercise of grants under stock option plans which are
exercisable within five years. The number of shares outstanding for prior
periods have been restated to give effect to prior stock dividends which should
have reduced the exercise price of the stock options. Fully diluted earnings per
share assume the exercise of all grants under the stock option plan. Primary and
fully diluted earnings per share are based on 738,578 shares and 738,578 shares
outstanding respectively for the three and nine months ended September 30, 1997.
4. Loan Commitments - At September 30, 1997, the Bank had total unused loan
commitments outstanding of $11,059,000 which were comprised of construction and
commercial unfunded lines of $4,117,000, unfunded consumer lines of credit of
$6,622,000 and letters of credit issued totaling $320,000. In the normal course
of business, the Bank issues loan commitments to customers at market rates of
interest. The Bank's general practice is to obtain investor commitments for
fixed rate loans at the time of commitment. At September 30, 1997, all fixed
rate residential loan commitments were covered by commitments from investors for
sale. At September 30, 1997 commitments to fund new loans totaled $2,122,000 of
which $612,000 were residential mortgage loans to be sold to investors.
5. Statement of Cash Flows - For the purposes of reporting cash flows, cash and
cash equivalents include cash, interest-bearing overnight deposits and other
short-term investments with original maturities of 90 days or less.
6
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Statements included in Management's Discussion and Analysis of
Financial Condition and Results of Operations which are not historical in nature
are intended to be, and are hereby identified as 'forward looking statements for
purposes of the safe harbor provided by Section 21E of the Securities Exchange
Act of 1934, as amended. The Company cautions readers that forward looking
statements, including without limitation, those relating to the Company's future
business prospects, revenues, working capital, liquidity, capital needs,
interest costs, and income, are subject to certain risks and uncertainties that
could cause actual results to differ materially from those indicated in the
forward looking statements, due to several important factors herein identified,
among others, and other risks and factors identified from time to time in the
Corporation's reports filed with the Securities and Exchange Commission.
During the first nine months of 1997, total assets decreased by $441,000
from December 31, 1996. During this period, the Bank's deposits increased by
$1,453,000 and its Federal Home Loan Bank advances decreased by $2,700,000. Real
estate owned at September 30, 1997 totaled $158,000 and consisted of two single
family homes and two residential lots.
The Company had net income for the three month period ended September
30, 1997 of $276,000, or $.37 per share, as compared to a net loss of $76,000,
or $.11 per share, for the third quarter of 1996. The Company had improved net
interest margin of $98,000, higher provision for loan losses of $30,000, higher
non interest income of $99,000 and lower non interest expense of $387,000. The
lower non interest expense resulted from the FDIC/SAIF assessment of $445,000,
pre-tax, levied in the September 30, 1996 quarter.
For the nine month period ending September 30, 1997 total income was
$728,000 or $.97 per share versus $265,000 or $.36 per share for the nine month
period ending September 30, 1996. Net interest income improved by $292,000,
provision for loan losses declined by $12,000 and non interest income increased
by $161,000 during the nine month period ending September 30, 1997. Non interest
expense was lower by $265,000 which included the third quarter FDIC/SAIF
assessment in 1996 of $445,000, pre-tax. See discussion below for earnings
detail.
At September 30, 1997 the Bank's allowance for loan losses totaled
$707,000 or .89% of total loans as compared to $630,000 or .80% of total loans
at December 31, 1996. The Bank reviews its substandard and nonaccrual loans at
least quarterly to estimate losses and makes an assessment of losses based on
historical experience and its assessment of future economic conditions for the
balance of the portfolio by loan category. The Bank's loan portfolio is
concentrated in lower risk (relative to non-residential mortgage loans)
permanent, 1-4 residential first mortgage loans. Such loans totaled $46,927,000
or 58.8% of total loans outstanding at September 30, 1997. Construction loans
outstanding on primarily 1-4 residential properties totaled $7,639,000 or 9.6%;
consumer loans, including open ended home equity loans totaled $8,998,000 or
11.3%; and commercial and all other loans totaled $16,250,000 or 20.3% of total
loans at September 30, 1997.
The following table presents information of past due, nonaccrual loans
and real estate owned for the periods indicated:
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(Dollars in thousands) September 30, December 31,
1997 1996
------------ -----------
90+ days past due, accruing $456 $114
loans
Non accrual loans $285 $390
Other real estate owned $158 $228
The following table presents changes to the allowance for loan losses
for the periods indicated:
(Dollars in thousands) For the nine For the twelve
months ended months ended
September 30, 1997 December 31, 1996
Allowance at beginning of $630 $470
the period
Provision expense 120 162
Net charge-offs 43 2
Allowance at the end of $707 $630
the period
Allowance as a percent of
loans outstanding .89% .80%
ASSET/LIABILITY MANAGEMENT AND LIQUIDITY
Asset/Liability management is the process by which the Bank monitors and
controls the pricing, mix and maturity of its assets and liabilities. An
essential purpose of asset/liability management is to ensure adequate liquidity
and to maintain an appropriate balance between interest sensitive assets and
liabilities. Liquidity management involves managing this mix so that the Bank
can meet its demands for cash in a timely manner. The Bank uses a number of
tools to manage its liquidity including maintaining adequate current asset
levels (particularly cash, cash equivalents and overnight investments), pricing
deposits appropriately and ensuring the availability of sources for borrowed
funds (primarily from the FHLB). Current assets, including cash and due from
accounts and overnight investments decreased approximately $2,281,000 during the
year to date. This, along with deposit growth of $1,453,000 reduced borrowed
funds outstanding by $2,700,000 during the first nine months of the current
year. At September 30, 1997, the Bank had total credit lines of $11 million at
the FHLB-Atlanta to assist in meeting liquidity needs. The interest rates paid
on these borrowings are from time to time higher than the rates generally paid
to deposit customers. Management sees this capacity as a tool in its overall
asset/liability strategy of managing pricing and liquidity.
The Bank extends lines of credit to customers in its normal course of
business for various consumer and commercial needs. As of September 30, 1997 the
Bank had unused commitments outstanding totaling $11,059,000 plus commitments on
residential loans not yet closed of $2,122,000. The Bank's normal cash flows and
available sources of funding have traditionally been adequate to fund
commitments at these levels.
The Bank continues to monitor its interest rate risk through policies
designed to
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match the maturities of interest-earning assets and interest-bearing
liabilities. One measure of the Bank's interest sensitivity is using a static
gap analysis which compares repricing interest-earning assets and
interest-bearing liabilities for specific time intervals. A gap is considered
positive when the amount of interest sensitive assets exceeds the amount of
interest sensitive liabilities. A gap is considered negative when the amount of
interest sensitive liabilities exceeds the amount of interest sensitive assets.
During a period of rising rates, a negative gap would tend to adversely affect
net interest income while a positive gap would tend to result in an increase in
net interest income. During a period of falling rates, a negative gap would tend
to result in an increase in net interest income while a positive gap would tend
to adversely affect net interest income. The following table shows the Bank's
interest sensitivity position at September 30, 1997.
INTEREST SENSITIVITY POSITION
SEPTEMBER 30, 1997 Year 1 Years 2 Years 4 Year 8+ Total
(Dollars in thousands) and 3 thru 7
------ ------- ------- ------- -------
Interest earning assets
Loans $46,439 $19,798 $ 6,309 $ 7,879 $80,425
GNMA MBSs 1,472 0 0 0 1,472
Overnight and other
investments 4,952 0 0 130 5,082
------- ------- ------- ------- -------
Total interest earning assets $52,863 $19,798 6,309 8,009 86,979
Interest Bearing Liabilities
Deposits 63,002 8,822 431 0 72,255
FHLB Borrowings 2,500 0 400 0 2,900
------- ------ ------- ------ -------
Total interest bearing
liabilities 65,502 8,822 831 0 75,155
Asset (liability) Gap
position ($12,639) $10,976 $5,478 $ 8,009 $11,824
========== ======== ======= ======== =======
Cumulative Gap Position ($12,639) ($1,663) $3,815 $11,824
========== ======== ======== =======
Cumulative Gap to Total Earning
Assets (14.53%) (1.91%) 4.39% 13.59%
======== ======= ======= =======
(1) Contractual terms regarding periodic repricing during the loan terms are
used to determine repricing periods. Loans are net of undisbursed portions
of loans in process.
(2) NOW, money market and savings accounts are considered interest-sensitive and
to reprice in the first period.
As of September 30, 1997, the Bank's interest-earning assets that
reprice within one year totaled $52,863,000 while interest-bearing liabilities
repricing within one year totaled $65,502,000. This resulted in a negative gap
position of $12,639,000 or 14.53% of total interest-earning assets.
9
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YIELDS EARNED AND RATES PAID
The following table is a comparison of the three months ended September
30, 1997 and 1996.
AVERAGE BALANCES AND YIELDS EARNED VERSUS RATES PAID
QUARTER ENDED SEPTEMBER 30, 1997 COMPARED TO 1996
(Dollars in thousands)
Average Interest Earned Annualized
Balance or Paid Yield/Rate
For the quarter ended September 30,
1997 1996 1997 1996 1997 1996
---- ---- ---- ---- ---- ----
Assets
Interest-earning assets
Loans, loans held for sale $82,830 $79,765 $1,835 $1,703 8.86% 8.54%
Investments 3,750 4,116 67 70 7.15% 6.80%
------- ------- ------ ------ ------ ------
Total earning assets/
Income earned 86,580 83,881 1,902 1,773 8.79% 8.45%
Non-earning assets 5,441 5,384
------- -------
Total assets $92,021 $89,265
======= =======
Liabilities
Interest bearing deposits $72,206 $71,113 $ 821 $ 777 4.56% 4.38%
Borrowings 2,973 4,012 46 59 6.21% 5.90%
------- ------- ------ ------ ------ ------
Interest bearing deposits
and borrowings/expense 75,179 75,125 867 836 4.63% 4.46%
Non-interest-bearing 9,207 7,316
Liabilities
Stockholders' Equity 7,635 6,824
------- -------
Total Liabilities and
Stockholders' Equity $92,021 $89,265
======= =======
Net interest income $1,035 $ 937
====== =====
Interest Rate Spread (1) 4.16% 3.99%
Net yield on average
interest earning assets (1) 4.78% 4.47%
(1) Net interest income is the difference between interest income and interest
expense. Interest rate spread is the difference between the average rate on
earning assets and the average rate on interest bearing liabilities. Net yield
on average interest earning assets is net interest income divided by total
interest earning assets.
Interest income for the quarter ending September 30, 1997 was $129,000
greater than that of the same quarter last year and is primarily attributable to
an increase in average interest earning assets of $2,699,000 and an increase in
the yield earned of .34% during the current quarter. Interest expense increased
by $31,000 during the current quarter as average interest bearing liabilities
increased by $5,400 and rate paid increased by .17%. The higher rate paid on
interest bearing liabilities in the current quarter resulted from a higher rate
paid on deposits. Net interest income (interest income less interest expense)
for the current quarter was $98,000 greater than net interest income for the
quarter ended September 30, 1996 as a result of the combined effects of the
higher yield, higher level of interest earning assets and a higher net yield on
earning assets. For the September 30, 1997 quarter, total interest bearing
liability cost increased as a result
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of higher rates paid on deposits and borrowings. Net yield on earning assets
increased during the September 30, 1997 quarter as non interest bearing deposit
sources increased over those of the prior year's quarter. During the first nine
months of 1997, the Company's net interest income increased by $304,000 over the
same period of the previous year.
NON INTEREST INCOME
Other non interest income is listed in the table below.
Non interest income
(Dollars in thousands)
3 months 3 months 9 months 9 months
9/30/97 9/30/96 9/30/97 9/30/96
------- ------- ------- -------
Deposit account charges $157 $122 $417 $327
Loan fees 109 45 221 126
Rental income 11 13 28 33
Other income 12 10 54 73
-- -- -- --
Total $289 $190 $720 $559
==== === ==== ====
During the three month period ended September 30, 1997, total non interest
income was $289,000 as compared to $190,000 during the same 1996 period. Non
interest income in the current quarter consisted primarily of service charges on
deposit accounts of $157,000 as compared to $122,000 in the second quarter of
1996. Loan fee income includes gains on the sale of loans to investors
(servicing released premiums and fees allowed as income when a loan is sold to
an investor) which totaled $42,000 in the third quarter of 1997 versus $22,000
in the third quarter of 1996. First Securities Corporation, a wholly owned
subsidiary of FirstBank, began operation in the second quarter of 1997. During
the September 30, 1997 quarter First Securities Corporation had a loss of
$9,000.
For the nine month period ending September 30, 1997 non interest income
totaled $720,000 versus $559,000 for the nine months ending September 30, 1996.
Deposit Service fees were higher by $90,000 during the current year as a result
of higher volumes of NOW and DDA accounts. Loan fees were higher by $95,000.
These increases were offset in part by higher gains on the sale of real estate
owned of $32,000 in the first nine months of 1996.
NON INTEREST EXPENSES
Other non interest expenses for the periods ended September 30, 1997 and
September 30, 1996 are compared and detailed in the table below.
(Dollars in thousands)
3 Months 3 Months 9 months 9 months
Ended Ended Ended Ended
9/30/97 9/30/96 9/30/97 9/30/96
-------- -------- --------- --------
Other Expenses
Compensation and Benefits $ 419 399 1,224 1,136
Occupancy 131 108 378 323
Marketing 23 18 54 47
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Data Processing 29 39 106 116
FDIC Insurance 12 489 36 573
Professional Fees 19 20 77 83
Supplies and Printing 23 19 77 51
Telephone and Postage 28 28 89 77
Other Misc. Expenses 134 85 347 247
-------- -------- ------- -------
Total Other Expenses 818 1,205 2,388 2,653
======== ======== ======== ========
Other non interest expenses decreased by $387,000 during the quarter ended
September 30, 1997 as compared to the quarter ended September 30, 1996. During
the current period data processing costs declined as a result of a change in
data processing service bureaus. Other miscellaneous expense increased as the
Bank began to out-source its existing deposit proof operations. FDIC insurance
was lower due to the one-time assessment in 1996 of $445,000, pre-tax. Normal
quarterly FDIC insurance charges declined by $32,000 during the September 30,
1997 quarter.
For the nine months ending September 30, 1997 total non interest expense
decreased $265,000. The 1996 FDIC/SAIF assessment was offset by an increase in
compensation and benefits of $88,000 due to increased staffing levels and
general salary increases; increased occupancy expense of $56,000; supplies and
printing cost of $26,000 due to expenses associated with the first quarter data
processing conversion; and increased other miscellaneous expense of $28,000 due
to out-sourcing the Bank's deposit proof functions.
CAPITAL RESOURCES
For regulatory purposes, the Bank is required to maintain a minimum level of
capital based upon the risk related composition of its loan portfolio. This
risk-based capital requirement requires that the Bank maintain capital at a
minimum 8% level of its regulatory defined risk weighted assets. The Bank may
not declare or pay a cash dividend or repurchase any of its capital stock, if
the effect would cause the stockholders' equity of the Bank to be reduced below
its capital requirements. As of September 30, 1997, the Bank met all of its
risk-based capital requirements and met the definition of a "well capitalized
institution" under the OCC's regulation entitled Prompt and Corrective Action.
The table below outlines the capital ratios of the Bank under the capital
regulations of the Office of the Comptroller of the Currency and the dollar
amounts of capital maintained by the Bank at September 30, 1997.
At 9/30/97
----------
Total Risk-Based Capital $ 8,263,000
Risk-Based Capital/Risk Weighted Assets 12.80%
Tier 1 Risk-Based Capital $ 7,556,000
Tier 1 Risk-Based Capital/Risk Weighted
Assets 11.70%
Tangible Equity Capital $ 7,443,000
Tangible Equity Capital/Total Assets 8.09%
Total equity for the Company at September 30, 1997 was $7,762,000 or 8.50% of
total assets outstanding.
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IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS
EARNINGS PER SHARE. SFAS No.128, "Earnings per Share," issued in February
1997, establishes standards for computing and presenting earnings per share
("EPS") and applies to entities with publicly-held common stock or potential
common stock. It replaces the presentation of primary EPS with a presentation of
basic EPS and requires the dual presentation of basic and diluted EPS on the
face of the income statement. SFAS No. 128 is effective for the financial
statements for the periods ending after December 15, 1997. SFAS No. 128 requires
restatement of all prior period EPS data presented. The impact of its adoption
is not expected to be material to the Company.
DISCLOSURE OF INFORMATION ABOUT CAPITAL STRUCTURE. SFAS No. 129, "Disclosure
of Information About Capital Structure, " establishes standards for disclosing
information about an entity's capital structure and applies to all entities.
SFAS No. 129 continues the previous requirements to disclose certain information
about an entity's capital structure found in Accounting Principles Board ("APB")
Opinions No. 10 "Omnibus Opinion-1966," and No. 15, "Earnings Per Share," and
SFAS No. 47, "Disclosure of Long-Term Obligations, " for entities that were
subject to those standards. SFAS No. 129 contains no change in disclosure
requirements for entities that were previously subject to the requirements of
APB Opinions Nos. 10 and 15 and SFAS No. 47. The adoption of the provisions of
SFAS No. 129 is not expected to have a material impact on the Company.
COMPREHENSIVE INCOME. SFAS No. 130, "Reporting Comprehensive Income," issued
in July 1997, establishes standards for reporting and presenting of
comprehensive income and its component (revenues, expenses, gains and losses) in
full set of general-purpose financial statements. It requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is presented with
the same prominence as other financial statements. SFAS No. 130 requires that
companies (i) classify items of other comprehensive income by their nature in a
financial statement and (ii) display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of the statement of financial condition. SFAS No.
130 is effective for fiscal years beginning after December 15, 1997.
Reclassification of financial statements for earlier periods provided for
comprehensive purposes is required.
DISCLOSURE ABOUT SEGMENTS. SFAS No. 131, "Disclosure About Segments of an
Enterprise and Related Information," issued in June 1997, establishes standards
for disclosure about operating segments in annual financial statements and
selected information in interim financial reports. It also establishes standards
for related disclosures about products and services, geographic areas, and major
customers. SFAS No. 131 supersedes SFAS No. 14, "Financial Reporting for
Segments of a Business Enterprise." SFAS No. 131 becomes effective for the
Company's fiscal year beginning after December 31, 1997, and requires that
comparative information from earlier years be restated to conform to its
requirements. The adoption of the provisions of SFAS No. 131 is not expected to
have a material impact on the Company.
13
<PAGE>
<PAGE>
PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- --------------------------
There were no material legal proceedings pending or settled during the quarter
in which the Company or the Bank was a party.
ITEM 2. CHANGES IN SECURITIES
- ------------------------------
There were no changes made in the rights of security holders or in the
securities of the Company during the quarter.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- ----------------------------------------
The Company has not issued any instruments of indebtedness which constitute
securities.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- ------------------------------------------------------------
There were no matters of the Company that were submitted to a vote of security
holders.
ITEM 5. OTHER INFORMATION
- --------------------------
There were no matters of the Company which required reporting.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
On September 24, 1997 the Company filed on Form 8-K to report the Company's
preliminary plans for the formation of a de-novo national bank subsidiary in
Columbia, South Carolina.
14
<PAGE>
<PAGE>
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.
FirstBancorporation, Inc.
DATED: November 11, 1997 /s/JAMES A SHUFORD, III
----------------- ------------------------
James A. Shuford, III
Chief Executive Officer
DATED: November 11, 1997 /s/JAMES L. PATE, III
----------------- ------------------------
James L. Pate, III
Chief Financial Officer
15
<PAGE>
<PAGE>
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