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, 1998
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 843-521-5600
------------
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 outstanding shares of the issuer's $.01 par value common stock as
of November 5, 1998 is 887,637.
1
<PAGE>
<PAGE>
INDEX FORM 10-QSB
Part I
Page
Item 1. Consolidated Financial Statements and Related Notes----------- 3-7
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ---------------------------------- 8-12
Part II
Item 1. Legal Proceedings -------------------------------------------- 13
Item 2. Changes in Securities ---------------------------------------- 13
Item 3. Defaults upon Senior Securities ------------------------------ 13
Item 4. Submission of Matters to a Vote
of Security Holders ------------------------------------------ 13
Item 5. Other Information -------------------------------------------- 13
Item 6. Exhibits and Reports on Form 8-K ----------------------------- 13
Signatures ------------------------------------------------------- 15
Exhibit 27. Financial data schedule------------------------------------ 16
2
<PAGE>
<PAGE>
ITEM 1: FINANCIAL STATEMENTS AND RELATED NOTES
BALANCE SHEETS (UNAUDITED)
(DOLLARS IN THOUSANDS)
AT SEPTEMBER 30, AT DECEMBER 31,
1998 1997
ASSETS
Cash and amounts due from banks $ 2,722 $ 4,127
Interest bearing overnight deposits 13,326 1,969
Securities available-for-sale 4,031 2,182
Loans available-for-sale 1,899 676
Loans 79,807 80,792
Less allowance for loan losses (843) (728)
-------- -------
Net loans 78,964 80,064
-------- -------
Premises and equipment 1,901 1,288
Accrued interest receivable 540 556
Real estate owned-acquired through
foreclosure 23 127
Deferred organizational costs 131 123
Deferred tax assets 291 264
Other assets 396 323
-------- -------
Total assets $104,224 $91,699
======== =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities
Deposits $ 83,783 $77,462
Federal Home Loan Bank advances 4,300 5,050
Other borrowed funds 2,100 0
Amounts due to depository
institutions 638 305
Advances from borrowers for
taxes and insurance 160 55
Accrued interest payable 276 208
Expenses payable 177 173
Other liabilities 682 465
-------- -------
Total liabilities $ 92,116 $83,718
-------- -------
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 - 887,637
- 9/30/98; 690,323 - 12/31/97. $ 9 7
Additional paid-in capital 9,657 6,249
Accumulated other comprehensive
loss: Unrealized loss on
securities available-for-sale,
net of applicable deferred income
taxes (14) (15)
Retained earnings 2,456 1,740
-------- -------
Total stockholders' equity $ 12,108 $ 7,981
-------- -------
Total liabilities and
stockholders' equity $104,224 $91,699
======== =======
3
<PAGE>
<PAGE>
CONSOLIDATED STATEMENTS OF INCOME FOR THE PERIODS ENDED SEPTEMBER 30, 1998
AND 1997 (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
THREE THREE NINE NINE
MONTHS MONTHS MONTHS MONTHS
ENDED ENDED ENDED ENDED
9/30/98 9/30/97 9/30/98 9/30/97
------- ------- ------- -------
Interest income
Interest on mortgage loans $1,052 $1,196 $3,162 $3,674
Interest on other loans 806 688 2,273 1,776
Interest on investments 247 67 440 196
------ ------ ------ ------
Total interest income 2,105 1,951 5,875 5,646
Interest expense
Interest on deposits 844 821 2,489 2,398
Interest on FHLB advances 74 46 123 173
------ ------ ------ ------
Total interest expense 918 867 2,612 2,571
Net interest income 1,187 1,084 3,263 3,075
------ ------ ------ ------
Provision for loan losses 45 60 142 120
------ ------ ------ ------
Net interest income after
provision for loan losses 1,142 1,024 3,121 2,955
Non interest income
Service charges on deposit
accounts 156 157 481 417
Other non interest income 102 83 410 192
------ ------ ------ ------
Total non interest income 258 240 891 609
Non interest expenses
Compensation and benefits 470 419 1,386 1,224
Occupancy 214 131 478 378
Data processing 33 29 95 237
Other non interest expense 340 239 885 549
------ ------ ------ ------
Total non interest expenses 1,057 818 2,844 2,388
Net income before taxes 343 446 1,168 1,176
------ ------ ------ ------
Income tax expense 129 170 452 448
------ ------ ------ ------
Net income $ 214 $ 276 $ 716 $ 728
====== ====== ====== ======
Net income per share-basic $ 0.28 $ 0.40 $ 1.00 $ 1.05
====== ====== ====== ======
Net income per share-diluted $ 0.27 $ 0.38 $ 0.95 $ 1.00
====== ====== ====== ======
4
<PAGE>
<PAGE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDING SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
(UNAUDITED)
(DOLLARS IN THOUSANDS)
Common Common Addi- Retained Accumu- Total
shares Stock tional Earnings lated Stock-
Paid- Other holders'
in Compre- Equity
Capital hensive
Income
(Loss)
Balances at December 31,
1996 627,587 $ 6 $5,441 $1,609 $(10) $7,046
Issuance of 62,736 shares
of stock for 10% stock
dividend 62,736 1 815 (816) -
Comprehensive income:
Net income 728 728
Other comprehensive
income (loss) net of
tax:
Unrealized loss on
securities available
for sale 2 2
------
Comprehensive income 726
------
Balances at September 30,
1997 690,323 $ 7 $6,256 $1,507 $( 8) $7,762
Balances at December 31,
1997 690,323 $ 7 $6,249 $1,740 $(15) $7,981
Comprehensive income:
Net income 716 716
Other comprehensive
income, net of tax:
Unrealized gain on
securities available
for sale 1 1
------
Comprehensive income 716 1 717
------
193,422 shares of
common stock issued at
$18.00 per share 193,422 2 3,480 3,482
Stock offering costs (110) (110)
Stock options 3,892 - 38 38
exercised
Balances at September 30,
1998 887,637 $ 9 $9,657 $2,456 $(14) $12,108
======= === ====== ====== ==== =======
5
<PAGE>
<PAGE>
STATEMENT OF CASH FLOWS FOR THE PERIODS ENDED
SEPTEMBER 30, 1998 AND 1997 (UNAUDITED)
Nine months Nine months
(DOLLARS IN THOUSANDS) Ended Ended
9/30/98 9/30/97
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 716 $ 728
Adjustments to reconcile net income to cash
provided by operating activities:
Provision for loan losses 142 120
Depreciation and amortization 224 193
Decrease(increase) in interest receivable 16 (78)
Decrease (increase) in other assets 201 (279)
Originations of loans sold to investors (19,285) (6,644)
Proceeds from sales of loans to investors 19,285 6,780
Disbursements of loans serviced for others (2,569) (1,787)
Receipts of loans serviced for others 2,494 2,103
(Increase) decrease in real estate loans
held for sale (1,223) 179
Increase in accrued interest payable 68 108
Decrease in expenses payable (4) (70)
Increase (decrease) in other liabilities (58) (316)
-------- -------
Net cash provided by operating activities 7 1,037
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of securities available for sale (4,257) (94)
Maturities and repayments of securities
available for sale 2,408 405
Loans originated or acquired, net 984 (1,094)
Proceeds from the sale of foreclosed
real estate 104 112
Capital expenditures (813) (321)
-------- -------
Net cash used for investing activities (1,574) (992)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in non interest-bearing
demand accounts 414 364
Increases in Now, Money Market and
Savings accounts 6,606 982
Increase (decrease) in certificates of
deposit, net (699) 107
Proceeds from Federal Home Loan Bank advances 5,000 10,250
Repayment of Federal Home Loan Bank advances (5,750) (12,950)
Proceeds from long term debt 2,100 0
Increase in amounts due to depository
institutions 333 (102)
Increase in advances from borrowers for taxes
and insurance 105 81
Common stock subscribed, net of offerning costs 3,372 0
Proceeds from stock options exercised 38 0
-------- -------
Net cash provided by financing activities 11,519 (1,268)
-------- -------
NET INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS 9,952 (1,223)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 6,096 7,871
-------- -------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 16,048 $ 6,648
======== =======
CASH PAID DURING THE PERIOD:
Interest paid on deposits and borrowings $ 2,544 $ 2,463
======== =======
Income tax paid $ 597 $ 441
======== =======
6
<PAGE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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"). As 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 September 1, 1998 the Company opened FirstBank of
the Midlands, N.A.(FBM) after receiving all regulatory approvals. The
Company's principal business is its investment in the two banks.
2. The unaudited interim consolidated 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 consolidated
financial statements, including related notes, should be read in conjunction
with the consolidated financial statements for the year ended December 31,
1997 appearing in the 1997 Annual Report of FirstBancorporation, Inc. The
results of operations for the period ended September 30, 1998 are not
necessarily indicative of the results of operations for the full year.
3. Earnings Per Share - Basic earnings per common share are calculated on the
basis of the weighted average number of shares outstanding during the year.
Diluted earnings per common share include stock options which have been
granted but not exercised. Average basic shares outstanding for the three and
nine month periods of 1998 totaled 757,287 shares and 714,383 shares
respectively. Average diluted shares outstanding for the three and nine month
periods of 1998 totaled 798,804 and 757,161 shares respectively.
4. Loan Commitments - At September 30, 1998, the Bank had total unused loan
commitments outstanding of $12,625,000 which were comprised of construction
and commercial unfunded lines of $5,650,000, unfunded consumer lines of credit
of $6,954,000 and letters of credit issued totaling $21,000. In the normal
course of business, the Bank issues loan commitments to customers at market
rates of interest. The Company's general practice is to obtain investor
commitments for fixed rate loans at the time of commitment. At September 30,
1998, all fifteen to thirty year fixed rate residential loan commitments were
covered by commitments from investors for sale.
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. FirstBank of the Midlands, N.A. was granted regulatory authority to open
for business on September 1, 1998. FBM is located at 1900 Assembly Street,
Columbia, South Carolina. The Company acquired all of the common stock of FBM
for $5.0 million. The acquisition of FBM's common stock was funded from the
proceed of the sale of additional common stock of the Company and a loan with
an unaffiliated commercial bank.
7. On August 31, 1998 proceeds from the common stock offering were released to
the Company which increased the number of shares outstanding to 887,637. Gross
proceeds from the subscription offering totaled $3,481,596. 1998 stock
offering costs which were deducted from capital in connection with this
offering totaled $109,000. In 1997, $7,000 of stock offering costs were
recorded.
7
<PAGE>
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- ------------------------------------------------------------------------
RESULTS OF OPERATIONS.
- ----------------------
Comparison of Financial Condition at September 30, 1998 and December 31, 1997
Total assets increased from $91.7 million at December 31, 1997 to $104.2
million at September 30, 1998. Loans receivable, net, decreased from $80.1
million at December 31, 1997 to $79.0 million at September 30, 1998 primarily
as a result of mortgage loan repayments and prepayments. Cash and cash
equivalents increased from $6.1 million at December 31, 1997 to $16.0 million
at September 30, 1998. Total deposits increased 8.2% from $77.5 million at
December 31, 1997 to $83.9 million at September 30, 1998 primarily as a result
of increases in NOW, savings and money market accounts of $6.6 million,
increases in non interest demand accounts of $.4 million and decreases in
certificate accounts of $.7 million. FHLB borrowings decreased by $.8 million
to $4,300,000 at September 30, 1998 as a result of the increase in deposits
and loan repayments. Long term borrowings increased by $2.1 million in order
to contribute capital towards FirstBank of the Midlands, N.A. Total
stockholders' equity increased 38.0% from $8.0 million at December 31, 1997 to
$12.1 million at September 30, 1998 as a result of retained net income of
$716,000, proceeds of $38,000 received from the exercise of stock options
(2,425 shares at an exercise price of $10.85 per share and 1,467 shares at
$8.18 per share) and the receipt of $3,373,000 of net stock subscription
proceeds. See Note 7 of "Notes to Consolidated Financial Statements" for
discussion of stock subscription proceeds.
Comparison of Operations for the Three Months Ended September 30, 1998 and
1997
Net Income. Net income decreased 22.5% from $276,000 for the three
months ended September 30, 1997 ($0.40 per basic earnings per common share and
$0.38 per share on a diluted basis) to $215,000 for the three months ended
September 30, 1998 ($0.28 per basic earnings per common share and $0.27 per
share on a diluted basis) primarily as a result of a $239,000 increase in non
interest expenses which were primarily the result of start up costs of FBM.
These were offset by a $85,000 increase in non-interest income and a $36,000
increase in net interest income.
Net Interest Income. Net interest income remained stable at $1.2
million for the three months ended September 30, 1998 versus $1.1 million for
the third quarter of 1997. The Company's interest rate spread decreased from
4.39% for the three months ended September 30, 1997 to 4.08% for the same
period in 1998 as the average yield on interest-earning assets decreased from
9.01% for the three months ended September 30, 1997 to 8.61% for the
comparative period in 1998 while the average rate paid on interest-bearing
liabilities decreased from 4.63% for the three months ended September 30, 1997
to 4.53% for the same period in 1998.
Interest income increased from $1,951,000 for the three months ended
September 30, 1997 to $2,105,000 for the three months ending September 30,
1998. Interest expense increased from $867,000 for the three months ended
September 30, 1997 to $918,000 for the same period in 1998 primarily as a
result of higher average deposits and borrowings outstanding.
Provision for Loan Losses. Provisions for loan losses are charges to
earnings to bring the total allowance for loan losses to a level considered
adequate by management to provide for probable known and inherent loan losses
based on management's evaluation of the collectible of the loan portfolio. In
determining the adequacy of the allowance for loan losses, management
considers past loan loss experience, known and inherent risks in the
portfolio, adverse situations that may affect a borrower's ability to repay,
the estimated value of any underlying collateral, and current economic
conditions. Although management uses the best information available, future
adjustments to the allowance may be necessary as a result of changes in
economic, operating, regulatory and other conditions that may be beyond the
Company's control. While the Company maintains its allowance for loan losses
at a level that management considers as adequate to provide for probable known
and inherent losses, there can be no assurance that further additions will not
be made to the allowance for loan losses or that actual losses will not exceed
the estimated amounts.
The provision for loan losses decreased from $60,000 for the three months
ended September 30, 1997 to $45,000 for the three months ended September 30,
1998. Management deemed the decrease necessary because of the decrease in
nonaccrual loans from $429,000 at December 31, 1997 to $204,000 at September
30, 1998 and lower expected losses in specifically cited delinquent loans. At
September 30, 1998, the Company's allowance for loan losses as a percent of
total loans was 1.06%.
Noninterest Income. Noninterest income increased from $240,000 for the
three months ended September 30, 1997 to $258,000 for the same period in 1998
primarily as a result of increased gains on sale of loans sold.
Noninterest Expenses. Noninterest expenses increased 17.8% from $818,000
for the three months ended September 30, 1997 to $1,057,000 for the three
months ended September 30, 1998 primarily as a result of a $51,000 increase in
compensation expense related to salary expense associated with FBM and general
salary increases and a $83,000 increase in occupancy expense attributable to
rent increases on the Beaufort main office lease and expenses related to
quarters for the FBM.
Provision for Income Taxes. The Company pays Federal corporate income
taxes and South Carolina bank taxes. The provision for income taxes decreased
from $170,000 for the three months ended
8
<PAGE>
<PAGE>
September 30, 1997 to $129,000 for the three months ended September 30, 1998
as a result of lower income before income taxes.
Comparison of Operations for the Nine months Ended September 30, 1998 and 1997
Net Income. Net income decreased 1.6% from $728,000 for the nine months
ended September 30, 1997 ($1.05 per basic earnings per common share and $1.00
per share on a diluted basis) to $716,000 for the nine months ended September
30, 1998 ($1.00 per basic earnings per common share and $0.95 per share on a
diluted basis) primarily as a result of a $456,000 increase in non-interest
expense. this was offset by a $188,000 increase in net interest income and a
$282,000 increase in non interest income.
Net Interest Income. Net interest income increased from $3.1 million for
the nine months ended September 30, 1997 to $3.3 million for the nine months
ended September 30, 1998.
Interest income increased to $5,875,000 for the nine months ended
September 30, 1998 from $5,646,000 for the same period in 1997 as a result of
higher levels on investments outstanding. Interest expense increased from
$2,571,000 for the nine months ended September 30, 1997 to $2,612,000 for the
same period in 1998 primarily as a result of higher levels of deposits
outstanding.
Provision for Loan Losses. The provision for loan losses increased from
$120,000 for the nine months ended September 30, 1997 to $142,000 for the nine
months ended September 30, 1998.
Noninterest Income. Noninterest income increased 46.3% from $609,000 for
the nine months ended September 30, 1997 to $891,000 for the same period in
1998 primarily as a result of a $64,000 increase in service charges
attributable to an increased number of deposit accounts, a $162,000 increase
in gains on sale of loans held-for-sale attributable to higher volumes of
loans sold, and a $22,000 increase in gain on mortgage servicing rights
attributable to increased loans sold with servicing retained.
Noninterest Expenses. Noninterest expenses increased 19.1% from
$2,388,000 for the nine months ended September 30, 1997 to $2,844,000 for the
nine months ended September 30, 1998 primarily as a result of a $162,000
increase in compensation expense related to salary expense associated with the
New Bank and general salary increases , a $100,000 increase in occupancy
expense attributable to rent increases on the Bank's main office lease and
expenses related to quarters for the FBM, and a $205,000 increase in other
expenses primarily related to the startup of the Columbia bank.
Provision for Income Taxes. The Company pays Federal corporate income
taxes and South Carolina bank taxes. The provision for income taxes remained
relatively stable at $448,000 for the nine months ended September 30, 1997
versus $452,000 for the nine months ended September 30, 1998 as a result of
similar income before income taxes in both periods.
9
<PAGE>
<PAGE>
ASSET/LIABILITY AND LIQUIDITY MANAGEMENT
INTEREST SENSITIVITY POSITION
SEPTEMBER 30, 1998 Years 4
Year 1 Year 2-3 thru 7 Year 8+ Total
(Dollars in thousands)
Interest-earning assets:
Loans and loans held for
sale $49,643 $18,341 $ 7,601 $ 6,021 $81,606
GNMA MBSs 1,097 0 0 0 1,097
Overnight and other
investments 16,080 0 0 280 16,360
------- ------- ------- ------- -------
Total interest-
earning assets 66,820 18,341 7,601 6,301 99,063
Interest-bearing liabilities:
Deposits 52,926 16,531 5,826 0 75,283
FHLB borrowings/long
term debt 2,200 1,200 3,000 0 6,400
------- ------- ------- ------- -------
Total interest-bearing
liabilities 55,126 17,731 8,826 0 81,683
Asset (liability) gap
position $11,694 $ 610 ($1,225) $ 6,301 $17,380
======= ======= ======= ======= =======
Cumulative gap position $11,694 $12,304 $11,079 $17,380
======= ======= ======= =======
Cumulative Gap to Total
Earning Assets 11.8% 12.4% 11.2% 17.5%
======= ======= ======= =======
(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, regular savings and money marketings accounts are considered
interest-sensitive.
As of September 30, 1998, the Company's interest-earning assets that
reprice within one year totaled $66,820,000 while interest-bearing liabilities
repricing within one year totaled $55,126,000 This resulted in a positive gap
position of $11,694,000 or 11.8% of total interest-earning assets.
10
<PAGE>
<PAGE>
YIELDS EARNED AND RATES PAID
The following table is a comparison of the three months ended September
30, 1998 and 1997.
AVERAGE BALANCES AND YIELDS EARNED VERSUS RATES PAID
QUARTER ENDED SEPTEMBER 30, 1998 COMPARED TO 1997
(Dollars in thousands)
Average Interest Earned Annualized
Balance or Paid Yield/Rate
For the quarter ended September 30,
1998 1997 1998 1997 1998 1997
---- ---- ---- ---- ---- ----
Assets:
Interest-earning
assets
Loans $ 80,626 $ 82,830 $1,858 $1,884 9.22% 9.10%
Investments 17,229 3,750 247 67 5.74% 7.15%
-------- -------- ------ ------ ---- ----
Total earning
assets/
Income earned 97,855 86,580 2,105 1,951 8.61% 9.01%
Non-earning assets 6,036 5,441
-------- --------
Total assets $103,891 $ 92,021
======== ========
Liabilities:
Interest-bearing
deposits $ 76,349 $ 72,206 $ 844 $ 821 4.42% 4.55%
Borrowings 5,000 2,973 74 46 5.93% 6.21%
-------- -------- ------ ------ ---- ----
Interest-bearing
deposits and
borrowings/expense 81,349 75,179 918 867 4.53% 4.63%
Non-interest-bearing
liabilities 12,665 9,207
Stockholders' equity 9,878 7,635
-------- --------
Total Liabilities
and Stockholders'
equity $103,891 $ 92,021
======== ========
Net interest income $1,187 $1,084
====== ======
Interest Rate Spread (1) 4.08% 4.39%
Net yield on average
interest-earning
assets (1) 4.85% 5.01%
(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.
Net interest income increased by $154,000 during the current year's
quarter as a result of the of a higher volume of interest earning assets.
Yield on interest earning assets decreased by .40% during the current year's
quarter and the rate paid on interest bearing liabilities decreased by .20%
resulting in an decrease in the net interest rate spread of .21% over the same
period last year. Total average interest earning assets increased by
$11,275,000 primarily as result of a higher volume of overnight investments
while interest bearing liabilities increased by $6,170,000 from third quarter
1997.
11
<PAGE>
<PAGE>
CAPITAL RESOURCES
For regulatory purposes, each of the Company's banks is required to maintain a
minimum of level of capital based upon the risk related composition of its
loan portfolio. This risk-based capital requirement requires that the each
bank maintain capital at a minimum 8% level of its regulatory defined risk
weighted assets. A bank may not declare or pay a cash dividend or repurchase
any of its capital stock, if the effect would cause the stockholders' equity
to be reduced below its capital requirements. As of September 30, 1998, both
banks met all of risk-based capital requirements and met the definition of a
"well capitalized institution" under the OCC's regulation entitled Prompt and
Corrective Action.
The Company's and subsidiary banks' actual capital ratios are presented in the
following table:
At September 30, 1998 Amount Ratio
Tier 1 Capital ( to
Total Assets):
Consolidated $12,001 12.4%
FirstBank, N.A. 7,803 7.9
FirstBank of the Midlands, N.A. 4,821 81.7
Tier 1 Capital (to
Risk Weighted Assets):
Consolidated $12,001 18.3%
FirstBank, N.A. 7,803 12.3
FirstBank of the Midlands, N.A. 4,821 210.6
Total Capital (to
Risk Weighted Assets):
Consolidated $12,792 19.5%
FirstBank, N.A. 8,595 13.6
FirstBank of the Midlands, N.A. 4,821 210.6
12
<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 was, or the Banks were a party.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
- --------------------------------------------------
A. Changes in Securities: None
B. Use of Proceeds: During the quarter ended September 30, 1998, the Company
completed an offering of securities registered pursuant to the Securities Act
of 1933, as amended. In connection therewith:
1. The effective date of the Registration Statement on Form SB-2, as
amended (File No. 333-48625) ("Registration Statement"),was May 14, 1998.
2. The offering of securities was not underwritten.
3. The class of securities registered pursuant to the Registration
Statement was common stock, $0.01 per value per share. The aggregate amount of
such securities registered was 220,000 shares at an offering price of $18.00
per share, for an aggregate dollar amount of $3,960,000. The offering
terminated on August 31, 1998 with the sale of 193,422 shares at a price of
$18.00 per share.
4. The total offering expenses incurred by the Company were $116,898
none of which none were paid directly or indirectly to directors or officers
of the Company or their associates.
5. The net proceeds of the offering were $3,364,698, of which all were
contributed to the initial capitalization of FirstBank of the Midlands,
National Association. Such use of proceeds did not represent a material change
in the use of proceeds described in the Company's prospectus dated May 14,
1998.
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 submitted to vote of security holders.
ITEM 5. OTHER INFORMATION
- --------------------------
There were no matters of the registrant which required reporting.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- -----------------------------------------
3. Exhibits
3.1--Articles of Incorporation of FirstBancorporation, Inc.
(incorporated by reference to Exhibit 3.1 contained in the Company's
Current Report on Form 8-k dated November 7, 1995)
3.2--Bylaws of FirstBancorporation, Inc. (incorporated by reference
to Exhibit 3.2 contained in the Company's Current Report on form 8-k
dated November 7, 1995)
10.1--Employment Agreement with James A. Shuford, III (incorporated
by reference to Exhibit 10(g) contained in the Company's Annual
Report on Form 10-KSB for the year ended December 31, 1995)
10.2--Employment agreement with James L. Pate, III (Incorporated by
reference on Registration Statement on Form SB-2)
13
<PAGE>
<PAGE>
10.3--Employment Agreement with Richard E. Morgan, Jr. (Incorporated
by reference on Registration Statement on Form SB-2)
10.4--Employment Agreement with F. Wayne Lovelace (Incorporated by
reference on Registration Statement on Form SB-2)
10.5--1996 Stock Option Plan (incorporated by reference to Exhibit A
appended to the Company's 1996 annual meeting proxy statement)
10.6--Qualified Incentive Stock Option Plan (incorporated by
reference to Exhibit 10(b) contained in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1995)
10.7--Amended and Restated Non-Qualified Stock Option Plan
(incorporated by reference to Exhibit 10(c) contained in the
Company's Annual Report on form 10-KSB for the year ended December
31, 1995)
10.8--Non-qualified Stock Option for Robert A. Kerr (incorporated by
reference to Exhibit 10(d) contained in the Company's Annual Report
on Form 10-KSB for the year ended December 31, 1995)
10.9--Lease for Company's main office (incorporated by reference to
Exhibit 10(e) contained in the company's Annual Report on Form
10-KSB for the year ended December 31, 1995)
10.10--Lease for Company's main office (incorporated by reference to
Exhibit 10(e) contained in the company's Annual Report on Form
10-KSB for the year ended December 31, 1995)
10.11--Lease for Columbia, South Carolina Office (Incorporated by
reference on Registration Statement on Form SB-2)
(Note: All other required exhibits are not applicable.)
The Company filed an 8-K which disclosed the commencement of operations of a
de novo bank known as "FirstBank of the Midlands, National Association" and a
term loan agreement of $2.1 million that the Company entered into with
Ameribank, N.A.
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 12, 1998 /s/ James A. Shuford, III
-------------------------------
James A. Shuford, III
Chief Executive Officer
DATED: November 12, 1998 /s/ James L. Pate, III
-------------------------------
James L. Pate, III
Chief Financial Officer
15
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1998
<CASH> 2722
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 13326
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 4031
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 79807
<ALLOWANCE> (843)
<TOTAL-ASSETS> 104224
<DEPOSITS> 83782
<SHORT-TERM> 100
<LIABILITIES-OTHER> 1934
<LONG-TERM> 6300
0
0
<COMMON> 9
<OTHER-SE> 12098
<TOTAL-LIABILITIES-AND-EQUITY> 104224
<INTEREST-LOAN> 5435
<INTEREST-INVEST> 440
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 5875
<INTEREST-DEPOSIT> 2489
<INTEREST-EXPENSE> 2612
<INTEREST-INCOME-NET> 3263
<LOAN-LOSSES> 142
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2844
<INCOME-PRETAX> 1168
<INCOME-PRE-EXTRAORDINARY> 1168
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 716
<EPS-PRIMARY> .28
<EPS-DILUTED> .27
<YIELD-ACTUAL> 4.85
<LOANS-NON> 204
<LOANS-PAST> 678
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 728
<CHARGE-OFFS> 31
<RECOVERIES> 3
<ALLOWANCE-CLOSE> 843
<ALLOWANCE-DOMESTIC> 628
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 215
</TABLE>
