FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended SEPTEMBER 30, 1995
------------------------------------------
[ ] 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 0-10974
-------
FIRST PULASKI NATIONAL CORPORATION
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee 62-1110294
------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
206 South First Street, Pulaski, Tennessee 38478
------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number: 615-363-2585
---------------------
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 .
------- -------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the close of the period covered by this
report:
Common Stock, $1.00 par value -- 307,735 Shares Outstanding
PAGE 1 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements.
<TABLE>
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
FIRST PULASKI NATIONAL CORPORATION AND SUBSIDIARY
<CAPTION>
September 30, December 31,
1995 1994
------------ ------------
<S> <C> <C>
ASSETS
------
Cash and due from banks $ 8,188,921 $8,783,095
Federal funds sold 16,611,331 1,525,929
------------ ------------
Cash and cash equivalents 24,800,252 10,309,024
Interest bearing balances with banks 100,100 0
Securities available for sale 40,348,867 47,012,477
Securities held to maturity 14,061,248 15,446,504
Net loans and leases 147,214,008 134,346,992
Bank premises and equipment 7,270,711 7,035,901
Accrued interest receivable 3,287,861 2,347,930
Prepayments and other assets 2,103,842 2,417,617
Other real estate owned 115,525 185,570
------------ ------------
TOTAL ASSETS $239,302,414 $219,102,015
============ ============
LIABILITIES
-----------
Deposits
Non-interest bearing balances $27,504,398 $26,374,760
Interest bearing balances 178,374,295 163,294,365
------------ ------------
205,878,693 189,669,125
Other borrowed funds 1,096,277 1,160,584
Accrued taxes 247,145 58,434
Accrued interest on deposits 1,662,349 969,657
Accrued profit sharing expense 116,976 111,234
Other liabilities 474,358 83,955
------------ ------------
TOTAL LIABILITIES 209,475,798 192,052,989
------------ ------------
STOCKHOLDERS' EQUITY
--------------------
Common Stock, $1.00 par; authorized 1,800,000
shares; 307,735 and 304,910 shares issued
and outstanding, respectively 307,735 304,910
Capital Surplus 6,079,167 5,720,392
Retained Earnings 23,333,496 21,869,084
Unrealized gains (losses) on securities 106,218 (845,360)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 29,826,616 27,049,026
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $239,302,414 $219,102,015
============ ============
</TABLE>
PAGE 2 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements. (Continued)
<TABLE>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FIRST PULASKI NATIONAL CORPORATION AND SUBSIDIARY
<CAPTION>
For Three Months Ended For Nine Months Ended
September 30, September 30,
---------------------- ---------------------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans, including
fees $4,092,552 $3,273,683 $11,550,148 $9,222,186
Investment
securities 796,902 981,815 2,471,657 2,984,152
Deposits 0 2,661 0 19,276
Federal funds sold 230,388 57,504 618,690 253,546
---------- ---------- --------- ---------
5,119,842 4,315,663 14,640,495 12,479,160
INTEREST EXPENSE:
Interest on deposits:
NOW accounts 122,707 133,009 442,092 400,954
Savings and MMDA 193,467 208,199 573,383 610,203
Time 1,882,150 1,184,120 5,114,972 3,319,482
Notes payable 16,523 14,276 50,526 20,174
--------- ---------- --------- ---------
2,214,847 1,539,604 6,180,973 4,350,813
--------- ---------- --------- ---------
NET INTEREST INCOME 2,904,995 2,776,059 8,459,522 8,128,347
Loan loss provision 64,027 65,000 143,649 125,000
--------- ---------- --------- ---------
NET INTEREST INCOME
AFTER PROVISION FOR
LOAN LOSSES 2,840,968 2,711,059 8,315,873 8,003,347
--------- ---------- --------- ---------
OTHER INCOME:
Service charges on
deposit accounts 324,806 339,049 1,013,609 1,020,666
Other service
charges and fees 107,339 101,930 322,306 314,241
Security gains
(losses) (50,543) 0 (46,243) (87,139)
Other 83,817 10,357 303,183 151,994
---------- ---------- ---------- ---------
465,419 451,336 1,592,855 1,399,762
---------- ---------- --------- ---------
PAGE 3 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements. (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
FIRST PULASKI NATIONAL CORPORATION AND SUBSIDIARY (UNAUDITED)
For Three Months Ended For Nine Months Ended
September 30, September 30,
---------------------- -----------------------
1995 1994 1995 1994
---- ---- ---- ----
OTHER EXPENSES:
Salaries and
employee benefits 973,078 875,007 2,928,660 2,628,330
Occupancy, net 201,890 179,194 602,760 499,203
Furniture and
equipment 200,176 112,718 556,982 325,308
Advertising and
public relations 108,375 101,372 370,476 326,784
Other operating 288,747 383,608 1,204,687 1,058,954
--------- ---------- --------- ---------
1,772,266 1,651,899 5,663,565 4,838,579
---------- ---------- --------- ---------
Income before
income taxes $1,534,121 $1,510,496 $4,245,163 $4,564,530
Applicable income
taxes 535,118 513,948 1,479,469 1,574,337
---------- ---------- ---------- ----------
NET INCOME $999,003 $996,548 $2,765,694 $2,990,193
========== ========== ========== ==========
PER SHARE DATA:
Net income per
share $3.25 $3.28 $9.04 $9.92
Dividends per share $1.50 $1.25 $4.25 $3.75
Number of shares 307,714 303,757 305,969 301,455
========== ========== ========== =========
</TABLE>
PAGE 4 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements. (Continued)
<TABLE>
STOCKHOLDER'S EQUITY
FIRST PULASKI NATIONAL CORPORATION AND SUBSIDIARY (UNAUDITED)
<CAPTION>
For the Nine Months Ended September 30, 1995
Unrealized
Gains/<Losses>
Common Capital Retained on Securities
Stock Surplus Earnings net of Taxes Total
-----------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance,
Dec 31, 1994 $304,910 $5,720,392 $21,869,084 ($845,360) $27,049,026
Net Income 2,765,694 2,765,694
Cash Dividends (1,301,282) (1,301,282)
($4.25 per
share)
Proceeds from
Issuance of
Additional
Stock 2,825 358,775 361,600
Change in
unrealized gains
<losses> on
securities,
net of tax 951,578 951,578
------- ---------- ----------- -------- -----------
Balance,
September 30,
1995 $307,735 $6,079,167 $23,333,496 $106,218 $29,826,616
========= ========== =========== ======== ===========
</TABLE>
PAGE 5 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements. (Continued)
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FIRST PULASKI NATIONAL CORPORATION AND SUBSIDIARY (UNAUDITED)
<CAPTION>
For Nine Months Ended
September 30,
1995 1994
---- ----
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $2,765,694 $2,990,193
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities:
Provision for loan losses 143,649 125,000
Depreciation of premises and equipment 579,338 322,834
Amortization and accretion of investment
securities, net 306,183 319,158
Security losses, net 46,243 87,139
Increase in interest receivable (939,932) (410,783)
Increase in prepaid expenses (79,113) (190,819)
Increase in other assets (97,319) (14,315)
Increase in accrued interest payable 692,691 149,445
Increase in accrued taxes 188,710 50,875
Increase (decrease) in other liabilities 179,637 (173,903)
----------- -----------
Net Cash From Operating Activities 3,785,781 3,254,824
Cash Flows for Investing Activities:
Proceeds from maturity of investment
securities 28,134,362 24,287,970
Purchase of investment securities (18,996,136) (30,476,220)
Decrease in interest bearing deposits 149,975 500,000
Net increase in loans (12,794,156) (12,592,949)
Principal payments received under leases 0 21,804
Capital expenditures (814,147) (1,966,417)
Other real estate acquired, net 70,044 (36,570)
----------- ------------
Net Cash Used by Investing Activities (4,250,058) (20,262,382)
Cash Flows From Financing Activities:
Net increase in deposits 16,209,569 8,940,662
Cash dividends paid (1,301,282) (1,132,387)
Proceeds from issuance of common stock 361,600 737,728
Proceeds from borrowings 0 1,000,000
Borrowings repaid (64,307) (18,608)
----------- -----------
Net Cash From Financing Activities 15,205,580 9,527,395
----------- -----------
Net Increase (Decrease) in Cash
and Cash Equivalents 14,741,303 (7,480,163)
Cash and Cash Equivalents at Beginning of Period 10,058,949 19,727,146
----------- -----------
Cash and Cash Equivalents at End of Period $24,800,252 $12,246,983
=========== ===========
</TABLE>
PAGE 6 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements. (Continued)
The interim financial statements furnished under this item reflect
all adjustments which are, in the opinion of management, necessary for
a fair presentation of the results of operations for the interim periods
presented. All such adjustments are of a normal recurring nature.
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations.
The following analysis should be read in conjunction with the
financial statements set forth in Part I, Item 1, immediately preceding
this section.
Reference is made to the report of the registrant on Form 10-KSB
for the year ending December 31, 1994, which report was filed with the
Securities and Exchange Commission on or about March 30, 1995.
(a) Liquidity
Liquidity has been defined as the ability to fund increases in
loan demand or to compensate for decreases in deposits and other
sources of funds, or both. Maintenance of adequate liquidity is an
essential component of the financial planning process. The objective
of asset/liability management is to provide an optimum balance of
safety, liquidity and earnings. The registrant seeks to generate
adequate cash flows to meet its needs without sacrificing income or
taking undue risks.
Marketable investment securities, particularly those of short
maturities, are the principal source of asset liquidity. Securities
maturing in one year or less amounted to $8,687,675 at September 30,
PAGE 7 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
1995, representing 16.0 percent of the investment securities portfolio
as compared to the 27.2 percent level of one year earlier. Other sources
of liquidity include maturing loans and federal funds sold, which
increased 13.6 million since September 1994 due to increased deposits.
The registrant knows of no unusual demands, commitments, or
events which could adversely impact the liquidity of the registrant.
(b) Capital Adequacy
The Federal Reserve Board, the Office of the Comptroller of the
Currency and the FDIC have issued risk-based capital guidelines for
U.S. banking organizations. These guidelines provide a uniform capital
framework that is sensitive to differences in risk profiles among
banking companies.
Under these guidelines, total capital consists of Tier I capital
(core capital, primarily stockholders' equity) and Tier II capital
(supplementary capital, including certain qualifying debt instruments
and the loan loss reserve). Assets are assigned risk weights ranging
from 0 percent to 100 percent depending on the level of credit risk
normally associated with such assets. Off-balance sheet items (such as
commitments to make loans) are also included in assets through the use
of conversion factors established by regulators and are assigned risk
weights in the same manner as on-balance sheet items. By the end of
1992, banking institutions were expected to achieve a Tier I capital to
risk-weighted assets ratio of at least 4.00 percent, a total capital
(Tier I plus Tier II) to total risk-weighted assets ratio of at least
PAGE 8 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
8.00 percent, and a Tier I capital to total assets ratio (leverage
ratio) of at least 3.00 percent. The following table sets out the
appropriate regulatory standards as well as First Pulaski National
Corporation's actual ratios at September 30, 1995 and December 31, 1994.
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------ ------------
(in thousands of dollars)
<S> <C> <C>
Tier I Capital to Risk-Weighted Assets:
Tier I capital 29,720 27,894
Risk-weighted assets 161,355 145,033
Tier I capital to risk-weighted assets 18.42% 19.23%
Regulatory requirement 4.00% 4.00%
Total Capital to Risk-Weighted Assets:
Total capital (Tier I plus Tier II) 31,737 29,707
Risk-weighted assets 161,355 145,033
Total capital to risk-weighted assets 19.67% 20.48%
Regulatory requirement 8.00% 8.00%
Tier I Capital to Total Assets (Leverage Ratio)
Tier I capital 29,720 27,894
Total assets 239,302 219,102
Tier I capital to total assets 12.42% 12.73%
Regulatory requirement 3.00% 3.00%
</TABLE>
(c) Results of Operations
Net income of the registrant amounted to $2,765,694 in the first
nine months of 1995. This amounted to a decrease of $224,499, or
7.5 percent, compared to the first nine months of 1994. Despite an
increase in net interest income, an increase in other income and a slight
decrease in applicable income taxes, the bank experienced a decrease in
net income primarily because of significant increases in other expenses.
The increase in other expenses was mainly due to the added furniture and
PAGE 9 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
equipment costs, increased costs of advertising and public relations,
increased personnel costs and significant increases in other operating
costs as compared to the same period in 1994. The rise in net interest
income was largely due to an increase in interest earned on loans,
including fees. Other income was up through the first nine months of
1995 as compared to the same period last year mainly because of
increases in service charges and fees.
Net interest income, the largest component of earnings for the
registrant, is the difference between income earned on loans and
investments and interest paid on deposits and other sources of funds.
The net interest income of the registrant for the nine month period
ending September 30, 1995 increased by $331,175, or 4.1 percent, as
compared to the same period of 1994, reflecting the fact that an
appropriate balance is being maintained between the company's interest
sensitive assets and interest sensitive liabilities to provide yields
appropriate to the risk and liquidity involved.
Income before taxes decreased by $319,367 or 7.0 percent as
compared to the same period from prior year. The decrease in
applicable income taxes was $94,868, or 6.0 percent.
On a per share basis, income was $9.04 per share based on 305,969
shares for the first nine months of 1995 as compared to $9.92 per share
on 301,455 shares for the first nine months of 1994.
PAGE 10 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
Non-performing assets at December 31, 1994 included $186 thousand
in other real estate owned, $272 thousand in non-accrual loans, and
$161 thousand in loans past due ninety days or more as to interest or
principal payment. Additionally, loans restructured but in compliance
with modified terms amounted to $29 thousand. At September 30, 1995, the
corresponding figures were $116 thousand in other real estate owned,
$206 thousand in non-accrual loans, $666 thousand in loans past due
ninety days or more, and $29 thousand in loans restructured but in
compliance with modified terms. Although there was a significant
increase in loans past due ninety days or more from December 31, 1994,
the allowance for loan losses, $2,037 thousand is deemed sufficient by
management to cover potential losses in the loan portfolio.
On January 1 of 1994, the Company adopted Statement of Financial
Accounting Standards No. 115. As a result of the issuance and
adoption of this statement, management now classifies a majority of the
investment portfolio in the available-for-sale category and reports
these securities at fair value. Management does not anticipate the sale
of a material amount of investment securities classified as available-
for-sale in the forseeable future. However, these securities may be
sold in response to changes in interest rates, changes in prepayment
risk, the need to increase regulatory capital or asset/liability
strategy.
On January 1, 1995, the Company adopted FASB Statements No. 114 and
No. 118, both of which deal with accounting by creditors for impairment
PAGE 11 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
of loans. Statements No. 114 and No. 118 provide new rules for measuring
impairment losses on loans. As of the third quarter of 1995, the Company
has identified those loans which it deems to be impaired and has computed
allowances which management believes to be sufficient for those loans.
The adoption of these statements had no material effect on the earnings
or financial condition of the Company.
In the opinion of management, the registrant maintains a strong
financial position and is optimistic that trends as reflected in the
Form 10-Q will be sustained.
PAGE 12 OF 15 PAGES
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings.
The registrant and its subsidiary are involved, from time to time,
in ordinary routine litigation incidental to the banking business.
Neither the registrant nor its subsidiary is involved in any material
pending legal proceedings.
Item 6. Exhibits and Reports on Form 8-K.
(a) Following the signature page of this report on Form 10-Q is
an Index of Exhibits listed according to the numbers assigned to such
exhibits as shown on Table II of Regulation S-K.
(b) No Form 8-K Reports were required to be filed during the
third quarter of 1995.
PAGE 13 OF 15 PAGES
<PAGE>
SIGNATURES
----------
Pursuant to the requirements of Section 13 or 15 (d) 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.
FIRST PULASKI NATIONAL CORPORATION
Date: November 8, 1995 /s/ Robert M. Curry
---------------- ---------------------------------------
Robert M. Curry, Chairman of the Board
and Chief Executive Officer
Date: November 8, 1995 /s/ Glen Lamar
---------------- ---------------------------------------
Glen Lamar, Secretary/Treasurer
PAGE 14 OF 15 PAGES
<PAGE>
INDEX TO EXHIBITS FOR THE FIRST PULASKI NATIONAL CORPORATION
------------------------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED SEPTEMBER 30, 1995
--------------------------------------------------
(11) Statement regarding computation of per share earnings
(27) Financial Data Schedules
PAGE 15 OF 15 PAGES
<PAGE>
EXHIBIT 11
COMPUTATION OF PER SHARE EARNINGS OF
------------------------------------
FIRST PULASKI NATIONAL CORPORATION
----------------------------------
Computation of per share earnings relative to the common capital
stock of First Pulaski National Corporation is calculated by dividing
the net income of the registrant by the weighted average of the then
outstanding shares of common capital stock ($1.00 par value) during
the quarter.
For the quarter ended September 30, 1995, 305,969 shares were used
in the computation; 301,455 shares were used in the computation for the
quarter ended September 30, 1994.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S 10-Q FOR PERIOD ENDING SEPTEMBER 30, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND THE NOTES THERETO.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 8,188,921
<INT-BEARING-DEPOSITS> 100,000
<FED-FUNDS-SOLD> 16,611,331
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 40,348,867
<INVESTMENTS-CARRYING> 14,061,248
<INVESTMENTS-MARKET> 14,190,219
<LOANS> 149,250,921
<ALLOWANCE> 2,036,913
<TOTAL-ASSETS> 239,302,414
<DEPOSITS> 205,878,693
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,500,828
<LONG-TERM> 1,096,277
<COMMON> 307,735
0
0
<OTHER-SE> 29,518,881
<TOTAL-LIABILITIES-AND-EQUITY> 239,302,414
<INTEREST-LOAN> 11,550,148
<INTEREST-INVEST> 2,471,657
<INTEREST-OTHER> 618,690
<INTEREST-TOTAL> 14,640,495
<INTEREST-DEPOSIT> 6,130,447
<INTEREST-EXPENSE> 6,180,973
<INTEREST-INCOME-NET> 8,459,522
<LOAN-LOSSES> 143,649
<SECURITIES-GAINS> (46,243)
<EXPENSE-OTHER> 5,663,565
<INCOME-PRETAX> 4,245,163
<INCOME-PRE-EXTRAORDINARY> 2,765,694
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,765,694
<EPS-PRIMARY> 9.04
<EPS-DILUTED> 9.04
<YIELD-ACTUAL> 3.84
<LOANS-NON> 206,435
<LOANS-PAST> 666,467
<LOANS-TROUBLED> 28,912
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,023,681
<CHARGE-OFFS> 274,221
<RECOVERIES> 143,884
<ALLOWANCE-CLOSE> 2,036,913
<ALLOWANCE-DOMESTIC> 2,036,913
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
