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 March 31, 1996
------------------------------------------
[ ] 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
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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 -- 302,818 Shares Outstanding
PAGE 1 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements.
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEET (UNAUDITED)
FIRST PULASKI NATIONAL CORPORATION AND SUBSIDIARY
March 31, December 31,
1996 1995
<S> <C> <C>
ASSETS ------------ ------------
Cash and due from banks $7,516,561 $8,767,525
Federal funds sold 14,105,910 10,231,642
------------ ------------
Cash and cash equivalents 21,622,471 18,999,167
Interest bearing balances with banks 0 100,000
Securities available for sale 42,260,464 41,533,475
Securities held to maturity 18,048,305 17,389,119
Net loans and leases 153,633,155 150,934,127
Bank premises and equipment 7,136,044 7,239,935
Accrued interest receivable 3,529,652 3,383,798
Prepayments and other assets 2,009,869 1,862,047
Other real estate owned 108,458 110,058
------------ ------------
TOTAL ASSETS $248,348,418 $241,551,726
============ ============
LIABILITIES
Deposits
Non-interest bearing balances $27,820,248 $27,784,716
Interest bearing balances 185,835,884 179,624,823
------------ ------------
213,656,132 207,409,539
Other borrowed funds 1,946,101 1,312,788
Accrued taxes 561,394 111,713
Accrued interest on deposits 1,669,843 1,792,560
Accrued profit sharing expense 112,110 131,341
Other liabilities 476,929 461,990
------------ ------------
TOTAL LIABILITIES 218,422,509 211,219,931
------------ ------------
STOCKHOLDERS' EQUITY
Common Stock, $1.00 par; authorized 1,800,000
shares; 302,818 and 308,261 shares issued
and outstanding, respectively 302,818 308,261
Capital Surplus 5,400,278 6,145,969
Retained Earnings 24,082,883 23,579,610
Unrealized gains on securities 139,930 297,955
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 29,925,909 30,331,795
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $248,348,418 $241,551,726
============ ============
</TABLE>
PAGE 2 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements. (Continued)
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FIRST PULASKI NATIONAL CORPORATION AND SUBSIDIARY
For Three Months Ended
March 31,
----------------------
1996 1995
---- ----
<S> <C> <C>
INTEREST INCOME:
Loans, including fees $4,218,468 $3,522,279
Investment securities 858,753 900,017
Deposits 1,823 0
Federal funds sold 152,793 143,264
---------- ----------
TOTAL INTEREST INCOME 5,231,837 4,565,560
INTEREST EXPENSE:
Interest on Deposits:
NOW accounts 107,905 120,366
Savings and MMDA 195,225 204,169
Time 1,893,246 1,481,688
Borrowed funds 22,573 17,159
---------- ----------
TOTAL INTEREST EXPENSE 2,218,949 1,823,382
---------- ----------
NET INTEREST INCOME 3,012,888 2,742,178
Provision for loan losses 100,000 41,437
---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 2,912,888 2,700,741
---------- ----------
OTHER INCOME:
Service charges on deposit accounts 340,313 324,618
Other service charges and fees 91,302 108,064
Security (losses) (323) 0
Other miscellaneous income 28,088 60,866
---------- ----------
TOTAL OTHER INCOME 459,380 493,548
---------- ----------
PAGE 3 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements. (Continued)
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
FIRST PULASKI NATIONAL CORPORATION AND SUBSIDIARY
For Three Months Ended
March 31,
----------------------
1996 1995
---- ----
OTHER EXPENSES:
Salaries and employee benefits 1,019,069 943,534
Occupancy, net 213,840 215,614
Furniture and equipment 172,103 173,219
Advertising and public relations 92,420 127,342
Other operating 311,565 450,784
---------- ----------
TOTAL OTHER EXPENSES 1,808,997 1,910,493
---------- ----------
Income before income taxes $1,563,271 $1,283,796
Applicable income taxes 575,489 473,173
---------- ----------
NET INCOME $987,782 $810,623
========== ==========
PER SHARE DATA:
Net income per
share $3.24 $2.66
Dividends per share $1.60 $1.25
Number of shares 304,570 304,967
========== ==========
</TABLE>
PAGE 4 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements. (Continued)
<TABLE>
<CAPTION>
STOCKHOLDER'S EQUITY
FIRST PULASKI NATIONAL CORPORATION AND SUBSIDIARY (UNAUDITED)
For the Three Months Ended March 31, 1996
Unrealized
Gains/<Losses>
Common Capital Retained on Securities Total
Stock Surplus Earnings Net of Taxes
---------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
Balance, December 31,
1995 $308,261 $6,145,969 $23,579,610 $297,955 $30,331,795
Net Income 987,782 987,782
Cash Dividends
($1.60 per share) (484,509) (484,509)
Common Stock Issued (5,443) 15,793 10,350
Common Stock Repurchased (761,484) (761,484)
Change in unrealized gains
<losses> on securities,
net of tax (158,025) (158,025)
--------- ---------- ----------- ----------- -----------
Balance,
March 31, 1996 $302,818 $5,400,278 $24,082,883 $139,930 $29,925,909
========= ========== =========== =========== ===========
</TABLE>
PAGE 5 OF 15 PAGES
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements. (Continued)
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
FIRST PULASKI NATIONAL CORPORATION AND SUBSIDIARY (UNAUDITED)
For Three Months Ended
March 31,
1996 1995
---- ----
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $987,782 $810,623
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities:
Provision for loan losses 100,000 41,437
Depreciation of premises and equipment 169,848 181,525
Amortization and accretion of investment
securities, net 64,534 110,780
Security losses, net 323 0
(Increase) decrease in interest receivable (145,854) 9,456
Increase in prepaid expenses (54,815) (148,100)
Increase in other assets (11,601) (19,052)
Increase (decrease) in accrued interest payable (122,717) 94,905
Increase in accrued taxes 449,681 186,927
Increase (decrease) in other liabilities (44,605) 175,909
------------ ------------
Net Cash From Operating Activities 1,392,576 1,444,410
Cash Flows From Investing Activities:
Proceeds from maturity of investment
securities 5,880,857 8,133,333
Purchase of investment securities (7,571,322) (1,173,709)
Decrease in interest bearing deposits 100,000 250,075
Net increase in loans (2,758,714) (3,651,968)
Capital expenditures (65,957) (453,883)
Other real estate acquired, net 1,600 5,783
------------ ------------
Net Cash From (Used by) Investing Activities (4,413,536) 3,109,631
Cash Flows From Financing Activities:
Net increase in deposits 6,246,593 13,463,227
Cash dividends paid (484,509) (381,229)
Proceeds from issuance of common stock 10,350 9,344
Payments to repurchase shares (761,484) 0
Proceeds from borrowing 660,000 0
Borrowings repaid (26,686) (21,118)
------------ ------------
Net Cash From Financing Activities 5,644,264 13,070,224
------------ ------------
Net Increase in Cash and Cash Equivalents 2,623,304 17,624,265
Cash and Cash Equivalents at Beginning of Period 18,999,167 10,058,949
------------ ------------
Cash and Cash Equivalents at End of Period $21,622,471 $27,683,214
============ ============
</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-K
for the year ending December 31, 1995, which report was filed with the
Securities and Exchange Commission on or about March 30, 1996.
(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 $16,361,594 at March 31,
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)
1996, representing 27.1 percent of the investment securities portfolio
as compared to the 23.2 percent level of one year earlier. Other sources
of liquidity include maturing loans and federal funds sold.
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. Banking
institutions are expected to maintain 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 8.00 percent,
and a Tier I capital to total assets ratio (leverage ratio) of at
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)
least 3.00 percent. The following table sets out the appropriate
regulatory standards as well as First Pulaski National Corporation's
actual ratios at March 31, 1996 and December 31, 1995.
<TABLE>
<CAPTION>
March 31, December 31,
1996 1995
------------ ------------
(in thousands of dollars)
<S> <C> <C>
Tier I Capital to Risk-Weighted Assets:
Tier I capital 29,783 30,034
Risk-weighted assets 168,842 164,697
Tier I capital to risk-weighted assets 17.64% 18.24%
Regulatory requirement 4.00% 4.00%
Total Capital to Risk-Weighted Assets:
Total capital (Tier I plus Tier II) 31,894 32,092
Risk-weighted assets 168,842 164,697
Total capital to risk-weighted assets 18.89% 19.49%
Regulatory requirement 8.00% 8.00%
Tier I Capital to Total Assets (Leverage Ratio)
Tier I capital 29,783 30,034
Total assets 248,348 241,552
Tier I capital to total assets 11.99% 12.43%
Regulatory requirement 3.00% 3.00%
</TABLE>
The Board of Directors authorized the Company to repurchase up to
5,518 shares of First Pulaski National Corporation common stock from the
estate of an investor at a cost of $761,484.
(c) Results of Operations
Net income of the registrant was $987,782 in the first three months
of 1996. This amounted to an increase of $177,159, or 21.9 percent
as compared to the first three months of 1995. The increase in net
income resulted primarily from a significant increase in net interest
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)
income over 1995. Net interest income was greater mainly due to an
increase in income earned on loans, including fees. Interest expense,
the rates paid on interest-bearing liabilities, showed increases over
the same period as well, largely due to interest paid on time deposits,
but was materially offset by interest income earned. Other income
showed a slight decrease from same period last year mainly because of
a reduction in other service charges, fees and miscellaneous income.
However, the decrease had minimal effect in that total other expenses
were down by a greater degree. The decrease in other expenses resulted
from lesser advertising, public relations and other operating costs with
salaries and employee benefits slightly higher than in March of 1995.
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 three month period
ending March 31, 1996 increased by $270,710, or 9.9 percent, as
compared to the same period of 1995, 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 increased by $279,475, or 21.8 percent as
compared to the same period from prior year. The increase in
applicable income taxes was $102,316, or 21.6 percent.
On a per share basis, income was $3.24 per share based on 304,570
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)
shares for the first three months of 1996 as compared to $2.66 per share
on 304,967 shares for the first three months of 1995.
Non-performing assets at December 31, 1995 included $110 thousand
in other real estate owned, $208 thousand in non-accrual loans, and
$210 thousand in loans past due ninety days or more as to interest or
principle payment. Additionally, there were no restructured loans at
year-end. At March 31, 1996, the corresponding figures were $108
thousand in other real estate owned, $434 thousand in non-accrual loans,
$220 thousand in loans past due ninety days or more, and $62 thousand
in loans restructured but in compliance with modified terms. Although
there was a slight increase in non-accrual loans from December 31, 1995,
the allowance for loan losses totaling $2,132 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.
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)
On January 1, 1995, the Company adopted FASB Statements No. 114 and
No. 118, both of which deal with accounting by creditors for impairment
of loans. Statements No. 114 and No. 118 provide new rules for measuring
impairment losses on loans. As of the first quarter of 1996, 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
first quarter of 1996.
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: May 13, 1996 /s/ Robert M. Curry
---------------- ---------------------------------------
Robert M. Curry, Chairman of the Board
and Chief Executive Officer
Date: May 13, 1996 /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 MARCH 31, 1996
---------------------------------------------------
(11) Statement re 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 March 31, 1996, 304,570 shares were used
in the computation; 304,967 shares were used in the computation for the
quarter ended March 31, 1995.
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S 10-Q FOR PERIOD ENDING MARCH 31, 1996 AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND THE NOTES THERETO.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 7,516,561
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 14,105,910
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 42,260,464
<INVESTMENTS-CARRYING> 18,048,305
<INVESTMENTS-MARKET> 18,099,224
<LOANS> 155,764,850
<ALLOWANCE> 2,131,695
<TOTAL-ASSETS> 248,348,418
<DEPOSITS> 213,656,132
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,820,276
<LONG-TERM> 1,946,101
0
0
<COMMON> 302,818
<OTHER-SE> 29,623,091
<TOTAL-LIABILITIES-AND-EQUITY> 248,348,418
<INTEREST-LOAN> 4,218,468
<INTEREST-INVEST> 858,753
<INTEREST-OTHER> 154,616
<INTEREST-TOTAL> 5,231,837
<INTEREST-DEPOSIT> 2,196,376
<INTEREST-EXPENSE> 2,218,949
<INTEREST-INCOME-NET> 3,012,888
<LOAN-LOSSES> 100,000
<SECURITIES-GAINS> (323)
<EXPENSE-OTHER> 1,808,997
<INCOME-PRETAX> 1,563,271
<INCOME-PRE-EXTRAORDINARY> 987,782
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 987,782
<EPS-PRIMARY> 3.24
<EPS-DILUTED> 3.24
<YIELD-ACTUAL> 5.03
<LOANS-NON> 433,129
<LOANS-PAST> 219,788
<LOANS-TROUBLED> 61,655
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,058,456
<CHARGE-OFFS> 105,685
<RECOVERIES> 78,923
<ALLOWANCE-CLOSE> 2,131,695
<ALLOWANCE-DOMESTIC> 2,131,695
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
