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, 1997
------------------------------------------
[ ] 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 -- 1,532,290 Shares Outstanding
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements.
<TABLE>
<CAPTION>
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
FIRST PULASKI NATIONAL CORPORATION AND SUBSIDIARY
March 31, December 31,
1997 1996
<S> <C> <C>
ASSETS ------------ ------------
Cash and due from banks $10,118,513 $8,411,810
Federal funds sold 13,535,484 8,491,655
------------ ------------
Cash and cash equivalents 23,653,997 16,903,465
Securities available for sale 44,371,599 43,757,815
Securities held to maturity 19,712,241 19,689,343
Net loans and leases 158,864,347 155,522,625
Bank premises and equipment 7,205,062 7,151,876
Accrued interest receivable 3,462,681 3,401,339
Prepayments and other assets 1,388,255 2,147,073
Other real estate owned 161,352 218,901
------------ ------------
TOTAL ASSETS $258,819,534 $248,792,437
============ ============
LIABILITIES
Deposits
Non-interest bearing balances $31,358,653 $30,479,710
Interest bearing balances 190,610,919 182,206,625
------------ ------------
221,969,572 212,686,335
Other borrowed funds 1,812,696 1,846,814
Accrued taxes 552,463 113,041
Accrued interest on deposits 1,766,081 1,684,906
Accrued profit sharing expense 138,325 158,699
Other liabilities 417,472 415,240
------------ ------------
TOTAL LIABILITIES 226,656,609 216,905,035
------------ ------------
STOCKHOLDERS' EQUITY
Common Stock, $1.00 par; authorized 10,000,000
shares; 1,532,290 and 1,532,220 shares
issued and outstanding, respectively 1,532,290 1,532,220
Capital Surplus 5,896,768 5,895,046
Retained Earnings 24,777,208 24,278,237
Unrealized gains (losses) on securities (43,341) 181,899
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 32,162,925 31,887,402
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $258,819,534 $248,792,437
============ ============
</TABLE>
<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,
----------------------
1997 1996
---- ----
<S> <C> <C>
INTEREST INCOME:
Loans, including fees $4,222,676 $4,218,468
Securities 933,929 858,753
Deposits 0 1,823
Federal funds sold 137,055 152,793
---------- ----------
TOTAL INTEREST INCOME 5,293,660 5,231,837
INTEREST EXPENSE:
Deposits:
NOW accounts 93,867 107,905
Savings and MMDAs 175,627 195,225
Time 1,908,015 1,893,246
Borrowed funds 28,379 22,573
---------- ----------
TOTAL INTEREST EXPENSE 2,205,888 2,218,949
---------- ----------
NET INTEREST INCOME 3,087,772 3,012,888
Provision for loan losses 75,000 100,000
---------- ----------
NET INTEREST INCOME AFTER PROVISION
PROVISION FOR LOAN LOSSES 3,012,772 2,912,888
---------- ----------
OTHER INCOME:
Service charges on deosit accounts 379,994 340,313
Other service charges and fees 92,676 91,302
Security gains (losses), net (6,563) (323)
Other miscellaneous income 16,382 28,088
---------- ----------
TOTAL OTHER INCOME 482,489 459,380
---------- ----------
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,
----------------------
1997 1996
---- ----
OTHER EXPENSES:
Salaries and employee benefits 1,037,396 1,019,069
Occupancy, net 185,778 213,840
Furniture and equipment 169,523 172,103
Advertising and public relations 130,574 92,420
Other operating 320,710 311,565
---------- ----------
TOTAL OTHER EXPENSES 1,843,981 1,808,997
---------- ----------
Income before income taxes $1,651,280 $1,563,271
Applicable income taxes 600,685 575,489
---------- ----------
NET INCOME $1,050,595 $987,782
========== ==========
PER SHARE DATA:
Net income per
share $0.69 $0.65
Dividends per share $0.36 $0.32
Number of shares 1,532,263 1,522,850
========== ==========
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 1. Financial Statements. (Continued)
<TABLE>
<CAPTION>
STATEMENT OF STOCKHOLDER'S EQUITY
FIRST PULASKI NATIONAL CORPORATION AND SUBSIDIARY (UNAUDITED)
For the Three Months Ended March 31, 1997
Unrealized
Gains/<Losses>
Common Capital Retained on Securities Total
Stock Surplus Earnings Net of Taxes
-----------------------------------------------------------------
<C> <C> <C> <C> <C> <C>
Balance, December 31,
1996 $1,532,220 $5,895,046 $24,278,237 $181,899 $31,887,402
Net Income 1,050,595 1,050,595
Cash Dividends
($3.20 per share) (551,624) (551,624)
Common Stock Issued 70 1,722 1,792
Change in unrealized
gains <losses> on
securities, net of tax (225,240) (225,240)
-----------------------------------------------------------------
Balance,
March 31, 1997 $1,532,290 $5,896,768 $24,777,208 ($43,341) $32,162,925
=================================================================
</TABLE>
<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,
1997 1996
---- ----
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $1,050,595 $987,782
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities:
Provision for loan losses 75,000 100,000
Depreciation of premises and equipment 171,780 169,848
Amortization and accretion of securities, net 58,581 64,534
Security (gains) losses, net 6,563 323
Gains on sale of other assets (5,982) 0
Increase in interest receivable (61,410) (145,854)
Increase in prepaid expenses (30,728) (54,815)
(Increase) decrease in other assets 27,745 (11,601)
Increase (decrease) in accrued interest payable 81,175 (122,717)
Increase in accrued taxes 439,422 449,681
Decrease in other liabilities (19,738) (44,605)
----------- -----------
Net Cash From Operating Activities 1,793,003 1,392,576
Cash Flows for Investing Activities:
Proceeds from maturity of securities 4,531,883 5,880,857
Proceeds from sale of securities 1,500,000 0
Proceeds from sale of other real estate 63,532 1,600
Purchase of investment securities (6,197,081) (7,571,322)
Decrease in interest bearing deposits 0 100,000
Net increase in loans (3,415,127) (2,758,714)
Capital expenditures (224,967) (65,957)
----------- -----------
Net Cash Used by Investing Activities (3,741,760) (4,413,536)
Cash Flows From Financing Activities:
Net increase in deposits 9,283,238 6,246,593
Cash dividends paid (551,624) (484,509)
Proceeds from issuance of common stock 1,792 10,350
Payments to repurchase shares 0 (761,484)
Proceeds from borrowings 0 660,000
Borrowings repaid (34,118) (26,686)
----------- -----------
Net Cash From Financing Activities 8,699,288 5,644,264
----------- -----------
Net Increase in Cash and Cash Equivalents 6,750,531 2,623,304
Cash and Cash Equivalents at Beginning of Period 16,903,466 18,999,167
----------- -----------
Cash and Cash Equivalents at End of Period $23,653,997 $21,622,471
=========== ===========
</TABLE>
<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 financial condition and 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, 1996, which report was filed with the
Securities and Exchange Commission on or about March 30, 1997.
(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 essential in
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. Cash and
cash equivalents increased $6,750.5 thousand in the first quarter of 1997
due to an excess of deposit growth over loan demand and management's
decision to delay investment activity due to the current interest rate
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
environment.
Marketable investment securities, particularly those of short
maturities, are the principal source of asset liquidity. Securities
maturing in one year or less amounted to $16,122,105 at March 31,
1997, representing 25.2 percent of the investment securities portfolio
as compared to the 27.1 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
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
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
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, 1997 and December 31, 1996.
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
------------ ------------
(in thousands of dollars)
<S> <C> <C>
Tier I Capital to Risk-Weighted Assets:
Tier I capital 32,204 31,703
Risk-weighted assets 177,153 172,614
Tier I capital to risk-weighted assets 18.18% 18.37%
Regulatory requirement 4.00% 4.00%
Total Capital to Risk-Weighted Assets:
Total capital (Tier I plus Tier II) 34,423 33,863
Risk-weighted assets 177,153 172,614
Total capital to risk-weighted assets 19.43% 19.62%
Regulatory requirement 8.00% 8.00%
Tier I Capital to Total Assets (Leverage Ratio)
Tier I capital 32,204 31,703
Total assets 258,820 248,792
Tier I capital to total assets 12.44% 12.74%
Regulatory requirement 3.00% 3.00%
Effective April 18,1996, the Board of Directors declared a five-
for-one stock split of the commom stock effected in the form of a stock
dividend to shareholders of record on July 1, 1996. The aggregate par
value of the addional shares ($1,214,072) was transferred from
retained earnings to the common stock account. Information in the
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
financial statements as to the number of shares and per share amounts
have been adjusted to reflect the stock split on a retroactive basis.
(c) Results of Operations
Net income of the registrant amounted to $1,050,595 in the first
three months of 1997. This amounted to an increase of $62,813, or
6.4 percent, compared to the first three months of 1996. Net income
was higher, as compared to the same period last year, largely due to
increased net interest income. Net interest income increased mainly
because of significant growth in income earned on investment securities
and loans, including fees. Also contributing to higher net interest
income was the reduction in interest expense, which resulted primarily
from decreases in interest paid on Savings, Money Market, and Now
accounts as compared to first quarter last year. Other income for the
first three months showed an increase from same period last year mainly
due to the rise in service charges on deposit accounts. However, this
increase was more than offset by the increase in total other expenses.
This was the result of higher advertising, public relations and other
operating costs. Salaries and employee benefits were also slightly
higher,although, net occupancy expense showed a decrease as compared to
the first quarter of 1996.
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.
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
The net interest income of the registrant for the three month period
ending March 31, 1997 increased by $74,884, or 2.5 percent, as
compared to the same period of 1996, 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.
The loan loss provision for the three months ended March 31,
1997, decreased $25,000 over the same period in 1996.
Income before taxes increased by $88,009, or 5.6 percent as
compared to the same period from prior year. The increase in
applicable income taxes was $25,196, or 4.4 percent.
On a per share basis, income was $0.69 per share based on 1,532,263
shares for the first three months of 1997 as compared to $0.65 per share
on 1,522,850 shares for the first three months of 1996. These per share
figures have been restated to reflect the increased number of common
shares resulting from the stock split approved April 18, 1996 and
effective July 1, 1996.
Non-performing assets at December 31, 1996 included $218.9 thousand
in other real estate owned, $449.5 thousand in non-accrual loans, and
$190.7 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, 1997, the corresponding figures were $161.4
thousand in other real estate owned, $496.9 thousand in non-accrual
loans, $74.5 thousand in loans past due ninety days or more, and no
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
loans restructured. Although there was an increase in nonaccrual loans
from December 31, 1996, the allowance for loan losses totaling $2,550.6
thousand is deemed sufficient by management to cover potential losses
in the loan portfolio.
On January 1, 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 srategy.
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 1997, 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>
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 1997.
<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 15, 1997 /s/ Robert M. Curry
---------------- ---------------------------------------
Robert M. Curry, Chairman of the Board
and Chief Executive Officer
Date: May 15, 1997 /s/ Glen Lamar
---------------- ---------------------------------------
Glen Lamar, Secretary/Treasurer
<PAGE>
INDEX TO EXHIBITS FOR THE FIRST PULASKI NATIONAL CORPORATION
------------------------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1997
---------------------------------------------------
(11) Statement re computation of per share earnings
(27) Financial Data Schedules
<PAGE>
</TABLE>
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, 1997, 1,532,263 shares were
used in the computation; 1,522,850 shares were used in the computation
for the quarter ended March 31, 1996. These per share figures have
been restated to reflect the increased number of common shares resulting
from the stock split approved on April 18, 1996 and effective
July 1, 1996.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S 10-Q FOR PERIOD ENDING MARCH 31, 1997 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-31-1997
<CASH> 10,118,513
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 13,535,484
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 44,371,599
<INVESTMENTS-CARRYING> 19,712,241
<INVESTMENTS-MARKET> 19,708,644
<LOANS> 161,414,946
<ALLOWANCE> 2,550,599
<TOTAL-ASSETS> 258,819,534
<DEPOSITS> 221,969,572
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,874,341
<LONG-TERM> 1,812,696
0
0
<COMMON> 1,532,290
<OTHER-SE> 30,630,635
<TOTAL-LIABILITIES-AND-EQUITY> 258,819,534
<INTEREST-LOAN> 4,222,676
<INTEREST-INVEST> 933,929
<INTEREST-OTHER> 137,055
<INTEREST-TOTAL> 5,293,660
<INTEREST-DEPOSIT> 2,177,509
<INTEREST-EXPENSE> 2,205,888
<INTEREST-INCOME-NET> 3,087,772
<LOAN-LOSSES> 75,000
<SECURITIES-GAINS> (6,563)
<EXPENSE-OTHER> 1,843,981
<INCOME-PRETAX> 1,651,280
<INCOME-PRE-EXTRAORDINARY> 1,051,595
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,051,595
<EPS-PRIMARY> 0.69
<EPS-DILUTED> 0.69
<YIELD-ACTUAL> 1.31
<LOANS-NON> 496,881
<LOANS-PAST> 74,487
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,380,700
<CHARGE-OFFS> 121,838
<RECOVERIES> 216,736
<ALLOWANCE-CLOSE> 2,550,596
<ALLOWANCE-DOMESTIC> 2,550,596
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
