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, 1999
------------------------------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-10974
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FIRST PULASKI NATIONAL CORPORATION
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(Exact name of registrant as specified in its charter)
Tennessee 62-1110294
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(State or other jurisdiction (IRS Employer
of incorporation) Identification No.)
206 South First Street, Pulaski, Tennessee 38478
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number: 931-363-2585
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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 .
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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 -- 1,574,065 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,
ASSETS 1999 1998
------ ------------ ------------
<S> <C> <C>
Cash and due from banks $10,801,467 $9,427,069
Federal funds sold 16,148,725 12,970,075
------------ ------------
Cash and cash equivalents 26,950,192 22,397,144
Securities available for sale 50,638,234 45,972,651
Securities held to maturity 25,825,233 25,589,675
Net loans and leases 164,755,315 166,715,527
Bank premises and equipment 7,500,147 7,521,071
Accrued interest receivable 3,209,508 3,340,417
Prepayments and other assets 2,553,471 3,275,581
Other real estate owned 246,711 192,911
------------ ------------
TOTAL ASSETS $281,678,811 $275,004,977
============ ============
LIABILITIES
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Deposits
Non-interest bearing balances $34,718,271 $36,187,911
Interest bearing balances 205,741,558 197,611,615
------------ ------------
240,459,829 233,799,526
Other borrowed funds 1,984,407 2,028,120
Accrued taxes 381,949 111,768
Accrued interest on deposits 1,792,481 1,909,612
Accrued profit sharing expense 117,439 120,392
Other liabilities 300,922 349,364
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TOTAL LIABILITIES 245,037,027 238,318,782
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STOCKHOLDERS' EQUITY
--------------------
Common Stock, $1.00 par; authorized 10,000,000
shares; 1,574,065 and 1,573,515 shares issued
and outstanding, respectively 1,574,065 1,573,515
Capital Surplus 7,119,124 7,105,124
Retained Earnings 27,764,659 27,590,464
Accumulated other comprehensive income, net
of tax of $264,855 and $170,826,
respectively in 1998 and 1997 183,936 417,092
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TOTAL STOCKHOLDERS' EQUITY 36,641,784 36,686,195
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $281,678,811 $275,004,977
============ ============
</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,
----------------------
1999 1998
---- ----
<S> <C> <C>
INTEREST INCOME:
Loans, including
fees $4,223,342 $4,544,681
Investment
securities 1,037,142 1,070,632
Federal funds sold 188,747 130,196
---------- ----------
5,449,231 5,745,509
INTEREST EXPENSE:
Interest on deposits:
NOW accounts 103,729 97,542
Savings and MMDA 182,118 185,916
Time 1,965,244 2,051,436
Borrowed funds 32,604 35,252
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2,283,695 2,370,146
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NET INTEREST INCOME 3,165,536 3,375,363
Loan loss provision 164,288 180,000
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NET INTEREST INCOME
AFTER PROVISION FOR
LOAN LOSSES 3,001,248 3,195,363
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OTHER INCOME:
Service charges on
deposit accounts 417,518 392,817
Other service
charges and fees 88,626 101,947
Security gains
(losses) 0 0
Other 32,292 55,358
---------- ----------
538,436 550,122
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<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
March 31,
----------------------
1999 1998
---- ----
OTHER EXPENSES:
Salaries and
employee benefits 1,124,573 1,085,005
Occupancy, net 207,695 220,618
Furniture and
equipment 164,068 187,537
Advertising and
public relations 93,050 126,943
Other operating 711,619 375,355
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2,301,005 1,995,458
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Income before
income taxes $1,238,679 $1,750,027
Applicable income
taxes 419,117 648,909
---------- ----------
NET INCOME $819,562 $1,101,118
========== ==========
PER SHARE DATA:
Net income per
share $0.52 $0.71
Dividends per share $0.41 $0.38
Number of shares 1,573,982 1,553,173
========== ==========
</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, 1999
Unrealized
Gains/<Losses>
Common Capital Retained on Securities Total
Stock Surplus Earnings Net of Taxes
-----------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Balance, December 31,
1998 $1,573,515 $7,105,124 $27,590,464 $417,092 $36,686,195
Comprehensive Income:
Net Income 819,562
Net change in
unrealized gains on
securities, net of
tax of $120,111 (233,156)
Comprehensive Income 586,406
Cash Dividends
($0.41 per share) (645,367) (645,367)
Common Stock Issued 550 14,000 14,550
---------- ---------- ----------- ----------- -----------
Balance,
March 31, 1999 $1,574,065 $7,119,124 $27,764,659 $183,936 $36,641,784
========== ========== =========== =========== ===========
</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 Nine Months Ended
March 31,
1998 1998
---- ----
<S> <C> <C>
Cash Flows From Operating Activities:
Net Income $819,562 $1,101,118
Adjustments to Reconcile Net Income
to Net Cash Provided by Operating Activities:
Provision for loan losses 164,288 180,000
Depreciation of premises and equipment 174,554 179,260
Amortization and accretion of investment
securities, net 27,602 26,373
Deferred income taxes (benefits) (34,260) 0
Gains from sale of other assets 4,362 0
Loans originated for sale (3,071,629)
Proceeds from sale of loans 2,868,050
(Increase) decrease in interest receivable 130,839 216,949
(Increase) decrease in prepaid expenses 912,312 (45,753)
Decrease in accrued interest payable (117,131) (128,007)
Increase in accrued taxes 228,548 332,944
Decrease in other liabilities (32,947) (22,386)
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Net Cash From Operating Activities 2,074,150 1,840,498
Cash Flows for Investing Activities:
Proceeds from maturity or sale
of investment securities 6,755,406 2,534,220
Proceeds from sale of investment securities 0 0
Proceed from sale of other assets 188,620 0
Purchase of investment securities (12,041,328) (1,904,179)
Net increase in loans 1,915,930) (962,821)
Capital expenditures (155,130) (165,050)
Proceeds from sale of other assets 18,254 0
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Net Cash Provided(Used) by Investing Activities (3,506,874) (497,830)
Cash Flows From Financing Activities:
Net increase in deposits 6,660,303 2,450,214
Cash dividends paid (645,367) (590,229)
Proceeds from issuance of common stock 14,550 60,333
Proceeds from borrowings 0 0
Borrowings repaid (43,714) (41,065)
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Net Cash From Financing Activities 5,985,772 1,879,253
Net Increase in Cash and Cash Equivalents 4,553,048 3,221,921
Cash and Cash Equivalents at Beginning of Peri 22,397,144 16,292,171
----------- ------------
Cash and Cash Equivalents at End of Period $26,950,192 $19,514,092
=========== ============
</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 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, 1998, which report was filed with the
Securities and Exchange Commission on or about March 31, 1999.
This Form 10-Q contains certain forward-looking statements
regarding, among other thins, the anticipated financial and operating
results of the registrant. Investors are cautioned not to place undue
reliance on these forward-looking statements, which speak only as of
the date hereof. The registrant undertakes no obligation to publicly
release any modifications or revisions of these statements to reflect
events or circustances occurring after the day hereof, or to reflect
the occurrence of unanticipated events.
In connection with the "safe harbor" provisions of the Private
Securities Litigation Reform Act of 1995, the registrant cautions
investors that future financial and operating results may differ
materially from those projected in forward-looking statements made by,
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
or on behalf of, the registrant. Such forward-looking statements
involve known and unknown risks and uncertainties, including, but not
limited to, adverse changes in interest rates, bad debt of a material
amount, loss of key personnel, and the Y2K issue. These risks and
uncertainties may cause the actual results or performance of the
registrant to be materially different from any future results or
performance expressed or implied by such forward-looking statements.
(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. Cash and cash equivalents increased $4,553,000
as of the end of the first quarter in 1999 due to an excess of
deposit growth over loan demand.
Marketable investment securities, particularly those of short
maturities, are the principal source of asset liquidity. Securities
maturing in one year or less amounted to approximately $16,153,000 at
March 31, 1999, representing 21.1 percent of the investment securities
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
portfolio as compared to the 21.8 percent level of one year earlier.
Management 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 forsee-
able 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.
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 frame-
work that is sensitive to differences in risk profiles among banks.
Under these guidelines, total capital consists of Tier I capital
(core capital, essentially stockholders' equity) and Tier II capital
(supplementary capital, including certain qualifying debt instruments
and a part of the allowance for possible loan losses). Assets are
assigned risk weights ranging from 0 percent to 100 percent depending
on the level of credit risk normally associated with such assets.
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
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 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,
1999 and December 31, 1998.
<TABLE>
<CAPTION>
March 31, December 31,
1999 1998
------------ ------------
(in thousands of dollars)
<S> <C> <C>
Tier I Capital to Risk-Weighted Assets:
Tier I capital 34,834 36,267
Risk-weighted assets 189,842 191,059
Tier I capital to risk-weighted assets 18.35% 18.98%
Regulatory requirement 4.00% 4.00%
Total Capital to Risk-Weighted Assets:
Total capital (Tier I plus Tier II) 37,216 38,662
Risk-weighted assets 189,842 191,059
Total capital to risk-weighted assets 19.60% 20.24%
Regulatory requirement 8.00% 8.00%
Tier I Capital to Total Assets (Leverage Ratio)
Tier I capital 34,834 36,267
Total assets 281,679 275,005
Tier I capital to total assets 12.37% 13.19%
Regulatory requirement 3.00% 3.00%
</TABLE>
[CAPTION]
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
(c) Results of Operations
Net income of the registrant was $819,562 in the first three
months of 1999. This amounted to a decrease of $281,556, or 25.6
percent, compared to the first three months of 1998. Net income was
lower as compared to the same period last year largely due to an
approximately $300,000 increase in operating expenses, as discussed
below, and an approximately $200,000 decrease in net interest income
(see below) offset by a $230,000 decrease in income taxes paid.
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, exclusive of the provision for loan losses,
of the registrant for the three month period ending March 31, 1999
decreased by $209,827, or 6.2 percent, as compared to the same period
in 1998, mainly due to a decrease in interest and fee income on loans
with a decrease in interest income on investment securities. Interest
income on federal funds sold was higher as compared to same period
last year. Total interest expense was lower as compared to the period
ending March 31, 1998 primarily because of a decrease in interest
paid on time deposits.
Total other expenses increased $305,547, or 15.3 percent, for the
three months ending March 31, 1999 as compared to same period last year
primarily due to increased other operating costs. These costs
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
included a loss from the uninsured portion of an insurance claim for
misappropriated funds and additional costs involving pending litigation.
Part II, Item 1 of this report discusses legal proceedings in more
detail.
The loan loss provision for the three months ended March 31,
1999, decreased $15,712, or 8.7 percent, over the same period in 1998.
Income before taxes decreased by $511,348 or 29.2 percent as
compared to the same period from the prior year. The decrease in
applicable income taxes for the first quarter of 1999 was $229,792 or
35.4 percent.
On a per share basis, net income was $.52 per share based on
1,573,982 shares for the first three months of 1999 as compared to
$.71 per share on 1,553,173 shares for the first three months of 1998.
Non-performing assets at December 31, 1998 included $192.9 thousand
in other real estate owned, $3,173.1 thousand in non-accrual loans, and
$252.6 thousand in loans past due ninety days or more as to interest or
principal payment. Additionally, there were no restructured loans at
year-end. At March 31, 1999, the corresponding figures were $246.7
thousand in other real estate owned, $3,347.6 thousand in non-accrual
loans, 282.3 thousand in loans past due ninety days or more, and no loans
restructured. Nonaccrual loans in both periods are the result of the
default on the loans to persons and entities related to the Bank's
former CEO. Management has since begun to review problem loans even
closer and more frequently and as a result, additional loans have been
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
placed in nonaccrual status which accounts for the increase since
year end.
The registrant has computed allowances for loan losses which
management believes to be sufficient. Although there was an increase
in nonaccrual loans from December 31, 1998, the allowance
for loan losses was increased, totaling $3,069.2 thousand, is deemed
sufficient by management to cover potential losses in the loan
portfolio.
YEAR 2000
The registrant continues its effort to assure that it is
ready for Year 2000. The registrant has adopted a broad-based
approach designed to encompass all areas whereby the registrant
must be ready or have contingencies in place.
The registrant's Year 2000 Steering Committee, active since
1997, meets on a regular basis and reports to the Board of Directors
regarding the status of any of the registrant's Year 2000 risks. The
areas being addressed by the Steering Committee include:
* Subsidary bank's primary data processing system. This
software and hardware is of the highest priority for day
to day operations, accounting and success of the
subsidary bank.
* Government systems, such as the Federal Reserve Bank
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
for check clearing, wire transfers and the free flow of
exchange of funds between institutions.
* The internal PC hardware and software systems within the
subsidiary bank.
* Credit administration, i.e., the risk associated with the
Year 2000 status of the subsidiary bank's loan customers
and depositors.
The Steering Committee has adopted a Year 2000 Plan which has
five phases: awareness, assessment and planning, renovation,
testing, and implementation. The registrant has completed the
first four of these phases and is currently in the Y2K Plan's
final phase. The registrant has completed its assessment of its
hardware, software and other information technologies system and
has found no irregularities. Consequently, at March 31, 1999,
the Year 2000 Steering Committee has determined that substantially
all of the registrant's core systems will operate properly in the
Year 2000.
The registrant has been in constant dialog with key vendors
and service providers with whom the registrant has a material
relationship and is performing due diligence over their
redemption and testing efforts in connection with their Y2K
readiness. All mission-critical vendors have informed the
registrant that they are Y2K compliant.
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
The registrant will continue to monitor its vendors and
suppliers to seek to minimize risks to the registrant and its
customers.
Customer awareness of the registrant's Y2k readiness is
critical. Steps taken by the registrant's subsidiary bank to
prepare for the Year 2000 will be shared with customers through
newsletters, statement stuffers, the Y2K training of employees, and
Y2K seminars for customers. The registrant believes customers must have
a high confidence level in the subsidiary bank at the end of 1999 to
avoid mass withdrawals of funds from the registrant. The
registrant is working toward a comprehensive customer awareness
program during the 1999 year.
The registrant has required Y2K readiness information from
all of its major borrowers and funds providers. The registrant
believes commercial borrowers must realize the impact that the
Y2K issue could have on their respective businesses. Based upon
information received from these borrowers, the registrant has
both designated a specific additional amount in its allowance
for loan losses and implemented a plan to monitor the Y2K
readiness of borrowers not currently in compliance.
Based on the registrant's current estimate, the registrant
has allocated $137,400 in total to fund testing and replacement
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
costs in connection with Year 2000 issues. This estimate
excludes internal personnel costs, as the registrant does not
track and specifically assign these costs. To date, the
registrant has paid approximate 41% of these projected costs. At
this time, management does not believe these costs will have a
material effect on the operations or financial performance of the
registrant. The cost expected to be incurred the remaining
portion of the year will be used to finalize and test the
registrant's contingency plan and to finalize Year 2000
compliance of any non-critical technology systems currently not
in compliance, if any
The registrant believes that the reasonably likely worse
case scenario that could occur as a result of the year 2000
issue is loss of electricity and telephone services. Deposit,
withdrawal and other transaction processing for customers of the
subsidiary bank depend directly on the registrant's information
technology systems, and also on the use of electricity as well
as telephone services. While the registrant believes its own
systems to be Y2K ready, loss of power could significantly delay
the subsidiary bank's ability to adequately process bank and
customer transactions, thus adversely impacting the registrant's
operations. The registrant has developed a Year 2000 Contingency
Plan to address the possibility of power outages and telephone
service disruption, as well as other operational risks that could
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
occur as a result of the Y2K issue.
The Contingency Plan was approved by the Board of Directors
in January 1999 and has since been amended to include more detail.
The Plan was designed to assure that mission-critical systems
will continue in the event that one or more systems should fail.
The Contingency Plan addresses all aspects of the registrant's
operation systems identifying those systems as mission critical,
semi-critical, or non-critical. Alternatives are in place for
many of the systems identified detailing information on
contingency processes, their capabilities, and the personnel that
are responsible for addressing and correcting system issues and
supervising alternative plans. For example, certain personnel
are identified to test electricity and telephone services PM
Saturday, January 1, 2000. The Contingency Plan also identifies
contact individuals' phone numbers and addresses. The Plan
further provides both on-site and off-site locations, materials,
personnel, and procedures to implement back up transaction
processing in the event electricity is not restored by Monday,
January 3, 2000, going forward. The contingency plan will be updated
continually as final testing of other system applications is completed and
additional information is received the subsidiaries' vendors and suppliers
as to Y2K readiness.
The above discussion of Year 2000 as used includes numerous
forward-looking statements reflecting management's current
assessment and estimates with respect to the registrant's Year
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Result of Operations. (Continued)
2000 compliance efforts and the impact of Year 2000 issues on the
registrant's business and operations. Statements are based on
information currently available to management. Various factors
could cause actual results to differ materially from those
contemplated by such estimates and forward-looking
statements, including many factors that are beyond control of the
registrant. These factors include, but are not limited to the
success of the registrant in identifying systems and programs that
are not Year 2000 compliant, the continuing availability of
experienced consultants and information technology personnel,
the ability of third parties to complete their own Year 2000
remediations, and the ability of the registrant to implement
contingency plans.
<PAGE>
PART I - FINANCIAL INFORMATION
------------------------------
Item 3. Quantitative and Qualitative Disclosures About Market Risks.
The registrant's primary component of market risks is interest
rate volatility. Fluctuations in interest rates will ultimately impact
both the level of income and expense recorded on a large portion of the
registrant's assets and liabilities, and the market value of all
interest-earning assets and interest-bearing liabilities, other than
those which possess a short term to maturity. Based upon the nature
of the registrant's operations, the registrant is not subject to foreign
currency exchange or commodity price risk.
Interest rate risk management focuses on the earnings risk
associated with changing interest rates. Management seeks to maintain
profitability in both immediate and long term earnings through funds
management and interest rate risk management. The registrant's rate
sensitive position has an important impact on earnings. Management of
the registrant meets regularly to analyze the rate sensitivity position,
focusing on the spread between the cost of funds and interest yields
generated primarily through loans and investments.
There have been no material changes in reported market risks
during the three months ended March 31, 1999.
<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, except as follows:
The registrant was the defendant in a declaratory judgment action
filed by BancInsure, Inc.("BancInsure"), in the United States District
Court for the Middle District of Tennessee. The action was settled
during the first quarter of 1999 and the Corporation sustained a loss
of $158,003 as a result.
The Registrant has filed suits in Giles County, Tennessee,
Chancery Court against Carroll M. Curry, John T. Curry, Connie Curry,
Cathy Curry, C & C Partnership and C & T Partnership (the "Curry
Debtors") to collect promissory notes on which such persons are liable
as makers or guarantors. The Curry Debtors filed a counter-complaint
in March 1999 against the Bank alleging (i) that the Bank knew or
should have known of certain activities of Mike Curry, the Bank's
former Chairman and Chief Executive Officer, and that the Bank had a
duty to inform the Curry's of these activities, (ii) that the Bank
was negligent and reckless in placing Mike Curry in a position to
commit fraud on the Currys and (iii) the Bank, through its officers,
and directors and employees, intentionally, recklessly and fraudulently
concealed Mike Curry's fraudulent conduct from the Currys. The counter
claim also alleges violations of Federal Banking Law, the Tennessee
Consumer Protection Act and alleges that certain Curry Debtor
<PAGE>
PART II - OTHER INFORMATION
---------------------------
Item 1. Legal Proceedings. (Continued)
obligations were the result of coersion and duress. The counter claim
seeks $8 million in compensatory and $20 million in punitive damages.
The Registrant will continue to vigorously contest all claims asserted
by the Currys in their counter-complaint, which the Bank believes are
totally without merit.
AmSouth Bank has filed suit in the United States Bankruptcy Court
case of Robert M. Curry to recover for alleged breaches of presentment
and warranty claims arising under the Uniform Commercial Code, for
conversion of collateral allegedly pledged to AmSouth and for an
equitable subordinate of the Bank's claims in the Curry bankruptcy case
and subordination of the Bank's security interest in Curry Debtors'
stock. The Bank will continue to vigorously contest all claims in this
case.
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders.
None
Item 5. Other Information
<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 14, 1999 /s/ James T. Cox
---------------- ---------------------------------------
James T. Cox, President and Chief
Executive Officer
Date: May 14, 1999 /s/ Harold Bass
---------------- ---------------------------------------
Harold Bass, Secretary/Treasurer
(The Corporation's Principal Financial
Officer and Principal Accounting
Officer)
<PAGE>
INDEX TO EXHIBITS FOR THE FIRST PULASKI NATIONAL CORPORATION
------------------------------------------------------------
FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 1999
--------------------------------------------------
(11) Statement regarding computation of per share earnings
(27) Financial Data Schedules
<PAGE>
[TYPE] EX-11
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, 1999, 1,573,982 shares were used
in the computation; 1,553,173 shares were used in the computation for
the quarter ended March 31, 1998.
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S 10-Q FOR PERIOD ENDING MARCH 31, 1999 AND IS QUALIFIED IN
ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS AND THE NOTES
THERETO.
</LEGEND>
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-1999
<CASH> 10,801,467
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 16,148,725
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 50,638,234
<INVESTMENTS-CARRYING> 25,825,233
<INVESTMENTS-MARKET> 26,199,897
<LOANS> 167,824,561
<ALLOWANCE> 3,069,246
<TOTAL-ASSETS> 281,678,811
<DEPOSITS> 240,459,829
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,592,791
<LONG-TERM> 1,984,407
0
0
<COMMON> 1,574,065
<OTHER-SE> 35,067,719
<TOTAL-LIABILITIES-AND-EQUITY> 281,678,811
<INTEREST-LOAN> 4,223,342
<INTEREST-INVEST> 1,037,142
<INTEREST-OTHER> 188,747
<INTEREST-TOTAL> 5,449,231
<INTEREST-DEPOSIT> 2,251,091
<INTEREST-EXPENSE> 2,283,695
<INTEREST-INCOME-NET> 3,165,536
<LOAN-LOSSES> 164,288
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,301,005
<INCOME-PRETAX> 1,238,679
<INCOME-PRE-EXTRAORDINARY> 819,562
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 819,562
<EPS-PRIMARY> 0.52
<EPS-DILUTED> 0.52
<YIELD-ACTUAL> 1.23
<LOANS-NON> 3,347,626
<LOANS-PAST> 282,342
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,935,534
<CHARGE-OFFS> 123,056
<RECOVERIES> 92,480
<ALLOWANCE-CLOSE> 3,069,246
<ALLOWANCE-DOMESTIC> 3,069,246
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
