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 JUNE 30, 1994
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 000-12359
SECURITY CAPITAL BANCORP
(Exact name of registrant as specified in its charter)
NORTH CAROLINA 56-1354694
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
507 WEST INNES STREET, SALISBURY, NORTH CAROLINA 28144
(Address of principal executive offices) (Zip Code)
(704) 636-3775
(Registrant's telephone number, including area code)
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
As of July 29, 1994, there were issued and outstanding 11,742,962 shares of
the Registrant's common stock, no par value per share.
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Page 1 of 16
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PART I. FINANCIAL INFORMATION
ITEM 1. Financial Statements.
The following unaudited consolidated financial statements within Item 1
include, in the opinion of management of Security Capital Bancorp ("SCBC"), all
adjustments (consisting only of normal recurring adjustments) necessary for a
fair presentation of such financial statements for the periods indicated.
2
<PAGE>
SECURITY CAPITAL BANCORP AND SUBSIDIARIES
Consolidated Balance Sheets
(UNAUDITED)
<TABLE>
<CAPTION>
Assets JUNE 30, DECEMBER 31,
1994 1993
(Dollars in Thousands)
<S> <C> <C>
Cash and due from banks $ 18,072 28,102
Interest-bearing balances in other banks 4,795 5,145
Federal funds sold - 3,450
Investment securities held to maturity (market
value of $75,909 at June 30, 1994 and
$375,046 at December 31, 1993) (note 2) 77,241 368,353
Investment securities available for sale (note 2) 281,600 -
Loans, net of unearned income ($2,501 at June
30, 1994 and $2,698 at December 31, 1993) 494,440 473,202
Less allowance for loan losses 7,118 7,227
Loans, net 487,322 465,975
Loans held for sale 5,379 18,409
Premises and equipment, net 18,530 18,360
Other assets 21,176 21,141
Total assets $ 914,115 928,935
Liabilities and Shareholders' Equity
Deposit accounts:
Demand, noninterest-bearing 65,040 67,830
Interest-bearing 662,109 673,854
Time deposits over $100 38,703 42,772
Total deposit accounts 765,852 784,456
Advances from the Federal Home Loan Bank 7,000 8,000
Other borrowed money 8,064 1,764
Other liabilities 7,865 10,495
Total liabilities 788,781 804,715
Stockholders' Equity:
Preferred stock, no par value, 5,000,000 shares
authorized; none issued and outstanding - -
Common stock, no par value, 25,000,000 shares
authorized; 11,742,962 and 11,682,837 shares
issued and outstanding at June 30, 1994
and December 31, 1993, respectively 51,435 51,167
Retained earnings, substantially restricted 77,400 73,053
Unrealized loss on investment securities available
for sale (note 2) (3,501) -
Total stockholders' equity 125,334 124,220
Total liabilities and stockholders' equity $ 914,115 928,935
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
3
<PAGE>
SECURITY CAPITAL BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
(Dollars in Thousands, Except Share Data)
<S> <C> <C>
INTEREST INCOME:
Loans $ 19,539 21,192
Investment securities
Taxable 10,144 10,626
Nontaxable 380 569
Other 431 390
Total interest income 30,494 32,777
INTEREST EXPENSE:
Deposit accounts 12,432 13,859
Borrowings 348 493
Total interest expense 12,780 14,352
Net interest income 17,714 18,425
Provision for loan losses 172 337
Net interest income after provision
for loan losses 17,542 18,088
OTHER INCOME:
Loan servicing and other loan fees 801 607
Deposit and other service charge income 2,212 2,591
Gain on sales of investments 6 226
Gain on sales of loans, net 136 454
Gain on sales of premises and equipment 181 -
Brokerage commissions 912 732
Other 330 601
Total other income 4,578 5,211
OTHER EXPENSE:
Personnel 6,428 6,843
Net occupancy 1,803 1,709
Telephone, postage, and supplies 804 827
Federal and other insurance premiums 1,024 847
Professional and other services 405 448
Other 1,389 1,689
Total other expense 11,853 12,363
Income before income taxes 10,267 10,936
Income taxes (note 3) 3,342 3,315
Net income $ 6,925 7,621
Net income per share (note 4) $ .59 .64
Dividends per share $ .22 .19
Weighted average shares outstanding 11,714,551 11,839,871
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
SECURITY CAPITAL BANCORP AND SUBSIDIARIES
Consolidated Statements of Income
FOR THE THREE MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
(Dollars in Thousands, Except Share Data)
<S> <C> <C>
INTEREST INCOME:
Loans $ 9,916 10,500
Investment securities
Taxable 5,114 5,295
Nontaxable 188 286
Other 212 198
Total interest income 15,430 16,279
INTEREST EXPENSE:
Deposit accounts 6,170 6,872
Borrowings 172 232
Total interest expense 6,342 7,104
Net interest income 9,088 9,175
Provision for loan losses 84 153
Net interest income after provision
for loan losses 9,004 9,022
OTHER INCOME:
Loan servicing and other loan fees 392 325
Deposit and other service charge income 972 1,236
Gain on sales of investments 6 226
Gain on sales of premises and equipment 226 -
Gain on sales of loans, net 29 209
Brokerage commissions 404 363
Other 111 241
Total other income 2,140 2,600
OTHER EXPENSE:
Personnel 3,263 3,332
Net occupancy 910 869
Telephone, postage, and supplies 383 408
Federal and other insurance premiums 512 416
Professional and other services 267 270
Other 765 905
Total other expense 6,100 6,200
Income before income taxes 5,044 5,422
Income taxes (note 3) 1,581 1,770
Net income $ 3,463 3,652
Net income per share (note 4) $ .30 .31
Dividends per share $ .11 .095
Weighted average shares outstanding 11,723,436 11,839,133
</TABLE>
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
5
<PAGE>
SECURITY CAPITAL BANCORP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
FOR THE SIX MONTHS ENDED JUNE 30, 1994 AND 1993
(UNAUDITED)
<TABLE>
<CAPTION>
1994 1993
(Dollars in Thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 6,925 7,621
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 172 337
Depreciation 918 708
Amortization of premiums on securities held
to maturity 60 962
Amortization of premiums on securities
available for sale 1,281 -
Gain on sales of investments (6) (226)
Gain on sales of premises and equipment, net (181) -
Change in loans held for sale, net 13,030 (6,158)
(Increase) decrease in other assets 2,595 (954)
Increase (decrease) in other liabilities (2,630) 1,702
Net cash provided by operating
activities 22,164 3,992
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities, sale, and issuer calls of
investment securities held to maturity 2,670 41,085
Proceeds from maturities of investment securities
available for sale 52,549 -
Purchases of investment securities held to maturity (41,417) (54,978)
Purchases of investment securities available for
sale (10,936) -
Decrease (increase) in loans, net (22,339) 14,497
Proceeds from sales of premises and equipment 340 -
Capital expenditures for premises and equipment (1,247) (1,234)
Net cash used in investing activities (20,380) (630)
CASH FLOWS FROM FINANCING ACTIVITIES:
Decrease in deposits (18,604) (2,158)
Proceeds from Federal Home Loan Bank advances - 11,670
Repayment of Federal Home Loan Bank advances (1,000) (13,530)
Increase in other borrowed money, net 6,300 27
Dividends paid to stockholders (2,578) (2,254)
Proceeds from stock options exercised 268 371
Purchase and retirement of common stock, net - (2,534)
Net cash used in financing activities (15,614) (8,408)
Net decrease in cash and cash equivalents (13,830) (5,046)
Cash and cash equivalents at beginning of period 36,697 33,331
Cash and cash equivalents at end of period $ 22,867 28,285
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 11,624 11,593
Income taxes 3,513 4,395
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING ACTIVITIES:
Loans receivable transferred to real estate
owned $ 820 800
Investments transferred to available for sale 329,799 -
Unrealized loss on available for sale securities
net of tax benefit of $1,810 3,501 -
SEE ACCOMPANYING NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
</TABLE>
6
<PAGE>
SECURITY CAPITAL BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
JUNE 30, 1994
(UNAUDITED)
(1) Principles of Consolidation and Reporting
The accompanying unaudited consolidated financial statements include the
accounts of Security Capital Bancorp("SCBC"),a North Carolina corporation
organized as a multi-bank holding company, and its wholly-owned subsidiaries,
Security Bank and Trust Company ("Security Bank"), OMNIBANK, Inc., A State
Savings Bank ("OMNIBANK"), Citizens Savings, Inc., SSB ("Citizens"), Home
Savings Bank, Inc., SSB ("Home Savings"), First Cabarrus Corporation ("FCC"),
and Estates Development Corporation ("EDC"). All significant intercompany
balances have been eliminated.
On May 31, 1994, Security Bank, through an intercompany transaction,
purchased all the assets and assumed all the liabilities of FCC from SCBC.
FCC was in the process of being dissolved at June 30, 1994.
(2) Investment Securities
The Financial Accounting Standards Board ("FASB") has issued Standard No.
115, "Accounting for Certain Investments in Debt and Equity Securities," that
requires debt and equity securities held: (i) to maturity to be classified as
such and reported at amortized cost; (ii) for current resale to be classified as
trading securities and reported at fair value, with unrealized gains and losses
included in current earnings; and (iii) for any other purpose to be classified
as securities available for sale and reported at fair value, with unrealized
gains and losses excluded from current earnings and reported as a separate
component of stockholders' equity. SCBC adopted Standard No. 115 as of January
1, 1994. In connection with this adoption, as of June 30, 1994, SCBC classified
$281,600,000 of investment securities as securities available for sale. These
securities had net unrealized losses of approximately $5,311,000, which resulted
in an unrealized securities loss, net of income tax effects, of $3,501,000 being
recorded as a decrease to stockholders' equity as of June 30, 1994. SCBC has no
securities classified as trading securities.
(3) Income Taxes
Effective January 1, 1993, SCBC changed its method of accounting for income
taxes from the deferred method to the asset and liability method required by
FASB Statement of Financial Accounting Standards No. 109 "Accounting for Income
Taxes" ("Statement 109"). The cumulative effect of adopting Statement 109 as of
January 1, 1993, was to increase net income for the first quarter of 1993 by
approximately $388,000. Due to immateriality, the cumulative effect of this
accounting change has not been separately disclosed in the consolidated
statement of income.
(4) Net Income Per Share
Net income per share has been computed by dividing net income by the
weighted average number of shares outstanding.
(5) Pending Acquisition
On April 6, 1994, SCBC announced that it and Fairfield Communities, Inc.
("FCI") had executed a Stock Purchase Agreement concerning SCBC's acquisition of
First Federal Savings and Loan Association of Charlotte, North Carolina, a
subsidiary of FCI ("First Federal"). First Federal operates ten banking
offices and had total assets of approximately $300 million at June 30, 1994.
Under the terms of the Agreement, SCBC will acquire all of the capital stock
of First Federal for a cash payment of approximately $40 million plus an
interim earnings adjustment, with an offsetting payment by FCI from the
conveyance by First Federal to FCI of certain real estate owned, classified
7
<PAGE>
SECURITY CAPITAL BANCORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
loans and other assets, which, at
March 28, 1994, aggregated approximately $19.8 million, net of certain reserves.
FCI will also purchase First Federal's lot and timeshare contract receivables,
including the underlying real estate assets (in the case of cancellations or
foreclosures under such contracts), which, at December 31, 1993, totalled
approximately $53.5 million. Approximately $1.4 million of SCBC's cash
payment will be deferred pending the resolution of certain litigation
involving FCI and First Federal. Under certain conditions, the purchase price
will be increased by the adjusted earnings of First Federal from October 1,
1993 through August 1, 1994 or the date of closing, whichever is
earlier, subject to a cap of $1.825 million. Applications for approval of the
acquisition have been filed with applicable federal and state regulatory
authorities. Assuming all conditions are satisfied, the parties currently
expect the acquisition to occur by September 30, 1994.
8
<PAGE>
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Comparison of Financial Condition and Operating Results as of and for the Six
Months ended June 30, 1994 and 1993
Net income for the six months ended June 30, 1994, was $6,925,000, or $.59
per share, compared with net income of $7,621,000, or $.64 per share, for the
same period in 1993. This 9.1% decrease is primarily attributable to a decrease
in net interest income, a decrease in gain on sales of loans, a decrease in gain
on sales of investments, and the required adoption in 1993 of Statement of
Financial Accounting Standards No. 109, "Accounting for Income Taxes"
("Statement 109") which resulted in a net benefit to SCBC of approximately
$388,000 for the six months ended June 30, 1993. Earnings per share, excluding
the effect of Statement 109, would have been $.61 for the six months ended June
30, 1993.
Net interest income amounted to $17,714,000 for the six months ended June
30, 1994, compared to $18,425,000 for the same period in 1993, representing a
3.9% decrease. This decrease is primarily attributable to the reduction in
interest income from $32,777,000 in 1993 to $30,494,000 in 1994. This decrease
is a result of the yields on new investments being less than the yields on
maturing investments and the refinancing of existing portfolio mortgage loans at
lower fixed rates. This is reflected in the average yield on interest-earning
assets decreasing 60 basis points from 7.59% in 1993 to 6.99% in 1994. This
decrease in interest income has been partially offset by the reduction in
interest expense from $14,352,000 in 1993 to $12,780,000 in 1994. The average
rate on interest-bearing liabilities has decreased 46 basis points from 4.00% in
1993 to 3.54% in 1994. The net yield on average interest-earning assets has
decreased 19 basis points from 4.27% in 1993 to 4.08% in 1994. In future
periods, SCBC could experience a reduction in interest income should prepayments
occur and mortgage loans price downward.
The provision for loan losses for the six months ended June 30, 1994 was
$172,000, representing a decrease of $165,000, or 49.0%, from the $337,000
provision reported in the comparable period in 1993. This decrease is due
to the continual decline of non-performing assets and management's assessment
of the allowance for loan losses in relation to the overall loan portfolio.
The following table presents information on non-performing assets,
including non-accrual loans, accruing loans 90 days or more past due,
restructured loans and real estate owned as of each of the dates shown:
AT AT
JUNE 30, DECEMBER 31,
1994 1993
(Dollars in Thousands)
Non-accrual loans $1,144 1,573
Accruing loans 90 days or more past due 288 420
Restructured loans 162 186
Real estate owned 469 951
$2,063 3,130
Non-performing loans and real estate owned as
a percentage of total assets .23% .34
Loans classified for regulatory purposes as loss, doubtful, substandard, or
special mention that have not been included in the table above do not (1)
represent or result from trends or uncertainties which management reasonably
expects will materially impact future operating results, liquidity, or capital
resources, or (2) represent material credits about which management is aware of
any information which causes management to have serious doubts as to the ability
of such borrowers to comply with the repayment terms.
9
<PAGE>
Other income of $4,578,000 for the six months ended June 30, 1994,
represents a decrease of $633,000, or 12.1%, from other income of $5,211,000
reported in the comparable period in 1993. This decrease is primarily
attributable to a decrease in net gain on sales of loans of $318,000, or 70.0%,
which resulted from the increase in interest rates during the first six months
of 1994. Deposit and other service charge income decreased $379,000, or 14.6%,
to $2,212,000. This decrease is partially due to a decline in deposit accounts.
Gain on sales of investments decreased $220,000, or 97.3%, due to the sale and
merger of Atlantic States Bankcard Association, Inc. ("ASBA") in 1993. As a
stockholder in ASBA, SCBC received proceeds for its stock that resulted in this
gain in 1993. SCBC had net gain on sales of fixed assets of $181,000 for the
six months ended June 30, 1994, primarily due to the sale of a parcel of real
estate. Other decreased $271,000, or 45.1%, due to a decrease in gain on real
estate owned and several other items included in the total. Loan servicing and
other loan fees increased $194,000, or 32.0%, to $801,000 due to an increase in
loan fees, charge card fees, and late charges. Brokerage commission increased
$180,000, or 24.6%, due to an increase in volume, which can be attributed to
the expansion of the operation along with depositors continuing to seek higher
yields through alternative investments.
Other expense decreased $510,000, or 4.1%, to $11,853,000 for the six
months ended June 30, 1994. Personnel decreased $415,000, or 6.1%, due to
the continued consolidation of various operations. Other decreased $300,000,
or 17.8%, due to the decrease of several items included in this total.
Income taxes increased $27,000, or 0.8%, to $3,342,000 for the six months
ended June 30, 1994, while income before income taxes decreased $669,000, or
6.1%, to $10,267,000 in 1994 from $10,936,000 in the comparable period in 1993.
Excluding the impact of adoption of Statement 109, income taxes for the six
months ended June 30, 1993, would have been $3,703,000 or 33.9% of income before
income taxes, compared to 32.6% in 1994.
Total assets of SCBC at June 30, 1994 were $914,115,000, a decrease of
$14,820,000, or 1.6%, from the December 31, 1993, total of $928,935,000. At
June 30, 1994, net loans receivable, including loans held for sale, were
$492,701,000, an increase of $8,317,000, or 1.7%, over the December 31, 1993
amount. This slight increase is a result of modest increases in various types
of loans. Deposit accounts decreased $18,604,000, or 2.4%, to $765,852,000 at
June 30, 1994. This decrease is partially attributable to the completion of the
sale of Home Savings' Gastonia office to First Citizens Bank & Trust Co. ("First
Citizens") and the purchase of First Citizens' Bessemer City office during the
quarter ended June 30, 1994. With the transaction, First Citizens assumed
approximately $6.4 million in deposits in Gastonia and Home Savings assumed
approximately $2.7 million in deposits in Bessemer City. Additionally,
depositors continued seeking higher yields through alternative investments.
Stockholders' equity was $125,334,000, or 13.7% of total assets, at June 30,
1994.
The following table sets forth the average yield on interest-earning assets
and the average rate paid on interest-bearing liabilities of SCBC as of and for
the periods indicated.
SIX MONTHS ENDED AT AT
JUNE 30, JUNE 30, DECEMBER 31,
1994 1993 1994 1993
(annualized)
Average yield on loans 8.01% 8.46% 8.02% 7.78%
Average yield on interest-
earning assets 6.99 7.59 6.99 6.93
Average rate on deposits 3.49 3.93 3.54 3.63
Average rate on interest-
bearing liabilities 3.54 4.00 3.61 3.69
Loans/deposits spread 4.52 4.53 4.48 4.15
Asset/liability spread 3.45 3.59 3.38 3.24
Net yield on average
interest-earning assets 4.08 4.27 - -
10
<PAGE>
Comparison of Financial Condition and Operating Results as of and for the Three
Months ended June 30, 1994 and 1993
Net income was $3,463,000 or $.30 per share, for the three months ended June
30, 1994, compared with net income of $3,652,000, or $.31 per share, for the
same period in 1993. This 5.2% decrease is primarily attributable to decreased
other income as discussed below. Net interest income amounted to $9,088,000 for
the three months ended June 30, 1994, compared to $9,175,000 for the same period
in 1993, representing a slight decrease of 0.9%.
The provision for loan losses for the three months ended June 30, 1994, was
$84,000, representing a decrease of $69,000, or 45.1%, from the $153,000
provision reported in the comparable period in 1993. As previously discussed,
this decrease was primarily due to the continual decline of non-performing
assets, and management's assessment of the allowance for loan losses in
relation to the overall loan portfolio.
Other income of $2,140,000 for the three months ended June 30, 1994,
represents a decrease of $460,000, or 17.7%, from other income reported in the
comparable period in 1993. This decrease was primarily due to the reduced net
gain on sales of loans, reduced deposit and other service charge income, reduced
gain on sales of investments, and reduced other previously discussed. Net gain
on sales of fixed assets were primarily due to the sale of a parcel of real
estate.
Other expense decreased $100,000, or 1.6%, to $6,100,000 for the three
months ended June 30, 1994. Other decreased $140,000, or 15.5%, due to the
decrease of several items included in this total.
Income taxes amounted to 31.3% of income before income taxes for the three
months ended June 30, 1994, compared with 32.6% for the comparable period in
1993.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The principal sources of liquidity for SCBC's banking subsidiaries are
deposit accounts, Federal Home Loan Bank advances, principal and interest
payments on loans, interest received on investment securities, and fees.
Deposit accounts are considered a primary source of funds supporting the banking
subsidiaries' lending and investment activities. At June 30, 1994, the SCBC
banking subsidiaries were in compliance with all regulatory liquidity
requirements.
At June 30, 1994, SCBC and its banking subsidiaries were in compliance with
all applicable regulatory capital requirements. The following table compares
SCBC's regulatory capital as of June 30, 1994, with the two minimum capital
standards established by the Board of Governors of the Federal Reserve System
(the "FRB").
LEVERAGE CAPITAL RISK-BASED CAPITAL
AMOUNT % OF ASSETS AMOUNT % OF BASE
(Dollars in Thousands)
SCBC- actual $125,334 13.54% $131,182 28.12%
Minimum capital standards 27,765 3.00 1 37,323 8.00
Excess of actual
regulatory capital over
minimum regulatory
capital standards $ 97,569 10.54% $ 93,859 20.12%
1 The FRB minimum leverage ratio requirement is 3% to 5%, depending on the
institution's composite rating as determined by its regulators. The FRB has
not advised SCBC of any specific requirement applicable to it.
Management is not aware of any current recommendations by regulatory
authorities which, if implemented, would have a material effect on liquidity,
capital resources or operations of SCBC or its banking subsidiaries.
At June 30, 1994, outstanding loan commitments approximated $5,105,000
(consisting of $1,759,000 in fixed rate loans and $3,346,000 in variable rate
loans), preapproved but unused lines of credit totalling $84,190,000 and standby
letters of credit aggregating $689,000.
At June 30, 1994, SCBC had commitments to sell approximately $2,750,000 of
fixed rate mortgage loans at prices approximating carrying value.
12
<PAGE>
INTEREST SENSITIVITY ANALYSIS
The following table sets forth the dollar amount of maturing assets and
liabilities as of June 30, 1994, and the difference between them for the
repricing periods indicated:
<TABLE>
<CAPTION>
JUNE 30, 1994
(Dollars in Thousands)
0-90 91-180 181-365 1-3 3-5 OVER 5
DAYS DAYS DAYS YEARS YEARS YEARS TOTAL
<S> <C> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS
Interest-bearing balances in
other banks $ 4,795 - - - - - 4,795
Investment securities
held to maturity - - 6,522 12,411 39,564 18,744 77,241
Investment securities
available for sale 21,110 22,179 47,555 131,720 53,782 5,254 281,600
Loans 1 213,287 80,171 72,473 41,320 34,993 57,575 499,819
Total $ 239,192 102,350 126,550 185,451 128,339 81,573 863,455
INTEREST-BEARING LIABILITIES
Deposits 250,582 83,034 93,504 187,910 85,695 87 700,812
FHLB advances - - - 7,000 - - 7,000
Other borrowed money 8,064 - - - - - 8,064
Total $ 258,646 83,034 93,504 194,910 85,695 87 715,876
Interest sensitivity gap $ (19,454) 19,316 33,046 (9,459) 42,644 81,486 147,579
Cumulative interest
sensitivity gap $ (19,454) (138) 32,908 23,449 66,093 147,579
Cumulative ratio of interest-
earning assets to interest-
bearing liabilities 92.48% 99.96% 107.56% 103.72% 109.23% 120.62%
1 Includes loans held for sale.
</TABLE>
ACCOUNTING MATTERS
Postemployment Benefits
In November 1992, the FASB issued Statement of Financial Accounting
Standards No. 112, "Employers' Accounting for Postemployment Benefits"
("Statement 112"), which is effective for fiscal years beginning after December
15, 1993. Statement 112 establishes accounting standards for employers who
provide benefits to former or inactive employees after employment but before
retirement (referred to in this statement as postemployment benefits). Those
benefits include, but are not limited to, salary continuation, supplemental
unemployment benefits, severance benefits, continuation of benefits such as
health care benefits and life insurance coverage, etc. There was no material
impact on SCBC's consolidated financial statements since SCBC generally does not
provide such benefits.
13
<PAGE>
Accounting by Creditors for Impairment of a Loan
The FASB has issued standard No. 114, "Accounting by Creditors for
Impairment of a Loan," which requires that all creditors value all specifically
reviewed loans for which it is probable that the creditor will be unable to
collect all amounts due according to the terms of the loan agreement at either
the present value of expected cash flows discounted at the loan's effective
interest rate, or if more practical, the market price or value of collateral.
This Standard is required for fiscal years beginning after December 15, 1994.
The Corporation has not determined the impact, if any, of this Standard on its
consolidated financial statements.
Stock-based Compensation
The FASB has issued an Exposure Draft for a proposed SFAS entitled
"Accounting for Stock-based Compensation" which addresses the recognition and
measurement of stock-based compensation paid to employees, including employee
stock options, restricted stock, and stock appreciation rights. Employers would
be required to recognize a charge to earnings for such awards, whereas generally
no charge is recognized under current accounting practices. Compensation
expense would be measured as the fair value of the award at the grant date with
subsequent adjustments made to reflect the outcome of certain service or
performance assumptions made at the date of grant but not for effects of
subsequent changes in the price of the entity's stock. Disclosure provisions
of the proposed statement may be effective for fiscal years beginning after
December 31, 1994 with recognition provisions being effective for awards
granted after December 31, 1996.
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PART II. OTHER INFORMATION
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<S> <C> <C>
ITEM 1. Legal Proceedings. None
ITEM 2. Changes in Securities. None
ITEM 3. Defaults Upon Senior Securities. None
ITEM 4. Submission of Matters to a Vote of Security Holders.
At the annual meeting of
shareholders held on April 28, 1994,
the matters voted upon,
the number of affirmative votes, and
the number of negative votes (where
applicable) cast with respect to each such
matter were as follows:
VOTE
AFFIRMATIVE NEGATIVE WITHHELD
1) To consider and vote
upon the
election of seven
directors to
serve for three-year
terms or
until their
successors are duly
elected and
qualified.
The following
individuals were
elected as directors
of SCBC for
terms expiring in
1997:
John M.Barnhardt 8,455,529 - 58,598
Edward A.Brown 8,454,042 - 60,085
Henry B. Gaye 8,455,729 - 58,398
Dan L. Gray 8,455,729 - 58,398
Ervin E.Lampert, Jr. 8,454,042 - 60,085
Harold Mowery 8,454,042 - 60,085
Fred J. Stanback, Jr. 8,455,729 - 58,398
2) To consider and vote
upon the
Corporation's
OMNIBUS Stock
Ownership and Long
Term
Incentive
Compensation Plan. 7,919,020 383,782 211,325
3) To ratify the selection
of KPMG
Peat Marwick as the
independent
auditors of SCBC for
the 1994 year 8,396,566 117,561 -
ITEM 5. Other Information. None
ITEM 6. Exhibits and Reports on Form 8-K.
a) Report on Form 8-K,
filed April
13, 1994, concerning
execution of
a definitive Stock
Purchase
Agreement between
Registrant and
Fairfield
Communities, Inc.
</TABLE>
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report on Form 10-Q to be signed on its behalf
by the undersigned, thereunto duly authorized.
SECURITY CAPITAL BANCORP
(Registrant)
Date: August 12, 1994 By:/s/ PRESSLEY A. RIDGILL
Pressley A. Ridgill
SENIOR VICE PRESIDENT, TREASURER
AND CHIEF FINANCIAL OFFICER
(DULY AUTHORIZED REPRESENTATIVE)
16
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