<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
Form 10-QSB
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended Commission File Number 0-16187
March 31, 1995 _______
______________
FWB BANCORPORATION
______________________
(Exact name of small business issuer as specified in its charter)
Maryland 52-1332050
__________ _____________
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
1800 Rockville Pike, Rockville, Maryland 20852
______________________________________________
(Address of principal executive offices)
(301) 770-1300
________________
(Issuer's telephone number, including area code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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
___ ___
At April 30, 1995, there were 3,241,783 shares of Common Stock, Par
Value $.10 per share outstanding.
Transitional Small Business Disclosure Format
YES NO X
___ ___
<PAGE> 2
TABLE OF CONTENTS
_________________
PART I - FINANCIAL INFORMATION PAGE
______________________________ ____
Item 1 - Consolidated Financial Statements
Consolidated Balance Sheets. . . . . . . . . . . . . . . . . 1
Consolidated Statements of Income (Loss) . . . . . . . . . . 2
Consolidated Statements of Cash Flow . . . . . . . . . . . . 3
Consolidated Statements of Changes in Stockholder's Equity . 4
Notes to Consolidated Financial Statements . . . . . . . . . 5
Item 2 - Management's Discussion and Analysis
Financial Condition . . . . . . . . . . . . . . . . . . 6 - 10
Results of Operations . . . . . . . . . . . . . . . . . 10 - 12
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings. . . . . . . . . . . . . . . . . . . . 13
Item 2 - Changes in Securities. . . . . . . . . . . . . . . . . . 13
Item 3 - Defaults Upon Senior Securities. . . . . . . . . . . . . 13
Item 4 - Submission of Matters to a Vote of Security Holders. . . 13
Item 5 - Other Information. . . . . . . . . . . . . . . . . . . . 13
Item 6 - Exhibits and Reports on Form 8-K . . . . . . . . . . . . 13 - 14
SIGNATURES. . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE> 3
FWB BANCORPORATION
CONSOLIDATED BALANCE SHEET
(In thousands)
<TABLE>
<CAPTION>
(unaudited) (audited)
March 31, December 31,
1995 1994 1994
_______ _______ _______
<S> <C> <C> <C>
ASSETS
Cash and due from banks $ 1,630 $ 1,733 $ 1,567
Federal funds sold 2,182 1,665 --
Investment securities:
Available for sale - at fair value 2,495 10,005 2,244
Held to maturity - at amortized cost 4,889 -- 4,866
------ ------ ------
Total Investment Securities 7,384 10,017 7,110
______ ______ ______
Loans 29,354 23,026 27,002
Less allowance for loan losses (671) (747) (704)
______ ______ ______
Loans - net 28,683 22,279 26,298
______ ______ ______
Property and equipment 279 353 289
Other real estate owned, net 1,052 2,791 1,633
Accrued interest receivable 290 225 429
Other assets 646 147 4,087
______ ______ ______
TOTAL ASSETS $42,146 $39,210 $41,413
======= ======= =======
LIABILITIES
Non-interest bearing deposits $ 9,229 $ 8,016 $ 8,850
Interest bearing deposits 29,398 29,254 27,992
______ ______ ______
Total deposits 38,627 37,270 36,842
______ ______ ______
Accrued expenses and other liabilities 152 110 114
Federal funds purchased and securities
sold under agreements to repurchase -- -- 1,352
______ ______ ______
TOTAL LIABILITIES 38,779 37,380 38,308
______ ______ ______
STOCKHOLDERS' EQUITY
Common stock - $.10 par value, shares
authorized 7,500,000; shares
outstanding 3,241,783; 2,758,833
and 3,178,833 respectively 324 276 318
Additional paid-in capital 8,443 7,541 8,331
Accumulated deficit (5,010) (5,153) (5,081)
Net unrealized holding loss on
investment securities (390) (834) (463)
_______ _______ _______
Total stockholders' equity 3,367 1,830 3,105
_______ _______ _______
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $42,146 $39,210 $41,413
======= ======= =======
</TABLE>
<PAGE> 4
FWB BANCORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
For the Three
Months Ended
March 31,
1995 1994
_____ _____
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $705 $517
Interest on investment securities:
U. S. Government, its agencies,and sponsored entities 113 174
Interest on federal funds sold 20 7
____ ____
Total interest income 838 698
INTEREST EXPENSE:
Interest on certificates of deposit of $100,000 or more 15 8
Interest on other deposits 228 221
____ ____
243 229
Interest on federal funds purchased and securities
sold under agreements to repurchase 2 2
____ ____
Total interest expense 245 231
NET INTEREST INCOME 593 467
PROVISION (RECOVERY) FOR LOAN LOSSES (30) (50)
____ ____
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 623 517
____ ____
NON-INTEREST INCOME:
Service charges on deposit accounts 59 44
Other income 47 29
____ ____
Total non-interest income 106 73
____ ____
NON-INTEREST EXPENSE:
Salaries and employee benefits 321 267
Occupancy and equipment expense 118 115
Data processing services 47 44
FDIC insurance 23 26
Insurance 10 32
Legal fees 37 6
Other real estate owned expense 34 44
Other expenses 68 56
____ ____
Total non-interest expense 658 590
____ ____
INCOME (LOSS) BEFORE INCOME TAXES 71 0
APPLICABLE INCOME TAX (BENEFIT) -- --
____ ____
NET INCOME (LOSS) $ 71 $ 0
===== =====
EARNINGS PER COMMON SHARE: $0.09 $0.00
</TABLE>
<PAGE> 5
FWB BANCORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
Additional Unrealized Total
Common Paid-In Accumulated Holding (Loss) Stockholders'
Stock Capital (Deficit) on Securities Equity
_______ __________ ___________ ______________ _____________
<S> <C> <C> <C> <C> <C>
BALANCE AT DECEMBER 31, 1993 $ 276 $ 7,541 $(5,153) $(192) $ 2,472
Net income for the three months
ended March 31, 1994 -- -- -- -- --
Net change in unrealized depreciation
on investment securities -- -- -- (642) (642)
_______ _________ _______ _____ _______
BALANCE AT MARCH 31, 1994 $ 276 $ 7,541 $(5,153) $(834) $ 1,830
_______ _________ _______ _____ _______
BALANCE AT DECEMBER 31, 1994 $ 318 $ 8,331 $(5,081) $(463) $ 3,105
Net income for the three
months ended March 31, 1995 -- -- 71 -- 71
Issuance of common stock
at $2.00 per share 6 112 -- -- 118
Net change in unrealized appreci-
ation on investment securities -- -- -- 73 73
_______ _________ _______ _____ _______
BALANCE AT MARCH 31, 1995 $ 324 $ 8,443 $(5,010) $(390) $ 3,367
======= ========= ======== ====== =======
</TABLE>
<PAGE> 6
FWB BANCORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
<TABLE>
<CAPTION>
For Three Months Ended
March 31,
1995 1994
_____ _____
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 71 $ --
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 25 27
Accretion and amortization of securities (3) (1)
Provision for loan losses (30) (50)
Net realized (gain) loss from sales of assets -- (1)
Other real estate owned - write downs 30 50
Net changes in:
Accrued interest receivable 139 112
Prepaid expenses and other assets (9) (15)
Accrued expenses and other liabilities 38 40
Other - net 25 40
______ _____
Net cash provided by operating activities 286 202
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in federal funds sold (2,182) (1,665)
Purchases of available for sale securities (248) --
Proceeds from maturities/principal payments
on available for sale securities 50 250
Proceeds from sale of available
for sale securities 4,000 --
Net (increase) decrease in loans originated (2,574) 341
Proceeds from sale of participation loans 301 1,102
Purchases of loans (107) (1,124)
Purchase of property and equipment (14) (22)
Proceeds from disposition of other
real estate owned -- 72
______ ______
Net cash used by investing activities (774) (1,046)
______ ______
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 1,785 407
Net decrease in federal funds purchased and
securities sold under agreements to repurchase (1,352) --
Proceeds from issuance of common stock 118 --
______ ______
Net cash provided by financing activities 551 407
______ ______
NET (DECREASE) IN CASH AND CASH EQUIVALENTS 63 (437)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 1,567 2,170
______ ______
CASH AND CASH EQUIVALENTS AT END OF PERIOD $1,630 $1,733
====== ======
Supplemental disclosures:
Interest payments $ 228 $ 233
Income tax payments -- --
Noncash investing and financing activities:
Transfers from loans to other real estate owned -- --
Unrealized loss on investment securities
available for sale (390) (834)
</TABLE>
<PAGE> 7
NOTE TO FINANCIAL STATEMENTS
Management is responsible for the financial statements which have been
prepared in accordance with generally accepted accounting principles. The
financial statements contained herein, except for the financial statements
as of December 31, 1994, are unaudited. In management's opinion, the
financial statements present fairly the financial condition of the
Corporation and its subsidiary at March 31, 1994 and March 31, 1995, and
all adjustments necessary to fairly state the results of operations and
financial condition are reflected and that such adjustments are of a normal
recurring nature. The results of operations presented for the three months
ended March 31, 1995 are not necessarily indicative of the results of
operations to be expected for the remainder of the year.
<PAGE> 8
MANAGEMENT'S DISCUSSION AND ANALYSIS
FINANCIAL CONDITION
FWB Bancorporation's (the "Corporation") total assets at March 31, 1995 of
$42,146,000 reflected an increase of $733,000 or 1.77% from December 31,
1994 and an increase of $2,936,000 or 7.49% from March 31, 1994. The
Corporation's Stockholders' Equity of $3,367,000 at March 31, 1995
reflected an increase of $262,000 or 8.44% from December 31, 1994. The
increase is attributable to additional capital raised under a private
placement memorandum, earnings from operations, and a reduction in net
unrealized holding loss on investment securities available for sale. See
"Stockholders' Equity of the Corporation" below.
Deposits of the Corporation's wholly owned financial institution
subsidiary, FWB Bank, (the "Bank") at March 31, 1995 of $38,627,000
reflected an increase of $1,785,000 or 4.85% from December 1994. This
increase consists of an increase in non-interest bearing deposits of
$379,000 and an increase in interest bearing deposits of $1,406,000. The
increase in interest bearing deposits reflects the current rising rate
environment. The mix of deposits continues to show an increase in
non-interest bearing deposits compared to the mix at March 31, 1994.
The Bank's net loans at March 31, 1995 of $28,683,000 reflected an increase
of $2,385,000 or 9.07% from December 31, 1994, and an increase of
$6,404,000 or 28.76% compared to net loans at March 31, 1995. The increase
in net loans in both periods reflect continued positive results of the
Bank's marketing efforts and overall increased demand for credit.
The Bank's liquidity position, those assets invested in cash, federal
funds, and obligations of the U.S. Government, its agencies, and sponsored
entities available for sale, of $2,495,000 reflected an increase of
$2,496,000 from December 31, 1994. This increase is due primarily to an
increase in federal funds. The Corporation received payment in the amount
of $4,000,000 for a sale of securities from its available for sale
portfolio for their par amount in January. The proceeds from the sale were
used to eliminate short term borrowings and fund loans during the first
quarter of 1995. In addition, the growth in certificates of deposit
resulted in additional funds available for federal funds investment. Funds
available through short term borrowing and asset maturities are considered
adequate to meet current needs. Although this liquidity position remains
adequate, loan demand continues which could have a negative impact on
liquidity. The Bank continues to evaluate the asset and liability mix to
ensure that liquidity needs are met.
The Bank's loan to deposit ratio at March 31, 1995 was 75.65%, which is up
from 73.29% at December 31, 1994.
<PAGE> 9
INVESTMENT ACTIVITY
The Corporation's investment policy is implemented by the Investment
Committee, which is comprised of selected Board members and management.
Investments are chosen primarily to provide and maintain adequate liquidity
and to generate a positive return on investments without undue interest or
credit risk. The Corporation invests in various types of liquid assets,
including United States Treasury obligations, securities of federal
government agencies and government sponsored entities, certain certificates
of deposit, federal funds, and other qualifying liquid investments. In
March 1995, the Bank purchased $250,000 in Treasury Notes which mature in
one year as a result of its evaluation of its short term liquidity needs
and current yields. At March 31, 1995, the Corporation had $2,495,000 in
investments available for sale and $4,889,000 in investments held to
maturity.
ALLOWANCE FOR LOAN LOSSES
The allowance for loan losses is analyzed and reviewed by management and
the Executive Committee of the Board of Directors to determine if adequate
reserves are maintained based on the risk ratings and classifications
related to the loan portfolio, prior credit loss experience, and projected
future losses.
At March 31, 1995, the allowance for loan losses was $671,000 or 2.29% of
total loans outstanding compared to $704,000 or 2.61% of total loans
outstanding as of December 31, 1994, a decrease of $33,000 or 4.69%. In
addition, charge-offs of $28,000 as of March 31, 1995 decreased by $24,000
compared to the period ended March 31, 1994. At March 31, 1995, the
allowance for loan loss is 170.30% of non-performing loans compared to
185.36% of non-performing loans at March 31, 1994. A reduction of the
allowance in the amount of $30,000 in the period ended March 31, 1995 was
due to management's determination that the allowance was more than adequate
as asset quality has continued to improve and recoveries continue to be
realized. In the period ending March 31, 1995, total recoveries were
$25,000. In management's opinion, the allowance for loan losses as of March
31, 1995 is adequate to cover potential losses that can be anticipated at
this time based on current risks and knowledge of the portfolio.
NON-PERFORMING LOANS AND ASSETS
The Bank's non-performing assets consist of non-performing loans, other
real estate owned ("OREO"), and other assets. The percentage of
non-performing assets to total assets continues to decrease to 4.74% at
March 31, 1995 from 4.90% at December 31, 1994 and 8.15% at March 31, 1994.
Nevertheless, the non- performing assets of the Bank remain at a level
considered high by management and management intends to continue its
efforts to reduce non-performing assets including future sales of OREO and
upgrading of non-performing loans.
Non-performing loans, consisting of loans delinquent 90 days or more and in
non-accrual status, and restructured loans are $394,000 as of March 31,
1995, compared to $397,000 as of December 31, 1994 and $403,000 at March
31, 1994.
<PAGE> 10
This amount consists primarily of one loan in the amount of $376,000 which
has been renegotiated and is currently performing within its terms. The
percentage of non-performing loans to total loans continues to decrease to
1.34% at March 31, 1995 compared to 1.47% as of December 31, 1994 and 1.75%
at March 31, 1994.
At March 31, 1995, OREO, net of valuation reserve, totaled $1,633,000 at
December 31, 1994, a decrease of $581,000 or 35.58%. This is primarily a
result of the reclassification of a property in the amount $550,000 to
Other Assets. As a result of an evaluation done in conjunction with the
Bank's recent examination as of January 31, 1995, it was determined to
reclassify this property. The Bank has a contractual interest in the
property owned by an affiliate of the Bank as a result of foreclosure. In
addition, a valuation reserve in the amount of $30,000 was established for
another property as a result of an updated appraisal. This property is
currently generating rental income on a monthly basis (see "Non-Interest
Income and Expense") and the lease agreement contains a purchase option at
a price significantly above the Bank's carrying value. It is management's
belief that the property will be sold for the option price at the end of
the lease. It is the Bank's policy to write down OREO property to fair
value at the date of foreclosure and to obtain appraisals on an annual
basis. At March 31, 1995, management believes OREO properties are carried
at fair value. There were no additions to OREO in the current period.
STOCKHOLDERS' EQUITY OF THE CORPORATION
Stockholders' equity of $3,367,000 at March 31, 1995 reflected an increase
of $262,000 or 83.99% from December 31, 1994 and an increase of $1,537,000
or 83.99% from March 31, 1994. The increase at March 31, 1995 was due
primarily to the raising of an additional $118,000 under a private
placement offering initiated in December 1994. In addition, the Corporation
posted earnings from operations in the amount of $71,000 in the period
ended March 31, 1995. Also included in stockholders' equity at March 31,
1995 is an unrealized holding loss of $36,000 for securities available for
sale compared to $86,000 at December 31, 1994 and $354,000 of unamortized
loss on securities held to maturity compared to $377,000 at December 31,
1994. The unamortized loss on securities held to maturity relates to the
transfer of securities from the available for sale portfolio to the held to
maturity portfolio in 1994. This unrealized loss is being amortized over
the remaining life of the securities as an adjustment of yield.
CAPITAL ADEQUACY AND REGULATORY REQUIREMENTS
Since May 1994, the Bank has been subject to a Memorandum of Understanding
("MOU") which it has entered into with the Maryland State Bank Commission
(the "Commissioner") and the FDIC. The terms of the Memorandum of
Understanding were described in From 10-KSB for the period ending December
31, 1994. The MOU requires the Bank to, among other things, increase and
maintain its ratio of Tier 1 capital to average assets at not less than 7%
<PAGE> 11
by December 31, 1994. As of December 31, 1994 and March 31, 1995, the
Bank's Tier 1 capital to average assets ratio was 8.55% and 8.68%,
respectively. Further, the MOU requires the Bank to reduce the ratio of
adversely classified assets to Tier 1 capital to no more than 50% by
December 31, 1994. Management continues to reduce the ratio of total
adversely classified assets which are currently $2,049,000 while Tier I
capital at March 31, 1995 was $3,577,000 to 57.29%, Of this amount,
$1,052,000 is OREO and $550,000 is classified as Other Assets.
The FDIC has issued regulations that require Bank Insurance Fund ("BIF")-
insured banks, such as the Bank, to maintain minimum levels of capital. The
regulations establish a minimum leverage capital requirement of not less
than 3% Tier 1 capital to total average assets ("leverage capital ratio")
for banks in the financial and managerial condition, with a CAMEL Rating of
1 (the highest rating of the FDIC for banks). For all other banks, the
minimum leverage capital requirements is 3% plus an additional 100 to 200
basis points. Tier 1 capital is comprised of the sum of common
stockholders' equity, non- cumulative perpetual preferred stock (including
any related surplus) and minority interests in consolidated subsidiaries,
minus all intangible assets (other than qualifying mortgage servicing
rights and purchased credit card relationships). At March 31, 1995, the
Bank's ratio of Tier I capital to total average assets equalled 8.68%,
which exceeded the minimum leverage capital ratio standard.
The FDIC also requires that banks meet risk-based capital standards. The
Tier I risk-based capital standard requires the maintenance of Tier I
capital to risk-weighted assets of 4% and total capital (which is defined
as Tier 1 capital and supplementary capital) to risk-weighted assets of 8%.
The components of Tier 1 capital are discussed above. The components of
supplementary capital currently include cumulative perpetual preferred
stock, long-term perpetual preferred stock, mandatory convertible
securities, subordinated debt and intermediate-term preferred stock, and
allowance for loan and lease losses. Allowance for loan and lease losses
included in supplementary capital is limited to a maximum of 1.25% of
risk-weighted assets. Overall, the amount of capital counted toward
supplementary capital cannot exceed 100% of Tier 1 capital. In determining
the amount of risk- weighted assets, all assets, including certain off
balance sheet assets, are multiplied by a risk-weight of 0% to 100%, based
on the risks the FDIC believes are inherent in the type of asset. Federal
law also prohibits a bank from paying a dividend if it will not meet
applicable capital requirements after the payment. The Federal Reserve
Board ("FRB") also has adopted capital adequacy guidelines applicable to
the Corporation, which are substantially similar to those of the FDIC for
the Bank.
At March 31, 1995, the Bank's Tier I capital to risk-weighted assets was
12.16% and the Bank's total capital to risk-weighted assets was 13.41%.
The Federal Deposit Insurance Corporation Improvement Act of 1991 (the
"FDICIA") established a system of prompt corrective action to resolve the
problems of undercapitalized institutions. The FDIC, FRB, Office of the
<PAGE> 12
Comptroller of the Currency ("OCC"), and OTS have adopted final rules,
effective December 19, 1992, which require such regulators to take certain
supervisory actions against undercapitalized institutions, the severity of
which depends upon the categories consisting of "well capitalized",
"adequately capitalized", "undercapitalized", "significantly
undercapitalized", and "critically undercapitalized". Regulatory action
taken will depend on the level of capitalization of the institution and may
range from restrictions on capital distributions and dividends to seizure
of the institution. Generally, subject to narrow exceptions, FDICIA
authorizes the banking regulators to specify the ratio of tangible capital
to assets at which an institution becomes critically undercapitalized and
requires that ratio to be no less than 2% of assets. The FDICIA also allows
the regulator to downgrade an institution if the institution is determined
to be in an unsafe or unsound condition or to be engaging in unsafe or
unsound practices. Such a downgrading may result in an otherwise
"adequately capitalized" institution with other problems being subject to
supervisory actions as if it were classified as "undercapitalized".
The final rule adopted by the FDIC, on September 15, 1992, to implement the
prompt corrective action section of the FDICIA generally provides that an
insured institution that has total risk-based capital of less than 8%, Tier
I capital of less than 4%, or a leverage ratio that is less than 4% would
be considered to be "undercapitalized", an insured institution that has
total risk-based capital less than 6%, Tier I capital of less than 3%, or
leverage ratio that is less than 3% would be considered to be
"significantly undercapitalized", and an insured institution that is
"undercapitalized", "significantly undercapitalized", or "critically
undercapitalized" becomes immediately subject to certain regulatory
restrictions, including, but not limited to, restrictions on growth,
investment activities, capital distributions, and affiliate transactions.
The filing of a capital restoration plan, which must be guaranteed by any
parent holding company is also required. In addition, "critically
undercapitalized' institutions must receive prior written approval from the
FDIC to engage in any material transaction other than the normal course
of business. Subject to a narrow exception, a receiver or conservator must
be appointed for any critically undercapitalized institution within 90 days
after it becomes critically undercapitalized.
RESULTS OF OPERATIONS
The Corporation had net income of $71,000 for the three months ended March
31, 1995 compared to net income of $80 for the corresponding period in
1994, an increase of $71,000. The increase in net income resulted primarily
from an increase in net interest income of $126,000 and a reduction in the
allowance for loan losses through the provision for loan losses of $30,000
offset by an increase in total non-interest expense of $68,000 for the
three months ended March 31, 1995 compared to the corresponding period in
1994.
The earnings per share were $0.09 for the three months ended March 31,
1995, compared to earnings per share of $0.00 for the corresponding period
in 1994.
<PAGE> 13
NET INTEREST INCOME
Net interest income is the difference between interest income on earning
assets and interest expense on interest bearing deposits and funds
purchased. Net interest income for the period ending March 31, 1995 of
$593,000 reflected an increase of $126,000 or 26.98% compared to the
corresponding period in 1994. Interest income for the period ending March
31, 1995 of $838,000 reflected an increase of $140,000 or 20.06% compared
to the corresponding period in 1994. This increase was primarily due to an
increase in interest and fees on loans of $188,000 at March 31, 1995
compared to March 31, 1994 which resulted from an increase in average loans
outstanding of $5,242,000 at March 31, 1995 compared to March 31, 1994 and
an overall rate increase. Interest income on investment securities and
federal funds sold for the period ending March 31, 1995 of $133,000
reflected a decrease of $48,000 or 26.52% compared to the corresponding
period of 1994. This decrease is primarily the result of the sale of
investment securities in December 1994 and, to a lesser extent, the
repricing of floating rate securities in the investments portfolio. The
earnings on these securities will continue to be affected by changes in the
relationship of yields for assets at various maturities as they reprice.
Interest expense on deposits for the period ending March 31, 1995 of
$243,000 increased $14,000 or 6.11%. This increase is the result of growth
in interest bearing deposits and to an overall rate increase.
The average yield on earning assets for the period ended March 31, 1995,
was 9.21% compared to 8.15% for the three months ended March 31, 1994. The
average interest rate paid on interest bearing deposits for the three
months ended March 31, 1995, was 3.48% compared to 3.19% for the same
period in 1994. Additionally, the net interest margin (annualized net
interest income divided by average earning assets) was 6.52% for the period
ended March 31, 1995 compared to 5.45% for the corresponding period in
1994. In the current rising interest rate environment, interest margin may
narrow which could in turn adversely affect income.
PROVISION FOR LOAN LOSS
A reduction of $30,000 in the allowance for loan losses through a provision
for loan loss in the period ended March 31, 1995 was the result of
management's evaluation that the allowance was more than adequate as credit
quality improved and recoveries were realized.
NON-INTEREST INCOME AND EXPENSE
Non-interest income for the three months ended March 31, 1995, was $106,000
compared to $73,000 for the three months ended March 31, 1994, an increase
of $33,000 or 45.21%. The increase for the three months ended March 31,
1995 compared to the corresponding period in 1994 was due primarily to an
increase in loan documentation fees, service charges on deposit accounts,
and gross brokers' fees received on loans originated by the mortgage loan
origination department. Also included in non-interest income is $4,500 in
rental income from a property carried as OREO.
<PAGE> 14
Non-interest expense for the three months ended March 31, 1995 of $658,000
reflects an increase of $68,000 or 11.53% compared to the corresponding
period of 1994. The decrease resulted from an increase in salaries and
benefits expense primarily due to the addition of an internal auditor and
commissions paid to mortgage loan origination staff. In addition, expense
has been accrued for benefits in 1995. Legal expense of $37,000 in the
period ended March 31, 1995 increased $31,000 compared to the corresponding
period of 1994 due to litigation arising from normal banking activities.
Expenses associated with OREO at March 31, 1995 of $34,000 decreased
$10,000 or 22.73% from the corresponding period in 1994 due to a reduction
in the amount of OREO carried. In addition, the Bank's expense for FDIC
insurance for the period ending March 31, 1995 of $23,000 decreased by
$3,000 or to its improved supervisory rating and well capitalized position.
<PAGE> 15
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings N/A
Item 2 - Changes in Securities N/A
Item 3 - Defaults Upon Senior Securities N/A
Item 4 - Submission of Matters to a Vote of Security Holders N/A
Item 5 - Other Information N/A
Item 6 - Exhibits and Reports on Form 8-K
A. Exhibits
(2) Plan of purchase, sale, reorganization, arrangement, liquidation
or succession: N/A
(3) (i) Articles of Incorporation: Incorporated by reference to
Exhibit 3.1(a) of the issuer's Form 10-KSB for the period ending
December 31, 1994 filed with the Commission.
(ii) By-Laws: Incorporated by reference to Exhibit 3.2 of the
issuer's Form 10-KSB for the period ending December 31, 1994
filed with the Commission.
(4) Instruments defining the rights of security holders, including
indentures: N/A
(10) Material contracts: N/A
(11) Statement regarding computation of per share earnings: Earnings
per share have been computed based upon 3,212,967 shares, the
weighted average number of shares outstanding during the first
quarter of 1995.
(15) Letter regarding unaudited interim financial information: N/A
(18) Letter regarding change in accounting principles: N/A
(19) Report furnished to security holders: N/A
(22) Published report regarding matters submitted to vote of security
holders: N/A
(23) Consents of experts and counsel: N/A
(24) Power of attorney: N/A
(27) Financial Data Schedule: Filed herewith.
B. Reports on Form 8-K
No reports on Form 8-K were filed during the first quarter of 1995.
<PAGE> 16
SIGNATURES
__________
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
FWB BANCORPORATION
(Registrant)
Date: May 8, 1995
_________________ ____________________________
Steven K. Colliatie
President
Date: May 8, 1995
_________________ ____________________________
Barbara L. Martinez
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary information extracted from the Form 10-Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000719488
<NAME> FWB BANCORPORATION
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1994
<PERIOD-END> MAR-31-1995
<CASH> 1,630
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,182
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,495
<INVESTMENTS-CARRYING> 4,889
<INVESTMENTS-MARKET> 0<F1>
<LOANS> 29,354
<ALLOWANCE> 671
<TOTAL-ASSETS> 42,146
<DEPOSITS> 38,627
<SHORT-TERM> 0
<LIABILITIES-OTHER> 152
<LONG-TERM> 0
<COMMON> 324
0
0
<OTHER-SE> 3,043
<TOTAL-LIABILITIES-AND-EQUITY> 42,146
<INTEREST-LOAN> 705
<INTEREST-INVEST> 113
<INTEREST-OTHER> 20
<INTEREST-TOTAL> 838
<INTEREST-DEPOSIT> 243
<INTEREST-EXPENSE> 245
<INTEREST-INCOME-NET> 593
<LOAN-LOSSES> (30)
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 658
<INCOME-PRETAX> 71
<INCOME-PRE-EXTRAORDINARY> 71
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 71
<EPS-PRIMARY> .09
<EPS-DILUTED> .09
<YIELD-ACTUAL> 9.21
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 394
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 704
<CHARGE-OFFS> 28
<RECOVERIES> 25
<ALLOWANCE-CLOSE> 671<F2>
<ALLOWANCE-DOMESTIC> 114
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 557<F3>
<FN>
<F1>Not broken out in QSB
<F2>Allowance for loan loss at end of period includes a reduction in the allowance
through the provision for loan losses.
<F3>All unallocated is for domestic loans.
</FN>
</TABLE>
