U. S. Securities and Exchange Commission
Washington, DC 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
Commission file number 811-0969
The First Connecticut Capital Corporation
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(Exact name of small business issuer as specified in its charter)
Connecticut 06-0759497
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(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
1000 Bridgeport Avenue, Shelton, Connecticut 06484
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(Address of principal executive offices)
(203) 944-5400
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(Issuer's telephone number)
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(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: 1,173,382
Transitional Small Business Format: Yes [ ] No [ X ]
<PAGE>
Item 1. Financial Statements
THE FIRST CONNECTICUT CAPITAL CORPORATION
<TABLE>
<CAPTION>
BALANCE SHEET, DECEMBER 31, 1996
(Dollars in thousands,except per share data)
(Unaudited)
<S> <C>
ASSETS
Investments:
Loans - net ................................................... $ 1,157
Foreclosed assets ............................................. 0
-------
Investments-net ......................................... 1,157
Cash and cash equivalents ..................................... 150
Restricted cash ............................................... 45
Accrued interest .............................................. 47
Servicing rights .............................................. 264
Fixed assets .................................................. 61
Other assets .................................................. 286
-------
TOTAL ASSETS .................................................. $ 2,010
=======
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Warehouse line of credit ...................................... $ 371
Accounts payable and other accrued expenses ................... 480
Deferred income taxes ......................................... 76
-------
TOTAL LIABILITIES ............................................. 927
-------
Commitments and contingencies (Note B)
STOCKHOLDERS' EQUITY:
Common stock, no par value, stated value $.50
per share, authorized 3,000,000 shares,
issued and outstanding 1,173,382 shares .................... 587
Paid-in surplus ............................................... 9,253
Accumulated deficit ........................................... (8,757)
-------
TOTAL STOCKHOLDERS' EQUITY .................................... 1,083
-------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY .................... $ 2,010
=======
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE FIRST CONNECTICUT CAPITAL CORPORATION
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(Dollars in thousands, except per share data)
(Unaudited)
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
Dec. 31, 1996 Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest and fees on loans $27 $76 $14 $66
--------- --------- --------- ---------
OTHER OPERATING INCOME:
Servicing fees 42 123 47 164
Loan Orgination fees 52 165 16 79
Other fees 6 10 4 31
--------- --------- --------- ---------
Total Other Operating Income 100 298 67 274
--------- --------- --------- ---------
TOTAL INCOME 127 374 81 340
--------- --------- --------- ---------
OTHER OPERATING EXPENSES:
Amortization of servicing rights 36 73 72 173
Collection expenses 3 2 0 14
Officers' salaries 42 130 45 133
Other salaries 30 100 35 139
Directors' fees 5 14 4 13
Professional services 5 4 9 43
Miscellaneous taxes 5 23 8 29
Employee and general insurance 17 51 13 51
Rent 3 25 10 31
Communications 4 12 2 12
Advertising and promotions 1 4 3 14
Stock record and other financial expenses 1 4 2 5
Employees' pension plan 2 4 5 14
Depreciation expense 6 17 14 21
Other operating expenses 35 94 33 113
--------- --------- --------- ---------
Total Other Operating Expenses 195 557 255 805
LOSS BEFORE LOAN LOSSES (68) (183) (174) (465)
--------- --------- --------- ---------
<PAGE>
<CAPTION>
STATEMENTS OF OPERATIONS
FOR THE THREE AND NINE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(Dollars in thousands, except per share data)
(Unaudited)
(continued)
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
Dec. 31, 1996 Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1995
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Loan losses 0 5 0 0
--------- --------- --------- ---------
NET LOSS ($68) ($188) ($174) ($465)
========= ========= ========= =========
LOSS PER COMMON SHARE ($0.06) ($0.16) ($0.15) ($0.40)
Weighted average number of
common shares outstanding 1,173,382 1,173,382 1,173,382 1,173,382
========= ========= ========= =========
See notes to financial statements.
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
THE FIRST CONNECTICUT CAPITAL CORPORATION
STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(Dollars in thousands)
(Unaudited)
Common Stock Total
Number Of Paid-In Accumulated Stockholders'
Shares Amount Surplus Deficit Equity
------ ------ ------- ------- ------
<S> <C> <C> <C> <C> <C>
BALANCE, MARCH 31,1995 1,173,382 $587 $9,253 ($7,965) $1,875
Net Loss (465) (465)
--------- ----- ------ ------- ------
BALANCE, DECEMBER 31,1995 1,173,382 $587 $9,253 ($8,430) $1,410
========= ==== ====== ======= ======
BALANCE, MARCH 31,1996 1,173,382 $587 $9,253 ($8,569) $1,271
Net Loss (188) (188)
--------- ---- ------ ------- ------
BALANCE, DECEMBER 31,1996 1,173,382 $587 $9,253 ($8,757) $1,083
========= ==== ====== ======= ======
See notes to financial statements.
</TABLE>
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION
<TABLE>
<CAPTION>
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED DECEMBER 31, 1996 AND 1995
(Dollars in thousands)
(Unaudited)
Nine Months Nine Months
Ended Ended
Dec 31, 1996 Dec 31, 1995
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net loss .................................................... ($ 188) ($ 465)
Adjustments to reconcile net loss to net cash
used in operating activities:
Investment losses ....................................... 5 --
Depreciation ............................................ 17 21
Amortization of servicing rights ........................ 73 173
(Increase) decrease in accrued interest receivable ...... (12) 1
(Increase) decrease in other assets ..................... (25) 58
Decrease in accounts payable / other accrued expenses ... (79) (176)
------- -------
Net cash used in operating activities .............. (209) (388)
------- -------
INVESTING ACTIVITIES
Principal collected on investments .......................... 12 18
Investments originated ...................................... (1,857) (1,064)
Proceeds from sale of loans ................................. 1,629 1,115
------- -------
Net cash (used in) provided by investing activities (216) 69
------- -------
FINANCING ACTIVITIES
Increase in warehouse line of credit ........................ 145 0
------- -------
DECREASE IN CASH AND CASH EQUIVALENTS .......................... (280) (319)
CASH AND CASH EQUIVALENTS, BEGINNING ........................... 430 415
------- -------
CASH AND CASH EQUIVALENTS, ENDING .............................. $ 150 $ 96
======= =======
</TABLE>
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION
NOTES TO CONDENSED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited condensed financial statements of The First
Connecticut Capital Corporation (the "Corporation"), formerly The First
Connecticut Small Business Investment Company, have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB and Article 10-01 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes required
by generally accepted accounting principles for complete financial statements.
In the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair representation have been included.
Operating results are not necessarily indicative of the results that may be
expected for the year ending March 31, 1997. For further information, refer to
the financial statements and footnotes thereto included in the Corporation's
annual report filed on Form 10-KSB for the year ended March 31, 1996.
NOTE B - COMMITMENTS AND CONTINGENCIES
During the year ended March 31, 1995, the Corporation foreclosed on a
real estate property with potential environmental contamination. No lawsuit or
other action is currently pending or expected with regard to this site and in
the opinion of management, this matter will not have a material adverse effect
on the financial position or results of operations of the Corporation.
The Corporation is involved in litigation and administrative
proceedings primarily arising in the normal course of its business. In the
opinion of management, the Corporation's liability, if any, under any pending
litigation or administrative proceeding would not materially affect its
financial condition or results of operations.
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The Corporation had a net loss for the nine months ended December 31,
1996 of $188,000 compared to a net loss of $465,000 for the comparable period of
the prior year.
The Corporation is currently licensed in the States of Connecticut and
Massachusetts to operate as Mortgage Lender/Broker. It is in the process of
applying for a similar license in the State of New York.
Interest Income and Other Operating Income
Interest income increased $10,000 for the nine months ended December
31, 1996 as compared with the comparable period of the prior year. Total other
operating income increased by $24,000 from the prior year due to the increase in
loan originations.
Other Operating Expense
Other operating expenses declined $248,000 during the nine months ended
December 31, 1996 as compared to the comparable period of the prior year due
primarily to decreases in professional fees, clerical salaries, amortization of
servicing rights and an overall reduction in all operating expenses.
Plan of Operation
The Corporation is engaged in the mortgage banking business, which
involves the origination, purchase, sale and servicing of mortgage loans secured
by residential properties and other real estate.
It is anticipated that the Corporation will continue to increase its
level of activities in these areas creating servicing fees and interest income.
It is too early to evaluate the results as the Corporation is in a period of
strong competition and the real estate market remains in a state of flux.
LIQUIDITY AND FINANCIAL CONDITION
The Corporation has approximately $150,000 of unrestricted cash and
cash equivalents and approximately $1.083 million of Stockholders' Equity at
December 31, 1996.
The Corporation currently anticipates that during the year ending March
31, 1997, its principal financing needs will consist of funding its mortgage
loans held for sale and the ongoing net cost of mortgage loan originations and
cash flow used in operations. Although the Corporation anticipates increased
activities in originating mortgage loans, the difficulties experienced within
the relevant economic markets still exist and there are no assurances that
increased activity will occur. Consequently, as a means to provide further cash
flow, the Corporation has the positive intent to liquidate certain assets in its
portfolio and believes that a market exists for those assets. Future cash flow
requirements will depend primarily on the level of the Corporation's activities
in originating and selling mortgage loans, as well as cash flow required by its
operations.
<PAGE>
The Corporation continues to investigate and pursue alternative and
supplementary methods to finance its operations and to support the growth of the
Corporation.
The Corporation believes that the cash on hand and internally generated
funds will be sufficient to meet its corporate, general and administrative
working capital and other cash requirements during the year ending March 31,
1997. The Corporation took certain steps during the year ended March 31, 1996
and continues to decrease its cash flow requirements. These steps included a
management salary reduction and a restatement and amendment to the pension plan.
Management also believes additional steps can be taken if necessary.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
NONE
<PAGE>
THE FIRST CONNECTICUT CAPITAL CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned duly authorized.
THE FIRST CONNECTICUT CAPITAL CORPORATION
(Registrant)
Date: February 12, 1997 By: /s/David Engelson
-----------------
David Engelson
President and Chief Financial
Officer
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 195
<SECURITIES> 0
<RECEIVABLES> 2,235
<ALLOWANCES> (481)
<INVENTORY> 0
<CURRENT-ASSETS> 1,949
<PP&E> 281
<DEPRECIATION> (220)
<TOTAL-ASSETS> 2,010
<CURRENT-LIABILITIES> 927
<BONDS> 0
0
0
<COMMON> 587
<OTHER-SE> 496
<TOTAL-LIABILITY-AND-EQUITY> 2,010
<SALES> 374
<TOTAL-REVENUES> 374
<CGS> 0
<TOTAL-COSTS> 165
<OTHER-EXPENSES> 392
<LOSS-PROVISION> 5
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (188)
<INCOME-TAX> 0
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (188)
<EPS-PRIMARY> (0.16)
<EPS-DILUTED> (0.16)
</TABLE>
