<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
MARK ONE
--------
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
FOR THE TRANSITION PERIOD
FROM _______________ TO _______________
Commission File Number 2-90200
-------
FIRST MCMINNVILLE CORPORATION
-----------------------------------------------------------------
(Exact Name of Small Business Issuer As Specified in its Charter)
Tennessee 62-1198119
- ------------------------------- ----------------------------
(State or Other Jurisdiction of (IRS Employer Identification
Incorporation or Organization) Number)
200 East Main Street, McMinnville, TN 37110
--------------------------------------------
(Address of Principal Executive Offices)
(615) 473-4402
---------------------------
(Issuer's Telephone Number)
Not Applicable
---------------------------------------------------
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
----- -----
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date (July 22, 1996): 537,083
Transitional Small Business Disclosure Format (check one):
YES NO X
----- -----
Total number of sequentially-numbered pages 16
----
Exhibit index is at sequentially-numbered page 15
----
1
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The unaudited consolidated financial statements of the small business issuer
and its wholly-owned subsidiary are as follows:
Consolidated Balance Sheets - June 30, 1996 and December 31, 1995.
Consolidated Statements of Earnings - For the three months and six months
ended June 30, 1996 and 1995.
Consolidated Statements of Cash Flows - For the six months ended June 30,
1996 and 1995.
2
<PAGE> 3
FIRST MCMINNVILLE CORPORATION
Consolidated Balance Sheets
June 30, 1996 and December 31, 1995
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1996 1995
-------- ------------
(In Thousands)
Assets
------
<S> <C> <C>
Loans $102,402 100,859
Less: Allowance for loan losses (1,512) (1,562)
-------- -------
Net loans 100,890 99,297
Securities:
Held-to-maturity, at cost (market value
$53,643,000 and $49,839,000, respectively) 53,660 48,837
Available-for-sale, at market (amortized
cost $29,601,000 and $32,073,000,
respectively) 28,800 32,269
Interest-bearing deposits in other banks 100 100
Federal funds sold - 300
-------- -------
Total earning assets 183,450 180,803
Cash and due from banks 4,777 4,872
Bank premises and equipment, net of
accumulated depreciation 2,045 1,881
Accrued interest receivable 1,991 2,015
Deferred tax asset 623 245
Other real estate 346 305
Other assets 538 542
-------- -------
$193,770 190,663
======== =======
Liabilities and Stockholders' Equity
Deposits $156,925 154,551
Securities sold under repurchase agreements 3,268 4,213
Federal fund purchased 2,000 -
Accrued interest and other liabilities 2,074 3,010
-------- -------
Total liabilities 164,267 161,774
-------- -------
Stockholders' equity:
Common stock, $2.50 par value;
authorized 5,000,000 shares, issued
579,537 shares 1,512 1,512
Additional paid-in capital 1,512 1,512
Retained earnings 28,600 27,171
Net unrealized gains (losses) on available-
for-sale securities, net of income tax
benefits of $304,000 and income taxes
of $74,000, respectively (497) 122
-------- -------
31,127 30,317
Less cost of treasury stock of 32,086 shares
at June 30, 1996 and 28,366 shares at
December 31, 1995 (1,624) (1,428)
-------- -------
Total stockholders' equity 29,503 28,889
-------- -------
$193,770 190,663
======== =======
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
3
<PAGE> 4
FIRST MCMINNVILLE CORPORATION
Consolidated Statements of Earnings
Three Months and Six Months Ended June 30, 1996 and 1995
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
--------------------- ----------------------
1996 1995 1996 1995
-------- ------- ------- -------
(Dollars In Thousands (Dollars In Thousands
Except Per Share Amounts) Except Per Share Amounts)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 2,261 2,142 4,558 4,209
Interest and dividends on securities:
Taxable securities 955 915 1,876 1,853
Tax exempt from Federal income taxes 335 295 653 602
Interest on federal funds sold 43 34 74 37
Interest on interest-bearing deposits in other
banks and other interest 1 1 3 2
-------- ------- ------- -------
Total interest income 3,595 3,387 7,164 6,703
-------- ------- ------- -------
Interest expense:
Interest on negotiable order of withdrawal accounts 117 148 237 296
Interest on money market demand and savings accounts 238 295 482 602
Interest on certificates of deposit 1,252 1,132 2,513 2,129
Interest on securities sold under repurchase agreements
and short term borrowings 23 23 44 64
-------- ------- ------- -------
Total interest expense 1,630 1,598 3,276 3,091
-------- ------- ------- -------
Net interest income 1,965 1,789 3,888 3,612
Provision for loan losses - 60 - 120
-------- ------- ------- -------
Net interest income after provision for loan losses 1,965 1,729 3,888 3,492
-------- ------- ------- -------
Other income:
Service charges on deposit accounts 137 112 263 225
Other fees and commissions 42 41 75 73
Commissions and fees on fiduciary activities 6 4 12 9
Security gains related to available-for-sale securities - 22 4 37
Other income 7 12 17 32
-------- ------- ------- -------
192 191 371 376
-------- ------- ------- -------
Other expenses:
Salaries and employee benefits 568 548 1,061 1,025
Occupancy expenses, net 48 43 107 103
Furniture and equipment expense 24 15 42 33
Data processing expense 59 14 111 97
Security losses related to available-for-sale securities 89 24 89 24
Other operating expenses 206 318 424 544
-------- ------- ------- -------
994 962 1,834 1,826
-------- ------- ------- -------
Earnings before income taxes 1,163 958 2,425 2,042
Income taxes 358 291 722 594
-------- ------- ------- -------
Net earnings $ 805 667 1,703 1,448
======== ======= ======= =======
Weighted average number of shares outstanding 547,616 552,711 548,581 553,015
======== ======= ======= =======
Net earnings per share $ 1.47 1.21 3.10 2.62
======== ======= ======= =======
Dividends per share $ .50 .50 .50 .50
======== ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
4
<PAGE> 5
FIRST MCMINNVILLE CORPORATION
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
-------- -------
(In Thousands)
<S> <C> <C>
Cash flows from operating activities:
Interest received $ 7,157 6,584
Fees and commissions received 367 339
Interest paid (3,340) (2,715)
Cash paid to suppliers and employees (1,581) (1,591)
Income taxes paid (688) (659)
-------- -------
Net cash provided by operating
activities 1,915 1,958
-------- -------
Cash flows from investing activities:
Proceeds from maturities of held-to-maturity
securities 13,760 1,595
Proceeds from maturities of available-for-sale
securities 3,476 1,859
Proceeds from sales of available-for-sale
securities 3,663 7,198
Purchase of held-to-maturity securities (18,573) (1,071)
Purchase of available-for-sale securities (4,731) (4,102)
Loans made to customers, net of repayments (1,634) (4,620)
Purchase of premise and equipment (265) (8)
-------- -------
Net cash provided by (used in)
investing activities (4,304) 851
-------- -------
Cash flows from financing activities:
Net increase (decrease) in non-interest bearing,
savings and NOW deposit accounts 488 (2,525)
Net increase in time deposits 1,886 5,019
Increase (decrease) in securities sold under
repurchase agreement (945) 254
Increase (decrease) in Federal funds purchased 2,000 (600)
Dividends paid (1,239) (1,203)
Payments to acquire treasury stock (196) (61)
Advances on line of credit 45 13
Repayment of advances on line of credit (45) (13)
-------- -------
Net cash provided by financing
activities 1,994 884
-------- -------
Net increase (decrease) in cash and cash equivalents (395) 3,693
Cash and cash equivalents at beginning of
period 5,172 4,028
-------- -------
Cash and cash equivalents at end of period $ 4,777 7,721
======== =======
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
5
<PAGE> 6
FIRST MCMINNVILLE CORPORATION
Consolidated Statements of Cash Flows, Continued
Six Months Ended June 30, 1996 and 1995
Increase (Decrease) in Cash and Cash Equivalents
(Unaudited)
<TABLE>
<CAPTION>
1996 1995
------- -------
(In Thousands)
<S> <C> <C>
Reconciliation of net earnings to net cash
provided by operating activities:
Net earnings $ 1,703 1,448
Adjustments to reconcile net earnings to
net cash provided by operating activities:
Depreciation 101 108
Provision for loan losses - 120
Security losses related to available-
for sale 89 24
Security gains related to available-
for sale (4) (37)
FHLB dividend reinvestment (21) (18)
Decrease (increase) in other assets, net 15 (38)
Increase in other liabilities 72 76
Decrease (increase) in interest
receivable 24 (101)
Increase (decrease) in interest payable (64) 376
-------- -------
Total adjustments 212 510
-------- -------
Net cash provided by
operating activities $ 1,915 1,958
======== =======
Supplemental schedule of noncash activities:
Non-cash transfers from loans to other
real estate $ 41 73
======== =======
Unrealized gain (loss) in value of
securities available-for-sale net of
income tax benefit of $304,000 in
1996 and income taxes of $317,000
in 1995. $ (618) 519
======== =======
</TABLE>
See accompanying notes to consolidated financial statements (unaudited).
6
<PAGE> 7
FIRST MCMINNVILLE CORPORATION
Notes to Consolidated Financial Statements
(Unaudited)
Basis of Presentation
The unaudited consolidated financial statements include the accounts of First
McMinnville Corporation and its wholly-owned subsidiary, First National Bank of
McMinnville.
The accompanying consolidated financial statements have been prepared, without
audit, pursuant to the rules and regulations of the Securities and Exchange
Commission. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules and
regulations.
In the opinion of management, the statements contain all adjustments and
disclosures necessary to summarize fairly the financial position of the Company
as of June 30, 1996 and December 31, 1995, and the results of operations for
the six months and three months ended June 30, 1996 and 1995 and changes in
cash flows for the six months ended June 30, 1996 and 1995. All significant
intercompany transactions have been eliminated. The interim consolidated
financial statements should be read in conjunction with the notes to the
consolidated financial statements presented in the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1995. The results for interim
periods are not necessarily indicative of results to be expected for the
complete fiscal year.
Allowance for Loan Losses
Transactions in the allowance for loan losses were as follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
----------------------
1996 1995
------ -----
(In Thousands)
<S> <C> <C>
Balance, January 1, 1996 and 1995,
respectively $1,562 1,448
Add (deduct):
Losses charged to allowance (68) (12)
Recoveries credited to allowance 18 29
Provision for loan losses - 120
------ -----
Balance, June 30, 1996 and 1995,
respectively $1,512 1,585
====== =====
</TABLE>
7
<PAGE> 8
FIRST MCMINNVILLE CORPORATION
FORM 10-QSB, CONTINUED
Item 2. Management's Discussion and Analysis or Plan of Operations
The purpose of this discussion is to provide insight into the financial
condition and results of operations of the Company and its subsidiary. This
discussion should be read in conjunction with the consolidated financial
statements. Reference should also be made to the Company's Annual Report on
Form 10-KSB for the year ended December 31, 1995 for a more complete discussion
of factors that impact liquidity, capital and the results of operations.
Liquidity and Interest Rate Sensitivity Management
The concept of liquidity involves the ability of the Registrant and its
subsidiary to meet future cash flow requirements, particularly those of
customers who are either withdrawing funds from their accounts or borrowing to
meet their credit needs.
Proper asset/liability management is designed to maintain stability in the
balance of interest-sensitive assets to interest-sensitive liabilities in order
to provide a stable growth in net interest margins. Earnings on
interest-sensitive assets such as loans tied to the prime rate of interest and
Federal funds sold, may vary considerably from fixed rate assets such as
long-term investment securities and fixed rate loans. Interest-sensitive
liabilities such as large certificates of deposit and money market
certificates, generally require higher costs than fixed rate instruments such
as passbook savings.
Banks, in general, must maintain large cash balances to meet day-to-day
cash flow requirements as well as maintaining required reserves for regulatory
agencies. The cash balances maintained are the primary source of liquidity.
Federal funds sold, which are basically overnight or short-term loans to other
banks that increase the other bank's required reserves, are also a major source
of liquidity.
The Company's investment portfolio consists of earning assets that provide
interest income. For those securities classified as held-to-maturity the
Company has the ability and intention to hold these securities until maturity.
Securities classified as available-for-sale include securities intended to be
used as part of the Company's asset/liability strategy and/or securities that
may be sold in response to changes in interest rate, prepayment risk, the need
or desire to increase capital and similar economic factors. Securities
totaling approximately $10.1 million mature or reprice within the next twelve
months.
A secondary source of liquidity is the Bank's loan portfolio. At June 30,
1996 commercial loans of approximately $16.7 million and other loans (mortgage
and consumer) of approximately $19.4 million either will become due or will be
subject to rate adjustments within twelve months. Continued emphasis will be
placed on structuring adjustable rate loans.
8
<PAGE> 9
FIRST MCMINNVILLE CORPORATION
FORM 10-QSB, CONTINUED
Item 2. Management's Discussion and Analysis or Plan of Operations
As for liabilities, certificates of deposit of $100,000 or greater of
approximately $23.9 million will become due during the next twelve months. The
Bank's deposit base increased approximately $2.4 million during the six months
ended June 30, 1996. Securities sold under repurchase agreements decreased
approximately $945,000 during the six months ended June 30, 1996. The deposit
base increased approximately $249,000 during the first quarter of 1996.
Securities sold under repurchase agreements decreased approximately $2.0
million during the first three months of 1996. Federal funds purchased were
$2,000,000 at June 30, 1996 as compared to Federal funds sold of $1,500,000 and
$300,000 at March 31, 1996 and December 31, 1995, respectively.
Historically, there has been no significant reduction in immediately
withdrawable accounts such as negotiable order of withdrawal accounts, money
market demand accounts, demand deposit and regular savings. Management
anticipates that there will be no significant withdrawals from these accounts
in the future.
The subsidiary bank is limited by banking regulatory agencies as to the
amount of dividends that it can pay. At June 30, 1996, the Bank can declare
during the remainder of 1996 cash dividends in an aggregate amount not to
exceed approximately $5.4 million, exclusive of any 1996 net earnings, without
prior approval of the Comptroller of the Currency. However, most of these
funds will be retained for use in the Bank's operations rather than being paid
out in dividends. It is anticipated that with present maturities, the
anticipated growth in deposit base, and the efforts of management in its
asset/liability management program, liquidity will not pose a problem in the
foreseeable future. At the present time there are no known trends or any known
commitments, demands, events or uncertainties that will result in or that are
reasonably likely to result in the Company's liquidity changing in any material
way.
Capital Resources
A primary source of capital is internal growth through retained earnings.
The ratio of stockholders' equity to total assets was 15.2% at June 30, 1996
and December 31, 1995. Total assets increased 1.6% during the six months ended
June 30, 1996. The annualized rate of return on stockholders' equity for the
first six months of 1996 was 11.7% compared to 10.3% for the comparable period
in 1995. Because of the high percentage of equity capital, the return on
equity is lower than the reported average for banks in the Bank's peer group.
Dividends of $274,000 and $276,000 or $.50 per share were declared in the six
months ended June 30, 1996 and 1995, respectively. Cash dividends will be
increased in the remainder of 1996 over 1995 only in the discretion of the
Board of Directors as profits permit. Dividends paid during 1995 were $2.25
per share. No material changes in the mix or cost of capital is anticipated in
the foreseeable future.
The subsidiary bank has entered into a contract to build a new branch at a
total estimated cost of $800,000. At June 30, 1996, approximately $442,000 has
been incurred related to this project. The new branch is scheduled to open
during the third quarter of 1996. The Bank also completed the renovations of
the main office during the first quarter of 1996. At the present time there
are no other material commitments for capital expenditures.
9
<PAGE> 10
FIRST MCMINNVILLE CORPORATION
FORM 10-QSB, CONTINUED
Item 2. Management's Discussion and Analysis or Plan of Operations
Regulations of the Comptroller of the Currency establish required minimum
capital levels for the Bank. Under these regulations, national banks must
maintain certain capital levels as a percentage of average total assets
(leverage capital ratio) and as a percentage of total risk-based assets
(risk-based capital ratio). Under the risk-based requirements, various
categories of assets and commitments are assigned a percentage related to
credit risk ranging from 0% for assets backed by the full faith and credit of
the United States to 100% for loans other than residential real estate loans
and certain off-balance sheet commitments. Total capital is characterized as
either Tier 1 capital which includes common shareholders' equity, noncumulative
perpetual preferred stock and a limited amount of cumulative perpetual
preferred - or Tier 2 capital which includes the allowance for loan losses up
to 1.25% of risk weighted assets, perpetual preferred stock, subordinated debt
and various other hybrid capital instruments, subject to various limits.
Goodwill is not includable in Tier 1 or Tier 2 capital. National banks must
maintain a Tier 1 capital to risk-based assets of at least 4.0%, a Tier 2
capital to risk-based assets ratio of at least 8.0% and a leverage capital
ratio defined as Tier 1 capital to average total assets for the most recent
quarter of at least 4.0%. The same ratios are also required in order for a
national bank to be considered "adequately capitalized" under the OCC's "prompt
corrective action" regulations, which impose certain operating restrictions on
institutions which are not adequately capitalized. The Bank has a Tier 1
risk-based ratio of 27.8%, a Tier 2 capital to risk-based ratio of 29.1% and a
leverage ratio of 15.4%, and is classified as "well capitalized" under the
regulations.
The Federal Reserve Board imposes consolidated capital guidelines on bank
holding companies which have more than $150 million in consolidated assets.
These guidelines require bank holding companies to maintain consolidated
capital ratios which are essentially the same as the minimum capital levels
required for national banks. The Company's consolidated capital ratios were
substantially the same as those set forth above for the Bank, and exceeded the
minimums required under these Federal Reserve Board guidelines.
Results of Operations
Net earnings were $1,703,000 for the six months ended June 30, 1996 as
compared to $1,448,000 for the same period in 1995. Net earnings were $805,000
for the quarter ended June 30, 1996 as compared to $667,000 during the same
quarter in 1995.
As in most financial institutions, a major element in analyzing the
statement of earnings is net interest income, which is the excess of interest
earned over interest paid. This is particularly true with the volatility in
interest rates encountered in recent years.
10
<PAGE> 11
FIRST MCMINNVILLE CORPORATION
FORM 10-QSB, CONTINUED
Item 2. Management's Discussion and Analysis or Plan of Operations
The Registrant's interest income, excluding tax equivalent adjustments,
increased by $461,000 or 6.9% and $621,000 or 10.2% during the six months ended
June 30, 1996 and 1995, respectively. Interest income for the quarter ended
June 30, 1996 increased $208,000 or 6.1% over the quarter ended June 30, 1995,
and $26,000 or .7% from the first quarter of 1996. The increases were
primarily attributable to an increase in average earning assets. The ratio of
average earning assets to total average assets was 95.5% for the six months
ended June 30, 1996 and 94.8% for the same period in 1995.
Interest expense increased by $185,000 for the six months ended June 30,
1996 or 6.0% compared to the same period in 1995. Interest expense for the
quarter ended June 30, 1996 increased $32,000 or 2.0% as compared to the
quarter ended June 30, 1995. Interest expense for the quarter ended June 30,
1996 decreased $16,000 or 1.0% compared to the first quarter of 1996. The
increase in interest expense can be attributable to an increase in weighted
average interest rates, as well as an increase in average interest bearing
liabilities.
The foregoing resulted in net interest income of $3,888,000 for the six
months ended June 30, 1996, an increase of $276,000 or 7.6% compared to the
prior year period. Net interest income for the quarter ended June 30, 1996
increased $176,000 or 9.8% over the second quarter of 1995 and $42,000 or 2.2%
over the first quarter in 1996.
The provision for loan losses was $120,000 for the first six months of
1995. The provision was $60,000 for the quarter ended June 30, 1995. During
1996, management concluded that the allowance for loan losses was adequate to
cover any potential loan losses; therefore, the Bank made no provision for loan
losses. The provision for loan losses is based on past loan experience and
other factors which, in management's judgment, deserve current recognition in
estimating possible loan losses. Such factors include past loan loss
experience, growth and composition of the loan portfolio, review of specific
loan problems, the relationship of the allowance for loan losses to outstanding
loans, and current economic conditions that may affect the borrower's ability
to repay. Management has in place a system that is designed to identify and to
monitor loan problems on a timely basis.
11
<PAGE> 12
FIRST MCMINNVILLE CORPORATION
FORM 10-QSB, CONTINUED
Item 2. Management's Discussion and Analysis or Plan of Operations
Results of Operations, Continued
The following schedule details selected information as to non-performing
loans of the Company at June 30, 1996:
<TABLE>
<CAPTION>
June 30, 1996
-----------------------
Past Due
90 Days Non-Accrual
-------- -----------
(In Thousands)
<S> <C> <C>
Real estate loans $ 36 -
Installment loans 2 -
Commercial loans 20 -
---- ----
$ 58 -
==== ====
Renegotiated loans $ - -
==== ====
</TABLE>
At June 30, 1996, loans which include the above, totaling $7,748,000, were
included in the Company's internal classified loan list. Of these loans
$5,053,000 are real estate and $2,695,000 are personal. The collateral values
securing these loans are estimated at approximately $10,694,000, ($8,516,000
related to real property and $2,178,000 related to personal loans). Such loans
are listed as classified when information obtained about possible credit
problems of the borrower has prompted management to question the ability of the
borrower to comply with the agreed repayment terms. The classifications
include one performing working capital loan in the amount of $2,128,287, which
has been classified by the bank as substandard. This line is secured by
collateral consisting of real estate and personal property. The collateral
valuations received by management indicate an estimated value of $2,866,000.
The classifications also include one performing working capital loan totaling
$618,129 (secured by collateral consisting of real estate and personal property
for which management has received valuations estimated at $812,000) which has
been classified by the bank as doubtful. The borrowers have experienced losses
in recent years which resulted in the classifications. The loan
classifications do not represent or result from trends or uncertainties which
management expects will materially impact future operating results, liquidity
or capital resources.
There were no material amounts of other interest-bearing assets
(interest-bearing deposits with other banks, municipal bonds, etc.) at June 30,
1996 which would be required to be disclosed as past due, non-accrual,
restructured or potential problem loans, if such interest-bearing assets were
loans.
12
<PAGE> 13
FIRST MCMINNVILLE CORPORATION
FORM 10-QSB, CONTINUED
Item 2. Management's Discussion and Analysis or Plan of Operations
Results of Operations, Continued
Non-interest income excluding securities transactions increased $28,000 or
8.3% during the six months ended June 30, 1996 as compared to the same period
in 1995. The increase for the quarter ended June 30, 1996 was $23,000 or 13.6%
as compared to the comparable quarter in 1995. The increase in the first six
months of 1996 was due primarily to an increase in service charges on deposits
of $38,000 combined with a decrease in other income totaling $15,000. The
increase for the quarter ended June 30, 1996 as compared to the same period in
1995 was due primarily to an increase in service charges on deposit accounts.
Commissions and service charges are monitored continually to insure maximum
return based on costs and competition.
Securities gains during the six months ended June 30, 1996 and 1995
amounted to $4,000 and $37,000, respectively, and related to transactions in
the available-for-sale category. The gains during 1996 and 1995 were incurred
primarily in conjunction with management's strategies to restructure the
investment portfolio to improve the quality of the portfolio, to improve
maturity distribution and to maintain a flexible position to react to market
conditions.
Non-interest expense excluding securities transactions decreased $57,000
or 3.2% during the first six months of 1996 as compared to the same period in
1995. The decrease for the quarter ended June 30, 1996 was $33,000 or 3.5% as
compared to the quarter ended June 30, 1995. The decreases in the first six
months of 1996 was primarily attributable to a decrease in the FDIC assessment
rate which was effective during the second quarter of 1995. The assessment
rate during the first six months of 1995 was .23% of eligible deposits. The
assessment was suspended in 1995. The decrease in the FDIC assessment rate was
offset by an increase in salaries and employee benefits. Fixed assets costs
should increase slightly with the opening of the new branch.
Securities losses during the six months ended June, 1996 and 1995 amounted
to $89,000 and $24,000 related to transactions in the available-for-sale
category. The losses during 1996 and 1995 were incurred primarily in
conjunction with management's strategies to restructure the investment
portfolio to improve the quality of the portfolio, to improve maturity
distribution and to maintain a flexible position to react to market conditions.
13
<PAGE> 14
FIRST MCMINNVILLE CORPORATION
FORM 10-QSB, CONTINUED
Item 2. Management's Discussion and Analysis or Plan of Operations
Results of Operations, Continued
Management is not aware of any current recommendations by the regulatory
authorities which, if implemented, would have a material effect on the
Registrant's liquidity, capital resources or operations.
Impact of Inflation
The primary impact which inflation has on the results of the Registrant's
operations is evidenced by its effects on interest rates. Interest rates tend
to reflect, in part, the financial market's expectations of the level of
inflation and, therefore, will generally rise or fall as the level of expected
inflation fluctuates. To the extent interest rates paid on deposits and other
sources of funds rise or fall at a faster rate than the interest income earned
on funds, loans or invested, net interest income will vary. Inflation also
affects non-interest expenses as goods and services are purchased, although
this has not appeared to have a significant effect on net earnings. If the
inflation rate stays flat or increases slightly, the effect on profits will not
be significant.
14
<PAGE> 15
PART II. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 27 Financial Data Schedule (for SEC use only) - This schedule
contains summary financial information extracted from the financial
statements of the Company at June 30, 1996 (unaudited) and is qualified in
its entirety by reference to such financial statements as set forth in the
Company's quarterly report on Form 10-QSB for the period ending June 30,
1996.
(b) No reports on Form 8-K have been filed during the quarter for which this
report is filed.
15
<PAGE> 16
SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
has duly caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
FIRST MCMINNVILLE CORPORATION
-----------------------------
(Registrant)
DATE: August 9, 1996 /s/ Charles C. Jacobs
------------------------------
Charles C. Jacobs
President and Chief Executive
Officer
DATE: August 9, 1996 /s/ Kenny D. Neal
------------------------------
Kenny D. Neal
Chief Financial and Accounting
Officer
16
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
FINANCIAL STATEMENTS OF FIRST MCMINNVILLE CORPORATION FOR THE SIX MONTHS ENDED
JUNE 30, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<CASH> 4,777
<INT-BEARING-DEPOSITS> 100
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 28,800
<INVESTMENTS-CARRYING> 53,600
<INVESTMENTS-MARKET> 53,643
<LOANS> 102,402
<ALLOWANCE> 1,512
<TOTAL-ASSETS> 193,770
<DEPOSITS> 156,925
<SHORT-TERM> 5,268
<LIABILITIES-OTHER> 2,074
<LONG-TERM> 0
0
0
<COMMON> 1,512
<OTHER-SE> 27,991
<TOTAL-LIABILITIES-AND-EQUITY> 193,770
<INTEREST-LOAN> 4,558
<INTEREST-INVEST> 2,529
<INTEREST-OTHER> 77
<INTEREST-TOTAL> 7,164
<INTEREST-DEPOSIT> 3,232
<INTEREST-EXPENSE> 3,276
<INTEREST-INCOME-NET> 3,888
<LOAN-LOSSES> 0
<SECURITIES-GAINS> (85)
<EXPENSE-OTHER> 1,745
<INCOME-PRETAX> 2,425
<INCOME-PRE-EXTRAORDINARY> 2,425
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,703
<EPS-PRIMARY> 3.10
<EPS-DILUTED> 3.10
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 58
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 7,748
<ALLOWANCE-OPEN> 1,562
<CHARGE-OFFS> 68
<RECOVERIES> 18
<ALLOWANCE-CLOSE> 1,512
<ALLOWANCE-DOMESTIC> 1,512
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
