<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from --------------- to ---------------
Commission file number 1-9138
FIRST CENTRAL FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
<TABLE>
<S> <C>
New York 11-2648222
(State or other jurisdiction of incorporation (I.R.S. Employer Identification Number)
or organization)
</TABLE>
266 Merrick Road, Lynbrook, New York 11563
(Address of principal executive offices)
(Zip Code)
(516) 593-7070
(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
--- ----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Shares Outstanding at August 11, 1995
Title of Class (excluding 595,404 treasury shares)
-------------------------------------- -------------------------------------
Common Stock, Par Value $.10 Per Share 5,991,108
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Page No.
--------
ITEM I FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . 1
Consolidated Balance Sheets . . . . . . . . . . . . . . . . . 1
Consolidated Statements of Income . . . . . . . . . . . . . . 3
Consolidated Statements of Changes in Shareholders' Equity . . 4
Consolidated Statements of Cash Flows . . . . . . . . . . . . 5
Notes to Financial Statements . . . . . . . . . . . . . . . . 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . 7
PART II - OTHER INFORMATION
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K . . . . . . . . . . . . . . . 10
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . 15
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. Financial Statements
FIRST CENTRAL FINANCIAL CORPORATION and SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
------------ ------------
(Unaudited) *
<S> <C> <C>
ASSETS
Investments
Securities available-for-sale, at market value:
Fixed maturities (amortized cost 1995 - $34,873,901;
1994 - $33,426,715) $33,778,461 $30,574,904
Equity securities, (cost: 1995 - $33,116,250;
1994 - $38,782,895) 32,582,529 32,801,833
Securities held-to-maturity at amortized cost (market:
1995 - $17,031,815; 1994 - $9,870,326) 16,731,307 9,937,037
Short-term investments, at cost, which approximates
market 8,322,870 8,759,364
------------ ------------
Total Investments 91,415,167 82,073,138
Cash 1,038,644 409,612
Accrued investment income 879,768 944,470
Agents' balances, less allowance for doubtful accounts
(1995 - $1,495,387; 1994 - $1,321,936) 18,374,732 15,202,267
Reinsurance receivables on unpaid losses 22,769,139 24,589,577
Reinsurance receivables on paid losses 343,795 243,504
Prepaid reinsurance premiums 7,953,051 1,973,997
Federal income taxes recoverable 0 154,262
Other receivables 509,938 139,444
Deferred policy acquisition costs 7,072,392 7,339,084
Deferred debenture costs 486,897 541,696
Deferred income taxes 4,399,000 6,280,000
Property, plant and equipment less accumulated depreciation
(1995 - $1,808,340; 1994 - $1,562,814) 4,865,047 1,045,799
Other Assets 414,835 791,730
------------ ------------
$160,522,405 $141,728,580
============ ============
</TABLE>
* The balance sheet at December 31, 1994 has been derived from audited
consolidated financial statements at that date.
The accompanying notes are an integral part of these statements.
1
<PAGE>
FIRST CENTRAL FINANCIAL CORPORATION and SUBSIDIARIES
Consolidated Balance Sheets
<TABLE>
<CAPTION>
June 30, December 31,
1995 1994
------------ ------------
(Unaudited) *
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Policy Liabilities
Unpaid losses $ 68,372,927 $ 66,499,524
Unpaid loss adjustment expenses 7,866,576 7,016,895
Unearned premiums 37,740,293 32,529,415
------------ ------------
Total Policy Liabilities 113,979,796 106,045,834
Funds held for reinsurance treaty 3,848,451
Reinsurance payable 344,481 503,684
Obligation under capital leases 84,744
Convertible subordinated debentures 6,505,000 6,755,000
Federal income taxes payable 72,116
Other liabilities 1,021,102 1,101,335
------------ ------------
Total Liabilities 125,770,867 114,490,597
------------ ------------
Commitments and Contingencies
Shareholders' Equity
Common Stock, par value $.10 per share;
authorized - 20,000,000 shares; issued (1995 -
6,576,512 shares; 1994 - 6,576,512 shares) 657,652 657,652
Additional paid-in capital 13,139,551 13,139,551
Net unrealized depreciation on securities available-
for-sale, net of deferred taxes of (1995 -
$554,000; 1994 $3,003,000) (1,075,161) (5,829,873)
Retained earnings 26,112,513 23,189,795
------------ ------------
38,834,555 31,157,125
Less treasury stock, at cost (1995 - 595,404
shares; 1994 - 572,404 shares) (4,083,017) (3,919,142)
------------ ------------
Total Shareholders' Equity 34,751,538 27,237,983
------------ ------------
$160,522,405 $141,728,580
============ ============
</TABLE>
* The balance sheet at December 31, 1994 has been derived from audited
consolidated financial statements at that date.
The accompanying notes are an integral part of these statements.
2
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FIRST CENTRAL FINANCIAL CORPORATION and SUBSIDIARIES
Consolidated Statements of Income
<TABLE>
<CAPTION>
Six Months Ended June 30, Three Months Ended June 30,
1995 1994 1995 1994
----------- ----------- ----------- -----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Revenues
Premiums Written - Direct $38,382,994 $35,432,516 $20,492,252 $18,977,303
Reinsurance ceded (12,989,372) (5,032,663) (9,668,076) (3,251,160)
----------- ----------- ----------- -----------
Net Premiums Written 25,393,622 30,399,853 10,824,176 15,726,143
(Increase) Decrease in unearned premiums 768,176 (5,891,612) 2,514,061 (3,631,266)
----------- ----------- ----------- -----------
Net Premiums Earned 26,161,798 24,508,241 13,338,237 12,094,877
Net investment income 2,557,582 2,292,656 1,307,715 1,121,861
Realized gain (loss) on investments 544,860 811,248 363,614 373,174
Claims adjusting revenues 303,930 291,484 155,417 125,958
Rental income 286,938 0 157,193 -
----------- ----------- ----------- -----------
Total Revenues 29,855,108 27,903,629 15,322,211 13,715,870
----------- ----------- ----------- -----------
Expenses
Losses 12,376,093 11,656,023 6,458,400 5,745,150
Loss adjustment expense 3,734,193 2,926,542 1,709,823 1,401,110
Policy acquisition costs 6,446,583 6,338,843 3,199,326 3,069,119
Interest expense 304,450 307,625 152,922 145,728
Doubtful accounts 617,429 616,803 529,847 298,447
Other operating expenses 2,092,220 2,278,185 828,719 1,056,299
----------- ----------- ----------- -----------
Total Expenses 25,570,968 24,124,021 12,879,037 11,715,853
----------- ----------- ----------- -----------
Income Before Income Taxes 4,284,140 3,779,608 2,443,139 2,000,017
Federal and State Income Taxes 999,500 907,300 631,000 369,000
----------- ----------- ----------- -----------
Net Income $ 3,284,640 $ 2,872,308 $ 1,812,139 $ 1,631,017
=========== =========== =========== ===========
Per Share Data:
Net Income:
Primary $0.55 $0.50 $0.30 $0.28
===== ===== ===== =====
Fully Diluted $0.50 $0.46 $0.27 $0.26
===== ===== ===== =====
Cash Dividends Paid $0.060 $0.050 $0.030 $0.025
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
FIRST CENTRAL FINANCIAL CORPORATION and SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
Six Months Ended June 30, 1995
(Unaudited)
<TABLE>
<CAPTION>
Net Unrealized
Depreciation on
Additional Securities
Common Stock Paid-in Available Retained Treasury Stock
Shares Amount Capital For Sale Earnings Shares Amount Total
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balances at December 31, 1994* 6,576,512 $657,652 $13,139,551 $(5,829,873) $23,189,795 572,404 $(3,919,142) $27,237,983
Add (deduct):
Net income 3,284,640 3,284,640
Cash dividends declared
(.03 per share) (361,922) (361,922)
Purchase shares of treasury
stock 23,000 (163,875) (163,875)
Decrease in unrealized
depreciation 4,754,712 4,754,712
------------------------------------------------------------------------------------------------------------------------------------
Balance June 30, 1995 6,576,512 $657,652 $13,139,551 $(1,075,161) $26,112,513 595,404 $(4,083,017) $34,751,538
====================================================================================================================================
</TABLE>
* The balance sheet at December 31, 1994 has been derived from audited
consolidated financial statements at that date.
The accompanying notes are an integral part of these statements.
4
<PAGE>
FIRST CENTRAL FINANCIAL CORPORATION and SUBSIDIARIES
Consolidated Statements of Cash Flows
<TABLE>
<CAPTION>
Six Months Ended June 30,
1995 1994
---------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 3,284,640 $ 2,872,308
Adjustments to reconcile net income to net cash provided
by operating activities:
Amortization of deferred policy acquisition costs 7,339,084 6,451,030
Provision for depreciation and amortization 306,208 278,213
Provision for losses on uncollectible agents' balances 617,429 318,356
Net realized investment (gains) (544,860) (811,249)
Provision for deferred federal income taxes (568,000) (875,000)
Changes in operating assets and liabilities
Decrease in accrued investment income 64,702 167,820
Decrease (increase) in agents' balances and unearned premiums (4,558,070) 1,171,183
Decrease in unpaid losses, unpaid loss adjustment
expenses, and reinsurance recoverable 4,443,231 6,459,317
Deferred policy acquisition costs (7,072,392) (7,257,586)
Other items, net 3,403,659 (138,399)
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 6,715,631 8,912,791
------------ ------------
INVESTING ACTIVITIES
Purchases of fixed maturities (23,746,114) (5,656,475)
Sales and maturities of fixed maturities 15,575,041 13,802,970
Purchases of equity securities (9,861,954) (20,411,851)
Sales of equity securities 16,034,250 14,080,667
Net sales (purchases) sales of short-term investments 436,494 (9,906,171)
Purchases of property, plant and equipment (3,663,775) (158,672)
------------ ------------
NET CASH USED IN INVESTING ACTIVITIES (5,226,058) (8,249,532)
------------ ------------
FINANCING ACTIVITIES
Reduction of Convertible Subordinated Debentures (250,000) (810,000)
Proceeds from issuance of shares of common stock 0 0
Principal payments on capital lease obligations (84,744) (78,249)
Cash dividend paid (361,922) (302,106)
Purchases of treasury stock (163,875) (29,917)
------------ ------------
NET CASH USED IN FINANCING ACTIVITIES (860,541) (1,220,272)
------------ ------------
INCREASE IN CASH 629,032 (557,013)
CASH AT BEGINNING OF YEAR 409,612 1,099,729
------------ ------------
CASH AT END OF YEAR $ 1,038,644 $ 542,716
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 313,445 $ 367,000
============ ============
Income Taxes $ 1,349,160 $ 2,271,000
============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
FIRST CENTRAL FINANCIAL CORPORATION and SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1995
1. BASIS OF PRESENTATION
The financial information included herein is unaudited; however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
presentation of results for the interim periods. The financial statements for
the periods reported should be read in conjunction with the financial statements
and related notes contained in First Central's Annual Report on Form 10-K for
the year ended December 31, 1994.
2. PER SHARE DATA
Income per common share is based upon the weighted average number of shares
outstanding for the periods reported. Such weighted average number of shares
outstanding were as follows:
For the six-month periods ended June 30,
<TABLE>
<CAPTION>
Basic Primary Fully Diluted
----- ------- -------------
<S> <C> <C> <C>
1995. . . . . . . . . . . . . . . . . . 5,966,425 6,019,334 6,922,153
1994. . . . . . . . . . . . . . . . . . 5,743,483 5,783,311 6,742,545
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<S> <C>
Land .................................. $ 1,000,000
Building .............................. 3,022,289
Equipment ............................. 2,651,098
---------
Sub-total ............................. 6,673,387
---------
Less accumulated depreciation ......... 1,808,340
---------
Total ................................. $ 4,865,047
===========
</TABLE>
6
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
General Information
First Central Financial Corporation ("First Central") was incorporated on
May 18, 1983 under the laws of the State of New York. It is the parent
corporation of First Central Insurance Company ("First Central Insurance") and
Mercury Adjustment Bureau, Inc. ("Mercury"). First Central Insurance is a New
York licensed property and casualty insurance company which underwrites the
following types of insurance primarily in the State of New York: Commercial
Multiple Peril, Workers' Compensation, General Liability, Automobile Liability
and Automobile Physical Damage. First Central Insurance is licensed to
underwrite insurance in the states of New York, Pennsylvania, Maryland,
Delaware, and Connecticut. Mercury, a claims adjustment company, was acquired by
First Central in September, 1988.
Net Income - Earnings
First Central reported net income for the three and six-month periods ended
June 30, 1995 of $1,812,139 or $0.30 per share primary and $0.27 per share fully
diluted, and $3,284,640, or $0.55 per share primary and $0.50 per share fully
diluted. The increase in net income of 11.1% and 14.4%, for the three and six
month periods ended June 30, 1995 in comparison to the corresponding periods
ended June 30, 1994, is due primarily to increases in earned premiums and net
investment income offset in part by increases in loss and loss adjustment
expenses incurred and a decrease in realized gains.
Premiums Written and Earned
Direct written premiums increased $1,514,949 (8.0%) and $2,950,478 (8.3%),
for the three and six-month periods ended June 30, 1995, in comparison to the
corresponding period of 1994. The increase in premium volume was a result of an
expansion of First Central Insurance's markets into larger premium yielding
lines. Although direct written premiums increased, net written premiums
decreased $4,901,967 (31.2%) and $5,006,231 (16.5%) when compared to the
corresponding period in 1994 due to a substantial increase in reinsurance
premiums.
Ceded premiums increased $6,416,916 (197.4%) and $7,956,709 (158.1%) for
the three and six month periods ended June 30, 1995 when compared to the
corresponding periods ended June 30, 1994. The increase in ceded premiums were
due to a change in the company's reinsurance treaty as of April 1, 1995. The
endorsement to the reinsurance treaty changed the calculation of reinsurance
premium from a percentage of earned premiums to a percentage of written premiums
although reinsurance premiums will continue to be paid when earned. The effect
of this endorsement is a change in the manner by which the Company accounts for
reinsurance ceded resulting in a decrease in net premiums written and a decrease
in unearned premiums. The endorsement also produces a liability; Funds held for
reinsurance treaty of $3,848,451 at June 30, 1995.
Net premiums earned increased $1,243,360 (10.3%) and $1,653,557 (6.7%), for
the three and six-month periods ended June 30, 1995, when compared to the same
period in 1994. The increase for the three and six-month periods is attributable
to the increase in direct written premiums.
Net Investment Income; Realized Gains
First Central's net investment income of $1,307,715 and $2,557,582 for the
three and six-month periods ended June 30, 1995 respectively, represent a 16.6%
and 11.6%, increase over the net investment
7
<PAGE>
income from the corresponding periods of 1994. The increase in net investment
income is primarily due to the increase in invested assets of approximately
$13,800,000 since June 30, 1994. First Central's realized gains for the three
and six-month periods ended June 30, 1995 were $363,614 and $544,860
respectively, a decrease of 2.6% and 32.8%, over the same period ended June 30,
1994. The decrease in realized gains was a result of fewer opportunities to
realize gains from the sale of investments during the six month period ended
June 30, 1995 compared to the first six months in 1994.
At June 30, 1995 First Central held 46.1% of its invested assets in fixed
maturities available-for-sale, 18.3% in fixed maturities held-to-maturity, and
35.6% in equity securities (common and preferred stocks) available for sale. In
comparison to December 31, 1994, First Central held 48.0% of its invested assets
in fixed maturities available-for-sale, 12.1% in fixed maturities
held-to-maturity, 40.0% in equity securities (common and preferred stocks)
available for sale.
At June 30, 1995, the total net unrealized loss applicable to First
Central's available-for-sale securities amounted to $722,990. The unrealized
loss is net of deferred taxes of $372,450. In comparison to December 31, 1994
the unrealized loss decreased $4,754,709 from $5,829,870 to $1,075,161 net of
the change in deferred taxes of $2,449,000, primarily due to stronger market
conditions experienced in 1995.
Upon adoption of FASB Statement No. 115, the following is the investment
classifications at June 30, 1995. Under Statement No. 115, unrealized loss or
gains on available-for-sale investments are reported as a reduction or increase
in shareholders equity.
<TABLE>
<CAPTION>
CHARGE TO
JUNE 30, 1995 COST MARKET SURPLUS
------------------------------------------------------------------------
<S> <C> <C> <C>
Debt Securities:
Held to Maturity 16,731,307 17,031,815 0
Available for Sale 43,196,771 42,101,331 1,095,440
Trading Securities 0 0 0
------------------------------------------------
Equity Securities:
Available for Sale 33,116,250 32,582,589 533,720
Trading Securities 0 0 0
-----------
Less deferred taxes (554,000)
-----------
Reduction of Shareholder's Equity & Investments $ 1,075,160
===========
</TABLE>
Loss and Loss Adjustment Expense
During the three and six-month periods ended June 30, 1995, incurred losses
net of reinsurance increased by 12.4% and 6.2% respectively, when compared to
the corresponding periods in 1994. The increase in net incurred losses is a
result of an increase in paid losses of approximately $2,500,000 while a
decrease in outstanding reserves of approximately $1,800,000 netting to a change
in losses incurred of approximately $700,000 as of June 30, 1995 when compared
to the six-month period ended June 30, 1994.
8
<PAGE>
During the three and six-month periods ended June 30, 1995 incurred loss
adjustment expenses, net of reinsurance, increased by 22.0% and 27.6% when
compared to the corresponding periods in 1994. The increase in loss adjustment
expenses is due to an increase in costs associated with claims and litigation
primarily due to the increase of policies written over the last several years.
Underwriting Expenses
Underwriting expenses are a combination of policy acquisition costs and
other operating expenses as shown on the income statement.
Policy acquisition costs increased by 4.2% and 1.7% for the three and
six-months ended June 30, 1995 respectively, as compared to the corresponding
period in 1994. Other operating expenses decreased by 21.5% and 8.2% for the
three and six-month periods ended June 30, 1995 as compared to the corresponding
period in 1994.
Provision for Doubtful Accounts
Provision for doubtful accounts increased 77.5% and 0.1% for the three and
six-month periods ended June 30, 1995 compared to the corresponding period in
1994. The increase for the three month period was primarily due to an audit with
respect to one workers' compensation policy.
Interest Expense
Interest expense increased 4.9% and decreased 1.0% for the three and
six-month periods ended June 30, 1995 when compared to corresponding period in
1994. This decrease is due to the reduction in the principal amount outstanding
of First Central's convertible subordinated debentures (the "Debentures") from
$7,005,000 at June 30, 1994 to $6,505,000 at June 30, 1995.
Financing Activities
For the six-month period ended June 30, 1995, net cash used in First
Central's investing activities was approximately $5,226,058 as compared to
approximately $8,249,532 from the comparable period in 1994. The decrease in
cash used for investing activities was due to a net decrease in investments in
equity securities and short term investments as offset by net increases in
investments in fixed maturities and property plant and equipment. In January
1995, First Central Insurance completed the purchase of its home office for
$4,000,000 in cash.
Liquidity and Capital Resources
First Central Insurance's operations generated funds adequate to meet the
business needs of First Central and the First Central Insurance during the six
months ended June 30, 1995.
Management is unaware of any trend which is reasonably likely to result in
an increase or decrease in First Central's liquidity or its capital resources
except that as the First Central Insurance's assets and investments have
increased, the availability of investable funds have resulted in increased
investment income and improved cash flow, and hence some increased liquidity of
the First Central Insurance. The liquidity of the investment portfolio of an
insurance company is important to its ability to maximize investment return
which is a significant component of overall profitability.
9
<PAGE>
First Central funded its February 1, 1995 interest payment of $303,975 and
August 1, 1995 interest payment of $292,725 under its outstanding Debentures
from the dividends it received from the First Central Insurance in the amount of
$1,500,000.
Capital Commitments
Neither the Company nor its subsidiaries made any material commitment for
capital expenditures.
10
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. Exhibits and Reports on Form 8-K
A. Exhibits
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<S> <C>
3.1 Certificate of Incorporation of First Central Financial
Corporation ("First Central") a copy of which was filed with the
Commission on December 6, 1984 as Exhibit 3.1 to First Central's
Registration Statement on Form S-18 (Reg. No. 2-94804-NY) and is
hereby incorporated herein by this reference).
3.2 Certificate of Amendment of Certificate of Incorporation of
First Central dated the 30th day of November 1984 (a copy of which
was filed with the Commission on December 10, 1984 as Exhibit 3.2 to
First Central's Registration Statement on Form S-18 (Reg. No.
2-94804-NY) and is hereby incorporated herein by this reference).
3.3 Certificate of Amendment of Certificate of Incorporation of
First Central dated July 23, 1993 (a copy of which was filed with
the Commission on August 15, 1994 as Exhibit 3.1 to First Central's
Quarterly Report on Form 10-Q and is hereby incorporated by this
reference).
3.4 Amended and Restated By-Laws of First Central, dated as of May
18, 1994 (a copy of which was filed with the Commission on August
15, 1994 as Exhibit 3.2 to First Central's Quarterly Report on Form
10-Q and is hereby incorporated by this reference).
4.1 Specimen copy of First Central's common stock certificate (a
copy of which was filed with the Commission on December 10, 1984 as
Exhibit 4.1 to First Central's Registration Statement on Form S-1
(Reg. No. 2-94804-NY), and is hereby incorporated herein by this
reference).
4.2 Specimen copy of First Central's 9% Convertible Subordinated
Debenture Due 2000 (a copy of which was filed as Exhibit 4.2 to
Registrant's Amendment No. 1 to its Registration Statement on Form
S-1, Reg. No. 33-25264, and is hereby incorporated herein by this
reference).
4.3 Indenture dated as of September 1, 1988 between First Central
and United States Trust Company of New York as Trustee (a copy of
which was filed with the Commission on October 31, 1988 as Exhibit
4.3 to First Central's Registration Statement on Form S-1 (Reg. No.
33-25264), and is hereby incorporated herein by this reference).
4.4 Form of Common Stock Purchase Warrant (a copy of which was filed
with the Commission on August 15, 1994 as Exhibit 4.4 to First
Central's Quarterly Report on Form 10-Q and is hereby incorporated
by this reference).
4.5 Form of First Central's 1990 Stock Incentive Plan Stock Option
(a copy of which was filed with the Commission on August 15, 1994 as
Exhibit 4.5 to First Central's Quarterly Report on Form 10-Q and is
hereby incorporated by this reference).
</TABLE>
11
<PAGE>
<TABLE>
<S> <C>
10.1 Facultative Reinsurance Agreement dated September 25, 1987
between Munich American Reinsurance Company and First Central
Insurance (a copy of which was filed with the Commission on August
15, 1994 as Exhibit 10.8 to First Central's Quarterly Report on Form
10-Q and is hereby incorporated by this reference).
10.2 Addendum No. 1 to the Reinsurance Agreement between First
Central Insurance and Munich American Reinsurance Company, dated
July 28, 1988 (a copy of which was filed with the Commission on
August 15, 1994 as Exhibit 10.9 to First Central's Quarterly Report
on Form 10-Q and is hereby incorporated by this reference).
10.3 Addendum No. 2 to the Reinsurance Agreement between First
Central Insurance and Munich American Reinsurance Company, dated
January 1, 1989 (a copy of which was filed with the Commission on
August 15, 1994 as Exhibit 10.10 to First Central's Quarterly Report
on Form 10-Q and is hereby incorporated by this reference).
10.4 Addendum No. 3 to the Reinsurance Agreement between First
Central Insurance and Munich American Reinsurance Company, dated
January 1, 1992 (a copy of which was filed with the Commission on
August 15, 1994 as Exhibit 10.11 to First Central's Quarterly Report
on Form 10-Q and is hereby incorporated by this reference).
10.5 Addendum No. 4 to the Reinsurance Agreement between First
Central Insurance and Munich American Reinsurance Company, dated
June 18, 1993 (a copy of which was filed with the Commission on
August 15, 1994 as Exhibit 10.12 to First Central's Quarterly Report
on Form 10-Q and is hereby incorporated by this reference).
10.6 Addendum No. 5 to the Reinsurance Agreement between First
Central Insurance and Munich American Reinsurance Company, dated
August 9, 1994 (a copy of which was filed with the Commission on
March 31, 1995 as Exhibit 10.6 to First Central's Annual Report on
Form 10-K and is hereby incorporated by this reference).
10.7 Automobile Physical Damage Automatic Binding Agreement between
First Central Insurance and National Reinsurance Corporation, dated
December 6, 1994 (a copy of which was filed with the Commission on
March 31, 1995 as Exhibit 10.7 to First Central's Annual Report on
Form 10-K and is hereby incorporated by this reference).
10.8 License Agreement dated September 30, 1989, between Policy
Management Systems Corporation and First Central (a copy of which
was filed with the Commission on August 15, 1994 as Exhibit 10.15 to
First Central's Quarterly Report on Form 10-Q and is hereby
incorporated by this reference).
10.9 Sublease Agreement dated December 15, 1988 between First
Central Insurance and Simon General (incorporated herein by
reference to Exhibit 10.9 in First Central's Amendment No. 1 to its
Registration Statement on Form S-1, Reg. No. 33-25264).
10.10 Addendum to Sublease dated October 1, 1993 between First
Central Insurance and Simon General (a copy of which was filed with
the Commission on August 15, 1994 as Exhibit 10.17 to First
Central's Quarterly Report on Form 10-Q and is hereby incorporated
by this reference).
</TABLE>
12
<PAGE>
<TABLE>
<S> <C>
10.11 Form of Indemnity Agreement (a copy of which was filed with
the Commission on August 15, 1994 as Exhibit 10.20 to First
Central's Quarterly Report on Form 10-Q and is hereby incorporated
by this reference).
10.12 Agreement of Tax Allocation between First Central and First
Central Insurance (a copy of which was filed with the Commission on
August 15, 1994 as Exhibit 10.21 to First Central's Quarterly Report
on Form 10-Q and is hereby incorporated by this reference).
10.13 Property Facultative Automatic Reinsurance Agreement between
First Central Insurance and North American Reinsurance Corp.,
effective January 1, 1993 (a copy of which was filed with the
Commission on August 15, 1994 as Exhibit 10.22 to First Central's
Quarterly Report on Form 10-Q and is hereby incorporated by this
reference).
10.14 Subscription Agreement between First Central and The Trustees
of General Electric Pension Trust ("G.E."), dated March 19, 1993 (a
copy of which was filed with the Commission on August 15, 1994 as
Exhibit 10.23 to First Central's Quarterly Report on Form 10-Q and
is hereby incorporated by this reference).
10.15 Common Stock Purchase Warrant (Series B) issued by First
Central to G.E., dated March 19, 1993 (a copy of which was filed
with the Commission on August 15, 1994 as Exhibit 10.25 to First
Central's Quarterly Report on Form 10-Q and is hereby incorporated
by this reference).
10.16 Subscription Agreement, dated April 16, 1993 between First
Central and SBSF Funds, Inc. (a copy of which was filed with the
Commission on August 15, 1994 as Exhibit 10.26 to First Central's
Quarterly Report on Form 10-Q and is hereby incorporated by this
reference).
10.17 Common Stock Purchase Warrant (Series B) issued by First
Central to Atwell dated April 16, 1993 (a copy of which was filed
with the Commission on August 15, 1994 as Exhibit 10.28 to First
Central's Quarterly Report on Form 10-Q and is hereby incorporated
by this reference).
10.18 Subscription Agreement, dated December 3, 1993 between First
Central and GE (a copy of which was filed with the Commission on
August 15, 1994 as Exhibit 10.29 to First Central's Quarterly Report
on Form 10-Q and is hereby incorporated by this reference).
10.19 Common Stock Purchase Warrant (Series B) issued by First
Central to GE, dated December 3, 1993 (a copy of which was filed
with the Commission on August 15, 1994 as Exhibit 10.30 to First
Central's Quarterly Report on Form 10-Q and is hereby incorporated
by this reference).
10.20 Stock Option, dated September 10, 1993, granted to Martin J.
Simon by First Central (a copy of which was filed with the
Commission on August 15, 1994 as Exhibit 10.31 to First Central's
Quarterly Report on Form 10-Q and is hereby incorporated by this
reference).
10.21 Employment Agreement, dated as of March 18, 1994, by and
between First Central and Martin J. Simon (a copy of which was filed
with the Commission on August 15, 1994 as Exhibit 10.32 to First
Central's Quarterly Report on Form 10-Q and is hereby incorporated
by this reference).
10.22 Software License Agreement, dated May 4, 1994, between the
Wheatley Group, Ltd. and First Central Insurance (a copy of which
was filed with the Commission on August 15, 1994 as Exhibit 10.33 to
First Central's Quarterly Report on Form 10-Q and is hereby
incorporated by this reference).
</TABLE>
13
<PAGE>
<TABLE>
<S> <C>
10.23 Multiple Line Excess of Loss Reinsurance Agreement between
First Central Insurance and National Reinsurance Corporation, dated
January 1, 1994 (a copy of which was filed with the Commission on
August 15, 1994 as Exhibit 10.34 to First Central's Quarterly Report
on Form 10-Q and is hereby incorporated by this reference).
10.24 Endorsement No. 1 of Agreement No. 3522-01002 Multiple Line
Excess of Loss Reinsurance Agreement between First Central Insurance
and National Reinsurance Corporation, dated January 1, 1994 (a copy
of which was filed with the Commission on August 15, 1994 as Exhibit
10.35 to First Central's Quarterly Report on Form 10-Q and is hereby
incorporated by this reference).
10.25 Investment Advisory Agreement, dated June 30, 1994 between
First Central Insurance and Cramer Rosenthal McGlynn, Inc. (a copy
of which was filed with the Commission on August 15, 1994 as Exhibit
10.36 to First Central's Quarterly Report on Form 10-Q and is hereby
incorporated by this reference).
10.26 Contract of Sale, dated October 18, 1994 between Lynbrook
Court Associates and First Central Insurance (a copy of which was
filed with the Commission on March 31, 1994 as Exhibit 10.37 to
First Central's Quarterly Report on Form 10-Q and is hereby
incorporated by this reference).
10.27 Subscription Agreement, dated August 19, 1994, between First
Central and CRM Retirement Partners, L.P. ("CRM") (a copy of which
was filed with the Commission on March 31, 1994 as Exhibit 10.38 to
First Central's Quarterly Report on Form 10-Q and is hereby
incorporated by this reference).
10.28 Common Stock Purchase Warrant (Series C) issued by First
Central to CRM, dated August 19, 1994 (a copy of which was filed
with the Commission on March 31, 1994 as Exhibit 10.39 to First
Central's Quarterly Report on Form 10-Q and is hereby incorporated
by this reference).
10.29 Subscription Agreement, dated August 19, 1994, between First
Central and CRM (a copy of which was filed with the Commission on
March 31, 1994 as Exhibit 10.40 to First Central's Quarterly Report
on Form 10-Q and is hereby incorporated by this reference).
10.30 Common Stock Purchase Warrant (Series C) issued by First
Central to CRM, dated August 19, 1994 (a copy of which was filed
with the Commission on March 31, 1994 as Exhibit 10.41 to First
Central's Quarterly Report on Form 10-Q and is hereby incorporated
by this reference).
10.31 Subscription Agreement, dated September 2, 1994, between First
Central and National Reinsurance Corp. (a copy of which was filed
with the Commission on March 31, 1994 as Exhibit 10.42 to First
Central's Quarterly Report on Form 10-Q and is hereby incorporated
by this reference).
10.32 Common Stock Purchase Warrant (Series C) issued by First
Central to National Reinsurance Corp, dated August 2, 1994 (a copy
of which was filed with the Commission on March 31, 1994 as Exhibit
10.43 to First Central's Quarterly Report on Form 10-Q and is hereby
incorporated by this reference).
10.33 Employment Agreement, dated as of July 1, 1994 by and between
First Central and Joan M. Locascio (a copy of which was filed with
the Commission on March 31, 1995 as Exhibit 10.37 to First Central's
Annual Report on Form 10-K and is hereby incorporated by this
reference).
</TABLE>
14
<PAGE>
<TABLE>
<S> <C>
10.34 Employment Agreement, dated as of July 1, 1994 by and between
First Central and Harvey Mass (a copy of which was filed with the
Commission on March 31, 1995 as Exhibit 10.38 to First Central's
Annual Report on Form 10-K and is hereby incorporated by this
reference).
10.35 Employment Agreement, dated as of July 1, 1994 by and between
First Central and Raymond F. Brancaccio (a copy of which was filed
with the Commission on March 31, 1995 as Exhibit 10.39 to First
Central's Annual Report on Form 10-K and is hereby incorporated by
this reference).
10.36 Employment Agreement, dated as of July 1, 1994 by and between
First Central and Joel I. Dollinger (a copy of which was filed with
the Commission on March 31, 1995 as Exhibit 10.40 to First Central's
Annual Report on Form 10-K and is hereby incorporated by this
reference).
10.37 Employment Agreement, dated as of July 1, 1994 by and between
First Central and Allan R. Goodman (a copy of which was filed with
the Commission on March 31, 1995 as Exhibit 10.41 to First Central's
Annual Report on Form 10-K and is hereby incorporated by this
reference).
10.38 Employment Agreement, dated as of July 1, 1994 by and between
Mercury and Joseph P. Ciorciari (a copy of which was filed with the
Commission on March 31, 1995 as Exhibit 10.42 to First Central's
Annual Report on Form 10-K and is hereby incorporated by this
reference).
*11 Computation of Per Share Earnings.
21 List of Subsidiaries (incorporated by reference to Exhibit 22 to
the Registrant's Amendment No. 1 to its Registration Statement on
Form S-1 Reg. No. 33-25264).
*27 Financial Data Schedule (filed only with the electronic EDGAR
filing of this document).
</TABLE>
-------------------------
* filed herewith
B. Reports on Form 8-K.
There were no reports filed on Form 8-K during the three and six-month
periods ended June 30, 1995.
15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST CENTRAL FINANCIAL CORPORATION
Dated: August 11, 1995 By: /s/ Martin J. Simon
-------------------- -------------------------------
Martin J. Simon, President
(Chief Executive Officer)
Dated: August 11, 1995 By: /s/ Joan M. Locascio
-------------------- -------------------------------
Joan M. Locascio, Treasurer, Vice President
(Chief Financial and Accounting Officer)
16
<PAGE>
FIRST CENTRAL FINANCIAL CORPORATION AND SUBSIDIARIES Exhibit 11
COMPUTATION OF PER COMMON SHARE EARNINGS
<TABLE>
<CAPTION>
Six Months Ended June 30,
1995 1994 1993
---- ---- ----
<S> <C> <C> <C>
Primary
Net income applicable to common shares ................................ $ 3,289,676 $ 2,872,308 $ 2,218,244
=========== =========== ===========
Weighted average number of primary common shares:
Outstanding .......................................................... 5,966,425 5,743,483 5,573,217
Issuable upon assumed exercise of dilutive warrants .................. 52,909 39,828 --
----------- ----------- -----------
TOTAL ............................................................... 6,019,334 5,783,311 5,573,217
=========== =========== ===========
Primary earnings per common share ...................................... $0.547 $0.497 $0.398
====== ====== ======
Fully Diluted
Net income applicable to common shares ................................. $ 3,289,676 $ 2,872,308 $ 2,218,244
Add interest and amortization of debentures
(net of tax) .......................................................... 194,436 216,068 284,081
----------- ----------- -----------
TOTAL ............................................................... $ 3,484,112 $ 3,088,376 $ 2,502,325
=========== =========== ===========
Weighted average number of primary common shares:
Outstanding .......................................................... 5,966,425 5,743,483 5,573,217
Increase to assumed exercise of stock options and
conversion of convertible debt to reflect maximum
dilution effect ..................................................... 955,728 999,062 1,108,667
----------- ----------- -----------
TOTAL ............................................................... 6,922,153 6,742,545 6,681,884
=========== =========== ===========
Fully diluted earnings per common share ................................ $0.503 $0.458 $0.374
===== ====== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> APR-1-1995
<PERIOD-END> JUN-30-1995
<DEBT-HELD-FOR-SALE> 33,778,461
<DEBT-CARRYING-VALUE> 16,731,307
<DEBT-MARKET-VALUE> 17,031,815
<EQUITIES> 32,582,529
<MORTGAGE> 0
<REAL-ESTATE> 0
<TOTAL-INVEST> 91,415,167
<CASH> 1,038,644
<RECOVER-REINSURE> 343,795
<DEFERRED-ACQUISITION> 7,072,392
<TOTAL-ASSETS> 160,522,405
<POLICY-LOSSES> 76,239,503
<UNEARNED-PREMIUMS> 37,740,293
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 6,505,000
0
0
<COMMON> 657,652
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 160,522,405
38,382,994
<INVESTMENT-INCOME> 2,557,582
<INVESTMENT-GAINS> 544,860
<OTHER-INCOME> 590,868
<BENEFITS> 16,110,286
<UNDERWRITING-AMORTIZATION> 6,446,583
<UNDERWRITING-OTHER> 2,092,220
<INCOME-PRETAX> 4,284,140
<INCOME-TAX> 999,500
<INCOME-CONTINUING> 3,284,640
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,284,640
<EPS-PRIMARY> .55
<EPS-DILUTED> .50
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
