<PAGE>
<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, 1996
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.
<TABLE>
<S> <C>
Shares Outstanding at August 12, 1996
Title of Class (excluding 602,404 treasury shares)
- ------------------------------------------- ------------------------------------------
Common Stock, Par Value $.10 Per Share 5,986,608
</TABLE>
<PAGE>
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
<TABLE>
<CAPTION>
PAGE NO.
--------
<S> <C> <C>
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.................................. 11
SIGNATURES........................................................ 16
</TABLE>
<PAGE>
<PAGE>
PART I
FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
FIRST CENTRAL FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
---------------- -----------------
(UNAUDITED) *
<S> <C> <C>
ASSETS
Investments
Securities available-for-sale, at market value:
Fixed maturities (amortized cost 1996 - $35,552,668;
1995 - $35,181,479) $ 34,876,547 $ 35,640,019
Equity securities, (cost: 1996 - $22,787,051;
1995 - $28,011,278) 23,351,006 28,704,546
Securities held-to-maturity at amortized cost (market:
1996 - $40,721,556; 1995 - $33,693,837) 41,621,606 33,415,757
Short-term investments, at cost, which approximates
market 4,474,380 2,918,369
---------------- -----------------
Total Investments 104,323,539 100,678,691
Cash 948,812 1,499,829
Accrued investment income 1,482,091 835,720
Agents' balances, less allowance for doubtful accounts
(1996 - $1,669,762; 1995 - $1,554,074) 19,202,262 17,871,850
Reinsurance receivables on unpaid losses 21,184,903 19,541,811
Reinsurance receivables on paid losses 231,320 817,681
Prepaid reinsurance premiums 7,272,884 8,206,455
Federal income taxes recoverable 645,225 2,467,225
Other receivables 264,953 333,234
Deferred policy acquisition costs 6,637,657 6,351,976
Deferred debenture costs 369,177 438,603
Deferred income taxes 5,281,000 4,465,000
Property, plant and equipment less accumulated depreciation
(1996 - $1,226,518; 1995 - $1,639,866) 4,443,954 4,523,949
Other Assets 425,048 428,325
---------------- -----------------
$ 172,712,825 $ 168,460,349
================ =================
</TABLE>
* The balance sheet at December 31, 1995 has been derived from audited
consolidated financial statements at that date.
The accompanying notes are an integral part of these statements.
1
<PAGE>
<PAGE>
FIRST CENTRAL FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1996 1995
----------------- ----------------
(UNAUDITED) *
<S> <C> <C>
LIABILITIES AND STOCKHOLDERS' EQUITY
Policy Liabilities
Unpaid losses $ 84,539,704 $ 78,887,340
Unpaid loss adjustment expenses 8,422,739 7,749,141
Unearned premiums 35,187,466 36,295,661
----------------- ----------------
Total Policy Liabilities 128,149,909 122,932,142
Funds held for reinsurance treaty 3,637,850 3,704,947
Reinsurance payable 822,706 1,393,663
Convertible subordinated debentures 5,830,000 6,330,000
Other liabilities 1,128,105 761,988
----------------- ----------------
Total Liabilities 139,568,570 135,122,740
----------------- ----------------
Commitments and Contingencies
Shareholders' Equity
Common Stock, par value $.10 per share;
authorized - 20,000,000 shares; issued (1996 -
6,589,012 shares; 1995 - 6,589,012 shares) 658,902 658,902
Additional paid-in capital 13,209,395 13,209,395
Net unrealized (depreciation) appreciation on
securities available for sale, net of deferred
taxes of (1996 - $38,000; 1995 - $392,000) (74,166) 759,806
Retained earnings 23,481,266 22,826,898
----------------- ----------------
37,275,397 37,455,001
Less treasury stock, at cost (1996 - 602,404
shares; 1995 - 600,404 shares) (4,131,142) (4,117,392)
----------------- ----------------
Total Shareholders' Equity 33,144,255 33,337,609
----------------- ----------------
$ 172,712,825 $ 168,460,349
================= ================
</TABLE>
* The balance sheet at December 31, 1995 has been derived from audited
consolidated financial statements at that date.
The accompanying notes are an integral part of these statements.
2
<PAGE>
<PAGE>
FIRST CENTRAL FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30, THREE MONTHS ENDED JUNE 30,
1996 1995 1996 1995
------------- ------------- ------------- -------------
(UNAUDITED) (UNAUDITED) (UNAUDITED) (UNAUDITED)
<S> <C> <C> <C> <C>
Revenues
Premiums Written - Direct $ 31,974,146 $ 38,382,994 16,934,735 $ 20,492,252
Reinsurance ceded (6,543,060) (12,989,372) (2,859,357) (9,668,076)
------------ ------------ ------------ ------------
Net Premiums Written 25,431,086 25,393,622 14,075,378 10,824,176
(Increase) Decrease in unearned premiums 174,625 768,176 (1,405,807) 2,514,061
------------ ------------ ------------ ------------
Net Premiums Earned 25,605,711 26,161,798 12,669,571 13,338,237
Net investment income 2,538,263 2,557,582 1,342,766 1,307,715
Realized gain (loss) on investments 1,036,031 544,860 313,906 363,614
Claims adjusting revenues 481,093 303,930 288,817 155,417
Rental and Miscellaneous income 119,420 286,938 67,210 157,193
------------ ------------ ------------ ------------
Total Revenues 29,780,518 29,855,108 14,682,270 15,322,176
------------ ------------ ------------ ------------
Expenses
Losses 14,121,728 12,376,093 7,800,553 6,458,400
Loss adjustment expense 4,727,475 3,734,193 1,683,674 1,709,823
Policy acquisition costs 5,910,067 6,446,583 2,991,832 3,199,326
Interest expense 282,407 304,450 139,926 152,922
Doubtful accounts 464,697 617,429 336,966 529,847
Other operating expenses 2,903,046 2,092,220 1,556,356 828,719
------------ ------------ ------------ ------------
Total Expenses 28,409,420 25,570,968 14,509,307 12,879,037
------------ ------------ ------------ ------------
Income Before Income Taxes 1,371,098 4,284,140 172,963 2,443,139
Federal and State Income Taxes 354,400 999,500 (13,000) 631,000
------------ ------------ ------------ ------------
Net Income $ 1,016,698 $ 3,284,640 $ 185,963 $ 1,812,139
============ ============ ============ ============
Per Share Data:
Net Income:
Primary $0.17 $0.55 $0.03 $0.30
===== ===== ===== =====
Fully Diluted $0.17 $0.50 $0.03 $0.27
===== ===== ===== =====
Cash Dividends Paid $0.06 $0.060 $0.03 $0.030
===== ====== ===== ======
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE>
<PAGE>
FIRST CENTRAL FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
SIX MONTHS ENDED JUNE 30, 1996
(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, 1995* 6,589,012 $658,902 $13,209,395 $759,806 $22,826,898 600,404 $(4,117,392) $33,337,609
Add (deduct):
Net income 1,016,698 1,016,698
Cash dividends declared (.10 per share) (362,330) (362,330)
Purchase shares of treasury stock 2,000 (13,750) (13,750)
Increase in unrealized depreciation (833,972) (833,972)
- ------------------------------------------------------------------------------------------------------------------------------------
Balance June 30, 1996 6,589,012 $658,902 $13,209,395 $(74,166) $23,481,266 602,404 $(4,131,142) $33,144,255
====================================================================================================================================
</TABLE>
* The balance sheet at December 31, 1995 has been derived from audited
consolidated financial statements at that date.
The accompanying notes are an integral part of these statements.
4
<PAGE>
<PAGE>
FIRST CENTRAL FINANCIAL CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
Six MONTHS ENDED JUNE 30,
1996 1995
----------------- -----------------
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 1,016,698 $ 3,284,640
Adjustments to reconcile net income to net cash provided
by operating activities:
Amortization of deferred policy acquisition costs 6,351,976 7,339,084
Provision for depreciation and amortization 171,723 306,208
Provision for losses on uncollectible agents' balances 464,697 617,429
Net realized investment gains (1,036,031) (544,860)
Provision for deferred federal income taxes (386,000) (568,000)
Changes in operating assets and liabilities
Increase (decrease) in accrued investment income (646,371) 64,702
Change in agents' balances and unearned premiums (2,036,830) (4,558,070)
Change in unpaid losses, unpaid loss adjustment
expenses, and reinsurance recoverables 5,269,231 4,443,231
Deferred policy acquisition costs (6,637,657) (7,072,392)
Other items, net 1,694,797 3,403,659
----------------- -----------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,226,233 6,715,631
----------------- -----------------
INVESTING ACTIVITIES
Purchases of fixed maturities (40,531,975) (23,746,114)
Sales and maturities of fixed maturities 31,395,866 15,575,041
Purchases of equity securities (5,714,543) (9,861,954)
Sales of equity securities 12,515,785 16,034,250
Net (purchases) sales of short-term investments (1,556,011) 436,494
Purchases of property, plant and equipment (10,291) (3,663,775)
----------------- -----------------
NET CASH USED IN INVESTING ACTIVITIES (3,901,169) (5,226,058)
----------------- -----------------
FINANCING ACTIVITIES
Principal payments on convertible subordinated debentures (500,000) (250,000)
Proceeds from issuance of shares of common stock 0 0
Principal payments on capital lease obligations 0 (84,744)
Cash dividend paid (362,331) (361,922)
Purchases of shares of common stock for the treasury (13,750) (163,875)
----------------- -----------------
NET CASH USED IN FINANCING ACTIVITIES (876,081) (860,541)
----------------- -----------------
DECREASE (INCREASE) IN CASH (551,017) 629,032
CASH AT BEGINNING OF YEAR 1,499,829 409,612
----------------- -----------------
CASH AT END OF YEAR $ 948,812 $ 1,038,644
================= =================
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $ 303,000 $ 313,000
================= =================
Income Taxes $ 1,062,000 $ 1,349,000
================= =================
</TABLE>
The accompanying notes are an integral part of these statements.
5
<PAGE>
<PAGE>
FIRST CENTRAL FINANCIAL CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1996
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, 1995.
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>
1996......... 5,988,327 6,019,135 6,766,524
1995......... 5,966,425 6,019,334 6,922,153
</TABLE>
3. PROPERTY, PLANT AND EQUIPMENT
Property, plant and equipment consists of the following:
<TABLE>
<S> <C>
Land $ 1,000,000
Building 3,039,313
Equipment 1,631,159
-------------
Sub-total 5,670,472
--------------
Less accumulated depreciation 1,226,518
--------------
Total $ 4,443,954
==============
</TABLE>
6
<PAGE>
<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, Products Liability, Fire, Allied Lines, Boiler
and Machinery, Glass, Burglary and Theft, Umbrella and Inland Marine. First
Central Insurance is licensed to underwrite insurance in the states of New York,
Pennsylvania and Connecticut. Mercury, a claims adjustment company,
was acquired by First Central in September, 1988. First Central
Insurance is rated B++ by A.M. Best.
NET INCOME - EARNINGS
First Central reported net income for the three and six-month periods
ended June 30, 1996 of $185,963 or $0.03 per share primary and $0.03 per share
fully diluted, and $1,016,698, or $0.17 per share primary and $0.17 per share
fully diluted, respectively. The decrease in net income of 89.7% for the three
month period ended June 30, 1996 in comparison to the corresponding period ended
June 30, 1995, is due primarily to a decrease in earned premiums and increases
in losses incurred and other operating expense offset in part by increases in
claims adjusting revenue and decreased policy acquisition costs. The decrease in
net income of 69.0% for the six month period ended June 30, 1996 when compared
to the same period ended June 30, 1995 was primarily due to decreases in earned
premiums, and increases in loss and loss adjustment expenses and other operating
expenses offset in part by increases in realized gains, claims adjusting revenue
and a decrease in policy acquisition costs.
PREMIUMS WRITTEN AND EARNED
Direct written premiums of $16,934,735 and $31,974,146 for the three and
six-month periods ended June 30, 1996, respectively, decreased 17.4% and 16.7%,
when compared to the corresponding period of 1995. The decrease in premium
volume primarily resulted from the lead paint exclusion that First Central
Insurance Company now has in effect on all policies, competitive pricing
pressures and softer property and casualty markets.
In January 1996, an endorsement to First Central Insurance's reinsurance
treaty increased First Central Insurance's retention per loss to $250,000 from
$200,000 and decreased its ceded premium rate on property and casualty
writings. An April 1995, 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 continue to be paid when earned). This change is the primary reason
that ceded premiums decreased $6,808,719 (70.4%) and $6,446,312 (49.6%) for the
three and six month periods ended June 30, 1996, respectively, and net written
premiums increased $3,251,202 (30%) and $37,464 (0.1%), respectively, over the
same periods when compared to the corresponding periods in 1995.
Net premiums earned decreased $668,666 (5.0%) and $556,087 (2.1%), for
the three and six-month periods ended June 30, 1996, respectively, when compared
to the same periods in 1995. The decrease for the three and six-month periods is
attributable to the decrease in direct written premiums.
7
<PAGE>
<PAGE>
NET INVESTMENT INCOME; REALIZED GAINS
First Central's net investment income of $1,342,766 and $2,538,263 for
the three and six-month periods ended June 30, 1996, respectively, represent a
2.7% increase and a 0.8%, decrease over the net investment income from the
corresponding periods of 1995. First Central's net realized gains for the three
and six-month periods ended June 30, 1996 declined $49,708 (13.7%) and increased
$491,171 (90.1%), respectively, over the same periods ended June 30, 1995. The
increase in net realized gains resulted primarily from gains realized on the
sale of equity securities.
At June 30, 1996 First Central held 33.4% of its invested assets in
fixed maturities available-for-sale, 39.9% in fixed maturities held-to-maturity,
22.4% in equity securities (common and preferred stocks) available for sale and
4.3% in short-term investments (principally money markets). At December 31,
1995, First Central held 35.4% of its invested assets in fixed maturities
available-for-sale, 33.2% in fixed maturities held-to-maturity, 28.5% in equity
securities (common and preferred stocks) available for sale and 2.9% in
short-term investments.
At June 30, 1996, the total net unrealized loss applicable to First
Central's available-for-sale securities amounted to $74,166. The unrealized loss
is net of deferred taxes of $38,000. At December 31, 1995 the net unrealized
gain was $759,806 net of deferred taxes of $392,000, the change from a net
unrealized gain position to a net unrealized loss is primarily due to a decline
in market value of First Central's fixed maturities available for sale.
In accordance with FASB Statement No. 115, the following is the
investment classifications at June 30, 1996. 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, 1996 COST MARKET SURPLUS
-------------------------------------------------------------------------------------
<S> <C> <C> <C>
Debt Securities:
Held to Maturity 41,621,606 40,721,556 0
Available for Sale 35,552,668 34,876,547 (676,121)
Trading Securities 0 0 0
-------------------------------------------------------
Equity Securities:
Available for Sale 22,787,051 23,351,006 563,955
Trading Securities 0 0 0
-----------------
Less deferred taxes (38,000)
-----------------
Reduction of Shareholder's Equity & Investments $ (74,166)
=================
</TABLE>
LOSS AND LOSS ADJUSTMENT EXPENSE
It has been First Central Insurance's practice to maintain reserves at
or near the middle range of an 'actuarial reasonableness range' established by
its independent actuary to evaluate the adequacy of reserves. The Insurance
Company's reserves are analyzed on a quarterly basis. As of June 30, 1996, the
actuary's preliminary report indicates that the actuarial reasonableness range
is between $68.1 million and $83.3 million. As of June 30, 1996, the Insurance
Company's net reserves were $71.7 million.
During the three and six-month periods ended June 30, 1996, incurred
losses net of reinsurance increased by 20.8% and 14.1%, respectively, when
compared to the corresponding periods in 1995.
8
<PAGE>
<PAGE>
During the three and six-month periods ended June 30, 1996, incurred
loss adjustment expenses, net of reinsurance, decreased by 1.5% and increased by
26.6%, respectively, when compared to the corresponding periods in 1995. The
increase in loss adjustment expenses for the six-month period is primarily due
to an increase in costs associated with claims and litigation resulting from 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 decreased by 6.5% and 8.3% for the three and six-months ended June 30,
1996, respectively, as compared to the corresponding periods in 1995. These
decreases are primarily due to the decrease in commission and premium tax
expenses associated with the reduced premium writing. Other operating expenses
increased by 87.8% and 38.8% for the three and six-month periods ended June 30,
1996 as compared to the corresponding periods in 1995. This increase is
primarily due to new statutory assessments on workers' compensation lines.
Accordingly, Underwriting Expenses increased 12.9% and 3.2% for the three and
six-month period ended June 30, 1996, respectively, as compared to the
corresponding period in 1995.
PROVISION FOR DOUBTFUL ACCOUNTS
Provision for doubtful accounts decreased 36.4% and 24.7% for the three
and six-month periods ended June 30, 1996 compared to the corresponding periods
in 1995. This decrease was primarily the result of a reduction in the amount of
uncollectible premiums identified in workers' compensation policy audits.
INTEREST EXPENSE
Interest expense decreased 8.5% and 7.2% for the three and six-month
periods ended June 30, 1996 when compared to corresponding periods in 1995. This
decrease is due to the reduction in the principal amount outstanding of First
Central's convertible subordinated debentures from $6,505,000 at June 30, 1995
to $5,830,000 at June 30, 1996.
FINANCING ACTIVITIES
For the six-month period ended June 30, 1996, net cash used in First
Central's investing activities was approximately $3,901,169 as compared to
approximately $5,226,058 from the comparable period in 1995. The decrease in
cash used for investing activities was due primarily to a net decrease in
investments in property, plant and equipment and equity securities as offset by
net increases in investments in fixed maturities and short-term investments. The
decrease in property, plant and equipment was a result of the First Central
Insurance purchasing its home office in the first quarter or 1995.
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, 1996.
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
9
<PAGE>
<PAGE>
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.
First Central funded its February 1, 1996 interest payment of $284,850
and August 1, 1996 interest payment of $262,350 under its outstanding Debentures
from the dividends it received from the First Central Insurance in the amount of
$2,000,000.
CAPITAL COMMITMENTS
Neither the Company nor its subsidiaries made any material commitment
for capital expenditures.
10
<PAGE>
<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>
<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>
<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>
<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>
<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, 1996.
15
<PAGE>
<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 13, 1996 BY: /s/ Martin J. Simon
------------------- ----------------------------------------
Martin J. Simon, President
(Chief Executive Officer)
DATED: August 13, 1996 BY: /s/ Joan M. Locascio
------------------- ----------------------------------------
Joan M. Locascio, Treasurer,
Vice President
(Chief Financial and Accounting Officer)
16
<PAGE>
<PAGE>
FIRST CENTRAL FINANCIAL CORPORATION AND SUBSIDIARIES Exhibit 11
COMPUTATION OF PER COMMON SHARE EARNINGS
<TABLE>
<CAPTION>
SIX MONTHS ENDED JUNE 30,
1996 1995 1994
---- ---- ----
<S> <C> <C> <C>
PRIMARY
Net income applicable to common shares $ 1,016,698 $ 3,289,676 $ 2,872,308
=============== =============== ===============
Weighted average number of primary common shares:
Outstanding 5,988,327 5,966,425 5,743,483
Issuable upon assumed exercise of dilutive warrants 30,808 52,909 39,828
--------------- --------------- ---------------
TOTAL 6,019,135 6,019,334 5,783,311
=============== =============== ===============
Primary earnings per common share $0.169 $0.547 $0.497
====== ====== ======
FULLY DILUTED
Net income applicable to common shares $ 1,016,698 $ 3,289,676 $ 2,872,308
Add interest and amortization of debentures
(net of tax) 183,051 194,436 216,068
--------------- --------------- ---------------
TOTAL $ 1,199,749 $ 3,484,112 $ 3,088,376
=============== =============== ===============
Weighted average number of primary common shares:
Outstanding 5,988,327 5,966,425 5,743,483
Increase to assumed exercise of stock options and
conversion of convertible debt to reflect maximum
dilution effect 778,197 955,728 999,062
--------------- --------------- ---------------
TOTAL 6,766,524 6,922,153 6,742,545
=============== =============== ===============
Fully diluted earnings per common share $0.169 $0.503 $0.458
====== ====== ======
</TABLE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 7
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-30-1996
<DEBT-HELD-FOR-SALE> 34,876,547
<DEBT-CARRYING-VALUE> 41,621,606
<DEBT-MARKET-VALUE> 40,721,556
<EQUITIES> 23,351,006
<MORTGAGE> 0
<REAL-ESTATE> 3,958,958
<TOTAL-INVEST> 104,323,539
<CASH> 948,812
<RECOVER-REINSURE> 231,320
<DEFERRED-ACQUISITION> 6,637,657
<TOTAL-ASSETS> 172,712,825
<POLICY-LOSSES> 92,962,443
<UNEARNED-PREMIUMS> 35,187,466
<POLICY-OTHER> 0
<POLICY-HOLDER-FUNDS> 0
<NOTES-PAYABLE> 5,830,000
<COMMON> 658,902
0
0
<OTHER-SE> 0
<TOTAL-LIABILITY-AND-EQUITY> 172,712,825
31,974,146
<INVESTMENT-INCOME> 2,538,263
<INVESTMENT-GAINS> 1,036,031
<OTHER-INCOME> 600,513
<BENEFITS> 18,849,203
<UNDERWRITING-AMORTIZATION> 5,910,067
<UNDERWRITING-OTHER> 2,903,046
<INCOME-PRETAX> 1,371,098
<INCOME-TAX> 354,400
<INCOME-CONTINUING> 1,016,698
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,016,698
<EPS-PRIMARY> 0.17
<EPS-DILUTED> 0.17
<RESERVE-OPEN> 0
<PROVISION-CURRENT> 0
<PROVISION-PRIOR> 0
<PAYMENTS-CURRENT> 0
<PAYMENTS-PRIOR> 0
<RESERVE-CLOSE> 0
<CUMULATIVE-DEFICIENCY> 0
<PAGE>
