<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 September 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: 0-15732
Central Bancorporation, Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Texas 75-1653291
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
777 West Rosedale, Fort Worth, Texas 76104
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(817) 347-8102
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
No Change
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year
if changed since last report)
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
----- -----
The number of shares of common stock, $2.50 par value, outstanding at
September 30, 1995 was 2,616,723 shares.
<PAGE>
CENTRAL BANCORPORATION, INC.
----------------------------
INDEX
PART I - FINANCIAL INFORMATION Page No.
- ------------------------------ --------
Item 1. Financial Statements
-------
Consolidated Balance Sheets at September 30, 1995 (unaudited)
and at December 31, 1994 (audited) 3
Consolidated Statements of Earnings for the Three Months and Nine
Months Ended September 30, 1995 and 1994 (unaudited) 4
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1995 and 1994 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 7
Item 2. Management's Discussion and Analysis of
-------
Financial Condition and Results of Operations 8
PART II - OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings 23
-------
Item 2. Change in Securities 23
-------
Item 3. Defaults Upon Senior Securities 23
-------
Item 4. Submission of Matters to a Vote of Security Holders 23
-------
Item 5. Other Information 23
-------
Item 6. Exhibits and Reports on Form 8-K 23
-------
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
- ----------------------------
CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994
<TABLE>
<CAPTION>
Assets 1995 1994
- ------ ------------- ------------
<S> <C> <C>
Cash and due from banks $ 47,220,589 49,348,407
Interest-bearing deposits in other banks 176,362 267,925
Federal funds sold 12,000,000 25,100,000
------------ -----------
Total cash and cash equivalents 59,396,951 74,716,332
------------ -----------
Investment securities 498,050,538 504,687,973
Loans:
Loans, net of unearned discount 318,527,159 272,825,001
Less allowance for loan losses 4,419,572 3,871,653
------------ -----------
Net loans 314,107,587 268,953,348
------------ -----------
Premises and equipment, net 22,321,987 21,090,898
Accrued interest receivable 8,160,461 7,028,363
Other real estate owned, net 614,385 352,211
Excess of cost over net assets acquired,
net of applicable amortization 759,251 907,752
Federal income taxes receivable - 523,524
Deferred Federal income taxes 2,171,896 3,626,813
Other assets 2,227,082 2,980,357
------------ -----------
$907,810,138 884,867,571
============ ===========
Liabilities and Stockholders' Equity
- ------------------------------------
Deposits:
Noninterest-bearing demand $154,401,036 140,459,818
Interest-bearing demand 307,350,810 252,959,937
Savings 66,702,112 67,145,836
Time, $100,000 and over 56,953,672 53,383,374
Other time 216,598,236 212,298,950
------------ -----------
Total deposits 802,005,866 726,247,915
------------ -----------
Short-term borrowings 30,329,126 89,598,888
Note payable 2,000,000 500,000
Dividends payable 261,672 261,672
Accrued interest payable 2,316,989 1,982,687
Federal income taxes payable 114,236 -
Other liabilities 6,006,159 10,950,102
------------ -----------
Total liabilities 843,034,048 829,541,264
------------ -----------
Stockholders' equity:
Common stock, $2.50 par value,
5,000,000 shares authorized and 2,616,723
shares issued 6,541,808 6,541,808
Additional paid-in capital 16,578,010 16,578,010
Retained earnings 42,341,316 36,104,018
Unrealized loss on securities
available-for-sale, net of
deferred Federal income taxes (685,044) (3,897,529)
------------ -----------
Total stockholders' equity 64,776,090 55,326,307
------------ -----------
$907,810,138 884,867,571
============ ===========
</TABLE>
3
<PAGE>
CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF EARNINGS
THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
----------------------- ----------------------
1995 1994 1995 1994
----------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 7,148,044 5,550,305 20,086,958 15,628,752
Interest on investment securities:
Taxable securities 6,413,696 6,455,265 20,382,508 17,419,234
Tax-exempt securities 1,197,320 645,356 3,011,325 1,910,392
Interest on deposits in other banks 1,765 6,677 5,170 16,182
Interest on Federal funds sold 212,616 164,911 895,295 394,652
----------- ---------- ---------- ----------
Total interest income 14,973,441 12,822,514 44,381,256 35,369,212
----------- ---------- ---------- ----------
Interest expense:
Interest on interest-bearing
demand deposits 2,370,452 1,499,355 6,456,281 3,816,882
Interest on savings deposits 381,016 408,462 1,093,756 1,203,613
Interest on time deposits 3,643,318 2,593,796 10,363,958 6,963,961
Interest on short-term borrowings 418,104 675,958 2,699,291 1,322,045
Interest on note payable 41,514 - 90,660 -
----------- ---------- ---------- ----------
Total interest expense 6,854,404 5,177,571 20,703,946 13,306,501
----------- ---------- ---------- ----------
Net interest income 8,119,037 7,644,943 23,677,310 22,062,711
Provision for loan losses 225,000 250,000 675,000 250,000
----------- ---------- ---------- ----------
Net interest income after
provision for loan losses 7,894,037 7,394,943 23,002,310 21,812,711
----------- ---------- ---------- ----------
Noninterest income:
Service charges and fees 2,430,161 2,108,007 6,940,366 6,147,600
Gains on sales of investment
securities - - 133,176 -
Other income 284,918 251,154 705,010 577,955
----------- ---------- ---------- ----------
Total noninterest income 2,715,079 2,359,161 7,778,552 6,725,555
----------- ---------- ---------- ----------
Noninterest expenses:
Salaries and employee benefits 4,091,142 3,898,179 12,133,468 11,449,458
Net occupancy expense 710,795 587,468 2,107,016 2,004,199
Equipment and data processing expense 835,534 738,291 2,423,338 2,091,655
Communication expense 334,650 343,436 1,012,111 1,004,071
Other real estate owned expense
(income), net (19,015) 45,978 (70,676) (9,859)
Federal deposit insurance fees, net (38,138) 378,465 758,062 1,127,283
Legal and professional 285,618 221,391 760,111 665,081
Stationery and supplies 187,006 177,660 646,346 609,757
Marketing expense 204,646 215,128 637,184 606,539
Other operating expense 428,790 378,784 1,265,588 1,193,518
----------- ---------- ---------- ----------
Total noninterest expenses 7,021,028 6,984,780 21,672,548 20,741,602
----------- ---------- ---------- ----------
Income before Federal income taxes 3,588,088 2,769,324 9,108,314 7,796,664
Provision for Federal income taxes 829,000 722,000 2,086,000 1,991,000
----------- ---------- ---------- ----------
Net income $ 2,759,088 2,047,324 7,022,314 5,805,664
=========== ========== ========== ==========
Net income per share $1.05 .78 2.68 2.22
=========== ========== ========== ==========
Weighted average number of
shares outstanding 2,616,723 2,616,723 2,616,723 2,616,723
=========== ========== ========== ==========
</TABLE>
4
<PAGE>
CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994 (UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
------------- -------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ 7,022,314 5,805,664
Adjustments to reconcile net income to
net cash provided by operating activities:
Provision for loan losses and losses
on other real estate owned 707,489 248,716
Depreciation 2,009,629 1,758,475
Amortization of intangibles 148,501 137,993
Premium amortization and discount accretion 554,919 1,597,653
Net gain on sales of other real estate owned (135,109) (33,103)
Net gain on sales of premises and equipment (7,948) (3,874)
Gains on sales of investment securities (133,176) -
Deferred Federal income taxes, net (200,000) 180,000
Changes in operating assets and liabilities:
Decrease (increase) in accrued interest receivable (1,132,098) 59,237
Decrease in Federal income taxes receivable 523,524 112,360
Decrease in other assets 753,275 159,942
Increase in Federal income taxes payable 114,236 -
Increase in accrued interest payable 334,302 284,427
Decrease (increase) in other liabilities (4,943,943) 22,416
------------ ------------
Net cash provided by
operating activities 5,615,915 10,329,906
------------ ------------
Cash flows from investing activities:
Cash and cash equivalents paid in acquisitions - (1,679,778)
Proceeds from sales of investment securities
available-for-sale 30,228,601 -
Proceeds from maturities and principal reductions
of investment securities held-to-maturity 35,688,732 37,575,409
Proceeds from maturities and principal reductions
of investment securities available-for-sale 21,553,475 84,824,374
Purchases of investment securities held-to-maturity (47,509,933) (117,411,568)
Purchases of investment securities available-for-sale (29,177,781) (84,895,275)
Net increase in loans (46,481,261) (30,349,481)
Proceeds from sales of premises and equipment 9,342 15,909
Purchases of premises and equipment (3,242,112) (4,188,446)
Proceeds from sales of other real estate owned 792,468 240,897
------------ ------------
Net cash used in
investing activities (38,138,469) (115,867,959)
------------ ------------
</TABLE>
(Continued)
5
<PAGE>
CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
CONSOLIDATED STATEMENTS OF CASH FLOWS, CONTINUED
<TABLE>
<CAPTION>
1995 1994
------------ ------------
<S> <C> <C>
Cash flows from financing activities:
Net increase in demand deposits
and savings accounts $ 67,888,367 27,048,264
Net increase in time deposits 7,869,584 10,099,986
Proceeds from note payable 1,500,000 -
Net increase (decrease) in other borrowings (59,269,762) 67,989,183
Dividends paid (785,016) (706,515)
------------ -----------
Net cash provided by
financing activities 17,203,173 104,430,918
------------ -----------
Net decrease in cash and cash equivalents (15,319,381) (1,107,135)
Cash and cash equivalents at beginning of period 74,716,332 64,182,656
------------ -----------
Cash and cash equivalents at end of period $ 59,396,951 63,075,521
============ ===========
Supplemental Cash Flow Information:
- ----------------------------------
Cash paid for interest $ 20,369,644 13,022,074
Cash paid for Federal income taxes $ 1,650,000 1,700,000
Loans transferred to other real estate owned $ 952,022 134,710
Proceeds from sales of other real estate owned
financed through loans $ - 83,399
</TABLE>
6
<PAGE>
CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
(1) Principles of Reporting and Consolidation
-----------------------------------------
The accounting and reporting policies of Central Bancorporation, Inc. (the
Corporation), formerly known as Texas Security Bancshares, Inc., and
subsidiaries conform to generally accepted accounting principles and to general
practices in the banking industry. All subsidiaries are included in the
consolidated financial statements, and all significant intercompany accounts and
transactions are eliminated in consolidation.
The consolidated financial information reflects all adjustments, consisting
of only normal recurring accruals, which are, in the opinion of management,
necessary for a fair presentation of the results of the interim periods.
(2) Acquisition Agreement
---------------------
On November 13, 1995, the Corporation announced that they had entered into
an agreement and plan of reorganization to acquire First American Savings Bank
(First American). The transaction, subject to regulatory approval, is
anticipated to close before the end of the first quarter of 1996.
The transaction is anticipated to increase total consolidated assets of the
Corporation by approximately $150 million at the date of closure. The
acquisition will be accounted for as a purchase with, to the extent possible,
the assets and liabilities of First American recorded at their fair market
values as of the purchase date.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
- -------------------------------------------------------------------------
RESULTS OF OPERATIONS
---------------------
ACQUISITION AGREEMENT
As discussed in note 2 in Notes to Consolidated Financial Statements, on
November 13, 1995, the Corporation announced that they had entered into an
agreement and plan of reorganization to acquire First American Savings Bank
(First American). The transaction, subject to regulatory approval, is
anticipated to close before the end of the first quarter of 1996.
The transaction is anticipated to increase total consolidated assets of the
Corporation by approximately $150 million at the date of closure. The
acquisition will be accounted for as a purchase with, to the extent possible,
the assets and liabilities of First American recorded at their fair market
values as of the purchase date.
The acquisition is expected to improve the Corporation's market share,
particularly in Northeast Tarrant County, provide real estate development and
interim construction lending expertise and enhance the Corporation's mortgage
servicing operation.
ANALYSIS OF EARNINGS
Net income for the third quarter of 1995 was $2,759,088 or $1.05 per share
compared to $2,047,324 or $.78 per share for the third quarter of 1994. For the
nine months ended September 30, 1995, net income was $7,022,314 or $2.68 per
share, compared with net income of $5,805,664 or $2.22 per share for the same
period in 1994. Per share amounts are based on average shares outstanding of
2,616,723.
The following is a discussion of the significant changes in the results of
operations and financial condition for the periods indicated.
Net Interest Income
Net interest income on a taxable equivalent basis for the third quarter of
1995 increased $829,000 or 10.30%, compared to the same period in 1994. For the
nine months ended September 30, 1995, net interest income on a taxable
equivalent basis increased $2,375,000 or 10.23% compared to the same period in
1994. The increase in net interest income is primarily attributable to the
higher level of earning assets, as the Corporation's net interest spread
declined 17 basis points from the third quarter of 1994. The increase in
earning assets was the result of investing funds provided by growth in deposits.
Yields on earning assets and rates on interest-bearing liabilities for the third
quarter of 1995 increased from the same period last year. The net interest
spread on a taxable equivalent basis decreased to 3.59% for the third quarter of
1995 from 3.76% for the comparable period in 1994 and the net interest margin on
taxable equivalent basis increased to 4.29% for the third quarter of 1995 from
4.27% for the same period in 1994.
8
<PAGE>
The following table summarizes the effects of changes in interest rates and
average volume of earning assets on net interest income for the quarters ended
September 30, 1995 and 1994.
ANALYSIS OF CHANGES IN NET INTEREST MARGIN
(Dollars in Thousands - Taxable Equivalent Basis)
3rd Qtr 1995 vs. 3rd Qtr 1994
- -------------------------------
<TABLE>
<CAPTION>
Due to Due to Changes
Net Changes Changes in Rates/
Increase In Volume In Rates Volume
-------- --------- -------- ---------
<S> <C> <C> <C> <C>
Earning assets $2,506 $1,291 $1,108 $108
Interest-bearing
liabilities 1,677 370 1,220 87
------ ------ ------ ----
Net interest margin before
allocation of
rates/volume 829 920 (112) 21
Allocation of
rates/volume - 24 (3) (21)
------ ------ ------ ----
Net interest margin $ 829 $ 944 $ (115) $ -
====== ====== ====== ====
YTD 1995 vs. YTD 1994
- ---------------------
Due to Due to Changes
Net Changes Changes in Rates/
Increase In Volume In Rates Volume
-------- --------- -------- ---------
Earning assets $9,773 $5,143 $4,059 572
Interest-bearing
liabilities 7,398 1,808 4,922 669
------ ------ ------ ----
Net interest margin before
allocation of
rates/volume 2,375 3,335 (863) (97)
Allocation of
rates/volume - (131) 34 97
------ ------ ------ ----
Net interest margin $2,375 $3,204 $ (829) $ -
====== ====== ====== ====
</TABLE>
9
<PAGE>
Noninterest Income
Noninterest income increased $355,918 or 15.09% for the third quarter of
1995 from the same period last year. For the nine months ended September
30,1995, noninterest income increased $1,052,997 or 15.66%. Increased levels of
noninterest income are primarily attributable to increases in service charge
income resulting from the increased customer deposit base and increases in rates
charged for certain services. The following table summarizes the major
categories of noninterest income for the nine months ended September 30, 1995
and 1994 (dollars in thousands).
<TABLE>
<CAPTION>
Nine Months
Ended September 30, $ %
-------------------
1995 1994 Change Change
--------- -------- ------- -------
<S> <C> <C> <C> <C>
Service charges and fees $5,805 $5,313 $ 492 9.3%
Investment services income 397 380 17 4.5
Trust fees 654 455 199 43.7
Mortgage services income 544 319 225 70.5
Gains on sales of investment securities 133 - 133 -
Other income 245 259 (14) (5.4)
------ ------ ------ ----
Total noninterest income $7,778 $6,726 $1,052 15.6%
====== ====== ====== ====
</TABLE>
Noninterest Expenses
Noninterest expenses were $7,021,028 for the third quarter of 1995 compared
to $6,984,780 for the third quarter of 1994, an increase of $36,248 or .52%. For
the nine months ended September 30,1995 and 1994, noninterest expenses were
$21,672,548 and $20,741,602, respectively, an increase of 4.49%. The following
table summarizes the major categories of noninterest expense for the nine months
ended September 30, 1995 and 1994 (dollars in thousands).
<TABLE>
<CAPTION>
Nine Months
Ended September 30, $ %
---------------------
1995 1994 Change Change
---------- --------- ------- -------
<S> <C> <C> <C> <C>
Salaries and employee benefits $12,134 $11,449 $ 685 6.0%
Net occupancy expense 2,107 2,004 103 5.1
Equipment and data processing expense 2,423 2,092 331 15.8
Communication expense 1,012 1,004 8 .8
Other real estate owned expense (income), net (71) (10) (61) (610.0)
Federal deposit insurance fees 758 1,127 (369) (32.7)
Legal and professional 760 665 95 14.3
Stationery and supplies 647 610 37 6.1
Marketing expense 637 607 30 4.9
Other operating expenses 1,265 1,194 71 5.9
------- ------- ----- ------
Total noninterest expenses $21,672 $20,742 $ 930 4.5%
======= ======= ===== ======
</TABLE>
Salaries and employee benefits for the nine months ended September 30,
1995, increased $684,010 or 6.0% over the same period in 1994 due to normal
compensation increases and expanded banking operations.
Equipment and data processing expense increased $331,683 or 15.8% compared
to the same period in 1994. The increase is primarily attributable to
depreciation expense on new equipment and new furniture for new and remodeled
banking centers.
Federal deposit insurance fees decreased $369,221 or 32.7% over the same
period in 1994. The decrease is attributable to the reduction of the FDIC
insurance premium and the resulting refund of premium paid for June 1995 through
September 1995.
10
<PAGE>
Provision for Federal Income Taxes
The Corporation files a consolidated tax return under the consolidation
provisions of the Internal Revenue Code. Generally, the consolidated tax
liability is settled between the Corporation and its subsidiaries as if each had
filed a separate return. Payments are made to the Corporation by its
subsidiaries with net tax liabilities on a separate return basis. Subsidiaries
with losses or excess tax credits on a separate return basis receive payment
for these benefits when they are usable in the consolidated return.
As of September 30, 1995 the Corporation has a deferred tax asset in the
amount of $2,171,896. This deferred tax asset is determined based on net
deductible temporary differences, primarily relating to the allowance for loan
losses, the allowance for losses on other real estate owned, and unrealized loss
on securities available-for-sale, approximating $6,100,000. Based on the
Corporation's historical ability to generate taxable income exclusive of
reversing timing differences, management of the Corporation believes it is more
likely than not that the entire deferred tax asset will be realized or settled,
and accordingly, no valuation allowance has been recorded as of September 30,
1995 and December 31, 1994.
Provision for Loan Losses, Allowance for Loan Losses and Credit Quality
The Texas economy, in general, continued a recovery which began in 1993.
Growth was experienced by small and medium size companies and, overall, in 1994,
Texas was second nationally behind only Florida in job creation. For May 1995,
the Dallas/Fort Worth area reported an unemployment rate of 4.5%, reflecting a
stable economy.
In 1995 and 1994, the real estate market, as a whole, has continued to
improve. The most encouraging news came from the areas of residential, retail
and industrial markets. The Dallas/Fort Worth area currently rates as one of
the top residential markets in the U.S. with sales of single-family homes
remaining strong. Through June 1995, new home sales have declined from 1994
levels, but sales of pre-owned homes have improved from a year earlier. The
apartment market maintained over 90% occupancy in 1994, which resulted in higher
rental rates and new development. The retail market reported approximately 85%
occupancy in 1994 with increasing rent levels. The industrial market has
improved to above 90% occupancy. The office market has finally started to
improve in 1995.
With the improving economy, the Corporation has continued to achieve
moderate loan growth. Most of the growth came from small and medium size
companies and from new or refinanced real estate mortgages. The Corporation's
loan portfolio, although concentrated in real estate, does not have any industry
concentrations and is primarily extended to user occupied property.
Based upon current information and conditions, management believes the
known risks in the existing loan portfolio have been properly evaluated and the
allowance is at a satisfactory level. Subsequent evaluations, however, could
necessitate changes in the balance of the allowance.
11
<PAGE>
The following table presents the provision for loan losses, loans charged-
off, recoveries of loans previously charged-off, and amounts of the allowance
for loan losses, the loans outstanding and certain pertinent ratios for the
periods indicated (dollars in thousands).
<TABLE>
<CAPTION>
Three Months Nine Months Year Ended
Ended September 30, Ended September 30, December 31,
--------------------- --------------------- -------------
1995 1994 1995 1994 1994
---------- --------- ---------- --------- -------------
<S> <C> <C> <C> <C> <C>
Balance at beginning of period $ 4,218 $ 3,505 $ 3,872 $ 4,072 $ 4,072
-------- -------- -------- -------- --------
Charge-offs:
Commercial and financial loans 118 228 224 880 913
Real estate loans 23 3 384 226 230
Installment loans 85 119 180 244 335
-------- -------- -------- -------- --------
Total 226 350 788 1,350 1,478
-------- -------- -------- -------- --------
Recoveries:
Commercial and financial loans 125 105 394 301 419
Real estate loans 32 13 149 184 241
Installment loans 46 38 118 104 118
-------- -------- -------- -------- --------
Total 203 156 661 589 778
-------- -------- -------- -------- --------
Net charge-offs (recoveries):
Commercial and financial loans (7) 123 (170) 579 494
Real estate loans (9) (10) 235 42 (11)
Installment loans 39 81 62 140 217
-------- -------- -------- -------- --------
Total 23 194 127 761 700
-------- -------- -------- -------- --------
Provision charged to earnings 225 250 675 250 500
-------- -------- -------- -------- --------
Balance at end of period $ 4,420 $ 3,561 $ 4,420 $ 3,561 $ 3,872
======== ======== ======== ======== ========
Amount of outstanding loans at
end of period $318,527 $266,521 $318,527 $266,521 $272,825
======== ======== ======== ======== ========
Average amount of loans outstanding
Commercial and financial loans $117,017 $ 86,666 $105,469 $ 80,200 $ 82,714
Real estate loans 177,316 156,931 171,955 152,218 154,599
Installment loans 17,490 14,769 16,970 15,216 15,365
-------- -------- -------- -------- --------
Total $311,823 $258,366 $294,394 $247,634 $252,678
======== ======== ======== ======== ========
Ratios:
Annualized net charge-offs (recoveries) to
average loans:
Commercial and financial loans (.21)% .97% 0.60%
Real estate loans .18 .04 (0.01)
Installment loans .49 1.23 1.41
-------- -------- --------
Total .06% .41% 0.28%
======== ======== ========
Balance in allowance at end of
period to outstanding loans
at end of period 1.39% 1.34% 1.42%
======== ======== ========
</TABLE>
At September 30, 1995, the allowance for loan losses was $4.420 million, or
1.39% of period end loans, compared to $3.872 million and 1.42% at December 31,
1994 and $3.561 million or 1.34% at September 30, 1994.
12
<PAGE>
The following schedule presents the allowance for loan losses by loan
category at the dates indicated (dollars in thousands).
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
------------------ -----------------
<S> <C> <C>
Specific reserves by category:
Commercial and financial loans $ 268 $ 427
Real estate loans 880 1,180
Installment loans 59 103
Unallocated reserves 3,213 2,162
------ ------
Total allowance for loan losses $4,420 $3,872
====== ======
</TABLE>
Net charge-offs for the quarter ended September 30, 1995 were $23,000
compared to net charge-offs of $194,000 in the third quarter of 1994. For the
nine months ended September 30, 1995, net charge-offs were $127,000 compared to
$761,000 for the same period in 1994.
For the quarter ended September 30, 1995, a provision for loan losses of
$225,000 was charged to earnings. In the third quarter of 1994, a provision for
loan losses of $250,000 was charged to earnings.
Nonperforming assets (loans accounted for on a nonaccrual basis,
restructured loans and foreclosed real estate) at September 30, 1995 totaled
$2.484 million, a 36.49% decrease from the $3.911 million reported at December
31, 1994 and a decrease of $924,000 or 27.11% compared to September 30, 1994
totals. The decrease in nonperforming assets from September 30, 1994 to
September 30, 1995 is primarily attributable to decreases in nonaccrual loans.
The following table summarizes the nonperforming assets and loans 90 days
or more past due that are still accruing interest (dollars in thousands).
<TABLE>
<CAPTION>
September 30, June 31, March 31, December 30, September 30,
1995 1995 1995 1994 1994
------------- -------- --------- ------------ -------------
<S> <C> <C> <C> <C> <C>
Nonaccrual loans $1,642 $1,985 $2,986 $3,339 $2,941
Other real estate
owned, net 614 939 89 352 224
Restructured loans 228 231 235 220 243
------ ------ ------ ------ ------
Total nonperforming
assets $2,484 $3,155 $3,310 $3,911 $3,408
====== ====== ====== ====== ======
Loans over 90 days
past due but not
on nonaccrual $ 233 $ 112 $ - $ 48 $ 88
====== ====== ====== ====== ======
</TABLE>
The Corporation's problem loan monitoring program examines on a monthly
basis the status and specific action plan for resolution or liquidation of all
major nonperforming assets.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 114 ("Statement No. 114"), "Accounting by Creditors for
Impairment of a Loan" and Statement of Financial Accounting Standards No. 118
("Statement No. 118"), "Accounting by Creditors for Impairment of a Loan -Income
Recognition and Disclosures." Both statements are effective for fiscal years
beginning after December 15, 1994 and have been applied on a prospective basis.
Statement No. 114 requires that impaired loans within the scope of the statement
be measured based on the present value of expected future cash flows discounted
at the loan's effective interest rate or at the loan's observable market price
or the fair value of the collateral if the loan is collateral dependent.
Impairment shall be recognized by creating a valuation allowance with a
corresponding charge to the provision for loan losses. Statement No. 118 amends
Statement No. 114 and allows the use of existing methods for recognizing
interest income on impaired loans. The effect of adopting these statements is
not considered material.
13
<PAGE>
BALANCE SHEET ANALYSIS
Loans
The following schedule presents the Corporation's loan balances at the
dates indicated according to loan type.
DISTRIBUTION OF LOANS
(Dollars in Thousands)
<TABLE>
<CAPTION>
September 30, 1995 December 31, 1994
------------------- ------------------
<S> <C> <C>
Commercial and financial $119,955 $ 92,992
Real Estate:
Construction 7,827 3,355
Mortgage 174,808 162,130
Installment 18,181 16,395
Overdrafts 141 151
-------- --------
Total loans 320,912 275,023
Less unearned discount (2,385) (2,198)
-------- --------
Total loans, net
of unearned discount $318,527 $272,825
======== ========
</TABLE>
Net loans increased by $45.155 million or 16.8% from December 31, 1994. The
growth is primarily from commercial loans and from new and refinanced real
estate mortgages, and has resulted from an improved economy and a continued
focus on developing new commercial lending customer relationships.
Deposits
The most important source of the Corporation's funds is the deposits of the
subsidiary bank. The types of deposits that were in the subsidiary bank on a
daily average basis are shown in the following table (dollars in thousands).
<TABLE>
<CAPTION>
Nine Months Ended Twelve Months Ended
September 30, 1995 December 31, 1994
------------------ -------------------
<S> <C> <C>
Noninterest-bearing demand $139,304 $130,532
Interest-bearing demand 278,347 234,293
Savings 65,041 71,787
Time, $100,000 and over 54,758 49,063
Other time 218,466 208,079
-------- --------
Total deposits $755,916 $693,754
======== ========
</TABLE>
Total average deposits increased $62.162 million or 9.0% from the average
for the year ended December 31, 1994. Time deposits have increased due to higher
interest rates. Money market accounts, included in interest-bearing demand
deposits in the table above, continue to grow as the rates on these products are
competitive with those offered for similar investment alternatives.
14
<PAGE>
Investment Portfolio
Management of the investment portfolio remains very important as the loan
to deposit ratio remains below 40% and alternative investments are examined to
protect the Corporation's net interest margin. Significant investments have been
made in mortgage-backed securities that provide attractive yields, minimal
credit risk and a balance to the asset and liability management strategy. The
principal mortgage-backed investments have been Federal Home Loan Mortgage
Corporation adjustable rate mortgages and balloon mortgages, and government-
backed collateralized mortgage obligations.
Effective January 1, 1994, the Corporation adopted the Financial Accounting
Standards Board's Statement of Financial Accounting Standards No. 115
"Accounting for Certain Investments in Debt and Equity Securities". Under
Statement No. 115, all securities must be classified as held-to-maturity,
trading, or available-for-sale.
Management determines the appropriate classification of securities at the
time of purchase and reevaluates the designation as of each balance sheet date.
Debt securities are classified as held-to-maturity when the Corporation has the
positive intent and ability to hold the securities to maturity. Held-to-maturity
securities are stated at amortized cost. Trading securities, consisting of debt
and marketable equity securities are held for resale in anticipation of short-
term market movements. Trading securities are stated at fair value and gains and
losses, both realized and unrealized, are included in earnings. Debt securities
not classified as held-to-maturity or trading and marketable equity securities
not classified as trading are classified as available-for-sale. Available-for-
sale securities are stated at fair value, with the unrealized gains and losses,
net of tax, reported in a separate component of stockholders' equity. The
Corporation does not have any securities classified as trading as of September
30, 1995.
The following schedule presents the amortized cost and fair value of the
available-for-sale and held-to-maturity investment securities as of September
30, 1995 (dollars in thousands).
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Available-for-sale
- ----------------------------------
U. S. Treasury $102,826 622 (594) 102,854
U. S. Government agencies 26,050 236 (70) 26,216
FHLB stock 2,792 - - 2,792
Mortgage-backed securities 12,974 11 (70) 12,915
-------- ----- ------ -------
$144,642 869 (734) 144,777
======== ===== ====== =======
Held-to-maturity
- ----------------------------------
U.S. Treasury $ 5,038 24 - 5,062
State and political subdivisions 94,081 3,666 (116) 97,631
Mortgage-backed securities 254,154 804 (4,697) 250,261
-------- ----- ------ -------
$353,273 4,494 (4,813) 352,954
======== ===== ====== =======
</TABLE>
15
<PAGE>
Investment Portfolio, Continued
The following schedule presents the total book value and fair value of the
investment securities as of December 31, 1994 (dollars in thousands).
<TABLE>
<CAPTION>
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ----------- -------
<S> <C> <C> <C> <C>
Available-for-sale
- ----------------------------------
U. S. Treasury $ 97,312 14 (2,827) 94,499
U. S. Government agencies 22,407 37 (554) 21,890
FHLB stock 3,482 - - 3,482
Mortgage-backed securities 44,483 - (1,245) 43,238
-------- --- ------- -------
$167,684 51 (4,626) 163,109
======== === ======= =======
Held-to-maturity
- ----------------------------------
U.S. Treasury $ 5,064 - (108) 4,956
U.S. Government agencies 5,527 - (189) 5,338
State and political subdivisions 53,374 801 (1,196) 52,979
Mortgage-backed securities 277,614 36 (16,784) 260,866
-------- --- ------- -------
$341,579 837 (18,277) 324,139
======== === ======= =======
</TABLE>
Short-term Borrowings
In May 1994, the Corporation began borrowing by offering repurchase
agreements to customers. As of September 30, 1995, through this funding source,
the Corporation has $27,652,931 in securities sold under agreement to
repurchase. These agreements have a maturity of one day and are repricable on a
daily basis. The weighted average interest rate of the agreements on September
30, 1995 was 4.97%. These agreement were collateralized by U.S. Government
securities with a market value of $38,409,980 as of September 30, 1995.
In January 1994, the Corporation initiated a process whereby funds were
borrowed from the Federal Home Loan Bank through securities sold under agreement
to repurchase. As of December 31, 1994, the Corporation had borrowed
$50,000,000 under this arrangement. As of September 30, 1995 the $50,000,000
has been paid and there are no outstanding borrowings with the Federal Home Loan
Bank.
16
<PAGE>
Interest Rate Sensitivity
Asset/liability management involves the maintenance of an appropriate
balance between interest sensitive assets and interest sensitive liabilities to
reduce interest rate exposure while also providing liquidity to satisfy the cash
flow requirement of operations to meet customers' fluctuating demands for funds,
either in terms of loan requests or deposit withdrawals.
A volatile rate environment combined with industry deregulation has placed
an increased emphasis on interest rate sensitivity management. Interest
sensitive earning assets and interest-bearing liabilities are those which have
yields or rates which are subject to change within a future time period due to
maturity of the instrument or changes in the rate environment. Gap refers to the
difference between the rate sensitive assets and rate sensitive liabilities.
Interest rate sensitivity management seeks to protect earnings by
maintaining an appropriate balance between interest sensitive earning assets and
interest-bearing liabilities in order to minimize fluctuations in the net
interest margin and net earnings in period of volatile interest rates.
The following table quantifies the interest rate sensitivity of both
earning assets and interest-bearing liabilities as of September 30, 1995.
INTEREST RATE SENSITIVITY ANALYSIS AT SEPTEMBER 30, 1995
(Dollars in Thousands)
<TABLE>
<CAPTION>
Repriced
Due in After One
Due in Due in 91 Days Total Year or
30 Days 31 to 90 to Rate Non-Rate
or Less Days One Year Sensitive Sensitive Total
---------- ---------- ---------- ---------- --------- --------
<S> <C> <C> <C> <C> <C> <C>
Earning assets:
Loans $ 86,506 $ 12,216 $ 81,564 $ 180,286 $138,241 $318,527
Interest-bearing deposits
in other banks 176 - - 176 - 176
Federal funds sold 12,000 - - 12,000 - 12,000
Investment securities:
Taxable 44,887 9,713 61,838 116,438 284,739 401,177
Tax-exempt - - 3,273 3,273 90,808 94,081
--------- --------- --------- --------- -------- --------
Total investment securities 44,887 9,713 65,111 119,711 375,547 495,258
--------- --------- --------- --------- -------- --------
Total earning assets 143,569 21,929 146,675 312,173 513,788 825,961
--------- --------- --------- --------- -------- --------
Interest-bearing liabilities:
Interest-bearing demand 307,351 - - 307,351 - 307,351
Savings 66,702 - - 66,702 - 66,702
Time deposits (less than) $100,000 25,166 21,626 80,690 127,482 89,116 216,598
Time deposits (greater than) $100,000 5,136 6,776 23,190 35,102 21,852 56,954
Other borrowings 30,329 - 2,000 32,329 - 32,329
--------- --------- --------- --------- -------- --------
Total interest-bearing
liabilities 434,684 28,402 105,880 568,966 110,968 679,934
--------- --------- --------- --------- -------- --------
Interest sensitivity gap $(291,115) $ (6,473) $ 40,795 $(256,793) $402,820 $146,027
========= ========= ========= ========= ======== ========
Cumulative gap $(291,115) $(297,588) $(256,793)
========= ========= =========
Relationship of gap to
total earning assets (35.2)% (36.0)% (31.1)%
========= ========= =========
</TABLE>
17
<PAGE>
Capital
The Corporation recognizes the importance of proper capitalization. The
continuing philosophy is to maintain a highly capitalized organization operating
with capital levels well in excess of those required by regulatory agencies.
The Federal Reserve Board's guidelines to United States banking
organizations provide for the application of a risk-based capital framework.
The guidelines classify capital into two tiers, referred to as Tier 1 and Tier
2. Tier 1 consists of core capital elements less certain intangible assets,
while Tier 2 includes the allowance for loan losses, but is limited to 100% of
Tier 1 and 1.25% of risk-weighted adjusted assets. The denominator or asset
portion of risk-based capital aggregates generic classes of balance sheet and
off-balance-sheet exposures, each weighted by one of four factors, ranging from
0% to 100%, based upon the relative risk of the exposure class. The Federal
Reserve Board guidelines require a minimum capital of 8%, of which at least 4%
must be Tier 1.
Amendments to the capital rules for the adoption of Statement No. 115 have
not yet been adopted and as such, net unrealized gains on available-for-sale
securities resulting from the accounting change have been excluded from the
computation of Tier 1 (and total) capital.
The Federal Reserve Board has also established guidelines that set forth
the leverage standards to be applied to banking organizations in conjunction
with the risk-based capital framework. The leverage standard requires a minimum
ratio of 3% Tier 1 capital to average total adjusted assets, as defined.
However, regulators are given wide discretion to set a level appropriate for
each bank, with most banks expected to maintain a leverage capital ratio of 4%
to 5%.
The following table presents the Corporation's risk-based and leverage
capital ratios (dollars in thousands).
<TABLE>
<CAPTION>
September 30, December 31,
1995 1994
------------- ------------
<S> <C> <C>
Tier 1 (Core Capital)
Stockholders' equity $ 64,776 $ 55,326
Plus: Unrealized loss on securities
available-for-sale 685 3,898
Less: Excess cost over
net assets acquired (759) (908)
-------- --------
Total Tier 1 Capital 64,702 58,316
-------- --------
Tier 2 (Supplementary Capital)
Eligible portion of allowance
for loan losses 4,420 3,872
-------- --------
Total risk-based capital $ 69,122 $ 62,188
======== ========
Total risk-weighted assets $410,137 $370,252
======== ========
Tier 1 capital ratio 15.78% 15.75%
Total risk-based capital ratio 16.85% 16.80%
======== ========
Leverage capital ratio 7.29% 7.22%
======== ========
</TABLE>
The above capital ratios, under all regulatory measurements, are in excess
of required minimum levels. The Texas State Banking Department issued a 6%
minimum leverage capital ratio standard for all state banks during 1991.
18
<PAGE>
Dividends
The subsidiary bank is subject to various restrictions imposed by the Texas
Banking Code relating to the declaration and payment of dividends to the
Corporation, including continued capital adequacy. The Corporation believes that
the policies and procedures currently in place comply with regulatory
requirements.
Cash dividends are paid to the Corporation's shareholders at the discretion
of the Corporation's Board of Directors and depend upon a number of factors,
including future earnings of the Corporation, the financial condition of the
Corporation, the Corporation's cash needs, general business conditions and the
amount of dividends paid to the Corporation by the subsidiary bank.
Liquidity
Liquidity ratios are in excess of regulatory guidelines. The Corporation's
primary internal source of liquidity is its short-term marketable assets,
primarily Federal funds sold and United States Government and Agency securities
maturing within the next twelve months.
19
<PAGE>
CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
CONSOLIDATED AVERAGE BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
Assets 1995 1994 1995 1994
- ------ ------- -------- -------- --------
<S> <C> <C> <C> <C>
Earning assets:
Loans $311,823 $258,366 $294,394 $247,634
Interest-bearing deposits in banks 265 492 249 615
Federal funds sold 14,312 14,739 19,954 14,017
Investment securities:
Taxable 407,395 431,953 428,601 409,660
Tax-exempt 86,891 42,161 70,277 41,150
-------- -------- -------- --------
Total investment securities 494,286 474,114 498,878 450,810
-------- -------- -------- --------
Total earning assets 820,686 747,711 813,475 713,076
Cash and due from banks 42,235 40,337 41,632 40,367
Other real estate 793 253 525 290
Other assets 37,049 35,672 36,744 36,741
Less allowance for possible loan losses (4,329) (3,613) (4,075) (3,956)
-------- -------- -------- --------
Total assets $896,434 $820,360 $888,301 $786,518
======== ======== ======== ========
Liabilities and Stockholders' Equity
- ------------------------------------
Interest-bearing liabilities:
Deposits $642,183 $570,919 $616,612 $556,917
Other borrowings 33,666 59,820 65,357 43,482
-------- -------- -------- --------
Total interest-bearing liabilities 675,849 630,739 681,969 600,399
-------- -------- -------- --------
Noninterest-bearing demand deposits 149,299 131,425 139,304 128,197
Other liabilities 7,773 4,037 6,641 3,586
Stockholders' equity 63,513 54,159 60,387 54,336
-------- -------- -------- --------
Total liabilities and stockholders'
equity $896,434 $820,360 $888,301 $786,518
======== ======== ======== ========
</TABLE>
20
<PAGE>
CENTRAL BANCORPORATION, INC AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
CONSOLIDATED TAXABLE EQUIVALENT STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1995 1994 1995 1994
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans (1) $ 7,290 $ 5,622 $20,454 $15,802
Interest on investment securities:
Taxable securities 6,414 6,455 20,383 17,419
Tax-exempt (1) 1,814 978 4,563 2,895
Interest on deposits in other banks 2 7 5 16
Interest on federal funds sold 213 165 895 395
------- ------- ------- -------
Total interest income 15,733 13,227 46,300 36,527
------- ------- ------- -------
Interest expense:
Interest on interest-bearing demand deposits 2,370 1,499 6,456 3,817
Interest on savings deposits 381 408 1,094 1,203
Interest on time deposits 3,643 2,594 10,364 6,964
Interest on other borrowings 460 676 2,790 1,322
------- ------- ------- -------
Total interest expense 6,854 5,177 20,704 13,306
------- ------- ------- -------
Net interest income 8,879 8,050 25,596 23,221
Provision for possible loan losses 225 250 675 250
------- ------- ------- -------
Net interest income after provision
for possible loan losses 8,654 7,800 24,921 22,971
------- ------- ------- -------
Other income:
Service charges and fees 2,430 2,108 6,940 6,148
Gains on sales of investment securities - - 133 -
Other income 285 251 705 578
------- ------- ------- -------
Total other income 2,715 2,359 7,778 6,726
------- ------- ------- -------
Other expenses:
Salaries and employee benefits 4,091 3,898 12,134 11,449
Net occupancy expense 711 587 2,107 2,004
Equipment and data processing expense 836 738 2,423 2,092
Communications expense 335 344 1,012 1,004
Other real estate owned expense, net (19) 46 (71) (10)
Federal deposit insurance fees (38) 379 758 1,127
Legal and professional 285 221 760 665
Stationery and supplies 187 178 647 610
Marketing expense 205 215 637 607
Other operating expenses 429 379 1,265 1,194
------- ------- ------- -------
Total other expenses 7,022 6,985 21,672 20,742
------- ------- ------- -------
Income before Federal income taxes 4,347 3,174 11,027 8,955
------- ------- ------- -------
Tax equivalent adjustment 759 405 1,919 1,158
------- ------- ------- -------
Income before Federal income taxes 3,588 2,769 9,108 7,797
------- ------- ------- -------
Provision for Federal income taxes 829 722 2,086 1,991
------- ------- ------- -------
Net income $ 2,759 $ 2,047 $ 7,022 $ 5,806
======= ======= ======= =======
</TABLE>
(1) Presented on a taxable equivalent basis using a 34% Federal income tax
rate for 1995 and 1994.
21
<PAGE>
CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES
(FORMERLY TEXAS SECURITY BANCSHARES, INC. AND SUBSIDIARIES)
AVERAGE INTEREST RATES AND SELECTED RATIOS
(TAX EQUIVALENT BASIS)
<TABLE>
<CAPTION>
(Unaudited) (Unaudited)
Three Months Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
1995 1994 1995 1994
------ ------ ------ ------
<S> <C> <C> <C> <C>
Yields on earning assets:
Loans (1) 9.28% 8.63% 9.29% 8.53%
Interest-bearing deposits
in other banks 2.99 5.64 2.68 3.48
Federal funds sold 5.90 4.44 6.00 3.77
Investment securities:
Taxable 6.25 5.93 6.36 5.68
Tax-exempt (1) 8.28 9.20 8.68 9.41
----- ----- ----- -----
Total investment securities 6.60 6.22 6.69 6.02
----- ----- ----- -----
Total earning assets 7.61% 7.02% 7.61% 6.85%
----- ----- ----- -----
Rates on interest-bearing liabilities:
Deposits 3.95% 3.13% 3.88% 2.88%
Other borrowings 5.42 4.48 5.71 4.06
----- ----- ----- -----
Total interest-bearing liabilities 4.02% 3.26% 4.06% 2.96%
----- ----- ----- -----
Net interest spread 3.59% 3.76% 3.55% 3.89%
===== ===== ===== =====
Net interest margin 4.29% 4.27% 4.21% 4.35%
===== ===== ===== =====
Selected ratios:
Net income as a percent of:
Average total assets 1.22% .99% 1.06% .99%
===== ===== ===== =====
Average stockholders' equity 17.23% 15.00% 15.55% 14.29%
===== ===== ===== =====
</TABLE>
(1) Presented on a taxable equivalent basis using a 34% Federal income tax
rate for 1995 and 1994.
22
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
---------------------------
Not applicable.
Item 2. Change in Securities.
------------------------------
Not applicable.
Item 3. Defaults Upon Senior Securities.
-----------------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
------------------------------------------------------------
Not applicable.
Item 5. Other Information
--------------------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
-----------------------------------------
(a) Exhibits
--------
(10(a)) Amendment Three to Retirement Plan for Employees of Texas
Security Bancshares, Inc. and Affiliates as Amended and Restated
effective January 1, 1989 and Amendment One to Retirement Trust for
Employees of Texas Security Bancshares, Inc. and Affiliates as Amended
and Restated effective January 1, 1993*
(11) Computation of Earnings Per Common Share*
(27) Financial Data Schedule*
______
*Filed herewith.
(b) Reports on Form 8-K
-------------------
No report of Form 8-K was filed by the registrant during the quarter
ended September 30, 1995.
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
CENTRAL BANCORPORATION, INC.
----------------------------------
Registrant
DATE: November 14, 1995 By: /s/ J. Andy Thompson
-------------------------------------------------
J. Andy Thompson, Chairman of the Board
and Chief Executive Officer
DATE: November 14, 1995 By: /s/ Michael J. Tyler
-------------------------------------------------
Michael J. Tyler, Senior Vice President
and Chief Financial Officer
24
<PAGE>
EXHIBIT 10(A)
AMENDMENT THREE TO
RETIREMENT PLAN FOR EMPLOYEES OF
TEXAS SECURITY BANCSHARES, INC. AND AFFILIATES
As Amended and Restated Effective January 1, 1989
and
AMENDMENT ONE TO
RETIREMENT TRUST FOR EMPLOYEES OF
TEXAS SECURITY BANCSHARES, INC. AND AFFILIATES
As Amended and Restated Effective January 1, 1993
WHEREAS, effective as of January 1, 1989, the Retirement Plan for Employees
of Texas Security Bancshares, Inc. and Affiliates was amended and restated in
its entirety;
WHEREAS, effective as of January 1, 1993, the Retirement Trust for
Employees of Texas Security Bancshares, Inc. and Affiliates was amended and
restated in its entirety;
WHEREAS, by the terms of Section 6.4 of the amended and restated plan
(hereinafter referred to as the "Plan"), and Article IX of the amended and
restated trust agreement (hereinafter referred to as the "Trust Agreement"), the
Plan and Trust Agreement may be amended;
WHEREAS, it is deemed desirable to amend the Plan and Trust Agreement in
order to reflect the name change of the Plan Sponsor;
NOW, THEREFORE, the Plan and Trust Agreement are hereby amended effective
as of May 1, 1995, as follows:
I. AMENDMENT TO PLAN
Wherever the name "Texas Security Bancshares, Inc." appears in the Plan and
any Supplement thereto (including wherever it appears within the names of the
Plan, Trust Agreement and any Supplement to the Plan), it shall be changed,
effective with respect to periods of time on and after April 1, 1995, to
"Central Bancorporation, Inc."
II. AMENDMENT TO TRUST AGREEMENT
Wherever the name "Texas Security Bancshares, Inc." appears in the Trust
Agreement (including wherever it appears within the names of the Plan and Trust
Agreement), it shall be changed, effective with respect to periods of time on
and after April 1, 1995, to "Central Bancorporation, Inc."
IN WITNESS WHEREOF, CENTRAL BANCORPORATION, INC. has caused this
instrument to be executed by its duly authorized officers on this 5t day of
July, 1995.
(CORPORATE SEAL)
ATTEST: CENTRAL BANCORPORATION, INC.
/s/Karen Larsen Sweeney /s/J. Andy Thompson
- ----------------------------- --------------------------------
Secretary Title: Chairman of the Board
<PAGE>
EXHIBIT (11)
COMPUTATION OF EARNINGS PER COMMON SHARE
The details of the computation of earnings per common share are disclosed in
the Consolidated Statements of Earnings for the Three Months and Nine Months
Ended September 30, 1995 and 1994 (unaudited) contained in the Quarterly
Report on Form 10-Q of the registrant for the quarter ended September 30,
1995.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS OF CENTRAL BANCORPORATION, INC. AND SUBSIDIARIES AS
OF SEPT 30, 1995 (UNAUDITED) AND DECEMBER 31, 1994, AND THE RELATED CONSOLIDATED
STATEMENTS OF EARNINGS FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPT 30, 1995
AND 1994 (UNAUDITED) AND CONSOLIDATED STATEMENTS OF CASH FLOWS FOR THE NINE
MONTHS ENDED SEPT 30, 1995 AND 1994 (UNAUDITED) AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> SEP-30-1995
<CASH> 47,220,589
<INT-BEARING-DEPOSITS> 176,362
<FED-FUNDS-SOLD> 12,000,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 144,777,000
<INVESTMENTS-CARRYING> 353,273,000
<INVESTMENTS-MARKET> 352,954,000
<LOANS> 318,527,159
<ALLOWANCE> 4,419,572
<TOTAL-ASSETS> 907,810,138
<DEPOSITS> 802,005,866
<SHORT-TERM> 30,329,126
<LIABILITIES-OTHER> 8,699,056
<LONG-TERM> 2,000,000
<COMMON> 6,541,808
0
0
<OTHER-SE> 58,234,282
<TOTAL-LIABILITIES-AND-EQUITY> 907,810,138
<INTEREST-LOAN> 20,086,958
<INTEREST-INVEST> 23,393,833
<INTEREST-OTHER> 900,465
<INTEREST-TOTAL> 44,381,256
<INTEREST-DEPOSIT> 17,913,995
<INTEREST-EXPENSE> 20,703,946
<INTEREST-INCOME-NET> 23,677,310
<LOAN-LOSSES> 675,000
<SECURITIES-GAINS> 133,176
<EXPENSE-OTHER> 21,672,548
<INCOME-PRETAX> 9,108,314
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<LOANS-NON> 1,642,000
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</TABLE>
