<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X Quarterly report under Section 13 of 15 (d) of the Securities Exchange
- ----- Act of 1934 for the quarterly period ended March 31, 1997
[NO FEE REQUIRED, EFFECTIVE OCTOBER 7, 1996]
Transition report under Section 13 or 15 (d) of the Exchange Act for
- ----- the transition period from to
--------- ---------
COMMISSION FILE NUMBER 0-18827
FIRST COMMUNITY BANKING SERVICES, INC.
(Exact name of small business issuer as specified in its charter)
Georgia 58-1835725
- --------------------------------------- ----------------------------
(State or other Jurisdiction of (I.R.S. Employer
incorporation or organization Identification No.)
300 S. Peachtree Parkway, Peachtree City, Georgia 30269
-------------------------------------------------------
(Address of principal executive offices)
Issuer's telephone number, including area code: (770) 631-2265
--------------
Not Applicable
--------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (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, and (2) has been subject to such filing requirements for the past 90
days.
Yes x No
--- ---
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date:
Class Outstanding at April 23, 1997
- --------------------------------- ------------------------------
Common Stock, $1.00 Par Value 646,062 shares
Transitional Small Business Disclosure Format:
Yes______ No__x___
<PAGE> 2
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
The following financial statements are provided for First Community
Banking Services, Inc. and subsidiary:
A. Consolidated Balance Sheets as of March 31, 1997 and December
31, 1996.
B. Consolidated Statements of Operations for the three month
periods ended March 31, 1997 and 1996.
C. Consolidated Statements of Cash Flows for the three month
periods ended March 31, 1997 and 1996.
D. Notes to Consolidated Financial Statements.
1
<PAGE> 3
FIRST COMMUNITY BANKING SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
MARCH 31, 1997 AND DECEMBER 31, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, December 31,
------------------------------------
1997 1996
---- ----
ASSETS
<S> <C> <C>
Cash and due from banks $ 4,032,120 $ 5,317,785
Federal funds sold 13,870,000 1,860,000
Interest-bearing deposits in
other financial institutions 28,193 25,088
Investment securities held to maturity
(market value of $1,653,324 and
$1,665,963, respectively) 1,659,732 1,659,519
Investment securities available for sale 13,443,088 13,145,260
Other investments 325,500 273,200
Loans, net of deferred loan fees 83,038,793 81,915,981
Less: Allowance for loan losses 968,078 1,214,173
------------- -------------
Loans, net 82,070,715 80,701,808
Premises and equipment, net 3,295,209 3,352,404
Other real estate 240,546 399,199
Accrued interest receivable 780,492 885,625
Intangible assets, net of accumulated
amortization of $267,976 and
$539,226, respectively 382,024 470,774
Other assets 489,922 463,027
------------- -------------
TOTAL ASSETS $ 120,617,541 $ 108,553,689
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest-bearing demand $ 25,453,831 $ 17,122,818
Interest-bearing demand and money market 18,797,465 19,229,218
Savings 6,090,405 5,666,954
Time deposits of $100,000 or more 14,495,619 15,290,467
Other time deposits 45,098,596 40,834,909
------------- -------------
TOTAL DEPOSITS 109,935,916 98,144,366
Accrued interest payable 675,355 941,468
Other liabilities 421,308 303,139
------------- -------------
TOTAL LIABILITIES 111,032,579 99,388,973
------------- -------------
STOCKHOLDERS' EQUITY
Preferred stock - $1.00 par value:
5,000,000 shares authorized,
no shares issued and outstanding -0- -0-
Common stock - $1.00 par value:
5,000,000 shares authorized,
646,062 shares and 643,062 issued
and outstanding 646,062 643,062
Surplus 6,123,901 6,096,901
Retained earnings 2,916,432 2,562,787
Market valuation reserve on investment
securities available for sale (101,433) (138,034)
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 9,584,962 9,164,716
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 120,617,541 $ 108,553,689
============= =============
See Notes to Consolidated Financial Statements
</TABLE>
2
<PAGE> 4
FIRST COMMUNITY BANKING SERVICES, AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
------------------------------------
1997 1996
---- ----
INTEREST INCOME
<S> <C> <C>
Loans, including fees $ 2,172,771 $ 1,889,704
Investment securities:
Taxable Securities 207,309 180,273
Tax Exempt Securities 19,418 20,795
Federal funds sold 38,837 52,834
Interest-bearing deposits in
other financial institutions 416 2,654
----------- -----------
TOTAL INTEREST INCOME 2,438,751 2,146,260
----------- -----------
INTEREST EXPENSE
Interest-bearing demand and money market 131,046 163,839
Savings 34,019 34,005
Time deposits 809,233 673,314
Federal funds purchased and securities
sold under agreement to repurchase 4,759 512
----------- -----------
TOTAL INTEREST EXPENSE 979,057 871,670
----------- -----------
NET INTEREST INCOME 1,459,694 1,274,590
PROVISION FOR LOAN LOSSES 120,000 120,000
----------- -----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN
LOSSES 1,339,694 1,154,590
----------- -----------
OTHER INCOME
Service charges on deposit accounts 137,148 113,311
Investment securities gains (losses), net 145 (967)
Gains on sales of SBA loans 60,994 -0-
Other income 12,764 20,152
----------- -----------
TOTAL OTHER INCOME 211,051 132,496
----------- -----------
OTHER EXPENSE
Salaries and wages 428,523 403,810
Net occupancy expense 142,656 107,270
Other expense (NOTE B) 412,921 327,976
----------- -----------
TOTAL OTHER EXPENSE 984,100 839,056
----------- -----------
INCOME BEFORE INCOME TAX EXPENSE 566,645 448,030
INCOME TAX EXPENSE 213,000 174,700
----------- -----------
NET INCOME $ 353,645 $ 273,330
=========== ===========
NET INCOME PER SHARE - (NOTE C) $ 0.52 $ 0.40
=========== ===========
WEIGHTED AVG NUMBER OF SHARES 646,062 612,440
=========== ===========
OUTSTANDING
</TABLE>
See Notes to Consolidated Financial Statements
3
<PAGE> 5
FIRST COMMUNITY BANKING SERVICES, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1997 AND 1996
(UNAUDITED)
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Income $ 353,645 $ 273,330
Adjustments to reconcile net income
to net cash provided by operating activities:
Amortization of intangibles 88,750 24,464
Depreciation, amortization and accretion 52,545 45,268
Provision for loan losses 120,000 120,000
Securities gains, net (145) 967
Gains on Sale of SBA loans (60,994) -0-
Change in:
(Increase) decrease in interest receivable 105,133 48,891
Increase (Decrease) in interest payable (266,113) (224,269)
(Increase) decrease in other assets (45,751) (180,825)
Increase (Decrease) in other liabilities 118,169 342,000
------------ ------------
NET CASH PROVIDED BY OPERATING ACTIVITIES 465,239 449,826
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net change in interest-bearing deposits
with other banks (3,105) -0-
Purchases of investment securities available for sale (507,031) (5,734,047)
Purchases of other investments (52,300) (22,000)
Proceeds from sales of investment securities
available for sale 69,567 1,239,523
Proceeds from maturities of investment securities -0- 200,000
Proceeds from maturities of investment securities
available for sale 200,000 2,250,000
Proceeds from the sale of loans 1,347,286 -0-
Net (increase) decrease in loans (3,015,745) (4,467,156)
Purchase of bank premises and equipment (325) (882)
Sale of other real estate 399,199 -0-
------------ ------------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES (1,562,454) (6,534,762)
------------ ------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in Federal Funds purchased
and securities sold under agreements to repurchase -0- (1,161)
Net increase (decrease) in demand and savings
deposits 8,322,711 2,710,366
Net increase (decrease) in time deposits 3,468,839 6,971,949
Proceeds from Stock Sales 30,000 -0-
Cash Dividend Payment -0- (183,732)
NET CASH PROVIDED BY FINANCING ACTIVITIES 11,821,550 9,497,422
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS 10,724,335 3,412,486
============ ============
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 7,177,785 5,852,249
------------ ------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 17,902,120 $ 9,264,735
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH PAID:
Interest $ 1,245,170 $ 1,095,939
============ ============
Income Taxes $ -0- $ -0-
============ ============
SUPPLEMENTAL DISCLOSURES OF NONCASH
FINANCING AND INVESTING ACTIVITIES:
Acquisition of real estate in
settlement of loans $ 240,546 $ 66,097
============ ===========
</TABLE>
4
<PAGE> 6
FIRST COMMUNITY BANKING SERVICES INC., AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE A
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information, and with the instructions to Form 10-QSB and Item 310 (b)
of Regulation S-B of the Securities and Exchange Commission. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the opinion
of management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. Operating
results for the three month period ended March 31, 1997, are not necessarily
indicative of the results that may be expected for the year ended December 31,
1997. For further information refer to the consolidated financial statements and
footnotes thereto included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1996.
ACCOUNTING RULE CHANGES
(Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities). The Financial Accounting Standards Board has issued Statement
of Financial Accounting Standards No. 125 (SFAS 125), "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities." SFAS 125
is effective for such transactions entered into subsequent to December 31, 1996,
and for certain excess servicing rights recorded at December 31, 1996. Under
SFAS 125, a company recognizes the financial and servicing assets it controls
and the liabilities it has incurred and derecognizes financial assets when
control has been surrendered and liabilities when extinguished. The Financial
Accounting Standard Board has issued Statement of Financial Accounting Standards
No. 127 (SFAS 127), "Deferral of the Effective Date of FASB Statement of No.
125", which delays the effective date of certain provisions of SFAS 125 until
1998. The adoption of SFAS 125 and SFAS 127 is not expected to have a
significant impact on the financial conditions or results of operations of the
Company.
(Accounting for Stock Based Compensation). Effective January 1, 1996, the
Company adopted the disclosure requirements of Statement of Financial Accounting
Standards No. 123 (SFAS 123), "Accounting for Stock-Based Compensation." As
provided by SFAS 123, the Company has elected to continue applying the
provisions of APB 25 in determining its net income relative to stock-based
compensation. The Company has adopted the SFAS 123 requirement that a company
disclose the pro forma net income and pro forma earnings per share, as if the
alternative fair-value-based accounting method in SFAS 123 had been used in
determining net income. The adoption of SFAS 123 did not have a significant
impact on the financial condition or results of operations of the Company.
(Accounting for the Impairment of Long-Lived Assets and Long-Lived Assets to be
Disposed of). Effective January 1, 1996, the Company adopted Statement of
Financial Accounting Standards No. 121 (SFAS 121), "Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of."
The provisions of SFAS 121 require the Company to review long-lived assets for
impairment whenever events or changes in circumstances indicated that the
carrying amount of an asset may not be recoverable. The adoption of SFAS 121 did
not have a significant impact on the financial condition or results of
operations of the Company.
PENDING ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 128 (SFAS 128), "Earnings per Share". SFAS 128 is
effective for financial statements issued for periods ending after December 15,
1997. This statement supercedes APB Opinion 15 "Earnings per Share, " and
simplifies earnings per share computations by replacing primary EPS with Basic
EPS, which shows no effects from dilutive securities. Entities with complex
capital structures will have to show diluted EPS, which is similar to the
fully-diluted EPS computation under APB 15. The adoption of SFAS 128 is not
expected to have a significant impact on the financial conditions or results of
operations of the Company.
The Financial Accounting Standards Board has issued Statement of Financial
Accounting Standards No. 129, "Disclosure of information about capital
structure. SFAS 129 is effective for financial statements issued for periods
ending December 15, 1997. This standard consolidates existing disclosure
requirements on capital structure. The adoption of SFAS 129 is not expected to
have a significant impact on the financial conditions or results of operations
of the Company.
5
<PAGE> 7
NOTE B
SUPPLEMENTAL FINANCIAL DATA
Components of other operating expense in excess of 1% of total interest and
other income for the periods ended March 31, 1997 and 1996 are as follows:
<TABLE>
<CAPTION>
1997 1996
---- ----
<S> <C> <C>
Printing and supplies $23,767 $22,821
Data Processing fees 75,123 65,997
Director fees 34,650 29,000
Amortization of intangibles 88,750 24,464
Professional fees 61,363 38,504
</TABLE>
NOTE C
EARNINGS PER SHARE
Earnings per share have been computed on the weighted average number of common
shares outstanding during the period. Stock options and warrants are considered
to be common stock equivalents for purposes of calculating earnings per share.
The effect of including these common stock equivalents in the earnings per share
calculations for the quarter ended March 31, 1997, is dilutive. Stock dividends
have been retroactively restated to first quarter, 1996.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATIONS
RESULTS OF OPERATIONS
PERIOD ENDED MARCH 31, 1997
First Community Banking Services, Inc. (the "Company"), reported net income of
$353,645 for the first quarter of 1997, a 29.39% increase as compared to
$273,330 for the same period in 1996. Net earnings per share for the first
quarter of 1997 and 1996 were $.52 and $.40, respectively. The increase in net
income is primarily attributable to the increase in interest income including
fees from loans, as well as gains on sale of SBA loans. Total assets increased
$12,063,852 to $120,617,541 between December 31, 1996 and March 31, 1997, an
increase of 11.12%.
The return on average assets for the Company was 1.40% for the three month
period ended March 31, 1996, as compared to 1.19% for the same period last year.
The return on average shareholders' equity increased for the first three months
of 1997 to 16.34% as compared to 13.91% for the first three months of 1996. Book
value at March 31, 1997, was $14.84, an increase of $.58 from December 31, 1996.
Deposits grew $11,791,550 from December 31, 1996, an increase of 12.02%, to
$109,935,916, at March 31, 1997. Noninterest bearing demand deposits accounted
for $8,331,013 of this increase, or 70.65%. At March 31, 1997, there was one
large depositor that had $8.2million in accounts with the bank. Time deposits
over $100,000 decreased $794,848 to $14,495,619, at March 31, 1997. Other time
deposits increased $4,263,687 or 10.44% to $45,098,596 at March 31, 1997. This
deposit growth is attributed to Fayette County Bank (the "Bank") increasing its
rates on time deposits in order to attract more core deposits and to fund loan
demand. Management believes that most of these additional deposits are with
individuals and businesses within the Bank's local market area and with whom or
which the Bank has had consistent deposit relationships. The Bank does not
solicit brokered deposits. However, because these additional deposits resulted
from the Bank's decision to increase its rates on deposits, management believes
that these deposit relationships may not remain with the Bank if the Bank does
not continue to pay market or above market rates on the deposits.
6
<PAGE> 8
Loans, net of the allowance for loan losses, increased $1,368,907 during the
three month period ended March 31, 1997. As represented in the Statement of Cash
Flow the Bank sold $1,347,286 in credit card loans during the first quarter of
1997. Management's decision to sell the credit card portfolio was based on
historical charge offs and projected economic forecast of consumer bankruptcys.
The loss on the sale was $107; however, there was a $77,143 unamortized premium
charged to earnings during the period ending March 31, 1997.
Deposit funds in excess of those needed to support loan growth were allocated to
purchases of investment securities and to federal funds sold, which increased
from $1,860,000 at December 31, 1996 to $13,870,000 at March 31, 1997.
Investment securities available-for-sale increased $297,828 during the first
quarter of 1997. The Statement of Cash Flows shows the Bank had $69,567 in
available- for-sale securities mature during the first quarter of 1997, while
the Bank purchased $507,031 of available-for-sale securities.
The Bank's increase in earning assets resulted in an increase in the Company's
net interest income for the first three months of 1997 as compared to the first
three months of 1996. Net interest income for the three month period ended March
31, 1997, increased 14.53% to $1,459,694, as compared to $1,274,590 for the same
period in 1996. The net interest margin for the first three months of 1997
declined only slightly to 5.85%, as compared to 5.90% for the same three month
period in 1996.
Other income increased to $78,555, from $132,496, for the three month periods
ended March 31, 1997 and 1996, respectively. The Bank had a gain on sale of two
SBA loans totaling $60,994 during the first quarter of 1997, as compared to -0-
for the same period ending March 31, 1996. Service charges on deposit accounts
increased to $137,148, up $23,837 or 20.00% from $113,311 during the first
quarter of 1997, as compared to the same period of 1996. This is primarily
attributed to the increase in new accounts during the period. Other
miscellaneous income decreased to $12,764, compared to $20,152 for the three
month periods ended March 31, 1997 and 1996, respectively. This decrease is due
to the loss on the sale of OREO equaling $5,905.
Other expenses increased $145,044 to $984,100, from $839,056, for the three
month periods ended March 31, 1997 and 1996, respectively. Salaries and employee
benefits accounted for approximately $24,713 of this increase. Net occupancy
expense increased 32.99% or $35,386 to $142,656 during the first quarter of
1997, from $107,270 for the same period ending March 31, 1996. Repairs to
offices as well as an upgrade of our computer system, which occurred during the
third quarter of 1996, contributed to this increase.
ASSET QUALITY
Nonperforming assets (nonaccrual and restructured loans and real estate acquired
through foreclosure (OREO) declined to .30% of total loans and OREO at March 31,
1997, compared to .88% at December 31, 1996. This decline is primarily
attributable to the charge off of one commercial loan which was classified as
restructured/impaired at December 31, 1996, as well as increases in loans and
decreases in non-accrual loans.
Nonperforming Assets
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
---- ----
<S> <C> <C>
Loans on nonaccrual $ 5,772 $ 14,854
Other real estate owned 240,546 399,199
Restructured / Impaired loans -0- 303,913
-------- --------
Total non-performing assets $246,318 $717,966
Loans 90 days past due $489,646 $560,530
Total nonperforming assets as a percentage
of total loans and other real estate .30% .88%
Loans ninety days past due as a percentage
of total loans .59% .69%
</TABLE>
7
<PAGE> 9
The allowance for loan losses at March 31, 1997, decreased $246,095 from
December 31, 1996, to $968,078. The Bank funded the reserve with $120,000 and
had net charge offs of $366,095. The allowance at March 31, 1997, represented
1.17% of total loans compared to 1.49% at December 31, 1996. The allowance at
March 31, 1997 represented 393.02% of nonperforming loans (nonaccrual and
restructured/impaired) at March 31, 1997, compared to 169.12% of non-performing
loans at December 31, 1996.
Analysis of the Allowance for Loan Losses at
March 31, 1997
<TABLE>
<S> <C>
Allowance for loan losses at December 31, 1996 $1,214,173
----------
Charge-offs:
Commercial 303,915
Real Estate -0-
Installment 31,943
Credit card related 44,170
----------
Total 380,028
Recoveries:
Commercial 100
Real Estate -0-
Installment 13,311
Credit card related 522
----------
Total 13,933
Net Charge-offs 366,095
----------
Provision charged to income 120,000
----------
Allowance for loan losses at March 31, 1997 $ 968,078
==========
</TABLE>
The loan portfolio is periodically reviewed to evaluate the
outstanding loans and to measure both the performance of the portfolio and the
adequacy of the allowance for loan losses. This analysis includes a review of
delinquency trends, actual losses, and internal credit ratings. Management's
judgment as to the adequacy of the allowance is based upon a number of
assumptions about future events which it believes to be reasonable, but which
may or may not be reasonable. However, because of the inherent uncertainty of
assumptions made during the evaluation process, there can be no assurance that
loan losses in future periods will not exceed the allowance for loan losses or
that additional allocations to the allowance will not be required.
LIQUIDITY AND CAPITAL ADEQUACY
The Bank's net loan to deposit ratio decreased by 793 basis points at March 31,
1997, to 75.54%, as compared to 83.47% at December 31, 1996. This change is a
result of the Bank maintaining a level of loan growth below the level of deposit
growth. During the first three months of 1997, deposits grew by more than $11.8
million while gross loans increased by approximately $1.1 million. The Bank's
liquid assets as a percentage of total deposits were 14.87% at March 31, 1997,
compared to 6.64% at December 31, 1996. Management also analyzes the level of
off-balance sheet assets such as unfunded loan equivalents, liquid investments,
and available fund lines in an attempt to minimize the possibility that a
potential shortfall will exist. Based on this analysis, management believes that
the Company has adequate liquidity to meet short-term operating requirements.
However, no assurances can be given in this regard.
8
<PAGE> 10
Shareholders equity increased 4.59% from December 31, 1996, to $9,584,962 at
March 31, 1997. The capital of the Company and the Bank exceeded all prescribed
regulatory capital guidelines. Regulations require that the most highly rated
banks maintain a minimum Tier l leverage ratio of 3% plus an additional cushion
of at least 1 to 2 percentage points. Tier 1 capital consists of common
shareholders' equity, less certain intangibles. The Bank's Tier 1 leverage ratio
was 7.72% at March 31, 1997, compared to 8.2% at December 31, 1996, a decline
which was due to growth in the Bank's assets. Regulations require that the Bank
maintain a minimum total risk-weighted capital ratio of 8%, with one-half of
this amount, or 4%, made up of Tier 1 capital. Risk-weighted assets consist of
balance sheet assets adjusted by risk category, and off-balance sheet asset
equivalents similarly adjusted. At March 31, 1997, the Bank had a risk-weighted
total capital ratio of 9.71%, compared to 11.4% at December 31, 1996, and a Tier
1 risk-weighted capital ratio of 8.80%, compared to 10.2% at December 31, 1996.
INVESTMENT SECURITIES
At March 31,1997, the Bank had $13,443,088 in investment securities
available-for-sale and $1,659,732 in securities held-to-maturity. The net
unrealized loss on available-for-sale securities, net of deferred income taxes,
was $101,433 on March 31, 1997.
Investment securities comprised approximately 13% and 14% of the Bank's assets
on March 31, 1997 and December 31, 1996, respectively. The Bank invests
primarily in obligations of the United States or obligations guaranteed as to
principal and interest by the United States and other taxable and tax exempt
securities. The Bank has included in its investment portfolio instruments
described as a derivative, primarily, structured note derivatives. Structured
notes are debt securities whose cash flow characteristics depend on one or more
indexes. Structured notes carry high credit ratings and are issued as
floating-rate instruments. In a rising interest rate environment, the market
value of these securities can decrease due to the fact that the embedded
options, puts, calls, etc., become evident and in contrast to predictions. The
Bank has one investment totaling $250,000 in the investment portfolio at March
31, 1997, classified as a structured note. There can be no assurance that as
interest rates change in the future the amount of unrealized loss will not
increase, but if these securities are held until they mature and are repaid in
accordance with their terms, these principal losses will not be realized. The
Bank also engages in Federal Funds transactions with its principal correspondent
banks and primarily acts as a net seller of such funds. The sale of Federal
Funds amounts to a short-term loan from the Bank to another Bank.
9
<PAGE> 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
There are no material pending legal proceedings to which the Company is a party
or of which its property is the subject.
Item 2. Changes in Securities
Not Applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of security holders during the quarter
ended March 31, 1997.
Item 5. Other information
Not applicable.
Item 6. Exhibits and Report on Form 10-K
Exhibits
<TABLE>
<CAPTION>
Exhibit
Number Description
- ------ -----------
<S> <C>
3.1* Articles of Incorporation
3.2* Bylaws
10.5*** Settlement Agreement and Release with Fayette County Bancshares, Inc.
and Terry L. Miller as of October 21, 1994.
10.6*** Fayette County Bancshares, Inc. Stock Option Plan
10.7**** Purchase Agreement-Credit Card Accounts dated January 23, 1997
between Fayette County Bank and Carolina First
11 Computation of Net Income Per Share
21.1** Subsidiaries of the Company
24 Power of Attorney (contained on the Signature Page)
27 Financial Data Schedule (for SEC use only)
* Previously filed as exhibits to the Company's Registration Statement
on Form S-18 (Registration No. 33-6658-A) and incorporated herein by
reference.
** Previously filed as exhibit to the Company's Annual Report on Form
10-KSB for the year ended December 31, 1990.
*** Previously filed as exhibits to the Company's Annual Report on Form
10-KSB for the year ended December 31, 1994.
**** Previously filed as exhibits to the Company's Annual Report on Form
10-KSB for the year ended December 31, 1996.
Reports on Form 8-K
NONE.
</TABLE>
10
<PAGE> 12
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant has duly
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRST COMMUNITY BANKING SERVICES, INC.
--------------------------------------
(Registrant)
Date: April 23, 1997 Ira Pat Shepherd
--------------------------------------
Ira Pat Shepherd,
Principal Executive Officer
Date: April 23, 1997 Mark Kearsley
--------------------------------------
Mark Kearsley,
Principal Financial Officer
11
<PAGE> 1
FIRST COMMUNITY BANKING SERVICES, INC. AND SUBSIDIARY
EXHIBIT 11 - COMPUTATION OF NET INCOME PER SHARE
<TABLE>
<CAPTION>
Period Ending Period Ending
March 31, March 31,
Primary 1997 1996
------- ---- ----
<S> <C> <C>
Net Income used for primary share amounts $353,645 $273,330
======== ========
Weighted average of common shares outstanding 646,062 612,440
Add-Common Stock equivalents determined
using the "Treasury Stock" method
representing shares issuable upon exercise
of director and employee stock options
using quarterly average market price 46,694, 34,796 46,694 34,796
-------- --------
Weighted average number of shares
used in calculation of primary
earnings per share 692,756 647,236
======== ========
Primary earnings per share used $ .52 $ .40
======== ========
</TABLE>
12
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 4,032,120
<INT-BEARING-DEPOSITS> 28,193
<FED-FUNDS-SOLD> 13,870,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 13,443,088
<INVESTMENTS-CARRYING> 1,659,732
<INVESTMENTS-MARKET> 1,653,324
<LOANS> 83,038,793
<ALLOWANCE> 968,078
<TOTAL-ASSETS> 120,617,541
<DEPOSITS> 109,935,916
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,096,663
<LONG-TERM> 0
0
0
<COMMON> 646,062
<OTHER-SE> 8,939,900
<TOTAL-LIABILITIES-AND-EQUITY> 120,617,541
<INTEREST-LOAN> 2,172,771
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2,438,751
<INTEREST-DEPOSIT> 974,298
<INTEREST-EXPENSE> 979,057
<INTEREST-INCOME-NET> 1,459,694
<LOAN-LOSSES> 120,000
<SECURITIES-GAINS> 145
<EXPENSE-OTHER> 984,100
<INCOME-PRETAX> 566,645
<INCOME-PRE-EXTRAORDINARY> 566,645
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 353,645
<EPS-PRIMARY> .52
<EPS-DILUTED> 0
<YIELD-ACTUAL> 9.77
<LOANS-NON> 5,772
<LOANS-PAST> 489,646
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,214,173
<CHARGE-OFFS> 380,028
<RECOVERIES> 13,933
<ALLOWANCE-CLOSE> 968,078
<ALLOWANCE-DOMESTIC> 968,078
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
