FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly period Ended September 30, 1997
( ) 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
0-17915
1ST BANCORP
--------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Indiana 35-1775411
- -------------------------------------- ------------------------------------
(State of other jurisdiction of (I.R.S. Employer Identification
Incorporation or organization) Number)
101 N. Third Street
Vincennes, Indiana 47591
- -------------------------------------- ------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including are code: (812) 882-4528
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______________
As of October 28, 1997, there were 691,726 Shares of the Registrant's Common
Stock issued and outstanding.
<PAGE>
1ST BANCORP AND SUBSIDIARIES
INDEX
Page
Number
Forward Looking Statements 3
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Consolidated Condensed Statements
of Financial Condition,
September 30, 1997 (Unaudited) and
June 30, 1997 4
Consolidated Condensed Statements
of Earnings, Three Months Ended
September 30, 1997 and 1996 (Unaudited) 5
Consolidated Condensed Statements of
Cash Flows, Three Months Ended
September 30, 1997 and 1996 (Unaudited) 6
Notes to Consolidated Condensed
Financial Statements (Unaudited) 7-8
Item 2. Management's Discussion and Analysis
of Financial Condition and Results
of Operations 9-14
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 14
PART II. OTHER INFORMATION 15
Item 1. Legal Proceedings 15
Item 2. Submissions of Matters to Vote of Securities
Holders 15
Item 3. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
<PAGE>
Forward Looking Statements
This Quarterly Report on Form 10-Q ("Form 10-Q") contains statements which
constitute forward looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. These statements appear in a number of
places in this Form 10-Q and include statements regarding the intent, belief,
outlook, estimate or expectations of the Corporation (as defined below), its
directors or its officers primarily with respect to future events and the future
financial performance of the Corporation. Readers of this Form 10-Q are
cautioned that any such forward looking statements are not guarantees of future
events or performance and involve risks and uncertainties, and that actual
results may differ materially from those in the forward looking statements as a
result of various factors. The accompanying information contained in this Form
10-Q identifies important factors that could cause such differences. These
factors include changes in interest rates; loss of deposits and loan demand to
other savings and financial institutions; substantial changes in financial
markets; changes in real estate values and the real estate market; regulatory
changes; or the deterioration in the financial strength of the Corporation's
loan customers.
<PAGE>
1ST BANCORP AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(Unaudited and in Thousands)
<TABLE>
<CAPTION>
September 30, June 30,
1997 1997
----------------------------
<S> <C> <C>
ASSETS
Cash and cash equivalents:
Interest bearing deposits $19,982 $19,771
Non-interest bearing deposits 476 523
---------- -------------
Cash and cash equivalents 20,458 20,294
---------- -------------
Securities available for sale 6,687 11,588
Securities held to maturity (market value
of $39,692 at September 30, 1997 and
$43,556 at June 30, 1997) 39,859 44,065
Loans receivable, net 151,309 146,840
Loans held for sale 27,349 27,769
Accrued interest receivable:
Securities 534 1,081
Loans 1,152 1,099
Stock in FHLB of Indianapolis, at cost 4,941 4,941
Office premises and equipment 3,162 3,225
Real estate owned 408 397
Prepaid expenses and other assets 5,076 9,191
---------- -------------
TOTAL ASSETS $260,935 $270,490
========== =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $134,864 $144,316
Advances from FHLB and other borrowings 100,247 100,296
Advance payments by borrowers for taxes and insurance 567 304
Accrued interest payable on deposits 681 1,194
Accrued expenses and other liabilities 2,002 2,047
---------- -------------
Total Liabilities $238,361 $248,157
---------- -------------
Stockholders' Equity:
Preferred stock, no par value; shares authorized
of 2,000,000, none outstanding - -
Common stock, $1 par value; shares authorized
of 5,000,000; shares issued and outstanding
of 691,726 at September 30, 1997 and
697,897 at June 30, 1997 $692 $698
Paid-in capital 2,428 2,642
Retained earnings, substantially restricted 19,488 19,102
Unrealized depreciation on securities (34) (109)
---------- -------------
Total Stockholders' Equity $22,574 $22,333
---------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $260,935 $270,490
========== =============
</TABLE>
See Notes to Consolidated Condensed Financial Statements.
<PAGE>
1ST BANCORP AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS
(Unaudited and in Thousands)
<TABLE>
<CAPTION>
Three months ended
September 30,
-------------------
1997 1996
-------- --------
<S> <C> <C>
INTEREST INCOME:
Loans $ 3,783 $ 3,595
Investment securities 901 927
Trading account securities 2 --
Other short-term investments and
interest bearing deposits 292 187
------- -------
Total Interest Income 4,978 4,709
------- -------
INTEREST EXPENSE:
Deposits 1,972 1,829
Short-term borrowings 2 21
FHLB advances and other borrowings 1,426 1,417
------- -------
Total Interest Expense 3,400 3,267
------- -------
NET INTEREST INCOME BEFORE
PROVISION FOR LOAN LOSSES 1,578 1,442
Provision for loan losses 90 46
------- -------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,488 1,396
------- -------
NON-INTEREST INCOME:
Fees and service charges 83 84
Net gain (loss) on sales of investment securities available
for sale and trading account investments 6 --
Net gain on sales of loans 61 653
Other 219 136
------- -------
Total Non-Interest Income 369 873
------- -------
NON-INTEREST EXPENSE:
Compensation and employee benefits 663 1,045
Net occupancy 127 181
Federal insurance premiums 41 1,429
Other 406 669
------- -------
Total Non-Interest Expense 1,237 3,324
------- -------
Earnings Before Income Taxes 620 (1,055)
Income Taxes 165 (424)
------- -------
NET EARNINGS $ 455 ($ 631)
======= =======
EARNINGS PER SHARE: $ 0.65 ($ 0.90)
</TABLE>
See Notes to Consolidated Condensed Financial Statements
<PAGE>
1ST BANCORP AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited and in Thousands)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
--------------------
1997 1996
-------- --------
<S> <C> <C>
Net Cash Flow From Operating Activities:
Net earnings $ 455 ($ 631)
Adjustments to reconcile net cash
provided by operating activities:
Depreciation and amortization 105 58
Amortization of mortgage servicing rights 46 26
Gain on sale of loans (61) (653)
Gain on sale of securities (6) --
Net change in loans held for sale 420 4,963
Provision for loan losses 90 46
Change in accrued interest receivable 494 478
Change in prepaid expenses and other assets 4,015 (174)
Change in accrued expenses and other liabilities (608) 10
Loss on investment in limited partnership 32 36
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES 4,982 4,159
-------- --------
Cash Flows From Investing Activities:
Purchase of securities held to maturity -- --
Proceeds from maturity of securities held to maturity 4,207 31
Purchase of securities available for sale and
trading account securities (2,998) --
Proceeds from maturities of securities available for sale 2,007 89
Proceeds from sales of securities available for sale
and trading account securites 6,017 --
Principal collected on loans, net of originations (4,499) (10,313)
Purchases of equipment (14) (25)
Other (11) (275)
-------- --------
NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 4,709 (10,493)
-------- --------
Cash Flows From Financing Activities:
Change in deposits (9,452) (3,142)
Proceeds from FHLB advances and other borrowings 10,996 18,865
Repayment of FHLB advances and other borrowings (11,045) (20,845)
Proceeds from issuance of common stock 85 95
Purchase and retirement of common stock (305) --
Payment of dividends on common stock (69) (67)
Change in advance payments by borrowers
for insurance and taxes 263 152
-------- --------
NET CASH USED BY FINANCING ACTIVITIES (9,527) (4,942)
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 164 (11,276)
Cash and Cash Equivalents at Beginning of Period 20,294 25,099
-------- --------
Cash and Cash Equivalents at End of Period $ 20,458 $ 13,823
======== ========
</TABLE>
See Notes to Consolidated Financial Statements
<PAGE>
1ST BANCORP AND SUBSIDIARIES
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. Basis of Presentation
In the opinion of management, the accompanying unaudited consolidated condensed
financial statements contain all adjustments necessary for a fair presentation.
The results of operations for the interim periods are not necessarily indicative
of the results which may be expected for an entire year. These financial
statements are condensed and do not contain all disclosures required by
generally accepted accounting principles which would be included in a complete
set of financial statements.
Note 2. Earnings Per Share
Earnings per share have been computed on the basis of the weighted average
number of common shares outstanding and the dilutive effect of stock options not
exercised during the periods presented using the treasury stock method. The
weighted average number of shares outstanding for use in the earnings per share
computations was 698,729 and 700,328 for the three months ended September 30,
1997 and 1996, respectively.
Note 3. Stock Purchase Plans
The Corporation maintains an Employee Stock Purchase Plan whereby full-time
employees of First Federal Bank, A Federal Savings Bank (the "Bank") and First
Financial Insurance Agency, Inc. ("First Financial") can purchase the
Corporation's common stock at a discount. The purchase price of the shares under
this plan is 85% of the fair market value of such stock at the beginning or end
of the offering period, whichever is lesser. A total of 15,750 authorized but
unissued shares were reserved for issuance under this plan. A total of 3,564
shares were issued and purchased by employees in the first quarter of fiscal
year 1998 for the fiscal 1997 plan year.
Note 4. Stock Option Plan
The Corporation has a stock option plan under which 165,375 authorized but
unissued shares of common stock were reserved. As of September 30, 1997, 17,000
incentive stock options were outstanding with certain key officers. An
additional 1,880 shares remain reserved for future grant. All other options have
been exercised or canceled.
Note 5. Stock Repurchase Plan
In August 1996, the Board authorized the repurchase of up to 5% of the
outstanding shares of common stock (703,638 shares were outstanding at the
time), subject to market conditions, over a two year period which expires in
August 1998. During the quarter ended September 30, 1997, 10,000 shares of
common stock were repurchased.
<PAGE>
Note 6. Savings Association Insurance Fund ("SAIF") Recapitalization
On September 30, 1996, the federal government mandated an industry wide
assessment to recapitalize the SAIF, which is a part of the Federal Deposit
Insurance Corporation ("FDIC"). The special assessment was charged to savings
associations with insured deposits by the SAIF. The assessment was calculated at
0.657% of insured deposits as of March 31, 1995. The Bank's portion of the
assessment was $1,330,000 and is included in non-interest expense for the three
months ended September 30, 1996.
Note 7. Reclassifications
Certain amounts in the fiscal year 1997 consolidated financial statements have
been reclassified to conform to the fiscal year 1998 presentation.
<PAGE>
1ST BANCORP AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 2 Management's Discussion and Analysis of Financial Condition and Results
of Operations
(a) Financial Condition:
Total assets decreased by $9,555,000, or 3.53%, to $260,935,000 at September 30,
1997, compared to total assets of $270,490,000 at June 30, 1997. The decrease is
primarily attributable to decreases in the securities held to maturity and
available for sale portfolios.
Cash and cash equivalents remained stable during the quarter ended September 30,
1997. Cash and cash equivalents totaled $20,458,000 at September 30, 1997,
compared to $20,294,000 at June 30, 1997.
Investment securities consist primarily of U.S. Agency securities. The majority
of securities have either a "call" or "step-up" feature, which provides the Bank
with flexibility under varying interest rate scenarios. The level of investment
securities held to maturity (including mortgage-backed securities) decreased by
$4,206,000, or 9.55%, to $39,859,000, at September 30, 1997, from $44,065,000 at
June 30, 1997. The decline in the level of securities held to maturity resulted
from the exercise of the call feature by the issuer of the securities.
Investment securities available for sale (including mortgage-backed securities)
declined by $4,901,000, or 42.29%, to $6,687,000 at September 30, 1997, from
$11,588,000 at June 30, 1997. The decline in the level of securities available
for sale resulted from sales of securities and the exercise of the call feature
of the securities by the issuer. There were no trading account securities at
September 30, 1997 or June 30, 1997.
The overall decline in the level of securities is a part of the Corporation's
asset/liability management strategy to shift funds from the securities
portfolios into the loan portfolios as the securities are called and mature
rather than replacing the securities. This strategy is being undertaken to
continue the expansion of the Bank's net interest margin.
<PAGE>
1ST BANCORP AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Net loans receivable (including loans held for sale) increased by $4,049,000, or
2.32%, to $178,658,000 at September 30, 1997, from $174,609,000 at June 30,
1997. The increase in net loans receivable is attributable to residential
mortgage loan production, an emphasis on the Bank's indirect auto lending
program and a lower level of mortgage loan sales. Growth occurred in the
non-conforming and conforming mortgage loan portfolios and in the auto loan
portfolio.
Loan production during the three months ended September 30, 1997 decreased
compared to the same period of the prior year. During the three months ended
September 30, 1997, the Bank funded $17.7 million of loans compared to $37.8
million of loans during the three months ended September 30, 1996. The decrease
in loan originations is primarily due to the restructuring of the Bank's
nonconforming loan origination network in the latter part of fiscal year 1997.
All loan origination offices were closed except the Evansville, Indiana loan
origination office and all administrative functions were transferred to the main
office in Vincennes, Indiana.
During the three months ended September 30, 1997, non-conforming mortgage
lending constituted $5.6 million, or 31.6%, of total loans funded during the
period compared with $21.7 million, or 57.2% of total loans funded during the
three months ended September 30, 1996. Non-conforming loans, including those
held for sale, increased to $70.6 million at September 30, 1997 compared to
$66.5 million at June 30, 1997.
During the fourth quarter of fiscal year 1997, the Bank implemented an indirect
auto lending program in its Vincennes, Indiana market area. Indirect auto loan
fundings during the first quarter of fiscal year 1997 totaled $1.5 million. The
indirect auto loan portfolio totaled $1.7 million at September 30, 1997.
At September 30, 1997, nonaccrual loans and real estate owned totaled
$2,930,000, or 1.12% of total assets. This compares to $2,727,000 of nonaccrual
loans and real estate owned, or 1.01% of total assets, at June 30, 1997. The
upward trend in loan delinquencies is related to residential one-to-four family
mortgage loans. Delinquencies have trended upward in both conforming and
non-conforming mortgage loans. Loan quality continues to be of major importance
to the Bank and strong efforts are being made to ensure loan quality. In an
effort to mitigate potential losses and reduce non-performing assets, mortgage
loan collection personnel have been expanded, more stringent collection
practices have been implemented, and certain higher risk lending programs have
been discontinued. In addition, loan loss allowances have been increased to
prepare for potential future losses in the portfolio.
The table below sets forth the amounts and categories of 1ST BANCORP's
nonaccrual loans and real estate owned for the balance sheet dates presented.
Loans are reviewed regularly and are generally placed on nonaccrual status when
they become contractually past due more than 90 days.
<PAGE>
1ST BANCORP AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
<TABLE>
<CAPTION>
September 30, June 30,
1997 1997
-------------------------------
<S> <C> <C>
Nonaccrual loans and real estate owned:
Nonaccrual loans $2,522,000 $2,330,000
Real estate owned (1) 408,000 397,000
Restructured loans - -
-------------------------------
Total nonaccrual loans and real estate owned $2,930,000 $2,727,000
Nonaccrual loans and real estate owned to total assets 1.12% 1.01%
</TABLE>
- -----------------------
(1) Certain assets acquired through foreclosures or deeds in lieu of
foreclosure, which are included in the Consolidated Condensed Statement of
Financial Condition as real estate owned.
During the three months ended September 30, 1997, the Bank established, through
operations, provisions for loan losses totaling $90,000. In addition, the Bank
realized net charge-offs through its allowance for loan loss accounts of
$74,000. The Bank's allowance for loan loss was $1,174,000 at September 30, 1997
and $1,158,000 at June 30, 1997.
Prepaid expenses and other assets decreased by $4,115,000 to $5,076,000 at
September 30, 1997 from $9,191,000 at June 30, 1997. The decrease was primarily
the result of the funding of a $4.1 million loan sale during the quarter ended
September 30, 1997 which was in process at June 30, 1997.
Total deposits decreased by $9,452,000, or 6.55%, to $134,864,000 at September
30, 1997 from $144,316,000 at June 30, 1997. The decrease in deposits was
primarily the result of decreasing brokered funds during the three months ended
September 30, 1997. The decline in brokered funds correlated to the decline in
the securities held to maturity and available for sale portfolios. Advances from
the Federal Home Loan Bank ("FHLB") and other borrowings remained stable at
$100,247,000 at September 30, 1997 compared to $100,296,000 at June 30, 1997.
Accrued expenses and other liabilities remained stable at $2,002,000 at
September 30, 1997 compared to $2,047,000 at June 30, 1997. Advance payments by
borrowers for taxes and insurance increased modestly to $567,000 at September
30, 1997, from $304,000 at June 30, 1997. Accrued interest payable on deposits
decreased to $681,000 at September 30, 1997, from $1,194,000 at June 30, 1997.
The fluctuations in these categories were due to the timing differences that
occur in the normal course of business.
(b) Results of Operations:
During the three months ended September 30, 1997, 1ST BANCORP had net income of
$455,000, or $0.65 per share, compared to a net loss of $631,000, or $0.90 per
share, for the three months ended September 30, 1996. The net loss for the
quarter ended September 30, 1996, was directly attributable to the one-time
assessment for the recapitalization of the SAIF. Exclusive of the SAIF
assessment, pre-tax net earnings for the quarter ended September 30, 1996 would
have been approximately $275,000.
<PAGE>
1ST BANCORP AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The increased earnings for the quarter ended September 30, 1997 as compared to
the quarter ended September 30, 1996, resulted from an increased net interest
margin and a substantially reduced level of noninterest expenses. The decreased
noninterest expenses, exclusive of the SAIF assessment, was attributable to the
closure of several of the Bank's loan origination offices during the latter part
of fiscal 1997.
Net interest income before provision for loan losses was $1,578,000 for the
three months ended September 30, 1997, compared to $1,442,000 for the three
months ended September 30, 1996. The net interest margin was 2.49% for the three
months ended September 30, 1997 compared to 2.30% for the three months ended
September 30, 1996. The increased level of net interest income was the result of
the expanded net interest margin. The net interest margin was expanded primarily
through the increased level of higher yielding non-conforming mortgage loans
which have been retained in the loan portfolio. The higher yield on the Bank's
loan portfolio was partially offset by an increased cost of funds. The modestly
higher cost of funds was attributable to the Bank's savings deposits. Also
contributing to the increased net interest margin for the three months ended
September 30, 1997 as compared with the same period of the previous year, was a
slightly higher level of interest-earning assets and interest-bearing
liabilities.
Non-interest income for the three months ended September 30, 1997 totaled
$369,000 compared to $873,000 for the three months ended September 30, 1996. The
lower level of non-interest income for the three months ended September 30, 1997
resulted primarily from a decreased gain on sale of loans.
The gain on sale of mortgage loans totaled $61,000 for the quarter ended
September 30, 1997, compared to $653,000 for the quarter ended September 30,
1996. The decline in the gain on sale of loans for the three months ended
September 30, 1997 resulted from a lower volume of loan sales. Loan sales
totaled $5.1 million for the quarter ended September 30, 1997, compared to $23.9
million for the quarter ended September 30, 1996. The reduction in loan sales is
a part of the Bank's asset/liability management strategies to enhance the net
interest margin by retaining a larger portion its mortgage loan originations in
portfolio.
Fees and service charges remained stable and totaled $83,000 for the three
months ended September 30, 1997 compared to $84,000 for the three months ended
September 30, 1996. The net gains on the sale of investment securities available
for sale and trading account investments totaled $6,000 for the three months
ended September 30, 1997 compared with no activity in the first quarter of
fiscal year 1996.
"Other" non-interest income increased to $219,000 for the three months ended
September 30, 1997 compared with $136,000 during the three months ended
September 30, 1996. The increase is attributable to additional income from the
insurance operations of First Financial Insurance Agency, Inc. The additional
insurance income was due in large part to the purchase of book of business of an
existing independent insurance agency in December 1996. The book of business was
merged with the existing customer base of First Financial. As a result of the
acquisition, First Financial operates full service insurance offices in
Vincennes, Indiana and Princeton, Indiana.
<PAGE>
1ST BANCORP AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
Non-interest expense totaled $1,237,000 for the three months ended September 30,
1997, compared to $3,324,000 for the three months ended September 30, 1996. The
lower level of non-interest expenses were the result of the SAIF assessment in
the quarter ended September 30, 1996, and the restructuring of the Bank's
nonconforming loan operations.
On September 30, 1996, the federal government mandated an industry wide
assessment to recapitalize the SAIF, which is a part of the FDIC. The special
assessment was charged to savings associations with insured deposits by the
SAIF. The assessment was calculated at 0.657% of insured deposits as of March
31, 1995. The Bank's portion of the assessment was $1,330,000 and was included
in non-interest expense for the first quarter of fiscal 1997. Federal insurance
premiums totaled $41,000 for the quarter ended September 30, 1997, compared with
$1,429,000 for the quarter ended September 30, 1996.
During the fourth quarter of fiscal year 1997, the Bank restructured its
nonconforming loan operation. The restructuring included closing all loan
offices except the Evansville, Indiana loan origination office and moving all
administrative functions to the Bank's home office in Vincennes, Indiana. The
restructuring was undertaken to reduce noninterest operating expenses and
improve profitability of the Bank.
Compensation and employee benefits expense declined to $663,000 for the three
months ended September 30, 1997 compared to $1,045,000 for three months ended
September 30, 1996. Net occupancy expense also decreased in the quarter ended
September 30, 1997 as compared to the same period of the prior year. Net
occupancy expense totaled $127,000 for the three months ended September 30, 1997
compared to $181,000 for the three months ended September 30, 1996. These
declines in operating expenses resulted from a reduced number of employees and
fewer office facilities which are attributable to the nonconforming loan
operation restructuring.
(c) Capital Resources and Liquidity:
The Corporation is subject to regulation as a savings and loan holding company
by the Office of Thrift Supervision ("OTS"). First Federal Bank, A Federal
Savings Bank, as a subsidiary of a savings and loan holding company, is subject
to certain restrictions in its dealings with the Corporation. The Bank is also
subject to the regulatory requirements applicable to a federal savings bank.
Current capital regulations require savings institutions to have minimum
tangible capital equal to 1.5% of total assets and a minimum 3% core capital
ratio. Additionally, savings institutions are required to meet a risk-based
capital ratio equal to 8.0% of risk-weighted assets. At September 30, 1997, the
Bank met all current capital requirements.
<PAGE>
1ST BANCORP AND SUBSIDIARIES
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following is a summary of the Bank's regulatory capital and capital
requirements at September 30, 1997:
Tangible Core Risk-Based
Capital Capital Capital
-----------------------------------------
Regulatory Capital $22,836,000 $22,836,000 $23,497,000
Minimum Capital Requirement 3,912,000 7,825,000 11,315,000
-----------------------------------------
Excess Capital $18,924,000 $15,011,000 $12,182,000
Regulatory Capital Ratio 8.75% 8.75% 16.61%
Required Capital Ratio 1.50% 3.00% 8.00%
During the quarter ended September 30, 1997, 1ST BANCORP paid a $0.10 cash
dividend per share to shareholders. This is the twentieth consecutive quarterly
dividend 1ST BANCORP has paid to shareholders.
Liquidity measures the Bank's ability to meet savings withdrawals and lending
commitments. Management believes that liquidity is adequate to meet current
requirements, including the funding of $13,792,000 in loan commitments and
$1,099,000 of loans in process outstanding at September 30, 1997. The majority
of these commitments are expected to be funded within the three month period
ending December 31, 1997. At September 30, 1997, the Bank had $268,000 in
outstanding commitments to sell mortgage loans and mortgage-backed securities.
The Bank maintains liquidity of at least 5% of net withdrawable assets. The
average regulatory liquidity ratio for the quarter ended September 30, 1997 was
12.11%.
On October 23, 1997, the Corporation declared a three-for-two stock split. The
additional shares are payable November 30, 1997, to shareholders of record as of
November 15, 1997. For financial statements issued after November 15, 1997, all
share and per share data will be adjusted retroactively to reflect the
three-for-two stock split.
There are no other known trends, events, or uncertainties, including current
recommendations by regulatory authorities, that should have, or that are
reasonably likely to have, a material effect on the liquidity, capital
resources, or operations of 1ST BANCORP.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in market risk exposures that affect the
quantitative or qualitative disclosures presented as of the preceding fiscal
year end in the Corporation's Annual Report on Form 10-K.
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings.
Neither 1ST BANCORP nor its subsidiaries is involved in any legal proceedings,
other than routine proceedings occurring in the ordinary course of its business.
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 September 30, 1997.
Item 6. Exhibits and Reports on Form 8-K
a) The following exhibits are filed herewith:
Exhibit 3a Certificate of Incorporation of Registrant (incorporated
by reference to exhibit 3.1 to Registrant's Registration
Statement on Form S-4, Registration No. 33-24587, filed
September 28, 1988)
Exhibit 3b Restated Code of By-Laws of Registrant (incorporated by
reference to Exhibit 3b to Registrant's Form 10-K for the
year ended June 30, 1994)
Exhibit 27 Financial Data Schedule
b) Reports on Form 8-K -- There were no reports on Form 8-K filed during
the three months ended September 30, 1997.
<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 thereunto duly authorized.
1ST BANCORP
Date: November 13, 1997 By: /s/ C. James McCormick
-----------------------------
C. James McCormick, Chairman and
Chief Executive Officer
Date: November 13, 1997 By: /s/ Frank D. Baracani
----------------------------
Frank D. Baracani, President
Date: November 13, 1997 By: /s/ Mary Lynn Stenftenagel
---------------------------------
Mary Lynn Stenftenagel,
Secretary-Treasurer and
Chief Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 1ST BANCORP
AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0000840458
<NAME> 1ST BANCORP
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-1-1997
<PERIOD-END> SEP-30-1997
<EXCHANGE-RATE> 1.000
<CASH> 476
<INT-BEARING-DEPOSITS> 19,982
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 6,687
<INVESTMENTS-CARRYING> 38,859
<INVESTMENTS-MARKET> 39,692
<LOANS> 179,832
<ALLOWANCE> 1,174
<TOTAL-ASSETS> 260,935
<DEPOSITS> 134,864
<SHORT-TERM> 0
<LIABILITIES-OTHER> 3,250
<LONG-TERM> 100,247
<COMMON> 0
0
692
<OTHER-SE> 21,882
<TOTAL-LIABILITIES-AND-EQUITY> 260,935
<INTEREST-LOAN> 3,783
<INTEREST-INVEST> 903
<INTEREST-OTHER> 292
<INTEREST-TOTAL> 4,978
<INTEREST-DEPOSIT> 1,972
<INTEREST-EXPENSE> 3,400
<INTEREST-INCOME-NET> 1,578
<LOAN-LOSSES> 90
<SECURITIES-GAINS> 6
<EXPENSE-OTHER> 1,237
<INCOME-PRETAX> 620
<INCOME-PRE-EXTRAORDINARY> 165
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 455
<EPS-PRIMARY> 0.65
<EPS-DILUTED> 0.65
<YIELD-ACTUAL> 7.86
<LOANS-NON> 2,522
<LOANS-PAST> 464
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 2,865
<ALLOWANCE-OPEN> 896
<CHARGE-OFFS> 75
<RECOVERIES> 1
<ALLOWANCE-CLOSE> 1,174
<ALLOWANCE-DOMESTIC> 661
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 513
</TABLE>
