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 QUARTER ENDED March 31, 1998
or
\ \ Transition Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Transition Period From: To:
Commission File Number: 0-19398
FIRST COASTAL BANKSHARES, INC.
----------------------------------------------------------
(Exact name of Registrant as Specified in its Charter)
Virginia 54-1534067
- ------------------------------- -------------------
(State or other jurisdiction of (IRS Employer ID No.)
incorporation or organization
2101 Parks Avenue
Virginia Beach, Virginia 23451
- --------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (757) 428-9331
----------------
VIRGINIA BEACH FEDERAL FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Former Name, Former Address and Former Fiscal Year
If Changed Since Last Report)
Indicate by check mark whether the registrant (1) has filed all documents
reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES [x] NO
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date: 4,982,164
---------
<PAGE>
FIRST COASTAL BANKSHARES, INC.
CONTENTS
PART I - FINANCIAL INFORMATION
ITEM I
Unaudited Consolidated Statement of Financial
Condition as of March 31, 1998 and December 31, 1997.................... 1
Unaudited Consolidated Statement of Income for
the three months ended March 31, 1998 and 1997.......................... 2
Unaudited Consolidated Statement of Cash Flows
for the three months ended March 31, 1998 and 1997...................... 3 - 4
Unaudited Consolidated Statement of Stockholders'
Equity for the three months ended
March 31, 1998 and 1997................................................. 5
Notes to Unaudited Consolidated Financial Statements.................... 6
Item II
Management's Discussion and Analysis of Financial
Condition and Results of Operations..................................... 7 - 10
PART II - OTHER INFORMATION
ITEM 1
Legal Proceedings....................................................... 11
ITEM 2
Changes in Securities................................................... 11
ITEM 3
Defaults Upon Senior Securities......................................... 11
ITEM 4
Submission of Matters to a Vote of Security Holders..................... 11
ITEM 5
Other Information....................................................... 11
ITEM 6
Exhibits and Report of Form 8-K......................................... 11
SIGNATURES.............................................................. 12
-i-
<PAGE>
Page 1
FIRST COASTAL BANKSHARES, INC.
UNAUDITED CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
March 31, December 31,
1998 1997
-------------------------------------
<S> <C> <C>
ASSETS
Cash and amounts due from banks...................... $ 10,467 $ 7,236
Federal funds sold and interest
bearing deposits................................. 830 194
Investment securities
Held-to-maturity (approximate fair
value $9,001 and $10,786,
respectively)............................... 9,022 11,006
Available-for-sale .............................. 8,655 8,407
Mortgage-backed and related securities
Held-to-maturity (approximate fair
value $22,195 and $23,780,
respectively)............................... 22,772 24,369
Available-for-sale, ............................. 87,324 86,637
Loans receivable, net
Held-for-investment.............................. 454,024 454,477
Held-for-sale.................................... 14,259 8,356
Foreclosed real estate, net.......................... 3,196 2,382
Property and equipment, net.......................... 6,690 6,888
Accrued income receivable, net....................... 4,318 4,414
Other assets ........................................ 3,697 1,822
--------- ---------
$ 625,254 $ 616,188
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits ...................................... $ 427,798 $ 407,443
Advances from the Federal Home
Loan Bank...................................... 133,534 143,084
Securities sold under agreements
to repurchase.................................. 12,815 17,033
Advance payments by borrowers
for taxes and insurance........................ 1,713 906
Other liabilities................................... 4,746 3,573
--------- ---------
580,606 572,039
--------- ---------
STOCKHOLDERS' EQUITY
Serial preferred stock, authorized
5,000,000 shares, no shares issued
or outstanding.................................. -- --
Common stock, $.01 par value, 10,000,000
shares authorized; 4,982,164 shares
issued and outstanding in 1998
(4,980,611 in 1997)............................. 50 50
Capital in excess of par value..................... 9,494 9,465
Retained earnings - substantially
restricted...................................... 35,300 34,588
Accumulated other comprehensive
income (loss)................................... (196) 46
--------- ---------
44,648 44,149
--------- ---------
$ 625,254 $ 616,188
========= =========
</TABLE>
Notes to Unaudited Consolidated Financial Statements
are an integral part of this statement
<PAGE>
Page 2
FIRST COASTAL BANKSHARES, INC.
UNAUDITED CONSOLIDATED STATEMENT OF INCOME
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1998 1997
------------------------------
<S> <C> <C>
Interest and fees on loans............................... $ 9,983 $ 9,727
Interest on mortgage-backed
and related securities............................... 1,927 1,776
Other interest and dividend income....................... 345 440
------- --------
Total interest income................................ 12,255 11,943
------- --------
Interest on deposits..................................... 4,937 5,141
Interest on advances from Federal
Home Loan Bank....................................... 2,228 2,063
Interest on repurchase agreements ....................... 234 89
------- --------
Total interest expense............................... 7,399 7,293
------- --------
Net interest income...................................... 4,856 4,650
Provision for loan losses................................ -- 75
------- --------
Net interest income after provision
for loan losses.................................... 4,856 4,575
------- --------
OTHER INCOME
Gain on sales of loans............................... 461 252
Gain on sales of foreclosed
real estate..................................... 3 23
Retail banking fees.................................. 379 266
Mortgage loan servicing fees......................... 169 172
Other ............................................ 121 74
------- --------
1,133 787
------- --------
OTHER EXPENSES
Salaries and employee benefits....................... 2,250 1,872
Net occupancy expense................................ 846 745
Provision for losses on foreclosed
real estate....................................... -- --
Other net expense of foreclosed
real estate....................................... 65 37
Federal deposit insurance premiums................... 61 104
Other................................................ 1,130 1,161
------- --------
4,352 3,919
------- --------
Income before income taxes .............................. 1,637 1,443
Provision for income taxes............................... 626 548
------- --------
Net income $ 1,011 $ 895
======= ========
Earnings per share, basic $ 0.20 $ 0.18
Earnings per share, diluted............................. $ 0.20 $ 0.18
======= ========
Dividend per common share............................... $ 0.06 $ 0.05
======= ========
</TABLE>
Notes to Unaudited Consolidated Financial Statements
are an integral part of this statement
<PAGE>
Page 3
FIRST COASTAL BANKSHARES, INC.
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1998 1997
-----------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income........................................... $ 1,011 $ 895
Adjustments to reconcile net income
to net cash provided (used) by
operating activities
Provision for loan losses ....................... -- 75
Depreciation..................................... 313 253
Amortization of loan discounts,
premiums and fees, net....................... (142) (209)
Amortization of other discounts
and premiums, net.............................. (205) 11
Gain on sales of foreclosed
real estate.................................. (3) (23)
Gain on sales of loans........................... (461) (252)
Originations of loans
held-for-sale.................................. (42,705) (26,608)
Proceeds from sales of loans
receivable held-for-sale....................... 37,263 26,613
Decrease in accrued income
receivable................................... 96 40
Decrease (increase) in other assets.............. (1,750) 777
Increase in other liabilities.................... 1,173 760
---------- ----------
Net cash provided (used) by
operating activities...................... (5,410) 2,332
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in loans receivable.................. (728) (8,386)
Principal payments received on mortgage-
backed and related securities.................. 8,925 6,853
Proceeds from maturities of
investment securities.......................... 2,325 4,637
Proceeds from sales of
foreclosed real estate ........................ 524 23
Purchases of:
Mortgage-backed securities
available for sale......................... (8,193) --
Investment securities
available-for-sale........................... (573) (1,000)
Property and equipment......................... (115) (237)
Additions to foreclosed
real estate.................................. (12) (17)
-------- --------
Net cash provided by
investing activities............................ 2,153 1,873
-------- --------
</TABLE>
Continued
<PAGE>
Page 4
FIRST COASTAL BANKSHARES, INC.
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
(Dollars in thousands)
(Continued)
<TABLE>
<CAPTION>
For the Three Months
Ended March 31,
1998 1997
-------------------------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in money market deposit
accounts, NOW accounts and
savings deposits................................... 22,496 9,216
Net decrease in time deposits........................... (2,141) (21,183)
Proceeds from Federal Home
Loan Bank advances................................... 61,500 39,500
Payments on Federal Home Loan
Bank advances........................................ (71,050) (34,500)
Net (decrease) increase in securities
sold under agreements to repurchase.................. (4,218) 6,172
Net increase in advance payments
by borrowers......................................... 807 884
Proceeds from issuance of
common stock......................................... 29 17
Cash dividends paid..................................... (299) (249)
--------- ---------
Net cash provided (used) by
financing activities............................. 7,124 (143)
--------- ---------
Increase in cash and cash equivalents....................... 3,867 4,062
Cash and cash equivalents at
beginning of period...................................... 7,430 7,335
--------- ---------
Cash and cash equivalents at end of period................. $ 11,297 $ 11,397
========= =========
CASH AND CASH EQUIVALENTS INCLUDES
Cash $ 10,467 $ 9,729
Federal funds sold and interest
bearing deposits 830 1,668
--------- ---------
$ 11,297 $ 11,397
========= =========
SUPPLEMENTAL CASH FLOW INFORMATION
Interest paid on deposits.............................. $ 7,242 $ 7,478
Income taxes paid (refunded)........................... 492 (567)
SCHEDULE OF NONCASH INVESTING ACTIVITIES
Real estate acquired in settlement of
loans, net of allowances............................ $ 1,323 $ 130
</TABLE>
Notes to Unaudited Consolidated Financial Statements
are an integral part of this statement
<PAGE>
Page 5
FIRST COASTAL BANKSHARES, INC.
UNAUDITED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
Accumulated
Capital in Other
Common Stock Excess of Comprehensive Retained
Shares Amount Par Value Income Earnings Total
------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance,
Dec. 31, 1997 4,980,611 $ 50 $ 9,465 $ 46 $ 34,588 $ 44,149
Net income for the
three months ended
March 31, 1998 -- -- -- -- 1,011 1,011
Sale of shares of
common stock to
Employee Stock
Purchase Plan 1,043 -- 19 -- -- 19
Issuance of common
stock under dividend
reinvestment plan 510 10 10
Net unrealized
loss on securities
available-for-sale,
net of tax -- -- -- (242) -- (242)
Cash dividends paid -- -- -- -- (299) (299)
-------- ------- ------- ------- ------- -------
Balance,
March 31, 1998 4,982,164 $ 50 $ 9,494 $ (196) $ 35,300 $ 44,648
========= ======= ======= ======= ======= =======
Balance,
Dec. 31, 1996 4,970,307 $ 50 $ 9,336 $ (39) $ 31,480 $ 40,827
Net income for the
three months ended
March 31, 1997 -- -- -- -- 895 895
Sale of shares of
common stock to
Employee Stock
Purchase Plan 1,715 -- 18 -- -- 18
Net unrealized
loss on securities
available-for-sale,
net of tax -- -- -- (281) -- (281)
Cash dividends paid -- -- -- -- (249) (249)
-------- ------- ------- ------- ------- -------
Balance,
March 31, 1997 4,972,022 $ 50 $ 9,354 $ (320) $ 32,126 $ 41,210
========= ======= ======= ======= ======= =======
</TABLE>
Notes to Unaudited Consolidated Financial Statements
are an integral part of this statement
<PAGE>
Page 6
FIRST COASTAL BANKSHARES, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. At the Annual Stockholders Meeting on April 29, 1998, the Company's
Shareholders approved an amendment to the Company's Amended and Restated
Articles of Incorporation, changing the name of the Company to First Coastal
Bankshares, Inc. The Commonwealth of Virginia State Corporation Commission
approved the amendment on May 5, 1998.
2. The accompanying unaudited consolidated financial statements are prepared in
accordance with the instructions to Form 10-Q and do not include all of the
disclosures and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of the
management of First Coastal Bankshares, Inc. (the "Company"), formerly
Virginia Beach Federal Financial Corporation, the financial statements
reflect all adjustments, consisting of only normal recurring accruals,
necessary to present fairly the financial position of the Company.
The Notes to the Consolidated Financial Statements of the Annual Report on
Form 10-K for the fiscal year ended December 31, 1997 should be read in
conjunction with this Form 10-Q.
3. Net unamortized premiums on loans and mortgage-backed securities amounted to
$2,736,000 at March 31, 1998. Deferred loan fees at March 31, 1998 amounted
to $1,373,000.
4. The results of operations for the three months ended March 31, 1998 are not
necessarily indicative of the results to be expected for the entire fiscal
year or any other period.
5. In addition to undisbursed loan funds of $34,877,000, the Bank had
outstanding commitments to purchase or originate $51,744,000 in loans and
investment securities at March 31, 1998. The Company also had outstanding
commitments to sell $52,896,000 in loans and securities at March 31, 1998.
6. The weighted average number of shares used in the computation of basic
earnings per share was 4,981,183 and 4,970,888 at March 31, 1998 and 1997,
respectively. The weighted average number of shares used in the computation
of diluted earnings per share was 5,150,868 and 5,035,807 at March 31, 1998
and 1997, respectively. The difference between basic and diluted shares is
entirely attributable to the effect of dilutive stock options.
7. Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130 (SFAS 130), "Reporting Comprehensive Income."
Comprehensive income includes net income for the period plus other items of
comprehensive income as described in SFAS 130. The only item of other
comprehensive income applicable to the Company is the change in unrealized
gains and losses on securities available-for-sale. Total comprehensive income
for the periods ending March 31, 1998 and 1997 was $769,000 and $614,000,
respectively.
<PAGE>
Page 7
FIRST COASTAL BANKSHARES, INC.
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
ITEM II. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
ASSETS
The Company's total assets at March 31, 1998 were $625 million which is
an increase of $9.0 million or 1.5% from December 31, 1997. The
majority of the increase is due to a $5.9 million increase in loans
receivable held-for-sale and occurred due to the increase in loan
production during the first quarter of 1998 compared with the fourth
quarter of 1997.
The Company's loans receivable held-for-investment remained relatively
flat during the quarter. However, the mix continues to shift away from
1-4 family residential loans and toward the Company's other loan
categories as shown in the following table (dollars in thousands):
<TABLE>
<CAPTION>
March 31, December 31, March 31,
1998 1997 1997
---------- ---------- ---------
<S> <C> <C> <C>
1-4 family residential $ 262,408 $ 280,620 $ 302,457
Commercial real estate 74,211 68,910 73,576
Land acquisition 17,458 15,751 15,850
Construction 52,141 48,321 34,465
Commercial business 30,897 24,750 13,356
Consumer 21,202 20,422 18,195
-------- -------- --------
458,317 458,774 457,899
Less:
Allowance for loan losses 4,293 4,297 4,454
-------- -------- --------
$ 454,024 $ 454,477 $ 453,445
======== ======== ========
</TABLE>
The net decreases in 1-4 family residential loans noted above were
caused by increased prepayments and declining originations of such
loans due to a flat yield curve and declining interest rates. This
interest rate environment results in increased prepayments of the
Company's 1-4 family residential loans as borrowers seek to refinance
their loans at lower fixed rates, thus shifting the origination of new
loans away from the Company's portfolio loan products which are shorter
term and variable rate loans. The Company sells all of its longer term,
fixed rate loans in the secondary market.
The overall increase in the Company's other loan categories
(collectively, non-residential) is the direct result of the Company's
emphasis on originating such loans.
NON-PERFORMING ASSETS
Non-performing assets of the Bank comprise delinquent loans on which
income accrual has ceased or is being fully reserved, and property
acquired through foreclosure or repossession. Non-performing assets
totaled $8.4 million at March 31, 1998, $8.6 million, at December 31,
1997, and $6.4 million at March 31, 1997.
The delinquent loan component of non-performing assets was $5.2
million, $6.2 million and $4.2 million, at March 31, 1998, December 31,
1997 and March 31, 1997, respectively. The delinquent loans were
substantially secured by single-family
<PAGE>
Page 8
residential properties at March 31, 1998.
Allowances are maintained for possible losses on loans receivable and
foreclosed real estate. The allowances for possible losses on loans
receivable and foreclosed real estate totaled $4.3 million and $.3
million, respectively, at March 31, 1998. The Bank's allowance for loan
losses was 0.97% of total loans receivable held for investment at March
31, 1998.
The following table sets forth the Bank's loan receivable and
foreclosed real estate allowance activity for the periods indicated:
<TABLE>
<CAPTION>
1998 1997
--------------------------------
LOANS RECEIVABLE ALLOWANCE (000's)
<S> <C> <C>
Balance, January 1............................. $4,297 $4,390
Provision for loan losses...................... -- 75
Less net charge-offs .......................... 4 11
-------- --------
Balance, March 31, $4,293 $4,454
======== ========
FORECLOSED REAL ESTATE ALLOWANCE (000's)
Balance, January 1 $ 335 $ 235
Provision for losses on foreclosed
real estate -- --
Net charges to the allowance -- --
-------- --------
Balance, March 31, $ 335 $ 235
======== ========
</TABLE>
RESULTS OF OPERATIONS: Three Months Ended March 31, 1998 and 1997
NET OPERATING RESULTS
For the three months ended March 31, 1998, the Company earned
$1,011,000 or $0.20 per diluted share as compared to $895,000 or $0.18
per diluted share for the same period in 1997. There was a $194,000
increase in pre-tax income during the first quarter of 1998 compared
with the year earlier quarter, which was composed of a $281,000
increase in net interest income after provision for loan losses, a
$346,000 increase in other income, and a $433,000 increase in other
expenses.
NET INTEREST INCOME
Net interest income during the quarter ended March 31, 1998 was $4.9
million as compared to $4.7 million during the same period of 1997. The
net interest margin for the quarter ended March 31, 1998 was 3.15% as
compared to 3.12% during the first quarter of 1997. The increase in net
interest income is largely attributable to a $21.6 million increase in
average earning assets and a $5.6 million increase in non-interest
bearing demand deposits during the first quarter of 1998 compared with
the year earlier quarter.
The following table sets forth the weighted average yields earned on
the Company's assets, the weighted average interest rates paid on the
Company's liabilities, and the net yield on average interest earning
assets for the periods indicated. Average balances are determined on a
daily basis and nonperforming loans are included in the average loan
amount (dollars in thousands).
<PAGE>
Page 9
<TABLE>
<CAPTION>
For the Three Months Ended March 31,
----------------------------------------------------------------
1998 1997
----------------------------------------------------------------
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
-------- --------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
Interest earning assets
Loans................................ $471,043 $ 9,983 8.50% $455,322 $ 9,727 8.56%
Mortgage-backed and related
securities......................... 113,526 1,927 6.79% 103,571 1,776 6.86%
Investment securities and other
earning assets..................... 24,132 345 5.79% 28,171 440 6.33%
-------- -------- ------ -------- -------- ------
Total earning assets 608,701 12,255 8.07% 587,064 11,943 8.15%
Non-earning assets..................... 18,574 13,862
-------- --------
Total assets....................... $627,275 $600,926
======== ========
Interest bearing liabilities
Time deposits........................ 259,533 3,631 5.67% 296,981 4,252 5.81%
Interest bearing demand and
other deposits..................... 131,351 1,306 4.02% 100,052 889 3.60%
FHLB advances........................ 149,029 2,228 6.06% 135,727 2,063 6.16%
Other borrowings..................... 16,949 234 5.59% 6,818 89 5.34%
-------- -------- ------ -------- -------- ------
Total interest bearing
liabilities...................... 556,862 7,399 5.38% 539,578 7,293 5.48%
Noninterest bearing liabilities........ 26,609 20,665
-------- --------
Total liabilities...................... 583,471 560,243
Equity................................. 43,804 40,683
-------- --------
Liabilities & equity................... $627,275 $600,926
======== ========
-------- --------
Net interest income.................... $ 4,856 $ 4,650
======== ========
Interest rate spread................... 2.69% 2.67%
====== ======
Net yield on earning assets............ 3.15% 3.12%
====== ======
</TABLE>
OTHER INCOME
Other income during the first quarter of 1998, increased by 44%
compared with the first quarter of 1997. The increase is, in part, due
to a $113,000 increase in retail banking fees, which grew due to a
combination of imposition of ATM surcharges during the second quarter
of 1997, and growth in fee producing commercial deposit accounts during
1997 and the first quarter of 1998. Other income also increased due to
a $209,000 increase in gain on sale of loans originated by the
Company's mortgage banking business. Near record-low interest rates
have caused an increase in refinancing loans closed during 1998. In
addition, the Company's mortgage banking business is benefiting from
increased market share in markets where new and existing home sales
have increased during 1998 compared to 1997. The table below compares
the residential lending production during the quarter ended March 31,
1998 to the same period in 1997 (in thousands):
For the Quarter Ended
March 31,
------------------------------------------
1998 1997 Increase
------------------------------------------
Applications $81,955 $40,074 $ 41,881
Closings 42,705 26,608 16,097
Fundings 35,575 23,770 11,805
Ending Pipeline 70,891 30,327 40,564
<PAGE>
Page 10
OTHER EXPENSE
Other expenses, increased $433,000 or 11% during the first quarter of
1998 as compared to the same period in 1997. Salaries and employee
benefits increased by $378,000 or 20% during the first quarter of 1998
compared with the first quarter of 1997 in line with the 25% increase
in the number of employees which stood at 257 filled positions at March
31, 1998 compared with 206 at March 31, 1997. This increase in human
resources is related to increased lending capacity in both mortgage
banking and non-residential lending lines of business, and the
increased personnel necessary to staff the full-service Williamsburg
branch which opened during the fourth quarter of 1997, and personnel
necessary to staff three supermarket branches which are scheduled to
open during the second quarter of 1998. Net occupancy expense increased
by 14% or $101,000 due in large part to the 22 free standing ATM's in
place at March 31, 1998 compared with five a year earlier. The majority
of other expenses, which totaled $1,130,000 during the first quarter of
1998, were outsourced expenses including mortgage loan servicing
expense of $111,000, data processing service bureau expense of
$238,000, advertising expense of $193,000, and legal, auditing and
examination expenses of $134,000. These expenses were all in line with
the prior year's quarterly expenses.
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY
The Office of Thrift Supervision ("OTS") has established minimum
liquidity requirements for savings associations. These regulations
provide, in part, that the Company maintain daily average balances of
liquid assets equal to a certain percentage of net withdrawable
deposits and current borrowings (payable in one year or less). Current
regulations require a liquidity level of at least 4%. The Bank's
liquidity ratio at March 31, 1998 was 4.5% and exceeded 4% at each
measurement date during the first three months of 1998.
REGULATORY CAPITAL STANDARDS
The OTS has established the regulatory capital requirements for savings
institutions. The following table sets forth the capital position of
the Bank in accordance with the requirements. (dollars in thousands)
<TABLE>
<CAPTION>
Capital Amount as of
Measure March 31, 1998 Requirement Excess
- -----------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Tangible $43,988 7.0% $ 9,465 1.5% $34,523 5.5%
Core 43,988 7.0% 25,239 4.0% 18,749 3.0%
Risk-based 47,760 12.3% 31,115 8.0% 16,645 4.3%
</TABLE>
<PAGE>
Page 11
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Inapplicable
ITEM 2 - CHANGES IN SECURITIES
Inapplicable
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
Inapplicable
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of the Stockholders was held on April 29,
1998. Represented at the meeting in person or by proxy were
the holders of 4,747,651 shares. Entitled to vote were
4,981,874 shares. Results of the items voted on were as
follows:
<TABLE>
<CAPTION>
VOTES
ITEM VOTES FOR WITHHELD
----------------------------- ------------- ----------
1. ELECTION OF DIRECTORS
<S> <C> <C>
Robert H. DeFord, Jr. 4,594,736 152,914
Charles P. Fletcher. 4,594,737 152,913
Rufus S. Kight, Jr. 4,593,242 154,408
George R. C. McGuire 4,594,737 152,913
</TABLE>
<TABLE>
<CAPTION>
VOTES FOR VOTES AGAINST ABSTAIN
--------- ------------- --------
<S> <C> <C> <C>
2. The ratification of the
adoption of the 1998
Stock Option Plan 3,425,106 279,721 48,110
3. The approval of the amendment
to Article I of the Restated
Articles of Incorporation changing
the name of the Corporation
to "First Coastal Bankshares, Inc." 4,709,383 27,873 10,393
</TABLE>
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORT ON FORM 8-K
(a) Exhibits - None
(b) Reports on Form 8-K - None
<PAGE>
Page 12
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.
FIRST COASTAL BANKSHARES, INC.
May 8, 1998 /s/ John A.B. Davies, Jr.
- ----------------- -------------------------
Date John A. B. Davies, Jr.
President/
Chief Executive Officer
May 8, 1998 /s/ Dennis R. Stewart
- ---------------- -------------------------
Date Dennis R. Stewart
Executive Vice President/
Chief Financial Officer
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