<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
Mark One
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended SEPTEMBER 30, 1998
------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to _________
COMMISSION FILE NUMBER: 0-18527
FIRST COMMUNITY BANCORP, INC.
-----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
GEORGIA 58-1869700
- ------------------------------- ------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
827 JOE FRANK HARRIS PARKWAY, S.E. CARTERSVILLE, GA 30120
----------------------------------------------------------
(Address of principal executive offices)
(770) 382-1495
---------------------------
(Issuer's telephone number)
N/A
---------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
----- -----
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by court.
Yes _____ No _____
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of November 11, 1998: 432,339
-------
Transitional Small Business Disclosure Format (Check One) Yes No X
----- -----
<PAGE>
FIRST COMMUNITY BANCORP, INC
AND SUBSIDIARY
================================================================================
INDEX
<TABLE>
<CAPTION>
PAGE
<S> <C> <C>
PART I. FINANCIAL INFORMATION
ITEM 1. CONSOLIDATED BALANCE SHEET (UNAUDITED) - SEPTEMBER 30, 1998............................................ 3
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) - THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1997.......................................................................... 4
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) - NINE MONTHS ENDED
SEPTEMBER 30, 1998 AND 1997.......................................................................... 5-6
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS............................................................. 7-8
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS........................................................................................... 9-16
PART II. OTHER INFORMATION
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.................................................... 17
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K....................................................................... 17
SIGNATURES
</TABLE>
2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
FIRST COMMUNITY BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
SEPTEMBER 30, 1998
(UNAUDITED)
ASSETS
- ------
Cash and due from banks $ 3,263,055
Interest-bearing deposits in banks 3,918,427
Securities available for sale, at fair value 20,065,958
Securities held to maturity, at cost (fair value of $3,515,793) 3,509,543
Loans 72,494,661
Less allowance for loan losses (1,218,160)
-------------
Loans, net 71,276,501
Premises and equipment, net 1,818,271
Other assets 3,237,993
-------------
Total Assets $ 107,089,748
=============
LIABILITIES, REDEEMABLE COMMON STOCK AND STOCKHOLDERS' EQUITY
- -------------------------------------------------------------
Deposits
Noninterest-bearing demand $ 12,079,539
Interest-bearing demand 28,240,199
Savings 4,773,604
Time 48,485,978
-------------
Total deposits 93,579,320
Other liabilities 2,198,319
Other borrowings 2,389,100
-------------
Total liabilities 98,166,739
-------------
COMMITMENTS AND CONTINGENT LIABILITIES
Redeemable common stock held by KSOP, 12,341 shares outstanding
at September 30, 1998, at fair value 156,871
-------------
STOCKHOLDERS' EQUITY
Common stock, par value $1; 10,000,000 shares authorized;
432,339 shares issued 432,339
Capital surplus 3,895,732
Treasury Stock (1,931 shares) (53,909)
Retained earnings 4,326,083
Accumulated other comprehensive income, net of tax 165,923
-------------
Total stockholders' equity 8,766,168
-------------
Total Liabilities and Stockholders' Equity $ 107,089,778
=============
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
3
<PAGE>
FIRST COMMUNITY BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
NINE AND THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED THREE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
---------------------------- -------------------------
1998 1997 1998 1997
------------ ------------ ------------ ----------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans 5,648,405 5,126,589 1,916,785 1,805,499
Interest on taxable securities 764,570 503,092 278,198 152,749
Interest on nontaxable securities 168,117 113,652 55,505 52,529
Interest on deposits in banks 159,937 96,375 74,259 14,551
------------ ------------ ------------ ----------
6,741,029 5,839,708 2,324,747 2,025,328
------------ ------------ ------------ ----------
INTEREST EXPENSE
Interest on deposits 2,763,606 2,144,249 982,151 788,151
Interest on other borrowings 158,474 175,849 37,646 24,028
------------ ------------ ------------ ----------
2,922,080 2,320,098 1,019,797 812,179
------------ ------------ ------------ ----------
Net interest income 3,818,949 3,519,610 1,304,950 1,213,149
PROVISION FOR LOAN LOSSES 225,000 224,893 75,000 75,000
------------ ------------ ------------ ----------
Net interest income after provision for loan
losses 3,593,949 3,294,717 1,229,950 1,138,149
------------ ------------ ------------ ----------
OTHER INCOME
Service charges on deposit accounts 382,072 366,599 134,101 127,344
Gain on sale of loans --- 38,822 --- ---
Other 259,176 147,948 87,530 51,947
------------ ------------ ------------ ----------
641,248 553,369 221,631 179,291
------------ ------------ ------------ ----------
OTHER EXPENSE
Salaries and employee benefits 1,427,378 1,318,882 521,372 463,086
Equipment and occupancy expense 391,565 354,350 128,670 141,022
Other operating expenses 1,087,280 619,505 504,686 182,962
------------ ------------ ------------ ----------
2,906,223 2,292,737 1,154,728 787,070
------------ ------------ ------------ ----------
(Loss) on Sale of Available for Sale Securities (2,045 (9,229) --- ---
------------ ------------ ------------ ----------
Income before income taxes 1,326,929 1,546,120 296,853 530,370
APPLICABLE INCOME TAXES 463,120 558,596 106,619 190,931
------------ ------------ ------------ ----------
Net income 863,809 987,524 190,234 339,439
============ ============ ============ ==========
Other comprehensive income, net of tax
Unrealized gains on securities
available-for-sale arising during period 88,900 42,553 88,107 18,000
------------ ------------ ------------ ----------
Comprehensive income $ 952,709 $1,030,077 $ 278,341 $ 357,439
============ ============ ============ ==========
PER SHARE OF COMMON STOCK
Basic earnings per common share $ 2.01 $ 2.33 $ 0.44 $ 0.80
============ ============ ============ ==========
Diluted earnings per common share $ 1.91 $ 2.31 $ 0.41 $ 0.79
============ ============ ============ ==========
Dividends $ 0.49 --- $ 0.49 ---
============ ============ ============ ==========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
4
<PAGE>
FIRST COMMUNITY BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
<TABLE>
<CAPTION>
1998 1997
---------- ----------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 863,809 $ 987,524
---------- ----------
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 225,000 224,893
Depreciation 190,280 165,018
Amortization and (accretion), net 16,977 16,580
Gain on sale of loans --- (38,822)
Loss on sale of securities 2,045 9,229
(Increase) decrease in other assets (373,983) (591,295)
Increase (decrease) in other liabilities 303,799 256,736
---------- ----------
Total adjustments 364,118 42,339
---------- ----------
Net cash provided by operating activities 1,227,927 1,029,863
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in interest-bearing deposits in bank net (3,206,429) 928,877
Proceeds from maturities of securities available for sale 3,779,882 1,969,814
Proceeds from the sale of securities available for sale 567,253 2,507,923
Purchases of securities available for sale (12,803,323) (5,971,989)
Proceeds from maturities of securities held to maturity 2,750,000 100,000
Purchases of securities held to maturity (300,531) (499,688)
Proceeds from sale of loans --- 509,642
Increase in loans, net (4,905,121) (8,534,422)
Purchase of premises and equipment (244,264) (237,580)
---------- ----------
Net cash used in investing activities (14,362,533) (9,227,423)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net 15,903,249 9,438,273
Proceeds from borrowings, net (902,550) (2,052,550)
Proceeds from stock options exercised 38,977 39,148
Purchase of 1,931 shares of Treasury Stock --- (48,758)
Cash dividends paid (210,800) (841)
---------- ----------
Net cash provided by financing activities 14,828,876 7,375,272
---------- ----------
</TABLE>
5
<PAGE>
FIRST COMMUNITY BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(UNAUDITED)
1997 1996
----------- ----------
Net increase (decrease) in cash and due from banks 1,694,270 (822,288)
Cash and due from banks at beginning of period 1,568,785 3,685,230
----------- -----------
Cash and due from banks at end of period $3,263,055 $2,862,942
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the period for:
Interest $2,878,521 $2,240,711
=========== ===========
Income taxes $ 742,327 $ 629,577
=========== ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Unrealized gains on securities available for sale $ 138,906 $ 65,964
=========== ===========
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
6
<PAGE>
FIRST COMMUNITY BANCORP, INC.
AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
NOTE 1. BASIS OF PRESENTATION
The consolidated financial information included herein is unaudited;
however, such information reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of results for interim
periods.
The results of operations for the three and nine month periods ended
September 30, 1998 are not necessarily indicative of the results to be
expected for the full year.
NOTE 2. EARNINGS PER COMMON SHARE
The following is a reconciliation of net income (the numerator) and
weighted average shares outstanding (the denominator) used in
determining basic and diluted earnings per common share (EPS):
Nine Months Ended September 30, 1998
-------------------------------------------
Net Weighted
Income Average Shares Per Share
(Numerator) (Denominator) Amount
----------- -------------- ---------
Basic EPS $863,809 429,074 $2.01
======
Effect of Dilutive Securities
Stock Options --- 23,849
-------- -------
$863,809 452,923 $1.91
======== ======= ======
Nine Months Ended September 30, 1997
-------------------------------------------
Net Weighted
Income Average Shares Per Share
(Numerator) (Denominator) Amount
----------- -------------- ---------
Basic EPS $987,524 423,364 $2.33
=====
Effect of Dilutive Securities
Stock Options --- 4,995
-------- -------
$987,524 428,359 $2.31
======== ======= =====
7
<PAGE>
Three Months Ended September 30, 1998
-------------------------------------------
Net Weighted
Income Average Shares Per Share
(Numerator) (Denominator) Amount
----------- -------------- ---------
Basic EPS $190,234 432,339 $0.44
=====
Effect of Dilutive Securities
Stock Options --- 23,849
-------- -------
$190,234 456,188 $0.41
======== ======= =====
Three Months Ended September 30, 1998
-------------------------------------------
Net Weighted
Income Average Shares Per Share
(Numerator) (Denominator) Amount
----------- -------------- ---------
Basic EPS $339,439 423,364 $0.80
=====
Effect of Dilutive Securities
Stock Options --- 4,995
-------- -------
$339,439 428,359 $0.79
======== ======= =====
NOTE 3. CURRENT ACCOUNTING DEVELOPMENTS
The adoption of the provisions of SFAS No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities" that became effective on January 1, 1998 did not have a
material effect on the Company's financial statements.
The adoption of SFAS No. 130, "Reporting Comprehensive Income", that
became effective on January 1, 1998 required the Company to report
comprehensive income in the Company's Statements of Income and
Comprehensive Income.
There are no other recent accounting pronouncements that have had, or
are expected to have, a material effect on the Company's financial
statements.
NOTE 4 DECLARATION OF CASH DIVIDEND
The Board of Directors declared a $210,800 or $.49 per share cash
dividend on August 24, 1998 for shareholders of record as of August
25, 1998 to be paid on September 4, 1998.
8
<PAGE>
FIRST COMMUNITY BANCORP, INC.
AND SUBSIDIARY
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
INTRODUCTION
The following is a discussion of the Company's financial condition at September
30, 1998 compared to December 31, 1997 and the results of its operations for the
three and nine months ended September 30, 1998 compared to the three and nine
month periods ended September 30, 1997. These comments should be read in
conjunction with the financial statements and related notes appearing elsewhere
in this report.
FINANCIAL CONDITION
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, INCREASE (DECREASE)
---------------------------------------
1998 1997 AMOUNT PERCENT
----------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Total Assets $107,089,748 $90,951,775 $16,137,973 17.74%
Loans $ 72,494,661 $67,506,857 $ 4,987,804 7.39%
Securities $ 23,575,501 $17,545,330 $ 6,030,171 34.37%
Interest-bearing bank balances $ 3,918,427 $ 711,998 $ 3,206,429 450.34%
</TABLE>
Changes in total assets and the major categories of assets are shown in the
table above. The increase in loans is due to a continuing increase in loan
demand throughout the year, and principally in residential construction and
development loans. The increase in the securities portfolio is due to the
purchase of U. S. Government Agency and School, County and Municipal Securities.
Deposits, as shown in another schedule, have outpaced the growth in loan demand.
Thus, the significant growth in securities. The decrease in interest-bearing
bank balances is also directly related to the utilization of funds to purchase
securities and generate loans.
The majority of the loans originated in the three and nine month periods ending
September 30, 1998 are primarily short-term maturities of six months to one year
or contain variable interest rates with terms from 1 to 3 years or less. The
following table presents scheduled repricing of the Company's loans at September
30, 1998.
<TABLE>
<CAPTION>
WITHIN 1 TO 5 AFTER
1 YEAR YEARS 5 YEARS TOTAL
--------------- --------------- ---------------
(DOLLARS IN THOUSANDS)
--------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Variable interest rates $ 23,813 $ 4,084 $ $ 27,897
Fixed interest rates 11,551 31,140 1,907 44,598
--------------- --------------- --------------- ---------------
Total $ 35,364 $ 35,224 $ 1,907 $ 72,495
=============== =============== =============== ===============
</TABLE>
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31, INCREASE (DECREASE)
-----------------------------------
1998 1997 AMOUNT PERCENT
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Total deposits $93,579,290 $77,676,041 $15,903,249 20.47%
Other borrowings $ 2,389,100 $ 3,291,650 ($902,550) -27.42%
Certificates of deposit over
$100,000 (included in total
deposits above) $14,055,285 $10,932,354 $ 3,122,931 28.57%
</TABLE>
The $15,903,249 increase in deposits included a $3,122,931 increase in
certificates of deposit over $100,000. The deposit growth has resulted from
continuing growth in the Bartow County and Cartersville areas accompanied by the
location of new retail and other businesses to the area. Competitive rates are
paid on deposits but not above the local market.
The decrease in other borrowings was due entirely to pay down of advances from
The Federal Home Loan Bank of Atlanta. The increase in deposits was used to
fund the continued strong loan demand.
The Company's ratio of loans to deposits at September 30, 1998 was 77.47% as
compared to 86.91% at December 31, 1997 and the decrease is primarily due to
stronger growth in deposits compared to loans during 1998.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Liquidity, as defined by net cash, short-term investments and other marketable
investments as a percent of deposits, was 19.50% at September 30, 1998, and is
considered adequate. The Company has an $10,000,000 line of credit with the
Federal Home Loan Bank of which $2,389,100 has been advanced, a $1,750,000
unsecured line of credit with correspondent banks and a security repurchase
agreement available with a correspondent bank. This repurchase agreement line
must be collateralized at 110% with available, unpledged investment securities.
At September 30, there was approximately $8,146,760 available using this
repurchase agreement. These lines are available should liquidity needs
increase.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
The following summarizes the cumulative interest sensitivity position of the
Company at September 30, 1998.
<TABLE>
<CAPTION>
TIME HORIZON
-------------------------------------------------------
MONTHS
-------------------------------------------------------
0 TO 3 0 TO 12 0 TO 60 TOTAL
------------------ -------------- -------------- --------------
(DOLLARS IN THOUSANDS)
-----------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest sensitive assets $ 35,655 $ 45,571 $ 88,043 $ 99,582
Interest sensitive liabilities 42,425 65,773 83,889 83,889
-------------- -------------- -------------- --------------
Assets less liabilities $ -6,770 $ -20,202 $ 4,154 $ 15,693
============== ============== ============== ==============
Ratio:
Interest sensitive assets to
interest sensitive
liabilities 0.84 0.69 1.05 1.19
============== ============== ============== ==============
</TABLE>
The current interest sensitivity position indicates a similiar match of
interest-sensitive assets and interest-sensitive liabilities, particularly in
the five year time horizon. Increases or decreases in interest rates should
have little effect on the Company's net interest margin.
CAPITAL RESOURCES
The minimum capital requirements for banks and bank holding companies require a
leverage capital to total assets ratio of at least 3%, core capital to total
assets ratio of at least 4% and total risk-based capital to total adjusted
assets ratio of 8%.
Selected financial information relating to the Company's minimum capital
requirements at September 30, 1998 is as follows:
PERCENT
----------------
Leverage capital ratio 8.19%
Core capital ratio 11.36%
Risk-based capital ratio 12.60%
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS (CONTINUED)
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30,1998 AND 1997
<TABLE>
<CAPTION>
THREE MONTHS ENDED INCREASE (DECREASE)
SEPTEMBER 30 ---------------------------------
1998 1997 AMOUNT PERCENT
------------- ------------- ------------- -------------
<S> <C> <C> <C> <C>
Total interest income $ 2,324,747 $ 2,025,328 $ 299,419 14.78%
Total interest expense 1,019,797 812,178 207,619 25.56%
Net interest income 1,304,950 1,213,150 91,800 7.57%
Provision for loan losses 75,000 75,000 0 0.00%
Other operating income 221,631 179,291 42,340 23.62%
Other operating expenses 1,154,728 787,071 367,657 46.71%
Provision for income taxes 106,619 190,931 -84,312 -44.16%
Net income 190,234 339,439 -149,205 -43.96%
</TABLE>
The increase in total interest income was due to the increased volume of
interest-earning assets, principally loans and investments. Total interest
expense for the same period increased as indicated in the above table primarily
due to the increase in deposits. The resulting increase in net interest margin
is due primarily to the stated growth in the securities portfolio and growth in
the loan portfolio. The loan to deposit ratio was 77.47% at September 30, 1998
compared to 83.45% at September 30, 1997. Since the majority of new deposits
were invested in securities instead of loans, the yield on earning assets has
decreased to 9.21% compared to 9.52% at the end of September 1998 and 10.34% in
September 1997.
The provision for loan losses is the charge to operating earnings that
management feels is necessary to maintain an adequate allowance for loan losses.
It is based on the growth of the loan portfolio, the amount of net loan losses
incurred and management's estimate of potential future loan losses based on an
evaluation of loan portfolio risks and certain economic factors. The provision
for loan losses was unchanged for the three month period ended September 30,
1998 as compared to the same period in 1997. The loan loss reserve as a
percentage of total loans was 1.68% and 1.72% at September 30, 1998 and
September 30, 1997, respectively. There were no non performing loans as of
Septembeer 30, 1998. However, other real estate owned totalled $173,761 as of
September 30, 1998 and management believes that the allowance for loan losses is
adequate to absorb anticipated loan losses.
The $42,340 or 23.62% increase in other operating income is due primarily to the
stated growth in deposit accounts.
12
<PAGE>
The increase of other operating expenses for the three month period ending
September 30, 1998 as compared to the comparable period in 1997 as shown in the
preceding table resulted primarily from the increase in personnel and other
expenses necessary to service an increasing deposit and loan customer base
including additional staffing in the mortgage origination and servicing areas.
Additionally, expenses pertaining to the merger with National Commerce
Bancorporation totalled $203,168 during the quarter.
The decrease in income taxes shown in the preceding table resulted primarily
from decreased net income before taxes for the three month period ended
September 30, 1998 as compared to the similar period in 1997. The effective tax
rate was 35.92% and 35.99%, respectively, for the three month periods ended
September 30, 1998 and 1997.
Net income for the three month period ended September 30, 1998 as compared to
the same period in 1997 decreased $149,205 or 43.96% primarily due to the
aforementioned merger expenses.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Results of Operations For The Nine Months Ended September 30,1998 and 1997
NINE MONTHS ENDED INCREASE (DECREASE)
SEPTEMBER 30 ----------------------
1997 1996 AMOUNT PERCENT
---------- ---------- --------- -------
Total interest income $6,741,029 $5,839,707 $ 901,322 15.43%
Total interest expense 2,922,080 2,320,098 601,982 25.95%
Net interest income 3,818,949 3,519,609 299,340 8.50%
Provision for loan losses 225,000 224,893 107 0.04%
Other operating income 641,248 553,370 87,878 15.88%
Other operating expenses 2,906,223 2,292,737 613,486 26.76%
Loss on Sale of AFS Securities (2,045) (9,229) 7,184 -77.84%
Provision for income taxes 463,120 558,596 (95,476) -17.09%
Net income 863,809 987,523 (123,714) -12.53%
The increase in total interest income was due to the increased volume of
interest-earning assets, principally loans and securities. Total interest
expense for the same period increased as indicated in the above table primarily
due to the increase in interest bearing deposits. The resulting increase in net
interest margin is due primarily to the stated growth in the securities
portfolio and growth in the loan portfolio. The loan to deposit ratio was
77.47% at September 30, 1998 compared to 83.45% at September 30, 1997. At
December 31, 1997, the loan to deposit ratio was 86.91%. Since the majority of
new deposits were invested in securities instead of loans, the yield on earning
assets has decreased to 9.21% compared to 9.52% at the end of September 1998 and
10.34% in September 1997 and 9.90% in December 1997.
The provision for loan losses was virtually unchanged for the nine month period
ended September 30, 1998 as compared to the same period in 1997.
The $87,878 or 15.88% increase in other operating income is the net result of a
general increase service charge income on deposit accounts.
The increase of other operating expenses for the nine month period ending
September 30, 1998 as compared to the comparable period in 1997 as shown in the
preceding table resulted primarily from the increase in personnel and other
expenses necessary to service an increasing deposit and loan customer base
including additional staffing in the mortgage origination areas. Additionally,
expenses pertaining to the merger with National Commerce Bancorporation totalled
$239,236.
14
<PAGE>
The decrease in income taxes shown in the preceding table resulted primarily
from increased net income before taxes in 1998 as compared to the similar period
in 1997. The effective tax rate was 34.90% and 36.13%, respectively, for the
nine month periods ended September 30, 1998 and 1997.
Net income for the nine month period ended September 30, 1997 as compared to the
same period in 1996 decreased $123,714 or 12.53%. The primary reasons are
decreased interest margins, decreased loan to deposit ratio and the
aforementioned merger expenses.
CAUTIONARY NOTICE REGARDING FORWARD-LOOKING STATEMENTS
Except for the historical information contained in this Report, the matters
reflected or discussed in this Report which relate to the Company's beliefs,
expectations, plans, future estimates and the like are forward-looking
statements within the meaning of Section 27A of the Securities Act of 1933, as
amended, and Section 21E of the Securities Exchange Act of 1934, as amended.
Such forward-looking statements are not guarantees of future performance and are
subject to risks, uncertainties and other factors that may cause the actual
results, performance or achievements of the Company to differ materially from
historcial results or from any results expressed or implied by such forward-
looking statements. Such factors include, without limitation, general economic
conditions, governmental monetary and fiscal policies, deposit management, the
effects of competition in the banking business, changes in government regulation
relating to the banking industry, the rate of growth in Bartow County and the
Cartersville areas, the proposed merger with National Commerce Bancorporation
and other factors discussed in this report, the Company's Report on Form 10-KSB
for the year ended December 31, 1997 and other filings by the Company with the
Securities and Exchange Commission. Many of such factors are beyond the
Company's ability to control or perdict, and readers are cautioned not to put
undue reliance on such forward-looking statements. The Company disclaims any
obligation to update or review any forward-looking statements contained in this
Report or in any statement referencing this Report, whether as a result of new
information, future events or otherwise.
YEAR 2000 COMPLIANCE
The Year 2000 issue refers generally to the data structure problem that will
prevent certain systems from properly recognizing dates after the year 1999.
For example, computer programs and various types of electronic equipment that
process date information by reference to two digits rather than four to define
the applicable year may recognize a date using "00" as the year 1900 rather than
the year 2000. The Year 2000 problem could result in system failures or
miscalculations causing disruptions of operations. The Year 2000 problem may
occur in computer chip if that chip relies on date information.
In preparation for January 1, 2000, the Company has implemented a Company-wide
program to prepare its computer systems and applications for the year 2000. The
Company's plans include necessary reviews of vendors, customers, third party
processors and other external parties with whom the Company conducts business.
The Company is incurring internal staff costs as well as
15
<PAGE>
consulting and other expenses related to the execution of th implementation
plan. A portion of these expenses may be in the cost of normal software upgrades
and involve the redeployment of existing information technology resources.
Presently, management has not yet completely determined the year 2000
implementation costs, but such costs are not expected to have a material
financial impact on the Company's business, financial condition or results of
operation. Management has not yet completely determined what effect, if any, the
proposed merger with National Commerce Bancorporation will have on year 2000
compliance issues.
16
<PAGE>
FIRST COMMUNITY BANCORP, INC.
AND SUBSIDIARY
PART II. OTHER INFORMATION
ITEM 4.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The shareholders approved, by the vote indicated a motion to accept, effective
November 1, 1998, the definitive merger agreement between the Company and
National Commerce Bancorporation. The plan for merger and acquisition was
approved by a quorum of First Community Bancorp, Inc. shareholders at a special
shareholders' meeting held on October 21, 1998. Of the 313,156 shares
represented (72.43% of total outstanding), 312,646 shares (99.84%) voted in
favor of the plan of merger, 153 shares (0.05%) voted against and 357 shares
(0.11%) abstained from voting.
ITEM 6.
(a) Exhibits filed in accordance with Item 601 of Regulation S-K.
27. Financial Data Schedule.
(b) The Company has not filed any reports on Form 8-K with the
Securities and Exchange Commission during the nine months ended
September 30,1998.
17
<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.
FIRST COMMUNITY BANCORP, INC.
BY: /s/ J. Steven Walraven
-----------------------------------------------
J. Steven Walraven
President and Chief Executive Officer
(Principal Executive Officer)
DATE:
---------------------------------------------
BY: /s/ Danny F. Dukes
-----------------------------------------------
Danny F. Dukes
Vice President, Chief Financial and
Operations Officer
DATE:
---------------------------------------------
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