<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 June 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 August 11, 1998: 432,339
--------
Transitional Small Business Disclosure Format (Check One) Yes No X
--- ---
<PAGE>
FIRST COMMUNITY BANCORP, INC
AND SUBSIDIARY
- --------------------------------------------------------------------------------
INDEX
-----
Page
PART I. FINANCIAL INFORMATION ----
Item 1. Consolidated Balance Sheet - June 30, 1998................3
Consolidated Statements of Income - Three and
Six Months Ended June 30, 1998 and 1997................4
Consolidated Statements of Cash Flows - Six Months
Ended June 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 5. Merger....................................................17
Item 6. Exhibits and Reports on Form 8-K..........................18
Signatures
2
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
FIRST COMMUNITY BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED BALANCE SHEET
JUNE 30, 1998
(Unaudited)
<TABLE>
<CAPTION>
Assets
- ------
<S> <C>
Cash and due from banks $ 3,223,951
Interest-bearing deposits in banks 410,767
Securities available for sale, at fair value 20,640,056
Securities held to maturity, at cost (fair value of $5,259,716) 5,259,349
Loans 69,747,617
Less allowance for loan losses (1,213,585)
------------
Loans, net 68,534,032
Premises and equipment, net 1,876,583
Other assets 3,040,468
------------
Total assets $102,985,206
============
Liabilities and Stockholders' Equity
- ------------------------------------
Deposits
Noninterest-bearing demand $ 12,979,429
Interest-bearing demand 20,406,997
Savings 4,938,298
Time 50,692,717
------------
Total deposits 89,017,441
Other liabilities 1,849,017
Other borrowings 3,263,250
------------
Total liabilities 94,129,708
------------
Commitments and contingent liabilities
Redeemable common stock held by KSOP, 12,341 shares 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 (2,135 shares) (53,909)
Retained earnings 4,346,649
Unrealized gains on securities available for sale,
net of taxes 77,816
------------
Total stockholders' equity 8,698,627
------------
Total liabilities and stockholders' equity $102,985,206
============
See Notes to Consolidated Financial Statements.
</TABLE>
3
<PAGE>
FIRST COMMUNITY BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
SIX AND THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
---------------------------- ---------------------------
1998 1997 1998 1997
-------------- ------------ ------------- ------------
<S> <C> <C> <C> <C>
Interest income
Interest and fees on loans $3,731,620 $3,321,090 $1,869,899 $1,737,070
Interest on taxable securities 486,372 350,343 286,446 172,324
Interest on nontaxable securities 112,612 61,123 58,115 36,124
Interest on deposits in banks 85,678 81,824 49,764 40,353
---------- ---------- ---------- ----------
Total interest income 4,416,282 3,814,380 2,264,224 1,985,871
---------- ---------- ---------- ----------
Interest expense
Interest on deposits 1,781,455 1,356,099 937,274 706,142
Interest on other borrowings 120,828 151,821 45,931 76,177
---------- ---------- ---------- ----------
Total interest expense 1,902,283 1,507,920 983,205 782,319
---------- ---------- ---------- ----------
Net interest income 2,513,999 2,306,460 1,281,019 1,203,552
Provision for loan losses 150,000 149,893 75,000 74,893
---------- ---------- ---------- ----------
Net interest income after provision for loan
losses 2,363,999 2,156,567 1,206,019 1,128,659
---------- ---------- ---------- ----------
Other income
Service charges on deposit accounts 247,971 239,255 130,700 120,921
Gain on sale of loans --- 38,822 --- ---
Other 171,646 96,002 77,900 28,293
---------- ---------- ---------- ----------
Total other income 419,617 374,079 208,600 149,214
---------- ---------- ---------- ----------
Other expense
Salaries and employee benefits 906,006 855,796 467,528 412,176
Equipment and occupancy expense 262,895 213,328 133,545 111,564
Other operating expenses 582,594 436,543 318,721 215,985
---------- ---------- ---------- ----------
Total other expense 1,751,495 1,505,667 919,794 739,725
---------- ---------- ---------- ----------
(Loss) on sale of available for sale securities (2,045) (9,229) (2,045) (9,229)
---------- ---------- ---------- ----------
Income before income taxes 1,030,076 1,015,750 492,780 528,919
Applicable income taxes 356,501 367,665 176,735 190,377
---------- ---------- ---------- ----------
Net income 673,575 648,085 316,045 338,542
========== ========== ========== ==========
Other comprehensive income, net of tax
Unrealized gains (losses) on securities
available-for-sale arising during period 793 14,163 7,010 12,452
---------- ---------- ---------- ----------
Comprehensive Income $ 674,368 $ 662,248 $ 323,055 $ 350,994
========== ========== ========== ==========
Per share of common stock
Basic earnings per common share $1.58 $1.53 $0.74 $0.80
========== ========== ========== ==========
Diluted earnings per common share $1.50 $1.51 $0.70 $0.79
========== ========== ========== ==========
Dividends --- --- --- ---
========== ========== ========== ==========
</TABLE>
See Notes to Consolidated Financial Statements.
4
<PAGE>
FIRST COMMUNITY BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------ -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 673,575 $ 648,085
------------ ------------
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 150,000 149,893
Depreciation 126,171 111,204
Amortization and (accretion), net 11,318 12,175
Gain on sale of loans --- (38,822)
Loss on sale of securities 2,045 9,229
(Increase) decrease in other assets (176,458) (524,682)
Increase (decrease) in other liabilities (45,502) 275,954
----------- ------------
Total adjustments 67,574 (5,049)
----------- ------------
Net cash provided by operating activities 741,149 643,036
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Decrease in interest-bearing deposits in bank, net (301,231) 2,846,681
Proceeds from maturities of securities available for sale 3,068,623 958,584
Proceeds from the sale of securities available for sale 567,253 2,507,923
Purchases of securities available for sale (12,072,242) (4,499,108)
Proceeds from maturities of securities held to maturity 1,000,000 ---
Purchase of securities held to maturity (300,531) ---
Proceeds from sale of loans --- 509,642
Increase in loans, net (2,162,652) (6,684,387)
Purchase of premises and equipment (237,180) (209,818)
----------- ------------
Net cash used in investing activities (10,437,960) (4,570,483)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase in deposits, net 11,341,400 5,326,822
Proceeds from borrowings, net (28,400) (1,528,400)
Proceeds from stock options exercised 38,977 37,057
Cash dividends paid --- (841)
----------- ------------
Net cash provided by financing activities 11,351,977 3,834,638
----------- ------------
</TABLE>
5
<PAGE>
FIRST COMMUNITY BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
<TABLE>
<CAPTION>
1998 1997
------------- -----------
<S> <C> <C>
Net increase (decrease) in cash and due from banks 1,655,166 (92,809)
Cash and due from banks at beginning of period 1,568,785 3,685,230
------------ -----------
Cash and due from banks at end of period $3,223,951 $3,592,421
============ ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW
INFORMATION
Cash paid during the period for:
Interest $1,522,539 $1,352,267
============ ===========
Income taxes $ 402,690 $ 512,254
============ ===========
SUPPLEMENTAL DISCLOSURE OF NONCASH
INVESTING AND FINANCING ACTIVITIES
Unrealized gains on securities available for sale $ 1,239 $ 22,129
============ ===========
See Notes to Consolidated Financial Statements.
</TABLE>
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 six month periods ended
June 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):
<TABLE>
<CAPTION>
Six Months Ended June 30, 1998
-----------------------------------------------------------------
Net Weighted Average
Income Shares Per Share
(Numerator) (Denominator) Amount
----------------- -------------------- -----------------
<S> <C> <C> <C>
Basic EPS $673,575 426,504 $1.58
=================
Effect of Dilutive Securities
Stock Options --- 23,849
----------------- --------------------
$673,575 450,353 $1.50
================= ==================== =================
Six Months Ended June 30, 1997
-----------------------------------------------------------------
Net Weighted Average
Income Shares Per Share
(Numerator) (Denominator) Amount
----------------- -------------------- -----------------
Basic EPS $648,085 423,364 $1.53
=================
Effect of Dilutive Securities
Stock Options --- 4,995
----------------- --------------------
$648,085 428,359 $1.51
================= ==================== =================
</TABLE>
7
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended June 30, 1998
-----------------------------------------------------------------
Net Weighted Average
Income Shares Per Share
(Numerator) (Denominator) Amount
----------------- -------------------- -----------------
<S> <C> <C> <C>
Basic EPS $316,045 426,504 $0.74
=================
Effect of Dilutive Securities
Stock Options --- 23,849
----------------- --------------------
$316,045 450,353 $0.70
================= ==================== =================
Three Months Ended June 30, 1997
-----------------------------------------------------------------
Net Weighted Average
Income Shares Per Share
(Numerator) (Denominator) Amount
----------------- -------------------- -----------------
Basic EPS $338,542 423,364 $0.80
=================
Effect of Dilutive Securities
Stock Options --- 4,995
----------------- --------------------
$338,542 428,359 $0.79
================= ==================== =================
</TABLE>
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.
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 June 30,
1998 compared to December 31, 1997 and the results of its operations for the
three and six months ended June 30, 1998 compared to the three and six month
periods ended June 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>
June 30, December 31, Increase (Decrease)
----------------------------------------
1998 1997 Amount Percent
-------------------- ----------------- ----------------- -----------------
<S> <C> <C> <C> <C>
Total Assets $102,985,206 $90,951,775 $12,033,431 13.23%
Loans $ 69,747,617 $67,506,857 $ 2,240,760 3.32%
Securities $ 25,899,405 $17,545,330 $ 8,354,075 47.61%
Interest-bearing bank balances $ 410,767 $ 711,998 ($301,231) (42.31)%
</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 six month periods ending
June 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 June 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 $ 25,789 $ 4,147 $ --- $ 29,936
Fixed interest rates 11,775 27,234 803 39,812
--------------- --------------- --------------- ---------------
Total $ 37,564 $ 31,381 $ 803 $ 69,748
=============== =============== =============== ===============
</TABLE>
9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
<TABLE>
<CAPTION>
Increase (Decrease)
June 30, December 31, ----------------------------------
1998 1997 Amount Percent
--------------- --------------- --------------- ---------------
<S> <C> <C> <C> <C>
Total deposits $89,017,441 $77,676,041 $11,341,400 14.60%
Other borrowings $ 3,263,250 $ 3,291,650 ($28,400) (0.86)%
Certificates of deposit over
$100,000 (included in total
deposits above) $14,754,266 $10,932,354 $ 3,821,912 34.96%
</TABLE>
The $11,341,400 increase in deposits included a $3,821,912 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, primarily
certificates of deposit less than $100,000, was used to fund the continued loan
demand and securities purchases.
The Company's ratio of loans to deposits at June 30, 1998 was 78.35% as compared
to 86.91% at December 31, 1997 and the decrease is primarily due to strong
deposit growth coupled with unanticipated loan payoffs and slower than expected
loan demand.
Liquidity and Interest Rate Sensitivity
- ---------------------------------------
Liquidity, as defined by net cash, short-term investments and other marketable
investments as a percent of deposits, was 28.10% at June 30, 1998, and is
considered adequate for the short-term and the foreseeable future. The Company
has a $10,000,000 line of credit with the Federal Home Loan Bank of which
$3,820,050 has been advanced, a $3,750,000 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 June 30, there was
approximately $17,936,104 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 June 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 $ 34,478 $ 46,057 $ 84,884 $ 95,651
Interest sensitive liabilities 34,409 58,898 79,301 79,301
-------------- -------------- -------------- --------------
Assets less liabilities $ 69 $ (12,841) $ 5,583 $ 16,350
============== ============== ============== ==============
Ratio:
Interest sensitive assets to
interest sensitive liabilities 1.00 0.78 1.07 1.21
============== ============== ============== ==============
</TABLE>
The current interest sensitivity position indicates a close 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 June 30, 1998 is as follows:
Percent
-------------------
Leverage capital ratio 8.45%
Core capital ratio 11.94%
Risk-based capital ratio 13.19%
11
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations For The Three Months Ended June 30,1998 and 1997
- ----------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended Increase (Decrease)
June 30 --------------------------------------
1998 1997 Amount Percent
------------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Total interest income $ 2,264,224 $ 1,985,871 $ 278,353 14.02%
Total interest expense 983,205 782,319 200,886 25.68%
Net interest income 1,281,019 1,203,552 77,467 6.44%
Provision for loan losses 75,000 74,893 107 0.14%
Other operating income 208,600 149,214 59,386 39.80%
Other operating expenses 919,794 739,725 180,069 24.34%
Loss on sale of AFS Securities (2,045) (9,229) 7,184 (0.78)%
Provision for income taxes 176,735 190,377 (13,642) (7.17)%
Net income 316,045 338,542 (22,497) (6.65)%
</TABLE>
The increase in total interest income was due to the increased volume of
interest-earning assets, principally securities. Total interest expense for the
same period increased as indicated in the above table primarily due to the
increase in time 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 78.35% at June 30, 1998 compared
to 85.73 at June 30, 1997. Since the majority of new deposits were invested in
securities instead of loans, the yield on earning assets has decreased to 9.69%
compared to 9.87% at the end of March 1998 and 10.18% in June 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 virtually unchanged for the three month period ended June 30,
1998 as compared to the same period in 1997. The loan loss reserve as a
percentage of total loans was 1.74% and 1.70% at June 30, 1998 and June 30,
1997, respectively. There were no non performing loans as June 30, 1998 and
management believes that the allowance for loan losses is adequate to absorb
anticipated loan losses.
The $59,586 or 39.80% increase in other operating income. The majority of this
increase is due to increased activity in mortgage loan originations. These
originations are sold to a third party and not carried in the company's loan
portfolio.
12
<PAGE>
The increase of other operating expenses for the three month period ending June
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 accounts receivable
factoring and servicing areas.
The $2,045 loss on sale of available for sale (AFS) securities was incurred to
increase the overall yield on investments by selling these lower yielding
securities during a bond market rally. Reinvestment of these proceeds will
recapture this loss in less than six months. In 1997, a similar strategy was
used.
The decrease in income taxes shown in the preceding table resulted primarily
from decreased net income before taxes for the three month period ended June 30,
1998 as compared to the similar period in 1997. The effective tax rate was
35.86% and 35.99%, respectively, for the three month periods ended June 30, 1998
and 1997.
Net income for the three month period ended June 30, 1998 as compared to the
same period in 1997 decreased $22,497 or 6.65%.
13
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (Continued)
Results of Operations For The Six Months Ended June 30,1998 and 1997
- --------------------------------------------------------------------
<TABLE>
<CAPTION>
Six Months Ended Increase (Decrease)
June 30 ------------------------------------
1998 1997 Amount Percent
------------------- -------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Total interest income $ 4,416,282 $ 3,814,380 $ 601,902 15.78%
Total interest expense 1,902,283 1,507,920 394,363 26.15%
Net interest income 2,513,999 2,306,460 207,539 9.00%
Provision for loan losses 150,000 149,893 107 0.07%
Other operating income 419,617 374,079 45,538 12.17%
Other operating expenses 1,751,495 1,505,667 245,828 16.33%
Loss on Sale of AFS Securities (2,045) (9,229) 7,184 (77.84)%
Provision for income taxes 356,501 367,665 (11,164) (3.04)%
Net income 673,575 648,084 25,491 3.93%
</TABLE>
The increase in total interest income was due to the increased volume of
interest-earning assets, principally securities. Total interest expense for the
same period increased as indicated in the above table primarily due to the
increase in time 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 78.35% at June 30, 1998 compared
to 85.73 at June 30, 1997. Since the majority of new deposits were invested in
securities instead of loans, the yield on earning assets has decreased to 9.69%
in June 1998 compared to 10.18% in June 1997.
The provision for loan losses was virtually unchanged for the six month period
ended June 30, 1998 as compared to the same period in 1997.
The $45,538 or 12.17% increase in other operating income is due to increased
activity in mortgage loan originations. These originations are sold to a third
party and not carried in the company's loan portfolio.
The increase of other operating expenses for the six month period ending June
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 accounts receivable
factoring and servicing areas.
14
<PAGE>
The decrease in income taxes shown in the preceding table resulted primarily
from the effect of carrying tax free investments for the entire six months of
1998 compared to less than three months in 1997. The effective tax rate was
34.61% and 36.20%, respectively, for the six month periods ended June 30, 1998
and 1997.
Net income for the six month period ended June 30, 1998 as compared to the same
period in 1997 increased $25,491 or 3.93%. The primary reasons are increased
volume of earning assets, increased activity in the mortgage origination area
and the lower effective tax rate.
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 consulting and other
expenses related to the execution of th implementation plan. A portion of
15
<PAGE>
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 Company's annual meeting was held on May 20, 1998. Notice of the annual
meeting was mailed April 10, 1998 to each stockholder of record as of April 9,
1998. At the 1998 annual meeting, the shareholders voted to approve the
following proposals.
Proposal I
- ----------
The shareholders approved, by the vote indicated a motion to elect the Class III
Board of Directors for 1998 consisting of J. Steven Walraven, Terry N. Tumlin,
DMD, Lewis Ross Whatley, III, MD, and Earl Williamson, Jr., CPA.
SHAREHOLDER VOTES
-----------------
DIRECTOR FOR AGAINST
-------- --- -------
J. Steven Walraven 284,951 6,765
Terry N. Tumlin, DMD 284,951 6,765
Lewis Ross Whatley, III, MD 284,951 6,765
Earl Williamson, Jr., CPA 284,951 6,765
Other directors whose terms of office as directors continue after the meeting
are C. Gregory Culverhouse, Jack Foumier, Fareed Z. Kadum, M.D., Sammy L. Neal,
H. Boyd Pettit, III, D. Arnold Tillman, Jr., MD, Terry N. Tumlin, J. Steven
Walraven, L. Ross Watley, III, Earl Williamson, Jr.
ITEM 5.
On April 17, 1998, the Company announced that it had entered into a Letter
of Intent regarding the proposed merger with National Commerce Bancorporation
("NCBC"). The Letter of Intent provides for the Company to exchange all of its
outstanding stock on a fully diluted basis in a tax-free exchange for shares of
NCBC common stock having a market value of $33,000,000 based on an average
closing price for the five day period from April 3, 1998 to April 9, 1998. On
August 7, 1998, the Company entered into a definitive agreement providing for
the merger with NCBC. The consummation of the proposed merger is subject to
certain conditions which must be satisfied prior to closing, including the
execution of a definitive agreement and shareholder and regulatory approval.
17
<PAGE>
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 three months ended
June 30, 1998.
18
<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: August 13, 1998
-----------------------------
BY: /s/ Danny F. Dukes
--------------------------------
Danny F. Dukes
Vice President, Chief Financial and
Operations Officer
DATE: August 13, 1998
-----------------------------
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