SECURITIES AND EXCHANGE COMMISSION
450 FIFTH STREET
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 the Quarterly Period Ended: March 31, 1996
_TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from: ______________ to ___________________
Commission File Number: 0-19297
FCFT, INC.
(Exact name of registrant as specified in its charter)
Delaware 55-0694814
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1001 Mercer Street, Princeton, West Virginia, 24740
(Address of principal executive offices) (Zip Code)
(304) 487-9000
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1)
has filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter
period that the Registrant was required to file such
reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No _
Indicate the number of shares outstanding of each
of the issuer's classes of common stock, as of the
latest practicable date.
Class Outstanding at April 30, 1996
Common Stock, $5 Par Value 4,215,239
<PAGE>
<TABLE>
PART 1. ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Amounts in Thousands)
<CAPTION>
March 31 December 31
1996 1995
<S> <C> <C>
Assets
Cash and due from banks $22,735 $22,146
Federal funds sold 0 810
Securities available for sale (amortized cost of
$109,950 March 31, 1996; $110,989
December 31, 1995) 109,978 111,606
Investment securities, at amortized cost:
U.S. Treasury securities 14,208 16,214
U.S. Government agencies and corporations 49,653 55,193
States and political subdivisions 46,452 46,444
Other securities 1,056 1,055
______ _______
Total investment securities (market
values; $115,287 March 31, 1996;
$120,277 December 31, 1995) 111,369 118,906
Total loans, net of unearned income 472,352 456,788
Less: reserve for possible loan losses 8,194 8,038
______ ______
Net loans 464,158 448,750
Premises and equipment, net 11,320 11,554
Interest receivable 5,653 6,218
Other assets 12,203 11,408
______ ______
Total Assets $737,416 $731,398
====== ======
Liabilities
Deposits, non-interest bearing $77,751 $81,352
Deposits, interest-bearing 496,651 496,495
_______ _______
Total deposits 574,402 577,847
Interest, taxes and other liabilities 12,114 11,604
Federal funds purchased 8,691 0
Securities sold under agreement to repurchase 48,749 50,205
Other indebtedness 15,133 15,136
_______ _______
Total Liabilities $659,089 $654,792
_______ _______
Stockholders' Equity
Common stock, $5 par value; 10,000,000 shares
authorized; 4,341,266 issued in 1996 and 1995;
4,215,239 and 4,212,108 shares outstanding
in 1996 and 1995, respectively 21,706 21,706
Additional paid-in capital 20,192 20,192
Retained earnings 38,971 36,978
Treasury stock, at cost (2,559) (2,646)
Unrealized gain on securities available for sale 17 376
_______ _______
Total Stockholders' Equity 78,327 76,606
_______ _______
Total Liabilities and Stockholders' Equity $737,416 $731,398
====== ======
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
(Amounts in Thousands, Except
Share and Per Share Data)
<CAPTION>
Three Months Ended
March 31
1996 1995
<S> <C> <C>
Interest Income
Interest and fees on loans $11,070 $9,239
Interest on securities available for sale 1,674 1,404
Interest on investment securities:
U.S. Treasury securities 231 262
U.S. Government agencies and corporations 826 1,488
States and political subdivisions 629 718
Other securities 21 75
Interest on federal funds sold 50 3
Interest on deposits in banks 6 3
_______ _____
Total interest income 14,507 13,192
_______ _____
Interest Expense
Interest on deposits 5,141 4,292
Interest on borrowings 762 520
_______ ______
Total interest expense 5,903 4,812
_______ ______
Net interest income 8,604 8,380
Provision for possible loan losses 448 374
_______ ______
Net interest income after provision for
possible loan losses 8,156 8,006
_______ ______
Non-Interest Income
Fiduciary income 385 438
Service charges on deposit accounts 655 559
Other charges, commissions and fees 556 499
Investment securities (losses) gains (165) 537
Other operating income 93 95
_______ ______
Total non-interest income 1,524 2,128
_______ ______
Non-interest expense
Salaries and employee benefits 2,264 2,381
Occupancy expense of bank premises 419 423
Furniture and equipment expense 340 316
Other operating expense 2,068 2,251
_______ ______
Total non-interest expense 5,091 5,371
_______ ______
Income before income taxes 4,589 4,763
Income tax expense 1,331 1,428
_______ ______
Net Income $3,258 $3,335
====== =====
Net income per common share $.77 $.79
====== =====
Weighted average shares outstanding 4,211,522 4,236,916
======= =======
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Ended
(Unaudited) March 31
(Amounts in Thousands)
<CAPTION>
1996 1995
<S> <C> <C>
Cash Flows From Operating Activities:
Net income $3,258 $3,335
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for possible loan losses 448 374
Depreciation of premises and equipment 213 229
Amortization of intangibles 195 195
Investment amortization and accretion, net 17 45
Recognition of unearned loan income (1) (3)
Loss (gain) on the sale of assets, net 159 (538)
Other liabilities, net 510 562
Interest receivable 565 (18)
Other assets, net (68) 1,522
Other, net (67) (68)
_____ _____
Net cash provided by operating activities 5,229 5,635
______ _____
Cash Flows From Investment Activities:
Sales of securities available for sale 11,016 2,983
Maturities and calls of investment securities 7,575 3,209
Maturities and calls of securities available for sale 2,705 7,721
Purchase of investment securities - (938)
Purchase of securities available for sale (12,902) (7,733)
Loans made to customers, net (16,433) (4,872)
Purchase of equipment (19) (109)
______ ______
Net cash <used in> provided by investment activities (8,058) 261
_____ _____
Cash Flows From Financing Activities:
Demand and savings deposits, net (5,597) (11,666)
Time deposits, net 2,152 3,210
Short-term borrowings, net 7,234 1,207
Payments of long-term debt (3) (11)
Reissuance <Acquisition> of treasury stock 87 (333)
Cash dividends paid (1,265) (1,163)
______ ______
Net cash provided by <used in> financing activities 2,608 (8,756)
______ ______
Net decrease in cash and due from banks (221) (2,860)
Cash and due from banks at beginning of year 22,956 23,628
______ ______
Cash and cash equivalents at end of quarter $22,735 $20,768
===== =====
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
<TABLE>
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<CAPTION>
Unrealized
(Loss) Gain
(Unaudited) Additional on Securities
(Amounts in Common Paid-In Retained Treasury Available
Thousands) Stock Capital Earnings Stock for Sale
<S> <C> <C> <C> <C> <C>
Balance beginning of
the period,
January 1, 1995 $21,706 $20,192 $30,094 $(1,807) $(3,445)
Net income - - 3,335 - -
Common dividends
declared ($.275
per common share) - - (1,163) - -
Purchase of 11,190
shares at
$29.76 per share - - - (333) -
Unrealized net gain
on securities
available for sale - - - - 1,436
_______ _______ _______ _______ _______
Balance,
March 31, 1995 $21,706 $20,192 $32,266 $(2,140) $(2,009)
===== ===== ===== ===== =====
Balance beginning of
the period,
January 1, 1996 $21,706 $20,192 $36,978 $(2,646) $376
Net income - - 3,258 - -
Common dividends
declared ($.30
per common share) - - (1,265) - -
Purchase of 5,100
shares at $33.42
per share - - - (170) -
Reissuance of 8,231
shares @ $31.25
per share - - - 257 -
Unrealized net loss
on securities
available for sale - - - - (359)
______ ______ ______ ______ _______
Balance,
March 31,1996 $21,706 $20,192 $38,971 $(2,559) $17
===== ===== ===== ===== ======
<FN>
See Notes to Consolidated Financial Statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Unaudited Financial Statements
The unaudited consolidated balance sheet as of March 31, 1996 and the
unaudited consolidated statements of income, cash flows and changes in
stockholders' equity for the periods ended March 31, 1996 and 1995 have
been prepared by the management of FCFT, Inc. without audit. In the opinion
of management, all adjustments (including normal recurring accruals) necessary
to present fairly the financial position of FCFT, Inc. and subsidiaries at
March 31, 1996 and its results of operations, cash flows, and changes in
stockholders' equity for the periods ended March 31, 1996 and 1995, have
been made. These results are not necessarily indicative of the results of
consolidated operations for the full calendar year.
The consolidated balance sheet as of December 31, 1995 has been extracted
from audited financial statements included in the Company's 1995 Annual
Report to Shareholders. Certain information and footnote disclosure normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted. It is suggested that
these financial statements should be read in conjunction with the financial
statements and notes thereto included in the 1995 Annual Report of FCFT, Inc.
During the second quarter of 1995, FASB issued SFAS No. 121 "Accounting
for the Impairment of Long-Lived Assets and for Long-Lived Assets to be
Disposed of" and SFAS No. 122 "Accounting for Mortgage Servicing Rights".
These Statements are effective for fiscal years beginning after December
31, 1995 with earlier adoption encouraged. The Company adopted these
statements during the first quarter of 1996 and the effects of adopting these
statements on the Company's financial statements were not material.
Note 2. Pending Acquisition
On January 16, 1996, the Company entered into a Definitive Agreement to
merge with Citizens Bank of Tazewell, Inc. (Citizens). This transaction
has received the necessary regulatory approval. A special meeting of
Citizen's shareholders will be held on May 28, 1996, for the purpose of
considering the proposed affiliation with FCFT, Inc. If approved, the
transaction is projected to close on or before June 30, 1996.
Note 3. Cash Flows
In 1996 and 1995 for purposes of reporting cash flows, cash and cash
equivalents include cash and due from banks and interest-bearing balances
available for immediate withdrawal of $22,735 in 1996 and $20,768 million in
1995.
Note 4. Commitments and Contingencies
In the matter of Four Winds Development, Inc., W. Stephen Melcher and
E. T. Boggess, plaintiffs, vs. First Community Bank of Princeton and Dave
Shields Company, Inc., defendants, on May 1, 1996, the Company argued
and was denied its petition for appeal of the Circuit Courts' decision. The
Company will now pursue its right of financial offset through the
appropriate court.
The Company is currently a defendant in other actions surrounding lending
and collection activities in the normal course of business, certain of which
have remained dormant for a number of years. Certain of these actions are
described in greater detail in the Company's 1995 Report on Form 10-K.
While the Company and legal counsel are unable to assess the outcome of
each of these matters, they are of the belief that these actions should not
have a material adverse affect on the financial position or results of
operations of the Company.
<PAGE>
INDEPENDENT ACCOUNTANTS' REPORT
To the Board of Directors and Stockholders of FCFT, Inc.
We have reviewed the accompanying consolidated balance sheet of FCFT, Inc.
and subsidiaries as of March 31, 1996, and the related consolidated statements
of income, changes in stockholders' equity and cash flows for the three month
periods ended March 31, 1996 and 1995. These financial statements are the
responsibility of the Corporation's management.
We conducted our review in accordance with standards established by the
American Institute of Certified Public Accountants. A review of interim
financial information consists principally of applying analytical procedures
to financial data and of making inquiries of persons responsible for
financial and accounting matters. It is substantially less in scope than an
audit conducted in accordance with generally accepted auditing standards,
the objective of which is the expression of an opinion regarding the financial
statements taken as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to such consolidated financial statements for them to be in
conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted
auditing standards, the consolidated balance sheet of FCFT, Inc. and
subsidiaries as of December 31, 1995, and the related consolidated statements
of income, changes in stockholders' equity, and cash flows for the year ended
(not presented herein); and in our report dated January 30, 1996, we expressed
an unqualified opinion on those consolidated financial statements. In our
opinion, the information set forth in the accompanying consolidated balance
sheet as of December 31, 1995, is fairly stated, in all material respects, in
relation to the consolidated balance sheet from which it has been derived.
Deloitte & Touche LLP
Pittsburgh, Pennsylvania
May 8, 1996
<PAGE>
FCFT, INC.
PART I. ITEM 2.
Management's Discussion and Analysis of Financial Condition
and Results of Operations
The following discussion and analysis is provided to address information about
the Company's financial condition and results of operations which is not
otherwise apparent from the consolidated financial statements incorporated
by reference or included in this report. Reference should be made to those
statements for an understanding of the following discussion and analysis.
Results of Operations
The Company reported net income of $3.3 million for the period ended
March 31, 1996, which represented 16.73% Return on Average Equity
and a Return on Average Assets of 1.79%. The net income of $3.3 million
for the corresponding period in 1995 included a $537,000 gain on securities
sold. Earnings per common share in the first quarter of 1996 were $.77 as
compared with $.79 for the same period in 1995. The aforementioned
securities gain in 1995 increased earnings per share for the March 31, 1995
quarter by $.08 per share. Net income for the quarter ended March 31, 1996
included a $165,000 loss on security transactions reducing earnings per share
by $.02 for the quarter. Increases in operational earnings are primarily
attributable to the $224,000 increase in net interest income compared with
the same period in 1995.
Net Interest Income
Net interest income, the largest contributor to earnings, was $8.6 million
for the first quarter of 1996 as compared with $8.4 million in the first
quarter of 1995. Tax equivalent net interest income was $9.2 million in
1996, a $285,000 increase over the $8.9 million reported in 1995. Net
interest income reached record levels as the yield on earning assets increased
in response to the reinvestment of investment securities maturities into the
higher yielding loan portfolio.
The Company's tax equivalent net interest margin decreased 19 basis points
from 5.63% for the first quarter of 1995 to 5.44% for the first quarter of
1996. The 19 basis point decrease in net interest margin was attributable
to an increase in the rate paid on time deposits from 4.16% in 1995 to 5.19%
in 1996; reflecting the effect of market pressure on the rates paid on these
deposits. This 25% increase in the rate paid on time deposits was offset
slightly by a 25 basis point improvement in the yield on earning assets
from 8.67% in 1995 to 8.92% in 1996.
The yield on investment securities available for sale decreased 36 basis points
from 6.84% in the first quarter of 1995 to 6.48% in the corresponding period
in 1996. This decline in yield was attributable to maturities and calls of
higher yielding securities in this portfolio being replaced by somewhat lower
yielding securities or reinvested in the higher yielding loan portfolio.
The loan portfolio increased 18 basis points, from 9.64% to 9.82%,
respectively, when comparing the yield in the first quarter of 1996
with the corresponding period in 1995. In comparing the yield on
investment securities held to maturity, the Company showed an improvement
of 29 basis points from 6.90% in 1995 to 7.19% in 1996, as maturities were
reinvested into slightly higher yielding securities.
The rate paid on short-term borrowings increased 43 basis points, rising from
3.77% in 1995 to 4.20% in 1996. Short-term deposits, such as interest-bearing
deposits, demand and savings deposits, did not experience an increase in cost
when comparing the first quarter of 1996 with 1995. The effect of the increase
in the rates paid on long-term deposits versus short-term deposits had the
effect of widening the yield curve on deposit products to a more traditional
yield curve.
<PAGE>
<TABLE>
NET INTEREST INCOME ANALYSIS
<CAPTION>
Three Months Ended Three Months Ended
March 31 March 31
1996 1995
________________ ________________
(Unaudited) Yield/ Yield/
(Amounts in Thousands) Average Interest Rate Average Interest Rate
Balance (1)(2) (2) Balance (1)(2) (2)
<S> <C> <C> <C> <C> <C> <C>
Earning Assets:
Loans (3)
Taxable 443,841 10,787 9.77% 377,687 8,938 9.60%
Tax-Exempt 15,636 437 11.24% 17,743 464 10.60%
______ ______ ______ ______ ______ ______
Total 459,477 11,224 9.82% 395,430 9,402 9.64%
Reserve for Possible
Loan Losses (8,182) - - (8,476) - -
______ ______ ______ ______ ______ ______
Net Total 451,295 11,224 9.82% 386,954 9,402 9.85%
______ ______ ______ ______ ______ ______
Investments Available
for Sale 110,827 1,786 6.48% 83,256 1,403 6.84%
Investment Securities:
Taxable 68,634 1,083 6.35% 121,026 1,841 6.17%
Tax-Exempt 45,496 958 8.47% 50,689 1,080 8.64%
______ ______ ______ ______ ______ ______
Total 114,130 2,041 7.19% 171,715 2,921 6.90%
Interest-Bearing Deposits 1,104 6 2.19% 110 3 11.65%
Federal Funds Sold 3,706 50 5.43% 227 3 5.61%
______ ______ ______ ______ ______ ______
Total Earning Assets 681,062 15,107 8.92% 642,262 13,732 8.67%
Other Assets 47,708 52,406
________ ________
Total $728,770 $694,668
======= =======
Interest-Bearing Liabilities
Interest-bearing Demand
Deposits 91,424 611 2.69% 101,171 670 2.69%
Savings Deposits 126,004 948 3.03% 137,500 1,025 3.03%
Time Deposits 277,615 3,585 5.19% 253,225 2,600 4.16%
Short-Term Borrowings51,666 540 4.20% 39,596 368 3.77%
Other Indebtedness 15,134 218 5.79% 10,205 149 5.93%
Total Interest-Bearing ______ ______ ______ ______ ______ ______
Liabilities 561,843 5,902 4.22% 541,697 4,812 3.60%
______ ______ ______ ______
Demand Deposits 75,693 73,644
Other Liabilities 13,128 10,386
Stockholders' Equity 78,106 68,941
______ _____
Total $728,770 $694,668
======= =======
Net Interest Earnings $9,205 $8,920
===== =====
Net Interest Spread
4.70% 5.07%
====== =====
Net Interest Margin 5.44% 5.63%
====== =====
</TABLE>
[FN]
(1) Interest amounts represent taxable equivalent results for the first
three months of 1996 and 1995.
(2) Fully Taxable Equivalent - using the statutory rates of 35%.
(3) Non-accrual loans are included in average balances outstanding
with no related interest income.
Provision and Reserve for Possible Loan Losses
In order to maintain a balance in the reserve for possible loan losses which
is sufficient to absorb potential loan losses, charges are made to the
provision for possible loan losses (provision). The provision for possible
loan losses was $448,000 in the first three months of 1996 compared with
$374,000 in the first three months of 1995.
Net charge-offs totaled $292,000 in 1996, down slightly from $297,000 in 1995.
Expressed as a percentage of loans, net charge-offs were .06% for the period
ended March 31, 1996 and .07% for the corresponding period in 1995.
The reserve for possible loan losses totaled $8.2 million at March 31, 1996
compared with reserves of $8.0 million at December 31, 1995.
Management continually evaluates the adequacy of the reserve for possible
loan losses and makes specific adjustments to it based on the results of risk
analysis in the credit review process, the recommendation of regulatory
agencies, and other factors, such as loan loss experience and prevailing
economic conditions. Management considers the level of reserves adequate
based on the current risk profile in the loan portfolio.
<PAGE>
Non-Interest Income
Non-interest income consists of all revenues which are not included in
interest and fee income related to earning assets. Total non-interest
income was $1.5 million and $2.1 million for the three months ended
March 31, 1996 and 1995, respectively. Included in non-interest income
for the first quarter of 1995 was $537,000 in gains from the sale of stock
of another West Virginia Bank Holding Company in which the Company
had taken a nominal position. Non-interest income for the first quarter
of 1996, includes a loss of $165,000 on the sale of investment securities
as the company repositioned a portion of its investment portfolio for
improved performance.
Excluding the securities loss in 1996 and stock gain in 1995, the Company's
non-interest income increased $98,000 or 6.2% when comparing the first three
months of 1996 with the corresponding period in 1995. This improvement in
non-interest income is the net of increases in service charges on deposit
accounts of $96,000 or 17.2%, and other service charges, commissions and
fees of $57,000 or 11.4%, and a decrease of $53,000 or 12.1% in fiduciary
income.
Non-Interest Expense
Non-interest expense decreased $280,000 or 5.2%, from $5.4 million
in the first quarter of 1995 to $5.1 million in 1996. Salaries and employee
benefits decreased $117,000 or 4.9% when comparing the first quarter of 1996
with the corresponding period in 1995. The largest percentage decrease was
in the other operating expense category with a decrease of $183,000 or 8.1%.
During the first quarter of 1995, a non-recurring charge of $90,000 was
recorded for a profit performance study. In January, 1996, FDIC premium
payments for the first half of the year were suspended as a result of full
funding of the Bank Insurance Fund, accounting for $294,000 of the
decrease in other operating expense.
Income Tax Expense
Income tax expense decreased $97,000 from $1.4 million in the first
three months of 1995 to $1.3 million for the corresponding period in 1996.
The decrease in taxes is principally the result of the decrease in pre-tax
income of $174,000 or 3.7% when comparing the first quarter of 1996 with the
corresponding period in 1995.
<PAGE>
FINANCIAL POSITION
Securities
Securities totaled $221.3 million at March 31, 1996 reflecting a decrease
of $9.2 million from December 31, 1995. This 4.0% decrease reflects
increases in the loan portfolio of $15.6 million or 3.4% along with
decreases in deposit funding over the first three months of 1996.
Securities available for sale were $110.0 million at March 31, 1996 versus
$111.6 million at December 31, 1995. Securities available for sale are
recorded at their fair market value at March 31, 1996 and December 31,
1995. The unrealized gain or loss which is the difference between book
value and market value, net of related deferred taxes, is recognized in the
Stockholders' Equity section of the balance sheet. At March 31, 1996,
the unrealized gain after taxes decreased $359,000 from $376,000 at
December 31, 1995 to $17,000.
Investment securities, which are generally purchased with the intent to
hold until maturity, totaled $111.4 million at March 31, 1996, as compared
with $118.9 million at December 31, 1995. The Company's liquidity position,
borrowing capacity, and cash flow from maturing loans and investments
provide the ability to hold these securities until maturity. The market
value of investment securities at March 31, 1996 was 104% of book value as
compared with 101% at December 31, 1995 and reflects the
improving bond market as a result of reductions in yields on
fixed income securities.
<PAGE>
Loans
The Company's lending strategy stresses quality growth, diversified by product,
geography, and industry. A common credit underwriting structure and review
process is in place throughout the Company.
Total loans increased to $472.4 million at March 31, 1996 as compared with
$456.8 million at December 31, 1995. Average total loans have increased
$64.0 million over the last twelve months. The loan-to-deposit ratio has
increased to 82% at March 31, 1996 as compared with 71% at December 31, 1995.
The loan growth experienced over the last twelve months reflects the
improvement in the economy and results of strategies implemented by the
Company to improve loan business development. Commercial loans increased
$11.0 million or 8.8% when comparing the balances at March 31, 1996 and
December 31, 1995.
<PAGE>
Non-Performing Assets
Non-performing assets are comprised of loans on non-accrual status, loans
contractually past due 90 days or more and still accruing interest and
other real estate owned (OREO). Non-performing assets were $7.6
million at March 31, 1996, or 1.6% of total loans and OREO, compared with
$5.8 million or 1.37% at December 31, 1995. The following schedule details
non-performing assets by category at the close of each of the last five
quarters:
<TABLE>
(In Thousands)
March31December 31 September 30 June 30 March 31
1996 1995 1995 1995 1995
<S> <C> <C> <C> <C> <C>
Non-Accrual 4,496 4,224 6,006 7,303 7,173
Ninety Days Past Due 1,504 646 2,153 1,886 2,216
Other Real Estate Owned 1,590 929 968 729 931
_____ _____ ______ ______ ______
7,590 5,799 9,127 9,918 10,320
===== ===== ===== ===== =====
Restructured loans
performing in
accordance with
modified terms 436 439 446 447 618
===== ===== ==== ===== =====
</TABLE>
Non-accrual loans and ninety-days past due increased $272,000 and $858,000,
respectively, when comparing March 31, 1996 and December 31, 1995.
The increase in non-accrual loans relates to one relationship totaling
$230,000 which was placed on non-accrual during the first quarter.
The Company has started foreclosure proceedings. The increase in
ninety-days past due is attributable to several relationships, three of
which historically border on ninety-days past due. These loans, totaling
$288,000, were under ninety days at December 31, 1995 but over ninety
at March 31, 1996. Another relationship amounting to $80,000 is expected to
become current by the end of the second quarter as a purchase agreement
is currently in place. Two other relationships, totaling $106,000 are death
claims and the company is awaiting estate settlements.
Management believes that the extent of problem loans at March 31,
1996 is disclosed as non-performing assets in the preceding chart.
However, there can be no assurance that future circumstances,
such as further erosions in economic conditions and the related potential
effect that such erosions may have on certain borrowers' ability to continue
to meet payment obligations, will not lead to an increase in problem loan
totals. Management further believes that non-performing asset carrying
values will be substantially recoverable after taking into consideration the
adequacy of applicable collateral and, in certain cases, partial writedowns
which have been taken and allowances that have been established.
Stockholders' Equity
Total stockholders' equity was $78.3 million at March 31, 1996,
representing an increase of $1.7 million or 2.2% over year-end 1995.
The increase in stockholders' equity was the result of earnings net of
dividends of $2.0 million. The Federal Reserve's risk-based capital
guidelines and leverage ratio measure capital adequacy of banking
institutions. Risk-based capital guidelines weight balance sheet assets
and off-balance sheet commitments. At March 31, 1996, the Company's
risk adjusted capital-to-asset ratio was 17.32%. The Company's leverage
ratio at March 31, 1996 was 10.32% compared with 9.99% at December 31, 1995.
Both the risk adjusted capital-to-asset ratio and the leverage ratio exceed the
current minimum levels prescribed for bank holding companies of 8% and 4%,
respectively.
Liquidity
The Company maintains a significant level of liquidity in the form of cash
and due from bank balances ($22.7 million), investment securities available
for sale ($110.0 million), and Federal Home Loan Bank of Pittsburgh credit
availability of $115.5 million. Cash and advances from the Federal Home
Loan Bank of Pittsburgh are immediately available for satisfaction of deposit
withdrawals, customer credit needs and operations of the Company. Investment
securities available for sale represent a secondary level of liquidity
available for conversion to liquid funds in the event of extraordinary needs.
<PAGE>
FCFT, INC.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
(a) N/A
Item 2. Changes in Securities
(a) N/A
(b) N/A
Item 3. Defaults Upon Senior Securities
(a) N/A
(b) N/A
Item 4. Submission of Matters to a Vote of Security Holders
(a) The Annual Meeting of Stockholders was held on April 9, 1996.
(b) The following directors were elected to serve a three-year
term through the date of the 1999 Annual Meeting of Stockholders:
<TABLE>
Votes For Votes Against Votes Withheld
<S> <C> <C> <C>
Sam Clark 3,486,068 2,549 0
Robert E. Perkinson, Jr 3,479,592 9,025 0
W. W. Tinder, Jr. 3,479,459 9,158 0
William P. Stafford 3,486,474 2,143 0
</TABLE>
(c) N/A
(d) The accounting firm of Deloitte & Touche, LLP was ratified
as independent auditors for the 1996 fiscal year with the
affirmative vote of 3,481,933 shares. There were
3,923 negative votes cast and 2,761 shareholders withheld
authority to vote.
Item 5. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 15 - Letter regarding unaudited interim financial
information
(b) Reports on Form 8-K - No reports were filed during the first
quarter of 1996.
<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.
FCFT, INC.
DATE: May 15, 1996
_______________________________
James L. Harrison, Sr.
President & Chief Executive Officer
(Duly Authorized Officer)
DATE: May 15, 1996
_______________________________
John M. Mendez
Vice President & Chief Financial Officer
(Principal Accounting Officer)
<PAGE>
Exhibit 15
May 13, 1996
To The Board of Directors and Stockholders
of FCFT, Inc.
Dear Sirs:
We have made a review, in accordance with standards established by the
American Institute of Certified Public Accountants, of the unaudited interim
financial information of FCFT, Inc. and subsidiaries for the periods ended
March 31, 1996 and 1995, as indicated in our report dated May 8, 1996;
because we did not perform an audit, we expressed no opinion on that
information.
We are aware that our report referred to above, which is included in your
Quarterly Report on Form 10-Q for the quarter ended March 31, 996, is
incorporated by reference in Registration Statement No. 33-72616 on Form
S-8 and Registration Statement No. 333-2996 on Form S-4.
We also are aware that the aforementioned report, pursuant to Rule 436(c)
under the Securities Act of 1993, is not considered a part of the Registration
Statement prepared or certified by an accountant or a report prepared or
certified by an accountant within the meaning of Sections 7 and 11 of that
Act.
Yours truly,
Deloitte & Touche LLP
Pittsburgh, Pennsylvania
