<PAGE>
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, 1997
OR
[ ] TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
Commission File Number 0-24024
-------------
FIRST COMMUNITY FINANCIAL GROUP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
WASHINGTON 91 -1277503
-------------- ---------------
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
721 COLLEGE STREET. SE, P.O. BOX 3800, LACEY, WA 98509
-------------------------------------------------------
(Address of principal executive offices)
Issuer's telephone number: (360) 459-1100
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 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
--- ---
Number of shares of common stock outstanding as of
September 30, 1997: 1,985,549
---------
Transitional Small Business Disclosure Format (Check one) Yes No X
--- ---
<PAGE>
FIRST COMMUNITY FINANCIAL GROUP, INC.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION Page
Item 1 Financial Statements
Condensed Consolidated Balance Sheets............................ 3
Condensed Consolidated Statements of Income...................... 4
Condensed Consolidated Statements of Cash Flows.................. 5
Notes to Condensed Consolidated Financial Statements............. 6
Item 2 Management's Discussion of Financial Condition and
Analysis or Plan of Operations................................... 7
PART II - OTHER INFORMATION
Item 6 Exhibits and Reports on Form 8-K................................. 11
SIGNATURES................................................................ 12
2
<PAGE>
FIRST COMMUNITY FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Balance Sheets (Unaudited)
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- ------------------------------------------------------------------------------
September 30 December 31
1997 1996
- ------------------------------------------------------------------------------
<S> <C> <C>
Assets
Cash and due from banks.......................... $ 12,922 $ 8,467
Interest bearing deposits in banks............... 2,022 10,141
Federal funds sold............................... 17,000 4,000
Securities available for sale.................... 37,875 7,513
Securities held to maturity...................... 1,414 3,182
Loans held for sale.............................. 2,986 726
Loans............................................ 188,233 130,632
Less allowance for possible credit losses........ 1,953 1,420
Net Loans...................................... 186,280 129,212
Premises and equipment........................... 11,405 7,593
Goodwill......................................... 5,058 0
Other assets..................................... 9,189 5,667
Total assets................................... $286,151 $176,501
Liabilities
Deposits:
Non-interest bearing........................... $ 42,423 $ 24,719
Interest bearing............................... 211,454 128,715
Total deposits................................... 253,877 153,434
Long term debt................................... 4,075 1,294
Other liabilities................................ 1,673 854
Total liabilities................................ 259,625 155,582
Stockholders' Equity
Common stock, par value $2.50 per share;
10,000,000 shares authorized, 1,985,549 shares
issued in 1997, and 1,698,505 shares issued
in 1996........................................ 4,964 4,246
Surplus.......................................... 20,461 13,745
Retained earnings................................ 2,267 3,186
Unrealized loss on securities available
for sale....................................... 15 (13)
Guaranteed KSOP Obligation....................... (1,181) (245)
Total Stockholders' Equity..................... 26,526 20,919
Total liabilities and stockholders' equity..... $286,151 $176,501
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
FIRST COMMUNITY FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Income (Unaudited)
<TABLE>
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
Three months ended Nine months ended
September 30 September 30
1997 1996 1997 1996
- -----------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest income
Interest and fees on loans................................. $4,993 $3,525 $13,845 $10,560
Federal funds sold and deposits in banks................... 187 170 253 337
Investments................................................ 619 173 1,212 550
Total interest income...................................... 5,799 3,868 15,310 11,447
Interest Expense
Deposits................................................... 2,126 1,418 5,534 4,124
Other...................................................... 37 25 98 85
Total interest expense..................................... 2,163 1,443 5,632 4,209
Net interest income........................................ 3,636 2,425 9,678 7,238
Provision for possible credit losses........................ 475 85 725 221
Net interest income after provision
for possible credit losses.............................. 3,161 2,340 8,953 7,017
Non-Interest Income
Service charges on deposit accounts........................ 435 277 1,120 823
Origination fees on mortgage loans sold.................... 191 73 506 351
Other income............................................... 1,288 47 1,576 296
Total non-interest income.................................. 1,914 397 3,202 1,470
Non-Interest Expense
Salaries and employee benefits............................. 2,433 1,129 5,792 3,464
Occupancy and equipment.................................... 563 323 1,467 1,045
Other expense.............................................. 1,547 666 3,486 1,995
Total non-interest expense................................. 4,543 2,118 10,745 6,504
Operating income before income taxes........................ 532 619 1,410 1,983
Income Taxes................................................ (228) 169 21 535
Net income................................................. $ 760 $ 450 $ 1,389 $ 1,448
Earnings per common share and common
Equivalent Share........................................... $0.36 $0.25 $0.69 $0.80
Average number of common
and equivalent shares outstanding.......................... 2,089,471 1,838,217 2,026,832 1,818,552
Earnings per common share
assuming full dilution..................................... $0.36 $0.25 $0.68 $0.79
Average number of common and equivalent
shares outstanding - assuming full dilution................ 2,125,180 1,838,739 2,058,019 1,837,886
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
FIRST COMMUNITY FINANCIAL GROUP, INC. AND SUBSIDIARIES
Condensed Consolidated Statements of Cash Flows (Unaudited)
<TABLE>
<CAPTION>
(DOLLARS IN THOUSANDS)
- -----------------------------------------------------------------------------------------
Nine months ended
September 30
1997 1996
- -----------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows from Operating Activities
Net Income................................................. $ 1,389 $ 1,448
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Provision for possible credit losses..................... 725 221
Depreciation and amortization............................ 778 584
Amortization of goodwill................................. 119 0
Other - net.............................................. (2,611) (1,524)
Originations of loans held for sale........................ (16,774) (16,478)
Proceeds from sales of loans held for sale................. 14,514 17,104
Net cash provided (used) by operating activities........... (1,860) 1,355
Cash Flows from Investing Activities
Net decrease in interest bearing deposits in banks......... 8,119 5,146
Net (increase) in Federal funds sold....................... (13,000) (1,867)
Proceeds from maturities of available-for-sale securities.. 5,470 1,765
Purchase of available-for-sale securities.................. (36,041) (1,317)
Proceeds from maturities of held-to-maturity securities.... 2,265 2,670
Purchases of held-to-maturity securities................... (500) (18)
Net increase in loans...................................... (57,833) (5,262)
Additions to premises and equipment........................ (4,590) (440)
Increase in goodwill....................................... (5,058) 0
Net cash provided (used) by investing activities........... (101,168) 677
Cash Flows from Financing Activities
Net increase (decrease) in deposits........................ 100,443 (7,129)
Sale of common stock....................................... 7,651 24
Repurchase of common stock................................. (2,511) 0
Long term borrowings....................................... 2,750 0
Repayment of long-term borrowings.......................... (837) (165)
Payment for dividends...................................... (13) (9)
Net cash provided (used) by financing activities........... 107,483 (7,279)
Net change in cash and due from banks...................... 4,455 (5,247)
Cash and Due from Banks:
Beginning of period........................................ 8,467 15,024
End of period.............................................. $12,922 $9,777
Supplemental Disclosures of Cash Flow Information:
Cash payments for:
Interest................................................. $5,486 $4,328
Taxes.................................................... 430 665
Supplemental Disclosures of Non-Cash Investing Activities:
Other real estate acquired in settlement of loans.......... 303 1,625
Increase (decrease) in depreciation of available for
sale securities.......................................... 27 (18)
Increase (decrease) in guarantee of KSOP obligation........ 936 265
</TABLE>
SEE NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
FIRST COMMUNITY FINANCIAL GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principals for
interim financial information and with instructions to Form 10-KSB and Rule
10-01 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of management,
adjustments considered necessary for a fair presentation have been included.
Operating results for the three months and nine months ended September 30,
1997 are not necessarily indicative of the results anticipated for the year
ended December 31, 1997.
2. EARNINGS PER COMMON AND EQUIVALENT SHARE
Earnings per common and equivalent share is calculated by dividing net income
by the weighted average number of common shares and common share equivalents
outstanding during the periods presented. Fully diluted earnings per share
assumes that all dilutive stock options outstanding are issued such that
their dilutive effect is maximized.
3. ACQUISITIONS
PRAIRIE SECURITY BANK
- ---------------------
On February 7, 1997, the Company completed the acquisition of Prairie
Security Bank (PSB) in a business combination accounted for as a purchase.
PSB was a state chartered bank headquartered in Yelm, Washington with three
branches and $47,334,000 in total assets. The purchase price of $9,982,000
in cash and company stock, exceeded value of net assets of PSB by $5,177,000,
which will be amortized on the straight line basis over 25 years.
WELLS FARGO BRANCHES
- --------------------
On March 3, 1997 the Bank was notified that it was the successful bidder in
the sale of four Wells Fargo Bank branches. This acquisition, which was
completed on July 18, 1997, was for $43,200,000 in deposits and includes
branch facilities in Hoquiam, Montesano, Toledo and Winlock, Washington. The
branches in Winlock, Toledo and Montesano represent further expansion of the
Company's market area. The Hoquiam branch represents further penetration into
an existing market.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
---------------------------------------------
FINANCIAL CONDITION
OVERVIEW
- --------
The Company's consolidated total assets at September 30, 1997 of $286,151,000
represent a 62.1% increase over December 31, 1996 assets of $176,501,000.
This is primarily due to the Company's acquisition of Prairie Security Bank
(PSB), effective February 7, 1997 and the deposits and fixed assets of four
Wells Fargo branches. The total assets acquired in these transactions were
$88,188,000 ($47,334,000 and $40,854,000 respectively). In addition to the
acquired assets, a recognition of goodwill in the amount of $5,058,000 from
the PSB acquisition and core deposit premium from the Wells Fargo branch
acquisition in the amount of $2,361,000, is included in the September 30,
1997 total assets. Total assets, excluding those added due to acquisition,
still experienced a 8.0% growth over the level at December 31, 1996.
Total deposit growth in the first three quarters of 1997 amounted to
$100,443,000, up 65.5% from $153,434,000 at December 31, 1996. The
acquisition of Prairie Security Bank accounted for $40,176,000 of the
increase while the Wells Fargo branch acquisition provided $43,200,000. The
total deposit increase, net of those added by acquisition, represents a 11.1%
increase for the first nine months. The deposit growth is expected to
continue due to the acquisition and its effects of solidifying the Company's
position in certain markets while providing expansion into an additional
market.
Loan balances in aggregate, net of loan loss reserve, increased by
$59,328,000, or 45.7%, to $189,266,000. The Prairie Security Bank
transaction provided a net increase of $36,923,000. Excluding this
acquisition related increase, loan balances increased $22,405,000 or 17.2%.
The loan to deposit ratio has decreased during the first nine months from
84.7% to 74.6%. This decrease is directly the result of the influx of
deposits from the Wells Fargo branch acquisition. This loan to deposit ratio
is expected to rise over time to previously experienced levels as the
opportunity to loan the acquired deposits persists.
The balances of cash and due from banks, interest bearing deposits in banks,
Federal funds sold and investment securities have increased $37,930,000. The
increase experienced in these assets is primarily the result of the Wells
Fargo branch acquisition. The structure of the acquisition provided for the
transfer of deposits in exchange for the cash to support these balances.
This transfer has led to the significant growth in investment securities and
Federal Funds sold as liquid investments in support of the loan portfolio.
Premises and equipment growth as well as increases in other assets, result
primarily from acquisitions.
The allowance for possible credit losses reflects management's current
estimate of the amount required to absorb losses on existing loans and
commitments to extend credit. Determination of the appropriate level of the
allowance is based on an analysis of various factors including historical
loss experience based on volumes and types of loans; volumes and trends in
delinquencies and non-accrual loans; trends in portfolio volume; results of
internal and independent external credit reviews; and anticipated economic
conditions. An analysis of the adequacy of the allowance is subject to
quarterly review by the Board of Directors.
7
<PAGE>
The following table summarizes the allowance for loan losses and charge-off
and recovery activity:
<TABLE>
<CAPTION>
Nine months ended Year ended
Dollars In Thousands September 30, 1997 December 31, 1996
- -------------------- ------------------ -----------------
<S> <C> <C>
Loans outstanding at end of period.................... $ 191,219 $ 131,358
Average loans outstanding during the period........... 174,302 131,187
Allowance for loan losses at beginning of period...... $ 1,420 $ 1,376
Allowance added due to acquisition.................... 469 --
Recoveries............................................ 22 10
Loans charged off..................................... (683) (227)
Net loans charged off................................. 661 (217)
Provision for loan losses............................. 725 261
Allowance for loan losses, end of period.............. $ 1,953 $ 1,420
Ratio of net loans charged off
to average loans outstanding (1)................... .51% .17%
Ratio of allowance for loan losses
to loans at end of period.......................... 1.02% 1.08%
</TABLE>
(1) The ratio for the nine months ended September 30, 1997 has been
annualized.
Non-accrual loans increased from $1,898,000 at December 31, 1996 to
$3,355,000 at September 30,1997. The majority of the Bank's non-performing
loans result from loans acquired from Northwest Community Bank in the fourth
quarter of 1995. Management continues to closely monitor the portfolio, and
in addition to the Company's credit review procedures, an external loan
review specialist has been retained to more quickly identify credit quality
issues in acquired portfolios. Additional provisions to the allowance for
possible credit losses may be made as collection efforts continue on these
assets.
LIQUIDITY AND RATE SENSITIVITY
- ------------------------------
The Company's assets and liabilities are managed to maximize long-term
shareholder returns by optimizing net interest income within the constraints
of maintaining high credit quality, conservative interest rate risk
disciplines and prudent levels of liquidity. The Asset/Liability Committee
meets regularly to monitor the composition of the balance sheet, to assess
current and projected interest rate trends, and to formulate strategies
consistent with established objectives for liquidity, interest rate risk and
capital adequacy.
Liquidity management involves the ability to meet cash flow requirements of
customers who may be either depositors wanting to withdraw funds or borrowers
needing assurance that sufficient funds will be available to meet their
credit needs. Liquidity is generated from both internal and external
sources. Internal sources are those assets that can be converted to cash with
little or no risk of loss. These include overnight investments in federal
funds sold and investment securities, particularly those of shorter maturity,
and are the principal source of asset liquidity. At September 30, 1997,
cash, deposits in banks, Federal funds sold and securities available for sale
totaled $69,819,000. External sources refer to the ability to attract new
liabilities and capital. They include increasing savings and demand deposits,
federal funds purchased, and the issuance of capital and debt securities. At
September 30, 1997, federal funds borrowing lines of credit totaled
$17,308,000 (5% of total assets plus $3,000,000) but was not used in the
third quarter of 1997. The Bank also has preestablished borrowing lines
available with the Federal Home Loan Bank of approximately $14,308,000 (5% of
total assets). This credit facility has remained unused in 1997.
Management believes the Bank's liquidity position at September 30, 1997, was
adequate to meet its short term funding requirements.
Interest rate sensitivity is closely related to liquidity, as each is
directly affected by the maturity of assets and liabilities. The Company's
net interest margin is affected by changes in the level of market interest
rates. Management's objectives are to monitor and control interest rate risk
and ensure predictable and consistent growth in net interest income.
8
<PAGE>
Management considers any asset or liability which matures, or is subject to
repricing within one year to be interest sensitive, although continual
monitoring is performed for other time intervals as well. The difference
between interest sensitive assets and liabilities for a defined period of
time is known as the interest sensitivity "gap", and may be either positive
or negative. If positive, more assets reprice before liabilities. If
negative, the reverse is true. Gap analysis provides a general measure of
interest rate risk but does not address complexities such as prepayment risk,
interest rate floors and ceilings imposed on financial instruments, interest
rate dynamics and customers' response to interest rate changes. Currently
the Banks' interest sensitivity gap is negative within one year. Assuming
that general market interest rate changes affected the repricing of assets
and liabilities in equal magnitudes, this indicates that the effects of
rising interest rates on the Company would be a decrease in the net interest
margin, whereas falling interest rates would cause a corresponding increase
in the margin.
CAPITAL
- -------
Consolidated capital of FCFG increased $5,607,000 during the first three
quarters of 1997 as a result of the acquisition of Prairie Security Bank as
well as increased retained earnings. Reductions to capital included a
targeted stock repurchase of 122,570 shares of common stock and an increase
in the guarantee of a loan obligation on behalf of the Company's KSOP.
There are regulatory constraints placed upon capital adequacy, and it is
necessary to maintain an appropriate ratio between capital and assets.
Regulations require banks and holding companies to maintain a minimum
"leverage" ratio (primary capital ratio) of total assets. For the most
highly rated holding companies this ratio must be at least 3%, and for others
it must be 4 to 5%. At September 30, 1997, the Company's leverage ratio was
7.88%, compared to 11.96% at year-end 1996. This decrease is due to the
effects of the use of purchase accounting in the acquisition of PSB and the
Wells Fargo branches. For regulatory purposes, the associated goodwill and
core deposit premium is treated as a reduction of capital. In addition,
holding companies are required to meet minimum risk-based capital guidelines
under which risk percentages are assigned to various categories of assets and
off-balance-sheet items to calculate a risk-adjusted capital ratio. Tier I
capital generally consists of common stockholders' equity, less goodwill,
while Tier II capital includes the allowance for possible loan losses,
subject to 1.25% limitation of risk-adjusted assets. The rules require Tier
II capital of 4% of risk-adjusted assets and total capital (combined Tier I
and Tier II) of 8%. At September 30, 1997, the Tier I capital ratio was
9.15%, and total capital was 10.03%.The similar ratios at December 31, 1996
were a Tier I capital ratio of 14.78% and a total capital ratio of 15.77%.
RESULTS OF OPERATIONS
- ---------------------
GENERAL
- -------
Net income is largely dependent upon the difference between the interest
received on earning assets and the interest paid on interest bearing
liabilities and is defined as net interest income. Net income is also
affected by the provision for loan losses, other non-interest income and
other non-interest expense.
Net income for the three months ended September 30, 1997 was $760,000,
compared to $450,000 for the three months ended September 30, 1996. As
detailed below, this 68.9% increase is due to a $1,931,000 increase in
interest income, a $1,517,000 increase in non-interest income and a decrease
of $397,000 in income tax. The income tax reduction despite the net income
increase is a factor of the tax-free benefit of the life insurance proceeds
discussed below. This was offset by a $720,000 increase in interest expense,
a $2,425,000 increase in non-interest expense and an increase in the
provision for loan losses of $390,000.
Net income for the nine months ended September 30, 1997 was $1,389,000,
compared to $1,448,000 for the nine months ended September 30, 1996. As
detailed below, this 4.1% decrease is due to a $1,423,000 increase in
interest expense, a $4,241,000 increase in non-interest expense and a
$504,000 increase in the provision for loan losses. This was offset to a
lesser degree by a $3,863,000 increase in interest income, a $1,732,000
increase in non-interest income, and a decrease of $514,000 in income taxes.
The disproportionate reduction in income taxes is a factor of the tax-free
benefit of the life insurance proceeds discussed below.
NET INTEREST INCOME
- -------------------
Net interest income for the three months ended September 30, 1997 increased
by $1,211,000 while the nine months ended September 30, 1997 increased
$2,440,000 over the comparable period in 1996. The net interest margin
decreased, moving 5 basis points from 6.32% to 6.27%.
9
<PAGE>
Interest income for the three months ended September 30, 1997 increased
$1,931,000 over the same period for 1996 while the nine months ended
September 30, 1997 increased $3,863,000 over the nine months ended September
30, 1996. Of this increase, approximately $3,944,000 is attributed to an
increase in the average volume of earning assets, offset by $81,000 as a
result of an 8 basis point decrease in the aggregate yield on earning assets
from 10.00% to 9.92%.
Total interest expense for the three months ended September 30, 1997
increased $720,000 as the deposit balances grew resulting from the Wells
Fargo branches while the nine months ended September 30, 1997 increased over
the comparable period of the prior year by $1,423,000. Of this increase,
approximately $1,479,000 was due to an increase in the average volume of
interest bearing liabilities, and offset by a $56,000 reduction due to a 6
basis point decrease in the aggregate cost of funds.
NON-INTEREST INCOME
- -------------------
Total non-interest income for the quarter ended September 30, 1997 increased
by $1,517,000 from the comparable quarter of 1996. Of this amount,
$1,110,000 is due to the receipt of life insurance proceeds on the death of
former Bank President John Johnson in July of 1997, of which the Bank was the
beneficiary. Origination fees on mortgage loans sold experienced a growth of
$118,000 over the prior year. Service charges on deposit accounts also
reflect the growth in deposit accounts and grew $158,000 as compared to the
prior year.
Total non-interest income for the nine months ended September 30, 1997
increased by $1,732,000 from the comparable quarter of 1996. Of this amount,
$1,280,000 is due to an increase in other income. This increase is also
reflective of the life insurance proceeds discussed above. Services charges
on deposit accounts have also grown by $297,000 over the prior period due to
the increase in deposits. Origination fees on mortgage loans sold increased
by $155,000 over the comparable period in 1996.
NON-INTEREST EXPENSE
- --------------------
Total non-interest expense for the quarter ended September 30, 1997 increased
$2,425,000 over the third quarter of 1996. Of this increase in non-interest
expense, $1,304,000 reflects the increased salaries and employee benefits of
the organization in its post-acquisitions structure. Occupancy and equipment
increased $240,000 as the result of the additional locations and resulting
equipment needs. Other expense increased $881,000 as the organization
continues to incorporate the sizable growth that has taken place as well as
the implementation of projects for the future benefit of the company.
Included in other expense are $163,000 in Wells Fargo related expenses,
including computer conversion and preparation, legal fees and marketing
expenses, the recognition of $379,000 to reflect a survivor benefit due to
the heirs of Mr. Johnson and $171,000 related to the settlement agreement
with former President of Prairie Security Bank and First Community Bank,
Michael D. Edwards. These items are not expected to be recurring.
Total non-interest expense for the nine months ended September 30, 1997
increased $4,241,000 over the first three quarters of 1996. Of this increase
in the level of non-interest expense, $2,328,000 reflects the increased
salaries and employee benefits of the organization in its post-acquisition
structure. Occupancy and equipment increased $422,000 as the result of the
additional locations and resulting equipment needs. Other expense increased
$1,491,000 as the organization continues to incorporate the sizable growth
that has taken place as well as the implementation of projects for the future
benefit of the company. Included in this area are $154,000 in PSB
transitional costs, including computer conversion and preparation, legal fees
and marketing expenses, $163,000 in Wells Fargo related expenses, including
computer conversion and preparation, legal fees and marketing expenses, the
recognition of $379,000 to reflect a survivor benefit due to the heirs of Mr.
Johnson and $171,000 related to the settlement agreement with former
President of Prairie Security Bank and First Community Bank, Michael D.
Edwards. These items are not expected to be recurring.
The Company has discovered two instances of embezzlement. These events have
been fully investigated and reported to the appropriate authorities. The
Company's bonding company has been notified and it is expected that full
indemnification, net of deductible, will be forthcoming from the Company's
bond.
The Company has accepted the resignation of Michael D. Edwards, President of
First Community Bank. Mr. Edwards was formerly the President of Prairie
Security Bank, which was acquired by the Company on February 7, 1997. The
Company expects to recognize $195,000 in fiscal year 1997 for severance
payments and other costs related to the separation.
10
<PAGE>
FIRST COMMUNITY FINANCIAL GROUP, INC.
PART II - OTHER INFORMATION
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits None
(b) Reports on Form 8-K None
11
<PAGE>
FIRST COMMUNITY FINANCIAL GROUP, INC.
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 FINANCIAL GROUP, INC.
(Registrant)
Date: August 14, 1997 By: /s/ KEN F. PARSONS
-----------------------------------------
Ken F. Parsons
President, Chief Executive Officer
By: /s/ JAMES F. ARNESON
-----------------------------------------
James F. Arneson
Executive Vice President,
Chief Financial Officer
(Principal Accounting Officer)
12
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 12,922
<INT-BEARING-DEPOSITS> 2,022
<FED-FUNDS-SOLD> 17,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 37,875
<INVESTMENTS-CARRYING> 1,414
<INVESTMENTS-MARKET> 1,477
<LOANS> 191,219
<ALLOWANCE> 1,953
<TOTAL-ASSETS> 286,151
<DEPOSITS> 253,877
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,673
<LONG-TERM> 4,075
0
0
<COMMON> 4,964
<OTHER-SE> 21,562
<TOTAL-LIABILITIES-AND-EQUITY> 286,151
<INTEREST-LOAN> 13,845
<INTEREST-INVEST> 1,212
<INTEREST-OTHER> 253
<INTEREST-TOTAL> 15,310
<INTEREST-DEPOSIT> 5,534
<INTEREST-EXPENSE> 5,632
<INTEREST-INCOME-NET> 9,678
<LOAN-LOSSES> 725
<SECURITIES-GAINS> 6
<EXPENSE-OTHER> 10,745
<INCOME-PRETAX> 1,410
<INCOME-PRE-EXTRAORDINARY> 1,410
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,389
<EPS-PRIMARY> .69
<EPS-DILUTED> .68
<YIELD-ACTUAL> 9.92
<LOANS-NON> 3,355
<LOANS-PAST> 1,238
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,420
<CHARGE-OFFS> 683
<RECOVERIES> 22
<ALLOWANCE-CLOSE> 1,953
<ALLOWANCE-DOMESTIC> 1,953
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
