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Securities and Exchange Commission
Washington, D.C. 20549
Form 10-QSB
Quarterly Report
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1996
Commission file number 22-25144
FIRST STATE BANCORPORATION
(Name of small business issuer in its charter)
New Mexico 85-0366665
(State of incorporation) (IRS Employer Identification No.)
111 LOMAS AVENUE N.W.
ALBUQUERQUE, NEW MEXICO
(505) 241-7500
(Address and telephone number of
principal executive offices)
Check whether the issuer (1) has 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 XX No ____
--
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:
1,981,667 shares of common stock, no par value, outstanding as of
April 30, 1996
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FIRST STATE BANCORPORATION
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
1
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings None
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Item 2. Changes in Securities None
Item 3. Defaults Upon Senior Securities None
Item 4. Submission of Matters to a Vote of Security Holders None
Item 5. Other Information None
Item 6. Exhibits and Reports on Form 8-K 2
SIGNATURES 2
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PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
The consolidated condensed financial statements of First State Bancorporation
(the "Company") are attached as Exhibit A.
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
Consolidated Balance Sheet
The Company's total assets increased by $11,388,000 from $252,981,000 as of
December 31, 1995 to $264,369,000 as of March 31, 1996, due to internal growth.
For the first quarter of 1996, net loans increased by $17,526,000 from
$182,009,000 to $199,535,000 while federal funds sold increased by $1,150,000
from $0 to $1,150,000 and investment securities decreased by $5,143,000 from
$38,676,000 to $33,533,000. For the first quarter of 1996, other assets
increased $575,000 from $17,508,000 to $18,083,000.
The increase in loans is due largely to increased economic activity and demand
for real estate in the Company's market area. Total commerical loans increased
by approximately $7,637,000 and real estate loans increased by approximately
$6,085,000. The company also began a leasing division in January 1996 and new
leases totaling approximately $3,000,000 were funded in the first quarter of
1996. Investment securities decreased as a result of maturities. Purchases of
premises and equipment, the majority of which resulted from construction of
branch facilities, accounted for $512,000 of the increase in other assets.
At March 31, 1996, one branch was under construction in Bernalillo, which is
expected to be completed in August 1996.
Deposits, which are the Company's main source of funds for loans, investments
and federal funds sold, increased by $10,050,000 from $218,847,000 as of
December 31, 1995 to $228,897,000 as of March 31, 1996. Non interest-bearing
deposits increased by $1,252,000 and interest-bearing deposits increased by
$8,798,000. For the first quarter of 1996, other liabilities increased by
$968,000 due largely to an increase in securities sold under repurchase
agreements of $617,000.
Consolidated Results of Operations
Net income for the Company for the three months ended March 31, 1996, was
$505,000, a decrease of $100,000 or 16.53% from $605,000 for the same period of
1995. The Company's return on average assets was 0.78% for the first quarter of
1996, compared to 1.17% for the same period of 1995.
Net interest income before provision for loan losses increased $479,000 to
$3,660,000 for the three months ended March 31, 1996, from $3,181,000 for the
three months ended March 31, 1995, due to increased loan volume. The Company's
net interest margin decreased to 6.42% at March 31, 1996, from 6.88% at March
31, 1995. This decrease was due to increased interest expense due to higher
deposit rates and growth in the volume of interest bearing deposits.
Total non interest income increased by $198,000 to $538,000 for the three months
ended March 31, 1996, compared to $340,000 for the same period of 1995, due to
an increase in credit card servicing revenue and increased service charges due
to deposit growth.
1
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Total non-interest expense increased by $853,000 to $3,336,000 for the first
quarter of 1996, compared to $2,483,000 for the same period of 1995. The
opening and staffing of new branches subsequent to the first quarter of 1995,
including Los Lunas in August, the Journal Center branch and operations center
in September, and the Santa Fe Downtown branch in December and the beginning of
the leasing division in January 1996, accounted for a substantial portion of the
increases in salaries and employee benefits, occupancy and equipment which
totaled $508,000.
Liquidity and Capital Expenditures
The Company's primary sources of funds are customer deposits, loan repayments,
loan sales and sales and maturities of investment securities. The Company has
additional sources of liquidity in the form of borrowings. Borrowings include
federal funds purchased, securities sold under repurchase agreements, and
borrowings from the Federal Home Loan Bank.
Management estimates that it will require an additional $800,000 to $1,000,000
for branch expansions during 1996.
Branch expansions will be funded through the sources discussed above.
PART II - OTHER INFORMATION
Form 8-K. On January 10, 1996, the Company filed a Form 8-K which contained,
under Item 5 Other Events, a press release concerning the Company's decision to
abandon its investment in a credit card processing operation.
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
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FIRST STATE BANCORPORATION
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Date: April 30, 1996 By: Michael R. Stanford
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Michael R. Stanford, President & Chief Executive Officer
Date: April 30, 1996 By: H. Patrick Dee
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H. Patrick Dee, Executive Vice President & Chief Operating Officer
Date: April 30, 1996 By: Brian C. Reinhardt
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Brian C. Reinhardt, Senior Vice President and Chief Financial Officer
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2
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Exhibit A
First State Bancorporation and Subsidiary
Consolidated Condensed Balance Sheets
(unaudited)
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March 31 December 31
Assets 1996 1995
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Cash and due from banks $ 12,068,961 $ 14,787,266
Federal funds sold 1,150,000 -
------------ ------------
Total cash and cash equivalents 13,218,961 14,787,266
Investment securities:
Held to maturity (at amortized cost, market
value of $18,512,000 at
March 31, 1996 and $22,232,000 at December
31, 1995) 18,564,222 21,171,746
Available for sale (at market, amortized cost of
14,995,000 at
March 31, 1996 and $16,442,000 at December
31, 1995) 14,968,492 17,504,265
------------ -----------
33,532,714 38,676,011
Loans net of unearned interest 201,526,547 183,859,770
Less allowance for loan losses 1,991,772 1,850,605
------------ ------------
Net loans 199,534,775 182,009,165
Other assets 18,082,977 17,508,118
------------ ------------
Total assets $264,369,427 $252,980,560
============ ============
Liabilities and Stockholders' Equity
-------------------------------------
Liabilities:
Deposits
Noninterest-bearing $ 43,278,960 $ 42,026,645
Interest bearing 185,618,257 176,820,223
------------ ------------
Total deposits 228,897,217 218,846,868
Other liabilities 17,675,984 16,707,784
------------ ------------
Total liabilities 246,573,201 235,554,652
Stockholders' equity:
Preferred stock, no par value, 1,000,000 share
authorized, none issued or outstanding
Common stock, no par value, 4,000,000 shares
authorized, issued and outstanding 1,981,667
at March 31, 1996 and 1,962,067 at
December 31, 1995 9,962,794 9,864,598
Retained earnings 7,850,849 7,445,338
Unrealized (losses) gains on investment (17,417) 115,972
securities available for sale ------------ ------------
Total stockholders' equity 17,796,226 17,425,908
------------ ------------
Total liabilities and stockholders' equity $264,369,427 $252,980,560
============ ============
Book value per share $8.98 $8.88
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Tangible book value per share $8.44 $8.39
============ ============
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See accompanying notes to consolidated condensed financial statements.
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Exhibit A
First State Bancorporation and Subsidiary
Consolidated Condensed Statements of Operations
For the three months ended March 31, 1996 and 1995.
(unaudited)
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Three months Three months
ended ended
March 31, 1996 March 31, 1995
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Interest income:
Interest and fees on loans $5,211,186 $4,158,339
Interest on investment securities:
Taxable 480,231 426,354
Non-taxable 53,568 26,977
Federal funds sold 65,808 34,959
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Total interest income 5,810,793 4,646,629
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Interest expense:
Deposits 1,926,991 1,239,054
Short term borrowings 116,885 117,617
Long-term debt and capital leases 106,972 108,490
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Total interest expense 2,150,848 1,465,161
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Net interest income before provision
for loan losses 3,659,945 3,181,468
Provision for loan losses 118,500 91,500
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Net interest income after provision for
loan losses 3,541,445 3,089,968
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Other income:
Service charges on deposit accounts 260,173 233,754
Other banking service fees 158,293 53,122
Loss from equity investment - (30,000)
Gain on sale of investment securities 156 -
Other 119,054 82,956
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Total other income 537,676 339,832
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Other expenses:
Salaries and employee benefits 1,447,504 1,169,835
Occupancy 412,256 303,099
Data processing 169,930 41,110
Credit Card interchange 93,470 -
Equipment 255,793 134,678
Legal and accounting 79,570 64,280
Marketing 161,089 99,139
Other real estate owned expenses 11,020 36,756
FDIC insurance premiums 500 94,807
Amortization of goodwill 47,236 45,570
Other 657,765 493,451
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Total other expenses 3,336,133 2,482,725
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Income before income taxes 742,988 947,075
Income tax expense 238,393 342,000
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Net income $ 504,595 $ 605,075
========== ==========
Earnings per common and common equivalent
share $0.24 $0.30
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Earnings per common share-assuming full
dilution $0.22 $0.26
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Dividends per common share $0.05 $0.04
========== ==========
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See accompanying notes to consolidated condensed financial statements.
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Exhibit A
First State Bancorporation and Subsidiary
Consolidated Condensed Statements of Cash Flow
For the three months ended March 31, 1996 and 1995
(unaudited)
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Three months Three months
ended ended
March 31, 1996 March 31, 1995
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Operating activities:
Net income $ 504,595 $ 605,075
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Adjustments to reconcile net income to
cash provided by
operations:
Provision for loan losses 118,500 91,500
Provision for decline in value of
other real estate owned - 30,000
Depreciation and amortization 303,857 251,877
Gain on sale of investment securities
available for sale (156) -
Loss from credit card operation - 30,000
Decrease in accrued interest
receivable 132,661 83,953
Increase in other assets, net (243,159) (364,578)
Increase in other liabilities, net 359,446 340,856
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Total adjustments 671,149 463,608
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Net cash provided by operating
activities 1,175,744 1,068,683
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Cash flows from investing activities:
Net increase in loans (17,772,350) (4,367,171)
Purchase of investment securities
available for sale (3,151,600) (494,065)
Maturity of investment securities
available for sale 5,000,000 1,000,000
Purchase of investment securities
held to maturity (2,500,000) (4,978,034)
Maturity of investment securities
held to maturity 5,110,000 5,500,000
Sale of investment securities
available for sale 500,156 -
Purchases of premises and equipment (511,732) (1,456,650)
Sale of other real estate owned 67,917 -
Payment received on loans classified
as other real estate owned 500 103,391
Acquisition of other real estate
owned (145,156) -
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Net cash used in investing (13,402,265) (4,692,529)
activities ------------ -----------
Cash flows from financing activities:
Net increase in interest bearing
deposits 8,798,034 2,427,828
Net increase (decrease) in
noninterest-bearing deposits 1,252,315 (727,320)
Net increase in securities sold under
repurchase agreements 616,964 157,454
Borrowing on long term debt and
capital lease obligations - 250,000
Payments on long-term debt and
capital lease obligations (8,210) (46,151)
Issuance of common stock 98,196 -
Dividends paid (99,083) (62,787)
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Net cash provided by financing
activities 10,658,216 1,999,024
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Decrease in cash and cash
equivalents (1,568,305) (1,624,822)
Cash and cash equivalents at beginning
of period 14,787,266 14,194,237
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Cash and cash equivalents at end of
period $ 13,218,961 $12,569,415
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Supplemental disclosure of noncash investing activities:
Additions to other real estate owned
in settlement of loans $ 128,240 -
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See accompanying notes to consolidated condensed financial statements.
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Exhibit A
First State Bancorporation and Subsidiary
Notes to Consolidated Condensed Financial Statements
(Unaudited)
1. Consolidated Condensed Financial Statements
The accompanying consolidated condensed financial statements are unaudited and
include the accounts of First State Bancorporation (the "Company") and its
subsidiary, First State Bank of Taos (100% owned).
All significant intercompany accounts and transactions have been eliminated.
Information contained in the consolidated condensed financial statements and
notes thereto of the Company should be read in conjunction with the Company's
consolidated financial statements and notes thereto contained in the Company's
Annual Report on Form 10-KSB for the year ended December 31, 1995.
The consolidated condensed financial statements have been prepared in accordance
with generally accepted accounting principles for interim financial information
and with the instructions to Form 10-QSB. 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, all
adjustments (consisting only of normally recurring accruals) considered
necessary for a fair presentation have been included. Operating results for the
three month period ended March 31, 1996, are not necessarily indicative of the
results that may be expected for the year ending December 31, 1996.
Net income per common share and common equivalent share are computed by dividing
net income applicable to common stock by the total of the weighted average
number of common shares outstanding and the additional dilutive effect of stock
options and warrants outstanding during the respective periods. The dilutive
effect of stock options and warrants is computed using the average market price
of the Company's common stock for the period.
Net income per common share, assuming full dilution, is computed based on the
weighted average number of common shares outstanding during the period, and the
additional dilutive effect of stock options and warrants during the period. The
dilutive effect of outstanding stock options and warrants is computed using the
greater of the closing price or the average market price of the Company's common
stock for the period. Net income per common share, assuming full dilution, also
includes the dilution which would result if the convertible debentures
outstanding during the period had been converted at the beginning of the period.
The number of shares used in the net income per share calculations at March 31
1996 and 1995, are as follows:
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For the three months ended
March 31, 1996 March 31, 1995
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Earnings per common and common equivalent
share (primary) $2,072,697 $2,044,043
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Earnings per common share-assuming full
dilution $2,623,574 $2,602,319
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The March 31, 1995, shares have been adjusted for a 5-for-4 common stock split
which accured on November 20, 1995.
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