UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] 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: 33-58832
FIRST CENTRAL BANCSHARES, INC.
(Exact name of small business issue as specified in its charter)
Tennessee
(State or other jurisdiction of incorporation or organization)
725 Highway 321 North, Lenoir City, Tennessee
(Address of principal executive office)
62-1482501
(I.R.S. Employer Identification No.)
37771-0230
(Zip Code)
Registrant's telephone number, including area code: (423) 986-1300
Indicate by 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 by mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 13, or (15d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court.
Yes [x] No [ ]
The number of outstanding shares of the registrant's Common
Stock, par value $5.00 per share, was 466,755 on November
11, 1996.<PAGE>
FORM 10-QSB
Index
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
September 30, 1996 and December 31, 1995. . . . . . . . . . . 3
Condensed Consolidated Statements of Income for the
nine months ended September 30, 1996 and 1995 . . . . . . . . 4
Condensed Consolidated Statements of Cash
Flows for the nine months ended September 30, 1996
and September 30, 1995. . . . . . . . . . . . . . . . . . . . 5
Notes to Condensed Consolidated Financial Statements. . . . 6-7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations. . . . . . . . . . . . . . . . . . . . . . . . .8-14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings . . . . . . . . . . . . . . . . . . . . . .15
Item 2. Changes in Securities . . . . . . . . . . . . . . . . . . . .15
Item 3. Defaults upon Senior Securities . . . . . . . . . . . . . . .15
Item 4. Submission of Matters to a Vote
of Securities Holders . . . . . . . . . . . . . . . . . . . .15
Item 5. Other Information . . . . . . . . . . . . . . . . . . . . . .15
Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . . . . 15-16
Signature . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17
<PAGE>
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(Unaudited)
(In Thousands)
September 30, December 31,
1996 1995
- -ASSETS-
Cash and Due from Banks $ 3,708 $ 2,426
Federal Funds Sold 1,700 8,300
Total Cash and Cash Equivalents 5,408 10,726
Certificate of Deposit in Other Banks -0- 100
Investment Securities Available for Sale 11,576 8,478
Loans 56,156 45,155
Less: Unearned Interest (974) (868)
Unearned Loan Fees (64) (44)
Allowance for Loan Losses (551) (434)
Net Loans 54,567 43,809
Premises and Equipment (Net) 3,407 3,089
Other Assets 526 544
TOTAL ASSETS $75,484 $66,746
- -LIABILITIES AND STOCKHOLDERS' EQUITY-
Liabilities:
Deposits
Non-Interest Bearing $10,434 $ 8,023
Interest Bearing 58,621 52,503
Total Deposits 69,055 60,526
Other Liabilities 462 642
Total Liabilities 69,517 61,168
Stockholders' Equity:
Common Stock - Par Value $5.00, Authorized
2,000,000 Shares; Issued and Outstanding
466,755 (424,379 in 1995) 2,334 2,122
Additional Paid-In Capital 3,427 2,579
Retained Earnings (Deficit) 336 888
Unrealized Gain (Loss) on Securities (130) (11)
Total Stockholders' Equity 5,967 5,578
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $75,484 $66,746
See accompanying notes to financial statements.<PAGE>
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income
(Unaudited)
(In Thousands Except per Share Information)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
INTEREST INCOME:
Loans $1,334 $1,057 $3,772 $2,976
Investment Securities and CDs 193 136 543 387
Federal Funds Sold 27 71 199 89
Total Interest Income 1,554 1,264 4,514 3,452
INTEREST EXPENSE 732 619 2,181 1,561
Net Interest Income 822 645 2,333 1,891
PROVISION FOR LOAN LOSSES 75 28 193 93
Net Interest Income After
Provision for Loan Losses 747 617 2,140 1,798
OTHER INCOME 105 92 307 269
OPERATING EXPENSES 555 476 1,615 1,403
INCOME BEFORE INCOME TAX 296 233 832 664
INCOME TAXES 115 93 324 252
NET INCOME $ 181 $ 140 $ 508 $ 412
EARNINGS PER SHARE $ 0.39 $ 0.34 $ 1.10 $ 0.98
See accompanying notes to financial statements.<PAGE>
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
Nine Months Ended
September 30,
(Unaudited)
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 508 $ 415
Adjustments to Reconcile Net Cash Provided
by (Used in) Operating Activities:
Provision for Loan Losses 193 93
Depreciation 105 124
Amortization 3 3
Increase (Decrease) in Unearned Interest/Loan Fees 126 132
Amortization of Premiums (Discounts) on
Investment Securities and CDs, Net 13 8
FHLB Stock Dividends (14) (23)
(Increase) Decrease in Other Assets 89 198
Increase (Decrease) in Other Liabilities (180) 232
Total Adjustments 337 540
Net Cash Provided by Operating Activities 842 1,182
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Maturity of CD 100 -0-
Proceeds From Maturities, Principal Paydowns and
Redemption of Investment Securities 3,674 2,385
Purchase of Investment Securities (6,963) (3,888)
Increase in Loans (11,077) (4,945)
Purchase of Premises and Equipment (423) (788)
Net Cash Used in Investing Activities (14,689) (7,236)
NET CASH USED IN INVESTING ACTIVITIES
Increase in Deposits 8,529 9,148
(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (5,318) 3,094
CASH AT BEGINNING OF PERIOD 10,726 4,187
CASH AT END OF PERIOD $ 5,408 $ 7,281
Supplementary Disclosure of Cash Flow Information:
Cash Paid During the Year For:
Interest $ 2,162 $ 1,561
Income Tax $ 435 $ 254
Supplementary Disclosure of Noncash Investing Activities:
Change in Net Unrealized Loss on Investment Securities $ 119 $ 251
Change in Deferred Income Tax Benefit Associated with
Unrealized Loss on Investment Securities $ 73 $ 95
Change in Unrealized Loss on Investment Securities $ 192 $ 156
Issuance of Common Stock Dividend:
Par $ 212 $ -0-
Capital in Excess of Par Value $ 848 $ -0-
Reduction in Retained Earnings Due to Issuance of
Common Stock $ 1,060 $ -0-
See accompanying notes to financial statements.<PAGE>
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 1996 and 1995
NOTE 1 - ORGANIZATION AND BUSINESS
First Central Bancshares, Inc. (the Company) was incorporated in 1993 for the
purpose of becoming a one bank holding company. On April 3, 1993, the Company
acquired 100% of First Central Bank (the Bank) through a share exchange
agreement approved by the shareholders of the Bank. The investment in First
Central Bank represents virtually all of the assets of First Central
Bancshares, Inc.
The consolidated financial statements include the accounts of First Central
Bancshares, Inc. and its wholly owned subsidiary, First Central Bank. All
significant intercompany transactions and balances have been eliminated.
NOTE 2 - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared by the
Company. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. In the opinion of the Company's
management, the disclosures made are adequate to make the information
presented not misleading, and the consolidated financial statements contain
all adjustments necessary to present fairly the financial position as of June
30, 1996, results of operations for the three months and nine months ended
September 30, 1996 and 1995, and cash flows for the nine months ended
September 30, 1996 and 1995.
The results of operations for the nine months ended September 30, 1996 are not
necessarily indicative of the results to be expected for the full year.
NOTE 3 - COMMON STOCK DIVIDEND
In February 1996 the Company distributed a ten percent (10%) dividend to its
stockholders by issuing an additional 42,376 shares of common stock. The
Company used a fair market value of $25.00 per share and credited common stock
$5.00 per share or $211,880, additional paid in capital $20.00 or $847,520,
and charged retained earnings a total of $1,059,400.
NOTE 4 - ACCOUNTING POLICY CHANGES
In March 1995, the Financial Accounting Standards Board (FASB) issued SFAS No.
121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived
Assets to be Disposed of. SFAS No. 121 requires that long-lived assets and
certain identifiable intangibles be reviewed for impairment. If the carrying
amount of the asset exceeds its fair value, an impairment loss shall be
recognized. This Statement was adopted by the Bank on January 1, 1996 and had
no impact on the consolidated financial statements.
In May 1995, the FASB issued SFAS No. 122, Accounting for Mortgage Servicing
Rights. SFAS No. 122 amends SFAS No. 65 to eliminate the accounting
distinction between rights to service mortgage loans for others that are
acquired through loan origination activities and those acquired through
purchased transactions. A mortgage banking enterprise that acquires mortgages
servicing rights through either the purchase or origination of mortgage loans
and sells or securitizes those loans with servicing rights and the loans based
on their relative fair values. The Statement also requires that the
capitalized mortgage servicing rights be evaluated for impairment based on the
fair value of those rights.
This statement was adopted by the Bank on January 1, 1996 and had no impact
on the consolidated financial statements as of and for the nine months ended
September 30, 1996 because no loans were sold during that period. Retroactive
capitalization of mortgage servicing rights retained in transactions in which
a mortgage banking enterprise originates mortgage loans and sells or
securitizes those loans before the adoption of this Statement is prohibited.
In October 1995, the FASB issued SFAS No. 123, Accounting for Stock-Based
Compensation. This statement encourages entities to adopt a fair value based
method of accounting for employee stock compensation plans, whereby
compensation cost is measured at the grant date based on the value of the
award and is recognized over the service period, which is usually the vesting
period. However, it also allows an entity to continue to measure compensation
cost of those plans using the intrinsic value based method of accounting
prescribed by APB Opinion No. 25, Accounting for Stock Issued to Employees,
whereby compensation cost is the excess, if any, of the quoted market price
of the stock at the grant date (or other measurement date) over the amount an
employee must pay to acquire the stock. Entities electing to remain with the
accounting in Opinion No. 25 must make pro forma disclosures of net income and
earnings per share, as if the fair value based method of accounting had been
applied. Neither the Company nor the Bank currently has an employee stock
compensation plan, therefore, the Statement had no impact on the consolidated
financial statements.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
BALANCE SHEET ANALYSIS - COMPARISON AT SEPTEMBER 30, 1996 TO DECEMBER 31, 1995
Assets totalled $75.5 million as of September 30, 1996, as compared to $66.7
million as of December 31, 1995, an increase of 13%.
INVESTMENT SECURITIES
Investment securities were $11.6 million or 15% of total assets, as of
September 30, 1996, an increase of $3.1 million from $8.5 million as of
December 31, 1995. During the nine-month period there were $924,000 in calls
and maturities, $2.75 million in principal paydowns offset by the purchase of
$6.9 million in agency securities.
The investment portfolio is comprised of U.S. Government and federal agency
obligations and mortgage-backed securities issued by various federal agencies.
Mortgage-backed issues comprised 18% of the portfolio as of September 30, 1996
and 25% as of December 31, 1995.
As of September 30, 1996 and December 31, 1995, the Bank's entire investment
portfolio was classified as available for sale and reflected on the balance
sheet at fair value with unrealized gains and losses excluded from earnings
and reported as a separate component of stockholders' equity. The net
unrealized loss on securities available for sale, net of tax was approximately
$130,000 as of September 30, 1996 ($11,000 as of December 31, 1995), a change
of approximately $119,000 from December 31, 1995, a result of deterioration
in the bond market. The fair value of securities fluctuates with the movement
of interest rates. Generally, during periods of decreasing interest rates,
the fair values increase whereas the opposite may hold true during a rising
interest rate environment.
LOANS
During the first nine months of 1996, total gross loans outstanding increased
by approximately $11.0 million to $56.2 million as of September 30, 1996, from
$45.2 million as of December 31, 1995 attributable primarily to $25.6 million
in originated loans offset by amortization and payoffs. As of September 30,
1996 and December 31, 1995, net loans outstanding represented 73% and 66% of
total assets, respectively. Table 1 summarizes the Bank's loan portfolio by
major category as of June 30, 1996 and December 31, 1995.
Table 1 - Loan Portfolio by Category
(In Thousands)
June 30, December 31,
1996 1995
Loans secured by real estate:
Commercial properties $16,123 $ 8,742
Construction and land development 9,206 6,163
Residential and other properties 15,949 17,154
Total loans secured by real estate 41,278 32,052
Commercial and industrial loans 5,109 3,928
Consumer loans 8,767 8,078
Other loans 1,002 1,090
56,156 45,155
Less: Allowance for loan losses (551) (434)
Unearned interest (974) (868)
Unearned loan fees (64) (44)
$54,567 $43,809
<PAGE>
As of September 30, 1996, there were outstanding commitments to advance
construction funds and to originate loans in the amount of $5.3 million and
commitments to advance existing home equity, letters of credit and other
credit lines in the amount of $13.3 million.
Loans are carried net of the allowance for loan losses. The allowance is
maintained at a level to absorb possible losses within the loan portfolio.
As of September 30, 1996 and December 31, 1995, the allowance had a balance
of approximately $551,000 and $434,000, respectively. There were no loans on
which the accrual of interest had been discontinued as of September 30, 1996,
and there were no loans specifically classified as impaired as defined by SFAS
No. 114. Table 2 summarizes the allocation of the loan loss reserve by major
categories and Table 3 summarizes the activity in the loan loss reserve for
the nine month period.
Table 2 - Allocation of the Loan Loss Reserve
9-30-96 % to 9-30-95 % to
Balance applicable to: $ Amount Total $ Amount Total
Commercial, financial, and agricultural $ 56 10.2% $ 36 8.8%
Real Estate - Construction 90 16.3% 53 13.0%
Real Estate - Mortgages 191 34.6% 167 40.9%
Installment - Consumers 76 13.8% 73 17.9%
Other 11 2.0% 10 2.5%
Other Unallocated 127 23.1% 69 16.9%
Total $551 100.00% $408 100.00%
Table 3 - Analysis of Loan Loss Reserve
(In Thousands) 9-30-96 9-30-95
Balance, at beginning of period $434 $369
Charge-offs:
Commercial, financial, and agricultural 7 10
Real estate - construction -0- -0-
Real estate - mortgage 6 -0-
Installment - Customers 89 49
Other -0- -0-
Recoveries:
Commercial, financial, and agricultural 6 -0-
Real estate - construction -0- -0-
Real estate - mortgages -0- -0-
Installment - consumers 20 11
Other -0- -0-
Net charge-offs 76 48
Additions to loan loss reserve 193 93
Balance at end of period $551 $414
Ratio of net charge-offs to average loans outstanding 0.15% 0.12%
DEPOSITS
Deposits increased by $8.5 million to $69.0 million as of September 30, 1996
from $60.5 million as of December 31, 1995. Demand deposits, which include
regular savings money market, NOW and demand deposits, were $28.2 million, or
41% of total deposits, at September 30, 1996. Core deposits were 36% of total
deposits at December 31, 1995. During the nine-month period, the Bank was
successful in increasing total demand deposits by $6.2 million. Certificate
accounts were $40.8 million at September 30, 1996, an increase of $2.3 million
over the $38.5 million as of December 31, 1995. Table 4 summarizes the Bank's
deposits by major category as of September 30, 1996 and December 31, 1995.
Table 4 - Deposits by Category
(In Thousands)
September 30, December 31,
1996 1995
Demand Deposits:
Noninterest-bearing accounts $10,434 $ 8,023
NOW and MMDA accounts 14,466 10,443
Savings accounts 3,346 3,592
Total Demand Deposits 28,246 22,058
Term Deposits:
Less than $100,000 $32,222 $29,071
$100,000 or more 8,587 9,397
40,809 38,468
$69,055 $60,526
CAPITAL
During the nine month period ended September 30, 1996, stockholders' equity
increased by $389,000 to $6.0 million, due to net income for the period
$508,000 offset by the decrease in the value of securities available for sale.
LIQUIDITY AND CAPITAL RESOURCES
The Bank's primary sources of liquidity are deposit balances, available-for-
sale securities, principal and interest payments on loans and investment
securities and FHLB advances.
As of September 30, 1996, the Bank held $11.6 million in available-for-sale
securities and during the first nine months of 1996 the Bank received $3.3
million in principal payments on its investment portfolio. Deposits increased
by $8.5 million during the same nine month period.
The Bank is a member of the Federal Home Loan Bank of Cincinnati and is
eligible to obtain both short and long term credit advances. Borrowing
capacity is limited to the Bank's available qualified collateral which
consists primarily of certain 1-4 family residential mortgages and certain
investment securities.
The Bank can also enter into repurchase agreement transactions should the need
for additional liquidity arise. At September 30, 1996, the Bank had no
repurchase agreements outstanding.
As of September 30, 1996, the Bank had capital of $6.0 million, or 7.9% of
total assets, as compared to $5.6 million, or 8.4%, at December 31, 1995.
Tennessee chartered banks that are insured by the FDIC are subject to minimum
capital maintenance requirements. Regulatory guidelines define the minimum
amount of qualifying capital an institution must maintain as a percentage of
risk-weighted assets and total assets.
Table 5 - Regulatory Capital
(Dollars in Thousands)
Minimum
September 30, December 31, Regulatory
1996 1995 Ratios
Tier 1 Capital as a Percentage
of Risk-Weighted Assets 11% 11% 4.00%
Total Capital as a Percentage
of Risk-Weighted Assets 12% 12% 8.00%
Leverage Ratio 8% 8% Up to 5.00%
Total Risk-Weighted Assets $56,349 $49,111
As of September 30, 1996 and December 31, 1995, the Bank exceeded all of the
minimum regulatory capital ratio requirements.
RESULTS OF OPERATIONS FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1996 AND
1995
GENERAL
The Bank reported net income of $508,000 or $1.10 per share for the nine month
period ended September 30, 1996 as compared with $412,000 or $0.9809 per share
for the same period in 1995.
NET INTEREST INCOME
Net interest income increased by $442,000 to $2.3 million, for the nine month
period in 1996 from the comparable period in 1995. Contributing to this
increase was an increase in average interest earning assets. Average interest
earning assets, at a yield of 9.02% totalled $66.7 million as of September 30,
1996. In comparison in 1995, average interest earning assets, at a yield of
9.16%, totalled $50.2 million.
Total interest income increased by $1.06 million for the nine month period in
1996 compared to the same period in 1995. This improvement is primarily
attributable to an increase of approximately $16.5 million, or 33%, in the
volume of average earning assets during the nine month period ended
September 30, 1996 compared to the nine month period ended September 30, 1995.
Interest income on loans increased by $796,000 over the same two periods
primarily as a result of an increase of approximately $9.9 million in average
loans outstanding. Over the same two periods, interest and dividends on
investments increased by $156,000 due to an increase of approximately $3.6
million or 49% in the volume of investments during the nine month period.
Interest income on Federal Funds Sold increased by $110,000 due to an increase
of approximately $2.9 million in average Federal Funds Sold outstanding during
the nine month period as compared to $2.1 million during the same period in
1995.
Total interest expense increased $620,000 for the nine month period ended
September 30, 1996 compared to the same period in 1995. Interest on deposits
increased by $625,000 as a result of slightly higher weighted average rates
paid on deposits, but primarily to an increase in deposit balances. Interest
paid on Federal Home Loan Bank advances for the two comparable periods was
unchanged. The average rate on interest-bearing liabilities increased to
5.18% for the nine month period in 1996 from 5.00% in the comparable period
of 1995.
Table 6 - Average Balances, Interest and Average Rates
9-30-96 (in thousands) 9-30-95
Average Average Average Average
Balance Interest Rate Balance Interest Rate
Assets:
Federal Funds Sold $ 5,046 $ 199 5.26% $ 2,123 $ 89 5.59%
Investments:
Securities--Taxable 11,103 543 6.52% 7,460 387 6.92%
Non-Taxable -0- -0- N/A N/A
Total Loans, Including
Fees 50,555 3,772 9.95% 40,641 2,976 9.76%
Total Interest Earning
Assets 66,704 4,514 9.02% 50,224 3,452 9.16%
Cash and Due From Banks 2,484 2,311
All Other Assets 3,731 3,385
Loan Loss Reserve/
Unearned Fees (1,412) (1,243)
TOTAL ASSETS $71,507 $54,677
Liabilities and Stockholders Equity:
Interest Bearing Deposits:
Time Deposits $41,641 $1,834 5.87% $29,436 $1,249 5.66%
Other 14,413 344 3.18% 12,003 304 3.38%
FHLB Advances 47 3 8.51% 48 3 8.33%
Federal Funds Purchased -0- -0- N/A 104 5 6.41%
Total Interest-Bearing
Liabilities 56,101 2,181 5.18% 41,591 1,561 5.00%
Non-Interest Bearing
Deposits 9,149 7,457
Total Cost of Funds 4.46% 4.24%
Net Interest Income 2,333 1,891
All Other Liabilities 501 420
Stockholders Equity 5,852 5,203
Unrealized Gain/Loss on
Securities (96) (84)
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $71,507 $54,677
Net Interest Yield 3.84% 4.16%
Net Interest Margin 4.66% 5.02%
Table 7 - Interest Rate Sensitivity
(In Thousands) September 30, 1996
Less One Year Greater Non-
Than Through Than Interest
1 Year 5 Years 5 Years Bearing Total
Asset:
Federal Funds Sold $ 1,700 $ 1,700
Investments 981 $ 5,443 $ 5,152 11,576
Loans - Fixed Rate 11,831 26,779 69 38,679
Floating Rate 17,407 70 17,477
Non-Interest Earning Assets
and Unearned Assets/Loan
Loss Reserve 6,063 6,063
31,919 32,292 5,221 6,063 75,495
Liabilities and Stockholders Equity:
Interest-Bearing Deposits 50,629 7,978 -0- 58,607
Non-Interest Bearing Deposits 10,445 10,445
FHLB Advances 46 46
Noninterest Bearing Liabilities
and Stockholders Equity 6,397 6,397
Total 50,629 7,978 46 16,842 75,495
Interest Rate Sensitivity Gap (18,710) 24,314 5,175 (10,779) 0
Cumulative Interest Rate
Sensitivity Gap $(18,710) $ 5,604 $10,779 $ -0- $ -0-
OTHER INCOME
Total other income was $307,000 for the nine month period ended September 30,
1996 as compared to $269,000 for the same period in 1995, an increase of
$38,000. Other income is comprised primarily of customer service fees and
other items. Contributing to the increase in other income was a modest growth
of $42,000 in checking service fees and NSF charges resulting primarily from
an increase in the number of checking accounts.
OPERATING EXPENSES
Total operating expenses were $1,612,000 annualized 3.01% of average total
assets, for the nine month period ended September 30, 1996 as compared to
$1,403,000, or 3.42%, for the same period in 1995. Both the salaries and
employee benefits and occupancy and equipment categories of expenses increased
when comparing the two periods as a result of the addition of a new branch in
Farragut, Tennessee during the second quarter of 1995. Deposit insurance
expense decreased approximately $45,000 when comparing the two periods due to
the reduction of Federal Deposit Insurance Corporation (FDIC) premiums.
INCOME TAXES
The Bank recognizes income taxes under the asset and liability method
established in Financial Accounting Standards Board Statement No. 109,
Accounting for Income Taxes. Under this method, deferred tax assets and
liabilities are established for the temporary differences between the
accounting basis and the tax basis of the Bank's assets and liabilities at
enacted tax rates expected to be in effect when the amounts related to such
temporary differences are realized or settled. The Bank's deferred tax asset
is reviewed quarterly and adjustments to such asset are recognized as deferred
income tax expense or benefit based on management's judgment relating to the
realizability of such asset.
During the nine month period ending September 30, 1996, the Bank recorded
$327,000 in tax expense which resulted in an approximate effective rate of
39%. Comparably, in 1995, the Bank recorded $252,000 in tax expense,
resulting in an approximate effective rate of 38%.
BRANCH ACTIVITY
During the third quarter ended September 30, 1996 the Bank opened a loan
production office in Oak Ridge, Tennessee. Oak Ridge is in Anderson county
which is an adjacent county to Loudon county, where the main office is
located. Management expects loan fees and interest to increase as a result
of the new office. Also during the third quarter, the Bank completed the
renovation and expansion of it's Loudon branch which should better serve that
community.
<PAGE>
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
PART 1 - OTHER INFORMATION
Item 1. Legal Proceedings
None.
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
(a) Exhibits 27 - Financial Data Schedule.
Exhibit 27 - Financial Data Schedule
9-30-96
Amount (In Thousands)
Cash $3,708
Interest-Bearing Deposits -0-
Federal Funds Sold 1,700
Trading Assets -0-
Investments AFS 11,576
Investments HTM -0-
Investments-Market -0-
Loans, Net of Unearned Fees and Interest 55,118
Allowance for Losses 551
Total Assets 75,484
Deposits 69,055
Short-Term Borrowings -0-
Other Liabilities 462
Long-Term Debt -0-
Preferred Stock-Mandatory -0-
Preferred-Non Mandatory -0-
Common Stock 2,334
Other Stockholders Equity 3,427
Total Liab.-Stockh. Equity 75,495
Interest on Loans 3,772
Interest on Investments 543
Other Interest Income 199
Total interest Income 4,514
Interest on Deposits 2,178
Total Interest Expense 2,181
Net Interest Income 2,333
Provision-Loan Losses 193
Securities-Gain/Loss -0-
Other Expenses 1,615
Income Before Tax 832
Income Before Extraordinary 508
Extraordinary Less Tax -0-
<PAGE>
Exhibit 27 - Financial Data Schedule (Continued)
Cumul. Change Acct. Principal -0-
Net Income 508
Earnings Per Share-P 1.10
Earnings Per Share-D 1.10
Net Interest Yield-EA 3.84
Loans-Non Accrual -0-
Loans Past Due > 90 Days 53
Troubled Debt Restructuring -0-
Potential Problem Loans -0-
Allowance-Beginning 434
Total Charge-Offs 102
Total Recoveries 26
Allowance End of Period 551
Loan Loss-Domestic 424
Loan Loss-Foreign -0-
Loan Loss-Unallocated 127
(b) Reports on Form 8-K, None.
<PAGE>
FORM IO-QSB(A)
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.
FIRST CENTRAL BANCSHARES, INC.
Date: _______ By: ____________________________________________________
Ed. F. Bell Chairman, President and Chief Executive
Officer
Date: _______ By: ____________________________________________________
Willard D. Price Executive Vice President and Chief
Financial Officer
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