<PAGE>
<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission File Number: 0-25290
Twin City Bancorp, Inc.
--------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Tennessee 62-1582947
- ----------------------- -----------------
(State of incorporation) (I.R.S. Employer
Identification No.)
310 State Street, Bristol Tennessee 37620
- -----------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(423) 989-4400
--------------
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 require
ments for the past ninety days: Yes x No
----- -----
As of September 30, 1996, there are 860,576 shares of the
registrant's Common Stock, par value $1.00 per share, issued and
outstanding.
Transitional small business disclosure format (check one):
Yes No x
----- -----
<PAGE>
<PAGE>
TWIN CITY BANCORP, INC. AND SUBSIDIARIES
----------------------------------------
Bristol, Tennessee
------------------
INDEX
-----
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - (Unaudited) as of December
31, 1995 and September 30, 1996
Consolidated Statements of Income - (Unaudited) for the
nine month and three month periods ended September 30,
1995 and 1996
Consolidated Statements of Cash Flows- (Unaudited) for
the nine month periods ended September 30, 1995 and 1996
Notes to (Unaudited) Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
<PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Balance Sheets
(unaudited)
(in thousands)
December 31, September 30,
1995 1996
------------ ------------
Assets
- ------
<S> <C> <C>
Cash and due from banks $ 1,293 $ 1,800
Interest-earning deposits 3,316 1,038
Federal funds 300 -
Certificates of deposit 196 98
Investment securities (amortized cost -
$9,365 and $9,843) 9,396 9,816
Loans receivable, net 72,477 78,744
Loans held for sale 533 62
Mortgage-backed securities (amortized cost -
$11,446 and $11,556) 11,464 11,400
Premises and equipment, net 1,503 1,517
Real estate, net 375 436
Federal Home Loan Bank stock 626 659
Interest receivable 414 386
Other 658 1,111
-------- --------
Total Assets $102,551 $107,067
======== ========
</TABLE>
(continued on next page)<PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Balance Sheets
(unaudited)
(in thousands)
December 31, September 30,
1995 1996
------------ -------------
Liabilities and Stockholders' Equity
- ------------------------------------
<S> <C> <C>
Deposits $ 83,211 $ 85,709
Federal Home Loan Bank advances 4,000 5,200
Advance payments by borrowers for taxes
and insurance 358 1,368
Accrued expenses and other liabilities 352 926
Income taxes payable:
Deferred 372 453
-------- --------
Total Liabilities 88,293 93,656
Stockholders' Equity
Common stock ($1 par value, 8,000,000
shares authorized; 898,404 shares issued and
outstanding at December 31, 1995 and 860,576
shares issued and outstanding at September 30, 1996) 899 861
Paid-in capital 7,488 7,185
Retained earnings, substantially restricted 6,575 6,358
Unearned compensation:
Employee stock ownership plan (647) (593)
Management recognition plan (85) (284)
Net unrealized gains (losses) on securities
available-for-sale, net of income taxes 28 (116)
-------- --------
Total Stockholders' Equity 14,258 13,411
-------- --------
Total Liabilities and Stockholders' Equity $102,551 $107,067
======== ========
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
<PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Statements of Income
(unaudited)
(in thousands)
Nine Months Ended Three Months Ended
September 30, September 30,
----------------- --------------------
1995 1996 1995 1996
------- ------- ------ --------
<S> <C> <C> <C> <C>
Interest income:
Loans $4,627 $4,920 $1,591 $1,679
Mortgage-backed securities 497 583 211 181
Investment securities 419 432 145 148
Interest-bearing deposits 150 102 40 26
------ ------ ------ ------
Total interest income 5,693 6,037 1,987 2,034
------ ------ ------ ------
Interest expense:
Deposits 2,698 2,862 959 972
Federal Home Loan Bank advances 177 161 54 68
------ ------ ------ ------
Total interest expense 2,875 3,023 1,013 1,040
------ ------ ------ ------
Net interest income 2,818 3,014 974 994
Provision (recovery) for loan losses (20) 107 25 57
------ ------ ------ ------
Net interest income after
provision for loan losses 2,838 2,907 949 937
------ ------ ------ ------
Non-interest income:
Loan fees and service charges 282 234 85 86
Insurance commission and fees 56 67 21 26
Gain on sale of securities 30 - 1 -
Gain on sale of loans 79 116 32 37
Income from rental of real estate 139 98 42 33
Other 39 30 20 7
------ ------ ------ ------
Total non-interest income 625 545 201 189
------ ------ ------ ------
Non-interest expense:
Compensation and employee benefits 1,075 1,065 364 336
Net occupancy expense 177 172 62 57
Deposit insurance premiums 142 678 47 583
Data processing 134 148 44 48
Provision for real estate losses 74 45 15 15
Other 559 468 208 166
------ ------ ------ ------
Total non-interest expense 2,161 2,576 740 1,205
------ ------ ------ ------
Income (loss) before income taxes 1,302 876 410 (79)
Income tax expense (benefit) 499 331 156 (31)
------ ------ ------ ------
Net income (loss) $ 803 $ 545 $ 254 $ (48)
====== ====== ====== ======
Dividends paid per share $ 0.25 $ 0.62 $ 0.15 $ 0.16
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.<PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Nine Months Ended
September 30,
---------------------
1995 1996
------- -------
<S> <C> <C>
Net cash provided (used) by
operating activities $ 904 $ 992
--------- -------
Cash flows from investing activities:
Purchase of investment securities
classified as available-for-sale (4,343) (2,977)
Maturities of investment securities 2,000 2,500
Proceeds from sale of investment securities 3,512 -
Purchase of certificates of deposit (500) (98)
Maturities of certificates of deposit 696 196
Principal payments on mortgage-backed
securities 962 1,983
Purchase of mortgage-backed securities
classified as available-for-sale (2,614) (1,526)
Increase in cash surrender value of
life insurance (1) (1)
Proceeds from sale of real estate 125 -
Net decrease (increase) in loans originated (2,657) (5,064)
Purchase of loans (1,340) (1,531)
Purchase of premises and equipment (92) (113)
Proceeds from sale of FHLB stock 21 -
------- -------
Net cash provided (used) by
investing activities (4,231) (6,631)
------- -------
Cash flows from financing activities:
Increase (decrease) in deposits 896 2,498
Increase in advance payments by borrowers
for taxes and insurance 926 1,010
Proceeds from FHLB advances 2,000 5,600
Repayment of FHLB advances (3,600) (4,400)
Dividends paid (225) (516)
Acquisition of treasury stock - (624)
------- -------
Net cash provided (used) by
financing activities (3) 3,568
------- -------
Net increase (decrease) in cash (3,330) (2,071)
Cash at beginning of year 6,581 4,909
------- -------
Cash at end of the quarter $ 3,251 $ 2,838
======= =======
</TABLE>
(continued on next page)<PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
Nine Months Ended
September 30,
---------------------
1995 1996
------- -------
<S> <C> <C>
Supplemental disclosures:
Noncash investing and financing activities:
Loans sold in exchange for mortgage-backed
security $ 2,079 $ 589
======= =======
Transfer from held-to-maturity to
available-for-sale $17,628 $ -
======= =======
Unrealized loss on securities
available-for-sale, net of income taxes $ 86 $ 144
======= =======
Capitalized mortgage servicing rights $ 62 $ 281
======= =======
Cash paid during the period for:
Interest $ 2,891 $ 2,995
======= =======
Income taxes (net of refunds) $ 341 $ 415
======= =======
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements. <PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONSOLIDATED FINANCIAL STATEMENTS
Note 1. - Basis of Presentation and Principals of Consolidation
-----------------------------------------------------
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and in accordance
with the instructions to Form 10-QSB. Accordingly, they do not
include all of the disclosures required by generally accepted
accounting principles for complete financial statements. These
consolidated financial statements include the accounts of Twin
City Bancorp, Inc. and its subsidiary, Twin City Federal Savings
Bank, and the Bank's wholly owned subsidiaries, TCF Investors,
Inc. and Magnolia Investment, Inc., and in consolidation all
significant intercompany items are eliminated. In the opinion of
management, all adjustments necessary for a fair presentation of
the results of operations for the interim periods presented have
been made. Such adjustments were of a normal recurring nature.
The results of operations for the interim periods are not
necessarily indicative of the results that may be expected for
the entire fiscal year.
Note 2. - Cash Flow Information
---------------------
As presented in the consolidated statements of cash flows, cash
and cash equivalents include cash on hand, interest-earning
deposits in other banks, and federal funds sold. The Company
considers all highly liquid instruments with original maturities
of three months or less to be cash equivalents.
Note 3. - Retained Earnings, Substantially Restricted
-------------------------------------------
Retained earnings represents the accumulated net income of the
Company since its origination date. In connection with the
insurance of savings accounts for the Bank, the Federal Deposit
Insurance Corporation (FDIC) requires that certain minimum
amounts be restricted to absorb certain losses as specified in
the insurance of accounts regulations. Because restricted
retained earnings is not related to amounts of losses actually
anticipated, the appropriations thereto have not been charged to
income in the accompanying consolidated financial statements.
Furthermore, the use of retained earnings by the Bank is
restricted by certain requirements of the Internal Revenue Code.
There are further restrictions on retained earnings directed by
the Office of Thrift Supervision where by the Bank is subject to
maintain a minimum amount of regulatory capital as well as a
liquidation account for the benefit of eligible account holders
who continue to maintain their accounts at the Bank after the
conversion.
Note 4. - New Accounting Standards
------------------------
The FASB has issued SFAS No. 121, " Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed
of". SFAS 121 requires that long-lived assets and certain
identifiable intangibles to be held and used by an entity be
reviewed for impairment whenever events or changes in circum-
stances indicate that the carrying amount of an asset may not be
recoverable. In evaluating recoverability, if estimated future
cash flows, discounted and without interest charges, are less<PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONSOLIDATED FINANCIAL STATEMENTS
than carrying amount of the asset, an impairment loss is
recognized. SFAS 121 also requires that certain long-lived
assets and certain identifiable intangibles to be disposed of be
reported at the lower of carrying amount or fair value less cost
to sell. SFAS 121 applies prospectively for fiscal years
beginning after December 15, 1995. At the present time, the
statement has no material effect on the consolidated financial
statements.
Note 5. - Stock Option Plan
-----------------
In 1995, the Company adopted a stock option plan for the benefit
of directors, officers, and other key employees of the Company.
The number of shares of common stock reserved for issuance under
the stock option plan was equal to 10% of the total number of
common shares issued pursuant to the Company's offering. The
plan provides for incentive options for officers and employees
and non-incentive options for directors. The plan is
administered by a committee of at least three directors of the
Company. The option exercise price cannot be less than the fair
value of the underlying common stock as of the date of the option
grant, and the maximum option term cannot exceed ten years. The
number of shares of common stock authorized under the stock
option and incentive plan was 89,840. As of September 30, 1996,
22,460 non-incentive stock options have been granted to directors
and are exercisable on a cumulative basis in equal installments
over a five year period. The incentive stock options awarded to
officers and other key employees totalled 64,388 at September 30,
1996 with 62,888 exercisable on a cumulative basis in equal
installments over a five year period, and 1,500 exercisable upon
the date of option grant. As of September 30, 1996, 86,848
options have been granted, of which none have been exercised.
Options totaling 85,348 were granted with an exercise price of
$14 per share and the remaining 1,500 at $16.875 per share.
During the quarter ended September 30, 1996, the Company
established a stock option plan trust for the principal purpose
of acquiring and holding shares of common stock in the open
market to be issued to option holders upon the exercise of
options granted under the plan.
Note 6. - Management Recognition Plan
---------------------------
In 1995, the Company established a management recognition plan
("MRP") under which 35,936 shares of common stock were awarded to
participants. The plan share awards were granted to certain
employees and officers of the Company who began vesting on May
24, 1996 and be fully vested on May 24, 2000. The number of
shares awarded to certain employees and officers was 35,936.
Compensation expenses, in the amount of the fair value of the
common stock at the date plan shares are purchased, will be
recognized during the periods the participants become vested. As
of September 30, 1996, 27,000 shares of common stock had been
purchased in the open market by the MRP's trust to fund the MRP
and the remaining 8,936 shares will be purchased over the vesting
period. The unamortized balance of unearned compensation is
reflected as a reduction of stockholders' equity. For the nine
months and quarter ended September 30, 1996, $74,000 and $25,000
have been recognized as compensation expense, respectively.
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONSOLIDATED FINANCIAL STATEMENTS
Note 7. - Mortgage Servicing Rights
-------------------------
In June 1995, the Company began accounting for mortgage servicing
rights (MSRS) in accordance with the implementation of Statement
of Financial Accounting Standards No. 122, "Accounting for
Mortgage Servicing Rights". At December 31, 1995 and September
30, 1996, the fair value of MSRS capitalized was approximately
$152,000 and $281,000, respectively. Fair value is determined on
an individual loan basis for MSRS capitalized using valuing
methodology consistent with loans currently available for sale
with similar interest rates and maturity terms.
The amount of MSRS capitalized and amortized for the nine months
ending September 30, 1996, was approximately $156,000 and
$18,000, respectively. The amount of MSRS capitalized and
amortized for the quarter ending September 30, 1996 was
approximately $44,000 and $7,000 respectively. MSRS are being
amortized in proportion to and over the period of estimated net
servicing income. An allowance of $9,000 for valuation of MSRS
has been recorded as of and for the nine months ending September
30, 1996.
Note 8. - Investment and Mortgage-Backed Securities
-----------------------------------------
The Company records investments in debt and equity securities in
accordance with SFAS No. 115. SFAS No. 115 requires that all
investments in debt securities and all investments in equity
securities that have readily determinable fair values be
classified into three categories. Securities that management has
positive intent and ability to hold until maturity will be
classified as held-to-maturity. Securities that are bought and
held specifically for the purposes of selling them in the near
term will be classified as trading securities. All other
securities will be classified as available-for-sale. Securities
classified as trading and available-for-sale will be carried at
market value.
All investment and mortgage-backed securities have been
identified as available-for-sale at December 31, 1995 and
September 30, 1996. At December 31, 1995, the Company held $9.4
million of investment securities and $11.4 million of mortgage-
backed securities with unrealized gains of $49,000 as available-
for-sale. At September 30, 1996, the Company held $9.8 million
of investment securities and $11.6 million of mortgage-backed
securities with unrealized losses of $183,000 as available-for-
sale. The net unrealized gains and losses at December 31,1995
and September 30, 1996, net of the related tax benefits, are
reported as a separate component of stockholders' equity.
Note 9. - Deposit Insurance Premiums
--------------------------
The Company has recorded a liability at September 30, 1996 for
the one-time special assessment levied by the omnibus
appropriation bill to recapitalize the SAIF insurance fund and
resolve the BIF/SAIF premium disparity. The special assessment
for deposit insurance premiums of approximately $534,000 has been
reflected in operations for the quarter ending September 30, 1996
with an after tax impact on net income of approximately $332,000.
The FDIC will collect the assessment in late November and
effective January 1, 1997 the Company will begin paying reduced
premium assessments in accordance with the BIF/SAIF legislation.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
--------------------------------------------------
The Company's total consolidated assets increased $4.5
million, or 4.4% to $107.1 million at September 30, 1996 from
$102.6 million at December 31, 1995. Interest-earning deposits
and federal funds decreased $2.6 million as the Company has
experienced an increase in mortgage and consumer/commercial loan
originations. Net loans receivable increased $6.2 million or
8.7% from $72.5 million at December 31, 1995 to $78.7 million at
September 30, 1996. The Company originated 245 mortgage loans
during the nine months ended September 30, 1996 as compared to
176 originations during the nine months ended September 30, 1995.
The increase in 1996 over 1995 was due to increased efforts by
loan officers and originators to market the Company's mortgage
products and a general decrease in the prevailing interest rates
for the Company's mortgage products. The Company has sold the
majority of its fixed-rate originations during the nine months
ended September 30, 1996 to the Federal Home Loan Mortgage
Corporation (FHLMC), servicing retained and without recourse.
Total real estate loans amounted to $54.6 million at September
30, 1996 as compared to $52.1 million at December 31, 1995.
Consumer/commercial loans increased 16.7%, from $21.9 million at
December 31, 1995 to $25.5 million at September 30, 1996. The
increase is attributable to increased consumer interest in
automobile and equity loans. The Company's portfolio of
investment securities increased $420,000 or 4.5% from $9.4
million at December 31, 1995 to $9.8 million at September 30,
1996. The Company's portfolio of mortgage-backed securities
decreased $64,000 or 0.6% from $11.5 million at December 31, 1995
to $11.4 million at September 30, 1996.
Deposits increased $2.5 million or 3.0% from $83.2 million
at December 31, 1995 to $85.7 million at September 30, 1996.
Federal Home Loan Bank advances increased $1.2 million at
September 30, 1996 from December 31, 1995.
Total stockholders' equity has decreased $847,000, or 5.9%
from $14.3 million at December 31, 1995 to $13.4 million at
September 30, 1996. The Company posted net income of $545,000
for the nine months ended September 30, 1996 while paying
dividends totaling $0.62 per share of common stock outstanding,
or $516,000. During the nine months ended September 30, 1996,
management pursued further funding for the Company's Management
Recognition Plan (MRP) by funding the MRP trust's purchase of
16,000 shares of common stock in the open market at a total
purchase price of $272,000, while recognizing an expense of
$73,000 resulting in a net increase of $199,000 in unearned
compensation for the MRP. In addition, the Company has in place
a program to possibly repurchase up to 44,920, or approximately
5%, of its outstanding shares. As of September 30, 1996, the
Company had repurchased 37,828 shares at an average price of
$16.507 per share. The Company, in accordance with SFAS No. 115,
has classified its entire portfolio of investment and mortgage-
backed securities as available-for-sale. Net unrealized gains
and losses on securities available-for-sale are reported as a
component of stockholders' equity. At September 30, 1996, the
Company reported net unrealized losses on securities available-
for-sale, net of income taxes, of $116,000 as compared to net
unrealized gains on securities available-for-sale, net of income
taxes, of $28,000 at December 31, 1995.
<PAGE>
<PAGE>
Net interest income for the nine months ended September 30,
1996 increased $196,000 over the nine months ended September 30,
1995 from $2.8 million to $3.0 million, and for the three months
ended September 30, 1996 increased $20,000 over the three months
ended September 30, 1995 from $974,000 to $994,000. The increase
in net interest income for the nine months ended September 30,
1996 over the nine months ended September 30, 1995 was primarily
attributable to an improvement in the interest rate spread while
the increase in net interest income for the three months ended
September 30, 1996 over the three months ended September 30 1995
was primarily attributable to an increase in the average balance
of interest earning assets offset by a reduction in the average
cost on interest-bearing liabilities. The interest rate spread
increased from 3.43% for the nine months ended September 30, 1995
to 3.55% for the nine months ended September 30, 1996 and
decreased from 3.50% for the three months ended September 30,
1995 to 3.43% for the three months ended September 30, 1996. The
net interest margin increased from 3.94% for the nine months
ended September 30, 1995 to 4.07% for the nine months ended
September 30, 1996 and decreased from 4.05% for the three months
ended September 30, 1995 to 3.92% for the three months ended
September 30, 1996. The average yield on interest earning assets
increased 20 basis points from 7.95% for the nine months ended
September 30, 1995 to 8.15% for the nine months ended September
30, 1996 and decreased 22 basis points from 8.25% for the three
months ended September 30, 1995 to 8.03% for the three months
ended September 30, 1996. The average cost on interest-bearing
liabilities increased 8 basis points from 4.52% for the nine
months ended September 30, 1995 to 4.60% for the nine months
ended September 30, 1996 and decreased 16 basis points from 4.76%
for the three months ended September 30, 1995 to 4.60% for the
three months ended September 30, 1996. The average balance of
interest-earning assets was $95.5 million for the nine months
ended September 30, 1995 as compared to $98.8 million for the
nine months ended September 30, 1996 and was $96.3 million for
the three months ended September 30, 1995 as compared to $101.3
million for the three months ended September 30, 1996. The
average balance of interest-bearing liabilities was $84.8 million
for the nine months ended September 30, 1995 as compared to $87.6
million for the nine months ended September 30, 1996 and was
$85.2 million for the three months ended September 30, 1995 as
compared to $90.4 million for the three months ended September
30, 1996.
The provisions (recoveries) for loan losses amounted to
$(20,000), $107,000, $25,000 and $57,000 for the nine months and
three months ended September 30, 1995 and 1996, respectively. At
September 30, 1996, management reviewed the allowance for loan
losses in relation to the Company's performance with past
collections and charge offs, management's experience with the
loan portfolio, and observations of the general economic climate
and loan loss expectations. From this review and analysis and
based on management's experience and judgement in managing the
loan portfolio, it was determined that the allowance for loan
losses needed to be $213,000 and therefore a $57,000 provision
was recorded for the quarter ended September 30, 1996. At
September 30, 1996 the allowance represented 155% of total loans
past due more than ninety days.
Non-interest income decreased $80,000 from $625,000 for the
nine months ended September 30, 1995 to $545,000 for the nine
months ended September 30, 1996 and decreased $12,000 from
$201,000 for the three months ended September 30, 1995 to
$189,000 for the three months ended September 30, 1996. The
primary decrease for the nine months ended September 30, 1996 was<PAGE>
<PAGE>
in loan fees and service charges which amounted to $234,000 as
compared to $282,000 for the nine months ended September 30,
1995. Gain on sale of securities for the nine months ended
September 30, 1995 was $30,000 for which the same period of 1996
showed no gains on the sale of securities. Gain on the sale of
fixed-rate mortgage loans to the FHLMC recognized for the nine
months ended September 30, 1995 was $79,000 as compared to
$116,000 for the nine months ended September 30, 1996 and was
$32,000 for the three months ended September 30, 1995 as compared
to $37,000 for the three months ended September 30, 1996. In
accordance with SFAS No. 122 "Accounting for Mortgage Servicing
Rights" additional gains on the sale of mortgage loans of
approximately $44,000 and $156,000 for the three and nine months
ended September 30, 1996, respectively, were recognized as
compared to $35,000 and $63,000 for the three and nine months
ended September 30, 1995. Income from rental of real estate
amounted to $98,000 for the nine months ended September 30, 1996
as compared to $139,000 for the nine months ended September 30,
1995 and $33,000 for the three months ended September 30, 1996 as
compared to $42,000 for the three months ended September 30,
1995. The decreases were due to the loss of a tenant at the
Company's commercial office building in Knoxville, Tennessee.
Non-interest expense for the nine months ended September 30,
1996 was 3.32% of average assets as compared to 2.88% for the
nine months ended September 30, 1995 primarily due to the expense
recorded for the one-time deposit insurance assessment. Non-
interest expense increased $415,000 from $2.2 million for the
nine months ended September 30, 1995 to $2.6 million for the nine
months ended September 30, 1996, and increased $465,000 from
$740,000 for the three months ended September 30, 1995 to $1.2
million for the three months ended September 30, 1996.
Compensation and employee benefits decreased $10,000 for the nine
months ended September 30, 1996 over the nine months ended
September 30, 1995 and decreased $28,000 from $364,000 for the
three months ended September 30, 1995 to $336,000 for the three
months ended September 30, 1996. Data processing increased
$14,000 from $134,000 for the nine months ended September 30,
1995 to $148,000 for the nine months ended September 30,1996.
For the three and nine months ended September 30, 1996, a
provision for real estate losses of $15,000 and $45,000 was
recognized, respectively. The provisions for the three and nine
months ended September 30, 1996 were considered necessary by
management due to the loss of a tenant at the Company's
commercial office building in Knoxville, Tennessee. Other
expense decreased $91,000 from $559,000 for the nine months ended
September 30, 1995 to $468,000 for the nine months ended
September 30, 1996 and decreased $58,000 from $208,000 for the
three months ended September 30, 1995 to $166,000 for the three
months ended September 30, 1996 as management has attempted to
control its miscellaneous costs of doing business in 1996.
The primary increase in non-interest expense for the nine
months and three months ended September 30, 1996 over the nine
months and three months ended September 30, 1995 was in deposit
insurance premiums. For the nine months and three months ended
September 30, 1996, the Company recorded a liability for the one-
time special assessment levied by the omnibus appropriation bill
to recapitalize the SAIF (Savings Association Insurance Fund) and
resolve the BIF (Bank Insurance Fund)/SAIF disparity in the
amount of $534,000 with an after tax impact on net income of
approximately $332,000. Prior to the recognition of the special
assessment, the Company had posted net income for the nine months
ended September 30, 1996 of $876,000 as compared to $803,000 for
the nine months ended September 30, 1995 and for the three months
ended September 30, 1996 of $284,000 as compared to $254,000 for<PAGE>
<PAGE>
the three months ended September 30, 1995. The FDIC will collect
the assessment in late November and effective January 1, 1997,
the Company will begin paying reduced premium assessments in
accordance with the BIF/SAIF legislation.
During the quarter ended September 30, 1996, the Company
began to make renovations to the interior of its main office in
Bristol, Tennessee. In addition, the Company is planning
extensive improvements at the Volunteer Parkway Branch in
Bristol, Tennessee. The interior of the branch will be upgraded
along with the expansion of the under-roof area. Management is
also pleased to report that a site in Bristol, Virginia was
acquired subsequent to September 30, 1996 and the Company plans
to construct a branch of the Bank at the site in the future
subject to regulatory approval. The costs of these upgrades and
expansions will be capitalized and the expense will be recognized
over their estimated useful lives. Management believes that
these renovations and expansions will work to enhance the revenue
and net income of the Company resulting in greater profitability
in the future.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
From time to time, the Company and any subsidiary may be a party
to various legal proceedings incident to its or their business.
At September 30, 1996, there were no legal proceedings to which
the Company or any subsidiary was a party, or to which of any of
their property was subject, which were expected by management to
result in a material loss.
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
<PAGE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
The following exhibits are filed as a part of this report:
3.1(1) Charter of Twin City Bancorp, Inc.
3.2(1) Bylaws of Twin City Bancorp, Inc.
4(1) Form of Common Stock Certificate
10.1(1),(2) Twin City Bancorp, Inc. Incentive
Compensation Plan, as amended
10.2(1) Twin City Bancorp, Inc. Deffered Compensation
Plan
10.3(3) Employment Agreements between Twin City
Bancorp, Inc. and Twin City Federal Savings
Bank and Thad R. Bowers
10.4(3) Severance Agreements between Twin City
Bancorp, Inc. and Twin City Federal Savings
Bank and Brenda N. Baer, Judith O. Bowers,
Robert C. Glover, Michael H. Phipps, Joyce
C. Rouse and John M. Wolford
10.5(1) Twin City Federal Savings Bank Supplemental
Executive Retirement Agreement
10.6(3) Twin City Bancorp, Inc. 1995 Stock Option and
Incentive Plan
10.7(3) Twin City Bancorp, Inc. Management
Recognition Plan
27 Financial Data Schedule
______________
(1) Incorporated by reference to Company's Registration
Statement on Form S-1 No. 33-84196
(2) Incorporated by reference to Company's Quarterly Report on
Form 10-QSB for the fiscal quarter ended September 30, 1995
(3) Incorporated by reference to Company's Quarterly Report on
Form 10-QSB for the fiscal quarter ended March 31, 1995
The Corporation did not file a current report on Form 8-K during
the quarter covered by this report.
<PAGE>
<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.
Date: November 8, 1996 By /s/ Thad R. Bowers
-----------------------------
Thad R. Bowers
President and Chief Executive Officer
(Principal Executive and Financial
Officer)
Date: November 8, 1996 By /s/ Albert Joseph Vance, II
-----------------------------
Albert Joseph Vance, II
Assistant Treasurer
(Principal Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted
from the consolidated financial statements of Twin City Bancorp,
Inc. and Subsidiaries in the filing to which this schedule is an
exhibit and is qualified in its entirety by reference to such
financial statements.
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