<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 June 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
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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 June 30, 1996, there are 898,404 shares of the registrant's
Common Stock, par value $1.00 per share, issued and 896,564
shares of the registrant's Common Stock outstanding.
Transitional small business disclosure format (check one):
Yes _____ No __x__
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<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 June 30, 1996
Consolidated Statements of Income - (Unaudited) for the
six month and three month periods ended June 30, 1995
and 1996
Consolidated Statements of Cash Flows- (Unaudited) for
the six month periods ended June 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, June 30,
1995 1996
------------ ---------
Assets
- ------
<S> <C> <C>
Cash and due from banks $ 1,293 $ 1,564
Interest-earning deposits 3,316 857
Federal funds 300 -
Certificates of deposit 196 196
Investment securities (amortized cost -
$9,365 and $10,337) 9,396 10,295
Loans receivable, net 72,477 74,625
Loans held for sale 533 245
Mortgage-backed securities (amortized cost -
$11,446 and $11,897) 11,464 11,705
Premises and equipment, net 1,503 1,467
Real estate, net 375 379
Federal Home Loan Bank stock 626 648
Interest receivable 414 450
Other 658 869
-------- --------
Total Assets $102,551 $103,300
======== ========
</TABLE>
(continued on next page)<PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Balance Sheets
(unaudited)
(in thousands)
December 31, June 30,
1995 1996
------------ ---------
Liabilities and Stockholders' Equity
- ------------------------------------
<S> <C> <C>
Deposits $ 83,211 $ 82,891
Federal Home Loan Bank advances 4,000 4,500
Advance payments by borrowers for taxes
and insurance 358 1,026
Accrued expenses and other liabilities 352 330
Income taxes payable:
Deferred 372 440
-------- --------
Total Liabilities 88,293 89,187
-------- --------
Stockholders' Equity
Common stock ($1 par value, 8,000,000
shares authorized; 898,404 shares issued
and outstanding at December 31, 1995
and 896,564 shares outstanding at June
30, 1996) 899 899
Paid-in capital 7,488 7,512
Treasury stock, at cost (1,840 shares at
June 30, 1996) - (31)
Retained earnings, substantially restricted 6,575 6,786
Unearned compensation:
Employee stock ownership plan (647) (611)
Management recognition plan (85) (295)
Net unrealized gains (losses) on securities
available-for-sale, net of income taxes 28 (147)
-------- --------
Total Stockholders' Equity 14,258 14,113
======== ========
Total Liabilities and Stockholders'
Equity $102,551 $103,300
======== ========
</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)
Six Months Ended Three Months Ended
June 30, June 30,
----------------- --------------------
1995 1996 1995 1996
------- ------- ------ --------
<S> <C> <C> <C> <C>
Interest income:
Loans $3,036 $3,241 $1,570 $1,631
Mortgage-backed securities 286 402 144 197
Investment securities 274 284 140 157
Interest-bearing deposits 110 76 50 32
------ ------ ------ ------
Total interest income 3,706 4,003 1,904 2,017
------ ------ ------ ------
Interest expense:
Deposits 1,739 1,890 915 940
Federal Home Loan Bank advances 123 93 57 47
------ ------ ------ ------
Total interest expense 1,862 1,983 972 987
------ ------ ------ ------
Net interest income 1,844 2,020 932 1,030
Provision (recovery) for loan losses (45) 50 (60) 25
------ ------ ------ ------
Net interest income after
provision (recovery) for loan
losses 1,889 1,970 992 1,005
------ ------ ------ ------
Non-interest income:
Loan fees and service charges 224 148 131 71
Insurance commission and fees 35 41 20 24
Gain on sale of securities 29 - 29 -
Gain on sale of loans 20 79 5 33
Income from rental of real estate 97 65 40 32
Other 19 23 9 16
------ ------ ------ ------
Total non-interest income 424 356 234 176
------ ------ ------ ------
Non-interest expense:
Compensation and employee benefits 711 729 369 373
Net occupancy expense 115 115 58 57
Deposit insurance premiums 95 95 47 48
Data processing 90 100 46 48
Provision for real estate losses 59 30 53 15
Other 351 302 198 165
------ ------ ------ ------
Total non-interest expense 1,421 1,371 771 706
------ ------ ------ ------
Income before income taxes 892 955 455 475
Income tax expense 343 362 176 179
------ ------ ------ ------
Net income $ 549 $ 593 $ 279 $ 296
====== ====== ====== ======
Dividends paid per share $ 0.10 $ 0.46 $ 0.10 $ 0.31
====== ====== ====== ======
</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)
At June 30,
---------------------
1995 1996
------- -------
<S> <C> <C>
Net cash provided (used) by
operating activities $ 622 $ 532
------- -------
Cash flows from investing activities:
Purchase of investment securities
classified as available-for-sale (3,027) (1,972)
Maturities of investment securities 1,500 1,000
Proceeds from sale of investment securities 2,034 -
Purchase of certificates of deposit (500) (98)
Maturities of certificates of deposit 196 98
Principal payments on mortgage-backed
securities 515 1,062
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 96 -
Net decrease (increase) in loans originated (1,461) (906)
Purchase of loans (989) (1,082)
Purchase of premises and equipment (84) (30)
Proceeds from sale of FHLB stock 21 -
------- -------
Net cash provided (used) by
investing activities (4,314) (3,455)
------- -------
Cash flows from financing activities:
Net increase (decrease) in deposits 1,165 (320)
Increase in advance payments by borrowers
for taxes and insurance 659 668
Proceeds from FHLB advances - 1,400
Repayment of FHLB advances (1,100) (900)
Dividends paid (90) (382)
Acquisition of treasury stock - (31)
------- -------
Net cash provided (used) by
financing activities 634 435
------- -------
Net increase (decrease) in cash (3,058) (2,488)
Cash at beginning of period 6,581 4,909
------- -------
Cash at end of the period $ 3,523 $ 2,421
======= =======
</TABLE>
(continued on next page)
<PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
<TABLE>
<CAPTION>
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
At June 30,
---------------------
1995 1996
------- -------
<S> <C> <C>
Supplemental disclosures:
Noncash investing and financing activities:
Loans sold in exchange for mortgage-backed
security $ 2,079 $ -
======= =======
Transfer from held-to-maturity to
available-for-sale $17,628 $ -
======= =======
Unrealized loss on securities
available-for-sale, net of income taxes $ 99 $ 75
======= =======
Capitalized mortgage serving rights $ 22 $ 112
======= =======
Cash paid during the period for:
Interest $ 1,881 $ 1,995
======= =======
Income taxes (net of refunds) $ 187 $ 205
======= =======
</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 circumstances 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 than the 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.
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
NOTES TO (UNAUDITED) 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 June 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 June 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 June 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.
Note 6. - Management Recognition Plan
---------------------------
In 1995, the Company established a management recognition plan
("MRP") and related trust 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 will 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 June 30,
1996, 26,200 shares of common stock had been purchased by the trust
to fund the MRP and the remaining 9,736 shares will be purchased
over the vesting period. The unamortized balance of unearned
compensation is reflected as a reduction of stockholders' equity.
For the six months and quarter ended June 30, 1996, $49,000 and
$24,000 have been recognized as compensation expense, respectively.
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 June 30, 1996, the fair
value of MSRS capitalized was approximately $152,000 and $248,000,
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 six months
ending June 30, 1996, was approximately $112,000 and $11,000,
respectively. The amount of MSRS capitalized and amortized for the
quarter ending June 30, 1996 was approximately $44,000 and $6,000
respectively. MSRS are being amortized in proportion to and over
the period of estimated net servicing income. An allowance of
$5,000 for valuation of MSRS has been recorded as of and for the
six months ending June 30, 1996.
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONSOLIDATED FINANCIAL STATEMENTS
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 June 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 June 30, 1996,
the Company held $10.3 million of investment securities and $11.9
million of mortgage-backed securities with unrealized losses of
$234,000 as available-for-sale. The net unrealized gains and losses
at December 31,1995 and June 30, 1996, net of the related tax
benefits, are reported as a separate component of stockholders'
equity.
Note 9. - Deposit Insurance Premiums
--------------------------
The Company currently pays an insurance premium to the Federal Deposit
Insurance Corporation (FDIC) equal to a percentage of its total
deposits as a member of the Savings Association Insurance Fund (SAIF).
The FDIC has adopted lower insurance premium rates for members of the
Bank Insurance Fund (BIF). The disparity in insurance premiums
between BIF and SAIF could create a competitive disadvantage for SAIF
members. A proposed alternative to mitigate the effect is the
assessment of a special premium of approximately .85% of deposits in
order to recapitalize the SAIF and to permit a subsequent lowering of
the SAIF insurance premium rates.
If the proposal is realized, the Company would recognize an immediate
charge to earnings for the amount of the fee which would immediately
reduce its capital. After recapitalization, it is expected that the
SAIF and BIF premiums would be equalized and therefore provide the
Company with reduced insurance premiums in the future. However,
management of the Company is unable to predict whether this proposal
will be enacted or whether ongoing SAIF premiums will be reduced to
a level equal to that of BIF premiums. It is anticipated that the
ultimate effects of the proposed insurance premium assessment may be
recognized in 1996.
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
-----------------------------------------------------------
The Company's total consolidated assets increased $749,000, or
0.7% to $103.3 million at June 30, 1996 from $102.6 million at
December 31, 1995. Interest-earning deposits and federal funds
decreased $2.8 million as the Company has sought to invest idle cash
in investment and mortgage-backed securities which have a higher
yield. Net loans receivable increased $2.1 million or 3.0% from
$72.5 million at December 31, 1995 to $74.6 million at June 30, 1996.
The Company originated 170 mortgage loans during the six months ended
June 30, 1996 as compared to 99 originations during the six months
ended June 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. The Company has sold the majority of
its fixed-rate originations during the six months ended June 30, 1996
to the Federal Home Loan Mortgage Corporation (FHLMC), servicing
retained and without recourse. Total real estate loans amounted to
$53.0 million at June 30, 1996 as compared to $52.1 million at
December 31, 1995. Consumer/commercial loans increased 9.5%, from
$21.9 million at December 31, 1995 to $24.0 million at June 30, 1996.
The increase is attributable to increased consumer interest in
automobile and equity loans. The Company's portfolio of investment
securities increased $899,000 or 9.6% from $9.4 million at December
31, 1995 to $10.3 million at June 30, 1996. The Company's portfolio
of mortgage-backed securities increased $241,000 or 2.1% from $11.5
million at December 31, 1995 to $11.7 million at June 30, 1996.
Deposits decreased $320,000 or 0.4% from $83.2 million at
December 31, 1995 to $82.9 million at June 30, 1996. Federal Home
Loan Bank advances increased $500,000 at June 30, 1996 from December
31, 1995.
Total stockholders' equity has decreased $145,000, or 1.0% from
$14.3 million at December 31, 1995 to $14.1 million at June 30, 1996.
The Company posted net income of $593,000 for the six months ended
June 30, 1996 while paying dividends totaling $0.46 per share of
common stock outstanding, or $382,000. During the six months ended
June 30, 1996, management pursued further funding for the Company's
Management Recognition Plan (MRP) by funding the purchase by the MRP
trust of 15,200 shares of common stock at a total purchase price of
$259,000, while recognizing an expense of $49,000 resulting in a net
increase of $210,000 in unearned compensation for the MRP. In
addition, the Company has adopted a program to possibly repurchase up
to 44,920, or approximately 5%, of its outstanding shares. At June
30, 1996, the Company had repurchased 1,840 shares at an average
price of $16.532, and since that date the Company has repurchased
33,365 shares at an average price of $16,502. 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 June 30, 1996,
the Company reported net unrealized losses on securities available-
for-sale, net of income taxes, of $147,000 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 six months ended June 30, 1996
increased $176,000 over the six months ended June 30, 1995 from
$1.8 million to $2.0 million, and for the three months ended June
30, 1996 increased $98,000 over the three months ended June 30, 1995
from $932,000 to $1.0 million. The increases were primarily
attributable to an improvement in the interest rate spread which
increased from 3.38% for the six months ended June 30, 1995 to
3.61% for the six months ended June 30, 1996 and increased from
3.37% for the three months ended June 30, 1995 to 3.66% for the
three months ended June 30, 1996. The net interest margin increased
from 3.88% for the six months ended June 30, 1995 to 4.14% for the
six months ended June 30, 1996 and increased from 3.91% for the
three months ended June 30, 1995 to 4.19% for the three months
ended June 30, 1996. The average yield on interest earning assets
increased 41 basis points from 7.80% for the six months ended June
30, 1995 to 8.21% for the six months ended June 30, 1996 and
increased 21 basis points from 7.99% for the three months ended
June 30, 1995 to 8.20% for the three months ended June 30, 1996.
The average cost on interest-bearing liabilities increased 18 basis
points from 4.42% for the six months ended June 30, 1995 to 4.60%
for the six months ended June 30, 1996 while decreasing 8 basis points
from 4.62% for the three months ended June 30, 1995 to 4.54%
for the three months ended June 30, 1996. The average
balance of interest-earning assets was $95.0 million for the six
months ended June 30, 1995 as compared to $97.5 million for the
six months ended June 30, 1996 and was $95.3 million for the three
months ended June 30, 1995 as compared to $98.3 million for the
three months ended June 30, 1996. The average balance of
interest-bearing liabilities was $84.2 million for the six months
ended June 30, 1995 as compared to $86.2 million for the six months
ended June 30, 1996 and was $84.1 million for the three months
ended June 30, 1995 as compared to $87.0 million for the three
months ended June 30, 1996.
The provisions (recoveries) for loan losses amounted to
$(45,000), $50,000, $(60,000) and $25,000 for the six months and
three months ended June 30, 1995 and 1996, respectively. At June
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 $181,000 and therefore a $25,000 provision was recorded
for the quarter ended June 30, 1996. At June 30, 1996 the allowance
represented 274% of total loans past due more than ninety days.
<PAGE>
<PAGE>
Non-interest income decreased $68,000 from $424,000 for the six
months ended June 30, 1995 to $356,000 for the six months ended June
30, 1996 and decreased $58,000 from $234,000 for the three months
ended June 30, 1995 to $176,000 for the three months ended June 30,
1996. The primary decrease for the six months ended June 30, 1996
was in loan fees and service charges which amounted to $148,000 as
compared to $224,000 for the six months ended June 30, 1995. Gain
on sale of securities for the six months and three months ended June
30, 1995 was $29,000 for which the same periods 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 six months ended
June 30, 1995 was $20,000 as compared to $79,000 for the six months
ended June 30, 1996 and was $5,000 for the three months ended
June 30, 1995 as compared to $33,000 for the three months and
June 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 $112,000 for the three and six
months ended June 30, 1996, respectively, were recognized as
compared to $27,000 for the three and six months ended June 30,
1995. Income from rental of real estate amounted to $65,000 for
the six months ended June 30, 1996 as compared to $97,000 for the
six months ended June 30, 1995 and $32,000 for the three months ended
June 30, 1996 as compared to $40,000 for the three months ended June
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 six months ended June 30, 1996 was
2.69% of average assets as compared to 2.85% for the six months ended
June 30, 1995. Non-interest expense decreased $50,000 for the six
months ended June 30, 1996, and decreased $65,000 from $771,000 for
the three months ended June 30, 1995 to $706,000 for the three months
ended June 30, 1996. Compensation and employee benefits increased
$18,000 from $711,000 for the six months ended June 30, 1995 to
$729,000 for the six months ended June 30, 1996 and increased $4,000
from $369,000 for the three months ended June 30, 1995 to $373,000
for the three months ended June 30, 1996. The increase for the
three and six month periods were a direct result of normal salary
and wage increases and the recognition of additional compensation
from the Company's MRP. Data processing increased $10,000 from
$90,000 for the six months ended June 30, 1995 to $100,000 for the
six months ended June 30,1996. For the three and six months ended
June, 30 1996, a provision for real estate losses of $15,000 and
$30,000 was recognized, respectively. The provisions for the three
and six months ended June 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
$49,000 from $351,000 for the six months ended June 30, 1995 to
$302,000 for the six months ended June 30, 1996 and decreased
$33,000 from $198,000 for the three months ended June 30, 1995 to
$165,000 for the three months ended June 30, 1996 as management has
attempted to control it's miscellaneous costs of doing business in
1996.
The FDIC has proposed a one-time assessment on all SAIF-insured
deposits, in the range of 85 cents to 90 cents per $100 of domestic
deposits, held as of March 31, 1995. This one-time assessment is
intended to recapitalize the SAIF to the required level of 1.25% of
insured deposits, and could be payable during 1996.
If the assessment is made at the proposed rate, the effect on
Twin City Bancorp, Inc. would be a pretax charge of approximately
$628,000 (0.85% on deposits of $80.3 million at March 31, 1995) or
$423,00 after tax (38% assumed tax rate).
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
-----------------
Item 1. Legal Proceedings
-----------------
From time to time, the Company and any subsidiaries may be a
party to various legal proceedings incident to its or their
business. At June 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
---------------------------------------------------
On May 24, 1996, the registrant held its annual meeting of
stockholders. At the meeting, the following directors were
elected by the stockholders to serve for three year terms:
<TABLE>
<CAPTION>
Votes
----------------- Broker
For Withheld Abstentions Non-Votes
--- -------- ------------- ---------
<S> <C> <C> <C> <C>
Thad R. Bowers 702,908 - - -
Sid Oakley 702,908 - - -
</TABLE>
Item 5. Other Information
-----------------
For information regarding a stock repurchase program recently
adopted by the Company, see "Item 2. Management's Discussion and
Analysis of Financial Condition and Results of Operations" which
is incorporated herein by reference.
<PAGE>
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
The following exhibits are incorporated by reference or
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. Deferred 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 (File 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: By /s/ Thad R. Bowers
-----------------------------
Thad R. Bowers
President and Chief Executive Officer
(Principal Executive and Financial
Officer)
Date: 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.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1996
<CASH> 1,564
<INT-BEARING-DEPOSITS> 857
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 22,000
<LOANS> 75,051
<ALLOWANCE> 181
<TOTAL-ASSETS> 103,300
<DEPOSITS> 82,891
<SHORT-TERM> 2,000
<LIABILITIES-OTHER> 1,796
<LONG-TERM> 2,500
<COMMON> 899
0
0
<OTHER-SE> 13,234
<TOTAL-LIABILITIES-AND-EQUITY> 103,300
<INTEREST-LOAN> 3,241
<INTEREST-INVEST> 686
<INTEREST-OTHER> 76
<INTEREST-TOTAL> 4,003
<INTEREST-DEPOSIT> 1,890
<INTEREST-EXPENSE> 93
<INTEREST-INCOME-NET> 2,020
<LOAN-LOSSES> 50
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,371
<INCOME-PRETAX> 955
<INCOME-PRE-EXTRAORDINARY> 955
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 593
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
