<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, 1998
--------------------------------------------
Commission File Number: 0-25290
--------------------------------
Twin City Bancorp, Inc.
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(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 June 30, 1998, there are 1,241,230 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
----- -----
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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, 1997 and June 30, 1998
Consolidated Statements of Comprehensive Income -
(Unaudited) for the six and three-month periods ended
June 30, 1997 and 1998
Consolidated Statements of Cash Flows - (Unaudited) for
the six-month periods ended June 30, 1997 and 1998
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
Consolidated Balance Sheets
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ ---------
<S> <C> <C>
Assets
- ------
Cash and due from banks $ 1,283 $ 2,233
Interest-earning deposits 5,317 2,703
Investment securities (amortized cost -
$4,000 and $2,500) 4,004 2,505
Loans receivable, net 77,171 82,000
Loans held for sale 509 360
Mortgage-backed securities (amortized cost -
$15,149 and $15,052) 15,248 15,043
Premises and equipment, net 3,049 3,368
Real estate, net 89 237
Federal Home Loan Bank stock 720 746
Interest receivable 288 312
Other 1,009 1,103
-------- --------
Total assets $108,687 $110,610
======== ========
</TABLE>
(continued on next page)
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
December 31, June 30,
1997 1998
------------ ---------
<S> <C> <C>
Liabilities and Stockholders' Equity
- ------------------------------------
Deposits $ 92,320 $ 89,385
Federal Home Loan Bank advances 1,000 5,000
Advance payments by borrowers for taxes
and insurance 187 968
Accrued expenses and other liabilities 288 387
Income taxes payable:
Current 256 269
Deferred 625 584
-------- --------
Total liabilities 94,676 96,593
-------- --------
Stockholders' Equity
Common stock ($1 par value, 8,000,000
shares authorized; 1,268,527 shares issued
and outstanding at December 31, 1997 and
1,241,230 shares issued and outstanding at
June 30, 1998) 1,269 1,241
Paid-in capital 7,133 7,012
Retained earnings, substantially restricted 6,356 6,465
Treasury stock, 1,000 shares, at cost - (13)
Unearned compensation:
Employee stock ownership plan (503) (467)
Management recognition plan (307) (218)
Accumulated other comprehensive income 63 (3)
-------- --------
Total stockholders' equity 14,011 14,017
-------- --------
Total liabilities and stockholders'
equity $108,687 $110,610
======== ========
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
----------------- --------------------
1997 1998 1997 1998
------- ------- ------ --------
<S> <C> <C> <C> <C>
Interest income:
Loans $3,305 $3,533 $1,671 $1,771
Mortgage-backed securities 442 521 236 250
Investment securities 243 104 127 49
Interest-earning deposits 57 117 35 54
------ ------ ------ ------
Total interest income 4,047 4,275 2,069 2,124
------ ------ ------ ------
Interest expense:
Deposits 2,007 2,094 1,041 1,025
Federal Home Loan Bank advances 71 57 15 43
------ ------ ------ ------
Total interest expense 2,078 2,151 1,056 1,068
------ ------ ------ ------
Net interest income 1,969 2,124 1,013 1,056
Provision for loan losses 64 90 42 45
------ ------ ------ ------
Net interest income after
provision for loan losses 1,905 2,034 971 1,011
------ ------ ------ ------
Non-interest income:
Loan fees and service charges 164 108 81 46
Insurance commission and fees 28 44 19 27
Gain on sale of securities (2) 13 (2) -
Gain on sale of loans 111 131 31 54
Other 51 20 7 9
------ ------ ------ ------
Total non-interest income 352 316 136 136
------ ------ ------ ------
Non-interest expense:
Compensation and employee benefits 840 884 425 432
Net occupancy expense 128 163 63 82
Deposit insurance premiums 28 29 14 15
Data processing 108 136 52 73
Provision for real estate loans 10 - - -
Other 295 239 119 115
------ ------ ------ ------
Total non-interest expense 1,409 1,451 673 717
------ ------ ------ ------
</TABLE>
(continued on next page)<PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (continued)
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended Three Months Ended
June 30, June 30,
----------------- --------------------
1997 1998 1997 1998
------- ------- ------ --------
<S> <C> <C> <C> <C>
Income before income taxes $ 848 $ 899 $ 434 $ 430
Income tax expense 336 357 173 172
------ ------ ------ ------
Net income 512 542 261 258
Other comprehensive income:
Net unrealized gains (losses) on
securities available for sale,
net of tax (expense) of $32
and tax benefit of $41,
respectively, for the six
months ended June 30, 1997 and
1998, and $(76) and $10 for
three months ended June 30,
1997 and 1998 55 (66) 127 (15)
------ ------ ------ ------
Comprehensive income $ 567 $ 476 $ 388 $ 243
====== ====== ====== ======
Basic Net Income per share $ .43 $ .46 $ .22 $ .22
Diluted Net income per share $ .42 $ .44 $ .21 $ .21
Dividends paid per share $ .22 $ .20 $ .11 $ .10
====== ====== ====== ======
</TABLE>
The accompanying notes are an integral part of these
consolidated financial statements.
<PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
1997 1998
------ ------
<S> <C> <C>
Net cash provided (used) by
operating activities $ 956 $ 981
------- -------
Cash flows from investing activities:
Purchase of investment securities
classified as available-for-sale (1,994) -
Maturities of investment securities 2,525 1,500
Proceeds from sale of mortgage-backed
securities 422 1,788
Principal payments on mortgage-backed
securities 1,383 2,395
Purchase of mortgage-backed securities
classified as available-for-sale (875) (4,091)
Net decrease (increase) in loans originated 583 (3,634)
Increase in cash surrender value of life
insurance (3) -
Purchase of loans (1,387) (1,372)
Proceeds from sale of real estate 461 -
Purchase of premises and equipment (528) (425)
------- -------
Net cash provided (used) by investing
activities 587 (3,839)
------- -------
Cash flows from financing activities:
Net increase (decrease) in deposits 4,698 (2,935)
Increase in advance payments by borrowers
for taxes and insurance 735 781
Repayment of FHLB advances (13,850) -
Proceeds from FHLB advance 9,750 4,000
Dividends paid (255) (253)
Acquisition of treasury stock - (399)
------- -------
Net cash provided (used) by
financing activities 1,078 1,194
------- -------
Net increase (decrease) in cash 2,621 (1,664)
Cash at beginning of period 2,923 6,600
------- -------
Cash at end of period $ 5,544 $ 4,936
======= =======
</TABLE>
(continued on next page)
<PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (continued)
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended
June 30,
--------------------
1997 1998
------ ------
<S> <C> <C>
Supplemental disclosures:
Noncash investing and financing activities:
Loans sold in exchange for mortgage-backed
security $ 2,183 $ -
======= =======
Foreclosed real estate $ - $ 148
======= =======
Unrealized loss on securities
available for sale net of income taxes $ 55 $ 66
======= =======
Cash paid during the period for:
Interest $ 2,077 $ 2,160
======= =======
Income taxes $ 8 $ 173
======= =======
</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 Principles 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. (the "Company") and its
subsidiary, Twin City Federal Savings Bank (the "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 1998 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.<PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
NOTES TO (UNAUDITED) CONSOLIDATED
FINANCIAL STATEMENTS (continued)
Note 4 - New Accounting Standards
------------------------
The Company adopted Statement of Financial Accounting Standards
No. 130 "Reporting Comprehensive Income" (SFAS 130) in 1998. All
periods presented are in accordance with SFAS 130. SFAS 130
established standards for reporting and displaying comprehensive
income and its components. Comprehensive income consists of net
income and other changes in stockholders' equity from nonowner
sources. These nonowner sources consist of unrealized gains and
losses on certain investments in debt and equity securities.
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 134,760. As of June 30,
1998, 33,690 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 totaled
97,782 at June 30, 1998 with 94,332 exercisable on a cumulative
basis in equal installments over a five year period, and 3,450
exercisable upon the date of option grant. As of June 30, 1998,
131,472 options have been granted, of which none have been
exercised. Options totaling 128,022 were granted with an
exercise price of $9.33 per share, 2,250 were granted with an
exercise price of $11.25 per share, 900 were granted with an
exercise price of $11.67 per share and the remaining 300 at $14
per share. As of June 30, 1998, 80,263 options are exercisable.
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
-------------------------------------------------
GENERAL
The following discussion and analysis is intended to assist in
understanding the financial condition and the results of
operations of the Company. References to the "Company" include
Twin City Bancorp, Inc. and/or Twin City Federal Savings Bank
and its subsidiaries, as appropriate.
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1998 AND DECEMBER
31, 1997
The Company's total consolidated assets increased $1.9 million,
or 1.8% to $110.6 million at June 30, 1998 from $108.7 million
at December 31, 1997. Cash and due from banks and interest-
earning deposits decreased $1.7 million from $6.6 million
at December 31, 1997 to $4.9 million at June 30, 1998. Net loans
receivable increased $4.8 million or 6.3% from $77.2 million at
December 31, 1997 to $82.0 million at June 30, 1998. The Company
originated 264 mortgage loans during the six months ended June
30, 1998, as compared to 115 originations during the six
months ended June 30, 1997. The increase in originations in 1998
over 1997 was due to a general decrease in the prevailing market
rates for the Company's mortgage products causing a number of
customers to refinance existing mortgages. The Company has sold
a majority of its fixed-rate originations during the first six
months of 1998 to the Federal Home Loan Mortgage Corporation,
servicing retained without recourse. Total real estate loans
amounted to $57.6 million at June 30, 1998 as compared to $53.1
million at December 31, 1997. Consumer/commercial lending
decreased by $2.8 million or 10.2%, from $27.2 million at
December 31, 1997 to $24.4 million at June 30, 1998. The
Company's portfolio of investment securities decreased $1.5
million from $4.0 million at December 31, 1997 to $2.5 million
at June 30, 1998 and the proceeds from these maturities have
been invested into loans receivable which currently bear a
greater yield. In addition, the Company's portfolio of
mortgage-backed securities decreased $205,000 or 1.4%, from
$15.2 million at December 31, 1997 to $15.0 million at
June 30, 1998.
Deposits decreased $2.9 million, or 3.2% from $92.3 million at
December 31, 1997 to $89.4 million at June 30, 1998. Federal
Home Loan Bank advances increased $4.0 million at June 30, 1998
from December 31, 1997.
Total stockholders' equity has increased $6,000 or 0.04% from
December 31, 1997 to June 30, 1998. The Company posted
comprehensive income of $476,000 for the six months ended June
30, 1998 while paying dividends of $0.20 per share of common
stock, or $253,000. During the six months ended June 30, 1998,
the Company recognized compensation earned in the amount of
$139,000 from the Employee Stock Ownership Plan and the
Management Recognition Plan. In addition, the Company has
continued to repurchase some of its outstanding shares of common
stock and for the six months ending June 30, 1998, had
repurchased 28,297 shares (of which 27,297 were retired) at an
average purchase price of $14.13 per share.
COMPARISON OF RESULTS OF OPERATIONS
Net income increased to $542,000 ($0.46 basic earnings per
share) for the six months ended June
<PAGE>
<PAGE>
30, 1998 from $512,000 ($0.43 basic earnings per share) for the
six months ended June 30, 1997. For the three months ended June
30, 1998, net income remained essentially even at $258,000
($0.22 basic earnings per share) compared to $261,000 ($0.22
basic earnings per share) for the three months ended June 30,
1997. Net income for the six month period benefitted from an
improvement in net interest income which offset a decline in
non-interest income and increases in non-interest expense and
provision for loan losses. Although net interest income
also improved during the three month period, the improvement was
not sufficient to offset an increase in non-interest expense.
Net interest income for the six months ended June 30, 1998
increased $155,000 as compared to the six months ended June 30,
1997, and for the three months ended June 30, 1998 increased
$43,000 compared to the three months ended June 30, 1997. The
increase was primarily attributable to an increase in the
interest rate spread which increased from 3.45% for the six
months ended June 30, 1997 to 3.70% for the three months ended
June 30, 1998 and increased from 3.52% for the three months
ended June 30, 1997 to 3.67% for the three months ended June 30,
1998. The net interest margin increased from 3.92% for the six
months ended June 30, 1997 to 4.11% for the six months ended
June 30, 1998 and increased from 3.99% for the three months
ended June 30, 1997 to 4.08% for the three months ended June 30,
1998. The average yield on interest-earning assets increased 21
basis points from 8.06% for the six months ended June 30, 1997
to 8.27% for the six months ended June 30, 1998 and increased 4
basis points from 8.16% for the three months ended June 30, 1997
to 8.20% for the three months ended June 30, 1998. The average
cost on interest bearing liabilities decreased from 4.61% for
the six months ended June 30, 1997 to 4.57% for the six months
ended June 30, 1998 and decreased from 4.60% for the three
months ended June 30, 1997 to 4.53% for the three months ended
June 30, 1998. The average balance of interest-earning
assets was $100.4 million for the six months ended June 30, 1997
as compared to $103.3 million for the three months ended June
30, 1998 and $101.5 million for the three months ended June 30,
1997 as compared to the $103.6 million for the three months
ended June 30, 1998. The average balance of interest-bearing
liabilities was $90.2 million for the six months ended June 30,
1997 as compared to $94.1 million for the six months ended June
30, 1998 and was $91.1 million for the three months ended June
30, 1997 as compared to $94.2 million for the three months ended
June 30, 1998.
The provision for loan losses amounted to $64,000 and $90,000
for the six months ended June 30, 1997 and 1998, respectively,
and $42,000 and $45,000 for the three months ended June 30, 1997
and 1998, respectively. At June 30, 1997 and 1998, the
allowance for loan losses represented 259% and 64%,
respectively, of total loans past due more than ninety days. At
June 30, 1998, management reviewed the allowance for loan losses
in relation to the Company's performance with past collections
and chargeoffs, 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 judgment in managing the loan
portfolio, it was determined that the allowance for loan losses
needed to be $112,000, and therefore, a $45,000 provision was
recorded for the quarter ended June 30, 1998.
Non-interest income decreased $36,000 from $352,000 for the six
months ended June 30, 1997 to $316,000 for the six months ended
June 30, 1998 and was unchanged at $136,000 for the three months
ended June 30, 1997 as compared to the three months ended June
30, 1998. For the six months ended June 30, 1998, loan fees and
service charges amounted to $108,000 as compared to
<PAGE>
<PAGE>
$164,000 for the six months ended June 30, 1997 and amounted to
$46,000 for the three months ended June 30, 1998 as compared to
$81,000 for the three months ended June 30, 1997. Gain on the
sale of fixed-rate mortgage loans to the FHLMC recognized for
the six months ended June 30, 1997 was $111,000 as compared to
$131,000 for the six months ended June 30, 1998 and was $31,000
for the three months ended June 30, 1997 as compared to $54,000
for the three months ended June 30, 1998. Insurance commissions
and fees were $44,000 for the six months ended June 30, 1998 as
compared to $28,000 for the six months ended June 30, 1997 and
was $27,000 for the three months ended June 30, 1998 as compared
to $19,000 for the three months ended June 30, 1997.
Non-interest expense increased $42,000 from the six months ended
June 30, 1997 to the six months ended June 30, 1998, and $44,000
from $673,000 for the three months ended June 30, 1997 to
$717,000 for the three months ended June 30, 1998. Compensation
and employee benefits increased $44,000 from $840,000 for the
six months ended June 30, 1997 to $884,000 for the six months
ended June 30, 1998 and increased $7,000 from $425,000 for the
three months ended June 30, 1997 to $432,000 for the three
months ended June 30, 1998. The increase for the three and
six month-periods were a direct result of normal salary and wage
increase. Deposit insurance premiums remained constant from the
three and six month periods ended June 30, 1998 and 1997. Data
processing increased $28,000 from $108,000 for the six months
ended June 30, 1997 to $136,000 for the six months ended June
30, 1998. Of the six month increase in data processing, $21,000
came in the three months ending June 30, 1998. Other expense
decreased $56,000 from $295,000 for the six months ended June
30, 1997 to $239,000 for the six months ended June 30, 1998 and
decreased $4,000 from $119,000 for the three months ended June
30, 1997 to $115,000 for the three months ended June 30, 1998
as management has attempted to control its miscellaneous costs
of doing business in recent years.
Other comprehensive income is composed of net unrealized gains
and losses on securities classified as available for sale in
accordance with SFAS No. 115. For the six months ending June
30, 1997 and 1998, the Company reported net unrealized gain
(losses) on securities, net of tax benefits, of $55,000 and
$(66,000), respectively. These amounts were $127,000 and
$(15,000) for the three months ended June 30, 1997 and 1998,
respectively.
LIQUIDITY AND CAPITAL RESOURCES. The Company's primary sources
of funds are deposits and proceeds from principal and interest
payments on loans. While maturities and scheduled amortization
of loans are a predictable source of funds, deposit flows and
mortgage prepayments are greatly influenced by general interest
rates, economic conditions and competition. The Company's
primary investing activity is loan originations. The Company
maintains liquidity levels adequate to fund loan commitments,
investment opportunities, deposit withdrawals and other
financial commitments. At June 30, 1998, there were no material
commitments for capital expenditures and the Company had
unfunded loan commitments of approximately $2,254,000.
At June 30, 1998, management had no knowledge of any trends,
events or uncertainties that will have or are reasonably likely
to have material effects on the liquidity, capital resources or
operations of the Company. Further at June 30, 1998, management
was not aware of any current recommendations by the regulatory
authorities which, if implemented, would have such an effect.
The Savings Bank exceeded all of its capital requirements at
June 30, 1998.
<PAGE>
<PAGE>
Year 2000 Considerations. A great deal of information has been
disseminated about the year 2000 as it relates to computer
systems. Many computer programs that can only distinguish the
final two digits of the year entered (a common programming
practice in earlier years) are expected to read entries for the
year 2000 as the year 1900 and compute payment, interest or
delinquency based on the wrong date or are expected to be unable
to compute payment, interest or delinquency. Rapid and accurate
data processing is essential to the Bank's operations. Data
processing is also essential to most other financial
institutions and many other companies. Substantially all of the
Bank's material data processing that could be affected by this
problem is provided by a third party service bureau. The Bank's
service bureau has advised the Bank that it expects to resolve
this potential problem before the year 2000. However, if the
service bureau is unable to resolve this potential problem in
time, the Bank would likely experience significant data
processing delays, mistakes or failures. These delays, mistakes
or failures could have a significant adverse impact on our
financial condition and results of operation. The Company does
not expect to incur material costs in addressing year 2000
issues primarily because of its third party service bureau will
not be charging additional fees for the renovation and testing
of its software in preparation for year 2000.
The Bank has formulated a contingency plan for each mission-
critical service and product. The plan is designed to prepare
the institution for returning to operation in the event that
systems do not perform as planned either before or after the
century date change. The plan also outlines certain "trigger
dates" allowing sufficient time to change service providers and
software vendors if the applicable system or software is not
compliant.
<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, 1998, 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 22, 1998, the registrant held its annual meeting
of stockholders. At the meeting, the following
directors were elected by the stockholders.
<TABLE>
<CAPTION>
Votes
------------------- Broker
For Withheld Abstentions Non-Votes Term
--- -------- ----------- --------- ----
<S> <C> <C> <C> <C> <C>
William C. Burris, Jr. 1,118,342 1,200 - - 3 years
Louis H. Phetteplace 1,118,342 1,200 - - 1 year
</TABLE>
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
27.1 Financial Data Schedule
27.2 Restated 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: August 13, 1998 By /s/ Thad R. Bowers
-----------------------------
Thad R. Bowers
President and Chief Executive Officer
(Principal Executive and Financial
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-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 2,233
<INT-BEARING-DEPOSITS> 2,703
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 17,548
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 82,360
<ALLOWANCE> 112
<TOTAL-ASSETS> 110,610
<DEPOSITS> 89,385
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,208
<LONG-TERM> 5,000
<COMMON> 1,241
0
0
<OTHER-SE> 12,776
<TOTAL-LIABILITIES-AND-EQUITY> 110,610
<INTEREST-LOAN> 3,533
<INTEREST-INVEST> 625
<INTEREST-OTHER> 117
<INTEREST-TOTAL> 4,275
<INTEREST-DEPOSIT> 2,094
<INTEREST-EXPENSE> 2,151
<INTEREST-INCOME-NET> 2,124
<LOAN-LOSSES> 90
<SECURITIES-GAINS> 13
<EXPENSE-OTHER> 1,451
<INCOME-PRETAX> 899
<INCOME-PRE-EXTRAORDINARY> 899
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 542
<EPS-PRIMARY> .46
<EPS-DILUTED> .44
<YIELD-ACTUAL> 3.70
<LOANS-NON> 176
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 125
<CHARGE-OFFS> 103
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 112
<ALLOWANCE-DOMESTIC> 112
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<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-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 1,910
<INT-BEARING-DEPOSITS> 1,984
<FED-FUNDS-SOLD> 1,650
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 20,794
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 76,873
<ALLOWANCE> 220
<TOTAL-ASSETS> 107,345
<DEPOSITS> 90,387
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,158
<LONG-TERM> 1,000
<COMMON> 854
0
0
<OTHER-SE> 12,946
<TOTAL-LIABILITIES-AND-EQUITY> 107,345
<INTEREST-LOAN> 3,305
<INTEREST-INVEST> 685
<INTEREST-OTHER> 57
<INTEREST-TOTAL> 4,407
<INTEREST-DEPOSIT> 2,007
<INTEREST-EXPENSE> 2,078
<INTEREST-INCOME-NET> 1,969
<LOAN-LOSSES> 64
<SECURITIES-GAINS> (2)
<EXPENSE-OTHER> 1,409
<INCOME-PRETAX> 848
<INCOME-PRE-EXTRAORDINARY> 848
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 512
<EPS-PRIMARY> .43 <F1>
<EPS-DILUTED> .42 <F1>
<YIELD-ACTUAL> 3.45
<LOANS-NON> 85
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 327
<CHARGE-OFFS> 171
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 220
<ALLOWANCE-DOMESTIC> 220
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1> Restated for adoption of SFAS 128
</FN>
</TABLE>
