<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, 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
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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 September 30, 1998, there are 1,218,880 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
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INDEX
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets - (Unaudited) as of December
31, 1997 and September 30, 1998
Consolidated Statements of Comprehensive Income -
(Unaudited) for the nine and three-month periods ended
September 30, 1997 and 1998
Consolidated Statements of Cash Flows - (Unaudited) for
the nine-month periods ended September 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, except share data)
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
------------ ------------
<S> <C> <C>
Assets
- ------
Cash and due from banks $ 1,283 $ 4,090
Interest-earning deposits 5,317 2,834
Investment securities (amortized cost -
$4,000 and $1,505) 4,004 1,515
Loans receivable, net 77,171 82,599
Loans held for sale 509 484
Mortgage-backed securities (amortized cost -
$15,149 and $14,055) 15,248 14,144
Premises and equipment, net 3,049 3,250
Real estate, net 89 237
Federal Home Loan Bank stock 720 760
Interest receivable 288 330
Other 1,009 1,193
-------- --------
Total assets $108,687 $111,436
======== ========
</TABLE>
(continued on next page)
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
December 31, September 30,
1997 1998
------------ -------------
<S> <C> <C>
Liabilities and Stockholders' Equity
- ------------------------------------
Deposits $ 92,320 $ 88,963
Federal Home Loan Bank advances 1,000 5,500
Advance payments by borrowers for taxes
and insurance 187 1,331
Accrued expenses and other liabilities 288 593
Income taxes payable:
Current 256 293
Deferred 625 621
-------- --------
Total liabilities 94,676 97,301
-------- --------
Stockholders' Equity
Common stock ($1 par value, 8,000,000
shares authorized; 1,268,527 shares issued
and outstanding at December 31, 1997 and
1,219,430 shares issued and outstanding at
September 30, 1998) 1,269 1,219
Paid-in capital 7,133 6,901
Retained earnings, substantially restricted 6,356 6,600
Treasury stock, 550 shares, at cost - (7)
Unearned compensation:
Employee stock ownership plan (503) (449)
Management recognition plan (307) (191)
Accumulated other comprehensive income 63 62
-------- --------
Total stockholders' equity 14,011 14,135
-------- --------
Total liabilities and stockholders'
equity $108,687 $111,436
======== ========
</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>
Nine Months Ended Three Months Ended
September 30, September 30,
----------------- --------------------
1997 1998 1997 1998
------- ------- ------ --------
<S> <C> <C> <C> <C>
Interest income:
Loans $5,020 $5,363 $1,715 $1,830
Mortgage-backed securities 667 742 225 221
Investment securities 374 138 131 34
Interest-earning deposits 93 183 36 66
------ ------ ------ ------
Total interest income 6,154 6,426 2,107 2,151
------ ------ ------ ------
Interest expense:
Deposits 3,066 3,110 1,059 1,016
Federal Home Loan Bank advances 90 118 19 61
------ ------ ------ ------
Total interest expense 3,156 3,228 1,078 1,077
------ ------ ------ ------
Net interest income 2,998 3,198 1,029 1,074
Provision for loan losses 108 185 44 95
------ ------ ------ ------
Net interest income after
provision for loan losses 2,890 3,013 985 979
------ ------ ------ ------
Non-interest income:
Loan fees and service charges 240 170 76 62
Insurance commission and fees 45 68 17 24
Gain on sale of securities 11 13 13 -
Gain on sale of loans 173 227 62 96
Other 60 230 9 210
------ ------ ------ ------
Total non-interest income 529 708 177 392
------ ------ ------ ------
Non-interest expense:
Compensation and employee benefits 1,265 1,286 425 402
Net occupancy expense 195 255 67 92
Deposit insurance premiums 42 43 14 14
Data processing 165 201 57 65
Provision for real estate loans 10 - - -
Other 416 381 121 142
------ ------ ------ ------
Total non-interest expense 2,093 2,166 684 715
------ ------ ------ ------
</TABLE>
(continued on next page)<PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (continued)
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended Three Months Ended
September 30, September 30,
----------------- --------------------
1997 1998 1997 1998
------- ------- ------ --------
<S> <C> <C> <C> <C>
Income before income taxes $1,326 $1,555 $ 478 $ 656
Income tax expense 524 619 188 262
------ ------ ------ ------
Net income 802 936 290 394
Other comprehensive income:
Net unrealized gains (losses) on
Securities available for sale,
net of tax (expense) of $(63)
and tax benefit of $4,
respectively, for the nine
months ended September 30, 1997
and 1998, and $(32) and $(35)
for three months ended September
30, 1997 and 1998 105 (1) 50 65
------ ------ ------ ------
Comprehensive income $ 907 $ 935 $ 340 $ 459
====== ====== ====== ======
Basic Net Income per share $ .67 $ .80 $ .24 $ .34
Diluted Net income per share $ .65 $ .77 $ .23 $ .33
Dividends paid per share $ .32 $ .30 $ .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>
Nine Months Ended
September 30,
--------------------
1997 1998
------ ------
<S> <C> <C>
Net cash provided (used) by
operating activities $ 871 $ 1,358
------- -------
Cash flows from investing activities:
Purchase of investment securities
classified as available-for-sale (3,993) -
Maturities of investment securities 2,855 2,495
Proceeds from sale of investment securities 1,008 -
Proceeds from sale of mortgage-backed
securities 1,098 1,788
Principal payments on mortgage-backed
securities 1,874 3,395
Purchase of mortgage-backed securities
classified as available-for-sale (1,751) (4,091)
Net decrease (increase) in loans originated 4,388 (4,484)
Increase in cash surrender value of life
insurance (4) -
Purchase of loans (4,614) (1,372)
Proceeds from sale of land - 371
Proceeds from sale of real estate 461 -
Purchase of premises and equipment (868) (358)
------- -------
Net cash provided (used) by investing
activities 454 (2,256)
------- -------
Cash flows from financing activities:
Net increase (decrease) in deposits 3,935 (3,357)
Increase in advance payments by borrowers
for taxes and insurance 1,062 1,144
Repayment of FHLB advances (18,400) -
Proceeds from FHLB advance 14,300 4,500
Dividends paid (382) (378)
Acquisition of treasury stock (104) (687)
------- -------
Net cash provided (used) by
financing activities 411 1,222
------- -------
Net increase (decrease) in cash 1,736 324
Cash at beginning of period 2,923 6,600
------- -------
Cash at end of period $ 4,659 $ 6,924
======= =======
</TABLE>
(continued on next page)
<PAGE>
<PAGE>
TWIN CITY BANCORP, INC.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows (continued)
(unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------
1997 1998
------ ------
<S> <C> <C>
Supplemental disclosures:
Noncash investing and financing activities:
Loans sold in exchange for mortgage-backed
security $ 2,704 $ -
======= =======
Foreclosed real estate $ - $ 148
======= =======
Unrealized gain (loss) on securities
available for sale, net of income taxes $ 105 $ (1)
======= =======
Cash paid during the period for:
Interest $ 3,173 $ 3,225
======= =======
Income taxes $ 159 $ 398
======= =======
</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 September 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 September 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
September 30, 1998, 131,472 options have been granted, of which
450 were exercised in September 1998. 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 September 30, 1998, 79,813
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 SEPTEMBER 30, 1998 AND
DECEMBER 31, 1997
The Company's total consolidated assets increased $2.7 million,
or 2.5% to $111.4 million at September 30, 1998 from $108.7
million at December 31, 1997. Cash and due from banks and
interest-earning deposits increased $324,000 from $6.6 million
at December 31, 1997 to $6.9 million at September 30, 1998. Net
loans receivable increased $5.4 million or 7.0% from $77.7
million at December 31, 1997 to $83.1 million at September 30,
1998. The Company originated 369 mortgage loans during the nine
months ended September 30, 1998, as compared to 189 originations
during the nine months ended September 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 mortgage refinancings. The Company has
continued to sell a majority of its fixed-rate originations
during the first nine months of 1998 to the Federal Home Loan
Mortgage Corporation, servicing retained without recourse. Total
real estate loans amounted to $54.2 million at September 30,
1998 as compared to $53.1 million at December 31, 1997.
Consumer/commercial lending increased by $1.5 million or
5.5%, from $27.2 million at December 31, 1997 to $28.7 million
at September 30, 1998. The Company's portfolio of investment
securities decreased $2.5 million from $4.0 million at December
31, 1997 to $1.5 million at September 30, 1998 and the proceeds
from these maturities have been invested into loans receivable
which currently provide a greater yield. In addition, the
Company's portfolio of mortgage-backed securities decreased $1.1
million or 7.2%, from $15.2 million at December 31, 1997 to
$14.1 million at September 30, 1998.
Deposits decreased $3.3 million, or 3.6% from $92.3 million at
December 31, 1997 to $89.0 million at September 30, 1998.
Federal Home Loan Bank advances increased $4.5 million at
September 30, 1998 from December 31, 1997.
Total stockholders' equity has increased $124,000 or 0.09% from
December 31, 1997 to September 30, 1998. The Company posted
comprehensive income of $935,000 for the nine months ended
September 30, 1998 while paying dividends of $0.30 per share of
common stock, or $378,000. During the nine months ended
September 30, 1998, the Company recognized compensation earned
in the amount of $202,000 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 nine months ending September 30, 1998,
had repurchased 50,097 shares (of which 49,047 were retired) at
an average purchase price of $13.71 per share.
<PAGE>
<PAGE>
COMPARISON OF RESULTS OF OPERATIONS
Net income increased to $936,000 or a basic earnings per share
of $.80 for the nine months ended September 30, 1998 from
$802,000 or a basic earnings per share of $.67 for the nine
months ended September 30, 1997. For the three months ended
September 30, 1998, net income increased by $104,000 from
$290,000 or a basic earnings per share of $.24 to $394,000 or a
basic earnings per share of $.34 for the three months ended
September 30, 1997. Net income for the nine month period
benefited from an improvement in net interest income which
offset a increases in non-interest expense and the provision for
loan losses. Net income also benefited from the recognition of
a gain on the sale of land held for a potential branch location
of $123,000.
Net interest income for the nine months ended September 30, 1998
increased $200,000 as compared to the nine months ended
September 30, 1997, and for the three months ended September 30,
1998 increased $45,000 compared to the three months ended
September 30, 1997. The increase was primarily attributable to
an increase in the interest rate spread which increased from
3.49% for the nine months ended September 30, 1997 to 3.60% for
the nine months ended September 30, 1998 along with a net
increase in net interest earning assets. The increase for the
three month period resulted from an increase in net interest
earning assets offset by a decrease in the interest rate spread
from 3.57% for the three months ended September 30, 1997 to
3.52% for the three months ended September 30, 1998. The net
interest margin increased from 3.7% for the nine months ended
September 30, 1997 to 4.07% for the nine months ended September
30, 1998 while decreasing from 4.06% for the three months ended
September 30, 1997 to 4.04% for the three months ended September
30, 1998. The average yield on interest-earning assets increased
4 basis points from 8.14% for the nine months ended September
30, 1997 to 8.18% for the nine months ended September 30, 1998
while decreasing 22 basis points from 8.32% for the three
months ended September 30, 1997 to 8.10% for the three months
ended September 30, 1998. The average cost on interest bearing
liabilities decreased from 4.65% for the nine months ended
September 30, 1997 to 4.58% for the nine months ended September
30, 1998 and decreased from 4.75% for the three months ended
September 30, 1997 to 4.58% for the three months ended September
30, 1998. The average balance of interest-earning assets was
$100.7 million for the nine months ended September 30, 1997 as
compared to $106.2 million for the nine months ended September
30, 1998. The average balance of interest-bearing liabilities
was $90.4 million for the nine months ended September 30, 1997
as compared to $94.1 million for the nine months ended September
30, 1998.
The provision for loan losses amounted to $108,000 and $185,000
for the nine months ended September 30, 1997 and 1998,
respectively, and $44,000 and $95,000 for the three months ended
September 30, 1997 and 1998, respectively. At September 30, 1997
and 1998, the allowance for loan losses represented 173% and
115%, respectively, of total loans past due more than ninety
days. At September 30, 1998, management reviewed the allowance
for loan losses in relation to the Company's performance with
past collections and chargeoffs, management's <PAGE>
<PAGE>
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 approximately
$172,000, and therefore, a $95,000 provision was recorded for
the quarter ended September 30, 1998.
Non-interest income increased $179,000 from $529,000 for the
nine months ended September 30, 1997 to $708,000 for the nine
months ended September 30, 1998 and increased by $215,000 from
the three months ended September 30, 1997 as compared to the
three months ended September 30, 1998. The major reason for
these increases was as a result of a $200,000 gain recognized on
the sale of land being held for a potential branch location
,which the Company decided not to utilize as a branch location,
in August 1998. This gain is included in other non-interest
income. The Company saw a decrease in loan fees and service
charge income during both the nine and three month periods of
1998. For the nine months ended September 30, 1998, loan fees
and service charges amounted to $170,000 as compared to $240,000
for the nine months ended September 30, 1997 and amounted to
$62,000 for the three months ended September 30, 1998 as
compared to $76,000 for the three months ended September
30, 1997 as a result, primarily, of lower service charge
income. Gains on the sale of fixed-rate mortgage loans to the
FHLMC recognized for the nine months ended September 30, 1997
were $173,000 as compared to $227,000 for the nine months ended
September 30, 1998 and was $62,000 for the three months ended
September 30, 1997 as compared to $96,000 for the three months
ended September 30, 1998. Insurance commissions and fees during
both the nine and three month periods of 1998. They were $68,000
for the nine months ended September 30, 1998 as compared to
$45,000 for the nine months ended September 30, 1997 and were
$27,000 for the three months ended September 30, 1998 as
compared to $17,000 for the three months ended September 30,
1997. The increase in other non-interest income for the nine and
three month periods reflects the land sale gain.
Non-interest expense increased $73,000 from the nine months
ended September 30, 1997 to the nine months ended September 30,
1998, and $31,000 from $684,000 for the three months ended
September 30, 1997 to $715,000 for the three months ended
September 30, 1998. Compensation and employee benefits increased
$21,000 from $1,265,000 for the nine months ended September 30,
1997 to $1,286,000 for the nine months ended September 30, 1998
and decreased $23,000 from $425,000 for the three months ended
September 30, 1997 to $402,000 for the three months ended
September 30, 1998. Deposit insurance premiums remained
constant from the three and nine month periods ended September
30, 1998 and 1997. Data processing increased $36,000 from
$165,000 for the nine months ended September 30, 1997 to
$201,000 for the nine months ended September 30, 1998. Other
non-interest expenses decreased $35,000 from $416,000 for the
nine months ended September 30, 1997 to $381,000 for the nine
months ended September 30, 1998 while increasing $21,000 from
$121,000 for the three months ended September 30, 1997 to
$142,000 for the three months ended September 30, 1998.
Management has continued its attempt to control its
miscellaneous costs of doing business in recent years.
Other comprehensive income is composed entirely of net
unrealized gains and losses on securities classified as
available for sale in accordance with SFAS No. 115. For the nine
months <PAGE>
<PAGE>
ending September 30, 1997 and 1998, the Company reported net
unrealized gains (losses) on securities, net of income taxes, of
$105,000 and $(1,000), respectively. These amounts were $50,000
and $65,000 for the three months ended September 30, 1997 and
1998, respectively.
LIQUIDITY AND CAPITAL RESOURCES. The Company's primary sources
of funds are new deposits and proceeds from principal and
interest payments on loans and mortgage-backed securities. 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 September 30, 1998, there were no material
commitments for capital expenditures and the Company had
unfunded loan commitments of approximately $753,000.
At September 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 September
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 September 30, 1998.
YEAR 2000 CONSIDERATIONS. Early in 1997, the Bank developed a
team to analyze the Year 2000 (Y2K) problem and adopted a
strategy to ensure that appropriate changes are properly made
for all systems used by the Bank and all products offered to
customers. In addition, the Bank's employees were educated on
the Y2K issue. The Bank's Y2K team has researched not only the
systems which are critical to processing, but also systems and
services supplied by other organizations to the Bank.
The Bank has 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 test dates allowing
sufficient time to change service providers and software vendors
if the applicable system is not compliant.
The Bank's service bureau which provides data processing to the
Bank has advised that it expects to resolve any potential
problems prior to the Year 2000. Testing of the service
bureau's applications are scheduled to begin in November 1998
and continue through March 1999. This provides adequate time to
report and correct any problems that may be encountered within
an application.
In October 1998, the Bank replaced the computers and certain
third party software which were
<PAGE>
<PAGE>
found to be non-compliant for Y2K processing. The cost of such
replacement was approximately $99,000, which also included
upgrade of certain applications unrelated to the Y2K issue.
Other equipment has been tested and will be replaced
during 1999, if necessary.
<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 September 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
---------------------------------------------------
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. 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
27.1 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 Company 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 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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 4,090
<INT-BEARING-DEPOSITS> 2,834
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 15,659
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 83,255
<ALLOWANCE> 172
<TOTAL-ASSETS> 111,436
<DEPOSITS> 88,963
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,838
<LONG-TERM> 5,500
<COMMON> 1,219
0
0
<OTHER-SE> 12,916
<TOTAL-LIABILITIES-AND-EQUITY> 111,436
<INTEREST-LOAN> 5,363
<INTEREST-INVEST> 880
<INTEREST-OTHER> 183
<INTEREST-TOTAL> 6,426
<INTEREST-DEPOSIT> 3,110
<INTEREST-EXPENSE> 3,228
<INTEREST-INCOME-NET> 3,198
<LOAN-LOSSES> 185
<SECURITIES-GAINS> 13
<EXPENSE-OTHER> 2,166
<INCOME-PRETAX> 1,555
<INCOME-PRE-EXTRAORDINARY> 1,555
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 936
<EPS-PRIMARY> .80
<EPS-DILUTED> .77
<YIELD-ACTUAL> 4.07
<LOANS-NON> 149
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 125
<CHARGE-OFFS> 138
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 172
<ALLOWANCE-DOMESTIC> 172
<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> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,429
<INT-BEARING-DEPOSITS> 2,880
<FED-FUNDS-SOLD> 350
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 21,779
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 75,943
<ALLOWANCE> 149
<TOTAL-ASSETS> 106,932
<DEPOSITS> 89,624
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,467
<LONG-TERM> 1,000
<COMMON> 1,273
0
0
<OTHER-SE> 12,568
<TOTAL-LIABILITIES-AND-EQUITY> 106,932
<INTEREST-LOAN> 5,020
<INTEREST-INVEST> 1,041
<INTEREST-OTHER> 93
<INTEREST-TOTAL> 6,154
<INTEREST-DEPOSIT> 3,066
<INTEREST-EXPENSE> 3,156
<INTEREST-INCOME-NET> 2,998
<LOAN-LOSSES> 108
<SECURITIES-GAINS> 11
<EXPENSE-OTHER> 2,093
<INCOME-PRETAX> 1,326
<INCOME-PRE-EXTRAORDINARY> 1,326
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 802
<EPS-PRIMARY> .67 <F1>
<EPS-DILUTED> .65 <F1>
<YIELD-ACTUAL> 3.97
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 327
<CHARGE-OFFS> 178
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 149
<ALLOWANCE-DOMESTIC> 149
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1> Restated for adoption of SFAS 128
</FN>
</TABLE>
