SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
[Mark One]
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from to
------------ ------------
Commission File Number 0-27672
NORTH CENTRAL BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
IOWA 42-1449849
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification Number)
825 CENTRAL AVENUE FORT DODGE, IOWA 50501
(Address of principal executive offices)
Registrant's telephone number,including area code 515-576-7531
NONE
Former name, former address and former fiscal year, if changed
since last report
Check whether the Registrant (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the Registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days. Yes
X No
- - --- ---
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [x]
State the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
CLASS OUTSTANDING AT MAY 9, 1996
(Common Stock, $.01 par value) 4,011,057
NORTH CENTRAL BANCSHARES, INC.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed
Financial Statements (unaudited) 1 to 5
Consolidated Condensed Statements of
Financial Condition at March 31,
1996 and December 31, 1995 1
Consolidated Condensed Statements of
Income for the three months ended
March 31, 1996 and 1995 2
Consolidated Condensed Statements of
Cash Flows for the three months ended
March 31, 1996 and 1995 3
Notes to Consolidated Condensed Financial
Statements 4 & 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 6 to 11
PART II. OTHER INFORMATION 12 to 13
Items 1 through 6 12
Signatures 13
NORTH CENTRAL BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
March 31, December 31,
1996 1995
ASSETS
Cash:
Interest-bearing $ 9,810,570 $ 2,362,244
Noninterest-bearing 675,160 709,398
Securities available for sale 10,110,641 7,799,445
Securities held to maturity 14,496,181 15,994,521
Loans receivable, net 150,119,801 147,871,666
Accrued interest receivable 1,433,550 1,415,111
Foreclosed real estate 48,292 127,989
Premises and equipment, net 1,674,762 1,621,734
Title plant 857,800 857,800
Income taxes receivable -- 31,766
Deferred taxes 164,500 67,626
Prepaid expenses and other assets 1,222,070 1,070,396
------------ ------------
Total assets $190,613,327 $179,929,696
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $128,329,264 $126,672,313
Other Borrowed Funds 5,916,000 21,940,000
Advances from borrowers for taxes and insurance 401,926 781,545
Dividend payable -- 127,829
Income taxes payable 394,982 --
Accrued expenses and other liabilities 542,375 507,681
------------ ------------
Total liabilities 135,584,547 150,029,368
------------ ------------
COMMITMENTS
STOCKHOLDERS' EQUITY
Preferred stock -- --
Common Stock 40,111 37,000
Additional paid-in capital 37,815,073 12,350,840
Retained earnings, substantially restricted 18,765,451 18,220,626
Unrealized gain (loss) on securities available for
sale, net of income taxes (11,544) 60,652
Unearned shares, employee stock ownership plan (1,580,311) (768,790)
------------- -------------
Total stockholders' equity 55,028,780 29,900,328
------------- -------------
Total liabilities and stockholders' equity $190,613,327 $179,929,696
============= =============
See Notes to Consolidated Condensed Financial Statements.
1
NORTH CENTRAL BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1996 1995
Interest Income:
Loans receivable:
First mortgage loans $2,677,727 $2,270,998
Consumer loans 460,225 388,988
Securities and cash deposits 439,588 394,181
---------- ----------
3,577,540 3,054,167
---------- ----------
Interest expense:
Deposits 1,555,683 1,488,155
Other borrowed funds 280,882 127,836
---------- ----------
1,836,565 1,615,991
---------- ----------
Net Interest Income 1,740,975 1,438,176
Provision for loan losses 60,000 15,000
---------- ----------
Net interest income after provision for loan losses 1,680,975 1,423,176
---------- ----------
Noninterest income:
Fees and service charges 124,637 97,742
Abstract fees 195,640 177,889
Gain on sale of securities available for sale 13,774 --
Other income 88,191 60,685
---------- ----------
Total noninterest income 422,242 336,316
---------- ----------
Noninterest expense:
Salaries and employee benefits 582,542 418,902
Premises and equipment 111,060 92,293
Data processing 60,135 56,413
SAIF deposit insurance premiums 73,109 71,536
Other expenses 248,859 240,034
---------- ----------
Total noninterest expenses 1,075,705 879,178
---------- ----------
Income before income taxes 1,027,512 880,314
Provision for income taxes 371,634 332,355
---------- ----------
Net income $655,878 $547,959
========== ==========
Earnings per share $0.17 $0.14
========== ==========
Dividends declared per common share $0.10 $0.10
========== ==========
See Notes to Consolidated Condensed Financial Statements.
2
NORTH CENTRAL BANCSHARES, INC.
AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED
MARCH 31,
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $655,878 $547,959
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 60,000 15,000
Depreciation 54,621 39,706
Amortization and accretion (44,512) (59,800)
Deferred taxes (57,750) 25,926
Effect of contribution to employee stock ownership plan 9,809 (1,440)
(Gain) on sale of foreclosed real estate and loan, net (9,103) --
(Gain) on sale of securities available for sale (13,774) --
Loss on disposal of equipment 1,752 --
Change in assets and liabilities:
(Increase) in accrued interest receivable (18,439) (47,926)
Decrease in income taxes receivable 31,766 --
(Increase) in prepaid expenses and other assets (151,674) (518,626)
Increase in income taxes payable 394,982 185,336
Increase (decrease) in accrued expenses and other liabilities (93,135) 3,408
--------- ---------
Net cash provided by operating activities 820,421 189,543
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in loans 112,749 (2,213,674)
Purchase of loans (2,378,800) (4,929,721)
Proceeds from sale of securities available for sale 53,891 --
Purchase of securities available for sale (2,461,865) (176,816)
Proceeds from maturities of securities held to maturity 1,500,000 2,500,000
Purchase of securities held to maturity -- (3,992,285)
Purchase of premises and equipment (109,400) (71,318)
Purchase of title plant -- (699,270)
Other 88,799 (116,965)
----------- -----------
Net cash (used in) investing activities (3,194,626) (9,700,049)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 1,656,951 740,395
(Decrease) in advances from borrowers for taxes and insurance (379,619) (311,348)
Net change in short term borrowings (16,000,000) 6,500,000
Proceeds from other borrowed funds -- 150,000
Proceeds from issuance of 2,625,467 shares of common stock 25,412,159 --
Payments for expenses incurred relating to conversion to stock
form (790,145) --
Dividends paid (111,053) (118,920)
------------ -----------
Net cash provided by financing activities 9,788,293 6,960,127
------------ -----------
Net increase (decrease) in cash 7,414,088 (2,550,379)
CASH
Beginning 3,071,642 4,977,724
------------ -----------
Ending $10,485,730 $2,427,345
============ ===========
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash payments for:
Interest paid to depositors $1,544,569 $1,414,750
Interest paid on borrowings 315,251 104,527
Income taxes -- 131,093
See notes to consolidated condensed financial statements.
3
ITEM 1.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
1. SIGNIFICANT ACCOUNTING POLICIES
The consolidated condensed financial statements for the three month periods
ended March 31, 1996 and 1995 are unaudited. In the opinion of the management of
North Central Bancshares, Inc. (the "Company" or the "Registrant") these
financial statements reflect all adjustments, consisting only of normal
recurring accruals, necessary to present fairly these consolidated financial
statements. The results of operations for the interim periods are not
necessarily indicative of results which may be expected for an entire year.
Certain information and footnote disclosure normally included in complete
financial statements prepared in accordance with generally accepted accounting
principles have been omitted in accordance with the requirements for interim
financial statements. The financial statements and notes thereto should be read
in conjunction with the Company's 1995 Annual Report on Form 10-K.
The consolidated condensed financial statements include the accounts of the
Company and its wholly-owned subsidiaries (See Note 2). All significant
intercompany balances and transactions have been eliminated in consolidation.
2. REORGANIZATION
The Company was organized on December 5, 1995 at the direction of the Board of
Directors of First Federal Savings Bank of Fort Dodge (the "Bank") for the
purpose of acquiring all of the capital stock of the Bank and North Central
Bancshares, M.H.C. (the "Mutual Holding Company" or "MHC") from the mutual to
the stock holding company structure (these transactions are collectively
referred to as the "Reorganization"). On March 20, 1996, upon completion of the
Reorganization, the Company issued an aggregate of 4,011,057 shares of its
common stock, 1,385,590 shares of which were issued in exchange for all of the
Bank's issued and outstanding shares, except for shares owned by the MHC which
were cancelled and 2,625,467 shares of which were sold in Subscription and
Community Offerings (the "Offering") at a price of $10.00 per share, with gross
proceeds amounting to approximately $26,254,670. In addition, the Company
replaced the Bank as the issuer listed on the Nasdaq National Market.
At this time, the Company conducts business as a unitary savings and loan
holding company and the principal business of the Company consists of the
operation of its wholly owned subsidiary, the Bank.
The accompanying condensed consolidated financial statements include the
accounts of the Company and its subsidiaries. For periods prior to the
Reorganization the statements include the accounts of the Bank and its
subsidiaries and the accounts of the MHC. The inclusion of the accounts of the
MHC had the effect of increasing stockholders' equity at December 31, 1995 by
$314,000 and decreasing net income for the three months ended March 31, 1995 by
$17,000 as compared to amounts previously reported by the Bank.
4
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
(Continued)
3. EARNINGS PER SHARE
The earnings per share amounts were computed using the weighted average number
of shares outstanding during the periods presented. In accordance with Statement
of Position No. 93-6, Employers' Accounting for Employee Stock Ownership Plans,
issued by the American Institute of Certified Public Accountants, shares owned
by the Bank's Employee Stock Ownership Plan that have not been committed to be
released are not considered to be outstanding for the purpose of computing
earnings per share. For the three month periods ended March 31, 1996 and 1995,
the weighted average number of shares outstanding were 3,843,710 and 3,830,478,
respectively. The number of shares outstanding at March 31, 1995 were restated
to reflect the conversion ratio effected as part of the conversion and
reorganization.
4. DIVIDENDS
On January 26, 1996, the Bank declared a cash dividend on its common stock,
payable on March 8, 1996 to stockholders of record as of February 16, 1996,
equal to $0.10 per share. The dividend was declared and paid prior to the
reorganization and totaled $370,000 of which $127,829 was paid to public
shareholders. The MHC sought and obtained from the Office of Thrift Supervision
a waiver of dividend on its shares of common stock (amounting to $242,171).
Therefore this dividend was not paid to the Mutual Holding Company.
5. PENDING ACCOUNTING PRONOUNCEMENTS
The Financial Accounting Standards Board ("FASB") has approved, effective for
years beginning after December 15, 1995, Statement No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of,
Statement No, 122, Accounting for Mortgage Servicing Rights and Statement No.
123, Accounting for Stock-Based Compensation. The implementation of FASB
Statements No. 121, 122 and 123 did not have a material effect on the Company's
financial statements when adopted.
5
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
Total assets increased by $10.7 million, or 5.9%, from $179.9 million at
December 31, 1995 to $190.6 million at March 31, 1996. Cash increased by $7.4
million, or 241.4%, primarily due to the proceeds from the Offering. Securities
available for sale increased by $2.3 million, or 29.6%, primarily due to the
purchase of U.S. Treasury Notes. Total loans receivable, net, increased by $2.2
million, or 1.5%, due to originations of $3.3 million of new first mortgage
loans secured by one-to-four family residences, purchases of $2.4 million of
first mortgage loans secured by one-to-four family and multi-family residences
and originations of $2.2 million of second mortgage loans, which originations
and purchases were offset in part by payments and prepayments of loans during
the three months ended March 31, 1996. Deposits increased $1.7 million, or 1.3%,
from $126.7 million at December 31, 1995 to $128.3 million at March 31, 1996.
Other borrowings, primarily Federal Home Loan Bank of Des Moines ("FHLB")
advances, decreased by $16.0 million, to $5.9 million at March 31, 1996 from
$21.9 million at December 31, 1995, primarily due to the use of a portion of the
proceeds from the Offering which were used to repay FHLB advances. Total
stockholders' equity increased $25.1 million, from $29.9 million at December 31,
1995 to $55.0 million at March 31, 1996, primarily due to the issuance of common
stock in the Offering.
CAPITAL
The Company's total stockholders' equity increased by $25.1 million to
$55.0 million at March 31, 1996 from $29.9 million at December 31, 1995. The
unrealized gain (loss) on securities available for sale decreased by $72,000 to
$(12,000) at March 31, 1996 from $61,000 at March 31, 1996. The unearned shares
from the Employee Stock Ownership Plan increased by $812,000 to $1.6 million at
March 31, 1996 from $769,000 at March 31, 1995, primarily due to the purchase of
additional shares by the employee stock ownership plan as a part of the
Offering.
The Office of Thrift Supervision (the "OTS") requires that the Bank meet minimum
tangible, leverage (core) and risk-based capital requirements. As of March 31,
1996, the Bank exceeded all of its regulatory capital requirements. The Bank's
required, actual and excess capital levels as of March 31, 1996 are as follows:
6
AMOUNT PERCENTAGE
OF ASSETS
(DOLLAR AMOUNTS IN THOUSANDS)
Tangible capital:
Capital level $41,304 21.56%
Requirement 2,873 1.50%
Excess $38,431 20.06%
Core capital:
Capital level $41,304 21.56%
Requirement 5,746 3.00%
Excess $35,558 18.56%
Risk-based capital:
Capital level $42,541 43.22%
Requirement 7,874 8.00%
Excess $34,667 35.22%
LIQUIDITY
OTS regulations require that thrift institutions such as the Bank maintain an
average daily balance of liquid assets (cash, certain time deposits, banker's
acceptances and specified United States government, state or federal agency
obligations) equal to a monthly average of not less than 5% of their net
withdrawable deposits, plus short term borrowings. At March 31, 1996, the Bank's
liquidity position was $30.2 million or 20.90% of liquid assets, compared to
$9.8 million or 6.85% at December 31, 1995. The increase of $20.4 million was
primarily due to the release of $13.0 million of pledged liquid assets held as
collateral on the Bank's borrowings from the FHLB and the increase in cash due
to the issuance of common stock in the Offering.
OTS regulations also require that thrift institutions such as the Bank maintain
an average daily balance of short term liquid assets (cash, certain time
deposits, banker's acceptances and specified United States government, state or
federal agency obligations) equal to a monthly average of not less than 1% of
their net withdrawable deposits, plus short term borrowings. At December 31,
1995, the Bank's short term liquidity position was $10.7 million or 7.43% of
short term liquid assets, compared to $3.3 million or 2.31% at December 31,
1995. The increase of $7.4 million was primarily due to the increase in cash due
to the issuance of common stock in the Offering.
PROPOSED SAIF RECAPITALIZATION
The proposed Balanced Budget Act of 1995 ("Budget Act"), which was approved by
the Congress but vetoed by the President, included provisions that focused on a
resolution of the financial problems of the SAIF. Under the provisions of the
Budget Act, all SAIF member institutions will pay a special assessment to
recapitalize the SAIF, and the assessment base for the payments on the FICA
bonds would be expanded to include the deposits of both BIF- and SAIF-insured
institutions. The amount of the special assessment required to recapitalize the
SAIF was then estimated to be approximately 80 basis points of the
SAIFassessable deposits. This estimate of the special assessment was less than
the assessment of 85 to 90 basis points that had been previously estimated. The
special assessment would have been imposed on the first business day of January
1996, or on such other date prescribed by the FDIC not later than 60 days after
enactment of the Budget Act, based on the amount of SAIF deposits
7
on March 31, 1995. The Budget Act would have also permitted BIF-insured
institutions with deposits subject to SAIF assessments to reduce such
SAIF-deposits by 20% in computing the institution's special assessment. If an 85
or a 90 basis point assessment were assessed against the Bank's deposits as of
March 31, 1995, the Bank's aggregate SAIF assessment would be approximately $1.1
million or $1.1 million, respectively, and an assessment of 80 basis points
would be approximately $1.0 million.
The Budget Act also provided for the merger of the BIF SAIF on January 1, 1998,
with such merger being conditioned upon the prior elimination of the thrift
charter. Congressional leaders had also agreed that Congress should consider and
act upon separate legislation to eliminate the thrift charter as early as
possible in 1996. If adopted, such legislation would require that the Bank, as a
federal savings bank, convert to a bank charter. Such a requirement to convert
to a bank charter could cause the Bank to lose the favorable tax treatment for
its bad debt reserves that it currently enjoys under section 593 of the Internal
Revenue Code ("Code") and to have all or part of its existing bad debt reserves
recaptured into income.
The above described provisions of the Budget Act were not the basis for the
President's veto, and the federal banking regulators continue to seek a
legislative solution for the recapitalization of the SAIF. If enacted by
Congress, the above legislation would have the effect of reducing the capital of
SAIF member institutions by the after-tax cost of the special SAIF assessment,
plus any related additional tax liabilities. The legislation would also have the
effect of reducing any differential that may otherwise be required in the
assessment rates for the BIF and SAIF, while there is substantial support for
the above legislation, its passage remains uncertain.
RECAPTURE OF TAX BAD DEBT RESERVES
Under section 593 of the Internal Revenue Code, thrift institutions such as the
Bank, which met certain definitional tests, primarily relating to their assets
and the nature of their business, are permitted to establish a tax reserve for
bad debts and to make annual additions thereto, which additions may, within
specified limitations, be deducted in arriving at their taxable income. The
Bank's deduction with respect to "qualifying loans", which are generally loans
secured by certain interest in real property, may currently be computed using an
amount based on the Bank's actual loss experience (the "Experience Method"), or
a percentage equal to 8% of the Bank's taxable income (the "PTI Method"),
computed without regard to this deduction and with additional modifications and
reduced by the amount of any permitted addition to the non-qualifying reserve.
Under pending legislative proposals ,the PTI Method would be repealed and the
Bank would be permitted to use only the Experience Method of computing additions
to its bad debt reserve. In addition, the Bank would be required to recapture
(i.e., take into income) over a multi-year period, beginning with the Bank's
taxable year beginning January 1, 1996, the excess of the balance of its bad
debt reserves (other than the supplemental reserve) as of December 31, 1995 over
the greater of (a) the balance of such reserve as of December 31, 1987 (or a
lesser amount if the Bank's loan portfolio has decreased since December 31,
1987) or (b) an amount that would have been the balance of such reserves as of
December 31, 1995 had the Bank always computed the additions to its reserves
using the experience method. However, under the
8
proposed legislation, such recapture requirements would be suspended for each of
two successive taxable years beginning January 1, 1996 in which the Bank
originates a minimum amount of certain residential loans based upon the average
of the principal amounts of such loans made by the Bank during its six taxable
years preceding January 1, 1996. The Bank's post-December 31, 1987 bad debt
reserves at December 31, 1995 were $1.4 million. If that amount were recaptured,
the Bank would incur an additional tax liability of approximately $530,000. At
this time, the Management cannot predict whether any legislative proposal
regarding amendments to the Code related to addition to or recapture of its tax
bad debt reserve will be adopted as proposed.
RESULTS OF OPERATIONS
INTEREST INCOME. Interest income increased by $523,000 to $3.6 million for the
three months ended March 31, 1996 compared to $3.1 million for the three months
ended March 31, 1995. The increase in interest income was primarily due to a
$19.1 million increase in the average balance of interest earning assets
(primarily first and second mortgage loans) to $178.9 million for the three
months ended March 31, 1996, from $159.8 million for the comparable 1995 period.
The increase in the average balance in first and second mortgage loans reflects
an increase in originations of first mortgage loans secured by one-to-four
family residences, purchases of first mortgage loans secured by one-to-four
family and multi-family residences and originations of second mortgage loans.
The increase in interest income was also due to an increase in the average yield
on first mortgage loans to 8.14% for the three months ended March 31, 1996 from
7.91% for the three months ended March 31, 1995, reflecting an upward adjustment
of interest rates on the Bank's adjustable-rate mortgage loan portfolio and an
increase in the average yield on investments to 6.29% for the three months ended
March 31, 1996 from 5.70% for the three months ended March 31, 1995. The
increased yield reflects a general increase in market interest rates. The
average yield on interest earning assets increased to 8.01% for the three months
ended March 31, 1996 from 7.67% for the three months ended March 31, 1995.
INTEREST EXPENSE. Interest expense increased by $222,000 to $1.8 million for the
three months ended March 31, 1996 compared to $1.6 million for the three months
ended March 31, 1995. The increase in interest expense was primarily due to an
$14.6 million increase in the average interest bearing liabilities to $145.6
million for the three months ended March 31, 1996 from $131.0 million for the
three months ended March 31, 1995. This increase was due to an increase of $5.2
million in the average interest-bearing deposits from $121.5 million for the
three months ended March 31, 1995 to $126.7 million for the three months ended
March 31, 1996, as well as an increase of $9.4 million in the average borrowings
from $9.5 million for the three months ended March 31, 1995 to $18.9 million for
the three months ended March 31, 1996. The average borrowed funds also bear
interest at a rate higher than the rates paid on the Bank's interest bearing
deposits. The average cost of interest bearing liabilities increased to 5.07%
for the three months ended March 31, 1996 from 5.00% for the three months ended
March 31, 1995.
NET INTEREST INCOME. Net interest income before provision for loan losses
increased by $303,000 to $1.7 million for the three months ended March 31, 1996
from $1.4 million for the three months ended March 31, 1995. The increase is
primarily due
9
RESULTS OF OPERATIONS (Continued)
to the increase in the excess of average interest earning assets over average
interest bearing liabilities and the increase in the Bank's interest rate spread
from 2.67% for the three months ended March 31, 1995 to 2.94% for the three
months ended March 31, 1996.
The following tables sets forth certain information relating to the Bank's
average balance sheet and reflects the average yield on assets and average cost
of liabilities for the three months ended March 31, 1996 and March 31, 1995 and
the average yields earned and rates paid.
THREE MONTHS ENDED MARCH 31, 1996
AVERAGE AVERAGE YIELD/
BALANCE INTEREST COST
(DOLLARS IN THOUSANDS)
Interest-earning assets:
First mortgage loans $131,602 $ 2,678 8.14%
Consumer loans 19,230 460 9.63%
Securities available for sale 9,476 146 6.18%
Securities held to maturity 14,662 244 6.70%
Interest bearing cash 3,962 50 5.08%
-------- -------- ------
Total interest-earning assets $178,931 $ 3,578 8.01%
-------- ------
Noninterest-earning assets 4,278
--------
Total assets $183,210
========
Interest-bearing liabilities:
NOW and money market savings $ 17,830 $ 124 2.80%
Passbook savings 20,875 119 2.29%
Certificates of deposits 87,967 1,313 6.00%
Borrowed funds 18,932 281 5.97%
-------- -------- ------
Total interest-bearing
liabilities $145,604 $ 1,837 5.07%
-------- ------
Noninterest-bearing liabilities 4,485
--------
Total liabilities $150,089
Equity 33,121
--------
Total liabilities and equity $183,210
========
Net interest income $ 1,741
========
Net interest rate spread 2.94%
=====
Interest-earning assets and
net interest margin 3.89%
=====
Ratio of average interest-earning
assets to average interest-bearing
liabilities 122.89%
=======
PROVISION FOR LOAN LOSSES. The Bank's provision for loan losses was $60,000 for
the three months ended March 31, 1996 and $15,000 for the same period of the
prior year. The Bank establishes provisions for loan losses, which are charged
to operations, in order to maintain the allowance for loan losses at a level
which is deemed to be appropriate based upon an assessment of prior loss
experience, industry standards, past due loans, economic conditions, the volume
and type of loans in the Bank's portfolio, which includes a significant amount
of multifamily loans, substantially all of which are purchased and are
collateralized
10
by properties located outside of the Bank's market area, and other factors
related to the collectibility of the Bank's loan portfolio. The allowance for
loan loss was $1.8 million at March 31, 1996 as compared to $1.6 million at
March 31, 1995 and $1.7 million at December 31, 1995. Although the level of
nonperforming loans has decreased from $250,000 at March 31, 1995 to $194,000 at
March 31, 1996, management determined to increase the provision slightly in
order to continue the steady increase in the allowance for loan losses. This
increase in the allowance is primarily due to the increase in total loans from
$135.3 million at March 31, 1995 to $153.2 million at March 31, 1996. Management
believes that the allowance for loan losses is
RESULTS OF OPERATIONS (Continued)
adequate. While management estimates loan losses using the best available
information, such as independent appraisals for significant collateral
properties, no assurance can be made that future adjustments to the allowance
will not be necessary based on changes in economic and real estate market
conditions, further information obtained regarding known problem loans,
identification of additional problem loans, and other factors, both within and
outside of management's control.
NONINTEREST INCOME. Total noninterest income increased by $86,000 to $422,000
for the three months ended March 31, 1996 from $336,000 for the three months
ended March 31, 1995. The increase is due to increases in all categories of
noninterest income. Fees and service charges increased $26,000, primarily due to
increases in overdraft fees and loan prepayment fees. Abstract fees increased
$18,000 due to increased sales volume. A $14,000 gain on the sale of securities
available for sale was realized. Other income increase $28,000 primarily due to
increases in insurance and annuity sales.
NONINTEREST EXPENSE. Total noninterest expense increased by $197,000 to $1.1
million for the three months ended March 31, 1996 from $880,000 for the three
months ended March 31, 1995. The increase is primarily due to a $164,000
increase in salaries and benefits and a $19,000 increase in premises and
equipment. The increase in salaries and benefits was primarily a result of the
adoption of a retirement plan for the benefit of the chairman of the board and
normal salary increases. The increase in premises and equipment is primarily a
result of higher depreciation expense due to expenditures on buildings and
equipment in the Nevada office and equipment in the abstract companies.
INCOME TAXES. Income taxes increased by $39,000 to $372,000 for the three months
ended March 31, 1996 as compared to $332,000 for the three months ended March
31, 1995. The increase was primarily due to an increase in pre-tax earnings
during the 1996 period as compared to the 1995 period.
NET INCOME. Net income totalled $656,000 for the three months ended March 31,
1996, compared to $548,000 for the same period in 1994.
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PART II OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibit 11. Statement on computation of per share earnings.
Exhibit 27. Financial data schedule.
(b) Reports on Form 8-K
A form 8-K was filed on January 23, 1996 to report, pursuant to Item 5,
the issuance of limited financial information for the quarter and year ended
December 31, 1995.
A form 8-K was filed on January 29, 1996 to report, pursuant to Item 5,
the payment of a cash dividend on the Bank's common stock.
A form 8-K was filed on March 22, 1996 to report, pursuant to Item 2,
the completion of the Company's public offering.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
NORTH CENTRAL BANCSHARES, INC.
DATE: May 9, 1996 BY: /s/ David M. Bradley
--------------------
David M. Bradley, CPA
President and
Chief Executive Officer
DATE: May 9, 1996 BY: /s/ John L. Pierschbacher
-------------------------
John L. Pierschbacher, CPA
Principal Financial Officer
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