Page 4
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2000
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number: 33-58832
FIRST CENTRAL BANCSHARES, INC.
(Exact name of small business issue as specified in its
charter)
Tennessee
(State or other jurisdiction of incorporation or organization)
725 Highway 321 North, Lenoir City, Tennessee
(Address of principal executive office)
62-1482501
(I.R.S. Employer Identification No.)
37771-0230
(Zip Code)
Registrant's telephone number, including area code: (865) 986-
1300
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock (par value $5.00 per share)
Indicate by 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 filing
requirements for the past 90 days.
Yes [x] No [ ]
Indicate by mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13,
or (15d) of the Securities Exchange Act of 1934 subsequent to
the distribution of securities under a plan confirmed by a
court.
Yes [x] No [ ]
The number of outstanding shares of the registrant's
Common Stock, par value $5.00 per share, was 559,361 on October
30, 2000.
FORM 10-QSB
Index
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of September 30, 2000 and December 31, 1999 3
Condensed Consolidated Statements of Income
for the three months and nine months ended
September 30, 2000 and 1999 4
Condensed Consolidated Statements of Cash
Flows for the nine months ended September 30,
2000 and 1999 5
Condensed Consolidated Statements of Comprehensive
Income for the three months and nine months ended
September 30, 2000 and 1999 6
Notes to Condensed Consolidated Financial Statements7-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11-16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults upon Senior Securities 16
Item 4. Submission of Matters to a Vote
of Securities Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
September 30, December 31,
2000 1999
- -ASSETS-
Cash and Due from Banks $ 5,638 $ 6,221
Federal Funds Sold 20 2,280
Total Cash and Cash Equivalents 5,658 8,501
Investment Securities Available for Sale 32,707 28,229
Loans, Net 75,596 71,152
Premises and Equipment (Net) 4,831 5,109
Accrued Interest Receivable 879 779
Other Assets 652 962
TOTAL ASSETS $120,323 $114,732
- -LIABILITIES AND STOCKHOLDERS' EQUITY-
Liabilities:
Deposits
Non-Interest Bearing $ 17,059 $ 16,592
Interest Bearing 91,252 86,146
Total Deposits 108,311 102,738
Securities Sold Under Agreement to Repurchase386 2,671
Federal Funds Purchased 1,200 -0-
Accrued Interest Payable 472 391
Other Liabilities 189 273
Total Liabilities 110,558 106,073
Stockholders' Equity:
Common Stock - Par Value $5.00, Authorized
2,000,000 Shares; Issued 564,361 Shares
(513,281 in 1999) 2,822 2,566
Additional Paid-In Capital 5,430 4,357
Treasury Stock (130) -0-
Retained Earnings 2,348 2,639
Accumulated Other Comprehensive Income (Loss) (705)
(903)
Total Stockholders' Equity 9,765 8,659
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY$120,323 $114,732
See accompanying notes to financial statements.
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income
(Unaudited)
(In Thousands Except
per Share Information)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
INTEREST INCOME:
Loans $1,778 $1,567 $5,125 $4,517
Investment Securities 575 455 1,661 1,335
Federal Funds Sold 4 60 38 268
Total Interest Income 2,357 2,082 6,824 6,120
INTEREST EXPENSE:
Deposits 1,141 978 3,264 2,926
Securities Sold Under
Agreements to Repurchase 3 0 27 22
Federal Funds Purchased 14 0 36 0
Total Interest Expense 1,158 978 3,327 2,948
Net Interest Income 1,199 1,104 3,497 3,172
PROVISION FOR LOAN LOSSES 31 35 185 155
Net Interest Income After
Provision for Loan Losses 1,168 1,069 3,312 3,017
NONINTEREST INCOME
Service Charges on Demand
Deposits 161 157 480 443
Loan Fees and Other Service
Charges 84 109 241 368
Gain on Sale of Investment
Securities 0 0 0 23
Gain on Sale of Branch 5 0 435 0
Other 44 26 141 88
Total 294 292 1,297 922
NONINTEREST EXPENSE
Salaries and Employee
Benefits 569 499 1,619 1,529
Occupancy 113 116 325 323
Data Processing Fees 104 86 304 249
Furniture and Equipment 66 79 219 216
Federal Insurance Premiums 12 9 35 31
Advertising and Promotion 50 30 109 99
Office Supplies and Postage78 86 160 170
Other 27 8 144 145
Total Noninterest Expense 1,019 913 2,915 2,762
INCOME BEFORE INCOME TAX 443 448 1,694 1,177
INCOME TAXES 197 165 656 427
NET INCOME $ 246 $ 283 $1,038 $ 750
BASIC EARNINGS PER COMMON
SHARE $ 0.43 $ 0.55 $ 1.87 $ 1.46
See accompanying notes to financial statements.
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
Nine Months Ended
September 30,
2000 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 1,038 $ 750
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Provision for Loan Losses 185 155
Depreciation 220 229
Gain on Sale of Investment Securities -0- (23)
(Increase) in Interest Receivable (100) (1)
Increase (Decrease) in Interest Payable 81 (37)
Amortization of Premiums (Discounts) on
Investment Securities, Net 41 22
FHLB Stock Dividends (19) (54)
Gain on Sale of Branch (435) -0-
(Increase) Decrease in Other Assets 188 (139)
Increase (Decrease) in Other Liabilities (84) 95
Total Adjustments 77 247
Net Cash Provided by Operating Activities 1,115 997
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Maturities, Principal Paydowns and
Redemption of Investment Securities Available
for Sale 739 9,443
Purchase of Investment Securities Available
for Sale (4,919) (11,964)
(Increase) Decrease in Loans (4,629) (8,540)
Purchase of Premises and Equipment (730) (1,069)
Sales of Premises and Equipment 1,223 -0-
Net Cash Used in Investing Activities (8,316) (12,130)
NET CASH FROM FINANCING ACTIVITIES
Increase (Decrease) in Deposits 5,573 (1,068)
Increase (Decrease)in Securities Sold
Under Agreement to Repurchase (2,285) 1,721
Increase in Federal Funds Purchased 1,200 -0-
Purchase of Common Stock (130) -0-
Net Cash Provided by Financing Activities 4,358 653
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (2,843) (10,480)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 8,501 17,47
9
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 5,658 $ 6,999
Supplementary Disclosures of Cash Flow Information:
Cash Paid During the Period For:
Interest $ 3,246 $ 2,911
Income Taxes $ 802 $ 392
Supplementary Disclosures of Noncash Investing Activities:
Change in Unrealized Loss on Investment Securities$ 320 $ 1
,158
Change in Deferred Income Tax Benefit Associated with
Unrealized Loss on Investment Securities $ 122 $ 440
Change in Net Unrealized Loss on Investment Securities$ 198
$ 718
Issuance of Common Stock Dividend:
Par $ 256 $ -0-
Additional Paid-in Capital $ 1,073 $ -0-
Reduction in Retained Earnings Due to Issuance of
Common Stock $ 1,329 $ -0-
See accompanying notes to financial statements.
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(In Thousands)
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
Net Income $ 246 $ 283 $1,038 $ 750
Other Comprehensive Income
(Loss), Net of Tax:
Unrealized Gains/(Losses) on
Investment Securities 440 (133) 320 (1,158)
Less Reclassification
Adjustment for Gains
Included in Net Income -0- -0- -0- -0-
Less Income Taxes Related
to Unrealized Gains/(Losses)
on Investment Securities (167) 49 (122) 440
Other Comprehensive Income
(Loss), Net of Tax 273 (84) 198 (718)
Comprehensive Income $ 519 $ 199 $ 1,236 $ 32
See accompanying notes to financial statements.
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
September 30, 2000 and 1999
NOTE 1 - ORGANIZATION AND BUSINESS
First Central Bancshares, Inc. (the Company) was incorporated
in 1993 for the purpose of becoming a one bank holding company.
On April 3, 1993, the Company acquired 100% of First Central
Bank (the Bank) through a share exchange agreement approved by
the shareholders of the Bank. The investment in First Central
Bank represents virtually all of the assets of First Central
Bancshares, Inc.
The consolidated financial statements include the accounts of
First Central Bancshares, Inc. and its wholly owned subsidiary,
First Central Bank. All significant intercompany transactions
and balances have been eliminated.
The Company's subsidiary, First Central Bank, formed a new
subsidiary, FCB Financial Services, Inc. in 2000. This new
subsidiary is a financial services company authorized by the
State of Tennessee to sell insurance and investments. FCB
Financial Services, Inc. has had no activity as of September
30, 2000.
NOTE 2 - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been
prepared by the Company. Certain information and footnote
disclosures normally included in financial statements prepared
in accordance with generally accepted accounting principles
have been condensed or omitted. In the opinion of the
Company's management, the disclosures made are adequate to make
the information presented not misleading, and the consolidated
financial statements contain all adjustments necessary to
present fairly the financial position as of September 30, 2000,
results of operations for the three months and nine months
ended September 30, 2000 and 1999, and cash flows for the nine
months ended September 30, 2000 and 1999.
The results of operations for the three months and nine months
ended September 30, 2000 are not necessarily indicative of the
results to be expected for the full year.
Certain items in the 1999 consolidated financial statements
have been reclassified to conform with the 2000 consolidated
financial statements. In particular, the following change has
been made to the December 31, 1999 condensed consolidated
balance sheet:
As Previously
Reported As Restated
Deposits (in thousands)
Noninterest Bearing $ 16,592 $ 16,592
Interest Bearing 88,817 86,146
Total Deposits 105,409 102,738
Securities Solid Under
Agreements to Repurchase -0- 2,671
In addition, the categories of noninterest income and
noninterest expense have been detailed on the consolidated
condensed statements of income in accordance with the
instructions for Form 10QSB.
NOTE 3 - TREASURY STOCK
During the quarter ended June 30, 2000, the Company repurchased
5,000 shares of its common stock at a total cost of $130,000
from the estate of a stockholder.
NOTE 4 - STOCK OPTION PLAN
On April 20, 2000, the stockholders of the Company approved a
stock option plan which reserves 25,000 shares of the Company's
common stock for present and future employees as an incentive
for long-term employment. As of September 30, 2000, the plan
has not been implemented and no options have been awarded.
NOTE 5 - EARNINGS PER SHARE
Basic earnings per share is based on the weighted average
number of shares outstanding during the period. For the nine
months ended September 30, 2000 and 1999 the weighted average
number of shares was 554,107 and 513,281, respectively. During
the period ended September 30, 2000 and 1999 the Company did
not have any dilutive securities.
NOTE 6 - RECENT REGULATORY AND ACCOUNTING PRONOUNCEMENTS
In June 1998, the FASB issued Statement of Financial Accounting
Standards No. 133, Accounting for Derivative Instruments and
Hedging Activities. SFAS No. 133 establishes accounting and
reporting standards for derivative instruments, including
derivative instruments embedded in other contracts,
(collectively referred to as derivatives) and for hedging
activities. It requires that an entity recognize all
derivatives as either assets or liabilities in the consolidated
statement of financial position and measure those instruments
at fair value. This statement amends FASB Statement No. 52,
Foreign Currency Translation, to permit a special accounting
for a hedge of a foreign currency forecasted transaction with a
derivative. It supersedes FASB Statements No. 80, Accounting
for Future Contracts, No. 105, Disclosure of Information about
Financial Instruments with Off-Balance Sheet Risk and Financial
Instruments with Concentrations of Credit Risk, and No. 119,
Disclosure about Derivative Financial Instruments and Fair
Value of Financial Instruments. It amends FASB Statement No.
107, Disclosures about Fair Value of Financial Instruments to
include in Statement No. 107 the disclosure provisions about
concentrations of credit risk from Statement No. 105. In June
1999, the FASB issued Statement of Financial Accounting
Standards No. 137, Accounting for Derivative Instruments and
Hedging Activities - Deferral of the Effective Date of FASB
Statement No. 133. SFAS 137 amends SFAS 133 and deferred the
effective data until June 15, 2000. The Statement is required
to be applied retroactively to consolidated financial
statements of prior periods. In June 2000, the FASB issued
Statement of Financial Accounting Standards No. 138. This
statement amends the accounting and reporting standards of
Statement No. 133 for certain derivative instruments and
certain hedging activities. The Bank does not currently hold
any derivative instruments or engage in hedging activities.
Therefore, these statements have no effect on the Company's
financial statements at the present time.
In October 1998, the FASB issued Statement of Financial
Accounting Standards No. 134, Accounting for Mortgage-Backed
Securities after Securitization of Mortgage Loans Held for Sale
by a Mortgage Banking Enterprise. SFAS No. 134 amends FASB
Statement No. 65, Accounting for Certain Mortgage Banking
Activities, which establishes accounting and reporting
standards for certain activities of mortgage banking
enterprises and other enterprises that conduct operations that
are substantially similar to the primary operations of a
mortgage banking enterprise. The Bank is not currently
entering into any transactions related to securitization of
mortgage loans, nor does the Bank anticipate entering into any
transactions of this nature in the future. Therefore, SFAS No.
134 is not expected to have any effect on our financial
condition or results of operations.
On November 12, 1999, President Clinton signed legislation
which could have a far-reaching impact on the financial
services industry. The Gramm-Leach-Bliley ("G-L-B") Act
authorizes affiliations between banking, securities, and
insurance firms and authorizes bank holding companies and
national banks to engage in a variety of new financial
activities. Among the new activities that will be permitted to
bank holding companies are securities and insurance brokerage,
securities underwriting, insurance underwriting and merchant
banking. The Board of Governors of the Federal Reserve System
("Federal Reserve Board"), in consultation with the Secretary
of the Treasury, may approve additional financial activities.
The G-L-B Act imposes new requirements on financial
institutions with respect to customer privacy. The G-L-B Act
generally prohibits disclosure of customer information to non-
affiliated third parties unless the customer has been given the
opportunity to object and has not objected to such disclosure.
Financial institutions are further required to disclose their
privacy policies to customers annually.
The G-L-B Act contains a variety of other provisions including
a prohibition against ATM surcharges unless the customer has
first been provided notice of the imposition and amount of the
fee. The G-L-B Act reduces the frequency of Community
Reinvestment Act examinations for smaller institutions and
imposes certain reporting requirements on depository
institutions that make payments to non-governmental entities in
connection with the Community Reinvestment Act.
The Company is unable to predict the impact of the G-L-B Act on
its operations at this time.
In September 2000, the FASB issued Statement of Financial
Accounting Standards No. 140, Accounting for Transfers and
Servicing of Financial Assets and Extinguishment of
Liabilities. This Statement replaces FASB Statement No. 125,
Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities. It revises the standards for
accounting for securitization and other transfers of financial
assets and collateral and requires certain disclosures, but it
carries over most of Statement No. 125's provisions. The
Statement provides accounting and reporting standards for
transfers and servicing of financial assets and extinguishment
of liabilities occurring after March 31, 2001. This Statement
is effective for recognition and reclassification of collateral
and for disclosure related to securitization transactions and
collateral for fiscal years ending after December 15, 2000.
Since the Bank does not currently engage in securitization and
other transfers of financial assets and collateral, this
Statement is not expected to affect the financial condition or
results of operations at the present time.
Year 2000 Recap
The Bank successfully completed the century date change over
without any significant problems and zero interruptions in
operation.
NOTE 7 - BRANCH SALE
The Bank entered into an agreement, effective October 31, 1999,
to sell its Sweetwater branch to another bank holding company.
The sale was completed June 23, 2000 and included the premises
and equipment, loans and related accrued or unearned interest,
deposits and related accrued interest, and certain other assets
and liabilities related to the branch.
The total consideration of $1,500,000 was for the opportunity
to acquire the branch and for the branch itself and was payable
in two components. The buyer paid $300,000 (received in the
fourth quarter of 1999) upon the execution of the agreement.
The $300,000 amount was nonrefundable, and as such, was
recorded in the 1999 consolidated statement of income as Income
From Non-Refundable Deposit on Sale of Branch. The remaining
$1,200,000 was paid at closing of the transaction on June 23,
2000.
The Bank recognized a gain of approximately $435,000 on the
sale of the branch in the second quarter of 2000. This gain is
included in other income.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
BALANCE SHEET ANALYSIS - COMPARISON AT SEPTEMBER 30, 2000 TO
DECEMBER 31, 1999
Assets totalled $120.3 million as of September 30, 2000, as
compared to $114.7 million as of December 31, 1999, an increase
of 4.88%.
INVESTMENT SECURITIES
Investment securities were $32.7 million or 27.2% of total
assets, as of September 30, 2000 an increase of $4.5 million
from $28.2 million as of December 31, 1999. During the nine
month period there were $739,000 in calls, maturities, and
principal paydowns offset primarily by the purchase of $4.9
million in agency securities.
The investment portfolio is comprised of U.S. Government and
federal agency obligations and mortgage-backed securities
issued by various federal agencies. Mortgage-backed issues
comprised 12.58% of the portfolio as of September 30, 2000 and
16.79% as of December 31, 1999.
As of September 30, 2000 and December 31, 1999, the Bank's
entire investment portfolio was classified as available for
sale and reflected on the consolidated balance sheets at fair
value with unrealized gains and losses reported in the
consolidated statements of comprehensive income (loss), net of
any deferred tax effect. The net unrealized loss on securities
available for sale, net of tax was approximately $705,000 as of
September 30, 2000, a change of approximately $198,000 from
December 31, 1999, a result of limited improvement in the bond
market. The fair value of securities fluctuates with the
movement of interest rates. Generally, during periods of
decreasing interest rates, the fair values increase whereas the
opposite may hold true during a rising interest rate
environment.
LOANS
During the first nine months of 2000, total gross loans
outstanding increased by approximately $4.3 million to $76.8
million as of September 30, 2000 from $72.5 million as of
December 31, 1999 attributable primarily to $27.8 million in
originated loans offset by amortization and payoffs of
approximately $22.9 million and loans sold with the Sweetwater
branch of approximately $627,000. As of September 30, 2000 and
December 31, 1999, net loans outstanding represented 62.8% and
62.0% of total assets, respectively. Table 1 summarizes the
Bank's loan portfolio by major category as of September 30,
2000 and December 31, 1999.
Table 1 - Loan Portfolio by Category
(In Thousands)
September 30,December 31,
2000 1999
Loans secured by real estate:
Commercial properties $9,776 $13,233
Construction and land development 8,827 9,814
Residential and other properties 22,349 22,519
Total loans secured by real estate 40,952 45,566
Commercial and industrial loans 16,928 12,631
Consumer loans 18,054 13,512
Other loans 862 878
76,796 72,587
Less: Allowance for loan losses (735) (618)
Unearned interest (443) (800)
Unearned loan fees (22) (17)
Loans, Net $75,596 $71,152
As of September 30, 2000, there were outstanding commitments to
advance construction funds and to originate loans in the amount
of $7.4 million and commitments to advance existing home
equity, letters of credit and other credit lines in the amount
of $10.0 million.
Loans are carried net of the allowance for loan losses. The
allowance is maintained at a level to absorb possible losses
within the loan portfolio. As of September 30, 2000 and
December 31, 1999, the allowance had a balance of approximately
$735,000 and $618,000, respectively. There were approximately
$122,000 and $34,000 of loans on which the accrual of interest
had been discontinued as of September 30, 2000 and December 31,
1999, respectively. There were approximately $536,000 in loans
specifically classified as impaired as of September 30, 2000 as
defined by SFAS No. 114 compared to $658,000 as of December 31,
1999. Table 2 summarizes the allocation of the loan loss
reserve by major categories and Table 3 summarizes the activity
in the loan loss reserve for the nine month period.
Table 2 - Allocation of the Loan Loss Reserve (in Thousands)
9-30-00 % to 12-31-99 % to
Balance applicable to: $ Amount Total $ Amount Total
Commercial, financial, and agricultural$169 22.99%$127 20.55%
Real Estate - Construction 139 18.91% 108 17.48%
Real Estate - Mortgages 199 27.07% 113 18.28%
Installment - Consumers 228 31.03% 162 26.21%
Other 0 0.00% 108 17.48%
Total $735 100.00% $618 100.00%
Table 3 - Analysis of Loan Loss Reserve
(In Thousands) 9-30-00 9-30-99
Balance, beginning of period $618 $594
Charge-offs:
Commercial, financial, and agricultural 17 -0-
Real estate - construction -0- -0-
Real estate - mortgage -0- -0-
Installment - customers 94 173
Other -0- -0-
Recoveries:
Commercial, financial, and agricultural 13 -0-
Real estate - construction -0- -0-
Real estate - mortgages -0- -0-
Installment - consumers 30 49
Other -0- -0-
Net charge-offs 68 124
Additions to loan loss reserve 185 155
Balance, end of period $735 $625
Ratio of net charge-offs to average loans outstanding.09% .18%
DEPOSITS
Deposits increased by $5.6 million to $108.3 million as of
September 30, 2000 from $102.7 million as of December 31, 1999,
an increase of 5.45%. The $5.6 million increase in deposits is
net of $1.2 million of deposits sold with the Sweetwater
branch. Demand deposits, which include regular, money market,
NOW and demand deposits, were $45.7 million, or 42.2% of total
deposits, at September 30, 2000. Core deposits were 26.5% of
total deposits at September 30, 2000. During the nine month
period, the Bank had decreases in the balances in the demand
deposit category of $0.9 million to $45.7 million as of
September 30, 2000. Certificate accounts were $62.6 million at
September 30, 2000, an increase of $6.5 million compared to
$56.1 million as of December 31, 1999. Table 4 summarizes the
Bank's deposits by major category as of September 30, 2000 and
December 31, 1999.
Table 4 - Deposits by Category
(In Thousands)
September 30,December 31,
2000 1999
Demand Deposits:
Noninterest-bearing accounts $ 17,059 $ 16,592
NOW and MMDA accounts 23,291 24,978
Savings accounts 5,394 5,075
Total Demand Deposits 45,744 46,645
Term Deposits:
Less than $100,000 46,020 42,272
$100,000 or more 16,547 13,821
Total Deposits 62,567 56,093
$108,311 $102,738
CAPITAL
During the nine month period ended September 30, 2000,
stockholders' equity increased by $1,106,000 to $9.7 million,
due to net income for the period of $1,038,000, the increase in
value of securities available for sale of $198,000 and the
purchase of treasury stock for $130,000.
LIQUIDITY AND CAPITAL RESOURCES
The Bank's primary sources of liquidity are deposit balances,
available-for-sale securities, principal and interest payments
on loans and investment securities and FHLB advances.
As of September 30, 2000, the Bank held $32.7 million in
available-for-sale securities and during the first nine months
of 2000 the Bank received $739,000 in proceeds from maturities,
redemptions and principal payments on its investment portfolio.
Deposits increased by $5.6 million during the same nine month
period.
The Bank is a member of the Federal Home Loan Bank of
Cincinnati (FHLB) and is eligible to obtain both short and long
term credit advances. Borrowing capacity is limited to the
Bank's available qualified collateral which consists primarily
of certain 1-4 family residential mortgages and certain
investment securities. The Bank had no advances outstanding
from the FHLB at September 30, 2000.
The Bank can also enter into repurchase agreement transactions
should the need for additional liquidity arise. At September
30, 2000, the Bank had $386,000 of repurchase agreements
outstanding.
As of September 30, 2000, the Bank had capital of $9.8 million,
or 8.1% of total assets, as compared to $8.7 million, or 7.6%,
at December 31, 1999. Tennessee chartered banks that are
insured by the FDIC are subject to minimum capital
requirements. Regulatory guidelines define the minimum amount
of qualifying capital an institution must maintain as a
percentage of risk-weighted assets and total assets.
Table 5 - Regulatory Capital
(Dollars in Thousands)
Minimum
September 30,December 31,Regulatory
2000 1999 Ratios
Tier 1 Capital as a Percentage
of Risk-Weighted Assets 12.4% 11.6% 4.00%
Total Capital as a Percentage
of Risk-Weighted Assets 13.2% 12.4% 8.00%
Leverage Ratio 8.9% 8.5% Up to 5.00%
Total Risk-Weighted Assets $84,361 $82,275
As of September 30, 2000 and December 31, 1999, the Bank
exceeded all of the minimum regulatory capital ratio
requirements.
RESULTS OF OPERATIONS FOR THE NINE MONTH PERIODS ENDED
SEPTEMBER
30, 2000 AND 1999
GENERAL
The Bank reported net income of $1,038,000, or $1.87 per share
for the nine month period ended September 30, 2000 as compared
with $750,000 or $1.46 per share for the same period in 1999,
an increase of 38.4%.
NET INTEREST INCOME
Net interest income increased by $325,000 to $3.5 million for
the nine month period in 2000 from the comparable period in
1999. Contributing to this increase was an increase in average
interest earning assets. Average interest earning assets at a
yield of 8.45% totaled $107.7 million as of September 30, 2000.
In comparison in 1999, average interest earning assets, at a
yield of 7.90%, totaled $103.3 million.
Interest income increased by $704,000 for the nine month period
in 2000 compared to the same period in 1999. This improvement
is primarily attributable to an increase of approximately $4.3
million, or 4.2%, in the volume of average earning assets
during the nine month period ended September 30, 2000 compared
to the nine month period ended September 30, 1999. Interest
income on loans increased by $608,000 over the same two periods
primarily as a result of an increase of approximately $6.9
million in average loans outstanding. Over the same two
periods, interest on investments increased by $326,000 due to
an increase of approximately $4.0 million or 14.0% in the
average balance of investments during the nine month period.
Interest income on Federal Funds Sold decreased by $230,000 due
to a decrease in the average balance outstanding of $6.6
million over the same period in 1999.
Total interest expense increased $379,000 for the nine month
period ended September 30, 2000 compared to the same period in
1999. Interest on deposits increased as a result of an
increase of approximately $3.7 million in average deposits over
the same period in 1999. The average rate on interest-bearing
liabilities increased to 4.88% for the nine month period in
2000 from 4.52% in the comparable period of 1999.
Table 6 - Average Balances, Interest and Average Rates
September 30 ____
2000 _ (in thousands)__ ____ 1999
Average AverageAverage Average
Balance Interest Rate Balance Interest Rate
Assets:
Federal Funds Sold$ 846 $ 38 5.99% $ 7,464 $ 268 4.79%
Investments:
Securities--Taxable29,887 1,598 7.13% 26,042 1,273 6.52%
Securities--Non-Taxable2,400 63 3.50% 2,206 62 3.75%
Total Loans, Including
Amortized Fees 74,535 5,125 9.17% 67,589 4,517 8.91%
Total Interest Earning
Assets 107,668 6,824 8.45% 103,301 6,120 7.90%
Cash and Due From Banks4,001 3,422
All Other Assets 6,120 5,893
Loan Loss Reserve/
Unearned Fees (1,306) (1,491)
TOTAL ASSETS $116,483 $111,125
Liabilities and Stockholders Equity:
Interest Bearing Deposits:
Time Deposits $ 58,313 $2,496 5.71% $ 55,402 $2,224 5.35%
Other 31,056 768 3.30% 31,611 724 3.05%
Repurchase Agreements849 27 4.24% -0- -0- N/A
Federal Funds
Purchased 648 36 7.41% -0- -0- N/A
Total Interest-Bearing
Liabilities 90,866 3,327 4.88% 87,013 2,948 4.52%
Net Interest Income $3,497 $3,172
Non-Interest Bearing
Deposits 16,599 15,276
Total Cost of Funds 4.13% 3.84%
All Other Liabilities 28 382
Stockholders Equity9,982 8,731
Unrealized Gain/Loss on
Securities (992) (277)
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY$116,483 $111,125
Net Interest Yield 3.57% 3.38%
Net Interest Margin 4.33% 4.09%
Table 7 - Interest Rate Sensitivity
(In Thousands) September 30, 2000
Less One YearGreater Non-
Than Through Than Interest
1 Year 5 Years5 Years Bearing Total
Assets:
Federal Funds Sold $
2
0
$
2
0
Investments 1,838 7,917 22,952 32,707
Loans 57,670 18,912 214 76,796
Non-Interest Earning Assets
and Unearned Assets/Loan
Loss Reserve 10,800 10,800
59,528 26,829 23,166 10,800 120,323
Liabilities and Stockholders' Equity:
Interest-Bearing Deposits64,752 26,500 91,252
Non-Interest Bearing Deposits 17,059 17,059
Repurchase Agreements 386 386
Federal Funds Purchased 1,200 1,200
Noninterest Bearing Liabilities
and Stockholders' Equity 10,426 10,426
Total 66,338 26,500 -0- 27,485 120,323
Interest Rate Sensitivity Gap (6,810) 329 23,166 (16,685) -0-
Cumulative Interest Rate
Sensitivity Gap $ (6,810)$ (6,481)$16,685$ -0- $ -0-
OTHER INCOME
Total other income was $1,297,000 for the nine month period
ended September 30, 2000 as compared to $922,000 for the same
period in 1999, an increase of $375,000. Other income is
comprised primarily of customer service fees, loan fees, and
other items. Other income for the nine months ended September
30, 2000 includes a $435,000 gain on the sale of the Sweetwater
branch.
OPERATING EXPENSES
Total operating expenses were $2,915,000, or 3.33% of average
total assets, for the nine month period ended September 30,
2000 as compared to $2,762,000, or 3.31%, for the same period
in 1999. Salaries and employee benefits, equipment expenses and
computer expenses all increased slightly when comparing the two
periods.
INCOME TAXES
The Bank recognizes income taxes using the Financial Accounting
Standards Board Statement No. 109, Accounting for Income Taxes.
Under this method, deferred tax assets and liabilities are
established for the temporary differences between the
accounting basis and the tax basis of the Bank's assets and
liabilities at enacted tax rates expected to be in effect when
the amounts related to such temporary differences are realized
or settled. The Bank's deferred tax asset is reviewed quarterly
and adjustments to such asset are recognized as deferred income
tax expense or benefit based on management's judgment relating
to the realizability of such asset.
During the nine month period ending September 30, 2000, the
Bank recorded $656,000 in tax expense which resulted in an
approximate effective rate of 38.7%. Comparably, in 1999, the
Bank recorded $427,000 in tax expense, resulting in an
approximate effective rate of 36.3%.
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
PART 1 - OTHER INFORMATION
Item 1. Legal Proceedings
None.
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.
Item 6.Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule.
FORM IO-QSB(A)
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
FIRST CENTRAL BANCSHARES, INC.
Date: By:
____________________________________________________
Ed F. Bell, Chairman, President
and Chief Executive Officer
Date: By:
____________________________________________________
Willard D. Price, Executive Vice President
and Chief Operating Officer
Exhibit 27 - Financial Data Schedule
9-30-00
Amount (In Thousands)
Cash $ 5,638
Federal Funds Sold 20
Trading Assets -0-
Investments AFS 32,707
Investments HTM -0-
Investments-Market -0-
Loans 76,331
Allowance for Losses 735
Total Assets 120,323
Deposits 108,311
Securities Sold Under Agreements to Repurchase 386
Short-Term Borrowings 1,200
Other Liabilities 189
Long-Term Debt -0-
Preferred Stock-Mandatory -0-
Preferred-Non Mandatory -0-
Common Stock 2,822
Other Stockholders Equity 6,943
Total Liab.-Stockh. Equity 120,323
Interest on Loans 5,125
Interest on Investments 1,661
Other Interest Income 38
Total Interest Income 6,824
Interest on Deposits 3,264
Total Interest Expense 3,327
Net Interest Income 3,497
Provision-Loan Losses 185
Securities-Gain/Loss -0-
Other Expenses 2,915
Income Before Tax 1,694
Income Before Extraordinary 1,694
Extraordinary Less Tax -0-
Cumul. Change Acct. Principal -0-
Net Income 1,038
Earnings Per Share-P 1.87
Earnings Per Share-D 1.87
Net Interest Yield-EA 3.57
Loans-Non Accrual 122
Loans Past Due > 90 Days 177
Troubled Debt Restructuring -0-
Potential Problem Loans -0-
Allowance-Beginning 618
Total Charge-Offs 111
Total Recoveries 43
Allowance End of Period 735
Loan Loss-Domestic 735
Loan Loss-Foreign -0-
Loan Loss-Unallocated -0-
(b) Reports on Form 8-K, None.