FORM 10-QSBA
U. S. SECURITIES AND EXCHANGE COMMISSION
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996(A)
Commission File No. 33-58832
FIRST CENTRAL BANCSHARES, INC.
State of Incorporation-Tennessee IRS EIN 62-1482501
725 Highway 321 North
P.O. Box 230
Lenoir City, Tn 37771-0230
Check whether the issuer (1) 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 [ ]
466,755 Shares of Common Stock were outstanding as of
March 31, 1996.
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Notes to Financial Statements (Unaudited)
March 31, 1996 and 1995
BASIS OF PRESENTATION
First Central Bancshares, Inc. is a one bank holding company
which owns 100% of the outstanding stock of First Central
Bank. The investment in First Central Bank represents
virtually all of the assets of First Central Bancshares, Inc.
The accompanying unaudited financial statements have been
prepared in accordance with generally accepted accounting
principles for interim financial information. Accordingly,
they do not include all of the information and footnotes
required by generally accepted accounting principles for
audited financial statements. In the opinion of management,
the financial statements and results of operations herein
fairly present the financial position of First Central
Bancshares, Inc. and subsidiary.
On March 18, 1993 the shareholders of First Central Bank
approved a plan of reorganization and merger whereby First
Central Bancshares, Inc. acquired 100% of First Central Bank.
All of the outstanding stock of First Central Bank was
acquired in exchange for 385,819 shares of First Central
Bancshares, Inc., and was effective April 6, 1993. First
Central Bancshares, Inc. was formed for the purpose of
becoming a one bank holding company to own 100% of First
Central Bank.
In March 1994 the company distributed a ten percent dividend
to its stockholders by issuing an additional 38,560 shares of
common stock. The company used a fair value of $12.75 per
share and credited common stock $5.00 per share or $192,800,
additional paid in capital $7.75 per share or $298,840 and
charged retained earnings a total of $491,640.
In February 1996 the company distributed a ten percent (10%)
dividend to its stockholders by issuing an additional 42,376
shares of common stock. The company used a fair market value
of $25.00 per share and credited common stock $5.00 per share
or $211,880, additional paid in capital $20.00 or $847,520,
and charged retained earnings a total of $1,059,400.
ITEM #2 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION
FINANCIAL CONDITION
Total assets have grown approximately $5.6 million or 8.4% in
the first quarter and approximately $21.1 million or 41.1%
from 3/31/95. During the same period deposits increased
approximately $5.7 million or 9.4% in the first quarter and
approximately $20.3 million or 44.4% over 3/31/95. Non-
interest bearing accounts increased approximately $2.3
million or 28.5% for the quarter and increased approximately
$3.4 million or 50.1% for the year. Interest bearing accounts
increased $3.4 million or 6.5% for the quarter and $16.9
million or 43.3% from 3/31/95. The increase in deposits is
due in large part to the new branch in Farragut. The initial
growth for this office was primarily in interest bearing
deposits.
Loans increased approximately $2.7 million or 6.1% in the
quarter and $8.2 million or 20.8% from 3-31-95. The results
reflect a moderate loan growth for the quarter. The loan
growth for the year is moderate in relation to deposit growth
and prior years comparisons.
This strong deposit growth coupled with moderate loan growth
has allowed the bank to maintain a strong liquidity position.
Fed funds sold decreased $400 thousand or 4.8% for the first
quarter and increased $7.7 million or 4,414.3% over the prior
year. Investment securities increased approximately $3.3
million or 39.4% for the quarter and $4.8 million or 67.6%
from 3-31-95.
There was an increase of approximately $22 thousand for the
quarter in fixed assets and an increase of approximately $250
thousand or 8.7% over the prior year. The bank completed a
branch office in May of 1995 which accounts for the fixed
asset growth over the prior year. Other assets decreased
nominally for the quarter and increased approximately $100
thousand or 24.8% over 3/31/95.
CAPITAL
Total regulatory capital at March 31, 1996 increased $81
thousand or 1.5% for the quarter and $520 thousand or 10.1%
from 3/31/95. Risk based tier 1 capital ratio is
approximately 11.7% and total risk based capital is 12.6%.
The capital position is more than adequate to meet current
regulatory guidelines and support company operations.
RESULTS OF OPERATIONS
The Company had an increase in consolidated net income of
$7 thousand or 4.8% for the first quarter as compared to the
same period last year. The increase over the fourth quarter
was $85 thousand or 80.0%
Net interest income for the quarter was an increase of
approximately $61 thousand or 9.6% as opposed to the same
period last year. (see attached schedule I and II). Interest
income is composed of the following components: loan income
which increased by $206 thousand or 22.2% for the first
quarter as opposed to the first quarter of 1995 and $164
thousand or 16.9% as opposed to the fourth quarter of 1995.
Investment income increased $36 thousand or 27.1% over the
quarter ended 3/31/95. The increase over the fourth quarter
was $22 thousand or 15.0%. Federal funds sold income was up
$97 thousand or 1,616.7% for the three months ended 3/31/95
versus 3/31/95. The increase over the fourth quarter was $12
thousand or 13.2%. Interest expense increased $278 thousand
or 64.1% for the first quarter ended 3/31/96 as opposed to
the first quarter ended 3/31/95. The increase over the
fourth quarter was $41 thousand or 6.1%. The components of
interest expense include interest on now accounts which
decreased $6 thousand or 24.0% for the first quarter ended
3/31/96 as opposed to 3/31/95. The interest on now accounts
decreased by $2 thousand or 8.7% as opposed to the fourth
quarter ended 12/31/95. Money market accounts increased $16
thousand or 32.6% for the quarter over the prior year quarter
and decreased $1 thousand or 1.5% compared with the fourth
quarter. Certificates of deposit interest expense increased
$268 thousand or 80.5% for the quarter over the prior year
quarter and $43 thousand or 7.7% over the fourth quarter.
This significant increase in interest expense led to a net
interest margin of 4.19% at 3/31/96 versus 5.38% at 3/31/95,
with total interest income (annualized) decreasing to 8.59%
versus 9.10% at 3/31/95. Total interest expense
increased from 4.55% to 5.20% (annualized).
Management has continued to increase the loan loss reserve
prudently with the growth of loans. The adequacy of the
reserve is evaluated monthly by management and quarterly by
the board of directors. The reserve was increased by $43
thousand during the first quarter and remains approximately
1% of net loans outstanding. Nonperforming assets included
past due loans of ninety (90) days or more of $1 thousand at
3/31/96 and $10 thousand at 3/31/95. This resulted in
nonperforming ratios of .002% of total loans oustanding at
3/31/96 and .03% at 3/31/95. Coverage of loan loss reserve
to nonperforming assets was 459x for 3/31/96 and 39x at
3/31/95. The ratios decreased at the quarter end and remain
low with no material loss anticipated.
The nonperforming ratios are expected to remain low for 1996.
Past due loans of thirty (30) days or more total .89% and
2.72% respectively for the reporting periods. The bank has
adopted Fasb 114 and 118 with no material impact (see
attached schedules III and IV for disclosures).
Non-interest income increased $33 thousand or 40.2% for the
first quarter compared to the same period last year and $74
thousand or a 2.5% increase over the fourth quarter. Service
charge income, the largest component of non-interest income,
increased $6 thousand or 9.2% from 3/31/95 and decreased $9
thousand or 11.3% from the fourth quarter as a result of
continued growth in interest bearing deposits. Non-interest
expense for the first quarter increased $85 thousand or 19.6%
as compared to 3/31/95 and decreased $63 thousand or 10.8%
compared with the fourth quarter ended 12/31/95. The
significant increase in non-interest expense year to year is
directly related to the building and staffing of the new
branch office. The decrease over the previous quarter is
related to payment of bonuses at year end.
Fasb 121, 122, and 123 are not applicable to First Central
Bancshares, Inc or First Central Bank and therefore have no
impact on the operations of either.
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
PART II. OTHER INFORMATION
Not Applicable
FORM 10-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.
Ed F. Bell
Date: 7/3/96 By: ________________________________
Ed F. Bell Chairman, President
and Chief Executive Officer
Willard D. Price
Date: 7/3/96 By: ________________________________
Willard D. Price Executive Vice
President and Chief Financial
Officer
The following interim financial statements reflect
all adjustments which are, in the opinion of management,
necessary to a fair statement of the results for the
interim periods presented.
Item 1. Financial Statements
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(Unaudited)
(In Thousands)
_____________________________________
-ASSETS- March 31, 1996 March 31, 1995
_____________________________________
Cash and due from banks $2,395 $2,253
Federal Funds Sold 7,900 175
Total Cash and Cash Equivalents 10,295 2,428
Cert of Deposit in other banks 100 100
Investment Securities 11,816 7,048
Loans 47,890 39,641
Less:Unearned Interest (916) (823)
Allowance for Loan Losses (459) (386)
Net Loans 46,515 38,432
Premises and Equipment(net) 3,111 2,863
Other Assets 524 420
TOTAL ASSETS $72,361 $51,291
-LIABILITIES AND STOCKHOLDERS' EQUITY-
Liabilities:
Deposits
Non-interest Bearing $10,307 $6,866
Interest Bearing 55,895 38,994
Total Deposits 66,202 45,860
Fed Funds Purchased 0 0
Other Liabilities 499 290
Total Liabilities 66,701 46,150
Stockholders' Equity
Common Stock- Par Value $5.00
Authorized 2,000,000 Shares; 466,755 shares
issued and outstanding 2,334 2,122
Additional Paid In Capital 3,427 2,579
Retained Earnings (Deficit) (18) 535
Unrealized gain(loss) on securities (83) -95
Total Stockholders Equity 5,660 5,141
TOTAL LIABILITIES AND STOCKHOLDERS' $72,361 $51,291
FIRST CENTRAL BANCSHARES, INC AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
(In Thousands except per share
information)
_____________________________________
Three Months EndedThree Months Ended
March 31, 1996 March 31, 1995
_____________________________________
INTEREST INCOME:
Loans 1,134 928
Investment Securities and C D'S 169 133
Federal Funds Sold 103 6
Total Interest Income 1,406 1,067
INTEREST EXPENSE 712 434
Net Interest Income 694 633
PROVISION FOR LOAN LOSSES 43 45
Net interest income after provision
for Loan Losses 651 588
OTHER INCOME 115 82
OPERATING EXPENSES 519 434
INCOME BEFORE INCOME TAX 247 236
INCOME TAXES 97 90
Income before extraordinary items 150 146
Extraordinary items 0 0
Gains/Losses on Securities 3 0
NET INCOME 153 146
Earnings per share $0.36 $0.34
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
---------------------
Three Months Ended
March 31,
---------------------
1996 1995
OPERATING ACTIVITIES
Net Income 153 146
Adjustments to reconcile net cash
provided by (used in) operating activities:
Provision for Loan Losses 43 45
Depreciation 18 37
Amortization 1 1
Increase(dec)in unearned int/loan fees -5 53
Amortization of premiums (discounts) on
Investment securities and C D's-net 2 11
FHLB/Ins stock dividends (7) (17)
(Increase) decrease in other debt 2 0
(Increase) decrease in other assets (28) 235
Increase (decrease) in other liabilities (142) (7)
NET CASH PROVIDED BY OPERATING ACTIVITIES 37 504
INVESTING ACTIVITIES:
Net (inc) decrease in CD'S other banks 0 0
Proceeds from maturities and redemptions of
investment securities 2,944 400
Purchases of investment securities (6,230) (250)
Increase in Loans (2,735) (1,888)
Purchases of Premises and Equipment (126) (636)
NET CASH USED IN INVESTING ACTIVITIES (6,147) (2,374)
FINANCING ACTIVITIES
Increase(Decrease) in Federal Funds purchased 0 0
Increase in Deposits 5,679 111
NET CASH PROVIDED BY FINANCING ACTIVITIES 5,679 111
INCREASE IN CASH AND CASH EQUIVALENTS ($431) ($1,759)
CASH AT BEGINNING OF PERIOD $10,726 $4,187
CASH AT END OF PERIOD $10,295 $2,428
Supplementary Disclosure of Cash Flow Information:
Cash Paid During the Period for:
Interest $2,232 $434
Income Tax $330 $90
Supplementary Disclosure of Noncash Investing
Activities:
Increase (Decrease) in Net Unrealized Loss on
Investment Securities: $115 ($7)
Increase (Decrease) in Deferred Income Tax Benefit
Associated with Increase/Decrease in Net Unreal-
ized Loss on Investment Securities: $71 $18
Schedule I- Average Balances, Interest and Average Rates
3/31/96 3/31/95
_________________________________________________________________________
($ in thoAverage Average Average Average
Assets Balance Interest Rate Balance Interest Rate
_________________________________________________________________________
Federal F $7,973 $103 5.17% $521 $6 4.61%
Investments
Securiti 10,120 170 6.72% 7,156 133 7.43%
Non-Taxa 0 0 N/A N/A
Total Loans,
Includi 46,592 1,116 9.58% 38,914 921 9.47%
Total interest
earning 64,685 1,389 8.59% 46,591 1,060 9.10%
__________________ _______ ______ ________ ______ _____
Cash and 2,358 2,015
All other 3,564 3,122
Loan Loss Reserve/
Unearned (1,336) (1,101)
__________________ ________
TOTAL ASS $69,271 $50,627
__________________ ________
______________________________________________________________________
Liabilities and Stockholders Equity
_______________________________________________________________________
Interest Bearing Deposits
Time De $40,654 $601 5.91% $25,513 $333 5.22%
Other 14,029 110 3.14% 12,313 99 3.22%
FHLB Adva 47 1 8.51% 49 1 8.16%
Federal F 0 0 ERR 171 2 4.68%
________ _______ ______ ______ ________ _______ _______
Total Interest-Bea
Liabili 54,730 712 5.20% 38,046 433 4.55%
________ _______ ______ _____ ________ _______ _________
Non-Inter 8,289 7,246
Total Cost of Funds 4.52% 3.82%
All other 576 209
Stockhold 5,663 5,209
Unrealize 5 -83
________ _______
Total Liabilities and
Stockho $69,271 $50,627
________ ________ _________
Net interest Yield 3.39% 4.55%
Net interest margi 4.19% 5.38%
Schedule II-Interest Rate Sensitivity
---------------------------------------------------------------------------------
(in thousands) 3/31/96 <1 year 1yr-5yrs >5 yrs Non-Int Total
Bearing
---------------------------------------------------------------------------------
Assets
Federal Funds Sold 7,900 7900
Investments 219 6,170 5,427 11,816
Loans-Fixed Rate 7,492 24,437 787 32,716
Floating Rate 15,175 15,175
Non-Interest earning assets
and unearned assets/loan loss reserve 4,754 4,754
--------------------------------------------------------------------------------
Total 30,786 30,607 6,214 4,754 72,361
---------------------------------------------------------------------------------
Liabilities and Stockholders Equity
Interest Bearing Deposits 43,466 12,429 0 55,895
Non-interest bearing deposits 10,319 10,319
FHLB Advances 47 47
Noninterest bearing liabilities 0
and stockholders equity 6,100 6,100
---------------------------------------------------------------------------------
Total 43,466 12,429 47 16,419 72,361
---------------------------------------------------------------------------------
Interest Rate Sensitivity Gap ($12,680) $18,178 $6,167 ($11,665) $0
---------------------------------------------------------------------------------
Cumulative Interest Rate
Sensitivity Gap ($12,680) $5,498 $11,665 $0 $0
---------------------------------------------------------------------------------
Schedule III-Analysis of Loan Loss Reserve
---------------------------------------------------------------
($ in thousands) 3/31/96 3/31/95
---------------------------------------------------------------
Balance at beginning of period $434 $369
Charge-offs:
Commercial, financial, and agricultural 0 6
Real estate- construction 0 0
Real estate- mortgages 0 0
Installment-consumers 24 26
Other 0 0
Recoveries:
Commercial, financial, and agricultural 0 0
Real estate- construction 0 0
Real estate- mortgages 0 0
Installment-consumers 6 4
Other 0 0
Net charge-offs 18 28
Additions to loan loss reserve 43 45
Balance at end of period $459 $386
Ratio of net charge-offs to average loans outs 0.04% 0.07%
Schedule IV-Allocation of the Loan Loss Reserve
---------------------------------------------------------------------------------
3/31/96 % to 3/31/95 % to
Balance applicable to: $ Amount total $ Amount total
---------------------------------------------------------------------------------
Commercial, financial, and agricultural $50 10.82% $35 8.88%
Real Estate-Construction 58 12.64% 39 9.82%
Real Estate-Mortgages 134 58.28% 158 59.37%
Installment-consumers 84 18.26% 87 21.93%
Other
Unallocated 133 N/A 67 N/A
Total $459 100.00% $386 100.00%
Schedule IV-A Loan Portfolio by category
----------------------------------------------------------------------------------
March 31, 1996 March 31, 1995
Loan Category:
----------------------------------------------------------------------------------
Commercial, financial, and agricultural $5,183 $3,645
Real Estate-Construction 6,054 3,813
Real Estate-Mortgages 27,911 23,510
Installment-consumers 7,671 7,597
All other 1,072 1,076
Total Loans $47,891 $39,641
SCHEDULE XXVII - FINANCIAL DATA SCHEDULE
3/31/96
MAIN AMOUNT (IN THOUSANDS)
CASH 2,395
INTEREST-BEARING DEP 100
FED FUNDS SOLD 7,900
TRADING ASSETS 0
INVESTMENTS HFS 11,816
INVESTMENTS HTM 0
INVESTMENTS-MARKET 0
LOANS 47,890
ALLOWANCE FOR LOSSES 459
TOTAL ASSETS 72,361
DEPOSITS 66,202
SHORT-TERM BORROWINGS 0
OTHER LIABILITIES 499
LONG TERM DEBT 0
PREFERRED STOCK-MANDA 0
PREFERRED-NON MANDATO 0
COMMON STOCK 2,334
OTHER STOCKHOLDERS EQ 3,326
TOTAL LIAB- SH EQUITY 72,361
INTEREST ON LOANS 1,134
INT ON INVESTMENTS 169
OTHER INTEREST INCOME 103
TOTAL INT INCOME 1,406
INTEREST ON DEPOSITS 712
TOTAL INTEREST EXPENS 712
NET INTEREST INCOME 694
PROVISION- LOAN LOSS 43
SECURITIES-GAIN/LOSS 3
OTHER EXPENSES 519
INCOME BEFORE TAX 247
INCOME BEFORE EXTRAOR 150
EXTRAORD LESS TAX 0
CUM CHANGE ACCT PRIN 0
NET INCOME 153
EARNINGS PER SHARE-P 0.36
EARNINGS PER SHARE-D 0.36
NET INT YIELD-E A 3.39
LOANS-NON ACCRUAL 0
LOANS PAST DUE >90 1
TROUBLED DEBT RESTRUC 0
POTENTIAL PROBLEM LNS 15
ALLOWANCE-BEGINNING 434
TOTAL CHARGE-OFFS 24
TOTAL RECOVERIES 6
ALLOWANCE END PERIOD 459
LOAN LOSS-DOMESTIC 326
LOAN LOSS-FOREIGN 0
LOAN LOSS-UNALLOCATED 133