WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
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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 June 30, 1999
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: (423) 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 513,281 on August
2, 1999.
FORM 10-QSB
Index
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets
as of June 30, 1999 and December 31, 1998 3
Condensed Consolidated Statements of Income
for the three months and six months ended
June 30, 1999 and 1998 4
Condensed Consolidated Statements of Cash
Flows for the six months ended June 30, 1999
and 1998 5
Condensed Consolidated Statements of Comprehensive
Income (Loss) for the six months ended June 30, 1999
and 1998 6
Notes to Condensed Consolidated Financial
Statements 7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9-14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults upon Senior Securities 14
Item 4. Submission of Matters to a Vote
of Securities Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(Unaudited)
(In Thousands)
June 30, December 31,
1999 1998
- -ASSETS-
Cash and Due from Banks $ 2,756 $ 2,564
Federal Funds Sold 4,510 14,915
Total Cash and Cash Equivalents 7,266 17,479
Investment Securities Available for Sale 28,453 27,139
Loans, Net 68,953 60,944
Premises and Equipment (Net) 5,218 4,304
Accrued Interest Receivable 761 674
Other Assets 762 218
TOTAL ASSETS $111,413 $110,758
- -LIABILITIES AND STOCKHOLDERS' EQUITY-
Liabilities:
Deposits
Non-Interest Bearing $ 14,523 $ 14,551
Interest Bearing 88,120 87,236
Total Deposits 102,643 101,787
Accrued Interest Payable 405 444
Other Liabilities 106 101
Total Liabilities 103,154 102,332
Stockholders' Equity:
Common Stock - Par Value $5.00, Authorized
2,000,000 Shares; Issued and Outstanding
513,281 Shares 2,566 2,566
Additional Paid-In Capital 4,358 4,358
Retained Earnings 1,924 1,457
Accumulated Other Comprehensive
Income (Loss) (589) 45
Total Stockholders' Equity 8,259 8,426
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $111,413 $110,758
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 Six Months Ended
June 30, June 30,
1999 1998 1999 1998
INTEREST INCOME:
Loans $1,620 $1,488 $3,208 $2,986
Investment Securities 432 294 880 517
Federal Funds Sold 89 170 208 293
Total Interest Income 2,141 1,952 4,296 3,796
INTEREST EXPENSE 979 946 1,970 1,804
Net Interest Income 1,162 1,006 2,326 1,992
PROVISION FOR LOAN LOSSES 60 60 120 65
Net Interest Income After
Provision for Loan Losses 1,102 946 2,206 1,927
OTHER INCOME 198 128 372 253
OPERATING EXPENSES 965 691 1,849 1,391
INCOME BEFORE INCOME TAX 335 383 729 789
INCOME TAXES 118 139 262 301
NET INCOME $ 217 $ 244 $ 467 $ 488
BASIC EARNINGS PER COMMON
SHARE $ 0.42 $ 0.48 $ 0.91 $ 0.95
See accompanying notes to financial statements.
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
Six Months Ended
June 30,
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 467 $ 488
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Provision for Loan Losses 120 65
Depreciation 149 150
Amortization -0- 1
(Increase) in Interest Receivable (87) (154)
Increase (Decrease) in Interest Payable (39) 63
Amortization of Premiums (Discounts) on
Investment Securities, Net 18 3
FHLB Stock Dividends (48) (9)
(Increase) Decrease in Other Assets (153) 59
Increase (Decrease) in Other Liabilities 5 (102)
Total Adjustments (35) 76
Net Cash Provided by Operating Activities 432 564
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Maturities, Principal Paydowns and
Redemption of Investment Securities Available
for Sale 7,290 5,128
Purchase of Investment Securities Available
for Sale (9,599) (13,254)
(Increase) Decrease in Loans (8,129) 291
Purchase of Premises and Equipment (1,063) (100)
Net Cash Used in Investing Activities (11,501) (7,935)
NET CASH PROVIDED BY INVESTING ACTIVITIES
Increase in Deposits 856 18,616
INCREASE (DECREASE)IN CASH
AND CASH EQUIVALENTS (10,213) 11,245
CASH AND CASH EQUIVALENTS AT BEGINNING
OF PERIOD 17,479 8,682
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,266 $19,927
Supplementary Disclosures of Cash Flow Information:
Cash Paid During the Period For:
Interest $ 2,009 $ 1,741
Income Taxes $ 281 $ 277
Supplementary Disclosures of Noncash Investing Activities:
Change in Unrealized Loss on Investment
Securities $ 1,025 $ 23
Change in Deferred Income Tax Benefit Associated with
Unrealized Loss on Investment Securities $ 391 $ 9
Change in Net Unrealized Loss on
Investment Securities $ 634 $ 14
Issuance of Common Stock Dividend:
Par $ -0- $ 232
Additional Paid-in Capital $ -0- $ 931
Reduction in Retained Earnings Due to Issuance of
Common Stock $ -0- $ 1,163
See accompanying notes to financial statements.
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Comprehensive Income (Los
s)
(Unaudited)
(In Thousands)
Six Months Ended
June 30,
1999 1998
Net Income $ 467 $488
Other Comprehensive Income (Loss), Net of Tax:
Unrealized Losses on Investment Securities (1,025) (23)
Less Reclassification Adjustment for Gains
Included in net Income -0- -0-
Less Income Taxes Related to Unrealized
Gains on Investment Securities 391 9
Other Comprehensive Income (Loss),
Net of Tax (634) (14)
Comprehensive Income (Loss) $ (167) $474
See accompanying notes to financial statements.
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 1999 and 1998
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.
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 June 30, 1999,
results of operations for the three months and six months ended
June 30, 1999 and 1998, and cash flows for the six months ended
June 30, 1999 and 1998.
The results of operations for the three months and six months
ended June 30, 1999 are not necessarily indicative of the
results to be expected for the full year.
NOTE 3 - COMMON STOCK DIVIDEND
In February 1998, the Company distributed a ten percent (10%)
dividend to its stockholders by issuing an additional 46,526
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
$232,630, additional paid in capital $20.00 or $930,520, and
charged retained earnings a total of $1,163,150. No stock
dividends have been declared during 1999.
NOTE 4 - EARNINGS PER SHARE
Basic earnings per share is based on the weighted average
number of shares outstanding during the period. For the six
months ended June 30, 1999 and 1998 the weighted average number
of shares was 513,281. During the period ended June 30, 1999
and 1998 the Company did not have any dilutive securities.
NOTE 5 - ACCOUNTING POLICY CHANGES
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
included 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 to defer the
effective data until June 15, 2000. The Statement is required
to be applied retroactively to consolidated financial
statements of prior periods. The Bank is currently assessing
the impact of this statement on its consolidated financial
statements and will adopt the statement during 2000.
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 will not have any effect on our financial condition or
results of operations.
Year 2000 Compliance
The Bank continued its plans to be ready in all respects for
the new millennium. A Y2K committee including executive
management has been in place for approximately twenty-one
months. The board of directors is updated monthly of progress.
A comprehensive evaluation and testing schedule was finalized
in 1998 as well as a detailed contingency backup plan. All
equipment that was not Y2K compliant was replaced and a new
operating system was installed through our data processing
server in 1998. Testing of all mission critical systems
including the primary and backup operating system was
implemented and completed during the second quarter. Testing
for all mission critical systems and all other systems/software
was completed in the second quarter of 1999. The contingency
plans detail specific steps to be taken in the unlikely event
of a disruption in our systems or other aspects of operations
within our control as well as critical services outside our
control such as power, water, and communications. We are on
schedule to be compliant in all respects to Y2K. Management
remains confident that there will be no interruptions in our
ability to continue to provide efficient service to our
customers and shareholders in the year 2000 and beyond.
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
BALANCE SHEET ANALYSIS - COMPARISON AT JUNE 30, 1999 TO
DECEMBER 31, 1998
Assets totalled $111.4 million as of June 30, 1999, as compared
to $110.8 million as of December 31, 1998, an increase of
0.54%.
INVESTMENT SECURITIES
Investment securities were $28.5 million or 25.6% of total
assets, as of June 30, 1999 an increase of $1.4 million from
$27.1 million as of December 31, 1998. During the six month
period there were $7.3 million in calls, maturities, and
principal paydowns offset by the purchase of $9.6 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 16.89% of the portfolio as of June 30, 1999 and
16.47% as of December 31, 1998.
As of June 30, 1999 and December 31, 1998, 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 $589,000 as of June 30,
1999, a change of approximately $634,000 from December 31,
1998, a result of deterioration 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 six months of 1999, total gross loans
outstanding increased by approximately $8.0 million to $69.0
million as of June 30, 1999 from $61.0 million as of December
31, 1998 attributable primarily to $20.9 million in originated
loans offset by amortization and payoffs of approximately $12.9
million. As of June 30, 1999 and December 31, 1998, net loans
outstanding represented 62% and 55% of total assets,
respectively. Table 1 summarizes the Bank's loan portfolio by
major category as of June 30, 1999 and December 31, 1998.
Table 1 - Loan Portfolio by Category
(In Thousands)
June 30,December 31,
1999 1998
Loans secured by real estate:
Commercial properties $ 5,331 $ 7,539
Construction and land development 8,875 8,280
Residential and other properties 20,663 23,553
Total loans secured by real estate 34,869 39,372
Commercial and industrial loans 10,335 5,490
Consumer loans 23,888 16,762
Other loans 1,391 928
70,483 62,552
Less: Allowance for loan losses (639) (594)
Unearned interest (853) (977)
Unearned loan fees (38) (37)
Loans, Net $68,953 $60,944
As of June 30, 1999, there were outstanding commitments to
advance construction funds and to originate loans in the amount
of $6.5 million and commitments to advance existing home
equity, letters of credit and other credit lines in the amount
of $6.9 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 June 30, 1999 and December 31,
1998, the allowance had a balance of approximately $639,000 and
$594,000, respectively. There were no loans on which the
accrual of interest had been discontinued as of June 30, 1999
or at December 31, 1998, and there were approximately $543,000
in loans specifically classified as impaired as defined by SFAS
No. 114. 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 six month period.
Table 2 - Allocation of the Loan Loss Reserve (in Thousands)
6-30-99 % to 12-31-98 % to
Balance applicable to: $ Amount Total $ Amount Total
Commercial, financial, and agricultural$156 24.00%$ 56 9.00%
Real Estate - Construction 89 14.00% 123 21.00%
Real Estate - Mortgages 82 14.00% 111 19.00%
Installment - Consumers 238 37.00% 158 27.00%
Other 21 3.00% 0 0.00%
Other Unallocated 53 8.00% 146 24.00%
Total $639 100.00% $594 100.00%
Table 3 - Analysis of Loan Loss Reserve
(In Thousands) 6-30-99 6-30-98
Balance, at beginning of period $594 $587
Charge-offs:
Commercial, financial, and agricultural -0- 23
Real estate - construction -0- -0-
Real estate - mortgage -0- -0-
Installment - Customers 111 76
Other -0- -0-
Recoveries:
Commercial, financial, and agricultural -0- 3
Real estate - construction -0- -0-
Real estate - mortgages -0- -0-
Installment - consumers 36 21
Other -0- -0-
Net charge-offs 75 75
Additions to loan loss reserve 120 65
Balance at end of period $639 $577
Ratio of net charge-offs to average loans
outstanding .09% .13%
DEPOSITS
Deposits increased by $0.8 million to $102.6 million as of June
30, 1999 from $101.8 million as of December 31, 1998, an
increase of 0.79%. Demand deposits, which include regular,
money market, NOW and demand deposits, were $47.2 million, or
46.0% of total deposits, at June 30, 1999. Core deposits were
31.9% of total deposits at June 30, 1999. During the six month
period, the Bank was successful in increasing the balances in
the demand deposit category by $1.7 million to $47.2 million as
of June 30, 1999. Certificate accounts were $55.4 million at
June 30, 1999, a decrease of $812,000 compared to $56.2 million
as of December 31, 1998. Table 4 summarizes the Bank's
deposits by major category as of June 30, 1999 and December 31,
1998.
Table 4 - Deposits by Category
(In Thousands)
June 30,December 31,
1999 1998
Demand Deposits:
Noninterest-bearing accounts $ 14,523 $ 14,551
NOW and MMDA accounts 27,501 27,170
Savings accounts 5,221 3,856
Total Demand Deposits 47,245 45,577
Term Deposits:
Less than $100,000 41,999 41,301
$100,000 or more 13,399 14,909
55,398 56,210
Total Deposits $102,643 $101,787
CAPITAL
During the six month period ended June 30, 1999, stockholders'
equity decreased by $167,000 to $8.3 million, due to net income
for the period of $467,000 offset by the decline in value of
securities available for sale of $634,000.
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 June 30, 1999, the Bank held $28.5 million in available-
for-sale securities and during the first six months of 1999 the
Bank received $7.3 million in proceeds from maturities,
redemptions and principal payments on its investment portfolio.
Deposits increased by $856,000 during the same six 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 June 30, 1999.
The Bank can also enter into repurchase agreement transactions
should the need for additional liquidity arise. At June 30,
1999, the Bank had $1,247,000 of repurchase agreements
outstanding.
As of June 30, 1999, the Bank had capital of $8.3 million, or
7.4% of total assets, as compared to $8.4 million, or 7.6%, at
December 31, 1998. 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
June 30,December 31,Regulatory
1999 1998 Ratios
Tier 1 Capital as a Percentage
of Risk-Weighted Assets 11.0% 11.2% 4.00%
Total Capital as a Percentage
of Risk-Weighted Assets 11.8% 12.0% 8.00%
Leverage Ratio 8.5% 7.6% Up to 5.00%
Total Risk-Weighted Assets $80,159 $74,658
As of June 30, 1999 and December 31, 1998, the Bank exceeded
all of the minimum regulatory capital ratio requirements.
RESULTS OF OPERATIONS FOR THE SIX MONTH PERIODS ENDED JUNE 30,
1999 AND 1998
GENERAL
The Bank reported net income of $467,000, or $0.91 per share
for the six month period ended June 30, 1999 as compared with
$488,000 or $0.95 per share for the same period in 1998, an
decrease of 4.30%.
NET INTEREST INCOME
Net interest income increased by $334,000 to $2.3 million for
the six month period in 1999 from the comparable period in
1998. Contributing to this increase was an increase in average
interest earning assets. Average interest earning assets, at a
yield of 8.30% totalled $103.0 million as of June 30, 1999. In
comparison in 1998, average interest earning assets, at a yield
of 8.75%, totalled $86.7 million.
Interest income increased by $483,000 for the six month period
in 1999 compared to the same period in 1998. This improvement
is primarily attributable to an increase of approximately $16.4
million, or 18.9%, in the volume of average earning assets
during the six month period ended June 30, 1999 compared to the
six month period ended June 30, 1998. Interest income on loans
increased by $222,000 over the same two periods primarily as a
result of an increase of approximately $6.8 million in average
loans outstanding. Over the same two periods, interest on
investments increased by $346,000 due to an increase of
approximately $11.6 million or 71.3% in the volume of
investments during the six month period. Interest income on
Federal Funds Sold decreased by $85,000 due to a decrease in
the average yield on Federal Funds Sold outstanding during the
six month period from 5.39% in 1998 to 4.72% in 1999, and also
a decrease in the average balance outstanding of $2.1 million
over the same period in 1998.
Total interest expense increased $166,000 for the six month
period ended June 30, 1999 compared to the same period in 1998.
Interest on deposits increased as a result of an increase of
approximately $14.9 million in average deposits over the same
period in 1998. The average rate on interest-bearing
liabilities decreased to 4.53% for the six month period in 1999
from 5.00% in the comparable period of 1998.
Table 6 - Average Balances, Interest and Average Rates
June 30
1999 (in thousands) 1998
Average AverageAverage Average
Balance Interest Rate Balance Interest Rate
Assets:
Federal Funds Sold$ 8,812 $ 208 4.72% $10,875 $ 293 5.39%
Investments:
Securities--Taxable 25,778 821 6.37% 14,926 497 6.66%
Non-Taxable 2,176 42 3.86% 1,386 20 2.89%
Total Loans, Including
Fees 66,349 3,208 9.67% 59,555 2,986 10.03%
Total Interest Earning
Assets 103,115 4,279 8.30% 86,742 3,796 8.75%
Cash and Due From
Banks 3,404 2,759
All Other Assets 5,786 4,789
Loan Loss Reserve/
Unearned Fees (1,543) (1,933)
TOTAL ASSETS $110,762 $92,357
Liabilities and Stockholders Equity:
Interest Bearing Deposits:
Time Deposits $ 55,642 $1,354 4.87%$44,290 $1,250 5.64%
Other 31,397 616 3.92% 27,880 550 3.95%
FHLB Advances -0- -0- N/A 18 4 4.44%
Federal Funds
Purchased -0- -0- N/A -0- -0- N/A
Total Interest-Bearing
Liabilities 87,039 1,970 4.53% 72,188 1,804 5.00%
Net Interest Income $2,309 $1,992
Non-Interest Bearing
Deposits 14,743 11,700
Total Cost of Funds 3.87% 4.30%
All Other Liabilities 938 761
Stockholders Equity 8,150 7,718
Unrealized Gain/Loss
on Securities (108) (10)
TOTAL LIABILITIES
AND STOCKHOLDERS
EQUITY $110,762 $92,357
Net Interest Yield 3.77% 3.75%
Net Interest Margin 4.48% 4.59%
Table 7 - Interest Rate Sensitivity
(In Thousands) June 30, 1999
Less One YearGreater Non-
Than Through Than Interest
1 Year 5 Years 5 Years Bearing Total
Asset:
Federal Funds Sold $ 4,510 $ 4,510
Investments 428 3,828 24,197 28,453
Loans 38,837 31,260 386 70,483
Non-Interest Earning Assets
and Unearned Assets/Loan
Loss Reserve 7,967 7,967
43,775 35,088 24,583 7,967 111,413
Liabilities and Stockholders' Equity:
Interest-Bearing
Deposits 70,608 17,512 -0- 88,120
Non-Interest Bearing Deposits 14,523 14,523
FHLB Advances -0- -0-
Noninterest Bearing Liabilities
and Stockholders' Equity 8,770 8,770
Total 70,608 17,512 -0- 23,293 111,413
Interest Rate Sensitivity
Gap (26,833) 17,576 24,583 (15,326) -0-
Cumulative Interest Rate
Sensitivity Gap $(26,833) $(9,257)$15,326 $ -0- $ -0-
OTHER INCOME
Total other income was $372,000 for the six month period ended
June 30, 1999 as compared to $253,000 for the same period in
1998, an increase of $119,000. Other income is comprised
primarily of customer service fees and other items.
OPERATING EXPENSES
Total operating expenses were $1,849,000, or 1.67% of average
total assets, for the six month period ended June 30, 1999 as
compared to $1,391,000, or 3.01%, for the same period in 1998.
Both the salaries and employee benefits and occupancy and
equipment categories of expenses increased when comparing the
two periods. Salaries and employee benefits increased by
$292,000 or 43% over the first six months of 1999 due to normal
salary increases. Occupancy and equipment expenses increased
approximately $35,000 when compared to expenses at June 30,
1998, an increase of 25.9%. Contributing to the increase in
occupancy and equipment expenses was the opening of the Alcoa
branch during the fourth quarter of 1998 and the Sweetwater
branch during the first quarter of 1999.
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 six month period ending June 30, 1999, the Bank
recorded $262,000 in tax expense which resulted in an
approximate effective rate of 35.9%. Comparably, in 1998, the
Bank recorded $301,000 in tax expense, resulting in an
approximate effective rate of 38.2%.
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 Financial Officer
Exhibit 27 - Financial Data Schedule
6-30-99
Amount (In Thousands)
Cash $ 2,756
Federal Funds Sold 4,510
Trading Assets -0-
Investments AFS 28,453
Investments HTM -0-
Investments-Market -0-
Loans 70,483
Allowance for Losses 639
Total Assets 111,413
Deposits 102,643
Short-Term Borrowings -0-
Other Liabilities 108
Long-Term Debt -0-
Preferred Stock-Mandatory -0-
Preferred-Non Mandatory -0-
Common Stock 2,566
Other Stockholders Equity 4,358
Total Liab.-Stockh. Equity 111,413
Interest on Loans 3,208
Interest on Investments 880
Other Interest Income 208
Total interest Income 4,296
Interest on Deposits 1,970
Total Interest Expense 1,970
Net Interest Income 2,326
Provision-Loan Losses 120
Securities-Gain/Loss -0-
Other Expenses 1,849
Income Before Tax 729
Income Before Extraordinary 729
Extraordinary Less Tax -0-
Cumul. Change Acct. Principal -0-
Net Income 467
Earnings Per Share-P 0.91
Earnings Per Share-D 0.91
Net Interest Yield-EA 3.77
Loans-Non Accrual 543
Loans Past Due > 90 Days -0-
Troubled Debt Restructuring -0-
Potential Problem Loans -0-
Allowance-Beginning 594
Total Charge-Offs 111
Total Recoveries 36
Allowance End of Period 639
Loan Loss-Domestic 639
Loan Loss-Foreign -0-
Loan Loss-Unallocated -0-
(b) Reports on Form 8-K, None.