SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR
15 (D) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to .
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Commission File No. 0-19618
FIRST COMMUNITY BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Indiana 35-1833586
(State of Incorporation) (IRS Employer Id. No.)
210 East Harriman
Bargersville, IN 46106
(Address of principal executive offices)
(317) 422-5171
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Sections 13 or 15 (d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
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Outstanding Shares of Common Stock on March 31, 1997: 942,825
Exhibit Index: Page 12
FIRST COMMUNITY BANCSHARES, INC. AND SUBSIDIARY
FORM 10-Q
INDEX
Page No.
---------
Part I. Financial Information:
Item 1. Financial Statements:
Consolidated Condensed Balance Sheet 3
Consolidated Condensed Statement of Income 4
Consolidated Condensed Statement of Changes
in Stockholder's Equity 5
Consolidated Condensed Statement of Cash Flows 6
Notes to Consolidated Condensed Financial
Statements 7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. Other Information:
Item 1. Legal Proceedings 10
Item 2. Changes In Securities 10
Item 3. Defaults Upon Senior Securities 10
Item 4. Submission of Matter to a Vote of Security
Holders 10
Item 5. Other Information 10
Item 6. Exhibits and Reports on Form 8-K 10
Signatures 11
FIRST COMMUNITY BANCSHARES, INC. AND SUBSIDIARY
Consolidated Condensed Balance Sheet
(Unaudited)
March 31, December 31
1997 1996
------------ --------------
ASSETS
Cash and due from banks $ 959,404 $1,059,473
Short-term interest-bearing deposits 7,023,299 5,975,098
------------ --------------
Cash and cash equivalents 7,982,703 7,034,571
Investment securities
Available for sale 1,963,721 2,386,358
Held to maturity 2,482,552 2,540,803
------------ --------------
Total investment securities 4,446,273 4,927,161
Loans 68,516,133 65,108,481
Allowance for loan losses (655,150) (644,132)
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Net Loans 67,860,983 64,464,349
Premises and equipment 1,774,156 1,791,873
Federal Home Loan Bank of Indianapolis stock, at cost 777,800 777,800
Foreclosed real estate 139,500
Interest receivable 511,131 526,186
Other assets 392,609 417,268
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Total assets $83,745,655 $80,078,708
============ ==============
LIABILITIES
Deposits
Noninterest bearing $4,347,783 $5,833,251
Interest bearing 69,636,438 64,719,018
------------ --------------
Total deposits 73,984,221 70,552,269
Federal Home Loan Bank of
Indianapolis advances 2,378,830 2,378,830
Interest payable 205,662 187,083
Other liabilities 232,555 74,570
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Total liabilities 76,801,268 73,192,752
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COMMITMENTS AND CONTINGENT LIABILITIES
STOCKHOLDERS' EQUITY
Preferred stock, no-par value
Authorized and unissued 1,000,000 shares
Common stock, no-par value
Authorized 4,000,000 shares
Issued and outstanding 942,825 shares 6,181,486 6,181,486
Retained earnings and contributed capital 761,719 692,760
Net unrealized gain on securities available for sale 1,182 11,710
------------ --------------
Total stockholders' equity 6,944,387 6,885,956
------------ --------------
Total liabilities and stockholders' equity $83,745,655 $80,078,708
============ ==============
See notes to condensed consolidated financial statements
FIRST COMMUNITY BANCSHARES, INC. AND SUBSIDIARY
Consolidated Condensed Statement of Income
(Unaudited)
Three Months Ended
March 31,
1997 1996
--------------------------------
Interest Income:
Loans, including fees $1,531,909 $1,286,246
Investment securities
Taxable 45,244 57,339
Tax exempt 29,383 31,566
Interest-bearing time deposits 41,891 69,112
Dividends 16,248 12,740
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Total interest income 1,664,675 1,457,003
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Interest Expense:
Deposits 814,494 724,226
FHLB advances 35,103 77,323
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Total interest expense 849,597 801,549
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Net Interest Income 815,078 655,454
Provision for loan losses 54,000 52,500
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Net Interest Income After Provision
for Loan Losses 761,078 602,954
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Other Income
Trust fees 10,840 10,693
Service charges on deposit
accounts 55,510 39,809
Net realized gains on sales of securities 2,880
Other operating income 7,275 6,385
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Total other income 73,625 59,767
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Other Expenses
Salaries and
employee benefits 287,714 242,911
Premises and equipment 67,687 49,482
Advertising 28,105 22,659
Data processing fees 54,978 46,058
Deposit insurance expense 10,290 31,193
Printing and office supplies 17,599 19,263
Legal and professional fees 38,847 46,456
Telephone expense 17,318 13,912
Other operating expense 71,094 72,387
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Total other expenses 593,632 544,321
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Income (Loss) Before Income Tax 241,071 118,400
Income tax expense 77,830 33,851
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Net Income $ 163,241 $ 84,549
============= ===========
Net Income (Loss) Per Share $ .17 $ .09
Weighted Average Shares Outstanding 942,825 927,798
See notes to consolidated condensed financial statements.
FIRST COMMUNITY BANCSHARES, INC. AND SUBSIDIARY
Consolidated Condensed Statement of Changes in Stockholders' Equity
For the Three Months Ended March 31, 1997
(Unaudited)
Retained Net unrealized
Earnings Gain (Loss) on
Common Stock and Securities
Shares Contributed Available
Outstanding Amount Capital For Sale Total
- -----------------------------------------------------------------------------------------------
BALANCES,
DECEMBER 31, 1996 942,825 $ 6,181,486 $ 692,760 $ 11,710 $ 6,885,956
Net income for
the period 163,241 163,241
Net change in unrealized
gain on securities
available for sale (10,528) (10,528)
Cash dividends (94,282) (94,282)
---------- ----------- ----------- ----------- ------------
BALANCES,
MARCH 31, 1997 942,825 $ 6,181,486 $ 761,719 $ 1,182 $ 6,944,387
========== =========== =========== =========== ============
See notes to consolidated condensed financial statements.
FIRST COMMUNITY BANCSHARES, INC. AND SUBSIDIARY
Consolidated Condensed Statements of Cash Flows
(Unaudited)
Three Months Ended
March 31,
--------------------------------
1997 1996
--------------------------------
Operating Activities:
Net income $ 163,241 $ 84,549
Adjustments to reconcile net income to net
cash provided used) by operating activities:
Provision for loan losses 54,000 52,500
Depreciation and amortization 31,689 18,292
Securities gains (2,880)
Investment securities amortization 1,751 2,780
Net change in:
Interest receivable 15,055 64,933
Interest payable 18,579 34,672
Other assets 31,564 46,236
Other liabilities 157,985 (36,489)
Due from broker 2,025,329
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Net cash provided by
operating activities 473,864 2,289,922
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Investing Activities:
Proceeds from maturities of securities
available for sale 405,000 325,000
Proceeds from paydowns and maturities of
securities held to maturity 56,704 425,152
Proceeds from sales of securities available for sale 182,880
Net change in loans (3,434,301) (2,090,119)
Proceeds from sale of other real estate 123,167
Purchases of property and equipment (13,972) (14,407)
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Net cash used by investing activities (2,863,402) (1,171,494)
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Financing Activities:
Net change in:
Noninterest-bearing, NOW and savings
deposits (1,565,115) 1,189,923
Certificates of Deposit 4,997,067 974,872
Short-term borrowings (908,138)
Cash dividends (94,282)
Exercise of stock options 112,516
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Net cash provided by financing
activities 3,337,670 1,369,173
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Net Change in Cash and Cash
Equivalents 948,132 2,487,601
Cash and Cash equivalents, Beginning of
Period 7,034,571 5,650,826
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Cash and Cash equivalents, End of period $ 7,982,703 $ 8,138,427
=========== ===========
Supplemental cash flow disclosures:
Interest paid $ 831,018 $ 766,877
See notes to consolidated condensed financial statements.
FIRST COMMUNITY BANCSHARES, INC. AND SUBSIDIARY
Notes to Consolidated Condensed Financial Statements
March 31, 1997
(Unaudited)
Note 1 Basis of Presentation
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The consolidated financial statements include the accounts of First Community
Bancshares, Inc. (the "Company") and its wholly owned subsidiary, First
Community Bank & Trust, a state chartered bank (the "Bank"). A summary of
significant accounting policies is set forth in Note 1 of Notes to Financial
Statements included in the December 31, 1996, Annual Report to Shareholders.
All significant intercompany accounts and transactions have been eliminated in
consolidation.
The interim consolidated financial statements have been prepared in accordance
with instructions to Form 10-Q, and therefore do not include all information
and footnotes necessary for a fair presentation of financial position, results
of operations and cash flows in conformity with generally accepted accounting
principles.
The interim consolidated financial statements at March 31, 1997, and for the
three months ended March 31, 1997 and 1996, have not been audited
by independent accountants, but reflect, in the opinion of management, all
adjustments (which include only normal recurring adjustments) necessary to
present fairly the financial position, results of operations and cash flows for
such periods.
Statement of Financial Accounting Standards No. 123, Stock-Based Compensation,
is effective for the Company for 1996. This statement establishes a fair value
based method of accounting for stock-based compensation plans. The Company
intends to account for stock-based compensation as prescribed in Accounting
Principles Board Opinion No. 25, Accounting for Stock Issued to Employees,
with appropriate proforma disclosures made in the notes to the financial
statements.
Item 2. Management's Discussion and Analysis of Financial Condition and
- -----------------------------------------------------------------------
Results of Operations
- -----------------------------
Results of Operations
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First Community Bancshares, Inc. ("First Community") had net income of $163,241
and $84,549 for the three months ending March 31, 1997 and 1996,
respectively. Net interest income was $815,078 and $655,454 for the three
months ending March 31, 1997 and March 31, 1996, respectively.
Net income increased $78,692 for the three months ending March 31, 1997, when
compared to the same period in 1996, due primarily to the increase in net
interest income offset by general increases in other expenses. This increase
in net interest income resulted primarily from an increase in lending and the
income derived therefrom. Lending for the three months ended March 31, 1997
increased by $3,407,652 from December 31, 1996. The increase in income from
service charges on deposit accounts of $15,701 results from a significant
increase in the number of deposit accounts. The increases in other expenses
are directly a result of the overall growth of the Bank. Income taxes
increased $43,979 for the three months ended March 31, 1997, when compared
to the same period in 1996, because of the increase in the Bank's net income
before taxes of $122,671.
Balance Sheet
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Loans and Deposits
- ---------------------------
The Bank had an increase in net loans outstanding from $64,464,349 on December
31, 1996 to $67,860,983 on March 31, 1997. This increase is primarily
due to an increasing customer base.
Deposits increased from $70,552,269 on December 31, 1996 to $73,984,221 on
March 31, 1997. This increase, as in the increases in the loan portfolio,
is due to an increase in customer base.
Classification of Assets, Allowance for Loan Losses, and Nonperforming
- -----------------------------------------------------------------------
Loans
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The Bank currently classifies loans as substandard, doubtful and loss to
assist management in addressing collection risks and pursuant to regulatory
requirements which are not necessarily consistent with generally accepted
accounting principles. Substandard loans represent credits characterized by
the distinct possibility that some loss will be sustained if deficiencies are
not corrected. Doubtful loans possess the characteristics of substandard
loans, but collection or liquidation in full is doubtful based upon existing
facts, conditions and values. A loan classified as a loss is considered
uncollectible. As of March 31, 1997, the Bank had $528,022 of loans
classified as substandard, none as doubtful and none as loss. The allowance
for loan losses was $655,150 or .97% of net loans receivable at March 31,
1997 compared to $644,132 or 1.0% of net loans receivable at December 31,
1996. A portion of classified loans are non-accrual loans. First Community
had non-accrual loans totaling $186,000 at March 31, 1997 compared to
$99,000 at December 31, 1996.
Liquidity, Interest Rate Sensitivity and Capital Resources
- ----------------------------------------------------------
Liquidity refers to the ability of a financial institution to generate
sufficient cash to fund current loan demand, meet savings deposit withdrawals
and pay operating expenses. The primary sources of liquidity are cash,
interest-bearing deposits in other financial institutions, marketable
securities, loan repayments, increased deposits and total institutional
borrowing capacity.
Cash and interest-bearing deposits, when combined with investments
have remained a relatively constant percent of total assets, while increasing
in dollar volume. Management's goal is to maintain approximately twenty
percent (20%) to twenty-five percent (25%) of total assets in cash,
interest-bearing deposits and investments in order to satisfy First
Community's needs for liquidity and other short-term obligations.
Management believes it has adequate liquidity for First Community's short- and
long-term needs. Short-term liquidity needs resulting from normal
deposit/withdrawal functions are provided by First Community retaining a
portion of cash generated from operations in a FHLB daily investment account.
This account acts as a short-term liquidity source while providing interest
income to First Community. Long-term liquidity and other liquidity needs are
provided by the ability of First Community to borrow up to $16,590,000 from
the FHLB and the balance of its borrowings was $2,378,830 at March 31, 1997
and December 31, 1996, respectively.
At March 31, 1997, the Bank's one-year cumulative interest rate gap was a
negative 18.41%. A negative interest rate gap means First Community's earnings
are vulnerable during periods of rising interest rates because during such
periods the interest expense paid on liabilities will generally increase more
rapidly than the interest income earned on assets. Accordingly, this negative
interest rate gap represents substantial risk for First Community in an
environment of rising interest rates. Conversely, in a falling interest rate
environment, the total expense paid on liabilities will generally decrease
more rapidly than the interest income earned on assets. A positive interest
rate gap would have the opposite effect.
At March 31, 1997, the Company and its subsidiary, First Community Bank &
Trust, had core capital of approximately 8.3% and 8.1% respectively. Both
institutions had risk-based capital in excess of 8.0%. The regulatory core
and risk-based capital requirements are 4.0% and 8.0% respectively.
Part II - Other Information
Item 1.Legal Proceedings.
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None.
Item 2.Changes in Securities.
- ------------------------------
Not applicable.
Item 3.Defaults upon Senior Securities.
- ---------------------------------------
Not applicable.
Item 4.Submission of matters to a Vote by Security Holders.
- -----------------------------------------------------------
None.
Item 5.Other Information.
- --------------------------
None.
Item 6.Exhibits and Reports on Form 8-K.
- -----------------------------------------
(a) Exhibit 27.1...Financial Data Schedule
(b) No reports were filed on Form 8-K during the quarter
ended March 31, 1997.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST COMMUNITY BANCSHARES, INC.
By: /s/ Albert R. Jackson, III
--------------------------
Albert R. Jackson III
Chief Executive Officer,
Chief Financial Officer
May 12, 1997