UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark one): [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended JUNE 30, 1998
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 0-14087
FIRST COASTAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 06-1177661
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
36 THOMAS DRIVE, WESTBROOK, MAINE 04092
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (207) 774-5000
Indicate by check 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 [ ]
The number of shares outstanding of each of the registrant's classes of
common stock, as of the latest practicable date, is:
Class: COMMON STOCK, PAR VALUE $1.00 PER SHARE
Outstanding at August 7, 1998: 1,360,527 shares
INDEX
FIRST COASTAL CORPORATION AND SUBSIDIARY
PART I - FINANCIAL INFORMATION
---------------------
Page
----
Item 1. Financial Statements
Consolidated Balance Sheets (Unaudited) as of June 30, 1998 and December
31, 1997 3
Consolidated Statements of Operations (Unaudited) for the three and six
months ended June 30, 1998 and 1997 4
Consolidated Statements of Cash Flows (Unaudited) for the six months
ended June 30, 1998 and 1997 6
Consolidated Statements of Comprehensive Income (Unaudited) for the three
and six months ended June 30, 1998 and 1997 7
Notes to Consolidated Financial Statements (Unaudited), June 30, 1998 8
Item 2. Management's Discussion and Analysis of Financial of Operations Condition and
Results of Operations 10
Item 3. Quantitative and Qualitative Disclosures About Market Risk 21
PART II - OTHER INFORMATION
-----------------
Item 1. Legal Proceedings 21
Item 2. Changes in Securities and Use of Proceeds 21
Item 3. Defaults Upon Senior Securities 21
Item 4. Submission of Matters to a Vote of Security Holders 21
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 22
SIGNATURES 24
2
PART I - FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
First Coastal Corporation and Subsidiary
June 30, December 31,
-----------------------
(in thousands) 1998 1997
- -----------------------------------------------------------------------------------------------------------------------
ASSETS
Noninterest earning deposits and cash $ 5,167 $ 3,615
Interest earning deposits 19,549 3,939
-------- --------
Cash and cash equivalents 24,716 7,554
Investment securities:
Available for sale (at market value) 28,016 15,887
Held to maturity (at cost) (fair value of $4,187 and $6,973 at
June 30, 1998 and December 31, 1997, respectively) 4,199 7,000
-------- --------
32,215 22,887
Federal Home Loan Bank stock (at cost) 1,315 1,315
Loans held for sale (at market value) 2,655 3,565
Loans 104,230 104,304
Less: Deferred loan fees, net (135) (139)
Allowance for loan losses (2,726) (2,665)
-------- --------
101,369 101,500
Premises and equipment 3,749 3,554
Accrued income receivable 934 970
Real estate owned and repossessions 121 65
Deferred tax asset 3,816 4,095
Other assets 829 895
-------- --------
TOTAL ASSETS $171,719 $146,400
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $139,002 $114,991
Advances from Federal Home Loan Bank 12,925 13,294
Savings Bank Notes 2,800 3,000
Repurchase agreements 1,454 -
Accrued expenses and other liabilities 166 307
-------- --------
TOTAL LIABILITIES 156,347 131,592
STOCKHOLDERS' EQUITY
Preferred Stock, $1.00 par value; Authorized 1,000,000 shares; none outstanding
Common Stock, $1.00 par value; Authorized 6,700,000 shares; issued and
outstanding
as of June 30, 1998 and December 31, 1997 - 1,360,527 and 1,359,194 shares, respectively 1,361 1,359
Paid-in Capital 31,751 31,746
Retained earnings (deficit) (17,792) (18,369)
Unrealized gain on available for sale securities, net 52 72
-------- --------
TOTAL STOCKHOLDERS' EQUITY 15,372 14,808
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $171,719 $146,400
======== ========
See notes to consolidated financial statements.
3
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
First Coastal Corporation and Subsidiary
Three Months Ended June 30,
---------------------------
(in thousands, except share and per share amounts) 1998 1997
- ------------------------------------------------------------------------------------------
INTEREST AND DIVIDEND INCOME
Interest and fees on loans $ 2,514 $ 2,423
Interest and dividends on investment securities 414 508
Other interest income 221 80
---------- ----------
TOTAL INTEREST AND DIVIDEND INCOME 3,149 3,011
INTEREST EXPENSE
Deposits 1,260 1,129
Borrowings
Advances from Federal Home Loan Bank 190 254
Savings Bank Notes 87 108
Repurchase agreements 10 -
---------- ----------
Total Interest Expense 1,547 1,491
---------- ----------
Net Interest Income Before Provision for Loan Losses 1,602 1,520
Provision for Loan Losses - -
---------- ----------
Net Interest Income After Provision for Loan Losses 1,602 1,520
NONINTEREST INCOME
Service charges on deposit accounts 124 109
Gain on investment securities transactions 36 16
Gain on sales of mortgage loans 10 98
Other 38 34
---------- ----------
208 257
---------- ----------
OPERATING EXPENSES
Salaries and employee benefits 640 545
Occupancy 128 118
Net cost of operation of real estate owned and repossessions 5 33
Other 586 535
---------- ----------
1,359 1,231
---------- ----------
INCOME BEFORE INCOME TAXES 451 546
Income Taxes 159 195
---------- ----------
NET INCOME $ 292 $ 351
========== ==========
PER SHARE AMOUNTS
Basic earnings per share:
Weighted average shares outstanding 1,359,633 1,358,652
Net income per share $ .21 $ .26
========== ==========
Diluted earnings per share:
Weighted average shares outstanding 1,380,177 1,373,571
Net income per share $ .21 $ .26
========== ==========
See notes to consolidated financial statements.
4
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
First Coastal Corporation and Subsidiary
Six Months Ended June 30,
-------------------------
(in thousands, except share and per share amounts) 1998 1997
- -----------------------------------------------------------------------------------------
INTEREST AND DIVIDEND INCOME
Interest and fees on loans $ 4,991 $ 4,663
Interest and dividends on investment securities 808 970
Other interest income 328 222
---------- ----------
TOTAL INTEREST AND DIVIDEND INCOME 6,127 5,855
INTEREST EXPENSE
Deposits 2,339 2,230
Borrowings
Advances from Federal Home Loan Bank 403 499
Savings Bank Notes 170 217
Repurchase agreements 10 -
---------- ----------
Total Interest Expense 2,922 2,946
---------- ----------
Net Interest Income Before Provision for Loan Losses 3,205 2,909
Provision for Loan Losses - -
---------- ----------
Net Interest Income After Provision for Loan Losses 3,205 2,909
NONINTEREST INCOME
Service charges on deposit accounts 240 209
Gain on investment securities transactions 36 146
Gain on sales of mortgage loans 16 94
Other 60 69
---------- ----------
352 518
---------- ----------
OPERATING EXPENSES
Salaries and employee benefits 1,277 1,083
Occupancy 259 231
Net cost of operation of real estate owned and repossessions 2 66
Other 1,123 1,095
---------- ----------
2,661 2,475
---------- ----------
INCOME BEFORE INCOME TAXES 896 952
Income Taxes 319 334
---------- ----------
NET INCOME $ 577 $ 618
========== ==========
PER SHARE AMOUNTS
Basic earnings per share:
Weighted average shares outstanding 1,359,415 1,358,259
Net income per share $ .42 $ .45
========== ==========
Diluted earnings per share:
Weighted average shares outstanding 1,380,689 1,371,496
Net income per share $ .42 $ .45
========== ==========
See notes to consolidated financial statements.
5
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
First Coastal Corporation and Subsidiary
Six Months Ended June 30,
-------------------------
(in thousands) 1998 1997
- -----------------------------------------------------------------------------------------------------------
OPERATING ACTIVITIES
Net Income $ 577 $ 618
Adjustments to reconcile net income to net cash provided by operating activities:
Writedowns of REO - 20
Loss on sales of REO (5) -
Depreciation and amortization 194 126
Amortization of investment security premium 54 30
Realized investment securities gains (36) (146)
Realized gains on assets held for sale (16) (94)
Loans originated and acquired for resale (6,040) (2,866)
Sales of loans originated and acquired for sale 6,966 3,454
(Increase) decrease in interest receivable 36 (6)
Decrease in interest payable (17) (28)
Net change in other assets 294 656
Net change in other liabilities (124) (7)
-------- -------
Net cash provided by operating activities 1,883 1,757
-------- -------
INVESTING ACTIVITIES
Sales of securities available for sale 2,835 4,646
Maturities of securities held to maturity 6,000 2,001
Purchases of investment securities available for sale (15,008) (8,026)
Purchases of investment securities held to maturity (3,193) -
Net change in loans 131 (4,683)
Net purchases of premises and equipment (389) (100)
-------- -------
Net cash used by investing activities (9,624) (6,162)
-------- -------
FINANCING ACTIVITIES
Net change in deposits 24,011 2,358
Proceeds from borrowings 4,000 2,000
Payments on borrowings (4,569) (348)
Net change in Repurchase agreements 1,454 -
Proceeds from issuance of stock options 7 7
-------- -------
Net cash provided by financing activities 24,903 4,017
-------- -------
Increase (decrease) in cash and cash equivalents 17,162 (388)
Cash and cash equivalents at beginning of period 7,554 11,453
-------- -------
Cash and cash equivalents (interest and noninterest bearing) at end of period $ 24,716 $11,065
======== =======
NONCASH INVESTING ACTIVITIES
Change in unrealized holding gains and losses on investment securities
available for sale $ (20) $ 52
Transfer of loans to real estate owned and repossessions 121 -
See notes to consolidated financial statements.
6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)
First Coastal Corporation and Subsidiary
Three Months Ended June 30,
---------------------------
(dollars in thousands) 1998 1997
- --------------------------------------------------------------------------------------
Net income $ 292 $ 351
Other comprehensive income:
Unrealized holding gains (losses) arising during the period (net of
income taxes: 1998 - $(9); 1997 - $0) (16) 280
Reclassification adjustment for realized gains included in net
income (net of income taxes: 1998 - $(12); 1997 - $(5)) (24) (11)
----- -----
(40) 269
----- -----
Comprehensive income $ 252 $ 620
===== =====
Six Months Ended June 30,
-------------------------
(dollars in thousands) 1998 1997
- -------------------------------------------------------------------------------------
Net income $ 577 $ 618
Other comprehensive income:
Unrealized holding gains (losses) arising during the period (net of
income taxes: 1998 - $(10); 1997 - $0) (20) 52
Reclassification adjustment for realized gains included in net
income (net of income taxes: 1998 - $(12); 1997 - $(50)) (24) (96)
----- -----
(44) (44)
----- -----
Comprehensive income $ 533 $ 574
===== =====
See notes to consolidated financial statements.
7
FIRST COASTAL CORPORATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
JUNE 30, 1998
NOTE A BASIS OF PRESENTATION
---------------------
The accompanying unaudited condensed consolidated financial statements of First
Coastal Corporation (the "Company") and its subsidiary, Coastal Bank (the
"Bank"), have been prepared in conformity with generally accepted accounting
principles for interim financial information and with the instructions to Form
10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission.
Accordingly, they do not include all of the information and notes required by
generally accepted accounting principles for complete financial statements. In
the opinion of management, all adjustments (consisting of normal recurring
accruals) considered necessary for a fair presentation have been included.
Operating results and other data for the three and six months ended June 30,
1998 are not necessarily indicative of the results that may be expected for the
year ending December 31, 1998. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Company's Annual Report on Form 10-K for the year ended December 31, 1997.
NEW ACCOUNTING STANDARDS
Effective January 1, 1998, the Company adopted Financial Accounting Standards
Board ("FASB") Statement of Financial Accounting Standard ("SFAS") No. 130,
Reporting Comprehensive Income. SFAS No. 130 requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. The requirements of the
pronouncement do not have a material effect on the Company's financial
statements.
Effective January 1, 1998, the Company adopted FASB SFAS No. 131, Financial
Reporting for Segments of a Business Enterprise. SFAS No. 131 requires that a
public business enterprise report financial and descriptive information about
its reportable operating segments. The requirements of this pronouncement do
not have a material effect on the Company's financial statements.
In February 1998, FASB issued SFAS No. 132, Employers' Disclosures about
Pensions and Other Postretirement Benefits. SFAS No. 132 will revise employers'
disclosures about pension and other postretirement benefit plans. The
requirements of this pronouncement will be adopted for the Company's financial
statements for the year ending December 31, 1998. The requirements of this
pronouncement are not expected to have a material effect on the Company's
financial statements.
In June 1998, FASB issued SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities, which establishes accounting and reporting standards for
derivative instruments, including certain derivatives embedded in other
contracts, and for hedging activities. SFAS No. 133 requires that an entity
recognize all derivatives as either assets or liabilities in the statement of
financial position and measure those instruments at fair value. The
requirements of this pronouncement will be adopted effective January 1, 2000 and
are not expected to have a material effect on the Company's financial
statements.
8
COMPUTATION OF EARNINGS PER SHARE
In February 1997, FASB issued SFAS No. 128, Earnings Per Share. SFAS No. 128
provides reporting standards for basic and diluted earnings per share and is
effective for financial statement periods ending after December 15, 1997. Basic
earnings per share is computed by dividing income available to common
stockholders by the weighted-average number of common shares outstanding for the
period. Diluted earnings per share reflects the potential dilution that could
occur if securities or other contracts to issue common stock were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. All prior period earnings per share
data has been restated to conform to the provisions of this statement. The
table below sets forth the approximate number of shares used to calculate basic
and diluted earnings per share ("EPS") for the three and six months ended June
30, 1998 and 1997.
Three Months Ended Six Months Ended
June 30, June 30,
------------------- -------------------
1998 1997 1998 1997
--------- --------- --------- ---------
Weighted average shares outstanding for basic EPS 1,359,633 1,358,652 1,359,415 1,358,259
Effect of dilutive stock options 20,544 14,919 21,274 13,237
--------- --------- --------- ---------
Weighted averages shares outstanding for diluted EPS 1,380,177 1,373,571 1,380,689 1,371,496
========= ========= ========= =========
INCOME TAXES
Deferred tax assets and liabilities are recognized for the future tax
consequences attributable to differences between the financial statement
carrying amounts of existing assets and liabilities and their respective tax
bases. Due to the uncertainty that the benefit of deferred tax assets would be
realized, a full valuation allowance was recorded at December 31, 1995.
Effective December 31, 1996 management concluded that the completion of the July
1996 recapitalization, the payoff of the $9.0 million promissory note obligation
(the "FDIC Note") to the Federal Deposit Insurance Corporation ("FDIC") incurred
as a result of the January 1995 settlement of the cross guaranty claim, and the
improved financial condition of the Company reduced the uncertainties relating
to the prospective utilization of the net operating loss carryforwards. As a
result, in accordance with SFAS No. 109, in the fourth quarter of 1996 the
valuation allowance against the deferred tax asset was reduced and the $4.8
million income tax benefit was recognized. Accordingly, for financial reporting
purposes subsequent to January 1, 1997, earnings are reported on a tax effected
basis as though income tax expense had been incurred.
In order to help maintain the benefit of the deferred tax asset, the Company
amended its Restated Certificate of Incorporation in June 1996 to provide that
absent approval by the Company's Board of Directors no person shall become or
make an offer to become a beneficial owner of five percent or more of the
Company's voting stock for a three year period, which provision expires June 11,
1999. This amendment is intended to help reduce the likelihood that there will
be an "ownership change" as defined in Section 382 of the Internal Revenue Code,
which could result in a reduction in the amount of net operating loss
carryforwards for tax purposes.
YEAR 2000 ISSUE
The Company is aware of potential problems that may be experienced with
computerized and other electronic systems at the turn of the millennium. These
problems exist because many systems rely on two digit fields instead of four
digit fields to store the year of date sensitive information. The result will be
that some systems will interpret the 00 in its year field to mean 1900 instead
of 2000. This problem will not only affect software
9
programs but hardware as well, and could result in a system failure or
miscalculations causing disruptions of operations including, among other things,
a temporary inability to process transactions or engage in similar normal
business activities.
In response, the Company has formed a Year 2000 Action Committee which is
comprised of various members of the Bank's senior and middle management. The
Bank has implemented a detailed process for ensuring the Bank's systems are Year
2000 compliant, which includes systems assessment, systems renovation, systems
testing and systems implementation phases. The Committee has already completed
the awareness and assessment phases, which includes assessing computer software,
hardware, third party vendors and other electronic devices for compliance with
the year 2000. Since a majority of the Bank's processing systems are provided
by third party vendors, management is working to receive on-going assurances
that these systems will be Year 2000 compliant. Management does not expect the
costs associated with the year 2000 issues to have a material effect on the
Company's financial statements.
Though the Company is diligently working to ensure that there is no disruption
in its operations due to Year 2000 systems problems, and believes it will be
successful in this regard, there can be no guarantee that all of the systems
critical to the operational performance of the Bank will be Year 2000 compliant
and fully functional at the turn of the millennium. While management is working
diligently to protect the Company against such an occurrence, it is possible
that a vendor upon whom the Bank is reliant could, despite possible assurances
to the contrary, ultimately fail to provide Year 2000 compliant services to the
Company, or said services could prove incompatible with the Company's systems.
A significant systems failure could have a material adverse impact on the
financial condition of the Company.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
BUSINESS
First Coastal Corporation (the "Company"), a Delaware corporation, is a bank
holding company whose sole operating subsidiary is Coastal Bank (the "Bank"), a
Maine chartered savings bank headquartered in Westbrook, Maine. The Bank was
formed in 1981 through the consolidation of Brunswick Savings Institution and
York County Savings Bank, which were organized in 1858 and 1860, respectively.
The Company has no separate operations and its business consists of the business
of the Bank. The Bank is engaged in customary banking activities, including
attracting deposits and various lending activities, and conducts its business
from eight offices in the counties of Cumberland, Sagadahoc and York. The
Bank's deposits are insured by the FDIC up to the limits provided by law.
This Quarterly Report on Form 10-Q, including statements made in this
Management's Discussion and Analysis of Financial Condition and Results of
Operations, may include "forward-looking statements" within the meaning of the
Private Securities Litigation Reform Act of 1995. Any statements with regard to
the Company's expectations as to its financial results and other aspects of its
business, as well as general economic conditions, may constitute forward-looking
statements. Although the Company makes such statements based on assumptions
which it believes to be reasonable, there can be no assurance that actual
results will not differ materially from the Company's expectations.
Accordingly, the Company hereby identifies the following important factors,
among others, which could cause results to differ from any results which might
be projected, forecasted or estimated based on such forward-looking statements:
(i) general economic and competitive
10
conditions in the markets in which the Company operates, and the risks inherent
in its operations, (ii) the Company's ability to continue to control its
provision for loan losses, noninterest expense, increase earning assets and
noninterest income, and maintain its margin, and (iii) the level of demand for
new and existing products. Should one or more of these risks or uncertainties
materialize, or should underlying assumptions prove incorrect, actual results
may vary materially from those described in the forward-looking statements. The
Company does not intend to update forward-looking statements.
RESULTS OF OPERATIONS
OVERVIEW
The Company reported net income of $292,000 and $577,000 for the three and six
month ended June 30, 1998, compared to net income of $351,000 and $618,000 for
the same periods in 1997. The $41,000 decline in net income for the six months
ended June 30, 1998 as compared to the same respective period in 1997 is
primarily attributable to a decrease in securities and loan sale gains of
$188,000 for the six months ended June 30, 1998. Income for the three months
ended June 30, 1998 declined $59,000 as compared to the three months ended June
30, 1997, resulting primarily from a $68,000 decline in loan and securities
sales gains.
NET INTEREST INCOME
Net interest income increased $82,000 and $296,000 for the three and six months
ended June 30, 1998 as compared to the same respective period in 1997. The
increase in net interest income for the three months ended June 30, 1998 as
compared to the same respective period in 1997 was a result of a $138,000
increase in interest income, $91,000 of which was the result of higher loan
balances, partially offset by a $56,000 increase in interest expense, in part
related to the Company's new High Rise Savings program, as more fully described
below under the caption Interest Expense. The increase in net interest income
for the six months ended June 30, 1998 as compared to the same period in 1997 is
primarily attributable to a $328,000 increase in interest income and fees
received on loans resulting from an increase in average loan balances and
yields, partially offset by a $56,000 decrease in interest received on cash and
investments.
Changes in net interest income are caused by changes in the amount and
composition of interest earning assets and interest bearing liabilities,
interest rate movements and the repricing of assets and liabilities as a result
of these movements, changes in the level of noninterest earning assets and
noninterest bearing liabilities and income recognition and income reversals
related to interest earning assets which become noninterest earning assets.
11
The following table sets forth, for the periods indicated, information regarding
(i) the total dollar amount of interest income from interest-earning assets and
the resultant average yields, (ii) the total dollar amount of interest expense
on interest-bearing liabilities and the resultant average cost, (iii) net
interest income, (iv) interest rate spread, and (v) net interest margin.
For the Six Months Ended June 30,
------------------------------------------------------------------
1998 1997
------------------------------- -------------------------------
Average Average
(in thousands) Balance Interest Yield/(1)/ Balance Interest Yield/(1)/
- --------------------------------------------- -------- -------- ------------ -------- -------- ------------
ASSETS:
Cash $ 11,891 $ 328 5.48% $ 7,842 $ 222 5.71%
Investments 24,933 808 6.54 29,950 970 6.53
Loans/(2) (3)/
Residential real estate mortgages 36,685 1,579 8.61 35,027 1,482 8.53
Commercial real estate mortgages 50,214 2,440 9.80 48,511 2,294 9.53
Commercial and industrial loans 5,605 273 9.82 3,250 156 9.69
Consumer loans 14,726 699 9.58 15,171 731 9.71
-------- ------ -------- ------
Total loans 107,230 4,991 9.39 101,959 4,663 9.22
Total interest earning assets 144,054 6,127 8.58 139,751 5,855 8.45
Noninterest earning assets 10,297 11,452
-------- --------
Total assets $154,351 $151,203
======== ========
LIABILITIES:
Deposits
Savings $ 41,750 $ 674 3.25% $ 34,847 $ 470 2.72%
Now and money market accounts 17,626 201 2.30 18,728 234 2.52
Certificates of deposits 54,875 1,464 5.38 57,192 1,526 5.38
-------- ------ -------- ------
Total interest bearing deposits 114,251 2,339 4.13 110,767 2,230 4.06
Borrowings 17,273 583 6.81 20,561 716 7.02
-------- ------ -------- ------
Total interest bearing liabilities 131,524 2,922 4.48% 131,328 2,946 4.52%
Noninterest bearing deposits 7,154 5,675
Noninterest bearing liabilities 110 175
Stockholders' equity 15,563 14,025
-------- --------
Total liabilities and stockholders' equity $154,351 $151,203
======== ========
Net interest income $3,205 $2,909
====== ======
Net interest rate spread/(4)/ 4.10% 3.92%
Net interest margin/(5)/ 4.49% 4.20%
/(1)/ Annualized.
/(2)/ For purposes of these computations, loans held for sale and nonaccrual
loans are included in the average loan amounts outstanding.
/(3)/ Fees from loans is included in interest income from loans.
/(4)/ Return on interest earning assets less cost of interest bearing
liabilities.
/(5)/ Net interest income divided by average earning assets.
Interest income increased $138,000 for the three months ended June 30, 1998 as
compared to the three months ended June 30, 1997, primarily attributable to a
$91,000 increase in loan interest income resulting from a $3.4
12
million increase in average loan balances. Additionally, interest earned on cash
and securities increased $47,000 resulting from a $6.5 million increase in
average balances, offset by a 55 basis point decline in yields.
Interest income increased $272,000 for the six months ended June 30, 1998 as
compared to the six months ended June 30, 1997. This increase was the result of
a $328,000 increase in interest on loans, attributable to a $5.3 million
increase in average loan balances (of which $1.9 million is related to loans
held for sale), a 17 basis point increase in loan yields, from 9.22% to 9.39%,
and a $106,000 increase in interest income received on cash, primarily as a
result of higher average balances of $4.0 million. This was offset in part by a
$162,000 reduction in interest income from investments resulting from reduced
balances.
Competition with regard to loan originations, particularly commercial real
estate and commercial and industrial loans, has continued to be intense. As a
result, the yields on new loan originations, particularly in these two
categories, are expected to decline relative to interest rates in general.
Competitive factors have also resulted in, and are expected to continue to
result in, an increase in loan prepayments as compared to that which might
ordinarily have been expected, as well as some reductions in contract interest
rates for existing customers. As a result, there is some likelihood that loan
yields will decline in the foreseeable future.
Interest expense increased $56,000 for the three months ended June 30, 1998 as
compared to the same respective period in 1997 as a result of a $205,000
increase in interest expense paid on savings accounts (a $13.7 million increase
in average deposit balances and a 93 basis point increase in yield). This was
offset by a $74,000 decline in interest expense paid on certificate of deposits
and interest bearing checking accounts (a $3.4 million decline in average
deposit balances and a 19 basis point decline in yields). Additionally,
borrowing expense declined $75,000 as a result of a reduction in the amount of
advances owed the Federal Home Loan Bank and a $1.0 million unscheduled
principal payment made during the third quarter of 1997 against the promissory
notes issued to a group of four Maine savings banks (the "Savings Banks") in the
aggregate amount of $4.0 million (the "Savings Bank Notes"). On June 30, 1998 a
scheduled principal payment of $200,000 was made, further reducing the balance
to $2.8 million.
On March 23, 1998, the Company introduced a new savings deposit product called
High Rise Savings. The introductory interest rate paid on this product for
accounts opened during the initial introductory period (which period ended July
3, 1998) is tiered and ranges from 4.64% to 5.59%, with these rates in effect
through December 31, 1998 (following the introductory period, the product's
interest rates declined). Also, a portion of the Bank's deposit customers
converted their pre-existing accounts to High Rise Savings accounts at higher
yields. As a result of this program, savings deposit balances increased
significantly, thereby increasing the overall cost of funds to the Bank.
Interest expense declined $24,000 for the six months ended June 30, 1998 as
compared to the six months ended June 30, 1997. Borrowing expense declined
$133,000 as a result of a $3.3 million decline in average borrowings balances
and a 21 basis point decline in the yield. This decline in borrowing expense
was partially offset by a $109,000 increase in deposit expense, primarily
resulting from an increase in High Rise Savings balances.
Although interest expense declined $24,000 for the six months ended June 30,
1998 as compared to the same respective period in 1997, management does not
expect this trend to continue. Balances in the Bank's new High Rise Savings
product equaled $31.7 million at June 30, 1998 and, as discussed previously,
carry interest rates established during the introductory period until December
31, 1998 that will result in an increase in the Bank's cost of funds.
Additionally, the Bank launched its new cash management program for businesses
in May 1998. The program includes repurchase agreements, which are deposits
that are not FDIC insured, but instead are collateralized by mortgage-backed
securities owned by the Bank. At June 30, 1998 these
13
repurchase agreements equaled $1.5 million. The interest rates paid on these
repurchase agreements ranges between 4.0% and 4.5%.
PROVISION FOR LOAN LOSSES
There was no provision for loan losses expense for the three and six months
ended June 30, 1998 and 1997. The absence of provision for loan losses is
attributable to (i) the essentially unchanged level of the allowance for loan
losses (the "Allowance"), both in dollars ($2.7 million at June 30, 1998 and
$2.6 million at June 30, 1997) and as a percentage of total loans (2.61% at June
30, 1998 versus 2.62% at June 30, 1997), and (ii) management's review of the
portfolio and its determination of the adequacy of the Allowance as of June 30,
1998.
Management believes that in accordance with the Bank's Allowance for Loan Loss
Policy, the Allowance is adequate at June 30, 1998. However, future additions
to the Allowance may be necessary based on changes in the financial condition of
various borrowers, new information that becomes available relative to various
borrowers and loan collateral, growth in the size or changes in the mix or
concentration risk of the loan portfolio, as well as changes in local, regional
or national economic conditions. In addition, various regulatory authorities,
as an integral part of their examination process, periodically review the Bank's
Allowance. Such authorities may require the Bank to recognize additional
provision for loan losses based upon information available to them and their
judgments at the time of their examination.
NONINTEREST INCOME
Noninterest income declined $49,000 for the three months ended June 30, 1998 as
compared to the same respective period in 1997. Noninterest income for the
three months ended June 30, 1997 included a $94,000 gain received on the sale of
Maine State Housing Authority loans.
Noninterest income for the six months ended June 30, 1998 declined $166,000 as
compared to the six months ended June 30, 1997. This is primarily attributable
to a $188,000 decline in loan and security gains for the six months ended June
30, 1998 as compared to the same respective period in 1997.
OPERATING EXPENSES
Operating expense increased $128,000 for the three months ended June 30, 1998 as
compared to the same respective period in 1997. This increase is primarily
attributable to a $95,000 increase in salaries and benefits expense, resulting
from a $55,000 increase in salaries due to changes in staffing levels (including
the opening of the Portland office in March 1998), annual salary increases and a
$25,000 increase in pension expense resulting from the Company's 401(k) defined
contribution plan implemented in August 1997.
Operating expenses increased $186,000 for the six months ended June 30, 1998 as
compared to the same respective period in 1997 primarily as a result of
additional costs associated with several business initiatives the Bank
implemented during the first and second quarters of 1998. These initiatives
include the opening of the Portland branch, Internet banking for businesses, the
development and introduction of a new line of cash management services for
businesses and additional staffing resulting from increased commercial lending
activity. The increase in salaries and benefits expense represented $194,000 of
the total increase and was primarily attributable to changes in staffing levels,
annual salary increases and a $49,000 increase in pension expense in the form of
401(k) matching contributions attributable to the implementation of the 401(k)
defined contribution plan in August 1997.
14
FINANCIAL CONDITION
- -------------------
TOTAL ASSETS
At June 30, 1998, total assets were $171.7 million, representing an increase of
$25.3 million (or 17.3%) from total assets of $146.4 million at December 31,
1997. This increase was attributable to a $25.5 million increase in deposit
balances and repurchase agreements, with the deposit increase primarily
attributable to the introduction of High Rise Savings in March 1998. The High
Rise Savings introductory program was advertised and included introductory rates
that were in excess of market rates and ran from March 23 until July 3, 1998,
resulting in $25.0 million in new deposits by June 30, 1998. However, as a
result of the discontinuation of the marketing campaign, and a reduction in the
interest rate available to new High Rise Savings customers following the close
of the introductory period, increases in deposit balances attributable to High
Rise Savings are not expected to continue at the same level. The bulk of this
deposit growth was primarily invested in securities and overnight cash
investments at June 30, 1998.
INVESTMENTS
The Company's investment portfolio is comprised primarily of U.S. government and
agency obligations and also contains miscellaneous equity securities. Total
investment securities at June 30, 1998 were $32.2 million compared to $22.9
million at December 31, 1997. This increase is attributable to the purchase of
$11.0 million in mortgage-backed securities, $3.0 million in U.S. government
agency callable notes and $4.0 million in U.S. government obligations, partially
offset by $5.8 million in U.S. government agency callable notes which were
called (all during the first quarter of 1998) and $2.9 million in prepayments
and amortization on mortgage-backed securities. Investment securities
classified as available for sale are reported at fair value, with unrealized
gains and losses excluded from earnings and reported in a separate component of
stockholders' equity. Investment securities held to maturity are stated at
cost, adjusted for amortization of bond premiums and accretion of bond
discounts.
The following table sets forth the amortized cost and fair value of investment
securities for each major security type at June 30, 1998.
June 30, 1998
------------------------------------------
Gross Gross Fair
Amortized Unrealized Unrealized Market
(in thousands) Cost Gain Loss Value
- -----------------------------------------------------------------------------
Available for sale:
U.S. government obligations $ 3,993 $ 1 $ (1) $ 3,993
Mortgage backed securities 23,851 108 (25) 23,934
Other 89 - - 89
------- ---- ------- -------
$27,933 $109 $ (26) $28,016
======= ==== ======= =======
Held to maturity:
U.S. government obligations $ 199 $ 1 - $ 200
U.S. government callable notes 4,000 - $ (13) 3,987
------- ---- ------- -------
$ 4,199 $ 1 $ (13) $ 4,187
======= ==== ======= =======
The tax effected net unrealized gain on investment securities classified as
available for sale was $52,000 at June 30, 1998, versus a net unrealized gain of
$72,000 at December 31, 1997.
15
The following table represents the contractual maturities for investments in
debt securities for each major security type at June 30, 1998.
June 30, 1998
-----------------------------------------
Maturing
-----------------------------------------
After One
Within But Within After
(in thousands) One Year Five Years Five Years Total
- -----------------------------------------------------------------------------
Available for sale:
U.S. government obligations - $ 2,007 $ 1,986 $ 3,993
Mortgage backed securities - - 23,934 23,934
-------- ---------- ------- -------
- $ 2,007 $25,920 $27,927
======== ========== ======= =======
Held to maturity:
U.S. government obligations $ 199 - - $ 199
U.S. government agency callable
notes 4,000 - - 4,000
-------- ---------- ------- -------
$4,199 - - $ 4,199
======== ========== ======= =======
LOANS HELD FOR SALE
Loans held for sale (all of which were residential mortgages carried at market
value) equaled $2.7 million at June 30, 1998 as compared to $3.6 million at
December 31, 1997, a decrease of $0.9 million. The outstanding dollar amount of
loans held for sale can vary greatly from period to period, affected by such
factors as mortgage origination levels, the timing and delivery of loan sales,
changes in market interest rates and asset/liability management strategies. At
June 30, 1998 the Bank had binding commitments for the sale of mortgage loans
held for sale totaling $2.3 million.
LOANS
Loans consisted of the following:
June 30, December 31,
----------------------
(in thousands) 1998 1997
- ---------------------------------------------------------
Real estate mortgage loans:
Residential $ 32,532 $ 33,251
Commercial 51,861 48,705
Real estate construction loans 1,320 1,955
Commercial and industrial loans 4,474 5,166
Consumer and other loans 14,043 15,227
-------- --------
$104,230 $104,304
======== ========
Loans declined $74,000 (or 0.7%) at June 30, 1998 as compared to December 31,
1997. The decline was attributable to pay offs in all categories of loans with
the exception of commercial mortgage loans. The level of pay offs increased
during the first and second quarters of 1998 as a result of favorable interest
rates to the borrowers.
16
ALLOWANCE FOR LOAN LOSSES ("ALLOWANCE")
The Company's Allowance was $2.7 million at June 30, 1998 and December 31, 1997.
The Allowance represented 2.62% and 2.56% of total loans, and 650.6% and 353.9%
of nonperforming loans, at June 30, 1998 and December 31, 1997, respectively.
The Allowance is maintained at a level believed adequate by management to absorb
potential losses inherent in the current loan portfolio in accordance with the
Bank's Allowance for Loan Loss Policy. Management's determination of the
adequacy of the Allowance is based on an evaluation of the portfolio, past and
expected loan loss experience, current economic conditions, trends in loan
outstandings and diversification of the loan portfolio, the results of the most
recent regulatory examinations, the results of loan portfolio reviews completed
by outside consultants, the nature and level of nonperforming assets, impaired
loans and loans that have been identified as potential problems, financial
condition of its borrowers, the adequacy of loan collateral and other relevant
factors. The Allowance is increased by provisions for loan losses charged
against income and recoveries on loans previously charged off. In evaluating
reserve adequacy, management places a high reliance upon the review of
individual commercial loan assets to determine whether or not loss exposure
exists. Loans classified substandard or worse are assigned individual allocated
loan loss reserves, where appropriate. Consistent with current guidelines, a
five percent reserve is also established against loans graded special mention
and various reserve percentages are established against the non-classified
balance of the commercial portfolio, as well as residential loans, construction
loans and consumer loans. This methodology relies upon a combination of current
and anticipated trends, along with historical trends, in establishing the
appropriate reserve percentages for the different portfolios.
While the current level of the Allowance is believed to be adequate,
deterioration in the local economy or real estate market, upward movements in
interest rates, the Company's large concentration in commercial real estate
loans or other factors could have an adverse effect on the performance of the
loan portfolio that could result in the need for an increased allowance for loan
losses.
NONPERFORMING ASSETS
Information with respect to nonperforming assets is set forth below:
June 30, December 31,
-------- ------------
(in thousands) 1998 1997
- ----------------------------------------- -------- ------------
Nonaccrual loans $ 243 $ 387
Accruing loans past due 90 days or more 55 101
Restructured loans - 265
Real estate owned and repossessions 121 65
----- -----
Total $ 419 $ 818
===== =====
The level of nonperforming assets declined $399,000 from December 31, 1997 to
June 30, 1998. $265,000 of the $399,000 decline in is attributable to the
reclassification of a restructured loan to performing status under the terms of
the restructure.
Since 1992 the Company has experienced a significant downward trend in the level
of nonperforming assets. Though management has not seen any indication that
asset quality is or might be deteriorating, the current level
17
of nonperforming assets is at such a low level that is considered unsustainable,
and as a result the level of nonperforming assets is considered much more likely
to increase than decrease in the future.
In addition, other factors could result in a decline in the quality of the loan
portfolio and an increase in the level of nonperforming assets. Deterioration
in the national or local economy, a rise in interest rates, or deterioration in
the real estate market could all adversely affect asset quality and cause an
increase in the level of nonperforming assets. Furthermore, the Company
continues to hold a large concentration of commercial real estate loans which
are vulnerable to default in the event there is deterioration in the real estate
market.
IMPAIRED LOANS
Management reviews loans on a case by case basis to determine which loans should
be classified as impaired. If management believes that it is probable that there
will be a loss of scheduled principal or interest, then such loans are
determined to be impaired. At June 30, 1998, the recorded investment in loans
for which impairment has been recognized in accordance with SFAS No. 114 totaled
$375,000, as compared to $717,000 at December 31, 1997. The corresponding
portion of the Allowance allocated as reserves ("Allocated Reserves") against
the total recorded investment in loans was $70,000 as of June 30, 1998 and
$91,000 as of December 31, 1997. An amount equal to $243,000 of the $375,000
total impaired loans was classified as either nonaccrual or troubled debt
restructures and the remaining $132,000 was classified as potential problem
loans at June 30, 1998. The income recorded on a cash basis relating to
impaired loans equaled $8,700 and $52,000 for the six months ended June 30, 1998
and 1997, respectively. The average balance of outstanding impaired loans was
$481,000 and $3.1 million at June 30, 1998 and June 30, 1997, respectively, with
an effective annualized yield of 3.63% and 3.4%, respectively. All of the
impaired loans were collateralized by real estate at June 30, 1998 and accounted
for by the lower of the fair value of the collateral (net of the $70,000
Allocated Reserves) or amortized loan value.
REAL ESTATE OWNED ("REO")
REO consists of properties acquired through mortgage loan foreclosure
proceedings, repossessions or in full or partial satisfaction of outstanding
loan obligations. At June 30, 1998, REO totaled approximately $121,000,
consisting of $107,000 in 1-4 family residential real estate, and $14,000 in
other repossessed assets.
LIQUIDITY - BANK
Deposits totaled $139.0 million at June 30, 1998, an increase of $24.0 million
(or 20.9%) from the level of $115.0 million at December 31, 1997.
Deposit balances were as follows:
June 30, December 31,
----------------------
(in thousands) 1998 1997
- -------------------------------------------------------------
Noninterest bearing demand deposits $ 9,004 $ 7,599
Interest bearing demand deposits 16,839 17,117
Savings and escrow deposits 59,791 34,465
Time deposits 53,368 55,810
-------- --------
Total $139,002 $114,991
======== ========
18
The increase in deposit levels is primarily attributable to a new savings
deposit program, High Rise Savings, implemented in the first quarter of 1998,
which increased savings deposits by $25.3 million. As a result of the
discontinuation of the advertising program and introductory rate, this increase
in savings account balances is not expected to continue at the same level as
experienced during the second quarter of 1998.
LIQUIDITY - COMPANY
On a parent company only basis ("parent"), the Company conducts no separate
operations. Its business consists of the operations of its banking subsidiary.
In addition to debt service relating to the Savings Bank Notes in the aggregate
principal amount of $2.8 million, the Company's expenses consist primarily of
Delaware franchise taxes associated with the Company's authorized capital stock,
and certain legal and various other expenses. Expenses, including certain audit
and professional fees, insurance and other expenses, are allocated between the
Bank and the Company based upon the relative benefits derived. At June 30,
1998, the parent's assets consisted of $111,000 in cash.
Payment of dividends by the Company on its stock is subject to various
restrictions. Among these restrictions is a requirement under Delaware
corporate law that dividends may be paid by the Company out of its surplus or,
in the event there is no surplus, out of its net profits for the fiscal year in
which the dividend is declared and/or the preceding fiscal year.
The principal source of cash for the Company would normally be a dividend from
the Bank; however, certain restrictions also exist regarding the ability of the
Bank to transfer funds to the Company in the form of cash dividends, loans or
advances. Maine corporate law generally provides that dividends may only be
paid out of unreserved and unrestricted earned surplus or unreserved and
unrestricted net earnings of the current fiscal year and the next preceding
fiscal year taken as a single period. Maine banking law also imposes certain
restrictions, including the requirement that the Bank establish and maintain
adequate levels of capital as set forth in rules adopted by the Maine Bureau of
Banking.
The Loan Agreement, dated July 24, 1996, between the Company and the Savings
Banks contains certain terms, restrictions and covenants, including covenants
restricting the amount of borrowings that may be incurred by the Company and the
Bank, restrictions regarding the conditions under which cash dividends may be
paid by the Company (including a prohibition of the payment of cash dividends to
its stockholders as long as the Company's debt-to-equity ratio on a parent-only
basis exceeds 30%), and a requirement that the Company and the Bank maintain
certain minimum capital ratios.
On March 25, 1998, September 25, 1997, March 26, 1997, July 24, 1996 and May 3,
1996, the Bank paid the Company cash dividends of $500,000, $1.0 million,
$500,000, $3.2 million and $200,000, respectively.
The Company suspended the payment of cash dividends to its stockholders in the
fourth quarter of 1989 and has not paid any cash dividends to its stockholders
since that time.
19
CAPITAL - BANK
The table below sets forth the regulatory capital requirements and capital
ratios for the Bank at June 30, 1998 and December 31, 1997:
June 30, December 31,
------------------------
(dollars in thousands) 1998 1997
- --------------------------------------------------------------------------------
Tier 1 capital (Leverage) to total assets /(1)/ratio
- ------------------------------------------------------
Qualifying capital $ 14,582 $ 13,877
Actual % 9.30% 9.63%
Minimum requirement for capital adequacy % 4.00% 4.00%
Average quarterly assets $156,826 $144,138
Tier 1 capital to risk-weighted assets
- ------------------------------------------------------
Qualifying capital $ 14,582 $ 13,877
Actual % 15.24% 15.03%
Minimum requirement for capital adequacy % 4.00% 4.00%
Total capital to risk-weighted assets
(Tier 1 and Tier 2)
- ------------------------------------------------------
Qualifying capital $ 15,797 $ 15,050
Actual % 16.51% 16.30%
Minimum requirement for capital adequacy % 8.00% 8.00%
Risk-weighted assets $ 95,703 $ 92,335
/(1)/ Calculated on an average quarterly basis.
CAPITAL - COMPANY
The table below sets forth the regulatory capital requirements and capital
ratios for the Company at June 30, 1998 and December 31, 1997:
June 30, December 31,
------------------------
(dollars in thousands) 1998 1997
- --------------------------------------------------------------------------------
Tier 1 capital (Leverage) to total assets /(1)/ratio
- ----------------------------------------------------
Qualifying capital $ 11,982 $ 11,106
Actual % 7.72% 7.71%
Minimum requirement for capital adequacy % 4.00-5.00% 4.00-5.00%
Average quarterly assets $ 155,300 $ 144,004
Tier 1 capital to risk-weighted assets
- ------------------------------------------------------
Qualifying capital $ 11,982 $ 11,106
Actual % 12.55% 12.02%
Minimum requirement for capital adequacy % 4.00% 4.00%
Total capital to risk-weighted assets
(Tier 1 and Tier 2)
- ------------------------------------------------------
Qualifying capital $ 13,195 $ 12,279
Actual % 13.82% 13.29%
Minimum requirement for capital adequacy % 8.00% 8.00%
Risk-weighted assets $ 95,509 $ 92,378
/(1)/ Calculated on an average quarterly basis.
20
Item 3. Quantitative and Qualitative Disclosures About Market Risk
- -------------------------------------------------------------------
Not applicable.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
- -------------------------
As of June 30, 1998, there were various claims and lawsuits pending against
the Company incidental to the ordinary course of business. In the opinion of
management, after consultation with legal counsel, resolution of these matters
is not expected to have a material effect on the Company's consolidated
financial position or results of operations.
Item 2. Changes in Securities and Use of Proceeds
- --------------------------------------------------
Not applicable.
Item 3. Defaults Upon Senior Securities
- ---------------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
- -----------------------------------------------------------
(a) The 1998 Annual Meeting of Stockholders of the Company was held on May 19,
1998.
(b) Nominees Gregory T. Caswell, David B. Hawkes, Sr. and Charles A. Stewart III
were elected for three-year terms to expire in 2001. The continuing
directors are Dennis D. Byrd, MaryEllen FitzGerald, Roger E. Klein, Normand
E. Simard and Edward K. Simensky.
(c) The results of the voting at the 1998 Annual Meeting of Stockholders
(pursuant to a record date of April 16, 1998) were as follows:
(i) Election of Directors: 1,113,670 shares were voted to elect nominees
Gregory T. Caswell, David B. Hawkes, Sr. and Charles A. Stewart III as
directors of the Company for three year terms and 96,101 shares were voted
to withhold authority.
(ii) Ratification of Coopers & Lybrand L.L.P. as Independent Public
Accountants for the year ending December 31, 1998. For: 1,146,234;
Against: 62,927; Abstain: 610.
(d) Not applicable.
Item 5. Other Information
- -------------------------
Not applicable.
21
Item 6. Exhibits and Reports on Form 8-K
- ----------------------------------------
(a) The exhibits that are filed with this Form 10-Q, or that are incorporated
herein by reference, are set forth below:
3.1(i) Restated Certificate of Incorporation (filed as Exhibit 3.1(i) to
Annual Report on Form 10-K for the year ended December 31, 1997, File No.
0-14087 ("1997 Form 10-K"), and incorporated herein by reference).
3.1(ii) Amended and Restated Bylaws (filed as Exhibit 3.1(ii) to 1997 Form
10-K, and incorporated herein by reference).
10.1 First Coastal Corporation Director's Deferred Compensation Plan
(filed as Exhibit 10.13 to Annual Report on Form 10-K for the year ended
December 31, 1993, File No. 0-14087, and incorporated herein by reference).
10.2 Agreement for Data Processing Services, dated February 28, 1996,
between Coastal Savings Bank and Data Dimensions Inc. (filed as Exhibit
10.12 to Annual Report on Form 10-K for the year ended December 31, 1995,
File No. 0-14087, and incorporated herein by reference).
10.3 First Coastal Corporation 1996 Stock Option and Equity Incentive
Plan (filed as Exhibit 10.13 to Amendment No. 3 to Annual Report on
Form 10-K on Form 10-K/A for the year ended December 31, 1995, File No.
0-14087, and incorporated herein by reference).
10.4 Loan Agreement, dated as of July 24, 1996, among First Coastal
Corporation and Androscoggin Savings Bank, Bangor Savings Bank, Machias
Savings Bank and Norway Savings Bank (collectively, the "Lenders") and
Machias Savings Bank, as agent (filed as Exhibit 10.9 to Quarterly Report
on Form 10-Q for the Quarter Ended June 30, 1996 ("June 1996 Form 10-Q"),
and incorporated herein by reference).
10.5 Stock Pledge Agreement, dated as of July 24, 1996, between First
Coastal Corporation and Machias Savings Bank, for itself and as agent for
the Lenders (filed as Exhibit 10.10 to June 1996 Form 10-Q, and
incorporated herein by reference).
10.6 Promissory Note, dated July 24, 1996, by First Coastal Corporation
for the benefit of Androscoggin Savings Bank (filed as Exhibit 10.11 to
June 1996 Form 10-Q, and incorporated herein by reference).
10.7 Promissory Note, dated July 24, 1996, by First Coastal Corporation
for the benefit of Bangor Savings Bank (filed as Exhibit 10.12 to June 1996
Form 10-Q, and incorporated herein by reference).
10.8 Promissory Note, dated July 24, 1996, by First Coastal Corporation
for the benefit of Machias Savings Bank (filed as Exhibit 10.13 to June
1996 Form 10-Q, and incorporated herein by reference).
22
10.9 Promissory Note, dated July 24, 1996, by First Coastal Corporation
for the benefit of Norway Savings Bank (filed as Exhibit 10.14 to June 1996
Form 10-Q, and incorporated herein by reference).
10.10 Employment Agreement, dated as of July 31, 1996, among Coastal
Savings Bank, First Coastal Corporation and Dennis D. Byrd (filed as
Exhibit 10.15 to June 1996 Form 10-Q, and incorporated herein by
reference).
10.11 Employment Agreement, dated as of July 31, 1996, among Coastal
Savings Bank, First Coastal Corporation and Gregory T. Caswell (filed as
Exhibit 10.16 to June 1996 Form 10-Q, and incorporated herein by
reference).
10.12 Rights Agreement, dated as of February 25, 1998, between First
Coastal Corporation and ChaseMellon Shareholder Services, L.L.C. (filed as
Exhibit No. 1 to Current Report on Form 8-K, filed March 3, 1998, and
incorporated herein by reference).
27 Financial Data Schedule (filed herewith).
(b) No Reports on Form 8-K were filed by the Company during the second quarter
1998.
23
FIRST COASTAL CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
FIRST COASTAL CORPORATION
Date: August 11, 1998 By: /s/ Gregory T. Caswell
-----------------------------
Gregory T. Caswell
President and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrant and
in the capacities and on the dates indicated.
Date: August 11, 1998 By: /s/ Gregory T. Caswell
-----------------------------
Gregory T. Caswell
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 11, 1998 By: /s/ Dennis D. Byrd
-----------------------------
Dennis D. Byrd
Treasurer
(Principal Financial and Accounting
Officer)
24
EXHIBIT INDEX
Exhibit No. Description of Exhibit
- ----------- ----------------------
3.1(i) Restated Certificate of Incorporation (filed as Exhibit 3.1(i) to
Annual Report on Form 10-K for the year ended December 31, 1997, File
No. 0-14087 ("1997 Form 10-K"), and incorporated herein by reference).
3.1(ii) Amended and Restated Bylaws (filed as Exhibit 3.1(ii) to 1997 Form
10-K, and incorporated herein by reference).
10.1 First Coastal Corporation Director's Deferred Compensation Plan (filed
as Exhibit 10.13 to Annual Report on Form 10-K for the year ended
December 31, 1993, File No. 0-14087, and incorporated herein by
reference).
10.2 Agreement for Data Processing Services, dated February 28, 1996,
between Coastal Savings Bank and Data Dimensions Inc. (filed as
Exhibit 10.12 to Annual Report on Form 10-K for the year ended
December 31, 1995, File No. 0-14087, and incorporated herein by
reference).
10.3 First Coastal Corporation 1996 Stock Option and Equity Incentive Plan
(filed as Exhibit 10.13 to Amendment No. 3 to Annual Report on Form
10-K on Form 10-K/A for the year ended December 31, 1995, File
No. 0-14087, and incorporated herein by reference).
10.4 Loan Agreement, dated as of July 24, 1996, among First Coastal
Corporation and Androscoggin Savings Bank, Bangor Savings Bank,
Machias Savings Bank and Norway Savings Bank (collectively, the
"Lenders") and Machias Savings Bank, as agent (filed as Exhibit 10.9
to Quarterly Report on Form 10-Q for the Quarter Ended June 30, 1996
("June 1996 Form 10-Q"), and incorporated herein by reference).
10.5 Stock Pledge Agreement, dated as of July 24, 1996, between First
Coastal Corporation and Machias Savings Bank, for itself and as agent
for the Lenders (filed as Exhibit 10.10 to June 1996 Form 10-Q, and
incorporated herein by reference).
10.6 Promissory Note, dated July 24, 1996, by First Coastal Corporation for
the benefit of Androscoggin Savings Bank (filed as Exhibit 10.11 to
June 1996 Form 10-Q, and incorporated herein by reference).
10.7 Promissory Note, dated July 24, 1996, by First Coastal Corporation for
the benefit of Bangor Savings Bank (filed as Exhibit 10.12 to June
1996 Form 10-Q, and incorporated herein by reference).
10.8 Promissory Note, dated July 24, 1996, by First Coastal Corporation for
the benefit of Machias Savings Bank (filed as Exhibit 10.13 to June
1996 Form 10-Q, and incorporated herein by reference).
10.9 Promissory Note, dated July 24, 1996, by First Coastal Corporation for
the benefit of Norway Savings Bank (filed as Exhibit 10.14 to June
1996 Form 10-Q, and incorporated herein by reference).
10.10 Employment Agreement, dated as of July 31, 1996, among Coastal Savings
Bank, First Coastal Corporation and Dennis D. Byrd (filed as Exhibit
10.15 to June 1996 Form 10-Q, and incorporated herein by reference).
10.11 Employment Agreement, dated as of July 31, 1996, among Coastal Savings
Bank, First Coastal Corporation and Gregory T. Caswell (filed as
Exhibit 10.16 to June 1996 Form 10-Q, and incorporated herein by
reference).
10.12 Rights Agreement, dated as of February 25, 1998, between First Coastal
Corporation and ChaseMellon Shareholder Services, L.L.C. (filed as
Exhibit No. 1 to Current Report on Form 8-K, filed March 3, 1998, and
incorporated herein by reference).
27 Financial Data Schedule (filed herewith).