SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
---------------------------------
FORM 10-Q
[Mark One]
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _________________ to _________________
Commission File Number 0-27672
NORTH CENTRAL BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
Iowa 42-1449849
---- ----------
(State or other jurisdiction of (I. R. S. Employer
incorporation or organization) Identification Number)
825 Central Avenue Fort Dodge, Iowa 50501
--------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code #(515)576-7531
None
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 during
the past 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
Class Outstanding at May 7, 1997
----- --------------------------
(Common Stock, $.01 par value) 3,319,455
NORTH CENTRAL BANCSHARES, INC.
INDEX
Page
----
Part I. Financial Information
Item 1. Consolidated Condensed Financial Statements
(unaudited) 1 to 5
Consolidated Condensed Statements of
Financial Condition at March 31, 1997 and
December 31, 1996 1
Consolidated Condensed Statements of Income
for the three months ended March 31, 1997
and 1996 2
Consolidated Condensed Statements of Cash
Flows for the three months ended March 31,
1997 and 1996 3
Notes to Consolidated Condensed Financial
Statements 4 & 5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations 6 to 10
Item 3. Quantitative and Qualitative Disclosures
About Market Risk 10
Part II. Other Information 11 & 12
Items 1 through 6 11
Signatures 12
Exhibits
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
March 31, December 31,
ASSETS 1997 1996
------------ -------------
Cash:
Interest-bearing $ 2,237,345 $ 2,973,490
Noninterest-bearing 775,894 963,325
Securities available for sale 23,381,607 23,103,614
Securities held to maturity 999,956 3,499,528
Loans receivable, net 168,923,201 165,831,040
Accrued interest receivable 1,285,996 1,327,733
Foreclosed real estate 135,643 128,471
Premises and equipment, net 1,825,014 1,780,392
Rental real estate 2,096,108 1,775,844
Title plant 925,256 968,747
Deferred taxes 202,000 198,000
Prepaid expenses and other assets 708,530 542,351
------------ ------------
Total assets $203,496,550 $203,092,535
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $132,374,427 $129,722,044
Other borrowed funds 19,300,000 22,335,000
Advances from borrowers for taxes and insurance 470,567 845,488
Dividend payable 214,341 230,344
Income taxes payable 603,149 182,826
Accrued expenses and other liabilities 494,940 542,026
------------ ------------
Total liabilities 153,457,424 153,857,728
------------ ------------
COMMITMENTS
STOCKHOLDERS' EQUITY
Preferred stock -- --
Common Stock 40,111 40,111
Additional paid-in capital 37,825,648 37,796,611
Retained earnings, substantially restricted 21,206,334 20,531,604
Unrealized gain on securities available for sale, net of
income taxes 121,399 73,097
Treasury stock at cost (7,789,661) (7,789,661)
Unearned shares, employee stock ownership plan (1,364,705) (1,416,955)
------------ ------------
Total stockholders' equity 50,039,126 49,234,807
------------ ------------
Total liabilities and stockholders' equity $203,496,550 $203,092,535
============ ============
See Notes to Consolidated Condensed Financial Statements.
-1-
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
1997 1996
---------- ----------
Interest Income:
Loans receivable:
First mortgage loans $2,980,603 $2,677,727
Consumer loans 523,467 460,225
Securities and cash deposits 400,878 439,588
---------- ----------
3,904,948 3,577,540
---------- ----------
Interest expense:
Deposits 1,550,267 1,555,683
Other borrowed funds 304,024 280,882
---------- ----------
1,854,291 1,836,565
---------- ----------
Net Interest Income 2,050,657 1,740,975
Provision for loan losses 60,000 60,000
---------- ----------
Net interest income after provision for loan losses 1,990,657 1,680,975
---------- ----------
Noninterest income:
Fees and service charges 154,364 124,637
Abstract fees 254,810 195,640
Gain on sale of securities available for sale -- 13,774
Other income 75,211 88,191
---------- ----------
Total noninterest income 484,385 422,242
---------- ----------
Noninterest expense:
Salaries and employee benefits 524,183 582,542
Premises and equipment 103,814 111,060
Data processing 64,419 60,135
SAIF deposit insurance premiums 21,069 73,109
Other expenses 396,145 248,859
---------- ----------
Total noninterest expense 1,109,630 1,075,705
---------- ----------
Income before income taxes 1,365,412 1,027,512
Provision for income taxes 476,262 371,634
---------- ----------
Net Income $ 889,150 $ 655,878
========== ==========
Earnings per share $ 0.27 $ 0.17
========== ==========
Dividends declared per common share $ 0.0625 $ 0.0922
========== ==========
See Notes to Consolidated Condensed Financial Statements.
-2-
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
1997 1996
----------- -------------
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 889,150 $ 655,878
Adjustments to reconcile net income to net cash provided by operating activities:
Provision for loan losses 60,000 60,000
Depreciation 54,544 54,621
Amortization and accretion 29,426 (44,512)
Deferred taxes (30,925) (57,750)
Effect of contribution to employee stock ownership plan 81,287 9,809
(Gain) on sale of foreclosed real estate and loans, net (2,855) (9,103)
(Gain) on sale of securities available for sale -- (13,774)
Loss on disposal of equipment 5,024 1,752
Change in assets and liabilities:
(Increase) decrease in accrued interest receivable 41,737 (18,439)
Decrease in income taxes receivable -- 31,766
(Increase) in prepaid expenses and other assets (166,179) (150,218)
Increase in income taxes payable 420,323 394,982
(Decrease) in accrued expenses and other liabilities (46,757) (93,135)
----------- ------------
Net cash provided by operating activities 1,334,775 821,877
----------- ------------
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease in loans 1,632,421 112,749
Purchase of loans (4,940,253) (2,378,800)
Proceeds from sale of loans 161,381 --
Proceeds from sale of securities available for sale -- 53,891
Purchase of securities available for sale (236,948) (2,461,865)
Proceeds from maturities of securities held to maturity 2,500,000 1,500,000
Purchase of premises and equipment (124,640) (109,400)
Proceeds from sale of premises and equipment 30,450 --
Purchase of rental real estate (330,264) (1,456)
Proceeds from sale of title plant 43,491 --
Other (6,107) 88,799
----------- ------------
Net cash (used in) investing activities (1,270,469) (3,196,082)
----------- ------------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 2,652,383 1,656,951
(Decrease) in advances from borrowers for taxes and insurance (374,921) (379,619)
Net change in short term borrowings (7,000,000) (16,000,000)
Proceeds from other borrowed funds 4,000,000 --
Payments of other borrowings (35,000) --
Proceeds from issuance of 2,625,467 shares of common stock -- 25,412,159
Payments for expenses incurred relating to conversion to stock form -- (790,145)
Dividends paid (230,344) (111,053)
----------- ------------
Net cash provided by (used in) financing activities (987,882) 9,788,293
----------- ------------
Net increase (decrease) in cash (923,576) 7,414,088
CASH
Beginning 3,936,815 3,071,642
----------- ------------
Ending $ 3,013,239 $ 10,485,730
=========== ============
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION
Cash payments for:
Interest paid to depositors $ 1,524,121 $ 1,544,569
Interest paid on borrowings 344,648 315,251
Income taxes 86,864 --
See Notes to Consolidated Condensed Financial Statements.
-3-
ITEM 1.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
1. SIGNIFICANT ACCOUNTING POLICIES
The consolidated condensed financial statements for the three month period ended
March 31, 1997 and 1996 are unaudited. In the opinion of the management of North
Central Bancshares, Inc. (the "Company" or the "Registrant") these financial
statements reflect all adjustments, consisting only of normal recurring
accruals, necessary to present fairly these consolidated financial statements.
The results of operations for the interim periods are not necessarily indicative
of results which may be expected for an entire year. Certain information and
footnote disclosure normally included in complete financial statements prepared
in accordance with generally accepted accounting principles have been omitted in
accordance with the requirements for interim financial statements. The financial
statements and notes thereto should be read in conjunction with the Company's
1996 Annual Report on Form 10-K.
The consolidated condensed financial statements include the accounts of the
Company and its wholly-owned subsidiaries (See Note 2). All significant
intercompany balances and transactions have been eliminated in consolidation.
2. REORGANIZATION
The Company was organized on December 5, 1995 at the direction of the Board of
Directors of First Federal Savings Bank of Fort Dodge (the "Bank") for the
purpose of acquiring all of the capital stock of the Bank, in connection with
the conversion of the Bank, and North Central Bancshares, M.H.C. (the "Mutual
Holding Company" or "MHC") from the mutual to the stock holding company
structure (these transactions are collectively referred to as the
"Reorganization"). On March 20, 1996, upon completion of the Reorganization, the
Company issued an aggregate of 4,011,057 shares of its common stock, 1,385,590
shares of which were issued in exchange for all of the Bank's issued and
outstanding shares, except for shares owned by the MHC which were cancelled, and
2,625,467 shares of which were sold in Subscription and Community Offerings (the
"Offering") at a price of $10.00 per share, with gross proceeds amounting to
$26,254,670. In addition, the Company replaced the Bank as the issuer listed on
The Nasdaq Stock Market.
At this time, the Company conducts business as a unitary savings and loan
holding company and the principal business of the Company consists of the
operation of its wholly owned subsidiary, the Bank.
3. EARNINGS PER SHARE
The earnings per share amounts were computed using the weighted average number
of shares outstanding during the periods presented. In accordance with Statement
of Position No. 93-6, Employers' Accounting for Employee Stock Ownership Plans,
issued by the American Institute of Certified Public Accountants, shares owned
by the Bank's Employee Stock Ownership Plan that have not been committed to be
released are not considered to be outstanding for the purpose of computing
earnings per share. For the three month periods ended March 31, 1997 and 1996,
the weighted average number of shares outstanding was 3,282,238 and 3,843,710,
respectively. The number of shares outstanding for the three month period ended
at March 31, 1996 was restated to reflect the conversion ratio effected as part
of the Reorganization.
4. DIVIDENDS
On February 28, 1997, the Company declared a cash dividend on its common stock,
payable on April 7, 1997 to stockholders of record as of March 14, 1997, equal
to $0.0625 per share.
-4-
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (Continued)
5. PENDING ACCOUNTING PRONOUNCEMENTS
In June 1996, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS No.
125"). SFAS No. 125 is effective for transfers and servicing of financial assets
and extinguishments of liabilities occurring after December 31, 1996, and is to
be applied prospectively. The Company adopted SFAS No. 125 on January 1, 1997
and its adoption has not had a material effect on the Company's financial
condition or results of operations.
In February 1997, FASB issued Statement of Financial Accounting Standards No.
128, "Earnings per Share" ("SFAS No. 128"). SFAS No. 128 specifies the
computation, presentation, and disclosure requirements for earnings per share
("EPS") for entities with publicly held common stock or potential common stock.
This statement simplifies the standards for computing EPS previously found in
Accounting principles Board Opinion No. 15 ("APB No. 15"). It replaces the
presentation of primary EPS with a presentation of Basic EPS, and requires dual
presentation of basic and diluted EPS. Basic EPS is computed by dividing net
income by the weighted average number of common shares outstanding for the
period. Diluted EPS 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. SFAS No. 128 is effective for financial
statements issued for periods ending after December 15, 1997 and requires
restatement of all prior-period EPS data presented. Upon adoption of SFAS No.
128, the change will not result in a material change in the Company's EPS
presentation from primary to basic EPS and from fully diluted to diluted EPS.
In February 1997, the FASB issued Statement of Financial Accounting Standards
No. 129 ("SFAS No. 129") "Disclosure of Information about Capital Structure."
SFAS No. 129 requires nonpublic entities to include disclosure requirements
regarding capital structure as specified in APB Opinion No. 15, "Earnings Per
Share." These disclosure requirements are effective for financial statements for
periods ending after December 15, 1997. The adoption of SFAS No. 129 will have
no effect on the financial condition or results of operations.
6. RECENT DEVELOPMENTS
On April 22, 1997, the Company announced a stock repurchase program to begin on
or about April 28, 1997. The program authorizes the Company to purchase up to
five percent of its 3,429,455 outstanding shares of common stock during the next
twelve months. During the quarter ended March 31, 1997, the Company did not
repurchase any shares of the Company's common stock.
-5-
ITEM 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
EXPLANATORY NOTE
This Quarterly Report on Form 10-Q contains forward-looking statements
consisting of estimates with respect to the financial condition, results of
operations and business of the Company that are subject to various factors which
could cause actual results to differ materially from these estimates. These
factors include, changes in general, economic and market, and legislative and
regulatory conditions, and the development of an adverse interest rate
environment that adversely affects the interest rate spread or other income
anticipated from the Company's operations and investments.
FINANCIAL CONDITION
Total assets remained relatively stable at $203.5 million at March 31, 1997
compared to $203.1 million at December 31, 1996. Securities held to maturity
decreased $2.5 million, or 71.4%, primarily due to the maturities of several
U.S. Treasury Notes. Total loans receivable, net, increased by $3.1 million, or
1.9%, from December 31, 1996, due primarily to originations of $4.2 million of
first mortgage loans secured primarily by one-to-four family residences,
purchases of $4.9 million of first mortgage loans secured by one-to-four family
and multi-family residences and originations of $2.1 million of second mortgage
loans, which originations and purchases were offset in part by payments and
prepayments of loans (of approximately $9.1 million). Deposits increased $2.7
million, or 2.0%, from $129.7 million at December 31, 1996 to $132.4 million at
March 31, 1997, primarily due to increases in NOW and money market savings
accounts, due to normal market fluctuations. Other borrowings, primarily Federal
Home Loan Bank of Des Moines ("FHLB") advances, decreased by $3.0 million, to
$19.3 million at March 31, 1997 from $22.3 million at December 31, 1996,
primarily due to the repayment of certain outstanding FHLB advances with the
proceeds from deposit increases. Total stockholders' equity increased $804,000,
from $49.2 million at December 31, 1996 to $50.0 million at March 31, 1997,
primarily due to earnings, offset by dividends declared.
CAPITAL
The Company's total stockholders' equity increased by $804,000 to $50.0 million
at March 31, 1997 from $49.2 million at December 31, 1996. The unrealized gain
on securities available for sale increased by $48,000 to $121,000 at March 31,
1997 from $73,000 at December 31, 1996. The unearned shares from the Employee
Stock Ownership Plan (the "ESOP") decreased by $52,000 to $1.4 million at March
31, 1997 from $1.4 million at December 31, 1996, due to the release of shares by
the ESOP to employees of the Bank.
The Office of Thrift Supervision (the "OTS") requires that the Bank meet minimum
tangible, leverage (core) and risk-based capital requirements. As of March 31,
1997, the Bank exceeded all of its regulatory capital requirements. The Bank's
required, actual and excess capital levels as of March 31, 1997 are as follows:
-6-
Amount Percentage of Assets
-------- ---------------------
(dollars in thousands)
Tangible capital:
Capital Level $44,936 22.27%
Less Requirement 3,027 1.50%
------- -----
Excess $41,909 20.77%
======= =====
Core capital:
Capital level $44,936 22.27%
Less Requirement 6,055 3.00%
------- -----
Excess $38,881 19.27%
======= =====
Risk-based capital:
Capital level $46,354 41.09%
Less Requirement 9,025 8.00%
------- -----
Excess $37,329 33.09%
======= =====
LIQUIDITY
The Company's primary sources of funds is cash provided by investing activities
and includes principal and interest payments on loans, deposits, maturities of
securities and other investments, and earnings and funds provided by operations.
During the first quarter of 1997 and 1996, principal payments on loans totalled
$9.1 million and $7.5 million, respectively. The net increases in deposits
during the first quarter of 1997 and 1996 totalled $2.7 million and $1.7
million, respectively. During the first quarter of 1997 and 1996, the proceeds
from the maturities and sales of securities totalled $2.5 million and $1.6
million, respectively. Cash provided from operating activities during the first
quarter of 1997 and 1996 totalled $1.4 million and $822,000, respectively, of
which $889,000 and $656,000, respectively, represented net income of the
Company. In the first quarter of 1996, the Company had net proceeds from the
Reorganization of $24.6 million. The Company's primary use of funds is cash used
to originate and purchase loans, repayment of borrowed funds and other financing
activities. During the first quarter of 1997 and 1996, the Company's gross
purchases and origination of loans totalled $12.6 million and $9.4 million,
respectively. The net decrease in borrowed funds during the first quarter of
1997 and 1996 totalled $3.0 million and $16.0 million, respectively, due to the
repayment of FHLB advances with the proceeds of the Reorganization. For
additional information about cash flows from the Company's operating, financing
and investing activities, see Statements of Cash Flows in the Condensed
Consolidated Financial Statements.
OTS regulations require that thrift institutions such as the Bank maintain an
average daily balance of liquid assets (cash, certain time deposits, banker's
acceptances and specified U.S. government, state or federal agency obligations)
equal to a monthly average of not less than 5% of their net withdrawable
deposits, plus short term borrowings. At March 31, 1997, the Bank's liquidity
position was $9.6 million or 6.83% of liquid assets, compared to $13.1 million
or 9.11% at December 31, 1996. The decrease of $3.5 million was primarily due to
the maturities of several U. S. Treasury Notes.
OTS regulations also require that thrift institutions such as the Bank maintain
an average daily balance of short term liquid assets (cash, certain time
deposits, banker's acceptances and specified U.S. government, state or federal
agency obligations) equal to a monthly average of not less than 1% of their net
withdrawable deposits, plus short term borrowings. At March 31, 1997, the Bank's
short term liquidity position was $3.1 million or 2.2% of short term liquid
assets, compared to $4.1 million or 2.84% at December 31, 1996.
Stockholders' equity totaled $50.0 million at March 31, 1997 compared to $49.2
million at December 31, 1996, reflecting the Company's earnings for the quarter,
the amortization of the unallocated portion of shares held by the ESOP,
dividends paid on common stock and the change in the net unrealized gains on
securities, net of taxes.
On January 10, 1997, the Company paid a quarterly cash dividend equal to $0.0625
per share on common stock outstanding as of the close of business on December
12, 1996, aggregating $230,000. On February 28, 1997, the Company declared a
quarterly cash dividend of $0.0625 per share payable on April 7, 1997 to
shareholders of record as of the close of business on March 14, 1997 aggregating
$214,000.
-7-
RESULTS OF OPERATIONS
Interest Income. Interest income increased by $327,000 to $3.9 million for the
three months ended March 31, 1997 compared to $3.6 million for the three months
ended March 31, 1996. The increase in interest income was primarily due to a
$18.9 million increase in the average balance of interest earning assets
(primarily first and second mortgage loans) to $197.8 million for the three
months ended March 31, 1997, from $178.9 million for the comparable 1996 period,
due to the investment of a portion of the proceeds from the Reorganization. The
increase in the average balance in first mortgage loans and consumer loans
(primarily second mortgage loans) generally reflects an increase over the past
twelve months in originations of first and second mortgage loans and purchases
of first mortgage loans secured by one-to-four family residences and multi-
family residences, which were offset, in part, by payments and prepayments on
such loans. See "Financial Condition." The impact of the increase in the average
balances of first mortgage and consumer loans was offset in part by a decrease
in the average yield on first mortgage loans, consumer loans and securities
available for sale. The average yield on first mortgage loans decreased to 8.10%
for the three months ended March 31, 1997 from 8.14% for the three months ended
March 31, 1996, primarily due to a general decrease in market interest rates.
The average yield on consumer loans decreased to 9.58% for the three months
ended March 31, 1997 from 9.63% for the three months ended March 31, 1996, also
primarily due to a general decrease in market interest rates. The average
balance of securities held to maturity decreased $12.2 million, or 82.9%, and
such securities were in part, replaced by lower yielding securities available
for sale. The average yield on interest earning assets decreased from 8.01% for
the three months ended March 31, 1996 to 7.92% for the three months ended March
31, 1997, due to general market interest rates.
Interest Expense. Interest expense increased by $18,000 to $1.9 million for the
three months ended March 31, 1997 compared to $1.8 million for the three months
ended March 31, 1996. The increase in interest expense was due in part to a $1.5
million increase in the average balance of deposits to $128.1 million for the
three months ended March 31, 1997 from $126.7 million for the comparable 1996
period due to an increase in the average balance of certificates of deposit and
money market savings accounts, which have relatively higher costs than the
Company's other deposit products. The increase in interest expense resulting
from increases in the average balance of certificates of deposit and money
market savings accounts were offset in part by decreases in the average balance
of lower costing passbook savings accounts. The increase in interest expense was
also due in part to a $1.7 million increase in the average balance of borrowed
funds to $20.6 million for the three months ended March 31, 1997 from $18.9
million for the comparable 1996 period. The average cost of interest bearing
liabilities remained relatively stable for the three months ended March 31,
1997.
Net Interest Income. Net interest income before provision for loan losses
increased by $310,000 to $2.1 million for the three months ended March 31, 1997
from $1.7 million for the three months ended March 31, 1996. The increase is
primarily due to the increase in the excess of average interest earning assets
over average interest bearing liabilities, and reflects the use of a portion of
the proceeds from the Reorganization. The impact of this net increase was offset
in part by the decrease in the Company's interest rate spread (i.e., the
difference in the average yield on assets and average cost of liabilities) from
2.94% for the three months ended March 31, 1996 to 2.86% for the three months
ended March 31, 1997.
The following tables set forth certain information relating to the Company's
average balance sheets and reflect the average yield on assets and average cost
of liabilities for the three month periods ended March 31, 1997 and 1996.
-8-
RESULTS OF OPERATIONS (Continued)
For Three Months Ended March 31,
------------------------------------------------------------
At March 31, 1997 1997 1996
----------------- ------------------------------ ----------------------------
Average Average
Yield/ Average Yield/ Average Yield/
Balance Cost Balance Interest Cost Balance Interest Cost
------- ------- -------- -------- -------- -------- -------- -------
(Dollars in thousands)
Assets:
Interest-earning assets:
First mortgage loans................. $148,606 8.11% $147,276 $2,981 8.10% $131,602 $2,678 8.14%
Consumer loans....................... 22,337 9.53 22,168 523 9.58 19,230 460 9.63
Securities available for sale........ 23,188 5.68 23,079 325 5.71 9,476 146 6.18
Securities held to maturity.......... 1,000 6.35 2,500 41 6.71 14,662 244 6.70
Interest bearing cash................ 2,237 5.00 2,783 35 5.05 3,962 50 5.08
-------- ------ -------- ------ ------ -------- ------ ------
Total interest-earning assets...... 197,368 7.94% 197,806 $3,905 7.92% 178,932 $3,578 8.01%
------ ------ ------ ------ ------
Noninterest-earning assets............. 6,129 6,605 4,278
-------- -------- --------
Total assets....................... $203,497 $204,411 $183,210
======== ======== ========
Liabilities and Equity:
Interest-bearing liabilities:
NOW and money market savings......... $ 22,172 2.95% $ 20,696 $ 146 2.87% $ 17,830 $ 124 2.80%
Passbook savings..................... 17,495 2.25 17,653 98 2.25 20,875 119 2.29
Certificates of Deposit.............. 89,957 5.88 89,789 1,306 5.90 87,967 1,313 6.00
Borrowed funds....................... 19,300 5.82 20,627 304 5.98 18,932 281 5.97
-------- ------ -------- ------ ------ -------- ------ ------
Total interest-bearing liabilities..... 148,924 5.01% 148,765 $1,854 5.06% 145,604 $1,837 5.07%
------ ------ ------ ------ -----
Noninterest-bearing liabilities........ 4,534 5,913 4,485
-------- -------- --------
Total liabilities.................. 153,458 154,678 150,089
Equity................................. 50,039 49,733 33,121
-------- -------- --------
Total liabilities and equity....... $203,497 $204,411 $183,210
======== ======== ========
Net interest income.................... $2,051 $1,741
====== ======
Net interest rate spread............... 2.93% 2.86% 2.94%
====== ====== ======
Net interest margin.................... 4.16% 4.15% 3.89%
====== ====== ======
Ratio of average interest-earning
assets to average interest-bearing
liabilities.......................... 132.53% 132.97% 122.89%
====== ====== ======
Provision for Loan Losses. The Company's provision for loan losses was $60,000
for each of the three months ended March 31, 1997 and 1996. The Company
establishes provisions for loan losses, which are charged to operations, in
order to maintain the allowance for loan losses at a level which is deemed to be
appropriate based upon an assessment of prior loss experience, industry
standards, past due loans, economic conditions, the volume and type of loans in
the Bank's portfolio, which includes a significant amount of multifamily loans,
substantially all of which are purchased and are collateralized by properties
located outside of the Bank's market area, and other factors related to the
collectibility of the Bank's loan portfolio. The net charge offs (recoveries)
were ($7,000) for the three months ended March 31, 1997 as compared to $2,000
for the three months ended March 31, 1996. The resulting allowance for loan
losses was $2.0 million at March 31, 1997 as compared to $2.0 million at
December 31, 1996 and $1.8 million at March 31, 1996. This increase in the
allowance for the first quarter of 1997 reflects the increase in total loans
from $153.2 million at March 31, 1996 to $172.2 million at March 31, 1997. The
level of nonperforming loans increased to $306,000 at March 31, 1997 from
$184,000 at December 31, 1996 and $194,000 at March 31, 1996. Management
believes that the allowance for loan losses is adequate. While management
estimates loan losses using the best available information, such as independent
appraisals for significant collateral properties, no assurance can be made that
future adjustments to the allowance will not be necessary based on changes in
economic and real estate market conditions, further information obtained
regarding known problem loans, identification of additional problem loans, and
other factors, both within and outside of management's control.
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RESULTS OF OPERATIONS (Continued)
Noninterest Income. Total noninterest income increased by $62,000 to $484,000
for the three months ended March 31, 1997 from $422,000 for the three months
ended March 31, 1996. The increase is due to increases in fees and service
charges and abstract fees, offset by decreases in gain on sale of securities
available for sale. Fees and service charges increased $30,000, primarily due to
increases in overdraft fees, checking account fees and loan prepayment fees.
Abstract fees increased $59,000 due to increased sales volume, partially
attributable to the purchase of the assets of an abstract company in December,
1996. Noninterest income for the three months ended March 31, 1996 also reflects
gains on sales of securities available for sale of $14,000, while no such gains
were recorded for the corresponding three month period in 1997.
Noninterest Expense. Total noninterest expense increased by $34,000 to $1.1
million for the three months ended March 31, 1997 from $1.1 million for the
three months ended March 31, 1996. The increase is primarily due to increases in
other expenses, offset by decreases in salaries and employee benefits and SAIF
deposit insurance premiums. The decrease in salaries and benefits was primarily
a result of the costs incurred in the 1996 period related to the adoption of a
retirement plan for the benefit of the former chairman of the board, offset by
increased costs in the corresponding 1997 period associated with the ESOP,
normal salary increases and an increase in the number of employees. The decrease
in SAIF deposit insurance premiums was primarily due to lower assessment rates.
The increase in other expenses is primarily a result of higher expenditures for
professional fees, advertising costs and costs associated with the Bank's
investment in the Northridge Apartments Limited Partnership, which owns and
operates a 44-unit apartment complex in Fort Dodge, Iowa. The Company's
efficiency ratio for the three months ended March 31, 1997 and 1996 was 43.77%
and 49.73%, respectively. The Company's ratio of noninterest expense to average
assets for the three months ended March 31, 1997 and 1996 was 2.17% and 2.35%,
respectively.
Income Taxes. Income taxes increased by $105,000 to $476,000 for the three
months ended March 31, 1997 as compared to $372,000 for the three months ended
March 31, 1996. The increase was primarily due to an increase in pre-tax
earnings during the 1997 period as compared to the corresponding 1996 period.
Net Income. Net income totalled $889,000 for the three months ended March 31,
1997, compared to $656,000 for the same period in 1996.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Not applicable.
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PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27. Financial data schedule. (Only submitted with filing in
electronic format.)
Exhibit 99.1 Press Release (regarding the issuance of limited financial
information for the year ended December 31, 1996).
Exhibit 99.2 Press Release (regarding the declaration of a dividend).
Exhibit 99.3. Press Release (regarding the issuance of limited financial
information for the quarter ended March 31, 1997).
(b)Reports on Form 8-K
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
NORTH CENTRAL BANCSHARES, INC.
DATE: May 13, 1997 BY: /s/ David M. Bradley
David M. Bradley, CPA
Chairman, President and
Chief Executive Officer
DATE: May 13, 1997 BY: /s/ John L. Pierschbacher
John L. Pierschbacher, CPA
Principal Financial Officer
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