UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended March 31, 2001
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _________ to _________
Commission file number: 33-58832
FIRST CENTRAL BANCSHARES, INC.
(Exact name of small business issue as specified in its charter)
Tennessee
(State or other jurisdiction of incorporation or organization)
725 Highway 321 North, Lenoir City, Tennessee
(Address of principal executive office)
62-1482501
(I.R.S. Employer Identification No.)
37771-0230
(Zip Code)
Registrant's telephone number, including area code: (865) 986-1300
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to Section 12(g) of the Act: Common Stock (par
value $5.00 per share)
Indicate by mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes [x] No [ ]
Indicate by mark whether the registrant has filed all documents and reports
required to be filed by Sections 12, 13, or (15d) of the Securities Exchange Act
of 1934 subsequent to the distribution of securities under a plan confirmed by a
court.
Yes [x] No [ ]
The number of outstanding shares of the registrant's Common Stock, par
value $5.00 per share, was 564,361 on April 30, 2001.
Page 1
FORM 10-QSB
Index
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2001
(Unaudited) and December 31, 2000.....................................3
Condensed Consolidated Statements of Income for the
three months ended March 31, 2001 and 2000 (Unaudited)...............4
Condensed Consolidated Statements of Cash Flows for the
three months ended March 31, 2001 and 2000 (Unaudited)...............5
Condensed Consolidated Statements of Comprehensive
Income for the three months ended March 31, 2001
and 2000 (Unaudited).................................................6
Notes to Condensed Consolidated Financial Statements For the
three month periods ended March 31,2001
and 2000 (Unaudited).................................................7
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations..................8-13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings................................................13
Item 2. Changes in Securities............................................13
Item 3. Defaults upon Senior Securities..................................13
Item 4. Submission of Matters to a Vote of
Securities Holders...............................................13
Item 5. Other Information................................................13
Item 6. Exhibits and Reports on Form 8-K.................................13
Signatures....................................................................14
Page 2
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
March 31, December 31,
2001 2000
------ ------
- -ASSETS-
Cash and Due from Banks $ 5,008 $ 5,409
Federal Funds Sold 8,929 5,360
------- -------
Total Cash and Cash Equivalents 13,937 10,769
Investment Securities Available for Sale 33,008 33,614
Loans, Net 78,906 76,070
Premises and Equipment (Net) 4,712 4,769
Accrued Interest Receivable 756 1,038
Other Assets 212 320
-------- -----
TOTAL ASSETS $131,531 $126,580
========= =========
- -LIABILITIES AND STOCKHOLDERS' EQUITY-
Liabilities:
Deposits
Non-Interest Bearing $ 19,199 $ 18,541
Interest Bearing 99,644 96,518
-------- --------
Total Deposits 118,843 115,059
Securities Sold Under Agreement to Repurchase 811 258
Accrued Interest Payable 492 529
Other Liabilities 260 185
----- -----
Total Liabilities 120,406 116,031
--------- ---------
Stockholders' Equity:
Common Stock - Par Value $5.00, Authorized
2,000,000 Shares; Issued 564,361 Shares 2,822 2,822
Additional Paid-In Capital 5,430 5,430
Treasury Stock (130) (130)
Retained Earnings 2,865 2,608
Accumulated Other Comprehensive Income (Loss) 138 (181)
------ ------
Total Stockholders' Equity 11,125 10,549
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $131,531 $126,580
========= =========
See accompanying notes to financial statements.
Page 3
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Income
(Unaudited)
(In Thousands Except
per Share Information)
---------------------------
Three Months Ended
March 31,
---------------------------
2001 2000
------ ------
INTEREST INCOME
Loans $1,830 $1,644
Investment Securities 530 531
Federal Funds Sold 109 30
---- ----
Total Interest Income 2,469 2,205
------ ------
INTEREST EXPENSE
Deposits 1,267 1,106
Securities Sold Under
Agreement to Repurchase 9 20
Federal Funds Purchased -0- 1
---- --
Total Interest Expense 1,276 1,127
------ ------
Net Interest Income 1,193 1,078
PROVISION FOR LOAN LOSSES 51 10
----- -----
Net Interest Income After
Provision for Loan Losses 1,142 1,068
NONINTEREST INCOME
Service Charges on Demand Deposits 238 151
Loan Fees and Other Service Charges 103 103
Other 15 21
----- ----
Total Noninterest Income 356 275
---- ----
NONINTEREST EXPENSE
Salaries and Employee Benefits 593 526
Occupancy 108 102
Data Processing Fees 110 106
Furniture and Equipment 91 109
Federal Insurance Premiums 12 12
Advertising and Promotion 17 29
Office Supplies and Postage 65 63
Other 84 50
----- -----
Total Noninterest Expense 1,080 997
------ ----
INCOME BEFORE INCOME TAX 418 346
INCOME TAXES 161 128
---- -----
NET INCOME $ 257 $ 218
====== =====
BASIC EARNINGS PER COMMON SHARE $ 0.46 $ 0.41
====== ======
See accompanying notes to financial statements.
Page 4
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
Three Months Ended
March 31,
-------------------
2001 2000
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 257 $ 218
--------- ------
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Provision for Loan Losses 51 10
Depreciation 73 66
Loss on Sale of Fixed Assets 1 -0-
Decrease(Increase) in Interest Receivable 282 (8)
Increase(Decrease) in Interest Payable (37) (3)
Amortization of Premiums (Discounts) on
Investment Securities, Net (23) (5)
FHLB Stock Dividends (7) (6)
Increase (Decrease) in Other Assets (88) 51
Increase (Decrease) in Other Liabilities 75 (65)
-------- -----
Total Adjustments 327 40
-------- --------
Net Cash Provided by Operating Activities 584 258
-------- -------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Maturities, Principal Paydowns and
Redemption of Investment Securities Available
for Sale 8,092 175
Purchase of Investment Securities Available
for Sale (6,941) (4,919)
(Increase) Decrease in Loans (2,887) (2,225)
Purchase of Premises and Equipment (17) (120)
---- ------
Net Cash Used in Investing Activities (1,753) (7,089)
-------- --------
NET CASH FROM FINANCING ACTIVITIES
Increase in Deposits 3,784 1,893
Increase in Securities Sold
Under Agreement to Repurchase 553 460
Increase in Federal Funds Purchased -0- 765
---- ----
Net Cash Provided by Financing Activities 4,337 3,118
------- -------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 3,168 (3,713)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 10,769 8,501
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 13,937 $ 4,788
========= ========
Supplementary Disclosures of Cash Flow Information:
Cash Paid During the Period For:
Interest $ 1,313 $ 1,132
Income Taxes $ 4 $ -0-
Supplementary Disclosures of Noncash Investing Activities:
Change in Unrealized Loss on Investment Securities $ 515 $ 22
Change in Deferred Income Tax Benefit Associated with
Unrealized Loss on Investment Securities $ 196 $ 8
Change in Net Unrealized Loss on Investment Securities $ 319 $ 14
Issuance of Common Stock Dividend:
Par $ -0- $ 256
Additional Paid-in Capital $ -0- $ 1,073
Reduction in Retained Earnings Due to Issuance of
Common Stock $ -0- $ 1,329
See accompanying notes to financial statements.
Page 5
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Comprehensive Income
(Unaudited)
(In Thousands)
Three Months Ended
March 31,
----------------------
2001 2000
------ ------
Net Income $ 257 $ 218
------ ------
Other Comprehensive Income(Loss), Net of Tax:
Unrealized Gains/Losses on Investment Securities 515 (22)
Less Income Taxes Related to Unrealized
Gains/Losses on Investment Securities (196) 8
------ ---
Other Comprehensive Income(Loss), Net of Tax 319 (14)
----- -----
Comprehensive Income $ 576 $ 204
====== ======
See accompanying notes to financial statements.
Page 6
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2001 and 2000
NOTE 1 - ORGANIZATION AND BUSINESS
First Central Bancshares, Inc. (the Company) was incorporated in 1993 for the
purpose of becoming a one bank holding company. On April 3, 1993, the Company
acquired 100% of First Central Bank (the Bank) through a share exchange
agreement approved by the shareholders of the Bank. The investment in First
Central Bank represents virtually all of the assets of First Central Bancshares,
Inc.
The consolidated financial statements include the accounts of First Central
Bancshares, Inc. and its wholly owned subsidiary, First Central Bank. In 2000,
First Central Bank formed a new subsidiary, FCB Financial Services, Inc., for
the purpose of selling insurance and investment products. This new subsidiary
has not yet had any activity. All significant intercompany transactions and
balances have been eliminated.
NOTE 2 - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared by the
Company. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. In the opinion of the Company's
management, the disclosures made are adequate to make the information presented
not misleading, and the consolidated financial statements contain all
adjustments necessary to present fairly the financial position as of March 31,
2001, results of operations, comprehensive income, and cash flows for the three
months ended March 31, 2001 and 2000.
The results of operations for the three months ended March 31, 2001 are not
necessarily indicative of the results to be expected for the full year.
NOTE 3 - EARNINGS PER SHARE
Basic earnings per share is based on the weighted average number of shares
outstanding during the period. For the three months ended March 31, 2001 and
2000, the weighted average number of shares was 564,361 and 538,821,
respectively. During the periods ended March 31, 2001 and 2000 the Company did
not have any dilutive securities.
NOTE 4 - RECENT REGULATORY AND ACCOUNTING PRONOUNCEMENTS
In September 2000, the FASB issued Statement of Financial Accounting Standards
No. 140, Accounting for Transfers and Servicing of Financial Assets and
Extinguishment of Liabilities. This Statement replaces SFAS No. 125, Accounting
for Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities. It revises the standards for accounting for securitization and
other transfers of financial assets and collateral and requires certain
disclosures, but it carries over most of SFAS No. 125's provisions. The
statement provides accounting and reporting standards for transfers and
servicing of financial assets and extinguishment of liabilities occurring after
March 31, 2001. This statement is effective for recognition and reclassification
of collateral and for disclosure related to securitization transactions and
collateral for fiscal years ending after December 15, 2000. Since the Company
(including the Bank) does not engage in securitization and other transfers of
financial assets and collateral, this statement is not expected to affect the
financial condition or results of operations at the present time.
Page 7
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
BALANCE SHEET ANALYSIS - COMPARISON AT MARCH 31, 2001 TO DECEMBER 31, 2000
Assets totaled $131.5 million as of March 31, 2001, as compared to $126.6
million as of December 31, 2000, an increase of 3.87%.
INVESTMENT SECURITIES
Investment securities were $33.0 million or 25.1% of total assets, as of March
31, 2001 an decrease of $0.6 million from $33.6 million as of December 31, 2000.
During the three month period there were $8.1 million in calls, maturities, and
principal paydowns offset primarily by the purchase of $6.9 million in agency
and mortgage-backed securities and an increase in the market value of the
investment portfolio of $0.5 million.
The investment portfolio is primarily comprised of U.S. Government and federal
agency obligations and mortgage-backed securities issued by various federal
agencies. Mortgage-backed issues comprised 18.92% of the portfolio as of March
31, 2001 and 11.68% as of December 31, 2000.
As of March 31, 2001 and December 31, 2000, the Bank's entire investment
portfolio was classified as available for sale and reflected on the consolidated
balance sheets at fair value with unrealized gains and losses reported in the
consolidated statements of comprehensive income (loss), net of any deferred tax
effect. The net unrealized gain on securities available for sale, net of tax was
approximately $138,000 as of March 31, 2001, a change of approximately $319,000
from December 31, 2000, a result of considerable improvement in the bond market.
The fair value of securities fluctuates with the movement of interest rates.
Generally, during periods of decreasing interest rates, the fair values increase
whereas the opposite may hold true during a rising interest rate environment.
LOANS
During the first three months of 2001, total gross loans outstanding increased
by approximately $2.7 million to $79.9 million as of March 31, 2001 from $77.2
million as of December 31, 2000 attributable primarily to $7.0 million in
originated loans offset by amortization and payoffs of approximately $4.3
million. As of March 31, 2001 and December 31, 2000, net loans outstanding
represented 60.0% and 60.1% of total assets, respectively. Table 1 summarizes
the Bank's loan portfolio by major category as of March 31, 2001 and December
31, 2000.
Table 1 - Loan Portfolio by Category
(In Thousands)
--------------------------
March 31, December 31,
2001 2000
------ ------
Loans secured by real estate:
Commercial properties $20,700 $9,024
Construction and land development 12,717 9,633
Residential and other properties 26,389 22,082
-------- --------
Total loans secured by real estate 59,806 40,739
Commercial and industrial loans 6,432 16,135
Consumer loans 13,381 19,245
Other loans 329 1,050
----- -------
79,948 77,169
Less: Allowance for loan losses (761) (739)
Unearned interest (255) (342)
Unearned loan fees (26) (18)
----- -----
Loans, Net $78,906 $76,070
======== ========
Page 8
As of March 31, 2001, there were outstanding commitments to advance construction
funds and to originate loans in the amount of $7.2 million and commitments to
advance existing home equity, letters of credit and other credit lines in the
amount of $12.9 million.
Loans are carried net of the allowance for loan losses. The allowance is
maintained at a level to absorb possible losses within the loan portfolio. As of
March 31, 2001 and December 31, 2000, the allowance had a balance of
approximately $761,000 and $739,000, respectively. There were approximately $-0-
and $11,000 of loans on which the accrual of interest had been discontinued as
of March 31, 2001 and December 31, 2000, respectively. There were approximately
$998,000 in loans specifically classified as impaired as of March 31, 2001 as
defined by SFAS No. 114 compared to $944,000 as of December 31, 2000. Table 2
summarizes the allocation of the loan loss reserve by major categories and Table
3 summarizes the activity in the loan loss reserve for the three month period.
Table 2 - Allocation of the Loan Loss Reserve (in Thousands)
3-31-01 % to 12-31-00 % to
Balance applicable to: $ Amount Total $ Amount Total
-------- ------- -------- -------
Commercial, Financial, and Agricultural $221 29.04% $152 20.57%
Real Estate - Construction 150 19.71% 123 16.64%
Real Estate - Residential Mortgages 107 14.06% 205 27.74%
Installment - Consumer Loans 269 35.35% 255 34.51%
Other 14 1.84% 4 0.54%
---- ------ ---- -------
Total $761 100.00% $739 100.00%
==== ======= ==== =======
Table 3 - Analysis of Loan Loss Reserve
(In Thousands) 3-31-01 3-31-00
------- -------
Balance, beginning of period $739 $618
---- ----
Charge-offs:
Commercial, financial, and agricultural 10 -0-
Real estate - construction -0- -0-
Real estate - mortgage -0- -0-
Installment - customers 33 56
Other -0- -0-
Recoveries:
Commercial, financial, and agricultural -0- -0-
Real estate - construction -0- -0-
Real estate - mortgages -0- -0-
Installment - consumers 14 21
Other -0- -0-
---- ----
Net charge-offs 29 35
Additions to loan loss reserve 51 10
---- ----
Balance, end of period $761 $593
==== ====
Ratio of net charge-offs to average loans outstanding .04% .05%
DEPOSITS
Deposits increased by $3.7 million to $118.8 million as of March 31, 2001 from
$115.1 million as of December 31, 2000, an increase of 3.21%. Demand deposits,
which include regular, money market, NOW and demand deposits, were $50.2
million, or 42.3% of total deposits, at March 31, 2001. Core deposits were 26.1%
of total deposits at March 31, 2001. During the three month period, the Bank had
increases in the balances in the demand deposit category of $2.5 million to
$50.2 million as of March 31, 2001. Term deposit accounts were $68.6 million at
March 31, 2001, an increase of $1.2 million compared to $67.4 million as of
December 31, 2000. Table 4 summarizes the Bank's deposits by major category as
of March 31, 2001 and December 31, 2000.
Page 9
Table 4 - Deposits by Category
(In Thousands)
---------------------------
March 31, December 31,
2001 2000
------ ------
Demand Deposits:
Noninterest-bearing accounts $ 19,199 $ 18,541
NOW and MMDA accounts 25,121 23,768
Savings accounts 5,920 5,374
------ ------
Total Demand Deposits 50,240 47,683
------- -------
Term Deposits:
Less than $100,000 50,780 49,809
$100,000 or more 17,823 17,567
------- -------
Total Deposits 68,603 67,376
------- -------
$118,843 $115,059
======== ========
CAPITAL
During the three month period ended March 31, 2001, stockholders' equity
increased by $576,000 to $11.1 million, due to net income for the period of
$257,000, and the increase in net value of securities available for sale of
$319,000.
LIQUIDITY AND CAPITAL RESOURCES
The Bank's primary sources of liquidity are deposit balances, available-for-sale
securities, principal and interest payments on loans and investment securities
and FHLB advances.
As of March 31, 2001, the Bank held $33.0 million in available-for-sale
securities and during the first three months of 2001 the Bank received $8.1
million in proceeds from maturities, redemptions and principal payments on its
investment portfolio. Deposits increased by $3.78 million during the same three
month period.
The Bank is a member of the Federal Home Loan Bank of Cincinnati (FHLB) and is
eligible to obtain both short and long term credit advances. Borrowing capacity
is limited to the Bank's available qualified collateral which consists primarily
of certain 1-4 family residential mortgages and certain investment securities.
The Bank had no advances outstanding from the FHLB at March 31, 2001.
The Bank can also enter into repurchase agreement transactions should the need
for additional liquidity arise. At March 31, 2001, the Bank had approximately
$811,000 of repurchase agreements outstanding.
As of March 31, 2001, the Bank had capital of $11.1 million, or 8.4% of total
assets, as compared to $10.5 million, or 8.3%, at December 31, 2000. Tennessee
chartered banks that are insured by the FDIC are subject to minimum capital
requirements. Regulatory guidelines define the minimum amount of qualifying
capital an institution must maintain as a percentage of risk-weighted assets and
total assets.
Page 10
Table 5 - Regulatory Capital
(Dollars in Thousands)
-------------------------------------------
Minimum
March 31, December 31, Regulatory
2001 2000 Ratios
------ ------ --------
Tier 1 Capital as a Percentage
of Risk-Weighted Assets 12.4% 12.5% 4.00%
Total Capital as a Percentage
of Risk-Weighted Assets 13.3% 13.3% 8.00%
Leverage Ratio 8.6% 8.8% Up to 5.00%
Total Risk-Weighted Assets $88,398 $85,943
As of March 31, 2001 and December 31, 2000, the Bank exceeded all of the minimum
regulatory capital ratio requirements.
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED MARCH 31, 2001
AND 2000
GENERAL
The Bank reported net income of $257,000, or $0.46 per share for the three month
period ended March 31, 2001 as compared with $218,000 or $0.41 per share for the
same period in 2000, an increase of 17.9%.
NET INTEREST INCOME
Net interest income increased by $115,000 to $1.19 million for the three month
period in 2001 from the comparable period in 2000. Contributing to this increase
was an increase in average interest earning assets. Average interest earning
assets at a yield of 8.41% totaled $119.1 million as of March 31, 2001. In
comparison in 2000, average interest earning assets, at a yield of 8.30%,
totaled $106.9 million.
Interest income increased by $264,000 for the three month period in 2001
compared to the same period in 2000. This improvement is primarily attributable
to an increase of approximately $12.2 million, or 11.4%, in the volume of
average earning assets during the three month period ended March 31, 2001
compared to the three month period ended March 31, 2000. Interest income on
loans increased by $186,000 over the same two periods primarily as a result of
an increase of approximately $5.6 million in average loans outstanding. Over the
same two periods, interest on investments decreased by $1,000 due to a
relatively small increase of approximately $863,000 or 2.7% in the average
balance of investments offset by a decrease in the yield on investments during
the three month period. Interest income on Federal Funds Sold increased by
$79,000 due to an increase in the average balance outstanding of $5.7 million
over the same period in 2000.
Total interest expense increased $149,000 for the three month period ended March
31, 2001 compared to the same period in 2000. Interest on deposits increased as
a result of an increase of approximately $9.6 million in average deposits over
the same period in 2000. The average rate on interest-bearing liabilities
increased to 5.23% for the three month period in 2001 from 5.01% in the
comparable period of 2000.
Page 11
Table 6 - Average Balances, Interest and Average Rates
March 31
-------------------------------------------------------------------------
2001 (in thousands) 2000
-------------------------------------------------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
--------- -------- ------ -------- -------- ------
Assets:
Federal Funds Sold $ 7,863 $ 109 5.62% $ 2,134 $ 30 5.65%
Investments:
Securities--Taxable 29,704 502 6.85% 29,323 510 7.00%
Securities--Non-Taxable 2,882 28 3.94% 2,400 21 3.52%
Total Loans, Including
Amortized Fees 78,609 1,830 9.44% 73,025 1,644 9.05%
-------- ------ ----- -------- ------ -----
Total Interest Earning
Assets 119,058 2,469 8.41% 106,882 2,205 8.30%
--------- ---------
Cash and Due From Banks 4,330 4,020
All Other Assets 5,777 6,272
Loan Loss Reserve/
Unearned Fees (1,055) (1,422)
-------- --------
TOTAL ASSETS $128,110 $115,752
========= =========
Liabilities and Stockholders Equity:
Interest Bearing Deposits:
Time Deposits $ 67,910 $1,044 6.23% $ 57,238 $840 5.90%
Other 30,209 223 2.99% 31,239 266 3.42%
Repurchase Agreements 745 9 4.90% 1,972 20 4.08%
Federal Funds
Purchased -0- -0- 0.00% 66 1 6.09%
----- ---- ---- ---- ----- ------
Total Interest-Bearing
Liabilities 98,864 1,276 5.23% 90,515 1,127 5.01%
-------- ------ ---- -------- ------ ------
Net Interest Income $1,193 $1,078
====== ======
Non-Interest Bearing
Deposits 17,866 16,633
Total Cost of Funds 4.43% 4.23%
All Other Liabilities 622 111
Stockholders Equity 10,843 9,548
Unrealized Gain/Loss on
Securities (85) (1,055)
--------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $128,110 $115,752
========= =========
Net Interest Yield 3.18% 3.29%
Net Interest Margin 4.06% 4.06%
Table 7 - Interest Rate Sensitivity
(In Thousands) March 31, 2001
-----------------------------------------------
Less One Year Greater Non-
Than Through Than Interest
1 Year 5 Years 5 Years Bearing Total
-------- -------- ------- --------- -------
Assets:
Federal Funds Sold $ 8,929 $ 8,929
Investments 13,802 5,183 14,023 33,008
Loans 60,658 18,093 155 78,906
Non-Interest Earning Assets
and Unearned Assets/Loan
Loss Reserve 10,688 10,688
- - - -------- -------
83,389 23,276 14,178 10,688 131,531
-------- -------- ------- -------- --------
Liabilities and Stockholders' Equity:
Interest-Bearing Deposits 74,574 25,070 99,644
Non-Interest Bearing Deposits 19,099 19,099
Repurchase Agreements 811 811
Federal Funds Purchased -0- -0-
Noninterest Bearing Liabilities
and Stockholders' Equity 11,977 11,977
- - - -------- -------
Total 75,385 25,070 -0- 31,076 131,531
-------- -------- ---- -------- --------
Interest Rate Sensitivity Gap 8,004 (1,794) 14,178 20,388 -0-
-------- -------- ------- -------- ----
Cumulative Interest Rate
Sensitivity Gap $ 8,004 $ 6,210 $20,388 $ -0- $ -0-
======== ======== ======= ====== =====
Page 12
NONINTEREST INCOME
Total noninterest income was $356,000 for the three month period ended March 31,
2001 as compared to $275,000 for the same period in 2000, an increase of
$81,000. The increase in noninterest income was primarily due to the
restructuring of our deposit fees and the introduction of a new overdraft
protection checking account. Noninterest income is comprised primarily of
customer service fees, loan fees, and other items.
NONINTEREST EXPENSE
Total noninterest expense was $1,080,000, or 0.84% of average total assets, for
the three month period ended March 31, 2001 as compared to $997,000, or 0.86%,
for the same period in 2000. Salaries and employee benefits, occupancy and
equipment, data processing fees and office supplies and postage are categories
of expenses with increases when comparing the two periods. The decrease in the
percentage of operating expenses resulted from the increase in average total
assets of approximately $12.4 million for the year ended March 31, 2001.
INCOME TAXES
The Bank recognizes income taxes using the Financial Accounting Standards Board
Statement No. 109, Accounting for Income Taxes. Under this method, deferred tax
assets and liabilities are established for the temporary differences between the
accounting basis and the tax basis of the Bank's assets and liabilities at
enacted tax rates expected to be in effect when the amounts related to such
temporary differences are realized or settled. The Bank's deferred tax asset is
reviewed quarterly and adjustments to such asset are recognized as deferred
income tax expense or benefit based on management's judgment relating to the
realizability of such asset.
During the three month period ending March 31, 2001, the Bank recorded $161,000
in tax expense which resulted in an approximate effective rate of 38.5%.
Comparably, in 2000, the Bank recorded $128,000 in tax expense, resulting in an
approximate effective rate of 37.0%.
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
PART 1 - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
Page 13
FORM 1O-QSB
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
FIRST CENTRAL BANCSHARES, INC.
Date: May 15,2001 By: /s/ Ed F. Bell
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Ed F. Bell, Chairman, President
and Chief Executive Officer
Date: May 15,2001 By: /s/ Ralph Micalizzi
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Ralph Micalizzi, Vice President, Cashier
and Controller, First Central Bank
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