UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 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 July 31, 2001.
Page 1
FORM 10-QSB
Index
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Balance Sheets as of
June 30, 2001(Unaudited) and December 31, 2000...............3
Condensed Consolidated Statements of Income for the
the three months and six months ended June 30, 2001
and 2000(Unaudited)..........................................4
Condensed Consolidated Statements of Cash Flows for the
six months ended June 30, 2001 and 2000(Unaudited)...........5
Condensed Consolidated Statements of Comprehensive Income for
the three months and six months ended June 30, 2001
and 2000(Unaudited)..........................................6
Notes to Condensed Consolidated Financial Statements
for the six month periods ended June 30, 2001
and 2000(Unaudited)........................................7-8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations.............9-14
PART II. OTHER INFORMATION
Item 1. Legal Proceedings...........................................14
Item 2. Changes in Securities.......................................14
Item 3. Defaults upon Senior Securities.............................14
Item 4. Submission of Matters to a Vote
of Securities Holders....................................14-15
Item 5. Other Information...........................................15
Item 6. Exhibits and Reports on Form 8-K............................15
Signatures....................................................................16
Page 2
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Balance Sheets
(In Thousands)
(Unaudited)
June 30, December 31,
2001 2000
------ ------
- -ASSETS-
Cash and Due from Banks $ 4,854 $ 5,409
Federal Funds Sold 12,821 5,360
-------- -------
Total Cash and Cash Equivalents 17,675 10,769
Investment Securities Available for Sale 28,566 33,614
Loans, Net 83,812 76,070
Premises and Equipment (Net) 4,612 4,769
Accrued Interest Receivable 903 1,038
Other Assets 173 320
-------- -----
TOTAL ASSETS $135,741 $126,580
========= =========
- -LIABILITIES AND STOCKHOLDERS' EQUITY-
Liabilities:
Deposits
Non-Interest Bearing $ 20,368 $ 18,541
Interest Bearing 102,978 96,518
--------- --------
Total Deposits 123,346 115,059
Securities Sold Under Agreement to Repurchase 209 258
Accrued Interest Payable 510 529
Other Liabilities 159 185
----- -----
Total Liabilities 124,224 116,031
--------- ---------
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 -0- (130)
Retained Earnings 3,128 2,608
Accumulated Other Comprehensive Income (Loss) 137 (181)
------- ------
Total Stockholders' Equity 11,517 10,549
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $135,741 $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 Six Months Ended
June 30, June 30,
------------------- -----------------
2001 2000 2001 2000
------ ------ ------ ------
INTEREST INCOME
Loans $1,885 $1,710 $3,715 $3,347
Investment Securities 488 555 1,018 1,086
Federal Funds Sold 104 4 213 34
---- --- ---- ----
Total Interest Income 2,477 2,269 4,946 4,467
------ ------ ------ ------
INTEREST EXPENSE
Deposits 1,239 1,017 2,506 2,123
Securities Sold Under
Agreements to Repurchase 4 4 13 24
Federal Funds Purchased -0- 21 -0- 22
---- --- ---- ---
Total Interest Expense 1,243 1,042 2,519 2,169
------ ------ ------ ------
Net Interest Income 1,234 1,227 2,427 2,298
PROVISION FOR LOAN LOSSES 66 144 117 154
--- ---- ---- ----
Net Interest Income After
Provision for Loan Losses 1,168 1,083 2,310 2,144
------ ------ ------ ------
NONINTEREST INCOME
Service Charges on
Demand Deposits 275 179 513 330
Loan Fees and Other
Service Charges 144 89 247 199
Gain on Sale of Branch 0 430 0 430
Other 2 23 17 44
----- --- ---- ----
Total Noninterest Income 421 721 777 1,003
------ ---- ------ ------
NONINTEREST EXPENSE
Salaries and Employee
Benefits 637 471 1,230 998
Occupancy 105 84 213 185
Data Processing Fees 149 110 259 216
Furniture and Equipment 84 71 175 180
Federal Insurance Premiums 12 12 24 23
Advertising and Promotion 26 30 43 59
Office Supplies and Postage 66 45 131 109
Other 86 76 170 126
---- --- ----- ----
Total Noninterest Expense 1,165 899 2,245 1,896
------ ---- ------ ------
INCOME BEFORE INCOME TAX 424 905 842 1,251
INCOME TAXES 161 331 322 459
---- ---- ---- ----
NET INCOME $ 263 $ 574 $ 520 $ 792
===== ===== ====== =====
BASIC EARNINGS PER COMMON
SHARE $ 0.46 $ 1.04 $ 0.92 $ 1.44
====== ====== ====== ======
See accompanying notes to financial statements.
Page 4
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Condensed Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
Six Months Ended
June 30,
----------------------
2001 2000
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 520 $ 792
------ ------
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Provision for Loan Losses 117 154
Depreciation 145 152
Loss on Sale of Fixed Assets 14 -0-
Decrease (Increase) in Interest Receivable 135 (193)
Increase (Decrease) in Interest Payable (19) 22
Amortization of Premiums (Discounts) on
Investment Securities, Net (25) (10)
FHLB Stock Dividends (14) (7)
Gain on Sale of Branch -0- (430)
Decrease in Other Assets (48) (59)
Increase (Decrease) in Other Liabilities (26) 86
------ ----
Total Adjustments 279 (285)
-------- ------
Net Cash Provided by Operating Activities 799 507
------- --------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Maturities, Principal Paydowns and
Redemption of Investment Securities Available
for Sale 12,541 468
Purchase of Investment Securities Available
for Sale (6,941) (4,919)
(Increase) in Loans (7,859) (3,811)
Purchase of Premises and Equipment (21) (320)
Sales of Premises and Equipment 19 1,210
------- -------
Net Cash Used in Investing Activities (2,261) (7,372)
-------- --------
NET CASH FROM FINANCING ACTIVITIES
Increase in Deposits 8,287 5,167
Decrease in Securities Sold Under
Agreement to Repurchase (49) (2,433)
Increase in Federal Funds Purchased -0- 650
Purchase of Common Stock -0- (130)
Sale of Treasury Stock 130 -0-
------ ------
Net Cash Provided by Financing Activities 8,368 3,254
------- -------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS 6,906 (3,611)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 10,769 8,501
-------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $17,675 $ 4,890
======== ========
Supplementary Disclosures of Cash Flow Information:
Cash Paid During the Period For:
Interest $ 2,538 $ 2,147
Income Taxes $ 360 $ 597
Supplementary Disclosures of Noncash Investing Activities:
Change in Unrealized Loss on Investment Securities $ 513 $ 120
Change in Deferred Income Tax Benefit Associated with
Unrealized Loss on Investment Securities $ 195 $ 45
Change in Net Unrealized Loss on Investment Securities $ 318 $ 75
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 Six Months Ended
June 30, June 30,
---------------- ----------------
2001 2000 2001 2000
-------- ------ ------ -------
Net Income $ 263 $ 574 $ 520 $ 792
------ ------ ------ ------
Other Comprehensive Income
(Loss), Net of Tax:
Unrealized Gains/Losses on
Investment Securities (2) (98) 513 (120)
Less Reclassification
Adjustment for Gains
Included in Net Income -0- -0- -0- -0-
Less Income Taxes Related
to Unrealized Gains/Losses
on Investment Securities 1 37 (195) 45
------- ------- ------ ------
Other Comprehensive Income
(Loss), Net of Tax (1) (61) 318 (75)
------- ------ ------ ------
Comprehensive Income $ 262 $ 513 $ 838 $ 717
====== ======= ====== =======
See accompanying notes to financial statements.
Page 6
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
June 30, 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 the Bank
represents virtually all of the assets of First Central Bancshares, Inc.
The consolidated financial statements include the accounts of First Central
Bancshares, Inc. and its wholly owned subsidiary, First Central Bank. All
significant intercompany transactions and balances have been eliminated.
The Company's subsidiary, First Central Bank, formed a new subsidiary, FCB
Financial Services, Inc. in 2000. This new subsidiary is a financial services
company authorized by the State of Tennessee to sell insurance and investments.
FCB Financial Services, Inc. has had no activity as of June 30, 2001.
NOTE 2 - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been prepared by the
Company. Certain information and footnote disclosures normally included in
financial statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted. In the opinion of the Company's
management, the disclosures made are adequate to make the information presented
not misleading, and the consolidated financial statements contain all
adjustments necessary to present fairly the financial position as of June 30,
2001, results of operations and comprehensive income for the three months and
six months ended June 30, 2001 and 2000, and cash flows for the six months ended
June 30, 2001 and 2000.
The results of operations and comprehensive income for the three months and six
months ended June 30, 2001 are not necessarily indicative of the results to be
expected for the full year.
NOTE 3 - STOCK OPTION PLAN
On April 20, 2000, the stockholders of the Company approved a stock option plan
which reserves 25,000 shares of the Company's common stock for present and
future employees as an incentive for long-term employment. As of June 30, 2001,
the plan has not been implemented and no options have been awarded.
NOTE 4 - EARNINGS PER SHARE
Basic earnings per share is based on the weighted average number of shares
outstanding during the period. For the six months ended June 30, 2001 and 2000
the weighted average number of shares was 564,361 and 551,579, respectively.
During the period ended June 30, 2001 and 2000 the Company did not have any
dilutive securities.
Page 7
NOTE 5 - 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 FASB Statement 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 Statement 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 Bank does
not currently 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 8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
BALANCE SHEET ANALYSIS - COMPARISON AT JUNE 30, 2001 TO DECEMBER 31, 2000
Assets totaled $135.7 million as of June 30, 2001, as compared to $126.6 million
as of December 31, 2000, an increase of 7.19%.
INVESTMENT SECURITIES
Investment securities were $28.6 million or 21.1% of total assets, as of June
30, 2001 a decrease of $5.0 million from $33.6 million as of December 31, 2000.
During the six month period there were $12.5 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 comprised of U.S. Government and federal agency
obligations and mortgage-backed securities issued by various federal agencies.
Mortgage-backed issues comprised 20.45% of the portfolio as of June 30, 2001 and
11.68% as of December 31, 2000.
As of June 30, 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 $137,000 as of June 30, 2001, a change of approximately $318,000
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 six months of 2001, total gross loans outstanding increased by
approximately $7.6 million to $84.8 million as of June 30, 2001 from $77.2
million as of December 31, 2000 attributable primarily to $16.5 million in
originated loans offset by amortization and payoffs of approximately $8.9
million. As of June 30, 2001 and December 31, 2000, net loans outstanding
represented 61.7% and 60.1% of total assets, respectively. Table 1 summarizes
the Bank's loan portfolio by major category as of June 30, 2001 and December 31,
2000.
Table 1 - Loan Portfolio by Category
(In Thousands)
--------------------------
June 30, December 31,
2001 2000
------ -------
Loans secured by real estate:
Commercial properties $18,720 $ 9,024
Construction and land development 16,089 9,633
Residential and other properties 27,846 22,082
-------- --------
Total loans secured by real estate 62,655 40,739
Commercial and industrial loans 10,681 16,135
Consumer loans 11,135 19,245
Other loans 335 1,050
----- -------
84,806 77,169
Less: Allowance for loan losses (782) (739)
Unearned interest (184) (342)
Unearned loan fees (28) (18)
----- -----
Loans, Net $83,812 $76,070
======== ========
Page 9
As of June 30, 2001, there were outstanding commitments to advance construction
funds and to originate loans in the amount of $5.1 million and commitments to
advance existing home equity, letters of credit and other credit lines in the
amount of $16.0 million.
Loans are carried net of the allowance for loan losses. The allowance is
maintained at a level to absorb possible losses within the loan portfolio. As of
June 30, 2001 and December 31, 2000, the allowance had a balance of
approximately $782,000 and $739,000, respectively. There were approximately $-0-
and $11,000 of loans on which the accrual of interest had been discontinued as
of June 30, 2001 and December 31, 2000, respectively. There were approximately
$887,000 in loans specifically classified as impaired as of June 30, 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 six month period.
Table 2 - Allocation of the Loan Loss Reserve (in Thousands)
6-30-01 % to 12-31-00 % to
Balance applicable to: $ Amount Total $ Amount Total
-------- ------- -------- -------
Commercial, financial, and agricultural $247 31.59% $152 20.57%
Real Estate - Construction 171 21.87% 123 16.64%
Real Estate - Mortgages 105 13.42% 205 27.74%
Installment - Consumers 230 29.42% 255 34.51%
Other 29 3.70% 4 0.54%
---- ------ ---- -------
Total $782 100.00% $739 100.00%
==== ======= ==== =======
Table 3 - Analysis of Loan Loss Reserve
(In Thousands) 6-30-01 6-30-00
------ ------
Balance, beginning of period $739 $618
---- ----
Charge-offs:
Commercial, financial, and agricultural 10 17
Real estate - construction -0- -0-
Real estate - mortgage -0- -0-
Installment - customers 91 56
Other -0- -0-
Recoveries:
Commercial, financial, and agricultural -0- 5
Real estate - construction -0- -0-
Real estate - mortgages -0- -0-
Installment - consumers 27 25
Other -0- 6
--- ----
Net charge-offs 74 37
Additions to loan loss reserve 117 154
---- ----
Balance, end of period $782 $735
==== ====
Ratio of net charge-offs to average loans outstanding .09% .05%
DEPOSITS
Deposits increased by $8.2 million to $123.3 million as of June 30, 2001 from
$115.1 million as of December 31, 2000, an increase of 7.12%. Demand deposits,
which include regular, money market, NOW and demand deposits, were $53.1
million, or 43.1% of total deposits, at June 30, 2001. Core deposits were 26.5%
of total deposits at June 30, 2001. During the six month period, the Bank had
increases in the balances in the demand deposit category of $5.4 million to
$53.1 million as of June 30, 2001. Term deposit accounts were $70.2 million at
Page 10
June 30, 2001, an increase of $2.8 million compared to $67.4 million as of
December 31, 2000. Table 4 summarizes the Bank's deposits by major category as
of June 30, 2001 and December 31, 2000.
Table 4 - Deposits by Category
(In Thousands)
---------------------------
June 30, December 31,
2001 2000
------ ------
Demand Deposits:
Noninterest-bearing accounts $ 20,368 $ 18,541
NOW and MMDA accounts 26,598 23,768
Savings accounts 6,157 5,374
------ ------
Total Demand Deposits 53,123 47,683
------- -------
Term Deposits:
Less than $100,000 52,163 49,809
$100,000 or more 18,060 17,567
------- -------
Total Deposits 70,223 67,376
------- -------
$123,346 $115,059
======== ========
CAPITAL
During the six month period ended June 30, 2001, stockholders' equity increased
by $968,000 to $11.5 million, due to net income for the period of $520,000, the
increase in value of securities available for sale of $318,000, and the sale of
treasury stock for $130,000.
LIQUIDITY AND CAPITAL RESOURCES
The Bank's primary sources of liquidity are deposit balances, available-for-sale
securities, principal and interest payments on loans and investment securities
and FHLB advances.
As of June 30, 2001, the Bank held $28.6 million in available-for-sale
securities and during the first six months of 2001 the Bank received $12.5
million in proceeds from maturities, redemptions and principal payments on its
investment portfolio. Deposits increased by $8.3 million during the same six
month period.
The Bank is a member of the Federal Home Loan Bank of Cincinnati (FHLB) and is
eligible to obtain both short and long term credit advances. Borrowing capacity
is limited to the Bank's available qualified collateral which consists primarily
of certain 1-4 family residential mortgages and certain investment securities.
The Bank had no advances outstanding from the FHLB at June 30, 2001.
The Bank can also enter into repurchase agreement transactions should the need
for additional liquidity arise. At June 30, 2001, the Bank had $209,000 of
repurchase agreements outstanding.
As of June 30, 2001, the Bank had capital of $11.5 million, or 8.5% 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 11
Table 5 - Regulatory Capital
(Dollars in Thousands)
--------------------------------------------
Minimum
June 30, December 31, Regulatory
2001 2000 Ratios
------ ------ --------
Tier 1 Capital as a Percentage
of Risk-Weighted Assets 12.3% 12.5% 4.00%
Total Capital as a Percentage
of Risk-Weighted Assets 13.1% 13.3% 8.00%
Leverage Ratio 8.5% 8.8% Up to 5.00%
Total Risk-Weighted Assets $91,685 $85,943
As of June 30, 2001 and December 31, 2000, the Bank exceeded all of the minimum
regulatory capital ratio requirements.
RESULTS OF OPERATIONS FOR THE SIX MONTH PERIODS ENDED JUNE 30, 2001 AND 2000
GENERAL
The Bank reported net income of $520,000, or $0.92 per share for the six month
period ended June 30, 2001 as compared with $792,000 or $1.44 per share for the
same period in 2000, a decrease of 34.3%. Net income was higher in 2000 due to
the sale of a branch in the second quarter of 2000 for a gain of $430,000.
NET INTEREST INCOME
Net interest income increased by $129,000 to $2.4 million for the six 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 8.24% totaled $121.0 million as of June 30, 2001. In
comparison in 2000, average interest earning assets, at a yield of 8.32%,
totaled $107.3 million.
Interest income increased by $479,000 for the six month period in 2001 compared
to the same period in 2000. This improvement is primarily attributable to an
increase of approximately $13.6 million, or 12.7%, in the volume of average
earning assets during the six month period ended June 30, 2001 compared to the
six month period ended June 30, 2000. Interest income on loans increased by
$368,000 over the same two periods primarily as a result of an increase of
approximately $7.0 million in average loans outstanding. Over the same two
periods, interest on investments decreased by $68,000 due to a decrease of
approximately $799,000 or 2.5% in the average balance of investments and a
decrease in the yield on investments during the six month period. Interest
income on Federal Funds Sold increased by $179,000 due to an increase in the
average balance outstanding of $7.5 million over the same period in 2000.
Total interest expense increased $350,000 for the six month period ended June
30, 2001 compared to the same period in 2000. Interest on deposits increased as
a result of an increase of approximately $10.1 million in average deposits over
the same period in 2000. The average rate on interest-bearing liabilities
increased to 5.08% for the six month period in 2001 from 4.76% in the comparable
period of 2000.
Page 12
Table 6 - Average Balances, Interest and Average Rates
June 30
------------------------------------------------------------------------
2001 (in thousands) 2000
------------------------------------------------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
-------- -------- ------ -------- -------- ------
Assets:
Federal Funds Sold $ 8,682 $ 213 4.95% $ 1,209 $ 34 5.62%
Investments:
Securities--Taxable 28,426 962 6.82% 29,757 1,044 7.02%
Securities--Non-Taxable 2,932 56 3.85% 2,400 42 3.50%
Total Loans, Including
Amortized Fees 80,938 3,715 9.26% 73,985 3,347 9.05%
-------- ------ ----- -------- ------ -----
Total Interest Earning
Assets 120,978 4,946 8.24% 107,351 4,467 8.32%
--------- ---------
Cash and Due From Banks 4,426 3,910
All Other Assets 5,677 6,960
Loan Loss Reserve/
Unearned Fees (1,030) (1,363)
-------- --------
TOTAL ASSETS $130,051 $116,858
========= =========
Liabilities and Stockholders Equity:
Interest Bearing Deposits:
Time Deposits $ 69,275 2,081 6.06% $ 57,494 1,596 5.55%
Other 30,088 425 2.85% 31,792 527 3.32%
Repurchase Agreements 587 13 4.47% 1,142 24 4.20%
Federal Funds
Purchased -0- -0- N/A 620 22 7.10%
---- ---- ----- ----- ---- ------
Total Interest-Bearing
Liabilities 99,950 2,519 5.08% 91,048 2,169 4.76%
------- ------ ----- -------- ------ -----
Net Interest Income $2,427 $2,298
====== ======
Non-Interest Bearing
Deposits 18,499 16,479
Total Cost of Funds 4.29% 4.03%
All Other Liabilities 888 593
Stockholders Equity 10,712 9,801
Unrealized Gain/Loss on
Securities 2 (1,063)
------- --------
TOTAL LIABILITIES AND
STOCKHOLDERS EQUITY $130,051 $116,858
======== =========
Net Interest Yield 3.16% 3.56%
Net Interest Margin 4.05% 4.28%
Table 7 - Interest Rate Sensitivity
(In Thousands) June 30, 2001
-------------------------------------------------------------
Less One Year Greater Non-
Than Through Than Interest
1 Year 5 Years 5 Years Bearing Total
-------- -------- ------- --------- -------
Assets:
Federal Funds Sold $ 12,821 $ 12,821
Investments 11,367 4,218 12,981 28,566
Loans 64,215 20,419 172 84,806
Non-Interest Earning Assets
and Unearned Assets/Loan
Loss Reserve 9,548 9,548
-------- -------- ------- ------- --------
88,403 24,637 13,153 9,548 135,741
-------- -------- ------- ------- --------
Liabilities and Stockholders'
Equity:
Interest-Bearing Deposits 59,687 43,291 102,978
Non-Interest Bearing Deposits 20,368 20,368
Repurchase Agreements 209 209
Noninterest Bearing Liabilities
and Stockholders' Equity 12,186 12,186
-------- -------- ------- ------- --------
Total 59,896 43,291 -0- 32,554 135,741
-------- -------- ---- -------- --------
Interest Rate Sensitivity Gap 28,507 (18,654) 13,153 (23,006) -0-
--------- --------- ------- --------- ----
Cumulative Interest Rate
Sensitivity Gap $ 28,507 $ 9,853 $23,006 $ -0- $ -0-
========= ======== ======= ====== =====
Page 13
NONINTEREST INCOME
Total noninterest income was $777,000 for the six month period ended June 30,
2001 as compared to $1,003,000 for the same period in 2000, a decrease of
$226,000. Noninterest income is comprised primarily of customer service fees,
loan fees, and other items. The decrease in noninterest income was primarily due
to the sale of a branch office in the second quarter of 2000 for a gain of
$430,000 offset by an increase in deposit fees in the second quarter of 2001 of
$184,000. We restructured our deposit fees and introduced a new overdraft
protection checking account during the six month period ended June 30, 2001.
NONINTEREST EXPENSE
Total noninterest expense was $2,245,000, or 1.73% of average total assets, for
the six month period ended June 30, 2001 as compared to $1,896,000, or 1.62%,
for the same period in 2000. Both the salaries and employee benefits and
occupancy and data processing categories of expenses increased when comparing
the two periods. The increase in the percentage of operating expenses primarily
resulted from the opening of a new full service branch in Alcoa, Tennessee in
August 2000.
INCOME TAXES
The Bank recognizes income taxes using the Financial Accounting Standards Board
Statement No. 109, Accounting for Income Taxes. Under this method, deferred tax
assets and liabilities are established for the temporary differences between the
accounting basis and the tax basis of the Bank's assets and liabilities at
enacted tax rates expected to be in effect when the amounts related to such
temporary differences are realized or settled. The Bank's deferred tax asset is
reviewed quarterly and adjustments to such asset are recognized as deferred
income tax expense or benefit based on management's judgment relating to the
realizability of such asset.
During the six month period ending June 30, 2001, the Bank recorded $322,000 in
tax expense which resulted in an approximate effective rate of 38.2%.
Comparably, in 2000, the Bank recorded $459,000 in tax expense, resulting in an
approximate effective rate of 36.7%.
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
PART II - 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
On April 19, 2001, First Central Bancshares, Inc. held its 2001
Annual Meeting of Stockholders. The following is a brief
description of each matter voted upon and the results of the
voting.
1. Election of Directors
Nominee For Withheld
---------------------- ------- --------
Ed F. Bell 365,737 -0-
Gary Kimsey 365,737 -0-
Peter G. Stimpson 365,737 -0-
James W. Wilburn III 365,737 -0-
There were no abstentions or broker non-votes.
Page 14
The terms of the Office of Directors Barry Gordon, Robert D.
Grimes, Bruce Martin, Benny L. Shubert, and Ted Wampler, Jr.
continued after the meeting.
2. The stockholders also approved the appointment of Pugh &
Company, P.C. as independent auditors for 2001. 365,199
shares were voted in favor of the appointment, 146 shares
were withheld and 392 shares were voted against the
appointment.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
Page 15
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: August 9, 2001 By: /s/ Ed F. Bell
-----------------------------------------------
Ed F. Bell, Chairman and Chief Executive Officer
Date: August 9, 2001 By: /s/ Joseph Hamdi
-----------------------------------------------
Joseph Hamdi, President
Date: August 9, 2001 By: /s/ Ralph Micalizzi
-----------------------------------------------
Ralph Micalizzi, Vice President,
Cashier and Controller, First Central Bank
Page 16