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, 2002
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 15(d) 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 547,228 on April 30, 2002.
FORM 10-QSB
Index
Page
Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of
March 31, 2002 and December 31, 2001...............................3
Consolidated Statements of Income for the
three months ended March 31, 2002 and 2001.........................4
Consolidated Statements of Cash Flows for the
three months ended March 31, 2002 and 2001.........................5
Consolidated Statements of Comprehensive Income
for the three months ended March 31, 2002
and 2001...........................................................6
Notes to Consolidated Financial Statements.......................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
2
PART 1 - FINANCIAL INFORMATION
Item 1. Financial Statements
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Consolidated Balance Sheets
(In Thousands)
(Unaudited)
March 31, December 31,
2002 2001
------ ------
- -ASSETS-
Cash and Due from Banks $ 3,605 $ 5,698
Federal Funds Sold 10,450 11,758
-------- --------
Total Cash and Cash Equivalents 14,055 17,456
Investment Securities Available for Sale 35,683 31,559
Loans, Net 86,994 89,509
Premises and Equipment (Net) 4,426 4,484
Accrued Interest Receivable 740 714
Other Assets 370 306
-------- -----
TOTAL ASSETS $142,268 $144,028
========= =========
- -LIABILITIES AND SHAREHOLDERS' EQUITY-
Liabilities:
Deposits
Non-Interest Bearing $ 23,001 $ 22,184
Interest Bearing 106,642 108,846
--------- ---------
Total Deposits 129,643 131,030
Securities Sold Under Agreement to Repurchase 572 820
Accrued Interest Payable 392 467
Other Liabilities 81 230
------ -----
Total Liabilities 130,688 132,547
--------- ---------
Shareholders' 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, at Cost; 17,133 Shares
(17,333 Shares at December 31, 2001) (426) (431)
Retained Earnings 3,878 3,641
Accumulated Other Comprehensive Income (Loss) (124) 19
------ ------
Total Shareholders' Equity 11,580 11,481
-------- --------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $142,268 $144,028
========= =========
See accompanying notes to financial statements.
3
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
(In Thousands Except
per Share Information)
-----------------------
Three Months Ended
March 31,
2002 2001
------ ------
INTEREST INCOME
Loans $1,616 $1,784
Investment Securities 461 530
Federal Funds Sold 47 109
---- -----
Total Interest Income 2,124 2,423
------ ------
INTEREST EXPENSE
Deposits 934 1,267
Securities Sold Under
Agreement to Repurchase 6 9
---- ----
Total Interest Expense 940 1,276
------ ------
Net Interest Income 1,184 1,147
PROVISION FOR LOAN LOSSES 55 51
----- -----
Net Interest Income After
Provision for Loan Losses 1,129 1,096
NONINTEREST INCOME
Service Charges on Demand Deposits 228 238
Loan Fees and Other Service Charges 94 103
Net Gain on Sales of Loans 95 46
Other 12 15
----- ----
Total Noninterest Income 429 402
---- ----
NONINTEREST EXPENSE
Salaries and Employee Benefits 650 593
Occupancy 116 108
Data Processing Fees 125 110
Furniture and Equipment 77 91
Federal Insurance Premiums 15 12
Advertising and Promotion 31 17
Office Supplies and Postage 74 65
Other 109 84
----- -----
Total Noninterest Expense 1,197 1,080
------ ------
INCOME BEFORE INCOME TAX 361 418
INCOME TAXES 124 161
---- -----
NET INCOME $ 237 $ 257
====== =====
BASIC EARNINGS PER COMMON SHARE $ 0.43 $ 0.46
====== ======
See accompanying notes to financial statements.
4
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
Three Months Ended
March 31,
-------------------
2002 2001
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 237 $ 257
------ ------
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Provision for Loan Losses 55 51
Depreciation 63 73
Loss on Sale of Fixed Assets -0- 1
Net (Gain) on Sales of Loans (95) (46)
(Increase)Decrease in Interest Receivable (26) 282
(Decrease) in Interest Payable (75) (37)
Amortization of Premiums (Discounts) on
Investment Securities, Net 41 (23)
FHLB Stock Dividends (4) (7)
Decrease (Increase) in Other Assets 23 (88)
(Decrease) Increase in Other Liabilities (149) 75
------ ------
Total Adjustments (167) 281
------ -----
Net Cash Provided by Operating Activities 70 538
---- -----
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds From Maturities, Principal Paydowns and
Redemption of Investment Securities Available
for Sale 5,485 8,092
Purchase of Investment Securities Available
for Sale (9,876) (6,941)
(Increase) in Loans (9,486) (10,844)
Proceeds From Sales of Loans 12,041 8,003
Purchases of Premises and Equipment (5) (17)
------- -----
Net Cash Used in Investing Activities (1,841) (1,707)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES
Increase (Decrease) in Deposits (1,387) 3,784
Increase (Decrease) in Securities Sold
Under Agreement to Repurchase (248) 553
Sale of Treasury Stock 5 -0-
-------- -----
Net Cash Provided by (Used in) Financing Activities (1,630) 4,337
-------- -------
INCREASE (DECREASE) IN CASH
AND CASH EQUIVALENTS (3,401) 3,168
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 17,456 10,769
-------- --------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 14,055 $ 13,937
========= =========
Supplementary Disclosures of Cash Flow Information:
Cash Paid During the Period for:
Interest $ 1,015 $ 1,313
Income Taxes $ 258 $ 223
Supplementary Disclosures of Noncash Investing Activities:
Change in Unrealized Gain(Loss)on Investment Securities $ (230) $ 515
Change in Deferred Income Tax Associated with
Unrealized Gain (Loss) on Investment Securities $ (87) $ 196
Change in Net Unrealized Gain (Loss) on
Investment Securities $ (143) $ 319
See accompanying notes to financial statements.
5
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Comprehensive Income
(Unaudited)
(In Thousands)
Three Months Ended
March 31,
---------------------
2002 2001
------ ------
Net Income $ 237 $ 257
------- -------
Other Comprehensive Income (Loss), Net of Tax:
Unrealized Gains/Losses on Investment Securities (230) 515
Less Reclassification Adjustment for Gains
Included in Net Income -0- -0-
Less Income Taxes Related to Unrealized
Gains/Losses on Investment Securities 87 (196)
------- -------
Other Comprehensive Income (Loss), Net of Tax (143) 319
------- -------
Comprehensive Income $ 94 $ 576
======= =======
See accompanying notes to financial statements.
6
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
March 31, 2002 and 2001
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., its wholly-owned subsidiary, First Central Bank, and the
Bank's subsidiary, FCB Financial Services, Inc. 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 accounting principles generally
accepted in the United States of America 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, 2002, results of operations for the three months ended
March 31, 2002 and 2001, and cash flows for the three months ended March 31,
2002 and 2001.
The results of operations for the three months ended March 31, 2002 are not
necessarily indicative of the results to be expected for the full year 2002.
NOTE 3 - EARNINGS PER SHARE
Basic earnings per share are based on the weighted average number of shares
outstanding during the period. For the three months ended March 31, 2002 and
2001, the weighted average number of shares was 547,106 and 564,361,
respectively. During the period ended March 31, 2002 and 2001 the Company did
not have any dilutive securities.
NOTE 4 - REGULATORY MATTERS AND RECENT LEGISLATION
The Bank is state chartered and federally insured, and is subject to the rules
and regulations of the Tennessee Department of Financial Institutions (TDFI) and
the Federal Deposit Insurance Corporation (FDIC). The holding company is also
subject to the rules and regulations of the Federal Reserve Bank (FRB) and the
Securities and Exchange Commission (SEC).
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard (SFAS) No. 141, Business Combinations and SFAS No.
142 Goodwill and Other Intangible Assets. SFAS 141 requires that the purchase
method of accounting be used for all business combinations initiated after June
30, 2001. Since the Company has not purchased any other banks or entities, this
statement is not expected to have any impact on the Company's consolidated
financial statements. SFAS 142 requires that goodwill and other intangible
assets with indefinite useful lives no longer be amortized, but instead be
tested for impairment annually. SFAS 142 is effective January 1, 2002. Since the
Company does not have any goodwill or other intangible assets, this statement is
not expected to have any impact on their consolidated financial position or
results of operations.
7
NOTE 4 - RECENT REGULATORY AND ACCOUNTING PRONOUNCEMENTS, continued
In June 2001, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 143, Accounting for Asset Retirement
Obligations. SFAS 143 applies to legal obligations associated with the
retirement of long-lived assets that result from the acquisition, construction,
development and/or the normal operation of a long-lived asset, except for
certain obligations of lessees. SFAS No. 143 is effective for financial
statements issued for fiscal years beginning after June 15, 2002. Since the
Company does not have any legal obligations as described above, this statement
is not expected to have any impact on the Company's consolidated financial
position or results of operations.
In August 2001, the Financial Accounting Standards Board issued Statement of
Financial Standard No. 144, Accounting for the Impairment or Disposal of
Long-Lived Assets. This statement supersedes SFAS No. 121, Accounting for the
Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed of, and
the accounting and reporting provisions of APB Opinion No. 30, Reporting the
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions, for the disposal of a segment of a business (as previously defined
in that Opinion). SFAS No. 144 is effective for financial statements issued for
fiscal years beginning after December 15, 2001, and interim periods within those
fiscal years. This statement is not expected to have a significant impact on the
Company's consolidated financial position or results of operations.
8
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations.
BALANCE SHEET ANALYSIS - COMPARISON AT MARCH 31, 2002 TO DECEMBER 31, 2001
Assets totaled $142.3 million as of March 31, 2002, as compared to $144.0
million as of December 31, 2001, a decrease of 1.18%.
INVESTMENT SECURITIES
Investment securities were $35.7 million or 25.1% of total assets, as of March
31, 2002 an increase of $4.1 million from $31.6 million as of December 31, 2001.
During the three month period there were $5.5 million in calls, maturities, and
principal paydowns offset primarily by the purchase of $9.9 million in agency
and mortgage-backed securities.
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 50.16% of the portfolio as of March
31, 2002 and 57.13% as of December 31, 2001.
As of March 31, 2002 and December 31, 2001, 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 loss on securities available for sale, net of tax was
approximately $124,000 as of March 31, 2002, a change of approximately $143,000
from December 31, 2001, a result of a decline 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 decreased
by approximately $2.6 million to $88.0 million as of March 31, 2002 from $90.6
million as of December 31, 2001 attributable primarily to $22.0 million in
originated loans offset by amortization and payoffs of approximately $12.6
million and sales of residential mortgage loans of $12.0 million. As of March
31, 2002 and December 31, 2001, net loans outstanding represented 61.1% and
62.1% of total assets, respectively. Table 1 summarizes the Bank's loan
portfolio by major category as of March 31, 2002 and December 31, 2001.
Table 1 - Loan Portfolio by Category
(In Thousands)
March 31, December 31,
2002 2001
------ ------
Loans secured by real estate:
Commercial properties $29,872 $30,472
Construction and land development 16,334 14,341
Residential and other properties 22,264 26,058
--------- --------
Total loans secured by real estate 68,470 70,871
Commercial and industrial loans 10,631 10,092
Consumer loans 8,680 9,311
Other loans 268 347
------- -------
88,049 90,621
Less: Allowance for loan losses (936) (967)
Unearned interest (74) (101)
Unearned loan fees (45) (44)
----- -----
Loans, Net $86,994 $89,509
======== ========
9
As of March 31, 2002, there were outstanding commitments to advance construction
funds and to originate loans in the amount of $5.8 million and commitments to
advance existing home equity, letters of credit and other credit lines in the
amount of $18.5 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, 2002 and December 31, 2001, the allowance had a balance of
approximately $936,000 and $967,000, respectively. There were approximately
$410,000 and $305,000 of loans on which the accrual of interest had been
discontinued as of March 31, 2002 and December 31, 2001, respectively. There
were approximately $1,279,000 in loans specifically classified as impaired as of
March 31, 2002 as defined by SFAS No. 114 compared to $1,472,000 as of December
31, 2001. 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)
March 31, December 31,
2002 % to 2001 % to
Balance applicable to: $ Amount Total $ Amount Total
-------- ------- -------- -------
Commercial, Financial, and Agricultural $321 34.29% $410 42.40%
Real Estate - Construction 203 21.69% 104 10.75%
Real Estate - Residential Mortgages 147 15.69% 150 15.51%
Installment - Consumer Loans 223 23.80% 269 27.82%
Other 42 4.53% 34 3.52%
---- ------ ---- -------
Total $936 100.00% $967 100.00%
==== ======= ==== =======
Table 3 - Analysis of Loan Loss Reserve
March 31, March 31,
(In Thousands) 2002 2001
------- -------
Balance, beginning of period $967 $739
---- ----
Charge-offs:
Commercial, financial, and agricultural -0- 10
Real estate - construction -0- -0-
Real estate - mortgage -0- -0-
Installment - customers 107 33
Other -0- -0-
Recoveries:
Commercial, financial, and agricultural -0- -0-
Real estate - construction -0- -0-
Real estate - mortgages -0- -0-
Installment - consumers 21 14
Other -0- -0-
---- ----
Net charge-offs 86 29
Additions to loan loss reserve 55 51
---- ----
Balance, end of period $936 $761
==== ====
Ratio of net charge-offs to average loans outstanding .10% .04%
DEPOSITS
Deposits decreased by $1.4 million to $129.6 million as of March 31, 2002 from
$131.0 million as of December 31, 2001, a decrease of 1.07%. Demand deposits,
which include regular, money market, NOW and demand deposits, were $60.3
million, or 46.5% of total deposits, at March 31, 2002. Core deposits were 28.8%
of total deposits at March 31, 2002. During the three month period ended March
31, 2002, the Bank had a $24,000 increase in the balances in the demand deposit
category and remained at $60.3 million as of March 31, 2002. Term deposit
accounts were $69.3 million at March 31, 2002, a decrease of $1.4 million
compared to $70.7 million as of December 31, 2001. Table 4 summarizes the Bank's
deposits by major category as of March 31, 2002 and December 31, 2001. Table 4 -
Deposits by Category
10
(In Thousands)
March 31, December 31,
2002 2001
------ ------
Demand Deposits:
Noninterest-bearing accounts $ 23,001 $ 22,184
NOW and MMDA accounts 30,364 31,715
Savings accounts 6,975 6,417
------ ------
Total Demand Deposits 60,340 60,316
------- -------
Term Deposits:
Less than $100,000 49,582 51,722
$100,000 or more 19,721 18,992
------- -------
Total Term Deposits 69,303 70,714
------- -------
$129,643 $131,030
======== ========
CAPITAL
During the three month period ended March 31, 2002, shareholders' equity
increased by $99,000 to $11.6 million, due to net income for the period of
$237,000, the decrease in value of securities available for sale of $143,000,
and the sale of $5,000 of treasury stock.
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, 2002, the Bank held $35.7 million in available-for-sale
securities and during the first three months of 2002 the Bank received
$5,485,000 in proceeds from maturities, redemptions and principal payments on
its investment portfolio. Deposits decreased by $1.39 million during the same
three month period.
The Bank is a member of the Federal Home Loan Bank (FHLB) of Cincinnati 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, 2002.
The Bank can also enter into repurchase agreement transactions should the need
for additional liquidity arise. At March 31, 2002, the Bank had approximately
$572,000 of repurchase agreements outstanding.
As of March 31, 2002, the Bank had capital of $11.6 million, or 8.2% of total
assets, as compared to $11.5 million, or 8.0%, at December 31, 2001. 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.
11
Table 5 - Regulatory Capital
(Dollars in Thousands)
Minimum
March 31, December 31, Regulatory
2002 2001 Ratios
------ ------ --------
Tier 1 Capital as a Percentage
of Risk-Weighted Assets 12.0% 11.7% 4.00%
Total Capital as a Percentage
of Risk-Weighted Assets 12.9% 12.7% 8.00%
Leverage Ratio 8.2% 8.1% Up to 5.00%
Total Risk-Weighted Assets $97,687 $97,627
As of March 31, 2002 and December 31, 2001, the Bank exceeded all of the minimum
regulatory capital ratio requirements.
RESULTS OF OPERATIONS FOR THE THREE MONTH PERIODS ENDED
MARCH 31, 2002 AND 2001
GENERAL
The Bank reported net income of $237,000, or $0.43 per share for the three month
period ended March 31, 2002 as compared with $257,000, or $0.46 per share for
the same period in 2001, a decrease of 7.8%.
NET INTEREST INCOME
Net interest income increased $37,000 to $1.2 million for the three month period
in 2002 from the comparable period in 2001. Contributing to this increase was an
increase in average interest earning assets and a much lower interest rate
environment compared to the first quarter of 2001. Average interest earning
assets at a yield of 6.45% totaled $133.5 million as of March 31, 2002. In
comparison to 2001, average interest earning assets, at a yield of 8.25%,
totaled $119.1 million.
Total interest income decreased $299,000 for the three month period ended March
31, 2002 compared to the same period in 2001, while the average balance in
interest earning assets increased approximately $14.4 million, or 12.1%,
compared to the three month period ended March 31, 2001. Interest income on
loans decreased $168,000 over the same two periods due to a lower interest rate
environment, while average loans outstanding increased approximately $9.0
million. The average yield on loans decreased from 9.2% for the three month
period ended March 31, 2001 to 7.48% for the three month period ended March 31,
2002. Over the same two periods, interest on investments decreased by $69,000
due to a decrease in the yield on investments. The yield on taxable investments
decreased from 6.85% to 5.58% and the yield for non-taxable investments
decreased from 3.94% to 3.72% for the three month period ended March 31, 2002
compared to the same period in 2001. The average balance of investments
increased approximately $1,855,000 or 5.7% for the three month period ended
March 31, 2002 compared to the same period in 2001. Interest income on Federal
Funds Sold decreased by $62,000 due to a decrease in the yield on Federal Funds
sold from 5.62% during the quarter ended March 31, 2001 to 1.67% for the same
quarter in 2002, offset by an increase in average balance outstanding of $3.6
million over the same period in 2001.
Total interest expense decreased $336,000 for the three month period ended March
31, 2002 compared to the same period in 2001. Interest on deposits increased as
a result of an increase of approximately $9.5 million in average deposits over
the same period in 2001. The average rate on interest-bearing liabilities
decreased to 3.52% for the three month period in 2002 from 5.24% in the
comparable period of 2001.
12
Table 6 - Average Balances, Interest and Average Rates
March 31 __
---------------------------------------
2002 _ (in Thousands)__ _ 2001
------------------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
-------- -------- ------ -------- -------- ------
Assets:
Federal Funds Sold $ 11,439 $ 47 1.67% $ 7,863 $ 109 5.62%
Investments:
Securities--Taxable 31,716 436 5.58% 29,704 502 6.85%
Securities--Non-Taxable 2,725 25 3.72% 2,882 28 3.94%
Total Loans, Including
Amortized Fees 87,609 1,616 7.48% 78,609 1,784 9.20%
-------- ------ ----- -------- ------ -----
Total Interest Earning
Assets 133,489 2,124 6.45% 119,058 2,423 8.25%
--------- ---------
Cash and Due From Banks 4,189 4,330
All Other Assets 5,347 5,777
Loan Loss Reserve/
Unearned Fees (1,065) (1,055)
-------- --------
TOTAL ASSETS $141,960 $128,110
========= =========
Liabilities and Shareholders' Equity:
Interest Bearing Deposits:
Time Deposits $ 70,635 $ 798 4.58% $ 67,910 $1,043 5.87%
Other 36,531 136 1.51% 30,209 224 3.40%
Repurchase Agreements 1,148 6 2.12% 745 9 4.06%
------- ---- ----- ----- ----- ------
Total Interest-Bearing
Liabilities 108,314 940 3.52% 98,864 1,276 5.24%
--------- ------ ----- -------- ------ -----
Net Interest Income $1,184 $1,147
====== ======
Non-Interest Bearing
Deposits 21,425 17,866
Total Cost of Funds 2.94% 4.38%
All Other Liabilities 560 622
Shareholders' Equity 11,746 10,843
Unrealized Gain/(Loss)
on Securities (85) (85)
--------- --------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $141,960 $128,110
========= =========
Net Interest Yield 2.93% 3.01%
Net Interest Margin 3.60% 3.91%
Table 7 - Interest Rate Sensitivity
(In Thousands) March 31, 2002
-------------------------------------------------
Less One Year Greater Non-
Than Through Than Interest
1 Year 5 Years 5 Years Bearing Total
-------- -------- ------- --------- -------
Assets:
Federal Funds Sold $ 10,450 $ -0- $ -0- $ -0- $ 10,450
Investments 11,013 9,247 15,423 -0- 35,683
Net Loans 62,626 23,947 421 -0- 86,994
Non-Interest Earning Assets
and Unearned Assets 9,141 9,141
- - - --------- -------
84,089 33,194 15,844 9,141 142,268
-------- -------- ------- -------- --------
Liabilities and Shareholders' Equity:
Interest-Bearing Deposits 79,640 27,002 -0- -0- 106,642
Non-Interest Bearing Deposits -0- -0- -0- 23,001 23,001
Repurchase Agreements 572 -0- -0- -0- 572
Noninterest Bearing Liabilities
and Shareholders' Equity -0- -0- -0- 12,053 12,053
----- ----- ---- -------- -------
Total 80,212 27,002 -0- 35,054 142,268
-------- -------- ------- -------- --------
Interest Rate Sensitivity Gap 3,877 6,192 15,844 (25,913) -0-
--------- -------- ------- --------- ----
Cumulative Interest Rate
Sensitivity Gap $ 3,877 $ 10,069 $25,913 $ -0- $ -0-
========= ======== ======= ====== =====
13
NONINTEREST INCOME
Total noninterest income was $429,000 for the three month period ended March 31,
2002 as compared to $402,000 for the same period in 2001, an increase of
$27,000. Noninterest income is comprised primarily of customer service fees,
loan fees, and other items.
NONINTEREST EXPENSE
Total noninterest expense was $1,197,000, or 0.84% of average total assets, for
the three month period ended March 31, 2002 as compared to $1,080,000, or 0.84%,
for the same period in 2001. Salaries and employee benefits, occupancy, data
processing fees and office supplies and postage are categories of expenses with
increases when comparing the two periods. The percentage of operating expenses
remained level as average total assets increased approximately $13.8 million for
the year ended March 31, 2002.
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, 2002, the Bank recorded $124,000
in tax expense which resulted in an approximate effective rate of 34.4%.
Comparably, in 2001, the Bank recorded $161,000 in tax expense, resulting in an
approximate effective rate of 38.5%.
FIRST CENTRAL BANCSHARES, INC. AND SUBSIDIARY
PART 2- 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 18, 2002, First Central Bancshares, Inc. held its 2002
Annual Meeting of Shareholders. The following is a brief
description of each matter voted upon and the results of the
voting.
1. Election of Directors
Nominee __For Against Withheld
---------------------- ----- ------- --------
Barry H. Gordon 331,668 11,023 -0-
Robert D. Grimes 342,691 -0- -0-
Joseph Hamdi 342,691 -0- -0-
Benny L. Shubert 342,691 -0- -0-
Ted L. Wampler, Jr. 331,668 11,023 -0-
There were no abstentions or broker non-votes.
The terms of the Office of Directors Ed F. Bell, Gary Kimsey, G.
Bruce Martin, Peter G. Stimpson, and James W. Wilburn, III
continued after the meeting.
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2. The shareholders also approved the appointment of Pugh & Company,
P.C. as independent auditors for 2002. 331,522 shares were voted
in favor of the appointment, with no shares withheld and 11,169
shares voted against the appointment.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
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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: March 13, 2002 By: /s/ Ed F. Bell
------------------------------------------------
Ed F. Bell, Chairman and Chief Executive Officer
Date: March 13, 2002 By: /s/ Joseph Hamdi
------------------------------------------------
Joseph Hamdi, President
Date: March 13, 2002 By: /s/ Ralph Micalizzi
------------------------------------------------
Ralph Micalizzi, Vice President, Cashier
and Controller, First Central Bank
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