-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, O/3IG+Fru5hsPQFicnLdqiBhtdgyLGelYISOKPbH+1jSaObLPyucD6ejaF+b5Z99 cC7EQYM1SfDEOHi/MUg4lw== 0000882377-96-000231.txt : 19961118 0000882377-96-000231.hdr.sgml : 19961118 ACCESSION NUMBER: 0000882377-96-000231 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 19960930 FILED AS OF DATE: 19961114 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH CENTRAL BANCSHARES INC CENTRAL INDEX KEY: 0001005188 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 421449849 STATE OF INCORPORATION: IA FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 000-27672 FILM NUMBER: 96665696 BUSINESS ADDRESS: STREET 1: 825 CENTRAL AVE STREET 2: C/O FIRST FED SAVINGS BANK OF FT DODGE CITY: FORT DODGE STATE: I0 ZIP: 50501 BUSINESS PHONE: 5155767531 MAIL ADDRESS: STREET 1: 825 CENTRAL AVENUE CITY: FORT DODGE STATE: IA ZIP: 50501 10-Q 1 NORTH CENTRAL BANCSHARES, INC. SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 - -------------------------------------------------------------------------------- FORM 10-Q [Mark One] [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended September 30, 1996 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT For the transition period from _______________ to____________ Commission File Number 0-27672 NORTH CENTRAL BANCSHARES, INC. (Exact name of registrant as specified in its charter) IOWA 42-1449849 ---- ---------- (State or other jurisdiction of (I. R. S. Employer incorporation or organization) Identification Number) 825 CENTRAL AVENUE FORT DODGE, IOWA 50501 -------------------------------------------------- (Address of principal executive offices) Registrant's telephone number, including area code(515)573-7531 NONE ------------------------------------------------- Former name, former address and former fiscal year, if changed since last report Check whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ---- ----- Transitional Small Business Disclosure Format (check one): Yes [ ] No [x] State the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Outstanding At November 12, 1996 - ----- -------------------------------- (Common Stock, $.01 par value) 3,810,505 NORTH CENTRAL BANCSHARES, INC. INDEX PAGE PART I. FINANCIAL INFORMATION Item 1. Consolidated Condensed Financial Statements (unaudited) 1 to 5 Consolidated Condensed Statements of Financial Condition at September 30, 1996 and December 31, 1995 1 Consolidated Condensed Statements of Income for the nine months ended September 30, 1996 and 1995 2 Consolidated Condensed Statements of Cash Flows for the nine months ended September 30, 1996 and 1995 3 Notes to Consolidated Condensed Financial Statements 4 & 5 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 6 to 15 PART II. OTHER INFORMATION 16 to 23 Items 1 through 6 16 Signatures 17 Exhibits 18 to 23 NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
ASSETS September 30, December 31, 1996 1995 ------------- ------------ Cash: Interest-bearing $ 2,092,437 $ 2,362,244 Noninterest-bearing 1,013,779 709,398 Securities available for sale 21,893,884 7,799,445 Securities held to maturity 6,498,658 15,994,521 Loans receivable, net 160,384,650 147,871,666 Accrued interest receivable 1,317,519 1,415,111 Foreclosed real estate 120,425 127,989 Premises and equipment, net 1,776,850 1,621,734 Title plant 857,800 857,800 Income taxes receivable 120,965 31,766 Deferred taxes 244,500 67,626 Prepaid expenses and other assets 1,599,541 1,070,396 ----------------- ----------------- Total assets $ 197,921,008 $ 179,929,696 ================= ================= LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits $ 129,458,652 $ 126,672,313 Other borrowed funds 10,500,000 21,940,000 Advances from borrowers for taxes and insurance 368,046 781,545 Dividend payable 250,691 127,829 Accrued expenses and other liabilities 1,274,522 507,681 ----------------- ----------------- Total liabilities $ 141,851,911 $ 150,029,368 ----------------- ----------------- COMMITMENTS STOCKHOLDERS' EQUITY Preferred stock -- -- Common Stock 40,111 37,000 Additional paid-in capital 37,750,227 12,350,840 Retained earnings, substantially restricted 19,781,048 18,220,626 Unrealized gain (loss) on securities available for sale, net of income taxes (32,076) 60,652 Unearned shares, employee stock ownership plan (1,470,213) (768,790) ----------------- ----------------- Total stockholders' equity 56,069,097 29,900,328 ----------------- ----------------- Total liabilities and stockholders' equity $ 197,921,008 $ 179,929,696 ================= =================
See Notes to Consolidated Condensed Financial Statements. 1 NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended Nine Months Ended SEPTEMBER 30, SEPTEMBER 30, ---------------------------------------------- ----------------------------- 1996 1995 1996 1995 ---------------------- ---------------------- -------------------- ------------- Interest Income: Loans receivable: First mortgage loans $ 2,823,390 $ 2,500,667 $ 8,241,977 $ 7,137,035 Consumer loans 521,388 439,605 1,472,851 1,243,458 Securities and cash deposits 479,904 407,377 1,421,624 1,215,585 -------------- -------------- -------------- -------------- 3,824,682 3,347,649 11,136,452 9,596,078 -------------- -------------- -------------- -------------- Interest expense: Deposits 1,553,231 1,606,957 4,652,589 4,671,351 Other borrowed funds 119,513 175,186 463,945 484,625 -------------- -------------- -------------- -------------- 1,672,744 1,782,143 5,116,534 5,155,976 -------------- -------------- -------------- -------------- Net Interest Income 2,151,938 1,565,506 6,019,918 4,440,102 Provision for loan losses 60,000 60,000 180,000 190,000 -------------- -------------- -------------- -------------- Net interest income after provision for loan losses 2,091,938 1,505,506 5,839,918 4,250,102 -------------- -------------- -------------- -------------- Noninterest income: Fees and service charges 166,355 108,218 415,458 325,625 Abstract fees 250,048 220,105 702,301 588,458 Gain on sale of securities available for sale -- -- 13,774 181,871 Other income 83,908 65,515 273,049 206,534 -------------- -------------- -------------- -------------- Total noninterest income 500,311 393,838 1,404,582 1,302,488 -------------- -------------- -------------- -------------- Noninterest expense: Salaries and employee benefits 466,115 404,108 1,495,268 1,227,910 Premises and equipment 93,367 96,552 317,185 278,930 Data processing 59,887 60,077 178,959 171,500 One-time SAIF special assessment 817,275 -- 817,275 -- SAIF deposit insurance premiums 74,215 71,527 220,314 214,599 Other expenses 320,913 286,632 843,321 822,721 -------------- -------------- -------------- -------------- Total noninterest expense 1,831,772 918,896 3,872,322 2,715,660 -------------- -------------- -------------- -------------- Income before income taxes 760,477 980,448 3,372,178 2,836,930 Provision for income taxes 260,216 355,287 1,209,599 1,043,738 -------------- -------------- -------------- -------------- Net income $ 500,261 $ 625,161 $ 2,162,579 $ 1,793,192 ============== ============== ============== ============== Earnings per share $ 0.13 $ 0.16 $ 0.56 $ 0.46 ============== ============== ============== ============== Dividends declared per common share $ 0.0625 $ 0.1000 $ 0.2250 $ 0.5500 ============== ============== ============== ==============
See Notes to Consolidated Condensed Financial Statements. 2 NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF INCOME (UNAUDITED)
Nine Months Ended SEPTEMBER 30, --------------------------------------------- 1996 1995 --------------------- --------------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 2,162,579 $ 1,793,192 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 180,000 190,000 Depreciation 150,878 122,228 Amortization and accretion (141,992) (213,053) Deferred taxes (125,964) 29,396 Effect of contribution to employee stock ownership plan 112,508 -- (Gain) on sale of foreclosed real estate and loans, net (9,323) (8,045) (Gain) on sale of securities available for sale (13,774) (181,871) Loss on disposal of equipment 19,781 -- Change in assets and liabilities: (Increase) decrease in accrued interest receivable 97,592 (184,296) (Increase) in income taxes receivable (89,199) -- (Increase) in prepaid expenses and other assets (529,145) (662,748) (Decrease) in income taxes payable -- (34,775) Increase in accrued expenses and other liabilities 766,841 3,576 ------------- -------------- Net cash provided by operating activities 2,580,782 853,604 -------------- -------------- CASH FLOWS FROM INVESTING ACTIVITIES Net (increase) in loans (5,188,068) (6,889,409) Purchase of loans (7,370,289) (13,102,339) Proceeds from sale of securities available for sale 53,891 1,165,856 Purchase of securities available for sale (14,274,965) (1,674,631) Proceeds from maturities of securities held to maturity 9,500,000 6,000,000 Purchase of securities held to maturity -- (4,991,650) Purchase of premises and equipment (325,874) (233,991) Proceeds from sale of equipment 100 500 Purchase of title plant -- (699,270) Other 16,885 (73,432) -------------- --------------- Net cash (used in) investing activities (17,588,320) (20,498,366) --------------- --------------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase in deposits 2,786,339 2,376,678 (Decrease) in advances from borrowers for taxes and insurance (413,499) (357,090) Net change in short term borrowings (10,500,000) 13,000,000 Proceeds from other borrowed funds -- 3,150,000 Payments of other borrowings (892,000) (245) Proceeds from issuance of 2,625,467 shares of common stock 25,412,159 -- Payments for expenses incurred relating to conversion to stock form (871,592) -- Dividends paid (479,295) (654,063) -------------- -------------- Net cash provided by financing activities 15,042,112 17,515,280 -------------- ------------- Net increase (decrease) in cash 34,574 (2,129,482) CASH Beginning 3,071,642 4,977,724 -------------- -------------- Ending $ 3,106,216 $ 2,848,242 ============== ============== SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION Cash payments for: Interest paid to depositors $ 4,632,704 $ 4,683,642 Interest paid on borrowings 455,175 445,099 Income taxes 1,424,761 1,049,117
See Notes to Consolidated Condensed Financial Statements. 3 ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES 1. SIGNIFICANT ACCOUNTING POLICIES The consolidated condensed financial statements for the three and nine month periods ended September 30, 1996 and 1995 are unaudited. In the opinion of the management of North Central Bancshares, Inc. (the "Company" or the "Registrant") these financial statements reflect all adjustments, consisting only of normal recurring accruals, necessary to present fairly these consolidated financial statements. The results of operations for the interim periods are not necessarily indicative of results which may be expected for an entire year. Certain information and footnote disclosure normally included in complete financial statements prepared in accordance with generally accepted accounting principles have been omitted in accordance with the requirements for interim financial statements. The financial statements and notes thereto should be read in conjunction with the Company's 1995 Annual Report on Form 10-K. The consolidated condensed financial statements include the accounts of the Company and its wholly-owned subsidiaries (See Note 2). All significant intercompany balances and transactions have been eliminated in consolidation. 2. REORGANIZATION The Company was organized on December 5, 1995 at the direction of the Board of Directors of First Federal Savings Bank of Fort Dodge (the "Bank") for the purpose of acquiring all of the capital stock of the Bank, in connection with the conversion of the Bank, and North Central Bancshares, M.H.C. (the "Mutual Holding Company" or "MHC") from the mutual to the stock holding company structure (these transactions are collectively referred to as the "Reorganization"). On March 20, 1996, upon completion of the Reorganization, the Company issued an aggregate of 4,011,057 shares of its common stock, 1,385,590 shares of which were issued in exchange for all of the Bank's issued and outstanding shares, except for shares owned by the MHC which were cancelled, and 2,625,467 shares of which were sold in Subscription and Community Offerings (the "Offering") at a price of $10.00 per share, with gross proceeds amounting to approximately $26,254,670. In addition, the Company replaced the Bank as the issuer listed on The Nasdaq Stock Market. At this time, the Company conducts business as a unitary savings and loan holding company and the principal business of the Company consists of the operation of its wholly owned subsidiary, the Bank. The accompanying condensed consolidated financial statements include the accounts of the Company and its subsidiaries. For periods prior to the Reorganization the statements include the accounts of the Bank and its subsidiaries and the accounts of the MHC. The inclusion of the accounts of the MHC had the effect of increasing stockholders' equity at December 31, 1995 by $314,000 and decreasing net income for the three and nine months ended September 30, 1995 by $19,000 and $39,000, respectively as compared to amounts previously reported by the Bank. 4 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (Continued) 3. EARNINGS PER SHARE The earnings per share amounts were computed using the weighted average number of shares outstanding during the periods presented. In accordance with Statement of Position No. 93-6, Employers' Accounting for Employee Stock Ownership Plans, issued by the American Institute of Certified Public Accountants, shares owned by the Bank's Employee Stock Ownership Plan that have not been committed to be released are not considered to be outstanding for the purpose of computing earnings per share. For the three and nine month periods ended September 30, 1996, the weighted average number of shares outstanding were 3,852,586 and 3,872,209, respectively. For the three and nine month periods ended September 30, 1995, the weighted average number of shares outstanding were 3,921,180 and 3,917,828, respectively. The number of shares outstanding for the three and nine month periods ended at September 30, 1995 were restated to reflect the conversion ratio effected as part of the Reorganization. 4. DIVIDENDS On August 22, 1996, the Company declared a cash dividend on its common stock, payable on October 10, 1996 to stockholders of record as of September 12, 1996, equal to $0.0625 per share. 5. PENDING ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board ("FASB") has approved, effective for fiscal years beginning after December 15, 1995, Statement No. 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of, Statement No. 122, Accounting for Mortgage Servicing Rights and Statement No. 123, Accounting for Stock-Based Compensation. The implementation of FASB Statements No. 121, 122 and 123 did not have a material effect on the Company's financial statements when adopted. FASB has approved, effective for transactions entered into after December 31, 1996, Statement No. 125, Accounting for Transfers and Servicing of Financial Assets and Extinguishments of Liabilities. The implementation of FASB Statement No. 125 is not expected to have a material effect on the Company's financial statements when adopted. 6. RECENT DEVELOPMENTS On October 22, 1996, the Company completed a stock repurchase program, acquiring 200,552 shares of the Company's common stock, which represented 5% of the outstanding shares at an aggregate cost of $2,594,642. For the quarter ended September 30, 1996, the Company did not repurchase any shares of the Company's common stock. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS EXPLANATORY NOTE This Quarterly Report on Form 10-Q contains forward-looking statements consisting of estimates with respect to the financial condition, results of operations and business of the Company that are subject to various factors which could cause actual results to differ materially from these estimates. These factors include, changes in general, economic and market, and legislative and regulatory conditions, and the development of an adverse interest rate environment that adversely affects the interest rate spread or other income anticipated from the Company's operations and investments. FINANCIAL CONDITION Total assets increased by $18.0 million, or 10.0%, from $179.9 million at December 31, 1995 to $197.9 million at September 30, 1996. Securities available for sale increased by $14.1 million, or 180.7%, primarily due to the purchase of U.S. Treasury Notes and equity securities. Securities held to maturity decreased $9.5 million, or 59.4%, primarily due to the maturity of U.S. Treasury Notes and the reinvestment of the proceeds from such securities into securities classified as available for sale. Total loans receivable, net, increased by $12.5 million, or 8.5%, due to originations of $18.2 million of first mortgage loans secured primarily by one-to-four family residences, purchases of $7.4 million of first mortgage loans secured by one-to-four family and multi-family residences and originations of $7.6 million of second mortgage loans, which originations and purchases were offset in part by payments and prepayments of loans (of approximately $25.7 million) during the nine months ended September 30, 1996. Deposits increased $2.8 million, or 2.2%, from $126.7 million at December 31, 1995 to $129.5 million at September 30, 1996. Other borrowings, primarily Federal Home Loan Bank of Des Moines ("FHLB") advances, decreased by $11.4 million, to $10.5 million at September 30, 1996 from $21.9 million at December 31, 1995, primarily due to the use of a portion of the proceeds from the Offering to repay FHLB advances. Total stockholders' equity increased $26.2 million, from $29.9 million at December 31, 1995 to $56.1 million at September 30, 1996, primarily due to the proceeds received from the issuance of common stock in the Offering. CAPITAL The Company's total stockholders' equity increased by $26.2 million to $56.1 million at September 30, 1996 from $29.9 million at December 31, 1995. The unrealized gain (loss) on securities available for sale decreased by $93,000 to $(32,000) at September 30, 1996 from $61,000 at December 31, 1995. The unearned shares from the Employee Stock Ownership Plan increased by $701,000 to $1.5 million at September 30, 1996 from $769,000 at December 31, 1995, primarily due to the purchase of additional shares by the Employee Stock Ownership Plan as a part of the Offering. The Office of Thrift Supervision (the "OTS") requires that the Bank meet minimum tangible, leverage (core) and risk-based capital requirements. As of September 30, 1996, the Bank exceeded all of its regulatory capital requirements. The Bank's 6 required, actual and excess capital levels as of September 30, 1996 are as follows: Amount Percentage of Assets (DOLLAR AMOUNTS IN THOUSANDS) Tangible capital: Capital level $ 42,871 21.82% Requirement 2,947 1.50% ----------- ----------- Excess $ 39,924 20.32% =========== =========== Core capital: Capital level $ 42,871 21.82% Requirement 5,893 3.00% ----------- ----------- Excess $ 36,978 18.82% =========== =========== Risk-based capital: Capital level $ 44,222 41.11% Requirement 8,605 8.00% ----------- ----------- Excess $ 35,617 33.11% =========== =========== LIQUIDITY OTS regulations require that thrift institutions such as the Bank maintain an average daily balance of liquid assets (cash, certain time deposits, banker's acceptances and specified U.S. government, state or federal agency obligations) equal to a monthly average of not less than 5% of their net withdrawable deposits, plus short term borrowings. At September 30, 1996, the Bank's liquidity position was $17.1 million or 12.8% of liquid assets, compared to $9.8 million or 6.9% at December 31, 1995. The increase of $7.3 million was primarily due to the release of $8.5 million of pledged liquid assets held as collateral on the Bank's borrowings from the FHLB. OTS regulations also require that thrift institutions such as the Bank maintain an average daily balance of short term liquid assets (cash, certain time deposits, banker's acceptances and specified U.S. government, state or federal agency obligations) equal to a monthly average of not less than 1% of their net withdrawable deposits, plus short term borrowings. At September 30, 1996, the Bank's short term liquidity position was $3.1 million or 2.4% of short term liquid assets, compared to $3.3 million or 2.3% at December 31, 1995. The Bank's primary sources of funds are deposits, amortization and prepayment of loans, maturities of securities and other investments, and earnings and funds provided from operations. While scheduled principal repayments on loans are a relatively predictable source of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions, and competition. The Bank manages the pricing of its deposits to maintain a desired deposit balance. In addition, the Bank invests in short-term interest-earning assets, which provide liquidity to meet lending requirements. At September 30, 1996, $8.5 million, or 45.9%, of the Bank's investment portfolio, excluding equity securities, was scheduled to mature in one year or less and $10.0 million, or 54.1%, was scheduled to mature in one to five years. For additional information about cash flows from the Bank's operating, financing and investing activities, see Statements of Cash Flows included in the Condensed Consolidated Financial Statements. 7 DEPOSIT INSURANCE-SAIF RECAPITALIZATION For the first three quarters of 1996, SAIF-insured institutions paid deposit insurance assessment rates of $0.23 to $0.31 per $100 of deposits. In contrast, institutions insured by the FDIC's Bank Insurance Fund (the "BIF") that were well capitalized and without any significant supervisory concerns paid the minimum annual assessment of $2,000, and all other BIF-insured institutions paid deposit insurance assessment rates of $0.03 to $0.27 per $100 of deposits. In response to the SAIF/BIF assessment disparity, the Deposit Insurance Funds Act of 1996 (the "Funds Act") was enacted into law on September 30, 1996. The Funds Act amended the Federal Deposit Insurance Act (the "FDIA") in several ways to recapitalize the SAIF and reduce the disparity in the assessment rates for the BIF and the SAIF. The Funds Act authorized the FDIC to impose a special assessment on all institutions with SAIF-assessable deposits in the amount necessary to recapitalize the SAIF. As implemented by the FDIC, institutions with SAIFassessable deposits will pay a special assessment, subject to adjustment, of 65.7 basis points per $100 of the institution's SAIF-assessable deposits, and the special assessment will be paid on November 27, 1996. The special assessment is based on the amount of SAIF-assessable deposits held on March 31, 1995. The Funds Act provides that the amount of the special assessment will be deductible for federal income tax purposes for the taxable year in which the special assessment is paid. Based on the foregoing, the special assessment for the Bank is $817,000 (before taxes) and has been charged against income for the quarter ended September 30, 1996. In view of the recapitalization of the SAIF, the FDIC proposed on October 8, 1996, to reduce the assessment rate for SAIFassessable deposits for periods beginning on October 1, 1996. As would be effective for the SAIF-assessable deposits of SAIFinsured savings points for the last quarter of 1996 and would range from 0 to 27 basis points for subsequent assessment periods. However, the Funds Act also provides that the FDIC cannot assess regular insurance assessments for an insurance fund unless required to maintain or to achieve the designated reserve ratio of 1.25%, except on those of its member institutions that are not classified as "well capitalized" or that have been found to have "moderately severe" or "unsatisfactory" financial, operational or compliance weaknesses. The Bank has not been so classified by the FDIC or the OTS. Accordingly, assuming that the designated reserve ratio is maintained by the SAIF after the collection of the special SAIF assessment, the Bank, as long as it maintains its regulatory status, will have to pay substantially lower regular SAIF assessments compared to those paid by the Bank in recent years. In addition, the Funds Act expanded the assessment base for the payments on the bonds (the "FICO bonds") issued in the late 1980s by the Financing Corporation to recapitalize the now defunct Federal Savings and Loan Insurance Corporation to include the deposits of both BIF- and SAIF-insured institutions beginning January 1, 1997. Until December 31, 1999, or such earlier date on which the last savings association ceases to exist, the rate of assessment for BIF-assessable deposits will be one-fifth of the rate imposed on SAIF-assessable deposits. It has been estimated that the rates of assessment for the payment of interest on the FICO bonds will be approximately 1.3 basis points for BIF-assessable deposits and approximately 6.4 basis points 8 for SAIF-assessable deposits. The Funds Act also provides for the merger of the BIF and SAIF on January 1, 1999, with such merger being conditioned upon the prior elimination of the thrift charter. The Secretary of the Treasury is required to conduct a study of relevant factors with respect to the development of a common charter for all insured depository institutions and abolition of separate charters for banks and thrifts and to report the Secretary's conclusions and findings to the Congress on or before March 31, 1997. RECAPTURE OF BAD DEBT RESERVES Prior to the enactment, on August 20, 1996, of the Small Business Job Protection Act of 1996 (the "1996 Act"), for federal income tax purposes, thrift institutions such as the Bank, which met certain definitional tests primarily relating to their assets and the nature of their business, were permitted to establish tax reserves for bad debt and to make annual additions thereto, which additions could, within specified limitations, be deducted in arriving at their taxable income. The Bank's deduction with respect to "qualifying loans," which are generally loans secured by certain interests in real property, could be computed using an amount based on a six-year moving average of the Bank's actual loss experience (the "Experience Method"), or a percentage equal to 8.0% of the Bank's taxable income (the "PTI Method"), computed without regard to this deduction and with additional modifications and reduced by the amount of any permitted addition to the non-qualifying reserve. Under the 1996 Act, the PTI Method was repealed and the Bank will be required to use the Experience Method of computing additions to its bad debt reserve for taxable years beginning with the Bank's taxable year beginning January 1, 1996. In addition, the Bank will be required to recapture (i.e., take into income) over a six-year period, beginning with the Bank's taxable year beginning January 1, 1996, the excess of the balance of its bad debt reserves (other than the supplemental reserve) as of December 31, 1995 over the greater of (a) the balance of such reserves as of December 31, 1987 (or over a lesser amount if the Bank's portfolio decreased since December 31, 1987) or (b) an amount that would have been the balance of such reserves as of December 31, 1995 had the Bank always computed the additions to its reserves using the six-year moving average Experience Method. However, under the 1996 Act, such recapture requirements will be suspended for each of the two successive taxable years beginning January 1, 1996 in which the Bank originates a minimum amount of certain residential loans during such years that is not less than the average of the principal amounts of such loans made by the Bank during its six taxable years preceding January 1, 1996. This legislation will result in the Bank's recapture of reserves with the aggregate tax liability of $530,000. Since the Bank has already provided a deferred income tax liability of this amount for financial reporting purposes, there will be no adverse impact to the Bank's financial condition or results of operations from the enactment of this legislation. RESULTS OF OPERATIONS INTEREST INCOME. Interest income increased by $477,000 to $3.8 million for the three months ended September 30, 1996 compared to $3.3 million for the three months ended September 30, 1995. The increase in interest income was primarily due to a $25.6 million increase in the average balance of interest earning assets 9 RESULTS OF OPERATIONS (Continued) (primarily first and second mortgage loans) to $191.0 million for the three months ended September 30, 1996, from $165.4 million for the comparable 1995 period. The increase in the average balance in first mortgage loans and consumer loans (primarily second mortgage loans) generally reflects an increase over the past twelve months in originations of first and second mortgage loans and purchases of first mortgage loans secured by one-to-four family residences and multi-family residences in excess of payments and prepayments. See "Financial Condition." The increase in interest income was also due to an increase of $3.4 million in the average balance of securities to $27.4 million for the three months ended September 30, 1996 from $24.0 million for the three months ended September 30, 1996, reflecting the investment of proceeds from the Offering. The impact of the increase in the average balances was offset in part by a decrease in the average yield on first mortgage loans from 8.29% for the three months ended September 30, 1995 to 8.09% for the three months ended September 30, 1996. The increase in interest income also reflected unscheduled prepayments and repayments of purchased loans which resulted in increased amortization of the unearned discount in 1995. The average yield on interest earning assets decreased from 8.07% for the three months ended September 30, 1995 to 8.00% for the three months ended September 30, 1996. Interest income increased by $1.5 million to $11.1 million for the nine months ended September 30, 1996 compared to $9.6 million for the nine months ended September 30, 1995. The increase in interest income was primarily due to a $22.5 million increase in the average balance of interest earning assets (primarily first and second mortgage loans) to $185.3 million for the nine months ended September 30, 1996, from $162.8 million for the comparable 1995 period. The increase in the average balance in first and second mortgage loans generally reflects an increase over the past twelve months in originations of first and second mortgage loans and purchases of first mortgage loans secured by one-to-four family residences and multi-family residences in excess of payments and prepayments. See "Financial Condition." The increase in interest income was also due to an increase in the average yield on securities to 6.60% for the nine months ended September 30, 1996 compared to 6.06% for the nine months ended September 30, 1995. This increase was due to the purchase of certain higher yielding equity securities and increases in market interest rates. The increase in interest income was also due to an increase in the average yield on first mortgage loans to 8.13% for the nine months ended September 30, 1996 from 8.08% for the nine months ended September 30, 1995, reflecting an upward adjustment of interest rates on the Bank's adjustable-rate mortgage loan portfolio and the higher yields on loans purchased. The increase in interest income also reflected unscheduled prepayments and repayments of purchased loans which resulted in increased amortization of the unearned discount in 1995. The average yield on interest earning assets increased to 8.02% for the nine months ended September 30, 1996 from 7.86% for the nine months ended September 30, 1995. INTEREST EXPENSE. Interest expense decreased by $109,000 to $1.7 million for the three months ended September 30, 1996 compared to $1.8 million for the three months ended September 30, 1995. The decrease in interest expense was primarily due to a decrease in the cost of interest-bearing deposits to 4.90% for the three months ended September 30, 1996 from 5.15% for the three months ended September 30, 1995. The decline in average costs was due 10 RESULTS OF OPERATIONS (Continued) to a net increase of $2.1 million in the average balance of NOW, Money Market and passbook savings accounts to $37.5 million for the three months ended September 30, 1996 from $35.5 million for the three months ended September 30, 1995, which accounts bear interest at lower rates than the Company's average cost of funds. The decline in the average costs was also due to a general decline in the Company's average cost of deposits (particularly passbook accounts) reflecting a decline in market interest rates. The decrease in interest expense was also due to a decrease of $3.9 million in the average borrowings from $12.1 million for the three months ended September 30, 1995 to $8.2 million for the three months ended September 30, 1996, as the Company used a portion of the proceeds of the Offering to repay FHLB advances, shortly after the Offering. This decrease was offset in part by an increase of $2.3 million in the average interest-bearing deposits from $123.8 million for the three months ended September 30, 1995 to $126.1 million for the three months ended September 30, 1996, due to the Bank's offering of favorable rates on certain types of deposit accounts. The average cost of interest bearing liabilities decreased to 4.96% for the three months ended September 30, 1996 from 5.20% for the three months ended September 30, 1995. Interest expense decreased by $39,000 to $5.1 million for the nine months ended September 30, 1996 compared to $5.2 million for the nine months ended September 30, 1995. The decrease in interest expense was primarily due to the decrease in the average cost of average interest-bearing deposits to 4.92% for the nine months ended September 30, 1996 from 5.09% for the nine months ended September 30, 1995. The decline in average costs was due to a net increase of $3.4 million in the average balance of NOW, Money Market and passbook savings accounts to $37.9 million for the nine months ended September 30, 1996 from $34.5 million for the nine months ended September 30, 1995, which accounts bear interest at lower rates than the Company's average cost of funds. The decline in the average cost was primarily due to a decline in the Company's average cost of passbook accounts reflecting a general decline in market interest rates. The decrease in interest expense was also due to a decrease of $768,000 in the average borrowings from $11.2 million for the nine months ended September 30, 1995 to $10.4 million for the nine months ended September 30, 1996, as the Company used a portion of the proceeds of the Offering to repay FHLB advances shortly after the Offering, offset in part by an increase in the cost of such funds. This decrease was offset in part by an increase of $3.6 million in the average interest-bearing deposits from $122.6 million for the nine months ended September 30, 1995 to $126.2 million for the nine months ended September 30, 1996, due to the Bank's offering of favorable rates on certain types of deposit accounts. The average cost of interest bearing liabilities decreased to 5.00% for the nine months ended September 30, 1996 from 5.15% for the nine months ended September 30, 1995. NET INTEREST INCOME. Net interest income before provision for loan losses increased by $586,000 to $2.2 million for the three months ended September 30, 1996 from $1.6 million for the three months ended September 30, 1995. The increase is primarily due to the increase in the excess of average interest earning assets over average interest bearing liabilities and the increase in the Bank's interest rate spread (i.e., the difference in the average yield on assets and the average cost of liabilities) from 2.87% for the three months ended September 30, 1995 to 3.04% for the 11 RESULTS OF OPERATIONS (Continued) three months ended September 30, 1996. Net interest income before provision for loan losses increased by $1.6 million to $6.0 million for the nine months ended September 30, 1996 from $4.4 million for the nine months ended September 30, 1995. The increase is primarily due to the increase in the excess of average interest earning assets over average interest bearing liabilities and the increase in the Bank's interest rate spread from 2.71% for the nine months ended September 30, 1995 to 3.02% for the nine months ended September 30, 1996. The following tables set forth certain information relating to the Bank's average balance sheets and reflect the average yield on assets and average cost of liabilities for the three and nine month periods ended September 30, 1996 and 1995. 12
RESULTS OF OPERATIONS (Continued) NINE MONTHS ENDED SEPTEMBER 30, 1996 NINE MONTHS ENDED SEPTEMBER 30, 1995 ---------------------------------------- --------------------------------------- Average Average Average Yield/ Average Yield/ Balance Interest Cost Balance Interest Cost ------- -------- ------- ------- -------- ------- (Dollars in Thousands) (Dollars in Thousands) Interest-earning assets: First mortgage loans $135,109 $ 8,242 8.13% $117,842 $ 7,137 8.08% Consumer loans 20,524 1,473 9.59% 17,552 1,243 9.47% Securities available for sale 14,292 692 6.47% 5,175 247 6.38% Securities held to maturity 11,775 595 6.75% 19,876 888 5.98% Interest bearing cash 3,613 134 4.97% 2,336 81 4.59% ------- ------- ------- ------- ------- ------- Total interest-earning assets $185,313 $11,136 8.02% $162,781 $ 9,596 7.86% ------- ------- ------- ------- Noninterest-earning assets 4,574 3,640 ------- ------- Total assets $189,887 $166,421 ======== ======== Interest-bearing liabilities: NOW and money market savings $18,538 $ 394 2.84% $14,465 $ 298 2.77% Passbook savings 19,361 330 2.28% 20,078 440 2.92% Certificates of deposits 88,270 3,928 5.94% 88,043 3,933 5.97% Borrowed funds 10,392 464 5.96% 11,160 485 5.81% ------- ------- -------- ------- ------- ------- Total interest-bearing liabilities $136,561 $ 5,116 5.00% $133,746 $ 5,156 5.15% ------- ------- ------- ------- Noninterest-bearing liabilities 5,094 4,139 ------- ------- Total liabilities $141,655 $137,885 Equity 48,232 28,536 ------- ------- Total liabilities and equity $189,887 $166,421 ======== ======== Net interest income $ 6,020 $ 4,440 ======= ======= Net interest rate spread 3.02% 2.71% ======= ======= Interest-earning assets and net interest margin 4.33% 3.63% ======= ======= Ratio of average interest-earning assets to average interest-bearing liabilities 135.70% 121.71% ======= =======
THREE MONTHS ENDED SEPTEMBER 30, 1996 THREE MONTHS ENDED SEPTEMBER 30, 1995 ---------------------------------------- ---------------------------------------- Average Average Average Yield/ Average Yield/ Balance Interest Cost Balance Interest Cost ------- -------- ------- ------- -------- ------- (Dollars in Thousands) (Dollars in Thousands) Interest-earning assets: First mortgage loans $139,558 $ 2,823 8.09% $120,617 $ 2,501 8.29% Consumer loans 21,701 521 9.56% 18,206 440 9.58% Securities available for sale 18,917 304 6.38% 5,354 89 6.62% Securities held to maturity 8,498 148 6.92% 18,656 292 6.21% Interest bearing cash 2,307 29 4.93% 2,564 26 4.07% ------- ------- ------- ------- ------- ------- Total interest-earning assets $190,981 $ 3,825 8.00% $165,398 $ 3,348 8.07% ------- ------- ------- ------- Noninterest-earning assets 4,944 3,673 ------- ------- Total assets $195,925 $169,071 ======== ======== Interest-bearing liabilities: NOW and money market savings $19,096 $ 139 2.89% $16,176 $ 121 2.96% Passbook savings 18,427 103 2.23% 19,296 134 2.75% Certificates of deposits 88,562 1,311 5.89% 88,313 1,352 6.07% Borrowed funds 8,210 120 5.79% 12,113 175 5.74% ------- ------- -------- ------- ------- ------- Total interest-bearing liabilities $134,295 $ 1,673 4.96% $135,898 $ 1,782 5.20% ------- ------- ------- ------- Noninterest-bearing liabilities 5,531 4,178 ------- ------- Total liabilities $139,826 $140,076 Equity 56,099 28,995 ------- ------- Total liabilities and equity $195,925 $169,071 ======== ======== Net interest income $ 2,152 $ 1,566 ======= ======= Net interest rate spread 3.04% 2.87% ======= ======= Interest-earning assets and net interest margin 4.51% 3.78% ======= ======= Ratio of average interest-earning assets to average interest-bearing liabilities 142.21% 121.71% ======= =======
13 RESULTS OF OPERATIONS (Continued) PROVISION FOR LOAN LOSSES. The Company's provision for loan losses was $60,000 for the three months ended September 30, 1996 and 1995. The Company's provision for loan losses was $180,000 for the nine months ended September 30, 1996 and $190,000 for the nine months ended September 30, 1995. The Company establishes provisions for loan losses, which are charged to operations, in order to maintain the allowance for loan losses at a level which is deemed to be appropriate based upon an assessment of prior loss experience, industry standards, past due loans, economic conditions, the volume and type of loans in the Bank's portfolio, which includes a significant amount of multifamily loans, substantially all of which are purchased and are collateralized by properties located outside of the Bank's market area, and other factors related to the collectibility of the Bank's loan portfolio. The net charge offs were $9,000 for the nine months ended September 30, 1996 as compared to $54,000 for the nine months ended September 30, 1995. The resulting allowance for loan losses was $1.9 million at September 30, 1996 as compared to $1.7 million at September 30, 1995 and $1.7 million at December 31, 1995. This increase in the allowance reflects the increase in total loans from $144.8 million at September 30, 1995 to $160.4 million at September 30, 1996. The level of nonperforming loans increased to $287,000 at September 30, 1996 from $211,000 at September 30, 1995. Management believes that the allowance for loan losses is adequate. While management estimates loan losses using the best available information, such as independent appraisals for significant collateral properties, no assurance can be made that future adjustments to the allowance will not be necessary based on changes in economic and real estate market conditions, further information obtained regarding known problem loans, identification of additional problem loans, and other factors, both within and outside of management's control. NONINTEREST INCOME. Total noninterest income increased by $106,000 to $500,000 for the three months ended September 30, 1996 from $394,000 for the three months ended September 30, 1995. The increase is due to increases in all categories of noninterest income. Fees and service charges increased $58,000, primarily due to increases in overdraft fees and loan prepayment fees. Abstract fees increased $30,000 due to increased sales volume. Other income increased $18,000 primarily due to increases in annuity sales. Total noninterest income increased by $102,000 to $1.4 million for the nine months ended September 30, 1996 from $1.3 million for the nine months ended September 30, 1995. The increase is due to increases in fees and service charges, abstract fees and other income, offset in part by a decrease in the gain on the sale of securities of $168,000. Fees and service charges increased $90,000, primarily due to increases in overdraft fees and loan prepayment fees. Abstract fees increased $113,000 due to increased sales volume. Other income increased $67,000 primarily due to increases in annuity sales. NONINTEREST EXPENSE. Total noninterest expense increased by $913,000 to $1.8 million for the three months ended September 30, 1996 from $919,000 for the three months ended September 30, 1995. The increase is primarily due to the $817,000 one-time special assessment to recapitalize the SAIF. See "Deposit Insurance SAIF Recapitalization". Absent the one-time assessment, the increase in noninterest expense reflects a $62,000 increase in 14 RESULTS OF OPERATIONS (Continued) salaries and benefits and a $34,000 increase in other expenses. The increase in salaries and benefits was primarily a result of the increased costs associated with the ESOP and normal salary increases. The increase in other expenses is primarily a result of higher expenditures for professional fees, costs associated with being a public company and costs associated with certain demand and NOW checking account customers, offset in part by lower advertising costs and a write down of the National bankruptcy claim. The Company's efficiency ratio for the three months ended September 30, 1996 and 1995 was 69.06% and 46.90%, respectively. The Company's ratio of noninterest expense to average assets for the three months ended September 30, 1996 and 1995 was 3.74% and 2.17%, respectively. Excluding the one-time SAIF assessment for the three months ended September 30, 1996, the efficiency ratio would have been 38.25% and the ratio of noninterest expense to average assets would have been 2.07%. Total noninterest expense increased by $1.2 million to $3.9 million for the nine months ended September 30, 1996 from $2.7 million for the nine months ended September 30, 1995. The increase is primarily due to the $817,000 one-time special assessment to recapitalize the SAIF. See "Deposit Insurance SAIF Recapitalization". Absent the one-time assessment, the increase in noninterest expense reflects a $267,000 increase in salaries and benefits and a $38,000 increase in premises and equipment. The increase in salaries and benefits was primarily a result of a one time adoption of a retirement plan for the benefit of the chairman of the board, the increased costs associated with the ESOP and normal salary increases. The increase in premises and equipment is primarily a result of increased depreciation expense due to expenditures on buildings and equipment in the Bank's Nevada office and equipment in the abstract companies. The Company's efficiency ratio for the nine months ended September 30, 1996 and 1995 was 52.16% and 47.29%, respectively. The Company's ratio of noninterest expense to average asset for the nine months ended September 30, 1996 and 1995 was 2.72% and 2.18%, respectively. Excluding the one-time SAIF assessment for the nine months ended September 30, 1996, the efficiency ratio would have been 41.15% and the ratio of noninterest expense to average assets would have been 2.15%. INCOME TAXES. Income taxes decreased by $95,000 to $260,000 for the three months ended September 30, 1996 as compared to $355,000 for the three months ended September 30, 1995. The decrease was primarily due to a decrease in pre-tax earnings during the 1996 period as compared to the 1995 period. Income taxes increased by $166,000 to $1.2 million for the nine months ended September 30, 1996 as compared to $1.0 million for the nine months ended September 30, 1995. The increase was primarily due to an increase in pre-tax earnings during the 1996 period as compared to the 1995 period. NET INCOME. Net income totalled $500,000 for the three months ended September 30, 1996, compared to $626,000 for the same period in 1995. Net income totalled $2.2 million for the nine months ended September 30, 1996, compared to $1.8 million for the same period in 1995. 15 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not applicable ITEM 2. CHANGES IN SECURITIES Not applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS At a special meeting of shareholders held on September 21, 1996, the following matter was voted upon, and the results of the voting on such matter are indicated below: The proposal to approve the 1996 North Central Bancshares, Inc. Stock Option Plan: For 2,796,589 Against 240,551 Abstain 34,602 Broker non-votes 588,792 ITEM 5. OTHER INFORMATION Not applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 11. Statement on computation of per share earnings. Exhibit 27. Financial data schedule. (Only submitted with filing in electronic format.) Exhibit 99.1 Press Release (regarding the issuance of limited financial information for the quarter ended September 30, 1996). (b) Reports on Form 8-K A Form 8-K was filed on July 24, 1996 to report, pursuant to Item 5, the issuance of limited financial information for the quarter ended June 30, 1996. A Form 8-K was filed on August 26, 1996 to report, pursuant to Item 5, the payment of a cash dividend on the Company's common stock. 16 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned thereunto duly authorized. NORTH CENTRAL BANCSHARES, INC. DATE: November 12, 1996 BY: /s/ David M. Bradley David M. Bradley, CPA President and Chief Executive Officer DATE: November 12, 1996 BY: /s/ John L. Pierschbacher John L. Pierschbacher, CPA Principal Financial Officer 17 EX-11 2 STATEMENT ON COMPUTATION OF PER SHARE EARNINGS. Exhibit 11. Statement on computation of per share earnings. For the three months ended September 30, 1996 and 1995, the primary and fully diluted weighted average number of shares outstanding were 3,852,586 and 3,921,180, respectively. For the nine months ended September 30, 1996 and 1995, the primary and fully diluted weighted average number of shares outstanding were 3,872,209 and 3,917,828, respectively. The number of shares outstanding for the three and nine month periods ended September 30, 1995 were restated to reflect the conversion ratio of 1.0841375 shares of the Company's common stock per share of the Bank's common stock effected as part of the Reorganization. 18 EX-27 3 FDS -- NORTH CENTRAL BANCSHARES, INC.
9 This schedule contains summary financial information extracted from the consolidated condensed statement of financial condition and the consolidated condensed statement of income and is qualified in its entirety by reference to such financial statements. 9-MOS DEC-31-1996 JAN-01-1996 SEP-30-1996 1,013,779 2,092,437 0 0 21,893,884 6,498,658 6,529,221 160,384,650 1,905,931 197,921,008 129,458,652 7,500,000 1,893,259 3,000,000 0 0 40,111 56,028,986 197,921,008 9,714,828 1,421,624 0 11,136,452 4,652,589 5,116,534 6,019,918 180,000 13,774 3,872,322 3,372,178 3,372,178 0 0 2,162,579 .56 .56 8.02 287,000 0 0 0 1,735,599 9,000 0 1,905,931 0 0 0
EX-99.1 4 PRESS RELEASE Exhibit 99.1 Press release FORT DODGE, IOWA -- North Central Bancshares, Inc., (the "Company") the holding company for First Federal Savings Bank of Fort Dodge (the "Bank"), announced today that the Company earned $500,000, or $0.13 per share for the third quarter of 1996, after posting the one-time pre-tax special assessment of $817,000 to fulfill the Bank's obligation under recently enacted legislation to recapitalize the Savings Association Insurance Fund ("SAIF"). This compares to net income of $625,000, or $0.16 per share during the third quarter of 1995. For the nine months ended September 30, 1996, net earnings were $2,163,000, or $0.56 per share, after posting the one-time SAIF special assessment, as compared to $1,793,000 or $0.46 per share for the corresponding period a year ago, an increase of $369,000 or 20.6%. The Company earned $1,013,000, or $0.26 per share during the third quarter of 1996 and $2,675,000, or $0.69 per share during the nine months ended September 30, 1996, before posting the SAIF special assessment. David M. Bradley, President and Chief Executive Officer said, "While the special recapitalization assessment adversely impacted earnings for the third quarter, the short-term impact of this assessment is outweighed by the long-term benefit of significantly reduced deposit insurance premiums for well capitalized institutions such as First Federal. A reduction in noninterest expense may begin as early as the fourth quarter 1996." On March 20, 1996, First Federal Savings Bank completed a reorganization from a mutual holding company form of organization to a stock holding company form of organization. Pursuant to this transaction, the Bank became a wholly-owned subsidiary of North Central Bancshares, Inc. and the Company replaced the Bank as the issuer listed by The Nasdaq Stock Market. In addition to the exchange of the Bank's common stock for 1,385,590 shares of the Company's stock, the Company sold 2,625,467 shares of stock in a subscription offering. This stock offering resulted in net proceeds for the Company of $25.4 million. Total assets at September 30, 1996 amount to $197.9 million compared to $179.9 at December 31, 1995. The primary reason for the $18.0 million or 10.0% increase in total assets was the $25.4 million in net proceeds received from the offering, a portion of which were used to repay certain borrowings. Securities increased $4.6 million, or 19.3%, and net loans increased $12.5 million, or 8.5% from December 31, 1995. Deposits increased $2.8 million, or 2.2%. and other borrowed funds decreased by $11.4 20 million, or 52.1% from December 31, 1995. Nonperforming assets were 0.23% of total assets as of September 30, 1996 compared to 0.21% as of June 30, 1996 and 0.17% as of December 31, 1995. The allowance for loan losses was to $1.9 million or 1.16% of total loans at September 30, 1996, compared to $1.7 million or 1.15% of total loans at December 31, 1995. The net interest margin for the quarter ended September 30, 1996 was 4.51% compared to 3.78% for the corresponding quarter in 1995. Net interest income for the quarter ending September 30, 1996 was $2.2 million, an increase of 37.5% from $1.6 million for the corresponding period last year. Interest income for the quarter ended September 30, 1996 increased $477,000, or 14.2%, compared with the corresponding period in 1995, due primarily to increased average balances of interest-earning assets. Interest expense decreased $109,000 or 6.1%, when comparing the third quarter of 1996 with the corresponding period of 1995. The decrease in interest expense was due primarily to a decrease in the cost of interest-bearing deposits and the decrease in the average balances of borrowed funds, offset by an increase in the average balances of interest-bearing deposits. The Bank's provision for loan losses was $60,000, for each of the three months ended September 30, 1996 and 1995. The Bank establishes provisions for loan losses, which are charged to operations, in order to maintain the allowance for loan losses at a level which is deemed to be appropriate based upon an assessment of prior conditions, the volume and type of loans in the Bank's portfolio, and other factors related to the collectibility of the Bank's loan portfolio. Noninterest income increased $106,000 or 27.0% and noninterest expense, which included the one-time SAIF special assessment, increased $913,000 or 99.3%, in the third quarter of 1996 compared to the corresponding period of 1995. Noninterest income, excluding the gain on sale of securities available for sale, increased $270,000 or 24.1%, and noninterest expense, which included the one-time SAIF special assessment, increased $1,157,000 or 42.6%, for the nine months ended September 30, 1996 as compared to the corresponding period of 1995. Book value, or stockholders' equity, per share at September 30, 1996 was $13.98 and stockholders' equity to total assets was 28.3%. Stockholders' equity was $56.1 million at September 30, 1996 compared to $29.9 million at December 31, 1995. The ratio of stockholders' equity to total assets was 16.6% as of December 31, 21 1995. North Central Bancshares, Inc. serves north central Iowa at 4 full service locations in Fort Dodge, Nevada and Ames, Iowa through its wholly-owned subsidiary, First Federal Savings Bank of Fort Dodge, headquartered in Fort Dodge, Iowa. The Bank's deposits are insured by the Federal Deposit Insurance Corporation. The Company's stock is traded on The Nasdaq National Market under the symbol "FFFD". FINANCIAL HIGHLIGHTS OF NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (DOLLARS IN THOUSANDS, EXCEPT PER SHARE AND SHARE DATA) SEPTEMBER 30, 1996 DECEMBER 31, 1995 -------------------------------- ----------------------- Assets Cash and cash equivalents $ 3,106 $ 3,071 Securities available for sale 21,894 7,799 Securities held to maturity (Market value 6,499 15,995 $6.5 million and $16.2 million, respectively) Loans (net of allowance of loan loss of $1.9 160,385 147,872 million and $1.7 million, respectively) Other assets 6,037 5,193 ---------------- ---------------- Total Assets $ 197,921 $ 179,930 ================ ================ Liabilities Deposits $ 129,459 $ 126,672 Other borrowed funds 10,500 21,940 Other liabilities 1,893 1,418 ---------------- ---------------- Total Liabilities 141,852 150,030 Stockholders' Equity 56,069 29,900 ---------------- ---------------- Total Liabilities and Stockholders' Equity $ 197,921 $ 179,930 ================ ================ Stockholders' equity to total assets 28.33% 16.62% ================ ================ Book value per share $ 13.98 $ 7.45 ================ ================ Total shares outstanding 4,011,057 4,011,057 ================ ================
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA) For the Three Months For the Nine Months Ended September 30, Ended September 30, -------------------------------------------- -------------------------------------- 1996 1995 1996 1995 -------------------------------------------- -------------------------------------- Interest income $ 3,825 $ 3,348 $ 11,136 $ 9,596 Interest expense 1,673 1,782 5,117 5,156 ---------- ---------- ---------- ---------- Net interest income 2,152 1,566 6,019 4,440 Provision for loan loss 60 60 180 190 ---------- ---------- ---------- ---------- Net interest income after provision for loan loss 2,092 1,506 5,839 4,250 Noninterest income 500 393 1,391 1,121 Gain on sale of securities available for sale -- -- 14 182 One-time SAIF special assessment 817 -- 817 -- Noninterest expense 1,015 919 3,055 2,716 ---------- ---------- ---------- ---------- Income before income taxes 760 980 3,372 2,837 Income taxes 260 355 1,209 1,044 ---------- ---------- ---------- ---------- Net income $ 500 $ 625 $ 2,163 $ 1,793 ========== ========== ========== ========== Earnings per share $ 0.13 $ 0.16 $ 0.56 $ 0.46 ========== ========== ========== ==========
22
SELECTED FINANCIAL RATIOS For the Three Months For the Nine Months For the Year Ended September 30, Ended September 30, Ended ------------------------------- ------------------------------ 1996 1995 1996 1995 DECEMBER 31, 1995 ------------- --------------- ------------- -------------- ---------------------- Performance Ratios: (annualized) Net interest spread 3.04% 2.87% 3.02% 2.71% 2.75% Net interest margin 4.51% 3.78% 4.33% 3.63% 3.66% Return on average assets 1.02% 1.48% 1.52% 1.44% 1.48% Return on average equity 3.57% 8.62% 5.98% 8.38% 8.78% Efficiency ratio (noninterest expense divided by the sum of net income before provision for loan losses plus noninterest income) 69.06% 46.90% 52.16% 47.29% 46.48%
SEPTEMBER 30, 1996 JUNE 30, 1996 DECEMBER 31, 1995 ------------------ ------------------ --------------------- Asset Quality Ratios: Nonaccrual loans and total net loans 0.18% 0.14% 0.12% Nonperforming assets to total assets 0.23% 0.21% 0.17% Allowance for loan losses as a percent of total 1.16% 1.16% 1.15% loan's receivable
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