-----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, EsfInU6njJDpveKwJqIq1fbyvFgPITydJ11u/4p/0PfSdisdjGIXMnURQBVe/Jbk CuRHWDol/FUCfHGyD1Q/yg== 0000882377-96-000043.txt : 19960806 0000882377-96-000043.hdr.sgml : 19960806 ACCESSION NUMBER: 0000882377-96-000043 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19960331 FILED AS OF DATE: 19960510 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: NORTH CENTRAL BANCSHARES INC CENTRAL INDEX KEY: 0001005188 STANDARD INDUSTRIAL CLASSIFICATION: 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: 96560043 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 March 31, 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 515-576-7531 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 MAY 9, 1996 (Common Stock, $.01 par value) 4,011,057 NORTH CENTRAL BANCSHARES, INC. INDEX Page PART I. FINANCIAL INFORMATION Item 1. Consolidated Condensed Financial Statements (unaudited) 1 to 5 Consolidated Condensed Statements of Financial Condition at March 31, 1996 and December 31, 1995 1 Consolidated Condensed Statements of Income for the three months ended March 31, 1996 and 1995 2 Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 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 11 PART II. OTHER INFORMATION 12 to 13 Items 1 through 6 12 Signatures 13 NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
March 31, December 31, 1996 1995 ASSETS Cash: Interest-bearing $ 9,810,570 $ 2,362,244 Noninterest-bearing 675,160 709,398 Securities available for sale 10,110,641 7,799,445 Securities held to maturity 14,496,181 15,994,521 Loans receivable, net 150,119,801 147,871,666 Accrued interest receivable 1,433,550 1,415,111 Foreclosed real estate 48,292 127,989 Premises and equipment, net 1,674,762 1,621,734 Title plant 857,800 857,800 Income taxes receivable -- 31,766 Deferred taxes 164,500 67,626 Prepaid expenses and other assets 1,222,070 1,070,396 ------------ ------------ Total assets $190,613,327 $179,929,696 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits $128,329,264 $126,672,313 Other Borrowed Funds 5,916,000 21,940,000 Advances from borrowers for taxes and insurance 401,926 781,545 Dividend payable -- 127,829 Income taxes payable 394,982 -- Accrued expenses and other liabilities 542,375 507,681 ------------ ------------ Total liabilities 135,584,547 150,029,368 ------------ ------------ COMMITMENTS STOCKHOLDERS' EQUITY Preferred stock -- -- Common Stock 40,111 37,000 Additional paid-in capital 37,815,073 12,350,840 Retained earnings, substantially restricted 18,765,451 18,220,626 Unrealized gain (loss) on securities available for sale, net of income taxes (11,544) 60,652 Unearned shares, employee stock ownership plan (1,580,311) (768,790) ------------- ------------- Total stockholders' equity 55,028,780 29,900,328 ------------- ------------- Total liabilities and stockholders' equity $190,613,327 $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 March 31, 1996 1995 Interest Income: Loans receivable: First mortgage loans $2,677,727 $2,270,998 Consumer loans 460,225 388,988 Securities and cash deposits 439,588 394,181 ---------- ---------- 3,577,540 3,054,167 ---------- ---------- Interest expense: Deposits 1,555,683 1,488,155 Other borrowed funds 280,882 127,836 ---------- ---------- 1,836,565 1,615,991 ---------- ---------- Net Interest Income 1,740,975 1,438,176 Provision for loan losses 60,000 15,000 ---------- ---------- Net interest income after provision for loan losses 1,680,975 1,423,176 ---------- ---------- Noninterest income: Fees and service charges 124,637 97,742 Abstract fees 195,640 177,889 Gain on sale of securities available for sale 13,774 -- Other income 88,191 60,685 ---------- ---------- Total noninterest income 422,242 336,316 ---------- ---------- Noninterest expense: Salaries and employee benefits 582,542 418,902 Premises and equipment 111,060 92,293 Data processing 60,135 56,413 SAIF deposit insurance premiums 73,109 71,536 Other expenses 248,859 240,034 ---------- ---------- Total noninterest expenses 1,075,705 879,178 ---------- ---------- Income before income taxes 1,027,512 880,314 Provision for income taxes 371,634 332,355 ---------- ---------- Net income $655,878 $547,959 ========== ========== Earnings per share $0.17 $0.14 ========== ========== Dividends declared per common share $0.10 $0.10 ========== ==========
See Notes to Consolidated Condensed Financial Statements. 2 NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED MARCH 31, 1996 1995 CASH FLOWS FROM OPERATING ACTIVITIES Net Income $655,878 $547,959 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 60,000 15,000 Depreciation 54,621 39,706 Amortization and accretion (44,512) (59,800) Deferred taxes (57,750) 25,926 Effect of contribution to employee stock ownership plan 9,809 (1,440) (Gain) on sale of foreclosed real estate and loan, net (9,103) -- (Gain) on sale of securities available for sale (13,774) -- Loss on disposal of equipment 1,752 -- Change in assets and liabilities: (Increase) in accrued interest receivable (18,439) (47,926) Decrease in income taxes receivable 31,766 -- (Increase) in prepaid expenses and other assets (151,674) (518,626) Increase in income taxes payable 394,982 185,336 Increase (decrease) in accrued expenses and other liabilities (93,135) 3,408 --------- --------- Net cash provided by operating activities 820,421 189,543 --------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Net (increase) decrease in loans 112,749 (2,213,674) Purchase of loans (2,378,800) (4,929,721) Proceeds from sale of securities available for sale 53,891 -- Purchase of securities available for sale (2,461,865) (176,816) Proceeds from maturities of securities held to maturity 1,500,000 2,500,000 Purchase of securities held to maturity -- (3,992,285) Purchase of premises and equipment (109,400) (71,318) Purchase of title plant -- (699,270) Other 88,799 (116,965) ----------- ----------- Net cash (used in) investing activities (3,194,626) (9,700,049) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase in deposits 1,656,951 740,395 (Decrease) in advances from borrowers for taxes and insurance (379,619) (311,348) Net change in short term borrowings (16,000,000) 6,500,000 Proceeds from other borrowed funds -- 150,000 Proceeds from issuance of 2,625,467 shares of common stock 25,412,159 -- Payments for expenses incurred relating to conversion to stock form (790,145) -- Dividends paid (111,053) (118,920) ------------ ----------- Net cash provided by financing activities 9,788,293 6,960,127 ------------ ----------- Net increase (decrease) in cash 7,414,088 (2,550,379) CASH Beginning 3,071,642 4,977,724 ------------ ----------- Ending $10,485,730 $2,427,345 ============ =========== SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION Cash payments for: Interest paid to depositors $1,544,569 $1,414,750 Interest paid on borrowings 315,251 104,527 Income taxes -- 131,093
See notes to consolidated condensed financial statements. 3 ITEM 1. NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES 1. SIGNIFICANT ACCOUNTING POLICIES The consolidated condensed financial statements for the three month periods ended March 31, 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 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 National 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 months ended March 31, 1995 by $17,000 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 month periods ended March 31, 1996 and 1995, the weighted average number of shares outstanding were 3,843,710 and 3,830,478, respectively. The number of shares outstanding at March 31, 1995 were restated to reflect the conversion ratio effected as part of the conversion and reorganization. 4. DIVIDENDS On January 26, 1996, the Bank declared a cash dividend on its common stock, payable on March 8, 1996 to stockholders of record as of February 16, 1996, equal to $0.10 per share. The dividend was declared and paid prior to the reorganization and totaled $370,000 of which $127,829 was paid to public shareholders. The MHC sought and obtained from the Office of Thrift Supervision a waiver of dividend on its shares of common stock (amounting to $242,171). Therefore this dividend was not paid to the Mutual Holding Company. 5. PENDING ACCOUNTING PRONOUNCEMENTS The Financial Accounting Standards Board ("FASB") has approved, effective for 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. 5 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FINANCIAL CONDITION Total assets increased by $10.7 million, or 5.9%, from $179.9 million at December 31, 1995 to $190.6 million at March 31, 1996. Cash increased by $7.4 million, or 241.4%, primarily due to the proceeds from the Offering. Securities available for sale increased by $2.3 million, or 29.6%, primarily due to the purchase of U.S. Treasury Notes. Total loans receivable, net, increased by $2.2 million, or 1.5%, due to originations of $3.3 million of new first mortgage loans secured by one-to-four family residences, purchases of $2.4 million of first mortgage loans secured by one-to-four family and multi-family residences and originations of $2.2 million of second mortgage loans, which originations and purchases were offset in part by payments and prepayments of loans during the three months ended March 31, 1996. Deposits increased $1.7 million, or 1.3%, from $126.7 million at December 31, 1995 to $128.3 million at March 31, 1996. Other borrowings, primarily Federal Home Loan Bank of Des Moines ("FHLB") advances, decreased by $16.0 million, to $5.9 million at March 31, 1996 from $21.9 million at December 31, 1995, primarily due to the use of a portion of the proceeds from the Offering which were used to repay FHLB advances. Total stockholders' equity increased $25.1 million, from $29.9 million at December 31, 1995 to $55.0 million at March 31, 1996, primarily due to the issuance of common stock in the Offering. CAPITAL The Company's total stockholders' equity increased by $25.1 million to $55.0 million at March 31, 1996 from $29.9 million at December 31, 1995. The unrealized gain (loss) on securities available for sale decreased by $72,000 to $(12,000) at March 31, 1996 from $61,000 at March 31, 1996. The unearned shares from the Employee Stock Ownership Plan increased by $812,000 to $1.6 million at March 31, 1996 from $769,000 at March 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 March 31, 1996, the Bank exceeded all of its regulatory capital requirements. The Bank's required, actual and excess capital levels as of March 31, 1996 are as follows: 6 AMOUNT PERCENTAGE OF ASSETS (DOLLAR AMOUNTS IN THOUSANDS) Tangible capital: Capital level $41,304 21.56% Requirement 2,873 1.50% Excess $38,431 20.06% Core capital: Capital level $41,304 21.56% Requirement 5,746 3.00% Excess $35,558 18.56% Risk-based capital: Capital level $42,541 43.22% Requirement 7,874 8.00% Excess $34,667 35.22% 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 United States government, state or federal agency obligations) equal to a monthly average of not less than 5% of their net withdrawable deposits, plus short term borrowings. At March 31, 1996, the Bank's liquidity position was $30.2 million or 20.90% of liquid assets, compared to $9.8 million or 6.85% at December 31, 1995. The increase of $20.4 million was primarily due to the release of $13.0 million of pledged liquid assets held as collateral on the Bank's borrowings from the FHLB and the increase in cash due to the issuance of common stock in the Offering. 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 United States 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 December 31, 1995, the Bank's short term liquidity position was $10.7 million or 7.43% of short term liquid assets, compared to $3.3 million or 2.31% at December 31, 1995. The increase of $7.4 million was primarily due to the increase in cash due to the issuance of common stock in the Offering. PROPOSED SAIF RECAPITALIZATION The proposed Balanced Budget Act of 1995 ("Budget Act"), which was approved by the Congress but vetoed by the President, included provisions that focused on a resolution of the financial problems of the SAIF. Under the provisions of the Budget Act, all SAIF member institutions will pay a special assessment to recapitalize the SAIF, and the assessment base for the payments on the FICA bonds would be expanded to include the deposits of both BIF- and SAIF-insured institutions. The amount of the special assessment required to recapitalize the SAIF was then estimated to be approximately 80 basis points of the SAIFassessable deposits. This estimate of the special assessment was less than the assessment of 85 to 90 basis points that had been previously estimated. The special assessment would have been imposed on the first business day of January 1996, or on such other date prescribed by the FDIC not later than 60 days after enactment of the Budget Act, based on the amount of SAIF deposits 7 on March 31, 1995. The Budget Act would have also permitted BIF-insured institutions with deposits subject to SAIF assessments to reduce such SAIF-deposits by 20% in computing the institution's special assessment. If an 85 or a 90 basis point assessment were assessed against the Bank's deposits as of March 31, 1995, the Bank's aggregate SAIF assessment would be approximately $1.1 million or $1.1 million, respectively, and an assessment of 80 basis points would be approximately $1.0 million. The Budget Act also provided for the merger of the BIF SAIF on January 1, 1998, with such merger being conditioned upon the prior elimination of the thrift charter. Congressional leaders had also agreed that Congress should consider and act upon separate legislation to eliminate the thrift charter as early as possible in 1996. If adopted, such legislation would require that the Bank, as a federal savings bank, convert to a bank charter. Such a requirement to convert to a bank charter could cause the Bank to lose the favorable tax treatment for its bad debt reserves that it currently enjoys under section 593 of the Internal Revenue Code ("Code") and to have all or part of its existing bad debt reserves recaptured into income. The above described provisions of the Budget Act were not the basis for the President's veto, and the federal banking regulators continue to seek a legislative solution for the recapitalization of the SAIF. If enacted by Congress, the above legislation would have the effect of reducing the capital of SAIF member institutions by the after-tax cost of the special SAIF assessment, plus any related additional tax liabilities. The legislation would also have the effect of reducing any differential that may otherwise be required in the assessment rates for the BIF and SAIF, while there is substantial support for the above legislation, its passage remains uncertain. RECAPTURE OF TAX BAD DEBT RESERVES Under section 593 of the Internal Revenue Code, thrift institutions such as the Bank, which met certain definitional tests, primarily relating to their assets and the nature of their business, are permitted to establish a tax reserve for bad debts and to make annual additions thereto, which additions may, 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 interest in real property, may currently be computed using an amount based on the Bank's actual loss experience (the "Experience Method"), or a percentage equal to 8% 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 pending legislative proposals ,the PTI Method would be repealed and the Bank would be permitted to use only the Experience Method of computing additions to its bad debt reserve. In addition, the Bank would be required to recapture (i.e., take into income) over a multi-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 reserve as of December 31, 1987 (or a lesser amount if the Bank's loan portfolio has 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 experience method. However, under the 8 proposed legislation, such recapture requirements would be suspended for each of two successive taxable years beginning January 1, 1996 in which the Bank originates a minimum amount of certain residential loans based upon the average of the principal amounts of such loans made by the Bank during its six taxable years preceding January 1, 1996. The Bank's post-December 31, 1987 bad debt reserves at December 31, 1995 were $1.4 million. If that amount were recaptured, the Bank would incur an additional tax liability of approximately $530,000. At this time, the Management cannot predict whether any legislative proposal regarding amendments to the Code related to addition to or recapture of its tax bad debt reserve will be adopted as proposed. RESULTS OF OPERATIONS INTEREST INCOME. Interest income increased by $523,000 to $3.6 million for the three months ended March 31, 1996 compared to $3.1 million for the three months ended March 31, 1995. The increase in interest income was primarily due to a $19.1 million increase in the average balance of interest earning assets (primarily first and second mortgage loans) to $178.9 million for the three months ended March 31, 1996, from $159.8 million for the comparable 1995 period. The increase in the average balance in first and second mortgage loans reflects an increase in originations of first mortgage loans secured by one-to-four family residences, purchases of first mortgage loans secured by one-to-four family and multi-family residences and originations of second mortgage loans. The increase in interest income was also due to an increase in the average yield on first mortgage loans to 8.14% for the three months ended March 31, 1996 from 7.91% for the three months ended March 31, 1995, reflecting an upward adjustment of interest rates on the Bank's adjustable-rate mortgage loan portfolio and an increase in the average yield on investments to 6.29% for the three months ended March 31, 1996 from 5.70% for the three months ended March 31, 1995. The increased yield reflects a general increase in market interest rates. The average yield on interest earning assets increased to 8.01% for the three months ended March 31, 1996 from 7.67% for the three months ended March 31, 1995. INTEREST EXPENSE. Interest expense increased by $222,000 to $1.8 million for the three months ended March 31, 1996 compared to $1.6 million for the three months ended March 31, 1995. The increase in interest expense was primarily due to an $14.6 million increase in the average interest bearing liabilities to $145.6 million for the three months ended March 31, 1996 from $131.0 million for the three months ended March 31, 1995. This increase was due to an increase of $5.2 million in the average interest-bearing deposits from $121.5 million for the three months ended March 31, 1995 to $126.7 million for the three months ended March 31, 1996, as well as an increase of $9.4 million in the average borrowings from $9.5 million for the three months ended March 31, 1995 to $18.9 million for the three months ended March 31, 1996. The average borrowed funds also bear interest at a rate higher than the rates paid on the Bank's interest bearing deposits. The average cost of interest bearing liabilities increased to 5.07% for the three months ended March 31, 1996 from 5.00% for the three months ended March 31, 1995. NET INTEREST INCOME. Net interest income before provision for loan losses increased by $303,000 to $1.7 million for the three months ended March 31, 1996 from $1.4 million for the three months ended March 31, 1995. The increase is primarily due 9 RESULTS OF OPERATIONS (Continued) 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 2.67% for the three months ended March 31, 1995 to 2.94% for the three months ended March 31, 1996. The following tables sets forth certain information relating to the Bank's average balance sheet and reflects the average yield on assets and average cost of liabilities for the three months ended March 31, 1996 and March 31, 1995 and the average yields earned and rates paid.
THREE MONTHS ENDED MARCH 31, 1996 AVERAGE AVERAGE YIELD/ BALANCE INTEREST COST (DOLLARS IN THOUSANDS) Interest-earning assets: First mortgage loans $131,602 $ 2,678 8.14% Consumer loans 19,230 460 9.63% Securities available for sale 9,476 146 6.18% Securities held to maturity 14,662 244 6.70% Interest bearing cash 3,962 50 5.08% -------- -------- ------ Total interest-earning assets $178,931 $ 3,578 8.01% -------- ------ Noninterest-earning assets 4,278 -------- Total assets $183,210 ======== Interest-bearing liabilities: NOW and money market savings $ 17,830 $ 124 2.80% Passbook savings 20,875 119 2.29% Certificates of deposits 87,967 1,313 6.00% Borrowed funds 18,932 281 5.97% -------- -------- ------ Total interest-bearing liabilities $145,604 $ 1,837 5.07% -------- ------ Noninterest-bearing liabilities 4,485 -------- Total liabilities $150,089 Equity 33,121 -------- Total liabilities and equity $183,210 ======== Net interest income $ 1,741 ======== Net interest rate spread 2.94% ===== Interest-earning assets and net interest margin 3.89% ===== Ratio of average interest-earning assets to average interest-bearing liabilities 122.89% =======
PROVISION FOR LOAN LOSSES. The Bank's provision for loan losses was $60,000 for the three months ended March 31, 1996 and $15,000 for the same period of the prior year. 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 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 10 by properties located outside of the Bank's market area, and other factors related to the collectibility of the Bank's loan portfolio. The allowance for loan loss was $1.8 million at March 31, 1996 as compared to $1.6 million at March 31, 1995 and $1.7 million at December 31, 1995. Although the level of nonperforming loans has decreased from $250,000 at March 31, 1995 to $194,000 at March 31, 1996, management determined to increase the provision slightly in order to continue the steady increase in the allowance for loan losses. This increase in the allowance is primarily due to the increase in total loans from $135.3 million at March 31, 1995 to $153.2 million at March 31, 1996. Management believes that the allowance for loan losses is RESULTS OF OPERATIONS (Continued) 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 $86,000 to $422,000 for the three months ended March 31, 1996 from $336,000 for the three months ended March 31, 1995. The increase is due to increases in all categories of noninterest income. Fees and service charges increased $26,000, primarily due to increases in overdraft fees and loan prepayment fees. Abstract fees increased $18,000 due to increased sales volume. A $14,000 gain on the sale of securities available for sale was realized. Other income increase $28,000 primarily due to increases in insurance and annuity sales. NONINTEREST EXPENSE. Total noninterest expense increased by $197,000 to $1.1 million for the three months ended March 31, 1996 from $880,000 for the three months ended March 31, 1995. The increase is primarily due to a $164,000 increase in salaries and benefits and a $19,000 increase in premises and equipment. The increase in salaries and benefits was primarily a result of the adoption of a retirement plan for the benefit of the chairman of the board and normal salary increases. The increase in premises and equipment is primarily a result of higher depreciation expense due to expenditures on buildings and equipment in the Nevada office and equipment in the abstract companies. INCOME TAXES. Income taxes increased by $39,000 to $372,000 for the three months ended March 31, 1996 as compared to $332,000 for the three months ended March 31, 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 $656,000 for the three months ended March 31, 1996, compared to $548,000 for the same period in 1994. 11 PART II OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS Not applicable ITEM 2. CHANGES IN SECURITIES Not applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable ITEM 5. OTHER INFORMATION Not applicable ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibit 11. Statement on computation of per share earnings. Exhibit 27. Financial data schedule. (b) Reports on Form 8-K A form 8-K was filed on January 23, 1996 to report, pursuant to Item 5, the issuance of limited financial information for the quarter and year ended December 31, 1995. A form 8-K was filed on January 29, 1996 to report, pursuant to Item 5, the payment of a cash dividend on the Bank's common stock. A form 8-K was filed on March 22, 1996 to report, pursuant to Item 2, the completion of the Company's public offering. 12 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned thereunto duly authorized. NORTH CENTRAL BANCSHARES, INC. DATE: May 9, 1996 BY: /s/ David M. Bradley -------------------- David M. Bradley, CPA President and Chief Executive Officer DATE: May 9, 1996 BY: /s/ John L. Pierschbacher ------------------------- John L. Pierschbacher, CPA Principal Financial Officer 13 EX-11 2 STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS EXHIBIT 11. STATEMENT ON COMPUTATION OF PER SHARE EARNINGS. For the three months ended March 31, 1996 and 1995, the primary and fully dilutive weighted average number of shares outstanding were 3,843,710 and 3,830,478, respectively. The number of shares outstanding at March 31, 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. EX-27 3 FINANCIAL DATA SCHEDULE
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. 3-MOS DEC-31-1995 MAR-31-1996 675,160 9,810,570 0 0 10,110,641 14,496,181 0 150,119,801 1,794,145 190,613,327 128,329,264 2,150,000 1,339,283 3,766,000 0 0 40,111 54,988,669 190,613,327 3,137,952 439,588 0 3,577,540 1,555,683 280,882 1,740,975 60,000 13,774 1,075,705 1,027,512 1,027,512 0 0 655,878 .17 .17 8.01 194,000 0 0 0 1,735,599 0 0 1,794,145 0 0 0
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