-----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, RylkfK1u87Z9G0gehgHkyJCiXYcCmQY01iV73qFfb0C3pEQmksaBSr9XIpxzkOAw hcMKTSQN/NCzNQU88BEM1A== 0000927797-02-000127.txt : 20020514 0000927797-02-000127.hdr.sgml : 20020514 ACCESSION NUMBER: 0000927797-02-000127 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20020331 FILED AS OF DATE: 20020514 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: 02644803 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 northcentral10q_03-02.txt MARCH 31, 2002 FORM 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [Mark One] [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2002 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ----------------- ---------------- Commission File Number 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 Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No --- --- Indicate 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 3, 2002 - -------------------------------------------------------------------------------- Common Stock, $.01 par value 1,688,280 NORTH CENTRAL BANCSHARES, INC. INDEX Page Part I. Financial Information Item 1. Consolidated Condensed Financial Statements (Unaudited) 1 to 3 Consolidated Condensed Statements of Financial Condition at March 31, 2002 (Unaudited) and December 31, 2001 1 Consolidated Condensed Statements of Income for the three months ended March 31, 2002 and 2001 (Unaudited) 2 Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 2002 and 2001 (Unaudited) 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 9 Item 3. Quantitative and Qualitative Disclosures About Market Risk 9 Part II. Other Information Items 1 through 6 10 Signatures 11 Exhibits PART I. FINANCIAL INFORMATION ITEM 1. NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION
March 31, December 31, ASSETS 2002 2001 ------------- ------------ (Unaudited) Cash and due from banks: Interest-bearing $ 17,023,914 $ 17,650,064 Noninterest-bearing 2,035,767 2,258,838 Securities available-for-sale 26,074,390 31,365,731 Loans receivable, net 332,390,064 307,981,424 Loans held for sale 1,781,590 1,605,710 Accrued interest receivable 1,982,193 1,913,557 Foreclosed real estate 1,116,347 1,073,873 Premises and equipment, net 7,447,938 6,797,505 Rental real estate 1,660,819 1,681,337 Title plant 925,256 925,256 Goodwill 4,970,800 4,970,800 Deferred taxes 554,871 484,904 Prepaid expenses and other assets 798,810 666,228 ------------- ------------- Total assets $ 398,762,759 $ 379,375,227 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits $ 272,088,049 $ 268,813,731 Borrowed funds 87,630,342 71,412,723 Advances from borrowers for taxes and insurance 1,070,778 1,589,314 Dividends payable 301,190 256,587 Income taxes payable 693,370 78,711 Accrued expenses and other liabilities 925,945 1,311,412 ------------- ------------- Total liabilities 362,709,674 343,462,478 ------------- ------------- COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock ($.01 par value, authorized 3,000,000 shares; issued and outstanding none) -- -- Common stock ($.01 par value, authorized 15,500,000 shares; issued 1,700,280 shares) 17,003 17,003 Additional paid-in capital 16,833,362 16,780,875 Retained earnings, substantially restricted 20,342,284 19,402,706 Accumulated other comprehensive income 138,348 189,991 Less cost of treasury stock, 2002, 37,000 shares; 2001, none (840,800) -- Unearned shares, employee stock ownership plan (437,112) (477,826) ------------- ------------- Total stockholders' equity 36,053,085 35,912,749 ------------- ------------- Total liabilities and stockholders' equity $ 398,762,759 $ 379,375,227 ============= =============
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, 2002 2001 ----------- ----------- Interest income: Loans receivable $ 6,092,631 $ 6,373,033 Securities and cash deposits 438,026 667,520 ----------- ----------- 6,530,657 7,040,553 ----------- ----------- Interest expense: Deposits 2,433,434 3,132,595 Borrowed funds 1,059,629 1,248,818 ----------- ----------- 3,493,063 4,381,413 ----------- ----------- Net Interest Income 3,037,594 2,659,140 Provision for loan losses 180,000 30,000 ----------- ----------- Net interest income after provision for loan losses 2,857,594 2,629,140 ----------- ----------- Noninterest income: Fees and service charges 588,581 408,806 Abstract fees 396,610 302,272 Mortgage banking fees 108,158 108,763 Gain (loss) on sale of securities available for sale, net (1,365) 800 Other income 222,538 217,935 ----------- ----------- Total noninterest income 1,314,522 1,038,576 ----------- ----------- Noninterest expense: Salaries and employee benefits 1,265,930 1,099,846 Premises and equipment 308,817 297,145 Data processing 128,932 105,580 SAIF deposit insurance premiums 12,186 12,836 Goodwill amortization -- 118,073 Other expenses 649,591 540,379 ----------- ----------- Total noninterest expense 2,365,456 2,173,859 ----------- ----------- Income before income taxes 1,806,660 1,493,857 Provision for income taxes 575,924 512,719 ----------- ----------- Net Income $ 1,230,736 $ 981,138 =========== =========== Basic earnings per common share $ 0.75 $ 0.53 =========== =========== Earnings per common share- assuming dilution $ 0.71 $ 0.51 =========== =========== Dividends declared per common share $ 0.18 $ 0.15 =========== =========== Comprehensive income $ 1,179,093 $ 1,364,347 =========== =========== 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, 2002 2001 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,230,736 $ 981,138 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 180,000 30,000 Depreciation 175,574 167,772 Amortization and accretion 43,301 148,295 Deferred taxes (39,045) (78,885) Effect of contribution to employee stock ownership plan 93,201 88,129 (Gain) on sale of foreclosed real estate and loans, net (108,108) (18,061) (Gain) loss on sale of securities available for sale 1,365 (800) (Gain) loss on impairment and disposal of equipment and premises, net (15) 396 Proceeds from sales of loans held for sale 7,343,384 7,736,192 Originations of loans held for sale (7,411,106) (9,806,324) Change in assets and liabilities: Accrued interest receivable (68,636) 165,287 Income taxes receivable -- 209,995 Prepaid expenses and other assets (117,077) (92,044) Income taxes payable 614,659 463,801 Accrued expenses and other liabilities (385,467) 400,400 ------------ ------------ Net cash provided by operating activities 1,552,766 395,291 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES Net decrease in loans 11,641,869 4,765,257 Purchase of loans (36,314,323) (1,126,469) Proceeds from sales of securities available-for-sale 13,760 11,400 Purchase of securities available-for-sale -- (5,499,000) Proceeds from maturities of securities available-for-sale 5,192,377 12,091,001 Purchase of premises and equipment and rental real estate (820,994) (350,355) Proceeds from sale of equipment 15 3,336 Other (737) -- ------------ ------------ Net cash provided by (used in) investing activities (20,288,033) 9,895,170 ------------ ------------ CASH FLOWS FROM FINANCING ACTIVITIES Net increase in deposits 3,274,318 5,728,917 (Decrease) in advances from borrowers for taxes and insurance (518,536) (418,843) Net change in short-term borrowings 4,750,000 (5,000,000) Proceeds from other borrowed funds 20,000,000 3,000,000 Payments of other borrowings (8,532,381) (9,530,728) Purchase of treasury stock (840,800) (1,093,813) Dividends paid (246,555) (229,547) Other -- (9,704) ------------ ------------ Net cash provided by (used in) financing activities 17,886,046 (7,553,718) ------------ ------------ Net increase (decrease) in cash (849,221) 2,736,743 CASH Beginning 19,908,902 8,849,726 ------------ ------------ Ending $ 19,059,681 $ 11,586,469 ============ ============ SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION Cash payments (receipts) for: Interest paid to depositors $ 2,596,731 $ 3,225,623 Interest paid on borrowings 1,059,276 1,300,368 Income taxes 310 (82,192)
3 NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) 1. SIGNIFICANT ACCOUNTING POLICIES The consolidated condensed financial statements for the three month periods ended March 31, 2002 and 2001 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 2001 Annual Report on Form 10-K. The consolidated condensed financial statements include the accounts of the Company and its wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated in consolidation. 2. 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 First Federal Savings Bank of Iowa'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 period ended March 31, 2002, the weighted average number of shares outstanding for basic and diluted earnings per share computation were 1,639,190 and 1,734,670, respectively. For the three month period ended March 31, 2001, the weighted average number of shares outstanding for basic and diluted earnings per share computation were 1,834,939 and 1,921,261, respectively. 3. DIVIDENDS On February 22, 2002, the Company declared a cash dividend on its common stock, payable on April 8, 2002 to stockholders of record as of March 15, 2002, equal to $0.18 per share. 4. GOODWILL On January 1, 2002, the Company adopted Statement of Financial Accounting Standards No. 141, "Business Combinations, " and No. 142, "Goodwill and Other Intangible Assets" (SFAS 141 and 142). SFAS 141 addresses financial accounting and reporting for business combinations and replaces APB Opinion No. 16, "Business Combinations" (APB 16). SFAS 141 no longer allows the pooling of interests method of accounting for acquisitions, provides new recognition criteria for intangible assets and carries forward without reconsideration the guidance in APB 16 related to the application of the purchase method of accounting. SFAS 142 addresses financial accounting and reporting for acquired goodwill and other intangible assets and replaces APB Opinion No. 17, "Intangible Assets." SFAS 142 addresses how intangible assets should be accounted for upon their acquisition and after they have been initially recognized in the financial statements. The new standards provide specific guidance on measuring goodwill for impairment annually using a two-step process. The first step identifies potential impairment and the second step measures the amount of goodwill impairment loss to be recognized. As of January 1, 2002, the Company has undertaken to identify those intangible assets that remain separable under the provisions of the new standard and those that are to be included in goodwill and concluded that all amounts should be included in goodwill. In the year of adoption, SFAS 142 requires the first step of the goodwill impairment test to be completed within the first six months and the final step to be completed within the twelve months of adoption. The Company has completed the first step of the goodwill impairment test and has determined that there is no impairment of goodwill. 4 Had the provisions of SFAS 141 and 142 been applied in fiscal year 2001, the Company's net income and net income per share would have been as follows:
Three months ended March 31, 2001 Net Basic earnings Diluted earnings Income Per Share Per Share ------------ ------------------ ---------------- Net Income: As reported......................... $ 981,138 $ .53 $ .51 Add: Goodwill amortization.......... 118,073 .07 .06 ---------- ----- ----- Pro forma net income............ $ 1,099,211 $ .60 $ .57 =========== ===== =====
As of December 31, 2001 and March 31, 2002, the Company had intangible assets of $4,970,800, all of which has been determined to be goodwill. There was no goodwill impairment loss or amortization related to goodwill during the three months ended March 31, 2002. 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, market, legislative and regulatory conditions, and the development of an interest rate environment that adversely affects the interest rate spread or other income anticipated from the Company's operations and investments. The Company's actual results may differ from the results discussed in the forward looking statements. The Company disclaims any obligation to publicly announce future events or developments which may affect the forward-looking financial statements contained here within. FINANCIAL CONDITION Total assets increased $19.4 million, or 5.1%, to $398.8 million at March 31, 2002 compared to $379.4 million at December 31, 2001. Securities available for sale decreased $5.3 million, or 16.9% from $31.4 million at December 31, 2001 to $26.1 million at March 31, 2002, primarily due to $5.2 million of maturities, calls and sales and decreases in fair market value of $83,000 of such securities. Total loans receivable, net, increased by $24.4 million to $332.4 million at March 31, 2002 from $308.0 million at December 31, 2001, due primarily to originations of $12.8 million of first mortgage loans secured primarily by one-to four-family residences, purchases of $36.3 million of first mortgage loans secured primarily by multifamily and commercial real estate and originations of $6.3 million of second mortgage loans secured primarily by one- to-four-family residences. These originations and purchases were offset in part by payments and prepayments of loans of approximately $27.6 million. Total deposits increased $3.3 million, or 1.2%, to $272.1 million at March 31, 2002 from $268.8 million at December 31, 2001, reflecting increases primarily in checking, savings and retail certificates of deposit accounts, offset in part by a decrease in the money market account and public funds certificates of deposit. Other borrowings, primarily Federal Home Loan Bank ("FHLB") advances, increased by $16.2 million to $87.6 million at March 31, 2002 from $71.4 million at December 31, 2001. Total stockholders' equity increased $140,000, to $36.1 million at March 31, 2002 from $35.9 million at December 31, 2001. See "Capital." CAPITAL The Company's total stockholders' equity increased by $140,000 to $36.1 million at March 31, 2002 from $35.9 million at December 31, 2001, primarily due to earnings, which were offset in part by stock repurchases, dividends declared and a decrease in the accumulated other comprehensive income. The changes in stockholders' equity were also due to a decrease in the unearned shares from First Federal Savings Bank of Iowa's Employee Stock Ownership Plan (the "ESOP") to $437,000 at March 31, 2002 from $478,000 at December 31, 2001. The decrease in unearned shares resulted from the release of shares within the ESOP to employees of First Federal Savings Bank of Iowa (the "Bank"). 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, 2002, the Bank exceeded all of its regulatory capital requirements. The Bank's required, actual and excess capital levels as of March 31, 2002 were as follows: Amount Percentage of Assets ---------- -------------------- (dollars in thousands) Tangible capital: Capital level $ 29,323 7.47% Less Requirement 5,887 1.50% ---------- --------- Excess $ 23,436 5.97% ========== ========= Core capital: Capital level $ 29,323 7.47% Less Requirement 15,704 4.00% ---------- --------- Excess $ 13,619 3.47% ========== ========= Risk-based capital: Capital level $ 32,283 12.94% Less Requirement 19,952 8.00% ---------- --------- Excess $ 12,331 4.94% ========== ========= 6 LIQUIDITY The Company's primary sources of funds are cash provided by operating activities (including net income), certain financing activities (including increases in deposits and proceeds from borrowings) and certain investing activities (including principal payments on loans and maturities and calls of securities). During the first three months of 2002 and 2001, principal payments and repayments on loans totalled $27.6 million and $21.1 million, respectively. The net increase in deposits during the first three months of 2002 and 2001 totalled $3.3 million and $5.7 million, respectively. The proceeds from borrowed funds during the three months ended March 31, 2002 and 2001 totalled $20.0 million and $3.0 million, respectively. The net change in short-term borrowings during the three months ended March 31, 2002 totalled $4.8 million. During the first three months of 2002 and 2001, the proceeds from the maturities, calls and sales of securities totalled $5.2 million and $12.1 million, respectively. Cash provided from operating activities during the first three months of 2002 and 2001 totalled $1.6 million and $395,000, respectively, of which $1.2 million and $981,000, respectively, represented net income of the Company. The Company's primary use of funds is cash used to originate and purchase loans, purchase of securities available for sale, repayment of borrowed funds and other financing activities. During the first three months of 2002 and 2001, the Company's gross purchases and origination of loans totalled $59.0 million and $24.6 million, respectively. The purchase of securities available for sale for the three months ended March 31, 2002 and 2001 totalled none and $5.5 million, respectively. The repayment of borrowed funds during the first three months of 2002 and 2001 totalled $8.5 million and $9.5 million, respectively. The net change in short-term borrowings during the three months ended March 31, 2001 totalled $5.0 million. For additional information about cash flows from the Company's operating, financing and investing activities, see "Statements of Cash Flows in the Condensed Consolidated Financial Statements." The OTS regulations require the Company to maintain sufficient liquidity to ensure its safe and sound operation. The Company entered into a $2.0 million line of credit agreement on October 1, 2001 with another unaffiliated bank. The Company may use this line of credit to fund stock repurchases in the future and general corporate purposes. As of March 31, 2002, there were no borrowings outstanding on this line of credit. Stockholders' equity totaled $36.1 million at March 31, 2002 compared to $35.9 million at December 31, 2001, reflecting the Company's earnings, stock repurchases, the amortization of the unallocated portion of shares held by the ESOP, dividends declared on common stock and the change in the accumulated other comprehensive income. The Company repurchased 37,000 shares of common stock during the three months ended March 31, 2002 at an average price of $22.72. On January 7, 2002, the Company paid a quarterly cash dividend of $0.15 per share on common stock outstanding as of the close of business on December 17, 2001, aggregating $256,000. On February 22, 2002, the Company declared a quarterly cash dividend of $0.18 per share payable on April 8, 2002 to shareholders of record as of the close of business on March 15, 2002, aggregating $301,000. Interest Income. Interest income decreased by $510,000 to $6.5 million for the three months ended March 31, 2002 compared to $7.0 million for the three months ended March 31, 2001. The decrease in interest income was primarily due to a decreases in the average yield on interest earning assets and changes in the average balances of certain interest earning assets. The yield on interest earning assets decreased to 7.13% for the three months ended March 31, 2002 from 7.68% for the three months ended March 31, 2001. The decrease in average yields was due primarily to a decrease in the average yield on loans, an increase in the average balance of interest bearing cash, a decrease in the average yield on interest bearing cash, a decrease in the average yield on securities available for sale and a decrease in the average balance of securities available for sale. The average yield on loans decreased to 7.72% for the three months ended March 31, 2002 from 8.02% for the three months ended March 31, 2001. The average yield on securities available for sale decreased to 5.06% for the three months ended March 31, 2002 from 5.47% for the three months ended March 31, 2001. The average yield on interest bearing cash decreased to 1.39% for the three months ended March 31, 2002 from 5.36% for the three months ended March 31, 2001. The decreases in the average yields on assets was primarily due to decreases in market interest rates. The average balance of interest earning assets decreased $314,000 to $367.5 million for the three months ended March 31, 2002 from $367.8 million for the three months ended March 31, 2001. This decrease was primarily due to lower levels of loans and securities available for sale, offset by an increase in interest bearing cash. The decrease in the average balance of loans generally reflects payments, sales and prepayments of loans in excess of originations over the past twelve months of first mortgage loans, second mortgage loans and purchases of first mortgage loans secured primarily by one-to four-family residential, multifamily and commercial real estate loans. See "Financial Condition. "The decrease in securities available for sale reflects maturities, calls and sales, offset in part by purchases and increases in fair market value. 7 RESULTS OF OPERATIONS (Continued) Interest Expense. Interest expense decreased by $888,000 to $3.5 million for the three months ended March 31, 2002 compared to $4.4 million for the three months ended March 31, 2001. The decrease in interest expense was primarily due to a decrease in the average cost of interest bearing liabilities and changes in the average balances of certain interest bearing liabilities. The average cost of interest bearing liabilities decreased to 4.15% for the three months ended March 31, 2002 from 5.21% for the three months ended March 31, 2001. The decrease in the average cost of interest bearing liabilities was due primarily to a decrease in the average cost of certificates of deposit and borrowed funds. The average cost of certificates of deposit decreased to 5.02% for the three months ended March 31, 2002 from 5.97% for the three months ended March 31, 2001. The average cost of borrowed funds decrease to 5.62% for the three months ended March 31, 2002 from 6.08% for the three months ended March 31, 2001. The decreased in the average cost of funds was primarily due to decreases in market interest rates. The average balance of interest bearing liabilities increased $459,000 to $341.2 million for the three months ended March 31, 2002 from $340.8 million for the three months ended March 31, 2001. This increase was due primarily to an increase in NOW and money market savings accounts, offset by a decrease in certificates of deposits and borrowed funds. The decrease in the certificates of deposit was due in part to a decrease in the average balances of public funds certificates of deposits, offset in part by an increase in the average balance of retail certificates of deposit. Net Interest Income. Net interest income before the provision for loan losses increased by $378,000 to $3.0 million for the three months ended March 31, 2002 from $2.7 million for the three months ended March 31, 2001. The increase is due primarily to an increase in the interest rate spread. The interest rate spread (i.e., the difference in the average yield on assets and average cost of liabilities) increased to 2.98% for the three months ended March 31, 2002 from 2.47% for the three months ended March 31, 2001. The following table sets forth certain information relating to the Company's average balance sheets and reflects the average yield on assets and average cost of liabilities for the three month periods ended March 31, 2002 and 2001, respectively.
For the Three Months Ended March 31, 2002 2001 ---- ---- Average Average Average Average Balance Interest Yield/Cost Balance Interest Yield/Cost ------- -------- ---------- ------- -------- ---------- (Dollars in thousands) Assets: Interest-earning assets: Loans..................................... $ 316,645 $ 6,093 7.72% $ 318,647 $ 6,373 8.02% Securities available for sale............. 28,569 362 5.06 39,732 543 5.47 Interest bearing cash..................... 22,249 76 1.39 9,398 124 5.36 --------- --------- ------ --------- ------- ------ Total interest-earning assets........... 367,463 $ 6,531 7.13% 367,777 $ 7,040 7.68% --------- ------ ------- ------ Noninterest-earning assets.................. 19,337 18,952 --------- --------- Total assets............................ $ 386,800 $ 386,729 ========= ========= Liabilities and Equity: Interest-bearing liabilities: NOW and money market savings.............. $ 63,286 $ 160 1.02% $ 56,262 $ 387 2.79% Passbook savings.......................... 23,568 73 1.26 21,448 97 1.84 Certificates of deposit................... 177,897 2,200 5.02 179,800 2,648 5.97 Borrowed funds............................ 76,477 1,060 5.62 83,259 1,249 6.08 --------- --------- ------ --------- ------- ------ Total interest-bearing liabilities.......... 341,228 $ 3,493 4.15% 340,769 $ 4,381 5.21% --------- ------ ------- ------ Noninterest-bearing liabilities............. 9,255 9,119 --------- --------- Total liabilities....................... 350,483 349,888 Equity...................................... 36,317 36,841 --------- --------- Total liabilities and equity ........... $ 386,800 $ 386,729 ========= ========= Net interest income.......................... $ 3,038 $ 2,659 ========= ======= Net interest rate spread..................... 2.98% 2.47% ====== ====== Net interest margin.......................... 3.31% 2.89% ====== ====== Ratio of average interest-earning assets to average interest-bearing liabilities........ 107.69% 107.93% ====== ======
8 RESULTS OF OPERATIONS (Continued) Provision for Loan Losses. The Company's provision for loan losses was $180,000 and $30,000 for the three months ended March 31, 2002 and 2001, respectively. The increase in the provision for loan loss is primarily due to the increase in the loan portfolio, specifically the commercial real estate loan portfolio, nonperforming loans and general economic conditions. 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 a number of factors. These factors include 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 multi-family and commercial real estate 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 $22,000 for the three months ended March 31, 2002 as compared to net charge offs of $33,000 for the three months ended March 31, 2001. The resulting allowance for loan losses was $3.0 million, $2.9 million and $2.8 million at March 31, 2002, December 31, 2001 and March 31, 2001, respectively. The allowance for loan losses as a percentage of total loans receivable was 0.91%, 0.92% and 0.89% at March 31, 2002, December 31, 2001 and March 31, 2001, respectively. The level of nonperforming loans was $452,000 at March 31, 2002, $277,000 at December 31, 2001 and $1.1 million at March 31, 2001. The level of nonperforming assets was $1.6 million, $1.4 million and $1.2 million at March 31, 2002, December 31, 2001 and March 31, 2001, respectively. Management believes that the allowance for loan losses is adequate as of March 31, 2002. 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 $276,000 to $1.3 million the three months ended March 31, 2002 from $1.0 million for the three months ended March 31, 2001. The increase is due to increases in fees and services charges and abstract fees. Fees and services charges increased $180,000, primarily due to increases in loan prepayment fees. Abstract fees increased $94,000, primarily due to increased sales volume. Sales volume increased in part due to a general increase in real estate activity. Noninterest income for the three months ended March 31, 2002 reflects losses on the sales of securities available for sale of $1,400, while the three months ended March 31, 2001 reflects gains on the sale of securities available for sale of $800. Noninterest Expense. Total noninterest expense increased by $192,000 to $2.4 million for the three months ended March 31, 2002 from $2.2 million for the three months ended March 31, 2001. The increase is due primarily to increases in salaries and employee benefits, data processing and other expenses, offset in part by a decrease in goodwill amortization. The increase in salaries and employee benefits was due in part to normal salary increases, increases in health insurance costs and the opening of a new office in Ankeny, Iowa. The increase in data processing was primarily due to normal data processing costs increases and an increase in consulting costs. The increase in other expenses were primarily due to an increase in marketing expenses, professional expenses and the opening of a new office in Ankeny, Iowa. The decrease in goodwill expense was due to no amortization of goodwill expense for the three months ended March 31, 2002 due to the Company's adoption of SFAS No. 142, Goodwill and Other Intangible Assets. The Company expects that this trend in the decrease of $118,000 to goodwill expense will likely continue. The Company's efficiency ratio for the three months ended March 31, 2002 and 2002 were 54.35% and 58.79%, respectively. The Company's ratio of noninterest expense to average assets for the three months ended March 31, 2002 and 2001 were 2.45% and 2.25%, respectively. Income Taxes. Income taxes increased by $63,000 to $576,000 for the three months ended March 31, 2002 as compared to $513,000 for the three months ended March 31, 2001, primarily due to an increase in net income before income taxes, partially offset by a decrease in nondeductible amortization as a result of the Company's adoption of SFAS 142. Net Income. Net income increased by $250,000 to $1.2 million for the three months ended March 31, 2001, as compared to $981,000 for the same period in 2001. ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK In management's opinion, there has not been a material change in market risk from December 31, 2001 as reported in Item 7A of the Annual Report on Form 10-K. 9 PART II. OTHER INFORMATION Item 1. Legal Proceedings Not applicable Item 2. Changes in Securities and Use of Proceeds Not applicable Item 3. Defaults Upon Senior Securities Not applicable Item 4. Submission of Matters to a Vote of Security Holders None Item 5. Other Information None Item 6. Exhibits and Reports on Form 8-K (a) Exhibits Exhibit 99.1 Press Release, dated February 1, 2002 (regarding the repurchase program). Exhibit 99.2 Press Release, dated February 22, 2002 (regarding the declaration of a dividend). Exhibit 99.3 Press Release, dated April 17, 2002 (regarding 2002 1st Quarter earnings) (b) Reports on Form 8-K None 10 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. NORTH CENTRAL BANCSHARES, INC. DATE: May 14, 2002 BY: /s/ David M. Bradley ----------------------------------------- David M. Bradley, Chairman, President and Chief Executive Officer DATE: May 14, 2002 /s/ John L. Pierschbacher ----------------------------------------- John L. Pierschbacher Principal Financial Officer 11 EX-99 4 northcentral10qex991_03-02.txt EXHIBIT 99.1 FEBRUARY 1, 2002 PRESS RELEASE Exhibit 99.1 Press Release PRESS RELEASE February 1, 2002 For further information contact: David M. Bradley Chairman, President and Chief Executive Officer North Central Bancshares, Inc. 825 Central Avenue Fort Dodge, Iowa 50501 515-576-7531 NORTH CENTRAL BANCSHARES, INC. ANNOUNCES STOCK REPURCHASE PROGRAM Fort Dodge, Iowa, February 1, 2002 - North Central Bancshares, Inc. (Nasdaq: "FFFD") (the "Company"), the holding company for First Federal Savings Bank of Iowa, announced today that it will commence a stock repurchase program. The program authorizes the Company to repurchase up to 100,000 shares of its outstanding shares of common stock during the next twelve months. The repurchases will be made from time to time, in open market transactions, at the discretion of management. This new program will commence immediately upon the completion of the Company's current repurchase program which was announced on September 20, 2001, of which 10,700 shares remain to be purchased. The Company has 1,700,280 shares of common stock currently outstanding. North Central Bancshares, Inc., with over $379 million in assets, as of December 31, 2001, is the holding company for First Federal Savings Bank of Iowa, a federally chartered stock savings bank. First Federal is a community-oriented institution serving Iowa through 8 full service locations in Fort Dodge, Nevada, Ames, Perry, Burlington and Mt. Pleasant, Iowa. First Federal's deposits are insured by the Federal Deposit Insurance Corporation. EX-99 5 northcentral10qex992_03-02.txt EXHIBIT 99.2 FEBRUARY 22, 2002 PRESS RELEASE Exhibit 99.2 Press Release PRESS RELEASE February 22, 2002 For further information contact: David M. Bradley Chairman, President and Chief Executive Officer North Central Bancshares, Inc. 825 Central Avenue Fort Dodge, Iowa 50501 515-576-7531 NORTH CENTRAL BANCSHARES, INC. INCREASES DIVIDEND 20% David M. Bradley, Chairman, President and Chief Executive Officer of North Central Bancshares, Inc. (the "Company") announced today that the Company declared a regular quarterly cash dividend of $0.18 per share on the Company's common stock for the fiscal quarter ended March 31, 2002. This amount is an increase of 20% compared to the previous dividend rate. The dividend will be payable to all stockholders of record as of March 15, 2002 and will be paid on April 8, 2002. Since 1997, North Central Bancshares annual dividends have increased from $0.25 per share to $0.72 per share, an increase of 188%. North Central Bancshares, Inc. serves north central and southeastern Iowa at 8 full service locations in Fort Dodge, Nevada, Ames, Burlington, Mount Pleasant and Perry, Iowa through its wholly-owned subsidiary, First Federal Savings Bank of Iowa, 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". For further information contact: David M. Bradley, President 515-576-7531 EX-99 6 northcentral10qex993_03-02.txt EXHIBIT 99.3 APRIL 17, 2002 PRESS RELEASE Exhibit 99.3 Press Release PRESS RELEASE For More Information Contact: April 17, 2002 David M. Bradley, President North Central Bancshares, Inc. 825 Central Avenue Fort Dodge, Iowa 50501 515-576-7531 NORTH CENTRAL BANCSHARES, INC. ANNOUNCES RECORD EARNINGS FOR FIRST QUARTER OF 2002 Fort Dodge, Iowa -- North Central Bancshares, Inc. (the "Company") (Nasdaq: FFFD), the holding company for First Federal Savings Bank of Iowa (the "Bank"), announced today that the Company earned a record $0.71 diluted earnings per share for the quarter ended March 31, 2002, compared to diluted earnings per share of $0.51 for the quarter ended March 31, 2001, an increase in diluted earnings per share of 39.2%. In dollars, the Company's net income was $1.2 million for the quarter ended March 31, 2002, as compared to $981,000 for the quarter ended March 31, 2001, an increase of 25.4%. Total assets at March 31, 2002 were $398.8 million as compared to $379.4 million at December 31, 2001. The increase in assets resulted primarily from an increase in loans, offset by a decrease in securities available-for-sale. Loans increased by $24.4 million, or 7.9%, to $332.4 million at March 31, 2002 from $308.0 million at December 31, 2001. At March 31, 2002, net loans consisted of $155.9 million of one-to-four family loans, $73.5 million of multifamily real estate loans, $52.6 million of commercial real estate loans and $50.5 million of consumer loans. The increase in loans was primarily due to the purchases of $36.3 million of multifamily and commercial real estate loans. Securities available-for-sale decreased $5.3 million, or 16.9%, from $31.4 million at December 31, 2001 to $26.1 million at March 31, 2002. The decrease in securities available-for-sale was primarily due to calls and maturities. Deposits increased $3.3 million, or 1.2%, to $272.1 million at March 31, 2002 from $268.8 million at December 31, 2001. Other borrowed funds increased $16.2 million, or 22.7%, to $87.6 million at March 31, 2002 from $71.4 million at December 31, 2001. The increase in the deposits and borrowed funds were used in part to fund asset growth. Nonperforming assets were 0.39% of total assets as of March 31, 2002 compared to 0.36% of total assets as of December 31, 2001. The allowance for loan losses was $3.0 million, or 0.91% of total loans, at March 31, 2002, compared to $2.9 million, or 0.92% of total loans, at December 31, 2001. The net interest spread of 2.98% for the quarter ended March 31, 2002 represented an increase from the net interest spread of 2.47% for the quarter ended March 31, 2001. The net interest margin of 3.31% for the quarter ended March 31, 2002 represented an increase from the net interest margin of 2.89% for the quarter ended March 31, 2001. Net interest income for the quarter ended March 31, 2002 was $3.0 million, compared to net interest income of $2.7 million for the quarter ended March 31, 2001. - MORE- The Company's provision for loan losses was $180,000 and $30,000 for the quarters ended March 31, 2002 and 2001, respectively. The increase in the provision for loan losses was due primarily to the increase in the loan portfolio. 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 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. Stockholders' equity was $36.1 million at March 31, 2002, compared to $35.9 million at December 31, 2001. Stockholders' equity increased by $140,000 primarily due to earnings, offset in part by stock repurchases and declared dividends. Book value, or stockholders' equity per share, at March 31, 2002 was $21.68 compared to $21.12 at December 31, 2001. The ratio of stockholders' equity to total assets was 9.0% at March 31, 2002, as compared to 9.5% at December 31, 2001. All stockholders of record on March 15, 2002, received a quarterly cash dividend of $0.18 per share on April 8, 2002. In addition, on February 21, 2002, the Company commenced a new stock repurchase program for 100,000 shares, of which 73,700 shares remain to be repurchased. The Company has 1,666,080 shares of common stock currently outstanding. During the quarter ended March 31, 2002, the Company repurchased a total of 37,000 shares or approximately 2.2% of its outstanding shares of common stock at prevailing market prices averaging $22.72 per share. Since its formation in 1996, the Company has invested a total of $40.9 million in the repurchase of 2,400,767 shares of its outstanding stock. The Bank recently received approval from the Iowa Finance Authority to construct a 23-unit low-income housing tax credit apartment building for the elderly in Fort Dodge, Iowa. Construction will begin during the second quarter of 2002 and we anticipate that the project will be completed in the first quarter of 2003. Total cost of the project is expected to be $1.8 million. North Central Bancshares, Inc. serves north central and southeastern Iowa at nine full service locations in Fort Dodge, Nevada, Ames, Perry, Ankeny, Burlington and Mount Pleasant, Iowa through its wholly-owned subsidiary, First Federal Savings Bank of Iowa, headquartered in Fort Dodge, Iowa. The Bank recently opened a branch office in Ankeny, Iowa in leased space. Construction is expected to begin in the second quarter of 2002 on a new 5,000 square foot facility. The Bank's Ankeny office will relocate to this new office when completed, sometime during the first quarter of 2003. The Bank's deposits are insured by the Federal Deposit Insurance Corporation under the full extent permitted by law. The Company's stock is traded on The Nasdaq National Market under the symbol "FFFD". Statements contained in this news release, which are not historical facts, contain forward-looking statements as that term is defined in the Private Securities Litigation Reform Act of 1995. Such forward-looking statements are subject to risk and uncertainties which could cause actual results to differ materially from those currently anticipated due to a number of factors, which include, but are not limited to, factors discussed in documents filed by the Company with the Securities and Exchange Commission from time to time. The Company or the Bank does not undertake to update any forward looking statement, whether written or oral, that may be made from time to time by or on behalf of the Company or the Bank. For more information contact: David M. Bradley, President and Chief Executive Officer, 515-576-7531 FINANCIAL HIGHLIGHTS OF NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Financial Condition (Unaudited)
(Dollars in Thousands, except per share and share data) March 31, 2002 December 31, 2001 -------------- ----------------- Assets Cash and cash equivalents $ 19,060 $ 19,909 Securities available for sale 26,074 31,366 Loans (net of allowance of loan loss of $3,041 and $2,883, respectively) 332,390 307,981 Goodwill 4,971 4,971 Other assets 16,268 15,148 ---------- ---------- Total Assets $ 398,763 $ 379,375 ========== ========== Liabilities Deposits $ 272,088 $ 268,814 Other borrowed funds 87,630 71,413 Other liabilities 2,992 3,235 ---------- ----------- Total Liabilities 362,710 343,462 Stockholders' Equity 36,053 35,913 ---------- ---------- Total Liabilities and Stockholders' Equity $ 398,763 $ 379,375 ========== ========== Stockholders' equity to total assets 9.04% 9.47% ========== ========== Book value per share $ 21.68 $ 21.12 ========== =========== Total shares outstanding 1,663,280 1,700,280 ========== ===========
Condensed Consolidated Statements of Income (Unudited) (Dollars in Thousands, except per share data)
For the Three Months Ended March 31, 2002 2001 ------ ------ Interest income $6,531 $7,040 Interest expense 3,493 4,381 ------ ------ Net interest income 3,038 2,659 Provision for loan loss 180 30 ------ ------ Net interest income after provision for loan loss 2,858 2,629 Noninterest income 1,315 1,039 Noninterest expense 2,366 2,174 ------ ------ Income before income taxes 1,807 1,494 Income taxes 576 513 ------ ------ Net income $1,231 $ 981 ====== ====== Basic earnings per share $ 0.75 $ 0.53 ====== ====== Diluted earnings per share $ 0.71 $ 0.51 ====== ======
Selected Financial Ratios
For the Three Months Ended March 31, 2002 2001 ------ ------ Performance ratios Net interest spread 2.98% 2.47% Net interest margin 3.31% 2.89% Return on average assets 1.27% 1.01% Return on average equity 13.56% 10.65% Efficiency ratio (noninterest expense divided by the sum of net interest income before provision for loan losses plus noninterest income) 54.35% 58.79%
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