-----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, Vbyl29t6FB8jOiAdqKpQxND/IT1KfYcs6ZaIAZxU2N49uiDtYvR58Jt/FD8sFQ5m zaVJvO87fIe0OEOAttjcFg== 0000950131-98-003213.txt : 19980514 0000950131-98-003213.hdr.sgml : 19980514 ACCESSION NUMBER: 0000950131-98-003213 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 7 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 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: SEC FILE NUMBER: 000-27672 FILM NUMBER: 98617290 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 FORM 10-Q 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, 1998 [ ] 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 Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act of 1934 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 ----- ----- 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 13, 1998 - -------------------------------------------------------------------------------- (Common Stock, $.01 par value) 3,266,483 NORTH CENTRAL BANCSHARES, INC. INDEX
Page Part I. Financial Information Item 1. Consolidated Condensed Financial Statements (unaudited) 1 to 4 Consolidated Condensed Statements of Financial Condition at March 31, 1998 and December 31, 1997 (Unaudited) 1 Consolidated Condensed Statements of Income for the three months ended March 31, 1998 and 1997 (Unaudited) 2 Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 1998 and 1997 (Unaudited) 3 & 4 Notes to Consolidated Condensed Financial Statements 5 & 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7 to 13 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 Part II. Other Information 15 & 16 Items 1 through 6 15 Signatures 16 Exhibits
NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
March 31, December 31, ASSETS 1998 1997 ------------ ------------ Cash: Interest-bearing $ 11,084,683 $ 2,462,809 Noninterest-bearing 1,503,559 982,354 Securities available for sale 56,554,348 19,815,913 Loans receivable, net 247,660,677 191,248,830 Accrued interest receivable 2,287,627 1,300,495 Foreclosed real estate 331,518 67,107 Premises and equipment, net 3,202,638 2,143,016 Rental real estate 2,030,701 2,059,148 Title plant 925,256 925,256 Goodwill 6,651,971 195,628 Deferred taxes -- 105,139 Prepaid expenses and other assets 578,820 647,913 ------------ ------------ Total assets $332,811,798 $221,953,608 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits $244,733,479 $141,123,707 Other borrowed funds 33,592,000 28,550,000 Advances from borrowers for taxes and insurance 607,841 918,369 Dividend payable 261,319 204,155 Deferred income taxes 145,113 -- Income taxes payable 839,368 194,325 Accrued expenses and other liabilities 1,298,941 545,976 ------------ ------------ Total liabilities 281,478,061 171,536,532 ------------ ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock ($.01 par value, authorized 3,000,000 shares, issued and outstanding none) -- -- Common Stock ($.01 par value, authorized 15,500,000 shares; issued and outstanding 4,011,057) 40,111 40,111 Additional paid-in capital 38,006,397 37,949,598 Retained earnings, substantially restricted 24,514,349 23,660,964 Accumulated other comprehensive income-unrealized gain on securities available for sale, net of income taxes 311,315 354,781 Treasury stock at cost (744,574 shares) (10,377,937) (10,377,937) Unearned shares, employee stock ownership plan (1,160,498) (1,210,441) ------------ ------------ Total stockholders' equity 51,333,737 50,417,076 ------------ ------------ Total liabilities and stockholders' equity $332,811,798 $221,953,608 ============ ============
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, 1998 1997 ---------- ---------- Interest income: Loans receivable $4,749,038 $3,504,070 Securities and cash deposits 716,182 400,878 ---------- ---------- 5,465,220 3,904,948 ---------- ---------- Interest expense: Deposits 2,393,317 1,550,267 Other borrowed funds 479,432 304,024 ---------- ---------- 2,872,749 1,854,291 ---------- ---------- Net Interest Income 2,592,471 2,050,657 Provision for loan losses 60,000 60,000 ---------- ---------- Net interest income after provision for loan losses 2,532,471 1,990,657 ---------- ---------- Noninterest income: Fees and service charges 237,619 154,364 Abstract fees 361,098 254,810 Gain on sale of securities available for sale, net 54,853 -- Other income 161,772 75,211 ---------- ---------- Total noninterest income 815,342 484,385 ---------- ---------- Noninterest expense: Salaries and employee benefits 770,569 524,183 Premises and equipment 153,215 103,814 Data processing 99,231 64,419 SAIF deposit insurance premiums 32,490 21,069 Goodwill amortization 79,609 6,987 Other expenses 499,316 389,158 ---------- ---------- Total noninterest expense 1,634,430 1,109,630 ---------- ---------- Income before income taxes 1,713,383 1,365,412 Provision for income taxes 607,880 476,262 ---------- ---------- Net Income $1,105,503 $ 889,150 ========== ========== Basic earnings per common share $ 0.35 $ 0.27 ========== ========== Diluted earnings per common share $ 0.34 $ 0.27 ========== ========== Dividends declared per common share $ 0.08 $ 0.0625 ========== ========== Comprehensive Income $1,062,037 $ 937,452 ========== ==========
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, 1998 1997 ----------- ----------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,105,503 $ 889,150 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 60,000 60,000 Depreciation, premises and equipment 61,299 54,544 Depreciation, rental real estate 28,447 -- Amortization and accretion 123,818 29,426 Deferred taxes (44,835) (30,925) Effect of contribution to employee stock ownership plan 106,742 81,287 (Gain) on sale of foreclosed real estate and loans, net (2,560) (2,855) (Gain) on sale of securities available for sale (54,853) -- Loss on disposal of equipment -- 5,024 Change in assets and liabilities: Decrease in accrued interest receivable 32,241 41,737 (Increase) decrease in prepaid expenses and other assets 278,999 (166,179) Increase in income taxes payable 657,608 420,323 (Decrease) in accrued expenses and other liabilities (96,063) (46,757) ----------- ----------- Net cash provided by operating activities 2,256,346 1,334,775 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Net decrease in loans 1,879,166 1,632,421 Purchase of loans (1,655,000) (4,940,253) Proceeds from sale of loans 1,644,000 161,381 Proceeds from sales, calls and maturities of securities available for sale 9,060,169 -- Purchase of securities available for sale (4,050,821) (236,948) Proceeds from maturities of securities held to maturity -- 2,500,000 Purchase of premises and equipment (39,031) (124,640) Proceeds from sale of equipment -- 30,450 Purchase of rental real estate -- (330,264) Proceeds from sale of title plant -- 43,491 Cash paid in connection with acquisition of Valley Financial Corp., net of cash received (8,532,270) -- Other (1,992) (6,107) ----------- ----------- Net cash (used in) investing activities (1,695,779) (1,270,469) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase in deposits 4,347,777 2,652,383 Increase in advances from borrowers for taxes and insurance (612,311) (374,921) Net change in short term borrowings -- (7,000,000) Proceeds from other borrowed funds 8,042,000 4,000,000 Payments of other borrowings (3,000,000) (35,000) Dividends paid (194,954) (230,344) ----------- ----------- Net cash provided by (used in) financing activities 8,582,512 (987,882) ----------- ----------- Net increase (decrease) in cash 9,143,079 (923,576) CASH Beginning 3,445,163 3,936,815 ----------- ----------- Ending $12,588,242 $ 3,013,239 =========== =========== SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION Cash payments for: Interest paid to depositors $ 2,331,593 $ 1,524,121 Interest paid on borrowings 479,432 344,648 Income taxes 85 86,864
(Continued) -3- The following is a summary of the assets acquired and liabilities assumed in connection with the acquisition of Valley Financial Corp.
Securities $ 41,818,057 Loans 58,567,364 Accrued interest receivable 1,019,373 Premises and equipment 1,081,890 Goodwill 6,535,951 Prepaid expenses and other assets 209,906 Deposits (99,261,995) Advances from borrowers for taxes and insurance (301,783) Deferred income taxes (300,030) Accrued taxes payable 12,565 Accrued expenses and other liabilities (849,028) ------------- Cash Paid, less cash received $ 8,532,270 =============
See Notes to Consolidated Condensed Financial Statements -4- 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 period ended March 31, 1998 and 1997 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 1997 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 Iowa (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 $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. 3. ACQUISITION OF VALLEY FINANCIAL CORP. As of the close of business on January 30, 1998, First Federal Savings Bank of Iowa (the "Bank") completed the acquisition of Valley Financial Corp., ("Valley Financial") (the "Merger") pursuant to an Agreement and Plan of Merger, dated as of September 18, 1997 (the "Merger Agreement"). The acquisition resulted in the merger of Valley Financial's wholly owned subsidiary, Valley Savings Bank, FSB ("Valley Savings") with and into the Bank, with the Bank as the resulting financial institution. Valley Savings, headquartered in Burlington, Iowa was a federally-charted stock savings bank with three branch offices located in southeastern Iowa. The former offices of Valley Savings are being operated as a division of the Bank. In connection with the Acquisition, each share of Valley Financial's common stock, par value $1.00 per share, issued and outstanding (other than shares held as treasury stock of Valley Financial) was cancelled and converted automatically into the right to receive $525 per share in cash pursuant to the terms and conditions of the Merger Agreement. As a result of the Acquisition, shareholders of Valley Financial were paid a total of $14,726,250 in cash. The Acquisition was accounted for as a purchase transaction and therefore, the operating results of the former offices of Valley Savings Bank are included in the 1998 operating results of the Company only from the date of acquisition through March 31, 1998. -5- NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED)(Continued) 4. 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 period ended March 31, 1998, the weighted average number of shares outstanding for basic and diluted earnings per share computation were 3,140,815 and 3,233,867, respectively. For the three month period ended March 31, 1997, the weighted average number of shares outstanding were 3,282,240 and 3,321,003, respectively. 5. DIVIDENDS On February 27, 1998, the Company declared a cash dividend on its common stock, payable on April 6, 1998 to stockholders of record as of March 16, 1998, equal to $0.08 per share. -6- 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. ACQUISITION OF VALLEY FINANCIAL CORP. On September 18, 1997, the Company announced the execution of a definitive agreement to acquire Valley Financial, a privately held Iowa corporation and parent company of Valley Savings, Burlington, Iowa. As of the close of business on January 30, 1998 the Bank completed this acquisition. Under the terms of the Agreement, the Bank was acquired in a cash transaction totalling $14,726,250, or $525 per share, all 28,050 shares outstanding of Valley Financial's common stock. Valley Savings was a federally chartered savings bank, with two offices in Burlington, Iowa and one office in Mount Pleasant, Iowa. At January 30, 1998, just prior to the merger, Valley Financial had assets of $108.0 million, loans of $57.9 million and deposits of $98.9 million. The acquisition of Valley Financial resulted in the merger of Valley Financial's wholly-owned subsidiary, Valley Savings, with and into First Federal, with the three Valley Savings branches continuing to operate as Valley Savings Bank, a division of First Federal Savings Bank of Iowa. The transaction was accounted for as a purchase and closed on January 30, 1998. PRO FORMA CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) The following unaudited pro forma consolidated financial statements presented on the following pages are based on the historical financial statements of the Company and Valley Financial. The unaudited pro forma consolidated statements of income for the three months ended March 31, 1998 and 1997 were prepared as if the Acquisition had occurred as of the beginning of the respective periods for purposes of the combined consolidated statements of income and as if such an acquisition had occurred at December 31, 1997 for purposes of the combined consolidated statement of financial condition. These pro forma financial statements are not necessarily indicative of the results of operations that might have occurred had the Acquisition taken place at the beginning of the period, or to project the Company's results of operations at any future date or for any future period. The pro forma consolidated condensed statements should be read in connection with the notes thereto. -7- NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES ACTUAL AND PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION (Unaudited)
Actual ProForma March 31, December 31, ASSETS 1998 1997 ------------ ------------ Cash: Interest-bearing $ 11,084,683 $ 6,481,513 Noninterest-bearing 1,503,559 2,035,107 Securities available for sale 56,554,348 58,892,100 Loans receivable, net 247,660,677 250,700,535 Accrued interest receivable 2,287,627 2,273,563 Foreclosed real estate 331,518 74,240 Premises and equipment, net 3,202,638 3,229,923 Rental real estate 2,030,701 2,059,148 Title plant 925,256 925,256 Goodwill 6,651,971 6,734,983 Prepaid expenses and other assets 578,820 742,395 ------------ ------------ Total assets $332,811,798 $334,148,763 ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits $244,733,479 $240,634,725 Other borrowed funds 33,592,000 39,858,760 Advances from borrowers for taxes and insurance 607,841 1,164,417 Dividend payable 261,319 204,155 Deferred income taxes 145,113 209,657 Income taxes payable 839,368 98,558 Accrued expenses and other liabilities 1,298,941 1,561,415 ------------ ------------ Total liabilities 281,478,061 283,731,687 ------------ ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock ($.01 par value, authorized 3,000,000 shares, issued and outstanding none) -- -- Common Stock ($.01 par value, authorized 15,500,000 shares; issued and outstanding 4,011,057) 40,111 40,111 Additional paid-in capital 38,006,397 37,949,598 Retained earnings, substantially restricted 24,514,349 23,660,964 Unrealized gain on securities available for sale, net of income taxes 311,315 354,781 Treasury stock at cost (744,574 shares) (10,377,937) (10,377,937) Unearned shares, employee stock ownership plan (1,160,498) (1,210,441) ------------ ------------ Total stockholders' equity 51,333,737 50,417,076 ------------ ------------ Total liabilities and stockholders' equity $332,811,798 $334,148,763 ============ ============
-8- NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES PRO FORMA CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)
Three Months Ended March 31 1998 1997 ---------- ---------- Interest income $6,087,529 $5,789,333 Interest expense 3,322,829 3,144,229 ---------- ---------- Net interest income 2,764,700 2,645,104 Provision for loan losses 60,000 60,000 ---------- ---------- Net interest income after provision for loan losses 2,704,700 2,585,104 ---------- ---------- Noninterest income: Fees and service charges 273,524 255,557 Abstract fees 361,098 254,810 Gain on sale of securities available for sale 54,853 -- Other income 186,990 154,252 ---------- ---------- Total noninterest income 876,465 664,619 ---------- ---------- Noninterest expense: Salaries and employee benefits 938,514 781,787 Premises and equipment 187,713 179,049 Data processing 129,054 108,245 SAIF deposit insurance premiums 37,784 24,266 Goodwill amortization 115,920 115,920 Other expenses 579,147 550,547 ---------- ---------- Total noninterest expense 1,988,132 1,759,814 ---------- ---------- Income before income taxes 1,593,033 1,489,909 Provision for income taxes 587,759 531,355 ---------- ---------- Net Income $1,005,274 $ 958,554 ========== ==========
-9- FINANCIAL CONDITION The pro forma statement of financial condition as of December 31, 1997 was used for comparison purposes to the March 31, 1998 statement of financial condition in order to more clearly present the changes in financial condition. Total assets decreased $1.3 million, or 0.4%, to $332.8 million at March 31, 1998 compared to $334.1 million at December 31, 1997. Interest bearing cash increased $4.6 million, or 71.0%. Securities available for sale decreased $2.3 million, or 4.0%, primarily due to $6.1 million of maturities, calls and proceeds from sales, partially offset by $4.1 million of purchases. Total loans receivable, net, decreased by $3.0 million, or 1.2%, from December 31, 1997, due primarily to payments and prepayments of loans (of approximately $13.5 million) and loan sales of $1.6 million, which payments, prepayments and sales were offset in part by originations of $7.0 million of first mortgage loans secured primarily by one-to-four family residences, purchases of $1.7 million of first mortgage loans secured by multi-family residences and originations of $3.1 million of second mortgage loans. Deposits increased $4.1 million, or 1.7%, from $240.6 million at December 31, 1997 to $244.7 million at March 31, 1998, reflecting increases in certificates of deposit, NOW and money market accounts. These increases were primarily due to advertising by the Company to promote noninterest bearing checking accounts and offering competitive interest rates on certain deposit products. Other borrowings, primarily FHLB advances, decreased by $6.3 million, to $33.6 million at March 31, 1998 from $39.9 million at December 31, 1997, primarily due to the repayment of short term advances with excess cash available from the Acquisition of Valley Financial. Total stockholders' equity increased $917,000, from $50.4 million at December 31, 1997 to $51.3 million at March 31, 1998, primarily due to earnings, which were offset in part by dividends declared. See "Capital". CAPITAL The Company's total stockholders' equity increased by $917,000 to $51.3 million at March 31, 1998 from $50.4 million at December 31, 1997, primarily due to earnings, which were offset in part by dividends declared. The changes in stockholders' equity were also due to the unrealized gain on securities available for sale decreased by $43,000 to $311,000 at March 31, 1998 from $355,000 at December 31, 1997. The unearned shares from the Employee Stock Ownership Plan (the "ESOP") decreased by $50,000 to $1,160,000 at March 31, 1998 from $1,210,000 at December 31, 1997, due to the release of shares by the ESOP to employees of 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, 1998, the Bank exceeded all of its regulatory capital requirements. The Bank's required, actual and excess capital levels as of March 31, 1998 are as follows:
Amount Percentage of Assets ------- -------------------- (dollars in thousands) Tangible capital: Capital level $37,655 11.63% Less Requirement 4,856 1.50% ------- ----- Excess $32,799 10.13% ======= ===== Core capital: Capital level $37,655 11.63% Less Requirement 9,711 3.00% ------- ----- Excess $27,944 8.63% ======= ===== Risk-based capital: Capital level $39,955 23.42% Less Requirement 13,647 8.00% ------- ----- Excess $26,308 15.42% ======= =====
LIQUIDITY The Company's primary sources of funds are cash provided by operating activities (including principal and interest payment on loans), certain financing activities (including increases in deposits and proceeds from -10- borrowings) and certain investing activities (including maturities and calls of securities and other investments). During the first three months of 1998 and 1997, principal payments and repayments on loans totalled $13.5 million and $9.1 million, respectively. The net increases in deposits during the first three months of 1998 and 1997 totalled $4.3 million and $2.7 million, respectively. The proceeds from borrowed funds during the first three months of 1998 and 1997 totalled $8.0 million and $4.0 million, respectively. During the first three months of 1998 and 1997, the proceeds from the maturities, calls and sales of securities totalled $9.1 million and $2.5 million, respectively. Cash provided from operating activities during the first three months of 1998 and 1997 totalled $2.3 million and $1.3 million, respectively, of which $1.1 million and $889,000, respectively, represented net income of the Company. The Company's primary use of funds is cash used to originate and purchase loans, repayment of borrowed funds and other financing activities. During the first three months of 1998 and 1997, the Company's gross purchases and origination of loans totalled $13.5 million and $12.6 million, respectively. The repayment of borrowed funds during the first three months of 1998 and 1997 totalled $3.0 million and $7.0 million, respectively. 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 Bank is required to maintain an average daily balance of liquid assets (cash, certain time deposits, bankers' acceptances, specified United States Government, state or federal agency obligations, shares of certain mutual funds and certain corporate debt securities and commercial paper) equal to a monthly average of not less than a specified percentage of its net withdrawable deposit accounts plus short-term borrowings. This liquidity requirement may be changed from time to time by the OTS to any amount within the range of 4.0% to 10%, depending upon economic conditions and the savings flows of member institutions, and is currently 4.0%. Monetary penalties may be imposed for failure to meet these liquidity requirements. At March 31, 1998, the Bank's liquidity position was $47.2 million or 18.48% of liquid assets, compared to $14.0 million, or 9.28%, at December 31, 1997. The increase in the Bank's liquidity position was due primarily to the Acquisition of Valley Financial on the close of business as of January 30, 1998. During the fourth quarter of 1997, the OTS revised its liquidity requirements by reducing the minimum liquidity requirements from 5% to 4%, eliminating the short term liquidity requirement and requiring each savings association to maintain sufficient liquidity to ensure its safe and sound operation. Stockholders' equity totaled $51.3 million at March 31, 1998 compared to $50.4 million at December 31, 1997, reflecting the Company's earnings for the quarter, the amortization of the unallocated portion of shares held by the ESOP, dividends paid on common stock and the change in the net unrealized gains on securities, net of taxes. On January 6, 1998, the Company paid a quarterly cash dividend equal to $0.0625 per share on common stock outstanding as of the close of business on December 15, 1997, aggregating $204,000. On February 27, 1998, the Company declared a quarterly cash dividend of $0.08 per share payable on April 6, 1998 to shareholders of record as of the close of business on March 16, 1998, aggregating $261,000. RESULTS OF OPERATIONS The pro forma statements of income for the three months ended March 31, 1998 and 1997 were used for comparison purposes in order to more clearly present the changes in the results of operations. Interest Income. Interest income increased by $298,000 to $6.1 million for the three months ended March 31, 1998 compared to $5.8 million for the three months ended March 31, 1997. The increase in interest income was primarily due to a $15.7 million increase in the average balance of interest earning assets(primarily first mortgage and consumer loans) to $316.0 million for the three months ended March 31, 1998 from $300.3 million for the comparable 1997 period. The increase in the average balance of 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 multi-family residences, which were offset, in part, by payments and prepayments on such loans. See "Financial Condition." The impact of the increase in the average balances of loans was offset in part by a decrease in the average yield on loans. The average yield on loans decreased to 8.23% for the three months ended March 31, 1998 from 8.31% for the three months ended March 31, 1997, primarily due to a general decrease in market interest rates. The average balance of securities held to maturity decreased $2.5 million, or 100.0%, and such securities were in part, replaced by -11- RESULTS OF OPERATIONS (Continued) lower yielding securities available for sale. The average balance of securities available for sale decreased $4.1 million, or 6.6%, as such maturing, sold and called securities were partially replaced with securities available for sale. The average yield on interest earning assets decreased from 7.73% for the three months ended March 31, 1997 to 7.72% for the three months ended March 31, 1998. Interest Expense. Interest expense increased by $179,000 to $3.3 million for the three months ended March 31, 1998 compared to $3.1 million for the three months ended March 31, 1997. The increase in interest expense was primarily due to a $14.3 million increase in the average balance of interest bearing liabilities (primarily NOW accounts, money market accounts and certificates of deposit) to $274.2 million for the three months ended March 31, 1998 from $259.9 million for the comparable 1997 period. The increase in such deposit accounts are due to marketing of the Company's noninterest bearing checking accounts, offering competitive rates on the certificate of deposit and money market accounts and a $4.4 million money market account opened for a certain governmental entity. The average cost of interest bearing liabilities was 4.91% for the three months ended March 31, 1998 and 1997. Net Interest Income. Net interest income before the provision for loan losses increased by $120,000 to $2.8 million for the three months ended March 31, 1998 from $2.6 million for the three months ended March 31, 1998. The increase is primarily due to the increase in the excess of average interest earning assets over the average interest bearing liabilities. The interest rate spread (i.e., the difference in the average yield on assets and average cost of liabilities) decreased slightly from 2.82% for the three months ended March 31, 1997 to 2.81% for the three months ended March 31, 1998. The following table sets forth certain information relating to the Company's average balance sheets and reflect the average yield on assets and average cost of liabilities for the three month periods ended March 31, 1998 and 1997.
For Three Months Ended March 31, ----------------------------------------------------------------- 1998 1997 -------------------------------- -------------------------------- Average Average Average Average Balance Interest Yield/Cost Balance Interest Yield/Cost -------- -------- ------------ --------- -------- ----------- (Dollars in thousands) Assets: Interest-earning assets: Loans.................................... $250,567 $5,154 8.23% $231,229 $4,803 8.31% Securities available for sale............ 58,497 844 5.85 62,617 897 5.81 Securities held to maturity.............. - - - - - - 2,500 41 6.71 Interest bearing cash.................... 6,930 90 5.24 3,939 48 5.04 -------- ------ ------ -------- ------ ------ Total interest-earning assets.......... 315,994 $6,088 7.72% 300,285 $5,789 7.73% ------ ------ ------ ------ Noninterest-earning assets................. 18,383 18,634 -------- -------- Total assets........................... $334,377 $318,919 ======== ======== Liabilities and Equity: Interest-bearing liabilities: NOW and money market savings............. $ 46,658 $ 360 3.13% $ 38,896 $ 274 2.86% Passbook savings......................... 26,200 155 2.39 26,602 161 2.45 Certificates of deposit.................. 163,690 2,254 5.58 158,377 2,178 5.58 Borrowed funds........................... 37,642 554 5.98 36,026 531 5.98 -------- ------ ------ -------- ------ ------ Total interest-bearing liabilities......... 274,190 $3,323 4.91% 259,901 $3,144 4.91% ------ ------ ------ ------ Noninterest-bearing liabilities............ 9,206 9,286 -------- -------- Total liabilities...................... 283,396 269,187 Equity..................................... 50,981 49,732 -------- -------- Total liabilities and equity........... $334,377 $318,919 ======== ======== Net interest income........................ $2,765 $2,645 ====== ====== Net interest rate spread................... 2.81% 2.82% ====== ====== Net interest margin........................ 3.50% 3.52% ====== ====== Ratio of average interest-earning assets to average interest-bearing liabilities...... 115.25% 115.54% ====== ======
-12- RESULTS OF OPERATIONS (Continued) Provision for Loan Losses. The Company's provision for loan losses was $60,000 for each of the three months ended March 31, 1998 and 1997. For the month ended January 31, 1998 and the three months ended March 31, 1997, Valley Financial did not have a provision for loan loss. 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 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 $1,000 for the three months ended March 31, 1998 as compared to net charge offs (recoveries) of $(6,000) for the three months ended March 31, 1997. The resulting allowance for loan losses was $2.6 million at March 31, 1998 as compared to $2.5 million at December 31, 1997 and $2.5 million at March 31, 1997. The level of nonperforming loans increased to $539,000 at March 31, 1998 from $296,000 at December 31, 1997 and from $407,000 at March 31, 1997. 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 $212,000 to $876,000 for the three months ended March 31, 1998 from $665,000 for the three months ended March 31, 1997. The increase is primarily due to increases in abstract fees, gains of sale of securities available for sale and other income. Abstract fees increased $106,000 due to increased sales volume, which is in part attributable to an improved housing market and the current level of interest rates. Other income increased $33,000, primarily due to increases in rental income from the Bank's investment in the Northridge Apartments Limited Partnership, which owns and operates a 44-unit apartment complex in Fort Dodge, Iowa. Noninterest income for the three months ended March 31, 1998 reflects gains on sales of securities available for sale of $55,000, while no such gains were recorded for the corresponding three month period in 1997. Noninterest Expense. Total noninterest expense increased by $228,000 to $2.0 million for the three months ended March 31, 1998 from $1.8 million for the three months ended March 31, 1997. The increase is primarily due to increases in salaries and employee benefits. The increase in salaries and benefits was primarily a result of the increased costs associated with the ESOP, normal salary increases, one time costs associated with the acquisition of Valley Financial and an increase in the number of employees. The Company's efficiency ratio for the three months ended March 31, 1998 and 1997 were 54.60% and 53.17%, respectively. The Company's ratio of noninterest expense to average assets for the three months ended March 31, 1998 and 1997 were 2.38% and 2.21%, respectively. Income Taxes. Income taxes increased by $56,000 to $588,000 for the three months ended March 31, 1998 as compared to $531,000 for the three months ended March 31, 1997. The increase was primarily due to an increase in pre-tax earnings during the 1998 period as compared to the corresponding 1997 period. Net Income. Net income totaled $1,005,000 for the three months ended March 31, 1998, compared to $959,000 for the same period in 1997. Year 2000 Compliance. Many existing computer programs use only two digits to identify a year in the date field. These programs were designed and developed without considering the impact of the upcoming change in the century. If not corrected, many computer applications could fail or create erroneous results by or at the Year 2000. The Year 2000 issue affects virtually all companies and organizations. The Company, working with its outside service providers, has initiated a project to ensure that its computer systems are year 2000 compliant. The Company has sent letters to all service providers, that management believes impact the Company's year 2000 compliance, in order verify their status on year 2000 compliance. The Company will begin testing for year 2000 compliance of certain computer applications in the fourth quarter of 1998. The Company believes that the costs associated with insuring year 2000 compliance will not materially affect the Company's future operating results or financial condition. -13- 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, 1997 as reported in Item 7A of the Form 10-K. -14- 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 Not applicable Item 5. Other Information First Federal Savings Bank of Fort Dodge changed its name to First Federal Savings Bank of Iowa on February 27, 1998. Item 6. Exhibits and Reports on Form 8-K Exhibit 27. Financial data schedule. (Only submitted with filing in electronic format.) Exhibit 99.1 Press Release (regarding the approval of Valley Savings Bank, FSB by the Office of Thrift Supervision). Exhibit 99.2 Press Release (regarding the completion of the acquisition of Valley Financial Corp. as of the close of business on January 30, 1998). Exhibit 99.3 Press Release (regarding the declaration of a dividend). Exhibit 99.4 Press Release (regarding the announcement of a stock repurchase program). Exhibit 99.5 Press Release (regarding the issuance of limited financial information for the quarter ended March 31, 1998). (b)Reports on Form 8-K A Form 8-K was filed on February 6, 1998 to report, pursuant to Item 2, the acquisition of Valley Financial as of the close of business on January 30, 1998. A Form 8-K was filed on March 27, 1998 to report, pursuant to Item 7, the financial statements of Valley Financial and the pro forma combined financial statements of the Company and Valley Financial. -15- 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 13, 1998 BY: /s/ David M. Bradley David M. Bradley, CPA Chairman, President and Chief Executive Officer DATE: May 13, 1998 BY: /s/ John L. Pierschbacher John L. Pierschbacher, CPA Principal Financial Officer -16- EX-27 2 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-31-1997 JAN-01-1998 MAR-31-1998 1,503,559 11,084,683 0 0 56,554,348 0 0 247,660,677 2,553,296 332,811,798 244,733,479 12,250,000 3,152,582 21,342,000 40,111 0 0 51,293,626 332,811,798 4,749,038 716,182 0 5,465,220 2,393,317 2,872,749 2,592,471 60,000 54,853 1,634,430 1,713,383 1,713,383 0 0 1,105,503 .35 .34 7.78 539,189 0 0 0 2,150,588 1,315 605 2,553,296 2,553,296 0 0
EX-99.1 3 PRESS RELEASE -- JANUARY 5, 1998 Exhibit 99.1 Press Release PRESS RELEASE January 5, 1998 For more information contact: David M. Bradley Chairman, President & Chief Executive Officer North Central Bancshares, Inc. 825 Central Avenue Fort Dodge, Iowa 50501 515-576-7531 NORTH CENTRAL BANCSHARES, INC. ACQUISITION OF VALLEY SAVINGS BANK, FSB APPROVED BY OFFICE OF THRIFT SUPERVISION Fort Dodge, Iowa, January 5, 1998...North Central Bancshares, Inc. (NASDAQ/NMS:FFFD) has received approval from the Office of Thrift Supervision for the acquisition of Valley Financial Corp. and its wholly owned subsidiary Valley Savings Bank, FSB. In connection with the acquisition, Valley Savings Bank will be merged into First Federal Savings Bank of Fort Dodge, the wholly owned subsidiary of North Central. The shareholders of Valley Financial previously approved the transaction at a meeting held in November, 1997. Mr. David M. Bradley, Chairman of the Board, President and Chief Executive Officer of both North Central and First Federal commented, "We are very pleased to have received both Valley Financial shareholder and bank regulatory approval. We are confident that the transaction will enhance shareholder value and provide long-term benefits for our customers and the communities that First Federal and Valley Savings Bank serve." The closing of the transaction is scheduled to occur as of the close of business on January 30, 1998. Each share of Valley Financial common stock outstanding will be converted into the right to receive cash consideration equal to $525.00 per share. The transaction will be accounted for by First Federal as a purchase transaction. The branch offices of Valley Savings Bank will be operated as a separate division of First Federal. 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. Upon completion of the transaction, North Central will have assets in excess of $300 million and will operate seven banking offices in southeastern and north central Iowa. First Federal'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." EX-99.2 4 PRESS RELEASE -- JANUARY 30, 1998 Exhibit 99.2 Press Release PRESS RELEASE January 30, 1998 For further information contact: David M. Bradley Chairman, President & Chief Executive Officer North Central Bancshares, Inc. 825 Central Avenue Fort Dodge, Iowa 50501 515-576-7531 NORTH CENTRAL BANCSHARES, INC. COMPLETES ACQUISITION OF VALLEY FINANCIAL CORP Fort Dodge, Iowa, January 30, 1998...North Central Bancshares, Inc. (NASDAQ/NMS:FFFD) has announced today the successful completion of the acquisition of Valley Financial Corp. and the merger of Valley Savings Bank, FSB, Burlington, Iowa, Valley Financial's wholly owned subsidiary, with and into First Federal Savings Bank of Fort Dodge, the wholly owned subsidiary of North Central, both of which will be effective as of the close of business today. The shareholders of Valley Financial received $525.00 in cash for each share of Valley Financial common stock held. The total consideration amounted to $14,726,250.00. The branch offices of Valley Savings Bank will continue to operate as Valley Savings Bank, a division of First Federal. The addition of Valley Savings Bank's three banking offices will increase the number of First Federal's banking offices to a total of seven in southeastern and north central Iowa. Mr. David M. Bradley, Chairman of the Board, President and Chief Executive Officer of both North Central and First Federal, commented, "In addition to representing our first acquisition to enhance our franchise, the acquisition of Valley Financial effectively deploys some of the capital raised in our second step conversion completed in 1996. We are confident that the transaction will enhance shareholder value and provide long-term benefits for our customers and the communities that First Federal and Valley Savings Bank serve." As a result of the acquisition, North Central will have in excess of $300 million in assets and $240 million in deposits. North Central Bancshares, Inc., through its wholly owned subsidiary, First Federal Savings Bank of Fort Dodge, headquartered in Fort Dodge, Iowa now serves north central Iowa at four full service locations in Fort Dodge, Nevada and Ames, Iowa and southeastern Iowa at three full service locations in Burlington and Mount Pleasant, Iowa, which will operate as Valley Savings Bank branches. First Federal'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." EX-99.3 5 PRESS RELEASE -- FEBRUARY 27, 1998 Exhibit 99.3 Press Release PRESS RELEASE February 27, 1998 For further information contact: David M. Bradley Chairman, President & Chief Executive Officer North Central Bancshares, Inc. 825 Central Avenue Fort Dodge, Iowa 50501 515-576-7531 NORTH CENTRAL BANCSHARES, INC. DECLARES DIVIDEND David M. Bradley, Chairman, President and Chief Executive Officer of North Central Bancshares, Inc. (the "Company") announced on February 27, 1998 that the Company declared a regular quarterly cash dividend of $.08 per share on the Company's common stock for the fiscal quarter ended March 31, 1998. This amount is an increase of 28% compared to the previous dividend rate. The dividend will be payable to all stockholders of record as of March 16, 1998 and will be paid on April 6, 1998. The Company's common stock trades on the Nasdaq Stock Market under the symbol "FFFD". The Company's wholly owned subsidiary, First Federal Savings Bank of Fort Dodge, is a federally chartered savings bank headquartered in Fort Dodge, Iowa. EX-99.4 6 PRESS RELEASE -- MARCH 5, 1998 Exhibit 99.4 Press Release PRESS RELEASE March 5, 1998 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, March 5, 1998 - North Central Bancshares, Inc. (Nasdaq: "FFFD") (the "Company"), the holding company for First Federal Savings Bank of Fort Dodge, announced that it will commence a stock repurchase program beginning on or about March 11, 1998. The program authorizes the Company to repurchase up to five percent of its 3,266,483 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. North Central Bancshares, Inc., with over $300 million in assets, is the holding company for First Federal Savings Bank of Fort Dodge, a federally chartered stock savings bank. First Federal is a community-oriented institution serving Iowa through 7 full service locations in Fort Dodge, Nevada, Ames, Burlington and Mt. Pleasant, Iowa. First Federal's deposits are insured by the Federal Deposit Insurance Corporation. EX-99.5 7 PRESS RELEASE -- FIRST QUARTER EARNINGS Exhibit 99.5 Press Release 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 RECORD FIRST QUARTER 1998 EARNINGS (Nasdaq: FFFD) Fort Dodge, Iowa -- North Central Bancshares, Inc., (the "Company") the holding company for First Federal Savings Bank of Iowa (formerly known as First Federal Savings Bank of Fort Dodge) (the "Bank"), announced today the Company's results of operations for the first quarter. For the quarter ended March 31, 1998, the Company reported net income of $1,105,000, or diluted earnings per share of $0.34, which represents an increase of over 24% from the first quarter of 1997, when the company reported net income of $889,000 or diluted earnings per share of $0.27. As of the close of business on January 30, 1998, the Bank completed the acquisition of Valley Financial Corp. pursuant to an Agreement and Plan of Merger, dated as of September 18, 1997. The acquisition resulted in the merger of Valley Financial's wholly owned subsidiary, Valley Savings Bank, FSB with and into the Bank, with the Bank as the resulting financial institution. Valley Savings, headquartered in Burlington, Iowa, was a federally-charted stock savings bank with three branch offices located in southeastern Iowa, with assets of approximately $110 million. The former offices of Valley Savings are being operated as a division of the Bank. The acquisition was accounted for as a purchase transaction and therefore, the operating results of the former offices of Valley Savings Bank are included in the 1998 operating results of the Company only from the date of acquisition through March 31, 1998. The operating results for the period ended March 31, 1997 and the Company's balance sheet as of December 31, 1997 have not been restated to include any Valley Savings Bank assets, liabilities or operations. Therefore, the comparison between periods is significantly impacted by this acquisition. Total assets at March 31, 1998 totalled $332.8 million as compared to $222.0 million at December 31, 1997. Stockholders of record on March 16, 1998, received a quarter cash dividend of $0.08 per share, a 28% increase from the cash dividend of $0.0625 per share paid during the previous quarter. Nonperforming assets were 0.26% of total assets as of March 31, 1998 compared to 0.10% of total assets as of December 31, 1997. This increase is due primarily to the acquisition of Valley Financial Corp. The allowance for loan losses was $2.6 million or 1.01% of total loans at March 31, 1997, compared to $2.2 million or 1.10% of total loans at December 31, 1997. ...MORE... The net interest spread for the quarter ended March 31, 1998 of 2.86% was only slightly changed from 2.87% for the quarter ended March 31, 1997, however, the net interest margin for the quarter ended March 31, 1998 was reduced to 3.68% compared to 4.15% for the corresponding quarter in 1997, primarily due to a shift in the ratio of interest earning assets to interest bearing liabilities caused by the acquisition of Valley Financial Corp. Net interest income for the quarter ended March 31, 1998 was $2.6 million, an increase of 26.4% from $2.1 million for the corresponding quarter last year. The Company's provision for loan losses was $60,000 for the quarters ended March 31, 1998 and 1997. 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 Company's portfolio, and other factors related to the collectibility of the Company's loan portfolio. Stockholders' equity was $51.3 million at March 31, 1998, compared to $50.4 million at December 31, 1997. Book value, or stockholders' equity, per share at March 31, 1998 was $15.72 and was $15.43 at December 31, 1997. The ratio of stockholders' equity to total assets was 15.4% at March 31, 1998, as compared to 22.7% for the corresponding date in 1997. This decrease was primarily due to the acquisition of Valley Financial Corp. North Central Bancshares, Inc. serves north central and southeastern Iowa at 7 full service locations in Fort Dodge, Nevada, Ames, Burlington and Mount Pleasant, 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 more information contact: David M. Bradley, President, 515-576-7531 FINANCIAL HIGHLIGHTS OF NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES Condensed Consolidated Statements of Financial Condition
(Dollars in Thousands, except per share and share data) March 31, 1998 December 31, 1997 -------------- ----------------- Assets Cash and cash equivalents $ 12,588 $ 3,445 Securities available for sale 51,643 19,816 Mortgage backed securities Loans (net of allowance of loan loss of $2.6 4,911 -- million and $2.2 million, respectively) 247,661 191,249 Goodwill 6,652 -- Other assets 9,357 7,444 ---------- ---------- Total Assets $ 332,812 $ 221,954 ========== ========== Liabilities Deposits $ 244,733 $ 141,124 Other borrowed funds 33,592 28,550 Other liabilities 3,153 1,863 ---------- ---------- Total Liabilities 281,478 171,537 Stockholders' Equity $ 51,334 $ 50,417 ---------- ---------- Total Liabilities and Stockholders' Equity $ 332,812 $ 221,954 ========== ========== Stockholders' equity to total assets 15.42% 22.72% ========== ========== Book value per share $15.72 $15.43 ========== ========== Total shares outstanding 3,266,483 3,266,483 ========== ==========
Condensed Consolidated Statements of Income (Dollars in Thousands, except per share data)
For the Three Months Ended March 31, 1998 1998 1997 ------ ------ Interest income $5,465 $3,905 Interest expense 2,873 1,854 ------ ------ Net interest income 2,592 2,051 Provision for loan loss 60 60 ------ ------ Net interest income after provision for loan loss 2,532 1,991 Noninterest income 760 484 Gain on the sale of securities available for sale 55 -- Noninterest expense 1,634 1,110 ------ ------ Income before income taxes 1,713 1,365 Income taxes 608 476 ------ ------ Net income $1,105 $ 889 ====== ====== Basic earnings per share $ 0.35 $ 0.27 ====== ====== Diluted earnings per share $ 0.34 $ 0.27 ====== ======
Selected Financial Ratios
For the Three Months Ended March 31, 1998 1997 ------ ------ Performance ratios: Net interest spread 2.86% 2.87% Net interest margin 3.68% 4.15% Return on average assets 1.49% 1.74% Return on average equity 8.67% 7.15% Efficiency ratio (noninterest expense divided by the sum of net interest income before provision for loan losses plus noninterest income) 47.96% 43.79%
March 31, 1998 December 31, 1997 March 31, 1997 -------------- ----------------- -------------- Asset Quality Ratios: Nonaccrual loans to total net loans 0.22% 0.08% 0.18% Nonperforming assets to total assets 0.26% 0.10% 0.22% Allowance for loan losses as a percent of total loans receivable 1.01% 1.10% 1.17%
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