-----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, QL+7wBFu+JQ1gRR/L4C8VbUDKRQvD4R8NAdrhLyxIQCmwXC0bUK8xiW1fqOC62fv FHL6OZt81aZY/ImoPkx3Cg== 0000950131-99-003045.txt : 19990514 0000950131-99-003045.hdr.sgml : 19990514 ACCESSION NUMBER: 0000950131-99-003045 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 6 CONFORMED PERIOD OF REPORT: 19990331 FILED AS OF DATE: 19990513 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: 99619829 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, 1999 [ ] 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 14, 1999 - ------------------------------------------------------------------------- (Common Stock, $.01 par value) 2,765,242 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, 1999 and December 31, 1998 (Unaudited) 1 Consolidated Condensed Statements of Income for the three months ended March 31, 1999 and 1998 (Unaudited) 2 Consolidated Condensed Statements of Cash Flows for the three months ended March 31, 1999 and 1998 (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 14 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 PART II. OTHER INFORMATION 15 & 16 Items 1 through 6 15 Signatures 16 Exhibits
PART 1. FINANCIAL INFORMATION ITEM 1. NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
ASSETS March 31, December 31, 1999 1998 ----------- ------------- Cash: Interest-bearing $ 10,529,198 $ 13,201,437 Noninterest-bearing 1,532,558 2,435,439 Securities available for sale 52,292,839 49,882,544 Loans receivable, net 254,086,234 254,032,497 Loans held for sale 564,958 1,681,017 Accrued interest receivable 1,952,866 1,933,237 Foreclosed real estate 268,671 186,931 Premises and equipment, net 3,876,157 3,616,438 Rental real estate 1,920,907 1,945,851 Title plant 925,256 925,256 Goodwill 6,269,598 6,387,671 Deferred taxes 204,317 13,490 Prepaid expenses and other assets 559,419 448,331 ------------ ------------ $334,982,978 $336,690,139 TOTAL ASSETS ============ ============ LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits $245,721,303 $246,690,313 Other borrowed funds 37,804,569 38,832,239 Advances from borrowers for taxes and insurance 614,669 1,066,025 Dividend payable 295,724 237,133 Income taxes payable 802,478 199,224 Accrued expenses and other liabilities 988,148 1,458,391 ------------ ------------ TOTAL LIABILITIES 286,226,891 288,483,325 ------------ ------------ COMMITMENTS AND CONTINGENCIES STOCKHOLDERS' EQUITY Preferred stock ($.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 38,171,550 38,135,817 Retained earnings, substantially restricted 27,856,928 27,084,907 Accumulated other comprehensive income-unrealized gain on securities available for sale, net of income taxes 178,672 358,666 Treasury stock at cost (1,053,815 and 1,046,608 shares, respectively) (16,525,525) (16,399,403) Unearned shares, employee stock ownership plan (965,649) (1,013,284) ------------ ------------ Total stockholders' equity 48,756,087 48,206,814 ------------ ------------ Total liabilities and stockholders' equity $334,982,978 $336,690,139 ============ ============
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, 1999 1998 ----------- ----------- Interest income: Loans receivable $5,099,590 $4,749,038 Securities and cash deposits 867,178 716,182 ---------- ---------- 5,966,768 5,465,220 ---------- ---------- Interest expense: Deposits 2,665,780 2,393,317 Other borrowed funds 533,735 479,432 ---------- ---------- 3,199,515 2,872,749 ---------- ---------- Net Interest Income 2,767,253 2,592,471 Provision for loan losses 30,000 60,000 ---------- ---------- Net interest income after provision for loan losses 2,737,253 2,532,471 ---------- ---------- Noninterest income: Fees and service charges 361,338 237,619 Abstract fees 343,473 361,098 Gain on sale of securities available for sale, net - - 54,853 Other income 215,438 161,772 ---------- ---------- Total noninterest income 920,249 815,342 ---------- ---------- Noninterest expense: Salaries and employee benefits 973,004 770,569 Premises and equipment 207,334 153,215 Data processing 147,932 99,231 SAIF deposit insurance premiums 37,415 32,490 Goodwill amortization 118,070 79,609 Other expenses 570,554 499,316 ---------- ---------- Total noninterest expense 2,054,309 1,634,430 ---------- ---------- Income before income taxes 1,603,193 1,713,383 Provision for income taxes 545,501 607,880 ---------- ---------- Net Income $1,057,692 $1,105,503 ========== ========== Basic earnings per common share $ 0.37 $ 0.35 ========== ========== Diluted earnings per common share $ 0.36 $ 0.34 ========== ========== Dividends declared per common share $ 0.10 $ 0.08 ========== ==========
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, 1999 1998 ------------- ------------- CASH FLOWS FROM OPERATING ACTIVITIES Net income $ 1,057,692 $ 1,105,503 Adjustments to reconcile net income to net cash provided by operating activities: Provision for loan losses 30,000 60,000 Depreciation 122,943 89,746 Amortization and accretion 19,814 123,818 Deferred taxes (59,507) (44,835) Effect of contribution to employee stock ownership plan 83,368 106,742 (Gain) on sale of foreclosed real estate and loans, net (8,372) (2,560) (Gain) on sale of securities available for sale -- (54,853) Loss on sale and disposal of equipment, net 14,101 -- Net (increase) decrease in loans held for sale 1,116,059 (117,042) Change in assets and liabilities: (Increase) decrease in accrued interest receivable (19,629) 32,241 (Increase) decrease in prepaid expenses and other assets (111,088) 278,999 Increase in income taxes payable 603,254 657,608 Increase (decrease) in accrued expenses and other liabilities (470,243) 20,979 ----------- ----------- Net cash provided by operating activities 2,378,392 2,256,346 ----------- ----------- CASH FLOWS FROM INVESTING ACTIVITIES Net decrease in loans 8,983,457 3,523,166 Purchase of loans (9,102,362) (1,655,000) Proceeds from sales of securities available for sale -- 3,485,697 Purchase of securities available for sale (8,441,322) (4,050,821) Proceeds from maturities of securities available for sale 5,786,768 5,574,472 Purchase of premises and equipment and rental real estate (372,016) (39,031) Proceeds from sale of equipment 197 -- Cash paid in connection with acquisition of Valley Financial Corporation net of cash received -- (8,532,270) Other (6,996) (1,992) ----------- ----------- Net cash (used in) investing activities (3,152,274) (1,695,779) ----------- ----------- CASH FLOWS FROM FINANCING ACTIVITIES Net increase (decrease) in deposits (969,010) 4,347,777 (Decrease) in advances from borrowers for taxes and insurance (451,356) (612,311) Proceeds from other borrowed funds - - 8,042,000 Payments of other borrowings (1,027,670) (3,000,000) Purchase of treasury stock (126,122) - - Dividends paid (227,080) (194,954) ----------- ----------- Net cash provided by (used in) financing activities (2,801,238) 8,582,512 ----------- ----------- Net increase (decrease) in cash (3,575,120) 9,143,079 CASH Beginning 15,636,876 3,445,163 ----------- ----------- Ending $12,061,756 $12,588,242 =========== =========== SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION Cash payments for: Interest paid to depositors $ 2,730,040 $ 2,331,593 Interest paid on borrowings 533,641 479,432 Income taxes 1,754 85
(Continued) -3- The following is a summary of the assets acquired and liabilities assumed in connection with the acquisition of Valley Financial Corporation Cash $ 6,157,507 Securities 41,818,057 Loans 58,567,364 Accrued interest receivable 1,019,373 Premises and equipment 1,081,890 Goodwill 6,565,174 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 (878,251) ------------ Cash Paid $ 14,689,777 Less Cash Received (6,157,507) ------------ Cash Paid, net of 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, 1999 and 1998 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 1998 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, formerly known as First Federal Savings Bank of Fort Dodge, (the "Bank") for the purpose of acquiring all of the capital stock of the Bank, in connection with the conversion of the Bank and North Central Bancshares, M.H.C. (the "Mutual Holding Company" or "MHC") from the mutual to the stock holding company structure (these transactions are collectively referred to as the "Reorganization"). On March 20, 1996, upon completion of the Reorganization, the Company issued an aggregate of 4,011,057 shares of its common stock, 1,385,590 shares of which were issued in exchange for all of the Bank's issued and outstanding shares, except for shares owned by the MHC which were canceled, 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 $26.3 million. 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, the Bank completed the acquisition of Valley Financial Corp., ("Valley Financial") (the "Acquisition") 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 canceled 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 $14.7 million in cash. The Acquisition was accounted for as a purchase transaction, resulting in goodwill of $6.6 million. The operating results of the former offices of Valley Savings 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, 1999, the weighted average number of shares outstanding for basic and diluted earnings per share computation were 2,854,867 and 2,912,166, respectively. 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. 5. DIVIDENDS On February 26, 1999, the Company declared a cash dividend on its common stock, payable on April 6, 1999 to stockholders of record as of March 16, 1999, equal to $0.10 per share. 6. COMPREHENSIVE INCOME Comprehensive income for the three months ended March 31, 1999 and 1998 was $877,698 and $1,062,037, respectively. -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, 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. 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 the Acquisition. Under the terms of the Merger Agreement, the Bank was acquired in a cash transaction totalling $14.7 million, or $525 per share, of 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 the Bank, 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, resulting in goodwill of $6.6 million and closed on January 30, 1998, consequently the operating results of the former Valley Savings are included in the 1998 operating results of the Company only from the date of acquisition through March 31, 1998. FINANCIAL CONDITION Total assets decreased $1.7 million, or 0.5%, to $335.0 million at March 31, 1999 compared to $336.7 million at December 31, 1998. Interest bearing cash decreased $2.7 million, or 20.2%. Securities available for sale increased $2.4 million, or 4.8%, primarily due to $8.4 million of purchases, partially offset by $5.8 million of maturities and calls. Total loans receivable, net, increased by $54,000 from December 31, 1998, due primarily to payments and prepayments of loans (of approximately $21.3 million) and loan sales of $381,000, which payments, prepayments and sales were offset in part by originations of $7.6 million of first mortgage loans secured primarily by one-to-four family residences, purchases of $9.1 million of first mortgage loans secured primarily by multi-family residences and commercial real estate and originations of $3.6 million of second mortgage loans. Deposits decreased $969,000, or 0.4%, from $246.7 million at December 31, 1998 to $245.7 million at March 31, 1999, reflecting decreases primarily in NOW accounts. This decrease was due in part to the timing of certain deposits to NOW accounts at December 31, 1998. Other borrowings, primarily FHLB advances, decreased by $1.0 million to $37.8 million at March 31, 1999 from $38.8 million at December 31, 1998, due to the repayment of an advance. Total stockholders' equity increased $549,000, to $48.8 million at March 31, 1999 from $48.2 million at December 31, 1998. See "Capital". -7- CAPITAL The Company's total stockholders' equity increased by $549,000 to $48.8 million at March 31, 1999 from $48.2 million at December 31, 1998, primarily due to earnings, which were offset in part by stock repurchases and dividends declared. The changes in stockholders' equity were also due to an decrease in the unrealized gain on securities available for sale by $180,000 to $179,000 at March 31, 1999 from $359,000 at December 31, 1998. The unearned shares from the Employee Stock Ownership Plan (the "ESOP") decreased by $48,000 to $966,000 at March 31, 1999 from $1,013,000 at December 31, 1998, 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, 1999, the Bank exceeded all of its regulatory capital requirements. The Bank's required, actual and excess capital levels as of March 31, 1999 are as follows: Amount Percentage of Assets -------------- -------------------------- (dollars in thousands) Tangible capital: Capital level $ 30,438 9.32% Less Requirement 4,900 1.50% ------- ----- Excess $ 25,538 7.82% ======= ===== Core capital: Capital level $ 30,438 9.32% Less Requirement 13,068 4.00% ------- ----- Excess $ 17,370 5.32% ======= ===== Risk-based capital: Capital level $ 32,649 18.74% Less Requirement 13,936 8.00% ------- ----- Excess $ 18,713 10.74% ======= ===== 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 1999 and 1998, principal payments and repayments on loans totalled $21.3 million and $13.5 million, respectively. The increase in loan payments and repayments is due to the current low interest rate environment. The net increase (decrease) in deposits during the first three months of 1999 and 1998 totalled $(969,000) and $4.3 million, respectively. The proceeds from borrowed funds during the first three months ended March 31, 1999 and 1998 totalled none and $8.0 million, respectively. During the first three months of 1999 and 1998, the proceeds from the maturities, calls and sales of securities totalled $5.8 million and $9.1 million, respectively. The decrease in proceeds from securities is due in part to the sales of certain investments in 1998 of which there were none in 1999. Cash provided from operating activities during the first three months of 1999 and 1998 totalled $2.4 million and $2.3 million, respectively, of which $1.1 million and $1.1 million, 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 1999 and 1998, the Company's gross purchases and origination of loans totalled $22.3 million and $13.5 million, respectively. The increase in purchase and origination of loans is due to the current low interest rate environment. The purchase of securities available for sale for the three months ended March 31, 1999 and 1998 totalled $8.4 million and $4.1 million, respectively. The repayment of borrowed funds during the first three months of 1999 and 1998 totalled $1.0 million and $3.0 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." -8- 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) in each calendar quarter of not less than four percent of either (1) the liquidity base at the end of the preceding quarter, or (2) the average daily balance of the liquidity base during the preceding quarter equal to 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, 1999, the Bank's liquidity position was $44.7 million, or 17.1%, of liquid assets, compared to $45.7 million, or 17.6%, at December 31, 1998. Stockholders' equity totaled $48.8 million at March 31, 1999 compared to $48.2 million at December 31, 1998, reflecting the Company's earnings for the quarter, stock repurchases, the amortization of the unallocated portion of shares held by the ESOP, dividends declared on common stock and the change in the net unrealized gains on securities, net of taxes. On January 6, 1999, the Company paid a quarterly cash dividend equal to $0.08 per share on common stock outstanding as of the close of business on December 16, 1998, aggregating $237,000. On February 26, 1999, the Company declared a quarterly cash dividend of $0.10 per share payable on April 6, 1999 to shareholders of record as of the close of business on March 16, 1999, aggregating $296,000. PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME (UNAUDITED) The following unaudited pro forma consolidated statement of income for the three months ended March 31, 1998 presented on the following page is based on the historical income statements of the Company and Valley Financial. The unaudited pro forma consolidated statement of income for the three months ended March 31, 1998 was prepared as if the Acquisition had occurred as of the beginning of the respective period for purposes of the combined consolidated statements of income. This pro forma income statement is 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 statement of income should be read in connection with the notes thereto. -9- NORTH CENTRAL BANCSHARES, INC. AND SUBSIDIARIES - ----------------------------------------------- CONSOLIDATED CONDENSED STATEMENTS OF INCOME (Unaudited)
Three Months Ended March 31, ACTUAL PRO FORMA 1999 1998 ----------- ----------- Interest income $5,966,768 $6,087,529 Interest expense 3,199,515 3,322,829 ---------- ---------- Net interest income 2,767,253 2,764,700 Provision for loan losses 30,000 60,000 ---------- ---------- Net interest income after provision for loan losses 2,737,253 2,704,700 ---------- ---------- Noninterest income: Fees and service charges 361,338 273,524 Abstract fees 343,473 361,098 Gain on sale of securities available for sale -- 54,853 Other income 215,438 186,990 ---------- ---------- Total noninterest income 920,249 876,465 ---------- ---------- Noninterest expense: Salaries and employee benefits 973,004 938,514 Premises and equipment 207,334 187,713 Data processing 147,932 129,054 SAIF deposit insurance premiums 37,415 37,784 Goodwill amortization 118,070 115,920 Other expenses 570,554 579,147 ---------- ---------- Total noninterest expense 2,054,309 1,988,132 ---------- ---------- Income before income taxes 1,603,193 1,593,033 Provision for income taxes 545,501 587,759 ---------- ---------- Net Income $1,057,692 $1,005,274 ========== ==========
RESULTS OF OPERATIONS The actual statement of income for the three months ended March 31, 1999 was used for comparison purposes to the pro forma statement of income for the three months ended March 31 1998 in order to more clearly present the changes in the results of operations. INTEREST INCOME. Interest income decreased by $121,000 to $6.0 million for the three months ended March 31, 1999 compared to $6.1 million for the three months ended March 31, 1998. The decrease in interest income was primarily due to a decrease in the average yield on interest earning assets from 7.72% for the three months ended March 31, 1998 to 7.56% for the three months ended March 31, 1999. The average yields on interest bearing assets declined due to a general decrease in the market interest rates. The impact of the decrease in average yields was offset in part by an increase in the average balance of interest earning assets . The average balance of interest bearing assets increased $803,000 (primarily first mortgage and consumer loans and interest bearing cash) to $316.8 million for the three months ended March 31, 1999 from $316.0 million for the comparable 1998 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 primarily by multi-family residences and commercial -10- RESULTS OF OPERATIONS (Continued) real estate, 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 balance of securities available for sale. The decrease in the average balance of securities available for sale was due to sales, calls and maturities, which were offset, in part, by purchases of available for sale securities. INTEREST EXPENSE. Interest expense decreased by $123,000 to $3.2 million for the three months ended March 31, 1999 compared to $3.3 million for the three months ended March 31, 1998. The decrease in interest expense was primarily due to a decrease in the average cost of interest bearing liabilities from 4.91% for the three months ended March 31, 1998 to 4.64% for the three months ended March 31, 1999. The average cost of interest bearing liabilities declined due to a general decrease in the market interest rates. The impact of the decrease in average cost of interest bearing liabilities was offset in part by an increase in the average balance of interest bearing liabilities . The increase in the average balance of interest bearing liabilities was primarily due to a $4.2 million increase in the average balance of NOW and money market savings accounts. The increase in such deposit accounts is due to marketing of the Company's NOW accounts. NET INTEREST INCOME. Net interest income before the provision for loan losses increased by $3,000 to $2.8 million for the three months ended March 31, 1999 from $2.8 million for the three months ended March 31, 1998. The increase is primarily due to the increase in the interest rate spread, offset by the decrease 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) increased to 2.92% for the three months ended March 31, 1999 from 2.81% for the three months ended March 31, 1998. The following table sets forth certain information relating to the Company's actual and pro forma average balance sheets and reflects the actual and pro forma average yield on assets and actual and pro forma average cost of liabilities for the three month periods ended March 31, 1999 and 1998, respectively. -11- RESULTS OF OPERATIONS (Continued)
FOR THREE MONTHS ENDED MARCH 31, ------------------------------------------------------------------ ACTUAL PRO FORMA 1999 1998 ------------------------------------------------------------------ AVERAGE AVERAGE AVERAGE AVERAGE BALANCE INTEREST YIELD/COST BALANCE INTEREST YIELD/COST ------- -------- ---------- ------- -------- ---------- (Dollars in thousands) ASSETS: Interest-earning assets: Loans.......................................... $254,270 $5,100 8.04% $250,567 $5,154 8.23% Securities available for sale.................. 50,428 730 5.86 58,497 844 5.85 Interest bearing cash.......................... 12,099 137 4.60 6,930 90 5.24 -------- ------ ------ -------- ------ ------ Total interest-earning assets................ 316,797 $5,967 7.56% 315,994 $6,088 7.72% ------ ------ ------ ------ Noninterest-earning assets....................... 17,430 18,383 -------- -------- Total assets................................. $334,227 $334,377 ======== ======== LIABILITIES AND EQUITY: Interest-bearing liabilities: NOW and money market savings................... $ 50,825 $ 276 2.20% $ 46,658 $ 360 3.13% Passbook savings............................... 26,570 148 2.26 26,200 155 2.39 Certificates of deposit........................ 163,572 2,242 5.56 163,690 2,254 5.58 Borrowed funds................................. 38,150 534 5.60 37,642 554 5.98 -------- ------ ------ -------- ------ ------ Total interest-bearing liabilities............... 279,117 $3,200 4.64% 274,190 $3,323 4.91% ------ ------ ------ ------ Noninterest-bearing liabilities.................. 6,522 9,206 -------- -------- Total liabilities............................ 285,639 283,396 Equity........................................... 48,635 50,981 -------- -------- Total liabilities and equity................. $334,227 $334,377 ======== ======== Net interest income................................. $2,767 $2,765 ====== ====== Net interest rate spread............................ 2.92% 2.81% ====== ====== Net interest margin................................. 3.49% 3.50% ====== ====== Ratio of average interest-earning assets to average interest-bearing liabilities............. 113.50% 115.25% ====== ======
RESULTS OF OPERATIONS (Continued) PROVISION FOR LOAN LOSSES. The Company's provision for loan losses was $30,000 and $60,000 for the three months ended March 31, 1999 and 1998, respectively. 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 $2,000 for the three months ended March 31, 1999 as compared to net charge offs of $1,000 for the three months ended March 31, 1998. The resulting allowance for loan losses was $2.7 million at March 31, 1999 as compared to $2.7 million at December 31, 1998 and $2.6 million at March 31, 1998. The level of nonperforming loans decreased to $291,000 at March 31, 1999 from $956,000 at December 31, 1998 and from $539,000 at March 31, 1998. 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 $44,000 to $920,000 for the three months ended March 31, 1999 from $876,000 for the three months ended March 31, 1998. The increase is due to increases in fees and service charges and other income, offset in part by decreases in abstract fees. Other fees and service charges increased -12- RESULTS OF OPERATIONS (Continued) $88,000, primarily due to increases in overdraft fees, NOW and savings account service charges and loan prepayment fees. Other income increased $28,000, primarily due to an increase in revenues from the sale of loans, offset by losses on disposal of certain equipment and decreases in annuity sales. Abstract fees decreased $18,000 due to decreased sales volume. Noninterest income for the three months ended March 31, 1998 reflects gains on sales of securities available for sale of $55,000, while the three months ended March 31, 1999 does not include any gains on sale of securities available for sale. NONINTEREST EXPENSE. Total noninterest expense increased by $66,000 to $2.1 million for the three months ended March 31, 1999 from $2.0 million for the three months ended March 31, 1998. The increase is primarily due to increases in premisses and equipment and data processing. The increases in premises and equipment was primarily due to an increase in depreciation expense relating primarily to the purchase of computer equipment and software and normal cost increases. The increase in data processing expense was due to one time costs incurred as a result of some Year 2000 costs and normal cost increases. The Company's efficiency ratio for the three months ended March 31, 1999 and 1998 were 55.71% and 54.60%, respectively. The Company's ratio of noninterest expense to average assets for the three months ended March 31, 1999 and 1998 were 2.46% and 2.38%, respectively. INCOME TAXES. Income taxes decreased by $42,000 to $546,000 for the three months ended March 31, 1999 as compared to $588,000 for the three months ended March 31, 1998. The decrease was primarily due to a decrease in pre-tax earnings during the 1999 period as compared to the corresponding 1998 period. NET INCOME. Net income totaled $1.1 million for the three months ended March 31, 1999, compared to $1.0 million for the same period in 1998. YEAR 2000 COMPLIANCE. The Year 2000 "Y2K" issue is a serious operational problem that is widespread and complex, affecting all industries. The problem consists essentially of the risk that programming code in existing computer systems will fail to properly recognize the new millennium when it occurs in the Year 2000. Many computer programs and related hard-printed memory circuits were developed with six-digit date fields. These programs and memory circuits 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. Because banks rely heavily on their computer systems, the Federal Financial Institutions Examination council ("FFIEC") has placed significant emphasis on the problems surrounding the year 2000 issues and has required financial institutions to document the assessment, testing and corrections made to ready their computer systems and programs for the year 2000 date change. The FFIEC and the OTS have strict regulations, guidelines and milestones in place that each FDIC insured financial institution must follow in order to remain operational. The Company's board of directors has remained informed of the Company's position and progress in its year 2000 project. In addition, noninformation technology systems, such as equipment like telephones, copies and elevators may also contain embedded technology which controls its operation and which may be effected by the Y2K problem. When the Year 2000 arrives, systems, including some of those with embedded chips, may not work properly because of the way they store date information. They may not be able to deal with the date 01/01/00, and may not be able to deal with operational 'cycles' such as 'do X every 100 days'. Thus, even noninformation technology systems may affect the normal operations of the Company upon arrival of the Year 2000. In order to address the Y2K issue and to minimize its potential adverse impact, management has begun a process to identify areas that will be affected by the Y2K Problem, assess its potential impact on the operations of the Company, monitor the progress of FIserv, Inc. of Milwaukee ("FIserv") and other third party software vendors in addressing the matter, test changes provided by these vendors, and develop contingency plans for all critical systems. An internal committee of the Company has been formed to address the potential risks that Y2K poses for the Company. The Company's Y2K committee has completed the awareness, inventory and assessment phases of Y2K. The testing of the Company's internal computer system and software should be completed by the second quarter of 1999. The Company's most critical exposure to Y2K system problems is with its data processing provider, FIserv. The Company -13- RESULTS OF OPERATIONS (Continued) has been advised by FIserv that Fiserv's Vision system is Y2K ready as of February, 1999. During the early second quarter of 1999, the Company intends to complete the testing phase of Y2K. Management anticipates that the enhancements necessary to prepare it's mission critical systems for Y2K will be completed during the second quarter of 1999. Although the effort to prepare for Y2K is intended to address all Y2K issues, the Company's has developed a contingency plan to address potential Y2K issues that arise from noncompliance. Contingency plans have been developed on a department-by-department basis in anticipation of the possibility of unplanned system difficulties or failure of third parties to successfully prepare reporting procedures. The testing phase on the Company's contingency plan will begin in the second quarter of 1999. The Company anticipates that it has and will incur internal staff costs, consulting costs, data processing costs, additional purchase of equipment and other expenses related to the enhancements necessary to prepare its systems for Y2K. The Company has replaced some equipment, software and incurred consulting fees at a cost of approximately $40,000. Management anticipates the additional costs associated with Year 2000 compliance will not exceed $100,000. Any personnel and consulting costs have been and will continue to be expense as incurred. If the Company is not Y2K compliant, the costs to become compliant would likely be material to the financial condition and operating results of the Company. 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, 1998 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 None ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (a) Exhibits Exhibit 27. Financial data schedule. (Only submitted with filing in electronic format.) Exhibit 99.1 Press Release, dated January 28, 1999 (regarding the completion of a stock repurchase program). Exhibit 99.2 Press Release, dated February 26, 1999 (regarding the declaration of a dividend). Exhibit 99.3 Press Release, dated March 26, 1999 (regarding stock repurchase program) Exhibit 99.4 Press Release, dated April 16, 1999 (regarding the issuance of limited financial information for the three months ended March 31, 1999). (b) Reports of Form 8-K None -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 14, 1999 BY: /s/ David M. Bradley David M. Bradley, CPA Chairman, President and Chief Executive Officer DATE: May 14, 1999 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-31-1998 JAN-01-1999 MAR-31-1999 1,532,558 10,529,198 0 0 52,292,839 0 0 253,519,327 2,704,152 334,416,071 245,721,303 10,000,000 2,134,112 27,804,569 0 0 40,111 48,715,976 334,416,071 5,099,590 867,178 0 5,966,768 2,665,780 3,199,515 2,767,253 30,000 0 2,054,309 1,603,193 1,603,193 0 0 1,057,692 0.37 0.36 7.56 290,941 0 0 0 2,676,438 2,286 0 2,704,152 2,704,152 0 0
EX-99.1 3 PRESS RELEASE DATED 01/28/1999 Exhibit 99.1 Press Release PRESS RELEASE January 28, 1999 For further information contact: David M. Bradley President and Chief Executive Officer North Central Bancshares, Inc. 825 Central Avenue Fort Dodge, Iowa 50501 515-576-7531 NORTH CENTRAL BANCSHARES, INC. COMPLETES STOCK REPURCHASE Fort Dodge, Iowa January 28, 1999 - North Central Bancshares, Inc. (Nasdaq: "FFFD") announced that it has completed a 5% stock repurchase program on January 28, 1999. The Company said it repurchased 155,207 shares of its outstanding common stock, par value $.01 per share, at the aggregate cost of $2,706,123, in open market transactions. The repurchase program began on November 13, 1998. Upon settlement of the last transaction on or about February 2, 1999, there will be 2,957,242 shares of North Central Bancshares, Inc. common stock outstanding. North Central Bancshares, Inc., with over $335 million in assets, 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 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-99.2 4 PRESS RELEASE DATED 02/26/1999 Exhibit 99.2 Press Release PRESS RELEASE February 26, 1999 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 today that the Company declared a regular quarterly cash dividend of $0.10 per share on the Company's common stock for the fiscal quarter ended March 31, 1999. This amount is an increase of 25% compared to the previous dividend rate. The dividend will be payable to all stockholders of record as of March 16, 1999 and will be paid on April 6, 1999. 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". EX-99.3 5 PRESS RELEASE DATED 03/26/1999 Exhibit 99.3 Press Release PRESS RELEASE March 26, 1999 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 26, 1999 - North Central Bancshares, Inc. (Nasdaq: "FFFD") (the "Company"), the holding company for First Federal Savings Bank of Iowa, announced that it will commence a stock repurchase program beginning on or about three business days after the release of the Company's first quarter earnings for 1999. The program authorizes the Company to repurchase up to 5.1% or 150,000 shares of its 2,957,242 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 $335 million in assets, 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 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-99.4 6 PRESS RELEASE DATED 04/16/1999 Exhibit 99.4 Press Release PRESS RELEASE For More Information Contact: April 16, 1999 David M. Bradley, President North Central Bancshares, Inc. 825 Central Avenue Fort Dodge, Iowa 50501 515-576-7531 NORTH CENTRAL BANCSHARES, INC. ANNOUNCES FIRST QUARTER 1999 EARNINGS (Nasdaq: FFFD) Fort Dodge, Iowa -- North Central Bancshares, Inc., (the "Company") the holding company for First Federal Savings Bank of Iowa (the "Bank"), announced today that the Company earned $1,058,000, or diluted earnings per shares of $0.36, for the first quarter of 1999, compared to $1,106,000, or diluted earnings per share of $0.34, for the first quarter of 1998. 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. Therefore, the comparison between periods is significantly impacted by this acquisition. Stockholders of record on March 16, 1999, received a quarterly cash dividend of $0.10 per share, a 25% increase from the cash dividend of $0.08 per share paid during the previous quarter. Total assets at March 31, 1999 were $334.4 million as compared to $336.7 million at December 31, 1998. The decrease in assets resulted primarily from decreases in interest-bearing cash and loans, offset by increases in securities available for sale. Interest-bearing cash decreased $2.4 million, or 18.4% from $13.2 million at December 31, 1998 to $10.8 million at March 31, 1999. Loans decreased by $513,000, or 0.2% from $254.0 million at December 31, 1998 to $253.5 million at March 31, 1999. Securities available for sale increased $2.2 million, or 4.3% from $49.9 million at December 31, 1998 to $52.0 million at March 31, 1999. - MORE - Deposits decreased $969,000, or 0.4% from $246.7 million at December 31, 1998 to $245.7 million at March 31, 1999. Other borrowed funds decreased $1.0 million, or 2.6% from $38.8 million at December 31, 1998 to $37.8 million at March 31, 1999. The unaudited pro forma consolidated statement of income, for the three months ended March 31, 1998, presented in this press release is based on the historical financial statements of the Company and Valley Financial and was prepared as if the Acquisition had occurred as of the beginning of the period for purposes of the combined consolidated statement of income. The pro forma financial statement of income is 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' results of operations at any future date or for any future period. Nonperforming assets were 0.17% of total assets as of March 31, 1999 compared to 0.34% of total assets as of December 31, 1998. The allowance for loan losses was $2.7 million or 1.05% of total loans at March 31, 1999, compared to $2.7 million or 1.03% of total loans at December 31, 1998. The net interest spread for the three months ended March 31, 1999 of 2.92% was increased from the pro forma net interest spread of 2.81% for the three months ended March 31, 1998. The net interest margin for the three months ended March 31, 1999 was 3.49% compared to the pro forma net interest margin of 3.50% for the three months ended March 31, 1998. Net interest income for the three months ended March 31, 1999 was $2.8 million, compared to pro forma net interest income of $2.8 million for the corresponding period a year ago. The Bank's provision for loan losses was $30,000 for the three months ended March 31, 1999, compared to pro forma provision for loan losses of $60,000 for the corresponding period a year ago. 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 $48.8 million at March 31, 1999, compared to $48.2 million at December 31, 1998. Book value, or stockholders' equity, per share at March 31, 1999 was $16.49 and was $16.26 at December 31, 1998. The ratio of stockholders' equity to total assets was 14.6% at March 31, 1999, as compared to 14.3% at December 31, 1998. 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 March 31, 1999 December 31, 1998 data) --------------- ------------------ Assets Cash and cash equivalents $ 12,307 $ 15,637 Securities available for sale 52,047 49,883 Loans (net of allowance of loan loss of $2.7 million and $2.7 million, respectively) 253,519 254,032 Goodwill 6,270 6,388 Other assets 10,273 10,750 ---------- ---------- Total Assets $ 334,416 $ 336,690 ========== ========== Liabilities Deposits $ 245,721 $ 246,690 Other borrowed funds 37,805 38,832 Other liabilities 2,134 2,961 ---------- ---------- Total Liabilities 285,660 288,483 Stockholders' Equity 48,756 48,207 ---------- ---------- Total Liabilities and Stockholders' Equity $ 334,416 $ 336,690 ========== ========== Stockholders' equity to total assets 14.58% 14.32% ========== ========== Book value per share $ 16.49 $ 16.26 ========== ========== Total shares outstanding 2,957,242 2,964,449 ========== ==========
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (Dollars in Thousands, except per share data)
For the Three Months Ended March 31, 1999 1998 --------- --------- Interest income $5,967 $5,465 Interest expense 3,200 2,873 ------ ------ Net interest income 2,767 2,592 Provision for loan loss 30 60 ------ ------ Net interest income after provision for loan loss 2,737 2,532 Noninterest income 920 760 Gain on the sale of securities available for sale -- 55 Noninterest expense 2,054 1,634 ------ ------ Income before income taxes 1,603 1,713 Income taxes 545 607 ------ ------ Net income $1,058 $1,106 ====== ====== Basic earnings per share $ 0.37 $ 0.35 ====== ====== Diluted earnings per share $ 0.36 $ 0.34 ====== ====== SELECTED FINANCIAL RATIOS For the Three Months Ended March 31, 1999 1998 ---------- ---------- Performance ratios: Net interest spread 2.92% 2.86% Net interest margin 3.49% 3.68% Return on average assets 1.27% 1.49% Return on average equity 8.71% 8.67% Efficiency ratio (noninterest expense divided by the sum of net interest income before provision for 55.71% 47.96% loan losses plus noninterest income) March 31, 1999 December 31, 1998 --------------- ------------------ Asset Quality Ratios: Nonaccrual loans to total net loans 0.11% 0.38% Nonperforming assets to total assets 0.17% 0.34% Allowance for loan losses as a percent of total loans receivable 1.05% 1.03%
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
For the Three Months Ended March 31, Actual ProForma* 1999 1998 -------- ---------- Interest income $5,967 $6,088 Interest expense 3,200 3,323 ------ ------ Net interest income 2,767 2,765 Provision for loan loss 30 60 ------ ------ Net interest income after provision for loan loss 2,737 2,705 Noninterest income 920 821 Gain on the sale of securities available for sale -- 55 Noninterest expense 2,054 1,988 ------ ------ Income before income taxes 1,603 1,593 Income taxes 545 588 ------ ------ Net income $1,058 $1,005 ====== ====== *See explanatory note below. SELECTED FINANCIAL RATIOS For the Three Months Ended March 31, Actual ProForma* 1999 1998 --------- ----------- Performance ratios: Net interest spread 2.92% 2.81% Net interest margin 3.49% 3.50% Return on average assets 1.27% 1.20% Return on average equity 8.71% 7.89% Efficiency ratio (noninterest expense divided by the sum of net interest income before provision for loan losses plus noninterest income) 55.71% 54.60%
*See explanatory note below. *PRO FORMA CONSOLIDATED CONDENSED STATEMENT OF INCOME (UNAUDITED) The above unaudited pro forma consolidated statement of income presented is 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 was prepared as if the Acquisition had occurred as of the beginning of the respective period for purposes of the combined consolidated statements of income. The pro forma statement of income is 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' results of operations at any future date or for any future period. -----END PRIVACY-ENHANCED MESSAGE-----