-----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, CXVJvrNUkkO5adjGa7oYiWE4xBDk3tEo4pYqVXJKomzZ2JTRfL411iH50qK7Evu+ t98TGcHnoo15UhinX3UdvA== 0000908834-97-000285.txt : 19971113 0000908834-97-000285.hdr.sgml : 19971113 ACCESSION NUMBER: 0000908834-97-000285 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST BANCORP /IN/ CENTRAL INDEX KEY: 0000840458 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 351775411 STATE OF INCORPORATION: IN FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-17915 FILM NUMBER: 97716365 BUSINESS ADDRESS: STREET 1: THIRD & BUSSERON STREETS CITY: VINCENNES STATE: IN ZIP: 47591 BUSINESS PHONE: 8128824528 MAIL ADDRESS: STREET 1: THIRD & BUSSERON STREET STREET 2: P O BOX 1417 CITY: VINCENNES STATE: IN ZIP: 47591 10-Q 1 1ST BANCORP'S FORM 10-Q FORM 10-Q SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 (X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly period Ended September 30, 1997 ( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _________________to ________________ Commission File Number 0-17915 1ST BANCORP -------------------------------------------------------------- (Exact name of registrant as specified in its charter) Indiana 35-1775411 - -------------------------------------- ------------------------------------ (State of other jurisdiction of (I.R.S. Employer Identification Incorporation or organization) Number) 101 N. Third Street Vincennes, Indiana 47591 - -------------------------------------- ------------------------------------ (Address of principal executive office) (Zip Code) Registrant's telephone number, including are code: (812) 882-4528 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. YES_____X_________NO______________ As of October 28, 1997, there were 691,726 Shares of the Registrant's Common Stock issued and outstanding. 1ST BANCORP AND SUBSIDIARIES INDEX Page Number Forward Looking Statements 3 PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Consolidated Condensed Statements of Financial Condition, September 30, 1997 (Unaudited) and June 30, 1997 4 Consolidated Condensed Statements of Earnings, Three Months Ended September 30, 1997 and 1996 (Unaudited) 5 Consolidated Condensed Statements of Cash Flows, Three Months Ended September 30, 1997 and 1996 (Unaudited) 6 Notes to Consolidated Condensed Financial Statements (Unaudited) 7-8 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 9-14 Item 3. Quantitative and Qualitative Disclosures About Market Risk 14 PART II. OTHER INFORMATION 15 Item 1. Legal Proceedings 15 Item 2. Submissions of Matters to Vote of Securities Holders 15 Item 3. Exhibits and Reports on Form 8-K 15 SIGNATURES 16 Forward Looking Statements This Quarterly Report on Form 10-Q ("Form 10-Q") contains statements which constitute forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These statements appear in a number of places in this Form 10-Q and include statements regarding the intent, belief, outlook, estimate or expectations of the Corporation (as defined below), its directors or its officers primarily with respect to future events and the future financial performance of the Corporation. Readers of this Form 10-Q are cautioned that any such forward looking statements are not guarantees of future events or performance and involve risks and uncertainties, and that actual results may differ materially from those in the forward looking statements as a result of various factors. The accompanying information contained in this Form 10-Q identifies important factors that could cause such differences. These factors include changes in interest rates; loss of deposits and loan demand to other savings and financial institutions; substantial changes in financial markets; changes in real estate values and the real estate market; regulatory changes; or the deterioration in the financial strength of the Corporation's loan customers. 1ST BANCORP AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF FINANCIAL CONDITION (Unaudited and in Thousands)
September 30, June 30, 1997 1997 ---------------------------- ASSETS Cash and cash equivalents: Interest bearing deposits $19,982 $19,771 Non-interest bearing deposits 476 523 ---------- ------------- Cash and cash equivalents 20,458 20,294 ---------- ------------- Securities available for sale 6,687 11,588 Securities held to maturity (market value of $39,692 at September 30, 1997 and $43,556 at June 30, 1997) 39,859 44,065 Loans receivable, net 151,309 146,840 Loans held for sale 27,349 27,769 Accrued interest receivable: Securities 534 1,081 Loans 1,152 1,099 Stock in FHLB of Indianapolis, at cost 4,941 4,941 Office premises and equipment 3,162 3,225 Real estate owned 408 397 Prepaid expenses and other assets 5,076 9,191 ---------- ------------- TOTAL ASSETS $260,935 $270,490 ========== ============= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Deposits $134,864 $144,316 Advances from FHLB and other borrowings 100,247 100,296 Advance payments by borrowers for taxes and insurance 567 304 Accrued interest payable on deposits 681 1,194 Accrued expenses and other liabilities 2,002 2,047 ---------- ------------- Total Liabilities $238,361 $248,157 ---------- ------------- Stockholders' Equity: Preferred stock, no par value; shares authorized of 2,000,000, none outstanding - - Common stock, $1 par value; shares authorized of 5,000,000; shares issued and outstanding of 691,726 at September 30, 1997 and 697,897 at June 30, 1997 $692 $698 Paid-in capital 2,428 2,642 Retained earnings, substantially restricted 19,488 19,102 Unrealized depreciation on securities (34) (109) ---------- ------------- Total Stockholders' Equity $22,574 $22,333 ---------- ------------- TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $260,935 $270,490 ========== =============
See Notes to Consolidated Condensed Financial Statements. 1ST BANCORP AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF EARNINGS (Unaudited and in Thousands)
Three months ended September 30, ------------------- 1997 1996 -------- -------- INTEREST INCOME: Loans $ 3,783 $ 3,595 Investment securities 901 927 Trading account securities 2 -- Other short-term investments and interest bearing deposits 292 187 ------- ------- Total Interest Income 4,978 4,709 ------- ------- INTEREST EXPENSE: Deposits 1,972 1,829 Short-term borrowings 2 21 FHLB advances and other borrowings 1,426 1,417 ------- ------- Total Interest Expense 3,400 3,267 ------- ------- NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 1,578 1,442 Provision for loan losses 90 46 ------- ------- NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 1,488 1,396 ------- ------- NON-INTEREST INCOME: Fees and service charges 83 84 Net gain (loss) on sales of investment securities available for sale and trading account investments 6 -- Net gain on sales of loans 61 653 Other 219 136 ------- ------- Total Non-Interest Income 369 873 ------- ------- NON-INTEREST EXPENSE: Compensation and employee benefits 663 1,045 Net occupancy 127 181 Federal insurance premiums 41 1,429 Other 406 669 ------- ------- Total Non-Interest Expense 1,237 3,324 ------- ------- Earnings Before Income Taxes 620 (1,055) Income Taxes 165 (424) ------- ------- NET EARNINGS $ 455 ($ 631) ======= ======= EARNINGS PER SHARE: $ 0.65 ($ 0.90)
See Notes to Consolidated Condensed Financial Statements 1ST BANCORP AND SUBSIDIARIES CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited and in Thousands)
Three Months Ended September 30, -------------------- 1997 1996 -------- -------- Net Cash Flow From Operating Activities: Net earnings $ 455 ($ 631) Adjustments to reconcile net cash provided by operating activities: Depreciation and amortization 105 58 Amortization of mortgage servicing rights 46 26 Gain on sale of loans (61) (653) Gain on sale of securities (6) -- Net change in loans held for sale 420 4,963 Provision for loan losses 90 46 Change in accrued interest receivable 494 478 Change in prepaid expenses and other assets 4,015 (174) Change in accrued expenses and other liabilities (608) 10 Loss on investment in limited partnership 32 36 -------- -------- NET CASH PROVIDED BY OPERATING ACTIVITIES 4,982 4,159 -------- -------- Cash Flows From Investing Activities: Purchase of securities held to maturity -- -- Proceeds from maturity of securities held to maturity 4,207 31 Purchase of securities available for sale and trading account securities (2,998) -- Proceeds from maturities of securities available for sale 2,007 89 Proceeds from sales of securities available for sale and trading account securites 6,017 -- Principal collected on loans, net of originations (4,499) (10,313) Purchases of equipment (14) (25) Other (11) (275) -------- -------- NET CASH PROVIDED (USED) BY INVESTING ACTIVITIES 4,709 (10,493) -------- -------- Cash Flows From Financing Activities: Change in deposits (9,452) (3,142) Proceeds from FHLB advances and other borrowings 10,996 18,865 Repayment of FHLB advances and other borrowings (11,045) (20,845) Proceeds from issuance of common stock 85 95 Purchase and retirement of common stock (305) -- Payment of dividends on common stock (69) (67) Change in advance payments by borrowers for insurance and taxes 263 152 -------- -------- NET CASH USED BY FINANCING ACTIVITIES (9,527) (4,942) -------- -------- NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 164 (11,276) Cash and Cash Equivalents at Beginning of Period 20,294 25,099 -------- -------- Cash and Cash Equivalents at End of Period $ 20,458 $ 13,823 ======== ========
See Notes to Consolidated Financial Statements 1ST BANCORP AND SUBSIDIARIES NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (Unaudited) Note 1. Basis of Presentation In the opinion of management, the accompanying unaudited consolidated condensed financial statements contain all adjustments necessary for a fair presentation. The results of operations for the interim periods are not necessarily indicative of the results which may be expected for an entire year. These financial statements are condensed and do not contain all disclosures required by generally accepted accounting principles which would be included in a complete set of financial statements. Note 2. Earnings Per Share Earnings per share have been computed on the basis of the weighted average number of common shares outstanding and the dilutive effect of stock options not exercised during the periods presented using the treasury stock method. The weighted average number of shares outstanding for use in the earnings per share computations was 698,729 and 700,328 for the three months ended September 30, 1997 and 1996, respectively. Note 3. Stock Purchase Plans The Corporation maintains an Employee Stock Purchase Plan whereby full-time employees of First Federal Bank, A Federal Savings Bank (the "Bank") and First Financial Insurance Agency, Inc. ("First Financial") can purchase the Corporation's common stock at a discount. The purchase price of the shares under this plan is 85% of the fair market value of such stock at the beginning or end of the offering period, whichever is lesser. A total of 15,750 authorized but unissued shares were reserved for issuance under this plan. A total of 3,564 shares were issued and purchased by employees in the first quarter of fiscal year 1998 for the fiscal 1997 plan year. Note 4. Stock Option Plan The Corporation has a stock option plan under which 165,375 authorized but unissued shares of common stock were reserved. As of September 30, 1997, 17,000 incentive stock options were outstanding with certain key officers. An additional 1,880 shares remain reserved for future grant. All other options have been exercised or canceled. Note 5. Stock Repurchase Plan In August 1996, the Board authorized the repurchase of up to 5% of the outstanding shares of common stock (703,638 shares were outstanding at the time), subject to market conditions, over a two year period which expires in August 1998. During the quarter ended September 30, 1997, 10,000 shares of common stock were repurchased. Note 6. Savings Association Insurance Fund ("SAIF") Recapitalization On September 30, 1996, the federal government mandated an industry wide assessment to recapitalize the SAIF, which is a part of the Federal Deposit Insurance Corporation ("FDIC"). The special assessment was charged to savings associations with insured deposits by the SAIF. The assessment was calculated at 0.657% of insured deposits as of March 31, 1995. The Bank's portion of the assessment was $1,330,000 and is included in non-interest expense for the three months ended September 30, 1996. Note 7. Reclassifications Certain amounts in the fiscal year 1997 consolidated financial statements have been reclassified to conform to the fiscal year 1998 presentation. 1ST BANCORP AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations (a) Financial Condition: Total assets decreased by $9,555,000, or 3.53%, to $260,935,000 at September 30, 1997, compared to total assets of $270,490,000 at June 30, 1997. The decrease is primarily attributable to decreases in the securities held to maturity and available for sale portfolios. Cash and cash equivalents remained stable during the quarter ended September 30, 1997. Cash and cash equivalents totaled $20,458,000 at September 30, 1997, compared to $20,294,000 at June 30, 1997. Investment securities consist primarily of U.S. Agency securities. The majority of securities have either a "call" or "step-up" feature, which provides the Bank with flexibility under varying interest rate scenarios. The level of investment securities held to maturity (including mortgage-backed securities) decreased by $4,206,000, or 9.55%, to $39,859,000, at September 30, 1997, from $44,065,000 at June 30, 1997. The decline in the level of securities held to maturity resulted from the exercise of the call feature by the issuer of the securities. Investment securities available for sale (including mortgage-backed securities) declined by $4,901,000, or 42.29%, to $6,687,000 at September 30, 1997, from $11,588,000 at June 30, 1997. The decline in the level of securities available for sale resulted from sales of securities and the exercise of the call feature of the securities by the issuer. There were no trading account securities at September 30, 1997 or June 30, 1997. The overall decline in the level of securities is a part of the Corporation's asset/liability management strategy to shift funds from the securities portfolios into the loan portfolios as the securities are called and mature rather than replacing the securities. This strategy is being undertaken to continue the expansion of the Bank's net interest margin. 1ST BANCORP AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations Net loans receivable (including loans held for sale) increased by $4,049,000, or 2.32%, to $178,658,000 at September 30, 1997, from $174,609,000 at June 30, 1997. The increase in net loans receivable is attributable to residential mortgage loan production, an emphasis on the Bank's indirect auto lending program and a lower level of mortgage loan sales. Growth occurred in the non-conforming and conforming mortgage loan portfolios and in the auto loan portfolio. Loan production during the three months ended September 30, 1997 decreased compared to the same period of the prior year. During the three months ended September 30, 1997, the Bank funded $17.7 million of loans compared to $37.8 million of loans during the three months ended September 30, 1996. The decrease in loan originations is primarily due to the restructuring of the Bank's nonconforming loan origination network in the latter part of fiscal year 1997. All loan origination offices were closed except the Evansville, Indiana loan origination office and all administrative functions were transferred to the main office in Vincennes, Indiana. During the three months ended September 30, 1997, non-conforming mortgage lending constituted $5.6 million, or 31.6%, of total loans funded during the period compared with $21.7 million, or 57.2% of total loans funded during the three months ended September 30, 1996. Non-conforming loans, including those held for sale, increased to $70.6 million at September 30, 1997 compared to $66.5 million at June 30, 1997. During the fourth quarter of fiscal year 1997, the Bank implemented an indirect auto lending program in its Vincennes, Indiana market area. Indirect auto loan fundings during the first quarter of fiscal year 1997 totaled $1.5 million. The indirect auto loan portfolio totaled $1.7 million at September 30, 1997. At September 30, 1997, nonaccrual loans and real estate owned totaled $2,930,000, or 1.12% of total assets. This compares to $2,727,000 of nonaccrual loans and real estate owned, or 1.01% of total assets, at June 30, 1997. The upward trend in loan delinquencies is related to residential one-to-four family mortgage loans. Delinquencies have trended upward in both conforming and non-conforming mortgage loans. Loan quality continues to be of major importance to the Bank and strong efforts are being made to ensure loan quality. In an effort to mitigate potential losses and reduce non-performing assets, mortgage loan collection personnel have been expanded, more stringent collection practices have been implemented, and certain higher risk lending programs have been discontinued. In addition, loan loss allowances have been increased to prepare for potential future losses in the portfolio. The table below sets forth the amounts and categories of 1ST BANCORP's nonaccrual loans and real estate owned for the balance sheet dates presented. Loans are reviewed regularly and are generally placed on nonaccrual status when they become contractually past due more than 90 days. 1ST BANCORP AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations
September 30, June 30, 1997 1997 ------------------------------- Nonaccrual loans and real estate owned: Nonaccrual loans $2,522,000 $2,330,000 Real estate owned (1) 408,000 397,000 Restructured loans - - ------------------------------- Total nonaccrual loans and real estate owned $2,930,000 $2,727,000 Nonaccrual loans and real estate owned to total assets 1.12% 1.01%
- ----------------------- (1) Certain assets acquired through foreclosures or deeds in lieu of foreclosure, which are included in the Consolidated Condensed Statement of Financial Condition as real estate owned. During the three months ended September 30, 1997, the Bank established, through operations, provisions for loan losses totaling $90,000. In addition, the Bank realized net charge-offs through its allowance for loan loss accounts of $74,000. The Bank's allowance for loan loss was $1,174,000 at September 30, 1997 and $1,158,000 at June 30, 1997. Prepaid expenses and other assets decreased by $4,115,000 to $5,076,000 at September 30, 1997 from $9,191,000 at June 30, 1997. The decrease was primarily the result of the funding of a $4.1 million loan sale during the quarter ended September 30, 1997 which was in process at June 30, 1997. Total deposits decreased by $9,452,000, or 6.55%, to $134,864,000 at September 30, 1997 from $144,316,000 at June 30, 1997. The decrease in deposits was primarily the result of decreasing brokered funds during the three months ended September 30, 1997. The decline in brokered funds correlated to the decline in the securities held to maturity and available for sale portfolios. Advances from the Federal Home Loan Bank ("FHLB") and other borrowings remained stable at $100,247,000 at September 30, 1997 compared to $100,296,000 at June 30, 1997. Accrued expenses and other liabilities remained stable at $2,002,000 at September 30, 1997 compared to $2,047,000 at June 30, 1997. Advance payments by borrowers for taxes and insurance increased modestly to $567,000 at September 30, 1997, from $304,000 at June 30, 1997. Accrued interest payable on deposits decreased to $681,000 at September 30, 1997, from $1,194,000 at June 30, 1997. The fluctuations in these categories were due to the timing differences that occur in the normal course of business. (b) Results of Operations: During the three months ended September 30, 1997, 1ST BANCORP had net income of $455,000, or $0.65 per share, compared to a net loss of $631,000, or $0.90 per share, for the three months ended September 30, 1996. The net loss for the quarter ended September 30, 1996, was directly attributable to the one-time assessment for the recapitalization of the SAIF. Exclusive of the SAIF assessment, pre-tax net earnings for the quarter ended September 30, 1996 would have been approximately $275,000. 1ST BANCORP AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations The increased earnings for the quarter ended September 30, 1997 as compared to the quarter ended September 30, 1996, resulted from an increased net interest margin and a substantially reduced level of noninterest expenses. The decreased noninterest expenses, exclusive of the SAIF assessment, was attributable to the closure of several of the Bank's loan origination offices during the latter part of fiscal 1997. Net interest income before provision for loan losses was $1,578,000 for the three months ended September 30, 1997, compared to $1,442,000 for the three months ended September 30, 1996. The net interest margin was 2.49% for the three months ended September 30, 1997 compared to 2.30% for the three months ended September 30, 1996. The increased level of net interest income was the result of the expanded net interest margin. The net interest margin was expanded primarily through the increased level of higher yielding non-conforming mortgage loans which have been retained in the loan portfolio. The higher yield on the Bank's loan portfolio was partially offset by an increased cost of funds. The modestly higher cost of funds was attributable to the Bank's savings deposits. Also contributing to the increased net interest margin for the three months ended September 30, 1997 as compared with the same period of the previous year, was a slightly higher level of interest-earning assets and interest-bearing liabilities. Non-interest income for the three months ended September 30, 1997 totaled $369,000 compared to $873,000 for the three months ended September 30, 1996. The lower level of non-interest income for the three months ended September 30, 1997 resulted primarily from a decreased gain on sale of loans. The gain on sale of mortgage loans totaled $61,000 for the quarter ended September 30, 1997, compared to $653,000 for the quarter ended September 30, 1996. The decline in the gain on sale of loans for the three months ended September 30, 1997 resulted from a lower volume of loan sales. Loan sales totaled $5.1 million for the quarter ended September 30, 1997, compared to $23.9 million for the quarter ended September 30, 1996. The reduction in loan sales is a part of the Bank's asset/liability management strategies to enhance the net interest margin by retaining a larger portion its mortgage loan originations in portfolio. Fees and service charges remained stable and totaled $83,000 for the three months ended September 30, 1997 compared to $84,000 for the three months ended September 30, 1996. The net gains on the sale of investment securities available for sale and trading account investments totaled $6,000 for the three months ended September 30, 1997 compared with no activity in the first quarter of fiscal year 1996. "Other" non-interest income increased to $219,000 for the three months ended September 30, 1997 compared with $136,000 during the three months ended September 30, 1996. The increase is attributable to additional income from the insurance operations of First Financial Insurance Agency, Inc. The additional insurance income was due in large part to the purchase of book of business of an existing independent insurance agency in December 1996. The book of business was merged with the existing customer base of First Financial. As a result of the acquisition, First Financial operates full service insurance offices in Vincennes, Indiana and Princeton, Indiana. 1ST BANCORP AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations Non-interest expense totaled $1,237,000 for the three months ended September 30, 1997, compared to $3,324,000 for the three months ended September 30, 1996. The lower level of non-interest expenses were the result of the SAIF assessment in the quarter ended September 30, 1996, and the restructuring of the Bank's nonconforming loan operations. On September 30, 1996, the federal government mandated an industry wide assessment to recapitalize the SAIF, which is a part of the FDIC. The special assessment was charged to savings associations with insured deposits by the SAIF. The assessment was calculated at 0.657% of insured deposits as of March 31, 1995. The Bank's portion of the assessment was $1,330,000 and was included in non-interest expense for the first quarter of fiscal 1997. Federal insurance premiums totaled $41,000 for the quarter ended September 30, 1997, compared with $1,429,000 for the quarter ended September 30, 1996. During the fourth quarter of fiscal year 1997, the Bank restructured its nonconforming loan operation. The restructuring included closing all loan offices except the Evansville, Indiana loan origination office and moving all administrative functions to the Bank's home office in Vincennes, Indiana. The restructuring was undertaken to reduce noninterest operating expenses and improve profitability of the Bank. Compensation and employee benefits expense declined to $663,000 for the three months ended September 30, 1997 compared to $1,045,000 for three months ended September 30, 1996. Net occupancy expense also decreased in the quarter ended September 30, 1997 as compared to the same period of the prior year. Net occupancy expense totaled $127,000 for the three months ended September 30, 1997 compared to $181,000 for the three months ended September 30, 1996. These declines in operating expenses resulted from a reduced number of employees and fewer office facilities which are attributable to the nonconforming loan operation restructuring. (c) Capital Resources and Liquidity: The Corporation is subject to regulation as a savings and loan holding company by the Office of Thrift Supervision ("OTS"). First Federal Bank, A Federal Savings Bank, as a subsidiary of a savings and loan holding company, is subject to certain restrictions in its dealings with the Corporation. The Bank is also subject to the regulatory requirements applicable to a federal savings bank. Current capital regulations require savings institutions to have minimum tangible capital equal to 1.5% of total assets and a minimum 3% core capital ratio. Additionally, savings institutions are required to meet a risk-based capital ratio equal to 8.0% of risk-weighted assets. At September 30, 1997, the Bank met all current capital requirements. 1ST BANCORP AND SUBSIDIARIES Management's Discussion and Analysis of Financial Condition and Results of Operations The following is a summary of the Bank's regulatory capital and capital requirements at September 30, 1997: Tangible Core Risk-Based Capital Capital Capital ----------------------------------------- Regulatory Capital $22,836,000 $22,836,000 $23,497,000 Minimum Capital Requirement 3,912,000 7,825,000 11,315,000 ----------------------------------------- Excess Capital $18,924,000 $15,011,000 $12,182,000 Regulatory Capital Ratio 8.75% 8.75% 16.61% Required Capital Ratio 1.50% 3.00% 8.00% During the quarter ended September 30, 1997, 1ST BANCORP paid a $0.10 cash dividend per share to shareholders. This is the twentieth consecutive quarterly dividend 1ST BANCORP has paid to shareholders. Liquidity measures the Bank's ability to meet savings withdrawals and lending commitments. Management believes that liquidity is adequate to meet current requirements, including the funding of $13,792,000 in loan commitments and $1,099,000 of loans in process outstanding at September 30, 1997. The majority of these commitments are expected to be funded within the three month period ending December 31, 1997. At September 30, 1997, the Bank had $268,000 in outstanding commitments to sell mortgage loans and mortgage-backed securities. The Bank maintains liquidity of at least 5% of net withdrawable assets. The average regulatory liquidity ratio for the quarter ended September 30, 1997 was 12.11%. On October 23, 1997, the Corporation declared a three-for-two stock split. The additional shares are payable November 30, 1997, to shareholders of record as of November 15, 1997. For financial statements issued after November 15, 1997, all share and per share data will be adjusted retroactively to reflect the three-for-two stock split. There are no other known trends, events, or uncertainties, including current recommendations by regulatory authorities, that should have, or that are reasonably likely to have, a material effect on the liquidity, capital resources, or operations of 1ST BANCORP. Item 3. Quantitative and Qualitative Disclosures About Market Risk There have been no material changes in market risk exposures that affect the quantitative or qualitative disclosures presented as of the preceding fiscal year end in the Corporation's Annual Report on Form 10-K. PART II. OTHER INFORMATION Item 1. Legal Proceedings. Neither 1ST BANCORP nor its subsidiaries is involved in any legal proceedings, other than routine proceedings occurring in the ordinary course of its business. Item 4. Submission of Matters to a Vote of Security Holders. There were no matters submitted to a vote of security holders during the quarter ended September 30, 1997. Item 6. Exhibits and Reports on Form 8-K a) The following exhibits are filed herewith: Exhibit 3a Certificate of Incorporation of Registrant (incorporated by reference to exhibit 3.1 to Registrant's Registration Statement on Form S-4, Registration No. 33-24587, filed September 28, 1988) Exhibit 3b Restated Code of By-Laws of Registrant (incorporated by reference to Exhibit 3b to Registrant's Form 10-K for the year ended June 30, 1994) Exhibit 27 Financial Data Schedule b) Reports on Form 8-K -- There were no reports on Form 8-K filed during the three months ended September 30, 1997. SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. 1ST BANCORP Date: November 13, 1997 By: /s/ C. James McCormick ----------------------------- C. James McCormick, Chairman and Chief Executive Officer Date: November 13, 1997 By: /s/ Frank D. Baracani ---------------------------- Frank D. Baracani, President Date: November 13, 1997 By: /s/ Mary Lynn Stenftenagel --------------------------------- Mary Lynn Stenftenagel, Secretary-Treasurer and Chief Accounting Officer EX-27 2 FDS FOR 1ST BANCORP
9 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM 1ST BANCORP AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 0000840458 1ST BANCORP 1,000 U.S. DOLLARS 3-MOS JUN-30-1997 JUL-1-1997 SEP-30-1997 1.000 476 19,982 0 0 6,687 38,859 39,692 179,832 1,174 260,935 134,864 0 3,250 100,247 0 0 692 21,882 260,935 3,783 903 292 4,978 1,972 3,400 1,578 90 6 1,237 620 165 0 0 455 0.65 0.65 7.86 2,522 464 0 2,865 896 75 1 1,174 661 0 513
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