**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**FORM 10-Q**

** **
|   | **(mark one)** |
|--------|----------------|

** **
| **ý** |   | **QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934** |
|------------|--------|----------------------------------------------------------------------------------------|

 

**For the quarterly period ended September30, 2001**

 

**OR**

 
| **o** |   | **TRANSITION REPORT UNDER SECTION 13 or 15(d) OF THE  SECURITIES EXCHANGE ACT OF 1934** |
|-------|--------|-----------------------------------------------------------------------------------------|

**For the transition period from________ to ________**

 

**Commission File Number  0-24024**

 

**First Community Financial Group,Inc.**

(Exact name of registrant as specified in itscharter)

** **

| **Washington**                                                        |   | **91 -1277503**                      |
|-----------------------------------------------------------------------|--------|--------------------------------------|
| (State or other jurisdiction                                          |   | (IRS Employer Identification Number) |
| of incorporation or organization)                                     |   |                                 |
|                                                                  |   |                                 |
| **721 College Street. SE,  P.O. Box 3800, Lacey, WA  ****98509** |
| (Address of principal executive offices)                              |
|                                                                  |   |                                 |
| Registrant's telephone number:    **(360)  459-1100**  |
|                                                                  |

 

Indicate by check mark whether theregistrant (1) has filed all reports required to be filed by Section 13 or15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (orfor 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   ý     No   o

 

Indicate the number of shares outstanding ineach of the issuer’s classes of common stock, as of the latest practicabledate.

 

| Title of Class             |   | Outstanding at November 1, 2001                                                                                  |
|----------------------------|--------|------------------------------------------------------------------------------------------------------------------|
| Common Stock, no par value |   |                   2,186,681 |
|                       |   |                                                                                                             |

 

 

**First Community FinancialGroup, Inc.**

 

Table of Contents

 
| PART I - FINANCIAL INFORMATION |
|--------------------------------|
|                           |   |
| Item 1                         | Financial Statements |
|                           | Condensed  Consolidated Balance Sheets |
|                           | Condensed  Consolidated Statements of Income and Comprehensive Income |
|                           | Condensed  Consolidated Statement of Stockholders’ Equity |
|                           | Condensed  Consolidated Statements of Cash Flows |
|                           | Notes to Condensed Consolidated  Financial Statements |
|                           |   |
| Item 2                         | Management's  Discussion of Financial Condition and |
|                           | Analysis or Plan of Operations |
|                           |
| PART II - OTHER INFORMATION    |
|                           |
| Item 6                         | Exhibits and  Reports on Form 8-K |
|                           |
| SIGNATURES                     |

 

**FIRST COMMUNITY FINANCIAL GROUP, INC. and SUBSIDIARIES**

Condensed Consolidated Balance Sheets (Unaudited)

 
| ***(Dollars in  thousands)***                                                                                                                 |   |
|-----------------------------------------------------------------------------------------------------------------------------------------------|--------|
|                                                                                                                                          |   | **September 30** |   | **December 31** |   |
|                                                                                                                                          |   | **2001** |   | **2000** |   |
| **Assets**                                                                                                                                    |   |   |   |   |   |
| Cash and due from banks                                                                                                                       |   | $ | 23,537 |   | $ | 12,640 |   |
| Interest bearing deposits in banks                                                                                                            |   | 148 |   | 172 |   |
| Securities available for sale                                                                                                                 |   | 19,975 |   | 24,875 |   |
| Securities held to maturity                                                                                                                   |   | 676 |   | 676 |   |
| Federal Home Loan Bank stock                                                                                                                  |   | 1,992 |   | 1,854 |   |
| Loans held for sale                                                                                                                           |   | 11,685 |   | 4,121 |   |
|                                                                                                                                          |   |   |   |   |   |
| Loans                                                                                                                                         |   | 279,453 |   | 255,183 |   |
| Allowance for credit losses                                                                                                                   |   | 3,441 |   | 3,503 |   |
| **Net loans**                                                                                                                                 |   | **276,012** | ** ** | **251,680** | ** ** |
|                                                                                                                                          |   |   |   |   |   |
| Premises and equipment                                                                                                                        |   | 10,427 |   | 10,067 |   |
| Foreclosed real estate                                                                                                                        |   | 4,474 |   | 4,097 |   |
| Accrued interest receivable                                                                                                                   |   | 1,652 |   | 1,817 |   |
| Cash value of life insurance                                                                                                                  |   | 8,257 |   | 3,110 |   |
| Goodwill and other intangible assets                                                                                                          |   | 6,371 |   | 6,677 |   |
| Other assets                                                                                                                                  |   | 2,200 |   | 2,449 |   |
|                                                                                                                                          |   |   |   |   |   |
| **Total assets**                                                                                                                              |   | **$** | **367,406** | ** ** | **$** | **324,235** | ** ** |
|                                                                                                                                          |   |   |   |   |   |
|                                                                                                                                          |   |   |   |   |   |
| **Liabilities**                                                                                                                               |   |   |   |   |   |
| Deposits:                                                                                                                                     |   |   |   |   |   |
| Non-interest bearing                                                                                                                          |   | $ | 54,495 |   | $ | 48,715 |   |
| Savings and interest bearing demand                                                                                                           |   | 121,675 |   | 98,036 |   |
| Time deposits                                                                                                                                 |   | 131,409 |   | 124,626 |   |
| **Total deposits**                                                                                                                            |   | **307,579** | ** ** | **271,377** | ** ** |
|                                                                                                                                          |   |   |   |   |   |
|                                                                                                                                          |   |   |   |   |   |
| Federal funds purchased                                                                                                                       |   | 8,000 |   | 2 |   |
| Short term borrowings                                                                                                                         |   | 9,721 |   | 13,999 |   |
| Long term debt                                                                                                                                |   | 620 |   | 1,303 |   |
| Accrued interest payable                                                                                                                      |   | 363 |   | 450 |   |
| Other liabilities                                                                                                                             |   | 3,362 |   | 2,731 |   |
| **Total liabilities**                                                                                                                         |   | **329,645** | ** ** | **289,862** | ** ** |
|                                                                                                                                          |   |   |   |   |   |
| **Stockholders’ Equity**                                                                                                                 |   |   |   |   |   |
| Common stock, par value $2.50 per share;  10,000,000 shares authorized, 2,186,681 shares issued in 2001, and 2,184,003  shares issued in 2000 |   | 5,467 |   | 5,460 |   |
| Surplus                                                                                                                                       |   | 23,119 |   | 23,099 |   |
| Retained earnings                                                                                                                             |   | 9,024 |   | 6,349 |   |
| Accumulated other comprehensive income  (loss)                                                                                                |   | 221 |   | (332 | ) |
| Debt related to KSOP                                                                                                                          |   | (70 | ) | (203 | ) |
| **Total stockholders’ equity**                                                                                                           |   | **37,761** | ** ** | **34,373** | ** ** |
|                                                                                                                                          |   |   |   |   |   |
| **Total liabilities and  stockholders’ equity**                                                                                          |   | **$** | **367,406** |   | **$** | **324,235** |   |

* *

*See notes to condensedconsolidated financial statements*

 

**FIRST COMMUNITYFINANCIAL GROUP, INC. and SUBSIDIARIES**

CondensedConsolidated Statements of Income and Comprehensive Income(Unaudited)

 
| ***(Dollars in  thousands, except per share amounts)***                     |   |
|-----------------------------------------------------------------------------|--------|
|                                                                        |   | **Three months ended** |   | **Nine months ended** |   |
|                                                                        |   | **September 30** |   | **September 30** |   |
|                                                                        |   | **2001** | ** ** | **2000** | ** ** | **2001** | ** ** | **2000** |   |
| **Interest income**                                                         |   |   |   |   |   |   |   |   |   |
| Loans                                                                       |   | $ | 7,609 |   | $ | 6,466 |   | $ | 21,533 |   | $ | 18,855 |   |
| Federal funds sold and deposits in banks                                    |   | 6 |   | 1 |   | 104 |   | 83 |   |
| Investments                                                                 |   | 353 |   | 437 |   | 1,161 |   | 1,336 |   |
| **Total interest income**                                                   |   | **7,968** | ** ** | **6,904** | ** ** | **22,798** | ** ** | **20,274** | ** ** |
| **Interest Expense**                                                        |   |   |   |   |   |   |   |   |   |
| Deposits                                                                    |   | 2,500 |   | 2,502 |   | 7,925 |   | 6,871 |   |
| Other                                                                       |   | 80 |   | 238 |   | 244 |   | 771 |   |
| **Total interest expenses**                                                 |   | **2,580** | ** ** | **2,740** | ** ** | **8,169** | ** ** | **7,642** | ** ** |
| **Net interest income**                                                     |   | **5,388** | ** ** | **4,164** | ** ** | **14,629** | ** ** | **12,632** | ** ** |
| **Provision for credit  losses**                                            |   | **513** | ** ** | **120** | ** ** | **958** | ** ** | **410** | ** ** |
| **Net interest income after provision****for credit Losses**                |   | **4,875** |   | **4,044** |   | **13,671** |   | **12,222** |   |
| **Non-interest income**                                                     |   |   |   |   |   |   |   |   |   |
| Service charges on deposit accounts                                         |   | 709 |   | 483 |   | 1,649 |   | 1,445 |   |
| Origination fees on mortgage loans sold                                     |   | 497 |   | 277 |   | 1,398 |   | 718 |   |
| Other income                                                                |   | 395 |   | 638 |   | 1,341 |   | 1,679 |   |
| **Total non-interest income**                                               |   | **1,601** | ** ** | **1,398** | ** ** | **4,388** | ** ** | **3,842** | ** ** |
| **Non-interest expense**                                                    |   |   |   |   |   |   |   |   |   |
| Salaries and employee benefits                                              |   | 2,433 |   | 2,113 |   | 7,000 |   | 6,294 |   |
| Occupancy and equipment                                                     |   | 618 |   | 548 |   | 1,824 |   | 1,642 |   |
| Other expense                                                               |   | 1,610 |   | 1,138 |   | 4,432 |   | 3,399 |   |
| **Total non-interest expense**                                              |   | **4,661** | ** ** | **3,799** | ** ** | **13,256** | ** ** | **11,335** | ** ** |
| **Operating income before  income taxes**                                   |   | **1,815** | ** ** | **1,643** | ** ** | **4,803** | ** ** | **4,729** | ** ** |
| Income Taxes                                                                |   | 547 |   | 551 |   | 1,472 |   | 1,599 |   |
|                                                                        |   |   |   |   |   |   |   |   |   |
| **Net income**                                                              |   | **$** | **1,268** | ** ** | **$** | **1,092** | ** ** | **$** | **3,331** | ** ** | **$** | **3,130** | ** ** |
|                                                                        |   |   |   |   |   |   |   |   |   |
| **Other comprehensive  income, net of tax**                                 |   |   |   |   |   |   |   |   |   |
| Unrealized holding gains on securities  arising during the period           |   | 114 |      | 193 |      | 553 |      | 133 |      |
|                                                                        |   |   |   |   |   |   |   |   |   |
| **Comprehensive income**                                                    |   | **$** | **1,382** | ** ** | **$** | **1,285** | ** ** | **$** | **3,884** | ** ** | **$** | **3,263** | ** ** |
|                                                                        |   |   |   |   |   |   |   |   |   |
| **Earnings per share data**                                                 |   |   |   |   |   |   |   |   |   |
| **Basic earnings per share**                                                |   | **$** | **0.58** | ** ** | **$** | **0.51** | ** ** | **$** | **1.53** | ** ** | **$** | **1.45** | ** ** |
| **Diluted earnings per share**                                              |   | **$** | **0.57** | ** ** | **$** | **0.49** | ** ** | **$** | **1.50** | ** ** | **$** | **1.41** | ** ** |
|                                                                        |   |   |   |   |   |   |   |   |   |
| Weighted average number of common shares                                    |   | 2,181,459 |   | 2,150,816 |   | 2,178,716 |   | 2,152,480 |   |
| Weighted average number of common shares-  including dilutive stock options |   | 2,227,194 |     | 2,216,549 |     | 2,224,451 |     | 2,218,212 |     |
| Return on average assets (annualized)                                       |   | 1.43 | % | 1.39 | % | 1.29 | % | 1.34 | % |
| Dividends per share                                                         |   | $ | 0.10 |   | $ | 0.10 |   | $ | 0.30 |   | $ | 0.30 |   |

 

*See notes to condensedconsolidated financial statements*

* *

CondensedConsolidated Statements of Stockholders’ Equity(Unaudited)

Nine Months Ended September 30, 2000 and 2001

 
| ***(Dollars in  thousands)***       |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
|-------------------------------------|--------|-------------------|-----------------|-------------|---------------|------------------------|---------------|----------------------------------------------------------|-----------------|------------------------------|---------------|----------------|---------------|
|                                |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
|                                |   | **Common  Stock** | ** **      | **Surplus** | ** **    | **Retained  Earnings** |          | **Accumulated****Other****Comprehensive  Income (Loss)** |            | **Debt****Related  to KSOP** |          | **Total**      |          |
|                                |   |              | ** **      |        | ** **    |                   |          |                                                     | ** **      |                         |          |           |          |
| **Balance, December 31, 1999**      |   | **$**             | ** 5,443** | ** **  | **$**         | ** 23,428**       | ** **    | **$**                                                    | ** 2,855** | ** **                   | **$**         | ** (728** | **)**         | **$** | ** (380** | **)** | **$** | ** 30,618** | ** ** |
|                                |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
| Net income                          |   | - -               |            | - -         |          | 3,130                  |          | - -                                                      |            | - -                          |          | 3,130          |          |
|                                |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
| Stock options exercised             |   | 72                |            | 251         |          | - -                    |          | - -                                                      |            | - -                          |          | 323            |          |
|                                |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
| Cash dividend ($0.30 per share)     |   | - -               |            | - -         |          | (652                   | )             | - -                                                      |            | - -                          |          | (652           | )             |
|                                |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
| Stock repurchased                   |   | (100              | )               | (834        | )             | - -                    |          | - -                                                      |            | - -                          |          | (934           | )             |
|                                |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
| Other comprehensive income          |   | - -               |            | - -         |          | - -                    |          | 133                                                      |            | - -                          |          | 133            |          |
|                                |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
| Net decrease in debt relatedto KSOP |   | - -               |       | - -         |     | - -                    |     | - -                                                      |       | 133                          |     | 133            |     |
|                                |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
| **Balance, September 30,  2000**    |   | **5,415**         | ** **      | **22,845**  | ** **    | **5,333**              | ** **    | **(595**                                                 | **)**           | **(247**                     | **)**         | **32,751**     | ** **    |
|                                |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
| **Balance, December 31, 2000**      |   | **$**             | ** 5,460** | ** **  | **$**         | ** 23,099**       | ** **    | **$**                                                    | ** 6,349** | ** **                   | **$**         | ** (332** | **)**         | **$** | ** (203** | **)** | **$** | ** 34,373** | ** ** |
|                                |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
| Net income                          |   | - -               |            | - -         |          | 3,331                  |          | - -                                                      |            | - -                          |          | 3,331          |          |
|                                |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
| Stock options exercised             |   | 7                 |            | 20          |          | - -                    |          | - -                                                      |            | - -                          |          | 27             |          |
|                                |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
| Cash dividend ($0.30 per share)     |   | - -               |            | - -         |          | (656                   | )             | - -                                                      |            | - -                          |          | (656           | )             |
|                                |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
| Other comprehensive income          |   | - -               |            | - -         |          | - -                    |          | 553                                                      |            | - -                          |          | 553            |          |
|                                |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
| Net decrease in debt relatedto KSOP |   | -  -              |       | -  -        |          | -  -                   |     | -  -                                                     |       | 133                          |     | 133            |     |
|                                |   |              |            |        |          |                   |          |                                                     |            |                         |          |           |          |
| **Balance, September 30,  2001**    |   | **$**             | ** 5,467** | ** **  | **$**         | ** 23,119**       | ** **    | **$**                                                    | ** 9,024** | ** **                   | **$**         | ** 221**  | ** **    | **$** | ** (70** | **)** | **$** | ** 37,761** | ** ** |

 

*See notes to condensed consolidated financialstatements*

 

**FIRST COMMUNITYFINANCIAL GROUP, INC. and SUBSIDIARIES**

Condensed Consolidated Statements of Cash Flows (Unaudited)

 
| ***(Dollars in  thousands)***                                          |   |                               |       |        |   |
|------------------------------------------------------------------------|--------|------------------------------------|------------|-------------|--------|
|                                                                   |   | **Nine months ended September 30** |       |
|                                                                   |   | **2001**                           |       | **2000**    |   |
| **Cash Flows from Operating  Activities**                              |   |                               |       |        |   |
| Net Income                                                             |   | $                                  | 3,331      |        | $      | 3,130 |   |
| Adjustments to reconcile net income to net  cash provided by (used in) |   |                               |       |        |   |
| Operating activities:                                                  |   |                               |       |        |   |
| Provision for credit losses                                            |   | 958                                |       | 410         |   |
| Depreciation and amortization                                          |   | 829                                |       | 824         |   |
| Amortization of intangible assets                                      |   | 306                                |       | 306         |   |
| Increase in cash value of life insurance                               |   | (3                                 | )          | (163        | )      |
| Other – net                                                       |   | (1309                              | )          | (164        | )      |
| Originations of loans held for sale                                    |   | (64,242                            | )          | (48,834     | )      |
| Proceeds from sales of loans held for sale                             |   | 58,076                             |       | 49,094      |   |
| **Net cash provided by  operating activities**                         |   | **(2,054**                         | **)**      | **4,603**   |   |
|                                                                   |   |                               |       |        |   |
| **Cash Flows from Investing  Activities**                              |   |                               |       |        |   |
| Net (increase) decrease in interest bearing  deposits in banks         |   | 24                                 |       | (39         | )      |
| Proceeds from maturities of  available-for-sale securities             |   | 5,845                              |       | 1,504       |   |
| Net increase in loans                                                  |   | (25,290                            | )          | (24,182     | )      |
| Proceeds from sale of foreclosed real  estate                          |   | 95                                 |       | 910         |   |
| Additions to premises and equipment                                    |   | (1,189                             | )          | (1,730      | )      |
| Investment in life insurance                                           |   | (5,144                             | )          | - -         |   |
| **Net cash used by investing  activities**                             |   | **(25,659**                        | **)**      | **(23,537** | **)**  |
|                                                                   |   |                               |       |        |   |
| **Cash Flows from Financing  Activities**                              |   |                               |       |        |   |
| Net increase in deposits                                               |   | 36,202                             |       | 17,035      |   |
| Net increase in federal funds purchased and  short-term borrowings     |   | 3,720                              |       | 4,002       |   |
| Sale of common stock                                                   |   | 27                                 |       | 323         |   |
| Repurchase of common stock                                             |   | 0                                  |       | (934        | )      |
| Repayment of long-term borrowings                                      |   | (683                               | )          | (683        | )      |
| Payment of dividends                                                   |   | (656                               | )          | (652        | )      |
| **Net cash provided by  financing activities**                         |   | **38,610**                         | ** ** | **19,091**  |   |
|                                                                   |   |                               |       |        |   |
| **Net change in cash and due  from banks**                             |   | **10,897**                         | ** ** | **157**     |   |
|                                                                   |   |                               |       |        |   |
| **Cash and Due from Banks:**                                           |   |                               |       |        |   |
| Beginning of period                                                    |   | 12,640                             |       | 10,349      |   |
|                                                                   |   |                               |       |        |   |
| **End of period**                                                      |   | **$**                              | **23,537** | ** **  | **$**  | **10,506** |   |
|                                                                   |   |                               |       |        |   |
| **Supplemental Disclosures  of Cash Flow Information:**                |   |                               |       |        |   |
| **Cash payments for:**                                                 |   |                               |       |        |   |
| Interest                                                               |   | $                                  | 8,256      |        | $      | 7,557 |   |
| Taxes                                                                  |   | 1,095                              |       | 1,568       |   |
|                                                                   |   |                               |       |        |   |
| **Supplemental Disclosures  of Non-Cash Investing Activities:**        |   |                               |       |        |   |
| Other real estate acquired in settlement of  loans                     |   | 392                                |       | 647         |   |
| Decrease in guarantee of KSOP obligation                               |   | (133                               | )          | (133        | )      |

 

*See notes to condensed consolidated financialstatements*

 

Notesto Condensed Consolidated Financial Statements

(Unaudited)

 

**1.             Basis ofPresentation**

 

The accompanying unaudited consolidated financialstatements have been prepared in accordance with generally accepted accountingprinciples for interim financial information and with instructions to Form 10-Qand Rule 10-01 of Regulation S-X. Accordingly, they do not include all of the information and footnotesrequired by generally accepted accounting principles for complete financialstatements.  In the opinion ofmanagement, adjustments considered necessary for a fair presentation(consisting of normally recurring accruals) have been included.  The interim condensed consolidated financialstatements should be read in conjunction with the December 31, 2000consolidated financial statements, including notes thereto, included in theCompany’s 2000 Annual Report to Shareholders. Operating results for the nine months ended September 30, 2001 are notnecessarily indicative of the results anticipated for the year ending December31, 2001.

 

The preparation of financial statements inconformity with generally accepted accounting principles requires management tomake estimates and assumptions that affect the reported amounts of assets andliabilities and disclosure of contingent assets and liabilities at the date ofthe financial statements and the reported amounts of revenues and expensesduring the reporting period.  Actualresults could differ from those estimates.

 

**2.             Basic andDiluted Earnings Per Share**

 

Basic earnings per share are calculated by dividingnet income by the weighted average number of common shares outstanding duringthe periods presented.  Diluted earningsper share assumes that all dilutive stock options outstanding are issued suchthat their dilutive effect is maximized.

 
|                                                        |   | **Three Months Ended  September 30,** |      | **Nine Months Ended September 30,** |   |
|-------------------------------------------------------------|--------|---------------------------------------|-----------|-------------------------------------|--------|
|                                                        |   | **2001**                              |      | **2000**                            |   | **2001** |   | **2000** |   |
| Basic EPS computation                                       |   | $                                     | 1,268,000 |                                | $      | 1,092,000 |   | $ | 3,331,000 |   | $ | 3,130,000 |   |
| Numerator - Net Income                                      |   |                                  |      |                                |   |   |   |   |   |
| Denominator - Weighted Average   common shares outstanding  |   | 2,181,459                             |      | 2,150,816                           |   | 2,178,716 |   | 2,152,480 |   |
|                                                        |   |                                  |      |                                |   |   |   |   |   |
| Basic EPS                                                   |   | $                                     | .58       |                                | $      | .51 |   | $ | 1.53 |   | $ | 1.45 |   |
|                                                        |   |                                  |      |                                |   |   |   |   |   |
| Diluted EPS computation                                     |   | $                                     | 1,268,000 |                                | $      | 1,092,000 |   | $ | 3,331,000 |   | $ | 3,130,000 |   |
| Numerator - Net Income                                      |   |                                  |      |                                |   |   |   |   |   |   |   |   |   |
| Denominator - Weighted averagecommon  shares outstanding    |   | 2,181,459                             |      | 2,150,816                           |   | 2,178,716 |   | 2,152,480 |   |
| Effect of dilutive stock options                            |   | 43,940                                |      | 65,733                              |   | 45,735 |   | 65,732 |   |
| Weighted average common sharesand common stock  equivalents |   | 2,225,399                             |      | 2,216,549                           |   | 2,224,451 |   | 2,218,212 |   |
|                                                        |   |                                  |      |                                |   |   |   |   |   |
| Diluted EPS                                                 |   | $                                     | .57       |                                | $      | .49 |   | $ | 1.50 |   | $ | 1.41 |   |

 

**3.             Recent Accounting Pronouncements**

 

The Financial Accounting Standards Board adoptedFinancial Accounting Standards No. 141, Business Combinations, and 142,Goodwill and Other Intangible Assets, in 2001. SFAS No. 141 requires that all business combinations entered into afterJune 30, 2001 be accounted for under the purchase method.  SFAS No. 142 addresses how goodwill andother intangible assets should be accounted for after they have been initiallyrecorded in the financial statements. Goodwill arising from business combinations prior to the effective dateof this standard will no longer be amortized, starting in 2002, but will besubject to annual tests for impairment. Other identifiable intangible assets, and certain unidentifiableintangible assets arising from certain acquisitions, will continue to beamortized using the same lives and methods. The Company has $4,211,000 of goodwill on which amortization will ceaseeffective January 1, 2002.  Theremaining intangible assets of $2,160,000 will continue to be amortized.

 

SFAS No. 133, Accounting for Derivative Instrumentsand Hedging Activities became effective and was adopted by the Company effectiveJanuary 1, 2001.  The Company does notengage in hedging activities.  Theadoption of SFAS No. 133 had no effect on the Company’s financial position asof September 30, 2001 or the nine months there ended.

 

**Management's Discussion****and Analysis of Financial Condition and Results of Operations**

 

This discussion contains certain forward-lookingstatements within the meaning of the federal securities laws.  Actual results and the timing of certainevents could differ materially from those projected in the forward-lookingstatements due to a number of factors.

 

**Financial Condition**

 

Overview

 

The Company’s consolidated total assets atSeptember 30, 2001 of $367,406,000 represents an 13.3% increase over December31, 2000 assets of $324,235,000.  Thegrowth in assets was concentrated in the loan portfolio.  Loan balances, net of allowance for creditlosses, increased $31,896,000, or 12.5%, in the first three quarters to$287,697,000 from $255,801,000 at December 31, 2000.  The composition of the loan portfolio at September 30, 2001 andDecember 31, 2000 follows (dollars in thousands):

 
|            |   | **September 30,  2001** |        | **December 31,  2000** |   |
|-----------------|--------|-------------------------|-------------|------------------------|--------|
| Commercial      |   | $                       | 42,864      |                   | $      | 37,989 |   |
| Real Estate     |   |                    |        |                   |   |
| Residential (1) |   | 22,925                  |        | 8,244                  |   |
| Commercial      |   | 163,664                 |        | 163,557                |   |
| Construction    |   | 50,243                  |        | 39,486                 |   |
| Consumer        |   | 11,442                  |        | 10,028                 |   |
|            |   | **$**                   | **291,138** | ** **             | **$**  | **259,304** | ** ** |

** **

The total of non-performing loans (non-accrual andloans over 90 days past due) has improved since December 31, 2000, as shown inthe following table of non-performing assets (dollars in thousands):

 
|                                     |       | **September 30,  2001** |      | **December 31,  2000** |   |
|------------------------------------------|------------|-------------------------|-----------|------------------------|--------|
|                                     |       |                    |      |                   |   |
| Non-accrual  loans                       |       | $                       | 1,223     |                   | $      | 857 |   |
| Accruing  loans past due 90 days or more |       | 613                     |      | 1,264                  |   |
| Foreclosed  real estate                  |       | 4,474                   |      | 4,097                  |   |
| Other  assets                            |       | 0                       |      | 7                      |   |
|                                     | ** ** | **$**                   | **6,310** | ** **             | **$**  | **6,225** | ** ** |

 

Non-accrual loans increased by $366,000 during thefirst three quarters of 2001.  Accruingloans past due 90 days or more decreased $651,000 over the same period.  Loans in this category must be well securedand in the process of collection for the accrual of interest to continue.  These loans are monitored and may bereclassified as non-accrual as conditions warrant. ** **Foreclosed real estatehas increased by $377,000 from prior year end.   As shown in the schedule of non-performing assets detailed above,loan quality has improved from 2000 year-end. In the first three quarters of 2001, the percentage of non-performingloans to total loans decreased to 0.63% from 0.82% at December 31, 2000.

 

The allowance for credit losses reflectsmanagement’s current estimate of the amount required to absorb losses onexisting loans and commitments to extend credit.  Determination of the appropriate level of the allowance is basedon an analysis of various factors including historical loss experience based onvolumes and types of loans; volumes and trends in delinquencies and non-accrualloans; trends in portfolio volume; results of internal and independent externalcredit reviews; and economic conditions. All loans in the portfolio are assigned a grade indicating creditquality by the originating loan officer at the time of loan origination.  These grades are reviewed at regularintervals and, if performance concerns arise on an individual loan, the gradeis lowered to the appropriate level. Management reviews the composite changes in loan grades within theportfolio in it’s assessment of the adequacy of the allowance.  If a loan becomes impaired, the Company’sloss exposure on that loan is measured based on expected cash flows orcollateral values, and if necessary, a portion of the allowance for creditlosses is allocated to that loan. Management is continuing to monitor the Company’s loss experience withit’s small loan portfolio and, based on that experience, adjusts loss factorsused in assessing the adequacy of the allowance for credit losses related tothose loans.  After reviewing thecomposition of the loan portfolio at September 30, 2001, the levels ofclassified loans, losses experienced during the period, and the changes in theeconomy, management has determined the allowance for credit losses to beadequate to cover the loss exposure in the loan portfolio at that date.  An analysis of the adequacy of the allowanceis subject to quarterly review by the Board of Directors.

 

The allowance for credit losses decreased $62,000in the first three quarters of 2001. The ratio of allowance for credit losses to total loans decreased duringthe first three quarters of 2001 to 1.23% from 1.37% at December 31, 2000.  The dollar value change in the allowanceconsisted of $958,000 of provision less $1,020,000 in net charge offs ofloans.  Chargeoffs were concentrated inthe Company’s small loan portfolio.

 

Investment securities decreased by $4,900,000, or19.2% during the first three quarters of 2001 to a total of $20,651,000.  The Company’s portfolio of securities havecontinued to decease as securities matured or prepayments were made onasset-backed securities.  No additionalsecurities were purchased during the year because available funds were used forloan growth.  Investment portfoliobalances are managed in conjunction with the remainder of the balance sheet andsupport the lending and depository functions of the Bank.  Balances will increase and decrease to meetliquidity demands.

 

Total deposits increased $36,202,000, or 13.3% inthe nine months ended September 30, 2001 to $307,579,000.  The largest increase has been in interestbearing demand deposits, which increased $23,639,000, or 24.1%.  The primary reason for this increase isrelated to promotional money market products offered to customers in connectionwith the opening of new branches.  Shortterm borrowings have also been used as a funding source.  Fed funds purchased and short termborrowings increased by $3,720,000 from the balances at December 31, 2000.

 

Liquidity and Rate Sensitivity

 

The Company’s assets and liabilities are managed tomaximize long-term shareholder returns by optimizing net interest income withinthe constraints of maintaining high credit quality, conservative interest raterisk disciplines and prudent levels of liquidity.  The Asset/Liability Committee meets regularly to monitor thecomposition of the balance sheet, to assess current and projected interest ratetrends, and to formulate strategies consistent with established objectives forliquidity, interest rate risk and capital adequacy.

 

Liquidity management involves the ability to meetcash flow requirements of customers who may be either depositors wanting towithdraw funds or borrowers needing assurance that sufficient funds will be availableto meet their credit needs.  Liquidityis generated from both internal and external sources.  Internal sources are those assets that can be converted to cashwith little or no risk of loss.  Theseinclude overnight investments in interest bearing deposits in banks and federalfunds sold and investment securities, particularly those of shorter maturity,and are the principal source of asset liquidity.  At September 30, 2001, cash, deposits in banks, federal fundssold and securities available for sale totaled $43,660,000.  External sources refer to the ability toattract new liabilities and capital. They include increasing savings and demand deposits, federal funds purchased,borrowings and the issuance of capital and debt securities.  At September 30, 2001, borrowing lines ofcredit totaled $43,741,000.  Thesecredit facilities are being used regularly as a source of funds as a result ofloan growth. $17,721,000 was being borrowed against these lines of credit inthe form of federal funds purchased and term advances as of September 30, 2001.

 

Management believes the Bank's liquidity positionat September 30, 2001, was adequate to meet its short term fundingrequirements.

 

Interest rate sensitivity is closely related toliquidity, as each is directly affected by the maturity of assets andliabilities.  The Company’s net interestmargin is affected by changes in the level of market interest rates.  Management’s objectives are to monitor andcontrol interest rate risk and ensure predictable and consistent growth in netinterest income.

 

Management considers any asset or liability whichmatures, or is subject to repricing within one year to be interest sensitive,although continual monitoring is performed for other time intervals aswell.  The difference between interestsensitive assets and liabilities for a defined period of time is known as theinterest sensitivity "gap", and may be either positive ornegative.  If positive, more assetsreprice before liabilities.  Ifnegative, the reverse is true.  Gapanalysis provides a general measure of interest rate risk but does not addresscomplexities such as prepayment risk, interest rate floors and ceilings imposedon financial instruments, interest rate dynamics and customers’ response tointerest rate changes.  Currently theBanks' interest sensitivity gap is negative within one year.  Assuming that general market interest ratechanges affected the repricing of assets and liabilities in equal magnitudes,this indicates that the effects of rising interest rates on the Company wouldbe a decrease in the net interest margin, whereas falling interest rates wouldcause a corresponding increase in the margin.

 

**Interest Rate Gap AnalysisSeptember 30, 2001**

** **
| ***(dollars in thousands)***         |   |           |     | **After One But** |   |           |   |      |    |
|--------------------------------------|--------|----------------|----------|-------------------|--------|----------------|--------|-----------|---------|
|                                 |   | **Within One** |     | **Within Five**   |   | **After Five** |   |      |    |
|                                 |   | **Year**       |     | **Years**         |   | **Years**      |   | **Total** |    |
| Loans                                |   | $              | 113,655  |              | $      | 137,900        |   | $         | 39,583  |   | $ | 291,138 |   |
| Securities:                          |   |           |     |              |   |           |   |      |    |
| Available for sale                   |   | 3,484          |     | 8,404             |   | 7,813          |   | 19,701    |    |
| Held to maturity                     |   | 170            |     | 100               |   | 406            |   | 676       |    |
| Interest bearing deposits with banks |   | 148            |     | - -               |   | - -            |   | 148       |    |
| Total Earning Assets                 |   | $              | 117,457  |              | $      | 146,404        |   | $         | 47,802  |   | $ | 311,663 |   |
|                                 |   |           |     |              |   |           |   |      |    |
| Deposits:                            |   |           |     |              |   |           |   |      |    |
| Savings, NOW and money market        |   | $              | 121,675  |              | - -    |           | - -    |      | $       | 121,675 |   |
| Time deposits                        |   | 120,693        |     | $                 | 10,716 |           | - -    |      | 131,409 |   |
| Short-term borrowings                |   | 17,721         |     | - -               |   | - -            |   | 17,721    |    |
| Long-term debt                       |   | 620            |     | - -               |   | - -            |   | 620       |    |
|                                 |   |           |     |              |   |           |   |      |    |
| Total Interest Bearing Liabilities   |   | $              | 260,709  |              | $      | 10,716         |   | - -       |    | $ | 271,425 |   |
|                                 |   |           |     |              |   |           |   |      |    |
| Net Interest Rate Sensitivity Gap    |   | $              | (143,252 | )                 | $      | 135,688        |   | $         | 47,802  |   | $ | 40,238 |   |

 

The Company’s market risk is impacted bychanges in interest rates.  Other typesof market risk, such as foreign currency exchange rate risk and commodity pricerisk, do not arise in the normal course of the Company’s business.

 

The Company has market risk in the form ofinterest rate risk on its financial assets. In an effort to understand the relative impact of this risk on theCompany’s current financial situation, a process known as a rate shock isapplied to the current financial assets.

 

Rate shock is a process wherein thecharacteristics of the financial assets of the Company are reviewed in theevent they are subjected to an instantaneous and complete adjustment in themarket rate of interest.  These resultsare modeled to determine the effects on interest rate margin for the succeedingtwelve months from the repricing of variable rate assets and liabilities whereapplicable.  The level of impact on thevarious assets and liabilities are also estimated for their sensitivity topricing changes of such a market interest rate change.  According to this model and its assumptions,the change in net interest margin in the event market interest rates were toimmediately rise or fall by 100 basis points is estimated to be $193,000.

 

Capital

 

Consolidated capital of FCFG increased$3,388,000 during the first three quarters of 2001.  Increases in capital are a result of net income of $3,331,000,market value adjustments of securities available for sale increased by $553,000,payments made on the debt related to the Company’s KSOP plan amounting to$133,000 and exercising of stock options providing $27,000 in additionalcapital.  Reductions to capital were theresult of cash dividends paid in the amount of $656,000.

 

There are regulatory constraints placed uponcapital adequacy, and it is necessary to maintain an appropriate ratio betweencapital and assets.  Regulations requirebanks and holding companies to maintain a minimum "leverage" ratio(primary capital ratio) to total assets. For the most highly rated holding companies this ratio must be at least3%, and for others it must be 4 to 5%. At September 30, 2001, the Company's leverage ratio was 8.92**%**, compared to 8.96% at year-end 2000.  In addition, banks and holding companies arerequired to meet minimum risk-based capital guidelines under which riskpercentages are assigned to various categories of assets and off-balance-sheetitems to calculate a risk-adjusted capital ratio.  Tier I capital generally consists of common stockholders' equity,less goodwill, while total capital includes the allowance for possible creditlosses, subject to 1.25% limitation of risk-adjusted assets.  The rules require Tier I capital of 4% of risk-adjustedassets and total capital of 8%.  AtSeptember 30, 2001, the Tier I capital ratio was 9.19%, and total capital was10.21%.  At December 31, 2000 the Tier Icapital ratio was 9.24% and the total capital ratio was 10.39%.

 

**Results of Operations**

 

General

 

Net income for the nine months endedSeptember 30, 2001 was $3,331,000, compared to $3,130,000 for the same periodin 2000, an increase of $201,000, or 6.4% for the comparable periods.   Net income for the three months endedSeptember 30, 2001 was $1,268,000, compared to $1,092,000 for the three monthsended September 30, 2000.  Thisrepresents a 16.1% increase in net income for the period.  The increases in net income were generatedin part as a result of interest income that the Company receives for the smallconsumer loans (“payday loans”) that the Company makes in Alabama and Arkansasthrough it program with Advance America.

 

Net interest income increased $1,997,000, anincrease of 15.8% for the nine months ended September 30, 2001 over the sameperiod for 2000.  Net interest incomeincreased $1,224,000 for the three months ended September 30, 2001.  This represents an increase of 29.4% overthe same period in the prior year.  Theincrease in the Company’s net interest income is primarily the result of growthin loans, particularly the small consumer loans made through the AdvanceAmerica program.  The Company enteredinto the Advance America program in November 2000, and net interest income inthe first three quarters of 2001 has been positively affected by the returns onthese loans.  While the average balanceof such small loans was approximately 1.6% of the gross loan portfolio for theCompany on September 30, 2001, interest income from the loans equaled$3,044,000 in the first three quarters of 2001, or 13.4% of the total interestincome received by the Company during the same period.  Traditional loans have been impacted by thedramatic interest rate reductions throughout 2001.  New, adjustable, and repriced traditional loans have beensubstantially impacted by the rate reductions. However, the Company’s management of liability sensitivity has allowed asubstantial portion of deposits and other funding sources to be repriced tolower interest rates sooner than in the past and had a positive effect on thecosts of funds for the Company.  Inparticular, the cost of funds decreased second quarter of 2001 as time depositsfrom a 2000 spring promotion began to mature and were replaced with lower costsources of funding.

Interest income for the nine months endedSeptember 30, 2001 increased $2,524,000, or 12.4%, over the nine months endedSeptember 30, 2000.   Of  this increase, approximately $1,525,000 isattributed to an increase in the average volume of earning assets.  Average earning assets for the first ninemonths of 2001 were $19,037,000, or 6.8% higher than in the same period of2000.  The average rate earned onassets, which was 10.10% on September 30, 2001, up from 9.59% for the same ninemonth period in 2000, increased interest income by $999,000. The percentage ofaverage loans to total average earning assets increased slightly over the prioryear and represents 90.5% of total average earning assets, up from 89.4% in2000.  The average rate of return onassets increased 51 basis points despite the reduction on investment and federalfunds earning rates.  Interest incomefor the three months ended September 30, 2001 was $1,064,000 higher than thesame period in the previous year. Likewise due to changes in the composition of and increased yield on theloan portfolio.

 

Total interest expense for the nine monthsended September 30, 2001 increased $527,000, or 6.9%, from the comparableperiod of the prior year.  Of the totalincrease in interest expense, $838,000 was related to the increased volumes ofaverage interest bearing liabilities, which increased $23,773,000, or 10.3%, to$255,036,000.  The average cost of fundsdecreased on savings, NOW and money market funds as well as time deposits.  However, due to the change in mix towards agreater percentage of time deposits, the overall cost of interest bearingdeposits increased to 4.25% from 4.22%. Other borrowings reflected the decreasing rate environment more clearlygiven the generally short term nature of the balance, with the average rate droppingto 4.73% from 7.06%.  The average rateof expense for total deposits and borrowings in the first three quarters of2001 decreased to 4.27% from 4.40% in the same period of 2000, a decrease of 13basis points and relates to an approximate $101,000 savings in interestexpense.  Total interest expense for thethree months ended September 30, 2001 was $160,000 less than the third quarterof 2000 primarily due to the reduced rate environment.

 

Net interest margin, defined as net interestincome as a percentage of average earning assets, increased by 51 basis pointsto 6.48% in the nine months ended September 30,2001 from 5.97% in the firstthree quarters of 2000.

 

 

 

The yield and cost of funds for earningassets and interest bearing liabilities were as follows as of and for the ninemonths ended September 30 (dollars in thousands):

 
|                                                     |   |                  |    | **2001**      |   |        |   |        |   | **2000**                |    |                |   |
|----------------------------------------------------------|--------|-----------------------|---------|---------------|--------|-------------|--------|-------------|--------|-------------------------|---------|---------------------|--------|
|                                                     |   |                  |    | **Interest**  |   |        |   |        |   | **Interest**            |    |                |   |
|                                                     |   | **Average**           |    | **Income**    |   | **Average** |   | **Average** |   | **Income**              |    | **Average**         |   |
|                                                     |   | ** ****Balance** |    | **(Expense)** |   | **Rates**   |   | **Balance** |   | ** ****(Expense)** |    | ** ****Rates** |   |
| Earning Assets:                                          |   |                  |    |          |   |        |   |        |   |                    |    |                |   |
| Loans (Interest and fees)                                |   | $                     | 272,330 |          | $      | 21,533      |   | 10.53       | %      | $                       | 251,782 |                | $      | 18,855 |   | 9.98 | % |
| Federal funds sold and interest bearing deposits         |   | 2,661                 |    | 104           |   | 5.21        | %      | 1,706       |   | 83                      |    | 6.48                | %      |
| Investment securities                                    |   | 25,810                |    | 1,161         |   | 5.99        | %      | 28,276      |   | 1,336                   |    | 6.29                | %      |
| Total earning assets and interest income                 |   | $                     | 300,801 |          | $      | 22,798      |   | 10.10       | %      | $                       | 281,764 |                | $      | 20,274 |   | 9.59 | % |
|                                                     |   |                  |    |          |   |        |   |        |   |                    |    |                |   |
| Interest bearing liabilities:                            |   |                  |    |          |   |        |   |        |   |                    |    |                |   |
| Deposits:                                                |   |                  |    |          |   |        |   |        |   |                    |    |                |   |
| Savings, NOW, and                                        |   |                  |    |          |   |        |   |        |   |                    |    |                |   |
| Money Market Deposits                                    |   | $                     | 107,945 |          | $      | (1,873      | )      | 2.31        | %      | $                       | 100,188 |                | $      | (1,803 | ) | 2.40 | % |
| Time deposits                                            |   | 140,212               |    | (6,052        | )      | 5.75        | %      | 116,527     |   | (5,068                  | )       | 5.79                | %      |
| Total interest bearing deposits                          |   | $                     | 248,157 |          | $      | (7,925      | )      | 4.25        | %      | $                       | 216,715 |                | $      | (6,871 | ) | 4.22 | % |
| Other borrowings                                         |   | 6,879                 |    | (244          | )      | 4.73        | %      | 14,548      |   | (771                    | )       | 7.06                | %      |
| Total interest bearing liabilities

and interest expense |   |                  |    |          |   |        |   |        |   |                    |    |                |   |
|                                                     | $      | 255,036               |    | $             | (8,169 | )           | 4.27   | %           | $      | 231,263                 |    | $                   | (7,642 | ) | 4.40 | % |
|                                                     |   |                  |    |          |   |        |   |        |   |                    |    |                |   |
| Net interest income                                      |   |                  |    | $             | 14,629 |        |   |        |   |                    | $       | 12,632              |   |   |   |
| Net interest income as a percent percentage              |   |                  |    |          |   |        |   |        |   |                    |    |                |   |
| of average earning assets:                               |   |                  |    |          |   | 6.48        | %      |        |   |                    |    | 5.97                | %      |

 

An analysis of the change in net interestincome is as follows for the nine months ended September 30 (dollars inthousands):

 
|   | **2001 compared to 2000********Increase (decrease)  due to** |
|--------|--------------------------------------------------------------|
|   | ** **                                                   | **Volume** | ** ** | **Rate** | ** ** | **Net** | ** ** |  
Interest earned on:

 

 

 

 

 

 

 

 
Loans

 

$

1,590

 

$

(1,088

)

$

2,678

 

 
Federal funds sold and deposits in banks

 

48

 

(27

)

21

 

 
Investment securities

 

(113

)

(62

)

(175

)

 
Total interest income

 

1,525

 

999

 

2,524

 

 
 

 

 

 

 

 

 

 

 
Interest  paid on:

 

 

 

 

 

 

 

 
Savings, NOW and MMA

 

140

 

(70

)

70

 

 
Time deposits

 

1,022

 

(38

)

984

 

 
Other borrowings

 

(324

)

(203

)

(527

)

 
Total Interest expense

 

838

 

(311

)

527

 

 
 

 

 

 

 

 

 

 

 
Net  interest income

 

$

687

 

$

(1,310

)

$

1,997

 

 
 

The change in interest due to both rate andvolume has been allocated to volume and rate changes in proportion to therelationship of the absolute dollar amounts of the change in each.

 

Non-interest income increased by $546,000 inthe first three quarters of 2001, or 14.2%, from the same period of 2000.Origination fees on mortgage loans sold increased $680,000, or 94.7%, to total$1,398,000, largely as a result of increased mortgage activity due to thefavorable interest rate environment. Service charges, positively affected by initiation of a new overdraftprotection plan, increased $204,000, or 14.1%, to $1,649,000.  The other income decrease of $338,000 isprimarily due to one time gains  in2000, which included $234,000 on certain equity investments accounted for atfair value and $198,000 in gain on the sale of a former branch building.  Non-interest income for the three monthsended September 30, 2001 increased over the prior year $203,000 for the reasonsmentioned previously.

 

Non-interest expenses for the first ninemonths of 2001 increased by $1,921,000, or 16.9%, over the first three quartersof 2000.  The salary and benefitsexpense increase of $706,000 represents an 11.2% increase from the first threequarters of 2000 due to additional staffing for the new branches and increasedcommission expense related to the increase in mortgage origination fees.  The Company’s occupancy expense increase of$182,000 is a result of the additions to the branch network.  The increase in other expense of $1,033,000included $351,000 related to the new small loan product, such as increasedbusiness taxes, correspondent bank fees and credit investigations, $222,000 inincreased marketing costs related to the new branch openings, increasedoperational losses of $120,000, $68,000 increase in consulting fees incurred,and $60,000 for office supplies related to the additional branches.  The ratio of non-interest expense to averageassets increased slightly, largely as a result of costs associated with the newbranches,  to 4.98% for the nine monthsended September 30, 2001 from 4.87% for the same period in 2000.  The ratio of net overhead (non-interestexpense minus non-interest income) divided by average total assets increased to3.33% for the nine months ended September 30, 2001 from 3.22% for the sameperiod in 2000. Increases in non-interest expense for the three months endedSeptember 30, 2001 compared to the same period in 2000 related primarily toincreased commissions on mortgage loans originated and expenses related to thesmall loan program which was not yet initiated by this time in 2000.

** **
****
**First CommunityFinancial Group, Inc.**

**PART II - OTHER INFORMATION**

**Item 6 Exhibits and Reports on Form 8-K**

 

(a)  Exhibit 10

 

Employee  agreement between Company and Jon M. Jones

 

 

 

(b)  Reports on Form 8-K

 

Report  on Form 8-K filed on September 7, 2001, regarding change in registrant’s  certifying accountant

 
****
**First Community Financial Group, Inc.**

 

SIGNATURES

Pursuant to the requirements of the SecuritiesExchange Act of 1934, the registrant has duly caused this report to be signedon its behalf by the undersigned thereunto duly authorized.

 

 

FIRST  COMMUNITY FINANCIAL GROUP, INC.

 

 

(Registrant)

 

 

 

 

 

Date:  November 14, 2001

By:

/s/  Ken F. Parsons

 

 

 

Ken  F. Parsons

 

 

 

President,  Chief Executive Officer

 

 

 

 

 

 

By:

/s/  James F. Arneson

 

 

 

James  F. Arneson

 

 

 

Executive  Vice President,

 

 

 

Chief  Financial Officer

 

 

 

(Principal  Accounting Officer)

 

  |