10-Q 1 d10q.txt FORM 10-Q 03/31/2001 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark one): [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended MARCH 31, 2001 OR [ ] 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 0-14087 FIRST COASTAL CORPORATION --------------------------------- (Exact name of registrant as specified in its charter) Delaware 06-1177661 --------------------------------- -------------------------------- (State or other jurisdiction IRS Employer Identification No.) of incorporation or organization) 1200 Congress Street, Portland, Maine 04102 ---------------------------------------- ---------- (Address of principal executive offices) (Zip Code) (207) 774-5000 ---------------------------------------------------- (Registrant's telephone number, including area code) 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 [ ] The number of shares outstanding of each of the registrant's classes of common stock, as of the latest practicable date, is: Class: Common Stock, Par Value $1.00 per share Outstanding at May 7, 2001: 1,199,989 INDEX FIRST COASTAL CORPORATION AND SUBSIDIARY

2 PART I - FINANCIAL INFORMATION Item 1. FINANCIAL STATEMENTS -----------------------------

6 FIRST COASTAL CORPORATION AND SUBSIDIARY NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) MARCH 31, 2001 NOTE 1 BASIS OF PRESENTATION --------------------- The accompanying unaudited condensed consolidated financial statements of First Coastal Corporation (the "Company") and its subsidiary, Coastal Bank (the "Bank"), have been prepared in conformity with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X of the Securities and Exchange Commission. Accordingly, they do not include all of the information and notes required by generally accepted accounting principles for complete financial statements. The December 31, 2000 financial data in the Condensed Consolidated Balance Sheets is derived from the consolidated financial statements included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results and other data for the three months ended March 31, 2001 are not necessarily indicative of the results that may be expected for the year ending December 31, 2001. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2000 and other documents filed by the Company with the Securities and Exchange Commission. PENDING MERGER TRANSACTION On April 2, 2001 the Company announced that it had entered into a definitive agreement for Norway Bancorp ("Norway"), the mutual holding parent company of Norway Savings Bank ("Norway Savings"), to acquire the Company in a cash acquisition of $21.00 for each outstanding share of the Company's common stock. Under the proposed agreement, the Company will be merged into a newly formed subsidiary of Norway Bancorp, and the Bank will merge into Norway Savings Bank (the "Merger Transaction"). The acquisition of the Company and the Bank will be accomplished through a three-step process. First, the Company will merge with a newly formed subsidiary of Norway Bancorp created for the purposes of the merger. As a result of this merger, the Company will be the surviving corporation and Norway will be its sole stockholder. At the effective time of the merger, each share of the Company's common stock will be converted into the right to receive $21.00 in cash. Second, the Company will be merged into Norway. Finally, the Bank will be merged into Norway Savings, with Norway Savings being the surviving bank. The combination of the two banks is expected to create the fourth largest Maine-based bank, based on a combined approximately $580 million in assets. The combined bank will have 18 offices in southern and western Maine. The Merger Transaction is subject to the receipt of stockholder and regulatory approvals and is expected to close in the third quarter of 2001. In connection with the Merger Transaction, the Company has filed a proxy statement with the Securities and Exchange Commission. Following clearance of that proxy statement by the SEC, stockholders are urged to read the proxy statement when it becomes available because it will contain important information relating to the Merger Transaction and the special meeting of stockholders. STOCK REPURCHASE PROGRAM During the quarter ended March 31, 2001, the Company repurchased 17,700 shares of its common stock under the Company's stock repurchase program. As of March 31, 2001, the Company had repurchased a total of 160,738 shares of its common stock since inception of the repurchase program in June 1999. In light of the pending proposed Merger Transaction between the Company and Norway Bancorp, the Company has suspended all stock repurchases. 7 COMPUTATION OF EARNINGS PER SHARE Financial Accounting Standards Board ("FASB") Statement of Financial Accounting Standard ("SFAS") No. 128, Earnings Per Share, provides reporting standards for basic and diluted earnings per share. Basic earnings per share is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. There is no adjustment made to income used to calculate basic and diluted earnings per share. The following table sets forth the approximate number of shares used to calculate basic and diluted earnings per share ("EPS") for the three months ended March 31, 2001 and 2000. Three Months Ended March 31, --------------------- 2001 2000 --------------------- Weighted average shares outstanding for basic EPS 1,205,496 1,306,607 Effect of dilutive stock options /1/ 25,780 12,342 --------- --------- Weighted average shares outstanding for diluted EPS 1,231,276 1,318,949 ========= ========= /1/ Shares considered anti-dilutive and therefore excluded from the calculation of the Company's weighted average shares outstanding for diluted EPS equaled 22,000 and 55,000 for the three months ended March 31, 2001 and 2000, respectively. Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND ------- --------------------------------------------------------------- RESULTS OF OPERATIONS --------------------- BUSINESS First Coastal Corporation (the "Company"), a Delaware corporation, is a bank holding company whose sole operating subsidiary is Coastal Bank ("Coastal Bank" or the "Bank"), a Maine chartered bank currently headquartered in Portland, Maine. The Bank was formed in 1981 through the consolidation of Brunswick Savings Institution and York County Savings Bank, which were organized in 1858 and 1860, respectively. The Company has no separate operations and its business consists of the business of the Bank. The Bank is engaged in customary banking activities, including attracting deposits and various lending activities, and conducts its business from eight branches in the counties of Cumberland, Sagadahoc and York. The Bank's deposits are insured by the Federal Deposit Insurance Corporation up to the limits provided by law. This Quarterly Report on Form 10-Q, including statements made in this Management's Discussion and Analysis of Financial Condition and Results of Operations, contains certain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Certain, but not necessarily all, of such forward-looking statements can be identified by the use of forward-looking terminology, such as "believes," "expects," "may," "will," "should," "estimates," or "anticipates" or the negative thereof or other variations thereof or comparable terminology. In making forward-looking statements, the Company claims the protection of the safe harbor for forward- looking statements contained in the Private Securities Litigation Reform Act of 1995. All forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the actual transactions, results, performance or achievements of the Company to be materially different from those expressed or implied by such forward-looking statements. Although the Company has made such statements based on assumptions which it believes to be reasonable, there can 8 be no assurance that the actual transactions, results, performance or achievements will not differ materially from the Company's expectations. For example, there are a number of important factors with respect to such forward- looking statements that could materially and adversely affect the future results associated with forward-looking statements, such as (i) matters related to the Merger Transaction, (ii) the impact of changes in market rates of interest, economic conditions, or competitive factors on the Company's deposit products and loan demand; (iii) the possibility that certain transactions, such as the pending Merger Transaction, the opening of new branches, the introduction of new banking products or other planned or contemplated events, may not occur or be successful; (iv) the possibility that operating expenses may be higher than anticipated; (v) the effect of changes in the general economic and competitive conditions in markets in which the Company operates; (vi) the Company's ability to continue to control its provision for loan losses, noninterest expense and to maintain its margin; (vii) the level of demand for new and existing products; and (vii) legislative and regulatory changes, changes in tax policies, rates and regulations and changes in accounting principles, policies or guidelines. Should one or more of these risks or other uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those described in the forward-looking statements. The Company does not intend to update forward-looking statements. Investors are also directed to other information related to the Company in documents filed by the Company with the Securities and Exchange Commission. RESULTS OF OPERATIONS OVERVIEW The Company reported net income of $257,000 for the three months ended March 31, 2001 as compared to net income of $319,000 for the same period in 2000. Net income for the three months ended March 31, 2001 was positively impacted by after-tax securities gains of $161,000, offset by $91,000 in after tax expenses related to the pending merger. Additionally, operating expense for the three months ended March 31, 2001 were higher as compared to the same period in 2000, primarily attributable to costs associated with the June 2000 opening of the Bank's new Portland main office and the November 2000 opening of the Bank's Falmouth branch. NET INTEREST INCOME Net interest income before provision for loan losses increased by $66,000 for the three months ended March 31, 2001 as compared to the same period in 2000. The increase in net interest income for the three months ended March 31, 2001 was primarily the result of higher balances of average interest earning assets as compared to average interest bearing liabilities. Changes in net interest income are caused by changes in the amount and composition of interest earning assets and interest bearing liabilities, interest rate movements and the repricing of assets and liabilities as a result of these movements, changes in the level of noninterest earning assets and noninterest bearing liabilities and income recognition and income reversals related to interest earning assets which become noninterest earning assets. 9 The following table sets forth, for the periods indicated, information regarding (i) the total dollar amount of interest income from interest-earning assets and the resultant average yields, (ii) the total dollar amount of interest expense on interest-bearing liabilities and the resultant average cost, (iii) net interest income, (iv) interest rate spread, and (v) net interest margin.

(1) Annualized. (2) For purposes of these computations, loans held for sale and nonaccrual loans are included in the average loan amounts outstanding. (3) Return on interest earning assets less cost of interest bearing liabilities. (4) Net interest income divided by average interest earning assets. 10 INTEREST INCOME Interest income increased $421,000 for the three months ended March 31, 2001 as compared to the same period in 2000. The increase for the three months ended March 31, 2001 is mainly attributable to a $19.1 million increase in average loan balances (primarily consumer and commercial and industrial) and a $3.6 million increase in average interest earning cash and securities balances. The Company's yield on total interest earning assets for the three months ended March 31, 2001 equaled 8.20% as compared to 8.19% for the three months ended March 31, 2000. INTEREST EXPENSE Interest expense increased $355,000 for the three months ended March 31, 2001 as compared to the same period in 2000. The increase in interest expense for the three months ended March 31, 2001 is primarily attributable to a $21.0 million increase in average interest bearing liabilities and a 0.33% increase in the cost of funds. Interest expense on deposits increased $157,000 as a result of a 0.40% increase in interest rates paid on deposits, and a $4.3 million increase in average deposit balances, which increased as a result of the opening of the Bank's Portland main office and Falmouth branch. Interest expense on borrowings increased $198,000 as a result of increased average balances of $16.7 million, partially offset by a 0.24% decline in interest rates paid. The increase in borrowings is primarily attributable to a $13.6 million increase in secured borrowings. Secured borrowings include agreements similar to repurchase agreements that are not FDIC insured, have no term and may fluctuate or terminate at any time. As competitive pressures continue, the cost of funds to financial institutions may rise relative to market interest rates, thereby narrowing the spread on interest earning assets as compared to interest bearing liabilities. PROVISION FOR LOAN LOSSES There was no provision for loan loss expense for the three months ended March 31, 2001 and 2000. The absence of a provision for loan losses in 2001 and 2000 is primarily attributable to the continued low level of nonperforming loans and potential problem loans, and the result of management's review of the portfolio and determination of the adequacy of the allowance for loan losses at March 31, 2001. NONINTEREST INCOME Noninterest income increased $328,000 for the three months ended March 31, 2001 as compared to the same period in 2000. This increase is attributable to securities gains totaling $247,000 for the three months ended March 31, 2001 as compared to no securities gains for the same period in 2000. Additionally, service charges on deposit accounts and other income increased $75,000 for the three months ended March 31, 2001 as compared to the same period in 2000. This increase is primarily attributable to rental income received on property owned by the Bank for future branch expansion, growth in deposit balances resulting from the opening of the Bank's branches in Portland and Falmouth, and the introduction of the Bank's new relationship program for retail customers. OPERATING EXPENSES Operating expense increased $496,000 for the three months ended March 31, 2001 as compared to the same period in 2000. This increase was primarily the result of (i) a $157,000 increase in salaries and benefits expense, attributable to annual salary increases and additional staff associated with the opening of the Bank's new main office in Portland (June 2000) and branch in Falmouth (November 2000), (ii) a $109,000 increase in occupancy expense (rent and utilities) relating to the Bank's new branches, and (iii) a $230,000 increase 11 in other expenses, of which $140,000 was attributable to legal fees associated with the pending merger. The Company anticipates to incur approximately $210,000 in merger related expenses during the second and third quarter of 2001. Additionally, loan servicing costs increased $42,000 for the three months ended March 31, 2001 as compared to the same period in 2000, as a result of an increase in student loan balances, from $4.4 million at March 31, 2000 to $18.4 million at March 31, 2001. Management anticipates operating expenses for the balance of 2001 and beyond to further increase as a result of business initiatives that are currently underway or contemplated, including (i) the lease expense and related occupancy costs associated with its new main office, including related furniture, fixtures and equipment expenses, (ii) the opening of the Bank's newest branch in Falmouth, Maine, (iii) the opening of additional branches over the next several years in the Greater Portland market, (iv) the introduction of a number of new retail banking products, and (v) the Bank's continued expansion of its overall banking activities. FINANCIAL CONDITION TOTAL ASSETS At March 31, 2001, total assets equaled $223.0 million, representing an increase of $3.9 million (or 1.8%), as compared to total assets of $219.1 million at December 31, 2000. This increase was primarily the result of an $11.5 million increase in loan balances and a $6.6 million increase in investment securities. The funding of these increases was accomplished in part by the reallocation of $14.3 million in cash and cash equivalents to loans and securities, with the remaining increases funded by increased deposit balances, offset in part by a reduction in borrowings. INVESTMENTS The Company's investment portfolio is comprised primarily of U.S. government and agency obligations. Total investment securities increased $6.6 million during the quarter, from $45.5 million at December 31, 2000 to $52.1 million at March 31, 2001. This increase is primarily attributable to the purchase of $20.2 million in mortgage-backed securities and $1.0 million in corporate notes, offset in part by the sale of $8.5 million in U.S. government obligations, $1.0 million in government agency notes, $3.9 million in mortgage-backed securities and $1.1 million in prepayments and amortization on mortgage-backed securities, amortization of premiums on investment securities and the net change in the unrealized loss on available for sale securities. The following table sets forth the amortized cost and fair value of investment securities for each major security type at March 31, 2001.

The after-tax unrealized gain (loss) on investment securities classified as available for sale was $332,000 and $(61,000), at March 31, 2001 and December 31, 2000, respectively. 12 The following table represents the contractual maturities for investments in debt securities for each major security type at March 31, 2001.

LOANS HELD FOR SALE Loans held for sale equaled $1.1 million at March 31, 2001 as compared to $0.3 at December 31, 2000, an increase of $0.8 million. The outstanding dollar amount of loans held for sale can vary greatly from period to period, affected by such factors as mortgage origination levels, the timing and delivery of loan sales, changes in market interest rates and asset liability management strategies. LOANS Loans consisted of the following: March 31, December 31, ----------------------------- (in thousands) 2001 2000 ---------------------------------------------------------- Real estate mortgage loans: Residential $ 26,841 $ 27,745 Commercial 66,964 65,417 Real estate construction 4,031 3,450 Commercial and industrial 15,221 13,107 Consumer and other 30,023 21,890 ----------------------------- Total $ 143,080 $ 131,609 ============================= Loans increased $11.5 million (or 8.7%) at March 31, 2001 as compared to December 31, 2000. The increase is attributable to an $8.1 million increase in consumer loans, a $2.1 million increase in commercial and industrial loans, a $1.6 million increase in commercial real estate loans and a $0.6 million increase in construction loans, partially offset by a $0.9 million decline in residential mortgage balances. The increase in consumer loans during the quarter ended March 31, 2001 is primarily the result of the purchase of $5.6 million in student loans and $2.3 million in student loan originations. The yield on student loans adjusts quarterly through the special allowance received from the federal government and each loan carries a minimum guarantee of the federal government of 98% of the original principal balance. The Bank purchased these loans in part to improve the Company's overall interest rate sensitivity position and may consider additional purchases of student loans. 13 ALLOWANCE FOR LOAN LOSSES ("ALLOWANCE") The Company's Allowance was $2.9 million and $2.8 million at March 31, 2001 and December 31, 2000, respectively. For the three months ended March 31, 2001, loan loss recoveries equaled $120,000 and there were no charged-off loans. The Allowance represented 2.1% of total loans at March 31, 2001 and December 31, 2000. Management believes that in accordance with the Bank's Allowance for Loan Loss Policy, the Allowance is adequate at March 31, 2001. However, future additions to the Allowance may be necessary based on changes in the financial condition of various borrowers, new information that becomes available relative to various borrowers and loan collateral, growth in the size or changes in the mix or concentration risk of the loan portfolio, as well as changes in local, regional or national economic conditions. In addition, various regulatory authorities, as an integral part of their examination process, periodically review the Bank's Allowance. Such authorities may require the Bank to increase the Allowance based upon information available to them and their judgments at the time of their examination. NONPERFORMING ASSETS Information with respect to nonperforming assets is set forth below: March 31, December 31, ---------------------------- (in thousands) 2001 2000 --------------------------------------------------------------------- Nonaccrual loans $ 1,276 $ 1,358 Accruing loans past due 90 days or more 712 352 Restructured loans - - Real estate owned and repossessions 46 46 --------- --------- Total $ 2,034 $ 1,756 ========= ========= Nonperforming assets increased $278,000 at March 31, 2001 as compared to December 31, 2000. The $712,000 balance of accruing loans past due 90 days or more includes $633,000 in government guaranteed student loans, which carry a minimum guarantee of 98% of the original principal balance. The increase in the balance of accruing loans past due 90 days or more at March 31, 2001 as compared to December 31, 2000 is primarily the result of a $7.9 million increase in student loan balances, which generally carry a higher deliquency rate than more traditional unsecured loans. While the current level of nonperforming assets remains low compared to historical levels, deterioration in the local economy or real estate market, or upward movements in interest rates could adversely impact the performance and/or value of the underlying collateral for these loans and could have an adverse impact on the Bank's loan portfolio, and in particular, currently performing commercial real estate loans. In addition, deterioration in the local economy or adverse changes in the financial condition of various borrowers could have an impact on the Bank's entire loan portfolio (including commercial real estate). These factors could result in an increased incidence of loan defaults and, as a result, an increased level of nonperforming loans and assets. In addition, while the current level of nonperforming assets is encouraging, this level is considered by management to be so low that it is unlikely to be sustained. IMPAIRED LOANS At March 31, 2001, the recorded investment in loans for which impairment has been recognized in accordance with SFAS No. 114 totaled $1,468,000 as compared to $1,358,000 at December 31, 2000. At March 31, 2001, the corresponding allocated reserves totaled $53,000 (relating to two impaired loans with a balance of $599,000). All nonaccrual loans were classified as impaired at March 31, 2001 and December 31, 2000. The income recorded on a cash basis relating to impaired loans equaled $40,000 and $8,000 for the three months ended March 31, 2001 and 2000, respectively. The average balance of outstanding impaired loans 14 was $1,468,000 for the three months ended March 31, 2001 and $656,000 for the twelve months ended December 31, 2000. REAL ESTATE OWNED ("REO") REO consists of properties acquired through mortgage loan foreclosure proceedings, repossessions or in full or partial satisfaction of outstanding loan obligations. At March 31, 2001 and December 31, 2000 the Bank's REO properties totaled $46,000, consisting of one residential property. LIQUIDITY - BANK Deposits totaled $149.2 million at March 31, 2001, an increase of $5.9 million (or 4.1%) from the level of $143.4 million at December 31, 2000. Deposit balances were as follows: March 31, December 31, ----------------------------- (in thousands) 2001 2000 ------------------------------------------------------------------ Noninterest bearing demand deposits $ 14,407 $ 14,119 Interest bearing demand deposits 16,550 16,018 Savings and escrow deposits 62,000 58,066 Time deposits 56,275 55,155 ---------- ---------- Total $ 149,232 $ 143,358 ========== ========== The $5.9 million increase in deposit balances was primarily attributable to growth in savings account balances resulting from the opening of the Bank's new main office in June 2000 and Falmouth branch in November 2000. LIQUIDITY - COMPANY On a parent company only basis ("parent"), the Company conducts no separate operations. Its business consists of the operations of its banking subsidiary. In addition to debt service relating to the promissory notes issued by the Company to a group of three Maine savings banks (the "Savings Banks") (the outstanding aggregate principal amount of such notes was $1.7 million at March 31, 2001) the Company's expenses consist primarily of Delaware franchise taxes associated with the Company's authorized capital stock and various other expenses. These expenses, including legal, certain audit and other professional fees, insurance and other expenses, are allocated between the Bank and the Company based upon the relative benefits derived. During the quarter ended March 31, 2001 the Company repurchased 17,700 shares of its common stock under the stock repurchase program authorized by its Board of Directors. As of March 31, 2001, the Company had repurchased a total of 160,738 shares of its common stock since inception of the repurchase program in June 1999. In light of the pending Merger Transaction between the Company and Norway, the Company has suspended all stock repurchases. Payment of dividends by the Company on its stock is subject to various restrictions. Among these restrictions is a requirement under Delaware corporate law that dividends may be paid by the Company only out of its surplus or, in the event there is no surplus, out of its net profits for the fiscal year in which the dividend is declared and/or the preceding fiscal year. Additionally, under the terms of the pending Merger 15 Transaction between the Company and Norway, the Company is prohibited from paying dividends to its stockholders. The principal source of cash for the Company would normally be a dividend from the Bank; however, certain restrictions also exist regarding the ability of the Bank to transfer funds to the Company in the form of cash dividends, loans or advances. Maine corporate law generally provides that dividends may only be paid out of unreserved and unrestricted earned surplus or unreserved and unrestricted net earnings of the current fiscal year and the next preceding fiscal year taken as a single period. Maine banking law also imposes certain restrictions, including the requirement that the Bank establish and maintain adequate levels of capital as set forth in rules adopted by the Maine Bureau of Banking. The Loan Agreement dated August 4, 1999 (the "Loan Agreement"), between the Company and the Savings Banks contains certain terms, restrictions and covenants, such as restrictions regarding the conditions under which cash dividends may be paid by the Company (including a prohibition on the payment of cash dividends to its stockholders as long as the Company's debt-to-equity ratio on a parent-only basis exceeds 50%), and a requirement that the Company and the Bank maintain certain minimum capital ratios. At March 31, 2001, the Company's debt-to-equity ratio and regulatory capital ratios would have permitted the payment of a dividend by the Company under the terms of the Loan Agreement. On April 30, 2001, the Bank paid the Company a cash dividend of $1,398,596. At March 31, 2001, the parent's cash and cash equivalents totaled $67,000. The Company suspended the payment of cash dividends to its stockholders in the fourth quarter of 1989 and has not paid any cash dividends to its stockholders since that time. 16 CAPITAL - BANK The table below sets forth the regulatory capital requirements and capital ratios for the Bank at March 31, 2001 and December 31, 2000:

CAPITAL - COMPANY The table below sets forth the regulatory capital requirements and capital ratios for the Company at March 31, 2001 and December 31, 2000:

17 Item 3. Quantitative and Qualitative Disclosures About Market Risk ------------------------------------------------------------------- Not applicable. PART II - OTHER INFORMATION Item 1. Legal Proceedings ------------------------- Not applicable. Item 2. Changes in Securities and Use of Proceeds -------------------------------------------------- Not applicable. Item 3. Defaults Upon Senior Securities --------------------------------------- Not applicable. Item 4. Submission of Matters to a Vote of Security Holders ----------------------------------------------------------- Not applicable. Item 5. Other Information ------------------------- Not applicable. Item 6. Exhibits and Reports on Form 8-K ---------------------------------------- (a) None. (b) The Company filed a Current Report on Form 8-K on March 22, 2001 announcing the date of its 2001 annual meeting of stockholders. Subsequent to the filing of the Form 8-K, the meeting has been postponed as a result of the pending Merger Transaction. 18 FIRST COASTAL CORPORATION 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. FIRST COASTAL CORPORATION Date: May 14, 2001 By: /s/ Gregory T. Caswell ------------------------------------- Gregory T. Caswell President and Chief Executive Officer Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Date: May 14, 2001 By: /s/ Gregory T. Caswell ------------------------------------- Gregory T. Caswell President and Chief Executive Officer (Principal Executive Officer) Date: May 14, 2001 By: /s/ Dennis D. Byrd ------------------------------------- Dennis D. Byrd Vice President and Treasurer (Principal Financial and Accounting Officer) 19

FIRST COASTAL CORP 10-Q