UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
- --- EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2000
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: 0-26360
FRANKFORT FIRST BANCORP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 61-1271129
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
216 West Main Street, Frankfort, Kentucky 40602
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(Address of principal executive offices) (Zip Code)
(502) 223-1638
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant has filed all documents and
reports required to be filed by Sections 12, 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock as of February 9, 2001: 1,246,108
Page 1 of 13 pages
page 1
CONTENTS
PART I. FINANCIAL INFORMATION PAGE
--------------------------------------------------------------
Item 1 Consolidated Statements of Financial Condition at
December 31, 2000 and June 30, 2000 3
Consolidated Statements of Earnings for the three
months and six months ended December 31,
2000 and 1999 4
Consolidated Statements of Cash Flows for the six
months ended December 31, 2000 and 1999 5
Notes to Consolidated Financial Statements 6
Item 2 Management's Discussion and Analysis
of Financial Condition and Results of
Operations 8
PART II. OTHER INFORMATION
-----------------
Item 1 Legal Proceedings 12
Item 2 Changes in Securities and Use of Proceeds 12
Item 3 Defaults upon Senior Securities 12
Item 4 Submission of Matters to a
Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
SIGNATURES 13
- ----------
page 2
FRANKFORT FIRST BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except per share data)
December 31, June 30,
2000 2000
ASSETS (Audited)
Cash and due from banks $ 167 $ 133
Interest-bearing deposits in other financial institutions 2,095 845
-------- --------
Cash and cash equivalents
2,262 978
Certificates of deposit in other financial institutions 100 100
Investment securities held to maturity- at amortized cost,
approximate fair market value of $1,998 and $1,965 as of
December 31, 2000 and June 30, 2000 1,987 1,979
Loans receivable - net 139,149 137,792
Office premises and equipment - at depreciated cost 1,420 1,453
Federal Home Loan Bank stock - at cost 2,476 2,351
Accrued interest receivable on loans 431 413
Accrued interest receivable on investments and
interest-bearing deposits 42 41
Prepaid expenses and other assets 41 77
Prepaid federal income taxes 303 251
Deferred federal income taxes -- 19
-------- --------
Total assets $148,211 $145,454
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 80,771 $ 82,502
Advances from the Federal Home Loan Bank 48,090 42,108
Other borrowed money -- 373
Advances by borrowers for taxes and insurance 25 337
Accrued interest payable 44 59
Deferred federal income taxes 24 --
Other liabilities 1,249 1,251
-------- --------
Total liabilities 130,203 126,630
Shareholders' equity
Preferred stock, 500,000 shares authorized, $.01 par
value; no shares issued -- --
Common stock, 3,750,000 shares authorized, $.01
par value; 1,672,443 shares issued 17 17
Additional paid-in capital 5,876 5,876
Retained earnings - restricted 18,549 18,412
Less 426,335 and 352,335 shares of treasury stock-at cost (6,434) (5,481)
-------- --------
Total shareholders' equity 18,008 18,824
-------- --------
Total liabilities and shareholders' equity $148,211 $145,454
======== ========
Book value per share $ 14.45 $ 14.26
======== ========
page 3
FRANKFORT FIRST BANCORP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
Six months ended Three months ended
December 31, December 31,
2000 1999 2000 1999
Interest income
Loans $5,246 $4,795 $2,652 $2,426
Investment securities 66 46 33 19
Interest-bearing deposits and other 118 90 61 50
------ ------ ------ ------
Total interest income 5,430 4,931 2,746 2,495
Interest expense
Deposits 2,020 1,920 1,006 958
Borrowings 1,398 985 730 524
------ ------ ------ ------
Total interest expense 3,418 2,905 1,736 1,482
------ ------ ------ ------
Net interest income 2,012 2,026 1,010 1,013
Provision for losses on loans -- -- -- --
------ ------ ------ ------
Net interest income after provision
for losses on loans 2,012 2,026 1,010 1,013
Other operating income 25 23 11 13
General, administrative and other expense
Employee compensation and benefits 465 460 228 231
Occupancy and equipment 77 80 39 42
Federal deposit insurance premiums 8 25 4 13
Franchise and other taxes 57 50 28 29
Data processing 61 66 30 32
Other operating 173 162 90 80
------ ------ ------ ------
Total general, administrative
and other expense 841 843 419 427
------ ------ ------ ------
Earnings before income taxes 1,196 1,206 602 599
Federal income taxes
Current 364 374 187 173
Deferred 43 36 18 31
------ ------ ------ ------
Total federal income taxes 407 410 205 204
------ ------ ------ ------
NET EARNINGS $ 789 $ 796 $ 397 $ 395
====== ====== ====== ======
Basic Earnings Per Share $ 0.62 $ 0.54 $ 0.32 $ 0.27
====== ====== ====== ======
Diluted Earnings Per Share $ 0.62 $ 0.53 $ 0.32 $ 0.27
====== ====== ====== ======
page 4
FRANKFORT FIRST BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended December 31,
(In thousands)
2000 1999
Cash flows from operating activities:
Net earnings for the period $ 789 $ 796
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Amortization of discounts and premiums on loans,
investments, and mortgage backed securities, net (8) 3
Amortization of deferred loan origination fees (19) (7)
Depreciation and amortization 36 40
Federal Home Loan Bank stock dividends (90) (62)
Increase (decrease) in cash due to changes in:
Accrued interest receivable (19) (1)
Prepaid expenses and other assets 36 77
Accrued interest payable (15) (10)
Other liabilities (2) 49
Federal income taxes
Current (52) (57)
Deferred 43 36
-------- -------
Net cash provided by operating activities 699 864
Cash flows provided by (used in) investing activities:
Purchase of investment securities designated as held
to maturity -- (984)
Proceeds from maturity of investment securities -- 1,000
Purchase of Federal Home Loan Bank stock (35) (228)
Loan principal repayments 10,698 13,436
Loan disbursements (12,036) (17,136)
Purchase of office premises and equipment (3) (54)
-------- -------
Net cash used in investing activities (1,376) (3,966)
Cash flows provided by (used in) financing activities:
Net decrease in deposit accounts (1,731) (2,579)
Proceeds from Federal Home Loan Bank advances 14,650 18,550
Repayment of Federal Home Loan Bank advances (8,668) (12,448)
Proceeds from other borrowed money 460 932
Repayment of other borrowed money (833) (1,216)
Advances by borrowers for taxes and insurance (312) (288)
Dividends paid on common stock (652) (703)
Acquisition of treasury stock (953) (808)
-------- -------
Net cash provided by financing activities 1,961 1,440
-------- -------
Net increase (decrease) in cash and cash equivalents 1,284 (1,662)
Cash and cash equivalents at beginning of period 978 2,591
-------- -------
Cash and cash equivalents at end of period $ 2,262 $ 929
======== =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes $ 415 $ 430
======== =======
Interest on deposits and borrowings $ 3,433 $ 2,915
======== =======
page 5
FRANKFORT FIRST BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements were prepared
in accordance with instructions for Form 10-Q and therefore do not include all
disclosures necessary for a complete presentation of the statements of financial
condition, statements of earnings, and statements of cash flows in conformity
with generally accepted accounting principles. However, all adjustments which
are, in the opinion of management, necessary for the fair presentation of the
interim financial statements have been included and all such adjustments are of
a normal recurring nature. The results of operations for the six and three month
periods ended December 31, 2000 and 1999 are not necessarily indicative of the
results which may be expected for the entire year. These financial statements
should be read in conjunction with the audited consolidated financial statements
and the notes thereto included in the Company's Annual Report on Form 10-K for
the year ended June 30, 2000.
(2) PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
Frankfort First Bancorp, Inc. (the Company) and First Federal Savings Bank of
Frankfort (the Bank). All significant intercompany items have been eliminated.
(3) EARNINGS PER SHARE
Basic earnings per share is computed based upon the weighted average common
shares outstanding which totaled 1,278,385 and 1,250,347 for the six and three
month periods ended December 31, 2000, respectively, and 1,474,587 and 1,456,338
for the six and three month periods ended December 31, 1999.
Diluted earnings per share is computed taking into consideration common
shares outstanding and dilutive potential common shares, i.e. the Company's
stock option plan. Weighted-average common shares deemed outstanding for
purposes of computing diluted earnings per share totaled 1,494,915 and 1,477,878
for the six and three month periods ended December 31, 1999, respectively.
Incremental shares related to the assumed exercise of stock options included in
the calculation of diluted earnings per share totaled 20,328 and 21,540 for the
six and three month periods ended December 31, 1999. For the six and three month
periods ended December 31, 2000, there were no incremental shares related to the
assumed exercise of stock options due to the non-dilutive nature of the options
during those periods. The Company has 239,492 stock options outstanding of which
234,745 have an exercise price of $13.80 per share and 4,747 have an exercise
price of $14.91 per share.
(4) EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS
Accounting for Derivative Instruments and Hedging Activities. In June,
1998, the Financial Accounting Standards Board (the "FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for Derivative
Instruments and Hedging Activities," which requires entities to recognize all
derivatives in their financial statements as either assets or liabilities
measured at fair value. SFAS No. 133 also specifies new methods of accounting
for hedging transactions, prescribes the items and transactions that may be
hedged, and specifies detailed criteria to be met to qualify for hedge
accounting.
The definition of a derivative financial instrument is complex, but in
general, it is an instrument with one or more underlyings, such as an interest
rate or foreign exchange rate, that is applied to a notional amount, such as an
amount of currency, to determine the settlement amount(s). It generally requires
no significant initial investment and can be settled net or by delivery of an
asset that is readily convertible to cash. SFAS No. 133 applies to derivatives
embedded in other contracts, unless the underlying of the embedded derivative is
clearly and closely related to the host contract.
page 6
SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years
beginning after June 15, 2000. On adoption, entities are permitted to transfer
held-to-maturity debt securities to the available-for-sale or trading category
without calling into question their intent to hold other debt securities to
maturity in the future. Management adopted SFAS No. 133 effective July 1, 2000,
as required, without material impact on the Company's financial statements.
In September 2000, the FASB issued SFAS No. 140 "Accounting for Transfers
and Servicing of Financial Assets and Extinguishments of Liabilities", which
revises the standards for accounting for securitizations and other transfers of
financial assets and collateral and requires certain disclosures, but carries
over most of the provisions of SFAS No. 125 without reconsideration. SFAS No.
140 is effective for transfers and servicing of financial assets and
extinguishments of liabilities occurring after March 31, 2001. The Statement is
effective for recognition and reclassification of collateral and for disclosures
relating to securitization transactions and collateral for fiscal years ending
after December 15, 2000. SFAS No. 140 is not expected to have a material effect
on the Company's financial position or results of operations.
page 7
MANAGEMENT'S DISCUSSION AND ANALYSIS
NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. Economic circumstances, the Company's operations, and the
Company's actual results could differ significantly from those discussed in the
forward-looking statements. Some of the factors that could cause or contribute
to such differences are discussed herein but also include changes in the economy
and interest rates in the nation and the Company's market area generally.
GENERAL
The principal business of the Bank consists of accepting deposits from the
general public and investing these funds in loans secured by one- to four-family
owner-occupied residential properties in the Bank's primary market area. The
Bank also invests in loans secured by non-owner occupied one- to four-family
residential properties and some churches located in the Bank's primary market
area. The Bank also maintains an investment portfolio which includes FHLB stock,
FHLB certificates of deposit, U.S. Government Agency-issued bonds, and other
investments.
COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 2000 AND JUNE 30, 2000
ASSETS: The Company's total assets increased from $145.5 million at June
30, 2000 to $148.2 million at December 31, 2000, an increase of $2.7 million or
1.9%. The increase in total assets is primarily attributable to an increase in
the Company's net loans receivable and an increase in cash and cash equivalents.
Net loans receivable increased $1.4 million or 1.0% to $139.1 million at
December 31, 2000. Cash and cash equivalents increased by $1.3 million or 131.3%
to $2.3 million at December 31, 2000.
LIABILITIES: The Company's total liabilities increased from $126.6 million
at June 30, 2000 to $130.2 million at December 31, 2000, an increase of $3.6
million or 2.8%. The increase in total liabilities is primarily attributable to
an increase in Advances from the Federal Home Loan Bank ("Advances"). Advances
increased $6.0 million or 14.2% to $48.1 million at December 31, 2000. The
increase has been utilized to fund new loans, replace lost deposits and to make
dividends to the Company. The Company, in turn, has repurchased some of its
common stock (see "Stock Repurchase"). Deposits decreased from $82.5 million at
June 30, 2000 to $80.8 million at December 31, 2000, a decrease of $1.7 million
or 2.1%.
SHAREHOLDERS' EQUITY: Shareholders' equity decreased from $18.8 million at
June 30, 2000 to $18.0 million at December 31, 2000, a decrease of $816,000 or
4.3%. This decrease is a result of the Company's net earnings of $789,000 less
the Company's dividends declared during the period of $652,000 and less the
acquisition of the Company's own stock at a cost of $953,000 (see "Dividends"
and "Stock Repurchase"). The Company's book value per share was $14.45 at
December 31, 2000 compared to $14.26 at June 30, 2000.
COMPARISON OF RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED DECEMBER 31, 2000
AND DECEMBER 31, 1999
NET EARNINGS: The Company's net earnings decreased $7,000 or 0.9% to
$789,000 for the six month period ended December 31, 2000 compared to $796,000
for the six month period ended December 31, 1999. This decrease is primarily
attributable to a decrease in net interest income of $14,000. The Company's
basic earnings per share rose $0.08 or 14.8% from $0.54 per share for the six
month period ended December 31, 1999 to $0.62 per share for the six month period
ended December 31, 2000. The Company's diluted earnings per share rose $0.09 or
17.0% from $0.53 per share for the six month period ended December 31, 1999 to
$0.62 per share for the six month period ended December 31, 2000. The increase
in the per share amounts was due to a decrease in the weighted average number of
shares outstanding.
NET INTEREST INCOME: Net interest income totaled $2.0 million for the six
month period ended December 31, 2000, a decrease of $14,000 or 0.7% from the
same period in 1999. The decrease was primarily due to an increase in total
interest expense.
page 8
INTEREST INCOME: Interest income increased $499,000 or 10.1% to $5.4
million for the six month period ended December 31, 2000. The increase in
interest income from loans was primarily responsible for the increased level of
interest income for the period. Interest income from loans increased $451,000 or
9.4% to $5.2 million for the six month period ended December 31, 2000. Interest
income from interest-bearing deposits and other increased from $90,000 for the
six month period ended December 31, 1999 to $118,000 for the six month period
ended December 31, 2000, an increase of $28,000 or 31.1%. Interest income from
investment securities increased from $46,000 for the six month period ended
December 31, 1999 to $66,000 for the six month period ended December 31, 2000,
an increase of $20,000 or 43.5%. Management believes that generally rates paid
on short-term investments and deposits are less than the rates that can be
earned on mortgage loans, and prefers to use excess funds to either make new
loans or reduce advances. The increase in interest income from loans is
attributable to both an increase in volume of the Company's loan portfolio as
well as an increase in the rate earned on the portfolio.
INTEREST EXPENSE: Interest expense increased $513,000 or 17.7% to $3.4
million for the six month period ended December 31, 2000. This increase was
primarily due to an increase in interest expense on borrowings which increased
$413,000 or 41.9% from $985,000 for the six month period ended December 31, 1999
to $1.4 million for the six month period ended December 31, 2000. The increase
is a result of an increase in the average amount of Advances outstanding as well
as an increase in the average interest rate paid on those borrowings.
Supplementing the increase in interest expense on Advances was an increase of
$100,000 or 5.2% in interest expense on deposits, which increased to $2.0
million for the six month period ended December 31, 2000.
PROVISION FOR LOSSES ON LOANS: The provision for losses on loans remained
constant with no provision for the six month periods ended December 31, 2000 or
1999. Management believed, on the basis of its analysis of the risk profile of
the Company's assets, that the allowance for loan losses, which was $101,000 and
$100,000, was appropriate at December 31, 2000 and 1999, respectively. In
determining the appropriate provision, management considers a number of factors,
including specific loans in the Company's portfolio, real estate market trends
in the Company's market area, economic conditions, interest rates, and other
conditions that may affect a borrower's ability to comply with repayment terms.
There can be no assurance that the allowance will be adequate to cover losses on
nonperforming assets in the future.
OTHER OPERATING INCOME: Other operating income increased $2,000 or 8.7%
from $23,000 for the six month period ended December 31, 1999 to $25,000 for the
six month period ended December 31, 2000. Other operating income is not a
significant component of the Company's statement of operations.
GENERAL, ADMINISTRATIVE, AND OTHER EXPENSES: General, administrative, and
other expense decreased $2,000 or 0.2% from $843,000 for the six month period
ended December 31, 1999 to $841,000 for the six month period ended December 31,
2000. The decrease was comprised primarily of a $17,000 or 68.0% decrease in
Federal deposit insurance premiums and a $5,000 or 7.6% decrease in data
processing expense, which were partially offset by an $11,000 or 6.8% increase
in other operating expenses and a $7,000 or 14.0% increase in franchise and
other taxes. The decrease in Federal deposit insurance premiums is due to a
reduction in premium rates year to year. Effective January 1, 2000, the FICO
assessment rate for SAIF-insured institutions was reduced from 5.920 basis
points to 2.120 basis points. Further reductions in the assessment rate were
made for each quarterly period of 2000. As of January 1, 2001, the current FICO
assessment rate is set at 1.96 basis points. The increase in other operating
expenses was a result of an isolated incident which management does not expect
to reoccur.
INCOME TAX: The Company's provision for federal income taxes decreased from
$410,000 for the six month period ended December 31, 1999 to $407,000 for the
six month period ended December 31, 2000. The decrease was a result of the
decrease in the Company's pretax earnings. The Company's effective tax rate was
34.0% for the six month periods ended December 31, 2000 and 1999.
NON-PERFORMING ASSETS: At December 31, 2000, the Bank had approximately
$215,000 in loans 90 days or more past due but still accruing. These delinquent
loans represent 0.2% of the Bank's net loans. The Bank had $47,000 in loans
listed as special mention in addition to $587,000 in loans internally classified
as Substandard. No loans were classified as Doubtful or Loss. The Bank has not
charged off any loans during the period.
page 9
DIVIDENDS: On September 13, 2000, the Company announced a dividend policy
whereby it will pay a quarterly cash dividend of $0.26 per share, per quarter,
payable on the 15th day of the month following the end of each quarter, to
shareholders of record as of the last business day of each quarter. This
represented an increase of $0.02 or 8.3% from the previous quarterly dividend of
$0.24 per share, which was established on September 15, 1999. The Board of
Directors determined that the payment of a dividend was appropriate in light of
the Company's capital position and financial condition. Although the Board of
Directors has adopted this policy, the future payment of dividends is dependent
upon the Company's financial condition, earnings, equity structure, capital
needs, regulatory requirements, and economic conditions. The Company last paid a
dividend on October 13, 2000. At December 31, 2000, the Company had recorded
dividends payable of $324,000 for the payment of a dividend on January 12, 2001.
STOCK REPURCHASES: On September 13, 2000, the Company announced a plan to
purchase up to 65,000 shares of the Company's common stock, which represented
approximately 5% of the outstanding common stock at that time. Management
believes that the repurchase program should be completed within nine months of
commencement. The Board of Directors considers the Company's common stock to be
an attractive investment, and the repurchase program may improve liquidity in
the market for the common stock and result in increased per share earnings and
book value per share. The Board will continue to consider stock repurchases and
in the future may enact similar programs depending on market conditions,
interest rates, and the availability of funds. At February 9, 2001, 15,000
shares had been repurchased at an average cost of $12.94 per share.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED DECEMBER 31, 2000
AND DECEMBER 31, 1999
NET EARNINGS: The Company's net earnings increased $2,000 or 0.5% to
$397,000 for the three months ended December 31, 2000 compared to $395,000 for
the three months ended December 31, 1999. This increase is primarily
attributable to a decrease in general, administrative and other expense of
$8,000. The Company's basic and diluted earnings per share rose $0.05 or 18.5%
from $0.27 per share for the three month period ended December 31, 1999 to $0.32
per share for the three month period ended December 31, 2000.
NET INTEREST INCOME: Net interest income totaled $1.0 million for the three
months ended December 31, 2000, a decrease of $3,000 or 0.3% from the same
period in 1999. The decrease was primarily due to an increase in total interest
expense.
INTEREST INCOME: Interest income increased $251,000 or 10.1% to $2.7
million for the three month period ended December 31, 2000. This was primarily
attributed to the increase in interest income from loans which increased
$226,000 or 9.3% to $2.7 million for the three month period ended December 31,
2000. Interest income from investment securities increased from $19,000 for the
three month period ended December 31, 1999 to $33,000 for the three month period
ended December 31, 2000, an increase of $14,000 or 73.7%. Interest income from
interest-bearing deposits and other increased from $50,000 for the three month
period ended December 31, 1999 to $61,000 for the three month period ended
December 31, 2000, an increase of $11,000 or 22.0%. Management believes that
generally rates paid on short-term investments and deposits are less than the
rates that can be earned on mortgage loans, and prefers to use excess funds to
either make new loans or reduce advances. The increase in interest income from
loans is attributable to both an increase in volume of the Company's loan
portfolio as well as an increase in the rate earned on the portfolio.
INTEREST EXPENSE: Interest expense increased $254,000 or 17.1% to $1.7
million for the three month period ended December 31, 2000. This increase was
primarily due to an increase in interest expense on borrowings which increased
$206,000 or 39.3% from $524,000 for the three month period ended December 31,
1999 to $730,000 for the three month period ended December 31, 2000. The
increase is a result of an increase in the average amount of Advances
outstanding as well as an increase in the average interest rate paid on those
borrowings. Also, the Company experienced an increase of $48,000 or 5.0% in
interest expense on deposits, which increased from $958,000 for the three month
period ended December 31, 1999, to $1.0 million for the three month period ended
December 31, 2000.
page 10
PROVISION FOR LOSSES ON LOANS: The provision for losses on loans remained
constant with no provision for the three month periods ended December 31, 2000
or 1999. Management believed, on the basis of its analysis of the risk profile
of the Company's assets, that the allowance for loan losses, which was $101,000
and $100,000, was appropriate at December 31, 2000 and 1999, respectively. In
determining the appropriate provision, management considers a number of factors,
including specific loans in the Company's portfolio, real estate market trends
in the Company's market area, economic conditions, interest rates, and other
conditions that may affect a borrower's ability to comply with repayment terms.
There can be no assurance that the allowance will be adequate to cover losses on
nonperforming assets in the future.
OTHER OPERATING INCOME: Other operating income decreased $2,000 or 15.4%
from $13,000 for the three month period ended December 31, 1999 to $11,000 for
the three month period ended December 31, 2000. Other operating income is not a
significant component of the Company's statement of operations.
GENERAL, ADMINISTRATIVE, AND OTHER EXPENSES: General, administrative, and
other expense decreased $8,000 or 1.9% from $427,000 for the three month period
ended December 31, 1999 to $419,000 for the three month period ended December
31, 2000. The decrease was primarily the result of a $9,000, or 69.2% decrease
in Federal deposit insurance premiums. Offsetting the decrease in Federal
deposit insurance premiums was an increase in other operating expense of $10,000
or 12.5%. The reduction in Federal deposit insurance premiums was due to a
reduction in premium rates year to year due to the aforementioned reduction in
the FICO assessment. The increase in other operating expenses was a result of an
isolated incident which management does not expect to reoccur.
INCOME TAX: The Company's provision for federal income taxes increased from
$204,000 for the three month period ended December 31, 1999 to $205,000 for the
three month period ended December 31, 2000. The increase was a result of the
increase in the Company's pretax earnings. The Company's effective tax rate was
34.0% for the three month period ended December 31, 2000 and 34.1% for the three
month period ended December 31, 1999.
page 11
PART II.
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
(a) The registrant held its Annual Meeting of Stockholders on November 14,
2000.
(b) Not applicable.
(c) The only matter to be voted upon at the Annual Meeting was the
election of three individuals as directors.
Nominee Votes For Votes Withheld
------- --------- --------------
William M. Johnson 1,115,679 11,257
Frank McGrath 1,114,531 12,405
Herman D. Regan, Jr. 1,114,591 12,345
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibits: None
Reports on Form 8-K: None
page 12
SIGNATURE
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.
Frankfort First Bancorp, Inc.
Date: February 9, 2001
/S/ Don D. Jennings
----------------------------------
. Don D. Jennings
President
/S/ R. Clay Hulette
----------------------------------
R. Clay Hulette
Vice President and Treasurer
(Principal Financial and Accounting
Officer)
page 13