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 September 30, 1998
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: No. 0-26360
FRANKFORT FIRST BANCORP, INC.
_______________________________________________________________
(Exact name of registrant as specified in its charter)
Delaware 61-1271129
____________________ ______________________
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification Number)
216 West Main Street, Frankfort, Kentucky 40602
________________________________________________________________
(Address of principal executive offices) (Zip Code)
(502) 223-1638
________________________________________________________________
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
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 November 5, 1998:
1,562,248
Page 1 of 13 pages
page 1
CONTENTS
PART I - FINANCIAL INFORMATION PAGE
-----------------------------------------------------
Item 1. Consolidated Statements of Financial Condition
at September 30, 1998 and June 30, 1998 3
Consolidated Statements of Earnings for the
three months ended September 30, 1998 and 1997 4
Consolidated Statements of Cash Flows for the
three months ended September 30, 1998 and 1997 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 12
Item 3 Defaults upon Senior Securities 12
Item 4 Submission of Matters to a Vote
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 share data)
September 30, June 30,
1998 1998
------------ ------------
ASSETS
Cash and due from banks $ 167 $ 201
Interest-bearing deposits in other financial
institutions 2,024 1,120
-------- --------
Cash and cash equivalents 2,191 1,321
Certificates of deposit in other financial
institutions 200 200
Investment securities - at amortized cost,
approximate fair market value of $1,000 and
$2,996 as of September 30, 1998 and June 30,
1998 1,000 2,996
Loans receivable - net 127,821 126,328
Office premises and equipment - at depreciated
cost 1,485 1,503
Federal Home Loan Bank stock - at cost 1,494 1,494
Accrued interest receivable on loans 354 342
Accrued interest receivable on investments
and interest-bearing deposits 54 58
Prepaid expenses and other assets 61 90
Prepaid federal income taxes -- 97
Deferred federal income taxes 74 56
-------- --------
Total assets $134,734 $134,485
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 83,602 $ 81,891
Advances from the Federal Home Loan Bank 27,030 28,260
Advances by borrowers for taxes and insurance 397 305
Accrued interest payable 74 85
Other liabilities 1,229 1,238
Accrued federal income taxes 104 --
-------- --------
Total liabilities 112,436 111,779
Shareholders' equity
Preferred stock, 500,000 shares authorized
$.01 par value: no shares issued -- --
Common stock, 3,750,000 shares authorized,
$.01 par value; 1,672,473 shares
issued 17 17
Additional paid-in capital 5,876 5,876
Retained earnings - restricted 17,946 17,846
Less 88,525 and 53,325 shares of treasury
stock - at cost (1,541) (1,033)
-------- --------
Total shareholders' equity 22,298 22,706
-------- --------
Total liabilities and shareholders' equity $134,734 $134,485
======== ========
Book value per share $ 14.08 $ 14.02
======== ========
page 3
FRANKFORT FIRST BANCORP, INC.
CONSOLIDATED STATEMENTS OF EARNINGS
For the three months ended September 30,
(In thousands, except share data)
1998 1997
---------- ---------
Interest income
Loans $2,352 $2,297
Investment securities 70 22
Interest-bearing deposits and other 27 90
------ ------
Total interest income 2,449 2,409
Interest expense
Deposits 989 1,025
Borrowings 432 400
------ ------
Total interest expense 1,421 1,425
------ ------
Net interest income 1,028 984
Provision for losses on loans -- --
------ ------
Net interest income after provision
for losses on loans 1,028 984
Other operating income 10 12
General, administrative and other expense
Employee compensation and benefits 215 224
Occupancy and equipment 37 37
Federal deposit insurance premiums 13 14
Franchise and other taxes 32 25
Data processing 40 32
Other operating 70 94
------ ------
Total general, administrative
and other expense 407 426
------ ------
Earnings before income taxes 631 570
Federal income taxes
Current 231 107
Deferred (18) 87
------ ------
Total federal income taxes 213 194
------ ------
NET EARNINGS $ 418 $ 376
====== ======
Basic Earnings Per Share $ 0.26 $ 0.24
====== ======
Diluted Earnings Per Share $ 0.25 $ 0.23
====== ======
page 4
FRANKFORT FIRST BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended September 30,
(In thousands)
1998 1997
------------ ------------
Cash flows from operating activities:
Net earnings for the period $ 418 $ 376
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 (4) 3
Amortization of deferred loan origination fees (14) --
Depreciation and amortization 18 20
Increase (decrease) in cash due to changes in:
Accrued interest receivable (8) (9)
Prepaid expenses and other assets 29 9
Other liabilities (20) 25
Federal income taxes
Current 201 106
Deferred (18) 87
------- --------
Net cash provided by operating activities 602 617
Cash flows provided by (used in) investing activities:
Proceeds from maturity of investment securities 2,000 1,000
Loan principal repayments 9,647 6,751
Loan disbursements (11,126) (9,305)
------- --------
Net cash provided by (used) in investing
activities 521 (1,554)
Cash flows provided by (used in) financing activities:
Net increase (decrease) in deposit accounts 1,711 (920)
Proceeds from Federal Home Loan Bank advances 8,000 24,000
Repayment of Federal Home Loan Bank advances (9,230) (11,164)
Repayment of other borrowed money -- (11,000)
Advances by borrowers for taxes and insurance 92 89
Capital distributions paid on common stock (318) (295)
Acquisition of treasury stock (508) --
------- --------
Net cash provided by (used in) financing
activities (253) 710
------- --------
Net increase (decrease) in cash and cash equivalents 870 (227)
Cash and cash equivalents at beginning of period 1,321 2,751
------- --------
Cash and cash equivalents at end of period $ 2,191 $ 2,524
======= ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes $ 30 $ --
======= ========
Interest on deposits and borrowings $ 1,438 $ 1,410
======= ========
page 5
Frankfort First Bancorp, Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
September 30, 1998 and 1997
(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 three month period ended September 30, 1998 is 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 financial statements and the notes
thereto included in the Company's Annual Report on Form 10-K for
the year ended June 30, 1998.
(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 less shares in the ESOP that
were unallocated and not committed to be released. Weighted
average common shares deemed outstanding for purposes of
computing basic earnings per share totaled 1,613,059 and
1,528,147 for the three month periods ended September 30, 1998
and 1997, respectively.
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 1,654,646 and 1,605,582 for the three
month periods ended September 30, 1998 and 1997, respectively.
(4) EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the FASB issued SFAS No. 130, "Reporting
Comprehensive Income." SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components
(revenues, expenses, gains, and losses) in a full set of
general-purpose financial statements. SFAS No. 130 requires
that all items that are required to be recognized under
accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the
same prominence as other financial statements. It does not
require a specific format for that financial statement but
requires that an enterprise display an amount representing total
comprehensive income for the period in that financial statement.
SFAS No. 130 requires that an enterprise (a) classify
items of other comprehensive income by their nature in a
financial statement and (b) display the accumulated balance of
other comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of a statement
of financial position. SFAS No. 130 is effective for fiscal
years beginning after December 15, 1997. Reclassification of
financial statements for earlier periods provided for
comparative purposes is required. Management adopted SFAS No.
130 effective July 1, 1998, as required, without material impact
on the Company's financial statements. The Company has no items
of other comprehensive income as defined, therefore net earnings
are equal to other comprehensive income for the periods ended
September 30, 1998 and 1997.
page 6
In June, 1997, the FASB issued SFAS No. 131, "Disclosure
about Segments of an Enterprise and Related Information." SFAS
No. 131 significantly changes the way that public business
enterprises report information about operating segments in
annual financial statements and requires that those enterprises
report selected information about reportable segments in interim
financial reports issued to shareholders. It also establishes
standards for related disclosures about products and services,
geographic areas, and major customers. SFAS No. 131 uses a
"management approach" to disclose financial and descriptive
information about the way that management organizes the segments
within the enterprise for making operating decisions and
assessing performance. For many enterprises, the management
approach will likely result in more segments being reported. In
addition, SFAS No. 131 requires significantly more information
to be disclosed for each reportable segment than is presently
being reported in annual financial statements and also requires
that selected information be reported in interim financial
statements. SFAS No. 131 is effective for fiscal years
beginning after December 15, 1997. SFAS No. 131 is not expected
to have a material impact on the Company's financial statements.
In June, 1998, the FASB issued 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.
SFAS No. 133 is effective for fiscal years beginning after
June 15, 1999. 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. SFAS No.
133 is not expected to have a material impact on the Company's
financial statements.
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.
OTHER MATTERS -- YEAR 2000 COMPLIANCE
As with all providers of financial services, the Bank's
operations are heavily dependent on information technology
systems. The Bank is addressing the potential problems
associated with the possibility that the computers that control
or operate the Bank's information technology system and
infrastructure may not be programmed to read four-digit date
codes and, upon arrival of the year 2000, may recognize the two-
digit code "00" as the year 1900, causing systems to fail to
function or to generate erroneous data. The Bank is working
with the companies that supply or service its information
technology systems to identify and remedy any year 2000 related
problems.
The Bank is particularly dependent upon The BISYS Group,
Inc., ("BISYS"), a provider of information processing systems to
banks. Through BISYS, the Bank processes all of its daily
transactions and keeps records of all loan and deposit accounts,
as well as other functions. The Bank's management has been
working closely with BISYS to monitor their efforts to renovate
their systems. In November, 1998, the Bank will begin a
comprehensive testing program through BISYS. During the test,
the Bank will use the same hardware and software that it will
use after the year 2000. BISYS is making available a set of
data extracted from the Bank's data files. The data will be
aged to certain key dates associated with year 2000 compliance
for the purposes of testing. Testing is expected to conclude in
March, 1999. Procedures are in place to notify BISYS of any
processing errors found during testing. In the event that the
Bank determines that the BISYS system is not capable of
processing data after the year 2000 and that the system cannot
be properly renovated, the Bank has the option of switching to
another BISYS software system that was designed to be year 2000
compliant. There would be no charge from BISYS to make this
switch; however, the Bank may incur significant costs in
training its employees on this new system. The Bank also has
procedures in place to address short-term unavailability of the
BISYS system.
The Company expects that there will be some expense
incurred as a result of preparing for the year 2000. The Bank
has decided to replace some older computer hardware which is at
or near the end of its useful life. The new equipment will be
year 2000 compliant and will have sufficient capacity to run
BISYS's year 2000 compliant software. Management has assessed
the impact of such cost on the Company's net earnings in future
periods. Generally, management expects that the Bank will spend
approximately $80,000 on hardware, software, the testing
program, and other year 2000 related expenses. Of this amount,
approximately $10,000 was incurred during the year ended June
30, 1998. Management expects a cost of $30,000 to $40,000 to be
incurred in the fiscal year ending June 30, 1999, with the
remainder to be incurred in subsequent fiscal years as hardware
is depreciated--at a cost of $6,000 to $10,000 per year. At the
present time, management believes that these costs are an
accurate reflection of the Bank's needs in order to establish
year 2000 readiness; however, if the Bank is ultimately required
to purchase replacement computer systems, programs, and
equipment or incur substantial unforeseen expense to make the
Bank's current systems, programs, and equipment year 2000
compliant, the Company's net earnings and financial condition
could be adversely affected.
page 8
In addition to BISYS, the Bank is dependent on numerous
other providers of services ranging from specific bank-related
services (such as check processing and ATM operations) to
general environmental and administrative support services such
as electrical power and telephone service. The Bank has
attempted to identify such services on which it is most
dependent and to contact each provider to determine their level
of year 2000 readiness. In most cases, the Bank is unable to
independently verify that such services are or will be year 2000
compliant. The Bank may or may not have the option of switching
to other service providers. The Bank's management is working to
establish contingency plans as to how it may best respond to the
inability to utilize these services. In most cases, management
does not foresee a substantial impact on its financial condition
and future earnings. However, it is possible that situations
could occur that are beyond the Bank's control that would have
significant impact on its financial condition and earnings--such
as widespread electrical power failure.
While it is possible that the Bank could incur losses if
loan payments are delayed due to year 2000 problems affecting
its borrowers, management believes that such losses are unlikely
given the composition of the Bank's loan portfolio, which is
primarily made up of one- to four-family residential mortgages.
Likewise, it is possible that the Bank could incur losses if its
level of deposits decreased due to withdrawals from depositors
in anticipation of or in response to problems with their access
to funds from other sources, such as the delay or incapacity of
their employers' payroll processing systems.
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 1998 AND JUNE
30, 1998
ASSETS: The Company's total assets increased slightly
from $134.5 million at June 30, 1998 to $134.7 million at
September 30, 1998, an increase of $249,000 or 0.2%. The
Company's net loans receivable increased from $126.3 million at
June 30, 1998 to $127.8 million at September 30, 1998, an
increase of $1.5 million or 1.2%.
LIABILITIES: Deposits increased from $81.9 million at
June 30, 1998 to $83.6 million at September 30, 1998, an
increase of $1.7 million or 2.1%. Advances from the Federal
Home Loan Bank decreased from $28.3 million at June 30, 1998 to
$27.0 million at September 30, 1998, an decrease of $1.2 million
or 4.4%.
SHAREHOLDERS' EQUITY: Shareholders' equity decreased from
$22.7 million at June 30, 1998 to $22.3 million at September 30,
1998, an decrease of $408,000 or 1.8%. This decrease is a
result of Company's net earnings of $418,000 less the Company's
dividends accrued or paid during the period of $318,000 less the
acquisition of the Company's own stock at a cost of $508,000.
The Company's book value per share was $14.08 at September 30,
1998 compared to $14.02 at June 30, 1998.
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997
NET EARNINGS: The Company's net earnings increased from
$376,000 for the three months ended September 30, 1997 to
$418,000 for the three months ended September 30, 1998, an
increase of $42,000 or 11.2%. This increase is attributable to
several factors, two of which are an increase in net interest
income of $44,000 and a decrease in general, administrative and
other expense of $19,000. The Company's basic earnings per
share rose from $0.24 per share for the three months ended
September 30, 1997 to $0.26 per share for the three months ended
September 30, 1998. The Company's diluted earnings per share
rose from $.23 per share for the three months ended September
30, 1997 to $.25 per share for the three months ended September,
1998.
NET INTEREST INCOME: Net interest income increased from
$984,000 for the three month period ended September 30, 1997 to
$1.0 million for the three month period ended September 30,
1998, an increase of $44,000 or 4.5%. This increase was
primarily due to an increase in interest income. Although
interest income increased in this period, Management believes
that the current low interest rate environment could have a
negative impact on net interest income in future periods.
Generally, in a declining interest rate environment some
existing borrowers choose to refinance their mortgages, interest
rates on adjustable rate loans decrease, and the coupon rate on
new loans declines. While lower interest income may be offset
by lower interest expense, it is possible that interest income
could decrease faster than interest expense. The result would
be a reduction in net interest income.
page 9
INTEREST INCOME: Interest income remained practically
constant at $2.4 million for the three month periods ended
September 30, 1998 and 1997, increasing only $40,000 or 1.7% for
the most recent period ended. This increase was primarily due
to an increase in the Company's level of loans receivable and a
higher percentage of fixed rate mortgage originations compared
to adjustable rate mortgage originations in the Company's
mortgage loan portfolio. Initially, fixed rate mortgages
generally pay a higher rate of interest than adjustable rate
mortgages.
INTEREST EXPENSE: Interest expense remained practically
constant at $1.4 million for the three month periods ended
September 30, 1998 and 1997, decreasing only $4,000 or 0.3% for
the most recent period ended. Management expects to continue to
utilize FHLB advances where advantageous to fund loan growth.
Advances generally are a more stable source of funds than
deposits which proves helpful in managing the Bank's assets and
liabilities. Historically, the interest rates paid on FHLB
advances have generally been greater than rates paid on
deposits. However, in some instances FHLB advances carry lower
interest rates than deposit rates generally being paid in the
Bank's market area.
PROVISION FOR LOSSES ON LOANS: The provision for losses
on loans remained constant with no provision for either of the
three month periods ended September 30, 1998 or 1997.
Management believed, on the basis of its analysis of the risk
profile of the Company's assets, that it was appropriate to
maintain the allowance for loan losses at $100,000, which was
reached previously. 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
from $12,000 for the three month period ended September 30, 1997
to $10,000 for the three month period ended September 30, 1998.
Other operating income is not a significant component of the
Company's statement of operations.
GENERAL, ADMINISTRATIVE, AND OTHER EXPENSE: General,
administrative, and other expense decreased from $426,000 for
the three month period ended September 30, 1997 to $407,000 for
the three month period ended September 30, 1998, a decrease of
$19,000 or 4.5%. The decrease was caused by various reductions
in the Company's expense.
INCOME TAX: The Company's provision for federal income
taxes increased from $194,000 for the three month period ended
September 30, 1997 to $213,000 for the three month period ended
September 30, 1998. The increase was a result of the increase
in the Company's pretax earnings. The Company's effective tax
rate was 33.8% for the three month period ended September 30,
1998 and 34.0% for the three month period ended September 30,
1997.
NON-PERFORMING ASSETS: At September 30, 1998, the Bank
had approximately $197,000 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 $49,000 in loans internally
classified as Substandard and no loans classified as Doubtful,
or Loss. The Bank has not charged off any loans during the
period.
DIVIDENDS: On December 10, 1997, the Company announced a
dividend policy whereby it will pay a quarterly cash dividend of
$0.20 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. 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 July
15, 1998. At September 30, 1998 the Company had recorded
dividends payable of $318,000 for the payment of a dividend on
October 15, 1998.
page 10
In addition to this regular dividend policy, on June 24,
1997 the Company also paid a return of capital in the amount of
$4.00 per share to shareholders of record on June 17, 1997. It
was subsequently determined that $3.60 of this $4.00
distribution was not taxable but would reduce the shareholders'
basis in the stock. The $0.40 portion of this return of
capital, as well as all other dividends paid during calendar
1997, are treated as ordinary dividends.
STOCK SPLIT: On December 1, 1997, the Company effected a
two-for-one reverse stock split, as approved by the shareholders
at the Company's 1997 Annual Meeting held November 11, 1997.
STOCK REPURCHASE: On August 12, 1998, the Company
announced a plan to purchase up to 81,000 shares of the
Company's common stock, which represented approximately 5% of
the outstanding common stock at that time. The program
continues to be dependent upon market conditions and there is no
guarantee as to the exact number of shares to be repurchased by
the Company. The repurchase should be completed within nine
months of commencement. Management considers the Company's
common stock to be an attractive investment, and the repurchase
program is expected to improve liquidity in the market for the
common stock and result in increased per share earnings and book
value. At November 3, 1998, 56,900 shares had been repurchased
at an average price of $14.30 per share.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
This response is incorporated herein by reference from the
discussion under the sub-caption "Asset and Liability Management"
of the caption "MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS" in the Company's 1998 Annual
Report, included as Part II, Item 7 of the Form 10-K filed with
the Securities and Exchange Commission for the fiscal year ended
June 30, 1998.
page 11
PART II.
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES
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. Exhibits. The following exhibits are filed with this report.
--------
Exhibit 27.1 Financial Data Schedule for the three
months ended September 30, 1998, is
attached.
Exhibit 27.2 Restated Financial Data Schedule for the
three months ended September 30, 1997, is
attached.
b. Reports on Form 8-K.
On August 13, 1998, the Company filed a Current
Statement on Form 8-K with the Securities and Exchange
Commission to disclose the Company's program to repurchase
up to 81,000 shares of the Company's common stock.
page 12
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.
Frankfort First Bancorp, Inc.
Date: November 6, 1998 /s/ William C. Jennings
-------------------------------------
William C. Jennings
Chairman, President, and
Chief Executive Officer
(Principal Executive Officer
and Principal Financial and
Accounting Officer)
/s/ Don D. Jennings
-------------------------------------
Don D. Jennings
Vice President
(Principal Financial and
Accounting Officer)
page 13