SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2002
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 0-21170
FFW CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 35-1875502
(State or other jurisdiction of (I.R.S. Employer identification
incorporation or organization) or Number)
1205 North Cass Street, Wabash, IN 46992
(Address of principal executive offices)
(260) 563-3185
(Issuer's telephone number)
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 [ ]
Transitional Small Business Disclosure Format (check one):
Yes [ ] No [X]
State the number of Shares outstanding of each of the issuer's classes of common
equity, as of the latest date:
As of November 8, 2002, there were 1,356,775 shares of the Registrant's common
stock issued and outstanding.
FFW CORPORATION
INDEX
PART I. FINANCIAL INFORMATION PAGE NO.
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets September 30, 2002 3
and June 30, 2002
Consolidated Statements of Income and 4
Comprehensive Income for the
three months ended September 30, 2002 and 2001.
Consolidated Statements of Cash Flows for the three 5
months ended September 30, 2002 and 2001.
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial 8
Condition and Results of Operations
Item 3. Controls and Procedures 13
PART II. OTHER INFORMATION
Items 1-6 14
Signature Page 15
Certifications 16
PART I: FINANCIAL INFORMATION
FFW CORPORATION
CONSOLIDATED BALANCE SHEETS
ASSETS:
(Unaudited)
September 30 June 30
2002 2002
------------- ------------
Cash and due from financial institutions..................................... $ 5,981,783 $ 6,321,697
Interest-earning deposits in financial institutions - short term............. 1,696,110 2,996,816
------------- ------------
Cash and cash equivalents 7,677,893 9,318,513
Securities available for sale 77,978,771 76,344,629
Loans receivable, net of allowance for loan losses of $2,266,597
at September 30, 2002 and $2,361,241 at June 30, 2002 .................. 136,296,122 141,857,794
Federal Home Loan Bank stock, at cost ....................................... 3,400,900 3,400,900
Accrued interest receivable 1,357,408 1,448,182
Premises and equipment-net................................................... 2,680,832 2,693,163
Investment in limited partnership....................................... 393,474 409,974
Cash surrender value of life insurance.................................. 4,515,282 0
Other assets 2,012,358 2,355,286
------------- ------------
Total Assets...........................................................$ 236,313,040 $237,828,441
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Non-interest-bearing demand deposits.........................................$ 9,952,812 $ 9,981,667
Savings, NOW and MMDA deposits............................................... 68,245,141 67,611,581
Other time deposits.......................................................... 83,054,271 81,067,474
------------- ------------
Total Deposits......................................................... 161,252,224 158,660,722
Federal Home Loan Bank advances.............................................. 48,862,554 54,362,554
Accrued interest payable..................................................... 696,698 153,571
Accrued expenses and other liabilities....................................... 2,162,566 2,242,805
------------- ------------
Total Liabilities...................................................... 212,974,042 215,419,652
Shareholders' Equity:
Preferred stock, $.01 par value, 500,000 shares authorized none issued ...... -- --
Common stock, $.01 par value, 2,000,000 shares authorized, 1,829,828 shares
issued and 1,356,775 shares outstanding at September 30, 2002; 1,829,828
shares issued and 1,367,375 shares outstanding at June 30, 2002 .......... 18,298 18,298
Additional paid-in capital................................................... 9,345,123 9,345,123
Retained earnings - substantially restricted................................. 18,082,303 17,711,055
Accumulated other comprehensive income....................................... 855,549 138,695
Unearned management retention plan shares.................................... (71,574) (80,961)
Treasury stock at cost, 473,053 shares on September 30, 2002 and
462,453 shares on June 30, 2002 .......................................... (4,890,701) (4,723,421)
------------- ------------
Total Shareholders' Equity............................................. 23,338,998 22,408,789
Total Liabilities and Shareholders' Equity ............................ $236,313,040 $237,828,441
============= ============
PART I: FINANCIAL INFORMATION
FFW CORPORATION
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended
September 30
2002 2001
---- ----
Interest income:
Loans receivable
Mortgage loans..............................$ 1,172,123 $ 1,485,635
Consumer and other loans ................... 1,562,938 1,702,056
Securities
Taxable..................................... 748,365 850,237
Nontaxable.................................. 229,186 130,480
Other interest-earning assets........................ 23,806 29,633
----------- -----------
Total interest income ...................... 3,736,418 4,198,041
Interest expense:
Deposits............................................. 1,314,668 1,723,078
Other................................................ 707,632 842,051
----------- -----------
Total interest expense...................... 2,022,300 2,565,129
----------- -----------
Net interest income........................................... 1,714,118 1,632,912
Provision for loan losses............................ 225,000 225,000
----------- -----------
Net interest income after provision for loan losses........... 1,489,118 1,407,912
Non-interest income:
Net gain on sale of securities....................... 1,222 5,000
Net gain on sale of loans............................ 133,886 49,024
Other 349,206 342,652
----------- -----------
Total noninterest income.................... 484,314 396,676
Noninterest expense :
Compensation and benefits ........................... 579,905 526,290
Occupancy and equipment ............................ 100,272 92,803
Data processing expense....................... 119,361 116,867
Other 397,971 346,155
----------- -----------
Total noninterest expense .................. 1,197,509 1,082,115
----------- -----------
Income before income taxes ................................... 775,923 722,473
Income tax expense................................... 200,183 196,363
----------- -----------
Net income....................................................$ 575,740 $ 526,110
=========== ===========
Comprehensive income..........................................$ 1,292,594 $ 732,499
=========== ===========
Earnings per common share :
Basic $ .42 $ .37
Diluted $ .42 $ .37
PART I: FINANCIAL INFORMATION
FFW CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30
2002 2001
---- ----
Cash flows from operating activities :
Net income .................................................... $ 575,740 $ 526,110
Adjustments to reconcile net income to net cash
from operating activities :
Depreciation and amortization, net of accretion ............ 67,498 24,327
Provision for loan losses .................................. 225,000 225,000
Increase in cash surrender value of life insurance ......... (15,282) 0
Net (gains) losses on sale of :
Securities available for sale ........................... (1,222) (5,000)
Loans held for sale .................................. (133,886) (49,024)
Foreclosed estate owned and repossessed assets .......... 9,387 7,980
Origination of loans held for sale ......................... (8,741,414) (5,110,050)
Proceeds from sale of loans held for sale .................. 8,834,183 5,159,074
Net change in accrued interest receivable and other
assets ............................................... 205,634 (285,878)
Amortization of goodwill and core deposit intangibles ...... 18,286 41,760
Net change in accrued interest payable, accrued
expenses and other liabilities ........................ 462,888 1,230,708
------------ ------------
Total adjustments ................................. 931,072 1,238,897
------------ ------------
Net cash from operating activities .................... 1,506,812 1,765,007
Cash flows from investing activities :
Proceeds from :
Sales/calls of securities available for sale ............... 3,252,317 9,386,600
Maturities of securities available for sale ................ 150,000 0
Purchase of securities available for sale ..................... (7,069,083) (11,970,180)
Purchase of life insurance .................................... (4,500,000) 0
Principal collected on mortgage- backed securities ............ 3,097,579 1,402,844
Net change in loans receivable ................................ 5,050,797 159,929
Net purchases premises and equipment .......................... (33,957) (581,575)
Proceeds from sales of other real estate and
repossessed assets ......................................... 185,185 104,769
------------ ------------
Net cash from investing activities ......................... 132,838 (1,497,613)
Cash flows from financing activities :
Net increase in deposits ...................................... 2,591,502 666,425
Proceeds from borrowings ...................................... 0 25,490,750
Payment on borrowings ......................................... (5,500,000) (21,500,000)
Purchase of treasury stock .................................... (167,280) (280,218)
Cash dividends paid ........................................... (204,492) (185,464)
------------ ------------
Net cash from financing activities ......................... (3,280,270) 4,191,493
Net increase (decrease) in cash and cash equivalents ............. (1,640,620) 4,458,887
Cash and cash equivalents at beginning of period ................. 9,318,513 8,530,159
------------ ------------
Cash and cash equivalents at end of period ....................... $ 7,677,893 $ 12,989,046
============ ============
PART I: FINANCIAL INFORMATION
FFW CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Basis of Presentation
The accompanying unaudited Consolidated Financial Statements have been
prepared in accordance with accounting principles generally accepted in the
United States of America for interim financial information and with the
instructions to Form 10-QSB and Regulation S-B. Accordingly, they do not include
all the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.
In the opinion of management, the Consolidated Financial Statements contain
all adjustments (consisting only of normal recurring adjustments) necessary to
represent fairly the financial condition of FFW Corporation as of September 30,
2002 and June 30, 2002 and the results of its operations, for the three months
ended September 30, 2002 and 2001. Financial Statement reclassifications have
been made for the prior period to conform to classifications used as of and for
the period ended September 30, 2002.
Operating results for the three months ended September 30, 2002 are not
necessarily indicative of the results that may be expected for the fiscal year
ended June 30, 2003.
(2) New Accounting Pronouncements:
In June 2001, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 142, "Goodwill and
Other Intangible Assets," which addresses the accounting for such assets arising
from prior and future business combinations. Upon the adoption of this
statement, goodwill arising from business combinations will no longer be
amortized, but rather will be assessed regularly for impairment, with any such
impairment recognized as a reduction to earnings in the period identified. Other
identified intangible assets, such as core deposit intangible assets, will
continue to be amortized over their estimated useful lives.
On October 1, 2002, the FASB issued SFAS No. 147, "Acquisitions of Certain
Financial Institutions." SFAS No. 147 is effective October 1, 2002, and may be
early applied. SFAS No. 147 supersedes SFAS No. 72, "Accounting for Certain
Acquisitions of Banking or Thrift Institutions." SFAS No. 147 provides guidance
on the accounting for the acquisition of a financial institution, and applies to
all such acquisitions except those between two or more mutual enterprises. Under
SFAS No. 147, the excess of the fair value of liabilities assumed over the fair
value of tangible and identifiable intangible assets acquired in a financial
institution business combination represents goodwill that should be accounted
for under SFAS No. 142, "Goodwill and Other Intangible Assets." If certain
criteria are met, the amount of the unidentifiable intangible asset resulting
from prior financial institution acquisitions is to be reclassified to goodwill
upon adoption of this Statement.
The adoption by the Company of SFAS No. 142 and SFAS No. 147 effective July
1, 2002 resulted in $975,000 of unamortized goodwill that will cease to be
amortized into expense. The following table reflects net income and earnings per
share as previously reported and adjusted income and earnings per share for the
same period as if the new standard had been adopted in 2001.
Three months ended
September 30
(Dollars in thousands except for per share data) 2002 2001
---- ----
Net income as reported $ 576 $ 526
Add discontinued goodwill expense, net of tax - 14
------ ------
Adjusted net income $ 576 $ 540
====== ======
Basic earnings per share as reported $ 0.42 $ 0.37
Diluted earnings per share as reported $ 0.42 $ 0.37
Adjusted basic earnings per share $ 0.42 $ 0.38
Adjusted diluted earnings per share $ 0.42 $ 0.38
Intangible assets at September 30, 2002 subject to amortization are as follows:
Gross Accumulated
Amount Amortization
------ ------------
Core deposit premium resulting from branch acquisition $ 447 $ 392
Amortization expense for the first three months of fiscal 2003 was $18. The
remaining amortization expense is $55 and will be expensed in the remaining nine
months of fiscal 2003.
Intangible assets not subject to amortization, because they have indefinite
lives are as follows:
Gross Accumulated
Amount Amortization
------- ------------
1997 Purchase of South Whitley branch $ 1,248 $ 416
2001 Purchase of investment company 160 17
------- ------
$ 1,408 $ 433
======= ======
Impairment testing revealed that no impairment provision was required at
September 30, 2002.
PART I: ITEM 2
FFW CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The accompanying Consolidated Financial Statements include the accounts of
FFW Corporation (the "Company") and its wholly owned subsidiaries, First Federal
Savings Bank of Wabash (the "Bank") and FirstFed Financial, Inc ("FirstFed
Financial"). All significant inter-company transactions and balances are
eliminated in consolidation. The Company's results of operations are primarily
dependent on the Bank's net interest margin, which is the difference between
interest income on interest-earning assets and interest expense on
interest-bearing liabilities. The Bank's net income is also affected by the
level of its non-interest expenses, such as employee compensation and benefits,
occupancy expenses, and other expenses.
FORWARD-LOOKING STATEMENTS
Except for historical information contained herein, the matters discussed
in this document, and other information contained in the Company's SEC filings,
may express "forward-looking statements." Those "forward-looking statements" may
involve risk and uncertainties, including statements concerning future events,
performance and assumptions and other statements that are other than statements
of historical facts. The Company wishes to caution readers not to place undue
reliance on any forward-looking statements, which speak only as of the date
made. Readers are advised that various factors--including, but not limited to,
changes in laws, regulations or accounting principles generally accepted in the
United States of America; the Company's competitive position within the markets
served; increasing consolidation within the banking industry; unforeseen changes
in interest rates; any unforeseen downturns in the local, regional or national
economies--could cause the Company's actual results or circumstances for future
periods to differ materially from those anticipated or projected.
The Company does not undertake - and specifically declines any obligation -
to publicly release the result of any revisions which may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
CRITICAL ACCOUNTING POLICIES
Certain of the Company's accounting policies are important to the portrayal
of the Company's financial condition, since they require management to make
difficult, complex or subjective judgments, some of which may relate to matters
that are inherently uncertain. Estimates associated with these policies are
susceptible to material changes as a result of changes in facts and
circumstances. Facts and circumstances that could effect these judgments
include, but without limitation, changes in interest rates, in the performance
of the economy or in the financial condition of borrowers. Management believes
that its critical accounting policies include determining the allowance for loan
losses, ("ALL"), the valuation of mortgage servicing rights, classification and
valuation of securities, and stock compensation.
Allowance for Loan Losses (ALL): The ALL is a valuation allowance for
probable incurred credit losses, increased by the provision for loan losses and
decreased by charge-offs less recoveries. Management estimates the ALL balance
required using past loan loss experience, the nature and volume of the
portfolio, information about specific borrower situations and estimated
collateral values, economic conditions, and other factors. Allocations of the
ALL may be made for specific loans, but the entire ALL is available for any loan
that, in management's judgment, should be charged-off. Loan losses are charged
against the ALL when management believes the uncollectibility of a loan balance
is confirmed.
A loan is impaired when full payment under the loan terms is not expected.
Impairment is evaluated in total for small-balance loans of similar nature such
as residential mortgage, consumer, and credit card loans, and on an individual
loan basis for other loans. If a loan is impaired, a portion of the ALL is
allocated so that the loan is reported, net, at the present value of estimated
future cash flows using the loan's existing rate or at the fair value of
collateral if repayment is expected solely from the collateral.
Mortgage Servicing Rights: Servicing rights represent both purchased rights
and the allocated value of servicing rights retained on loans sold. Servicing
rights are expensed in proportion to, and over the period of, estimated net
servicing revenues. Impairment is evaluated based on the fair value of the
rights, using groupings of the underlying loans as to interest rates and then,
secondarily, as to geographic and prepayment characteristics. Any impairment of
a grouping is reported as a valuation allowance. As of September 30, 2002,
mortgage servicing rights had a carrying value of $506,000.
Securities: Securities are classified as held to maturity and carried at
amortized cost when management has the positive intent and ability to hold them
to maturity. Securities are classified as available for sale when they might be
sold before maturity. Securities available for sale are carried at fair value,
with unrealized holding gains and losses reported separately in shareholders'
equity, net of tax. Securities are classified as trading when held for
short-term periods in anticipation of market gains, and are carried at fair
value. Securities are written down to fair value when a decline in fair value is
not temporary.
Gains and losses on sales are determined using the amortized cost of the
specific security sold. Interest income includes amortization of purchase
premiums and discounts.
Stock Compensation: Expense for employee compensation under stock option
plans is based on Accounting Principles Board (APB) Opinion 25, with expense
reported only if options are granted below market price at grant date. If
applicable, disclosures of net income and earnings per common share are provided
as if the fair value method of Statement of Financial Accounting Standards SFAS
No. 123 were used for stock-based compensation.
COMPARISON OF THREE-MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND 2001
Net income for the three-month period ended September 30, 2002 was $576,000
compared to $526,000 for the equivalent period in 2001. This 9.4% increase of
$50,000 was the result of an $81,000 increase in net interest income and an
$88,000 increase in non-interest income being partially offset by a $115,000
increase in non-interest expense for the period ended September 30, 2002
compared to September 30, 2001.
Diluted net income per common share was $0.42 for the three-month period
ended September 30, 2002 compared $0.37 for the equivalent period in 2001.
Return on average shareholders' equity was 10.04% for the three months ended
September 30, 2002, compared to 9.45% in 2001. The return on total average
assets was 0.96% for the three months ended September 30, 2002, compared to
0.91% in 2001.
NET INTEREST INCOME
The net interest income for the three-month period ended September 30,
2002, was $1,714,000 compared to $1,633,000, an increase of 5.0% over the same
period in 2001, resulting in a net yield of 3.00% compared to 2.95% in 2001.
Total average earning assets increased by $6.5 million for the three-month
period ended September 30, 2002, over the comparative period in 2001. Total
average investment securities increased $13.2 million for the three-month period
over one-year ago. Total average loans decreased $9.5 million for the
three-month period over one-year ago. The yields on average total
interest-earning assets were 6.55% and 7.57% for the three-month periods ended
September 30, 2002, and 2001 while the rates on average total interest-bearing
liabilities were 3.97% and 5.20%, respectively.
The following tables set forth consolidated information regarding average
balances and rates.
FFW Corp
Three Months Ending
(In Thousands)
9/30/2002 9/30/2001
Average Average Average Average
Interest-earning assets: Balance Interest Rate Balance Interest Rate
- ------------------------ -------- -------- ----- -------- -------- ------
Loans $142,120 $2,735 7.63% $151,646 $3,187 8.34%
Securities 78,863 978 4.96% 65,676 981 5.99%
Other interest-earning assets 6,099 24 1.56% 3,265 30 3.65%
-------- ------ -------- ------
Total interest-earning assets 227,082 3,737 6.55% 220,587 4,198 7.57%
Non interest-earning assets
Cash and due from
4,796 4,818
Allowance for loan losses (2,390) (1,750)
Other non interest-earning assets 7,357 5,896
-------- --------
Total assets $236,845 $229,551
======== ========
Interest-bearing liabilities:
- -----------------------------
Interest-bearing deposits $151,474 1,315 3.44% $135,737 1,723 5.04%
FHLB advances 50,728 708 5.54% 60,072 842 5.56%
-------- ------ -------- ------
Total interest-bearing liabilities 202,202 2,023 3.97% 195,809 2,565 5.20%
-------- ------ -------- ------
Non interest-bearing deposit accounts
9,640 9,535
Other non interest-bearing liabilities 2,248 2,116
-------- --------
Total liabilities 214,090 207,460
Shareholders' equity 22,755 22,091
-------- ---------
Total liabilities and shareholders equity $236,845 $229,551
======== ========
Net interest income $ 1,714 $ 1,633
======= =======
Net interest margin 3.00% 2.95%
===== =====
PROVISION FOR LOAN LOSSES
The provision for loan losses was $225,000 for the three-month period ended
September 30, 2002 and also $225,000 for the same period in 2001. Changes in the
provision for loan losses are attributed to management's analysis of the
adequacy of the allowance for loan losses (ALL) to address recognizable and
currently estimated losses. Net charge-offs of $320,000 have been recorded for
the three-month period ended September 30, 2002, compared to $421,000 of net
charge-offs for the same period in 2001. For the period ended September 30,
2002, gross charge-offs were $416,000. The ALL was $2,267,000 or 1.66% of net
loans as of September 30, 2002, compared to $2,361,000 or 1.66% of net loans at
June 30, 2002. Non-performing loans, which includes non-accruing loans and
accruing loans delinquent more than 90 days, were $1,981,000 at September 30,
2002 compared to $1,943,000 at June 30, 2002.
The Company establishes an ALL based on an evaluation of risk factors in
the loan portfolio and changes in the nature and volume of its loan activity.
This evaluation includes, among other factors, the level of the Company's
classified and non-performing assets and their estimated value, the national
outlook which may tend to inhibit economic activity and depress real estate and
other values in the Company's primary market area, regulatory issues and
historical loan loss experience. Accordingly, the calculation of the adequacy of
loan losses is not based directly on the level of non-performing loans. Although
management believes it uses the best information available to determine the ALL,
unforeseen market conditions or other unforeseen events could result in
adjustments and net earnings could be significantly affected if circumstances
differ substantially from the assumptions used in making the determination. In
addition, a determination by the Company's main operating subsidiary, First
Federal, as to the classification of its assets and the amount of its valuation
allowances is subject to review by the OTS which may order the establishment of
additional general or specific reserve allowances. It is management's opinion
that the ALL is adequate to absorb existing losses in the loan portfolio as of
September 30, 2002.
NONINTEREST INCOME
Noninterest income for the three-month periods ended September 30, 2002 and
2001 was $484,000 and $397,000, respectively. This $87,000 increase from the
prior period is composed primarily of increased gain on sale of loans, $85,000
higher, compared to the period ending September 30, 2001. Included in the gain
on sale of loans is $41,000 of income recorded for mortgage servicing right
assets. In other noninterest income, commission income fell by $53,000 due to
lower annuity and life insurance sales while other income, fees and charges grew
$60,000 over the comparable quarter.
NONINTEREST EXPENSE
Noninterest expense for the three-month period ended September 30, 2002
increased $116,000, or 10.7%, compared to the total of $1,082,000 for the same
period in 2001. For the three-month period ended September 30, 2002,
compensation and employee benefits increased 10.2%, occupancy and equipment
expense increased 8.1%, data processing expense increased 2.1% and other
noninterest expense increased 15.0% over the same period in 2001. After
adjusting for a nonrecurring $20,000 expense on real estate owned, other
noninterest expense increased 9.2% over the same period in 2001.
INCOME TAXES
The provision for income taxes for the three-month period ended September
30, 2002, was $200,000 compared to $196,000 for the comparable period in 2001.
The provision for income taxes for the three months ended September 30, 2002, is
at a rate which management believes approximates the effective rate for the year
ending June 30, 2003.
REGULATORY CAPITAL REQUIREMENTS
The Bank is required to maintain specific amounts of regulatory capital
pursuant to regulations of the OTS. At September 30, 2002, the Bank exceeded all
regulatory capital standards as is shown in the following table.
Minimum
To Be Well
Minimum Capitalized Under
For Capital Prompt Corrective
Actual Adequacy Purposes Action Provisions
--------------------- ------------------- -----------------
Amount Ratio Amount Ratio Amount Ratio
------- ------ ------- ----- ------- ------
As of September 30, 2002
Total Risk-based Capital $20,660 14.32% $11,544 8.00% $14,429 10.00%
Tier I (Core) Capital 18,851 13.06% 5,772 4.00% 8,658 6.00%
(to risk weighted assets)
Tier I (Core) Capital 18,851 8.14% 9,260 4.00% 11,574 5.00%
(to adjusted total assets)
NEW ACCOUNTING PRONOUNCEMENTS
Effective July 1, 2002, the Company adopted SFAS No. 142, "Goodwill and
Other Intangible Assets," and SFAS No. 147, "Acquisitions of Certain Financial
Institutions." The adoption by the Company of SFAS No. 142 and SFAS No. 147
effective July 1, 2002 resulted in $975,000 of unamortized goodwill that will
cease to be amortized into expense. For details on the effects of these
adoptions, please see Footnote (2) above in Part I: Financial Information, Notes
to Consolidated Financial Statements.
PART I: ITEM 3
FFW CORPORATION
CONTROLS AND PROCEDURES
Within the 90-day period prior to the filing date of this report, an
evaluation was carried out under the supervision and with the participation of
FFW Corporation's management, including our Chief Executive Officer and Chief
Financial Accounting Officer, of the effectiveness of our disclosure controls
and procedures (as defined in Exchange Act Rules 13a-14(c) and 15d-14(c) under
the Securities Exchange Act of 1934). Based on their evaluation, our Chief
Executive Officer and Chief Financial Accounting Officer have concluded that the
Company's disclosure controls and procedures are, to the best of their
knowledge, effective to ensure that information required to be disclosed by FFW
Corporation in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.
Subsequent to the date of their evaluation, our Chief Executive Officer and
Chief Financial Accounting Officer have concluded that there were no significant
changes in FFW Corporation's internal controls or in other factors that could
significantly affect its internal controls, including any corrective actions
with regard to significant deficiencies and material weaknesses.
Part II - Other Information
As of September 30, 2002, management is not aware of any current
recommendations by regulatory authorities which, if they were to be implemented,
would have or are reasonably likely to have a material adverse effect on the
Company's liquidity, capital resources or operations.
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
---------------------------------------------------
The Annual Meeting of Shareholders (the "Meeting") of FFW Corporation was
held on October 22, 2002. The matters approved by shareholders at the Meeting
and the number of votes cast for, against or withheld (as well as the number of
abstentions and broker non-votes) as to each matter are set below:
PROPOSAL NUMBER OF VOTES
-------- --------------------------
FOR WITHHELD
--------- --------
Election of the following Directors for a three-year term
Thomas L. Frank........................................... 1,086,121 128,610
J. Stanley Myers.......................................... 1,086,121 128,610
John N. Philippsen........................................ 1,086,121 128,610
FOR AGAINST ABSTAIN
--------- ------- -------
Ratification of Crowe, Chizek and Company LLP as
auditors for the fiscal year ending June 30, 2003........... 1,197,766 14,165 2,800
Item 5 - Other Information
Not Applicable
Item 6 - Exhibits and Reports on Form 8-K
Not Applicable
SIGNATURES
Pursuant to the requirement 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.
FFW CORPORATION
Registrant
Date: November 13, 2002 /S/ Roger K. Cromer
----------------------------- --------------------------------------
Roger K. Cromer
President and Chief Executive Officer
Date: November 13, 2002 /S/ Timothy A. Sheppard
----------------------------- --------------------------------------
Timothy A. Sheppard
Treasurer and Chief Accounting Officer
CERTIFICATION
By signing below, each of the undersigned hereby certifies pursuant to 18
U.S.C. ss. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of
2002, that, to his knowledge, (i) this Quarterly Report on Form 10-QSB for the
quarterly period ended September 30, 2002 ("Report") fully complies with the
requirements of Section 13(a) of the Securities Exchange Act of 1934 and (ii)
the information contained in this Report fairly presents, in all material
respects, the financial condition and results of operations of FFW Corporation.
Signed this 13th day of November, 2002.
FFW CORPORATION
Registrant
By: {s} Roger K. Cromer
-----------------------------------------
Roger K. Cromer
President and Chief Executive Officer
By: {s} Timothy A. Sheppard
-----------------------------------------
Timothy A. Sheppard
Treasurer and Chief Accounting Officer
CERTIFICATION
I, Roger K. Cromer, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of FFW Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: November 13, 2002 {S} Roger K. Cromer
--------------------------------------
President/Chief Executive Officer
CERTIFICATION
I, Timothy A. Sheppard, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of FFW Corporation;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent function):
a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officers and I have indicated in this
quarterly report whether or not there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Dated: November 13, 2002 {S} Timothy A. Sheppard
--------------------------------------
Treasurer/Chief Financial Accounting
Officer