Exhibit 13
(FFY Logo) FFY Financial Corp.
2000 ANNUAL REPORT
(Photo) Board of Directors of FFY Financial Corp. and FFY Bank
Contents
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Financial Highlights 1
President's Letter 3
Selected Consolidated Financial Information 4
Management's Discussion & Analysis 7
Financial Statements 20
Officers & Directors 42
Stockholder Information 43
Financial Highlights
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FFY Financial Corp. and Subsidiaries
(Dollars in Thousands Except Per Share Data)
At or for the year ended June 30
For the year ended 2000 1999 Change
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Net interest income $ 21,673 22,569 -4.0%
Non-interest income, excluding gains 1,745 1,627 7.3%
Net income 7,360 8,140 -9.6%
Dividends on common stock 3,103 3,102 0.0%
Return on average equity 11.28% 10.26% 9.9%
Return on average assets 1.10% 1.23% -10.6%
Efficiency ratio 54.02% 49.84% 8.4%
Operating expense to average assets 1.92% 1.88% 2.1%
Per common share
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Basic earnings per share $ 1.15 1.15 0.0%
Diluted earnings per share 1.12 1.11 0.9%
Cash dividends declared per share 0.50 0.45 11.1%
Tangible book value per share 9.56 9.81 -2.5%
At year end
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Total assets $674,475 675,691 -0.2%
Loans receivable, net 484,517 453,839 6.8%
Securities available for sale 158,136 190,326 -16.9%
Deposits 446,049 457,343 -2.5%
Securities sold under agreements to repurchase 58,238 57,918 0.6%
Borrowed funds 96,780 82,800 16.9%
Stockholders' equity 65,195 70,117 -7.0%
Average for the year
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Total assets $668,212 663,251 0.7%
Loans receivable, net 469,756 465,622 0.9%
Securities available for sale, net 168,185 167,217 0.6%
Deposits 446,716 454,066 -1.6%
Securities sold under agreements to repurchase 58,213 60,354 -3.5%
Borrowed funds 89,062 57,771 54.2%
Stockholders' equity 65,230 79,310 -17.8%
(Photo) Presidents of the Bank
Asahel Jones
1900-1906
Benjamin Wirt
1906-1930
Harry W. Geitgey
1930-1934
A. Grover Welsh
1934-1946
Carl E. Knodle
1946-1969
George W. Collier
1969-1975
George J. Smith
1975-1980
Norman Armstrong Jr.
1980-1986
Charles Shellogg Jr.
1986-1996
Jeffrey L. Francis
1996-Present
To Our Shareholders:
As I reflect on fiscal 2000, I am proud of the accomplishments our company
has made in many areas. This year was no different than any others in the
recent past, as we encountered many challenges that your board of directors
and management team worked diligently to meet.
We began the year by embarking on an initiative that we named Performance
Banking. It was a two-pronged approach which embraced both pricing and
efficiency. We looked at all of our product pricing and made appropriate
adjustments to improve profitability by adjusting pricing to be more
competitive on profitable services and less competitive on unprofitable
services. At the same time, we reviewed in detail nearly every area of the
organization including personnel, policies, procedures and systems. Results
of our studies showed us what changes we needed to make to streamline our
organization. Appropriate changes were developed and implemented. The
practice of reviewing pricing and processes will continue as part of our
management's approach to continuing performance improvement.
Our financial performance was solid this year, notwithstanding the effects
of rising interest rates. Compared to fiscal 1999, and excluding merger
expenses recognized in the fiscal fourth quarter, our earnings per diluted
share were up from $1.11 to $1.16 in 2000, return on average equity
increased from 10.26% to 11.68% and our operating expense to average assets
ratio improved from 1.88% to 1.87%. The Cleveland newspaper, The Plain
Dealer, recognized the accomplishments of your company by naming FFY one of
the 100 best performing companies in Ohio for 1999.
Commercial lending, which was a priority in 1999, continued to be a growth
area for us this year with additional staff and product offerings. During
the year our commercial loan balances increased 27% or $9.5 million to a
total of $44.6 million. We continue to target corporate banking for
significant growth in the future.
Bank customers were the recipients of many enhancements this year. We
introduced our telephone banking system, opened a grocery store branch in
Struthers and broke ground for an expanded office in Poland, which opened
in August 2000.
Our affiliates grew significantly this year as well. This past May FFY
Insurance expanded with the acquisition of Moreman-Yerian Insurance Agency,
a company that has been providing insurance service to customers since
1884. Coldwell Banker FFY Real Estate expanded, too, with the opening of a
new office in Columbiana County and by adding a commercial real estate
division.
FFY Bank is celebrating its 100th year of service to the Mahoning Valley.
This has only been possible through the efforts of thousands of dedicated
employees over the years, including the fine staff currently with the
company. The employees of the bank and our affiliates have made fiscal 2000
a success, and I thank them for their efforts.
While we are proud of our history and our performance this past year, I am
most excited about the future, in particular our future with our proposed
merger partner, First Place Financial Corp. This merger of equals will
combine the strengths and talents of two fine organizations into one. With
total assets of approximately $1.7 billion, First Place will be the largest
financial institution ever headquartered in the Mahoning Valley, and the
fourth largest thrift institution in Ohio. Combined with our affiliates,
our organization of the future will be one of which our shareholders will
continue to be proud.
Thank you very much for your continued support.
Sincerely,
/s/ Jeffrey L. Francis
Jeffrey L. Francis
President and Chief Executive Officer
Selected Consolidated Financial Information
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FFY Financial Corp. and Subsidiaries
(Dollars in Thousands Except Per Share Data)
June 30,
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Selected Consolidated Financial Condition Data: 2000 1999 1998 1997 1996
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Total assets $674,475 675,691 651,746 599,249 575,602
Loans receivable, net 484,517 453,839 482,463 460,712 438,790
Loans available for sale 171 442 - - -
Allowance for loan losses 2,659 2,645 2,740 2,962 3,439
Non-performing assets 3,392 2,356 3,324 3,993 4,673
Securities available for sale 158,136 190,326 140,793 112,036 109,836
Deposits 446,049 457,343 444,017 450,224 456,541
Short-term repurchase agreements (1) 6,938 6,618 13,088 7,307 6,640
Long-term repurchase agreements (1) 51,300 51,300 51,300 25,000 -
Short-term borrowed funds 17,500 22,800 33,985 27,455 1,200
Long-term borrowed funds 79,280 60,000 - - -
Stockholders' equity 65,195 70,117 84,216 82,174 101,921
Years ended June 30,
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Selected Consolidated Operations Data: 2000 1999 1998 1997 1996
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Total interest income $ 49,796 49,084 48,006 45,925 43,716
Total interest expense 28,123 26,515 25,559 23,823 22,133
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Net interest income 21,673 22,569 22,447 22,102 21,583
Provision for loan losses 476 494 565 688 325
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Net interest income after provision for loan losses 21,197 22,075 21,882 21,414 21,258
Service charges 1,106 897 700 563 522
Gain (loss) on sale of securities 46 203 247 (320) 30
Gain on sale of loans 234 720 134 - -
Other non-interest income 639 730 684 375 548
Total non-interest expense (12,835) (12,495) (11,771) (14,288) (11,991)
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Income before income taxes and minority interest 10,387 12,130 11,876 7,744 10,367
Income tax expense 3,048 4,083 4,147 2,420 3,465
Minority interest in loss of consolidated subsidiaries (21) (93) - - -
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Net income $ 7,360 8,140 7,729 5,324 6,902
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Basic earnings per share (2) $ 1.15 1.15 1.03 0.62 0.71
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Diluted earnings per share (2) $ 1.12 1.11 0.99 0.60 0.68
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Cash dividends declared per share (2) $ 0.50 0.45 0.40 0.35 0.30
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<FN>
<F1> Securities sold under agreements to repurchase.
<F2> Per share figures were restated for years prior to 1999 to reflect a
100% stock dividend, effected in the form of a two-for-one stock
split, declared on January 19, 1999.
</FN>
Selected Financial Ratios and Other Data: At or for the years ended June 30,
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2000 1999 1998 1997 1996
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Performance Ratios:
Return on average assets (1) 1.10% 1.23% 1.25% 0.90% 1.20%
Return on average equity (2) 11.28% 10.26% 9.28% 5.73% 6.58%
Interest rate spread information:
Average during the period (3) 2.97% 3.08% 3.19% 3.16% 3.04%
End of period (3) 2.66% 2.99% 2.94% 3.06% 2.95%
Net interest margin (3) (4) 3.46% 3.62% 3.81% 3.89% 3.89%
Operating expense to average assets 1.92% 1.88% 1.90% 2.42% 2.09%
Efficiency ratio (5) 54.02% 49.84% 49.08% 62.01% 52.93%
Dividend payout ratio (6) 44.64% 40.54% 40.40% 58.82% 43.80%
Quality Ratios:
Non-performing assets to total assets 0.50% 0.35% 0.51% 0.67% 0.81%
Allowance for loan losses to non-performing
assets 78.39% 112.27% 82.43% 74.18% 73.59%
Allowance for loan losses to gross loans
outstanding 0.54% 0.58% 0.56% 0.64% 0.77%
Capital Ratios:
Equity to total assets at end of period 9.67% 10.38% 12.92% 13.71% 17.71%
Average equity to average assets 9.76% 11.96% 13.47% 15.71% 18.29%
Book value per share (7) $ 9.70 9.85 10.50 9.91 10.03
Tangible book value per share (7) $ 9.56 9.81 10.49 9.91 10.03
Change in book value per share due to SFAS
No. 115 (7) $(0.95) (0.40) 0.10 0.01 (0.09)
Ratio of average interest-earning assets to
average interest-bearing liabilities 1.10 x 1.13 x 1.15 x 1.17 x 1.21 x
<FN>
<F1> Ratio of net income to average total assets.
<F2> Ratio of net income to average equity.
<F3> Ratio is presented on a fully taxable equivalent basis using the
Company's federal statutory tax rate of 34%.
<F4> Net interest income divided by average interest earning assets -
calculated without consideration of the unrealized gain (loss) on
securities available for sale.
<F5> Ratio is calculated without consideration to goodwill amortization and
gain (loss) on sale of securities.
<F6> Cash dividends per share divided by diluted earnings per share.
<F7> Per share figures were restated for years prior to 1999 to reflect a
100% stock dividend declared on January 19, 1999.
</FN>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following presents management's discussion and analysis of the Company's
financial condition and results of operations. This discussion and analysis
highlights significant changes in balance sheet items and principal factors
affecting earnings for each of the periods presented in this Annual Report.
Financial information for prior years is presented when appropriate to
discuss. The objective of this commentary is to enhance the reader's
understanding of the accompanying financial statements, tables and charts
and should be read in conjunction with the financial statements and notes
thereto.
(Photo) Senior management and the Board of Directors rely heavily on their
competent and professional executive secretarial staff.
General
FFY Financial Corp. (FFY or Company) is a unitary savings and loan holding
company incorporated under the laws of Delaware and is engaged in financial
services through its wholly-owned subsidiaries, FFY Bank (Bank) and FFY
Holdings, Inc. FFY Bank is a federally chartered savings bank and FFY
Holdings, Inc. invests in entities offering expanded financial services to
its customers. In June 1993, FFY Bank converted from a federally chartered
mutual savings bank to a federally chartered stock savings bank. As part of
the conversion, the Company acquired all of the outstanding common stock of
the Bank. FFY Holdings, Inc., which was formed in August 1997, has a one-
third interest in Coldwell Banker FFY Real Estate and a 100% interest in FFY
Insurance Agency, Ltd. (formerly known as Daniel W. Landers Insurance
Agency, Ltd.). Real estate services are offered through Coldwell Banker FFY
Real Estate and property and casualty insurance is offered through FFY
Insurance Agency, Ltd.
In May 2000, FFY Holdings, Inc. acquired the minority interest in FFY
Insurance Agency, Ltd. Also in May 2000, FFY Insurance Agency, Ltd. acquired
Moreman-Yerian Insurance Agency, which had an over 100-year history of
providing insurance products to consumers in the Company's market area.
On May 23, 2000, FFY and First Place Financial Corp. (First Place), the
holding company for First Federal Savings and Loan Association of Warren,
entered into a definitive agreement (the Merger Agreement) to combine in a
merger of equals (the Merger). The Merger Agreement calls for a tax-free
exchange of each outstanding share of FFY common stock for 1.075 shares of
First Place common stock, with cash paid in lieu of fractional shares. In
addition, pursuant to the Merger Agreement, the Bank will merge with First
Federal Savings and Loan Association of Warren to become First Place Bank.
The Merger will be accounted for as a purchase and is expected to close in
the fourth quarter of calendar year 2000. The Merger Agreement has been
approved by the boards of directors of both companies. However, it is
subject to certain other conditions, including the approvals of the
shareholders of both companies and the approvals of regulatory authorities.
Forward-Looking Statements
When used in this Annual Report, the words or phrases "will likely result",
"are expected to", "will continue", "is anticipated", "estimate", "project"
or similar expressions are intended to identify "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995.
Such statements are subject to certain risks and uncertainties including
changes in economic conditions in the Company's market area, changes in
policies by regulatory agencies, fluctuations in interest rate changes in
the relationship between short- and long-term interest rates, demand for
loans in the Company's market area and competition, that could cause actual
results to differ materially from historical earnings and those presently
anticipated or projected. The Company wishes to caution readers not to place
undue reliance on any such forward-looking statements, which speak only as
of the date made. The Company wishes to advise readers that the factors
listed above could affect the Company's financial performance and could
cause the Company's actual results for future periods to differ materially
from any opinions or statements expressed with respect to future periods in
any current statements.
(Photo) FFY Bank's in-house appraisal staff enables us to complete your
real estate appraisal within 48 hours.
The Company does not undertake, and specifically disclaims 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.
Changes in Financial Condition
General. Total assets at June 30, 2000 were $674.5 million compared to
$675.7 million at June 30, 1999, a decrease of $1.2 million, or 0.2%. The
decrease during fiscal year 2000 was primarily due to a decline in the
securities portfolio, partially offset by growth in the Bank's loan
portfolio. Total liabilities at June 30, 2000 were $609.3 million compared
to $605.6 million at June 30, 1999, an increase of $3.7 million, or 0.6%.
This increase was primarily due to an increase in borrowed funds, partially
offset by a decline in deposit accounts. The discussion below provides
greater detail regarding significant changes in balance sheet items.
Securities Portfolio. The Company's securities portfolio decreased $32.2
million, or 16.9%, during fiscal year 2000 and totaled $158.1 million at
June 30, 2000 compared to $190.3 million at June 30, 1999. The decrease
during fiscal year 2000 was comprised primarily of $15.4 million, $8.8
million and $3.0 million in security sales, principal receipts and
maturities, respectively. Also contributing to the decline in securities was
a $5.5 million increase in the gross unrealized loss in the securities
portfolio, resulting from an increase in interest rates. Management believes
that the decline in fair value is temporary and that there is no impairment
of securities. Security purchases totaling $743,000 partially offset the
aforementioned declines. Proceeds provided by the sales, principal receipts
and maturities of securities were primarily used to fund the growth in loans
receivable. A summary of the securities portfolio can be found in Note 2 of
the Notes to Consolidated Financial Statements contained in this Annual
Report.
Loan Portfolio. Net loans receivable increased $30.7 million, or 6.80%,
during fiscal year 2000 and totaled $484.5 million at June 30, 2000 compared
to $453.8 million at June 30, 1999.
First mortgage loans at June 30, 2000 totaled $442.9 million, or 88.5% of
total gross loans compared to $412.4 million, or 88.3% of total gross loans
at June 30, 1999. The dollar volume increase in first mortgage loans was
primarily in loans secured by one- to four -family residences and commercial
real estate. One- to four -family residential loans totaled $351.4 million,
or 70.2%, of total gross loans at June 30, 2000, compared to $335.1 million,
or 71.7%, of total gross loans one year earlier. This increase in one- to
four -family loans was largely the result of retaining such newly-originated
loans in FFY Bank's portfolio as opposed to selling them in the secondary
market during the increasing interest rate environment that existed during
fiscal year 2000 - see below. Commercial real estate loans totaled $44.6
million, or 8.9%, of the total gross loans at June 30, 2000, compared to
$33.7 million, or 7.2%, of total gross loans one year earlier. This increase
was attributable to the Company's management identifying commercial real
estate lending as a growth area throughout fiscal 2000.
Consumer and other loans at June 30, 2000 totaled $57.4 million, or 11.5% of
total gross loans compared to $53.5 million, or 11.4% of total gross loans
at June 30, 1999. The dollar volume growth in consumer and other loans was
primarily in home equity loans, which totaled $44.4 million, or 8.9%, of
total gross loans at June 30, 2000, compared to $37.9 million, or 8.1% of
total gross loans one year earlier. Like commercial real estate lending,
this increase was attributable to the Company's management identifying home
equity lending as a growth area throughout fiscal 2000.
(Photo) FFY Insurance expanded in May 2000 with its acquisition of the
Moreman-Yerian Insurance Agency which was founded in Youngstown in 1884.
FFY Bank's secondary market mortgage lending operation originates and sells
qualifying loans to the Federal National Mortgage Association (Fannie Mae).
During fiscal year 2000, FFY Bank sold 192 loans with an aggregate principal
balance of $14.9 million resulting in a pre-tax gain of $234,000. This
compares to sales in fiscal year 1999 of 390 loans with an aggregate
principal balance of $31.0 million and a pre-tax gain of $720,000. FFY
Bank's secondary market sales slowed during fiscal year 2000 due to rising
market interest rates, which caused us to keep more loans in our portfolio.
However, management expects that the secondary market mortgage lending
program will continue as long as market conditions allow it to be
profitable.
Deposits. Deposit accounts decreased $11.3 million, or 2.5%, during fiscal
year 2000 and totaled $446.0 million at June 30, 2000 compared to $457.3
million at June 30, 1999. Declines in certificate and passbook accounts of
$10.9 million and $10.1 million, respectively, were partially offset by
increases of $7.7 million and $2.0 million in money market and demand
accounts, respectively. The net deposit outflow during fiscal year 2000 was
primarily funded by increased borrowings. The level of deposit flows during
any given period is heavily influenced by factors such as the general level
of interest rates as well as alternative yields that investors may obtain on
competing instruments, such as money market mutual funds and other
investments. The weighted average cost of deposits increased 29 basis points
during fiscal year 2000, from 4.27% at June 30, 1999 to 4.56% at June 30,
2000.
Repurchase Agreements and Borrowed Funds. Short-term repurchase agreements
increased $320,000, or 4.8%, during fiscal year 2000 and totaled $6.9
million at June 30, 2000 compared to $6.6 million at June 30, 1999. Long-
term repurchase agreements totaled $51.3 million at both June 30, 2000 and
1999. Short-term borrowings decreased $5.3 million, or 23.2%, during fiscal
year 2000, whereas long-term borrowings increased $19.3 million, or 32.1%,
during the same period. Short- and long-term borrowings totaled $17.5
million and $79.3 million, respectively, at June 30, 2000 compared to $22.8
million and $60.0 million, respectively, at June 30, 1999. Due to the rising
interest rate environment that existed during fiscal year 2000, the weighted
average cost of borrowings increased 162 basis points, from 5.06% at June
30, 1999 to 6.68% at June 30, 2000. Both short- and long-term borrowed funds
consist of advances from the Federal Home Loan Bank of Cincinnati.
Repurchase agreements and borrowed funds are managed within the Company's
guidelines for asset/liability management, profitability and overall growth
objectives.
(Photo) Opened in February 2000, FFY Bank's first grocery branch inside the
Nemenz Struthers IGA and offers traditional lobby and drive-up services.
Stockholders' Equity. Total stockholders' equity declined $4.9 million, or
7.0%, during fiscal year 2000 and totaled $65.2 million at June 30, 2000
compared to $70.1 million at June 30, 1999. This decline resulted
principally from stock repurchases, dividends paid to stockholders and a
decline in market value of available-for-sale securities, net of tax,
totaling $7.1 million, $3.1 million and $3.6 million, respectively. These
declines were partially offset by net income for fiscal year 2000 totaling
$7.4 million and other increases totaling $1.5 million. On January 19, 1999,
the Company announced a 100% stock dividend, which is equivalent to a two-
for-one stock split, that was paid on March 5, 1999 to stockholders of
record on February 19, 1999. Accordingly, all share and per share data have
been restated as a result of the stock dividend.
(Photo) Ensuring proper processing of checks and timely delivery of statements
is the responsibility of our Check Processing department.
Results of Operations
The Company's results of operations depend primarily on the level of net
interest income, which is the difference, or "spread", between the average
yield earned on interest-earning assets and the average rate paid on
interest-bearing liabilities. Interest-earning assets consist primarily of
loans receivable and securities, whereas interest-bearing liabilities
consist primarily of deposits, repurchase agreements and borrowed funds. The
ratio of average interest-earning assets to average interest-bearing
liabilities during fiscal year 2000 was 1.10:1 compared to 1.13:1 during
fiscal year 1999. Net interest income is affected by both changes in the
level of interest rates and changes in the amount and composition of
interest-earning assets and interest-bearing liabilities. Results of
operations are also dependent upon, among other things, the provision for
loan losses, non-interest income, non-interest expense and income taxes.
Comparison of Years Ended June 30, 2000 and 1999
General. The Company recorded net income for the year ended June 30, 2000 of
$7.4 million, a decrease of $780,000, or 9.6%, from net income of $8.1
million for the year ended June 30, 1999. Diluted earnings per share for the
year ended June 30, 2000 were $1.12, a 0.90% increase from diluted earnings
per share of $1.11 for the year ended June 30, 1999. The Company's return on
equity for fiscal year 2000 was 11.28% compared to 10.26% for fiscal year
1999.
Interest Income. Total interest income for the year ended June 30, 2000 was
$49.8 million, an increase of $712,000, or 1.5%, compared to $49.1 million
for the year ended June 30, 1999. Interest income from loans totaled $39.0
million for both of the years ended June 30, 2000 and 1999. A $4.1 million
increase in the average balance of loans receivable was offset by an 8 basis
point decline in yield earned on the loan portfolio. The increase in total
interest income was primarily from an increase in interest earned on the
securities portfolio. Interest income from securities totaled $10.4 million
for the year ended June 30, 2000, an increase of $801,000, or 8.4%, compared
to $9.6 million for the year ended June 30, 1999. The increase in interest
from securities was due to a $10.2 million increase in the average balance
of securities, using amortized cost basis, and a 27 basis point increase in
yield (on a fully-taxable equivalent basis). The average balance of
securities, using amortized cost basis, was $176.3 million and $166.1
million for the years ended June 30, 2000 and 1999, respectively, and the
securities portfolio yielded 6.39% and 6.12% for the same respective
periods. Although the average balance of securities increased comparing June
30, 2000 and 1999, the trend of a growing securities portfolio reversed
during fiscal year 2000 due to proceeds from securities transactions being
primarily used to fund loan growth.
Interest Expense. Total interest expense for the year ended June 30, 2000
was $28.1 million, an increase of $1.6 million, or 6.1%, compared to $26.5
million for the year ended June 30, 1999. The increase in interest expense
was due to an increase in both the average balance and cost of long-term
borrowed funds. The average balance of long-term borrowed funds increased
$38.5 million, from $30.2 million for fiscal year 1999 to $68.7 million for
fiscal year 2000. The average rate paid on long-term borrowed funds
increased 87 basis points, from 5.05% for the year ended June 30, 1999 to
5.92% for the year ended June 30, 2000 as a result of the rising interest
rate environment that existed during fiscal year 2000. The increase in
interest expense from long-term borrowings was partially offset by a decline
in interest expense associated with interest-bearing deposit accounts. The
average balance of interest-bearing deposit accounts declined $10.1 million,
from $447.5 million for fiscal year 1999 to $437.4 million for fiscal year
2000. Additionally, a 7 basis point decline in cost of interest-bearing
deposit accounts, from 4.49% for fiscal year 1999 to 4.42% for fiscal year
2000, contributed to the decline in interest expense associated with deposit
balances. To a lesser extent, rate increases in short- and long-term
repurchase agreements and short-term borrowings, partially offset by a
decline in volume of short-term borrowings, contributed to the increased
interest expense comparing fiscal years 2000 and 1999.
(Photo) Ground was broken in summer 2000 for a more visible and enhanced
Poland office complete with a new drive-up ATM to better serve that community.
Net Interest Income. Net interest income for the year ended June 30, 2000
totaled $21.7 million, a decline of $896,000, or 4.0%, compared to $22.6
million for the year ended June 30, 1999. The Company's net interest margin
declined 16 basis points, from 3.62% for fiscal year 1999 to 3.46% for
fiscal year 2000. The decline in net interest margin was principally due to
the increased cost of borrowings.
(Photo) Accurate recordkeeping, timely reporting and regulatory compliance
are just a small part of the Accounting and Auditing Department functions.
Provision for Loan Losses. The provision for loan losses totaled $476,000
for the year ended June 30, 2000 compared to $494,000 for the year ended
June 30, 1999. The provision for loan losses reflects management's
evaluation of the underlying credit risk of FFY Bank's loan portfolio to
adequately provide for probable loan losses inherent in the loan portfolio
as of the balance sheet date. The allowance for loan losses totaled 78.4% of
non-performing loans at June 30, 2000, down from 112.3% at June 30, 1999 due
to a $1.0 million increase in non-performing loans, principally one- to four-
family loans. The Company's management analyzes the adequacy of the
allowance for loan losses regularly through reviews of the performance of
the loan portfolio, economic conditions, changes in interest rates and the
effect of such changes on real estate values and changes in the composition
of the loan portfolio. Future additions to the allowance for loan losses
will be dependent on these factors. Management believes that the allowance
for loan losses is adequate at June 30, 2000.
Non-Interest Income and Expense. Non-interest income for the year ended June
30, 2000 totaled $2.0 million, a decline of $525,000, or 20.6% compared to
$2.6 million for the year ended June 30, 1999 largely due to a $486,000
decline in gains from sales of loans. The decline in non-interest income was
also due to a $158,000 decrease in gains from security sales comparing
fiscal year 2000 to fiscal year 1999. Partially offsetting the decline was a
$209,000 increase in service charge income, primarily non-sufficient funds
charges, service fees on commercial checking accounts, debit card income and
automated teller machine income. Non-interest expense increased $339,000 in
fiscal year 2000 and totaled $12.8 million for the year compared to $12.5
million for the year ended June 30, 1999 primarily due to $329,000 in
expenses related to the proposed merger of equals with First Place Financial
Corp. Operating expense to average assets without the merger expenses
totaled 1.87% for fiscal year 2000 compared to 1.88% for fiscal year 1999.
(Photo) Coldwell Banker FFY Real Estate expanded its operations by opening
a new office in Columbiana and a commercial real estate arm.
Income Taxes. Federal income taxes for the year ended June 30, 2000 totaled
$3.0 million, a decline of $992,000 compared to $4.0 million for the year
ended June 30, 1999. The decline in federal income taxes resulted from less
income subject to tax and a reduction in the Company's effective tax rate
due to increased income from tax-exempt securities.
Minority Interest. Minority interest in loss of consolidated subsidiaries
represents the portion of net loss from the real estate and insurance
affiliates not wholly-owned by FFY Holdings, Inc. during the year.
Comparison of Years Ended June 30, 1999 and 1998
General. The Company recorded net income for the year ended June 30, 1999 of
$8.1 million, an increase of $411,000, or 5.3%, from net income of $7.7
million for the year ended June 30, 1998. Basic and diluted earnings per
share for the year ended June 30, 1999 totaled $1.15 per share and $1.11 per
share, respectively, compared to $1.03 per share and $0.99 per share,
respectively, for the year ended June 30, 1998. This represents an increase
in basic and diluted earnings per share of 11.7% and 12.1%, respectively.
The Company's return on average equity for fiscal year 1999 was 10.26%
compared to 9.28% for fiscal year 1998.
Interest Income. Total interest income for the year ended June 30, 1999 was
$49.1 million, an increase of $1.1 million, or 2.2%, compared to $48.0
million for the year ended June 30, 1998. Interest income from loans
declined $738,000, or 1.9%, and totaled $39.0 million for the year ended
June 30, 1999 compared to $39.8 million for year ended June 30, 1998. This
decrease was the result of a 20 basis point decline in the average yield
earned on loans, from 8.59% to 8.39%, partially offset by an increase of
$2.5 million in the average balance of loans outstanding. The average yield
earned on loans declined due to a decrease in market rates for most of
fiscal year 1999. Although net loans receivable declined $28.6 million from
June 30, 1998 to June 30, 1999, the average balance of loans receivable
increased as mentioned previously. The June 30, 1998 loans receivable
balance included approximately $17.1 million of short-term loans made to
customers in June 1998 to fund their stock subscriptions in a local
financial institution's initial public offering which remained outstanding
for part of the first quarter of fiscal year 1999, thus impacting the
average balance for fiscal year 1999. Interest income from securities
increased $1.9 million, or 25.3%, and totaled $9.5 million for the year
ended June 30, 1999 compared to $7.6 million for the year ended June 30,
1998. This increase was the result of a $42.5 million increase in the
average balance of securities, primarily Federal agency obligations,
municipal securities and trust preferred securities. The increase in volume
of securities was partially offset by a 29 basis point decline in the
average yield on securities, from 6.41% to 6.12%. The decline in the
weighted average yield was largely the result of reinvesting proceeds from a
high level of loan repayments and prepayments at lower market rates.
Interest Expense. Interest expense increased $955,000, or 3.7%, and totaled
$26.5 million for the year ended June 30, 1999 compared to $25.6 million for
the year ended June 30, 1998. This increase was primarily due to volume
increases in long-term repurchase agreements and borrowed funds, partially
offset by a rate decline in deposits and, to a lesser extent, volume and
rate declines in short-term repurchase agreements. The average balance of
long-term repurchase agreements and borrowed funds increased $17.1 million
and $30.2 million, respectively. The average cost of interest on deposits
declined 28 basis points, from 4.77% for fiscal year 1998 to 4.49% for
fiscal year 1999. This decline in rate primarily reflects an overall
reduction in market interest rates throughout the Company's 1999 fiscal
year.
Net Interest Income. Net interest income increased $122,000, or 0.5%, and
totaled $22.6 million for the year ended June 30, 1999 compared to $22.4
million for the year ended June 30, 1998. The Company's net interest margin
(net interest income as a percentage of average interest-earning assets) was
3.62% for the year ended June 30, 1999, down 19 basis points from 3.81% for
the year ended June 30, 1998. The Company's net interest margin declined due
mainly to a lower yield earned on loans and securities as well as increased
borrowings, which tend to have a higher cost than core deposits. However,
the Company's net interest margin was positively affected by lower rates
paid on deposits and short-term borrowings.
(Photo) "Thank you for calling FFY Bank. How may I direct your call?" When
you call us, you are greeted by one of our operators, not an automated phone
system.
Provision for Loan Losses. The provision for loan losses totaled $494,000
for the year ended June 30, 1999 compared to $566,000 for the year ended
June 30, 1998. The provision for loan losses reflects management's
evaluation of the underlying credit risk of the Bank's loan portfolio to
adequately provide for probable loan losses inherent in the loan portfolio
as of the balance sheet date. The allowance for loan losses totaled 112.3%
of non-performing loans at June 30, 1999, up from 82.4% at June 30, 1998 due
primarily to a 29% decline in non-performing loans. More aggressive
collection efforts contributed to the decline in non-performing loans.
Non-Interest Income. Non-interest income totaled $2.6 million for the year
ended June 30, 1999, an increase of $785,000, or 44.5%, compared to $1.8
million for the year ended June 30, 1998. Largely contributing to this
increase was the Bank's secondary market operation, which began during
fiscal year 1998 and accounted for $720,000 in gains from loan sales during
the 1999 fiscal year compared to $134,000 in gains from loan sales during
the 1998 fiscal year. Service charge income increased 28.1% from $700,000
for the year ended June 30, 1998 to $897,000 for the year ended June 30,
1999 largely due to increased fees on NOW accounts and fees from a loan
extension program.
Non-Interest Expense. Non-interest expense totaled $12.5 million for the
year ended June 30, 1999, an increase of $724,000, or 6.2%, compared to
$11.8 million for the year ended June 30, 1998. Largely contributing to this
increase were the activities of FFY Holding's insurance affiliate, FFY
Insurance Agency, Ltd., which began operations on April 1, 1998, and
therefore only had three months activity during fiscal year 1998. Also
contributing to the fiscal year 1999 growth in non-interest expense was
increased depreciation, primarily due to Year 2000 computer-related
purchases, and advertising. In addition, severance pay was awarded to a
long-tenured Company officer in December 1998 as a result of her retirement.
The Company's efficiency ratio totaled 49.8% for the year ended June 30,
1999 compared to 49.1% for the year ended June 30, 1998.
Income Taxes. Federal income taxes totaled $4.0 million for the year ended
June 30, 1999, a decline of $107,000 compared to $4.1 million for the year
ended June 30, 1998. The decline in federal income taxes resulted from a
reduction in the Company's effective tax rate due to increased income from
tax-exempt securities.
Minority Interest. Minority interest in loss of consolidated subsidiaries
represents the portion of the net loss from the real estate and insurance
affiliates not owned by FFY Holdings, Inc.
The following table presents for the periods indicated average balance
sheets, the total dollar amount of interest income from average interest-
earning assets and the resultant yields, as well as the interest expense on
the average interest-bearing liabilities, and the resultant costs, expressed
both in dollars and rates. Average balances for all years presented are
daily average balances. Interest on non-accruing loans has been included in
the table to the extent received.
Average Balances, Interest Rates and Yields
(Dollars in Thousands)
Years ended June 30,
---------------------------------------------------------------------------------------------------
2000 1999 1998
---------------------------------------------------------------------------------------------------
Average Interest Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate Balance Paid Rate
---------------------------------------------------------------------------------------------------
Interest-Earning Assets:
Loans receivable (1) $469,756 39,046 8.31% $465,622 39,047 8.39% $463,118 39,785 8.59%
Securities available
for sale, net (2) (3) 168,185 11,269 6.39% 167,217 10,163 6.12% 124,764 7,916 6.41%
FHLB Stock 5,023 363 7.23% 4,677 333 7.12% 4,284 312 7.28%
Other 991 34 3.43% 3,343 151 4.52% 5,556 287 5.17%
------------------- ------------------- -------------------
Total
interest-earning
assets (2) 643,955 50,712 7.78% 640,859 49,694 7.77% 597,722 48,300 8.10%
------ ------ ------
Noninterest-earning
assets 24,257 22,392 20,942
-------- -------- --------
Total assets $668,212 $663,251 $618,664
======== ======== ========
Interest-Bearing
Liabilities:
Demand and NOW accounts $ 73,244 2,204 3.01% $ 63,148 1,613 2.55% $ 54,962 1,399 2.55%
Savings accounts 87,852 1,985 2.26% 92,049 2,091 2.27% 100,125 2,683 2.68%
Certificate accounts 276,300 15,139 5.48% 292,328 16,413 5.61% 291,841 17,200 5.89%
Short-term repurchase
agreements 6,913 406 5.87% 9,054 450 4.97% 15,241 872 5.72%
Long-term repurchase
agreements 51,300 3,128 6.10% 51,300 2,974 5.80% 34,241 2,043 5.97%
Short-term borrowings 20,382 1,194 5.86% 27,596 1,451 5.26% 24,004 1,362 5.67%
Long-term borrowings 68,680 4,067 5.92% 30,175 1,523 5.05% - - -
------------------- ------------------- -------------------
Total interest-bearing
liabilities 584,671 28,123 4.81% 565,650 26,515 4.69% 520,414 25,559 4.91%
------ ------ ------
Noninterest-bearing
liabilities (4) 18,311 18,291 14,935
-------- -------- --------
Total liabilities 602,982 583,941 535,349
Stockholders' equity 65,230 79,310 83,315
-------- -------- --------
Total liabilities
and equity $668,212 $663,251 $618,664
======== ======== ========
Net interest income $22,589 23,179 22,741
Less fully taxable
equivalent adjustment (916) (610) (294)
------- ------- -------
Net interest income per
statement of income $21,673 22,569 22,447
======= ======= =======
Net interest rate spread 2.97% 3.08% 3.19%
==== ==== ====
Net earning assets $ 59,284 $ 75,209 $ 77,308
======== ======== ========
Net yield on average
interest-earning
assets (2) 3.46% 3.62% 3.81%
==== ==== ====
Average interest-earning
assets to average
interest-bearing
liabilities 1.10 x 1.13 x 1.15 x
======= ======= =======
<FN>
<F1> Calculated net of deferred loan fees, loan discounts, loans in process
and loss reserves.
<F2> Yield is calculated without consideration of the unrealized gain
(loss) on securities available for sale.
<F3> Interest is presented on a fully taxable equivalent basis using the
Company's federal statutory tax rate of 34%.
<F4> Includes noninterest-bearing checking accounts.
</FN>
The following table presents the dollar amount of changes in interest income
and interest expense for major components of interest-earning assets and
interest-bearing liabilities. For each category of interest-earning assets
and interest-bearing liabilities, information is provided on changes
attributable to (i) changes in volume (changes in volume multiplied by old
rate) and (ii) changes in rate (changes in rate multiplied by old volume).
For purposes of this table, changes attributable to both rate and volume,
which cannot be segregated, have been allocated proportionately to the
change due to volume and the change due to rate.
Rate/Volume Analysis
(Dollars in Thousands)
Years ended June 30,
----------------------------------------------------------------------
2000 vs. 1999 1999 vs. 1998
--------------------------------- ---------------------------------
Increase (Decrease) Total Increase (Decrease) Total
Due to Increase Due to Increase
Volume Rate (Decrease) Volume Rate (Decrease)
------ ---- ---------- ------ ---- ----------
Interest-earning assets:
Loans receivable $ 359 (360) (1) 210 (948) (738)
Securities (1) 642 464 1,106 2,620 (373) 2,247
FHLB stock 25 5 30 28 (7) 21
Other (87) (30) (117) (103) (33) (136)
-------------------------------------------------------------------
Total interest-earning assets $ 939 79 1,018 2,755 (1,361) 1,394
===================================================================
Interest-bearing liabilities:
Demand and NOW accounts $ 278 313 591 214 - 214
Savings accounts (97) (9) (106) (204) (388) (592)
Certificate accounts (895) (379) (1,274) 29 (816) (787)
Short-term repurchase agreements (117) 73 (44) (319) (103) (422)
Long-term repurchase agreements - 154 154 991 (60) 931
Short-term borrowings (410) 153 (257) 193 (104) 89
Long-term borrowings 2,241 303 2,544 1,523 - 1,523
-------------------------------------------------------------------
Total interest-bearing liabilities $1,000 608 1,608 2,427 (1,471) 956
===================================================================
Net interest income (1) $ (590) 438
====== =====
<FN>
<F1> Presented on a fully taxable equivalent basis.
</FN>
Asset/Liability Management
Asset/liability management is the measurement and analysis of the Company's
exposure to changes in the interest rate environment. Management analyzes
the effects of interest rate changes on net portfolio value and net interest
income over specified periods of time by evaluating the Company's mix of
interest-earning assets and interest-bearing liabilities in varied interest
rate environments. The Company manages this risk on a continuing basis
through the use of a number of strategies as an ongoing part of its business
plan. The objective of the Company's asset/liability management is to
maintain consistent growth in net interest income within the Company's
policy guidelines. Management considers interest rate risk to be the
Company's most significant market risk.
Income simulation techniques and net portfolio value analysis are used to
determine the Company's sensitivity to changes in interest rates. The models
are based on actual cash flows and repricing characteristics for on and off
balance sheet instruments, and incorporate market-based assumptions
regarding the impact of changing interest rates on certain assets and
liabilities. Actual results will differ from simulated results due to
timing, magnitude and frequency of interest rate changes. Actual results may
also differ due to changes in market conditions and management strategies.
The income simulation modeling employed by the Company measures changes in
net interest income over the next 12- and 24-month periods resulting from
hypothetical rising and declining interest rates. Key assumptions used in
this model include (i) reinvestment of security and mortgage cash flows,
(ii) loan prepayment speeds, (iii) reinvestment of certificate of deposit
maturities and (iv) deposit pricing strategies. As of June 30, 2000, the
Company's simulation modeling indicated that, with a 200 basis point (bp)
increase in interest rates, the Company's net interest income would be 2.96
percent and 6.76 percent less than if rates remained constant over the next
12- and 24-month periods, respectively. As of the same date and a 200bp
decrease in interest rates, the Company's net interest income would be 1.44
percent more and 1.62 percent less than if rates remained constant over the
next 12- and 24-month periods, respectively. The percentage changes in net
interest income are within the acceptable range established by the Company's
board of directors in both a rising and falling rate environment.
The Bank measures the effect of interest rate changes on its net portfolio
value (NPV), which is the difference between the market value of the Bank's
assets and liabilities, under different interest rate scenarios. Changes in
NPV are measured using interest rate shocks rather than changes in interest
rates over a period of time as are assumed with the income simulation model.
At June 30, 2000, the Bank's NPV ratio, using interest rate shocks ranging
from a 300bp rise in rates to a 300bp decline in rates are shown in the
following table. All values are within the acceptable range established by
the Company's board of directors.
Net Portfolio Value
(Bank only)
Basis Point
Change in 6/30/00
Rates NPV Ratio
----------- ---------
+300 6.05%
+200 7.40%
+100 8.73%
Base 9.86%
-100 10.50%
-200 10.65%
-300 10.89%
A significant part of FFY Bank's asset/liability management focuses on
originating adjustable-rate home equity credit lines. This product is tied
to the prime rate and adjusts monthly depending on fluctuations in the prime
lending rate. Adjustable-rate home equity credit lines totaled $21.2 million
at June 30, 2000, an increase of $14.6 million from $6.6 million at June 30,
1999. At June 30, 2000, loans with an adjustable rate feature totaled $259.2
million, or 51.8% of the gross loan portfolio compared to $197.0 million, or
42.2% of the gross loan portfolio at June 30, 1999. The Bank's sale of
predominantly fixed-rate mortgage loans to Fannie Mae decreases the Bank's
exposure to interest rate risk and provides income from sales and servicing.
Additionally, the servicing asset hedges the Bank against rising rates, as
it becomes more valuable in a rising rate environment, offsetting the
decline in the value of other longer term assets in a rising rate
environment.
In order to consolidate its customer base and reduce interest rate risk
while maintaining adequate returns, FFY Bank has increased its investment in
consumer loans over the past several years. While consumer loans are
believed to have a greater risk of default than mortgage loans, consumer
loans are typically much shorter in duration than mortgage loans which
serves to reduce interest rate risk. Management intends to continue to
expand the Bank's consumer loan portfolio over the next several years.
Since June 30, 1996, the Company increased its investments in adjustable-
rate securities in an attempt to reduce interest rate risk. At June 30,
2000, the market value of adjustable-rate securities totaled $42.4 million,
or 26.8% of the total securities portfolio compared to a market value of
$694,000, or 0.6% of the total securities portfolio four years earlier.
The Company's management may, at times, place greater emphasis on maximizing
net interest margin rather than merely concentrating on interest rate risk
depending on the relationship between short- and long-term interest rates,
market conditions and consumer preference. Management believes that
increased net income resulting from a moderate contrast between the maturity
of its assets and liabilities can provide high enough returns to justify the
increased risk exposure during periods of stable interest rates. Management
has established limits on the amount of its interest rate risk exposure.
There can be no assurance, however, that management's efforts to limit
interest rate risk will be successful.
Liquidity and Cash Flows
In general terms, liquidity is a measurement of the Company's ability to
meet its cash needs. The Company's objective in liquidity management is to
maintain the ability to meet loan commitments, purchase securities or to
repay deposits and other liabilities in accordance with their terms without
an adverse impact on current or future earnings. The Company's principal
sources of funds are deposits, amortization and prepayments of loans,
maturities, sales and principal receipts of securities, borrowings,
repurchase agreements and operations.
Federal regulations require the Bank to maintain minimum levels of liquid
assets in each calendar quarter of not less than 4% of either (i) its
liquidity base at the end of the preceding quarter, or (ii) the average
daily balance of its liquidity base during the preceding quarter. The Bank's
liquidity exceeded the applicable liquidity requirement at June 30, 2000 and
1999. Simply meeting the liquidity requirement does not automatically mean
the Bank has sufficient liquidity for a safe and sound operation.
Regulations also include a separate requirement that each thrift must
maintain sufficient liquidity to ensure its safe and sound operation. Thus,
adequate liquidity may vary depending on the Bank's overall asset/liability
structure, market conditions, the activities of competitors and the
requirements of its own deposit and loan customers. Management believes
the Bank's liquidity is sufficient.
Liquidity management is both a daily and long-term responsibility of
management. The Bank adjusts its investments in liquid assets based upon
management's assessment of (i) expected loan demand, (ii) expected deposit
flows, (iii) yields available on interest-earning deposits and securities
and (iv) the objective of its asset/liability management program. Along with
its liquid assets, the Bank has additional sources of liquidity available
including, but not limited to, the ability to obtain deposits by offering
above-market interest rates and access to advances from the Federal Home
Loan Bank.
The primary investing activities of the Company are originating loans and
purchasing securities. Growth in loans receivable during fiscal year 2000
used $30.6 million, the decline in loans receivable during fiscal year 1999
provided $29.2 million and growth in loans receivable during fiscal year
1998 used $21.6 million. A decrease in the Company's securities portfolio
during fiscal year 2000 provided $26.5 million, whereas growth in the
securities portfolio during fiscal years 1999 and 1998 used $72.0 million
and $11.5 million, respectively. Generally, during periods of declining
interest rates, the Bank would be expected to experience increased loan
prepayments, which would likely be reinvested at lower interest rates.
During periods of increasing interest rates, loan prepayments would be
expected to decline, reducing funds available for investment at higher
interest rates.
The primary financing activities of the Company are deposits, repurchase
agreements and borrowings. The decline in deposit accounts during fiscal
year 2000 used $11.3 million, the increase in deposit accounts during fiscal
year 1999 provided $13.4 million and the decline in deposit accounts during
fiscal year 1998 used $6.1 million. The increase in repurchase agreements
during fiscal year 2000 provided $320,000, the decline in repurchase
agreements during fiscal year 1999 used $6.5 million and the increase in
repurchase agreements during fiscal year 1998 provided $32.1 million. The
increase in borrowed funds during fiscal years 2000, 1999 and 1998 provided
$14.0 million, $48.8 million and $6.5 million, respectively.
Capital Resources
Office of Thrift Supervision (OTS) regulations require savings institutions
to maintain certain minimum levels of regulatory capital. An institution
that fails to comply with its regulatory capital requirements must obtain
OTS approval of a capital plan and can be subject to a capital directive and
certain restrictions on its operations. At June 30, 2000, the minimum
capital regulations require savings institutions to have tangible capital to
total tangible assets of 1.5%; a minimum leverage ratio of core (Tier 1)
capital to total adjusted tangible assets of 3.0%; and a minimum ratio of
total capital (core capital and supplementary capital) to risk weighted
assets of 8.0%, of which 4.0% must be core capital.
Under the prompt corrective action regulations, the OTS is required to take
certain supervisory actions (and may take additional discretionary actions)
with respect to an undercapitalized institution. Such actions could have a
direct material effect on an institution's financial statements. The
regulations establish a framework for the classification of savings
institutions into five categories: well capitalized, adequately capitalized,
undercapitalized, significantly undercapitalized and critically
undercapitalized. Generally, an institution is considered well capitalized
if it has a core (Tier 1) capital ratio of at least 5.0% (based on average
total assets); a core (Tier 1) risk-based capital ratio of at least 6.0%;
and a total risk-based capital ratio of at least 10.0%.
The foregoing capital ratios are based in part on specific quantitative
measures of assets, liabilities and certain off-balance sheet items as
calculated under regulatory accounting practices. Capital amounts and
classifications are also subject to qualitative judgments by the OTS about
capital components, risk weightings and other factors.
At June 30, 2000, the Bank met all capital adequacy requirements to which it
is subject. Further, the most recent OTS notification categorized the Bank
as a well-capitalized institution under the prompt corrective action
regulations. There have been no conditions or events since that notification
that management believes have changed the Bank's capital classification.
Impact of Inflation and Changing Prices
The Consolidated Financial Statements and Notes thereto presented herein
have been prepared in accordance with generally accepted accounting
principles, which require the measurement of financial position and
operating results in terms of historical dollars without considering the
change in the relative purchasing power of money over time due to inflation.
The impact of inflation is reflected in the increased cost of the Bank's
operations. Unlike most industrial companies, nearly all the assets and
liabilities of the Company are monetary. As a result, interest rates have a
greater impact on the Company's performance than do the effects of general
levels of inflation. Interest rates do not necessarily move in the same
direction or to the same extent as the price of goods and services.
Year 2000
On January 1, 2000, the Company reported that FFY Bank had successfully
completed its processing for 1999 and had tested all mission critical
systems for proper operation due to the change to the Year 2000. Based on
operations since January 1, 2000, the Company does not expect any
significant impact to its ongoing business as a result of the Year 2000.
The Company spent nearly $1 million on its Year 2000 readiness efforts,
including $429,000 for a new comprehensive software system in 1998. In
addition to the new software system, monies were spent to replace outdated,
noncompliant hardware and software as well as identifying and remediating
Year 2000 problems.
Market Prices and Dividends Declared
The common stock of FFY Financial Corp. trades on The Nasdaq Stock Market
under the symbol "FFYF". As of July 31, 2000, there were 6,720,115 shares
outstanding held by approximately 1,259 stockholders of record (not
including the number of persons or entities holding stock in nominee or
street name through various brokerage firms). The table below shows the
quarterly reported high and low trade prices of the common stock and cash
dividends per share declared during the years ended June 30, 2000 and 1999.
June 30, 2000: High Low Dividends
------------------------------------------------
First quarter $19.00 $18.38 $0.125
Second quarter 19.00 11.88 0.125
Third quarter 13.13 10.50 0.125
Fourth quarter 11.44 9.38 0.125
June 30, 1999:
------------------------------------------------
First quarter $18.69 $13.13 $0.1125
Second quarter 17.75 13.25 0.1125
Third quarter 18.88 16.75 0.1125
Fourth quarter 19.00 16.88 0.1125
(Photo) Our team of qualified loan processors simplifies the home loan
process from the time of application through closing.
Quarterly Earnings Summary
- ----------------------------------------------------------------------------
FFY Financial Corp. and Subsidiaries
(Dollars in Thousands Except Per Share Data)
Quarter ended fiscal 2000 September 30 December 31 March 31 June 30
- --------------------------------------------------------------------------------------
Total interest income $12,405 12,279 12,488 12,624
Total interest expense 6,813 6,835 7,091 7,385
-----------------------------------------------
Net interest income 5,592 5,444 5,397 5,239
Provision for loan losses 101 105 135 135
-----------------------------------------------
Net interest income
after provision for
loan losses 5,491 5,339 5,262 5,104
Service charges 255 288 264 299
Gain on sale of securities
available for sale 1 28 17 -
Gain on sale of loans 60 59 45 71
Other non-interest income 150 173 149 166
Non-interest expense (3,335) (3,099) (2,906) (3,494)
-----------------------------------------------
Income before income taxes
and minority interest 2,622 2,788 2,831 2,146
Income tax expense 781 836 830 601
Minority interest in loss of
consolidated subsidiaries (2) (2) (5) (12)
-----------------------------------------------
Net income $ 1,843 1,954 2,006 1,557
===============================================
Basic earnings per share $ 0.28 0.31 0.32 0.25
===============================================
Diluted earnings per share $ 0.27 0.30 0.31 0.24
===============================================
Quarter ended fiscal 1999 September 30 December 31 March 31 June 30
- --------------------------------------------------------------------------------------
Total interest income $12,161 12,384 12,241 12,297
Total interest expense 6,711 6,742 6,522 6,539
-----------------------------------------------
Net interest income 5,450 5,642 5,719 5,758
Provision for loan losses 125 124 131 114
-----------------------------------------------
Net interest income
after provision for
loan losses 5,325 5,518 5,588 5,644
Service charges 198 218 217 264
Gain (loss) on sale of securities
available for sale 64 (7) 54 91
Gain on sale of loans 112 277 202 129
Other non-interest income 243 194 113 179
Non-interest expense (3,126) (3,138) (3,048) (3,182)
-----------------------------------------------
Income before income taxes
and minority interest 2,816 3,062 3,126 3,125
Income tax expense 931 1,029 1,086 1,037
Minority interest in gain (loss)
of consolidated subsidiaries - - (106) 12
-----------------------------------------------
Net income $ 1,885 2,033 2,146 2,076
===============================================
Basic earnings per share $ 0.26 0.28 0.31 0.31
===============================================
Diluted earnings per share $ 0.25 0.27 0.30 0.30
===============================================
* Consolidated Statements of Financial Condition, June 30, 2000 and 1999
* Consolidated Statements of Income, Years ended June 30, 2000, 1999 and 1998
* Consolidated Statements of Changes in Stockholders' Equity, Years
ended June 30, 2000, 1999 and 1998
* Consolidated Statements of Cash Flows, Years ended June 30, 2000,
1999 and 1998
* Notes to Consolidated Financial Statements
* Independent Auditors' Report
FFY FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
June 30, 2000 and 1999
Assets 2000 1999
---- ----
Cash $ 4,543,181 5,362,745
Interest-bearing deposits 6,489,636 5,245,061
Short-term investments - 865,000
----------------------------
Total cash and cash equivalents 11,032,817 11,472,806
----------------------------
Securities available for sale 158,136,350 190,325,599
Loans receivable, net of allowance for loan losses of
$2,658,784 and $2,645,132, respectively 484,516,963 453,839,111
Loans available for sale 170,800 441,500
Interest and dividends receivable on securities 1,675,487 1,953,940
Interest receivable on loans 2,920,810 2,707,846
Federal Home Loan Bank stock, at cost 5,192,800 4,841,200
Office properties and equipment, net 7,172,439 7,218,640
Other assets 3,656,928 2,890,372
----------------------------
Total assets $674,475,394 675,691,014
============================
Liabilities and Stockholders' Equity
Deposits $446,048,790 457,342,802
Securities sold under agreements to repurchase
Short-term 6,937,905 6,617,747
Long-term 51,300,000 51,300,000
Borrowed funds:
Short-term 17,500,000 22,800,000
Long-term 79,280,000 60,000,000
Advance payments by borrowers for taxes and insurance 2,347,744 2,221,976
Other payables and accrued expenses 5,865,465 5,291,964
----------------------------
Total liabilities 609,279,904 605,574,489
----------------------------
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value; authorized 5,000,000 shares,
none outstanding - -
Common stock, $.01 par value; authorized 15,000,000 shares,
issued 7,589,366 shares 75,894 75,894
Additional paid-in capital 38,456,297 38,092,628
Retained earnings, substantially restricted 50,500,226 46,243,673
Treasury stock, at cost (869,251 and 467,987 shares,
respectively) (14,865,169) (8,551,484)
Accumulated other comprehensive loss (6,415,886) (2,816,864)
Common stock purchased by:
Employee Stock Ownership and 401(k) Plan (2,274,082) (2,645,532)
Recognition and Retention Plans (281,790) (281,790)
----------------------------
Total stockholders' equity 65,195,490 70,116,525
----------------------------
Total liabilities and stockholders' equity $674,475,394 675,691,014
============================
See accompanying notes to consolidated financial statements.
FFY FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Income
Years ended June 30, 2000, 1999 and 1998
2000 1999 1998
---- ---- ----
Interest income:
Loans $39,046,180 39,046,983 39,785,064
Securities available for sale 10,353,310 9,552,383 7,622,185
Federal Home Loan Bank stock 362,556 333,072 312,213
Other interest-earning assets 33,597 151,179 286,969
-----------------------------------------
Total interest income 49,795,643 49,083,617 48,006,431
-----------------------------------------
Interest expense:
Deposits 19,327,671 20,116,405 21,282,008
Securities sold under agreements to repurchase:
Short-term 406,052 449,923 871,761
Long-term 3,127,608 2,974,050 2,043,340
Borrowed funds:
Short-term 1,194,432 1,451,527 1,361,933
Long-term 4,067,135 1,522,577 -
-----------------------------------------
Total interest expense 28,122,898 26,514,482 25,559,042
-----------------------------------------
Net interest income 21,672,745 22,569,135 22,447,389
Provision for loan losses 475,763 494,438 565,521
-----------------------------------------
Net interest income after provision for
loan losses 21,196,982 22,074,697 21,881,868
-----------------------------------------
Noninterest income:
Service charges 1,106,266 897,011 700,445
Gain on sale of securities available for sale 45,574 203,317 246,473
Gain on sale of loans 234,162 720,153 134,211
Other 638,687 729,529 683,847
-----------------------------------------
Total noninterest income 2,024,689 2,550,010 1,764,976
-----------------------------------------
Noninterest expense:
Salaries and employee benefits 6,670,918 6,456,173 6,076,824
Net occupancy and equipment 2,010,129 2,043,578 1,805,939
Insurance and bonding 388,415 478,923 493,752
State and local taxes 914,057 993,634 1,077,154
Other 2,850,978 2,522,740 2,316,964
-----------------------------------------
Total noninterest expense 12,834,497 12,495,048 11,770,633
-----------------------------------------
Income before income taxes and
minority interest 10,387,174 12,129,659 11,876,211
Income tax expense:
Federal 3,048,000 4,040,000 4,147,000
State - 43,000 -
Minority interest in loss of consolidated subsidiaries (20,625) (93,446) -
-----------------------------------------
Net income $ 7,359,799 8,140,105 7,729,211
=========================================
Basic earnings per share $ 1.15 1.15 1.03
=========================================
Diluted earnings per share $ 1.12 1.11 0.99
=========================================
See accompanying notes to consolidated financial statements.
FFY FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Changes in Stockholders' Equity
Years ended June 30, 2000, 1999 and 1998
Common stock
---------------------- Additional
Shares paid-in
outstanding Amount capital
----------- ------ ----------
Balance at June 30, 1997 4,144,840 $66,300 64,506,573
Comprehensive income:
Net income - - -
Change in unrealized holding gain
on securities available for sale, net - - -
-------------------------------------
Comprehensive income - - -
Dividends paid, $.775 per share - - -
Treasury stock purchased (167,543) - -
Stock options exercised 33,693 - (396,676)
Amortization of KSOP expense - - -
Tax benefit related to exercise
of stock options - - 152,987
Difference between average fair value
per share and cost per share on KSOP
shares committed to be released - - 855,257
-------------------------------------
Balance at June 30, 1998 4,010,990 66,300 65,118,141
Comprehensive income:
Net income - - -
Change in unrealized holding gain (loss)
on securities available for sale, net - - -
-------------------------------------
Comprehensive income - - -
Distribution of 100% stock dividend 4,010,990 9,594 (27,525,112)
Dividends paid, $.438 per share - - -
Treasury stock purchased (1,008,899) - -
Stock options exercised 108,298 - (720,004)
Amortization of KSOP expense - - -
Tax benefit related to exercise
of stock options - - 295,643
Difference between average fair value
per share and cost per share on KSOP
shares committed to be released - - 923,960
-------------------------------------
Balance at June 30, 1999 7,121,379 75,894 38,092,628
Comprehensive income:
Net income - - -
Change in unrealized holding gain (loss)
on securities available for sale, net - - -
-------------------------------------
Comprehensive income - - -
Dividends paid, $.488 per share - - -
Treasury stock purchased (444,931) - -
Treasury stock issued 5,625 - -
Stock options exercised 38,042 - (506,877)
Amortization of KSOP expense - - -
Tax benefit related to exercise
of stock options - - 188,174
Difference between average fair value
per share and cost per share on KSOP
shares committed to be released - - 682,372
-------------------------------------
Balance at June 30, 2000 6,720,115 75,894 38,456,297
=====================================
Common stock
purchased by
Accumulated --------------------------
other Employee Recognition
comprehen- stock own- and
Retained Treasury sive income ership and retention
earnings stock (loss) 401(k) plan plans Total
-------- -------- ----------- ----------- ----------- -----
Balance at June 30, 1997 74,599,977 (53,387,258) 111,796 (3,441,382) (281,790) 82,174,216
Comprehensive income:
Net income 7,729,211 - - - - 7,729,211
Change in unrealized holding gain
on securities available for sale, net - - 700,941 - - 700,941
--------------------------------------------------------------------------------------
Comprehensive income 7,729,211 - 700,941 - - 8,430,152
Dividends paid, $.775 per share (2,900,750) - - - - (2,900,750)
Treasury stock purchased - (5,239,911) - - - (5,239,911)
Stock options exercised - 733,606 - - - 336,930
Amortization of KSOP expense - - - 406,820 - 406,820
Tax benefit related to exercise
of stock options - - - - - 152,987
Difference between average fair value
per share and cost per share on KSOP
shares committed to be released - - - - - 855,257
--------------------------------------------------------------------------------------
Balance at June 30, 1998 79,428,438 (57,893,563) 812,737 (3,034,562) (281,790) 84,215,701
Comprehensive income:
Net income 8,140,105 - - - - 8,140,105
Change in unrealized holding gain (loss)
on securities available for sale, net - - (3,629,601) - - (3,629,601)
--------------------------------------------------------------------------------------
Comprehensive income 8,140,105 - (3,629,601) - - 4,510,504
Distribution of 100% stock dividend (38,222,741) 65,738,259 - - - -
Dividends paid, $.438 per share (3,102,129) - - - - (3,102,129)
Treasury stock purchased - (17,675,478) - - - (17,675,478)
Stock options exercised - 1,279,298 - - - 559,294
Amortization of KSOP expense - - - 389,030 - 389,030
Tax benefit related to exercise
of stock options - - - - - 295,643
Difference between average fair value
per share and cost per share on KSOP
shares committed to be released - - - - - 923,960
--------------------------------------------------------------------------------------
Balance at June 30, 1999 46,243,673 (8,551,484) (2,816,864) (2,645,532) (281,790) 70,116,525
Comprehensive income:
Net income 7,359,799 - - - - 7,359,799
Change in unrealized holding gain (loss)
on securities available for sale, net - - (3,599,022) - - (3,599,022)
--------------------------------------------------------------------------------------
Comprehensive income 7,359,799 - (3,599,022) - - 3,760,777
Dividends paid, $.488 per share (3,103,246) - - - - (3,103,246)
Treasury stock purchased - (7,072,998) - - - (7,072,998)
Treasury stock issued - 62,227 - - - 62,227
Stock options exercised - 697,086 - - - 190,209
Amortization of KSOP expense - - - 371,450 - 371,450
Tax benefit related to exercise
of stock options - - - - - 188,174
Difference between average fair value
per share and cost per share on KSOP
shares committed to be released - - - - - 682,372
--------------------------------------------------------------------------------------
Balance at June 30, 2000 50,500,226 (14,865,169) (6,415,886) (2,274,082) (281,790) 65,195,490
=====================================================================================
See accompanying notes to consolidated financial statements.
FFY FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended June 30, 2000, 1999 and 1998
2000 1999 1998
---- ---- ----
Cash flows from operating activities:
Net income $ 7,359,799 8,140,105 7,729,211
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 1,047,013 1,135,772 969,042
Amortization and accretion 35,562 344,464 381,801
Increase (decrease) in accrued federal income taxes 1,317,826 (1,323,643) (487,987)
Deferred federal income taxes 1,357,000 1,593,000 261,000
Net gain on sale of securities (45,574) (203,317) (246,473)
Gain on sale of loans (234,162) (720,153) (134,211)
Loans originated for sale (14,904,923) (30,855,271) (4,988,080)
Proceeds from sales of loans originated for sale 15,409,785 31,128,924 5,077,069
Provision for loan losses 475,763 494,438 565,521
Federal Home Loan Bank stock dividend (351,600) (329,700) (304,700)
(Increase) decrease in interest receivable 65,489 (542,095) (355,161)
Tax benefits related to employee plans 188,174 295,643 152,987
Other, net 497,362 1,205,683 1,043,628
-------------------------------------------
Net cash provided by operating activities 12,217,514 10,363,850 9,663,647
-------------------------------------------
Cash flows from investing activities:
Proceeds from maturity of securities available for sale 3,020,000 10,697,077 16,727,605
Proceeds from sales of securities available for sale 15,451,261 35,698,278 41,929,782
Purchase of securities available for sale (742,661) (144,809,607) (99,324,173)
Purchase of Federal Home Loan Bank stock - - (112,300)
Principal receipts on securities available for sale 8,773,241 26,370,997 29,165,393
Net (increase) decrease in loans (30,559,564) 29,154,107 (21,563,866)
Purchase of office properties and equipment (1,003,087) (554,064) (1,136,981)
(Increase) decrease in investment in real estate
development joint venture 364,084 (128,639) (766,241)
Purchase of insurance agency intangible assets (690,000) - -
Other, net (278,611) (59,115) (6,017)
-------------------------------------------
Net cash used in investing activities (5,665,337) (43,630,966) (35,086,798)
-------------------------------------------
Cash flows from financing activities:
Net increase (decrease) in deposits (11,264,389) 13,371,715 (6,138,251)
Net increase (decrease) in securities sold under agreements to repurchase:
Short-term 320,158 (6,470,576) 5,781,075
Long-term - - 26,300,000
Net increase (decrease) in short-term borrowed funds (5,300,000) (11,185,000) 6,530,000
Proceeds from long-term borrowings 29,280,000 60,000,000 -
Repayments of long-term borrowed funds (10,000,000) - -
Treasury stock purchases (7,072,998) (17,675,478) (5,239,911)
Dividends paid (3,103,246) (3,102,129) (2,900,750)
Proceeds from stock options exercised 190,209 559,294 336,930
Increase (decrease) in amounts due to bank (154,055) (368,059) 695,939
Other, net 112,155 (465,027) 125,546
-------------------------------------------
Net cash provided by (used in) financing activities (6,992,166) 34,664,740 25,490,578
Net increase (decrease) in cash and cash equivalents $ (439,989) 1,397,624 67,427
Cash and cash equivalents at beginning of year 11,472,806 10,075,182 10,007,755
-------------------------------------------
Cash and cash equivalents at end of year $ 11,032,817 11,472,806 10,075,182
===========================================
Supplemental disclosure of cash flow information:
Cash payments of interest expense $ 28,328,248 25,377,616 25,095,614
Cash payments of federal income taxes 185,000 3,475,000 4,150,000
===========================================
Supplemental schedule of non-cash investing activities:
Real estate acquired through foreclosure $ 961,969 936,116 643,725
Real estate sales by loan issuance 730,392 742,543 543,500
===========================================
See accompanying notes to consolidated financial statements.
FFY FINANCIAL CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 2000, 1999 and 1998
(1) Summary of Significant Accounting Policies
(a) Principles of Consolidation
The consolidated financial statements of the Company include the
accounts of FFY Financial Corp. (FFY or Holding Company) and its
wholly owned subsidiaries, FFY Bank (Bank) and FFY Holdings, Inc.
The consolidated financial statements also include the accounts
of FFY Insurance Agency, Ltd., the insurance affiliate of FFY
Holdings, Inc. The accounts of FFY Holdings real estate
affiliate, Coldwell Banker FFY Real Estate, are not consolidated
since the company owns a non-controlling one-third interest. All
significant intercompany balances and transactions have been
eliminated in consolidation.
(b) Basis of Presentation
The consolidated financial statements have been prepared in
conformity with generally accepted accounting principles. The
preparation of the consolidated financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the
reported amounts of assets and liabilities, and the disclosure of
contingent assets and liabilities at the date of the consolidated
statement of financial condition and the reported amounts of
revenues and expenses during the reporting period. Actual results
could differ from those estimates.
(c) Cash and Cash Equivalents
The Company considers all highly liquid debt instruments with
maturities at date of purchase of three months or less to be cash
equivalents. Cash equivalents also include interest-bearing
deposits and short-term investments.
(d) Securities
Management determines the appropriate classification of
securities at the time of purchase. Debt and equity securities,
including mortgage-backed securities, are classified as available
for sale and reported at fair value, with unrealized gains and
losses excluded from earnings and reported as a component of
accumulated other comprehensive income (loss), net of tax.
Available-for-sale securities are those which management may
decide to sell, if needed, for liquidity, asset/liability
management, or other reasons. Gains or losses on the sale of
securities are recognized using the specific identification
method. A decline in the fair value of any security below cost
that is deemed other than temporary is charged to earnings
resulting in the establishment of a new cost basis for the
security. Premiums and discounts are amortized or accreted over
the life of the related security as an adjustment to yield using
the interest method. Dividends and interest income are recognized
when earned.
(e) Loans and Related Fees and Costs
Loans receivable originated with the intent to hold to maturity
are carried at unpaid principal balances, less the allowance for
loan losses and net deferred loan origination fees. Interest on
loans is accrued and credited to income as earned. The accrual of
interest is discontinued generally when a loan is more than
90 days delinquent or otherwise doubtful of collection. Such
interest ultimately collected is credited to income in the period
of recovery. Loans are returned to accrual status when both
principal and interest are current, and the loan is determined
to be performing in accordance with the applicable loan terms.
Loan origination fees and certain direct loan origination costs
are deferred, and the net amounts are amortized as an adjustment
of the related loan's yield. The Bank amortizes these amounts
using the interest method over the contractual life of the
related loans.
The Company currently sells loans to Federal National Mortgage
Association (Fannie Mae) in the secondary market and delivers
shortly after funding. Mortgage loans held for sale are carried
at the lower of cost or market value, determined on a net
aggregate basis.
Mortgage servicing rights associated with loans originated and
sold, where servicing is retained, are capitalized and included
in other assets in the statement of financial condition. The
servicing rights capitalized are amortized in proportion to and
over the period of estimated servicing income. Management
measures impairment of servicing rights based on prepayment
trends and external market factors. Any impairment is recorded as
a valuation allowance.
(f) Allowance for Loan Losses
The allowance for loan losses is maintained at a level adequate
to absorb probable losses inherent in the loan portfolio as of
the balance sheet date. The provision for loan losses charged to
expense is based on management's judgment taking into
consideration past experience, current and estimated future
economic conditions, known and inherent risks in the loan
portfolio, and the estimated value of underlying collateral.
While management uses the best information available to make
these evaluations, future adjustments to the allowance may become
necessary if economic conditions change substantially from the
assumptions used in making the evaluations. Additionally, various
regulatory agencies, as an integral part of their examination
process, periodically review the allowance for loan losses. Such
agencies may require the recognition of additions to the reserve
based on their judgments of information available to them at the
time of their examination.
Management considers a loan impaired when, based on current
information and events, it is probable that the Company will be
unable to collect all amounts of principal and interest under the
original terms of the loan agreement. Significant factors
impacting management's judgment in determining when a loan is
impaired include an evaluation of compliance with repayment
program, condition of collateral, deterioration in financial
strength of borrower or any case when the expected future cash
payments may be less than the recorded amount. Since the Bank's
loans are primarily collateral dependent, measurement of
impairment is based on the fair value of the collateral.
Management excludes large groups of smaller balance homogeneous
loans such as residential mortgages and consumer loans which are
collectively evaluated.
(g) Office Properties and Equipment
Land is carried at cost. Office properties and equipment are
stated at cost less accumulated depreciation. Depreciation is
computed on the straight-line method over the estimated useful
lives of the assets. Estimated lives are 10 to 40 years for
office properties, including improvements, and 3 to 10 years for
equipment. Leasehold improvements are depreciated using the
straight-line method over the terms of the related leases.
(h) Repurchase Agreements
The Bank enters into sales of securities under agreements to
repurchase securities of the same agency bearing the identical
contract rate and similar remaining weighted average maturities
as the original securities that result in approximately the same
market yield.
(i) Income Taxes
The Company files a consolidated federal income tax return.
The Company accounts for income taxes under the asset and
liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts of
existing assets and liabilities and their respective tax bases.
Deferred tax assets and liabilities are measured using enacted
tax rates expected to apply to taxable income in the years in
which those temporary differences are expected to be recovered or
settled. The effect on deferred tax assets and liabilities of a
change in tax rates is recognized as income or expense in the
period that includes the enactment date.
(j) Earnings Per Share
Basic earnings per share of common stock for the years ended June
30, 2000, 1999 and 1998 have been determined by dividing net
income for the year by the weighted average number of shares of
common stock outstanding during the year. Diluted earnings per
share of common stock for the years ended June 30, 2000, 1999 and
1998 have been determined by dividing net income for the year by
the weighted average number of shares of common stock outstanding
during the year adjusted for the dilutive effect of outstanding
stock options. Total shares outstanding for earnings per share
calculation purposes have been reduced by the KSOP shares that
have not been committed to be released. In addition, weighted
average common and common equivalent shares have been restated to
reflect a 100% stock dividend, effected in the form of a two-for-
one stock split, declared on January 19, 1999. The computation of
basic and diluted earnings per share is shown in the table below.
Years ended June 30,
--------------------------------------
2000 1999 1998
---- ---- ----
Basic earnings per share computation:
Numerator - Net income $7,359,799 8,140,105 7,729,211
Denominator - Weighted average common
shares outstanding 6,388,100 7,072,607 7,515,890
Basic earnings per share $ 1.15 1.15 1.03
======================================
Diluted earnings per share computation:
Numerator - Net income $7,359,799 8,140,105 7,729,211
Denominator - Weighted average common
shares outstanding 6,388,100 7,072,607 7,515,890
Dilutive effect of stock options 187,602 234,046 278,162
--------------------------------------
Weighted average common shares
and common stock equivalents 6,575,702 7,306,653 7,794,052
Diluted earnings per share $ 1.12 1.11 0.99
======================================
(k) Comprehensive Income
On July 1, 1998, the Company adopted the provisions of Statement
of Financial Accounting Standard (SFAS) No. 130, Reporting
Comprehensive Income. This Statement establishes standards for
reporting and display of comprehensive income and its components.
Comprehensive income consists of net income and other
comprehensive income, which for the Company is comprised entirely
of unrealized holding gains and losses on securities available-
for-sale, net of the related tax effect. As permitted by SFAS No.
130, the Company has elected to disclose the components of
comprehensive income in the Consolidated Statements of Changes in
Stockholders' Equity. Other comprehensive income (loss), before
tax, for the years ended June 30, 2000, 1999 and 1998 was
($5,453,022), ($5,500,601) and $1,062,941, respectively. The
related tax (expense) benefit for the years ended June 30, 2000,
1999 and 1998 was $1,854,000, $1,871,000 and ($362,000),
respectively.
(l) Effect of New Financial Accounting Standards
In June 1998, the FASB issued SFAS No. 133, Accounting for
Derivative Instruments and Hedging Activities, that was
subsequently amended by SFAS No. 137, which delayed the original
effective date of SFAS No. 133. This statement standardizes the
accounting for derivative contracts, by requiring that an entity
recognize those items as assets or liabilities in the statement
of financial condition and measure them at fair value. SFAS No.
137 was effective for the Company on July 1, 2000. Management
determined that the Company did not engage in any hedging
activities or derivative instruments and therefore, the adoption
of SFAS No. 137 had no impact on financial condition or results
of operations.
(m) Reclassifications
Certain amounts in the prior year consolidated financial
statements have been reclassified to conform with the current
year's presentation.
(2) Securities
A summary of securities available for sale is as follows:
Gross Gross
Amortized unrealized unrealized Fair
cost gains losses value
-------------------------------------------------------
June 30, 2000
Federal agency obligations $ 18,966,247 - (724,553) 18,241,694
Mortgage-backed securities 65,298,064 - (3,608,828) 61,689,236
Municipal securities 44,928,441 42,285 (3,641,919) 41,328,807
Trust preferred securities 24,586,625 - (1,390,429) 23,196,196
Asset-backed SLMA's 11,567,549 - (197,549) 11,370,000
Equity securities 894,066 46,612 (68,609) 872,069
Other securities 1,617,244 - (178,896) 1,438,348
--------------------------------------------------------
Totals $167,858,236 88,897 (9,810,783) 158,136,350
========================================================
Gross Gross
Amortized unrealized unrealized Fair
cost gains losses value
-------------------------------------------------------
June 30, 1999
Federal agency obligations $ 33,957,204 37,454 (350,690) 33,643,968
Mortgage-backed securities 74,454,008 13,833 (2,268,422) 72,199,419
Municipal securities 46,707,415 251,106 (1,982,949) 44,975,572
Trust preferred securities 24,581,418 9,339 (381,382) 24,209,375
Asset-backed SLMA's 11,493,465 - (26,215) 11,467,250
Equity securities 1,798,791 509,914 (43,290) 2,265,415
Other securities 1,602,162 - (37,562) 1,564,600
--------------------------------------------------------
Totals $194,594,463 821,646 (5,090,510) 190,325,599
========================================================
The amortized cost and fair values of debt securities available for
sale at June 30, 2000, by contractual maturity, are shown below.
Actual maturities will differ from contractual maturities because
issuers may have the right to call or prepay obligations with or
without call or prepayment penalties. Equity securities do not have a
contractual maturity.
Amortized Fair
cost value
--------- -----
Within one year $ 290,406 289,773
After one year through five years 20,376,635 19,805,298
After five years through ten years 27,882,719 26,501,725
After ten years 118,414,410 110,667,485
----------------------------
$166,964,170 157,264,281
============================
The weighted average tax-equivalent annual yield of securities
available for sale at June 30, 2000 and 1999 was 6.59% and 6.32%,
respectively.
Gross proceeds from sales of securities available for sale during the
years ended June 30, 2000, 1999 and 1998 totaled $15,451,261,
$35,698,278 and $41,929,782, respectively. Gross realized gains and
losses on sales of securities available for sale totaled $131,868 and
$86,294, respectively, during the year ended June 30, 2000; $385,137
and $181,820, respectively, during the year ended June 30, 1999; and
$324,487 and $78,014, respectively, during the year ended June 30,
1998.
(3) Loans Receivable
Following is a summary of loans receivable at June 30, 2000 and 1999:
2000 1999
---- ----
First mortgage loans:
Secured by one-to-four family residences $351,425,171 335,064,165
Secured by other properties 14,367,031 15,579,362
Commercial 44,628,822 35,117,294
Construction and development loans, primarily residential 32,480,194 28,084,891
---------------------------
442,901,218 413,845,712
Consumer and other loans:
Automobile 5,811,518 7,788,757
Home equity 44,436,874 36,469,834
90-day notes 1,816,299 3,416,013
Commercial 1,057,010 849,071
Other 4,307,435 4,981,141
---------------------------
57,429,136 53,504,816
---------------------------
500,330,354 467,350,528
Less:
Undisbursed loans in process 10,349,503 7,969,623
Net deferred loan origination fees 2,634,304 2,455,162
Allowance for loan losses 2,658,784 2,645,132
Loans available for sale 170,800 441,500
---------------------------
15,813,391 13,511,417
---------------------------
$484,516,963 453,839,111
===========================
Weighted average annual yield at year-end 8.20% 8.05%
===========================
Activity in the allowance for loan losses for the years ended June 30,
2000, 1999 and 1998 is summarized as follows:
2000 1999 1998
---- ---- ----
Balance at beginning of year $2,645,132 2,740,169 2,961,810
Provision charged to operations 475,763 494,438 565,521
Charge-offs (597,907) (723,383) (839,704)
Recoveries 135,796 133,908 52,542
------------------------------------
Balance at end of year $2,658,784 2,645,132 2,740,169
====================================
Real estate owned, troubled debt restructurings, and non-accrual
loans, as well as the related impact on income in the accompanying
consolidated statements of income, were immaterial for 2000, 1999 and
1998. At June 30, 2000 and 1999, non-accrual loans consisted primarily
of one-to-four family residences and totaled $3,128,827 and
$2,160,290, respectively. At June 30, 2000 and 1999, the recorded
investment in loans which have been identified as being impaired
totaled $1,565,705 and $1,591,754, respectively. No valuation
allowance has been recorded on impaired loans since the fair value of
the underlying collateral exceeds the recorded investment on an
individual loan by loan basis. Average impaired loans for the years
ended June 30, 2000 and 1999 totaled $1,565,580 and $1,606,423,
respectively.
Mortgage loans serviced for others are not included in the
accompanying consolidated statements of financial condition. The
outstanding principal balance of loans serviced for others totaled
$47,311,813 and $35,050,912 at June 30, 2000 and 1999, respectively.
Capitalized net mortgage servicing rights totaled $418,687 and
$329,602 at June 30, 2000 and 1999, respectively.
(4) Office Properties and Equipment
Following is a summary of office properties and equipment by major
classifications as of June 30, 2000 and 1999:
2000 1999
---- ----
Land $ 1,617,581 1,617,581
Buildings 8,604,004 8,513,962
Furniture and equipment 2,834,168 2,663,168
Computer equipment and software 4,164,898 3,621,618
Automobiles 160,484 132,578
Leasehold improvements 501,131 402,322
-------------------------
17,882,266 16,951,229
Less accumulated depreciation and amortization 10,709,827 9,732,589
-------------------------
$ 7,172,439 7,218,640
=========================
(5) Deposits
Following is an analysis of interest-bearing deposits, which consist
of various savings and certificate accounts with varying interest
rates, as of June 30, 2000 and 1999:
2000 1999
---------------------- ----------------------
Account type and stated interest rate Amount % Amount %
------------------------------------- ------ --- ------ ---
NOW accounts, up to 1.74% $ 38,732,058 8.68 $ 36,677,860 8.02
Money market accounts, up to 5.27% 47,136,810 10.57 39,448,435 8.63
Passbook accounts, 2.25% 82,610,394 18.52 92,719,043 20.27
------------------------------------------------
168,479,262 37.77 168,845,338 36.92
Certificate accounts:
3.00% to 3.99% 120,915 0.03 22,172,077 4.85
4.00% to 4.99% 51,125,296 11.46 44,800,820 9.79
5.00% to 5.99% 106,360,998 23.85 144,645,834 31.63
6.00% to 6.99% 95,382,685 21.38 69,208,919 15.13
7.00% to 7.99% 24,579,634 5.51 7,669,814 1.68
------------------------------------------------
277,569,528 62.23 288,497,464 63.08
------------------------------------------------
$446,048,790 100.00 $457,342,802 100.00
================================================
At June 30, 2000 and 1999, scheduled maturities of certificate
accounts are as follows:
2000 1999
---------------------- ----------------------
Amount % Amount %
------ --- ------ ---
Less than 12 months $171,117,345 61.65 $189,811,007 65.79
13 to 24 months 50,487,978 18.19 55,191,248 19.13
25 to 36 months 19,484,670 7.02 23,196,762 8.04
37 to 48 months 6,475,814 2.33 12,246,369 4.25
49 to 60 months 28,076,233 10.12 6,517,036 2.26
Over 60 months 1,927,488 0.69 1,535,042 0.53
------------------------------------------------
$277,569,528 100.00 $288,497,464 100.00
The 1999 amounts above included callable certificate accounts totaling
$8,556,305 with a weighted average rate of 6.91%. Due to a decline in
market rates during fiscal year 1999, management exercised their call
options during fiscal year 2000. There were no callable certificate
accounts at June 30, 2000.
Following is a summary of certificate accounts of $100,000 or more by
remaining maturities at June 30, 2000 and 1999:
2000 1999
---- ----
Three months or less $13,102,503 10,414,553
Over three to six months 17,940,423 8,007,383
Over six to twelve months 15,588,919 11,495,888
Over twelve months 20,813,464 17,840,509
--------------------------
$67,445,309 47,758,333
==========================
At June 30, 2000 and 1999, certificate accounts included $1,215,105
and $1,543,897, respectively, in customer deposits for which federal
agency obligations were pledged as collateral in an amount equal to
the certificate account balances. The weighted average rate of the
certificate accounts was 6.43% and 5.51%, respectively, at June 30,
2000 and 1999. The certificates at June 30, 2000 for which securities
are pledged are scheduled to mature from April 2002 to April 2005.
At June 30, 2000, certificate accounts included four deposits totaling
$13,300,000 from the State of Ohio with a weighted average rate of
6.60%. These certificates have six-month terms which will mature from
September 2000 to December 2000. Federal Home Loan Bank letters of
credit collateralize $8,300,000 of these deposits and federal agency
obligations collateralize the remaining $5,000,000.
Interest expense on deposits for the years ended June 30, 2000, 1999
and 1998 is summarized below:
2000 1999 1998
---- ---- ----
NOW accounts $ 388,036 476,884 636,915
Money market accounts 1,815,365 1,136,095 762,231
Passbook accounts 1,985,495 2,090,725 2,683,094
Certificate accounts 15,138,775 16,412,701 17,199,768
---------------------------------------
$19,327,671 20,116,405 21,282,008
=======================================
The weighted average interest rate on deposits was 4.56% and 4.27% at
June 30, 2000 and 1999, respectively.
(6) Securities Sold Under Agreements to Repurchase
At June 30, 2000 and 1999, securities sold under agreements to
repurchase were as follows:
2000 1999
---- ----
Short-term:
Repurchase agreements $ 6,937,905 6,617,747
Federal agency obligations pledged as collateral:
Book value, including accrued interest 10,218,236 10,236,120
Market value, including accrued interest 9,876,930 10,237,604
Average balance outstanding during the year 6,913,474 9,054,035
Maximum amount outstanding at any month-end 7,693,664 13,448,884
Weighted average interest rate 6.51% 5.02%
Long-term:
Repurchase agreements 51,300,000 51,300,000
Mortgage-backed securities pledged as collateral:
Book value, including accrued interest 61,902,083 61,469,494
Market value, including accrued interest 58,510,942 59,782,455
Average balance outstanding during the year 51,300,000 51,300,000
Maximum amount outstanding at any month-end 51,300,000 51,300,000
Weighted average interest rate 6.84% 5.76%
Short and long-term repurchase agreements are treated as financings,
and the obligations to repurchase securities sold are reflected as a
liability in the consolidated statements of financial condition. The
pledged securities, although held in safekeeping outside the Bank,
remain in the asset accounts. A summary of individual long-term
repurchase agreements at June 30, 2000 and 1999 with respect to
maturity and call dates is summarized in the table below. The call
dates renew every three months and are at the option of the buyer.
Maturity Earliest call 2000 1999
-------- ------------- ---- ----
5/20/02 Non-callable $25,000,000 -
12/20/02 12/20/01 16,300,000 -
1/16/03 1/16/01 10,000,000 10,000,000
2/19/02 Called - 25,000,000
3/19/01 Called - 16,300,000
(7) Borrowed Funds
Borrowed funds at June 30, 2000 and 1999 consist of advances from the
Federal Home Loan Bank (FHLB).
2000 1999
---------------------- ----------------------
Weighted Weighted
average average
Amount rate Amount rate
------ -------- ------ --------
Advances from the FHLB of Cincinnati
with maturities less than one year:
Line of credit advances $17,500,000 7.35% $ - -
Repo-based advances - - 22,800,000 4.92%
----------------------------------------------
$17,500,000 7.35% $22,800,000 4.92%
==============================================
2000 1999
----------------------- ---------------------
Weighted Weighted
Maturity average average
date Amount rate Amount rate
-------- ------ -------- ------ --------
Advances from the FHLB of Cincinnati
with maturities greater than one year:
LIBOR-based advance 8/26/00 $25,000,000 6.66% $25,000,000 4.89%
Convertible fixed-rate advance 12/3/03 - - 10,000,000 4.40%
Convertible fixed-rate advance 5/14/09 25,000,000 5.61% 25,000,000 5.61%
Fixed-rate advance 1/05/05 25,000,000 7.22% - -
Fixed-rate advance 7/05/03 4,280,000 7.10% - -
------------------------------------------------
$79,280,000 6.53% $60,000,000 5.11%
================================================
The FHLB line of credit advances have adjustable rates. The LIBOR-
based advance is tied to 3-month LIBOR minus 16 basis points and is
adjusted quarterly. The $25 million convertible fixed-rate advance can
be converted, at the option of the FHLB of Cincinnati, to a 3-month
LIBOR-based advance on May 14, 2004. All outstanding advances at June
30, 2000 from the FHLB of Cincinnati are secured by a blanket mortgage
collateral agreement for 150% of outstanding advances, amounting to
$145.2 million.
At June 30, 2000, the Bank has two standby letters of credit with
the FHLB in the amounts of $5,000,000 and $3,300,000, which respectively
mature on October 4, 2000 and December 6, 2000. These letters were not
drawn on as of June 30, 2000 and are being used to collateralize
certificates of deposit. A fee of 12 1/2 basis points was charged for
each letter of credit.
(8) Compliance with Regulatory Capital Requirements
The Bank is subject to various regulatory capital requirements
administered by the federal banking agencies. Failure to meet minimum
capital requirements can initiate certain mandatory and possibly
additional discretionary actions by regulators that, if undertaken,
could have a direct material effect on the Bank's financial
statements. Under capital adequacy guidelines and the regulatory
framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's
assets, liabilities, and certain off-balance-sheet items as calculated
under regulatory accounting practices. The Bank's capital amounts and
classification are also subject to qualitative judgments by the
regulators about components, risk weightings and other factors.
Office of Thrift Supervision (OTS) regulations require savings
institutions to maintain certain minimum levels of regulatory capital.
An institution that fails to comply with its regulatory capital
requirements must obtain OTS approval of a capital plan and can be
subject to a capital directive and certain restrictions on its
operations. At June 30, 2000, the minimum regulatory capital
regulations require institutions to have equity capital to total
tangible assets of 1.5% ; a minimum leverage ratio of core (Tier 1)
capital to total adjusted tangible assets of 3.0% ; and a minimum
ratio of total capital (core capital and supplementary capital) to
risk weighted assets of 8.0% , of which 4.0% must be core capital.
The most recent notification from the OTS categorized the Bank as well
capitalized under the regulatory framework for prompt corrective
action. To be categorized as well capitalized, the Bank must maintain
minimum total risk-based, Tier I risk-based, and Tier I leverage
ratios as set forth in the following table. There are no conditions or
events since that notification that management believes have changed
the institution's category.
The following is a reconciliation of the Bank's GAAP and Regulatory
capital, and a summary of the Bank's actual capital ratios compared
with the OTS minimum bank capital adequacy requirements and their
requirements for classification as well capitalized at June 30, 2000
and 1999:
Tier-1 Tier-1 Total
Equity core risk-based risk-based
June 30, 2000 capital capital capital capital
------------- ------- ------- ---------- ----------
GAAP capital $ 49,295,266 49,295,266 49,295,266 49,295,266
Accumulated losses on certain securities
available for sale, net 6,150,228 6,150,228 6,150,228
General loan valuation allowances - - 2,526,716
Other (41,719) (41,719) (41,719)
-----------------------------------------
Regulatory capital 55,403,775 55,403,775 57,930,491
Total assets 664,283,748
------------
Adjusted total assets 670,887,743
-----------
Risk-weighted assets 454,889,366 454,889,366
--------------------------
Actual capital ratio 7.42% 8.26% 12.18% 12.73%
Minimum capital adequacy requirements 1.50% 3.00% 8.00%
Regulatory capital category:
Well capitalized - equal to
or greater than 5.00% 6.00% 10.00%
Tier-1 Tier-1 Total
Equity core risk-based risk-based
June 30, 1999 capital capital capital capital
------------- ------- ------- ---------- ----------
GAAP capital $ 51,063,276 51,063,276 51,063,276 51,063,276
Accumulated losses on certain securities
available for sale, net 3,140,221 3,140,221 3,140,221
General loan valuation allowances - - 2,380,434
Other (329,602) (329,602) (565,575)
Regulatory capital 53,873,895 53,873,895 56,018,356
-----------------------------------------
Total assets 661,204,894
------------
Adjusted total assets 665,870,977
-----------
Risk-weighted assets 404,152,959 404,152,959
--------------------------
Actual capital ratio 7.72% 8.09% 13.33% 13.86%
Minimum capital adequacy requirements 1.50% 3.00% 8.00%
Regulatory capital category:
Well capitalized - equal to
or greater than 5.00% 6.00% 10.00%
(9) Income Taxes
Federal income tax expenses include current and deferred amounts as
follows:
2000 1999 1998
---- ---- ----
Current $1,691,000 2,447,000 3,886,000
Deferred 1,357,000 1,593,000 261,000
---------------------------------------
Federal income tax expense 3,048,000 4,040,000 4,147,000
Deferred federal tax expense (benefit)
on unrealized gains (losses) on
securities available for sale (1,854,000) (1,871,000) 362,000
---------------------------------------
$1,194,000 2,169,000 4,509,000
=======================================
Actual federal income tax expense differed from the amounts computed
by applying the federal income tax rate of 35% to income before
federal income taxes as a result of the following:
2000 1999 1998
-------------------- -------------------- --------------------
Expected income tax expense
at statutory rate $3,642,730 35.00% $4,263,037 35.00% $4,156,674 35.00%
Other (594,730) (5.71) (223,037) (1.83) (9,674) (0.08)
-------------------------------------------------------------------
Actual federal tax expense $3,048,000 29.29% $4,040,000 33.17% $4,147,000 34.92%
===================================================================
The net tax effect of temporary differences that give rise to
significant portions of the deferred tax assets and deferred tax
liabilities at June 30, 2000 and 1999, is as follows:
2000 1999
---- ----
Deferred tax assets:
Deferred loan fees $ 978,000 842,000
Employee benefits 136,000 128,000
Bad debt reserves 904,000 899,000
Interest on nonaccrual loans 120,000 40,000
Unrealized depreciation on securities
available for sale 137,000 -
Other 53,000 54,000
-----------------------
Total gross deferred tax assets 2,328,000 1,963,000
-----------------------
Deferred tax liabilities:
FHLB stock dividends 1,070,000 950,000
Basis difference in fixed assets 166,000 172,000
Excess of tax reserves over base year amounts 769,000 961,000
Unrealized appreciation on securities
available for sale - 166,000
Other 297,000 185,000
-----------------------
Total gross deferred tax liabilities 2,302,000 2,434,000
-----------------------
Net deferred tax asset (liability) $ 26,000 (471,000)
=======================
A valuation allowance is established to reduce the deferred tax asset
if it is more likely than not that the related tax benefits will not
be realized. In management's opinion, it is more likely than not that
the tax benefits will be realized; consequently, no valuation
allowance has been established as of June 30, 2000 and 1999.
Retained earnings at June 30, 2000 includes approximately $17,254,000
for which no provision for federal income tax has been made. These
amounts represent allocations of income to bad debt deductions for tax
purposes only. These qualifying and nonqualifying base year reserves
and supplemental reserves will be recaptured into income in the event
of certain distributions and redemptions. Such recapture would create
income for tax purposes only, which would be subject to the then
current corporate income tax rate.
Recapture would not occur upon the reorganization, merger, or
acquisition of the Bank, nor if the Bank is merged or liquidated tax-
free into a bank or undergoes a charter change. If the Bank fails to
qualify as a bank or merges into a nonbank entity, these reserves will
be recaptured into income.
The favorable reserve method previously afforded to thrifts was
repealed for tax years beginning after December 31, 1995. Large
thrifts must switch to the specific charge-off method of Section 166.
In general, a thrift is required to recapture its qualifying and
nonqualifying reserves in excess of its qualifying and nonqualifying
base year reserves. As the Bank has previously provided deferred taxes
on the recapture amount, no additional financial statement tax expense
should result from this legislation.
(10) Commitments, Contingencies, and Credit Risk
In the normal course of business, the Bank is party to financial
instruments with off-balance sheet risk to meet the financing needs of
its customers and to minimize exposure to fluctuations in interest
rates. These financial instruments primarily include commitments to
extend credit and unused lines of credit. Currently the Bank does not
enter into forward contracts for future delivery of residential
mortgage loans. These instruments involve elements of credit risk and
interest rate risk in excess of the amount recognized in the
consolidated statements of financial condition. The Bank's exposure to
credit loss in the event of nonperformance by the other party to the
commitment is represented by the contractual amount of the commitment.
The Bank uses the same credit policies in making commitments as it
does for on-balance sheet instruments. Interest rate risk on
commitments to extend credit results from the possibility that
interest rates may have moved unfavorably from the position of the
Bank since the time the commitment was made.
Commitments to extend credit are agreements to lend to a customer as
long as there is no violation of any condition established in the
contract. Commitments generally have fixed expiration dates of 30 to
180 days or other termination clauses and may require payment of a
fee. Since some of the commitments may expire without being drawn
upon, the total commitment amounts do not necessarily represent future
cash requirements. Following is a table of financial instruments whose
contract amounts represent credit risk:
2000 1999
---- ----
Fixed rate commitments to extend credit $11,400,906 11,902,729
Variable rate commitments to extend credit 7,747,985 7,398,242
Commercial lines and letters of credit 1,510,000 2,700,000
Undisbursed lines and letters of credit 14,292,215 8,195,471
-------------------------
$34,951,106 30,196,442
=========================
The Bank evaluates each customer's creditworthiness on a case-by-case
basis. The amount of collateral obtained by the Bank upon extension of
credit is based on management's credit evaluation of the applicant.
Collateral held is generally single-family residential real estate.
The Bank's primary lending area is in Mahoning, Trumbull, and
Columbiana counties in the state of Ohio. Accordingly, the ultimate
collectibility of a substantial portion of the loan portfolio is
susceptible to changes in market conditions in that area.
In the ordinary course of business, the Company has various
outstanding commitments and contingent liabilities that are not
reflected in the accompanying consolidated financial statements. In
addition, the Company is a defendant in certain claims and legal
actions arising in the ordinary course of business. In the opinion of
management, after consultation with legal counsel, the ultimate
disposition of these matters is not expected to have a material
adverse effect on the consolidated financial statements of the
Company.
(11) Director and Employee Plans
(a) Stock Option and Incentive Plan
FFY sponsors a stock option and incentive plan for the benefit of
directors and employees of the Company. The number of shares of
common stock authorized under the plan is 1,326,000, equal to 10%
of the total number of shares issued in the conversion adjusted
for the 100% stock dividend in 1999. The option exercise price
must be at least 100% of the fair value of the common stock on
the date of the grant, and the option term cannot exceed
10 years. Outstanding options can be exercised over a 10-year
period from the date of the grant.
Following is activity under the plan during the years ended
June 30, 2000, 1999 and 1998:
2000 1999 1998
---- ---- ----
Options outstanding, beginning of year 395,186 463,704 531,090
Exercised (38,042) (108,298) (67,386)
Granted 218,768 39,780 -
------------------------------
Options outstanding, end of year 575,912 395,186 463,704
==============================
Exercisable:
At $5.00 per share 296,174 334,216 439,814
From $11.59 to $18.63 per share 54,340 34,450 23,890
Options available for grant, end of year - 218,768 258,548
On May 23, 2000, 83,878 options were granted to the outside
directors of the Company pursuant to the merger with First Place
Financial Corp. (refer to note 15). These options shall vest in
their entirety only upon the closing of the proposed merger.
The Company applies Accounting Principles Board (APB) No. 25 for
its stock option and incentive plan. Accordingly, no compensation
cost has been recognized. Had compensation cost for this plan
been determined consistent with SFAS No. 123, the Company's net
income and earnings per share pro forma amounts for the years
ended June 30, 2000, 1999 and 1998 would be as follows (in
thousands, except per share amounts):
2000 1999 1998
----------------- ----------------- ------------------
As Pro As Pro As Pro
reported forma reported forma reported forma
-------- ----- -------- ----- -------- -----
Net income $7,360 7,264 8,140 8,108 7,729 7,715
Basic earnings per share $ 1.15 1.14 1.15 1.15 1.03 1.03
Diluted earnings per share $ 1.12 1.10 1.11 1.11 0.99 0.99
The above results may not be representative of the effects of
SFAS No. 123 on net income for future years.
The Company applied the Black-Scholes option pricing model to
determine the fair value of each option granted. Below is a
summary of the assumptions used in the calculation:
June 30,
-------------------------------------------------------------
2000 1999 1998
---- ---- ----
Dividend yield 2.68 - 4.88% 2.59 - 2.92% 2.59 - 2.92%
Expected volatility 16.54% 12.53 - 14.39% 12.53%
Risk-free interest rate 6.36 - 6.83% 4.47 - 6.47% 6.36 - 6.47%
Expected option life 5.25 - 5.36 years 5.25 years 5.25 years
(b) Employee Stock Ownership and 401(k) Plan
In June 1993, the Company established the FFY Financial Corp.
Employee Stock Ownership Plan (ESOP) for the benefit of its
employees. The ESOP covers substantially all employees with more
than one year of employment and who have attained the age of 21.
The ESOP borrowed $5,304,000 from FFY and purchased 1,060,800
shares (adjusted for the 100% stock dividend in 1999) in
conjunction with the Bank's conversion. Effective January 1,
1997, the Company amended the ESOP to include 401(k) provisions
under Section 401(k) of the Internal Revenue Code, thus forming
the FFY Financial Corp. Employee Stock Ownership and 401(k) Plan
(KSOP). The eligibility requirements of the KSOP did not change
pursuant to the amendment. Under the 401(k) provisions of the
KSOP, employees may elect to make pretax contributions of up to
15% of compensation as defined in the plan document. The Company
matches up to 6% of employee compensation in the form of stock
from the shares that are committed to be released to participants
for that year. The remaining shares after the 401(k) match are
released to participants' accounts using the shares allocated
method. Dividends on allocated and unallocated shares are used
for debt service.
The Company follows SOP 93-6, Employers' Accounting for Employee
Stock Ownership Plans which requires that (1) compensation cost
be recognized based on the fair value of the KSOP shares when
committed to be released; (2) dividends on unallocated shares
used for debt service do not reduce compensation expense and are
not considered dividends for financial reporting purposes; and
(3) KSOP shares that have not been committed to be released are
not considered outstanding for purposes of computing earnings per
share.
KSOP compensation expense for the years ended June 30, 2000, 1999
and 1998 totaled $827,641, $1,138,068 and $1,131,374,
respectively. The fair value of unearned KSOP shares at June 30,
2000 and 1999, totaled $5,002,976 and $10,053,014, respectively.
Following is a summary of KSOP shares at June 30, 2000 and 1999:
2000 1999
---- ----
Allocated 605,984 531,694
Unallocated 454,816 529,106
----------------------
1,060,800 1,060,800
======================
(c) Recognition and Retention Plans (RRPs)
The Company and the Bank have a Recognition and Retention Plan
(RRP), formed in conjunction with the Bank's conversion in 1993.
Pursuant to the RRP, 474,042 shares of common stock awarded to
directors and certain officers were earned over a 3 1/2 year period
through December 1996. On May 23, 2000, 56,000 RRP shares were
awarded to certain officers of the Bank pursuant to the pending
merger with First Place Financial Corp. (refer to note 15). These
shares shall vest in their entirety only upon the closing of the
proposed merger. Such shares, if vesting occurs, will be
accounted for as compensation expense. At June 30, 2000, 358
shares in the RRP remain unawarded. The 56,358 shares that remain
in the RRP at June 30, 2000 are reflected as a reduction of
stockholders' equity.
(12) Stockholders' Equity
On January 19, 1999, the Company announced a 100% stock dividend,
which is equivalent to a two-for-one stock split, that was paid on
March 5, 1999 to shareholders of record on February 19, 1999. The
Company used its then 2.8 million treasury shares and issued an
additional 959,366 shares to pay for the stock dividend. Proper
accounting treatment to record these transactions warranted the
decline in additional paid in capital and retained earnings, but did
not affect total stockholders' equity. Additionally, all share and per
share data have been restated as a result of the stock dividend.
In accordance with federal regulations, at the time the Bank converted
from a federal mutual savings bank to a federal stock savings bank,
the Bank restricted a portion of retained earnings by establishing a
liquidation account. The liquidation account is maintained for the
benefit of eligible account holders who continue to maintain their
accounts at the Bank. The liquidation account is reduced annually to
the extent that eligible account holders have reduced their qualifying
deposits. Subsequent increases will not restore an eligible account
holder's interest in the liquidation account. In the event of a
complete liquidation, each eligible account holder is entitled to
receive a distribution from the liquidation account in an amount
proportionate to the current adjusted qualifying balances for accounts
then held. Under current regulations, the Bank is not permitted to pay
dividends on its stock if the effect would reduce its regulatory
capital below the liquidation account.
OTS regulations also provide that an institution that before and after
a proposed distribution remains well-capitalized, may make capital
distributions during any calendar year equal to the greater of 100% of
net income for the year-to-date plus retained net income for the two
preceding years. However, an institution deemed to be in need of more
than normal supervision by the OTS may have its dividend authority
restricted by the OTS. The Bank may pay dividends in accordance with
this general authority. Institutions proposing to make any capital
distribution need not submit written notice to the OTS prior to such
distribution unless they are a subsidiary of a holding company or
would not remain well-capitalized following the distribution. Savings
institutions that do not, or would not meet their current minimum
capital requirements following a proposed capital distribution or
propose to exceed the net income limitations must obtain OTS approval
prior to making such distribution. During the years ended June 30,
2000, 1999 and 1998, the Bank paid cash dividends to the Holding
Company as follows:
Date Amount
---- ------
January 23, 1998 $1,577,312
April 13, 1998 1,713,029
July 15, 1998 1,609,984
July 20, 1998 3,400,000
October 15, 1998 1,563,763
January 15, 1999 1,735,963
April 12, 1999 1,872,575
May 20, 1999 750,000
August 12, 1999 1,818,329
October 15, 1999 1,644,903
January 14, 2000 1,817,284
April 14, 2000 1,907,304
At June 30, 2000, dividends payable from the Bank to the Holding
Company totaled $1,684,144.
After the dividends, the Bank's regulatory capital exceeds all of the
fully phased-in capital requirements imposed by the Financial
Institutions Reform, Recovery and Enforcement Act of 1989 as well as
the aforementioned liquidation account.
Unlike the Bank, the Holding Company is not subject to these
regulatory restrictions on the payment of dividends to its
stockholders. However, the source of future dividends may depend upon
dividends from the Bank.
(13) Fair Value of Financial Instruments
The following disclosure of the estimated fair value of financial
instruments is made in accordance with the requirements of SFAS No.
107, Disclosures About Fair Value of Financial Instruments. The
estimated fair value amounts have been determined by the Company using
available market information and appropriate valuation methodologies.
However, considerable judgment is necessarily required to interpret
market data to develop the estimates of fair value. Accordingly, the
estimates presented herein are not necessarily indicative of the
amounts the Company could realize in a current market exchange. The
use of different market assumptions and/or estimation methodologies
may have a material effect on the estimated fair value amounts.
June 30, 2000 June 30, 1999
--------------------------- --------------------------
Carrying Estimated Carrying Estimated
amount fair value amount fair value
-------- ---------- ---------- ----------
Assets:
Cash and cash equivalents $ 11,032,817 11,032,817 11,472,806 11,472,806
Securities available for sale 158,136,350 158,136,350 190,325,599 190,325,599
Loans receivable 484,516,963 479,147,000 453,839,111 460,997,000
Loans available for sale 170,800 171,965 441,500 441,500
Federal Home Loan Bank stock 5,192,800 5,192,800 4,841,200 4,841,200
Accrued interest receivable 4,596,297 4,596,297 4,661,786 4,661,786
Liabilities:
Deposits:
Certificate accounts 277,569,528 278,353,000 288,497,464 290,809,000
Other deposit accounts 168,479,262 168,479,262 168,845,338 168,845,338
Securities sold under
agreements to repurchase:
Short-term 6,937,905 6,937,905 6,617,747 6,617,747
Long-term 51,300,000 50,780,000 51,300,000 51,213,000
Borrowed funds:
Short-term 17,500,000 17,500,000 22,800,000 22,800,000
Long-term 79,280,000 78,772,000 60,000,000 59,944,000
Accrued interest payable 2,063,865 2,063,865 2,248,219 2,248,219
The fair value estimates are based on the following methods and
assumptions:
* Cash and cash equivalents. The carrying amounts of cash and cash
equivalents approximates fair value.
* Securities available for sale. Fair values for securities are based
on quoted market prices or dealer quotes; where such quotes are not
available, fair values are based on quoted market prices of
comparable instruments.
* Loans receivable. The fair values of loans receivable are estimated
using a discounted cash flow calculation that applies estimated
discount rates reflecting the credit and interest rate risk
inherent in the loans to homogeneous categories of loans with
similar financial characteristics. Loans are segregated by types,
such as residential mortgage, commercial and consumer. Each loan
category is further segmented into fixed and adjustable rate
interest terms.
* Loans available for sale. The fair values of loans available for
sale are based on quoted market prices of similar loans sold. At
June 30, 1999, the carrying amount of loans available for sale
approximates fair value.
* Federal Home Loan Bank stock. This item is valued at cost, which
represents redemption value and approximates fair value.
* Accrued interest receivable. The carrying amount of accrued
interest receivable approximates fair value.
* Deposits. The fair values of fixed maturity certificate accounts
are estimated using a discounted cash flow calculation that applies
interest rates currently offered for deposits of similar remaining
maturities. The fair values of other deposit accounts (passbook,
NOW, and money market accounts) equal their carrying values.
* Short-term securities sold under agreements to repurchase. The
carrying amount of short-term securities sold under agreements to
repurchase approximates fair value.
* Long-term securities sold under agreements to repurchase. Fair
value is estimated using a discounted cash flow calculation that
applies interest rates currently available to the Bank for debt
with similar terms and maturity.
* Short-term borrowed funds. Short-term borrowed funds reprice
frequently; therefore, the carrying amount approximates fair value.
* Long-term borrowed funds. Fair value is estimated using a
discounted cash flow calculation that applies interest rates
currently available to the Bank for debt with similar terms and
maturity.
* Accrued interest payable. The carrying amount of accrued interest
payable approximates fair value.
* Off-balance sheet instruments. The fair value of commitments is
estimated using the fees currently charged to enter similar
agreements, taking into account the remaining terms of the
agreements and the counterparties' credit standing. For fixed-rate
loan commitments, fair value also considers the difference between
current levels of interest rates and the committed rates. The fair
value of undisbursed lines of credit is based on fees currently
charged for similar agreements or on estimated cost to terminate
them or otherwise settle the obligations with the counterparties
at the reporting date. The carrying amount and fair value of
off-balance sheet instruments is not significant as of June 30,
2000 and 1999.
The fair value estimates are presented for on-balance sheet financial
instruments without attempting to estimate the value of the Bank's
long-term relationships with depositors and the benefit that results
from low-cost funding provided by deposit liabilities. In addition,
significant assets which are not considered financial instruments and
are, therefore, not a part of the fair value estimates include office
properties and equipment.
(14) Condensed Parent-Company-Only Financial Statements
The following condensed statements of financial condition as of
June 30, 2000 and 1999, and related condensed statements of income and
cash flows for the years ended June 30, 2000, 1999 and 1998 for FFY
Financial Corp. should be read in conjunction with the consolidated
financial statements and the notes thereto.
Condensed Statements of Financial Position 2000 1999
------------------------------------------ ---- ----
Assets:
Cash $ 166,394 142,257
Short-term investments 805,300 865,000
--------------------------
Total cash and cash equivalents 971,694 1,007,257
Securities available for sale 7,058,043 11,060,613
Loans receivable 1,913,733 1,900,000
Note receivable - KSOP 2,740,400 3,094,000
Equity in net assets of the Bank 49,295,266 51,063,276
Interest receivable on investments 78,488 98,905
Dividend receivable from Bank 1,684,144 1,818,329
Other assets 1,583,577 563,496
--------------------------
Total assets $65,325,345 70,605,876
Liabilities and stockholders' equity:
Other liabilities $ 129,855 489,351
Stockholders' equity 65,195,490 70,116,525
--------------------------
Total liabilities and stockholders' equity $65,325,345 70,605,876
Condensed Statements of Income 2000 1999 1998
------------------------------ ---- ---- ----
Income:
Equity in earnings of the Bank and subsidiary $ 6,891,058 6,840,653 6,389,428
Interest income 816,984 1,302,593 1,587,602
Gain on sale of securities 126,654 331,433 266,002
-----------------------------------------
Total income 7,834,696 8,474,679 8,243,032
Expenses:
State and local taxes 44,510 50,720 116,271
Other 551,387 199,854 181,550
-----------------------------------------
Total expenses 595,897 250,574 297,821
-----------------------------------------
Income before income taxes 7,238,799 8,224,105 7,945,211
Income taxes (benefit) (121,000) 84,000 216,000
-----------------------------------------
Net income $ 7,359,799 8,140,105 7,729,211
=========================================
Condensed Statements of Cash Flows 2000 1999 1998
------------------------------ ---- ---- ----
Cash flows from operating activities:
Net income $ 7,359,799 8,140,105 7,729,211
Adjustments to reconcile net income to net cash
provided by operating activities:
Equity in earnings of the Bank and subsidiary (6,891,058) (6,840,653) (6,389,428)
Amortization and accretion 4,609 48,389 77,419
(Increase) decrease in interest receivable 20,445 71,435 (85,268)
Other, net (378,085) (235,261) (191,303)
-----------------------------------------
Net cash provided by operating activities 115,710 1,184,015 1,140,631
-----------------------------------------
Cash flows from investing activities:
Sales of securities available for sale 3,158,242 17,388,127 13,648,851
Purchase of securities available for sale - (7,690,267) (14,101,273)
Principal receipts on securities available for sale - - 595,851
Return of capital 50,000 - -
Net increase in loans receivable (13,733) (1,900,000) -
KSOP loan repayment 353,600 353,600 353,600
Dividends from the Bank 7,187,820 10,932,286 4,920,924
Additional investment in subsidiary (925,000) (33,500) (686,500)
Other - - (500)
-----------------------------------------
Net cash provided by investing activities 9,810,929 19,050,246 4,730,953
-----------------------------------------
Cash flows from financing activities:
Purchase of treasury stock $(7,072,998) (17,675,478) (5,239,911)
Dividends paid (3,103,246) (3,102,129) (2,900,750)
Proceeds from stock options exercised 190,209 559,294 336,930
Other 23,833 (10,134) (19,866)
-----------------------------------------
Net cash used in financing activities (9,962,202) (20,228,447) (7,823,597)
-----------------------------------------
Net increase (decrease) in cash and cash equivalents (35,563) 5,814 (1,952,013)
Cash and cash equivalents at beginning of year 1,007,257 1,001,443 2,953,456
-----------------------------------------
Cash and cash equivalents at end of year $ 971,694 1,007,257 1,001,443
=========================================
(15) Pending Merger
On May 23, 2000, the board of directors of FFY, and First Place
Financial Corp. (First Place), the holding company for First Federal
Savings and Loan Association of Warren, entered into a definitive
agreement (the Merger Agreement) to combine in a merger of equals (the
Merger). The Merger Agreement calls for a tax-free exchange of each
outstanding share of FFY common stock for 1.075 shares of First Place
common stock, with cash paid in lieu of fractional shares. In
addition, pursuant to the Merger Agreement, FFY Bank will merge with
First Federal Savings and Loan Association of Warren to become First
Place Bank.
In connection with the Merger Agreement, FFY and First Place entered
into option agreements pursuant to which each party granted the other
party options, exercisable under certain circumstances, to purchase
shares of their respective common stock in an amount equal to 19.9% of
the total number of outstanding shares of either FFY's or First
Place's common stock.
The Merger will be accounted for as a purchase by First Place and is
expected to close in the fourth quarter of calendar year 2000. The
Merger Agreement has been approved by the boards of directors of both
companies. However, it is subject to certain other conditions,
including the approvals of the shareholders of both companies and the
approvals of regulatory authorities.
Included in the Company's results of operations for fiscal year 2000
were $329,000 in pre-tax expenses for professional fees related to the
pending Merger with First Place.
Independent Auditors' Report
The Board of Directors
FFY Financial Corp.:
We have audited the accompanying consolidated statements of financial
condition of FFY Financial Corp. and subsidiaries as of June 30, 2000 and
1999, and the related consolidated statements of income, changes in
stockholders' equity, and cash flows for each of the years in the three-year
period ended June 30, 2000. These consolidated financial statements are the
responsibility of the Company's management. Our responsibility is to express
an opinion on these consolidated financial statements based on our audits.
We conducted our audits in accordance with auditing standards generally
accepted in the United States of America. Those standards require that we
plan and perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures
in the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above
present fairly, in all material respects, the financial position of FFY
Financial Corp. and subsidiaries as of June 30, 2000 and 1999, and the
results of their operations and their cash flows for each of the years in
the three-year period ended June 30, 2000, in conformity with accounting
principles generally accepted in the United States of America.
/s/ KPMG LLP
Cleveland, Ohio
July 28, 2000
Officers and Director
- ----------------------------------------------------------------------------------------------------------------------------
Board of Directors of Board of Directors of Officers of Officers of
FFY Financial Corp. and FFY Holdings, Inc. FFY Bank FFY Bank, continued
FFY Bank
A. Gary Bitonte, MD Marie Izzo Cartwright Jeffrey L. Francis Christine Chasko
Medical Consultant Vice President President and CEO Assistant Controller
Private Investments Glimcher Properties
Limited Partnership Therese Ann Liutkus, CPA Joseph Conroy
Marie Izzo Cartwright Treasurer and CFO Assistant Secretary
Vice President Jeffrey L. Francis
Glimcher Properties President and CEO J. Craig Carr Richard Curry
Limited Partnership of FFY Financial Corp. and Vice President, General Assistant Secretary
FFY Bank Counsel and Secretary
Jeffrey L. Francis Janice S. Elias
President and CEO of W. Terry Patrick David S. Hinkle Assistant Treasurer
FFY Financial Corp. and Chairman of the Board of Vice President
FFY Bank FFY Financial Corp. and Dominic Mancini
FFY Bank and Mark Makoski Assistant Secretary
W. Terry Patrick Partner, Friedman & Rummell Vice President
Chairman of the Board of Attorneys at Law Jill Mayfield
FFY Financial Corp. and Joseph R. Sainato Assistant Treasurer
FFY Bank and Samuel A. Roth Vice President
Partner, Friedman & Rummell President Frank Pasquale
Attorneys at Law FirstEnergy Facilities Timm B. Schreiber Assistant Secretary
Service Group Vice President
Samuel A. Roth Thomas J. Roberts
President Robert L. Wagmiller Randy Shaffer Assistant Secretary
FirstEnergy Facilities Chairman of the Board of Vice President
Service Group FFY Holdings, Inc. and Cheryl J. Taraszewski
Partner/Principal of Jeffrey L. DeRose, CPA Assistant Treasurer
William A. Russell Hill, Barth & King, Inc. Controller
President Jeanne G. Yankle
Canteen Service of Robert Adema Assistant Treasurer
Steel Valley, Inc. Officers of Assistant Vice President
FFY Financial Corp. Jerome D. Zetts
Randy Shaffer Robert Campolito Assistant Treasurer
Vice President of Jeffrey L. Francis Assistant Vice President
FFY Financial Corp. and President and CEO
FFY Bank Jane Hutchins Officers of
Therese Ann Liutkus, CPA Assistant Vice President FFY Holdings, Inc.
Ronald P. Volpe, Ph.D. Treasurer and CFO
Professor of Finance Jon Schmied Jeffrey L. Francis
Williamson College of Randy Shaffer Assistant Vice President President
Business Administration Vice President
Youngstown State University Dennis Sell Therese Ann Liutkus, CPA
J. Craig Carr Assistant Vice President Treasurer
Robert L. Wagmiller Vice President, General
Chairman of the Board of Counsel and Secretary Joanne Harrold J. Craig Carr
FFY Holdings, Inc. and Internal Auditor Vice President and Secretary
Partner/Principal of
Hill, Barth & King, Inc. Marilyn J. Burrows Randy Shaffer
Assistant Treasurer Vice President
Janet Byrne
Assistant Secretary
Annual Report on Form 10-K
A copy of the Annual Report on Form 10-K filed with the Securities and
Exchange Commission will be available September 29, 2000 without charge upon
written request to:
Therese Ann Liutkus, CPA
Treasurer and CFO
FFY Financial Corp.
724 Boardman-Poland Road
P.O. Box 3300
Youngstown, Ohio 44513
Phone: (330) 726-3396
Fax: (330) 758-1356
E-mail: ffyinfo@ffybank.com
Web page: www.ffybank.com
Annual Meeting
The Annual Meeting of Stockholders of FFY Financial Corp. will be held at
2:00 p.m. on Wednesday, November 15, 2000 at:
The Holiday Inn
7410 South Avenue
Youngstown, Ohio, 44512
Stockholder Services
Fifth Third Bank serves as transfer agent for FFY Financial Corp.'s shares.
Communications regarding change of address, transfer of shares, lost
certificates or dividend reinvestment should be sent to:
Fifth Third Bank
Corporate Trust Operations
580 Building
Mail Location 10AT60
Cincinnati, Ohio 45263
(800) 837-2755
Market Makers
McDonald & Company Securities, Inc
Sandler O'Neill & Partners
Keefe, Bruyette & Woods, Inc.
Friedman, Billings, Ramsey & Co.
Stifel Nicholaus & Co.
Chicago Capital, Inc.
OTA Limited Partnership
Insurance and Real Estate Affiliations
FFY Insurance Agency, Ltd.
1275 Boardman-Poland Road
Youngstown, Ohio 44514
Phone: (330) 726-4636
Fax: (330) 726-4635
E-mail: daniel.landers@mciworldcom.net
------------------------------
Coldwell Banker FFY Real Estate, Ltd.
1275 Boardman-Poland Road
Youngstown, Ohio 44514
Phone: (330) 726-8161
Fax: (330) 726-1931
E-mail: dmeikle104@aol.com
------------------
- ----------------------------------------------------------------------------
FFY Bank Office Locations
- ----------------------------------------------------------------------------
Phone Number (330) 726-3396 connects all offices except
Howland (330) 856-5566
Main Office 724 Boardman-Poland Road
P.O. Box 3300
Youngstown, Ohio 44513-3300
Branch Offices Downtown Canfield
25 Market Street, Suite 3 2 South Broad Street
Youngstown, Ohio 44503 Canfield, Ohio 44406
Westside Canfield Drive-up
4390 Mahoning Avenue 352 W. Main Street
Youngstown, Ohio 44515 Canfield, Ohio 44406
Southside Cornersburg
3900 Market Street 3516 S. Meridian Road
Youngstown, Ohio 44512 Youngstown, Ohio 44511
Northside New Middletown
600 Gypsy Lane 10416 Main Street
Youngstown, Ohio 44505 New Middletown, Ohio 44442
Logan Way Howland Loan Office
4423 Logan Way 5000 E. Market Street, Suite 16
Youngstown, Ohio 44505 Warren, Ohio 44484
Poland FFY Professional Center/Loan Office
5 McKinley Way West 1275 Boardman-Poland Road
Poland, Ohio 44514 Youngstown, Ohio 44514
Struthers IGA
655 Creed Street
Struthers, Ohio 44471