UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1996
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number: 0-28894
ACCESS ANYTIME BANCORP, INC.
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(Exact name of small business issuer as specified in its charter)
Delaware 85-0444597
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(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
801 Pile Street, Clovis, New Mexico 88101
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (505) 762-4417
-----------------------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes No X(1)
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(1) Registrant's predecessor, First Savings Bank, F.S.B., has filed all
reports described herein and has been subject to such filing requirements
for the past 90 days prior to September 30, 1994.
732,198 Shares of Capital Stock $.01 par value
Outstanding as of November 13, 1996
Transactional Small Business Disclosure Format (check one):
Yes No X
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FIRST SAVINGS BANK, F.S.B.
(PREDECESSOR TO ACCESS ANYTIME BANCORP, INC.)
INDEX
PART I - FINANCIAL INFORMATION
Item 1 - Financial Statements
Unaudited Consolidated Statements of Financial Condition. . . . 3
Unaudited Consolidated Statements of Operations . . . . . . . . 4
Unaudited Consolidated Statements of Changes in
Stockholders' Equity. . . . . . . . . . . . . . . . . . . . . . 5
Unaudited Consolidated Statements of Cash Flows . . . . . . . . 6
Notes to Consolidated Financial Statements (Unaudited). . . . . 7 - 13
Item 2 - Managements' Discussion and Analysis of Financial Condition
and Results of Operations. . . . . . . . . . . . . . . . . . . . . . 14 - 18
PART II - OTHER INFORMATION
Item 5 - Other Information . . . . . . . . . . . . . . . . . . . . . 19
Item 6 - Exhibits and Reports on Form 8-K. . . . . . . . . . . . . . 19
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
2
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
The following consolidated financial statements include all adjustments which in
the opinion of management are necessary in order to make such financial
statements not misleading.
First Savings Bank, F.S.B.
(Predecessor to Access Anytime Bancorp, Inc.)
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
SEPTEMBER 30, December 31,
1996 1995
------------ ------------
ASSETS
Cash and cash equivalents $4,641,553 $6,752,606
Certificates of deposit 965,784 476,425
Investment securities available-for-sale
(aggregate cost of $24,663,131 and $33,294,495) 24,336,244 33,090,085
Investment securities held-to-maturity
(aggregate fair value of $30,347,303
and $36,025,403) 31,399,006 36,404,135
Loans held-for-sale
(aggregate fair value of $551,951 and $874,512) 543,313 861,454
Loans receivable 41,908,569 34,331,988
Interest receivable 602,814 692,771
Real estate owned 68,013 113,820
FHLB stock 1,549,634 1,483,434
Premises and equipment 1,946,010 1,984,860
Servicing rights 355,286 359,854
Other assets 596,118 414,867
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TOTAL ASSETS $108,912,344 $116,966,299
------------ ------------
------------ ------------
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $102,391,176 $110,633,124
Accrued interest and other liabilities 1,043,687 401,641
Advance payments by borrowers for taxes
and insurance 486,205 311,157
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TOTAL LIABILITIES 103,921,068 111,345,922
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COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Common stock, $1 par value, authorized -
6,000,000 shares, issued - 732,198 shares
at September 30, 1996, and 695,698 at
December 31,1995 732,198 695,698
Capital in excess of par value 6,294,701 6,137,701
Accumulated deficit (1,708,736) (1,008,612)
Unrealized loss on securities
available-for-sale, net (326,887) (204,410)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 4,991,276 5,620,377
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $108,912,344 $116,966,299
------------ ------------
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SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
3
First Savings Bank, F.S.B.
(Predecessor to Access Anytime Bancorp, Inc.)
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
THREE MONTH PERIODS ENDED NINE MONTH PERIODS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1996 1995 1996 1995
----------- ----------- ----------- -----------
Interest income:
Loans $ 897,037 $ 1,182,394 $ 2,505,568 $ 2,850,844
U.S. government agency and other securities 74,032 121,924 268,099 389,303
Mortgage-backed securities 819,766 998,288 2,646,128 3,090,992
Other interest income 57,850 53,199 218,180 129,667
----------- ----------- ----------- -----------
Total interest income 1,848,685 2,355,805 5,637,975 6,460,806
----------- ----------- ----------- -----------
Interest expense:
Deposits 1,139,153 1,361,311 3,607,581 3,997,064
FHLB advances 11,624 6,854 11,624 80,248
----------- ----------- ----------- -----------
Total interest expense 1,150,777 1,368,165 3,619,205 4,077,312
----------- ----------- ----------- -----------
Net interest income before provision for credit
losses 697,908 987,640 2,018,770 2,383,494
Provision for credit losses charged (credited) 28,967 -- (6,775) --
----------- ----------- ----------- -----------
Net interest income after provision for
credit losses 668,941 987,640 2,025,545 2,383,494
----------- ----------- ----------- -----------
Non-interest income:
Loan servicing and other fees 88,963 75,087 260,610 267,542
Gains on loans held-for-sale 34,402 30,468 98,411 76,203
Other 79,848 81,772 233,082 264,575
----------- ----------- ----------- -----------
Total non-interest income 203,213 187,327 592,103 608,320
----------- ----------- ----------- -----------
Non-interest expenses:
Compensation and employee benefits 401,192 368,358 1,188,944 1,148,497
Occupancy 100,403 95,922 269,639 273,927
Federal insurance 856,644 101,329 1,051,752 303,252
Advertising 7,918 5,603 17,290 18,912
Real estate operations, net 327 40,937 37,983 57,316
Professional fees 56,537 57,185 142,479 217,463
Other 197,162 201,565 609,685 600,799
----------- ----------- ----------- -----------
Total non-interest expenses 1,620,183 870,899 3,317,772 2,620,166
----------- ----------- ----------- -----------
Net income (loss) $ (748,029) $ 304,068 $ (700,124) $ 371,648
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Earnings (loss) per share $ ( 1.04) $ .44 $ (1.00) $ .53
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average shares outstanding 717,703 695,698 703,087 695,698
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
4
First Savings Bank, F.S.B.
(Predecessor to Access Anytime Bancorp, Inc.)
UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
Unrealized
Number Loss on
of Common Capital in Securities
Common Stock Excess of Accumulated Available-
Shares Amount Par Value Deficit for-Sale, Net Total
------- -------- ---------- ------------ ---------- ----------
Balance at December 31, 1995 695,698 $695,698 $6,137,701 $(1,008,612) $(204,410) $5,620,377
NET LOSS -- -- -- (700,124) -- (700,124)
ISSUANCE OF COMMON STOCK 36,500 36,500 157,000 -- -- 193,500
CHANGE IN UNREALIZED
LOSS ON SECURITIES
AVAILABLE-FOR-SALE,
NET -- -- -- -- (122,477) (122,477)
------- -------- ---------- ------------ ---------- ----------
BALANCE AT SEPTEMBER 30, 1996 732,198 $732,198 $6,294,701 $(1,708,736) $(326,887) $4,991,276
------- -------- ---------- ------------ ---------- ----------
------- -------- ---------- ------------ ---------- ----------
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
5
First Savings Bank, F.S.B.
(Predecessor to Access Anytime Bancorp, Inc.)
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
NINE MONTH PERIODS ENDED
SEPTEMBER 30,
--------------------------
1996 1995
----------- -----------
Cash flows from operating activities:
Net Income (loss) $ (700,124) $ 371,648
Adjustments to reconcile net income (loss) to
cash provided by operations:
Depreciation 101,313 98,362
Provision for credit losses credited (6,775) --
Amortization of premiums on investment securities 217,466 155,916
Gain on sale of loans (98,411) (76,203)
Proceeds from loan sales 6,469,597 4,906,617
Originations of loans held-for-sale (6,053,045) (4,761,310)
(Gain) loss on sale of REO 1,469 (13,105)
Gain on sale of assets -- (1,095)
Net decrease in accrued income and other assets 89,957 105,192
Increase in accrued interest and other liabilities 642,046 141,104
Increase in other assets (242,883) (141,665)
----------- -----------
Net cash provided by operating activities 420,610 785,461
----------- -----------
Cash flows from investing activities:
Proceeds from maturities and principal repayments of
available-for-sale securities 8,631,364 235,555
Purchases of held-to-maturity securities (5,000,000) --
Proceeds from maturities and principal repayments
of held-to-maturity securities 9,787,663 6,533,017
Net increase in certificates of deposit (489,359) (186,880)
Net decrease (increase) in loans (7,548,806) 1,674,097
Proceeds from sales of real estate 23,338 97,105
Net purchases of premises and equipment and other assets (62,463) (43,575)
----------- -----------
Net cash provided by investing activities 5,341,737 8,309,319
----------- -----------
Cash flows from financing activities:
Net increase (decrease) in deposits (8,241,948) 903,225
Net change in FHLB advances -- (7,400,000)
Net increase in advance payments by
borrowers for taxes and insurance 175,048 149,186
Net proceeds from sale of common stock 193,500 --
----------- -----------
Net cash used by financing activities (7,873,400) (6,347,589)
----------- -----------
Increase (decrease) in cash and cash equivalents (2,111,053) 2,747,191
Cash and cash equivalents at beginning of period 6,752,606 3,048,974
----------- -----------
Cash and cash equivalents at end of period $4,641,553 $5,796,165
----------- -----------
----------- -----------
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $3,720,411 $3,997,160
Income Taxes 100 --
Supplemental disclosure of non-cash investing activities
Real estate acquired in settlement of loans -- 60,685
Loans to facilitate the sale of real estate owned 21,000 80,150
SEE ACCOMPANYING NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS.
6
First Savings Bank, F.S.B.
(Predecessor to Access Anytime Bancorp, Inc.)
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
SEPTEMBER 30, 1996
NOTE A - BASIS OF CONSOLIDATION AND PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of First Savings Bank, F.S.B. and its wholly-owned subsidiary, First
Equity Development Corporation. Collectively, First Savings Bank and First
Equity Development Corporation are referred to herein as the Bank. The
financial statements do not include all disclosures required by generally
accepted accounting principles for complete financial statements. Certain
information required by generally accepted accounting principles has been
condensed or omitted pursuant to regulations of the Securities and Exchange
Commission. All significant intercompany transactions and balances have been
eliminated.
The unaudited consolidated financial statements include all adjustments
(consisting only of normal recurring accruals) which Management considers
necessary for a fair presentation of results for those interim periods. The
results for the nine-month periods ended September 30, 1996 and 1995 are not
necessarily indicative of the results for the entire year.
The unaudited interim financial statements should be read in conjunction with
the audited consolidated financial statements of the Bank for the year ended
December 31, 1995.
Certain reclassifications have been made to the 1995 consolidated financial
statements in order for them to conform with the 1996 presentation.
7
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NOTE B - INVESTMENT SECURITIES AVAILABLE-FOR-SALE
A summary of investment securities available-for-sale is as follows:
SEPTEMBER 30, 1996
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AMORTIZED FAIR GROSS UNREALIZED
COST VALUE GAINS LOSSES
----------- ----------- ------- --------
MORTGAGE-BACKED SECURITIES:
GNMA ADJUSTABLE RATE $24,663,131 $24,336,244 $ -- $326,887
----------- ----------- ------- --------
$24,663,131 $24,336,244 $ -- $326,887
----------- ----------- ------- --------
----------- ----------- ------- --------
December 31, 1995
-----------------------------------------------------------------
Amortized Fair Gross unrealized
cost value Gains Losses
----------- ----------- ------- --------
Mortgage-backed securities:
GNMA adjustable rate $28,295,654 $28,095,981 $30,691 $230,364
Obligation of U.S.
government agencies 4,998,841 4,994,104 10,000 14,737
----------- ----------- ------- --------
$33,294,495 $33,090,085 $40,691 $245,101
----------- ----------- ------- --------
----------- ----------- ------- --------
8
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NOTE C - INVESTMENT SECURITIES HELD-TO-MATURITY
A summary of investment securities held-to-maturity is as follows:
SEPTEMBER 30, 1996
-----------------------------------------------------------------
AMORTIZED FAIR GROSS UNREALIZED
COST VALUE GAINS LOSSES
----------- ----------- ------- ----------
MORTGAGE-BACKED SECURITIES:
FNMA PARTICIPATION CERTIFICATES $ 5,551,160 $ 5,323,130 $ -- $ 228,030
FHLMC PARTICIPATION CERTIFICATES 23,760,536 22,986,234 3,259 777,561
FHLMC ADJUSTABLE RATE 2,087,310 2,037,939 -- 49,371
----------- ----------- ------- ----------
$31,399,006 $30,347,303 $3,259 $1,054,962
----------- ----------- ------- ----------
----------- ----------- ------- ----------
December 31, 1995
-----------------------------------------------------------------
Amortized Fair Gross unrealized
cost value Gains Losses
----------- ----------- ------- ----------
Mortgage-backed securities:
FNMA participation certificates $ 6,225,192 $ 6,106,781 $ -- $118,411
FHLMC participation certificates 27,872,939 27,648,060 43,254 268,133
FHLMC adjustable-rate 2,306,004 2,270,562 -- 35,442
----------- ----------- ------- ----------
$36,404,135 $36,025,403 $43,254 $421,986
----------- ----------- ------- ----------
----------- ----------- ------- ----------
9
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NOTE D - LOANS HELD-FOR-SALE
Loans held-for-sale are identified at the time the loan is originated, and
recorded at the lower of amortized cost or fair value with only net unrealized
losses included in the consolidated statements of operations.
SEPTEMBER 30, 1996
-----------------------------------------------------------------
AMORTIZED FAIR GROSS UNREALIZED
COST VALUE GAINS LOSSES
----------- ----------- ------- --------
LOANS ON RESIDENTIAL ONE TO FOUR UNITS:
CONVENTIONAL REAL ESTATE LOANS $310,160 $315,035 $4,875 $ --
INSURED OR GUARANTEED REAL
ESTATE LOANS 233,153 236,916 3,763 --
----------- ----------- ------- --------
$543,313 $551,951 $8,638 $ --
----------- ----------- ------- --------
----------- ----------- ------- --------
December 31, 1995
-----------------------------------------------------------------
Amortized Fair Gross unrealized
cost value Gains Losses
----------- ----------- ------- --------
Loans on residential one to four units:
Conventional real estate loans $395,250 $400,287 $ 5,037 $ --
Insured or guaranteed real
estate loans 466,204 474,225 8,021 --
----------- ----------- ------- --------
$861,454 $874,512 $13,058 $ --
----------- ----------- ------- --------
----------- ----------- ------- --------
10
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NOTE E - LOANS RECEIVABLE
Loans receivable consisted of the following:
SEPTEMBER 30, December 31,
1996 1995
----------- -----------
First mortgage loans:
Conventional $29,444,511 $25,110,648
FHA insured and VA guaranteed 3,974,596 4,059,531
Consumer and installment loans 7,799,938 4,612,586
Consumer timeshare loans 247,273 560,320
Construction loans 2,419,750 1,059,954
Other 367,489 552,822
----------- -----------
44,253,557 35,955,861
Less:
Loans in process 1,581,116 862,760
Deferred loan fees 228,027 187,090
Unearned discounts 71,436 78,169
Allowance for credit losses 415,614 427,889
Deferred income 48,795 67,965
----------- -----------
$41,908,569 $34,331,988
----------- -----------
----------- -----------
Changes in the allowance for credit losses are as follows:
NINE MONTHS ENDED Year Ended
SEPTEMBER 30, December 31,
1996 1995
----------- -----------
Balance at beginning of year $427,889 $460,923
Provision credited to operations (6,775) (15,000)
Charge-offs (9,971) (20,878)
Recoveries 4,471 2,844
----------- -----------
Balance at end of period $415,614 $427,889
----------- -----------
----------- -----------
11
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NOTE F - NON-PERFORMING ASSETS
The composition of the Bank's portfolio of non-performing assets is shown in the
following table.
SEPTEMBER 30, December 31,
1996 1995
---------- ----------
Non-accrual loans (1) $ 79,441 $ --
Past due 90 days or more and still accruing -- --
Renegotiated loans (2) 1,572,814 1,572,814
Real estate owned (3) 68,013 113,820
---------- ----------
Total non-performing assets $1,720,268 $1,686,634
---------- ----------
---------- ----------
Ratio of non-performing assets to total assets 1.58% 1.44%
---------- ----------
---------- ----------
(1) Generally refers to loans that are contractually delinquent (i.e., payments
were due and unpaid for more than 90 days).
(2) Renegotiated loans are those for which the interest rate or other terms
were renegotiated because of the inability of borrowers to service the
obligation under the original terms of the agreements and loans to
facilitate the sale of real estate.
(3) Refers to real estate acquired by the Bank through foreclosure or voluntary
deed.
NOTE G - INCOME TAXES
At December 31, 1995, the Bank had remaining net operating loss carryforwards of
approximately $5,555,000 for federal income tax purposes which expire in varying
amounts through 2009. In addition, at that date the alternative minimum tax
(AMT) net operating loss carryforward and AMT credit carryforward were
approximately $5,866,000 and $101,000, respectively, which will expire in
varying amounts through 2009. At December 31, 1995, the Bank had remaining net
operating loss carryforwards of approximately $44,583,000 for state income tax
purposes which expire in varying amounts through 2005. These state net
operating loss carryforwards are substantially more than the federal net
operating loss carryforwards as a result of the exclusion of the U.S. Investment
security and other income for state income tax purposes.
The Bank has incurred significant losses during the nine months ended September
30, 1996 which resulted primarily from a one-time deposit insurance assessment
which is described in Note H. Accordingly, the aforementioned net operating
loss carryforwards existing at December 31, 1995 have increased substantially
since that date.
12
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NOTE H - SUBSEQUENT EVENTS
During September 1996, the Federal Deposit Insurance Corporation (FDIC) imposed
a special assessment on assessable deposits of insured depository institutions
that are insured by the Savings Association Insurance Fund. In October 1996,
the Bank was notified by the FDIC that the assessment to be charged to the Bank
was approximately $762,000 and is to be paid in November 1996. The amount of
the assessment has been accrued as of September 30, 1996.
At a special meeting of the stockholders of the Bank on October 18, 1996, and
agreement and plan of reorganization by and between the Bank and Access Anytime
Bancorp, Inc. (AABC), a newly-formed unitary thrift holding company, was
approved whereby the Bank became a wholly-owned subsidiary of AABC under a stock
for stock exchange.
13
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL CONDITION
Total liabilities for the Bank decreased by $7,424,854 or 6.67% from December
31, 1995 to September 30, 1996, and total assets decreased by $8,053,955 or
6.89% during the same period. The decrease in total liabilities was primarily
the result of a decrease in deposits of $8,241,948 or 7.45%, due to the Bank's
overall strategy to change the product mix of deposit accounts offered to its
customers and a decreasing reliance on public fund deposits.
The decrease in liabilities was partially offset by an accrual of $761,686 in
September 1996 relating to a special premium assessment by the Federal Deposit
Insurance Corporation as a part of the Economic Growth and Regulatory Paperwork
Reduction Act of 1996 which, in part, contains a comprehensive approach to
recapitalize the Savings Association Insurance Fund. The decline in deposits
was funded primarily by a reduction in cash and cash equivalents of $2.1
million, and proceeds from maturities and principal repayments of investments
available-for-sale and investments held-to-maturity, net, of approximately $8.6
and $4.8 million, respectively, during the first nine months of 1996. In
addition to the funding of deposit reductions, the maturities and increased
principal prepayments on available-for-sale and held-to-maturity securities
during the nine months ended September 30, 1996 were used to fund an increase in
loans receivable of approximately $7.6 million, which is also the result of the
Bank's strategy to enhance future earnings through a change in the overall
asset/liability mix of the Bank's interest earning assets as they relate to its
interest bearing liabilities. The primary changes in the Bank's loan portfolio
at September 30, 1996 as compared to that at December 31, 1995 were in
conventional first mortgage loans ($4,333,863 or 17.26% increase), consumer and
installment loans ($3,187,352 or 69.10% increase), and construction loans
($1,359,796 or 128.29% increase).
14
CAPITAL ADEQUACY AND LIQUIDITY
CAPITAL ADEQUACY - Under the Financial Institutions Reform, Recovery and
Enforcement Act of 1989 (FIRREA) and the implementation of Office of Thrift
Supervision (OTS) regulations on December 7, 1989, effective date of the new
capital standards, the Bank must have: (1) core capital equal to 3% of adjusted
total assets; (2) tangible capital equal to 1.5% of adjusted total assets; and
(3) total capital equal to 8.0% of risk-weighted assets, which includes
off-balance sheet items.
On November 28, 1994, the OTS announced its decision to immediately reverse its
August 1993 interim policy requiring institutions to include unrealized gains
and losses, net of income taxes, on available-for-sale debt securities in
regulatory capital. Because this revised policy applies only to regulatory
capital, however, institutions must continue to comply with Statement of
Financial Accounting Standards (SFAS) No. 115. ACCOUNTING FOR CERTAIN
INVESTMENTS IN DEBT AND EQUITY SECURITIES for financial reporting purposes.
The following table is a reconciliation of the Bank's capital for regulatory
purposes at September 30, 1996 as reported to the OTS.
Tangible Core Risk-based
Assets capital capital capital
------------ ---------- ---------- ----------
Total assets $108,912,344
Liabilities carried net of assets for
regulatory purposes (71,594)
Unrealized loss on securities
available-for-sale, net 326,887
------------
Adjusted regulatory total assets $109,167,637
------------
------------
Risk-based assets $ 41,273,000
------------
------------
Stockholders' equity $4,991,276 $4,991,276 $4,991,276
Unrealized loss on securities
available-for-sale, net 326,887 326,887 326,887
General valuation allowance -- -- 415,614
---------- ---------- ----------
Regulatory capital 5,318,163 5,318,163 5,733,777
Regulatory capital required 1,637,515 3,275,029 3,301,840
---------- ---------- ----------
Excess regulatory capital $3,680,648 $2,043,134 $2,431,937
---------- ---------- ----------
---------- ---------- ----------
Bank's capital to adjusted
regulatory assets 4.87% 4.87%
---------- ----------
---------- ----------
Bank's capital to risk-based assets 13.89%
----------
----------
At December 31, 1995 and September 30, 1996, the Bank met the foregoing minimum
tangible, core and risk-based capital levels.
15
Effective as of June 17, 1996, the Board of Directors and the OTS signed a
Supervisory Agreement which states that it is of mutual benefit for the Bank to
do the following:
1. Complete and submit a revised business and capital plan which will:
a. Increase core capital to 6% as of December 31, 1996.
b. Increase core capital to 7% as of June 30, 1997.
2. Create an asset/liability and investment committee of the Board to oversee
and review pricing activities, investment selection and interest rate risk.
3. Report quarterly on the Bank's operating results and explain variances of
actual results to budgeted projections.
This agreement may be suspended in part or in whole by the OTS Regional
Director.
LIQUIDITY - Liquidity enables the Bank to meet withdrawals of its deposits and
the needs of its loan customers. The Bank maintains its liquidity position
through maintenance of cash resources and a core deposit base. A further source
is the Bank's ability to borrow funds. The Bank is a member of the Federal Home
Loan Bank (FHLB) which provides a source of borrowings to the Bank for asset and
asset/liability matching. Over the past three years, the FHLB has been used as a
funding source. As of September 30, 1996, the Bank had no outstanding
borrowings at the FHLB and does not anticipate significant borrowings from the
FHLB in the foreseeable future.
The Bank's liquidity has been stable and adequate over the past three years.
Although short-term deposits have declined in the last nine months of 1996,
those reductions have been the result of management's planned restructuring of
the Bank's asset/liability mix. The Bank's primary source of funds is core
consumer deposits and commercial accounts. This is a significant factor to the
Bank's liquidity structure, because these funds are generally not subject to
significant movements resulting from changing interest rates and other economic
factors.
INFLATION - The general rate of inflation over the past three years, as measured
by the Consumer Price Index, has not changed significantly. Therefore,
management does not consider the effects of inflation on the Bank's financial
position and results of operations to be material.
16
RESULTS OF OPERATIONS
THREE-MONTH COMPARATIVE ANALYSIS FOR PERIODS ENDED SEPTEMBER 30, 1996 AND 1995
The Bank's net interest income before provision for credit losses decreased by
$289,732 or 29.34% for the quarter ended September 30, 1996 as compared to the
quarter ended September 30, 1995. The decrease in net interest income before
provision for credit losses was due to a decrease in interest income of $507,120
or 21.53%, which was caused primarily by the recognition in 1995 of deferred
interest income in the amount of $365,310 resulting from the early payoff of a
previously restructured loan. In addition, interest income on U.S. government
agency and other securities decreased by $47,892 or 39.28% due to significant
maturities of those securities during the quarter ended September 30, 1996. In
addition, interest income on mortgage-backed securities decreased by $178,522 or
17.88% in the quarter ended September 30, 1996 compared to the quarter ended
September 30, 1995, primarily due to the high levels of principal prepayments on
those investment securities since the period ended September 30, 1995.
A decrease of $222,158 or 16.32% in interest expense on deposits is the result
of a decrease in volume and rates paid on deposits as a direct result of
management's overall strategy related to the asset/liability mix of the Bank and
their efforts to develop a more diversified and lower cost deposit base all of
which entailed declines in the average interest rates paid on interest bearing
accounts and the resulting decline in interest bearing deposits.
The Bank experienced an increase in loans receivable in the third quarter of
1996, as discussed under FINANCIAL CONDITION herein which resulted in a net
increase of $28,967 in management's estimates relative to the provision for
credit losses charged as compared to no provision in the third quarter of 1995
when the Bank's loan portfolio declined $1,900,153 during the quarter then
ended.
Non-interest income increased by $15,886 or 8.48% for the quarter ended
September 30, 1996 as compared to the same quarter in 1995. The increase was
primarily due to $13,876 increase in other fee income charged for various
services provided to customers and non-customers of the Bank.
The increase in non-interest expenses of $749,284 or 86.04% as compared to the
same period in 1995 was due primarily to the one-time charge of $761,686 for the
SAIF Special Assessment charged on September 30, 1996 which is to be paid in
November 1996. Compensation and employee benefit expenses increased by $32,834
or 8.91% as a result of the opening of a Loan Production Office during that
quarter in Rio Rancho, New Mexico. These increases were partially offset by a
decrease in real estate operations expenses of $40,610 or 99.20% for the quarter
ended September 30, 1996 as compared to the quarter ended September 30, 1995
which was primarily attributable to reductions in real estate owned ("REO")
during 1996 as compared to the same period in 1995.
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NINE-MONTH COMPARATIVE ANALYSIS FOR PERIODS ENDED SEPTEMBER 30, 1996 AND 1995
Interest income for the nine months ended September 30, 1996 decreased by
$822,831 or 12.74% and interest expense decreased by $458,107 or 11.24% for the
same period in 1995 to produce a decrease in net interest income before
provision for credit losses of $364,724 or 15.30% as compared to the nine months
ended September 30, 1995. The decrease in net interest income before provision
for credit losses in 1996 was caused primarily by an early recognition in 1995
of $365,310 of deferred interest income as a result of the early payoff of a
previously restructured loan. In addition, interest income on U.S. government
agency and other securities and mortgage-backed securities declined $121,204 or
31.13% and $444,864 or 14.39% respectively, all of which were the result of
lower levels of outstanding investment caused by significant maturities and
prepayments of such securities during the nine months ended September 30, 1996.
The provision for credit losses for the nine months ended September 30, 1996 was
a credit of $6,775 compared to no provision for the nine month period ended
September 30, 1995. The net credit resulted from reductions in the allowance
for credit losses in early 1996 as a result of management's revision of previous
estimates related to necessary allowances. These reductions in the allowance
for credit losses were offset subsequent to the first quarter of 1996 by
additional charges to the allowance which were caused primarily by increased
levels of lending.
Non-interest income for the nine month period ended September 30, 1996 decreased
$16,217 or 2.67% as compared to the nine months ended September 30, 1995, and
non-interest expense increased by $697,606 or 26.62% during the nine months
ended September 30, 1996 as compared to the same time period in 1995. The
decline in non-interest income was primarily the result of other income declines
which were partially offset by an increase in loans held-for-sale which reflects
higher levels of loans sold into the secondary markets during 1996 as compared
to the same period in 1995. The increase in non-interest expense was due
primarily to the one-time charge of $761,686 for the SAIF Special Assessment,
included in federal insurance expenses. Federal insurance expense increases
were partially offset by a $19,333 or 33.73% decrease in REO expenses. The
decline was attributable to reductions in the level of REO during 1996 as
compared to the same period in 1995. In addition, professional fee expenses
decreased by $74,984 or 34.48% for the nine months ended September 30, 1996 as
compared to the nine months ended September 30, 1995 as a result of reduced
activities of the Bank which relate to certain litigation in which the Bank has
been involved since 1992.
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ITEM 5 - OTHER INFORMATION
At a special meeting of the stockholders of the Bank on October 18, 1996, and
agreement and plan of reorganization by and between the Bank and Access Anytime
Bancorp, Inc. (AABC), a newly-formed unitary thrift holding company, was
approved whereby the Bank became a wholly-owned subsidiary of AABC under a stock
for stock exchange.
On November 13, 1996, the Bank was informed the OTS had suspended the
December 31, 1996 core capital requirement of 6%.
PART II - OTHER INFORMATION
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11 Statement re: computation of per share earnings
27.1 Financial Data Schedule
(b) Reports on Form 8-K.
Form 8-K dated July 3, 1996 was filed by First Savings Bank, F.S.B.
(predecessor to Registrant) reporting under Item 5, an application
dated July 1, 1996 from the Bank to the OTS for formation of a
holding company.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
ACCESS ANYTIME BANCORP, INC.
Date: November 13, 1996 /s/ Norman R. Corzine
---------------------------------------
Norman R. Corzine, Chief Executive
Officer, and Chairman of the Board of
Directors
(DULY AUTHORIZED REPRESENTATIVE)
Date: November 13, 1996 /s/ Ken Huey, Jr.
---------------------------------------
Ken Huey, Jr., President, Chief
Financial Officer and Director
(PRINCIPAL FINANCIAL AND ACCOUNTING
OFFICER)
(DULY AUTHORIZED REPRESENTATIVE)
20