UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 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 ______________________
Commission File Number 0-25172
FIRST BELL BANCORP, INC.
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 251752651
- - -------------------------------------------------------------------------------
(State or other jurisdiction of (IRS Employer
or organization) Identification No.)
532 LINCOLN AVENUE, PITTSBURGH, PENNSYLVANIA 15202
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(Address of principal executive offices) (Zip Code)
(412) 734-2700
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if
changed since last report)
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. [X] Yes [ ] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 8,166,450 shares of
common stock, par value $.01 per share, were outstanding as of June 30, 1996.
FIRST BELL BANCORP, INC.
FORM 10-Q
INDEX
PAGE
-----
PART I FINANCIAL INFORMATION
Item 1 Consolidated Balance Sheets as of June 30, 1996
and December 31, 1995.............................. 2
Consolidated Statements of Income for the
Three and Six Months Ended June 30, 1996
and 1995........................................... 3
Consolidated Statements of Cash Flows for the
Six Months Ended June 30, 1996 and 1995............ 4
Consolidated Statements of Changes in
Stockholders' Equity for the Six Months Ended
June 30, 1996 and 1995............................. 5
Notes to Consolidated Financial Statements......... 6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations...... 7
PART II OTHER INFORMATION
Item 1 Legal Proceedings.................................. 11
Item 2 Changes in Securities.............................. 11
Item 3 Defaults Upon Senior Securities.................... 11
Item 4 Submission of Matters to a Vote of Security Holders 11
Item 5 Other Information.................................. 12
Item 6 Exhibits and Reports on Form 8-K................... 12
SIGNATURES
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
1
FIRST BELL BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(IN THOUSANDS)
JUNE 30, 1996 DECEMBER 31, 1995
------------- ------------------
(unaudited)
ASSETS
- - ------
Cash:
Cash on hand....................................................... $ 712 $ 735
Non-interest-bearing deposits...................................... 2,827 1,262
Interest-bearing deposits.......................................... 4,844 21,725
-------- --------
Total cash................................................... 8,383 23,722
Federal funds sold.................................................. 30,125 52,025
Investment securities - at cost (fair value of $20,068
and $20,968 at June 30, 1996 and December 31, 1995,
respectively)..................................................... 19,959 19,953
Conventional mortgage loans - net of allowance for
loan losses of $635 and $575 at June 30, 1996
and December 31, 1995, respectively............................... 499,861 414,610
Other loans, net.................................................... 998 959
Real estate owned................................................... -- 178
Premises and equipment, net......................................... 3,761 3,601
Federal Home Loan Bank stock, at cost .............................. 3,999 3,009
Accrued interest receivable......................................... 2,972 2,677
Other assets........................................................ 591 108
-------- --------
Total assets ................................................ $570,649 $520,842
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- - ------------------------------------
Liabilities:
Deposits:
Passbook, club and other accounts............................ $ 72,191 $ 71,723
Money market and NOW accounts................................ 43,270 39,447
Certificate accounts......................................... 318,190 280,241
-------- --------
Total deposits............................................ 433,651 391,411
Advances by borrowers for taxes and insurance....................... 13,827 8,545
Accrued interest on deposits........................................ 2,936 338
Accrued income taxes................................................ 48 23
Deferred tax liability ............................................. 1,087 673
Other liabilities................................................... 2,835 1,370
-------- --------
Total liabilities............................................ 454,384 402,360
Stockholders' equity:
Preferred Stock, ($0.01 par value, 2,000,000 shares authorized;
no shares issued or outstanding)............................... -- --
Common stock ($0.01 par value; 20,000,000 shares authorized:
8,596,250 issued; 8,166,450 outstanding at June 30, 1996;
8,596,250 outstanding at December 31, 1995..................... 86 86
Additional paid-in capital....................................... 83,591 83,524
Unearned ESOP shares............................................. (6,513) (6,636)
Treasury stock, at cost, 429,800 shares at June 30, 1996......... (5,996) --
Retained earnings - substantially restricted .................... 45,097 41,508
-------- --------
Total stockholders' equity .................................... 116,265 118,482
-------- --------
Total liabilities and stockholders' equity.......................... $570,649 $520,842
======== ========
See accompanying notes to consolidated financial statements.
2
FIRST BELL BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
Three Months Three Months Six Months Six Months
Ended Ended Ended Ended
June 30, 1996 June 30, 1995 June 30, 1996 June 30, 1995
------------- ------------- ------------- -------------
INTEREST INCOME:
Conventional mortgage loans......................... $ 9,147 $6,493 $17,373 $12,608
Interest-earning deposits........................... 108 728 393 1,225
Mortgage-backed securities.......................... -- 84 -- 176
Federal funds sold.................................. 552 -- 1,234 --
Investment securities............................... 330 597 668 1,264
Other loans......................................... 18 21 37 42
Federal Home Loan Bank stock........................ 64 51 111 91
------- ------ ------- -------
Total interest and dividend income................. 10,219 7,974 19,816 15,406
Interest expense on deposits......................... 5,180 4,691 10,112 8,905
------- ------ ------- -------
Net interest income.................................. 5,039 3,283 9,704 6,501
Provision for loan losses............................ 30 -- 60 --
------- ------ ------- -------
Net interest income after provision for loan losses.. 5,009 3,283 9,644 6,501
------- ------ ------- -------
Other income:
Service fee and charges............................. 203 182 404 353
Other income........................................ 6 3 8 6
------- ------ ------- -------
Total of other income.............................. 209 185 412 359
------- ------ ------- -------
Other expenses:
Compensation, payroll taxes and fringe benefits..... 668 455 1,349 925
Federal insurance premiums.......................... 227 208 447 416
Office occupancy expense, excluding depreciation.... 117 126 230 240
Depreciation........................................ 65 66 116 133
Computer services................................... 52 52 102 103
Other expenses...................................... 249 238 569 458
------- ------ ------- -------
Total other expenses............................... 1,378 1,145 2,813 2,275
------- ------ ------- -------
Income before provision for income taxes............. 3,840 2,323 7,243 4,585
------- ------ ------- -------
Provision for income taxes:
Current:
Federal............................................ 1,022 590 1,934 1,150
State.............................................. 261 143 489 302
Deferred expense................................... 262 162 414 319
------- ------ ------- -------
Total provision for income taxes.................. 1,545 895 2,837 1,771
------- ------ ------- -------
Net income........................................... $ 2,295 $1,428 $ 4,406 $ 2,814
======= ====== ======= =======
Earnings per share................................... $ 0.31 $ -- $ 0.58 $ --
======= ====== ======= =======
Weighted average share outstanding................... 7,511 -- 7,633 --
======= ====== ======= =======
See accompanying notes to consolidated financial statements.
3
FIRST BELL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
(UNAUDITED)
SIX MONTHS ENDED SIX MONTHS ENDED
JUNE 30, 1996 JUNE 30, 1995
----------------- -----------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income.............................................................. $ 4,406 $ 2,814
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation............................................................ 116 133
Deferred income taxes................................................... 414 319
Amortization of premiums and accretion of discounts..................... (6) (324)
Provision for loan losses............................................... 60 --
Compensation expense-allocation of ESOP shares.......................... 190 --
Dividend payable........................................................ (409) --
Increase or decrease in assets and liabilities:
Accrued interest receivable........................................ (295) (367)
Accrued interest on deposits....................................... 2,598 2,118
Accrued income taxes............................................... 25 187
Other assets....................................................... (483) 211
Other liabilities.................................................. 1,465 27
-------- --------
Net cash provided by operating activities........................ 8,081 5,118
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities....................................... -- (4,878)
Purchase/(maturity) of Federal Funds.................................... 21,900 (34,950)
Proceeds from maturities of investment securities....................... -- 26,000
Principal paydowns on mortgage-backed securities........................ -- 460
Net increase in conventional mortgage loans............................. (85,311) (43,013)
Net (increase)/decrease in other loans.................................. (39) 49
Purchase of Federal Home Loan Bank stock................................ (990) (600)
Net proceeds from sale of real estate owned............................. 178 30
Purchase of premises and equipment...................................... (276) (5)
-------- --------
Net cash used in investing activities (64,538) (56,907)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in demand deposits, NOW accounts and savings
accounts................................................................. 4,291 (16,263)
Net increase in certificate accounts...................................... 37,949 18,277
Net increase in advances by borrowers for taxes and insurance............. 5,282 3,598
Net proceeds from sale of stock........................................... -- 76,785
Dividends paid............................................................ (408) --
Purchase of treasury stock................................................ (5,996) --
-------- --------
Net cash provided by financing activities............................ 41,118 82,397
-------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS....................... (15,339) 30,608
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD............................. 23,722 40,204
-------- --------
CASH AND CASH EQUIVALENTS, END OF PERIOD................................... $ 8,383 $ 70,812
-------- --------
SUPPLEMENTAL DISCOLSURE
Cash paid for:
Interest on deposits and advances by borrowers for taxes and insurance... $ 7,514 $ 6,787
Income taxes............................................................. 2,352 1,266
Noncash transactions:
Transfers from conventional loans to real estate acquired through
foreclosure...................................................... -- 125
See accompanying notes to consolidated financial statements.
4
FIRST BELL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
(IN THOUSANDS)
(UNAUDITED)
Preferred Unearned
Stock Common Stock Additional ESOP Shares Treasury Stock
------------- ------------- Paid In -------------- --------------- Retained
Shares Amount Shares Amount Capital Shares Amount Shares Amount Earnings Total
------ ------ ------ ------ ---------- ------- ------- ------- ------- -------- -----
Balance at December 31,
1994...................... -- $ -- -- $ -- $ -- -- $ -- -- $ -- $34,575 $ 34,575
Net income................. -- -- -- -- -- -- -- -- -- 2,814 2,814
Net proceeds from initial
public offering........... -- -- 8,596 86 83,570 (688) (6,877) -- -- -- 76,785
---- ---- ----- --- ------- ---- ------- ----- -------- ------- --------
Balance at June 30, 1995... -- $ -- 8,596 $86 $83,576 (688) $(6,877) -- $ -- $37,389 $114,174
==== ==== ===== === ======= ==== ======= ===== ======== ======= ========
Balance at December 31,
1995...................... -- $ -- 8,596 $86 $83,576 (664) $(6,636) -- $ -- $41,508 $118,482
Purchase of treasury
stock.................... -- -- -- -- -- -- -- (430) (5,996) -- (5,996)
Allocation of ESOP shares.. -- -- -- -- 61 12 129 -- -- -- 190
Dividends................. -- -- -- -- -- -- -- -- -- (817) (817)
Net income................. -- -- -- -- -- -- -- -- -- 4,406 4,406
---- ---- ----- ---- ------- ---- ------- ----- -------- ------- --------
Balance at June 30, 1996... -- $ -- 8,596 $ 86 $83,585 (652) $(6,507) (430) $(5,996) $45,097 $116,265
==== ==== ===== ==== ======= ==== ======= ===== ======== ======= ========
See accompanying notes to consolidated financial statements.
5
FIRST BELL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR SIX MONTHS ENDED JUNE 30, 1996 AND 1995
1. PRINCIPLES OF CONSOLIDATION
---------------------------
The consolidated financial statements include the accounts of First Bell
Bancorp, Inc. ("First Bell" or the "Company") and its wholly-owned subsidiary
Bell Federal Savings and Loan Association of Bellevue (the "Association or Bell
Federal"). All significant intercompany transactions have been eliminated in
consolidation. The investment in Bell Federal on First Bell's financial
statements is carried at the parent company's equity in the underlying net
assets.
The consolidated balance sheet as of June 30, 1996 and related consolidated
statements of income, cash flows and changes in stockholder's equity for the
three and/or six months ended June 30, 1996 and 1995 are unaudited. In the
opinion of management, all adjustments necessary for a fair presentation of such
financial statements have been included. Such adjustments consisted of normal
recurring items. Interim results are not necessarily indicative of results for
a full year.
The financial statements and notes are presented as permitted by Form 10-Q.
The interim statements are unaudited and should be read in conjunction with the
financial statements and notes thereto contained in First Bell's annual report
for the fiscal year ended December 31, 1995.
2. CONVERSION TO CAPITAL STOCK FORM OF OWNERSHIP
---------------------------------------------
On July 18, 1994, the Board of Directors of Bell Federal Savings and Loan
Association of Bellevue adopted a plan of conversion, pursuant to which the
Association would convert from a federally chartered mutual savings and loan
association to a federally chartered capital stock savings and loan association,
with the concurrent formation of the holding company, First Bell Bancorp, Inc.
On June 29, 1995, the conversion from a mutual form of ownership to a stock
form was finalized. First Bell was capitalized through the initial sale of
8,596,250 shares of common stock to eligible account holders, an employee
benefit plan of the Association, supplemental eligible account holders, other
members of the Association, and the general public. First Bell then used a
portion of the proceeds from the sale to purchase all of the outstanding shares
of the Association. This transaction was accounted for in a manner similar to
the pooling of interests method.
The Association may not declare or pay cash dividends on or repurchase any of
its shares of common stock if the effect thereof would cause equity to be
reduced below applicable regulatory capital maintenance requirements or if such
declaration and payment would otherwise violate regulatory requirements.
6
ITEM 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Comparison of Financial Condition at June 30, 1996 and December 31, 1995.
- - ------------------------------------------------------------------------
Assets. Total assets increased by $49.8 million, or 9.6% to $570.6 million at
June 30, 1996, from $520.8 million at December 31, 1995. The increase in total
assets was primarily attributable to an increase in conventional mortgage loans
of $85.3 million, or 20.6% to $499.9 million at June 30, 1996 from $414.6
million at December 31, 1995. The increase in conventional mortgage loans,
which was caused by the strong demand for mortgage refinancing due to the
favorable rates offered by the Association, was offset by a decrease in interest
bearing deposits of $16.9 million or 77.7% to $4.8 at June 30, 1996 from $21.7
million at December 31, 1995, and a decrease in federal funds sold of $21.9
million or 42.1% to $30.1 million at June 30, 1996 from $52.0 million at
December 31, 1995. Conventional mortgage loans were funded through the decrease
of interest bearing deposits and federal funds sold, increases in deposits and
advances by borrowers for taxes and insurance, and principal repayments and
prepayments of conventional mortgage loans.
Liabilities. Total deposits at June 30, 1996 were $433.6 million, representing
a $42.2 million, or 10.8% increase over the December 31, 1995 balance of $391.4
million. Certificate accounts increased $37.9 million or 13.5% while passbook,
club and other accounts increased $468,000 or .7% and money market and NOW
accounts increased $3.8 million or 9.7% during the first six months of 1996.
The increase in deposits was due mainly to the continued strong demand and
favorable rates offered by the Association. Advances by borrowers for taxes and
insurance increased $5.3 million or 61.8% to $13.8 million at June 30, 1996 from
$8.5 million at December 31, 1995. The increase in advances by borrowers for
taxes and insurance is the result of an increase in the origination of
conventional mortgage loans and the collection of such advances for future
payments. Accrued interest on deposits increased $2.6 million from $338,000 at
December 31, 1995 to $2.9 million at June 30, 1996. This increase is the result
of increases in the balance of total deposits between the respective periods and
the timing of the crediting of the accrued interest to the deposit accounts.
Other liabilities increased from $1.4 million at June 30, 1996 to $2.8 million
from $1.4 million at December 31, 1995, due to additional monies held for
mortgage commitments and the quarterly dividend on the Company's common stock
which will be paid in the beginning of the third quarter.
Stockholders' Equity. Stockholders' equity decreased by $2.2 million or 1.9% to
$116.3 million at June 30, 1996 from $118.5 million at December 31, 1995. The
decrease was due to the repurchase of 429,800 shares of common stock on the open
market for $6.0 million or at an average price of $13.95. In addition, total
dividends of $817,000 or $.05 per share were declared for stockholders on the
record dates of March 29, 1996 and June 28, 1996. Offsetting these decreases to
stockholders' equity was a net income of $4.4 million earned for the six months
ended June 30, 1996.
In July 1996, the Company received regulatory approval regarding a plan to
repurchase up to 5%, or 408,322 shares of its common stock. Under the
repurchase plan, which was adopted by the Company's Board of Directors, the
Company repurchased 408,300 shares of stock through
7
registered broker-dealers in the open market. The repurchase plan was completed
on July 29, 1996 and was funded by maturities in the Company's current short-
term investment portfolio.
Liquidity and Capital Resources. The Company's primary sources of funds are
deposits and principal and interest payments on loans. While maturities and
scheduled amortization of loans are predictable sources of funds, deposit flows
and mortgage prepayments are strongly influenced by changes in general interest
rates, economic conditions, and competition.
The primary investment activity of the Company for the six months ended June 30,
1996 was the origination of mortgage loans in the amount of $118.7 million. The
most significant source of funds for the six months ended June 30, 1996 was the
net increase in deposits of $42.2 million and the principal repayment and
prepayment of conventional mortgage loans of $33.4 million.
The Association is required to maintain an average daily balance of liquid
assets and short term liquid assets as a percentage of net withdrawable deposit
accounts plus short-term borrowings as defined by the Office of Thrift
Supervision's regulations. The minimum required liquidity and short term
liquidity ratios are currently 5.0% and 1.0% respectively. The Association's
average liquidity and average short-term liquidity ratios were 11.3% and 10.0%
at June 30, 1996. The Association's most liquid assets are cash and short-term
investments. The levels of the Association's liquid assets are dependent on the
Association's operating, financing, lending and investing activities during any
given period. At June 30, 1996, assets qualifying for short term liquidity,
including cash and short term investments, totalled $23.6 million.
At June 30, 1996, the Association's capital exceeded all of the capital
requirements of the Office of Thrift Supervision ("OTS"). The Association's
tangible, core and risk-based capital ratios were 14.8%, 14.8% and 31.2%,
respectively. The Association is considered a "well capitalized" institution
under the prompt corrective action regulations of the OTS.
Comparison of Results of Operations for the Three and Six Months ended June 30,
- - -------------------------------------------------------------------------------
1996 and 1995.
- - -------------
General. Net income for the six months ended June 30, 1996 increased by $1.6
million, or 56.6%, to $4.4 million from $2.8 million for the six months ended
June 30, 1995. This increase was due primarily to an increase in net interest
income of $3.2 million, offset by an increase in taxes of $1.1 million and an
increase of $538,000 in general and administrative expenses resulting primarily
from increases in compensation, payroll taxes and fringe benefits and other
expenses.
For the second quarter of 1996, net income increased by $867,000 or 60.7% to
$2.3 million as compared with the second quarter of 1995. The increase, again,
was the result of an increase in net interest income of $1.8 million offset by
an increase in taxes of $650,000 and an increase in general and administrative
expenses of $233,000.
Interest Income. Interest earned on conventional mortgage loans increased $4.8
million, or 37.8% to $17.4 million for the six months ended June 30, 1996 from
$12.6 million for the six
8
months ended June 30, 1995 and was the primary reason for the increase in
interest income. The increase in interest earned on conventional mortgage loans
was primarily due to an increase of $125.7 million, or 38.3%, in the average
balance of conventional mortgage loans for the six months ended June 30, 1996
from the comparable 1995 period. This increase was due to the favorable rates
offered by the Association. In addition, interest on federal funds sold was $1.2
million for the six months ended June 30, 1996. For the comparable 1995 period,
the Company had no investment in federal funds sold and, therefore, earned no
interest on federal funds sold for that period. Offsetting these increases in
interest income, was a decrease of $832,000 or 67.9% in interest earned on
interest bearing deposits. This decrease was primarily due to the average
balance of interest bearing deposits declining $32.3 million or 70.7% to $13.4
million for the six months ended June 30, 1996 as compared to an average balance
of $45.7 million for the six months ended June 30, 1995. Interest on other
investment securities decreased by $596,000 or 47.2% to $668,000 for the six
months ended June 30, 1996 from $1.3 million for the six months ended June 30,
1995. This decrease was primarily due to the average balance of investment
securities decreasing by $18.2 million or 47.7% to $20.0 million for the six
months ended June 30, 1996 from $38.2 for the comparable 1995 period. Also, due
to the sale of all the mortgage-backed securities in the fourth quarter of 1995,
there was no interest earned on mortgage-backed securities for the six months
ended June 30, 1996. For the six months ended June 30, 1995, $176,000 was earned
from investments in mortgage-backed securities.
Interest income for the quarter ended June 30, 1996 increased by $2.2 million or
28.2% to $10.2 million from $8.0 million for the quarter ended June 30, 1995.
This increase was due to an increase in interest on conventional mortgage loans
and federal funds sold, offset by a decrease in interest on interest-bearing
deposits, mortgage-backed securities and other investment securities. Interest
on conventional mortgage loans increased by $2.7 million or 40.9%. The increase
was the result of the average balance on conventional mortgage loans increasing
by $142.4 million or 42.1% from $338.1 million for the quarter ended June 30,
1995 to $480.5 for the quarter ended June 30, 1996. Interest on federal funds
sold was $552,000 for the quarter ended June 30, 1996. There was no investment
in federal funds sold during the quarter ended June 30, 1995. Interest on
interest-bearing deposits decreased by $620,000 or 85.2% to $108,000 for the
quarter ended June 30, 1996 from $728,000 for the comparable 1995 period. This
decrease was primarily due to the average balance decreasing by $51.9 million or
90.0% to $5.8 million for the quarter ended June 30, 1996 from $57.7 million for
the quarter ended June 30, 1995. Interest on other investment securities
decreased by $267,000 or 44.7% to $330,000 for the quarter ended June 30, 1996
from $597,000 for the comparable 1995 period. Again, this was the result of the
average balance at other investment securities decreasing by $13.6 million or
40.5% to $20.0 million for the quarter ended June 30, 1996 from $33.6 for the
quarter ended June 30, 1995. No interest was earned on mortgage-backed
securities for the second quarter of 1996 compared to $84,000 for the comparable
1995 period.
Interest Expense. Interest expense on deposits was $10.1 million for the six
months ended June 30, 1996 as compared to $8.9 million for the six months ended
June 30, 1995. The $1.2 million or 13.6% increase was primarily due to an
overall increase of $45.8 million in the average balance of deposits to $423.5
million from $377.7 million for the six months ended June 30, 1996 and 1995,
respectively.
9
Interest expense for the quarter ended June 30, 1996 increased to $5.2 million
or 10.6% compared to $4.7 million for the quarter ended June 30, 1995. The
$500,000 increase was primarily due to an increase of $56.7 million in the
average balance of deposits to $437.1 million from $380.4 million for the
quarterly periods ended June 30, 1996 and 1995, respectively.
Both increases were due to the Association's effort to attract increase levels
of deposits and favorable rates offered by the Association.
Net Interest Income. Net interest income increased for the six months ended June
30, 1996 to $9.7 million from $6.5 million for the six months ended June 30,
1995. This increase was due to interest income increasing by $4.4 million, or
28.6% to $19.8 million for the six months ended June 30, 1996 from $15.4 million
for the six months ended June 30, 1995. Offsetting this increase was an increase
in interest expense of $1.2 million for the six months ended June 30, 1996, as
compared to the six months ended June 30, 1995.
For the quarters ended June 30, 1996 and 1995, net interest income increased by
$1.8 million or 53.5% to $5.0 million from $3.2 million. This increase was due
to an increase in interest income of $2.2 million offset by an increase of
interest expense of $489,000.
Provision for Loan Losses. A provision for loan losses of $60,000 was recorded
for the six months ended June 30, 1996, of which $30,000 was recorded in the
quarter ended June 30, 1996. The additional provision was recorded as the
result of the continued growth in conventional mortgage loans. No provision for
loan losses was recorded for the six months ended June 30, 1995. As of June 30,
1996, non-performing assets totalled $474,000 representing a $37,000 decrease
from the December 31, 1995 balance of $511,000. At June 30, 1996, the allowance
for loan losses equalled 134.0% of total non-performing assets, as compared to
112.5% as of December 31, 1995.
For the six months ended June 30, 1996 and 1995, no loans were charged off.
Management believes that the current level of loan loss reserve is adequate to
cover losses inherent in the portfolio as of such date. There can be no
assurance, however, that First Bell will not sustain losses in future periods
which could be substantial in relation to the size of the allowance at June 30,
1996.
Other Income. Other income increased $53,000 or 14.8% to $412,000 for the six
months ended June 30, 1996 from $359,000 for the six months ended June 30, 1995.
The increase was due to additional servicing fees earned as the result of an
increase in conventional mortgage loans.
Other income for the quarter ended June 30, 1996 increased $24,000 or 13.0% to
$209,000 from $185,000 for the quarter ended June 30, 1995. Again, the increase
was due to additional servicing fees earned as the result of an increase in
conventional mortgages loans.
Other Expenses. Other expenses increased for the six months ended June 30, 1996
to $2.8 million from $2.3 million for the six months ended June 30, 1995 and
increased to $1.4 million from $1.1 million for the quarterly periods ending
June 30, 1996 and 1995, respectively. These
10
increases were the result of the implementation of the Association's Employee
Stock Ownership Plan ("ESOP"), accruals for other employee benefit plans, the
additional cost of federal deposit insurance premiums and additional expenses
associated with becoming a public company.
Income Taxes. Income taxes for the six months ended June 30, 1996 increased
$1.0 million to $2.8 million, from $1.8 million for the six months ended June
30, 1995. This was the result of an increase in income before taxes of $2.7
million for the six months ended June 30, 1996, compared to the same period of
the prior year. The annualized effective income tax rate for the periods ended
June 30, 1996 and 1995 were 39.2% and 38.6%, respectively.
Income taxes increased for the second quarter of 1996 to $1.5 million from
$895,000 for the second quarter of 1995. This was due to net income before
taxes increasing $1.5 million to $3.8 million from $2.3 million for the
quarterly periods ended June 30, 1996 and 1995, respectively.
Legislative Initiatives
- - -----------------------
Legislative initiatives regarding the recapitalization of the Savings
Association Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation
("FDIC"), deposit insurance premiums, FICO bond interest payments, the merger of
SAIF and Bank Insurance Fund ("BIF"), financial industry regulatory structure,
and revision of thrift and bank charters are still pending before Congress.
Management cannot predict the ultimate impact any final legislation or
regulatory actions may have on the operations of the Company. Without passage of
legislation addressing the FDIC insurance premium disparity, the Association,
like other thrifts, will continue to pay deposit insurance premiums
significantly higher than banks. As long as such premium differential continues,
it may have adverse consequences on the Company's earnings and the Company may
be placed at a substantial competitive disadvantage to commercial banking
organizations insured by the BIF.
Legislation regarding bad debt recapture has been passed by Congress and sent to
the President for signature. The legislation requires recapture of reserves
accomodated after 1987. The recapture of post 1987 reserves must be paid over a
six year period starting in 1996. The payment of the tax can be deferred in each
of 1996 and 1997 if an institution originates at least the same average annual
principal amount of mortgage loans that it originated in the six years prior to
1996. Management does not believe that this legislation will have a material
impact on the operations of the Company.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are various claims and lawsuits in which the Company is periodically
involved incidental to the Company's business, which in the aggregate involve
amounts which are believed by management to be immaterial to the financial
condition and results of operations of the Company.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
11
(a) The Holding Company held an Annual Meeting of Stockholders on
April 29, 1996.
(b) The names of each Director elected at the Annual Meeting and votes
casted are as follows:
For Withheld
--- ---------
David F. Figgins 7,202,021 306,263
Peter E. Reinert 7,385,838 122,446
Theodore R. Dixon 7,417,647 90,637
The names of the Directors whose term of office continued after the
Annual Meeting are as follows:
Albert H. Eckert William S. McMinn
Thomas J. Jackson, Jr. Jeffrey M. Hinds
Norman B. Ward, Jr. Jack W. Schweiger
Robert C. Baierl
(c) A brief description of each other matter voted on and the number of
yes and no votes cast:
(i) The approval of First Bell Bancorp, Inc. 1996 Master Stock
Option Plan.
For Against Abstain Non-vote
--- --------- ------- --------
4,908,064 1,048,131 73,321 1,406,768
(ii) The approval of the Bell Federal Savings and Loan Association
of Bellevue 1996 Master Stock Compensation Plan.
For Against Abstain Non-vote
--- --------- ------- --------
5,110,547 958,858 61,591 1,377,288
(iii) Ratification of Deloitte & Touche LLP as independent auditors
of First Bell Bancorp, Inc. for the fiscal year ending
December 31, 1996.
For Against Abstain Non-vote
--- --------- ------- --------
7,428,973 60,195 116 18,116
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are filed as part of this report.
12
Exhibit 3.1 - Certificate of Incorporation of First Bell Bancorp, Inc.*
Exhibit 3.2 - Bylaws of First Bell Bancorp, Inc.*
Exhibit 11 - Computation of Earnings Per Share (filed herewith)
Exhibit 27 - Financial Data Schedule (filed herewith)
13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K (CONT.).
(b) Reports on Form 8-K
None
- - -------------------
*Incorporated herein by reference into this document from the Exhibits to
Form S-1, Registration Statement, filed on November 9, 1994, as amended,
Registration No. 33-86160.
14
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
FIRST BELL BANCORP, INC.
(Registrant)
Date: August 9, 1996 /s/ Albert H. Eckert, II
------------------------------------
Albert H. Eckert, II
President and Chief Executive Officer
Date: August 9, 1996 /s/ Jeffrey M. Hinds
------------------------------------
Jeffrey M. Hinds
Executive Vice President and
Chief Financial Officer
(Principal Accounting Officer)