UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10QSB
(Mark One)
[X ] QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934. FOR THE QUARTERLY
PERIOD ENDED:
SEPTEMBER 30, 1996
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934. FOR THE TRANSITION
PERIOD FROM ___________ TO ___________
FOR QUARTER ENDED
COMMISSION FILE NUMBER: 0-21688
FFBS BANCORP, INC.
(exact name of registrant as specified in its charter)
Delaware 64-0828070
(State or other (IRS Employer ID No)
jurisdiction of
incorporation or organization)
1121 Main Street, Columbus, Mississippi 39701
(Address of principal executive offices)
(601) 328-4631
(Issuer's telephone number)
N/A
(Former name, former address and former fiscal year
if changed since last report)
Indicate by check mark whether the registrant (1) has filed
all the reports required to be filed by Section 13 of 15 (d) of
the Securities Exchange Act of 1934 during the preceding 12
months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Sections 12, 13,
or 15 (d) of the Securities Exchange Act of 1934 subsequent to
the distribution of securities under a plan confirmed by a
court.
YES NO
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the
issuer's classes of common equity, as of the latest practicable
date:
1,570,443 shares of common stock, $.01 par value 09/30/96
Transitional Small Business Disclosure Format (check one):
YES NO X
FFBS BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
Three Months Ended
September 30,
1996 1995
__________ __________
INTEREST INCOME
Interest and fees on loans $1,821,804 $1,736,399
Interest on mortgage-backed and
related securities 38,093 27,965
Interest on investment securities 383,143 365,314
FHLB stock dividends 11,231 11,587
Interest on deposits due from banks 58,023 57,113
__________ __________
2,312,294 2,198,378
INTEREST EXPENSE
Interest on deposits 1,147,530 1,115,003
__________ __________
Net interest income 1,164,764 1,083,375
Provision of losses on loans 0 0
__________ __________
Net interest income after provision
for losses on loans 1,164,764 1,083,375
NON-INTEREST INCOME
Loan fees and service charges 53,860 45,059
NOW account fees 78,523 60,503
Other 28,208 26,203
__________ __________
160,591 131,765
NON-INTEREST EXPENSE
Compensation and benefits 345,906 291,421
Occupancy 27,644 27,492
Furniture and equipment 18,632 17,035
Deposit insurance premium 654,846 52,393
Loss on foreclosed real estate 121 0
Data processing 36,507 43,457
Other 141,711 134,005
__________ __________
1,225,367 565,803
__________ __________
Income before income taxes and
cumulative effect of accounting
change 99,988 649,337
Income tax expense:
Current (23,212) 185,450
Deferred income tax 18,000 34,500
__________ __________
Net Income $ 105,200 $ 429,387
========== ==========
Earnings per common share $ 0.07 $ 0.28
FFBS BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
September 30, June 30,
1996 1995
ASSETS ____________ ____________
Cash $ 2,888,028 $ 3,337,978
Interest-bearing deposits due from
banks 5,384,981 3,673,244
Federal funds sold 0 550,000
____________ ____________
Total cash and cash equivalents 8,273,009 7,561,222
Other interest-bearing deposits due
from banks 0 0
Investment securities (approximate
market value of $26,458,504 at
September 30, 1996, and
$27,517,628 at June 30, 1996) 26,749,641 27,740,646
Mortgage-backed and related
securities (approximate market
value of $2,361,240 at
September 30, 1996 and $2,449,956
at June 30, 1996) 2,399,107 2,506,359
Federal Home Loan Bank stock, at
cost 767,700 756,500
Loans receivable, net 85,077,227 83,528,151
Foreclosed real estate 0 554,515
Properties and equipment 1,086,258 1,095,423
Accrued interest receivable 1,078,504 1,125,991
Other assets 295,671 359,551
____________ ____________
Total Assets $125,727,117 $125,228,358
============ ============
LIABILITIES AND RETAINED
EARNINGS
Liabilities:
Deposits $ 99,269,272 $ 99,148,108
Advances from borrowers for
taxes and insurance 318,123 259,102
Accrued interest payable on
deposits 761,062 695,107
Accrued expenses and other
liabilities 747,552 487,706
____________ ____________
Total liabilities 101,096,009 100,590,023
Commitments and contingencies
Stockholders' equity:
Cumulative preferred stock,
$.01 par value, 500,000 shares
authorized; shares issued and
outstanding - none
Common stock, $.01 par value,
2,000,000 shares authorized;
1,570,443 and 1,572,183 shares
issued and outstanding at
September 30, 1996, and
June 30, 1996, respectively. 15,704 15,722
Additional paid in capital 15,236,264 15,253,646
Retained earnings 10,270,193 10,260,020
Unrealized loss on available-for-
sale securities (2,333) (2,333)
Loan receivable from ESOP (888,720) (888,720)
____________ ____________
Total stockholders' equity 24,631,108 24,638,335
____________ ____________
Total liabilities and retained
earnings $125,727,117 $125,228,358
============ ============
FFBS BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATING STATEMENTS OF CASH FLOWS
(UNAUDITED)
Three Months Ended
September 30,
1996 1995
____________ ____________
CASH FLOWS FROM OPERATING
ACTIVITIES
Net income $ 105,200 $ 429,387
Adjustments to reconcile net
earnings to net cash:
Depreciation of properties
and equipment 9,856 9,370
Accretion of discount on
loans (1,800) (1,761)
Accretion of discount on
mortgage-backed
securities (113) (129)
Accretion of discount on
investments (3,397) (35,732)
Amortization of premium on
investments 5,543 3,980
Amortization of premium on
mortgage-backed
securities 1,126 1,811
Deferred income taxes
(benefit) 18,000 34,500
FHLB stock dividends (11,200) (11,500)
Provision for losses on
loans 0 0
(Increase) decrease in
accrued interest
receivable 47,487 77,162
(Increase) decrease in
other assets 63,880 (7,720)
Increase (decrease) in
accrued interest payable
on deposits 65,955 147,363
Increase (decrease) in
accrued expenses and
other liabilities 241,846 (63,941)
Provision for losses on
foreclosed real estate 10,452 0
____________ ____________
Net cash provided by operating
activities 552,835 582,790
CASH FLOWS FROM INVESTING
ACTIVITIES
Loan originations (14,177,000) (11,728,000)
Purchase of investment
securities (3,011,141) (5,025,355)
Principal repayment of loans 11,203,275 9,417,131
Principal repayments of
mortgage-backed and related
securities 106,239 110,433
Sale of loans 1,416,000 1,114,000
Maturities of investment
securities 4,000,000 5,000,000
Purchase of loans 0 (117,055)
Sale of foreclosed real estate 554,515 0
Foreclosure of real estate 0 (52,177)
Purchase of properties and
equipment (691) (9,801)
____________ ____________
Net cash provided by (used in)
investing activities 91,197 (1,290,824)
CASH FLOWS FROM FINANCING
ACTIVITIES
Increase (decrease) in deposits 121,164 2,516,109
Increase (decrease) in advances
from borrowers for taxes and
insurance 59,021 65,932
Purchase of company stock (115,776) (184,638)
Dividends paid 0 (1,592,173)
Exercise of stock options 39,670 0
Dividends unallocated on RRP
stock (36,324) 0
____________ ____________
Net cash provided by financing
activities 67,755 805,230
____________ ____________
Net increase in cash and cash
equivalents 711,787 97,196
Cash and cash equivalents at
beginning of period 7,561,222 6,495,700
____________ ____________
Cash and cash equivalents at end
of period $ 8,273,009 $ 6,592,896
============ ============
FFBS BANCORP, INC.
Notes to Unaudited Consolidated Financial Statements
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements
include the accounts of FFBS Bancorp, Inc. and its wholly owned
subsidiary, First Federal Bank for Savings. All significant
intercompany balances and transactions have been eliminated for
the purpose of the consolidated financial statements. In
preparing the statement, management is required to make estimates
and assumptions that affect the reported amounts of assets and
liabilities as of the date of the balance sheets and revenues and
expenses for the periods. Actual results could differ from those
estimates. In the opinion of management, all adjustments
necessary for the fair presentation of the results of operations
for the interim periods presented have been made. Such
adjustments were of a normal recurring nature.
Certain information and footnote disclosures normally
included in financial statements prepared in accordance with
generally accepted accounting principles have been condensed or
omitted. The results of operations for the interim periods are
not necessarily indicative of the results that may be expected
for the entire fiscal year.
(2) Earnings Per Share
Earnings per share for the three months ended September 30,
1996 have been computed on the basis of the weighted average
number of common shares outstanding (1,483,227) and common stock
equivalent shares (45,052) outstanding. Common stock equivalent
shares arise from stock option plans and a recognition and
retention stock plan.
FFBS BANCORP, INC.
SUMMARY OF CONSOLIDATED FINANCIAL INFORMATION
UNAUDITED
At and for the
Three Months Ended
September 30, September 30,
1996 1995
____________ ____________
Select Consolidated Financial
Condition Data:
Total assets $125,727,117 $120,284,518
Loans receivable, net 85,077,227 81,706,686
Deposits 99,269,272 95,092,276
Stockholders' equity 24,631,108 23,793,534
Selected Consolidated Operations
Data:
Net interest income 1,164,764 1,083,375
Provision for loan losses 0 0
Non-interest income 160,591 131,765
Non-interest expense 1,225,367 565,803
Net income 105,200 429,387
Per Share Data:
Book value at end of period $16.62 $16.08
Earnings per common and
common equivalent share 0.07 0.28
Cash dividends declared 0.00 1.00
Other Data:
Yield on average earning
assets 7.73% 7.67%
Cost of funds 4.66% 4.76%
Interest rate spread 3.07% 2.91%
Net interest margin (1) 3.94% 3.86%
Annualized return on average
assets 0.34% 1.44%
Annualized return on average
equity 1.70% 7.12%
Stockholders' equity as a
percentage of total
assets 19.62% 19.78%
Non-performing assets as a
percentage of total
assets (2) 0.60% 0.86%
Net interest income as
percentage of general and
administrative expenses 95.05% 191.48%
(1) Net interest income divided by average interest earning
assets.
(2) Non-performing assets consist of non-accruing loans,
accruing loans delinquent 90 days or more, and foreclosed
real estate.
FFBS BANCORP, INC.
FINANCIAL DATA SCHEDULE
At or At or
For Three For the
Months Ended Year Ended
September 30, June 30,
1996 1996
____________ ____________
Cash $ 2,888,028 $ 3,337,978
Interest-bearing deposits due
from banks 5,384,981 3,673,244
Federal funds sold 0 550,000
Trading account assets 0 0
Investments and mortgage-backed
securities held for sale 0 0
Investments and mortgage-backed
securities held to maturity -
carrying value 29,148,748 30,247,005
Investments and mortgage-backed
securities held to maturity -
market value 28,819,744 29,967,584
Loans 85,077,227 83,528,151
Allowance for losses 657,000 666,000
Total assets 125,727,117 125,228,358
Deposits 99,269,272 99,148,108
Short-term borrowings 0 0
Other liabilities 1,826,737 1,441,915
Long-term debt 0 0
Preferred stock - mandatory
redemption 0 0
Preferred stock - no mandatory
redemption 0 0
Common stock 15,704 15,722
Other stockholders' equity 24,615,404 24,622,613
Net yield - interest-earning
assets - actual 3.94% 3.78%
Loans on accrual 371,000 495,000
Accruing loans past due 90 days
or more 379,000 675,000
Troubled debt restructuring 40,000 864,000
Potential problem loans 0 0
Allowance for loan loss -
beginning of period 666,000 705,000
Total charge-offs 10,000 44,000
Total recoveries 1,000 5,000
Allowance for loan loss - end
of period 657,000 666,000
Loan loss allowance allocated
to domestic loans 657,000 666,000
Loan loss allowance allocated
to foreign loans 0 0
Loan loss allowance -
unallocated 0 0
Non-Performing Assets
The following table sets forth information regarding non-accrual
loans, loans which are 90 or more days delinquent and still
accruing, and foreclosed properties at the date indicated. At
September 30, 1996, there are no other potential problem loans
except as included in the table below.
(In Thousands)
At
Sept. 30, June 30,
1996 1996
_________ _________
Non-accrual mortgage loans $ 323 $ 455
Non-accrual other loans 48 40
_________ _________
Total non-accrual loans 371 495
Loans 90 days or more delinquent
and still accruing 379 675
_________ _________
Total non-performing loans 750 1,170
Total foreclosed real estate, net
of related allowance for losses 0 558
_________ _________
Total non-performing assets 750 1,728
========= =========
Troubled debt restructured 40 864
========= =========
Total non-performing loans to total
loans 0.88% 1.40%
Total non-performing assets to total
assets 0.60% 1.38%
2. There were no loan concentrations in excess of 10% of total
loans at September 30, 1996.
3. There were no outstanding foreign loans at September 30,
1996.
4. Loans classified for regulatory purposes or for internal
credit review that have not been disclosed in the above
table do not represent or result from trends or
uncertainties that management expects will materially
impact the financial condition of the Company or its
subsidiary bank, or the future operating results, liquidity,
or capital resources.
5. If all nonaccrual loans have been current throughout their
terms, interest income for the three months ended
September 30, 1996, and June 30, 1996, increased (decreased)
by approximately $2,000 and ($10,000) respectively.
6. Management stringently monitors assets that are classified
as non-performing. Non-performing assets include nonaccrual
loans, loans past due 90 or more, and foreclosed properties.
Management places loans on a nonaccrual status when it is
determined that the borrower is unable to meet his
contractual obligations or when interest or principal is
90 days or more past due, unless the loan is adequately
secured by way of collateralization, guarantees, or other
security.
7. At September 30, 1996, management was not aware of any
potential problem loans not previously disclosed.
Allowance for Loan Losses
The allowance for loan losses is established through a provision
for loan losses based on management's periodic evaluation of the
adequacy of the allowance for loan losses. Such evaluation,
which includes a review of all loans on which full collectibility
may not be reasonably assured, considers, among other matters,
known and inherent risks in the portfolio, prevailing market
conditions, management's judgment as to collectibility, the
estimated net realizable value of the underlying collateral,
historical loan loss experience and other factors that warrant
recognition in providing for an adequate loan loss allowance.
(In Thousands)
For the
Three For the
Months Ended Year Ended
September 30, June 30,
1996 1996
____________ ____________
Balance at beginning of period $ 666 $ 705
Provision for loan losses 0 0
Charge-offs:
Mortgage loans 0 0
Other loans 10 44
Recoveries:
Mortgage loans 0 3
Other loans 1 2
____________ ____________
Balance at end of period $ 657 $ 666
============ ============
Ratio of net charge-offs during
the period to average loans (Annualized)
outstanding during the period 0.01% 0.50%
Ratio of allowance for loan
losses to non-performing loans
at end of period 87.60% 56.92%
Ratio of allowance for loan
losses to net loans receivable
at the end of the period 0.77% 0.80%
Ratio of allowance for loan
losses and foreclosed real
estate to total non-performing
assets at end of the period 87.60% 39.21%
FFBS BANCORP, INC.
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The following discussion reviews the financial condition of
FFBS Bancorp, Inc. and its wholly owned subsidiary First Federal
Bank for Savings as of September 30, 1996, and the results of
operations for the three month period ending September 30, 1996.
Comparison of Changes in Financial Condition
at September 30, 1996 and at June 30, 1996
At September 30, 1996, total assets were $125.7 million, an
increase of $499,000 from June 30, 1996. Interest-bearing
deposits due from banks increased $1.7 million, or 46.60%, to
$5.4 million during the three month period as investment
securities decreased $991,000 to $26.7 million. This was
attributable to the maturity of an investment that was not
reinvested and the conversion of federal funds to cash. During
the three month period, net loans receivable accounted for the
greatest change in total assets as the balance increased $1.5
million, or 1.85%, to $85.1 million. Foreclosed real estate
decreased to $0 at September 30, 1996, from $555,000 at June 30,
1996, due to the sale of the properties. Total deposits
increased $121,000 to $99.3 million at September 30, 1996.
Accrued expenses and other liabilities increased $260,000 to
$748,000 at September 30, 1996, due primarily to the net tax
effect of the one-time special assessment on all "Savings
Association Insurance Fund" deposits, which was enacted on
September 30, 1996 to recapitalize the reserves of the FDIC.
Total stockholder's equity remains stable at $24.6 million at
September 30, 1996. Stockholder's equity was decreased by the
purchases of the Company's stock under a stock repurchase
program, and increased by earnings of $105,000.
Liquidity and Capital Resources
Positive cash flows of $553,000 were provided by the
Company's operating activities for the three months ended
September 30, 1996. Included in the operating activities of
the bank was the accrual and tax effect of the FDIC special
assessment, which was added to net income since it will not
impact cash until payment, which is expected in late November,
1996.
Investing activities of the Company provided positive cash flows
of $91,000 for the three months ended September 30, 1996,
resulting from the net maturity of investments over the purchase
of investments, the sale of foreclosed real estate, and offset by
loan originations netted against loan repayments.
Financing activities provided positive cash flows of $68,000
due to the increase in deposits of $121,000 and the exercise
of stock options, which was partially offset by the repurchase of
the Company's stock.
The Company is required to maintain minimum levels of liquid
assets as defined by OTS regulations. This requirement, which
may be varied at the direction of the OTS depending upon economic
conditions and deposit flows, is based upon a percentage of
deposits and short-term borrowings. The required minimum
liquidity ratio is currently 5.0%. At September 30, 1996, the
Bank's liquidity ratio was 29.69%.
The OTS capital regulations require savings institutions to
meet three capital standards: a 1.5% tangible capital standard; a
3% leverage (core capital) ratio; and an 8% risk-based capital
standard. Although the core capital ratio is 3%, the OTS
regulations provide that an institution with less than 4% core
capital is deemed to be "undercapitalized".
At September 30, 1996, the Bank's capital position exceeded
minimum regulatory capital requirements as indicated by the
following table (dollars in thousands):
Risk-Based
Tangible Capital Core Capital Capital
________________ ________________ ________________
Amount Percent Amount Percent Amount Percent
_______ _______ _______ _______ _______ _______
First Federal $19,144 15.8% $19,144 15.8% $19,720 29.3%
OTS Requirement 1,817 1.5% 3,634 3.0% 5,381 8.0%
_______ _______ _______ _______ _______ _______
Excess $17,327 14.3% $15,510 12.8% $14,339 21.3%
======= ======= ======= ======= ======= =======
Comparison of Operating Results for the
Three Months Ended September 30, 1996 and 1995
General
Net income of the Company for the three months ended
September 30, 1996 was $105,000 compared to $429,000 for the
three months ended September 30, 1995, a decrease of $324,000, or
75.52%, due primarily to the FDIC special assessment of $ 599,000
offset by a tax benefit of $223,000. Excluding the net effect of
the special assessment, net income would have been $481,000,
which would have been an increase of $52,000 over the first
quarter earnings for the prior year.
Interest Income
Interest income increased $114,000, or 5.18%, to $2.3 million for
the three months ended September 30, 1996
due to an increase of $4.4 million in average-earning assets and
an increase in yield on average-earning assets to 7.73% from
7.63% for the three months ended September 30, 1995.
Interest Expense
Interest expense increased $33,000, or 2.92%, to $1.1 million for
the three months ended September 30, 1996 due to an increase in
average deposits of $4.1 million.
Net Interest Income
Net interest income increased $81,000, or 7.51%, to $1.2 million
for the three months ended September 30, 1996 due to a increase
in the interest rate margin from 3.81% for the three months ended
September 30, 1995 to 3.94% for the three months ended September
30, 1996. The Company's average-earning assets increased $4.4
million while average deposits increased $4.1 million in
comparing the three month periods.
Provision for Loan Losses
The Bank's reserve for loan losses was considered sufficient to
absorb potential losses; therefore, no provisions for loan losses
was taken for either of the three months periods.
Non-interest Income
Non-interest income increased $29,000, or 21.88%, to $161,000 for
the three months ended September 30, 1996. Loan fees and service
charges have increased due to increased originations. Loan
originations for the quarter ended September 30, 1996 were $14.2
million compared to $11.7 million for the quarter ended
September 30, 1995. NOW account fees have increased $18,000, or
29.78%, to $79,000 for the three months ended September 30, 1996
compared to $61,000 for the three months ended September 30,
1995. The increase is attributable to an increase of 197
accounts, or 7.21%, in the number of accounts since September 30,
1995 and increased fees for non-sufficient funds and negative
balances.
Non-interest Expense
Non-interest expense increased $660,000, or 116.57%, to $1.2
million for the three months ended September 30, 1996, compared
to $566,000 for the three months ended September 30, 1995. The
increase is primarily due to the FDIC special assessment of
$599,000. Also affecting the increase was the difference of
$55,000 in compensation and benefits, which was due primarily to
the valuation of shares to be released during the fiscal year for
allocation in the Employee's Stock Ownership Plan. The shares
are reported at current fair market value. The fair market value
of the stock at September 30, 1996 was $22.00 per share compared
to $17.75 at September 30, 1995.
Income Tax Expense
Income tax expense amounted to <$5,200> for the three months
ended September 30, 1996 compared to $220,000 for the three
months ended September 30, 1995. Tax savings of $223,000 were
recorded in accordance with the FDIC special assessment for the
three months ended September 30, 1996. The Company recorded
deferred income taxes of $18,000 for the three months ended
September 30, 1996 due to timing differences.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
N/A
Item 2. Changes in Securities.
Stock options on 3,967 shares were exercised during the
three months ended with an exercise price of $10.00
per share.
Item 3. Defaults Upon Senior Securities.
N/A
Item 4. Submission of Matters to a Vote of Security Holders.
A. Annual Meeting - October 16, 1996
B. FFBS Bancorp, Inc. solicited proxies for the meeting
pursuant to Regulation 14A under the Exchange Act.
There was no solicitation in opposition to the
management's nominees as listed in the proxy
statement, and all such nominees were elected.
C. The matters voted on at the annual meeting and the
votes cast for, against or withheld, as well as the
number of abstentions and broker non-votes as to
each matter were as follows:
Resolution I.
The election of
directors of all
nominees listed
below. VOTE
FOR WITHHELD
______ ________
Mr. Jolly 99.95% .05%
Mr. Graham 99.82% .18%
Resolution II.
Ratification of the
appointment of T.E.
Lott & Company, as
independent FOR AGAINST ABSTAIN
auditors for fiscal ______ ________ _______
year ended June 30,
1997 99.87% .04% 0.09%
Item 5. Other Information
N/A
Item 6. Exhibits
N/A
SIGNATURES
Pursuant to the requirement of the Security Exchange Act of
1934, the registrant has duly caused this report to the signed on
its behalf by the undersigned thereunto duly authorized.
FFBS BANCORP, INC.
Date: November 1, 1996 By: E. FRANK GRIFFIN, III
E. Frank Griffin, III
Chief Executive Officer
and President
By: SHERRY L. BOYD
Sherry L. Boyd
Chief Financial Officer