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, 1997
[ ] 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:
1,572,244, shares of common stock, $.01 par value 9/30/97
Transitional Small Business Disclosure Format (check one):
YES NO x
FFBS BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended
September 30
1997 1996
___________ ___________
INTEREST INCOME
Interest and fees on loans $ 2,031,456 $ 1,821,804
Interest on mortgage-backed and
related securities 145,588 38,093
Interest on investment securities 290,559 383,143
FHLB stock dividends 12,168 11,231
Interest on deposits due from banks 47,847 58,023
___________ ___________
2,527,618 2,312,294
INTEREST EXPENSE
Interest on deposits 1,294,986 1,147,530
Interest on advances 49,193
___________ ___________
1,344,179 1,147,530
___________ ___________
Net interest income 1,183,439 1,164,764
Provision of losses on loans 0 0
___________ ___________
Net interest income after provision 1,183,439 1,164,764
for losses on loans
NON-INTEREST INCOME
Loan fees and service charges 70,662 53,860
NOW account fees 72,267 78,523
Other 25,997 28,208
___________ ___________
168,926 160,591
NON-INTEREST EXPENSE
Compensation and benefits 362,420 345,906
Occupancy 27,336 27,644
Furniture and equipment 18,785 18,632
Deposit insurance premium 16,078 654,846
Loss on foreclosed real estate 0 121
Data processing 42,626 36,507
Other 154,734 141,711
___________ ___________
621,979 1,225,367
Income before income taxes and
cumulative effect of accounting
change 730,386 99,988
Income tax expense
Current 253,115 (23,212)
Deferred income tax 26,000 18,000
___________ ___________
Net Income $ 451,271 $ 105,200
=========== ===========
Earnings per common share $ 0.30 $ 0.07
FFBS BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(unaudited)
ASSETS SEPTEMBER 30 JUNE 30
1997 1997
____________ ____________
Cash $ 2,617,310 $ 3,347,511
Interest-bearing deposits due from banks 4,385,605 5,058,945
Federal funds sold 0 0
____________ ____________
Total cash and cash equivalents 7,002,915 8,406,456
Other interest-bearing deposits due from
banks 0 0
Investment securities (approximate market
value of $18,900,096 at Sept. 30, 1997
and $18,758,223 at June 30, 1997) 18,929,226 18,814,395
Mortgage-backed and related securities
(approximate market value of $10,006,960
at Sept. 30, 1997 and $7,256,822 at
June 30, 1997) 9,981,460 7,267,626
Federal Home Loan Bank stock, at cost 814,000 801,900
Loans receivable, net 95,249,944 92,760,267
Foreclosed real estate 0 0
Properties and equipment 1,450,716 1,354,677
Accrued interest receivable 1,200,645 1,064,535
Other assets 322,872 292,445
____________ ____________
Total Assets $134,951,778 $130,762,301
============ ============
LIABILITIES AND RETAINED EARNINGS
Liabilities:
Deposits $105,740,351 $103,798,255
Advances from borrowers for taxes and
insurance 365,157 277,749
Accrued interest payable on deposits 919,146 763,339
Accrued expenses and other liabilities 778,070 781,370
Advances/Borrowings from Federal Home
Loan Bank 4,605,000 0
____________ ____________
Total Liabilities 112,407,724 105,620,713
Commitments and contingencies
Stockholders' equity
Cummulative preferred stock, $.01
par value, 500,000 shares authorized;
shares issued and outstanding - none
Common stock, $.01 par value, 2,000,000
shares authorized; 1,574,639 and
1,565,595 shares issued and outstanding
at Sept. 30, 1997 and June 30, 1997,
respectively. 15,746 15,656
Additional paid in capital 15,362,435 15,371,923
Retained earnings 8,026,284 10,692,318
Unrealized loss on available-for-sale
securities (45,658) 4,789
Loan receivable from ESOP (761,760) (761,760)
Treasury Stock at cost (2,395 shares) (52,993) (181,338)
____________ ____________
Total stockholders' equity 22,544,054 25,141,588
____________ ____________
Total liabilities and retained earnings $134,951,778 $130,762,301
============ ============
FFBS BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Three Months Ended
September 30,
1997 1996
____________ ____________
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 451,271 $ 105,200
Adjustments to reconcile net
earnings to net cash:
Depreciation of properties and
equipment 21,361 9,856
Accretion of discount on loans (3,236) (1,800)
Accretion of discount on mortgage-
backed securities (2,118) (113)
Accretion of discount on investments (2,241) (3,397)
Amortization of premium on
investments 2,724 5,543
Amortization of premium on mortgage-
backed securities 6,830 1,126
Deferred income taxes (benefit) 26,000 18,000
FHLB stock dividends (12,100) (11,200)
Provision for losses on loans 0 0
Sale of loans 1,481,000 1,416,000
Loans originated for sale (1,481,000) (1,416,000)
(Increase) decrease in accrued
interest receivable (136,110) 47,487
(Increase) decrease in other assets (30,426) 63,880
Increase (decrease) in accrued
interest payable on deposits 155,807 65,955
Increase (decrease) in accrued
expenses and other liabilities (49,693) 241,846
Provision for losses on foreclosed
real estate 0 10,452
____________ ____________
Net cash provided by operating
activities 428,069 552,835
CASH FLOWS FROM INVESTING ACTIVITIES
(Increase) decrease in other interest-
bearing deposits due from banks 0 0
Loan originations (13,771,000) (12,761,000)
Purchase of investment securities (2,779,116) (3,011,141)
Sale of equipment 11,993 0
Purchase of mortgage-backed and related
securities (3,261,903) 0
Principal repayment of loans 11,284,559 11,203,275
Principal repayments of mortgage-backed
and related securities 527,103 106,239
Proceeds from calls and maturities of
investment securities 2,650,000 4,000,000
Purchase of loans 0 0
Sale of foreclosed real estate 0 554,515
Foreclosure of real estate 0 0
Purchase of properties and equipment (129,392) (691)
____________ ____________
Net cash used investing activities (5,467,756) 91,197
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings from FHLB 4,673,000 0
Repayments of borrowings from FHLB (68,000) 0
Increase (decrease) in deposits 1,942,096 121,164
Increase (decrease) in advances from
borrowers for taxes and insurance 87,408 59,021
Purchase of company stock (52,993) (115,776)
Dividends declared 0 0
Dividends paid (3,117,305) 0
Exercise of stock options 171,940 39,670
Dividends unallocated on RRP stock 0 (36,324)
____________ ____________
Net cash provided by (used in)
financing activities 3,636,146 67,755
____________ ____________
Net increase (decrease) in cash and
cash equivalents (1,403,541) 711,787
Cash and cash equivalents at beginning
of period 8,406,456 7,561,222
____________ ____________
Cash and cash equivalents at end of period $ 7,002,915 $ 8,273,009
============ ============
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,
1997 have been computed on the basis of the weighted average number
of common shares outstanding (1,496,505) and common stock equivalent
shares (33,656) 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
Sept. 30, 1997 Sept. 30, 1996
_____________ _____________
Select Consolidated Financial
Condition Data:
Total Assets $134,951,778 $125,727,117
Loans receivable, net 95,249,944 85,077,227
Deposits 105,740,351 99,269,272
Stockholders' equity 22,544,054 24,631,108
Selected Consolidated Operations
Data:
Net interest income 1,183,439 1,164,764
Provision for loan losses 0 0
Non-interest income 168,926 160,591
Non-interest expense 621,979 1,225,367
Net income 451,271 105,200
Per Share Data:
Book value at end of period $15.07 $16.62
Earnings per common and common
equivalent share 0.30 0.07
Cash dividends declared 2.00 0.00
Other Data:
Yield on average earning assets 7.93% 7.73%
Cost of funds 4.89% 4.66%
Interest rate spread 3.04% 3.07%
Net interest margin (1) 3.77% 3.94%
Annualized return on average assets 1.45% 0.34%
Annualized return on average equity 8.35% 1.70%
Stockholder's equity as a percentage
of total assets 16.70% 19.62%
Non-performing assets as a percentage
of total assets (2) 0.55% 0.60%
Net interest income as percentage of
general and administrative expenses 190.27% 95.05%
(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 For Three At or For The
Months Ended Year Ended
Sept. 30, 1997 June 30, 1997
_____________ _____________
Cash $ 2,617,310 $ 3,347,511
Interest-bearing deposits due
from banks 4,385,605 5,058,945
Federal funds sold 0 0
Trading account assets 0 0
Investments amd mortgage-backed
securities held for sale 6,390,721 1,221,505
Investments and mortgage-backed
securities held to maturity -
carrying value 22,519,965 24,860,516
Investments and mortgage-backed
securities held to maturity -
market value 22,516,335 24,793,540
Loans 95,249,944 93,336,267
Allowance for losses 567,000 576,000
Total assets 134,951,778 130,762,301
Deposits 105,740,351 103,798,255
Short-term borrowings 3,255,000 0
Other liabilities 2,062,373 1,822,458
Long-term debt 1,350,000 0
Preferred stock - mandatory
redemption 0 0
Preferred stock - no mandatory
redemption 0 0
Common stock 15,746 15,656
Other stockholders' equity 22,528,308 25,125,932
Net yield - interest-earning
assets - actual 3.77% 3.93%
Loans on nonaccrual 0 0
Accruing loans past due 90 days
or more 739,000 446,000
Troubled debt restructuring 39,000 39,000
Potential problem loans 0 0
Allowance for loan loss -
beginning of period 576,000 666,000
Total charge-offs 9,000 97,000
Total recoveries 0 7,000
Allowance for loan loss - end
of period 567,000 576,000
Loan loss allowance allocated to
domestic loans 567,000 576,000
Loan loss allowance allocated to
foreign loans 0 0
Loan loss allowance - unallocated 0 0
Non-performing Assets
1. 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,
1997, there are no other potential problem loans except as included
in the table below.
(In Thousands)
At
Sept. 30 June 30
1997 1997
_________ _________
Non-accrual mortgage loans 0 0
Non-accrual other loans 0 0
_________ _________
Total non-accrual loans 0 0
Loans 90 days or more delinquent
and still accruing 739 446
_________ _________
Total non-performing loans 739 446
Total foreclosed real estate, net
of related allowance for losses 0 0
_________ _________
Total non-performing assets 739 446
========= =========
Troubled debt restructured 39 39
========= =========
Non-performing loans to total loans 0.55% 0.48%
Total non-performing assets to total
assets 0.55% 0.34%
2. There were no loan concentrations in excess of 10% of total loans
at September 30, 1997.
3. There were no outstanding foreign loans at September 30, 1997.
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 subsidary 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 nine months ended September 30, 1997 and
June 30, 1997 would be increased (decreased) by approximately $0
and $0 respectively.
6. Management stringently monitors assets that are classified as non-
performing. Non-performing assets include nonaccrual loans, loans
past due 90 days 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, 1997, 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 judgement 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
Sept. 30 June 30
1997 1997
_________ _________
Balance at beginning of period $ 576 $ 666
Provision for loan losses 0 0
Charge-offs:
Mortgage loans 0 0
Other loans 9 97
Recoveries:
Mortgage loans 0 0
Other loans 0 7
_________ _________
Balance at end of period $ 567 $ 576
========= =========
Ratio of net charge-offs
during the period to average
loans outstanding during the (Annualized)
period 0.00% 0.11%
Ratio of allowance for loan
losses to non-performing
loans at end of period 76.73% 129.15%
Ratio of allowance for loan
losses to net loans
receivable at the end of
the period 0.60% 0.62%
Ratio of allowance for loan
losses and foreclosed real
estate to total
non-performing assets at
end of the period 76.73% 129.15%
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, 1997, and the results of operations
for the three month period ending September 30, 1997.
Comparison of Changes in Financial Condition
at September 30, 1997 and at June 30, 1997
At September 30, 1997, total assets were $135.0 million, an
increase of $4.2 million, from June 30, 1997. Mortgage-backed and
related securities increase $2.7 million, or 37.3%, to $10.0 million
during the three month period. Loans receivable increased $2.5
million, or 2.68%, to $95.2 million at September 30, 1997. These
increases were funded by an increase in deposits and Federal Home
loan Bank advances. Deposits grew to $105.7 million at September 30,
1997, an increase of $1.9 million, or 1.9%. Advances from the Federal
Home Loan Bank increased and totalled $4.6 million at September 30,
1997. Stockholder's equity decreased $2.6 million from June 30, 1997
due to the payment of a special dividend of $3.1 million during the
quarter. Stockholder s equity totalled $22.5 million at September 30,
1997 and amounted to 16.7% of assets.
Liquidity and Capital Resources
Positive cash flows of $428,000 were provided by the Company's
operating activities for the three months ended September 30, 1997,
primarily as a result of net income.
Investing activities of the Company provided negative cash
flows of $5.5 million for the three months ended September 30, 1997,
resulting from an increase in loan originations over loan repayments
of $2.5 million and the purchase of $3.3 million in mortgage-backed
and related securities.
Financing activities provided positive cash flows of $3.6 million
for the three months ended September 30, 1997, due to an increase in
deposits of $1.9 million and advances from the Federal Home Loan Bank
of $4.7 million. Offsetting the increase in deposits and advances were
$3.1 million in dividends.
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, 1997, the Bank's liquidity ratio was 19.61%.
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, 1997, 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 $18,489 14.04% $18,489 14.04% $19,039 26.11%
OTS Requirement 1,975 1.5% 3,950 3.0% 5,832 8.0%
_______ _______ _______ _______ _______ _______
Excess $16,514 12.54% $14,539 11.04% $13,207 18.11%
======= ======= ======= ======= ======= =======
Comparison of Operating Results for the
Three Months Ended September 30, 1997 and 1996
General. Net income of the Company for the three months ended
September 30, 1997 was $451,000 compared to $105,000, or $.07 per share,
for the three months ended September 30, 1996. The increase of $346,000
in net income is primarily attributable to the Federal Deposit Insurance
Corporation's one-time special assessment during the first quarter of
last year which decreased net income $376,000, net of taxes.
Interest Income. Interest income increased $215,000, or 9.3%, to
$2.5 million for the three months ended September 30, 1997 due to an
increase of $8.2 million in average-earning assets and an increase in
yield on average-earning assets to 7.93% from 7.73% for the three months
ended September 30, 1996.
Interest Expense. Interest expense increased $197,000, or 17.1%,
to $1.3 million for the three months ended September 30, 1997 due to an
increase of $11.2 million in average deposits and Federal Home Loan Bank
advances and an increase in cost to 4.89% from 4.66% for the three months
ended September 30, 1996.
Net Interest Income. Net interest income increased $19,000, to
$1.2 million for the three months ended September 30, 1997. The net
interest margin was 3.77% for the three months ended September 30, 1997,
which was a decrease from 3.93% for the three months ended September 30,
1996.
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 $8,000, or 5.2%, to
$169,000 for the three months ended September 30, 1997. Loan fees and
service charges have increased due to increased originations. Loan
originations for the quarter ended September 30, 1997 were $15.2 million
compared to $14.2 million for the quarter ended September 30, 1996.
Non-interest Expense. Non-interest expense decreased $603,000, or
49.2%, to $622,000 for the three months ended September 30, 1997. The
decrease is due to the FDIC special assessment of $599,000 which
occurred during the three month period ending September 30, 1996.
Compensation and benefits increased $17,000 due to annual raises. The
deposit insurance premium is decreased $599,000 due to the special
assessment and $40,000 due to decreased regular premiums. Other
operating expenses show an increase due primarily to expenses associated
with converting to check imaging.
Income Tax Expense. Income tax expense amounted to $279,000 for the
three months ended September 30, 1997 compared to a tax benefit of
$5,000 for the three months ended September 30, 1996. During the prior
year, tax savings of $223,000 were recorded in accordance with the FDIC
special assessment.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
N/A
Item 2. Changes in Securities.
Stock options on 17,194 shares were exercised during the three
months ended September 30, 1997, 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 15, 1997
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 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. Evans 100.00% 0.00%
Mr. Caldwell 100.00% 0.00%
Resolution II.
Ratification of the appointment
of T. E. Lott & Company, as independent
auditors for fiscal year ended June 30, 1997.
For Against Abstain
_______ _______ _______
99.75% 0.00% .248%
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 3, 1997 By: E. FRANK GRIFFIN, III
E. Frank Griffin, III
Chief Executive Officer
and President
By: SHERRY L. BOYD
Sherry L. Boyd
Chief Financial Officer