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, 1998
[ ] TRANSTION REPORTUNDER SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934. FOR THE TRNSITION 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 Identification
jurisdiction of incorporation Number)
or organization)
1121 Main street, Columbus, Mississippi 39701
(address of principal executive offices)
(601) 328-4631
(Issuers 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 all
the 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 has been
subject to such filing requirements for the past 90 days.
YES [x] NO [ ]
APPLICABLE ONLY TO ISSURES 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 Section 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 for each of the
issuer's classes of common equity, as of the latest practicable date:
1,575,735 shares of common stock, $.01 par value 9/30/98
Transitional Small Business Disclosure Format (check one):
YES [ ] NO [ ]
FFBS BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Months Ended
September 30, 1998
1998 1997
__________ __________
INTEREST INCOME
Interest and fees on loans $2,116,468 $2,031,456
Interest on mortgage-backed
and related securities 221,799 145,588
Interest on investment securities 249,579 267,706
FHLB stock dividends 12,870 12,168
Interest on deposits due from banks 201,887 70,700
__________ __________
2,802,603 2,527,618
INTEREST EXPENSE
Interest on deposits 1,469,884 1,294,986
Interest on borrowed funds 140,211 49,193
__________ __________
Net interest income 1,192,508 1,183,439
Provision for losses on loans 0 0
Net interest income after provision
for losses on loans 1,192,508 1,183,439
NON-INTEREST INCOME
Loan fees and service charges 57,853 70,662
NOW account fees 82,778 72,267
Other 56,493 25,997
__________ __________
197,124 168,926
__________ __________
NON-INTEREST EXPENSE
Compensation and benefits 433,056 362,420
Occupancy 36,721 27,336
Furniture and equipment 20,500 18,785
Deposit insurance premium 16,934 16,078
Loss on foreclosed real estate 43,654 0
Data processing 57,368 42,626
Other 155,681 154,734
__________ __________
763,914 621,979
__________ __________
Income before income taxes
and cumulative effect of
accounting change 625,718 730,386
Income tax expense
Current 223,559 253,115
Deferred income tax 3,000 26,000
__________ __________
Net Income $ 399,159 $ 451,271
========== ==========
Net Income Per Share:
Basic $ .26 $ .30
Diluted .26 .29
FFBS BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
SEPTEMBER 30 JUNE 30
1998 1998
____________ ____________
ASSETS
Cash $ 3,531,916 $ 4,616,045
Interest-bearing deposits
due from banks 19,198,480 9,705,397
____________ ____________
Total cash and cash equivalents 22,730,396 14,321,442
____________ ____________
Available-for-sale securities 12,283,950 13,901,495
Held-to-maturity securities 16,694,545 19,547,537
Federal Home Loan Bank stock at cost 863,800 851,000
Loans receivable, net 99,919,275 98,917,846
Foreclosed real estate 0 0
Properties and equipment 1,884,406 1,906,215
Accrued interest receivable 1,232,385 1,279,518
Other assets 122,657 81,279
____________ ____________
Total Assets $155,731,414 $150,806,332
============ ============
LIABILITIES AND RETAINED EARNINGS
Liabilities:
Deposits $119,677,740 $114,537,907
Advances from borrowers for
taxes and insurance 366,534 286,311
Accrued interest payable on deposits 1,113,777 891,954
Accrued expenses and other liabilities 739,282 875,032
Advances from FHLB of Dallas 10,174,000 10,961,000
____________ ____________
Total Liabilities 132,071,333 127,552,204
____________ ____________
Commitments and contingencies
Stockholder's equity:
Cumulative preferred stock,
$.01 par value, 500,000 shares
authorized; shares issued and
outstanding - None 0 0
Common stock, $.01 par value,
2,000,000 shares authorized;
1,575,735 shares issued and
outstanding at Sept. 30, 1998
and June 30, 1998, respectively 15,757 15,757
Additional paid in capital 15,457,458 15,457,458
Retained earnings 8,884,417 8,485,228
Unrealized loss on AFS securities (24,918) (18,457)
Loan receivable from ESOP (551,380) (551,380)
Treasury Stock at cost (100 shares) (2,228) (2,228)
Unearned compensation (119,025) (132,250)
____________ ____________
Total Stockholder's equity 23,660,081 23,254,128
____________ ____________
Total Liabilities and
Retained Earnings $155,731,414 $150,806,332
============ ============
FFBS BANCORP, INC.
AND SUBSIDIARY
COINSOLIDATED STATMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30, 1998
CASH FLOWS FROM OPERATING ACTIVITIES 1998 1997
____________ ____________
Net income $ 399,159 $ 451,271
Adjustments to reconcile net earnings
to net cash:
Depreciation of properties & equipment 28,299 21,361
Accretion of discount on loans 0 (3,236)
Accretion of discount on mortgage-
backed securities (1,721) (2,118)
Accretion of discount on investments (4,343) (2,241)
Amortization of premium on investments 1,161 2,724
Amortization of premium on MBS 33,980 6,830
Deferred income taxes <benefit> 3,000 26,000
FHLB stock dividends (12,800) (12,100)
Provision for losses on loans 0 0
Sale of loans 3,102,933 1,481,000
Loans originated for sale (3,102,933) (1,481,000)
<Increase> decrease in accrued
interest receivable 47,133 (136,110)
<Increase> decrease in other assets (41,378) (30,426)
Increase <decrease> in accrued interest
payable on deposits 221,823 155,807
Increase <decrease> in accrued expenses
and other liabilities (131,415) (49,693)
Provision for losses on foreclosed
real estate 42,254 0
Amortization of unearned compensation 13,225 0
____________ ____________
Net cash provided by operating activities 598,377 428,069
CASH FLOWS FROM INVESTING ACTIVITIES
Loan originations (16,529,000) (13,771,000)
Purchase of investment securities (28,010) (2,779,116)
Sale of equipment 0 11,993
Purchase of mortgage-backed and
related securities 0 (3,261,903)
Principal repayment of loans 15,527,571 11,284,559
Principal repayments of mortgage-
backed and related securities 2,455,704 527,103
Proceeds from calls and maturities
of investment securities 2,000,000 2,650,000
Sale of foreclosed real estate 51,980 0
Foreclosure of real estate (94,234) 0
Purchase of properties and equipment (6,490) (129,392)
____________ ____________
Net cash used investing activities 3,377,521 (5,467,756)
____________ ____________
CASH FLOW FROM FINANCING ACTIVITIES
Borrowings from FHLB 0 4,673,000
Repayments of borrowings from FHLB (787,000) (68,000)
Increase <decrease> in deposits 5,139,833 1,942,096
Increase <decrease> in advances from
borrowers for taxes and insurance 80,223 87,408
Purchase of company stock 0 (52,993)
Dividends declared 0 0
Dividends paid 0 (3,117,305)
Exercise of stock options 0 171,940
Dividends unallocated on RRP stock 0 0
____________ ____________
Net cash provided by <used in>
financing activities 4,433,056 3,636,146
____________ ____________
Net increase <decrease> in cash and
cash equivalents 8,408,954 (1,403,541)
____________ ____________
Cash and cash equivalents at beginning
of period 14,321,442 8,406,456
____________ ____________
Cash and cash equivalents at end of
period $ 22,730,396 $ 7,002,915
============ ============
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, 1998 have
been computed on the basis of the weighted average number of common shares
outstanding (1,520,497) and common stock equivalent shares (38,703)
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, 1998 Sept. 30, 1997
_______________ _______________
Selected Consolidated
Financial Condition Data:
Total Assets $ 155,731,414 $ 134,951,778
Loans Receivable, net 99,919,275 95,249,944
Deposits 119,677,740 105,740,351
Stockholder's equity 23,660,081 22,544,054
Selected Consolidated
Operations Data:
Net interest income 1,192,508 1,183,439
Provision for loan losses 0 0
Non-interest income 197,124 168,926
Non-interest expense 763,914 621,979
Net income 399,159 451,271
Per Share Data:
Book value at end of period $15.56 $15.07
Diluted earnings per common share 0.26 0.29
Cash dividends declared 0.00 2.00
Other Data:
Yield on average earning assets 7.61% 7.93%
Cost of funds 5.05% 4.89%
Interest rate spread 2.56% 3.04%
Net interest margin (1) 3.30% 3.77%
Annualized return on average assets 1.04% 1.45%
Annualized return on average equity 6.81% 8.35%
Stockholder's equity as a percentage of
total assets 15.19% 16.70%
Non-performing assets as a percentage
of total assets (2) 0.92% 0.55%
Net interest income as a percentage of
general and administrative expenses 156.11% 190.27%
(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 Three
Months Ended Year Ended
Sept. 30, 1998 June 30, 1998
____________ ____________
Cash $ 3,531,916 $ 4,616,045
Interest-bearing deposits
due from banks 19,198,480 9,705,397
Federal funds sold 0 0
Trading account assets 0 0
Investments and MBS/Held for Sale 12,283,950 13,901,495
Investments and MBS/Held to
maturity-carrying value 16,694,545 19,547,537
Investments and MBS/Held to
maturity-market value 16,800,268 19,580,307
Loans, net 99,919,275 98,917,846
Allowance for losses 530,000 523,000
Total assets 155,731,414 150,806,332
Deposits 119,677,740 114,537,907
Short-term borrowings 1,824,000 2,611,000
Other liabilities 2,219,593 2,053,297
Long-term debt 8,350,000 8,350,000
Preferred stock-mandatory redemption 0 0
Preferred stock-no mandatory
redemption 0 0
Common stock 15,757 15,757
Other stockholder's equity 23,644,324 23,238,371
Net yield-interest-earning assets 3.30% 3.66%
Loans on non-accrual 0 1,000
Accruing loans past due 90 days or
more 739,000 1,382,000
Troubled debt restructuring 39,000 31,000
Potential problem loans 0 0
Allowance for loan loss-beginning
of period 523,000 576,000
Total charge-offs 0 63,000
Total recoveries 7,000 5,000
Allowance for loan loss-end of period 530,000 523,000
Loan loss allowance allocated to
domestic loans 530,000 523,000
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, 1998, there are no other potential problem loans
except as included in the table below.
(In Thousands)
At
Sept. 30 Sept. 30
1998 1997
________ ________
Non-accrual mortgage loans 0 0
Non-accrual other loans 0 1
________ ________
Total non-accrual loans 0 1
Loans 90 days or more delinquent
and still accruing 739 1,382
________ ________
Total non-performing loans 739 1,383
Total foreclosed real estate,
net of related allowance for losses 0 0
Total non-performing assets 739 1,383
======== ========
Troubled debt restructured 39 31
======== ========
Non-performing loans to total loans 0.55% 1.40%
Total non-performing assets
to total assets 0.55% 0.92%
2. There were no loan concentrations in excess of 10% of total loans
at September 30, 1998.
3. There were no outstanding foreign loans at September 30, 1998.
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 non-accrual loans have been current throughout their terms
interest income for the nine months ended September 30, 1998 and the
year ended June 30, 1998, 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 non-accrual loans, loans
past due 90 days or more, and foreclosed properties. Management
places loans on a non-accrual 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 collaterization, guarantees, or other
security.
7. At September 30, 1998, management was not aware of any potential
problem loans not previously disclosed.
Allowance for Loan Losses
The allowance of 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 risk 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
1998 1998
_____________ ______________
Balance at beginning of period $523 $576
Provision for loan losses 0 5
Charge-Offs:
Mortgage loans 0 0
Other loans 0 63
Recoveries:
Mortgage loans 0 1
Other loans 7 4
____ ____
Balance at end of period $530 $523
==== ====
Ratio of net charge offs during
the period to average loans (Annualized)
outstanding during the period 0.00% 0.06%
Ratio of allowance for loan
losses to non-performing loans
at end of period 71.72% 37.82%
Ratio of allowance for loan
losses to net loans receivable
at end of period 0.53% 0.53%
Ratio of allowance for loan
losses and foreclosed real
estate to total non-performing
assets at end of the period 71.72% 37.82%
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, 1998, and the results of operations for the
three month period ending September 30, 1998.
Comparison of Changes in Financial Condition
at September 30, 1998 and at June 30, 1998
At September 30, 1998, total assets were $155.7 million, an increase
of $4.9 million, or 3.27%, since June 30, 1998. Interest-bearing deposits
due from banks increased $9.5 million to $19.2 million during the three
month period due to an increase in funds from deposits coupled with the
early call of some investments. Total securities decreased $4.5 million
to $29.0 million during the three month period. Loans receivable
increased $1.0 million to 99.9 million at September 30, 1998. Deposits
grew to $119.7 million at September 30, 1998, an increase of $5.1
million, or 4.49% for the three month period. Advances from the Federal
Home Loan Bank totalled $10.2 million at September 30, 1998. The increase
of $406,000 in stockholder's equity since June 30, 1998 was due primarily
to net income. Stockholder's equity totalled $23.7 million at
September 30, 1998 and amounted to 15.19% of assets.
Liquidity and Capital Resources
Positive cash flows of $598,000 were provided by the Company's
operating activities for the three months ended September 30, 1998,
primarily as a result of net income and an increase in accrued interest
payable on deposits.
Investing activities of the Company provided positive cash flows
of $3.4 million for the three months ended September 30, 1998, resulting
primarily from principal repayments on mortgage-backed and related
securities and proceeds from calls of investment securities of $4.5
million, which were partially offset by an increase in loan originations
over loan repayments of $1.0 million.
Financing activities provided positive cash flows of $4.4 million for
the three months ended September 30, 1998, due to an increase in deposits
of $5.1 million offset by repayments of borrowings from the Federal Home
Loan Bank of $800,000.
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 4.0%. At September 30,
1998, the Bank's liquidity ratio was 48.56%.
The OTS capital regulations require savings institutions to meet
three capital standards to be deemed other than critically "under-
capitalized": a 4% leverage (Tier 1) capital ratio; a 4% Tier 1
risk-based capital ratio; and an 8% total risk-based capital standard.
At September 30, 1998, the Bank's capital position exceeded minimum
regulatory capital requirements as indicated by the following table
(dollars in thousands):
(Tier 1)
(Tier 1) (Tier 1) (Total)
Risk-based Risk-based
Core Capital Capital Capital
________________ ________________ ________________
Amount Percent Amount Percent Amount Percent
_______ _______ _______ _______ _______ _______
First Federal $20,301 13.27% $20,301 23.40% $20,831 24.01%
OTS Requirement 6,117 4.0% 3,471 3.0% 6,942 8.0%
_______ _______ _______ _______ _______ _______
Excess $14,184 9.27% $16,830 20.04% $13,889 16.01%
======= ======= ======= ======= ======= =======
Comparison of Operating Results for the
Three Months Ended September 30, 1998 and 1997
General. Net income of the Company for the three months ended
September 30, 1998 was $399,000, or $.26 per fully-diluted share,
compared to $451,000, or $.29 per fully-diluted share, for the three
months ended September 30, 1997. The decrease of $52,000 in net income is
primarily attributable to a loss on foreclosed real estate of $44,000.
Interest Income. Interest income increased $275,000, or 10.88%, to $2.8
million for the three months ended September 30, 1998 due to an increase
in average-earning assets of $19.3 million, which was partially offset by
a decrease in the yield on average-earning assets from 7.93% to 7.61%.
Interest Expense. Interest expense increased $266,000, or 19.78%, to
$1.6 million for the three months ended September 30, 1998 due to an
increase of $17.4 million in average deposits and Federal Home Loan Bank
advances and an increase in cost to 5.05% from 4.89% for the three months
ended September 30, 1997.
Net Interest Income. Net interest income increased slightly to $1.2
million for the three months ended September 30, 1998, an increase of
$9,000 compared to the three months ended September 30, 1997.
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 $28,000, or 16.69%,
to $197,000 for the three months ended September 30, 1998. Other income
was increased $30,000, or 117% due primarily to increases in service
release premiums on mortgage loans sold.
Non-interest Expense. Non-interest expense increased $142,000, or 22.82%,
to $764,000 for the three months ended September 30, 1998 due primarily
to the loss on foreclosed real estate, expenses associated with operating
another branch, and an increase in expenses associated with participation
in benefit plans.
Income Tax Expense. Income tax expense amounted to $227,000 for the
three months ended September 30, 1998 compared to $279,000 for the three
months ended September 30, 1997. The current years taxes were at a
reduced rate due to the taxable deduction of certain benefit plan
provisions and a reduced amount of taxable income.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
N/A
Item 2. Changes in Securities.
N/A
Item 3. Defaults Upon Senior Securities.
N/A
Item 4. Submission of Matters to a Vote of Security Holders.
A. Annual Meeting - October 21, 1998
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 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. Griffin 99.788% 0.212%
Mr. McIntyre 98.689% 1.311%
Resolution II.
Ratification of the appointment of T. E. Lott & Company,
as independent auditors for fiscal year ended June 30,
1999.
For Against Abstain
_______ _______ _______
99.412% 0.085% 0.504%
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 11, 1998 By: /s/ E.FRANK GRIFFIN, III
E. Frank Griffin, III
Chief Executive Officer
and President
By: /s/ SHERRY L. BOYD
Sherry L. Boyd
Chief Financial Officer