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:
March 31, 1999
[ ] 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:
1,575,735 shares of common stock, $.01 par value 03/31/99
Transitional Small Business Disclosure Format (check one):
YES NO x
FFBS BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
Three Months Ended Nine Months Ended
March 31 March 31
1999 1998 1999 1998
__________ __________ __________ __________
INTEREST INCOME
Interest and fees on loans $2,013,686 $2,076,117 $6,234,727 $6,157,548
Interest on MBS and
related securities 146,989 207,882 537,381 505,931
Interest on investment
securities 115,494 234,461 578,765 767,573
FHLB Stock dividends 11,884 12,225 37,273 36,703
Interest on deposits due
from banks 422,652 95,398 896,833 249,360
__________ __________ __________ __________
2,710,705 2,626,083 8,284,979 7,717,115
INTEREST EXPENSE
Interest on deposits 1,477,009 1,347,515 4,452,684 3,969,005
Interest on FHLB Advances
/Borrowings 108,483 93,642 374,031 211,562
__________ __________ __________ __________
1,585,492 1,441,157 4,826,715 4,180,567
__________ __________ __________ __________
Net Interest Income 1,125,213 1,184,926 3,458,264 3,536,548
Provision of losses on
loans 0 0 0 5,000
__________ __________ __________ __________
Net interest income after
provision for losses on
loans 1,125,213 1,184,926 3,458,264 3,531,548
NON INTEREST INCOME
Loan fees and service
charges 51,957 62,372 172,505 179,940
NOW account fees 70,125 70,120 232,692 221,055
Other 71,455 34,826 179,219 89,786
__________ __________ __________ __________
193,537 167,318 584,416 490,781
NON INTEREST EXPENSE
Compensation and benefits 448,206 391,484 1,310,685 1,137,879
Occupancy 34,561 27,258 106,725 80,871
Furniture and equipment 13,024 25,681 55,231 62,069
Deposit insurance premium 18,167 16,550 51,291 48,891
Loss on foreclosed real
estate 4,454 34,456 45,015 34,766
Data processing 50,723 44,099 147,757 124,097
Other 247,000 146,672 582,552 479,002
__________ __________ __________ __________
816,135 686,200 2,299,256 1,967,575
Income before income taxes
and cumulative effect of
accounting change 502,615 666,044 1,743,424 2,054,754
Income tax expense
Current 219,400 233,300 679,159 727,270
Deferred income tax <10,500> 3,000 <23,730> 32,000
__________ __________ __________ __________
Net Income $ 293,715 $ 429,744 $1,087,995 $1,295,484
========== ========== ========== ==========
Earnings per common share $ .20 $ .29 $ .72 $ .87
Diluted Earnings per
common share $ .19 $ .29 $ .70 $ .85
FFBS BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(unaudited)
ASSETS MARCH 31 JUNE 30
1999 1998
____________ ____________
Cash $ 2,753,595 $ 4,616,045
Interest-bearing deposits due from banks 32,394,739 9,705,397
____________ ____________
Total cash and cash equivalents 35,148,334 14,321,442
Available-for-sale Securities 13,888,794 13,901,495
Held-to maturity Securities 10,315,443 19,547,537
Federal Home Loan Bank stock, @ cost 888,100 851,000
Loans receivable, net 95,294,336 98,917,846
Foreclosed real estate 122,680 0
Properties and equipment 1,847,252 1,906,215
Accrued interest receivable 1,055,664 1,279,518
Other assets 97,404 81,279
____________ ____________
Total Assets $158,658,007 $150,806,332
============ ============
LIABILITIES AND RETAINED EARNINGS
Liabilities:
Deposits $124,972,752 $114,537,907
Advances from borrowers for taxes &
insurance 199,012 286,311
Accrued interest payable on deposits 701,667 891,954
Accrued expenses and other liabilities 559,336 875,032
Advances/Borrowings from FHLB of Dallas 8,350,000 10,961,000
____________ ____________
Total Liabilities 134,782,767 127,552,204
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; 1,575,735 shares
issued and outstanding at March 31,1998,
and June 30, 1998, respectively. 15,757 15,757
Additional paid in capital 15,457,458 15,457,458
Retain earnings 9,100,561 8,485,228
Unearned compensation <92,575> <132,250>
Unrealized gain<loss> on available-for-
sale securities <52,353> <18,457>
Loan receivable from ESOP <551,380> <551,380>
Treasury Stock @ cost (100 shares) <2,228> <2,228>
____________ ____________
Total Stockholders' equity 23,875,240 23,254,128
____________ ____________
Total Liabilities and Retained Earnings $158,658,007 $150,806,332
============ ============
FFBS BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended
March 31
1999 1998
____________ ___________
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 1,087,995 $ 1,295,484
Adjustments to reconcile net earnings
to net cash:
Depreciation of properties and
equipment 84,897 69,252
Accretion of discount on loans 0 <9,955>
Accretion of discount on mortgage-
backed securities <6,322> <5,861>
Accretion of discount on investments <9,372> <8,592>
Amortization of premium on investments 1,698 8,223
Amortization of premium on mortgage-
backed securities 90,661 30,353
Deferred income taxes <benefit> <23,730> 32,000
FHLB Stock dividends <37,100> <36,600>
Provision for losses on loans 0 5,000
Sale of loans 10,932,000 5,610,000
Loans originated for sale <10,932,000> <5,610,000>
<Increase> decrease in accrued interest
receivable 223,854 <95,295>
<Increase> decrease in other assets <12,396> 148,167
Increase <decrease> in accrued interest
payable on deposits <190,287> <127,209>
Increase <decrease> in accrued expenses
and other liabilities <278,916> <215,216>
Provision for losses on foreclosed real
estate 42,254 34,766
Amortization of unearned compensation 39,675 0
____________ ___________
Net cash provided by operating
activities 1,012,911 1,124,517
CASH FLOWS FROM INVESTING ACTIVITIES
<Increase> decrease in other interest-
bearing deposits due from banks 0 0
Loan originations <47,237,000> <41,728,000>
Purchase of investment securities <3,074,419> <7,829,231>
Sale of equipment 0 29,993
Purchase of MBS and related securities <4,000,156> <11,358,101>
Principal repayment of loans 50,860,510 36,121,977
Principal repayments of MBS and related
securities 6,492,029 2,635,486
Proceeds from calls/maturities of
investments 9,700,000 10,650,000
Purchase of loans 0 0
Sale of foreclosed real estate 84,327 85,000
Foreclosure of real estate <249,261> <119,766>
Purchase of properties and equipment <25,934> <610,943>
____________ ___________
Net cash used from investing activities 12,550,096 <12,123,585>
CASH FLOWS FROM FINANCING ACTIVITIES
Borrowings from FHLB of Dallas 0 13,791,000
Repayments of borrowings from FHLB of
Dallas <2,611,000> <389,000>
Increase <decrease> in deposits 10,434,845 8,189,210
Increase <decrease> in advances from
borrowers for taxes and insurance < 87,299> <71,705>
Purchase of company stock 0 <270,332>
Dividends declared < 472,661> <3,507,944>
Exercise of stock options 0 303,660
Unearned Compensation 0 <145,475>
Adjustments to unrealized loss on AFS
securities 0 14,745
____________ ___________
Net cash provided by <used in>
financing activities 7,263,885 17,914,159
____________ ___________
Net increase <decrease> in cash and
cash equivalents 20,826,892 6,915,091
Cash and cash equivalents at beginning
of period 14,321,442 8,406,456
____________ ___________
Cash and cash equivalents at end of
period $ 35,148,334 $ 15,321,547
============ ============
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
Basic earnings per share for the nine months ended March 31, 1999 have been
computed on the basis of the weighted average number of common shares
outstanding (1,520,497).
Diluted earnings per share have been computed on the basis of the weighted
average number of common shares outstanding (1,520,497) and common stock
equivalent shares (35,527) outstanding. Common stock equivalent shares
arise from stock option plans and a recognition and retention stock plan.
YEAR 2000
The Company is aware of the issue associated with the programming code in
existing computer systems as the Year 2000 approaches. The Year 2000 issue
is the result of computer programs being written to store and process data
using two digits rather than four to define the applicable year. Computer
programs that have time sensitive coding may recognize a date using "00" as
the year 1900 rather than the year 2000. Systems that do not properly
recognize such information could generate erroneous data or cause a system
to fail.
The Bank has conducted a review of its computer systems to identify the
systems that could be affected by the Year 2000 Issue and has developed an
implementation plan to resolve the issue. The majority of the Bank's data
processing is provided by a third party service bureau. The service bureau
is actively involved in resolving Year 2000 issues and has provided the
Bank with frequent updates regarding their progress. The service bureau
has advised the Bank that it has substantially completed all phases of its
Year 2000 Readiness Plan. The Bank tested the service bureau's system for
Year 2000 compliance during November of 1998. The Bank presently believes
that, based on the progress and testing of the Bank's service bureau, the
Year 2000 problem will not pose significant operational problems for the
Bank's computer system. The total cost of Year 2000 projects are not
estimated to be material to the financial performance of the Company.
FFBS BANCORP, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(unaudited)
At and for the At and for the
Three Months Ended Nine Months Ended
March 31 March 31
1999 1998 1999 1998
____________ ____________ ____________ ____________
Select Consolidated
Financial
Condition Data:
Total Assets $158,658,007 $149,621,482 $158,658,007 $149,621,482
Loans receivable,
net 95,294,336 98,371,245 95,294,336 98,371,245
Deposits 124,972,752 111,987,465 124,972,752 111,987,465
Borrowings from
FHLB of Dallas 8,350,000 13,402,000 8,350,000 13,402,000
Stockholders'
equity 23,875,240 22,791,689 23,875,240 22,791,689
Selected
Consolidated
Operations Data:
Net Interest
Income 1,125,213 1,184,926 3,458,264 3,536,548
Provision for
loan losses 0 0 0 5,000
Non-interest
income 193,537 167,318 584,416 490,781
Non-interest
expense 816,135 686,200 2,299,256 1,967,575
Net income 293,715 429,744 1,087,995 1,295,484
Per Share Data:
Book value at end
of period $15.70 $15.20 $15.70 $15.02
Diluted Earnings
per common
share .19 .29 .70 .85
Cash dividends
declared .00 .00 .30 2.25
Other Data:
Yield on average
earning assets 7.27% 7.85% 7.38% 7.93%
Cost of Funds 4.79% 4.99% 4.97% 5.00%
Interest rate
spread 2.48% 2.86% 2.41% 2.93%
Net interest
margin (1) 3.04% 3.64% 3.12% 3.69%
Annualized return
on average assets .74% 1.21% .93% 1.25%
Annualized return
on average equity 4.94% 7.58% 6.14% 7.56%
Stockholders'
equity as a
percentage of
total assets 15.05% 15.23% 15.05% 15.23%
Non-performing
assets as
a percentage of
total assets (2) .50% .50% .50% .50%
Net interest
income as
percentage of
general and
administrative
expenses 137.87% 172.68% 150.41% 179.74%
(1) Net interest income divided by average interest earning assets.
(2) Non-performing assets consists of non-accruing loans, accruing loans
delinquent 90 days or more, and foreclosed real estate.
FFBS BANCORP, INC.
FINANCIAL DATA SCHEDULE
At or For Nine At or For The
Months Ended Year Ended
March 31, 1999 June 30, 1998
____________ ____________
Cash $ 2,753,595 $ 4,616,045
Interest-bearing deposits due from bank 32,394,739 9,705,397
Investments and MBS held for sale 13,888,794 13,901,495
Investments and MBS held to
maturity/carry value 10,315,443 19,547,537
Investments and MBS held to
maturity/market value 11,090,202 19,580,307
Loans 95,791,784 98,917,846
Allowance for losses 497,448 523,000
Total Assets 158,658,007 150,806,332
Deposits 124,972,752 114,537,907
Short-term borrowings 0 2,611,000
Long-term borrowings 8,350,000 8,350,000
Other liabilities 1,460,015 2,053,297
Preferred stock-mandatory redemption 0 0
Preferred stock-no mandatory redemption 0 0
Common stock 15,757 15,757
Other stockholders' equity 23,859,483 23,238,371
Net yield-interest-earnings
assets-actual 3.12% 3.66%
Loans on nonaccrual 47,000 1,000
Accruing loans past 617,000 1,382,000
Trouble debt restructuring 162,000 31,000
Potential problem loans 0 0
Allowance for loan loss-beginning of
period 523,000 576,000
Provision for loan losses 0 5,000
Total charge-offs 59,000 63,000
Total recoveries 7,000 5,000
Allowance for loan loss-end of period 471,000 523,000
Loan loss allowance allocated to
domestic loans 471,000 523,000
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 March 31, 1999, there
are no other potential problem loans except as included in the table
below.
(In Thousands)
At
March 31, June 30,
1998 1998
_________ _________
Non-accrual mortgage loans 23 0
Non-accrual other loans 24 1
_________ _________
Total non-accrual loans 47 1
Loans 90 days or more delinquent and
still accruing 617 1382
_________ _________
Total non-performing loans 664 1383
Total foreclosed real estate, net
of related allowance for losses 123 0
_________ _________
Total non-performing assets 787 1383
========= =========
Troubled debt restructured 162 39
========= =========
Non-performing loans to total loans .69% 1.40%
Total non-performing assets to total assets .50% .92%
2. There were no loan concentrations in excess of 10% of total loans at
March 31, 1999.
3. There were no outstanding foreign loans at March 31, 1999.
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 nine months ended March 31, 1999 and June 30,
1998 would be increased (decreased) by approximately $4,000 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 March 31, 1999, 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 included 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 Nine For the Year
Months Ended Ended
March 31, 1999 June 30, 1998
______________ _____________
Balance at beginning of period 523 576
Provision for loan losses 0 5
Charge-offs:
Mortgage loans 20 0
Other loans 39 63
Recoveries:
Mortgage loans 0 1
Other loans 7 4
______________ _____________
Balance at end of period 471 523
============== =============
Ratio of net charge-offs during
the period to average loans
outstanding during the period 0.05% 0.06%
Ratio of allowance for loan losses
to non-performing loans at end
of period 70.93% 37.82%
Ratio of allowance for loan losses
to net loans receivable at the end
of the period 0.49% 0.53%
Ratio of allowance for loan losses
and foreclosed real estate to total
non-performing assets at the end
of the period 59.85% 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
March 31, 1999, and the results of operations for the nine month period
ending March 31, 1999 and for the three month period ending March 31, 1999.
Comparison of Changes in Financial Condition
at March 31, 1999 and at June 30, 1998
At March 31, 1999, total assets were $158.7 million, an increase of $7.9
million, or 5.21%, since June 30, 1998. Total cash and cash equivalents
increased $20.8 million to $35.1 million during the nine month period due
to an increase in funds from deposits coupled with the early redemption of
investments and mortgage-backed and related securities. Total securities
decreased $9.2 million to $24.2 million during the nine month period.
Loans receivable decreased $3.6 million to $95.3 million at March 31, 1999
although loan originations totalled $47.2 million during the nine months
ended March 31, 1999, an increase of $5.5 million, or 13.20%, over loan
originations during the nine months ended March 31, 1998. The mortgage
market dictated that new mortgage originations be fixed-rate products,
which the Bank sells into the secondary market to avoid the interest-rate
risk; thereby decreasing the Bank's mortgage portfolio. Deposit growth
remained strong as deposits grew to $125.0 million at March 31, 1999, an
increase of $10.4 million, or 9.11%, for the nine month period. Advances
from the Federal Home Loan Bank totalled $8.3 million at March 31, 1999, a
decrease of $2.6 million since June 30, 1998. Stockholder's equity totalled
$23.9 million at March 31, 1999, an increase of $621,000 since June 30,
1998, primarily due to net income offset partially by the declaration of
dividends. Stockholder's equity amounted to 15.05% of assets.
Liquidity and Capital Resources
Positive cash flows of $1.0 million were provided by the Company's
operating activities for the nine months ended March 31, 1999, primarily as
a result of net income.
Investing activities of the Company provided positive cash flows of $12.6
million for the nine months ended March 31, 1999, resulting primarily from
principal repayments on mortgage-backed and related securities and proceeds
from calls of investment securities of $16.2 million, which were partially
offset by the purchase of $7.1 million of investment securities and
mortgage-backed and related securities. Principal repayments on loans
provided positive cash flows of $3.6 million, after being offset by loan
originations.
Financing activities provided positive cash flows of $7.3 million for the
nine months ended March 31, 1999, due to an increase in deposits of $10.4
million offset by repayments of borrowings from the Federal Home Loan Bank
of $2.6 million and the declaration of dividends of $473,000.
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 March 31, 1999, the
Bank's liquidity ratio was 56.25%.
The OTS capital regulations require savings institutions to meet capital
standards to be deemed other than "critically undercapitalized": a 4%
leverage (Tier 1) capital ratio; a 4% Tier 1 risk-based capital ratio; and
an 8% total risk-based capital standard. At March 31, 1999, the Bank's
capital position exceeded minimum regulatory capital requirements as
indicated by the following table (dollars in thousands):
(Tier 1) (Tier 1) (Total)
Risk-based
Tangible Capital Core Capital Capital
________________ ________________ ________________
Amount Percent Amount Percent Amount Percent
_______ _______ _______ _______ _______ _______
First Federal $21,092 13.48% $21,092 24.48% $21,563 25.02%
OTS Requirement 6,259 4.0% 3,447 4.0% 6,893 8.0%
_______ _______ _______ _______ _______ _______
Excess $14,833 9.48% $17,645 20.48% $14,670 17.02%
======= ======= ======= ======= ======= =======
Comparison of Operating Results for the
Nine Months Ended March 31, 1999 and 1998
General. Net income of the Company for the nine months ended March 31,
1999 was $1.1 million or $.70 per fully-diluted share, compared to $1.3
million or $.85 per fully-diluted share, for the nine months ended
March 31, 1998. The decrease of $207,000 in net income is primarily
attributable to an increase in non-interest expenses.
Interest Income. Interest income increased $568,000, or 7.36%, to $8.3
million for the nine months ended March 31, 1999 due to an increase in
average-earning assets of $19.5 million, which was partially offset by a
decrease in the yield on average-earning assets from 7.93% to 7.38%.
Interest Expense. Interest expense increased $646,000, or 15.46%, to $4.8
million for the nine months ended March 31, 1999 due to an increase of
$17.9 million in average deposits and Federal Home Loan Bank advances.
Net Interest Income. Net interest income decreased $73,000 to $13.5
million for the nine months ended March 31, 1999, compared to the nine
months ended March 31, 1998 due primarily to the decrease in the yield on
average-earning assets.
Provision for Loan Losses. The Bank's reserve for loan losses was
considered sufficient to absorb potential losses during the nine months
ended March 31, 1999; therefore, no provisions for loan losses was taken
for that period. The Bank increased its provision to the reserve for loan
losses to $5,000 during the nine months ended March 31, 1998.
Non-interest Income. Non-interest income increased $94,000, or 19.08%, to
$584,000 for the nine months ended March 31, 1999. NOW account fees
increased $12,000, or 5.26%, to $233,000 due primarily to non-sufficient
fund charges. Other income was increased $89,000, or 99.61%, to $179,000
due primarily to increases in service release premiums on mortgage loans
sold.
Non-interest Expense. Non-interest expense increased $332,000, or 16.86%,
to $2.3 million for the nine months ended March 31, 1999 due primarily to
an increase in expenses associated with participation in benefit plans,
expenses associated with operating another branch, and expenses associated
with the impending merger referenced in Part II, Item 5.
Income Tax Expense. Income tax expense amounted to $655,000 for the nine
months ended March 31, 1999 compared to $759,000 for the nine months ended
March 31, 1998. The current years' taxes were at a reduced rate due
primarily to a reduced amount of taxable income.
Comparison of Operating Results for the
Three Months Ended March 31, 1999 and 1998
General. Net income of the Company for the three months ended March 31,
1999 was $294,000, or $.19 per fully-diluted share, compared to $430,000,
or $.29 per fully-diluted share, for the three months ended March 31, 1998.
The decrease of $136,000 in net income is attributable primarily to a
decrease in net-interest income and an increase in non-interest expense.
Interest Income. Interest income increased $85,000, or 3.22%, to $2.7
million for the three months ended March 31, 1999 due to an increase in
average-earning assets of $14.7 million, which was partially offset by a
decrease in the yield on average-earning assets from 7.85% for the three
months ending March 31, 1998, to 7.27%, for the three months ending
March 31, 1999.
Interest Expense. Interest expense increased $144,000, or 10.02%, to $1.6
million for the three months ended March 31, 1999, due to an increase of
$17.0 million in average deposits and Federal Home Loan Bank advances.
Net Interest Income. Net interest income decreased to $1.1 million for the
three months ended March 31, 1999, a decrease of $60,000 compared to the
three months ended March 31, 1998 due primarily to the decrease in the
yield on average-earning assets.
Non-interest Income. Non-interest income increased $26,000, or 15.67%, to
$194,000 for the three months ended March 31, 1999. Other income increased
$37,000, or 105.18%, due primarily to increases in service release premiums
on mortgage loans sold.
Non-interest Expense. Non-interest expense increased $130,000, or 18.94%,
to $816,000 for the three months ended March 31, 1999 due primarily to
expenses associated with the impending merger referenced in Part II,
Item 5.
Income Tax Expense. Income tax expense amounted to $209,000 for the three
months ended March 31, 1999 compared to $236,000 for the three months ended
March 31, 1998. The decrease is due primarily to 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 Matter to a Vote of Security Holders.
N/A
Item 5. Other Information
A definitive agreement was signed on February 3, 1999, defining
the merger of FFBS Bancorp, Inc. into NBC Capital Corporation.
As part of the merger, FFBS Bancorp, Inc. has granted an
irrevocable option to NBC Capital Corporation to purchase 19.9%
of FFBS Bancorp, Inc.'s issued and outstanding shares of Common
Stock. A copy of the press release is attached as Exhibit 99.1
and will stand in lieu of filing a Form 8-K. Also attached as
Exhibits 99.2 and 99.3 are the Agreement and Plan of Merger and
the Stock Option Agreement and Exhibit 99.4 Plan of
Reorganization and Merger. The merger is expected to be
completed during the summer of 1999.
Item 6. Exhibits
99.1 -Press release concerning merger between FFBS Bancorp, Inc.
and NBC Capital Corporation.
99.2 -Agreement and Plan of Merger between FFBS Bancorp, Inc. and
NBC Capital Corporation.
99.3 -Stock Option Agreement between FFBS Bancorp, Inc. and NBC
Capital Corporation.
99.4 -Plan of Reorganization and Merger between FFBS Bancorp,
Inc. and NBC Capital Corporation.
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.
/S/ E. FRANK GRIFFIN, III
Date: April 26, 1999 By: _______________________________________
E. Frank Griffin, III
Chief Executive Officer
and President
/S/ SHERRY L. BOYD
By: _______________________________________
Sherry L. Boyd
Chief Financial Officer