UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ______________ to _______________
Commission File Number 1-13842
Texarkana First Financial Corporation .
(Exact name of registrant as specified in its charter)
Texas . 71-0771419 .
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
3rd & Olive Streets
Texarkana, Arkansas . 71854 .
(Address of principal executive office) (Zip Code)
(501) 773-1103 .
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes _X_ No ___
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of July 31, 1997, there
were issued and outstanding 1,790,305 shares of the Registrant's Common Stock,
par value $0.01 per share.
TEXARKANA FIRST FINANCIAL CORPORATION
TABLE OF CONTENTS
Page
Part I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Statements of Financial Condition
As of June 30, 1997 (unaudited) and September 30, 1996 1
Consolidated Statements of Income for the three and
nine months ended June 30, 1997 and 1996 (unaudited) 2
Consolidated Statements of Cash Flows for the nine months
ended June 30, 1997 (unaudited) and 1996 (unaudited) 3
Notes to Unaudited Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Part II. Other Information
Item 1. Legal Proceedings 12
Item 2. Changes in Securities 12
Item 3. Defaults Upon Senior Securities 12
Item 4. Submission of Matters to a Vote of Security Holders 12
Item 5. Other Information 12
Item 6. Exhibits and Reports on Form 8-K 12
Signatures 13
TEXARKANA FIRST FINANCIAL CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In Thousands)
(Unaudited)
June 30, September 30,
1997 1996
ASSETS
Cash and Cash Equivalents
Cash & due from banks $ 995 $ 1,481
Interest bearing deposits in other banks 461 1,829
Federal funds sold 3,625 5,550
_______ _______
Total Cash and Cash equivalents 5,081 8,860
Investment securities available-for-sale 13,870 14,887
Investment securities held-to-maturity -- --
Mortgage-backed securities held-to-maturity 3,035 1,518
Federal Home Loan Bank stock 1,100 1,053
Loans receivable, net of unearned income 145,179 136,805
Allowance for loan losses 1,145 1,145
_______ _______
Loans receivable, net 144,034 135,660
Accrued interest receivable 1,238 1,207
Foreclosed real estate, net 207 72
Premises and equipment, net 2,345 2,014
Other assets 448 476
_______ _______
Total Assets $171,358 $165,747
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $140,132 $133,071
Advances from borrowers for taxes & insurance 1,398 1,865
Borrowed funds 1,552 2,858
Accrued federal income tax 385 25
Accrued state income tax 182 138
Accrued expenses and other liabilities 802 1,366
_______ _______
Total Liabilities 144,451 139,323
_______ _______
Commitments and contingencies -- --
Common stock, $0.01 par value;
15,000,000 shares authorized;
1,983,750 shares issued and outstanding 20 20
Additional paid-in capital 13,499 13,052
Common stock acquired by stock benefit plans (2,203) (2,147)
Treasury stock, at cost, 193,445 shares and (3,029) (1,567)
99,187 shares September 30, 1996
Retained earnings-substantially restricted 18,590 17,074
Net unrealized gain on investment securities
available for sale, net of tax 30 (8)
_______ _______
Total Stockholders' Equity 26,907 26,424
_______ _______
Total Liabilities and Stockholders' Equity $171,358 $165,747
======= =======
[FN]
The accompanying notes are an integral part of this statement.
Page 1
TEXARKANA FIRST FINANCIAL CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(In Thousands, Except Per Share Data)
(Unaudited)
Three Months Nine Months
Ended Ended
June 30, June 30,
1997 1996 1997 1996
Interest Income
Loans
First mortgage loans $2,758 $2,506 $8,008 $7,416
Consumer and other loans 310 228 888 629
Investment securities 309 411 943 1,330
Mortgage-backed and related securities 38 40 92 126
_____ _____ _____ _____
Total Interest Income 3,415 3,185 9,931 9,501
_____ _____ _____ _____
Interest Expense
Deposits 1,735 1,605 5,115 4,813
Borrowed funds 9 1 16 3
_____ _____ _____ _____
Total Interest Expense 1,744 1,606 5,131 4,816
_____ _____ _____ _____
Net Interest Income 1,671 1,579 4,800 4,685
Provision for loan losses -- -- -- --
_____ _____ _____ _____
Net Interest Income After Provision 1,671 1,579 4,800 4,685
_____ _____ _____ _____
Noninterest Income
Gain on sale of repossessed assets, net 8 11 8 16
Loan origination and commitment fees 79 93 207 238
Investment securities gains (losses), net -- -- -- --
Other 115 122 324 299
_____ _____ _____ _____
Total Noninterest Income 202 226 539 553
_____ _____ _____ _____
Noninterest Expense
Compensation and benefits 421 414 1,329 1,087
Occupancy and equipment 40 43 124 123
SAIF deposit insurance premium 22 72 101 228
Provision & loss on foreclosed real estate -- -- -- --
Other 119 128 399 419
_____ _____ _____ _____
Total Noninterest Expense 602 657 1,953 1,857
_____ _____ _____ _____
Income Before Income Taxes 1,271 1,148 3,386 3,381
Income tax expense 474 404 1,258 1,200
_____ _____ _____ _____
Net Income $ 797 $ 744 $2,128 $2,181
===== ===== ===== =====
Weighted average shares outstanding 1,675.6 1,788.3 1,697.0 1,829.1
Earnings Per Share $0.48 $0.42 $1.25 $1.19
Dividends per share $0.1400 $0.1125 $0.3650 $0.3375
[FN]
The accompanying notes are an integral part of this statement.
Page 2
TEXARKANA FIRST FINANCIAL CORPORATION
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Nine Months Ended June 30,
1997 1996
Cash Flows From Operating Activities:
Interest and dividends received $ 9,804 $ 9,308
Miscellaneous income received 531 472
Interest paid (1,616) (1,739)
Cash paid to suppliers and employees (2,217) (1,700)
Cash from REO operations -- 38
Cash paid for REO operations -- (18)
Cash from loans sold 1,488 2,092
Cash paid for loans originated to sell (1,051) (2,092)
Income taxes paid (854) (1,253)
______ ______
Net Cash Provided By Operating Activities 6,085 5,108
______ ______
Cash Flows From Investing Activities:
Proceeds from maturities of investment securities 4,840 9,000
Purchases of investment securities (3,800) (9,585)
Purchases of mortgage-backed securities (1,725) --
Collection of principal on mortgage-backed securities 207 237
Purchase of fixed assets (379) (72)
Net (increase) in loans (8,843) (8,599)
Cash paid for REO held for resale (46) --
Proceeds from sale of REO and other REO recoveries 77 77
______ ______
Net Cash Provided (Used) By Investing Activities (9,669) (8,942)
______ ______
Cash Flows From Financing Activities:
Net increase (decrease) in savings,
demand deposits, and certificates of deposit 3,673 505
Net increase (decrease) in escrow funds (467) (584)
Repayment of funds borrowed (1,306) --
Purchase of treasury stock (1,462) (514)
Purchase of common stock for employee benefit plans (9) (932)
Cash dividends paid on common stock (624) (446)
______ ______
Net Cash (Used) By Financing Activities (195) (1,971)
______ ______
Net (Decrease) In Cash and Cash Equivalents (3,779) (5,805)
______ ______
Cash and Cash Equivalents, beginning of period 8,860 13,848
______ ______
Cash and Cash Equivalents, end of period $ 5,081 $ 8,043
====== ======
[FN]
The accompanying notes are an integral part of this statement.
Page 3
TEXARKANA FIRST FINANCIAL CORPORATION
SUPPLEMENTAL INFORMATION CONCERNING CASH FLOWS
Nine Months Ended June 30,
1997 1996
Reconciliation of net income to cash provided
by operating activities:
Net income $ 2,128 $ 2,181
______ ______
Adjustments to reconcile net income to cash provided
by operating activities:
Depreciation 48 57
Amortization of discounts and premiums (22) 2
Amortization of deferred loan fees (29) (11)
Amortization of common stock acquired by benefit plans 365 153
(Gain) loss on sales of real estate owned (8) (16)
Interest expense credited to saving accounts 3,387 3,183
Dividend and interest income added to investments (80) (76)
Loan fees deferred 36 8
Changes in assets and liabilities:
(Increase) decrease in interest receivable (32) (162)
Increase (decrease) in accrued interest payable 128 (105)
Increase (decrease) in income tax payable 404 (53)
(Increase) decrease in loans held for sale 437 --
Net increase(decrease) in other receivables & payables (677) (53)
______ ______
Total adjustments 3,957 2,927
______ ______
Net cash provided by operations $ 6,085 $ 5,108
====== ======
Supplemental schedule of noncash investing
and financing activities:
FHLB stock dividends not redeemed $ 47 $ 46
Dividends declared and unpaid 251 220
Acquisition of real estate in settlement of loans 157 86
Loans made to finance sale of REO 52 17
Net unrealized gain (loss) on investment securities
available for sale 58 (55)
Page 4
TEXARKANA FIRST FINANCIAL CORPORATION
Notes to Unaudited Consolidated Financial Statements
Basis of Presentation
Texarkana First Financial Corporation (the "Company") was incorporated in
March 1995 under Texas law for the purpose of acquiring all of the capital
stock issued by First Federal Savings and Loan Association of Texarkana (the
"Association") in connection with the Association's conversion from a
federally chartered mutual savings and loan association to a stock savings and
loan association (the "Conversion"). The Conversion was consummated on July
7, 1995 and, as a result, the Company became a unitary savings and loan
holding company for the Association. Prior to the Conversion, the Company had
no material assets or liabilities and engaged in no business activity.
Subsequent to the acquisition of the Association, the Company has engaged in
no significant activity other than holding the stock of the Association and
engaging in certain passive investment activities.
The accompanying unaudited consolidated financial statements of the Company
have been prepared in accordance with instructions to Form 10-Q. Accordingly,
they do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. However,
such information reflects all adjustments (consisting solely of normal
recurring adjustments) which are, in the opinion of management, necessary for
a fair statement of results for the interim periods.
The results of operations for the three and nine months ended June 30, 1997
are not necessarily indicative of the results to be expected for the year
ending September 30, 1997. Although net income was consistent for the first
three quarters, earnings for the full fiscal year will be impacted by the
repurchase of Company stock, the new SAIF assessment rate and various economic
conditions. The unaudited consolidated financial statements and notes thereto
should be read in conjunction with the audited financial statements and notes
thereto for the year ended September 30, 1996, contained in the Company's
annual report to stockholders.
Earnings Per Share
Earnings per share is computed on the basis of the weighted-average number of
shares of common stock outstanding. Stock options outstanding had no material
dilutive effect on earnings per share. Shares acquired by the ESOP are
accounted for in accordance with Statement of Position 93-6 and are not
included in the weighted-average shares outstanding until the shares are
committed to be released for allocation to ESOP participants.
Page 5
Borrowed Funds
In September 1996, the Company borrowed $475,000 from a local financial
institution on a short-term basis, and sold $2.4 million of securities with
repurchase agreements. The loan and the repurchase agreements matured in
October 1996 and were repaid at that time. The borrowings provided cash
needed on a temporary basis due to the payment of the $3.00 per share special
one-time distribution to stockholders on September 25, 1996. Borrowings were
utilized to minimize any loss from the sale of securities.
In May 1997, the Association initiated a short-term, fixed rate advance from
the Federal Home Loan Bank ("FHLB") in the amount of $1.6 million. At June
30, 1997, the balance was $1.5 million, at 5.53% maturing July 21, 1997. The
Association intends to continue short-term borrowings from the FHLB.
Recent Legislation
The deposits of the Association are currently insured by the Savings
Association Insurance Fund ("SAIF"). The underfunded status of the SAIF has
resulted in the introduction of federal legislation intended to, among other
things, recapitalize the SAIF and address the resulting premium disparity
between the SAIF and the Bank Insurance Fund ("BIF"), the federal deposit
insurance fund that covers commercial bank deposits. In September 1996, the
Omnibus Appropriations Act was signed into law. This legislation authorized a
one time charge of SAIF-insured institutions in the amount of .657 dollars for
every one hundred dollars of assessable deposits. Additional provisions of
the Act include new BIF and SAIF premiums and the merger of BIF and SAIF. The
new BIF and SAIF premiums will include a premium for repayment of the
Financing Corporation ("FICO") bonds plus any regular insurance assessment,
currently nothing for the lowest risk category institutions. Until full pro-
rata FICO sharing is in effect, the FICO premiums for BIF and SAIF will be 1.3
and 6.4 basis points, respectively, beginning January 1, 1997. Full pro-rata
FICO sharing is to begin no later than January 1, 2000. BIF and SAIF are to
be merged on January 1, 1999, provided the bank and savings association
charters are merged by that date.
As a result of this legislation, the Association's assessment amounted to
$835,000 which was included in expense in September, the fourth quarter of
fiscal 1996, and paid in November, the first quarter of fiscal 1997. While
the one-time special assessment had a significant impact on the fiscal 1996
earnings, the resulting lower premiums will benefit future earnings.
Recent Accounting Developments
In May 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage Servicing
Rights", amending FASB Statement No. 65, "Accounting for Certain Mortgage
Banking Activities", to require that a mortgage banking enterprise recognize
as separate assets rights to service mortgage loans for others, however those
servicing rights are acquired. Mortgage servicing rights are to be amortized
in proportion to and over the period of estimated net servicing income and are
to be evaluated for impairment based on their fair value. This Statement
applies prospectively in fiscal years beginning after December 15, 1995, to
transactions in which a mortgage banking enterprise sells or securitizes
mortgage loans with servicing rights retained. The Company adopted SFAS No.
122 effective October 1, 1996, with no material impact on the Company's
financial condition or results of operations.
Page 6
FASB has issued final standards on earnings per share ("EPS") under two new
pronouncements, Statement of Financial Accounting Standards No. 128 and SFAS
129 which include standards for computing and presenting EPS and for
disclosing information about an entity's capital structure. The standards for
EPS apply to entities with publicly held common stock or potential common
stock, while the standards for disclosure about capital structure apply to all
entities. The standards eliminate the presentation of primary EPS and require
presentation of basic EPS, the principal difference being that common stock
equivalents will not be considered in the computation of basic EPS. The
standards also require dual presentation of basic and diluted EPS on the face
of the income statement for all entities with complex capital structures and
require a reconciliation of the numerator and denominator of the basic EPS
computation to the numerator and denominator of the diluted EPS computation.
Basic EPS would include no dilution and would be computed by dividing income
available to common stockholders by the weighted-average number of common
shares outstanding for the period. Diluted EPS would reflect the potential
dilution that could occur if the potential common shares were exercised or
converted into common stock or resulted in the issuance of common stock that
then shared in the earnings of the entity. SFAS 128 and SFAS 129 are
effective for periods ending after December 15, 1997 and earlier application
is not permitted. The standards require restatement of all prior-period EPS
data presented.
Page 7
TEXARKANA FIRST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Financial Condition
At June 30, 1997, the Company's assets amounted to $171.4 million as compared
to $165.7 million at September 30, 1996. The $5.6 million (3.4%) increase was
primarily due to an increase of $8.4 million (6.1%) in loans, partially offset
by a $3.8 million (42.7%) decrease in cash and cash equivalents. Liabilities
increased $5.1 million (3.7%) to $144.5 million at June 30, 1997 compared to
$139.3 million at September 30, 1996 primarily due to a $7.1 million (5.3%)
increase in deposits which was partially offset by a $1.3 million (45.7%)
decrease in borrowed funds and a $467,000 (25.0%) decrease in borrowers'
escrow balances (property tax payments are made in the first two quarters of
the fiscal year).
Stockholders' equity amounted to $26.9 million (15.7% of total assets) at June
30, 1997 compared to $26.4 million (15.9% of total assets) at September 30,
1996. The retained earnings balance reflects the $2.1 million net income from
operations, less the $612,000 in dividends declared. The treasury stock
balance reflects the purchases of 94,258 shares of common stock, at a cost of
$1.5 million. The change in the balance of additional paid-in capital is
primarily the result of the purchase of an additional 26,730 shares of the
Company's common stock by the ESOP plan at a cost of $395,000. The change in
the balance of common stock acquired by stock benefit plans reflects the
purchase of the additional ESOP shares partially offset by vesting of shares
in the benefit plans.
The increase in deposits and the decrease in cash and cash equivalents
provided the cash needed to fund the increase in loans, the repayment of
borrowed funds and the repurchase of common shares to be held as treasury
stock. The additional ESOP shares were purchased with the proceeds of
dividends paid on unallocated shares.
Asset quality remains strong with a ratio of nonperforming assets to total
assets of .46% and .17% as of June 30, 1997 and September 30, 1996,
respectively, and a ratio of nonperforming loans and debt restructurings to
total loans of .40% and .15%, respectively.
Comparison of Results of Operations for the Three Month and Nine Month Periods
Ended June 30, 1997 and 1996
General. For the three months ended June 30, 1997, net income was $797,000
($.48 per share) compared to $744,000 ($.42 per share) for the same period
ended June 30, 1996. The increase of $53,000 (7.1%) in net income was due to
an increase of $92,000 in net interest income and a decrease of $31,000 in net
noninterest expense, which were partially offset by an increase of $70,000 in
income tax expense.
For the three months ended June 30, 1997 and June 30, 1996, return on average
assets (ROA) was 1.87% and 1.82%, respectively, and return on average equity
(ROE) was 11.79% and 8.96%, respectively.
Page 8
For the nine months ended June 30, 1997, net income was $2.1 million ($1.25
per share) compared to $2.2 million ($1.19 per share) for the same period
ended June 30, 1996. The decrease of $53,000 (2.4%) in net income was due to
an increase of $110,000 in net noninterest expense and an increase of $58,000
in income tax expense, partially offset by an increase of $115,000 in net
interest income.
For the nine months ended June 30, 1997 and June 30, 1996, return on average
assets (ROA) was 1.70% and 1.79%, respectively, and return on average equity
(ROE) was 10.64% and 8.71%, respectively.
Beginning in the third quarter of fiscal 1996, the Company began repurchasing
common stock to be held as treasury stock and for employee benefit plans. As
of June 30, 1997, 193,448 shares were purchased to be held as treasury stock
and 62,935 shares were purchased for employee benefit plans. In the fourth
quarter of fiscal 1996, a $5.7 million special distribution ($3.00 per share)
was paid to stockholders. The resulting reductions of earning assets
adversely affected interest income and the rate of return on average assets
while the resulting reductions of stockholders' equity favorably affected the
rate of return on average equity.
Net Interest Income. For the three months ended June 30, 1997, net interest
income increased $92,000 (5.8%) compared to the same period in 1996. The
increase was due to an increase of $230,000 (7.2%) in interest income,
partially offset by an increase of $138,000 (8.6%) in interest expense. For
the third quarter of fiscal 1997 compared to the third quarter of fiscal 1996,
the net interest margin was 4.03% and 3.96%, respectively, and the net
interest spread was 3.25% and 2.96%, respectively.
For the nine months ended June 30, 1997, net interest income increased
$115,000 (2.5%) compared to the same period in 1996. The increase was due to
an increase of $430,000 (4.5%) in interest income, partially offset by an
increase of $315,000 (6.5%) in interest expense. For the nine month period of
fiscal 1997 compared to the same period of fiscal 1996, the net interest
margin was 3.93% and 3.92%, respectively, and the net interest spread was
3.15% and 2.90%, respectively.
Interest Income. For the three months ended June 30, 1997, interest income
increased $230,000 (7.2%) compared to the same period in 1996. The increase
was the result of higher average balances and rates. Average earning assets
increased to $166.5 million from $160.2 million and the average yield
increased to 8.23% from 7.99%.
For the nine months ended June 30, 1997, interest income increased $430,000
(4.5%) compared to the same period in 1996. The increase was the result of
higher average balances and rates. Average earning assets increased to $163.1
million from $159.5 million and the average yield increased to 8.14% from
7.96%.
Interest Expense. For the three months ended June 30, 1997, interest expense
increased $138,000 (8.6%) compared to the same period in 1996. The increase
was the result of higher average balances, partially offset by slightly lower
rates. Average interest bearing liabilities increased to $140.5 million from
$128.3 million and the average rate declined to 4.98% from 5.03%
Page 9
For the nine months ended June 30, 1997, interest expense increased $315,000
(6.5%) compared to the same period in 1996. The increase was the result of
higher average balances, partially offset by slightly lower rates. Average
interest bearing liabilities increased to $137.3 million from $127.2 million
and the average rate declined to 5.00% from 5.06%.
Provision for Loan Losses. No provisions were made for loan losses during the
nine months ended June 30, 1997. No provision for loan losses has been
recorded for the last nine successive quarters due to the consistently
favorable ratio of nonperforming loans to total loans of .40% at June 30,
1997, .40% at March 31, 1997, .15% at September 30, 1996 and .17% at September
30, 1995.
At June 30, 1997 and September 30, 1996, the balance of the allowance for loan
losses was $1.1 million and $1.1 million, respectively, and the ratio of the
allowance for loan losses to nonperforming loans was 196.74% and 540.09%,
respectively. Management believes that the current allowance for loan losses
is adequate based upon prior loss experience, the volume and type of lending
conducted by the Association, industry standards, past due loans and the
current economic conditions in the market area.
Noninterest Income. For the three months ended June 30, 1997, noninterest
income decreased $24,000 (10.6%) compared to the same period in 1996. The
decrease was primarily due to a decrease of $14,000 in loan origination fees.
The decrease in loan origination fees was primarily the result of a decline in
the number of mortgage loans originated.
For the nine months ended June 30, 1997, noninterest income decreased $14,000
(2.5%) compared to the same period in 1996. The increase was primarily due to
a decrease of $31,000 in loan origination fees, partially offset by an
increase of $25,000 in other noninterest income. The decrease in loan
origination fees was primarily the result of a decline in the number of
mortgage loans originated and an increase in the number of independent third-
party appraisals. The increase in other noninterest income was primarily due
to increases in service charge income and gains from the sale of originated
mortgage loans.
For the nine months ended June 30, 1997 compared to the same period in 1996,
the number of originated mortgage loans declined 9.7% while the amount of
originations declined 2.6%, and the number of originated commercial and
consumer loans increased 30.2% while the amount of originations increased
46.4%.
Noninterest Expense. For the three months ended June 30, 1997, noninterest
expense decreased $55,000 (8.4%) compared to the same period in 1996. The
decrease was primarily due to a decrease of $50,000 in SAIF deposit insurance
premiums.
Page 10
For the nine months ended June 30, 1997, noninterest expense increased $96,000
(5.2%) compared to the same period in 1996. The increase was primarily due to
increases of $67,000 in compensation expense and $171,000 in benefits expense,
which were partially offset by decreases of $127,000 in SAIF deposit insurance
premiums and $20,000 in other noninterest expense. The increase in
compensation expense was primarily due to the addition of two staff members,
one in the second quarter and one in the third quarter of fiscal 1996. The
increase in benefits expense was primarily due to accrued expenses for the
annual vesting of 20% of the shares awarded under the Management Recognition
Plans for directors and officers, approved by stockholders in January of 1996.
The decrease in other noninterest expense was primarily due to a decrease in
legal expense.
Liquidity and Capital Resources
The Company's assets consist primarily of cash and cash equivalents and the
shares of the Association's common stock. The Company has no significant
liabilities. The Association's deposit retention and growth has remained
steady. Although the ratio of loans to deposits increased to 103.6% at June
30, 1997 from 102.8% at September 30, 1996, liquidity remains adequate for
current operating needs. At June 30, 1997, the Association's liquidity ratio
was 11.9% compared to the required regulatory minimum of 5.0%.
The Company's and the Association's regulatory capital remains well in excess
of all applicable regulatory requirements. At June 30, 1997, the Company's
tangible, core and risk-based capital ratios were 15.7%, 15.7% and 26.2%,
respectively, and the Association's tangible, core and risk-based capital
ratios were 15.6%, 15.6% and 26.1%, respectively, compared to regulatory
requirements of 1.5%, 3.0% and 8.0%, respectively.
Page 11
TEXARKANA FIRST FINANCIAL CORPORATION
Part II
Item 1. Legal Proceedings
Neither the Company nor the Association is involved in any pending legal
proceedings other than non-material legal proceedings occurring in the
ordinary course of business.
Item 2. Changes in Securities
None.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
On October 30, 1996, the Company announced a plan to repurchase up to 94,228
shares (5%) of the Company's outstanding common stock and all shares were
repurchased as of June 30, 1997. The repurchased shares will be held as
treasury stock and will be available for general corporate purposes.
On June 24, 1997, the Company declared a quarterly dividend in the amount of
$.14 per share, payable July 25, 1997 to stockholders of record on July 11,
1997. The dividend of $.14 represents a 24.4% increase over the previous
quarterly rate of $.1125 per share.
Item 6. Exhibits and Reports on Form 8-K
No reports on Form 8-K were filed during the period.
Page 12
TEXARKANA FIRST FINANCIAL CORPORATION
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TEXARKANA FIRST FINANCIAL CORPORATION
/s/ James W. McKinney
Date: August 7, 1997 By: ______________________________
James W. McKinney
Chairman and CEO
/s/ James L. Sangalli
Date: August 7, 1997 By: ______________________________
James L. Sangalli
Chief Financial Officer
Page 13