SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 2001
[ ] 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 0-23645
LEEDS FEDERAL BANKSHARES, INC
-----------------------------
(Exact name of registrant as specified in its charter)
UNITED STATES 52-2062351
------------- ----------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
1101 Maiden Choice Lane, Baltimore, Maryland 21229
--------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: 410-242-1234
Former name, former address and former fiscal year, if changed since
last report: N/A
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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: There were 4,538,181 shares
of the Registrant's common stock outstanding as of February 12, 2002.
1
LEEDS FEDERAL BANKSHARES, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of December 31, 2001
(unaudited), and June 30, 2001 3
Consolidated Statements of Income and Comprehensive Income (unaudited)
for the three and six months ended December 31, 2001 and 2000 4
Consolidated Statements of Cash Flows (unaudited) for the six months
ended December 31, 2001 and 2000 5
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
PART II. OTHER INFORMATION 13
2
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LEEDS FEDERAL BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31
2001 June 30,
(unaudited) 2001
---------- --------
Assets
Cash:
On hand and due from banks.................................. $ 6,099,836 $ 4,817,724
Interest-bearing deposits................................... 2,266,082 2,198,218
Short-term investments........................................ 95,975,931 35,334,058
Secured short-term loans to commercial banks.................. 6,624,256 16,225,333
Investment securities held-to-maturity........................ 20,992,675 60,518,903
Securities available-for-sale................................. 4,528,533 5, 802,094
Mortgage backed securities held-to-maturity................... 34,470,110 20,021,025
Loans receivable, net......................................... 233,595,091 217,182,587
Investment in Federal Home Loan Bank
of Atlanta stock, at cost................................... 2,187,200 2,187,200
Property and equipment, net................................... 2,137,162 2,205,229
Cash surrender value of life insurance........................ 7,252,146 7,023,712
Accrued interest receivable................................... 1,445,264 2,236,760
Other real estate owned . . . . . . . . . . . . . . . . . . . . . . . . 2,550,400 2,540,127
Prepaid expenses and other assets............................. 172,752 207,267
------- -------
$420,297,438 $378,500,237
------------ -----------
Liabilities and Stockholders' Equity
Liabilities:
Savings accounts............................................... $363,995,995 $ 320,470,865
Borrowed funds-- Employee
Stock Ownership Plan........................................ 170,274 274,123
Advance payments by borrowers for taxes,
insurance and ground rents.................................. 940,344 3,515,261
Federal and state income taxes:
Currently payable........................................... 251,923 218,075
Deferred.................................................... 1,152,181 1,219,523
Accrued expenses and other liabilities......................... 2,036,100 1,913,349
---------- ---------
Total liabilities........................................... 368,546,817 327,611,196
----------- -----------
Stockholders' equity:
Common stock, $1 par value: 20,000,000
shares authorized: 5,205,597 shares issued................. 5,205,597 5,205,597
Additional paid-in capital .................................... 9,839,788 9,667,133
Unearned employee stock ownership plan shares.................. ( 73,043) (180,672)
Retained income, substantially restricted...................... 42,437,959 41,750,444
Treasury stock at cost: 667,416 shares. . . . . . . . . . . . . . . . (8,336,969) (8,336,969)
Accumulated other comprehensive income......................... 2,677,289 2,783,508
--------- -------------
Total stockholders' equity............................ 51,750,621 50,889,041
---------- -------------
$420,297,438 $ 378,500,237
------------ -------------
See accompanying notes to consolidated financial statements.
3
LEEDS FEDERAL BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(unaudited)
Three Months Ended Six Months Ended
December 31, December 31
------------------------------------------------------
2001 2000 2001 2000
---------- ---------- --------- ---------
Interest income:
First mortgage and other loans.................. $ 4,088,989 $ 3,850,986 $8,036,153 $7,743,882
Mortgage-backed securities ..................... 549,073 144,806 966,996 298,008
Investment securities and short-term
investments................................... 1,027,818 1,718,346 2,602,994 3,382,277
------------ --------- ---------- ---------
Total interest income........................... 5,665,880 5,714,138 11,606,143 11,424,167
------------ --------- ---------- ----------
Interest expense:..................................
Savings accounts. . . . . . . . . . . . . . . .. 4,304,377 3,881,639 8,625,606 7,655,217
Other ......................................... 2,103 8,444 5,682 17,351
Total interest expense.......................... 4,306,480 3,890,083 8,631,288 7,672,568
--------- --------- --------- ---------
Net interest income............................. 1,359,400 1,824,055 2,974,855 3,751,599
Provision for loan losses....................... -0- -0- -0- -0-
--------- ---------- ---------- ----------
Net interest income after
provision for loan losses................... 1,359,400 1,824,055 2,974,855 3,751,599
--------- --------- --------- ---------
Noninterest income:................................
Service fees and charges.................... 60,340 48,275 114,890 93,896
Other .......................................... 156,636 80,083 252,725 161,594
---------- --------- -------- -------
216,976 128,358 367,615 255,490
---------- --------- ------- -------
Noninterest expense:
Compensation and employee benefits.............. 585,164 487,315 1,111,641 968,530
Occupancy....................................... 76 88,392 152,868 166,565
SAIF deposit insurance premiums................. 34,601 32,589 68,442 65,251
Advertising..................................... 35,037 31,078 61,983 77,598
Other .......................................... 265,041 209,674 587,803 381,063
--------- ------- --=------ ----------
996,361 849,048 1,982,737 1,659,007
--------- ------- --------- ----------
Income before provision for income taxes........ 580,015 1,103,365 1,359,733 2,348,082
Provision for income taxes......................... 115,850 353,750 311,848 800,390
--------------- -------- --------- ----------
Net income.................................... 464,165 749,615 1,047,885 1,547,692
--------------- ------- --------- ----------
Other comprehensive income(loss), net of taxes:
Unrealized gain (loss) on securities
available-for-sale, net....................... 11,824 670,307 (106,219) 1,252,315
---------------- -------- --------- ----------
Comprehensive income............................... $ 475,989 $1,419,922 $ 941,666 $2,800,007
--------------- ----------- --------- ----------
Net income per share of common stock...............
Basic........................................... $ .10 $ .17 $ .2 $ .34
------------ ------------ ---------- ----------
Diluted......................................... $ .10 $ .16 $ .34 .23
------------ ------------ ---------- ----------
See accompanying notes to consolidated financial statements.
4
LEEDS FEDERAL BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Six Months Ended
December 31,
2001 2000
------------- -------------
Cash flows from operating activities:
Net income................................................. $ 1,047,885 $ 1,547,692
Adjustments to reconcile net income to
net cash provided by operating activities:
Accretion of loan fees..................................... 102,916 26,907
Accretion of premiums (discounts) on investment
securities and mortgage-backed securities, net.......... (18,793) (18,504)
Depreciation............................................... 78,560 33,834
Non-cash compensation under stock-based benefit plans 280,284 77,454
Decrease (increase) in accrued interest receivable........ 791,496 (96,718)
Increase (decrease) in income taxes currently payable...... 33,848 (71,096)
Increase in accrued expenses and other liabilities......... 122,751 76,145
Increase (decrease) in unearned loan fees.................. 157,268 (53,413)
Decrease in prepaid expenses and other assets............. 24,242 177,906
------------ ------------
Net cash provided by operating activities............... 2,620,457 1,700,207
------------ ------------
Cash flows from investing activities:
Purchase of investment securities held-to-maturity......... (11,100,000) (485,240)
Maturities of and principal repayments on
investment securities held-to-maturity.......... 50,640,966 1, 342,740
Maturities of securities available-for-sale. . . . . . . . . 1,100,000 -0-
Loan repayments (disbursements), net ................... (16,672,688) 4,632,887
Purchase of mortgage-backed securities held-to-maturity.... (17,798,055) -0-
Principal repayments on mortgage-backed securities
held-to-maturity........................................ 3,353,025 773,901
Purchases of property and equipment........................ (10,493) (44,594)
Investment in life insurance policies...................... (228,434) (140,178)
------------- -----------
Net cash provided by investing activities.............. 9,284,321 6,079,516
------------- ------------
Cash flows from financing activities:
Net increase in savings accounts........................... 43,525,130 6,310,703
Decrease in advance payments by borrowers for taxes,
insurance and ground rents.............................. (2,574,917) (4,244,987)
Payment of dividends ..................................... (360,370) (348,556)
Purchase of treasury stock ............................... -0- ( 120,250)
Repayment of borrowed funds............................. (103,849) (48,011)
------------ ------------
Net cash provided by financing activities............ 40,485,994 1,548,899
----------- -------------
Net increase in cash and cash equivalents.................... 52,390,772 9,328,622
Cash and cash equivalents at beginning of period.............. 58,575,333 23,155,887
------------- ------------
Cash and cash equivalents at end of period.................... $110,966,105 $ 32,484,509
------------ ------------
Cash paid during the period for interest
on deposits and other borrowings........................... $ 8,631,000 $ 7,673,000
Cash paid during the period for income taxes.................. $ 278,000 $ 871,000
See accompanying notes to consolidated financial statements.
5
LEEDS FEDERAL BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31 2001
(unaudited)
(1) Basis of Presentation
The accompanying consolidated financial statements include the accounts of
Leeds Federal Bankshares, Inc. (the Company), its wholly owned subsidiary, Leeds
Federal Savings Bank (the Bank), and Leeds Investment Corporation, a wholly
owned subsidiary of the Bank. Adjustments, consisting of normal recurring
adjustments, which, in the opinion of management are necessary for a fair
presentation of financial position and results of operations have been recorded.
The financial statements have been prepared using the accounting policies
described in the June 30, 2001 Annual Report. The results of operations for the
six months ended December 31, 2001, are not necessarily indicative of the
results that may be expected for the entire year.
(2) Reclassification of Prior Year's Statements
Certain amounts in the 2000 financial statements have been reclassified to
conform to the 2001 presentation.
(3) Dividends on Common Stock
On December 19, 2001, the Company declared a quarterly cash dividend of
$.15 per share. The dividends were payable to stockholders of record as of
January 4, 2002 and were paid on January 16, 2002. Leeds Federal Bankshares,
M.H.C. (the MHC) , which owns 3,300,000 shares of stock in the Company, waived
receipt of its quarterly dividend, thereby reducing the actual dividend payout
to approximately $186,000. The dollar amount of dividends waived by the MHC is
considered as a restriction on the retained earnings of the Company. The amount
of any dividend waived by the MHC shall be available for declaration as a
dividend solely to the MHC. At December 31, 2001, the cumulative amount of such
waived dividends was $12,698,400.
(4) Real Estate Owned
At December 31, 2001, the Company had Real Estate Owned of $2.55 million. A
public sale of the property was held on November 2, 2001. However, to date the
purchaser has not settled on the contract. The Company's counsel is pursuing all
possible options in completing the transaction. There can be no assurance that
the sale will close.
(5) Recent Developments
An application has been filed with the Office of Thrift Supervision
concerning the announced acquisition of the Company by Northwest Bancorp, Inc.
It is expected that the transaction will be completed in the second quarter of
2002, subject to stockholder and regulatory approval.
(6) Net Income per Share of Common Stock
Basic earnings per share (EPS) is calculated by dividing net income by the
weighted average number of common shares outstanding for the applicable period.
Diluted EPS is calculated after adjusting the denominator of the basic EPS
calculation for the effect of all dilutive potential common shares outstanding
during the period. Information related to the calculation of net income per
share of common stock is summarized as follows:
6
Three months Three months
Ended December 31, Ended December 31,
2001 2000
--------------------------------- -----------------------------
Basic Diluted Basic Diluted
----------- ----------- ----------- -----------
Net income $ 464,165 $ 464,165 $749,615 $749,615
--------- --------- -------- --------
Weighted-average shares outstanding 4,521,709 4,521,709 4,501,243 4,501,243
Dilutive securities - options 103,673 56,314
---------- -----------
Adjusted weighted-average shares used
in EPS computation 4,521,709 4,625,382 4,501,243 4,557,557
---------- ---------- --------- ---------
Six months Six months
Ended December 31, Ended December 31,
2001 2000
-------------------------- --------------------------
Basic Diluted Basic Diluted
----------- ----------- ----------- -----------
Net income $1,047,885 $1,047,885 $1,547,692 $1,547,692
---------- ---------- ---------- ----------
Weighted-average shares outstanding 4,521,709 4,521,709 4,501,243 4,501,243
Dilutive securities - options 98,852 50,822
----------- -----------
Adjusted weighted-average shares used
in EPS computation 4,521,709 4,620,561 4,501,243 4,552,065
---------- ----------- --------- ---------
7
LEEDS FEDERAL BANKSHARES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Forward Looking Statements
In addition to historical information, this Quarterly Report contains
forward-looking statements. The forward-looking statements contained in this
document are subject to certain risks and uncertainties that could cause actual
results to differ materially from those projected in the forward-looking
statements. Important factors that might cause such a difference include, but
are not limited to, those discussed in this section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Readers should not place undue reliance on these forward-looking statements, as
they reflect management's analysis as of the date of this report. The Company
has no obligation to update or revise these forward-looking statements to
reflect events or circumstances that occur after the date of this report.
Readers should carefully review the risk factors described in other documents
the Company files from time to time with the Securities and Exchange Commission,
including current reports filed on Form 8-K.
Discussion of Financial Condition Changes from June 30, 2001 to December 31,2001
- --------------------------------------------------------------------------------
Cash on hand and due from banks, interest bearing deposits, other
short-term investments and investment securities totaled approximately $138.7
million at December 31, 2001, an increase of approximately $11.6 million, or
9.1%, from June 30, 2001. Mortgage-backed securities totaled $34.5 million, an
increase of $14.5 million, or 72.5%, due primarily to purchases of new
mortgage-backed securities. Loans receivable totaled $233.6 million, an increase
of $16.4 million, or 7.6%, due primarily to increased mortgage originations.
Deposits increased approximately $43.5 million, or 13.6%, to a total of
$364.0 million at December 31, 2001, compared to June 30, 2001. Such increase
was primarily attributable to general market trends. The Company has offered
savings rates that are competitive with other financial institutions. However,
it has not relied on brokered funds or negotiated jumbo certificates to achieve
increased deposit levels.
The Bank is subject to capital standards which generally require the
maintenance of regulatory capital sufficient to meet each of three tests,
hereinafter described as the Tier 1 core capital requirement, the Tier 1
risk-based capital requirement and the total risk-based capital requirement. At
December 31, 2001, the Bank had Tier 1 core capital of $48.4 million, or 11.6%
of total adjusted assets, which was $31.8 million in excess of the requirement
of minimum core capital of $16.6 million, or 4% of total adjusted assets; Tier 1
risk-based capital of $48.4 million, or 18.9% of risk-weighted assets, which was
$38.1 million in excess of the requirement of minimum Tier 1 risk-based capital
of $10.3 million, or 4% of risk-weighted assets; and total risk- based capital
of $51.1 million, or 19.9% of risk-weighted assets, which was $30.6 million in
excess of the requirement of a minimum total risk-based capital of 8% of
risk-weighted assets.
Comparison of Operating Results for Three and Six Month Periods Ended
December 31, 2001 and 2000.
General
The Company's net income for the three months ended December 31, 2001,
totaled $464,000, a decrease of $286,000, or 38.1% as compared to $750,000 for
the three months ended December 31, 2000, due principally to a decrease in net
8
interest income and an increase in noninterest expenses. Unrealized gains on
securities available-for-sale decreased $658,000 to $12,000 for the three
months ended December 31, 2001, as compared to $670,000 for the same period last
year, as a result of a decrease in the fair value of the Company's investment
securities available-for-sale, principally the Company's Federal Home Loan
Mortgage Corporation preferred stock.
The Company's net income for the six months ended December 31, 2001,
decreased $500,000 to $1.0 million as compared to $1.5 million for the same
period in 2000. Unrealized gains (losses) on securities available-for-sale
decreased $1.4 million to ($106,000) for the six months ended December 31, 2001,
as compared to $1.3 million for the same period last year, as a result of a
decrease in the fair value of the Company's investment securities
available-for-sale.
Net Interest Income
Interest income on loans increased $238,000, to $4.1 million for the three
months ended December 31, 2001, as compared to the three months ended December
31, 2000. Average balances on loans increased by $14.6 million, while the
average yield on loans remained unchanged at 7.1%. Interest income on loans for
the six months ended December 31, 2001, totaled $8.0 million, an increase of
$292,000, or 3.8%, as compared to the six months ended December 31, 2000.
Average balances on loans increased by $9.1 million, or 4.2%, to $227.0 million,
for the six months ended December 31, 2001, as compared to the six months ended
December 31, 2000, while average yield on loans remained relatively unchanged at
7.1%. The increases in the average balances of loans were the result of
increased loan demand during the three and six months ended December 31, 2001,
as compared to the same periods last year.
Interest income on mortgage-backed securities increased by $404,000, to
$549,000 for the three months ended December 31, 2001, from $145,000 for the
three months ended December 31, 2000. Average yield on mortgage-backed
securities decreased to 6.4%, from 7.4%, while the average balance of
mortgage-backed securities increased by $26.6 million to $34.4 million from $7.8
million, for the three months ended December 31, 2001, compared to the same
period last year. Interest income on mortgage-backed securities increased by
$669,000, to $967,000 for the six months ended December 31, 2001, as compared to
$298,000 for the prior period, due principally to an increase in the average
balance of mortgage-backed securities of $21.6 million to $29.6 million from
$8.0 million, while the average yield on mortgage-backed securities decreased to
6.5%, from 7.5%. The increases in the average balances of mortgage-backed
securities for the three and six months ended December 31, 2001, were the result
of purchases of mortgage-backed securities. The decreases in average yield on
mortgage-backed securities for the periods were attributable to decreases in
market interest rates.
Interest income on investment securities and short-term investments
("Investments") decreased by $691,000, to $1.0 million for the three months
ended December 31, 2001, from $1.7 million for the three months ended December
31, 2000. The average balance of Investments increased by $25.4 million to
$129.9 million for the three months ended December 31, 2001, from $104.5 million
for the same period in the prior year, while yield on Investments decreased to
3.2% from 6.6%. Interest income on Investments decreased by $779,000 to $2.6
million during the six months ended December 31, 2001, from $3.4 million for the
six months ended December 31, 2000. The average balance of Investments increased
by $25.2 million to $127.5 million for the six months ended December 31, 2001,
from $102.3 million for the same period in the prior year, while yield on
Investments decreased to 4.1% from 6.6%. The increases in average balances of
Investments for the three and six months ended December 31, 2001, were the
result of an increase in the supply of funds to invest in such securities. The
decreases in average yield on Investments for these periods were due in part to
approximately $49.6 million of the Company's investment in callable securities
9
being called during the fiscal year and management's decision to reinvest
the proceeds of such securities in short term liquid securities in the current
low interest rate environment.
Total interest expense increased by approximately $416,000 to $4.3 million
for the quarter ended December 31, 2001, from $3.9 million for the quarter ended
December 31, 2000. This increase was the result of an increase in average
balances of interest bearing liabilities outstanding to $353.9. million from
$286.1 million, while average rates paid on deposits decreased to 4.9%, from
5.4%. For the six months ended December 31, 2001, total interest expense
increased by $959,000 to $8.6 million, from $7.7 million for the six months
ended December 31, 2000. The increase was the result of an increase in average
balances of interest bearing liabilities outstanding to $342.4 million from
$285.5 million, while average rates paid on deposits decreased to 5.0% from
5.4%. The increases in average balances of interest bearing liabilities
outstanding for the three and six months ended December 31, 2001, as compared to
the same periods last year, were due to increased customer deposits, while the
decreases in average rates paid on deposits for these periods were due a
decrease in market interest rates. The decrease in average rates paid was
mitigated by a $50.3 million increase in an account type that permitted
additions at a specified yield during a term of 18 months. The Bank has
discontinued this type of deposit account.
As a result of the foregoing changes, the increase in interest income was
more than offset by an increase in interest expense resulting in a decrease in
net interest income of $465,000, or 25.5%, to $1.4 million during the three
months ended December 31, 2001, as compared to $1.8 million during the three
months ended December 31, 2000. During the six months ended December 31, 2001,
net interest income decreased by $777,000, or 20.7%, to $3.0 million from $3.8
million for the same period in the previous year.
Provision for Loan Losses
The Bank made no provision for loan losses for the three and six months
ended December 31, 2001 and 2000. The allowance for loan losses, which was
$730,000 and $732,000 at December 31, 2001 and June 30, 2001, respectively, is
established in accordance with generally accepted accounting principles and
represents management's best estimate of known and inherent losses in the
Company's overall loan portfolio. In addition to historical loss experience, the
Company considers other factors that are likely to cause credit losses,
including changes in economic and business conditions and developments, changes
in the nature and volume of the portfolio, trends in the level of past due and
classified loans, and the status of nonperforming loans. Based on management's
review and analysis of the allowance for loan losses as of December 31, 2001,
management considered the allowance for loan losses to be appropriate.
Noninterest Income
Noninterest income increased $89,000 to $217,000, for the three months
ended December 31, 2001, from $128,000 for the three months ended December 31,
2000. For the six months ended December 31, 2001, noninterest income increased
to $368,000, from $255,000 for the six months ended December 31, 2000. The
increases were primarily the result of increases in income from life insurance
policies and increases in service fee income.
10
Noninterest Expense
Noninterest expense increased by $147,000 to $996,000 for the three months
ended December 31, 2001, from $849,000, for the three months ended December 31,
2000. Compensation and employee benefits increased $98,000 to $585,000 for the
three months ended December 31, 2001, from $487,000 for the same period last
year, due to higher noncash Employee Stock Ownership Plan compensation expense
resulting from an increase in the Company's stock price and additional funding
to the Directors' Retirement Plan do to the death of a director. Other expenses
increased $55,000 to $265,000 for the three months ended December 31, 2001, from
$210,000 for the three months ended December 31, 2000, principally due to
expenses incurred in connection with the announced merger discussed below.
During the six months ended December 31, 2001, noninterest expense increased
$324,000 to $2.0 million for the six months ended December 31, 2001, from $1.7
million for the six months ended December 31, 2000. This increase was also due
to increased compensation costs and other expenses.
Provision for Income Taxes
The provision for income taxes for the three months ended December 31,
2001, totaled $116,000, compared to $354,000 for the three months ended December
31, 2000. For the six months ended December 31, 2001, the provision for income
taxes totaled $312,000, as compared to $800,000 for the same period last year.
The effective income tax rate for the three months ended December 31, 2001, was
20.0%, compared to 32.1% for the three months ended December 31, 2000. The
effective income tax rate for the six months ended December 31, 2001, was 22.9%,
compared to 34.1% for the six months ended December 31, 2000. The lower
effective tax rates in 2001 reflect the treatment of the increase in cash
surrender value of life insurance as a permanent difference.
Classified Assets
There were three loans totaling $34,000 which were 90 or more days
delinquent but still accruing at December 31, 2001; the Company had no such
loans at June 30, 2001. Loans 90 or more days delinquent and not accruing
totaled $37,000 at December 31, 2001. There were no such loans at June 30, 2001.
At December 31, 2001, the Company had real estate owned totaling $2.55 million.
A public sale for the property was held on November 2, 2001. However, to date
the purchaser has not settled on the contract. The Company's counsel is pursuing
all possible options in completing the transaction. There can be no assurances
that the sale will close.
Liquidity
The Bank is required to maintain levels of liquid assets, as defined by
Office of Thrift Supervision regulations, to support safe and sound operations.
The Bank's liquidity ratio averaged 59.4% during the quarter ended December 31,
2001, and equaled 49.6% at December 31, 2001.
Stock Repurchase Plan
As of December 31, 2001, the Company has repurchased 667,416 shares of its
common stock in connection with its repurchase plan. The Company has the Board's
authorization to repurchase an additional 356,025 shares as, in the opinion of
management, market conditions warrant.
11
Merger Application
An application has been filed with the Office of Thrift Supervision
concerning the previously announced acquisition of the Company by Northwest
Bancorp, Inc. It is expected that the transaction will be completed in the
second quarter of 2002, subject to stockholder and regulatory approval.
12
PART II. OTHER INFORMATION
Legal Proceedings
The Company is not involved in any litigation, nor is it aware of any
pending litigation, other than legal proceedings incidental to the Bank's
business. In the opinion of management, no material loss is expected from any
such claims or lawsuits.
Submission of Matters to a Vote of Security-Holders
(A) On November 14, 2001, the Company held its annual meeting of
stockholders.
(B) At the annual meeting Directors Amer and Wolf were elected to three
year terms. The following table shows the terms of all directors.
Director's Name Term Began Term Expires
--------------- ---------- ------------
John F. Amer 2001 2004
Gordon E. Clark 1999 2002
Raymond J. Hartman, Jr. 2000 2003
Joan H. McCleary 2000 2003
Marguerite E. Wolf 2001 2004
(C) There were present at the Annual Meeting in person or by proxy the
holders of 4,282,622 votes, said votes constituting a majority and more than a
quorum of the outstanding votes entitled to be cast.
The stockholders acted on the following two matters at the Annual Meeting,
approving each. Set forth below are the results of the stockholder vote on the
matters considered at the Annual Meeting.
(1) The following directors were elected by the stockholders to serve for
three year terms:
Votes For Withheld
John F. Amer 4,269,322 13,300
Joan H. McCleary 4,269,322 13,300
(2) The appointment of KPMG LLP to be the Company's auditors for the fiscal
year ending June 30, 2002, was approved as follows:
For Against
Number of Votes 4,267,330 3,817
Exhibits and Report on Form 8-K
No Form 8-K reports were filed during the quarter.
Changes in Securities
None
Defaults Upon Senior Securities
None
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
LEEDS FEDERAL BANKSHARES, INC.
Date February 13, 2002 /s/ Gordon E. Clark
------------------------------------
Gordon E. Clark
President and Chief Executive Officer
Date February 13, 2002 /s/ Kathleen Trumpler
-------------------------------------
Kathleen Trumpler
Treasurer and Chief Financial Officer
14