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 March 31, 2002
[ ] 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 May 13, 2002
1
LEEDS FEDERAL BANKSHARES, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of
March 31, 2002 (unaudited), and June 30, 2001 3
Consolidated Statements of Income and Comprehensive Income (unaudited)
for the three and nine months ended March 31, 2002 and 2001 4
Consolidated Statements of Cash Flows (unaudited) for the nine months
ended March 31, 2002 and 2001 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
March 31 June 30,
2002 2001
---------- ----------
(unaudited)
Assets
Cash:
On hand and due from banks.................................. $ 4,762,344 $ 4,817,724
Interest-bearing deposits................................... 1,873,603 2,198,218
Short-term investments........................................ 96,957,305 35,334,058
Secured short-term loans to commercial banks.................. 13,165,665 16,225,333
Investment securities held-to-maturity........................ 22,300,535 60,518,903
Securities available-for-sale................................. 5,325,620 5,802,094
Mortgage backed securities held-to-maturity................... 33,320,722 20,021,025
Loans receivable, net......................................... 243,658,644 217,182,587
Investment in Federal Home Loan Bank
of Atlanta stock, at cost................................... 2,578,200 2,187,200
Property and equipment, net................................... 2,109,433 2,205,229
Cash surrender value of life insurance........................ 7,363,192 7,023,712
Accrued interest receivable................................... 1,849,395 2,236,760
Other real estate owned........................................ 2,608,773 2,540,127
Prepaid expenses and other assets............................. 197,074 207,267
--------------- --------------
$438,070,505 $ 378,500,237
=============== ==============
Liabilities and Stockholders' Equity
Liabilities:
Savings accounts............................................... $380,173,934 $ 320,470,865
Borrowed funds-- Employee
Stock Ownership Plan........................................ 124,744 274,123
Advance payments by borrowers for taxes,
insurance and ground rents.................................. 2,245,233 3,515,261
Federal and state income taxes:
Currently payable........................................... 315,738 218,075
Deferred.................................................... 1,073,857 1,219,523
Accrued expenses and other liabilities......................... 2,022,712 1,913,349
--------------- --------------
Total liabilities........................................... 385,956,218 327,611,196
--------------- --------------
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 .................................... 9,929,976 9,667,133
Unearned employee stock ownership plan shares.................. ( 49,338) (180,672)
Retained income, substantially restricted...................... 42,812,321 41,750,444
Treasury stock at cost: 667,416 shares......................... (8,336,969) (8,336,969)
Accumulated other comprehensive income......................... 2,552,700 2,783,508
--------------- --------------
Total stockholders' equity.................................. 52,114,287 50,889,041
--------------- --------------
$ 438,070,505 $ 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 Nine Months Ended
March 31 March 31
------------------------------------------------------------------
2002 2001 2002 2001
------ ------ ------ ------
Interest income:
First mortgage and other loans.................. $ 4,180,100 $ 3,815,789 $12,216,253 $11,559,671
Mortgage-backed securities ..................... 539,335 157,158 1,506,331 455,166
Investment securities and short-term
investments................................... 976,553 1,745,416 3,579,547 5,127,693
------------ ----------- ----------- -----------
Total interest income........................... 5,695,988 5,718,363 17,302,131 17,142,530
------------ ----------- ----------- -----------
Interest expense:
Savings accounts................................ 4,152,074 3,889,868 12,777,680 11,545,085
Other........................................... 1,590 6,226 7,272 23,577
------------ ----------- ----------- -----------
Total interest expense.......................... 4,153,664 3,896,094 12,784,952 11,568,662
------------ ----------- ----------- -----------
Net interest income............................. 1,542,324 1,822,269 4,517,179 5,573,868
Provision for loan losses....................... -0- -0- -0- -0-
------------ ----------- ----------- -----------
Net interest income after
provision for loan losses................... 1,542,324 1,822,269 4,517,179 5,573,868
------------ ----------- ----------- -----------
Noninterest income:................................
Service fees and charges........................ 57,703 50,529 172,593 144,425
Other .......................................... 116,187 125,221 368,912 286,815
------------ ----------- ----------- -----------
173,890 175,750 541,505 431,240
------------ ----------- ----------- -----------
Noninterest expense:
Compensation and employee benefits.............. 478,069 548,719 1,589,710 1,517,249
Occupancy....................................... 78,098 94,460 230,966 261,025
SAIF deposit insurance premiums................. 37,808 33,132 106,250 98,383
Advertising..................................... 12,608 51,372 74,591 128,970
Other .......................................... 363,429 263,745 951,232 644,808
------------ ----------- ----------- -----------
970,012 991,428 2,952,749 2,650,435
------------ ----------- ----------- -----------
Income before provision for income taxes........ 746,202 1,006,591 2,105,935 3,354,673
Provision for income taxes......................... 188,750 340,500 500,598 1,140,890
------------ ----------- ----------- -----------
Net income.................................... 557,452 666,091 1,605,337 2,213,783
------------ ----------- ----------- -----------
Other comprehensive income (loss), net of taxes:
Unrealized gain (loss) on securities
available-for-sale, net....................... (124,588) (141,381) (230,808) 1,110,934
------------ ----------- ----------- -----------
Comprehensive income............................... $ 432,864 $ 524,710 $1, 374,529 $ 3,324,717
============ =========== =========== ===========
Net income per share of common stock...............
Basic........................................... $ .12 $ .15 $ .35 $ .49
============ =========== =========== ===========
Diluted......................................... $ .12 $ .15 $ .35 $ .49
============ =========== =========== ===========
See accompanying notes to consolidated financial statements.
4
LEEDS FEDERAL BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
Nine Months Ended
March 31,
2002 2001
Cash flows from operating activities:
Net income................................................. $ 1,605,337 $ 2,213,783
Adjustments to reconcile net income to
net cash provided by operating activities:
Accretion of loan fees..................................... 147,296 53,720
Accretion of discounts on investment
securities and mortgage-backed securities, net.......... (32,541) (16,753)
Depreciation............................................... 117,082 135,813
Non cash compensation under stock-based benefit plans 394,177 131,792
Decrease in accrued interest receivable................... 387,365 75,993
Increase (decrease) in income taxes currently payable 97,663 (86,836)
Increase in accrued expenses and other liabilities......... 109,363 254,063
Increase (decrease) in unearned loan fees.................. 251,236 (102,224)
Decrease (increase) in prepaid expenses and other assets (58,453) 173,177
----------- -----------
Net cash provided by operating activities............... 3,018,525 2,832,528
----------- -----------
Cash flows from investing activities:
Purchase of investment securities held-to-maturity......... (15,698,875) (485,240)
Purchase of investment securities available-for-sale....... (1,000,000) -0-
Maturities of and principal repayments on
investment securities held-to-maturity.................. 53,932,353 5,037,655
Maturities of securities available-for-sale................ 1,100,000 1,475,000
Purchase of Federal Home Loan Bank stock.................. (391,000) -0-
Loan repayments (disbursements), net ..................... (26,874,589) 6,463,458
Purchase of mortgage-backed securities held-to-maturity (18,166,178) (3,296,022)
Principal repayments on mortgage-backed securities
held-to-maturity........................................ 4,883,912 1,169,199
Purchases of property and equipment........................ (21,286) (127,134)
Investment in life insurance policies...................... (339,480) (250,675)
----------- -----------
Net cash provided (used) by investing activities....... (2,575,143) 9,986,241
----------- -----------
Cash flows from financing activities:
Net increase in savings accounts........................... 59,703,069 16,735,922
Decrease in advance payments by borrowers for taxes,
insurance and ground rents.............................. (1,270,028) (2,939,543)
Payment of dividends ..................................... (543,460) (528,470)
Purchase of treasury stock ............................... -0- (120,250)
Repayment of borrowed funds............................. (149,379) (85,877)
----------- -----------
Net cash provided by financing activities............ 57,740,202 13,061,782
----------- -----------
Net increase in cash and cash equivalents.................... 58,183,584 25,880,551
Cash and cash equivalents at beginning of period.............. 58,575,333 23,155,887
----------- -----------
Cash and cash equivalents at end of period.................... $116,758,917 $49,036,438
============ ===========
Cash paid during the period for interest
on deposits and other borrowings........................... $ 12,785,000 $11,569,000
Cash paid during the period for income taxes.................. $ 403,000 $ 1,227,000
See accompanying notes to consolidated financial statements.
5
LEEDS FEDERAL BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2002
(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
nine months ended March 31, 2002, 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 2001 financial statements have been reclassified
to conform to the 2002 presentation.
(3) Dividends on Common Stock
On March 13, 2002, the Company declared a quarterly cash dividend of
$.15 per share. The dividends were payable to stockholders of record as of April
3, 2002 and were paid on April 17, 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 March 31, 2002, the cumulative amount of such
waived dividends was $13,193,400.
(4) Real Estate Owned
At March 31, 2002, the Company had real estate owned of $2.6 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.
On April 30, 2002, the parties agreed to extend the agreement for up to 120
days, to August 28, 2002. It is expected that the transaction will be completed
in the third 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 March 31, 2002 Ended March 31, 2001
------------------------ ------------------------
Basic Diluted Basic Diluted
------- --------- ------- ---------
Net income $ 557,452 $ 557,452 $666,091 $666,091
--------- --------- --------- ---------
Weighted-average shares outstanding 4,526,967 4,526,967 4,503,490 4,503,490
Dilutive securities - options 103,988 55,524
--------- --------
Adjusted weighted-average shares used
in EPS computation 4,526,967 4,630,955 4,503,490 4,559,014
--------- --------- --------- ---------
Nine months Nine months
Ended March 31, 2002 Ended March 31, 2001
------------------------ ------------------------
Basic Diluted Basic Diluted
------- --------- ------- ---------
Net income $1,605,337 $1,605,337 $2,213,783 $2,213,783
---------- ---------- ---------- ----------
Weighted-average shares outstanding 4,526,967 4,526,967 4,503,490 4,503,490
Dilutive securities - options 100,726 52,447
---------- ---------- ---------- ----------
Adjusted weighted-average shares used
in EPS computation 4,526,967 4,627,693 4,503,490 4,555,937
---------- ---------- ---------- ----------
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 March 31, 2002
Cash on hand and due from banks, interest bearing-deposits, other
short-term investments and investment securities totaled approximately $147.0
million at March 31, 2002, an increase of approximately $19.9 million, or 15.7%,
from June 30, 2001. Mortgage-backed securities totaled $33.3 million, an
increase of $13.3 million, or 66.5%, due primarily to purchases of new
mortgage-backed securities. Loans receivable totaled $243.7 million, an increase
of $26.5 million, or 12.2%, due primarily to increased mortgage originations.
Deposits increased approximately $59.7 million, or 18.6%, to a total of
$380.2 million at March 31, 2002, compared to June 30, 2001. Such increase was
primarily attributable to a general market trend toward deposits instead of the
equity markets. 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
March 31, 2002, the Bank had Tier 1 core capital of $49.3 million, or 11.4% of
total adjusted assets, which was $31.9 million in excess of the minimum
requirement of core capital of $17.4 million, or 4% of total adjusted assets;
Tier 1 risk-based capital of $49.3 million, or 18.7% of risk-weighted assets,
which was $38.7 million in excess of the requirement of $10.6 million, or 4% of
risk-weighted assets; and total risk-based capital of $51.9 million, or 19.7% of
risk-weighted assets, which was $30.8 million in excess of the minimum
requirement of 8% of risk-weighted assets.
8
Comparison of Operating Results for Three and Nine Month Periods Ended March 31,
2002 and 2001.
General
The Company's net income for the three months ended March 31, 2002,
totaled $557,000, a decrease of $109,000, or 16.4%, as compared to $666,000 for
the three months ended March 31, 2001, due principally to a decrease in net
interest income. Unrealized gains/(losses) on securities available-for-sale
decreased $16,000 to ($125,000) for the three months ended March 31, 2002, as
compared to ($141,000) for the same period last year.
The Company's net income for the nine months ended March 31, 2002,
decreased $608,000 to $1.6 million as compared to $2.2 million for the same
period in 2001. Unrealized gains (losses) on securities available-for-sale
decreased $1.3 million to ($231,000) for the nine months ended March 31, 2002,
as compared to $1.1 million for the same period last year.
Net Interest Income
Interest income on loans increased $364,000, to $4.2 million for the
three months ended March 31, 2002, as compared to the three months ended March
31, 2001. Average balances on loans increased by $28.6 million, while the
average yield on loans decreased to 6.9% for the three months ended March 31,
2002, as compared to 7.1% for the same period last year. Interest income on
loans for the nine months ended March 31, 2002, totaled $12.2 million, an
increase of $657,000,as compared to $11.6 million for the nine months ended
March 31, 2001. Average balances on loans increased by $15.6 million to $232.3
million, for the nine months ended March 31, 2002, as compared to the nine
months ended March 31, 2001, while average yield on loans decreased to 7.0% from
7.1%. The increases in the average balances of loans were the result of
increased loan demand during the three and nine months ended March 31, 2002, as
compared to the same periods last year.
Interest income on mortgage-backed securities increased by $382,000, to
$539,000 for the three months ended March 31, 2002, from $157,000 for the three
months ended March 31, 2001. The average balance of mortgage-backed securities
increased by $25.7 million to $34.1 million from $8.3 million, for the three
months ended March 31, 2002, compared to the same period last year. Average
yield on mortgage-backed securities decreased to 6.3%, from 7.6%. Interest
income on mortgage-backed securities increased by $1.1 million to $1.5 million
for the nine months ended March 31, 2002, as compared to $455,000 for the prior
period, due principally to an increase in the average balance of mortgage-backed
securities of $23.0 million to $31.1 million from $8.1 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 nine months ended March 31, 2002, were the result of purchases of
mortgage-backed securities using funds from the growth in deposits. 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 $769,000, to $977,000 for the three months ended
March 31, 2002, from $1.7 million for the three months ended March 31, 2001. The
average balance of Investments increased by $26.7 million to $139.5 million for
the three months ended March 31, 2002, from $112.8 million for the same period
in the prior year, while yield on Investments decreased to 2.8% from 6.2%.
Interest income on Investments decreased by $1.5 million to $3.6 million during
the nine months ended March 31, 2002, from $5.1 million for the nine months
ended March 31, 2001. The average balance of Investments increased by $26.0
million to $131.8 million for the nine months ended March 31, 2002, from $105.8
million for the same period in
9
the prior year, while yield on Investments decreased to 3.6% from 6.5%. The
increases in average balances of Investments for the three and nine months ended
March 31, 2002, 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 being called during the fiscal year and
management's decision to reinvest the proceeds of such securities in short-term
liquid securities despite the current low interest rate environment.
Total interest expense increased by approximately $258,000 to $4.2
million for the quarter ended March 31, 2002, from $3.9 million for the quarter
ended March 31, 2001. This increase was the result of an increase in average
balances of interest bearing liabilities outstanding to $375.0 million from
$292.4 million, while average rates paid on deposits decreased to 4.4%, from
5.3%. For the nine months ended March 31, 2002, total interest expense increased
by $1.2 million to $12.8 million, from $11.6 million for the nine months ended
March 31, 2001. The increase was the result of an increase in average balances
of interest bearing liabilities outstanding to $353.2 million from $287.8
million, while average rates paid on deposits decreased to 4.8% from 5.4%. The
increases in average balances of interest bearing liabilities outstanding for
the three and nine months ended March 31, 2002, 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 to a decrease in
market interest rates.
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 $280,000, or 15.4%, to $1.5 million during the three
months ended March 31, 2002, as compared to $1.8 million during the three months
ended March 31, 2001. During the nine months ended March 31, 2002, net interest
income decreased by $1.1 million, or 19.0%, to $4.5 million from $5.6 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 nine
months ended March 31, 2002 and 2001. The allowance for loan losses, which was
$729,000 and $732,000 at March 31, 2002 and June 30, 2001, respectively, is
established in accordance with generally accepted accounting principles and
represents managements 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 March 31, 2002,
management considered the allowance for loan losses to be appropriate.
Noninterest Income
Noninterest income remained relatively unchanged at $174,000 for the
three months ended March 31, 2002, and $176,000 for the three months ended March
31, 2001. For the nine months ended March 31, 2002, noninterest income increased
to $542,000, from $431,000 for the nine months ended March 31, 2001. The
increase was primarily the result of increases in income from life insurance
policies and increases in service fee income.
10
Noninterest Expense
Noninterest expense decreased by $21,000 to $970,000 for the three
months ended March 31, 2002, from $991,000, for the three months ended March 31,
2001. Compensation and employee benefits decreased $71,000 to $478,000 for the
three months ended March 31, 2002, from $549,000 for the same period last year,
due to the prior year's one-time charge to complete funding of the directors'
retirement plan due to the attainment of retirement age of two directors who
continue to serve as directors; partly offset by an increase in the noncash
charge to expense for ESOP shares earned due to an increase in the market price
of the Company's stock. Advertising expense decreased $38,000 to $13,000 for the
three months ended March 31, 2002, compared to $51,000 for the same period last
year. Other expenses increased $100,000 to $363,000 for the three months ended
March 31, 2002, from $264,000 for the three months ended December 31, 2001,
principally due to expenses incurred in connection with the announced merger
discussed below. During the nine months ended March 31, 2002, noninterest
expense increased $302,000 to $3.0 million for the nine months ended March 31,
2001, from $2.7 million for the nine months ended March 31, 2001. This increase
was principally due to expenses incurred in connection with the previously
announced merger.
Provision for Income Taxes
The provision for income taxes for the three months ended March 31,
2002, totaled $189,000, compared to $341,000 for the three months ended March
31, 2001. For the nine months ended March 31, 2002, the provision for income
taxes totaled $501,000, as compared to $1.1 million for the same period last
year. The effective income tax rate for the three months ended March 31, 2002,
was 25.3%, compared to 33.8% for the three months ended March 31, 2001. The
effective income tax rate for the nine months ended March 31, 2002, was 23.8%,
compared to 34.0% for the nine months ended March 31, 2001. The lower effective
tax rates in 2002 reflect an increased portion of the Company's pretax income
consisting of tax exempt income, including an increase in the cash surrender
value of life insurance.
Classified Assets
There were five loans totaling $25,000 which were 90 or more days
delinquent but still accruing at March 31, 2002; the Company had no such loans
at June 30, 2001. Loans 90 or more days delinquent and not accruing totaled
$36,000 at March 31, 2002. There were no such loans at June 30, 2001. At March
31, 2002, the Company had real estate owned totaling $2.6 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 46.7% during the quarter ended March 31,
2002, and equaled 47.6% at March 31, 2002.
Stock Repurchase Plan
As of March 31, 2002, 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. On April 30, 2002, the parties agreed to extend the agreement for
up to 120 days to August 28, 2002. It is expected that the transaction will be
completed in the third 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.
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
13
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: May 13, 2002 /s/ Gordon E. Clark
-------------------------------
Gordon E. Clark
President and Chief Executive
Officer
Date: May 13, 2002 /s/ Kathleen Trumpler
-------------------------------
Kathleen Trumpler
Treasurer and Chief Financial
Officer
14