UNITED STATES
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, 2000
-----------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE EXCHANGE ACT OF 1934
For the transition period from to
Commission file number: 0-25854
GFSB BANCORP, INC.
----------------------------------------------
(Name of Small Business Issuer in its Charter)
Delaware 04-2095007
- -------------------------------------------- -------------------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
221 West Aztec Avenue, Gallup, New Mexico 87301
- ----------------------------------------- ------------------
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number, Including Area Code: (505) 722-4361
------------------
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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
------------- ------------
As of February 2, 2001, there were issued and outstanding 1,154,909 shares of
the registrant's Common Stock.
GFSB Bancorp, Inc.
Index
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements:
Consolidated Statements of Financial Condition
December 31, 2000 and June 30, 2000 3
Consolidated Statements of Earnings and Comprehensive
Earnings
Three months and six months ended December 3, 2000 and 1999 4
Consolidated Statements of Cash Flows
Six months ended December 31, 2000 and 1999 6
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis or Plan of Operation 9
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 18
2
GFSB Bancorp, Inc.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, June 30,
2000 2000
--------------- --------------
(Unaudited)
ASSETS
Cash and due from banks $ 4,089,585 $ 2,875,537
Interest-bearing deposits with banks 1,059,048 1,215,428
Available-for-sale investment securities 26,610,596 25,438,540
Available-for-sale mortgage-backed securities 27,460,896 28,930,510
Held-to-Maturity investment securities 1,673,500 1,681,310
Stock of Federal Home Loan Bank, at cost, restricted 4,527,400 4,206,900
Loans receivable, net, substantially pledged 121,957,216 109,777,269
Accrued interest and dividends receivable 1,166,410 1,033,974
Premises and equipment 1,232,886 1,296,048
Other real estate and repossessed property 4,450 38,000
Prepaid and other assets 84,341 197,883
Deferred tax asset 94,517 94,517
------------- -------------
TOTAL ASSETS $ 189,960,845 176,785,916
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Transaction and NOW accounts $ 14,622,049 $ 12,409,069
Savings and MMDA deposits 14,308,816 14,801,893
Time deposits 55,470,743 52,736,983
Advances from Federal Home Loan Bank 89,052,109 82,935,066
Accrued interest payable 296,906 288,350
Advances from borrowers for taxes and insurance 378,241 305,909
Accounts payable and accrued liabilities 365,158 236,070
Repurchase agreements 720,215 230,839
Deferred income taxes 560,583 67,157
Dividends declared and payable 87,172 88,875
Income taxes payable 86,166 -
------------- -------------
TOTAL LIABILITIES 175,948,158 164,100,211
COMMITMENTS AND CONTINGENCIES - -
STOCKHOLDERS' EQUITY
Preferred stock, $.10 par value, 500,000
shares authorized; no shares issued or
outstanding - -
Common stock, $.10 par value, 1,500,000
shares authorized; 1,154,909 issued and outstanding
at December 31,2000 and 940,963 shares issued and
outstanding at June 30, 2000 115,491 94,096
Additional paid-in-capital 2,602,430 2,810,626
Unearned ESOP stock (299,766) (323,911)
Retained earnings, substantially restricted 10,506,341 9,974,531
Accumulated other comprehensive earnings 1,088,191 130,363
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 14,012,687 12,685,705
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 189,960,845 $ 176,785,916
============= =============
See notes to consolidated financial statements.
3
GFSB Bancorp, Inc.
CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE EARNINGS
Three months ended Six months ended
December 31, December 31,
------------------------------ -------------------------------
2000 1999 2000 1999
------------------------------ -------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest income
Loans
receivable
Mortgage loans $ 2,194,347 $ 1,903,691 $ 4,262,227 3,723,509
Commercial loans 287,353 108,791 482,317 219,594
Share and consumer loans 163,627 117,839 310,245 228,575
Investment and mortgage-backed securities 934,489 703,174 1,869,192 1,334,191
Other interest-earning assets 85,623 65,335 170,313 122,902
------------ ------------ -------------------------------
TOTAL INTEREST EARNINGS 3,665,439 2,898,830 7,094,294 5,628,771
Interest expense
Deposits 930,330 789,052 1,800,817 1,577,045
Advances from Federal Home Loan Bank 1,402,591 919,749 2,771,458 1,702,359
Repurchase agreements 24,213 912 42,624 912
------------ ------------ -------------------------------
TOTAL INTEREST EXPENSE 2,357,134 1,709,713 4,614,899 3,280,316
------------ ------------ -------------------------------
NET INTEREST EARNINGS 1,308,305 1,189,117 2,479,395 2,348,455
Provision for loan losses 80,000 40,000 150,000 60,000
------------ ------------ -------------------------------
NET INTEREST EARNINGS AFTER
PROVISION FOR LOAN LOSSES 1,228,305 1,149,117 2,329,395 2,288,455
Non-interest earnings
Income from real estate operations - - - 2,500
Miscellaneous income 35,916 4,699 47,128 8,284
Net gains from sales of loans 2,981 13,380 17,396 20,521
Service charge income 79,061 70,820 150,171 130,460
------------ ------------ -------------------------------
TOTAL NON-INTEREST EARNINGS 117,958 88,899 214,695 161,765
Non-interest expense
Compensation and benefits 444,379 404,165 832,509 799,000
FDIC Insurance 3,972 11,863 8,174 22,957
Insurance 8,013 7,692 16,404 15,382
Stock services 5,942 3,403 8,233 5,903
Occupancy 83,195 83,471 174,140 159,115
Data processing 50,431 47,596 102,187 96,857
Professional fees 34,064 23,779 51,891 47,276
Advertising 22,896 20,745 41,218 34,910
Stationary, printing and office supplies 21,082 26,479 35,209 39,714
ATM Expense 10,301 11,610 21,631 25,670
Supervisory Exam Fees 10,976 9,491 21,952 18,983
Postage 10,168 8,713 18,799 15,972
Other 71,161 47,454 133,190 98,888
------------ ------------ -------------------------------
TOTAL NON-INTEREST EXPENSE 776,580 706,461 1,465,537 1,380,627
4
GFSB Bancorp, Inc.
CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE EARNINGS - CONTINUED
Three months ended Six months ended
December 31, December 31,
------------------------------ -------------------------------
2000 1999 2000 1999
------------------------------ -------------------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
EARNINGS BEFORE INCOME TAXES 569,683 531,555 1,078,553 1,069,593
Income tax expense
Currently payable 186,977 192,713 346,820 385,518
Deferred provision - - - -
------------ ------------ ------------- ------------
186,977 192,713 346,820 385,518
------------ ------------ ------------- ------------
NET EARNINGS $ 382,706 $ 338,842 731,733 684,075
============ ============ ============= ============
Other Comprehensive Earnings
Unrealized gain (loss), net of tax 579,789 (239,626) 957,828 (372,889)
------------ ------------ ------------- ------------
COMPREHENSIVE EARNINGS 962,495 99,216 1,689,561 311,186
============ ============ ============= ============
Earnings per common share
Basic $ 0.35 0.29 0.66 0.59
============ ============ ============= ============
Weighted average number of common shares outstanding
Basic 1,105,117 1,157,191 1,107,086 1,163,750
============ ============ ============= ============
Earnings per common share
Diluted 0.34 0.29 0.65 0.58
============ ============ ============= ============
Weighted average number of common shares outstanding
Diluted 1,128,680 1,179,455 1,130,650 1,187,938
============ ============ ============= ============
Comprehensive earnings per common share
Basic 0.87 0.09 1.53 0.27
============ ============ ============= ============
Diluted 0.85 0.08 1.49 0.26
============ ============ ============= ============
5
GFSB Bancorp, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
Six months ended
December 31,
------------------------------
2000 1999
-------------- -------------
(Unaudited) (Unaudited)
Cash flows from operating activities
Net earnings $ 731,733 $ 684,075
Adjustments to reconcile net earnings to
net cash provided by operations
Deferred loan origination fees (120,548) (156,437)
Loss (gain) on sale of loans and securities (17,396) (18,816)
Provision for loan losses 150,000 60,000
Depreciation of premises and equipment 89,083 87,535
Amortization of investment and
mortgage-backed securities premiums 35,544 101,279
Stock dividend on FHLB stock (142,500) (88,800)
Release of ESOP stock 50,442 47,002
Stock compensation 34,178 32,443
Provision (benefit) for deferred income taxes - (23,892)
Net changes in operating assets and liabilities
Accrued interest and dividends receivable (132,436) 7,625
Prepaid and other assets 113,542 9,333
Accrued interest payable 8,556 138,978
Accounts payable and accrued liabilities 94,910 2,473
Repurchase agreements 489,376 216,595
Income taxes payable 86,166 (140,530)
Dividends declared and payable (1,703) 16,960
------------ ------------
Net cash provided by
operating activities 1,468,947 975,823
Cash flows from investing activities
Purchase of premises and equipment (25,921) (20,419)
Loan originations and principal
repayment on loans, net (12,158,117) (7,458,282)
Principal payments on mortgage-backed
securities 2,257,861 3,296,815
Purchases of mortgage-backed securities (509,098) -
Purchases of available-for-sale securities (3,221,028) (12,208,015)
Maturities and proceeds from sale of
available-for-sale securities 3,012,812 2,746,655
Principal payments on available-for-sale securities 170,195 75,000
Principal payments on hold-to-maturity securities 10,000 -
Purchase of FHLB stock (178,000) (670,500)
------------ ------------
Net cash used by
investing securities (10,641,296) (14,238,746)
6
GFSB Bancorp, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Increase (decrease) in cash and cash equivalents
Six months ended
December 31,
-------------------------------------
2000 1999
------------------ -----------------
(Unaudited) (Unaudited)
Cash flows from financing activities
Net increase (decrease) in transaction accounts, passbook
savings, money market accounts, and
certificates of deposit $ 4,453,663 $ (2,098,297)
Net increase (decrease) in mortgage escrow funds 72,332 (1,054)
Proceeds from FHLB advances 1,385,222,346 258,008,922
Repayments on FHLB advances (1,379,105,303) (243,273,860)
Purchase of GFSB Bancorp stock under
the stock repurchase plan in cash (236,190) (248,487)
Dividends paid or to be paid in cash (176,831) (165,474)
Proceeds from exercise of stock options - 8,325
--------------- ---------------
Net cash provided by
financing activities 10,230,017 12,230,075
--------------- ---------------
Increase (decrease) in cash and cash equivalents 1,057,668 (1,032,848)
Cash and cash equivalents at beginning of period 4,090,965 5,147,215
--------------- ---------------
Cash and cash equivalents at end of period $ 5,148,633 4,114,367
=============== ===============
Supplemental disclosures of cash flow information
Cash paid during the period for
Interest on deposits and advances $ 4,563,718 $ 3,136,426
Income taxes 261,823 526,049
Change in unrealized gain (loss), net of deferred
taxes on available-for-sale securities 957,828 (372,889)
Dividends declared not yet paid 87,172 91,708
Supplemental schedule of noncash and financing activities
Issuance of stock dividend $ 23,091 -
7
GFSB BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. The accompanying unaudited consolidated financial statements were in
accordance with instructions for Form 10-QSB and therefore do not include all
disclosure necessary for a complete presentation of the consolidated financial
statements in conformity with generally accepted accounting principles. However,
all adjustments which are, in the opinion of management, necessary for the fair
presentation of the interim financial statements have been included. All such
adjustments are of a normal recurring nature. The consolidated statements of
income are not necessarily indicative of results, which may be expected for the
entire year, or for any other interim period.
Certain information and footnote disclosures normally included in the financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to the rules and regulations of the
Securities and Exchange Commission. It is suggested that these condensed
unaudited financial statement be read in conjunction with the Form 10-KSB for
the year ended June 30, 2000.
2. Stock Dividend
The Board of Directors of the Company announced on October 31, 2000, the
declaration of a 25% stock dividend payable on December 15, 2000 to shareholders
of record on December 1, 2000. The basic and diluted weighted average number of
shares outstanding and net earnings and comprehensive earnings per share
information for all prior reporting periods have been restated to reflect the
effects of the stock dividend.
8
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
General
The Private Securities Litigation Reform Act of 1995 contains safe harbor
provisions regarding forward-looking statements. When used in this discussion,
the words "believes", "anticipates", "contemplates", "expects", and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties which could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in interest rates, risks associated with the ability to control costs
and expenses, and general economic conditions. We undertake no obligation to
publicly release the results of any revisions to those forward looking
statements which may be made to reflect events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Overview
GFSB Bancorp, Inc. ("GFSB Bancorp") is a bank holding company headquartered in
Gallup, New Mexico, which provides a full range of deposits and traditional
mortgage loan products through its wholly owned banking subsidiary, Gallup
Federal Savings Bank. All references refer collectively to the Company and the
Bank, unless the context indicates otherwise.
FINANCIAL CONDITION
The total assets of the Company increased $13.2 million or 7.5% from $176.8
million at June 30, 2000 to $190 million at December 31, 2000. This increase was
primarily the result of a $12.2 million dollar increase in the Company's net
loan portfolio. Of this increase, approximately $7 million was in commercial
loans, $3.1 million in consumer residential loans, and $1.9 million in
commercial real estate non-residential loans. The increase was the result of the
Company hiring a new senior lending officer in May 2000. During the same period,
total liabilities increased $11.8 million or 7.2% from $164.1 million at June
30, 2000 to $175.9 million at December 31, 2000. This increase was primarily due
to an increase in borrowings from the Federal Home Loan Bank (FHLB) of $6.1
million and an increase in deposits of $4.5 million. The increase in deposits
was primarily the result of the growth in transaction and NOW accounts, and time
deposits. This increase was primarily attributed to the increase in market rates
paid on these products. FHLB advances funded loan originations, purchases of
securities, and mortgage loan participations.
9
RESULTS OF OPERATIONS
COMPARISON OF OPERATING RESULTS FOR QUARTER ENDED DECEMBER 31, 2000 COMPARED TO
QUARTER ENDED DECEMBER 31, 1999.
General
Net income for the quarter ended December 31, 2000 increased $44,000 to $383,000
compared to net income of $339,000 for the comparable quarter 1999. The increase
in net income was the result of higher net interest earnings income and
non-interest earnings offset by increases to the provision for loan losses and
non-interest expense. See "Average Balance Sheets and Rate/Volume Analysis" for
the details of the Company's results of operations for the current and prior
three-month periods.
Average Balance Sheets
The following table sets forth certain information relating to the Company's
average balance sheet and reflects the average yield on assets and average cost
of liabilities for the periods indicated and the average yields earned and rates
paid. Average balances are derived from month-end balances. Management does not
believe that the use of month-end balances instead of daily average balances has
caused any material differences in the information presented.
Quarter ended Quarter ended
December 31, 2000 December 31, 1999
--------------------------------------- --------------------------------------------
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
------- -------- ---------- ------- -------- ----------
(Dollars in Thousands) (Dollars in Thousands)
Interest-earning assets:
Loans receivable (1) $118,897 $2,645 8.90% $102,038 $2,131 8.35%
Investment securities and
Mortgage-backed securities 55,841 934 6.69% 47,836 703 5.88%
Other interest-earning
Assets (2) 5,524 86 6.23% 4,454 65 5.84%
----------- ---------- ----------- ---------
Total interest-earning assets 180,262 3,665 8.13% 154,328 2,899 7.51%
Non-interest-earning assets 6,398 5,101
----------- -----------
Total assets $186,660 $159,429
=========== ============
Interest-bearing liabilities:
Transaction accounts $ 6,172 $ 33 2.14% $ 5,960 $ 23 1.54%
Passbook savings 4,825 25 2.07% 4,958 25 2.02%
Money market accounts 9,296 83 3.57% 9,664 71 2.94%
Certificates of deposit 54,382 789 5.80% 52,513 670 5.10%
Other liabilities (3) 88,558 1,427 6.45% 65,292 921 5.64%
----------- ---------- ----------- ---------
Total interest-bearing
liabilities 163,233 2,357 5.78% 138,387 1,710 4.94%
Non-interest bearing
liabilities 9,785 8,559
----------- -----------
Total liabilities 173,018 146,946
Stockholders' equity 13,642 12,483
----------- -----------
Total liabilities and
Stockholders' equity $186,660 $159,429
=========== ===========
Net interest income $1,308 $1,189
========== =========
Interest rate spread (4) 2.35% 2.57%
=========== ===========
Net yield on interest-
earning assets (5) 2.90% 3.08%
=========== ===========
Ratio of average interest-
earning assets to average
interest-bearing liabilities 1.10X 1.12X
=========== ===========
(1) Average balances include non-accrual loans.
(2) Includes interest-bearing deposits in other financial institutions
(3) Other liabilities include FHLB advances and Repurchase agreements.
(4) Interest-rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(5) Net yield on interest - earning assets represents net interest income as a
percentage of average interest-earning assets.
10
Rate/Volume Analysis
The table below sets forth certain information regarding changes in interest
income and interest expense of the Company for the periods indicated. For each
category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (i) changes in volume; (ii)
changes in rates; (iii) changes in rate-volume. The changes attributable to the
combined impact of volume and rate have been allocated proportionately to the
changes due to volume and the changes due to rate.
Quarter ended
December 31, 2000 vs. 1999
Increase (Decrease)
Due to
--------------------------------
Rate/
Volume Rate Volume Net
------ ---- ------ -----
(Dollars in Thousands)
Interest income:
Loans receivable $ 352 $ 140 $ 23 $ 515
Mortgage-backed securities and
investment securities 117 97 16 230
Other interest-earning assets 16 4 1 21
----- ----- ----- -----
Total interest-earning assets 485 241 40 766
----- ----- ----- -----
Interest expense:
Transaction accounts - 9 - 9
Savings accounts - - - -
Money markets - 15 (1) 14
Certificates of deposit 24 91 3 118
Other liabilities 327 132 47 506
----- ----- ----- -----
Total interest-bearing liabilities 351 247 49 647
----- ----- ----- -----
Net change in interest income $ 134 $ (6) $ (9) $ 119
===== ===== ===== =====
11
Provision for Losses on Loans
The Company maintains an allowance for loan losses based upon management's
periodic evaluation of known and inherent risks in the loan portfolio, past loss
experience, adverse situations that may affect the borrower's ability to repay
loans, estimated value of the underlying collateral and current and expected
market conditions. The provision for loan loss was $80,000 and $40,000 for the
quarter ended December 31, 2000 and 1999, respectively. The increase in the
provision for loan losses for the current three-month period was the result of
the growth in commercial and commercial real estate loans, which tend to have
greater credit risk than residential real estate loans. While the Company
maintains its allowance for losses at a level which it considers to be adequate,
there can be no assurance that further additions will not be made to the loss
allowances and that such losses will not exceed the estimated amounts. Recent
substantial increases in the loan portfolio of the Company may result in an
increase of provision for losses on loans.
Non-Interest Income
Total non-interest income increased by $29,000 or 32.7% from $89,000 for the
quarter ended December 31, 1999 to $118,000 for the quarter ended December 31,
2000. This increase was primarily due to increased miscellaneous income, due
primarily to a gain on the sale of other real estate owned of $21,300,
commission fees collected from credit card merchant sales of $3,800 and $6,000
from a winning raffle ticket, which the Company subsequently donated to several
local charities. Service charge income increased $8,200 as the result of
increased NSF charges collected on NOW and checking accounts. Net gains from
sales of loans decreased $10,400.
Non-Interest Expense
Total non-interest expense increased $70,000 or 9.9% from $707,000 for the
quarter ended December 31, 1999 to $777,000 for the quarter ended December 31,
2000. The most significant increases in non-interest expense for the current
period were primarily attributable to compensation and benefits, professional
fees and other non-interest expenses. Compensation and benefits increased
$40,214 for the three-months ended December 31, 2000 primarily due to the hiring
of three full time employees, general merit increases and increases in the cost
of employee insurance and benefits expense. Professional fees for the current
period increased $10,285 primarily due to an increase in accounting fees. Other
non-interest expense increased $23,707, primarily due to an increase of $9,230
in telephone expense, resulting from upgraded telephone services and increases
in other general operating expenses. Offsetting the increases in non-interest
expenses was a decrease of $7,891 in FDIC insurance. Effective January 2000,
FDIC insurance assessments were lowered.
12
RESULTS OF OPERATIONS
COMPARISON OF OPERATING RESULTS FOR THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2000
COMPARED TO THE SIX-MONTH PERIOD ENDED DECEMBER 31, 1999.
General
Net income for the six months ended December 31, 2000 increased $48,000 to
$732,000 compared to net income of $684,000 for the comparable six-month period
in 1999. The increase in net income was the result of higher net interest
earnings income and non-interest earnings offset by increases to the provision
for loan losses and non-interest expense. See "Average Balance Sheets and
Rate/Volume Analysis" for the details of the Company's results of operations for
the current and prior six-month periods.
Average Balance Sheets
The following table sets forth certain information relating to the Company's
average balance sheet and reflects the average yield on assets and average cost
of liabilities for the periods indicated and the average yields earned and rates
paid. Average balances are derived from month-end balances. Management does not
believe that the use of month-end balances instead of daily average balances has
caused any material differences in the information presented.
Six-month period ended Six-month period ended
---------------------- ----------------------
December 31, 2000 December 31, 1999
--------------------------------------- ------------------------------------------
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
------- -------- ---------- ------- -------- ----------
(Dollars in Thousands) (Dollars in Thousands)
Interest-earning assets:
Loans receivable (1) $115,984 $5,055 8.72% $100,081 $4,172 8.34%
Investment securities and
Mortgage-backed securities 55,955 1,869 6.69% 46,700 1,334 5.71%
Other interest-earning
assets (2) 5,417 170 6.28% 4,502 123 5.46%
----------- ---------- ----------- ----------
Total interest-earning assets 177,356 7,094 8.00% 151,283 5,629 7.44%
Non-interest-earning assets 6,064 5,008
----------- -----------
Total assets $183,420 $156,291
=========== ============
Interest-bearing liabilities:
Transaction accounts $ 6,084 $ 45 1.48% $ 6,008 $ 46 1.53%
Passbook savings 4,967 51 2.05% 4,887 50 2.05%
Money market accounts 9,421 168 3.57% 10,462 152 2.91%
Certificates of deposit 53,596 1,537 5.74% 52,103 1,329 5.10%
Other liabilities (3) 87,002 2,814 6.47% 62,057 1,703 5.49%
----------- ---------- ----------- ----------
Total interest-bearing
liabilities 161,070 4,615 5.73% 135,517 3,280 4.84%
Non-interest bearing
liabilities 9,036 8,355
----------- -----------
Total liabilities 170,106 143,872
Stockholders' equity 13,314 12,419
----------- -----------
Total liabilities and
Stockholders' equity $183,420 $156,291
=========== ===========
Net interest income $2,479 $2,349
========== ==========
Interest rate spread (4) 2.27% 2.60%
=========== ===========
Net yield on interest-
earning assets (5) 2.80% 3.11%
=========== ===========
Ratio of average interest-
earning assets to average
interest-bearing liabilities 1.10X 1.12X
=========== ===========
(1) Average balances include non-accrual loans.
(2) Includes interest-bearing deposits in other financial institutions
(3) Other liabilities include FHLB advances and Repurchase agreements
(4) Interest-rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
(5) Net yield on interest - earning assets represents net interest income as a
percentage of average interest-earning assets.
13
Rate/Volume Analysis
The table below sets forth certain information regarding changes in interest
income and interest expense of the Company for the periods indicated. For each
category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (i) changes in volume; (ii)
changes in rates; (iii) changes in rate-volume. The changes attributable to the
combined impact of volume and rate have been allocated proportionately to the
changes due to volume and the changes due to rate.
Six-month period ended
December 31, 2000 vs. 1999
Increase (Decrease)
Due to
----------------------------------------
Rate/
Volume Rate Volume Net
------ ---- ------ -------
(Dollars in Thousands)
Interest income:
Loans receivable $ 663 $ 190 $ 30 $ 883
Mortgage-backed securities and
investment securities 264 226 45 535
Other interest-earning assets 25 18 4 47
------- ------- ------- -------
Total interest-earning assets 952 434 79 1,465
------- ------- ------- -------
Interest expense:
Transaction accounts - (2) - (2)
Savings accounts - - - -
Money markets (15) 36 (3) 18
Certificates of deposit 38 166 4 208
Other liabilities 685 304 122 1,111
------- ------- ------- -------
Total interest-bearing liabilities 708 504 123 1,335
------- ------- ------- -------
Net change in interest income $ 244 $ (70) $ (44) $ 130
======= ======= ======= =======
Provision for Losses on Loans
The Company maintains an allowance for loan losses based upon management's
periodic evaluation of known and inherent risks in the loan portfolio, past loss
experience, adverse situations that may affect the borrower's ability to repay
loans, estimated value of the underlying collateral and current and expected
market conditions. The provision for loan loss was $150,000 and $60,000 for the
six-month period ended December 31, 2000 and 1999, respectively. The increase in
the provision for loan losses for the current six-month period was the result of
the growth in commercial and commercial real estate loans, which tend to have
greater credit risk than residential real estate loans. While the Company
maintains its allowance for losses at a level which it considers to be adequate,
there can be no assurance that further additions will not be made to the loss
allowances and that such losses will not exceed the estimated amounts. Recent
substantial increases in the loan portfolio of the Company may result in an
increase of provision for losses on loans.
14
Non-Interest Income
The non-interest earnings increase of $53,000 for the six months ended December
31, 2000 in comparison with the same period a year earlier is primarily due to a
gain on the sale of other real estate owned of $21,000, an increase in service
charge income of $20,000, an increase in commission fees collected from credit
card merchant sales of $11,000 and $6,000 from a winning raffle ticket, which
the Company subsequently donated to several local charities. Offsetting the
increases in non-interest earnings were decreases in income from real estate
operations and net gains from sale of held-for-sale loans and securities
totaling $5,000.
Non-Interest Expense
The non-interest expense increase of $85,000 for the six-month period ended
December 31, 2000 over the comparable period a year earlier is primarily due to
an increase in compensation and benefits of $34,000, an increase in occupancy
costs of $15,000, due to increases in automated teller machine maintenance
expense, utilities, and property taxes, an increase of $18,000 in telephone
expense resulting from upgrading telephone services, an increase in loan expense
of $11,000 and increases in other general operating expenses of $22,000.
Offsetting the increases in non-interest expenses was a decrease of $15,000 in
FDIC insurance.
Liquidity and Capital Resources
The Bank is required under applicable federal regulations to maintain "liquid"
investments in qualifying types of U.S. Government, federal agency and other
investments of not less than 4% of its average daily balance of net withdrawable
deposit accounts and borrowings payable in one year of less. At December 31,
2000, the Bank's liquidity, as measured for regulatory purposes, was 5.46%.
At December 31, 2000, the Bank exceeded each of the three OTS capital
requirements on a fully-phased-in basis.
15
PART II. OTHER INFORMATION
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Item 1. Legal Proceedings
-----------------
Not applicable.
Item 2. Changes in Securities and Use of Proceeds
-----------------------------------------
Not applicable.
Item 3. Defaults Upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The annual meeting of the stockholders of the Company was held on October 27,
2000. At the meeting three directors were elected for terms to expire in 2003,
the appointment of Neff & Ricci, LLP as the Company's independent accountants
was ratified and the 2000 Stock Option Plan was ratified.
The results of voting are shown for each matter considered.
Director election:
Nominees Votes for Votes withheld
George S. Perce 698,781 0
Charles L. Parker, Jr. 698,781 0
Michael P. Mataya 698,781 0
GFSB Bancorp, Inc. 2000 Stock Option Plan ratification:
Votes for Votes against Abstentions
445,428 122,636 3,037
Independent accountant ratification:
Votes for Votes against Abstentions
698,781 0 0
Item 5. Other Information
-----------------
Not applicable.
16
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) List of Exhibits
3.1 Certificate of Incorporation of GFSB Bancorp, Inc.*
3.2 Bylaws of GFSB Bancorp, Inc.*
10.1 1995 Stock Option Plan**
10.2 Management Stock Bonus Plan**
10.3 Form of Directors Deferred Compensation Agreement
between the Bank and Directors***
10.4 Form of Directors Stock Compensation Plan between
the Company and Directors of the Company***
10.5 2000 Stock Option Plan****
--------------
* Incorporated herein by reference to exhibits 3(i)(Certificate of
Incorporation) and 3(ii)(Bylaws) to the Registration Statement on
Form S-1 of the Registrant (File No. 33-90400) initially filed
with the Commission on March 17, 1995.
** Incorporated by reference to the identically numbered exhibits of
the Annual Report on Form 10-KSB for the fiscal year ended June
30, 1997 (File No. 0-25854) filed with the SEC.
*** Incorporated by reference to the identically numbered exhibits of
the Quarterly Report on Form 10-QSB for the quarter ended March
31, 2000 filed with the SEC.
**** Incorporated by reference to the Proxy Statement for the Annual
Meeting of Stockholders on October 27, 2000 and filed with the
SEC on September 25, 2000.
(b) Not applicable.
17
SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GFSB BANCORP, INC.
Date: February 12, 2001 /s/Jerry R. Spurlin
------------------------------------------------
Jerry R. Spurlin
Assistant Secretary and Chief Financial Officer
(Duly Authorized Representative and
Principal Financial Officer)