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, 2001
-----------------
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
- --------------------------------------------
(State or Other Jurisdiction of Incorporation or Organization)
04-2095007
------------
(I.R.S. Employer
Identification No.)
221 West Aztec Avenue, Gallup, New Mexico
- -----------------------------------------
(Address of Principal Executive Offices)
87301
----------
(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 5, 2002, there were issued and outstanding 1,150,106 shares of
the registrant's Common Stock.
GFSB Bancorp, Inc.
Index
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Statements of Financial Condition
December 31, 2001 and June 30, 2001 3
Condensed Consolidated Statements of Earnings and Comprehensive Earnings
Three months and six months ended December 31, 2001 and 2000 4
Condensed Consolidated Statements of Cash Flows
Six months ended December 31, 2001 and 2000 6
Notes to Condensed 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.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, June 30,
2001 2001
------------- -------------
(Unaudited)
ASSETS
Cash and due from banks $ 3,449,129 $ 3,216,000
Interest-bearing deposits with banks 374,789 1,046,254
Available-for-sale investment securities 23,500,367 21,804,107
Available-for-sale mortgage-backed securities 32,030,440 32,376,812
Held-to-maturity investment securities 1,943,046 1,945,720
Stock of Federal Home Loan Bank, at cost, restricted 3,759,500 3,649,000
Loans receivable, net, substantially pledged 130,917,364 130,430,937
Accrued interest and dividends receivable 1,117,296 1,185,400
Premises and equipment 2,217,529 1,323,770
Other real estate and repossessed property 74,245 7,950
Prepaid and other assets 71,674 66,674
Deferred tax asset 98,006 98,006
------------- -------------
TOTAL ASSETS $ 199,553,385 197,150,630
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Transaction and NOW accounts $ 16,268,253 $ 15,462,712
Savings and MMDA deposits 14,258,459 14,521,879
Time deposits 78,931,700 76,675,576
Advances from Federal Home Loan Bank 71,332,839 72,105,997
Repurchase agreements 1,049,495 1,324,335
Accrued interest payable 438,105 473,446
Advances from borrowers for taxes and insurance 443,394 440,048
Accounts payable and accrued liabilities 291,771 219,855
Deferred income taxes 671,577 653,197
Dividends declared and payable 109,392 98,453
Income taxes payable 1,168 195,854
------------- -------------
TOTAL LIABILITIES 183,796,153 182,171,352
------------- -------------
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; 1,150,106 issued and outstanding
at June 30,2001 and December 31, 2001 115,011 115,011
Additional paid-in-capital 2,681,578 2,630,860
Unearned ESOP stock (241,313) (272,480)
Retained earnings, substantially
restricted 11,898,307 11,237,917
Accumulated other comprehensive
earnings 1,303,649 1,267,970
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 15,757,232 14,979,278
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 199,553,385 $ 197,150,630
============= =============
See notes to consolidated financial statements.
3
GFSB Bancorp, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE EARNINGS
Three months ended Six months ended
December 31, December 31,
----------------------- -----------------------
2001 2000 2001 2000
---------- ---------- ---------- ----------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
Interest income
Loans receivable
Mortgage loans $2,176,818 $2,194,347 $4,320,978 4,262,227
Commercial loans 323,645 287,353 676,911 482,317
Share and consumer loans 121,821 163,627 247,655 310,245
Investment and mortgage-backed securities 790,043 934,489 1,583,413 1,869,192
Other interest-earning assets 34,396 85,623 79,397 170,313
---------- ---------- ---------- ----------
TOTAL INTEREST EARNINGS 3,446,723 3,665,439 6,908,354 7,094,294
Interest expense
Deposits 1,145,021 930,330 2,358,507 1,800,817
Advances from Federal Home Loan Bank 834,058 1,402,591 1,711,968 2,771,458
Repurchase agreements 2,733 24,213 11,235 42,624
---------- ---------- ---------- ----------
TOTAL INTEREST EXPENSE 1,981,812 2,357,134 4,081,710 4,614,899
---------- ---------- ---------- ----------
NET INTEREST EARNINGS 1,464,911 1,308,305 2,826,644 2,479,395
Provision for loan losses - 80,000 50,007 150,000
---------- ---------- ---------- ----------
NET INTEREST EARNINGS AFTER
PROVISION FOR LOAN LOSSES 1,464,911 1,228,305 2,776,637 2,329,395
---------- ---------- ---------- ----------
Non-interest earnings
Income from real estate operations 900 - 900 -
Miscellaneous income 10,123 35,916 22,710 47,128
Net gains/(losses) from sales of AFS securities 10,000 - 10,000 (336)
Net gains from sales of loans 6,720 2,981 16,845 17,732
Service charge income 71,735 79,061 141,741 150,171
---------- ---------- ---------- ----------
TOTAL NON-INTEREST EARNINGS 99,478 117,958 192,196 214,695
---------- ---------- ---------- ----------
Non-interest expense
Compensation and benefits 470,874 444,379 890,379 832,509
FDIC Insurance 4,847 3,972 9,607 8,174
Insurance 8,790 8,013 17,577 16,404
Stock services 13,361 5,942 15,974 8,233
Occupancy 98,445 83,195 200,157 174,140
Data processing 56,564 50,431 148,981 102,187
Professional fees 20,473 34,064 67,354 51,891
Advertising 19,528 22,896 40,361 41,218
Stationary, printing and office supplies 25,236 21,082 54,581 35,209
ATM expense 10,382 10,301 22,679 21,631
Supervisory exam fees 12,684 10,976 28,242 21,952
Postage 11,881 10,168 28,459 18,799
Other 56,667 71,161 125,258 133,190
---------- ---------- ---------- ----------
TOTAL NON-INTEREST EXPENSE 809,732 776,580 1,649,609 1,465,537
---------- ---------- ---------- ----------
4
GFSB Bancorp, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE EARNINGS - CONTINUED
Three months ended Six months ended
December 31, December 31,
-------------------------- -----------------------
2001 2000 2001 2000
-------------------------- -----------------------
(Unaudited) (Unaudited) (Unaudited) (Unaudited)
EARNINGS BEFORE INCOME TAXES 754,657 569,683 1,319,224 1,078,553
Income tax expense
Currently payable 266,626 186,977 440,314 346,820
Deferred provision - - - -
----------- ----------- --------- ---------
266,626 186,977 440,314 346,820
----------- ----------- --------- ---------
NET EARNINGS $ 488,031 $ 382,706 878,910 731,733
=========== =========== ========= =========
Other Comprehensive Earnings
Unrealized gain (loss), net of tax (114,145) 579,789 35,679 957,828
----------- ----------- --------- ---------
COMPREHENSIVE EARNINGS 373,886 962,495 914,589 1,689,561
=========== =========== ========= =========
Earnings per common share
Basic $ 0.44 0.35 0.80 0.66
=========== =========== ========= =========
Weighted average number of common shares outstanding
Basic 1,103,364 1,105,117 1,101,938 1,107,086
=========== =========== ========= =========
Earnings per common share
Diluted 0.43 0.34 0.77 0.65
=========== =========== ========= =========
Weighted average number of common shares outstanding
Diluted 1,143,436 1,128,680 1,140,767 1,130,650
=========== =========== ========= =========
Comprehensive earnings per common share
Basic 0.34 0.87 0.83 1.53
=========== =========== ========= =========
Diluted 0.33 0.85 0.80 1.49
=========== =========== ========= =========
Dividends per share 0.10 0.08 0.09 0.08
=========== =========== ========= =========
5
GFSB Bancorp, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
Six months ended
December 31,
---------------------------
2001 2000
------------- -------------
(Unaudited) (Unaudited)
Cash flows from operating activities
Net earnings $ 878,910 $ 731,733
Adjustments to reconcile net earnings to
net cash provided by operations
Deferred loan origination fees (215,510) (120,548)
Gain on sale of loans and securities (26,846) (17,396)
Provision for loan losses 50,007 150,000
Depreciation of premises and equipment 104,891 89,083
Amortization of investment and mortgage-
backed securities premiums 96,793 35,544
Stock dividends on FHLB stock (61,500) (142,500)
Release of ESOP stock 76,335 50,442
Stock compensation 8,325 34,178
Net changes in operating assets and liabilities
Accrued interest and dividends receivable 68,104 (132,436)
Prepaid and other assets (5,000) 113,542
Accrued interest payable (35,341) 8,556
Accounts payable and accrued liabilities 63,591 94,910
Repurchase agreements (274,840) 489,376
Income taxes payable (194,686) 86,166
Dividends declared and payable 10,939 (1,703)
----------- -----------
Net cash provided by
operating activities 544,172 1,468,947
----------- -----------
Cash flows from investing activities
Purchase of premises and equipment (998,650) (25,921)
Loan originations and principal
repayment on loans, net (370,373) (12,158,117)
Principal payments on mortgage-backed
securities 5,423,524 2,257,861
Purchases of mortgage-backed securities (5,130,469) (509,098)
Purchases of available-for-sale securities (4,043,762) (3,221,028)
Maturities and proceeds from sale of
available-for-sale securities 1,310,000 3,012,812
Principal payments on available-for-sale securities 1,055,759 170,195
Principal payments on hold-to-maturity securities 5,000 10,000
Purchase of FHLB stock (49,000) (178,000)
----------- -----------
Net cash used by
investing activities (2,797,971) (10,641,296)
----------- -----------
6
GFSB Bancorp, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Increase (decrease) in cash and cash equivalents
Six months ended
December 31,
--------------------------------
2001 2000
-------------- -------------
(Unaudited) (Unaudited)
Cash flows from financing activities
Net increase in transaction accounts, passbook
savings, money market accounts, and
certificates of deposit $ 2,798,245 $ 4,453,663
Net increase in mortgage escrow funds 3,346 72,332
Proceeds from FHLB advances 291,654,462 1,385,222,346
Repayments on FHLB advances (292,427,620) (1,379,105,303)
Purchase of GFSB Bancorp stock under the
stock repurchase plan in cash - (236,190)
Dividends paid or to be paid in cash (218,520) (176,831)
Price paid for vested management bonus stock plan stock 5,550 -
-------------- ---------------
Net cash provided by
financing activities 1,815,463 10,230,017
-------------- ---------------
(Decrease) increase in cash and cash equivalents (438,336) 1,057,668
Cash and cash equivalents at beginning of period 4,262,254 4,090,965
-------------- ---------------
Cash and cash equivalents at end of period $ 3,823,918 5,148,633
============== ===============
Supplemental disclosures of cash flow information
Cash paid during the period for
Interest on deposits and advances $ 4,117,052 $ 4,563,718
Income taxes 635,000 261,823
Change in unrealized gain, net of deferred
taxes on available-for-sale securities 35,679 957,828
Dividends declared not yet paid 109,392 87,172
Supplemental schedule of noncash and financing activities
Issuance of stock dividend $ - 23,091
7
GFSB BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. The accompanying unaudited condensed 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 condensed consolidated statements of earnings 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, 2001.
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., 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.
On November 14, 2001, GFSB Bancorp purchased land and a building in San Juan
County, New Mexico for the purpose of opening a Branch of the Bank. The
acquisition totaled approximately $902,000. The Bank expects to open its new
branch facility on or about March 2002 and estimates that it will spend
approximately $400,000 to renovate this branch location. The operation of this
new branch may increase non-interest expense in future periods.
9
RESULTS OF OPERATIONS
COMPARISON OF OPERATING RESULTS FOR QUARTER ENDED DECEMBER 31, 2001 COMPARED TO
QUARTER ENDED DECEMBER 31, 2000.
General
Net income for the quarter ended December 31, 2001 increased $105,000 to
$488,000 compared to net income of $383,000 for the comparable quarter in 2000.
The increase in net income was primarily the result of an increase in net
interest earnings income of $157,000, a $80,000 decline in the provision for
loan losses, offset by a $33,000 increase in non-interest expense and an $80,000
increase in income tax expense. Please refer to "Average Balance Sheets" for an
analysis of the changes in net interest income for the three months ended
December 31, 2001 compared to the same 2000 period.
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 December 31, 2001 Quarter ended December 31, 2000
-------------------------------------- ----------------------------------------
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
------- -------- ---------- ------- -------- ----------
(Dollars in Thousands) (Dollars in Thousands)
Interest-earning assets:
Loans receivable (1) $ 130,071 $ 2,622 8.06% $ 118,897 $ 2,645 8.90%
Investment securities and
mortgage-backed securities 58,753 790 5.38% 55,841 934 6.69%
Other interest-earning
assets (2) 4,421 35 3.17% 5,524 86 6.23%
----------- ---------- ----------- ----------
Total interest-earning assets 193,245 3,447 7.13% 180,262 3,665 8.13%
Non-interest-earning assets 6,671 6,398
----------- -----------
Total assets $199,916 $ 186,660
=========== ===========
Interest-bearing liabilities:
Transaction accounts $ 7,983 $ 18 .90% $ 6,172 $ 33 2.14%
Passbook savings 4,422 14 1.27% 4,825 25 2.07%
Money market accounts 9,819 103 4.20% 9,296 83 3.57%
Certificates of deposit 78,885 1,010 5.12% 54,382 789 5.80%
Other liabilities (3) 72,357 837 4.63% 88,558 1,427 6.45%
----------- ---------- ----------- ---------- ----------
Total interest-bearing
liabilities 173,466 1,982 4.57% 163,233 2,357 5.78%
Non-interest bearing
liabilities 10,724 9,785
----------- -----------
Total liabilities 184,190 173,018
Stockholders' equity 15,726 13,642
----------- -----------
Total liabilities and
stockholders' equity $ 199,916 $ 186,660
=========== ===========
Net interest income $ 1,465 $ 1,308
========== =========
10
Interest rate spread (4) 2.56% 2.35%
=========== ========
Net yield on interest-
earning assets (5) 3.03% 2.90%
=========== ========
Ratio of average interest-
earning assets to average
interest-bearing liabilities 1.11X 1.10X
=========== ========
(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.
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, 2001 vs. 2000
Increase (Decrease)
Due to
--------------------------------
Rate/
Volume Rate Volume Net
------ ---- ------ -----
(Dollars in Thousands)
Interest income:
Loans receivable $ 248 $(249) $ (22) $ (23)
Mortgage-backed securities and
investment securities 49 (183) (10) (144)
Other interest-earning assets (17) (42) 8 (51)
----- ----- ----- -----
Total interest-earning assets 280 (474) (24) (218)
----- ----- ----- -----
Interest expense:
Transaction accounts 10 (19) (6) (15)
Savings accounts (2) (11) 1 (12)
Money markets 5 15 1 21
Certificates of deposit 355 (92) (42) 221
Other liabilities (261) (403) 74 (590)
----- ----- ----- -----
Total interest-bearing liabilities 107 (510) 28 (375)
----- ----- ----- -----
Net change in interest income $ 173 $ 36 $ (52) $ 157
===== ===== ===== =====
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. No provision for loan loss was made in the current quarter.
The provision for loan losses for the quarter ended December 31, 2000 was
$80,000. The decrease in the provision for loan losses for the current
three-month period was the result of less loan 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 at the balance sheet date,
there can be no assurance that further additions will not be made to the loss
allowances and that such losses will not exceed the
11
estimated amounts.
Non-Interest Income
Total non-interest income decreased by $18,500 or 18.6% from $118,000 for the
quarter ended December 31, 2000 to $99,500 for the quarter ended December 31,
2001. This decrease was primarily due to decreased miscellaneous income of
$25,800 and decreased service charge income of $7,300, offset by increases in
net gains from sales of loans of $3,700 and net gains from sales of
available-for-sale securities of $10,000. The decrease in miscellaneous income
is primarily due to a gain on the sale of other real estate owned of $21,300 and
$6,000 received from a winning raffle ticket in the quarter ended December 31,
2000. Service charge income decreased for the current three month period
primarily due to a decline in insufficient fee charges collected on NOW and
checking accounts.
Non-Interest Expense
Total non-interest expense increased $33,200 or 4.3% from $776,600 for the
quarter ended December 31, 2000 to $809,700 for the quarter ended December 31,
2001. The most significant increases in non-interest expense for the current
period were primarily attributable to compensation and benefits, occupancy,
stock services and data processing, offset by decreases in professional fees and
other non-interest expenses. The increase in compensation and benefits expense
reflects increases of $24,400 in general salaries and benefit expense primarily
due to the hiring of a project manager for the new branch purchase and general
merit increases. Occupancy costs increased $15,300 primarily due to increases in
depreciation for furniture, fixtures, and equipment, resulting from the purchase
of equipment needed to operate our new service bureau format. Stock services
increased $7,400 primarily due to a regulatory filing fee paid to the OTS. Data
processing expense increased by $6,100 due to increased service bureau expense
resulting from growth in the volume of deposits and loans and a change in our
service bureau provider. Professional fees decreased $13,600 primarily due to a
decrease in legal and accounting fees this quarter. In the three months ended
December 31, 2000, other non-interest expense included approximately $9,200 of
telephone expense related to the upgrading of the Bank's telephone system.
12
RESULTS OF OPERATIONS
COMPARISON OF OPERATING RESULTS FOR THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2001
COMPARED TO THE SIX-MONTH PERIOD ENDED DECEMBER 31, 2000.
General
Net income for the six months ended December 31, 2001 increased $147,000 to
$879,000 compared to net income of $732,000 for the comparable six-month period
in 2000. The increase in net income was primarily the result of an increase net
interest earnings income of $347,000, a $100,000 decline in the provision for
loan losses, offset by a $185,000 increase in non-interest expense and a $93,000
increase in income tax expense. Please refer to "Average Balance Sheets" for an
analysis of the change in net interest income for the six months ended December
31, 2001 compared to the same 2000 period.
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, 2001 December 31, 2000
-------------------------------------- -----------------------------------------
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
------- -------- ---------- ------- -------- ----------
(Dollars in Thousands) (Dollars in Thousands)
Interest-earning assets:
Loans receivable (1) $ 129,776 $ 5,246 8.08% $ 115,984 $ 5,055 8.72%
Investment securities and
Mortgage-backed securities 57,559 1,583 5.50% 55,955 1,869 6.69%
Other interest-earning
assets (2) 4,596 79 3.44% 5,417 170 6.28%
---------- ---------- ----------- ----------
Total interest-earning assets 191,931 6,908 7.20% 177,356 7,094 8.00%
Non-interest-earning assets 6,175 6,064
---------- -----------
Total assets $ 198,106 $183,420
========== ===========
Interest-bearing liabilities:
Transaction accounts $ 7,814 $ 43 1.10% $ 6,084 $ 45 1.48%
Passbook savings 4,548 29 1.28% 4,967 51 2.05%
Money market accounts 9,699 206 4.25% 9,421 168 3.57%
Certificates of deposit 78,229 2,079 5.32% 53,596 1,537 5.74%
Other liabilities (3) 71,661 1,724 4.81% 87,002 2,814 6.47%
---------- ---------- ---------- -------- -----------
Total interest-bearing
liabilities 171,951 4,081 4.75% 161,070 4,615 5.73%
Non-interest bearing
liabilities 10,670 9,036
---------- ----------
Total liabilities 182,621 170,106
Stockholders' equity 15,485 13,314
---------- ----------
Total liabilities and
Stockholders' equity $ 198,106 $ 183,420
========== ==========
13
Net interest income $ 2,827 $ 2,479
========== ========
Interest rate spread (4) 2.45% 2.27%
=========== ========
Net yield on interest-
earning assets (5) 2.95% 2.80%
=========== ========
Ratio of average interest-
earning assets to average
interest-bearing liabilities 1.12X 1.10X
=========== ========
(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.
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, 2001 vs. 2000
Increase (Decrease)
Due to
----------------------------------------
Rate/
Volume Rate Volume Net
------ ---- ------ -------
(Dollars in Thousands)
Interest income:
Loans receivable $ 601 $ (371) $ (39) $ 191
Mortgage-backed securities and
investment securities 54 (333) (7) (286)
Other interest-earning assets (26) (77) 12 (91)
------- ------- ------- -------
Total interest-earning assets 629 (781) (34) (186)
------- ------- ------- -------
Interest expense:
Transaction accounts 13 (12) (3) (2)
Savings accounts (5) (19) 2 (22)
Money markets 5 32 1 38
Certificates of deposit 707 (113) (52) 542
Other liabilities (496) (722) 128 (1,090)
------- ------- ------- -------
Total interest-bearing liabilities 224 (834) 76 (534)
------- ------- ------- -------
Net change in interest income $ 405 $ 53 $ (110) $ 348
======= ======= ======= =======
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 $50,000 and $150,000 for the
six-month period ended December 31, 2001 and 2000, respectively. See "Comparison
of Operating Results for the quarter ended December 31, 2001 compared to quarter
ended December 31, 2000 - Provision for Losses on Loans."
Non-Interest Income
Total non-interest income decreased by $22,500 or 11.7% from $214,700 for the
six months ended December
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31, 2000 to $192,200 for the six months ended December 31, 2001. This decrease
was primarily due to decreased miscellaneous income of $24,400 and decreased
service charge income of $8,400, offset by an increase in net gains from the
sale of available-for-sale securities of $10,000. See "Comparison of Operating
Results for quarter ended December 31, 2001 compared to quarter ended December
31, 2000 - Non-Interest Income.
Non-Interest Expense
Total non-interest expense increased $184,100 or 12.6% from $1,465,500 for the
six months ended December 30, 2000 to $1,649,600 for the six months ended
December 31, 2001. The most significant changes in non-interest expenses were
increases in compensation and benefits, data processing, professional fees,
occupancy costs and stationary, printing, and office supplies. The increase in
compensation and benefits expense reflects increases of $53,000 in general
salaries and benefits expense primarily due to the hiring of the operations
manager in September 2000, the hiring of a project manager for the new branch
purchase in September 2001 and the hiring of two additions to staff in current
six-month period. Also, contributing to this increase were general merit
increases. Data processing expense increased by $46,800 due to increased service
bureau expense resulting from growth in deposits and loans and a change in our
service bureau provider. The increase in professional fees of $15,500 was due to
increases in audit, accounting, and legal fees during the first 2002 quarter.
Occupancy costs increased $26,000 due primarily to increases in depreciation for
furniture, fixtures, and equipment, resulting from the purchase of equipment
needed to operate our new service bureau format. Stationary, printing and office
supplies increased $19,400 primarily as the result of the purchase of new forms
during the first 2002 quarter for the banks new service bureau.
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 26,
2001. At the meeting two directors were elected for terms to expire in 2004 and
the appointment of Neff & Ricci, LLP as the Company's independent accountants
was ratified.
The results of voting are shown for each matter considered.
Director election:
Nominees Votes for Votes withheld
Wallace R. Phillips 863,407 1,875
Richard C. Kauzlaric 817,546 47,736
Independent accountant ratification:
Votes for Votes against Abstentions
846,532 15,000 3,750
Item 5. Other Information
-----------------
Not applicable.
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****
16
--------------
* 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 13, 2002 /s/Jerry R. Spurlin
-----------------------------------------------
Jerry R. Spurlin
Assistant Secretary and Chief Financial Officer
(Duly Authorized Representative and
Principal Financial Officer)
18