UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 2004
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF
THE EXCHANGE ACT
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) 726-6500
------------------
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 October 31, 2004, there were issued and outstanding 1,146,635 shares of
the registrant's Common Stock.
Transitional Small Business Disclosure format:
Yes No X
------------- ------------
GFSB Bancorp, Inc.
Index
Page No.
--------
PART I. FINANCIAL INFORMATION
Item 1. Condensed Consolidated Financial Statements:
Condensed Consolidated Statements of Financial Condition
September 30, 2004 and June 30, 2004 3
Condensed Consolidated Statements of Earnings and Comprehensive Earnings
Three months ended September 30, 2004 and September 30, 2003 4
Condensed Consolidated Statements of Cash Flows
Three months ended September 30, 2004 and September 30, 2003 6
Notes to Condensed Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis or Plan of Operation 9
Item 3. Controls and Procedures 13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 14
Item 3. Defaults Upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits 14
Signatures 16
2
GFSB Bancorp, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, June 30,
2004 2004
------------- -------------
(Unaudited)
ASSETS
Cash and due from banks $ 8,476,582 $ 7,840,712
Interest-bearing deposits with banks 257,272 866,281
Available-for-sale investment securities 29,779,522 30,518,828
Available-for-sale mortgage-backed securities 28,707,069 30,680,195
Held-to-maturity investment securities 398,999 398,999
Stock of Federal Home Loan Bank, at cost, restricted 3,944,900 4,409,200
Loans receivable, net, substantially pledged 152,387,986 152,430,322
Loans held-for-sale -- 411,400
Accrued interest and dividends receivable 922,849 859,298
Premises and equipment 2,455,856 2,513,992
Other real estate and repossessed property 280,082 437,211
Prepaid and other assets 214,239 445,847
Deferred tax asset 103,018 275,125
------------- -------------
TOTAL ASSETS $ 227,928,374 $ 232,087,410
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Transaction and NOW accounts $ 30,155,975 $ 28,987,811
Savings and MMDA deposits 22,519,176 21,501,954
Time deposits 83,725,941 83,369,991
Advances from Federal Home Loan Bank 65,896,776 73,652,218
Other secured borrowings 4,771,582 4,814,763
Repurchase agreements 400,519 157,119
Accrued interest payable 483,867 460,520
Advances from borrowers for taxes and insurance 580,148 499,998
Accounts payable and accrued liabilities 352,845 369,595
Dividends declared and payable 140,895 140,895
------------- -------------
TOTAL LIABILITIES 209,027,724 213,954,864
------------- -------------
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; 1,146,645 issued and outstanding
at September 30, 2004 and June 30, 2004 114,665 114,665
Additional paid-in-capital 3,172,154 3,095,718
Unearned ESOP stock (43,743) (68,048)
Retained earnings, substantially
restricted 14,773,392 14,440,118
Accumulated other comprehensive
earnings 884,182 550,093
------------- -------------
TOTAL STOCKHOLDERS' EQUITY 18,900,650 18,132,546
------------- -------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 227,928,374 $ 232,087,410
============= =============
See notes to condensed consolidated financial statements.
3
GFSB Bancorp, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE EARNINGS
Three months ended
September 30,
---------------------------
2004 2003
---------------------------
(Unaudited) (Unaudited)
Interest income
Loans receivable
Mortgage loans $1,989,119 $2,045,024
Commercial loans 390,301 328,838
Share and consumer loans 104,454 108,569
Investment and mortgage-backed securities 471,339 499,202
Other interest-earning assets 21,054 25,473
---------- ----------
TOTAL INTEREST EARNINGS 2,976,267 3,007,106
Interest expense
Deposits 608,266 753,160
Advances from Federal Home Loan Bank 617,385 705,638
Repurchase agreements 239 104
---------- ----------
TOTAL INTEREST EXPENSE 1,225,890 1,458,902
---------- ----------
NET INTEREST EARNINGS 1,750,377 1,548,204
Provision for loan losses -- 60,000
---------- ----------
NET INTEREST EARNINGS AFTER
PROVISION FOR LOAN LOSSES 1,750,377 1,488,204
---------- ----------
Non-interest earnings
Income from real estate operations 3,450 2,200
Miscellaneous income 20,366 13,681
Net gains from sales of loans 15,076 10,784
Service charge income 215,768 170,548
---------- ----------
TOTAL NON-INTEREST EARNINGS 254,660 197,213
---------- ----------
Non-interest expense
Compensation and benefits 585,892 586,123
FDIC insurance 15,184 4,730
Insurance 17,229 13,208
Stock services 4,337 6,584
Occupancy 119,383 134,827
Data processing 100,832 89,484
Professional fees 210,329 45,570
Advertising 49,884 57,050
Stationary, printing and office supplies 24,921 30,905
ATM expense 25,442 14,578
Supervisory exam fees 23,916 14,585
Postage 13,502 19,286
Other 102,936 100,475
---------- ----------
TOTAL NON-INTEREST EXPENSE 1,293,787 1,117,405
---------- ----------
4
GFSB Bancorp, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF EARNINGS
AND COMPREHENSIVE EARNINGS - CONTINUED
Three months ended
September 30,
--------------------------
2004 2003
--------------------------
(Unaudited) (Unaudited)
EARNINGS BEFORE INCOME TAXES 711,250 568,012
Income tax expense
Currently payable 237,081 241,167
Deferred provision -- --
------------ -----------
237,081 241,167
------------ -----------
NET EARNINGS $ 474,169 $ 326,845
============ ===========
Other Comprehensive Earnings
Unrealized (loss) gain, net of tax $ 334,090 $ (196,863)
------------ -----------
COMPREHENSIVE EARNINGS $ 808,259 $ 129,982
============ ===========
Earnings per common share
Basic $ 0.42 $ 0.29
============ ===========
Weighted average number of common shares outstanding
Basic 1,136,166 1,121,733
============ ===========
Earnings per common share
Diluted $ 0.40 $ 0.28
============ ===========
Weighted average number of common shares outstanding
Diluted 1,196,326 1,169,955
============ ===========
Comprehensive earnings per common share
Basic $ 0.71 $ 0.12
============ ===========
Diluted $ 0.68 $ 0.11
============ ===========
Dividends per share $ 0.13 $ 0.11
============ ===========
See notes to condensed consolidated financial statements.
5
GFSB Bancorp, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
Increase (decrease) in cash and cash equivalents
Three Months Ended
September 30,
-------------------------------
2004 2003
------------- -------------
(Unaudited) (Unaudited)
Cash flows from operating activities
Net earnings $ 474,169 $ 326,845
Adjustments to reconcile net earnings to
net cash provided by operations
Deferred loan origination fees (136,387) (158,702)
Gain on sale of loans and securities (15,075) (10,784)
Provision for loan losses -- 60,000
Depreciation of premises and equipment 58,136 72,619
Amortization of investment and mortgage-
backed securities premiums 84,638 147,273
Stock dividend on FHLB stock (19,700) (21,800)
Release of ESOP stock 100,740 57,356
Stock compensation under management stock bonus plan 4,912 9,706
Net changes in operating assets and liabilities
Accrued interest and dividends receivable (63,551) (105,894)
Prepaid and other assets 327,025 (52,349)
Accrued interest payable 23,348 6,810
Accounts payable and accrued liabilities (21,661) 28,760
Income taxes (receivable) payable (95,418) 216,298
------------ ------------
Net cash provided by
operating activities 721,176 576,138
------------ ------------
Cash flows from investing activities
Purchase of premises and equipment -- (179,118)
Loan originations and principal
repayment on loans, net 18,828 (11,803,750)
Change in other secured borrowings (180,056) 2,437,665
Proceeds from the sale of loans 743,500 852,982
Principal payments on mortgage-backed
securities 2,183,298 5,396,403
Principal payments on available-for-sale securities 1,040,825 439,976
Purchases of mortgage-backed securities -- (979,375)
Purchases of available-for-sale securities (1,090,133) (5,225,184)
Maturities and proceeds from sale of
available-for-sale securities 1,000,000 --
Maturities and proceeds from sale of held-to-maturity securites -- 500,000
Purchase of FHLB stock 484,000 --
------------ ------------
Net cash provided (used) by
investing activities 4,200,262 (8,560,401)
------------ ------------
6
GFSB Bancorp, Inc.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
Increase (decrease) in cash and cash equivalents
Three Months Ended
September 30,
-------------------------------
2004 2003
------------- --------------
(Unaudited) (Unaudited)
Cash flows from financing activities
Net increase in transaction accounts, passbook
savings, money market accounts, and
certificates of deposit $ 2,541,335 $ 7,356,907
Net increase in Repurchase agreements 243,399 226,326
Net increase in mortgage escrow funds 217,025 202,199
Proceeds from FHLB advances 207,775,000 523,764,296
Repayments on FHLB advances (215,530,441) (522,432,721)
Dividends paid or to be paid in cash (140,895) (122,467)
Price paid for vested management bonus
stock plan stock -- 7,622
------------- -------------
Net cash (used) provided by
financing activities (4,894,577) 9,002,162
------------- -------------
Decrease in cash and cash equivalents 26,861 1,017,899
Cash and cash equivalents at beginning of period 8,706,993 7,252,358
------------- -------------
Cash and cash equivalents at end of period $ 8,733,854 $ 8,270,257
============= =============
Supplemental disclosures of cash flow information
Cash paid during the period for
Interest on deposits and advances $ 1,202,303 $ 1,452,092
Income taxes -- 24,869
Change in market value, net of deferred taxes on
available-for-sale securities (other comprehensive earnings) 334,090 (196,863)
Dividends declared not yet paid 140,895 122,467
See notes to condensed consolidated financial statements.
7
GFSB BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
1. The accompanying unaudited condensed consolidated financial statements
were prepared in accordance with the 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 accounting principles
generally accepted in the United States of America. 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 and
comprehensive 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 accounting principles generally accepted
in the United States of America 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 statements be read in conjunction with
the Form 10-KSB for the year ended June 30, 2004.
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 that 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, general economic conditions. We undertake no obligation to
publicly release the results of any revisions to those forward-looking
statements that 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.
Proposed Merger
On August 25, 2004, the Company announced that it had signed a definitive merger
agreement with First Federal Banc of the Southwest, Inc. ("FFBSW"), the holding
company for First Federal Bank, Roswell, New Mexico, pursuant to which the
Company will merge with and into FFBSW.
Under the terms of the agreement, upon consummation of the merger of the Company
into FFBSW, each outstanding share of the Company's common stock will be
converted into the right to receive either $20.00 in cash or FFBSW common stock,
at the election of the holder, subject to an overall requirement that 51% of the
Company's total outstanding common stock be exchanged for stock. The transaction
is subject to various conditions, including stockholder approval of both the
Company and FFBSW, and approval by the applicable banking regulatory agencies.
Pursuant to the terms of the merger agreement, FFBSW has agreed to register
FFBSW's common stock under the Securities Exchange Act of 1934 and it will file
reports with the Securities and Exchange Commission. In addition, upon the
completion of the merger, its shares are expected to be listed on the NASDAQ.
Comparison of Financial Condition at September 30, 2004 and June 30, 2004
Total assets decreased by $4.2 million, or 1.8%, to $227.9 million at September
30, 2004 from $232.1 million at June 30, 2004 primarily due to decreases in
available-for-sale investment and mortgage-backed securities, stock of the
Federal Home Loan Bank ("FHLB"), loans held for sale and other real estate and
repossessed property owned. The $2.7 million, or 4.4%, decrease in
available-for-sale investment and mortgage-backed securities to $58.5 million at
September 30, 2004 from $61.2 million at June 30, 2004, was the result of normal
monthly principal payments received on the securities owned. The stock of FHLB
decreased $0.5 million, or 10.5%, to $3.9 million at September 30, 2004 from
$4.4 million at June 30, 2004, primarily to a quarterly stock redemption by the
FHLB. There were no loans held for sale at September 30, 2004, while there were
$0.4 million in loans held for sale at June 30, 2004, resulting in a decrease of
$0.4 million, or 100.0%. This change was primarily a matter of timing, as there
has been no change in the Company's plan to sell some longer-term, fixed-rate
one- to four-family loans in the secondary market. The $0.1 million, or 35.9%,
decrease in other real estate and repossessed property owned to $0.3 million at
September 30, 2004 from $0.4 million at June 30, 2004 was the result of sales of
properties. Total cash and cash equivalents of $8.8 million at September 30,
2004 was virtually unchanged from the $8.7 million at June 30, 2004, although
there were some changes in the various components of cash and cash equivalents,
primarily a $0.6 million increase in cash and due from banks
9
offset by a $0.6 million decrease in interest-bearing deposits with banks. The
interest-bearing deposits with banks consists primarily of the Company's FHLB
demand account. The $152.4 million in loans receivable, net was unchanged from
June 30, 2004 to September 30, 2004. The remaining $0.5 million decrease in
assets during the quarter ended September 30, 2004 was the result of small
changes in various asset accounts including accrued interest and dividends
receivable, deferred tax asset and prepaid and other assets.
Total liabilities decreased $4.9 million, or 2.3% mostly due to a decrease in
FHLB advances to $65.9 million at September 30, 2004, from $73.7 million at June
30, 2004, a $7.8 million, or 10.5% decrease. Deposits increased $2.5 million, or
1.9% to $136.4 million at September 30, 2004 from $133.9 million at June 30,
2004. There were increases in transaction and NOW accounts, savings and MMDA
deposits and time deposits.
Stockholders' equity increased $0.8 million, or 4.2% to $18.9 million at
September 30, 2004 from $18.1 million at June 30, 2004, primarily due to income
of $474,000 for the three months ended September 30, 2004 and to unrealized
gains, net of taxes, in investment and mortgage-backed securities. The Company
paid a cash dividend of $0.125 per share, or $141,000, in the quarter ending
September 30, 2004.
10
RESULTS OF OPERATIONS
COMPARISON OF OPERATING RESULTS FOR QUARTER ENDED SEPTEMBER 30, 2004 COMPARED TO
QUARTER ENDED SEPTEMBER 30, 2003.
General
Net earnings for the three months ended September 30, 2004 increased $147,000 to
$474,000 ($0.40 per diluted share) from $327,000 ($0.28 per diluted share) for
the three months ended September 30, 2003. The increase in net earnings is
primarily attributable to a $202,000 increase in net interest earnings, a
$57,000 increase in non-interest earnings, a $60,000 decrease in the provision
for loan losses and a $4,000 decrease in income tax expense partially offset by
a $176,000 increase in non-interest expense. Please refer to "Average Balance
Sheets" for an analysis of the changes in net interest earnings for the three
months ended September 30, 2004 compared to the same 2003 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 annual 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 September 30, 2004 Quarter ended September 30, 2003
--------------------------------------- -----------------------------------------
Average Average Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
(Dollars in Thousands) (Dollars in Thousands)
Interest-earning assets:
Loans receivable (1) $ 152,351 $ 2,484 6.52% $ 153,141 $ 2,482 6.48%
Investment securities and
mortgage-backed securities 60,240 471 3.13% 67,677 499 2.95%
Other interest-earning
assets (2) 4,851 21 1.74% 4,716 25 2.16%
---------- ---------- ----------- ----------
Total interest-earning assets 217,442 2,976 5.48% 225,534 3,006 5.33%
---------- ---------
Non-interest-earning assets 11,830 11,044
---------- -----------
Total assets $ 229,272 $ 236,578
========== ===========
Interest-bearing liabilities:
Transaction accounts $ 12,922 $ 11 .35% $ 9,838 $ 10 .42%
Passbook savings 9,029 17 .76% 6,422 16 1.00%
Money market accounts 13,133 31 .95% 11,844 25 .87%
Certificates of deposit 83,785 549 2.62% 88,718 701 3.16%
Other liabilities (3) 73,172 618 3.38% 84,367 706 3.35%
---------- ---------- ----------- ----------
Total interest-bearing
liabilities 192,041 1,226 2.55% 201,189 1,458 2.90%
---------- ----------
Non-interest bearing
liabilities 18,616 17,792
---------- -----------
Total liabilities 210,657 218,981
Stockholders' equity 18,615 17,597
---------- -----------
Total liabilities and
stockholders' equity $ 229,272 $ 236,578
========== ===========
11
Net interest earnings $ 1,750 $ 1,548
========== ==========
Interest rate spread (4) 2.93% 2.43%
====== =====
Net yield on interest- 3.22% 2.75%
earning assets (5)
====== =====
Ratio of average interest-
Earning assets to average
interest-bearing liabilities 1.13X 1.12X
====== =====
(1) Average balances include non-accrual loans.
(2) Includes interest-bearing deposits in other financial institutions.
(3) Other liabilities include FHLB advances, repurchase agreements and other
secured borrowings.
(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.
Borrowings
The Company may obtain advances from the FHLB of Dallas to supplement its supply
of funds available for loans and investments. Advances from the FHLB are
typically secured by a pledge of the Company's stock in the FHLB, a portion of
the Company's first mortgage loans and certain other assets. Each FHLB credit
program has its own interest rate, which may be fixed or variable, and range of
maturities. The Company, if the need arises, may also access the Federal Reserve
Bank discount window to supplement its supply of funds for available for loans
and investments and to meet deposit withdrawal requirements. At June 30, 2004
and September 30, 2004, borrowings with the FHLB totaled $73,652,218 and
$65,896,776, respectively. The approximate weighted average rate paid on
borrowings was 3.58% and 3.76% at June 30, 2004 and September 30, 2004,
respectively.
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 September 30, 2004 vs. 2003
Increase (Decrease)
Due to
----------------------------------------
Rate/
Volume Rate Volume Net
------ ------ -------- ------
(Dollars in Thousands)
Interest income:
Loans receivable $ (13) $ 15 $ -- $ 2
Mortgage-backed securities and
investment securities (55) 30 (3) (28)
Other interest-earning assets 1 (5) -- (4)
----- ----- ----- -----
Total interest-earning assets (67) 40 (3) (30)
Interest expense:
Transaction accounts 3 (2) -- 1
Savings accounts 7 (4) (2) 1
Money markets 3 3 -- 6
Certificates of deposit (39) (120) 7 (152)
Other liabilities (94) 5 1 (88)
----- ----- ----- -----
Total interest-bearing liabilities (120) (118) 6 (232)
----- ----- ----- -----
Net change in interest income $ 53 $ 158 $ ( 9) $ 202
===== ===== ===== =====
12
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 $0 and $60,000 for the
periods ended September 30, 2004 and 2003, respectively. There was no provision
for loan losses for the current three-month period primarily due to improvement
in loan quality and the fact that the Company's loan portfolio did not increase
during the period. While the Company maintains its allowance for losses at a
level that 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.
Non-Interest Earnings
Total non-interest earnings increased by $57,000 or 53.7% to $254,000 for the
quarter ended September 30, 2004 from $197,000 for the quarter ended September
30, 2003. This increase was primarily due to a $45,000 increase in service
charge income and increases in miscellaneous income, net gains from sales of
loans and income from real estate operations.
Non-Interest Expense
Total non-interest expense increased $176,000 or 15.7% to $1,294,000 for the
quarter ended September 30, 2004 from $1,118,000 for the quarter ended September
30, 2003. The increase in non-interest expense was primarily attributable to
increases in professional fees, data processing, ATM expense, FDIC insurance and
supervisory exam fees, partially offset by a decrease in occupancy, advertising
and stationary, printing and office supplies. The $165,000 increase in
professional fees for the period ended September 30, 2004 is primarily
attributable to $106,000 in legal fees and $61,000 in other professional
services in connection with the Agreement and Plan of Merger between the Company
and First Federal Banc of the Southwest, Inc. announced on August 25, 2004. Data
processing increased $11,000 primarily due to growth in the number of deposit
accounts and transaction volume increases. ATM expenses increased $11,000 due to
the addition of an additional ATM and an increase in the volume of transactions.
The $10,000 increase in FDIC insurance was primarily due to the growth in
deposits. Occupancy expense decreased $15,000 primarily due to a decrease in
depreciation expense for furniture, fixtures and equipment.
Item 3. CONTROLS AND PROCEDURES
(a) Evaluation of disclosure controls and procedures. The Company's
management evaluated, with the participation of the Company's Chief
Executive Officer and Chief Financial Officer, the effectiveness of
the Company's disclosure controls and procedures as of the end of the
period covered by this report. Based on such evaluation, the Company's
principal executive officer and the principal financial officer have
concluded that such disclosure controls and procedures are effective
to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is recorded,
processed, summarized and reported within the time periods specified
in Securities and Exchange Commission rules and forms.
(b) Changes in internal control over financial reporting. During the
quarter under report, there was no change in the Company's internal
control over financial reporting that has materially affected, or is
reasonably likely to materially affect, the Company's internal control
over financial reporting.
13
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
Not applicable.
Item 2. Unregistered Sales of Equity 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
---------------------------------------------------
Not applicable.
Item 5. Other Information
-----------------
Not applicable.
Item 6. Exhibits
--------
(a) List of Exhibits
2.1 Agreement and Plan of Merger, dated as of August 25,
2004, between GFSB Bancorp, Inc. and First Federal
Banc of the Southwest, Inc.*
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*****
10.6+ Change-in-Control Severance Agreement with Richard P.
Gallegos******
10.7+ Change-in-Control Severance Agreement with Jerry R.
Spurlin******
10.8+ Change-in-Control Severance Agreement with William W.
Head, Jr.******
10.9+ Change-in-Control Severance Agreement with Leonard C.
Scalzi******
31.1 Rule 13a-14(a)/15d-14(a) Certification
31.2 Rule 13a-14(a)/15d-14(a) Certification
32 Section 1350 Certification
--------------
+ Management contract or compensatory plan or arrangement.
* Incorporated herein by reference to the identically numbered
exhibit to the current report on Form 8-K filed with the SEC
on August 26, 2004.
** Incorporated herein by reference to the Registration Statement
on Form S-1 of the Company (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.
14
**** Incorporated by reference to the identically numbered exhibits
of the Quarterly Report on Form 10-QSB for the quarter ended
March 31, 2001 filed with the SEC.
***** Incorporated by reference to Exhibit 4.1 to the Registration
Statement on Form S-8 (File No. 333-51498) filed with the SEC
on December 8, 2000.
****** Incorporated by reference to Annual Report on Form 10-KSB for
the fiscal year ended June 30, 2004 as filed September 27,
2004.
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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: November 12, 2004 /s/ Jerry R. Spurlin
------------------- -----------------------------------------------
Jerry R. Spurlin
Assistant Secretary and Chief Financial Officer
(Duly Authorized Representative and
Principal Financial Officer)
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