SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
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FORM 10-QSB
(Mark One)
[X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
OR
[ ] TRANSITION report pursuant to section 13 or 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________________ to ______________________
SEC File Number 0-23194
First Savings Bancorp of Little Falls, Inc.
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(Exact name of registrant as specified in its charter)
New Jersey 22-3360945
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(State or other jurisdiction) (I.R.S. Employer
Identification No.)
Registrant's telephone number, including area code (973) 256-2100
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Former name, former address and former fiscal year, if changed since last report
Indicate by check (X) whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes x No
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APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of
shares outstanding of each of the issuer's classes of common stock,
as of the latest practicable date: 440,100.
FIRST SAVINGS BANCORP OF LITTLE FALLS, INC.
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INDEX
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Page Number
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PART I - CONSOLIDATED FINANCIAL INFORMATION
Consolidated Statements of Financial
Condition at March 31, 1998
and December 31, 1997 (unaudited) 1
Consolidated Statements of Income
for the Three Months Ended
March 31, 1998 and 1997
(unaudited) 2
Consolidated Statements of Cash Flows
of the Three Months Ended
March 31, 1998 and 1997 (unaudited) 3-4
Notes to Consolidated Financial Statements 5
Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-8
PART II -OTHER INFORMATION 9
SIGNATURES 10
FIRST SAVINGS BANCORP OF LITTLE FALLS, INC
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
Assets March 31, 1998 December 31, 1997
- ------ -------------- -----------------
Cash and amounts due from
depository institutions $ 1,858,106 $ 2,142,413
Interest-bearing demand
deposits in other banks 10,670,518 1,540,810
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Total cash and cash equivalents 12,528,624 3,683,223
Securities available for sale 31,048,175 31,226,440
Investment securities held to maturity
estimated fair value of $16,798,000(1998) and $19,647,000(1997) 16,893,316 19,643,589
Mortgage-backed securities held to maturity
estimated fair value of $10,403,000(1998) and $10,438,000(1997) 9,876,405 10,414,679
Loans receivable, net of allowance for loan
losses of $578,205(1998) $596,230 (1997) 103,537,456 105,467,485
Real estate owned 1,673,999 1,640,004
Premises and equipment 2,863,730 2,775,060
Federal Home Loan Bank of New York stock, at cost 1,154,400 1,106,600
Interest and dividends receivable 1,402,433 1,379,628
Other assets 915,075 807,631
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Total assets $181,893,613 $178,144,339
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Liabilities and stockholder's equity
- ------------------------------------
Liabilities
- -----------
Deposits $170,076,203 $166,758,857
Borrowed money 540,783 551,132
Advance payments by borrowers for
taxes and insurance 774,687 769,354
Other liabilities 628,316 200,537
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Total liabilities 172,019,989 168,279,880
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Stockholders' Equity
- --------------------
Common Stock (par value $1.00 per share)
authorized 5,000,000 shares: issued and
outstanding 440,100 shares 440,100 440,100
Additional paid-in capital 3,670,377 3,670,377
Retained earnings-substantially restricted 5,465,443 5,458,904
Unrealized gain on securities available for sale 297,704 295,078
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Total stockholders' equity 9,873,624 9,864,459
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Total liabilities and stockholders' equity $181,893,613 $178,144,339
============ ============
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
PAGE 1
FIRST SAVINGS BANCORP OF LITTLE FALLS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(UNAUDITED)
THREE MONTHS ENDED
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MARCH 31
-----------------------
1998 1997
Interest income
Loans $2,217,253 $1,977,647
Mortgage-backed securities 407,536 482,412
Investments 549,092 403,730
Other interest-earning assets 104,937 117,071
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Total interest income 3,278,818 2,980,860
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Interest Expense
Deposits 2,093,391 1,957,284
Borrowed Money 9,116 --
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Total Interest expense 2,102,507 1,957,284
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Net interest income 1,176,311 1,023,576
Provision for loan losses 25,000 25,000
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Net interest income after
provision for loan losses 1,151,311 998,576
Non-interest income
Service charges 27,784 21,768
Miscellaneous 15,151 9,759
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Total non-interest income 42,935 31,527
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Non-interest expense
Salaries and employee benefits 364,918 364,016
Net occupancy expense 61,098 61,444
Equipment 89,781 88,380
Loss on foreclosed real estate 31,218 17,805
Federal insurance premium 25,802 22,389
Advertising and promotion 11,588 28,299
Legal fees 53,421 44,668
Miscellaneous 165,308 167,559
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Total non-interest expenses 803,134 794,560
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Income before income taxes 391,112 235,543
Income taxes 164,523 86,814
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Net income 226,589 148,729
Other comprehensive income- unrecognized
holding gains on securities available for sale,
net of income taxes of $630(1998) and $14,188(1997) 2,626 26,349
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Comprehensive income $ 229,215 $ 175,078
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Net income per common share- basic and diluted $ 0.51 $ 0.34
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Weighted average number of common
shares outstanding- basic and diluted 440,100 440,100
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See notes to unaudited consolidated financial statements.
FIRST SAVINGS BANCORP OF LITTLE FALLS INC.
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AND SUBSIDIARY
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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(unaudited)
Three Months Ended March 31,
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1998 1997
Cash flows from operating activities:
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Net income $ 226,589 $ 148,729
Adjustments to reconcile net income to
- ----------------------------------------
net cash provided by operating activities:
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Depreciation 65,298 69,249
Amortization of premiums, discounts and fees, net 93,526 65,563
Provision for losses on loans and real estate owned 63,000 25,000
Net (gain)loss on sales of real estate owned (37,814) 333
Increase in interest and dividends receivable, net (22,805) (100,844)
Increase in other assets (116,406) (149,899)
Increase(decrease) in accrued interest payable 39,002 (45,112)
Increase in other liabilities 207,730 15,349
Amortization of branch premium 8,334 8,334
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Net cash provided by operating activities 526,454 36,702
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Cash flows from investing activities:
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Purchase of securities available for sale (2,120,003) (1,920,484)
Proceeds from Investment securities held to maturity matured or called 3,954,079 --
Purchase of investment securities held to maturity (1,203,806) (8,998,371)
Securities available for sale repayments 2,213,023 601,517
Mortgage-backed securities held to maturity repayments 538,105 1,448,896
Recovery of loan losses 1,157 --
Net decrease in loans receivable 1,672,751 1,143,339
Additions to premises and equipment (153,968) (54,452)
Payments received on real estate owned -- 1,000
Proceeds from sales of real estate owned 192,081 59,354
Purchase of Federal Home Loan Bank of NY stock (47,800) (181,000)
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Net cash provided by(used in) investment activities 5,045,619 (7,900,201)
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Cash flows from financing activities:
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Net increase in deposits 3,278,344 2,866,498
Repayment of Federal Home Loan Bank Advances (10,349) --
Increase in advance payments by
borrowers for taxes and insurance 5,333 25,673
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Net cash provided by financing activities 3,273,328 2,892,171
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Net increase(decrease) in cash and cash equivalents 8,845,401 (4,971,328)
Cash and cash equivalents -- beginning 3,683,223 10,673,339
============ ============
Cash and cash equivalents -- end $ 12,528,624 $ 5,702,011
============ ============
See notes to unaudited consolidated financial statements
Page 3
FIRST SAVINGS BANCORP OF LITTLE FALLS INC.
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AND SUBSIDIARY
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CONSOLIDATED STATEMENTS OF CASH FLOWS
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(unaudited)
Three Months Ended March 31,
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1998 1997
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Supplemental disclosures of cash flows information:
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Cash paid during the period for:
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Interest $2,063,505 $2,002,396
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Income taxes $ 64,515 $ 0
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Supplemental disclosure of noncash activities:
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Increase(decrease) in unrealized gain on securities,
net of deferred income taxes $ 2,626 $ 26,349
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Loans transferred to real estate owned $ 226,262 --
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Loans originated to facilitate the sale of
real estate owned -- $ 161,000
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Common stock dividend declared but not yet paid $ 220,050 --
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See notes to unaudited consolidated financial statements
Page 4
First Savings Bancorp of Little Falls, Inc.
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Notes To Consolidated Financial Statements
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The consolidated financial statements include the accounts of First
Savings Bancorp of Little Falls, Inc. (the "Company") and its wholly owned
subsidiary, First Savings Bank of Little Falls, FSB (the "Savings Bank") and the
Savings Bank's wholly owned subsidiaries, The First Service Corporation of
Little Falls and Redeem, Inc. All significant intercompany balances and
transactions have been eliminated in consolidation.
These consolidated financial statements were prepared in accordance with
instructions for Form 10-QSB and therefore, do not include all disclosures
necessary for a complete presentation of the statements of financial condition,
statements of income, and statements of cash flows 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 and all such adjustments are of a normal
recurring nature. The results of operations for the three months ended March 31,
1998 are not necessarily indicative of the results that may be expected for the
fiscal year ending December 31, 1998 or any other interim period.
These statements should be read in conjunction with the consolidated
statements and related notes which are incorporated by reference in the
Company's Annual Report on Form 10-KSB for the year ended December 31, 1997.
Effective January 1, 1998, the Company adopted Financial Accounting
Standards Board Statement of Financial Accounting Standards ("Statement") No.
130, "Reporting Comprehensive Income". Statement No. 130 requires the reporting
of comprehensive income in addition to net income from operations. Comprehensive
income is a more inclusive financial reporting methodology that includes
disclosure of certain financial information that historically has not been
recognized in the calculation of net income. As required, the provisions of
Statement No. 130 have been retroactively applied to previously reported
periods. The application of Statement No. 130 had no effect on the Company's
consolidated financial condition or operations.
Page 5
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
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AND RESULTS OF OPERATIONS
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FINANCIAL CONDITION AT MARCH 31, 1998
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Total assets of the Company increased $3.7 million or 2% from $178.1
million at December 31, 1997 to $181.9 million at March 31, 1998 primarily due
to a $9.1 million increase in interest bearing demand deposits in other banks,
offset by a $1.9 million decrease in loans receivable, $178,000 decrease in
securities available for sale, $538,000 decrease in net mortgage-backed
securities held to maturity and a $2.8 million net decrease in investment
securities held to maturity. In view of the Company's decreased loan demand for
the quarter, the Company increased its interest bearing demand deposits in other
banks. The increase was funded primarily from repayments of mortgage-backed
securities held to maturity, investment securities held to maturity that were
called, repayments from loans receivable and a $3.3 million increase in
deposits. The Bank as of March 31, 1998 had $7.3 million of outstanding loan
commitments that will be funded in the second quarter of 1998 with outstanding
balances of interest bearing demand deposits in other banks.
Deposits increased $3.3 million or 2% from $166.8 million at December 31,
1997 to $170.1 million at March 31, 1998. The increase resulted primarily from
the growth of regular savings, Now accounts and the Company's response to the
general increase in rates offered by other bank's in the market area. The
Company did not offer promotional rates on deposits during this quarter.
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1998
- ---------------------------------------------------------------
Net income for the three months ended March 31, 1998 increased $78,000 or
52% from $149,000 for the three month period ended March 31, 1997 to $227,000
for three month period ended March 31, 1998. This increase was primarily due to
a $153,000 increase in net interest income, offset by a $78,000 increase in
income taxes expense.
For the three months ended March 31, 1998, net interest income increased
$153,000 from $1.02 million for the same period in 1997 to $1.18 million in
1998. The primary reason for the increase was that the average balances of the
securities and loan portfolios increased $12.8 million due to asset growth from
the origination of whole loans and the purchase of securities. During the three
months ended March 31, 1998, the Company's interest rate spread and net interest
margin increased to 2.69% and 2.75%, respectively, compared to 2.60% and 2.59%,
respectively for the same period of 1997. The higher spread and margin are
primarily due to a higher yield on earning assets exceeding the higher cost of
funds in the first quarter of 1998. The increased interest rate spread and net
interest margin were augmented by an increase in net interest-earning assets.
Page 6
Non-interest income increased $11,000 or 36% from $32,000 for the three
month period ended March 31, 1997 to $43,000 for the three month period ended
March 31, 1998. The increase was primarily the result of increases in the
collection of mortgage late charges and DDA fees.
Non-interest expense increased marginally to $803,000 for the three month
period ended March 31, 1997 from $795,000 for the three month period ended March
31, 1998. Loss on foreclosed real estate increased $13,000 from $18,000 for the
three month period ended March 31, 1997 to $31,000 for the three month period
ended March 31, 1998. The primary reason for the increase was REO rental income
of $14,000 for the three month period ended March 31, 1997 compared to no rental
income for the 1998 period. Advertising and promotion expense decreased $17,000
from $28,000 for the three month period ended March 31, 1997 to $12,000 for the
1998 period because of advertising and promotion expenses for the "Grand
Reopening" of the Little Ferry Branch during the 1997 period were not
reoccurring for the 1998 period.
Income taxes were $165,000 and $87,000 for the three months ended March
31, 1998 and 1997, respectively. The increase resulted from increased pre-tax
earnings and a additional tax expense of $23,000 during the three month period
ended March 31, 1998 for the 1997 tax period. The effective tax rate for the
three month periods ended March 31, 1998 and 1997, exclusive of the additional
tax expense noted above, was 36% and 37% respectively.
Asset Quality
The following schedule sets forth certain information regarding the Bank's
non-performing as of March 31, 1998, and as of December 31, 1997.
March 31, December 31,
1998 1997
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Non-accrual loans ............................ $1,179 $2,601
Renegotiated loans ........................... 406 406
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Total non-accural and
renegotiated loans ......................... 1,585 3,007
Other real estate owned ...................... 1,674 1,640
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Total ..................................... $3,259 $4,647
========================
At March 31, 1998, non-accrual loans decreased $1.4 million from December 31,
1997. Residential loans totaling $595,000 became current, a $100,000 payment was
made on a mult-family loan, four loans totaling $479,000 were paid-off and a
loan of $226,000 was transferred to other real estate owned.
Page 7
The following table represents a analysis of the allowance for loan losses:
Three months ended March 31, Year ended December 31,
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1998 1997 1997
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Balance - beginning $ 596,230 $ 523,715 $ 523,715
Provision charged 25,000 25,000 101,174
Loans charged off (44,182) (23,497) (37,374)
Recoveries 1,157 -0- 8,715
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Balance-ending $ 578,205 $ 525,218 $ 596,230
======================== =============
Net loans charged off
as a percent of average (1) .17% .10% .03%
Allowance as a percent of
Total loans 56% .56% .56%
Non performing loans 36.48% 34.34% 19.83%
(1)Annualized
LIQUIDITY AND CAPITAL RESOURCES
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The Savings Bank is required to maintain minimum levels of liquid assets,
as defined by the Office Of Thrift Supervision regulations. This requirement,
which may be varied from time to time depending upon economic conditions and
deposit flows, is based upon a percentage of deposits and short-term borrowings.
The required minimum ratio is 4%. The Savings Bank's liquidity ratio averaged
39.9% during first quarter of 1998.
The Savings Bank anticipates that it will have sufficient funds available
to meet its current loan commitments and normal savings withdrawals. At March
31, 1998, the Savings Bank had outstanding loan commitments of $7.3 million. In
addition, it had $94.9 million in certificates of deposits scheduled to mature
within one year of March 31, 1998. Based upon historical experience, management
believes that a substantial portion of such deposits will remain with the
Savings Bank.
As of March 31, 1998, the Company had regulatory capital that was in
excess of applicable limits. The Company is required under certain federal
regulations to maintain tangible capital equal to at least 1.5% of its tangible
assets, core capital equal to at least 3.00% of adjusted tangible assets and
risk-based capital equal to at least 8.00% of risk-weighted assets. At March 31,
1998, the Savings Bank had tangible capital equal to 5.08% of adjusted total
assets, core capital equal to 5.08% of adjusted total assets and total capital
equal to 12.69% of risk-weighted assets.
Page 8
FIRST SAVINGS BANCORP OF LITTLE FALLS, INC.
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PART II
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Item 1. Legal Proceedings
The Company and the Savings Bank are not engaged in any legal
proceedings of a material nature at the present time. From time to
time, the Savings Bank is a party to legal proceedings wherein it
enforces its security interest in loans.
Item 2. Changes in Securities
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 shareholders of the Company was held on April 21,
1998, and the following items were acted upon:
Election of Directors Emanuel Kontokosta and Frederick Tedeschi for a
term of three years ending in 2001. Election of Director Nikos
Mouyiaris for a term of one year ending in 1999.
Emanuel Kontokosta, Frederick Tedeschi, and Nikos Mouyiaris were
elected to the term as indicated by the following vote:
For Withheld
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Number Percentage Number Percentage
of of of of
Votes Shares Votes Shares
----- ------ ----- ------
Emanuel Kontokosta 418,975 95.2% -0- -0-
Frederick Tedeschi 418,975 95.2% -0- -0-
Nikos Mouyiaris 418,975 95.2% -0- -0-
Ratification of the appointment of Radics & Co., LLC as independent
auditors for the fiscal year ending December 31, 1998. Radics & Co.,
LLC was ratified as the Company's auditors by the following vote:
For Against Abstain
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Number Percentage Number Percentage Number Percentage
of of of of of of
Votes Shares Votes Shares Votes Shares
----- ------ ----- ------- ----- -------
418,975 95.2% -0- -0- -0- -0-
Item 5. Not Applicable
Item 6. Exhibits and Reports on Form 8-K
(a)Exhibits
Exhibit 27 Financial Data Schedule(electronic filing only)
b)Reports on Form 8-K
Not Applicable
Page 9
SIGNATURES
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Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST SAVINGS BANCORP OF LITTLE FALLS INC.
(Registrant)
Date: May 12, 1998 /s/Haralambos S. Kostakopoulos
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Haralambos S. Kostakopoulos
President
Chief Executive Officer
Date: May 12, 1998 /s/Brian McCourt
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Brian McCourt
Vice President
Treasurer
Page 10