UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(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, 1997
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-25172
FIRST BELL BANCORP, INC.
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(Exact name of registrant as specified in its charter)
DELAWARE 251752651
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(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
300 DELAWARE AVENUE, SUITE 1704, WILMINGTON, DELAWARE 19801
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(Address of principal executive offices) (Zip Code)
(302) 427-7883
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. [X] Yes [_] No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 6,802,750 shares of
common stock, par value $.01 per share, were outstanding as of March 31, 1997.
FIRST BELL BANCORP, INC.
FORM 10-Q
INDEX
PAGE
----
PART I FINANCIAL INFORMATION
Item 1 Consolidated Balance Sheets March 31, 1997 (unaudited)
and December 31, 1996 (audited)..................................................2
Consolidated Statements of Income
Three Months Ended March 31, 1997
and 1996, (unaudited)............................................................3
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1997 and 1996, (unaudited)..........................4
Consolidated Statements of Changes in
Stockholders' Equity for the Three Months Ended
March 31, 1997 and 1996, (unaudited).............................................5
Notes to Unaudited Consolidated Financial Statements.............................6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations....................................8
PART II OTHER INFORMATION
Item 1 Legal Proceedings...............................................................10
Item 2 Changes in Securities...........................................................10
Item 3 Defaults Upon Senior Securities.................................................10
Item 4 Submission of Matters to a Vote of Security Holders.............................11
Item 5 Other Information...............................................................11
Item 6 Exhibits and Reports on Form 8-K................................................11
SIGNATURES
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements
1
FIRST BELL BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
(In Thousands)
MARCH 31, DECEMBER 31
1997 1996
----------- -----------
ASSETS: (unaudited) (audited)
Cash:
Cash on-hand.................................................................. $ 919 $ 980
Non-interest-bearing deposits................................................. 1,335 1,554
Interest-bearing deposits..................................................... 13,098 23,872
-------- -------
Total cash........................................................... 15,352 26,406
Mortgage-backed securities-available for sale, at fair value (cost of $58,673
and $0 at March 31, 1997 and December 31, 1996, respectively)........................ 59,656 --
Federal funds sold..................................................................... 27,700 72,875
Investment securities held to maturity - at cost (fair value of $15,233 and
$15,429 at March 31, 1997 and December 31, 1996, respectively)................ 14,966 14,964
Investment securities available for sale, at fair value................................ 25,890 --
Conventional mortgage loans - net of allowance for loan losses of $685 and $665
at March 31, 1997 and December 31, 1996, respectively......................... 540,575 529,866
Conventional mortgage loans, available for sale........................................ 10,065 --
Other loans, net....................................................................... 964 949
Real estate owned...................................................................... 223 229
Properties and equipment, net.......................................................... 3,642 3,692
Federal Home Loan Bank stock, at cost.................................................. 6,000 3,999
Accrued interest receivable............................................................ 3,537 2,758
Other assets........................................................................... 441 445
-------- -------
Total assets.................................................................. $709,011 $656,183
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits:
Passbook, club and other accounts............................................. $ 69,165 $ 66,486
Money market and NOW accounts................................................. 46,725 44,661
Certificate accounts.......................................................... 381,309 372,794
-------- -------
Total deposits............................................................ 497,199 483,941
Borrowings............................................................................. 120,000 70,000
Advances by borrowers for taxes and insurance.......................................... 11,599 10,822
Accrued interest on deposits........................................................... 2,266 503
Accrued interest on borrowings......................................................... 159 191
Accrued income taxes................................................................... 1,120 81
Deferred income tax liability.......................................................... 1,290 1,244
Dividend payable on common stock....................................................... 618 713
Other liabilities...................................................................... 2,465 2,255
-------- -------
Total liabilities............................................................. 636,716 569,750
Stockholders' equity:
Preferred stock, ($0.01 par value; 2,000,000 shares authorized;
no shares issued or outstanding)..................................... -- --
Common stock ($0.01 par value; 20,000,000 shares authorized;
8,596,250 issued; 6,802,750 outstanding at March 31, 1997
7,758,150 outstanding at December 31, 1996........................... 86 86
Paid-in capital............................................................... 61,124 61,063
Unearned ESOP shares (621,915 and 629,622 shares at March 31, 1997
and December 31, 1996, respectively)................................. (4,394) (4,454)
Unearned MRP shares (343,850 shares at March 31, 1997 and
December 31, 1996, respectively)..................................... (4,792) (4,792)
Treasury stock (1,793,500 shares and 838,100 shares at March 31,
1997 and December 31, 1996, respectively) ........................... (27,221) (11,684)
Unrealized gain or loss, net of taxes......................................... (100) --
Retained earnings............................................................. 47,592 46,214
-------- -------
Total Stockholders' Equity............................................................. 72,295 86,433
Total Liabilities and Stockholders' Equity............................................. $709,011 $656,183
======== ========
2
FIRST BELL BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME
MARCH 31, 1997
(In thousands, except per share amounts)
(Unaudited)
THREE MONTHS THREE MONTHS
ENDED ENDED
MARCH 31, 1997 MARCH 31, 1996
-------------- --------------
Interest income:
Conventional mortgage loans $ 9,966 $ 8,226
Interest-bearing deposits 268 285
Mortgage-backed securities 772 --
Federal funds sold 339 682
Investment securities 635 338
Other loans 17 19
Federal Home Loan Bank stock 76 48
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Total interest and dividend income 12,073 9,598
Interest expense on deposits 6,422 4,932
Interest expense on borrowings 1,217 --
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Total interest expense 7,639 4,932
Net interest income 4,434 4,666
Provision for loan losses 20 30
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Net interest income after provision
for loan losses 4,414 4,636
Other income:
Loan fees and service charges 127 61
Gains on sales of loans and investment -- --
Other income 3 3
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Total other income 130 64
Other general and administrative expense:
Compensation, payroll taxes and fringe benefits 685 681
Federal insurance premiums 18 219
Office occupancy expense, excluding depreciation 130 114
Depreciation 73 52
Computer services 55 50
Other expenses 211 182
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Total general and administrative expenses 1,172 1,298
Net income before taxes 3,372 3,402
Provision for income taxes:
Current:
Federal 1,008 912
State 258 228
Deferred expense (credit) 110 151
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Total provision for income taxes 1,376 1,291
Net income $ 1,996 $ 2,111
======= =======
Primary earnings per share $0.29 $0.27
----- -----
Fully diluted earnings per share $0.28 $0.27
----- -----
Weighted average shares outstanding 7,612 7,763
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3
FIRST BELL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
MARCH 31, 1997
(In thousands)
(unaudited)
Number
Common Additional Unearned
Stock Common Paid-in ESOP Treasury
Shares Stock Capital Shares Stock
-------------------------------------------------------------
Balance at December 31, 1995 7,932 $ 86 $83,524 $(6,636) --
Purchase of treasury stock (430) (5,996)
Allocation of ESOP shares 6 21 62
Dividend on common stock ($0.05) --
Net income --
----- ----- ------- -------- ----------
Balance at March 31, 1996 7,508 $ 86 $83,545 $(6,574) $ (5,996)
===== ===== ======= ======== ==========
Balance at December 31, 1996
Purchase of treasury stock
Allocation of ESOP 6,784 $ 86 $61,063 $(4,454) $(11,684)
Dividend on common stock ($0.10) (956) (15,537)
Change in unrealized gain or 8 61 60
loss on securities available for sale,
net of taxes
Net income
Balance at March 31, 1997
----- ----- ------- -------- ---------
5,836 $ 86 $61,124 $(4,394) $(27,221)
===== ===== ======= ======== =========
Unrealized
MRP Gain/Loss Retained
Stock Net of Taxes Earnings Total
--------------------------------------------------------
Balance at December 31, 1995 -- -- $41,508 $118,482
Purchase of treasury stock (5,996)
Allocation of ESOP shares 83
Dividend on common stock ($0.05) (408) (408)
Net income 2,111 2,111
-------- ------ ------- --------
Balance at March 31, 1996 -- -- $43,211 $114,272
======= ========
Balance at December 31, 1996
Purchase of treasury stock
Allocation of ESOP $(4,792) $46,214 $86,433
Dividend on common stock ($0.10) (15,537)
Change in unrealized gain or 121
loss on securities available for sale, (618) (618)
net of taxes --
Net income
Balance at March 31, 1997 (100) (100)
1,996 1,996
-------- ------ ------- -------
$(4,792) $(100) $47,592 $72,295
======== ====== ======= =======
4
FIRST BELL BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In Thousands)
(Unaudited)
Three Months Ended Three Months Ended
March 31, 1997 March 31, 1996
-------------- --------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,996 $ 2,111
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation 73 51
Deferred income taxes 109 152
Amortization of premiums and accretion of discounts 66 (3)
Provision for loan losses 20 30
Compensation expense-allocation of ESOP shares 121 83
Loss on sale of real estate owned 5 --
Dividend payable -- (408)
Increase or decrease in assets and liabilities
Accrued interest receivable (779) (54)
Accrued interest on deposits 1,763 1,307
Accrued interest on borrowings (32) --
Accrued income taxes 1,039 913
Other assets 4 (325)
Other liabilities 211 1,323
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Net cash provided by operating activities 4,596 5,180
----- -----
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities, available for sale (25,947) --
Purchase of mortgage-backed securities, available for sale (61,926) --
Maturity of Federal Funds 45,175 5,475
Principal paydowns on mortgage-backed securities, available for sale 2,095 --
Net increase in conventional mortgage loans (20,828) (24,928)
Net increase in other loans (15) (73)
Purchase of Federal Home Loan Bank stock (2,001) (990)
Net proceeds from sale of real estate owned 35 --
Purchase of premises and equipment (23) (8)
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Net cash used in investing activities (63,435) (20,524)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in demand deposits, NOW accounts and savings
accounts 4,743 5,498
Net increase in certificate accounts 8,515 13,082
Advances by borrowers for taxes and insurance 777 3,693
Net increase in borrowings 50,000 --
Dividend paid (713) --
Purchase of treasury stock (15,537) (5,996)
------- ------
Net cash provided by financing activities 47,785 16,277
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NET INCREASE IN CASH AND CASH EQUIVALENTS (11,054) 933
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 26,406 23,722
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $15,352 $24,655
======= =======
SUPPLEMENTAL DISCLOSURES:
Cash paid for:
Interest on deposits and advances by borrowers for
taxes and insurance $ 4,659 $ 3,625
Income taxes 266 181
Transfer from conventional loans to real estate acquired
through foreclosure 29 --
Increase in additional paid-in capital-ESOP allocation 61 21
Transfers from conventional mortgage loans to conventional
mortgage loans, available for sale 10,065 --
5
FIRST BELL BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FOR THREE MONTHS ENDED MARCH 31, 1997 AND 1996
1. PRINCIPLES OF CONSOLIDATION
---------------------------
The consolidated financial statements include the accounts of First Bell
Bancorp, Inc. ("First Bell" or the "Company") and its wholly-owned subsidiary
Bell Federal Savings and Loan Association of Bellevue (the "Association"). All
significant intercompany transactions have been eliminated in consolidation. The
investment in Bell Federal on First Bell's financial statements is carried at
the parent company's equity in the underlying net assets.
The consolidated balance sheet as of March 31, 1997 and related
consolidated statements of income, cash flows and changes in stockholders'
equity for the three months ended March 31, 1997 and 1996 are unaudited. In the
opinion of management, all adjustments necessary for a fair presentation of such
financial statements have been included. Such adjustments consisted of normal
recurring items. Interim results are not necessarily indicative of results for a
full year.
The financial statements and notes are presented as permitted by Form 10-Q.
The interim statements are unaudited and should be read in conjunction with the
financial statements and notes thereto contained in First Bell's annual report
for the fiscal year ended December 31, 1996.
Item 2. MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS.
Comparison of Financial Condition at March 31, 1996 and December 31, 1995.
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Assets. Total assets increased by $52.8 million, or 8.1% to $709.0 million at
March 31, 1997, from $656.2 million at December 31, 1996. The increase in total
assets is attributable to increases in mortgage-backed securities, investment
securities, conventional mortgage loans, Federal Home Loan Bank stock, and
accrued interest receivable. Offsetting these increases were decreases in
interest-bearing deposits and federal funds sold. Mortgage-backed securities
increased by $59.7 million at March 31, 1997 due to the purchase of $61.9
million of adjustable rate mortgage-backed securities in January, 1997. The
Company had no mortgage-backed securities at December 31, 1996. Investment
securities increased by $25.9 million or, 173.0% to $40.9 million at March 31,
1997 from $15.0 million at December 31, 1996 due to the purchase of $25.9
million of adjustable rate collateralized mortgage obligations ("CMO's").
Conventional mortgage loans increased by $20.7 million or 3.9% to $550.6 million
at March 31, 1997 from $529.9 million at December 31, 1996 as the result of loan
demand and competitive rates being offered by the Company. Included in this
increase is $10.1 million of loans which have been reclassified as available for
sale. These loans have been committed to be sold to the Federal national
Mortgage Association in the second quarter of 1997. The proceeds from the sale
will
6
be used to purchase additional adjustable rate mortgage-backed securities.
Federal Home Loan Bank ("FHLB") stock increased to $6.0 million at March 31,
1997 from $4.0 million at December 31, 1996. This $2.0 million or 50.0% increase
was the result of the Association being required by the FHLB to increase the
amount of stock held due to the increase in borrowings and the increase in the
conventional mortgage loan portfolio. To fund the above increases,
interest-bearing deposits decreased by $10.8 million, or 45.1%, to $13.1 million
at March 31, 1997 from $23.9 million at December 31, 1996 and federal funds sold
were decreased by $45.2 million, or 62.0% to $27.7 million at March 31, 1997
from $72.9 million at December 31, 1996. In addition, the increase in deposits
and borrowings were also used to help in the funding of the above mentioned
increases. Accrued interest receivable increased by $779,000 or 28.2% to $3.5
million at March 31, 1997 from $2.8 million at December 31, 1996 as the result
of the increases the investment in mortgage-backed securities, investment
securities and conventional mortgage loans.
Liabilities. Total liabilities at March 31, 1997 were $636.7 million as
compared to $569.8 million at December 31, 1996. This $66.9 million, or 11.8%
increase, was the result of increases in deposits, borrowings, advances by
borrowers for taxes and insurance, accrued interest on deposits, and accrued
income taxes. Total deposits increased by $13.3 million, or 2.7% to $497.2
million at March 31, 1997 from $483.9 million at December 31, 1996. This
increase was the result of the favorable rates offered by the Company on its
saving products. Borrowings increased by $50.0 million, or 71.4% to $120.0
million at March 31, 1997 from $70.0 million at December 31, 1996. This was the
result of the Company undertaking a leverage program in which adjustable rate
mortgage-backed securities and CMO's were purchased with the proceeds from the
FHLB borrowings. Advances by borrowers for taxes and insurance was $11.6 million
at March 31, 1997 as compared to $10.8 million at December 31, 1996. This
$777,000, or 7.2% increase was due to the increase in conventional mortgage
loans and the collection of such advances for future payments. Accrued interest
on deposits increased $1.8 million to $2.3 million at March 31, 1997 from
$503,000 at December 31, 1996. This increase is the result of interest on
certificate accounts being accrued throughout the year and then being paid in
December. Accrued income taxes increased by $1.0 million due to the timing of
federal income tax estimate payments.
Capital. Stockholders' equity decreased by $14.1 million or 16.4% to $72.3
million at March 31, 1997 from $86.4 million at December 31, 1996. The decrease
was the result of the purchase of $15.5 million of treasury stock and a dividend
of $618,000 declared for stockholders of record on March 31, 1997. The Company
purchased 955,400 shares of common stock at an average price per share of $16.26
to be held in Treasury. The treasury shares were purchased to improve the return
on equity and shareholder value. In addition, the Company had committed as of
March 31, 1997 to purchase an additional 292,125 shares of treasury stock in
April of 1997. Offsetting these decreases was net income of $2.0 million.
Liquidity and Capital Resources. The Company's primary sources of funds are
deposits, borrowings, and principal and interest payments on loans,
mortgage-backed securities and investments. While maturities and scheduled
amortization of loans are predictable sources of funds, deposit flows and
mortgage prepayments are strongly influenced by changes in general interest
rates, economic conditions, and competition.
7
The primary investing activities of the Company for the three months ended
March 31, 1997 was the origination of $34.3 million of conventional mortgage
loans and the purchase of $61.9 million of mortgage-backed securities and $25.9
million of CMO's. The most significant source of funds for the three months
ended March 31, 1997 were the increase in deposits of $13.3 million, the $50.0
million increase in borrowings and the $15.6 million in principal repayments and
prepayments of conventional mortgage loans and mortgage-backed securities.
The Association is required to maintain an average daily balance of liquid
assets and short term liquid assets as a percentage of net withdrawable deposit
accounts plus short-term borrowings as defined by Office of Thrift Supervision
regulations. The minimum required liquidity and short term liquidity ratios are
currently 5.0% and 1.0% respectively. The Association's average liquidity and
average short-term liquidity ratios were 14.9% and 13.8% at March 31, 1997. The
Association's most liquid assets are cash, federal funds sold and short-term
investments. The levels of the Association's liquid assets are dependent on the
Association's operating, financing, lending and investing activities during any
given period. At March 31, 1997, assets qualifying for short term liquidity,
including cash and short term investments, totalled $53.1 million.
At March 31, 1997, the Association's capital exceeded all of the capital
requirements of the Office of Thrift Supervision. The Association's tangible,
core and risk-based capital ratios were 9.2%, 9.2% and 21.4%, respectively. The
Association is considered a "well capitalized" institution under the prompt
corrective action regulations of the OTS.
Comparison of Results of Operations for the Three Months ended March 31, 1997
- -----------------------------------------------------------------------------
and 1996.
- --------
General. Net income for the three months ended March 31, 1997 decreased by
$115,000 or 5.4% to $2.0 million from $2.1 million for the three months ended
March 31, 1996. This decrease was the result of net interest income decreasing
by $232,000 and taxes increasing by $85,000. Offsetting the reduction to net
income was an increase of $66,000 in other income and a decrease in other
expenses of $126,000.
Interest Income. Interest income for the three months ended March 31, 1997
increased by $2.5 million or 25.8% to $12.1 million from $9.6 million for the
three months ended March 31, 1996. This increase was the result of increases in
interest income on conventional mortgage loans, mortgage-backed securities,
investment securities, and an increase in dividends on FHLB stock. Offsetting
these increases was a decrease in interest earned on federal funds sold.
Interest income on conventional mortgage loans was $10.0 million for the three
months ended at March 31, 1997 as compared to $8.2 million for the three months
ended March 31, 1996. The $1.8 million or 21.2% increase was the result of the
average balance on conventional mortgage loans increasing by $113.7 million or
26.6% to $541.4 million at March 31, 1997 from $427.7 million at March 31, 1996.
Average balances are based on month end balances for the respective periods.
Reducing the impact of the increase in average conventional mortgage loan
balance was a 33 basis point decline in the average rate earned on conventional
mortgage loans from March 31, 1996 to March 31, 1997. Interest on
mortgage-backed securities for the three months ended March 31, 1997 was
$772,000 as compared to zero for the three months ended March 31, 1996. This
increase was the result of the purchase of $61.9 million of adjustable rate
mortgage-backed securities. Interest on investment securities increased by
$297,000 or 87.9% to $635,000 for the three months ended March 31, 1997 from
$338,000 for the three months
8
ended March 31, 1996. This increase was the result of the purchase of $25.9
million in CMO's during the first quarter of 1997. Dividends on FHLB stock
increased by $28,000 or 58.3% to $76,000 for the three months ended March 31,
1997 from $48,000 for the comparable 1996 period. This was the result of the
average balance in FHLB stock increasing by $2.0 million or 59.7% to $5.3
million at March 31, 1997 from $3.3 million at March 31, 1996. Offsetting these
increases was a decrease in federal funds sold of $343,000 or 50.3%. This
decrease was the result of the average balance in federal funds sold decreasing
by $23.6 million or 48.4% to $25.2 million at March 31, 1997 from $48.8 million
at March 31, 1996.
Interest Expense. Interest expense increased by $2.7 million or 54.9% to
$7.6 million for the three months ended March 31, 1997 as compared to $4.9
million for the related 1996 period. This increase was the result of increases
in interest expense on both deposits and borrowings for the three months ended
March 31, 1997 as compared to the three months ended March 31, 1996. Interest
expense on deposits rose $1.5 million or 30.2% to $6.4 million for the three
months ended March 31, 1997 from $4.9 million for the comparable 1996 period.
This increase was the result of the average balance on deposits and advances by
borrowers for taxes and insurance increasing by $97.4 million or 23.8% to $507.4
million at March 31, 1997 from $410.0 million at March 31, 1996. Also
contributing to the increase in interest expense on deposits was a 25 basis
points increase in the average rate earned by depositors. The average rate rose
to 5.06% for the three months ended March 31, 1997 from 4.81% for the three
months ended March 31, 1996. Interest expense on borrowing was $1.2 million for
the three months ended March 31, 1997. There were no borrowings for the
comparable 1996 period.
Net Interest Income. Net interest income decreased by $232,000 or 5.0% to
$4.4 million for the three months ended March 31, 1997 from $4.7 million for the
three months ended March 31, 1996. This decrease was the result of interest and
dividend income increasing by $2.5 million while interest expense increased $2.7
million.
Provision for Loan Losses. A $20,000 provision for loan losses was recorded
for the three months ended March 31, 1997 as compared to $30,000 for the three
months ended March 31, 1996. The additional provision was recorded as the result
of the continued growth in the conventional mortgage loans portfolio. At March
31, 1997, non-performing assets were $635,000 compared to $629,000 at December
31, 1996. At March 31, 1997, the allowance for loan losses equalled 107.9% of
total non-performing assets, as compared to 105.7% as of December 31, 1996. For
the three months ended March 31, 1997 and 1996, no loans were charged off.
Management believes that the current level of loan loss reserve is adequate to
cover losses inherent in the portfolio as of such date. There can be no
assurance, however, that the Company will not sustain losses in future periods
which could be substantial in relation to the size of the allowance at March 31,
1997.
Other Income. Other income increased $66,000 or 103.1% to $130,000 for the
three months ended March 31, 1997 from $64,000 for the comparable 1996 period.
This increase was the result of loan fees and service charges increasing by
$66,000.
General and Administrative Expenses. General and administrative expenses
decreased by $126,000 or 9.7% to $1.2 million for the three months ended March
31, 1997 from $1.3 million for the three months ended March 31, 1996. The
decrease is due to a decrease in federal insurance premiums offset by increases
in office occupancy, depreciation and other expenses.
9
Federal insurance premiums decreased by $201,000 or 91.8% to $18,000 for the
three months ended March 31, 1997 from $219,000 for the three months ended March
31, 1996. This decrease was the result of the Saving Association Insurance Fund
("SAIF") reducing the premiums for deposit insurance in 1997 to 6.5 basis points
per $100 of deposits from 23 basis points per $100 of deposits charged during
the first quarter of 1996. In addition, there was $57,000 credit received in the
first quarter of 1997 for an overcharge of the premium paid during the fourth
quarter of 1996. Office occupancy expense expense was $130,000 for the three
months ended March 31, 1997 compared to $114,000 for the three months ended
March 31, 1996. This $16,000 or 14.0% increase was due to rent paid on our
downtown office. The downtown office was moved to a new location in 1996. The
previous office was owned by the Company. Depreciation increased $21,000 or
40.4% for the three months ended March 31, 1997 to $73,000 from $52,000 for the
comparable 1996 period. This increase was the result of a full year of
depreciation being charged in 1997 for the new computer system installed in
1996. One half year of depreciation was charged in 1996. Other expenses were
$211,000 for the three months ended March 31, 1997 compared to $182,000 for the
three months ended March 31, 1996. This $29,000 or 15.9% increase is due to
additional expenses associated with being a public company.
Income Taxes. Even though net income before taxes was slightly less for the
three months ended March 31, 1997 compared to the three months ended March 31,
1996, income taxes increased by $85,000 or 6.6%. This is the result of the
Company being in a higher tax bracket in 1997. Overall, the annualized effective
tax rate for the periods ended March 31, 1997 and 1996 were 40.8% and 37.9%,
respectively.
New Accounting Pronouncement. The Financial Accounting Standard Board
("FASB") recently issued FASB 128, Earnings per Share, and FASB 129, Disclosure
of Information about Capital Structure, which are effective for financial
statements for both interim and annual periods ending after December 15, 1997.
FASB 128 establishes standards for computing and presenting earnings per share
(EPS). It simplifies the standards for computing EPS and makes them comparable
to international EPS. It replaces the presentation of primary EPS with a
presentation of basic EPS. Basic and diluted EPS would have been $.30 and $.29,
respectively, as of March 31, 1997 and $.27 for basic and diluted at March 31,
1996. In reviewing FASB 129, management anticipates that the effect on the
financial statements of the adoption of this standard will not be material.
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
There are various claims and lawsuits in which the Company is
periodically involved incidental to the Company's business, which in
the aggregate involve amounts which are believed by management to be
immaterial to the financial condition and results of operations of the
Company.
ITEM 2. CHANGES IN SECURITIES.
Not applicable.
10
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) The following exhibits are filed as part of this report.
Exhibit 3.1 - Certificate of Incorporation of First Bell
Bancorp, Inc.*
Exhibit 3.2 - Bylaws of First Bell Bancorp, Inc.*
Exhibit 4.0 - Stock Certificate of First Bell Bancorp, Inc.*
Exhibit 11 - Computation of Earnings Per Share (filed
herewith)
Exhibit 27 - Financial Data Schedule (filed herewith)
(b) Reports on Form 8-K
None
- -----------------------
* Incorporated herein by reference into this document from the Exhibits to
Form S-1, Registration Statement, filed on November 9, 1994, as amended,
Registration No. 33-86160.
11
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
FIRST BELL BANCORP, INC.
(Registrant)
Date: May 14, 1997 /s/ Albert H. Eckert, II
--------------------------- ----------------------------------------
Albert H. Eckert, II
President and Chief Executive Officer
Date: May 14, 1997 /s/ Jeffrey M. Hinds
--------------------------- ----------------------------------------
Jeffrey M. Hinds
Executive Vice President and
Chief Financial Officer (Principal
Accounting Officer)