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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(Mark One)
[ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 2000
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[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____________ to _________________
Commission file number: 0-21297
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Foundation Bancorp, Inc.
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(Exact name of small business issuer as specified in its charter)
Ohio 31-1465239
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
25 Garfield Place, Cincinnati, Ohio 45202
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(Address of principal executive offices)
(513) 721-0120
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(Issuer's telephone number)
N/A
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(Former name, former address and former fiscal year,
if changed since last report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13 or 15(d) of the Exchange Act after the distribution of
securities under a plan confirmed by a court. Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's
classes of common equity, as of the latest practicable date:
Common shares, no par value, outstanding at September 30, 2000: 462,875
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [ X ]
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FOUNDATION BANCORP, INC.
FORM 1O-QSB
QUARTER ENDED SEPTEMBER 30, 2000
Part l - Financial Information
Item 1 - Financial Statements
Interim financial information required by Regulation 210.10-01 of
Regulation S-X is included in this Form 10-QSB as referenced below:
Consolidated Statements of Financial Condition....................3
Consolidated Statements of Income.................................4
Consolidated Statement of Cash Flows..............................5
Notes to Consolidated Financial Statements........................6
Item 2 - Management's Discussion and Analysis of
Financial Condition and Results of Operations........................8
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FOUNDATION BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, June 30,
2000 2000
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(Unaudited)
ASSETS
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Cash and due from banks ........................... $ 237,116 $ 13,279
Interest-bearing deposits in other financial
institutions .................................... 374,906 360,262
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Cash and cash equivalents ................... 612,022 373,541
Investment securities-at amortized cost
(approximate market value of $5,152,781 and
$5,097,605 at September 30, 2000 and June 30,
2000, respectively) ............................. 5,250,000 5,250,000
Mortgage-backed securities-at cost
(approximate market value of $3,965,592 and
$4,152,316 at September 30, 2000 and June 30,
2000, respectively) ............................. 4,146,952 4,355,022
Loans receivable-net .............................. 22,433,272 22,441,795
Office premises and equipment-at depreciated cost.. 277,125 281,405
Federal Home Loan Bank stock-at cost .............. 375,700 368,800
Accrued interest receivable on loans .............. 112,045 100,882
Accrued interest receivable on mortgage-backed
securities ...................................... 28,759 29,841
Accrued interest receivable on investments and
interest-bearing deposits ....................... 94,205 73,151
Prepaid expenses and other assets ................. 64,117 107,459
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TOTAL ASSETS ................................ $33,394,197 $33,381,896
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LIABILITIES AND SHAREHOLDERS' EQUITY
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Deposits .......................................... $25,520,350 $25,505,422
Advances from the Federal Home Loan Bank .......... 497,221 518,652
Advances by borrowers for taxes, insurance and
other ........................................... 153,927 57,872
Other liabilities ................................. 130,235 123,330
Deferred federal income taxes ..................... 101,300 101,300
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TOTAL LIABILITIES ........................... 26,403,033 26,306,576
Shareholders' equity
Common shares-2,000,000 shares, no par value,
authorized; 462,875 shares issued and
outstanding ................................... -- --
Additional paid-in capital ...................... 4,399,494 4,398,922
Retained earnings-substantially restricted ...... 2,830,062 2,927,918
Shares acquired for restricted stock plan ....... (87,519) (100,647)
Unallocated shares held by Employee Stock
Ownership Plan ................................ (150,873) (150,873)
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TOTAL SHAREHOLDERS' EQUITY .......... 6,991,164 7,075,320
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TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY ............................ $33,394,197 $33,381,896
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FOUNDATION BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three months ended
September 30,
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2000 1999
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(Unaudited)
Interest Income
Loans .................................................. $448,922 $407,573
Mortgage-backed securities ............................. 65,686 69,379
Investment securities .................................. 98,832 95,944
Interest bearing deposits and other .................... 5,857 24,085
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Total interest income .................................. 619,297 596,981
Interest expense
Deposits ............................................... $357,606 $323,337
Borrowings ............................................. 7,119 9,396
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Total interest expense ................................. 364,725 332,733
Net interest income before provision for losses on loans.. 254,572 264,248
Provision for losses on loans ............................ -- --
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Net interest income after provision for losses on loans 254,572 264,248
Other operating income ................................... 14,185 13,489
General, administrative and other expense
Employee compensation and benefits ..................... 120,089 119,889
Occupancy and equipment ................................ 20,630 20,587
Federal deposit insurance premiums ..................... 1,303 3,791
Franchise taxes ........................................ 19,142 19,997
Data processing ........................................ 8,619 9,121
Other .................................................. 36,068 34,660
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Total general, administrative and other expenses ....... 205,851 208,045
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Income before income taxes ............................... 62,906 69,692
Provision for federal income taxes ....................... (21,898) (25,734)
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NET INCOME ............................................... $ 41,008 $ 43,958
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BASIC AND DILUTED EARNINGS PER SHARE ..................... $0.09 $0.10
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FOUNDATION BANCORP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS
Three months ended
September 30
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2000 1999
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(unaudited) (unaudited)
Cash flows provided by operating activities
Net income for the period ............................ $ 41,008 $ 43,958
Adjustments to reconcile net income to net cash
provided by operating activities
Gain on sale of loans ............................ (2,464) --
Depreciation and amortization .................... 4,937 4,887
Amortization of premiums and discounts on
mortgage-backed securities ..................... 3,502 7,089
FHLB stock dividends ............................. (6,900) (6,200)
Recognition and Retention Plan (RRP) allocation .. 24,128 23,200
Amortization of deferred loan origination (fees)
costs .......................................... 56 (692)
ESOP allocation .................................. 572 6,000
Deferred loan origination costs .................. (1,820) (975)
Effects of changes in operating assets and
liabilities
Accrued interest receivable .................... (31,135) (77,295)
Prepaid expenses and other assets .............. 43,342 53,006
Accrued expenses ............................... 6,905 (71,437)
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Net cash provided by (used in) operating
activities ................................. 82,131 (18,459)
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Cash flows provided by investing activities
Repayments of mortgage-backed securities ........... 204,567 305,875
Purchases of investment securities - held to
maturity ......................................... -- (1,500,000)
Purchases of certificate of deposits ............... -- (3,156)
Maturity of certificates of deposits ............... -- 306,899
Loan disbursements ................................. (936,371) (1,819,062)
Loan principal repayments .......................... 803,381 1,415,628
Proceeds from sale of loans ........................ 145,741 --
Purchases of property and equipment ................ (657) --
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Net cash provided by (used in) investing
activities ................................. 216,661 (1,293,816)
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Cash flows provided by (used in) financing activities
Net increase (decrease) in deposit accounts ........ 14,928 (581,200)
Repayment of FHLB advances ......................... (21,431) (20,300)
Purchase of shares for restricted stock plan ....... (11,000) --
Net increase in advances by borrowers for taxes,
insurance and other .............................. 96,055 83,967
Dividends paid ..................................... (138,863) (231,437)
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Net cash used by financing activities ........ (60,311) (748,970)
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Net increase (decrease) in cash and cash equivalents . 238,481 (2,061,245)
Cash and cash equivalents at beginning of period ..... 373,541 2,414,253
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Cash and cash equivalents at end of period ........... $ 612,022 $ 353,008
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Supplemental disclosure of cash flow information
Cash paid during the period for:
Interest expense ................................. $ 361,131 $ 329,806
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FOUNDATION BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three months ended
September 30, 2000 and 1999
1. BASIS OF PRESENTATION
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The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-QSB and, therefore, do not include
information or footnotes necessary for a complete presentation of consolidated
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. However, in the opinion of management,
all adjustments (consisting only of normal recurring accruals) which are
necessary for a fair presentation of the consolidated financial statements have
been included. The results of operations for the three months ended September
30, 2000 and 1999, are not necessarily indicative of the results which may be
expected for an entire fiscal year.
2. PRINCIPLES OF CONSOLIDATION
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The accompanying consolidated financial statements include the accounts of
the Foundation Bancorp, Inc. (the "Company") and its wholly-owned subsidiary,
Foundation Savings Bank ("Foundation"). All significant intercompany items have
been eliminated.
3. EARNINGS PER SHARE
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Basic earnings per share for the three month periods ended September 30, 2000
and 1999, were computed based on weighted average shares outstanding of 440,991
and 435,581, respectively, which gives effect to a reduction for the 14,140 and
19,660 unallocated shares held by the Foundation Bancorp, Inc. Employee Stock
Ownership Plan (the "ESOP") at such dates, respectively, in accordance with
Statement of Position 93-6 ("SOP 93-6") issued by the American Institute of
Certified Public Accountants.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
DISCUSSION OF FINANCIAL CONDITION CHANGES FROM JUNE 30, 2000 TO
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SEPTEMBER 30, 2000
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At September 30, 2000, the Company's assets totaled $33.4 million, an
increase of $12,301, from the $33.4 million total at June 30, 2000. Cash and
equivalents were $0.6 million at September 30, 2000, an increase of $0.2
million, or 63.8%, over the $0.4 million at June 30, 2000. There was no change
in investment securities, and mortgage-backed securities decreased $0.2 million,
or 4.8%, resulting from repayments. Loans receivable-net was almost unchanged at
$22.4 million, a decrease of $8,523 from the June 30, 2000 total. Advances from
Federal Home Loan Bank decreased $21,431, or 4.1% from the June 30, 2000 total
due to scheduled repayments. Deposits totaled $25.5 million at September 30,
2000, an increase of $14,928, virtually unchanged from the total at June 30,
2000. Advances from borrowers for taxes, insurance and other expenses increased
$96,055, or 166.0%, resulting from timing differences in the payment of real
estate taxes. Shareholders' equity decreased $84,156, or 1.2%, as a result of
the $.30 per share dividend, which totaled $138,863, paid to shareholders in
September 2000.
The Office of Thrift Supervision has two minimum regulatory capital standards
for savings associations. At September 30, 2000, Foundation's capital
substantially exceeded each of the requirements. The following is a summary of
Foundation's approximate regulatory capital position, in dollars and as a
percentage of regulatory assets, at September 30, 2000:
ACTUAL REQUIRED EXCESS
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(Dollars in thousands)
Core capital $5,833 17.5% $1,336 4.0% $4,497 13.5%
Risk-based capital $5,976 39.7% $1,205 8.0% $4,771 31.7%
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000
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AND 1999
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General
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The Company recorded net earnings of $41,008 for the three months ended
September 30, 2000, a decrease of $2,950, or 6.7%, from the net earnings of
$43,958 recorded for the three months ended September 30, 1999. The decrease was
primarily the result of a decrease in net interest income after provision for
loan losses of $9,676, or 3.7%, which was partially offset by an increase in
other income of $696, or 5.2%, a decrease in general, administrative and other
expense of $2,194, or 1.1%, and a decrease in federal income taxes of $3,836, or
14.9%.
Net Interest Income
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Net interest income after provision for losses on loans for the three months
ended September 30, 2000, decreased $9,676, or 3.7%, compared to the same period
of 1999. An increase in total interest income of $22,316, or 3.7%, was offset by
an increase in total interest expense of $31,992, or 9.6%. Interest income on
loans increased $41,349, or 10.1%, the result of an increase in loans receivable
of $1.5 million compared to the same period of 1999. Interest on mortgage-backed
securities decreased
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$3,693, or 5.3%, due to a lower portfolio balance. Interest on investment
securities increased $2,888, or 3.0%, due to higher yields. Interest on
interest-bearing deposits decreased $18,228, or 75.7%, due to a decline in
average deposits as funds were reinvested in higher yielding mortgage loans.
Interest expense on deposits increased $34,269, or 10.6%, due to a larger
portfolio and an increasing weighted cost of funds.
Other Operating Income
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Other operating income for the three months ended September 30, 2000
increased $696, or 5.2%, compared to the same period of 1999 due to gains on
sales of loans.
General, Administrative and Other Expense
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General, administrative and other expense for the three months ended
September 30, 2000 decreased $2,194, or 1.1%, compared to the same period of
1999. This was primarily due to the decrease in federal deposit insurance
premiums of $2,488, or 65.6%, a decrease in franchise taxes of $855, or 4.3%,
and a decrease in data processing costs of $502, or 5.5%, partially offset by an
increase in other expense of $1,408, or 4.1% due to increased professional
costs. Federal income taxes decreased $3,836, or 14.9%, due to lower earnings.
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FOUNDATION BANCORP, INC.
10-QSB
PART II
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OTHER INFORMATION
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ITEM 1. LEGAL PROCEEDINGS
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Not applicable
ITEM 2. CHANGES IN SECURITIES
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Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
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Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
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Not applicable
ITEM 5. OTHER INFORMATION
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None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
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(a) Exhibit 27. Financial Data Schedule
(b) The Company did not file any reports on Form 8-K during the quarter
ended September 30, 2000.
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SIGNATURES
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.
/s/ Laird L. Lazelle
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Date: November 10, 2000 Laird L. Lazelle
President
/s/ Dianne K. Rabe
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Date: November 10, 2000 Dianne K. Rabe
Treasurer
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