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 March 31, 2001OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-20956
HFB FINANCIAL CORPORATION
A Tennessee Corporation I.R.S. Employer
Identification
No. 61-1228266
Address Telephone Number
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1602 Cumberland Avenue (606) 248-1095
Middlesboro, Kentucky 40965
Indicate by check mark whether the registrant (1) has filed all reports required
by Section 13 or 15(d) of the Securities and Exchange Act of 1934 during the
preceding twelve 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 .
The number of shares of the registrant's $1 par value common stock outstanding
at May 14, 2001 was 1,296,854.
There are a total of 14 pages filed in this document.
HFB FINANCIAL CORPORATION
I N D E X
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PAGE NO
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PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Consolidated Balance Sheet 3
Consolidated Statement of Income 4
Consolidated Statement of Stockholders' Equity 5
Consolidated Statement of Cash Flows 6
Notes to Consolidated Financial Statements 7
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS 8-12
PART II - OTHER INFORMATION 13
SIGNATURES 14
2
HFB FINANCIAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED BALANCE SHEET
(UNAUDITED)
MARCH 31, JUNE 30,
2001 2000
ASSETS
Cash and cash equivalents $ 8,680,174 $ 3,171,389
Trading securities 932,601 758,570
Investment securities
Available for sale 33,434,569 36,672,364
Held to maturity 21,206,819 24,697,115
------------- -------------
Total investment securities 54,641,388 61,369,479
Loans 140,704,924 132,038,855
Allowance for loan losses (699,352) (645,107)
------------- -------------
Net loans 140,005,572 131,393,748
Premises and equipment 4,577,449 3,871,340
Federal Home Loan Bank stock 1,500,600 1,419,700
Real Estate Owned 25,627 345,790
Interest Receivable 1,901,649 1,908,022
Goodwill 284,538 366,769
Other assets 192,108 606,061
------------- -------------
Total assets $ 212,741,706 $ 205,210,868
============= =============
LIABILITIES
Deposits
Interest bearing $ 175,525,196 $ 167,221,697
Non-interest bearing 1,809,231 5,315,314
------------- -------------
Totals 177,334,427 172,537,011
Short term borrowings 0 400,000
Long term debt 12,472,180 12,528,050
Interest payable 1,636,548 850,771
Other liabilities 1,428,874 908,629
------------- -------------
Total liabilities 192,872,029 187,224,461
------------- -------------
STOCKHOLDERS' EQUITY
Issued and outstanding - 1,579,582 and 1,574,282 shares 1,579,582 1,574,282
Additional paid-in-capital 8,729,990 8,708,790
Less: Common stock acquired by Rabbi trusts for deferred
compensation plans (515,623) (515,623)
Treasury stock, at cost, 282,728 and 278,935 shares (2,484,267) (2,438,366)
Retained earnings 12,461,082 11,843,918
Accumulated other comprehensive loss 98,913 (1,186,594)
------------- -------------
Total stockholders' equity 19,869,677 17,986,407
------------- -------------
Total liabilities and stockholders' equity $ 212,741,706 $ 205,210,868
============= =============
See notes to consolidated financial statements.
3
HFB FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF INCOME
(Unaudited)
THREE-MONTHS ENDED NINE-MONTHS ENDED
MARCH 31, MARCH 31,
2001 2000 2001 2000
INTEREST INCOME
Loans receivable $2,971,662 $ 2,594,545 $ 8,752,650 $ 7,652,846
Investment securities 890,081 1,007,135 2,871,137 2,942,367
Other dividend income 34,744 30,928 105,266 97,913
Deposits with financial institutions 41,923 24,982 81,536 66,478
--------------- ---------------- --------------- ----------------
Total interest income 3,938,410 3,657,590 11,810,589 10,759,604
--------------- ---------------- --------------- ----------------
INTEREST EXPENSE
Deposits 2,230,252 1,898,386 6,608,024 5,544,290
Short term borrowings 225 5,462 4,746 110,764
Long term debt 168,660 146,494 513,290 431,071
--------------- ---------------- --------------- ----------------
Total interest expense 2,399,137 2,050,342 7,126,060 6,086,125
--------------- ---------------- --------------- ----------------
NET INTEREST INCOME 1,539,273 1,607,248 4,684,529 4,673,479
PROVISION FOR LOAN LOSSES 30,000 15,000 74,980 (459,488)
--------------- ---------------- --------------- ----------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 1,509,273 1,592,248 4,609,549 5,132,967
--------------- ---------------- --------------- ----------------
OTHER INCOME
Service charges for deposit accounts 163,315 94,773 454,317 286,814
Other customer fees 26,548 10,617 59,846 48,252
Net gain (loss) on trading securities 22,656 (112,660) 154,818 (186,699)
Net realized loss on sales of
available for sale securities - - (670) -
Other income 3,212 1,821 18,748 10,623
--------------- ---------------- --------------- ----------------
Total other income 215,731 (5,449) 687,059 158,990
--------------- ---------------- --------------- ----------------
OTHER EXPENSES
Salaries and employee benefits 576,377 546,490 1,625,320 1,568,149
Net occupancy expenses 78,455 81,961 247,985 210,475
Equipment expenses 104,768 68,793 295,275 183,568
Data processing fees 60,747 64,803 195,406 206,095
Deposit insurance expense 8,520 8,136 25,938 53,386
Legal and professional fees 53,124 74,158 169,178 178,422
Advertising 58,588 49,951 142,823 173,692
State franchise and deposit taxes 40,885 19,818 129,202 94,108
Other expenses 251,793 202,788 776,798 686,579
--------------- ---------------- --------------- ----------------
Total other expenses 1,233,257 1,116,898 3,607,925 3,354,474
--------------- ---------------- --------------- ----------------
INCOME BEFORE INCOME TAX 491,747 469,901 1,688,683 1,937,483
Income tax expense 165,645 134,984 578,279 663,419
--------------- ---------------- --------------- ----------------
NET INCOME $ 326,102 $ 334,917 $ 1,110,404 $ 1,274,064
=============== ================ =============== ================
BASIC EARNINGS PER SHARE $ 0.25 $ 0.25 $ 0.86 $ 0.96
DILUTED EARNINGS PER SHARE $ 0.25 $ 0.25 $ 0.85 $ 0.96
See notes to consolidated financial statements.
4
HFB FINANCIAL CORPORATION AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
NINE-MONTHS ENDED MARCH 31, 2001
(UNAUDITED)
ACCUMULATED
ADDITIONAL COMPRE- OTHER TOTAL
COMMON PAID-IN RABBI TREASURY HENSIVE RETAINED COMPREHENSIVE STOCKHOLDERS'
STOCK CAPITAL TRUSTS STOCK INCOME EARNINGS INCOME (LOSS) EQUITY
---------------------------------------------------------------------------------------------------
Balances, June 30, 2000 $1,574,282 $8,708,790 ($515,623) ($2,438,366) $11,843,918 ($1,186,594) $17,986,407
Net income $1,110,404 1,110,404 1,110,404
Other comprehensive income,
net of tax
Unrealized gain on securities 1,285,507 1,285,507 1,285,507
-----------
Comprehensive income $2,395,911
===========
Cash dividend declared
($.38 per share) (493,240) (493,240)
Stock issued upon exercise of
stock options 5,300 21,200 26,500
Purchase of treasury stock
(3,793 shares) (45,901) (45,901)
------------------------------------------------- ---------------------------------------
BALANCES, MARCH 31, 2001 $1,579,582 $8,729,990 ($515,623) ($2,484,267) $12,461,082 $98,913 $19,869,677
================================================= =======================================
See notes to consolidated financial statements.
5
HFB FINANCIAL CORPORATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED)
NINE-MONTHS ENDED
MARCH 31,
2001 2000
OPERATING ACTIVITIES
Net cash provided by operating activities $ 2,485,672 $ 2,188,372
--------------- -----------------
INVESTING ACTIVITIES
Purchases of securities available for sale (5,719,570) (8,346,396)
Proceeds from maturities of securities available for sale 7,387,287 7,871,376
Purchases of securities held to maturity - (7,874,038)
Proceeds from sales of securities available for sale 3,649,998 -
Proceeds from maturities of securities held to maturity 3,547,264 4,370,423
Net change in loans (8,686,804) (5,221,870)
Purchases of premises and equipment (983,967) (1,160,797)
Acquisition of deposits (net of cash acquired) - (459,423)
--------------- -----------------
Net cash used by investing activities (805,792) (10,820,725)
--------------- -----------------
FINANCING ACTIVITIES
Net change in
Non interest-bearing, interest-bearing and
savings deposits 137,835 3,574,604
Certificates of deposit 4,659,581 11,433,622
Short term borrowings (400,000) (6,500,000)
Proceeds of long-term debt - 2,000,000
Repayment of long term debt (55,870) (51,563)
Cash dividends (493,240) (475,503)
Proceeds from exercise of options on common stock 26,500 53,832
Purchase of treasury stock (45,901) -
--------------- -----------------
Net cash provided by financing activities 3,828,905 10,034,992
--------------- -----------------
NET CHANGE IN CASH AND CASH EQUIVALENTS 5,508,785 1,402,639
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 3,171,389 3,573,139
--------------- -----------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 8,680,174 $ 4,975,778
=============== =================
ADDITIONAL CASH FLOWS INFORMATION
Interest paid $ 6,340,283 $ 5,471,178
Income tax paid 496,826 624,105
See notes to consolidated financial statements.
6
HFB FINANCIAL CORPORATION
Notes to Consolidated Financial Statements (Unaudited)
1. BASIS OF PRESENTATION
The unaudited consolidated financial information for the three and
nine-month periods ended March 31, 2001 and 2000 includes the results
of operations of HFB Financial Corporation (the "Company") and its
wholly owned subsidiary Home Federal Bank, Federal Savings Bank ("Home
Federal" or the "Bank"). The accompanying unaudited financial
statements have been prepared in accordance with generally accepted
accounting principles for interim financial statements and with the
instructions to Form 10-Q. It is suggested that these statements and
notes be read in conjunction with the financial statements and notes
thereto included in the Company's annual report for the year ended
June 30, 2000 on Form 10-K filed with the Securities and Exchange
Commission.
In the opinion of management, the financial information reflects all
adjustments (consisting only of normal recurring adjustments), which
are necessary for a fair presentation of the results of operations for
such periods but should not be considered as indicative of results for
a full year.
2. NON-PERFORMING LOANS AND PROBLEM ASSETS
The following sets forth the activity in the Company's allowance for
loan losses for the nine-months ended March 31, 2001 and 2000:
(Dollars in thousands)
2001 2000
---- ----
Balance July 1 $645 $1,212
Charge offs (22) (130)
Recoveries 1 2
Provision for loan losses 75 (459)
-- -----
Balance March 31 $699 $625
Information on impaired loans is summarized below
AT MARCH 31 2001
----
Impaired loans with an allowance $162
Allowance for impaired loans (included in the Company's
allowance for loan losses) $96
NINE-MONTHS ENDED MARCH 31 2001
----
Average balance of impaired loans $471
Interest income recognized on impaired loans 209
Cash-basis interest received 206
7
3. EARNINGS PER SHARE
Earnings per share have been computed based upon the weighted average
common shares (including ESOP shares) outstanding during each period.
All share and per share amounts in previous periods have been adjusted
to reflect the effect of a 20% stock dividend paid during 2000.
4. RECLASSIFICATIONS
Reclassifications of certain amounts in the March 31, 2000
consolidated statement have been made to conform to the March 31,2000
presentation.
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain matters discussed in this Quarterly Report on Form 10-Q are
"forward-looking statements" intended to qualify for the safe harbors from
liability established by the Private Securities Litigation Reform Act of 1995.
These forward-looking statements can generally be identified as such because the
context of the statement will include words such as the Company "believes",
"anticipates", "expects", "estimates" or words of similar import. Similarly,
statements that describe the Company's future plans, objectives or goals are
also forward-looking statements. Such forward-looking statements are subject to
certain risks and uncertainties, which are described in, close proximity to such
statements and which could cause actual results to differ materially from those
anticipated as of the date of this report. Shareholders, potential investors and
other readers are urged to consider these factors in evaluating the
forward-looking statements and are cautioned not to place undue reliance on such
forward-looking statements. The forward-looking statements included herein are
only made as of the date of this report and the Company undertakes no obligation
to publicly update such forward-looking statements to reflect subsequent events
or circumstances.
GENERAL:
HFB Financial Corporation, a Tennessee Corporation, was formed in September 1992
at the direction of Home Federal Bank, Federal Savings Bank for the purpose of
becoming a holding company for the Bank as part of its conversion from mutual to
stock form. The Company's primary operation is its investment in the common
stock of the Bank.
The Bank is principally engaged in the business of accepting deposits from the
general public and originating permanent loans, which are secured by one-to-four
family residential properties located in its market area. The Bank also
originates consumer loans and commercial real estate loans, and maintains a
substantial investment portfolio of mortgage-backed and other investment
securities.
The operations of Home Federal, and savings institutions generally, are
significantly influenced by general economic conditions and the monetary and
fiscal policies of government regulatory agencies. Deposit flows and costs of
funds are influenced by interest rates on competing investments and prevailing
market rates of interest. Lending activities are affected by the demand for
financing real estate and other types of loans, which in turn are influenced by
the interest rates at which such financing may be offered and other factors
related to loan demand and the availability of funds.
FINANCIAL CONDITION
The Corporation's assets increased by 3.65% to $212.7 million at March 31, 2001
compared to $205.2 million at June 30, 2000. The majority of this increase is
reflected in increases in cash and cash equivalents and loans. These increases
were financed primarily by an increase in deposits and a decrease in investment
securities.
Cash and cash equivalents increased by $5.509 million to $8.680 million at March
31, 2001 from $3.171 million at June 30, 2000. This increase was primarily due
to a larger uncollected balance at the Bank's clearing account at the Federal
Reserve Bank and a higher level of federal funds sold at March 31, 2001.
8
The Company maintains a portfolio of trading account securities, which is
comprised of common stock of other financial institutions. The portfolio was
$933,000 at March 31, 2001 compared to $759,000 at June 30, 2000. Most of this
increase was attributable to an increase in the fair market value of the
portfolio.
Investment securities, available for sale, decreased $3.3 million to $33.4
million at March 31, 2001 from $36.7 million at June 30, 2000 as the result of
$7.3 million in securities matured offset by a $2.0 million increase in market
value and the purchase of $2.1 million in securities, net of securities sold.
Investment securities, held to maturity, decreased $3.5 million to $21.2 million
at March 31, 2001 from $24.7 million at June 30, 2000 due to securities
maturing. The proceeds from sold and matured securities were primarily used to
fund an increase in the loan portfolio.
Loans, net, increased by $8.6 million to $140.0 million at March 31, 2001 from
$131.4 million at June 30, 2000 as the result of continued mortgage loan demand
and an increase in participation loans. The Company continues to maintain a high
percentage of its loan portfolio in adjustable-rate residential mortgages.
At March 31, 2001, the allowance for loan losses was $699,000 or .50% of loans
receivable compared to $645,000 or .49% of loans receivable at June 30, 2000.
Premises and equipment increased by $706,000 to $4.577 million at March 31, 2001
from $3.871 million at June 30, 2000, primarily due to the $437,000 purchase of
real estate which houses the recently acquired branch in Harlan Kentucky,
purchases of office furniture for the main office, computer software and
computer hardware.
Total deposits increased by $4.8 million to $177.3 million at March 31, 2001
from $172.5 million at June 30, 2000. During the nine-months ended March 31,
2001, certificates of deposit increased $4.7 million, while NOW accounts and
savings deposits increased $100,000. Competition for deposits in the local
market has become increasingly fierce from other banks primarily due to
increased loan demand.
Short-term borrowings were paid during the nine-months ended March 31, 2001
primarily due to funds provided from an increase in deposits and a decrease in
the investment portfolio.
The Bank's regulatory liquidity ratio was 45.6% at March 31, 2001 as compared to
40.1% at June 30, 2001. At March 31, 2001 the Bank met all the regulatory
capital requirements to be considered "well capitalized" under bank regulations.
Tangible, core and risk-based capital ratios were 8.7%, 8.7% and 17.6%
respectively at March 31, 2001 as compared to 8.6%, 8.6% and 18.3% respectively,
at June 30, 2000.
RESULTS OF OPERATIONS FOR THE THREE-MONTHS ENDED MARCH 31, 2001 AND 2000
Net income decreased by $9,000 to $326,000 for the three-month period ended
March 31, 2001 from $335,000 for the three-month period ended March 31, 2000.
The primary reasons for the decrease were a $68,000 decrease in net interest
income, a $15,000 increase in the provision for loan losses, a $116,000 increase
in other expense and a $31,000 increase in income tax expense offset by a
$221,000 increase in other income.
Interest income increased by $281,000 for the three-month period ended March 31,
2001 as compared to the three-month period ended March 31, 2000, primarily a
result of a higher average balance of earning assets.
Interest on loans increased by $377,000 to $2.972 million for the three-month
period ended March 31, 2001 as compared to $2.595 million for the three-month
period ended March 31, 2000. This increase is mainly attributable to a higher
weighted-average balance of loans receivable outstanding.
Interest on investment securities and other dividend income decreased by
$113,000 to $925,000 for the three-month period ended March 31, 2001 from $1.038
million for the three-month period ended March 31, 2000. This decrease is
primarily the result of a lower weighted-average balance during the period and a
lower reinvestment rate on maturing investments.
9
Interest on deposits with other financial institutions increased by $17,000 to
$42,000 for the three-month period ended March 31, 2001 from $25,000 for the
three-month period ended March 31, 2000 primarily due to a higher level of
interest-bearing cash balances.
Interest expense on deposits increased by $332,000 to $2.230 million for the
three-month period ended March 31, 2001 from $1.898 million for the three-month
period ended March 31, 2000 as a result of higher volume and a higher cost of
funds.
Interest expense on short-term borrowings and long-term debt increased by
$17,000 to $169,000 for the three-month period ended March 31, 2001 from
$152,000 for the three-month period ended March 31, 2000, primarily due to a
higher level of long-term debt.
The provision for loan losses increased $15,000 for the three-month period ended
March 31, 2001 as compared to the same period in 2000. The provision was the
result of management's evaluation of the adequacy of the allowance for loan
losses including consideration of recoveries of loans previously charged off,
the perceived risk exposure among loan types, actual loss experience,
delinquency rates, and current economic conditions. The Bank's allowance for
loan losses as a percent of total loans at March 31, 2001 was 0.5%.
Non-interest income increased by $221,000 to $216,000 for the three-month period
ended March 31, 2001 as compared to a loss of $5,000 for the same period in
2000. The increase was primarily attributable to a net increase in realized and
unrealized gains on trading account securities and realized gains on available
for sale securities of $135,000, an increase of $69,000 in service charges on
deposits and an increase of $17,000 in other fees and other income.
Non-interest expense increased by $116,000 to $1.233 million for the three-month
period ended March 31, 2001 as compared to $1.117 million for the same period in
2000.
Compensation and benefits increased by $30,000 to $576,000 for the three-month
period ended March 31, 2001 as compared to $546,000 for the three-months ended
March 31, 2000 primarily as the result of a reduction in the amount of
compensation expense being deferred on new loan originations in the current
period.
Equipment expense increased by $36,000 to $105,000 for the three-months ended
March 31, 2001 from $69,000 for the three months-ended March 31, 2000 primarily
due to an increase in depreciation expense attributable to the addition of fixed
assets over the past 12 months.
Legal and professional fees decreased by $21,000 to $53,000 for the three-month
period ended March 31, 2001 from $74,000 for the three-month period ended March
31, 2000 primarily due to a lower level of consulting services utilized in the
three-months ended March 31, 2001.
Advertising expense increased by $9,000 to $59,000 for the quarter ended March
31, 2001 compared to $50,000 for the quarter ended March 31, 2000 primarily due
to a higher level of advertising activity in the current period.
State deposit and franchise taxes increased by $21,000 to $41,000 for the
quarter ended March 31, 2001 compared to $20,000 for the quarter ended March 31,
2000 primarily due to a higher level of deposits in the current period
Other expenses increased by $49,000 to $252,000 for the three-month period ended
March 31, 2001 from $203,000 for the three-month period ended March 31, 2000,
primarily due to the addition of core deposit intangible amortization expense
related to the Harlan branch purchase in 2000.
Income tax expense increased by $31,000 to $166,000 for the three-month period
ended March 31, 2001 compared to $135,000 for the three-months ended March 31,
2000 due a higher level of taxable income.
10
RESULTS OF OPERATIONS FOR THE NINE-MONTHS ENDED MARCH 31, 2001 AND 2000
Net income decreased by $164,000 to $1.110 million for the nine-month period
ended March 31, 2001 from $1.274 million for the nine-month period ended March
31, 2000. The primary reasons for the decrease were a $534,000 increase in
provision for loan losses and a $254,000 increase in non-interest expense offset
by a $11,000 increase in net interest income, a $528,000 increase in
non-interest income and a $85,000 decrease in income tax expense.
Net interest income increased by $11,000 for the nine-month period ended March
31, 2001 as compared to the nine-month period ended March 31, 2000, primarily as
the result of a higher volumes in the period ended March 31, 2001.
Interest on loans increased by $1.100 million to $8.753 million for the
nine-month period ended March 31, 2001 as compared to $7.653 million for the
nine-month period ended March 31, 2000. This increase is mainly attributable to
higher yields and higher volume.
Interest on investment securities and other dividend income decreased by $64,000
to $2.976 million for the nine-month period ended March 31, 2001 from $3.040
million for the nine-month period ended March 31, 2000. This decrease is
primarily the result of lower weighted-average balances during the period and
lower reinvestment rates on maturing securities.
Interest expense on deposits increased by $1.064 million to $6.608 million for
the nine-month period ended March 31, 2001 from $5.544 million for the
nine-month period ended March 31, 2000 as a result of higher volume and a higher
cost of funds.
Interest expense on short term borrowings and long term debt increased by
$24,000 to an aggregate of $518,000 for the nine-month period ended March 31,
2001 from an aggregate of $542,000 for the nine-month period ended March 31,
2000 primarily due to lower levels of short-term borrowings.
The provision for loan losses increased $534,000 for the nine-month period ended
March 31, 2001 as compared to the same period in 2000. This change reflects a
recovery in the quarter ended September 30, 2000 when a total of $904,000 of
impaired loans were paid off. The amount charged off for those loans was
significantly less than what was specifically reserved for and resulted in a
$474,000 reduction in the overall allowance. The provision was the result of
management's evaluation of the adequacy of the allowance for loan losses
including consideration of recoveries of loans previously charged off, the
perceived risk exposure among loan types, actual loss experience, delinquency
rates, and current economic conditions. The Bank's allowance for loan losses as
a percent of total loans, net at March 31, 2001 was 0.5%.
The Bank's non-interest income increased by $528,000 to $687,000 for the
nine-month period ended March 31, 2001 as compared to $159,000 for the same
period in 2000. The increase was mainly attributable to a net increase in
realized and unrealized gains on trading account securities of $341,000 and a
$168,000 increase in service charges for deposit accounts. The increase in
realized and unrealized gains on trading account securities was primarily the
result of an increase in the market value of equity securities included in the
trading account portfolio. The trading account portfolio is comprised of common
stocks of other financial institutions. The increase in service charges on
deposits reflects income derived from a new overdraft checking product, which
was introduced during the nine-months ended March 31, 2001.
Non-interest expense increased by $254,000 to $3.608 million for the nine-month
period ended March 31, 2001 as compared to $3.354 million for the same period in
2000. Compensation and benefits increased by $57,000 to $1.625 million for the
nine-month period ended March 31, 2001 as compared to $1.568 million for the
same period in 2000. This increase is primarily attributable to annual wage
increases and the result of a reduction in the amount of compensation expense
being deferred on new loan originations in the current period.
Occupancy expense increased by $38,000 to $248,000 for the nine-month period
ended March 31, 2001 compared to $210,000 for the same period in 2000, as the
Company incurred additional expenses from its new Harlan branch office. This
increase was primarily due to a $35,000 increase in depreciation expense, an
$22,000 decrease in repairs and maintenance expense, an $18,000 increase in
property tax expense and an increase of $7,000 in utilities expense.
11
Equipment expense increased by $111,000 to $295,000 for the nine-month period
ended March 31, 2001 compared to $184,000 for the same period in 2000. This
increase was mainly the result of higher deprecation associated with the
purchase of new furniture and equipment over the past year.
Data processing fees decreased by $11,000 to $195,000 for the nine-month period
ended March 31, 2001 from $206,000 for the nine-month period ended March 31,
2000 primarily due to one time conversion expenses incurred for the Harlan
branch acquisition in the nine-months ended March 31, 2000.
Deposit insurance expense decreased by $27,000 to $26,000 for the nine-month
period ended March 31, 2001 from $53,000 for the nine-month period ended March
31, 2000 due to lower deposit premium rates.
Legal and professional fees decreased by $9,000 to $169,000 for the nine-month
period ended March 31, 2001 from $178,000 for the nine-month period ended March
31, 2000 primarily due to a decrease in consulting fees.
Advertising expense decreased by $31,000 to $143,000 for the nine-month period
ended March 31, 2001 compared to $174,000 for the nine-month period ended March
31, 2000 due to a lower level of advertising.
Other expenses increased by $90,000 to $777,000 for the nine-month period ended
March 31, 2001 from $687,000 for the nine-month period ended March 31, 2000
primarily as the result of the addition of core deposit intangible amortization
expense of $20,000 related to the Harlan branch purchase in 2000, an increase of
$32,000 in telephone expense and an increase of $20,000 in ATM processing
charges and other services.
Income tax expense decreased by $85,000 to $578,000 for the nine-month period
ended March 31, 2001 compared to $663,000 for the nine-months ended March 31,
2000 due to a lower level of taxable income.
12
HFB FINANCIAL CORPORATION
PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS
No matters were submitted to a vote of Security Holders during the
quarter ended March 31, 2001.
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
a. Exhibits
None
b. Reports on Form 8-K
None
13
HFB FINANCIAL CORPORATION
Signatures
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed in its behalf by the
undersigned, thereunto duly authorized.
HFB FINANCIAL CORPORATION
By: /s/ David B. Cook
---------------------------
David B. Cook
President and
Chief Executive Officer
By: /s/ Stanley Alexander, Jr.
---------------------------
Stanley Alexander, Jr.
Chief Financial Officer
Dated: May 14, 2001
14