SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
- --------------------------------------------------------------------------------
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
For the quarterly period ended September 30, 2002
Commission File Number 0-22790
STATEFED FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 42-1410788
--------------------------------- -------------------------------
(State of other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) or Number)
13523 University Avenue, Clive, Iowa 50325
- --------------------------------------------------------------------------------
(Address of principal executive offices)
(515) 223-8484
- --------------------------------------------------------------------------------
(Issuer's telephone number)
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. Yes [X] No [ ]
State the number of Shares outstanding of each of the issuer's classes of
common equity, as the latest date:
As of November 7, 2002, there were 1,278,870 shares of the Registrant's
common stock issued and outstanding.
Transitional Small Business Disclosure Format:
Yes [ ] No [X]
1
STATEFED FINANCIAL CORPORATION
Form 10-QSB
Index
Page
PART I. - CONSOLIDATED FINANCIAL INFORMATION Number
Item 1. Financial Statements (Unaudited) 3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
Item 3. Controls and Procedures 13
PART II. - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 14
Item 3. Defaults upon Senior Securities 14
Item 4. Submission of Matters to Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
SIGNATURES 15
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002 16 & 17
Exhibit 99.1 18
Exhibit 99.2 20
2
PART I. - CONSOLIDATED FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
STATEFED FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
September 30, 2002 and June 30, 2002
(Unaudited)
ASSETS
SEPTEMBER 30, 2002 JUNE 30, 2002
Cash and amounts due from depository institutions $ 7,288,305 $ 3,114,682
Investments in certificates of deposit 99,000 99,000
Investment securities available for sale 1,259,317 1,323,918
Loans receivable, net 85,993,764 84,771,507
Real estate held for sale, net 540,500 540,500
Property acquired in settlement of loans 572,582 364,622
Office property and equipment, net 3,448,822 3,405,720
Federal Home Loan Bank stock, at cost 1,762,200 1,762,200
Accrued interest receivable 563,503 572,414
Deferred income taxes 142,046 142,046
Other assets 324,729 308,632
------------------ ----------------
TOTAL ASSETS $ 101,994,767 96,405,241
================== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 73,511,315 $ 66,901,147
Advances from Federal Home Loan Bank 14,000,000 14,000,000
Advances from borrowers for taxes and insurance - 351,422
Accrued interest payable 1,724 174,921
Dividends payable 127,887 127,887
Income taxes:current and deferred 68,107 305,231
Other liabilities 216,726 349,063
------------------ ----------------
TOTAL LIABILITIES 87,925,759 82,209,671
------------------ ----------------
Stockholders' equity:
Common stock 17,810 17,810
Additional paid-in capital 8,540,662 8,527,873
Unearned compensation - Employee Stock Ownership Plan (71,556) (85,575)
Accumulated other comprehensive income - unrealized gains (losses)
on investment securities available for sale, net of deferred taxes (2,027) 27,521
Treasury stock (5,172,468) (5,172,468)
Retained earnings - substantially restricted 10,756,587 10,880,409
------------------ ----------------
TOTAL STOCKHOLDERS' EQUITY 14,069,008 14,195,570
------------------ ----------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 101,994,767 $ 96,405,241
================== ================
3
STATEFED FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATION
FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30,
2002 AND SEPTEMBER 30, 2001
(Unaudited)
------------- -------------
2002 2001
------------- -------------
Interest Income:
Loans $ 1,648,471 $ 1,845,983
Investments & other 35,150 104,303
------------- -------------
Total interest income 1,683,621 1,950,286
Interest Expense:
Deposits 675,369 853,512
Borrowings 197,289 355,821
------------- -------------
Total interest expense 872,658 1,209,333
Net interest income 810,963 740,953
Provision for loan losses 103,076 24,000
------------- -------------
Net interest income after
provision for loan losses 707,887 716,953
Non-interest Income:
Real estate operations 12,755 127,810
Other 58,074 28,747
------------- -------------
Total non-interest income 70,829 156,557
Non-interest Expense:
Salaries and benefits 373,922 325,787
Real estate operations - 80,996
Occupancy and equipment 169,966 74,631
FDIC premiums and OTS assessments 10,930 9,407
Data processing 42,630 33,064
Other 200,963 139,013
------------- -------------
Total non-interest expense 798,411 662,898
------------- -------------
Income before income taxes (19,695) 210,612
Income tax expense (benefit) (23,760) 67,240
------------- -------------
Net income $ 25,065 $ 143,372
============= =============
Basic earnings per share $ - $ 0.11
Diluted earnings per share - 0.11
Dividends declared per common share $ 0.10 $ 0.10
STATEFED FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATION
FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30,
2002 AND SEPTEMBER 30, 2001
(Unaudited)
-----------------------------------
2002 2001
--------------- ---------------
Net income $ 4,065 $ 95,732
Other comprehensive income (loss),
net of tax:
Net change in unrealized gains (losses) (29,548) 45,326
--------------- ---------------
Comprehensive income (loss) $ (25,483) $ 141,058
=============== ===============
5
STATEFED FINANCIAL CORPORATION
CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTH PERIOD SEPTEMBER 30, 2002
(UNAUDITED)
Balance - June 30, 2002 $ 14,195,570
Net change in accumulated other comprehensive income--unrealized
gain (loss) on investment securities available for sale, net of deferred income taxes (29,548)
Dividends declared (127,887)
ESOP common stock released for allocation 26,808
Net income 4,065
--------------
Balance - September 30, 2002 $ 14,069,008
==============
6
STATEFED FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30, 2002 AND SEPTEMBER 30, 2001
(UNAUDITED)
CASH FLOWS FROM OPERATING ACTIVITIES SEPTEMBER 30, SEPTEMBER 30,
2002 2001
------------- -------------
Net income $ 4,065 $ 143,372
Adjustments to reconcile net income to net cash
provided (used) by operating activities:
Depreciation 53,776 32,579
Amortization of ESOP 26,808 25,685
Deferred loan fees 6,487 (6,900)
Provision for losses on loans 103,076 (7,216)
Change in:
Accrued interest receivable 8,911 30,574
Other assets (16,097) 5,833
Accrued interest payable (173,197) 76,471
Current and deferred income tax liability (237,124) 66,377
Other liabilities (132,337) (567)
------------- -------------
NET CASH FLOWS PROVIDED (USED) BY OPERATING ACTIVITIES (355,632) 366,208
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in certificates of deposit - 74
Proceeds from sale or maturity of available-for-sale investment securities - 34
Net (increase) decrease in loans outstanding (1,296,766) 1,020,992
Investment in real estate acquired in settlement of loans (207,960) 1,276,679
Purchase of office property and equipment (96,878) 23,401
------------- -------------
NET CASH FLOWS PROVIDED (USED) BY INVESTING ACTIVITIES (1,601,604) 2,321,180
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 6,610,168 3,668,953
Repayment of advances from the Federal Home Loan Bank - (8,685,149)
Net decrease in advances from borrowers (351,422) (395,032)
Dividends paid (127,887) (127,633)
Purchase of treasury stock - 10,300
------------- -------------
NET CASH FLOWS PROVIDED (USED) BY FINANCING ACTIVITIES 6,130,859 (5,528,561)
------------- -------------
CHANGE IN CASH AND CASH EQUIVALENTS 4,173,623 (2,841,173)
CASH AND CASH EQUIVALENTS, beginning of period 3,114,682 7,278,551
------------- -------------
CASH AND CASH EQUIVALENTS, end of period $ 7,288,305 $ 4,437,378
============= =============
7
STATEFED FINANCIAL CORPORATION
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE THREE MONTH PERIOD ENDED SEPTEMBER 30,
2002 AND SEPTEMBER 30, 2001
1. BASIS OF PRESENTATIONS
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for interim
financial information, instructions for Form 10-QSB and Regulation SB 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 accordance with generally accepted accounting principles. However,
in the opinion of management, all adjustments (consisting only of normal
recurring adjustments) necessary for a fair presentation of the consolidated
financial statements have been included. Results for any interim period are not
necessarily indicative of results expected for the year. The interim
consolidated financial statements include the accounts of StateFed Financial
Corporation (the "Company"), its subsidiary, State Federal Savings and Loan
Association (the "Bank" or "State Federal") and the Bank's subsidiary, State
Service Corporation.
These statements should be read in conjunction with the consolidated
financial statements and related notes, which are incorporated by reference in
the Company's Annual Report on Form 10-KSB for the year ended June 30, 2002.
2. EARNINGS PER SHARE OF COMMON STOCK
Basic earnings per share is computed based upon the weighted-average shares
outstanding during the period, less shares in the ESOP that are unallocated and
not committed to be released. For the three month period, weighted-average
common shares outstanding totaled 1,264,333 at September 30, 2002 and 1,251,422
at September 30, 2001.
Diluted earnings per share is computed by considering common shares
outstanding and dilutive potential common shares to be issued under the
Company's stock option plan. Weighted-average common shares deemed outstanding
for the purpose of computing diluted earnings per share, for the three month
periods ending September 30, 2002 and September 30, 2001, totaled 1,277,057 and
1,281,809, respectively.
8
3. REGULATORY CAPITAL REQUIREMENTS
Pursuant to Federal law, the Bank must meet three separate minimum capital
requirements. The Bank's capital ratios and balances at September 30, 2002 were
as follows:
Amount %
--------- ----------
(Dollars in thousands)
Tangible Capital:
Bank's $ 7,137 7.40 %
Requirement 1,447 1.50
--------- ----------
Excess $ 5,690 5.90 %
Core Capital:
Bank's $ 7,137 7.40 %
Requirement 3,859 4.00
--------- ----------
Excess $ 3,278 3.40 %
Risk-Based Capital:
Bank's $ 7,858 12.63 %
Requirement 4,978 8.00
--------- ----------
Excess $ 2,880 4.63 %
The Bank is considered "well-capitalized" under federal regulations.
4. STOCK OPTION PLAN
At September 30, 2002 there were unexercised options for 49,050 shares of
common stock under the terms of the Company's 1993 Stock Option Plan. There were
27,562, 10,744 and 10,744 options with exercise prices of $5.00, $9.50 and
$10.00 per share, respectively. There were no shares exercised during the three
months ended September 30, 2002.
5. STOCK REPURCHASE PLAN
On April 3, 2002, the Company's Board of Directors authorized management to
repurchase up to 64,344 shares of the Company's common stock over the next
twelve months. Through September 30, 2002, the Company has repurchased 8,000
shares, leaving 56,344 available for repurchase. During the three-month period
ending September 30, 2002, there were no shares repurchased.
9
PART I. - ITEM 2
STATEFED FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
The accompanying Consolidated Financial Statements include StateFed Financial
Corporation (the "Company") and its wholly owned subsidiary, State Federal
Savings and Loan Association (the "Bank"). All significant inter-company
transactions and balances are eliminated in consolidation. The Company's results
of operations are primarily dependent on the Bank's net interest margin, which
is the difference between interest income earned on interest-earning assets and
interest expense paid on interest-bearing liabilities. The Bank's net income is
also affected by the level of non-interest income, gains or losses on the sale
of investments, gains or losses from the sale of real estate, provision for loan
loss expense, and by its non-interest expenses, such as employee compensation
and benefits, occupancy expenses, and other expenses.
FORWARD-LOOKING STATEMENTS
When used in this Form 10-QSB and in future filings with the SEC, in the
Company's press releases or other public or shareholder communications, as well
as in oral statements made by the executive officers of the Company or its
primary subsidiary, the words or phrases "will likely result," "are expected
to," "will continue," "is anticipated," "estimated," "project" or similar
expressions are intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
are subject to certain risks and uncertainties, including, among other things,
changes in economic conditions in the Company's market area, changes in policies
by regulatory agencies, fluctuations in interest rates, demand for loans in the
Company's market area and competition, that could cause actual results to differ
materially from historical earnings and those presently anticipated or
projected. The Company wishes to caution readers not to place undue reliance on
any such forward-looking statements, which speak only as of the date made. The
Company wishes to advise readers that the factors listed above could affect its
financial performance and could cause its actual results for future periods to
differ materially from any opinions or statements expressed with respect to
future periods in any current statements.
The Company does not undertake--and specifically declines any
obligation--to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or unanticipated
events.
FINANCIAL CONDITION
The Company's total assets at June 30, 2002 and September 30, 2002, totaled
$96.4 million and $102.0 million, respectively. The increase of $5.6 million was
due primarily to increases in cash and amounts due from depository institutions
of $4.2 million, net loans receivable of $1.2 million, funded by an increase in
deposits.
Cash and amounts due from depository institutions increased from $3.1
million at June 30, 2002 to $7.3 million at September 30, 2002, or an increase
of $4.2 million. The increase was
10
primarily the result of an increase in deposits and was partially offset by an
increase in loans receivable.
Net loans receivable increased $1.2 million, from $84.8 million at June 30,
2002 to $86.0 million at September 30, 2002. Loan originations total $6.7
million for the three-month period, while repayment of principal totaled $5.5
million for the same period.
Total deposits increased by $6.6 million from $66.9 million at June 30,
2002 to $73.5 million at September 30, 2002. The increases in certificates of
deposit and demand deposits were $7.0 million and $148,000, respectively, offset
in part by decreases in savings and money market deposits of $340,000 and
$230,000, respectively.
Total stockholders' equity decreased $126,600 from $14.2 million at June
30, 2002 to $14.1 million at September 30, 2002. The decrease was primarily the
result of net earnings of $4,100 and accounting for employee stock ownership
plan awards of $26,800, which was offset by dividends declared of $127,900 and
unrealized loss on investment securities of $29,500.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTH PERIODS ENDED SEPTEMBER 30,
2002 AND SEPTEMBER 30, 2001
GENERAL. Net income decreased $139,300 from $143,400 for the three months
ended September 30, 2001, to $4,100 for the three months ended September 30,
2002. The decrease in net income resulted from increases in non-interest expense
of $135,500 and provision for loan losses of $79,100, and a decrease in
non-interest income of $85,700. There was an increase in net interest income of
$70,000, and an income tax benefit of $24,000 compared to an income tax expense
of $67,000 for the prior comparable period.
NET INTEREST INCOME. Net interest income increased $70,000, from $741,000
for the three months ended September 30, 2001 to $811,000 for the three months
ended September 30, 2002. This increase was the result of decreases of $266,600
in interest income and $336,600 in interest expense.
INTEREST INCOME. Interest income decreased $266,600 from $2.0 million for
the three months ended September 30, 2001 to $1.7 million for the three months
ended September 30, 2002. This decrease was primarily the result of decreases in
interest earned on the loan portfolio of $197,500 and investments and other of
$69,100.
The decrease in interest earned on loans receivable resulted from a
decrease in the average rate and was partially offset by an increase in the
average loans receivable balance. Investment and other interest income decreased
primarily from decreases in the average rate paid on such balances.
INTEREST EXPENSE. Interest expense decreased $336,600 from $1.2 million for
the three months ended September 30, 2001 to $900,000 for the three months ended
September 30, 2002. This decrease resulted primarily from decreases in interest
expense on deposits of $178,100, and decreases of interest expense on borrowings
of $158,500. The decrease in interest expense resulted primarily from the
repayment of Federal Home Loan Bank advances and a decrease in the average rate
paid on deposit accounts from the prior period.
11
PROVISION FOR LOAN LOSSES. The provision for loan losses increased $79,100
from $24,000 for the three months ended September 30, 2001 to $103,100 for the
three months ended September 30, 2002. The increase was primarily related to
five participation loans totaling $3.0 million. Two of the loans have completed
the foreclosure process and are being marketed for sale. The provision during
the three months ended September 30, 2002 was based on management's analysis of
the allowance for loan losses. The Company will continue to monitor its
allowance for loan losses and make future additions to the allowance through the
provision for loan losses based on the condition of the loan portfolio, analysis
of specific loans, regulatory comments, and if economic conditions dictate.
Although the Company maintains its allowance for loan losses at a level, which
it considers to be adequate to provide for probable losses, there can be no
assurance that future losses will not exceed estimated amounts or that
additional provisions for loan losses will not be required for future periods.
NON-INTEREST INCOME. Non-interest income decreased $85,700 from $156,500 in
the three months ended September 30, 2001 to $70,800 in the three months ended
September 30, 2002. The decrease was primarily due to a $115,100 decrease in
income from real estate operations, which in previous periods had been generated
by the two apartment complexes that the Company sold during the quarter ended
December 31, 2001. The decrease was offset by a $29,300 increase in other
non-interest income, which consists primarily of fee income.
NON-INTEREST EXPENSE. Non-interest expense increased from $662,900 in the
three months ended September 30, 2001 to $798,400 in the three months ended
September 30, 2002. This increase of $135,500 was primarily the result of
increases in occupancy and equipment expense of $95,300, other non-interest
expense of $62,000, and salaries and benefits expense of $48,100. The increase
in occupancy and equipment expense was due to the increased costs associated
with the Clive office and the expansion of the mortgage lending department.
Other non-interest expense increases were primarily due to increases in
marketing and advertising expense and employee education. The increases were
offset by an $81,000 decrease in real estate operations expense, which had been
generated by the two apartment complexes that the Company sold during the
December 2001 quarter.
INCOME TAX EXPENSE. Income tax expense decreased $91,000 for the three
months ended September 30, 2002, when compared to the three months ended
September 30, 2001, due to a reduction in taxable income and the application of
tax credits.
LIQUIDITY AND CAPITAL RESOURCES. The Office of Thrift Supervision regulations
require the Bank to maintain a safe and sound level of liquid assets. Such
assets may include United States Treasury, federal agency, and other investments
having maturities of five years or less and are intended to provide a source of
relatively liquid funds upon which the Bank may rely, if necessary, to fund
deposit withdrawals and other short-term funding needs. The Bank's regulatory
liquidity at September 30, 2002 was 11.6%. The Company's primary sources of
funds consist of deposits, FHLB advances, repayments of loans, interest earned
on investments and funds provided by operations. Management believes that loan
repayments and other sources of funds will be adequate to meet the Company's
foreseeable liquidity needs.
The Company uses its capital resources principally to meet its ongoing
commitments, to fund maturing certificates of deposits and loan commitments,
maintain its liquidity, and meet its foreseeable short and long term needs. The
Company expects to be able to fund or refinance, on a timely basis, its material
commitments and long-term liabilities.
12
Regulatory standards impose the following capital requirements: a
risk-based capital standard expressed as a percent of risk-adjusted assets, a
leverage ratio of core capital to total adjusted assets, and a tangible capital
ratio expressed as a percent of total adjusted assets. As of September 30, 2002,
the Bank exceeded regulatory capital requirements.
At September 30, 2002, the Bank's tangible equity capital was $7.1 million,
or 7.40%, of tangible assets, which exceeded the 1.5% requirement by $5.7
million. In addition, at September 30, 2002, the Bank had core capital of $7.1
million, or 7.40%, of adjusted total assets, which exceeded the 4% requirement
by $3.3 million. The Bank had total risk-based capital of $7.9 million at
September 30, 2002, or 12.63%, of risk-weighted assets which exceeded the 8.0%
risk-based capital requirements by $2.9 million. The Bank is considered
"well-capitalized" under federal regulations.
PART I. - ITEM 3
CONTROLS AND PROCEDURES
With the participation and under the supervision of the Company's management,
including the Company's Chief Executive Officer and Chief Financial Officer, and
within 90 days of the filing date of this quarterly report, the Company's Chief
Executive Officer and Chief Financial Officer have evaluated the effectiveness
of the design and operation of the Company's disclosure controls and procedures
(as defined in Exchange Act Rules 13a-14(c) and 15(d)-14(c)) and, based on their
evaluation, have concluded that the disclosure controls and procedures are
effective. There were no significant changes in the Company's internal controls
or in other factors that could significantly affect these controls subsequent to
the date of their evaluation, including any corrective action with regard to
significant deficiencies and material weaknesses.
13
STATEFED FINANCIAL CORPORATION
Part II - Other Information
---------------------------
Item 1 - Legal Proceedings
Not applicable.
Item 2 - Changes in Securities
Not applicable.
Item 3 - Defaults upon Senior Securities
Not applicable.
Item 4 - Submission of Matters to Vote of Security Holders
Not applicable.
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
(b) The following is a description of the Form 8-K's filed during the
three months ended September 30, 2002:
1. August 28, 2002, a current report on Form 8-K was filed announcing
a change in certifying accountants.
2. September 3, 2002, a current report on Form 8-K was filed
reflecting quarterly financial information and dividend
announcement.
3. September 12, 2002, a current report on Form 8-K was filed
announcing appointment of new certifying accountants.
14
SIGNATURES
Pursuant to the requirement 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.
STATEFED FINANCIAL CORPORATION
Registrant
Date: November 14, 2002 /s/ Randall C. Bray
----------------------------- ----------------------------------
Randall C. Bray
Chairman and President
Date: November 14, 2002 /s/ Andra K. Black
----------------------------- ----------------------------------
Andra K. Black
Executive Vice President and CFO
15
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Randall C. Bray, certify that:
1. I have reviewed this quarterly report on Form 10-QSB of StateFed
Financial Corporation;
2. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly represent in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
4. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
identified in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a. designed such disclosures controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared.
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Sate"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
a. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
b. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
6. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
By: /s/ Randall C. Bray
-------------------
Name: Randall C. Bray
Chairman of the Board and President
November 14, 2002
16
CERTIFICATION PURSUANT TO
SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002
I, Andra K. Black, certify that:
7. I have reviewed this quarterly report on Form 10-QSB of StateFed
Financial Corporation;
8. Based on my knowledge, this quarterly report does not contain any
untrue statement of a material fact or omit to state a material fact
necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to
the period covered by this quarterly report;
9. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly represent in all
material respects the financial condition, results of operations and
cash flows of the registrant as of, and for, the periods presented in
this quarterly report;
10. The registrant's other certifying officers and I are responsible for
establishing and maintaining disclosure controls and procedures (as
identified in Exchange Act Rules 13a-14 and 15d-14) for the registrant
and have:
a. designed such disclosures controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within
those entities, particularly during the period in which this
quarterly report is being prepared.
b. evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Sate"); and
c. presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
11. The registrant's other certifying officers and I have disclosed, based
on our most recent evaluation, to the registrant's auditors and the
audit committee of the registrant's board of directors (or persons
performing the equivalent functions):
c. all significant deficiencies in the design or operation of
internal controls which could adversely affect the registrant's
ability to record, process, summarize and report financial data
and have identified for the registrant's auditors any material
weaknesses in internal controls; and
d. any fraud, whether or not material, that involves management or
other employees who have a significant role in the registrant's
internal controls; and
12. The registrant's other certifying officers and I have indicated in
this quarterly report whether there were significant changes in
internal controls or in other factors that could significantly affect
internal controls subsequent to the date of our most recent
evaluation, including any corrective actions with regard to
significant deficiencies and material weaknesses.
By: /s/ Andra K. Black
------------------
Name: Andra K. Black
Chief Financial Officer and Executive Vice President
November 14, 2002
17