-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, V94CiLO+X1bjRp5qIlB4khoaSba4gBwafQ/Y5PDiIwT6AE7kQJpePb1O2gFv9l4V oYgWhte1D2bMkxdkB6uIqA== 0000916641-00-000105.txt : 20000215 0000916641-00-000105.hdr.sgml : 20000215 ACCESSION NUMBER: 0000916641-00-000105 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: FIRST SAVINGS BANCORP INC CENTRAL INDEX KEY: 0000912836 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTIONS, NOT FEDERALLY CHARTERED [6036] IRS NUMBER: 561842701 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-27098 FILM NUMBER: 539059 BUSINESS ADDRESS: STREET 1: 205 S.E. BROAD ST STREET 2: PO BOX 1657 CITY: SOUTHERN PINES STATE: NC ZIP: 28387 BUSINESS PHONE: 9106926222 MAIL ADDRESS: STREET 1: P O BOX 1657 CITY: SOUTHERN PINES STATE: NC ZIP: 28388 10-Q 1 FORM 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, DC ______ FORM 10-Q QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For Quarter Ended December 31, 1999 Commission File Number 0-27098 FIRST SAVINGS BANCORP, INC. (Exact name of registrant as specified in its charter) North Carolina 56-1842701 -------------- ---------- (State of jurisdiction of (I.R.S. Employer incorporation or organization) Identification number) 205 SE Broad Street, Southern Pines, North Carolina 28387 - --------------------------------------------------- ----- (Address of principal executive offices) (Zip Code) (910) 692-6222 -------------- (Registrant's telephone number, including area code) Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 12 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 [ ] As of January 31, 2000 there were 3,462,889 shares of the issuer's common stock issued and outstanding. FIRST SAVINGS BANCORP, INC. TABLE OF CONTENTS
PART I FINANCIAL INFORMATION Page Number --------------------- Item 1. Financial Statements Consolidated Statements of Financial Condition 3 Consolidated Statements of Income 4 Consolidated Statements of Cash Flow 5 Notes to Consolidated Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7-9 PART II OTHER INFORMATION ----------------- Year 2000 10 Merger Agreement SIGNATURES 11
2 FIRST SAVINGS BANCORP, INC. - ------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited)
December 31, June 30, ------------------------ 1999 1999 ------------------------ ($ in thousands) ASSETS Cash and due from banks $ 7,574 $ 3,753 Interest earning deposits with banks 201 3,085 Investment securities available for sale at fair value 56,786 54,846 Investment securities held to maturity at amortized cost (fair values - $34,059 at December 31, 1999; $36,154 at June 30, 1999) 35,119 36,708 Loans receivable (net of allowance for loan losses of $596 at December 31, and June 30, 1999) 223,465 208,678 Accrued interest receivable 1,913 1,730 Premises and equipment 2,296 2,340 Stock in the Federal Home Loan Bank of Atlanta, at cost 1,929 1,929 Prepaid expenses and other assets 801 164 ----------------------- TOTAL $ 330,084 $ 313,233 ======================= LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Deposits 232,116 226,651 Borrowed funds 32,500 20,000 Accrued expenses and other liabilities 2,430 2,354 ------------------------ Total liabilities 267,046 249,005 ------------------------ SHAREHOLDERS' EQUITY: Preferred stock, no par value, 5,000,000 shares, authorized, none issued and outstanding Common stock, no par value, 20,000,000 shares authorized, 3,446,680 shares issued and outstanding at December 31, 1999; 3,503,763 at June 30, 1999 32,415 33,018 Unearned compensation related to ESOP note payable (16) Retained earnings 31,736 31,605 Accumulated other comprehensive income (loss) (1, 113) (379) ------------------------ Total shareholders' equity 63,038 64,228 ------------------------ TOTAL $330,084 $313,233 =======================
See notes to consolidated financial statements 3 CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Three Months Ended Six Months Ended December 31 , December 31, -------------------------- -------------------------- 1999 1998 1999 1998 -------------------------- -------------------------- ($ in thousands except per share data) INTEREST AND DIVIDEND INCOME: Interest on loans receivable $ 4,298 $ 4,169 $ 8,422 $ 8,393 Interest on mortgage-backed securities 552 215 1,117 388 Interest on investment securities 950 885 1,833 2,006 Dividends on investment securities 38 36 74 73 Other 28 102 73 127 -------------------------- -------------------------- Total interest income 5,866 5,407 11,519 10,987 -------------------------- -------------------------- INTEREST EXPENSE: Interest on deposits 2,542 2,463 5,062 4,983 Interest on borrowings 365 67 582 257 -------------------------- -------------------------- Total interest expense 2,907 2,530 5,644 5,240 -------------------------- -------------------------- Net interest income 2,959 2,877 5,875 5,747 Provision for loan losses -------------------------- -------------------------- Net interest income after provision for loan losses 2,959 2,877 5,875 5,747 -------------------------- -------------------------- NONINTEREST INCOME: Fees and service charges 116 198 265 354 Income from real estate operations 2 2 4 4 Rent on safe deposit boxes 9 7 13 9 Other, net 13 2 27 3 -------------------------- -------------------------- Total noninterest income, net 140 209 309 370 -------------------------- -------------------------- GENERAL AND ADMINISTRATIVE EXPENSES: Compensation and fringe benefits 475 542 1,012 1,105 Occupancy and building 79 54 159 115 Federal insurance premiums 34 31 67 64 Computer services 125 100 241 189 Other 288 283 520 522 -------------------------- -------------------------- Total general and administrative expenses 1,001 1,010 1,999 1,995 -------------------------- -------------------------- INCOME BEFORE INCOME TAXES 2,098 2,076 4,185 4,122 INCOME TAXES 771 763 1,505 1,516 -------------------------- -------------------------- NET INCOME $ 1,327 $ 1,313 $ 2,680 $ 2,606 ========================== ========================== NET INCOME PER COMMON SHARE: Basic $ 0.38 $ 0.35 $ 0.77 $ 0.70 ========================== ========================== Diluted $ 0.36 $ 0.33 $ 0.73 $ 0.65 ========================== ========================== WEIGHTED AVERAGE SHARES OUTSTANDING Basic 3,494,102 3,711,147 3,678,848 3,717,555 ========================== ========================== Diluted 3,698,576 3,998,413 3,967,173 4,013,285 ========================== ==========================
See notes to consolidated financial statements. 4 FIRST SAVINGS BANCORP, INC. - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
Six Months Ended December 31, ------------------------- ($ in thousands) 1999 1998 ------------------------- OPERATING ACTIVITIES: Net income $ 2,680 $ 2,606 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of premises and equipment 78 51 Issuance of ESOP shares 32 162 Net amortization on investments 107 102 Loan origination fees and costs deferred, net of current amortization 22 6 Changes in: Other assets (247) 207 Other liabilities (104) (292) ------------------------- Net cash provided by operating activities 2,568 2,842 ------------------------- INVESTING ACTIVITIES: Net (increase) decrease in interest-earning deposits with banks 2,884 (3,090) Purchases of available for sale investment securities (11,120) (17,000) Proceeds from maturities and calls of: Available for sale investment securities 8,000 37,000 Held to maturity investment securities 1,550 958 Loan originations net of repayments and net fees (14,809) (206) Purchase of premises and equipment (34) (274) ------------------------- Net cash provided by (used in) investing activities (13,529) 17,388 ------------------------- FINANCING ACTIVITIES: Net increase in deposits 5,465 3,957 Net increase (decrease) in borrowed funds 12,500 (20,000) Net proceeds from exercise of stock options 123 178 Repurchases of common stock (1,496) (1,130) Cash dividends paid (1,810) (1,859) ------------------------- Net cash provided by (used in) financing activities 14,782 (18,854) ------------------------- INCREASE IN CASH AND DUE FROM BANKS 3,821 1,376 CASH AND DUE FROM BANKS, BEGINNING OF PERIOD 3,753 3,825 ------------------------- CASH AND DUE FROM BANKS, END OF PERIOD $ 7,574 $ 5,201 ========================= SUPPLEMENTAL DISCLOSURES: - ------------------------ Cash paid for: Interest on deposits $ 5,030 $ 4,979 Interest on borrowed funds 519 312 Income taxes 1,545 1,536
See notes to consolidated financial statements. See notes to consolidated financial statements. 5 FIRST SAVINGS BANCORP, INC. - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation: The accompanying consolidated financial statements ---------------------- include the accounts of First Savings Bancorp, Inc. and its wholly-owned subsidiary, First Savings Bank of Moore County, Inc., SSB (the "Bank"), together referred to as "First Savings". All significant intercompany balances and transactions have been eliminated in consolidation. 2. Accounting Policies: The significant accounting policies followed by First -------------------- Savings for interim financial reporting are consistent with the accounting policies followed for annual financial reporting. The accompanying unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Article 10 or Regulation S-X. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments (none of which were other than normal accruals) necessary for a fair presentation of the financial position and results of operations for the periods presented have been included. The results of operations for the three and six month periods ended December 31, 1999 is not necessarily indicative of the results of operations that may be expected for the year ending June 30, 2000. For further information, refer to the consolidated financial statements and footnotes thereto included in the annual report on Form 10-K for the year ended June 30, 1999. 3. Earnings Per Common Share: Effective July 1,1997, First Savings Bank has -------------------------- implemented Statement of Financial Accounting Standards ("SFAS") No. 128, "Earnings per Share". This Statement simplifies the standards for computing earnings per share previously found in Accounting Principles Board ("APB") Opinion No. 15, Earnings per Share ("EPS"), and makes them comparable to international EPS standards. It replaces the presentation of primary EPS with the presentation of basic EPS. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and the denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS excludes dilution and is computed by dividing income available to common shareholders by the weighted-average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Diluted EPS is computed similarly to fully diluted EPS pursuant to APB Opinion No. 15. Basic and diluted earnings per share have been computed based upon net income as presented in the accompanying statements of operation divided by the weighted average number of common shares outstanding or assumed to be outstanding as summarized below.
Three Months Ended Six Months Ended December 31, December 31 ---------------------------- -------------------------- 1999 1998 1999 1998 --------- ---------- --------- --------- Weighted average number of common shares used in basic EPS 3,494,102 3,711,147 3,678,848 3,717,555 Effect of dilutive stock options 204,474 287,266 288,325 295,730 --------- --------- --------- --------- Weighted average number of common shares and dilutive potential common shares used in diluted EPS 3,698,576 3,998,413 3,967,173 4,013,285 ========= ========= ========= =========
4. Stock Repurchase Plan: On September 12, 1996 First Savings' Board of ---------------------- Directors adopted the First Savings Bancorp, Inc. Stock Repurchase Plan. Pursuant to the Plan, First Savings may repurchase shares of its outstanding common stock in the open market or in privately negotiated transactions in accordance with regulatory requirements. 6 FIRST SAVINGS BANCORP, INC. - -------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS General First Savings Bancorp, Inc., a North Carolina holding company ("First Savings"), was formed on November 1, 1995 to become the parent holding company of First Savings Bank of Moore County, Inc., SSB (the "Bank"), a North Carolina chartered stock savings bank. First Savings engages in no substantial business activities other than the activities related to ownership of the Bank. The Bank is primarily engaged in the business of attracting deposits from the general public and using those funds to originate mortgage loans for the purchase or construction of one-to-four family homes. To a lesser extent, the Bank also originates multi-family residential mortgage loans, nonresidential real estate loans, loans secured by deposits, home equity lines of credit, installment loans and credit card loans. As a savings bank, the Bank's deposit accounts are insured up to applicable limits by the Savings Association Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation ("FDIC"). The Bank conducts its operations through its main office in Southern Pines, North Carolina and 5 branch offices located in Moore County. Financial Condition First Savings had total assets of $330.1 million at December 31, 1999 compared to $313.2 million at June 30, 1999. The increase in assets was primarily attributable to a 7.1% increase in net loans. Net loans totaled $223.5 million at December 31, 1999 compared to $208.7 million at June 30, 1999. An increase in loan originations and a decrease in refinancing were factors contributing to the loan growth. Supporting the loan growth were increases in deposits and borrowed funds. Deposits and borrowed funds increased from 226.7 million and $20.0 million, respectively, at June 30, 1999 to 232.1 million and $32.5 million, respectively, at December 31, 1999. As a result of rising interest rates, accumulated other comprehensive loss associated with investment securities available for sale increased from $379,000 at June 30, 1999 to $1.1 million at December 31, 1999. Liquidity Maintaining adequate liquidity while managing interest rate risk is the primary goal of First Savings' asset and liability management strategy. Liquidity is the ability to fund the needs of the Bank's borrowers and depositors, pay operating expenses, and meet regulatory liquidity requirements. Maturing investments, loan and mortgage-backed security principal repayments, deposits and income from operations are the main sources of liquidity. The Bank's primary uses of liquidity are to fund loans and to make investments. As of December 31, 1999, liquid assets (cash and cash equivalents, and marketable investment securities, less pledged investments) were approximately $96.9 million, which represents 41.8% of deposits. As a North Carolina chartered savings bank, First Savings is required to maintain liquid assets equal to at least 10.0% of its total assets. At December 31, 1999, this liquidity ratio, based on North Carolina regulations, was 29.4% Management considers current liquidity levels to be adequate to meet First Savings' foreseeable needs. At December 31, 1999, outstanding mortgage loan commitments and available home equity line of credit balances were $23.4 million, available credit card line of credit balances were $3.8 million and the undisbursed portion of construction loans was $10.7 million. Funding for these commitments is expected to be provided from deposits, loan and mortgage-backed securities principal repayments, maturing investments and income generated from operations. 7 FIRST SAVINGS BANCORP, INC. - ------------------------------------------------------------------------------ MANAGEMENT'S DISCUSSION AND ANALYSIS Regulatory Capital Requirements Federal banking regulations require that bank holding companies and their bank subsidiaries meet various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory, and possibly additional discretionary actions by regulators that, if undertaken, could have a direct material effect on First Savings' financial statements. Under capital adequacy guidelines and the regulatory framework for prompt corrective action, First Savings must meet specific capital guidelines that involve quantitative measures of First Savings assets, liabilities, and certain off-balance-sheet items as calculated under regulatory accounting practices. First Savings' capital amounts and classification are also subject to qualitative judgements by the regulators about components, risk weightings, and other factors. Quantitative measures established by regulation to ensure capital adequacy require First Savings to maintain minimum amounts and ratios of total and Tier 1 capital to risk-weighted assets, and of Tier 1 capital to average assets. As of December 31, 1997, the most recent notification from the FDIC categorized the Bank as well capitalized under the regulatory framework for prompt corrective action. To be categorized as well capitalized, the Bank must maintain minimum total risk-based, Tier 1 risk-based, and Tier 1 leverage ratios as set forth in the table. There are no conditions or events since that notification that management believes have changed the category. Actual capital amounts and ratios for First Savings and the Bank are presented in the table below:
To Be Well Capitalized Under For Capital Prompt Corrective Actual Adequacy Purposes Action Provisions Amount Ratio Amount Ratio Amount Ratio ---------------------------------------------------------------------- As of December 31, 1999 Total Capital (to Risk Weighted Assets: Consolidated $64,747 38.36% $13,501 *8.0% n/a n/a First Savings Bank of Moore Co., Inc., SSB $62,998 37.47% $13,451 *8.0% $16,814 *10.0% Tier 1 Capital (to Risk Weighted Assets): Consolidated $64,151 38.01% $ 6,751 *4.0% n/a n/a First Savings Bank of Moore Co., Inc., SSB $62,402 37.11% $ 6,726 *4.0% $10,088 *6.0% Tier 1 Capital (to Average Assets): Consolidated $64,151 19.51% $13,151 *4.0% n/a n/a First Savings Bank of Moore Co., Inc., SSB $62,402 19.04% $13,108 *4.0% $16,385 *5.0%
In addition to federal regulatory requirements, the Bank is subject to a North Carolina savings bank capital requirement of at least 5% of total assets. At December 31, 1999, the Bank's capital ratio under the North Carolina requirements was 19.02%. At December 31, 1999, First Savings and the Bank exceeded all capital requirements. * = more than or equal to 8 FIRST SAVINGS BANCORP, INC. - ------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS Comparison of Operating Results for the Three Months Ended December 31, 1999 and 1998 Net income for the three months ended December 31, 1999 was $1,327,000, compared to $1,313,000 for the same period in 1998. Basic and diluted earnings per share for the three months ended December 31, 1999 was $0.38 and $0.36, respectively, compared to $0.35 and $0.33, respectively, for the same period of the prior year. The increase in earnings was primarily due to increases in net interest income. Net interest income for the quarter ended December 31, 1999 increased $82,000. Noninterest income decreased primarily as a result of a reduction in loan fees associated with a slow down of secondary loan originations from the prior year. General and administrative expenses totaled $1,001,000 and remained relatively unchanged. Comparison of Operating Results for the Six Months Ended December 31, 1999 and 1998 Net income for the six months ended December 31, 1999 was $2,680,000, compared to $2,606,000 for the same period in 1998. Basic and diluted earnings per share for the six months ended December 31, 1999 was $0.77 and $0.73, respectively, compared to $0.70 and $0.65, respectively, for the same period of the prior year. The increase in earnings was primarily due to an increase in net interest income. Net interest income increased $128,000 from $5,747,000, for the six months ended December 31, 1998 to $5,875,000 for the same period of the current year. The increase was primarily due to higher levels of interest earning assets. Noninterest income decreased $61,000, ,from $370,000 for the six months ended December 31, 1998 to $309,000 for the current six month period. The decrease was primarily due to a reduction in loan fees associated with secondary loan originations. General and administrative expenses for the six month period ended December 31, 1999 was $1,999,000 compared to $1,995,000 for the same period of the prior year. 9 OTHER INFORMATION Year 2000 The Year 2000 issue has posed business risk to most business organizations, including the Company. In response, the Company formed a Year 2000 project team, consisting of senior officers within the Company's operations, information systems, financial and management areas, to ensure that the Company attained Year 2000 compliance. All date sensitive systems were evaluated for Year 2000 compliance, with complete upgrading and testing of systems completed well in advance of the Year 2000 date change. The Company also developed contingency plans for its computer processes, including the use of alternative systems and the manual processing of certain critical operations. In addition, the Company had undertaken extensive efforts to ensure that significant vendor and customer relationships are Year 2000 compliant. The Company's management is pleased, but not surprised, that business continued as normal without adverse impact to the Company during the critical date change. In coming months, the Bank will continue monitoring external entities to assure that they have not experienced any Year 2000 problems that could impact their relationship with the Company. In addition to the estimated costs of its Year 2000 compliance, the Company routinely makes annual investments in technology in its efforts to improve customer service and to efficiently manage its product and service delivery systems. As anticipated, the costs associated with Year 2000 compliance were not material to First Savings' financial condition or results of operations. Merger Agreement On December 15, 1999, First Bancorp ("First Bancorp"), First Savings Bancorp, Inc. ("First Savings") and the wholly-owned banking subsidiaries of First Bancorp and First Savings entered into a Merger Agreement (the "Merger Agreement"), pursuant to which First Bancorp and First Savings will merge with First Bancorp being the surviving company. In addition, the Merger Agreement provides First Savings Bank of Moore County, Inc., SSB, First Savings' wholly- owned savings bank subsidiary, and First Bank, First Bancorp's wholly-owned banking subsidiary, will merge with First Bank being the surviving company. For further information refer to Form 8-K. 10 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. FIRST SAVINGS BANCORP, INC. ______________ _______________________________________ Date John F. Burns President _____________ ________________________________________ Date Timothy S. Maples Sr. Vice President/ Chief Financial Officer 11 EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 3-MOS 6-MOS JUN-30-2000 JUN-30-2000 OCT-01-1999 JUL-01-1999 DEC-31-1999 DEC-31-1999 7,574 7,574 201 201 0 0 0 0 58,715 58,715 35,119 35,119 34,059 34,059 224,061 224,061 596 596 330,084 330,084 232,116 232,116 22,500 22,500 2,430 2,430 10,000 10,000 0 0 0 0 32,415 32,415 30,623 30,623 330,084 330,084 4,298 8,422 1,540 3,024 28 73 5,866 11,519 2,542 5,062 2,907 5,644 2,959 5,875 0 0 0 0 1,001 1,999 2,098 4,185 2,098 4,185 0 0 0 0 1,327 2,680 0.38 0.77 0.36 0.73 3.71 3.74 829 829 5 5 0 0 0 0 596 596 0 0 0 0 596 596 227 227 0 0 369 369
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