-----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, VLcwWbvxB1r7WYoNeaLkkQ8GsHd5TUQFGkEMSmQOgAAr/spLCwT7oajuUmrZa12m BeEdZSh5oyU/LlrIUcMcxA== 0000950109-98-003159.txt : 19980514 0000950109-98-003159.hdr.sgml : 19980514 ACCESSION NUMBER: 0000950109-98-003159 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980331 FILED AS OF DATE: 19980513 SROS: NASD 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: 560408240 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-27098 FILM NUMBER: 98617934 BUSINESS ADDRESS: STREET 1: P O BOX 1657 CITY: SOUTHERN PINES STATE: NC ZIP: 28388 BUSINESS PHONE: 9106926222 MAIL ADDRESS: STREET 1: P O BOX 1657 CITY: SOUTHERN PINES STATE: NC ZIP: 28388 10-Q 1 QUARTERLY REPORT 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 March 31, 1998 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 April 30, 1998 there were 3,709,820 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 ----------------- Item 5. Other Information 10 SIGNATURES 11 FIRST SAVINGS BANCORP, INC. - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (unaudited) March 31, June 30, 1998 1997 ----------------------- ($ in thousands) ASSETS Cash and due from banks $ 3,547 $ 2,801 Interest bearing deposits with banks 8,115 6,301 Securities at market value 70,748 82,187 Securities at amortized cost (market values - $10,299 at March 31, 1998; $6,672 at June 30, 1997) 10,238 6,572 Loans receivable (net of allowance for loan losses of $604 at March 31, 1998 and June 30, 1997) 203,369 192,238 Premises and equipment 1,954 1,968 Accrued interest receivable 1,591 1,836 Prepaid expenses and other assets 240 314 --------------------- TOTAL $299,802 $294,217 ===================== LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Deposits 213,172 204,317 Borrowed funds 15,000 20,000 Accrued expenses and other liabilities 2,585 2,705 --------------------- Total liabilities 230,757 227,022 --------------------- 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, 3,709,820 shares issued and outstanding at March 31, 1998; 3,679,185 at June 30, 1997 35,475 35,237 Unearned compensation related to ESOP note payable (194) (293) Net unrealized gain on securities available for sale 403 281 Retained earnings 33,361 31,970 --------------------- Total shareholders' equity 69,045 67,195 --------------------- TOTAL $299,802 $294,217 ===================== See notes to consolidated financial statements 3 FIRST SAVINGS BANCORP, INC. - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF INCOME (unaudited)
Three Months Ended Nine Months Ended March 31, March 31, ------------------------------------------------------ ($ in thousands except per share data) 1998 1997 1998 1997 ------------------------------------------------------ INTEREST AND DIVIDEND INCOME: Interest on loans receivable $4,092 $3,750 $12,096 $11,092 Interest on mortgage-backed securities 185 120 492 203 Interest on investment securities 1,248 901 3,897 2,905 Dividends on investment securities 37 34 107 105 Other 99 143 318 307 ------------------------------------------------------ Total interest income 5,661 4,948 16,910 14,612 ------------------------------------------------------ INTEREST EXPENSE: Interest on deposits 2,479 2,377 7,466 7,044 Interest on borrowings 273 895 13 ------------------------------------------------------ Total interest expense 2,752 2,377 8,361 7,057 ------------------------------------------------------ Net interest income 2,909 2,571 8,549 7,555 ------------------------------------------------------ Provision for loan losses Net interest income after provision for loan losses 2,909 2,571 8,549 7,555 ------------------------------------------------------ NONINTEREST INCOME: Fees and service charges 148 88 393 261 Income from real estate operations 2 2 6 7 Rent on safe deposit boxes 10 10 19 19 Other, net 22 1 44 3 ------------------------------------------------------ Total noninterest income, net 182 101 462 290 ------------------------------------------------------ GENERAL AND ADMINISTRATIVE EXPENSES: Compensation and fringe benefits 531 481 1,565 1,542 Occupancy and building 53 47 159 154 Federal insurance premiums 33 31 99 1,295 Computer services 82 86 252 226 Other 240 212 707 577 ------------------------------------------------------ Total general and administrative expenses 939 857 2,782 3,794 ------------------------------------------------------ INCOME BEFORE INCOME TAXES 2,152 1,815 6,229 4,051 INCOME TAX EXPENSE 798 656 2,301 1,415 ------------------------------------------------------ NET INCOME $1,354 $1,159 $3,928 $2,636 ====================================================== NET INCOME PER COMMON SHARE: Basic: $ 0.37 $ 0.31 $ 1.06 $ 0.71 ====================================================== Diluted: $ 0.34 $ 0.29 $ 0.98 $ 0.66 ====================================================== WEIGHTED AVERAGE SHARES OUTSTANDING: Basic: 3,704,823 3,692,481 3,694,114 3,713,490 =========================================================== Diluted: 4,035,403 3,960,572 4,015,417 3,965,005 ===========================================================
See notes to consolidated financial statements. 4 FIRST SAVINGS BANCORP, INC. - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited) Nine Months Ended March 31, --------------------- ($ in thousands) 1998 1997 --------------------- OPERATING ACTIVITIES: Net income $ 3,928 $ 2,636 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 75 71 Issuance of ESOP shares 227 179 Net amortization on investments 73 395 Loan origination fees and costs deferred, net of current amortization (8) 28 Changes in: Other assets 152 (65) Other liabilities (354) (57) --------------------- Net cash provided by operating activities 4,093 3,187 --------------------- INVESTING ACTIVITIES: Net decrease in interest-bearing deposits with banks (1,814) (12,965) Purchase of certificates of deposits (7,000) Proceeds from maturities of certificates of deposit 7,000 Proceeds from maturities of investments 27,500 9,700 Purchase of investment securities (20,950) (5,373) Principal repayments on mortgage-backed securities 1,335 1,532 Loan originations net of principal repayments 11,123 (9,794) Proceeds from sale of premises and equipment 9 Gain on sale of premises and equipment (7) Purchase of premises and equipment (63) (39) Proceeds from sale of real estate 188 Gain on sale of real estate (21) --------------------- Net cash used in investing activities (4,946) (16,939) --------------------- FINANCING ACTIVITIES: Net increase in deposits 8,855 14,911 Net decrease in borrowed funds (5,000) (422) Net proceeds from exercise of stock options 110 35 Cash dividends paid (2,366) (2,193) Repurchases of common stock (976) --------------------- Net cash provided by financing activities 1,599 11,355 --------------------- INCREASE IN CASH AND CASH EQUIVALENTS 746 (2,397) CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 2,801 4,005 --------------------- CASH AND CASH EQUIVALENTS END OF PERIOD $3,547 $1,608 ===================== SUPPLEMENTAL DISCLOSURES: - ------------------------- Cash paid for: Interest on deposits $7,417 $7,070 Interest on borrowed funds 916 15 Income taxes 2,495 1,546 See notes to consolidated financial statements. 5 FIRST SAVINGS BANCORP, INC. - -------------------------------------------------------------------------------- NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation and Accounting Policies: The accompanying ---------------------------------------------- consolidated financial statements include the accounts of First Savings Bancorp, Inc., ("First Savings"), First Savings Bank of Moore County, Inc., SSB (the "Bank") and its wholly-owned subsidiary (the "Bank"). 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 month period ended March 31, 1998 is not necessarily indicative of the results of operations that may be expected for the year ending June 30, 1998. 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, 1997. 3. Earnings Per Common Share: Effective with periods ended December 31, 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. Weighted average number of common shares used in basic EPS 3,704,823 3,692,481 3,694,114 3,713,490 Effect of dilutive stock options 330,580 268,091 321,303 251,515 --------- --------- --------- --------- Weighted average number of common shares and dilutive potential common shares used in diluted EPS 4,035,403 3,960,572 4,015,417 3,965,005 ========= ========= ========= ========= 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. On September 27, 1996 First Savings initiated a plan to repurchase 10% or its stock over the next twelve months. As of March 31, 1998, 76,500 shares have been repurchased. 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 4 branch offices located in Moore County. Financial Condition First Savings had total assets of $299.8 million at March 31, 1998 compared to $294.2 million at June 30, 1997. The increase was primarily related to a 5.6% increase in net loans. Net loans increased from $192.2 million at June 30, 1997 to $203.4 million at March 31, 1998. The favorable rate environment and strong marketing programs continue to fuel the loan growth. Increased deposits and maturing securities funded the loan growth. Deposits increased by $8.9 million to $213.2 million at March 31, 1998 from $204.3 million at June 30, 1997 and shareholders' equity increased to $69.0 million at March 31, 1998 from $67.2 million at June 30, 1997. 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 March 31, 1998, liquid assets (cash and cash equivalents, and marketable investment securities, less pledged investments) were approximately $86.6 million, which represents 40.61 of deposits. As a North Carolina chartered savings bank, the Bank is required to maintain liquid assets equal to at least 10.0% of its total assets. At March 31, 1998, this liquidity ratio, based on North Carolina regulations, was 26.39%. Management considers current liquidity levels to be adequate to meet First Savings' foreseeable needs. At March 31, 1998, outstanding mortgage loan commitments and available home equity line of credit balances were $17.0 million, available credit card line of credit balances were $3.7 million and the undisbursed portion of construction loans was $10.0 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 May 10, 1996, 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:
For Capital Actual Adequacy Purposes Amount Ratio Amount Ratio --------------------------------------------------------------- As of March 31, 1998 Total Capital (to Risk Weighted Assets: Consolidated $69,246 49.68% $11,151 greater than or equal to 8.0% First Savings Bank of Moore Co., Inc., SSB $50,952 36.36% $11,211 greater than or equal to 8.0% Tier 1 Capital (to Risk Weighted Assets): Consolidated $68,642 49.24% $ 5,576 greater than or equal to 4.0% First Savings Bank of Moore Co., Inc., SSB $50,349 35.93% $ 5,606 greater than or equal to 4.0% Tier 1 Capital (to Average Assets): Consolidated $68,642 22.90% $11,989 greater than or equal to 4.0% First Savings Bank of Moore Co., Inc., SSB $50,349 17.77% $11,334 greater than or equal to 4.0% To Be Well Capitalized Under Prompt Corrective Action Provisions Amount Ratio ----------------------------------------- As of March 31, 1998 Total Capital (to Risk Weighted Assets: Consolidated n/a n/a First Savings Bank of Moore Co., Inc., SSB $14,014 greater than or equal to 10.0% Tier 1 Capital (to Risk Weighted Assets): Consolidated n/a n/a First Savings Bank of Moore Co., Inc., SSB $ 8,409 greater than or equal to 6.0% Tier 1 Capital (to Average Assets): Consolidated n/a n/a First Savings Bank of Moore Co., Inc., SS $14,168 greater than or equal to 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 March 31, 1998, the Bank's capital ratio under the North Carolina requirements was 17.92%. At March 31, 1998, First Savings and the Bank exceeded all capital requirements. 8 FIRST SAVINGS BANCORP, INC. - -------------------------------------------------------------------------------- MANAGEMENT'S DISCUSSION AND ANALYSIS Comparison of Operating Results for the Three Months Ended March 31, 1998 and 1997 Net income for the three months ended March 31, 1998 was $1,354,000 compared with $1,159,000 for the same period in 1997. Basic and diluted earnings per share for the three months ended March 31, 1998 was $0.37 and $0.34, respectively, compared with $0.31 and $0.29, respectively, for the same period of the prior year. Increases in the net interest margin and noninterest income were the primary factors for the increase in earnings. Net interest income for the quarter ended March 31, 1998 increased $338,000 representing an increase of 13.15% from the corresponding period of the prior year. Noninterest income increased $81,000 or 80% from $101,000 for the three months ended March 31, 1997 to $182,000 for the corresponding period of the current year. An increase in fees and service charges of $60,000 supported the growth. General and administrative expenses increased from $857,000 for the quarter ended March 31, 1997 to $939,000 for the quarter ended March 31, 1998 due primarily to increases in compensation and fringe benefits, advertising and credit card related expenses. Comparison of Operating Results for the Nine Months Ended March 31, 1998 and 1997 Net income for the nine months ended March 31, 1998 was $3,928,000, compared to $2,636,000 for the same period in 1997. Basic and diluted earnings per share for the nine months ended March 31, 1998 was $1.06 and $0.98, respectively, compared to $0.71 and $0.66, respectively, for the same period of the prior year. The increase in earnings was primarily due to an increase in the net interest margin, a reduction in federal insurance premiums and an increase in noninterest income. Net interest income increased $994,000 from $7,555,000 for the nine months ended March 31, 1997 to $8,549,000 for the same period of the current year. The increase was primarily due to higher levels of interest earning assets. Led by fees and service charges, noninterest income increased $172,000 or 59.30% from $290,000 for the nine month period ended March 31, 1997 to $462,000 for the same period of the current year. General and administrative expenses for the nine month period ended March 31, 1998 was $2,782,000 compared to $3,794,000 for the same period of the prior year. The decrease was primarily due to a nonrecurring SAIF Assessment of $1,159,000 in the prior year. 9 FIRST SAVINGS BANCORP, INC. - -------------------------------------------------------------------------------- OTHER INFORMATION SAIF Assessment As of September 30, 1996, legislation was passed requiring financial institutions insured by the Savings Association Insurance Fund ("SAIF") to pay a one time special assessment of 0.657% based on the March 31, 1995 deposit base. For the nine month period ended March 31, 1997, First Savings recorded a charge to earnings of approximately $1,159,000 relating to the special SAIF assessment. The Year 2000 As is the case with substantially all financial institutions, the Bank relies upon computers for the daily conduct of its business. There is concern that at/on January 1, 2000 many computers will be unable to "read" the new year. Thus, at the turn of the century, computer-based information systems will be faced with the problems potentially affecting hardware, software, networks, and processing platforms, as well as customer and vendor interdependencies. The Bank has established a committee and is in the process of assessing the effect of Year 2000 on its operating plans and systems. The Bank is developing a plan for identifying, renovating, testing and implementing its systems for Year 2000 processing and internal control requirements. The cost to be incurred in achieving full Year 2000 compliance has not been determined; however, management believes it will not be material to the Bank's financial statements. 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. May 11, 1998 /s/ William E. Samuels, Jr. --------------------- ---------------------------------------- Date William E. Samuels, Jr. President May 11, 1998 /s/ Timothy S. Maples --------------------- ---------------------------------------- Date Timothy S. Maples Controller/ Principal Financial Officer 11 EX-27 2 FDS
9 1,000 3-MOS 9-MOS JUN-30-1997 JUN-30-1997 JAN-01-1998 JUL-01-1997 MAR-31-1998 MAR-31-1998 3,547 3,547 8,115 8,115 0 0 0 0 70,748 70,748 10,238 10,238 10,299 10,299 203,973 203,973 604 604 299,802 299,802 213,172 213,172 15,000 15,000 2,585 2,585 0 0 0 0 0 0 35,475 35,475 33,570 33,570 299,802 299,802 4,092 12,096 1,470 4,496 99 318 5,661 16,910 2,479 7,466 2,752 8,361 2,909 8,549 0 0 0 0 939 2,782 2,152 6,229 2,152 6,229 0 0 0 0 1,354 3,928 0.37 1.06 0.34 0.98 3.94 3.88 482 482 0 0 0 0 482 482 604 604 0 0 0 0 604 604 193 193 0 0 411 411
-----END PRIVACY-ENHANCED MESSAGE-----