-----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, PIhlnsIhvw56RmQ4Z6pAOSd31QCAPMuSiyBA/aCWI0hWTim5BjhTCpmHjb8fecwN UU4YA9ufBs+cBx1qtCMqcA== 0000950109-98-000918.txt : 19980217 0000950109-98-000918.hdr.sgml : 19980217 ACCESSION NUMBER: 0000950109-98-000918 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980212 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: 98535269 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 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, 1997 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, 1998 there were 3,704,978 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 Consolidate 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)
DECEMBER 31, JUNE 30, 1997 1997 ---------------------------- ($ in thousands) ASSETS Cash and due from banks $ 3,198 $ 2,801 Interest bearing deposits with banks 2,337 6,301 Securities at market value 79,760 82,187 Securities at amortized cost (market values - $11,118 at December 31, 1997; $6,672 at June 30, 1997) 10,944 6,572 Loans receivable (net of allowance for loan losses of $604 at December 31, and June 30, 1997) 200,408 192,238 Premises and equipment 1,966 1,968 Accrued interest receivable 1,823 1,836 Prepaid expenses and other assets 380 314 -------------------------- TOTAL $ 300,816 $ 294,217 ========================== LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Deposits 209,908 204,317 Borrowed funds 20,000 20,000 Accrued expenses and other liabilities 2,415 2,705 -------------------------- Total liabilities 232,323 227,022 -------------------------- 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, 3,700,481 shares issued and outstanding at December 31, 1997; 3,679,185 at June 30, 1997 35,411 35,237 Unearned compensation related to ESOP note payable (227) (293) Net unrealized gain on securities available for sale 380 281 Retained earnings 32,929 31,970 -------------------------- Total shareholders' equity 68,493 67,195 -------------------------- TOTAL $ 300,816 $ 294,217 ==========================
See notes to consolidated financial statements 3 FIRST SAVINGS BANCORP, INC. - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
THREE MONTHS ENDED SIX MONTHS ENDED DECEMBER 31, DECEMBER 31, ------------------------------------------------------- ($ in thousands except per share data) 1997 1996 1997 1996 ------------------------------------------------------- INTEREST AND DIVIDEND INCOME: Interest on loans receivable $ 4,058 3,706 8,005 7,343 Interest on mortgage-backed securities 177 28 307 83 Interest on investment securities 1,270 982 2,647 1,998 Dividends on investment securities 124 35 71 70 Other 35 113 232 165 ----------------------------------------------------- Total interest income 5,664 4,864 11,262 9,659 ----------------------------------------------------- INTEREST EXPENSE: Interest on deposits 2,500 2,364 4,987 4,667 Interest on borrowings 317 6 622 12 ----------------------------------------------------- Total interest expense 2,817 2,370 5,609 4,679 ----------------------------------------------------- Net interest income 2,847 2,494 5,653 4,980 Provision for loan losses ----------------------------------------------------- Net interest income after provision for loan losses 2,847 2,494 5,653 4,980 ----------------------------------------------------- NONINTEREST INCOME: Fees and service charges 128 85 245 173 Income from real estate operations 2 2 4 5 Rent on safe deposit boxes 7 7 9 9 Other, net 8 1 9 2 ----------------------------------------------------- Total noninterest income, net 145 95 267 189 ----------------------------------------------------- GENERAL AND ADMINISTRATIVE EXPENSES: Compensation and fringe benefits 512 509 1,033 1,061 Occupancy and building 56 51 106 108 Federal insurance premiums 33 66 1,264 Computer services 66 71 171 139 Other 268 201 467 366 ----------------------------------------------------- Total general and administrative expenses 935 832 1,843 2,938 ----------------------------------------------------- INCOME BEFORE INCOME TAXES 2,057 1,757 4,077 2,231 INCOME TAX EXPENSE 759 586 1,503 759 ----------------------------------------------------- NET INCOME $ 1,298 $ 1,171 $ 2,574 $ 1,472 ===================================================== INCOME PER COMMON SHARE: BASIC: $ 0.35 $ 0.32 $ 0.70 $ 0.40 ===================================================== DILUTED: $ 0.32 $ 0.30 $ 0.64 $ 0.37 ===================================================== WEIGHTED AVERAGE SHARES OUTSTANDING: BASIC: 3,674,737 3,669,850 3,666,126 3,690,149 ========================================================= DILUTED: 4,016,668 3,948,720 4,004,594 3,963,130 =========================================================
See notes to consolidated financial statements. 4 FIRST SAVINGS BANCORP, INC. - -------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
SIX MONTHS ENDED DECEMBER 31, --------------------------------- ($ IN THOUSANDS) 1997 1996 --------------------------------- OPERATING ACTIVITIES: Net income $ 2,574 $ 1,472 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation 49 57 Issuance of ESOP shares 148 118 Net amortization on investments 9 276 Loan origination fees and costs deferred, net of current amortization (26) 14 Changes in: Other assets (53) (223) Other liabilities (400) 116 ------------------------- Net cash provided by operating activities 2,301 1,830 ------------------------- INVESTING ACTIVITIES: Net decrease in interest-bearing deposits with banks 3,964 607 Purchase of certificates of deposits (7,000) Proceeds from maturities of investments 7,500 6,700 Purchase of investment securities (9,950) Principal repayments on mortgage-backed securities 646 1,404 Loan originations net of principal repayments (8,148) (7,183) Proceeds from sale of property and equipment 9 Gain on sale of property and equipment (7) Purchase of premises and equipment (49) (35) ------------------------- Net cash used in investing activities (6,035) (6,114) ------------------------- FINANCING ACTIVITIES: Net increase in deposits 5,591 9,275 Net decrease in borrowed funds (30) Net proceeds from exercise of stock options 92 Cash dividends paid (1,552) (1,572) Repurchases of common stock (976) ------------------------- Net cash provided by financing activities 4,131 6,697 ------------------------- INCREASE IN CASH AND CASH EQUIVALENTS 397 2,413 CASH AND CASH EQUIVALENTS BEGINNING OF PERIOD 2,801 4,718 ------------------------- CASH AND CASH EQUIVALENTS END OF PERIOD $3,198 $7,131 ========================= SUPPLEMENTAL DISCLOSURES: - ------------------------- Cash paid for: Interest on deposits $4,959 $4,650 Interest on borrowed funds 622 13 Income taxes 1,560 946
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 December 31, 1997 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 3,674,737 3,669,850 3,666,126 3,690,149 Effect of dilutive stock options 341,931 278,870 338,468 272,981 --------- --------- --------- --------- Weighted average number of common shares and dilutive potential common shares used in diluted EPS 4,016,668 3,948,720 4,004,594 3,963,130 ==========================================
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 December 31, 1997, 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 $300.8 million at December 31, 1997 compared to $294.2 million at June 30, 1997. The increase was primarily related to a 4.2% increase in net loans. Net loans increased from $192.2 million at June 30, 1997 to $200.4 million at December 31, 1997. The favorable rate environment and strong marketing programs continue to fuel the loan growth. Increased deposits and a reduction in interest-bearing deposits with banks supported the loan growth. Deposits increased by $5.6 million to $209.9 million at December 31, 1997 from $204.3 million at June 30, 1997 and shareholders' equity increased to $68.5 million at December 31, 1997 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 December 31, 1997, liquid assets (cash and cash equivalents, and marketable investment securities, less pledged investments) were approximately $89.2 million, which represents 42.4% 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 December 31, 1997, this liquidity ratio, based on North Carolina regulations, was 27.2% Management considers current liquidity levels to be adequate to meet First Savings' foreseeable needs. At December 31, 1997, outstanding mortgage loan commitments and available home equity line of credit balances were $16.7 million, available credit card line of credit balances were $3.6 million and the undisbursed portion of construction loans was $8.5 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 DECEMBER 31, 1997 Total Capital (to Risk Weighted Assets): Consolidated $68,717 49.91% $11,015 greater than or equal to 8.0% First Savings Bank of Moore Co., Inc., SSB $52,262 38.06% $10,985 greater than or equal to 8.0% Tier 1 Capital (to Risk Weighted Assets): Consolidated $68,113 49.48% $ 5,506 greater than or equal to 4.0% First Savings Bank of Moore Co., Inc., SSB $51,658 37.62% $ 5,493 greater than or equal to 4.0% Tier 1 Capital (to Average Assets): Consolidated $68,113 22.90% $11,872 greater than or equal to 4.0% First Savings Bank of Moore Co., Inc., SSB $51,658 18.03% $11,460 greater than or equal to 4.0% TO BE WELL CAPITALIZED UNDER PROMPT CORRECTIVE ACTION PROVISIONS AMOUNT RATIO -------------------------------------------- Total Capital (to Risk Weighted Assets: Consolidated n/a n/a First Savings Bank of Moore Co., Inc., SSB $13,732 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 $ 8,239 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., SSB $14,326 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 December 31, 1997, the Bank's capital ratio under the North Carolina requirements was 18.04%. At December 31, 1997, 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 DEC. 31, 1997 AND 1996 Net income for the three months ended December 31, 1997 was $1,298,000 compared with $1,171,000 for the same period in 1996. Basic and diluted earnings per share for the three months ended December 31, 1997 was $0.35 and $0.32, respectively, compared with $0.32 and $0.30, 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 December 31, 1997 increased $353,000 representing an increase of 14.21% for the corresponding period of the prior year. Fueling the 52.6% increase in noninterest income was an increase in fees and service charges of $43,000. General and administrative expenses increased from $832,000 for the quarter ended December 31, 1996 to $935,000 for the quarter ended December 31, 1997 due primarily to increases in advertising and credit card related expenses. COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED DECEMBER 31, 1997 AND 1996 Net income for the six months ended December 31, 1997 was $2,574,000, compared to $1,472,000 for the same period in 1996. Basic and diluted earnings per share for the six months ended December 31, 1997 was $0.70 and $0.64, respectively, compared to $0.40 and $0.37, respectively, for the same period of the prior year. The increase in earnings was primarily due to an increase in the net interest margin and a reduction in federal insurance premiums. Net interest income increased $673,000 from $4,980,000 for the six months ended December 31, 1996 to $5,653,000 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 $78,000 or 41.30% from $189,000 for the six month period ended December 31, 1996 to $267,000 for the same period of the current year. General and administrative expenses for the six month period ended December 31, 1997 was $1,843,000 compared to $2,938,000 for the same period of the prior year. The decrease was primarily due to a nonrecurring SAIF Assessment of $1,159,000 in 1996. 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 six month period ended December 31, 1996, 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. 2/11/98 /s/ William E. Samuels, Jr. ---------------------- ------------------------------------------- Date William E. Samuels, Jr. President 2/11/98 /s/ Timothy S. Maples ---------------------- ------------------------------------------- Date Timothy S. Maples Controller/Principal Financial Officer 11 EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 3-MOS 6-MOS JUN-30-1998 JUN-30-1998 OCT-01-1997 JUL-01-1997 DEC-31-1997 DEC-31-1997 3,198 0 2,337 0 0 0 0 0 79,760 0 10,944 0 11,118 0 201,012 0 604 0 300,816 0 209,908 0 20,000 0 2,415 0 0 0 0 0 0 0 35,411 0 33,082 0 300,816 0 4,058 8,005 1,571 3,025 35 232 5,664 11,262 2,500 4,987 2,817 5,609 2,847 5,653 0 0 0 0 935 1,843 2,057 4,077 2,057 4,077 0 0 0 0 1,298 2,574 0.35 0.70 0.32 0.64 3.87 3.86 596 0 0 0 0 0 596 0 604 0 0 0 0 0 604 0 196 0 0 0 408 0
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