-----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, QMU5ag2cW21P8WCpSglxy1iXdPiKGlusFnALFUAi+Wre7jZFX3BK37PW+6jy4bfy d9oZwhDUqjHhU4pPXDrd6A== 0000950109-98-005092.txt : 19981116 0000950109-98-005092.hdr.sgml : 19981116 ACCESSION NUMBER: 0000950109-98-005092 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19980930 FILED AS OF DATE: 19981113 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: 98748013 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 September 30, 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 October 31, 1998 there were 3,714,301 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 9-10 SIGNATURES 11 FIRST SAVINGS BANCORP, INC. - ------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
SEPTEMBER 30, June 30, ------------- --------- 1998 1998 ------------- --------- ($ in thousands) ASSETS Cash and due from banks $ 3,304 $ 3,825 Interest earning deposits with banks 3,255 3,991 Investment securities available for sale at fair value 63,974 72,732 Investment securities held to maturity at amortized cost (fair values - $9,765 at September 30, 1998; $9,821 at June 30, 1998) 9,400 9,737 Loans receivable (net of allowance for loan losses of $596 at September 30, and June 30, 1998) 209,697 208,094 Accrued interest receivable 1,756 1,749 Premises and equipment 2,098 1,936 Stock in the Federal Home Loan Bank of Atlanta, at cost 1,930 1,930 Prepaid expenses and other assets 289 174 -------- -------- TOTAL $295,703 $304,168 ======== ======== LIABILITIES AND SHAREHOLDERS' EQUITY LIABILITIES: Deposits 212,607 211,925 Borrowed funds 10,000 20,000 Accrued expenses and other liabilities 3,144 2,722 -------- -------- Total liabilities 225,751 234,647 -------- -------- 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, 3,714,320 shares issued and outstanding at September 30, 1998; 3,710,820 at June 30, 1998 35,379 35,536 Unearned compensation related to ESOP note payable (123) (158) Net unrealized gain on securities available for sale 562 375 Retained earnings 34,134 33,768 -------- -------- Total shareholders' equity 69,952 69,521 -------- -------- TOTAL $295,703 $304,168 ======== ========
See notes to consolidated financial statements 3 FIRST SAVINGS BANCORP, INC. - ------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended September 30, ------------------------ 1998 1997 ------------------------ ($ in thousands except per share data) INTEREST AND DIVIDEND INCOME: Interest on loans receivable $ 4,224 $ 3,947 Interest on mortgage-backed securities 173 130 Interest on investment securities 1,121 1,377 Dividends on investment securities 36 35 Other 25 108 ---------- ---------- Total interest income 5,579 5,597 ---------- ---------- INTEREST EXPENSE: Interest on deposits 2,520 2,488 Interest on borrowings 190 305 ---------- ---------- Total interest expense 2,710 2,793 ---------- ---------- Net interest income 2,869 2,804 Provision for loan losses Net interest income after provision for loan losses 2,869 2,804 ---------- ---------- NONINTEREST INCOME: Fees and service charges 156 118 Income from real estate operations 2 2 Rent on safe deposit boxes 2 2 Other, net 1 1 ---------- ---------- Total noninterest income, net 161 123 ---------- ---------- GENERAL AND ADMINISTRATIVE EXPENSES: Compensation and fringe benefits 563 552 Occupancy and building 62 49 Federal insurance premiums 33 33 Computer services 89 105 Other 237 198 ---------- ---------- Total general and administrative expenses 984 907 ---------- ---------- INCOME BEFORE INCOME TAXES 2,046 2,020 INCOME TAXES 752 744 ---------- ---------- NET INCOME $ 1,294 $ 1,276 ========== ========== NET INCOME PER COMMON SHARE: Basic $0.35 $0.35 ========== ========== Diluted $0.32 $0.32 ========== ========== WEIGHTED AVERAGE SHARES OUTSTANDING Basic 3,718,420 3,682,500 ========== ========== Diluted 4,018,718 3,984,737 ========== ==========
See notes to consolidated financial statements. 4 FIRST SAVINGS BANCORP, INC. - ------------------------------------------------------------------------------- CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
THREE MONTHS ENDED SEPTEMBER 30, ---------------------- ($ IN THOUSANDS) 1998 1997 ---------------------- OPERATING ACTIVITIES: Net income $ 1,294 $ 1,276 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation of premises and equipment 26 24 Issuance of ESOP shares 83 69 Net amortization on investments 47 48 Loan origination fees and costs deferred, net of current amortization 11 (14) Changes in: Other assets (115) 129 Other liabilities 315 83 -------- ------- Net cash provided by operating activities 1,661 1,615 -------- ------- INVESTING ACTIVITIES: Net decrease in interest-earning deposits with banks 736 3,510 Purchase of available for sale investment securities (2,000) (2,000) Proceeds from maturities and calls of: Available for sale investment securities 11,000 5,500 Held to maturity investment securities 331 182 Loan originations net of principal repayments and net fees (1,614) (4,036) Purchase of premises and equipment (188) (29) -------- ------- Net cash provided by investing activities 8,265 3,127 -------- ------- FINANCING ACTIVITIES: Net increase in deposits 682 2,121 Net decrease in borrowed funds (10,000) (2,000) Net proceeds from exercise of stock options 18 Repurchases of common stock (223) (740) Cash dividends paid (924) 71 -------- ------- Net cash used in financing activities (10,447) (548) -------- ------- INCREASE (DECREASE) IN CASH AND DUE FROM BANKS (521) 4,194 CASH AND DUE FROM BANKS, BEGINNING OF PERIOD 3,825 2,801 -------- ------- CASH AND DUE FROM BANKS, END OF PERIOD $ 3,304 $ 6,995 ======== ======= SUPPLEMENTAL DISCLOSURES: - ------------------------------------------------- Cash paid for: Interest on deposits $ 2,528 $ 2,468 Interest on borrowed funds 216 332 Income taxes 10 310
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 month period ended September 30, 1998 is not necessarily indicative of the results of operations that may be expected for the year ending June 30, 1999. 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, 1998. 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.
SEPTEMBER 30, --------------------- 1998 1997 --------- --------- Weighted average number of common shares used in basic EPS 3,718,420 3,682,500 Effect of dilutive stock options 300,298 302,237 --------- --------- Weighted average number of common shares and dilutive potential common shares used in diluted EPS 4,018,718 3,984,737 ========= =========
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% of its stock. As of September 30, 1998, 86,760 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 $295.7 million at September 30, 1998 compared to $304.2 million at June 30, 1998. Net loans increased from $208.1 million at June 30, 1998 to $210.0 million at September 30, 1998. The favorable rate environment continues to fuel the loan growth. First Savings' total securities decreased slightly due primarily to principal repayments on mortgage-backed securities and maturing securities. Increased deposits and maturing securities supported the loan growth. Deposits increased from $211.9 million at June 30, 1998 to $212.6 million at September 30, 1998, and shareholders' equity increased to $70.0 million at September 30, 1998 from $69.5 million at June 30, 1998. 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 September 30, 1998, liquid assets (cash and cash equivalents, and marketable investment securities, less pledged investments) were approximately $65.8 million, which represents ----% 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 September 30, 1998, this liquidity ratio, based on North Carolina regulations, was 23.05% Management considers current liquidity levels to be adequate to meet First Savings' foreseeable needs. MANAGEMENT'S DISCUSSION AND ANALYSIS At September 30, 1998, outstanding mortgage loan commitments and available home equity line of credit balances were $16.8 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. - ------------------------------------------------------------------------------- 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 SEPTEMBER 30, 1998 Total Capital (to Risk Weighted Assets: Consolidated $69,986 48.19% $11,617 *8.0% n/a n/a First Savings Bank of Moore Co., Inc., SSB $56,224 38.75% $11,608 *8.0% $14,510 *10.0% Tier 1 Capital (to Risk Weighted Assets): Consolidated $69,390 47.78% $ 5,809 *4.0% n/a n/a First Savings Bank of Moore Co., Inc., SSB $55,628 38.34% $ 5,804 *4.0% $ 8,706 *6.0% Tier 1 Capital (to Average Assets): Consolidated $69,390 23.19% $11,969 *4.0% n/a n/a First Savings Bank of Moore Co., Inc., SSB $55,628 19.27% $11,548 *4.0% $14,435 *5.0%
- --------- * Greater than or equal to 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 September 30, 1998, the Bank's capital ratio under the North Carolina requirements was 19.76%. At September 30, 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 SEPT.30, 1998 AND 1997 Net income and earnings per share on a diluted basis for the three months ended September 30, 1998 were $1,294,000 and $0.32, respectively, compared to $1,276,000 and $0.32, respectively, for the corresponding period of the prior year. Increases in net interest income and noninterest income supported the earnings growth. General and administrative expenses increased from $907,000 for the month ended September 30, 1997 to $984,000 for the quarter ended September 30, 1998. The increase was due primarily to increases in compensation and other administrative expenses. OTHER INFORMATION YEAR 2000 COMPLIANCE The "Year 2000" issue confronting First Savings and its suppliers, customers, customers' suppliers and competitors centers on the inability of computer systems to recognize the Year 2000. Many existing computer programs and systems were originally programmed with six digit dates that provided only two digits to identify the calendar year in the date field, without considering the upcoming change in the century. With the impending new millennium, these programs and computers will recognize "00" as the year 1900 rather than the year 2000. Like most financial service providers, First Savings and its operations may be significantly affected by the Year 2000 issue due to its dependence on computer generated financial information. Software, hardware, and equipment both within and outside First Savings' direct control and with whom First Savings electronically or operationally interfaces (e.g. third party vendors providing data processing, information system management, maintenance of computer systems, and credit bureau information) are likely to be affected. Furthermore, if computer systems are not adequately changed to identify the Year 2000, many computer applications could fail or create erroneous results. As a result, many calculations which rely on date field information, such as interest, payment of due dates and other operating functions, could generate results which are significantly misstated, and First Savings could experience a temporary inability to process transactions, prepare statements or engage in similar normal business activities. In addition, under certain circumstances, failure to adequately address the Year 2000 issue could adversely affect the viability of First Savings' suppliers and creditors and the creditworthiness of its borrowers. Thus, if not adequately addressed, the Year 2000 matter could result in a significant adverse impact on products, services and the competitive condition of First Savings. Financial institution regulators have recently increased their focus upon Year 2000 compliance issues, issuing guidance concerning the responsibilities of senior management and directors. The Federal Financial Institutions Examination Council ("FFIEC") has issued several interagency statements on Year 2000 Project Management Awareness. These statements require financial institutions to, among other things, examine the Year 2000 implications of reliance on vendors, data exchange and potential impact on customers, suppliers and borrowers. These statements also require each federally regulated financial institution to survey its exposure, measure its risk and prepare a plan in order to solve the Year 2000 issue. In addition, the federal banking regulators have issued safety and soundness guidelines to be followed by insured depository institutions, such as the Bank, to assure resolution of any Year 2000 9 FIRST SAVINGS BANCORP, INC. - ------------------------------------------------------------------------------- problems. The federal banking agencies have asserted that Year 2000 testing and certification is a key safety and soundness issue in conjunction with regulatory exams, and thus an institution's failure to address appropriately the Year 2000 issue could result in supervisory action, including such enforcement actions as the reduction of the institution's supervisory ratings, the denial of applications for approval of a merger or acquisition, or the imposition of civil money penalties. In order to address the Year 2000 issue and to minimize its potential adverse impact, management is engaged in a process to identify areas that will be affected by the Year 2000, assess their potential impact on operations, monitor the progress of third party software vendors in addressing the matter, test changes provided by these vendors, and develop contingency plans for any critical systems which are not effectively reprogrammed. The plan is divided into the five phases: (1) awareness, (2) assessment, (3) renovations, (4) validation, and (5) implementation. First Savings has substantially completed the first two phases of the plan and is currently working internally and with external vendors on the final three phases. First Savings outsources its item processing operations to a service provider. First Savings' Year 2000 compliance is being closely coordinated with that of the service provider. First Savings does not currently expect that the cost of its Year 2000 compliance program will be material to its financial condition or results of operations, and expects that it will satisfy such compliance program without material disruption of its operations. In the event that First Savings' significant suppliers do not successfully and timely achieve Year 2000 compliance, First Savings' business, results of operations or financial condition could be adversely affected. 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. /s/ WILLIAM E. SAMUELS, JR. ___________________________ __________________________________________ Date William E. Samuels, Jr. President /s/ TIMOTHY S. MAPLES ___________________________ __________________________________________ Date Timothy S. Maples Vice President/ Chief Financial Officer 11 EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 3-MOS JUN-30-1999 JUL-01-1998 SEP-30-1998 3,304 3,255 0 0 63,974 9,400 9,765 210,293 596 295,703 212,607 10,000 3,144 0 0 0 35,379 34,573 295,703 4,224 1,330 25 5,579 2,520 2,710 2,869 0 0 984 2,046 2,046 0 0 1,294 0.35 0.32 3.93 255 0 0 255 596 0 0 596 200 0 396
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