UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended December 31, 1996
Commission File Number: 0-27930
Community Federal Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Delaware 64-086536
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
P.O. Box F
333 Court Street
Tupelo, Mississippi 38802
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including
area code: (601) 842-3981
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months
(or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest practicable
date.
Class Outstanding at December 31, 1996
Common Stock, 4,628,750 shares
$.01 par value
COMMUNITY FEDERAL BANCORP, INC.
PART I. FINANCIAL INFORMATION
Page
ITEM 1. FINANCIAL STATEMENTS:
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL 2
CONDITION AS OF DECEMBER 31, 1996 AND
SEPTEMBER 30, 1996
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR 3
THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 4
FOR THE THREE MONTHS ENDED DECEMBER 31, 1996 AND 1995
THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FURNISHED HAVE NOT BEEN AUDITED BY INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS, BUT REFLECT, IN
THE OPINION OF MANAGEMENT,ALL ADJUSTMENTS
NECESSARY FOR A FAIR PRESENTATION OF FINANCIAL
CONDITION AND THE RESULTS OF OPERATIONS FOR
THE PERIOD PRESENTED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF 7
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
OTHER INFORMATION 9
SIGNATURES 10
Part I. Financial Information
Item1. Financial Statments
COMMUNITY FEDERAL BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS
December 31, September 30,
1995 1996
CASH AND CASH EQUIVALENTS $4,567,792 $4,205,679
SECURITIES AVAILABLE FOR SALE,
at fair value 73,542,189 75,111,784
SECURITIES HELD TO MATURITY,
fair values of $4,674,304 and
$4,625,305, respectively 4,745,166 4,755,702
LOANS RECEIVABLE, net 121,338,419 117,630,885
PREMISES AND EQUIPMENT 592,431 607,267
OTHER ASSETS 1,237,334 1,705,625
Total assets $206,023,331 $204,016,942
LIABILITIES AND STOCKHOLDERS' EQUITY
December 31, September 30,
1995 1996
DEPOSITS $131,152,422 $131,740,433
OTHER LIABILITIES 5,900,680 5,137,613
Total liabilities 137,053,102 136,878,046
STOCKHOLDERS' EQUITY:
Preferred stock, no par, no shares issued,
2,000,000 authorized 0 0
Common stock, par $.01 per share, 4,628,750
issued and outstanding, 10,000,000 authorized 46,288 46,288
Additional paid-in capital 45,042,922 45,006,311
Retained earnings 23,075,223 22,511,930
Unrealized gain on securities
available for sale, net 4,217,426 3,038,477
Unearned ESOP compensation (3,411,630) (3,464,110)
Total stockholders' equity 68,970,229 67,138,896
Total liabilities and stockholders' equity $206,023,331 $204,016,942
The accompanying notes are an integral part of these statements
COMMUNITY FEDERAL BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months
Ended DECEMBER 31,
1996 1995
INTEREST INCOME:
Interest and fees on loans $2,363,602 $1,994,127
Interest and dividends on securities 409,883 430,692
Interest on mortgage-backed and
related securities 826,203 494,757
Total interest income 3,599,688 2,919,576
INTEREST EXPENSE:
Interest on deposits 1,665,944 1,783,726
Other interest expense 11,471 15,290
Total interest expense 1,677,415 1,799,016
PROVISION FOR LOAN LOSSES 5,000 10,000
Net interest income after
provision for loan losses 1,917,273 1,110,560
NONINTEREST INCOME:
Deposit fees 21,636 10,470
Loan servicing fees 40,453 38,704
Other income 3,922 43,076
Total noninterest income 66,011 92,250
NONINTEREST EXPENSE:
Compensation and benefits 322,382 244,631
Occupancy and equipment 25,895 17,595
Other operating expense 222,433 171,999
Total noninterest expense 570,710 434,225
Income before income taxes 1,412,574 768,585
PROVISION FOR INCOME TAXES 528,104 300,000
NET INCOME $884,470 $468,585
EARNINGS PER SHARE $0.21 N/A
SHARES OUTSTANDING LESS UNALLOCATED ESOP 4,282,339 N/A
The accompany notes are an integral part of these statements
COMMUNITY FEDERAL BANCORP, INC
STATEMENT OF CASH FLOWS
DECEMBER 31, 1996 AND 1995
1996 1995
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $884,470 $468,585
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 17,109 13,391
Deferred loan fees 5,411 24,117
Accreation of discounts, net (14,824) (28,363)
Amortization of Unearned Compensation 89,091 0
Provision for loan losses 5,000 10,000
Gain on sale of securities, net 0 (33,360)
Gain on Sale of REO 0 (15,119)
Changes in assets and liabilities:
Increase (Decrease) in other asset s 347,713 (172,802)
Increase in interest and dividends receivable 120,578 112,297
Decrease (Increase) in other liabilities (1,027,243) 461,820
Total adjustments (457,165) 371,981
Net cash provided by operating activities 427,305 840,566
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of Real Estate Owned 0 190,000
Proceeds from maturities of securities 1,496,955 1,500,000
Proceeds from sales of securities 0 388,240
Principal collections and maturities on mortgage-
backed and related securities 1,891,571 887,518
Net change in REO 0 (2,031)
Purchase of property and equipment (2,273) 0
Loan (originations) and principal repayments, net (3,717,945) (5,090,900)
Purchase of securities (18,300) (19,000)
Net cash used by investing activities (349,992) (2,146,173)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in customer deposits, net (588,011) 4,447,103
Dividends paid (321,176) 0
(Decrease) increase in advances from borrowers for
taxes and insurance (306,013) (309,064)
Net change in FHLB advances 1,500,000 0
Net cash provided by financing activities 284,800 4,138,039
Net increase in cash and cash equivalents 362,113 2,832,432
CASH AND CASH EQUIVALENTS, beginning of year 4,205,679 2,895,100
CASH AND CASH EQUIVALENTS, end of period $4,567,792 $5,727,532
The accompanying notes are an integral part of these statements
COMMUNITY FEDERAL BANCORP, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
Community Federal Bancorp, Inc. (The "Company") was
incorporated in the State of Delaware on November 22, 1995, for
the purpose of becoming a holding company to own all of the
outstanding capital stock of Community Federal Savings Bank (the
"Bank"), an existing Stock Bank which was 100% owned by Community
Federal Mutual Holding Company (the "MHC"). Upon the conversion
from a federally chartered mutual holding company form of
organization to a federally chartered stock savings association
(the "Conversion"), the MHC was dissolved.
The accompanying unaudited condensed consolidated financial
statements as of December 31, 1996, and for the three month
period then ended, include the accounts of the Company and the
Bank. All significant intercompany transactions and accounts
have been eliminated in consolidation.
The condensed consolidated financial statements were prepared
by the company without an audit, but in the opinion of
management, reflect all adjustments necessary for the fair
presentation of financial position and results of operations for
the three month period ended December 31, 1996 and 1995. Results
of operations for the current interim period are not necessarily
indicative of results expected for the fiscal year ended
September 30, 1997. While certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have
been condensed or omitted pursuant to the rules and regulations
of the Securities and Exchange commission, management believes
that the disclosures herein are adequate to make the information
presented not misleading. These condensed consolidated financial
statements should be read in conjunction with the consolidated
financial statements and notes thereto for the year ended
September 30, 1996. The accounting policies followed by the Bank
are set forth in the summary of significant accounting policies
in the Bank's September 30, 1996 consolidated financial
statements.
2. STOCK CONVERSION
On March 14, 1996, the Conversion to a federally chartered
stock savings bank through amendment of its charter, dissolution
of the MHC, and issuance of common stock to the company was
completed. Related thereto, the Company sold 4,628,750 shares of
common stock, par value $.01 per share, at an initial price of
$10 per share in subscription and community offerings. Costs
associated with the Conversion were approximately $1,300,000
including underwriting fees. These conversion costs were
deducted from the gross proceeds of the sale of the common stock.
In connection with the Conversion, the Company has
established an employee stock ownership plan (the "ESOP"). The
ESOP purchased approximately 8%, or 363,200 shares, of the total
shares of common stock sold. The company lent $3,632,000 to the
ESOP for the purchase of the shares of common stock. Unearned
compensation for the ESOP was charged to stockholders' equity and
is reduced ratably in connection with principal payments under
the terms of the Plan.
Within one year following the Conversion, and subject to
shareholder approval, the Company is expected to implement the
Management Recognition Plan, under which employees could be
awarded an aggregate amount of shares of common stock equal to 4%
of the shares issued in the Conversion (185,150 shares of common
stock) and the Stock Option Plan, under which employees and
directors could be granted options to purchase an aggregate
amount of shares of common stock equal to 10% of the shares
issued in the Conversion at exercise prices equal to the market
price of the common stock on the date of grant.
3. PRO FORMA EARNINGS PER SHARE
Earnings per share for the three months ended December 31,
1996 has been computed based on the weighted average number of
shares of common stock, less any unallocated ESOP shares, which
were outstanding during the three month periods ended December
31, 1996.
Item 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
On March 25, 1996, Community Federal Bancorp, Inc. (The
"Company") completed the sale of 4,628,750 shares of its common
stock in an initial public offering at a price of $10.00 and
simultaneously acquired the shares of common stock of Community
Federal Savings Bank (the "Bank") in connection with the mutual
to stock conversion (the "Conversion"). Costs associated with
the conversion were approximately $1,300,000. Prior to March 25,
1996, the Company had not issued any stock, had no assets or
liabilities, and had not engaged in any business activities other
than of an organizational nature. Accordingly, the financial
data for periods prior to March 24, 1996 included herein reflect
the operations of the Bank only.
Comparisons of Financial Conditions at December 31, 1996 and
September 30, 1996
Total assets increased by $2 million, or 1.0%, from $204 million
at September 30, 1996 to $206 million at December 31, 1996. The
increase in total assets was primarily attributed to a $3.7
million increase in loans receivable and a$1.6 million decrease
in investments.
Equity increased $1.8 million over the prior year as a result of
the $1.2 million increase in unrealized gains on securities
available for sale and the net income for the quarter ended
December 31, 1996 of $884,000.
Comparison of Results of Operations for the Three Months Ended
December 31, 1996 and 1995
The company reported net income for the three months ended
December 31, 1996 of $884,000 as compared to $469,000 for the
three months ended December 31, 1995. The increase in income for
the three months ended December 31, 1996 was due mainly to an
increase in net interest income.
Net Interest Income
Net interest income for the three months ended December 31, 1996
amounted to $1.9 million as compared to $1.1 million for the
three months ended December 31, 1995. Total interest income
increased $680,000 during the quarter ended December 31, 1996 as
compared to the same three month period of the prior year. This
increase resulted primarily from increased interest and fees on
the higher average balance in loans and mortgage backed and
related securities. Total interest expense decreased only
slightly during the first quarter of 1997 compared to the same
three month period of the previous year.
Provision for Loan Losses
A $5,000 provision for loan losses was made during the first
quarter of 1997 to correspond with the volume in the mortgage and
consumer loan portfolio, compared to a $10,000 provision for loan
losses during the comparable 1995 first quarter. This adjustment
reflects management's estimates which took into account
historical experience, the amount of nonperforming assets, and
general economic condition. Total nonperforming assets at
December 31, 1996 were $654,000 compared to $517,000 at December
31, 1995. The allowance for loan losses at December 31, 1996 was
$575,000 compared to $562,000 at December 31, 1995.
Noninterest Income
Noninterest income decreased $25,000 from $91,000 for the three
months ended December 31, 1995 to $66,000 for the three months ended
December 31, 1996.
Noninterest Expense
Noninterest expense increase $136,000 from $434,000 for the three months
ended December 31, 1995 to $570,000 for the three months ended
December 31, 1996. Cheif reasons for the increase were the increase
in compensation expense associated with the Employee Stock Ownership
plan ("ESOP") and the additional staffing of the consumer lending
department.
Provision for Income Tax
Income tax expense for the three months ended December 31, 1996
increased $228,000 to $528,000 as compared to income tax expense
of $300,000 for the three months ended December 31, 1995. This
increase is the result of the increase in income before income
taxes.
Capital Resources
The Bank's primary sources of funds are customer deposits, repayments
of loan principal, and interest from loans and investments. While
scheduled principal repayments on loans and mortgage-backed
securities are a relatively predictable source of funds, deposit flows,
and loan prepayments are greatly influenced by general interest
rates, economic conditions, and competition. The Bank manages
the pricing of its deposits to maintain a desired deposit balance.
In addition, the Bank invests in short term interest-earning assets
which provide liquidity to meet lending requirements.
The Bank is required to maintain certain levels of regulatory
capital. At December 31, 1996, the Bank was in compliance
with all regulatory capital requirements.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, the Company and any subsidiaries may be a
party to various legal proceedings incident to its or their
business. At December 31, 1996, there were no legal proceedings
to which the Company or any subsidiary was a party, or to which any
of their property was subject, which were expected by management
to result in a material loss.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
Not applicable
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.
Date: February 14, 1996 (S) Jim Ingram
Jim Ingram, President
and Chief Executive Officer
Date: February 14, 1996 (S) Sherry McCarty
Sherry McCarty, Controller
and Principal Financial Officer
COMMUNITY FEDERAL BANCORP,INC.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> DEC-31-1997
<CASH> 533
<INT-BEARING-DEPOSITS> 4035
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 73542
<INVESTMENTS-CARRYING> 4745
<INVESTMENTS-MARKET> 4676
<LOANS> 121338
<ALLOWANCE> 575
<TOTAL-ASSETS> 206023
<DEPOSITS> 131152
<SHORT-TERM> 1500
<LIABILITIES-OTHER> 4401
<LONG-TERM> 0
0
0
<COMMON> 46
<OTHER-SE> 68924
<TOTAL-LIABILITIES-AND-EQUITY> 206023
<INTEREST-LOAN> 2364
<INTEREST-INVEST> 1183
<INTEREST-OTHER> 53
<INTEREST-TOTAL> 3600
<INTEREST-DEPOSIT> 1666
<INTEREST-EXPENSE> 1677
<INTEREST-INCOME-NET> 1922
<LOAN-LOSSES> 5
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 571
<INCOME-PRETAX> 1413
<INCOME-PRE-EXTRAORDINARY> 1413
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 884
<EPS-PRIMARY> .21
<EPS-DILUTED> .21
<YIELD-ACTUAL> 7.00
<LOANS-NON> 654
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1492
<ALLOWANCE-OPEN> 572
<CHARGE-OFFS> 2
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 575
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 575
</TABLE>
