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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 June 30, 1999
Commission File Number: 0-27930
Community Federal Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Delaware 64-0869537
(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 June 30, 1999
Common Stock, 4,266,150 shares
$.01 par value
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COMMUNITY FEDERAL BANCORP, INC.
PART I. FINANCIAL INFORMATION
Page
ITEM 1. FINANCIAL STATEMENTS:
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL 2
CONDITION AS OF JUNE 30, 1999 AND
SEPTEMBER 30, 1998
CONDENSED CONSOLIDATED STATEMENTS OF INCOME FOR 3
THE THREE MONTHS ENDED JUNE 30, 1999 AND 1998
THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS 4
FOR THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998
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 PERIODS PRESENTED
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF 13
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PART II. OTHER INFORMATION
OTHER INFORMATION 18
SIGNATURES 19
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Part I. Financial Information
Item 1. Financial Statements
COMMUNITY FEDERAL BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
ASSETS
Unaudited
June 30, September 30,
1999 1998
CASH AND CASH EQUIVALENTS $7,804,481 $4,070,714
SECURITIES AVAILABLE FOR SALE, at fair value 149,850,456 119,799,017
SECURITIES HELD TO MATURITY,
fair values of $1,923,838 and
$2,760,651 respectively 1,940,561 2,742,209
LOANS RECEIVABLE, net 141,822,405 141,414,264
PREMISES AND EQUIPMENT 3,603,325 2,944,000
OTHER ASSETS 3,668,603 4,350,238
Total assets $308,689,831 $275,320,442
LIABILITIES AND STOCKHOLDERS' EQUITY
June 30, September 30,
1999 1998
DEPOSITS $151,775,659 $144,801,613
FHLB Advances and Other Borrowings 92,323,014 65,451,449
OTHER LIABILITIES 6,338,753 7,502,754
Total liabilities 250,437,426 217,755,816
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 45,355,832 45,210,144
Retained earnings 16,712,436 15,487,717
Treasury Stock at cost, 362,600 and 310,500,
respectively (6,330,042) (5,545,540)
Other Comprehensive income 7,073,438 7,643,803
Unearned compensation (4,605,547) (5,277,786)
Total stockholders' equity 58,252,405 57,564,626
Total liabilities and stockholders' equity $308,689,831 $275,320,442
The accompanying notes are an integral part of these statements
2
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COMMUNITY FEDERAL BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
Three Months Nine Months
Ended June 30, Ended June 30,
1999 1998 1999 1998
INTEREST INCOME:
Interest and fees on loans $2,701,116 $2,733,348 $8,192,062 $7,958,834
Interest on securities, HTM 31,357 43,654 100,273 155,964
Interest on securities, AFS 2,017,476 1,518,525 5,613,111 3,968,909
Total interest income 4,749,949 4,295,527 13,905,446 12,083,707
INTEREST EXPENSE:
Interest on deposits 1,809,786 1,821,721 5,509,041 5,298,536
Other interest expense 1,099,401 713,639 2,922,710 1,542,703
Total interest expense 2,909,187 2,535,360 8,431,751 6,841,239
PROVISION FOR LOAN LOSSES 17,500 30,000 62,500 55,000
Net interest income after
provision for loan losses 1,823,262 1,730,167 5,411,195 5,187,468
NONINTEREST INCOME:
Deposit fees 40,917 28,002 113,384 68,259
Loan servicing fees 114,846 87,334 356,574 265,243
Other income 334,815 365,298 803,413 581,642
Total noninterest income 490,578 480,634 1,273,371 915,144
NONINTEREST EXPENSE:
Compensation and benefits 667,274 616,163 1,982,766 1,795,197
Occupancy and equipment 65,610 46,740 191,356 130,688
Other operating expense 293,888 187,924 904,379 667,402
Total noninterest expense 1,026,772 850,827 3,078,501 2,593,287
Income before income taxes 1,287,068 1,359,974 3,606,065 3,509,325
PROVISION FOR INCOME TAXES 482,273 474,379 1,293,877 1,229,292
NET INCOME $804,795 $885,595 $2,312,188 $2,280,033
EARNINGS PER SHARE
Basic $0.21 $0.22 $0.60 $0.56
Diluted $0.20 $0.21 $0.59 $0.53
The accompanying notes are an integral part of these statements
3
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COMMUNITY FEDERAL BANCORP, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (unaudited)
FOR THE NINE MONTHS ENDED JUNE 30, 1999 AND 1998
1999 1998
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $2,312,188 $2,280,033
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation 114,363 88,128
Amortization of premium/discounts, net 351,989 94,973
Amortization of Unearned Compensation 817,927 836,111
Provision for loan losses 62,500 55,000
Gain on sale securities, AFS, net (500,279) (611,836)
Changes in assets and liabilities:
Increase (Decrease)in other assets 681,635 (466,115)
Decrease (Increase) in other liabilities (457,868) (1,048,438)
Total adjustments 1,070,267 (1,052,177)
Net cash provided by operating activities 3,382,455 1,227,856
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and principal payments
on securities, AFS 36,350,993 27,320,693
Proceeds from maturities and principal payments
on securities, HTM 488,824 1,171,736
Proceeds from sale of securities, AFS 4,013,766 683,605
(Purchase of) sale of property and equipment (773,688) 274,465
Loan (originations) and principal repayments, net (470,641) (13,221,213)
Purchase of securities, AFS (71,231,582) (61,597,176)
Net cash used by investing activities (31,622,328) (45,367,890)
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in customer deposits, net 6,974,046 10,378,274
Dividends paid (1,087,469) (968,555)
Purchase of Treasury Stock (784,502) (4,264,576)
Purchase of Stock for stock plan trust 0 (13,474)
Proceeds (repayments)in FHLB advances, net 26,871,565 36,309,777
Net cash provided by financing activities 31,973,640 41,441,446
Net increase in cash and cash equivalents 3,733,767 (2,698,588)
CASH AND CASH EQUIVALENTS, beginning of year 4,070,714 5,437,003
CASH AND CASH EQUIVALENTS, end of period $7,804,481 $2,738,415
The accompanying notes are an integral part of these statements
4
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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 June 30, 1999, and for the three and nine month
periods 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 and
nine month periods ended June 30, 1999 and 1998. Results of
operations for the current interim period are not necessarily
indicative of results expected for the fiscal year ended
September 30, 1999. 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, 1998. The accounting policies followed by the Bank
are set forth in the summary of significant accounting policies
in the Bank's September 30, 1998 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.
5
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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.
The Management Recognition and Retention Plan Trust and the Stock
Option Plan (the "Plans") were approved by shareholders and was
effective April 1, 1997. Under the Management Recognition and
Retention Plan ("MRP"), employees and directors 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).
The aggregate fair market value of the shares purchased by the
MRP is considered unearned compensation at the time of purchase
and compensation is earned ratably over the stipulated vesting
period. Under the Company's Stock Option Plan, 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 (462,875 shares of common stock) at
exercise prices equal to the market price of the common stock on
the date of grant. The Company accounts for the Stock Option
Plan under the provisions of Accounting Principles Board Opinion
No 25, Accounting for Stock Issued to Employees.
3. EARNINGS PER SHARE
Basic earnings per share were computed by dividing net income by
the weighted average number of shares of common stock outstanding
during the three and nine months ended June 30, 1999 and 1998.
Common stock outstanding consists of issued shares less treasury
stock, unallocated ESOP shares, and shares owned by the MRP and
Stock option plan trust. Diluted earnings per share for the
three and nine months ended June 30, 1999 and 1998, were computed
by dividing net income by the weighted average number of shares
of common stock and the dilutive effect of the shares awarded
under the MRP and Stock Option plans, based on the treasury stock
method using an average fair market value of the stock during the
respective periods.
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The following table represents the earnings per share
calculations for the three and nine months ended June 30, 1999
and 1998:
Per Share
For the Three Months Ended Income Shares Amount
June 30, 1999
Net Income $804,795
Basic earnings per share:
Income available to
common shareholders $804,795 3,853,961 $0.21
Dilutive Securities
Management recognition
plan shares 112,500
Stock option plan shares 0
Diluted earning per share:
Income available to common
shareholders plus assumed
conversions $804,795 3,966,461 $0.20
June 30, 1998
Net Income $885,595
Basic earnings per share:
Income available to common
shareholders $885,595 3,957,574 $0.22
Dilutive Securities:
Management recognition plan
shares 140,120
Stock option plan shares 61,369
Diluted earnings per share:
Income available to common
shareholders plus assumed
conversion $885,595 4,159,063 $0.21
Per Share
For the Nine Months Ended Income Shares Amount
June 30, 1999
Net income $2,312,188
Basic earnings per share:
Income available to common
shareholders $2,312,188 3,835,061 $0.60
Dilutive Securities:
Management recognition
plan shares 112,590
Stock option plan shares 0
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Diluted earning per share:
Income available to common
shareholders plus assumed
conversions $2,312,188 3,947,651 $0.59
Per Share
For the Nine Months Ended Income Shares Amount
June 30, 1998
Net income $2,280,033
Basic earnings per share:
Income available to common
shareholders $2,280,033 4,057,863 $0.56
Dilutive Securities:
Management recognition
plan shares 140,120
Stock option plan shares 68,993
Diluted earning per share:
Income available to common
shareholders plus assumed
conversions $2,280,033 4,266,976 $0.53
4. PENDING ACCOUNTING PRONOUNCEMENTS
The AICPA has issued Statements of Position 98-1, Accounting for
the Costs of Computer Software Developed or Obtained for Internal
Use. This statement requires capitalization of external direct
costs of materials and services; payroll and payroll-related
costs for employees directly associated; and interests costs
during development of computer software for internal use
(planning and preliminary costs should be expensed). Also,
capitalized costs of computer software developed or obtained for
internal use should be amortized on a straight-line basis unless
another systematic and rational basis is more representative of
the software's use.
This statement is effective for financial statements for fiscal
years beginning after December 15, 1998 (prospectively) and is
not expected to have a material effect on the consolidated
financial statements.
The AICPA has issued Statement of Position (SOP) 98-5 Reporting
on Cost of Start-up-Activities. This SOP provides guidance on
the financial reporting of start-up cost and organization costs.
It requires cost of start-up activities and organization cost to
be expensed as incurred and the initial application of this SOP
should be reported as the cumulative effect of a change in
accounting principle. This SOP is effective for financial
statements for fiscal years beginning after December 15, 1998.
Earlier application is encouraged in fiscal years for which
annual financial statements previously have not been issued.
Management does not believe that the adoption of this statement
will have a material impact on the presentation of the Company's
financial condition or results of operations.
8
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In October 1998, the Financial Accounting Standards Board
("FASB") issued Statement of Financial Accounting Standards
("SFAS") No. 134, Accounting for Mortgage Backed Securities
Retained After the Securitization of Mortgage Loans Held for Sale
by a Mortgage Banking Enterprise. This Statement, an amendment
to SFAS No. 65, requires that after the securitization of
mortgage loans held for sale, an entity engaged in mortgage
banking activities classify the resulting mortgage-backed
securities or other retained interest based on its ability to
sell or hold those investments. This Statement is effective for
first fiscal quarter beginning after December 15, 1998. The
Company adopted the provisions of this Statement on January 1,
1999. Based on the Company's current operating activities, the
adoption of this Statement did not have a impact on the
presentation of the Company's financial condition or results of
operations.
In June 1999, the FASB issued SFAS No. 137 Accounting for
Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133. This statement delays
the effective date of Statement 133 from fiscal quarters of all
fiscal years beginning after June 15, 1999, with earlier
application encouraged to fiscal quarters of all fiscal years
beginning after June 15, 2000.
5. COMPREHENSIVE INCOME
The Company adopted SFAS No 130 October 1, 1998 SFAS No. 130
established standards for reporting and display of comprehensive
income and its components.
The Company has classified certain securities as available for
sale in accordance with Financial Accounting Standard Board
Statement No. 115. For the three month period ended June 30, 1999
the net unrealized gain on these securities decreased by $1.6
million and increased $369,000 for the same period in 1998. For
the nine month periods ended June 30, 1999, the net unrealized
gain on these securities decreased by $1.3 million and increased
$3.8 million for the same period in 1998. Pursuant to Statement
No. 115, any unrealized gain or loss activity of available for
sale securities is to be recorded as an adjustment to a separate
component of shareholder's equity, net of income tax effect.
Accordingly, for the three and nine month periods ended June 30,
1999 and 1998, the Company recognized a corresponding adjustment
in the net unrealized gain component of equity.
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Since comprehensive income is a measure of all changes in equity
of an enterprise that result from transactions and other economic
events of the period, this change in unrealized gain serves to
increase or decrease comprehensive income. The following table
represents comprehensive income for the three and nine month
periods ended June 30, 1999 and 1998:
Three Months Ended Nine Months Ended
June 30, June 30,
1999 1998 1999 1998
Net income $ 805 $ 886 $2,312 $2,280
income(loss),net
of tax:
Unrealized gain
(loss)on
Other
Comprehensive
Securities
available for
Sale (1,561) 369 (1,276) 3,799
Total Comprehensive
Income (loss) $ (756) $1,255 $1,036 6,079
6. COMMITMENTS and CONTINGENCIES
On January 21, 1999, the Company's Board of Directors approved
the Key Employee Retention Plan for certain officers and the
Severance Pay Plan for substantially all employees of the Company
and the Bank. Under the provisions of the Plan, the Company
could be continently liable to the employees if an employee is
terminated within one year after a change of control of the
Company. As of June 30, 1999, the amount the Company could be
continently liable would be approximate $295,000.
7. SALE OF BANK
The Company and First M&F Corp. Of Kosciusko, MS, have signed a
definitive agreement for First M&F Corp. to acquire Community
Federal Bancorp, and its subsidiary, Community Federal Bank.
Under the terms of the Agreement, First M&F will issue .2855
share of its common stock (subject to adjustment under certain
circumstances) plus $8.8457 of cash for each share of Community
Federal common stock. The transaction, which will be accounted
for as a purchase, should be a tax-free exchange relative to the
stock received and is subject to the approval of the stockholders
of First M&F Corp. and Community Federal and regulatory
authorities.
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Part 1
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.
Comparisons of Financial Conditions at June 30, 1999 and
September 30, 1998
Total assets increased by $33.4 million, or 12.1%, from $275.3
million at September 30, 1998 to $308.7 million at June 30, 1999.
The increase in total assets was primarily attributed to a $30
million increase in securities available for sale and a $3.7
million increase in cash and cash equivalents. These increases
were primarily funded by approximately $27 million in additional
FHLB Advances.
Equity increased $688,000 since September 30, 1998, which was
primarily attributed to $2.3 million in net income for the nine
month period, a decrease of $672,000 in unearned compensation,
offset by a decrease of $570,000 in unrealized gain on securities
available for sale, the purchase of $785,000 in treasury stock
and the declaration of dividends of $1,088,000.
Comparison of Results of Operations for the Three Months Ended
June 30, 1999 and 1998
The company reported net income for the three months ended June
30, 1999 of $805,000 as compared to $886,000 for the three months
ended June 30, 1998. The decrease in income for the three months
ended June 30, 1999 was due mainly to an increase in other
operating expense.
Net Interest Income
Net interest income after provision for loan losses for the three
months ended June 30, 1999 amounted to $1.8 million as compared
to $1.7 million for the three months ended June 30, 1998. Total
interest income increased $454,000 during the quarter ended June
30, 1999 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 interest earning
assets. Total interest expense increased $374,000 during the
third quarter 1999 compared to the same three month period of the
previous year. The main reason for this increase is due to an
increase in interest expense associated with FHLB advances to
fund the growth in interest earning assets.
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Noninterest Income
Noninterest income increased $10,000 from $481,000 for the three
months ended June 30, 1998 to $491,000 for the three months ended
June 30, 1999. This increase was due to a $13,000 increase in
deposit fees, a $28,000 increase in loan fees, offset by a
$31,000 decrease in other income. .
Noninterest Expense
Noninterest expense increased $176,000 from $851,000 for the
three months ended June 30, 1998 to $1 million for the three
months ended June 30, 1999. The main reason for this increase
was related to compensation expense, office occupancy and
equipment expense.
Provision for Income Tax
Income tax expense for the three months ended June 30, 1999
increased $8,000 to $482,000 as compared to income tax expense of
$474,000 for the three months ended June 30, 1998.
Comparisons of Results of Operations for the Nine Months Ended
June 30, 1999 and 1998.
The Company reported net income for the nine months ended June
30, 1999 of $2,312,000 as compared to $2,280,000 for the nine
months ended June 30, 1998, an increase of $32,000. The increase
in income for the nine months ended June 30, 1999 was due mainly
to an increase in non-interest income.
Net Interest Income
Net interest income after provision for loan losses for the nine
months ended June 30, 1999 amounted to $5.4 million as compared
to $5.2 million for the nine months ended June 30, 1998. Total
interest income increased $1.8 million during the nine months
ended June 30, 1999 as compared to the same nine month period of
the prior year. This increase resulted primarily from increased
interest and fees on the higher average balances in interest
earning assets. Total interest expense for the nine month period
ended June 30, 1999 increased $1.6 million compared to the same
nine month period of the prior year. The above resulted from the
increase in FHLB advances to fund the growth in interest earning
assets.
Provisions for Loan Losses
A $62,500 provision for loan losses was made during the nine
months ended June 30, 1999 to correspond with the volume in the
mortgage and consumer loan portfolio, compared to the $55,000
provision made during the nine months ended June 30, 1998. This
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adjustment reflects management's estimates which took into
account historical experience, the amount of nonperforming
assets, and general economic conditions.
Noninterest Income
Non-interest Income increased $358,000 from $915,000 for the nine
months ended June 30, 1998 to $1.3 million for the nine months
ended June 30, 1999. This increase was due to increased fee
income and gain on the sale of securities available for sale.
Noninterest Expense
Noninterest expense increased by $485,000 from $2.6 million for
the nine months ended June 30, 1998 to $3.1 million for the nine
months ended June 30, 1999. The increase was primarily due to an
increase in compensation expense and office occupancy and
equipment expense.
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 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 June 30, 1999, the Bank was in compliance with all
regulatory capital requirements.
Year 2000 Issue
The Company uses a wide range of software and related
technologies throughout its business that will be affected by the
date change in the year 2000. This date change requires
modification of portions of the Company's software so that its
computer systems will properly recognize dates beyond December
31, 1999. The Company believes that with the current and planned
upgrades or modifications to existing software and conversion to
new software, the impact of the Year 2000 issue can be mitigated.
The Company believes all of the computerized systems that process
checking accounts, savings accounts, CDs, IRAs, indirect
deposits, ATMs, installment loans, commercial loans, mortgage
loans, and general ledger are ready for the Year 2000.
The Company has established a contingency plan for the period of
time that the Company is going through the century change an is
exposed to the Year 2000 issue. This plan is designed to address
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the most likely risk facing the Company during that period. Some
of these risks include application system failures, power
outages, security systems, and environmental systems.
The Company relies on several third party service providers who
are also affected by the Year 2000 issue. The Company has worked
closely with these providers to monitor, to the extent possible,
the progress of their Year 2000 efforts. There can be no
assurance that the potential impact of a major interruption or
failure in the services provided by these companies would not
have a material adverse effect on the Company's financial
condition or results of operations.
The Year 2000 project cost is expected to total approximately
$18,000 of which $10,000 has already been expensed.
Forward-Looking Statements
In this report and in documents incorporated herein by reference,
the Company may communicate statements relating to the future
results of the Company that my be considered "forward-looking
statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. The Company's actual results may
differ materially from those included in the forward-looking
statements. Forward-looking statements are typically identified
by the words "believe, expect, anticipate, intend, estimate" and
similar expressions, These statements may relate to, among other
things, Year 2000 readiness and unforeseen or unanticipated cost
associated with Year 2000 compliance, loan loss reserve adequacy,
simulation of changes in interest rates and litigation results.
Actual results may differ materially from those expressed or
implied as a result of certain rate fluctuations, competitive
product and pricing pressures within the Company's markets,
equity and fixed income market fluctuations, personal and
corporate customers's bankruptcies, inflation, acquisitions and
integrations of acquired businesses, technological change,
changes in law, changes in fiscal, monetary , regulatory and tax
policies, monetary fluctuations, success in gaining regulatory
approvals when required as well as other risks and uncertainties.
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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 June 30, 1999, 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
None
15
<PAGE>
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.
COMMUNITY FEDERAL BANCORP, INC.
Date: August 6, 1999 (s) Jim Ingram
Jim Ingram, Chief Executive Officer
Date: August 6,1999 (s) H. Lewis Whitfield
H. Lewis Whitfield, President
Date: August 6, 1999 (s) Sherry McCarty
Sherry McCarty, Vice President
and Chief Financial Officer
16
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