UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000
-------------------------------------
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from ____________ to _______________
Commission File Number: 0-27916
---------------------------
FFD FINANCIAL CORPORATION
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(Exact name of small business issuer as specified in its charter)
Ohio 34-1921148
- ------------------------------- -----------------------------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
321 North Wooster Avenue, Dover, Ohio 44622
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(Address of principal executive offices)
(330) 364-7777
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(Issuer's telephone number)
- ---------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the issuer filed all documents and reports required to be filed by
Section 12, 13 or 15(d) of the Exchange Act after the distribution of securities
under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes of common
equity, as of the latest practicable date: May 10, 2000 - 1,412,283 shares of
common stock, no par value
Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X]
Page 1 of 16 pages
<PAGE>
INDEX
Page
PART I - FINANCIAL INFORMATION
Consolidated Statements of Financial Condition 3
Consolidated Statements of Earnings 4
Consolidated Statements of Comprehensive Income 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
PART II - OTHER INFORMATION 15
SIGNATURES 16
2
<PAGE>
FFD Financial Corporation
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
March 31, June 30,
ASSETS 2000 1999
<S> <C> <C>
Cash and due from banks $ 1,176 $ 844
Interest-bearing deposits in other financial institutions 2,122 2,167
------- -------
Cash and cash equivalents 3,298 3,011
Investment securities available for sale - at market 2,877 2,924
Mortgage-backed securities available for sale - at market 9,442 10,978
Mortgage-backed securities held to maturity - at amortized cost,
approximate market value of $4,360 and $4,907 as of
March 31, 2000 and June 30, 1999 4,309 4,779
Loans receivable - net 100,383 86,417
Loans held for sale 831 965
Office premises and equipment - at depreciated cost 1,280 1,364
Federal Home Loan Bank stock - at cost 1,630 1,201
Accrued interest receivable 417 329
Prepaid expenses and other assets 164 209
Prepaid federal income taxes 62 116
------- -------
Total assets $124,693 $112,293
======= =======
LIABILITIES AND SHAREHOLDER' EQUITY
Deposits $ 77,254 $ 72,025
Advances from the Federal Home Loan Bank 30,528 23,616
Securities sold under agreements to repurchase 287 -
Accrued interest payable 183 146
Other liabilities 252 250
Deferred federal income taxes 44 52
------- -------
Total liabilities 108,548 96,089
Shareholders' equity
Preferred stock - authorized 1,000,000 shares without par
value; no shares issued - -
Common shares - authorized 5,000,000 shares without par or
stated value, 1,454,750 shares issued - -
Additional paid-in capital 7,862 7,798
Retained earnings - restricted 10,116 9,850
Accumulated comprehensive losses, unrealized losses
on securities designated as available for sale,
net of related tax effects (293) (216)
Shares acquired by stock benefit plans (1,029) (1,207)
Less 42,467 and 1,334 shares of treasury stock - at cost (511) (21)
------- -------
Total shareholders' equity 16,145 16,204
------- -------
Total liabilities and shareholders' equity $124,693 $112,293
======= =======
</TABLE>
3
<PAGE>
FFD Financial Corporation
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
For the nine months For the three months
ended March 31, ended March 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Interest income
Loans $5,119 $4,090 $1,814 $1,413
Mortgage-backed securities 706 809 230 292
Investment securities, interest-bearing deposits and other 252 192 89 64
----- ----- ----- -----
Total interest income 6,077 5,091 2,133 1,769
Interest expense
Deposits 2,321 2,237 793 730
Borrowings 1,128 678 439 287
----- ----- ----- -----
Total interest expense 3,449 2,915 1,232 1,017
----- ----- ----- -----
Net interest income before provision
for losses on loans 2,628 2,176 901 752
Provision for losses on loans 82 - 51 -
----- ----- ----- -----
Net interest income after provision
for losses on loans 2,546 2,176 850 752
Other income
Gain on sale of loans 19 89 13 21
Other operating 101 86 31 37
----- ----- ----- -----
Total other income 120 175 44 58
General, administrative and other expense
Employee compensation and benefits 804 855 260 278
Occupancy and equipment 171 177 56 62
Federal deposit insurance premiums 22 28 4 10
Franchise taxes 200 198 63 64
Data processing 138 139 50 51
Other operating 389 349 130 107
----- ----- ----- -----
Total general, administrative and other expense 1,724 1,746 563 572
----- ----- ----- -----
Earnings before income taxes 942 605 331 238
Federal income taxes
Current 280 79 78 91
Deferred 32 123 30 (10)
----- ----- ----- -----
Total federal income taxes 312 202 108 81
----- ----- ----- -----
NET EARNINGS $ 630 $ 403 $ 223 $ 157
===== ===== ===== =====
EARNINGS PER SHARE
Basic $.47 $.30 $.17 $.12
=== === === ===
Diluted $.46 $.29 $.16 $.11
=== === === ===
</TABLE>
4
<PAGE>
FFD Financial Corporation
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
For the nine months For the three months
ended March 31, ended March 31,
2000 1999 2000 1999
<S> <C> <C> <C> <C>
Net earnings $ 630 $403 $ 223 $157
Other comprehensive income, net of tax:
Unrealized holding losses on securities
during the period, net of tax of $(40),
$(35), $(7) and $(64) for the respective
periods (77) (67) (14) (125)
---- --- ---- ---
Comprehensive income $ 553 $336 $ 209 $ 32
==== === ==== ===
Accumulated comprehensive income (loss) $(293) $ 73 $(293) $ 73
==== === ==== ===
</TABLE>
5
<PAGE>
FFD Financial Corporation
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended March 31,
(In thousands)
2000 1999
<S> <C> <C>
Cash flows from operating activities:
Net earnings for the period $ 630 $ 403
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Amortization of discounts and premiums on loans,
investments and mortgage-backed securities - net 38 28
Amortization of deferred loan origination fees (25) (61)
Depreciation and amortization 97 96
Provision for losses on loans 82 -
Amortization expense of stock benefit plans 255 394
Gain on sale of loans (4) (38)
Proceeds from sale of loans 1,846 6,361
Loans originated for sale in the secondary market (1,708) (6,323)
Federal Home Loan Bank stock dividends (74) (54)
Increase (decrease) in cash due to changes in:
Accrued interest receivable (88) (32)
Prepaid expenses and other assets 45 15
Accrued interest payable 37 49
Other liabilities 2 296
Federal income taxes
Current 54 (349)
Deferred 32 123
------ ------
Net cash provided by operating activities 1,219 908
Cash flows provided by (used in) investing activities:
Proceeds from maturity of investment securities - 4,975
Purchase of investment securities - (1,500)
Purchase of mortgage-backed securities - (11,633)
Principal repayments on mortgage-backed securities 1,898 4,441
Purchase of Federal Home Loan Bank stock (355) (184)
Loan principal repayments 6,564 10,893
Loan disbursements (20,587) (21,812)
Purchase of office premises and equipment (13) (96)
------ ------
Net cash used in investing activities (12,493) (14,916)
------ ------
Net cash used in operating and investing
activities (subtotal carried forward) (11,274) (14,008)
------ ------
</TABLE>
6
<PAGE>
FFD Financial Corporation
<TABLE>
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the nine months ended March 31,
(In thousands)
2000 1999
<S> <C> <C>
Net cash used in operating and investing
activities (subtotal brought forward) $(11,274) $(14,008)
Cash flows provided by (used in) financing activities:
Net increase in deposit accounts 5,229 7,429
Proceeds from securities sold under agreements to repurchase 287 724
Proceeds from Federal Home Loan Bank advances 37,618 10,500
Repayment of Federal Home Loan Bank advances (30,706) (8)
Proceeds from other borrowed money - 300
Repayment of other borrowed money - (300)
Proceeds from exercise of stock options 26 32
Purchase of treasury shares (529) -
Dividends on common shares (364) (294)
------- -------
Net cash provided by financing activities 11,561 18,383
------- -------
Net increase in cash and cash equivalents 287 4,375
Cash and cash equivalents at beginning of period 3,011 1,633
------- -------
Cash and cash equivalents at end of period $ 3,298 $ 6,008
======= =======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes $ 294 $ 434
======= =======
Interest on deposits and borrowings $ 3,412 $ 2,866
======= =======
Supplemental disclosure of noncash investing activities:
Unrealized losses on securities designated as available for
sale, net of related tax effects $ (77) $ (67)
======= =======
Recognition of mortgage servicing rights in accordance with
SFAS No. 125 $ 15 $ 51
======= =======
</TABLE>
7
<PAGE>
FFD Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the nine and three months ended March 31, 2000 and 1999
1. Basis of Presentation
The accompanying unaudited consolidated financial statements were prepared
in accordance with instructions for Form 10-QSB and, therefore, do not
include information or footnotes necessary for a complete presentation of
financial position, results of operations and cash flows in conformity with
generally accepted accounting principles. Accordingly, these financial
statements should be read in conjunction with the consolidated financial
statements and notes thereto of FFD Financial Corporation (the
"Corporation") included in the Annual Report on Form 10-KSB for the year
ended June 30, 1999. However, in the opinion of management, all adjustments
(consisting of only normal recurring accruals) which are necessary for a
fair presentation of the financial statements have been included. The
results of operations for the three and nine month periods ended March 31,
2000, are not necessarily indicative of the results which may be expected
for the entire fiscal year.
2. Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Corporation and First Federal Savings Bank of Dover (the "Savings Bank"
or "First Federal"). All significant intercompany items have been
eliminated.
3. Effects of Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities," which requires entities
to recognize all derivatives in their financial statements as either assets
or liabilities measured at fair value. SFAS No. 133 also specifies new
methods of accounting for hedging transactions, prescribes the items and
transactions that may be hedged, and specifies detailed criteria to be met
to qualify for hedge accounting.
The definition of a derivative financial instrument is complex, but in
general, it is an instrument with one or more underlyings, such as an
interest rate or foreign exchange rate, that is applied to a notional
amount, such as an amount of currency, to determine the settlement
amount(s). It generally requires no significant initial investment and can
be settled net or by delivery of an asset that is readily convertible to
cash. SFAS No. 133 applies to derivatives embedded in other contracts,
unless the underlying of the embedded derivative is clearly and closely
related to the host contract.
8
<PAGE>
FFD Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the nine and three months ended March 31, 2000 and 1998
3. Effects of Recent Accounting Pronouncements (continued)
SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years
beginning after June 15, 2000. On adoption, entities are permitted to
transfer held-to-maturity debt securities to the available-for-sale or
trading category without calling into question their intent to hold other
debt securities to maturity in the future. SFAS No. 133 is not expected to
have a material impact on the Corporation's financial statements.
4. Earnings Per Share
Basic earnings per share is computed based upon the weighted-average common
shares outstanding during the period less shares in the FFD Financial
Corporation Employee Stock Ownership Plan (the "ESOP") that are unallocated
and not committed to be released. Weighted-average common shares deemed
outstanding, which gives effect to 72,567 unallocated ESOP shares, totaled
1,345,170 and 1,339,656 for the nine and three month periods ended March 31,
2000, respectively. Weighted-average common shares deemed outstanding, which
gives effect to 85,744 unallocated ESOP shares, totaled 1,352,195 and
1,363,006 for the nine and three month periods ended March 31, 1999,
respectively.
Diluted earnings per share is computed taking into consideration common
shares outstanding and dilutive potential common shares to be issued under
the Corporation's stock option plan. Weighted-average common shares deemed
outstanding for purposes of computing diluted earnings per share totaled
1,365,694 and 1,350,249 for the nine and three month periods ended March 31,
2000, respectively, and 1,395,392 and 1,394,389 for the nine and three month
periods ended March 31, 1999, respectively. Incremental shares related to
the assumed exercise of stock options included in the computation of diluted
earnings per share totaled 20,524 and 10,593 for the nine and three month
periods ended March 31, 2000, respectively, and 43,197 and 31,383 for the
nine and three month periods ended March 31, 1999, respectively.
Options to purchase 25,507 and 18,635 shares of common stock with a
respective weighted-average exercise price of $9.14 and $9.28 were
outstanding at March 31, 2000 but were excluded from the computation of
common share equivalents during the three and nine months ended March 31,
2000, respectively, because their exercise prices were greater than the
average market price of the common shares.
9
<PAGE>
FFD Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Discussion of Financial Condition Changes from June 30, 1999 to March 31, 2000
The Corporation's total assets at March 31, 2000, amounted to $124.7 million, a
$12.4 million, or 11.0%, increase over the total at June 30, 1999. This increase
was funded primarily through an increase in advances from the Federal Home Loan
Bank ("FHLB") of $6.9 million and growth in deposits of $5.2 million.
Cash and cash equivalents and investment securities totaled $6.2 million at
March 31, 2000, an increase of $240,000, or 4.0%, over the total at June 30,
1999.
Mortgage-backed securities totaled $13.8 million at March 31, 2000, a $2.0
million, or 12.7%, decrease from the total at June 30, 1999. This decrease
resulted primarily from principal repayments.
Loans receivable, including loans held for sale, totaled $101.2 million at March
31, 2000, an increase of $13.8 million, or 15.8%, over the June 30, 1999 total.
Loan disbursements during the period totaled $22.3 million, which were partially
offset by principal repayments of $6.6 million and loans sold in the secondary
market totaling $1.8 million. Loans secured by nonresidential real estate, which
amounted to $27.6 million at March 31, 2000 and $18.7 million at June 30, 1999,
accounted for most of the growth in the loan portfolio. Nonresidential real
estate lending is generally considered to involve a higher degree of risk than
residential real estate lending due to the relatively larger loan amounts and
the effects of general economic conditions on the successful operation of
income-producing properties. The Savings Bank has endeavored to reduce such risk
by evaluating the credit history and past performance of the borrower, the
location of the real estate, the quality of the management constructing and
operating the property, the debt service ratio, the quality and characteristics
of the income stream generated by the property and appraisals supporting the
property's valuation.
The allowance for loan losses totaled $351,000 and $269,000 at March 31, 2000
and June 30, 1999, which represented .35% and .30% of total loans and 172.9% and
1,793.3% of nonperforming loans at those respective dates. Nonperforming loans
amounted to $203,000 and $15,000 at March 31, 2000, and June 30, 1999,
respectively. Although management believes that its allowance for loan losses at
March 31, 2000, is adequate based upon the available facts and circumstances,
there can be no assurance that additions to such allowance will not be necessary
in future periods, which could adversely affect the Corporation's results of
operations.
Deposits totaled $77.3 million at March 31, 2000, a $5.2 million, or 7.3%,
increase over total deposits at June 30, 1999. FHLB advances totaled $30.5
million at March 31, 2000, a $6.9 million, or 29.3%, increase over June 30,
1999. Proceeds from the increase in deposits and borrowings were primarily used
to fund loan originations.
The Savings Bank is required to meet minimum capital standards promulgated by
the Office of Thrift Supervision ("OTS"). At March 31, 2000, the Savings Bank's
regulatory capital was well in excess of such minimum capital requirements.
10
<PAGE>
FFD Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Nine Month Periods Ended March 31, 2000
and 1999
General
The Corporation's net earnings totaled $630,000 for the nine months ended March
31, 2000, an increase of $227,000, or 56.3%, over the net earnings of $403,000
recorded in the comparable period in 1999. The increase in net earnings resulted
primarily from an increase of $452,000 in net interest income and a decrease of
$22,000 in general, administrative and other expense, which were partially
offset by a decrease of $55,000 in other income, an increase of $82,000 in the
provision for losses on loans, and an increase of $110,000 in the provision for
federal income taxes.
Net Interest Income
Total interest income increased by $986,000, or 19.4%, to a total of $6.1
million for the nine months ended March 31, 2000, compared to the nine month
period ended March 31, 1999. Interest income on loans increased by $1.0 million,
or 25.2%, due primarily to an increase of approximately $18.0 million, or 23.7%,
in the average loan portfolio balance outstanding. Interest income on
mortgage-backed securities decreased by $103,000, or 12.7%, due primarily to a
$2.2 million, or 13.2%, decline in the weighted-average balance outstanding.
Interest income on investment securities and interest-bearing deposits increased
by $60,000, or 31.3%, due primarily to a $405,000, or 7.0%, increase in the
weighted-average balance outstanding coupled with a 100 basis point increase in
the yield earned on such investments.
Interest expense on deposits increased by $84,000, or 3.8%, for the nine months
ended March 31, 2000, compared to the same period in 1999, due primarily to an
approximate by $7.6 million, or 11.5%, increase in the average deposit portfolio
balance outstanding, which was partially offset by a 32 basis point decrease in
the average cost of deposits, to 4.20% in the fiscal 2000 period. The decrease
in the average cost of deposits resulted as growth in the deposit portfolio was
concentrated in lower yielding transaction accounts.
Interest expense on borrowings increased by $450,000, or 66.4%, due primarily to
an increase in the average balance of advances outstanding of approximately $9.1
million, or 48.1%, coupled with a 58 basis point increase in the cost of such
funds year to year.
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $452,000, or 20.8%, for the nine months ended
March 31, 2000, compared to the same period in 1999. The interest rate spread
amounted to approximately 2.52% for the nine month period ended March 31, 2000,
compared to 2.29% for the 1999 period, while the net interest margin was
approximately 3.04% and 2.94% for the nine month periods ended March 31, 2000
and 1999, respectively.
11
<PAGE>
FFD Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Nine Month Periods Ended March 31, 2000
and 1999 (continued)
Provision for Losses on Loans
A provision for losses on loans is charged to earnings to bring the total
allowance for loan losses to a level considered appropriate by management based
on historical loss experience, the volume and type of lending conducted by the
Savings Bank, the status of past due principal and interest payments, general
economic conditions, particularly as such conditions relate to the Savings
Bank's market area, and other factors related to the collectibility of First
Federal's loan portfolio. As a result of such analysis, management elected to
record a provision for losses on loans totaling $82,000 during the nine month
period ended March 31, 2000. The current period provision was predicated
primarily upon growth in the portfolio of loans secured by non-residential real
estate. There can be no assurance that the loan loss allowance of the Savings
Bank will be adequate to cover losses on nonperforming assets in the future.
Other Income
Other income totaled $120,000 for the nine months ended March 31, 2000, a
decrease of $55,000, or 31.4%, from the 1999 period. The decrease was due
primarily to a $70,000 decline in gain on sale of loans due to a decline in
sales volume, which was partially offset by a $15,000, or 17.4%, increase in
other operating income.
General, Administrative and Other Expense
General, administrative and other expense totaled $1.7 million for the nine
months ended March 31, 2000, a decrease of $22,000, or 1.3%, compared to the
same period in 1999. The decrease in general, administrative and other expense
resulted primarily from a $51,000, or 6.0%, decrease in employee compensation
and benefits, which was partially offset by an increase of $40,000, or 11.5%, in
other operating expenses. The decrease in employee compensation and benefits
resulted primarily from a decrease in costs related to stock benefit plans, due
to fluctuations in the fair value of the Corporation's stock, which was
partially offset by hiring additional personnel and normal merit increases year
to year. The increase in other operating expense was comprised primarily of
increases in ATM charges and pro-rata increases in other operating expenses
related to the Corporation's overall growth year to year.
Federal Income Taxes
The Corporation recorded a provision for federal income taxes totaling $312,000
for the nine months ended March 31, 2000, an increase of $110,000, or 54.5%,
over the same period in 1999. The increase resulted primarily from a $337,000,
or 55.7%, increase in earnings before taxes. The effective tax rates were 33.1%
and 33.4% for the nine months ended March 31, 2000 and 1999, respectively.
12
<PAGE>
FFD Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Three Month Periods Ended March 31, 2000
and 1999
General
The Corporation's net earnings totaled $223,000 for the three months ended March
31, 2000, an increase of $66,000, or 42.0%, over the net earnings of $157,000
recorded in the comparable period in 1999. The increase in net earnings resulted
primarily from an increase of $149,000 in net interest income and a decrease of
$9,000 in general, administrative and other expense, which were offset by an
increase of $51,000 in the provision for losses on loans, a decrease of $14,000
in other income and an increase of $27,000 in the provision for federal income
taxes.
Net Interest Income
Total interest income increased by $364,000, or 20.6%, to a total of $2.1
million for the three months ended March 31, 2000, compared to the three month
period ended March 31, 2000. Interest income on loans increased by $401,000, or
28.4%, due primarily to an increase of approximately $18.9 million, or 23.6%, in
the average loan portfolio balance outstanding. Interest income on
mortgage-backed securities decreased by $62,000, or 21.2%, due primarily to a
decrease in the average balance outstanding. Interest income on investment
securities and interest-bearing deposits increased by $25,000, or 39.1%, due
primarily to a $663,000, or 11.4%, increase in the weighted-average outstanding
balance coupled with a 110 basis point increase in the yield earned on such
investments.
Interest expense on deposits increased by $63,000, or 8.6%, for the three months
ended March 31, 2000, compared to the same period in 1999, due primarily to an
approximate $6.6 million increase in the average deposit portfolio balance
outstanding, which was partially offset by a decrease in the average cost of
deposits.
Interest expense on borrowings increased by $152,000, or 53.0%, due to an $8.2
million, or 35.4%, increase in the average balance of advances outstanding
coupled with a 65 basis point increase in the cost of such funds.
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $149,000, or 19.8%, for the three months ended
March 31, 2000, compared to the same period in 1999.
Provision for Losses on Loans
Management elected to record a provision for losses on loans totaling $51,000
during the three month period ended March 31, 2000. The current quarter
provision was predicated primarily upon growth in the portfolio of loans secured
by non-residential real estate. There can be no assurance that the loan loss
allowance of the Savings Bank will be adequate to cover losses on nonperforming
assets in the future.
13
<PAGE>
FFD Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Three Month Periods Ended March 31, 2000
and 1999 (continued)
Other Income
Other income totaled $44,000 the three months ended March 31, 2000, a decrease
of $14,000, or 24.1%, from the 1999 total. The decrease was due primarily to a
decrease of $8,000, or 38.1%, in gain on sale of loans, coupled with a $6,000,
or 16.2%, decrease in other operating income.
General, Administrative and Other Expense
General, administrative and other expense totaled $563,000 for the three months
ended March 31, 2000, a decrease of $9,000, or 1.6%, compared to the same period
in 1999. The decrease in general, administrative and other expense resulted
primarily from a $18,000, or 6.5%, decrease in employee compensation and
benefits, primarily related to a reduction in costs associated with the stock
benefit plans, due to fluctuations in the fair value of the Corporation's stock,
which was partially offset by a $23,000, or 21.5%, increase in other operating
expense. The increase in other operating expenses was comprised primarily of
increase in ATM charges and pro-rata increases in other operating expenses
related to the Corporation's overall growth year to year.
Federal Income Taxes
The Corporation recorded a provision for federal income taxes totaling $108,000
for the three months ended March 31, 2000, an increase of $27,000, or 33.3%,
over the same period in 1999. The increase resulted primarily from a $93,000, or
39.1%, increase in earnings before taxes. The effective tax rates were 32.6% and
34.0% for the three months ended March 31, 2000 and 1999, respectively.
14
<PAGE>
FFD Financial Corporation
PART II
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities
Not applicable
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits:
27 Financial data schedule for the nine
months ended March 31, 2000.
(b) Reports on Form 8-K: None.
15
<PAGE>
FFD Financial Corporation
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: May 12, 2000 By: /s/Robert R. Gerber
-------------------------- -------------------
Robert R. Gerber
President
Date: May 12, 2000 By: /s/Larry D. Browning
-------------------------- --------------------
Larry D. Browning
Chief Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 1,176
<INT-BEARING-DEPOSITS> 2,122
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
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0
0
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<ALLOWANCE-DOMESTIC> 0
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</TABLE>
