FORM 10-QSB
U. S. SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to _______________
Commission File No. 0-27916
FFD FINANCIAL CORPORATION
(Exact name of small business issuer as specified in its charter)
Ohio 34-1921148
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
321 North Wooster Avenue
Dover, Ohio 44622
(Address of principal (Zip Code)
executive office)
Issuer's telephone number: (330) 364-7777
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 February 7, 2000, the latest practicable date, 1,412,283 shares of the
registrant's common stock, without par value, were issued and outstanding.
Page 1 of 16 pages
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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
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<TABLE>
FFD Financial Corporation
<CAPTION>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
December 31, June 30,
ASSETS 1999 1999
<S> <C> <C>
Cash and due from banks $ 1,885 $ 844
Interest-bearing deposits in other financial institutions 1,828 2,167
------- -------
Cash and cash equivalents 3,713 3,011
Investment securities available for sale - at market 2,865 2,924
Mortgage-backed securities available for sale - at market 9,711 10,978
Mortgage-backed securities held to maturity - at amortized cost,
approximate market value of $4,505 and $4,907 as of
December 31, 1999 and June 30, 1999 4,419 4,779
Loans receivable - net 96,230 86,417
Loans held for sale 863 965
Office premises and equipment - at depreciated cost 1,308 1,364
Federal Home Loan Bank stock - at cost 1,603 1,201
Accrued interest receivable 378 329
Prepaid expenses and other assets 68 209
Prepaid federal income taxes 95 116
------- -------
Total assets $121,253 $112,293
======= =======
LIABILITIES AND SHAREHOLDER' EQUITY
Deposits $ 73,091 $ 72,025
Advances from the Federal Home Loan Bank 31,545 23,616
Securities sold under agreements to repurchase 186 -
Accrued interest payable 183 146
Other liabilities 181 250
Deferred federal income taxes 21 52
------- ------
Total liabilities 105,207 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 7,847 7,798
Retained earnings - restricted 10,013 9,850
Accumulated comprehensive losses, unrealized losses
on securities designated as available for sale,
net of related tax effects (279) (216)
Shares acquired by stock benefit plans (1,024) (1,207)
Less 42,467 and 1,334 shares of treasury stock - at cost (511) (21)
------- -------
Total shareholders' equity 16,046 16,204
------- -------
Total liabilities and shareholders' equity $121,253 $112,293
======= =======
</TABLE>
3
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<TABLE>
FFD Financial Corporation
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share data)
For the six months For the three months
ended December 31, ended December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Interest income
Loans $3,305 $2,677 $1,708 $1,359
Mortgage-backed securities 568 517 275 279
Investment securities, interest-bearing
deposits and other 71 128 39 59
----- ----- ----- -----
Total interest income 3,944 3,322 2,022 1,697
Interest expense
Deposits 1,528 1,507 766 755
Borrowings 689 391 387 224
----- ----- ----- ------
Total interest expense 2,217 1,898 1,153 979
----- ----- ----- ------
Net interest income 1,727 1,424 869 718
Provision for losses on loans 31 - 22 -
----- ----- ----- -----
Net interest income after
provision for losses on loans 1,696 1,424 847 718
Other income
Gain on sale of loans 6 43 1 43
Other operating 70 74 37 49
----- ----- ----- -----
Total other income 76 117 38 92
General, administrative and other expense
Employee compensation and benefits 574 623 289 315
Occupancy and equipment 115 115 57 56
Federal deposit insurance premiums 18 18 8 9
Franchise taxes 137 134 69 64
Data processing 88 88 46 45
Other operating 229 196 110 115
----- ----- ------ -----
Total general, administrative and other expense 1,161 1,174 579 604
----- ----- ------ -----
Earnings before income taxes 611 367 306 206
Federal income taxes
Current 202 (12) 120 57
Deferred 2 133 ( 20) 9
----- ------ ----- -----
Total federal income taxes 204 121 100 66
----- ------ ----- -----
NET EARNINGS $ 407 $ 246 $ 206 $ 140
===== ====== ===== =====
EARNINGS PER SHARE
Basic $ .30 $ .18 $ .16 $ .10
===== ====== ===== =====
Diluted $ .30 $ .18 $ .15 $ .10
===== ====== ===== =====
</TABLE>
4
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<TABLE>
FFD Financial Corporation
<CAPTION>
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(In thousands)
For the six months For the three months
ended December 31, ended December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net earnings $ 407 $246 $ 206 $140
Other comprehensive income, net of tax:
Unrealized holding gains (losses) on securities
during the period, net of tax of $32, $30, $14
and $5 for the respective periods (63) 58 ( 28) (10)
---- --- ---- ---
Comprehensive income $ 344 $304 $ 178 $130
==== === ==== ===
Accumulated comprehensive income (loss) $(279) $198 $(279) $198
==== === ==== ===
</TABLE>
5
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<TABLE>
FFD Financial Corporation
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended December 31,
(In thousands)
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net earnings for the period $ 407 $ 246
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 25 18
Amortization of deferred loan origination fees (18) (40)
Depreciation and amortization 62 66
Provision for losses on loans 31 -
Amortization expense of stock benefit plans 245 375
Gain on sale of loans (1) (6)
Proceeds from sale of loans 1,381 4,633
Loans originated for sale in the secondary market (1,278) (4,627)
Federal Home Loan Bank stock dividends (47) (34)
Increase (decrease) in cash due to changes in:
Accrued interest receivable (49) 35
Prepaid expenses and other assets 141 161
Accrued interest payable 37 (32)
Other liabilities (69) (44)
Federal income taxes
Current 21 (441)
Deferred 2 133
------- -------
Net cash provided by operating activities 890 507
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 - (9,633)
Principal repayments on mortgage-backed securities 1,565 806
Loan principal repayments 4,738 5,955
Loan disbursements (14,564) (13,359)
Purchase of stock in Federal Home Loan Bank (355) (151)
Purchase of office premises and equipment (6) (92)
------- -------
Net cash used in investing activities (8,622) (12,999)
Cash flows provided by (used in) financing activities:
Net increase in deposit accounts 1,066 5,824
Proceeds from securities sold under agreements to repurchase 186 435
Proceeds from Federal Home Loan Bank advances 30,118 9,500
Repayment of Federal Home Loan Bank advances (22,189) (1)
Proceeds from other borrowed money - 300
Proceeds from exercise of stock options 26 32
Purchase of treasury shares (529) -
Dividends on common stock (244) (217)
------- -------
Net cash provided by financing activities 8,434 15,873
------- -------
Net increase in cash and cash equivalents 702 3,381
Cash and cash equivalents at beginning of period 3,011 1,633
------- -------
Cash and cash equivalents at end of period $ 3,713 $ 5,014
======= =======
</TABLE>
6
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<TABLE>
FFD Financial Corporation
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the six months ended December 31,
(In thousands)
1999 1998
<S> <C> <C>
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes $ 248 $ 434
===== =====
Interest on deposits and borrowings $2,180 $1,866
===== =====
Supplemental disclosure of noncash investing activities:
Unrealized gains (losses) on securities designated as available for
sale, net of related tax effects $ (63) $ 58
===== =====
Recognition of mortgage servicing rights in accordance
with SFAS No. 125 $ 5 $ 37
===== =====
</TABLE>
7
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FFD Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six and three months ended December 31, 1999 and 1998
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 six month periods ended December 31,
1999, 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"). 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
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FFD Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the six and three months ended December 31, 1999 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 85,744 unallocated ESOP shares, totaled
1,347,897 and 1,329,068 for the six and three month periods ended December
31, 1999. Weighted-average common shares deemed outstanding, which gives
effect to 98,861 unallocated ESOP shares, totaled 1,346,965 and 1,347,441
for the six and three month periods ended December 31, 1998.
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
1,367,278 and 1,339,342 for the six and three month periods ended December
31, 1999, and 1,394,981 and 1,388,912 for the six and three month periods
ended December 31, 1998. Incremental shares related to the assumed exercise
of stock options included in the calculation of diluted earnings per share
totaled 19,381 and 10,274 for the six and three month periods ended December
31, 1999, and 48,016 and 41,471 for the six and three month periods ended
December 31, 1998, respectively.
9
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FFD Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Note Regarding Forward-Looking Statements
In addition to historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties.
Economic circumstances, the Corporation's operations and the Corporation's
actual results could differ significantly from those discussed in the
forward-looking statements. Some of the factors that could cause or contribute
to such differences are discussed herein but also include changes in the economy
and interest rates in the nation and the Corporation's market area generally.
Some of the forward-looking statements included herein are the statements
regarding management's determination of the amount and adequacy of allowance for
losses on loans and the effect of certain recent accounting pronouncements.
Discussion of Financial Condition Changes from June 30, 1999 to December 31,
1999
The Corporation's total assets at December 31, 1999, amounted to $121.3 million,
a $9.0 million, or 8.0%, 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 $7.9 million and growth in deposits of $1.1 million.
Cash and cash equivalents and investment securities totaled $6.6 million at
December 31, 1999, an increase of $643,000, or 10.8%, over the total at June 30,
1999.
Mortgage-backed securities totaled $14.1 million at December 31, 1999, a $1.6
million, or 10.3%, decrease from the total at June 30, 1999. This decrease
resulted primarily from principal repayments.
Loans receivable totaled $97.1 million at December 31, 1999, an increase of $9.7
million, or 11.1%, over the June 30, 1999 total. Loan disbursements during the
period totaled $15.8 million, which were partially offset by principal
repayments of $4.7 million and loans sold in the secondary market totaling $1.4
million. Loans secured by nonresidential real estate, which amounted to $24.3
million at December 31, 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 $299,000 and $269,000 at December 31, 1999
and June 30, 1999, which represented .31% and .30% of total loans and 151.8% and
1,793.3% of nonperforming loans at those respective dates. Nonperforming loans
amounted to $197,000 and $15,000 at December 31, 1999, and June 30, 1999,
respectively. Although management believes that its allowance for loan losses at
December 31, 1999, 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.
10
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FFD Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Discussion of Financial Condition Changes from June 30, 1999 to December 31,
1999 (continued)
Deposits totaled $73.1 million at December 31, 1999, a $1.1 million, or 1.5%,
increase over total deposits at June 30, 1999. FHLB advances totaled $31.5
million at December 31, 1999, a $7.9 million, or 33.6%, 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 December 31, 1999, the Savings
Bank's regulatory capital was well in excess of such minimum capital
requirements.
Comparison of Operating Results for the Six Month Periods Ended December 31,
1999 and 1998
General
The Corporation's net earnings totaled $407,000 for the six months ended
December 31, 1999, an increase of $161,000, or 65.4%, over the net earnings of
$246,000 recorded in the comparable period in 1998. The increase in net earnings
resulted primarily from an increase of $303,000 in net interest income and a
decrease of $13,000 in general, administrative and other expense, which were
offset by a decrease of $41,000 in other income, an increase of $31,000 in the
provision for losses on loans, and an increase of $83,000 in the provision for
federal income taxes.
Net Interest Income
Total interest income increased by $622,000, or 18.7%, to a total of $3.9
million for the six months ended December 31, 1999, compared to the six month
period ended December 31, 1998. Interest income on loans increased by $628,000,
or 23.5%, due primarily to an increase of approximately $17.7 million, or 23.8%,
in the average loan portfolio balance outstanding. Interest income on
mortgage-backed securities increased by $51,000, or 9.9%, due primarily to a 121
basis point increase in the yield earned on such securities, which was partially
offset by a $1.2 million decline in the weighted-average balance outstanding.
Interest income on investment securities and interest-bearing deposits decreased
by $57,000, or 44.5%, due primarily to a decrease in the yield earned on such
investments.
Interest expense on deposits increased by $21,000, or 1.4%, for the six months
ended December 31, 1999, compared to the same period in 1998, due primarily to
an approximate $400,000 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 $298,000, or 76.2%, due primarily to
an increase in the average balance of advances outstanding of approximately $9.8
million, or 56.4%, year to year.
11
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FFD Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Six Month Periods Ended December 31,
1999 and 1998 (continued)
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $303,000, or 21.3%, for the six months ended
December 31, 1999, compared to the same period in 1998. The interest rate spread
amounted to approximately 2.53% for the six month period ended December 31,
1999, compared to 2.30% for the 1998 period, while the net interest margin was
approximately 3.06% and 3.46% for the six month periods ended December 31, 1999
and 1998, respectively.
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 $31,000 during the six month
period ended December 31, 1999. 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 $76,000 for the six months ended December 31, 1999, a
decrease of $41,000, or 35.0%, from the 1998 total. The decrease was due
primarily to a $37,000 decline in gain on sale of loans, coupled with a $4,000,
or 5.4%, decrease in other operating income.
General, Administrative and Other Expense
General, administrative and other expense totaled $1.2 million for the six
months ended December 31, 1999, a decrease of $13,000, or 1.1%, compared to the
same period in 1998. The decrease in general, administrative and other expense
resulted primarily from a $49,000, or 7.9%, decrease in employee compensation
and benefits, which was partially offset by an increase of $33,000, or 16.8%, 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, partially offset
by 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 $204,000
for the six months ended December 31, 1999, an increase of $83,000, or 68.6%,
over the same period in 1998. The increase resulted primarily from a $244,000,
or 66.5%, increase in earnings before taxes. The effective tax rates were 33.4%
and 33.0% for the six months ended December 31, 1999 and 1998, respectively.
12
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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 December 31,
1999 and 1998
General
The Corporation's net earnings totaled $206,000 for the three months ended
December 31, 1999, an increase of $66,000, or 47.1%, over the net earnings of
$140,000 recorded in the comparable period in 1998. The increase in net earnings
resulted primarily from an increase of $151,000 in net interest income and a
decrease of $25,000 in general, administrative and other expense, which were
partially offset by a decrease of $54,000 in other income and an increase of
$34,000 in the provision for federal income taxes.
Net Interest Income
Total interest income increased by $325,000, or 19.2%, to a total of $2.0
million for the three months ended December 31, 1999, compared to the three
month period ended December 31, 1998. Interest income on loans increased by
$349,000, or 25.7%, due primarily to an increase of approximately $18.3 million,
or 24.1%, in the average loan portfolio balance outstanding. Interest income on
mortgage-backed securities decreased by $4,000, or 1.4%, due primarily to a
decrease in the average balance outstanding. Interest income on investment
securities and interest-bearing deposits decreased by $20,000, or 33.9%, due
primarily to a decrease in the related investment balance and a decrease in the
yield earned on such investments.
Interest expense on deposits increased by $11,000, or 1.6%, for the six months
ended December 31, 1999, compared to the same period in 1998, due primarily to
an approximate $7.8 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 $163,000, or 72.8%, due primarily to
an increase in the average balance of advances outstanding.
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $151,000, or 21.0%, for the three months ended
December 31, 1999, compared to the same period in 1998.
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 $22,000 during the three month
period ended December 31, 1999. 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 December 31,
1999 and 1998 (continued)
Other Income
Other income totaled $38,000 the three months ended December 31, 1999, a
decrease of $54,000, or 58.7%, from the 1998 total. The decrease was due
primarily to a decrease of $42,000 in gain on sale of loans, coupled with a
$12,000, or 24.5%, decrease in other operating income.
General, Administrative and Other Expense
General, administrative and other expense totaled $579,000 for the three months
ended December 31, 1999, a decrease of $25,000, or 4.1%, compared to the same
period in 1998. The decrease in general, administrative and other expense
resulted primarily from a $26,000, or 8.3%, 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.
Federal Income Taxes
The Corporation recorded a provision for federal income taxes totaling $100,000
for the three months ended December 31, 1999, an increase of $34,000, or 51.5%,
over the same period in 1998. The increase resulted primarily from a $100,000,
or 48.5%, increase in earnings before taxes. The effective tax rates were 32.7%
and 32.0% for the three months ended December 31, 1999 and 1998, respectively.
Year 2000 Compliance Matters
During the periods leading up to January 1, 2000, the Savings Bank addressed the
potential problems associated with the possibility that the computers that
control or operate the Savings Bank's information technology system and
infrastructure may not have been programmed to read four-digit date codes and,
upon arrival of the year 2000, may have recognized the two-digit code "00" as
the year 1900, causing systems to fail to function or to generate erroneous
data.
The Savings Bank expended less than $10,000 through the periods ended December
31, 1999, in connection with its Year 2000 compliance program. The Savings Bank
experienced no significant problems related to its information technology
systems upon arrival of the Year 2000, nor was there any interruption in service
to its customers of any kind.
The Savings Bank could incur losses if Year 2000 issues adversely affect its
depositors or borrowers. Such problems could include delayed loan payments due
to Year 2000 problems affecting any significant borrowers or impairing the
payroll systems of large employers in the Savings Bank's primary market area.
Because the Savings Bank's loan portfolio is highly diversified with regard to
individual borrowers and types of businesses, the Savings Bank does not expect,
and to date has not realized, any significant or prolonged difficulties that
will affect net earning or cash flow.
14
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FFD Financial Corporation
PART II
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities and Use of Proceeds
Not applicable
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
On October 19, 1999, the Annual Meeting of the Corporation's
Shareholders was held. Each of the three directors nominated
were elected to terms expiring in 2001 by the following votes:
J. Richard Gray For: 1,246,135 Withheld: 16,200
Roy O. Mitchell, Jr. For: 1,211,766 Withheld: 50,569
Robert D. Sensel For: 1,236,317 Withheld: 26,018
One other matter was submitted to the shareholders, for which the
following votes were cast:
Ratification of the appointment of Grant Thornton LLP as independent
auditors of the Corporation for the fiscal year ended June 30, 2000.
For: 1,246,562 Against: 9,448 Abstain: 6,325
ITEM 5. Other Information
None
ITEM 6. Exhibits and Reports on Form 8-K
Reports on Form 8-K: None.
Exhibits:
27 Financial data schedule for the six months
ended December 31, 1999.
15
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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: February 8, 2000 By: /s/Robert R. Gerber
-------------------
Robert R. Gerber
President
Date: February 8, 2000 By: /s/Larry D. Browning
--------------------
Larry D. Browning
Chief Financial Officer
16
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