<PAGE> 1
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 SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ___________________ TO ____________________
COMMISSION FILE NUMBER 0-28020
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FIRST FEDERAL FINANCIAL BANCORP, INC.
- -------------------------------------------------------------------------------
(EXACT NAME OF SMALL BUSINESS ISSUER AS SPECIFIED IN ITS CHARTER)
DELAWARE 31-1456058
- -------------------------------- -----------------------------------
(STATE OR OTHER JURISDICTION OF (IRS EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)
415 CENTER STREET, IRONTON, OHIO 45638
- -------------------------------------------------------------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)
(ZIP CODE)
(740) 532-6845
------------------------------------------------
(ISSUER'S TELEPHONE NUMBER, INCLUDING AREA CODE)
CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY
SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 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
-------
STATE THE NUMBER OF SHARES OUTSTANDING OF EACH OF THE ISSUER'S CLASSES OF
COMMON EQUITY, AS OF THE LATEST PRACTICABLE DATE:
AS OF MAY 8, 2000, THERE WERE ISSUED AND OUTSTANDING 531,673 SHARES OF
THE REGISTRANT'S COMMON STOCK.
TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):
YES NO X
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<PAGE> 2
FIRST FEDERAL FINANCIAL BANCORP, INC.
TABLE OF CONTENTS
*****************
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets (as of March 31, 2000 (unaudited) and
September 30, 1999)........................................................... 3
Consolidated Statements of Income (for the three months ended March
31, 2000 (unaudited) and 1999 (unaudited)).................................... 4
Consolidated Statements of Income (for the six months ended March 31,
2000 (unaudited) and 1999 (unaudited))........................................ 5
Consolidated Statements of Changes in Stockholders' Equity (for the
six months ended March 31, 2000 (unaudited) and the year ended
September 30, 1999)........................................................... 6
Consolidated Statements of Cash Flows (for the six months ended March
31, 2000 (unaudited) and 1999 (unaudited)).................................... 7
Notes to Consolidated Financial Statements.................................... 8-10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................................... 11-16
PART II. OTHER INFORMATION
Item 1. Legal Proceedings ............................................................ 17
Item 2. Changes in Securities......................................................... 17
Item 3. Defaults Upon Senior Securities............................................... 17
Item 4. Submission of Matters to a Vote of Security Holders........................... 17
Item 5. Other Information............................................................. 17
Item 6. Exhibits and Reports on Form 8-K.............................................. 18
Signatures ............................................................................. 18
</TABLE>
<PAGE> 3
FIRST FEDERAL FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
March 31, September 30,
2000 1999
------------ ------------
(Unaudited)
ASSETS
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 1,322,269 $ 940,751
INVESTMENT SECURITIES HELD
TO MATURITY 2,331,080 2,317,111
INVESTMENT SECURITIES AVAILABLE
FOR SALE 343,382 791,159
LOANS RECEIVABLE 52,536,840 49,703,008
MORTGAGE-BACKED SECURITIES
HELD TO MATURITY 4,125,604 4,443,450
MORTGAGE-BACKED SECURITIES
AVAILABLE FOR SALE 4,510,697 4,702,702
ACCRUED INTEREST RECEIVABLE 357,172 337,610
FORECLOSED REAL ESTATE 59,109 45,499
OFFICE PROPERTIES AND EQUIPMENT 1,744,490 1,760,051
OTHER ASSETS 100,797 94,407
------------ ------------
$ 67,431,440 $ 65,135,748
============ ============
</TABLE>
<TABLE>
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
DEPOSITS $ 47,637,763 $ 47,743,450
ADVANCES FROM FEDERAL HOME LOAN BANK 10,408,444 7,845,869
ACCRUED INCOME TAXES PAYABLE:
Current 35,850 12,391
Deferred 25,561 54,461
ACCRUED INTEREST PAYABLE 48,282 37,015
OTHER LIABILITIES 123,668 159,477
------------ -------------
Total liabilities 58,279,568 55,852,663
------------ -------------
STOCKHOLDERS' EQUITY:
Common stock 5,317 5,516
Employee benefit plans (505,850) (549,531)
Additional paid-in capital 5,042,112 5,227,406
Retained earnings-substantially restricted 4,727,491 4,658,872
Accumulated other comprehensive loss (117,198) (59,178)
------------ -------------
Total stockholders' equity 9,151,872 9,283,085
------------ -------------
$ 67,431,440 $ 65,135,748
============ =============
</TABLE>
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<PAGE> 4
FIRST FEDERAL FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Three Months Ended
--------------------------
March 31, March 31,
2000 1999
--------- ---------
<S> <C> <C>
INTEREST INCOME: (Unaudited) (Unaudited)
Loans receivable-
First mortgage loans $ 888,140 $ 840,979
Consumer and other loans 75,778 56,534
Mortgage-backed and related securities 138,049 143,214
Investment securities 44,449 42,004
Other interest-earning assets 9,718 11,924
---------- ----------
Total interest income 1,156,134 1,094,655
---------- ----------
INTEREST EXPENSE:
Interest-bearing checking 5,671 6,597
Passbook savings 60,875 62,110
Certificates of deposit 492,347 503,721
Advances from Federal Home
Loan Bank 128,012 91,205
---------- ----------
Total interest expense 686,905 663,633
---------- ----------
Net interest income 469,229 431,022
PROVISION FOR LOAN LOSSES 6,000 4,500
---------- ----------
Net interest income after provision
for loan losses 463,229 426,522
---------- ----------
NON-INTEREST INCOME:
Gains on foreclosed real estate - 2,732
Gains on sales of assets - 6,131
Other 28,235 20,149
---------- ----------
Total non-interest income 28,235 29,012
---------- ----------
NON-INTEREST EXPENSE:
Compensation and benefits 143,229 146,798
Occupancy and equipment 34,272 33,653
SAIF deposit insurance premiums 2,523 6,900
Directors' fees and expenses 19,689 19,481
Franchise taxes 32,810 36,309
Data processing 32,883 28,837
Advertising 17,474 21,524
Professional services 32,696 38,157
Other 47,620 45,763
---------- ----------
Total non-interest expense 363,196 377,422
---------- ----------
INCOME BEFORE PROVISION
FOR INCOME TAXES 128,268 78,112
PROVISION FOR INCOME TAXES 40,381 14,719
---------- ----------
NET INCOME $ 87,887 $ 63,393
========== ==========
EARNINGS PER SHARE
Basic $ .17 $ .12
========== ==========
Diluted $ .17 $ .12
========== ==========
</TABLE>
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<PAGE> 5
FIRST FEDERAL FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Six Months Ended
------------------------
March 31, March 31,
2000 1999
--------- --------
(Unaudited) (Unaudited)
<S> <C> <C>
INTEREST INCOME:
Loans receivable -
First mortgage loans $ 1,751,977 $ 1,639,674
Consumer and other loans 146,985 110,362
Mortgage-backed and related
securities 269,754 298,638
Investment securities 92,908 95,510
Other interest-earning assets 20,904 24,898
--------- ---------
Total interest income 2,282,528 2,169,082
--------- ---------
INTEREST EXPENSE:
Interest-bearing checking 11,539 11,911
Passbook savings 123,011 124,038
Certificates of deposit 981,646 1,014,689
Advances from Federal Home
Loan Bank 239,598 184,601
--------- ---------
Total interest expense 1,355,794 1,335,239
--------- ---------
Net interest income 926,734 833,843
PROVISION FOR LOAN LOSSES 10,500 7,500
---------- ---------
Net interest income after
provision for loan losses 916,234 826,343
---------- ---------
NON-INTEREST INCOME:
Gains on foreclosed real estate - 3,035
Gains on sales of assets - 11,131
Other 55,758 42,065
-------- --------
Total non-interest income 55,758 56,231
-------- --------
NON-INTEREST EXPENSE:
Compensation and benefits 292,945 305,094
Occupancy and equipment 66,458 66,065
SAIF deposit insurance premiums 9,675 13,453
Directors' fees and expenses 41,352 42,762
Franchise taxes 65,944 74,190
Data processing 63,798 54,336
Advertising 40,630 41,641
Professional services 60,769 66,482
Other 92,686 88,037
-------- --------
Total non-interest expense 734,257 752,060
-------- --------
INCOME BEFORE PROVISION FOR
INCOME TAXES 237,735 130,514
PROVISION FOR INCOME TAXES 75,611 35,074
-------- --------
NET INCOME $162,124 $ 95,440
======== ========
EARNINGS PER SHARE:
Basic $ .31 $ .18
======== ========
Diluted $ .31 $ .18
======== ========
</TABLE>
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<PAGE> 6
FIRST FEDERAL FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
Retained Accumulated
Employee Additional Earnings- Other Total
Common Benefit Paid-in Substantially Comprehensive Stockholders'
Stock Plans Capital Restricted Income (Loss) Equity
----------- ----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C>
BALANCES, September 30, 1998 $ 5,834 $ (643,854) $ 5,510,264 $ 4,707,377 $ 71,275 $ 9,650,896
COMPREHENSIVE INCOME:
Net income, year ended September 30, 1999 - - - 239,626 - 239,626
Other comprehensive loss, net of tax:
Change in unrealized gain on invest-
ments available for sale, net of
tax of $67,203 - - - - (130,453) (130,453)
----------- ----------- ----------- ----------- ----------- -----------
TOTAL COMPREHENSIVE INCOME - - - 239,626 (130,453) 109,173
ESOP SHARES RELEASED, 5,261 shares;
$12.44 average fair market value - 52,610 12,863 - - 65,473
RRP SHARES AMORTIZED, 3,270 shares - 38,422 - - - 38,422
DIVIDENDS PAID ($.28 per share) - 3,291 955 (146,095) - (141,849)
PURCHASE OF 31,764 TREASURY SHARES (318) - (296,676) (142,036) - (439,030)
----------- ----------- ----------- ----------- ----------- -----------
BALANCES, September 30, 1999 5,516 (549,531) 5,227,406 4,658,872 (59,178) 9,283,085
COMPREHENSIVE INCOME:
Net income, six months ended
March 31, 2000 (unaudited) - - - 162,124 - 162,124
Other comprehensive income, net of tax:
Change in unrealized loss on invest-
ments available for sale, net of
tax of $29,888 (unaudited) - - - - (58,020) (58,020)
----------- ----------- ----------- ----------- ----------- -----------
TOTAL COMPREHENSIVE INCOME (unaudited) - - - 162,124 (58,020) 104,104
ESOP SHARES RELEASED, 2,447 shares;
$9.59 average fair market value (unaudited) - 24,470 796 - - 25,266
RRP SHARES AMORTIZED, 1,635 shares (unaudited) - 19,211 - - - 19,211
DIVIDENDS PAID ($.14 per share) (unaudited) - - - (68,817) - (68,817)
PURCHASE OF 19,924 TREASURY SHARES
(unaudited) (199) - (186,090) (24,688) - (210,977)
----------- ----------- ----------- ----------- ----------- -----------
BALANCES, MARCH 31, 2000 (unaudited) $ 5,317 $ (505,850) $ 5,042,112 $ 4,727,491 $ (117,198) $ 9,151,872
=========== =========== =========== =========== =========== ===========
</TABLE>
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<PAGE> 7
FIRST FEDERAL FINANCIAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the Six Months Ended
------------------------------
March 31, March 31,
2000 1999
----------- -----------
(Unaudited) (Unaudited)
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 162,124 $ 95,440
Adjustments to reconcile net income to net cash
provided by operating activities -
Gains on sales of assets - (11,131)
Gains on foreclosed real estate - (3,035)
Provision for loan losses 10,500 7,500
Depreciation 38,140 38,102
FHLB stock dividends (19,000) (17,700)
Amortization and accretion, net 8,244 5,486
ESOP compensation 25,266 37,259
RRP compensation 19,211 19,211
Change in -
Accrued interest receivable (19,562) 9,797
Other assets (6,390) (17,621)
Deferred Federal income taxes 988 (2,760)
Accrued interest payable 11,267 2,196
Current income taxes payable 23,459 3,979
Other liabilities (35,809) (17,082)
----------- -----------
Net cash provided by operating activities 218,438 149,641
----------- -----------
INVESTING ACTIVITIES:
Net increase in loans (2,857,942) (4,380,662)
Proceeds from sales and maturities of investment securities available for sale 450,000 -
Proceeds from maturities of investment securities held to maturity 250,000 1,324,000
Purchases of investment securities held to maturity (245,560) -
Purchases of mortgage-backed securities held to maturity - -
Purchases of mortgage-backed securities available for sale - -
Principal collected on mortgage-backed securities held to maturity 307,193 383,744
Principal collected on mortgage-backed securities available for sale 104,875 591,090
Purchases of office properties and equipment (22,579) (22,487)
Proceeds from sale of foreclosed real estate - 56,993
----------- -----------
Net cash used for investing activities (2,014,013) (2,047,322)
----------- -----------
FINANCING ACTIVITIES:
Dividends paid (68,817) (72,106)
Purchase of treasury shares (210,978) (410,175)
Proceeds from FHLB advances 8,950,000 700,000
Principal paid on FHLB advances (6,387,425) (440,272)
Net increase (decrease) in deposits (105,687) 2,475,524
----------- -----------
Net cash provided by financing activities 2,177,093 2,252,971
----------- -----------
INCREASE IN CASH AND CASH EQUIVALENTS 381,518 355,290
CASH AND CASH EQUIVALENTS, beginning of period 940,751 746,261
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,322,269 $ 1,101,551
=========== ===========
NONCASH INVESTING ACTIVITIES:
Loans taken into foreclosed real estate $ 13,610 $ 43,355
Change in unrealized holding loss on investment securities
available for sale (87,907) (68,511)
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Federal income taxes paid $ 51,166 $ 51,929
Interest paid 1,344,527 1,333,043
</TABLE>
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<PAGE> 8
FIRST FEDERAL FINANCIAL BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Basis of Financial Statement Presentation
First Federal Financial Bancorp, Inc. (the "Company") was incorporated
under Delaware law in February 1996 by First Federal Savings and Loan
Association of Ironton (the "Association") in connection with the conversion of
the Association from a federally-chartered mutual savings and loan association
to a federally-chartered stock savings bank to be known as "First Federal
Savings Bank of Ironton" (the "Bank") and the issuance of the Bank's common
stock to the Company and the offer and sale of the Company's common stock by the
Company to the members of the public, the Association's Board of Directors, its
management, and the First Federal Financial Bancorp, Inc. Employee Stock
Ownership Plan (the "ESOP") (the "Conversion").
The accompanying financial statements were prepared in accordance with
instructions to 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. However, all normal, recurring adjustments which, in the opinion of
management, are necessary for a fair presentation of the financial statements,
have been included. These financial statements should be read in conjunction
with the audited consolidated financial statements and the notes thereto for the
year ended September 30, 1999.
Business
The Company's principal business is conducted through the Bank which
conducts business from its main office located in Ironton, Ohio, and one
full-service branch located in Proctorville, Ohio. The Bank's deposits are
insured by the Savings Association Insurance Fund ("SAIF") to the maximum extent
permitted by law. The Bank is subject to examination and comprehensive
regulation by the Office of Thrift Supervision ("OTS"), which is the Bank's
chartering authority and primary regulator. The Bank is also subject to
regulation by the Federal Deposit Insurance Corporation ("FDIC"), as the
administrator of the SAIF, and to certain reserve requirements established by
the Federal Reserve Board ("FRB"). The Bank is a member of the Federal Home Loan
Bank of Cincinnati ("FHLB").
Principles of Consolidation
The consolidated financial statements at March 31, 2000 and September 30,
1999, and for the three and six months ended March 31, 2000 and 1999, include
the accounts of the Company and the Bank. All significant intercompany
transactions and balances have been eliminated in consolidation. Additionally,
certain reclassifications may have been made in order to conform with the
current period's presentation. The accompanying financial statements have been
prepared on the accrual basis.
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<PAGE> 9
(2) CONVERSION TRANSACTION
On June 3, 1996, (i) the Association converted from a federally-chartered
mutual savings and loan association to a federally-chartered stock savings bank
to be named "First Federal Savings Bank of Ironton", and (ii) the Company
acquired all of the common stock of the Bank in the Conversion. As part of the
Conversion, the Company issued 671,783 shares of its Common Stock. Total
proceeds of $6,717,830 were reduced by $537,430 for shares to be purchased by
the ESOP and by approximately $432,000 for conversion expenses. As a result of
the Conversion, the Company contributed approximately $3,145,000 of additional
capital to the Bank and retained the balance of the proceeds.
(3) COMMON STOCK ACQUIRED BY THE EMPLOYEE STOCK OWNERSHIP PLAN
The Company has established an ESOP for employees of the Company and the
Bank which became effective upon the Conversion. Full-time employees of the
Company and the Bank who have been credited with at least 1,000 hours of service
during a twelve month period and who have attained age 21 are eligible to
participate in the ESOP. The Company loaned the ESOP $537,430 for the initial
purchase of the ESOP shares. The loan is due and payable in forty-eight (48)
equal quarterly installments of $11,200 beginning June 29, 1996, plus interest
at the rate of 8.75% per annum. The Company makes scheduled discretionary cash
contributions to the ESOP sufficient to amortize the principal and interest on
the loan over a period of 12 years. The Company accounts for its ESOP in
accordance with Statement of Position 93-6, "Employer's Accounting For Employee
Stock Ownership Plans." As shares are committed to be released to participants,
the Company reports compensation expense equal to the average market price of
the shares during the period. ESOP compensation expense for the three month
periods ended March 31, 2000 and 1999 was $12,052 and $16,721, respectively, and
for the six month periods ended March 31, 2000 and 1999 was $25,266 and $37,259,
respectively.
(4) STOCK OPTION PLAN
On December 16, 1996, the Stock Option Plan (the "Plan") was approved by
the Company's stockholders. A total of 67,178 shares of common stock may be
issued pursuant to the Plan and 37,529 shares have been awarded as of March 31,
2000. These options are subject to vesting provisions as well as other
provisions of the Plan. No options have been exercised through March 31, 2000.
(5) RECOGNITION AND RETENTION PLAN AND TRUST
On December 16, 1996, the Recognition and Retention Plan and Trust (the
"RRP") was approved by the Company's stockholders. A total of 26,871 shares of
common stock are available for awards pursuant to the RRP and 16,438 shares have
been awarded as of March 31, 2000. Awards will vest in equal installments over a
five year period, with the first installment vesting on the first anniversary
date of the grant and each additional installment vesting on the four subsequent
anniversaries of such date, subject to certain conditions as more fully
described in the plan documents. Compensation cost related to RRP shares earned
during the three month periods ended March 31, 2000 and 1999 was $9,606 and
$9,605, respectively, and for the six month periods ended March 31, 2000 and
1999 was $19,211 and $19,211, respectively.
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<PAGE> 10
The Company purchased 26,871 shares of common stock during the year ended
September 30, 1997, to fully fund the RRP. The cost of unearned RRP shares is
recorded as a reduction of stockholders' equity.
(6) PURCHASE OF COMMON STOCK
During the six months ended March 31, 2000, the Company purchased 19,924
shares of its outstanding common stock at an aggregate price of $210,977. During
the year ended September 30, 1999, the Company purchased 31,764 shares of its
outstanding common stock at an aggregate cost of $439,030. The purchase of these
shares has been recorded as a purchase of common stock shares, which are
authorized but unissued.
(7) EARNINGS PER SHARE
Basic and full dilution Earnings Per Share (EPS) for the three and six
months ended March 31, 2000 and 1999, were calculated by dividing the
consolidated net income by the weighted average number of common shares, and
common stock equivalents outstanding, as set forth below. Shares which have not
been committed to be released to the ESOP are not considered to be outstanding
for purposes of calculating earnings per share.
<TABLE>
<CAPTION>
For the Three Months Ended For the Three Months Ended
March 31, 2000 March 31, 1999
----------------------------------- -----------------------------------
Shares Shares
Income (Denomi- Per-Share Income (Denomi- Per-Share
(Numerator) nator) Amount (Numerator) nator) Amount
------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $87,887 504,908 $ .17 $63,393 542,668 $ .12
Effect of Dilutive
Securities-Options - - - - 496 -
------- ------- ------- ------- ------- -------
Diluted EPS $87,887 504,908 $ .17 $63,393 543,164 $ .12
======= ======= ======= ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
For the Six Months Ended For the Six Months Ended
March 31, 2000 March 31, 1999
-------------------------------------- --------------------------------
Shares Shares
Income (Denomi- Per-Share Income (Denomi- Per-Share
(Numerator) nator) Amount (Numerator) nator) Amount
-------- -------- ------- -------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Basic EPS $162,124 514,790 $ .31 $ 95,440 542,014 $ .18
Effect of Dilutive
Securities-Options - - - - 2,623 -
-------- -------- ------- -------- -------- -------
Diluted EPS $162,124 514,790 $ .31 $ 95,440 544,637 $ .18
======== ======== ======= ======== ======== =======
</TABLE>
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<PAGE> 11
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
ASSETS. Total assets increased $2.3 million, or 3.5%, from $65.1 million at
September 30, 1999 to $67.4 million at March 31, 2000. The increase consisted
primarily of increases in cash and cash equivalents of $.4 million and loans
receivable of $2.8 million, offset by declines in mortgage-backed securities
(held to maturity and available for sale) of $.5 million and investment
securities (held to maturity and available for sale) of $.4 million.
CASH AND CASH EQUIVALENTS. Cash and cash equivalents increased $381,518, or
40.6%, from $940,751 at September 30, 1999 to $1,322,269 at March 31, 2000. The
increase resulted from net cash flows provided by operating activities of
$218,438 and from financing activities of $2,177,093, offset by net cash flows
used for investing activities of $2,014,013.
INVESTMENT SECURITIES. Investment securities (held to maturity and
available for sale) decreased $.4 million, or 12.9%, from $3.1 million at
September 30, 1999 to $2.7 million at March 31, 2000. The Company primarily
invests in U.S. Treasury and U.S. government agency securities, and to a lesser
extent, in municipal securities and in certificates of deposit in other insured
financial institutions (in amounts up to $99,000 at any one institution). The
decrease resulted from maturities of investment securities during the period of
$.7 million, with $.3 million of corresponding reinvestments of the proceeds.
LOANS RECEIVABLE. Loans receivable increased $2.8 million, or 5.6%, from
$49.7 million at September 30, 1999 to $52.5 million at March 31, 2000. The
majority of the increase is attributed to mortgage loan originations.
The Company does not have a concentration of its loan portfolio in any one
industry or to any one borrower. Real estate lending (both mortgage and
construction loans) continues to be the largest component of the loan portfolio,
representing $49.8 million, or 93.4%, of total gross loans, while consumer
loans, including installment loans and loans secured by deposit accounts,
totaled $3.5 million, or 6.6%, of total gross loans outstanding at March 31,
2000.
The Company's lending is concentrated to borrowers who reside in and/or
which are collateralized by real estate and property located in Lawrence and
Scioto County, Ohio, and Boyd and Greenup County, Kentucky. Employment in these
areas is highly concentrated in the petroleum, iron and steel industries.
Therefore, many debtors' ability to honor their contracts is dependent upon
these economic sectors.
ALLOWANCE FOR LOAN LOSSES. The allowance for loan losses as a percentage of
total loans decreased slightly from .6% of loans outstanding at September 30,
1999 to .5% of loans outstanding at March 31, 2000. The dollar amount of the
allowance totaled $280,134 at March 31, 2000 as compared to $292,500 at
September 30, 1999.
Charge-off activity for the six months ended March 31, 2000 and 1999,
totaled $22,866 and $7,314, respectively. Recoveries totaled $-0- and $-0- for
the six months ended March 31, 2000 and 1999, respectively.
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<PAGE> 12
The Company had $199,708 and $153,000 of non-accrual loans at March 31,
2000 and September 30, 1999, respectively. At the same dates, there were no
significant loans greater than 90 days delinquent which were still accruing
interest.
The Company had no troubled debt restructurings during the six month
periods ended March 31, 2000 and 1999.
MORTGAGE-BACKED SECURITIES. The Company invests primarily in
adjustable-rate, mortgage-backed securities, which are classified as either held
to maturity (carried at amortized cost), or available for sale (carried at
quoted market). Mortgage-backed securities decreased $.5 million, or 5.5%, from
$9.1 million at September 30, 1999 to $8.6 million at March 31, 2000, due to
scheduled principal payments of $.5 million.
DEPOSITS. Deposits decreased by $.1 million, or .2%, from $47.7 million at
September 30, 1999 to $47.6 million at March 31, 2000. The Company continues to
offer competitive interest rates on deposits, but has elected to utilize
available advances from the FHLB to meet its funding requirements, rather than
to pay above market rates of interest to retain, or increase deposits.
ADVANCES FROM FEDERAL HOME LOAN BANK. The Company's advances from the FHLB
totaled $10.4 million at March 31, 2000 as compared to $7.8 million at September
30, 1999. During the six months ended March 31, 2000, the Company had additional
borrowings of $9.0 million and repayments of $6.4 million.
STOCKHOLDERS' EQUITY. Stockholders' equity totaled $9.2 million at March
31, 2000 as compared to $9.3 million at September 30, 1999. The Company's net
income for the period was offset by dividends declared, the release of common
stock shares to the employee benefit plans, and the purchase of treasury shares.
RESULTS OF OPERATIONS-THREE MONTHS ENDED MARCH 31, 2000 AS COMPARED TO
THREE MONTHS ENDED MARCH 31, 1999
Net income increased $24,494, or 38.6%, from $63,393 for the quarter ended
March 31, 1999 to $87,887 for the comparable 2000 quarter. Net income per share
was $.17 and $.12 for the 2000 and 1999 quarters, respectively, both primary and
assuming full dilution. The increase in net income resulted from an increase in
net interest income of $38,207, or 8.9%, and a decrease in non-interest expense
of $14,226, or 3.8%, offset by increases in the provision for loan losses of
$1,500, or 33.3%, and the provision for income taxes of $25,662, or 174.4%, and
a decrease in non-interest income of $777, or 2.7%.
Total interest income increased $61,479, or 5.6%, from $1,094,655 for the
three months ended March 31, 1999 to $1,156,134 for the comparable 2000 period.
The increase was due to increased interest earned on loans receivable of
$66,405, and on investment securities of $2,445, offset by reductions in
interest earned on mortgage-backed securities and other interest-earning assets
of $5,165 and $2,206, respectively. Interest on loans receivable increased
primarily due to higher volumes of loans during the 2000 period as compared to
the 1999 period, and from increased yields earned on the variable rate loan
portfolio, such loans having been subject to increased repricing in recent
months. The increase in interest on investment securities resulted from
-12-
<PAGE> 13
higher yielding investments during the 2000 period as compared to the 1999
period. The decreases in interest earned on mortgage-backed securities and other
interest-earning assets are primarily attributable to lower volumes of these
assets, such volumes having decreased during the 2000 quarter as compared to the
1999 quarter to fund the increased loan demand.
Total interest expense increased $23,272, or 3.5%, from $663,633 for the
quarter ended March 31, 1999 to $686,905 for the quarter ended March 31, 2000,
such increase being primarily attributable to higher volumes of interest-bearing
liabilities during the 2000 quarter as compared to the 1999 quarter, and to a
lesser extent, due to higher interest rates paid on FHLB advances.
The Company provided $6,000 for loan losses during the 2000 quarter to
correspond with the growth in the loan portfolio. This compared to a $4,500
provision for the 1999 quarter.
The $777 decrease in non-interest income, from $29,012 for the 1999 quarter
to $28,235 for the 2000 quarter, resulted primarily from decreases of $2,732 and
$6,131 in gains on foreclosed real estate and sales of assets, respectively,
offset by an increase of $8,086 in other non-interest income primarily
attributable to service charges on deposit accounts.
The $14,226 decrease in non-interest expense, from $377,422 for the 1999
quarter to $363,196 for the comparable 2000 quarter, resulted primarily from
decreases in compensation and benefits of $3,569, SAIF deposit insurance
premiums of $4,377, franchise taxes of $3,499, advertising expenses of $4,050,
and professional services expenses of $5,461, partially offset by increases in
data processing expenses and other non-interest expenses of $4,046 and $1,857,
respectively. Compensation and benefits decreased primarily due to lower costs
associated with employee benefit plans, while SAIF deposit insurance premiums
decreased due to a slight decline in the volume of deposit accounts during the
2000 quarter as compared to the 1999 quarter. Franchise taxes declined due to
lower levels of taxable stockholders' equity on which such taxes are based,
advertising expenses decreased due to less media advertising during the 2000
quarter as compared to the 1999 quarter, while professional services expenses
decreased due to the timing of the services rendered. Data processing expenses
increased due to an increase in ATM usage as well as increases in deposit and
check processing costs during the 2000 quarter as compared to the 1999 quarter,
while the increase in other non-interest expenses was not due to any one
significant factor.
The $25,662 increase in the provision for income taxes resulted from higher
pretax income during the 2000 quarter as compared to the 1999 quarter.
RESULTS OF OPERATIONS - SIX MONTHS ENDED MARCH 31, 2000 AS COMPARED TO SIX
MONTHS ENDED MARCH 31, 1999
Net income increased $66,684, or 69.9%, from $95,440 for the six months
ended March 31, 1999 to $162,124 for the six months ended March 31, 2000. Net
income per share for the 2000 six month period totaled $.31 per share, both
primary and assuming full dilution. This compared to $.18 per share for the 1999
comparable period, both primary and assuming full dilution. The increase in net
income resulted from an increase in net interest income of $92,891, or 11.1%,
and a decrease in non-interest expense of $17,803, or 2.4%, offset by increases
in the provision for loan losses of $3,000, or 40.0%, the provision for income
taxes of $40,537, or 115.6%, and a decrease in non-interest income of $473, or
.8%.
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<PAGE> 14
Total interest income increased $113,446, or 5.2%, from $2,169,082 for the
six months ended March 31, 1999 to $2,282,528 for the comparable 2000 six month
period. The increase was due to higher levels of interest earned on loans
receivable of $148,926, offset by a reduction in interest earned on
mortgage-backed and investment securities of $28,884 and $2,602, respectively,
and a decrease in interest on other interest-earning assets of $3,994. Interest
on loans receivable increased due to a higher volume of loans during the 2000
six month period as compared to the 1999 six month period, and from variable
rate loans, repricing at higher rates during the 2000 six month period as
compared to the 1999 six month period. The decrease in interest on
mortgage-backed securities, investment securities, and other interest-earning
assets resulted from decreases in the average volume of these assets during the
2000 six month period as compared to the 1999 six month period.
Total interest expense increased $20,555, or 1.5%, from $1,335,239 for the
1999 six month period to $1,355,794 for the 2000 six month period, such increase
reflecting the higher volume of advances from the FHLB during the 2000 period as
compared to the 1999 period, partially offset by a decline in interest paid on
interest-bearing deposits due to lower market rates of interest.
The Company provided $10,500 for loan losses during the 2000 six month
period as compared to $7,500 for the 1999 six month period to correspond to the
increase in the loan portfolio.
The $473 decrease in non-interest income, from $56,231 for the six months
ended March 31, 1999 to $55,758 for the six months ended March 31, 2000,
resulted primarily from decreases of $3,035 and $11,131 in gains on foreclosed
real estate and gains on sales of assets, respectively, offset by an increase in
other non-interest income of $13,693 primarily attributable to increased service
charges on deposit accounts.
The $17,803 decrease in non-interest expense, from $752,060 for the 1999
period to $734,257 for the 2000 period resulted primarily from decreases in
compensation and benefits of $12,149, franchise taxes of $8,246, professional
services expenses of $5,713, and SAIF deposit insurance premiums of $3,778,
partially offset by increases in data processing expenses and other non-interest
expenses of $9,462 and $4,649, respectively. Compensation and benefits decreased
primarily due to lower costs associated with employee benefit plans during the
2000 six month period as compared to the 1999 six month period, while franchise
taxes decreased due to lower levels of taxable stockholders' equity.
Professional services expenses declined due to the timing of services rendered,
while SAIF deposit insurance premiums decreased due to a slight decline in the
volume of deposit accounts during the 2000 period as compared to the 1999
period. Data processing expenses increased due to an increase in ATM usage as
well as increases in deposit and check processing costs, while the increase in
other non-interest expenses was not due to any one significant factor.
The $40,537 increase in the provision for income taxes, from $35,074 for
the six months needed March 31, 1999 to $75,611 for the six months ended March
31, 2000 resulted from the increase in pretax income.
-14-
<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES
The Bank is required under applicable federal regulations to maintain
specified levels of "liquid" investments. Such investments are intended to
provide a source of relatively liquid funds upon which the Bank may rely if
necessary to fund deposit withdrawals and for other short-term funding needs.
The required level of such liquid investments is currently 4% of certain
liabilities as defined by the OTS and may be changed to reflect economic
conditions.
The liquidity of the Bank, as measured by the ratio of cash, cash
equivalents, qualifying investments, mortgage-backed securities and interest
receivable on investments, and mortgage-backed securities that would qualify
except for the maturity dates, to the sum of total deposits less any share loans
on deposits, averaged 25.8% at March 31, 2000, as compared to 31.1% for the
quarter ended September 30, 1999. At March 31, 2000, the Bank's "liquid" assets
totaled approximately $10.5 million, which was $8.9 million in excess of the
current OTS minimum requirement.
The Bank's liquidity, represented by cash and cash equivalents, is a
product of its operating, investing and financing activities. The Bank's primary
sources of funds are deposits, prepayments and maturities of outstanding loans
and mortgage-backed securities, maturities of short-term investments, and funds
provided from operations. While scheduled loan and mortgage-backed securities
amortization and maturing short-term investments are relatively predictable
sources of funds, deposit flows and loan prepayments are greatly influenced
generally by interest rates, economic conditions and competition. The Bank
generates cash through its retail deposits and, to the extent deemed necessary,
has utilized borrowings from the FHLB of Cincinnati. Outstanding advances
totaled $10.4 million at March 31, 2000.
Liquidity management is both a daily and long-term function of business
management. The Bank maintains a strategy of investing in loans and
mortgage-backed securities. The Bank uses its sources of funds primarily to meet
its ongoing commitments, to pay maturing savings certificates and savings
withdrawals, fund loan commitments and maintain a portfolio of mortgage-backed
and investment securities. At March 31, 2000, the total approved loan
commitments outstanding amounted to $.6 million. Certificates of deposit
scheduled to mature in one year or less at March 31, 2000, totaled $26.8
million. The Bank believes that it has adequate resources to fund all of its
commitments and that it could either adjust the rate of certificates of deposit
in order to retain deposits in changing interest rate environments or replace
such deposits with borrowings if it proved to be cost-effective to do so.
At March 31, 2000, the Bank had regulatory capital which was well in excess
of applicable limits. At March 31, 2000, the Bank was required to maintain
tangible capital of 1.5% of adjusted total assets, core capital of 4.0% of
adjusted total assets and risk-based capital of 8.0% of adjusted risk-weighted
assets. At March 31, 2000, the Bank's tangible capital was $8.7 million, or
13.0% of adjusted total assets, core capital was $8.7 million, or 13.0% of
adjusted total assets and risk-based capital was $8.9 million, or 23.5% of
adjusted risk-weighted assets, exceeding the requirements by $7.7 million, $6.0
million and $5.9 million, respectively.
-15-
<PAGE> 16
RECENT ACCOUNTING PRONOUNCEMENTS
There are no recent accounting pronouncements to be implemented which
management believes will have a material adverse effect on the Company's
financial position or results of operations.
"SAFE HARBOR" STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT OF
1995
In addition to historical information, forward-looking statements are
contained herein that are subject to risks and uncertainties, that could cause
actual results to differ materially from those reflected in the forward-looking
statements. Factors that could cause future results to vary from current
expectations, include, but are not limited to, the impact of economic conditions
(both generally and more specifically in the markets in which the Company
operates), the impact of competition for the Company's customers from other
providers of financial services, the impact of government legislation and
regulation (which changes from time to time and over which the Company has no
control), and other risks detailed in this Form 10-Q and in the Company's other
Securities and Exchange Commission (SEC) filings. Readers are cautioned not to
place undue reliance on these forward-looking statements, which reflect
management's analysis only as of the date hereof. The Company undertakes no
obligation to publicly revise these forward-looking statements, to reflect
events or circumstances that arise after the date hereof. Readers should
carefully review the risk factors described in other documents the Company files
from time to time with the Securities and Exchange Commission.
-16-
<PAGE> 17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal proceedings to which the Issuer is a part,
or to which any of its property is subject.
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
a) An annual meeting of stockholders ("Annual Meeting") was held on
January 19, 2000.
b) Not applicable
c) Two matters were voted upon at the Annual Meeting. The
stockholders approved matters brought before the Annual Meeting.
The matters voted upon together with the applicable voting
results were as follows:
1) Proposal to elect two directors for a three-year term or
until their successors are elected and qualified; Edward R.
Rambacher received votes for 373,211, against -0-, abstain
72,950, not voted 103,436, and James E. Waldo received votes
for 381,601, against -0-, abstain 64,560, not voted 103,436.
2) Proposal to ratify the appointment of Kelley, Galloway &
Company, PSC as the Company's independent auditors for the
fiscal year ending September 30, 2000; received votes for
423,611, against 21,000, abstain 1,550, not voted 103,436.
d) Not applicable
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
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<PAGE> 18
No. Description
--- ----------------------------------------------------------------
3.1 Certificate of Incorporation of First Federal Financial Bancorp,
Inc.1/
3.2 Bylaws of First Federal Financial Bancorp, Inc. 1/
27 Financial Data Schedule.
_______________
1/ Incorporated by reference from the Registration Statement on Form S-1
(Registration No. 333-1672) filed by the Registrant with the SEC on February 26,
1996, as amended.
b) No Form 8-K reports were filed during the quarter.
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934,
the registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Date: May 12, 2000 By:/s/ I. Vincent Rice
----------------------------- ------------------------------------
I. Vincent Rice, President
Date: May 12, 2000 By:/s/ Jeffery W. Clark
----------------------------- ------------------------------------
Jeffery W. Clark, Comptroller
-18-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the First
Federal Financial Bancorp, Inc. and subsidiary consolidated balance sheet as of
March 31, 2000 and the consolidated statement of income for the six months ended
March 31, 2000 and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> MAR-31-2000
<CASH> 213,424
<INT-BEARING-DEPOSITS> 1,108,845
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 4,854,079
<INVESTMENTS-CARRYING> 6,456,684
<INVESTMENTS-MARKET> 6,345,412
<LOANS> 52,816,974
<ALLOWANCE> 280,134
<TOTAL-ASSETS> 67,431,440
<DEPOSITS> 47,637,763
<SHORT-TERM> 2,500,000
<LIABILITIES-OTHER> 233,361
<LONG-TERM> 7,908,444
0
0
<COMMON> 5,317
<OTHER-SE> 9,146,555
<TOTAL-LIABILITIES-AND-EQUITY> 67,431,440
<INTEREST-LOAN> 1,898,962
<INTEREST-INVEST> 362,662
<INTEREST-OTHER> 20,904
<INTEREST-TOTAL> 2,282,528
<INTEREST-DEPOSIT> 1,116,196
<INTEREST-EXPENSE> 1,355,794
<INTEREST-INCOME-NET> 926,734
<LOAN-LOSSES> 10,500
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 734,257
<INCOME-PRETAX> 237,735
<INCOME-PRE-EXTRAORDINARY> 162,124
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 162,124
<EPS-BASIC> .31
<EPS-DILUTED> .31
<YIELD-ACTUAL> 2.75
<LOANS-NON> 199,708
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 292,500
<CHARGE-OFFS> 22,866
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 280,134
<ALLOWANCE-DOMESTIC> 280,134
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
