UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the period ended March 31, 1996
Commission File Number: 000-20739
EAGLE BANCGROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
37-1353957
(IRS Employer Identification No.)
301 Fairway Drive, Bloomington, IL 61701
(309) 663-6345
(Address, including zip code, and telephone number,
including area code, of principal executive offices)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the past 90 days.
YES XX NO ___
As of June 10, 1996, there were no shares of the Registrant's
Common Stock, par value $.01 per share, outstanding.
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PART I--FINANCIAL INFORMATION
Item 1. Financial Statements.
Eagle BancGroup, Inc.
Consolidated Statement of Condition
(amounts in thousands)
Mar 31, 1996 Dec 31, 1995
<S> <C> <C>
ASSETS
Cash on hand & in other inst 1,108 1,047
Fed funds sold & overnight dep 818 2,853
Investment securities 13,648 11,810
Mortgage backed securities 41,059 41,376
Loans receivable, net 89,676 88,786
Real estate owned 644 644
Premises and equipment 3,047 3,112
Other assets 1,806 1,346
Total Assets 151,806 150,974
LIABILITIES AND EQUITY
Deposits 139,426 138,396
FHLB advances 0 0
Other borrowed funds 0 0
Other liabilities 1,144 1,063
Total Liabilities 140,570 139,459
Retained Earnings 11,236 11,515
Total Liabilities and Equity 151,806 150,974
See accompanying notes.
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Eagle BancGroup, Inc.
Consolidated Statement of Income
(amounts in thousands)
For the Three Months Ended March 31,
1996 1995
<S> <C> <C>
Interest income:
Interest and fees on loans 1,760 1,650
Interest on investment sec &
temporary investments 221 195
Interest on mtg-backed sec 617 495
Total Interest Income 2,598 2,340
Interest expense:
Interest on deposits:
Passbook 137 119
MMDA and NOW 46 47
Certificates of deposit 1,719 1,398
Interest on borrowings 0 74
Total Interest Expense 1,902 1,638
Net Interest Income 696 702
Provision for loan losses 15 15
Net Int Inc After Prov for
Loan Losses 681 687
Non-interest income:
Gains on loans sold 38 3
Other 75 93
Total Non-Interest Income 113 96
Non-interest expense
Salaries and employee ben 377 404
Net occupancy expense 137 134
Federal deposit ins prem 89 79
Data processing expense 66 57
Other 174 14
Total Non-Interest Expense 843 688
Income(Loss) Bef Fed Inc Tax (49) 95
Federal inc tax ben (exp) 15 (30)
Net Income (Loss) (34) 65
See accompanying notes.
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Eagle BancGroup, Inc
Consolidated Statement of Cash Flows
(amounts in thousands)
For the Three Months Ended March 31,
1996 1995
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Operating activities:
Net (loss) income (34) 65
Adjustments to reconcile net
(loss)income to net cash
provided by oper activities:
Provision for loan loss 15 15
Provision for depreciation 75 119
Amort of prem/disc on
investment securities 20 28
Net (gain)loss on sale
of securities 5 0
Purchase of FHLB stock (35) 0
Proceeds from sale of mtg
loans originated-for-sale 3,558 306
Loans rec originated-for-sale (4,973) (253)
Decrease in accrued int rec 58 25
Inc(dec) in accrued int pay 5 (10)
Increase in other assets (333) (101)
Increase in other liab 82 93
Net cash (used) provided by
operating activities (1,557) 287
Investing activities:
Proceeds from sale of inv sec 3,011 10
Purchases of investment sec (4,984) 0
Purchases of mtg-backed sec (2,845) 0
Proceeds from sale of mtg-bkd
securities 1,500 0
Principal coll on mtg-bkd sec 1,395 631
Principal coll on loans rec 8,939 3,993
Loans receivable originated (8,448) (7,374)
Purchases of prem and equip (10) (36)
Net cash used by investing
activities (1,442) (2,776)
Financing activities:
Net change in savings, demand
and NOW accounts 1,325 397
Net change in certificate accts (300) 11,072
Net change in short-term borr 0 (7,936)
Net cash provided by
financing activities 1,025 3,533
Net (dec)inc in cash and
cash equivalents (1,974) 1,044
Cash and cash equivalents at
beginning of period 3,900 2,703
Cash and cash equivalents at
end of period 1,926 3,747
See accompanying notes.
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Eagle BancGroup, Inc.
Notes to Consolidated Financial Statements
1. Basis of Presentation
The unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and therefore do not include all information and disclosures
required by generally accepted accounting principles for complete financial
statements. All adjustments which are, in the opinion of management,
necessary for a fair presentation of the results for the periods reported,
consisting only of normal recurring adjustments, have been included
in the accompanying consolidated financial statements.
2. Conversion
Under a Plan of Conversion (the 'Plan') adopted by the Board of Directors of
First Federal Savings and Loan Association of Bloomington ('First Federal')
on November 21, 1995, First Federal is simultaneously converting from a
federally-chartered mutual savings association to a federally-chartered
capital stock savings association and issuing its common stock to Eagle
BancGroup, Inc., the 'Holding Company'. The Plan was amended and restated on
February 13, 1996, March 12, 1996 and April 29, 1996. The Holding Company is
simultaneously offering for sale Common Stock of the Holding Company in a
subscription and community offering expected to conclude in June, 1996. A
Prospectus dated May 13, 1996 details the subscription and community
offering. The charter conversion, the issuance of First Federal stock to
the Holding Company and the offer for sale of Holding Company stock is
referred to as the 'Conversion'.
Separate financial statements of the Holding Company have not been included
because it will not engage in material transactions until after the Conversion.
The Holding Company, which has been inactive to date, has no significant
assets, liabilities, revenues, expenses or contingent liabilities.
3. SFAS 122
Statement of Financial Accounting Standards No. 122, 'Accounting for
Mortgage Servicing Rights' was adopted as of January 1, 1996 resulting in
the recognition of a servicing asset related to loans sold of $21,000 in the
first quarter of 1996. No adjustment to 1995 results was made as the
statement was not retroactively adopted.
4. Earnings Per Share and Dividends
The Company has yet to issue stock pending completion of the Conversion
(Footnote 2). No earnings per share or dividend information is applicable.
Eagle BancGroup, Inc.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
RESULTS OF OPERATIONS
GENERAL. The company's net loss for the three months ended March 31, 1996
was $34,000 compared to net income for the three months ended March 31, 1995
of $65,000. The decline in income was primarily due to a decrease in the
interest rate spread and an increase in non-interest expense.
NET INTEREST INCOME. For the three months ended March 31, 1996, net
interest income decreased to $696,000 from $702,000 for the same period in
1995. Interest income increased to $2,598,000 for the first three months of
1996 from $2,340,000 for the same period in 1995 while interest expense
increased to $1,902,000 from $1,638,000 for the same periods in 1996 and
1995, respectively.
The interest rate spread (the rate earned on average interest earning assets
minus the rate paid on average interest bearing liabilities) decreased to
1.65% for the first three months of 1996 from 2.29% for the first three
months of 1995. The net interest margin (net interest income divided by
average interest earning assets) decreased to 1.92% from 2.17% during the
same periods in 1996 and 1995, respectively.
Average interest earning assets increaed $13,958,000 to $145,445,000 for the
first quarter of 1996 from the same period in 1995 while the yield on average
interest earning assets decreased .04% to 7.18% in the first quarter of 1996
from the same period in 1995. The increase in interest earning assets in 1996
from 1995 was due to the 1995 marketing effort to attract new deposits and
the sale, in the fourth quarter of 1995, of a large commercial property
previously held as real estate owned. The funds generated were invested
primarily in mortgage-backed securities, collateralized mortgage obligations
and government securities. The average balance of total investments increased
to $56,153,000 for the first three months of 1996 from $45,817,000 for the
first three months of 1995.
Average total deposits increased to $138,200,000 for the first three months of
1996 from $129,886,000 in the first three months of 1995 due to the Company's
efforts to increase certificate of deposit balances by matching local
competitor's terms on certain certificates during the first six months of
1995. While the marketing effort was successful in attracting new deposits,
the rate paid on average total deposits increased to 5.54% for the three
months ended March 31, 1996 from 4.94% for the first three months of 1995.
Also during the first quarter of 1995, the Company had average FHLB advances
of $4,649,000 while no funds were borrowed during the first three months of
1996. Interest expense on the FHLB advances in 1995 was $74,000.
All loans that are contractually past due 90 days or more are non-accrual and
are considered non-performing. Interest income of $7,000 was recognized on
non-performing loans in the three months ended March 31, 1996. An additional
$10,000 would have been recognized on an accrual basis.
PROVISION FOR LOAN LOSSES. The provision for loan losses was $15,000 for
both the first three months of 1996 and 1995. For both three-month periods,
the provision for loan losses was computed as the amount necessary to bring
the ending allowance to a level deemed adequate to absorb estimated future
losses inherent in the loan portfolio. The allowance for loan losses was
$905,000 or 1.00% of total loans at March 31, 1996 compared to $865,000 or
.99% of total loans at March 31, 1995. At December 31, 1995, the allowance
for loan losses was $907,000 or 1.01% of total loans. In the first three
months of 1996, the allowance was adjusted for the $15,000 provision for loan
losses, charge-offs of $18,000 and recoveries of $1,000 resulting in the
allowance total of $905,000 at March 31, 1996. Non-performing loans were
$684,000 or .76% of total loans at March 31, 1996 compared to $485,000 or
.54% of total loans at 1995
NON-INTEREST INCOME. Non-interest income increased to $113,000 in the first
quarter of 1996 from $96,000 the first quarter of 1995. Gains on loans sold
increased to $38,000 in the first three months of 1996 from $3,000 in the
same period in 1995 as mortgage loan originations increased to $8,264,000
during the first three months of 1996 from $2,110,000 for the same period in
1995. In addition, in 1996, $21,000 was recognized as a servicing asset
related to loans sold as a result of the adoption of SFAS 122, while no
adjustment to 1995 results was made. Loan fees and deposit account fees both
increased $5,000 in the first three months of 1996 from the same period in
1995. In the first quarter of 1995, $36,000 was recognized as income as the
result of a reduction in the valuation allowance for loans held for sale.
NON-INTEREST EXPENSE. Non-interest expense increased to $843,000 for the
first three months of 1996 from $688,000 for the same period in 1995. In
the first three months of 1995, income of $93,000 was recognized on real
estate owned operations. The large commercial property included in real
estate owned, which generated the rental income in early 1995, was sold in
the fourth quarter of 1995. A market value adjustment of $13,000 was
expensed in the first three months of 1996 on loans held for sale compared
to a gain in the first three months of 1995 included in non-interest income.
Marketing expense increased to $36,000 in the first three months of 1996 from
$10,000 in the same period in 1995 due to increased advertising, focusing on
home mortgage lending and customer service.
In addition, comparing the first three months of 1996 to the same period in
1995, data processing and ATM service charges increased $18,000 due to
increased transaction volumes processed and small price increases and FDIC
premium expense increased $10,000 due to increased deposit levels. Partially
offsetting the increased expense items was compensation expense, which
decreased to $377,000 in the first three months of 1996 from $404,000 in the
first three months of 1995 due to staff changes.
INCOME TAX EXPENSE. For the three months ended March 31, 1995, income tax
expense of $30,000 was recorded compared to an income tax benefit of $15,000
for the same period in 1996 due to changes in pre-tax income. The effective
rate for both periods was 32%.
Results of operations for the three months March 31, 1996 may not be
indicative of what the results of operations will be for all of 1996.
FINANCIAL CONDITION
Total assets at March 31, 1996 increased to $151,806,000 from $150,974,000
at December 31, 1995 due to an increase in deposits from $138,396,000 at
year-end to $139,426,000 at March 31, 1996. Investment securities increased
$1,521,000 to $54,707,000 at March 31, 1996 from December 31, 1995 funded by
the increase in deposits and decreased cash and short-term investments, which
were $1,926,000 at March 31, 1996 compared to $3,900,000 at year-end. Net
loans also increased to $89,676,000 at March 31, 1996 from $88,786,000 at
December 31, 1995.
Savings institutions are required by regulation to maintain minimum levels of
capital as measured by three capital-to-assets ratios: Risk-based capital to
risk weighted assets of 8%; core capital to adjusted tangible assets of 3%
and tangible core capital to tangible assets of 1.50%. At March 31, 1996,
the Company's ratios were 15.52%, 7.64% and 7.64%, respectively. At December
31, 1995, the ratios were 15.78%, 7.73% and 7.73%, respectively.
A minimum liquidity ratio of 5%, calculated as the ratio of liquid assets
(cash, short-term investments and certain long-term investments) to deposits
and certain borrowed funds, must be maintained by savings institutions. At
March 31, 1996 and December 31, 1995, the liquidity ratio was 12.41% and
12.79%, respectively.
At March 31, 1996, commitments for loan originations and loans in process
totaled $1,035,000 while unused lines of credit amounted to $2,435,000.
Funds to meet these commitments are available from scheduled principal and
interest payments on loans, mortgage-backed and investment securities and
new deposits. Funds are primarily invested in residential mortgage loans,
indirect automobile loans and mortgage-backed securities and are also used
for deposit interest payments, maturities and withdrawals.
Eagle BancGroup, Inc.
PART II--OTHER INFORMATION
Item 5. Other Information
On April 16, 1996, the Office of Thrift Supervision ('OTS') approved First
Federal's Application for Approval of Conversion subject to approval of the
Plan of Conversion by First Federal's members. A meeting of members has
been called for June 11, 1996 to vote on the Plan. OTS approval of Eagle
BancGroup, Inc.'s application to become the holding company for First
Federal is expected prior to the close of the Subscription Offering.
Eagle BancGroup, Inc. filed a Registration Statement with the SEC on
Form S-1 in May, 1996.
Item 6. Exhibits and Reports on Form 8-K
The following exhibits are included herein:
(27) - Financial Data Schedule
Eagle BancGroup, Inc. did not file any reports on Form 8-K during the three
months ended March 31, 1996.
SIGNATURES
Pursuant to the requirments 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.
EAGLE BANCGROUP, INC.
/s/ Gerald A. Bradley
DATE June 11, 1996 ---------------------
GERALD A. BRADLEY
Chairman of the Board
/s/ Donald L. Fernandes
DATE June 11, 1996 -----------------------
DONALD L. FERNANDES
President and Chief
Executive Officer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> MAR-31-1996
<CASH> 1,108
<INT-BEARING-DEPOSITS> 498
<FED-FUNDS-SOLD> 320
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 54,707
<INVESTMENTS-CARRYING> 54,707
<INVESTMENTS-MARKET> 54,707
<LOANS> 90,928
<ALLOWANCE> (905)
<TOTAL-ASSETS> 151,806
<DEPOSITS> 139,426
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,144
<LONG-TERM> 0
0
0
<COMMON> 0
<OTHER-SE> 11,236
<TOTAL-LIABILITIES-AND-EQUITY> 151,806
<INTEREST-LOAN> 1,760
<INTEREST-INVEST> 789
<INTEREST-OTHER> 47
<INTEREST-TOTAL> 2,596
<INTEREST-DEPOSIT> 1,902
<INTEREST-EXPENSE> 1,902
<INTEREST-INCOME-NET> 694
<LOAN-LOSSES> 15
<SECURITIES-GAINS> (5)
<EXPENSE-OTHER> 838
<INCOME-PRETAX> (49)
<INCOME-PRE-EXTRAORDINARY> (49)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (34)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 684
<LOANS-PAST> 684
<LOANS-TROUBLED> 1,736
<LOANS-PROBLEM> 576
<ALLOWANCE-OPEN> 907
<CHARGE-OFFS> 18
<RECOVERIES> 1
<ALLOWANCE-CLOSE> 905
<ALLOWANCE-DOMESTIC> 905
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 813
</TABLE>
