UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
( ) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ending
or
(X) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from May 1, 1996 to June 30, 1996
----------- -------------
Commission File Number 0-21273
----------
Fulton Bancorp, Inc.
--------------------
(Exact name of small business
issuer as specified in its charter)
Delaware 43-1754577
- ------------------------------ -------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
410 Market Street, Fulton, MO 65251
- ------------------------------- --------------------------
(Address of principal executive offices) (Zip Code)
573-682-6617
- -------------------------------
(Registrant's telephone number)
Former fiscal year end: April 30
-----------------------------------------
(Former name, former address and former
fiscal year, if changed since last report)
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding twelve 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 December 30, 1996, there were 1,719,250 shares of the Registrant's
Common Stock, $.01 par value per share, outstanding.
Transitional Small Business Disclosure Format
Yes No X
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FULTON BANCORP, INC. AND SUBSIDIARY
FORM 10-QSB
JUNE 30, 1996
INDEX PAGE
- ------ -----
PART I - FINANCIAL INFORMATION
- ------------------------------
ITEM 1 - FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION 1
CONSOLIDATED STATEMENTS OF INCOME 2
CONSOLIDATED STATEMENTS OF CASH FLOWS 3
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 4-6
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 7-9
PART II - OTHER INFORMATION
- ---------------------------
ITEM 1 - LEGAL PROCEEDINGS 10
ITEM 2 - CHANGES IN SECURITIES 10
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES 10
ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY-HOLDERS 10
ITEM 5 - OTHER INFORMATION 10
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 10
SIGNATURES
<PAGE>
<PAGE>
FULTON BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
June 30, April 30,
1996 1996
-------- ----------
(Unaudited)
ASSETS
Cash and cash equivalents, including interest-
bearing accounts of $1,306 at June 30, 1996,
and $2,499 at April 30, 1996 $ 3,154 $2,924
Investment securities available-for-sale 3,207 3,216
Stock in Federal Home Loan Bank of Des Moines 637 637
Loans held for sale 548 2,306
Loans receivable, net (allowance for loan
losses of $800 at June 30, 1996 and $782
at April 30, 1996) 78,541 73,893
Accrued interest receivable 705 608
Premises and equipment, net 1,398 1,307
Foreclosed real estate 198 198
Other assets 383 407
------- ------
TOTAL ASSETS $88,771 $85,496
======= =======
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Customer deposits $71,288 $70,316
Advances from Federal Home Loan Bank of Des Moines 7,000 5,000
Advances from borrowers for taxes and insurance 746 620
Accrued interest payable 100 299
Other liabilities 363 144
------- -------
TOTAL LIABILITIES 79,497 76,379
Commitments and contingencies
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value per share,
1,000,000 authorized, none issued --- ---
Common stock, $.01 par value per share;
6,000,000 shares authorized, none issued and
outstanding at June 30, none issued and outstanding
at April 30 --- ---
Paid-in capital --- ---
Retained earnings - substantially restricted 9,260 9,096
Unrealized gain on securities available-for-sale,
net of taxes 14 21
Unearned ESOP shares --- ---
------- -----
TOTAL STOCKHOLDERS' EQUITY 9,274 9,117
------- -----
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $88,771 $85,496
======= =======
See accompanying notes to Consolidated Financial Statements
-1-
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FULTON BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands)
Two Months Ended
June 30,
1996 1995
-------------
(Unaudited)
Interest Income
Mortgage loans $ 974 $ 814
Consumer and other loans 144 115
Investment securities 43 56
Interest-earning deposits 9 33
------ -----
TOTAL INTEREST INCOME 1,170 1,018
Interest Expense
Deposits 600 509
Advances from Federal Home Loan Bank of
Des Moines 65 52
------ -----
665 561
------ -----
NET INTEREST INCOME 505 457
Provision for loan losses 25 ---
------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 480 457
Noninterest Income
Loan servicing fees 29 11
Service charges and other fees 23 24
Income from foreclosed assets 3 3
Other 43 10
---- ----
TOTAL NONINTEREST INCOME 98 48
Noninterest Expense
Employee salaries and benefits 151 148
Occupancy costs 40 29
Advertising 7 5
Data processing 33 25
Federal insurance premiums 26 25
Directors' fees 14 13
Other 45 60
---- ----
TOTAL NONINTEREST EXPENSE 316 305
---- ----
INCOME BEFORE INCOME TAXES 262 200
Income Taxes 98 74
----- ----
NET INCOME $ 164 $ 126
====== ======
See accompanying notes to Consolidated Financial Statements
-2-
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FULTON BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
Two Months Ended
June 30,
1996 1995
----------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 164 $ 126
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 22 18
Amortization of premiums and discounts (3) ---
Provisions for loan losses (25) ---
Proceeds from sales of loans held for sale 2,466 2,870
Origination of loans held for sale (708) (3,089)
Stock and patronage dividends 47 ---
Change to assets and liabilities
increasing (decreasing) cash flows
Accrued interest receivable (97) (32)
Other assets (24) (18)
Accrued interest payable (200) (197)
Other liabilities 223 (88)
----- -----
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 1,865 (410)
CASH FLOWS FROM INVESTING ACTIVITIES:
Loans originated, net of repayments (4,623) 663
Purchase of premises and equipment (111) (39)
Expenditures on foreclosed real estate --- (2)
------ -----
NET CASH PROVIDED BY (USED IN)
INVESTING ACTIVITIES (4,734) 622
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in deposits 972 1,447
Advances from Federal Home Bank of Des Moines:
Borrowings 2,000 ---
Repayments --- ---
Net increase in advance payments by borrowers
for taxes and insurance 127 151
----- ------
NET CASH PROVIDED BY FINANCING ACTIVITIES 3,099 1,598
----- ------
NET INCREASE IN CASH 230 1,810
Cash, beginning of period 2,924 4,188
------- -------
CASH, END OF PERIOD $ 3,154 $ 5,998
======= =======
See accompanying notes to Consolidated Financial Statements
-3-
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FULTON BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A--Basis of Presentation and Change in fiscal Year-End
- -----------------------------------------------------------
The consolidated interim financial statements as of June 30, 1996, included in
this report have been prepared by Fulton Bancorp, Inc. ("Company") without
audit. The financial statements include only the consolidated accounts of
Fulton Savings Bank, FSB ("Bank") and its subsidiary. The Company did not
engage in any business prior to October 17, 1996, upon the Bank's conversion
from a federally chartered mutual savings bank to a federally chartered
capital stock savings bank. In the opinion of management, all adjustments
(consisting only of normal recurring accruals) necessary for a fair
presentation are reflected in the June 30, 1996, interim financial statements.
The results of operations for the period ended June 30, 1996, are not
necessarily indicative of the operating results for the full year. The April
30, 1996, Consolidated Statement of Financial Condition presented with the
interim financial statements was audited and received an unqualified opinion.
On November 13, 1996, the Board of Directors of the Company determined to
change the Company's fiscal year-end from April 30 to June 30. Accordingly,
the accompanying statements of income and cash flows include the transition
period for the two months from May 1, 1996 to June 30, 1996. The Company will
begin reporting on the basis of its new fiscal year-end beginning with the
quarter ending December 31, 1996.
NOTE B--Formation of Holding Company and Conversion to Stock Form
- -----------------------------------------------------------------
On October 17, 1996, the Company became the holding company for the Bank upon
the Bank's conversion from a federally chartered mutual savings bank to a
federally chartered capital stock savings bank. The conversion was
accomplished through the sale and issuance by the Company of 1,719,250 shares
of common stock at $10 per share. Proceeds from the sale of common stock, net
of expenses incurred to date of $642,494 were $16,532,813, inclusive of
$1,375,400 related to shares held by the Bank's Employee Stock Ownership Plan
("ESOP"). The financial statements included herein have not been restated as
a result of the consummation of the conversion.
NOTE C--Earnings Per Share
- --------------------------
Earnings per share data is not relevant for any period prior to October 31,
1996, since the Company had no stockholders prior to the initial stock
offering completed October 17, 1996.
NOTE D--Employee Stock Ownership Plan
- -------------------------------------
In connection with the conversion to stock form as described in Note B, the
Bank established an ESOP for the exclusive benefit of participating employees
(all salaried employees who have completed at least 1,000 hours of service in
a twelve-month period and have attained the age of 21). The ESOP borrowed
funds from the Company in an amount sufficient to purchase 137,450 shares (8%
of the Common Stock issued in the stock offering). The loan is secured by the
shares purchased and will be repaid by the ESOP with funds from contributions
made by the Bank, dividends received by the ESOP and any other earnings on
ESOP assets. The Bank presently expects to contribute approximately $203,300
including interest, annually to the ESOP. Contributions will be applied to
repay interest on the loan first, then the remainder will be applied to
principal. The loan is expected to be repaid in approximately 10 years.
Shares purchased with the loan proceeds are held in a suspense account for
allocation among participants as the loan is repaid. Contributions to the
ESOP and shares released from the suspense account are allocated among
participants in proportion to their compensation relative to total
compensation of all active participants. Benefits generally become 25% vested
after each year of credited service beyond one year. Vesting is accelerated
upon retirement, death or disability of the participant. Forfeitures are
returned to the Company or reallocated to other participants to reduce future
funding costs. Benefits may be payable upon retirement, death, disability or
separation from service. Since the Bank's annual contributions are
discretionary, benefits payable under the ESOP cannot be estimated.
-4-
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FULTON BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE D--Employee Stock Ownership Plan (Continued)
- -------------------------------------------------
The Company accounts for its ESOP in accordance with Statement of Position
93-6, Employers' Accounting for Employee Stock Ownership Plans. Accordingly,
the debt of the ESOP is eliminated in consolidation and the shares pledged as
collateral are reported as unearned ESOP shares in the consolidated balance
sheets. Contributions to the ESOP shall be sufficient to pay principal and
interest currently due under the loan agreement. As shares are committed to
be released from collateral, the Company reports compensation expense equal to
the average market price of the shares for the respective period, and the
shares become outstanding for earnings per share computations. Dividends on
allocated ESOP shares are recorded as a reduction of retained earnings;
dividends on unallocated ESOP shares are recorded as a reduction of debt and
accrued interest. ESOP compensation expense was $-0- for the two months
ended June 30, 1996.
NOTE E--Accounting Changes
- --------------------------
Effective October 1996, the Company adopted Statement of Position ("SOP")
93-6, "Employers' Accounting for Employee Stock Ownership Plans". SOP 93-6
applies to shares acquired by employee stock ownership plans after December
31, 1992, but not yet committed to be released as of the beginning of the year
SOP 93-6 is adopted. SOP 93-6 changes the measure of compensation expenses
recorded by employers for leveraged employee stock ownership plans from the
cost of the ESOP shares to the fair value of the ESOP shares during the
periods in which they become committed to be released. To the extent that
fair value of the Bank's ESOP shares differs from the cost of such shares, the
differential will be charged or credited to equity. Employers with internally
leveraged employee stock ownership plans such as the Company will not report
the loans receivable from the ESOP as an asset and will not report the ESOP
debt from the employer as a liability.
The Bank adopted SFAS No. 114, "Accounting by Creditors for Impairment of a
Loan" and SFAS No. 118, "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures, an amendment of SFAS No. 114", effective
May 1, 1995. These statements address the accounting by creditors for
impairment of certain loans. They apply to all creditors and to all loans,
uncollateralized as well as collateralized, except for large groups of
small-balance homogeneous loans that are collectively evaluated for
impairment, loans measured at fair value or at lower of cost or fair value,
leases, and debt securities. The Bank considers all one-to four-family
residential mortgage loans, construction loans, and all consumer and other
loans to be smaller homogeneous loans.
These statements apply to all loans that are restructured involving a
modification of terms. Loans within the scope of these statements are
considered impaired when, based on current information and events, it is
probable that all principal and interest will not be collected in accordance
with the contractual terms of the loans. Management determines the impairment
of loans based on knowledge of the borrower's ability to repay the loan
according to the contractual agreement as well as the borrower's repayment
history.
Management applies its normal loan review procedures in determining when a
loan is impaired. The Bank applies SFAS No. 114 on a loan by loan basis. All
nonaccrual loans are considered impaired. Impaired loans are measured based on
present value of expected cash flows, the loan's observable market price or
the fair value of the underlying collateral. If the value computed is less
than the recorded value, a valuation allowance is recorded for the difference
as a component of the provision for loan loss expense. Management has elected
to continue to use its existing nonaccrual methods for recognizing interest
income on impaired loans.
-5-
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FULTON BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE E--Accounting Changes (Continued)
- --------------------------------------
Accounting for Transfers and Servicing of Financial Assets and Extinguishment
of Liabilities. In June 1996, the FASB issued SFAS 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishment of
Liabilities". SFAS 125 provides accounting and reporting standards for
transfers and servicing of financial assets and the extinguishment of
liabilities based on consistent application of a financial components approach
that focuses on control. It distinguishes transfers of financial assets
that are sales from transfers that are secured borrowings. Under the
financial components approach, after a transfer of financial assets, an entity
recognizes all financial and servicing assets it controls and liabilities it
has incurred and derecognizes financial assets it no longer controls and
liabilities that have been extinguished. The financial components approach
focuses on the assets and liabilities that exist after the transfer. Many of
these assets and liabilities are components of financial assets that existed
prior to the transfer. If a transfer does not meet the criteria for a sale,
the transfer is accounting for as a secured borrowing with pledge of
collateral.
SFAS 125 extends the "available for sale" or "trading" approach in SFAS 115 to
nonsecurity financial assets that can contractually be repaid or otherwise
settled in such a way that the holder of the assets would not recover
substantially all of its recorded investment. SFAS 125 also amends SFAS 115
to prevent a security from being classified as held to maturity if the
security can be prepaid or otherwise settled in such a way that the holder of
the security would not recover substantially all of its recorded investment.
SFAS 125 provides implementation guidance for accounting for (i)
securitizations, (ii) transfers of partial interests, (iii) servicing
of financial assets, (iv) securities lending transactions, (v) repurchase
agreements including "dollar rolls", (vi) loan syndications and
participations, (vii) risk participations in banker's acceptances, (viii)
factoring arrangements, (ix) transfers of receivables with recourse, (x)
transfers of sales type and direct financing lease receivables, and (xi)
extinguishments of liabilities.
SFAS 125 is effective for transfers and servicing of financial assets and
extinguishment of liabilities occurring after December 31, 1996, and is to be
applied prospectively. Earlier or retroactive application is not permitted.
In addition, the extension of the SFAS 125 approach to certain nonsecurity
financial assets and the amendment of SFAS 115 is effective for financial
assets held on or acquired after January 1, 1997. Reclassifications that are
necessary because of the amendment do not call into question an entity's
ability to hold other debt securities to maturity in the future. Management
of the Company does not expect the adoption of SFAS 125 will have a material
effect on the Company's financial position or results of operations.
-6-
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<PAGE>
FULTON BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
- -------
Fulton Bancorp, Inc. ("Company") is a Delaware corporation that was organized
for the purpose of becoming the holding company for Fulton Savings Bank, FSB
("Bank") upon the Bank's conversion from a federal mutual savings bank to a
federal capital stock savings bank. The Bank's conversion was completed on
October 17, 1996. The Bank is a community oriented financial institution that
engages primarily in the business of attracting deposits from the general
public and using those funds to originate residential and commercial mortgage
loans within its market area. The Bank's deposits are insured up to
applicable limits by the Savings Association Insurance Fund.
The Company's operating results depend primarily on its net interest income,
which is the difference between the income it receives on its loan and
investments portfolio, and its cost of funds, which consists of interest paid
on deposits and borrowings. The Company's operating results are also
affected by the level of noninterest income and expenses. Noninterest income
consists primarily of loan servicing fees and service charges and other fees.
Noninterest expenses include employee salaries and benefits, occupancy costs,
deposit insurance premiums, data processing expenses and other operating
costs.
On September 30, 1996, the Bank recorded the effect of a one-time special
assessment to be paid by institutions whose deposit accounts are insured by
the Savings Association Insurance Fund ("SAIF"). The assessment was 0.657% of
assessable deposits as of March 31, 1995, which for the Bank totalled
$427,000. The assessment was designed to recapitalize the SAIF and permit the
eventual merger of the SAIF with the Bank Insurance Fund. As a result of the
recapitalization of the SAIF, the Bank's deposit insurance premiums will be
reduced to $0.065 per $100 of deposits beginning in 1997.
On November 13, 1996, the Company changed its fiscal year-end from April 30 to
June 30. Thus, this is a transition report for the period May 1, 1996 through
June 30, 1996 (the "transition period"). The discussion and analysis included
herein covers certain changes in results of operations during the two month
period ended June 30, 1996 and 1995, as well as those material changes in
liquidity and capital resources that have occurred since April 30, 1996.
The following should be read in conjunction with the Company's Prospectus
dated September 6, 1996, which contains the latest audited financial
statements and notes thereto, together with Management's Discussion and
Analysis of Financial Condition and Results of Operations contained therein.
Therefore, only material changes in financial condition and results of
operation are discussed herein.
Comparison of Financial Condition at June 30 and April 30, 1996
- ---------------------------------------------------------------
Assets of the Company increased from $85.5 million at April 30, 1996, to
$88.8 million at June 30, 1996, primarily the result of increases in cash and
interest-bearing deposits of $230,000 and loans, including loans held for
sale, of $2.9 million. The increase in assets was funded by an increase in
customer deposits of $1.0 million and additional borrowings from the Federal
Home Loan Bank of Des Moines of $2.0 million. Stockholders' equity increased
from $9.1 million at April 30, 1996, to $9.3 million at June 30, 1996.
Nonperforming assets of $516,000 or 0.60% of total assets at April 30,
1996, decreased to $396,000 or 0.45 % of total assets at June 30, 1996.
Comparison of the two months ended June 30, 1996 to the two months ended June
30, 1995
- -----------------------------------------------------------------------------
Net Income. The Company experienced net income of $164,000 for the
Transition Period, compared to net income of $126,000 for the two months ended
June 30, 1995.
Net Interest Income. Net interest income was $505,000 for the Transition
Period, an increase of $ 48,000 or 11% from $457,000 for the two months June
30, 1995. Interest income increased $152,000 while interest expense
increased $104,000.
-7-
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<PAGE>
FULTON BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Comparison of the two months ended June 30, 1996 to the two months ended June
30, 1995
- ------------------------------------------------------------------------------
Interest Income. Interest income increased by $152,000 or 23% from
$1,018,000 for the two months ended June 30, 1995, to $1,170,000 for the two
months ended June 30, 1996. Interest income from mortgage loans receivable
increased $160,000 from $814,000 for the two months ended June 30, 1995, to
$974,000 for the two months June 30, 1996. The increase was due to an
increase in mortgage loans and adjustments on adjustable-rate mortgages.
Interest income on consumer and other loans increased by $29,000 from $115,000
for the two months ended June 30, 1995, to $144,000 for the two months ended
June 30, 1996. The increase was due to an increase in loans and rates on
loans. Interest and dividend income on investment securities decreased
$13,000 from $56,000 for the two months ended June 30, 1995, to $43,000 for
the two months ended June 30, 1996. This decrease was due to a decrease in
investments. Interest income on interest- bearing deposits decreased $24,000
from $33,000 for the two months ended June 30, 1995, to $9,000 for the two
months ended June 30, 1996. This decrease was due to the funds in
interest-earning deposits used to fund loan demands.
Interest Expense. Interest expense increased $104,000 from $561,000 for
the two months ended June 30, 1995, to $665,000 for the Transition Period.
The increase results from increased rates and a higher average deposit base
during the conversion process which was completed on October 17, 1996.
Provision for Loan Losses. Provision for loan losses increased by
$25,000 for the two months ended June 30, 1996. The Company recorded no
provision for loan losses for the two months ended June 30, 1995. The
provision was larger in 1996 primarily because of the increase in the size of
the loan portfolio. Accordingly, the Bank's allowance for loan losses
increased from $782,000 at April 30, 1996 to $800,000 at June 30, 1996.
Noninterest Income. Noninterest income increased $50,000 from $48,000
for the two months ended June 30, 1995, to $98,000 for the Transition Period.
Loan servicing fees increased $18,000 from servicing a larger loan servicing
portfolio. Other income increased $33,000 resulting primarily from the
Company's gain on the sale of it's data processing company in the amount of
$41,000.
Noninterest Expense. Noninterest expense increased $11,000 or 4% from
$305,000 for the two months ended June 30, 1995, to $316,000 for the two
months ended June 30, 1996.
Liquidity and Capital Resources
- -------------------------------
The Bank's primary sources of funds are deposits, proceeds from principal and
interest payments on loans, mortgage-backed securities, investment securities
and net operating income. While maturities and scheduled amortization of
loans and mortgage-backed securities are a somewhat predictable source of
funds, deposit flows and mortgage prepayments are greatly influenced by
general interest rates, economic conditions and competition. The Bank
utilizes advances from the Federal Home Loan Bank to supplement its supply of
lendable funds. At June 30, 1996, FHLB advances totaled $7,000,000.
The Bank must maintain an adequate level of liquidity to ensure availability
of sufficient funds to support loan growth and deposit withdrawals, satisfy
financial commitments and to take advantage of investment opportunities. At
June 30, 1996, the Bank had approved loan commitments totaling $2.8 million
and had undisbursed loans in process of $4,179,000.
Liquid funds necessary for normal daily operations are maintained in a working
checking account and a daily time account with the Federal Home Loan Bank of
Des Moines. It is the Bank's current policy to maintain adequate collected
balances in those deposit accounts to meet daily operating expenses, customer
withdrawals, and fund loan demand. Funds received from daily operating
activities are deposited on a daily basis in the checking account and
transferred, when appropriate, to the daily time account to enhance income.
-8-
<PAGE>
<PAGE>
FULTON BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Liquidity and Capital Resources (Continued)
At June 30, 1996, certificates of deposit amounted to $56.0 million or 78.5%
of total deposits, including $21.9 million of fixed rate certificates
scheduled to mature within twelve months. Historically, the Bank has been
able to retain a significant amount of its deposits as they mature.
Management believes it has adequate resources to fund all loan commitments
from savings deposits, loan payments and maturities of investment securities.
The Office of Thrift Supervision requires a thrift institution to maintain an
average daily balance of liquid assets (cash and eligible investments) equal
to at least 5% of the average daily balance of its net withdrawable deposits
and short-term borrowing. The Bank's liquidity ratio was 7.74% at June 30,
1996. The Bank consistently maintains liquidity levels in excess of
regulatory requirements, and believes this is an appropriate strategy for
proper asset and liability management.
The Office of Thrift Supervision requires institutions such as the Bank to
meet certain tangible, core, and risk-based capital requirements. Tangible
capital generally consists of stockholders' equity minus certain intangible
assets. Core capital generally consists of stockholders' equity. The
risk-based capital requirements presently address risk related to both
recorded assets and off-balance sheet commitments and obligations. The
following table summarizes the Bank's capital ratios and the ratios required
by regulation (dollars in thousands) at June 30, 1996.
Percent of Adjusted
Amount Total Assets
----------------------
(Unaudited)
Tangible capital $ 9,260 10.4%
Tangible capital requirement 1,332 1.5
------- -----
EXCESS $ 7,928 8.9%
======= =====
Core capital $ 9,260 10.4%
Core capital requirement 2,664 3.0
------- -----
EXCESS $ 6,596 7.4%
======= =====
Risk-based capital $ 9,712 18.2%
Risk-based capital requirement 4,262 8.0
------- -----
EXCESS $ 5,450 10.2%
======= =====
-9-
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<PAGE>
FULTON BANCORP, INC AND SUBSIDIARY
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Neither the Company nor the Bank is a party to any material legal proceedings
at this time. From time to time the Bank is involved in various claims and
legal actions arising in the ordinary course of business.
ITEM 2. CHANGES IN SECURITIES
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Exhibit 27 -- Financial Information Data
-10-
<PAGE>
<PAGE>
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.
FULTON BANCORP, INC
Date 12/30/96 By: /s/ Kermit D. Gohring
-------- -------------------------
Kermit D. Gohring
President
Date 12/30/96 By: /s/ Bonnie K. Smith
-------- -------------------------
Bonnie K. Smith
Secretary - Treasurer
(Principal Accounting
Officer)
<PAGE>
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 2-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 3154
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</TABLE>
