UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ending March 31, 1998
----------------
or
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-21273
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Fulton Bancorp, Inc.
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(Exact name of small business
issuer as specified in its charter)
Delaware 43-1754577
- --------------------------------- ---------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
410 Market Street, Fulton, MO 65251
- ---------------------------------------- ---------------------
(Address of principal executive offices) (Zip Code)
573-642-6617
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(Registrant's telephone number)
None
----------------------------------------
(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 May 12, 1998, there were 1,699,650 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
March 31, 1998
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 11
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FULTON BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
March 31, June 30,
1998 1997
----------------------------
(Unaudited)
ASSETS
Cash, including interest-bearing accounts
of $13,814 and $6,318 respectively $ 14,538 $ 7,095
Investment securities, available-for-sale 1,200 1,899
Stock in Federal Home Loan Bank of Des Moines 773 637
Loans held for sale 5,515 4,463
Loans receivable 84,540 83,714
Accrued interest receivable 638 729
Premises and equipment 1,417 1,483
Foreclosed real estate 197 198
Other assets 804 339
-------- --------
TOTAL ASSETS $109,622 $100,557
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $ 69,543 $ 67,509
Advances from Federal Home Loan Bank
of Des Moines 12,893 6,500
Advances from borrowers for property
taxes and insurance 604 757
Accrued interest payable 136 97
Other liabilities 831 437
-------- --------
TOTAL LIABILITIES 84,007 75,300
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,
1,719,250 issued and outstanding 17 17
Paid-in capital 16,720 16,601
Treasury stock, 18,600 at March 31, 1998,
at cost (475) ---
Retained earnings - substantially restricted 10,520 9,911
Unrealized gain (loss) on securities
available-for-sale, net of taxes 1 ---
Unearned ESOP shares (1,168) (1,272)
-------- --------
TOTAL STOCKHOLDERS' EQUITY 25,615 25,257
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $109,622 $100,557
======== ========
See accompanying notes to Consolidated Financial Statements
-1-
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FULTON BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
Three Months Ended Nine Months Ended
March 31, March 31,
1998 1997 1998 1997
------------------ -----------------
(Unaudited)
Interest Income
Mortgage loans $1,558 $1,512 $4,809 $4,352
Consumer and other loans 239 205 701 631
Investment securities 17 56 71 204
Interest-earning deposits 221 92 480 296
------ ------ ------ ------
TOTAL INTEREST INCOME 2,035 1,865 6,061 5,483
Interest Expense
Deposits 861 863 2,596 2,689
Advances from Federal Home Loan
Bank of Des Moines 229 100 509 337
------ ------ ------ ------
TOTAL INTEREST EXPENSE 1,090 963 3,105 3,026
------ ------ ------ ------
NET INTEREST INCOME 945 902 2,956 2,457
Provision for Loan Losses --- 60 60 60
------ ------ ------ ------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 945 842 2,896 2,397
Non-interest Income
Loan servicing fees 94 82 268 240
Income from sale of loans 66 --- 283 ---
Service charges and other fees 19 34 63 102
Income from foreclosed assets (1) 2 (40) 8
Other 15 7 42 26
------ ------ ------ ------
TOTAL NON-INTEREST INCOME 193 125 616 376
Non-interest Expense
Employee salaries and benefits 485 295 1,227 820
Occupancy costs 66 57 203 205
Advertising 11 11 44 40
Data processing 43 46 122 138
Federal insurance premiums 11 4 35 499
Directors' fees 24 22 67 65
Other 144 172 411 337
------ ------ ------ ------
TOTAL NON-INTEREST EXPENSE 784 607 2,109 2,104
------ ------ ------ ------
INCOME BEFORE INCOME TAXES 354 360 1,403 669
Income Taxes 131 134 518 245
------ ------ ------ ------
NET INCOME $ 223 $ 226 $ 885 $ 424
====== ====== ====== ======
Basic Earnings Per Share $ 0.14 $ 0.14 $ 0.56 $ 0.27
====== ====== ====== ======
Diluted Earnings Per Share $ 0.14 $ 0.14 $ 0.56 $ 0.27
====== ====== ====== ======
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)
Nine Months Ended
March 31,
1998 1997
-----------------
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 885 $ 424
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization 115 111
Provision for loan losses 60 60
Provisions for loss on foreclosed real estate 40 ---
Gain on loan sales (258) ---
Proceeds from sales of loans held for sale 14,221 18,681
Origination of loans held for sale (15,149) (18,878)
ESOP shares released 223 69
Change to assets and liabilities increasing
(decreasing) cash flows
Accrued interest receivable 91 ---
Other assets (209) (90)
Accrued interest payable 40 30
Other liabilities 394 (20)
------- -------
NET CASH PROVIDED BY
OPERATING ACTIVITIES 453 387
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities of investment securities
Available-for-sale 700 2,500
Purchase of securities available-for-sale --- (1,203)
Loans originated, net of repayments (1,055) (5,222)
Carrying value of other real estate investment
disposal --- 409
Purchase of Federal Home Loan Bank Stock (136) ---
Purchase of premises and equipment (43) (226)
------- -------
NET CASH USED IN INVESTING ACTIVITIES (534) (3,742)
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits 2,034 (4,192)
Advances from Federal Home Bank of Des Moines:
Borrowings 9,000 11,500
Repayments (2,607) (12,000)
Net decrease in escrows held (153) (214)
Proceeds from sale of common stock --- 16,587
Treasury stock purchased (475) ---
Loan to ESOP --- (1,375)
Dividends paid (275) (86)
------- -------
NET CASH PROVIDED BY FINANCING ACTIVITIES 7,524 10,220
------- -------
NET INCREASE IN CASH 7,443 6,865
Cash, beginning of period 7,095 3,154
------- -------
CASH, END OF PERIOD $14,538 $10,019
======= =======
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
- -----------------------------
The consolidated interim financial statements as of March 31, 1998, included
in this report have been prepared by Fulton Bancorp, Inc. ("Company") without
audit. In the opinion of management, all adjustments (consisting only of
normal recurring accruals) necessary for a fair presentation are reflected in
the March 31, 1998, interim financial statements. The results of operations
for the period ended March 31, 1998, are not necessarily indicative of the
operating results for the full year.
NOTE B--Formation of Holding Company and Conversion to Stock Form
- -----------------------------------------------------------------
On October 17, 1996, the Company became the holding company for Fulton Savings
Bank, FSB (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 of $643,370 was $16,549,130, inclusive
of $1,375,400 related to shares held by the Bank's Employee Stock Ownership
Plan ("ESOP").
NOTE C--Earnings Per Share
- --------------------------
During the quarter ended December 31, 1997, the Company adopted Statement of
Financial Accounting Standard No. 128, "Earnings Per Share" ("SFAS No. 128").
The Statement requires restatement of all prior-period earnings per share
("EPS") data presented. It replaces the presentation of primary EPS with basic
EPS and requires dual presentation of basic and diluted EPS on the face of the
statement of income. Basic EPS is computed by dividing income available to
common stockholders by the weighted average number of common shares
outstanding for the period. Diluted EPS reflects the potential dilution that
could occur if securities or other contracts to issue common stock were
exercised or converted into common stock.
Three months ended Nine months ended
March 31, March 31,
1998 1997 1998 1997
------------------ -----------------
(In thousands, except per share amounts)
Basic earnings per share:
Income available to common
shareholders $ 223 $ 226 $ 885 $ 424
===== ===== ===== =====
Average common shares outstanding 1,593 1,582 1,594 1,582
===== ===== ===== =====
Basic earnings per share $0.14 $0.14 $0.56 $0.27
===== ===== ===== =====
Diluted earnings per share:
Income available to common
shareholders $ 223 $ 226 $ 885 $ 424
===== ===== ===== =====
Average common shares outstanding 1,593 1,582 1,594 1,582
Dilutive potential common shares
outstanding due to common stock
options and grants 46 -- 26 --
----- ----- ----- -----
Average number of common shares
and dilutive potential common
shares outstanding 1,639 1,582 1,620 1,582
===== ===== ===== =====
Diluted earnings per share $0.14 $0.14 $0.56 $0.27
===== ===== ===== =====
-4-
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FULTON BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
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 137,540 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 20% vested after three years of
credited service and then 20% per year thereafter until 100% vested. 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.
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 $205,000 for the nine months
ended March 31, 1998.
A summary of ESOP shares at March 31, 1998, is as follows:
Shares allocated 17,288
Shares available for allocation 3,458
Unreleased shares 116,794
----------
TOTAL 137,540
==========
Fair value of unreleased shares $2,569,468
==========
NOTE E--Stock Based Compensation Plans
- --------------------------------------
The Board of Directors adopted and the shareholders subsequently approved a
Management Recognition and Development Plan ("MRDP") and an Stock Option Plan
("SOP") on October 23, 1997. These plans were established to assist the
Company and its subsidiary in attracting, retaining and motivating key
management and employees by aligning their financial interest with those of
the shareholders of the Company.
The MRDP is a fixed award of 68,770 shares of restricted stock which vest over
a five year period. The Company selected an amortization method which
recognizes a higher percentage of compensation cost in the earlier years than
in the later years of the service period. Compensation cost will approximate
34% of the cost of the MRDP awards in the first year, 31% the second year, 18%
the third, and 17% in the remaining two years.
-5-
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FULTON BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE E--Stock Based Compensation Plans (Continued)
- --------------------------------------------------
Under the SOP, options to acquire shares of the Company's common stock may be
granted to certain officers, directors and employees of the Bank. The options
will enable the recipient to purchase stock at an exercise price equal to the
fair market value of the stock at the date of the grant. On November 12, 1997,
the Company granted options for 171,925 shares at $19.75 per share. The
options will vest over a five year period following the date of grant and are
exercisable for up to ten years
As permitted under SFAS No. 123, "Accounting for Stock-Based Compensation,"
the Company will not adopt the accounting provisions and will continue to
apply its current method of accounting. Accordingly, adoption of SFAS No. 123
will have no impact on the Company's consolidated financial position or
results of operations.
NOTE F--Accounting Changes
- --------------------------
In June 1997, the FASB issued Statements No. 130, Reporting of Comprehensive
Income and No. 131, Disclosures about Segments of an Enterprise and Related
Information. Both statements are effective for financial statements for
periods beginning after December 15, 1997. Statement No. 130 establishes
standards for reporting and display of comprehensive income in a full set of
general purpose financial statements. An enterprise shall continue to display
an amount for net income but will also be required to display other
comprehensive income, which includes other changes in equity. Statement No.
131 establishes standards for the way that public business enterprises report
information about operating segments in annual financial statements. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers.
NOTE G--Change in Fiscal Year-End
- ---------------------------------
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. The Company
began reporting on the basis of its new fiscal year-end with the quarter ended
December 31,1996.
NOTE H--Year 2000 Issue
- -----------------------
The year 2000 issue concerns computer software programs which use only two
digits to identify the calendar year in date fields. Software applications
utilizing two digit date fields could produce erroneous results at the turn of
the century. The Federal Financial Institutions Examination council requires
all insured financial institutions to complete an inventory of core computer
functions and set priorities for meeting Year 2000 conversion goals. The
Company's material software applications are provided by a third party data
processing service. The Company has inventoried and assessed core computer
functions. All material systems are expected to be compliant by June 30, 1998.
Testing is planned during the fourth quarter of 1998 and the first quarter of
1999. Estimated cost to the Company is not expected to be material since all
critical applications are supported by the third party data processing
service.
-6-
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FULTON BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
- -------
Comparison of Financial Condition at March 31, 1998 and June 30, 1997
- ---------------------------------------------------------------------
Assets increased $9.1 million, or 9.0 percent, to $109.6 million at March 31,
1998. Management took advantage of favorable rates and terms available on
Federal Home Loan advances which funded $6 million of the growth. Deposits
grew by $2.0 million, primarily certificates of deposit. Cash and
interest-bearing deposits increased $7.4 million, as the proceeds of the most
recent Federal Home Loan Bank advances have not yet been invested in loans.
The level of loans held for investment remained stable, increasing
approximately $0.8 million. Loan sales remained strong. The balance of
mortgage loans sold to and serviced for others increased by $10.6 million to
$101.1 million from $90.5 million at June 30, 1997.
Non-performing assets totaled $618,000 or 0.56 percent of total assets at
March 31, 1998. The composition includes three mortgage loans totaling
$109,000, eighteen consumer loans totaling $132,000 and foreclosed real
estate. The non-performing mortgage loans are considered well secured and are
in the process of collection.
Comparison of the three months ended March 31, 1998
to the three months ended March 31, 1997
- ---------------------------------------------------
Fulton Bancorp earned net income of $223,000 for the quarter ended March 31,
1998, down $3,000 from the $226,000 earned for the three months ended March
31, 1997. A rise in salaries and benefits exceeded the increases in net
interest and noninterest income.
Net interest income increased $43,000 or 4.8 percent, to $945,000 for the
quarter ended March 31, 1998. Interest income for the current quarter
increased $170,000 over the comparative period on a $12.1 million increase in
average earning assets. The yield on average earning assets declined .24 basis
points to 7.54. The lower yield is due to the temporary investment of Federal
Home Loan Bank (FHLB) debt proceeds in interest bearing bank balances until
they are redeployed to higher yielding loans. Interest expense increased
$127,000 due to an increase in FHLB borrowings. The weighted average cost of
funds dipped slightly to 5.22 percent from 5.25 percent at March 31, 1997.
Gains on the sales of loans accounted for $66,000 of the $68,000 increase in
noninterest income over the prior period. Higher loan servicing income during
the current quarter was offset by declines in service charges and income on
foreclosed real estate.
Noninterest expense rose 29.2 percent over the comparative prior period to
$784,000. The $177,000 increase was caused by higher salaries and benefits.
The company recognized $175,000 in compensation expense related to the
Management Recognition and Development Stock Compensation Plan referred to
previously. Sixty-five percent of the five-year cost of the plan is to be
recognized in the first two plan years.
Comparison of the nine months ended March 31, 1998,
to the nine months ended March 31, 1997
- ---------------------------------------------------
Fulton Bancorp earned $885,000 or $0.56 per share for the nine months ended
March 31, 1998, a $461,000 rise from the $424,000, $0.27 per share amounts
reported for the comparative 1997 period. The increase was primarily due to
higher net interest income and a 63.8 percent rise in noninterest income.
Higher compensation cost offset the absence of a one time SAIF assessment
recognized in the prior period.
Net interest income increased 20.3 percent or $499,000 for the nine months
ended March 31, 1998. The net interest margin was 3.80 percent of average
earning assets for the current nine month period, versus 3.49 percent for the
comparable period. The net interest spread, the difference between the average
rates received and the rates paid on liabilities, also improved to 2.56% from
2.31%. The increase was due primarily to higher interest income. Total
interest income rose by $578,000 while interest expense increased by $79,000.
-7-
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FULTON BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Higher interest income was due primarily to a larger volume of mortgage loans.
Interest income on mortgage loans increased $457,000, or 10.5 percent due
primarily to a $5.9 million rise in average mortgage loans; higher average
loan rates contributed to a lesser extent. Higher rates on consumer and
commercial loans added $64,000 to interest income. Income from a higher volume
of interest earning deposits offset a decline in securities income.
Interest expense increased $79,000, as lower rates paid on deposits mitigated
the impact of a higher volume of FHLB borrowings. Interest on deposits fell
$93,000, while interest on borrowings increased $172,000.
Noninterest income for the nine months ended March 31, 1998 rose $240,000 or
63.8 percent to $616,000. Recognition of gains on loan sales and increases in
the related servicing income exceeded a recorded loss on foreclosed real
estate. The bank recognized gains of $283,000 on the sale of loans pursuant
to adoption of Statement of Financial Accounting Standards No. 125. Servicing
income rose 11.7 percent to $268,000 from $240,000 in the prior period, due to
a higher volume of serviced loans. A $40,000 loss on foreclosed real estate
reflects a charge down in the carrying value of a parcel owned.
Noninterest expense increased $5,000 to $2.1 million. The absence of a
one-time, $427,000 Savings Association Insurance Fund assessment levied in
1996 offset a $407,000 rise in salaries and benefits related to the adoption
on the Management Recognition and Development Plan. As noted earlier, the
majority of MRDP compensation expense is recognized in the first two years of
the program. A $74,000 increase in Other noninterest expense is due primarily
to higher expenses related to being a publicly traded company.
Provision for loan losses totaled $60,000 for the nine months ended March 31,
1998. The provision reflects management commitment to maintaining adequate
allowances in anticipation of strong loan growth.
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 March 31, 1998, FHLB advances totaled $12,893,000.
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
March 31, 1998, the Bank had approved loan commitments totaling $7.1 million
and had undisbursed loans in process of $6.8 million.
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.
At March 31, 1998, certificates of deposit amounted to $53.2 million or 76.5%
of total deposits, including $21.3 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, maturities of investment securities and ability to
obtain advances from the Federal Home Loan Bank of Des Moines.
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 4% of the average daily balance of its net withdrawable deposits
and short-term borrowing. The Bank's liquidity ratio was 16.2% at March
31,1998. The Bank consistently maintains liquidity levels in excess of
regulatory requirements, and believes this is an appropriate strategy for
proper asset and liability management.
-8-
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FULTON BANCORP, INC. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Liquidity and capital resources (Continued)
- -------------------------------------------
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 March 31, 1998.
Percent of Adjusted
Amount Total Assets
------------------------------
(Unaudited)
Tangible capital $18,182 16.6%
Tangible capital requirement 1,643 1.5
------- -----
EXCESS $16,539 15.10%
======= =====
Core capital $18,181 16.6%
Core capital requirement 3,286 3.0
------- -----
EXCESS $14,895 13.6%
======= =====
Risk-based capital $18,977 29.9%
Risk-based capital requirement 5,082 8.0
------- -----
EXCESS $13,895 21.9%
======= =====
-9-
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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
The Annual Meeting of Stockholders of the company ("Meeting") was held on
January 27, 1997. The results of the vote on the matters presented at the
Meeting is as follows:
1. The following individuals were elected as directors, each for a
three-year term:
Vote For Vote Withheld
---------------------------------
Richard W. Gohring 1,425,791 8,150
Dennis J. Adrain 1,425,841 8,100
The terms of Directors Billy M. Conner, Kermit D. Gohring, Clifford E.
Hamilton, Jr., Bonnie K. Smith and David W. West continued after the
meeting.
2. The Fulton Bancorp, Inc. 1997 Stock Option Plan was approved by
stockholders by the following vote:
For: 988,152 ; Against: 424,211 ; Abstain: 21,578
----------- ----------- --------
3. The Fulton Bancorp, Inc. 1997 Management Recognition and Development
Plan was approved by stockholders by the following vote:
For: 999,595 ; Against: 412,928 ; Abstain: 21,418
----------- ----------- ---------
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
ITEM 27 FINANCIAL DATA SCHEDULE
-10-
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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 May 12, 1998 By: /s/Kermit D. Gohring
-----------------------------
Kermit D. Gohring
President
Date May 12, 1998 By: /s/Bonnie K. Smith
-----------------------------
Bonnie K. Smith
Secretary - Treasurer
(Principal Accounting Officer)
<PAGE>
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