SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 10-Q
(Mark One)
[ X ]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ]TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number 0-21491
Big Foot Financial Corp.
(Exact name of registrant as specified in its charter)
Illinois 36-4108480
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) (Identification No.)
1190 RFD, Long Grove, IL 60047-7304
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(Address of principal executive offices)
(Zip Code)
(847) 634-2100
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(Registrant's telephone number including area code)
NA
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(Former name, former address and former fiscal year,
if changed from 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 requirement for the past 90 days.
Yes /X/ No / /
Indicate the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date.
OUTSTANDING AT
CLASS SEPTEMBER 30, 1997
----- ------------------
Common Stock, Par Value $.01 2,512,750
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS OF BIG FOOT FINANCIAL CORP.
Consolidated Statements of Financial Condition (Unaudited)
September 30, 1997 and June 30, 1997......................... Page 3
Consolidated Statements of Earnings (Unaudited) - Three months
ended September 30, 1997 and 1996............................ Page 4
Consolidated Statements of Cash Flows (Unaudited) - Three months
ended September 30, 1997 and 1996............................ Page 5
Notes to Unaudited Consolidated Financial Statements......... Page 6
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS................................ Page 8
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK..... Page 12
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.............................................. Page 13
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS...................... Page 13
ITEM 3. DEFAULTS UPON SENIOR SECURITIES ............................... Page 13
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS............ Page 13
ITEM 5. OTHER INFORMATION.............................................. Page 13
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K............................... Page 13
SIGNATURES
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<PAGE>
ITEM 1.
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FINANCIAL STATEMENTS OF BIG FOOT FINANCIAL CORP.
BIG FOOT FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
September 30, June 30,
ASSETS 1997 1997
------------- --------
<S> <C> <C>
Cash and due from banks .............................................................. $ 2,315 $ 2,191
Interest-earning deposits ............................................................ 3,201 1,701
Mortgage-backed securities held-to-maturity, at amortized cost ....................... 45,156 47,376
Mortgage-backed securities available-for-sale, at fair value ......................... 57,235 60,219
Investment in mutual funds, at fair value ............................................ 1,209 1,087
Loans receivable, net ................................................................ 97,190 93,624
Accrued interest receivable .......................................................... 1,057 1,051
Stock in Federal Home Loan Bank of Chicago, at cost .................................. 2,580 2,480
Investment in real estate held for sale and development .............................. 262 262
Real estate owned .................................................................... -- --
Office properties and equipment, net ................................................. 4,703 4,737
Prepaid expenses and other assets .................................................... 254 168
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Total assets ......................................................................... $ 215,162 $ 214,896
========= =========
LIABILITIES
Noninterest-bearing NOW accounts ..................................................... $ 4,757 $ 4,582
Interest-bearing NOW accounts ........................................................ 7,151 7,178
Money market demand accounts ......................................................... 11,729 12,281
Passbook accounts .................................................................... 38,728 39,607
Certificates of deposit .............................................................. 59,640 59,333
--------- ---------
Total savings deposits ............................................................... 122,005 122,981
Borrowed money ...................................................................... 51,600 49,600
Advance payments by borrowers for taxes and insurance ................................ 616 1,610
Accrued interest payable and other liabilities ....................................... 3,331 3,728
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Total liabilities .................................................................... $ 177,552 $ 177,919
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STOCKHOLDERS' EQUITY
Preferred Stock, $.01 par value, 2,000,000 shares authorized; none issued ............ -- --
Common Stock, $.01 par value, 8,000,000 shares authorized; 2,512,750
shares issued and outstanding .................................................... 25 25
Excess Common Stock, $.01 par value, 7,200,000 shares authorized; none issued ........ -- --
Additional paid-in capital ........................................................... 24,077 24,039
Retained earnings-substantially restricted ........................................... 15,101 14,869
Unrealized gain (loss) on securities available-for-sale, net of tax .................. 317 (46)
Common stock acquired by the ESOP ................................................... (1,910) (1,910)
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Total stockholders' equity ........................................................... 37,610 36,977
--------- ---------
Total liabilities and stockholders' equity ........................................... $ 215,162 $ 214,896
========= =========
</TABLE>
(See accompanying notes to unaudited consolidated financial statements)
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<PAGE>
BIG FOOT FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS (LOSS)
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
For the Three Months ended
September 30,
-----------------------------
1997 1996
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INTEREST INCOME:
<S> <C> <C>
Mortgage-backed securities held-to-maturity ................ $ 683 $ 616
Mortgage-backed securities available-for-sale .............. 964 983
Loans receivable ........................................... 1,853 1,541
Interest-earning deposits ................................. 25 28
FHLB of Chicago stock ..................................... 43 35
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Total interest income ...................................... 3,568 3,203
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INTEREST EXPENSE:
Savings deposits ........................................... 1,191 1,386
Borrowed money ............................................. 776 650
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Total interest expense ..................................... 1,967 2,036
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Net interest income before provision for loan losses ....... 1,601 1,167
Provision for loan losses .................................. -- --
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Net interest income after provision for loan losses ....... 1,601 1,167
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NONINTEREST INCOME:
Service fees ............................................... 58 55
Other ...................................................... 10 52
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Total noninterest income ................................... 68 107
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NONINTEREST EXPENSE:
Compensation and benefits .................................. 669 565
Office occupancy .......................................... 276 278
Federal deposit insurance premiums ......................... 20 1,020
Real estate held for development ........................... 11 19
Professional services ..................................... 100 54
Other ...................................................... 238 93
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Total noninterest expense .................................. 1,314 2,029
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Income(loss) before income taxes ........................... 355 (755)
Income tax expense (benefit) ............................... 123 (257)
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NET INCOME(LOSS): ................... $ 232 $ (498)
======= =======
=============================================================================================
Earnings per share:
Primary ................................................. $ 0.10 n/a
</TABLE>
(See accompanying notes to unaudited consolidated financial statements)
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<PAGE>
BIG FOOT FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
For the
Three Months ended
September 30,
-------------------------
1997 1996
---------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) ................................................................................ $ 232 $ (498)
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation ..................................................................................... 103 97
Net amortization of deferred loan fees ........................................................... (20) (18)
Net amortization of discounts and premiums ....................................................... 65 65
Increase in prepaid expenses and other assets .................................................... (86) (187)
Increase in accrued interest receivable .......................................................... (6) (7)
Market adjustment for committed ESOP shares ...................................................... 39 --
Increase (decrease) in accrued interest payable and other liabilities, net ....................... (397) 717
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Net cash provided by (used in) operating activities .............................................. (70) 169
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CASH FLOWS FROM INVESTING ACTIVITIES:
Origination of loans receivable .................................................................. (6,710) (4,197)
Principal repayment of loans receivable .......................................................... 3,164 2,374
Principal repayments on mortgage-backed securities held-to-maturity .............................. 2,161 2,092
Principal repayments on mortgage-backed securities available-for-sale ............................ 3,340 2,580
Purchase of investment securities available-for-sale ............................................. (122) --
Purchase of stock in Federal Home Loan Bank of Chicago ........................................... (100) --
Purchase of office properties and equipment ...................................................... (69) (129)
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Net cash provided by investing activities ........................................................ 1,664 2,720
- -----------------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in savings deposits ................................................................. (976) (3,757)
Net increase (decrease) in borrowed money ........................................................ 2,000 (300)
Decrease in advance payments by borrowers for taxes and insurance ................................ (994) (977)
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Net cash provided by (used in) financing activities .............................................. 30 (5,034)
- ------------------------------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents ............................................. 1,624 (2,145)
Cash and cash equivalents at beginning of period ................................................. 3,892 5,200
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CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD................................................ $ 5,516 $ 3,055
- -----------------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ............................................................................. 2,000 2,098
Income taxes ......................................................................... 120 --
</TABLE>
(See accompanying notes to unaudited consolidated financial statements)
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<PAGE>
BIG FOOT FINANCIAL CORP. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of Big Foot Financial Corp. (the "Company") and its wholly-owned
subsidiary, Fairfield Savings Bank, F.S.B. (the "Bank") as of September 30, 1997
and June 30, 1997 and for the three month periods ended September 30, 1997 and
1996, respectively. The consolidated financial statements for periods prior to
December 19, 1996 include only the accounts of the Bank. Material intercompany
accounts and transactions have been eliminated in consolidation. The
accompanying unaudited consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates. In the
opinion of management the unaudited consolidated financial statements include
all necessary adjustments, consisting of normal recurring accruals, necessary
for a fair presentation for the periods presented. These consolidated financial
statements should be read in conjunction with the audited financial statements
for the year ended June 30, 1997, and the notes thereto included in the
Company's Form 10-K.
The Company believes that the disclosures are adequate to make the
information presented not misleading, however, the results for the periods
presented are not necessarily indicative of results to be expected for the
entire fiscal year.
In connection with the conversion (see Note 2), the Bank changed its fiscal
year end to June 30. The Company's and the Bank's 1997 fiscal year ended June
30, 1997. The Company believes it is appropriate to compare this year's fiscal
quarter to the corresponding period in the prior year.
(2) CONVERSION TO STOCK FORM OF OWNERSHIP
On May 21, 1996, the Board of Directors of the Bank adopted a Plan of
Conversion ("Plan") (which was amended on September 17, 1996) whereby the Bank
converted from a federally chartered mutual savings bank to a federally
chartered stock savings bank. The Plan was approved by the Office of Thrift
Supervision (the "OTS") and by the Bank's members at a special meeting. The
stock of the Bank was issued to the Company, which was formed in connection with
the conversion. On December 19, 1996, shares of common stock of the Company were
fully subscribed by eligible members of the Bank and the Company's Employee
Stock Ownership Plan.
The common stock was offered and sold at $10 per share. A total of
2,512,750 shares were sold. After giving effect to offering expenses of
approximately $1,125,000 and the cost of 201,020 shares issued to the Company's
tax qualified Employee Stock Ownership Plan, net proceeds from the conversion
were $22.0 million.
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<PAGE>
Capital distribution regulations limit the Bank's ability to make
capital distributions which include dividends, stock redemptions or repurchases,
cash-out mergers, interest payments on certain convertible debt and other
transactions charged to the capital account based on the Bank's capital level
and supervisory condition. Federal regulations also preclude any repurchase of
the stock of the Bank or its holding company for three years after conversion
except for repurchases pursuant to an offer made on a pro rata basis to all
stockholders and with prior approval of the OTS; or pursuant to an open-market
stock repurchase program that complies with certain regulatory criteria. The OTS
approved the Company's stock repurchase program ("Repurchase Program") that was
adopted by the Board of Directors of the Company on August 19, 1997. The
Repurchase Program authorizes the Company to repurchase up to 125,637 shares, or
five percent, of its 2,512,750 outstanding common shares. The Repurchase Program
will commence as soon as practicable and continue for a period of up to six
months. The repurchases, if any, will be made from time to time at the
discretion of management. At September 30, 1997, the Company had not repurchased
any shares of its common stock pursuant to the Repurchase Program.
(3) EARNINGS PER SHARE
Earnings per share of common stock for the three months ended September
30, 1997 has been determined by dividing net income for the three months by
2,321,781, the weighted average number of primary shares of common stock. ESOP
shares are only considered outstanding for earnings per share calculations when
they are committed to be released.
The initial public offering was completed December 19, 1996. Accordingly,
earnings per share calculations for the prior year period is not meaningful and
is therefore not presented.
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<PAGE>
ITEM 2
------
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
- -------
Big Foot Financial Corp. (the "Company"), an Illinois corporation, is the
holding company for Fairfield Savings Bank, F.S.B. (the "Bank"), a federally
chartered stock savings bank. On December 19, 1996, the Bank completed its
conversion (the "Conversion") from a federally chartered mutual savings bank to
a federally chartered stock savings bank, and all of the capital stock of the
Bank was acquired by the Company. The Company issued and sold 2,512,750 shares
of its common stock, $.01 par value, at a price of $10.00 per share in a
subscription offering (the "Offering") to eligible members of the Bank and to
the Company's Employee Stock Ownership Plan ("ESOP"). Net proceeds from the
Offering amounted to $22.0 million.
The Company's principal business is its investment in the Bank, which
is a community-oriented financial institution providing a variety of financial
services to the communities which it serves. The Bank's principal business
consists of gathering savings deposits from the general public within its market
area and investing those funds primarily in mortgage loans secured by one- to
four-family owner occupied properties, mortgage-backed securities and
obligations of the U.S. Government. To a lesser extent, the Bank makes
multifamily residential loans, commercial real estate loans, land, construction
and development loans, consumer loans and commercial lines of credit. The Bank's
revenues are derived principally from interest on mortgage loans and interest
and dividends on investments, mortgage-backed securities and, to a much lesser
extent, short-term investments. The Bank also derives income from fees and
service charges. The Bank's primary sources of funds are savings deposits and,
to a lesser extent, advances from the Federal Home Loan Bank of Chicago (the
"FHLB"). The Bank does not have any subsidiaries.
In connection with the conversion, the Bank changed its fiscal year end
to June 30. The Company's and the Bank's 1997 fiscal year ended June 30, 1997.
The Company believes it is appropriate to compare this year's fiscal quarter to
the corresponding period in the prior year.
The selected financial ratios and other data of the Company set forth
in the table on the next page are derived in part from, and should be read in
conjunction with, the Financial Statements of the Company presented elsewhere in
this report.
-8-
<PAGE>
FINANCIAL HIGHLIGHTS
(Dollars in thousands except per share data)
<TABLE>
<CAPTION>
September 30, June 30,
1997 1997
------------- -----------
<S> <C> <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets ...................................................... $215,162 $214,896
Loans receivable (net) ............................................ 97,190 93,624
Allowance for loan losses ......................................... 300 300
Mortgage-backed securities ........................................ 102,391 107,595
Savings deposits .................................................. 122,005 122,981
Borrowed funds .................................................... 51,600 49,600
Stockholders' equity .............................................. 37,610 36,977
</TABLE>
<TABLE>
<CAPTION>
At or for the
Three Months ended
September 30,
1997 1996 (1)
------------- -----------
<S> <C> <C>
SELECTED OPERATING DATA:
Net interest income before provision
for loan losses .............................................. $ 1,601 $ 1,167
Net income (loss) ................................................. 232 (498)
Net income excluding
special SAIF assessment, net of tax .......................... 232 119
SELECTED FINANCIAL RATIOS:
Bank Capital ratios:
Tangible ..................................................... 12.26% 7.18
Core ......................................................... 12.26 7.18
Risk-based ................................................... 33.92 20.69
Return on average assets (2)(3) ................................... 0.42 0.24
Return on average stockholders' equity (2)(3) ..................... 2.49 3.53
Consolidated equity to assets at end of period .................... 17.48 6.95
Noninterest expense to average assets (2)(4) ...................... 2.44 2.25
Nonperforming assets as a percent of total assets ................. 0.09 0.20
Allowance for loan losses as a percent of total loans ............. 0.31 0.38
Allowance for loan losses as a percent of
non-performing loans ........................................... 150.80 77.52
PER SHARE DATA:
Primary earnings per share ........................................ $ 0.10 n/a
Book value per share .............................................. 14.97 n/a
STOCK QUOTES:
High .............................................................. $ 17.875 n/a
Low ............................................................... 16.000 n/a
At September 30, 1997 ............................................. 17.375 n/a
</TABLE>
- ---------------------------------------------------------------
(1) Fairfield Savings Bank, F.S.B. only.
(2) Three month results have been annualized.
(3) 1996 results exclude special SAIF assessment of $617,000, net of tax.
(4) 1996 results exclude special SAIF assessment of $936,000.
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<PAGE>
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 1997 AND JUNE 30, 1997
Total assets increased $266,000 from $214.9 million at June 30, 1997 to
$215.2 million at September 30, 1997. The components of the Company's asset base
also changed from June 30, 1997 to September 30, 1997. Mortgage-backed
securities ("MBS") (including both held-to-maturity and available-for-sale
portfolios) decreased $5.2 million from $107.6 million at June 30, 1997 to
$102.4 million at September 30, 1997. This decrease is primarily due to
principal repayments, as well as the market value adjustment for the
available-for-sale portfolio changing from a loss to a gain during the three
month period. An increase of $3.6 million in loans receivable was the result of
loan originations of $6.7 million which exceeded loan repayments. Stock in the
FHLB increased by $100,000 because the Bank had additional advances from the
FHLB during the period. Borrowers are required to hold FHLB stock based upon
outstanding advances from the FHLB, and stock purchases were made to meet the
requirement.
The allowance for loan losses at September 30, 1997 and June 30, 1997
was $300,000. Management believes that the provision for loan losses and the
allowance for loan losses are reasonable and adequate to cover any known losses,
and any losses reasonably expected in the loan portfolio. While management
estimates loan losses using the best available information, no assurance can be
made that future additions to the allowance will not be necessary. The ratio of
the allowance for loan losses to total loans was 0.31% and 0.32% at September
30, 1997 and June 30, 1997, respectively. At September 30, 1997 and June 30,
1997, the ratio of the allowance for loan losses to non-performing loans
remained constant at 150.8%. The Bank had one non-performing loan amounting to
approximately $199,000 at September 30, 1997 and June 30, 1997.
Savings deposits declined $976,000 from June 30, 1997 to September 30,
1997; during this time, borrowed funds increased by $2.0 million. The decrease
in saving deposits was attributable to a decline of $552,000 in Money Market
Demand accounts and $879,000 in Passbook accounts. This decline was offset by an
increase of $307,000 in Certificates of Deposits.
Stockholders' equity increased $633,000 for the three months ended
September 30, 1997. The increase was due primarily to a change from a loss to a
gain on the available-for-sale portfolio of $363,000, and an increase of
$232,000 in retained earnings, due to the quarter's net income.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996
GENERAL. For the three months ended September 30, 1997, net income was
$232,000 or $.10 per share, compared to a net loss of $498,000 for the three
months ended September 30, 1996. The net loss for the three months ended
September 30, 1996 included the one time after tax charge of $617,000 due to the
special assessment recapitalizing the Savings Association Insurance Fund (the
"SAIF"). Net income for the three months ended September 30, 1996 excluding the
SAIF assessment would have been $119,000.
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<PAGE>
INTEREST INCOME. Interest income increased $365,000 to $3.6 million for
the three months ended September 30, 1997, compared to $3.2 million for the
three months ended June 30, 1996. The average balance of interest-earning assets
increased $21.4 million from $185.5 million for the three months ended September
30, 1996 to $206.9 million for the three months ended September 30, 1997. The
majority of this increase was due to the receipt of the net proceeds of the
Conversion. The average yield on the Bank's interest-earning assets decreased
one basis point from 6.91% for the three months ended September 30, 1996 to
6.90% for the three months ended September 30, 1997.
INTEREST EXPENSE. Interest expense decreased $69,000 to $2.0 million
for the three months ended September 30, 1997, as compared to the same period in
1996. This decrease was due to a decrease in the cost of average
interest-bearing liabilities resulting primarily from new certificates of
deposit issued at lower rates than maturing certificates of deposit and lower
average balances of interest-bearing liabilities. The average rate paid on
interest-bearing liabilities decreased seven basis points from 4.70% for the
three months ended September 30, 1996 to 4.63% for the three months ended
September 30, 1997. The average balance of interest-bearing liabilities
decreased $3.5 million to $168.5 million for the three months ended September
30, 1997 from $172.0 million for the three months ended September 30, 1996.
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest
income before provision for loan losses was $1.6 million for the three months
ended September 30, 1997 and $1.2 million for the comparable period in 1996. The
average interest rate spread increased six basis points from 2.21% for the three
months ended September 30, 1996 to 2.27% for the comparable period in 1997.
PROVISION FOR LOAN LOSSES. There was no provision for loan losses for
the three months ended September 30, 1997 and for the comparable period in 1996.
NONINTEREST INCOME. Noninterest income was $68,000 for the three months
ended September 30, 1997 compared to $107,000 for the three months ended
September 30, 1996. Other noninterest income for the three months ended
September 30, 1997 was $10,000, a decrease of $42,000 from the comparable period
in 1996. The difference is due to a sale of assets at a profit in 1996, a
non-recurring item.
NONINTEREST EXPENSE. Noninterest expense decreased $715,000 for the
three months ended September 30, 1997 as compared to the three months ended
September 30, 1996. The FDIC deposit insurance premium was $1.0 million less
than a year ago at $20,000 for the three months ended September 30, 1997. The
Bank was assessed and paid to the FDIC a one-time special SAIF assessment of
$936,000 in September 1996. After this special assessment, regular deposit
insurance premiums were reduced. Compensation, professional services, and other
expenses increased $104,000, $46,000 and $145,000, respectively, over the
similar period last year; primarily due to new employee benefits, legal and
audit expenses and franchise taxes, a consequence of creating and operating the
Company as a public company; there were no similar costs in the first quarter of
1996.
INCOME TAX EXPENSE. Income tax expense increased $380,000 from a tax
benefit of $257,000 for the three months ended September 30, 1996 to a tax
expense of $123,000 for the three months ended September 30, 1997. This increase
was due to the increase of $1.1 million in pre-tax income. The effective tax
rate was 34.6% and 34.0% for the three month periods ended September 30, 1997
and 1996, respectively.
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<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Bank's primary sources of funds are savings deposits, principal and
interest payments on loans and mortgage-backed securities, and borrowings from
the FHLB. While maturities and scheduled amortization of loans and
mortgage-backed securities provide an indication of the timing of the receipt of
funds, changes in interest rates, economic conditions and competition strongly
influence mortgage prepayment rates and savings deposit flows, reducing the
predictability of the timing of sources of funds.
The Bank is required to maintain an average daily balance of liquid
assets and short-term liquid assets as a percentage of net withdrawable savings
deposit accounts plus short-term borrowings as defined by the regulations of the
OTS. The minimum required liquidity and short-term liquidity ratios are
currently 5.0% and 1.0%, respectively. At September 30, 1997, the Bank's
liquidity ratio was 41.56% and its short-term liquidity ratio was 3.01%. The
Bank's liquidity ratio is high due to the amount of mortgage-backed-securities
in the portfolio with a stated maturity of less than five years. The levels of
the Bank's short-term liquid assets are dependent on the Bank's operating,
financing and investing activities during any given period.
The primary investing activities of the Bank during the three months
ended September 30, 1997 were the origination of mortgage loans, and other
loans.
See the "Consolidated Statements of Cash Flows" in the Unaudited
Consolidated Financial Statements included in this Form 10-Q for the sources and
uses of cash flows for operating activities and financing activities for the
three months ended September 30, 1997 and 1996.
At September 30, 1997, the Bank had outstanding loan origination
commitments of $2.3 million and unused lines of consumer credit of $512,000. The
Bank anticipates that it will have sufficient funds available to meet its
current origination and other lending commitments. Certificates of deposit
scheduled to mature in one year or less from September 30, 1997 totaled $39.8
million. Based upon the Bank's most recent pricing strategy, management believes
that a significant portion of such deposits will remain with the Bank.
Management believes it will have adequate resources to fund all commitments on a
short term and long term basis in accordance with its business strategy.
At September 30, 1997, the Bank exceeded all of its regulatory capital
requirements with a tangible capital level of $25.1 million, or 12.26% of total
adjusted assets, which is above the required level of $3.1 million or 1.5%; core
capital of $25.1 million, or 12.26% of total adjusted assets, which is above the
required level of $6.1 million or 3.0%; and total risk-based capital of $25.4
million, or 33.92% of risk-weighted assets, which is above the required level of
$6.0 million, or 8.0%.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There has been no material change in market risk since June 30, 1997.
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<PAGE>
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings
None
ITEM 2. Changes in Securities and Use of Proceeds
None
ITEM 3. Defaults upon Senior Securities
None
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
(a) Exhibit 27 - Financial Data Schedule*
(b) Reports on Form 8-K
None
*Submitted only with filing in electronic format.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BIG FOOT FINANCIAL CORP.
(Registrant)
By: /s/ Timothy L. McCue
------------------------
Timothy L. McCue
Vice President and Chief
Financial Officer
November 10, 1997
-13-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and the statements of income of Big Foot Financial
Corp. and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 2,315,181
<INT-BEARING-DEPOSITS> 3,200,988
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 58,438,137
<INVESTMENTS-CARRYING> 45,155,567
<INVESTMENTS-MARKET> 44,545,814
<LOANS> 97,489,757
<ALLOWANCE> 300,000
<TOTAL-ASSETS> 215,162,193
<DEPOSITS> 122,005,202
<SHORT-TERM> 34,600,000
<LIABILITIES-OTHER> 3,947,138
<LONG-TERM> 17,000,000
0
0
<COMMON> 25,128
<OTHER-SE> 37,584,725
<TOTAL-LIABILITIES-AND-EQUITY> 212,245,478
<INTEREST-LOAN> 1,852,759
<INTEREST-INVEST> 1,714,951
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 3,567,710
<INTEREST-DEPOSIT> 1,191,062
<INTEREST-EXPENSE> 1,967,347
<INTEREST-INCOME-NET> 1,600,363
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,313,702
<INCOME-PRETAX> 355,324
<INCOME-PRE-EXTRAORDINARY> 355,327
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 231,884
<EPS-PRIMARY> 0.10
<EPS-DILUTED> 0<F1>
<YIELD-ACTUAL> 6.90
<LOANS-NON> 199,132
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 300,000
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 300,000
<ALLOWANCE-DOMESTIC> 300,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
<FN>
<F1>Not applicable.
</FN>
</TABLE>
