SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------
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 March 31, 2000
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 36-410848-0
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
1190 RFD, Long Grove, IL 60047-7304
(Address of principal executive offices)
(Zip Code)
(847) 634-2100
(Registrant's telephone number including area code)
NA
(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 MAY 8, 2000
----- -----------
Common Stock, Par Value $.01 1,855,149
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TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
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ITEM 1. FINANCIAL STATEMENTS OF BIG FOOT FINANCIAL CORP.
Consolidated Statements of Financial Condition (Unaudited)
March 31, 2000 and June 30, 1999...................................................... Page 3
Consolidated Statements of Earnings (Unaudited) - Three months and Nine months
ended March 31, 2000 and 1999......................................................... Page 4
Consolidated Statements of Cash Flows (Unaudited) - Nine months
ended March 31, 2000 and 1999......................................................... 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 14
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS..................................................................... Page 14
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS............................................. Page 14
ITEM 3. DEFAULTS UPON SENIOR SECURITIES....................................................... Page 15
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS................................... Page 15
ITEM 5. OTHER INFORMATION..................................................................... Page 15
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K...................................................... Page 15
SIGNATURES
</TABLE>
2
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BIG FOOT FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
(In thousands, except share data)
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
ASSETS 2000 1999
----------- ---------
<S> <C> <C>
Cash and due from banks ................................................... $ 2,740 $ 3,126
Interest-earning deposits ................................................. 4,882 7,501
Mortgage-backed securities held-to-maturity, at amortized cost
(fair value of $21,033 at March 31, 2000 and $28,055 at June 30, 1999) ... 21,869 28,567
Mortgage-backed securities available-for-sale, at fair value .............. 20,721 25,447
Investment in mutual funds and preferred stock, at fair value ............. 3,264 3,320
Loans receivable, net ..................................................... 147,970 138,517
Accrued interest receivable ............................................... 950 979
Stock in Federal Home Loan Bank of Chicago, at cost ....................... 2,800 2,600
Investment in real estate held for sale and development, net .............. -- 154
Office properties and equipment, net ...................................... 4,580 4,820
Prepaid expenses and other assets ......................................... 434 462
--------- ---------
Total assets .............................................................. $ 210,210 $ 215,493
========= =========
LIABILITIES
Noninterest-bearing NOW accounts .......................................... $ 6,251 $ 5,949
Interest-bearing NOW accounts ............................................. 8,291 10,020
Money market demand accounts .............................................. 10,806 10,865
Passbook accounts ......................................................... 36,943 39,358
Certificates of deposit ................................................... 58,008 57,725
--------- ---------
Total savings deposits .................................................... 120,299 123,917
Borrowed money ............................................................ 56,000 52,000
Advance payments by borrowers for taxes and insurance ..................... 1,700 1,866
Accrued interest payable and other liabilities ............................ 2,178 2,988
--------- ---------
Total liabilities ......................................................... 180,177 180,771
--------- ---------
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 ................................................ 25 25
Treasury stock, at cost (610,601 shares at March 31, 2000 and
241,801 shares at June 30, 1999) ....................................... (7,815) (3,259)
Additional paid-in capital ................................................ 24,504 24,463
Retained earnings-substantially restricted ................................ 16,958 16,866
Common stock acquired by the ESOP ......................................... (1,508) (1,508)
Common stock acquired by Recognition and Retention Plan ................... (1,099) (1,385)
Accumulated other comprehensive loss ...................................... (1,032) (480)
--------- ---------
Total stockholders' equity ................................................ 30,033 34,722
--------- ---------
Total liabilities and stockholders' equity ................................ $ 210,210 $ 215,493
========= =========
</TABLE>
(See accompanying notes to unaudited consolidated financial statements)
3
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BIG FOOT FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands, except per share data)
<TABLE>
<CAPTION>
FOR THE THREE FOR THE NINE
MONTHS ENDED MONTHS ENDED
MARCH 31, MARCH 31,
----------------- -----------------
2000 1999 2000 1999
------- ------- ------- -------
<S> <C> <C> <C> <C>
INTEREST INCOME
Mortgage-backed securities held-to-maturity ....... $ 311 $ 491 $ 1,009 $ 1,695
Mortgage-backed securities available-for-sale ..... 342 451 1,082 1,335
Mutual funds and preferred stock .................. 54 54 162 218
Loans receivable .................................. 2,590 2,272 7,605 6,693
Interest-earning deposits ......................... 60 100 193 435
FHLB of Chicago stock ............................. 56 40 143 148
------- ------- ------- -------
Total interest income ............................. 3,413 3,408 10,194 10,524
------- ------- ------- -------
INTEREST EXPENSE
Savings deposits .................................. 1,055 1,108 3,184 3,496
Borrowed money .................................... 799 727 2,306 2,217
------- ------- ------- -------
Total interest expense ............................ 1,854 1,835 5,490 5,713
------- ------- ------- -------
Net interest income before provision
for loan issued................................. 1,559 1,573 4,704 4,811
Provision for loan losses ......................... -- -- -- --
------- ------- ------- -------
Net interest income after provision for loan losses 1,559 1,573 4,704 4,811
------- ------- ------- -------
NONINTEREST INCOME
Service fees ...................................... 57 61 193 189
Other ............................................. 8 7 35 21
------- ------- ------- -------
Total noninterest income .......................... 65 68 228 210
------- ------- ------- -------
NONINTEREST EXPENSE
Compensation and benefits ......................... 775 724 2,312 2,297
Office occupancy .................................. 289 302 848 830
Federal deposit insurance premiums ................ 6 19 43 57
Real estate held for sale and development ......... -- 11 8 34
Professional services ............................. 212 60 540 208
Other expense ..................................... 158 177 540 617
------- ------- ------- -------
Total noninterest expense ......................... 1,440 1,293 4,291 4,043
------- ------- ------- -------
Income before income taxes ........................ 184 348 641 978
Income tax expense ................................ 65 126 232 364
------- ------- ------- -------
NET INCOME $ 119 $ 222 $ 409 $ 614
======= ======= ======= =======
- -------------------------------------------------------------------------------------------
Earnings per share:
Basic ............................................ $ 0.06 $ 0.10 $ 0.20 $ 0.27
Diluted .......................................... 0.06 0.10 0.20 0.27
</TABLE>
(See accompanying notes to unaudited consolidated financial statements)
4
<PAGE>
BIG FOOT FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
<TABLE>
<CAPTION>
FOR THE
NINE MONTHS ENDED
MARCH 31,
--------------------
2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income ...................................................................... $ 409 $ 614
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization.................................................... 365 332
Market adjustment for committed ESOP shares ..................................... 41 65
Amortization of award of RRP shares ............................................. 286 350
Net amortization of deferred loan fees .......................................... (47) (131)
Net amortization of discounts and premiums ...................................... 255 283
(Increase) decrease in accrued interest receivable .............................. 29 (28)
(Increase) decrease in prepaid expenses and other assets ........................ 28 (31)
Decrease in accrued interest payable and other liabilities, net ................. (526) (199)
-------- --------
Net cash provided by operating activities ....................................... 840 1,255
- --------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Origination of loans receivable ................................................. (21,875) (30,571)
Principal repayment of loans receivable ......................................... 12,469 16,594
Principal repayments on mortgage-back securities held-to-maturity ............... 6,502 13,078
Principal repayments on mortgage-backed securities available-for-sale ........... 4,237 12,665
Purchase of mortgage-backed securities available-for-sale ....................... -- (10,121)
Purchase of investment securities available-for-sale ............................ (350) (942)
(Purchase) redemption of stock in Federal Home Loan Bank of Chicago ............. (200) 800
Proceeds from sale of real estate held for development .......................... 154 --
Purchase of office properties and equipment ..................................... (125) (545)
-------- --------
Net cash provided by investing activities ....................................... 812 958
- --------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in savings deposits ................................................ (3,618) (1,457)
Net increase (decrease) in borrowed money ....................................... 4,000 (1,000)
Decrease in advance payments by borrowers for taxes and insurance ............... (166) (252)
Payment of cash dividend ........................................................ (317) --
Purchase of treasury stock ...................................................... (4,556) (2,827)
Purchase of RRP shares .......................................................... -- (1,013)
-------- --------
Net cash used in financing activities ........................................... (4,657) (6,549)
- --------------------------------------------------------------------------------------------------------
Net decrease in cash and cash equivalents ....................................... (3,005) (4,336)
Cash and cash equivalents at the beginning of period ............................ 10,627 13,146
-------- --------
CASH AND CASH EQUIVALENTS AT THE END OF THE PERIOD .............................. $ 7,622 $ 8,810
- --------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ....................................................................... $ 5,529 $ 5,776
Income taxes ................................................................... 350 405
</TABLE>
(See accompanying notes to unaudited consolidated financial statements)
5
<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 March 31, 2000 and
June 30, 1999 and for the three and nine month periods ended March 31, 2000 and
1999. 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, 1999, and the notes thereto included in the
Company's 1999 Annual Report on Form 10K.
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 2000 fiscal year.
(2) EARNINGS PER SHARE
Basic earnings per share is calculated by dividing income available to
common stockholders by the weighted average number of common shares outstanding.
Diluted earnings per share is calculated by dividing income available to common
stockholders by the weighted average number of common shares adjusted for the
dilutive effect of outstanding stock options. ESOP shares are only considered
outstanding for earnings per share calculations when they are committed to be
released. Presented below are the calculations for basic and diluted earnings
per share:
6
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<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
----------------------- -----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
BASIC:
Net income ................................. $ 119,000 $ 222,000 $ 409,000 $ 614,000
Weighted average shares outstanding ........ 1,878,835 2,191,090 2,009,515 2,271,503
Basic earnings per share ................... 0.06 0.10 0.20 0.27
DILUTED:
Net income ................................. $ 119,000 $ 222,000 $ 409,000 $ 614,000
Weighted average shares outstanding ........ 1,878,835 2,191,000 2,009,515 2,271,503
Effect of dilutive stock options outstanding -- -- -- --
Diluted weighted average shares outstanding 1,878,835 2,191,090 2,009,515 2,271,503
Diluted earnings per share ................. 0.06 0.10 0.20 0.27
</TABLE>
(3) COMPREHENSIVE INCOME
The Company's comprehensive income (loss) for the three and nine month
periods ended March 31, 2000 and 1999 is as follows:
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
---------------------- ----------------------
2000 1999 2000 1999
--------- --------- --------- ---------
<S> <C> <C> <C> <C>
Net income ................................................... $ 119,000 $ 222,000 $ 409,000 $ 614,000
Other comprehensive income (loss), net of tax:
Unrealized holding gains (losses) arising during the period (24,000) (163,000) (552,000) (270,000)
--------- --------- --------- ---------
Comprehensive income (loss) .................................. $ 95,000 $ 59,000 $(143,000) $ 344,000
========= ========= ========= =========
</TABLE>
(4) DIVIDEND DECLARATION
On February 15, 2000, the Board of Directors declared a quarterly
dividend of $.05 per share, which was paid on March 15, 2000 to stockholders of
record on February 29, 2000.
(5) STOCK REPURCHASE PROGRAM
In February 2000, the Board of Directors approved the repurchase of an
additional 150,000 shares of the Company's outstanding common stock. The shares
of common stock available for repurchase under the current repurchase program,
together with shares of common stock previously repurchased, totals
approximately 28.5% of the total shares issued by the Company in the initial
public offering. Repurchases will be made from time to time through privately
negotiated transactions, odd-lot purchases and open-market transactions at the
discretion of management. At March 31, 2000, 610,601 shares had been repurchased
under all of the repurchase programs at an average cost of $12.80 per share and
105,498 shares remain to be repurchased under the current program. Management
continues to believe that stock repurchase
7
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programs are an effective capital management tool and provide enhanced value to
both the Company and its stockholders.
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
This Quarterly Report on Form 10-Q contains certain forward looking
statements consisting of estimates with respect to the financial condition,
results of operations and business of the Company that are subject to various
factors which could cause actual results to differ materially from these
estimates. These factors include: changes in general, economic and market
conditions; the development of an adverse interest rate environment that
adversely affects the interest rate spread or other income anticipated from the
Company's operations and investments; and depositor and borrower preferences.
GENERAL
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.
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 Unaudited Consolidated Financial Statements of the Company
presented elsewhere in this report.
8
<PAGE>
FINANCIAL HIGHLIGHTS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
MARCH 31, JUNE 30,
2000 1999
--------- --------
<S> <C> <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets ...................................................... $210,210 $215,493
Loans receivable (net) ............................................ 147,970 138,517
Allowance for loan losses ......................................... 300 300
Mortgage-backed securities ........................................ 42,590 54,014
Savings deposits .................................................. 120,299 123,917
Borrowed money .................................................... 56,000 52,000
Stockholders' equity .............................................. 30,033 34,722
<CAPTION>
AT OR FOR THE AT OR FOR THE
THREE MONTHS ENDED NINE MONTHS ENDED
MARCH 31, MARCH 31,
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Net interest income before provision for loan losses .............. $ 1,559 $ 1,573 $ 4,704 $ 4,811
Net income ........................................................ 119 222 409 614
SELECTED FINANCIAL RATIOS:
Bank capital ratios:
Tangible ..................................................... 12.14% 12.68% 12.14% 12.68%
Core ......................................................... 12.14 12.68 12.14 12.68
Risk-based ................................................... 27.49 31.03 27.49 31.03
Return on average assets (1) ..................................... 0.23 0.41 0.26 0.38
Return on average stockholders' equity (1) ....................... 1.53 2.50 1.65 2.24
Consolidated equity to assets at end of period ................... 14.29 16.31 14.29 16.31
Noninterest expense to average assets (1) ........................ 2.74 2.39 2.70 2.47
Non-performing assets as a percent of total assets ............... 0.14 0.10 0.14 0.10
Allowance for loan losses as a percent of total loans ............ 0.20 0.23 0.20 0.23
Allowance for loan losses as a percent of non-performing loans ... 98.68 144.93 98.68 144.93
PER SHARE DATA:
Basic earnings per share ......................................... $ 0.06 $ 0.10 $ 0.20 $ 0.27
Diluted earnings per share ....................................... 0.06 0.10 0.20 0.27
Book value per share ............................................. 15.79 15.20 15.79 15.20
Cash dividends per share ......................................... 0.05 -- 0.15 --
STOCK QUOTES:
High ............................................................. $ 13.000 $ 14.250 $ 15.063 $ 18.500
Low .............................................................. 10.250 12.313 10.250 12.313
At March 31 ...................................................... 11.438 12.875 11.438 12.875
</TABLE>
- --------------------------------------------------------------------------------
(1) Three and nine month results have been annualized.
9
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COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 2000 AND JUNE 30, 1999
Total assets decreased $5.3 million from $215.5 million at June 30,
1999 to $210.2 million at March 31, 2000. The components of the Company's asset
base also changed from June 30, 1999 to March 31, 2000. Mortgage-backed
securities ("MBS") (including both held-to-maturity and available-for-sale
portfolios) decreased $11.4 million from $54.0 million at June 30, 1999 to $42.6
million at March 31, 2000. This decrease is primarily due to the receipt of
$10.7 million in principal repayments during the nine month period. An increase
of $9.5 million in loans receivable was the result of loan originations of $21.9
million which exceeded the $12.5 million of loan repayments. Interest earning
deposits decreased $2.6 million from $7.5 million at June 30, 1999 to $4.9
million at March 31, 2000, and primarily funded the savings outflows.
Investments in mutual funds and preferred stock are recorded at fair
value and were $3.3 million at both March 31, 2000 and June 30, 1999. The net
unrealized loss in this portfolio is included as a component of accumulated
other comprehensive loss.
The allowance for loan losses at March 31, 2000 and June 30, 1999 was
$300,000. Management believes that the allowance for loan losses is 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 0.20% and 0.22% at March 31, 2000 and June 30, 1999, respectively. At March
31, 2000 and June 30, 1999, the ratio of the allowance for loan losses to
non-performing loans was 98.68% and 155.44%, respectively. The Bank had three
non-performing loans totaling approximately $304,000 at March 31, 2000 and three
non-performing loans totaling approximately $193,000 at June 30, 1999. There
were no loan chargeoffs during the nine month periods ended March 31, 2000 and
1999.
Savings deposits decreased $3.6 million from June 30, 1999 to March 31,
2000; during this time, borrowed funds increased by $4.0 million. Interest
bearing NOW accounts declined $1.7 million primarily due to withdrawals from
government entity deposits, as such balances tend to fluctuate during the year.
Passbook savings were $36.9 million at March 31, 2000 compared to $39.4 million
at June 30, 1999. Certificates of deposit accounts increased $283,000 to $58.0
million at March 31, 2000. During the quarter, the Bank offered a special CD
program which attracted approximately $3.7 million of new certificates of
deposits.
Stockholders' equity at March 31, 2000 was $30.0 million or $4.7
million less than at June 30, 1999. This decline was due primarily to the
Company's stock repurchase program and the payment of a $0.05 per share
quarterly cash dividend in each of the three quarters in fiscal 2000. Under the
Company's stock repurchase programs, the Company acquired 368,800 shares of its
common stock at an aggregate cost of $4.6 million during the nine months ended
March 31, 2000. Since March 31, 2000, the Company has also purchased an
additional 47,000 shares at an aggregate cost of $531,000.
10
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED
MARCH 31, 2000 AND 1999
GENERAL. For the three months ended March 31, 2000, net income was
$119,000 or $0.06 basic and diluted earnings per share, compared to $222,000 or
$0.10 basic and diluted earnings per share for the three months ended March 31,
1999.
INTEREST INCOME. Interest income was $3.4 million for the three months
ended March 31, 2000 and 1999. The average balance of interest-earning assets
decreased $5.4 million from $206.8 million for the three months ended March 31,
1999 to $201.4 million for the three months ended March 31, 2000. The average
yield on the Bank's interest-earning assets increased 19 basis points from 6.59%
for the three months ended March 31, 1999 to 6.78% for the three months ended
March 31, 2000.
INTEREST EXPENSE. Interest expense increased $19,000 and was $1.8
million for the three months ended March 31, 2000 and 1999. The average rate
paid on interest-bearing liabilities increased two basis points from 4.39% for
the three months ended March 31, 1999 to 4.41% for the three months ended March
31, 2000. The average balance of interest-bearing liabilities decreased $389,000
to $168.9 million for the three months ended March 31, 2000 from $169.3 million
for the three months ended March 31, 1999. The increase in the cost of average
interest-bearing liabilities resulted primarily from higher rates paid on money
market demand accounts and borrowed money which was partially offset by lower
costs on certificates of deposit.
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 March 31, 2000 and 1999. The average interest rate spread increased 17
basis points from 2.20% for the three months ended March 31, 1999 to 2.37% for
the comparable period in 2000. Net interest margin increased nine basis points
and was 3.08% for the three months ended March 31, 2000.
PROVISION FOR LOAN LOSSES. There was no provision for loan losses for
the three months ended March 31, 2000 or for the comparable period in 1999. See
"Comparison of Financial Condition at March 31, 2000 and June 30, 1999".
NONINTEREST INCOME. Noninterest income was $65,000 for the three months
ended March 31, 2000, compared to $68,000 for the three months ended March 31,
1999.
NONINTEREST EXPENSE. Noninterest expense increased $147,000 from $1.3
million for the three months ended March 31, 1999 to $1.4 million for the
comparable period in 2000.
Compensation and benefits expense increased $51,000 during the three
months ended March 31, 2000 over the similar period in 1999.
Professional services expense was $212,000 for the three months ended
March 31, 2000, an increase of $152,000 over the comparable 1999 period. This
increase was primarily due to increases in legal fees incurred in a suit to
recover damages in a real estate development known
11
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as The Trails of Olympia Fields. A trial date previously scheduled for May 2000
has been postponed by the trial judge. A new trial date has not yet been set.
Other expense was $158,000 for the three months ended March 31, 2000,
compared to $177,000 for the comparable period in 1999. This decrease was due to
expenses that were incurred in the 1999 quarter for Year 2000 safeguards, and
decreased expenses as a result of reduced mortgage loan origination volume.
INCOME TAX EXPENSE. Income tax expense decreased $61,000 from $126,000
for the three months ended March 31, 1999 to $65,000 for the three months ended
March 31, 2000. This decrease was primarily due to the decrease of $164,000 in
pre-tax income and a decrease in the effective tax rate. The effective tax rate
was 35.3% and 36.2% for the three month periods ended March 31, 2000 and 1999,
respectively.
COMPARISON OF OPERATING RESULTS FOR THE NINE MONTHS ENDED
MARCH 31, 2000 AND 1999
GENERAL. For the nine months ended March 31, 2000, net income was
$409,000 or $0.20 basic and diluted earnings per share, compared to $614,000 or
$0.27 basic and diluted earnings per share for the nine months ended March 31,
1999.
INTEREST INCOME. Interest income was $10.2 million for the nine months
ended March 31, 2000, compared to $10.5 million for the nine months ended March
31, 1999. The average balance of interest earning assets decreased $5.7 million
from $208.8 million for the nine months ended March 31, 1999 to $203.1 million
for the nine months ended March 31, 2000. The average yield on the Bank's
interest-earning assets decreased three basis points from 6.72% for the nine
months ended March 31, 1999 to 6.69% for the nine months ended March 31, 2000.
INTEREST EXPENSE. Interest expense decreased $223,000 and was $5.5
million for the nine months ended March 31, 2000. This decrease was due
primarily to a lower cost of funds. The average rate paid on interest-bearing
liabilities decreased 14 basis points from 4.47% for the nine months ended March
31, 1999 to 4.33% for the nine months ended March 31, 2000. The average balance
of interest-bearing liabilities increased $2.0 million to $168.4 million for the
nine months ended March 31, 2000 from $170.4 million for the nine months ended
March 31, 1999.
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest
income before provision for loan losses decreased $107,000 and was $4.7 million
for the nine months ended March 31, 2000 and $4.8 million for the comparable
period in 1999. The average interest rate spread increased 11 basis points from
2.25% for the nine months ended March 31, 1999 to 2.36% for the comparable
period in 2000. Net interest margin increased two basis points and was 3.09% for
the nine months ended March 31, 2000.
PROVISION FOR LOAN LOSSES. There was no provision for loan losses for
the nine months ended March 31, 2000 and for the comparable period in 1999. See
"Comparison of Financial Condition at March 31, 2000 and June 30, 1999".
12
<PAGE>
NONINTEREST INCOME. Noninterest income was $228,000 for the nine months
ended March 31, 2000 compared to $210,000 for the nine months ended March 31,
1999.
NONINTEREST EXPENSE. Noninterest expense increased $248,000 from $4.0
million for the nine months ended March 31, 1999 to $4.3 million for the nine
months ended March 31, 2000.
Compensation and benefits expense increased $15,000 to $2.3 million for
the nine month period ended March 31, 2000 compared to the same period in the
prior year.
Professional service expense for the nine month period ended March 31,
2000 was $540,000, as compared to $208,000 for the nine months ended March 31,
1999. This increase was primarily due to legal fees incurred in a suit to
recover damages in a real estate development known as The Trails of Olympia
Fields.
Office occupancy expense was $848,000 for the nine months ended March
31, 2000, compared to $830,000 for the same period in 1999. This increase was
primarily due to furniture and fixture depreciation expense, resulting from the
purchase of new ATMs and in-house data processing equipment, which were placed
into service in the second half of fiscal year 1999.
Other expense was $540,000 for the nine month period ended March 31,
2000 compared to $617,000 for the nine month period ended March 31, 1999. The
decrease was due to expenses that were incurred during the 1999 period for Year
2000 safeguards, and decreased expenses as a result of reduced mortgage loan
origination volume.
INCOME TAX EXPENSE. Income tax expense decreased $132,000 from $364,000
for the nine months ended March 31, 1999 to $232,000 for the nine months ended
March 31, 2000. This decrease was primarily due to a decrease of $337,000 in
pre-tax income and a decrease in the effective tax rate. The effective tax rate
was 36.2% and 37.2% for the nine month periods ended March 31, 2000 and 1999,
respectively.
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 (cash, certain time deposits, bankers' acceptances, specified United
States Government, state or federal agency obligations, shares of certain mutual
funds and certain corporate debt securities and commercial paper) equal to a
monthly average of not less than a specified percentage of its net withdrawable
deposits accounts plus short-term borrowings. This liquidity requirement may be
changed from time to time by the OTS to any amount within the range of 4% to 10%
depending upon economic
13
<PAGE>
conditions and the savings flows of member institutions, and is currently 4%. At
March 31, 2000, the Bank's liquidity ratio was 36.6%. The Bank's liquidity ratio
is high due to the amount of mortgage-backed-securities held in the Bank's
investment 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 March 31, 2000 were the origination of mortgage 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
nine months ended March 31, 2000 and 1999.
At March 31, 2000, the Bank had outstanding loan origination
commitments of $3.2 million and unused lines of consumer credit of $558,000. 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 March 31, 2000 totaled $41.2
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 March 31, 2000, the Bank exceeded all of its regulatory capital
requirements with a tangible capital level of $25.2 million, or 12.14% of total
adjusted assets, which is above the required level of $3.1 million or 1.5%; core
capital of $25.2 million, or 12.14% of total adjusted assets, which is above the
required level of $6.2 million or 3.0%; and total risk-based capital of $25.5
million, or 27.49% of risk-weighted assets, which is above the required level of
$7.4 million, or 8.0%.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There has been no material change in market risk since that disclosed
in Item 7A of the Company's Form 10-K for the year ended June 30, 1999.
PART II
OTHER INFORMATION
ITEM 1. Legal Proceedings
None
ITEM 2. Changes in Securities and Use of Proceeds
None
14
<PAGE>
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
Senior Vice President and Chief
Financial Officer
May 11, 2000
15
<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>
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 2,740,318
<INT-BEARING-DEPOSITS> 4,882,075
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 23,984,847
<INVESTMENTS-CARRYING> 21,869,385
<INVESTMENTS-MARKET> 21,033,013
<LOANS> 147,970,121
<ALLOWANCE> 300,000
<TOTAL-ASSETS> 210,209,971
<DEPOSITS> 120,298,551
<SHORT-TERM> 26,000,000
<LIABILITIES-OTHER> 3,878,623
<LONG-TERM> 30,000,000
0
0
<COMMON> 25,128
<OTHER-SE> 30,007,668
<TOTAL-LIABILITIES-AND-EQUITY> 210,209,971
<INTEREST-LOAN> 2,589,894
<INTEREST-INVEST> 170,092
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 3,413,101
<INTEREST-DEPOSIT> 1,055,030
<INTEREST-EXPENSE> 1,853,198
<INTEREST-INCOME-NET> 1,559,903
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,440,307
<INCOME-PRETAX> 183,226
<INCOME-PRE-EXTRAORDINARY> 183,226
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 118,627
<EPS-BASIC> 0.06
<EPS-DILUTED> 0.06
<YIELD-ACTUAL> 6.78
<LOANS-NON> 304,133
<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
</TABLE>
