SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20552
---------------------------
FORM 10-QSB
(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
[ ] 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 0-23645
LEEDS FEDERAL BANKSHARES, INC
-----------------------------
(Exact name of registrant as specified in its charter)
UNITED STATES 52-2062351
------------- ----------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification Number)
1101 Maiden Choice Lane, Baltimore, Maryland 21229
--------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: 410-242-1234
------------
-------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicated by a check 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 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
--- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: There were 4,605,531 shares
of the Registrant's common stock outstanding as of April 1, 2000.
<PAGE>
LEEDS FEDERAL BANKSHARES, INC.
INDEX
PAGE
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of March 31, 2000
(unaudited), and June 30, 1999 1
Consolidated Statements of Income and Comprehensive Income (unaudited)
for the three months and nine months ended March, 2000 and 1999 2
Consolidated Statements of Cash Flows (unaudited) for the nine months
ended March 31, 2000 and 1999 3
Notes to Consolidated Financial Statements (unaudited) 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
PART II. OTHER INFORMATION 12
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
LEEDS FEDERAL BANKSHARES,INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
March 31, June 30,
2000 1999
----- ----
(unaudited) (audited)
Assets
Cash:
<S> <C> <C>
On hand and due from banks $2,257,561 5,093,316
Interest-bearing deposits 1,908,604 4,964,126
Short-term investments 8,818,857 12,941,254
Secured short-term loans to commercial banks 6,268,122 10,011,970
Investment securities, net (held to maturity) 67,478,320 66,167,181
Investment securities, net (available for sale) 5,511,359 6,551,478
Mortgage backed securities, net (held to maturity) 8,677,791 10,008,111
Loans receivable, net 218,336,144 203,886,170
Investment in Federal Home Loan Bank of Atlanta stock, at cost 2,187,200 1,935,700
Property and equipment, net 2,026,255 1,484,620
Cash surrender value of life insurance 6,617,448 6,399,473
Accrued interest receivable 2,035,933 1,994,604
Prepaid expenses and other assets 414,094 204,020
-------- -------
Total assets $332,537,688 331,642,023
------------- -----------
Liabilities and Stockholders' Equity
Liabilities:
Savings accounts $278,590,512 274,625,611
Borrowed funds-Employee Stock Ownership Plan 408,000 470,813
Advance payments by borrowers for taxes, insurance and ground rents 3,706,940 5,203,532
Federal and state income taxes:
Currently payable 21,731 107,577
Deferred 995,843 1,393,803
Accrued expenses and other liabilities 1,646,828 1,336,275
------------ -----------
Total liabilities 285,369,854 283,137,611
------------ -----------
Stockholders' Equity:
Common Stock $1 par value:
20,000,000 shares authorized; 5,205,597 shares
and 5,195,597 shares issued and outstanding 5,205,597 5,195,597
Additional paid-in capital 9,469,158 9,367,161
Employee stock ownership plan (317,145) (390,682)
Treasury stock, at cost,(600,066 shares and 331,941 shares) (7,612,163) (4,740,869)
Retained income, substantially restricted 38,725,658 36,734,317
Accumulated other comprehensive income 1,696,729 2,338,888
---------- ---------
Total stockholders' equity 47,167,834 48,504,412
------------- -----------
$332,537,688 331,642,023
------------ -----------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
LEEDS FEDERAL BANKSHARES, INC.
Consolidated Statements of Income and Comprehensive Income
(unaudited)
Nine Months Three Months
Ended March 31, Ended March 31,
2000 1999 2000 1999
==== ==== ==== ====
Interest income:
<S> <C> <C> <C> <C>
First mortgage and other loans $11,454,069 10,837,239 3,874,397 3,530,935
Mortgage-backed securities 482,172 733,143 158,713 208,634
Investment securities and short term
investments 4,552,025 3,992,352 1,508,304 1,409,245
----------- ---------- ---------- ---------
Total interest income 16,488,266 15,562,734 5,541,414 5,148,814
------------ ----------- ---------- ---------
Interest expense:
Savings accounts 10,322,212 9,645,274 3,459,233 3,235,966
Other 27,491 30,156 9,251 9,069
----------- ------- ------- ------
Total interest expense 10,349,703 9,675,430 3,468,484 3,245,035
----------- ---------- ---------- ---------
Net interest income 6,138,563 5,887,304 2,072,930 1,903,779
Provision for loan losses 20,983 30,916 -0- -0-
---------- ---------- ---------- ---------
Net interest income after provision
for loan losses 6,117,580 5,856,388 2,072,930 1,903,779
----------- ---------- ---------- ---------
Service fees and charges 112,955 98,697 38,018 31,456
Other 218,495 207,790 95,140 67,128
--------- --------- ------- ------
331,450 306,487 133,158 98,584
-------- -------- -------- -------
Noninterest expense:
Compensation and employee benefits 1,269,061 1,191,123 469,765 407,582
Occupancy 183,297 169,425 59,562 63,310
SAIF deposit insurance premiums 151,454 167,122 32,796 54,862
Advertising 102,850 88,013 37,786 37,994
Other 522,479 512,463 177,089 170,879
-------- -------- -------- -------
2,229,141 2,128,146 776,998 734,627
---------- ---------- -------- -------
Income before provision for income
taxes 4,219,889 4,034,729 1,429,090 1,267,736
Provision for income taxes: 1,454,892 1,438,274 488,927 450,086
---------- ---------- -------- -------
Net income 2,764,997 2,596,455 940,163 817,650
----------- ---------- -------- -------
Other comprehensive income, net of tax-
unrealized gains (losses) on securities
available for sale, net (642,159) 406,458 (111,144) (320,162)
--------- -------- --------- ---------
Comprehensive income $2,122,838 3,002,913 829,019 497,488
----------- ---------- ---------- ---------
Net income per share of common stock
Basic $ .59 $ .52 $ .21 $ .16
----------- -------- ---------- -------
Diluted $ .59 $ .51 $ .20 $ .16
----------- -------- ---------- -------
</TABLE>
See accompanying notes to consolidated
financial statements.
<PAGE>
LEEDS FEDERAL BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended March 31, 2000 and 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
Cash flows from operating activities:
<S> <C> <C>
Net income $2,764,997 2,596,455
Adjustments to reconcile net income to net cash provided by
operating activities:
Amortization of loan fees, premiums and discounts,net 65,015 (185,378)
Provision for loan losses 20,983 30,916
Accretion of premiums(discounts) on investment securities and
mortgage-backed securities, net (15,480) (31,765)
Depreciation 95,372 102,488
Non cash compensation under stock based benefit plans 175,534 177,406
Decrease (increase) in accrued interest receivable on securities
and loans receivable (41,329) (53,904)
(Decrease) increase in income taxes currently payable (85,846) 53,942
Increase in accrued expenses and other liabilities 310,553 78,349
Increase (decrease) in unearned loan fees 29,889 (58,825)
Decrease (increase) in prepaid expenses and other assets (210,074) 66,663
--------- -------
Net cash provided by operating activities 3,109,614 2,776,347
--------- ---------
Cash flows from investing activities:
Purchase of investment securities held to maturity (1,700,000) (60,680,000)
Purchase of investment securities available for sale -0- (900,000)
Maturity of investment securities held to maturity -0- 42,371,803
Maturity of securities available for sale -0- 3,000,000
Principal repayments of investment securities 398,350 -0-
Purchase of Federal Home Loan Bank stock (251,500) -0-
Loan disbursements, net of repayments (14,565,861) (4,932,532)
Purchase of mortgage-backed securities (400,000) -0-
Mortgage-backed securities held to maturity principal repayments 1,736,311 5,055,407
Purchases of property and equipment (637,007) (707,167)
Investment in life insurance policies (217,975) (206,184)
--------- ---------
(15,637,682) (16,998,673)
Net cash used by investing activities ------------ ------------
(continued)
</TABLE>
<PAGE>
LEEDS FEDERAL BANKSHARES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine months ended March 31, 2000 and 1999
(unaudited)
<TABLE>
<CAPTION>
2000 1999
---- ----
Cash flows from financing activities:
<S> <C> <C>
Net increase in savings accounts 3,964,901 20,578,870
Decrease in advance payments by borrowers for taxes, insurance
and ground rents (1,496,592) (1,197,849)
Payment of dividends (773,656) (684,349)
Purchases of treasury stock (2,871,294) (3,054,677)
Proceeds from exercise of stock options 10,000 -0-
Repayment of borrowed funds (62,813) (48,000)
-------- --------
Net cash provided (used) by financing activities (1,229,454) 15,593,995
------------ ----------
Net increase (decrease) in cash and cash equivalents (13,757,522) 1,371,669
Cash and cash equivalents at beginning of period 33,010,666 36,857,469
------------ ----------
Cash and cash equivalents at end of period $19,253,144 38,229,138
------------ ----------
Supplemental disclosure of cash flow information:
Cash paid for interest on deposits and borrowed
funds $10,350,000 9,675,000
Cash paid for income taxes 1,422,000 1,384,000
--------- ---------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
LEEDS FEDERAL BANKSHARES, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000
(Unaudited)
(1) Basis of Presentation
The accompanying consolidated financial statements include the accounts of
Leeds Federal Bankshares, Inc. (the Company), its wholly owned subsidiary, Leeds
Federal Savings Bank and Leeds Investment Corporation, a wholly owned subsidiary
of Leeds Federal Savings Bank. Adjustments, consisting of normal recurring
adjustments, which, in the opinion of management are necessary for a fair
presentation of financial position, results of operations, and cash flows have
been recorded. The financial statements have been prepared using the accounting
policies described in the June 30, 1999 Annual Report. The results of operations
for the three months and nine months ended March 31, 2000, are not necessarily
indicative of the results that may be expected for the entire year.
In preparing the consolidated financial statements, management is required
to make estimates and assumptions that affect the reported amounts of assets and
liabilities as of the date of the consolidated statements of financial condition
and income and comprehensive income for the period. Actual results could differ
significantly from those estimates.
(2) Reclassification of Prior Year's Statements
Certain amounts in the 1999 financial statements have been reclassified to
conform to the 2000 presentation.
(3) Net Income per Share of Common Stock
Basic earnings per share (EPS) is calculated by dividing net income by the
weighted average number of common shares outstanding for the applicable period.
Diluted EPS is calculated after adjusting the numerator and the denominator of
the basic EPS calculation for the effect of all dilutive potential common shares
outstanding during the period. Information related to the calculation of net
income per share of common stock is summarized as follows:
<PAGE>
LEEDS FEDERAL BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
March 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Nine months Nine months
Ended March 31, Ended March 31,
2000 1999
Basic Diluted Basic Diluted
----- ------- ----- -------
<S> <C> <C> <C> <C>
Net income $2,764,997 $2,764,997 $2,596,455 $2,596,455
Dividends on unvested common stock $0 $0 ($4,032) ($2,362)
---------- ---------- ---------- ----------
Adjusted net income used in EPS
calculations $2,764,997 $2,764,997 $2,592,423 $2,594,093
Weighted-average shares outstanding 4,659,995 4,659,995 5,024,652 5,024,652
Dilutive securities - options 33,983 70,037
Adjusted weighted-average shares used ---------- --------- --------- ---------
in EPS computation 4,659,995 4,693,978 5,024,652 5,094,689
---------- --------- --------- ---------
</TABLE>
<TABLE>
<CAPTION>
Three months Three months
Ended December 31, Ended December 31,
2000 1999
Basic Diluted Basic Diluted
----- ------- ----- -------
<S> <C> <C> <C> <C>
Net income $940,163 $940,163 $817,650 $817,650
-------- -------- -------- --------
Weighted-average shares outstanding 4,561,558 4,561,558 4,960,555 4,960,555
Dilutive securities - options 28,066 61,511
Adjusted weighted-average shares used --------- --------- --------- ---------
in EPS computation 4,561,558 4,589,624 4,960,555 5,022,066
--------- --------- --------- ---------
</TABLE>
<PAGE>
LEEDS FEDERAL BANKSHARES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, CONTINUED
March 31, 2000
(Unaudited)
(4) Dividends on Common Stock
On March 15,2000, the Company declared a quarterly cash dividend of $.15
per share. The dividends were payable to stockholders of record as of April 5,
2000 and were paid on April 19, 2000. Leeds Federal Bankshares, M.H.C. (the
MHC), which owns 3,300,000 shares of stock in the Company, waived receipt of a
portion of its quarterly dividend, thereby reducing the actual dividend payout
to approximately $396,000. The dollar amount of dividends waived by the MHC is
considered as a restriction on the retained earnings of the Company. The amount
of any dividend waived by the MHC shall be available for declaration of a
dividend solely to the MHC. At March 31, 2000, the cumulative amount of such
waived dividends was $9,033,400.
(5) Impact of New Accounting Standards
The Financial Accounting Standards Board has issued SFAS No. 133,
Accounting for Derivative Instruments and Hedging Activities, as amended (SFAS
No. 133). SFAS No.133 establishes accounting and reporting standards for
derivative instruments, including certain derivative instruments embedded in
other contracts (collectively referred to as derivatives), and for hedging
activities. SFAS No. 133 requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. It is effective for all fiscal quarters of
fiscal years beginning after June 15, 2000. Initial application of this
Statement should be as of the beginning of an entity's fiscal quarter. On that
date, hedging relationships must be designated anew and documented pursuant to
the provisions of SFAS No. 133. Earlier application of SFAS No. 133 is
encouraged, but it may not be applied retroactively to financial statements of
prior periods. Management has not determined when it will adopt the provisions
of SFAS No. 133 but believes that adoption will not have a material effect on
the Company's financial position or results of operations.
<PAGE>
LEEDS FEDERAL BANKSHARES, INC.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Forward Looking Statements
- --------------------------
In addition to historical information, this Quarterly Report contains
forward-looking statements. The forward-looking statements contained in this
document are subject to certain risks and uncertainties that could cause actual
results to differ materially from those projected in the forward-looking
statements. Important factors that might cause such a difference include, but
are not limited to, those discussed in this section entitled "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
Readers should not place undue reliance on these forward-looking statements, as
they reflect management's analysis as of the date of this report. The Company
has no obligation to update or revise these forward-looking statements to
reflect events or circumstances that occur after the date of this report.
Readers should carefully review the risk factors described in other documents
the Company files from time to time with the Securities and Exchange Commission,
including current reports filed on Form 8-K.
Discussion of Financial Condition Changes from June 30, 1999 to March 31, 2000
- ------------------------------------------------------------------------------
Cash on hand and due from banks, interest bearing deposits, other liquid
investments and investment securities ("Investments") totaled approximately
$94.4 million, a decrease of approximately $13.3 million from June 30, 1999
levels. Mortgage-backed securities totaled $8.7 million, a decrease of $1.3
million, due to repayments of principal. Loans receivable totaled $218.3
million, an increase of $14.4 million, mainly in residential mortgage loans. The
increase in loans was funded principally by the decrease in Investments.
Savings accounts increased approximately $4.0 million, to a total of $278.6
million at March 31, 2000. Such increase was primarily attributable to general
market trends. The Company has offered savings rates that are competitive with
other institutions. However, it has not relied on brokered funds or negotiated
jumbo certificates to maintain deposit levels.
The Company is subject to capital standards which generally require the
maintenance of regulatory capital sufficient to meet each of three tests,
hereinafter described as the Tier 1 core capital requirement, the Tier 1 risk
based capital requirement and the total risk-based capital requirement. At March
31, 2000, the Company had Tier 1 core capital of $45.3 million, or 13.8% of
total adjusted assets, which was $32.1 million in excess of the requirement of
minimum core capital of $13.2 million, or 4.0% of total adjusted assets; Tier 1
risk-based capital of $45.3 million, or 27.9% of risk weighted assets, which was
$38.8 million in excess of the requirement of a minimum risk-based capital of 4%
of risk weighted assets; and total risk-based capital of $47.3 million, or 29.2%
of risk weighted assets, which was $36.9 million in excess of the requirement of
a minimum total risk-based capital of 8% of total risk weighted assets.
Comparison of Operating Results for Three and Nine Month Periods
Ended March 31, 2000 and 1999.
- -----------------------------
General
- -------
The Company's net income for the three months ended March 31, 2000, totaled
$940,000, an increase of $122,000, or 14.9%, as compared to $818,000 for the
three months ended March 31, 1999. Such increase was due primarily to an
increase in net interest income and noninterest income, partially offset by an
increase in
<PAGE>
noninterest expenses. The net effect of unrealized losses on securities
available for sale decreased $209,000 to ($111,000) for the three months ended
March 31, 2000, as compared to the same period last year, as a result of
fluctuations in interest rates and general market trends. The Company's net
income for the nine months ended March 31, 2000, totaled $2.8 million, an
increase of $169,000, or 6.5%, from net income of $2.6 million for the nine
months ended March 31, 1999. Such increase was due to an increase in net
interest income and noninterest income, partially offset by an increase in
noninterest expenses. Unrealized gains (losses) on securities available for sale
decreased $1.0 million to ($642,000) for the nine months ended March 31, 2000,
as compared to the same period last year, as a result of a decrease in the fair
value of the Company's investment securities available for sale, due to an
increase in interest rates during the period.
Net Interest Income
- -------------------
Interest income on loans increased $343,000, or 9.7% to $3.9 million for
the three months ended March 31, 2000, from $3.5 million for the three months
ended March 31, 1999. The average yield on loans for the three months ended
March 31, 2000, decreased to 7.1%, from 7.2% for the same period last year,
while the average balance of loans increased by $24.0 million to $219.9 million.
Interest income on loans for the nine months ended March 31, 2000, totaled $11.5
million, an increase of $617,000, as compared to the nine months ended March 31,
1999. The average balance of loans increased by $22.1 million, to $216.3
million, for the period, while the average yield on loans decreased to 7.1%,
from 7.4%. The increases in the average balance in loans was the result of
increased loan demand during the three and nine months ended March 31, 2000, as
compared to the same periods last year. The decreases in the average yield on
loans for these periods were due principally to new loan originations at lower
yields.
Interest income on mortgage-backed securities decreased by $50,000, or
23.9%, to $159,000 for the three months ended March 31, 2000, from $209,000
during the three months ended March 31, 1999. The average yield on
mortgage-backed securities increased to 7.1%, from 6.8%, while the average
balance of mortgage-backed securities decreased by $3.4 million to $8.9 million
from $12.3 million, for the three months ended March 31, 2000, compared to the
same period last year. The decreases in the average balance of mortgage-backed
securities during the three months ended March 31, 2000, as compared to the same
period last year was attributable to higher principal repayments. The increases
in the average yields on these securities for the quarter was due to increased
interest rates on the adjustable mortgage-backed portion of the portfolio.
Interest income on mortgage-backed securities decreased by $251,000, to $482,000
for the nine months ended March 31, 2000, as compared to $733,000 for the same
period last year. The average yield on mortgage-backed securities decreased to
6.9%, from 7.0%, while the average balance of mortgage-backed securities
decreased by $4.7 million to $9.3 million from $14.0 million, for the nine
months ended March 31, 1999. The decreases in the average balance of
mortgage-backed securities and average yields on these securities during the
nine months ended March 31, 2000, as compared to the same periods last year was
attributable to higher principal repayments on higher yielding securities.
Interest income on investment securities and short-term investments
("Investments") increased by $100,000, or 7.1%, to $1.5 million during the three
months ended March 31, 2000, from $1.4 million during the three months ended
March 31, 1999. This increase in interest income from Investments was due to an
increase in average yield of Investments to 6.4%, from 5.5%, partially offset by
a $9.1 million decrease in average balances to $93.9 million from $103 million.
Interest on Investments increased by $560,000, or 14.0%, to $4.6 million during
the nine months ended March 31, 2000, from $4.0 million during the nine months
ended March 31, 1999. Such increase was attributable to an increase in average
yield of Investments to 6.3% from 5.7%, and a $3.5 million increase in average
balance of Investments to $96.3 million, from $92.8 million. The increases in
average yield on Investments for these periods was due to increases in market
rates on short term investments.
<PAGE>
Total interest expense increased by approximately $223,000 during the
quarter ended March 31, 2000 to $3.5 million from $3.2 million for the quarter
ended March 31, 1999. This increase was the result of an increase in average
interest bearing liabilities to $280.6 million from $262.1 million, while the
average rate paid on deposits remained relatively unchanged at 4.9%. For the
nine months ended March 31, 2000, total interest expense increased by $674,000
to $10.3 million, from $9.7 million for the nine months ended March 31, 1999.
The increase was the result of a $24.7 million increase in average balances to
$279.1 million from $254.4 million, while the average rate paid on deposits
decreased to 4.9% from 5.1%. The increases in average balance on interest
bearing liabilities outstanding for the three and nine months ended March 31,
2000, as compared to the same periods last year, was due to increased customer
deposits. The decrease in average rates paid on deposits for the nine months
ended March 31, 2000, was due to general market conditions.
As a result of the foregoing changes, net interest income increased by
$169,000 to $2.1 million during the three months ended March 31, 2000, as
compared to $1.9 million for the three months ended March 31, 1999. During the
nine months ended March 31, 2000, net interest income increased by 251,000, to
$6.1 million from $5.9 million for the same period last year.
Provision for Loan Losses
- -------------------------
The Company had no provision for loan losses for the quarters ended March
31, 2000, and 1999. During the nine months ended March 31, 2000, and 1999, the
Company had provisions for loan losses of $21,000 and $31,000, respectively. The
allowance for loan losses, which was $741,000 at March 31, 2000, is established
in accordance with generally accepted accounting principles and exists to absorb
losses inherent in the Company's overall loan portfolio. In addition to
historical loss experience, the Company considers other factors that are likely
to cause estimated credit losses associated with the loan portfolio; namely,
changes in economic and business conditions and developments, changes in the
nature and volume of the portfolio and trends in the level of its past due and
classified loans, and the status of nonperforming loans. Based on management's
review and analysis, the allowance for loan losses as of March 31, 2000, was
considered adequate.
Noninterest Income
- ------------------
Noninterest income increased by approximately $35,000 to $133,000 during
the three months ended March 31, 2000, as compared to $99,000 during the three
months ended March 31, 1999. For the nine months ended March 31, 2000,
noninterest income increased $25,000 to $331,000, as compared to the same period
last year. Such increases were due to increases in income from life insurance
contracts.
Noninterest Expense
- -------------------
Noninterest expense for the three months ended March 31, 2000, increased by
approximately $42,000, or 5.7%, to $777,000 from $735,000 during the three
months ended March 31, 1999. Compensation and employee benefits expense
increased by $62,000 for the quarter ended March 31, 2000, due to additional
staffing in anticipation of opening a branch, partially offset by a decrease in
the non-cash charges for ESOP contributions which are accounted for at the
current market price of the Company's stock. During the nine months ended March
31, 2000, noninterest expense increased $101,000, or 4.7%, to $2.2 million, from
2.1 million. Compensation and employee benefits increased by $78,000,
advertising by $15,000, and occupancy by $14,000 during the nine months ended
March 31, 2000, compared to the same period last year. Such increases were due
principally to expenses incurred in the opening of a branch.
<PAGE>
Provision for Income Taxes
- --------------------------
The effective income tax rates for the three months and nine months ended
March 31, 2000, were approximately 34.2% and 34.5% respectively, compared to
35.5% and 35.6%, respectively for the three months and nine months ended March
31, 1999. The decrease was due to lower state taxes.
Classified Loans
- ----------------
Loans which were 90 or more days delinquent but still accruing totaled
$10,000 at March 31, 2000, and $7,000 at June 30, 1999. Loans 90 or more days
delinquent and not accruing totaled $2.7 million at March 31, 2000 and June 30,
1999. At March 31, 2000, the Company had a $2.5 million loan which matured in
June, 1998, and has not been repaid. Management has obtained an appraisal, and
based on the appraisal and other factors, believes the Company will not incur a
material loss on this loan.
Liquidity
- ---------
The Company is required to maintain levels of liquid assets as defined by
OTS regulations. This requirement, which varies from time to time (currently set
at 4%) depending upon economic conditions and deposit flows, is based upon a
percentage of deposits and short-term borrowings. The Company's liquidity ratio
averaged 35.6% during the quarter ended March 31, 2000, and equaled 35.1% at
March 31, 2000.
Stock Repurchase Plan
- ---------------------
As of March 31, 2000, the Company had repurchased 600,066 shares of its
common stock in connection with its authorization to repurchase 1,023,441
shares, or approximately 20%, of its outstanding shares of common stock as, in
the opinion of management, market conditions warrant.
<PAGE>
PART II. OTHER INFORMATION
Legal Proceedings
The Company is not involved in any litigation, nor is it aware of any pending
litigation, other than legal proceedings incidental to the Bank's business. In
the opinion of management, no material loss is expected from any such claims or
lawsuits.
Changes in Securities
None
Defaults Upon Senior Securities
None
Submission of matters to a Vote of Security Holders
None
Other Information
None
Exhibits and Report on Form 8-K
(a) The following exhibits are filed as part of this report: Exhibit 27, EDGAR
Financial Data Schedule
(b) No Form 8-K reports were filed during the quarter.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
LEEDS FEDERAL BANKSHARES, INC.
Date: May 12, 2000 By:/s/ Gordon E. Clark
--------------- -----------------------
Gordon E. Clark
President and Chief Executive Officer
Date: May 12, 2000 By:/s/ Kathleen Trumpler
--------------- -----------------------
Kathleen Trumpler
Treasurer and Chief Financial Officer
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