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, 1999
[ ] 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: 0-25509
First Federal Bankshares,Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 42-1485449
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
329 Pierce Street, Sioux City, Iowa 51101
(Address of principal executive offices)
Registrant's telephone number, including area code 712-277-0200
----------------------------------------------------------------
Former name, former address and former fiscal year, if changed
since last report
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 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 [ ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at May 12, 1999
(Common Stock, $.01 par value) 4,817,807
<PAGE>
FIRST FEDERAL BANKSHARES, INC.
INDEX
Part I. Financial Information
Item I. Financial Statements of First Federal Savings Bank
of Siouxland and Subsidiaries
Consolidated Condensed Balance Sheets at March 31, 1999 and June 30,
1998
Consolidated Condensed Statements of Operations for the three and
nine month periods ended March 31, 1999 and 1998
Consolidated Statements of Comprehensive Income for the three and
nine month periods ended March 31, 1999 and 1998
Consolidated Statements of Cash Flows for the nine month periods
ended March 31, 1999 and 1998
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
Part II. Other Information
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
FIRST FEDERAL SAVINGS BANK OF SIOUXLAND and SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
March 31, June 30,
1999 1998
------------- -------------
Assets (Unaudited)
<S> <C> <C>
Cash and interest bearing deposits .............. $ 28,173,490 $ 17,225,007
Securities available for sale ................... 81,584,860 65,194,875
(amortized cost $81,833,086 and $64,821,107)
Securities held to maturity ..................... 25,471,429 32,023,240
(fair value of $25,816,834 and $32,371,990)
Loans receivable, net ........................... 391,179,076 404,800,425
Real estate owned and in judgement, net ......... 204,852 489,055
Office property and equipment, net .............. 12,242,270 10,844,964
Federal Home Loan Bank stock, at cost ........... 6,294,300 5,670,600
Accrued interest receivable ..................... 2,911,544 3,526,679
Deferred tax asset .............................. 293,000 250,000
Excess of cost over fair value of assets acquired 7,907,955 8,158,212
Other assets .................................... 4,088,557 3,267,043
------------- -------------
Total assets .................................... $ 560,351,333 $ 551,450,100
============= =============
Liabilities
Deposits ........................................ $ 400,493,233 $ 392,425,285
Advances from Federal Home Loan Bank ............ 106,797,399 107,900,878
Advance payments by borrowers for
taxes and insurance ......................... 1,065,980 2,276,049
Accrued taxes on income ......................... 474,221 (84,884)
Accrued interest payable ........................ 3,285,275 3,636,142
Accrued expenses and other liabilities .......... 3,908,660 3,276,547
------------- -------------
Total liabilities ............................... 516,024,768 509,430,017
------------- -------------
Stockholders' equity
Common stock, $1 par value ...................... 2,850,113 2,839,943
Additional paid-in capital ...................... 8,311,484 8,266,796
Retained earnings, substantially restricted ..... 33,320,194 30,678,991
Accumulated other comprehensive income .......... (155,226) 234,353
------------- -------------
Total stockholders' equity ...................... 44,326,565 42,020,083
------------- -------------
Total liabilities and stockholders' equity ...... $ 560,351,333 $ 551,450,100
============= =============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
FIRST FEDERAL SAVINGS BANK OF SIOUXLAND AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months For the Nine Months
Ended March 31, Ended March 31,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income:
Loans receivable .................. $ 7,819,221 $ 6,790,785 $24,044,530 $20,626,453
Mortgage-backed securities ........ 505,977 654,663 1,687,373 2,053,101
Investment securities ............. 1,173,437 970,957 3,839,780 2,641,349
Other interest-earning assets ..... 96,057 69,932 152,805 77,714
----------- ----------- ----------- -----------
Total interest income ........ 9,594,692 8,486,337 29,724,488 25,398,617
----------- ----------- ----------- -----------
Interest expense:
Deposits .......................... 4,071,435 3,782,180 13,037,947 11,414,145
Borrowings ........................ 1,601,726 1,284,210 5,030,350 3,913,457
----------- ----------- ----------- -----------
Total interest expense ....... 5,673,161 5,066,390 18,068,297 15,327,602
----------- ----------- ----------- -----------
Net interest income ............... 3,921,531 3,419,947 11,656,191 10,071,015
Provision for loan losses ......... 105,000 95,000 255,000 240,000
----------- ----------- ----------- -----------
Net interest income after provision 3,816,531 3,324,947 11,401,191 9,831,015
----------- ----------- ----------- -----------
Noninterest income:
Service charges and other fees .... 555,823 286,931 1,515,135 871,888
Gain on sale of loans held for sale 59,258 52,300 233,669 141,998
Gain on sale of branch deposits ... -- -- 1,087,884 --
Abstracting income ................ 193,242 189,895 548,908 507,672
Other income, net ................. 208,027 161,506 655,523 516,972
----------- ----------- ----------- -----------
Total noninterest income ..... 1,016,350 690,632 4,041,119 2,038,530
----------- ----------- ----------- -----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIRST FEDERAL SAVINGS BANK OF SIOUXLAND AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (continued)
(Unaudited)
For the Three Months For the Nine Months
Ended March 31, Ended March 31,
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Noninterest expense:
Compensation and employee benefits 1,872,776 1,761,404 5,532,888 4,734,514
Office property and equipment ..... 463,009 380,397 1,341,543 1,070,909
Deposit insurance premiums ........ 60,367 51,305 178,512 155,575
Data processing expense ........... 100,285 69,732 296,357 220,713
Advertising ....................... 143,483 107,777 430,587 274,632
Amortization of intangibles ....... 85,989 6,561 257,967 19,683
Other general and administrative .. 554,743 448,294 1,963,664 1,614,836
----------- ----------- ----------- -----------
Total noninterest expense .... 3,280,652 2,825,470 10,001,518 8,090,862
----------- ----------- ----------- -----------
Earnings before taxes on income ... 1,552,229 1,190,109 5,440,792 3,778,683
Taxes on income ................... 563,079 417,208 1,982,079 1,347,690
----------- ----------- ----------- -----------
Net earnings ...................... $ 989,150 $ 772,901 $ 3,458,713 $ 2,430,993
=========== =========== =========== ===========
Per share data: (1)
Basic earnings per share .......... $ 0.35 $ 0.27 $ 1.22 $ 0.86
=========== =========== =========== ===========
Diluted earnings per share ........ $ 0.34 $ 0.27 $ 1.20 $ 0.84
=========== =========== =========== ===========
Dividends declared per share ...... $ 0.24 $ 0.12 $ 0.48 $ 0.36
=========== =========== =========== ===========
</TABLE>
-----------------
(1) Restated for adoption of SFAS 128, "Earnings Per Share," effective
December 31, 1997.
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
FIRST FEDERAL SAVINGS BANK OF SIOUXLAND AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
---------------------------- ----------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Net earnings .................................................. $ 989,150 $ 772,901 $ 3,458,713 $ 2,430,993
Other comprehensive income:
Unrealized gains (losses) on securities available for sale:
Unrealized holding gains (losses) arising
during the period, net of tax ................... (240,236) (94,284) (389,579) 305,059
----------- ----------- ----------- -----------
Other comprehensive income, net of tax ........................ (240,236) (94,284) (389,579) 305,059
----------- ----------- ----------- -----------
=========== =========== =========== ===========
Comprehensive income .......................................... $ 748,914 $ 678,617 $ 3,069,134 $ 2,736,052
=========== =========== =========== ===========
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
FIRST FEDERAL SAVINGS BANK OF SIOUXLAND AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine months ended March 31,
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from operating activities:
Net earnings ................................................... $ 3,458,713 $ 2,430,993
Adjustments to reconcile net earnings to net cash
provided by operating activities:
Loans originated for sale to investors ...................... (27,189,689) (10,993,253)
Proceeds from sale of loans originated for sale ............. 27,386,792 10,528,869
Provision for losses on loans and other assets .............. 255,000 240,000
Depreciation and amortization ............................... 926,431 497,884
Provision for deferred taxes ................................ 190,000 --
Net gain on sale of loans ................................... (233,669) (141,998)
Net (gain) loss on sale of real estate owned ................ (41,247) 464
Net gain on sale of branch deposits ......................... (1,087,837) --
Net loan fees deferred ...................................... 36,236 (6,302)
Amortization of premiums and discounts on loans,
mortgage-backed securities, and investment securities ..... (16,555) (65,861)
Decrease in accrued interest receivable ..................... 615,135 400,850
Increase in other assets .................................... (843,140) (396,541)
(Decrease) increase in accrued interest payable ............. (350,867) 865,141
Increase (decrease) in accrued expenses and other liabilities 290,100 (208,492)
Increase in taxes payable ................................... 559,105 125,264
------------ ------------
Net cash provided by operating activities ...................... 3,954,508 3,277,018
------------ ------------
Cash flows from investing activities:
Cash and cash equivalents of acquisition .................... -- 9,913,195
Purchase of securities held to maturity ..................... (10,527,262) (18,017,045)
Proceeds from maturities of securities held to maturity ..... 16,415,656 17,643,000
Purchase of securities available for sale ................... (62,031,575) (27,986,562)
Purchase of Federal Home Loan Bank Stock .................... (623,700) --
Proceeds from maturities of securities available for sale ... 45,800,271 33,113,338
Loans purchased ............................................. (3,672,000) (12,302,000)
Decrease in loans receivable ................................ 16,606,228 20,662,579
Proceeds from sale of real estate owned ..................... 657,198 29,845
Purchase of office property and equipment ................... (2,052,439) (1,061,205)
------------ ------------
Net cash provided by investing activities ...................... 572,377 21,995,145
------------ ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
FIRST FEDERAL SAVINGS BANK OF SIOUXLAND AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (continued)
(Unaudited)
Nine months ended March 31,
1999 1998
------------ ------------
<S> <C> <C>
Cash flows from financing activities:
Increase in deposits ........................................ 27,436,896 4,525,019
Branch deposits transferred due to sale, net ................ (18,281,111) --
Proceeds from advances from FHLB ............................ 29,000,000 52,000,000
Repayment of advances from FHLB ............................. (30,103,479) (61,500,000)
Issuance of common stock .................................... 54,858 48,071
Cash dividends paid ......................................... (475,497) (471,337)
Net decrease in advances from
borrowers for taxes and insurance ........................ (1,210,069) (847,742)
------------ ------------
Net cash provided by (used in) financing activities ............ 6,421,598 (6,245,989)
------------ ------------
Net increase in cash and cash equivalents ...................... 10,948,483 19,026,174
Cash and cash equivalents at beginning of period ............... 17,225,007 12,478,167
------------ ------------
Cash and cash equivalents at end of period ..................... $ 28,173,490 $ 31,504,341
============ ============
</TABLE>
See notes to consolidated financial statements ...............
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
FIRST FEDERAL SAVINGS BANK OF SIOUXLAND AND SUBSIDIARIES
1. BASIS OF PRESENTATION
The financial statements presented are those of First Federal Savings Bank of
Siouxland (the "Bank" or "First Federal") rather than those of First Federal
Bankshares, Inc. (the "Registrant" or the "Company"). The Registrant was formed
as a holding company to own all of the capital stock of the Bank following the
conversion and acquisition which took place on April 13, 1999, subsequent to the
period reported on by this quarterly report on Form 10-Q. The conversion and
acquisition are described at Note 2.
The consolidated condensed balance sheet information for June 30, 1998 was
derived from the Bank's audited Consolidated Balance Sheets for the fiscal year
ended June 30, 1998. The consolidated condensed financial statements at and for
the three months and nine months ended March 31, 1999 and 1998 are unaudited. In
the opinion of management of the Bank these financial statements reflect all
adjustments, consisting only of normal recurring accruals necessary to present
fairly these consolidated financial statements. The results of operations for
the interim periods are not necessarily indicative of results that may be
expected for an entire year. Certain information and footnote disclosure
normally included in financial statements prepared in accordance with generally
accepted accounting principles have been omitted.
A summary of significant accounting policies followed by the Bank is set forth
in Note 1 of the Bank's 1998 Annual Report to Stockholders and is incorporated
herein by reference.
This report contains certain forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Bank intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Reform Act of
1995, and is including this statement for the purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain assumptions
and describe future plans, strategies and expectations of the Bank, are
generally identifiable by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project" or similar expressions. The Bank's ability
to predict results or the actual effect of future plans or strategies is
inherently uncertain. Factors which could have a material adverse effect on the
Bank's future activities and operating results include, but are not limited to,
changes in: interest rates, general economic conditions, legislative/regulatory
changes, U.S. monetary and fiscal policies, demand for products and services,
deposit flows, competition and accounting policies, principles and guidelines.
These risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements.
2. REORGANIZATION, CONVERSION AND ACQUISITION
Throughout the period reported on by this report, the Bank was organized as a
federally chartered stock savings bank engaging in retail and commercial banking
and related financial services. At March 31, 1999, approximately 53.49 percent
of the Bank's capital stock was owned by First Federal Bankshares, M.H.C. (the
"Holding Company") a mutual holding company formed as part of the 1992
reorganization. The remaining 46.51 percent of the shares were owned by the
Bank's Employee Stock Ownership Plan, stock-based compensation plans, and the
general public.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On August 17, 1998 the Bank announced the execution of a definitive agreement to
acquire Mid-Iowa Financial Corp. and its wholly-owned subsidiary, Mid-Iowa
Savings Bank, FSB in a cash transaction. The total purchase consideration of the
acquisition was $28.3 million. At March 31, 1999, Mid-Iowa Financial had total
assets of $151.5 million and total deposits of $101.2
million. The acquisition of Mid-Iowa Financial Corp. will be accounted for as a
purchase. In order to accomplish this acquisition, the Bank formed the
Registrant for the purpose of holding all of its capital stock following the
conversion and acquisition. The Bank changed its name to First Federal Bank in
conjunction with the conversion and acquisition. The 53.5% interest in the Bank
owned by the Holding Company was offered in a subscription and community
offering as part of the conversion and 2,635,000 shares of common stock of the
Registrant were sold at $10 per share. In addition, the minority public
stockholders of the Bank exchanged each existing share of Bank stock for 1.64696
shares of the Registrant's stock. The conversion and acquisition were
interdependent transactions. These transactions became effective after close of
business on April 13, 1999.
3. EARNINGS PER SHARE
The Bank adopted Statement of Financial Accounting Standards (SFAS) 128,
"Earnings Per Share," effective December 31, 1997. Prior period information was
restated to conform to current period reporting under SFAS 128. The computation
of earnings per share is presented below:
<TABLE>
<CAPTION>
Three months ended Nine months ended
March 31, March 31,
1999 1998 1999 1998
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Basic earnings per share:
Net earnings ................ $ 989,150 $ 772,901 $3,458,713 $2,430,993
Weighted average shares
outstanding ........... 2,847,897 2,835,603 2,845,119 2,833,448
Basic earnings per share .... $ .35 $ .27 $ 1.22 $ .86
========== ========== ========== ==========
Diluted earnings per share:
Net earnings ................ $ 989,150 $ 772,901 $3,458,713 $2,430,993
Weighted average shares
outstanding ............... 2,847,897 2,835,603 2,845,119 2,833,448
Incremental option shares
using treasury stock method 28,603 35,118 27,003 45,346
---------- ---------- ---------- ----------
Diluted shares outstanding .. 2,876,500 2,870,721 2,872,122 2,878,794
Diluted earnings per share .. $ .34 $ .27 $ 1.20 $ .84
========== ========== ========== ==========
</TABLE>
4. DIVIDENDS
On January 21, 1999 the Bank declared a cash dividend on its common stock,
payable on February 26, 1999 to stockholders of record as of February 12, 1999,
equal to $.12 per share. Dividends totaling $158,864 were paid to public
stockholders. The Holding Company sought and was granted approval from the
Office of Thrift Supervision (OTS) to waive its portion of the dividend which
totaled $182,952.
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
On March 18, 1999 the Bank declared a cash dividend on its common stock, payable
on April 9, 1999 to stockholders of record as of March 29, 1999 equal to $.12
per share. Dividends totaling $159,062 were paid to public stockholders.
Dividends totaling $182,952 were paid to the Holding Company. This represented
the final dividend paid to stockholders of the Bank prior to the conversion and
acquisition addressed in Note 2 above.
5. BRANCH DEPOSIT SALES
The Bank sold $19.4 million of deposits at branch offices in Hartley, Sanborn
and Hawarden, Iowa to other local financial institutions. In addition, the Bank
sold $699,000 of the loans associated with the Hawarden, Iowa office. The
transactions were completed in the fourth calendar quarter of 1998 and a gain
totaling $1.1 million was recorded in connection with the branch deposit sales.
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
FINANCIAL CONDITION
Total assets increased by $8.9 million, or 1.6%, to $560.4 million at March 31,
1999 from $551.5 million at June 30, 1998. Cash and interest-bearing deposits
increased by $10.9 million, or 63.6%, and securities available for sale
increased by $16.4 million, or 25.1%, to $81.6 million at March 31, 1999 from
$65.2 million at June 30, 1998, as proceeds from amortization and prepayments of
loans receivable were invested in short-term investments. Securities held to
maturity decreased by $6.6 million, or 20.5%, from June 30, 1998 to March 31,
1999. Additionally, loans receivable decreased by $13.6 million, or 3.4%, to
$391.2 million at March 31, 1999 from $404.8 million at June 30, 1998 due to
amortization and prepayments. The balance of real estate owned decreased by
$284,000, or 58.1%, to $205,000 at March 31, 1999 from $489,000 at June 30, 1998
primarily due to the sale of three multi-family properties in Madison,
Wisconsin, with a carrying value totaling $457,000. No losses were realized on
this sale. A foreclosure on a commercial real estate property located in
Grinnell, Iowa with a carrying value totaling $136,000 at March 31, 1999,
partially offset the decrease in real estate owned due to the sale of the
Madison properties.
Deposits increased by $8.1 million, or 2.1%, to $400.5 million at March 31, 1999
from $392.4 million at June 30, 1998. The increase in deposits was primarily due
to stock subscription funds received for common stock offered by First Federal
Bankshares, Inc. in the conversion of the Holding Company from a federally
chartered mutual holding company to a Delaware stock corporation formed to hold
all the stock of the Bank. Stock subscription funds totaling approximately $17.5
million are included in deposit balances at March 31, 1999. The stock
subscription funds partially offset the sale of $19.4 million of deposits in
three branch offices to local financial institutions in November and December of
1998. Deposit balances, excluding the stock subscription amounts, in the
remaining offices increased by $10.0 million. Advances from the Federal Home
Loan Bank decreased by $1.1 million, or 1.0%, to $106.8 million at March 31,
1999 from $107.9 million at June 30, 1998. Advance payments by borrowers for
taxes and insurance decreased by $1.2 million, or 53.2%, due to payment in March
1999 of the second half of real estate taxes escrowed.
Total stockholders' equity increased by $2.3 million, or 5.5%, to $44.3 million
at March 31, 1999 from $42.0 million at June 30, 1998. The increase was
primarily due to earnings totaling $3.5 million for the first half of the fiscal
year, less dividends declared totaling $817,000 and a decrease totaling $390,000
in accumulated other comprehensive income.
CAPITAL
The Bank's total equity increased by $2.3 million to $44.3 million at March 31,
1999 from $42.0 million at June 30, 1998. The OTS requires that the Bank meet
minimum tangible, leverage (core) and risk-based capital requirements. As of
March 31, 1999 the Bank was in compliance with all regulatory capital
requirements. The Bank's required, actual and excess capital levels as of March
31, 1999 are as follows:
<PAGE>
<TABLE>
<CAPTION>
Excess of
Actual Over
Required % of Actual % of Regulatory
Amount Assets Amount Assets Requirement
(Amounts in thousands)
<S> <C> <C> <C> <C> <C>
Tangible Capital $ 8,289 1.5% $36,601 6.62% $28,312
Core Capital 16,578 3.0% 36,601 6.62% 20,023
Risk-based Capital 23,264 8.0% 39,316 13.52% 16,052
</TABLE>
LIQUIDITY
OTS regulations require that thrift institutions such as the Bank maintain an
average daily balance of liquid assets (cash, certain time deposits, banker's
acceptances and specified United States government, state or federal agency
obligations) in each calendar quarter of not less than 4% of the average daily
balance of its liquidity base (net withdrawable deposits plus short term
borrowings) during the preceding quarter. For the quarter ended March 31, 1999
the Bank's average liquidity position was $96.4 million, or 23.5% of its
liquidity base for the preceding quarter.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
March 31, 1999 and 1998
General. Net earnings increased by $216,000, or 28.0%, to $989,000 for the three
months ended March 31, 1999 from $773,000 for the three months ended March 31,
1998. Diluted earnings per share totaled $.34 and $.27, respectively, for the
three months ended March 31, 1999 and 1998. The acquisition of GFS Bancorp,
Inc.(GFS), effective March 31, 1998, was accounted for using the purchase method
of accounting; therefore, the results of operations for the three months ended
March 31, 1998 do not include GFS activity.
Interest Income. Interest income increased by $1.1 million, or 13.1%, to $9.6
million for the three months ended March 31, 1999 from $8.5 million for the
three months ended March 31, 1998, largely due to an increase in the average
balance of interest-earning assets. The average balance of interest-earning
assets increased by $72.9 million, or 16.6%, to $511.5 million for the three
months ended March 31, 1999 from $438.6 million for the three months ended March
31, 1998. The increase in average balances of interest-earning assets was
primarily due to the acquisition of GFS Bancorp, Inc. effective March 31, 1998.
The average yield on interest-earning assets decreased to 7.50% for the three
months ended March 31, 1999 from 7.74% for the three months ended March 31,
1998, primarily due to the generally lower interest-rate environment in the
current year period.
Interest income on loans for the three months ended March 31, 1999 increased by
$1.0 million, or 15.1%, compared to the three months ended March 31, 1998. This
increase in interest income on loans was primarily due to an increase in average
loans of $62.3 million, or 18.5%, to $399.5 million for the three months ended
March 31, 1999 from $337.2 million for the three months ended March 31, 1998.
The average yield on loans decreased to 7.83% for the three months ended March
31, 1999 from 8.06% for the three months ended March 31, 1998.
<PAGE>
Interest income on mortgage-backed securities for the three months ended March
31, 1999 decreased by $149,000, or 22.7%, when compared to the three months
ended March 31, 1998. This decrease was due to a decrease of $8.2 million, or
21.1%, in the average balance of mortgage-backed securities to $30.7 million for
the three months ended March 31, 1999 from $38.9 million for the three months
ended March 31, 1998. In addition, the average yield on mortgage-backed
securities decreased to 6.60% for the three months ended March 31, 1999 from
6.73% for the three months ended March 31, 1998.
Interest income on investment securities increased by $202,000, or 20.9%, as the
average balance of investment securities increased by $15.7 million, or 27.3%,
to $73.0 million at March 31, 1999 from $57.4 million at March 31, 1998. The
average yield on investment securities decreased by 34 basis points to 6.43% for
the three months ended March 31, 1999 from 6.77% for the three months ended
March 31, 1998. The increase in the average balance of investment securities was
due to the Bank's strategy of leveraging investment purchases with FHLB advance
borrowings. Interest income on other interest-earning assets increased by
$26,000 due to higher average balances in these investments during the three
months ended March 31, 1999 as compared to the same quarter of the prior year.
Interest Expense. Interest expense increased by $607,000, or 12.0%, to $5.7
million for the three months ended March 31, 1999 from $5.1 million for the
three months ended March 31, 1998. Interest on deposits increased by $289,000,
or 7.6%, to $4.1 million for the three months ended March 31, 1999 from $3.8
million for the three months ended March 31, 1998. The increase in interest on
deposits was primarily due to an increase in the average balance of deposits as
a result of the GFS acquisition, partially offset by the sale of the deposits of
three branches in November and December of 1998. The average balance of deposits
increased by $52.4 million, or 16.4%, to $371.2 million at March 31, 1999 from
$318.8 million at March 31, 1998. The increase in interest paid on deposits due
to increased average balances was partly offset by a decrease in the average
cost of deposits to 4.39% for the three months ended March 31, 1999 from 4.75%
for the three months ended March 31, 1998. Rates paid on deposit accounts were
lowered in response to generally lower market rates during 1999 as compared to
1998.
Interest on borrowings increased by $318,000, or 24.7%, to $1.6 million for the
three months ended March 31, 1999 from $1.3 million for the three months ended
March 31, 1998. The increase in interest on borrowings was primarily due to an
increase in the average balance of advances. Average advance balances increased
by $23.6 million, or 27.4%, to $109.8 million at March 31, 1999 from $86.2
million at March 31, 1998. The increases in interest expense due to increased
balances were partly offset by a decrease of 13 basis points in the average cost
of borrowings to 5.83% for the three months ended March 31, 1999 from 5.96% for
the three months ended March 31, 1998.
Net Interest Income. Net interest income increased by $502,000, or 14.7%, to
$3.9 million for the three months ended March 31, 1999 from $3.4 million for the
three months ended March 31, 1998. The Bank's interest rate spread for the three
months ended March 31, 1999 increased to 2.79% from 2.73% for the quarter ended
March 31, 1998.
<PAGE>
Provision for Loan Loss. Provision for loan loss expense totaled $105,000 and
$95,000, respectively, for the three months ended March 31, 1999 and 1998. The
allowance for losses on loans is based on management's periodic evaluation of
the loan portfolio and reflects an amount that, in management's opinion, is
adequate to absorb losses in the existing portfolio. In evaluating the
portfolio, management takes into consideration numerous factors, including
current economic conditions, prior loan loss experience, the composition of the
loan portfolio, and management's estimate of anticipated credit losses.
Noninterest Income. Noninterest income increased by $326,000, or 47.2%, to $1.0
million for the three months ended March 31, 1999 from $691,000 for the three
months ended March 31, 1998. The increase in noninterest income was largely due
to an increase of $269,000, or 93.7%, in service charges and other fees for the
three months ended March 31, 1999 as compared to the three months ended March
31, 1998. The increase in service charges and other fees was largely due to
prepayment penalties associated with commercial real estate lending, growth
related to the GFS acquisition and the introduction of a new checking product.
Other income increased by $46,000, or 28.8%, to $208,000 for the three months
ended March 31, 1999 from $162,000 for the three months ended March 31, 1998
largely due to increased abstracting and other activity in the Bank's non-bank
subsidiaries.
Noninterest expense. Noninterest expense increased by $455,000, or 16.1%, to
$3.3 million for the three months ended March 31, 1999 from $2.8 million for the
three months ended March 31, 1998. Compensation and benefits expense increased
by $111,000, or 6.3%, to $1.9 million for the three months ended March 31, 1999
from $1.8 million for the three months ended March 31, 1998. During the three
months ended March 31, 1998 the Bank recognized a liability totaling
approximately $214,000 for an early retirement incentive program. Excluding the
early retirement program in the prior year quarter, compensation and benefits
expense increased by $325,000, or 21.0%, to $1.9 million for the three months
ended March 31, 1999 from $1.5 million, as adjusted, for the three months ended
March 31, 1998. The Bank's staff increased by approximately twenty-three
full-time-equivalent employees due to the GFS acquisition and due to the
addition of a new branch office.
Office property and equipment expense increased by $83,000, or 21.7%, over the
prior year, partially due to the implementation of a new platform banking
system, equipment and software upgrades and replacements related to Year 2000
issues and to the addition of two offices. Deposit insurance premium expense,
data processing expense and advertising expense increased by $9,000, $31,000 and
$36,000, respectively, for the three months ended March 31, 1999 as compared to
the three months ended March 31, 1998. Amortization of intangibles increased by
$79,000 to $86,000 for the three months ended March 31, 1999 from $7,000 for the
three months ended March 31, 1998 due to amortization of the goodwill related to
the GFS acquisition that commenced in April 1998. Other general and
administrative expenses increased by $106,000, or 23.8%, for the three months
ended March 31, 1999 as compared to the three months ended March 31, 1998.
<PAGE>
Net earnings and income tax expense. Net earnings before income taxes totaled
$1.6 million for the three months ended March 31, 1999, compared to $1.2 million
for the three months ended March 31, 1998. Income tax expense increased by
$146,000, or 35.0%, to $563,000 for the three months ended March 31, 1999 from
$417,000 for the three months ended March 31, 1998. The Bank's effective tax
rate increased to 36.3% for the three months ended March 31, 1999 from 35.1% for
the three months ended March 31, 1998.
COMPARISON OF THE RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED
March 31, 1999 and 1998.
General. Net earnings increased by $1.0 million, or 42.3%, to $3.4 million for
the nine months ended March 31, 1999 from $2.4 million for the nine months ended
March 31, 1998. Diluted earnings per share totaled $1.20 and $.84, respectively,
for the nine months ended March 31, 1999 and 1998. The acquisition of GFS
Bancorp, Inc., effective March 31, 1998, was accounted for using the purchase
method of accounting; therefore, the results of operations for the nine months
ended March 31, 1998 do not include GFS activity.
Interest income. Interest income increased by $4.3 million, or 17.0%, to $29.7
million for the nine months ended March 31, 1999 from $25.4 million for the nine
months ended March 31, 1998, largely due to an increase in the average balance
of interest-earning assets. The average balance of interest-earning assets
increased by $84.3 million, or 19.3%, to $520.3 million at March 31, 1999 from
$436.0 million at March 31, 1998 primarily due to growth related to the GFS
acquisition. The average yield on interest-earning assets decreased to 7.62% for
the nine months ended March 31, 1999 from 7.77% for the nine months ended March
31, 1998, primarily due to the generally lower interest-rate environment in the
current year period. This decrease in yield partially offset the increases in
interest income related to larger average balances.
Interest income on loans increased by $3.4 million, or 16.6%, to $24.0 million
for the nine months ended March 31, 1999 from $20.6 million for the nine months
ended March 31, 1998 primarily due to an increase in the average balance of
loans. The average balance of loans receivable increased by $62.0 million, or
18.1%, to $404.2 million for the nine months ended March 31, 1999 from $342.2
million at March 31, 1998 primarily due to growth related to the GFS
acquisition. The yield on loans receivable was 7.93% and 8.04%, respectively,
for the nine months ended March 31, 1999 and 1998.
Interest income on mortgage-backed securities decreased by $366,000, or 17.8%,
to $1.7 million for the nine months ended March 31, 1999 from $2.1 million for
the nine months ended March 31, 1998. The decrease in interest income on
mortgage-backed securities was primarily due to a decrease of $7.3 million in
the average balance of mortgage-backed securities to $33.6 million for the nine
months ended March 31, 1999 from $40.9 million for the nine months ended March
31, 1998. The decrease in the balance of mortgage-backed securities was due to
amortization and prepayment as borrowers refinanced in the generally low
interest-rate environment for fixed-rate mortgage loans. The average yield on
mortgage-backed securities was 6.69% for both the nine month periods ended March
31, 1999 and 1998.
Interest income on investment securities increased by $1.2 million, or 45.4%, to
$3.8 million for the nine months ended March 31, 1999 from $2.6 million for the
nine months ended March 31, 1998. The average balance of investment securities
<PAGE>
increased by $27.3 million, or 53.5%, to $78.3 million for the nine months ended
March 31, 1999 from $51.0 million for the nine months ended March 31, 1998 as
the Bank leveraged investment purchases with FHLB advances. The average yield on
investment securities decreased to 6.54% for the nine months ended March 31,
1999 from 6.91% for the nine months ended March 31, 1998 in the generally lower
interest-rate environment.
Interest expense. Interest expense increased by $2.7 million, or 17.9%, to $18.1
million for the nine months ended March 31, 1999 from $15.3 million for the nine
months ended March 31, 1998. The increase in interest expense was primarily due
to an increase of $87.3 million, or 21.7%, in the average balance of
interest-bearing liabilities to $490.0 million for the nine months ended March
31, 1999 from $402.7 million at March 31, 1998.
Interest on deposits increased by $1.6 million, or 14.2%, to $13.0 million for
the nine months ended March 31, 1999 from $11.4 million for the nine months
ended March 31, 1998, primarily due to an increase in the average balance of
deposits. The average balance of deposits increased by $60.2 million, or 19.0%,
to $377.3 million for the nine months ended March 31, 1999 from $317.1 million
for the nine months ended March 31, 1998, primarily due to the acquisition of
GFS deposit accounts. The average interest cost of deposits decreased to 4.61%
for the nine months ended March 31, 1999 from 4.80% for the nine months ended
March 31, 1998 as rates paid on deposit accounts were lowered in response to
generally lower market rates.
Interest on FHLB advances increased by $1.1 million, or 28.5%, to $5.0 million
for the nine months ended March 31, 1999 from $3.9 million for the nine months
ended March 31, 1998. The average balance of FHLB advances increased by $27.1
million, or 31.6%, to $112.7 million for the nine months ended March 31, 1999
from $85.6 million for the nine months ended March 31, 1998 largely due to GFS
fixed-term advances acquired in March 1998. The average interest rate paid on
FHLB advances decreased to 5.95% for the nine months ended March 31, 1999 from
6.09% for the nine months ended March 31, 1998 as generally lower-rate advances
were added in the current nine-month period.
Net interest income. Net interest income increased by $1.6 million, or 15.7%, to
$11.7 million for the nine months ended March 31, 1999 from $10.1 million for
the nine months ended March 31, 1998.
Provision for Loan Losses. The Bank provided $255,000 and $240,000,
respectively, for loan losses for the nine months ended March 31, 1999 and 1998.
The general loan loss allowance acquired from GFS Bancorp totaling $801,000 was
combined with the Bank's loan loss allowance on the effective date of the
acquisition and problem assets acquired from GFS were recorded at fair value.
Noninterest income. Noninterest income increased by $2.0 million to $4.0 million
for the nine months ended March 31, 1999 from $2.0 million for the nine months
ended March 31, 1998. The increase in noninterest income was largely due to the
recognition of a $1.1 million gain on the sale of the deposits of three branch
offices. Deposits totaling $19.4 million were sold to local financial
institutions. Over 80% of the deposits sold were fixed-rate, fixed-maturity
certificates of deposits with average interest rates higher than First Federal's
weighted average interest rate paid on total deposits. The sale of these
deposits reduced the average interest rate paid on the Bank's total deposits by
approximately 10 basis points. The increase in noninterest income was also due
<PAGE>
to growth related to the acquisition of GFS in March, 1998. Income from service
charges and other fees and gain on sale of loans held for sale increased by
$643,000, or 73.8%, and $92,000, or 64.6%, respectively, for the nine months
ended March 31, 1999 when compared to the nine months ended March 31, 1998.
Service charge income increased due to an increase in transaction account
balances in 1999 and also due to the addition of a new checking product. Gain on
sale of loans held for sale increased due to increased mortgage activity as
borrowers took advantage of generally low fixed-rate financing opportunities for
both refinancing and purchases.
Noninterest expense. Noninterest expense increased by $1.9 million, or 23.6%, to
$10.0 million for the nine months ended March 31, 1999 from $8.1 million for the
nine months ended March 31, 1998. Compensation and benefit expense increased by
$798,000, or 16.9%, to $5.5 million for the nine months ended March 31, 1999
from $4.7 million for the nine months ended March 31, 1998. This increase was
largely due to the addition of GFS Bancorp staff and staff for a new
full-service office opened in May 1998. The increase in noninterest expense was
also due to an increase of $271,000, or 25.3%, in office property and equipment
expense and to an increase of $156,000, or 56.8%, in advertising expense,
partially due to the promotion of a new checking product. Other administrative
expenses increased by $349,000 over the prior year period. In addition,
amortization of intangibles increased to $258,000 for the nine months ended
March 31, 1999 from $20,000 for the nine months ended March 31, 1998 due to
amortization of the goodwill recorded in conjunction with the GFS acquisition.
Net earnings and income tax expense. Net earnings before income taxes increased
by $1.7 million, or 44.0%, to $5.4 million for the nine months ended March 31,
1999 from $3.8 million for the nine months ended March 31, 1998. Income tax
expense increased by $634,000, or 47.1%, to $2.0 million for the nine months
ended March 31, 1999 from $1.3 million for the nine months ended March 31, 1998.
The federal and state tax rate on earnings was 36.4% and 35.7%, respectively,
for the nine months ended March 31, 1999 and 1998.
YEAR 2000
The Bank has identified the systems that will be affected by the Year 2000
problem. The Bank's Year 2000 Action Team has completed the awareness and
inventory phases of Year 2000 in which potential Year 2000 risk areas and
systems have been identified; and, assessment of the Bank's Year 2000 exposures
is complete. Programming changes, system upgrades and replacements and other
actions necessary to prepare for Year 2000 were completed during the first
calendar quarter of 1999. In addition, testing and assessing the validity of
Year 2000 changes were completed during the quarter ended March 31, 1999 and
Year 2000-ready systems have been implemented.
The Bank has identified its mission-critical systems including its "core" data
processing system for loans, deposits and the general ledger. The enhancements
necessary to prepare the Bank's mission-critical systems for the year 2000 are
complete. Contingency plans are being developed for these systems on a
department-by-department basis in anticipation of the possibility of unplanned
system difficulties or failure of third parties to successfully prepare for Year
2000. Most of these plans provide for some types of manual record-keeping and
reporting procedures, and will be completed by June 30, 1999 as part of the
Bank's overall contingency planning process. The Bank anticipates that it will
incur internal staff costs as well as consulting and other expenses related to
enhancements necessary to prepare and maintain its systems for Year 2000
readiness. Based on the Bank's current estimate, fiscal 1999 expenses of the
Year 2000 project are not expected to exceed $100,000.
<PAGE>
In addition to expenses related to its own computer systems, the Bank is aware
of potential Year 2000 risks to third parties, including vendors, depositors and
borrowers and the possible adverse impact on the Bank resulting from failures by
these parties to adequately address the Year 2000 problem. The Bank has
contacted all mission-critical vendors and service providers regarding their
Year 2000 readiness. The potential risks posed by these entities have been
analyzed and periodic updates on the Year 2000 progress of currently
non-compliant vendors are being performed. To date, the Bank has not been
advised by any of these parties that they do not have plans in place to address
and correct the issues associated with the Year 2000 problem. However, no
assurance can be given as to the adequacy of such plans or to the timeliness of
their implementation.
The risk exists that some of the Bank's commercial borrowers may not be prepared
for Year 2000 and may suffer financial harm as a result. This, in turn,
represents risk to the Bank regarding the repayment of loans from those
commercial customers. The Bank surveyed its existing commercial customers with
aggregate outstanding loan balances of $250,000 or more regarding their Year
2000 preparedness. The results of this survey process were not conclusive as to
the overall level of Year 2000 risk in the Bank's commercial loan portfolio.
However, repayment sources for the majority of loans in the Bank's commercial
loan portfolio are from multi-family real estate projects that tend to be less
computer-dependent than, for example, a manufacturing business. Accordingly, the
Bank considers its commercial loan portfolio to contain a relatively low level
of Year 2000 risk. Nevertheless, the Bank has established a $75,000 reserve for
loan losses related to unforeseen Year 2000 problems of its commercial
customers. The Bank analyzes Year 2000 risk posed by prospective commercial loan
customers prior to approving their loan requests. Commercial loan customers are
asked to sign an acknowledgement demonstrating their commitment to address Year
2000 problems inherent in their operations and agreeing to provide the Bank with
specific information regarding their Year 2000 status.
The Bank is also analyzing the Year 2000 risk posed by its 50 largest commercial
depositors. To date, the analysis of the 25 largest depositors has been
completed and indicates a relatively low level of Year 2000 risk. The Bank
considers its commercial deposit portfolio to contain a relatively low level of
Year 2000 risk since the majority of its commercial depositors are
small-business customers with limited computer technology dependence in their
core business functions. The bank analyzes potential Year 2000 risk of
prospective commercial deposit customers prior to accepting their deposits.
The Bank has assigned responsibility to a committee of staff members to provide
information to customers and employees about The Bank's progress in addressing
the Year 2000 problem. The mission of the committee is to maintain customer
confidence in the Bank's ability to operate in Year 2000 and to educate
employees about its Year 2000 efforts in order to allow them to adequately
address customer concerns.
The preceding paragraphs include forward-looking statements that involve
inherent risks and uncertainties. The actual costs of Year 2000 compliance and
the impact of Year 2000 issues could differ materially from what is currently
anticipated. Factors that might result in such differences include incomplete
inventory and assessment results, higher than anticipated costs to update
software and hardware and vendors', customers' and other third parties'
inability to effectively address the Year 2000 issue.
<PAGE>
PART II. OTHER INFORMATION
Legal Proceedings.
There are various claims and lawsuits in which the Registrant is periodically
involved incidental to the Registrant's business. In the opinion of management,
no material loss is expected from any of such pending claims or
lawsuits.
Submission of Matters to a Vote of Security Holders.
A special meeting of members of First Federal Bankshares, M.H.C. and a
special meeting of the stockholders of First Federal Savings Bank of Siouxland
were held on March 26, 1999. At the meetings, both the members and the
stockholders voted on the following proposal:
Ballot No. 1.
- -------------
The approval of a Plan of Conversion and Reorganization (the "Plan") pursuant to
which (i) the Bank will organize First Federal Bankshares, Inc. as a first-tier
Delaware-chartered subsidiary; (ii) the Company will organize an interim federal
savings association ("Interim") as a wholly owned subsidiary; (iii) the Mutual
Holding Company will convert into an interim federal stock savings association
and will simultaneously merge with and into the Bank with the Bank as the
resulting entity and with shares of Bank Common Stock held by the Mutual Holding
Company being canceled and each eligible account holder of the Bank receiving an
interest in the liquidation account of the Bank in exchange for such
individual's interest in the Mutual Holding Company; (iv) Interim will merge
with and into the Bank (the "Bank Merger") with the Bank as the resulting
entity, with the public stockholders of the Bank ("Minority Stockholders")
receiving common stock of the Company in exchange for the publicly-owned shares
of the Bank ("Minority Shares"), based on the Exchange Ratio; (v) all of the
shares of common stock of Interim held by the Company will be converted into
shares of common stock of the Bank; and, (vi) contemporaneously with the Bank
Merger, the Company will offer for sale in the offering shares of common stock
in a subscription and, if necessary, community offering.
The results of the voting on Ballot No. 1 were as follows:
Votes Votes
In favor Against
-------- -------
Meeting of members
First Federal Bankshares, M.H.C. 2,176,777 133,192
Percentage of votes cast 94.23% 5.77%
Percentage of votes eligible to be cast 63.48% 3.88%
Meeting of stockholders
First Federal Savings Bank of Siouxland,
including votes and
proxies of the
Mutual Holding Company 2,249,825 88,886
Percentage of eligible votes 78.98% 3.12%
<PAGE>
Meeting of stockholders
First Federal Savings Bank of Siouxland,
excluding votes and
proxies of the
Mutual Holding Company 725,225 88,886
Percentage of eligible votes 54.78% 6.71%
The proposal, having received the favorable votes of at least a majority of the
total votes eligible to be cast at the Members meeting was declared duly
approved by the Members. In addition, the proposal, having received the
favorable votes of at least two-thirds of the Bank's stockholders, including at
least a majority of the shares held by Minority Stockholders, was declared duly
approved by the stockholders of the Bank.
Exhibits and Reports on Form 8-K.
(a) Exhibits
27 - Financial Data Schedule
(b) Reports of Form 8-K
On April 29, 1999 the Registrant filed a current report on Form 8-K relating
to the Bank's acquisition of Mid-Iowa Financial Corp. and the conversion of
the former mutual holding company of the Bank to a capital stock corporation
resulting in the organization of the Registrant, First Federal Bankshares,
Inc.
<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.
FIRST FEDERAL BANKSHARES, INC.
DATE: May 12, 1999 BY: /s/Barry E. Backhaus
--------------------
Barry E. Backhaus
President and
Chief Executive Officer
DATE: May 12, 1999 BY: /s/Katherine Bousquet
---------------------
Katherine Bousquet
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> MAR-31-1999
<CASH> 9,473,490
<INT-BEARING-DEPOSITS> 18,700,000
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 81,584,860
<INVESTMENTS-CARRYING> 25,471,429
<INVESTMENTS-MARKET> 25,816,834
<LOANS> 393,908,986
<ALLOWANCE> 2,729,910
<TOTAL-ASSETS> 560,351,333
<DEPOSITS> 400,493,233
<SHORT-TERM> 11,296,581
<LIABILITIES-OTHER> 8,734,136
<LONG-TERM> 95,500,818
0
0
<COMMON> 2,850,113
<OTHER-SE> 41,476,452
<TOTAL-LIABILITIES-AND-EQUITY> 560,351,333
<INTEREST-LOAN> 24,044,530
<INTEREST-INVEST> 5,527,153
<INTEREST-OTHER> 152,805
<INTEREST-TOTAL> 29,724,488
<INTEREST-DEPOSIT> 13,037,947
<INTEREST-EXPENSE> 18,068,297
<INTEREST-INCOME-NET> 11,656,191
<LOAN-LOSSES> 255,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 10,001,518
<INCOME-PRETAX> 5,440,792
<INCOME-PRE-EXTRAORDINARY> 3,458,713
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,458,713
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.20
<YIELD-ACTUAL> 2.99
<LOANS-NON> 1,031,000
<LOANS-PAST> 332,000
<LOANS-TROUBLED> 444,101
<LOANS-PROBLEM> 76,407
<ALLOWANCE-OPEN> 2,607,167
<CHARGE-OFFS> 199,192
<RECOVERIES> 66,934
<ALLOWANCE-CLOSE> 2,729,910
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