UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------------------
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 September 30, 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 0-29655
Alamogordo Financial Corporation
--------------------------------
(Exact name of small business issuer as specified in its charter)
United States of America 74-2819148
-------------------------------------- -----------------------------------
(State or other jurisdiction (IRS Employer Identification Number)
of incorporation or organization)
500 10th Street, Alamogordo, New Mexico 88310
---------------------------------------------
(Address of principal executive offices)
(505) 437-9334
--------------
Issuer's telephone number
-----------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
APPLICABLE ONLY TO CORPORATE ISSUERS:
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: 1,275,000 shares of common
stock par value $.10 per share.
Transitional Small Business Disclosure Format (check one): Yes / / No /x/
<PAGE>
ALAMOGORDO FINANCIAL CORPORATION
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of
September 30, 2000 and June 30, 2000.............................1
Consolidated Statements of Income for the
three months ended
September 30, 2000 and 1999......................................2
Consolidated Statements of Changes in Equity
for the three months ended
September 30, 2000...............................................3
Consolidated Statements of Cash Flows for the
three months ended
September 30, 2000 and 1999......................................4
Notes to Unaudited Consolidated Financial Statements...............5
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations................................................7
PART II. OTHER INFORMATION..................................................9
ii
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Alamogordo Financial Corporation
Consolidated Balance Sheets at
September 30, 2000 and June 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
At At
September 30, 2000 June 30, 2000
------------------ ---------------
(Dollars in thousands)
ASSETS
<S> <C> <C>
Cash and cash equivalents................................. $ 3,128 $ 3,159
Securities:
Available for sale.................................. 15,520 15,468
Held to maturity.................................... 1,413 1,837
Loans, net................................................ 115,255 116,782
Real estate owned, net.................................... 30 52
Premises and equipment, net............................... 8,407 8,492
Stock in Federal Home Loan Bank, at cost.................. 1,459 1,435
Accrued interest.......................................... 694 912
Deferred income taxes .................................... -- 27
Other assets.............................................. 230 230
----------- -----------
Total assets.......................................... $ 146,136 $ 148,394
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits.................................................. $ 113,334 $ 116,298
Escrows................................................... 1,292 1,035
Accrued interest and other liabilities.................... 310 227
Deferred income taxes..................................... 38 --
Advances from Federal Home Loan Bank...................... 5,000 5,000
Income taxes payable...................................... 88 20
----------- -----------
Total liabilities...................................... 120,062 122,580
----------- -----------
STOCKHOLDERS' EQUITY
Common Stock, $.10 par value ,10,000,000 shares
authorized, 1,275,000 shares outstanding.................. 128 128
Additional paid-in capital................................ 2,857 2,857
Retained earnings, substantially restricted............... 23,650 23,506
Unearned ESOP shares...................................... (250) (257)
Accumulated other comprehensive loss...................... (311) (420)
------------ ------------
Total stockholders' equity............................ 26,074 25,814
----------- -----------
Total liabilities and stockholders' equity................ $ 146,136 $ 148,394
=========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
Alamogordo Financial Corporation
Consolidated Statements of Income
For the three months ended
September 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
2000 1999
---- ----
(In thousands, except per share data)
Interest income:
<S> <C> <C>
Interest and fees on loans......................... $ 2,265 $ 2,289
Interest on securities............................. 210 227
Interest on mortgage-backed securities............. 40 45
Interest on other interest earning assets.......... 49 73
----------- ------------
Total interest income............................. 2,564 2,634
Interest expense:
Interest on deposits............................... 1,555 1,531
Interest on FHLB and other borrowings.............. 96 123
----------- ------------
Total interest expense ........................... 1,651 1,654
----------- ------------
Net interest income.............................. 913 980
Provision for loan losses............................ -- --
----------- ------------
---------
Net interest income, after provision for loan losses 913 980
----------- ------------
Other income (loss)
Service charges and fees........................... 67 47
Gain on sale of premises and equipment............. -- 29
Other ............................................ 32 32
----------- ------------
Total other income................................ 99 108
----------- ------------
Other expenses
Salaries and benefits.............................. 332 318
Occupancy ......................................... 182 179
Data processing fees............................... 67 64
Federal insurance premiums and other insurance
expense.......................................... 17 29
Advertising ....................................... 15 26
Other ............................................ 159 149
----------- ------------
Total other expenses.............................. 772 765
----------- ------------
Income before income taxes........................ 240 323
----------- ------------
Provision for income taxes........................... 96 94
----------- ------------
Net income........................................ $ 144 $ 229
=========== ============
Basic and diluted earnings per common share (Note 5). $ .12
==========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
Alamogordo Financial Corporation
Consolidated Statement of Changes in Equity
Three Months ended September 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Accumulated
Additional Unearned Other
Common Paid-In Retained ESOP Comprehensive Total
Stock Capital Earnings Shares Income Equity
(In Thousands)
<S> <C> <C> <C> <C> <C> <C>
Balances at June 30, 2000 $ 128 $ 2,857 $ 23,506 $ (257) $ (420) $ 25,814
ESOP Stock note payment -- -- -- 7 -- 7
Comprehensive income
Net income.................. -- -- 144 -- -- 144
Other comprehensive income, net of tax:
Change in unrealized loss on securities
available for sale, net of deferred
income tax benefit of $ 73.......... -- -- -- -- 109 109
--------
Total comprehensive income...... 253
----- ----- ----- ----- ----- ---------
Balances at September 30, 2000..... $128 $ 2,857 $ 23,650 $ (250) $ (311) $ 26,074
===== ======== ========= ===== ===== ========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
Alamogordo Financial Corporation
Consolidated Statements of Cash Flows
Three months ended September 30, 2000 and 1999
(Unaudited)
<TABLE>
<CAPTION>
Three months ended September 30,
2000 1999
-------- --------
(in thousands)
Cash flows from operating activities:
<S> <C> <C>
Net income................................................................... $ 144 $ 229
Adjustments to reconcile net income to net cash provided by
operating activities
Depreciation and amortization............................................. 91 93
Net amortization of premiums and accretion of discounts on securities..... 5 7
Gain on sales of premises and equipment................................... -- (29)
Decrease in provision for loan losses..................................... -- (6)
Decrease in accrued interest................................................. 218 270
Increase in other assets..................................................... -- (74)
Increase in accrued interest and other liabilities........................... 83 28
Increase (decrease) in deferred income taxes................................. 65 (37)
Increase in income taxes payable............................................. 68 95
-------- -------
Net cash provided by operating activities................................. 674 576
Cash flows from investing activities:
Proceeds from maturities of securities available-for-sale.................... 53 961
Proceeds from maturities of securities held-to-maturity...................... 423 1,277
Purchases of FHLB stock...................................................... (24) (19)
Net (increase) decrease in loans............................................. 1,527 (1,288)
Proceeds from sales of premises and equipment................................ -- 74
Purchases of premises and equipment.......................................... (6) (50)
Net proceeds from sales/claims of real estate owned.......................... 22 103
-------- -------
Net cash provided by investing activities................................ 1,995 1,058
Cash flows from financing activities:
Net decrease in deposits..................................................... (2,964) (49)
Net increase in escrows...................................................... 257 297
ESOP stock note payment...................................................... 7 --
-------- -------
Net cash provided by (used in) financing activities....................... $ (2,700) $ 248
======== =======
Net increase (decrease) in cash and cash equivalents............................ $ (31) $ 1,882
Cash and cash equivalents, beginning of year.................................... 3,159 8,472
-------- -------
Cash and cash equivalents, end of year.......................................... $ 3,128 $10,354
======== =======
Noncash investing and financing activities:
Transfers of loans to real estate owned...................................... $ -- $ 158
Supplemental disclosures of cash flow information:
Income taxes paid............................................................ $ 36 $ --
Interestexpense.............................................................. 1,662 1,676
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
1. Basis of Presentation
The accompanying consolidated financial statements include the accounts of
Alamogordo Financial Corporation (the "Company"), its wholly owned subsidiary,
Alamogordo Federal Savings and Loan Association (the "Bank"), and Space Age City
Service Corporation, a wholly owned subsidiary of the Bank. The financial
statements included herein have been prepared by the Company without audit. In
the opinion of management, the unaudited financial statements include all
adjustments, consisting of normal recurring accruals, necessary for a fair
presentation of the financial position and results of operations for the periods
presented. Certain information and footnote disclosures normally included in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. Alamogordo Financial believes that the disclosures are adequate to
make the information presented not misleading; however, the results for the
quarter ended September 30, 2000 are not necessarily indicative of results to be
expected for the entire fiscal year ending June 30, 2001.
The interim unaudited financial statements presented herein should be read
in conjunction with the annual audited financial statements of Alamogordo
Financial for the fiscal year ended June 30, 2000,included in the Company's 2000
Annual Report.
2. Reclassification of Prior Year's Statements
Certain amounts in the 1999 financial statements have been reclassified to
conform to the 2000 presentation.
3. Allowance for Loan Losses
The allowance for loan losses is established through provisions for losses
charged to earnings. Loan losses are charged against the allowance when
management believes that the collection of principal is unlikely. Recoveries of
loans previously charged-off are credited to the allowance when realized.
The allowance for loan losses is an amount that management believes will be
adequate to absorb probable losses on existing loans that may become
uncollectible, based on evaluations of the collectibility of the loans.
Management's evaluations, which are subject to periodic review by the Bank's
regulators, tinto consideration such factors as the Bank's past loan loss
experience, changes in the nature and volume of the loan portfolio, overall
portfolio quality, review of specific problem loans and collateral values, and
current economic conditions that may affect the borrowers' ability to pay.
Future adjustments to the allowance for loan losses may be necessary based on
changes in economic and real estate market conditions, further information
obtained regarding known problem loans, regulatory examinations, the
identification of additional problem loans, and other factors. Activity in the
allowance for loan losses for the periods indicated is summarized as follows:
5
<PAGE>
Three Months Ended
September 30,
2000 1999
------------- ----------
(In Thousands)
Balance at beginning of period....... $ 419 $ 472
Provision for loan losses............ -- --
Charge-offs.......................... -- (6)
Recoveries........................... -- 1
--------- ---------
Balance at end of period............. $ 419 $ 467
========= =========
4. Comprehensive Income
Alamogordo Financial has adopted Statement of Financial Accounting
Standards ("SFAS") No. 130, "Reporting Comprehensive Income", which establishes
standards for reporting and display of comprehensive income and its components
(revenues, expenses, gains and losses). In accordance with the provisions of
SFAS No. 130, Alamogordo Financial's total comprehensive income was $253 and
$192 for the three months ended September 30, 2000 and 1999, respectively. The
difference between Alamogordo Financial's net iand total comprehensive income
for these periods equals the change in the after-tax net unrealized gain or loss
on securities available for sale during the applicable periods. Accumulated
other comprehensive loss in the consolidated statements of financial condition
represents the after-tax net unrealized loss on securities available for sale as
of September 30, 2000 and June 30, 2000.
5. Earnings Per Common Share
The Company completed a public stock offering on May 16, 2000, issuing an
additional 1,274,900 shares of its $.10 par value common stock. As a result,
earnings per share ("EPS") data is presented herein only for periods subsequent
to that date. EPS of $.12 is calculated based on the net income for the three
months ended September 30, 2000 divided by the number of shares outstanding at
September 30, 2000 of 1,250,010 (1,275,000 less 24,990 shares held in trust for
the ESOP Plan).
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
This discussion and analysis reflects Alamogordo Financial's consolidated
financial statements and other relevant statistical data and is intended to
enhance your understanding of our financial condition and results of operations.
You should read the information in this section in conjunction with Alamogordo
Financial's consolidated financial statements and their notes and t the other
statistical data provided in this Form 10-QSB. This 10-QSB contains certain
"forward-looking statements" which may be identified by the use of such words as
"believe," "expect," "anticipate," "should," "planned," "estimated" and
"potential." Examples of forward-looking statements include, but are not limited
to, estimates with respect to our financial condition, results of operations and
business that are subject to various factors which could cause actual results to
differ materially from these estimates and most other statements that are not
historical in nature. These factors include, but are not limited to, general and
local economic conditions, changes in interest rates, deposit flows, demand for
mortgage and other loans, real estate values, and competition; changes in
accounting principles, policies, or guidelines; changes in legislation or
regulation; and other economic, competitive, governmental, regulatory, and
technological factors affecting our operations, pricing, products and services.
Comparison of Financial Condition at September 30, 2000 and June 30, 2000
Alamogordo Financial's total assets decreased by $2.3 million, or 1.5%, to
$146.1 million at September 30, 2000, from $148.4 million at June 30, 2000. The
decrease resulted primarily from a decrease in securities and loans receivable.
Securities, including mortgage-backed securities, decreased by $372,000, or
2.1%, to $16.9 million from $17.3 million as a result of maturities and
repayments, partially offset by a decrease in the allowance for decline in value
for securities available for sale. Loans receivable decreased by $1.5 million,
or 1.3%, to $115.3 million from $116.8 million as a result of principal
repayments and loan payoffs surpassing new loan originations.
Total deposits decreased by $3.0 million or 2.6%, to $113.3 million at
September 30, 2000 from $116.3 million at June 30, 2000. The decrease resulted
primarily from a $2.4 million, or 2.5%, decrease in certificate accounts to
$95.0 million from $97.4 million, and a $335,000, or 16.8%, decrease in
non-inte- bearing deposits to $1.7 million from $2.0 million. The decrease in
certificate accounts resulted from a decrease in public funds and maturities.
Total borrowings, including advances from Federal Home Loan Bank, remained
steady at $5.0 million.
Equity increased by $260,000, or 1.0%, to $26.1 million from $25.8 million
primarily due to earnings over the period and a $109,000 increase in accumulated
other comprehensive income related to unrealized losses on securities available
for sale. As of September 30, 2000, Alamogordo Federal had $23.9 mof tangible
capital or 16.3% of tangible assets, $23.9 million of core capital or 16.3% of
total adjusted assets, and $24.3 million of risk-based capital or 33.1% of
risk-weighted assets.
Comparison of Operating Results for the Three Months Ended September 30, 2000
and 1999
General. Net income decreased by $85,000, or 37.1%, to $144,000 for the
three months ended September 30, 2000, from $229,000 for the three months ended
September 30, 1999. The decrease resulted from a decrease in net interest income
and other income and an increase in other expenses.
Interest Income. Interest income decreased by $70,000, or 2.7%, to $2.6
million for the three months ended September 30, 2000 from $2.6 million for
three months ended September 30, 1999. Interest and fees
7
<PAGE>
on loans receivable remained stable at $2.3 million, and a $600,000, or .5%,
decrease in the average balance of loans receivable to $116.0 million from
$116.6 million was accompanied by a 4 basis point decrease in the average yield
on the loan portfolio to 7.81% from 7.85%. Interest on securities, including
mortga securities and other interest-earning assets, decreased by $46,000, or
13.3%, to $299,000 from $345,000. This decrease resulted from a $1.9 million, or
10.1%, decrease in the average balance of securities due to maturities and
repayment of principal, the effects of which were partially offset by a 13 basis
point increase in the average yield on securities, and a $2.5 million decrease
in the average balance of other interest-earning assets, the effects of which
were partially offset by an increase in the average yield of 297 basis points.
Interest Expense. Interest expense on deposits increased by $24,000, or
1.6%, to $1.6 million fthe three months ended September 30, 2000 from $1.5
million for the three months ended September 30, 1999. Interest expense on
transaction and savings accounts increased to $131,000 from $96,000, as the
average cost increased 106 basis points to 3.15% from 2.09%, and was partially
offset by a $1.7 million decrease in the average balance of transaction and
savings accounts from $18.4 million to $16.7 million. The increase in the
average cost is a result of a general increase in shorter-term market rates of
interest. Interest expense on certificate accounts remained stable at $1.4.
million, as a decrease in the average balance of certificate accounts of $5.6
million from $100.6 million to $95.0 million was offset by an increase in the
average cost to 6.00% from 5.71%. Interest expense on borrowings decreased by
$27,000, to $96,000 from $123,000, as the average cost increased by 182 basis
points to 6.74% from 4.92%, the effects of which were partially offset by a $4.3
million decrease in the average balance to $5.7 million from $10.0 million.
Net Interest Income. Net interest income decreased by $67,000 or 6.8%, to
$913,000 for the three months ended September 30, 2000 from $980,000 for the
three months ended September 30, 1999. Net interest rate spread, the difference
between the yield on average total interest-earning assets and the cost of
average total interest-bearing liabilities, decreased by 42 basis points to
1.96% from 2.38%.
Provision for Loan Losses. We establish provisions for loan losses, which
are charged to operations, in order to maintain the allowance for loan losses at
a level that we believe is appropriate to absorb future charge-offs of loans
deemed uncollectible. In determining the appropriate level of the allowance for
llosses, management considers loss experience, evaluations of real estate
collateral, economic conditions, vand type of lending the levels of
nonperforming and other classified loans. Based on our evaluation of these
factors, and based on loan allowance recoveries of $1,000 and charge-offs of
$6,000 for the three months ended September 30, 1999, we made no provision for
loan losses. The allowance for loan losses was $419,000, or 53.9% of total
nonperforming loans at September 30, 2000, and $419,000, or 58.7% of total
nonperforming loans at June 30, 2000. The amount of the allowance is based on
estimates and the ultimate losses may vary from such estimates. Management
assesses the allowance for loan losses on a quarterly basis and make provisions
for loan losses as necessary in order to maintain the adequacy of the allowance.
While management uses available information to recognize losses on loans, future
loan loss provisions may be necessary based on changes in economic conditions.
In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the allowance for loan losses and may
require us to recognize additional provisions based on their judgment of
information available to them at the time of their examination. Management
believes that the allowance for loan losses at September 30, 2000 and June 30,
2000 was adequate.
Other Income. Total other income includes service charges and fees, gain on
sale of premises and equipment, and other. Total other income decreased by
$9,000, or 8.3%, to $99,000 from $108,000. Service charges and fees increased by
$20,000 primarily due to deposit account service charges. Gain on sale of
premises and equipment totaled $29,000 for the three months ended September 30,
1999 as compared to no gain for the current period as the result of a sale of
land.
8
<PAGE>
Other Expense. Total other expense increased by $7,000, or .9%, to $772,000
for the three months ended September 30, 2000 from $765,000 for the three months
ended September 30, 1999. Salaries and benefits expense increased by $14,000,
primarily due to a $13,000 decrease in the deferral of loan origination costs,
as new loan originations decreased during the current period. A $12,000 decrease
in federal insurance premiums and other insurance expense resulted as the
Federal Deposit Insurance Corporation ("FDIC") assessment rate for Savings
Association Insurance Fund ("SAIF") insured institutions was lowered effective
January 1, 2000. In aggregate, other expense decreased by $20,000, pursuant to
an expense sharing agreement entered into between the Company and AF Mutual
Holding Company. The Company is a majority owned subsidiary of AF Mutual Holding
Company.
Provision for Income Taxes. The provision for income taxes increased to
$96, or 40.0% of net income before income taxes, from $94,000, or 29.1% of net
income before income taxes. The increase in the provision and the effective tax
rate resulted from the payment of income taxes with the filing of the June 30,
2000 tax returns. The increase in the effective tax rate also resulted from a
decrease in income from tax-exempt securities and other changes in deferred tax
items.
Liquidity
Alamogordo Federal 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. Alamogordo
Federal's liquidity ratio averaged 11.47% during the quarter ended September 30,
2000, and was 11.75% at September 30, 2000.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
There are various claims and lawsuits in which Alamogordo Financial is
periodically involved incidental to its business. In the opinion of management,
no material loss is expected from any of such pending claims or lawsuits.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
(a) Changes in Securities.
Not applicable.
(b) Use of proceeds.
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
9
<PAGE>
ITEM 5. OTHER INFORMATION
Dividends on Common Stock
On October 19, 2000, the Company declared a quarterly cash dividend of
$.105 per share. The dividends are payable to stockholders of record
as of November 1, 2000, and will be paid on November 10, 2000. AF
Mutual Holding Company, which owns 918,000 shares of stock in the
Company, waived receipt of $.0725 per share of its quarterly dividend,
thereby reducing the actual dividend payout to $67,320.
ITEM 6. EXHIBITS AND REPORT ON FORM 8-K.
None.
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.
Alamogordo Financial Corporation
Date: November 10, 2000 By: /s/ R. Miles Ledgerwood
----------------------------------
R. Miles Ledgerwood
President and Chief Executive Officer
Date: November 10, 2000 By: /s/ Norma J. Clute
----------------------------------
Norma J. Clute
CFO and Treasurer
10
