PROSPECTUS SUPPLEMENT
ALAMOGORDO FINANCIAL CORPORATION
Up to 472,133 Shares of Common Stock
================================================================================
Alamogordo Financial Corporation, the holding company for Alamogordo Federal
Savings and Loan Association, is offering shares of its common stock for a
purchase price of $10.00 per share. Alamogordo Financial Corporation is the
wholly-owned subsidiary of AF Mutual Holding Company. The shares we are offering
will represent 28.0% of the shares of common stock outstanding after the
offering. AF Mutual Holding Company will own 72.0% of our shares outstanding
after the offering. We expect that Alamogordo Financial's common stock will be
quoted on the OTC Bulletin Board under the symbol "ALMO."
Alamogordo Financial originally offered shares of its common stock in a
prospectus dated February 11, 2000. This prospectus supplement describes
material changes to the terms of the stock offering and updates the pro forma
financial information as of, and for the fiscal quarter ended, December 31,
1999. You should read this prospectus supplement along with the prospectus dated
February 11, 2000.
If you subscribed for shares of our common stock, this prospectus supplement
describes how you may maintain, increase, decrease or cancel your order. If you
subscribed for shares, and you do not return a completed and signed supplemental
order form to either office of Alamogordo Federal by 4:30 p.m., local time, on
May 4, 2000, your original order will be automatically canceled and your funds
will be returned promptly with interest or your withdrawal authorization will be
terminated.
================================================================================
TERMS OF THE OFFERING
Price: $10.00 Per Share
Adjusted
Minimum Maximum Maximum
----------- ----------- -----------
Number of shares ............... 303,450 410,550 472,133
Underwriting commissions
and fixed expenses ............ $ 650,000 $ 650,000 $ 650,000
Net proceeds ................... $ 2,385,000 $ 3,455,500 $ 4,071,330
Net proceeds per share ......... $ 7.86 $ 8.42 $ 8.62
The Adjusted Maximum column reflects that we may increase the maximum
number of shares that we may sell to up to 472,133 shares. We will not
sell more than 410,550 shares unless the Office of Thrift Supervision
approves the increase. Subscribers are not required to be notified
of any increase in the number of shares that we sell.
-------------------
This investment involves a high degree of risk,
including possible loss of principal.
PLEASE READ THE RISK FACTORS BEGINNING ON PAGE 12 OF THE PROSPECTUS DATED
FEBRUARY 11, 2000 AND PAGE 7 OF THIS PROSPECTUS SUPPLEMENT
These securities are not deposits or accounts and are not insured or guaranteed
by the Federal Deposit Insurance Corporation or any other governmental agency.
Neither the Securities and Exchange Commission, the Office of Thrift
Supervision, the Federal Deposit Insurance Corporation, nor any state securities
regulator has approved or disapproved these securities or determined if this
prospectus is accurate or complete. It is illegal for anyone to tell you
otherwise.
We are offering the common stock on a best efforts basis, and subject to certain
other conditions. The minimum number of shares that you may purchase is 25
shares. Payments received prior to closing will be held in an account at
Alamogordo Federal Savings and Loan Association which will bear interest at
Alamogordo Federal Savings and Loan Association's passbook rate.
------------------
KEEFE, BRUYETTE & WOODS, INC.
------------------
The date of this prospectus supplement is April 11, 2000
<PAGE>
TABLE OF CONTENTS
Page
----
THE EXTENDED OFFERING .................................................... 3
ADDITIONAL RISK FACTOR ................................................... 7
ADDITIONAL INFORMATION ................................................... 7
ALAMOGORDO FEDERAL'S REGULATORY CAPITAL COMPLIANCE ....................... 8
ALAMOGORDO FINANCIAL'S CAPITALIZATION .................................... 9
PRO FORMA DATA ........................................................... 10
QUARTERLY REPORT ON FORM 10-QSB FOR QUARTER ENDED DECEMBER 31, 1999 ...... Q-1
2
<PAGE>
THE EXTENDED OFFERING
Summary
From February 11, 2000, to March 15, 2000, Alamogordo Financial offered for
sale to its customers and others, between 624,750 and 972,038 shares of its
common stock for $10.00 per share. Alamogordo Financial was not able to complete
the offering because it received orders to purchase only 230,000 shares
(excluding the order placed by Alamogordo Federal's Employee Stock Ownership
Plan), which is less than the minimum necessary to complete the offering.
Because it did not receive orders for the minimum number of shares offered,
Alamogordo Financial is extending the offering period, and amending some of the
terms of the offering. The purpose of this prospectus supplement is to describe
these changes.
In addition, this prospectus supplement will give you information about
ordering stock. If you ordered stock during the original offering period, the
prospectus supplement will describe how you can modify or cancel your original
order. If you did not order stock during the original offering period, this
prospectus supplement will describe how you may do so now.
The following information describes certain material changes to the terms
of the offering described in the prospectus dated February 11, 2000. You should
read the February 11 prospectus along with this prospectus supplement, as this
supplement includes only information that has changed, and in most cases does
not repeat information that has not materially changed.
Change to the Independent Valuation
As described in the February 11 prospectus, RP Financial advised Alamogordo
Financial that in its opinion, dated January 21, 2000, the estimated pro forma
market value of the common stock of Alamogordo Financial on a fully converted
basis, ranged from a minimum of $12.75 million to a maximum of $17.25 million
with a midpoint of $15.0 million. RP Financial has updated its valuation, and
has considered the following noteworthy items:
o an updated comparison of Alamogordo Financial's financial condition
and operating results versus a peer group of companies,
o a review of stock market conditions since January 21, 2000, and
o the results of Alamogordo Financial's offering at the end of the
offering period on March 15, 2000.
Based on the items described above, along with the factors considered in
its January 21, 2000, valuation report, RP has advised Alamogordo Financial that
in its opinion, dated March 17, 2000, the estimated pro forma market value of
the common stock of Alamogordo Financial on a fully converted basis, ranged from
a minimum of $10.8 million to a maximum of $15.0 million with a midpoint of
$12.75 million. This represents a 15% decrease from the January 21, 2000
valuation.
A lower valuation will mean that there will be fewer shares of our common
stock outstanding after the offering. As a result, each share sold in the
offering will represent a larger percentage of our total outstanding shares.
Please note, however, that the current midpoint of the appraised value range is
equal to the minimum of the January 21, 2000 appraised value range. As a result,
a final valuation that exceeds the midpoint of the appraised value range, will
also exceed the minimum of the January 21, 2000 appraised value range. We cannot
assure you that the final valuation will be lower than the January 21, 2000
appraised value range. In addition, we cannot assure you that the updated
appraisal reflects the actual market value of Alamogordo Financial, or that you
will be able to sell shares of common stock for $10.00 or more.
Change in the Percentage of Our Shares that We Will Sell in the Offering
We are offering fewer shares in the offering. Fewer shares will be offered
because of the change in the independent valuation that we previously described,
and also because we are offering a smaller percentage of our to-be outstanding
shares in the offering. Rather than selling 49.0% of our to-be outstanding
shares in the offering and issuing 51.0% to AF Mutual Holding Company, we have
decided to sell 28.0% of our to-be outstanding shares in the offering, and issue
72.0% to AF Mutual Holding Company. As a result of the decrease in the
percentage of to-be outstanding shares that will be sold in the offering, and
the decrease in the updated valuation, the minimum number of shares that must be
sold in order for the offering to be successfully completed has been lowered to
303,450 shares from 624,750 shares. Alamogordo Financial has affirmed its
decision that the common stock will be sold at $10.00 per share.
3
<PAGE>
As a result of changes in financial markets, the maximum of the appraised
value range, and the number of shares we sell in the offering and issue to AF
Mutual Holding Company, may increase by up to 15%. If we increase the number of
shares by 15%, we will still sell 28.0% of the shares in the offering and issue
72.0% to AF Mutual Holding Company. If we increase the number of shares we issue
by 15%, we will sell 472,133 shares in the offering, we will issue 1,214,155
shares to AF Mutual Holding Company, and we will have a total of 1,686,187
shares outstanding after the offering. If we increase the number of shares we
issue by no more than 15%, you will not have the opportunity to change or cancel
your stock order.
Change in Our Policy Regarding Dividends
Our board of directors has decided to increase the dividend that Alamogordo
Financial will pay, and currently intends to pay quarterly cash dividends of
between $.075 and $.125 per share, which is an annual rate of between 3.0% and
5.0%, based on the $10.00 per share offering price. The payment of dividends
will depend upon a number of factors, including the following:
o capital requirements,
o Alamogordo Financial's and Alamogordo Federal's financial condition
and results of operations,
o tax considerations,
o statutory and regulatory limitations, and
o general economic conditions.
Although we intend to do so, we do not guaranty that we will in fact pay
dividends or that if we do pay a dividend that it will not be lower than the
amount stated above.
Procedures to Modify or Maintain Your Orders
We are giving all persons who submitted orders in the stock offering the
opportunity to maintain their original orders, to increase or decrease the
number of shares for which they subscribed, or to cancel their original order.
If you ordered stock on or prior to March 15, 2000, regardless of the amount you
ordered, you may now choose to:
o maintain your original order for the number of shares indicated on
your previously submitted stock order form;
o increase the number of shares for which you subscribed, subject to the
maximum purchase limitations;
o decrease the number of shares for which you subscribed, with any
excess payment to be refunded promptly or any excess authorization for
withdrawal to be canceled promptly; or
o cancel your order in its entirety, with any payment to be refunded,
with interest, and any authorization for withdrawal to be canceled
promptly.
To maintain, increase, decrease or cancel your original order, you must
return a completed and signed supplemental order form to either office of
Alamogordo Federal by 4:30 p.m., local time, on May 4, 2000. After Alamogordo
Federal receives your supplemental order form you may not modify or rescind it
without Alamogordo Federal's consent unless the offering is further extended
beyond May 4, 2000. If Alamogordo Federal does not receive your completed
supplemental order form on or before May 4, 2000, your original order will be
automatically canceled and your funds will be returned promptly with interest or
your withdrawal authorization will be terminated.
If you wish to maintain your original order, you must indicate your
intention on the supplemental order form and return it to Alamogordo Federal. If
you wish to increase your order you may do so by returning the supplemental
order form along with full payment or with a withdrawal authorization from a
deposit account at Alamogordo Federal for the amount of additional shares
ordered. If you wish to decrease or cancel your order you may do so by returning
the supplemental order form marked accordingly, and you will receive a prompt
refund with interest, or a reduction in the amount of your withdrawal
authorization, as applicable, for all or part of your original order.
4
<PAGE>
If an original stock order form contained more than one signature, the
supplemental order form should be signed by all persons who signed the original
stock order form. Alamogordo Financial reserves the right to treat the
supplemental order form as invalid if it is not signed by all persons who signed
the original stock order form.
Procedures to Submit New Orders
Persons who have not subscribed for common stock as of the date of this
prospectus supplement may also be offered the opportunity to subscribe for
common stock. Because all subscription rights terminated on March 15, 2000, any
qualifying depositor who submits an order for the first time after March 15,
2000 will be deemed to be a participant in the community offering.
If you wish to purchase shares, you must submit, by mail, by overnight
courier or by hand delivering to either of our offices, a properly completed
stock order form and certification, together with payment for the shares. We
must receive your stock order form and certification, along with your payment,
by 4:30 p.m., local time, on May 4, 2000, unless we extend this deadline.
Changes in Limits on Your Purchase of Common Stock
We have not changed the purchase limitations in the offering. Your orders
for common stock will be limited in the following ways:
o the minimum order is 25 shares;
o the maximum amount that an individual may purchase is $150,000;
o the total amount that an individual with his or her associates may
purchase is $200,000 (although this amount may be decreased in certain
circumstances); and
o if we receive orders for a greater number of shares than we are
offering, then we will allocate the shares that we issue as described
in "The Stock Offering--Limitations on Stock Purchases" in the
February 11 prospectus. As a result, you may receive a smaller number
of shares than you ordered.
For additional information on these purchase limitations see "The Stock
Offering--Limitations on Stock Purchases" in the February 11 prospectus.
How You May Pay for Shares
We have not changed how you may pay for your shares. You may only pay for
your shares by:
o personal check, official bank check or money order; or
o authorizing us to withdraw money from your deposit accounts maintained
with Alamogordo Federal.
Interest will continue to be paid on subscriptions made by personal check,
official bank check or money order. If you authorize or previously authorized
Alamogordo Financial to withdraw subscription funds from your deposit account at
Alamogordo Federal, we will do so when the offering is completed. The funds that
you authorize to be withdrawn will continue to earn interest based on the terms
that you agreed to when you opened the account. You will not be able to use
these funds until the stock offering is completed or terminated. If you
subscribe by submitting a personal check, official bank check or money order,
your funds will be held in an account at Alamogordo Federal until the stock
offering is completed, and Alamogordo Federal will pay you interest at its
current passbook rate. If you subscribe by submitting a personal check, official
bank check or money order and the stock offering is not completed, we will send
you a refund check that will include interest. If you subscribe by authorizing
Alamogordo Financial to withdraw funds from your deposit account and the stock
offering is not completed, then we will cancel the withdrawal authorization.
5
<PAGE>
How We Intend to Use the Proceeds We Raise from the Offering
Alamogordo Financial has not changed its intention to contribute 50% of the
offering proceeds to Alamogordo Federal. Because the offering proceeds will be
less than the amount described in the February 11 prospectus, however, the
actual amount that will be contributed to Alamogordo Federal will be less.
Assuming we sell 357,000 shares at the midpoint of the offering, and our
offering expenses are $650,000, we intend to distribute the net proceeds from
the offering as follows:
o $1.5 million will be contributed to Alamogordo Federal;
o $286,000 will be loaned to Alamogordo Federal's employee stock
ownership plan to fund its purchase of common stock; and
o $1.2 million will be retained by Alamogordo Financial.
Alamogordo Financial has not changed its intention to use the net proceeds
retained from the offering as a possible source of funds to finance the
acquisition of other financial institutions and other businesses, pay dividends
to stockholders, repurchase common stock, purchase mortgage-backed and
investment securities, or for other general corporate purposes. Alamogordo
Federal may use the proceeds it receives to establish or acquire additional
branch offices, fund new loans, purchase mortgage-backed and investment
securities, fund the recognition and retention plan or for general corporate
purposes. Because the amount of the proceeds will be less than the amount
described in the February 11 prospectus, however, Alamogordo Financial will
probably be less likely to be able to complete an acquisition.
Changes in the Additional Compensation and Benefits that our Directors, Officers
and Employees Will Have After the Stock Offering
The benefit plans that we intend to provide for our officers, directors and
employees have not changed. Stock benefits will continue to be offered to these
persons at no cost to them. As described in the February 11 prospectus, the
number of shares that will be awarded under any of these plans implemented
within one year of the offering will be based on a percentage of the shares sold
in the offering. Because the number of shares that is being offered has been
decreased from the number offered pursuant to the February 11 prospectus, the
actual number of shares that will be awarded pursuant to these plans may be
less. As we stated in the February 11 prospectus, we will not implement a stock
option plan or recognition and retention plan unless our stockholders approve
them. We do not expect to ask our stockholders to approve these plans until at
least six months after we complete the offering. We expect that these plans will
purchase in the open market the shares to fund the awards, although the plans
may be funded from our authorized but unissued shares.
Proposed Purchases of Common Stock by Management
Because the size of the offering has been reduced, the percentage of the
shares sold in the offering that will be owned by management will increase. The
following table presents certain information as to the approximate purchases of
common stock by each of our directors and by executive officers as a group,
including their associates, as defined by applicable regulations. No individual
has entered into a binding agreement to purchase these shares and, therefore,
actual purchases could be more or less than indicated. For purposes of the
following table, sufficient shares are assumed to be available to satisfy
subscriptions in all categories. Our directors and executive officers and their
associates, and our employees will pay the same price as all other subscribers
for the shares for which they subscribe.
<PAGE>
<TABLE>
<CAPTION>
As a Percentage of Shares Sold
----------------------------------
Number Minimum Adjusted
of of Maximum
Name Amount of Shares Offering Range of Offering Range
---- -------- --------- -------------- -----------------
<S> <C> <C> <C> <C>
Robert W. Hamilton ............ $150,000 15,000 4.9% 3.2%
S. Thomas Overstreet .......... 150,000 15,000 4.9 3.2
Marilyn L. Mott ............... 50,000 5,000 1.6 1.1
Earl E. Wallin ................ 50,000 5,000 1.6 1.1
R. Miles Ledgerwood ........... 50,000 5,000 1.6 1.1
Executive officers who are
not directors (4 persons) ... 86,000 8,600 2.8 1.8
-------- ------ ---- ----
Total to be purchased by
directors and executive
officers .................. $536,000 53,600 17.7% 11.4%
======== ====== ==== ====
</TABLE>
- ----------
* Less than 1%.
How You May Obtain Additional Information Regarding the Offering
If you have any questions regarding the offering, please call the Stock
Information Center at (505) 443-2521.
6
<PAGE>
ADDITIONAL RISK FACTOR
You should consider carefully the following risk factor, in addition to
those described in the February 11 prospectus, before deciding whether to invest
in our common stock.
Our common stock will not be liquid.
Because we are offering fewer shares than we offered in the February 11
prospectus, our common stock will be even less liquid that we stated in the
February 11 prospectus. As we stated in the February 11 prospectus, we have
never issued common stock to the public. Consequently, there is no established
market for the common stock. We do not believe that a liquid trading market in
shares of our common stock will develop. Persons purchasing shares may not be
able to sell their shares when they desire if a liquid trading market does not
develop, or sell them at a price equal to or above the initial offering price of
$10.00 per share even if a liquid trading market develops.
ADDITIONAL INFORMATION
This prospectus supplement describes the material changes to the terms of
Alamogordo Financial's stock offering, and updates the pro forma effect,
capitalization and regulatory capital of Alamogordo Financial and Alamogordo
Federal as a result of the change in the terms of the offering and the updated
independent appraisal. You should read this prospectus supplement along with the
prospectus dated February 11, 2000.
You may obtain another copy of the February 11, 2000 prospectus from the
Stock Information Center, located at 500 10th Street, Alamogordo, New Mexico or
by calling (505) 443-2521. We will not mail a prospectus supplement or February
11 prospectus any later than five days prior to the date on which the offering
period ends, or hand deliver a prospectus supplement or February 11 prospectus
any later than two days prior to that date. We have established this deadline in
order to ensure that each purchaser receives a prospectus supplement and an
additional copy of the February 11 prospectus in a timely manner under
Securities and Exchange Commission rules. The Stock Order Form will include a
representation that you have received this prospectus supplement and any
February 11 prospectus in accordance with these rules, and by executing the
Stock Order Form you will confirm this representation.
Alamogordo Financial has filed with the Securities and Exchange Commission
a post-effective amendment to a registration statement under the Securities Act
of 1933 with respect to the common stock that we are offering. As permitted by
the rules and regulations of the Securities and Exchange Commission, this
prospectus supplement does not contain all the information set forth in the
registration statement. The additional information, including the updated
appraisal report which is an exhibit to the registration statement, can be
examined without charge at the public reference facilities of the Securities and
Exchange Commission located at 450 Fifth Street, N.W., Washington, D.C. 20549,
and copies of such material can be obtained from the SEC at prescribed rates. In
addition, the SEC maintains a web site (http://www.sec.gov) that contains
reports, proxy and information statements and other information regarding
registrants that file electronically with the SEC, including Alamogordo
Financial. The statements contained in this prospectus supplement as to the
contents of any contract or other document filed as an exhibit to the
post-effective amendment to the registration statement are brief descriptions of
the material terms of, and should be read along with, the contract or document.
In addition, Alamogordo Financial has filed a post-effective amendment to
its Application on Form MHC-2 with respect to the stock issuance. As permitted
by the rules and regulations of the Office of Thrift Supervision, this
prospectus supplement omits certain information, including the updated appraisal
valuation, contained in the application. The application may be examined at the
principal office of the Office of Thrift Supervision, 1700 G Street, N.W.,
Washington, D.C. 20552, and at the Midwest Regional Office of the Office of
Thrift Supervision located at 122 West John Carpenter Freeway, Suite 600,
Irving, Texas 75039-2010.
A copy of the Stock Issuance Plan and the charter and bylaws of Alamogordo
Financial, Alamogordo Federal and AF Mutual Holding Company are available
without charge from Alamogordo Federal. Requests for this information should be
directed to the Corporate Secretary, Alamogordo Financial, 500 10th Street,
Alamogordo, New Mexico.
7
<PAGE>
ALAMOGORDO FEDERAL'S REGULATORY CAPITAL COMPLIANCE
At December 31, 1999, Alamogordo Federal exceeded each of its regulatory
capital requirements. Set forth below is a summary of Alamogordo Federal's
compliance with the OTS capital standards as of December 31, 1999, on an
historical and pro forma basis assuming that the indicated number of shares were
sold for $10.00 per share as of such date and receipt by Alamogordo Federal of
50% of the net proceeds. For purposes of the table below, the amount expected to
be borrowed by the ESOP and the cost of the shares expected to be acquired by
the recognition and retention plan are deducted from pro forma regulatory
capital. See "Management" from the February 11 prospectus.
<TABLE>
<CAPTION>
Pro Forma at December 31, 1999, Based Upon the Sale of
------------------------------------------------------------------------------------------------------
472,133 Shares(1)
303,450 Shares 357,000 Shares 410,550 Shares at Adjusted
Historical at at Minimum of at Midpoint of at Maximum of Maximum of
December 31, 1999 Offering Range Offering Range Offering Range Offering Range
------------------ ------------------ ------------------ ------------------ ------------------
Percent Percent Percent Percent Percent
of of of of of
Amount Assets(2) Amount Assets(2) Amount Assets(2) Amount Assets(2) Amount Assets(2)
------- --------- ------- --------- ------- --------- ------- --------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
GAAP capital ............... $22,579 14.4% $23,407 14.8% $23,611 15.0% $23,814 15.1% $24,048 15.2%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====
Tangible capital:
Tangible capital(3) ...... $22,679 14.4% $23,507 14.9% $23,710 15.0% $23,914 15.1% $24,148 15.2%
Requirement .............. 2,357 1.5 2,373 1.5 2,376 1.5 2,380 1.5 2,384 1.5
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Excess ................. $20,322 12.9% $21,134 13.4% $21,334 13.5% $21,534 13.6% $21,764 13.7%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====
Core capital:
Core capital(3) .......... $22,679 14.4% $23,507 14.9% $23,710 15.0% $23,914 15.1% $24,148 15.2%
Requirement(4) ........... 4,713 3.0 4,745 3.0 4,753 3.0 4,760 3.0 4,768 3.0
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Excess ................. $17,966 11.4% $18,762 11.9% $18,957 12.0% $19,154 12.1% $19,380 12.2%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====
Risk-based capital:
Risk-based capital(3)(5) . $23,108 29.9% $23,943 30.7% $24,148 31.0% $24,353 31.2% $24,588 31.4%
Requirement .............. 6,187 8.0 6,229 8.0 6,239 8.0 6,249 8.0 6,260 8.0
------- ---- ------- ---- ------- ---- ------- ---- ------- ----
Excess ................. $16,921 21.9% $17,714 22.7% $17,909 23.0% $18,104 23.2% $18,328 23.4%
======= ==== ======= ==== ======= ==== ======= ==== ======= ====
</TABLE>
- ----------
(1) As adjusted to give effect to a 15% increase in the number of shares
outstanding after the offering which could occur due to an increase in the
maximum of the appraised value range as a result of regulatory
considerations, demand for the shares, or changes in market conditions or
general financial and economic conditions following the commencement of the
offering.
(2) Tangible capital levels are shown as a percentage of tangible assets. Core
capital levels are shown as a percentage of total adjusted assets.
Risk-based capital levels are shown as a percentage of risk-weighted
assets.
(3) Pro forma capital levels assume that Alamogordo Federal funds the
recognition and retention plan, which purchases in the open market 4% of
the common stock sold in the offering at a price equal to the price for
which the shares are sold in the offering, and that the ESOP purchases 8%
of the shares sold in the offering. See "Management" in the February 11
prospectus for a discussion of the recognition and retention plan and ESOP.
(4) The current core capital requirement for savings associations is 3% of
total adjusted assets. The OTS has proposed core capital requirements that
would require a core capital ratio of 3% of total adjusted assets for
thrifts that receive the highest supervisory rating for safety and
soundness and a 4% to 5% core capital ratio requirement for all other
thrifts. See "Regulation--Standards for Safety and Soundness--Capital
Requirements" in the February 11 prospectus.
(5) Assumes net proceeds are invested in assets that carry a risk-weighting
equal to the average risk weighting of Alamogordo Federal's risk weighted
assets as of December 31, 1999.
8
<PAGE>
ALAMOGORDO FINANCIAL'S CAPITALIZATION
The following table presents the historical consolidated capitalization of
Alamogordo Financial at December 31, 1999, and the pro forma consolidated
capitalization after giving effect to the stock offering, based upon the sale of
the number of shares indicated in the table and the other assumptions set forth
under "Pro Forma Data."
<TABLE>
<CAPTION>
Pro Forma Consolidated Capitalization
Based Upon the Sale for $10.00 Per Share of
-------------------------------------------------
472,133
303,450 357,000 410,550 Shares at
Shares at Shares at Shares at Adjusted
Minimum of Midpoint of Maximum Maximum of
Historical Offering Offering Offering Offering
Capitalization Range Range Range Range(1)
-------------- ---------- ----------- --------- ----------
(In Thousands)
<S> <C> <C> <C> <C> <C>
Deposits(2) ................................... $123,351 $123,351 $123,351 $123,351 $123,351
FHLB advances ................................. 10,000 10,000 10,000 10,000 10,000
-------- -------- -------- -------- --------
Total deposits and borrowed funds ............. $133,351 $133,351 $133,351 $133,351 $133,351
======== ======== ======== ======== ========
Stockholders' equity:
Preferred Stock, $.10 par value, 10,000,000
shares authorized; none to be issued(3) ... $ -- $ -- $ -- $ -- $ --
Common Stock, $.10 par value per share:
10,000,000 shares authorized; shares to
be issued as reflected .................... -- 108 128 147 169
Additional paid-in capital(3) ............... -- 2,277 2,792 3,309 3,902
Retained earnings ........................... 22,702 22,702 22,702 22,702 22,702
Less:
Common Stock acquired by ESOP(4) .......... -- (243) (286) (328) (378)
Common Stock acquired by
recognition and retention plan(5) ....... -- (121) (143) (164) (189)
-------- -------- -------- -------- --------
Total stockholders' equity .............. $ 22,702 $ 24,723 $ 25,193 $ 25,666 $ 26,206
======== ======== ======== ======== ========
Total stockholders' equity as a percentage of
pro forma total assets .................... 14.49% 15.58% 15.83% 16.08% 16.36%
======== ======== ======== ======== ========
</TABLE>
- ----------
(1) As adjusted to give effect to a 15% increase in the number of shares
outstanding after the offering which could occur due to an increase in the
maximum of the appraised value range as a result of regulatory
considerations, demand for the shares, or changes in market conditions or
general financial and economic conditions following the commencement of the
offering.
(2) Does not reflect withdrawals from deposit accounts for the purchase of
common stock in the offering. Such withdrawals would reduce pro forma
deposits by the amount of such
(3) Reflects the sale of shares in the offering. Does not include proceeds from
the offering that will be loaned to the ESOP to enable it to purchase
shares in the offering. No effect has been given to the issuance of
additional shares of common stock pursuant to the stock option plan that
Alamogordo Financial expects to adopt. If such plan is approved by
stockholders, an amount equal to 10% of the shares of common stock issued
in the offering will be reserved for issuance upon the exercise of options.
See "Management" in the February 11 prospectus.
(4) Assumes that 8% of the shares sold in the offering will be purchased by the
ESOP and that the funds used to acquire the ESOP shares will be borrowed
from Alamogordo Financial. The common stock acquired by the ESOP is
reflected as a reduction of stockholders' equity. See "Management" in the
February 11 prospectus.
(5) Assumes that, subsequent to the stock offering, 4% of the shares of common
stock sold in the stock offering is purchased by the recognition and
retention plan in the open market. The common stock to be purchased by the
recognition and retention plan is reflected as a reduction of stockholders'
equity. See"Pro Forma Data," and "Management" in the February 11
prospectus. The recognition and retention plan will not be implemented for
at least six months after the stock offering and until it has been approved
by stockholders.
9
<PAGE>
PRO FORMA DATA
We are not able to determine the actual net proceeds from the sale of the
common stock until the offering is completed. However, we estimate that net
proceeds will be between $2.4 million and $3.5 million, or $4.1 million if the
maximum of the independent valuation is increased by 15%. Our estimate is based
on the assumption that the total expenses, including the marketing fees paid to
Keefe, Bruyette & Woods, will be approximately $650,000.
We calculated the pro forma consolidated net income and stockholders'
equity of Alamogordo Financial for the six months ended December 31, 1999 and
the year ended June 30, 1999, as if the common stock had been sold at the
beginning of those periods and the net proceeds had been invested at 5.95% and
5.09% for the six months ended December 31, 1999 and the year ended June 30,
1999, respectively. We chose these yields because they represent the yields on
the one-year U.S. treasury bill at December 31, 1999 and at June 30, 1999. In
light of changes in interest rates in recent periods, Alamogordo Financial
believes these rates more accurately reflect pro forma reinvestment rates than
the arithmetic average method which assumes reinvestment of the net proceeds at
a rate equal to the average of the yield on interest earning assets and the cost
of deposits for these periods. We assumed a tax rate of 38% for both periods.
This results in an after-tax annualized yield of 3.69% for the six months ended
December 31, 1999 and 3.16% for the year ended June 30, 1999.
We calculated historical and pro forma per share amounts by dividing
historical and pro forma amounts of pro forma consolidated net income and
stockholders' equity by the indicated number of shares of common stock. We
adjusted these figures to give effect to the shares purchased by the employee
stock ownership plan. We computed per share amounts for each period as if the
common stock was outstanding at the beginning of the periods, but we did not
adjust per share historical or pro forma stockholders' equity to reflect the
earnings on the estimated net proceeds. As discussed under "How We Intend to Use
the Proceeds from the Offering" in the February 11 prospectus, Alamogordo
Financial intends to retain 50% of the net proceeds from the offering and
intends to make a loan to the employee stock ownership plan to fund the employee
stock ownership plan's purchase of 8% of the common stock issued in the
offering. The loan is assumed to be repaid in substantially equal principal
payments over a period of years.
The following table gives effect to the recognition and retention plan,
which we expect to adopt following the stock offering and present, along with
the stock option plan, to stockholders for approval at least six months
following the completion of the stock offering. If the recognition and retention
plan is approved by stockholders, the restricted stock plan will acquire an
amount of common stock equal to 4% of the shares of common stock issued in the
offering if the plan is adopted within one year of the stock offering, either
through open market purchases or from authorized but unissued shares of common
stock, if permissible. In preparing the table below we assumed that stockholder
approval has been obtained and that the recognition and retention plan purchases
in the open market a number of shares equal to 4% of the shares sold in the
offering at the same price for which they were sold in the stock offering. The
stock is assumed to be awarded under the program in awards that vest gradually
over five years.
The following table does not give effect to:
o the shares to be reserved for issuance under the stock option plan;
o withdrawals from deposit accounts for the purpose of purchasing common
stock in the stock offering;
o Alamogordo Financial's results of operations after the stock offering;
or
o the market price of the common stock after the stock offering.
10
<PAGE>
The following pro forma information may not represent the financial effects
of the stock offering at the date on which the stock offering actually occurs
and you should not use the table to indicate future results of operations. Pro
forma stockholders' equity represents the difference between the stated amount
of assets and liabilities of Alamogordo Financial computed in accordance with
generally accepted accounting principles. We did not increase or decrease
stockholders' equity to reflect the difference between the carrying value of
loans and other assets and market value. Pro forma stockholders' equity is not
intended to represent the fair market value of the common stock and may be
different than amounts that would be available for distribution to stockholders
if we liquidated.
<TABLE>
<CAPTION>
At or For the Six Months Ended December 31, 1999
Based upon the Sale for $10.00 per share of
------------------------------------------------
Maximum
Minimum Midpoint Maximum As Adjusted
303,450 357,000 410,550 472,133
Shares Shares Shares Shares(1)
--------- --------- --------- -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Gross proceeds .................................... $ 3,035 $ 3,570 $ 4,106 $ 4,721
Expenses .......................................... 650 650 650 650
--------- --------- --------- ---------
Estimated net proceeds .......................... 2,385 2,920 3,456 4,071
Common stock purchased by ESOP(2) ............... (243) (286) (328) (378)
Common stock purchased by
recognition and retention plan(3) ............. (121) (143) (164) (189)
--------- --------- --------- ---------
Estimated net proceeds after adjustment
for stock benefit plans ......................... $ 2,021 $ 2,491 $ 2,964 $ 3,504
========= ========= ========= =========
For the six months ended December 31, 1999:
Net income:
Historical ...................................... $ 388 $ 388 $ 388 $ 388
Pro forma adjustments:
Income on net proceeds .......................... 37 46 55 65
ESOP(2) ......................................... (8) (9) (10) (12)
Recognition and retention plan(3) ............... (8) (9) (10) (12)
--------- --------- --------- ---------
Pro forma net income .......................... $ 409 $ 416 $ 423 $ 429
========= ========= ========= =========
Net income per share:
Historical ...................................... $ 0.37 $ 0.31 $ 0.27 $ 0.24
Pro forma adjustments:
Income on net proceeds .......................... 0.03 0.04 0.04 0.04
ESOP(2) ......................................... (0.01) (0.01) (0.01) (0.01)
Recognition and retention plan(3) ............... (0.01) (0.01) (0.01) (0.01)
--------- --------- --------- ---------
Pro forma net income per share(2)(3)(4) ....... $ 0.38 $ 0.33 $ 0.29 $ 0.26
========= ========= ========= =========
Offering price to pro forma net income per share .. 13.16x 15.15x 17.24x 19.23x
========= ========= ========= =========
Shares considered outstanding in calculating
pro forma net income per share .................. 1,060,688 1,247,868 1,435,047 1,650,307
========= ========= ========= =========
At December 31, 1999:
Stockholders' equity:
Historical ...................................... $ 22,702 $ 22,702 $ 22,702 $ 22,702
Estimated net proceeds .......................... 2,385 2,920 3,456 4,071
Less: Common stock acquired by ESOP(2) .......... (243) (286) (328) (378)
Common stock acquired by recognition
and retention plan(3) ................... (121) (143) (164) (189)
--------- --------- --------- ---------
Pro form stockholders' equity(5) ................ $ 24,723 $ 25,193 $ 25,666 $ 26,206
========= ========= ========= =========
Stockholders' equity per share:
Historical ...................................... $ 20.95 $ 17.81 $ 15.48 $ 13.46
Estimated net proceeds .......................... 2.20 2.29 2.36 2.41
Less: Common stock acquired by ESOP(2) .......... (0.22) (0.22) (0.22) (0.22)
Common stock acquired by recognition
and retention plan(3) ................... (0.11) (0.11) (0.11) (0.11)
--------- --------- --------- ---------
Pro forma stockholders' equity per share(3)(4)(5) $ 22.82 $ 19.77 $ 17.51 $ 15.54
========= ========= ========= =========
Offering price as a percentage of pro forma
stockholders' equity per share .................. 43.82% 50.58% 57.11% 64.35%
========= ========= ========= =========
Shares considered outstanding in calculating
offering price as a percentage of pro forma
stockholders' equity per share .................. 1,083,750 1,275,000 1,466,250 1,686,189
========= ========= ========= =========
</TABLE>
(footnotes begin on following page)
11
<PAGE>
<TABLE>
<CAPTION>
At or For the Six Months Ended June 30, 1999
Based upon the Sale for $10.00 per share of
------------------------------------------------
Maximum
Minimum Midpoint Maximum As Adjusted
303,450 357,000 410,550 472,133
Shares Shares Shares Shares(1)
--------- --------- --------- -----------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Gross proceeds .................................... $ 3,035 $ 3,570 $ 4,106 $ 4,721
Expenses .......................................... 650 650 650 650
--------- --------- --------- ---------
Estimated net proceeds .......................... 2,385 2,920 3,456 4,071
Common stock purchased by ESOP(2) ............... (243) (286) (328) (378)
Common stock purchased by
recognition and retention plan(3) ............. (121) (143) (164) (189)
--------- --------- --------- ---------
Estimated net proceeds after adjustment
for stock benefit plans ......................... $ 2,021 $ 2,491 $ 2,964 $ 3,504
========= ========= ========= =========
For the fiscal year ended June 30, 1999:
Net income:
Historical ...................................... $ 679 $ 679 $ 679 $ 679
Pro forma adjustments:
Income on net proceeds .......................... 64 79 94 111
ESOP(2) ......................................... (15) (18) (20) (23)
Recognition and retention plan(3) ............... (15) (18) (20) (23)
--------- --------- --------- ---------
Pro forma net income .......................... $ 713 $ 722 $ 733 $ 744
========= ========= ========= =========
Net income per share:
Historical ...................................... $ 0.64 $ 0.54 $ 0.47 $ 0.41
Pro forma adjustments:
Income on net proceeds .......................... 0.06 0.06 0.07 0.07
ESOP(2) ......................................... (0.01) (0.01) (0.01) (0.01)
Recognition and retention plan(3) ............... (0.01) (0.01) (0.01) (0.01)
--------- --------- --------- ---------
Pro forma net income per share(2)(3)(4) ....... $ 0.68 $ 0.58 $ 0.52 $ 0.46
========= ========= ========= =========
Offering price to pro forma net income per share .. 14.71x 17.28x 19.23x 21.74x
========= ========= ========= =========
Shares considered outstanding in calculating
pro forma net income per share .................. 1,061,902 1,249,296 1,436,689 1,652,195
========= ========= ========= =========
At June 30, 1999:
Stockholders' equity:
Historical ...................................... $ 22,441 $ 22,441 $ 32,441 $ 22,441
Estimated net proceeds .......................... 2,385 2,920 3,456 4,071
Less: Common stock acquired by ESOP(2) .......... (243) (286) (328) (378)
Common stock acquired by recognition
and retention plan(3) ................... (121) (143) (164) (189)
--------- --------- --------- ---------
Pro form stockholders' equity(5) ................ $ 24,462 $ 24,932 $ 25,405 $ 25,945
========= ========= ========= =========
Stockholders' equity per share:
Historical ...................................... $ 20.71 $ 17.60 $ 15.31 $ 13.31
Estimated net proceeds .......................... 2.20 2.29 2.36 2.41
Less: Common stock acquired by ESOP(2) .......... (0.22) (0.22) (0.22) (0.22)
Common stock acquired by recognition
and retention plan(3) ................... (0.11) (0.11) (0.11) (0.11)
--------- --------- --------- ---------
Pro forma stockholders' equity per share(3)(4)(5) $ 22.58 $ 19.56 $ 17.34 $ 15.39
========= ========= ========= =========
Offering price as a percentage of pro forma
stockholders' equity per share .................. 44.29% 51.12% 57.67% 64.98%
========= ========= ========= =========
Shares considered outstanding in calculating
offering price as a percentage of pro forma
stockholders' equity per share .................. 1,083,750 1,275,000 1,466,250 1,686,189
========= ========= ========= =========
</TABLE>
- ----------
(1) As adjusted to give effect to a 15% increase in the number of shares
outstanding after the offering which could occur due to an increase in the
maximum of the estimated valuation range as a result of regulatory
considerations, demand for the shares, or changes in market conditions or
general financial and economic conditions following the commencement of the
offering.
12
<PAGE>
(2) It is assumed that 8% of the shares sold in the stock offering will be
purchased by the ESOP. For purposes of this table, the funds used to
acquire such shares are assumed to have been borrowed by the ESOP from
Alamogordo Financial. The amount to be borrowed is reflected as a reduction
of stockholders' equity. Alamogordo Federal intends to make annual
contributions to the ESOP in an amount at least equal to the principal and
interest requirement of the debt. Alamogordo Federal's total annual payment
of the ESOP debt is based upon ten equal annual installments of principal,
with an assumed interest rate of 8.5%. The pro forma net earnings
information makes the following assumptions: (i) Alamogordo Federal's
contribution to the ESOP is equivalent to the debt service requirement for
the period presented and was made at the end of the period; (ii) 1,214,
1,428, 1,642, and 1,889 shares at the minimum, midpoint, maximum and
adjusted maximum of the offering range, respectively, were committed to be
released during the six months ended December 31, 1999, at an average fair
value equal to the price for which the shares are sold in the stock
offering in accordance with Statement of Position ("SOP") 93-6; (iii)
2,428, 2,856, 3,284, and 3,777 shares at the minimum, midpoint, maximum and
adjusted maximum of the offering range, respectively, were committed to be
released during the year ended June 30, 1999, at an average fair value
equal to the price for which the shares are sold in the stock offering in
accordance with SOP 93-6; and (iv) only the ESOP shares committed to be
released were considered outstanding for purposes of the net earnings per
share calculations.
(3) Gives effect to the recognition and retention plan expected to be adopted
following the stock offering. If implemented within one year of the
offering, this plan intends to acquire a number of shares of common stock
equal to 4% of the shares sold in the stock offering either through open
market purchases or from authorized but unissued shares of common stock or
treasury stock of Alamogordo Financial, if any. Funds used by the
recognition and retention plan to purchase the shares will be contributed
to the plan by Alamogordo Federal. In calculating the pro forma effect of
the recognition and retention plan, it is assumed that the shares were
acquired by the plan in open market purchases at the beginning of the
period presented for a purchase price equal to the price for which the
shares are sold in the stock offering, and that 10% and 20% of the amount
contributed was an amortized expense during the six months ended December
31, 1999 and the fiscal year ended June 30, 1999, respectively. The
issuance of authorized but unissued shares of the common stock to the
recognition and retention plan instead of open market purchases would
dilute the voting interests of existing stockholders by approximately 1%.
In addition, if the recognition and retention plan purchases shares in the
open market, then pro forma net earnings per share for the six months ended
December 31, 1999 would be $0.38, $0.33, $0.29, and $0.25, and pro forma
stockholders' equity per share at December 31, 1999 would be $22.68,
$19.66, $17.42, and $15.48 at the minimum, midpoint, maximum and adjusted
maximum of the offering range, respectively, and pro forma net earnings per
share for the fiscal year ended June 30, 1999 would be $0.67, $0.59, $0.52,
and $0.46, and pro forma stockholders' equity per share at June 30, 1999
would be $22.44, $19.46, $17.25, and $15.33 at the minimum, midpoint,
maximum and adjusted maximum of the offering range, respectively. There can
be no assurance that the actual purchase price of the shares granted under
the recognition and retention plan will be equal to the Subscription Price.
(4) No effect has been given to the issuance of additional shares of common
stock pursuant to the stock option plan expected to be adopted by
Alamogordo Financial following the stock offering. Under the stock option
plan, an amount equal to 10% of the common stock sold in the stock offering
will be reserved for future issuance upon the exercise of options to be
granted under the stock option plan. The issuance of common stock pursuant
to the exercise of options under the stock option plan will result in the
dilution of existing stockholders' interests. Assuming all options were
exercised at the end of the period at an exercise price equal to the price
for which the shares were sold in the offering, existing stockholders'
voting interest would be diluted by approximately 2.8%. In addition, if the
shares to fund the option plan are purchased in the open market, then pro
forma net earnings per share for the six months ended December 31, 1999
would be $0.38, $0.32, $0.28, and $0.25, and pro forma stockholders' equity
per share at December 31, 1999 would be $22.46, $19.49, $17.29, and $15.39
at the minimum, midpoint, maximum and adjusted maximum of the offering
range, respectively, and pro forma net earnings per share for the fiscal
year ended June 30, 1999 would be $0.67, $0.58, $0.51, and $0.45, and pro
forma stockholders' equity per share at June 30, 1999 would be $22.22,
$19.29, $17.12, and $15.24 at the minimum, midpoint, maximum and adjusted
maximum of the offering range, respectively. There can be no assurance that
the actual purchase price of the shares purchased by the stock option plan
will be $10.00 per share.
(5) The retained earnings of Alamogordo Federal will continue to be
substantially restricted after the offering.
13
<PAGE>
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 December 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 0-29655
Alamogordo Financial Corporation
--------------------------------
(Exact name of small business issuer as specified in its charter)
United States of America 74-2819148
- -------------------------------- ------------------------------------
(State or other jurisdiction of (IRS Employer Identification Number)
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: 10 shares of common stock par
value $.10 per share.
Transitional Small Business Disclosure Format (check one): Yes [ ] No [x]
Q-1
<PAGE>
ALAMOGORDO FINANCIAL CORPORATION
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets as of
December 31, 1999 and June 30, 1999..................... Q-3
Consolidated Statements of Income for the
three months and six months ended
December 31, 1999 and 1998.............................. Q-4
Consolidated Statements of Changes in Equity
for the six months ended
December 31, 1999....................................... Q-5
Consolidated Statements of Cash Flows for the
six months ended
December 31, 1999 and 1998.............................. Q-6
Notes to Consolidated Financial Statements................ Q-7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of
Operations....................................... Q-9
PART II. OTHER INFORMATION......................................... Q-12
Q-2
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Alamogordo Financial Corporation
Consolidated Balance Sheets as of
December 31, 1999 and June 30, 1999
(Unaudited)
At At
December 31, June 30,
1999 1999
--------- ---------
(Dollars in thousands)
ASSETS
Cash and cash equivalents ........................ $ 7,088 $ 8,472
Securities:
Available for sale ......................... 15,723 17,030
Held to maturity ........................... 5,215 3,473
Loans, net ....................................... 117,451 115,949
Real estate owned, net ........................... 52 --
Premises and equipment, net ...................... 8,585 8,745
Stock in Federal Home Loan Bank, at cost ......... 1,370 1,332
Accrued interest ................................. 881 955
Other assets ..................................... 320 202
--------- ---------
Total assets ................................. $ 156,685 $ 156,158
========= =========
LIABILITIES AND EQUITY
Deposits ......................................... $ 123,351 $ 122,460
Escrows .......................................... 489 1,006
Accrued interest and other liabilities ........... 143 251
Advances from Federal Home Loan Bank ............. 10,000 10,000
--------- ---------
Total liabilities ............................. 133,983 133,717
--------- ---------
EQUITY
Common Stock, par value $.10 per share;
10,000,000 shares authorized,
100 shares issued ............................... -- --
Retained earnings, substantially restricted ...... 23,098 22,710
Accumulated other comprehensive income ........... (396) (269)
--------- ---------
Total equity ................................. 22,702 22,441
--------- ---------
Total liabilities and equity ..................... $ 156,685 $ 156,158
========= =========
Q-3
<PAGE>
Alamogordo Financial Corporation
Consolidated Statements of Income
for the Three Months and Six Months Ended
December 31, 1999 and 1998
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
----------------- ----------------
1999 1998 1999 1998
---- ---- ---- ----
Interest income:
Interest and fees on loans .......... $ 2,287 $ 2,251 $ 4,577 $ 4,463
Interest on securities .............. 258 305 485 690
Interest on mortgage-backed
securities ......................... 43 61 87 118
Interest on other interest
earning assets ..................... 59 169 132 319
------- ------- ------- -------
Total interest income .............. 2,647 2,786 5,281 5,590
Interest expense:
Interest on deposits ................ 1,547 1,750 3,078 3,519
Interest on FHLB and other
borrowings ......................... 127 127 250 254
------- ------- ------- -------
Total interest expense ............. 1,674 1,877 3,328 3,773
------- ------- ------- -------
Net interest income ............... 973 909 1,953 1,817
Provision for loan losses ............. -- -- -- --
------- ------- ------- -------
Net interest income, after
provision for loan losses .......... 973 909 1,953 1,817
------- ------- ------- -------
Other income
Service charges and fees ............ 49 32 95 61
Loss on sale of real
estate owned ....................... -- -- -- (9)
Gain on sale of
premises and equipment ............. -- -- 29 --
Other ............................... 35 33 68 66
------- ------- ------- -------
Total other income ................. 84 65 192 118
------- ------- ------- -------
Other expenses
Salaries and benefits ............... 338 322 657 623
Occupancy ........................... 164 164 343 315
Data processing fees ................ 64 82 128 211
Federal insurance premiums
and other insurance expense ........ 29 30 58 61
Advertising ......................... 28 19 54 33
Other ............................... 173 134 322 293
------- ------- ------- -------
Total other expenses ............... 796 751 1,562 1,536
------- ------- ------- -------
Income before income taxes ......... 261 223 583 399
------- ------- ------- -------
Provision for income taxes ............ 102 66 195 104
------- ------- ------- -------
Net income ......................... $ 159 $ 157 $ 388 $ 295
======= ======= ======= =======
Q-4
<PAGE>
Alamogordo Financial Corporation
Consolidated Statement of Changes in Stockholders' Equity
Six Months Ended December 31, 1999
(Unaudited)
Accumulated
Other
Comprehensive Total
Stock Equity Income Equity
----- ------ ------ ------
BALANCES AT JUNE 30, 1999 ......... $ -- $ 22,710 $ (269) $ 22,441
Comprehensive income
Net income ..................... -- 388 -- 388
Other comprehensive income,
net of tax:
Change in unrealized loss
on securities available
for sale, net of deferred
income tax benefit of $(85) . -- -- (127) (127)
--------
Total comprehensive income ..... -- -- -- 261
-------- -------- -------- --------
Balances at December 31, 1999 ..... $ -- $ 23,098 $ (396) $ 22,702
======== ======== ======== ========
Q-5
<PAGE>
Alamogordo Financial Corporation
Consolidated Statements of Cash Flows
Six Months Ended December 31, 1999 and 1998
(Unaudited)
Six Months
Ended December 31,
------------------
1999 1998
---- ----
Cash flows from operating activities:
Net income .......................................... $ 388 $ 295
Adjustments to reconcile net income to
net cash provided by operating activities
Depreciation ..................................... 181 166
Net amortization of premiums and accretion
of discounts on securities ...................... (28) (48)
Gain on sale of loans ............................ -- (5)
(Gain) loss on sales of other real
estate owned .................................... -- 9
Gain on sales of premises and equipment .......... (29) --
(Increase) decrease in interest receivable .......... 74 (64)
(Increase) in other assets .......................... (118) (102)
(Decrease) in interest payable and
other liabilities .................................. (108) (41)
------- -------
Net cash provided by operating activities ........ 360 210
Cash flows from investing activities:
Proceeds from maturities of securities
available-for sale ................................. 1,084 13,777
Proceeds from maturities of securities
held-to-maturity ................................... 1,297 466
Purchases of securities available-for-sale .......... -- (5,019)
Purchases of securities held-to-maturity ............ (2,915) --
Purchases of FHLB stock ............................. (38) (38)
Net (increase) in loans ............................. (1,712) (867)
Proceeds from sale of loans ......................... -- 1,148
Purchases of loans .................................. -- (4,585)
Proceeds from sales of premises and equipment ....... 74 --
Purchases of premises and equipment ................. (66) (327)
Net proceeds from sales of real estate owned ........ 158 25
------- -------
Net cash provided by (used in)
investing activities ............................ (2,118) 4,580
Cash flows from financing activities:
Net increase (decrease) in deposits ................. 891 701
Net increase (decrease) in escrows .................. (517) (623)
------- -------
Net cash provided by (used in) financing
activities ...................................... 374 78
------- -------
Net increase in cash and cash equivalents .............. (1,384) 4,868
Cash and cash equivalents, beginning of year ........... 8,472 6,992
------- -------
Cash and cash equivalents, end of year ................. $ 7,088 $11,860
------- -------
Noncash investing and financing activities:
Transfers of loans to real estate owned ............. $ 209 $ --
Supplemental disclosures of cash flow information:
Income taxes paid ................................... $ 186 $ 106
Interest ............................................ 3,378 3,777
Q-6
<PAGE>
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in thousands)
1. Stock Offering
On October 19,1999, the Board of Directors of Alamogordo Financial
adopted a Plan of Stock issuance. Pursuant to the Plan of Stock Issuance, a
prospectus date February 11, 2000, and a prospectus supplement dated April 11,
2000 Alamogordo Financial plans to offer and sell up to 410,550 shares of its
common stock in a community offering, and issue additional shares to AF Mutual
Holding Company. Following the offering, purchasers in the offering will own
28.0% of Alamogordo Financial's common stock, and AF Mutual Holding Company will
own 72.0%. The offering price will be $10 per share. Offering costs will be
deferred and deducted from the proceeds of the shares sold. If the offering is
not completed, all costs will be charged to expense.
2. Basis of Presentation
The financial statements included herein have been prepared by
Alamogordo Financial 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 December 31, 1999 are not
necessarily indicative of results to be expected for the entire fiscal year
ending June 30, 2000.
The interim unaudited financial statements presented herein should be
read in conjunction with Alamogordo Financial's prospectus dated February 11,
2000, and the annual audited financial statements of Alamogordo Financial for
the fiscal year ended June 30, 1999, that are contained in the prospectus.
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, take into 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.
Q-7
<PAGE>
Activity in the allowance for loan losses for the periods indicated is
summarized as follows:
Three Months Ended Six Months Ended
December 31, December 31,
------------------ -----------------
1999 1998 1999 1998
---- ---- ---- ----
Balance at beginning of period... 467 481 472 486
Provision for loan losses........ -- -- -- --
Charge-offs...................... (5) -- (11) (5)
Recoveries....................... 7 -- 8 --
----- ----- ----- -----
Balance at end of period......... $ 469 $ 481 $ 469 $ 481
===== ===== ===== =====
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 (loss) was $261
and $322 for the six months ended December 31, 1999 and 1998, respectively, and
$69 and $105 for the three months ended December 31, 1999 and 1998,
respectively. The difference between Alamogordo Financial's net income and 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 income (loss) in the consolidated
statements of financial condition represents the after-tax net unrealized gain
(loss) on securities available for sale as of December 31, 1999 and June 30,
1999.
Q-8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AT DECEMBER 31, 1999
AND JUNE 30, 1999
Alamogordo Financial's total assets increased by $527,000, or .3%, to
$156.7 million at December 31, 1999, from $156.2 million at June 30, 1999. The
increase resulted primarily from an increase in loans receivable and securities,
partially offset by a decrease in cash and cash equivalents. Loans receivable
increased by $1.5 million, or 1.3%, to $117.4 million from $115.9 million as a
result of new loan originations surpassing principal repayments and loan
payoffs. Securities, including mortgage- backed securities, increased by
$435,000, or 2.1%, to $20.9 million from $20.5 million as a result of new
purchases surpassing maturities and repayments. Cash and cash equivalents
decreased by $1.4 million, or 16.3%, to $7.1 million from $8.5 million primarily
due to the annual payment of county property taxes for borrowers.
Total deposits increased by $891,000, or .7%, to $123.4 million at
December 31, 1999 from $122.5 million at June 30, 1999. The increase resulted
from a $1.1 million, or 1.1%, increase in term certificates to $103.6 million
from $102.5 million, offset by a $178,000, or .1%, decrease in transaction and
savings deposits to $19.8 million from $20.0 million. The increase in term
certificates resulted primarily from an increase in public funds. Total
borrowings were unchanged at $10.0 million.
Equity increased by $261,000, or 1.16%, to $22.7 million from $22.4
million primarily due to earnings over the period, partially offset by a
$127,000 decrease in accumulated other comprehensive income related to
unrealized losses on securities available for sale. As of December 31, 1999,
Alamogordo Federal had $22.7 million of tangible capital or 14.4% of tangible
assets, $22.7 million of core capital or 14.4% of total adjusted assets, and
$23.1 million of risk-based capital or 29.9% of risk- weighted assets.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED DECEMBER 31, 1999 AND
1998
General. Net income increased by $2,000, or 1.3%, to $159,000 for the
three months ended December 31, 1999, from $157,000 for the three months ended
December 31, 1998. The increase resulted from an increase in net interest income
and other income, partially offset by an increase in other expense and the
provision for income taxes. Alamogordo Federal's computers and data processors
did not experience any difficulties related to their ability to correctly
identify the year 2000.
Interest Income. Interest income decreased by $139,000, or 5.0%, to
$2.6 million for the three months ended December 31, 1999 from $2.8 million for
the three months ended December 31, 1998. The decrease resulted from a decrease
in interest on securities and other interest-earning assets, partially offset by
an increase in interest and fees on loans. Interest and fees on loans receivable
increased by $36,000, or 1.6%. The increase resulted from a $6.3 million, or
5.7%, increase in the average balance of loans receivable to $117.2 million from
$110.9 million, partially offset by a 32 basis point decrease in the average
yield on the loan portfolio to 7.80% from 8.12%. The increase in average balance
of loans receivable resulted from a net increase in both mortgage and consumer
and other loans. The decrease in the average yield resulted from the prepayment
of higher yielding loans in a declining interest rate environment. The decrease
in average yield also resulted, in part, from downward adjustments in
Q-9
<PAGE>
adjustable-rate loans. Interest on securities, including mortgage-backed
securities and other interest- earning assets, decreased by $175,000, or 32.7%,
to $360,000 from $535,000. This decrease resulted from a $4.1 million, or 16.3%,
decrease in the average balance of securities due to maturities and repayment of
principal, and a 10 basis point decrease in the average yield on securities. The
average balance of other interest-earning assets decreased by $9.4 million, the
effects of which were partially offset by an increase in the average yield of
190 basis points.
Interest Expense. Interest expense on deposits decreased by $203,000,
or 11.6%, to $1.5 million for the three months ended December 31, 1999 from $1.8
million for the three months ended December 31,1998. Interest expense on
transaction and savings accounts decreased to $101,000 from $111,000, as the
average balance of transaction and savings accounts remained relatively stable,
and the average cost decreased to 2.27% from 2.46%. Interest expense on
certificate accounts decreased by $193,000, to $1.4 million from $1.6 million,
as the average balance of certificate accounts decreased by $4.6 million and the
average cost decreased by 48 basis points. Interest expense on borrowings
remained stable at $127,000. The decrease in certificate accounts resulted
primarily from a decrease in public funds. The decrease in rates resulted from a
general decline in shorter-term market rates of interest.
Net Interest Income. Net interest income increased by $64,000, or 7.0%,
to $973,000 for the three months ended December 31, 1999 from $909,000 for the
three months ended December 31, 1998. Net interest rate spread, the difference
between the yield on average total interest-earning assets and the cost of
average total interest-bearing liabilities, increased by 41 basis points to
2.36% from 1.95%.
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 loan losses, management considers loss experience, evaluations of
real estate collateral, economic conditions, volume and type of lending and the
levels of nonperforming and other classified loans. Based on our evaluation of
these factors, and based on loan allowance recoveries of $7,000 and charge-offs
of $5,000 for the three months ended December 31, 1999, and no charge-offs or
recoveries for the three months ended December 31, 1998, we made no provision
for loan losses. The allowance for loan losses decreased to $469,000, or 259.1%
of total nonperforming loans at December 31, 1999 from $472,000, or 88.7% of
total nonperforming loans at June 30, 1999. 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 makes 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 December 31, 1999 and June 30,
1999 was adequate.
Other Income. Total other income includes service charges and fees,
gain (loss) on sale of real estate owned and premises and equipment, and other.
Total other income increased by $19,000, or 29.2%, to $84,000 from $65,000.
Service charges and fees increased by $17,000 primarily due to ATM fee income
and deposit account service charges. Other income increased by $5,000 as a
result of increased tenant occupancy of the office building.
Q-10
<PAGE>
Other Expense. Total other expense increased by $45,000, or 6.1%, to
$796,000 for the three months ended December 31, 1999 from $751,000 for the
three months ended December 31, 1998. A decrease in the deferral of loan
origination costs, which was offset by employee compensation expense,
contributed $16,000 to this increase as new loan originations decreased during
the latter period. Advertising expense increased $9,000 primarily due to
additional marketing programs. These increases were partially offset by a
$18,000 decrease in data processing fees due to Alamogordo Federal's conversion
of its data processing system during the earlier period.
Provision for Income Taxes. The provision for income taxes increased to
$102,000, or 39.1% of net income before income taxes, from $66,000, or 29.6% of
net income before income taxes. The increase in the provision resulted from an
increase in net income before income taxes. The increase in effective tax rate
resulted from a decrease in income from tax-exempt securities and other changes
in deferred tax items.
COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED DECEMBER 31, 1999 AND
1998
General. Net income increased by $93,000, or 31.7%, to $388,000 for the
six months ended December 31, 1999, from $295,000 for the six months ended
December 31, 1998. The increase resulted from an increase in net interest income
and other income, partially offset by an increase in other expense and the
provision for income taxes.
Interest Income. Interest income decreased by $309,000, or 5.5%, to
$5.3 million for the six months ended December 31, 1999 from $5.6 million for
the six months ended December 31, 1998. The decrease resulted from a decrease in
interest on securities and other interest-earning assets, partially offset by an
increase in interest and fees on loans. Interest and fees on loans receivable
increased by $114,000, or 2.6%. The increase resulted from a $7.2 million, or
6.5%, increase in the average balance of loans receivable to $116.9 million from
$109.7 million, partially offset by a 30 basis point decrease in the average
yield on the loan portfolio to 7.83% from 8.13%. The increase in average balance
of loans receivable resulted from a net increase in both mortgage and consumer
and other loans. The decrease in the average yield resulted from the prepayment
of higher yielding loans in a declining interest rate environment. The decrease
in average yield also resulted, in part, from downward adjustments in
adjustable-rate loans. Interest on securities, including mortgage-backed
securities and other interest- earning assets, decreased by $423,000, or 37.5%,
to $704,000 from $1.1 million. This decrease resulted from an $8.7 million, or
30.2%, decrease in the average balance of securities due to maturities and
repayment of principal, and an 8 basis point decrease in the average yield on
securities. The average balance of other interest-earning assets decreased by
$6.8 million, the effects of which were partially offset by a 76 basis point
increase in the average yield.
Interest Expense. Interest expense on deposits decreased by $441,000,
or 12.5%, to $3.1 million for the six months ended December 31, 1999 from $3.5
million for the six months ended December 31,1998. Interest expense on
transaction and savings accounts decreased to $197,000 from $245,000, as the
average balance of transaction and savings accounts remained relatively stable,
and the average cost decreased to 2.18% from 2.72%. Interest expense on
certificate accounts decreased by $393,000, to $2.9 million from $3.3 million,
as the average balance of certificate accounts decreased by $5.6 million and the
average cost decreased by 44 basis points. Interest expense on borrowings
decreased to $250,000 from $254,000. The decrease in certificate accounts
resulted primarily from a decrease in public funds. The decrease in rates
resulted from a general decline in shorter-term market rates of interest.
Q-11
<PAGE>
Net Interest Income. Net interest income increased by $136,000, or
7.5%, to $1.9 million for the six months ended December 31, 1999 from $1.8
million for the six months ended December 31, 1998. The net interest rate
spread, the difference between the yield on average total interest-earning
assets and the cost of average total interest-bearing liabilities, increased by
45 basis points to 2.38% from 1.93%.
Provision for Loan Losses. Our policy regarding provisions for loan
losses is described in "Management's Discussion and Analysis of Financial
Condition and Results of Operations -- Comparison of Operating Results for the
Three Months Ended December 31, 1999 and 1998." Based on the factors described
in that section, and based on net loan charge-offs of $3,000 and $5,000 during
the six months ended December 31, 1999 and 1998, respectively, we made no
provision for loan losses in either period. Management believes that the
allowance for loan losses at December 31, 1999 was adequate.
Other Income. Total other income increased by $74,000, or 62.7%, to
$192,000 from $118,000. Service charges and fees increased by $33,000 primarily
due to ATM fee income and deposit account service charges. Other income
increased by $10,000 as a result of increased tenant occupancy of the office
building. Gain on sale of real estate totaled $29,000 for the six months ended
December 31, 1999, as compared to no gain for the previous period as a result of
the sale of land.
Other Expense. Total other expense increased by $26,000, or 1.7%, to
$1.6 million for the six months ended December 31, 1999 from $1.5 million for
the six months ended December 31, 1998. The net increase was the result
primarily of the opening of Alamogordo Federal's second branch office.
Provision for Income Taxes. The provision for income taxes increased to
$195,000, or 33.4% of net income before income taxes, from $104,000, or 26.1% of
net income before income taxes. The increase in the provision resulted from an
increase in net income before income taxes. The increase in effective tax rate
resulted from a decrease in income from tax-exempt securities and other changes
in deferred tax items.
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
Q-12
<PAGE>
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
ITEM 5. OTHER INFORMATION
None.
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
/s/ R. Miles Ledgerwood
Date: April 4, 2000 By: ----------------------------------------
R. Miles Ledgerwood
President and Chief Executive Officer
/s/ Norma J. Clute
Date: April 4, 2000 By: ----------------------------------------
Norma J. Clute
Vice President and Treasurer
Q-13
<PAGE>
================================================================================
You should rely only on the information contained in this prospectus.
Alamogordo Financial Corporation has not authorized anyone to provide you with
different information. This prospectus does not constitute an offer to sell or
the solicitation of an offer to buy any of the securities offered hereby to any
person in any jurisdiction in which such offer or solicitation is not
authorized, or in which the person making such offer or solicitation is not
qualified to do so, or to any person to whom it is unlawful to make such offer
or solicitation. Neither the delivery of this prospectus nor any sale hereunder
shall, under any circumstances, create any implication that information herein
is correct as of any time subsequent to the date hereof.
ALAMOGORDO
FINANCIAL CORPORATION
Up to 472,133 Shares
Common Stock
($0.10 par value per share)
COMMUNITY OFFERING
PROSPECTUS
-----------------------------
Keefe, Bruyette & Woods, Inc.
-----------------------------
April 11, 2000
THESE SECURITIES ARE NOT DEPOSITS OR ACCOUNTS
AND ARE NOT FEDERALLY INSURED OR GUARANTEED
================================================================================
