<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
-------------------
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number 0-14417
-----------
FIRST LIBERTY FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
Georgia 58-1680650
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(State of incorporation) (I.R.S. Employer Identification No.)
201 Second Street, Macon, Georgia 31297
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(Address of principal executive offices) (Zip Code)
(912) 743-0911
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(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days. Yes /X/ No / /
Exhibit index appears on page 22.
There were 3,930,276 shares of Common Stock outstanding as of
August 14, 1995.
Page 1 of 25
<PAGE> 2
FIRST LIBERTY FINANCIAL CORP.
QUARTERLY REPORT ON FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 1995
Table of Contents
PART I - FINANCIAL INFORMATION
Item Page
---- ----
1. Financial Statements:
Consolidated Statements of Financial Condition 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 7
Independent Accountants' Report 11
2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 12
PART II - OTHER INFORMATION
4. Submission of Matters to a Vote of Securities Holders 20
6. Exhibits and Reports on Form 8-K 20
Signatures 21
Index of Exhibits 22
2
<PAGE> 3
First Liberty Financial Corp. and Subsidiaries
Consolidated Statements of Financial Condition
(Unaudited)
<TABLE>
<CAPTION>
June 30, September 30,
1995 1994
------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C>
ASSETS:
Cash and due from banks $ 24,366 $ 16,293
Federal funds sold 948 4,815
Investment securities available-for-sale, at
market value 23,219 18,928
Mortgage-backed securities available-for-sale,
at market value 134,014 111,386
Loans available-for-sale, net, at market value 13,330 9,983
Loans, net 584,132 487,315
Accrued interest receivable 5,359 3,880
Premises and equipment, net 21,411 20,047
Real estate, net 4,339 7,511
Intangible assets 9,290 3,508
Advances to attorneys for loans originated 5,106 1,264
Other assets 7,733 8,275
-------- --------
$833,247 $693,205
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposits $675,772 $562,113
Notes payable and other borrowed money 42,500 50,274
Subordinated debentures 12,450 12,295
Securities sold under agreements to repurchase 19,034 1,660
Checks payable on loans originated 5,012 3,824
Other liabilities 13,010 6,648
-------- --------
767,778 636,814
-------- --------
Commitments and contingencies- - -
Stockholders' equity:
Series A, 7.75% Cumulative Convertible
Preferred stock ($25.00 stated value, 460,000
shares authorized, issued and outstanding) 11,500 11,500
Series B, 6.00% Cumulative Convertible
Preferred stock ($25.00 stated value, 148,799
shares authorized, issued and outstanding) 3,720 -
Common stock ($1.00 par value, 25,000,000
shares authorized, 3,037,690 and 3,030,690
shares issued, respectively, and 3,015,350 and
3,008,350 shares outstanding, respectively) 3,038 3,031
Additional paid-in capital 14,718 15,209
Retained earnings 31,973 27,794
Net unrealized gain (loss) on securities 789 (874)
Treasury stock at cost (22,340 shares) (269) (269)
-------- --------
65,469 56,391
-------- --------
$833,247 $693,205
======== ========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
3
<PAGE> 4
First Liberty Financial Corp. and Subsidiaries
Consolidated Statements of Income
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
--------------------------------------------------
1995 1994 1995 1994
------------------------------------------------------------------------------
(dollars in thousands, except per share data)
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans $13,119 $10,274 $36,295 $31,248
Mortgage-backed securities 2,378 1,433 6,651 4,118
Investment securities 415 215 1,396 577
Federal funds sold 110 60 337 180
------- ------- ------- -------
16,022 11,982 44,679 36,123
------- ------- ------- -------
INTEREST EXPENSE:
Deposits 7,217 4,863 18,679 14,705
Short-term borrowings 535 302 2,754 1,126
Long-term borrowings 687 889 2,150 3,057
------- ------- ------- -------
8,439 6,054 23,583 18,888
------- ------- ------- -------
Net interest income 7,583 5,928 21,096 17,235
Provision for estimated
losses on loans 300 375 900 1,125
------- ------- ------- -------
Net interest income after
provision for estimated
losses on loans 7,283 5,553 20,196 16,110
------- ------- ------- -------
NON-INTEREST INCOME:
Loan servicing fees 554 716 1,846 2,183
Gain on sale of investment
securities - - 21 -
Gain (loss) on sale of loans
and mortgage-backed securities 39 (118) 35 548
Gain on sale of servicing 977 1,293 1,794 2,667
Deposit account service charges 843 694 2,425 2,045
Other income 45 67 256 343
------- ------- ------- -------
Total non-interest income 2,458 2,652 6,377 7,786
------- ------- ------- -------
9,741 8,205 26,573 23,896
------- ------- ------- -------
NON-INTEREST EXPENSE:
Compensation, taxes and
benefits 3,403 3,006 9,167 9,062
Occupancy and equipment 764 656 2,118 2,061
Advertising 213 203 664 649
Professional fees 170 197 472 686
Data processing 178 150 507 484
Federal deposit insurance
premiums 496 391 1,317 1,154
Amortization of intangible
assets 240 101 489 274
Net cost of operation of other
real estate 66 131 309 544
Other 1,032 722 2,571 2,195
------- ------- ------- -------
Total non-interest expense 6,562 5,557 17,614 17,109
------- ------- ------- -------
Income before income tax
expense 3,179 2,648 8,959 6,787
Income tax expense 1,093 1,024 3,081 2,406
------- ------- ------- -------
Net income 2,086 1,624 5,878 4,381
Dividends on preferred stock 278 222 797 668
------- ------- ------- -------
Net income applicable to
common stockholders $ 1,808 $ 1,402 $ 5,081 $ 3,713
======= ======= ======= =======
EARNINGS PER COMMON SHARE:
Primary $ .58 $ .45 $ 1.64 $ 1.20
Fully diluted $ .50 $ .40 $ 1.41 $ 1.09
DIVIDENDS PER COMMON SHARE: $ .10 $ .08 $ .30 $ .24
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
4
<PAGE> 5
First Liberty Financial Corp. and Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
----------------------------------
1995 1994
-------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C>
OPERATING ACTIVITIES:
Cash flows from operating activities:
Net income $ 5,878 $ 4,381
Adjustments to reconcile net income
to cash provided by operations:
Depreciation 1,284 1,210
Amortization of loan fees (502) (573)
Provision for estimated losses
on loans and real estate 1,390 1,370
Amortization of intangibles 489 274
Dividends received on stock (185) (366)
Gain on sale of loans and mortgage-
backed and investment securities (56) (548)
Loans available-for-sale:
Disbursements (22,344) (140,248)
Purchases (43,773) (171,431)
Sales 62,183 359,605
Principal repayments 445 8,053
Increase in accrued interest receivable (1,207) (167)
Increase in accrued interest payable 620 383
Other, net 7,032 (1,326)
---------- ----------
Net cash provided by operating activities 11,254 60,617
---------- ----------
INVESTING ACTIVITIES:
Cash flows from investing activities:
Net decrease(increase) in federal funds sold 6,867 (5,497)
Investment securities available-for-sale:
Purchases (8,261) (1,943)
Sales 28,645 74
Maturities 2,000 2,546
Mortgage-backed securities available-for-sale:
Purchases (52,176) (46,348)
Sales 19,478 5,625
Principal repayments 15,626 27,744
Loan disbursements (248,984) (206,005)
Loan purchases (30,465) -
Loan sales 7,214 -
Loan principal repayments 196,161 189,968
Purchases of premises and equipment (1,128) (1,596)
Proceeds from sales of real estate 1,375 1,504
Net decrease(increase) in advances to
attorneys for loans originated (3,842) 13,597
Acquisition of other institutions,
net of cash paid 88,141 -
---------- ----------
Net cash provided by(used in)
investing activities 20,651 (20,331)
---------- ----------
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
5
<PAGE> 6
First Liberty Financial Corp. and Subsidiaries
Consolidated Statements of Cash Flows, continued
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
-----------------------------------
1995 1994
------------------------------------------------------------------------------
(dollars in thousands)
<S> <C> <C>
FINANCING ACTIVITIES:
Cash flows from financing activities:
Net increase(decrease) in deposits (32,920) 15,616
Notes payable and other borrowed money:
Proceeds 255,500 116,500
Repayments (263,915) (140,508)
Net increase(decrease) in securities
sold under agreements to repurchase 17,374 (6,767)
Net increase(decrease) in checks
payable on loans originated 1,188 (21,266)
Issuance of common stock 61 -
Dividends paid on stock (1,120) (1,150)
--------- ---------
Net cash used in financing activities (23,832) (37,575)
--------- ---------
Net increase in cash and due from banks 8,073 2,711
Cash and due from banks beginning of period 16,293 13,478
--------- ---------
Cash and due from banks end of period $ 24,366 $ 16,189
========= =========
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period for:
Interest (net of amount capitalized) $ 7,363 $ 6,644
Income taxes 1,805 2,668
Noncash investing and financing activities:
Real estate foreclosed $ 1,205 $ 1,394
Financing of sales of foreclosed real estate 3,359 2,695
Conversion of mortgage loans into
mortage-backed securities - 596
Dividends declared, unpaid on preferred stock 279 223
Dividends declared, unpaid on common stock 301 241
Acquisition of other institutions:
Fair value of assets acquired $(62,006) -
Fair value of liabilities assumed 150,147 -
--------
Net cash received $ 88,141 -
========
</TABLE>
The accompanying notes are an integral part of the consolidated financial
statements.
6
<PAGE> 7
FIRST LIBERTY FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. Summary of Significant Accounting Policies
------------------------------------------
The accounting and reporting policies of First Liberty Financial Corp. and
Subsidiaries ("the Company") conform to generally accepted accounting
principles and to general practices within the savings and loan industry. The
interim consolidated financial statements included herein are unaudited but
reflect all adjustments which, in the opinion of management, are necessary to
a fair presentation of the consolidated financial position, results of
operations and cash flows for the interim periods presented. All adjustments
reflected in the interim financial statements are of a normal recurring
nature. Such financial statements should be read in conjunction with the
financial statements and notes thereto and the report of independent
accountants included in the Company's Form 10-K Annual Report for the fiscal
year ended September 30, 1994. The year end balance sheet data was derived
from audited financial statements, but does not include all disclosures
required by generally accepted accounting principles. The results of
operations for the three and nine months ended June 30, 1995 are not
necessarily indicative of the results to be expected for the full year.
Certain reclassifications have been made to the prior year consolidated
financial statements to conform to the current year consolidated financial
statements presentation.
2. Earnings Per Share
------------------
Earnings per share are computed on the weighted average number of shares
outstanding including common stock equivalents, if dilutive. For computing
primary earnings per share, stock options exercisable at a price less than
average market price during the period are considered common stock equivalents.
Fully diluted earnings per share assumes (i) the conversion, if dilutive, of
all convertible debt as of the beginning of the year (or date of issue), with
the elimination of the related interest expense net of applicable income taxes
(ii) the exercise of all stock options below the market price at June 30 or
the average market price for the quarter, and (iii) the conversion, if
dilutive, of all convertible preferred stock as of the beginning of the year
(or date of issue), with the elimination of dividends declared.
Weighted average shares of common stock and common stock equivalents used in
the computation of earnings per share are as follows:
<TABLE>
<CAPTION>
Three Months Ended June 30, Nine Months Ended June 30,
-----------------------------------------------------------
1995 1994 1995 1994
-----------------------------------------------------------
<S> <C> <C> <C> <C>
Primary 3,092,903 3,085,499 3,082,905 3,089,397
Fully diluted 4,233,591 4,046,160 4,191,152 4,050,058
</TABLE>
7
<PAGE> 8
FIRST LIBERTY FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
3. Sale of Servicing
-----------------
During the three and nine months ended June 30, 1995, Liberty Mortgage
Corporation ("Liberty Mortgage"), the Company's mortgage banking subsidiary,
sold bulk loan servicing rights with aggregate principal balances of $89
million and $214 million, respectively, compared to $81 million and $174
million, respectively, a year earlier. This resulted in the recognition of a
gain on the sale of servicing of $977,000 and $1.8 million for the three and
nine months ended June 30, 1995 compared to $1.3 million and $2.7 million,
respectively, for the same periods a year ago. The servicing rights sold
generally related to loans originated for sale and sold within the last six
months. The servicing sales during the nine months ended June 30, 1995
includes $47 million in servicing rights which Liberty Mortgage sold during
the second quarter and granted recourse to the seller. Accordingly, the gain
related to such rights, estimated to be approximately $552,000, was deferred
and will be recognized in the fourth quarter when the recourse expires.
4. Purchased Mortgage Servicing Rights
-----------------------------------
Liberty Mortgage invests in purchased mortgage servicing rights ("PMSRs")
resulting from loans purchased through correspondent relationships. The
investment in PMSRs has the effect of reducing the basis in the loans
purchased, and increasing the gain (or reducing the loss) on sales of loans.
The following table outlines the activity in PMSRs for the three and nine
month periods ended June 30, 1995 and 1994 (dollars in thousands).
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
---------------------------------------
1995 1994 1995 1994
---------------------------------------
<S> <C> <C> <C> <C>
Acquired $ 73 $ 726 $ 140 $1,938
Sold 312 - 692 -
Amortized 95 149 350 404
Written off 52 - 52 -
Net Investment at June 30, 1,961 3,025
</TABLE>
5. Acquisitions
------------
On December 2, 1994, the Company acquired Central Banking Company ("CBC") of
Swainsboro, Georgia. CBC, on the date of acquisition, held the following
approximate balances: loans of $21 million, cash and investments of $34
million, premises and equipment of $1 million and deposits of $52 million.
Intangible assets resulting from the acquisition amounted to approximately $2
million.
On March 24, 1995, the Company acquired three banking offices located in
Sylvania, Vidalia and Waycross, Georgia from First Union National Bank. Total
assets acquired were approximately $3 million and total cash received and
deposits assumed were approximately $95 million. Intangible assets resulting
from the acquisition were approximately $4 million.
8
<PAGE> 9
FIRST LIBERTY FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
The following table presents unaudited proforma results of operations for the
nine months ended June 30, 1995 and June 30, 1994, after giving effect to the
amortization of intangibles and other proforma adjustments, as if the
acquisitions previously discussed had occurred on October 1, 1994 and 1993.
The proforma summary information does not necessarily reflect the results of
operations as they actually would have been, if the acquisitions had occurred
at the beginning of the years presented (dollars in thousands, except per
share data).
<TABLE>
<CAPTION>
Nine Months Ended
June 30
-----------------
1995 1994
-----------------
(unaudited)
<S> <C> <C>
Net interest income before provision for
estimated losses on loans $22,179 $20,218
Net income 6,055 5,159
Earnings Per Common Share:
Primary $ 1.69 $ 1.40
Fully diluted 1.44 1.23
Average Shares Outstanding:
Primary 3,083 3,089
Fully diluted 4,233 4,227
</TABLE>
On March 16, 1995 the Company announced an agreement to acquire Tifton Bank
and Trust of Tifton, Georgia. Tifton Bank and Trust has two offices,
approximately $55 million in assets, $48 million in deposits, and $32 million
in loans. This transaction is expected to close in fall of 1995, subject to
regulatory approval.
6. Preferred Stock
---------------
On December 2, 1994, in connection with the acquisition of CBC, the Company
issued $3.7 million in Series B 6.00% Cumulative Convertible Preferred
("Series B") stock. The shares have a liquidation preference of $25.00 per
share. Dividends on the Series B stock are cumulative and at an annual rate
of $1.50 per share and are payable quarterly. Each share of the Series B
stock is convertible at the option of the holder into 1.19 shares of common
stock, at a conversion price of $21.00 per share of common stock, subject to
adjustment in certain circumstances. The Company, at its option, may redeem
the Series B stock at any time on or after January 1, 1997.
On June 28, 1995 the Company announced that it would redeem all 460,000 shares
of its Series A 7.75% Cumulative Convertible Preferred ("Series A") stock on
July 31, 1995. The redemption price was $26.20 per share plus accrued and
unpaid dividends from July 1, 1995 to, but excluding, the redemption date. The
conditions for redeeming the Series A stock had been met in that the average
market price of the Company's common stock had been at least 135% of the $12.50
Series A stock conversion price for a period of twenty consecutive trading days
prior to the date of notice. Each share of the Series A stock to be redeemed
9
<PAGE> 10
FIRST LIBERTY FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
was convertible into two shares of the Company's common stock until the close
of business on July 31, 1995. On July 31, 1995, 457,463 shares of the Series A
stock were converted into 914,926 shares of common stock and 2,537 shares were
redeemed for $66,879.
7. Recently Issued Accounting Standards
------------------------------------
In March, 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 121 "Accounting for
the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed
Of". SFAS No. 121 requires that long-lived assets and certain identifiable
intangibles to be held and used at the entity be reviewed for impairment
whenever events or changes in circumstances indicate that the carrying amount
of an asset may not be recoverable. If the future undiscounted cash flows
expected to result from the use of the asset and its eventual disposition are
less than the carrying amount of the asset, an impairment loss is recognized.
Otherwise, an impairment loss is not recognized. This statement also requires
that long-lived assets and certain intangibles to be disposed of be reported
at the lower of carrying amount or fair value less cost to sell, except for
assets that are covered by Accounting Principles Board Opinion No. 30
"Reporting the Results of Operations-Reporting the Effects of Disposal of a
Segment of a Business, and Extraordinary, Unusual and Infrequently Occurring
Events and Transactions. Assets that are covered by Opinion 30 will continue
to be reported at the lower of carrying amount or net realizable value. SFAS
No. 121 is effective for financial statements for fiscal years beginning after
December 15, 1995. Management believes that the adoption of SFAS No. 121 will
not have a material impact on the Company's financial statements.
In May, 1995, FASB issued SFAS No. 122 "Accounting for Mortgage Servicing
Rights". This statement is effective for financial statements issued by the
Company for the fiscal year ending September 30, 1997. SFAS 122 amends SFAS
No. 65 "Accounting for Certain Mortgage Banking Activities", to require that
a mortgage banking enterprise recognize as separate assets rights to service
mortgage loans for others regardless of whether those servicing rights are
acquired through either the purchase or origination of mortgage loans. This
statement also requires that the mortgage banking enterprise assess its
capitalized mortgage servicing rights for impairment based upon the fair
value of those rights, including those rights purchased before adoption of
this statement. Impairment should be recognized through a valuation
allowance. Retroactive capitalization of mortgage servicing rights before the
adoption of this statement is prohibited. The Company is currently reviewing
the impact this statement will have on its mortgage operations.
10
<PAGE> 11
COOPERS & LYBRAND L.L.P.
Independent Accountants Report
The Board of Directors
First Liberty Financial Corp.
We have reviewed the accompanying consolidated financial statements of First
Liberty Financial Corp. and Subsidiaries as of June 30, 1995 and for the
three-month and nine-month periods then ended. These financial statements
are the responsibility of the Company's management.
We conducted our audit in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to
financial data and making inquiries of persons responsible for financial and
accounting matters. It is substantially less in scope than an audit conducted
in accordance with generally accepted auditing standards, the objective of
which is the expression of an opinion regarding the financial statements taken
as a whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that
should be made to the accompanying financial statements for them to be in
conformity with generally accepted accounting principles.
Coopers & Lybrand L.L.P.
Atlanta, Georgia
August 11, 1995
11
<PAGE> 12
FIRST LIBERTY FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS
AND FINANCIAL CONDITION
OVERVIEW
First Liberty Financial Corp. is a unitary savings and loan holding company
for First Liberty Bank ("Liberty Bank"). The consolidated financial
statements include the accounts of First Liberty Financial Corp., Liberty
Bank, a wholly-owned subsidiary of First Liberty Financial Corp., and Liberty
Mortgage Corporation ("Liberty Mortgage"), a wholly-owned subsidiary of
Liberty Bank (collectively known as "the Company").
LIQUIDITY
The Company's primary sources of funds are deposits, loan repayments, sales and
maturities of securities, loan sales, repurchase agreements, advances from the
Federal Home Loan Bank of Atlanta and various other borrowings. Deposits
provide a source of funds that are highly dependent on market and other
conditions, while loan repayments are a relatively stable source of funds.
The liquidity of Liberty Bank's operation is measured by the ratio of cash and
short-term investments (as defined by federal regulations) to the sum of
withdrawable deposits and borrowings maturing within one year. Federal
regulations currently require institutions to maintain a liquidity ratio of
at least 5%. Liberty Bank was in compliance with its requirements at June
30, 1995.
CAPITAL RESOURCES
The Office of Thrift Supervision ("OTS") capital regulations include a core
capital requirement, a tangible capital requirement and a risk-based capital
requirement. Subject to certain exceptions, each of these capital standards
must be no less stringent than the capital standards applicable to national
banks, although the risk-based capital requirement for savings institutions
may deviate from the risk-based capital standards applicable to national banks
to reflect interest rate risk or other risks if the deviations in the
aggregate do not result in materially lower levels of capital being required of
savings institutions than would be required of national banks.
The following table reflects Liberty Bank's compliance with regulatory capital
requirements at June 30, 1995 (dollars in thousands):
<TABLE>
<CAPTION>
----------------------------------------------------------------------
| Actual for Liberty Bank | Regulatory Requirement| |
|--------------------------------------|-----------------------| |
| % of | % of | |
| Capital Adjusted | Adjusted | Excess|
|Standard Amount Assets | Amount Assets | Amount|
|--------------------------------------|-------------------------------|
| | | |
|<S> <C> <C> | <C> <C> |<C> |
|Tangible $47,629 5.79% | $12,349 1.50% |$35,280|
|Core $49,705 6.02% | $24,761 3.00% |$24,944|
|Risk-based $67,761 11.63% | $46,626 8.00% |$21,135|
----------------------------------------------------------------------
</TABLE>
12
<PAGE> 13
The Federal Deposit Insurance Corporation Improvement Act of 1991 establishes
five classifications for institutions based upon the capital requirements.
Each appropriate banking agency, such as the OTS for Liberty Bank, must
establish by regulation the parameters of each such classification. Based on
final regulations promulgated by the OTS, Liberty Bank is considered
well-capitalized. Failure to maintain that status could result in greater
regulatory oversight or restrictions on Liberty Bank's activities.
COMMITMENTS
Commitments to originate loans are generally made at the market rate
prevailing at the time of issuance. The Company had open commitments to
originate residential mortgage loans of approximately $44 million, including
$1.7 million to be held in portfolio and $14 million on which the interest
rate had not been locked-in at June 30, 1995. Commitments to sell and
purchase residential mortgage loans and mortgage-backed securities for
mandatory delivery at June 30, 1995 were $28 million and $1.9 million,
respectively. Also at June 30, 1995, the Company bought $11 million of
optional commitments to sell residential mortgage loans. Loans in process
(which represent undisbursed loan commitments principally related to
construction loans), amounted to $37 million at June 30, 1995. Other
commitments were not material at June 30, 1995.
RESULTS OF OPERATIONS
The Company's consolidated net income for the three and nine months ended June
30, 1995 was $2.1 million and $5.9 million, respectively, compared to $1.6
million and $4.4 million for the three and nine months ended June 30, 1994,
respectively.
The Company's net income is affected by the level of its non-interest income,
non-interest expense and the level of earnings of its mortgage banking
operations. However, the Company's net income is most significantly affected
by the difference between interest income on its loan and investment
portfolios and the interest expense of its deposits and borrowings ("net
interest income"). Net interest income is affected by several factors, but is
most affected by the volume of and interest rates on interest-earning assets
and interest-bearing liabilities. The following tables reflect the effective
yields and costs of funds for the three and nine month periods ended June 30,
1995 and 1994 (dollars in thousands:)
13
<PAGE> 14
<TABLE>
<CAPTION>
AVERAGE BALANCE RATE/YIELD
THREE MONTHS ENDED THREE MONTHS ENDED
JUNE 30, JUNE 30,
1995 1994 1995 1994
------------------ ------------------
<S> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans $577,972 $502,880 9.08% 8.17%
Mortgage-backed securities 135,616 100,895 7.01% 5.68%
Other investments 29,292 22,050 7.17% 4.98%
-------- -------- ------ ------
All interest-earning assets $742,880 $625,825 8.63% 7.66%
======== ======== ------ ------
INTEREST-BEARING LIABILITIES:
Deposits $678,932 $559,711 4.25% 3.48%
Borrowings 60,034 64,491 8.14% 7.39%
-------- -------- ------ ------
All interest-bearing
liabilities $738,966 $624,202 4.57% 3.88%
======== ======== ------ ------
Interest rate spread 4.06% 3.78%
====== ======
Interest income as a percentage
of average earning assets 4.08% 3.79%
====== ======
</TABLE>
<TABLE>
<CAPTION>
AVERAGE BALANCE RATE/YIELD
NINE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
1995 1994 1995 1994
-------------------- -----------------
<S> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans $543,721 $513,945 8.90% 8.11%
Mortgage-backed securities 132,440 98,395 6.70% 5.58%
Other investments 31,043 21,118 7.45% 4.78%
-------- -------- ------ ------
All interest-earning assets $707,204 $633,458 8.42% 7.60%
======== ======== ------ ------
INTEREST-BEARING LIABILITIES:
Deposits $619,014 $550,980 4.02% 3.56%
Borrowings 82,387 80,270 7.94% 6.95%
-------- -------- ------ ------
All interest-bearing
liabilities $701,401 $631,250 4.48% 3.99%
======== ======== ------ ------
Interest rate spread 3.94% 3.61%
====== ======
Interest income as a percentage
of average earning assets 3.98% 3.63%
====== ======
</TABLE>
The Company's net interest margin increased $3.9 million during the nine months
ended June 30, 1995 as compared to the same period a year ago. Contributing to
this increase was growth in the interest rate spread principally resulting from
rising interest rates and expansion of earning assets and interest-bearing
liabilities principally resulting from acquisitions during the period. The
following table describes the extent to which changes in interest rates and
changes in volume of interest-earning assets and interest-bearing liabilities
have affected the Company's interest income and expense for the nine month
period ended June 30, 1994 and the nine month period ended June 30, 1995
(dollars in thousands):
14
<PAGE> 15
<TABLE>
<CAPTION>
JUNE 30, 1995 VS JUNE 30, 1994
--------------------------------------
DUE TO
--------------------------------------
RATE/
RATE VOLUME VOLUME TOTAL
------- -------- -------- -------
<S> <C> <C> <C> <C>
CHANGES IN INTEREST INCOME:
Loans $ 3,060 $ 1,810 $ 177 $ 5,047
Mortgage-backed securities 823 1,425 285 2,533
Other investments 422 356 198 976
------- ------- ------- -------
Total interest income 4,305 3,591 660 8,556
------- ------- ------- -------
CHANGES IN INTEREST EXPENSE:
Deposits 1,921 1,816 237 3,974
Borrowings 595 110 16 721
------- ------- ------- -------
Total interest expense 2,516 1,926 253 4,695
------- ------- ------- -------
Net interest income $ 1,789 $ 1,665 $ 407 $ 3,861
======= ======= ======= =======
</TABLE>
The Company's provision for estimated loan losses decreased to $300,000 and
$900,000 during the three and nine months ended June 30, 1995, respectively,
from $375,000 and $1.1 millon for the three and nine months ended June 30,
1994, respectively. There were net charge-offs to the loan loss reserve of
$348,000 and $127,000 during the three and nine months ended June 30, 1995,
respectively, compared to net charge-offs of $530,000 and $1.7 million,
respectively, for the same periods a year earlier. Loan loss reserves at June
30, 1995 were $6.9 million, or 176% of nonperforming loans, or 1.17% of loans
held for investment, compared to $5.5 million, or 112% of nonperforming loans,
or 1.13% of loans held for investment at June 30, 1994.
The table below summarizes nonperforming assets at June 30, 1995 and June 30,
1994. Nonperforming assets consist of nonaccrual loans, foreclosed real
estate, other repossessed assets, and loans past due 90 days or more which
are still accruing (dollars in thousands).
<TABLE>
<CAPTION>
JUNE 30,
-----------------------------
1995 1994
-----------------------------
<S> <C> <C>
Nonaccrual loans $ 1,652 $ 4,924
Loans past due 90 days or more
and still accruing 2,273 -
Real estate acquired through foreclosure 4,889 10,733
Insubstance foreclosures - 299
Other repossessed assets 160 112
------- -------
Total nonperforming assets $ 8,974 $16,068
======= =======
Total nonperforming assets as
a percentage of total assets 1.08% 2.32%
======= =======
</TABLE>
Foreclosed real estate decreased from $10.2 million at September 30, 1994 to
$4.9 million at June 30, 1995 reflecting foreclosures of $1.2 million, and
sales of $4.5 million. Also contributing to the decline was the writedown of
four commercial properties in the amount of $2.6 million, which were previously
reserved, due to the permanent impairment of such assets.
15
<PAGE> 16
Liberty Mortgage originated loans during the three and nine months ended June
30, 1995 totaling $37 million and $102 million, respectively, compared to $58
million and $329 million for the same periods a year earlier.
Liberty Mortgage invests in purchased mortgage servicing rights ("PMSRs")
resulting from loans purchased through correspondent relationships. The
investment in PMSRs has the effect of reducing the basis in the loans
purchased, and increasing the gain (or reducing the loss) on sales of loans.
The following table outlines the activity in PMSRs for the three and nine
month periods ended June 30, 1995 and 1994 (dollars in thousands).
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
----------------------------------------
1995 1994 1995 1994
----------------------------------------
<S> <C> <C> <C> <C>
Acquired $ 73 $ 726 $ 140 $1,938
Sold 312 - 692 -
Amortized 95 149 350 404
Written off 52 - 52 -
Net Investment at June 30, 1,961 3,025
</TABLE>
Liberty Mortgage's policy requires the purchase of interest rate protection
to limit risk of volatile interest rates ("interest rate risk"). Liberty
Mortgage generally will incur a loss on the sale of loans which reflects the
marketing concession (or discount) to originate loans and the cost of
purchasing interest rate risk protection. However, the effect of PMSR's
offset the impact of marketing concessions.
During the three and nine months ended June 30, 1995, Liberty Mortgage sold
bulk loan servicing rights with aggregate principal balances of $89 million
and $214 million, respectively, compared to $81 million and $174 million,
respectively, a year earlier. This resulted in the recognition of a gain on
the sale of servicing of $977,000 and $1.8 million for the three and nine
months ended June 30, 1995 compared to $1.3 million and $2.7 million,
respectively, for the same periods a year ago. The servicing rights sold
generally related to loans originated for sale and sold within the last six
months. The servicing sales during the nine months ended June 30, 1995
includes $47 million in servicing rights which Liberty Mortgage sold during
the second quarter and granted recourse to the seller. Accordingly, the gain
related to such rights, estimated to be approximately $552,000, was deferred
and will be recognized in the fourth quarter when the recourse expires.
Non-interest income (net of gains on the sale of assets) remained relatively
flat at approximately $1.4 million for the quarters ended June 30, 1995 and
1994, and approximately $4.5 million for the nine months then ended.
Significant offsetting variances were the following.
o A decline in loan servicing fees of $162,000 for the quarter, and $337,000
for the nine months ended June 30, 1995 over last year, reflecting the
decline in loans serviced for others to $602 million at June 30, 1995 from
$930 million at June 30, 1994.
o An increase in deposit account service charges of $149,000 and $380,000 for
the three and nine months ended June 30, 1995 due to quarter-to-date average
16
<PAGE> 17
transaction accounts increasing 30% and year-to-date averages increasing
18% from June 1994 to June 1995 as a result of acquisitions during the
nine month period as well as internal growth.
The net cost of operations of other real estate declined by $65,000 and
$235,000 for the quarter and nine months ended June 30, 1995, respectively, as
compared to the same periods a year ago. Contributing to this variance was
the following (dollars in thousands).
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
JUNE 30, JUNE 30,
-------------------------------------------
1995 1994 1995 1994
-------------------------------------------
<S> <C> <C> <C> <C>
Provisions for estimated losses $ 78 $132 $490 $245
Net (gains) on sales (2) (132) (174) (74)
Net expense (income) from operations (10) 131 (7) 373
</TABLE>
Non-interest expense (net of other real estate operations) increased $1.1
million or 20% to $6.5 million for the quarter ended June 30, 1995, and
$740,000 or 4% to $17.3 million for the nine months then ended. Approximated
expenses relating to the acquisitions for the three and nine months ended June
30, 1995 are as follows (dollars in thousands).
<TABLE>
<CAPTION>
THREE ONTHS ENDED NINE MONTHS ENDED
JUNE 30, 1995 JUNE 30, 1995
-----------------------------------------
<S> <C> <C>
Compensation, taxes and benefits $ 325 $ 460
Occupancy and equipment 92 117
Advertising 8 17
Data processing 16 19
Federal deposit insurance premiums 109 140
Amortization of intangible assets 139 186
Other 123 197
------ ------
$ 812 $1,136
====== ======
</TABLE>
These additional expenses were offset by Liberty Bank deferring $614,000 for
the nine months ended June 30, 1995 as compared to $284,000 a year earlier in
compensation and benefits attributable to increased loan originations at
Liberty Bank. Expenses deferred during the three months ended June 30, 1995
and 1994 were comparable.
Professional fees declined $27,000 for the quarter and $214,000 for the nine
months ended June 30, 1995 as compared to the same periods a year earlier
principally due to lower legal fees resulting from a decline in nonperforming
assets. There were no other significant variances in other expenses for the
three and nine month periods ended June 30, 1995 and 1994.
ACCOUNTING FOR INCOME TAXES
The Company's effective income tax rate for the nine months ended June 30,
1995 and 1994 was 34% and 35%, respectively. The Company's management has
determined that it is more likely than not that its deferred tax assets will be
realized. This is based on the existence of taxable income in the form of
future reversals of existing taxable temporary differences and taxable income
in prior carryback years that is sufficient to allow realization of the tax
benefit of the Company's existing deductible temporary differences. The
Company is not aware of any material uncertainties existing at June 30, 1995
that may affect the realization of the Company's deferred tax assets. The
17
<PAGE> 18
Company evaluates the realizability of deferred tax assets quarterly by
assessing the need for a valuation allowance.
ACQUISITIONS
On December 2, 1994, the Company acquired Central Banking Company ("CBC") of
Swainsboro, Georgia. CBC, on the date of acquisition, held the following
approximate balances: loans of $21 million, cash and investments of $34
million, premises and equipment of $1 million and deposits of $52 million.
Intangible assets resulting from the acquisition amounted to approximately $2
million.
On March 24, 1995, the Company acquired three banking offices located in
Sylvania, Vidalia and Waycross, Georgia from First Union National Bank. Total
assets acquired were approximately $3 million, and total cash received and
deposits assumed were approximately $95 million. Intangible assets resulting
from the acquisition were approximately $4 million.
On March 16, 1995 the Company announced an agreement to acquire Tifton Bank
and Trust of Tifton, Georgia. Tifton Bank and Trust has two offices,
approximately $55 million in assets, $48 million in deposits, and $32 million
in loans. This transaction is expected to close in fall of 1995, subject to
regulatory approval.
During the nine months ended June 30, 1995, the Company purchased investments
totaling approximately $51 million and paid off borrowings of approximately $36
million with the proceeds from the three branch acquisitions described above.
PREFERRED STOCK
On December 2, 1994, in connection with the acquisition of CBC, the Company
issued $3.7 million in Series B 6.00% Cumulative Convertible Preferred
("Series B") stock. The shares have a liquidation preference of $25.00 per
share. Dividends on the Series B stock are cumulative and at an annual rate of
$1.50 per share and are payable quarterly. Each share of the Series B stock is
convertible at the option of the holder into 1.19 shares of common stock, at a
conversion price of $21.00 per share of common stock, subject to adjustment in
certain circumstances. The Company, at its option, may redeem the Series B
stock at any time on or after January 1, 1997.
On June 28, 1995 the Company announced that it would redeem all 460,000 shares
of its Series A 7.75% Cumulative Convertible Preferred ("Series A") stock on
July 31, 1995. The redemption price was $26.20 per share plus accrued and
unpaid dividends from July 1, 1995 to, but excluding, the redemption date. The
conditions for redeeming the Series A stock had been met in that the average
market price of the Company's common stock had been at least 135% of the $12.50
Series A stock conversion price for a period of twenty consecutive trading days
prior to the date of notice. Each share of the Series A stock to be redeemed
was convertible into two shares of the Company's common stock until the close
of business on July 31, 1995. On July 31, 1995, 457,463 shares of the Series
A stock were converted into 914,926 shares of common stock and 2,537 shares
were redeemed for $66,879.
18
<PAGE> 19
RECENTLY ISSUED ACCOUNTING STANDARDS
In March, 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards ("SFAS") No. 121 "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets to be Disposed Of". SFAS No.
121 requires that long-lived assets and certain identifiable intangibles to be
held and used at the entity be reviewed for impairment whenever events or
changes in circumstances indicate that the carrying amount of an asset may
not be recoverable. If the future undiscounted cash flows expected to result
from the use of the asset and its eventual disposition are less than the
carrying amount of the asset, an impairment loss is recognized. Otherwise, an
impairment loss is not recognized. This statement also requires that
long-lived assets and certain intangibles to be disposed of be reported at the
lower of carrying amount or fair value less cost to sell, except for assets
that are covered by Accounting Principles Board Opinion No. 30 "Reporting the
Results of Operations-Reporting the Effects of Disposal of a Segment of a
Business, and Extraordinary, Unusual and Infrequently Occurring Events and
Transactions. Assets that are covered by Opinion 30 will continue to be
reported at the lower of carrying amount or net realizable value. SFAS No.
121 is effective for financial statements for fiscal years beginning after
December 15, 1995. Management believes that the adoption of SFAS No. 121 will
not have a material impact on the Company's financial statements.
In May, 1995, FASB issued SFAS No. 122 "Accounting for Mortgage Servicing
Rights". This statement is effective for financial statements issued by the
Company for the fiscal year ending September 30, 1997. SFAS 122 amends SFAS
No. 65 "Accounting for Certain Mortgage Banking Activities", to require that
a mortgage banking enterprise recognize as separate assets rights to service
mortgage loans for others regardless of whether those servicing rights are
acquired through either the purchase or origination of mortgage loans. This
statement also requires that the mortgage banking enterprise assess its
capitalized mortgage servicing rights for impairment based upon the fair
value of those rights, including those rights purchased before adoption of
this statement. Impairment should be recognized through a valuation
allowance. Retroactive capitalization of mortgage servicing rights before the
adoption of this statement is prohibited. The Company is currently reviewing
the impact this statement will have on its mortgage operations.
19
<PAGE> 20
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Securities Holders
-----------------------------------------------------
There were no matters submitted to a vote of securities holders during
the quarter ended June 30, 1995.
Item 6. Exhibits and Reports Filed on Form 8-K
--------------------------------------
(a) Exhibits
Exhibit 11 - Statements of Computation of Earnings Per Share
Exhibit 15 - Awareness Letter of Coopers & Lybrand
Exhibit 27 - Financial Data Schedule
(b) Reports Filed on Form 8-K
On June 5, 1995, the Registrant filed an Amendment to Current Report on
Form 8-K/A, Amendment No. 1, to include the financial statements and
proforma financial information relating to the Current Report on Form 8-K
dated March 24, 1995.
On June 6, 1995, the Registrant filed an Amendment to Current Report on
Form 8-K/A, Amendment No. 2, amending the financial statements and
proforma financial information contained in the Amendment to Current
Report on Form 8-K/A filed June 5, 1995.
On June 6, 1995, the Registrant filed a Current Report on Form 8-K which
included a press release dated May 15, 1995 announcing that George A.
Molloy had been elected President and Chief Executive Officer of its
subsidiary, Liberty Mortgage Corporation.
On July 11, 1995 the Registrant filed a Current Report on Form 8-K which
included a press release dated June 28, 1995 announcing the Notice of
Redemption for its Series A 7.75% Cumulative Convertible Preferred Stock
and its intent to increase the dividend on its common stock.
On July 14, 1995, the Registrant filed a Current Report on Form 8-K which
included two press releases dated July 6, 1995 and July 11, 1995. The
first announcing the resignation of Larry D. Flowers, the Executive Vice
President for Retail Banking of its subsidiary, First Liberty Bank, and
the second announcing that Mr. Flowers had withdrawn his resignation.
20
<PAGE> 21
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST LIBERTY FINANCIAL CORP.
-----------------------------
<TABLE>
<S> <C>
DATE: August 14, 1995 /s/ David L. Hall
------------------------- ---------------------------------------
David L. Hall
Executive Vice President and
Chief Financial Officer
(Duly authorized, principal
financial and principal accounting
officer)
</TABLE>
21
<PAGE> 22
FIRST LIBERTY FINANCIAL CORP.
Index of Exhibits
The following exhibits are filed as part of the Report.
Exhibit No. Description Page
11 Statements of Computation of Earnings Per Share 23
15 Awareness Letter of Coopers & Lybrand 25
27 Financial Data Schedule -
22
<PAGE> 23
EXHIBIT 11
STATEMENTS OF COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
--------------------------------------------------
June 30, June 30,
--------------------------------------------------
1995 1994 1995 1994
------------------------------------------------------------------------------
Primary Earnings Per Share:
<S> <C> <C> <C> <C>
Average shares outstanding 3,008,965 3,008,350 3,008,555 3,008,350
----------- ----------- ----------- -----------
Average options outstanding 166,000 164,000 159,498 162,315
Average exercise price $ 7.87 $ 7.43 $ 7.57 $ 7.36
----------- ----------- ----------- -----------
Proceeds from the assumed
exercise of options
outstanding $ 1,306,420 $ 1,218,520 $ 1,207,400 $ 1,194,638
Average market price per
share 15.92 14.03 14.18 14.70
----------- ----------- ----------- -----------
Assumed shares repurchased 82,062 86,851 85,148 81,268
----------- ----------- ----------- -----------
Common stock equivalents of
options outstanding 83,938 77,149 74,350 81,047
----------- ----------- ----------- -----------
Weighted average shares
outstanding (including
common stock equivalents) 3,092,903 3,085,499 3,082,905 3,089,397
=========== =========== =========== ===========
Net income $ 2,086,648 $ 1,623,175 $ 5,878,564 $ 4,380,649
Preferred stock dividend 278,613 222,813 797,402 668,438
----------- ----------- ----------- -----------
Net income applicable to
common stockholders $ 1,808,035 $ 1,400,362 $ 5,081,162 $ 3,712,211
=========== =========== =========== ===========
Earnings per common share $ .58 $ .45 $ 1.64 $ 1.20
=========== =========== =========== ===========
FULLY DILUTED EARNINGS PER SHARE:
Average shares outstanding 3,008,965 3,008,350 3,008,555 3,008,350
----------- ----------- ----------- -----------
Average options outstanding 166,000 164,000 159,498 162,315
Average exercise price $ 7.87 $ 7.43 $ 7.57 $ 7.36
----------- ----------- ----------- -----------
Proceeds from the assumed
exercise of options
outstanding $ 1,306,420 $ 1,218,520 $ 1,207,400 $ 1,194,638
Average market price per
share 16.50 14.03 16.50 14.70
----------- ----------- ----------- -----------
Assumed shares repurchased 79,177 86,851 73,176 81,268
----------- ----------- ----------- -----------
Common stock equivalents of
options outstanding 86,823 77,149 86,322 81,047
Assumed conversion of
outstanding convertible
debentures (1) 40,661 40,661 40,661 40,661
Assumed conversion of
outstanding preferred
stock (2) 1,097,142 920,000 1,055,614 920,000
----------- ----------- ----------- -----------
Weighted average shares
outstanding (including
common stock equivalents) 4,233,591 4,046,160 4,191,152 4,050,058
=========== =========== =========== ===========
</TABLE>
23
<PAGE> 24
EXHIBIT 11
STATEMENTS OF COMPUTATION OF EARNINGS PER SHARE, CONTINUED
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------------------------------------
JUNE 30, JUNE 30,
---------------------------------------------------
1995 1994 1995 1994
-------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income $2,086,648 $1,623,175 $5,878,564 $4,380,649
Interest expenses associated
with the convertible
debentures (3) 13,839 13,814 41,517 41,443
Income taxes (4) 4,705 4,697 14,116 14,091
---------- ---------- ---------- ----------
Net income adjusted $2,095,782 $1,632,292 $5,905,965 $4,408,001
========== ========== ========== ==========
Earnings per common share $ .50 $ .40 $ 1.41 $ 1.09
========== ========== ========== ==========
</TABLE>
(1) Potential dilution relating to convertible debentures is calculated as
follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Average debentures
outstanding 664,000 664,000 664,000 664,000
Conversion price $ 16.33 $ 16.33 $ 16.33 $ 16.33
---------- ---------- ---------- ----------
Potentially dilutive
shares 40,661 40,661 40,661 40,661
========== ========== ========== ==========
</TABLE>
(2) Potential dilution relating to preferred stock is calculated as follows:
<TABLE>
<CAPTION>
<S> <C> <C> <C> <C>
Average Series A Preferred
stock outstanding 11,500,000 11,500,000 11,500,000 11,500,000
Conversion price $ 12.50 $ 12.50 $ 12.50 $ 12.50
---------- ---------- ---------- ----------
Potentially dilutive
shares 920,000 920,000 920,000 920,000
========== ========== ========== ==========
Average Series B Preferred
stock outstanding 3,719,975 - 2,847,894 -
Conversion price $ 21.00 - $ 21.00 -
---------- ---------- ---------- ----------
Potentially dilutive
shares 177,142 - 135,614 -
========== ========== ========== ==========
</TABLE>
(3) This amount includes interest expense and the amortization of issuance
costs associated with the convertible debentures.
(4) Income taxes have been computed at the Company's marginal tax rate of 34%.
24
<PAGE> 25
COOPERS & LYBRAND L.L.P.
August 11, 1995
Securities and Exchange Commission
450 Fifth Street., N.W.
Washington, DC 20549
RE: First Liberty Financial Corp.
Registration on Form S-8
We are aware that our report dated August 11, 1995 on our review of interim
financial information of First Liberty Financial Corp. and Subsidiaries for
the three-month and nine-month periods ended June 30, 1995, and included in
the Company's quarterly report on Form 10-Q for the quarter then ended is
incorporated by reference into the Company's Form S-8 (File No. 33-24733).
Pursuant to Rule 436(c) under the Securities Act of 1933, this report should
not be considered a part of the registration statement prepared or certified
by us within the meaning of Sections 7 and 11 of the Act.
Coopers & Lybrand L.L.P.
25
