<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1996
OR
[ ] 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 0-19611
CITFED BANCORP, INC.
--------------------
(Exact name of registrant as specified in its charter)
DELAWARE 31-1332674
(State of other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
ONE CITIZENS FEDERAL CENTRE, DAYTON, OHIO 45402
(Address of principal executive offices) (Zip code)
(937) 223-4234
(Registrant's telephone number, including area code)
NOT APPLICABLE
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report), and (2) has been subject to such
filing requirements for the past 90 days.
YES X No
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Outstanding at
Class of Common Stock January 31, 1997
--------------------- ----------------
$.01 par value 8,584,392
<PAGE> 2
CITFED BANCORP, INC.
FORM 10-Q
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C> <C>
PART I. Financial Information
Item 1. Financial Statements:
Consolidated Statements of Financial
Condition as of December 31, 1996
and March 31, 1996 1
Consolidated Statements of Operations
for the Three and Nine Months ended
December 31, 1996 and 1995 2
Consolidated Statement of Stockholders'
Equity for the Nine Months ended
December 31, 1996 3
Consolidated Statements of Cash Flows
for the Nine Months ended
December 31, 1996 and 1995 4
Notes to Consolidated Financial
Statements 5
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of
Operations 7
PART II. Other Information
Item 1. Legal Proceedings 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
Exhibit 11
Exhibit 27
</TABLE>
<PAGE> 3
CITFED BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
DECEMBER 31, 1996 AND MARCH 31, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
Part 1. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS DECEMBER 31, MARCH 31,
1996 1996
------------ -----------
(unaudited)
ASSETS
------
<S> <C> <C>
CASH AND DEMAND DEPOSITS $ 36,189 $ 23,047
Interest-bearing time deposits and cash equivalents 22,924 29,677
----------- ------------
TOTAL CASH AND EQUIVALENTS 59,113 52,724
Mortgage-backed securities available for sale 817,849 655,679
Investment securities held to maturity 235,817 188,743
Loans held for sale 36,319 75,656
Loans (less allowance for loan losses of $15,779 and $16,330
at December 31, 1996 and March 31, 1996, respectively) 1,578,896 1,445,844
Accrued interest receivable:
Mortgage-backed securities 4,440 3,578
Investment securities 3,562 2,479
Loans 8,745 8,929
Real estate held for sale, net 9,081 5,862
Federal Home Loan Bank stock, at cost 40,808 31,908
Office properties and equipment, net 18,855 20,039
Cost in excess of fair value of net assets acquired 21,044 23,219
Other assets 83,631 83,226
----------- ------------
TOTAL $ 2,918,160 $ 2,597,886
=========== ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
LIABILITIES:
Deposits $ 1,606,669 $ 1,649,265
Advances from Federal Home Loan Bank 788,369 602,504
Other borrowings 302,439 145,557
Other liabilities 35,739 26,451
----------- ------------
TOTAL LIABILITIES 2,733,216 2,423,777
STOCKHOLDERS' EQUITY:
Serial Preferred Stock, ($.01 par value),
Authorized 5,000,000 shares; none outstanding
Common Stock ($.01 par value),
Authorized 20,000,000 shares; 8,584,392 and 5,685,567 outstanding
at December 31, 1996 and March 31, 1996, respectively 86 57
Additional paid-in capital 56,205 54,718
Retained earnings-substantially restricted 131,092 123,743
Unearned ESOP shares 0 (632)
Net unrealized loss on securities available for sale (2,153) (3,402)
Unearned compensation - restricted stock awards (286) (375)
----------- ------------
TOTAL STOCKHOLDERS' EQUITY 184,944 174,109
----------- ------------
TOTAL $ 2,918,160 $ 2,597,886
=========== ============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 1
<PAGE> 4
CITFED BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Three and Nine Months Ended December 31, 1996 and 1995
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
December 31, December 31,
------------ ------------
1996 1995 1996 1995
--------- --------- --------- ----------
INTEREST INCOME: (unaudited)
<S> <C> <C> <C> <C>
Loans $31,364 $29,912 $91,531 $86,668
Mortgage-backed securities 12,795 8,132 35,971 25,180
Investments 3,745 2,848 10,911 8,465
Other 813 556 2,082 1,932
------- ------- ------- -------
TOTAL INTEREST INCOME 48,717 41,448 140,495 122,245
------- ------- ------- -------
INTEREST EXPENSE:
Deposits 17,498 18,434 53,273 54,608
Borrowings 14,200 8,564 37,520 25,675
------- ------- ------- -------
TOTAL INTEREST EXPENSE 31,698 26,998 90,793 80,283
------- ------- ------- -------
NET INTEREST INCOME 17,019 14,450 49,702 41,962
Provision for loan losses 900 300 2,400 900
------- ------- ------- -------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 16,119 14,150 47,302 41,062
------- ------- ------- -------
NON-INTEREST INCOME(LOSS):
Servicing fees and charges:
Consumer banking 3,494 2,568 9,630 7,058
Trust 805 694 2,571 1,929
Mortgage loan origination & servicing, net 2,706 2,582 7,782 6,171
Gain (loss) on sale of earning assets:
Mortgage servicing rights 0 0 0 3,662
Investments 0 0 0 63
Loans and mortgage-backed securities 0 0 0 50
Land held for development (93) (57) (203) (93)
Gain on sale:
Office properties and equipment 0 72 32 73
Provision for losses on real estate held for sale (169) (9) (187) (28)
Other 743 167 1,834 534
------- ------- ------- -------
TOTAL NON-INTEREST INCOME 7,486 6,017 21,459 19,419
------- ------- ------- -------
NON-INTEREST EXPENSES:
Salaries and benefits 6,726 5,982 19,977 17,929
Occupancy and equipment 3,276 3,065 9,763 9,514
Amortization of cost in excess of fair value of
net assets acquired 725 723 2,175 2,198
FDIC premiums and OTS assessments 1,017 1,035 13,340 2,988
Marketing and advertising 224 510 1,247 1,439
Franchise Tax 396 427 1,189 1,293
Other 2,628 2,574 7,758 8,058
------- ------- ------- -------
TOTAL NON-INTEREST EXPENSES 14,992 14,316 55,449 43,419
------- ------- ------- -------
INCOME BEFORE INCOME TAXES 8,613 5,851 13,312 17,062
Income tax provision 2,830 1,812 4,379 5,571
------- ------- ------- -------
NET INCOME $ 5,783 $ 4,039 $ 8,933 $11,491
======= ======= ======= =======
NET INCOME PER COMMON AND COMMON EQUIVALENT SHARES $ 0.65 $ 0.46 $ 1.01 $ 1.30
======= ======= ======= =======
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 2
<PAGE> 5
CITFED BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
For The Nine Months Ended December 31, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
ADDITIONAL NET UNREALIZED OTHER TOTAL
OUTSTANDING COMMON PAID-IN RETAINED (LOSS)GAIN ON SECURITIES EQUITY STOCKHOLDERS'
(unaudited) SHARES STOCK CAPITAL EARNINGS AVAILABLE FOR SALE ADJUSTMENTS EQUITY
----------- ------ ----------- --------- ---------------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE, MARCH 31, 1996 5,685,567 $57 $54,718 $123,743 ($3,402) ($1,007) $174,109
Stock Dividend 2,842,783 29 (29)
Net Income 8,933 8,933
Dividends Paid (1,555) (1,555)
Change in net unrealized
(Loss) Gain on securities
available for sale 1,249 1,249
Stock options exercised 58,325 478 478
Shares retired (3,033)
Termination of ESOP 991 632 1,623
RRP compensation 107 107
Restricted stock awards 750
Restricted stock compensation 18 (18) 0
--------- --- ------- -------- ------ ---- --------
BALANCE, DEC. 31, 1996 8,584,392 $86 $56,205 $131,092 ($2,153) ($286) $184,944
========= === ======= ======== ====== ==== ========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 3
<PAGE> 6
CITFED BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Nine Months Ended December 31, 1996 and 1995
(Dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
-----------------
(Unaudited) 1996 1995
-------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 8,933 $ 11,491
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization 2,003 2,805
Amortization of intangibles 2,266 8,570
Amortization of deferred loan fees (393) (879)
(Increase) decrease in loans held for sale 37,304 (20,545)
FHLB stock dividends (1,889) (1,415)
Loss on sale of earning assets 2,110 3,751
Provision for loan and REO losses 2,587 928
ESOP & RRP and other 94 107
Increase in accrued interest receivable (1,760) (2,399)
(Increase) decrease in other assets 16,599 (22,625)
Increase (decrease) in other liabilities, net 8,616 (2,300)
--------- -----------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 76,470 (22,511)
--------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment securities:
Purchased (80,741) (54,212)
Matured/principal collected 33,653 44,409
Mortgage-backed securities available for sale:
Purchased (244,708) (68,219)
Sold 1,939
Principal collected 84,716 49,338
Loans held for investment:
Originated (364,939) (291,703)
Principal collected 225,009 169,989
Purchased and originated mortgage servicing rights (17,223) (4,112)
Purchases/Redemptions of FHLB stock (7,011) (3,926)
Proceeds from real estate sold 1,635 3,804
Real estate acquired for development and sale (246) (348)
Office properties and equipment, net (923) (1,088)
--------- -----------
NET CASH USED IN INVESTING ACTIVITIES (370,778) (154,129)
--------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Increase (decrease) in deposits, net, excluding purchase of deposits (42,596) 41,804
FHLB advances:
Borrowings 968,200 1,336,500
Payments (782,335) (1,140,340)
Other borrowings 161,040 99,798
Other borrowing payments (4,158) (167,356)
Termination of ESOP 1,623
Common stock issuances 478 426
Cash dividends paid (1,555) (1,097)
--------- -----------
NET CASH PROVIDED BY FINANCING ACTIVITIES 300,697 169,735
--------- -----------
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 6,389 (6,905)
Cash and equivalents, beginning of period 52,724 72,660
--------- -----------
CASH AND EQUIVALENTS, END OF PERIOD $ 59,113 $ 65,755
========= ===========
SUPPLEMENTAL CASH FLOW INFORMATION:
Interest paid $ 86,680 $ 78,416
========= ===========
Income taxes paid (received) $ 4,450 ($3,724)
========= ===========
SUPPLEMENTAL OF NON-CASH INVESTING ACTIVITIES:
Transfer of loans to foreclosed real estate $ 4,998 $ 2,243
========= ===========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Page 4
<PAGE> 7
CITFED BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three and Nine Months Ended December 31, 1996 and 1995
(Unaudited)
1. BASIS OF PRESENTATION
The foregoing consolidated financial statements as of December 31, 1996
and 1995, and for the three and nine months ended December 31, 1996 and 1995
are unaudited. However, in the opinion of management, all adjustments (which
consist of normal recurring accruals) necessary for a fair presentation of the
consolidated financial statements have been included. Results for any interim
period are not necessarily indicative of results to be expected for the year.
The interim consolidated financial statements include the accounts of CitFed
Bancorp, Inc. (the "Corporation"), its subsidiary, Citizens Federal Bank,
F.S.B. (the "Bank" or "Citizens Federal") and the Bank's subsidiaries.
2. COMMITMENTS AND CONTINGENCIES
At December 31, 1996, the Bank had outstanding commitments to originate
and purchase loans aggregating approximately $38.6 million. The commitments
extend over varying periods of time with the majority being disbursed within
thirty days. Loan commitments with interest rates established with the
borrower amounted to $32.0 million; the remainder are at floating rates. The
Bank had outstanding mandatory and optional forward commitments to sell loans
and mortgage-backed securities of $51.3 million at December 31, 1996.
The Corporation and its subsidiaries are defendants in certain lawsuits
arising in the ordinary course of business. Management, after review with its
legal counsel, is of the opinion that the resolution of these legal matters
will not have a material adverse effect on the Corporation's financial position
or results of operations.
3. SUBSIDIARY OPERATIONS
CitFed Bancorp has four subsidiaries:
Citizens Federal Bank, F.S.B. CitFed Mortgage Corporation of America
(federal savings bank) (mortgage banking)
C. F. Property Management Company Dayton Financial Services Corporation
(which does business as CitFed (residential land development)
Investment Group mutual fund and
insurance sales)
<TABLE>
<CAPTION>
Earnings (losses): THREE MONTHS ENDED NINE MONTHS ENDED
(In thousands) DEC. 31, DEC. 31
------------------ -----------------
1996 1995 1996 1995
----- ------ ------ -----
<S> <C> <C> <C> <C>
Citizens Federal Bank $5,514 $4,190 $7,999 $10,620
CitFed Mortgage 725 366 2,213 2,710
CitFed Investment Group 52 (8) 227 (2)
Dayton Financial (57) (51) (160) (112)
CitFed Bancorp (including
consolidating entries) (451) (458) (1,346) (1,725)
------ ------ ------ -------
NET INCOME $5,783 $4,039 $8,933 $11,491
====== ====== ====== =======
</TABLE>
Page 5
<PAGE> 8
4. EARNINGS PER COMMON AND COMMON EQUIVALENT SHARE
Earnings per common and common equivalent share for the three and nine
months ended December 31, 1996 and 1995 are divided by the weighted average
number of common shares and common share equivalents outstanding during the
period. Average common and common stock equivalents outstanding for the three
month period ended December 31, 1996 and 1995 were 8,899,332 and 8,814,950,
respectively. Average common and common stock equivalents outstanding for the
nine month period ended December 31, 1996 and 1995 were 8,880,224 and
8,813,796, respectively. Stock options are considered common share
equivalents.
5. DIVIDEND
On October 18, 1996, the Board of Directors approved a three-for-two stock
split in the form of a stock dividend, which was distributed on November 29,
1996, to shareholders of record on November 15, 1996. Par value will remain at
$0.01 per share. All references to the number of shares and per share amounts
have been restated to reflect the effect of the stock dividend. The Board of
Directors declared on January 17, 1997, a quarterly dividend of $0.08 per share
payable February 28, 1997 to stockholders of record on February 14, 1997. The
total amount of the dividend will be approximately $686,750.
6. ACCOUNTING FOR MORTGAGE SERVICING RIGHTS
Effective April 1, 1996, the Corporation adopted the provisions of
Statement of Financial Accounting Standards No. 122, "Accounting for Mortgage
Servicing Rights" ("SFAS 122"). SFAS 122 requires that a mortgage banking
enterprise recognize, as separate assets, rights to service mortgage loans for
others that have been acquired through either the purchase or origination of a
loan. A mortgage banking enterprise that sells or securitizes those loans with
servicing rights retained should allocate the total cost of the mortgage loans
sold or securitized to the mortgage servicing rights ("MSR's") and the loans
based on their relative fair values. Additionally, SFAS 122 requires that
MSR's be periodically assessed for impairment and reported on the Consolidated
Statement of Financial Condition at the lower of cost or fair value. As a
result of adopting SFAS 122, the Corporation capitalized $3.6 million of MSR's
from its retail lending operations.
The fair value of capitalized MSR's is calculated, on a disaggregated
basis, by discounting estimated expected future cash flows using a discount
rate commensurate with the risk involved. In using this valuation method, the
Bank used assumptions that market participants would use in estimating future
net servicing income which included estimates of the cost of servicing per
loan, the discount rate, float value, inflation rate, ancillary income per
loan, prepayment speeds and default rates. The Bank conducts its periodic
impairment analyses using a disaggregated method, based on the underlying
loans' interest rates and loan type. At December 31, 1996, the Bank had
recorded an MSR impairment reserve of $167,100.
Page 6
<PAGE> 9
7. ACCOUNTING FOR STOCK-BASED COMPENSATION
On April 1, 1996, the Corporation adopted Statement of Financial
Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS
123"). SFAS 123 establishes optional financial accounting standards and
additional disclosure requirements for stock-based employee compensation plans.
The Corporation is retaining its current accounting method for its stock-based
employee compensation plans, and as such, its adoption of SFAS 123 has had no
material impact on the Corporation's financial condition or results of its
operations.
8. ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS AND FOR LONG-LIVED
ASSETS TO BE DISPOSED OF
On April 1, 1996, the Corporation adopted Statement of Financial
Accounting Standards No. 121, "Accounting for the Impairment of Long-Lived
Assets and for Long-Lived Assets to Be Disposed of" ("SFAS 121"). SFAS 121
requires that long-lived assets and certain identifiable intangibles, and
goodwill related to those assets to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. Adoption of this statement
did not have a material impact on the financial condition or results of
operations of the Corporation.
9. TERMINATION OF ESOP
In connection with the Corporation's acquisition of PSB Holdings,
Corporation ("PSB") during fiscal 1996, the Corporation filed a request with
the Internal Revenue Service ("IRS") for a determination letter with respect to
the tax qualified status of PSB's employee stock ownership plan ("ESOP") upon
termination. The Corporation received a determination letter from the IRS
indicating that the PSB ESOP could be terminated, with shares distributed,
without adversely affecting its qualifications for federal income tax purposes.
As a result, the ESOP paid off its obligation to the Corporation and
distributed all remaining shares of stock to qualifying employees during the
third quarter of fiscal 1997. The fair value of the shares released for
distribution to participants was $991,000 and was included in compensation
expense.
10. RECLASSIFICATIONS
Certain amounts for prior periods have been reclassified for comparative
purposes to conform with the current year's presentation.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
GENERAL
The Corporation is a Delaware corporation organized on January 25, 1991
for the purpose of acquiring all of the outstanding capital stock of Citizens
Federal which was issued on January 29, 1992. Citizens Federal is a
federally-chartered stock savings bank headquartered in Dayton, Ohio. The Bank
has 34 offices in a six county area that comprises the greater Dayton area. In
addition, through the Bank's wholly owned subsidiary, CitFed Mortgage
Corporation of America (the "CitFed Mortgage"), it operates thirteen mortgage
loan origination offices in Dayton, Columbus and Cincinnati, Ohio; Indiana,
Kentucky, Virginia and North Carolina.
Page 7
<PAGE> 10
FORWARD-LOOKING STATEMENT
When used in this Quarterly Report on Form 10-Q, the words or phrases
"will likely result", "are expected to", "will continue", "is anticipated",
"estimate", "project" or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. Such statements are subject to certain risks
and uncertainties - including, changes in economic conditions in the Company's
market area, changes in policies by regulatory agencies, fluctuations in
interest rates, demand for loans in the Company's market area and competition,
that could cause actual results to differ materially from historical earnings
and those presently anticipated or projected. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements,
which speak only as of the date made. The Company wishes to advise readers
that the factors listed above could affect the Company's financial performance
and could cause the Company's actual results for future periods to differ
materially from any opinions or statements expressed with respect to future
periods in any current statements.
The Company does not undertake -- and specifically disclaims any
obligation -- to publicly release the result of any revisions which may be made
to any forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.
RESULTS OF OPERATIONS
Citizens Federal's results of operations depend primarily upon the level
of net interest income, which is the difference between the interest income
earned on its interest-earning assets such as loans and investments, and the
costs of the Bank's interest-bearing liabilities, primarily deposits and
borrowings. Results of operations are also dependent upon the level of the
Bank's non-interest income, including fee income and service charges, and
affected by the level of its non-interest expenses, including its general and
administrative expenses. Net interest income depends upon the volume of
interest-earning assets and interest-bearing liabilities and the interest rate
earned or paid on them, respectively.
Net Income: Net income for the three months ended December 31, 1996, was
$5.8 million as compared to $4.0 million for the three months ended December
31, 1995, resulting in an increase of 43.2%.
Net income for the nine months ended December 31, 1996, was $8.9 million
compared to $11.5 million for the same period a year ago. This $2.6 million,
or 22.3%, decrease is attributable to a one-time charge of $7.2 million (net of
tax) for the recapitalization of the Savings Association Insurance Fund
("SAIF") resulting from legislation enacted on September 30, 1996, partially
offset by an increase in net interest income after provision for loan losses of
$6.2 million, or 15.2%. Without the SAIF recapitalization charge, net income
for the nine months ended December 31, 1996, would have been $16.1 million, or
a 40.4% increase over the same period in fiscal 1996.
Interest Income: Total interest income increased $7.3 million, or 17.5%
from $41.4 million for the third quarter of fiscal 1996 to $48.7 million for
the third quarter of fiscal 1997. Of this increase, $7.6 million resulted from
an increase of $414.7 million in the average balance of interest-earning
assets, primarily loans receivable and mortgage-backed securities. The
offsetting $282,000 decrease resulted from a 7 basis point decrease in the
weighted average yield on interest-earning assets caused by a decline in market
rates of interest.
Page 8
<PAGE> 11
Total interest income increased $18.3 million, or 14.9% from $122.2
million for the nine months ended December 31, 1995, to $140.5 million for the
nine months ended December 31, 1996. Of this increase, $19.3 million resulted
from a $361.6 million increase in the average balance of interest-earning
assets. The offsetting $1.0 million decrease resulted from a 11 basis point
decrease in the average yield on interest-earning assets.
Management decided, throughout fiscal 1996 and 1997, to grow the Bank's
assets by increasing its permanent portfolio of consumer and one- to
four-family loans held for investment. As a result, the average balance of
loans increased $92.1 million from December 1995 to December 1996. In
addition, purchases during this same period have resulted in an increase in the
average balance of mortgage-backed securities and investment securities of
$217.9 million and $44.2 million, respectively.
Interest Expense: Total interest expense increased $4.7 million, or
17.4% from $27.0 million for the third quarter of fiscal 1996 to $31.7 million
for the third quarter of fiscal 1997. Of this increase, $9.1 million was the
result of an increase of $401.1 million in the average balance of
interest-bearing liabilities. The offsetting $4.4 million decrease related to
a 4 basis point decrease in the cost of funds.
Total interest expense increased $10.5 million, or 13.1% from $80.3
million for the nine months ended December 31, 1995, to $90.8 million for the
nine months ended December 31, 1996. Of this increase $16.5 million was the
result of a $341.0 million increase in the average balance of interest-bearing
liabilities. The offsetting $5.9 million related to a 12 basis point decrease
in the cost of funds.
The Bank's average deposits decreased $52.5 million for the third quarter
of fiscal 1997 as compared to the third quarter of fiscal 1996 primarily due to
a $56.2 million decrease in demand, money market deposits, and retail
certificates of deposit partially offset by a $4.3 million increase in now
accounts. In addition, FHLB advances and securities sold under agreements to
repurchase increased $270.1 million and $183.6 million, respectively. These
increases were necessary to fund the asset growth planned by management and to
offset the reduction in deposits.
Rate/Volume Analysis. The following table presents the dollar amount of
changes in interest income and interest expense for major components of
interest-earning assets and interest-bearing liabilities. For each category
of interest-earning assets and interest-bearing liabilities, information is
provided on changes attributable to (i) changes in rate (i.e., changes in rate
multiplied by old volume) and (ii) changes in volume (i.e., changes in volume
multiplied by old rate). For purposes of this table, changes attributable to
both rate and volume which cannot be segregated have been allocated
proportionately to the change due to rate and the change due to volume.
Page 9
<PAGE> 12
<TABLE>
<CAPTION>
RATE/VOLUME ANALYSIS
(In Thousands) 3 Months Ended Dec. 31, 9 Months Ended Dec. 31,
|------------ 1996 vs 1995 -----------| |-------------- 1996 vs 1995 ---------------|
Total Total
Increase(Decrease) Due to Increase Increase(Decrease) Due to Increase
Volume Rate (Decrease) Volume Rate (Decrease)
------ ---- --------- ------ ---- ----------
<S> <C> <C> <C> <C> <C> <C>
Interest-Earning Assets:
Loans receivable $ 1,958 $ (506) $ 1,452 $ 5,904 $ (1,041) $ 4,863
Mortgage-backed securities 4,614 49 4,663 10,917 (126) 10,791
Investment securities 771 126 897 2,174 272 2,446
Other 208 49 257 316 (166) 150
-------- ------- -------- -------- --------- ----------
Total interest-earning assets $ 7,551 $ (282) $ 7,269 $ 19,311 $ (1,061) $ 18,250
======== ======= -------- ======== ========= ----------
Interest-Bearing Liabilities:
Deposits:
NOW Accounts $ 153 $ (293) $ (140) $ 114 $ (420) $ (306)
Savings Deposits (22) 171 149 (28) (186) (214)
Money Market Deposits (158) 100 (58) (301) 0 (301)
Certificates of Deposits (267) (620) (887) 574 (1,088) (514)
FHLB advances 6,517 (3,335) 3,182 11,251 (3,125) 8,126
Securities sold under agreement
to repurchase 2,883 (442) 2,441 4,852 (1,119) 3,733
Other Borrowings (14) 27 13 (7) (7) (14)
-------- ------- -------- -------- --------- ----------
Total interest-bearing liabilities $ 9,092 $(4,392) 4,700 $ 16,455 $ (5,945) 10,510
======== ======== -------- ======== ========= ----------
Net interest income $ 2,569 $ 7,740
======== ==========
</TABLE>
Net Interest Margin. The following table presents, for the periods
indicated, the total dollar amount of interest income from average
interest-earning assets and the resultant yields, as well as the interest
expense on average interest-bearing liabilities, and the resultant rates and
the net interest margin. No tax equivalent adjustments have been made. All
average balances are daily average balances.
The ratio of average interest-earning assets to average interest-bearing
liabilities increased to 102.4% for the nine months ended December 31, 1996, as
compared to 101.8% for the same period last year. Although the weighted
average interest rate declined for both interest-earning assets and
interest-bearing liabilities, the decline was greater for interest-bearing
liabilities resulting in an increased interest rate spread.
Page 10
<PAGE> 13
<TABLE>
<CAPTION>
Three months ended December 31,
1996 1995
---------------------------------------- ----------------------------------------
Average Interest Yield/ Average Interest Yield/
Outstanding Earned/ Weighted Outstanding Earned/ Weighted
Balance Paid Rate Balance Paid Rate
------- ---- ---- -------- ---- ----
<S> <C> <C> <C> <C> <C> <C>
(Dollars in thousands)
Interest-Earning Assets:
Loans receivable (1) $1,584,143 $ 31,364 7.92% $1,507,339 $ 29,912 7.94%
Mortgage-backed securities 762,625 12,795 6.71 487,872 8,132 6.67
Investment securities 227,192 3,745 6.59 180,134 2,848 6.32
Other 62,102 813 5.24 45,996 556 4.84
---------- -------- ----- ---------- -------- -----
Total interest-earning assets $2,636,062 $ 48,717 7.39% $2,221,341 $ 41,448 7.46%
========== -------- ----- ========== -------- -----
Interest-Bearing Liabilities:
Deposits:
NOW account $ 178,167 $ 859 1.93% $ 173,873 $ 999 2.30%
Demand deposits 91,270 0 0.00 121,601 0 0.00
Savings deposits 208,410 1,290 2.48 209,004 1,141 2.18
Money Market deposits 128,999 1,092 3.39 137,664 1,150 3.34
Certificates of deposit 945,784 14,257 6.03 962,953 15,144 6.29
FHLB advances 746,134 10,222 5.48 476,055 7,040 5.92
Securities sold under agreements
to repurchase 228,225 3,113 5.46 44,583 672 6.03
Other borrowings 41,148 865 8.41 41,253 852 8.26
---------- -------- ----- ---------- -------- -----
Total interest-bearing liabilities $2,568,137 31,698 4.94% $2,166,986 26,998 4.98%
========== -------- ----- ========== -------- -----
Net interest income; interest
rate spread $ 17,019 2.45% $ 14,450 2.48%
======== ===== ======== =====
Net interest margin (2) 2.58% 2.60%
===== =====
Average interest-earning assets to
average interest-bearing liabilities 102.64% 102.51%
========== ==========
<CAPTION>
Nine months ended December 31,
1996 1995
-------------------------------------- ---------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Interest-Earning Assets:
Loans receivable (1) $1,542,589 $ 91,531 7.91% $1,450,477 $ 86,668 7.97%
Mortgage-backed securities 721,022 35,971 6.65 503,133 25,180 6.67
Investment securities 221,096 10,911 6.58 176,869 8,465 6.38
Other 59,209 2,082 4.69 51,802 1,932 4.97
---------- -------- ----- ---------- -------- -----
Total interest-earning assets $2,543,916 $140,495 7.36% $2,182,281 $122,245 7.47%
========== -------- ----- ========== -------- -----
Interest-Bearing Liabilities:
Deposits:
NOW account $ 178,039 $ 2,713 2.03% $ 173,849 $ 3,019 2.32%
Demand deposits 110,476 0 0.00 121,854 0 0.00
Savings deposits 210,983 3,912 2.47 212,482 4,126 2.59
Money Market deposits 130,772 3,294 3.36 142,784 3,595 3.36
Certificates of deposit 957,779 43,354 6.04 948,848 43,868 6.16
FHLB advances 687,687 28,168 5.46 443,234 20,042 6.03
Securities sold under agreements
to repurchase 168,193 6,765 5.36 59,762 3,032 6.76
Other borrowings 41,175 2,587 8.38 41,272 2,601 8.40
---------- -------- ----- ---------- -------- -----
Total interest-bearing liabilities $2,485,104 90,793 4.87% $2,144,085 80,283 4.99%
========== -------- ----- ========== -------- -----
Net interest income; interest
rate spread $ 49,702 2.49% $ 41,962 2.48%
======= ===== ======== =====
Net interest margin (2) 2.61% 2.56%
===== ====
Average interest-earning assets to
average interest-bearing liabilities 102.37% 101.78%
========== ==========
</TABLE>
(1) Average balances for loans receivable include average balances for
non-accrual loans.
(2) Net interest margin is net interest income divided by average
interest-earning assets.
Page 11
<PAGE> 14
Provision for Loan Losses. The Bank's provision for loan losses was $2.4
million for the nine months ended December 31, 1996, compared to a provision of
$900,000 for the nine months ended December 31, 1995. Both provisions reflect
the Bank's continuing evaluation of its loan portfolio, the growth of the
portfolio, and the effect thereon from general economic conditions.
Management's estimate of the adequacy of its general allowances for loan losses
is based upon an analysis of the Bank's loan portfolio including such factors
as prior loan loss experiences, economic conditions affecting the real estate
market, regulatory considerations and other matters.
The following table sets forth an analysis of the Bank's allowance for
loan losses at the dates indicated.
<TABLE>
<CAPTION>
Nine Months Ended
December 31,
1996 1995
---- ----
(Dollars in thousands)
<S> <C> <C>
Balance at beginning of period $16,330 $15,782
------- -------
Charge-offs:
One-to four-family real estate (371) (52)
Other real estate (2,599) (1,396)
Consumer (411) (48)
Commercial business (23)
------- -------
Total charge-offs (3,404) (1,496)
------- -------
Recoveries:
One-to four-family real estate 70 63
Other real estate 264 199
Consumer 87 40
Commercial business 32 102
------- -------
Total recoveries 453 404
------- -------
Net charge-offs (2,951) (1,092)
Transfer from REO (for adoption of FAS #114) 318
Provisions 2,400 900
------- -------
Balance at end of period $15,779 $15,908
======= =======
Ratio of net charge-offs during the period
to average loans outstanding during the period (0.19%) (0.07%)
======= =======
Ratio of allowance to non-performing loans
at end of period. 204.3% 82.86%
======= =======
</TABLE>
Management believes that the relationship of the allowance to total loans
and to non-performing loans is adequate based on all information currently
available. See "Asset Quality."
Page 12
<PAGE> 15
The ratio of the allowance to non-performing loans increased to 204.29% at
December 31, 1996, compared to 82.86% for the same period one year ago
primarily because of the decrease in non-performing loans from $17.7 million to
$7.7 million. This decrease was the result of the Bank removing its 1%
participation in a first mortgage loan on two office buildings in New York City
amounting to $9.3 million from non-accrual status during the December 1996
quarter. Through bankruptcy resolution, $4 million was received in cash and
the remaining balance of $5.3 million was converted into REIT shares, valued at
$3.0 million at the date of conversion, resulting in a charge-off of $2.3
million. These shares are marked-to-market at each month-end.
Non-Interest Income: Non-interest income for the three months ended
December 31, 1996, totaled $7.5 million as compared to $6.0 million for the
same period a year ago, an increase of $1.5 million, or 24.4%. Non-interest
income for the nine months ended December 31, 1996, totaled $21.5 million as
compared to $19.4 million for the same period a year ago, an increase of $2.0
million, or 10.5%.
Consumer banking fees and charges increased 36.1% to $3.5 million for the
three months ended December 31, 1996, up from $2.6 million for the same period
last year. This increase continued to reflect the benefits of growth in
consumer checking accounts and increased fees associated with consumer and
commercial loan activities. Consumer banking fees and charges increased 36.4%
to $9.6 million for the nine months ended December 31, 1996, up from $7.1
million for the same period last year.
Trust and investment services fee income for the third quarter of fiscal
1997 increased 16.0% to $805,000 compared to $694,000 for the third quarter of
fiscal 1996. Administered trust assets were $429.7 million at December 31,
1996, compared with $419.5 million at December 31, 1995. CitFed Investment
Group initiated a new program during the first quarter of fiscal 1996 to
facilitate the sale of mutual funds and insurance products through the Bank's
retail branches. Commission revenue from CitFed Investment Group was $269,000
for the third quarter of fiscal 1997, compared to $170,000 for the third
quarter of fiscal 1996. Trust and investment service fee income for the nine
months ended December 31, 1996, increased 33.3% to $2.6 million from $1.9
million for the same period a year ago.
Income from mortgage banking operations increased by 4.8% in the third
quarter of fiscal 1997 to $2.7 million, up from $2.6 million for the same
period a year ago. This increase in income was due primarily to $884,000 of
capitalized mortgage servicing rights recognized as a result of the
implementation of SFAS 122. See Note 6 of the Notes to Consolidated Financial
Statements under Item 1 of this Part I. Without the effects of SFAS 122,
mortgage banking fee income would have declined by $759,000. Secondary
marketing losses were greater by approximately $830,000, because more loans
were sold with servicing retained in the third quarter of fiscal 1997, than in
the same period a year ago when more loans were sold with servicing released.
Income from mortgage banking operations increased by 26.1% for the nine months
ended December 31, 1996, to $7.8 million, as compared to $6.2 million for the
same period last year.
Page 13
<PAGE> 16
CitFed Mortgage maintains the flexibility to either sell servicing rights
for current income and cash flow or retain servicing for future income. The
decision to sell or retain servicing is based on current market conditions, as
well as, CitFed Mortgage's financial objectives. To help offset lower
origination revenues in the first nine months of fiscal 1996, CitFed Mortgage
sold $302.7 million of mortgage loan servicing rights generating a gain of $3.7
million. There were no servicing rights sold during the first nine months of
fiscal 1997 due to the implementation of SFAS 122, which recognized as income
from mortgage banking operations, $3.6 million of mortgage servicing rights on
loans sold. Mortgage loan closings totaled $149.6 million for the three months
ended December 31, 1996, compared to $164.5 million for the three months ended
December 31, 1995, a decrease of 9.0%.
Non-Interest Expenses: Non-interest expenses for the nine months ended
December 31, 1996 were $55.4 million, which includes the one-time SAIF
recapitalization charge of $10.3 million. Without the SAIF recapitalization
charge, non-interest expenses were $45.1 million for the nine months ended
December 31, 1996, compared to $43.4 million for the same period a year ago, an
increase of $1.7 million, or 4.0%. See "Regulatory Development" herein.
Non-interest expenses for the three months ended December 31, 1996 were
$15.0 million, compared to $14.3 million for the three months ended December
31, 1995, an increase of $676,000, or 4.7%.
Salaries and benefits increased $744,000 over the prior year's third
quarter due to normal wage increases during the quarter and the opening of
Williamsburg, Virginia and Indianapolis, Indiana mortgage origination offices.
Salaries and benefits increased by $2.1 million to $20.0 million for the nine
months ended December 31, 1996, as compared to $17.9 million for the same
period a year ago, a 11.4% increase. Included in salaries & benefits for
fiscal 1997 is $991,000 of compensation expense related to the termination of
PSB Holdings ESOP Plan.
Income Tax Provision. The Bank's income tax provision for the three
months ended December 31, 1996, was 32.9%, compared to 31.0% for the three
months ended December 31, 1995.
For the nine months ended December 31, 1996, the effective tax rate
increased to 32.9%, compared to 32.7% for the nine months ended December 31,
1995.
Page 14
<PAGE> 17
ASSET QUALITY
Non-Performing Assets. The table below sets forth the amounts and
categories of non-performing assets in the Bank's loan portfolio as of the
dates indicated below.
<TABLE>
<CAPTION>
Dec. 31, March 31,
1996 1996
---------- ----------
(Dollars in thousands)
<S> <C> <C>
Non-Performing Assets
Non-accruing loans:
One-to four-family $ 6,564 $ 4,595
Multi-family and commercial real estate 883 12,760
Consumer 87 38
Commercial business 190 303
------- -------
Total 7,724 17,696
------- -------
Foreclosed assets:
One- to four-family 2,772 823
Multi-family and commercial real estate 4,778 3,449
------- -------
Total 7,550 4,272
------- -------
Total non-performing assets $15,274 $21,968
======= =======
Non-performing loans to total loans 0.48% 1.21%
======= =======
Non-performing assets to total assets 0.52% 0.85%
======= =======
</TABLE>
The $6.7 million decrease in non-performing assets from March 31, 1996 to
December 31, 1996, was the result of several factors. Non-accruing one-to
four-family mortgage loans increased $2.0 million during the period.
Eighty-eight loans totaling $7.0 million were placed on non-accrual status, 17
loans totaling $1.7 million were transferred to foreclosed assets, 28 loans
totaling $1.7 million were returned to accruing status and 24 loans totaling
$1.6 million were paid off.
Non-accruing multi-family and commercial real estate loans decreased $11.9
million for the period. Six loans for $1.2 million were added to non-accrual
status, six loans totaling $1.0 million were paid in full, ten loans totaling
$2.5 million were transferred to foreclosed assets and two loans for $258,000
were returned to accruing status. In addition, one loan for $9.3 million was
partially paid off with the balance converted into REIT shares as a result of a
bankruptcy resolution which resulted in a net charge-off of $2.3 million.
Foreclosed assets increased $3.3 million for the period. Twenty-three
residential properties totaling $2.7 million (net of $71,000 in loss reserves)
were added, and seven properties totaling $830,000 were sold. Ten commercial
properties totaling $2.2 million (net of $312,000 in loss reserves) were added
and seven commercial properties totaling $667,000 were sold. The reserve for
foreclosed assets increased by $210,000 from net recoveries of $23,000 and a
provision of $187,000.
Page 15
<PAGE> 18
LIQUIDITY AND CAPITAL RESOURCES
LIQUIDITY--The Corporation conducts its business through its subsidiary,
Citizens Federal and Citizens Federal's subsidiaries. The main source of funds
for the Corporation are dividends from the Bank. The Bank meets the OTS
regulatory capital requirements that would allow the Bank to declare and pay
capital distributions to the Corporation. The Corporation is not subject to
any OTS regulatory restrictions on the payment of dividends to its
stockholders. The Board of Directors of the Corporation declared on January
17, 1997, a dividend on its common stock of eight cents ($0.08) per share. The
dividend will be paid on February 28, 1997 to stockholders of record on
February 14, 1997.
The Bank's principal sources of funds include deposits, advances from the
FHLB, reverse repurchase agreements, repayments on loans and mortgage-backed
securities, maturities of investment securities, proceeds from the sale of
loans, mortgage-backed and investment securities available for sale, funds
provided by operations and capital invested by the Corporation. Investment
maturities and scheduled amortization of loans and mortgage-backed securities
are generally a predictable source of funds. Deposit flows and mortgage
prepayments are influenced by the general level of interest rates, economic
conditions, competition and the restructuring of the thrift industry.
Management also considers the Corporation's interest sensitivity "gap" when
considering alternative sources of funds. The one year interest rate
sensitivity "gap" is the difference between interest-earning assets and
interest-bearing liabilities maturing or repricing within one year. The
Corporation mitigates its exposure to interest rate risk by striving to
maintain a neutral "gap" between the maturities of its interest-earning assets
and interest-bearing liabilities. This strategy results in a more stabilized
net interest margin in periods of either rising or falling interest rates. At
December 31, 1996, the Corporation's one-year gap was a negative 7.15%.
The Bank is required to maintain minimum levels of liquid assets as
defined by OTS regulations. This requirement, which may vary at the discretion
of the OTS depending upon economic conditions and deposit flows, is based upon
a percentage of deposits and short-term borrowings. The required ratio is
currently 5.0%. While the Bank's liquidity ratio varies from time to time, it
has generally maintained liquid assets substantially in excess of the minimum
requirement. The Bank's liquid asset ratio was 15.71% at December 31, 1996.
Liquidity management is both a daily and long-term responsibility of
management. The Bank adjusts its investments in liquid assets based upon
management's assessment of (i) expected loan demand, (ii) the projected amount
of loans to be originated by the mortgage banking subsidiary and held for
re-sale, (iii) expected deposit flows, (iv) yields available on
interest-earning deposits, and (v) the objective of its asset/liability
management program. Excess liquidity is invested generally in interest-earning
overnight deposits and other short-term government and agency obligations. If
Citizens Federal requires funds beyond its ability to generate them internally,
the Bank has additional borrowing capacity with the FHLB and collateral
eligible for reverse repurchase agreements.
The Bank anticipates that it will have sufficient funds available to meet
current loan commitments. At December 31, 1996, the Bank had commitments to
purchase from CitFed Mortgage loans totaling $18.6 million. CitFed Mortgage
had commitments to fund loans of $38.6 million and to sell loans of $51.3
million.
Page 16
<PAGE> 19
CAPITAL--Savings institutions insured by the Federal Deposit Insurance
Corporation are required to meet three regulatory capital requirements. If a
requirement is not met, regulatory authorities may take legal or administrative
actions, including restrictions on growth or operations or, in extreme cases,
seizure. Institutions not in compliance may apply for an exemption from the
requirements and submit a recapitalization plan. The following table
demonstrates the Bank's compliance with each of these requirements as of
December 31, 1996:
<TABLE>
<CAPTION>
Fully Phased-in
Requirement (1)
------------------
(Dollars in thousands) Amount %(2)
------------------
<S> <C> <C>
Tangible Capital:
Bank's $168,449 5.84%
Requirement 43,274 1.50
-------- -------
Excess $125,175 4.34%
======== =======
Core Capital
Bank's $168,449 5.84%
Requirement 86,549 3.00
-------- -------
Excess $ 81,900 2.84%
======== =======
Risk-Based Capital:
Bank's $184,228 13.39%
Requirement 110,035 8.00
-------- -------
Excess $ 74,193 5.39%
======== =======
</TABLE>
(1) Entire investment in non-qualifying subsidiary is excluded for
calculations.
(2) Tangible and core capital levels are shown as a percentage of
total adjusted assets, risk-based capital levels are a percentage of
risk-weighted assets.
A reconciliation of the Corporation's GAAP Capital is as follows:
<TABLE>
<CAPTION>
(Dollars in thousands) Dec. 31, 1996
-------------
<S> <C>
Bank's stockholder's equity $189,432
Less additional capital contributed to
Bank by the Corporation (22,000)
Plus Corporation's stockholders'
equity not available for regulatory capital 17,512
--------
Stockholders' equity of the Corporation $184,944
========
</TABLE>
Minimum capital requirements, as required by the Federal Deposit Insurance
Corporation Improvement Act of 1991, to determine whether an institution is
well capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, or critically undercapitalized became effective December 19,
1992. Well capitalized institutions are defined as having core capital of at
least 5%, core capital to risk-weighted assets of at least 6% and risk-based
capital of at least 10%. The Bank's ratios at December 31, 1996 were 5.84%,
12.25% and 13.39%, respectively. As a result, the Bank meets the capital
requirements of a well capitalized institution.
Page 17
<PAGE> 20
REGULATORY DEVELOPMENTS
On September 30, 1996, federal legislation was enacted that required the
Savings Association Insurance Fund ("SAIF") to be recapitalized with a one-time
assessment on virtually all SAIF-insured institutions, such as the Bank, equal
to 65.7 basis points on each $100 of SAIF-insured deposits maintained by those
institutions as of March 31, 1995. The amount of the Bank's special assessment
was $10.3 million, which was paid to the FDIC on November 27, 1996 and accrued
by the Bank at September 30, 1996.
As a result of the SAIF recapitalization, the FDIC amended its regulation
concerning the insurance premiums payable by SAIF-insured institutions.
Effective January 1, 1997, the SAIF insurance premium will range from 0 to 27
basis points per $100 of domestic deposits. Additionally, the FDIC has imposed
a Financing Corporation ("FICO") assessment on SAIF-assessable deposits for the
first semi-annual period of 1997 equal to 6.48 basis points per $100 of
domestic deposits, as compared to a 1.30 basis point FICO assessment on
BIF-assessable deposits for the same period.
Page 18
<PAGE> 21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
In August 1995, the Corporation filed suit against the United
States Government for reneging on contracts with the Bank regarding
the treatment of supervisory goodwill as capital. Although, the
U. S. Supreme Court recently decided for the plaintiff in three
pending supervisory goodwill cases involving other entities it is
uncertain as to how this will affect the Corporation's claim.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibit - Index
Exhibit Number Description
11 Statement regarding computation
of per share earnings
27 Financial Data Schedule
b) Report on Form 8-K - There were no reports on Form 8-K filed during
the three months ended December 31, 1996.
Page 19
<PAGE> 22
SIGNATURES
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.
CITFED BANCORP, INC.
(Registrant)
Date February 12, 1997 By /s/ Jerry L. Kirby
-------------------- ---------------------
Jerry L. Kirby
Chairman of the Board, President and
Chief Executive Officer
(Duly Authorized Representative)
Date February 12, 1997 By /s/ William M. Vichich
-------------------- -------------------------
William M. Vichich
Executive Vice President,
Chief Operating Officer and
Chief Financial Officer
(Principal Financial and Accounting
Officer)
Page 20
<PAGE> 23
Exhibit Index
Exhibit Number Description
11 Statement regarding computation
of per share earnings
27 Financial Data Schedule
<PAGE> 1
EXHIBIT 11
CITFED BANCORP, INC.
Computation of Per Share Earnings
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
For the Three For the Three For the Nine For the Nine
Months Ended Months Ended Months Ended Months Ended
Dec. 31, 1996 Dec. 31, 1995 Dec. 31, 1996 Dec. 31, 1995
------------- ------------- ------------- --------------
<S> <C> <C> <C> <C>
Computation of Primary Earnings Per Share:
Weighted average number of common
shares outstanding 8,583,955 8,439,317 8,557,935 8,435,229
Add common stock equivalents for shares
issuable under the Stock Option Plan (1) 315,377 375,633 322,289 378,567
--------- --------- --------- ---------
Weighted average number of shares
outstanding adjusted for common
stock equivalents 8,899,332 8,814,950 8,880,224 8,813,796
========= ========= ========= =========
Net income $5,783 $ 4,039 $ 8,933 $11,491
========= ========= ========= =========
Earnings per common and common equivalent share $0.65 $0.46 $1.01 $1.30
===== ===== ===== =====
</TABLE>
(1) Additional shares issuable were derived under the "treasury stock method"
using average market price during the period or the
end of period close price, whichever is higher.
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1997
<PERIOD-END> DEC-31-1996
<CASH> 36,189
<INT-BEARING-DEPOSITS> 22,924
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 817,849
<INVESTMENTS-CARRYING> 235,817
<INVESTMENTS-MARKET> 236,215
<LOANS> 1,615,215
<ALLOWANCE> 15,779
<TOTAL-ASSETS> 2,918,160
<DEPOSITS> 1,606,669
<SHORT-TERM> 0
<LIABILITIES-OTHER> 35,739
<LONG-TERM> 1,090,808
0
0
<COMMON> 86
<OTHER-SE> 184,858
<TOTAL-LIABILITIES-AND-EQUITY> 2,918,160
<INTEREST-LOAN> 31,364
<INTEREST-INVEST> 16,540
<INTEREST-OTHER> 813
<INTEREST-TOTAL> 48,717
<INTEREST-DEPOSIT> 17,498
<INTEREST-EXPENSE> 31,698
<INTEREST-INCOME-NET> 17,019
<LOAN-LOSSES> 900
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 14,992
<INCOME-PRETAX> 8,613
<INCOME-PRE-EXTRAORDINARY> 5,783
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,783
<EPS-PRIMARY> 0.65
<EPS-DILUTED> 0.65
<YIELD-ACTUAL> 7.24
<LOANS-NON> 7,724
<LOANS-PAST> 0
<LOANS-TROUBLED> 14,390
<LOANS-PROBLEM> 19,818
<ALLOWANCE-OPEN> 17,811
<CHARGE-OFFS> 3,086
<RECOVERIES> 154
<ALLOWANCE-CLOSE> 15,779
<ALLOWANCE-DOMESTIC> 15,779
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
