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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 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
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Commission File Number 0-19783
SUBURBFED FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
Delaware 36-3796361
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(State or other jurisdiction I.R.S. Employer
of incorporation or Identification or
organization) Number
3301 W. Vollmer Road, Flossmoor, Illinois 60422
- - ------------------------------------------ -------
(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(708) 333-2200
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 [ ]
As of May 9, 1996, the Registrant had 1,253,269 shares of common stock
issued and outstanding.
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SUBURBFED FINANCIAL CORP.
Contents
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION Page
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<S> <C> <C>
Item 1 Financial Statements
Consolidated Statements of Financial Condition,
March 31, 1996 (Unaudited) and
December 31, 1995 1
Consolidated Statements of Income, Three Months
Ended March 31, 1996 and 1995 (Unaudited)
Consolidated Statements of Cash Flows, Three
Months Ended March 31, 1996 and 1995
(Unaudited) 3
Notes to Consolidated Financial Statements 4-6
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 7-12
PART II OTHER INFORMATION 13-14
</TABLE>
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SUBURBFED FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1996 1995
(Unaudited)
ASSETS
<S> <C> <C>
Cash and amounts due from depository institutions $2,767,682 $1,608,019
Interest-bearing deposits 6,729,528 8,911,445
Total cash and cash equivalents 9,497,210 10,519,464
Investment securities held to maturity 5,959,167 5,954,167
(Market value: 1996: $5,916,250; 1995: $5,946,875)
Investment securities available for sale, at market 3,078,376 2,345,376
Investment securities held for trade 1,245,142 1,215,654
Mortgage-backed securities held to maturity 105,645,826 108,386,409
(Market value: 1996: $105,032,297; 1995: $108,276,030)
Mortgage-backed securities available for sale, at market 66,240,588 77,478,970
Loans receivable 160,286,799 147,908,039
Real estate owned 0 13,597
Stock in Federal Home Loan Bank of Chicago 2,290,000 2,045,000
Office properties and equipment 4,713,085 4,835,447
Accrued interest receivable 2,148,241 2,114,963
Prepaid expenses and other assets 1,007,569 489,991
Deposit base intangible 160,389 173,284
--------------------------
Total assets 362,272,392 363,480,361
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits 298,243,447 288,955,466
Federal Home Loan Bank advances 26,900,000 34,200,000
Other borrowed money 6,738,000 9,227,000
Advance payments by borrowers for taxes
and insurance 2,131,763 2,387,758
Other liabilities 2,380,642 2,346,029
-------------------------
Total liabilities 336,393,852 337,116,253
Stockholders' Equity:
Common stock 13,518 13,518
Additional paid-in capital 8,254,412 8,225,832
Treasury stock -1,359,250 -1,032,625
Retained earnings 19,688,064 19,371,312
Unrealized gain (loss) on securities available for sale -428,750 112,011
Common stock acquired by ESOP -237,373 -259,654
Common stock acquired by Bank Incentive Plan -52,081 -66,286
--------------------------
Total stockholders' equity 25,878,540 26,364,108
--------------------------
Total liabilities and stockholders'
equity $362,272,392 $363,480,361
=========================
</TABLE>
See notes to consolidated financial statements
1
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SUBURBFED FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31,
1996 1995
<S> <C> <C>
Interest income:
Interest on loans $3,028,141 $2,158,730
Interest on mortgage-backed securities 2,981,802 3,234,585
Interest on investment securities 128,469 144,792
Interest on other financial assets 46,158 28,423
Dividends on FHLB stock 37,627 29,108
--------------------------
Total interest income 6,222,197 5,595,638
Interest expense:
Interest on deposits 3,257,143 2,347,704
Interest on borrowed money 511,329 621,288
--------------------------
Total interest expense 3,768,472 2,968,992
--------------------------
Net interest income before
provision for loan losses 2,453,725 2,626,646
Provision for loan losses 45,680 19,200
--------------------------
Net interest income after
provision for loan losses 2,408,045 2,607,446
Non-interest income:
Loan fees and service charges 183,461 117,839
Commission income 124,587 87,813
Gain(loss) on sale of loans and securities - net 90,749 12,146
Unrealized gain(loss) on investment
and mortgage-backed securities - net -138 54,438
Deposit-related fees and other income 372,771 303,631
--------------------------
Total other income 771,430 575,867
Non-interest expense:
General and administrative:
Staffing costs 1,334,019 1,240,955
Advertising 57,931 73,045
Occupancy and equipment expenses 471,437 476,693
Data processing 73,703 74,751
Federal deposit insurance premiums 160,782 146,997
Other 408,594 420,574
Total general and administrative --------------------------
expenses 2,506,466 2,433,015
Amortization of deposit base intangible 12,895 14,747
--------------------------
Total non-interest expense 2,519,361 2,447,762
--------------------------
Income before income taxes 660,114 735,551
Provision for income taxes 242,500 272,000
--------------------------
Net income $417,614 $463,551
==========================
Earnings per share - primary $.32 $.34
- fully diluted $.32 $.34
Dividends declared per common share $.08 $.08
</TABLE>
See notes to consolidated financial statements
2
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SUBURBFED FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1996 1995
<S> <C> <C>
Cash flows from operating activities:
Net income $417,614 $463,551
Adjustments to reconcile net income
to net cash from operating activities:
Depreciation 166,400 170,598
Amortization of intangible 12,895 14,747
Amortization of cost of stock benefit plans 36,486 36,485
Amortization of discount on investment securities -5,000 -5,000
Provision for loan losses 45,680 19,200
Net gain on sale of loans and securities -90,749 -12,146
Net gain on sale of real estate owned -13,106 0
Unrealized (gain) loss on investment securities 138 -54,438
Proceeds from sales of trading account securities 0 176,265
Purchase of trading account securities -29,625 -49,027
Net change in:
Accrued interest receivable -33,278 -125,291
Accrued interest payable -70,421 33,689
Deferred income -15,341 -62,134
Deferred and accrued income taxes 241,296 270,854
Other liabilities 253,375 -889,330
Prepaid expenses and other assets -498,301 641,796
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Net cash flows provided by operating activities 418,063 629,819
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Investing activities:
Purchases of investment securities -779,625 0
Proceeds from sale of mortgage-backed securities 21,401,973 1,310,315
Proceeds from repayments of mortgage-backed securities 5,697,034 3,181,944
Purchases of mortgage-backed securities -13,890,580 -2,532,350
Purchase of Federal Home Loan Bank stock -245,000 0
Proceeds from sale of loans 2,627,516 757,757
Disbursements for loans -31,586,055 -15,269,378
Loan repayments 16,536,256 10,065,792
Proceeds from sale of real estate owned 26,703 0
Property and equipment expenditures -44,038 -923,313
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Net cash flows used in investing activities -255,816 -3,409,233
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Financing activities:
Dividends paid on common stock -100,862 -104,068
Purchase of treasury stock -326,625 -705,875
Deposit receipts 230,965,229 203,901,907
Deposit withdrawals -224,555,280 -205,794,392
Interest credited to deposit accounts 2,878,032 2,058,852
Purchase of deposits - Hinsdale 0 2,167,763
Purchase of deposit base intangible - Hinsdale 0 -88,326
Proceeds from borrowed money 37,352,000 64,855,155
Repayment of borrowed money -47,141,000 -62,765,000
Net decrease in advance payments
by borrowers for taxes and insurance -255,995 -335,904
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Net cash flows provided by financing activities -1,184,501 3,190,112
------------ ------------
Increase (Decrease) in cash and cash equivalents -1,022,254 410,698
Cash and cash equivalents at beginning of period 10,519,464 9,447,586
------------ ------------
Cash and cash equivalents at end of period $9,497,210 $9,858,284
============ ============
Cash paid during the period for:
Interest $3,838,893 $2,935,303
Income taxes 1,204 1,146
Non cash investing activities:
Loans securitized into mortgage-backed securities $0 $0
============ ============
</TABLE>
See notes to consolidated financial statements.
3
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SUBURBFED FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - Statement of Information Furnished
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Form 10-Q instructions and Article 10 of Regulation
S-X, and in the opinion of management contains all adjustments (all of which
are normal and recurring in nature) necessary to present fairly the financial
position as of March 31, 1996, the results of operations for the three months
ended March 31, 1996 and 1995 and cash flows for the three months ended March
31, 1996 and 1995. These results have been determined on the basis of
generally accepted accounting principles. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates. The attached consolidated statements are those of SuburbFed
Financial Corp. (the "Company") and its consolidated subsidiaries Suburban
Federal Savings, a Federal Savings Bank (the "Bank"); the Bank's wholly owned
subsidiaries, Suburban Mortgage Services, Inc. and South Suburban Securities
Corporation; and the wholly owned subsidiary of South Suburban Securities
Corporation, Suburban Insurance Resources Agency, Inc. The results of
operations for the three month period ended March 31, 1996 is not necessarily
indicative of the results to be expected for the full year.
Note B - Stock Conversion
On September 12, 1991 the Board of Directors of Suburban Federal approved a
plan to convert from a federally chartered mutual association to a federally
chartered stock savings bank. The stock conversion plan included, as part of
the conversion, the concurrent formation of a holding company. The stock
offering of the Bank's parent, SuburbFed Financial Corp. (the "Company") was
closed on March 3, 1992 with the sale of 891,250 shares at $10.00 per share.
The Company purchased all the shares of stock of the Bank for $4,023,750 upon
completion of its stock offering.
Note C - Earnings Per Share
Earnings per share of common stock for the three month periods ended March
31, 1996 and 1995 have been determined by dividing net income for the period by
the weighted average number of shares of common stock and common stock
equivalents outstanding after consideration of the 3 for 2 stock split
completed November 3, 1995. Stock options are regarded as common stock
equivalents
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and are therefore considered in both the primary and fully diluted earnings per
share calculations. Common stock equivalents are computed using the treasury
stock method.
Note D - Dividend Declaration
The Company declared a dividend of $.08 per share, representing its sixteenth
consecutive quarterly dividend payable April 15, 1996 to shareholders of record
April 1, 1996. The dividend, totaling $100,862, has been recorded as of March
31, 1996 as a reduction of retained earnings in the accompanying consolidated
statement of financial condition.
Note E - Disparity in Insurance and Special Assessment
Federal law requires that the Federal Deposit Insurance Corporation ("FDIC")
maintain the reserve level of each of the Savings Association Insurance Fund
("SAIF") and the Bank Insurance Fund ("BIF") at 1.25% of insured deposits.
Reserves are funded through payments by insured institutions of insurance
premiums. On November 14, 1995, due to the BIF reaching the required reserve
level, the FDIC reduced the insurance premiums for members of BIF to a range of
between 0.00% and 0.27% of deposits, subject to the statutory requirement that
all institutions pay at least $2,000 annually for FDIC insurance, while
maintaining the current range of between 0.23% and 0.31% of deposits for
members of SAIF. The FDIC is required to set insurance premiums independently
for members of BIF and SAIF.
A disparity in insurance premiums between those required for SAIF members,
such as the Bank, and BIF members could allow BIF members to attract and retain
deposits at a lower effective cost than that of SAIF members. In the event BIF
members in the Bank's market area, as a result of the reduction in insurance
premiums, increase the interest rates paid on deposits, this could put
competitive pressure on the Bank to raise the interest rates paid on deposits
thus increasing its cost of funds and possibly reducing net interest income.
An increase in interest expense would also impair the Bank's ability to
maintain low operating costs. The resultant competitive disadvantage could
result in the Bank losing deposits to BIF members who have a lower cost of
funds and are therefore able to pay higher rates of interest on deposits.
Although the Bank has other sources of funds, these other sources may have
higher costs than those of deposits, resulting in lower net yields on loans
originated using such funds. However, because of possible regulatory or policy
changes, there can be no assurance that upon SAIF reaching its required reserve
level that deposit insurance premiums for SAIF members will be reduced, or, if
reduced, to what extent such premiums will be reduced.
Several alternatives to mitigate the effect of the BIF/SAIF insurance premium
disparity are currently under consideration by the U.S. Congress. One plan
that has gained the support of several sponsors would require all SAIF member
institutions,
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including the Bank, to pay a one-time fee of approximately 0.80% to 0.90% of
insured deposits ($0.80 to $0.90 for every $100 of deposits) on the amount of
deposits held by the member institution to recapitalize the SAIF. If this
proposal is enacted by Congress, the effect would be to immediately reduce the
capital of SAIF-member institutions by the amount of the fee, and such amount
would be immediately charged to earnings. If an 80 basis point (0.80%)
assessment was effected, based on deposits as of March 31, 1995 (as proposed),
the Bank's pro rata share would amount to approximately $2,072,000, before
taxes. If the Bank is required to pay the proposed special assessment, future
deposit insurance premiums may be reduced from 0.23% to approximately 0.00%
(subject to the statutory requirement that all institutions pay at least $2,000
annually for FDIC insurance). Based upon the Bank's deposits as of March 31,
1996, the Bank's annual deposit insurance expense would decrease by
approximately $420,000 per year after taxes. Management of the Bank is unable
to predict whether this proposal or any similar proposal will be enacted or
whether ongoing SAIF premiums will be reduced to a level comparable to that of
BIF premiums.
6
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SUBURBFED FINANCIAL CORP.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
During the three month period ended March 31, 1996, total assets of the Company
decreased by $1.2 million. This decrease is primarily attributable to the
repayment of $9.8 million of borrowed money offset by $9.3 million of deposit
growth. Mortgage-backed securities declined by $14.0 million while loans
receivable grew $12.4 million. The strategy of increasing loan originations,
which began in 1995, continued during the first quarter of 1996 and will be
pursued for the remainder of the year.
The 1996 increase in loans receivable was primarily a result of increased loan
originations, offset by the sale of $2.6 million of fixed rate loans to the
Federal National Mortgage Association. Principal repayments on loans during
the three months ended March 31, 1996 amounted to $16.5 million as compared to
$10.1 million for the same period last year. The Company disbursed $31.6
million of loans during the three month period ended March 31, 1996 as
compared to $15.3 million for the same quarter in 1995.
Mortgage-backed securities held to maturity decreased $2.7 million during the
most recent three month period due to the purchase of only $1.7 million during
the quarter compared to MBS repayments of $4.4 million. Pursuant to the
Company's asset/liability management strategy, the Company's purchases carried
adjustable interest rates or had short effective terms (2 to 5 year average
lives).
Mortgage-backed securities available for sale decreased $11.2 million during
the most recent quarter due to sales of $21.4 million, repayments of $1.2
million and a market value adjustment of $771,000 offset by purchases of $12.2
million. A restructuring transaction involving the sale and reinvestment of
$12 million was completed during the quarter which shortened the average life
of the portfolio, maintained the yield and realized a gain of $62,000. During
the comparable 1995 period, mortgage-backed securities available for sale
decreased $325,000 due to repayments of $1.6 million and sales of $188,000
offset by a positive market value adjustment of $1.5 million.
The level of savings deposits is affected primarily by interest rates, the
total amount of funds consumers elect to save, and competition for savings from
alternative investments in the marketplace. Total savings deposit
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accounts increased $9.3 million from $288.9 million on December 31, 1995 to
$298.2 million on March 31, 1996. The Company experienced a net deposit inflow
of $6.4 million for the three month period ended March 31, 1996 (before
interest credited), as compared to an increase of $175,000 (before interest
credited) for the three month period ended March 31, 1995, which included the
purchase of the Hinsdale branch with $2.1 in deposits. Interest credited was
$2.9 million and $2.1 million for the three months ended March 31, 1996 and
1995, respectively.
During 1996, the Company decreased Federal Home Loan Bank advances by $7.3
million and other borrowed money by $2.5 million as funding needs were met with
deposit growth.
Stockholders' equity decreased $486,000 during the three month period ended
March 31, 1996 due to the increase in unrealized losses on securities
available for sale of $541,000, the repurchase of 19,500 shares of stock for
$327,000 and dividends paid of $101,000 all of which was partially offset by
earnings of $418,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of funds are deposits from customers into
interest bearing accounts, scheduled monthly repayments and prepayments of
principal and interest on loans and mortgage-backed securities, and borrowings.
Other potential sources of funds available to the Company include borrowings
from the Federal Home Loan Bank of Chicago. While scheduled loan and
mortgage-backed security payments are relatively predictable sources of funds,
the actual mix and amounts of funds from these sources are directly affected by
general interest rates, economic conditions and competition. The primary
business activity of the Company, that of making conventional mortgage loans on
residential housing, is likewise affected by economic conditions.
Current Office of Thrift Supervision regulations require the Bank to maintain
cash and eligible investments in an amount equal to at least 5% of customer
accounts and short-term borrowings to assure its ability to meet demands for
withdrawals and repayment of short-term borrowings. The Bank's average daily
liquidity ratio for the three-month period ending March 31, 1996 ranged from
5.8% to 7.7%, and it was 5.9% at March 31, 1996. The Bank's daily liquidity
ratio at December 31, 1995 was 6.8%. Liquid assets have been maintained at a
level above regulatory minimums.
The Company uses its capital resources principally to meet its ongoing
commitments to fund maturing certificates of deposits and deposit withdrawals,
repay borrowings, fund existing and continuing loan commitments, maintain its
liquidity and meet operating expenses. As of March 31, 1996,
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the Company had approximately $22.8 million in outstanding commitments to
originate mortgage loans. The Company considers it liquidity and capital
resources to be adequate to meet its foreseeable short and long-term needs.
The Company expects to be able to fund or refinance, on a timely basis, its
material commitments and long-term liabilities.
On December 7, 1989, new capital standards were imposed on the thrift industry
as a result of the Financial Institutions Reform, Recovery and Enforcement Act
("FIRREA"). Regulatory standards impose the following capital requirements:
a risk-based capital standard expressed as a percent of risk-adjusted assets, a
leverage ratio of core capital to total adjusted assets, and a tangible capital
ratio expressed as a percent of total adjusted assets. As of March 31, 1996,
the Bank exceeded all regulatory capital standards.
At March 31, 1996, the Bank's tangible capital was $22.6 million or 6.3% of
adjusted total assets, which is in excess of the current 1.5% requirement by
$17.2 million. In addition, at March 31, 1996, the Bank had core capital of
$22.7 million or 6.3% of adjusted total assets, which exceeds the current 3.0%
requirement by $11.9 million. The Bank had risk-based capital of $23.0 million
at March 31, 1996, or 14.8% of risk-adjusted assets which exceeds the 8.0%
risk-based capital requirement by $10.5 million.
ANALYSIS OF OPERATIONS
Net income for the three month periods ended March 31, 1996 and 1995 were
$418,000 and $464,000, respectively. This decrease is primarily attributable
to decline in the net interest income of $173,000 as a result of the decline
in net interest margin. Net interest margin decreased from 3.34% for the three
months ended March 31, 1995 to 2.79% for the three months ended March 31, 1996.
Interest income on loans and mortgage-backed securities for the three month
period ended March 31, 1996 increased $617,000 from the same period in 1995.
This increase resulted primarily from the effect of the increase of $37.3
million in average loans and mortgage-backed securities.
Interest expense on deposits increased by $909,000 for the three month period
ended March 31, 1996 from the prior year level. The additional expense resulted
from the increase in the average cost of deposits from 3.66% for the three
month period ended March 31, 1995 to 4.43% for the 1996 period plus the
increased cost incurred from the increase in average deposit account balances
of $37.3 million for the three month period ended March 31, 1996 from the
prior year level.
Interest expense on borrowed money decreased $110,000 for the quarter ended
March 31, 1996 from the same period in 1995.
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This decrease is primarily attributable to a decrease of $5.6 million in the
average outstanding balance of borrowed money for the three month period ended
March 31, 1996 as compared to the same period in 1995.
Management establishes specific reserves for estimated losses on loans when it
determines that losses are anticipated on these loans. The Company calculates
any allowance for possible loan losses based upon its ongoing evaluation of
pertinent factors underlying the types and quality of its loans. These factors
include but are not limited to current and anticipated economic conditions,
historical loan loss experience, a detailed analysis of individual loans for
which full collectability may not be assured, a determination of the existence
and realizable value of the underlying collateral, the ability of the borrower
to repay and the guarantees securing such loans. Management, as a result of
this review process, recorded provisions for loan losses in the amount of
$46,000 for the three month period ended March 31, 1996 as compared to $19,000
for the three month period ended March 31, 1995. The Company's general loan
loss reserve balance as of March 31, 1996 was $630,000. The December 31, 1995
general loan loss reserve balance was $611,000. Net charge-offs for the 1996
period were $3,000 as compared to $8,000 in 1995. Total nonperforming assets as
of March 31, 1996 were $910,000 or 0.25% of total assets.
Loan fees and service charges increased $66,000 due to an increase in the
number of loans originated during the three month period ended March 31, 1996,
as compared to the same period in 1995. Deposit-related fees and other income
for the three month period ended March 31, 1996 increased $69,000 from the
1995 period primarily as a result of increases in the number of transaction
accounts and the periodic review and adjustment of deposit fees. Commission
income for the three months ended March 31, 1996 from the sale of insurance
products and mutual funds increased $37,000, from the comparable 1995 period,
as sales volumes increased.
Gains on sale of loans and securities were $91,000 for the three month period
ended March 31, 1996 as compared to $67,000 for the comparable 1995 period.
Total general and administrative expense increased $73,000 during the three
month period ended March 31, 1996, primarily as a result of the additional
costs involved in operating and promoting the new Hinsdale branch office which
was purchased in February, 1995.
The provision for income taxes decreased due to decreased earnings. The
effective tax rates, however, declined to 36.7% for the three months ended
March 31, 1996 from 37.0% for the three month periods ended March 31, 1995
primarily because a higher percentage of the 1996 income was subject to the
dividends received deduction.
10
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IMPACT OF THE NEW ACCOUNTING STANDARDS
ACCOUNTING FOR THE IMPAIRMENT OF LONG-LIVED ASSETS. Statement of Financial
Accounting Standards No. 121 ("SFAS 121"), "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed of," is effective for
fiscal years beginning after December 15, 1995. The statement requires that
long-lived assets and certain identifiable intangibles 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. An impairment loss is recognized if the sum of the expected
future cash flows is less than the carrying amount of the asset. The adoption
of SFAS 121 does not have a material impact on the Company's consolidated
financial position or results of operations.
ACCOUNTING FOR STOCK-BASED COMPENSATION. In October, 1995 the FASB issued
Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting
for Stock-Based Compensation." This statement establishes a value-based method
of accounting for stock options which encourages employers to account for stock
compensation awards based on their fair value at the date the awards are
granted. The resulting compensation award would be shown as an expense on the
income statement.
SFAS 123 also permits entities to continue to use the intrinsic value method
contained in Accounting Principles Board Opinion No. 25, "Accounting for Stock
Issued to Employees," (the "APB Opinion No. 25 Method"), allowing them to
continue to apply current accounting requirements, which generally result in no
compensation cost for most fixed stock-option plans. If the intrinsic value
method is retained, SFAS 123 requires significantly expanded disclosures,
including disclosure of the pro forma amount of net income and earnings per
share as if the fair value-based method were used to account for stock based
compensation. SFAS 123 is effective for fiscal years beginning after December
15, 1995, however, employers will be required to include in that year's
financial statements, information about options granted in 1995. The Company
has determined that it will continue to apply the APB Opinion No. 25 Method in
preparing its consolidated financial statements.
The foregoing does not constitute a comprehensive summary of all material
changes or developments affecting the manner in which the Bank keeps its books
and records and performs it financial accounting responsibilities. It is
intended only as a summary of some of the recent pronouncements made by the
FASB which are of particular interest to financial institutions.
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RECENT DEVELOPMENTS
On October 24, 1995, the Company announced that its Board of Directors had
authorized a second stock repurchase program which allows the Company to
repurchase up to 4.9% (62,925 shares) of the common stock outstanding over the
next twelve months in open market transactions. As of May 9, 1996, the Company
had purchased 31,907 shares.
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SUBURBFED FINANCIAL CORP.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, the Bank is a party to legal proceedings in
the ordinary course of business, wherein it enforces its
security interest. The Company and the Bank are not engaged
in any legal proceedings of a material nature at the present
time.
Item 2. Changes in Securities
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Computation of earnings per share (Exhibit 11
filed herewith.)
(b) Not applicable
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SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SUBURBFED FINANCIAL CORP
------------------------
Registrant
DATE: May 9, 1996 BY:(s)
------------------------------------------
Daniel P. Ryan
President and
Chief Executive Officer
DATE: May 9, 1996 BY:(s)
------------------------------------------
Steven E. Stock
Senior Vice President
Chief Financial and
Accounting Officer
14
<PAGE> 1
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months
Ended
March 31, 1996
--------------
<S> <C>
Net Income $417,614
========
Weighted average
shares outstanding 1,270,027
Common stock
equivalents due to dilutive
effect of stock options 55,193
--------
Total weighted average
common shares
and equivalents
outstanding 1,325,220
=========
Primary earnings
per share $.32
====
Total weighted average
common shares and
equivalents outstanding
for primary computation 1,325,220
Additional dilutive
shares using the end of
period market value versus
the average market value
when applying the treasury
stock method 0*
---------
Total weighted average
common shares and
equivalents outstanding for
fully diluted
computation 1,325,220
==========
Fully diluted
earnings per share $.32
====
</TABLE>
*Note: If the average share price is greater than the ending price, use
average price for both primary and fully diluted calculation.
<TABLE> <S> <C>
<ARTICLE> 9
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> MAR-31-1996
<EXCHANGE-RATE> 1
<CASH> 2,767,682
<INT-BEARING-DEPOSITS> 6,729,528
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 1,245,142
<INVESTMENTS-HELD-FOR-SALE> 69,318,964
<INVESTMENTS-CARRYING> 111,604,993
<INVESTMENTS-MARKET> 110,948,547
<LOANS> 161,100,799
<ALLOWANCE> 814,000
<TOTAL-ASSETS> 362,272,392
<DEPOSITS> 298,243,447
<SHORT-TERM> 16,638,000
<LIABILITIES-OTHER> 4,512,405
<LONG-TERM> 17,000,000
<COMMON> 13,518
0
0
<OTHER-SE> 25,865,022
<TOTAL-LIABILITIES-AND-EQUITY> 362,272,392
<INTEREST-LOAN> 3,211,602
<INTEREST-INVEST> 3,194,056
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 6,222,197
<INTEREST-DEPOSIT> 3,257,143
<INTEREST-EXPENSE> 3,768,472
<INTEREST-INCOME-NET> 2,453,725
<LOAN-LOSSES> 45,680
<SECURITIES-GAINS> 90,611
<EXPENSE-OTHER> 2,519,361
<INCOME-PRETAX> 660,114
<INCOME-PRE-EXTRAORDINARY> 417,614
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 417,614
<EPS-PRIMARY> .32
<EPS-DILUTED> .32
<YIELD-ACTUAL> 2.79
<LOANS-NON> 910,000
<LOANS-PAST> 74,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 771,000
<CHARGE-OFFS> 3,000
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 814,000
<ALLOWANCE-DOMESTIC> 184,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 630,000
</TABLE>
