UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported)
October 15, 1996
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FFY FINANCIAL CORP
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(Exact name of registrant as specified in its charter)
Delaware 0-21638 34-1735753
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(State or other (Commission File Number) (IRS Employer
jurisdiction of Identification
incorporation) Number)
724 Boardman-Poland Road, Youngstown, Ohio 44512
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 330-726-3396
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N/A
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(Former name or former address, if changed since last report)
Item 5. Other Events
On October 15, 1996, the Registrant issued the attached press release.
Item 7. Financial Statements and Exhibits
(a) Fiancial Statements
FFY FINANCIAL CORP. AND SUBSIDIARY
(unaudited)
<TABLE>
<CAPTION>
Selected Consolidated Financial Condition Data: September 30, June 30, %
(Dollars in thousands) 1996 1996 Change
------------- -------- ------
<S> <C> <C> <C>
Total assets $602,557 $575,602 5%
Loans receivable, net 449,145 438,790 2%
Allowance for loan losses 3,545 3,439 3%
Non-performing assets 5,067 4,673 8%
Securities available for sale (1) 125,023 109,836 14%
Deposits 448,910 456,541 -2%
Securities sold under agreements to repurchase 6,619 6,640 -0%
Borrowed funds 32,655 1,200 NM
Stockholders' equity 102,228 101,921 0%
</TABLE>
<TABLE>
<CAPTION>
Three Months Ended
September 30,
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Selected Consolidated Operations Data: %
(Dollars in thousands except per share amounts) 1996 1995 Change
-------- -------- ------
<S> <C> <C> <C>
Total interest income $ 11,209 $ 10,848 3%
Total interest expense 5,566 5,603 -1%
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Net interest income 5,643 5,245 8%
Provision for loan losses 155 76 104%
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Net interest income after provision for loan losses 5,488 5,169 6%
Non-interest income 219 255 NM
Loss on sale of securities (543) 0 NM
Total non-interest expense (5,953) (2,942) 102%
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Income (loss) before federal income taxes (789) 2,482 NM
Federal income tax expense (benefit) (293) 830 NM
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Net income (loss) $ (496) $ 1,652 NM
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Earnings (loss) per share $ (0.10) $ 0.32 NM
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Cash dividends declared per share $ 0.175 $ 0.15 17%
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<FN>
<F1> Includes $28.8 million in securities which management decided to sell at
September 30, 1996 resulting in a charge of $340,000 after tax, or $.07 per
share representing a write-down for other-than-temporary impairment at that
date.
</FN>
</TABLE>
FFY FINANCIAL CORP. AND SUBSIDIARY
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
---------------------------
Selected Financial Ratios and Other Data: 1996 1995
----------- -----------
<S> <C> <C>
Performance Ratios:
Return on assets (ratio of net income to average total assets) -0.34% (2) 1.15% (2)
Interest rate spread information:
Average during period (3) 3.28% (2) 2.88% (2)
End of period (3) 2.93% 2.69%
Net interest margin (1) (3) 4.08% (2) 3.75% (2)
Ratio of operating expense to average total assets 4.13% (2) 2.04% (2)
Return on equity (ratio of net income to average equity) -1.94% (2) 6.16% (2)
Dividend payout ratio NM 46.88%
Liquidity Ratio (bank only) 10.32% 16.00%
Quality Ratios:
Non-performing assets to total assets at end of period 0.84% 0.85%
Allowance for loan losses to non-performing assets 69.96% 66.38%
Provision for loan losses to total loans receivable, net 0.14% (2) 0.07% (2)
Capital Ratios:
Equity to total assets at end of period 16.97% 18.82%
Average equity to average assets 17.76% 18.61%
Book value per share $19.98 $19.88
Decrease in book value per share due to SFAS No. 115 ($ 0.07) ($ 0.05)
Ratio of average interest-earning assets to average
interest-bearing liabilities 1.20 x 1.22 x
Regulatory capital ratios: (Bank only)
Tangible capital - 1.50% required 9.40% 9.85%
Core capital - 3.00% required 9.40% 9.85%
Risk-based capital - 8.00% required 16.97% 18.79%
<FN>
<F1> Net interest income divided by average interest earning assets - calculated
without consideration of the unrealized loss on securities available for
sale.
<F2> Annualized.
<F3> Ratio is presented on a fully taxable equivalent basis using the company's
federal statutory tax rate of 34%.
</FN>
</TABLE>
(b) Exhibits
20.1. Press release, dated October 15, 1996.
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.
FFY FINANCIAL CORP.
Date: October 16, 1996 By: /s/ JEFFREY L. FRANCIS
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Jeffrey L. Francis,
President and CEO
FFY Financial Corp.
For Immediate Release For Further Information:
Tuesday, October 15, 1996 Jeff Francis, President and CEO
Terri Liutkus, Treasurer
330/726-3396 - telephone
330/758-1356 - telecopier
FFY Financial Corp. Reports 1st Quarter Loss and Regular Dividend Increase
Youngstown, Ohio, October 15, 1996 - FFY Financial Corp. (NASDAQ: FFYF)
announced a net loss of ($496,000) or ($.10) per share for its first fiscal
quarter ended September 30, 1996. The net loss for the current quarter compared
to net income of $1.7 million, or $.32 per share for the quarter ended September
30, 1995. The net loss for the quarter is due to a one-time charge of
approximately $2.0 million after tax, or $.41 per share, representing a special
assessment of 65.7 basis points on the bank's deposits held as of March 31,
1995, as a result of the recently enacted legislation to recapitalize the SAIF
insurance fund. The bank expects to realize annual savings of approximately $.10
per share ($475,000 after tax, based on current deposit levels) beginning in
January 1997 as a result of reduced deposit premiums following the
recapitalization of the SAIF fund. The current quarter loss also includes a
charge of $340,000 after tax, or $.07 per share, representing a write-down for
other-than-temporary impairment in the value of certain available for sale
securities which management decided to sell at September 30, 1996. Proceeds from
the sale, which was completed in October 1996, will be used for liquidity or
reinvestment purposes. If not for the one-time charge or the write-down of
securities, the company's earnings for the quarter ended September 30, 1996
would have been $1.8 million, or $.37 per share.
Assets totaled $602.6 million at September 30, 1996, an increase of $27.0
million, or 4.7% from $575.6 million at June 30, 1996. The increase in assets
was largely the result of a wholesale growth strategy employed during the
quarter where Federal Home Loan Bank borrowings were used to purchase $24.2
million in adjustable rate mortgage-backed securities. This growth strategy will
enable the company to leverage its excess capital, and will be managed within
the company's guidelines for asset/liability management, profitability and
overall growth objectives.
The bank continued to experience strong loan demand, particularly in 1-4
family mortgages. Net loans receivable increased $10.4 million, or 2.4% during
the quarter ended September 30, 1996 and totaled $449.1 million at September 30,
1996. Securities increased $15.2 million during the quarter ended September 30,
1996 and totaled $125.0 million at September 30, 1996 due to the wholesale
growth strategy mentioned above, offset by the use of proceeds from maturing
securities to fund loan growth. Deposits totaled $448.9 million at September 30,
1996, a decline of $7.6 million, or 1.7% from $456.5 million at June 30, 1996.
The decline in deposits is the result of continued competition for retail
customer deposits. Traditionally, thrift institutions, like the bank, relied on
retail deposits to provide loan funding. The existing competitive environment
for customer deposits and the lack of growth in deposits experienced by the bank
over the last 3 years, including the current quarter, has caused the bank to
rely on proceeds from maturing securities to fund the strong loan demand
experienced over the last 3 years. Although the bank has historically been a
portfolio lender, management is currently pursuing a secondary market mortgage
lending operation in an effort to access that portion of the mortgage market
that is currently serviced by secondary market lenders.
A review of salary and benefits expense, specifically regarding retirement
costs, indicated that the bank's retirement expense was significantly higher
than financial institution industry averages, primarily due to the Employee
Stock Ownership Plan (ESOP) accounting change that was adopted in fiscal year
1995. This accounting change caused ESOP expense to be recorded at the market
value of FFYF shares, not the original $10 cost per share as was allowed under
previous accounting. In order to reduce retirement costs, the board of directors
approved termination of the existing defined benefit pension plan as of November
15, 1996, implementation of a 401(k) plan effective January 1, 1997 and, subject
to approval by the Internal Revenue Service (IRS), restructuring of the ESOP
loan. The termination of the defined benefit pension plan resulted in no pension
expense for the quarter ended September 30, 1996, compared to $39,000 for the
quarter ended September 30, 1995, and is expected to generate cost savings of
approximately $156,000 before tax annually. Cost savings associated with
restructuring the ESOP loan, although expected to be approximately $450,000
before tax in the first year and average $256,000 before tax per year over the
remaining 17 year term of the proposed restructured loan, have not been
reflected in the results for the quarter ended September 30, 1996, as the
restructuring is dependent on IRS approval. Cost savings will be reflected in
the company's financial statements when, and if, the IRS approves the change. No
assurance can be given as to whether the IRS will approve the restructuring.
At its meeting of October 15, 1996 the company's board of directors
increased its regular quarterly dividend from 15 cents per share to 17.5 cents
per share. The dividend will be paid on November 14, 1996 to shareholders of
record on October 31, 1996.
Except for the historical information contained herein, the matters
discussed in this press release may be deemed to be forward-looking statements
that involve 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, and other risks detailed from time to time in the company's SEC
reports, including the report on Form 10-K for the year ended June 30, 1996.
Actual strategies and results in future periods may differ materially from those
currently expected. These forward-looking statements represent the company's
judgment as of the date of this release. The company disclaims, however, any
intent or obligation to update these forward-looking statements.
