SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
-----------------------------------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended 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 ______________________
SEC File Number 0-23194
First Savings Bancorp of Little Falls, Inc.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
New Jersey 22-3360945
- ---------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer Identification No.)
Registrant's telephone number, including area code (201) 256-2100
- ---------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last
report
Indicate by check (X) 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 _______
APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares
outstanding of each of the issuer's classes of common stock, as of the latest
practicable date: 100,100.
<PAGE>
FIRST SAVINGS BANCORP OF LITTLE FALLS, INC.
INDEX
Page Number
PART I - CONSOLIDATED FINANCIAL INFORMATION
Consolidated Statements of Financial
Condition at March 31, 1996
and December 31, 1995 (unaudited) 1
Consolidated Statements of Income
for the Three Months Ended
March 31, 1996 and 1995
(unaudited) 2
Consolidated Statements of Cash Flows
of the Three Months Ended
March 31, 1996 and 1995 (unaudited) 3 - 4
Notes to Consolidated Financial Statements 5 - 9
Management's Discussion and Analysis of
Financial Condition and Results of Operations 10 - 18
PART II - OTHER INFORMATION 19
SIGNATURES 20
<PAGE>
FIRST SAVINGS BANCORP OF LITTLE FALLS, INC
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
ASSETS December 31, 1995 March 31, 1996
Cash and amounts due from (UNAUDITED)
<S> <C> <C>
depository institutions $ 862,200 $ 584,757
Interest-bearing demand
deposits in other banks 265,375 631,783
----------- -----------
Total cash and cash equivalents 1,127,575 1,216,540
Securities available for sale, net 35,964,115 37,345,887
Investment securities held to maturity,
net; estimated fair value of
$18,952,000(1995) and $6,990,000(1996) 19,000,000 7,000,000
Mortgage-backed securities held to maturity,
net; estimated fair value of
$2,538,000(1995) and $10,890,000(1996) 2,545,101 10,671,443
Loans receivable, net of allowance for loan
losses of $388,633(1995) $413,633 (1996) 85,836,007 84,982,960
Premises and equipment, net 2,904,934 2,848,516
Real estate owned, net 3,724,958 3,909,727
Federal Home Loan Bank
of New York stock, at cost 823,300 925,600
Interest and dividends receivable, net 1,427,868 1,346,122
Other assets 1,281,111 1,400,747
----------- -----------
Total assets $154,634,969 $151,647,542
============ ============
LIABILITIES AND STOCKHOLDER'S EQUITY
Liabilities
Deposits $131,636,083 $133,055,958
Federal Home Loan Bank Advances 12,600,000 8,000,000
Advance payments by borrowers for taxes 563,262 607,328
Other liabilities 238,715 269,018
----------- -----------
Total liabilities 145,038,060 141,932,304
----------- -----------
Stockholder's Equity
Convertible Preferred Stock (par value $.01 per share)
authorized 1,000,000 shares: issued and
outstanding 34,000 shares 340 340
Common Stock (par value $1.00 per share)
authorized 5,000,000 shares: issued and
outstanding 100,100 shares 100,100 100,100
Additional paid-in capital 4,010,037 4,010,037
Retained earnings-substantially restricted 5,352,463 5,474,158
Unrealized gain on securities available for sale 133,969 130,603
----------- -----------
Total stockholder's equity 9,596,909 9,715,238
----------- -----------
Total liabilities and stockholder's equity $154,634,969 $151,647,542
============ ============
</TABLE>
SEE NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
PAGE 1
<PAGE>
FIRST SAVINGS BANCORP OF LITTLE FALLS, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31
1 9 9 5 1 9 9 6
---------- ---------
Interest income
<S> <C> <C>
Loans $1,639,832 $1,864,489
Mortgage-backed securities 284,855 666,267
Investments and other 453,790 288,031
---------- ----------
Total interest income 2,378,477 2,818,787
Interest Expense
Deposits 1,379,105 1,594,602
Borrowed Money 0 181,326
---------- ----------
Total Interest expense 1,379,105 1,775,928
Net interest income 999,372 1,042,859
Provision for loan losses 0 25,000
---------- ----------
Net interest income after
recovery of loan losses 999,372 1,017,859
---------- ----------
Non-interest income
Service charges 20,824 24,048
Miscellaneous 19,264 17,002
---------- ----------
Total non-interest income 40,088 41,050
---------- ----------
Non-interest expense
Salaries and employee benefits 384,526 352,389
Net occupancy expense 59,576 67,528
Equipment 91,547 85,547
(Income) loss on foreclosed real estate (12,762) 22,764
Federal insurance premium 79,187 74,471
Advertising and promotion 23,954 6,069
Legal fees 39,325 49,600
Miscellaneous 159,466 148,386
---------- ----------
Total non-interest expenses 824,819 806,754
---------- ----------
Income before income taxes 214,641 252,155
Income taxes 75,375 87,960
---------- ----------
Net income 139,266 164,195
Preferred stock dividends 42,500 42,500
---------- ----------
Net income applicable to common shares $96,766 $121,695
========== ==========
Net income per common share and common
stock equivalents $0.22 $0.28
Weighted average number of common
shares and common stock
equivalents outstanding 440,100 440,100
</TABLE>
See notes to unaudited consolidated financial statements
Page 2
<PAGE>
FIRST SAVINGS BANCORP OF LITTLE FALLS INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 31,
1995 1996
---------- ----------
Cash flows from operating activities:
<S> <C> <C>
Net income $ 139,266 $ 164,195
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 88,571 70,221
Amortization of premiums, discounts and fees, net (11,211) 58,465
Provision for loan losses ---- 25,000
Net gain on sales of real estate owned (55,335) ----
(Increase)decrease in interest and dividends receivable, net (16,870) 81,746
Increase in other assets (32,553) (132,308)
Decrease in accrued interest payable (8,193) (98,407)
Decrease in other liabilities (73,793) (12,198)
Amortization of branch premium 8,334 8,333
---------- ----------
Net cash provided by operating activities 38,216 165,047
---------- ----------
Cash flows from investing activities:
Purchase of securities available for sale ---- (2,251,937)
Proceeds from maturities of term deposits 2,500,000 ----
Term deposits purchased (8,750,000) ----
Proceeds from Investment securities held to maturity matured or called ---- 12,000,000
Mortgage-backed securities held to maturity purchased (1,120,632) (8,390,111)
Investment securities held to maturity repayments 4,575 ----
Investment securities available for sale repayments ---- 800,248
Mortgage-backed securities held to maturity repayments 730,272 263,469
Net decrease in loans receivable 167,507 770,504
Additions to premises and equipment (289,018) (13,803)
Additions to real estate owned (96,850) (117,500)
Payments received on real estate owned 2,000 3,000
Proceeds from sales of real estate owned 452,897 ----
Purchase of Federal Home Loan Bank of NY stock (151,300) (102,300)
---------- ----------
Net cash (used in) provided by investment activities (6,550,549) 2,961,570
---------- ----------
Cash flows from financing activities:
Net increase in deposits 5,616,976 1,518,282
Increase in bank overdraft 758,593 ----
Repayment of Federal Home Loan Bank Advances ---- (4,600,000)
Increase in advance payments by
borrowers for taxes and insurance 49,284 44,066
---------- ----------
Net cash provided by (used in) financing activities 6,424,853 (3,037,652)
---------- ----------
Net decrease in cash and cash equivalents (87,480) 88,965
Cash and cash equivalents -- beginning 3,559,346 1,127,575
---------- ----------
Cash and cash equivalents -- end $3,471,866 $1,216,540
========== ==========
</TABLE>
See notes to unaudited consolidated financial statements
PAGE 3
<PAGE>
FIRST SAVINGS BANCORP OF LITTLE FALLS INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
<TABLE>
<CAPTION>
Three Months Ended March 3
1995 1996
---------- ----------
Supplemental disclosures of cash flows information:
Cash paid during the period for:
<S> <C> <C>
Interest $1,387,298 $1,874,335
========== ==========
Income taxes $75,599 $0
========== ==========
Supplemental disclosure of noncash activities:
Increase in unrealized loss on securities(1995), decrease in
unrealized gain on securities(1996), net of deferred income taxes ($4,936) ($3,366)
========== ==========
Loans transferred to real estate owned ---- $70,268
========== ==========
Loans originated to facilitate the sale of
real estate owned $0 $0
========== ==========
Preferred stock dividend declared but not yet paid $42,500 $42,500
========== ==========
</TABLE>
See notes to unaudited consolidated financial statements
Page 4
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-Q and do not include information or
footnotes necessary for a complete presentation of financial condition, results
of operations, and cash flows in conformity with generally accepted accounting
principles. Reference is made to First Savings Bancorp of Little Falls, Inc.
(Bancorp) and Subsidiary's annual report to stockholders for information
regarding the audited consolidated financial statements for year ended December
31, 1995. In the opinion of management, all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation of the
consolidated financial statements have been included. The results of operations
for the three months ended March 31, 1996 are not necessarily indicative of the
results which may be expected for the entire fiscal year or any other period.
2. NET INCOME PER COMMON SHARE AND COMMON STOCK EQUIVALENTS
Net income per common share and common stock equivalents is based on net income
applicable to common shares (net income less preferred stock dividends) and the
average number of common shares and common stock equivalents outstanding during
the period. The calculation assumes the exercise of all convertible preferred
stock, which is considered a common stock equivalent.
3. CHANGE IN ACCOUNTING POLICY
In May 1993, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for
Impairment of a Loan." SFAS 114 generally requires all creditors to account for
impaired loans, except for large groups of smaller-balance homogenous loans that
are collectively evaluated for impairment and those loans that are accounted for
at fair value or at the lower of cost or fair value, at the present value of the
expected future cash flows discounted at the loan's effective interest rate.
SFAS 114 also provides that in-substance foreclosed loans should not be included
in real estate owned for financial reporting purposes, but rather should be
included in the loan portfolio. SFAS 114 is effective for fiscal years beginning
after December 15, 1994.
Page 5
<PAGE>
In October 1994, the FASB amended certain provisions of SFAS 114 via the
issuance of SFAS 118, "Accounting by Creditors for Impairment of a Loan Income
Recognition and Disclosures." SFAS 118 amends SFAS 114 by eliminating provisions
describing how a creditor should report income on an impaired loan and
increasing disclosure requirements as to information on related interest income.
The effective date of SFAS 118 is the same as for SFAS 114. The provisions of
SFAS 114, as amended by SFAS 118, were adopted effective January 1, 1995. Such
adoption did not have a material adverse effect on the consolidated financial
condition or results of operations.
4. IMPACT OF NEW ACCOUNTING STANDARDS
In December 1991, the FASB issued SFAS No. 107 ("SFAS 107"), "Disclosures About
Fair Value of Financial Instruments." SFAS No. 107 generally requires fair value
disclosures for all financial instruments, including certain off-balance sheet
items. SFAS No. 107 is effective for financial statements of entities with less
than $150 million in total assets(such as Bancorp) issued after December 15,
1995. SFAS No. 107 does not require disclosure for periods prior to the
effective date which are presented for comparative purposes. SFAS No. 107 does
not have an effect on the Bancorp's consolidated financial position or results
of operations as its provisions extend only to financial statement disclosure.
In October 1994, the FASB issued SFAS No. 119 ("SFAS 119"), "Disclosure About
Derivative Financial Instruments and Fair Value of Financial Instruments." SFAS
No. 119 requires disclosure of all derivative financial instruments defined as
"futures, forward, swaps, and options contracts, and other financial instruments
with similar characteristics." SFAS No. 119 also expands on and amends SFAS No.
105 and SFAS No. 107, which dealt with off-balance-sheet risk and disclosing the
fair value of financial instruments. The amendments require a distinction as to
whether financial instruments are held or issued for trading, or for other
purposes. The standard is effective for fiscal years ending after December 15,
1995. The adoption of SFAS No. 119 does not have an effect on the Bancorp's
consolidated financial condition or results of operations as the statement
extends only to financial statement disclosure.
Page 6
<PAGE>
In October 1995, FASB issued SFAS No. 123, "Accounting for Stock-based
Compensation". SFAS No. 123 establishes financial accounting and reporting
standards for stock-based employee compensation plans. Those plans include all
arrangements by which employees receive shares of stock or other equity
instruments of the employer or the employer incurs liabilities to employees in
amount based on the price of the employer's stock. SFAS No. 123 defines a fair
value based method of accounting for and employee stock option or similar equity
instrument and encourages all entities to adopt that method of accounting for
all their employee stock compensation plans. However, it also allows an entity
to continue to measure compensation costs for those plans using the intrinsic
value based method of accounting prescribed by APB Opinion No. 25, "Accounting
for stock Issued to Employees". Entities electing to continue the use of the
accounting method under Opinion 25 must make pro forma disclosures of net income
and, if presented, earning per share, as if the fair value based method of
accounting defined in SFAS No. 123 had been applied. SFAS No. 123 is effective
for transactions entered into during fiscal years that begin after December 15,
1995. SFAS 123, does not have any effect on the Bancorp's consolidated financial
conditions or results of operations as the Bancorp does not currently utilize
stock-based compensation.
Page 7
<PAGE>
5. Allowance for Loan Losses
In March 1995, the FASB issued SFAS No. 121, "Accounting for the Impairment of
Long-Lived Assets and Long-Lived Assets to be Disposed of." SFAS No. 121
establishes accounting standards for the impairment of long-lived assets,
certain identifiable intangibles, and goodwill related to those assets to be
held and used and for long-lived assets and certain identifiable intangibles to
be disposed of. SFAS No. 121 does not apply to financial instruments, long-term
customer relationships of a financial institution (i.e. core deposit
intangibles), mortgage and other servicing rights, or deferred tax assets. SFAS
No. 121 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. In such cases, an impairment loss is to be recognized if the
carrying value of such asset exceeds its fair value. In regard to long-lived
assets to be disposed of either through sales or abandonment, such assets are to
be carried at the lower of cost or fair value less costs to sell. SFAS No. 121
is effective for fiscal years beginning after December 15, 1995 and restatement
of previously issued financial statements is not permitted. SFAS 121, was
implemented effective January 1, 1996. Such implementation did not have a
material adverse effect on Bancorp's consolidated financial condition or results
of operations.
In June 1995, the FASB issued SFAS No. 122, "Accounting for Mortgage Servicing
Rights". SFAS No. 122 amends FASB Statement No. 65, "Accounting for Certain
Mortgage Banking Activities", to require that a mortgage banking enterprise
recognize as separate assets rights to service mortgage loans for others,
however those servicing rights were acquired, should such loans be sold or
securitized and the related mortgage servicing rights retained. The servicing
rights are to be recorded based upon an allocation of the total investment in
related loans to the relative fair values of the loans and the separated
servicing rights retained, providing it is practical to estimate those fair
values. SFAS No. 122 is effective prospectively in fiscal years beginning after
December 15, 1995. Retroactive capitalization of mortgage servicing rights
retained in transactions in which a mortgage banking enterprise originates
mortgage loans and sells or securitizes those loans before the adoption of this
statement is prohibited. SFAS 122, was implemented effective January 1, 1996.
Such implementation did not have a material adverse effect on the Bancorp's
consolidated financial condition or results of operations.
Page 8
<PAGE>
An analysis of the allowance for loan losses is as follows:
Year ended Three months ended March 31,
1995 1995 1996
-------------------------------------
Balance - beginning $ 377,315 $ 377,315 $ 388,633
Provision charged 80,228 --- 25,000
Loans charged off (70,605) --- ---
Recoveries 1,695 --- ---
-------------------------------------
Balance - ending $ 388,633 $ 377,315 $ 413,633
=====================================
Impaired loans and related amounts recorded in the allowance for loan losses are
summarized as follows (in thousands:
December 31, March 31,
1995 1995 1996
-------------------------
Recorded investment in impaired loans:
With recorded allowances $--- $--- ---
Without recorded allowances 281 511 281
-------------------------
Total impaired loans 281 511 281
Related allowance for loan losses --- --- ---
Net impaired loans $281 $511 $281
==========================
For the year ended December 31, 1995, and the three months ended March 31, 1995
and 1995, the average recorded investment in impaired loans totalled $355,000,
$511,000 and $281,000, respectively, while interest income recognized on such
loans during the time each was impaired totalled $7,000, $2,000 and $1,500,
respectively, all of which was recorded on the cash basis.
Page 9
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FIRST SAVINGS BANCORP OF LITTLE FALLS INC. AND SUBSIDIARY
LIQUIDITY
The Bank is required to maintain minimum levels of liquid assets as defined
by the Office of Thrift Supervision (OTS) regulations. This requirement is
currently 5% and is based upon a percentage of deposits and short term
borrowings. The Bank's liquidity was $17.6 million or 12.5% as of March 31 1996,
which was available for investment, mortgage originations, or deposit outflows.
The Bank also has an unused $13.3 million line of credit with the Federal Home
Loan Bank of New York (FHLB).
The Bank's liquidity portfolio as of March 31, 1996 consists of $585,000 of
cash on hand and in banks, $632,000 of interest earning deposits at FHLB, and
$16.4 million of investments and mortgage backed securities due in less than
five years.
The Bank utilized the FHLB for borrowings in the first quarter of 1996 to
fund investment purchases and loan originations. The Bank utilized a line of
credit which matures daily and one month non-prepayable advances. As of March
31, 1996 the Bank had an outstanding one month advance of $8.0 million with a
rate of 5.50% which matures in April 1996. The Bank expects to continue the use
of borrowed funds during the remaining fiscal year ended December 31, 1996 to
supplement liquidity and investing needs.
The Bank experienced a small net outflow of savings deposits during the first
quarter of 1996 totalling $175,000.
The Bank is presently active in the mortgage loan origination market and is
currently offering competitive residential loan rates. The Bank closed $2.0
million of loans for the three month period ended March 1996. The Bank had $1.7
million of outstanding loan commitments as of March 31, 1996. Although there can
be no assurance, the Bank expects to continue the marketing of loans in the
second quarter of 1996 in an effort to produce a higher loan to deposit ratio.
The Bank also has outstanding commitments to purchase $3.1 million of mortgage
backed securities and also expects to continue the purchase in these types of
securities during the second quarter of 1996, provided acceptable rates of
return can be achieved. The Bank anticipates that it will have sufficient funds
available to fund loan commitments and investment purchases.
PAGE 10
<PAGE>
RESULTS OF OPERATIONS
Three Months ended March 30, 1994 and 1995
Net Income
Net income for the three months ended March 31, 1996 was $164,000 compared to
$139,000 for the three month period ended March 31, 1995. The primary reasons
for the increase in earnings were an increase in net interest income of $43,000
and a decrease in non-interest expenses of $18,000, which were partially offset
by increases of $25,000 in the provision for loan losses, and income taxes of
$13,000.
Interest Income
Interest income increased $441,000 from $2.4 million for the three month period
ended March 31, 1995 to $2.8 million for the three month period ended March 31,
1996. The primary reason for the increase was that the average balances of the
securities and loan portfolios increased $27.0 million due to asset growth from
purchase of whole loans and securities. The majority of the asset growth came
from $9.8 million of whole loans purchased from the Resolution Trust
Corporation(RTC) during the fourth quarter of 1995. Rising interest rates also
helped contribute to the increase in interest income, the average return on
loans and securities increased from 7.45% during the three month period ended
March 31, 1995 to 7.87% during the three month period ended March 31, 1996.
Interest Expense
Interest expense increased $397,000 from $1.4 million for the three month period
ended March 31, 1995 to $1.8 million for the three month period ended March 31,
1996. The primary reason for the increase was that the average balances of
deposits were higher during the three month period ended March 31, 1996 because
of a increase in savings deposits. The Bank also maintained an average balance
of FHLB borrowings totalling $12.9 million during the three month period ended
March 31, 1996 compared to no borrowings for the same period last year.
Page 11
<PAGE>
Net Interest Income
The Bank's net interest income increased $43,000 to $1.04 million for the three
month period ended March 31, 1996 compared to $999,000 for the same period in
1995. The increase was due to a higher level of net interest earning assets
during the three month period ended March 31, 1996 compared to the same period
last year. The higher level of net interest earning assets resulted from the
purchase of whole loans and investment securities that were funded by deposit
growth and short term FHLB borrowings. The increase was not due in part to net
interest margin because that remained at 2.95% for the three month period ended
March 31, 1996, the same as for the period last year.
Provision for Loan Losses
The Bank had a $25,000 provision for loan losses during the three month period
ended March 31, 1996 compared to no provision for loan losses during the three
month period ended March 31, 1995. Based on the factors set forth below, the
Bank chose to increase its general loan loss provision during the three month
period ended March 31, 1996 and this provision was not identified by any one
asset. See "Loans Receivable" for analysis of allowance for loan loss levels.
It is management's policy to provide for estimated losses on its loan portfolio.
Provisions for loan losses are charged to earnings to bring the total allowance
for loan losses to a level considered appropriate by management based on
historical experience, the volume and type of lending conducted by the Bank, The
amount of the Bank's classified assets, the status of past due principal and
interest payments, general economic conditions, particularly as they relate to
the Bank's market area, and other factors related to the collectability of the
Bank's loan portfolio. Management of the Bank assesses the allowance for loan
losses on a quarterly basis and will make provisions for loan losses as deemed
appropriate by management in order to maintain the adequacy of the allowance for
loan losses. However, there can be no assurance that the allowance for loan
losses will be adequate to cover losses which may in fact be realized in the
future and that additional provisions for loan losses will not be required.
Non-Interest Income
Non-interest income increased only $1,000 for the three month period ended March
31, 1996 compared to the same period last year because the Bank maintained its
fee schedule from the previous year.
Page 12
<PAGE>
Non-Interest Expense
Non-interest expenses decreased $18,000 to $807,000 for the three months ended
March 31, 1996 from $823,000 for the same prior year period.
Salaries and employee benefits decreased $32,000 or 8.4% to $352,000 for the
three month period ended March 31, 1996 as compared to $385,000 the same period
last year. The decrease was mostly due to the reduction of some staff through
normal attrition and reduced medical benefits expense.
During the three month period ended March 31, 1995 the Bank recorded income of
$13,000 on foreclosed real estate compared to a $23,000 loss during the three
month period ended March 31, 1996. The primary reason for the change was a
$55,000 gain on the sale of one non-residential real estate owned property
during the first quarter of 1995 as compared to no sales of real estate owned
during the three month period ended March 31, 1996.
During the three months ended March 31, 1995 non-interest expenses other than
salaries and employee benefits and loss(income) on foreclosed real estate
decreased $21,000 or 4.6% to $432,000 from $453,000 in the prior year quarter.
The main reason for the decrease was an $18,000 reduction in advertising and
marketing expense during the three month period ended March 31, 1996 compared to
the same period last year.
Income Taxes
Income taxes were $88,000 and $75,000 for the three months ended March 31,
1996 and 1995, respectively. The increase resulted from increased pre-tax
earnings.
Page 13
<PAGE>
COMPARISON OF FINANCIAL CONDITION
DECEMBER 31, 1995 AND MARCH 31, 1996
Cash and Cash Equivalents
The Bank's cash and cash equivalents increased to $1.2 million at March 31, 1996
from $1.1 million at December 31, 1995.
Securities Available for Sale
The Bank's securities available for sale increased to $37.3 million as of March
31, 1996 from $36.0 million at December 31, 1995. The Bank purchased a Small
Business Administration security for $2.3 million with a rate that adjusts
monthly and is tied to the prime rate index. The purchase was partially offset
by $800,000 in repayments during the three months ended March 31, 1996.
Investment Securities Held to Maturity
During the three month period ended March 31, 1996, various government agencies
exercised their options to call $12.0 million of step-up securities before the
stated maturity date. The proceeds of these funds were used to reduce FHLB
borrowings and to purchase mortgage backed securities during the three month
period ended March 31, 1996.
Mortgage Backed Securities
As of March 31, 1996 the Bank had $10.7 million of mortgage backed securities
classified as held to maturity with a estimated fair value of $10.9 million
compared to $2.5 million and $2.5 million, respectively, as of December 31,
1995. During the first three months of 1996 the Bank purchased $8.4 million of
fixed-rate short-term maturity securities with an average yield of 6.21% that
will be used for regulatory liquidity. These purchases were partially offset by
principal repayments of $263,000.
Page 14
<PAGE>
Loans Receivable
Loans receivable decreased slightly to $85.0 million at March 31, 1996 from
$85.8 million as of December 31, 1995. Repayments of $2.8 million were offset
somewhat by $2.0 million of new loan originations. The allowance for loans
increased by $25,000 during the first three months of 1996 to $414,000 or .48%
of loans compared to $389,000 or .45% of loans as of December 31, 1995.
On January 1, 1995, the Bank adopted SFAS 114 ("Accounting by Creditors for
Impairment of a Loan") and SFAS 118 ("Accounting by Creditors for Impairment of
a Loan -- Income Recognition and Disclosures") as required by generally accepted
accounting principles. In doing so, the Bank identified loans for which the
provisions of these pronouncements apply and has established criteria to
determine whether such loans are impaired. SFAS 114 provides that provisions of
such Statement are not applicable to large groups of smaller-balance homogeneous
loans that are collectively evaluated for impairment. Accordingly, management
has determined that SFAS 114 and 118 do not apply to the following groups of
smaller-balance homogeneous loans:
CATEGORY INVESTMENT
Mortgage: Residential $200,000 or less
Mortgage: Non-Residential 100,000 or less
Commercial: Unsecured 50,000 or less
Commercial: Secured 100,000 or less
Consumer All loans
Home Equity 75,000 or less
A loan evaluated under SFAS 114 is deemed impaired when, based on current
information and events, it is probable that the Company will be unable to
collect all amount due according to the contractual terms of the loan agreement.
An insignificant delay, which is defined as up to 90 days by the Bank, will not
cause a loan to be classified as impaired. A loan is not impaired during a
period of delay in payment if the Bank expects to collect all amount due,
including interest accrued at the contractual interest rate for the period of
delay. Thus, a demand loan or other loan with no stated maturity is not impaired
if the Bank expects to collect all amounts due, including interest accrued at
the contractual interest rate, during the period the loan is outstanding. All
loans identified as impaired are evaluated independently. The Bank does not
aggregate such loans for evaluation purposes.
Page 15
<PAGE>
The Bank's policy concerning non-accrual loans states that loans are
placed on a non-accrual status when payments are 90 days delinquent or more.
Therefore, a loan will be considered to be impaired, when it is 90 days
delinquent and it exceeds the balance guidelines for SFAS 114 non-applicability
stated above. It is, therefore, possible for a loan to be on non-accrual status
and not be impaired if the balance falls within the above stated guidelines.
SFAS 114 also requires that loans renegotiated, as part of a troubled debt
restructuring, be classified as impaired and measured for impairment by
discounting the total expected cash flow under the renegotiated terms at the
loan's original effective interest rate. This requirement applies only to loans
renegotiated on or after the effective date of SFAS 114.
Loans, or portions thereof, are charged-off when it is determined that a
loss has occurred. Until such time, an allowance for loan loss is maintained for
estimated losses. With impaired loans, unless they are also non-accrual loans,
the Bank payments first to accrued interest receivable and then to principal.
As of March 31, 1996, based on the above criteria, the Bank classified
four commercial loans, totalling $592,000, as impaired. The impairment of these
loans is measured based on the fair value of the underlying collateral. Based
upon such evaluations, $0 has been allocated to the allowance for loan losses
for such impairment.
Page 16
<PAGE>
The following schedule sets forth certain information regarding the Bank's
non-accrual, past due and renegotiated loans and other real estate owned (as
such terms are defined in the Bank's Annual Report on Form 10-K for the year
ended December 31, 1995) as of March 31, 1996, and as of December 31 of each of
the last five years:
March 31, DECEMBER 31,
--------- -----------------------------------
1996 1995 1994 1993 1992 1991
---- ---- ---- ---- ---- ----
(In Thousands)
Non-accrual loans............. $1,459 $1,146 $1,470 $ 1,748 $ 4,799 $ 7,593
Past due and accruing loans... --- --- --- --- 450 316
Renegotiated loans............ 1,253 1,348 1,253 215 223 316
------ ------ ------ ------- ------- -------
Total non-accrual, past due
and renegotiated loans $2,712 2,494 2,723 1,963 5,472 8,225
Other real estate owned....... $3,910 3,725 3,943 4,998 5,977 7,385
------ ------ ------ ------- ------- -------
Total..................... $6,622 $6,219 $6,666 $ 6,961 $11,449 $15,610
====== ====== ====== ======= ======= =======
Included in the above schedule are four non-accrual commercial loans,
totalling $592,000, which represents all loans categorized as impaired.
Therefore, SFAS 114 has no impact on the comparability of data in the above
credit risk table.
At March 31, 1996, non-accrual loans totaled $1.5 million and increase of
$313,000 from the period ending December 31, 1995. Of the total non-accrual
loans at March 31, 1996, all are either in foreclosure, in various stages of
litigation, or on a repayment schedule.
Real Estate Owned(REO)
REO increased $185,000 to $3.9 million during the three month period ended
March 31, 1996. The increase was due to a transfer to REO from loans of $70,000
and the additional cash payment for a residential loan totalling $188,000. The
Bank also received $3,000 in payments on an REO property and continues to
actively seek the resolution of all REO properties.
Page 17
<PAGE>
Federal Home Loan Bank of New York Stock
The Bank purchased $102,300 of stock during the first quarter of 1996.
Asset Liability Management
The Bank prepares asset liability reports on a quarterly basis for management
and Board of Directors approval. The Bank utilizes a in-house computer system to
generate reports and also submits data to the Office of Thrift Supervision for
calculations on interest rate risk which presents the Bank is exempt from
filing. As of December 31, 1995 the Bank's net portfolio value (NPV) was $11.8
million and the change in NPV as a percentage of present value assets when rates
rise 200 basis points is -.92% which is within the minimum regulatory
requirements.
Deposits
Deposits decreased $175,000 or 0.1%, excluding the effect of $1.6 million in
interest credited, during the first three months of 1996.
Stockholder's Equity
Stockholders equity increased $109,000 during the three month period ended March
31, 1995 to $9.7 million. The increase was due to net income of $164,000 for the
three months ended March 31, 1996, and a $13,000 decrease in unrealized gain on
securities held for sale, which more than offset $42,500 in preferred stock
dividends declared during the first three months of 1996.
REGULATORY CAPITAL
(dollars in thousands)
ACTUAL REQUIRED EXCESS
-------------- -------------- --------------
TANGIBLE $9,051 6.01% $2,260 1.50% $6,791 4.51%
CORE 9,051 6.01 4,520 3.00 4,531 3.01
RISK-BASED 9,733 14.97 5,201 8.00 4,531 6.97
Page 18
<PAGE>
FIRST SAVINGS BANCORP OF LITTLE FALLS, INC.
PART II
Item 1. Legal Proceedings
Bancorp and the Bank are not engaged in any legal proceedings of a
material nature at the present time. From time to time, the Bank is a
party to legal proceedings wherein it enforces its security interest in
loans.
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
Not applicable
Item 5. Other Information
Not Applicable
Item 6. Exhibits and Reports on Form 8-K
Not Applicable
Page 19
<PAGE>
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.
FIRST SAVINGS BANCORP OF LITTLE FALLS INC.
(Registrant)
Date: March 15, 1996 /s/Haralambos S. Kostakopoulos
Haralambos S. Kostakopoulos
President
Chief Executive Officer
Date: March 15, 1996 /s/Brian McCourt
Brian McCourt
Vice President
Treasurer
Page 20
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C> <C>
<PERIOD-TYPE> YEAR 3-MOS
<FISCAL-YEAR-END> DEC-31-1995 DEC-31-1996
<PERIOD-END> DEC-31-1995 MAR-31-1996
<CASH> 862 585
<INT-BEARING-DEPOSITS> 265 632
<FED-FUNDS-SOLD> 0 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 35,964 37,346
<INVESTMENTS-CARRYING> 21,545 17,671
<INVESTMENTS-MARKET> 21,490 17,880
<LOANS> 85,836 84,983
<ALLOWANCE> 389 414
<TOTAL-ASSETS> 154,635 151,648
<DEPOSITS> 131,636 133,056
<SHORT-TERM> 12,600 8,000
<LIABILITIES-OTHER> 802 876
<LONG-TERM> 0 0
0 0
0 0
<COMMON> 100 100
<OTHER-SE> 4,010 4,010
<TOTAL-LIABILITIES-AND-EQUITY> 154,635 151,648
<INTEREST-LOAN> 6,788 1,864
<INTEREST-INVEST> 3,185 666
<INTEREST-OTHER> 369 0
<INTEREST-TOTAL> 10,342 2,819
<INTEREST-DEPOSIT> 6,095 1,595
<INTEREST-EXPENSE> 131 182
<INTEREST-INCOME-NET> 4,116 1,043
<LOAN-LOSSES> 80 25
<SECURITIES-GAINS> (5) 0
<EXPENSE-OTHER> 3,457 807
<INCOME-PRETAX> 738 252
<INCOME-PRE-EXTRAORDINARY> 738 252
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 363 164
<EPS-PRIMARY> .83 .37
<EPS-DILUTED> .44 .28
<YIELD-ACTUAL> 3.14 2.95
<LOANS-NON> 1,146 1,459
<LOANS-PAST> 0 0
<LOANS-TROUBLED> 1,348 1,253
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 377 414
<CHARGE-OFFS> 71 0
<RECOVERIES> 2 0
<ALLOWANCE-CLOSE> 389 414
<ALLOWANCE-DOMESTIC> 389 414
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 389 414
</TABLE>
