SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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 December 31, 1999
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number 0-22790
STATEFED FINANCIAL CORPORATION
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(Exact name of small business issuer as specified in its charter)
Delaware 42-1410788
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(State of other jurisdiction (I.R.S. Employer Identification
of incorporation or organization) or Number)
519 Sixth Avenue, Des Moines, Iowa 50309
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(Address of principal executive offices)
(515) 282-0236
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(Issuer's telephone number)
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 [ ]
State the number of Shares outstanding of each of the issuer's classes
of common equity, as the latest date:
As of February 9, 1999, there were 1,508,600 shares of the Registrant's
common stock issued and outstanding.
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STATEFED FINANCIAL CORPORATION
Form 10-QSB
Index
Financial Information Page No.
Item 1. Consolidated Financial Statements: 1
Consolidated Statements of Financial Condition
as of December 31, 1999 and June 30, 1999 3
Consolidated Statements of Operations for the Three
Months Ending December 31, 1999 and December 31, 1998
and for the Six Months Ending
December 31, 1999 and December 31, 1998 4
Consolidated Statements of Comprehensive Income for
the Three Months Ending December 31,1999 and
December 31,1998 and for the Six Months ending
December 31, 1999 and December 31, 1998 5
Consolidated Statement of Stockholders' Equity
for the Six Months Ending December 31,1999 6
Consolidated Statements of Cash Flows for the Six
Months Ending December 31,1999 and
December 31,1998 7
Notes to Consolidated Financial Statements 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10
PART II. Other Information 15
Signatures 16
2
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STATEFED FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, 1999 and June 30, 1999
PART I. Financial Information
Item 1. Financial Statements
ASSETS (Unaudited)
December 31, 1999 June 30, 1999
----------------- -------------
Cash and amounts due from depository institutions $ 1,295,641 $ 8,481,216
Investments in certificates of deposit 685,000 884,300
Investment securities held-for-sale 2,218,333 1,944,374
Loans receivable, net 79,810,014 72,330,884
Real estate acquired for development 156,608 236,602
Real estate held for investment, net 3,118,806 2,645,245
Property acquired in settlement of loans 982,624 1,133,517
Office property and equipment, net 1,149,023 1,188,247
Federal Home Loan Bank stock, at cost 1,147,600 1,147,600
Accrued interest receivable 541,625 536,028
Other assets 294,939 295,695
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TOTAL ASSETS $ 91,400,213 $90,823,708
============ ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $54,538,387 $54,713,072
Advances from Federal Home Loan Bank 19,831,158 18,877,047
Advances from borrowers for taxes and insurance 323,605 337,371
Accrued interest payable 2,140 133,773
Dividends payable 113,145 114,300
Income taxes: current and deferred 288,998 324,643
Other liabilities 192,314 200,123
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TOTAL LIABILITIES 75,289,747 $74,700,329
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Stockholders' equity:
Common stock 8,905$ 8,905
Additional paid-in capital 8,537,818 8,526,563
Unearned compensation - restricted stock awards (238,035) (271,290)
Unrealized gain (loss) on investments (191,642) 3,803
Treasury stock (2,371,629) (2,234,986)
Retained earnings - substantially restricted 10,365,049 10,090,384
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TOTAL STOCKHOLDERS' EQUITY 16,110,466 16,123,379
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TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 91,400,213 $90,823,708
============ ===========
3
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Three Months Ended Six Months Ended
December 31 December 31
(Unaudited) (Unaudited)
----------------------- ---------------------
1999 1998 1999 1998
---------- ---------- ---------- ----------
Interest Income:
Loans $1,646,931 $1,520,251 $3,154,013 $3,004,423
Investments 66,494 76,216 136,306 169,076
Other 16,179 96,437 102,765 225,488
---------- ---------- ---------- ----------
Total interest income 1,729,604 1,692,904 3,393,084 3,398,987
Interest Expense:
Deposits 672,276 727,734 1,362,215 1,472,265
Borrowings 281,271 275,860 556,132 569,814
---------- ---------- ---------- ----------
Total interest expense 953,547 1,003,594 1,918,347 2,042,079
---------- ---------- ---------- ----------
Net interest Income 776,057 689,310 1,474,737 1,356,908
Provision for loan losses 9,000 9,000 18,000 18,000
---------- ---------- ---------- ----------
Net interest income after 767,057 680,310 1,456,737 1,338,908
provision for loan losses
Non-interest Income:
Real estate operations 128,328 147,650 264,411 285,511
Gain on sale of real estate 5,998 1,224 6,027 1,272
Other 26,789 27,846 53,554 51,729
---------- ---------- ---------- ----------
Total non-interest income 161,115 176,720 323,992 338,512
Non-interest expense:
Salaries and benefits 265,234 228,600 506,318 457,890
Real estate operations 83,461 70,347 162,700 165,292
Occupancy and equipment 41,043 36,768 79,370 73,463
FDIC premiums and OTS
assessments 15,328 7,026 30,524 22,291
Data processing 27,509 25,666 47,557 54,367
Other 110,040 105,510 202,263 193,779
---------- ---------- ---------- ----------
Total non-interest expense 542,615 473,917 1,028,732 967,082
---------- ---------- ---------- ----------
Income before income taxes 385,557 383,113 751,997 710,338
Income tax expense 130,140 130,240 251,380 232,480
---------- ---------- ---------- ----------
Net income $255,417 $252,873 $500,617 $477,858
========== ========== ========== ==========
Basic earnings per share $0.17 $0.17 $0.34 $0.32
Diluted earnings per share $0.17 $0.17 $0.33 $0.31
4
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Three Months Ended Six Months Ended
December 31 December 31
(Unaudited) (Unaudited)
-------------------- ---------------------
1999 1998 1999 1998
--------- -------- --------- --------
Net income $ 255,417 $252,873 $ 500,617 $477,858
Other comprehensive income,
net of tax:
Unrealized holding gains
(losses) on securities
arising during period $(101,789) $(21,645) $(195,445) $ (7,051)
--------- -------- --------- --------
Comprehensive income $ 153,628 $231,228 $ 305,172 $470,807
========= ======== ========= ========
5
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Balance - June 30, 1999 $16,123,379
Additional paid in capital 11,255
Other comprehensive income--unrealized gain on
investment securities, net of deferred income taxes (195,445)
Dividends declared (225,951)
Repurchase of 26,500 shares treasury stock (202,313)
Stock options exercised (7,596 shares) 65,670
ESOP common stock released for allocation 33,254
Net income 500,617
Balance - December 31, 1999 $16,110,466
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6
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<TABLE>
<CAPTION>
December 31, 1999 December 31, 1998
----------------- -----------------
<S> <C> <C>
Cash Flows From Operating Activities
- ------------------------------------
Net Income $ 500,617 $ 477,858
Adjustments to reconcile net income to
net cash provided by operating activities:
Depreciation 82,712 79,261
Amortization of purchase loan discounts (2,678) (60)
Amortization of ESOP 44,510 78,105
Deferred loan fees 15,505 (29,837)
Provision for losses on loans 7,802 18,000
Change in:
Accrued interest receivable (5,597) 25,509
Other assets 756 (25,553)
Accrued interest payable (131,633) (131,162)
Current income tax liability (35,645) 35,480
Other liabilities (7,808) (89,842)
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NET CASH FLOWS PROVIDED BY OPERATING $ 468,541 $ 437,759
ACTIVITIES
CASH FLOWS FROM INVESTING ACTIVITIES
Investment in certificates of deposit $ --- $ (99,054)
Maturity of investments in certificates of deposit 198,640 ---
Purchase of available-for-sale investment securities (468,745) (292,254)
Proceeds from sale or maturity of available-for-sale --- 1,004,288
investment securities
(Purchase) redemption of FHLB Stock --- (198,600)
Net (increase) decrease in loans outstanding (7,499,759) (1,357,855)
Investment in real estate held for development 79,994 (4,725)
Investment in real estate held for investment (508,959) (16,010)
Investment in real estate acquired in settlement of loans 150,893 (29,794)
Purchase of office property and equipment (8,090) (31,686)
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NET CASH FLOWS PROVIDED BY INVESTING $(8,056,026) $(1,025,690)
ACTIVITIES
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits $ (174,685) $ 2,121,847
Advances from the Federal Home Loan Bank 1,000,000 ---
Repayment of advances from the Federal Home Loan (45,889) (43,279)
Bank
Net decrease in advances from borrowers (13,766) (31,030)
Proceeds from stock options exercised 65,670 8,070
Dividends paid (227,108) (155,764)
Purchase of treasury stock (202,312) (267,500)
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NET CASH FLOWS PROVIDED (USED) BY $ 401,910 $ 1,632,344
FINANCING ACTIVITIES
----------- -----------
CHANGE IN CASH AND CASH EQUIVALENTS $(7,185,575) $ 1,044,413
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CASH AND CASH EQUIVALENTS, beginning of $ 8,481,216 $ 9,445,404
period
----------- -----------
CASH AND CASH EQUIVALENTS, end of period $ 1,295,641 $10,489,817
=========== ===========
</TABLE>
7
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STATEFED FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the Three Months Ending December 31,1999 and December 31,1998
And for the Six Months Ending December 31, 1999 and December 31, 1998
(Unaudited)
1. BASIS OF PRESENTATIONS
These consolidated financial statements are unaudited (with the
exception of the Consolidated Statement of Financial Condition for June 30,
1999). These consolidated financial statements were prepared in accordance with
institutions for Form 10-QSB and therefore, do not include all disclosures
necessary for a complete presentation of the statements of financial condition,
statements of income and statements of cash flows in accordance with generally
accepted accounting principles. However, in the opinion of management, all
adjustments necessary for a fair presentation of the consolidated financial
statements have been included. Results for any interim period are not
necessarily indicative of results expected for the year. The interim
consolidated financial statements include the accounts of StateFed Financial
Corporation (the "Corporation"), its subsidiary, State Federal Savings and Loan
Association (the "Association" or "State Federal") and the Association's
subsidiary, State Service Corporation.
These statements should be read in conjunction with the consolidated
financial statements and related notes, which are incorporated by reference in
the Company's Annual Report on Form 10-KSB for the year ended June 30, 1999.
2. EARNINGS PER SHARE OF COMMON STOCK
Basic earnings per share are computed based upon the weighted-average
shares outstanding during the period, less shares in the ESOP that are
unallocated and are not committed to be released.
Diluted earnings per share are computed by considering common stocks
outstanding and dilutive potential common shares to be issued under the
Company's stock option plan.
For the three months For the six months
ended ended
Weighted Average Shares Outstanding: December 31, 1999 December 31, 1999
-------------------- ------------------
Basic earnings per share 1,460,438 1,460,015
Fully diluted earnings per share 1,495,429 1,496,682
For the three months For the six months
ended ended
Weighted Average Shares Outstanding: December 31, 1998 December 31, 1998
-------------------- ------------------
Basic earnings per share 1,484,565 1,488,827
Fully diluted earnings per share 1,528,503 1,541,142
8
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3. REGULATORY CAPITAL REQUIREMENTS
Pursuant to Federal law, savings institutions must meet three separate
capital requirements. The Association's capital ratios and balances at December
31, 1999 are as follows:
Amount %
--------- -----
(Dollars in thousands)
Tangible Capital:
Association's $ 7,681 9.04%
Requirement 1,275 1.50
--------- -----
Excess $ 6,406 7.54%
Core Capital:
Association's $ 7,681 9.04%
Requirement 2,550 3.00
--------- -----
Excess $ 5,131 6.04%
Risk-Based Capital:
Association's $ 7,931 13.96%
Requirement 4,544 8.00
--------- -----
Excess $ 3,387 5.96%
Tire 1 Risk-Based Capital:
Association's $ 7,681 13.52%
Requirement 3,399 4.00
--------- -----
Excess $ 4,282 9.52%
4. STOCK OPTION PLAN
At December 31, 1999 there were unexercised options for 62,306 shares
of common stock under the terms of the StateFed Financial Corporation 1993 Stock
Option Plan. The options have an exercise price of $5 per share. There were
7,596 shares exercised during the six months ended December 31,1999.
5. STOCK REPURCHASE PLAN
On May 24, 1999, the Company's Board of Directors authorized management
to repurchase up to 77,450 shares of the Company's common stock over the next
twelve months. During the three-month period ending December 31, 1999, 5,000
shares were repurchased. As of February 10, 2000, 50,500 shares had been
repurchased since May 24, 1999, at a cost of $572,000.
9
<PAGE>
PART I ITEM 2
STATEFED FINANCIAL CORPORATION
Management's Discussion and Analysis of Financial
Condition and Results of Operations
General
The accompanying Consolidated Financial Statements include StateFed
Financial Corporation (the "Company") and its wholly owned subsidiary, State
Federal Savings and Loan Association (the "Association"). All significant
inter-company transactions and balances are eliminated in consolidation. The
Company's results of operations are primarily dependent on the Association's net
interest margin, which is the difference between interest income earned on
interest-earning assets and interest expense paid on interest-bearing
liabilities. The Association's net income is also affected by the level of its
non-interest expenses, such as employee compensation and benefits, occupancy
expenses, and other expenses.
Forward Looking Statements
When used in this Form 10-QSB and in future filings with the SEC, in
the Company's press releases or other public or shareholder communications, as
well as in oral statements made by the executive officers of the Company or its
primary subsidiary, the words or phrases "will likely result," "are expected
to," "will continue," "is anticipated," "estimated," "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, among other things,
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 its
financial performance and could cause its 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 declines 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.
10
<PAGE>
Financial Condition
The Company's total assets increased $576,500 from $90.8 million at
June 30, 1999 to $91.4 million at December 31,1999. This increase was due
primarily to an increase in net loans receivable, of $7.5 million, partially
offset by a decrease in cash and amounts due from depository institutions of
$7.2 million.
Cash and amounts due from depository institutions decreased $7.2
million, from $8.5 million at June 30, 1999 to $1.3 million at December 31,1999.
The decrease in cash and amounts due from depository institutions occurred as
the Company used the cash to fund the increase in net loans receivable of $7.4
million.
Net loans receivable increased $7.5 million, from $72.3 million at June
30, 1999 to $79.8 million at December 31,1999. Loan originations of primarily
residential loans totaled $8.5 million for the six month period and purchased
loan participations totaled $4.6 million, while repayment of principal totaled
$5.6 million.
Total deposits decreased by $175,000 from $54.7 million at June 30,
1999 to $54.5 million at December 31,1999. Certificate accounts decreased
$1,417,000 and passbook accounts decreased $233,100, while money market fund
accounts increased $1,020,000 and NOW accounts increased $455,100.
Total stockholders' equity decreased $12,900 from $16,123,400 at June
30, 1999 to $16,110,500 million at December 31,1999. The decrease was primarily
the result of dividends declared of $225,900, an increase in unrealized losses
on investment securities of $195,400, and the cost to repurchase the Company's
stock of $202,300, offset by net earnings of $500,600 and the accounting for
employee stock awards and options of $110,100.
Comparison of Operating Results for the Three Month Periods Ended December 31,
1999 and December 31, 1998
General. Net income increased $2,500 to $255,400 for the three months
ended December 31, 1999 from $252,900 for the three months ended December 31,
1998. The increase in net income was primarily due to an increase in net
interest income of $86,800, partially offset by a decrease in non-interest
income of $15,600, and an increase non-interest expense of $68,700.
Net Interest Income. Net interest income increased $86,700, from
$689,300 for the three months ended December 31, 1998 to $776,100 for the three
months ended December 31, 1999. This increase was primarily the result of an
increase in interest income of $36,700 and a decrease in interest expense of
$50,000.
Interest Income. Interest income increased $36,700, from $1,692,900 for
the three months ended December 31, 1998 to $1,729,600 for the three months
ended December 31, 1999. This increase was primarily the result of an increase
in interest earned on the loan portfolio of $126,700, partially offset
11
<PAGE>
by a decrease in interest earned on investments of $9,700 and a decrease in
other interest income of $80,300. Interest on the loan portfolio increased
primarily because of the increase in the balance of net loans receivable. Other
interest income decreased as a result of a decrease in the balance of cash,
which was used to fund loan demand.
Interest Expense. Interest expense decreased $50,100 from $1,003,600 in
the three months ended December 31, 1998 to $953,500 in the three months ended
December 31, 1999. This decrease resulted primarily from an decrease in interest
paid on deposits of $55,500, offset by an increase in interest paid on
borrowings of $5,400. The decrease in interest paid on deposits was primarily
the result of a decrease in the balance of deposits of $175,000 and a shift of
funds from certificate accounts to money market accounts, which have lower
interest rates.
Provision for Loan Losses. The provision for loan losses remained
unchanged in the three months ended December 31,1999 as compared to the three
months ended December 31,1998. The provision during the three months ended
December 31,1999 was based on management's analysis of the allowance for loan
losses. The Company will continue to monitor its allowance for loan losses and
make future additions to the allowance through the provision for loan losses as
economic conditions dictate. Although the Company maintains its allowance for
loan losses at a level which it considers to be adequate to provide for
potential losses, there can be no assurance that future losses will not exceed
estimated amounts or that additional provisions for loan losses will not be
required for future periods.
Non-interest Income. Non-interest income decreased $15,600 from
$176,700 in the three months ended December 31, 1998 to $161,100 in the three
months ended December 31, 1999. The decrease was the result of a decrease in
income from real estate operations of $19,300, as a result of seasonal
fluctuation in rental payments, and a decrease of $1,100 in other income,
partially offset by an increase in gain on sale of real estate of $4,800.
Non-interest Expense. Non-interest expense increased from $473,900 in
the three months ended December 31, 1998 to $542,600 in the three months ended
December 31, 1999. This increase of $68,700 was primarily the result of an
increase of $36,600 in salaries and benefits, an increase of $13,100 in real
estate operations expense, an increase of $8,300 in FDIC premiums and OTS
assessments, an increase of $4,500 in other non-interest expense, an increase of
$4,300 in occupancy and equipment expense, and an increase of $1,900 in data
processing expense.
Income Tax Expense. Income tax expense was $130,100 for the three
months ended December 31, 1999 compared to $130,200 for the three months ended
December 31, 1998, a decrease of $100.
Comparison of the Six Months Ended December 31, 1999 and December 31, 1998
General. Net income increased $22,700 from $477,900 for the six months
ended December 31, 1998 to $500,600 for the six months ended December 31, 1999.
The increase was primarily the result of an increase in net interest income of
$117,800, partially offset by an increase in non-interest expense of $61,700, an
increase in income tax expense of $18,900, and a decrease in non-interest income
of $14,500.
12
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Net Interest Income. Net interest income increased $117,800 from
$1,356,900 for the six months ended December 31, 1998 to $1,474,700 for the six
months ended December 31, 1999. The increase was primarily the result of an
increase in interest on loans of $149,600, a decrease in interest paid on
deposits of $110,000, and a decrease in interest paid on borrowings of $13,700,
partially offset by a decrease in other interest income of $122,700 and a
decrease in investment interest income of $32,800.
Interest Income. Interest income decreased $5,900, from $3,399,000 for
the six months ended December 31, 1998 to $3,393,100 the six months ended
December 31, 1999. The decrease was primarily the result of a decrease in
interest on investments of $32,800 and a decrease in other interest income of
$122,700, partially offset by an increase in interest on loans of $149,600. The
decrease in interest on investments was primarily the result of lower interest
rates earned on the investments. The interest on loans increased primarily as a
result of an increase in outstanding loans receivable. Other interest income
decreased as a result of the decreased amounts in interest-bearing deposits held
at other depository institutions.
Interest Expense. Interest expense decreased $123,700 from $2,042,100
in the six months ended December 31, 1998 to $1,918,400 in the six months ended
December 31, 1999. The decrease resulted from a decrease in interest paid on
deposits of $110,000 and a decrease in interest paid on borrowings of $13,700.
The decrease in interest paid on deposits resulted primarily from a decrease in
the balance of deposits and a shift of funds from certificate accounts to lower
interest earning money market accounts.
Provision for Loan Losses. The provision for loan losses remained
unchanged in the six months ended December 31, 1998 as compared to the six
months ended December 31, 1999. The provision during the six months ended
December 31, 1999 was based on management's analysis of the allowance for loan
losses. The Company will continue to monitor its allowance for loan losses and
make future additions to the allowance through the provision for loan losses as
economic conditions dictate. Although the Company maintains its allowance for
loan losses at a level which it considers to be adequate to provide for
potential losses, there can be no assurance that future losses will not exceed
estimated amounts or that additional provisions for loan losses will not be
required for future periods.
Non-interest Income. Non-interest income decreased $14,500 from
$338,500 in the six months ended December 31, 1998 to $324,000 in the six months
ended December 31, 1999. The decrease was primarily the result of a decrease of
$21,100 in income from real estate operations, as a result of seasonal
fluctuation in rental payments, partially offset by an increase of $4,800 in
gain on sale of real estate and an increase of $1,800 in other non-interest
income.
Non-interest Expense. Non-interest expense increased from $967,100 in
the six months ended December 31, 1998 to $1,028,700 in the six months ended
December 31, 1999. This increase of $61,600 was primarily the result of an
increase in salaries and benefits expense of $48,400, an increase in FDIC
premiums and OTS assessments of $8,200, an increase in occupancy and equipment
expense of $5,900, and an increase in other expenses of $8,500, partially offset
by a decrease real estate operations expense of $2,600 and a decrease in data
processing expense of $6,800.
Income Tax Expense. Income tax expense increased from $232,500 for the
six months ended December 31, 1998 to $251,400 for the six months ended December
31, 1999, an increase of $22,800. The increase was primarily due to the increase
in net income before income taxes.
13
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Liquidity and Capital Resources. The Company's primary sources of funds
are deposits, principal and interest payments on loans, FHLB Des Moines
advances, and funds provided by operations. While scheduled loan repayments and
maturity of short-term investments are a relatively predictable source of funds;
deposit flows are greatly influenced by general interest rates, economic
conditions, and competition. Current Office of Thrift Supervision regulations
require the bank to maintain cash and eligible investments in an amount equal to
at least 4% of customer accounts and short-term borrowings to assure its ability
to meet demands for withdrawals and repayment of short-term borrowings. As of
December 31, 1999, the Association's average liquidity ratio was 5.09%, which
exceeded the minimum regulatory requirement on such date.
The Company uses its capital resources principally to meet its ongoing
commitments, to fund maturing certificates of deposits and loan commitments,
maintain its liquidity, and 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.
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 December 31,1999,
the Association exceeded all fully phased-in regulatory capital requirements.
At December 31, 1999, the Association's tangible equity capital was
$7.7 million, or 9.04%, of tangible assets, which is in excess of the 1.5%
requirement by $6.4 million. In addition, at December 31, 1999, the Association
had core capital of $7.7 million, or 9.04%, of adjusted total assets, which
exceeds the 3% requirement by $5.1 million. The Association had total risk-based
capital of $7.9 million at December 31, 1999, or 13.96%, of risk-weighted
assets, which exceeds the 8.0% risk-based capital requirements by $3.4 million.
As required by Federal law, the OTS has proposed a rule revising its
minimum core capital requirement to be no less stringent than that imposed on
national banks. the OTS has proposed that only those savings associations rated
a composite one (the highest rating) under the MACRO rating system for savings
associations will be permitted to operate at or near the regulatory minimum
leverage ratio of 3%. all other savings associations will be required to
maintain a minimum leverage ratio of 3% plus at least an additional 100 to 200
basis points. The OTS will assess each individual savings association through
the supervisory process on a case-by-case basis to determine the applicable
requirement. No assurance can be given as to the final form of any such
regulation, the date of its effectiveness or the requirement applicable to the
Association. As a result of the prompt corrective action provisions of federal
law discussed below, however, a savings association must maintain a core capital
ratio of at least 4% to be considered adequately capitalized unless its
supervisory condition is such to allow it to maintain a 3% ratio.
Year 2000 Compliance
The Bank has experienced no Y2K problems in conection with the advent
of the year 2000. The Bank and the Company will continue to monitor Y2K issues
and will address any problems should they occur. As of December 31, 1999, an
immaterial amount of funds was spent on Y2K issues.
14
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STATEFED FINANCIAL CORPORATION
Part II - Other Information
As of December 31,1999, management is not aware of any current
recommendations by regulatory authorities which, if they were to be implemented,
would have or are reasonably likely to have a material adverse effect on the
Company's liquidity, capital resources or operations.
Item 1- Legal Proceedings
Not applicable.
Item 2 - Changes in Securities Not applicable.
Item 3 - Defaults upon Senior Securities
Not applicable.
Item 4 - Submission of Matters to Vote of Security Holders
Not applicable
Item 5 - Other Information
None
Item 6 - Exhibits and Reports on Form 8-K
(a) Exhibits
Press Release on Form 8-K dated November 4, 1999, detailing the
earnings for the quarter ending September 30, 1999, filed with the
Commission on November 12, 1999.
15
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly cause this report to be signed on its behalf by the
undersigned thereunto duly authorized.
STATEFED FINANCIAL CORPORATION
Registrant
Date: February 14, 2000 /s/ John F. Golden
-------------------------------------
John F. Golden
President and Chief Executive Officer
Date: February 14, 2000 /s/ Andra K. Black
-------------------------------------
Andra K. Black
Executive Vice President and
Chief Financial Officer
16
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<LEGEND>
The schedule contains summary financial information extracted from the quarterly
report on Form 10-QSB for the fiscal quarter ended December 31,1999 and is
qualified in its entirety by reference to such financial statements.
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