SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________to____________
Commission File No. 0-24330
Bedford Bancshares, Inc.
(Exact name of registrant as specified in its charter)
Virginia 54-1709924
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
125 West Main Street, Bedford, Virginia 24523
(Address of principal executive offices)
(540) 586-2590
(Registrant's telephone number, including area code)
Check whether issuer (1) filed all reports required to be filed by Sections 13
or 15(d) of the Exchange Act during the past 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 of the latest practicable date.
Class: Common Stock, par value $.10 per share
Outstanding at August 5, 1996: 1,143,669 shares
<PAGE>
BEDFORD BANCSHARES, INC. AND SUBSIDIARY
INDEX TO FORM 10-QSB
PART I FINANCIAL INFORMATION PAGE
Item 1 Financial Statements
Consolidated Statements of Financial Condition
at June 30, 1996 (unaudited) and September 30, 1995
(audited) 1
Consolidated Statements of Income for the three
and nine months ended June 30, 1995 and 1996
(unaudited) 2
Consolidated Statements of Cash Flows for the nine
months ended June 30, 1995 and 1996 (unaudited) 3
Notes to Unaudited Interim Consolidated Financial
Statements 4
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 5
PART II OTHER INFORMATION
Item 1. Legal proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults upon Senior Securities 11
Item 4. Submission of Matters to a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on Form 8-K 11
SIGNATURES
<PAGE>
BEDFORD BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
(Unaudited)
September 30 June 30
1995 1996
(In Thousands)
Assets
Cash and cash equivalents............................ $ 3,337 $ 2,675
Investment securities held for investment
(estimated market value of $6,340 and $5,789)....... 6,352 5,872
$6,340 and $5,789).................................
Mortgage-backed securities held for investment
(estimated market value of $31 and $27).............. 31 27
Mortgage-backed securities available for sale,
at market value..................................... - 481
Marketable equity securities available for sale,
a market value...................................... 3,660 3,820
Investment securities available for sale, at
market value........................................ 1,409 2,946
Loans receivable, net................................ 97,669 103,452
Foreclosed real estate, net.......................... - -
Property and equipment, net.......................... 1,313 1,256
Accrued interest receivable.......................... 713 634
Deferred income taxes................................ 214 251
Refundable income taxes.............................. 103 -
Other assets......................................... 253 369
------- -------
Total assets..................................... $115,054 $121,783
======= =======
Liabilities and Stockholders' Equity
Liabilities
Deposits............................................. $ 90,063 $ 94,130
Advances from the Federal Home Loan Bank............. 5,000 8,000
Advances from borrowers for taxes and insurance...... 545 366
Dividends payable.................................... 186 -
Other liabilities.................................... 575 693
Income taxes payable................................. - 64
------- -------
Total liabilities............................... 96,369 103,253
------- -------
Commitments and Contingent Liabilities
Stockholders' Equity
Preferred stock, par value $.10 per share,
authorized 250,000; issues and outstanding, none.... - -
Common stock, par value $.10 per share,
authorized 2,750,000 shares; issued and outstanding
1,204,875 and 1,161,169 at September 30, 1995 and
June 30, 1996, respectively......................... 121 116
Additional paid in capital........................... 11,366 10,940
Retained earnings, substantially restricted.......... 8,263 8,910
Unrealized (loss) gain on securities available
for sale........................................... (9) (69)
Less stock acquired by ESOP and RRP.................. (1,056) (1,367)
------- -------
Total stockholders' equity...................... 18,685 18,530
------- -------
Total liabilities and stockholders' equity...... $115,054 $121,783
======= =======
See notes to consolidated financial statements.
-1-
<PAGE>
<TABLE>
<CAPTION>
BEDFORD BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Income
(Unaudited)
Three Months Ended Nine Months Ended
June 30 June 30
------------------------ ------------------------
1995 1996 1995 1996
----------- ----------- ----------- ----------
(In Thousands)
Interest Income:
<S> <C> <C> <C> <C>
Loans.......................... $1,918 $2,078 $5,403 $6,211
U.S. Government Obligations
including agencies........... 173 199 529 551
Mortgage-backed securities..... 1 9 3 12
Other investments, including
overnight deposits........... 13 37 32 84
----- ----- ----- -----
Total interest income......... 2,105 2,323 5,967 6,858
----- ----- ----- -----
Interest Expense:
Deposits....................... 906 1,026 2,570 3,086
Borrowed funds................. 78 89 130 218
----- ----- ----- -----
Total interest expense........ 984 1,115 2,700 3,304
----- ----- ----- -----
Net interest income........... 1,121 1,208 3,267 3,554
Provision for credit losses..... 8 - 15 -
----- ----- ----- -----
Net interest income after
provision for credit losses. 1,113 1,208 3,252 3,554
----- ----- ----- -----
Noninterest income:
Service charges and fees on loans 85 122 274 255
Other customer service fees and
commissions.................. 46 61 130 181
Gain (loss) on sale of loans,
investments and foreclosed
real estate.................. 1 - (7) 30
Other.......................... 5 8 18 42
----- ----- ----- -----
Total noninterest income...... 137 191 415 508
----- ----- ----- -----
Noninterest expense:
Personnel compensation and
benefits..................... 370 364 1,018 1,101
Occupancy and equipment........ 65 89 186 254
Data processing................ 75 74 210 232
Federal insurance of accounts.. 48 53 148 154
Advertising.................... 19 23 56 65
Professional fees.............. 27 23 112 95
Net cost of (gain on) operations
of foreclosed real estate.... - - - -
Other.......................... 53 89 182 263
----- ----- ----- -----
Total noninterest expense.... 657 715 1,912 2,164
----- ----- ----- -----
Income before income taxes... 593 684 1,755 1,898
Provision for income taxes...... 233 260 675 721
----- ----- ----- -----
Net income.................... $ 360 $ 424 $1,080 $1,177
===== ===== ===== =====
Net income per share.......... $ 0.31 $ 0.38 $ 0.92 $ 1.05
===== ===== ===== =====
</TABLE>
See notes to consolidated financial statements.
-2-
<PAGE>
<TABLE>
<CAPTION>
BEDFORD BANCSHARES, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
June 30
-----------------------
1995 1996
----------- --------
(In thousands)
Operating activities:
<S> <C> <C>
Net income............................................. $1,080 $1,177
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for credit losses.......................... 15 -
Provision for depreciation and amortization.......... 80 121
Amortization of investment security premiums and
accretion of discounts, net........................ (5) (8)
(Increase) decrease in deferred income taxes......... - (37)
(Gain) loss on sale of loans, investments and
foreclosed real estate 7 (30)
Loans originated for sale............................ (54) (152)
Proceeds from sale of loans originated for sale...... 54 152
(Increase) decrease in interest receivable........... (81) 79
(Increase) decrease in other assets.................. 63 (13)
Increase (decrease) in other liabilities............. 131 182
------ ------
Net cash provided by (used in) operating activities 1,290 1,471
------ ------
Investing activities:
Proceeds from the sale of investments, available
for sale 392 500
Proceeds from the maturities of investments.......... 900 1,391
Purchases of investment securities................... (1,338) (3,596)
Net increase in loans to customers................... (7,380) (5,783)
Principal collected on mortgage-backed securities.... 5 8
Purchases of premises, equipment and leasehold
improvements (156) (64)
Proceeds from the sale of REO........................ - 83
----- -----
Net cash provided by (used in) investing activities (7,577) (7,461)
------ ------
Financing activities:
Repurchase of stock.................................. (470) (824)
Proceeds - allocation of ESOP and RRP shares......... 25 149
Dividends paid....................................... (177) (401)
Net increase (decrease) in customer deposits......... 1,953 4,067
Proceeds from advances and other borrowed money...... 4,000 3,000
Purchase of stock by ESOP and RRP.................... - (484)
Net increase (decrease) in advance payments from
borrowers for taxes and insurance.................. (10) (179)
------ ------
Net cash provided by financing activities........ 5,321 5,328
------ ------
Increase (decrease) in cash and cash equivalents. (966) (662)
Cash and cash equivalents at beginning of period......... 2,553 3,337
------ ------
Cash and cash equivalents at end of period............... $ 1,587 $ 2,675
====== ======
Supplemental disclosure:
Net affect of adoption of FASB 115................... $ 9 $ 69
====== ======
</TABLE>
See notes to consolidated financial statements.
-3-
<PAGE>
Note to Unaudited Interim Consolidated Financial Statements
June 30, 1996
NOTE 1: BASIS OF PRESENTATION
The accompanying unaudited interim consolidated financial statements have
been prepared in accordance with generally accepted accounting principles
("GAAP") for interim financial information. Accordingly, they do not include all
of the information and footnotes required by generally accepted accounting
principles for complete financial statements.
The accompanying unaudited interim consolidated financial statements
include the accounts of Bedford Bancshares, Inc. (the "Corporation"), Bedford
Federal Savings Bank (the "Bank"), a wholly owned subsidiary of the Corporation,
and First Financial Enterprises, Inc., a wholly owned subsidiary of the Bank.
All significant intercompany balances and transactions have been eliminated in
consolidation.
In the opinion of management, all adjustments (consisting of normal
recurring accruals) considered necessary for the fair presentations have been
included. The results of operations for the interim periods ended June 30, 1995
and 1996 are not necessarily indicative of the results which may be expected for
any future period. For further information, refer to consolidated financial
statements and footnotes thereto included in the Corporation's Annual Report on
Form 10-KSB for the year ended September 30, 1995.
-4-
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
Total assets of the Corporation were $121.8 million at June 30, 1996, an
increase of $6.7 million from September 30, 1995. A $5.8 million rise in loan
receivables, primarily in mortgage loans, to $103.5 million at June 30, 1996
accounted for most of the increase. Funding for the asset growth was mainly
provided by increases in deposits and FHLB borrowings. Stockholders' equity was
$18.5 million on June 30, 1996, compared to $18.7 million on September 30, 1995,
as the net income of $1.2 million was more than offset by the payment of
$401,000 in dividends, stock repurchases of $824,000 and $484,000 of shares
acquired by the RRP Plan.
At June 30, 1996, nonperforming assets were $1,034,000, or .85% of total
assets compared to $1,312,000, or 1.14% of total assets at September 30, 1995.
During the third quarter of fiscal 1996, $452,000 of residential real estate
loans were classified nonperforming. The addition of these loans to
nonperforming status was more than offset by the $1.0 million shopping center
loan which had been classified as a nonperforming asset at September 30, 1995
but was current at June 30, 1996.
RESULTS OF OPERATIONS
COMPARISON OF NINE MONTHS ENDED JUNE 30, 1995 AND 1996
General. For the nine months ended June 30, 1996, net income amounted to
$1.2 million compared to $1.1 million for the same period of fiscal 1995.
Expansion of both net interest and noninterest income was partially offset by
growth of noninterest expense. A higher level of interest earning assets and an
improvement in the net interest margin were the primary reasons for the increase
in net interest income.
Interest Income. Interest income totaled $6.9 million for the nine months
ended June 30, 1996, a rise of 14.9% from the $6.0 million earned in the
comparable period of fiscal 1995. A rise of 7.47% in average outstanding loans
for the nine months ended June 30, 1996 compared to the same period of 1995 was
the principal reason for the increase in interest income.
Interest Expense. For the nine months ended June 30, 1996, interest
expense amounted to $3.3 million, a 22.4% rise over the same nine months of
fiscal 1995. A higher level of average interest bearing deposits and borrowed
funds was responsible for the increase in interest expense.
Net Interest Income. Net interest income for the nine months ended June
30, 1996 of $3.6 million was 8.8% higher than in the same nine months of fiscal
1995. A three basis point improvement in the net interest margin combined with
the 8.00% rise in average earning assets were primary factors in the increase.
Provision for Credit Losses. Based on management's ongoing evaluation of,
among other things, the Bank's loan portfolio, market conditions, the Bank's
market area and the current level of the allowance for credit losses, no
additional provision for credit losses was needed during the nine months ended
June 30, 1996. For the same nine month period of fiscal 1995, a provision for
credit losses of $15,000 was recorded. The determination of the adequacy of the
allowance for credit losses involves subjective judgements regarding future
events and, therefore, there can be no assurance that additions to the allowance
for credit losses will not be required in future periods. Management will
continue to
-5-
<PAGE>
evaluate the level of the allowance for credit losses based on, among other
things, growth of the loan portfolio, loan delinquency rates and general market
conditions. There can be no assurances, however, that additional provisions will
be required in future periods.
Total Noninterest Income. Noninterest income rose to $508,000 for the nine
months ended June 30, 1996 from $415,000 for the nine months ended June 30,
1995. The increase was focused in customer service fees related to NOW accounts.
In addition, a $27,000 gain realized on the sale of foreclosed real estate
during the first nine months of fiscal 1996, compared to a loss of $8,000 in the
same period of fiscal 1995, added to the increase.
Total Noninterest Expense. For the nine months ended June 30, 1996,
noninterest expense amounted to $2.2 million compared to $1.9 million for the
same nine months of fiscal 1995. Personnel compensation and benefits increased
due to staff increases, the rising cost of benefits and general merit increases.
Occupancy and equipment costs rose primarily due to expenses related to the
installation and operation of three freestanding ATMs. Other expenses increased
due to higher Federal Reserve processing charges and the cost of technical
support for the ATMs.
Provision for Income Taxes. The provision for income taxes increased for
the nine months ended June 30, 1996, to $721,000 from $675,000 for the nine
months ended June 30, 1996 due to the increased profitability of the
Corporation.
COMPARISON OF THREE MONTHS ENDED JUNE 30, 1995 AND 1996
General. Net income for the three months ended June 30, 1996 was $424,000,
a 17.8% increase from the $360,000 earned in the same quarter of fiscal 1995. An
increase of $87,000 in net interest income combined with a $54,000 rise in
noninterest income accounted for the expansion. Partially offsetting the
increase was a $58,000 increase in noninterest expense.
Interest Income. Total interest income amounted to $2.3 million for the
three months ended June 30, 1996 up from the $2.1 million earned in the
comparable quarter of fiscal 1995. The increase was primarily due to an increase
in the average balance of loans receivable to $100.9 million for the quarter
ended June 30, 1996 from $92.4 million for the same period of 1995. This
increase reflects the Corporation's continuing success in originating mortgage
loans. In addition, the average balance of investments increased to $13.2
million for the three months ended June 30, 1996 from $11.0 million during the
same quarter of fiscal 1995.
Interest Expense. For the three months ended June 30, 1996, total interest
expense rose to $1.1 million from the $1.0 million for the three months ended
June 30, 1995,primarily due to an increase in the average balance of interest
bearing liabilities to $93.9 million for the third quarter of fiscal 1996 from
$86.1 million for the same quarter of fiscal 1995. The average balance of
borrowings increased $1.3 million from $4.7 million for the three months ended
June 30, 1995 to $6.0 million for the three months ended June 30, 1996.
Net Interest Income. For the three months ended June 30, 1996, net
interest income was $1.2 million, an increase of $87,000 over the net interest
income recorded for the same three months of fiscal 1995. A 7.81% increase in
average earning assets for the three months ended June 30, 1996 over the same
period for fiscal 1995 was the major factor in the improvement.
Provision for Credit Losses. There was no provision for credit losses
taken during the three months ended June 30, 1996 compared to a provision of
$8,000 recorded in the same three months of
-6-
<PAGE>
fiscal 1995. See the discussion of Provision for Credit Losses contained on
pages 5 and 6 contained elsewhere herein.
Total Noninterest Income. Noninterest income totaled $191,000 for the
third quarter of fiscal 1996 compared to $137,000 for the same three month
period of fiscal 1995. Service charges and fees on loans increased $37,000 due
to the increased level of loans closed during the three months ended June 30,
1996, while other customer service fees and commissions rose $15,000 due
primarily to growth of and increased activity in deposit accounts.
Total Noninterest Expense. Total noninterest expense was $715,000 for the
three months ended June 30, 1996, up $58,000 from the $657,000 total for the
comparable quarter of fiscal 1995. Occupancy and equipment expenses were up
$24,000 and other expenses were up $36,000 primarily due to costs associated
with the installation and operation of ATMs.
Provision for Income Taxes. The provision for income taxes was $260,000
for the three months ended June 30, 1996 compared to a provision of $233,000 for
the same three months of fiscal 1995. The increase was due to the increased
profitability of the Corporation.
Capital Compliance. The following table presents the Bank's compliance
with its regulatory requirements of June 30, 1996. (Dollar amounts in
thousands).
June 30, 1996
Percentage
Amount of assets
(Dollars in thousands)
GAAP Capital................................. $15,699 12.81%
====== =====
Tangible capital............................. $15,632 12.78%
Tangible capital requirement ................ 1,835 1.50
------ -----
Excess....................................... $13,797 11.28%
====== =====
Core capital................................. $15,632 12.78%
Core capital requirement..................... 3,669 3.00
------ -----
Excess....................................... $11,963 9.78%
====== =====
Total risk-based capital (1)................. $16,212 24.09%
Total risk-based capital requirement (1)..... 5,385 8.00
------ -----
Excess....................................... $10,827 16.09%
====== =====
- ---------------
(1) Based on risk-weighted assets of $67,311
Management believes that under current regulations, the Bank will continue
to meet its minimum capital requirements in the foreseeable future. Events
beyond the control of the Bank, such as increased interest rates or a downturn
in the economy in areas in which the Bank operates could adversely affect future
earnings and as a result, the ability of the Bank to meet its future minimum
capital requirements.
-7-
<PAGE>
The Bank's liquidity is a measure of its ability to fund loans, pay
deposit withdrawals, and other cash outflows in an efficient, cost effective
manner. The Bank's primary source of funds are deposits and scheduled
amortization and prepayment of loans. During the past several years, the Bank
has used such funds primarily to fund maturing time deposits, pay savings
withdrawals, fund lending commitments, purchase new investments, and increase
liquidity. The Bank funds its operations internally but also borrows funds from
the Federal Home Loan Bank ("FHLB") of Atlanta. As of June 30, 1996, such
borrowed funds totaled $8.0 million. Loan payments and maturing investments are
greatly influenced by general interest rates, economic conditions and
competition.
The Bank is required under Federal regulations to maintain certain
specified levels of "liquid investments," which include certain United States
government obligations and other approved investments. Current regulations
require the Bank to maintain liquid assets of not less than 5% of net
withdrawable accounts plus short term borrowings. Short term liquid assets must
consist of not less then 1% of such accounts and borrowings, which amount is
also included within the 5% requirement. Those levels may be changed from time
to time by the regulators to reflect current economic conditions. The Bank has
generally maintained liquidity far in excess of regulatory requirements. The
Bank's regulatory liquidity was 8.46% and 7.85% at June 30, 1996 and 1995,
respectively, and its short term liquidity was 3.51% and 2.08% at such dates,
respectively.
The amount of certificate accounts which are scheduled to mature during
the next twelve months ending June 30, 1997, is approximately $38.7 million. To
the extent that these deposits do not remain at the Bank upon maturity, the Bank
believes that it can replace these funds with other deposits, excess liquidity,
FHLB advances, or other borrowings. It has been the Bank's experience that a
substantial portion of such maturing deposits remain at the Bank.
At June 30, 1996, the Bank had loan commitments outstanding of $3.1
million and no commitments to purchase mortgage-backed or investment securities.
Funds required to fill these commitments are derived primarily from current
excess liquidity, deposit inflows, borrowings or loan and investment repayments.
Impact of Inflation and Changing Prices
The consolidated financial statements of the Corporation and notes
thereto, presented elsewhere herein, have been prepared in accordance with GAAP,
which requires the measurement of financial position and operating results in
terms of historical dollars without considering the relative purchasing power of
money over time due to inflation. The impact of inflation is reflected in the
increased cost of the Corporation's operations. Unlike most industrial
companies, nearly all of the assets and liabilities of the Corporation are
financial. As a result, interest rates have a greater impact on the
Corporation's performance than do the general levels of inflation. Interest
rates do not necessarily move in the same direction or to the same extent as the
prices of goods and services.
Potential One-Time Assessment
The FDIC charges an annual assessment for the insurance of deposits based
on the risk that a particular institution poses to the insurance fund. Under
this risk-based system, a thrift pays within a range of 23 to 31 cents per $100
of domestic deposits, depending upon the institution's risk classification. This
risk classification is based on an institution's capital group and supervisory
subgroup assignment as determined by the FDIC. In addition, the FDIC is
authorized to increase such deposit insurance rates, on a semi-annual basis, if
it determines that such action is necessary to cause the balance in the SAIF to
reach the designated reserve ratio of 1.25% of SAIF-insured deposits within a
reasonable period of time.
-8-
<PAGE>
Because the SAIF is currently well below the desired level, pending
legislation calls for a one time special assessment of approximately 85 cents
per $100 on all SAIF insured deposits at March 31, 1995, in order to
recapitalize the SAIF to the designated reserve ratio of 1.25% of its insured
deposits. This assessment, if enacted, would cost the Bank approximately
$719,000 (before taxes). There can be no assurance as to the final form, if any,
of such special assessment. In addition, under the FDICIA, the FDIC may impose
special assessments on SAIF members to repay amounts borrowed from the U. S.
Treasury or for any other reason deemed necessary. Furthermore, due to the
disparity between deposit insurance premiums paid by members of the SAIF (such
as the Bank) and members of the Bank Insurance Fund ("BIF") (e.g., most
commercial banks), the bank may be at a competitive disadvantage as a result of
it being required to pay higher premiums as a member of the SAIF. The Bank's
Federal deposit insurance premium expense for the nine months ended June 30,
1995 and 1996 amounted to approximately $148,000 and $154,000, respectively.
Recent Legislation - Recapture of Post-1987 Bad-Debt Reserves
On August 2, 1996, both the U.S. House of Representatives and the U.S.
Senate passed the Small Business Job Protection Act of 1996. This bill will, if
signed by the President, among other things, equalize the taxation of thrifts
and banks. Previously, thrifts had been able to deduct a portion of their
bad-debt reserves set aside to cover potential loan losses ("bad-debt
reserves"). Furthermore, the bill will repeal current law mandating recapture of
thrifts' bad debt reserves if they convert to banks. Bad debt reserves set aside
through 1987 will not be taxed, however, any reserves taken since January 1,
1988 will be taxed over a six year period beginning in 1997. Institutions can
delay these taxes for two years if they meet a residential-lending test. At June
30, 1996, the Bank had $505,000 of post 1987 bad-debt reserves. Any recapture of
the Bank's bad-debt reserves may have an adverse effect on net income. The Bank
is currently evaluating this legislation to determine the effect on the Bank's
financial condition.
-9-
<PAGE>
<TABLE>
<CAPTION>
BEDFORD BANCSHARES, INC. AND SUBSIDIARY
Key Operating Ratios
(Unaudited)
For the For the
Three Months Ended Nine Months Ended
June 30 June 30
--------------------------- -------------------------
1995(1) 1996(1) 1995(1) 1996(1)
------------- ------------ ------------- ----------
<S> <C> <C> <C> <C>
Earnings per common share (2).. $0.31 $0.38 $0.92 $1.05
==== ==== ==== ====
Return on average assets....... 1.30% 1.42% 1.33% 1.34%
Return on average equity....... 7.67% 9.12% 7.50% 8.38%
Interest rate spread........... 3.35% 3.36% 3.36% 3.37%
Net interest margin............ 4.22% 4.22% 4.19% 4.22%
Noninterest expense to average
assets......................... 2.38% 2.39% 2.37% 2.47%
Net charge-offs to average
outstanding loans.............. 0.00% 0.00% 0.00% 0.00%
</TABLE>
<TABLE>
<CAPTION>
At At
September 30, 1995 June 30, 1996
------------------ -------------
(Dollars in Thousands)
<S> <C> <C>
Nonaccrual and 90 days past due loans............. $1,312 $1,034
Repossessed real estate........................... - -
----- -----
Total nonperforming assets........................ $1,312 $1,034
===== =====
Allowance for credit losses to nonperforming assets 48.78% 61.70%
Nonperforming loans to total loans................ 1.34% 1.00%
Nonperforming assets to total assets.............. 1.14% 0.85%
Book value per share (3).......................... $16.81 $16.96
===== =====
- ---------------
<FN>
(1) The ratios for the three- and nine-month periods are annualized
(2) The average number of shares outstanding during the three and nine months
ended June 30, 1996 were 1,115,240 and 1,123,771, respectively. The
average number of shares outstanding during the three and nine months
ended June 30, 1995 were 1,177,273 and 1,178,293, respectively.
(3) The number of shares outstanding as of September 30, 1995 and June 30,1996
were 1,111,608 and 1,093,139, respectively, net of unallocated ESOP
shares.
</FN>
</TABLE>
-10-
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Neither the Corporation nor the Bank was engaged in any legal
proceedings of a material nature at June 30, 1996. From time to time, the
Corporation is a party to legal proceedings in the ordinary course of
business 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
(a) Exhibits
Exhibit 11: Statement regarding computation of earnings per share.
(b) Reports on Form 8-K
On May 2, 1996, the Corporation filed a Form 8-K announcing that it
had completed its repurchase of 5% of its Common Stock. The
Corporation purchased 61,893 shares of its Common Stock in open
market transactions.
-11-
<PAGE>
BEDFORD BANCSHARES, INC. AND SUBSIDIARY
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.
BEDFORD BANCSHARES, INC.
Date: August 5, 1996 By: /s/ Harold K. Neal
Harold K. Neal
Executive Vice President and
Chief Executive Officer
(Principal Executive Officer)
Date: August 5, 1996 By: /s/ James W. Smith
James W. Smith
Vice President and Treasurer
(Principal Accounting and
Financial officer)
-12-
BEDFORD BANCSHARES, INC. AND SUBSIDIARY
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30 June 30
------------------------ ----------------------
1995 1996 1995 1996
----------- ----------- ----------- ---------
<S> <C> <C> <C> <C>
Net Income.............................. $ 360,000 $ 424,104 $1,080,000 $1,176,899
========= ========= ========= =========
Primary and Fully Diluted:
Average Shares Outstanding, Net of ESOP 1,177,273 1,115,240 1,178,293 1,123,771
========= ========= ========= =========
Shares (78,667 and 68,749 at June 30,
1995 and 1996, respectively.).........
Per Share Amount........................ $ .31 $ .38 $ .92 $ 1.05
========= ========= ========= =========
</TABLE>
Earnings per share of common stock for the three and nine months ended
June 30, 1995 and 1996 have been determined by dividing net income for the
periods by the weighted average number of shares of common stock outstanding net
of ESOP shares.
-13-
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 2,675
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 7,247
<INVESTMENTS-CARRYING> 5,899
<INVESTMENTS-MARKET> 5,816
<LOANS> 103,452
<ALLOWANCE> 0
<TOTAL-ASSETS> 121,783
<DEPOSITS> 94,130
<SHORT-TERM> 8,000
<LIABILITIES-OTHER> 1,123
<LONG-TERM> 0
0
0
<COMMON> 116
<OTHER-SE> 18,414
<TOTAL-LIABILITIES-AND-EQUITY> 121,783
<INTEREST-LOAN> 6,211
<INTEREST-INVEST> 563
<INTEREST-OTHER> 84
<INTEREST-TOTAL> 6,858
<INTEREST-DEPOSIT> 3,086
<INTEREST-EXPENSE> 3,304
<INTEREST-INCOME-NET> 3,554
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 2,164
<INCOME-PRETAX> 1,898
<INCOME-PRE-EXTRAORDINARY> 1,177
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,177
<EPS-PRIMARY> 1.05
<EPS-DILUTED> 1.05
<YIELD-ACTUAL> 8.11
<LOANS-NON> 0
<LOANS-PAST> 1,034
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 640
<CHARGE-OFFS> 2
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 638
<ALLOWANCE-DOMESTIC> 638
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 638
</TABLE>
