<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported)
November 22, 1996
EAST TEXAS FINANCIAL SERVICES, INC.
- --------------------------------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
DELAWARE 0-24848 75-2559089
- --------------------------------------------------------------------------------
(State or other (Commission File No.) (IRS Employer
jurisdiction of Identification
incorporation Number)
1200 SOUTH BECKHAM AVENUE, TYLER, TEXAS 75701-3319
- --------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (903) 593-1767
- --------------------------------------------------------------------------------
N/A
- --------------------------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
Item 5. Other Events
- ---------------------
On November 22, 1996, the Registrant issued for publication the press
release attached as Exhibit "99" announcing earnings for the fiscal year ended
September 30, 1996.
Item 7. Financial Statements and Exhibits
- ------------------------------------------
(c) Exhibits
The exhibit referred to in Item 5 of this Report and listed on the
accompanying Exhibit Index is filed as part of this Report and is incorporated
herein by reference.
2
<PAGE>
EXHIBIT SEQUENTIAL
NUMBER DESCRIPTION PAGE NO.
- ------- ----------- ----------
99 Press release, published on November 22, 1996. 6
3
<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.
EAST TEXAS FINANCIAL SERVICES, INC.
Date: November 22, 1996 By: /s/ GERALD W. FREE
------------------
Gerald W. Free
President and
Chief Executive Officer
<PAGE>
EXHIBIT 99
[LETTERHEAD OF EAST TEXAS FINANCIAL SERVICES APPEARS HERE]
NEWS RELEASE
For verification, contact: Gerald W. Free, President and CEO
Derrell W. Chapman, Vice President/COO/CFO
Telephone: (903) 593-1767
Fax: (903) 593-1094
For immediate release, November 22, 1996
______________________________________________________________________________
EAST TEXAS FINANCIAL SERVICES, INC.
ANNOUNCES YEAR END EARNINGS
Tyler, Texas, November 22, 1996, - - - East Texas Financial Services, Inc.
(NASDAQ: ETFS), the holding Company for First Federal Savings and Loan
Association of Tyler, Texas, today reported that consolidated net income for the
fiscal year ended September 30, 1996, was $457,876 or $.42 per share, based on
1,084,882 weighted average shares outstanding for the year, compared to net
income of $1,070,829 or $.95 per share for the year ended September 30, 1995.
"The decline in net income was expected and was primarily the result of a one-
time special assessment, mandated by the U. S. Congress, and charged to all
Savings Association Insurance Fund insured institutions during the year,"
stated Gerald W. Free, president and chief executive officer. "The assessment,
which totaled approximately $645,000 for First Federal, was designed to
recapitalize the SAIF fund. It is unfortunate that First Federal, like most
thrift institutions today, was not part of the savings and loan crisis of the
1980's and yet was asked to recapitalize the fund with this special assessment.
However, we believe the sacrifice made today will help insure the long-term
viability of the entire banking industry. Without the recapitalization of the
fund and the proposed reduction in annual SAIF premiums, deposit insurance
expense for the Company should decrease substantially. Our projection is a
savings of approximately $110,000 on an annualized after tax basis."
If the effects of the one-time special assessment were not considered, net
income and earnings per share would have approximated $867,000 and $.80 per
share respectively. Without the special assessment, the decrease in net income
was primarily the result of a 9.4% increase in total non-
- continued -
<PAGE>
interest expense resulting from additional expenses related to the Company's
1995 stockholder approved stock option and recognition and retention plans, as
well as a 2.9% decrease in net interest income after provision for loan losses.
Total assets of the Company were reported as $114.4 million at September 30,
1996, compared to $117.1 million at September 30, 1995. Investment and
mortgage-backed securities totaled $30.1 million and $25.0 million,
respectively, at September 30, 1996. Loans receivable totaled $47.9 million at
year end, an increase of $6.1 million or approximately 14.6% from the $41.8
million reported at September 30, 1995.
"We are extremely pleased with the increased lending activity experienced during
the year," said Free. "The $25.2 million of loans made during the year was a
record for the Association and was a result of the continued strength of the
real estate market in Tyler and the surrounding communities, as well as the
efforts of a dedicated and hard working lending staff."
Stockholders' equity totaled $20.9 million at September 30, 1996, or 18.3% of
total assets, compared to $23.1 million or 19.8% of total assets at September
30, 1995, a $2.2 million decrease. President Free stated that, "the decrease in
stockholders' equity was primarily a result of the Company's decision to
repurchase, in the open market, approximately 177,000 shares of Company stock
during the year. The Board of Directors believes that the repurchase of our
shares represents an attractive investment opportunity which will benefit the
Company and our stockholders." At year end, the Company owned 177,102 shares of
treasury stock at an average price of $15.79 per share, for a total of $2.8
million.
Capital levels for the Company's wholly owned subsidiary, First Federal Savings
and Loan Association of Tyler, were reported at year end, as 15.3% for both
tangible and core capital ratios, well in excess of the minimum required levels
of 1.5% and 3.0% respectively. The Association's risk-based capital ratio was
44.3% of risk-weighted assets at September 30, 1996, as compared to the minimum
8.0% regulatory requirement. At year end, the Association was considered a
"well-capitalized" institution.
For the year ended September 30, 1996, total interest income was reported as
$8.1 million, compared to $7.9 million for the year ended September 30, 1995.
Interest expense totaled $4.5 million for the year ended September 30, 1996,
compared to $4.3 million for 1995. Net interest income after provisions for
loan losses was reported as $3.6 million, compared to $3.7 million for the prior
year. The Company reported a net interest margin on interest earning assets of
3.16% for the year ended September 30, 1996, compared to 3.21% for 1995.
Total non-interest expenses were reported as $3.2 million for the year ended
September 30, 1996, compared to $2.3 million for the year ended September 30,
1995. The increase was primarily a result of the $645,000 one-time special
assessment paid by the Association.
At September 30, 1996, non-performing assets equaled $450,000 or .39% of total
assets, compared to $396,000 or .34% of assets at September 30, 1995. Non-
performing loans to total loans receivable equaled .94% at September 30, 1996,
compared to .95% at September 30, 1995.
- continued -
<PAGE>
Classified assets were reported as $999,000 at year end, compared to $781,000 at
September 30, 1995.
East Texas Financial Services, Inc., is the holding company for 73 year old
First Federal Savings and Loan Association of Tyler, Texas. First Federal
operates two full service offices and one loan agency in the Tyler area.
The Company's stock is traded on the NASDAQ National Market System and is listed
in most daily newspapers as "EastTxFnl".
Except for the historical information contained herein, the matters discussed in
the press release may be deemed to be forward-looking statements that involve
risks and uncertainties, including the acceptance of new products, the impact of
competitive products and pricing, and the other risks detailed from time to time
in the Company's SEC reports, including the report on Form 10-KSB, for the year
ended September 30, 1996. Actual strategies and results in future periods may
differ materially from those currently expected. These forward-looking
statements represent the Company's judgment as of the date of this release. The
Company disclaims, however, any intent or obligation to update these forward-
looking statements.
- selected financial data follows -
<PAGE>
East Texas Financial Services, Inc.
Selected Financial Data
<TABLE>
<CAPTION>
(Dollars in Thousands, except share data) 1996 1995 1994 1993 1992
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
AT SEPTEMBER 30,
- ----------------
Total assets $ 114,373 $ 117,077 $ 114,935 $ 115,728 $ 115,370
Loan receivable, net
Held for sale 0 0 0 9,312 4,839
Held in portfolio 47,925 41,760 35,337 28,683 36,605
Investment securities - held-to-maturity 30,139 30,263 0 26,985 7,069
Mortgage-backed securities - held-to-maturity 24,949 33,741 0 37,194 38,102
Deposits 91,661 92,474 102,200 102,349 103,227
Stockholders' equity 20,931 23,146 11,458 12,217 11,059
Common shares outstanding 1,079,285 1,256,387 N.A. N.A. N.A.
Book value per share 19.39 18.42 N.A. N.A. N.A.
FOR THE YEAR ENDED SEPTEMBER 30,
- --------------------------------
Net interest income $ 3,552 $ 3,658 $ 3,040 $ 2,967 $ 2,769
Provision for loan losses 0 0 121 61 (9)
Other operating income 371 299 (2,118) 705 389
Operating expenses 3,200 2,335 1,981 1,700 1,684
Net income 458 1,071 (759) 1,158 1,015
SELECTED FINANCIAL RATIOS
- -------------------------
Return on average assets (1) 0.%5 0.40% 0.92% (0.66)% 1.00% 0.86%
Return on average equity (1) 3.93 2.08 5.47 (6.41) 9.95 9.62
Interest rate spread (average) 2.27 2.49 2.33 2.32 2.11
Net interest margin 3.16 3.21 2.67 2.66 2.47
Ratio of interest-earning assets to
interest-bearing liabilities 122.23 119.13 110.08 109.61 107.29
Operating expenses to average assets (1) 2.21 2.77 2.01 1.72 1.47 1.43
Efficiency ratio (1) 67.10 84.10 59.70 61.70 50.70 53.80
Net interest income to operating expenses (1) 1.39x 1.11x 1.57x 1.47x 1.71x 1.65x
ASSET QUALITY RATIOS
- --------------------
Non-performing assets to total assets 0.39% 0.34% 0.27% 0.45% 0.40%
Non-performing loans to total loans
receivable 0.94 0.95 0.87 1.38 1.11
Allowance for loan losses to
non-performing loans 64.22 74.75 97.72 34.48 26.58
Allowance for loan losses to total loans 0.60 0.71 0.85 0.48 0.29
Allowance for loan losses to total assets 0.25 0.25 0.26 0.16 0.11
REGULATORY CAPITAL RATIOS (ASSOCIATION ONLY)
- --------------------------------------------
Total capital to total assets 15.39% 14.40% 9.97% 10.56% 9.59%
Tangible capital ratio 15.30 14.40 9.97 10.56 9.59
Core capital ratio 15.30 14.40 9.97 10.56 9.59
Risk-based capital ratio 44.27 43.44 31.06 37.32 31.93
</TABLE>
(1) 1996 without the SAIF special assessment
- end -
