<PAGE>
<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
_______________________________________
FORM 10-QSB
MARK ONE
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
-------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE EXCHANGE ACT
For the transition period from __________ to _____________.
Commission File Number: 033-86964
---------
FIRST FEDERAL BANCORPORATION
- ----------------------------------------------------------------
(Exact Name of Registrant as Specified in Its Charter)
Minnesota 41-1796238
- ------------------------------- -----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
214 5th Street, Bemidji, Minnesota 56601-9983
- -----------------------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code:(218) 751-5120
--------------
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 ( )
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
Class Outstanding at June 30, 1997
- ----- -----------------------------
Common Stock, $.01 par value 596,488<PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION
CONTENTS
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements Page
----
Consolidated Balance Sheets at
June 30, 1997 and September 30, 1996 3
Consolidated Statements of Earnings for
the Three Months Ended and Nine Months
Ended June 30, 1997 and 1996 5
Consolidated Statement of Stockholders'
Equity for the Nine Months Ended
June 30, 1997 6
Consolidated Statements of Cash Flows for
the Nine Months Ended June 30, 1997 and
1996 7
Notes to Consolidated Financial Statements 9
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of
Operations 11
PART II - OTHER INFORMATION
Item 1: Legal Proceedings 15
Item 2: Changes in Securities 15
Item 3: Defaults Upon Senior Securities 15
Item 4: Submission of Matters to a Vote of
Security Holders 15
Item 5: Other Materially Important Events 15
Item 6: Exhibits and Reports on Form 8-K 15
Signatures 16
2<PAGE>
<PAGE>
PART 1 - FINANCIAL STATEMENTS
FIRST FEDERAL BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30 September 30
1997 1996
---------- ------------
ASSETS
<S> <C> <C>
Cash $ 1,949,617 $ 1,376,853
Interest-bearing deposits with banks 4,433,346 3,308,983
------------ ------------
Cash and cash equivalents 6,382,963 4,685,836
Securities available for sale:
Mortgage-backed and related securities
(amortized cost of $19,016,271 and
$20,128,368) 18,793,520 19,903,383
Other securities (amortized cost of
$27,414,912 and $26,193,395) 27,752,590 26,162,483
------------ ------------
Total securities available for sale 46,546,110 46,065,866
------------ ------------
Securities held to maturity:
Mortgage-backed and related securities
(estimated market value of $554,176
and $852,113) 551,420 845,605
------------ ------------
Total securities held to maturity 551,420 845,605
------------ ------------
Loans receivable, net 52,878,381 51,003,105
Federal Home Loan Bank stock, at cost 700,500 700,500
Foreclosed real estate, net 246,559 193,823
Accrued interest receivable 882,231 862,732
Premises and equipment, net 1,865,615 1,944,754
Other assets 535,709 953,880
------------ ------------
Total assets $110,589,488 $107,256,101
============ ============
Liabilities and Stockholders' Equity
Deposits $ 82,346,810 $ 81,046,519
Repurchase Agreements 4,534,529 4,954,620
Federal Home Loan Bank Advances 10,257,893 6,943,258
Advance payments by borrowers for
taxes and insurance 106,422 156,730
Accrued interest payable 591,821 587,779
Accrued SAIF assessment 0 588,444
Accrued expenses and other liabilities 732,809 656,053
------------ ------------
Total liabilities 95,570,284 94,933,403
</TABLE>
(continued)
3<PAGE>
<PAGE>
<TABLE>
<CAPTION>
June 30 September 30
1997 1996
---------- ------------
<S> <C> <C>
Stockholders' Equity:
Common stock ($.01 par value): authorized
4,000,000 shares; issued 682,566 and
700,566 shares in 1997 and 1996 $ 6,826 $ 7,006
Additional paid-in capital 6,235,144 6,372,253
Retained earnings, subject to certain
restrictions 7,926,005 7,558,604
Unrealized gain (loss) on securities
available for sale, net of tax effect 67,807 (150,979)
Unearned employee stock ownership plan
shares (500,250) (552,000)
Unearned shares management recognition
plan (306,942) (377,775)
Treasury stock, at cost, 86,078 and
36,563 shares in 1997 and 1996 (1,409,386) (534,411)
------------ ------------
Total stockholders' equity 12,019,204 12,322,698
------------ ------------
Total liabilities and stock-
holders' equity $110,589,488 $107,256,101
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
4<PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNING
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
--------------------- --------------------
1997 1996 1997 1996
---------- --------- -------- --------
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $1,159,908 $1,109,273 $3,474,931 $3,335,415
Mortgage-backed and related
securities 317,896 359,267 968,730 1,062,480
Other securities 482,444 342,831 1,367,298 934,984
Interest-bearing deposits with banks 11,672 39,937 35,689 136,280
Other 12,225 12,192 36,641 37,795
---------- ---------- ---------- ----------
1,984,145 1,863,500 5,883,289 5,506,954
---------- ---------- ---------- ----------
Interest expense:
Deposits 927,597 915,401 2,778,560 2,822,224
Borrowings 207,557 69,035 534,881 99,860
---------- ---------- ---------- ----------
1,135,154 984,436 3,313,441 2,922,084
---------- ---------- ---------- ----------
Net interest income 848,991 879,064 2,569,848 2,584,870
Provision for loan losses 0 0 0 0
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses 848,991 879,064 2,569,848 2,584,870
---------- ---------- ---------- ----------
Noninterest income:
Fees and service charges 119,761 117,606 345,619 292,769
Gain on sales of securities 2,215 2,211 35,875 5,037
Gain on sales of foreclosed
real estate 7,129 3,464 8,589 4,781
Other 11,616 36,276 44,420 68,511
---------- ---------- ---------- ----------
Total noninterest income 140,721 159,557 434,503 371,098
---------- ---------- ---------- ----------
Noninterest expense:
Compensation and employee benefits 377,068 345,132 1,161,323 1,030,911
Occupancy 129,419 125,524 383,688 374,881
Federal deposit insurance premiums 13,476 55,826 72,395 165,619
Data processing 17,822 17,129 54,186 52,972
Advertising 35,005 28,693 113,182 68,978
Other 98,015 119,185 349,474 400,566
---------- ---------- ---------- ----------
Total noninterest expense 670,805 691,489 2,134,248 2,093,927
---------- ---------- ---------- ----------
Earnings before income tax
expense 318,907 347,132 870,103 862,041
Income tax expense 129,970 142,227 355,827 351,039
---------- ---------- ---------- ----------
Net earnings $ 188,937 $ 204,905 $ 514,276 $ 511,002
========== ========== ========== ==========
Earnings per common share and
common share equivalents $ 0.33 $ 0.27 $ 0.87 $ 0.66
---------- ---------- ---------- ----------
Weighted average number of common
share equivalents outstanding 572,096 741,103 591,586 771,827
---------- ---------- ---------- ----------
</TABLE>
See accompanying notes to consolidated financial statements.
5<PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Unrealized
Gain (loss) on
Additional Securities
Common Paid-in Retained Available for
Stock Capital Earnings sale, net
------ ---------- -------- -------------
<S> <C> <C> <C> <C>
September 30, 1996 $7,006 6,372,253 7,558,604 (150,979)
Net earnings 514,276
Change in unrealized gain (loss)
on securities available for
sale, net of tax effect 218,786
Purchase of treasury stock
Sale of treasury stock (54)
Purchase and retirement of
common stock (180) (179,820) (146,875)
Earned management recognition
plan shares
Earned employee stock ownership
plan shares 42,765
------ ---------- ---------- ---------
June 30, 1997 $6,826 6,235,144 7,926,005 67,807
====== ========== ========== =========
<CAPTION>
Unearned
Shares Unearned
Employee Shares
Stock Management Total
Ownership Recognition Treasury Stockholders'
Plan Plan Stock Equity
--------- ----------- --------- -------------
<S> <C> <C> <C> <C>
September 30, 1996 $(552,000) (377,775) (534,411) 12,322,698
Net earnings 514,276
Change in unrealized gain (loss)
on securities available for
sale, net of tax effect 218,786
Purchase of treasury stock (877,383) (877,383)
Sale of treasury stock 2,408 2,354
Purchase and retirement of
common stock (326,875)
Earned management recognition
plan shares 70,833 70,833
Earned employee stock ownership
plan shares 51,750 94,515
--------- --------- ----------- -----------
June 30, 1997 $(500,250) (306,942) (1,409,386) 12,019,204
========= ========= =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
6<PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended June 30,
----------------------------
1997 1996
---------- -----------
<S> <C> <C>
Operating activities:
Net earnings $ 514,276 $ 511,002
Adjustments to reconcile net earnings to net
cash provided (used) by operations:
Provision for loan losses 0 0
Depreciation 198,170 195,985
Amortization of premium and discount, net (6,819) 4,377
Increase in accrued interest receivable (19,499) (18,658)
Increase (decrease) in accrued interest payable 4,042 (12,517)
FHLB stock dividend 0 (13,800)
Gain on sale of securities (35,875) (5,037)
Gain on sale of foreclosed real estate (8,589) (4,781)
Earned ESOP shares priced above original cost 42,765 19,297
Decrease in Unearned ESOP Shares 51,750 51,750
Decrease in Unamortized Restricted Stock 70,833 70,833
Decrease (increase) in other assets 310,543 (25,093)
(Decrease) increase in accrued expenses
and other liabilities (511,688) 6,093
----------- -----------
Net cash provided by operating activities 609,909 616,451
----------- -----------
Investing activities:
Net increase in loans receivable (1,875,276) (1,090,006)
Purchases of:
Other securities - available for sale (10,752,822) (14,674,529)
Mortgage-backed & related securities -
available for sale (1,887,486) (4,518,974)
Premises and equipment (119,031) (60,599)
Proceeds from sales of:
Other securities - available for sale 483,700 750,000
Mortgage-backed & related securities -
available for sale 160,979 1,184,785
Mortgage-backed & related securities -
held to maturity 209,867 0
Proceeds from maturities or calls of:
Other securities - available for sale 9,040,466 5,294,247
Principal payments on:
Mortgage-backed & related securities
- available for sale 2,852,953 2,911,682
Mortgage-backed & related securities
- held to maturity 83,927 203,968
Net increase in foreclosed real estate (52,736) (36,571)
----------- -----------
Net cash used by investing activities (1,855,459) (10,035,997)
----------- -----------
</TABLE>
(continued)
7<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Nine Months
Ended June 30,
----------------------------
1997 1996
---------- -----------
<S> <C> <C>
Financing activities:
Net increase (decrease) in deposits $1,300,291 $(2,200,123)
Purchase of Treasury Stock, net (874,975) (473,930)
Purchase and retirement of common stock (326,875) (1,156,830)
Decrease in advance payments by borrowers
for taxes and insurance (50,308) (12,384)
Net increase in Federal Home Loan Bank advances 3,314,635 5,454,000
(Decrease) increase in Repurchase Agreements (420,091) 3,400,000
---------- -----------
Net cash provided by financing activities 2,942,677 5,010,733
---------- -----------
Increase (decrease) in cash and cash equivalents 1,697,127 (4,408,813)
Cash and cash equivalents, beginning of period 4,685,836 10,185,818
---------- -----------
Cash and cash equivalents, end of period $6,382,963 $ 5,777,005
========== ===========
Supplemental cash flow disclosures:
Cash paid for interest $3,309,399 $ 2,934,601
Cash paid for income taxes 107,000 341,076
Supplemental noncash flow disclosures:
Transfer of loans to real estate $ 120,514 $ 13,905
</TABLE>
See accompanying notes to consolidated financial statements.
8<PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
June 30, 1997
(1) The accompanying unaudited consolidated financial
statements, which are for interim periods, do not include all
disclosures provided in the annual consolidated financial
statements. These unaudited consolidated financial statements
should be read in conjunction with the consolidated financial
statements and the footnotes thereto contained in the Annual
Report on Form 10-KSB for the year ended September 30, 1996 of
First Federal Bancorporation (the "Company"), as filed with the
Securities and Exchange Commission. The September 30, 1996
balance sheet was derived from audited consolidated financial
statements, but does not include all disclosures required by
generally accepted accounting principles.
(2) Basis of Preparation
In the opinion of the Company, the accompanying unaudited
consolidated financial statements contain all adjustments (which
are of a normal recurring nature) necessary for a fair
presentation of the financial statements. The statements of
earnings for the three and nine month periods ended June 30, 1997
are not necessarily indicative of the results which may be
expected for the entire year.
(3) Earnings Per Common Share and Common Share Equivalents
Earnings per share are based upon the weighted average
number of common shares and common share equivalents, if
dilutive, outstanding during the period. The only common stock
equivalents are stock options. The weighted average number of
common stock equivalents is calculated using the treasury stock
method. Net earnings per common share were calculated using
572,096 shares, and 591,586 shares, as the weighted average
number of shares outstanding for the three month period and nine
month period, respectively, ended June 30, 1997.
The FASB has issued Statement No 128, Earnings per Share,
which supercedes APB Opinion No. 15. Statement No. 128 requires
the presentation of earnings per share by all entities that have
common stock or potential common stock, such as options,
warrants and convertible securities, outstanding that trade in a
public market. Those entities that have only common stock
outstanding are required to present basic earnings per-share
amounts. All other entities are required to present basic and
diluted per-share amounts. Diluted per-share amounts assume the
conversion, exercise or issuance of all potential common stock
intruments unless the effect is to reduce a loss or increase the
income per common share from continuing operations. All entities
required to present per-share amounts must initially apply
Statement No. 128 for annual and interim periods ending after
December 15, 1997. Earlier application is not permitted.
Because the Company has potential common stock outstanding
(stock options to employees), the Company will be required to
present basic and diluted earnings per share. The Company has
not completed its analysis of the pro forma effects of this
standard on reported earnings per share.
<PAGE>
<PAGE>
(4) Regulatory Capital Requirements
At June 30, 1997, the Bank met each of the three current
minimum regulatory capital requirements. The following table
summarizes the Bank's regulatory capital position at June 30,
1997:
<TABLE>
<CAPTION>
Amount Percent(1)
------ ----------
(Dollar in Thousands)
<S> <C> <C>
Tangible Capital:
Actual $10,553 9.64%
Required 1,642 1.50
------- ----
Excess $ 8,911 8.14%
Core Capital:
Actual $10,553 9.64%
Required 3,284 3.00
------- ----
Excess $ 7,269 6.64%
Risk-Based Capital:
Actual $10,960 19.07%
Required 4,599 8.00
------- -----
Excess $ 6,361 11.07%
<FN>
_________________________
(1) Tangible and core capital levels are shown as a percentage
of total adjusted assets; risk-based capital levels are shown as
a percentage of risk-weighted assets.
</FN>
</TABLE>
(5) Stockholders' Equity
During the three months ended December 31, 1996, the Company
repurchased 17,000 shares of the Company's outstanding common
stock. Repurchased shares are held as treasury shares and will
be used for the issuance of shares in conjunction with the
Stock Option Plan.
During the three months ended March 31, 1997, the Company
repurchased 22,600 shares of the Company's outstanding common
stock. Repurchased shares are held as treasury shares and will
be used for the issuance of shares in conjunction with the Stock
Option Plan.
During the three months ended June 30, 1997, the Company
repurchased 10,087 shares of the Company's outstanding common
stock. Repurchased shares are held as treasury shares and will
be used for the issuance of shares in conjunction with the Stock
Option plan.
During the three months ended June 30, 1997, the Company
sold 172 shares of its repurchased shares, held as treasury
shares, upon the exercise of stock options.
During the three months ended June 30, 1997, the Company
approved a stock repurchase program to acquire up to 35,028
shares of the Company's common stock which represented 5.0% of
the outstanding common stock. The Company repurchased 18,000
shares under this program during the three months ended June 30,
1997. The repurchased shares were retired by the Company.
10 <PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION AND SUBSIDIARIES
Item 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND OPERATIONS
General:
The Company's net earnings are dependent primarily on its
net interest income, which as the difference between interest
earned on loans and investments, and the interest paid
on interest-bearing liabilities, primarily deposits. Net
interest income is determined by (i) the difference between the
yield earned on interest earning assets and rates paid on
interest-bearing liabilities ("interest rate spread") and (ii)
the relative amounts of interest earning assets and
interest-bearing liabilities. The Company's interest rate
spread is also affected by regulatory, economic and competitive
factors that influence interest rates, loan demand and deposit
flows. The Company's net earnings are also affected by the
generation of non-interest income, which primarily consists of
fees and service charges. In addition, net earnings are affected
by the level of operating expenses and provisions for loan
losses.
The operations of financial institutions, including the
Bank, are significantly affected by prevailing economic
conditions, competition, regulatory policies, and the
monetary and fiscal policies of the U.S. Government and
government agencies. Lending activities are influenced by the
demand for, and supply of housing, competition among
lenders, the level of interest rates and the availability of
funds. Deposit flows and costs of funds are influenced by
prevailing market rates of interest primarily on competing
investments, account maturities and the levels of personal income
and savings in the market area of the Bank.
Financial Condition:
Total assets increased by $3.33 million, or 3.11%, from
$107.26 million at September 30, 1996, to $110.59 million at June
30, 1997. The increase was primarily due to an increase in net
loans receivable, cash and cash equivalents and the other
securities portfolio of the Bank, other than the mortgage-backed
and related securities, offset by a decrease in the
mortgage-backed and related securities portfolio of the Bank.
Cash and cash equivalents totaled $6.38 million at June 30, 1997,
an increase of $1.70 million, or 36.22%, from September 30, 1996.
The Company's other securities portfolio increased $1.59
million, or 6.08%, from $26.16 million at September 30, 1996, to
$27.75 million at June 30, 1997. The mortgage-backed and related
securities portfolio decreased $1.40 million, or 6.77%, from
$20.75 million at September 30, 1996, to $19.34 million at June
30, 1997. Net loans receivable increased $1.88 million, or
3.68%, from $51.00 million at September 30, 1996 to $52.88
million at June 30, 1997. This increase was due primarily to an
increase in non-real estate lending activity. Other assets
decreased by $418,000, or 43.84% from $954,000 at September 30,
1996 to $536,000 at June 30, 1997. The decrease was primarily
due to a decrease in income tax related assets.
Deposits increased by $1.30 million, or 1.60%, from $81.05
million at September 30, 1996, to $82.35 million at June 30,
1997.
Borrowings increased $2.89 million, or 24.33%, from $11.90
million at September 30, 1996, to $14.79 million at June 30,
1997. Federal Home Loan Bank advances increased $3.31
million during the nine month period ended June 30, 1997, while
borrowings in the form of Repurchase Agreements decreased
$420,000 during the same nine month period.
Stockholders' equity decreased during the nine months ended
June 30, 1997 by $303,000, or 2.46%, from $12.32 million at
September 30, 1996, to $12.02 million at June 30, 1997. The
decrease was primarily a result of an $875,000 net repurchase of
the
11<PAGE>
<PAGE>
Company's common stock to be used for the issuance of shares in
conjunction with the Stock Option Plan, and a $327,000 repurchase
and retirement of the Company's common stock. These decreases
were offset by a $219,000 decrease in the unrealized loss, net of
taxes, on the available for sale securities, net earnings of
$514,000, and an increase of $165,000 in the earned management
recognition plan shares and the employee stock ownership plan
shares.
Net Earnings:
Net earnings for the three months ended June 30, 1997,
decreased $16,000, or 7.79%, from the three months ended June 30,
1996, from $205,000 to $189,000, respectively. This decrease was
primarily the result of a decrease in net interest income and
non-interest income, offset by a decrease in non-interest expense
for the period. Net earnings for the nine months ended June 30,
1997, increased $3,000, or 0.64%, compared to the nine months
ended June 30, 1996, from $511,000 to $514,000, respectively.
This increase was primarily the result of an increase in
non-interest income, offset by a decrease in net interest
income and an increase in non-interest expense for the period.
Net Interest Income:
Net interest income decreased by $30,000, or 3.42%, for the
three months ended June 30, 1997, compared to the three months
ended June 30, 1996. The Company increased its average interest
earning assets by $5.73 million, or 5.81%, while the net interest
margin
decreased from 3.56% for the three months ended June 30, 1996, to
3.25% for the three months ended June 30, 1997. Net interest
income decreased by $15,000, or 0.58%, for the nine months ended
June 30, 1997, compared to the nine months ended June 30, 1996.
This decrease was primarily due to an increase of $7.01 million
in average interest earning assets and a decrease in net interest
margin from 3.59% for the nine months ended June 30,1996, to
3.33% for the nine months ended June 30, 1997.
Interest Income:
Interest income increased by $121,000, or 6.47%, from $1.86
million for the three months ended June 30, 1996, to $1.98
million for the three months ended June 30, 1997. The increase
in interest income is primarily a result of a $5.73 million
increase in average interest earning assets along with an
increase in the average yield on interest earning assets from
7.56% for the three months ended June 30, 1996, to 7.60% for the
three months ended June 30, 1997. Interest income increased by
$376,000, or 6.83%, from $5.51 million for the nine months ended
June 30, 1996, to $5.88 million for the nine months ended June
30, 1997. The increase in interest income is primarily a result
of a $7.01 million increase in average interest earning assets
offset by a decrease in the average yield on interest earning
assets from 7.65% for the nine months ended June 30, 1996, to
7.62% for the nine months ended June 30, 1997.
Interest Expense:
Interest expense increased by $151,000, or 15.31%, from
$984,000 for the three months ended June 30, 1996, to $1.14
million for the three months ended June 30, 1997. The
increase in interest expense is primarily a result of an $8.39
million increase in average interest bearing liabilities along
with an increase in the average cost of interest bearing
liabilities from 4.46% for the three months ended June 30, 1996,
to 4.70% for the three months ended June 30, 1997. Interest
expense increased by $391,000, or 11.81%, from $2.92 million for
the nine months ended June 30, 1996, to $3.31 million for the
nine months ended June 30, 1997. The increase in interest
expense is primarily a result of a $9.62 million increase in
average interest bearing liabilities along with an increase in
12<PAGE>
<PAGE>
the average cost of interest bearing liabilities from 4.58% for
the nine months ended June 30, 1996, to 4.66% for the nine months
ended June 30, 1997.
Provision for Losses on Loans:
The Bank's provision for losses on loans remained unchanged
at $0 for the three months ended June 30, 1996 and the three
months ended June 30, 1997. The Bank's provision for losses on
loans remained unchanged at $0 for the nine months ended June 30,
1996 and the nine months ended June 30, 1997. Adjustments to the
Bank's provision for losses on loans is a result of management's
evaluation of the loan portfolio.
Non-Interest Income:
Total non-interest income decreased by $19,000, or 11.81%,
from $160,000 for the three months ended June 30, 1996, to
$141,000 for the three months ended June 30, 1997. This decrease
was primarily due to a decrease in income from the sale of loans
and credit life. Total non-interest income increased by $63,000,
or 17.09%, from $371,000 for the nine months ended June 30, 1996,
to $434,000 for the nine months ended June 30, 1997. This
increase was primarily for the following reasons: (i) a $53,000
increase in transaction account service fees; (ii) a $31,000 net
increase in the gain on the sale of securities; (iii) a $4,000
net increase in the gain on the sale of foreclosed real estate;
and, (iv) a $25,000 decrease in income from the sale of loans and
credit life.
Non-Interest Expense:
Total non-interest expense decreased by $20,000, or 2.99%,
from $691,000 for the three months ended June 30, 1996, to
$671,000 for the three months ended June 30, 1997. This decrease
was primarily for the following reasons: (i) compensation and
employee benefits increased by $32,000 mainly due to a $10,000
increase in accruals for management bonus plans, a $10,000
increase in earned employee stock ownership plan shares priced
above original cost with the remainder caused by normal employee
pay raises and insurance benefits; (ii) a $42,000 decrease in
federal deposit insurance premiums due to the capitalization of
the SAIF fund at September 30, 1996; (iii) a $6,000 increase in
advertising expense; (iv) a $28,000 decrease in legal and other
professional fees; (v) $6,500 decrease in the provision for loss
on non-interest earning assets; and (vi) an increase of $18,500
in various other non-interest expense categories. Total
non-interest expense increased by $40,000, or 1.93%, from $2.09
million for the nine months ended June 30, 1996, to $2.13 million
for the nine months ended June 30, 1997. This increase was
primarily for the following reasons: (1) compensation and
employee benefits increased by $130,500 mainly due to a $35,000
increase in accruals for management bonus plans, a $24,000
increase in earned employee stock ownership shares priced above
original cost, an $11,000 increase in conventions, meetings and
travel expense with the remainder caused by normal employee pay
raises and insurance benefits; (ii) a $9,000 increase in
occupancy expense; (iii) a $93,000 decrease in federal deposit
insurance premiums due to the capitalization of the SAIF fund at
September 30, 1996; (iv) a $44,000 increase in advertising
expense; (v) a $82,500 decrease in legal and other professional
fees; (vi) $16,000 increase in the provision for loss on
non-interest earning assets; and, (vii) an increase of $16,000 in
various other non-interest expense categories.
Income Tax Expense:
Income tax expense decreased by $12,000, or 8.62%, from
$142,000 for the three months ended June 30, 1996, to $130,000
for the three months ended June 30, 1997. This decrease was
primarily the result of decreased pre-tax income for the three
months ended June 30, 1997. Income tax expense increased by
$5,000, or 1.37%, from $351,000 for the nine months ended June
30, 1996, to $356,000 for the
13<PAGE>
<PAGE>
nine months ended June 30, 1997. This was primarily the result
of increased pre-tax income for the nine months ended June
30, 1997.
Liquidity and Capital Resources:
The Company's primary source of funds for operations are
deposits from its market area; principal and interest payments on
loans, securities available for sale and securities held to
maturity; proceeds from the sale or maturation of securities,
advances from the FHLB of Des Moines, and retail repurchase
agreements. While maturities and scheduled amortization of loans
and securities are predictable sources of funds, deposit
flows and mortgage prepayments are greatly influenced by general
interest rates, economic conditions, and competition.
The primary investing activities of the Company are the
origination and purchase of mortgage loans, the origination of
consumer loans and the purchase of securities. During
the three months ended June 30, 1997, the Bank's loan
originations and purchases totaled $6.14 million. The Company
purchased investment securities and mortgage-backed and
related securities during the three months ended June 30, 1997 of
$3.55 million. During the nine months ended June 30, 1997, the
Bank's loan originations and purchases totaled $14.44 million.
The Company purchased investment securities and mortgage-backed
and related securities during the nine months ended June 30, 1997
of $12.64 million.
The primary financing activity of the Bank is the attraction
of deposits. During the three months ended June 30, 1997, the
Bank experienced a net increase in deposits of $680,000. During
the nine months ended June 30, 1997, the Bank experienced a net
increase in deposits of $1.30 million.
The Bank has utilized retail repurchase agreements as a
source of funding. At June 30, 1997, repurchase agreements
totaled $4.53 million compared to $4.95 million at September 30,
1996.
The Bank has the ability to borrow additional funds from the
FHLB of Des Moines by pledging additional securities. At June
30, 1997, the Bank had an undrawn borrowing capacity with the
FHLB for $14.49 million. At June 30, 1997, the Bank had
borrowings outstanding from the FHLB of Des Moines for $10.26
million. Other sources of liquidity include the sale of
securities held in the available for sale portfolio.
The Bank is required to maintain minimum levels of liquid
assets as defined by OTS regulations. This requirement, which
may be varied by the OTS depending upon economic conditions and
deposit flows, is based upon a percentage of deposits and
short-term borrowings. The required minimum liquidity ratio is
currently 5.00% and the short-term liquidity ratio is 1.00%. The
Bank's average daily liquidity ratio for the month of June
1997 was 17.10% and its short-term liquidity for the same month
was 11.09%.
The Company's most liquid assets are cash and cash
equivalents, which consist of short-term highly liquid
investments with original maturities of less than three months
that are readily convertible to known amounts of cash and
interest-bearing deposits. The level of these assets is
dependent on the Company's operating, financing and investing
activities during any given period. At June 30, 1997, cash and
cash equivalents totaled $6.38 million.
The Bank anticipates that it will have sufficient funds
available to meet its current commitments. At June 30, 1997, the
Bank had commitments to originate or purchase loans of $686,300.
Certificates of deposits which are scheduled to mature in one
year or less at June 30, 1997, totaled $30.19 million.
Management believes that a significant portion of such deposits
will remain with the Bank.
14<PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION AND SUBSIDIARIES
PART II - OTHER INFORMATION
ITEM 1: Legal Proceedings
None.
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.
None.
ITEM 5: Other Information.
On May 12, 1997 the registrant announced that it is
commencing a stock repurchase program to acquire up to
5% of the Company's outstanding common stock, or
approximately 35,028 shares, over a twelve month
period.
ITEM 6: Exhibits and Reports on Form 8-K.
None.
15<PAGE>
<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 FEDERAL BANCORPORATION
Registrant
Date: August 6, 1997 /s/ William R. Belford
-------------- ----------------------
William R. Belford, President and Chief
Executive Officer (Duly Authorized
Officer)
Date: August 6, 1997 /s/ Dennis M. Vorgert
-------------- ----------------------
Dennis M. Vorgert, Vice President
(Principal Financial Officer)
17
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<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1997
<CASH> 1,949,617
<INT-BEARING-DEPOSITS> 4,433,346
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 46,546,110
<INVESTMENTS-CARRYING> 551,420
<INVESTMENTS-MARKET> 554,176
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<ALLOWANCE> 407,194
<TOTAL-ASSETS> 110,589,488
<DEPOSITS> 82,346,810
<SHORT-TERM> 14,792,422
<LIABILITIES-OTHER> 1,431,052
<LONG-TERM> 0
<COMMON> 0
0
6,826
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<INTEREST-INCOME-NET> 2,569,848
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<SECURITIES-GAINS> 35,875
<EXPENSE-OTHER> 2,134,248
<INCOME-PRETAX> 870,103
<INCOME-PRE-EXTRAORDINARY> 870,103
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 514,276
<EPS-PRIMARY> .87
<EPS-DILUTED> .86
<YIELD-ACTUAL> 2.49
<LOANS-NON> 9,004
<LOANS-PAST> 41,062
<LOANS-TROUBLED> 0
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<ALLOWANCE-OPEN> 453,460
<CHARGE-OFFS> 55,432
<RECOVERIES> 9,168
<ALLOWANCE-CLOSE> 407,196
<ALLOWANCE-DOMESTIC> 370,634
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<ALLOWANCE-UNALLOCATED> 36,562
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