<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 December 31, 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 December 31, 1997
- ----- --------------------------------
Common Stock, $.01 par value 998,275<PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION
CONTENTS
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements Page
----
Consolidated Balance Sheets at
December 31, 1997 and September 30, 1996 3
Consolidated Statements of Earnings for
the Three Months Ended December 31, 1997
and 1996 5
Consolidated Statement of Stockholders'
Equity for the Three Months Ended
December 31, 1997 6
Consolidated Statements of Cash Flows for
the Three Months Ended December 31, 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>
December 31 September 30
1997 1997
---------- ------------
ASSETS
<S> <C> <C>
Cash $ 1,878,429 $ 1,623,991
Interest-bearing deposits with banks 4,465,725 2,975,412
------------ ------------
Cash and cash equivalents 6,344,154 4,599,403
Securities available for sale:
Mortgage-backed and related securities
(amortized cost of $18,035,486 and
$18,826,523) 18,119,296 18,834,293
Other securities (amortized cost of
$22,974,938 and $28,789,361) 22,954,959 28,756,991
------------ ------------
Total securities available for sale 41,074,255 47,591,284
------------ ------------
Securities held to maturity:
Mortgage-backed and related securities
(estimated market value of $507,121
and $535,513) 502,394 529,964
Other securities (estimated market
value of $9,996,232 and $0 9,999,063 0
------------ ------------
Total securities held to maturity 10,501,457 529,964
------------ ------------
Loans receivable, net 55,339,912 53,588,542
Federal Home Loan Bank stock, at cost 851,100 700,500
Foreclosed real estate, net 13,761 263,186
Accrued interest receivable 1,026,438 886,263
Premises and equipment, net 1,899,659 1,894,958
Other assets 1,787,026 1,437,938
------------ ------------
Total assets $118,837,762 $111,492,038
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 84,379,265 $ 83,003,312
Repurchase Agreements 2,948,447 4,696,904
Federal Home Loan Bank Advances 16,518,631 9,534,298
Advance payments by borrowers for
taxes and insurance 129,890 163,876
Accrued interest payable 600,114 594,920
Accrued expenses and other liabilities 2,168,315 1,557,702
------------ ------------
Total liabilities 106,744,662 99,551,012
</TABLE>
(continued)
3<PAGE>
<PAGE>
<TABLE>
<CAPTION>
December 31 September 30
1997 1997
---------- ------------
<S> <C> <C>
Stockholders' Equity:
Common stock ($.01 par value): authorized
4,000,000 shares; issued 998,275 and
1,008,849 shares $ 9,983 $ 6,726
Additional paid-in capital 6,054,206 6,109,390
Retained earnings, subject to certain
restrictions 8,126,106 8,015,142
Unrealized gain (loss) on securities
available for sale, net of tax effect 37,661 (14,515)
Unearned employee stock ownership plan
shares (465,750) (483,000)
Unearned shares management recognition
plan (259,720) (283,331)
Treasury stock, at cost, 129,117
shares (1,409,386) (1,409,386)
------------ ------------
Total stockholders' equity 12,093,100 11,941,026
------------ ------------
Total liabilities and stock-
holders' equity $118,837,762 $111,492,038
============ ============
</TABLE>
4<PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNING
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
---------------------
1997 1996
---------- ---------
<S> <C> <C>
Interest income:
Loans receivable $1,247,320 $1,161,966
Mortgage-backed and related
securities 305,844 332,759
Other securities 524,421 441,776
Interest-bearing deposits with banks 2,009 5,865
Other 12,919 12,326
---------- ----------
2,092,513 1,954,692
---------- ----------
Interest expense:
Deposits 966,772 936,429
Borrowings 233,720 154,788
---------- ----------
1,200,492 1,091,217
---------- ----------
Net interest income 892,021 863,475
Provision for loan losses 30,000 0
---------- ----------
Net interest income after
provision for loan losses 862,021 863,475
---------- ----------
Noninterest income:
Fees and service charges 164,178 117,351
Gain on sales of securities 0 16,323
(Loss) gain on sales of foreclosed
real estate (35,113) 681
Other 21,107 12,327
---------- ----------
Total noninterest income 150,172 146,682
---------- ----------
Noninterest expense:
Compensation and employee benefits 384,901 375,753
Occupancy 135,134 126,011
Federal deposit insurance premiums 13,043 45,560
Data processing 19,069 19,063
Advertising 20,666 31,007
Other 96,998 88,502
---------- ----------
Total noninterest expense 669,811 685,896
---------- ----------
Earnings before income tax
expense 342,382 324,261
Income tax expense 128,634 132,860
---------- ----------
Net earnings $ 213,748 $ 191,401
========== ==========
Earnings per share:
Basic $ 0.28 $ 0.22
---------- ----------
Diluted $ 0.26 $ 0.22
---------- ----------
</TABLE>
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, 1997 $6,726 6,109,390 8,015,142 (14,515)
Net earnings 213,748
Change in unrealized gain (loss)
on securities available for
sale, net of tax effect 52,176
Stock split 3,328 (4,165)
Purchase and retirement of
common stock (71) (70,210) (102,784)
Earned management recognition
plan shares
Earned employee stock ownership
plan shares 19,191
------ ---------- ---------- ---------
December 31, 1997 $9,983 6,054,206 8,126,106 37,661
====== ========== ========== =========
<CAPTION>
Unearned
Shares Unearned
Employee Shares
Stock Management Total
Ownership Recognition Treasury Stockholders'
Plan Plan Stock Equity
--------- ----------- --------- -------------
<S> <C> <C> <C> <C>
September 30, 1997 $(483,000) (283,331) (1,409,386) 11,941,026
Net earnings 213,748
Change in unrealized gain (loss)
on securities available for
sale, net of tax effect 52,176
Stock split (837)
Purchase and retirement of
common stock (173,065)
Earned management recognition
plan shares 23,611 23,611
Earned employee stock ownership
plan shares 17,250 36,441
--------- --------- ----------- -----------
December 31, 1997 $(465,750) (259,720) (1,409,386) 12,093,100
========= ========= =========== ===========
</TABLE>
6<PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended December 31,
----------------------------
1997 1996
---------- -----------
<S> <C> <C>
Operating activities:
Net earnings $ 213,748 $ 191,401
Adjustments to reconcile net earnings to net
cash provided (used) by operations:
Provision for loan losses 30,000 0
Depreciation 102,750 66,470
Amortization of premium and discount, net (5,613) (375)
Increase in accrued interest receivable (140,175) (39,162)
Increase (decrease) in accrued interest payable 5,194 (50,322)
Gain on sale of securities 0 (16,323)
Loss (gain) on sale of foreclosed real estate 35,113 (681)
Earned ESOP shares priced above original cost 19,191 12,649
Decrease in Unearned ESOP Shares 17,250 17,250
Decrease in Unamortized Restricted Stock 23,611 23,611
Decrease (increase) in other assets (420,459) 287,431
Increase (decrease) in accrued expenses
and other liabilities 610,613 (670,587)
----------- -----------
Net cash provided (used) by operating
activities 491,223 (178,638)
----------- -----------
Investing activities:
Net increase in loans receivable (1,781,370) (365,942)
Purchases of:
Other securities - available for sale (1,752,954) (4,000,270)
Other securities - held to maturity (9,999,063) 0
Mortgage-backed & related securities -
available for sale (787,709) (493,145)
FHLB stock (150,600) 0
Premises and equipment (107,451) (38,922)
Proceeds from sales of:
Other securities - available for sale 0 0
Mortgage-backed & related securities -
available for sale 0 170,929
Mortgage-backed & related securities -
held to maturity 0 213,257
Proceeds from maturities or calls of:
Other securities - available for sale 7,567,116 3,529,309
Principal payments on:
Mortgage-backed & related securities
- available for sale 1,584,841 843,640
Mortgage-backed & related securities
- held to maturity 27,352 50,560
Net decrease (increase) in foreclosed real
estate 249,425 (63)
----------- -----------
Net cash used by investing activities (5,150,413) (90,647)
----------- -----------
</TABLE>
(continued)
7<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Three Months
Ended December 31,
----------------------------
1997 1996
---------- -----------
<S> <C> <C>
Financing activities:
Net increase in deposits $ 1,375,953 $ 2,703,614
Purchase of Treasury Stock, net 0 (282,500)
Purchase and retirement of common stock (173,065) 0
Purchase of fractional shares on stock split (837) 0
Decrease in advance payments by borrowers
for taxes and insurance (33,986) (49,342)
Net increase (decrease) in Federal Home
Loan Bank advances 6,984,333 (50,386)
(Decrease) increase in Repurchase Agreements (1,748,457) 445,380
----------- -----------
Net cash provided by financing activities 6,403,941 2,766,766
----------- -----------
Increase in cash and cash equivalents 1,744,751 2,497,481
Cash and cash equivalents, beginning of period 4,599,403 4,685,836
----------- -----------
Cash and cash equivalents, end of period $ 6,344,154 $ 7,183,317
========== ===========
Supplemental cash flow disclosures:
Cash paid for interest $ 1,195,298 $ 1,141,539
Cash paid for income taxes 140,000 85,000
</TABLE>
8<PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
December 31, 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, 1997 of First Federal
Bancorporation (the "Company"), as filed with the
Securities and Exchange Commission. The September 30,
1997 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 month period
ended December 31, 1997 is not necessarily indicative of the results
which may be expected for the entire year.
(3) Earnings Per Common Share and Common Share Equivalents
The FASB has issued Statement No 128, Earnings per Share, which
supersedes 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 instruments unless the effect is to reduce the
loss or increase the income per common share from continuing
operations.
The Company initially applied Statement No. 128 for the three months
ended December 31, 1997 and (as required by the Statement) has
restated all per share information for the prior years to conform to
the Statement.
Following is information about the computation of the earnings per
share data for the three months ended December 31, 1997 and 1996:
<TABLE>
<CAPTION>
Three months ended Three months ended
December 31, 1997 December 31, 1996
---------------------------- --------------------------------
Per Share Per Share
Numerator Denominator Amount Numerator Denominator Amount
-------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
Basic earnings per share, income
available to common stockholders $213,748 770,426 $0.28 $191,401 854,270 $0.22
===== =====
Effect of dilutive securities:
MRP shares 15,291 7,610
Stock options 48,576 16,646
------- -------
Diluted earnings per share,
income available to common
stockholders $213,748 834,293 $0.26 $191,401 878,526 $0.22
-------- ------- ----- -------- ------- -----
</TABLE>
9<PAGE>
<PAGE>
(4) Regulatory Capital Requirements
At December 31, 1997, the Bank met each of the three current
minimum regulatory capital requirements. The following table
summarizes the Bank's regulatory capital position at December
31, 1997:
<TABLE>
<CAPTION>
Amount Percent(1)
------ ----------
(Dollar in Thousands)
<S> <C> <C>
Tangible Capital:
Actual $10,953 9.27%
Required 1,771 1.50
------- ----
Excess $ 9,182 7.77%
Core Capital:
Actual $10,953 9.27%
Required 3,541 3.00
------- ----
Excess $ 7,412 6.27%
Risk-Based Capital:
Actual $11,393 18.78%
Required 4,851 8.00
------- -----
Excess $ 6,542 10.78%
<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, 1997, the Company
repurchased 7,028 shares under the Company's repurchase program
which was approved on May 12, 1997. This purchase completed
that repurchase program. The repurchased shares were retired by
the Company.
On December 18, 1997, the Company paid a three for two stock
split in the form of a 50% stock dividend to stockholders of
record as of December 5, 1997. Share and per share amounts have
been adjusted to give affect to the three for two stock split as
of October 1, 1996.
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 is 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.
Year 2000 Issues:
The Company's Year 2000 Action Plan was presented to the Board
of Directors on September 24, 1997. The Year 2000 Plan includes
the following phases: awareness, assessment, upgrading,
implementation and testing. The Year 2000 Project Team,
currently in the assessment phase, has determined that the main
operating system and the teller system must be upgraded or
replaced. The Year 2000 Team is evaluating new systems which
are Year 2000 compliant. Based upon current findings, the
Company has estimated $300,000 for capital expenditures in
Fiscal 1998 relating to Year 2000 software and hardware issues.
The Year 2000 Plan is scheduled for completion by December 31,
1998 with progress reported to the Board of Directors.
Financial Condition:
Total assets increased by $7.35 million, or 6.58%, from $111.49
million at September 30, 1997, to $118.84 million at December
31, 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, partially offset by a
decrease in the mortgage-backed and related securities portfolio
of the Bank. Cash and cash equivalents totaled $6.34 million at
December 31, 1997, an increase of $1.74 million, or 37.93%, from
September 30, 1997. The Company's other securities portfolio
increased $4.20 million, or 14.59%, from $28.75 million at
September 30, 1997, to $32.95 million at December 31, 1997.
Other securities held-to-maturity increased to $10.0 million at
December 31, 1997. The Bank purchased callable fixed rate
agency bonds with maturity dates of up to 10 years with proceeds
of Federal Home Loan Bank advances. The maturity dates on the
advances coincide with the call dates of the bonds. The Bank
has the ability and the intent to hold these bonds to maturity,
accordingly, the Bank has classified these bonds as 'Held-to-
Maturity. The mortgage-backed and related securities portfolio
decreased $740,000, or 3.83%, from $19.36 million at September
30, 1997, to $18.62 million at December 31, 1997. Net loans
receivable increased $1.75 million, or 3.26%, from $53.59
million at September 30, 1997 to $55.34 million at December 31,
1997. This increase was due primarily to an increase in
residential real estate lending activity. Other assets
increased by $350,000, or 24.27% from $1.44 million at September
30, 1997 to $1.79 million at December 31, 1997. The increase
was primarily due to an increase in assets held in trust to
settle obligations under various compensation arrangements.
Deposits increased by $1.38 million, or 1.65%, from $83.00
million at September 30, 1997, to $84.38 million at December 31,
1997.
Borrowings increased $5.24 million, or 36.79%, from $14.23
million at September 30, 1997, to $19.47 million at December 31,
1997. Federal Home Loan Bank advances increased $6.99 million
during the three month period ended December 31, 1997. The
increase in Federal Home Loan Bank advances was primarily used
for the purchase of callable fixed rate agency bonds accounted
for
11<PAGE>
<PAGE>
as 'Held-to-Maturity' securities. Borrowings in the form of
repurchase agreements decreased $1.75 million during the same
three month period.
Stockholders' equity increased during the three months ended
December 31, 1997 by $150,000, or 1.27%, from $11.94 million at
September 30, 1997, to $12.09 million at December 31, 1997. The
increase was primarily a result of net earnings of $214,000, a
$52,000 in the unrealized gain, net of taxes, on the available
for sale securities and an increase of $60,000 in the earned
management recognition plan shares and the employee stock
ownership plan shares. This increase was offset by a $173,000
repurchase and retirement of the Company's common stock.
Net Earnings:
Net earnings for the three months ended December 31, 1997,
increased $22,000, or 11.67%, from the three months ended
December 31, 1996, from $192,000 to $214,000, respectively.
This increase was primarily the result of an increase in net
interest income and non-interest income, along with a decrease
in non-interest expense, offset by an increase in the provision
for loan loss during the period.
Net Interest Income:
Net interest income increased by $29,000, or 3.30%, for the
three months ended December 31, 1997, compared to the three
months ended December 31, 1996. The Company increased its
average interest earning assets by $6.29 million, or 6.18%, due
primarily to the increase in leveraged borrowings, while the net
interest margin decreased from 3.40% for the three months ended
December 31, 1996, to 3.28% for the three months ended December
31, 1997.
Interest Income:
Interest income increased by $138,000, or 7.05%, from $1.95
million for the three months ended December 31, 1996, to $2.09
million for the three months ended December 31, 1997. The
increase in interest income is primarily a result of a $6.29
million increase in average interest earning assets. There was
no change in the average yield on interest earning assets
between periods.
Interest Expense:
Interest expense increased by $109,000, or 10.01%, from $1.09
million for the three months ended December 31, 1996, to $1.20
million for the three months ended December 31, 1997. The
increase in interest expense is primarily a result of a $6.69
million increase in average interest bearing liabilities along
with an increase in the average cost of interest bearing
liabilities from 4.69% for the three months ended December 31,
1996, to 4.78% for the three months ended December 31, 1997.
Provision for Loan Losses:
The Bank's provision for loan losses increased $30,000 for the
three months ended December 31, 1997 over the three months ended
December 31, 1996. Adjustments to the Bank's provision for loan
losses is a result of management's ongoing evaluation of the
loan portfolio.
Non-Interest Income:
Total non-interest income increased by $3,500, or 2.37%, from
$146,500 for the three months ended December 31, 1996, to
$150,000 for the three months ended December 31, 1997. This
12<PAGE>
<PAGE>
increase was primarily due to a $46,800 increase in fees and
service charges and an $8,800 increase in other non-interest
income, primarily a reduction in expenses related to real estate
owned operations, offset by a $52,100 decrease in the net gains
on the sales of securities and foreclosed real estate.
Non-Interest Expense:
Total non-interest expense decreased by $16,000, or 2.34%, from
$686,000 for the three months ended December 31, 1996, to
$670,000 for the three months ended December 31, 1997. This
decrease was primarily for the following reasons: (i) a $32,500
decrease in federal deposit insurance premiums, (ii) a $10,000
decrease in advertising expenses and (iii) a $7,600 decrease in
professional fees. These decreases were offset by (i) a $9,200
increase in compensation and employee benefits, mainly due to an
increase in earned employee stock ownership plan shares priced
above original cost; (ii) a $9,200 increase in occupancy expense
and (iii) a $15,700 increase in various other non-interest
expense categories.
Income Tax Expense:
Income tax expense decreased by $4,000, or 3.18%, from $133,000
for the three months ended December 31, 1996, to $129,000 for
the three months ended December 31, 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 December 31, 1997, the Bank's loan originations and
purchases totaled $6.92 million. The Company purchased
investment securities and mortgage-backed and related securities
during the three months ended December 31, 1997 of $12.54
million. Other securities held-to-maturity increased to $10.0
million at December 31, 1997. The Bank purchased callable fixed
rate agency bonds with maturity dates of up to 10 years with
proceeds of Federal Home Loan Bank advances. The maturity dates
on the advances coincide with the call dates of the bonds. The
Bank has the ability and the intent to hold these bonds to
maturity, accordingly, the Bank has classified these bonds as
'Held-to-Maturity.
The primary financing activity of the Bank is the attraction of
deposits and secured borrowings. During the three months ended
December 31, 1997, the Bank experienced a net increase in
deposits of $1.38 million.
The Bank has utilized retail repurchase agreements as a source
of funding. At December 31, 1997, repurchase agreements totaled
$2.95 million compared to $4.70 million at September 30, 1997.
The Bank has the ability to borrow additional funds from the
FHLB of Des Moines by pledging additional securities. At
December 31, 1997, the Bank had an undrawn borrowing capacity
with the FHLB for $4.41 million. At December 31, 1997, the Bank
had borrowings outstanding from the FHLB of Des Moines for
$16.52 million. The increase in Federal Home Loan Bank advances
was primarily used for the purchase of callable fixed rate
agency bonds accounted for as 'Held-to-Maturity' securities.
Other sources of liquidity include the sale of securities held
in the available for sale portfolio.
13<PAGE>
<PAGE>
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
4.00%. The Bank's average daily liquidity ratio for the month
of December 31, 1997 was 31.13%.
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 December 31, 1997, cash and cash
equivalents totaled $6.34 million.
The Bank anticipates that it will have sufficient funds
available to meet its current commitments. At December 31,
1997, the Bank had commitments to originate or purchase loans of
$955,000. Certificates of deposits which are scheduled to
mature in one year or less at December 31, 1997, totaled $33.13
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.
ITEM 6: Exhibits and Reports on Form 8-K.
Exhibit 27 - Financial Data Schedule
On November 18, 1997 the registrant's Board of
Directors approved a 3-for-2 common stock split in the
form of a 50% stock dividend. The common stock split
was distributed December 18, 1997, to stockholders of
record as of December 5, 1997.
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: February 8, 1998 /s/ William R. Belford
----------------- ----------------------
William R. Belford, President and Chief
Executive Officer (Duly Authorized
Officer)
Date: February 8, 1998 /s/ Dennis M. Vorgert
---------------- ----------------------
Dennis M. Vorgert, Vice President
(Principal Financial Officer)
16
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 1,878,429
<INT-BEARING-DEPOSITS> 4,465,725
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0
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<EXTRAORDINARY> 0
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<LOANS-NON> 19,234
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