<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, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from __________ to _____________.
Commission File Number: 0-25704
-------
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, 1998
- ----- --------------------------------
Common Stock, $.01 par value 993,275<PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION
CONTENTS
PART I - FINANCIAL INFORMATION
Item 1: Financial Statements Page
----
Consolidated Balance Sheets at
December 31, 1998 and September 30, 1998 3
Consolidated Statements of Earnings for
the Three Months Ended December 31,
1998 and 1997 5
Consolidated Statement of Stockholders'
Equity for the Three Months Ended
December 31, 1998 6
Consolidated Statements of Cash Flows for
the Three Months Ended December 31, 1998
and 1997 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,
1998 1998
---------- ------------
ASSETS
<S> <C> <C>
Cash $ 1,715,566 $ 2,056,775
Interest-bearing deposits with banks 5,075,175 2,233,413
------------ ------------
Cash and cash equivalents 6,790,741 4,290,188
Securities available for sale:
Mortgage-backed and related
securities (amortized cost of
$16,793,627 and $16,866,562) 16,885,137 17,101,174
Other securities (amortized cost of
$17,205,697 and $19,593,156) 17,227,847 19,732,385
------------ ------------
Total securities available for sale 34,112,984 36,833,559
------------ ------------
Securities held to maturity:
Mortgage-backed and related
securities (estimated market value
of $297,061 and $309,944) 296,164 306,957
Other securities (estimated market
value of $27,958,813 and
$23,135,818) 28,077,922 22,992,251
------------ ------------
Total securities held to maturity 28,374,086 23,299,208
------------ ------------
Loans receivable, net 55,028,329 56,063,951
Federal Home Loan Bank stock, at cost 1,219,300 1,148,000
Foreclosed real estate, net 299,512 152,754
Accrued interest receivable 1,064,535 991,507
Premises and equipment, net 2,146,348 2,098,531
Other assets 452,570 372,930
------------ ------------
Total assets $129,488,405 $125,250,628
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 88,106,321 $ 85,866,264
Repurchase Agreements 4,407,229 3,135,488
Federal Home Loan Bank Advances 22,381,218 20,457,185
Federal funds purchased 0 1,300,000
Advance payments by borrowers for
taxes and insurance 95,702 163,022
Accrued interest payable 567,259 543,886
Accrued expenses and other liabilities 708,636 702,335
------------ ------------
Total liabilities 116,266,365 112,168,180
</TABLE>
(continued)
3<PAGE>
<PAGE>
<TABLE>
<CAPTION>
December 31, September 30
1998 1998
---------- ------------
<S> <C> <C>
Stockholders' Equity:
Common stock ($.01 par value):
authorized 4,000,000 shares;
issued 993,275 shares $ 9,933 $ 9,933
Additional paid-in-capital 6,192,536 6,173,130
Retained earnings, subject to certain
restrictions 8,923,923 8,691,092
Other comprehensive income,
unrealized gain (loss) on securities
available for sale, net of tax effect 67,060 220,566
Unearned employee stock ownership plan
shares (396,750) (414,000)
Unearned shares management recognition
plan (165,276) (188,887)
Treasury stock, at cost, 191,370 and
191,534 shares (1,948,418) (1,939,384)
Deferred compensation payable in
common stock 539,032 529,998
------------ ------------
Total stockholders' equity 13,222,040 13,082,448
------------ ------------
Total liabilities and
stockholders' equity $129,488,405 $125,250,628
============ ============
</TABLE>
4<PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNING
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
December 31,
----------------------
1998 1997
---------- ----------
<S> <C> <C>
Interest income:
Loans receivable $1,203,906 $1,247,320
Mortgage-backed and related
securities 265,459 305,844
Other securities 677,504 524,421
Interest-bearing deposits with banks 12,752 2,009
Other 19,278 12,919
---------- ----------
2,178,899 2,092,513
---------- ----------
Interest expense:
Deposits 971,878 966,772
Borrowings 322,827 233,720
---------- ----------
1,294,705 1,200,492
---------- ----------
Net interest income 884,194 892,021
(Recovery of) provision for
loan losses (41,292) 30,000
---------- ----------
Net interest income after
(recovery of) provision for
loan losses 925,486 862,021
---------- ----------
Noninterest income:
Fees and service charges 145,128 164,178
(Loss) gain on sales of foreclosed
real estate 132 (35,113)
Other 8,149 21,107
---------- ----------
Total noninterest income 153,409 150,172
---------- ----------
Noninterest expense:
Compensation and employee benefits 395,610 384,901
Occupancy 122,044 135,134
Federal deposit insurance premiums 12,524 13,043
Data processing 23,195 19,069
Advertising 22,773 20,666
Other 111,152 96,998
---------- ----------
Total noninterest expense 687,298 669,811
---------- ----------
Earnings before income tax
expense 391,597 342,382
Income tax expense 158,766 128,634
---------- ----------
Net earnings $ 232,831 $ 213,748
========== ==========
Earnings per share:
Basic $ 0.30 $ 0.28
---------- ----------
Diluted $ 0.28 $ 0.26
---------- ----------
Comprehensive income $ 79,325 $ 265,924
========== ==========
</TABLE>
5<PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Unrealized
gain (loss)
Additional on securities
Common Paid-in Retained available for
Stock Capital Earnings sale, net
------ ---------- -------- -------------
<S> <C> <C> <C> <C>
September 30, 1998 $9,933 6,173,130 8,691,092 220,566
Net earnings 232,831
Change in unrealized gain (loss)
on securities available for
sale, net of tax effect (153,506)
Amortization of management
recognition plan shares
Earned employee stock ownership
plan shares 19,406
Purchase of treasury stock
------ ---------- ---------- ---------
December 31, 1998 $9,933 6,192,536 8,923,923 67,060
====== ========== ========== =========
<CAPTION>
Unearned
shares Unearned Deferred
Employee shares Comp
Stock Management Payable in Total
Ownership Recognition Treasury Common Stockholders'
Plan Plan Stock Stock Equity
--------- ----------- --------- ---------- ------------
<S> <C> <C> <C> <C> <C>
September 30, 1998 $(414,000) (188,887) (1,939,384) 529,998 13,082,448
Net earnings 232,831
Change in unrealized gain (loss)
on securities available for
sale, net of tax effect (153,506)
Amortization of management
recognition plan shares 23,611 23,611
Earned employee stock ownership
plan shares 17,250 36,656
Purchase of treasury stock (9,034) 9,034
December 31, 1998 $(396,750) (165,276) (1,948,418) 539,032 13,222,040
========= ======== ========== ======= ==========
</TABLE>
6<PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months
Ended December 31,
-----------------------------
1998 1997
------------ ------------
<S> <C> <C>
Operating activities:
Net earnings $ 232,831 $ 213,748
Adjustments to reconcile net earnings to net
cash provided (used) by operations:
(Recovery of) provision for loan losses (41,292) 30,000
Depreciation 66,205 102,750
Amortization of premium and discount, net (8,730) (5,613)
Increase in accrued interest receivable (73,028) (140,175)
Increase in accrued interest payable 23,373 5,194
(Gain) loss on sales of foreclosed real estate (129) 35,113
Earned ESOP shares priced above original cost 19,406 19,191
Decrease in Unearned ESOP Shares 17,250 17,250
Decrease in Unamortized Restricted Stock 23,611 23,611
Decrease (increase) in other assets 39,765 (420,459)
(Decrease) increase in accrued expenses
and other liabilities (6,301) 610,613
----------- -----------
Net cash provided by operating activities 292,961 491,223
----------- -----------
Investing activities:
Net decrease (increase) in loans receivable 1,076,914 (1,781,370)
Purchases of:
Other securities - available for sale (1,993,875) (1,752,954)
Other securities - held to maturity (14,084,531) (9,999,063)
Mortgage-backed & related securities -
available for sale (2,255,555) (787,709)
FHLB stock (71,300) (150,600)
Premises and equipment (114,022) (107,451)
Proceeds from maturities or calls of:
Other securities - available for sale 4,385,398 7,567,116
Other securities - held to maturity 9,000,000 0
Principal payments on:
Mortgage-backed & related securities
- available for sale 2,332,207 1,584,841
Mortgage-backed & related securities
- held to maturity 10,603 27,352
Net (increase) decrease in foreclosed real
estate (146,758) 249,425
----------- -----------
Net cash used by investing activities (1,860,919) (5,150,413)
----------- -----------
</TABLE>
(continued)
7<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Three Months
Ended December 31,
----------------------------
1998 1997
---------- -----------
<S> <C> <C>
Financing activities:
Net increase in deposits $ 2,240,057 $ 1,375,953
Purchase and retirement of common stock 0 (173,065)
Purchase of fractional shares on stock split 0 (837)
Decrease in advance payments by borrowers
for taxes and insurance (67,320) (33,986)
Net increase in Federal Home Loan Bank advances 1,924,033 6,984,333
Decrease in other borrowed money (28,259) (1,748,457)
----------- -----------
Net cash provided by financing activities 4,068,511 6,403,941
----------- -----------
Increase in cash and cash equivalents 2,500,553 1,744,751
Cash and cash equivalents, beginning of period 4,290,188 4,599,403
----------- -----------
Cash and cash equivalents, end of period $ 6,790,741 $ 6,344,154
=========== ===========
Supplemental cash flow disclosures:
Cash paid for interest on deposits $ 957,805 $ 972,667
Cash paid for interest on borrowings 322,827 222,631
Cash paid for income taxes 209,000 215,000
Supplemental noncash flow disclosures:
Transfer of loans to real estate $ 153,648 $ 0
</TABLE>
8<PAGE>
<PAGE>
FIRST FEDERAL BANCORPORATION AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
December 31, 1998
(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, 1998 of First Federal
Bancorporation (the "Company"), as filed with the
Securities and Exchange Commission. The September 30,
1998 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
statement of earnings for the three month period
ended December 31, 1998 is not necessarily indicative of
the results which may be expected for the entire year.
(3) Earnings Per Common Share and Common Share Equivalents
Following is information about the computation of the
earnings per share data for the three months ended
December 31, 1998 and 1997:
<TABLE>
<CAPTION>
Three months ended Three months ended
December 31, 1998 December 31, 1997
-------------------------------- --------------------------------
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 $232,891 782,689 $0.30 $213,748 770,426 $0.28
===== =====
Effect of dilutive securities:
MRP shares 7,537 15,291
Stock options 34,841 48,576
-------- ------- -------- -------
Diluted earnings per share,
income available to common
stockholders $232,891 825,067 $0.28 $213,748 834,293 $0.26
======== ======= ===== ======== ======= =====
</TABLE>
(4) Regulatory Capital Requirements
At December 31, 1998, the Bank met each of the current minimum
regulatory capital requirements. The following table summarizes the
Bank's regulatory capital position at December 31, 1998:
9<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Minimum for Capital Minimum to be
Actual Adequacy Purposes Well Capitalized
---------------- -------------------- ----------------
Ratio Amount Ratio Amount Ratio Amount
--------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Stockholders' equity,
and ratio to total assets 8.37% $10,833
Tangible capital,
and ratio to adjusted total assets 8.46% $10,780 2.00% $2,548
Tier 1 (core) capital,
and ratio to adjusted total assets 8.46% $10,780 4.00% $5,097 5.00% $6,371
Tier 1 capital,
and ratio to risk-weighted assets 18.04% $10,780 4.00% $2,390 6.00% $3,584
Total risk-based capital,
and ratio to risk-weighted assets 18.79% $11,226 8.00% $4,779 10.00% $5,974
Total assets $129,488
Adjusted total assets $127,414
Risk-weighted assets $ 59,741
</TABLE>
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 Readiness Disclosure:
The Year 2000 ("Y2K") issue is the result of computer
programs using a two-digit format, as opposed to four digits, to
indicate the year. Such computer systems will be unable to
interpret dates beyond the year 1999, which could cause a system
failure or other computer errors, leading to disruptions in
operations. The Company's Year 2000 Action Plan was presented
to the Board of Directors in September 1997. The year 2000
Action Plan includes the following phases: awareness,
assessment, renovation, validation and implementation. During
the assessment phase, the Year 2000 Project Team identified
those areas which could be affected by the year 2000 date
change. During August 1998, the Company completed the
renovation of both the hardware and software for its operating
and teller systems. The Company is continuing to renovate some
of its ancillary systems (i.e. check processing, ATM network,
etc.) The Company is currently participating in user group
testing of its operating and teller system. This testing has
now been completed. A review and analysis of the test results
will be made prior to March 31, 1999. Testing for other
mission-critical systems (communication software) should be
completed by March 31, 1999. Based on current findings, the
Company has estimated $300,000 for capital expenditures relating
to Year 2000 hardware and software issues. Progress reports are
presented to the Board of Directors at least quarterly.
The most likely, worst case scenario for the transition to
the Year 2000 would be the failure of the application software
and teller software. Due to the complexity and time needed to
convert to an alternative system in the event that the Bank's
application and teller system do not operate in the Year 2000,
it will be necessary to manually update information until such
time that the programs and applications are corrected to
accommodate the year 2000. When data processing functions are
completed on December 31, 1999, a detailed trial balance of all
the applications will be generated. Authorization for
withdrawals will be based on the information contained in these
trial balances. Any transactions completed in subsequent days
will be reflected in an addendum to the trial balances on a
daily basis.
11<PAGE>
<PAGE>
Financial Condition:
Total assets increased by $4.24 million, or 3.38%, from
$125.25 million at September 30, 1998, to $129.49 million at
December 31, 1998. The increase was primarily due to an
increase in cash and cash equivalents, the securities portfolio
of the Bank, including mortgaged-backed and related securities,
and other assets, partially offset by a decrease in loans
receivable. Cash and cash equivalents totaled $6.79 million at
December 31, 1998, an increase of $2.50 million, or 58.28%, from
September 30, 1998. The Company's securities portfolio
increased $2.36 million, or 3.91%, from $60.13 million at
September 30, 1998, to $62.49 million at December 31, 1998.
Securities held-to-maturity increased $5.07 million, or 21.78%,
from $23.30 million at September 1998, to $28.37 million at
December 31, 1998. Other assets increased by $419,000, or 8.78%
from $4.76 million at September 30, 1998 to $5.18 million at
December 31, 1998. Due to a decrease in loan demand, loans
receivable, net, decreased $1.03 million, or 1.84%, from $56.06
million at September 30, 1998 to $55.03 million at December 31,
1998.
Deposits increased $2.24 million, or 2.60%, from $85.87
million at September 30, 1998, to $88.11 million at December 31,
1998.
Borrowings increased $1.90 million, or 7.61%, from $24.89
million at September 30, 1998, to $26.79 million at December 31,
1998. Federal Home Loan Bank advances increased $1.92 million,
or 9.40%, from $20.46 million at September 30, 1998, to $22.38
million at December 31, 1998. Borrowings in the form of
repurchase agreements increased $1.27 million, or 40.55%, from
$3.14 million at September 30, 1998 to $4.41 million at December
31, 1998. Repurchase agreements are primarily issued to local
government units. The Bank had no federal funds purchased at
December 31, 1998 compared to a balance of $1.30 million at
September 30, 1998.
Stockholders' equity increased during the three months
ended December 31, 1998 by $140,000, or 1.06%, from $13.08
million at September 30, 1998, to $13.22 million at December 31,
1998. The increase was primarily a result of net earnings of
$233,000, and an increase of $60,000 in the earned management
recognition plan shares and the employee stock ownership plan
shares. This increase was partially offset by a $154,000
decrease in the net unrealized gain on securities available for
sale, net of tax effect.
Net Earnings:
Net earnings for the three months ended December 31, 1998,
increased $19,000, or 8.92%, from the three months ended
December 31, 1997, from $214,000 to $233,000, respectively.
This increase was primarily the result of an increase in
noninterest income and a decrease in the provision for loan
loss, partially offset by a decrease in net interest income and
an increase in noninterest expenses during the period.
Net Interest Income:
Net interest income decreased by $8,000, or 0.87%, for the
three months ended December 31, 1998, compared to the three
months ended December 31, 1997. The Company increased its
average interest earning assets by $11.72 million, or 10.85%,
while the net interest margin decreased from 3.28% for the three
months ended December 31, 1997, to 2.93% for the three months
ended December 31, 1998. The primary reason for the decrease in
the net interest income during the periods, was a 47 basis point
decrease in the average yield on interest earning assets, which
was partially offset by a 14 basis point decrease in the average
cost of interest bearing liabilities.
Interest Income:
Interest income increased by $86,000, or 4.12%, from $2.09
million for the three months ended December 31, 1997, to $2.18
million for the three months ended December 31, 1998. The
increase in interest income is primarily a result of a $11.72
million increase in average interest earning assets, partially
offset by a decrease in the average yield on interest earning
12<PAGE>
<PAGE>
assets from 7.69% for the three months ended December 31, 1997,
to 7.22% for the three months ended December 31, 1998. The
primary reason for the decrease in the average yield on interest
earning assets was the refinancing activity in the lending area,
which resulted in a 44 basis point decrease in the average yield
on loans.
Interest Expense:
Interest expense increased by $94,000, or 7.84%, from
$1.20 million for the three months ended December 31, 1997, to
$1.29 million for the three months ended December 31, 1998. The
increase in interest expense is primarily a result of an $11.04
million increase in average interest bearing liabilities,
partially offset by a decrease in the average cost of interest
bearing liabilities from 4.78% for the three months ended
December 31, 1997, to 4.64% for the three months ended December
31, 1998.
Provision for Loan Losses:
Due to a decrease in the level of classified assets during
the three months ended December 31, 1998, to $1.03 million at
December 31, 1998 from $1.13 million at September 30, 1998, the
Bank reversed a portion of the provision for loan losses
established in prior periods. As a result, the Bank's provision
for loan losses decreased $71,000, from $30,000 for the three
months ended December 31, 1997, to ($41,000) for the three
months ended December 31, 1998. 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 $3,000, or 2.15%,
from $150,000 for the three months ended December 31, 1997, to
$153,000 for the three months ended December 31, 1998. This
increase was primarily due to a $35,000 decrease in the loss
incurred on the sale of foreclosed real estate along with a
$13,000 increase in related real estate owned expenses. This
was partially offset by a $19,000 decrease in fees and service
charges, primarily deposit related fees, ATM access fees, the
change in the billing of safe deposit box fees, and the
elimination of certain IRA related fees.
Non-Interest Expense:
Total non-interest expense increased by $17,000, or 2.61%,
from $670,000 for the three months ended December 31, 1997, to
$687,000 for the three months ended December 31, 1998. This
increase was primarily for the following reasons: (i) an
$11,000 increase in compensation and employee benefits; (ii) a
$4,000 increase in data processing expense; (iii) a $2,000
increase in advertising expense; and, (iv) a $14,000 increase in
other noninterest expense, primarily professional services.
These increases were partially offset by a $13,000 decrease in
occupancy expense.
Income Tax Expense:
Income tax expense increased by $30,000, or 23.42%, from
$129,000 for the three months ended December 31, 1997, to
$159,000 for the three months ended December 31, 1998.
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
13<PAGE>
<PAGE>
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, 1998, the Bank's loan originations and
purchases totaled $5.13 million. The Company purchased
investment securities and mortgage-backed and related securities
during the three months ended December 31, 1998 of $18.33
million. Securities held-to-maturity increased to $28.37
million at December 31, 1998 from $23.30 million at September
30, 1998.
The primary financing activity of the Bank is the
attraction of deposits and secured borrowings. During the three
months ended December 31, 1998, the Bank experienced a net
increase in deposits of $2.24 million, or 2.60%, from $85.87
million at September 30, 1998 to $88.11 million at December 31,
1998.
The Bank has utilized retail repurchase agreements as a
source of funding. At December 31, 1998, repurchase agreements
totaled $4.41 million compared to $3.14 million at September 30,
1998.
At December 31, 1998, the FHLB advances are secured by the
FHLB stock and a blanket pledge of residential loans, and
governmental agency securities. Under the agreement, the Bank
must maintain eligible collateral in amounts exceeding 125
percent of the outstanding advances. At December 31, 1998, the
Bank had $22.38 million in advances outstanding with the FHLB
compared to $20.46 million at September 30, 1998.
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 ended December 31, 1998 was 40.10%.
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, 1998, cash
and cash equivalents totaled $6.79 million.
The Bank anticipates that it will have sufficient funds
available to meet its current commitments. At December 31,
1998, the Bank had commitments to originate or purchase loans of
$585,000. Certificates of deposits which are scheduled to
mature in one year or less at December 31, 1998, totaled $32.93
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.
(a) The following exhibits are being filed herewith:
Exhibit 27.1 Financial Data Schedule for the
Three Months Ended December 31,
1998
Exhibit 27.2 Restated Financial Data Schedule
for the Three Months Ended
December 31, 1997
(b) 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: February 9, 1999 /s/ William R. Belford
---------------- ----------------------
William R. Belford, President
and Chief Executive Officer
(Duly Authorized Officer)
Date: February 9, 1999 /s/ Dennis M. Vorgert
---------------- ----------------------
Dennis M. Vorgert, Vice President
(Principal Financial Officer)
16
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 1,715,566
<INT-BEARING-DEPOSITS> 4,875,175
<FED-FUNDS-SOLD> 200,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 34,112,984
<INVESTMENTS-CARRYING> 28,374,086
<INVESTMENTS-MARKET> 28,255,874
<LOANS> 55,474,759
<ALLOWANCE> 446,430
<TOTAL-ASSETS> 129,488,405
<DEPOSITS> 88,106,321
<SHORT-TERM> 26,788,447
<LIABILITIES-OTHER> 1,371,597
<LONG-TERM> 0
<COMMON> 9,933
0
0
<OTHER-SE> 13,212,107
<TOTAL-LIABILITIES-AND-EQUITY> 129,488,405
<INTEREST-LOAN> 1,203,906
<INTEREST-INVEST> 942,963
<INTEREST-OTHER> 32,030
<INTEREST-TOTAL> 2,178,899
<INTEREST-DEPOSIT> 971,878
<INTEREST-EXPENSE> 1,294,705
<INTEREST-INCOME-NET> 884,194
<LOAN-LOSSES> (41,292)
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 687,298
<INCOME-PRETAX> 391,597
<INCOME-PRE-EXTRAORDINARY> 391,597
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 232,831
<EPS-PRIMARY> 0.30
<EPS-DILUTED> 0.28
<YIELD-ACTUAL> 0.74
<LOANS-NON> 310,623
<LOANS-PAST> 106,041
<LOANS-TROUBLED> 299,512
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 498,340
<CHARGE-OFFS> 14,023
<RECOVERIES> 3,405
<ALLOWANCE-CLOSE> 446,430
<ALLOWANCE-DOMESTIC> 446,430
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 1,878,429
<INT-BEARING-DEPOSITS> 4,465,725
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 41,074,255
<INVESTMENTS-CARRYING> 10,501,457
<INVESTMENTS-MARKET> 10,503,353
<LOANS> 55,779,383
<ALLOWANCE> 439,471
<TOTAL-ASSETS> 118,837,762
<DEPOSITS> 84,379,265
<SHORT-TERM> 19,467,078
<LIABILITIES-OTHER> 2,898,319
<LONG-TERM> 0
<COMMON> 0
0
9,983
<OTHER-SE> 12,083,117
<TOTAL-LIABILITIES-AND-EQUITY> 118,837,762
<INTEREST-LOAN> 1,247,320
<INTEREST-INVEST> 830,265
<INTEREST-OTHER> 14,928
<INTEREST-TOTAL> 2,092,513
<INTEREST-DEPOSIT> 966,772
<INTEREST-EXPENSE> 1,200,492
<INTEREST-INCOME-NET> 892,021
<LOAN-LOSSES> 30,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 669,811
<INCOME-PRETAX> 342,382
<INCOME-PRE-EXTRAORDINARY> 342,382
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 213,748
<EPS-PRIMARY> .28
<EPS-DILUTED> .26
<YIELD-ACTUAL> 0.79
<LOANS-NON> 19,234
<LOANS-PAST> 187,853
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 427,256
<CHARGE-OFFS> 21,356
<RECOVERIES> 3,571
<ALLOWANCE-CLOSE> 439,471
<ALLOWANCE-DOMESTIC> 438,247
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,224
</TABLE>
