-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, BZvFXqkxhgM322olsWDlTaHIRxrbe0cJlbUu1pk6t1WXF6kRN92dttKZXW+X8Rlq hjUdjzfGVdwsYnhgcCVVew== 0000950144-00-006071.txt : 20000510 0000950144-00-006071.hdr.sgml : 20000510 ACCESSION NUMBER: 0000950144-00-006071 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20000331 FILED AS OF DATE: 20000509 FILER: COMPANY DATA: COMPANY CONFORMED NAME: M&F BANCORP INC /NC/ CENTRAL INDEX KEY: 0001094738 STANDARD INDUSTRIAL CLASSIFICATION: STATE COMMERCIAL BANKS [6022] IRS NUMBER: 561980549 STATE OF INCORPORATION: NC FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-27307 FILM NUMBER: 623105 BUSINESS ADDRESS: STREET 1: 2634 CHAPTEL HILL BLVD STREET 2: PO BOX 19322 CITY: DURHAM STATE: NC ZIP: 27702-3221 BUSINESS PHONE: 9196831521 MAIL ADDRESS: STREET 1: 2634 CHAPTEL HILL BLVD STREET 2: PO BOX 19322 CITY: DURHAM STATE: NC ZIP: 27701-3221 10QSB 1 M & F BANCORP 1 UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 --------------------- FORM 10-QSB [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended March 31, 2000 Commission File Number 0-27307 M&F BANCORP, INC. - -------------------------------------------------------------------------------- (Name of small business issuer in its charter) North Carolina 56-1980549 - -------------------------------------------------------------------------------- (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 2634 Chapel Hill Blvd., P.O. Box 1932, Durham, North Carolina 27707 - -------------------------------------------------------------------------------- (Address of principal executive offices) (919) 683-1521 - -------------------------------------------------------------------------------- (Issuer's telephone number) Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] State the number of shares outstanding of each of the issuer's class of common equity, as of the latest practicable date: Common Stock no par value 853,725 - -------------------------------------------------------------------------------- Outstanding at April 28, 2000 Transitional Small Business Disclosure Format (Check one): Yes [ ] No [X] 1 2 M&F BANCORP, INC. INDEX
Page PART I. FINANCIAL INFORMATION (unaudited) Item 1. Consolidated Condensed Financial Statements Consolidated Condensed Balance Sheet as of March 31, 2000 and December 31, 1999 3 Consolidated Condensed Statements of Income for the three months ended March 31, 4 2000 and March 31, 1999 Consolidated Condensed Statements of Shareholders' Equity for the three months 5 ended March 31, 2000 and March 31, 1999 Consolidated Condensed Statements of Cash flows for the periods ended March 31, 6 2000 and March 31, 1999 Notes to Consolidated Condensed Financial Statements 7 Item 2. Management's Discussion and Analysis of Financial Condition and Results 8 of Operations PART II. OTHER INFORMATION Item 1. Legal Proceedings 11 Item 2. Changes in Securities 11 Item 3. Defaults Upon Senior Securities 11 Item 4. Submission of Matters to a Vote of Security Holders 11 Item 5. Other Information 11 Item 6. Exhibits and Reports on Form 8-K 11 Signature Page 11 Exhibit 27 12
2 3 PART I: FINANCIAL INFORMATION ITEM 1 Financial Statements CONSOLIDATED CONDENSED BALANCE SHEETS (unaudited) (in thousands)
March 31, 2000 December 31, 1999 Cash and due from financial institutions $ 6,310 $ 5,349 Interest-earning deposits in financial 4,975 4,187 institutions 1,725 5,100 Federal funds sold Cash and cash equivalents 13,010 14,636 Securities available for sale 31,584 30,390 Securities held to maturity 1,412 1,412 Loans: Commercial Loans 10,279 7,392 Real Estate-Construction Loans 6,187 7,395 Real Estate-Mortgage Loans 84,983 84,121 Consumer Loans 5,471 5,430 Other Loans 882 905 Total Loans 107,802 105,243 Unearned income 333 341 Allowance for Loan Losses 1,386 1,342 Net Loans 106,083 103,560 Bank premises and equipment, net 5,144 5,013 Other assets 2,113 2,733 TOTAL ASSETS $ 159,346 $ 157,744 LIABILITIES AND SHAREHOLDERS' EQUITY Liabilities: Noninterest-bearing demand deposits 27,271 28,583 Savings, NOW, and MMDA 62,214 60,210 Time Deposits 41,343 40,736 Total Deposits 130,828 129,529 Other Borrowings 10,000 10,000 Other Liabilities 2,006 1,916 Total Liabilities 142,834 141,445 Shareholders' Equity: Common Stock 6,000 6,000 Retained Earnings 10,606 10,352 Accumulated Other Comprehensive Loss (94) (53) Shareholders' Equity 16,512 16,299 TOTAL LIABILITIES & SHAREHOLDERS' EQUITY $ 159,346 $ 157,744
3 4 CONSOLIDATED CONDENSED STATEMENT OF INCOME (unaudited) (in thousands, except per share data)
Three months ending: March 31, 2000 March 31, 1999 Interest Income: Interest on Loans $2,452 $2,085 Securities : Taxable 372 269 Tax exempt 126 128 Federal Funds Sold 17 67 Other Interest 37 79 Total Interest $3,004 $2,628 Income Interest Expense: Interest-bearing Demand 31 32 Savings 303 273 Time Deposits 508 485 Interest on Federal Funds & Borrowings 116 126 Total Interest Expense $ 958 $ 916 Net Interest Income 2,046 1,712 Provision for Loan Losses 77 117 Net Interest Income After Provision for Loan Losses 1,969 1,595 Non-interest Income 355 364 Salaries & Employee Benefits 1,055 965 Other Non-interest Expense 792 717 Income before Taxes 477 277 Income Tax Expense 155 81 Net Income $ 322 $ 196 Earnings per share common equivalent shares: Basic $ .38 $ .23 Diluted $ .38 $ .23 Weighted average common shares outstanding: Basic 854 854 Diluted 854 854
4 5 CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY (unaudited) (in thousands)
March 31, 2000 March 31, 1999 Beginning Balance, January 1 $ 16,299 $ 16,497 Net Income 322 196 Other Comprehensive Loss (41) (141) Dividends (68) (111) Ending Balance, March 31 $ 16,512 $ 16,441
5 6 CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (unaudited) (in thousands, except per share data)
Three months ended: March 31, 2000 March 31, 1999 Cash flows from operating activities: Net Income $ 322 $ 196 Adjustments to reconcile net income to net cash from from operating activities: Provision for possible loan losses 77 117 Provision for depreciation 98 93 Deferred income taxes 67 (5) Gain on sale or disposal of assets (5) Deferred loan fees 8 17 Income Taxes Payable 19 98 Interest Receivable 166 Prepaid expenses and other assets 19 33 Accrued expenses and other liabilities 128 (195) Other (4) 172 Net Cash from Operating Activities 900 521 Cash flows used in Investing Activities: Proceeds from sales and maturities of securities (AFS) 1,000 3,560 Purchase of securities (AFS) (2,000) (6,545) Net increase (decrease) in loans (2,554) 1,003 Purchase of premises and equipment (202) (2,510) Net Cash Used in Investing Activities (3,756) (4,492) Net Cash Provided by (Used In) Investing Activities Net increase (decrease) in demand and savings deposits (3,901) 641 Net increase (decrease) in certificates of deposit 657 (286) Cash dividends (68) (111) Net Cash Provided By (Used In) Financing Activities 1,230 (4,298) Net Decrease in Cash and Cash Equivalents (1,626) (8,269) Cash and Cash Equivalents at the Beginning of the Period 14,636 20,963 Cash and Cash Equivalents at the End of the Period $ 13,010 $ 12,694
6 7 NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (unaudited) 1. Basis of Presentation The consolidated financial statements include the accounts and transactions of M&F Bancorp, Inc. (the "Company") and its wholly-owned subsidiary, Mechanics & Farmers Bank (M&F Bank). All significant intercompany accounts and transactions have been eliminated in consolidation. The accompanying unaudited Consolidated Condensed Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and instructions from Regulation S-B. In the opinion of management, all adjustments consisting of normal recurring adjustments necessary for a fair presentation have been included. M&F Bancorp, Inc. became the parent holding company of Mechanics & Farmers Bank on September 1, 1999 therefore prior periods reflect the balances of M&F Bank and its subsidiary. 2. Investment Securities The Company accounts for investment securities using Statement of Financial Accounting Standards No. 115, Accounting for Certain Investments in Debt and Equity Securities (SFAS 115). Under SFAS 115, the accounting for investment securities held as an asset is dependent upon their classification as held to maturity, available for sale, or trading assets. 3. Loans Loans are carried at their principal amount outstanding, net of the allowance for possible loan losses and deferred fees. Interest on commercial, mortgage and installment loans is accrued and credited to operating income based upon the principal amount outstanding. The Company's policy is to discontinue the accrual of interest when, in management's judgment, circumstances indicate that collection is doubtful. The Company applies Statement of Financial Accounting Standards No. 114, Accounting by Creditors for Impairment of a Loan (SFAS 114) and Statement of Financial Accounting Standards No. 118, Accounting by Creditors for Impairment of a Loan - Income Recognition and Disclosures (SFAS 118). 4. Earnings Per Share Earnings per share is calculated on the basis of the weighted-average number of common shares outstanding. There were no dilutive potential common shares outstanding for the periods ended March 31, 2000 and March 31, 1999. The shares outstanding have been adjusted for 3-for-2 stock split accounted for as a 50 percent dividend declared on December 14, 1999 to all shareholders of record December 14, 1999 payable January 21, 2000. 5. Regulatory Capital Requirements The Company is subject to various regulatory capital requirements administered by the federal banking agencies. Failure to meet minimum capital requirements can initiate certain mandatory and possibly additional discretionary- actions by regulators that, if undertaken, could have a direct material effect on the Company's financial statements. As of March 31, 2000, the Company had the following capital levels. 7 8 Capital Risk Based Tier 1 Tier 2 16.39% 10.64% 11.69% 6. Comprehensive Income Effective January 1, 1999, The Company adopted the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS 130"). Adoption of this standard requires the Company to (a) classify items of other comprehensive income by their nature in a financial statement and (b) display the accumulated balance of other comprehensive income separately from retained earnings and additional paid-in capital in the equity section of a statement of financial position. 7. Accounting Change Pending Implementation The Financial Accounting Standards Board has issued Statement of Financial Standards No. 133, Accounting for Derivative Instruments and Hedging Activities ("SFAS 133"). This Statement establishes accounting and reporting standards for derivative instruments, including certain derivative instruments embedded in other contracts, (collectively referred to as derivatives) and for hedging activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This Statement is effective for all fiscal quarters of fiscal years beginning after June 15, 2000. 8. Common Stock Cash Dividends On March 14, 2000 the Board of Directors of the Company declared a quarterly cash dividend of $.08 per share to all shareholders of record March 14, 2000 payable April 15, 2000. The payment of the cash dividend reduced shareholders' equity by $68,298. ITEM 2 Management's Discussion and Analysis of Financial Condition and Results of Operations General The following discussion and analysis of earnings and related financial data should be read in conjunction with the unaudited financial statements and related notes to the consolidated condensed statements. It is intended to assist you in understanding the financial condition and the results of operations for the three months ended March 31, 2000. Forward -Looking Statements When used in this report, the words or phrases "will likely result," "are expected to," "will continue," "is anticipated," "estimate," "project" or other similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties including changes in economic conditions in the market area, changes in policies by regulatory agencies, fluctuations in 8 9 interest rates, demand for loans in the market area, and competition that could cause actual results to differ materially from historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The company does not undertake, and specifically disclaims any obligation, to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or occurrences after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Financial Condition Total assets increased 1.01 percent to $159,346,000 at March 31, 2000 from $157,744,000 on December 31, 1999. The investment portfolio balance (including FHLB stock) as of March 31, 2000 was $32,996,000 compared to $31,802,000 at December 31, 1999. The portfolio decrease was caused by the increase in the loan portfolio. Maturities and deposits were used to fund loan demand. The portfolio can be liquidated to meet loan demand if necessary. Approximately 96 percent of the portfolio are classified as available -for-sale. All securities purchased during 2000 were classified in the available-for-sale category. The increase of 2.4 percent in net loans from December 31, 1999 was represented by an increase in commercial loans. Management continues its effort to add more adjustable rate loans to the portfolio in an effort to reduce the interest rate sensitivity of our loans. This effort is normally achieved in the commercial loans most of which are secured by real estate. Deposits increased 1.00 percent to $130,828,000 at March 31, 2000 from $129,529,000 at December 31, 1999. Management believes that the current level of deposit growth may be difficult to maintain as we move forward as customers continue to look for alternative investment opportunities with higher yields. Because of availability of future deposits the Company will continue to seek other sources of liquidity to meet loan demand. Total shareholders' equity increased 1.30 percent to $16,512,000 on March 31, 2000 from $16,299,000 at December 31, 1999. The marginal change in this account was due to an increase in net income and partially offset by dividends. Results of Operations - Comparison of March 31, 2000 with March 31, 1999 Net income increased 64.29 percent to $322,000 on March 31, 2000 compared with $196,000 for the same period in 1999. The increase in net income was primarily due to an increase in loan income resulting from an increase in net loans outstanding. Management increased the monthly loan loss provision beginning in March and anticipates maintaining the higher provision for the remainder of 2000. The reduction in the loan loss 9 10 provision for first quarter 2000 compared to first quarter 1999 contributed to the increase in net income. Noninterest expenses were impacted by the end of the lease period (February 2000) for some data processing equipment. The equipment will be purchased by the Bank at fair market value during April 2000. Management anticipates that noninterest expense will increase for the next quarter due to retroactive merit increases and incentive compensation that will be paid in the second quarter. Non-performing assets and allowance for loan losses The allowance for loan losses is calculated based upon an evaluation of pertinent factors underlying the types and qualities of the Company's loans. Management considers such factors as the repayment status of a loan, the estimated net realizable value of the underlying collateral, the borrower's ability to repay the loan, current and anticipated economic conditions which might affect the borrower's ability to repay the loan and the Company's past statistical history concerning charge-offs. The March 31, 2000 allowance for loan losses was 1,386,000 or 1.29 percent of total loans outstanding compared with $1,342,000 or 1.28 percent of total loans outstanding on December 31, 1999. Management has considered non-performing assets and total classified assets in establishing the allowance for loan losses. The ratio of non-performing assets to total assets is one indicator of the exposure to credit risk. Non-performing assets of the Company consist of non-accruing loans, accruing loans delinquent 90 days or more, and foreclosed assets, which have been acquired as a result of foreclosure or deed-in-lieu of foreclosure.
03/31/00 12/31/99 03/31/99 (Dollars in Thousands) Non-Accruing Loans $ 643 518 $ 765 Accruing Loans Delinquent 90 days or more 924 1,300 622 Foreclosed Assets 76 56 45 Restructured Loans 997 725 Total Non-Performing Assets $2,640 $2,599 $1,432 Percentage of total assets 1.66% 1.65% .96%
10 11 PART II OTHER INFORMATION ITEM 1. Legal Proceedings: Not applicable ITEM 2. Changes in Securities: Not applicable ITEM 3. Defaults upon Senior Securities: Not applicable ITEM 4. Submission of Matters to a Vote of Security Holders: Not applicable ITEM 5. Other Information: Not applicable ITEM 6. Exhibits and Report on Form 8-K (a) Exhibits 27. Financial Data Schedule (b) No reports on Form 8-K were filed during the quarter ended March 31, 2000 SIGNATURES In accordance with the requirements of the Exchange Act, the registrant caused this report to signed on its behalf by the undersigned, thereunto duly authorized. M&F Bancorp, Inc. - ----------------- (Registrant) Date: May 8, 2000 By: /s/ J.W. Taylor ---------------------------------- J.W. Taylor Chairman, President/CEO Date: May 8, 2000 By: /s/ Lee Johnson Jr. ---------------------------------- Lee Johnson, Jr. Vice President 11 EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 3-MOS DEC-31-2000 JAN-01-2000 MAR-31-2000 6,310 4,975 1,725 0 31,584 1,412 0 107,469 1,386 159,346 130,828 0 2,006 10,000 0 0 5,999 10,512 159,346 2,452 430 85 3,004 842 958 2,046 77 (1) 1,848 477 477 0 0 322 .38 .38 7.54 643 412 0 861 1,342 45 13 1,386 1,386 0 0
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