-----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, JDZ5tqFFmT98aFvMPUnB4zKsnaxHBx3KiqwtOK9RxNcDyMB4rg7X2TilrYg3ByW4 +cUsoCQZZjGT3GuEVA+gag== 0000914317-97-000548.txt : 19971113 0000914317-97-000548.hdr.sgml : 19971113 ACCESSION NUMBER: 0000914317-97-000548 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971113 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: FFW CORP CENTRAL INDEX KEY: 0000895401 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 351875502 STATE OF INCORPORATION: DE FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-21170 FILM NUMBER: 97716825 BUSINESS ADDRESS: STREET 1: 1205 N CASS STREET STREET 2: PO BOX 419 CITY: WABASH STATE: IN ZIP: 46992-1027 BUSINESS PHONE: 2195633185 MAIL ADDRESS: STREET 1: 1205 N CASS ST STREET 2: PO BOX 419 CITY: WABASH STATE: IN ZIP: 46992 10QSB 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 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 September 30, 1997 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 0-21170 FFW CORPORATION (Exact name of small business issuer as specified in its charter) Delaware 35-1875502 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification or Number) 1205 North Cass Street, Wabash, IN 46992 (Address of principal executive offices) (219) 563-3185 (Issuer's telephone number) 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 [ ] No [ X ] Transitional Small Business Disclosure Format (check one): Yes [ ] No [ X ] State the number of Shares outstanding of each of the issuer's classes of common equity, as of the latest date: As of November 12, 1997, there were 717,988 shares of the Registrant's common stock issued and outstanding. FFW CORPORATION INDEX PART I. FINANCIAL INFORMATION (unaudited) Item 1. Consolidated Condensed Financial Statements Consolidated Condensed Balance Sheets September 30, 1997 and June 30, 1997. Consolidated Condensed Statements of Income for the 4 three months ended September 30, 1997 and 1996. Consolidated Statements of Shareholders' Equity for the three months ended September 30, 1997 and 1996. Consolidated Statements of Cash Flows for the three months ended September 30, 1997 and 1996. Notes to Consolidated Condensed Financial Statements Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations PART II. OTHER INFORMATION Signature Page
PART I: FINANCIAL INFORMATION FFW CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) ASSETS: September 30 June 30 1997 1997 ------------- ------------- Cash and due from financial institutions .................................. $ 1,495,824 $ 1,620,716 Interest-earning deposits in financial institutions - short term .......... 1,729,061 15,499,898 ------------- ------------- Cash and cash equivalents ........................................ $ 3,224,885 $ 17,120,614 Interest-earning deposits in financial institutions (cost approximates market value) ................................. -- -- Securities available for sale ............................................. 50,452,597 40,449,698 Loans held for sale, net of unrealized gains and losses ................... -- -- Loans receivable, net of allowance for loan losses of $725,537 in September and $571,751 in June ............................................. 119,763,943 114,158,745 Stock in Federal Home Loan Bank, at cost .................................. 2,397,600 2,397,600 Accrued interest receivable ............................................... 1,313,942 1,123,623 Premises and Equipment-net ................................................ 1,894,284 1,926,910 Investment in limited partnership .................................... 749,952 749,952 Other assets .............................................................. 2,187,038 2,128,339 ------------- ------------- Total Assets ............................................ $ 181,984,241 $ 180,055,481 ============= ============= LIABILITIES AND SHAREHOLDERS' EQUITY: Liabilities: Non-interest-bearing demand deposits ...................................... $ 6,158,575 $ 5,751,478 Savings, Now and MMDA deposits ............................................ 50,661,998 50,529,826 Other time deposits ....................................................... 58,119,486 59,837,170 ------------- ------------- Total Deposits ................................................... $ 114,940,059 $ 116,118,474 Federal Home Loan Bank advances ........................................... 46,800,000 44,800,000 Obligations relative to limited partnership .......................... 525,000 712,500 Accrued Interest Payable .................................................. 634,265 157,521 Accrued expenses and other liabilities .................................... 1,474,429 1,125,700 ------------- ------------- Total Liabilities ................................................ $ 164,373,753 $ 162,914,195
FFW CORPORATION CONSOLIDATED BALANCE SHEETS (Unaudited) September 30 June 30 1997 1997 ------------- ------------- Shareholders' Equity: Preferred stock, $.01 par value, 500,000 shares authorized none issued .... -- -- Common stock, $.01 par value, 2,000,000 shares authorized, 873,379 shares issued and 714,847 outstanding at March 31, 1997; 853,592 shares issued and 710,840 shares outstanding at June 30, 1997 ........... 8,734 8,698 Additional paid-in capital ................................................ 8,488,659 8,439,565 Retained earnings - substantially restricted .............................. 11,460,684 11,119,378 Net unrealized appreciation on securities available for sale, net of tax of $210,706 on September 30, 1997 and $405,385 on June 30, 1997 ........................................................... 580,949 502,183 Unearned Employee stock Ownership Plan shares ............................. (244,553) (244,553) Treasury Stock 158,532 common shares, at cost ............................. (2,683,985) (2,683,985) ------------- ------------- Total Shareholders' equity ....................................... 17,610,488 17,141,286 Total Liabilities and Shareholders' Equity .............. $ 181,984,241 $ 180,055,481 ============= =============
PART I: FINANCIAL INFORMATION FFW CORPORATION CONSOLIDATED STATEMENTS OF INCOME (Unaudited) Three Months Ended September 30 1997 1996 ----------- ----------- Interest Income: Loans Receivable Mortgage loans .......................... $ 1,581,434 $ 1,448,240 Consumer and other loans ................ 996,536 739,004 Securities Taxable ................................. 761,959 593,654 Nontaxable .............................. 103,409 117,786 Other Interest-earning assets .................... 62,200 27,636 ----------- ----------- Total Interest Income ................... $ 3,505,538 $ 2,926,320 Interest Expense: Deposits ......................................... 1,386,462 1,169,388 Other ............................................ 675,266 589,203 ----------- ----------- Total Interest Expense .................. $ 2,061,728 $ 1,758,591 Net Interest Income ....................................... 1,443,810 1,167,729 Provision for Loan Losses ........................ 200,000 20,000 ----------- ----------- Net interest income after provision for loan losses ....... 1,243,810 1,147,729 Non-interest income: Net gain on sale of interest-earning assets ...... 16,240 10,728 Net unrealized gain or loss on loans held for sale -- -- Other ............................................ 217,550 147,721 ----------- ----------- Total Non-Interest Income ............... $ 233,790 $ 158,449
CONSOLIDATED STATEMENTS OF INCOME (Unaudited) (continued) Three Months Ended September 30 1997 1996 ----------- ----------- Non-Interest Expense: Compensation and Benefits ........................ 442,537 339,047 Occupancy and equipment .......................... 80,614 64,486 SAIF deposit insurance premiums .................. 27,164 623,249 Other ............................................ 359,797 230,979 ----------- ----------- Total Non-Interest Expense .............. $ 910,112 $ 1,257,761 ----------- ----------- Income before income taxes ................................ 567,488 48,417 Income Tax Expense ............................... 97,510 (30,988) ----------- ----------- Net Income ................................................ $ 469,978 $ 79,405 =========== =========== Earnings per common and common equivalent shares: Primary .......................................... $ .66 $ .11 Fully Diluted .................................... $ .65 $ .11
PART I: FINANCIAL INFORMATION FFW CORPORATION CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY (Unaudited) Three Months Ended September 30 ------------------------------ 1997 1996 ------------ ------------ Beginning Balance ...................................... $ 17,141,286 $ 15,458,143 Common Stock at .01 Par Value 2,000,000 shares authorized issued and outstanding September 30, 1997 -- 873,379; September 30, 1996 -- 853,592 ................. 36 -- Additional Paid-in Capital ............................. 49,094 24,000 Treasury Stock at Cost - 0 shares for the three-month period September 30, 1997 and 9,000 shares for the three-month period September 30, 1996 ..... -- (176,625) Cash Dividends of: $.18 and $.15 per share for the three-month periods ended September 30,1997 and 1996 ...... (128,672) (105,309) Amortization of ESOP Contribution ...................... -- -- Amortization of MRP Contribution ....................... -- 6,539 Net unrealized appreciation (depreciation) on securities available for sale, net of tax ................ 78,766 187,840 Net Income for Period(s) ............................... 469,978 79,405 ------------ ------------ Ending Balance ......................................... $ 17,610,488 $ 15,473,993 ============ ============
PART I: FINANCIAL INFORMATION FFW CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) Three Months Ended September 30 1997 1996 ------------ ------------ Cash flows from operating activities: Net Income ................................................... $ 469,978 $ 79,405 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization, net of accretion .......... (16,167) 44,449 Provision for loan losses ................................ 200,000 20,000 Net (gains) losses on sales of: Securities available for sale ....................... -- -- Loans held for sale ............................... (21,909) (13,679) Foreclosed real estate owned and repossessed assets (1,398) (8,273) Origination of loans held for sale ....................... (1,940,280) (1,400,221) Proceeds from sale of loans held for sale ................ 1,962,189 1,407,339 ESOP expenses ............................................ 13,000 24,000 Amortization of MRP contribution ......................... -- 6,539 Net change in accrued interest receivable ................ (190,319) (52,316) Amortization of goodwill and core deposit intangibles .... 41,118 -- Net change in other assets ............................... (213,369) (225,181) Net change in accrued interest payable, accrued expenses and other liabilities ...................... 811,572 893,354 ------------ ------------ Total adjustments .......................... $ 644,435 $ 696,011 ------------ ------------ Net cash from operating activities .................. $ 1,114,413 $ 775,416 Cash flows from investing activities: Net change in interest-bearing deposits in other financial institutions .............................. -- 337,935 Proceeds from: sales/calls of securities available for sale ........ 5,000,000 -- sales/calls of securities held-to-maturity .......... -- -- maturities of securities available for sale ......... 45,000 330,000 maturities of securities held-to-maturity ........... -- -- Purchase of: securities available for sale ....................... (15,056,122) (546,485) Federal Home Loan Bank Stock ........................ -- -- Principal collected on mortgage- backed securities ....... 154,081 159,042 Net change in loans receivable ........................... (5,805,198) (2,516,310) Net purchases premises and equipment ..................... (8,396) (50,855) Investment in limited partnership ........................ (187,500) -- Proceeds from sales of other real estate and repossessed assets .................................. 118,950 117,734 ------------ ------------ Net cash from investing activities ......... $(15,739,185) $ (2,168,939)
PART I: FINANCIAL INFORMATION FFW CORPORATION CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued) Three Months Ended September 30 1997 1996 ------------ ------------ Cash flows from financing activities: Net (decrease) increase in deposits ................... (1,178,415) 7,174,882 Proceeds from Federal Home Loan Bank advances ......... 10,500,000 -- Repayment of Federal Home Loan Bank advances .......... (8,500,000) (4,000,000) Purchase of Treasury Stock ............................ -- (176,625) Proceeds from exercising of stock options ............. 36,130 -- Cash dividends paid ................................... (128,672) (105,309) ------------ ------------ Net cash from financing activities .............. $ 6,521,332 $ 2,892,948 Net (decrease) increase in cash and cash equivalents .............. $(13,895,729) $ 1,499,425 Cash and cash equivalents at beginning of period .................. $ 17,120,614 $ 2,788,207 Cash and cash equivalents at end of period ........................ $ 3,224,885 $ 4,287,632 ============ ============ Supplemental disclosure of cash flow information: Cash paid during quarter for: Interest ........................................ $ 1,585,324 $ 1,348,029 Income Taxes .................................... $ 50,000 $ 61,000 Non-cash investing activities transfers from:
FFW CORPORATION NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS (UNAUDITED) (1) Basis of Presentation The accompanying unaudited Consolidated Condensed Financial Statements have been prepared in accordance with generally accepted accounting principles for interim financial information and with the instructions to Form 10-Q and Regulation S-X. Accordingly, they do not include all the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, the Consolidated Condensed Financial Statements contain all adjustments (consisting only of normal recurring adjustments) necessary to represent fairly the financial condition of FFW Corporation as of September 30, 1997 and June 30, 1997, and the results of its operations, changes in shareholders' equity for the three months ended September 30, 1997 and 1996. Financial Statement reclassifications have been made for the prior period to conform to classifications used as of and for the period ended September 30, 1997. Operating results for the three months ended September 30, 1997 are not necessarily indicative of the results that may be expected for the fiscal year ended June 30, 1998. (2) Earnings Per Share of Common Stock Earnings per share of Common Stock is computed by dividing net income for the period by the weighted average number of common stock and common stock equivalents outstanding during the three month periods ended September 30, 1997 and 1996. Weighted average number of shares used in the earnings per share computations were 690,936 for the three-month period ended September 30, 1997. On October 26, 1993, the shareholders of the Company ratified the adoption of the Company's 1992 Stock Option and Incentive Plan and the Management Recognition Plan and Trusts ("MRP"). Pursuant to the Stock Option Plan, 84,500 shares of the Company's Common Stock are reserved for issuance, of which the Company has granted options on 76,442 shares. As of September 30, 1997, options on 38,066 shares of the Company's Common Stock remain unexercised. (3) Regulatory Capital Requirements Pursuant to the Financial Institution Reform, Recovery, and Enforcement Act of l989 ("FIRREA"), savings institutions must meet three separate minimum capital-to-asset requirements. The following table summarizes, as of September 30, 1997, the capital requirements for the Bank under FIRREA and its actual capital ratios. As of September 30, 1997, the Bank substantially exceeded all current regulatory capital standards.
Regulatory Actual Capital Requirement Capital (Bank Only) -------------------- --------------------- Amount Percent Amount Percent ------ ------- ------ ------- (Dollars in Thousands) Risk-Based $8,041 8.00% $12,781 12.71% Core Capital 5,310 3.00% 12,060 6.62% Tangible Capital 2,655 1.50% 12,060 6.62%
(4) Common Stock Cash Dividends On August 26, 1997, the Board of Directors of FFW Corporation, declared a quarterly cash dividend of $.18 per share. The dividend was paid September 30, 1997 to shareholders of record on September 15, 1997. The payment of the cash dividend reduced shareholders' equity by $128,672. PART II FFW CORPORATION Management's Discussion and Analysis of Financial Condition and Results of Operations General The accompanying Consolidated Financial Statement includes the account of FFW Corporation (the "Company") and its wholly owned subsidiaries, First Federal Savings Bank of Wabash(the "Bank") and FirstFed Financial of Wabash, Inc. All significant inter-company transactions and balances are eliminated in consolidation. The Company's results of operations are primarily dependent on the Bank's net interest margin, which is the difference between interest income on interest-earning assets and interest expense on interest-bearing liabilities. The Bank's net income is also affected by the level of its non-interest expenses, such as employee compensation and benefits, occupancy expenses, and other expenses. Forward - Looking Statements When used in this Form 10 - Q and in future filings by the Company with Securities and Exchange Commission, in the Company's press release or other public or shareholder communications, and in oral statements made with the approval of an authorized executive officer, the words or phrase "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project" or similar expressions are intended to identify "forward - looking statements" within the meaning of the Private Securities Litigation Reform Act of 1997. Such statements are subject to certain risks and uncertainties, 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 below 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 declines any obligation - to publicly release the result of any revisions which may be made to any forward - looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. Financial Condition The Company's total assets increased $1.9 million, or 1.1%, from $180.1 million at June 30, 1997 to $182.0 million at September 30, 1997. This increase was due primarily to funds generated by an increase in advances from FHLB of $2.0 million. Net loans receivables increased $5.6 million and securities available-for-sale increased $10.0 million. All of which contributed to a decrease in cash and cash equivalents of $13.9 million. Loan demand and liquidity needs may result in additional borrowings if deposits and loan growth remain at current levels. Total securities available-for-sale increased $10.0 million from $40.4 million at June 30, 1997 to $50.4 million at September 30, 1997. This increase was primarily the result of purchases of callable bonds with the proceeds of the branch acquisition which closed on June 13. 1997. The available-for-sale portfolio consists primarily of municipal securities, government agencies, mortgage-backed securities and to a lesser extent mutual funds and FNMA preferred stock. Net loans receivable increased $5.6 million, or 4.9% from $114.2 million at June 30, 1997 to $119.8 million at September 30, 1997. The increase in the loan portfolio for the quarter resulted, primarily, from an increase in non-mortgage loans of $3.5 million due to an increase in origination's. Management, consistent with its asset/liability objectives, will continue to sell all of its newly originated fixed-rate mortgage loans with terms to maturity greater than 15 years. Total deposits decreased $1.2 million or 1.0% from $116.1 million at June 30, 1997 to $114.9 million at September 30, 1997. For the quarter ended September 30, 1997, Savings, Now and MMDA accounts increased $395,000 or .7% while certificates of deposit decreased $1.7 million or 2.9%. Management believes that deposit growth may become more costly with the increased use of specials with higher interest rates and the competitive nature of the markets we serve. Total borrowed funds increased $2.0 million from $44.8 million at June 30, 1997 to $46.8 million at September 30, 1997. The increase consisted of new short term advances from the Federal Home Loan Bank of Indianapolis. Total shareholders' equity increased $469,000 from $17.1 million at June 30, 1997 to $17.6 million at September 30, 1997. The increase resulted from net income of $470,000, the exercise of options for $36,000, and an increase in the market value of investments, net of tax of $79,000, which was partially reduced by $128,700 for the payment of dividends. Results of Operations - Comparison of the Quarters Ended September 30, 1997 and September 30, 1996 General. Net income increased by $391,000 for the three months ended September 31, 1997 respectively, as compared to the three months ended September 30, 1996. The increase for the three months ended September 30, 1997 was primarily the result of increases in net interest income, and the result of the one time SAIF assessment of $337,800 net of taxes paid in 1996. All of these items are discussed in greater detail below. Net Interest Income. Net interest income increased $276,000 or 23.6% for the three months ended September 30, 1997 and 1996 respectively. This was primarily the result of an increase in average interest-earning assets which exceeded the increase in average interest-bearing liabilities, and a corresponding increase in the spread earned. Interest Income. Interest income increased $579,000 to $3.5 from $2.9 million for the quarter ended September 30, 1997 and 1996 respectively. The increases in interest income for the three months ended September 30, 1997 were due to continued growth in interest-earning assets including mortgage loans, commercial and consumer loans and investment, as compared to the same periods ended September 30, 1996. These increased interest-earning assets are the result of competitive pricing, marketing, and the re-pricing of adjustable-rate loans and mortgage-backed securities. Interest Expense. Interest expense increased $303,000 to $2.1 million from $1.8 million for the quarter ended September 30, 1997 and 1996 respectively. For the three months ended September 30, 1997, the increase in interest expense was due to an increase in borrowed funds and deposits outstanding as compared to the same periods in 1996. Interest rates, while remaining steady have increased the use of higher rate specials by everyone trying to attract deposits. If interest rates remain at or near current levels, management anticipates the rate of shift to certificates from passbook accounts will continue. thereby raising our interest expense cost, as the difference between rates paid on existing certificates and passbooks expands. Provision for Loan Losses. The provision for loan losses increased $180,000 to $200,000 from $20,000 for the quarter ended September 30, 1997 and 1996 respectively. The loan loss provisions are based on management's quarterly analysis of the allowance for loan losses. The provisions for the three month period reflect an increase in non-mortgage lending and the inherent riskiness and the number of these loans as compared to 1-4 family mortgage loans. With the expansion into commercial lending the company will continue to increase its allowance for loan losses and make future additions to the allowance through the provision for loan losses as loan growth, economic and regulatory conditions dictate. Although the Company maintains its allowance for loan losses at a level which is deemed consistent with the level of risk in the portfolio, economic conditions, etc. there can be no assurance that future losses will not exceed estimated amounts or that additional provisions for loan losses will not be required in future periods. Non-interest Income. Non-interest income increased by $75,000 to $234,000 from $158,000 for the quarter ended September 30, 1997 and 1996 respectively. The increase was the primarily the result of increased fee income on deposit accounts and commission income of $54,000 and increase in gain on sales of loans to the Federal Home Loan Mortgage Corporation of $5,500. Management believes that with the lower interest rates we will see a increase in the gain on sales of loans to Freddie Mac for the remainder of the year as compared to last year. Non-Interest Expense. Non-interest expense decreased $348,000 to $910,000 from $1.3 million for the quarter ended September 30, 1997 and 1996 respectively. For the three months ended September 30, 1997, SAIF deposit premiums decreased $596,000 due to the one time assessment paid in 1996. This decrease in the SAIF premium was offset by an increase in, compensation and benefits expenses of $103,000 for increased staff related to our new branch in South Whitley and our commercial loan department compared to 1996; and other expenses increased by $156,000 for data processing and cost related to the branch acquisition in South Whitley compared to 1996. Income Tax Expense. Income tax expense increased $128,500 to $98,000 from a credit of $31,000 for the quarter ended September 30, 1997 compared to quarter ended 1996. The increase was due to the tax effect of the one time SAIF assessment for the quarter ended September 30, 1996. 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 Company's allowance for loan losses as of September 30, 1997, was $726,000 or 0.6% of total loans. The June 30, 1997 allowance for loan losses was $572,000, or 0.5% of total loans. Total loans classified as substandard, doubtful or loss as of September 30, 1997 were $1.3 million or 0.7% of total assets. 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.
9/30/97 6/30/97 ------- ------- (Dollars in Thousands) Non-Accruing Loans ................................. $290 $248 Accruing Loans Delinquent 90 days or more .......... -- -- Troubled Debt Restructurings ....................... -- -- Foreclosed Assets .................................. 44 33 Total Non-Performing Assets ........................ $334 $281 ==== ==== Total Non-Performing Assets as a Percentage of Total Assets ......................... .18% .16%
Total non-performing assets increased $53,000 to $355,000, or .22% of total assets at September 30, 1997, from $180,000 or .11% of total assets at December 31, 1996. The increase in non-performing assets was primarily due to the addition of two 1-4 family loans for $123,000. Foreclosed assets increased $11,000 due to the repossession of several vehicles. Liquidity and Capital Resources. The Company's primary sources of funds are deposits, principal and interest payments on loans and mortgage-backed securities, FHLB Indianapolis advances and funds provided by operations. While scheduled loan and mortgage-backed security repayments and maturity of short-term investments are a relatively predictable source of funds, deposit flows are greatly influenced by general interest rates, economic conditions, competition and, most recently, the restructuring occurring in the thrift industry. Current Office of Thrift Supervision regulations require the Bank to maintain cash and eligible investments in an amount equal to at least 5.0% of customer accounts and short-term borrowings to assure its ability to meet demands for withdrawals and repayment of short-term borrowings. As of September 30, 1997, the Bank's liquidity ratio of 5.95%, exceeds the minimum regulatory requirements. The Company uses its capital resources principally to meet its ongoing commitments to fund maturing certificates of deposits and loan commitments, maintain is liquidity and meet operating expenses. At September 30, 1997, the Company has commitments to originate loans totaling $2.2 million. The Company considers its liquidity and capital resources to be adequate to meet its foreseeable short- and long-term needs. The Company expects to be able to fund or refinance, on a timely basis, its material commitments and long-term liabilities. Regulatory standards impose the following capital requirements: a risk-based capital standard expressed as a percent of risk-adjusted assets, a leverage ratio of core capital to total adjusted assets, and a tangible capital ratio expressed as a percent of total adjusted assets. As of September 30, 1997, the Bank exceeded all fully phased-in regulatory capital standards. At September 30, 1997, the Bank's tangible capital was $12.1 million, or 6.8% of adjusted total assets, which is in excess of the 1.5% requirement by $9.4 million. In addition, at September 30, 1997, the Bank had core capital of $12.1 million, or 6.8% of adjusted total assets, which exceeds the 3.0% requirement by $6.8 million. The Bank had risk-based capital of $12.8 million at September 30, 1997 or 12.7% of risk-adjusted assets which exceeds the 8.0% risk-based capital requirements by $4.7 million. As required by federal law, the OTS has proposed a rule revising its minimum core capital requirement to be no less stringent than that imposed on national banks. The OTS has proposed that only those savings associations rated a composite one (the highest rating) under the MACRO rating system for savings associations will be permitted to operate at or near the regulatory minimum leverage ratio of 3.0%. All other savings associations will be required to maintain a minimum leverage ratio of 3.0% at least an additional 100 to 200 basis points. The OTS will assess each individual savings association through the supervisory process on a case-by-case basis to determine the applicable requirement. No assurance can be given as to the final form of any such regulation, the date of its effectiveness or the requirement applicable to the Bank. As a result of the prompt corrective action provisions of federal law discussed below, however, a savings association must maintain a core capital ratio of at least 4.0% to be considered adequately capitalized unless its supervisory condition is such to allow it to maintain a 3.0% ratio. Under the requirements of federal law all the federal banking agencies, including the OTS, must revise their risk-based capital requirements to ensure that such requirements account for interest rate risk, concentration of credit risk and the risks of non-traditional activities, and that they reflect the actual performance of and expected loss on multi-family loans. The OTS had adopted a final rule that requires every savings association with more than normal interest rate risk to deduct from its total capital, for purposes of determining compliance with such requirement, an amount equal to 50% of its interest-rate risk exposure multiplied by the market value of its assets. This exposure is a measure of the potential decline in the market value of portfolio equity of a savings association, greater than 2%, based upon a hypothetical 200 basis point increase or decrease in interest rates (whichever results in a greater decline) affecting on-and off-balance sheet assets and liabilities. The effective date of the new requirement is July 1, 1994. Any savings association with less than $300 million in assets and a total capital ratio in excess of 12% is exempt from this requirement unless the OTS determines otherwise. It is anticipated that since the Bank has less than $300 million in assets, and a risk-based capital ratio in excess of 12%, it will be exempt from this rule. Part II - Other Information As of September 30, 1997, management is not aware of any current recommendations by regulatory authorities which, if they were to be implemented, would have or are reasonably likely to have a material adverse effect on the Company's liquidity, capital resources or operations. 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 The Annual Meeting of Shareholders (the "Meeting") of FFW Corporation was held on October 28, 1997. The matters approved by shareholders at the Meeting and the number of votes cast for, against or withheld ( as well as the number of abstentions and broker non-votes) as to each matter are set below: PROPOSAL NUMBER OF VOTES -------- --------------- FOR WITHHELD --- -------- Election of the following Directors for a three-year term Wayne W. Rees ...................... 590,632 900 Ronald D. Reynolds ................. 590,632 900 FOR AGAINST ABSTAIN --- ------- ------- Ratification of Crowe Chizek as auditors for the fiscal year ending June 30, 1998..... 589,867 500 1,165 Item 5 - Other Information Not Applicable Item 6 - Exhibits and Reports on Form 8-K (a) Exhibits Not Applicable (b) The following is a description of the Form 8-K's filed during the quarter ended September 30, 1997. (i) A Form 8-K was filed on July 31, 1997 announcing the year end income results for fiscal year end June 30, 1997 SIGNATURES Pursuant to the requirement 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. FFW CORPORATION Registrant November 12, 1997 /S/ Nicholas M. George ------------------------ Nicholas M. George President and Chief Executive Officer November 12, 1997 /S/ Charles E. Redman Charles E. Redman Treasurer and Chief Financial Accounting Officer EX-27 2
9 1000 3-MOS JUN-30-1998 SEP-30-1997 1,496 1,729 0 0 50,453 0 0 120,489 726 181,984 114,940 46,800 2,634 0 0 0 9 17,601 181,894 2,578 866 62 3,506 1,387 2,062 1,444 200 16 910 567 567 0 0 470 .66 .65 2.74 290 0 0 961 572 61 15 726 720 0 6
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