-----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, Lq85hRaPjytzj9wRn2gvPmWFJYZ6vGhbJ8WqI22SKNTXogcYdtsdDZ4hI1PdUm10 c+OQiIbAPOjBxmszOkZNoQ== 0000914317-98-000099.txt : 19980212 0000914317-98-000099.hdr.sgml : 19980212 ACCESSION NUMBER: 0000914317-98-000099 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19971231 FILED AS OF DATE: 19980211 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: EAST TEXAS FINANCIAL SERVICES INC CENTRAL INDEX KEY: 0000929646 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 752559089 STATE OF INCORPORATION: DE FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-24848 FILM NUMBER: 98531620 BUSINESS ADDRESS: STREET 1: 1200 S BECKHAM AVE CITY: TYLER STATE: TX ZIP: 75701 BUSINESS PHONE: 9035931767 MAIL ADDRESS: STREET 1: 1200 SOUTH BECKHAM AVE CITY: TYLER STATE: TX ZIP: 75701 10QSB 1 FORM 10-QSB SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 [x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the period ended December 31, 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 0-24848 East Texas Financial Services, Inc. (Exact name of registrant as specified in its charter) Delaware 75-2559089 (State or other jurisdiction of (I.R.S. employer incorporation or organization identification number) 1200 South Beckham, Tyler, Texas 75701 (Address of principal executive offices) (Zip code) (903) 593-1767 (Registrant's telephone number, including area code) Check whether the issuer (1) filed all reports required to be filed by Section 13 of 15(d) of the Securities Exchange Act of 1934 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. [x] Yes [ ] No The number of shares of the registrant's common stock ($.01 par value) outstanding as of December 31, 1997, was 1,026,366. EAST TEXAS FINANCIAL SERVICES, INC. AND SUBSIDIARY FORM 10-QSB DECEMBER 31, 1997 INDEX Part I - Financial Information Item 1. Financial Statements Consolidated Statements of Financial Condition, December 31, 1997 (Unaudited) and September 30, 1997 Consolidated Statements of Income, (Unaudited) three months ended December 31, 1997, and December 31, 1996 Consolidated Statement of Changes in Stockholders' Equity, (Unaudited) three months ended December 31, 1997 Consolidated Statements of Cash Flows, (Unaudited) three months ended December 31, 1997, and December 31, 1996 Notes to (Unaudited) Consolidated Financial Statements, December 31, 1997 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Part II - Other Information Item 1. Legal Proceedings Item 2. Changes In Securities Item 3. Defaults Upon Senior Securities Item 4. Submission of Matters To a Vote of Security Holders Item 5. Other Information Item 6. Exhibits and Reports on Form 8-K Signature EAST TEXAS FINANCIAL SERVICES, INC. AND SUBSIDIARY FORM 10-QSB DECEMBER 31, 1997 PART I - FINANCIAL INFORMATION Item 1 - Financial Statements East Texas Financial Services, Inc. (the "Company") was formed in September of 1994 for the purpose of acquiring all of the common stock of First Federal Savings and Loan Association of Tyler (the "Association"), concurrent with its conversion from the mutual to stock form of ownership. The Company completed its initial public stock offering of 1,215,190 shares of $.01 par value common stock on January 10, 1995. The Company utilized approximately one half of the net stock sale proceeds to acquire all of the common stock issued by the Association. For additional discussion of the Company's formation and intended operations, see the Form S-1 Registration Statement (No. 33-83758) filed with the Securities and Exchange Commission and the Company's annual report on Form 10-KSB for the fiscal year ended September 30, 1997, also filed with the Commission. The financial statements presented in this Form 10-QSB reflect the consolidated financial condition and results of operations of the Company and its wholly owned subsidiary, First Federal Savings and Loan Association of Tyler.
EAST TEXAS FINANCIAL SERVICES, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION ASSETS December 31, 1997 September 30, 1997 ----------------- ------------------ (Unaudited) Cash and due from banks ........................................... $ 586,802 $ 508,729 Interest-bearing deposits with banks .............................. 2,545,055 6,422,404 Interest-earning time deposits with financial institutions......... 1,467,573 1,565,573 Federal funds sold ................................................ 2,671,416 753,847 Mortgage-backed securities available-for-sale ..................... 6,029,082 4,356,271 Investment securities held-to-maturity (estimated market value of $26,146,470 at December 31, 1997 and $23,128,073 at September 30, 1997) ........................... 26,077,423 23,058,359 Mortgage-backed securities held-to-maturity (estimated market value of $16,793,561 at December 31, 1997 and $18,611,834 at September 30, 1997) .......................... 16,303,540 18,151,765 Loans receivable, net of allowance for credit losses of $272,851 at December 31, 1997 and September 30, 1997 ........................................... 60,249,463 57,110,029 Accrued interest receivable ....................................... 922,498 885,383 Federal Home Loan Bank stock, at cost ............................. 1,020,900 1,005,700 Premises and equipment ............................................ 1,094,361 1,123,311 Foreclosed real estate, net of allowances of $-0- ................. 0 0 Deferred income taxes ............................................. 0 0 Mortgage servicing rights ......................................... 157,375 149,094 Other assets ...................................................... 967,565 858,147 ------------- ------------- Total Assets ............................................. $ 120,093,053 $ 115,948,612 ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Liabilities: Demand deposits .............................................. $ 3,895,981 $ 1,882,109 Savings and NOW deposits ..................................... 10,063,904 9,771,266 Other time deposits .......................................... 77,096,211 76,897,274 ------------- ------------- Total deposits ........................................... 91,056,096 88,550,649 FHLB advances ................................................ 7,522,000 4,195,000 Advances from borrowers for taxes and insurance .............. 171,878 881,685 Federal income taxes Current ................................................ (14,696) 0 Deferred ............................................... 121,318 127,909 Accrued expenses and other liabilities ....................... 255,481 1,314,001 ------------- ------------- Total Liabilities ........................................ 99,112,077 95,069,244 ------------- -------------
EAST TEXAS FINANCIAL SERVICES, INC. CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (continued) December 31, 1997 September 30, 1997 ----------------- ------------------ (Unaudited) Stockholders' equity: Preferred stock, $0.01 par value, 500,000 shares authorized, none outstanding Common stock, $.01 par value, 5,500,000 shares authorized, 1,256,387 shares issued ...................................... 12,564 12,564 Additional paid-in capital ................................... 12,196,879 12,196,879 Deferred compensation - RRP shares ........................... (300,652) (329,748) Unearned employee stock ownership plan shares ................ (650,614) (650,614) Net unrealized gain on securities available-for-sale ......... (4,961) 15,512 Retained earnings (substantially restricted) ................. 13,458,777 13,365,792 Treasury stock, 230,021 shares at cost ....................... (3,731,017) (3,731,017) ------------- ------------- Total stockholders' equity ............................... 20,980,976 20,879,368 ------------- ------------- Total liabilities and stockholders' equity ............... $ 120,093,053 $ 115,948,612 ============= =============
The accompanying notes are an integral part of the financial statements.
EAST TEXAS FINANCIAL SERVICES, INC. CONSOLIDATED STATEMENTS OF INCOME Three Months Ended December 31, (Unaudited) 1997 1996 ---------- ---------- INTEREST INCOME Loans receivable: First mortgage loans ..................... $1,134,833 $ 967,638 Consumer and other loans ................. 29,305 20,527 Securities available-for-sale: Mortgage-backed securities ............... 64,390 0 Securities held-to-maturity: Investment securities .................... 486,080 570,919 Mortgage-backed securities ............... 314,702 421,434 ---------- ---------- Total interest income .................. 2,029,310 1,980,518 ---------- ---------- INTEREST EXPENSE Deposits ...................................... 1,123,670 1,109,672 FHLB advances ................................. 62,173 0 ---------- ---------- Total interest expense ................. 1,185,843 1,109,672 ---------- ---------- Net interest income before provision for loan losses ...................... 843,467 870,846 Provision for loan losses ..................... 0 5,000 ---------- ---------- Net interest income after provision for loan losses ...................... 843,467 865,846 NONINTEREST INCOME Gain (loss) on sales of interest-earning assets 21,437 13,079 Loan origination and commitment fees .......... 22,963 17,219 Loan servicing fees ........................... 22,303 31,686 Other ......................................... 10,712 15,430 ---------- ---------- Total noninterest income ............... 77,415 77,414 ---------- ----------
EAST TEXAS FINANCIAL SERVICES, INC. CONSOLIDATED STATEMENTS OF INCOME Three Months Ended December 31, (Unaudited) (continued) 1997 1996 ---------- ---------- NONINTEREST EXPENSE Compensation and benefits ..................... 492,110 427,655 Occupancy and equipment ....................... 48,246 33,864 SAIF deposit insurance premium ................ 14,147 48,051 (Gain) loss on foreclosed real estate ......... 0 58 Other ......................................... 139,666 139,937 ---------- ---------- Total noninterest expense .............. 694,169 649,565 ---------- ---------- Income (loss) before provision for income taxes .. 226,713 293,695 Income tax expense (benefit) ..................... 82,409 110,465 ---------- ---------- NET INCOME (LOSS) ................................ $ 144,304 $ 183,230 ========== ========== Earnings per common share and earnings per common share - assuming dilution ................. $ 0.15 $ 0.18
The accompanying notes are an integral part of the financial statements.
EAST TEXAS FINANCIAL SERVICES, INC. CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY (UNAUDITED) THREE MONTHS ENDED December 31, 1997 Common Unearned Unallocated Net Unrealized Stock and RRP ESOP Gain on Avail. Retained Paid in Capital Shares Shares For Sale Securities Earnings --------------- ------ ------ ------------------- -------- Balance September 30, 1997 .... $ 12,209,443 $ (329,748) $ (650,614) $ 15,512 $ 13,365,792 Deferred compensation amortization ............. -- 29,096 -- -- -- Purchase of treasury stock at cost ............ -- -- -- -- -- Payment of cash dividends ..... -- -- -- -- (50,082) Accrued dividends - RRP stock . -- -- -- -- (1,237) Net change in unrealized gain on securities available for sale, net of deferred taxes of $10,547 -- -- -- (20,473) -- Net income for the three months ended December 31, 1997 ........ -- -- -- -- 144,304 Balance December 31, 1997 ..... $ 12,209,443 $ (300,652) $ (650,614) $ (4,961) $ 13,458,777 Total Treasury Stockholders' Stock Equity ----- ------ Balance September 30, 1997 .... $ (3,731,017) $ 20,879,368 Deferred compensation amortization ............. -- 29,096 Purchase of treasury stock at cost ............ -- -- Payment of cash dividends ..... -- (50,082) Accrued dividends - RRP stock . -- (1,237) Net change in unrealized gain on securities available for sale, net of deferred taxes of $10,547 -- (20,473) Net income for the three months ended December 31, 1997 ........ -- 144,304 Balance December 31, 1997 ..... $ (3,731,017) $ 20,980,976
The accompanying notes are an integral part of these financial statements.
EAST TEXAS FINANCIAL SERVICES, INC. CONSOLIDATED STATEMENT OF CASH FLOWS (Unaudited) For The Three Months Ended December 31, 1997 1996 ----------- ----------- Cash flows from operating activities: Net income ................................................ $ 144,304 $ 183,230 Adjustments to reconcile net income to net cash provided by operating activities: Amortization of deferred loan origination fees ........ (1,483) (69) Amortization of premiums and discounts on investment securities, mortgage-backed securities, and loans 29,964 34,002 Amortization of deferred compensation ................. 29,096 29,095 Compensation charge related to release of ESOP shares . 31,216 28,994 Depreciation .......................................... 25,413 16,875 Deferred income taxes ................................. 3,956 4,567 Stock dividends on FHLB stock ......................... (15,200) (13,900) Amortization of mortgage servicing rights ............. 8,686 0 Net (gain) loss on sale of: Securities held to maturity ......................... 0 0 Foreclosed real estate .............................. 0 0 Net loss on disposal of fixed assets ................ 3,889 0 Other Assets ........................................ 0 0 Loans ............................................... (21,438) (4,925) Loans held for sale ................................. 0 0 Proceeds from loan sales .............................. 1,596,651 1,184,950 Origination of loans held for sale .................... 0 0 (Increase) decrease in: Accrued interest receivable ......................... (37,115) (59,325) Other assets ........................................ (109,418) 136,571 Accrued loan loss reserve ........................... 0 5,000 Increase (decrease) in: Federal income tax payable .......................... 0 100,854 Accrued expenses and other liabilities .............. (1,073,216) (655,252) Capitalized interest on time deposits ................. 0 0 ----------- ----------- Net cash provided (used) by operating activities ............ 615,305 990,667 ----------- -----------
The accompanying notes are an integral part of the financial statements.
EAST TEXAS FINANCIAL SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) For the Three Months Ended December 31, 1997 1996 ----------- ----------- Cash flows from investing activities: Purchases of interest earning time deposits ........................... $ 0 $ 0 Net decrease (increase) in fed funds sold ............................. (1,917,569) (2,074,079) Purchases of obligations - U.S. Govt. and agencies held-to-maturity .................................................. (6,533,031) (997,578) Proceeds from maturity of time deposits ............................... 98,000 98,000 Proceeds from sale of securities held-to-maturity ..................... 0 0 Proceeds from maturity of securities held-to-maturity ................. 0 0 Proceeds from maturities of obligations - U.S. Govt. and agencies held-to-maturity ......................................... 3,500,000 3,000,000 Purchases of mortgage-backed securities available-for-sale............. (2,029,452) 0 Purchases of mortgage-backed securities held-to-maturity .............. 0 0 Principal pmts on mortgage-backed securities available-for-sale........ 312,146 0 Principal payments on mortgage-backed securities held-to-maturity .................................................. 1,847,047 1,628,759 Net originations and principal collections on loans ................... (4,762,692) (3,721,670) Acquisition cost related to foreclosed real estate .................... 0 (5,252) Proceeds from sale of foreclosed real estate .......................... 0 58,300 Expenditures for premises and equipment ............................... (352) 0 ----------- ----------- Net cash provided (used) by investing activities ........................ (9,485,903) (2,013,520) ----------- ----------- Cash flows from financing activities: Net increase (decrease) in: Non-interest bearing deposits, savings, and NOW accounts ............ 2,306,510 352,830 Time deposits ........................................................ 198,937 (154,908) FHLB advances ........................................................ 15,738,500 0 Repayment of FHLB advances ........................................... (12,411,500) 0 Advances from borrowers for taxes and insurance ...................... (709,807) (768,788) Dividends paid to stockholders .......................................... (51,318) (53,965) Purchase of treasury stock .............................................. 0 0 ----------- ----------- Net cash provided (used) by financing activities ........................ 5,071,322 (624,831) ----------- ----------- Net increase (decrease) in cash and cash equivalents .................... (3,799,276) (1,647,684) Cash and cash equivalents at beginning of the period .................... 6,931,133 5,699,647 ----------- ----------- Cash and cash equivalents at end of the period .......................... $ 3,131,857 $ 4,051,963 ============ ============
EAST TEXAS FINANCIAL SERVICES, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (continued) For the Three Months Ended December 31, 1997 1996 ----------- ----------- Supplemental disclosure: Cash paid for: Interest on deposits .................................................. $ 561,505 $ 559,672 Income taxes .......................................................... $ 0 $ 5,157 Transfers from loans to real estate acquired through foreclosures ......................................... $ 0 $ 197,595 Loan losses charged to valuation allowance .............................. $ 0 $ 1,185 Recoveries credited to loan loss reserves ............................... $ 0 $ 0
The accompanying notes are an integral part of the financial statements. EAST TEXAS FINANCIAL SERVICES, INC. AND SUBSIDIARY NOTES TO (UNAUDITED) CONSOLIDATED FINANCIAL STATEMENTS DECEMBER 31, 1997 NOTE 1 - BASIS OF PRESENTATION The financial statements presented in this report have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission for interim reporting and include all adjustments which are, in the opinion of management, necessary for fair presentation. These financial statements have not been audited by an independent accountant. Certain information and footnote disclosures normally included in financial statements prepared in accordance with generally accepted accounting principles have been condensed or omitted pursuant to such rules and regulations for interim reporting. The Company believes that the disclosures are adequate to make the information not misleading. However, these financial statements should be read in conjunction with the financial statements and notes thereto included in the Company's Annual Report on Form 10-KSB for the year ended September 30, 1997. The financial data and results of operations for interim periods presented may not necessarily reflect the results to be anticipated for the complete year. NOTE 2 - EARNINGS PER SHARE Earnings per share for the three months ended December 31, 1997 and 1996, has been computed based on net income divided by the weighted average number of common shares outstanding during the period. For the three months ended December 31, 1997 and 1996, the weighted average number of shares outstanding totaled 961,304 and 1,002,964 shares respectively Earnings per common share - assuming dilution, for the three months ended December 31, 1997 and 1996, has been computed based on net income divided by the weighted average number of common shares outstanding. In addition, it includes the effects of all dilutive potential common shares that were outstanding during the period. For the three months ended December 31, 1997 and 1996, the weighted average number of shares outstanding for earnings per share - assuming dilution totaled 993,829 and 1,013,056 shares respectively. For both earnings per share and earnings per common share - assuming dilution and as prescribed by the American Institute of Certified Public Accountants Statement of Position 93-6 ("SOP 93-6") Employer's Accounting for Employees Stock Ownership Plans, the weighted average number of shares outstanding does not include unallocated Employee Stock Ownership Plan ("ESOP") shares. See Part I, Item 1 - Note 4 to consolidated financial statements for further information on the changes applicable for earnings per share reporting. See Part II, Item 6 - Exhibits for a detailed presentation of the earnings per share calculation for the three-month periods ended December 31, 1997 and 1996. NOTE 3 - SECURITIES The amortized cost and estimated market values of investment securities held-to-maturity as of December 31, 1997, are as follows:
Gross Gross Estimated Amortized Unrealized Unrealized Market Cost Gains Losses Value ----------- ------------ ----------- ------------ Debt securities: U. S. Treasury ........... $ 2,509,325 $ 14,025 $ 0 $ 2,523,350 U. S. government agency 23,568,098 71,217 16,195 23,623,120 ----------- ----------- ----------- ----------- Total debt securities $26,077,423 $ 85,242 $ 16,195 $26,146,470 ----------- ----------- ----------- -----------
The amortized cost and estimated market values of investment securities held-to-maturity as of December 31, 1997, by contractual maturity are shown below:
Estimated Amortized Market Cost Value ----------- ----------- Due in one year or less .................... $ 9,504,316 $ 9,517,149 Due after one year through two years ....... 8,069,604 8,084,345 Due after two years through three years .... 5,988,368 6,032,289 Due after three years through five years ... 2,515,135 2,512,687 ----------- ----------- Total debt securities .............. $26,077,423 $26,146,470 ----------- -----------
As of December 31, 1997, the weighted average yield on the Company's investment security held-to-maturity portfolio was approximately 6.07% while the Company's overall investment portfolio, including securities held-to-maturity, overnight deposits and interest earning time deposits with other financial institutions was approximately 6.05%. The carrying values and estimated market values of mortgage-backed and related securities available-for-sale as of December 31, 1997, by type of security are as follows:
Principal Unamortized Unearned Unrealized Carrying Balance Premiums Discounts Gain/(Loss) Value ----------- ----------- ----------- ----------- ----------- Fixed Rate .... $ 0 $ 0 $ 0 $ 0 $ 0 Adjustable Rate 5,833,464 203,135 0 (7,517) 6,029,082 ----------- ----------- ----------- ----------- ----------- $ 5,833,464 $ 203,135 $ 0 $ (7,517) $ 6,029,082 ----------- ----------- ----------- ----------- -----------
The carrying values and estimated market values of mortgage-backed and related securities held-to-maturity as of December 31, 1997, by type of security are as follows:
Estimated Principal Unamortized Unearned Carrying Market Balance Premiums Discounts Value Value ----------- ----------- ----------- ----------- ----------- Fixed Rate .... $ 3,163,270 $ 0 $ 7,279 $ 3,155,991 $ 3,164,560 Adjustable Rate 13,073,684 89,345 15,480 13,147,549 13,629,001 ----------- ----------- ----------- ----------- ----------- $16,236,954 $ 89,345 $ 22,759 $16,303,540 $16,793,561 ----------- ----------- ----------- ----------- -----------
The overall yield on the Company's mortgage-backed securities portfolio as of December 31, 1997, was approximately 7.22%. NOTE 4 - CURRENT ACCOUNTING ISSUES SFAS NO. 128 In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 128, Earnings Per Share. SFAS No. 128 establishes standards for computing and presenting earnings per share (EPS) and applies to entities with publicly held common stock or potential common stock. The Statement simplifies the standards for computing EPS and makes them comparable with international EPS standards. SFAS No. 128 replaces the presentation of primary EPS previously prescribed in Accounting Principles Board Opinion (APB) No. 15, Earnings Per Share, with a presentation of basic EPS. It also requires dual presentation of basic and diluted EPS on the face of the income statement for all entities with complex capital structures and requires a reconciliation of the numerator and denominator of the basic EPS computation to the numerator and denominator of the diluted EPS computation. Basic EPS does not include dilution and is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the entity. Diluted EPS is computed similarly to fully diluted EPS pursuant to APB Opinion No. 15. The Statement is effective for financial statements issued for periods ending after December 15, 1997. The Company adopted the Statement as required. SFAS No. 129 In February 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 129, Disclosure of Information About Capital Structure. It requires information about capital structure to be disclosed in three separate categories: information about securities, liquidation preference of preferred stock and redeemable stock. The Statement is effective for financial statements issued for periods ending after December 15, 1997. The Company adopted the Statement as required. The Company has not issued any preferred or redeemable stock and does not anticipate any disclosure requirements for these types of capital instruments. The Company has issued stock options and certain disclosure requirements related to the number of shares, vesting, and exercise price of the options are required to be disclosed in the financial statements. (See Note 5 to the Consolidated Financial Statements of this report for a detailed presentation of the Company's stock option plan.) SFAS No. 130 In June of 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS ) No. 130, Reporting Comprehensive Income. SFAS No. 130 establishes standards for reporting and displaying comprehensive income and its components in general purpose financial statements. Comprehensive income includes net income and several other items that current accounting standards require to be recognized outside of net income. SFAS No. 130 requires companies to display comprehensive income in its financial statements, to classify items of comprehensive income by their nature in their financial statements and to display accumulated balances of comprehensive income in stockholders' equity separately from retained earnings and addition paid-in capital. The Statement is effective for fiscal years beginning after December 31, 1997. The Company adopted the Statement as required. SFAS No. 131 In June of 1997, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards (SFAS) No. 131, Disclosure About Segments of and Enterprise and Related Information. The Statement requires entities to report certain information about their operating segments in a complete set of financial statements. It requires them to report certain enterprise-wide information about their products and services, activities in different geographic regions and their reliance on major customers, and to disclose certain segment information in their interim financial statements. The Statement is effective for fiscal years beginning after December 15, 1997. The Company has not determined the effects, if any, that the disclosure requirements will have on its financial statements. The Company adopted the Statement as required. NOTE 5 - STOCK OPTION AND INCENTIVE PLAN The 1995 Stock Option and Incentive Plan (the "Stock Option Plan") provides for awards in the form of stock options, stock appreciation rights, limited stock appreciation rights, and restricted stock. Options to purchase shares of common stock of the Company may be granted to selected directors, officers and key employees. The number of shares of common stock reserved for issuance under the stock option plan was equal to 121,519 or 10% of the total number of common shares issued pursuant to the conversion. The option exercise price cannot be less than the fair market value of the underlying common stock as of the date of the option grant, and the maximum option term cannot exceed ten years. Awards vest at a rate of 20% per year beginning at the date of the grant. The Company plans to use treasury stock for the exercise of options. The following is a summary of changes in options outstanding:
Options outstanding Balance, September 30, 1995 ............................... 103,411 Granted at $14.125 per share ........................ -0- Exercised at $14.125 per share ...................... (2,090) Forfeited and expired ............................... -0- Balance, September 30, 1996 .................................... 101,321 Granted ............................................. -0- Exercised at $14.125 per share ...................... (1,056) Forfeited and expired ............................... -0- Balance, September 30, 1997 .............................. 100,276 ======== Options exercisable at year end under stock option plan ........ 38,233 ======== Shares available for future grants ............................. 18,108 ========
During the quarter ended December 31, 1997, there were no changes to the options outstanding. NOTE 6 - FORWARD-LOOKING STATEMENTS When used in this Form 10-QSB or future filings by the Company with the Securities and Exchange Commission, the Company's press releases or other public or shareholder communications or in oral statements made with the approval of an authorized executive officer, the words or phrases "will likely result", "are expected to", "will continue", "is anticipated", "estimate", "project", "believe" or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. 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, and to advise readers that various factors, including regional and national economic conditions, changes in levels of market interest rates, credit risks of lending activities, and competitive and regulatory factors, could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from those anticipated or projected. 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 the occurrence of anticipated or unanticipated events or circumstances after the date of such statements. EAST TEXAS FINANCIAL SERVICES, INC. AND SUBSIDIARY FORM 10-QSB DECEMBER 31, 1997 Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations GENERAL The principle business of the Company is that of a community-oriented financial institution attracting deposits from the general public and using such deposits to originate one- to four-family residential loans and, to a lesser extent, commercial real estate, one- to four-family construction, multi-family and consumer loans. These funds have also been used to purchase mortgage-backed securities, U. S. government and agency obligations and other permissible securities. The ability of the Company to attract deposits is influenced by a number of factors, including interest rates paid on competing investments, account maturities and levels of personal income and savings. The Company's cost of funds is influenced by interest rates on competing investments and general market rates of interest. Lending activities are influenced by the demand for real estate loans and other types of loans, which is in turn affected by the interest rates at which such loans are made, general economic conditions affecting loan demand, the availability of funds for lending activities, economic conditions and changes in real estate values. The Company's results of operations are dependent primarily on net interest income, which is the difference between the income earned on its loan and investment portfolios and the interest paid on deposits and borrowings. Results of operations are also affected by the Company's provision for loan losses and the net gain(loss) on sales of interest earning assets and loan fees. The Company's results of operations are also significantly affected by general economic and competitive conditions, particularly changes in interest rates, government policies and actions of regulatory authorities. FINANCIAL CONDITION Total assets were $120.1 million at December 31, 1997, a $4.2 million increase from the $115.9 million reported at September 30, 1997, the Company's most recent fiscal year end. The increase in total assets was the result of a $3.1 million increase in loans receivable, a $3.0 million increase in investment securities held-to-maturity and a $1.7 million increase in mortgage-backed securities available-for-sale. The increases were partially offset by a $2.0 million decrease in interest-bearing deposits with banks and federal funds sold and a $1.8 million decrease in mortgage-backed securities held-to-maturity. The increase in loans receivable was the result of the Company's continued emphasis on one- to four-family portfolio loans. During the quarter ended December 31, 1997, the Company continued its policy of placing all one- to four-family loans with original terms of less than or equal to 15 years and with interest rates of greater than or equal to 7.00% into portfolio. Continued lower mortgage rates influenced borrowers to select fixed rate loans and, as result, the Company was able to increase its loans receivable portfolio. Subsequent to December 31, 1997, mortgage loan rates for 15 year loans fell below the Company's 7.00% threshold. Management made the decision to then sell these loans into the secondary market. A sustained period of declining mortgage rates could impede the Company's ability to continue to increase its loans receivable portfolio as few, if any, loans would be placed into portfolio. The result could be an overall decline in the Company's yield on earning assets as cash flows normally directed to loans are reinvested into lower yielding assets. Also, the Company was able to originate approximately $1.4 million in commercial real estate loans during the quarter ended December 31, 1997. The fixed interest rate loans ranged in size from $140,000 to $500,000, had interest rates ranging from 7.25% to 8.50% and had terms of less than 20 years. The loans were funded with borrowed funds ("advances") from the Federal Home Loan Bank of Dallas ("FHLB"). The advances were designed to mirror the terms of the loans with respect to original maturity of the loan and, if applicable, any balloon payments. In addition, the advances were set up to amortize over the same schedule as the corresponding loan and the interest rates on the advances were fixed for the term of the advance. The advances had interest rates that ranged between 6.00% and 6.15%. The result was a gross margin on each of the loans of between 125 and 235 basis points. Subject to prudent underwriting standards, favorable borrowing rates and continued strength in the local economy, the Company expects to continue to originate small to medium sized commercial real estate loans and fund them with advances from the FHLB. At December 31, 1997, loans receivable totaled $60.2 million, compared to $57.1 million at September 30, 1997. For the quarter ended December 31, 1997, the Company originated approximately $8.1 million in loans. The increase in the investment securities held-to-maturity portfolio was primarily the result of the Company's decision to transfer excess interest-earning bank balances and federal funds sold into longer term higher yielding investments. At December 31, 1997, the portfolio contained $9.5 million in securities with remaining terms until maturity of less than one year, $8.1 million with remaining maturities of one through two years, $6.0 million with remaining maturities of two through three years and $2.5 million with remaining maturities of three through five years. At December 31, 1997, the investment securities held-to-maturity portfolio totaled $26.1 million, compared to $23.1 million at September 30, 1997. At December 31, 1997, the overall yield on the portfolio was approximately 6.05%. At December 31, 1997, the Company reported $6.0 million in mortgage-backed securities available-for-sale, compared to $4.3 million at September 30, 1997. The increase was the result of the Company's continued program of borrowing funds from the FHLB and investing the proceeds into mortgage-backed and similar securities in an effort to achieve a positive margin on the transaction. Subject to the favorable interest rates, the Company intends, over the next several quarters, to systematically borrow up to approximately $20.0 million from the FHLB and invest the proceeds in adjustable rate mortgage-backed securities to be held in an available-for-sale accounting classification. The purpose of the program is to leverage a portion of the Company's excess capital and to achieve a rate of return on the difference in the rate earned on the securities and the cost of the advances. The success of the program will be dependent upon several factors, including the Company's ability to purchase adjustable rate securities that will maintain a positive margin above the FHLB advance rates. The Company intends to primarily borrow funds from the FHLB with terms of approximately thirty days and invest in mortgage-backed securities with interest rate adjustment frequencies that vary between one month and one year. As a result, the success of the program will be dependent upon the difference between very short term federal fund type interest rates and interest rates comparable to U.S. Treasury bill rates. In general, the program will be more successful as the difference in these types of interest rates widens and less successful as the difference narrows. Also, the general level of interest rates, which in turn affect mortgage rates, will have an effect on the success of the program. A period of lower interest rates could have the effect of increasing prepayments of the principal balances on the securities as borrowers on underlying loans of the securities elect to refinance their mortgages. A rapid period of prepayments could have the effect of decreasing the overall yield on the program. At December 31, 1997, the yield on the securities in the program was approximately 6.31% while the cost of the FHLB advance was approximately 5.61%. The Company's mortgage-backed securities held-to-maturity portfolio totaled $16.3 million at December 31, 1997, compared to $18.2 million at September 30, 1997. The decrease was primarily due to principal payments received on the portfolio during the quarter. The Company's decision to invest in mortgage-backed securities held-to-maturity, as it is with investment securities held-to-maturity, is primarily dependent upon and is counter to the Company's ability to originate portfolio loans. The weighted average yield on the portfolio was approximately 7.65% at December 31, 1997. Total deposits were $91.1 million at December 31, 1997, a $2.5 million increase from the $88.6 million reported at September 30, 1997. The increase in deposits was primarily the result of the Company transferring funds from advances from borrowers for taxes and insurance and custodial accounts for escrow balances on loans sold into a temporary account designated to pay year end property taxes for its loan customers. The balance in the account, approximately $2.0 million, was, subsequent to December 31, 1997, withdrawn as payments to various taxing entities were made on behalf of loan customers. The Company's average deposit cost was approximately 4.91% at December 31, 1997, unchanged from the 4.91% reported at September 30, 1997. The Company reported $7.5 million in borrowed funds at December 31, 1997, an increase of $3.3 million from the $4.2 million reported at September 30, 1997. Approximately $6.0 million of the borrowed funds were associated with the Company's investment in mortgage-backed securities available-for-sale. The advance had a remaining term of less than 30 days and had an interest rate of 5.61%. The remaining $1.5 million in advances were associated with the Company's commercial real estate loan portfolio and had a weighted average cost of approximately 6.09%. Stockholders' equity totaled $21.0 million at December 31, 1997, an increase of $102,000 from the $20.9 million reported at September 30, 1997. The increase was primarily attributable to the net income of $144,000 reported for the quarter and a $29,000 increase in deferred compensation RRP shares. The increase was partially offset by a $20,000 decline in net unrealized gains on securities available-for-sale and $51,000 in cash dividends paid during the quarter . At December 31, 1997, the Company reported a book value per share of $20.44 based on 1,026,366 outstanding shares. The Company did not repurchase any treasury stock during the quarter ended December 31, 1997 and reported 230,021 shares of treasury stock at an average cost of $16.22 per share at quarter end. RESULTS OF OPERATIONS The Company's net income is dependent primarily upon net interest income, the difference or spread between the average yield earned on loans and investments and the average rate paid on deposits, as well as the relative amounts of such assets and liabilities. The Company, like other financial intermediaries, is subject to interest rate risk to the degree that its interest-bearing liabilities mature or reprice at different times, or on a different basis, than its interest earning assets. COMPARISON OF THE THREE MONTHS ENDED DECEMBER 31, 1997 AND DECEMBER 31, 1996 General. Net income for the three months ended December 31, 1997 was $144,000 or $.15 per share, a decrease of $39,000 from the $ 183,000 or $.18 per share reported for the three months ended December 31, 1996. The decrease in net income was attributable to a $22,000 decline in net interest income after provision for loan losses and a $45,000 increase in total non-interest expenses, which were partially offset by a $28,000 decline in income tax expenses. Net Interest Income. For the quarter ended December 31, 1997, net interest income after provision for loan losses totaled $844,000, a decrease of $22,000 from the $866,000 reported for the quarter ended December 31, 1996. On an annualized basis, the $843,000 in net interest income for the current quarter was approximately 2.95% of average interest earning assets and 2.86% of average total assets. For the quarter ended December 31, 1996, the $866,000 in reported net interest income was approximately 3.10% of average interest earning assets and 3.04% of average total assets. Average interest earning assets were approximately $114.4 million for the quarter ended December 31, 1997, compared to $111.7 million for the quarter ended December 31, 1996. The decline in net interest income, despite the fact that average interest earning assets increased, was primarily attributable to the continued decline in the general level of interest rates and the narrowing of the difference in short term and long term rates. Cash flow from the Company's interest earning assets has increased over the past several quarters as mortgage borrowers, both local and those associated with the Company's mortgage-backed securities portfolios, have elected to refinance their mortgages. In addition, scheduled maturities of the investment securities held-to-maturity portfolio have also provided additional challenges for reinvesting cash flow in a falling interest rate environment. The result has been, despite growth in interest earning assets, a yield on the Company's average interest earning assets that remained unchanged at 7.09% for the quarters ended December 31, 1997 and 1996. Contrarily, interest rates on the Company's primary source of funds, certificates of deposit, have not decreased as interest rates have fallen. Continued competition for deposits in the Company's market have compelled the Company to continue to pay higher interest rates in order to maintain current deposit levels. On an annualized basis, the $1.2 million in total interest expense, reported for the quarter ended December 31, 1997, was approximately 4.95% of average interest costing liabilities outstanding for the quarter. For the quarter ended December 31, 1996, the $1.1 million in total interest expense was approximately 4.83% of average interest costing liabilities. Total interest income was $2.0 million for the quarter ended December 31, 1997, unchanged from the $2.0 million reported for the same quarter in 1996. Interest income on loans receivable totaled $1.2 million or 7.94% of average loans receivable balances outstanding for the quarter, compared to 8.04% of average loans receivable balances for the $988,000 in interest income on loans receivable reported for the quarter ended December 31, 1996. During the quarter ended December 31, 1997, the Company continued its plan to place into portfolio mortgage loans with original maturities of less than or equal to 15 years and with interest rates of greater than or equal to 7.00%. As a result, the Company has been able to increase its loan receivable portfolio and increase interest income from loans receivable, despite the decline in the average yield on the portfolio. For the quarter ended December 31, 1997, the Company originated $8.1 million in loans. Approximately $1.6 million were sold into the secondary market while the remainder were placed into portfolio. Interest income from investment securities available-for sale totaled $64,000 for the three months ended December 31, 1997, compared to none for the three months ended December 31, 1996. Interest income from this portfolio is part of the Company's plan to borrow funds from the FHLB and invest in mortgage-related securities in an effort to achieve a margin on the difference in the investment yield and the cost of the borrowings from the FHLB. The yield on the portfolio was approximately 6.31% at December 31, 1997. Interest income from the investment securities held-to-maturity and overnight funds portfolios totaled $486,000 for the three months ended December 31, 1997, compared to $571,000 for the same quarter in 1996. The decline was primarily the result of a $4.2 million decrease in average balances outstanding in the portfolios from $36.5 million for the three months ended December 31, 1996 to $32.3 million for the three months ended December 31, 1997. During the past several quarters, maturing investment securities have been redirected to the Company's lending operations. Additionally, maturing investment securities that are replaced are at lower yields. The average yield on the portfolio was approximately 6.02% for the quarter ended December 31, 1997, compared to 6.24% for the three months ended December 31, 1996. Interest income from the mortgage-backed securities held-to-maturity portfolio totaled $315,000 for the three months ended December 31, 1997, compared to $421,000 for the same period in 1996. Continued prepayments on the adjustable rate securities in the portfolio caused the balance to decline to $16.3 million at December 31, 1997 from $23.3 million at December 31, 1996. The Company redirected the cash flow from the portfolio into its lending operations. Interest paid to depositors totaled $1.1 million for the three months ended December 31, 1997, unchanged from the $1.1 million for the three months ended December 31, 1996. Average deposit balances declined $2.0 million from $91.8 million at December 31, 1996 to $89.8 million at December 31, 1997. Interest on FHLB advances was $62,000 for the three months ended December 31, 1997, compared to none for the same period in 1996. Total interest expense as a percentage of average interest-costing liabilities was approximately 4.95% for the three months ended December 31, 1997, compared to 4.83% for the three months ended December 31, 1996. Provision For Loan Losses. The Company made no provision for loan losses for the quarter ended December 31, 1997, compared to $5,000 for the quarter ended December 31, 1996. (See - "Asset Quality") Non-Interest Income. Non-interest income totaled $77,000 for the three months ended December 31, 1997, unchanged from the $77,000 reported for the same period in 1996. Gains on sales of interest-earning assets equaled $21,000 for the current quarter, an $8,000 increase from the $13,000 reported for the same quarter in 1996. The increase was attributable to additional gains on the sale of mortgage loans into the secondary market during the quarter ended December 31, 1997, compared to the same quarter in 1996. In addition, loan origination fees increased $6,000 to $23,000 for the three months ended December 31, 1997 from $17,000 for the three months ended December 31, 1996. The increase was attributable to the increase lending activity for the quarter ended December 31, 1997 compared to the same quarter in 1996. Offsetting the increases in gains on sales of loans and loan fee income was a $9,000 decline in loan servicing fee income to $22,000 for the current quarter, compared to $32,000 for the quarter ended December 31, 1996. The decline was the result, as borrowers paid of or refinanced their mortgages, of a continued decrease of older loans in the Company's servicing portfolio with higher servicing margins. In addition, the Company's decision to retain its fifteen year loans and a borrower preference for such loans, has resulted in fewer sold loans and therefore fewer additions to the loan servicing portfolio. Non-Interest Expenses. Non-interest expenses totaled $694,000 for the three months ended December 31, 1997, compared to $650,000 for the three months ended December 31, 1996. The increase in non-interest expense was primarily the result of a $65,000 increase in compensation and benefits expense from $428,000 for the three months ended December 31, 1996 to $492,000 for the three months ended December 31, 1997. The increase in compensation and benefits expense was mostly the result of additional compensation for two new employees added in 1997 in conjunction with the opening of a new loan production office by the Company and the addition of a loan officer in one of its full service locations. Also, additional expenses associated with the funding of the Company's defined benefit pension plan and additional expenses associated with the Company's Employee Stock Ownership Plan accounted for a portion of the increase. Occupancy and equipment expense increased $14,000 from $34,000 for the three months ended December 31, 1996 to $48,000 for the three months ended December 31, 1997. The increase was also attributable to additional expenses associated with the opening of a new loan production office in 1997. Offsetting the increases in compensation and benefits and occupancy and equipment expenses was a $34,000 decrease in SAIF deposit insurance premium expense. The decrease was a result of reduced SAIF insurance premium rates once the fund attained its minimum required level after the one-time special assessment paid by all institutions in 1996. Provision For Income Taxes. The Company incurred federal income tax expense of $82,000 or 36.3% or pre-tax income for the three months ended December 31, 1997, compared to $110,000 or 37.6% of pre-tax income for the three months ended December 31, 1996. ASSET QUALITY At December 31, 1997, the Company's non-performing assets totaled $399,000 or .33% of total assets, compared to $310,000 or .27% of total assets at September 30, 1997. The increase was primarily the result of the addition of one single family residence. At December 31, 1997, non-performing assets was comprised of seventeen (17) loans, the largest of which was $204,000, secured by a single family dwellings. Non-performing loans at December 31, 1997, equaled $399,000 or .66% of loans receivable, compared to $310,000 or .54% of loans receivable at September 30, 1997. Classified assets totaled $819,000 or .68% of total assets at December 31, 1997, compared to $904,000 or .78% of total assets at September 30, 1997. Classified assets and non-performing assets differ in that classified assets may include loans less than ninety (90) days delinquent. Also, assets guaranteed by government agencies such as the Veterans Administration and the Federal Housing Administration are not included in classified assets but are included in non-performing assets. All classified assets at December 31, 1997, were deemed to be "substandard". No assets were classified "doubtful" or "loss" as of such date. The Company's allowance for loan losses totaled $273,0000 at December 31, 1997, unchanged from September 30, 1997. The allowance for loan losses as a percentage of loans receivable equaled .45% at December 31, 1997, compared to .48% at September 30, 1997. LIQUIDITY AND CAPITAL RESOURCES The Company's principal sources of funds are deposits from customers, advances from the FHLB, amortization and prepayment of loan principal (including mortgage-backed securities), maturities of securities, sales of loans and operations. Current Office of Thrift Supervision regulations require the Association to maintain, at a minimum, cash and eligible investments, in an amount of not less than 4.0% of net withdrawable savings accounts and borrowings payable on demand or in one year or less. Liquid assets include cash on hand, unpledged demand deposits, certain time deposits, and, U. S Government and agency obligations. The Association maintains a liquid asset ratio above the minimum required level of the Office of Thrift Supervision. At December 31, 1997, the Association's liquid asset ratio equaled 42.2%. The Association uses its liquidity and capital resources principally to meet ongoing commitments to fund maturing certificates of deposit and loan commitments, maintain liquidity and pay operating expenses. At December 31, 1997, the Association had outstanding commitments to extend credit on $2.8 million of real estate loans. Management believes that present levels of liquid assets are sufficient to meet anticipated future loan commitments as well as deposit withdrawal demands. Total stockholders' equity equaled $21.0 million at December 31, 1997, an increase of $102,000 from the $20.9 million reported at September 30, 1997. The increase was primarily the result of the $144,000 net income reported for the quarter ended December 31, 1997, less a $51,000 cash dividend paid during the quarter. As of December 31, 1997, the Company's reported book value per share, using total stockholders' equity of $21.0 million (net of the cost of unallocated ESOP and RRP shares) and 1,026,366 outstanding shares of common stock (the total issued shares including unallocated ESOP and RRP shares, less treasury shares), equaled $20.44 per share. Subsequent to the quarter ended December 31, 1997, the Company announced its intention to pay a cash dividend of $.05 per share on February 25, 1998, to stockholders of record at February 11, 1998. Under the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), Congress imposed a three part capital requirement for thrift institutions. At December 31, 1997, the Association's actual and required capital amounts under each of the three requirements were as follows: - - Tangible Capital (stockholders' equity) was $17.8 million or 14.8% of total assets, exceeding the minimum requirement of 1.5% by $16.0 million. - - Core Capital (Tangible capital plus certain intangible assets) was $17.8 million or 14.8% of total assets, exceeding the minimum requirement of 3.0% by $14.2 million. - - Risk-based Capital (Core capital plus general loan and valuation allowances less an adjustment for capitalized mortgage servicing rights) equaled $18.1 million of 38.9% of risk weighted assets, exceeding the minimum requirement of 8.0% of risk weighted assets by $14.4 million. At December 31, 1997, the Association was considered a "well capitalized" institution under the prompt corrective action requirements of the Federal Deposit Insurance Corporation Improvement Act of 1991. EAST TEXAS FINANCIAL SERVICES, INC. AND SUBSIDIARY FORM 10-QSB DECEMBER 31, 1997 PART II - OTHER INFORMATION Item 1. Legal Proceedings There are no material legal proceedings to which the Company or the Association is a party or of which any of their property is subject. From time-to-time, the Association is a party to various legal proceedings incident to the conduct of its business. Item 2. Changes In Securities None Item 3. Defaults Upon Senior Securities None Item 4. Submissions Of Matters To A Vote Of Security Holders On January 21, 1998, the Company's Annual Stockholders' Meeting was held to elect directors and ratify the appointment of independent auditors for the current fiscal year. The following are the voting results of each of these matters submitted to stockholders: The election of Gerald W. Free, For 848,244 Jim M. Vaughn, M.D., and H. H. Richardson, Jr. Against 0 As directors for a three year term ending Abstain 2,612 January 2001. Broker Non-Votes 0 Ratification of the appointment of Bryant For 848,244 And Welborn, LLP, as independent Against 0 Auditors for the fiscal year ending Abstain 2,612 September 30, 1998. The text of the matters referred to in this Item 4 is set forth in the Proxy Statement dated December 23, 1997, previously filed with the Securities and Exchange Commission. Item 5. Other Information. None Item 6. Exhibits and Reports on Form 8-K (a) The following exhibits are filed herewith: Exhibit 11.0 - Computation of Earnings Per Share Exhibit 27.0 - Financial Data Schedule (b) Reports on Form 8-K During the quarter ended December 31, 1997, the Company filed a report on Form 8-K on October 28, 1997, to report the issuance of a press release dated October 28, 1997, announcing the Company's intention to pay, on November 26, 1997, a cash dividend of $.05 per share for the quarter ended Septemer 30, 1997, to stockholders of record on November 2, 1997. During the quarter ended December 31, 1997, the Company filed a report on Form 8-K on December 1, 1997, to report the issuance of a press release dated December 1, 1997, announcing the Company's earnings for the year ended September 30, 1997. SIGNATURES Pursuant to the requirement of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. East Texas Financial Services, Inc. Date: February 9, 1998 /s/ Gerald W. Free ------------------ Vice Chairman, President and CEO (Principal Executive Officer) Date: February 9, 1998 /s/ Derrell W. Chapman ----------------------- Vice President/COO/CFO (Principal Financial and Accounting Officer) EX-11 2 COMPUTATIONS OF EARNINGS PER SHARE Three Months Ended December 31, 1997 Less Total Shares Unallocated Shares Used For Outstanding ESOP Shares EPS Calculation ----------- ----------- --------------- September 30, 1997 1,026,366 65,062 961,304 October 31, 1997 1,026,366 65,062 961,304 November 30, 1997 1,026,366 65,062 961,304 December 31, 1997 1,026,366 65,062 961,304 Weighted average number of shares outstanding for the quarter ended December 31, 1997, for earnings per share calculation 961,304 Stock options outstanding at December 31, 1997: 100,276 ------- Exercise price of stock options: $14.125 per share ----------------- Average stock price for three month period: $20.906 -------
Three Months Ended December 31, ----------- ----------- Basic Earnings Per Share 1997 1996 ----------- ----------- Income available to common stockholders .. $ 144,304 $ 183,230 =========== =========== Weighted average number of common shares outstanding for basic EPS calculation . 961,304 1,002,964 =========== =========== Basic Earnings Per Share .... $ .15 $ .18 =========== =========== Diluted Earnings Per Share Income available to common stockholders .. $ 144,304 $ 183,230 =========== =========== Weighted average number of common shares outstanding for basic EPS calculation . 961,304 1,002,964 Weighted average common shares issued under stock option plans .............. 100,276 101,321 Less weighted average shares assumed repurchased with proceeds ............. (67,751) (91,229) ----------- ----------- Weighted average number of common shares outstanding for diluted EPS calculation 993,829 1,013,056 =========== =========== Diluted Earnings Per Share ...... $ .15 $ .18 =========== ===========
EX-27 3
9 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONSOLIDATED FINANCIAL STATEMENTS OF EAST TEXAS FINANCIAL SERVICES, INC., AT DECEMBER 31, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 3-MOS SEP-30-1998 DEC-31-1997 586,802 4,012,628 2,671,416 0 6,029,082 42,380,963 42,940,031 60,522,314 272,851 120,093,053 91,056,096 6,142,000 1,380,000 0 0 0 12,564 20,968,412 120,093,053 1,164,138 865,172 0 2,029,310 1,123,670 1,185,843 843,467 0 0 694,169 226,713 144,304 0 0 144,304 0.15 0.15 7.09 142,462 0 0 200,582 272,851 0 0 272,851 84,043 0 188,808
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