- Quarterly Report (10-Q)

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C.  20549

FORM 10-Q

(Mark One)

x	QUARTERLY REPORT  PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

OR

o	TRANSITION  REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ____________ to _______________

 

Commission File Number:

0-27916

 

(Exact name of registrant as specified in its charter)

 

Ohio		38-1821148
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

321 North Wooster Avenue, Dover, Ohio  44622

(Address of principal executive offices) (Zip Code)

(330)  364-7777

(Registrant’s telephone number, including area code)

 

 

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.

Yes x                       No   o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes x                       No   o

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer o	Accelerated filer o
Non-accelerated filer o (Do not check if a smaller reporting company)	Smaller reporting company x

                                                                                                                                                                                

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes o                       No   x

 

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: May 14, 2012 – 1,016,096 common shares, no par value  

 

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FFD Financial Corporation

CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION

(In thousands, except share data)

		March 31,				June 30,
ASSETS		2012				2011
		(Unaudited)
Cash and due from financial institutions		$	1,141			$	1,352
Interest-bearing deposits in other financial institutions, including overnight deposits			22,190				14,944
Cash and cash equivalents			23,331				16,296
Investment securities available for sale			2				6,021
Mortgage-backed securities available for sale			10,469				6,257
Mortgage-backed securities held to maturity, fair value of $41 at March 31, 2012 and $51 at June 30, 2011			41				51
Loans receivable – net of allowance of $2,214 and $2,174			193,537				182,226
Loans held for sale			764				-
Premises and equipment, net			3,947				3,910
Federal Home Loan Bank of Cincinnati stock, at cost			2,422				2,422
Loan servicing rights			667				732
Accrued interest receivable			559				515
Prepaid expenses and other assets			1,504				1,106
Total assets		$	237,243			$	219,536
LIABILITIES AND SHAREHOLDERS’ EQUITY
Deposits
Non-interest bearing		$	17,857			$	15,746
Interest bearing			184,264				169,297
Total deposits			202,121				185,043
Federal Home Loan Bank advances			12,428				13,137
Other borrowed funds			566				630
Accrued interest payable			102				118
Accrued and deferred federal income tax			402				62
Other liabilities			1,821				1,575
Total liabilities			217,440				200,565
Shareholders’ equity
Preferred stock - authorized 1,000,000 shares without par value; no shares issued			-				-
Common stock - authorized 5,000,000 shares without par or stated value; 1,454,750 shares issued			-				-
Additional paid-in capital			8,340				8,334
Retained earnings			17,409				16,686
Accumulated comprehensive income, net			99				35
Treasury stock, at cost (438,654 and 443,154 treasury shares at March 31, 2012 and June 30, 2011, respectively)			(6,045	)			(6,084	)
Total shareholders’ equity			19,803				18,971
Total liabilities and shareholders’ equity		$	237,243			$	219,536

 

The accompanying notes are an integral part of these statements.

 

 

FFD Financial Corporation

CONSOLIDATED STATEMENTS OF EAR NINGS

 (In thousands, except per share data)

(Unaudited)

		For the three months								For the nine months
		ended March 31,								ended March 31,
		2012				2011				2012				2011
Interest income
Loans, including fees		$	2,569			$	2,509			$	7,716			$	7,736
Mortgage-backed securities			44				1				125				7
Investment securities			2				35				38				132
Interest-bearing deposits and other			35				30				93				87
			2,650				2,575				7,972				7,962
Interest expense
Deposits			497				542				1,538				1,846
Borrowings			124				148				383				454
			621				690				1,921				2,300
Net interest income			2,029				1,885				6,051				5,662
Provision for losses on loans			150				120				556				652
Net interest income after provision for losses on loans			1,879				1,765				5,495				5,010
Noninterest income
Net gain on sale of loans			225				56				646				591
Mortgage servicing revenue (loss)			(49	)			47				(109	)			(18	)
Service charges on deposit accounts			125				84				335				264
Other			54				27				111				85
			355				214				983				922
Noninterest expense
Employee and director compensation and benefits			706				669				2,055				1,938
Occupancy and equipment			169				124				477				412
Franchise taxes			63				61				184				185
FDIC Insurance Premiums			22				76				65				200
Data processing			105				109				303				289
ATM processing			50				36				130				108
Professional and consulting fees			97				72				273				207
Postage and stationery supplies			37				32				117				117
Advertising			64				40				187				130
Checking account maintenance expense			47				50				150				159
Other			237				182				649				546
			1,597				1,451				4,590				4,291
Income before income taxes			637				528				1,888				1,641
Income tax expense			218				180				647				562
Net Income		$	419			$	348			$	1,241			$	1,079
Earnings per share
Basic		$	.41			$	.34			$	1.22			$	1.07
Diluted		$	.41			$	.34			$	1.22			$	1.06
Dividends declared per share		$	.17			$	.17			$	.51			$	.51

 

 

 

FFD Financial Corporation

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 (In thousands)

(Unaudited)

 

		For the three months								For the nine months
		ended March 31,								ended March 31,
		2012				2011				2012				2011
Net income		$	419			$	348			$	1,241			$	1,079
Other comprehensive income (loss), net of related tax effects:
Unrealized holding gains (losses) on securities during the period, net of taxes (benefits) of $13, $(8), $34 and $(76), during the respective periods			25				(16	)			64				(147	)
Comprehensive income		$	444			$	332			$	1,305			$	932

 

FFD Financial Corporation

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

For the nine months ended March 31, 2012 and 2011

(In thousands)

(Unaudited)

		2012				2011
Cash flows from operating activities:
Net cash provided from (used by) operating activities		$	(1,396	)		$	6,680
Cash flows from investing activities:
Purchase of investment securities available for sale			(4,991	)			(8,000	)
Proceeds from maturities/calls of investment securities available for sale			6,000				6,000
Principal repayments on mortgage-backed securities			1,047				18
Loan originations and payments, net			(10,536	)			(2,376	)
Proceeds from participation loan sales to other financial institutions			1,333				-
Additions to premises and equipment			(254	)			(107	)
Proceeds from the sale of real estate owned			-				18
Net cash provided from investing activities			(7,401	)			(4,447	)
Cash flows financing activities:
Net change in deposits			17,078				5,094
Repayments of Federal Home Loan Bank advances			(709	)			(399	)
Net change in other borrowed funds			(64	)			-
Proceeds from exercise of stock options			45				6
Cash dividends paid			(518	)			(516	)
Net cash provided from financing activities			15,832				4,185
Net change in cash and cash equivalents			7,035				6,418
Beginning cash and cash equivalents			16,296				9,034
Ending cash and cash equivalents		$	23,331			$	15,452
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes		$	340			$	650
Supplemental noncash disclosures:
Transfer from loans to repossessed assets		$	-			$	404
Interest paid		$	1,937			$	2,326

 

 

 

FFD Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL ST ATEMENTS

For the three-and nine-month periods ended March 31, 2012 and 2011

 

1.	Basis of Presentation

The accompanying unaudited consolidated financial statements were prepared in accordance with the instructions for Form 10-Q and, therefore, do not include information or footnotes necessary for a complete presentation of financial position, results of operations and cash flows in conformity with United States generally accepted accounting principles.  Accordingly, these financial statements should be read in conjunction with the Consolidated Financial Statements and Notes thereto of FFD Financial Corporation (the “Corporation”) included in the Corporation’s Annual Report on Form 10-K for the year ended June 30, 2011.  However, in the opinion of management, all adjustments (consisting of only normal recurring accruals) which are necessary for a fair presentation of the financial statements have been included.  The results of operations for the three- and nine-month periods ended March 31, 2012, are not necessarily indicative of the results which may be expected for the entire fiscal year.

2.	Principles of Consolidation

The accompanying consolidated financial statements include the accounts of the Corporation and First Federal Community Bank (the “Bank).  All significant intercompany items have been eliminated.

3.	Earnings Per Share

Basic earnings per share is computed based upon the weighted-average common shares outstanding during the period.  Diluted earnings per common share includes the dilutive effect of additional common shares issuable under the Corporation’s stock option plans.  Stock options for 3,500 shares were not considered in computing diluted earnings per share for each of the three and nine months ended March 31, 2012 and 2011 because they were antidilutive.  The computations are as follows:

		For the three months ended								For the nine months ended
		March 31,								March 31,
		2012				2011				2012				2011
Weighted-average common shares outstanding (basic)			1,016,096				1,011,596				1,015,769				1,011,544
Dilutive effect of assumed exercise of stock options			2,066				2,978				2,070				2,718
Weighted-average common shares outstanding (diluted)			1,018,162				1,014,574				1,017,839				1,014,262

4.	Stock Option Plan

The FFD Financial Corporation 1996 Stock Option and Incentive Plan (the “Plan”) expired as to new awards in October of 2006.  Options granted prior to expiration remain exercisable for ten years from the grant date, unless terminated in accordance with the Plan or the applicable award agreement.  In addition, the Corporation has an option plan in which only one director participates.  The director-only plan was adopted in 2002 to permit an option issuance to a new director because the terms of the Plan at the time limited the aggregate number of options available for awards to directors.

 

FFD Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the three-and nine-month periods ended March 31, 2012 and 2011

4.	Stock Option Plan (continued)

A summary of the activity in the Plan for the nine months ended March 31, 2012 follows:

		Shares				Weighted average exercise price			Weighted average remaining contractual term		Aggregate intrinsic value
Outstanding at beginning of period			18,820			$	11.68
Granted			-				-
Exercised			(4,500	)			10.1
Forfeited or expired			-				-
Outstanding at end of period			14,320			$	12.18		1.0 yrs		$	57,539
Exercisable at end of period			14,320			$	12.18		1.0 yrs		$	57,539
Options available for grant			-

 

Information related to the Plan during the nine months ended March 31, 2012 and 2011 follows:

		2012				2011
Intrinsic value of options exercised		$	23,850			$	4,406
Cash received from options exercised			45,450				6,281
Tax benefit from options exercised			-				-

 

FFD Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the three-and nine-month periods ended March 31, 2012 and 2011

 

5.

Loans

 

Loans at period end and year end were as follows:

 

		March 31,				June 30,
		2012				2011
		(in thousands)
Residential real estate
One- to four-family		$	74,644			$	69,689
Multi-family			7,598				6,961
Nonresidential real estate and land			87,162				81,955
Commercial loans – secured			25,153				22,637
Commercial loans – unsecured			215				132
Consumer and other loans			5,144				6,086
			199,916				187,460
Net deferred loan origination costs			291				293
Undisbursed portion of loans in process			(4,456	)			(3,353	)
Allowance for loan losses			(2,214	)			(2,174	)
Loans, net		$	193,537			$	182,226

Activity in the allowance for loan losses was as follows:

The following table presents the activity in the allowance for loan losses by portfolio segment for the nine months ended

March 31, 2012.

 

		Residential real estate				Nonresidential real estate and land				Commercial secured and unsecured				Consumer and other				Total
		(in thousands)
Allowance for loan losses:
Beginning balance		$	935			$	861			$	268			$	110				2,174
Provision for loan losses			265				214				70				7				556
Loans charged-off			(298	)			(195	)			(21	)			(3	)			(517	)
Recoveries			-				-				-				1				1
Ending balance		$	902			$	880			$	317			$	115				2,214

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ended March 31, 2012.

		Residential real estate				Nonresidential real estate and land				Commercial secured and unsecured				Consumer and other				Total
		(in thousands)
Allowance for loan losses:
Beginning balance		$	856			$	866			$	294			$	114				2,130
Provision for loan losses			46				60				44				-				150
Loans charged-off			-				(46	)			(21	)			-				(67	)
Recoveries			-				-				-				1				1
Ending balance		$	902			$	880			$	317			$	115				2,214

 

 

FFD Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the three-and nine-month periods ended March 31, 2012 and 2011

5.	Loans (continued)

The following table presents the activity in the allowance for loan losses by portfolio segment for the three months ending March 31, 2011.

 

		Consumer and other				Commercial secured and unsecured				Nonresidential real estate and land				Residential real estate				Unallocated				Total
		(in thousands)
Allowance for loan losses:
Beginning balance		$	289			$	359				1,293			$	490			$	-				2,431
Provision for loan losses			15				17				65				23				-				120
Loans charged-off			(2	)			-				(51	)			(26	)			-				(79	)
Recoveries			1				-				-				-				-				1
Ending balance		$	303			$	376				1,307			$	487			$	-				2,473

		Nine months ended
		March 31,
		2012				2011
		(in thousands)
Beginning balance		$	2,174			$	1,993
Provision for loan losses			556				652
Loans charged-off			(517	)			(174	)
Recoveries			1				2
Ending balance		$	2,214			$	2,473

 

The following tables present, based on the impairment method, the balance in the allowance for loan losses and loan balances by portfolio segment as of March 31, 2012 and June 30, 2011:

		Residential real estate				Nonresidential real estate and land				Commercial secured and unsecured				Consumer and other				Total
March 31, 2012		(in thousands)
Allowance for loan losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment		$	186			$	65			$	45			$	-			$	296
Collectively evaluated for impairment			716				815				272				115				1,918
Total ending allowance balance		$	902			$	880			$	317			$	115			$	2,214
Loans
Loans individually evaluated for impairment		$	1,518			$	946			$	89			$	-			$	2,553
Loans collectively evaluated for impairment			79,971				86,080				21,966				5,181				193,198
Total ending loan balance		$	81,489			$	87,026			$	22,055				5,181			$	195,751

 

 

FFD Financial Corporation

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

For the three-and nine-month periods ended March 31, 2012 and 2011

5.	Loans (continued)

 

		Residential real estate				Nonresidential real estate and land				Commercial secured and unsecured				Consumer and other				Total
June 30, 2011		(in thousands)
Allowance for loan losses
Ending allowance balance attributable to loans:
Individually evaluated for impairment		$	323			$	222			$	23			$	-			$	568
Collectively evaluated for impairment			612				639				245				110				1,606
Total ending allowance balance		$	935			$	861			$	268			$	110				2,174
Loans
Loans individually evaluated for impairment		$	1,802			$	587			$	71			$	-			$	2,460
Loans collectively evaluated for impairment			74,707				79,211				21,897				6,125				181,940
Total ending loan balance		$	76,509			$	79,798				21,968			$	6,125			$	184,400