SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 2002
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 0-24648
FSF FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
Minnesota 41-1783064
(State or other jurisdiction of incorporation (IRS employer identification no.)
or organization)
201 Main Street South, Hutchinson, Minnesota 55350-2573
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (320) 234-4500
Former name, former address and former fiscal year,
if changed since last report.
Indicate by check 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
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicated the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date July 31, 2002.
-------------
Class Outstanding
- ----- -----------
$.10 par value common stock 2,299,514 shares
FSF FINANCIAL CORP. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED JUNE 30, 2002
INDEX
Page
Number
------
PART I - CONSOLIDATED FINANCIAL INFORMATION
Item 1. Financial Statements 1
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk 17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 18
Item 2. Changes in Securities 18
Item 3. Defaults Upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Item 5. Other Materially Important Events 18
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 19
FSF FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
At At
June 30, September 30,
2002 2001
----------------------
(in thousands, except share data)
ASSETS
------
Cash and cash equivalents $ 14,870 $ 12,594
Securities available for sale, at fair value
Equity securities 17,959 17,946
Mortgage-backed and related securities 29,252 27,481
Debt securities - 3,055
Securities held to maturity, at amortized cost:
Debt securities (fair value of $12,664 and $12,490) 12,440 12,420
Mortgage-backed and related securities (fair value of $21,879 and $25,586) 21,823 25,731
Loans held for sale 16,875 12,082
Loans receivable, net 373,988 340,484
Foreclosed real estate 274 126
Accrued interest receivable 4,169 4,777
Premises and equipment 6,134 5,439
Goodwill 4,522 2,595
Core deposit intangible 658 -
Other assets 9,020 8,901
----------------------
$ 511,984 $ 473,631
======================
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities:
Demand deposits $ 62,845 $ 40,721
Savings accounts 90,211 93,428
Certificates of deposit 210,695 178,392
----------------------
Total deposits 363,751 312,541
Federal Home Loan Bank borrowings 98,000 113,500
Advances from borrowers for taxes and insurance 279 497
Other liabilities 5,641 5,152
----------------------
Total liabilities
467,671 431,690
----------------------
Stockholders' equity:
Serial preferred stock, no par value 5,000,000 shares
authorized, no shares issued - -
Common stock, $.10 par value 10,000,000 shares authorized,
4,501,277 and 4,501,277 shares issued 450 450
Additional paid in capital 43,079 43,184
Retained earnings, substantially restricted 34,052 31,355
Treasury stock at cost (2,201,763 and 2,194,803 shares) (31,660) (31,146)
Unearned ESOP shares at cost (63,357 and 90,863 shares) (633) (909)
Unearned MSP stock grants at cost (42,564 and 42,564 shares) (453) (453)
Accumulated comprehensive loss (522) (540)
----------------------
Total stockholders' equity 44,313 41,941
----------------------
Total liabilities and stockholders' equity $ 511,984 $ 473,631
======================
See Notes to Unaudited Consolidated Financial Statements
1
FSF FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
AND COMPREHENSIVE INCOME
Three Months Nine Months
Ended June 30, Ended June 30,
----------------- -----------------
2002 2001 2002 2001
----------------- -----------------
(in thousands, except per share data)
Interest income:
Loans receivable $ 7,698 $ 7,499 $23,331 $23,111
Mortgage-backed and related securities 641 567 1,851 1,754
Investment securities 338 416 1,032 1,868
----------------- -----------------
Total interest income 8,677 8,482 26,214 26,733
Interest expense:
Deposits 2,710 3,536 8,820 11,489
Borrowed funds 1,379 1,650 4,378 5,369
----------------- -----------------
Total interest expense 4,089 5,186 13,198 16,858
----------------- -----------------
Net interest income 4,588 3,296 13,016 9,875
Provision for loan losses 203 90 628 885
----------------- -----------------
Net interest income after provision for loan losses 4,385 3,206 12,388 8,990
----------------- -----------------
Non-interest income:
Gain on sale of loans, net 887 769 3,097 1,716
Other service charges and fees 344 309 1,006 675
Service charges on deposit accounts 444 403 1,297 1,164
Commission income 281 283 809 792
Other 101 105 310 322
----------------- -----------------
Total non-interest income 2,057 1,869 6,519 4,669
----------------- -----------------
Non-interest expense:
Compensation and benefits 2,363 1,874 6,989 5,626
Occupancy and equipment 374 377 1,096 1,140
Deposit insurance premiums 16 14 45 42
Data processing 241 190 665 561
Professional fees 157 110 354 311
Other 972 612 2,637 1,755
----------------- -----------------
Total non-interest expense 4,123 3,177 11,786 9,435
----------------- -----------------
Income before provision for income taxes 2,319 1,898 7,121 4,224
Income tax expense 893 748 2,790 1,640
----------------- -----------------
Net income $ 1,426 $ 1,150 $ 4,331 $ 2,584
================= =================
Basic earnings per share $ 0.65 $ 0.52 $ 1.99 $ 1.16
Diluted earnings per share $ 0.61 $ 0.50 $ 1.89 $ 1.11
Cash dividend declared per common share $ 0.25 $ 0.15 $ 0.75 $ 0.45
Comprehensive income $ 1,641 $ 1,584 $ 4,349 $ 3,593
================= =================
See Notes to Unaudited Consolidated Financial Statements
2
FSF FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
Three Months Nine Months
Ended June 30, Ended June 30,
---------------------- ----------------------
2002 2001 2002 2001
---------------------- ----------------------
(in thousands)
Cash flows from operating activities:
Net income $ 1,426 $ 1,150 $ 4,331 $ 2,584
Adjustments to reconcile net income to net cash
provided by operating activities
Depreciation 186 161 524 467
Net amortization of discounts and premiums (44) (3) (144) (21)
Provision for loan losses 203 90 628 885
Net market value adjustment on ESOP shares 45 24 121 83
Amortization of ESOP and MSP stock compensation
and stock options 114 112 371 300
Amortization of intangibles 125 27 323 86
Net loan fees deferred and amortized 163 (4) 102 (81)
Loans originated for sale (37,164) (37,166) (158,352) (95,864)
Loans sold 37,736 38,897 153,559 88,178
Net gain on sale of assets - - - (33)
(Increase) decrease in:
Accrued interest receivable (72) (135) 701 230
Other assets 51 25 5 (249)
Increase (decrease) in other liabilities 656 797 33 1,034
---------------------- ----------------------
Net cash provided by (used in) operating activities
3,425 3,975 2,202 (2,401)
---------------------- ----------------------
Cash flows from investing activities:
Loan originations and principal payments on loans, net (3,216) 9,738 11,503 30,055
Purchase of loans (3,790) (9,193) (17,286) (22,253)
Principal payments on mortgage-related securities held to maturity 780 305 3,919 540
Purchase of available for sale securities - (6,388) (2,992) (6,388)
Principal payments and proceeds from maturities of
securities available for sale 3,588 4,000 4,286 450
Proceeds from the sale of securities available for sale - - - 12,000
Proceeds from the maturities of securities held to maturity - 6,000 - 6,000
Purchase of ING branch, net of deposits assumed - - 17,589 -
Investment in foreclosed property - (2) (9) (3)
Proceeds from sale of REO - - - 231
Purchase of equipment and property improvements (139) (160) (446) (409)
---------------------- ----------------------
Net cash provided by (used in) investing activities $ (2,777) $ 4,300 $ 16,564 $ 20,223
---------------------- ----------------------
See Notes to Unaudited Consolidated Financial Statements
3
FSF FINANCIAL CORP. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
Three Months Nine Months
Ended June 30, Ended June 30,
-------------------- --------------------
2002 2001 2002 2001
-------------------- --------------------
(in thousands)
Cash flows from financing activities:
Net increase (decrease) in deposits $ (9,023) $ (4,330) $ 1,697 $ 2,404
FHLB advances - - 10,000 26,000
Payments on FHLB advances - (5,000) (25,500) (40,000)
Net decrease in mortgage escrow funds (164) (423) (218) (429)
Treasury stock purchased (679) (577) (1,435) (1,670)
Net proceeds from exercise of stock options 440 65 599 257
Dividends on common stock (550) (324) (1,633) (984)
-------------------- --------------------
Net cash (used in) financing activities (9,976) (10,589) (16,490) (14,422)
-------------------- --------------------
Net increase (decrease) in cash and cash equivalents (9,328) (2,314) 2,276 3,400
Cash and cash equivalents
Beginning of period 24,198 14,195 12,594 8,482
-------------------- --------------------
End of period $ 14,870 $ 11,881 $ 14,870 $ 11,882
==================== ====================
Supplemental disclosures of cash flow information: Cash payments for:
Interest on advances and other borrowed money $ 1,382 $ 1,650 $ 4,378 $ 5,368
Interest on deposits $ 2,576 $ 3,243 $ 9,101 $ 10,970
Income taxes $ 854 $ 515 $ 2,711 $ 1,705
See Notes to Unaudited Consolidated Financial Statements
4
FSF FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 2002
NOTE 1- PRINCIPLES OF CONSOLIDATION
The unaudited consolidated financial statements as of and for the three
and nine months ended June 30, 2002 include the accounts of FSF
Financial Corp. (the "Corporation") and its wholly owned subsidiaries,
Insurance Planners of Hutchinson, Inc. (the "Agency") and First Federal
fsb (the "Bank"), with its wholly owned subsidiaries, Firstate Services
and Homeowners Mortgage Corporation ("HMC"). All significant
inter-company accounts and transactions have been eliminated in
consolidation.
NOTE 2- BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements were
prepared in accordance with instructions for Form 10-Q and therefore,
do not include information or footnotes necessary for a complete
presentation of consolidated financial condition, results of operations
and cash flows in conformity with United States Generally Accepted
Accounting Principles ("GAAP"). However, all adjustments consisting of
normal recurring accruals, which in the opinion of management are
necessary for fair presentation of the consolidated financial
statements, have been included. The results of operations for the three
and nine month periods ended June 30, 2002 are not necessarily
indicative of the results which may be expected for the entire fiscal
year or any other future period. For further information, refer to the
consolidated financial statements and footnotes thereto included in the
Corporation's Annual Report of Form 10-K for the year ended September
30, 2001.
NOTE 3- BUSINESS SEGMENTS
The Corporation's wholly owned subsidiary, First Federal fsb and HMC, a
wholly owned subsidiary of the Bank, have been identified as reportable
operating segments in accordance with the provisions of SFAS No. 131.
HMC was deemed to be a segment because it is a separate corporation
that operates independently from the Bank. HMC's mortgage banking
activity includes an origination function and it also purchases loans
from other loan originators. All loans acquired either by origination
or by purchase are intended for resale in the secondary loan market.
Insurance Planners, Firstate Services and FSF Financial Corp., the
holding company, did not meet the quantitative thresholds for
determining reportable segments and therefore are included in the
"other" category. The segments follow generally accepted accounting
principles as described in the summary of significant accounting
policies. Each corporation is managed separately with its own president
who reports directly to their own respective board of directors.
Bank HMC Consolidated
Stand-alone Stand-alone Other Eliminations Total
--------------------------------------------------------------
As of and for the three months ended June 30, 2002
From operations:
Interest income from external sources $ 8,617 $ 59 $ 1 $ - $ 8,677
Non-interest income from external sources 1,353 515 189 - 2,057
Inter-segment interest income 43 - 8 (51) -
Interest expense 4,089 43 - (43) 4,089
Provisions for loan losses 203 - - - 203
Depreciation and amortization 262 39 9 - 310
Other non-interest expense 2,751 1,520 288 (744) 3,815
Income tax expense (benefit) 1,026 (109) (24) - 893
-------------------------------------------------------------
Net income $ 1,681 $ (183) $ 1,928 $ (2,000) $ 1,426
=============================================================
Bank HMC Consolidated
Stand-alone Stand-alone Other Eliminations Total
--------------------------------------------------------------
As of and for the three months ended June 30, 2001
From operations:
Interest income from external sources $ 8,391 $ 86 $ 5 $ - $ 8,482
Non-interest income from external sources 1,258 544 67 - 1,869
Inter-segment interest income 57 - 33 (90) -
Interest expense 5,187 65 - (66) 5,186
Provisions for loan losses 90 - - - 90
Depreciation and amortization 148 31 9 - 188
Other non-interest expense 2,515 1,137 305 (968) 2,989
Income tax expense (benefit) 682 75 (9) - 748
-------------------------------------------------------------
Net income $ 1,084 $ 87 $ 2,979 $ (3,000) $ 1,150
=============================================================
5
Bank HMC Consolidated
Stand-alone Stand-alone Other Eliminations Total
---------------------------------------------------------------
As of and for the nine months ended June 30, 2002
From operations:
Interest income from external sources $ 25,829 $ 375 $ 10 $ - $ 26,214
Non-interest income from external sources 3,813 2,137 569 - 6,519
Inter-segment interest income 230 - 29 (259) -
Interest expense 13,199 230 - (230) 13,199
Provisions for loan losses 628 - - - 628
Depreciation and amortization 713 107 27 - 847
Other non-interest expense 7,742 4,210 798 (1,811) 10,939
Income tax expense (benefit) 2,931 (75) (66) - 2,790
-------------------------------------------------------------
Net income $ 4,658 $ (179) $ 1,852 $ (2,000) $ 4,331
=============================================================
Total Assets $ 510,333 $ 8,312 $ 41,647 $(48,308) $ 511,984
=============================================================
Bank HMC Consolidated
Stand-alone Stand-alone Other Eliminations Total
-------------------------------------------------------------
As of and for the nine months ended June 30, 2001
From operations:
Interest income from external sources $ 26,519 $ 167 $ 47 $ - $ 26,733
Non-interest income from external sources 3,007 1,139 523 - 4,669
Inter-segment interest income 105 - 92 (197) -
Interest expense 16,866 105 - (113) 16,858
Provisions for loan losses 885 - - - 885
Depreciation and amortization 430 92 31 - 553
Other non-interest expense 7,035 1,971 904 (1,028) 8,882
Income tax expense (benefit) 1,681 (13) (27) - 1,641
-------------------------------------------------------------
Net income $ 2,734 $ (90) $ 2,940 $ (3,000) $ 2,584
=============================================================
Total Assets $ 455,176 $ 8,838 $ 41,041 $(47,502) $ 457,553
=============================================================
NOTE 4- EARNINGS PER SHARE
The earnings per share amounts are computed using the weighted average
number of shares outstanding during the periods presented. The weighted
average number of shares outstanding for basic and diluted earnings per
share computation for the quarter ended June 30, 2001 were 2,204,670
and 2,300,601, respectively. For the same period in 2002, the number of
shares outstanding for basic and diluted earnings per share computation
was 2,182,167 and 2,322,339, respectively. For the nine-month period
ended June 30, 2001, the weighted average number of shares outstanding
for basic and diluted earnings per share computation was 2,228,847 and
2,324,763, respectively. For the same period in 2002, the number of
shares outstanding for basic and diluted earnings per share was
2,172,290 and 2,291,896, respectively. The difference between the basic
and diluted earnings per share denominator is the effect of stock based
compensation plans.
NOTE 5- EFFECT OF NEW FINANCIAL ACCOUNTING STANDARDS
The Financial Accounting Standards Board (FASB) issued Financial
Accounting Standards Statement No. 141, Business Combinations and
Statement No. 142, Goodwill and Other Intangible Assets. Statement 141
requires that the purchase method of accounting be used for all
business combinations initiated after June 30, 2001. Statement 142
changes the accounting for goodwill from an amortization method to an
impairment-only approach. Thus, amortization of goodwill, including
goodwill recorded in past business combinations, will cease upon
adoption of the Statement. The Company must adopt Statement 142
effective for the fiscal year beginning October 1, 2002. Amortization
of goodwill for the three-month period ended June 30, 2002 and 2001 was
$80,000 and $23,000, respectively. Amortization of goodwill for the
nine-month period ended June 30, 2002 and 2001 was $187,000 and
$68,000, respectively.
6
NOTE 6- BRANCH ACQUISITION
On November 9, 2001, the Bank acquired the St. Cloud, Minnesota branch
facility of ING Bank, fsb. The purchase method transaction involved the
assumption of deposits and acquisitions of assets as follows (in
thousands):
Deposits assumed (at fair value) $ 50,083
========
Assets acquired:
Cash $ 17,589
Loans receivable 28,806
Premises and equipment 765
Other assets 14
Core deposit intangible 794
--------
Sub-total (at fair value) $ 47,968
--------
Cost of unidentifiable intangible asset resulting
from the excess of fair value of deposit
liaabilities assumed over the fair value of
acquired identifiable asset $ 2,115
========
The unidentifiable intangible asset is recognized under FASB Statement
No. 72, Accounting for Certain Acquisitions of Banking and Thrift
Institutions. The unidentifiable intangible asset recognized under
Statement 72 is excluded from the scope of Statement 142. Statement 72
intangible asset (goodwill) continues to be subject to amortization
based upon the estimated remaining maturity of the interest rate
sensitive assets acquired (approximately 12 years) and is tax
deductible over a 15 year period. The primary reason for the ING branch
acquisition was to increase the Bank's market potential in the St.
Cloud, Minnesota area.
The results of operations for the current and comparable prior interim
periods were affected by less than one cent per share on a pro-forma
basis and considered not material for disclosure.
NOTE 7- COMPREHENSIVE INCOME
Comprehensive income consists of net income and other gains and losses
affecting shareholder's equity that, under generally accepted
accounting principles, is excluded from net income. For the
Corporation, the difference between net income and comprehensive income
consists of the change for the quarter in unrealized gains and losses
on securities available for sale, net of tax.
7
FSF FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Private Securities Litigation Reform Act of 1995 contains safe harbor
provisions regarding forward-looking statements. When used in this discussion,
the words "believes", "anticipates", "contemplates", "expects" and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties that could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in interest rates, risks associated with the effect of integrating newly
acquired businesses, the ability to control costs and expenses and general
economic conditions.
General
The Corporation's total assets at June 30, 2002 and September 30, 2001 totaled
$512.0 million and $473.6 million. This increase of $38.4 million was mainly the
result of an increase in loans held for sale and loans receivable from the ING
Bank branch acquisition (see Note 6 of the Notes to Unaudited Consolidated
Financial Statements).
Cash and cash equivalents increased $2.3 million from $12.6 million at September
30, 2001 to $14.9 million at June 30, 2002. The Corporation utilizes this excess
liquidity to fund the purchase of treasury shares and loan originations.
Securities available for sale decreased $1.3 million between June 30, 2002 and
September 30, 2001, as a result of the purchase of a security for $3.0 million,
net of market value changes and principal payments on mortgage-backed and
related securities and the call of a $3.0 million debt security.
Loans held for sale increased $4.8 million to $16.9 million at June 30, 2002
from $12.1 million at September 30, 2001. As of June 30, 2002, the Bank and HMC
had forward commitments to sell all of their loans held for sale in the
secondary market. Payment for these loans usually occurs within fourteen days of
funding.
Loans receivable increased $33.5 million or 9.8% to $374.0 million at June 30,
2002 from $340.5 million at September 30, 2001. Total residential real estate
and construction loan originations increased by $109.8 million and when combined
with the sale and prepayments of residential mortgages, resulted in an increase
in one-to-four family residential mortgages and construction loans of $55.2
million. Agricultural loans increased by $6.8 million and consumer loans
decreased by $9.6 million. To supplement originations, the Bank purchased $17.3
million of commercial business loans. As part of the acquisition of the ING
branch, the Bank purchased $2.6 million of consumer loans and $26.2 million in
commercial and commercial real estate loans at a premium of $316,000. The
commercial loans purchased that meet the risk profile established by the Bank
generally have interest rates that are based on the "Prime" rate as published in
The Wall Street Journal. These types of commercial loans provide the Bank with
the opportunity to continue to diversify the composition of and shorten the
length of maturity of the loan portfolio.
8
The following table sets forth information on loans originated and purchased for
the periods indicated:
Three Months Nine Months
Ended June 30, Ended June 30,
----------------------------- -----------------------------
2002 2001 2002 2001
----------------------------- -----------------------------
(in thousands) (in thousands)
Loans originated:
1-4 family residential mortgages $ 22,798 $ 30,797 $ 105,321 $ 69,150
1-4 family construction loans 69,428 57,474 172,169 98,505
Land 2,500 - 4,850 3,083
Agriculture 16,153 8,790 46,740 36,904
Commercial business & real estate 5,346 2,678 12,805 8,539
Consumer 6,651 11,599 16,411 22,420
----------------------------- -----------------------------
Total loans originated 122,876 111,338 358,296 238,601
----------------------------- -----------------------------
Loans purchased:
Commercial business 3,790 9,193 17,286 22,253
----------------------------- -----------------------------
Total new loans $ 126,666 $ 120,531 $ 375,582 $ 260,854
============================= =============================
Acquired in ING branch acquisition $ - $ - $ 28,806 $ -
============================= =============================
Total loans sold $ 37,736 $ 38,897 $ 153,559 $ 88,178
============================= =============================
The following table sets forth the composition of the Bank's loan portfolio in
dollars and in percentages of total loans at the dates indicated:
June 30, September 30,
2002 2001
----------------------------------- ----------------------------
Amount % Amount %
----------------------------------- ----------------------------
(dollars in thousands)
Residential real estate:
One-to-four family (1) $ 63,918 12.9% $ 81,790 19.1%
Residential construction 215,140 43.6% 142,035 33.2%
5,414 1.1% 5,922 1.4%
----------------------------------- ----------------------------
284,472 57.6% 229,747 53.7%
Agricultural loans 56,703 11.5% 49,935 11.7%
Land and commercial real estate 71,595 14.5% 55,220 12.9%
Commercial business 21,206 4.3% 23,908 5.6%
----------------------------------- ----------------------------
149,504 30.3% 129,063 30.1%
Consumer loans:
Home equity and second mortgages 27,559 5.6% 29,991 7.0%
Automobile loans 10,004 2.0% 13,023 3.0%
Other 22,155 4.5% 26,292 6.1%
----------------------------------- ----------------------------
Total consumer loans 59,718 12.1% 69,306 16.2%
----------------------------------- ----------------------------
Total loans 493,694 100.0% 428,116 100.0%
============== ==============
Less:
Loans in process (100,333) (73,235)
Deferred fees (795) (774)
Allowance for loan losses (1,703) (1,541)
-------------------- --------------------
Total loans, net $ 390,863 $ 352,566
==================== ====================
- --------------------------------------------------
1. Includes loans held for sale in the amount of $16.9 million and $12.1
million as of June 30, 2002 and September 31, 2001.
Deposits, after interest credited, excluding the ING branch acquisition,
increased from $312.5 million at September 30, 2001 to $313.7 million at June
30, 2002, an increase of $1.2 million. Overall cost of funds on deposits during
the period decreased 188 basis points (100 basis points equals 1%) as the Bank
attempted to maintain deposit rates consistent with market place competitors.
Demand deposits increased $2.8 million or 6.9% from September 30, 2001 to June
30, 2002. Savings account balances decreased 10.0% during the same period, while
certificates of deposit increased $8.1 million. As part of the ING branch
acquisition, the Bank assumed $19.3 million in demand deposits, $6.2 million in
savings
9
accounts and $24.2 million in certificates of deposit, at a discount of
$416,000. The Bank also recorded $794,000 of core deposits intangibles in this
transaction. The Bank utilized this increase in deposits to fund the continued
loan growth and reduce Federal Home Loan Bank ("FHLB") borrowings.
The Corporation completed the repurchase of 82,535 shares of common stock which,
when netted against 75,575 shares issued in connection with the exercise of
stock options, increased the number of treasury shares to 2,201,763 at June 30,
2002. Treasury shares are to be used for general corporate purposes, including
the issuance of shares in connection with the exercise of stock options. Total
stockholders' equity has increased $2.37 million since September 30, 2001 due to
net income, less dividends and a decrease in accumulated comprehensive loss.
Book value per share increased from $19.30 at September 30, 2001 to $20.20 at
June 30, 2002.
In making loans, the Bank recognizes that credit losses will be experienced and
that the risk of loss will vary with, among other things, the type of loan being
made, the creditworthiness of the borrower over the term of the loan and in the
case of a secured loan, the quality of the collateral for the loan. The Bank's
management evaluates the need to establish reserves against losses on loans and
other assets each quarter based on estimated losses on specific loans and on any
real estate held for sale or investment when a finding is made that a loss is
estimable and probable. Such an evaluation includes a review of all loans for
which full collectibility may not be reasonably assured and considers, among
other matters, the estimated market value of the underlying collateral of
problem loans, prior loss experience, economic conditions and overall portfolio
quality. While management recognizes and charges against the allowance for loan
losses, accounts that are determined to be uncollectible, experience indicates
that at any point in time, possible losses may exist in the loan portfolio which
are not specifically identifiable. Therefore, based upon management's best
estimate, each year an amount may be charged to earnings to maintain the
allowance for loan losses at a level sufficient to recognize inherent credit
risk.
Impaired loans, including all loans that are in a troubled debt restructuring
involving a modification of terms, are measured at the present value of expected
future cash flows discounted at the loan's initial effective interest rate. The
fair value of the collateral of an impaired collateral dependent loan or an
observable market price, if one exists, may be used as an alternative to
discounting. If the measure of the impaired loan is less than the recorded
investment in the loan, impairment is recognized through the allowance for loan
losses. A loan is considered impaired when, based on current information and
events, it is probable that the Bank will be unable to collect all amounts due
according to the contractual terms of the loan agreement.
The allowance for loan losses is maintained at a level that represents
management's best estimates of losses in the loan portfolio at the balance sheet
date. However, there can be no assurance that the allowance for losses will be
adequate to cover losses that may be realized in the future and that additional
provision for loan losses will not be required.
The following table sets forth information with respect to the
Bank's non-performing assets for the periods indicated:
June 30, September 30,
2002 2001
-----------------------------------
(in thousands)
Loans accounted for on a non-accrual basis:
Mortgage loans:
Residential construction loans $ 1,634 $ 1,043
Permanent loans secured by one-to-four family units 689 78
Non- mortgage loans:
Commercial and agricultural 711 1,195
Consumer 513 637
-----------------------------------
Total non-accrual loans 3,547 2,953
Foreclosed real estate 274 126
-----------------------------------
Total non-performing assets $ 3,821 $ 3,079
===================================
Total non-performing loans to net loans 0.91% 0.84%
===================================
Total non-performing loans to total assets 0.70% 0.62%
===================================
Total non-performing assets to total assets 0.75% 0.65%
===================================
10
The residential construction loans are comprised of 9 loans. The outstanding
balance of the loans range from $97,000 to $314,000. The loan-to-value ratios of
the loans range between 31% and 80%. Each of the loans has been evaluated for
impairment and is carried at the lower of fair value or cost. There are 5
permanent loans secured by one-to-four family residential units that range from
$54,000 to $301,000. These 5 loans have loan-to-value ratios between 38% and
82%. Commercial and agricultural loans are comprised of 7 loans. The outstanding
value of the loans range from $6,000 to $423,000. The largest loan is insured by
the U.S. Government and the Bank is awaiting the insured payment which will
liquidate the remaining balance of the loan. Each of the loans has been
evaluated for impairment and is carried at the lower of fair value or cost. The
consumer loan total is made up of 26 loans that range from $465 to $98,000. The
foreclosed real estate total, $274,000, consists of three loans with balances of
$15,000, $125,000 and $134,000.
COMPARISON OF THE THREE MONTHS ENDED JUNE 30, 2002 AND 2001
The following table sets forth information with respect to the Corporation's
average balance sheet, interest and dividends earned and paid and related yields
and rates (dollars in thousands):
Three Months Ended June 30,
---------------------------------------------------------------------------
2002 2001
---------------------------------------------------------------------------
Interest Interest
Average Yields & Average Yields &
Balance Interest Rates (1) Balance Interest Rates (1)
---------------------------------------------------------------------------
Assets:
Loans receivable (2) $ 383,296 $ 7,698 8.03 % $ 344,333 $ 7,499 8.71 %
Mortgage-backed securities 51,522 641 4.97 44,310 567 5.12
Investment securities (3) 47,261 338 2.86 42,457 416 3.92
----------------------- -----------------------
Total interest-earning assets 482,079 8,677 7.20 431,100 8,482 7.87
--------------------- ------------------------
Other assets 27,108 23,424
------------- -------------
Total assets $ 509,187 $ 454,524
============= =============
Liabilities:
Interest-bearing deposits $ 361,621 $ 2,710 3.00 % $ 294,320 $ 3,536 4.81 %
Borrowings 98,000 1,379 5.63 113,610 1,650 5.81
----------------------- -----------------------
Total interest-bearing
liabilities 459,621 4,089 3.56 407,930 5,186 5.09 %
--------------------- ------------------------
Other liabilities 5,759 5,691
------------- -------------
Total liabilities 465,380 413,621
Stockholders' equity 43,807 40,903
------------- -------------
Total liabilities and stockholders'
equity $ 509,187 $ 454,524
============= =============
Net interest income $ 4,588 $ 3,296
Net spread (4) 3.64 % 2.78 %
Net margin (5) 3.81 % 3.06 %
Ratio of average interest-earning assets
to average interest-bearing
liabilities 1.05X 1.06X
1. Annualized.
2. Average balances include non-accrual loans and loans held for sale.
3. Includes interest-bearing deposits in other financial institutions.
4. Net spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
5. Net margin represents net interest income as a percentage of
interest-earning assets.
11
Net Income
The Corporation recorded net income of $1.4 million for the three months ended
June 30, 2002, as compared to net income of $1.2 million for the three months
ended June 30, 2001. This increase in net income was $276,000 or 24.0%. The
increase in net income for third quarter 2002 was the result of increases in net
interest income and non-interest income, offset by increases in non-interest
expense. Net interest income increased $1.3 million in the third quarter of
fiscal 2002, an increase of 39.3% over third quarter 2001. Such an increase in
net interest income was the result of a 153 basis point decline in average cost
of funds. The mix of the Bank's deposits helped to stabilize its cost of funds
in this lower interest rate environment. Additionally, non-interest income
increased from the levels of one year ago, mainly due to gains on loan sales
increasing $118,000. Non-interest income was 50.0% of non-interest expense for
the quarter.
Total Interest Income
Total interest income decreased by $195,000 to $8.7 million for the three months
ended June 30, 2002. The average yield on loans decreased to 8.03% for the
quarter ended June 30, 2002 from 8.71% for the quarter ended June 30, 2001.
During the same period, the average yield on mortgage-backed securities
decreased 15 basis points, which was somewhat offset by an average balance
increase of $7.2 million. The average balance of investment securities increased
to $47.3 million for the quarter ended June 30, 2002 from $42.5 million for the
quarter ended June 30, 2001, mainly as a result of an increase in the Bank's
liquidity. The average yield decreased from 3.92% for the three months ended
June 30, 2001 to 2.86% for the same period in 2002.
Total Interest Expense
Total interest expense decreased to $4.1 million for the three months ended June
30, 2002 from $5.2 million for the same period in 2001. The average balance of
interest-bearing deposits increased from $294.3 million for the three months
ended June 30, 2001 to $361.6 million for the three months ended June 30, 2002,
mainly due to the ING transaction. The average cost of deposits decreased 181
basis points from 4.81% for the three month period ended June 30, 2001 to 3.00%
for the same period in 2002, as the rates offered by the Bank decreased. No
assurance can be made that deposits can be maintained in the future without
further increasing the cost of funds if interest rates increase. The average
balance of borrowings decreased $15.6 million to $98.0 million for the three
months ended June 30, 2002 from $113.6 million for the three months ended June
30, 2001. The cost of such borrowings decreased by 18 basis points to 5.63% for
the three months ended June 30, 2002 from 5.81% for the same period in 2001.
Borrowings decreased as the Bank utilized repayments of loans and an increase in
deposits to meet liquidity needs.
Net Interest Income
Net interest income increased from $3.3 million for the three months ended June
30, 2001 to $4.6 million for the same period ended June 30, 2002. Average
interest-earning assets increased $51.0 million from $431.1 million for the
three months ended June 30, 2001 to $482.1 million for the three months ended
June 30, 2002, while the average yield on those interest-earning assets
decreased from 7.87% for 2001 to 7.20% for 2002. Average interest-bearing
liabilities increased by $51.7 million to $459.6 million for the three months
ended June 30, 2002 from $407.9 million for the three months ended June 30,
2001, while the cost of those interest-bearing liabilities decreased from 5.09%
in 2001 to 3.56% in 2002.
Provision for Loan Losses
The Corporation's provision for loan losses was $203,000 for the three months
ended June 30, 2002, as compared to $90,000 for the same period in 2001.
Increases in the Bank's loan portfolio, especially in regard to increases in the
residential construction and land and commercial real estate portfolios,
precipitated the increases in the provision for loan losses for the current
period. Management believes, based on a detailed review of the loan portfolio,
historic loan losses, current economic conditions and other factors, that the
current level of provision for loan losses and the resulting level of the
allowance for loan losses reflects an adequate reserve against inherent losses
in the loan portfolio. The allowance for loan losses is established through a
provision for loan losses charged to expense. While the Corporation maintains
its allowance for losses at a level which it considers to be adequate, there can
be no assurance that further additions will not be made to the loss allowances
or that such losses will not exceed the estimated amounts.
12
Non-interest Income
Total non-interest income increased $188,000 to $2.1 million during the
three-month period ended June 30, 2002, as compared to the same period in 2001.
Due to the low interest rate environment, loan volume on new home purchases and
existing home refinances increased significantly. Since the Bank sells all of
its fixed rate loans into the secondary loan market, gains on loans sold
increased from $769,000 at June 30, 2001 to $887,000 at June 30, 2002 and
service charges and fees increased from $309,000 to $344,000 for the same
periods.
Non-interest Expense
Total non-interest expense increased $946,000 or 29.8% over the periods
compared. Compensation and benefits increased $489,000 to $2.4 million at June
30, 2002, mainly due to the ING branch acquisition and the compensation
associated with the increase in loan activity mentioned above. Data processing
expense increased $51,000 to $241,000 for the period ended June 30, 2002, due to
processing expenses associated with the increased delivery of electronic
services to customers. Other non-interest expense increased $362,000 to $972,000
at June 30, 2002, mainly due to the amortization of core deposit intangibles
associated with the ING branch acquisition and the indirect cost associated with
the increase in loan activity mentioned above.
Income Tax Expense
Income taxes increased by $145,000 to $893,000 for the three month period ended
June 30, 2002 from $748,000 for the same period in 2001, which was primarily due
to an increase of $421,000 in income before tax. The effective tax rate
decreased by 0.9% for the same periods as a result of an increase in tax exempt
income of $91,000.
13
COMPARISON OF THE NINE MONTHS ENDED JUNE 30, 2002 AND 2001
The following table sets forth information with respect to the Corporation's
average balance sheet, interest and dividends earned or paid and related yields
and rates (dollars in thousands):
Nine Months Ended June 30,
------------------------------------------------------------------------------
2002 2001
------------------------------------------------------------------------------
Interest Interest
Average Yields & Average Yields &
Balance Interest Rates (1) Balance Interest Rates (1)
------------------------------------------------------------------------------
Assets:
Loans receivable (2) $ 379,668 $23,331 8.19 % $ 343,606 $23,111 8.97 %
Mortgage-backed securities 51,682 1,851 4.78 42,996 1,754 5.44
Investment securities (3) 50,580 1,032 2.72 52,134 1,868 4.78
------------------------- ------------------------
Total interest-earning assets 481,930 26,214 7.25 438,736 26,733 8.12
----------------------- -----------------------
Other assets
26,571 23,677
------------- -------------
Total assets $ 508,501 $ 462,413
============= =============
Liabilities:
Interest-bearing deposits $ 358,215 $ 8,820 3.28 % $ 297,138 $11,489 5.16 %
Borrowings 101,839 4,378 5.73 119,460 5.369 5.99
------------------------- ------------------------
Total interest-bearing
liabilities 460,054 13,198 3.83 416,598 16,858 5.40 %
----------------------- -----------------------
Other liabilities 5,320 5,260
------------- -------------
Total liabilities 465,374 421,858
Stockholders' equity 43,127 40,555
------------- -------------
Total liabilities and stockholders'
equity $ 508,501 $ 462,413
============= =============
Net interest income $13,016 $ 9,875
Net spread (4) 3.42 % 2.72 %
Net margin (5) 3.60 % 3.00 %
Ratio of average interest-earning assets
to average interest-bearing
liabilities 1.05X 1.05X
1. Annualized.
2. Average balances include non-accrual loans and loans held for sale.
3. Includes interest-bearing deposits in other financial institutions.
4. Net spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
5. Net margin represents net interest income as a percentage of
interest-earning assets.
Net Income
The Corporation recorded net income of $4.3 million for the nine months ended
June 30, 2002, as compared to net income of $2.6 million for the nine months
ended June 30, 2001. This increase in net income was $1.7 million or 67.6%. The
increase in net income for the 2002 third quarter was the result of an increase
in net interest income and non-interest income, offset by an increase in
non-interest expense. Net interest income increased $3.1 million during the nine
months ended June 30, 2002, an increase of 31.8% over the same period in 2001.
Such an increase in net interest income was mainly the result of a 157 basis
point decline in average cost of funds. The mix of the Bank's deposits helped to
stabilize its cost of funds in this lower interest rate environment.
Additionally, non-interest income increased significantly over the levels of one
year ago, with gains on the sale of loans increasing $1.4 million. Non-interest
income was 55.3% of non-interest expense for the period.
14
Total Interest Income
Total interest income decreased by $519,000 to $26.2 million for the nine months
ended June 30, 2002. The average yield on loans decreased to 8.19% for the nine
months ended June 30, 2002 from 8.97% for the nine months ended June 30, 2001.
During the same period, the average yield on mortgage-backed securities
decreased 66 basis points, which was somewhat offset by an average balance
increase of $9.0 million. The average balance of investment securities decreased
to $50.6 million for the nine months ended June 30, 2002 from $52.1 million for
the nine months ended June 30, 2001, as a result of a reduction in the Bank's
liquidity. The average yield decreased from 4.78% for the nine months ended June
30, 2001 to 2.72% for the same period in 2002.
Total Interest Expense
Total interest expense decreased to $13.2 million for the nine months ended June
30, 2002 from $16.9 million for the same period in 2001. The average balance of
interest-bearing deposits increased from $297.1 million for the nine months
ended June 30, 2001 to $358.2 million for the nine months ended June 30, 2002,
mainly due to the ING transaction. The average cost of deposits decreased 188
basis points from 5.16% for the nine month period ended June 30, 2001 to 3.28%
for the same period in 2002, as the rates offered by the Bank decreased. No
assurance can be made that deposits can be maintained in the future without
further increasing the cost of funds if interest rates increase. The average
balance of borrowings decreased $17.7 million to $101.8 million for the nine
months ended June 30, 2002 from $119.5 million for the nine months ended June
30, 2001. The cost of such borrowings decreased by 26 basis points to 5.73% for
the nine months ended June 30, 2002 from 5.99% for the same period in 2001.
Borrowings decreased as the Bank utilized repayments of loans and the increase
in deposits to meet liquidity needs.
Net Interest Income
Net interest income increased from $9.9 million for the nine months ended June
30, 2001 to $13.0 million for the same period ended June 30, 2002. Average
interest-earning assets increased $43.2 million from $438.7 million for the nine
months ended June 30, 2001 to $481.9 million for the nine months ended June 30,
2002, while the average yield on those interest-earning assets decreased from
8.12% in 2001 to 7.25% in 2002. Average interest-bearing liabilities increased
by $43.5 million to $460.1 million for the nine months ended June 30, 2002 from
$416.6 million for the nine months ended June 30, 2001, while the cost of those
interest-bearing liabilities decreased from 5.40% in 2001 to 3.83% in 2002.
Provision for Loan Losses
The Corporation's provision for loan losses was $628,000 for the nine months
ended June 30, 2002, as compared to $885,000 for the same period in 2001. During
the quarter ended March 31, 2001, an agricultural loan in the Bank's loan
portfolio experienced deterioration. Stored corn collateralized a large portion
of the loan, which due to the weather conditions during the quarter, caused
spoilage to the corn. Following discussions with the borrower during the
quarter, management determined that the loan was impaired and recognized a
$615,000 charge to earnings for the 2001 period. See also "Comparison of the
Three Months Ended June 30, 2002 and 2001- Provision for Loan Losses".
The increase in the allowance for loan losses is a result of the change in total
loans outstanding and to a lesser extent, it is due to the changes in various
loan categories.
15
The following table sets forth information with respect to the Bank's allowance
for loan looses at the dates indicated:
For the Nine Months
Ended June 30,
----------------------------------------
2002 2001
----------------------------------------
(in thousands)
Average loans outstanding $ 379,668 $ 343,606
========================================
Allowance balance (beginning of period) $ 1,541 $ 1,534
========================================
ING branch acquisition $ 274 $ -
========================================
Provision (credit):
Residential and construction 100 -
Land and commercial real estate - 25
Commercial and agricultural business 220 670
Consumer 308 190
----------------------------------------
Total provision 628 885
Charge-offs:
Residential and construction 87 -
Commercial and agricultural business 276 654
Consumer 411 215
----------------------------------------
Total charge-offs 774 869
Recoveries:
Residential and construction - -
Land and commercial real estate - 35
Consumer 34 19
----------------------------------------
Total recoveries 34 54
----------------------------------------
Net charge-offs 740 815
----------------------------------------
Allowance balance (end of period) $ 1,703 $ 1,604
========================================
Allowance as percent of net loans 0.44% 0.40%
Net loans charged off as a percent of average 0.19% 0.24%
loans
Non-interest Income
Total non-interest income increased $1.9 million during the nine-month period
ended June 30, 2002 to $6.5 million as compared with the same period in 2001.
Due to the low interest rate environment, loan volume on new home purchases and
existing home refinances increased significantly. Since the Bank sells all of
its fixed rate loans into the secondary loan market, gains on loans sold
increased from $1.7 million at June 30, 2001 to $3.1 million at June 30, 2002
and service charges and fees increased from $675,000 to $1.0 million for the
same periods. Service charges on deposit accounts increased from $1.2 million
for the nine months ended June 30, 2001 to $1.3 million for the nine months
ended June 30, 2002.
Non-interest Expense
Total non-interest expense increased $2.4 million or 24.9% over the periods
compared. Compensation and benefits increased $1.4 million to $7.0 million at
June 30, 2002, mainly due to the ING branch acquisition and the compensation
associated with the increase in loan activity mentioned above. Data processing
expense increased $104,000 to $665,000 for the period ended June 30, 2002, due
to processing expenses associated with the increased delivery of electronic
services to customers. Other non-interest expense increased $882,000 to $2.6
million at June 30, 2002, due mainly to the amortization of core deposit
intangibles associated with the ING branch acquisition and the indirect cost
associated with the increase in loan activity mentioned above.
Income Tax Expense
Income taxes increased by $1.2 million to $2.8 million for the nine month period
ended June 30, 2002 from $1.6 million for the same period in 2001, which was
primarily due to an increase of $2.9 million in income before tax.
16
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's primary sources of funds are deposits, borrowings, principal
and interest payments on loans, investments and mortgage-backed securities,
sales of mortgage loans and funds provided by operations. While scheduled
payments on loans, mortgage-backed securities and short-term investments are
relatively predictable sources of funds, deposit flows and early loan repayments
are greatly influenced by general interest rates, economic conditions and
competition.
The amount of certificate accounts that are scheduled to mature during the
twelve months ending June 30, 2002 is approximately $165.3 million. To the
extent that these deposits do not remain upon maturity, the Bank believes that
it can replace these funds with new deposits, excess liquidity and FHLB advances
or outside borrowings. It has been the Bank's experience that substantial
portions of such maturing deposits remain at the Bank.
At June 30, 2002, the Bank and HMC had outstanding loan commitments of $1.2
million. Funds required to meet these commitments are derived primarily from
current excess liquidity, loan sales, advances, deposit inflows or loan and
security repayments.
OTS regulations require the Bank to maintain core capital of 4.0% of assets, of
which 2.0% must be tangible equity capital, excluding goodwill. The Bank is also
required to maintain risk-based capital equal to 8.0% of total risk-based
assets. The Bank's regulatory capital exceeded its tangible equity, tier 1
(risk-based), tier 1 (core) and risk-based capital requirements by 5.8%, 3.3%,
6.5% and 2.8%, respectively.
Management believes that under current regulations, the Bank will continue to
meet its minimum capital requirements in the foreseeable future. Events beyond
the control of the Bank, such as increased interest rates or a downturn in the
economy in areas in which the Bank operates, could adversely affect future
earnings and, as a result, the ability of the Bank to meet its future minimum
capital requirements.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes from the information regarding market risk
disclosed under the heading "Asset and Liability Management" in the
Corporation's Annual Report for the year ended September 30, 2001.
17
ITEM 1. LEGAL PROCEEDINGS
Neither the Corporation nor any of its subsidiaries were
engaged in any legal proceedings of a material nature at June
30, 2002. From time to time, the Corporation is a party to
legal proceedings in the ordinary course of business wherein
it enforces its security interest in loans.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable.
ITEM 5. OTHER MATERIALLY IMPORTANT EVENTS
Not applicable.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibits are filed as part of this report.
3.1 Articles of Incorporation of FSF Financial Corp. *
3.2 Bylaws of FSF Financial Corp. *
4.0 Stock Certificate of FSF Financial Corp. *
10.1 Form of Employment Agreement with Donald A. Glas,
George B. Loban and Richard H. Burgart *
10.2 First Federal fsb Management Stock Plan **
10.3 FSF Financial Corp. 1996 Stock Option Plan **
10.4 FSF Financial Corp. 1998 Stock Compensation Plan ***
99.0 Certification
- --------------------------------------------------------------------------------
* Incorporated herein by reference into this document from the Exhibits to
Form S-1, Registration Statement initially filed with the Commission on
June 1, 1994. Registration No. 33-79570.
** Incorporated herein by reference into this document from the Registrant's
Proxy Statement for the Annual Meeting of Stockholders held on January 17,
1996 and filed with the Commission on December 13, 1995.
*** Incorporated herein by reference into this document from the Registrant's
Proxy Statement for the Annual Meeting of Stockholders held on January 20,
1998 and filed with the Commission on December 10, 1997.
18
FSF FINANCIAL CORP. AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FSF FINANCIAL CORP.
Date: August 5, 2002 By: /s/ Donald A. Glas
- ---------------------- --------------------------------
Donald A. Glas
Chief Executive Officer
Date: August 5, 2002 By: /s/ Richard H. Burgart
- ---------------------- --------------------------------
Richard H. Burgart
Chief Financial Officer
19