SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
--- EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 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 001-16763
Allied First Bancorp, Inc.
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(Exact name of small business issuer as specified in its charter)
Maryland 36-4482786
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(State or other jurisdiction of (I.R.S. Employer identification
incorporation or organization) or number)
387 Shuman Boulevard, Suite 120 W, Naperville, IL 60563
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(Address of principal executive offices) (Zip Code)
(630) 778-7700
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(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- ------
Transitional Small Business Disclosure Format (check one):
Yes No X
----- ------
State the number of Shares outstanding of each of the issuer's classes of common
equity, as of the latest date:
As of May 14, 2002, there were 608,350 shares of the Registrant's common stock
issued and outstanding.
Allied First Bancorp, Inc.
INDEX
PAGE NO.
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Condensed Financial Statements
Consolidated Balance Sheets at March 31, 2002 and June 30, 2001 3
Consolidated Statements of Income and Comprehensive Income for the three and 4
nine months ended March 31, 2002 and 2001
Consolidated Statements of Cash Flows for the nine months ended March 31, 2002 5
and 2001
Notes to Consolidated Condensed Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 7
PART II. OTHER INFORMATION
Items 1-6 13
Signature Page 14
2
PART I: FINANCIAL INFORMATION
Allied First Bancorp, Inc.
CONSOLIDATED BALANCE SHEETS (Unaudited)
At At
March 31, June 30,
2002 2001
----- ----
ASSETS:
------
Cash and cash equivalents.......................................................... $9,662,533 $16,455,200
Securities available for sale...................................................... 4,854,717 -
Time deposits with other financial institutions.................................... 4,725,623 722,000
Loans, net of allowance for loan losses of $679,595 at
March 31, 2002 and $626,715 at June 30, 2001................................ 63,282,709 63,549,267
Federal Home Loan Bank Stock at cost............................................... 1,513,800 237,125
National Credit Union Share Insurance Fund deposit................................. - 618,802
Accrued interest receivable........................................................ 244,074 189,775
Premises and equipment-net......................................................... 75,745 82,448
Other assets....................................................................... 415,622 340,819
------------ ------------
Total Assets........................................................... $84,774,823 $82,195,436
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Liabilities:
Non-interest-bearing demand deposits............................................... $8,311,824 $8,798,380
Savings, Now and MMDA deposits..................................................... 48,670,603 50,040,259
Other time deposits................................................................ 17,555,326 18,795,015
Total Deposits........................................................... 74,537,753 77,633,654
Other Liabilities.................................................................. 319,346 317,608
Total Liabilities........................................................ 74,857,099 77,951,262
Shareholders' Equity:
Preferred Stock, $.01 par value, 2,000,000 shares authorized, none
issued Common Stock, $.01 par value, 8,000,000 shares authorized,
608,350 shares issued and outstanding at December 31, 2001................ 6,084 0
Additional paid-in capital......................................................... 5,271,948 0
Retained earnings.................................................................. 4,680,302 4,244,174
Accumulated other comprehensive income (loss)...................................... (40,610) 0
----------- -----------
Total Shareholders' equity............................................ 9,917,724 4,244,174
----------- -----------
Total Liabilities and Shareholders' Equity.................... $84,774,823 $82,195,436
=========== ===========
The accompanying notes are an integral part of these consolidated financial statements
3
PART I: FINANCIAL INFORMATION
Allied First Bancorp, Inc.
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
Three Months Ended Nine Months Ended
March 31, March 31,
2002 2001 2002 2001
---- ---- ---- ----
Interest Income:
Loans receivable.............................. $1,136,606 $1,447,119 $3,774,681 $4,423,332
Interest earning deposits..................... 85,983 124,266 284,666 279,733
Securities.................................... 43,377 - 61,221 -
---------- ---------- ---------- ----------
Total Interest Income.................... 1,265,966 1,571,385 4,120,568 4,703,065
Interest Expense:
Deposits...................................... 537,805 890,314 1,896,388 2,628,806
Other......................................... - - 27,305 1,570
---------- ---------- ---------- ----------
Total Interest Expense................... 537,805 890,314 1,923,693 2,630,376
Net Interest Income:.......................................... 728,161 681,071 2,196,875 2,072,689
Provision for loan losses..................................... 55,000 60,631 175,000 185,582
---------- ---------- ---------- ----------
Net interest income after
provision for loan losses..................................... 673,161 620,440 2,021,875 1,887,107
Non-interest income:
Credit and debit card transaction............. 143,638 139,836 425,815 411,244
Account fees.................................. 28,071 28,924 77,664 74,450
First mortgage loan fees...................... 20,575 16,147 59,235 62,391
Other......................................... 6,758 13,529 27,767 30,719
---------- ---------- ---------- ----------
Total non-interest income................ 199,042 198,436 590,481 578,804
Non-interest expense:
Salaries and employee benefits................ 292,231 261,069 835,639 711,701
Occupancy and equipment....................... 44,296 59,006 139,215 166,030
Data processing............................... 31,804 26,738 95,046 82,696
Loan servicing................................ 129,044 123,367 389,274 374,029
Charter conversion professional fees.......... - 17,898 49,180 63,355
Other expenses................................ 294,021 148,940 771,346 502,970
---------- ---------- --------- ---------
Total non-interest expense............... 791,396 637,018 2,279,700 1,900,781
Income before income taxes: .................................. 80,807 181,858 332,656 565,130
Income tax expense (benefit).................. 31,499 - (103,472) -
---------- ---------- --------- ---------
Net income: ................................................ 49,308 181,858 436,128 565,130
========== ========== ========= =========
Other Comprehensive Income (Loss)............................. (25,914) - (40,610) -
---------- ---------- --------- ---------
Total Comprehensive Income (Loss)............................. $23,394 $181,858 $395,518 $565,130
========== ========== ========= =========
Earning per common and common equivalent shares:
Basic......................................... $0.08 N/A $0.08 N/A
Diluted....................................... $0.08 N/A $0.08 N/A
The accompanying notes are an integral part of these consolidated financial statements
4
Part I: Financial Information
Allied First Bancorp, Inc.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended
March 31,
2002 2001
---- ----
Cash flows from operating activities
Net Income................................................................... $436,128 $565,130
Adjustment to reconcile net income to net cash from
operating activities
Depreciation......................................................... 48,901 63,103
Amortization of premiums on securities............................... 2,586 -
Provision for loan losses............................................ 175,000 185,582
Net Changes in
Accrued interest receivable.......................................... (54,299) (37,804)
National Credit Union Share Insurance Fund deposit................... 618,802 (11,944)
Other assets......................................................... (48,839) 23,950
Other liabilities.................................................... 1,738 (93,642)
---------- -----------
Net cash from operating activities 1,180,017 694,375
Cash flows from investing activities
Purchase of available for sale securities.................................... (5,202,553) -
Principal collected on mortgage backed securities............................ 278,676 -
Purchase of Federal Home Loan Bank stock..................................... (1,276,675) (12,630)
Net expenditures of premises and equipment................................... (42,198) (54,299)
Net changes in:
Loans to customers................................................... 91,558 2,505,660
Time deposits with other financial institutions...................... (4,003,623) (6,600)
---------- ----------
Net cash from investing activities.........................(10,154,815) 2,432,131
Cash flows from financing activities
Net change in
Deposits.............................................................($3,095,901) $8,041,309
Net proceeds from sale of common stock....................................... 5,278,032 -
Proceeds from the issuance of subordinated debt.............................. 1,000,000 -
Retirement of subordinated debt.............................................. (1,000,000) -
----------- ----------
Net cash from financing activities......................... 2,182,131 8,041,309
Increase (decrease) in cash and cash equivalents....................................... (6,792,667) 11,167,815
Cash and cash equivalents at beginning of period....................................... 16,455,200 6,534,083
----------- -----------
Cash and cash equivalents at end of period............................................. $9,662,533 $17,701,898
=========== ===========
5
Allied First Bancorp, Inc.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
(1) Basis of Presentation
The accompanying consolidated condensed financial statements include
the accounts of Allied First Bancorp, Inc. and its wholly owned subsidiary,
Allied First Bank, sb. All significant inter-company transactions and balances
are eliminated in consolidation. Prior to September 1, 2001, Allied First Bank
operated as Allied Pilots Association Federal Credit Union. The accompanying
unaudited consolidated condensed Financial Statements have been prepared in
accordance with accounting principles for interim financial information and with
the instructions to Form 10-QSB and Regulation SB. Accordingly, they do not
include all the information and footnotes required by generally accepted
accounting principles for complete financial statements.
In the opinion of management, the consolidated condensed financial
statements contain all adjustments (consisting only of normal recurring
adjustments) necessary to represent fairly the financial condition of Allied
First Bancorp, Inc. as of March 31, 2002 and June 30, 2001 and the results of
its operations, for the three and nine months ended March 31, 2002 and 2001.
Financial statement reclassifications have been made for the prior period to
conform to classifications used as of and for the period ended March 31, 2002.
Operating results for the three and nine months ended March 31, 2002
are not necessarily indicative of the results that may be expected for the
fiscal year ended June 30, 2002.
(2) Plan of Stock Conversion
On September 1, 2001, Allied Pilots Association Federal Credit Union
converted to Allied First Bank, sb an Illinois mutual savings bank as the first
part in a two-part plan to improve the capital position of Allied Pilots
Association Federal Credit Union. In conjunction with the first part of the
plan, Allied First Bank issued subordinated capital notes, qualifying as Tier 2
capital, in the amount of $1 million on September 1, 2001. The subordinated
capital notes had a term of five years, interest rate of 8.5% and were
redeemable without any prepayment penalty. The issuance of the notes was
sufficient to qualify Allied First Bank as adequately capitalized. In the second
part of the Plan, on September 17, 2001, the Board of Directors of Allied First
Bank adopted a Plan of Stock Conversion to convert from an Illinois mutual
savings bank to an Illinois stock savings bank with the concurrent formation of
a holding company. The purpose of the mutual to stock conversion was to increase
the capital of Allied First Bank in order to enable it to meet the
well-capitalized requirements of an FDIC insured institution and to support the
future growth of the institution. The subordinated capital notes were retired
upon completion of the stock conversion. On December 27, 2001, Allied First
Bancorp, Inc. sold 608,350 shares of common stock at $10 per share and received
proceeds of $5,278,032 net of conversion expenses of $805,468. Approximately 98%
of the net proceeds were used by Allied First Bancorp, Inc. to acquire all of
the capital stock of Allied First Bank.
(3) Earnings Per Share
The conversion to a stock based institution occurred on December 27,
2001. Earnings per share information is only presented for the period January 1,
2002 through March 31, 2002. Earnings per share was computed based on 608,350
shares issued and outstanding. There are no dilutive potential common shares.
Earnings per share information is not material for the other periods presented.
6
PART II
Allied First Bancorp, Inc.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Allied First Bancorp, Inc.'s results of operations are primarily
dependent on Allied First Bank's net interest margin, which is the difference
between interest income on interest-earning assets and interest expense on
interest-bearing liabilities. Allied First Bank's net income is also affected by
the level of its non-interest income and non-interest expenses, such as employee
compensation and benefits, occupancy expenses and other expenses.
FORWARD-LOOKING STATEMENTS
Except for historical information contained herein, the matters
discussed in this document, and other information contained in Allied First
Bancorp, Inc.'s SEC filings, may express "forward-looking statements." Those
"forward-looking statements" may involve risk and uncertainties, including
statements concerning future events, performance and assumptions and other
statements that are other than statements of historical facts. Allied First
Bancorp, Inc. wishes to caution readers not to place undue reliance on any
forward-looking statements, which speak only as of the date made. Readers are
advised that various factors--including, but not limited to, changes in laws,
regulations or generally accepted accounting principles; Allied First Bancorp,
Inc.'s competitive position within the markets served; increasing consolidation
within the banking industry; unforeseen changes in interest rates; any
unforeseen downturns in the local, regional or national economies--could cause
Allied First Bancorp, Inc.'s actual results or circumstances for future periods
to differ materially from those anticipated or projected. This report speaks
only as of its date, and Allied First Bancorp, Inc. disclaims any duty to update
the information herein.
COMPARISON OF THREE-MONTH AND NINE-MONTH PERIODS
ENDED MARCH 31, 2002 AND 2001
GENERAL
Net income for the three-month and nine-month periods ended March 31,
2002, was $49,000 and $436,000, respectively, compared to net income of $182,000
and $565,000 for the equivalent periods in 2001. As a former credit union, the
organization was not subject to federal income taxes or state income taxes for
the fiscal year ended June 30, 2001. Effective September 1, 2001, Allied First
Bancorp, Inc. was subject to federal and state income taxes. As a result of the
change in tax status and in accordance with Financial Accounting Standards No.
109, Accounting for Income Taxes, Allied First Bank recorded a net deferred tax
asset in the amount of $205,000 on September 1, 2001.
NET INTEREST INCOME
Net interest income for the three-month period ended March 31, 2002,
was $728,000 compared to $681,000 for the same period in 2001. This is a 6.90%
increase over the same period in 2001 and resulted in a net spread of 2.77% for
the three months ended March 31, 2002 compared to 2.58% for the same period in
7
2001. The net interest income for the nine-month period ended March 31, 2002,
was $2,197,000 compared to $2,073,000 for the same period in 2001, an increase
of 5.98% and resulted in a net spread of 2.84% compared to 2.77% in 2001. The
increase in net interest income and the corresponding increase in net interest
spread was due to our interest bearing liabilities repricing faster than our
interest earning assets in the declining interest rate environment in 2001.
Total average earning assets increased $4,713,000 and $7,271,000,
respectively, for the three-month and nine-month periods ended March 31, 2002,
over the comparative periods in 2001. Total average interest earning investment
balances increased $5,775,000 and $8,352,000, respectively, for the three-month
and nine-month periods over one-year ago. Total average loans decreased
$1,062,000 and $1,081,000, respectively, for the three-month and nine-month
periods over one-year ago. The yields on total average earning assets were 6.06%
and 7.98% for the three-month periods ended March 31, 2002, and 2001 and 6.66%
and 8.33% for the nine-month periods, ended March 31, 2002 and 2001,
respectively. Allied First Bank has a loan portfolio with a large concentration
in short term consumer loans which reprice quickly. This coupled with a
declining interest rate environment accounted for lower yields in earning assets
for the periods presented.
INTEREST INCOME
Interest income for the three months and nine months ended March 31,
2002 was $1,266,000 and $4,121,000, respectively, compared to $1,571,000 and
$4,703,000 for the same period in 2001. The decrease was primarily due to lower
loan yields during 2001. The yield on loans decreased to 7.78% for the nine
months ended March 31, 2002 from 8.97% for the same period in 2001.
INTEREST EXPENSE
Interest expense for the three months and nine months ended March 31,
2002 was $538,000 and $1,924,000, respectively, compared to $890,000 and
$2,630,000 for the same period in 2001. The decrease was primarily due to lower
rates paid on interest-bearing liabilities for 2001 which was 3.29% and 3.82%
for such periods, respectively, which represented a 211 and 174 basis point
decrease over the same periods in 2001.
8
The following tables set forth consolidated information regarding average
balances and rates.
Allied First Bancorp, Inc.
Three Months Ended March 31
(Dollars In Thousands)
2002 2001
-------------------------------------- ------------------------------------
Average Average Average Average
INTEREST EARNING ASSETS Balance Interest Rate Balance Interest Rate
----------------------- ------- -------- ----- ------- -------- ----
Loans $63,661 $1,137 7.14% $64,723 $1,447 8.94%
Available for sale securities 3,101 45 5.80% - - 0.00%
Federal Home Loan Bank Stock 1,514 19 5.02% 233 4 6.87%
Interest earning balances 15,227 65 1.71% 13,834 120 3.47%
-------- ------ ------ ------- ------ ------
Total interest-earning assets 83,503 1,266 6.06% 78,790 1,571 7.98%
-------- ------ ------ ------- ------ ------
NON-INTEREST EARNING ASSETS
Premises and equipment 81 99
Allowance for loan losses (701) (649)
Other non-earning assets 662 566
-------- -------
Total assets $83,545 $78,806
======== =======
INTEREST BEARNING LIABILITIES
Savings $11,959 $ 35 1.17% 11,603 $ 80 2.76%
Money market 35,971 259 2.88% 33,888 475 5.61%
Time deposits 17,471 244 5.59% 20,488 335 6.54%
Subordinated debt - - 0.00% - - 0.00%
-------- ------ ------ ------- ------ ------
65,401 538 3.29% 65,979 890 5.40%
-------- ------ ------ ------- ------ ------
NON-INTEREST BEARNING LIABILITIES
AND EQUITY
Checking 8,028 8,564
Other liabilities 280 336
Equity 9,836 3,827
-------- -------
Total liabilities and equity $83,545 $78,706
======== =======
Net Interest/Spread $ 728 2.77% $ 681 2.58%
====== ====== ====== ======
Margin 3.49% 3.46%
====== ======
9
Allied First Bancorp, Inc.
Nine Months Ended March 31
(Dollars in Thousands)
2002 2001
------------------------------------- -------------------------------------
Average Average Average Average
INTEREST EARNING ASSETS Balance Interest Rate Balance Interest Rate
----------------------- ------- -------- ----- ------- -------- ----
Loans $64,660 $3,775 7.78% $65,741 4,423 8.97%
Available for sale securities 1,450 62 5.70% - 0.00%
Federal Home Loan Bank Stock 943 42 5.94% 226 13 7.67%
Interest earning balances 15,473 242 2.09% 9,288 267 3.83%
------- ------ ----- ------- ----- -----
Total interest-earning assets 82,526 4,121 6.66% 75,255 4,703 8.33%
------- ------ ----- ------- ----- -----
NON-INTEREST EARNING ASSET
Premises and equipment 82 103
Allowance for loan losses (679) (668)
Other non-earning assets 755 580
------- -------
Total assets $82,684 $75,270
======= =======
INTEREST BEARING LIABILITIES
Savings $12,505 $ 151 1.61% $11,869 $ 249 2.80%
Money market 36,253 913 3.36% 30,550 1,380 6.02%
Time deposits 18,025 833 6.16% 20,567 999 6.48%
Subordinated debt 424 27 8.49% 40 2 6.67%
------- ------ ----- ------- ----- -----
67,207 1,924 3.82% 63,026 2,630 5.56%
------- ------ ----- ------- ----- -----
NON-INTEREST BEARING LIABILITIES AND EQUITY
Checking 8,264 8,081
Other liabilities 372 336
Equity 6,841 3,827
------- -------
Total liabilities and equity $82,684 $75,270
======= =======
Net Interest/Spread $2,197 2.84% $2,073 2.77%
====== ===== ====== =====
Margin 3.55% 3.67%
===== =====
10
PROVISION FOR LOAN LOSSES
The provision for loan losses was $55,000 and $175,000, respectively,
for the three-month and nine-month periods ended March 31, 2002 and $61,000 and
$186,000 for the same periods in 2001. Changes in the provision for loan losses
are attributed to management's analysis of the adequacy of the allowance for
loan losses to address probable incurred losses. Net charge-offs of $68,000 have
been recorded for the three-month period ended March 31, 2002, compared to
$38,000 of net charge-offs for the same period in 2001. Net charge-offs of
$123,000 have been recorded for the nine-month period ended March 31, 2002,
compared to $221,000 of net charge-offs for the same period in 2001. The
allowance for loan losses was $680,000 or 1.06% of gross loans as of March 31,
2002, compared to $627,000 or 0.98% of net loans at June 30, 2001.
We establish provisions for loan losses, which are charged to
operations, at a level management believes is appropriate to absorb probable
incurred credit losses in the loan portfolio. In evaluating the level of the
allowance for loan losses, management considers historical loss experience, the
nature and volume of the loan portfolio, adverse situations that may affect the
borrower's ability to repay, estimated value of any underlying collateral, peer
group information, and prevailing economic conditions. This evaluation is
inherently subjective as it requires estimates that are susceptible to
significant revisions as more information becomes available or as future events
change.
About 96% of our customer base consists of American Airlines pilots and
their family members. Although this customer base had historically relatively
stable employment and sources of income, the recent terrorist attacks on the
United States have adversely affected the airline industry. As a result of these
events, the stability of the employment and income of airline pilots has been
adversely affected. These layoffs could negatively affect the ability of our
customers to repay their loans, although the effect of the layoffs on our loan
delinquencies and loan losses cannot be identified with reasonable certainty at
this time. As a result of these events, we may have higher loan delinquencies
and defaults in future periods. At March 31, 2002, our delinquent loan past due
60 days or more was 0.22% or $140,000 of our loan portfolio compared to 0.03% or
$20,000 at June 30, 2001.
NON-INTEREST INCOME
Non-interest income remained relatively stable over all periods
presented. Non-interest income for the three-month periods ended March 31, 2002
and 2001 was $199,000 and $198,000, respectively, and for the nine-month periods
was $590,000 and $579,000.
NON-INTEREST EXPENSE
Non-interest expense for the three-month period ended March 31, 2002
and 2001 was $791,000 and $637,000, respectively, and was $2,280,000 and
$1,901,000, respectively, for the nine-month period ended March 31, 2002 and
2001. For the nine-month period ended March 31, 2002, compensation and employee
benefits increased 17.41% over the same nine-month period in 2001. For the
three-month period ended March 31, 2002 compensation and employee benefits
increased 11.94% over the same three-month period in 2001. The increase in
compensation and employee benefits in both periods presented are a result of
rising insurance premiums for health care coverage, additional qualified
11
participants in the pension plan and an increase in staff, compensation and
benefits expenses. Occupancy and equipment expense decreased 24.93% for the
three-month period ended March 31, 2002 over that same three-month period ended
in 2001. Occupancy and equipment expense decreased 16.15% for the nine-month
period ended March 31, 2002 over the same nine-month period ended March 31,
2001. The decline in occupancy and equipment expenses in both the nine-month
period and the three-month period ended March 31, 2002 over the same periods
ended 2001 are a result of a number of fixed assets becoming fully depreciated
during 2001 year. Data processing expenses increased in the year 2001 and 2002
as a result of adding and updating systems for the conversion from a credit
union to a bank. For the nine-month period ended March 31, 2002, other expenses
increased 53.36% over the same period nine-month period in 2001. For the
three-month period ended March 31, 2002 other expenses 97.41% over the same
three-month period in 2001. The increase in other expenses for the nine-month
period ending March 31, 2002 over the same nine-month period ending 2001 was a
result of increased consulting services in connection with the conversion from a
credit union to a bank. The sharp rise in other expenses for the three-month
period ended March 31, 2002 over the same period in 2001 is a result of an
increase of $14,000 in regulatory fees, an increase of $63,000 in professional
fees, and a $24,000 increase in advertising expenses. The increase in
professional services is a result of the additional reporting requirements for a
stock bank. The increase in advertisement expense is a result of increased
promotional activities.
INCOME TAXES
Due to credit unions being not-for-profit organizations, we were not
subject to federal or state income taxes during 2000 and during the first eight
months of 2001. The provision for income taxes for the three-month period ended
March 31, 2002 was $31,000. For the nine months ended March 31, 2002 a net tax
benefit of $103,000 was recorded. As a result of the change in tax status and in
accordance with Financial Accounting Standards No. 109, Accounting for Income
Taxes, Allied First Bancorp, Inc. recorded a net deferred tax asset in the
amount of $205,000 on September 1, 2001. The recording of the deferred tax asset
was reflected as an income tax benefit on our income statement.
REGULATORY CAPITAL REQUIREMENTS
Pursuant to federal law, Allied First Bank must meet three separate
minimum capital ratio requirements. As of March 31, 2002, Allied First Bank had
core capital, Tier I risk-based and risk-based ratios of 11.40%, 14.43% and
15.38% compared to well-capitalized requirements of 5.00%, 6.00% and 10.00%,
respectively.
LIQUIDITY
Liquidity management refers to the ability to generate sufficient cash to fund
current loan demand; meet deposit withdrawals and pay operating expenses. Allied
First Bancorp, Inc. relies on various funding sources in order to meet these
demands. Primary sources of funds include interest-earning balances with other
financial institutions, money market mutual funds, proceeds from principal and
interest payments on loans as well as the ability to borrow against marketable
securities. At March 31, 2002, Allied First Bank had $9.7 million in cash and
cash equivalents that could be used for its funding needs. Cash and cash
equivalents decreased by $6.8 million compared to the period ending June 30,
2001 and securities available for sale increased by $4.9 million, time deposits
with other institutions increased $4.0 million and Federal Home Loan Bank stock
increased $1.3 million.
12
As of March 31, 2002, management is not aware of any current
recommendations by regulatory authorities, which, if they were to be
implemented, would have or are reasonably likely to have a material adverse
effect on Allied First Bancorp, Inc.'s liquidity, capital resources or
operations.
Part II - Other Information
Item 1 - Legal Proceedings - Not Applicable.
-----------------
Item 2 - Changes in Securities - Not Applicable.
---------------------
Item 3 - Defaults upon Senior Securities - Not Applicable.
-------------------------------
Item 4 - Submission of Matters to a vote of Security Holders - Not Applicable
---------------------------------------------------
Item 5 - Other Information - Not Applicable
-----------------
Item 6 - Exhibits and Reports on Form 8-K - Not Applicable
--------------------------------
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Allied First Bancorp, Inc.
Registrant
Date: May 14, 2002 /s/ Kenneth L. Bertrand
--------------------- ---------------------------------------
Kenneth L. Bertrand
President and Chief Executive Officer
Date: May 14, 2002 /s/ Brian K. Weiss
--------------------- ---------------------------------------
Brian K. Weiss
Chief Financial Officer
13