-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, K8O+SgxuzDMNQs7Bj17Ya8eS2jlR2K734b8Bp8pLXD4D95bn8qzmm+BqOA1ZJde0 Dvf2S275DWajEGsDGiSHBg== 0000950164-03-000003.txt : 20030214 0000950164-03-000003.hdr.sgml : 20030214 20030214123427 ACCESSION NUMBER: 0000950164-03-000003 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20021231 FILED AS OF DATE: 20030214 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ALAMOGORDO FINANCIAL CORP CENTRAL INDEX KEY: 0001100542 STANDARD INDUSTRIAL CLASSIFICATION: FINANCE SERVICES [6199] IRS NUMBER: 742819148 FISCAL YEAR END: 0630 FILING VALUES: FORM TYPE: 10QSB SEC ACT: 1934 Act SEC FILE NUMBER: 000-29655 FILM NUMBER: 03564893 BUSINESS ADDRESS: STREET 1: 500 10TH ST CITY: ALAMOGORDO STATE: NM ZIP: 88310 MAIL ADDRESS: STREET 1: 500 10TH STREET CITY: ALAMOGORDO STATE: NM ZIP: 88310 10QSB 1 alamo10qsb39860.txt FORM 10-QSB UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ------------------------------ FORM 10-QSB (Mark One) [X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended December 31, 2002. [ ] 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 0-29655 Alamogordo Financial Corp. -------------------------- (Exact name of small business issuer as specified in its charter) United States of America 74-2819148 - --------------------------------- ---------------------------- (State or other jurisdiction of (IRS Employer Identification incorporation or organization) Number) 500 10th Street, Alamogordo, New Mexico 88310 (Address of principal executive offices) (505) 437-9334 Issuer's telephone number - -------------------------------------------------------------------------------- Former name, former address and former fiscal year, if changed since last report APPLICABLE ONLY TO CORPORATE ISSUERS: As of February 1, 2003, the Company had 1,292,317 shares of common stock outstanding, par value $.10 per share. Transitional Small Business Disclosure Format (check one): Yes / / No /x/ ALAMOGORDO FINANCIAL CORP. INDEX Page PART I. FINANCIAL INFORMATION Item 1. Condensed Consolidated Financial Statements Condensed Consolidated Balance Sheets at December 31, 2002 and June 30, 2002.................................2 Condensed Consolidated Statements of Income and Comprehensive Income for the three months and six months ended December 31, 2002 and 2001..........................................3 Comprehensive Consolidated Statements of Cash Flows for the six months ended December 31, 2002 and 2001..........................................5 Notes to Condensed Consolidated Financial Statements..................6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations...................................................6 Item 3. Controls and Procedures......................................10 PART II. OTHER INFORMATION Item 1. Legal Proceedings ...........................................10 Item 2. Changes in Securities and use of Proceeds....................10 Item 3. Defaults upon Senior Securities..............................10 Item 4. Submission of Matters to Vote of Security Holders............10 Item 5. Other Information............................................11 Item 6. Exhibits and Reports on Form 8-K.............................11 Signatures..................................................12 Certifications Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002..................................13 1 PART I. FINANCIAL INFORMATION ITEM 1. FINANCIAL STATEMENTS Alamogordo Financial Corp. Condensed Consolidated Balance Sheets at December 31, 2002 and June 30, 2002
At At December 31, 2002 June 30, 2002 ----------------- ------------- (Dollars in thousands) (Unaudited) ASSETS Cash and cash equivalents............................. $ 18,958 $ 21,924 Securities: Available for sale.............................. 22,734 9,941 Held to maturity................................ 5,108 725 Loans, net............................................ 109,199 116,543 Real estate owned, net................................ 290 280 Premises and equipment, net........................... 7,666 7,842 Stock in Federal Home Loan Bank, at cost.............. 1,591 1,568 Accrued interest...................................... 539 629 Other assets.......................................... 235 118 --------- --------- Total assets...................................... $ 166,320 $ 159,570 ========= ========= LIABILITIES AND STOCKHOLDERS' EQUITY LIABILITIES Deposits.............................................. $ 128,162 $ 130,989 Escrows............................................... 438 968 Accrued interest and other liabilities................ 167 185 Deferred income taxes................................. 115 135 Advances from Federal Home Loan Bank.................. 9,845 -- Income taxes payable.................................. 8 1 --------- --------- Total liabilities.................................. 138,735 132,278 --------- --------- STOCKHOLDERS' EQUITY Common Stock, $.10 par value,10,000,000 shares authorized, 1,284,534 and 1,278,793 shares issued and outstanding at December 31, 2002 and June 30, 2002, respectively ......................... 128 128 Additional paid-in capital............................ 3,177 3,177 Retained earnings, substantially restricted........... 24,446 24,322 Unearned ESOP shares and stock awards................. (311) (361) Accumulated other comprehensive income................ 145 26 --------- --------- Total stockholders' equity........................ 27,585 27,292 --------- --------- Total liabilities and stockholders' equity............ $ 166,320 $ 159,570 ========= =========
See accompanying notes to condensed consolidated financial statements. 2 Alamogordo Financial Corp. Condensed Consolidated Statements of Income and Comprehensive Income For the three months and six months ended December 31, 2002 and 2001 (Unaudited)
Three Months Ended Six Months Ended December 31, December 31, ------------------------- -------------------------- 2002 2001 2002 2001 ----------- ----------- ----------- ----------- (In Thousands) Interest income: Interest and fees on loans ................... $ 2,119 $ 2,232 $ 4,268 $ 4,597 Interest on securities ....................... 156 8 227 34 Interest on mortgage-backed securities ....... 26 37 55 64 Interest on other interest-earning assets .... 76 128 183 235 ----------- ----------- ----------- ----------- Total interest income ....................... 2,377 2,405 4,733 4,930 Interest expense: Interest on deposits ......................... 1,211 1,554 2,539 3,122 Interest on FHLB advances and other borrowings 73 -- 78 -- ----------- ----------- ----------- ----------- Total interest expense ...................... 1,284 1,554 2,617 3,122 ----------- ----------- ----------- ----------- Net interest income ........................ 1,093 851 2,116 1,808 Provision for loan losses ...................... 22 -- 204 -- ----------- ----------- ----------- ----------- Net interest income, after provision for loan losses ................................. 1,071 851 1,912 1,808 ----------- ----------- ----------- ----------- Other income (loss) Service charges and fees ..................... 86 75 168 152 Gain on sale of loans ........................ 19 -- 19 -- Loss on sale of real estate .................. -- (3) (3) (3) Other ........................................ 34 37 68 75 ----------- ----------- ----------- ----------- Total other income .......................... 139 109 252 224 ----------- ----------- ----------- ----------- Other expenses Salaries and benefits ........................ 428 400 870 806 Occupancy .................................... 166 166 340 341 Data processing fees ......................... 66 62 133 129 Federal insurance premiums and other insurance expense .................................... 17 16 36 33 Advertising .................................. 10 13 23 31 Other ........................................ 168 190 336 349 ----------- ----------- ----------- ----------- Total other expenses ........................ 855 847 1,738 1,689 ----------- ----------- ----------- ----------- Income before income taxes .................. 355 113 426 343 ----------- ----------- ----------- ----------- Provision for income taxes ..................... 132 34 147 116 ----------- ----------- ----------- ----------- Net income .................................. $ 223 $ 79 $ 279 $ 227 =========== =========== =========== =========== Other comprehensive income Unrealized gain, net of tax .................. 15 4 119 8 ----------- ----------- ----------- ----------- Total comprehensive income ................ $ 238 $ 83 $ 398 $ 235 =========== =========== =========== =========== Basic earnings per common share ................ $ .177 $ .063 $ .221 $ .181 =========== =========== =========== =========== Weighted average number of common shares outstanding-basic ........................... 1,261,672 1,254,049 1,261,672 1,254,049 =========== =========== =========== ===========
See accompanying notes to condensed consolidated financial statements. 3 Alamogordo Financial Corp. Condensed Consolidated Statements of Income and Comprehensive Income (continued) For the three months and six months ended December 31, 2002 and 2001 (Unaudited)
Three Months Ended Six Months Ended December 31, December 31, -------------------------- -------------------------- 2002 2002 2001 2001 ---- ---- ---- ---- (In Thousands) Diluted earnings per common share.................... $ .175 $ .063 $ .219 $ .180 ========== ========== ========== ========= Weighted average number of common shares outstanding-diluted............................... 1,273,023 1,261,130 1,276,556 1,259,973 ========= ========= ========= ========= Comprehensive income per common share: Basic.............................................. $ .189 $ .066 $ .315 $ .187 ========== ========== ========== ========= Diluted............................................ $ .187 $ .066 $ .312 $ .187 ========== ========== ========== ========= Minority shareholders cash dividends per common share.............................................. $ .17 $ .15 $ .34 $ .30 ========== ========== ========== =========
See accompanying notes to condensed consolidated financial statements. 4 Alamogordo Financial Corp. Condensed Consolidated Statements of Cash Flows for the Six months ended December 31, 2002 and 2001 (Unaudited)
Six months ended December 31, 2002 2001 -------- -------- (in thousands) Cash flows from operating activities: Net income ........................................................... $ 279 $ 227 Adjustments to reconcile net income to net cash provided by operating activities Depreciation ......................................................... 185 188 Net amortization of premiums and accretion of discounts on securities 15 19 Gain on sale of loans ................................................ 19 -- (Gain) loss on sales of other real estate owned ...................... (3) 3 Decrease in provision for loan losses ................................ (142) -- Decrease in accrued interest receivable ............................. 90 177 Decrease in income taxes receivable .................................. -- 15 (Increase) decrease in other assets ................................. (117) 57 Decrease in accrued interest payable and other liabilities ........... (18) (81) Decrease in deferred income taxes payable ............................ (20) (45) Increase in income taxes payable ..................................... 7 10 Amortization of stock awards ......................................... 36 115 -------- -------- Net cash provided by operating activities ......................... 331 685 -------- -------- Cash flows from investing activities: Proceeds from maturities, calls, and principal payments of securities available-for-sale ............................................... 539 4,090 Proceeds from maturities and principal payments of securities held-to-maturity ................................................. 500 576 Purchases of securities available-for-sale ........................... (13,228) (2,059) Purchases of securities held-to-maturity ............................. (4,883) -- Proceeds from sale of loans .......................................... 1,448 -- Purchases of FHLB stock .............................................. (23) (26) Net decrease in loans ................................................ 7,184 4,995 Purchases of loans ................................................... (1,407) (238) Purchases of premises and equipment .................................. (9) (19) Net proceeds from sales/claims of real estate owned .................. 235 83 -------- -------- Net cash provided investing activities ............................ (9,644) 7,402 -------- -------- Cash flows from financing activities: Net increase (decrease) in deposits .................................. (2,827) 11,428 Net decrease in escrows .............................................. (530) (583) Proceeds from advances from Federal Home Loan Bank ................... 10,000 -- Payments on advances from Federal Home Loan Bank ..................... (155) -- Cash dividends paid on common stock .................................. (177) (170) Release of ESOP shares ............................................... 22 15 ESOP stock note payment .............................................. 14 14 -------- -------- Net cash provided by (used in) financing activities ............. $ 6,347 $ 10,704 -------- -------- Net increase (decrease) in cash and cash equivalents ..................... $ (2,966) $ 18,791 Cash and cash equivalents, beginning of year ............................. 21,924 5,724 -------- -------- Cash and cash equivalents, end of year ................................... $ 18,958 $ 24,515 ======== ======== Noncash investing and financing activities: Transfers of loans to real estate owned .............................. $ 240 $ 198 FHLB stock dividends ................................................. 23 26 Supplemental disclosures of cash flow information: Income taxes paid .................................................... $ 240 $ 140 Interest expense ..................................................... 2,590 3,112
See accompanying notes to condensed consolidated financial statements. 5 NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) 1. Basis of Presentation The accompanying unaudited condensed consolidated financial statements include the accounts of Alamogordo Financial Corp. (the "Company"), its wholly owned subsidiary, Alamogordo Federal Savings and Loan Association (the "Bank"), and Space Age City Service Corporation, a wholly owned subsidiary of the Bank. The financial statements included herein have been prepared by the Company without audit and in accordance with instructions for Form 10-QSB and therefore do not include all disclosure necessary for a complete presentation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States of America. In the opinion of management, the unaudited financial statements include all adjustments, consisting of normal recurring accruals, necessary for a fair presentation of the financial position and results of operations for the periods presented. Certain information and footnote disclosures normally included in accordance with generally accepted accounting principles have been condensed or omitted pursuant to the rules and regulations of the Securities and Exchange Commission. Alamogordo Financial Corp. believes that the disclosures are adequate to make the information presented not misleading; however, the results for the quarter and the six months ended December 31, 2002 are not necessarily indicative of results to be expected for the entire fiscal year ending June 30, 2003. The interim unaudited financial statements presented herein should be read in conjunction with the annual audited financial statements of Alamogordo Financial Corp. for the fiscal year ended June 30, 2002, included in the Company's 2002 Annual Report. ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS This discussion and analysis reflects Alamogordo Financial Corp.'s consolidated financial statements and other relevant statistical data and is intended to enhance your understanding of our financial condition and results of operations. You should read the information in this section in conjunction with Alamogordo Financial's consolidated financial statements and their notes and the other statistical data provided in this Form 10-QSB. This 10-QSB contains certain "forward-looking statements" which may be identified by the use of such words as "believe," "expect," "anticipate," "should," "planned," "estimated" and "potential." Examples of forward-looking statements include, but are not limited to, estimates with respect to our financial condition, results of operations and business that are subject to various factors which could cause actual results to differ materially from these estimates and most other statements that are not historical in nature. These factors include, but are not limited to, general and local economic conditions, changes in interest rates, deposit flows, demand for mortgage and other loans, real estate values, and competition; changes in accounting principles, policies, or guidelines; changes in legislation or regulation; and other economic, competitive, governmental, regulatory, and technological factors affecting our operations, pricing, products and services. Comparison of Financial Condition at December 31, 2002 and June 30, 2002 Alamogordo Financial Corp.'s total assets increased by $6.7 million, or 4.2%, to $166.3 million at December 31, 2002, from $159.6 million at June 30, 2002. The increase resulted primarily from an increase in securities, partially offset by a decrease in cash and cash equivalents and loans receivable. Cash and cash equivalents decreased by $3.0 million, or 13.6%, to $19.0 million from $22.0 million primarily due to the purchase of securities and a decrease in deposits, partially offset by a decrease in loans receivable. Securities, including mortgage-backed securities, increased by $17.1 million, or 159.8%, to $27.8 million from $10.7 million as a result of purchases of securities, partially offset by maturities and repayments. 6 Loans receivable decreased by $7.3 million, or 6.3%, to $109.2 million from $116.5 million as a result of principal repayments and loan payoffs surpassing new loan originations. Total deposits decreased by $2.8 million, or 2.1%, to $128.2 million at December 31, 2002 from $131.0 million at June 30, 2002. The decrease resulted from a $4.1 million, or 3.7%, decrease in certificate accounts to $106.2 million from $110.3 million, partially offset by a $1.6 million, or 8.7%, increase in transaction and savings deposits to $19.9 million from $18.3 million. The decrease in certificate accounts resulted from maturities surpassing new account openings. Total borrowings increased to $9.8 million at December 31, 2002 as compared to none for the previous period as an advance from the Federal Home Loan Bank (the "FHLB") was obtained in order to meet future liquidity needs, take advantage of low advance rates, and partici e FHLB's "Community Investment Program". Total stockholders' equity increased by $293,000, or 1.1%, to $27.6 million at December 31, 2002 from $27.3 million at June 30, 2002. The increase resulted primarily from earnings over the period of $279,000 and a $119,000 increase in accumulated other comprehensive income related to unrealized gains on securities available for sale, partially offset by dividends paid to stockholders of $177,000. As of December 31, 2002, Alamogordo Federal had $25.8 million of tangible capital or 15.6% of tangible assets, $25.8 million of core capital or 15.6% of total adjusted assets, and $26.0 million of risk-based capital or 33.9% of risk-weighted assets. Comparison of Operating Results for the Three Months Ended December 31, 2002 and 2001 General. Net income increased by $144,000, or 182.3%, to $223,000 for the three months ended December 31, 2002, from $79,000 for the three months ended December 31, 2001. The increase resulted from a decrease in interest expense and an increase in other income, partially offset by a decrease in interest income, and increases in the provision for loan losses, other expenses, and the provision for income taxes. Interest Income. Interest income decreased by $28,000, or 1.2%, to $2.38 million for the three months ended December 31, 2002 from $2.41 million for three months ended December 31, 2001. Interest and fees on loans receivable decreased by $113,000, or 5.1%, to $2.1 million from $2.2 million. The decrease resulted from a $7.2 million, or 6.0%, decrease in the average balance of loans receivable to $112.0 million from $119.2 million, and was partially offset by an 8 basis point increase in the average yield on the loan portfolio to 7.57% from 7.49%. Interest on securities, including mortgage-backed securities, increased by $137,000, or 304.4%, to $182,000 from $45,000. This increase resulted from a $19.0 million, or 413.0%, increase in the average balance of securities, and was partially offset by an 85 basis point decrease in the average yield on securities from 3.93% to 3.08%. Interest on other interest-earning assets decreased by $52,000, or 40.6%, to $76,000 from $128,000. This decrease resulted from a $3.3 million decrease in the average balance of other interest-earning assets and a decrease in the average yield of 70 basis points. The decrease in the average yield on the Company's interest-earning assets was due to a general decrease in the market rates of interest. Interest Expense. Interest expense on deposits decreased by $343,000, or 21.4%, to $1.2 million for the three months ended December 31, 2002 from $1.6 million for the three months ended December 31, 2001. Interest expense on transaction and savings accounts decreased to $34,000 from $62,000, as the average cost decreased 66 basis points to .69% from 1.35%, and was partially offset by a $1.4 million increase in the average balance of transaction and savings accounts from $18.4 million to $19.8 million. Interest expense on certificate accounts decreased by $315,000 to $1.2 million from $1.5 million, as the average balance of certificate accounts decreased from $108.5 million to $105.2 million and the average cost decreased 103 basis points to 4.47% from 5.50%. The decrease in the average cost of deposits is a result of a general decrease in market rates of interest. Interest expense on borrowings increased by $73,000 as the average balance of Federal Home Loan Bank advances was $10.0 million for the three months ended December 31, 2002, as compared to none for the prior period. Net Interest Income. Net interest income increased by $242,000 or 28.4%, to $1.1 million for the 7 three months ended December 31, 2002 from $851,000 for the three months ended December 31, 2002. Net interest rate spread, the difference between the yield on average total interest-earning assets and the cost of average total interest-bearing liabilities, increased by 66 basis points to 2.36% from 1.70%. Provision for Loan Losses. We establish provisions for loan losses, which are charged to operations, in order to maintain the allowance for loan losses at a level that we believe is appropriate to absorb future charge-offs of loans deemed uncollectible. In determining the appropriate level of the allowance for loan losses, management considers loss experience, evaluations of real estate collateral, economic conditions, volume and type of lending the levels of nonperforming and other classified loans. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates. Management assesses the allowance for loan losses on a quarterly basis and makes provisions for loan losses as necessary in order to maintain the adequacy of the allowance. While management uses available information to recognize losses on loans, future loan loss provisions may be necessary based on changes in economic conditions. In addition, various regulatory agencies, as an integral part of their examination process, periodically review the allowance for loan losses and may require us to recognize additional provisions based on their judgment of information available to them at the time of their examination. Based on our evaluation of these factors, and charge-offs of $196,000 during the three months ended December 31, 2002, a provision of $22,000 was made for the three months ended December 31, 2002, as compared to none for the three months ended December 31, 2001. The allowance for loan losses was $398,000, or 46.7% of total nonperforming loans at December 31, 2002, and $540,000, or 22.3% of total nonperforming loans at June 30, 2002. Based on management's assessment of the allowance for loan losses, an additional monthly provision of $5,000 was recommended and commenced October 1, 2002. Based on management's assessment and after consultation with our auditors, the monthly provision was increased to $10,000 in December of 2002. Other Income. Total other income increased by $30,000, or 27.5%, to $139,000 from $109,000. Service charges and fees increased by $11,000, or 14.7%, primarily due to an increase in deposit account service charges. Gain on sale of loans totaled $19,000 for the three months ended December 31, 2002 as compared to no gain for the previous period as $1.4 million of loans were sold in the secondary market during the current period. Other Expenses. Total other expense increased by $8,000, or .9%, to $855,000 for the three months ended December 31, 2002 from $847,000 for the three months ended December 31, 2001. Salaries and benefits expense increased by $28,000, primarily due to a $23,000 decrease in the deferral of loan origination costs, as new loan originations decreased during the current period, and a $25,000 increase in salaries expense, and was partially offset by a $26,000 decrease in compensation expense recognized for the stock awards plan as the directors became fully vested in their shares. Other expense decreased by $22,000, or 11.6%, to $168,000 from $190,000. Provision for Income Taxes. The provision for income taxes increased to $132,000, or 37.2% of net income before income taxes, from $34,000, or 30.1% of net income before income taxes. The increase in the provision resulted from an increase in net income before income taxes. The increase in the effective tax rate resulted from changes in certain deferred tax items. Comparison of Operating Results for the Six Months Ended December 31, 2002 and 2001 General. Net income increased by $52,000, or 22.9%, to $279,000 for the six months ended December 31, 2002, from $227,000 for the six months ended December 31, 2001. The increase resulted from a decrease in interest expense and an increase in other income, partially offset by a decrease in interest income, and increases in the provision for loan losses, other expenses, and the provision for income taxes. Interest Income. Interest income decreased by $197,000, or 4.0%, to $4.7 million for the six months ended December 31, 2002 from $4.9 million for the six months ended December 31, 2001. Interest and fees on loans receivable decreased by $329,000, or 7.2%, to $4.3 million from $4.6 million. The 8 decrease resulted from a $7.6 million, or 6.3%, decrease in the average balance of loans receivable to $113.3 million from $120.9 million and a 7 basis point increase in the average yield on the loan portfolio to 7.53% from 7.60%. Interest on securities, including mortgage-backed securities, increased by $184,000, or 187.8%, to $282,000 from $98,000. This increase resulted from a $12.8 million, or 290.9%, increase in the average balance of securities, and was partially offset by a 114 basis point decrease in the average yield on securities from 4.41% to 3.27%. Interest on other interest-earning assets decreased by $52,000, or 22.1%, to $183,000 from $235,000. This decrease resulted from a decrease in the average yield of 99 basis points and was partially offset by a $3.5 million increase in the average balance of other interest-earning assets. The decrease in the average yield on the Company's interest-earning assets was due to a general decrease in the market rates of interest. Interest Expense. Interest expense on deposits decreased by $583,000, or 18.8%, to $2.5 million for the six months ended December 31, 2002 from $3.1 million for the six months ended December 31, 2001. Interest expense on transaction and savings accounts decreased to $74,000 from $162,000, as the average cost decreased 105 basis points to .76% from 1.81%, and was partially offset by a $1.5 million increase in the average balance of transaction and savings accounts from $17.9 million to $19.4 million. Interest expense on certificate accounts decreased by $495,000 to $2.5 million from $3.0 million, as the average cost decreased 101 basis points to 4.61% from 5.62% and was partially offset by an increase in the average balance of certificate accounts from $105.4 million to $106.8 million. The decrease in the average cost of deposits is a result of a general decrease in market rates of interest. Interest expense on borrowings increased by $78,000 as the average balance of Federal Home Loan Bank advances was $5.3 million for the six months ended December 31, 2002, as compared to none for the prior period. Net Interest Income. Net interest income increased by $308,000, or 17.1%, to $2.1 million for the six months ended December 31, 2002 from $1.8 million for the six months ended December 31, 2001. The net interest rate spread, the difference between the yield on average total interest-earning assets and the cost of average total interest-bearing liabilities, increased by 42 basis points to 2.29% from 1.87%. Provision for Loan Losses. Based on the factors described above in the "Comparison of Operating Results for the Three Months Ended December 31, 2002 and 2001, and charge-offs of $346,000 for the six months ended December 31, 2002, a provision of $204,000 was made for the six months ended December 31, 2002, as compared to none for the six months ended December 31, 2001. Other Income. Total other income increased by $28,000, or 12.5%, to $252,000 from $224,000. Service charges and fees increased by $16,000, or 10.5%, primarily due to an increase in deposit account service charges. Gain on sale of loans totaled $19,000 for the six months ended December 31, 2002 as compared to no gain for the previous period as $1.4 million of loans were sold in the secondary market during the current period. Other Expenses. Total other expense increased by $49,000, or 2.9%, to $1.74 million for the six months ended December 31, 2002 from $1.70 million for the six months ended December 31, 2001. Salaries and benefits expense increased by $64,000, primarily due to a $32,000 decrease in the deferral of loan origination costs, as new loan originations decreased during the current period, and a $90,000 increase in salaries expense, and was partially offset by a $78,000 decrease in compensation expense recognized for the stock awards plan as the directors became fully vested in their shares. Other expense decreased by $13,000, or 3.7%, to $336,000 from $349,000. Provision for Income Taxes. The provision for income taxes increased to $147,000, or 34.5% of net income before income taxes, from $116,000, or 33.8% of net income before income taxes. The increase in the provision resulted from an increase in net income before income taxes. The increase in the effective tax rate resulted from changes in certain deferred tax items. 9 Liquidity Alamogordo Federal Savings and Loan Association is required by OTS regulations to maintain sufficient liquidity to ensure its safe and sound operation. This requirement, which varies from time to time depending upon economic conditions and deposit flows, is based upon a percentage of deposits and short-term borrowings. The Bank's liquidity ratio averaged 29.77% during the quarter ended December 31, 2002, and was 30.73% at December 31, 2002. ITEM 3. CONTROLS AND PROCEDURES The Company's Chief Executive Officer and Chief Financial Officer have concluded, based on their evaluation within 90 days prior to the filing date of this report, that the Company's disclosure controls and procedures (as defined in Securities Exchange Act Rules 13a-14(c) and 15d-14(c)) are effective to ensure that information required to be disclosed in the reports that the Company files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission's rules and forms. There have been no significant changes in the Company's internal controls or in other factors that could significantly affect these controls subsequent to the date of the foregoing evaluation. PART II. OTHER INFORMATION ITEM 1. LEGAL PROCEEDINGS There are various claims and lawsuits in which Alamogordo Financial Corp. is periodically involved incidental to its business. In the opinion of management, no material loss is expected from any of such pending claims or lawsuits. ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS (a) Changes in Securities. Not applicable. (b) Use of proceeds. Not applicable ITEM 3. DEFAULTS UPON SENIOR SECURITIES Not applicable. ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS The Annual Meeting of Stockholders of the Company was held on November 20, 2002 at 11:00 a.m. local time, pursuant to due notice. According to the certified list of stockholders, which was presented at the Annual Meeting, there were 1,292,317 outstanding votes that were entitled to be cast at the Annual Meeting, of which 646,159 represented a majority. There were present at the Annual Meeting in person or by proxy the holders of 1,214,098 votes, said votes constituting a majority and more than a quorum of the outstanding votes entitled to be cast. 10 Proposal No. 1 - Election of Directors Proposal No. 1 was for the election of Robert W. Hamilton and Earl E Wallin, each to serve as directors for terms of three years and until their successors have been elected and qualified. There were 1,214,098 votes cast for Robert W. Hamilton and 1,214,098 votes cast for Earl E Wallin. Proposal No. 2 - Ratification of The Accounting & Consulting Group, L.L.P. as Auditors Proposal No. 2 was for the appointment of The Accounting & Consulting Group, L.L.P. to serve as auditors for the Company for the fiscal year ending June 30, 2003. There were 1,205,061 votes cast for and 9,037 votes case against ratification of the appointment of The Accounting & Consulting Group, L.L.P. Accordingly, each nominee for director having received a favorable vote of a plurality of the votes cast at the Annual Meeting and Proposal 2 having received a favorable vote of at least a majority of the Company's outstanding votes present in person or by proxy to be cast at the Annual Meeting, each of the propositions described above was declared to be duly approved by the stockholders of the Company. ITEM 5. OTHER INFORMATION Dividends on Common Stock On January 21, 2003, the Company declared a quarterly cash dividend of $.17 per share. The dividends were payable to stockholders of record as of January 31, 2003, and will be paid on February 14, 2003. AF Mutual Holding Company, which owns 918,000 shares of stock in the Company, waived receipt of $.1375 per share of its quarterly dividend, thereby reducing the actual dividend payout to $93,469. ITEM 6. EXHIBITS AND REPORT ON FORM 8-K. (a) Exhibit 99.1: Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. (b) Report on Form 8-K: None. 11 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed by the undersigned thereunto duly authorized. Alamogordo Financial Corp. Date: February 13, 2003 By: /s/ R. Miles Ledgerwood ---------------------------------- R. Miles Ledgerwood President and Chief Executive Officer Date: February 13, 2003 By: /s/ Norma J. Clute ---------------------------------- Norma J. Clute CFO and Treasurer 12 Certification of Chief Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, R. Miles Ledgerwood, President and Chief Executive Officer, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Alamogordo Financial Corp.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedure to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. February 13, 2003 /s/ R. Miles Ledgerwood - --------------------- ------------------------------------- Date R. Miles Ledgerwood President and Chief Executive Officer 13 Certification of Chief Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 I, Norma J. Clute, Chief Financial Officer and Treasurer, certify that: 1. I have reviewed this quarterly report on Form 10-QSB of Alamogordo Financial Corp.; 2. Based on my knowledge, this quarterly report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this quarterly report; 3. Based on my knowledge, the financial statements, and other financial information included in this quarterly report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this quarterly report; 4. The registrant's other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the registrant and have: a) designed such disclosure controls and procedure to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this quarterly report is being prepared; b) evaluated the effectiveness of the registrant's disclosure controls and procedures as of a date within 90 days prior to the filing date of this quarterly report (the "Evaluation Date"); and c) presented in this quarterly report our conclusions about the effectiveness of the disclosure controls and procedures based on our evaluation as of the Evaluation Date; 5. The registrant's other certifying officers and I have disclosed, based on our most recent evaluation, to the registrant's auditors and the audit committee of registrant's board of directors (or persons performing the equivalent functions): a) all significant deficiencies in the design or operation of internal controls which could adversely affect the registrant's ability to record, process, summarize and report financial data and have identified for the registrant's auditors any material weaknesses in internal controls; and b) any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant's internal controls; and 6. The registrant's other certifying officers and I have indicated in this quarterly report whether there were significant changes in internal controls or in other factors that could significantly affect internal controls subsequent to the date of our most recent evaluation, including any corrective actions with regard to significant deficiencies and material weaknesses. February 13, 2003 /s/ Norma J. Clute - --------------------- ------------------------------------- Date Norma J. Clute Chief Financial Officer and Treasurer 14 EX-99 3 alamo99139860.txt EXHIBIT 99.1 Exhibit 99.1 Exhibit 99.1 Certification of Chief Executive Officer and Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 R. Miles Ledgerwood, President and Chief Executive Officer, and Norma J. Clute, Chief Financial Officer and Treasurer of Alamogordo Financial Corp. (the "Company") each certify in his or her capacity as an officer of the Company that he or she has reviewed the Quarterly Report of the Company on Form 10-QSB for the quarter ended September 30, 2002 and that to the best of his or her knowledge: (1) the report fully complies with the requirements of Sections 13(a) of the Securities Exchange Act of 1934; and (2) the information contained in the report fairly presents, in all material respects, the financial condition and results of operations of the Company. The purpose of this statement is solely to comply with Title 18, Chapter 63, Section 1350 of the United States Code, as amended by Section 906 of the Sarbanes-Oxley Act of 2002 February 13, 2003 /s/ R. Miles Ledgerwood - --------------------- ------------------------------------- Date R. Miles Ledgerwood President and Chief Executive Officer February 13, 2003 /s/ Norma J. Clute - --------------------- ------------------------------------- Date Norma J. Clute Chief Financial Officer and Treasurer -----END PRIVACY-ENHANCED MESSAGE-----