SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 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 June 30, 2007
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 No. 001-52751
FSB Community Bankshares, Inc.
------------------------------
(Exact name of registrant as specified in its charter)
United States 74-3164710
------------------------------- ---------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
45 South Main Street, Fairport, New York 14450
----------------------------------------- -----
(Address of Principal Executive Offices) Zip Code
(585) 223-9080
--------------
(Registrant's telephone number)
N/A
------------------------------------------------------
(Former name or former address, if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such requirements for the past 90 days. YES NO X
--- ---.
Indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act). YES NO X
--- ---
As of August 13, 2007 there were 1,785,000 shares of the Registrant's
common stock, par value $0.10 per share, outstanding, 945,050, or 53.0%, of
which were held by FSB Community Bankshares, MHC, the Registrant's mutual
holding company.
FSB Community Bankshares, Inc.
FORM 10-QSB
Index
-----
Page
____
Part I. Financial Information
Item 1. Consolidated Financial Statements (unaudited)
Consolidated Balance Sheets as of June 30, 2007
and December 31, 2006 1
Consolidated Statements of Operations for the Three Months Ended
June 30, 2007 and 2006 2
Consolidated Statements of Operations for the Six Months Ended
June 30, 2007 and 2006 3
Consolidated Statements of Stockholder's Equity for the Six Months Ended
June 30, 2007 and 2006 4
Consolidated Statements of Cash Flows for the Six Months Ended
June 30, 2007 and 2006 5
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis or Plan of Operation 10
Item 3. Controls and Procedures 22
Part II. Other Information
Item 1. Legal Proceedings 22
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 22
Item 3. Defaults upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 23
Item 5. Other Information 23
Item 6. Exhibits 23
Signature Page 24
Part I. Financial Information
Item 1. Consolidated Financial Statements
FSB COMMUNITY BANKSHARES, INC.
Consolidated Balance Sheets
June 30, 2007 and December 31, 2006 (unaudited)
(Dollars in thousands, except per share data)
June 30, December 31,
Assets 2007 2006
------------- ----------------
Cash and due from banks $ 1,251 $ 1,202
Interest-earning demand deposits 8,495 980
------------- ----------------
Cash and Cash Equivalents 9,746 2,182
Securities available for sale 537 604
Securities held to maturity (fair value 2007- $24,904,
2006- $25,502) 25,213 24,191
Investment in FHLB stock 1,151 1,490
Loans receivable, net of allowance for loan losses of $322 120,475 121,137
Accrued interest receivable 808 873
Premises and equipment, net 2,641 2,146
Other assets 748 200
------------- ----------------
Total Assets $ 161,319 $ 152,823
============= ================
Liabilities
Deposits:
Non-interest bearing $ 3,291 $ 3,402
Interest bearing 121,873 105,178
------------- ----------------
Total Deposits 125,164 108,580
Short term borrowings - 4,200
Long term borrowings 19,957 23,824
Advances from borrowers for taxes and insurance 2,314 1,828
Other liabilities 305 521
------------- ----------------
Total Liabilities 147,740 138,953
------------- ----------------
Stockholder's Equity
Preferred Stock- no par- 1,000,000 shares authorized; - -
No shares issued and outstanding
Common Stock- $0.10 par value- 10,000,000 shares authorized; - -
100 shares issued and outstanding
Additional paid in capital 10 10
Retained earnings 13,258 13,505
Accumulated other comprehensive income 311 355
------------- ----------------
Total Stockholder's Equity 13,579 13,870
------------- ----------------
Total Liabilities and Stockholder's Equity $ 161,319 $ 152,823
============= ================
See accompanying notes to consolidated financial statements
1
FSB COMMUNITY BANKSHARES, INC.
Consolidated Statements of Operations
Three Months Ended June 30, 2007 and 2006 (unaudited)
(Dollars in thousands)
2007 2006
------------------- -------------------
Interest and Dividend Income
Loans $ 1,782 $ 1,656
Securities-taxable 242 234
Mortgage-backed securities 64 75
Other 41 18
------------------- -------------------
Total Interest and Dividend Income 2,129 1,983
------------------- -------------------
Interest Expense
Deposits 1,064 845
Borrowings:
Short term - 2
Long term 255 214
------------------- -------------------
Total Interest Expense 1,319 1,061
------------------- -------------------
Net Interest Income 810 922
------------------- -------------------
Other Income
Service fees 25 22
Fee income 20 53
Other 33 30
------------------- -------------------
Total Other Income 78 105
------------------- -------------------
Other Expense
Salaries and employee benefits 549 482
Occupancy expense 109 67
Data processing costs 29 18
Advertising 60 47
Equipment expense 84 72
Electronic banking 14 19
Directors fees 24 22
Mortgage fees and taxes 47 57
Other expense 147 92
------------------- -------------------
Total Other Expense 1,063 876
------------------- -------------------
Income (Loss) Before Income Taxes (175) 151
Provision (Benefit) for Income Taxes (63) 54
------------------- -------------------
Net Income (Loss) $ (112) $ 97
=================== ===================
See accompanying notes to consolidated financial statements
2
FSB COMMUNITY BANKSHARES, INC.
Consolidated Statements of Operations
Six Months Ended June 30, 2007 and 2006 (unaudited)
(Dollars in thousands)
2007 2006
Interest and Dividend Income ------------------- -------------------
Loans $ 3,575 $ 3,251
Securities-taxable 477 452
Mortgage-backed securities 123 156
Other 47 46
------------------- -------------------
Total Interest and Dividend Income 4,222 3,905
------------------- -------------------
Interest Expense
Deposits 2,027 1,587
Borrowings:
Short term 29 10
Long term 516 427
------------------- -------------------
Total Interest Expense 2,572 2,024
------------------- -------------------
Net Interest Income 1,650 1,881
------------------- -------------------
Other Income
Service fees 49 37
Fee income 42 77
Other 68 59
------------------- -------------------
Total Other Income 159 173
------------------- -------------------
Other Expense
Salaries and employee benefits 1,173 1,015
Occupancy expense 216 134
Data processing costs 53 37
Advertising 162 81
Equipment expense 178 149
Electronic banking 21 40
Directors fees 53 48
Mortgage fees and taxes 71 88
Other expense 267 206
------------------- -------------------
Total Other Expense 2,194 1,798
------------------- -------------------
Income (Loss) Before Income Taxes (385) 256
Provision (Benefit) for Income Taxes (138) 92
------------------- -------------------
Net Income (Loss) $ (247) $ 164
=================== ===================
See accompanying notes to consolidated financial statements
3
FSB COMMUNITY BANKSHARES, INC.
Consolidated Statements of Stockholder's Equity
Six Months Ended June 30, 2007 and 2006 (unaudited)
(Dollars in thousands)
Accumulated
Additional Other
Preferred Common Paid in Retained Comprehensive
Stock Stock Capital Earnings Income Total
----------- ----------- ------------- -------------- --------------- ----------
Balance - January 1, 2006 $ - $ - $ 10 $ 13,272 $ 336 $ 13,618
Comprehensive income
Net income 164 164
Change in net unrealized gain
on securities available for
sale, net of taxes - - - - (47) (47)
----------- ----------- ------------- -------------- --------------- ----------
Total Comprehensive Income 117
----------
Balance - June 30, 2006 $ - $ - $ 10 $ 13,436 $ 289 $ 13,735
=========== =========== ============= ============== ================ ==========
Balance - January 1, 2007 $ - $ - $ 10 $ 13,505 $ 355 $ 13,870
Comprehensive loss
Net loss (247) (247)
Change in net unrealized gain
on securities available for
sale, net of taxes - - - - (44) (44)
----------- ----------- ------------- -------------- ---------------- ----------
Total Comprehensive Loss (291)
----------
Balance - June 30, 2007 $ - $ - $ 10 $ 13,258 $ 311 $ 13,579
============ =========== ============= ============== =============== ==========
See accompanying notes to consolidated financial statements
4
FSB COMMUNITY BANKSHARES, INC.
Consolidated Statements of Cash Flows
Six Months Ended June 30, 2007 and 2006 (unaudited)
(Dollars in thousands)
2007 2006
---------------- --------------
Cash Flows From Operating Activities
Net income (loss) $ (247) $ 164
Adjustments to reconcile net income (loss) to net cash provided from
operating activities:
Amortization of premium on investments 17 24
Accretion of discount on investments (2) (1)
Amortization of net deferred loan origination costs (13) (111)
Loans originated for sale (411) -
Proceeds from sales of loans 411 -
Depreciation and amortization 151 111
Deferred income tax benefit (23) (42)
(Increase) decrease in accrued interest receivable 65 (61)
Increase in other assets (543) (48)
Increase (decrease) in other liabilities (175) (32)
---------------- --------------
Net Cash Used By Operating Activities (770) 4
---------------- --------------
Cash Flows From Investing Activities
Purchase of securities held to maturity (5,000) (1,500)
Proceeds from maturities and calls of securities
held to maturity 3,963 956
Net (increase) decrease in loans 675 (7,945)
Net (increase) decrease of Federal Home Loan Bank stock 339 (32)
Purchase of premises and equipment (646) (140)
Proceeds from sale of foreclosed real estate - 225
---------------- --------------
Net Cash Used By Investing Activities (669) (8,436)
---------------- --------------
Cash Flows From Financing Activities
Net increase in deposits 16,584 6,204
Net decrease in short term borrowings (4,200) -
Proceeds from long-term borrowings - 2,000
Repayments on long-term borrowings (3,867) (1,558)
Net increase in advances from borrowers
for taxes and insurance 486 628
---------------- --------------
Net Cash Provided By Financing Activities 9,003 7,274
---------------- --------------
Net Increase (Decrease) in Cash 7,564 (1,158)
and Cash Equivalents
Cash and Cash Equivalents- Beginning 2,182 4,669
---------------- --------------
Cash and Cash Equivalents- End $ 9,746 $ 3,511
================ ==============
5
FSB COMMUNITY BANKSHARES, INC.
Consolidated Statements of Cash Flows, Cont'd
2007 2006
------------------ -----------------
Supplementary Cash Flows Information
Interest paid $ 2,576 $ 2,019
================== =================
Income taxes paid $ 1 $ 46
================ ===============
See accompanying notes to consolidated financial statements
6
Notes to Financial Statements
Note 1-Basis of Presentation
The accompanying unaudited consolidated financial statements of FSB Community
Bankshares, Inc., and its wholly owned subsidiary (the "Company") have been
prepared in accordance with generally accepted accounting principles in the
United States of America for interim financial information and the instructions
of Form 10-QSB. Accordingly, they do not include all of the information and
footnotes necessary for a complete presentation of consolidated financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. In the opinion of management, all adjustments,
consisting of normal recurring accruals, considered necessary for a fair
presentation have been included.
The unaudited consolidated financial statements and "Management's Discussion and
Analysis or Plan of Operation" should be read in conjunction with the Company's
audited financial statements for the years ended December 31, 2006 and 2005,
included in the Prospectus filed under Rule 424(b)(3) with the Securities and
Exchange Commission ("SEC") on May 23, 2007, as subsequently amended.
Operating results for the three and six months ended June 30, 2007 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 2007.
The consolidated financial statements at June 30, 2007 and December 31, 2006 and
for the three and six months ended June 30, 2007 and 2006 include the accounts
of the Company, Fairport Savings Bank (the "Bank") and the Bank's wholly-owned
subsidiary, Oakleaf Services Corporation ("Oakleaf"). All inter-company balances
and transactions have been eliminated in consolidation. Certain amounts from
prior periods have been reclassified, when necessary, to conform to current
period presentation.
Note 2-Stock Issuance Plan
On August 10, 2007 the Company completed its stock offering of 47% of the
aggregate total voting stock of the Company pursuant to the laws of the United
States of America and the rules and regulations of the Office of Thrift
Supervision ("OTS") issuing 1,785,000 shares of common stock, of which 838,950
shares were sold at $10 per share raising gross proceeds of $8.4 million. The
stock was offered to eligible account holders, the Bank's employee stock
ownership plan (ESOP), and to the public. After the offering, 53% of the
Company's outstanding common stock, or 946,050 shares, is owned by FSB Community
Bankshares, MHC.
Costs of approximately $855,000 associated with the Stock Offering have been
deducted from the proceeds from the sale of stock resulting in approximate net
proceeds of $7,534,500, and were included in other assets at June 30, 2007.
Note 3-Recent Accounting Pronouncements
In July 2006, the FASB issued FASB Interpretation No. 48, "Accounting for
Uncertainty in Income Taxes" ("FIN 48"). The interpretation clarifies the
accounting for uncertainty in income taxes recognized in a company's financial
statements in accordance with Statement of Financial Accounting Standards No.
109, "Accounting for Income Taxes." Specifically, the pronouncement prescribes a
recognition threshold and a measurement attribute for the financial statement
recognition and measurement of a tax position taken or expected to be taken in a
tax return. The interpretation also provides guidance on the related
derecognition, classification, interest and penalties, accounting for interim
7
periods, disclosure and transition of uncertain tax positions. The adoption of
FIN 48 did not have any effect on our consolidated financial statements. In May
2007, the FASB issued FASB Staff Position ("FSP") FIN 48-1 "Definition of
Settlement in FASB Interpretation No. 48" (FSP FIN 48-1). FSP FIN 48-1 provides
guidance on how to determine whether a tax position is effectively settled for
the purpose of recognizing previously unrecognized tax benefits. FSP FIN 48-1 is
effective retroactively to January 1, 2007. The implementation of this standard
did not have any impact on our consolidated financial position or results of
operations.
In September 2006, the FASB issued SFAS No. 157, "Fair Value Measurements"
("SFAS 157"), which defines fair value, establishes a framework for measuring
fair value under GAAP, and expands disclosures about fair value measurements.
SFAS 157 applies to other accounting pronouncements that require or permit fair
value measurements. The new guidance is effective for financial statements
issued for fiscal years beginning after November 15, 2007, and for interim
periods within those fiscal years. We are evaluating the impact, if any, of the
adoption of SFAS 157 on our consolidated financial statements.
In February 2007, the FASB issued SFAS No. 159, "The Fair Value Option for
Financial Assets and Financial Liabilities-Including an amendment of FASB
Statement No. 115" ("SFAS 159"). SFAS 159 permits entities to choose to measure
many financial instruments and certain other items at fair value. Unrealized
gains and losses on items for which the fair value option has been elected will
be recognized in earnings at each subsequent reporting date. SFAS 159 is
effective as of January 1, 2008. We are evaluating the impact, if any, of the
adoption of SFAS 159 on our consolidated financial statements.
Note 4-Comprehensive Income (Loss)
Accounting principles generally require that recognized revenue, expenses,
gains, and losses be included in net income. Although certain changes in
assets and liabilities, such as unrealized gains and losses on available
for sale securities, are reported as a separate component of the
stockholder's equity section of the consolidated balance sheets, such
items, along with net income, are components of comprehensive income
(loss).
The components of other comprehensive income (loss) and related tax effects
for the three and six months ended June 30, 2007 and 2006 are as follows:
For the Three Months For the Six Months
Ended June 30, Ended June 30,
2007 2006 2007 2006
---- ---- ---- ----
(In Thousands) (In Thousands)
Unrealized holding gain (loss) on available for $ 9 $ (48) $ (67) $ (72)
sale securities
Less reclassification adjustment for realized gains
Included in net income - - - -
----- ------ ------ ------
Net unrealized loss 9 (48) (67) (72)
Tax effect 3 (17) (23) (25)
Net of tax amount $ 6 $ 31 $ (44) $ (47)
===== ====== ====== =======
8
Note 5-Earnings (Loss) Per Share
Since the Offering described in Note 2 was still in process as of June 30, 2007,
the Company has not presented earnings (loss) per share data since such
information would not be meaningful.
Item 2. Management's Discussion and Analysis or Plan of Operation
General
Throughout the Management's Discussion and Analysis or Plan of Operation
("MD&A") the term, "the Company", refers to the consolidated entity of FSB
Community Bankshares, Inc., Fairport Savings Bank, and Oakleaf Services
Corporation, a wholly owned subsidiary of Fairport Savings Bank. At June 30,
2007, FSB Community Bankshares, MHC the Company's mutual holding company parent,
held 100% of the Company's outstanding common stock, engaged in no significant
activities and was not included in the MD&A.
Forward Looking Statements
This Quarterly Report contains forward-looking statements, within the
meaning of the Private Securities Litigation Reform Act of 1995. Such statements
are subject to certain risks and uncertainties, including, among other things,
changes in economic conditions including real estate values in the Company's
market area, changes in policies by regulatory agencies, fluctuations in
interest rates, demand for loans in the Company's market areas and competition,
that could cause actual results to differ materially from historical earnings
and those presently anticipated or projected. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements,
which speak only as of the date made. The Company wishes to advise readers that
the factors listed above could affect the Company's financial performance and
could cause the Company's actual results for future periods to differ materially
from any opinions or statements expressed with respect to future periods in any
current statements.
The Company does not undertake, and specifically declines any obligation,
to publicly release the results of any revisions that may be made to any
forward-looking statements to reflect events or circumstances after the date of
such statements or to reflect the occurrence of anticipated or unanticipated
events.
Critical Accounting Policies
The most significant accounting policies followed by the Company are
presented in Note 1 to the consolidated financial statements ("the Consolidated
Financial Statements") included in the Company's Prospectus filed pursuant to
Rule 424(b) on May 23, 2007, as subsequently amended. These policies, along with
the disclosures presented in the other financial statement notes and in this
discussion, provide information on how significant assets and liabilities are
valued in the consolidated financial statements and how those values are
determined. We have identified the accounting of our allowance for loan losses
as our critical accounting policy.
Allowance for Loan Losses. The allowance for loan losses is the amount
estimated by management as necessary to absorb credit losses incurred in the
loan portfolio that are both probable and reasonably estimable at the balance
sheet date. The amount of the allowance is based on significant estimates, and
the ultimate losses may vary from such estimates as more information becomes
available or conditions change. The methodology for determining the allowance
for loan losses is considered a critical accounting policy by management due to
the high degree of judgment involved, the subjectivity of the assumptions used
9
and the potential for changes in the economic environment that could result in
changes to the amount of the recorded allowance for loan losses.
As a substantial percentage of our loan portfolio is collateralized by real
estate, appraisals of the underlying value of property securing loans are
critical in determining the amount of the allowance required for specific loans.
Assumptions are instrumental in determining the value of properties. Overly
optimistic assumptions or negative changes to assumptions could significantly
affect the valuation of a property securing a loan and the related allowance
determined. Management carefully reviews the assumptions supporting such
appraisals to determine that the resulting values reasonably reflect amounts
realizable on the related loans.
Management performs a quarterly evaluation of the adequacy of the allowance
for loan losses. We consider a variety of factors in establishing this estimate
including, but not limited to, current economic conditions, delinquency
statistics, geographic concentrations, the adequacy of the underlying
collateral, the financial strength of the borrower, results of internal loan
reviews and other relevant factors. This evaluation is inherently subjective as
it requires material estimates by management that may be susceptible to
significant change based on changes in economic and real estate market
conditions.
The evaluation has a specific and general component. The specific component
relates to loans that are delinquent or otherwise identified as a problem loan
through the application of our loan review process and our loan grading system.
All such loans are evaluated individually, with principal consideration given to
the value of the collateral securing the loan. Specific allowances are
established as required by this analysis. The general component is determined by
segregating the remaining loans by type of loan, risk weighting (if applicable)
and payment history. We also analyze historical loss experience, delinquency
trends, general economic conditions and geographic concentrations. This analysis
establishes factors that are applied to the loan groups to determine the amount
of the general component of the allowance for loan losses.
Actual loan losses may be significantly more than the allowance we have
established which could have a material negative effect on our financial
results.
Comparison of Financial Condition at June 30, 2007 and December 31, 2006
Total Assets. Total assets increased by $8.5 million, or 5.6%, to $161.3
million at June 30, 2007 from $152.8 million at December 31, 2006. The primary
increase in total asset growth reflected increases in cash and cash equivalents
of $7.6 million, with $5.6 million in subscription funds from the Company's
stock offering and additional funds from deposit growth in the Irondequoit and
Penfield branches. Securities increased by $955,000 while premises and equipment
increased by $495,000 mainly due to building and equipment costs associated with
the new Irondequoit branch. Other assets increased by $548,000 primarily due to
deferred stock offering costs of $502,000. These increases were offset by
decreases in loans receivable of $662,000, and FHLB stock of $339,000.
Loans receivable decreased by $662,000, or .5%, to $120.5 million at June
30, 2007 from $121.1 million at December 31, 2006. The decrease in loans
receivable was the result of loan repayments exceeding loan originations and
10
sales of three 30-year fixed-rate mortgage loans totaling $411,000. The Bank is
not involved in, and has no exposure to, subprime lending activities.
Investment securities increased by $955,000, or 3.9%, to $25.8 million at
June 30, 2007 from $24.8 million at December 31, 2006. The increase was
primarily attributable to $3.5 million in purchases of United States Government
agency securities, $1.5 million in purchases of adjustable rate mortgage-backed
securities, partially offset by the maturity of $3.2 million of United States
Government agency securities, $763,000 of principal payments received from
mortgage-backed securities, and a $67,000 decrease in the fair value of
securities classified as available for sale.
Deposits and Borrowings. Deposits increased by $16.6 million, or 15.3%, to
$125.2 million at June 30, 2007 from $108.6 million at December 31, 2006.
Certificates of deposit, including IRAs, increased by $8.1 million, and
transaction accounts, including checking, money market and savings accounts,
increased by $8.5 million. The net deposit growth was primarily attributable to
$5.6 million in subscription funds deposited into a savings account until the
offering closed, and $9.8 million in deposit growth in the Irondequoit branch
since opening on January 4, 2007.
Borrowings decreased by $8.1 million, or 28.8%, to $20.0 million at June
30, 2007 from $28.0 million on December 31, 2006. We decreased our short-term
Federal Home Loan Bank borrowings by $4.2 million and our long-term Federal Home
Loan Bank borrowings by $3.9 million. These funding sources were replaced by
deposits obtained following the opening of our Irondequoit branch.
Stockholder's Equity. Total stockholder's equity decreased by $291,000, or
2.1%, to $13.6 million at June 30, 2007 from $13.9 million at December 31, 2006.
The decrease resulted from a net loss of $247,000 for the six months ended June
30, 2007, and a $44,000 decrease in accumulated other comprehensive income.
Non-Performing Assets. The table below sets forth the amounts and
categories of our non-performing assets at the dates indicated.
June December
30, 2007 31, 2006
-------- ----------
(Dollars in thousands)
Non-accrual loans:
Real estate loans:
One- to four-family residential........... $ 85 $ 143
Home equity lines of credit............... 150 28
Multi-family residential.................. - -
Construction.............................. - -
Commercial................................ - -
Other loans............................... 3 -
--------- -----------
Total.................................... 238 171
--------- -----------
Accruing loans 90 days or more past due: - -
--------- -----------
Total non-performing loans.............. 238 171
--------- -----------
Foreclosed real estate....................... - -
Other non-performing assets.................. - -
--------- -----------
Total non-performing assets.................. $ 238 $ 171
--------- -----------
Ratios:
Total non-performing loans to total loans 0.20% 0.14%
Total non-performing loans to total assets 0.15% 0.11%
Total non-performing assets to total assets 0.15% 0.11%
11
At June 30, 2007, there were no other loans or other assets that are not
disclosed in the table or disclosed as classified or special mention, where
known information about possible credit problems of borrowers caused us to have
serious doubts as to the ability of the borrowers to comply with the present
loan repayment terms and which may result in disclosure of such loans in the
future.
Average balances and yields. The following table sets forth average balance
sheets, average yields and costs, and certain other information at and for the
periods indicated. All average balances are daily average balances. Non-accrual
loans were included in the computation of average balances, but have been
reflected in the table as loans carrying a zero yield. The Bank has no
tax-exempt securities or loans. The yields set forth below include the effect of
deferred fees, discounts and premiums that are amortized or accreted to interest
income.
For the Three Months Ended June 30,
-------------------------------------------------------------------
2007 2006
--------------------------------- --------------------------------
Interest Interest
Income/ Income/
Average --------- Yield/ Average ---------- Yield/
Balance Expense Cost Balance Expense Cost
---------- --------- -------- ----------- ---------- -------
Interest-earning assets:
Loans......................... $ 120,083 $ 1,782 5.94% $ 113,565 1,656 5.83%
Securities-taxable............ 18,791 242 5.15 20,530 234 4.56
Mortgage-backed securities.... 6,025 64 4.25 7,139 75 4.20
Other......................... 3,293 41 4.98 1,623 18 4.44
---------- ---------- ---- ---------- ---------- ----
Total interest-earning assets 148,192 2,129 5.75% 142,857 1,983 5.55%
---------- ----------
Noninterest-earning assets.... 4,980 3,193
---------- ----------
Total assets............... $ 153,172 $ 146,050
========== ==========
Interest-bearing liabilities:
NOW accounts.................. $ 5,390 8 0.59 $ 3,563 4 0.45
Passbook savings.............. 13,536 35 1.03 12,244 23 0.75
Money market savings......... 10,604 75 2.83 10,739 67 2.50
Individual retirement accounts 15,714 173 4.40 14,632 137 3.75
Certificates of deposit....... 68,265 773 4.53 64,821 614 3.79
Federal Home Loan Bank advances 20,536 255 4.97 19,997 216 4.32
---------- ---------- ---------- ----------
Total interest-bearing
liabilities.............. 134,045 1,319 3.94% 125,996 1,061 3.37%
---------- ---------- ----- ---------- ---------- ----
Noninterest-bearing liabilities:
Demand deposits......... 3,124 3,990
Other......................... 2,351 2,346
---------- ----------
Total liabilities........ 139,520 132,332
Stockholder's equity.......... 13,652 13,718
---------- ----------
Total liabilities and
stockholder's equity..... $ 153,172 $ 146,050
========== ===========
Net interest income........... $ 810 $ 922
========== ==========
Interest rate spread (1)...... 1.81% 2.18%
======== =========
Net interest-earning assets (2) $ 14,147 $ 16,861
========== ==========
Net interest margin (3)....... 2.18% 2.58%
============= ==========
Average interest-earning assets
to average interest-bearing
liabilities................ 111% 113%
========== ==========
---------------------
(1) Interest rate spread represents the difference between the yield on average
interest-earning assets and the cost of average interest-bearing
liabilities.
(2) Net interest-earning assets represent total interest-earning assets less
total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by total
interest-earning assets.
12
For the Six Months Ended June 30,
-------------------------------------------------------------------
2007 2006
-------------------------------- ---------------------------------
Interest Interest
Income/ Income/
Average --------- Yield/ Average ---------- Yield/
Balance Expense Cost Balance Expense Cost
---------- ---------- ------- ---------- ---------- --------
Interest-earning assets:
Loans......................... $ 120,277 $ 3,575 5.94% $ 111,622 3,251 5.94%
Securities-taxable............ 19,101 477 4.99 20,044 452 4.51
Mortgage-backed securities.... 5,899 123 4.17 7,389 156 4.22
Other......................... 1,882 47 4.99 2,174 46 4.23
---------- ---------- ---- ---------- ---------- ----
Total interest-earning assets 147,159 4,222 5.74% 141,229 3,905 5.53%
---------- ----------
Noninterest-earning assets.... 4,839 3,154
---------- ----------
Total assets............... $ 151,998 $ 144,383
========== ==========
Interest-bearing liabilities:
NOW accounts.................. $ 5,139 16 0.62 $ 3,412 8 0.47
Passbook savings.............. 12,866 77 1.20 12,245 38 0.62
Money market savings......... 10,407 146 2.81 10,602 117 2.21
Individual retirement accounts 15,358 330 4.30 14,739 272 3.69
Certificates of deposit....... 66,871 1,458 4.36 63,310 1,152 3.64
Federal Home Loan Bank advances 22,355 545 4.88 20,245 437 4.32
---------- ---------- ---------- ----------
Total interest-bearing
liabilities.............. 132,996 2,572 3.87% 124,553 2,024 3.25%
---------- ---------- ---- ---------- ---------- ----
Noninterest-bearing liabilities:
Demand deposits......... 3,185 4,063
Other......................... 2,132 2,065
---------- ----------
Total liabilities........ 138,313 130,681
Stockholder's equity.......... 13,685 13,702
---------- ----------
Total liabilities and
stockholder's equity..... $ 151,998 $ 144,383
========== ===========
Net interest income........... $ 1,650 $ 1,881
========== ==========
Interest rate spread (1)...... 1.87% 2.28%
==== ====
Net interest-earning assets (2) $ 14,163 $ 16,676
========== ==========
Net interest margin (3)....... 2.24% 2.66%
========== ==========
Average interest-earning assets
to average interest-bearing
liabilities................ 111% 113%
========== ===========
---------------------
(1) Interest rate spread represents the difference between the yield on average
interest-earning assets and the cost of average interest-bearing
liabilities.
(2) Net interest-earning assets represent total interest-earning assets less
total interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by total
interest-earning assets.
13
Comparison of Operating Results for the Three Months Ended June 30, 2007 and
June 30, 2006
General. We had a net loss of $112,000 for the three months ended June 30,
2007 compared to net income of $97,000 the three months ended June 30, 2006. The
decrease was primarily attributable to a decrease in net interest income as a
result of the decrease in our net interest margin in a flat yield curve
environment (short-term interest rates on United States Treasury obligations
equal or are slightly higher or lower than long-term rates). In addition we had
a decrease in other income mainly due to decreasing revenue generated from our
Oakleaf subsidiary, and an increase in other expense resulting primarily from
additional salaries and benefits, occupancy, advertising, and other operating
expenses incurred in connection with the operation of our Irondequoit branch
that opened in early 2007.
Interest and Dividend Income. Interest and dividend income increased by
$146,000, or 7.4% to $2.1 million for the three months ended June 30, 2007 from
$2.0 million for the three months ended June 30, 2006. The increase in interest
and dividend income resulted primarily from a $126,000, or 7.6%, increase in
interest income from loans and a $20,000, or 6.1%, increase in interest income
from investments. Average interest-earning assets increased by $5.3 million, or
3.7%, to $148.2 million for the three months ended June 30, 2007 from $142.9
million for the three months ended June 30, 2006. The yield on interest earning
assets increased by 20 basis points to 5.75% for the three months ended June 30,
2007 compared to 5.55% for the three months ended June 30, 2006, reflecting
modest increases in long-term rates.
Interest Expense. Interest expense increased $258,000, or 23.4%, to $1.3
million for the three months ended June 30, 2007 from $1.1 million for the three
months ended June 30, 2006. The increase in interest expense resulted from an
increase in both the average balance and average cost of interest-bearing
liabilities. The average balance of interest-bearing liabilities increased $8.0
million, or 6.4%, to $134.0 million for the three months ended June 30, 2007
compared to $126.0 million for the three months ended June 30, 2006. The average
cost of interest-bearing liabilities increased by 57 basis points to 3.94% for
the three months ended June 30, 2007 from 3.37% for the three months ended June
30, 2006. The average cost of deposit accounts increased by 56 basis points to
3.75% for the three months ended June 30, 2007 compared to 3.19% for the three
months ended June 30, 2006. In addition, the average cost of Federal Home Loan
Bank advances increased by 65 basis points to 4.97% for the three months ended
June 30, 2007 compared to 4.32% for the three months ended June 30, 2006. The
increase in interest expense reflects higher cost for new and renewing
certificates of deposits and borrowings over the last twelve months.
Based upon current market rates, we expect our cost of funds to increase
slightly in the third quarter of 2007 which will create additional pressure on
our interest rate spread and our ability to be profitable. We have $16.7 million
of certificates of deposit that will mature during the third quarter of 2007
with a weighted average cost of 4.44%. Based on current market rates, if these
funds remain with Fairport Savings Bank with similar maturities, the rates we
pay on these deposits would increase moderately. We hope to alleviate some of
this increase in interest expense with checking and savings account promotions
that would result in lower average interest costs.
Net Interest Income. Net interest income decreased $112,000, or 12.1%, to
$810,000 for the three months ended June 30, 2007 from $922,000 for the three
months ended June 30, 2006. The decrease in net interest income was due
primarily to a 57 basis point increase in the average cost of our
interest-bearing liabilities, while the average yield on our interest-earning
assets increased by only 20 basis points, as the flat yield curve continued to
decrease our net interest rate spread and net interest margin. Our net interest
margin decreased 40 basis points to 2.18% for the three months ended June 30,
2007 from 2.58% for the three months ended June 30, 2006.
14
Provision for Loan Losses. Based on management's evaluation of the factors
that determine the level of the allowance for loan losses, we recorded no
provision for loan losses for the three month periods ended June 30, 2007 and
June 30, 2006. We continue to maintain exceptional credit quality within our
loan portfolio with no charge-offs recorded within the reporting period. The
allowance for loan losses as of June 30, 2007 was $322,000, or 0.27% of total
loans, compared to $331,000, or 0.28% of total loans as of June 30, 2006. We had
non-accrual loans totaling $238,000, or 0.20% of total loans receivable as of
June 30, 2007 compared to $207,000, or 0.18% of loans in non-accrual status as
of June 30, 2006.
Other Income. Other income decreased $27,000, or 25.7%, to $78,000 for the
three months ended June 30, 2007 compared to $105,000 for the three months ended
June 30, 2006. The decrease in other income was primarily the result of a
$33,000 decrease in our Oakleaf subsidiary revenue.
Other Expense. Other expense increased $187,000, or 21.3%, to $1.1 million
for the three months ended June 30, 2007 compared to $876,000 for the three
months ended June 30, 2006. The increase was the result of an additional $67,000
in salaries and benefits expense primarily due to annual cost of living raises
effective January 1 of each year and staffing of the Irondequoit branch which
opened on January 4, 2007, an increase of $42,000 in occupancy expenses
(primarily lease, maintenance and depreciation of the Irondequoit branch), an
increase in data processing costs of $11,000, an increase of $13,000 in
advertising, and an increase of $54,000 in miscellaneous other expenses,
primarily related to the Irondequoit branch as well as increased costs
associated with being a newly registered public company.
Income Tax Expense/Benefit. We had a pre-tax loss of $175,000 for the three
months ended June 30, 2007 versus a pre-tax profit of $151,000 for the three
months ended June 30, 2006, which resulted in a $63,000 tax benefit for the
three months ended June 30, 2007, versus a $54,000 tax expense for the three
months ended June 30, 2006, a change of $117,000. The effective tax rate was
(36.0%) for the three months ended June 30, 2007 compared to 35.8% for the three
months ended June 30, 2006.
Comparison of Operating Results for the Six Months Ended June 30, 2007 and June
30, 2006
General. We had a net loss of $247,000 for the six months ended June 30,
2007 compared to net income of $164,000 the six months ended June 30, 2006. The
decrease was attributable to a decrease in net interest income of $231,000, a
decrease in other income of $14,000, an increase in other expense of $396,000,
offset by a decrease in income taxes of $230,000. The decrease in net interest
income resulted from a decrease in our net interest margin in a flat yield curve
environment and an increase in our other expense resulted primarily from the
additional cost of salaries and benefits, occupancy, and other operating
expenses incurred in connection with the recent opening and operation of our
Irondequoit branch.
Interest and Dividend Income. Interest and dividend income increased by
$317,000, or 8.1% to $4.2 million for the six months ended June 30, 2007 from
$3.9 million for the six months ended June 30, 2006. The increase in interest
and dividend income resulted primarily from a $324,000, or 10.0%, increase in
interest income from loans, partially offset with a $7,000, or 1.1%, decrease in
interest income from investments. Average interest-earning assets increased by
$5.9 million, or 4.2%, to $147.2 million for the six months ended June 30, 2007
from $141.2 million for the six months ended June 30, 2006. The yield on
interest earning assets increased by 21 basis points to 5.74% for the six months
ended June 30, 2007 compared to 5.53% for the six months ended June 30, 2006,
reflecting modest increases in long-term rates and an asset structure containing
a large percentage of fixed rate mortgages.
15
Interest Expense. Interest expense increased $548,000, or 27.1%, to $2.6
million for the six months ended June 30, 2007 from $2.0 million for the six
months ended June 30, 2006. The increase in interest expense resulted from an
increase in both the average balance and average cost of interest-bearing
liabilities. The average balance of interest-bearing liabilities increased $8.4
million, or 6.8%, to $133.0 million for the six months ended June 30, 2007
compared to $124.6 million for the six months ended June 30, 2006. The average
cost of interest-bearing liabilities increased by 62 basis points to 3.87% for
the six months ended June 30, 2007 from 3.25% for the six months ended June 30,
2006. The average cost of deposit accounts increased by 62 basis points to 3.66%
for the six months ended June 30, 2007 compared to 3.04% for the six months
ended June 30, 2006. In addition, the average cost of Federal Home Loan Bank
advances increased by 56 basis points to 4.88% for the six months ended June 30,
2007 compared to 4.32% for the six months ended June 30, 2006. The interest
expense increase was primarily attributable to the deposit customer preference
for high yielding certificates of deposits in the higher short term interest
rate environment that we have been experiencing.
Net Interest Income. Net interest income decreased $231,000, or 12.3%, to
$1.7 million for the six months ended June 30, 2007 from $1.9 million for the
six months ended June 30, 2006. The decrease in net interest income was due
primarily to a 62 basis point increase in the average cost of our
interest-bearing liabilities, while the average yield on our interest-earning
assets increased by only 21 basis points, as the flat yield curve continued to
decrease our net interest rate spread and net interest margin. Our net interest
margin decreased 42 basis points to 2.24% for the six months ended June 30, 2007
from 2.66% for the six months ended June 30, 2006.
Provision for Loan Losses. Based on management's evaluation of the factors
that determine the level of the allowance for loan losses, we recorded no
provision for loan losses for the six month periods ended June 30, 2007 and June
30, 2006. We continue to maintain exceptional credit quality within our loan
portfolio with no charge-offs recorded within the reporting period. The
allowance for loan losses as of June 30, 2007 was $322,000, or 0.27% of total
loans, compared to $331,000, or 0.28% of total loans as of June 30, 2006. We had
non-accrual loans totaling $238,000, or 0.20% of total loans receivable as of
June 30, 2007 compared to $207,000, or 0.18% of loans in non-accrual status as
of June 30, 2006.
Other Income. Other income decreased $14,000, or 8.1%, to $159,000 for the
six months ended June 30, 2007 compared to $173,000 for the six months ended
June 30, 2006. The decrease in non-interest income was primarily the result of a
$35,000 decrease in our Oakleaf subsidiary revenue, partially offset by a
$12,000 increase in service fees and a $9,000 increase in other income.
Other Expense. Other expense increased $396,000, or 22.0%, to $2.2 million
for the six months ended June 30, 2007 compared to $1.8 million for the six
months ended June 30, 2006. The increase was the result of an additional
$158,000 in salaries and benefits expense primarily due to annual cost of living
raises effective January 1 of each year and staffing of the Irondequoit branch
which opened on January 4, 2007, an increase of $82,000 in new occupancy
expenses (primarily lease, maintenance and depreciation of the Irondequoit
branch), an increase in data processing costs of $16,000, an increase of $81,000
in advertising expense, and an increase of $59,000 in miscellaneous other
expenses related to the Irondequoit branch as well as increased costs associated
with being a newly registered public company.
Income Tax Expense/Benefit. We had a pre-tax loss of $385,000 for the six
months ended June 30, 2007 versus a pre-tax profit of $256,000 for the six
months ended June 30, 2006, which resulted in a $138,000 tax benefit for the six
months ended June 30, 2007, versus a $92,000 tax expense for the six months
ended June 30, 2006, a change of $230,000. The effective tax rate was (35.8%)
for the six months ended June 30, 2007 compared to 35.9% for the six months
ended June 30, 2006.
16
Liquidity and Capital Resources
Liquidity is the ability to meet current and future financial obligations
of a short-term nature. Our primary sources of funds consist of deposit inflows,
loan repayments, advances from the Federal Home Loan Bank of New York,
maturities and principal repayments of securities, and recently, but to a lesser
extent, loan sales. While maturities and scheduled amortization of loans and
securities are predictable sources of funds, deposit flows and mortgage
prepayments are greatly influenced by general interest rates, economic
conditions and competition. Our asset/liability management committee is
responsible for establishing and monitoring our liquidity targets and strategies
in order to ensure that sufficient liquidity exists for meeting the borrowing
needs and deposit withdrawals of our customers as well as unanticipated
contingencies. We seek to maintain a liquidity ratio of 4.0% or greater. For the
six ended June 30, 2007, our liquidity ratio averaged 5.6%. We believe that we
have enough sources of liquidity to satisfy our short- and long-term liquidity
needs as of June 30, 2007. We anticipate that we will continue to maintain
current liquidity levels following the completion of the stock offering.
We regularly adjust our investments in liquid assets based upon our
assessment of:
(i) expected loan demand;
(ii) expected deposit flows;
(iii) yields available on interest-earning deposits and securities; and
(iv) the objectives of our asset/liability management program.
Excess liquid assets are invested generally in interest-earning deposits,
short- and intermediate-term securities and federal funds sold.
Our most liquid assets are cash and cash equivalents. The levels of these
assets are dependent on our operating, financing, lending and investing
activities during any given period. At June 30, 2007, cash and cash equivalents
totaled $9.7 million.
Our cash flows are derived from operating activities, investing activities
and financing activities as reported in our Consolidated Statements of Cash
Flows included in our Consolidated Financial Statements.
At June 30, 2007, we had $4.4 million in loan commitments outstanding. In
addition to commitments to originate loans, we had $7.7 million in unused lines
of credit to borrowers. Certificates of deposit, including individual retirement
accounts comprised solely of certificates of deposits, due within one year of
June 30, 2007, totaled $55.7 million, or 64.7% of our certificates of deposit
and 44.5% of total deposits. If these deposits do not remain with us, we will be
required to seek other sources of funds, including loan sales, other deposit
products, including certificates of deposit, and Federal Home Loan Bank
advances. Depending on market conditions, we may be required to pay higher rates
on such deposits or other borrowings than we currently pay on the certificates
of deposit at June 30, 2007. We believe, however, based on past experience that
a significant portion of such deposits will remain with us. We have the ability
to attract and retain deposits by adjusting the interest rates offered.
Our primary investing activity is originating loans. During the six months
ended June 30, 2007, we originated $7.3 million of loans, and during the six
months ended June 30, 2006, we originated $15.7 million of loans. We purchased
$5.0 million of securities held-to-maturity during the six months ended June 30,
17
2007 year as compared to $1.5 million of securities-held-to-maturity during the
six months ended June 30, 2006.
Financing activities consist primarily of activity in deposit accounts and
Federal Home Loan Bank advances. We experienced a net increase in total deposits
of $16.6 million for the six months ended June 30, 2007 compared to a net
increase of $6.2 million for the six months ended June 30, 2006. Of the $16.6
million increase, $5.6 million was attributable to funds received in our stock
offering. Deposit flows are affected by the overall level of interest rates, the
interest rates and products offered by us and our local competitors, and by
other factors.
Liquidity management is both a daily and long-term function of business
management. If we require funds beyond our ability to generate them internally,
borrowing agreements exist with the Federal Home Loan Bank of New York, which
provides an additional source of funds. Federal Home Loan Bank advances
decreased by $8.0 million to $20.0 million for the six months ended June 30,
2007, compared to a net decrease of $1.5 million during the six months ended
June 30, 2006. Federal Home Loan Bank advances have primarily been used to fund
loan demand. At June 30, 2007, we had the ability to borrow approximately $89.4
million from the Federal Home Loan Bank of New York, of which $20.0 million had
been advanced.
Fairport Savings Bank is subject to various regulatory capital
requirements, including a risk-based capital measure. The risk-based capital
guidelines include both a definition of capital and a framework for calculating
risk-weighted assets by assigning balance sheet assets and off-balance sheet
items to broad risk categories. At June 30, 2007, Fairport Savings Bank exceeded
all regulatory capital requirements. The Bank's leverage (Tier 1) capital at
June 30, 2007 was $13.3 million, or 8.25% of adjusted assets. In ordered to be
classified as "well capitalized" under regulatory guidelines, the Bank is
required to have Tier 1 capital of $8.0 million, or 5.00% of adjusted assets. To
be classified as a well capitalized bank under regulatory guidelines, the Bank
must have a total risk-based capital ratio of 10.0%. The Bank's total risk-based
capital ratio at June 30, 2007 was $18.45%.
The net proceeds from the stock offering will increase our liquidity and
capital resources. Over time, the initial level of liquidity will be reduced as
net proceeds from the stock offering are used for general corporate purposes,
including the funding of loans. Our financial condition and results of
operations will be enhanced by the net proceeds from the stock offering,
resulting in increased net interest-earning assets and net interest income.
However, due to the increase in equity resulting from the net proceeds raised in
the stock offering, our return on equity will be adversely affected following
the stock offering.
Off-Balance Sheet Arrangements
In the ordinary course of business, Fairport Savings Bank is a party to
credit-related financial instruments with off-balance sheet risk to meet the
financing needs of our customers. These financial instruments include
commitments to extend credit. We follow the same credit policies in making
commitments as we do for on-balance sheet instruments.
Commitments to extend credit are agreements to lend to a customer as long
as there is no violation of any condition established in the contract.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. The commitments for equity lines of credit may
expire without being drawn upon. Therefore, the total commitment amounts do not
necessarily represent future cash requirements. The amount of collateral
obtained, if it is deemed necessary by us, is based on our credit evaluation of
the customer.
18
At June 30, 2007 and 2006, we had $4.4 million and $6.5 million,
respectively, of commitments to grant loans, and $7.7 million and $7.3 million,
respectively, of unfunded commitments under lines of credit.
Item 3. Controls and Procedures
Under the supervision and with the participation of our management,
including our Chief Executive Officer and Chief Financial Officer, we evaluated
the effectiveness of the design and operation of our disclosure controls and
procedures (as defined in Rule 13a-15(e) and 15d-15(e) under the Exchange Act)
as of the end of the period covered by this report. Based upon that evaluation,
the Chief Executive Officer and Chief Financial Officer concluded that, as of
the end of the period covered by this report, our disclosure controls and
procedures were 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 were no significant changes made in the Company's internal control
over financial reporting or in other factors that could significantly affect the
Company's internal control over financial reporting during the period covered by
this report that has materially affected, or is reasonably likely to materially
affect, the Company's internal control over financial reporting.
Part II - Other Information
Item 1. Legal Proceedings
The Company and its subsidiaries are subject to various legal actions
arising in the normal course of business. In the opinion of management, the
resolution of these legal actions is not expected to have a material adverse
effect on the Company's financial condition or results of operations.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
(a) There were no sales of unregistered securities during the period
covered by this Report.
(b) On August 10, 2007 the Company completed its intital public stock
offering. In connection with this offering, the Company
registered 1,305,308 shares of its common stock, par value $0.10
per share, on a Registration Statement on Form SB-2, declared
effective on May 14, 2007 (Commission File No. 333-141380). In
the offering, the Company sold 838,950 shares of its common stock
to its eligible account holders, the Bank's employee stock
ownership plan and the public for gross offering proceeds of
$8,389,500. Costs of approximately $855,000 associated with the
Offering were deducted from the gross procees resulting in
approximate net proceeds of $7,534,500.
Sandler O'Neill & Parnters, L.P. was engaged to assist in the
marketing of the Company's common stock in the offering. For
these services, Sandler O'Neill & Partners, L.P. received a fee
of $150,000. Sandler O'Neill & Partners, L.P. was also reimbursed
for reasonable out-of-pock expenses.
The Company lent approximately $700,000 to the ESOP of the Bank
in connection with the stock offering. In addition to the funds
used for the ESOP loan, approximately $3 million of the net
proceeds of the offering was retained by the Company and the
remainder of the net proceeds was contributed to the Bank. All of
such proceeds have been invested in short-term investments.
19
(c) There were no issuer repurchases of securities during the period
covered by this Report.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
During the period covered by this report, the Company did not submit any
matters to the vote of security holders.
Item 5. Other Information
Not applicable
Item 6. Exhibits
The following exhibits are either filed as part of this report or are
incorporated herein by reference:
3.1 Charter of FSB Community Bankshares, Inc.*
3.2 Bylaws of FSB Community Bankshares, Inc.*
4 Form of Common Stock Certificate of FSB Community Bankshares, Inc.*
10.1 Employment Agreement between FSB Community Bankshares, Inc. and Dana C.
Gavenda*
10.2 Supplemental Executive Retirement Plan*
10.3 Form of Employee Stock Ownership Plan*
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32 Certification of Chief Executive Officer and Chief Financial Officer
pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
-----------------------
* Filed as exhibits to the Company's Registration Statement on Form SB-2,
and any amendments thereto, with the Securities and Exchange Commission
(Registration No. 333-141380).
20
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.
FSB COMMUNITY BANKSHARES, INC.
Date: August 14, 2007 /s/ Dana C. Gavenda
---------------------------------------
Dana C. Gavenda
President and Chief Executive Officer
Date: August 14, 2007 /s/ Kevin D. Maroney
---------------------------------------
Kevin D. Maroney
Senior Vice President and Chief Financial
Officer
21