FINANCIAL HIGHLIGHTS
(Dollars
in ThousandsexceptPer Share Data)
2001
2000
1999
1998
1997
AT SEPTEMBER 30
Toml assets
Total loans, net
Total deposits
Shareholders’ equity
Book value per common share
Total equity to assets
FOR THE FISCAL YEAR
Net interest income
Net income
Diluted earnings per share
Return on average assets
Return on average equity
Net yield on interest-earning assets
Cash earnings(’)
Cash earnings per share diluted(’)
Cash return on average assets(’)
Cmh return on average equity(’)
–$523,183
333,062
‘--338)782
$
43,727
17,71
8.36%
$12,536
1,910
0.78
.37%
4.57%
2.53%
2,278
.93
$
$
$
— .44%
5.44%
$505,590
324,703
318,654
$
40,035
16.48
7.93%
$13,832
2,328
0.93
.46%
$
$
$
5.98%
2.79%
2,696
1.08
.53%
6.93%
$511,213
303,079
304,780
39,771
$
15.86
7.78%
$418,380
270,286
283,858
$
42,286
16.56
10.11%
$404,589
254,641
246,116
$
43,477
16.11
10.75%
$13,197
$12,829
$11,946
$
$
$
2,641
1.04
.54%
6.35%
2.83%
3,006
1.18
.61%
7.23%
$
$
$
2,785
1.03
.68%
6.43%
3.26%
3,150
1.17
.77%
7.27%
$
$
$
3,642
1.28
.98%
8.41%
3.38%
4,006
1.40
1.08%
9.25%
TOTAL ASSETS
(in millions)
TOTAL LOANS, NET
(in millions)
TOTAL DEPOSITS
(in millions)
600
.,5.
$333
350
$303
$270
$254
$338
‘+So
$304
$246
$404 $418
(1)
Cash earnings exclude the amortization
of excess of cost over
fair value of assets acquired,
The Company
and irs subsidiaries exceed regulatory
capital
requirements
Bank ore Members FDIC and Equal Housing Lenders,
1
FEDEWAL’k-=~-~2:--—=..—
: ,A~\~Gs
+-<~7,.BAN~~ ---:
..-.—..
CHAIRMAN’S
LETTER
TO OUR SHAREHOLDERS:
Ours is a story that we are proud to tell. In eight short years,
First Midwest has more than doubled its financial service
network from seven to sixteen offices. Assets have more
than tripledfi-om$161 million in 1993 to $523 million in 2001.
But, we are not
just getting bigger.
We are getting better. Our company
to build employee
is using resources
customer-focused
skills and to create
DEMAND
DEPOSIT
BALANCES
(in mil[ions)
products. We are investing in and uti.
Iizing technology
to benefit
our CUS.
tomers
and our
internal
operations.
We are making it easier to bank with
us by opening new offices and provid-
to bank
ing more ways for customers
on their schedules, not ours.
$63.6
$63.5
Construction
in
April 2001, on schedule and on budg-
et, for our new facility in Sioux Falls,
completed
was
South Dakota. Since opening, deposits
and loans have grown to more than
$12 million and $22.2 million respec-
tively. Nearly half of the deposits are
in
checking
and money market
– a tremendous
accounts
branch into a new market.
start as we
about
mation
our
www.fmficash. corn.
Behind-the+cenes
company,
go to
technology pro-
gressed with more employee
computer
the integration
retirement,
training;
and network upgrades; and
of new loan, deposit,
and reporting software. A
major data processing conversion was
State
also completed
at our Security
Bank subsidiary. The
vides on-going efficiencies
conversion
pro-
as a consis-
tent
out
system is now in use through-
divi-
the Company’s
operating
sions.
Security
Thanks
to
State Bank,
the
conversion,
like our other
offices,
is able to offer QUICKbank
24-
Hot.w Telebartking to its customers.
The past year we grappled with
challenges
and enjoyed successes.
+ Total deposits
reached an all-time
high of $339 million,
a 6 percent
increase during
The Company purchased a third retail
Iowa Savings Bank in Des Moines,
location for
Iowa. Doors opened
increase
in ZOO1 and a 45 percent
the past five years.
on November
in 1995,
Iowa Savings Bank’s assets multiplied more than five
its purchase
16, 2001.
Since
times
from $23 million to $128 million. We expect
solid growth to continue
in coming years.
Along with brick and mortar, we are also reaching
and technology.
customers with new products
more
The past year we introduced Checking Choices – free
accounts designed to meet more
and benefit-packed
that makes it easier for
customer
and new business
customers
to move their accounts,
lifestyles, a switch kit
banking products. We also launched six interactive web
sites, one for First Midwest and one for each of its divi-
sions. To link to the bank sites and access more infor-
+
+
l
+
3
Checking
increased
in 2001.
21 percent
Total demand deposit balances have grown 114 per-
and money market
and 25 percent
balances
respectively
cent
Net
the past five years.
loans rose to a record $333 million, a 3 percent
increase in 2001 and a 37 percent
increase during the
past five years. Non-performing
bettered state and national
secutive year.(I)
Loan/deposit
while industry trends declined. (’]
loans
loans to toral
trends for the second con-
spreads widened for First Midwest
Total assets grew 3.5 percent and shareholder’s equi-
ty grew 9.2 percent while book value and tangible
CHAIRMAN’S
LETTER
book value per share grew $1.23
and $1.40
respec-
Comprehensive
internet
banking,
bill paying, and
tively.
The Company is attracting more low cost deposits.
by selling more
We are building more relationships
services to current customers and attracting new ones.
Our credit quality remains strong as we expand our loan
portfolio.
While deposit and loan trends are strong, diluted
earnings per share declined from $0.93 in 2000 to $0.78
business cash management
the coming year. A consolidated
services will be unveiled in
tnix
savings product
will also be integrated. These enhancements
complete
our plan to provide a consistent product mix across the
Company,
tomer demands
and will
improve our ability to meet
cus-
and broaden our customer base. We
will continue
innovative
serve our customers and the banks well.
to implement
solutions
that
We invest
in technology
advancements
to replace it. That
to enhance
is because
in 2001. This is primarily due to start-up costs associat-
one-on-one
service, not
ed with two new offices and expenses associated with
we truly believe
in people helping people, where cus-
technology
sion at Security State Bank. Long-term performance
advances and the data processing conver.
is
our top priority, and we invested in strategies
believe will pay greater dividends
in the future.
that we
The Company’s
Financial Capital Trust
trust
subsidiary,
First Midwest
I, sold $10 million in floating
rate cumulative preferred securities on July 16, 2001.
Proceeds
from the sales were used to purchase subordi-
nated debentures
the year 2031, and are redeemable
in
at any time after five
of First Midwest, which mature
years. Our company is using the proceeds
corporate purposes.
for general
In August
2001, we announced
intention to repurchase approximately
First Midwest’s
5 percent of the
outstanding
Company’s
end, no shares have been repurchased under
gram. Since
the fiscal year-
this pro-
our first stock repurchase pro-
shares. As of
initiating
gram in 1994,
the Company
has invested a toval of
$13.9 million in the repurchase of approximately
thousand shares of outstanding stock.
954
THE
PLOT
THICKENS
like the rest of the world, are mindful of the
We,
uncertainty
1 lth terrorist attacks. Proactive plans are in place to
economy after the September
in the U.S.
support our local communities
and protect
the banks.
In 2002, execution of five main focus areas will be the
key to our banks’ success.
1. Loan quality
2. Profi~able growth (demand deposits,
loans,
and fee income)
3. Managed expenses and sharing best practices
4. Employee and team development
5. People helping people
tomers can talk with a real person and get answers. We
have put systems
to make quick and local decisions. To us, that
in place that empower our people
is what
being a super-community
hood service with the resources of a larger bank.
bank is all about – neighbor-
We invite you to bank with us,
in us, and
the difference of better banking. We believe
and we
an attractive
investment,
invest
experience
our stock remains
thank
our
shareholders,
customers,
employees,
and
directors
Midwest
for your
First
team remains dedicated to increasing share-
continuing
support.
The
holder value and enhancing
your investment. And so
the story goes.
& .K
JAMES S. HAAHR
Chairman of the Board,
President and CEO
/J.
TYLER/IAAFIR
Senior Vice President,
Secretary and COO
(1)Based on reports
distributed
by the FDIC, Federal Reserve Bank, and OTS
4
=+=.
--l
COMPANY STRUCTURE
I First Midwest Financial,
Inc. I
m
lowa Sawngs Bank
D:SO.1-
COMPANY PROFILE
Inc.
First Midwest Financial,
is a $523 million bank
holding company for First Federal Savings Bank of the
Midwest and Security
in
Iowa, the Company converted from mutual
Storm Lake,
ownership to stock ownership in 1993.
Its primary busi-
ness is marketing financial deposit and loan products to
meet the needs of retail bank customers.
State Bank. Headquartered
First Midwest
operates under
a super-community
banking philosophy that allows the Company to grow
while maintaining its community bank roots, with local
decision making and customer
functions,
transparent
to enhance
service. Administrative
to the customer, are centralized
and to
the banks’ operational
efficiencies
improve customer service capabilities.
First Federal Savings Bank of the Midwest operates as
a thrift with four divisions: First Federal Storm Lake,
Brookings Federal Bank,
Iowa Savings Bank, and First
Federal Sioux Falls. Security State Bank operates as a
state-chartered commercial bank. Sixteen offices SUppLlrt
customers
and throughout central and northwest
Limited,
is a full-service
of
Financial
First Federal Savings Bank,
brokerage
operation that offers a wide range of ncminsured invest-
ment products to customers
through LaSalle St. Secur-
ities, Inc.
in Brookings and Sioux Falls, South Dakota,
a subsidiary
Services
Iowa.
First
COMPANY VISION, MISSION AND VALUES
VISION OF FIRST MIDWEST
FINANCIAL,
Build the best super-community bank sys-
tem in the Midwest.
INC.
VISION OF FIRST MIDWEST
FINANCIAL
BANKS
Be the bank of choice for financial servic-
es in our market area
COMPANY VALUES
internal
and external
Customer Service
cus-
Outstanding
tomer service are the foundation of our
success. Meeting customer financial needs
and exceeding expectations contribute to
customer satisfaction and long-term rela-
tionships.
Cjreat Work Environment
We embrace an atmosphereof open com-
munication and mutual respect where
people are treated fairly, have fulfilling
career opportunities and challenges, and
are able to make a difference in the com-
munities we serve.
MISSION
Have a professional, knowledgeable team
that cost effectively provides value-added
financial products and services that bene-
fit our customers.
Continuous Improvement
We embrace change to improve the qual-
ity and productivity of our product offer-
and customer
ings, business operations,
service.
Results
We are results oriented. Meeting goals
allows the company to earn a fair profit
while servicing our customers in an effi-
cient and professional manner.
5
Whether
our customers have a fami[y, run a business, or
just want
to save for the future, we offer a complete
line
matic Payment
* Switch Kits n Interactive Web Sites
s
of competitive
products
and services designed to work
Investments
and Insurance
including:(’)
Stocks ~ Bonds q
through every life stage. Combine
that with good people
Mutual
Funds E Fixed and Variable Annuities
~ Life
and customer-focused
service standards, and you have the
Insurance
s Disability
Insurance
a Long-term
Care
right
formula for success.
Insurance = Retirement
Plans = Tax Advantaged
hwest-
ments ~?Financial Planning
Checking
Choices
= Business Advan~age Checking
K
Photo-Secure
QUICKcard
Debit Card = ATM Card ~
Our company
is proud to offer products
and services
Money Market Accounts
= Certificates
of Deposit
QUICKbank
24-Hour Telebanking
~ Savings Accounts
*
~
that make handling money easier for our customers. We
continuously
look for and implement
innovative ways to
Mortgage
Lending
x Commercial
Lending
= Agricul-
exceed customer
expectations.
In fact, right now we are
tural Lendings Consumer Lending P Lines of Credit:-
24.
gearing up to launch online banking
and a new savings
Hour Loan Applications
* Credit Life Insurance = Crop
product mix.
Insurance = Credit Cards= Retirement
and Trust Services
~ Ready Reserve
~ Overdraft
Projection
~ Automated
(1)
Non-mdkional
bank products offered through LaSalle SC Securities,
Inc. are noc FDIC
insured, nor are they guaranteed
by the banks of First Midwest
or any affiliate.
OUR COMMUNITIES
We have a special connection
to our communities
just by
Every year we host a charity cookout
to benefit
local
the nature
of our business. Lending money
for a first
organizations. Together, we hwe
raised tens of thousands
home,
a new business,
and other
imporvant
life events
of dollars that stay right here in our neighborhoods
and
is one way our banks work to enhance people’s lives.
make them a better place.
Through
our partnership with the American
Bankers
Whether
it
is providing
annual
scholarships,
teach-
Association,
Colin Powell and America’s Promise,
each
ing students
the importance
of saving, or volunteering
of our banks
is recognized as a Bank of Promise. We ded-
in the classrooms, we have developed partnerships with
icate
financial
resources
and thousands
of employee
our community
school
systems
that work.
In fact,
two
hours to help youth and charitable
organizations
in our
Partners
in Education programs,
initiated by our people,
communities.
earned state recognition
for their
impact
to children.
OUR RESULTS
Every day our team works together
to do the right
things
Our people are sharing best practices
and implement-
right. We
review performance,
update
strategies,
and
ing practical
ideas to make the banks even better. We are
develop action plans to achieve our goals. Then we track
earning more new and repeat business
thanks
to employ-
results. Our people participate
in the process
so we all
ee initiatives
and customer
referrals. Our people
are
have ownership in the outcome.
exploring opportunities
to manage expenses and increase
We believe
the only way to move ahead of the com-
profitability. We are challenging
the status quo to make
petition is to embrace
change and strive toward continu-
banking and investing with us easier than ever.
ous improvement
in everything we do. This past year
When
you get right down to it, we are simply peo-
we did just
that. We expanded our branch network and
ple helping people. Our
success
comes
from the efforts
integrated more technologies
across the Company. New
of
talented
people working
together
toward common
products
and web sites were launched while operations
goals.
It comes
from listening
to and taking care of our
were streamlined
for smarter use of the banks’
resources.
customers
– and each other. And,
that
is what better
But, we are not stopping here.
banking is all about.
10
SELECTED CONSOLIDATED FINANCIAL
INFORMATION
September 3(3,
2001
2000
1999
1998
1997
SELECTED FINANCIAL CONDITION DATA
(ln Thousands)
*-=–
$523,183
333,062
145,374
3,403
338,782
138,344
43,727
$505,590
324,703
147,479
3,768
318,654
143,993
40,035
$511,213
$418,380
303,079
178,489
4,133
304,780
164,369
39,771
270,286
120,610
4,498
283,858
89,888
42,286
$ 404)589
254,641
115,985
4,863
246,116
112,126
43,477
.—~_=+......_-
-
$
- ““
37,927
25,391
12,536
710
1[,826
1,789
10,695
2,920
1,010
1,910 -
-——.
s&.
1,91:
$
$
$
$
0.79
0.78
0.79
0.78
.=—.. .
$
$
$
$
$
$
38,410
24,578
13,832
1,640
12,192
566
9,408
3,350
1,374
1,976
352
2,328
$
35,373
22,176
13,197
1,992
11,205
1,918
8,645
4,478
1;837
2,641
$
32,059
19,230
12,829
1,663
11,166
1,875
8,253
4,788
2,003
2,785
$
29,005
17,059
11,946
120
11,826
1,700
7,382
6,144
2,502
3,642
$
2,64;
$
2,78;
$
3,64;
0.81
0.79
0.95
0.93
$
$
$
$
1.07
1.04
1.07
1.04
1.08
1.03
1.08
1.03
i
$
$
$
$
$
$
1.34
1.28
1.34
1.28
Total assets
Loans receivable, net
Securities available for sale
Excessof cost over net assetsacquired, net
Deposits
Total borrowings
Shareholders’equity
Year Ended September
30,
SELECTED OPERATIONS
(In Thousands,Except Per ShareDad
DATA
Total interest income
Total interest expense
Net interest income
Provision for loan losses
Net interest income after provision for loan losses
Total noninterest income
Total noninterest expense
Income before income taies and extraordinary
items
Income tax expense
Income before extraordinary items
Extraordinary items, net of income tax
Net income
Earningsper common and common equivalent share:
Income before extraordinary items
Basicearningsper share
Diluted earnings per share
Net income
Basicearnings per share
Diluted earningsper share
Year Ended September 30,
RATIOS
SELECTED FINANCIAL
AND OTHER DATA
PERFORMANCE RATIOS
Return on average assets
Return on averageshareholders’equity
Interest rate spread information
Average during the year
End of year
Net yield on average interest-earning assets
Ratio of operating expense to average total assets
0.37~o
4.57
2.18%
2.21
2.53
2.09
0.46%
5.98
2.39%
2.32
2.79
1.85
0.54%
6.35
2.43%
2.40
2.83
1.80
0.68’%
6.43
2.76%
2.74
3.26
2.00
1.9496
41.15
10.11%
10.51
0.98%
8.41
2.80%
2.78
3.38
2.00
0.82%
75.36
10.75%
11.62
QUALITY RATIOS
Non-performingassetsto total assetsat end of year
Allowance for loan lossesto non-performing loans
0.49%
240.02
0.15%
1.156.13
0.47~o
137.16
CAPITAL RATIOS
Shareholders’equity to total assetsat end of period
Average shareholders’equity to averageassets
Ratio of average interest-earning assetsto
average interest-bearing liabilities
OTHER DATA
Cash earnings (in thousands) “)
Cash earningsper share - diluted”]
Cash return on average assets”)
Cash return on average equity”’
Baok value per common share outstanding
Dividends declared per share
Dividend payout ratio
Number of full-serviceoftlces
8.36%
8.17
7.93%
7.67
7.78%
8.65
106.90
108.02
108.39
110.22
112.00
$
$
$
$
2,278
0.93
0.44%
5.44
17.71
0.52
65.32%
14
$
$
$
$
2,696
1.08
0.53%
6.93
16.48
0.52
54.83%
14
$
$
$
$
3,006
1.18
0.61%
7.23
15.86
0.52
48.24%
13
$
$
$
$
3,150
1.17
0.77%
7.27
16.56
0.48
44.05%
13
$
$
$
$
4,006
1.40
1.08%
9.25
16.11
0.36
26.41%
13
(!)
Cash earnings exclude the amortization
of excess of cosc over
fair value of assets acquired
First Midwest Financial, Inc.
and Subsidia~ies
MANAGEMENT’S
DISCUSSION
AND ANALYSIS
MANAGEMENT’S
DISCUSSION
AND ANALYSIS
from securities
that matured, were called, or were SCM
(jeneral
First Midwest Financial,
(the “Company” or “First
Midwest”) is a bank holding company whose primary sub-
Inc.
sidiaries are First Federal Savings Bank of the Midwest (“First
Federal”) and Security State Bank (’063
$505,590,430
See Notes
co Consolidated
Financial Scaremencs.
25
Fine Midwest Finmcia[,Inc.
and Subsidiaries
CONSOLIDATED
STATEMENTS OF INCOME
Years ended September 30, 2001, 2000 and 1999
Interest and dividend income:
Loans receivable,
Securities available for sale
including fees
Dividends cm l+ILB stock
Interest expense:
Deposits
FHLB advances and other bmrcwings
2001
2000
1999
$27,455,000
$ 26,267,638
$ 23,795)796
10,043,154
428,472
37,926,626
—
17,546,621
7,843,978
25,390,599
11,589,221
553,165
38,410,024
15,636,793
8,941,569
24,578,362
11,108,170
468,765
35,372,731
14,506,472
7,669,408
22,175,880
Net interest income
12,536,027
13,831,662
13,196,851
Provision for loan losses
710,000
1,640,000
1,992,000
Net interest income after provision
for loan losses
11,826,027
12,191,662
11,204,851
Noninterest
income:
Deposit service charges and other fees
Gain (loss) on sales of securities available for sale, net
Gain (loss) on sales of foreclosed real estate, net
Brokerage commissions
Other income
Noninterest
expense:
Employee compensation and benefits
Occupancy and equipment expense
insurance premium
Deposit
Data processing expense
Other expense
Net
income before income tax expense
and extraordinary
item
Income rax expense
Net income before extraordinary item
Extraordinary item, gain on extinguishment of
debt, less income tax effecr of $208,600
1,575,805
(60,275)
27,017
96,808
_149,745
1,789,100
6,552,712
1,569,387
63,944
457,766
2,051,029
10,694,838
1,310,642
(1,020,885)
(12,033)
131,801
156,707
566,232
5,830,791
1,301,495
89,990
410,645
1,775,122
9408043
,
,
1,346,117
331,611
16,513
79,159
144,625
1,918,025
5,135,672
1,158,946
155,901
378,709
1,815,730
8644958
,
,
2,920,289
1,010,546
—.
3>349,851
1,374,220
4,477,918
1,836,786
1,909,743
1,975,631
2,641,132
351,995
Net
income
$
1,909,743
$
2,327,626
$
2,641,132
Earnings per common and common equivalent share:
Basic earnings per common share:
Income before extraordinary item
Extraordinary item, net of income taxes
income
Net
Diluted earnings per common share:
Income before extraordinary item
Extraordina ry item, net of income taxes
income
Net
See Notes
to Consolidated
Financial Statements.
26
$
$_
$
$“$
$
$
0.79
o.79—
0.78
0.78
0.81
0.14
0.95
0.79
0.14
0.93
$
$“
$
$
1.07
1.07
1.04
1.04
‘,
First Midwest Financial,Inc.
andSubsidiaries
CONSOLIDATED
STATEMENTS OF CHANGES IN SHAREHOLDER’S
EQUITY
Years ended September 30, 2001, 2000 and 1999
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
Other
Comprehensive
Income,
Net of Tax
Unearned
Employee
Stock
Ownership
Plan Shares
Treasury
Stock
Total
Shareholders’
Equity
$
29,580
$21,330,075
$27,985,814
$
798,820
$
(367,200)
$
(7,491,526)
$42,285,563
2,641,132
(3,319,453)
255.220
101,634
(1,274,003)
2,641,132
(3,319,453)
(678,321)
(1,289,186)
(1,289,186)
200)000
455,220
101,634
(1,274,003)
(222,026)
391,867
169,841
$“
29,580
(158,966)
$ 21,305,937
$29,352,943
$ (2,520,633)
$
(167,200)
$
(8,229,879)
$39,770,748
158,966
$
29,580
$ 21,305,937
$ 29,352,943
$ (2,520,633)
$
(167,200)
$
(8,229,879)
$ 39,770,748
2,327,626
(33,258)
2,327,626
(33,258)
2,294,368
103,664
(467,372)
(1,276,183)
(1,478,508)
(1,478,508)
167,200
270,864
887,290
419,918
(1,276,183)
Balance, September 30, 1998
Comprehensive income:
Net income for the year
ended September 30, 1999
Net change in net unrealized
gains and losses on
securities available for sale,
net of reclassification
adjustments and tax effects
Total comprehensive income (loss)
Purchase of 79,647 common
shares of treasury stock
30,000 common shares
committed to be released
under the ESOP
Amortization of management
recognition and retention plan
common shares and tax
benefits of restricted stock
under the plans
Cash dividends declared on
common stock ($.52 per share)
Issuance of 23,051 common
shares from treasury stock due
m exercise of stock options
Issuance of 10,424 common
shares from treasury stock
for award of stock under
management reccxmiticm and
retention plans
Balance, September 30, 1999-
Balance, September 30, 1999
Comprehensive income:
Net income for the year
ended September .30, 2000
Net change in net unrealized
gains and losses on
securities available for sale,
net of reclassification
adjustments and tax effects
Total comprehensive income
Purchase of 129,999 common
shares of treasury stock
25,080 common shares committed
to be released under the ESOP
Issuance of 54,500 common
shares from treasury stock due
to exercise of stock options
Cash dividends declared on
common stock ($.52 per share)
Amortization of management
recognition and retention plan
common shares and tax benefits
of restricted stock under the plans
Balance, September 30,2000
$
29,58;
$ 20,9?;YO;
$30,404,386
$
(2,553,891)
$
-
$ (8,821,09;)
$ 40,0;K
27
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER’S EQUITY, CONT.
First Midwest Financial, Inc.
and Subsidiaries
Years ended September 30, 2001, 2000 and 1999
Common
Stock
Additional
Paid-in
Capital
Retained
Earnings
Accumulated
other
Comprehensive
Income,
Net of Tax
Unearned
Employee
Stock
Ownership
Plan Shares
Treasury
Stock
Total
Shareholders’
Equity
$
29,580
$20,976,107
$30,404,386
$ (2,553,891)
$
-
$
(8,821,097)
$40,035,085
1,909,743
2,892,318
1,909,743
2,892,318
4,802,061
(17,777)
(17,777)
(360,000)
180,000
(360,000)
174,660
448,055
266,667
74,000
(5,340)
(181,388)
74,000
Balance, September 30,2000
Comprehensive income:
Net income for the year
ended September 30, 2001
Net change in net unrealized
gains and losses on
securities available for sale,
net of reclassification
adjustments and tax effects
Total comprehensive income
Purchase of 1,847 common
sharesof treasurystock
Purchase of 30,000 common
shares for ESOP
15,000common shares committed
to be releasedunder the ESOP
Issuance of 40,000 common
shares from treasury stock due
to exercise of stock options
T= benefit from exercise of
stock options
Cash dividends declared on
common stock ($.52 per share)
Balance, September 30,2001
~.
29,580
$20,863,379
(1,247,486)
$31,066,643
$
338,427
$
(1,247,486)
(180,000) $ (8,390,819) $43,727,210
See Nores to Consolidated
Financial Statements.
CONSOLIDATED
STATEMENTS
OF CASH FLOWS
Years Ended September 30, 2001, 2000 and 1999
CASH FLOWS
Net income
Adjustments to reconcile net income to
FROM OPERATING
ACTIVITIES
net cash provided by operating activitie~
Depreciation, amortization and accretion, net
Provision for loan losses
Gain on transfer of FHLB advances
(Gain) loss on sales of securities available for sale, net
Proceeds from the sales of loans held for sale
Originations of loans held for sale
(Gain) loss on sales of foreclosed real estate, net
Net change in
Accrued interest receivable
Other assets
Accrued interest payable
Accrued expenses and other liabilities
Net cash provided by operating activities
CASH FLOWS
FROM INVESTING
Purchase of securities available for sale
Proceeds from sales of securities available for sale
Proceeds from maturities and principal repayment
ACTIVITIES
of securities available for sale
Loans purchased
Net change in loans
Proceeds from sales of foreclosed real esmte
Purchase of FHLB stock
Proceeds from redemption of FHLB stock
Purchase of other investment
Purchase of premises and equipment
Net cash provided by (used in) investing ‘activities
CASH FLOWS
FROM FINANCING
ACTIVITIES
Net change in noninterest-bearing demand, savings,
NOW and money market demand deposits
Net clmnge in time deposits
Proceeds from advances from FHLB
Repayments of advances from FHLB
Net change in securities sold under agreements to repurchase
Net change in other borrowings
Proceeds from issuance of Company Obligated Mandatorily Redeemable
Preferred Securities of SubsidiaryTrust Holding Solely Subordinated
Debentures
Net change in advances fromborrowersfor taxes and insurance
Debt issuance costs incurred
Cash dividends paid
Proceeds from exercise of stock options
Purchase of treasury stock
Net cash provided by (used in) financing activities
2001
2000
1999
$
1)909,743
$
2,327,626
$
2,641,132
849,695
710,000
60,275
14,084,818
(14,084,818)
(27,017)
1,522,239
1,640,000
(560,595)
1,020,885
1,435,581
(1,435,581)
12,033
1,757,207
1,992,000
(331,61;)
7,403,780
(7,403,780)
(16,513)
466,137
(170,695)
(77,627)
88,031
(138,060)
(425,537)
3,493,267
(22,886,271)
795,0Q0
28,670,713
(33,208,949)
23,285,230
521,074
(71,300)
2,00QOO0
(10,000,000)
(3,914,687)
(14,809,190)
12,100,577
8,027,580
133,265,000
(146,651,690)
(2,262,245)
10,000,000
(15,117)
(305,812)
(1 ,247,486)
266,667
(17,777)
13,159,697
,
.
m
_
.
—
~
~
(505,918)
130,976
445,250
5,861,801
(515,000)
20,275,060
9,822,708
(55,565,541)
31,437,629
498,316
(201,800)
113,315
40,624
360,857
6,479,384
(125,354,705)
24,791,295
37,255,192
(77,329,717)
42,151,758
1,357,430
(2,620,000)
(1,770,90;)
3,980,466
(1,110,85;)
“(1OO,859,6O6)
(2,134,430)
16,008,230
789,920,595
(810,969,620)
1,234,014
17,956,774
2,964,995
278,950,000
(202,865,491)
(1,053,616)
(550,000)
38,921
17,375
(1,276,18;)
363p335
(1,478,509)
(8,293,647)
(1 ,274,003)
169,841
(1,289,186)
93,026,68~”
Net change in cash and cash equivalents
1,843,774
1,548,620
(1,353,533)
CASH AND CASH EQUIVALENTS
Beginning of year
End of year
SUPPLEMENTAL
DISCLOSURE
OF CASH FLOW
INFORMATION
Cash paid during the year for
Interest
Income taxes
SUPPLEMENTAL
INVESTING
Loans transferred to foreclosed real esrate
ACTIVITIES
SCHEDULE
OF NONCASH
See Notes
to Consolidated
Financial Srmemenrs.
29
=.$
6,922,531
8,766,305
5,373,911
6,922,531
$
6,727,444
5,373,911
$
.$ 25,528,659
926,543
$ 24,447,386
2,038,500
$ 22,135,256
1,919,389
$
989,067
$
812,581
$
420,501
First Midwest Financial,Inc.
and Subsidiaries
NOTES
TO CONSOLIDATED
FINANCIAL
STATEMENTS
NOTE
1.
SUMMARY
OF SIGNIFICANT
Certain significant
estimates
ACCOUNTING
POLICIES
The allowance for loan losses and fair values of securities
instruments involve certain significant
and other financial
Principles
The consolidated financial smtements include the accounts
of consolidation
estimates made by management.
estin~ates are
reviewed by management routinely and it is reasonably pos-
These
of First Midwest Financial,
holding company located in Storm Lake,
Inc.
(the Company),
a bank
Iowa, and its
sible tl~at circumstances that exist at September 30, 2001,
the effect
may change in the near-term future and that
wholly-owned subsidiaries which include First Federal
could be material to the consolidated financial statements.
Savings Bank of the Midwest (the Bank or First Fecleral), a
federally chartered savings bank whose primary regulator is
Security State Bank
Supervision,
the Office of Thrift
Cash and cash equivalents
For purposes of reporting
cash flows, cash and cash equiva-
(Security),
a srate chartered commercial bank whose pri-
lents is defined to include the Company’s cash on hand and
mary regulator
is the Federal Reserve,
First Services
due from financial
institutions
and short-term interest-bear-
Financial Limited and Brookings Service Corporation,
which offer brokerage services and non-insured investment
ing deposits
net
reports
in other
cash
financial
institutions.
flows
for customer
loan
The Company
transactions,
products and First Midwest Financial Capital Trust I, which
issuing
was capitalized in July 2001,
for the purpose of
deposit
in other
transactions,
financial
longer
institutions,
term interest-braring
deposits
and short-term borrowings
Company Obligated Mandatorily Redeemable Preferred
Securities. All significant intercompany balances and trans-
actions have been eliminated.
Nature of business,
concentration
of credit
risk
and industry segment
information
The primary source of income for the Company is the pur-
chase or origination of consumer, commercial, agricultural
commercial real estate, and residential real estate loans. See
Note 4 for a discussion of concentrations of credit risk. The
Company accepts deposits from customers in the normal
with maturities
of 90 days or less.
Securities
The Company classifies all securities as available for sale.
Available for sale securities are those the Company may
decide to sell if needed for liquidity, asset-liability mmage-
ment or other
reasons. Available for sale securities are
reported at fair value, with net unrealized gains and losses
reported as other comprehensive income or loss and as a
separate component of shareholders’ equity, net of mx.
Gains and losses on the sale of securities are determined
course of business primarily in northwest and central Iowa
and eastern South Dakota. The Company operates primaril-
using the specific identification method based on amortized
cost and are reflected in results of operations at the time of
y in the banking industry which accounts for more than
9096 of its revenues, operating income and assets. While the
sale. Interest and dividend income, adjusted by amortiza-
tion of purchase premium or discount over the estinyated
Company’s management monitors the revenue streams of
the various Company products and services, operations are
life of the security using the level yield method,
in earnings.
is included
managed and financial perfortwance is evaluated on a
Company-wide basis. Accordingly, all of the Company’s
Loans held for sale
banking operations are considered by management
to be
Mortgage loans originated and intended for de
in the sec-
aggregated in one reportable operating segment.
ondary market are carried at the lower of cost or estin~ated
Assets held in trust or fiduciary capacity are not assets
of
the Company and, accordingly, are not
included in
the accompanying consolidated financial
September 30, 2001 and 2000,
statements. At
trust assets totaled approxi-
market value in the aggregate. Net unrealized losses are rec-
ognized in a valuation allowance by charges to income.
Loans
receivable
mately $13,213,000
and $14,473,000,
respectively.
Loans receivable that n~anagement has the intent and abil-
Use of estimates
The preparation of financial statements in conformity with
in preparing
statements
financial
ity to hold for the foreseeable future or until n-aaturityor
pay-off are reported at their outstanding principal balances
reduced by the allowance for loan losses and any deferred
accounting principles generally accepted in the United
to make estimates
Svates of America requires management
fees or costs on originated loans.
Premiums or discounts on purchased loans are amortized
and assumptions that affect the reported amounts of assets,
to income using the level yield method over the remaining
liabilities and disclosure of contingent assets and liabilities
period to contractual maturity, adjusted fur anticipated pre-
at the date of the financial svatetnents and the reported
amounts of revenue and expenses during the reporting peri-
payments.
Interest
income on loans is accrued over the term of
od. Actual results could differ from those estimates.
the loans based upon the amount of principal outstanding
30
Loan origination
related costs
First Midwest Financia[, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
except when serious doubt exists as to the collectibility of a
Often this is associated with a delay or shortfall in payments
loan, in which case the accrual of interest is discontinued.
Interest
income is subsequently recognized only to the
of 90 days or more. Nonaccntal
red impaired.
lores are often also conside-
thereof, are
Impaired loans, or portions
extent
that cash payments are received until,
in manage-
charged off when deemed uncollectible.
ment’s judgment,
the borrower has the ability to make con-
tractual interest and principal payments, in which case the
Foreclosed
real
estate
loan is returned to accrual status.
Real esuate properties acquired through, or in lieu of, loan
foreclosure are initially recorded at fair value at the date of
fees,
commitment
fees,
and
acquisition, establishing a new cost basis. Any reduction to
Loan fees and certain direct
loan origination costs are
deferred, and the net fee or cost is recognized as an adjust-
fair value from rhe carrying value of the related loan at the
time of acquisition is accounted for as a loan loss and
charged against the allowance for lcvanlosses. Valuations are
ment to interest income using the interest method.
periodically performed by management
and valwation
Allowance
Because some loans may not be repaid in full, an allowance
for loan losses
allowances are adjusted through a charge to income for
changes in fair value or estimated selling costs.
for loan losses is recorded. The allowance for loan losses is
increased by a provision for loan losses charged to expense
taxes
Income
The Company records income tax expense kxasedon the
and ckcreased by charge-offs (net of recoveries). Estimating
the risk of loss and the amount of loss on any loan is neces-
amount of raxes due on its tax rctum plus deferred mxes
computed based on the expected future tax consequences of
sarily subjective. Management’s periodic evaluation of the
adequacy of the allowance is based on the Company’s past
temporary differences between the carrying amounts and
tax bases of assets and liabilities, using enacted tax rates. A
loan loss experience, known and inherent risks in the port-
folio, adverse situations that may affect the borrower’s abil-
valuation allowance,
to the amount expected to be realized.
if needed, reduces deferred tax assets
ity to repay, the estimated value of any underlying collater-
al, and current economic conditions. While management
may periodically allocate portions of the allowance for spe-
Premises
and equipment
Land is carried at cost. Buildings,
furniture,
fixtures and
cific problem loan situations, the whole allowance is avail-
equipment are carried at cost, less accumulated depreciation
able for any loan charge-offs tl~at occur.
Loans are considered
impaired if full principal or interest
are not anticipated
payments
tractual
ent va[ue of expected
loan terms.
Impaired loans are carried at
in accordance with the con-
the pres-
the
at
future cash flows discounted
loan’s effective
lateral
if the loan is collateral
interest
rate or at
the fair value of the col-
dependent. A portion of the
by using the
and amortization
straight-line method over the estimated useful lives of the
computed principally
assets ranging from 3 to 40 years. These assets are reviewed
for impairment under Statement of Financial Accounting
Standards (SFAS) No. 121 when events indicate the carry-
ing amount may not be recoverable.
allowance
for loan losses is allocated to itnpaired loans if the
value of such loans is deemed to be less than the unpaid bal-
ance. If these allocations cause the allowance for loan loss-
es to require an increase, such increase is reported as a com-
ponent of the provision for loan losses.
Smaller-balance homogeneous
loans are evaluated for
impairment
in total. Such loans include residential
first
mortgage loans secured by one-to-four
family residences
and residential construction loans, and automobile, manu-
factured homes, home equity and second mortgage loans.
loans and mortgage loans
Commercial
secured by other properties are evaluated individually for
and agricultural
impairment. V7hen analysis of borrower operating results
Employee
stock ownership plan
The Company accounts for its employee stock ownership
of
plan (ESOP)
in accordance with AICPA Statement
Position (SOP) 93-6. Under SOP 93-6,
the cost of shares
issued to the ESOP, but not yet allocated to participants, are
presented in the consolidated balance sheets as a reduction
of shareholders) equity. Compensation expense is recorded
based on the market price of the shares as they are commit-
ted to be released for allocation to participant accounts.
The difference between the market price and the cost of
shares committed to be released is recorded as an adjust-
ment to additional paid-in capital. Dividends on allocated
ESOP shares are recorded as a reduction of retained earn-
and financial condition indicates that underlying cash flows
ings. Dividends on unearned shares are used to reduce the
of the borrower’s business are not adequate to meet its debt
the loan is evaluated for impairment.
service requirements,
accrued interest and principal amount of the ESOP’S lcmn
payable to the Company.
31
First Midwest Financial, h
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
instruments
Financial
The Company,
in the normal course of business, makes
commitments to make loans which are not reflected in the
with off-balance.
sheet
risk
Stock
compensation
Expense for employee compensation under stock option
Principles Board (APB)
plans is based on Accounting
consolidated financial
commitments is disclosed in Note 14.
statements. A summary of
these
Opinion 25, with expense reported only if options are
granted below market price at grant date. Disclosures of net
Intangible
assets
income and earnings per share are provided as if the fair
value method of SFAS No. 123 were used for stock-based
Goodwill arising from the acquisition of subsidiary banks is
amortized over 15 years using the straight-line method. As
compensation.
of September 30, 2001 and 2000, unamortized goodwill
respectively. Amortiza-
totaled $3,403,019
and $3,767,951,
tion expense was $364,932
September 30, 2001, 2000 and 1999, respectively.
for each of the years ended
New accounting
In July 2001,
pronouncements
the Financial Accounting
Standards Board
(FASB)
Combinations
issued two statements,
141, Eksiness
142, Goodwill and Othet-
Intangibk Assets, which will impact the Company’s account-
and Statement
Statement
sold under agreements
Securities
The Company enters into sales of securities under agree-
ments to repurchase with primary dealers only, which pro-
to repurchase
ing for its reported goodwill. Statement
141 eliminates
the pooling method for accounting for business combina-
tions and requires that intangible assets that meet cer~ain
vide for the repurchase of the same security. Securities sold
under agreements to purchase identical securities are collat-
eralized by assets which are held in safekeeping in the name
of the Bank or Security by the dealers who arranged the
criterfia be reported separately from goodwill. Statement
the amortization of goodwill and other
142 eliminates
intangibles that are determined to have an indefinite life.
tests
It also requires, at a minimum, annual
impairment
transaction. Securities sold under agreements to repurchase
are treated as fimancings and the obligations to repurchase
for goodwill and other
intangible assets that are deter-
mined to have an indefinite life and requires the carrying
such securities are reflected as a liability. The securities
underlying the agreements remain in the asset accounts of
the Company.
Earnings
Basic earnings
per common
share
per common
share
is based on the net
value of goodwill which exceeds its implied fair value to be
loss. Upon adoption of these
recognized as an impairment
the Company is required toevaluate its exist-
Statements,
ing goodwill that was acquired in prior business combina-
tions and to make any necessary adjustrnents in order to
conform to the new criteria.
income divided by the weighted
average number
of com-
The provisions of FASB S~atement 141 apply to all busi-
mon shares outstanding
during the period. ESOP shares are
ness combinations
initiated after June 30, 2001, and all
considered
outstanding
for earnings per common share cal-
culations
as they are committed
ESOP shares are not considered
to be released; unearned
outstanding. Management
recognition
ered outstmding
and retention
plan (MRRP)
for basic earnings per common
shares are consid-
share cal-
culations
mon share shows the dilutive
as they become vested. Diluted earnings per com-
potential
effect of additional
common shares issuable under stock options and nonvested
and retention
shares issued under management
recognition
plans.
Comprehensive
income
income and other
Comprehensive
income
comprehensive
includes the net change in net unrealized gains and losses
income consists of net
income. Other
comprehensive
on securities available for sale, net of reclassification adjust-
ments and tax effects, and is also recognized as a separate
component of shareholders’ equity.
accounted for by the purchase
business
method for which the date of acquisition is July 1, 2001, or
combinations
later. The provisions of FASB Statement
142 are required
to be implemented by the Company in the first quarter
of its 2003 fiscal year, although the Company currently
in the first quarter of its 2002
intends to early implement
fiscal year. The Company has not yet completed its
full assessment of
these new pronounce-
ments on its financial statements, however, the impact of
the effects of
adopting FASB S~atement No. 142 will be to eliminate
the amortization of goodwill and subject goodwill to annu-
impairment
al
30,
2001, goodwill amortization expense was approximately
tests. For the year ended September
$365,000.
Fin-t Midwest Financial, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
PER COMMON SHARE
2.
NOTE
A reconciliation
EARNINGS
of the numerators
and denominators
used in the computation of basic earnings per common share and
diluted earnings per common share is presented below
Basic earnings per common share:
Numeratoc
Net
income before extraordinary
item
$
1,909,743
$
1,975,631
$
2,641,132
2001
2000
1999
Extraordinary
of debt,
Net
item, gain on extinguishment
less income tax effect of $208,600
Income
Denomination
$
1,909,74;
351,995
2,327,626
$
$
2,641,132
Weighted average common shares outstanding
Less weighted average unallocated ESOP shares
2,433,453
(13,353)
2,464,829
(11,535)
2,510,494
(41>327)
Weighted average common shares outstanding for
basic earnings per common share
2,420,100
2,453,294
2,469,167
Basic earnings per common share:
Earnings per common share before extraordinary item
Extraordinary item per common share
~
Earnin s
er common share
Diluted earnings per common share:
Numerato~
Net
income before extraordinary item
Extraordinary item, gain on extinguishment
$
$
0.79
0.79
0.81
0.14
0.95
$
$_
1.07
1.07
$
1,909,743
$
1,975,631
$
2,641,132
of debt, less income tax effect of $208,600
Net
income
$
1,909,743
$
351,995
2,327,626
$
2,641,132
Denomination
Weighted average common shares outstanding
for basic earnings per common share
Add dilutive effects of assumedexercises of stock options
2,420,100
2,453,294
2,469,167
and average nonvested MRRP shares, net of tax benefits
42,973
40,661
79,681
Weighted average common and dilutive potential
common shares outmanding
2,463,073
2,493,955
2,548,848
Diluted earnings per common share:
Diluted earnings per common share before
extraordinary item
Diluted extraordinary item per common share
Dihsted earnings per common share
$
$
0.78
0.78
$
$
0.79
0.14
0.93
$
$-
1.04
1.04
Stock options
ended September
toraling 171,416 shares were not considered
in computing
diluted earnings per common share for the year
30, 2001, because they were not dilutive.
33
First Midwest Financial, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3. SECURITIES
Year et-d securities available for sale were as follows:
2001
Debt securities:
Trust preferred
obligations
of suates and
political
subdivisions
U.S. Government and federal agencies
Mortga
e-backed securities
Marketable
equity securities
2000
Debt securities:
Tmst preferred
Obligations of states and
political subdivisions
U.S. Governmentand federalagencies
Mortgage-backed securities
Marketable equity securities
Amortized
cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
$ 27,170,021
$
22,050
$ (2,512,211)
$24,679,860
980,029
4,992,275
111,119,632
144,261,957
574,962
43,060
88,324
2,644,002
2,797,436
312,613
1,023,089
5,080,599
113,761,916
144,545,464
828,875
(1,718)
(2,513,929)
(58,700)
$144,836,919
$
3,110,049
$
(2,572,629)
$145374,339,
Amortized
cost
Gross
Unrealized
Gains
Gross
Unrealized
Losses
Fair
Value
$27,159,373
$
6,410
$ (1,244,923)
$25,920,860
1,199,591
16,959,412
104,795,500
150,113,876
1,434,043
$151,547,919
$
24,016
408,115
438,541
280,511
719,052
(8,850)
(579,462)
(2,666,055)
(4,499,290)
(288,750)
1,214)757
16,379,950
102,537,560
146,053,127
1,425,804
$ (4,788,040)
$147,478,931
The amortized cost and fair value of debt securities by
contractual maturity are shown below. Certain securities
have call features which allow the issuer to call the security
prior to maturity. Expected maturities may differ from con-
tractual maturities in mortgage-backed securities because
borrowers may have the right to call or prepay obligations
with or without call or prepayment penalties. Therefore,
these securities are not included in the maturity categories
in the following maturity summary.
September
30,
2001
Due in one year or less
Due after one year through five years
Due after five years through ten years
Due after ten years
Mortgage-backed securities
Amortized
cost
$
255>029
675,000
5,042,275
27,170,021
33,142,325
111,119,632
$144,261,957
Fair
Value
$
258,240
713,501
5,131,947
24,679,860
30,783,548
113,761,916
$144,545,464
34
First Midwest Financial, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Activities related to the sale of securities available for sale are summarized below. Included in gross (losses) on sales in
2001 and 2000 is impairment losses of approximately $5,000 and $142,000,
respectively.
Proceeds from sales
Gross gains on sales
Gross (losses) on sales
NOTE
4.
LOANS
RECEIVABLE,
NET
Year end loans receivable were as follows:
One to four family residential mortgage loans:
Insured by FHA or guaranteed by VA
Conventional
Construction
Commercial and multi-family real esrate loans
Agricultural
real estate loans
Commercial business loans
Agricultural business loans
Consumer
loans
Less:
Allowance for loan losses
Undistributed
portion of loans in process
Net deferred loan origination fees
2001
2000
1999
__
$795,000
$20,275,060
$24,791,295
76,874
(137,149)
(878,679)
331,611
=
—
—
2001
—,
2000
$
85,222
95,526,705
21,883,909
123,636,351
11,729,027
36,773,258
25,253,174
28,169,202
$
127,377
105,574,680
31,301,308
103,595,098
10,894,866
29,331,875
26,810,047
26,483,135
343,056,848
‘
334,118,386
(3,868,664)
(5,859,813)
(266,346)
‘- $333,062,025
(3>589,873)
(5,424,794)
(401,090)
$324,702,629
Activity in the allowance for loan losses for the years ended September 30 was as follows:
Beginning balance
Provision for loan losses
Recoveries
Chmge-offs
—
2001
2000
1999
— --$-3,589,873
---$—3f392.;628-
$—2T908,902-
710,000
51,331
~482,540)
1,640,000
126,887
(1,269,642)
w $
3,868,664
‘
$
3;589,873
1,992,000
58,240
(1,866,514)
3>092,628
$
Virtually all of the Company’s originated loans are to
Iowa and South Dakota-based individuals and organiza-
as follows:
in Minnesota,
lS%
tions. The Company’s purchased loans totaled approxi-
and were
at September
mately $126,660,000
30, 2001,
Dakova, 2% in New Mexico,
remaining 6°A in 17 other states.
in Washington,
5’%0in North Carolina,
4%
4% in Iowa, 3% in Wkconsin, 2% in South
2% in Arizona and the
secured by properties located, as a percentage of total loans,
The Company originates and@FShases
comrntirckr”real”
as follows: 15’%0in Washington, 3°k in North Carolina, 3%
estate loans. These loans are considered by management
to
in Minnesota, 3% in Iowa, 2% in Wisconsin, 2% in South
Dakora, 2% in Arizona and the remaining 7% in 15 other
be of somewhat greater risk of uncollectibility due to the
dependency on income production. The Company’s com-
srates. The Company’s purchased loans totaled approxi-
mercial real esrate loans include approximately $28,141,000
mately $136,798,000
30, 2000, and were
at September
secured by properties located, as a percentage of total loans,
35
and $18,333,000
$20,702,000
of
loans secured by hotel properties,
of loans secured by multi-
and $14,631,000
Fint Midwest Financial, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
family properties and $19,953)000 and $17,216,000 of loans
real estate portfolio is diversified by industry. The Corn-
secured by assisted living facilities at September 30, 2001
and 2000, respectively. The remainder of the commercial
pany’s policy for requiring collateral and guarantees varies
with the creditworthiness of each borrower.
Impaired loans were as follows:
Year-end loans with no allowance for loan losses allocated
Year-end loans with allowance for loan losses allocated
Amount of the allowance allocated
Average of impairedloans during the year
Interest income recognizedduring impairment
$-$”
1,347,574
167,693
4,770,909
255,002
5,693,460
734,237
3)954,277
374,205
Foregone interest
income and cash interest collected on impaired loans was not material during the years ended
September 30, 2001, 2000 and 1999.
NOTE 5. LOAN SERVICING
Mortgage loans serviced for others are not reported as assets. The unpaid principal balances of these loans at year end were
as follows:
Mortgage Ioan portfolios
serviced for FNMA
Other
2001
2000
$ 12,058,000
$
5,695,000
20,450,000
16,096,000
–
$32,508,000
=
$21,791,000
Custodial escrow balances maintained in connection with the foregoing loan servicing were approximately $11,000
and $12,000 at September 30, 2001 and 2000, respectively.
NOTE
6.
PREMISES
AND EQUIPMENT,
NET
Year end premises and equipment were as follows:
Land
Buildings
Furniture,
fixtures and equipment
Less accumulated depreciation
2001
2000
$
2,043,370
$
7,850,052
4,448,902
14,342,324
___
(4,995,536)
1,782,970
5,214,003
3,430,664
10,427,637
(4,335,896)
-
$
9,346,788
$
6,091,741
Depreciation of premises and equipment
included in occupancy and equipment expense was approximately $660,000,
$449,000 and $390,000 for the years ended September 30,2001,2000
and 1999, respectively.
36
First Midwest Financkd, Inc.
and Sz.tbsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
7. DEPOSITS
transfer of $15,000,000
of FHLB advances. The transfer of
Jumbo certificates of deposit in denominations of $100,000
or more were approximately $35,475,000
and $31,214,000
FHLB advances was in conjunction with a restructuring of
the balance sheet wherein lower yielding securities were
at year end 2001 and 2000, respectively.
sold with the proceeds reinvested in higher yielding loans
At September 30, 2001,
the scheduled maturities of
certificates of deposit were as follows for the years ended
and used to repay borrowings.
September 30:
2002
2003
2004
2005
2(3O6
Thereafter
NOTE 8. ADVANCES
LOAN BANK
NOTE 9. SECURITIES
AGREEMENTS
TO REPURCHASE
SOLD UNDER
$163,272,566
58,062,943
14,116,594
7,532,579
4,942,641
204,547
$248,131,780
Year end securities
$1,992,720
totaled
respectively.
sold under
and $4,254,965
agreements
to repurchase
for 2001 and 2000,
An analysis of securities
sold under agreements
to repur-
chase is as follows:
2001
2000
FROM FEDERAL HOME
Highest month-end
At September
Des Moines with fixed and variable
30, 2001,
advances
balance
from the FHLB of
from
ranging
rates
Average balance
Weighted average interest
$20,239,242
6,490,431
$4,920,423
3,460,390
3.15% to 7.82% (weighted-average
required
to be repaid in the year ending September
rate of 5.76%)
are
30 as
rate during the period
Weighted average interest
4.78%
5.95%
presented
which allow the FHLB to call
below. Certain
advances
contain
call
for the prepayment
features
of the
rate at end of period
4.57%
6.43%
borrowing prior
to maturity.
2002
2CK13
2004
2(X35
2006
Thereafter
At year end 2001, securities
repurchase had maturities
sold under
to
ranging from 1 to 15 months with
agreements
$21,661,763
a weighted average maturity of 6 months.
5,105,605
6,485,778
10,134,474
1,801,886
81,162,255
$126,351,761
The Company pledged securities with amortized costs of
$2,084,000 and $4,323,000 and fair values of
approximately
approximately
$2,154,000
year end 2001 and 2000 as collateral
under agreements
to repurchase.
and $4,221,000,
respectively,
for securities
at
sold
First Federal and Security have executed blanket pledge
NOTE 10. COMPANY OBLIGATED
MANDATORILY
REDEEMABLE
PREFERRED
agreements
transfer and pledge to the FHLB, and grant
First Federal
whereby
and Security
assign,
to the FHLB, a
security interest
However, First Federal and Security have the right
now or hereafter
in all property
owned.
to use,
SECURITIES
SOLELY SUBORDINATED
DEBENTURES
OF SUBSIDIARY TRUST HOLDING
The Company
Company Obligated Mandatorily
issued all of the 10,000 authorized
Redeemable
shares of
(COMR)
commingle and dispose of the collateral they have assigned
to the FHLB. Under
the agreements, First Federal and
Security must maintain “eligible collateral” that has a
“lending value” at least equal
to the “required collateral
amount,” all as defined by the agreements.
At year end 2001 and 2000, First Federal and Security
Preferred Securities of First Midwest Financial Capital Trust
1 holding solely subordinated
debt securities. Distributions
are paid semi-annually.
calculated
at a variable
Cumulative
cash distributions
rate of LIBOR (as defined)
are
plLN
3.75Y0, not
to exceed 12.50Y0. The Company may, at one or
more times, defer interest payments on the capiral securities
collectively pledged securities with amortized costs of
and fair values of approxi-
$67,678,000
and $87,376,000
for up to 10 consecutive
beyond July 25, 2031. At
semi-annual
but not
the end of any deferral period, all
periods,
and $85,104,000
mately $72,428,000
FHLB advances.
of approximately
pledged as collateral at year end 2001 and 2000.
specific
In addition, qualifying mortgage loans
were
and $103,338,000
$85,895,000
against
and unpaid
distributions
securities will be redeemed
accumulated
capiral
ever,
the Company
has the option to shorten
will be paid. The
on July 25, 2031; how-
the maturity
date to a date not earlier
than July 25, 2006. The redemp-
During fiscal 2000,
totaling $351,995,
the Company recognized a gain
net of related income taxes, on the
tion price is $1,000 per capital
and unpaid distributions
security plus any accrued
to the date of redemption
plus,
if
37
First Midwest Financial, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
redeemed prior to July 25, 2011, a redemption premium as
September 30, 2001, 2000 and 1999, respectively.
defined in the Indenture agreement.
Holders of the capital securities have no voting rights,
Contributions to the ESOP and shares rel~ased from sus-
to the repayment of the
pense in an amount proportional
are unsecured and rank junior in priority of payment to all
of the Company’s indebtedness and senior to the Company’s
ESOP loan are allocated among ESOP participants on the
basis of compensation in the year of allocation. Benefits
common stock.
The debentures are included on the balance sheet as of
September 30, 2001 as liabilities.
NOTE 11.
Employee
EMPLOYEE
BENEFITS
stock ownership plan (ESOP)
generally become 100% vested after seven years of credited
service. Prior to the completion of seven years of credited
service, a participant who terminates employment
for rea.
sons other than death or disability receives a reduced bene-
fit based on the ESOP’S vesting schedule. Forfeitures are
in
reallocated among remaining participating employees,
The Company mainrains an ESOP for eligible employees
who have 1,000 hours of employment with the Bank and
the same proportion as contributions. Benefits are payable
in the form of stock upon termination of employment.
who have attained age 21.
$1,534,100
the ESOP borrowed
from the Company to purchase 230,115 shares
In 1993,
of the Company’s common stock. Final payment of this
loan was received during the year ended September 30,
2000.
from the
Company to purchase 30,000 shares of the Company’s com-
the ESOP borrowed $360,000
In 2001,
The Company’s contributions to the ESOP are not fixed, so
benefits payable under the ESOP cannot be estimated.
For the years ended September 30,2001,2000
and 1999,
25,080
15,000,
shares with an average fair
value of $11.64, $10.80 and $15.17 per sl~are, respectively,
and 30,000
were committed to be released. Also for the years ended
mon stock. Shares purchased by the ESOP are held in sus-
pense for allocation among participants as the loan is repaid.
September 30, 2001, 2000 and 1999, allocated shares and
total ESOP shares reflect 5,514, 1,287 and 23,275 shares,
ESOP expense of $174,660,
and $455,220 was
recorded for the years ended September 30, 2001, 2000 and
$270,864
respectively, withdrawn from the ESOP by participants
who are no longer with the Cotnpany and 9,312, 7,434 and
1999, respectively. Contributions of $180,000,$167,200
and
$200,000 were made to the ESOP during the years ended
4,735 shares, respectively, purchased for dividend reinvest-
ment.
Year-end ESOP shares areas follows:
Allocated shares
Unearned shares
Total ESOP shares
2001
2000
1999
218,613
15,000
199,815
168,588
25,080
Fair value of unearned shares
$
202,500
$
-
$
319,770
Stock
options
and incentive
plans
method been used to measure compensation
cost
for
Certain
officers and directors of the Company have been
granted options to purchase common stock of the Company
stock option plans. The exercise price of options granted
is equivalent to the market value of underlying stock at the
pursuant to stock option plans.
SFAS No. 123, which became effective for stock-based
compensation during fiscal years beginning after December
15, 1995, requires proforma disclosures for companies that
grant date. Accordingly, no compensation cost was actu-
2000 or
ally recognized for stock options during 2001,
1999.
The fair value of options granted during 2001, 2000 and
do not adopt its fair value accounting method for stock-
based employee compensation for awards granted in the
1999 is estimated using the following weighted-average
rate of 4.52Y0, 5.99% and
information
risk-free interest
first
Accordingly,
fiscal year beginning
15, 1994.
the following proforma information presents
after December
6.17%,
expected life of 7.0 years, expected dividends of
3.85%, 5.30% and 4.00% per year and expecred stock price
net
income and earnings per share had the fair value
volatility of 22% per year.
38
First Midwest Financial, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Net income as reported
Profcmnanet income
Reported earnings per common and
common equivalent share:
Basic
Diluted
Proforma earnings per common and
common equivalent share:
Basic
Diluted
2001
2000
1999
—
$
1,909,743
1,876,780
$
2,327,626
2,287,501
$
2,641,132
2,569,635
$
$
0.79
0.78
0.78
0.76
$
$
0.95
0.93
0.93
0.92
$
$
1.07
1.04
1.04
1.01
In future years, the proforma effect of not applying this
interest. Options are issued for 10 year periods, with 100%
standard is expected to increase as additional options are
granted.
Stock option plans are used to reward directors, officers
vesting generally occurring either at grant date or 48
months after grant date. At September 30, 2001, 66,626
shares were authorized for future grants. Information about
and employees and provide them with an additional equity
option grants follows:
Outstanding, September 30, 1998
Granted
Exercised
Fotfeited
Outstanding, September 30, 1999
Granted
Exercised
Forfeited
Outstanding, September 30,2000
Granted
Exercised
Forfeited
Outstanding,
September 30, 2001
Number of
Weighted-
Average
Options
Exercise Price
331,116
26,335
(23,051)
(9,000)
325,400
29,418
(54,500)
300,318
31,738
(40,000)
(4,000)
288,056
$
$
10.62
13.00
7.37
17.59
10.85
9.88
6.67
11.51
13.61
6.67
13.00
12.40
The weighted-average fair value per option for options granted in 2001, 2000 and 1999 was $.97,$.66,
and $1.54.
At September 30, 2001, options outstanding were as follows:
Exercise
Price
Weighted-Average
Exercise
Price
Weighted-Average
Remaining
Life
(Years)
$6.67-$9.99
$10.00-$14.99
$15.00-$19.99
$20.00-$20.13
$
$
7.36
13.35
16.80
20.13
12.40
39
3.58
8.92
5.43
6.00
5.41
Number
of Options
116,6’40
58,593
102,383
10,440
288,056
First Midwest Financial, Inc.
and .Mbsidiwies
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Options exercisable at y~ar end areas follows:
was recorded for these plans for the years ended 2001,
2000 and 1999.
Weighted-
Average
Exercise
Price
Number of
Ontions
$
286,650
270,443
270,556
10.09
11.17
12.38
1999
2000
20Q1
Management
recognition
and retention
plans
plan
sharing
Profit
The Company has a profit sharing plan covering substan-
tially all full-time employees. Contribution expense for the
years ended September
$315,773,$329,108
30, 2001,
and $0, respectively.
2000 and 1999, was
NOTE 12.
INCOME
TAXES
The Company,
the Bank and its subsidiaries and Security
file a consolidated federal income tax return on a fiscal year
The Company granted 10,424, 7,191 and 106,428 (8,986
the Plan
of which have been forfeited under terms of
basis. Prior to fiscal year 1997,
met
if certain conditions were
in determining taxable income on the consolidated
due to termination of service)
shares of the Company’s
common stock on September 30, 1999, May 23, 1994 and
federal income tax return, the Bank was allowed a special
bad debt deduction based on a percentage of raxable
September 20, 1993, respectively,
Bank pursuant to a management
to certain officers of the
recognition and reten-
income (8Y0 for 1996) or on specified experience formulas.
The Bank used the percentage of taxable income method
tion plan (the Plan). The holders of the restricted stock
have all of the rights of a shareholder, except
they
cannot sell, assign, pledge or transfer any of the restricted
stock during the restricted period. The stock granted in
that
for the vax year ended September 30, 1996. Tax legislation
passed in August 1996 now requires the Bank to deduct a
provision for bad debts for tax purposes based on actual loss
experience and recapture the excess bad debt reserve accu-
1999 under the Plan vested as follows: 5,212 shares vest-
ed at the date of grant cm September 30, 1999 and 5,212
mulated in tax years beginning after September 30, 1987.
The related amount of deferred Pax liability which must be
shares vested on September 30, 2000. Previously granted
restricted stock vested at a rate of 25 Yoon each anniversary
recaptured is approximately $554,000 and is payable over a
ending
6-year period beginning with the
tax year
of the grant date. Expense of $0, $33,878
and $101,634
September 30, 1999.
The provision for income taxes consists of:
Federal:
Current
Deferred
Srate:
Current
Deferred
2001
2000
1999
$
1,170,302
$
(105,167 )__
1,065,135
1,644,698
(258,085)
1,386,613
$
1,690,170
(90,137)
1,600,033
(27>756)
(26,833)
(54,589)
-
236)122
(39,915)
196,207
250,616
(13,863)
236,753
Income tax expense
$
1,010,546
$
1,582,820
$
1,836,786
Income vax expense for the year ended September 30, 2000,
includes $208,600
related to a gain on an extraordi-
nary item.
40
First Midwest Financial, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Total income tax expense differs from the statutory federal income tax rate as follows:
Income taxes at 34~o federal
tax rate
Increase (decrease)
resulting from
State income taxes - net of federal benefit
Nondeductible
goodwill
Resolution
of a tax contingency
Other, net
Total
income tax expense
Year end deferred tax assets and liabilities consist of:
Deferred tax assets
Bad debts
Deferred loan fees
Net unrealized losses on securities available for sale
Other
items
Deferred tax liabilities:
Federal Home Loan Bank stock dividend
Accrual
to cmh basis
Premises and equipment
Net unrealizedgains on securities available for sale
Other
2001
2000
1999
$
993,000
$
1,139,000
$
1,522,000
113,000
124,000
(139,000)
(80,454)
129,000
124,000
156,000
124,000
(17,780)
34,786
$
1,010,546
$
1,374,220
$
1,836,786
2001
2000
$
1,047,000
$
861,000
40,000
1,087,000
(452,000)
(44,000)
(108,000)
(198,993)
(5,000)
(807,993)
44,000
1,514,054
84,000
2,503,054
(452,000)
(89,000)
(72,000)
(30,000)
(643,000)
Net deferred tax assets
$
279,007
$
1,860,054
Federal
income tax laws provided savings banks with
ments. Under
capital
adequacy guidelines
and the regula-
additional bad debt deductions
1987, toraling $6,744,000
thnmgh September
30,
for the Bank. Accounting stan-
for prompt
tory framework
and Security must meet specific quantitative
action, First Federal
capital guide-
corrective
dards do not require a deferred tax liability to be recorded
on this amount, which liability otherwise would total
and 2000.
approximately $2,300,000 at September 30,2001
If the Bank were liquidated or otherwise ceases to be a bank
lines using their assets,
items as calculated
sheet
tices. The requirements
ments by the regulators
liabilities
under
and terrain
regulatory accounting
off-balance-
prac-
are also subject
about components,
to qualitative
judg-
risk weighings
or if tax laws were to change,
recorded as expense.
the $2,300,000 would be
and other
factors.
NOTE 13. CAPITAL REQUIREMENTS
AND
RESTRICTIONS
The Company has two primary subsidiaries, First Federal
ON RETAINED EARNINGS
measures
Quantitative
to
ensure capital adequacy require First Federal and Security to
forth in the
maintain minimum amounts
by regulation
and ratios
established
(set
table below) of total
defined
in the
risk-based capital and Tier I capital
assets
to risk-weighted
regulations)
(as
(as
(as
and Security. First Federal and Security are subject to vari-
defined),
and a leverage ratio consisting of Tier I capital
ous regulatory capital requirements. Failure to meet mini-
defined)
to average
assets
(as defined). Management
mum capital requirements can initiate certain mandatory
or discretionary actions by regulators that,
if undertaken,
could have a direct material effect on the financial state-
41
believes,
Security meet
as of September
30, 2001,
the capital adequacy requirements.
that First Federal and
FiTst Midwest Financia[, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
First Federal’s and Security’s actual capital and required capital amounts and ratios are presenred below
Actual
Minimum Requirement
For Capital Adequacy
Purposes
Minimum
Requirement To Be
Well Capitalized Umier
Prompt Corrective
Action Provisions
Amount
Ratio
Amount
Ratio
Amount
Ratio
(Dollars
in thousands)
$44,393
4,514
13.8%
15.2
$25,681
2,380
8.0%
8.0
$32,101
2,975
10.0%
10.0
40,832
4,179
40,832
4,179
40,832
12.7
14.0
8.8
9.1
8.7
12,840
1,190
18,565
1,837
18,828
$35,898
4,144
11.8%
13.3
$24,291
2,490
32,541
3,848
32,541
3,848
32,541
10.7
12.4
7.1
8.2
7.1
12,146
1,245
18,423
1,876
4.0
4.0
4.0
4.0
4.0
8.0%
8.0
4.0
4.0
4.0
4.0
19,261
1,785
23,206
2,296
23,535
6.0
6.0
5.0
5.0
5.0
$30,364
3,113
10.0?6
10.0
18,218
1,868
23,028
2,345
6.0
6.0
5.0
5.0
5.0
18,227
4.0
22,784
As of September
30,
2001:
Total capital (to risk-weighted assets):
First Federal
Security
Tier 1 (Core) capital (to risk-weighted assets):
First Federal
Security
Tier 1 (Core) capital (to average total assets):
First Federal
Security
Tier 1 (Core) capital (to total assets),
Fkst Federal
As of September 30,2000:
Total capital (to risk-weighted assets):
First Federal
Security
Tier 1 (Core) capiral (to risk-weighted assets):
First Federal
Security
Tier 1 (Core) capital (to average total assets):
First Federal
Security
Tier 1 (Core) capiral (to tcmalassets),
First Federal
Regulations
limit
the amount of dividends and other
First Federal’s retained earnings and $96,000 of Security’s
capital distributions that may be paid by a financial
institu-
tion without prior approval of its primary regulator. The
retained earnings were potentially available for distribution
to the Company.
regulatory restriction is based on a three-tiered system
with the greatest flexibility being afforded to well-capiral-
ized (Tier 1) institutions. First Federal and Security are cur-
rently Tier 1 institutions. Accordingly, First Federal and
NOTE 14.
In the normal course of business, the Company’s subsidiary
AND CONTINGENCIES
COMMITMENTS
banks make various commitments
to extend credit which
regulatory approval,
Security can make, without prior
distributions during a calendar year up m 100% of their
are not reflected in the accompanying consolidated finan-
cial statements.
retained net
retained net
income for the calendar year-to-date plus
income for the previous two calendar yrars
At September 30, 2001 and 2000,
loan commitments
approximated $29,650,000
and $14,810,000,
respectively,
(less any dividends previously paid) as long as they remain
action
well-capitalized, as defined in prompt corrective
excluding undisbursed portions of loans in process. Loan
at September 30, 2001 included ccrmmit-
commitments
regulations,
ingly, at September 30, 2001, approximately
following the proposed distribution. Accord-
of
$1,671,000
ments to originate fixed-rate loans with interest rates rang-
ing from 5.5’%0to 8.5’%0toraling $7,730,000
and adjustable-
42
First Midwest Financial,
and Subsidiaries
Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
rate
loan commitments
with
interest
rates
ranging
from
5.25~0 to 18% totahng
$13,070,000.
The Company
ako
had
commitments
to purchase
adjustable
rate
loans of
$7,100,000 with interest
and fixed-rate
loans of $1,750,000 with interest
rates ranging from 5.5% to 6.5%
rates of
8.45%. Loan commitments
at September
30, 2000 included
commitments
ranging
to originate fixed-rate loans with interest
$530,000
8.875’%0 totaling
from 8% to
rates
and
cash commitments.
extend credit are agreements
In addition,
commitments
to lend to a customer
used to
as long
as there is no violation
contract.
of any condition
established
in the
Securities
with
amortized
costs
of
approximately
and $11,190,000
$14,234,000
mately
2001 and 2000,
$14,562,000
and $10,831,000
and fair values of approxi-
30,
as collateral
at September
respectively, were pledged
adjustable-rate
rates rang-
ing from 6.25’%0to 19V0 totaling $13,280,000. The Company
loan commitments with interest
for public funds on deposit.
Securities
with
amortized
costs
of
approximately
also had commitments
to purchase
adjustable
rate loans of
$5,808,000
and $6,135,000
and fair values
of approxi-
$1,000,000 with interest
rates of 11.25%. Commitments,
mately $6,057,000
and $6,096,000
at September
30, 2001
which are disbursed subject
to certain
limitations,
extend
over various periods of time. Generally,
unused commit-
and 2000,
vidual,
trust and estate deposits.
respectively, were pledged as collateral
for indi-
are canceled
ments
term as outlined
upon expiration
of the commitment
Under
employment
in each individual
contract.
officers,
certain
events
The exposure
to credit
mance by other parties
loss in the event of nonperfor-
for com-
instruments
to financial
mitments
by the contrac-
tual amount of those instruments. The same credit policies
is represented
to extend
credit
and collateral
ments
and conditional
requirements
are used in making
commit-
as are used for on-
obligations
agreements with certain
to separation
leading
executive
fkrm the
in cash payments
totaling
approxi-
could result
Company
mately $2,524,000
The Company
as of September
and its subsidiaries
30, 2001.
claims
and legal actions
arising
are subject
in the ordinary
to certain
course
of business.
tion with legal counsel,
In the opinion of management,
after ccmsulta-
the ultimate disposition of these
balance-sheet
instruments.
Since certain commitments
to make loans and to fund
matters is not expected to have a mater~al adverse effect on
the consolidated financial position or results of operations
lines of credit
the
used,
and loans
in process
amount
does not
necessarily
expire without
represent
being
future
of the Company.
NOTE 15. OTHER
COMPREHENSIVE
INCOME
(LOSS)
Other comprehensive income (loss) components and related taxes were as follows:
2001
2000
1999
Net change in net unrealized gains and
losses on securities available for sale:
Unrealized gains (losses) arising during the year
$
4,546,133
$
(1,075,235)
$
(4,956,193)
Reclassification
adjustment
for (gains)
losses included in net
income
Net change in unrealized gains and
losses on securities
available for sale
Tax effects
. .
60,275
1,020,885
(331,611)
4,606,408
____ (1,714,090)
(54,350)
21,092
(5,287,804)
1,968,351
Other comprehensive income (loss)
$ 2,892,318
$
(33,258)
$ (3,319,453)
NOTE
16.
LEASE COMMITMENT
The Company has leased property under various noncance-
lable operating lease agreements which expire at various
times through December 2009, and require annual rentals
of $52,600 plus the payment of the property taxes, normal
maintenance and insurance on the property.
The total minimum rental commitment at September
2002
2003
2004
2005
2006
Thereafter
30, 2001, under the leases is as follows:
43
$
52,900
52,375
46,600
42,100
40,600
131,950
$
366,525
First Midwest Financial,
and Szdnidiaries
Inc.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
17.
PARENT
COMPANY
FINANCIAL
STATEMENTS
Presented below are condensed financial statements for the parent company, First Midwest Financial,
Inc.:
CONDENSED
BALANCE
SHEETS
September 30,2001 and 2000
ASSETS
Cash and cash equivalents
Securities available for sale
Investment
Loan receivable from ESOP
in subsidiary banks
Loan receivable
Other assets
Total assets
LIABILITIES
AND SHAREHOLDERS’
EQUITY
LIABILITIES
Loan payable to subsidiary banks
Company Obligated Mandatorily Redeemable Preferred
Securities of Subsidiary Trust Holding Solely
Subordinated Debentures
Accrued expenses and other liabilities
Total
liabilities
SHAREHOLDERS’
EQUITY
Common stock
Additional paid-in capital
Reuained earnings, substantially restricted
Accumulated
other comprehensive
income
Unearned employee stock ownership plan shares
Treasury stock, at cost
Total shareholders’ equity
2001
2000
$
60,973
2,863,251
48,940,931
180,000
899,313
_827,772
$
72,236
3,380,496
38,702,338
325,179
211,071
$53,772,240
$42,691,320
$
$
2,550,000
10,000,000
45,030
106,235
_
10,045,030
2,656,235
—
———
_
—
29,580
20,863,379
31,066,643
338,427
( 180,000)
29,580
20,976,108
30,404,386
(2,553,891)
(8,390,819)
-
(8,821,098)
43,727,210
40,035,084
Total
liabilities and shareholders’
equity
$53,772,240
$42,691,320
44
First Midwest Financial, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED
STATEMENTS
OF INCOME
Years Ended September 30, 2001, 2000 and 1999
Dividend income from subsidiary banks
Interest
income
Gain (loss) on sales of securities available
for sale, net ___
Interest expense
Operation expenses
Income before income taxes and
equity in undistributed
net
income of subsidiaries
2001
2000
1999
$
1,550,000
$
2,525,000
309,054
280,351
$
2,350,000
297,447
(60,275)
1,798,779
(37,206)
2,768,145
62,466
2,709,913
. .. .
332,250
550,038
882,288
205,863
388,023
593,886
210,444
405,076
615,520
916,491
2,174,259
2,094,393
Income tax expense (benefit)
,—-
J247,000)
(142,000)
(106,000)
Income before equity in
undktributed net income of
subsidiaries
Equity in undistributednet income
of subsidiarybanks_
1,163,491
2,316,259
2,200,393
__ .746,252
11,367
440,739
Net income
$
1,909,743
$
2,327,626
$
2,641,132
45
Fint Midwest Financial, k.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
CONDENSED
STATEMENTS
OF CASH
FLOWS
Years Ended September 30, 2001, 2000 and 1999
CASH FLOWS FROM OPERATING ACTIVITIES
Net
income
$
1,909,743
$
2,327,626
$
2,641,132
2001
2000
1999
Adjustments to reconcile net
from operating activities:
Equity in undistributed net
income to net cash
income of subsidiary banks
Amortization of recognition ancl retention plan
loss on sales of securities available for sale, net
(Gain)
Change in other assets
Change in accrued expenses and other liabilities
Net cash provided by operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Investment
in subsidiary
Repayment of securities
Purchase of securities available for sale
Proceeds from sales of securities available for sale
Loan to ESOP
Loans purchased, net
Repayments on loan receivable from ESOP
(746,252)
60,275
(364,088)
(61,205)
798,473
(7,000,000)
3,806
795,000
(360,000)
(574,134)
180,000
Net cash provided by (used in) investment activities
(6,955,328)
(11,367)
33,878
37,206
(9,817)
7,771
2,385,297
5,409
(500,000)
495,000
(325,179)
167,200
(157,570)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issuance of Company Obligated Mandatorily
Redeemable Preferred Securities of Subsidiary Trust
Holding Solely Subordinated Debentures
Proceeds from loan payable to subsidiarybanks
Repayments on loan payable to subsidiarybanks
Debt issuance costs incurred
Cash dividendspaid
Proceeds from exercise of stock options
Purchase of treasury stock
Net cash provided by (used in) financing activities
10,000,000
(2,550,000)
(305,812)
(1,247,486)
266)667
(17,777)
6,145,592
(200,000)
(1,276,183)
363,335
(1,478,509)
(2,591,357)
(440,739)
101,634
(62,466)
(38,470)
94,617
2,295,708
(1,626,721)
2,155,709
200,000
728,988
1,150,000
(1,450,000)
(1,274,003)
169,841
(1,289,186)
(2,693,348)
Net change in cash and cash equivalents
(11,263)
(363,630)
331,348
CASH AND CASH EQUIVALENTS
Beginning of year
End of year
SUPPLEMENTAL DISCLOSURE OF CASH FLOW
INFORMATION
Cash paid during the year for interest
$
$
72,236
60,973
435,866
72,236
$
104,518
435,866
$
332,250
$
209,447
$
210,444
46
First Midwest Financial, Inc.
and .3rbsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The extent to which the Company may pay cash dividends to shareholders will depend on the cash currently available at
the Company, as well as the ability of the subsidiary banks to pay dividends to the Company (see Note 13).
NOTE 18. SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)
Quarter Ended
December 31
March 31
lune 30
Sentember 30
$
$
9,833,184
6,545,052
3,288,132
150,000
606,306
0.25
0.25
$
$
9,457,877
6,349,019
3,108,858
120,000
409,127
$
9,303,140
$
6,250,738
3,052,402
200,000
456,346
9,332,425
6,245,790
3,086,635
240,000
437,964
0.17
0.17
$
0.19
0.19
$
0.18
0.18
$
9,404,770
$
9,545,028
$
9,672,083
$
9,788,143
5,911,477
3,493,293
325,000
764,680
5,991,817
3,553,211
270,000
760,747
764,680
760,747
6,264,173
3,407,910
400,000
2,055
351,995
354,050
6,410,895
3,377,248
645,000
448,149
448,149
FISCAL
YEAR 2001:
Total interest income
Total interest expense
Net interest income
Provision for loan losses
Net income
Earnings per common and common
equivalent share:
Basic
Diluted
FISCAL
Total
YEAR 2000:
interest
income
Total
Net
interest expense
interest
income
Provision for loan losses
Net
income before extraordinary item
Extraordinary item
Net
income
Earnings per common and common
equivalent share:
Basic:
Net
income before extraordinary item
Extraordinary item
Net
Diluted:
income
Net
income before extraordinary item
Extraordinary item
Net
income
$
$
$
$
0.31
0.31
0.30
0.30
0.31
0.31
0.30
0.30
$’
$“
$
$
0.15
0.15
0.14
0.14
0.18
0.18
0.18
0.18
FISCAL YEAR 1999:
Total
Total
interest
income
interest expense
interest
income
Net
Provision for loan losses
Net
Earnings per common and common
income
$
8,761,124
$
8,585,259
$
5,342,257
3,418,867
243,000
908>517
5,472,837
3,112,422
358,000
759,500
8,842,903
5,577,855
3,265,048
299,000
756,673
$
9,183,445
5,782,931
3,400,514
1,092,000
216,442
equivalent share
Basic
Diluted
$
0.37
0.36
$
0.31
0.30
$
0.31
0.30
$
0.09
0.09
47
First Midwest Financial, Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE
19.
FAIR VALUES OF FINANCIAL
INSTRUMENTS
SFAS No.
Instruments,
107, Disclosur-esAbout Fair Value of Financial
requires that the Company disclose estimated
fair value amounts of its financial
agement’s belief
It is man-
instruments.
the fair values presented below are
that
sented could be substantially
nized over
time through
different when actually recog-
course of operations.
the normal
Additionally,
ent value is the subsidiary banks’ capitalization
portion of the Conl~any’s
a substantial
inher-
and fran-
chise Value. Neither
consideration
of these components
have been given
in the presentation
of fair values below.
reasonable based on the valuation techniques
and data
The
following
presents
the carrying amount
available to the Company as of September 30, 2001 and
mated fair value of the financial
instruments
and esti-
held by the
2000, as more fully described below. It should be noted that
Company
at September
30, 2001 and 2000. This
informa-
the operations of the Company are managed from a going
concern basis and not a liquidation basis. As a result, the
ultimate value realized for the financial
instrutnents pre-
tion is presented
and is subject
factors.
solely for compliance with SFAS No. 107
time based on a variety of
to change over
2001
2000
Carrying
Amount
Estimated
Fair Value
Carrying
Amount
Estimated
Fair Value
$
8,766,305
$
8,’766,000
$
6,922,531
$
6,923,000
145,374,339
333,062,025
6,398,900
4,750,792
145,374,000
335,953,000
6,399,000
4,751,000
147,478,931
324,702,629
8,327,600
5,216,929
147,479,000
321,192,000
8,328,000
5,217,000
Selected assets:
Cash and cash equivalents
Securities available for sale
Loans receivable, net
FHLB stock
Accrued interest receivable
Selected liabilities:
Noninterest bearing demand deposits
(7,733,294)
(7,733,000)
(6,040,991)
(6,041,000)
Savings, NOW and money market
demand deposits
Other
time certificates of deposit
Total deposits
Advances from FHLB
Securities sold under agreements
to repurchase
Company Obligated Mandatorily
Redeemable PreferreclSecurities of
SubsidiaryTmst Holding Solely
Subordinated Debentures
Advances from borrowersfor taxes
and insurance
Accrued interest payable
(82,916,804)
(248,131,780)
(338,781,878)
(82,917,000)
(253,180,000)
(343,830,000)
(72,508,530)
(240,104,200)
(318,653,721)
(72,509,000)
(239,698,000)
(318,248,000)
(126,351,761)
(134,530,000)
(139,738,451)
(137,078,000)
(1,992,720)
(2,008,000)
(4,254,965)
(4,250,000)
( 10,000,000)
(10,078,000)
(446,397)
(868,281)
(446,000)
(868,000)
(461,514)
(1,006,341)
(462,000)
(1 ,006,000)
Off-balance-sheet
commitments
instruments,
loan
(29,650,000)
(14,810,000)
48
First Midwest Financial,
Inc.
and Subsidiaries
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
The following sets forth the methods
and assumptions
used in determining the fair value estimates for the Com-
pany’sfinancial instruments at September 30,2001 and 2000.
equivalents
Cash and cash
The carrying amount of cash and short-term investments is
assumed to approximate the Fair value.
Securities
available
for sale
rates as of September
similar
terms and remaining maturities.
30, 2001 and 2000, for aclwances with
Securities
other borrowings
sold under
agreements
to repurchase,
and company
obligated mandatorily
preferred securities
redeemable
holding solely subordinated
The fair value of securities sold under agreements to repur-
chase, other borrowings and company obligated mandatorily
of subsidiary
debentures
trust
Quoted market prices or dealer quotes were used to deter-
mine the fair value of securities available for sale.
redeemable preferred securities of subsidiary trust holding
solely subordinated debentures was estimated by discounting
Loans
receivable,
net
The fair value of loans receivable, net was estimated by
discounting the fhture cash flows using the current rates at
which similar loans would be made to borrowers with similar
credit ratings and for similar remaining maturities. When
using the discounting method to determine fair value, loans
were gathered by homogeneous groups with similar terms and
the expected future cash flows using derived interest rates
approximating market as of September 30, 2001 and 2000,
over the contractual maturity of such borrowings.
Advances
The carrying amount of advances from borrowers for taxes
from borrowers
and insurance
taxes
for
and insurance is assumed to approximate the fair value.
conditions and discounted at a target rate at which similar
loans would be made to borrowers as of September 30,2001
Accrued interest
The carrying amount of accrued interest payable is assumed
payable
and 2000.
In addition, when computing the estimated fair
value for all loans, allowances for loan losses have been sub-
tracted from the calculated fair value for consideration of
credit issues.
FHLB stock
The fair value of such stock approximates book value since
the Company is able to redeem this stock with the Federal
Home Loan Bank at par value.
to approximate
the fair value.
Loan commitments
The commitments
to originate and purchase loans l~ave
terms
Accordingly,
that are consistent with current
rmarket terms.
the Company estimates tl~at the fair values of
these commitments are not significant.
Limitations
It must be noted that
cific point
fair value estimates are made at a spe-
in time, based on relevant market
information
Accrued interest
The
receivable
carrying amount of accrued interest
assumed to approximate the fair value.
receivable
is
the
about
estimates
financial
instrument.
are based on existing
Additionally,
fair value
on and off-balance-sheer
Deposits
The fair value of deposits were determined as follows (i) fm-
noninterest bearing demand deposits, savings, NOW and
money market demand deposits, since such deposits are
immediately withdrawable, fair value is determined to approx-
imate the carrying value (the amount payable on demand);
(ii) for other time certificates of deposit, the fair value has
been estimated by discounting expected future cash flows
by the current rates offered as of September 30, 2001 and
2000, on certificates of deposit with similar remaining matu-
rities. In accordance with SFAS No. 107. no value has been
assigned to the Company’s long-term relationships with its
deposit customers (core value of deposits intangible) since
such irmangible is not a financial
instrument as defined
under SFAS No. 107.
Advances
from FHLB
financial
value of anticipated
instruments without
attempting
to estinxate
the
fhture business, customer
relationships
and the value of assets and liabilities
financial
instruments.
These
estimates
that are not considered
any
do not
reflect
premium or discount
Company’s
entire holdings of a particular
that
could result
from offering the
instru-
financial
for sale at one time. Furthermore,
ment
exists for terrain
fair value estinxates may be based on judgments
loss experience,
future expected
since no market
instruments,
regarding
condi-
of the Company’s
economic
financial
current
tions,
and other
risk characteristics
of various
factors. These estimates
fimancial
are subjective
instruments,
in nature
and involve uncer~ainties
ment and therefore
judg-
cannot be determined with a high level
of significant
and matters
of precision. Changes
as well as tax consid-
in assumptions
erations could significantly affect the estimates. According-
ly, based on the limitations described above, the aggregate
fair value estimates are not intended to represent the under-
The fair value of such advances was estimated by discount-
interest
ing the expected future cash flows using current
lying value of the Company, on either a going concern or a
liquidation basis.
49
BOARD of DIRECTORS
JAMES
S. HAAHR
E. THURMAN
GASKILL
G. MARK MICKELSON
Chairman of the Board, President and
Chief Executive Officer for First Midwest
Inc. and First Federal Savings
Financial,
Bank of the Midwest; Chairman of the
Board for Security State Bank
E. WAYNE COOLEY
Executive Secretary of the Iowa Girls’
High School Athletic Union
Iowa State Senator and Owner of a
Grain and Livestock Farming Operation
Vice President of Blue Dot Services, a
subsidiary of Northwestern Corporation
J. TYLER HAAHR
Senior Vice President, Secretary and Chief
Operating Officer for First Midwest
Financial, Inc.; Executive Vice President,
Secretary, and Chief Operating Officer for
Fmt Federal Savings Bank of the Midwes~
Chief Executive Officer of Security State
Bank; and Vice President and Secretary of
First Services Financial Limited
RODNEY
G. MU ILENBURG
Dairy Specialist with Purina
MilIs,
Inc.
JEANNE PARTLOW
Retired President of Iowa Savings Bank
EXECUTIVE OFFICERS
JAMES
S. HAAHR
Chairman of the Board, President and
Chief Executive Officer for First Midwest
Financial,
Inc. and First Federal Savings
Bank of the Midwesq and Chainnan of
the Board for Security State Bank
J. TYLER HAAHR
Senior Vice President, Secretary and
Chief Operating Officer for First Midwest
Inc.; Executive Vice President,
Financial,
Secretary, Chief Operating Officer, and
Division President
for First Federal
Savings Bank of the Midwesq and Chief
Executive Officer for Security State Bank
DONALD J. WINCHELL,
CPA
Senior Vice President, Treasurer and
TIM D. HARVEY
President
for Brooklngs Federal Bank
Chief Financial Officer for First Midwest
Financial,
Inc. and First Federal Savings
Bank of the Midwest; and Secretary for
Security Spate Bank
ELLEN E. MOORE
Vice President, Marketing and Sales for
First Midwest Financial,
Inc.; and Senior
Vice President, Marketing and Sales for
First Federal Savings Bank of the
Midwest
Division
TROY MOORE
President
for Iowa Savings Bank Division
TONY TRUSSELL
President
for First Federal Sioux Falls
Division
I. EUGENE
President
RICHARDSON,
JR.
for Security State Bank
SUSAN C.
Senior Vice President
JESSE
for First Federal
Savings Bank of the Midwest
DIRECTORS OF
FIRST FEDERAL SAVINGS BANK
OF THE MIDWEST
James S. Haahr, Chairman
E. Wayne Cooley
E. Thurman GaskiII
J. Tyler Haahr
G. Mark Mickelson
Rodney G. Muilenburg
Jeanne Partlow
BANK DIRECTORS
DIRECTORS OF
SECURITY STATE BANK
James S. Haahr, Chairman
Jeffrey N. Bump
E. Wayne Cooley
E. Thurman Gaskill
J. Tyler Haahr
G. Mark MickeIson
Rodney G. Muilenburg
Jeanne Partlow
1. Eugene Richardson,
Jr.
ADVISORY
BOARD OF
BROOKINGS
FEDERAL
BANK
Fred J. Rittershaus, Chairman
Virgil G. Ellerbruch
J. Tyler Haahr
Tkn D. Harvey
O. Dale Larson
EarI R. Rue
First
Federal Savings Bank of the Midwest
OFFICE LOCATIONS
First Federal Storm Lake, Main Office
Brookings Federal Bank, Main Office
FIRST
FEDERAL
STORM LAKE DIVISION
BROOKINGS
BANK DIVISION
FEDERAL
Main Office
Fifth at Erie
P.O. Box 1307
Storm Lake, IA 50588
712.732.4117
800.792.6815
712.732.7105
fax
Storm Lake Plaza
1413 North Lake Avenue
Storm Lake, IA 50588
712.732.6655
712.732.7924
fax
Lake View
Fifth at Main
P.O. BOX 649
Lake View, IA 51450
fax
712.657.2721
712.657.2896
Laurens
104 North Third Street
Laurens, IA 50554
712.841.2588
712.841.2029 fax
Manson
Eleventh at Main
P.O. Box 130
Manson, IA 50563
712.469.3319
712.469.2458 fax
Odebolt
219 South Main Street
P.O. BOX 465
Odebolt,
IA 51458
712.668.4881
712.668.4882
fax
Sac City
518 Audubon Street
Sac City, IA 50583
712.662.7195
712.662.7196
fax
Main Office
600 Main Avenue
P.O. BOX 98
Brookings, SD 57006
605.692.2314
800.842.7452
605.692.7059
fax
Eastbrook
425 22ncI Avenue South
Brookhgs,
605.692.2314
SD 57006
lowa Savings Bank, Main Office
IOWA SAVINGS
DIVISION
BANK
Main Office
3448 Westown Parkway
West Des Moines, IA 50266
515.226.8474
515.226.8475 fax
Highland Park
3624 Sixth Avenue
Des Moines, IA 50313
515.288.4866
515.288.3104 fax
Ingersoll
3401 Ingersoll Avenue
Des Moines, IA 50312
515.274.9674
515.274.9675 fax
(coming soon)
Urbandale
4848 86th Street
Urbandale,
IA 50322
A = New building
location.
Security State Bank
First Federal Sioux Falls, Main Office
Security State Bank, Main Office
Main Office
IA 50250
615 South Division
P.O. Box 606
Stuart,
515.523.2203
800.523.8003
515.523.2460
fax
Casey Office
101 East Logan
P.O. Box 97
Casey, IA 50048
641.746.3366
800.746.3367
641.746.2828
fax
Menlo Office
501 Sherman
P.O. Box 36
Menlo,
641.524.4521
IA 50164
FEDERAL
FALLS DIVISION
FIRST
SIOUX
Main Office
2500South Minnesota Avenue
Sioux Falls, SD 57105
605.977.7500
605.977.7501
fax
51
INVESTOR INFORMATION
OF SHAREHOLDERS
ANNUAL MEETING
at
The Annual Meeting of Shareholders will convene
January 28, 2002. The meeting
1:00 pm on Monday,
will be held in the Board Room of First Federal Savings
Bank, Fifth at Erie, Storm Lake, Iowa. Further information
with regard to this meeting can be found in the proxy
sratement.
GENERAL
COUNSEL
Mack, Hansen, Gadd, Armstrong
& Brown, P.C.
316 East Sixth Street
P.O. BOX 278
Storm Lake. Iowa 50588
COUNSEL
SPECIAL
Katten Muchin Zavis
1025 Thomas Jefferson Street NW
East Lobby, Suite 700
Washington, D.C.
20007-5201
INDEPENDENT
AUDITORS
McGladrey
& Pullen,
LLP
400 Locust
Street,
Suite
640
Des Moines,
Iowa
50309-2372
SHAREHOLDER
INVESTOR
Shareholders
RELATIONS
desiring
SERVICES
AND
to change
the name,
address,
or
ownership
of stock;
to report
lost certificates;
or to consol-
idate
accounts,
should contact
the corporation’s
transfer
agent:
Registrar & Transfer Company
10 Commerce
Drive
Cranford, New Jersey
07016
Telephone:
800.368.5948
Email:
invrelations@rtco.
com
Website: www.rtco.com
FORM 1O-K
Copies
of the Company’s
annual
report on Form 1O-K for
the year ended September
30,
2001
(excluding
exhibits
thereto) may be obrained without
charge by contacting:
Investor Relations
First Midwest
Financial,
Inc.
First Federal Building,
Fifth at Erie
P.O. Box 1307
Storm Lake,
Iowa
50588
Telephone:
712.732.4117
Email:
invrelations@fmficash.
com
Website: www.frnficash.com
STOCK MARKET
INFORMATION
Financial,
First Midwest
the Nasdaq National Market
The Wall Street
tion for the stock under
.70to-nal publishes
Inc.’s common
under
the abbreviation,
daily trading
the symbol “CASH.”
informa-
“FstMidwFnl,”
stock trades on
FIRSTQUARTER
SECOND QUARTER
THIRD QUARTER
FOURTH QUARTER
Prices disclose inter-dealer quotations without retail mark-
up, mark-down or commissions, and do not necessarily rep-
resent actual transactions.
Dividend payment decisions are made with considera-
financial
tion of a variety of factors including earnings,
condition, market considerations,
and regulatory restric-
tions. Restrictions on dividend payments are described in
to Consolidated Financial State-
Note 14 of the Notes
ments included in this Annual Report.
As of September 30,2001,
First Midwest had 2,469,727
shares of common stock outstanding, which were held by
in the National Market Listing. Quarterly
for
2000 and 2001 were $0.13. The price range of the com-
on the Nasdaq System, was as fol-
mon stock, as reported
dividends
lows:
FISCAL YEAR 2001
FISCAL YEAR 2000
LOW
HIGH
Low
HIGH
$8.81
$10.81
$11.40
$12.31
$11.25
$12.75
$12.75
$14.25
$9.00
$9.50
$8.75
$9.00
$13.63
$12.50
$11.25
$10.81
276 shareholders of record, and 288,056 shares subject
to
outstanding options. The shareholders of record number
does not reflect approximately 440 persons or entities who
hold their stock in nominee or “street” name.
The
firms
following securities
indicated they were
acting as market makers for First Midwest Financial,
Inc.
stock as of September 30, 2001: AnPac Securities Group,
Inc.; Howe Barnes Invest-
Inc.; Herzog, Heine, Geduld,
ments, Inc.; Midwest Res. First Tennessee; Spear, Leeds &
Kellogg; and Tucker Anthony Incorporated.
I
Tribute We would
Iiketo
payaspecial
tribute
to our
friencls
at%mcl,er
ONeil[
& Partners
and
others
affected
by the September
Ilth
tragedy.
I
52
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