UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.                                                                                                                                                                                    Yes  ý   No  o

 

Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12(b)-2 of the Exchange Act)                                                                                                                                                                                     Yes  ý   No  o

 

APPLICABLE ONLY TO CORPORATE ISSUERS:

 

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date: 4,579,171 shares of common stock, par value $0.01 per share, were outstanding as of November 12, 2003.

 

 

EFC Bancorp, Inc.

 

Form 10-Q

 

For the Quarter Ended September 30, 2003

 

INDEX

 

PART I.	FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)
			Consolidated Balance Sheets at September 30, 2003 and December 31, 2002
			Consolidated Statements of Income - For the Three and Nine Months Ended September 30, 2003 and 2002
			Consolidated Statements of Cash Flows - For the Nine Months Ended September 30, 2003 and 2002
			Notes to Consolidated Financial Statements
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations
Item 3.	Quantitative and Qualitative Disclosures About Market Risk
Item 4.	Controls and Procedures
PART II:	OTHER INFORMATION
Item 1.	Legal Proceedings
Item 2.	Changes in Securities and Use of Proceeds
Item 3.	Defaults Upon Senior Securities
Item 4.	Submission of Matters to a Vote of Security Holders
Item 5.	Other Information
Item 6.	Exhibits and Reports on Form 8-K
SIGNATURES

 

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PART I. FINANCIAL INFORMATION

EFC BANCORP, INC.

 

Item 1. Financial Statements.

EFC BANCORP, INC.

AND SUBSIDIARIES

Consolidated Balance Sheets (unaudited)

September 30, 2003 and December 31, 2002

 

		September 30, 2003			December 31, 2002
Assets
Cash and cash equivalents:
On hand and in banks		$	5,085,545		4,277,209
Interest bearing deposits with financial institutions		19,035,025			28,567,081
Total cash and cash equivalents		24,120,570			32,844,290
Loans receivable, net		700,036,380			597,048,785
Mortgage-backed securities available-for-sale, at fair value		11,816,948			15,255,684
Investment securities available-for-sale, at fair value		89,670,384			87,981,884
Foreclosed real estate		39,109			1,985,741
Stock in Federal Home Loan Bank of Chicago, at cost		10,690,400			9,362,200
Accrued interest receivable		3,752,001			3,887,410
Office properties and equipment, net		17,275,263			16,796,685
Real estate held for development		3,757,902			2,934,072
Bank owned life insurance		17,781,013			12,246,803
Other assets		2,669,187			2,032,372
Total assets		$	881,609,157		782,375,926
Liabilities and Stockholders’ Equity
Liabilities:
Deposits		$	590,155,718		524,189,844
Borrowed money		201,797,598			171,778,743
Accrued expenses, income taxes payable and other liabilities		13,242,640			11,705,771
Total liabilities		805,195,956			707,674,358
Minority interest		(156,392		)	(75,127	)
Stockholders’ Equity:
Preferred stock, par value $.01 per share, authorized 2,000,000 shares; no shares issued		—			—
Common stock, par value $.01 per share, authorized 25,000,000 shares; issued  7,491,434 shares		74,914			74,914
Additional paid-in capital		71,967,721			71,834,834
Retained earnings, substantially restricted		45,562,570			41,911,421
Treasury stock, at cost, 2,912,263 and 2,854,293 shares at September 30, 2003 and December 31, 2002, respectively		(35,725,032		)	(33,755,940	)
Unearned employee stock ownership plan (ESOP), 369,578 and 399,544 shares at September 30, 2003 and December 31, 2002, respectively		(5,526,135		)	(5,974,199	)
Unearned stock award plan, 17,467 and 51,790 shares at September 30, 2003 and December 31, 2002, respectively		(194,321		)	(576,164	)
Accumulated other comprehensive income		409,876			1,261,829
Total stockholders’ equity		76,569,593			74,776,695
Commitments and contingencies		—			—
Total liabilities and stockholders’ equity		$	881,609,157		782,375,926

 

See accompanying notes to consolidated financial statements.

 

1

 

EFC BANCORP, INC.

AND SUBSIDIARIES

 

Consolidated Statements of Income (unaudited)

For the three and nine months ended September 30, 2003 and 2002

 

		Three months ended September 30,					Nine months ended September 30,
		2003			2002		2003		2002
Interest income:
Loans secured by real estate		$	8,258,392		8,589,699		25,448,767		25,867,869
Other loans		1,744,170			1,377,223		4,729,418		3,790,146
Mortgage-backed securities available-for-sale		107,310			124,541		415,612		477,568
Investment securities available-for-sale and interest bearing deposits with financial institutions		1,202,610			1,129,267		3,717,910		3,419,047
Total interest income		11,312,482			11,220,730		34,311,707		33,554,630
Interest expense:
Deposits		3,017,886			3,449,025		9,238,516		10,233,315
Borrowed money		2,372,350			2,313,926		6,950,759		6,937,225
Total interest expense		5,390,236			5,762,951		16,189,275		17,170,540
Net interest income before provision for loan losses		5,922,246			5,457,779		18,122,432		16,384,090
Provision for loan losses		140,000			225,000		463,250		675,000
Net interest income after provision for loan losses		5,782,246			5,232,779		17,659,182		15,709,090
Noninterest income:
Service fees		572,810			406,442		1,555,618		1,108,588
Insurance and brokerage commissions		136,292			59,919		250,322		370,259
Information technology sales and service income, net		146,628			243,355		642,882		984,234
Gain on sale of foreclosed real estate		—			—		41,315		—
Gain on sale of securities		290,385			—		816,454		—
Gain on sale of loans		—			200,409		156,223		200,409
Bank owned life insurance		234,543			178,137		600,675		514,726
Other		102,626			53,290		175,855		124,700
Total noninterest income		1,483,284			1,141,552		4,239,344		3,302,916
Noninterest expense:
Compensation and benefits		2,740,615			2,586,407		8,062,139		7,706,939
Office building, net		683,434			607,876		2,058,996		1,658,569
Federal insurance premiums		21,669			19,206		66,055		56,164
Advertising		160,877			181,981		594,003		450,553
Data processing		220,938			229,200		704,934		680,533
NOW/checking account expenses		177,093			155,282		432,866		402,697
Other		561,355			452,324		1,852,196		1,307,996
Total noninterest expense		4,565,981			4,232,276		13,771,189		12,263,451
Income before income taxes and minority interest		2,699,549			2,142,055		8,127,337		6,748,555
Income tax expense		889,286			727,242		2,766,221		2,173,162
Income before minority interest		1,810,263			1,414,813		5,361,116		4,575,393
Minority interest		10,615			34,377		81,265		36,885
Net income		$	1,820,878		1,449,190		5,442,381		4,612,278
Earnings per share:
Basic		$	0.43		0.34		1.29		1.10
Diluted		0.41			0.32		1.22		1.04

 

See accompanying notes to consolidated financial statements.

 

2

 

EFC BANCORP, INC.

AND SUBSIDIARIES

 

Consolidated Statements of Cash Flows (unaudited)

For the nine months ended September 30, 2003 and 2002

 

		2003			2002
Cash flows from operating activities:
Net income		$	5,442,381		4,612,278
Adjustment to reconcile net income to net cash provided by operating activities:
Amortization of premiums and discounts, net		75,318			(8,633	)
Provision for loan losses		463,250			675,000
FHLB of Chicago stock dividends		(568,000		)	(353,800	)
Stock award plan shares allocated		381,843			471,588
ESOP shares committed to be released		448,064			448,071
Change in fair value of ESOP shares		132,887			20,917
Depreciation of office properties and equipment		855,482			591,328
Gain on sale of foreclosed real estate		(41,315		)	—
Gain on sale of securities		(816,454		)	—
Gain on sale of loans		(156,223		)	(200,409	)
Change in minority interest in subsidiary		(81,265		)	(54,330	)
Increase in bank owned life insurance		(534,210		)	(455,246	)
Goodwill impairment		226,669			—
(Increase)/decrease in accrued interest receivable and other assets, net		(186,375		)	(1,524,419	)
Increase in income taxes payable, accrued expenses and other liabilities, net		1,510,496			695,135
Net cash provided by operating activities		7,152,548			4,917,480
Cash flows from investing activities:
Net (increase)/decrease in loans receivable		(32,964,799		)	5,106,839
Purchases of loans receivable		(83,263,883		)	(51,143,896	)
Proceeds fom the sale of loans		12,894,951			13,217,497
Increase in real estate held for development		(823,830		)	(2,900,268	)
Purchases of mortgage-backed securities available-for-sale		(2,549,222		)	(5,130,634	)
Principal payments on mortgage-backed securities available-for-sale		5,738,497			4,147,334
Maturities of investment securities available-for-sale		25,465,274			19,547,992
Purchases of investment securities available-for-sale		(42,909,565		)	(32,111,658	)
Proceeds from the sale of investment securities		15,349,744			—
Purchases of office properties and equipment		(1,334,060		)	(2,585,064	)
Investment in bank owned life insurance		(5,000,000		)	(780,000	)
Purchases of stock in the Federal Home Loan Bank of Chicago		(760,200		)	—
Cash used in acquisition of majority-owned susidiary		—			(420,000	)
Proceeds from the sale of foreclosed real estate		2,027,057			—
Net cash used in investing activities		(108,130,036		)	(53,051,858	)
Cash flows from financing activities:
Net increase in deposits		65,965,874			72,397,558
Proceeds from borrowed money		91,070,325			609,750
Repayments on borrowed money		(61,051,470		)	(3,978,088	)
Purchase of treasury stock		(2,514,270		)	(51,325	)
Stock options exercised		545,178			562,668
Cash dividends paid		(1,761,869		)	(1,626,153	)
Net cash provided by financing activities		92,253,768			67,914,410
Net increase/(decrease) in cash and cash equivalents		(8,723,720		)	19,780,032
Cash and cash equivalents at beginning of period		32,844,290			18,175,290
Cash and cash equivalents at end of period		$	24,120,570		37,955,322
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest		$	16,241,964		17,218,166
Income taxes		2,340,000			2,140,000
Noncash investing activities - transfer of loans to foreclosed real estate		39,190			—

 

See accompanying notes to consolidated financial statements.

 

3

 

Item 1. Financial Statements, continued

 

EFC BANCORP, INC.

Notes to Unaudited Consolidated Financial Statements

 

Note 1: BASIS OF PRESENTATION

 

The accompanying unaudited consolidated financial statements include the accounts of EFC Bancorp, Inc. (the Company), its majority-owned subsidiary, Computer Dynamics Group Inc. (CDGI), its wholly-owned subsidiary, EFS Bank (the Bank) and its wholly-owned subsidiary, EFS Service Corporation of Elgin.  The Company purchased an 80% interest in CDGI for $420,000 in January 2002.  The accompanying financial statements include the operating results of CDGI since the date of acquisition.  CDGI is consolidated and a minority interest is recorded for the proportionate interest not owned by the Company.  Certain amounts for the prior year have been reclassified to conform to the current year presentation.  The Company operates as a single segment.

 

In the opinion of the management of the Company, the accompanying consolidated financial statements include all normal recurring adjustments necessary for a fair presentation of the financial position and results of operations for the periods presented.  All significant intercompany transactions have been eliminated in consolidation.  These interim financial statements have been prepared according to the rules and regulations of the Securities and Exchange Commission and therefore certain information and footnote disclosures normally included in financial statements presented in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  The results of operations for the interim periods are not necessarily indicative of the results to be expected for the full year.  It is suggested that the accompanying unaudited consolidated financial statements be read in conjunction with the Company’s 2002 Annual Report on Form 10-K.  Currently, other than investing in various securities, the Company does not directly transact any material business other than through the Bank.  Accordingly, the discussion herein addresses the operations of the Company as they are conducted through the Bank.

 

Note 2: COMPREHENSIVE INCOME

 

The Company’s comprehensive income for the three and nine month periods ended September 30, 2003 and 2002 are as follows:

 

		Three months ended September 30,					Nine months ended September 30,
		2003			2002		2003			2002
Net income		$	1,820,878		1,449,190		$	5,442,381		4,612,278
Other comprehensive income, net of tax:
Unrealized holding gains/(losses) on securities arising during the period, net of tax effect		(1,577,044		)	716,014		(851,953		)	1,271,700
Reclassification adjustment for net gain on sales of securities realized in net income		(182,943		)	—		(514,366		)	—
Comprehensive income		$	60,891		2,165,204		$	4,076,062		$	5,883,978

 

4

 

For the three and nine month periods ended September 30, 2003 the sale of securities resulted in gains of $290,385 and $816,454, respectively ($182,943 and $514,366 net of tax effect).  There were no sales of investment securities as of and for the three and nine months ended September 30, 2002.

 

Note 3: COMPUTATION OF PER SHARE EARNINGS

 

Basic earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding.  Diluted earnings per share is calculated by dividing net income by the weighted average number of common shares outstanding adjusted for the dilutive effect of outstanding stock options.  ESOP shares are only considered outstanding for earnings per share calculations when they are released or committed to be released.

 

Presented below are the calculations for the basic and diluted earnings per share:

 

		Three months ended September 30,					Nine months ended September 30,
		2003			2002		2003		2002
Basic:
Net income		$	1,820,878		1,449,190		5,442,381		4,612,278
Weighted average shares outstanding		4,205,803			4,240,404		4,213,292		4,209,620
Basic earnings per share		$	0.43		0.34		1.29		1.10
Diluted:
Net income		$	1,820,878		1,449,190		5,442,381		4,612,278
Weighted average shares outstanding		4,205,803			4,240,404		4,213,292		4,209,620
Effect of dilutive stock options outstanding		243,877			236,356		234,472		206,074
Diluted weighted average shares outstanding		4,449,680			4,476,760		4,447,764		4,415,694
Diluted earnings per share		$	0.41		0.32		1.22		1.04

 

Note 4:  STOCK OPTION PLANS

 

The Company accounts for the stock-based compensation plans under APB Opinion No. 25.  For the stock option program, no compensation cost is recognized in connection with the granting of stock options with an exercise price equal to the fair market value of the stock on the date of the grant.  For the stock award plan, the Company uses fixed method of accounting and records compensation expense, over the vesting period of the grant, based upon the fair market value of the stock at the date of grant.  In accordance with the disclosure requirements of SFAS No. 123, as amended by SFAS No. 148, the following table provides the pro forma effect on net income and earnings per share if the fair value method of accounting for stock-based compensation had been used for all awards:

 

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		For the Three Months Ended September 30,						For the Nine Months Ended September 30,
		2003			2002			2003			2002
Net income as reported		$	1,820,878		$	1,449,190		$	5,442,381		$	4,612,278
Add: Stock-based compensation, net of tax, included in the determination of net income, as reported		127,281			157,196			381,843			471,588
Deduct: Stock-based compensation, net of tax, that would have been reported if the fair value based method had been applied to all awards		(245,185		)	(269,291		)	(732,202		)	(807,872		)
Pro forma net income		$	1,720,974		$	1,337,095		$	5,092,022		$	4,275,994
Basic earnings per share
As reported		$	0.43		$	0.34		$	1.29		$	1.10
Pro forma		0.40			0.32			1.21			1.02
Diluted earnings per share
As reported		$	0.41		$	0.32		$	1.22		$	1.04
Pro forma		0.38			0.30			1.14			0.97

 

Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

The following analysis discusses changes in the financial condition at September 30, 2003 and results of operations for the three and nine months ended September 30, 2003, and should be read in conjunction with the Company’s Unaudited Consolidated Financial Statements and the notes thereto, appearing in Part I, Item 1 of this document.

 

Forward-Looking Statements

 

This report contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. The Company intends such forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995, and is including this statement for purposes of these safe harbor provisions. Forward-looking statements, which are based on certain assumptions and describe future plans, strategies and expectations of the Company, are generally identified by use of the words “believe,” “expect,” “intend,” “anticipate,” “estimate,” “project,” or similar expressions. The Company’s ability to predict results or the actual effect of future plans or strategies is inherently uncertain. Factors which could have a material adverse effect on the operations of the Company and the subsidiaries include, but are not limited to, changes in: interest rates, general economic conditions, legislative/regulatory changes, monetary and fiscal policies of the U.S. Government, including policies of the U.S. Treasury and the Federal Reserve Board, the quality or composition of the loan or investment portfolios, demand for loan products, deposit flows, competition, demand for financial services in the Company’s market area and accounting principles and guidelines. These risks and uncertainties should be considered in evaluating forward-looking statements and undue reliance should not be placed on such statements. Further

 

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information concerning the Company and its business, including additional factors that could materially affect the Company’s financial results, is included in the Company’s filings with the SEC, including its 2002 Annual Report on Form 10-K.

 

The Company does not undertake - and specifically disclaims any obligation - to publicly release the result of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events.

 

Comparison of Financial Condition at September 30, 2003 and December 31, 2002

 

Total assets at September 30, 2003 were $881.6 million, which represented an increase of $99.2 million, or 12.7%, compared to $782.4 million at December 31, 2002. The increase in total assets was primarily a result of an increase in loans receivable of $103.0 million, or 17.3%, to $700.0 million at September 30, 2003 from $597.0 million at December 31, 2002.  The increase in loans receivable was primarily attributable to strong loan demand and loan purchases during the period.  In addition, stock in Federal Home Loan Bank of Chicago increased $1.3 million, or 14.2%, to $10.7 million at September 30, 2003 from $9.4 million at December 31, 2002, and bank owned life insurance increased $5.6 million, or 45.2%, to $17.8 million at September 30, 2003 from $12.2 million at December 31, 2002.  This increase was due to an investment of $5.0 million made in May 2003.  These increases were partially offset by decreases in cash and cash equivalents of $8.7 million, or 26.6%, to $24.1 million at September 30, 2003 from $32.8 million at December 31, 2002, decreases in mortgage-backed securities of $3.5 million, or 22.5% to $11.8 at September 30, 2003 from $15.3 million at December 31, 2002 and by the sale of foreclosed real estate of $1.9 million from December 31, 2002 to September 30, 2003.  This property was sold in January 2003 resulting in a gain of approximately $41,000.  The growth in total assets was funded by increases in deposits and borrowed money.  Deposits increased $66.0 million to $590.2 million at September 30, 2003 from $524.2 million at December 31, 2002.  Borrowed money, primarily representing FHLB advances, increased $30.0 million to $201.8 million at September 30, 2003 from $171.8 million at December 31, 2002.  Stockholders’ equity increased $1.8 million to $76.6 million at September 30, 2003 from $74.8 million at December 31, 2002.  The increase in stockholders’ equity was primarily the result of the Company’s net income for the nine months ended September 30, 2003, which was partially offset by an $852,000 decrease in the Company’s accumulated other comprehensive income relating to the change in fair value of its available-for-sale investment portfolio, stock repurchases totaling $2.5 million and dividends paid of $1.8 million.

 

Comparison of Operating Results For the Three Months Ended September 30, 2003 and 2002

 

General.  The Company’s net income increased $372,000, or 25.7%, to $1.8 million for the three months ended September 30, 2003 as compared to the prior year period.

 

Interest Income.  Interest income increased $92,000, or 1.0%, to $11.3 million for the three months ended September 30, 2003, compared with $11.2 million for the same period in 2002.  This increase resulted from an increase in the average balance of interest-earning assets,

 

7

 

partially offset by a decrease in the average rate earned on those interest-earning assets.  The average balance of interest-earning assets increased by $122.2 million, or 17.4%, to $825.8 million for the three months ended September 30, 2003 from $703.6 million for the comparable period in 2002.  The average yield on interest-earning assets decreased by 91 basis points to 5.57% for the three months ended September 30, 2003 from 6.48% for the three months ended September 30, 2002.

 

Mortgage loan interest income decreased by $331,000 for the three months ended September 30, 2003 compared with the same period in 2002.  The average balance of mortgage loans increased $75.4 million, while the mortgage loan yield decreased by 119 basis points from 7.10% to 5.91%.  Interest income from other loans increased $367,000 for the three months ended September 30, 2003. This increase resulted from a combination of an increase in average balance of $41.8 million, partially offset by a 100 basis point decrease in yield from 6.52% for the three months ended September 30, 2002 to 5.52% for the three months ended September 30, 2003.  Interest income from investment securities, mortgage-backed securities and short-term deposits increased $56,000 to $1.3 million for the three months ended September 30, 2003, compared with the same period in 2002.  The average balance increased $5.1 million and the yield increased four basis points from 4.25% for the three months ended September 30, 2002 to 4.29% for the three months ended September 30, 2003.  The average yields are reported on a tax equivalent basis.

 

Interest Expense.  Interest expense decreased by $373,000, or 6.5%, to $5.4 million for the three months ended September 30, 2003 from $5.8 million for the three months ended September 30, 2002.  This decrease resulted from an increase in the average balance of interest-bearing liabilities, offset by a decrease in the average rate paid on those interest-bearing liabilities.  The average balance of interest-bearing liabilities increased by $111.5 million, or 17.8%, to $737.2 million for the three months ended September 30, 2003 from $625.7 million for the three months ended September 30, 2002.  This increase is partially attributed to the opening of a new branch office in July 2002.  This change reflects a $92.8 million increase in the deposit accounts, which is attributable to a $22.0 million increase in money market accounts, a $25.4 million increase in passbook savings accounts, a $40.7 million increase in certificates of deposit and a $4.7 million increase in NOW accounts.  In addition, borrowings increased $18.7 million to $190.4 million for the three months ended September 30, 2003 from $171.7 million for the comparable period in 2002.  The average rate paid on combined deposits and borrowed money decreased by 76 basis points to 2.92% for the three months ended September 30, 2003 from 3.68% for the three months ended September 30, 2002.

 

Net Interest Income Before Provision for Loan Losses.  Net interest income before provision for loan losses increased $464,000, or 8.5%, to $5.9 million for the three months ended September 30, 2003 from $5.5 million for the comparable period in 2002.  The average balance of interest-earning assets increased $122.2 million for the three months ended September 30, 2003 compared to the comparable prior year period.  The increase in interest-earning assets was primarily the result of an increase in the average balance of mortgage loans of $75.4 million and a $41.8 million increase in other loans.  The tax equivalent net interest margin as a percent of interest-earning assets decreased by 25 basis points to 2.96% for the three months ended September 30, 2003 from 3.21% for the comparable period in 2002.

 

8

 

Provision for Loan Losses.  The provision for loan losses decreased by $85,000, to $140,000 for the three months ended September 30, 2003 from $225,000 in 2002.  At September 30, 2003, December 31, 2002 and September 30, 2002, non-performing loans totaled $2.9 million, $2.4 million and $2.1 million, respectively.  Nonperforming assets decreased $1.5 million to $2.9 million at September 30, 2003 from $4.4 million at December 31, 2002, largely due to the sale of foreclosed real estate in January 2003.  At September 30, 2003, the ratio of the allowance for loan losses to non-performing loans was 126.1% compared to 131.1% at December 31, 2002 and 136.5% at September 30, 2002.  The ratio of the allowance to total loans was 0.51%, 0.53% and 0.52%, at September 30, 2003, December 31, 2002 and September 30, 2002, respectively.  There were no charge-offs for the three months ended September 30, 2003 and 2002.  Management periodically calculates an allowance sufficiency analysis based upon the portfolio composition, asset classifications, loan-to-value ratios, probable impairments in the loan portfolio, and other factors.

 

Noninterest Income.  Noninterest income totaled $1.5 million and $1.1 million for the three months ended September 30, 2003 and 2002, respectively. The increase in noninterest income is primarily attributable to increases of $290,000 in gain on sale of securities, $166,000 in service fees and $76,000 in insurance and brokerage commissions.  The gain on sale of securities was the result of repositioning the balance sheet and favorable market conditions.  Service fees increased primarily due to the offering of an overdraft privilege account product to our customers.  These increases were partially offset by decreases of $97,000 in income generated by Computer Dynamics Group, Inc. (“CDGI”) and $200,000 in gain on sale of loans.  The decrease in income generated by CDGI is largely due to a decrease in sales related to a weaker demand for technology services.

 

Noninterest Expense.  Noninterest expense increased $334,000, to $4.6 million for the three months ended September 30, 2003 from $4.2 million for the comparable period in 2002.  Of this increase, $154,000 was directly related to compensation and benefits, and $76,000 is related to office building operations resulting from the costs related to the two new branch offices placed in service over the last year.  In addition, the Company incurred a goodwill impairment of $26,000, relating to its majority owned subsidiary CDGI, for the three months ended September 30, 2003.  The goodwill impairment is primarily due to a weaker demand for technology services.  Management continues to emphasize the importance of expense management and control while continuing to provide expanded banking services to a growing market base.

 

Income Tax Expense.  Income tax expense totaled $889,000 and $727,000 for the three months ended September 30, 2003 and 2002, respectively.  This increase was primarily due to a $557,000 increase in earnings before income taxes.  The effective tax rate was 32.9% and 34.0% for the three months ended September 30, 2003 and 2002, respectively.  The decrease in the effective tax rate is partially due to the increase in bank owned life insurance.

 

Comparison of Operating Results For the Nine Months Ended September 30, 2003 and 2002

 

General.  The Company’s net income increased $830,000, or 18.0%, to $5.4 million for

 

9

 

the nine months ended September 30, 2003 as compared to the prior year period.

 

Interest Income.  Interest income increased $757,000, or 2.3%, to $34.3 million for the nine months ended September 30, 2003, compared with $33.6 million for the same period in 2002.  This increase resulted from an increase in the average balance of interest-earning assets, partially offset by a decrease in the average rate earned on those interest-earning assets.  The average balance of interest-earning assets increased by $108.9 million, or 16.0%, to $790.9 million for the nine months ended September 30, 2003 from $682.0 million for the comparable period in 2002.  The average yield on interest-earning assets decreased by 77 basis points to 5.89% for the nine months ended September 30, 2003 from 6.66% for the nine months ended September 30, 2002.

 

Mortgage loan interest income decreased by $419,000 for the nine months ended September 30, 2003 compared with the same period in 2002.  The average balance of mortgage loans increased $58.7 million, while the mortgage loan yield decreased by 88 basis points from 7.15% to 6.27%.  Interest income from other loans increased $939,000 for the nine months ended September 30, 2003. This increase resulted from a combination of an increase in average balance of $31.5 million, partially offset by a 74 basis point decrease in yield from 6.52% for the nine months ended September 30, 2002 to 5.78% for the nine months ended September 30, 2003.  Interest income from investment securities, mortgage-backed securities and short-term deposits increased by $237,000 for the nine months ended September 30, 2003, compared with the same period in 2002. This increase resulted from a combination of an increase in average balance of $18.6 million, offset by a 33 basis point decrease in yield from 4.82% for the nine months ended September 30, 2002 to 4.49% for the nine months ended September 30, 2003.  The decrease in yield is largely attributed to the effect of the lower interest rate environment reducing yields on investment securities.  The average yields are reported on a tax equivalent basis.

 

Interest Expense.  Interest expense decreased by $981,000, or 5.7%, to $16.2 million for the nine months ended September 30, 2003 from $17.2 million for the nine months ended September 30, 2002.  This decrease resulted from an increase in the average balance of interest-bearing liabilities, offset by a decrease in the average rate paid on those interest-bearing liabilities. The average balance of interest-bearing liabilities increased by $99.0 million, or 16.3%, to $705.4 million for the nine months ended September 30, 2003 from $606.4 million for the nine months ended September 30, 2002.  This increase is partially attributed to the opening of a new branch office in July 2002.  This change reflects an $88.1 million increase in the deposit accounts, which is attributable to a $29.4 million increase in money market accounts, a $16.9 million increase in passbook savings accounts, a $38.1 million increase in certificates of deposit and a $3.7 million increase in NOW accounts.  In addition, borrowings increased $11.0 million to $184.4 million for the nine months ended September 30, 2003 from $173.4 million for the comparable period in 2002.  The average rate paid on combined deposits and borrowed money decreased by 72 basis points to 3.06% for the nine months ended September 30, 2003 from 3.78% for the nine months ended September 30, 2002.

 

Net Interest Income Before Provision for Loan Losses.  Net interest income before provision for loan losses increased $1.7 million, or 10.6%, to $18.1 million for the nine months ended September 30, 2003 from $16.4 million for the comparable period in 2002.  The average

 

10

 

balance of interest-earning assets increased $108.9 million for the nine months ended September 30, 2003 compared to the comparable prior year period.  The increase in interest-earning assets was primarily the result of an increase in the average balance of mortgage loans of $58.7 million and a $31.5 million increase in other loans.  The tax equivalent net interest margin as a percent of interest-earning assets decreased by 15 basis points to 3.16% for the nine months ended September 30, 2003 from 3.31% for the comparable period in 2002.

 

Provision for Loan Losses.  The provision for loan losses decreased by $212,000, to $463,000 for the nine months ended September 30, 2003 from $675,000 in 2002.  At September 30, 2003, December 31, 2002 and September 30, 2002, non-performing loans totaled $2.9 million, $2.4 million and $2.1 million, respectively.  Nonperforming assets decreased $1.5 million to $2.9 million at September 30, 2003 from $4.4 million at December 31, 2002, largely due to the sale of foreclosed real estate in January 2003.  At September 30, 2003, the ratio of the allowance for loan losses to non-performing loans was 126.1% compared to 131.1% at December 31, 2002 and 136.5% at September 30, 2002.  The ratio of the allowance to total loans was 0.51%, 0.53% and 0.52%, at September 30, 2003, December 31, 2002 and September 30, 2002, respectively.  There were no charge-offs for the nine months ended September 30, 2003 and $3,000 for the comparable period in 2002.  Management periodically calculates an allowance sufficiency analysis based upon the portfolio composition, asset classifications, loan-to-value ratios, probable impairments in the loan portfolio, and other factors.

 

Noninterest Income.  Noninterest income totaled $4.2 million and $3.3 million for the nine months ended September 30, 2003 and 2002, respectively. The increase in noninterest income is primarily attributable to increases of $816,000 in gain on sale of securities and $447,000 in service fees.  The gain on sale of securities was the result of repositioning the balance sheet and favorable market conditions.  Service fees increased primarily due to the offering of an overdraft privilege account product to our customers.  These increases were partially offset by decreases of $341,000 in income generated by Computer Dynamics Group, Inc. (“CDGI”) and $120,000 in insurance and brokerage commissions.  The decrease in income generated by CDGI is largely due to a decrease in sales related to a weaker demand for technology services.  The decrease in insurance and brokerage commissions is partially due to the lower interest rate environment.

 

Noninterest Expense.  Noninterest expense increased $1.5 million, to $13.8 million for the nine months ended September 30, 2003 from $12.3 million for the comparable period in 2002.  Of this increase, $355,000 was directly related to compensation and benefits, $400,000 is related to office building operations resulting from the costs related to the two new branch offices placed in service over the last year.  In addition, expenses relating to advertising increased $143,000 to $594,000 for the nine months ended September 30, 2003 from $451,000 for the comparable period in 2002.  The increase in advertising expense is primarily attributed to the Bank’s name change, which occurred in 2002.  In addition, the Company incurred a goodwill impairment of $227,000, relating to its majority owned subsidiary CDGI, for the nine months ended September 30, 2003. The goodwill impairment is primarily due to a weaker demand for technology services.  Management continues to emphasize the importance of expense management and control while continuing to provide expanded banking services to a growing market base.

 

11

 

Income Tax Expense.  Income tax expense totaled $2.8 million and $2.2 million for the nine months ended September 30, 2003 and 2002, respectively.  This increase was primarily due to a $1.4 million increase in earnings before income taxes.  The effective tax rate was 34.0% and 32.2% for the nine months ended September 30, 2003 and 2002, respectively.  The increase in the effective tax rate is partially due to a reduction in the municipal bond investment portfolio and the goodwill impairment related to CDGI.

 

Liquidity and Capital Resources

 

The Company’s primary source of funding for dividends and periodic stock repurchases has been dividends from the Bank.  The Bank’s ability to pay dividends and other capital distributions to the Company is generally limited by OTS regulations.

 

The Bank’s primary sources of funds are savings deposits, proceeds from the principal and interest payments on loans and proceeds from the maturity of securities and borrowings from the FHLB-Chicago. While maturities and scheduled amortization of loans and securities are predictable sources of funds, deposit outflows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition.

 

The primary investing activities of the Bank are the origination and purchase of primarily residential one-to-four-family loans and, to a lesser extent multi-family and commercial real estate, construction and land, commercial and consumer loans and the purchase of mortgage-backed securities.  In addition, the Bank purchases loans, secured by single-family, multi-family and commercial real estate.  Deposit flows are affected by the level of interest rates, the interest rates and products offered by the local competitors and other factors.

 

In addition to the primary investing activities of the Bank, the Company has repurchased shares of its common stock from time to time in the open market.  The Company is currently authorized to repurchase shares pursuant to its sixth stock repurchase program, which was previously announced in September 2001.  Under this program the Company is authorized to repurchase up to 231,808, or 5.0% of its outstanding common stock.  Under this current program, 218,900 shares of the Company’s common stock have been repurchased at an average price per share of $17.54.  During the three months ended September 30, 2003, 14,000 shares were purchased at an average price of $19.26.  As of September 30, 2003, the Company repurchased a total of 3,074,173 shares of the Company’s common stock at an average price per share of $12.05 since becoming a public company in 1998.

 

The Bank’s most liquid assets are cash and interest-bearing demand accounts. The levels of these assets are dependent on the Bank’s operating, financing, lending and investing activities during any given period.  At September 30, 2003, cash and interest-bearing demand accounts totaled $24.1 million, or 2.7% of total assets.

 

See the “Consolidated Statements of Cash Flows” in the Unaudited Consolidated Financial Statements included in this Form 10-Q for the sources and uses of cash flows for

 

12

 

operating, investing and financing activities for the nine months ended September 30, 2003 and 2002.

 

At September 30, 2003, the Bank exceeded all of its regulatory capital requirements. The following is a summary of the Bank’s regulatory capital ratios at September 30, 2003:

 

 

At September 30, 2003, the Company had a Total Capital to Total Assets ratio of 8.69%.

 

On September 16, 2003, the Company announced its third quarter dividend of $0.1450 per share.  The dividend was paid on October 7, 2003 to stockholders of record on September 30, 2003.

 

Financial Instruments with Off-Balance Sheet Risk

 

The Bank is party to financial instruments with off-balance sheet risk in the normal course of business to meet the financing needs of its customers.  Those financial instruments primarily include commitments to extend credit.  Commitments to extend credit are agreements to lend to a customer so long as there is no violation of any condition established in the contract. The Bank evaluates each customer’s creditworthiness on a case-by-case basis.  The amount of collateral obtained is based on management’s credit evaluation of the customer.  The Bank’s exposure to credit loss in the event of nonperformance by the customer is represented by the contractual amount of those financial instruments.  The commitments to originate first mortgage loans represent amounts, which the Bank plans to fund within a period of 30 to 90 days.

 

The Bank’s approved, but unused lines of credit are based on underwriting standards that allow total borrowings, including the equity line of credit to exceed 80% of the current appraised value of the customer’s residence.  However, the Bank charges a 1% higher interest rate on home equity lines of credit up to 90% of the home’s current appraised value.

 

The Bank’s standby letters of credit are conditional commitments issued by the Bank to guarantee performance of a customer to a third party.  The credit risk involved in these transactions is essentially the same as that involved in extending a loan to a customer in the normal course of business.  Standby letters of credit are collateralized by mortgages, savings accounts or liens on business assets.  The fair value of standby letters of credit approximates the amount of recorded related fees, which are not considered material.  The maximum risk of accounting loss for these items, which is represented by the total commitment outstanding, totaled $4.6 million at September 30, 2003.

 

13

 

At September 30, 2003 and December 31, 2002, the bank had the following commitments to extend credit:

 

		September 30, 2003			December 31, 2002
First mortgage loans		$	12,009,000		$	11,965,000
Construction loans		4,670,000			808,000
Unused lines of credit		38,179,000			32,666,000
Standby letters of credit		4,558,000			4,927,000

 

Recent Accounting Pronouncements

 

In June 2002, the FASB issued SFAS No. 146, “Accounting for Costs Associated with Exit or Disposal Activities.”  This statement addresses financial accounting and reporting for costs associated with exit or disposal activities and nullifies Emerging Task Force (EITF) Issue No. 94-3, “Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity (including Certain Costs Incurred in a Restructuring).”  This Statement is effective for exit or disposal activities that are initiated after December 31, 2002.  Adoption of this statement did not have a material effect on the Company’s consolidated financial statements.

 

In December 2002, the FASB issued Statement 148, “Accounting for Stock-Based Compensation – Transition and Disclosure” (FAS 148).  FAS 148 amends FAS 123, “Accounting for Stock-Based Compensation, to provide alternative methods of transition for a voluntary change to the fair value based method of accounting for stock-based employee compensation.  In addition, this Statement amends the disclosure requirements of FAS 123 to require prominent disclosures in both the annual and interim financial statements about the method of accounting for stock-based employee compensation and the effect of the method used on reported results.  Adoption of this statement did not have a material effect on the Company’s consolidated financial statements.

 

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” which provides new accounting guidance on when to consolidate a variable interest entity.  A variable interest entity exists when either the total equity investment at risk is not sufficient to permit the entity to finance its activities by itself, or the equity investors lack one of three characteristics associated with owning a controlling financial interest.  Those characteristics include the direct or indirect ability to make decisions about an entity’s activities through voting rights or similar rights, the obligation to absorb the expected loss of an entity if they occur, and the right to receive the expected residual return of the entity if they occur.  On October 9, 2003, the FASB issued a deferral to December 31, 2003 of the implementation of FIN 46 for variable interest entities in existence prior to February 1, 2003.  We do not expect that the adoption of this Interpretation will have a material impact on our consolidated financial statements.

 

In April 2003, the FASB issued SFAS No.149, “Amendment of Statement 133 on Derivative Instruments and Hedging Activities.”  This Statement amends and clarifies accounting for derivative instruments, including certain derivative instruments embedded in other contracts,

 

14

 

and for hedging activities.  This Statement is effective for contracts entered into or modified after June 30, 2003 and for hedging relationships designated after June 30, 2003.  Adoption of this Statement did not have a material impact on our consolidated financial statements.

 

In May 2003, the FASB issued SFAS No. 150, “Accounting for Certain Financial Instruments with Characteristics of both Liabilities and Equity.”  This Statement would require that certain financial instruments with characteristics of both liabilities and equity be classified on the consolidated balance sheets as liabilities.  The Statement is effective for financial instruments entered into or modified after May 31, 2003, and otherwise is effective at the beginning of the first interim period beginning after June 15, 2003.  On October 29, 2003, the FASB deferred the application of certain requirements of SFAS No. 150.  Adoption of this Statement did not have a material impact on our consolidated financial statements.

 

15

 

 

Average Balance Sheet

 

                                                The following tables set forth certain information relating to the Bank for the three and nine months ended September 30, 2003 and 2002, respectively.  The average yields and costs are derived by dividing income or expense by the average balance of interest-earning assets or interest-bearing liabilities, respectively, for the periods shown and reflect annualized yields and costs.  Average balances are derived from average monthly balances.  The yields and costs include fees, which are considered adjustments to yields.  Tax exempt income has been calculated on a tax equivalent basis using a tax rate of 34% and amounted to $196,000 and $182,000 for the three months ended September 30, 2003 and 2002, and $610,000 and $529,000 for the nine months ended September 30, 2003 and 2002, respectively.

 

		Three Months Ended September 30, 2003							Three Months Ended September 30, 2002
(in thousands)		Average Balance			Interest		Yield/Cost		Average Balance		Interest		Yield/Cost
Assets:
Interest earning assets:
Short-term deposits and FHLB stock		$	44,510		202		1.81	%	47,170		219		1.86	%
Investment securities		83,181			1,195		5.75	%	76,195		1,092		5.73	%
Mortgage-backed securities		12,534			107		3.42	%	11,802		124		4.22	%
Mortgage loans		559,186			8,259		5.91	%	483,823		8,590		7.10	%
Other loans		126,390			1,745		5.52	%	84,625		1,378		6.52	%
Total interest earning assets		825,801			11,508		5.57	%	703,615		11,403		6.48	%
Noninterest earning assets		51,559							40,119
Total assets		$	877,360						743,734
Liabilities and stockholders’ equity
Interest-bearing liabilities
Deposits:
Money market accounts		$	148,128		642		1.73	%	126,082		865		2.74	%
Passbook savings accounts		125,827			462		1.47	%	100,433		574		2.29	%
NOW Accounts		36,991			68		0.74	%	32,264		84		1.04	%
Certificates of deposit		235,894			1,846		3.13	%	195,231		1,926		3.95	%
Total deposits		546,840			3,018		2.21	%	454,010		3,449		3.04	%
FHLB Advances		190,367			2,372		4.98	%	171,700		2,314		5.39	%
Total interest-bearing liabilities		737,207			5,390		2.92	%	625,710		5,763		3.68	%
Noninterest-bearing liabilities		63,047							44,669
Total liabilities		800,254							670,379
Total stockholders’ equity		77,106							73,355
Total liabilities and stockholders’ equity		$	877,360						743,734
Net interest income before provision for loan losses					6,118						5,640
Interest rate spread							2.65	%					2.80	%
Net interest margin as a percent of interest earning assets							2.96	%					3.21	%
Ratio of interest-earning assets to interest-bearing liabilities							112.02	%					112.45	%

 

16

 

		Nine Months Ended September 30, 2003							Nine Months Ended September 30, 2002
(in thousands)		Average Balance			Interest		Yield/Cost		Average Balance		Interest		Yield/Cost
Assets:
Interest earning assets:
Short-term deposits and FHLB stock		$	38,511		536		1.85	%	37,894		552		1.95	%
Investment securities		87,528			3,789		5.77	%	72,175		3,385		6.25	%
Mortgage-backed securities		14,728			415		3.76	%	12,053		478		5.28	%
Mortgage loans		540,907			25,449		6.27	%	482,233		25,868		7.15	%
Other loans		109,193			4,732		5.78	%	77,706		3,801		6.52	%
Total interest earning assets		790,867			34,921		5.89	%	682,061		34,084		6.66	%
Noninterest earning assets		46,369							37,718
Total assets		$	837,236						719,779
Liabilities and stockholders’ equity
Interest-bearing liabilities
Deposits:
Money market accounts		$	146,530		2,103		1.91	%	117,156		2,506		2.85	%
Passbook savings accounts		116,937			1,419		1.62	%	99,997		1,774		2.37	%
NOW Accounts		35,344			211		0.79	%	31,662		241		1.02	%
Certificates of deposit		222,261			5,506		3.30	%	184,122		5,712		4.14	%
Total deposits		521,072			9,239		2.36	%	432,937		10,233		3.15	%
FHLB Advances		184,367			6,950		5.03	%	173,423		6,938		5.33	%
Total interest-bearing liabilities		705,439			16,189		3.06	%	606,360		17,171		3.78	%
Noninterest-bearing liabilities		55,765							42,011
Total liabilities		761,204							648,371
Total stockholders’ equity		76,032							71,408
Total liabilities and stockholders’ equity		$	837,236						719,779
Net interest income before provision for loan losses					18,732						16,913
Interest rate spread							2.83	%					2.88	%
Net interest margin as a percent of interest earning assets							3.16	%					3.31	%
Ratio of interest-earning assets to interest-bearing liabilities							112.11	%					112.48	%

 

17

 

Item 3.             Quantitative and Qualitative Disclosures About Market Risk.

 

The Bank’s interest rate sensitivity is monitored by management through the use of a Net Portfolio Value Model which generates estimates of the change in the Bank’s net portfolio value (“NPV”) over a range of interest rate scenarios.  NPV is the present value of expected cash flows from assets, liabilities, and off-balance sheet contracts.  The NPV ratio, under any interest rate scenario, is defined as the NPV in that scenario divided by the market value of assets in the same scenario.  The model assumes estimated prepayment rates, reinvestment rates and deposit decay rates.  The Sensitivity Measure is the decline in the NPV ratio, in basis points, caused by a 2% increase or decrease in rates, whichever produces a larger decline.  The higher the institution’s Sensitivity Ratio, the greater its exposure to interest rate risk is considered to be.  The following NPV Table sets forth the Bank’s NPV as of September 30, 2003.

 

Change in Interest Rates in Basis Points (Rate Shock)		Net Portfolio Value								NPV as % of Portfolio Value of Assets
		Amount			$ Change			% Change		NPV Ratio		% Change
		(In thousands)
+300		$	51,308		$	(29,503	)	(36.51	)%	5.95	%	(33.82	%)
+200		65,075			(15,736		)	(19.47	)	7.43		(17.35	)
+100		75,310			(5,501		)	(6.81	)	8.48		(5.67	)
Static		80,811			—			—		8.99		—
-100		74,074			(6,737		)	(8.34	)	8.23		(8.45	)
-200		65,396			(15,415		)	(19.08	)	7.27		(19.13	)
-300		57,749			(23,062		)	(28.54	)	6.42		(28.59	)

 

Certain shortcomings are inherent in the methodology used in the above interest rate risk measurements.  Modeling changes in NPV require the making of certain assumptions which may or may not reflect the manner in which actual yields and costs respond to changes in market interest rates.  In this regard, the NPV Table presented assumes that the composition of the Bank’s interest sensitive assets and liabilities existing at the beginning of a period remains constant over the period being measured and also assumes that a particular change in interest rates is reflected uniformly across the yield curve regardless of the duration to maturity or repricing of specific assets and liabilities.  Accordingly, although the NPV Table provides an indication of the Bank’s interest rate risk exposure at a particular point in time, such measurements are not intended to and do not provide a precise forecast of the effect of changes in market interest rates on the Bank’s net interest income and may differ from actual results.

 

Item 4.  Controls and Procedures

 

The Company’s management, including the Company’s principal executive officer and principal financial officer, have evaluated the effectiveness of the Company’s “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”).  Based upon their

 

18

 

evaluation, the principal executive officer and principal financial officer concluded that, as of the end of the period covered by this report, the Company’s disclosure controls and procedures were effective for the purpose of ensuring that the information required to be disclosed in the reports that the Company files or submits under the Exchange Act with the Securities and Exchange Commission (the “SEC”) (1) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and (2) is accumulated and communicated to the Company’s management, including its principal executive and principal financial officers, as appropriate to allow timely decisions regarding required disclosure.  In addition, based on that evaluation, no change in the Company’s internal control over financial reporting occurred during the quarter ended September 30, 2003 that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

19

 

PART II.  OTHER INFORMATION

 

Item 1.		Legal Proceedings.
		The Company is not involved in any pending legal proceedings other than routine legal proceedings occurring in the ordinary course of business.  Such routine legal proceedings, in the aggregate, are believed by management to be immaterial to the Company’s financial condition, results of operations and cash flows.
Item 2.		Changes in Securities and Use of Proceeds.
		None.
Item 3.		Defaults Upon Senior Securities.
		None.
Item 4.		Submission of Matters to a Vote of Security Holders.
		None.
Item 5.		Other Information.
		None.
Item 6.		Exhibits and Reports on Form 8-K.
		(a)	Exhibits
			3.1	Certificate of Incorporation of EFC Bancorp, Inc. *
			3.2	Bylaws of EFC Bancorp, Inc. *
			4.0	Specimen Stock Certificate of EFC Bancorp, Inc. *
			11.0	Statement re: Computation of Per Share Earnings Incorporated herein by reference to Footnote 3 on page 5 of this document.
			31.1	Rule 13a-14(a)/15d-14(a) Certification of Chief Executive Officer
			31.2	Rule 13a-14(a)/15d-14(a) Certification of Chief Financial Officer
			32.1	Certification of Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350
		(b)	Reports on Form 8-K
			On July 31, 2003, the EFC Bancorp, Inc. furnished a Current Report on Form 8-K announcing its financial results for the quarter ended June 30, 2003.
			On August 8, 2003, the EFC Bancorp, Inc. furnished a Current Report on Form 8-K announcing that it has been named to the FSB 100.

 

*

Incorporated herein by reference from the Exhibits filed with the Registration Statement on Form S-1 and any amendments thereto. Registration Statement No. 333-38637 filed with the Securities and Exchange Commission (“SEC”) on October 24, 1997.

 

20

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

			EFC BANCORP, INC.
Dated:	November 13, 2003		By:	/s/ Barrett J. O’Connor
			Barrett J. O’Connor
			President and Chief Executive Officer
			(Principal executive officer)
Dated:	November 13, 2003		By:	/s/ James J. Kovac
			James J. Kovac
			Executive Vice President and Chief Financial Officer
			(Principal financial and accounting officer)

 

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