_Search The Pilot * _Earnings Up For First Savings ------------------------------------------------------------------------------- BY SARA LINDAU _The holding company for First Savings Bank of Moore County has reported record earnings. But its stock price is down, and so are those for its merger partner, First Bank of Troy. The holding company for First Savings Bank of Moore County has reported record earnings. But its stock price is down, and so are those for its merger partner, First Bank of Troy. First Savings Bancorp reported record earnings for the quarter ended March 31, with diluted earnings per share for the three- and nine-month periods before that, rising 18.2 percent and 15.5 percent respectively.Net income and diluted earnings per share were $1,396,000 and 39 cents, compared to $1,261,000 and 33 cents, respectively, for the same period last year. Total assets increased from $294.2 million last year on March 31 to $327.3 million this March 31. “Community bank stocks are down nationwide and have been going down for the last year,” said First Savings CEO and President John Burns, when asked about the latest trend. “We think the timing of the merger was good, because bank stocks are going to turn around, it’s just a matter of time.” Bill Samuels, longtime president and CEO of First Savings, now chairman of the board of directors, agreed with Burns about the trends affecting stock prices. He has also blamed some of the declines in the recent past on grumblings of dissident and skeptical First Savings shareholders that have been reported in The Pilot. Meanwhile, the bank directors of both banks have signed a contract to merge, if the shareholders of both organizations vote in agreement. Burns pointed out other banks have continued to announce mergers and sales, despite the bumpy stock market for community banks. The proposed merger between the two banks will be detailed in a proxy statement that is expected to be mailed to shareholders of both entities sometime in early May, with a shareholders’ vote due about 20 days from then, Burns said Tuesday. A dissident shareholders group known as the Committee to Protect First Savings’ Shareholders Value has pointed to high volumes of traded stocks on March 31 as evidence of discontent with the proposal. But independent brokers said unusual activity, trading volume and stock activity, often occur at the end of a financial quarter. Most can only speculate as to why 87,500 shares of First Bank stock were traded on March 31 for just over $12 a share. On the same day the stock price closed at just over $14 for First Savings, and shares sold totaled 56,300 that same day this year, according to closing prices and volume reported by Data Broadcasting Corp. “Very unusual” was the way a Southern Pines broker described that large volume of selling and buying. Burns said stocks cannot be repurchased by the banks since the merger was announced. Those who oppose the merger see it as a symptom that some people want to sell, but others see the buying part of it as others taking advantage of a good deal –– a low price, compared to the $20-plus per share that First Savings went for previously. The average daily trading volume in First Savings stock was 3,727 shares, to First Bank’s 1,272 shares, according to the most recent data available at the time the acquisition agreement was announced in December 1999, according to dissident shareholder Stan Bradshaw. The Data Broadcasting Corp. reported that by April 3, the next business day, First Savings stock closed at $15 and three quarters, with 10,000 shares changing hands that day, and showed an up-and-down pattern for the next days of the week. It went to an even higher 17,500 on Wednesday, April 5, but declining Tuesday to 4,300, plummeting Thursday to 1,700 and steadily declining on Friday, April 7, to 900. At the end of the day on Monday, April 10 only 200 were traded. Meanwhile, First Savings’ price per share remained fairly consistent at $15 and some change. First Bank’s price per share was in the $12 and $13 range during the same time period. On March 31, when 87,500 shares changed hands, the price was $12 and one-16th. On Monday, April 3, trading came to 15,000 shares changing hands, at $13 and three-eighths at the end of the day, 10,200 changing hands on April 4, at $13; then down to $12 and five-eighths on Wednesday, April 5, with a still-high 9,700 shares traded. On April 6 and 7 the price was back up to $13 and one-fourth for First Bank stock, with 500 and then 200 shares changing hands. On Monday, April 10, 1,400 of First Bank’s shares changed hands, still above $13. In January, two weeks after the merger was announced, the same source had First Savings going at more than $18 a share, with 7,400 shares traded on the seventh, a $2 recovery from the New Year’s Day lows of $16 and some change per share. First Savings Chief Finance Officer Tim Maples said Tuesday, “Hopefully when you combine the synenergies of the two stocks, we’ll be well-positioned to increase shareholder value.” For every 100 shares of First Savings stock someone owns, they would get 125 shares of First Bank stock, under the merger agreement approved by their boards of directors. The growth in earnings was primarily driven by an increase in net interest income from loans and investments, Maples explained. One factor some brokers look closely at is book value. Book values, according to one broker, are based on a forumla that takes into account assets, liabilities, and shareholders. The book alue per share for First Savings at the time the merger was announced was $18.32, and that of First Bank was $9.46. The merger was expected to bring both book values to $12.01, cutting First Savings’ by 18 percent and increasing First Bank’s by 27 percent. Dividends were to decline for First Savings shareholders, while bringing up those of First Bank, but recentlyboth banks announced higher dividends would be paid to both sets of shareholders, with First Savings’ shareholders even getting six cents a share more after the merger goes into effect than they were getting at the time the merger was announced. Nevertheless, the First Savings shareholders who currently oppose the merger as not being beneficial to them are getting their own fairness opinion from an independent appraiser, Committee Chairman Bob Rhoads said this week.