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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 0-27522
PITTSBURGH HOME FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
Pennsylvania 25-1772349
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
438 Wood Street
Pittsburgh, Pennsylvania 15222
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(Address of principal executive office) (Zip Code)
(412) 281-0780
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(Registrant's telephone number, including area code)
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 No X
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Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: As of May 9, 1997,
there were issued and outstanding 1,969,369 shares of the Registrant's Common
Stock, par value $.01 per share.
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PITTSBURGH HOME FINANCIAL CORP.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
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<S> <C>
PART I. FINANCIAL INFORMATION
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Item 1. Financial Statements
Consolidated Statements of Financial Condition as of
March 31, 1997 (unaudited) and September 30, 1996 3
Consolidated Statements of Income for the three and six months
ended March 31, 1997 (unaudited) and 1996 (unaudited). 4
Consolidated Statements of Changes in Shareholders' Equity
for the six months ended March 31, 1997 (unaudited) 5
Consolidated Statements of Cash Flows for the three and six months
ended March 31, 1997 (unaudited) and 1996 (unaudited). 6
Notes to Unaudited Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 11
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults Upon Senior Securities 15
Item 4. Submission of Matters to a Vote of Security-Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES
</TABLE>
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PITTSBURGH HOME FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
March 31, September 30,
1997 1996
(Unaudited)
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<S> <C> <C>
ASSETS
Cash $ 1,553,719 $ 915,326
Interest-bearing deposits 2,977,523 6,646,384
------------ ------------
4,531,242 7,561,710
Investments and mortgage-backed securities; available for sale 54,230,175 46,305,705
Investments and mortgage-backed securities; held to maturity
(fair value of $9,812,064) 10,022,461 -
Loans receivable, net of allowance of $1,253,088 and
$1,128,279 159,337,041 135,551,534
Accrued interest receivable 1,732,300 1,243,462
Premises and equipment, net 2,496,994 1,900,149
Goodwill 319,140 -
Federal Home Loan Bank stock - at cost 3,400,000 1,875,000
Deferred income taxes 401,632 523,632
Foreclosed real estate 293,211 133,256
Other assets 233,843 235,317
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Total assets $236,998,039 $195,329,765
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $137,700,277 $124,341,573
Advances from Federal Home Loan Bank 68,000,000 36,500,000
Advances by borrowers for taxes and insurance 2,649,354 1,847,815
Accrued income taxes payable 343,509 496,029
Other liabilities 1,122,494 1,772,332
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Total liabilities 209,815,634 164,957,749
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 5,000,000 shares authorized,
none issued - -
Common stock, $.01 par value, 10,000,000 shares authorized,
2,182,125 shares issued and outstanding 21,821 21,821
Additional paid-in capital 20,981,398 20,958,806
Treasury stock - at cost, 199,106 shares (2,748,373) -
Unearned shares of ESOP (1,735,358) (1,831,720)
Unearned shares of Recognition and Retention Plan (974,570) -
Net unrealized gain (loss) on securities available for sale (145,000) (50,000)
Retained earnings (substantially restricted) 11,782,487 11,273,109
------------ ------------
Total shareholders' equity 27,182,405 30,372,016
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $236,998,039 $195,329,765
============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
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PITTSBURGH HOME FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
Three months ended Six months ended
March 31, March 31,
(Unaudited) (Unaudited)
---------------------------- -----------------------------
1997 1996 1997 1996
----------- ------------ ------------- -------------
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $3,196,799 $2,279,938 $6,094,541 $4,534,644
Mortgage-backed securities 506,439 423,985 899,365 864,331
Investment securities:
Taxable 456,384 189,876 885,612 390,790
Tax exempt 82,364 32,065 162,287 67,223
Interest-bearing deposits 85,578 164,335 180,058 219,526
---------- ---------- ---------- ----------
Total interest income 4,327,564 3,090,199 8,221,863 6,076,514
Interest expense:
Deposits 1,596,548 1,306,589 3,111,567 2,670,556
Interest on advances and other borrowings 949,744 556,147 1,683,106 1,078,118
---------- ---------- ---------- ----------
Total interest expense 2,546,292 1,862,736 4,794,673 3,748,674
---------- ---------- ---------- ----------
Net interest income before provision for
loan losses 1,781,272 1,227,463 3,427,190 2,327,840
Provision for loan losses 75,000 60,000 150,000 120,000
---------- ---------- ---------- ----------
Net interest income after provision for
loan losses 1,706,272 1,167,463 3,277,190 2,207,840
Noninterest income:
Service charges and other fees 96 21,583 17,211 51,009
Other income 88,285 65,805 181,357 128,938
---------- ---------- ---------- ----------
Total noninterest income 88,381 87,388 198,568 179,947
Noninterest expenses:
Compensation and employee benefits 643,344 462,649 1,199,716 889,124
Premises and occupancy costs 148,919 185,109 279,699 248,380
Amortization of goodwill 8,254 - 11,005
Federal insurance premium 20,235 76,251 20,235 153,599
Marketing 26,215 35,834 80,314 83,111
Data processing costs 68,816 40,185 125,385 80,846
Other expenses 249,775 69,543 444,849 193,718
---------- ---------- ---------- ----------
Total noninterest expense 1,165,558 869,571 2,161,203 1,648,778
---------- ---------- ---------- ----------
Income before income taxes 629,095 385,280 1,314,555 739,009
Income taxes 206,546 143,400 449,000 277,400
---------- ---------- ---------- ----------
Net income $ 422,549 $ 241,880 $ 865,555 $ 461,609
========== ========== ========== ==========
Earnings per share $ 0.23 N/A $ 0.45 N/A
========== ========== ========== ==========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
4
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PITTSBURGH HOME FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE PERIOD ENDED MARCH 31, 1997
<TABLE>
<CAPTION>
Net unrealized
Unearned gain (loss)
Additional shares of Unearned on securities Total
Common Paid In Retained Treasury Employee Stock shares of available for Shareholders'
Stock Capital Earnings Stock Ownership Plan RRP sale Equity
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<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance as of
September 30, 1996 $21,821 $20,958,806 $11,273,109 $ - $(1,831,720) $ - $ (50,000) $30,372,016
Acquisition of
Treasury stock - - - (2,748,373) - - - (2,748,373)
Stock acquired for the
Recognition and
Retention Plan - - - - - (1,063,170) - (1,063,170)
Amortization of
Employee Stock
Ownership Plan - - - - 96,362 - - 96,362
Amortization of
the Recognition
and Retention Plan - - - - - 88,600 - 88,600
Commitment for release
of ESOP shares - 22,592 - - - - - 22,592
Change in unrealized
loss on securities
available for sale - - - - - (95,000) (95,000)
Net income for period - - 865,555 - - - 865,555
Cash dividends declared - - (356,177) - - - - (356,177)
---------------------------------------------------------------------------------------------------------
Balance as of
March 31, 1997
(Unaudited) $21,821 $20,981,398 $11,782,487 $(2,748,373) $(1,735,358) $ (974,570) $(145,000) $27,182,405
=========================================================================================================
</TABLE>
See accompanying notes to unaudited financial statements.
5
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PITTSBURGH HOME FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
For the six months ended March 31,
1997 1996
--------------- ---------------
(Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 865,555 $ 461,609
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 98,184 81,291
Amortization and accretion of premiums and discounts on
assets and deferred loan fees (50,660) 29,960
Provision for loan losses 150,000 120,000
Deferred tax benefit 122,000 (44,493)
Amortization of ESOP plan 96,362 -
Amortization of Recognition and Retention Plan 88,600 -
Commitment for release of ESOP shares 22,592 -
Other, net (1,289,722) (287,342)
------------ ------------
Net cash provided by operating activities 102,911 361,025
CASH FLOWS FROM INVESTING ACTIVITIES
Loan orginations (39,285,391) (24,585,836)
Loan and Mortgage-backed securities principal repayments 16,553,341 17,690,007
Proceeds from loan sales 617,700 1,548,500
Purchases of:
Investment securities and mortgage-backed securities (26,915,000) (7,316,714)
Sales and maturities of:
Investment securities and mortgage-backed securities 5,528,571 7,871,429
Purchases of premises and equipment (1,014,168) (111,192)
Disposal of premises and equipment - 2,025
Other, net (110,955) 11,986
------------ ------------
Net cash (used) provided by investing activities (44,625,902) (4,889,795)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in checking, passbook, and money market
deposit accounts 4,049,508 3,750,337
Net increase (decrease) in certificates of deposit 9,309,196 1,695,592
Increase in advances by borrowers for taxes and insurance 801,539 1,623,571
Increase in stock subscriptions payable 29,611,879
Increase in advances from the Federal Home Loan Bank 31,500,000 -
Cash dividends paid to shareholders (356,177) -
Purchase of Recognition and Retention Plan shares (1,063,170) -
Purchase of treasury stock (2,748,373) -
------------ ------------
Net cash provided by financing activities 41,492,523 36,681,379
Net decrease in cash and cash equivalents (3,030,468) 32,152,609
Cash and cash equivalents at beginning of year 7,561,710 3,544,603
------------ ------------
Cash and cash equivalents at end of year $ 4,531,242 $ 35,697,212
============ ============
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Cash paid during the year for:
Interest (includes interest credited on
deposits of $3,111,567 and $2,598,171
in 1997, and 1996 respectively) $ 4,830,423 $ 3,809,094
============ ============
Income taxes paid (refund) $ 683,300 $ (8,734)
============ ============
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING
AND FINANCING ACTIVITIES
Foreclosed mortgage loans transferred to real estate owned 159,955 -
Unrealized loss on securities available for sale (144,000) (239,442)
Deferred income taxes 49,000 81,410
------------ ------------
Net unrealized loss securities available for sale $ (95,000) (158,032)
============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
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PITTSBURGH HOME FINANCIAL CORP. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements of
Pittsburgh Home Financial Corp. (the "Company") have been prepared in
accordance with instructions to Form 10-Q. Accordingly, they do not
include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements.
However, such information reflects all adjustments (consisting solely
of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair statement of results for the interim
periods.
The results of operations for the three and six months ended March 31,
1997 are not necessarily indicative of the results to be expected for
the year ending September 30, 1997. The unaudited consolidated
financial statements and notes thereto should be read in conjunction
with the audited financial statements and notes thereto for the year
ended September 30, 1996.
Financial Accounting Standards Board Statement Number 128, "Accounting
for Earnings per Share," is effective for fiscal years beginning after
December 15, 1997 and provides specific computation, presentation and
disclosure requirements for earnings per share. The statement's
objective is to simplify the computation of earnings per share and to
make the U. S. standard for computing earnings per share more
compatible with the standards of other countries and with that of the
International Accounting Standards Committee. Early adoption of FAS 128
is not permitted; however, reported Earnings Per Share would not be
materially different if FAS 128 would have been in effect.
Note 2 - Business
The Company's subsidiary, Pittsburgh Home Savings Bank (the "Bank"), is
a state chartered stock savings bank primarily engaged in attracting
retail deposits from the general public and using such deposits to
originate loans (primarily single-family residential loans.) The Bank
conducts business from seven offices in Allegheny and Butler counties
of western Pennsylvania and primarily lends in this geographic area.
The Bank is subject to competition from other financial institutions
and other companies which provide financial services. The Bank is
subject to the regulations of certain federal and state agencies and
undergoes periodic examinations by those regulatory authorities.
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Note 3 - Principles of consolidation
The consolidated financial statements include the accounts of
Pittsburgh Home Financial Corp. and its wholly owned subsidiary,
Pittsburgh Home Savings Bank. All significant intercompany balances and
transactions have been eliminated in consolidation.
Note 4 - Conversion
The Company is a Pennsylvania corporation which is the holding company
for the Bank. The Company was organized by the Bank for the purpose of
acquiring all of the capital stock of the Bank in connection with its
conversion from a mutual stock organization to the stock holding
company form which was completed on April 1, 1996 (the "Conversion").
In the Conversion, 2,182,125 shares of common stock were sold at a
subscription price of $10.00 per share, resulting in net proceeds of
approximately $21.0 million. In exchange for 50% of the net conversion
proceeds ($10.5 million), the Company acquired 100% of the stock of the
Bank and retained the remaining $10.5 million at the holding company
level.
Note 5 - Earnings per share
Earnings for the three and six months ended March 31, 1997 were $.23
and $.45 per share. Earnings per share information is not applicable
for any periods prior to April 1, 1996, which was the date the Company
completed the Conversion. Earnings per share were computed by dividing
net income for the three and six months ended March 31, 1997 by the
average number of common shares outstanding. Shares outstanding for
March 31, 1997 do not include ESOP shares that have not been committed
to be released in accordance with Statement of Position (SOP) 93-6,
"Employers' Accounting for Employee Stock Ownership Plans." Reported
earnings per share are based on 1,868,375 and 1,928,324 common shares
for the three and six months ended March 31, 1997.
Note 6 - Employee Stock Ownership Plan (ESOP)
In connection with the Conversion, the Company established an ESOP for
the benefit of eligible employees. The ESOP Trust borrowed $1.9 million
from the Company and purchased 174,570 shares, equal to 8% of the total
number of shares issued in the Conversion. The Company accounts for its
ESOP in accordance with SOP 93-6, "Employers Accounting for Employee
Stock Ownership Plans," which requires the Company to recognize
compensation expense equal to the fair value of the ESOP shares during
the periods in which they become committed to be released. To the
extent that the fair value of ESOP shares differs from the cost of such
shares, this differential will be charged or credited to equity.
Management expects the recorded amount of expense to
8
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fluctuate as continuing adjustments are made to reflect changes in the
fair value of the ESOP shares. Employers with internally leveraged
ESOPs, such as the Company, will not report the loan receivable from the
ESOP as an asset and will not report the ESOP debt from the employer as
a liability.
Note 7 - Stock Option Plan
On October 15, 1996, the Stock Option Plan was approved by the Company's
stockholders. A total of 218,212 shares of common stock may be issued
pursuant to the Stock Option Plan and 161,737 shares were awarded during
the six months ended March 31, 1997. These options are subject to
vesting provisions as well as other provisions of the Stock Option Plan.
No options have been exercised through March 31, 1997.
Note 8 - Recognition and Retention Plan and Trust (RRP)
On October 15, 1996, the RRP was approved by the Company's stockholders.
A total of 87,285 shares of common stock are available for awards
pursuant to the RRP and 67,960 shares were awarded during the six months
ended March 31, 1997. Awards will vest in equal installments over a five
year period, with the first installment vesting on the first anniversary
date of the grant and each additional installment vesting on the four
subsequent anniversaries of such date, subject to various requirements
as more fully described in the plan documents. Compensation cost related
to RRP shares earned during the six months ended March 31, 1997 was
$96,362.
The Company purchased on the open market 87,285 shares of common stock
during the six months ended March 31, 1997 to fully fund the RRP. The
cost of unearned RRP shares is recorded as a reduction of shareholders'
equity.
Note 9 - Recent Accounting and Regulatory Developments
The Financial Accounting Standards Board released Statement of Financial
Accounting Standard Number 123, "Accounting for Stock-Based
Compensation" ("SFAS 123") in October 1995. Effective for fiscal years
beginning after December 15, 1995, SFAS 123 outlines preferable
accounting treatment and reporting guidelines for employee stock option
plans. The Company plans to continue to measure compensation cost using
the method of accounting prescribed by Accounting Principles Board
("APB") Opinion Number 25.
The Financial Accounting Standards Board released Statement of Financial
Accounting Standard Number 125, "Accounting for Transfers and Servicing
of Financial Assets and Extinguishments of Liabilities" ("SFAS 123") in
June 1996. SFAS 125 is effective for transfers and servicing of
financial assets and extinguishments of liabilities occurring after
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December 31, 1996 and is to be applied prospectively. SFAS 125
establishes standards for resolving issues related to the circumstances
under which the transfer of financial assets should be considered as
sales of all or part of the assets or as secured borrowings and about
when a liability should be considered extinguished. The Company does not
anticipate any material impact on statements of income and financial
condition from the adoption of this statement.
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MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
At March 31, 1997, the Company's total assets amounted to $237.0
million compared with $195.3 million at September 30, 1996, an increase of
21.3%. Cash and interest-bearing deposits decreased $3.0 million, or 39.7%, to
$4.5 million at March 31, 1997, compared to $7.6 million at September 30, 1996.
The decrease reflects the payment of dividends and the purchase of treasury
stock and RRP shares. Investments and mortgage-backed securities (held to
maturity and available for sale) increased by $17.9 million or 38.7%, from
$46.3 million at September 30, 1996 to $64.3 million at March 31, 1997. The
Company purchased $26.9 million in investments and mortgage-backed securities
during the period, which was partially offset by repayments and maturities.
Loans receivable, net of allowance, increased $23.8 million or 17.6%, to $159.3
million at March 31, 1997 compared to $135.6 million at September 30, 1996. The
growth is primarily attributable to increases in residential mortgage loans.
Total liabilities increased by $44.9 million or 27.2% to $209.8 million
at March 31, 1997 compared to $165.0 at September 30, 1996. Deposits increased
by $13.4 million or 10.8% to $137.7 million at March 31, 1997 compared to
$124.3 million at September 30, 1996. During the period, the Bank acquired a
branch ("Branch Acquisition") from another financial institution located in
Pittsburgh and assumed all the deposits and acquired all equipment and real
estate associated with the branch. Borrowed funds increased $31.5 million or
86.3% to $68.0 million compared to $36.5 million at September 30, 1996, as the
Company increased its Federal Home Loan Bank ("FHLB") advances to increase
liquidity and used those funds to reinvest in assets at higher yields.
Total shareholders' equity decreased $3.2 million or 10.5% to $27.2
million at March 31, 1997 compared to $30.4 million at September 30, 1996. The
decrease was the result of the Company's repurchase of its common stock and the
funding of the RRP, which was partially offset by net income during the period.
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RESULTS OF OPERATIONS
GENERAL. The Bank reported net income of $423,000 or $.23 per share and
$866,000 or $.45 per share during the three and six months ended March 31,
1997, respectively, compared to $242,000 and $462,000 during the three and six
months ended March 31, 1996. The increases in net income were primarily due to
an increase in net interest income after the provision for losses on loans of
$539,000, or 46.2% and $1.1 million, or 49.8%, for the three and six months
ended March 31, 1997, respectively, compared to the same periods in 1996. The
increases were partially offset by an increase for both periods in provision
for loan losses of $15,000 or 25.0%, and $30,000 or 25.0%, an increase in
noninterest expense of $296,000, or 34.0% and $512,000, or 31.1%, and an
increase in income taxes of $63,000 or 43.9% and $172,000 or 62.0% for the same
three and six month periods.
INTEREST INCOME. Interest income increased $1.2 million or 38.8% and
$2.1 million or 34.6% during the three and six months ended March 31, 1997,
respectively, compared to the same periods in fiscal 1996. The increases were
primarily due to an increase in investment and loan origination activity. The
average balance of investment and mortgage-backed securities totaled $63.0
million and $57.5 million, with weighted average yields of 6.63% and 6.77%, for
the three and six months ended March 31, 1997 respectively, an increase of
53.2% and 35.0%, respectively, from $41.1 million and $42.6 million with
weighted average yields of 6.28% and 6.20% for the same periods ended March 31,
1996. The increase in investments is primarily attributable to the Company's
continued efforts to grow its balance sheet and leverage its capital position.
The investment and mortgage-backed securities purchased have been funded
primarily with advances from the FHLB. The average balance of loans receivable
totaled $153.8 million and $148.0 million, with weighted average yields of
8.31% and 8.24%, for the three and six months ended March 31, 1997
respectively, an increase of 39.0% and 36.5%, respectively, from $110.7 million
and $108.4 million with weighted average yields of 8.24% and 8.36% for the same
periods ended March 31, 1996.
INTEREST EXPENSE. Interest expense increased $684,000 or 36.7% and $1.0
million or 26.7% during the three and six months ended March 31, 1997,
respectively, compared to the same periods in fiscal 1996. Such increases were
primarily due to an increase in the average cost of interest-bearing
liabilities, from 4.84% and 5.02% for the three and six months ended March 31,
1996, respectively, to 5.15% for the same periods ended March 31, 1997. Average
deposits increased $20.3 million or 17.8% and $16.1 million or 14.2% for the
three and six months ended March 31, 1997 when compared to the same period in
1996. Average borrowed funds increased $31.3 million and $24.4 million for the
three and six months ended March 31, 1997 when compared to the same periods in
1996. Such increases were due to the Branch Acquisition, as well as, increased
borrowings from the FHLB of Pittsburgh.
PROVISION FOR LOAN LOSSES. During the three and six months ended March
31, 1997, the Bank recorded provisions for losses on loans of $75,000 and
$150,000, respectively, compared to $60,000 and $120,000 for the comparable
periods in fiscal 1996. The Company recorded
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such provisions to adjust the Company's allowance for loan losses to a level
deemed appropriate based upon an assessment of the volume and type of lending
presently being conducted by the Company, industry standards and economic
conditions in the Company's market area. The increases in the fiscal 1997
periods reflect the increased amount of lending by the Company.
NONINTEREST INCOME. Noninterest income remained consistent for the
three and six months ended March 31, 1997 compared to the three and six months
ended March 31, 1996.
NONINTEREST EXPENSES. Noninterest expenses increased by $296,000 or
34.0% and $512,000 or 31.1% for the three and six months ended March 31, 1997,
respectively, compared to the same periods during fiscal 1996. Such increases
were primarily attributable to an $181,000 and $311,000 increase in salaries
and employee benefits, an $181,000 and $251,000 increase in other operating
expenses (consisting primarily of office supplies, legal and professional
fees), and a $29,000 and $45,000 increase in data processing costs for the
three and six months ended March 31, 1997, respectively, when compared to the
same periods during fiscal 1996. The increase in salaries and employee benefits
is due to normal salary increases, the hiring of two new employees, and the
addition of the RRP. The increase in other operating expenses is to a large
degree reflective of increased ESOP costs associated with being a public
company.
PROVISION FOR INCOME TAXES. The Bank incurred provisions for income
taxes of $207,000 and $449,000 during the three and six months ended March 31,
1997, respectively, compared with $143,000 and $277,000 for the comparable
periods in fiscal 1996. The effective tax rates during the three and six months
ended March 31, 1997 were 32.8% and 34.2%, respectively, compared to 37.2% and
37.5% for the comparable 1996 periods.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds are deposits, repayments,
prepayments and maturities of outstanding loans, maturities of investment
securities and other short-term investments, and funds provided from
operations. While scheduled loan repayments and maturing investment securities
and short-term investments are relatively predictable sources of funds, deposit
flows and loan prepayments are greatly influenced by the movement of interest
rates in general, economic conditions and competition. The Company manages the
pricing of its deposits to maintain a deposit balance deemed appropriate and
desirable. In addition, the Company invests in short-term investment securities
and interest-earning assets which provide liquidity to meet lending
requirements. Although the Company's deposits have historically represented the
majority of its total liabilities, the Company also utilizes other borrowing
sources, primarily Federal Home Loan Bank ("FHLB") advances from the FHLB of
Pittsburgh. At March 31, 1997, the Bank had $68.0 million of outstanding
advances from the FHLB of Pittsburgh.
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Liquidity management is both a daily and long-term function of business
management. The Bank uses its sources of funds primarily to meet its ongoing
commitments, to pay maturing savings certificates and savings withdrawals, to
fund loan commitments and to maintain a portfolio of mortgage-backed and
investment securities. At March 31, 1997, the total approved loan commitments
outstanding amounted to $9.6 million, and unused lines of credit amounted to
$54,000. Certificates of deposit scheduled to mature in one year or less at
March 31, 1997, totaled $63.3 million. Management believes that a significant
portion of maturing deposits will remain with the Bank.
As of March 31, 1997, the Bank's regulatory capital was well in excess
of all applicable regulatory requirements. At March 31, 1997, the Savings
Bank's Tier 1 risk-based, total risk-based and Tier 1 leverage capital ratios
amounted to 20.77%, 21.93% and 9.54%, respectively, compared to regulatory
requirements of 4.0%, 8.0% and 4.0%, respectively.
14
<PAGE> 15
PITTSBURGH HOME FINANCIAL CORP.
PART II
Item 1. Legal Proceedings
Neither the Corporation nor the Bank is involved in any pending
legal proceedings other than non-material legal proceedings
occurring in the ordinary course of business.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security-Holders
Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
27 Financial Data Schedule
b) No Form 8-K reports were filed during the quarter.
15
<PAGE> 16
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PITTSBURGH HOME FINANCIAL CORP.
Date: May 9, 1997 By: /s/ J. ARDIE DILLEN
--------------------------------------------
J. Ardie Dillen
Chairman, President and
Chief Executive Officer
Date: May 9, 1997 By: /s/ MICHAEL J. KIRK
--------------------------------------------
Michael J. Kirk
Senior Vice President and Chief
Financial Officer
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