UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 25049
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
---------------------------------------
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- -----------------
Commission File Number 0-27620
-------
Green Street Financial Corp
---------------------------
(Exact name of registrant as specified in its charter)
North Carolina 56-1951478
-------------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
241 Green Street
Fayetteville, North Carolina 28301-5051
---------------------------------------
(Address of principal executive office) (Zip code)
(910)-483-3681
--------------
(Registrant's telephone number)
N/A
---
(Former name, former address and former fiscal year,
if changed since last report)
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 and 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 X No
--- ---
As of August 5, 1998 there were issued and outstanding 4,083,219 shares of the
Registrant's common stock, no par value.
<PAGE>
Green Street Financial Corp and Subsidiary
CONTENTS
PART I - FINANCIAL INFORMATION Pages
Item 1. Condensed Consolidated Financial Statements
Statements of financial condition at September 30, 1997
and June 30, 1998 (unaudited) 1-2
Statements of income for the three months ended
June 30, 1997 (unaudited) and
June 30, 1998 (unaudited) 3
Statements of income for the nine months ended
June 30, 1997 (unaudited) and
June 30, 1998 (unaudited) 4
Statements of cash flows for the nine months ended
June 30, 1997 (unaudited) and
June 30, 1998 (unaudited) 5-6
Notes to condensed consolidated financial statements 7-8
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 9-12
Item 3. Quantitative and Qualitative Disclosures About Market Risk 13
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 14
Item 2. Changes in Securities and Use of Proceeds 14
Item 3. Defaults upon Senior Securities 14
Item 4. Submission of Matters to a Vote of Security Holders 14
Item 5. Other Information 14
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 15
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, 1998 and September 30, 1997
<TABLE>
<CAPTION>
June 30 September 30,
ASSETS 1998 1997
- -------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Cash and short-term cash investments:
Interest-earning $ 19,405,018 $ 29,414,597
Noninterest-earning 605,066 555,043
Federal funds sold 3,257,000 3,118,000
Investment securities:
Held to maturity, at amortized cost 16,500,000 13,500,000
Nonmarketable equity securities 1,189,189 1,170,889
Loans receivable, net 131,068,598 128,945,951
Accrued interest receivable, investments 245,399 222,716
Real estate acquired in settlement of loans 34,521 -
Property and equipment, net 347,696 306,794
Prepaid expenses and other assets 612,294 727,688
-------------------------------
Total Assets $ 173,264,781 $ 177,961,678
===============================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
1
<PAGE>
<TABLE>
<CAPTION>
June 30, September 30,
LIABILITIES AND STOCKHOLDERS' EQUITY 1998 1997
- -------------------------------------------------------------------------------------------------------------
(Unaudited)
<S> <C> <C>
Liabilities:
Deposits $ 110,201,142 $ 112,641,893
Advance payments by borrowers for taxes and insurance 1,089,756 250,662
Accrued expenses and other liabilities 641,085 618,080
Dividends payable 489,986 1,117,513
Deferred compensation 379,620 387,847
----------------------------------
Total liabilities 112,801,589 115,015,995
----------------------------------
Stockholders' equity:
Preferred stock, no par value, authorized 1,000,000 shares;
none issued - -
Common stock, no par value, authorized 10,000,000 shares;
issued 4,083,219 shares at June 30, 1998; 4,298,125 at
September 30, 1997 - -
Additional paid-in capital 38,421,342 41,816,239
Note receivable, ESOP (2,015,000) (2,210,000)
Retained earnings, substantially restricted 24,056,850 23,339,444
----------------------------------
Total stockholders' equity 60,463,192 62,945,683
----------------------------------
Total liabilities and stockholders' equity $ 173,264,781 $ 177,961,678
================ ================
</TABLE>
2
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Three Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest and dividend income:
Loans $ 2,631,266 $ 2,545,258
Investments 641,498 702,576
----------------------------------
Total interest income 3,272,764 3,247,834
Interest expense 1,367,282 1,316,246
----------------------------------
Net interest income 1,905,482 1,931,588
Provision for loan losses - -
----------------------------------
Net interest income after provision for loan losses 1,905,482 1,931,588
----------------------------------
Noninterest income 25,117 20,599
----------------------------------
Noninterest expense:
Compensation and employee benefits 576,510 562,990
Other 227,314 219,103
----------------------------------
803,824 782,093
----------------------------------
Income before income taxes 1,126,775 1,170,094
Income taxes 425,900 442,050
----------------------------------
Net income $ 700,875 $ 728,044
----------------------------------
Basic earnings per share $ .17 $ .18
=================================
Diluted earnings per share $ .17 $ .18
=================================
Dividends paid per share $ .12 $ .11
=================================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
3
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Nine Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Interest and dividend income:
Loans $ 7,859,248 $ 7,593,549
Investments 2,049,167 2,114,939
--------------------------------
Total interest income 9,908,415 9,708,488
Interest expense 4,220,873 3,995,915
--------------------------------
Net interest income 5,687,542 5,712,573
Provision for loan losses - -
--------------------------------
Net interest income after provision for loan losses 5,687,542 5,712,573
--------------------------------
Noninterest income 98,554 80,600
--------------------------------
Noninterest expense:
Compensation and employee benefits 1,746,040 1,705,108
Other 703,081 775,128
--------------------------------
2,449,121 2,480,236
--------------------------------
Income before income taxes 3,336,975 3,312,937
Income taxes 1,254,650 1,259,015
--------------------------------
Net income $ 2,082,325 $ 2,053,922
===============================
Basic earnings per share $ .51 $ .51
===============================
Diluted earnings per share $ .50 $ .50
===============================
Dividends paid per share $ .34 $ .31
===============================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
4
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Operating Activities
Net income $ 2,082,325 $ 2,053,922
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization 27,000 30,679
Net loss (gain) on disposal of real estate acquired
in settlement of loans 2,308 (12,354)
Increase in deferred income taxes 17,000 335,000
Decrease in deferred compensation (8,227) (12,792)
ESOP compensation charged to paid-in capital 151,060 129,805
Changes in assets and liabilities:
(Increase) decrease in:
Prepaid expenses and other assets 115,394 (49,701)
Refundable income taxes - 35,650
Accrued interest receivable (22,683) (197,686)
Increase (decrease) in:
Accrued expenses and other liabilities 202,405 527,225
Accrued SAIF assessment - (792,868)
Income taxes payable (196,400) -
-------------------------------
Net cash provided by operating activities 2,370,182 2,046,880
-------------------------------
Cash Flows From Investing Activities
Net increase in loans receivable (2,174,396) (3,864,578)
Proceeds from sale of real estate acquired in settlement of loans 14,920 46,779
Proceeds from maturities of held to maturity investment securities 18,000,000 12,000,000
Purchase of held to maturity investment securities (21,000,000) (18,000,000)
Purchase of nonmarketable equity securities (18,300) -
Purchase of property and equipment (67,902) (13,038)
-------------------------------
Net cash provided by investing activities (5,245,678) (9,830,837)
-------------------------------
</TABLE>
5
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine Months Ended June 30, 1998 and 1997
<TABLE>
<CAPTION>
1998 1997
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash Flows From Financing Activities
Net decrease in deposits $ (2,440,751) $ (2,955,388)
Principal payment for ESOP debt 195,000 195,000
Cash dividends paid (1,992,446) (1,824,956)
Increase in advance payments by borrowers
for taxes and insurance 839,094 855,595
Repurchase of common stock (3,545,957) -
--------------------------------
Net cash used in financing activities (6,945,060) (3,729,749)
--------------------------------
Net decrease in cash and cash equivalents (9,820,556) (11,513,706)
Cash and cash equivalents:
Beginning 33,087,640 35,481,906
--------------------------------
Ending $ 23,267,084 $ 23,968,200
--------------------------------
Cash and cash equivalents:
Cash and short-term investments:
Interest-bearing $ 19,405,018 $ 21,747,685
Noninterest-bearing 605,066 510,515
Federal funds sold 3,257,000 1,710,000
--------------------------------
$ 23,267,084 $ 23,968,200
===============================
Supplemental Disclosures of Cash Flow Information
Cash payments for:
Interest $ 4,220,993 $ 3,994,136
===============================
Income taxes $ 1,451,050 $ 863,543
===============================
Supplemental Disclosure of Noncash Investing and Financing
Activities:
Dividends declared and accrued $ 489,986 $ 447,769
===============================
</TABLE>
See Notes to Condensed Consolidated Financial Statements.
6
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
Note 1. Nature of Business
Green Street Financial Corp (the "Corporation") was incorporated under the laws
of the State of North Carolina for the purpose of becoming the savings and loan
holding company of Home Federal Savings and Loan Association (the "Association"
or "Home Federal") in connection with the Association's conversion from a
federally chartered mutual savings and loan association to a federally chartered
stock savings and loan association, pursuant to its Plan of Conversion. The
Corporation was organized in December 1995 to acquire all of the common stock of
Home Federal upon its conversion to stock form. A subscription offering of the
Corporation's shares closed on April 3, 1996, at which time the Corporation
acquired all of the shares of the Association and commenced operations. The
financial statements of the Corporation are presented on a consolidated basis
with those of Home Federal.
The Corporation has no operations and conducts no business of its own other than
owning Home Federal, investing its portion of the net proceeds received in the
Conversion, and lending funds to the Employee Stock Ownership Plan (the "ESOP")
which was formed in connection with the Conversion. The principal business of
the Association is accepting deposits from the general public and using those
deposits and other sources of funds to make loans secured by real estate and
other forms of collateral located in the Association's primary market area of
Cumberland and Robeson counties in North Carolina.
Home Federal's results of operations depend primarily on its net interest
income, which is the difference between interest income from interest-earning
assets and interest expense on interest-bearing liabilities. The Association's
operations are also affected by noninterest income, such as miscellaneous income
from loans, customer deposit account service charges, and other sources of
revenue. The Association's principal operating expenses, aside from interest
expense, consist of compensation and associated benefits, federal deposit
insurance premiums, occupancy costs, advertising, and other general and
administrative expenses.
Note 2. Basis of Presentation
The accompanying unaudited consolidated financial statements (except for the
statement of financial condition at September 30, 1997, which is audited) have
been prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments (none of
which were other than normal recurring accruals) necessary for a fair
presentation of the financial position and results of operations for the periods
presented have been included. The results of operations for the nine month
period ended June 30, 1998 are not necessarily indicative of the results of
operations that may be expected for the year ended September 30, 1998 or any
other interim period.
The accounting policies followed are as set forth in Note 1 of the Notes to
Consolidated Financial Statements in the 1997 annual report of the Corporation.
7
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
- --------------------------------------------------------------------------------
Note 3. Dividends Declared
On June 25, 1998, the Board of Directors of the Corporation declared a dividend
of $ .12 a share for stockholders of record as of July 10, 1998 and payable on
July 23, 1998. The dividends declared were accrued and reported as other
liabilities in the June 30, 1998 consolidated statement of financial condition.
Note 4. Earnings Per Share
As required, the Corporation adopted statement of Financial Accounting Standards
No. 128 during the quarter ended December 31, 1997. This statement requires dual
presentation of basic and diluted earnings per share (EPS) with a reconciliation
of the numerator and denominator of the EPS computations. Basic per share
amounts are based on the weighted average shares of common stock outstanding.
Diluted earnings per share assume the conversion, exercise or issuance of all
potential common stock instruments such as options, warrants and convertible
securities, unless the effect is to reduce a loss or increase earnings per
share. Accordingly, this presentation has been adopted for all periods
presented. The basic and diluted weighted average shares outstanding are as
follows:
<TABLE>
<CAPTION>
Three months ended:
1998 1997
--------------------------------
<S> <C> <C>
Weighted average shares outstanding 4,276,654 4,298,125
Less unallocated ESOP shares 204,750 230,750
--------------------------------
Weighted average outstanding shares used for basic EPS 4,071,904 4,067,375
Plus incremental shares from assumed issuance
of stock options 47,195 63,982
--------------------------------
Weighted average outstanding shares used for diluted EPS 4,119,099 4,131,357
================================
Nine months ended:
1998 1997
--------------------------------
Weighted average shares outstanding 4,290,968 4,298,125
Less unallocated ESOP shares 211,250 234,000
--------------------------------
Weighted average outstanding shares used for basic EPS 4,079,718 4,064,125
Plus incremental shares from assumed issuance
of stock options 68,104 44,670
--------------------------------
Weighted average outstanding shares used for diluted EPS 4,147,822 4,108,795
================================
</TABLE>
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
Comparison of Financial Condition at June 30, 1998 and September 30, 1997:
Total assets decreased by $4.7 million to $173.3 million at June 30, 1998 from
$178.0 million at September 30, 1997. The decrease in assets during the nine
month period is principally attributable to a 5% stock repurchase plan begun and
completed in June 1998 of $3.5 million. Investments and other short term
interest earning assets amounted to $40.4 million at June 30, 1998, a decrease
of $6.8 million from $47.2 million at September 30, 1997. Net loans receivable
increased by $2.1 million during the nine month period and amounted to $131.1
million at June 30, 1998. Approximately 99% of the Corporation's assets were
interest earning at June 30, 1998, and approximately 76% of such interest
earning assets were held in the form of loans receivable.
Savings deposits decreased by $2.4 million during the period and amounted to
$110.2 million at June 30, 1998. The Association had no borrowings outstanding
during or at the end of the nine month period ended June 30, 1998, but has
guaranteed the repayment of the ESOP's note payable to the Corporation which was
originated on April 3, 1996 in order for the ESOP to purchase 260,000 shares of
common stock in the Corporation. The Corporation's note receivable from the
ESOP, which amounted to $2.0 million at June 30, 1998 net of a $195,000
principal repayment during the period, is reported as a reduction of
stockholders' equity. Retained earnings increased by $.7 million to $24.1
million at June 30, 1998, which is attributable to the Corporation's
consolidated earnings during the nine months ended June 30, 1998, less dividends
accrued for the period.
At June 30, 1998, the Corporation's stockholders' equity amounted to $60.5
million, which as a percentage of total assets was 34.9%. As a Federally
chartered savings and loan association, the Association is required to meet
three separate capital standards established by the Office of Thrift Supervision
(OTS). The Association's stand-alone equity was $45.1 million at June 30, 1998
and was substantially in excess of all such capital requirements.
The Association's level of nonperforming loans, defined as loans past due 90
days or more, as a percentage of loans outstanding, was .06% and .13% at June
30, 1998 and September 30, 1997, respectively. During the quarter ended June 30,
1998, the Association's level of nonperforming loans remained consistently low
in relation to total loans outstanding, and the Association did not incur any
loan losses. Based on management's analysis of the adequacy of its allowances at
June 30, 1998, no additional provision for loan losses was made during the
quarter.
9
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
Comparison of Operating Results for the Three and Nine Months Ended June 30,
1998 and 1997:
General. Net income for the three and nine month period ended June 30, 1998 was
$700,875, and $2,082,325, respectively, or $27,169 less than and $28,403 more
than the $728,044 and $2,053,922 earned during the same periods in 1997. The
decrease in net income for the three months ended June 30, 1998 was primarily
due to the decrease in spread between interest income and interest expense. The
increase in net income for the nine months ended June 30, 1998 was primarily
attributable to a decrease in other noninterest expense for the nine month
period as compared to the same period in 1997.
Interest income. Interest income increased by $25,000 from $3.2 million for the
three months ended June 30, 1997 to $3.3 million for the three months ended June
30, 1998. This increase was primarily the result of an increase in the volume of
net loans receivable outstanding during the three month period as compared to
the same period in 1997. Interest income increased by $200,000 from $9.7 million
for the nine months ended June 30, 1997 to $9.9 million for the nine months
ended June 30, 1998. This increase was primarily attributable to an overall
increase in the volume of net loans receivable outstanding during the first nine
months of the fiscal year in comparison to the same period a year earlier. The
yield on interest earning assets for the three months ended June 30, 1998 was
7.46% compared to 7.48% for the same period ended June 30, 1997.
Interest expense. Interest expense increased by $51,000 from $1.3 million for
the three months ended June 30, 1997 to $1.4 million for the three months ended
June 30, 1998. Interest expense increased by $225,000 from $4.0 million for the
nine months ended June 30, 1997 to $4.2 million for the nine months ended June
30, 1998. The Association's cost of funds, which approximated 4.85% for the
quarter ended June 30, 1997 has increased to approximately 4.92% for the quarter
ended June 30, 1998, an increase of 7 basis points.
Net interest income. Net interest income was approximately $1.9 million for the
three months ended June 30, 1998 and 1997, and approximately $5.7 million for
the nine months ended June 30, 1998 and 1997.
Provision for loan losses. Based on management's analysis of the adequacy of its
allowances at June 30, 1998, no provisions for loan losses were made during the
three and nine month periods ended June 30, 1998. Provisions, which are charged
to operations, and the resulting loan loss allowances are amounts the
Association's management believes will be adequate to absorb potential losses on
existing loans that may become uncollectible. Loans are charged off against the
allowance when management believes that collectibility is unlikely. The
evaluation to increase or decrease the provision and resulting allowances is
based both on prior loan loss experience and other factors, such as changes in
the nature and volume of the loan portfolio, overall portfolio quality, and
current economic conditions. The Association's level of nonperforming loans has
remained consistently low in relation to total loans outstanding, and the
Association has not charged off any loans during either of the three or nine
month periods ended June 30, 1998. At June 30, 1998, the Association's level of
general valuation allowances for loan losses amounted to $255,000, which
management believes is adequate to absorb potential losses in its loan
portfolio.
10
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
Noninterest income. Noninterest income has historically been immaterial in
relation to the Association's overall operations. Noninterest income amounted to
$25,000 and $99,000 for the three and nine months ended June 30, 1998, and
$21,000 and $81,000 for the three and nine months ended June 30, 1997,
respectively.
Noninterest expense. Noninterest expense increased by $22,000 to $804,000 for
the three month period ended June 30, 1998 from $782,000 for the comparable
quarter in 1997. For the nine month period ended June 30, 1998, noninterest
expense amounted to $2.4 million, a decrease of $31,000 from the $2.5 million
reported for the nine months ended June 30, 1997.
Deposit insurance expense decreased by $38,000 during the nine month period
ended June 30, 1998 as compared to the same period a year earlier as a result of
reduced premium rates subsequent to the recapitalization of the SAIF.
Capital Resources and Liquidity. The term "liquidity" generally refers to an
organization's ability to generate adequate amounts of funds to meet its needs
for cash. More specifically for financial institutions, liquidity insures that
adequate funds are available to meet deposit withdrawals, fund loan and capital
expenditure commitments, maintain reserve requirements, pay operating expenses,
and provide funds for debt service, dividends to stockholders, and other
institutional commitments. Funds are primarily provided through financial
resources from operating activities, expansion of the deposit base, borrowings,
through the sale or maturity of investments, the ability to raise equity
capital, or maintenance of shorter term interest-earning deposits.
During the nine month period ended June 30, 1998, cash and cash equivalents, a
significant source of liquidity, decreased by approximately $9.8 million,
primarily as a result of the purchase of held-to-maturity investment securities
which increased by $3.0 million and the 5% stock redemption completed in June
1998 for $3.5 million. Cash flows resulting from operating activities provided
an increase of $2.4 million in cash during the nine month period ended June 30,
1998. This cash was used to fund investing activities of $2.3 million and to
fund financing activities of $3.4 million, including a decrease in deposits and
the payment of dividends.
As a federally chartered savings association, Home Federal must maintain a daily
average balance of liquid assets equal to at least 4% of withdrawable deposits
and short-term borrowings. The Association's liquidity ratio at June 30, 1998,
as computed under OTS regulations, was considerably in excess of such
requirements. Given its excess liquidity and its ability to borrow from the
Federal Home Loan Bank, the Association believes that it will have sufficient
funds available to meet the anticipated future loan commitments, unexpected
deposit withdrawals, and other cash requirements.
11
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
OPERATIONS
- --------------------------------------------------------------------------------
Year 2000 Issue. The Year 2000 Issue relates to whether computer systems will
properly recognize and process date sensitive information on and after January
1, 2000. Systems that do not properly recognize such information could generate
erroneous data or fail. The Association is heavily dependent on computer systems
in the conduct of substantially all of its business activities. The Association
has conducted a comprehensive review of its computer systems, including its core
processing systems maintained by an independent data processing service center,
to identify the systems that could be affected by the Year 2000 Issue.
Management has identified the corrective action required to ensure that the
Association's internal and vendor-maintained systems that are date sensitive are
Year 2000 compliant. In addition, management is developing a contingency plan
that will be relied upon in the event of adverse effects to the Association as a
result of Year 2000 issues.
Based on preliminary study, the Association expects to spend approximately
$10,000 to $70,000 from 1998 through 1999 to modify its computer information
systems enabling proper processing of transactions relative to the year 2000 and
beyond. The Association continues to evaluate appropriate courses of corrective
action, including replacement of certain systems whose associated costs would be
recorded as assets and amortized. Accordingly, the Association does not expect
the amounts required to be expensed over the next two years to have a material
effect on its financial position or results of operations.
Special Note Regarding Forward-Looking Statements. Statements herein regarding
estimated future expense levels and other matters may constitute forward-looking
statements under the federal securities laws. Such statements are subject to
certain risks and uncertainties. Undue reliance should not be place on this
information. These estimates are based on the current expectations of
management, which may change in the future due to a large number of potential
events, including unanticipated future developments.
12
<PAGE>
GREEN STREET FINANCIAL CORP AND SUBSIDIARY
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
- --------------------------------------------------------------------------------
There were no significant changes for the nine months ended June 30, 1998 from
the information presented in the annual report on Form 10-K for the year ended
September 30, 1997, concerning quantitative and qualitative disclosures about
market risk.
13
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not engaged in any legal proceedings at the
present time. From time to time, the Association is a party to
legal proceedings within the normal course of business wherein
it enforces its security interest in loans made by it, and
other matters of a similar nature.
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) 27. Financial Data Schedule (electronic filing only)
(b) No reports on 8-K were filed for the period covered by
this report.
14
<PAGE>
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.
Green Street Financial Corp
Dated August 12, 1998 By: /s/ H.D. Reaves, Jr.
-----------------------------------
H. D. Reaves, Jr.
President and CEO
Dated August 12, 1998 By: /s/ John C. Pate
-----------------------------------
John C. Pate
Senior Vice President and CFO
15
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION DERIVED FROM THE
QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE
TO SUCH FINANCIAL INFORMATION.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 605
<INT-BEARING-DEPOSITS> 19,405
<FED-FUNDS-SOLD> 3,257
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 17,689
<INVESTMENTS-MARKET> 17,686
<LOANS> 131,324
<ALLOWANCE> 255
<TOTAL-ASSETS> 173,265
<DEPOSITS> 110,201
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,600
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0
0
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<INTEREST-OTHER> 0
<INTEREST-TOTAL> 9,908
<INTEREST-DEPOSIT> 4,221
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<EXPENSE-OTHER> 2,449
<INCOME-PRETAX> 3,337
<INCOME-PRE-EXTRAORDINARY> 3,337
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,082
<EPS-PRIMARY> .51
<EPS-DILUTED> .50
<YIELD-ACTUAL> 4.14
<LOANS-NON> 83
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<ALLOWANCE-OPEN> 255
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 255
<ALLOWANCE-DOMESTIC> 255
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
