<PAGE> 1
================================================================================
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 June 30, 1999
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 0-27522
PRESTIGE BANCORP, INC.
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1785128
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
710 Old Clairton Road
Pleasant Hills, Pennsylvania 15236
- --------------------------------------- ----------
(Address of principal executive office) (Zip Code)
(412) 655-1190
----------------------------------------------------
(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 X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of August 11, 1999, there
were 996,964 shares of the registrant's common stock outstanding, par value
$1.00 per share.
================================================================================
<PAGE> 2
PRESTIGE BANCORP, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
- ------------------------------- ----
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets of Prestige Bancorp, Inc. as of
June 30, 1999 (unaudited) and December 31, 1998 1
Consolidated Statements of Income of Prestige Bancorp, Inc. for the three
months ended June 30, 1999 and 1998 (unaudited) 2
Consolidated Statements of Income of Prestige Bancorp, Inc. for the six
months ended June 30, 1999 and 1998 (unaudited) 3
Consolidated Statements of Stockholders' Equity of Prestige Bancorp, Inc.
for the six months ended June 30, 1999 and 1998 (unaudited) 4
Consolidated Statements of Cash Flows of Prestige Bancorp, Inc. for the six
months ended June 30, 1999 and 1998 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 13
PART II. OTHER INFORMATION
- ---------------------------
Item 1. Legal Proceedings 19
Item 2. Changes in Securities 19
Item 3. Defaults upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security-Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURES 20
- ----------
</TABLE>
<PAGE> 3
PRESTIGE BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
June 30, December 31,
1999 1998
------------- -------------
ASSETS (Unaudited)
- ------
<S> <C> <C>
Cash and due from banks $ 876,603 $ 975,202
Interest-bearing deposits with banks 1,131,436 9,177,755
Investment securities:
Available for sale 11,567,665 9,907,260
Held to maturity (market value $25,166,480 and
$25,598,337 respectively) 25,846,957 25,478,289
Net loans 135,422,127 123,916,834
Federal Home Loan Bank stock, at cost 3,061,400 2,548,900
Premises and equipment, net 2,609,558 2,634,609
Accrued interest receivable 1,117,123 1,116,560
Deferred tax asset 286,156 90,359
Other assets 1,366,170 1,528,216
------------- -------------
Total assets $ 183,285,195 $ 177,373,984
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Non-interest-bearing deposits $ 5,297,193 $ 5,731,447
Interest-bearing deposits 110,802,521 103,966,675
------------- -------------
Total deposits 116,099,714 109,698,122
Federal Home Loan Bank advances 50,227,000 50,977,000
Advance payments by borrowers for taxes and insurance 1,169,716 1,023,230
Income taxes payable 164,751 172,086
Accrued interest payable 219,999 234,442
Other liabilities 475,244 509,199
------------- -------------
Total liabilities 168,356,424 162,614,079
------------- -------------
Stockholders' Equity:
Preferred stock, $1.00 par value;
5,000,000 shares authorized, none issued -- --
Common stock, $1.00 par value; 10,000,000 shares authorized,
1,162,313 shares issued at June 30, 1999; 1,100,090 shares
issued at December 31, 1998 1,162,313 1,100,090
Treasury stock at cost: 165,349 and 157,476 shares at
June 30, 1999 and December 31, 1998, respectively (2,161,243) (2,161,243)
Additional paid-in-capital 11,570,960 10,727,677
Unearned ESOP shares: 81,222 and 79,393 shares at
June 30, 1999 and December 31, 1998, respectively (672,660) (690,380)
Retained earnings - substantially restricted 5,201,333 5,826,182
Accumulated other comprehensive income (171,932) (42,421)
------------- -------------
Total stockholders' equity 14,928,771 14,759,905
------------- -------------
Total liabilities and stockholders' equity $ 183,285,195 $ 177,373,984
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
<TABLE>
PRESTIGE BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Three Months Ended
June 30,
----------------------------
1999 1998
----------- -----------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 2,540,836 $ 2,128,052
Interest on mortgage-backed securities 197,461 153,778
Interest and dividends on other investment securities 397,642 583,040
Interest on deposits in other financial institutions 35,093 37,447
----------- -----------
Total interest income 3,171,032 2,902,317
----------- -----------
Interest expense:
Interest on deposits 1,112,010 963,860
Advances from Federal Home Loan Bank 676,922 694,206
----------- -----------
Total interest expense 1,788,932 1,658,066
----------- -----------
Net interest income 1,382,100 1,244,251
Provision for loan losses 105,000 42,000
----------- -----------
Net interest income after provision for loan losses 1,277,100 1,202,251
----------- -----------
Other income:
Fees and service charges 189,982 121,410
Gain (loss) on sale of investments 9,309 (7,200)
(Loss) gain on sale of assets (615) 23,256
Other income, net 3,405 5,528
----------- -----------
Total other income 202,081 142,994
----------- -----------
Other expenses:
Salaries and employee benefits 607,014 514,294
Premises and occupancy costs 145,816 131,498
Federal deposit insurance premiums 16,044 14,480
Data processing costs 63,457 65,536
Advertising costs 34,879 23,851
Transaction processing costs 76,801 62,643
ATM transaction fees 38,331 27,663
Other expenses 195,058 183,968
----------- -----------
Total other expenses 1,177,400 1,023,933
----------- -----------
Income before income tax expense 301,781 321,312
Income tax expense 116,789 126,152
----------- -----------
Net income $ 184,992 $ 195,160
=========== ===========
Basic earnings per share:
Net income $ 0.20 $ 0.19
Weighted average number of common shares outstanding 915,041 1,018,277
Diluted earnings per share:
Net income $ 0.20 $ 0.19
Weighted average number of common shares outstanding 915,041 1,039,487
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
<TABLE>
PRESTIGE BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
---------------------------
1999 1998
----------- -----------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 4,986,038 $ 4,064,741
Interest on mortgage-backed securities 387,278 315,728
Interest and dividends on other investment securities 749,282 1,103,011
Interest on deposits in other financial institutions 149,820 106,374
----------- -----------
Total interest income 6,272,418 5,589,854
----------- -----------
Interest expense:
Interest on deposits 2,198,133 1,891,902
Advances from Federal Home Loan Bank 1,367,700 1,298,126
----------- -----------
Total interest expense 3,565,833 3,190,028
----------- -----------
Net interest income 2,706,585 2,399,826
Provision for loan losses 195,000 80,000
----------- -----------
Net interest income after provision for loan losses 2,511,585 2,319,826
----------- -----------
Other income:
Fees and service charges 351,499 216,553
Gain (loss) on sale of investments 48,559 (7,200)
Gain on sale of assets 1,380 23,256
Other income, net 6,803 11,821
----------- -----------
Total other income 408,241 244,430
----------- -----------
Other expenses:
Salaries and employee benefits 1,175,193 1,014,877
Premises and occupancy costs 291,429 247,603
Federal deposit insurance premiums 31,588 28,904
Data processing costs 126,903 127,810
Advertising costs 60,641 51,579
Transaction processing costs 153,457 122,152
ATM transaction fees 69,957 51,185
Other expenses 379,683 347,769
----------- -----------
Total other expenses 2,288,851 1,991,879
----------- -----------
Income before income tax expense 630,975 572,377
Income tax expense 241,575 224,064
----------- -----------
Net income $ 389,400 $ 348,313
=========== ===========
Basic earnings per share:
Net income $ 0.43 $ 0.34
Weighted average number of common shares outstanding 914,509 1,017,844
Diluted earnings per share:
Net income $ 0.43 $ 0.34
Weighted average number of common shares outstanding 914,812 1,033,911
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
<TABLE>
PRESTIGE BANCORP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE SIX MONTHS ENDED JUNE 30, 1999 AND 1998
(Unaudited)
<CAPTION>
Common
Stock Additional
Comprehensive $1.00 par Treasury Paid-in
Income value Stock Capital
------------- ----------- ----------- ------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1998 $ 1,100,090 $(2,161,243) $10,727,677
Allocation of 2,140 ESOP shares -- -- 12,962
Cash dividends declared:
Common stock ($.12 per share) -- -- --
Stock dividend declared:
Common stock (5% per share) 62,223 -- 830,321
Cash in lieu of stock -- -- --
Net income $ 389,400 -- -- --
Net unrealized losses on available
for sale securities, net of tax
of $106,319 (159,479) -- -- --
Reclassification adjustment for
gains realized in net income net
of tax of $18,591 29,968
-----------
Comprehensive income $ 259,889
=========== ----------- ----------- -----------
BALANCE, June 30, 1999 $ 1,162,313 $(2,161,243) $11,570,960
=========== =========== ===========
BALANCE, December 31, 1997 $ 963,023 $ (775,881) $ 8,033,296
Allocation of 1,998 ESOP shares -- -- 28,330
Cash dividends declared:
Common stock ($.08 per share) -- -- --
Stock dividend declared:
Common stock (15% per share) 137,067 -- 2,648,956
Cash in lieu of stock -- -- --
Net income $ 348,313 -- -- --
Net unrealized gains on available
for sale securities, net of tax
of $790 1,185 -- -- --
Reclassification adjustment for
losses realized in net income
net of tax of $2,827 (4,373) -- -- --
-----------
Comprehensive income $ 345,125
=========== ----------- ----------- -----------
BALANCE, June 30, 1998 $ 1,100,090 $ (775,881) $10,710,582
=========== =========== ===========
</TABLE>
<TABLE>
<CAPTION>
Accumulated
Other
Unearned Retained Comprehensive
ESOP Shares Earnings Income Total
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
BALANCE, December 31, 1998 $ (690,380) $ 5,826,182 $ (42,421) $ 14,759,905
Allocation of 2,140 ESOP shares 17,720 -- -- 30,682
Cash dividends declared:
Common stock ($.12 per share) -- (116,804) -- (116,804)
Stock dividend declared:
Common stock (5% per share) -- (892,544) -- --
Cash in lieu of stock -- (4,901) -- (4,901)
Net income -- 389,400 -- 389,400
Net unrealized losses on available
for sale securities, net of tax
of $106,319 -- -- (159,479) (159,479)
Reclassification adjustment for
gains realized in net income net
of tax of $18,591 29,968 29,968
Comprehensive income
------------ ------------ ------------ ------------
BALANCE, June 30, 1999 $ (672,660) $ 5,201,333 $ (171,932) $ 14,928,771
============ ============ ============ ============
BALANCE, December 31, 1997 $ (724,050) $ 8,064,202 $ 69,221 $ 15,629,811
Allocation of 1,998 ESOP shares 16,550 -- -- 44,880
Cash dividends declared:
Common stock ($.08 per share) -- (91,487) -- (91,487)
Stock dividend declared:
Common stock (15% per share) -- (2,786,023) -- --
Cash in lieu of stock -- (3,484) -- (3,484)
Net income -- 348,313 -- 348,313
Net unrealized gains on available
for sale securities, net of tax
of $790 -- -- 1,185 1,185
Reclassification adjustment for
losses realized in net income
net of tax of $2,827 -- -- (4,373) (4,373)
Comprehensive income
------------ ------------ ------------ ------------
BALANCE, June 30, 1998 $ (707,500) $ 5,531,521 $ 66,033 $ 15,924,845
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these statements.
4
<PAGE> 7
<TABLE>
PRESTIGE BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<CAPTION>
Six Months Ended
June 30,
---------------------------------
1999 1998
------------ ------------
<S> <C> <C>
Operating activities:
Net income $ 389,400 $ 348,313
------------ ------------
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Depreciation of premises and equipment 171,816 145,088
Amortization of premiums and discounts, net 13,497 (19,636)
Non cash compensation expense related to MRP Plan 70,429 65,535
Non cash compensation expense related to ESOP benefit 38,637 54,010
Loss on sale of mutual funds 17,625 7,200
Gain on sale of equity securities (66,184) --
Gain on sale of premises and equipment -- (37,971)
Provision for loan losses 195,000 80,000
(Decrease) increase in other liabilities (41,909) 202,561
(Decrease) increase in accrued interest payable (14,443) 60,262
Decrease in income taxes payable (116,889) (38,222)
Increase in accrued interest receivable (563) (124,308)
Decrease (increase) in other assets 91,617 (318,998)
------------ ------------
Total adjustments 358,633 75,521
------------ ------------
Net cash provided by operating activities 748,033 423,834
------------ ------------
Investing activities:
Loan originations (34,269,478) (32,338,637)
Principal payments on loans 22,569,185 19,444,065
Principal payments on mortgage-backed securities available for sale 386,223 698,744
Principal payments on mortgage-backed securities held to maturity 828,025 889,230
Principal payments on investment securities held to maturity 289,232 86,841
Proceeds from calls of held to maturity investment securities 3,000,000 2,500,000
Proceeds from sale of available for sale mutual funds 733,931 355,400
Proceeds from sale of equity securities 129,480 --
Proceeds from calls of available for sale investment securities 1,000,000 600,000
Return of capital on investment securities -- 897
Purchases of available for sale mortgage backed securities (1,500,000) --
Purchases of available for sale investment securities (2,576,656) (2,321,702)
Purchases of held to maturity investment securities (4,500,000) (8,225,007)
Proceeds from sale of premises and equipment -- 206,118
Purchases of premises and equipment (146,765) (290,914)
Purchase of Federal Home Loan Bank stock (512,500) (750,000)
------------ ------------
Net cash used by investing activities (14,569,323) (19,144,965)
------------ ------------
Financing activities:
Net change in advance payments by borrowers for taxes and insurance 146,486 115,214
Purchases of MRP shares -- (587,575)
Proceeds from Federal Home Loan Bank advances 1,750,000 18,000,000
Payments on Federal Home Loan Bank advances (2,500,000) (3,700,000)
Net increase in Money Market, NOW and Passbook savings accounts 3,914,684 3,903,493
Net increase in certificate accounts 2,486,907 2,547,781
Cash in lieu of stock dividend on fractional shares (4,901) (3,484)
Common stock cash dividends paid (116,804) (91,487)
------------ ------------
Net cash provided by financing activities 5,676,372 20,183,942
------------ ------------
Net (decrease) increase in cash and cash equivalents (8,144,918) 1,462,811
Cash and cash equivalents at beginning of period 10,152,957 2,213,461
------------ ------------
Cash and cash equivalents at end of period $ 2,008,039 $ 3,676,272
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes $ 320,200 $ 265,000
Cash paid during the period for interest on deposits and borrowings 3,580,276 3,129,766
============ ============
Supplemental schedule of noncash investing activity:
Loans transferred to real estate owned $ -- $ 250,000
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE> 8
PRESTIGE BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
JUNE 30, 1999
(UNAUDITED)
1. THE CORPORATION:
On February 14, 1996, the Board of Directors of Prestige Bank, F.S.B. (the Bank)
adopted a Plan of Conversion (the Plan) from a federally chartered mutual
savings bank to a federally chartered stock savings bank and the issuance of its
stock to Prestige Bancorp, Inc. (the Corporation), a Pennsylvania corporation.
The Corporation sold 963,023 shares of its common stock (including 77,041 shares
to its newly formed Employee Stock Ownership Trust (the ESOP)) at $10.00 a
share. Simultaneously there was a corresponding exchange of all the Bank's stock
for approximately 50% of the net offering proceeds. The remaining portion of the
net proceeds was retained by the Corporation net of $770,410 that was loaned to
the ESOP for its purchase. The conversion and public offering was completed on
June 27, 1996 with net proceeds from the offering, net of the ESOP loan,
totaling $8,188,394, after offering expenses.
2. BASIS OF PRESENTATION:
The following unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations, although
the Corporation believes that the disclosures made are adequate to make the
information presented not misleading. However, such interim information reflects
all adjustments (consisting solely of normal recurring adjustments) which are,
in the opinion of management, necessary for a fair presentation of financial
position and results of operations for the periods presented. The results of
operations for the three and six month periods ended June 30, 1999, are not
necessarily indicative of the results to be expected for the year ending
December 31, 1999.
The unaudited financial statements and notes hereto should be read in
conjunction with the audited financial statements and notes thereto for the year
ended December 31, 1998, contained in the Corporation's Annual Report and Form
10-K.
Earnings Per Common Share
The Corporation follows SFAS No. 128, "Earnings Per Share". Under SFAS No. 128,
earnings per share are classified as basic earnings per share and diluted
earnings per share. Basic earnings per share includes only the weighted average
common shares outstanding. Diluted earnings per share includes the weighted
average common shares outstanding and any dilutive common stock equivalent
shares in the calculation. Treasury shares are treated as retired for earnings
per share purposes.
6
<PAGE> 9
The following tables reflect the calculation of earnings per share under
SFAS No. 128.
<TABLE>
<CAPTION>
Three Months Ended
----------------------------
June 30, June 30,
1999 1998
---------- ----------
<S> <C> <C>
Basic earnings per share:
Net income $184,992 $ 195,160
Average shares outstanding 915,041 1,018,277
Earnings per share $ .20 $ .19
Diluted earnings per share:
Net income $184,992 $ 195,160
Average shares outstanding 915,041 1,018,277
Stock options -- 21,210
-------- ----------
Diluted average shares outstanding 915,041 1,039,487
Earnings per share $ .20 $ .19
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended
--------------------------
June 30, June 30,
1999 1998
-------- ----------
<S> <C> <C>
Basic earnings per share:
Net income $389,400 $ 348,313
Average shares outstanding 914,509 1,017,844
Earnings per share $ .43 $ .34
Diluted earnings per share:
Net income $389,400 $ 348,313
Average shares outstanding 914,509 1,017,844
Stock options 303 16,067
-------- ----------
Diluted average shares outstanding 914,812 1,033,911
Earnings per share $ .43 $ .34
</TABLE>
For the three and six months ended June 30, 1999, options to purchase 105,325
and 92,725 shares of common stock, respectively, were outstanding but not
included in the computation of diluted earnings per share because the options'
exercise price was greater than the average market price of the Corporation's
common shares for the period.
On April 15, 1998 the Board of Directors declared a stock dividend of 15% to
shareholders of record of June 2, 1998 payable on June 19, 1998. In addition, on
February 17, 1999 the Board of Directors declared a stock dividend of 5% to
shareholders of record of March 2, 1999 payable on March 19, 1999. All per share
data have been restated to reflect the stock dividends.
Comprehensive Income
The Corporation adopted SFAS No. 130, "Reporting Comprehensive Income", in the
quarter ended March 31, 1998. This accounting standard requires the reporting of
all changes in the equity of an enterprise that result from recognized
transactions and other economic events of the period other than transactions
with owners in their capacity as owners. Prior to the issuance of this standard,
some of those changes in equity were displayed in the income statement, while
others were included directly in balances within a separate component of equity
in the balance sheet.
7
<PAGE> 10
3. INVESTMENT SECURITIES:
The cost and market values of investment securities are summarized as follows:
Investment securities held to maturity:
<TABLE>
<CAPTION>
June 30, 1999
-----------------------------
Amortized Market
Cost Value
----------- -----------
<S> <C> <C>
U.S. government and government
agency obligations:
Due within one year $ 499,958 $ 504,065
Due after one and within five years 1,509,800 1,487,607
Due after five and within ten years 8,495,160 8,236,534
Due after ten years 6,957,374 6,686,226
Federal Home Loan Mortgage
Corporation (FHLMC) certificates:
Due within one year 249,120 251,663
Due after five and within ten years 2,655,638 2,630,497
Due after ten years 1,680,596 1,672,095
Government National Mortgage
Association (GNMA) certificates:
Due after ten years 1,842,176 1,817,236
Federal National Mortgage
Association (FNMA) certificates:
Due after ten years 1,957,135 1,880,557
----------- -----------
$25,846,957 $25,166,480
=========== ===========
</TABLE>
Investment securities available for sale:
<TABLE>
<CAPTION>
June 30, 1999
------------------------------
Amortized Market
Cost Value
----------- -----------
<S> <C> <C>
U.S. government and government
agency obligations:
Due after one and within five years $ 3,500,965 $ 3,432,890
Due after five and within ten years 1,500,000 1,457,350
Corporate Debentures 493,735 475,745
Federal Home Loan Mortgage
Corporation (FHLMC) certificates:
Due after ten years 2,058,229 1,995,446
Federal National Mortgage Association
FNMA) certificates:
Due after one and within five years 817,935 807,422
Due after 10 years 1,481,038 1,429,505
Mutual fund investment 538,295 533,630
Common stock portfolio 1,464,021 1,435,677
=========== ===========
$11,854,218 $11,567,665
=========== ===========
</TABLE>
8
<PAGE> 11
4. LOANS RECEIVABLE:
Loans receivable are summarized as follows:
<TABLE>
<CAPTION>
June 30,
1999
-------------
<S> <C>
Commercial real estate $ 10,602,700
Commercial business loans 21,571,446
Construction 750,000
Less- Undisbursed loan proceeds 196,559
Deferred loan fees 51,292
-------------
32,676,295
-------------
Real estate loans:
1-4 family 86,428,593
Construction 1,468,600
-------------
87,897,193
Deferred loan costs 42,774
Less- Undisbursed loan proceeds 891,033
-------------
87,048,934
Consumer loans:
Collateral 522,254
Automobile 2,485,944
Home equity 10,177,950
Student 2,286,800
Credit cards 469,901
Other 488,236
Deferred loan costs 15,245
-------------
16,446,330
-------------
136,171,559
Less- Allowance for loan losses 749,432
=============
$135,422,127
=============
</TABLE>
5. ALLOWANCE FOR LOAN LOSSES:
Activity with respect to the allowance for loan losses is summarized as follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
---------------------------
1999 1998
--------- ---------
<S> <C> <C>
Balance at beginning of period $ 571,183 $ 402,964
Provision for loan losses 195,000 80,000
Charge-offs (16,751) (31,030)
--------- ---------
Balance at end of period $ 749,432 $ 451,934
========= =========
</TABLE>
9
<PAGE> 12
6. DEPOSITS:
The scheduled maturities of the Bank's certificate accounts as of June 30, 1999
are as follows (amounts approximate):
<TABLE>
<CAPTION>
<S> <C>
July 1, 1999 to June 30, 2000 $41,213,006
July 1, 2000 to June 30, 2001 9,982,625
July 1, 2001 to June 30, 2002 2,906,951
July 1, 2002 to June 30, 2003 2,185,033
July 1, 2003 and thereafter 2,138,290
-----------
TOTAL $58,425,905
===========
Certificates of $100,000 or more $10,408,055
===========
</TABLE>
7. INCOME TAXES:
The provision for income taxes is as follows:
<TABLE>
<CAPTION>
Six Months Ended
June 30,
------------------------
1999 1998
-------- --------
<S> <C> <C>
Federal $196,313 $185,088
State 45,262 38,976
-------- --------
$241,575 $224,064
======== ========
</TABLE>
8. RELATED PARTY TRANSACTIONS:
Certain directors and executive officers of the Bank, including their immediate
families and companies in which they are principal owners, are loan customers of
the Bank. In management's opinion, such loans are made in the normal course of
business and were granted on substantially the same terms and conditions as
loans to other individuals and businesses of comparable creditworthiness at the
time. Total loans to these persons at June 30, 1999, and December 31, 1998,
amounted to $547,566 and $301,801, respectively.
9. CAPITAL STOCK:
On April 23, 1997, at the annual stockholders meeting, the Board of Directors
and shareholders formally approved the Corporation's Stock Option Plan (the
Option Plan) and Management Recognition and Retention Plan and Trust (the MRP
Plan; the Option Plan and the MRP Plan herein are referred to as the Plans) as
fully described in the Corporation's proxy statement dated March 31, 1997. In
connection with the MRP Plan, the Corporation incurred compensation expense of
approximately $36,000 and $70,000 during the three and six months ended June 30,
1999 compared to $33,000 and $66,000 for the comparable periods of 1998.
10
<PAGE> 13
The aforementioned approval of the Option Plan made 116,285 options available
for grant to employees and others who perform substantial services for the
Corporation. As of June 30, 1999, the Corporation had granted 109,079 options.
The options are exercisable one year from the grant date in equal installments
over a period of five years and as of June 30, 1999 there have been 507 options
exercised. The maximum term of any option granted under the Plan cannot exceed
10 years.
On April 15, 1998 the Board of Directors declared a stock dividend of 15% to
shareholders of record of June 2, 1998 payable on June 19, 1998. In addition, on
February 17, 1999 the Board of Directors declared a stock dividend of 5% to
shareholders of record of March 2, 1999 payable on March 19, 1999. All option
data above have been restated to reflect the stock dividends.
10. RETAINED EARNINGS AND REGULATORY CAPITAL:
The Savings Bank's actual capital amounts and ratios are presented below in the
following table. Based on the asset size of the Savings Bank and its strong risk
based capital ratios, the Corporation believes that the Savings Bank does not
have to deduct any amount from capital for interest-rate risk (amounts in
thousands).
<TABLE>
<CAPTION>
To Be Well Capitalized
For Capital Adequacy Under Prompt Corrective
Actual Purposes Action Provisions
---------------------- --------------------- --------------------
Amount Ratio Amount Ratio Amount Ratio
------- ----- ------ ----- ------- ----
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to Risk
Weighted Assets):
As of June 30, 1999 $14,057 14.35% =>$7,835 =>8.0% =>$9,793 =>10.0%
Tier 1 Capital (to Risk
Weighted Assets):
As of June 30, 1999 $13,307 13.59% =>$3,917 =>4.0% =>$5,876 =>6.0%
Tier 1 Capital (to
Average Assets):
As of June 30, 1999 $13,307 7.40% =>$7,192 =>4.0% =>$8,990 =>5.0%
</TABLE>
11. COMMITMENTS AND CONTINGENT LIABILITIES:
The Corporation incurs off-balance sheet risks in the normal course of business
in order to meet the financing needs of its customers. These risks derive from
commitments to extend or receive credit. Such commitments involve, to varying
degrees, elements of credit risk in excess of the amount recognized in the
financial statements.
Commitments to extend credit are obligations to lend to a customer as long as
there is no violation of any condition established in the loan agreement.
Commitments generally have fixed expiration dates or other termination clauses.
A portion of the commitments is not expected to be drawn upon; thus, the total
commitment amounts do not necessarily represent future cash requirements. Each
customer's creditworthiness is evaluated on a case-by-case basis.
11
<PAGE> 14
The Bank's exposure to credit loss in the event of nonperformance by the other
party to these commitments to extend credit is represented by their contractual
amounts. The Bank uses the same credit and collateral policies in making
commitments as for all other lending. The Bank has outstanding various
commitments to extend credit approximating $11.5 million as of June 30, 1999. In
the opinion of management, the funding of the credit commitments will not have a
material adverse effect on the Bank's financial position or results of
operations.
In addressing year 2000 liquidity concerns, the Savings Bank has entered into an
arrangement with the Federal Home Loan Bank of Pittsburgh to receive $6.0
million in funding in both the third and fourth quarters of 1999.
Additionally, the Bank is also subject to asserted and unasserted potential
claims encountered in the normal course of business. In the opinion of
management and legal counsel, the resolution of these claims will not have a
material adverse effect on the Bank's financial position or results of
operations.
12. FUTURE ACCOUNTING STANDARDS:
In June 1998, the Financial Accounting Standards Board ("FASB") issued SFAS
No.133, "Accounting for Derivative Instruments and Hedging Activities", which is
required to be adopted in years beginning after June 15, 2000. The Corporation
does not have any derivative instruments or hedging activities as of June 30,
1999.
In February 1999, SFAS No. 135, "Rescission of FASB Statement No. 75 and
Technical Corrections," was issued. This statement did not have a material
effect on the Corporation's financial statements.
12
<PAGE> 15
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Corporation is a registered savings and loan holding company. The
financial activity of the Corporation is undertaken primarily through its sole
subsidiary Prestige Bank, A Federal Savings Bank (the "Savings Bank"). Assets
held directly by the Corporation include all of the outstanding capital stock of
the Savings Bank, a loan receivable from the Prestige Bancorp Employee Stock
Ownership Trust (the "ESOP"), loan receivables to officers of the Savings Bank,
deposits maintained at the Savings Bank and common stock of mostly savings
associations or savings and loan holding companies (collectively the "Directly
Held Assets"). Each stock ownership interest in the unrelated savings
associations or savings and loan holding companies amounts to less than a 1.25%
interest in such entities.
The following discussion of the financial condition and activities of
the Corporation should be read as the consolidated activities of the Corporation
and the Savings Bank. Unless the following discussion specifically identifies an
activity, event or condition as relating to the Directly Held Assets, it is
assumed that such activity, event or condition occurred as a result of a direct
action of the Savings Bank and an indirect action of the Corporation.
As described in greater detail below, the Corporation and Savings Bank
intend to continue an emphasis on residential mortgage loans. However, as part
of the business strategy to increase profitability, the Savings Bank will
continue to widen its range of lending activities to include commercial business
loans, commercial real estate loans and consumer loans. Although such lending
activities entail greater risk than residential mortgage lending, management is
willing to accept such risks because of its belief that there are lending
opportunities in its market area which are not being currently fulfilled by
other financial institutions. In addition, management believes it can properly
manage the risks of greater consumer and commercial lending.
At June 30, 1999, the Corporation's total assets amounted to $183.3
million compared with $177.4 million at December 31, 1998. The $5.9 million or
3.3% increase was primarily due to increases of $11.5 million or 9.3% in net
loans receivable and $2.0 million or 5.7% in investment securities that was
partially offset by a reduction in cash and cash equivalents of $8.1 million or
80.2%. The growth in net loans receivable was attributed to an increase in
commercial business and commercial real estate of $5.8 million or 22.1%, and an
increase of $5.1 million or 6.3% in one-to-four family residential real estate
loans. Decreased cash and cash equivalents of $8.1 million were primarily
attributable to $11.7 million in new loans in excess of principal payments
received on existing loans and a $2.0 million increase in investment securities
which was partially offset by an increase in deposits of $6.4 million. Total
stockholders' equity amounted to $14.9 million or 8.15% of total assets at June
30, 1999, compared to equity of $14.8 million or 8.32% of total assets at
December 31, 1998. On February 17, 1999 the Board of Directors declared a stock
dividend of 5% to shareholders of record of March 2, 1999 payable on March 19,
1999. The Corporation paid a quarterly dividend of $.06 per share during the
first and second quarters of 1999 compared to $.04 per share for the same
periods in 1998.
The Corporation's nonperforming assets increased $421,000 or 46.6% to $1.3
million at June 30, 1999, compared to $903,000 at December 31, 1998. The
increase was primarily due to the addition of one nonperforming Small Business
Administration ("SBA") backed commercial real estate loan of $465,000 that is
75% guaranteed by the SBA. After realization of the collateral, management is of
the opinion it will sustain a loss, but such loss will not result in a material
adverse effect on the Bank's financial position or results of operations. In
addition, there are two commercial loans to another borrower that management has
identified as potential problems. At July 31, 1999, the balance outstanding of
these loans totaled $498,000. In the opinion of management, the resolution of
these loan problems will not have a material adverse effect on the Bank's
financial position or results of operations.
13
<PAGE> 16
RESULTS OF OPERATIONS
GENERAL--The Corporation's net income for the quarter ended June 30,
1999 was $185,000 or $.20 per diluted share compared to net income of $195,000
or $.19 per diluted share for the same quarter in the prior year. Excluding
gains and losses on sales of investments and assets, net of tax, core net income
for the quarter ended June 30, 1999 was $179,000 or $.20 per diluted share
compared to $185,000 or $.18 per diluted share for the comparable period of
1998. The $6,000 or 3.2% decrease in core net income for the quarter ended June
30, 1999 as compared to the quarter ended June 30, 1998 was primarily the result
of increases of $153,000 or 14.9% and $63,000 or 150.0% in total other expenses
and provision for loan losses, respectively. That decrease was partially offset
by an increase of $138,000 or 11.1% in net interest income before provision for
loan losses and an increase in total other income of $66,000, net of gains and
losses on sales of investments and assets. The annualized return on average
assets and return on average equity for the three months ended June 30, 1999,
excluding gains and losses on sales of investments and assets, were .39% and
4.80%, respectively, compared to .45% and 4.65% for the same period of 1998.
The Corporation's net income for the six months ended June 30, 1999 was
$389,000 or $.43 per diluted share compared to net income of $348,000 or $.34
per diluted share for the comparable period of 1998. Excluding gains and losses
on sales of investments and assets, net of tax, core net income for the six
months ended June 30, 1999 was $360,000 or $.39 per diluted share compared to
$338,000 or $.33 per diluted share for the comparable period of 1998. The
$22,000 or 6.5% increase in core net income was primarily the result of an
increase of $307,000 or 12.8% in net interest income before provision for loan
losses and an increase in total other income of $129,000, net of the gains and
losses on sales of investments and assets, that was partially offset by an
increase in total other expenses of $297,000 or 14.9% and an increase in
provision for losses on loans of $115,000 or 143.8%. The annualized return on
average assets and return on average equity, excluding gains on sales of
investments and assets, for the six months ended June 30, 1999 were .40% and
4.84%, respectively, compared to .42% and 4.27% for the same period of 1998.
INTEREST INCOME--The Corporation reported interest income of $3.2
million for the three months ended June 30, 1999, as compared to $2.9 million
for the three months ended June 30, 1998. The increase of $269,000 or 9.3% for
the quarter ended June 30, 1999, compared to the same period in the prior year
can be attributed to a $413,000 or 19.4% increase in interest and fees on loans
that was partially offset by a decrease of $185,000 or 31.7% in interest and
dividends on other investment securities. The increase of $413,000 in interest
and fees on loans was the result of loan growth. Among the areas of focused
growth within the Corporation's lending portfolio was commercial business and
commercial real estate loans. Average balances for commercial business and
commercial real estate loans, including net construction loans, during the
second quarter of 1999 were $31.0 million, compared to $17.6 million for the
same period in 1998. The average balances on total loans receivable, net of
undisbursed loan proceeds, during the second quarter of 1999 were $134.2 million
compared to $109.5 million for the same period in 1998.
The Corporation reported interest income of $6.3 million for the six
months ended June 30, 1999, as compared to $5.6 million for the six months ended
June 30, 1998. The increase of $682,000 or 12.2% for the six months ended June
30, 1999, compared to the same period in the prior year can be attributed to a
$921,000 or 22.7% increase in interest and fees on loans that was partially
offset by a decrease of $354,000 or 32.1% in interest and dividends on other
investment securities. The increase of $921,000 in interest and fees on loans
was the result of loan growth. Average balances for commercial business and
commercial real estate loans, including net construction loans, during the six
months of 1999 were $29.7 million, compared to $15.2 million for the same period
in 1998. The average balances on total loans receivable, net of undisbursed loan
proceeds, during the six months of 1999 were $130.8 million compared to $105.1
million for the same period in 1998.
14
<PAGE> 17
INTEREST EXPENSE--Interest expense increased $131,000 or 7.9% during
the three months ended June 30, 1999 as compared to the same period last year.
This increase was due to growth in average interest-bearing liabilities, which
was partially offset by a reduction in the weighted average interest rate paid
on interest-bearing liabilities. Average deposits and Federal Home Loan Bank
(FHLB) of Pittsburgh advances during the second quarter of 1999 were $116.1
million and $49.4 million, respectively, compared to $96.8 million and $49.6
million, respectively, for the same period in 1998. The weighted average
interest rate on interest-bearing liabilities during the second quarter of 1999
was 4.3% compared to 4.5% for the same period in 1998.
Interest expense increased $376,000 or 11.8% during the six months
ended June 30, 1999 as compared to the same period last year. This increase was
due to growth in average interest-bearing liabilities, which was partially
offset by a reduction in the weighted average interest rate paid on
interest-bearing liabilities. Average deposits and Federal Home Loan Bank (FHLB)
of Pittsburgh advances during the first six months of 1999 were $114.7 million
and $49.9 million, respectively, compared to $94.5 million and $48.0 million,
respectively, for the same period in 1998. The weighted average interest rate on
interest-bearing liabilities during the first six months of 1999 was 4.3%
compared to 4.5% for the same period in 1998.
PROVISION FOR LOAN LOSSES--During the three and six months ended June
30, 1999 the Corporation recorded provisions for losses on loans of $105,000 and
$195,000, respectively, compared to $42,000 and $80,000, respectively, for the
comparable periods in 1998. The Corporation recorded such provisions to adjust
the Corporation'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 Corporation, industry standards, current analysis of the existing
portfolio of loans, and a review of the current economic conditions in the
Corporation's market area.
OTHER INCOME--Total other income increased $66,000 and $129,000, net of
gains and losses on sales of investments and assets, for the three and six
months ended June 30, 1999, respectively, compared to same periods in 1998. The
increases were attributed to increases in fees and service charges generated
from an increase in total transaction accounts.
OTHER EXPENSES-- Total other expenses increased $153,000 or 14.9% for
the quarter ended June 30, 1999, as compared to the quarter ended June 30, 1998.
The increase in total other expenses occurred as a result of a $93,000 or 18.1%
increase in salaries and employee benefits. The increase in employee salaries
and benefits was the result of an additional employee hired for operations due
to increased services provided by the Corporation, an additional employee hired
for commercial loan expansion, and approved salary and bonus increases.
Additionally, there were increases of $15,000 and $14,000 in premises and
occupancy costs and transaction processing costs, respectively. These increases
were primarily due to higher depreciation expenses associated with additional
equipment needed to replace non-compliant computer, telephone and related
equipment associated with Year 2000 and increased transaction processing costs
associated with the growth in total transaction accounts.
Total other expenses increased $297,000 or 14.9% for the six months
ended June 30, 1999, as compared to the six months ended June 30, 1998. The
increase in total other expenses occurred as a result of a $160,000 or 15.8%
increase in salaries and employee benefits. The increase in employee salaries
and benefits was the result of an additional employee hired for operations due
to increased services provided by the Corporation, an additional employee hired
for commercial loan expansion, and approved salary and bonus increases.
Additionally, there were increases of $43,000, $32,000 and $31,000 in premises
and occupancy costs, other expenses and transaction processing costs,
respectively. These increases were primarily due to higher depreciation expenses
associated with additional equipment needed to replace non-compliant computer,
telephone and related equipment associated with Year 2000, higher consulting
15
<PAGE> 18
expenses, as the Corporation has outsourced some job functions, increased
transaction processing costs associated with the growth in total transaction
accounts and increased general operating expenses.
INCOME TAXES--The Corporation incurred a provision for income taxes of
$117,000 for the three months ended June 30, 1999 as compared to $126,000 for
the same period in the prior year. Such decrease for 1999 as compared to 1998
was due to a decrease in taxable income.
The Corporation incurred a provision for income taxes of $242,000 for
the six months ended June 30, 1999 as compared to $224,000 for the same period
in the prior year. Such increase for 1999 as compared to 1998 was due to an
increase in taxable income.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's primary sources of funds are deposits, repayments,
prepayments and maturities of outstanding loans and mortgage-backed securities,
maturities of investment securities and other short-term investments, and funds
provided from operations. While scheduled loan and mortgage-backed securities
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 Corporation manages the pricing of its deposits
to maintain a deposit balance deemed appropriate and desirable by its Board of
Directors. In addition, the Corporation invests in short-term interest-earning
assets, which provides liquidity to meet lending requirements. Although the
Corporation had historically relied on deposits for funding, the Corporation in
1996 began to use advances from the FHLB of Pittsburgh to leverage its strong
capital position. As of June 30, 1999, the Corporation had $50.2 million of
outstanding advances from the FHLB of Pittsburgh.
During the six months ended June 30, 1999 and 1998, the Corporation's
operating activities provided net cash of approximately $748,000 and $424,000,
respectively. The primary reasons for the $748,000 net cash provided during the
six months ended June 30, 1999 were $389,000 in net income, $172,000 in
depreciation of premises and equipment, and $195,000 in provision for loan
losses, which was partially offset by a $117,000 decrease in income taxes
payable. During the six months ended June 30, 1998, the $424,000 net cash
provided by operating activities was the result of $348,000 in net income,
$145,000 in depreciation of premises and equipment, and a $203,000 increase in
other liabilities, which was partially offset by a $124,000 and $319,000
increase in accrued interest receivable and other assets, respectively.
Net cash used by investing activities was $14.6 million for the six
months ended June 30, 1999. During the six months ended June 30, 1999, the
Corporation originated $11.7 million in new loans in excess of principal
payments received on existing loans and purchased $4.5 million and $2.6 million
of investment securities designated held to maturity and available for sale,
respectively. These uses of cash by investing activities were partially offset
by $3.0 million and $1.0 million of held to maturity securities and available
for sale securities, respectively, that were called. This compares with net cash
used by investing activities of $19.1 million for the six months ended June 30,
1998. The primary reasons for the $19.1 million net cash used by investing
activities was the Corporation had originated $12.9 million in new loans in
excess of principal payments received on existing loans and purchased $8.2
million and $2.3 million of investment securities designated held to maturity
and available for sale, respectively. In addition, $2.5 million of held to
maturity securities were called in the second quarter of 1998.
Net cash provided by financing activities for the six months ended June
30, 1999, was $5.7 million. This was attributable to increases in core deposits
and certificates of $6.4 million which were partially offset by a $750,000
decrease in net Federal Home Loan Bank advances. During the same period last
year, the Corporation experienced a $20.2 million increase in net cash provided
by financing activities primarily due
16
<PAGE> 19
to a $6.5 million increase in core deposits and certificates in addition to
increases in net Federal Home Loan Bank advances of $14.3 million.
The Savings Bank is required to maintain specified amounts of capital
pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of
1989 and regulations thereunder. Savings associations are required to maintain
tangible capital of 1.5%, core capital of 4.00% and risk-based capital of 8.00%.
At June 30, 1999, the Savings Bank's tangible, core, and risk-based capital
ratios amounted to 7.32%, 7.32%, and 14.35%, respectively, which substantially
exceeded applicable requirements.
YEAR 2000 ISSUES
The Year 2000 problem arises from the fact that many existing
information technology ("IT") hardware and software systems and non-information
technology ("non-IT") products containing embedded microchip processors
originally programmed to represent any date with six digits (e.g., 12/31/99), as
opposed to eight digits (e.g., 12/31/1999). Accordingly, problems may arise for
many such products and systems when attempting to process information containing
dates that fall after December 31, 1999. As a result, many such products and
systems could experience miscalculations, malfunctions or disruptions caused by
other dates, such as September 9, 1999 (9/9/99), which was a date traditionally
used as a default date by computer programmers. This problem is commonly
referred to as the "Year 2000" problem, and the acronym "Y2K" is common
substituted for the phrase "Year 2000."
The Corporation is unable at this time to assess the full impact on its
results of operations, liquidity or financial condition of any Y2K-related
disruptions to its business caused by the malfunctioning of any IT or non-IT
system and products that it or any third party with which it has a material
relationship uses. Management does not believe at the current time that the cost
of remediating the Corporation's internal Y2K problems will have a material
adverse impact upon its business, results of operations, liquidity or financial
condition.
The Corporation and the Savings Bank began a process in 1997 that
assigned an individual to begin investigating the Y2K issues. It was determined
that the Savings Bank relies on external processing vendors for all of its
mission critical core application processing, and its approach would be based on
the five-phase approach recommended by the Federal Financial Institutions
Examination Council ("FFIEC"). The Board of Directors and senior management were
apprised of the Year 2000 issues.
In 1997, a Y2K team was formed consisting of the President, Chief
Financial Officer, two employees of the Savings Bank and a member of the Board
of Directors. The initial focus of the team was to identify all issues that may
be affected by the date problem. This included computer hardware and software,
third party processing vendors, environmental factors (i.e., vaults, security
systems, etc.), and miscellaneous items such as preprinted forms, checkwriters,
date stamps, etc. The issues were then categorized as to their potential impact
on the ability of the Savings Bank to service its customers and ensure business
continuity for its shareholders, customers and employees. Communication was
initiated with all of the Savings Bank's vendors; for some vendors (i.e., PC and
network vendors) Year 2000 information was available via the Internet. Most
products and services that the Corporation and the Savings Bank receive are Year
2000 ready or are scheduled to be Year 2000 ready well in advance of the
millennium. A few products will not be Year 2000 ready and these have been
replaced or are scheduled to be replaced in 1999. The Savings Bank continues to
monitor its suppliers of products and services to ensure their Year 2000
readiness. Contingency plans have been received from individual areas of the
Savings Bank and combined into an overall bank wide plan.
The Savings Bank has developed a testing plan that includes
documentation for each vendor or product tested. The core applications systems,
personal computers and networks have been tested and are considered compliant.
17
<PAGE> 20
In the event that the Corporation's and its service providers' systems
would not handle the date changeover, the impact on the Corporation is at this
point uncertain. However, the Corporation's Y2K contingency plan would be
enacted which would include evaluating the entire situation, contacting key
personnel on January 1, 2000, off-line manual postings of all transactions
currently done by our service provider and detailed procedures to all personnel
in dealing with Y2K potential problems. This contingency plan is in process of
being tested and reviewed. Modifications will be implemented where deemed
necessary.
The Corporation's costs associated with Year 2000 include various costs
for replacement of non-compliant computer, telephone, software, and related
equipment. Excluding costs of Corporation's personnel time, the Corporation
estimates that the total Year 2000 project costs will not exceed $131,000
(pre-tax). As of June 30, 1999, the Corporation estimates that it has incurred
$114,000 in connection with its Y2K project plan. Most of these incurred costs
related to capital acquisitions and accordingly the capital related costs have
been capitalized.
18
<PAGE> 21
PRESTIGE BANCORP, INC.
PART II
Item 1. Legal Proceedings
Neither the Corporation nor the Bank is involved in any pending
legal proceedings other than nonmaterial 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
a) An annual meeting of shareholders of the Corporation was held
on May 5, 1999 ("Annual Meeting").
b) Not applicable.
c) There were 996,964 shares of Common Stock of the Corporation
eligible to be voted at the Annual Meeting and 849,146 shares
were represented at the meeting by the holders thereof, which
constituted a quorum. The items voted upon at the Annual
Meeting and the vote for each proposal were as follows:
1. Election of directors for a three-year term.
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C> <C>
Martin W. Dowling................... 828,253 20,893
Mark R. Schoen...................... 829,586 19,560
</TABLE>
2. Proposal to ratify the appointment of Arthur Andersen LLP
as the Corporation's independent auditors for the year
ending December 31, 1999.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C> <C>
845,581 1,744 1,821
</TABLE>
Each of the proposals was adopted by the shareholders of the
Corporation.
d) Not applicable.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
None.
19
<PAGE> 22
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.
PRESTIGE BANCORP, INC.
Dated: August 11, 1999 By: /s/ John A. Stiver
--------------------------
John A. Stiver,
Chief Executive Officer
And Chairman of the Board
Dated: August 11, 1999 By: /s/ Robert S. Zyla
--------------------------
Robert S. Zyla, President
Dated: August 11, 1999 By: /s/ James M. Hein
--------------------------
James M. Hein, Controller
20
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 877
<INT-BEARING-DEPOSITS> 1131
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 11,568
<INVESTMENTS-CARRYING> 25,847
<INVESTMENTS-MARKET> 25,166
<LOANS> 136,171
<ALLOWANCE> 749
<TOTAL-ASSETS> 183,285
<DEPOSITS> 116,100
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,029
<LONG-TERM> 50,227
0
0
<COMMON> 9,899
<OTHER-SE> 5,030
<TOTAL-LIABILITIES-AND-EQUITY> 183,285
<INTEREST-LOAN> 4,986
<INTEREST-INVEST> 1,136
<INTEREST-OTHER> 150
<INTEREST-TOTAL> 6,272
<INTEREST-DEPOSIT> 2,198
<INTEREST-EXPENSE> 3,565
<INTEREST-INCOME-NET> 2,707
<LOAN-LOSSES> 195
<SECURITIES-GAINS> 49
<EXPENSE-OTHER> 2,289
<INCOME-PRETAX> 631
<INCOME-PRE-EXTRAORDINARY> 631
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 389
<EPS-BASIC> .43
<EPS-DILUTED> .43
<YIELD-ACTUAL> 3.13
<LOANS-NON> 1,119
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 803
<ALLOWANCE-OPEN> 571
<CHARGE-OFFS> 17
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 749
<ALLOWANCE-DOMESTIC> 680
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 69
</TABLE>
