<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
----------------------------------
FORM 10-Q
Mark One)
[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
Commission File Number: 0-28076
PIONEER FINANCIAL CORPORATION
-----------------------------------------------------
(Exact name of registrant as specified in its charter)
KENTUCKY 61-1273657
- ---------------------------------- --------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
25 EAST HICKMAN STREET, WINCHESTER, KENTUCKY 40391
- -------------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (606) 744-3972
--------------
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 ninety days.
Yes X No
----- ------
As of May 8, 1997, 208,233 shares of the registrant's common stock were issued
and outstanding.
Page 1 of 15 Pages Exhibit Index at Page N/A
-----
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CONTENTS
<TABLE>
<S> <C>
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1997 (unaudited)
and September 30, 1996 3
Consolidated Statements of Income for the Three and
Six-Month Periods Ended March 31, 1997 and 1996 (unaudited) 4
Consolidated Statements of Cash Flows for the Six-Month Periods
Ended March 31, 1997 and 1996 (unaudited) 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 7
PART II. OTHER INFORMATION
-----------------
Item 1. Legal Proceedings 14
Item 2. Changes in Securities 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
</TABLE>
2
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PIONEER FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
----------------------
<TABLE>
<CAPTION>
AS OF AS OF
MARCH 31, SEPTEMBER 30,
ASSETS 1997 1996
- ------ ------------- -----------
(unaudited)
<S> <C> <C>
Cash $ 922,012 732,573
Interest bearing deposits 5,319,399 1,529,881
Certificates of deposit 98,000 194,000
Federal Funds Sold 4,976,180 3,211,000
Available-for-sale securities 6,866,247 7,601,611
Held-to-maturity securities 20,559,390 23,972,497
Loans receivable, net 34,293,781 35,247,421
Loans held for sale 244,500 0
Accrued interest receivable 501,608 535,269
Premises and equipment, net 1,199,346 1,175,987
Prepaid expenses and other assets 112,418 200,898
----------- -----------
Total assets $75,092,881 $74,401,137
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $65,316,865 $64,335,165
FHLB Advances 675,871 698,798
Advance payments by borrowers for taxes and insurance 17,283 26,788
Federal income tax payable 146,189 138,040
Other liabilities 299,562 957,711
----------- -----------
Total liabilities 66,455,770 66,156,502
----------- -----------
Stockholders' equity:
Common stock, $1 par value, 500,000 shares authorized;
208,233 shares issued and outstanding 208,233 208,233
Additional paid-in capital 1,797,432 1,797,432
Retained earnings, substantially restricted 6,607,642 6,213,169
Net unrealized appreciation on
available-for-sale securities 23,804 25,801
----------- -----------
Total stockholders' equity 8,637,111 8,244,635
----------- -----------
Total liabilities and stockholders' equity $75,092,881 $74,401,137
=========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
3
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PIONEER FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
-------------------
<TABLE>
<CAPTION>
FOR THE THREE-MONTH PERIODS FOR THE SIX-MONTH PERIODS
ENDED MARCH 31, ENDED MARCH 31,
--------------------------- ----------------------------
1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest income:
Interest on loans $ 785,449 $ 756,669 $1,560,361 $1,500,304
Interest and dividends on securities 532,646 554,499 1,053,518 1,132,965
Other interest income 78,365 140,157 142,781 225,376
---------- ---------- ---------- ----------
Total interest income 1,396,460 1,451,325 2,756,660 2,858,645
---------- ---------- ---------- ----------
Interest expense:
Interest on deposits 652,846 716,087 1,306,309 1,430,751
Interest on FHLB advances 11,314 11,682 26,545 23,542
---------- ---------- ---------- ----------
Total interest expense 664,160 727,769 1,332,854 1,454,293
---------- ---------- ---------- ----------
Net interest income: 732,300 723,556 1,423,806 1,404,352
Provision for loan losses 0 19,000 0 19,000
---------- ---------- ---------- ----------
Net interest income after provision
for loan losses 732,300 704,556 1,423,806 1,385,352
---------- ---------- ---------- ----------
Non-interest income:
Loan and other service fees, net 95,997 95,404 189,936 196,715
Gain (loss) on sale of securities 0 33,310 0 33,310
Gain (loss) on sale of loans 26,495 2,575 52,168 (876)
---------- ---------- ---------- ----------
Total non-interest income 122,492 126,139 242,104 229,149
---------- ---------- ---------- ----------
Non-interest expense:
Compensation and benefits 211,923 201,967 454,127 429,074
Occupancy expense 61,827 47,421 102,473 97,417
Office supplies and postage 29,238 34,057 51,002 58,598
Federal and other insurance premiums 6,309 42,442 44,425 87,475
Advertising 9,414 6,130 14,812 13,404
Data processing expense 34,703 32,633 68,335 65,965
State franchise tax 16,386 16,386 32,772 32,018
Legal fees 8,097 8,320 9,750 18,394
Other operating expense 26,962 31,931 55,786 44,642
---------- ---------- ---------- ----------
Total non-interest expense 404,859 421,287 833,482 846,987
---------- ---------- ---------- ----------
Income before income tax expense 449,933 409,408 832,428 767,514
Provision for income taxes 160,720 144,966 283,492 267,390
---------- ---------- ---------- ----------
Net income $ 289,213 $ 264,442 $ 548,936 $ 500,124
========== ========== ========== ==========
Earnings per share $ 1.39 $ .97 $ 2.64 $ 1.84
========== ========== ========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
PIONEER FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
---------------------
<TABLE>
<CAPTION>
FOR THE SIX-MONTHS ENDING
MARCH 31,
1997 1996
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 548,936 $ 500,124
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 0 19,000
Amortization of investment premium (discount) (38,694) 156,842
Amortization of organizational cost 6,754 6,754
Provision for depreciation 26,410 30,836
Amortization of loan fees (51,958) (41,985)
FHLB stock dividend (18,200) (18,700)
Securities gain (loss) 0 (33,310)
Loans originated for sale (4,617,359) (6,805,541)
Proceeds from loans held for sale 4,623,979 6,804,665
Loans held for sale (gain) loss (6,620) 876
Change in:
Income taxes payable 8,787 22,391
Interest receivable 33,661 103,532
Interest payable (33,282) 16,883
Accrued liabilities (624,867) (63,223)
Prepaid expense 127,274 54,943
----------- -----------
Net cash provided by operating activities (15,179) 754,087
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in loans 761,098 (854,644)
Matured certificates of deposit 96,000 94,000
Matured held-to-maturity securities 6,759,561 12,063,076
Purchase of held-to-maturity securities (4,986,379) (9,984,665)
Sale of FHLB stock 0 55,200
Purchase of premises and equipment (49,769) (9,305)
Purchase of available-for-sale securities 0 (3,614,506)
Sale of available-for-sale securities 0 0
Principal repayments on securities 2,385,712 2,989,148
----------- -----------
Net cash provided (used) by investing activities 4,966,223 738,304
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in demand deposits, NOW
accounts and savings accounts 917,427 3,314,506
Net increase (decrease) in certificates of deposit 64,273 (99,768)
Payments on FHLB advances ( 22,927) (21,454)
Cash dividend payments (156,175) (185,284)
Net increase (decrease) in custodial accounts (9,505) (7,986)
----------- -----------
Net cash provided (used) by financing activities 793,093 3,000,014
----------- -----------
Increase (decrease) in cash and cash equivalents 5,744,137 4,492,405
Cash and cash equivalents, beginning of period 5,473,454 5,664,527
----------- -----------
Cash and cash equivalents, end of period $11,217,591 $10,156,932
=========== ===========
</TABLE>
Supplemental disclosures:
The Bank made income tax payments during the six month periods ended March 31,
1997 and 1996, respectively of $155,000 and $245,000.
The Bank paid $1,339,591 and $1,438,240 in interest on deposits and other
borrowings during the six month periods ended March 31, 1997 and 1996,
respectively.
See accompanying notes to consolidated financial statements.
5
<PAGE>
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
---------------------
Pioneer Financial Corporation (the "Company") was formed at the direction of
Pioneer Federal Savings Bank (the "Bank") to become the holding company of the
Bank. The reorganization was completed on December 24, 1994 under an Agreement
and Plan of Reorganization, dated October 31, 1994. Since the Reorganization,
the Company's primary assets have been the outstanding capital stock of the
Bank, and its sole business is that of the Bank. Accordingly, the consolidated
financial statements and discussions herein include both the Company and the
Bank.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") for interim
financial information and with the instructions to Form 10-Q and Article 10 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by GAAP for complete financial statements. In the opinion of
management, all adjustments (consisting of only normal recurring accruals)
necessary for fair presentation have been included. The results of operations
and other data for the three and six month periods ended March 31, 1997 are not
necessarily indicative of results that may be expected for the entire fiscal
year ending September 30, 1997.
2. EARNINGS PER SHARE
------------------
Earnings per share for the three month periods ended March 31, 1997 and 1996
amounted to $1.39 and $.97 per share, respectively, based on weighted average
common stock shares outstanding. Earnings per share for the six month periods
ended March 31, 1997 and 1996 amounted to $2.64 and $1.84 per share,
respectively, based on weighted average common stock shares outstanding. The
weighted average number of common shares outstanding for the three and six month
periods ended March 31, 1997 and 1996 was 208,233 and 272,477 shares
respectively.
3. DIVIDENDS
---------
The Company paid dividends of $0.40 per share or $83,293 for the three month
period ended March 31, 1997 compared to $0.35 per share or $95,367 for the same
period in 1996. The Company paid dividends of $0.75 per share or $156,175 for
the six month period ended March 31, 1997 compared to $0.68 per share or
$185,284 for the same period in 1996.
6
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4. MORTGAGE SERVICING RIGHTS
-------------------------
In May 1995 the Financial Accounting Standards Board (FASB) issued SFAS No. 122
"Accounting for Mortgage Servicing Rights", which amended SFAS No. 65
"Accounting for Certain Mortgage Banking Activities". SFAS No. 122 requires a
mortgage banking enterprise to recognize as separate assets the rights to
service mortgage loans for others however these servicing rights are acquired.
SFAS No. 122 was effective for the Company and the Bank on October 1, 1996, and
applies prospectively to mortgage banking transactions occurring after that
date.
The Company recognized mortgage servicing rights of $47,000 for the six month
period ended March 31, 1997. The Bank sells certain residential loans, primarily
fixed rate loans secured by single family residences in the secondary market.
The fair value of the mortgage servicing rights were determined by quoted prices
in the secondary market. The mortgage servicing rights on the loans sold in the
secondary market are grouped by their primary risk characteristics, which is the
interest rate. At March 31, 1997 there was no allowance for impairment
recognized.
5. SUBSEQUENT EVENT
----------------
On April 11, 1997 the Board of Directors authorized Pioneer Financial
Corporation to make a loan of $249,913 to the ESOP Trust of Pioneer Federal
Savings Bank. The proceeds of the loan will be used to acquire 6,022 shares of
the Company's outstanding common stock to be held by the ESOP Trust.
The loan of $249,913 is to be repaid in ten installments beginning December 1,
1997. The first installment will be $37,024 and interest will be determined
annually based on the prime rate as reported in the Wall Street Journal. The
common shares purchased with the loan proceeds are pledged as collateral for the
loan. As the loan is repaid, shares are released from collateral and allocated
to active participates based a formula specified in the ESOP agreement.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Company's consolidated assets increased $692,000, or 1% to $75.1 million, at
March 31, 1997 compared to $74.4 million at September 30, 1996. Available-for-
sale securities decreased by $735,000, held-to-maturity securities decreased
$3.4 million, loans decreased $1 million, cash and cash equivalents plus
certificates of deposit increased $5.6 million, loans held for sale increased
$245,000 and other non-interest earning assets decreased by $99,000.
Available-for-sale securities decreased $735,000 due to receipt of principal
repayments on mortgage backed securities and amortization of investment premium.
Held-to-maturity securities decreased $3.4 million due to the maturities of
mortgage backed securities of $1.8 million and $1.6 million in principal
repayments received on mortgage backed securities and amortization of premiums.
In accordance with SFAS No. 115, unrealized gains or losses on available-for-
sale securities are recorded net of deferred income tax as a separate component
of
7
<PAGE>
stockholders' equity. At March 31, 1997, the Company included gross unrealized
gains of $36,067, which net of the tax expense of $12,263, amount to $23,804 as
a separate component of stockholders' equity. Per SFAS No. 115, such gains or
losses will not be reflected as a charge or credit to earnings until the
underlying gain or loss, if any, is actually realized at the time of sale.
Liabilities of the Company increased $299,000 to $66.5 million at March 31, 1997
compared to $66.2 million at September 30, 1996. The increase in liabilities
was primarily due to a net increase in deposits of $982,000 offset by the
decrease in accrued expense.
Stockholders' equity increased by $392,000 to $8.6 million at March 31, 1997
compared to $8.2 million at September 30, 1996. The increase is due to net
income of $549,000 offset by the payment of dividends totaling $155,000 and an
decrease in the net unrealized appreciation on available-for-sale securities of
$2,000.
The following summarizes the BANK'S capital requirements and position at March
------
31, 1997 and September 30, 1996.
<TABLE>
<CAPTION>
MARCH 31, 1997 SEPTEMBER 30, 1996
----------------- ------------------
(DOLLARS IN THOUSANDS)
AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------- -------
<S> <C> <C> <C> <C>
Tangible capital $8,291 11.0% $8,143 10.9%
Tangible capital requirement 1,127 1.5% 1,117 1.5%
------ ---- ------ ----
Excess $7,164 9.5% $7,026 9.4%
====== ==== ====== ====
Core capital $8,291 11.0% $8,143 10.9%
Core capital requirement 2,254 3.0% 2,234 3.0%
------ ---- ------ ----
Excess $6,037 8.0% $5,909 7.9%
====== ==== ====== ====
Tangible capital $8,291 27.9% $8,143 26.1%
General valuation allowance 380 1.3% 364 1.2%
------ ---- ------ ----
Total capital 8,671 29.2% 8,507 27.3%
Risk-based capital requirement 2,377 8.0% 2,498 8.0%
------ ---- ------ ----
Excess $6,294 21.2% $6,009 19.3%
====== ==== ====== ====
</TABLE>
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED MARCH 31, 1997 AND 1996
NET INCOME
- ----------
Net income increased by $25,000 or 9.4% for the three months ended March 31,
1997 as compared to the same period in 1996. The net increase of $25,000 was
due to an increase of $9,000 in net interest income, a decrease in non-interest
expense of $17,000 and a decrease in provision for loan loss of $19,000, offset
by an decrease in non-interest income of $4,000 and a increase in income tax of
$16,000.
8
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INTEREST INCOME
- ---------------
Interest income decreased $55,000 for the quarter ended March 31, 1997 compared
to the same period in 1996. Interest income was $1.4 million or 7.80% of average
interest-earning assets for the quarter ended March 31, 1997 as compared to $1.5
million or 7.28% of interest-earning assets for the quarter ended March 31,
1996. The decrease in interest income of $55,000 was due to a decrease in the
average balance of interest earning assets offset by the increase of 52 basis
points on the average rate earned on interest earning assets for the quarter
ended March 31, 1997 compared to the same period in 1996.
INTEREST EXPENSE
- ----------------
Interest expense was $664,000 or 4.06% of average deposits and FHLB advances for
the quarter ended March 31, 1997 as compared to $728,000 or 4.14% of average
deposit and FHLB advances for the quarter ended March 31, 1996. The decrease of
$64,000 was due primarily to the decrease in interest paid on deposits. The
decrease in interest paid on deposits was due to an 8 basis point decrease in
the average rate paid on deposits, and a $4 million decrease in the average
balance of deposits during the quarter ended March 31, 1997 compared to the same
period in 1996.
PROVISION FOR LOAN LOSSES
- -------------------------
There was no provision for loan losses for the quarter ended March 31, 1997 as
compared to $19,000 to the quarter ended March 31, 1996. Management considers
many factors in determining the necessary level of the allowance for loan
losses, including an analysis of specific loans in the portfolio, estimated
value of the underlying collateral, assessment of general trends in the real
estate market, delinquency trends, prospective economic and regulatory
conditions, inherent loss in the loan portfolio, and the relationship of the
allowance for loan losses to outstanding loans. There can be no assurance that
management will not decide to increase the allowance for loan losses or that
regulators, when reviewing the Bank's loan portfolio in the future, will not
request the Bank to increase such allowance, either of which could adversely
affect the Bank's earnings. Further, there can be no assurance that the Bank's
actual loan losses will not exceed its allowance for loan losses.
NON-INTEREST INCOME
- -------------------
Non-interest income amounted to $122,000 and $126,000 for the quarters ended
March 31, 1997 and 1996, respectively. Non-interest income is primarily
generated from fees on loans and fees received for servicing loans.
For the quarter ending March 31, 1997 the Bank recognized an additional $25,000
gain on the sale of loans as the result of retaining mortgage servicing rights
pursuant to FASB No. 122 which was adopted October 1, 1996.
9
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NON-INTEREST EXPENSE
- --------------------
Non-interest expense decreased $17,000 to $404,000 for the quarter ended March
31, 1997 compared to $421,000 for the same period in 1996. Non-interest expense
was 2.2% of average assets for the quarter ended March 31, 1997 and 2.0% of
average assets for the quarter ended March 31, 1996. The decrease of $17,000
was due to the decrease in Federal Insurance premiums on deposits of $36,000
offset by immaterial net increased in other non-interest expense categories.
INCOME TAX EXPENSE
- ------------------
The provision for income tax expense amounted to $161,000 and $145,000 for the
quarters ended March 31, 1997 and 1996, respectively, which as a percentage of
income before income tax expense amounts to 35.7% for 1996 and 35.4% for 1996.
RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED MARCH 31, 1997 AND 1996
NET INCOME
- ----------
Net income increased by $49,000 or 9.8% for the six months ended March 31, 1997
as compared to the same period in 1996. The net increase of $49,000 was due to
an increase of $14,000 in non-interest income an increase of $19,000 in net
interest income and a decrease in provision for loan loss of $19,000 a decrease
in non-interest expense of $13,000, offset by an increase in income tax expense
of $16,000.
INTEREST INCOME
- ---------------
Interest income decreased $102,000 for the quarter ended March 31, 1997 compared
to the same period in 1996. Interest income was $2.8 million or 7.69% of average
interest-earning assets for the quarter ended March 31, 1997 as compared to $2.9
million or 7.30% of interest-earning assets for the quarter ended March 31,
1996. The decrease in interest income of $102,000 was due to a decrease in the
average balance of interest earning assets offset by the increase of 39 basis
points on the average rate earned on interest earning assets for the quarter
ended March 31, 1997 compared to the same period in 1996.
10
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INTEREST EXPENSE
- ----------------
Interest expense was $1.3 million or 4.08% of average deposits and FHLB advances
for the six month period ended March 31, 1997 as compared to $1.5 million or
4.22% of average deposit and FHLB advances for the six month period ended March
31, 1996. The decrease of $121,000 was due primarily to the decrease in interest
paid on deposits. The decrease in interest paid on deposits was due to a 14
basis point decrease in the average rate paid on deposits, and a $5 million
decrease in the average balance of deposits during the six month period ended
March 31, 1997 compared to the same period in 1996.
PROVISION FOR LOAN LOSSES
- -------------------------
There was no provision for loan losses for the six month period ended March 31,
1997 as compared to $19,000 for the same period in 1996. Management considers
many factors in determining the necessary level of the allowance for loan
losses, including an analysis of specific loans in the portfolio, estimated
value of the underlying collateral, assessment of general trends in the real
estate market, delinquency trends, prospective economic and regulatory
conditions, inherent loss in the loan portfolio, and the relationship of the
allowance for loan losses to outstanding loans. There can be no assurance that
management will not decide to increase the allowance for loan losses or that
regulators, when reviewing the Bank's loan portfolio in the future, will not
request the Bank to increase such allowance, either of which could adversely
affect the Bank's earnings. Further, there can be no assurance that the Bank's
actual loan losses will not exceed its allowance for loan losses.
NON-INTEREST INCOME
- -------------------
Non-interest income amounted to $242,000 and $230,000 for the quarters ended
March 31, 1997 and 1996, respectively. Non-interest income is primarily
generated from fees on loans and fees received for servicing loans.
For the six month period ending March 31, 1997 the Bank recognized an additional
$47,000 gain on the sale of loans as the result of recording mortgage servicing
rights pursuant to FASB No. 122 which was adopted October 1, 1996.
NON-INTEREST EXPENSE
- --------------------
Non-interest expense decreased $14,000 to $833,000 for the six month period
ended March 31, 1997 compared to $847,000 for the same period in 1996. Non-
interest expense was 2.2% of average assets for the six month period ended March
31, 1997 and 2.1% of average assets for the six month period ended March 31,
1996. The decrease of $14,000 was due to the decrease in Federal Insurance
premiums on deposits of $43,000 offset by immaterial net changes in other non-
interest expense categories
INCOME TAX EXPENSE
- ------------------
The provision for income tax expense amounted to $283,000 and $267,000 for the
six month period ended March 31, 1997 and 1996, respectively, which as a
percentage of income before income tax expense amounts to 34.0% for 1997 and
34.8% for 1996.
11
<PAGE>
NON-PERFORMING ASSETS
- ---------------------
The following table sets forth information with respect to the Bank's non-
performing assets at the dates indicated. No loans were recorded as restructured
loans within the meaning of SFAS No. 15 at the dates indicated.
<TABLE>
<CAPTION>
MARCH 31, 1997 SEPTEMBER 30 1996
--------------- ------------------
(amounts in thousands)
<S> <C> <C>
Loans accounted for on a non-accrual basis:(1)
Real Estate:
Residential.................................... $ 3 $ 3
Commercial.....................................
Consumer.......................................... 10 15
---- ----
Total...................................... $ 13 $ 18
==== ====
Accruing loans which are contractually past due
90 days or more:
Real Estate:
Residential.................................... 0 205
Commercial.....................................
Consumer.......................................... 0
---- ----
Total...................................... 0 205
==== ====
Total of loans accounted for as non-accrual or as
accruing past due 90 days or more................. $ 13 $223
==== ====
Percentage of total loans.......................... .04% .63%
==== ====
Other non-performing assets (2).................... $ $
==== ====
</TABLE>
(1) Non-accrual status denotes loans which management believes may have defined
weaknesses whereby accrued interest is inadequately protected by the current
net worth and paying capacity of the obligor, or of the collateral pledged.
(2) Loans more than 90 days past due will continue to accrue interest when there
is no well defined weakness in the loan regarding net worth and paying
capacity of the obligor or of the collateral pledged which would cause
management to believe that interest accrued will be uncollectible.
If income on non-accrual loans had been accrued, such income would have amounted
to approximately $4,398 for the six month period ended March 31, 1997.
At March 31, 1997, there were no loans identified by management which were not
reflected in the preceding table but as to which known information about
possible credit problems of borrowers caused management to have serious doubts
as to the ability of the borrowers to comply with present loan repayment terms.
12
<PAGE>
MORTGAGE BANKING ACTIVITY
- -------------------------
Mortgage loans of $4.6 million were originated for sale during the six month
period ended March 31, 1997; the Bank retained the servicing for all loans sold.
The portfolio of loans owned by others but serviced by the Bank increased 2.2%
to $51.4 million at March 31, 1997 compared to $50.3 million at September 30,
1996. All of the loans serviced by the Bank, but owned by others, were
originated by the Bank.
LIQUIDITY AND COMMITTED RESOURCES
- ---------------------------------
As of March 31, 1997, the liquidity ratio under applicable federal regulations
was 26.74% as compared to 24.81% at September 30, 1996. Principal sources of
funds during the six months ended March 31, 1997 included loan principal
repayments, principal repayments on mortgage backed securities, proceeds from
matured and called securities and proceeds from the sale of loans.
As of March 31, 1997 loans approved but not closed amounted to $1.5 million.
Of these, none were evidenced by written commitments. The Bank anticipated
selling $ .9 million of the loans approved but not closed. As of March 31,
1997, there were commitments to sell loans which had been closed totaling
$244,500.
IMPACT OF INFLATION AND CHANGING PRICES
- ---------------------------------------
The consolidated financial statements and notes thereto presented herein have
been prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and operating results in terms of
historical dollars without considering the change in the relative purchasing
power of money over time and due to inflation. The impact of inflation is
reflected in the increased cost of the Company's operations. Unlike most
industrial companies, nearly all the assets and liabilities of the Company are
monetary in nature. As a result, interest rates have a greater impact on the
Company's performance than do the effects of general levels of inflation.
Interest rates do not necessarily move in the same direction or to the same
extent as the price of goods and services.
13
<PAGE>
PART II. OTHER INFORMATION
-----------------
Item 1. LEGAL PROCEEDINGS None
Item 2. CHANGES IN SECURITIES None
Item 3. DEFAULTS UPON SENIOR SECURITIES None
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders of Pioneer Financial Corporation
was held on January 8, 1997 pursuant to notice. Proxies were
solicited by the Corporation. Directors elected at the meeting were
Ewart W. Johnson, Nora M. Linville, and Thomas D. Muncie for terms
of office to expire at the annual meeting three years hence; all
were nominated by management and had held the office of Director for
terms expiring in January 1997. Present directors whose terms of
office expire in 1998 include: Carl C. Norton, Janet W. Prewitt,
William M. Cress, and Robert G. Strode. Present directors whose
terms of office expire in 1999 include: George W. Billings, Nancy M.
Lawwill, Wayne M. Martin, and Andrew Ryan. All of management's
nominees were elected to the class indicated above pursuant to vote
of the stockholders. The voting for the directors was as follows:
Ewart W. Johnson 160,961 votes
Nora M. Linville 161,284 votes
Thomas D. Muncie 160,909 votes
Shareholders voted on the ratification of appointment of auditors.
The voting in regard to the appointment of auditors was 160,418
voted for, 0 votes against, and 633 votes abstaining.
Item 5. OTHER INFORMATION None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(1) The following exhibit is filed herewith:
Exhibit 27: Financial Data Schedule
(2) No Form 8-K was filed for the quarter ended March 31, 1997
14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PIONEER FINANCIAL CORPORATION
Date: May 12, 1997 /s/ Carl C. Norton
-------------------------------
Carl C. Norton, President
(Duly Authorized Officer)
Date: May 12, 1997 /s/ Anthony D. Parrish
-------------------------------
Anthony D. Parrish, Chief Financial Officer
(Principal Financial and Accounting Officer)
15
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