FORM 10-QSB
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period ended September 30, 1997
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 0-22223
PEOPLES-SIDNEY FINANCIAL CORPORATION
(Exact name of small business issuer as specified in its charter)
Delaware 31-1499862
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
101 E. Court Street, Sidney, Ohio 45365
(Address of principal executive offices)
(937) 492-6129
(Issuer's telephone number)
Check whether the small business issuer (1) has filed all reports required to be
filed by Section 13 or 15(d) of the Securities Exchange Act during the past 12
months (or for such shorter period that the small business issuer 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 November 3, 1997, the latest practicable date, 1,785,375 shares of the
small business issuer's common shares, no par value, were issued and
outstanding.
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
INDEX
PART I - FINANCIAL INFORMATION (UNAUDITED)
Consolidated Balance Sheets...............................................
Consolidated Statements of Income.........................................
Condensed Consolidated Statements of Changes of Shareholders' Equity......
Consolidated Statements of Cash Flows.....................................
Notes to Financial Statements.............................................
Management's Discussion and Analysis of
Financial Condition and Results of Operations...........................
PART II - OTHER INFORMATION.....................................................
SIGNATURES .....................................................................
<PAGE>
<TABLE>
<CAPTION>
PEOPLES - SIDNEY FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, June 30,
1997 1997
------------- -------------
<S> <C> <C>
ASSETS
Cash and amounts due from depository institutions ......... $ 750,599 $ 297,722
Interest-bearing deposits in other banks .................. 1,183,791 1,498,104
Overnight deposits ........................................ -- 1,000,000
------------- -------------
Total cash and cash equivalents ...................... 1,934,390 2,795,826
Time deposits with other financial institutions ........... 3,000,000 5,000,000
Securities available for sale ............................. 2,523,358 2,012,802
Securities held to maturity (Estimated fair value of
$1,499,375 and $1,996,795 at September 30, 1997
and June 30, 1997) ...................................... 1,499,609 1,999,375
Loans receivable, net ..................................... 91,405,358 88,924,339
Accrued interest receivable ............................... 806,092 735,462
Premises and equipment, net ............................... 751,656 755,286
Federal Home Loan Bank stock available for sale ........... 776,400 762,500
Other assets .............................................. 137,880 156,772
------------- -------------
Total assets ......................................... $ 102,834,743 $ 103,142,362
============= =============
LIABILITIES
Deposits .................................................. $ 76,398,709 $ 77,045,430
Accrued expense and other liabilities ..................... 421,951 385,219
------------- -------------
Total liabilities .................................... 76,820,660 77,430,649
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 500,000 shares authorized,
none issued and outstanding
Common stock, $.01 par value, 3,500,000 shares authorized,
1,785,375 shares issued and outstanding ................. 17,854 17,854
Additional paid-in capital ................................ 17,248,648 17,234,087
Retained earnings ......................................... 10,031,903 9,776,982
Unearned employee stock ownership plan shares ............. (1,300,780) (1,326,280)
Unrealized gain on securities available for sale .......... 16,458 9,070
------------- -------------
Total shareholders' equity ........................... 26,014,083 25,711,713
------------- -------------
Total liabilities and shareholder's equity ........... $ 102,834,743 $ 103,142,362
============= =============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PEOPLES - SIDNEY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
September 30,
1997 1996
----------- -----------
<S> <C> <C>
Interest income
Loans, including fees ................................. $ 1,836,110 $ 1,608,487
Securities ............................................ 63,563 33,828
Interest-bearing demand and overnight deposits ........ 80,784 26,443
Dividends on Federal Home Loan Bank stock ............. 13,934 11,736
----------- -----------
Total interest income ............................. 1,994,391 1,680,494
Interest expense
Deposits .............................................. 979,265 947,429
Other borrowings ...................................... -- 21,013
----------- -----------
Total interest expense ............................ 979,265 968,442
----------- -----------
Net interest income ........................................ 1,015,126 712,052
Provision for loan losses .................................. 26,083 18,308
----------- -----------
Net interest income after provision for loan losses ........ 989,043 693,744
----------- -----------
Noninterest income
Service fees and other charges ........................ 15,868 12,730
----------- -----------
Noninterest expense
Compensation and benefits ............................. 223,013 169,842
Occupancy and equipment ............................... 39,426 35,650
Computer processing expense ........................... 36,926 35,566
FDIC deposit insurance premiums ....................... 12,710 499,936
State franchise taxes ................................. 35,081 31,726
Other ................................................. 133,701 81,330
----------- -----------
Total noninterest expense ......................... 480,857 854,050
----------- -----------
Income (loss) before income taxes .......................... 524,054 (147,576)
Provision for income taxes ................................. 186,495 (50,176)
----------- -----------
Net income (loss) .......................................... $ 337,559 $ (97,400)
=========== ===========
Earnings per common share .................................. $ 0.20 $ --
=========== ===========
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PEOPLES - SIDNEY FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
(Unaudited)
Three Months
Ended September 30,
1997 1996
<S> <C> <C>
Balance, beginning of period ................................ $ 25,711,713 $ 9,212,537
Net income (loss) ........................................... 337,559 (97,400)
Cash dividends of $.05 per share ............................ (82,638) --
Commitment to release 2,550 employee stock ownership plan
shares at fair value ...................................... 40,061 --
Change in unrealized gain on
securities available for sale ............................. 7,388 --
------------ ------------
Balance, end of period ...................................... $ 26,014,083 $ 9,115,137
============ ============
</TABLE>
See accompanying notes to financial statements.
<PAGE>
<TABLE>
<CAPTION>
PEOPLES - SIDNEY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
September 30,
1997 1996
----------- -----------
<S> <C> <C>
Cash flows from operating activities
Net income (loss) .......................................... $ 337,559 $ (97,400)
Adjustments to reconcile net income to net cash from
operating activities
Depreciation ........................................... 11,784 13,246
Provision for loan losses .............................. 26,083 18,308
FHLB stock dividends ................................... (13,900) (11,700)
Gain on sale of premises and equipment
Compensation expense related to ESOP shares ............ 40,061 --
Change in
Accrued interest receivable and other assets ...... (44,114) (121,557)
Accrued expense and other liabilities ............. 32,925 348,183
Deferred loan fees ................................ (5,343) (2,302)
----------- -----------
Net cash from operating activities ............ 385,055 146,778
Cash flows from investing activities
Purchases of securities available for sale ................. (499,219) --
Maturities of securities held to maturity .................. 500,000 500,000
Proceeds from maturities of time deposits in other financial
institutions ............................................. 3,000,000 --
Purchase of time deposits in other financial institutions .. (1,000,000) --
Net increase in loans ...................................... (2,509,759) (3,790,845)
Premises and equipment expenditures ........................ (8,154) --
Proceeds from sale of real estate owned .................... -- 42,652
----------- -----------
Net cash from investing activities ..................... (517,132) (3,248,193)
Cash flows from financing activities
Net increase in deposits ................................... (646,721) (1,674,526)
Net change in Federal Home Loan Bank advances .............. -- 3,500,000
Cash dividends paid ........................................ (82,638) --
----------- -----------
Net cash from financing activities ..................... (729,359) 1,825,474
----------- -----------
Net change in cash and cash equivalents ......................... (861,436) (1,275,941)
Cash and cash equivalents at beginning of period ................ 2,795,826 2,720,809
----------- -----------
Cash and cash equivalents at end of period ...................... $ 1,934,390 $ 1,144,868
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PEOPLES - SIDNEY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(continued)
Three Months Ended
September 30,
1997 1996
----------- -----------
<S> <C> <C>
Supplemental disclosures of cash flow information
Cash paid during the year for
Interest ............................................... $ 983,034 $ 987,732
Income taxes ........................................... 100,000 --
Noncash transactions
Transfer from loans to real estate owned ............... -- 42,652
</TABLE>
See accompanying notes to financial statements.
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
These interim financial statements are prepared without audit and reflect all
adjustments which, in the opinion of management, are necessary to present fairly
the financial position of Peoples - Sidney Financial Corporation ("Corporation")
at September 30, 1997, and its results of operations and cash flows for the
periods presented. All such adjustments are normal and recurring in nature. The
accompanying consolidated financial statements have been prepared in accordance
with the instructions of Form 10-QSB and therefore do not purport to contain all
the necessary financial disclosures required by generally accepted accounting
principles that might otherwise be necessary in the circumstances, and should be
read in conjunction with the financial statements and notes thereto of the
Corporation for the year ended June 30, 1997, included in its 1997 Annual
Report. Reference is made to the accounting policies of the Corporation
described in the notes to financial statements contained in its 1997 Annual
Report. The Corporation has consistently followed these policies in preparing
this Form 10-QSB.
The accompanying consolidated financial statements include accounts of the
Corporation and its wholly-owned subsidiary, The Peoples Federal Savings and
Loan Association (the Association). All significant intercompany transactions
and balances have been eliminated.
The Corporation and the Association's revenues, operating income and assets are
primarily from the financial institution industry. The Association is engaged
primarily in the business of making residential real estate loans and accepting
deposits. Its operations are conducted solely through its main office located in
Sidney, Ohio. The Association's market area consists of Shelby and surrounding
counties.
To prepare financial statements in conformity with generally accepted accounting
principles, management makes estimates and assumptions based on available
information. These estimates and assumptions affect the amounts reported in the
financial statements and the disclosures provided, and future results could
differ. The collectibility of loans, fair values of financial instruments and
status of contingencies are particularly subject to change.
The provision for income taxes is based upon the effective tax rate expected to
be applicable for the entire year. Income tax expense is the sum of the current
year income tax due or refundable and the change in deferred tax assets and
liabilities. Deferred tax assets and liabilities are expected future tax
consequences of temporary differences between the carrying amounts and tax basis
of assets and liabilities, computed using enacted tax rates. A valuation
allowance, if needed, reduces deferred tax assets to the amount expected to be
realized.
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings per common share is computed by dividing net income by the weighted
average number of shares outstanding during the year. As more fully discussed in
Note 2, the Association converted from mutual to stock ownership with the
concurrent formation of a holding company effective April 25, 1997. The weighted
average number of shares outstanding for the three-month period ended September
30, 1997 was 1,653,615. Unreleased ESOP shares are not considered to be
outstanding shares for the purpose of determining the weighted average number of
shares used in the earnings per common share calculation. No earnings per common
share is shown for the three months ended September 30, 1996, as prior to April
25, 1997, the Association was a mutual company. The financial information for
the three months ended September 30, 1996 reflects the Association prior to
conversion.
Statement of Financial Accounting Standards ("SFAS") No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinquishments of Liabilities,"
was issued by the Financial Accounting Standards Board ("FASB") in 1996. It
revises the accounting for transfers of financial assets, such as loans and
securities, and for distinguishing between sales and secured borrowings. It was
originally effective for some transactions in 1997 and others in 1998. SFAS No.
127, "Deferral of the Effective Date of Certain Provisions of FASB Statement No.
125" was issued in December 1996. SFAS 127 defers, for one year, the effective
date of provisions related to securities lending, repurchase agreements and
other similar transactions. The remaining portions of SFAS 125 will continue to
be effective January 1, 1997. SFAS 125 did not have a material impact on the
Corporation's financial statements.
In March 1997, the FASB issued SFAS No. 128, "Earnings Per Share" which is
effective for financial statements for periods ending after December 15, 1997,
including interim periods. SFAS 128 simplifies the calculation of earnings per
share ("EPS") by replacing primary EPS with basic EPS. It also requires dual
presentation of basic EPS and diluted EPS for entities with complex capital
structures. Basic EPS includes no dilution and is computed by dividing income
available to common shareholders by the weighted-average common shares
outstanding for the period. Diluted EPS reflects the potential dilution of
securities that could share in earnings such as stock options, warrants or other
common stock equivalents. All prior period EPS data will be restated to conform
with the new presentation. This statement will not impact the Corporation as it
currently has no common stock equivalents.
In February 1997, the FASB issued SFAS No. 129, "Disclosures of Information
about Capital Structure." SFAS No. 129 consolidated existing accounting guidance
relating to disclosure about a company's capital structure. Public companies
generally have always been required to make disclosures now required by SFAS No.
129 and, therefore, SFAS No. 129 should have no impact on the Corporation. SFAS
No. 129 is effective for financial statements for periods ending after December
15, 1997.
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income."
SFAS No. 130 establishes standards for reporting and display of comprehensive
income and its components (revenues, expenses, gains and losses) in a full set
of general-purpose financial statements. SFAS No. 130 requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. It does not require a
specific format for that financial statement but requires that an enterprise
display an amount representing total comprehensive income for the period in that
financial statement.
SFAS No. 130 requires that an enterprise (a) classify items of other
comprehensive income by their nature in a financial statement and (b) display
the accumulated balance of other comprehensive income separately from retained
earnings and additional paid-in capital in the equity section of a statement of
financial position. SFAS No. 130 is effective for fiscal years beginning after
December 15, 1997. Reclassification of financial statements for earlier periods
provided for comparative purposes is required.
In June 1997, the FASB issued SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information." This Statement significantly changes the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about reportable segments in interim financial reports
issued to shareholders. It also establishes standards for related disclosures
about products and services, geographic areas and major customers. SFAS No. 131
uses a "management approach" to disclose financial and descriptive information
about an enterprise's reportable operating segments which is based on reporting
information the way that management organizes the segments within the enterprise
for making operating decisions and assessing performance. For many enterprises,
the management approach will likely result in more segments being reported. In
addition, the Statement requires significantly more information to be disclosed
for each reportable segment than is presently being reported in annual financial
statements. The Statement also requires that selected information be reported in
interim financial statements. SFAS No. 131 is effective for financial statements
for periods beginning after December 15, 1997
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 2 - CONSUMMATION OF THE CONVERSION TO A STOCK SAVINGS
AND LOAN ASSOCIATION WITH THE CONCURRENT FORMATION OF
A HOLDING COMPANY
On November 8, 1996, the Board of Directors of the Association, unanimously
adopted a Plan of Conversion to convert from a federally chartered mutual
savings and loan association to a federally chartered stock savings and loan
association with the concurrent formation of a holding company, Peoples-Sidney
Financial Corporation. The conversion was consummated on April 25, 1997 by
amending the Association's charter and the sale of the holding company's common
stock in an amount equal to the market value of the Association after giving
effect to the conversion. Common shares of the Corporation were offered in
accordance with the plan of conversion. A total of 1,785,375 common shares of
the Corporation were sold at $10.00 per share and net proceeds from the sale
were $17,217,944 after deducting the costs of conversion.
The Corporation retained 50% of the net proceeds from the sale of common shares.
The remainder of the net proceeds were invested in the capital stock issued by
the Association to the Corporation as a result of the conversion.
At the time of conversion, the Association established a liquidation account in
an amount equal to its regulatory capital as of the latest practicable date
prior to the conversion. In the event of a complete liquidation, each eligible
depositor will be entitled to receive a distribution from the liquidation
account in an amount proportionate to the current adjusted qualifying balances
for accounts then held.
Under Office of Thrift Supervision (OTS) regulations, limitations have been
imposed on all "capital distributions" by savings institutions, including cash
dividends. The regulation establishes a three-tiered system of restrictions,
with the greatest flexibility afforded to thrifts which are both
well-capitalized and given favorable qualitative examination ratings by the OTS.
NOTE 3 - SECURITIES
The amortized cost and estimated fair values of securities are summarized as
follows:
<TABLE>
<CAPTION>
September 30, 1997
----------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
-------------- ---------- ----------- ---------------
<S> <C> <C> <C> <C>
Securities available for sale
U.S. Government agencies $ 2,498,421 $ 24,937 $ -- $ 2,523,358
============== ========== =========== ===============
Securities held to maturity
U.S. Government agencies $ 1,499,609 $ 80 $ 314 $ 1,499,375
============== ========== =========== ===============
</TABLE>
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1997
----------------------------------------------------------------
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
-------------- ---------- ----------- ---------------
<S> <C> <C> <C> <C>
Securities available for sale
U.S. Government agencies $ 1,999,060 $ 13,742 $ -- $ 2,012,802
============== ========== =========== ===============
Securities held to maturity
U.S. Government agencies $ 1,999,375 $ -- $ 2,580 $ 1,996,795
============== ========== =========== ===============
</TABLE>
The amortized cost and estimated fair values of securities, by contractual
maturity, at September 30, 1997 are shown below. Actual maturities could differ
from contractual maturities because borrowers may have the right to call or
prepay obligations with or without call or prepayment penalties.
<TABLE>
<CAPTION>
Estimated
Amortized Fair
Cost Value
-------------- ---------------
<S> <C> <C>
Securities available for sale
Due after one year through five years $ 2,498,421 $ 2,523,358
============== ===============
Securities held to maturity
Due in one year or less $ 999,609 $ 999,295
Due after one year through five years 500,000 500,080
-------------- ---------------
$ 1,499,609 $ 1,499,375
============== ===============
</TABLE>
NOTE 3 - SECURITIES (Continued)
No securities were sold during the three month periods ended September 30, 1997
and 1996. No securities were pledged as collateral at September 30, 1997 or June
30, 1997.
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 4 - LOANS RECEIVABLE
Loans receivable are summarized as follows:
<TABLE>
<CAPTION>
September 30, June 30,
1997 1997
------------ ------------
<S> <C> <C>
Mortgage loans:
1-4 family residential ................. $ 76,979,931 $ 75,808,323
Multi-family residential ............... 384,680 219,153
Commercial real estate ................. 6,159,926 5,842,476
Real estate construction and development 6,991,883 6,551,430
Land ................................... 1,088,867 1,446,838
------------ ------------
Total mortgage loans ............... 91,605,287 89,868,220
Consumer and other loans .................... 2,501,205 2,314,263
------------ ------------
Total loans receivable ............. 94,106,492 92,182,483
Less:
Allowance for loan losses .............. (412,695) (397,159)
Loans in process ....................... (2,135,592) (2,702,795)
Deferred loan fees ..................... (152,847) (158,190)
------------ ------------
$ 91,405,358 $ 88,924,339
============ ============
</TABLE>
Activity in the allowance for loan losses is summarized as follows:
<TABLE>
<CAPTION>
Three Months
Ended September 30,
-----------------------------
1997 1996
------------ ------------
<S> <C> <C>
Balance at beginning of period $ 397,159 $ 307,308
Provision for losses 26,083 18,308
Charge-offs (10,547) (5,073)
Recoveries -- --
------------ ------------
Balance at end of period $ 412,695 $ 320,543
============ ============
</TABLE>
As of and for the three months ended September 30, 1997 and 1996, no loans were
required to be evaluated for impairment on a loan-by-loan basis within the scope
of SFAS No. 114.
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 5 - BORROWINGS
At September 30, 1997 and June 30, 1997, the Association had a cash management
line of credit enabling it to borrow up to $5,000,000 with the Federal Home Loan
Bank (FHLB) of Cincinnati. The line of credit must be renewed on an annual
basis. No borrowings were outstanding on this line of credit at September 30,
1997 and June 30, 1997. As a member of the Federal Home Loan Bank system, the
Association has the ability to obtain additional borrowings up to a maximum
total of approximately $15,528,000, including the line of credit. Advances under
the borrowing agreements are collateralized by a blanket pledge of the
Association's residential mortgage loan portfolio and Federal Home Loan Bank
stock.
NOTE 6 - COMMITMENTS, CONTINGENCIES AND FINANCIAL INSTRUMENTS
WITH OFF-BALANCE SHEET RISK
Various contingent liabilities are not reflected in the financial statements,
including claims and legal actions arising in the ordinary course of business.
In the opinion of management, after consultation with legal counsel, the
ultimate disposition of these matters is not expected to have a material effect
on financial condition or results of operations.
Some financial instruments are used in the normal course of business to meet
financing needs of customers and reduce exposure to interest rate changes. These
financial instruments include commitments to extend credit, standby letters of
credit and financial guarantees. These involve, to varying degrees, credit risk
in excess of the amount reported in the financial statements.
Exposure to credit loss if the other party does not perform is represented by
contractual amount for commitments to extend credit, standby letters of credit
and financial guarantees written. The same credit policies are used for
commitments and conditional obligations as are used for loans. The amount of
collateral obtained, if deemed necessary, on extension of credit is based on
management's credit evaluation and generally consists of residential or
commercial real estate.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the commitment.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without being used, the total commitments do not necessarily represent
future cash requirements.
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 6 - COMMITMENTS, CONTINGENCIES AND FINANCIAL INSTRUMENTS
WITH OFF-BALANCE SHEET RISK (Continued)
As of September 30, 1997 and June 30, 1997, the Corporation had commitments to
make fixed rate commercial and residential real estate mortgage loans at current
market rates approximating $232,000 and $156,000, and variable rate commercial
and residential real estate mortgage loans at current market rates approximating
$449,000 and $876,000. Loan commitments are generally for 30 days. The interest
rates on fixed rate commitments ranged from 7.75% to 8.25% at September 30, 1997
and were 8.25% at June 30, 1997. The interest rates on variable rate commitments
ranged from 7.50% to 8.25% at September 30, 1997 and 7.25% to 8.50% at June 30,
1997. The Corporation also had unused lines of credit approximating $562,000 and
$622,000 at September 30, 1997 and June 30, 1997.
At September 30, 1997 and June 30, 1997, the Association was required to have
$258,000 and $298,000 on deposit with its correspondent banks as compensating
clearing requirement.
The Association entered into employment agreements with certain officers of the
Corporation and Association. The agreements provide for a term of one to three
years and a salary and performance review by the Board of Directors not less
often than annually, as well as inclusion of the employee in any formally
established employee benefit, bonus, pension and profit-sharing plans for which
management personnel are eligible. The agreements provide for extensions for a
period of one year on each annual anniversary date, subject to review and
approval of the extension by disinterested members of the Board of Directors of
the Association. The employment agreements also provide for vacation and sick
leave.
NOTE 7 - EMPLOYEE STOCK OWNERSHIP PLAN
The Corporation offers an employee stock ownership plan ("ESOP") for the benefit
of substantially all employees of the Corporation and the Association. During
July 1997, the ESOP received a favorable determination letter from the Internal
Revenue Service on the qualified status of the ESOP under applicable provisions
of the Internal Revenue Code.
The ESOP borrowed funds from the Corporation in order to acquire common shares
of the Corporation. The loan is secured by the shares purchased with the loan
proceeds and will be repaid by ESOP with funds from the Association's
discretionary contributions to the ESOP and earnings on ESOP assets. All
dividends on unallocated shares received by the ESOP are used to pay debt
service. The shares purchased with the loan proceeds are held in a suspense
account for allocation among participants as the loan is repaid. As payments are
made and the shares are released from the suspense account, such shares will be
validly issued, fully paid and nonassessable.
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
NOTE 7 - EMPLOYEE STOCK OWNERSHIP PLAN (Continued)
The Corporation accounts for the ESOP in accordance with Statement of Position
("SOP") 93-6. Accordingly, the shares pledged as collateral are reported as
unearned ESOP shares in the Consolidated Balance Sheets. As shares are released
from collateral, the Corporation reports compensation expense equal to the
current market price of the shares and the shares become outstanding for
earnings-per-share computations. Dividends on allocated ESOP shares are recorded
as a reduction of retained earnings; dividends on unallocated ESOP shares are
recorded as a reduction of debt and accrued interest. ESOP compensation expense
was $40,061 for the three months ended September 30, 1997.
The ESOP shares as of September 30, 1997 and June 30, 1997 were as follows:
<TABLE>
<CAPTION>
September 30, June 30,
1997 1997
---------- ----------
<S> <C> <C>
Allocated shares ......................... $ 10,202 $ 10,202
Shares released for allocation ........... 2,550
Unreleased shares ........................ 130,078 132,628
---------- ----------
Total ESOP shares ................... $ 142,830 $ 142,830
========== ==========
Fair value of unreleased shares .......... $2,146,287 $1,865,081
========== ==========
</TABLE>
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Introduction
On the following pages, management presents an analysis of the financial
condition of Peoples - Sidney Financial Corporation (the "Corporation") as of
September 30, 1997, compared to June 30, 1997, and results of operations for the
three months ended September 30, 1997, compared with the same period in 1996.
This discussion is designed to provide a more comprehensive review of the
operating results and financial position than could be obtained from an
examination of the financial statements alone. This analysis should be read in
conjunction with the interim financial statements and related footnotes included
herein.
In addition to the historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. Economic circumstances, the Corporation's operations and actual
results could differ significantly from those discussed in the forward-looking
statements. Some of the factors that could cause or contribute to such
differences are discussed herein but also include changes in the economy and
interest rates in the nation and the Association's general market area.
On November 8, 1996, the Board of Directors of the Peoples Federal Savings and
Loan Association (the "Association") unanimously adopted a Plan of Conversion to
convert from a federally chartered mutual savings and loan association to a
federally chartered stock savings and loan association with the concurrent
formation of a holding company, Peoples-Sidney Financial Corporation. The
conversion was consummated on April 25, 1997 by amending the Association's
charter and the sale of the holding company's common stock in an amount equal to
the market value of the Association after giving effect to the conversion. A
total of 1,785,375 common shares of the Corporation were sold at $10.00 per
share and net proceeds from the sale were $17,217,944 after deducting the costs
of conversion.
The Corporation retained 50% of the net proceeds from the sale of common shares.
The remainder of the net proceeds were invested in the capital stock issued by
the Association to the Corporation as a result of the conversion.
The Corporation is a financial intermediary primarily engaged in the business of
attracting savings deposits from the general public and investing such funds in
permanent mortgage loans secured by one- to four-family residential real estate
located in Shelby, Logan, Auglaize, Miami, Darke and Champaign Counties, Ohio.
The Corporation also originates, to a lesser extent, loans for the construction
of one- to four-family residential real estate loans secured by multi-family
residential real estate (over four units) and nonresidential real estate, and
consumer loans and invests in U.S. government obligations, interest-bearing
deposits in other financial institutions and other investments permitted by
applicable law.
Financial Condition
Total assets at September 30, 1997 were $102.8 million compared to $103.1
million at June 30, 1997, a decrease of $ 300,000, or 0.3%. The decrease in
total assets was primarily due to a decline in overnight deposits and time
deposits with other financial institutions partially offset by an increase in
loans.
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Loans receivable increased $2.5 million from June 30, 1997 to $91.4 million at
September 30, 1997. The Corporation experienced increases in all mortgage loan
categories except for land loans. The largest increase was in one- to
four-family residential real estate loans which increased $1.2 million. These
increases are reflective of a strong local economy coupled with attractive loan
rates and products compared to the local competition. The Corporation's consumer
loan portfolio increased $187,000 between June 30, 1997 and September 30, 1997.
Consumer loans remain a small portion of the entire loan portfolio and
represented 2.7% and 2.6% of gross loans at September 30, 1997 and June 30,
1997.
The decrease in overnight deposits and time deposits with other financial
institutions was the result of the redirection of funds provided from the
maturities of time deposits and other available funds to provide for loan
growth. Total securities remained relatively unchanged as the Corporation
replaced a matured held-to-maturity security with an available-for-sale
security.
Total deposits decreased $647,000 from $77.0 million at June 30, 1997 to $76.4
million at September 30, 1997. The Corporation experienced the most change in
passbook savings accounts and negotiable order of withdrawal ("NOW") accounts as
they declined $605,000 and $578,000 respectively. Management believes the
decline was the result of special interest rate promotions on certificates of
deposit by its local competitors, which attracted funds from these liquid
deposit accounts. The decline in passbook savings and NOW accounts was partially
offset by an increase in certificates of deposit, Christmas club accounts,
statement savings and Individual Retirement Accounts. Almost all certificates of
deposit mature in less than five years with the majority maturing in the next
two years.
As a secondary source of liquidity, the Association maintains a $5 million cash
management arrangement with the Federal Home Loan Bank ("FHLB") of Cincinnati.
There were no advances outstanding at September 30, 1997 or June 30, 1997. The
advances are variable rate and can be prepaid at any time without a penalty.
Advances may be obtained from the FHLB to fund future loan growth and liquidity
as needed.
Results of Operations
The operating results of the Corporation are affected by the general economic
conditions, the monetary and fiscal policies of federal agencies and the
regulatory policies of agencies that regulate financial institutions. The
Corporation's cost of funds is influenced by interest rates on competing
investments and general market rates of interest. Lending activities are
influenced by the demand for real estate loans and other types of loans, which
in turn is affected by the interest rates at which such loans are made, general
economic conditions and the availability of funds for lending activities.
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Corporation's net income primarily depends upon its net interest income,
which is the difference between the interest income earned on interest-earning
assets, such as loans and securities, and interest expense incurred on
interest-bearing liabilities, such as deposits and other borrowings. The level
of net interest income is dependent upon the interest rate environment and the
volume and composition of interest-earning assets and interest-bearing
liabilities. Net income is also affected by provisions for loan losses, service
charges, gains on the sale of assets and other income, noninterest expense and
income taxes.
The Corporation earned net income of $338,000 for the three months ended
September 30, 1997, compared to net loss of $97,000 for the three months ended
September 30, 1996. The increase in income for the three months ended September
30, 1997 was due to an increase in net interest income and a decrease in FDIC
deposit insurance premiums which resulted from the special deposit insurance
assessment recognized as expense in the three months ended September 30, 1996.
The special assessment is more fully discussed below.
Net interest income totaled $1,015,000 for the three months ended September 30,
1997, as compared to $712,000 for the three months ended September 30, 1996,
representing an increase of $303,000, or 42.6%. The change in net interest
income is attributable to higher average balances of interest earning assets
being funded with the proceeds from the mutual to stock conversion.
Interest and fees on loans increased approximately $228,000, or 14.2%, from
$1,608,000 for the three months ended September 30, 1996 to $1,836,000 for the
three months ended September 30, 1997. The increase in interest income was due
to higher average loans receivable, primarily related to the origination of new
one- to four-family first mortgages.
Interest earned on securities totaled $64,000 for the three months ended
September 30, 1997, as compared to $34,000 for the three months ended September
30, 1996. The increase was a result of higher average balances of securities.
Interest on interest-bearing demand and overnight deposits increased $54,000 for
the three months ended September 30, 1997, as compared to the three months ended
September 30, 1996. The increase was the result of higher average balances of
interest-bearing demand and overnight funds.
Dividends on FHLB stock increased slightly for the three months ended September
30, 1997, compared to the three months ended September 30, 1996, primarily due
to an increase in the number of shares of FHLB stock owned.
Interest paid on deposits increased $32,000 for the three months ended September
30, 1997, as compared to the three months ended September 30, 1996. The increase
in interest expense was due to an increase in the cost of funds. The increase in
the average cost of deposits was the result of certificates of deposits being a
larger part of the total portfolio.
Interest on other borrowings totaled $21,000 for the three months ended
September 30, 1996. The Corporation borrowed funds from the FHLB for the first
time during fiscal 1997. The borrowings were used as a source of short-term
liquidity to provide funding for loan demand prior to the conversion. There were
no borrowings during the three months ended September 30, 1997.
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Corporation maintains an allowance for loan losses in an amount which, in
management's judgment, is adequate to absorb reasonably foreseeable losses
inherent in the loan portfolio. While management utilizes its best judgment and
information available, the ultimate adequacy of the allowance is dependent upon
a variety of factors, including the performance of the loan portfolio, the
economy, changes in real estate values and interest rates and the view of the
regulatory authorities toward loan classifications. The provision for loan
losses is determined by management as the amount to be added to the allowance
for loan losses after net charge-offs have been deducted to bring the allowance
to a level which is considered adequate to absorb losses inherent in the loan
portfolio. The amount of the provision is based on management's monthly review
of the loan portfolio and consideration of such factors as historical loss
experience, general prevailing economic conditions, changes in the size and
composition of the loan portfolio and specific borrower considerations,
including the ability of the borrower to repay the loan and the estimated value
of the underlying collateral.
The provision for loan losses for the three months ended September 30, 1997
totaled $26,000 compared to $18,000 for the three months ended September 30,
1996, representing an increase of $8,000, or 42.5%. The Corporation has not
experienced significant net charge-offs in any of the periods presented. The
Corporation's low historical charge-off history is the product of a variety of
factors, including the Corporation's underwriting guidelines, which generally
require a loan-to-value or projected completed value ratio of 90% for the
purchase or construction of one- to four-family residential properties and 75%
for commercial real estate and land loans, established income information and
defined ratios of debt to income. Notwithstanding the historical charge-off
history, however, management believes it is prudent to continue to increase the
allowance for loan losses as total loans increase. Accordingly, management
anticipates it will continue its provisions to the allowance for loan losses at
current levels for the foreseeable future, provided the volume of nonperforming
loans remains low. The allowance for loan losses totaled $413,000, or 0.44% of
gross loans receivable at September 30, 1997, compared with $321,000, or 0.35%
of gross loans receivable at September 30, 1996.
Noninterest income includes service fees and other miscellaneous income. For the
three months ended September 30, 1997 noninterest income totaled $16,000
compared to $13,000 for the three months ended September 30, 1996.
Noninterest expense for the three months ended September 30, 1997 was $481,000
compared to $854,000 for same period in 1996. Increases in compensation and
benefits and other expenses were offset by a decrease in federal deposit
insurance premiums. The increase in compensation and benefits was the result of
normal, annual merit increases and the Corporation's establishment of an
employee stock ownership plan. Increase in other expense was attributable to
increases in director fees, professional service fees and printing costs related
to the Corporation's first annual report. These increases were largely due to
the mutual to stock conversion. FDIC deposit insurance expense during the three
months ended September 30, 1996 was $500,000 compared to $13,000 for the three
months ended September 30, 1997. Included in the prior three month period was a
special deposit insurance assessment of $456,000 resulting from legislation
passed and enacted into law on September 30, 1996 to recapitalize the Savings
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Association Insurance Fund ("SAIF"). The SAIF was below the level required by
law because a significant portion of the assessments paid into the SAIF by
thrifts, like the Association, were used to pay the cost of prior thrift
failures. The legislation called for a one-time assessment of $0.657 for each
$100 in deposits held as of March 31, 1995. As a result of the recapitalization
of the SAIF, the disparity between the bank and thrift insurance assessments was
reduced. Thrifts had been paying assessments of $0.23 per $100 of deposits,
which, for most thrifts, was reduced to $0.064 per $100 in deposits in January
1997 and will be reduced to $0.024 per $100 in deposits by no later than January
2000.
The legislation also provides for the merger of the SAIF and the Bank Insurance
Fund ("BIF") effective January 1, 1999, assuming there are no savings
associations under federal law. Under separate proposed legislation, Congress is
considering elimination of the federal thrift charter and the separate federal
regulation of thrifts. As a result, the Association would be required to convert
to a different financial institution charter and possibly become subject to more
restrictive activity limits. The Association cannot predict the impact of any
such legislation until it is enacted.
The volatility of income tax expense is primarily attributable to the change in
net income before income taxes. The provision for income taxes totaled $186,000
for the three months ended September 30, 1997 compared to $(50,000) for the
three months ended September 30, 1996.
Prior to the enactment of legislation discussed below, thrifts which met certain
tests relating to the composition of assets had been permitted to establish
reserves for bad debts and to make annual additions thereto which could, within
specified formula limits, be taken as a deduction in computing taxable income
for federal income tax purposes. The amount of the bad debt reserve deduction
for "nonqualifying loans" was computed under the experience method. The amount
of the bad debt reserve deduction for "qualifying real property loans" could be
computed under either the experience method or the percentage of taxable income
method, based on an annual election.
In August 1996, legislation was enacted that repeals the reserve method of
accounting used by many thrifts to calculate their bad debt reserve for federal
income tax purposes. As a result, small thrifts such as the Association must
recapture that portion of the reserve exceeding the amount that could have been
taken under the experience method for tax years beginning after December 31,
1987. The legislation also requires thrifts to account for bad debts for federal
income tax purposes on the same basis as commercial banks for tax years
beginning after December 31, 1995. The recapture will occur over a six-year
period, the commencement of which will be delayed until the first taxable year
beginning after December 31, 1997, provided the institution meets certain
residential lending requirements. At September 30, 1997, the Association had
approximately $581,000 in bad debt reserves subject to recapture for federal
income tax purposes. The deferred tax liability related to the recapture has
been previously established so there will be no effect on future net income.
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Liquidity and Capital Resources
The Corporation's liquidity, primarily represented by cash equivalents, is a
result of its operating, investing and financing activities. These activities
are summarized below for the three months ended September 30, 1997 and 1996.
<TABLE>
<CAPTION>
Three Months
Ended September 30,
----------------------
1997 1996
------- -------
(Dollars in thousands)
<S> <C> <C>
Net income (loss) .................................... $ 338 $ (97)
Adjustments to reconcile net income to net cash from
operating activities ............................... 47 244
------- -------
Net cash from operating activities ................... 385 147
Net cash from investing activities ................... (517) (3,248)
Net cash from financing activities ................... (730) 1,825
------- -------
Net change in cash and cash equivalents .............. (862) (1,276)
Cash and cash equivalents at beginning of period ..... 2,796 2,721
------- -------
Cash and cash equivalents at end of period ........... $ 1,934 $ 1,445
======= =======
</TABLE>
The Corporation's principal sources of funds are deposits, loan repayments,
maturities of securities, and other funds provided by operations. The
Association has the ability to borrow from the FHLB. While scheduled loan
repayments and maturing securities are relatively predictable, deposit flows and
early loan prepayments are more influenced by interest rates, general economic
conditions, and competition. The Association maintains investments in liquid
assets based upon management's assessment of (1) need for funds, (2) expected
deposit flows, (3) yields available on short-term liquid assets and (4)
objectives of the asset/liability management program.
OTS regulations presently require the Association to maintain an average daily
balance of investments in United States Treasury, federal agency obligations and
other investments having maturities of five years or less in an amount equal to
5% of the sum of the Association's average daily balance of net withdrawable
deposit accounts and borrowings payable in one year or less. The liquidity
requirement, which may be changed from time to time by the OTS to reflect
changing economic conditions, is intended to provide a source of relatively
liquid funds upon which the Association may rely, if necessary, to fund deposit
withdrawals or other short-term funding needs. At September 30, 1997, the
Association's regulatory liquidity was 11.8%. At such date, the Corporation had
commitments to originate fixed-rate commercial and residential real estate loans
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
totaling $232,000, and variable-rate commercial and residential real estate
mortgage loans totaling $449,000. Loan commitments are generally for 30 days.
The Corporation considers its liquidity and capital reserves sufficient to meet
its outstanding short- and long-term needs. See Note 6 of the Notes to
Consolidated Financial Statements.
The Association is subject to various regulatory capital requirements
administered by the federal regulatory agencies. Failure to meet minimum capital
requirements can initiate certain mandatory actions that, if undertaken, could
have a direct material affect on the Association's financial statements. Under
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Association must meet specific capital guidelines that involve
quantitative measures of the Association's assets, liabilities and certain
off-balance-sheet items as calculated under regulatory accounting practices. The
Association's capital amounts and classifications are also subject to
qualitative judgments by the regulators about the Association's components, risk
weightings and other factors. At September 30, 1997 and June 30, 1997,
management believes the Association is in compliance with all regulatory capital
requirements. Based on the Association's computed regulatory capital ratios, the
Association is considered well capitalized under the Federal Deposit Insurance
Act at September 30, 1997 and June 30, 1996.
At September 30, 1997 and June 30, 1997, the Association's actual capital levels
(in thousands) and minimum required levels were:
<TABLE>
<CAPTION>
Minimum
Required To Be
Minimum Required Well Capitalized
For Capital Under Prompt Corrective
Actual Adequacy Purposes Action Regulations
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
<S> <C> <C> <C> <C> <C> <C>
September 30, 1997
Total capital (to risk-weighted assets) $ 17,804 27.7% $ 5,136 8.0% $ 6,420 10.0%
Tier 1 (core) capital (to
risk-weighted assets) 17,401 27.1 2,568 4.0 3,852 6.0
Tier 1 (core) capital (to adjusted
total assets) 17,401 16.9 3,085 3.0 5,334 5.0
Tangible capital (to adjusted total assets) 17,401 16.9 1,542 1.5 N/A
June 30, 1997
Total capital (to risk-weighted assets) $ 17,481 26.9% $ 5,208 8.0% $ 6,510 10.0%
Tier 1 (core) capital (to
risk-weighted assets) 17,088 26.3 2,604 4.0 3,906 6.0
Tier 1 (core) capital (to adjusted
total assets) 17,088 16.6 3,094 3.0 5,156 5.0
Tangible capital (to adjusted total assets) 17,088 16.6 1,547 1.5 N/A
</TABLE>
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
In addition to certain federal income tax considerations, the Office of Thrift
Supervision (OTS) regulations impose limitations on the payment of dividends and
other capital distributions by savings associations. Under OTS regulations
applicable to converted savings associations, the Association is not permitted
to pay a cash dividend on its common shares if its regulatory capital would, as
a result of payment of such dividends, be reduced below the amount required for
the Liquidation Account, or below applicable regulatory capital requirements
prescribed by the OTS.
OTS regulations applicable to all savings and loan associations provide that a
savings association which immediately prior to, and on a pro forma basis after
giving effect to, a proposed capital distribution (including a dividend) has
total capital (as defined by OTS regulations) that is equal to or greater than
the amount of its capital requirements is generally permitted without OTS
approval (but subsequent to 30 days' prior notice to the OTS) to make capital
distributions, including dividends, during a calendar year in an amount not to
exceed the greater of (1) 100% of its net earnings to date during the calendar
year, plus an amount equal to one-half that which its total capital to assets
ratio exceeded its required capital to assets ratio at the beginning of the
calendar year, or (2) 75% of its net earnings for the most recent four-quarter
period. Savings associations with total capital in excess of the capital
requirements that have been notified by the OTS that they are in need of more
than normal supervision will be subject to restrictions on dividends. A savings
association that fails to meet current minimum capital requirements is
prohibited from making any capital distributions without the prior approval of
the OTS.
The Association currently meets all of its capital requirements and, unless the
OTS determines that the Association is an institution requiring more than normal
supervision, the Association may pay dividends in accordance with the foregoing
provisions of OTS regulations.
At September 30, 1997, the Corporation had no material commitments for capital
expenditures.
<PAGE>
PEOPLES - SIDNEY FINANCIAL CORPORATION
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
There no matters brought to a vote of security holders during the
quarter ended September 30, 1997.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. 27: Financial Data Schedule
(b) No current reports on Form 8-K were filed by the small business
issuer during the quarter ended September 30, 1997.
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the small
business issuer has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 10, 1997 /s/ Douglas Stewart
-------------------
Douglas Stewart
President
Date: November 10, 1997 /s/ Debra Geuy
--------------
Debra Geuy
Treasurer
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
------ -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
The schedule contains summary financial information extracted from the
consolidated balance sheet and the consolidated statement of income filed as
part of the quarterly report on Form 10-Q and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> SEP-30-1997
<CASH> 751
<INT-BEARING-DEPOSITS> 1,184
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,523
<INVESTMENTS-CARRYING> 1,500
<INVESTMENTS-MARKET> 1,499
<LOANS> 91,405
<ALLOWANCE> 413
<TOTAL-ASSETS> 102,835
<DEPOSITS> 76,399
<SHORT-TERM> 0
<LIABILITIES-OTHER> 422
<LONG-TERM> 0
0
0
<COMMON> 18
<OTHER-SE> 25,996
<TOTAL-LIABILITIES-AND-EQUITY> 102,835
<INTEREST-LOAN> 1,836
<INTEREST-INVEST> 64
<INTEREST-OTHER> 95
<INTEREST-TOTAL> 1,994
<INTEREST-DEPOSIT> 979
<INTEREST-EXPENSE> 979
<INTEREST-INCOME-NET> 1,015
<LOAN-LOSSES> 26
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 481
<INCOME-PRETAX> 524
<INCOME-PRE-EXTRAORDINARY> 338
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 338
<EPS-PRIMARY> 0.20
<EPS-DILUTED> 0.20
<YIELD-ACTUAL> 4.04
<LOANS-NON> 802
<LOANS-PAST> 228
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 397
<CHARGE-OFFS> 11
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 413
<ALLOWANCE-DOMESTIC> 413
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
