SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT
For the transition period from to
---------------------- ----------------------
Commission File Number 0-22535
Sistersville Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Delaware 31-1516424
- -------- -----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
726 Wells Street, Sistersville, WV 26175
----------------------------------------
(Address of principal executive offices)
(304) 652-3671
----------------------------------------------------
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or such shorter
period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days. Yes No X
---- -----
State the number of shares outstanding of each of the issuer's classes of common
equity as of the latest practicable date:
Class: Common Stock, par value $.10 per share
Outstanding at July 31, 1997: 661,428 shares
<PAGE>
SISTERSVILLE BANCORP, INC.
INDEX
Page
Number
--------
PART I. FINANCIAL INFORMATION
Item 1 Financial Statements
Consolidated Balance Sheet (Unaudited) as of
June 30, 1997 and March 31, 1997 3
Consolidated Statement of Income (Unaudited)
for the Three Months ended June 30, 1997 and 1996 4
Consolidated Statement of Cash Flows (Unaudited)
for the Three Months ended June 30, 1997 and 1996 5
Notes to Unaudited 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 10
Item 2 Changes in Securities 10
Item 3 Default Upon Senior Securities 10
Item 4 Submissions of Matters to a Vote of Security Holders 10
Item 5 Other Information 10
Item 6 Exhibits and Reports on Form 8-K 10
SIGNATURES 11
<PAGE>
SISTERSVILLE BANCORP, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
June 30, March 31,
1997 1997
------------ ------------
ASSETS
Cash and Cash Equivalents:
<S> <C> <C>
Cash and amounts due from banks $ 83,022 $ 81,065
Interest-bearing deposits with other institutions 6,509,400 1,713,394
------------ ------------
Total cash and cash equivalents 6,592,422 1,794,459
Investment Securities:
Securities held to maturity (fair value of $317,000
and $335,053) 310,993 328,053
Securities available for sale 2,933,988 2,319,633
------------ ------------
Total investment securities 3,244,981 2,647,686
Loans receivable, (net of allowance for loan losses
of $166,100 and $164,150) 22,272,183 21,724,869
Office properties and equipment, net 358,277 363,538
Accrued interest receivable 153,978 144,071
Other assets 12,934 142,127
------------ ------------
TOTAL ASSETS $ 32,634,775 $ 26,816,750
============ ============
LIABILITIES
Deposits $ 21,553,095 $ 21,699,725
Deferred income taxes 278,798 215,091
Accrued interest payable and other liabilities 125,899 98,620
------------ ------------
TOTAL LIABILITIES 21,957,792 22,013,436
------------ ------------
STOCKHOLDERS' EQUITY
Common Stock, $.10 par value;
661,428 shares authorized and outstanding 66,143 -
Additional paid - in capital 6,127,984 -
Retained Earnings - substantially restricted 4,494,125 4,410,275
Net unrealized gain on securities available for sale 517,871 393,039
Unearned Employee Stock Ownership Plan shares (ESOP) (529,140) -
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 10,676,983 4,803,314
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 32,634,775 $ 26,816,750
============ ============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
3
<PAGE>
SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30,
1997 1996
------------ ------------
INTEREST AND DIVIDEND INCOME
<S> <C> <C>
Taxable interest on loans $ 475,898 $ 444,194
Taxable interest on investments 68,931 62,530
Dividends on Federal Home Loan Bank Stock 3,231 2,901
Dividends on Federal Home Loan Mortgage Corporation Stock 2,270 1,987
------------ ------------
Total interest and dividend income 550,330 511,612
------------ ------------
INTEREST EXPENSE
Deposits 261,114 241,570
Advances from Federal Home Loan Bank 0 0
------------ ------------
Total interest expense 261,114 241,570
------------ ------------
NET INTEREST INCOME 289,216 270,042
Provision for loan losses 1,950 1,200
------------ ------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES` 287,266 268,842
------------ ------------
NONINTEREST INCOME
Service charges 5,874 5,342
Other income 480 523
------------ ------------
Total noninterest income 6,354 5,865
------------ ------------
NONINTEREST EXPENSE
Compensation and employee benefits 90,841 99,430
Occupancy 9,155 9,527
Furniture and equipment expense 8,470 8,963
Deposit insurance premiums 3,434 11,724
Supervisory examination, audit and legal fees 6,550 5,569
Advertising and public relations 6,495 6,643
Service bureau expense 17,334 14,099
Franchise, payroll and other taxes 10,389 11,767
Other expenses 14,558 14,458
------------ ------------
Total noninterest expense 167,226 182,180
------------ ------------
Income before income taxes 126,394 92,527
Income taxes 42,544 33,169
------------ ------------
NET INCOME $ 83,850 $ 59,358
============ ============
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
4
<PAGE>
SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended June 30,
1997 1996
----------- ------------
OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 83,850 $ 59,358
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and accretion, net 9,318 8,638
Provision for loan losses 1,950 1,200
Deferred federal income taxes (600) (20)
Decrease (increase) in accrued interest receivable
and other assets 119,285 (6,217)
Increase (decrease) in accrued interest payable
and other liabilities 39,019 5,549
Decrease in accrued federal income taxes (11,739) (25,566)
----------- -----------
Net cash provided by operating activities 241,083 42,942
------------ ------------
INVESTING ACTIVITIES
Purchase of term deposits 0 (500,000)
Purchase of available for sale securities (425,000) -
Principal collected on mortgage - backed securities 17,060 12,649
Net increase in loans (549,264) (528,034)
Purchases of office properties and equipment (4,273) -
----------- -----------
Net cash used for investing activities (961,477) (1,015,385)
----------- -----------
FINANCING ACTIVITIES
Net increase (decrease)in deposits (146,630) 53,435
Proceeds from sale of common stock 5,664,987 -
----------- --------------
Net cash provided by financing activities 5,518,357 53,435
----------- -----------
Increase (decrease) in cash and cash equivalents 4,797,963 (919,008)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF YEAR 1,794,459 2,424,571
----------- -----------
CASH AND CASH EQUIVALENTS
AT END OF YEAR $ 6,592,422 $ 1,505,563
=========== ===========
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest on deposits and borrowings $ 260,349 $ 241,146
Income taxes 28,000 33,000
</TABLE>
See accompanying notes to the unaudited consolidated financial statements.
5
<PAGE>
SISTERSVILLE BANCORP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements of Sistersville Bancorp, Inc. (the
"Company"), include its wholly-owned subsidiary, First Federal Savings Bank (the
"Bank"). All significant intercompany balances and transactions have been
eliminated.
The accompanying unaudited consolidated financial statements have been prepared
in accordance with the instructions to Form 10-QSB and, therefore, do not
necessarily include all information that would be included in audited financial
statements. The information furnished reflects all adjustments which are, in the
opinion of management, necessary for a fair statement of the results of
operations. All such adjustments are of a normal recurring nature. The results
of operations for the interim periods are not necessarily indicative of the
results to be expected for the fiscal year ended March 31, 1998.
These statements should be read in conjunction with the consolidated statements
as of and for the year ended March 31, 1997, and related notes which are
included on Form 10-KSB (file no. 0-22535).
NOTE 2 - CONVERSION TO STOCK FORM OF OWNERSHIP AND FORMATION OF HOLDING
COMPANY
On December 5, 1996, the Board of Directors of First Federal Savings and Loan
Association of Sistersville (the "Association") approved a plan of conversion
(the "Plan") whereby the Association was to convert from a federally chartered
mutual savings and loan to a federally chartered stock savings bank and
simultaneously reorganized into a holding company form of organization
(collectively, the "Conversion"). After approval by the regulatory authorities
and the Association's members, the Conversion was completed on June 25, 1997. As
a result of this transaction, the Company was formed and the Bank became a
wholly-owned subsidiary of the Company.
In connection with the Conversion on June 25, 1997, the Company completed the
sale of 661,428 shares of stock at $10.00 per share. From the proceeds, $66,143
was allocated to common stock based on a par value of $.10 per share and
$6,127,984, which is net of conversion costs of $420,153, was allocated to
additional paid in capital.
NOTE 3 - PENDING ACCOUNTING STANDARDS
On March 3, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 128, "Earnings Per Share." This statement
re-defines the standards for computing earnings per share (EPS) previously found
in Accounting Principles Board Opinion No. 15, Earnings Per Share. Statement No.
128 establishes new standards for computing and presenting EPS and requires dual
presentation of "basic" and "diluted" EPS on the face of the income statement
for all entities with complex capital structures. Under Statement No. 128, basic
EPS is to be computed based upon income available to common shareholders and the
weighted average number of common shares outstanding for the period. Diluted EPS
is to reflect the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common stock or
resulted in the issuance of common stock that then shared in the earnings of the
Company. Statement No. 128 also requires the restatement of all prior-period EPS
data presented. The company will adopt Statement No. 128 on December 31, 1997,
and based on current estimates, does not believe the effect on adoption will
have a significant impact on the Company's financial position or results of
operations.
NOTE 4 - EARNINGS PER SHARE
The Company has not presented earnings per share for the period from inception
on June 25, 1997, to June 30, 1997, because it was determined to be not
meaningful.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS
Comparison of Financial Condition at June 30, 1997, and March 31, 1997
On December 5, 1996, the Board of Directors of the Association approved the Plan
and the Conversion. After approval by the regulatory authorities and the
Association's members, the Conversion was completed on June 25, 1997, and as a
result, the holding company was formed (the "Company") and the Bank became a
wholly-owned subsidiary of the Company. In connection with the Conversion on
June 25, 1997, the Company completed the sale of 661,428 shares (the "Offering")
at $10 per share and received net proceeds of approximately $5,665,000. The
Company transferred approximately $3,097,000 of the net proceeds to the Bank for
the purchase of all of the capital stock of the Bank. In addition, $529,140 was
loaned to the Bank's Employee Stock Ownership Plan ("ESOP") for the purchase of
shares in the Offering.
Total assets increased by approximately $5,818,000 to $32,635,000 at June 30,
1997, from $26,817,000 at March 31, 1997. The increase in assets was directly
attributable to the Offering. Total cash and cash equivalents increased by
$4,798,000 to $6,592,000 at June 30, 1997, from $1,794,000 at March 31, 1997.
This increase represented the inflow of cash associated with subscription orders
received for the purchase of Common Stock in the Offering. Net loans receivable
increased approximately $547,000 to $22,272,000 at June 30, 1997, from
$21,725,000 at March 31, 1997. The net increase was primarily attributable to
the increase in one to four family mortgages of $515,000. Such increases
primarily reflected the economic health of the Bank's market area and the
competitive pricing of the Bank's loan product. The funding of the loan growth
was mainly provided by existing cash reserves. Investment securities available
for sale increased $614,000 to $2,934,000 at June 30, 1997, from $2,320,000 at
March 31, 1997. The increase was attributable to the purchase of a U. S.
Government Agency obligation for $425,000 and an increase in the unrealized gain
on securities available for sale of $189,000. Deposits decreased approximately
$147,000 to $21,553,000 at June 30, 1997, from $21,700,000. This decrease
primarily represents funds withdrawn by depositors which were used to purchase
stock in the Offering.
Comparison of the Results of Operations for the Three Months Ended June 30, 1997
and 1996
Net income increased by $24,500 or 41.0% from net income of $59,400 for the
three months ended June 30, 1996, to net income of $83,900 for the three months
ended June 30, 1997.
Interest income increased $39,000, or 7.6%, for the three months ended June 30,
1997 compared to the three months ended June 30, 1996. The increase in interest
income is primarily attributed to an increase in the average balance of
interest-earning assets. The average balance in interest-earning assets
increased by $2,261,000, or 8.8%, while the average yield on interest-earning
assets declined from 7.98% for the three months ended June 30, 1996 to 7.88% for
the three months ended June 30, 1997.
Interest expense increased $20,000 from $241,000 for the three months ended June
30, 1996 to $261,000 for the three months ended June 30, 1997. The increase in
interest expense was attributable to an increase in the average balance of
interest-bearing liabilities to $22.7 million from $21.0 million. The cost of
funds remained relatively unchanged from the same period a year ago.
Net interest income increased $19,000 or 7.1% from $270,000 for the three months
ended June 30, 1997 to $289,000 for the three months ended June 30, 1996. The
increase is primarily attributable to an increase in average interest earning
assets from $25.7 million for the three months ended June 30, 1996 to $27.9
million for the three months ended June 30, 1997. Net interest income was
partially offset by a declining interest rate spread from 3.38% for the three
months ended June 30, 1996 to 3.28% for the three months ended June 30, 1997.
Management regularly performs an analysis to identify the inherent risk of loss
in its loan portfolio. This analysis includes evaluation of concentrations of
credit, past loss experience, current economic conditions, amount and
composition
7
<PAGE>
of the loan portfolio (including loans being specifically monitored by
management), estimated fair value of underlying collateral, loan commitments
outstanding, delinquencies, and other factors. Based on this analysis,
management established an allowance for loan losses. The allowance for loan
losses is adjusted periodically by a provision for loan losses which is charged
to operations based on management's evaluation of the losses that may be
incurred in the Bank's loan portfolio. The provision for loan losses increased
to $1,950 for the three months ended June 30, 1997, from $1,200 for the three
months ended June 30, 1996.
The Bank will continue to monitor its allowance for loan losses and make future
additions to the allowance through the provision for loan losses as economic
conditions dictate. Although the Bank maintains its allowance for loan losses at
a level that it considers to be adequate to provide for the inherent risk of
loss in its loan portfolio, there can be no assurance that future losses will
not exceed estimated amounts or that additional provisions for loan losses will
not be required in future periods. In addition, the Bank's determination as to
the amount of its allowance for loan losses is subject to review by its primary
federal regulator, the Office of Thrift Supervision ("OTS"), as part of its
examination process, which may result in the establishment of an additional
allowance based upon the judgment of the OTS after a review of the information
available at the time of the OTS examination.
Noninterest income increased by less than $1,000 from $5,900 for the three
months ended June 30, 1996, to $6,400 for the three months ended June 30, 1997.
Noninterest income is comprised primarily of service charges on deposit
accounts.
Noninterest expense decreased by $15,000 from $182,000 for the three months
ended June 30, 1996, to $167,000 for the three months ended June 30, 1997.
Noninterest expense decreased primarily as a result of a lower deposit insurance
premium which decreased as a result of federal legislation enacted in September
1996 from $.23 per $100 of deposit premiums for the three months ended June 30,
1996, to $.065 per $100 of deposits for the three months ended June 30, 1997.
Deposit insurance premiums decreased $8,300 from $11,700 for the three months
ended June 30, 1996, to $3,400 for the three months ended June 30, 1997.
Compensation and employee benefits decreased $8,600 due to the retirement of an
employee in February, 1997, with no replacement hired as of June 30, 1997.
Income tax expense increased from $33,000 for the three months ended June 30,
1996, to $43,000 for the three months ended June 30, 1997, as a result of an
increase in pre-tax income.
Liquidity and Capital Resources
The Bank's primary sources of funds are deposits, amortization and prepayment of
loans, maturities of investment securities, and funds provided from operations.
While scheduled loan repayments are a relatively predictable source of funds,
deposit flows and loan prepayments are greatly influenced by general interest
rates, economic conditions, and competition. In addition, the Bank invests
excess funds in overnight deposits which provide liquidity to meet lending
requirements.
The Bank has other sources of liquidity if a need for additional funds arises.
Additional sources of funds include a line of credit with the Federal Home Loan
Bank ("FHLB") of Pittsburgh amounting to $1.9 million. As of June 30, 1997, the
Bank had no outstanding advances from the FHLB.
As of June 30, 1997, the Bank had $1,105,000 in outstanding mortgage and
construction loan commitments. Management believes that it has adequate sources
to meet the actual funding requirements.
Management monitors the Bank's tangible, core, and risk-based capital ratios in
order to assess compliance with OTS regulations. At June 30, 1997, the Bank
exceeded the minimum capital ratios requirements imposed by the OTS.
8
<PAGE>
At June 30, 1997, the Bank's capital ratios are as follows:
Requirement Actual
----------- ------
Tangible capital 1.50% 23.64%
Core capital 3.00% 23.64%
Risk-based capital 8.00% 54.84%
Risk Elements
The table below presents information concerning nonperforming assets including
nonaccrual loans, renegotiated loans, loans 90 days or more past due, other real
estate loans, and repossessed assets. A loan is classified as nonaccrual when,
in the opinion of management, there are serious doubts about collectibility of
interest and principal. At the time the accrual of interest is discontinued,
future income is recognized only when cash is received. Renegotiated loans are
those loans which terms have been renegotiated to provide a reduction or
deferral of principal or interest as a result of the deterioration of the
borrower.
<TABLE>
<CAPTION>
June 30, March 31,
1997 1997
------------ ------------
(dollars in thousands)
<S> <C> <C>
Loans on nonaccrual basis $ 10 $ 10
Loans past due 90 days or more - 70
Renegotiated loans - -
------------ ------------
Total nonperforming loans 10 80
------------ ------------
Other real estate - -
Repossessed assets - -
------------ ------------
Total nonperforming assets $ 10 $ 80
============ ============
Nonperforming loans as a percent of total loans 0.00% 0.36%
============ ============
Nonperforming assets as a percent of total assets 0.00% 0.30%
============ ============
Allowance for loan losses to nonperforming loans 1,661.00% 205.19%
============ ============
</TABLE>
Management monitors impaired loans on a continual basis. As of June 30, 1997 the
company had no impaired loans.
During the three months ended June 30, 1997, loans increased $547,000 and
nonperforming loans decreased $70,000 while the allowance for loan losses
increased $2,000 for the same period. The percentage of allowance for loan
losses to loans outstanding remained .7% during this time period. Nonperforming
loans are primarily made up of one to four family residential mortgages. The
collateral requirements on such loans reduce the risk of potential losses to an
acceptable level in management's opinion.
9
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal proceedings
The registrant was not engaged in any material pending legal proceedings as
of the date of this Report. From time to time, the Bank is a party to legal
proceedings within the normal course of business wherein it enforces its
security interest in loans made by it, and other matters of a like kind.
Item 2. Changes in securities
NONE
Item 3. Defaults upon senior securities
NONE
Item 4. Submission of matters to a vote of security holders
NONE
Item 5. Other information
NONE
Item 6. Exhibits and reports on Form 8-K
NONE
10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SISTERSVILLE BANCORP, INC.
Date: August 1, 1997 By:/s/ Stanley M. Kiser
-------------------------------
Stanley M. Kiser
President and Chief Executive
Officer
(Duly Authorized Officer)
Date: August 1, 1997 By:/s/ Stanley M. Kiser
-------------------------------
Stanley M. Kiser
President and Chief Executive
Officer
(Principal Executive and Financial
Officer)
11
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-END> JUN-30-1997
<CASH> 83
<INT-BEARING-DEPOSITS> 6,509
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,934
<INVESTMENTS-CARRYING> 311
<INVESTMENTS-MARKET> 317
<LOANS> 22,438
<ALLOWANCE> 166
<TOTAL-ASSETS> 32,635
<DEPOSITS> 21,553
<SHORT-TERM> 0
<LIABILITIES-OTHER> 405
<LONG-TERM> 0
0
0
<COMMON> 66
<OTHER-SE> 10,611
<TOTAL-LIABILITIES-AND-EQUITY> 32,635
<INTEREST-LOAN> 476
<INTEREST-INVEST> 74
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 550
<INTEREST-DEPOSIT> 261
<INTEREST-EXPENSE> 261
<INTEREST-INCOME-NET> 289
<LOAN-LOSSES> 2
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 167
<INCOME-PRETAX> 126
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 84
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 4.10
<LOANS-NON> 10
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 164
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 166
<ALLOWANCE-DOMESTIC> 166
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
