<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
----- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
----- TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------------ ------------
Commission File Number 333-49277
HOMESTEAD BANCORP, INC.
(Exact name of small business issuer as specified in its charter)
LOUISIANA 72 - 1416514
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
195 NORTH SIXTH STREET, PONCHATOULA, LOUISIANA 70454
Address of principal executive offices)
Issuer's telephone number, including area code: (504) 386-3379
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
for such shorter period that the issuer was required to file such
reports), and (2) has been subject to such filing requirements for the
past 90 days. Yes No X
Shares of common stock, par value $.01 per share, outstanding as of
March 31, 1998: 100
Transitional Small business Disclosure Format (check one):
Yes No X .
* The issuer just became subject to the filing requirements of Section 13
or 15(d) when its Form SB-2 was declared effective on May 14, 1998.
<PAGE>
Homestead Bancorp, Inc.
Form 10-QSB
Quarter Ended March 31, 1998
PART I - FINANCIAL INFORMATION
Interim Financial Information required by Rule 10-01 of Regulation S-X and Item
303 of Regulation S-B is included in this Form 10-QSB as referenced below:
<TABLE>
<CAPTION>
Page
----
<S> <C>
Item 1 - Financial Statements
Statement of Financial Condition at March 31, 1998............................... 3
Statement of Income (Unaudited) From February 27,
1998 (Date of Incorporation) to March 31, 1998............................. 4
Statement of Cash Flows (Unaudited) From February 27,
1998 (Date of Incorporation) To March 31, 1998............................. 5
Notes to 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................................................... 8
Item 2 - Changes in Securities............................................... 8
Item 3 - Defaults Upon Senior Securities..................................... 8
Item 4 - Submission of Matters to a Vote of Security-Holders................. 8
Item 5 - Other Information................................................... 8
Item 6 - Exhibits and Reports on Form 8-K.................................... 8
Signatures....................................................................... 9
</TABLE>
2
<PAGE>
Homestead Bancorp, Inc.
STATEMENT OF FINANCIAL CONDITION
--------------------------------
March 31, 1998
(Unaudited)
ASSETS
<TABLE>
<CAPTION>
Assets:
<S> <C>
Receivable $1,000
------
Total Assets $1,000
------
------
LIABILITIES AND STOCKHOLDER EQUITY
----------------------------------
Liabilities $ --
------
Total Liabilities --
Stockholder's Equity:
Common Stock, Par Value $.01, 10,000,000
Shares Authorized; 100 Shares Issued and
Outstanding 1
Paid in Capital in Excess of Par 999
Retained Earnings --
------
Total Stockholder Equity 1,000
------
Total Liabilities and Stockholder's
Equity $1,000
------
------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
Homestead Bancorp, Inc.
STATEMENT OF INCOME
-------------------
For the Period from February 27, 1998
(Date of Incorporation) to March 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Total Income $--
Total Expense --
-----
Net Income $--
-----
-----
Earnings Per Share $--
-----
-----
</TABLE>
See accompanying notes to financial statements.
4
<PAGE>
Homestead Bancorp, Inc.
STATEMENT OF CASH FLOWS
-----------------------
For the Period from February 27, 1998 (Date
of Incorporation) To March 31, 1998
(Unaudited)
<TABLE>
<CAPTION>
<S> <C>
Cash Flows from Operating Activities:
Net Income $ --
Adjustments to Reconcile Net Income to Net Cash
Provided by Operating Activities:
Changes in Assets and Liabilities:
(Increase) Decrease in Receivable (1,000)
-------
Net Cash Provided by Operating Activities (1,000)
-------
Cash Flows from Investing Activities:
Net Cash Provided by Investing Activities --
Cash Flows from Financing Activities:
Proceeds from Stock Issuance 1,000
-------
Net Cash Provided by Financing Activities 1,000
-------
Increase in Cash and Cash Equivalents --
Cash and Cash Equivalents at Beginning of Period --
-------
Cash and Cash Equivalents at End of Period $ --
-------
-------
</TABLE>
See accompanying notes to financial statements.
5
<PAGE>
Homestead Bancorp, Inc.
NOTES TO FINANCIAL STATEMENTS
-----------------------------
(Unaudited)
March 31, 1998
Note 1 - Basis of Presentation -
On February 5, 1998, Ponchatoula Homestead Savings, F.A. (the
"Association") incorporated Homestead Bancorp, Inc. (the "Company") to
facilitate the conversion of Homestead Mutual Holding Company (the "MHC") from
mutual to stock form (the "Conversion"). In connection with the Conversion, the
Company is offering its common stock to the depositors and borrowers of the
Association as of specified dates, to an employee stock ownership plan and to
members of the general public. Upon consummation of the Conversion, the MHC will
be merged into the Association, the Association will then merge with an interim
subsidiary of the Company (with the Association as the surviving entity), all of
the Association's outstanding common stock will be exchanged for common stock of
the Company, and the Company will become the holding company for the Association
and issue shares of common stock to the general public.
The Company filed a Form SB-2 with the Securities and Exchange Commission
("SEC") on April 2, 1998, which as amended was declared effective by the SEC on
May 14, 1998. The Association filed a Form AC with the Office of Thrift
Supervision ("OTS") on April 2, 1998. The Form AC and related offering and proxy
materials, as amended, were conditionally approved by the OTS by letters dated
May 14, 1998. The Company also filed an Application H-(e) 1-S with the OTS on
April 17, 1998, which was conditionally approved by the OTS by letter dated May
26, 1998.
Consummation of the Conversion is contingent upon approval of the Plan by
the members of the MHC and the stockholders of the Association and the sale of a
sufficient number of shares of common stock consistent with an independent
appraisal of the pro forma market value of the common stock. The members of the
MHC and the stockholders of the Association are scheduled to vote upon the Plan
at special meetings to be held on July 1, 1998, and the subscription and
community offerings are scheduled to close on June 23, 1998.
In connection with the incorporation of the Company, the Company issued
100 shares of common stock to the Association. The shares will be canceled upon
consummation of the Conversion, and the Conversion will be accounted for under
the pooling of interests method of accounting.
The accompanying unaudited financial statements were prepared in
accordance with instructions for Form 10-QSB and, therefore, do not include
information or footnotes necessary for a complete presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. However, all adjustments (consisting only of
normal recurring accruals) which, in the opinion of management, are necessary
for a fair presentation of the financial statements have been included.
6
<PAGE>
Note 2 - Earnings Per Share -
Earnings per share is not considered meaningful as the Conversion has not
yet been completed, the Company has not yet engaged in operations, and the 100
shares currently held by the Association will be canceled upon consummation of
the Conversion.
Item 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
Homestead Bancorp, Inc is a Louisiana corporation organized in
February 1998 by the Association for the purpose of becoming a unitary
holding company of the Association. The Company will acquire all of the
capital stock of the Association in exchange for common stock of the
Company and will issue additional shares to persons with subscription
rights and possibly other members of the public. Immediately following the
Conversion, the only significant assets of the Company will be the capital
stock of the Association, the Company's loan to the ESOP, and the
remainder of the net Conversion proceeds retained by the Company.
Initially, the business and management of the Company will primarily
consist of the business and management of the Association. Initially, the
Company will neither own nor lease any property, but will instead use the
premises, equipment and furniture of the Association. At the present time,
the Company does not intend to employ any persons other than officers of
the Association, and the Company will utilize the support staff of the
Association from time to time. Additional employees will be hired as
appropriate to the extent the Company expands or changes its business in
the future.
Management believes that the holding company structure will provide the
Company with additional flexibility to diversify, should it decide to do
so, its business activities through existing or newly formed subsidiaries,
or through acquisitions of or mergers with other financial institutions
and financial services related companies. Although there are no current
arrangements, understandings or agreements, written or oral, regarding any
such opportunities or transactions, the Company will be in a position
after the Conversion, subject to regulatory limitations and the Company's
financial position, to take advantage of any such acquisition and
expansion opportunities that may arise. The initial activities of the
Company are anticipated to be funded by the proceeds retained by the
Company and earnings thereon or, alternatively, through dividends from the
Association.
To date, the Company has not engaged in any business activities other than
those related to the Conversion.
7
<PAGE>
Homestead Bancorp, Inc.
Form 10-QSB
Quarter Ended March 31, 1998
PART II - OTHER INFORMATION
---------------------------
Item 1 - Legal Proceedings:
There are no matters required to be reported under this item.
Item 2 - Changes in Securities:
There are no matters required to be reported under this item.
Item 3 - Defaults Upon Senior Securities:
There are no matters required to be reported under this item.
Item 4 - Submission of Matters to a Vote of Security Holders:
On March 25, 1998, the Association executed a consent of sole
stockholder pursuant to which it approved the division of the
directors of the Company into three classes, as follows: the first
class, consisting of John C. Bohning and Milton J. Schanzbach, for a
term of office expiring in 1998; the second class, consisting of
Robert H. Gabriel and Barbara B. Theriot, for a term of office
expiring in 1999; and the third class, consisting of Lawrence C.
Caldwell, Jr., Dennis E. James and Allen B. Pierson, Jr., for a term
of office expiring in 2000, or until their successors are elected
and appointed.
Item 5 - Other Information:
There are no matters required to be reported under this item.
Item 6 - Exhibits and Reports on Form 8-K:
(a) The following exhibit is filed herewith:
<TABLE>
<CAPTION>
EXHIBIT NO. DESCRIPTION
<S> <C>
27.1 Financial Data Schedule
99.1 Form 10-QSB for the Association for the
quarter ended March 31, 1998 as filed with
the OTS.
</TABLE>
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during the
quarter ended March 31, 1998.
8
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HOMESTEAD BANCORP, INC.
Registrant
Date: June 19, 1998 By: /s/ Lawrence C. Caldwell, Jr.
-----------------------------
Lawrence C. Caldwell, Jr.
President and Chief Executive
Officer
Date: June 19, 1998 By: /s/ Kelly Morse
---------------
Kelly Morse, Comptroller
9
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 0
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 1000
<DEPOSITS> 0
<SHORT-TERM> 0
<LIABILITIES-OTHER> 0
<LONG-TERM> 0
0
0
<COMMON> 1000
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 1000
<INTEREST-LOAN> 0
<INTEREST-INVEST> 0
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 0
<INTEREST-DEPOSIT> 0
<INTEREST-EXPENSE> 0
<INTEREST-INCOME-NET> 0
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 0
<INCOME-PRETAX> 0
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 0
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
<YIELD-ACTUAL> 0
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<PAGE>
OFFICE OF THRIFT SUPERVISION
DEPARTMENT OF THE TREASURY
Washington, D.C. 20552
--------------------
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
----------------------
PONCHATOULA HOMESTEAD SAVINGS, F.A.
(Exact Name of Registrant as specified in its charter)
(504) 386-3379
Louisiana 72-1271955
(State of incorporation or organization) (IRS Employer Identification No.)
195 North Sixth Street
Ponchatoula, Louisiana 70454
(Address of principal executive office) (including zip code)
Securities to be registered pursuant to Section 12(b) of the Act:
NONE
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.10 per share
(Title of Class)
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION
Financial Statements:
<TABLE>
<CAPTION>
Page
<S> <C>
Statements of Financial Condition -
March 31, 1998 and December 31, 1997..................... 1-2
Statements of Income -
for the quarter ended
March 31, 1998 and 1997.................................. 3
Statements of Stockholders' Equity
for the quarter ended March 31, 1998
and 1997................................................. 4
Statements of Cash Flows -
for the quarter ended March 31, 1998
and 1997................................................. 5-6
Notes to Financial Statements..................................... 7-9
Management's Discussion and Analysis of Financial
Condition and Results of Operations...................... 10-13
Part II - OTHER INFORMATION
Legal Proceedings................................................. 14
Changes in Securities............................................. 14
Defaults Upon Senior Securities................................... 14
Submission of Matters to a Vote of Security
Holders.................................................. 14
Other Information................................................. 14
Exhibits and Reports on Form 8-K.................................. 14
Signatures........................................................ 15
</TABLE>
<PAGE>
Ponchatoula Homestead Savings, F.A.
STATEMENTS OF FINANCIAL CONDITION
As of March 31, 1998 and December 31, 1997
ASSETS
<TABLE>
<CAPTION>
(UNAUDITED) (AUDITED)
March 31, December 31,
1998 1997
------------- ------------
(In Thousands)
<S> <C> <C>
Cash and Cash Equivalents $ 579 $ 609
Interest-bearing Deposits in Other Institutions 1,031 645
Securities:
Investment Securities Available
for Sale (Amortized Cost of
$2.6 million and $2.6 million) 2,608 2,605
Mortgage-Backed Securities
Available for Sale (Amortized
Cost of $13.7 million and $14.3 million) 13,760 14,261
Mortgage-Backed Securities
Held to Maturity (Fair Value of
$10.1 million and $10.4 million) 9,977 10,301
Federal Home Loan Bank Stock, at Cost 704 584
------------- ------------
Total Securities 28,659 29,005
Loans Held for Sale 2,186 1,414
Loans Receivable 29,613 28,033
Leases Receivable 290 301
------------- ------------
Total Loans and Leases Receivable 29,903 28,334
Less: Allowance for Loan and Lease Losses (266) (265)
------------- ------------
Net Loans and Leases Receivable 29,637 28,069
Premises and Equipment, Net 537 545
Accrued Interest Receivable 430 420
Other Assets 38 127
------------- ------------
Total Assets $ 61,487 $ 59,580
------------- ------------
------------- ------------
</TABLE>
<PAGE>
LIABILITIES AND STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
(UNAUDITED) (AUDITED)
March 31, December 31,
1998 1997
------------- ------------
(In Thousands)
<S> <C> <C>
Deposits $ 41,382 $ 42,111
Advances from Borrowers for Taxes and
Insurance 30 32
Advances from Federal Home
Loan Bank 13,900 11,500
Income Taxes Payable 126 162
Other Liabilities 165 40
------------- ------------
Total Liabilities 55,603 53,845
Stockholders' Equity:
Common Stock - $.10 Par Value;
8,000,000 Shares Authorized, 606,479
Shares Issued and Outstanding in 1998
606,345 in 1997 61 61
Paid-in Capital in Excess of Par 2,109 2,017
Retained Earnings - Substantially Restricted 3,741 3,734
Unrealized Gain (Loss) on Securities
Available for Sale, Net 15 (35)
------------- ------------
5,926 5,777
Common Stock Acquired by Recognition Plans (42) (42)
------------- ------------
Total Stockholders' Equity 5,884 5,735
------------- ------------
Total Liabilities and Stockholders'
Equity $ 61,487 $ 59,580
------------- ------------
------------- ------------
</TABLE>
<PAGE>
Ponchatoula Homestead Savings, F.A.
STATEMENTS OF INCOME
for the quarter ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
(UNAUDITED)
QUARTER ENDED
March 31,
1998 1997
----- ----
(In Thousands)
<S> <C> <C>
Interest Income:
Loans and Leases $ 663 $ 593
Mortgage-Backed Securities 373 380
Investment Securities 44 44
Other 12 16
------- -------
Total Interest Income 1,092 1,033
Interest Expense:
Deposits 463 507
Borrowings 161 134
------- -------
Total Interest Expense 624 641
------- -------
Net Interest Income 468 392
Provision for (Recovery of) Loan and Lease
Losses 1 (16)
------- -------
Net Interest Income After Provision for
(Recovery of) Loan and Lease Losses 467 408
------- -------
Noninterest Income:
Gain on Sale of Loans 62 44
Loan Fees and Service Charges 61 49
Other Income 7 6
------- -------
Total Noninterest Income 130 99
Noninterest Expense:
Compensation and Benefits 210 192
Occupancy and Equipment Expense 40 36
Federal Insurance Premium 7 1
Net Real Estate Owned Expense 0 3
Other 146 118
------- -------
Total Noninterest Expense 403 350
------- -------
Income Before Provision for Income
Taxes 194 157
Income Taxes 66 54
------- -------
Net Income $ 128 $ 103
------- -------
------- -------
Per Share:
Earnings Per Common Share 0.21 0.17
------- -------
------- -------
Earnings Per Common Share - Assuming Dilution 0.21 0.17
------- -------
------- -------
Cash Dividends Declared 0.20 0.16
------- -------
------- -------
</TABLE>
<PAGE>
Ponchatoula Homestead Savings, F.A.
STATEMENTS OF STOCKHOLDERS' EQUITY
for the quarter ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
(UNAUDITED) (UNAUDITED)
March 31, March 31,
1998 1997
--------- ---------
(In Thousands)
<S> <C> <C>
Common Stock:
Balance - Beginning and End of Period $ 61 $ 61
------- -------
Paid-in Capital in Excess of Par:
Balance - Beginning of Period $ 2,017 $ 1,697
Exercise of Stock Options 1 --
Dividends Declared and Waived
by Holding Company 91 73
------- -------
Balance - End of Period $ 2,109 $ 1,770
------- -------
------- -------
Retained Earnings:
Balance - Beginning of Period $ 3,734 $ 3,843
Net Income 128 103
Cash Dividends (30) (24)
Dividends Declared and Waived
by Holding Company (91) (73)
------- -------
Balance - End of Period $ 3,741 $ 3,849
------- -------
------- -------
Unrealized Gain (Loss) on Securities
Available for Sale, Net:
Balance - Beginning of Period $ (35) $ (101)
Net Change in Unrealized Gain (Loss) 50 (35)
------- -------
Balance - End of Period $ 15 $ (136)
------- -------
------- -------
Director & Management Recognition Plans
Balance - Beginning and End of Period $ (42) $ (57)
------- -------
------- -------
</TABLE>
<PAGE>
Ponchatoula Homestead Savings, F.A.
STATEMENTS OF CASH FLOWS
for the quarter ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
(UNAUDITED)
March 31,
-------------------
1998 1997
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net Income 128 103
Adjustments to reconcile net income
to net cash provided by operating
activities:
Depreciation 9 7
Provision for (Recovery of) prior provision
for loan and lease losses 1 (16)
Net Amortization of Premiums on Securities 18 12
Stock Dividends on Federal Home
Loan Bank Stock (9) (7)
Net (Increase) Decrease in Loans
Held for Sale (772) 1,108
Change in Assets and Liabilities
(Increase) Decrease in Accrued
Interest Receivable (10) 48
(Increase) Decrease in Other
Assets 89 44
Increase (Decrease) in Income
Taxes Payable (36) (79)
Increase (Decrease) in Other
Liabilities 99 53
------ -----
Net Cash Provided by (Used in) Operating Activities (483) 1,273
Cash flows from Investing Activities:
Purchases of Property and Equipment (1) (4)
Maturities of Investment Securities 300 300
Purchases of Investment Securities (300) (400)
Maturities of Mortgage-Backed Securities 1,221 1,093
Purchases of Mortgage-Backed Securities (339) --
Net (Increase) Decrease in Loans and Leases Receivable (1,570) (518)
------ -----
Net Cash Provided by (Used in) Investing Activities (689) 471
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
(UNAUDITED)
March 31,
----------------
1998 1997
------ -----
<S> <C> <C>
Cash flows from Financing Activities:
Net Decrease in Money Market Accounts,
NOW Accounts and Savings Accounts (154) (748)
Net Increase (Decrease) in Certificates
of Deposit (575) 1,016
Proceeds from (Repayment of) Federal Home
Loan Bank Advances 2,400 (1,200)
Increase (Decrease) in Advances from
Borrowers for Taxes and Insurance (2) (11)
Dividends Paid on Common Stock (30) (24)
Purchase of Federal Home Loan Bank Stock (111) --
------ ------
Net Cash Provided by (Used In)
Financing Activities 1,528 (967)
------ ------
Net Increase (Decrease) in Cash and
Cash Equivalents 356 777
Cash and Cash Equivalents -
Beginning of Period 1,254 1,298
------ ------
Cash and Cash Equivalents -
End of Period 1,610 2,075
------ ------
------ ------
Supplemental Disclosures of Cash flow
Information:
Cash Payments for:
Interest Paid to Depositors 463 1,636
------ ------
------ ------
Interest Paid on Borrowings 161 134
------ ------
------ ------
Supplemental Schedules of Noncash
Investing and Financing Activities:
Real Estate Acquired in Settle-
ment of Loans and Leases -- 60
------ ------
------ ------
(Increase) Decrease in Unrealized Loss
on Securities Available for Sale 78 (53)
------ ------
------ ------
Increase (Decrease) in Deferred Tax
Effect on Unrealized Loss on Securities
Available for Sale 26 18
------ ------
------ ------
</TABLE>
<PAGE>
Ponchatoula Homestead Savings, F.A.
Notes to Financial Statements
(Unaudited)
March 31, 1998 and 1997
Note 1 - Summary of Significant Accounting Policies -
The accounting principles followed by Ponchatoula Homestead Savings,
F.A. are those which are generally practiced within the savings and loan
industry. The methods of applying those principles conform with generally
accepted accounting principles and have been applied on a consistent basis.
The accompanying unaudited financial statements were prepared in
accordance with instructions for Form 10-QSB and, therefore do not include
information or footnotes necessary for a complete presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. However, all adjustments (consisting only of
normal recurring accruals) which, in the opinion of management, are necessary
for a fair presentation of the financial statements have been included.
Comprehensive Income
The Financial Accounting Standards Board issued Statement No. 130
"Reporting Comprehensive Income", which becomes effective for fiscal years
beginning after December 15, 1997. This statement establishes standards for
reporting and display of comprehensive income and its components which are
revenues, expenses, gains, and losses that under GAAP are included in
comprehensive income but excluded from net income. Ponchatoula adopted this
statement in 1998. The only component of comprehensive income included in
the financial statements was an unrealized gain (loss) on securities
available for sale, which was immaterial for all periods presented.
Note 2 - Dividends and Earnings Per Share -
Ponchatoula declared a quarterly dividend of $.20 for the first quarter
of 1998. The Mutual Holding Company waived receipt of dividends declared on
all shares owned; the amounts waived have been recorded by Ponchatoula as
additional paid-in capital. Total dividends paid to stockholders other than
the Mutual Holding Company in the first three months of 1998 was $30,000 or
$.20 per share. Under Federal regulations, Ponchatoula may not declare or pay
a cash dividend on its capital stock if the effect thereof would cause
Ponchatoula's regulatory capital to be reduced below the amount required for
liquidity.
Earnings per common share are computed by dividing net income by the
number of shares of common stock outstanding, which is 606479 for the three
month period ended March 31, 1998. Earnings per common share - assuming
dilution, are computed by dividing net income by the number of shares of
common stock outstanding plus the effect of diluted securities, which was
617940 for the three month period ended March 31, 1998.
Note 3 - Stock Option and Management Recognition Plans -
1996 Stock Incentive Plan
This program was designed to attract and retain qualified personnel in
key positions, provide key employees with a proprietary interest in
Ponchatoula as an incentive to contribute to the success of Ponchatoula and
reward key employees for outstanding performance. An aggregate of 10,782
shares of authorized but unissued Common Stock of Ponchatoula was reserved
for issuance under the Plan, which is equal to 7.5% of Common Stock issued
to the public in connection with the formation of the mutual holding company
("the offering"). The exercise price of each option equals the market price
of Ponchatoula's stock on the date of grant and an option's maximum
<PAGE>
term is 10 years. Options are granted and vested at the discretion of the
Compensation Committee. Ninety percent of the options were granted on July
10, 1996. At December 31, 1997, shares available for grant under this plan
amounted to 1,449 shares. There were 134 options exercised during the first
three months of 1998
1996 Directors' Stock Option Plan
In order to attract and retain qualified directors for Ponchatoula, the
Board of Directors and stockholders of Ponchatoula have adopted the 1996
Directors' Stock Option Plan. An aggregate of 3,594 shares of authorized
but unissued Common Stock of Ponchatoula was reserved for issuance under the
Directors' Stock Option Plan, which is equal to 2.5% of the Common Stock of
Ponchatoula issued in the offering. The exercise price of each option equals
the market price of Ponchatoula's stock on the date of grant and an option's
maximum term is 10 years. Ninety percent of the options were granted on the
date the Plan was approved by the stockholders of Ponchatoula, which was
April 10, 1996. The options become exercisable after six months from the
grant date.
1996 Management Recognition Plan for Officers
The objective of this plan is to enable Ponchatoula to provide officers
and key employees with a proprietary interest in Ponchatoula as compensation
for their contributions to the Association and as an incentive to contribute
to Ponchatoula's future success. An aggregate of 4,312 shares of authorized
Common Stock of Ponchatoula was issued to the Management Recognition Plan for
Officers, which is equal to 3.0% of the Common Stock of Ponchatoula issued in
the offering. The awards are allocated at the discretion of the Committee.
Shares vest at the rate of 20% on each annual anniversary date.
1996 Management Recognition Plan for Directors
The objective of this plan is to enable Ponchatoula to provide
non-employee directors with a proprietary interest in Ponchatoula as
compensation for their contributions to Ponchatoula and as an incentive to
contribute to Ponchatoula's future success. An aggregate of 1,434 shares of
authorized Common Stock of Ponchatoula was issued to the Management
Recognition Plan for Directors, which is equal to 1.0% of the Common Stock of
Ponchatoula issued in the offering. Ninety percent of the awards were granted
on the date the Plan was approved by the stockholders of Ponchatoula, which
was April 10, 1996. The remaining 144 shares were granted April 10, 1997.
Shares vest at the rate of 20% on each annual anniversary date.
Note 4 - The Conversion -
On February 25, 1998, the Board of Directors of Ponchatoula and the
Company adopted a Plan of Conversion and Agreement and Plan of Reorganization
(the Plan). Pursuant to the Plan, (1) the Company, which owns approximately
75.2% of Ponchatoula, will convert from mutual to stock form and
simultaneously merge into Ponchatoula, with Ponchatoula being the surviving
entity; (2) Ponchatoula will then merge into an interim institution (Interim)
to be formed as a wholly owned subsidiary of Homestead Bancorp, Inc., a newly
formed Louisiana corporation formed in connection with the reorganization,
with Ponchatoula being the surviving entity; and (3) the outstanding shares
of Ponchatoula's common stock (other than those held by the Company, which
will be canceled) will be converted into shares of common stock of Homestead
Bancorp, Inc. Homestead Bancorp, Inc. will then offer for sale pursuant to
the Plan additional shares equal to 75.2% of the common shares of Homestead
Bancorp, Inc. Consummation of the Plan is subject to (i) the approval of the
members of the Company, (ii) the stockholders of Ponchatoula and (iii)
various regulatory agencies.
Pursuant to the Plan, shares of Homestead Bancorp, Inc.' s common stock
are expected to be offered initially for subscription by eligible members of
the Company and certain other persons as of specified dates subject to
various subscription priorities as provided in the Plan. The common stock
will be offered at a price to be determined by the Board of Directors based
upon an appraisal to be made by an independent appraisal firm. The exact
number of shares to be offered will be determined by the Board of Directors
in conjunction with the determination of the price at which the shares will
be sold. At least the minimum number of shares offered in the conversion
must be sold. Any stock not purchased in the subscription offering will be
sold in a community offering
<PAGE>
expected to the commenced simultaneously with the subscription offering or,
if necessary, in a syndicated community offering.
The Plan provides that when the conversion is completed, a "Liquidation
Account" will be established in an amount equal to the greater of (1) the
retained earnings of Ponchatoula as of March 31, 1994 or (2) 75.2% of
Ponchatoula's total stockholders' equity as reflected in its latest statement
of financial condition in the final prospectus utilized in the conversion.
The Liquidation Account is established to provide a limited priority claim to
the assets of Ponchatoula to qualifying depositors as of specified dates
(Eligible Account Holders and Supplemental Eligible Account Holders) who
continue to maintain deposits in Ponchatoula after the conversion. In the
unlikely event of a complete liquidation of Ponchatoula, and only in such an
event, Eligible Account Holders and Supplemental Eligible Account Holders
would receive from the Liquidation Account a liquidation distribution based
on their proportionate share of the then total remaining qualifying deposits.
Current regulations allow Ponchatoula to pay dividends on its stock
after the conversion if its regulatory capital would not thereby be reduced
below the amount then required for the aforementioned Liquidation Account.
Also, capital distribution regulations limit Ponchatoula's ability to make
capital distributions which include dividends, stock redemptions or
repurchases, cash-out mergers, interest payments on certain convertible debt,
and other transactions charged to the capital account based on their capital
level and supervisory condition. Federal regulations also preclude any
repurchase of the stock of Ponchatoula or its holding company for three years
after the conversion, except for repurchases of qualifying shares of a
director and repurchases pursuant to an offer made on a pro-rate basis to all
stockholders and with prior approval of the Office of Thrift Supervision or
pursuant to an open-market stock repurchase program that complies with
certain regulatory criteria. Ponchatoula has retained the services of both a
marketing firm and legal counsel for the specific purpose of implementing the
Plan. Costs relating to the conversion will be deferred and, upon
conversion, such costs and any additional costs will be charged against the
proceeds from the sale of stock.
<PAGE>
Ponchatoula Homestead Savings, F.A.
Managements Discussion and Analysis
Of Financial Condition and Results of Operations
March 31, 1998
General
Ponchatoula's results of operation depend primarily on its net interest
income, which is the difference between interest income on interest-earning
assets and interest expense on interest bearing liabilities. Ponchatoula's
principle interest-earning assets are loans and leases, mortgage-backed
securities and investment securities. Ponchatoula's results of operations
also are affected by the provision for losses on loans and leases; the level
of its other income, including loan fees and service charges, federal
insurance premiums, net real estate owned expense and miscellaneous other
expenses; as well as its income tax expense.
Changes in Financial Condition
At March 31, 1998, Ponchatoula's total assets, deposits and equity
amounted to $61.5 million, $41.4 million, and $5.9 million respectively
compared to $59.6 million, $42.1 million, and $5.7 million respectively at
December 31, 1997. The increase in total assets of 1.9 million or 3.2% was
due primarily to an increase of $1.6 million in the net loan and lease
portfolio, combined with an increase of $772,000 in loans held for sale. The
increase of 54.6% in loans held for sale was due to new loan originations
exceeding new loan sales. Interest-bearing deposits in other institutions
increased $386,000 or 59.8%, during the first three months to $1.03 million.
Ponchatoula's short term borrowing from the Federal Home Loan Bank
decreased during the first three months of 1998 by $600,000 or 5.2%.
Ponchatoula uses the proceeds from short term borrowing to finance the purchase
of mortgage-backed securities. Ponchatoula's long term borrowing from the
Federal Home Loan Bank increased during the first three months of 1998 by $3
million. Ponchatoula uses the proceeds from long term borrowing to fund long
term fixed rate mortgages. Deposits with Ponchatoula have decreased $729,000 or
1.7%. The equity of Ponchatoula increased $149,000 or 2.6% in the first three
months of 1998, as a result net income of $128,000 combined with a decrease in
unrealized loss on available for sale of $50,000 offset by dividends paid out of
$30,000.
Capital
As of March 31, 1998, Ponchatoula's unaudited regulatory capital
exceeded all minimum capital requirements as indicated in the following table:
<TABLE>
<CAPTION>
Unaudited Regulatory Capital
----------------------------
Tier 1
Core Risk-Based
Capital % Capital %
------- ----- ---------- ------
<S> <C> <C> <C> <C>
GAAP Capital $5,884 $5,884
Adjustments:
Unrealized Gain on
Securities Available
for Sale 15 15
General Valuation
Reserves -- 250
------ ------
Regulatory Capital 5,869 9.53% 6,119 22.97%
Minimum Capital Requirements 2,461 4.0 2,130 8.0
------ ----- ------ ------
Excess Regulatory Capital $3,408 5.53% $3,989 14.97%
</TABLE>
<PAGE>
Liquidity
Ponchatoula is required under applicable federal regulations to maintain
specific levels of "liquid" investments in qualifying types of United States
Government, federal agency and other investments having maturities of five
years or less. Current OTS regulations require that a Savings institution
maintain liquid assets of not less than 5% of its average daily balance of
net withdrawable shares.
Results of Operations
Net income for the first three months of 1998 was $128,000 compared to
$103,000 for the same period of 1997. The increase in net income of $25,000
or 24.3%, was primarily due to an increase in net interest income after
provision for recovery of loan and lease losses of $59,000 or 14.5%,
combined with an increase in non-interest income of $31,000 or 31.3%, offset
by an increase in non-interest expense of $53,000 or 15.1%, and an increase
of $12,000 or 22.2% in income tax expense. The increase in non-interest
income is due to an increase in gain on sale of loans and an increase in loan
fees, due to an increase in the volume of loans closed. The increase in
total non-interest expense was attributable to an increase of $18,000
compensation expense combined with an increase of $28,000 in other
non-interest expense. The increase in other non-interest expense is
attributable to the increased loan volume.
Net Interest Income
The primary source of earnings for Ponchatoula is net interest income;
the difference between income generated from interest-earning assets less
interest expense on interest-bearing liabilities. The primary factors that
affect interest income are changes in the volume and type of interest-earning
assets and interest-bearing liabilities, along with changes in market rates.
Net interest income for the first three months of 1998 was $468,000 an
increase of $76,000 or 19.4% over the same period of 1997. This increase in
net interest income was primarily attributable to an increase in interest
income of $59,000 or 5.7%, combined with a decrease in interest expense of
$17,000 or 2.6% over the same period of 1997. The increase in interest
income was due to an increase in interest received from Ponchatoula's loan
and lease portfolio, offset by a decrease in interest earned on
mortgage-backed securities. The decrease in interest expense was due to a
decrease in interest paid on deposit accounts, offset by an increase in
interest paid on Federal Home Loan Bank Advances. Interest rate spread is the
yield of interest-earning assets minus the costs of interest-bearing
liabilities. The interest rate spread for the first three months of 1998 was
2.81% as compared to 2.35% for the same period in 1997.
The table of Average Balance Sheets and Interest Rate Analysis for the
three months ended March 31, 1998 and 1997 on page 12, and the corresponding
table of Interest Differentials on page 13, detail the effect of a change in
average balances and the change in interest yield and interest cost have on
net interest income for the respective periods.
Nonperforming Assets
Nonperforming assets include non-accrual loans and leases and real
estate owned. Loans are considered non-accrual when the principal or
interest becomes 90 days past due or when there is uncertainty about the
repayment of the principal and interest in accordance with the terms of the
loans. Non-accrual loans at March 31, 1998 were $168,000 compared to
$237,000 at March 31, 1997. The percentage of non-accrual loans and leases to
total loan and leases at March 31, 1998 is 0.56%, down from 0.84% at March
31, 1997.
Real estate owned is properties held for sale acquired through
foreclosure or negotiated settlements of debt. At March 31, 1998 the
Association had no real estate owned, compared to $201,000 at March 31, 1997.
Nonperforming assets at March 31, 1998 were 0.27% of total assets compared
to 0.40% at March 31, 1997.
<PAGE>
Ponchatoula Homestead Savings, F.A.
AVERAGE BALANCE SHEETS AND INTEREST RATE ANALYSIS
for the quarter ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
March 31, 1998 March 31, 1997
-------------------------------- --------------------------------
AVERAGE YIELD/ AVERAGE YIELD/
BALANCE INTEREST RATE BALANCE INTEREST RATE
-------- -------- ------ -------- -------- ------
<S> <C> <C> <C> <C> <C> <C>
Interest - Earning Assets:
Loans and Leases Receivable $ 29,794 663 8.89% $ 28,206 593 8.41%
Mortgage - Backed Securities 24,174 373 6.17% 26,304 380 5.77%
Investment Securities 3,168 44 5.58% 2,959 44 5.92%
Other Interest - Earning Assets 698 12 6.88% 1,093 16 6.08%
-------- -------- ------ -------- -------- ------
Total Interest - Earning Assets $ 57,834 1,092 7.55% $ 58,562 1,033 7.06%
Noninterest - Earning Assets 1,316 1,791
-------- --------
Total Assets $ 59,150 $ 60,353
-------- --------
-------- --------
Interest - Bearing Liabilities:
Deposits $ 41,767 463 4.43% $ 44,432 507 4.57%
Federal Home Loan Bank Advances 10,858 161 5.94% 9,950 134 5.38%
-------- -------- ------ -------- -------- ------
Total Interest-Bearing Liabilities $ 52,625 624 4.74% $ 54,382 641 4.71%
Noninterest - Bearing Liabilities 465 243
-------- --------
Total Liabilities $ 53,090 $ 54,625
-------- --------
-------- --------
Retained Earnings $ 5,974 $ 5,548
-------- --------
Total Liabilities and Retained Earnings $ 59,064 $ 60,173
-------- --------
-------- --------
Net Interest Income; Interest Rate Spread $ 468 2.81% $ 392 2.35%
-------- ------ -------- ------
-------- ------ -------- ------
Net Interest Margin as a % of
Total Earning Assets 3.24% 2.68%
</TABLE>
12
<PAGE>
Ponchatoula Homestead Savings, F.A.
INTEREST DIFFERENTIALS
for the quarter ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
March 31, 1998 VS March 31, 1997
--------------------------------
CHANGE DUE TO
------------------ TOTAL
VOLUME RATE CHANGE
------ ------ ------
(In Thousands)
<S> <C> <C> <C>
Interest - Earning Assets:
Loans and Lease Receivable $ 34 $ 36 $ 70
Mortgage-Backed Securities (32) 25 (7)
Investment Securities 3 (3) 0
Other Interest-Earning assets (7) 3 (4)
------ ------ ------
Total Interest Income $ (2) $ 61 $ 59
Interest - Bearing Liabilities:
Deposits $ (29) $ (15) $ (44)
Federal Home Loan Bank Advances 13 14 27
------ ------ ------
Total Interest Expense $ (16) $ (1) $ (17)
Increase (Decrease) in Interest Differential $ 14 $ 62 $ 76
------ ------ ------
------ ------ ------
</TABLE>
<PAGE>
Ponchatoula Homestead Savings, F.A.
FORM 10-QSB
Quarter Ended March 31, 1998
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings:
There are no matters required to be reported under this item.
Item 2 - Changes in Securities:
There are no matters required to be reported under this item.
Item 3 - Defaults Upon Senior Securities:
There are no matters required to be reported under this item.
Item 4 - Submission of Matters to a Vote of Security Holders.
Item 5 - Other Information:
There are no matters required to be reported under this item.
Item 6 - Exhibits and Reports on Form 8-K:
a.)Exhibits:
No exhibits were filed on Form 8-K by the Registrant during
the quarter ended March 31, 1998.
b.)Reports:
No reports on Form 8-K were filed by the Registrant during
the quarter ended March 31, 1998.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
HOMESTEAD MUTUAL HOLDING COMPANY
Date: May 14, 1998 BY /s/Lawrence C. Caldwell, Jr.
----------------------- -----------------------------
Lawrence C. Caldwell, Jr.
President and Chief Executive Officer
Date: May 14, 1998 BY /s/Kelly Morse
----------------------- -----------------------------
Kelly Morse
Comptroller
