SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (D) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ______________ to _____________________
Securities Exchange Act Number 000-25101
ONEIDA FINANCIAL CORP.
---------------------------
(Exact name of registrant as specified in its charter)
Delaware 16-1561678
- ------------------------------- -----------------------------
(State or other jurisdiction of (IRS Employer)
incorporation or organization) Identification Number)
182 Main Street, Oneida, New York 13421
--------------------------------------------
(Address of Principal Executive Offices)
Registrant's telephone number, including area code: (315) 363-2000
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check x whether the Registrant has filed all reports required to be
filed by Sections 13, or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the Registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes X No
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the Registrant has filed all documents and
reports required to be filed by Sections 12, 13, or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan
confirmed by a court. Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: There were 3,580,200 shares
of the Registrant's common stock outstanding as of April 30, 1999.
<PAGE>
ONEIDA FINANCIAL CORP.
INDEX
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements 1
Consolidated Statements of Condition as of March 31, 2
1999, December 31, 1998 and March 31, 1998
Consolidated Statements of Operations for the three 3
months ended March 31, 1999 and 1998
Consolidated Statements of Comprehensive Income for the 4
three months ended March 31, 1999 and 1998
Consolidated Statements of Cash Flows for the three months 5
ended March 31, 1999 and 1998
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition 7
and Results of Operations
PART II. OTHER INFORMATION 12
<PAGE>
PART I. FINANCIAL INFORMATION
Item I. Financial Statements
Page 1 of 15
<PAGE>
ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CONDITION
At March 31, 1999, December 31, 1998 and March 31, 1998
<TABLE>
<CAPTION>
(unaudited) (audited) (unaudited)
At At At
March 31, December 31, March 31,
1999 1998 1998
---- ---- ----
(in thousands)
ASSETS
<S> <C> <C> <C>
Cash and due from banks ................. $ 4,932 $ 4,056 $ 3,700
Federal funds sold ...................... 6,900 22,100 6,700
-----------------------------------
TOTAL CASH AND CASH EQUIVALENTS ............... 11,832 26,156 10,400
Investment securities, at fair value..... 74,153 62,669 44,067
Mortgage-backed securities, at fair value 27,056 20,022 11,968
-----------------------------------
TOTAL INVESTMENT SECURITIES ................... 101,209 82,691 56,035
Mortgage loans held for sale ............ 2,121 1,863 467
Loans receivable ........................ 129,579 131,936 140,868
Allowance for credit losses ............. (1,568) (1,543) (1,804)
-----------------------------------
LOANS RECEIVABLE, NET ......................... 128,011 130,393 139,064
Bank premises and equipment, net ........ 4,923 4,854 4,581
Accrued interest receivable ............. 1,791 1,600 1,518
Refundable income taxes ................. 86 421 51
Other real estate ....................... 183 224 394
Other assets ............................ 920 579 807
-----------------------------------
TOTAL ASSETS ............................ $ 251,076 $ 248,781 $ 213,317
========================================================================================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Due to Depositors ....................... $ 186,964 $ 193,398 $ 184,551
Mortgagors' escrow funds ................ 524 807 645
Borrowings .............................. 20,000 10,000 0
Other Liabilities ....................... 257 442 370
-----------------------------------
TOTAL LIABILITIES ............................. 207,745 204,647 185,566
Shareholders' equity:
Common stock ( $.10 par value,
8,000,000 shares authorized,
3,580,200 issued and outstanding) . 358 358 0
Additional paid-in capital .............. 15,422 15,545 0
Retained earnings ....................... 28,315 27,710 27,184
Common shares issued under employee
stock plans - unearned ............ (1,313) (401) 0
Accumulated other comprehensive income .. 549 922 567
-----------------------------------
TOTAL SHAREHOLDERS' EQUITY .................... 43,331 44,134 27,751
-----------------------------------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY .................... $ 251,076 $ 248,781 $ 213,316
===============================================================================
</TABLE>
Page 2 of 15
<PAGE>
ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
March 31, 1999 and 1998 (unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31, March 31,
1999 1998
---- ----
(in thousands)
INTEREST INCOME:
<S> <C> <C>
Interest and fees on loans $ 2,763 $ 3,065
Interest and dividends on investments:
U.S. Government and Agency 524 619
Corporate obligations 432 174
Other 78 64
Mortgage-backed securities 443 3
Interest on federal fund sold and
Interest-bearing deposits 125 69
- -------------------------------------------------------------------------------------
Total interest and dividend income 4,365 3,994
- -------------------------------------------------------------------------------------
INTEREST EXPENSE:
Savings deposit 275 308
Money market and Super NOW 134 117
Time deposits 1,406 1,528
Borrowings 202 0
- -------------------------------------------------------------------------------------
Total interest expense 2,017 1,953
- -------------------------------------------------------------------------------------
NET INTEREST INCOME 2,348 2,041
Less: Provision for credit losses 45 0
- -------------------------------------------------------------------------------------
Net interest income after provision for credit losses 2,303 2,041
- -------------------------------------------------------------------------------------
OTHER INCOME:
Investment security gain (loss) 1 8
Other operating income 234 198
- -------------------------------------------------------------------------------------
Total other income 235 206
- -------------------------------------------------------------------------------------
OTHER EXPENSES:
Compensation and employee benefits 879 740
Occupancy expenses, net 336 297
Other operating expense 329 359
- -------------------------------------------------------------------------------------
Total other expenses 1,544 1,396
- -------------------------------------------------------------------------------------
INCOME BEFORE INCOME TAXES 994 851
- -------------------------------------------------------------------------------------
Provision for income taxes 389 315
- -------------------------------------------------------------------------------------
NET INCOME $ 605 $ 536
=====================================================================================
</TABLE>
Page 3 of 15
<PAGE>
ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THREE MONTHS ENDED MARCH 31, 1999 AND 1998 (UNAUDITED)
<TABLE>
<CAPTION>
For the For the
Three Months Ended Three Months Ended
March 31, 1999 March 31, 1998
-------------- --------------
(in thousands)
<S> <C> <C>
Net income $ 605 $ 536
-------------- --------------
Other comprehensive income, net of tax:
Unrealized gains(losses) on assets
available for sale:
Unrealized holding gains(losses)
arising during period (620) 166
Less: reclassificaion adjustment for
gains included in net income (1) (8)
-------------- --------------
(621) 158
Net income (tax) benefit effect 248 (63)
-------------- --------------
Other comprehensive income(loss), net of tax (373) 95
Comprehensive Income $ 23 $ 631
=============== ===============
</TABLE>
Page 4 of 15
<PAGE>
ONEIDA FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
1999 1998
---- ----
Three Months Ended March 31, 1999 and 1998 (unaudited) (in thousands)
Operating Activities:
<S> <C> <C>
Net income $ 605 $ 536
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 165 84
Amortization of premiums and discounts on securities, net 6 21
Provision for credit losses 45 0
Gain on calls of securities net (1) (8)
Gain on sale of loans (28) (42)
Income tax refundable 335 94
Accrued interest receivable (190) 50
Other assets (209) 197
Other liabilities (69) (186)
Origination of loans held for sale (3,984) (5,546)
Proceeds from sales of loans 3,754 5,312
- -----------------------------------------------------------------------------------------------------
Net cash provided by operating activities 429 512
- -----------------------------------------------------------------------------------------------------
Investing Activities:
Purchase of Investment Securities (28,465) (7,021)
Principal collected on and proceeds of maturities
or calls from investments 10,522 6,656
Purchase of mortgage-backed securities (3,033) (1,010)
Principal collected from mortgage-backed securities 1,832 791
Net decrease in loans 2,295 3,027
Purchase of bank premises and equipment (235) (854)
Proceeds from sale of other real estate 83 0
- -----------------------------------------------------------------------------------------------------
Net cash provided by investing activities (17,001) 1,589
- -----------------------------------------------------------------------------------------------------
Financing Activities:
Net increase (decrease) in demand deposit, savings,
money market, super now and escrow (4,525) 1,593
Net decrease (increase) in time deposits (2,191) 642
Net increase in borrowings 10,000 0
Adjust net proceeds (123) 0
Common stock acquired by ESOP (913) 0
- ----------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities 2,248 2,235
- ----------------------------------------------------------------------------------------------------
Increase (decrease) in cash and cash equivalents (14,324) 4,336
- ----------------------------------------------------------------------------------------------------
Cash and cash equivalents at beginning of year 26,156 6,064
- ----------------------------------------------------------------------------------------------------
Cash and cash equivalents at end of year 11,832 10,400
====================================================================================================
Supplemental disclosures of cash flow information:
====================================================================================================
Cash paid for interest 2,016 1,933
====================================================================================================
Cash paid for income taxes 11
====================================================================================================
Non-cash investing activities:
Unrealized gain (loss) on investment and mortgage-backed
securities designated as available for sale (621) 158
Transfer of loans to other real estate 42 86
===================================================================================================
</TABLE>
Page 5 of 15
<PAGE>
ONEIDA FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1999
Note A - Basis of Presentation
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles for interim
financial information and with the instructions to Form 10-Q and Rule 10-01 of
Regulation S-X. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, all adjustments necessary to
fairly present the consolidated financial position of the Company at March 31,
1999 and the results of its consolidated operations and cash flows for the
period then ended, all of which are normal and recurring nature, have been
included.
NOTE B - EARNINGS PER SHARE
Basic earnings per share is computed based on the weighted average shares
outstanding. The following represents the calculation of earnings per share for
the three months ended March 31:
Income Shares Per Share
March 31, 1999
Net income $605,078 3,580,200 $0.17
======== ========= =====
Earnings per share information is not presented for the quarter ended March 31,
1998 as the Company completed its offering on December 30, 1998 and accordingly
such data would not be meaningful.
Page 6 of 15
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results Of Operations
Page 7 of 15
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
This section presents Management's discussion and analysis of and
changes to the Company's consolidated financial results of operations and
condition and should be read in conjunction with the Company's financial
statements and notes thereto included herein.
When used in this Annual Report the words or phrases "will likely
result," "are expected to," "will continue," "is anticipated," "estimate,"
"project" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are subject to certain risks and uncertainties,
including, among other things, changes in economic conditions in the Company's
market area, changes in policies by regulatory agencies, fluctuations in
interest rates, demand for loans in the Company's market area and competition,
that could cause actual results to differ materially from historical earnings
and those presently anticipated or projected. The Company wishes to caution
readers not to place undue reliance on any such forward-looking statements,
which speak only as of the date made. The Company wishes to advise readers that
the factors listed above could affect the Company's financial performance and
could cause the Company's actual results for future periods to differ materially
from any opinions or statements expressed with respect to future periods in any
current statements.
The Company does not undertake, and specifically declines any
obligation, to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect events or circumstances after the date
of such statements or to reflect the occurrence of anticipated or unanticipated
events.
GENERAL
Oneida Financial Corp. (the "Company") is the parent company of The Oneida
Savings Bank (the "Bank"). The Company conducts no business other than holding
the common stock of the Bank and general investment activities resulting from
the capital raised and retained in the recent initial public stock offering.
Consequently, the net income of the Company is primary derived from its
investment in the Bank. The Bank's net income is primarily dependent on its net
interest income, which is the difference between interest income earned on its
investments in loans, investment securities and mortgage-backed securities and
its cost of funds consisting of interest paid on deposits and borrowings. The
Bank's net income is also affected by its provision for credit losses, as well
as by the amount of other income, including income from fees and service
charges, net gains and losses on sales of investments and loans, and operating
expenses such as employee compensation and benefits, occupancy and equipment
costs and income taxes. Earnings of the Bank are also affected significantly by
general economic and competitive conditions, particularly changes in market
interest rates, which tend to be highly cyclical and government policies and
actions of regulatory authorities, which events are beyond the control of the
Bank.
RECENT DEVELOPMENTS
On December 30, 1998 the Company completed its reorganization and initial
public stock offering providing a total of $15.9 million in additional paid in
capital. A total of 3,580,200 shares of common stock were issued with 1,915,445
shares issued to Oneida Financial MHC the mutual holding company parent of the
Company. Approximately half of the net proceeds of the stock offerring were
invested into the Bank.
On March 23, 1999, the Bank announced its intention to create Oneida
Preferred Funding Corp., a wholly owned subsidiary corporation that will elect
under Federal tax law to be treated as a Real Estate Investment Trust (REIT).
The REIT was funded effective April 26, 1999 with $43.1 million of 1-4 family
residential real estate loans and commercial real estate loans. The REIT is
expected to allow the Bank to more competitively price real estate loans and
provide state tax benefits in future periods.
The Bank continued deploying a wholesale arbitrage strategy to compliment
traditional retail deposit and loan activities. The arbitrage transactions have
involved entering into borrowing transactions with the Federal Home
Page 8 of 15
<PAGE>
Loan Bank of New York ("FHLB") as a funding source for the purchase of
investment securities and mortgage-backed securities. At March 31, 1999 the Bank
had total borrowings of $20.0 million at an average cost of 4.98%. The Bank's
net income is enhanced through the positive spread between the borrowing rate
and investment returns.
FINANCIAL CONDITION
ASSETS. Total Assets at March 31, 1999 were $251.1 million, an increase of
$2.3 million from $248.8 million at December 31, 1998. The increase in total
assets was primarily attributable to an increase of $18.5 million in investment
and mortgage-backed securities. The increase in assets reflects the Bank's
continuing leveraging strategy as well as the investment of stock proceeds and
the proceeds from the sale of fixed-rate residential real estate loans. The
overall asset growth was partially offset by a decrease of $2.1 million in net
loans receivable. This decrease is a result of Management's decision to sell
substantially all newly originated fixed-rate residential real estate loans into
the secondary mortgage market without recourse and on a servicing retained
basis. During the period between December 31, 1998 and March 31, 1999 a total of
$3.7 million in fixed rate residential real estate loans were sold. In addition,
federal funds sold decreased by $15.2 million to $6.9 million at March 31, 199
from $22.1 million at December 31, 1998 as stock proceeds were invested in
mortgage-backed securities and other investments.
Management has sought to increase the Bank's consumer and commercial
business loan portfolios with the intent of increasing the average yield on the
Bank's interest-earning assets. Total consumer and commercial business loans
increased by $1.3 million from December 31, 1998 to March 31, 1999.
LIABILITIES. Total liabilities increased by $3.1 million or 1.5% to $207.7
million at March 31, 1999 from $204.6 million at December 31, 1998. The increase
is primarily the result of an increase of $10.0 million in borrowings partially
offset by a decrease of $6.7 million in total deposits. The deposit decrease is
attributed to the use of depositors' funds for the purchase of Company stock.
STOCKHOLDERS' EQUITY. Total stockholders' equity at March 31, 1999 was
$43.3 million, a decrease of $803,000 from $44.1 million at December 31, 1998.
The decrease in stockholders' equity is primarily due to the open market
purchases of common stock acquired to fully fund the Employee Stock Ownership
Plan ("ESOP") and an equity adjustment necessary to reflect an additional
$123,000 in reorganization and conversion expenses. At March 31, 1999, a value
of $1.3 million in common shares were issued and unearned under the ESOP Plan.
There were no dividends declared for the period ending March 31, 1999. It is the
intention of the Company to pay an annual cash dividend of $.30 per common
share, payable semi-annually. The payment of dividends is expected to begin
following the second quarter of 1999.
RESULTS OF OPERATIONS
GENERAL. Net income for the three months ended March 31, 1999 increased by
$69,000 or 12.9%, to $605,000 for the first quarter 1999 from $536,000 for the
three months ended March 31, 1998. The increase was due primarily to an increase
in net interest income and other income. The increases in income were partially
offset by increases in operating and other expenses and an increase in the
provision for credit losses and the provision for income taxes.
INTEREST INCOME. Interest Income increased by $371,000 or 9.3%, to $4.4
million for the three months ended March 31, 999 from $4.0 million for three
months ended March 31, 1998. The increase in interest income was derived from an
increase in income on investment and mortgage-backed securities of $617,000 and
an increase in interest income on federal funds sold of $56,000. Income on loans
decreased by $302,000 partially offsetting the other increases noted.
The decrease in loan income is a result of a decrease of $12.2 million in
the average balance in loans receivable for the three months ended March 31,
1999 as compared with the same period in 1998, and a decrease of 11 basis points
in average yield from 8.68% at March 31, 1998 to 8.57% at March 31, 1999.
Management's strategy is to emphasize the origination of consumer and commercial
business loans for retention in the Bank's portfolio while originating for sale
in the secondary market substantially all fixed-rate residential real estate
loans. As of March 31, 1999 residential real estate loans totaled $79.0 million,
a decrease of $12.5 million from March 31, 1998. During the
Page 9 of 15
<PAGE>
same period a total of $15.0 million in fixed-rate residential real estate loans
were sold in the secondary market. The decrease in loans resulting from sales
activity was partially offset by increases in consumer and commercial business
loans of $4.4 million during the same period.
Investment income increased as a result of an increase of $40.7 million in
the average balance of investment and mortgage-backed securities for the three
month period ended March 31, 1999 as compared with the same period in 1998. The
increase in volume was partially offset by a decrease in the average yield of
investment securities of 38 basis points to 6.46% for the period. The yield
reduction is reflective of the general decrease in interest rates during the
twelve month period resulting in lower reinvestment yields on maturities and
called bonds. In addition, the investment of borrowing proceeds, loan sales
proceeds and stock proceeds have contributed to the tightening of the average
portfolio yield as these additional sources of invested funds have also obtained
the lower current attainable interest rates.
Income on federal funds also increased for the period as a result of an
increase of $5.5 million in the average balance of federal funds sold to $10.8
million on average during the first three months of 1999 as compared with the
same period in 1998. The increase was due to the temporary investment of stock
proceeds during the quarter. The increase in income as a result of a volume
increase was partially offset by a reduction in the average yield earned of 55
basis points to 4.63% for the 1999 period. The yield decrease is the result of
the Federal Reserve Bank's decrease in short term interest rates during 1998.
INTEREST EXPENSE. Interest expense was $2.0 million for the three months
ended March 31, 1999; an increase of $64,000 or 3.3% from the same period in
1998. The increase in interest expense is due to interest paid on borrowed
funds. The average balance outstanding in borrowings during the three months
ended March 31, 1999 was $15.4 million compared with no borrowings during the
first three months of 1998. The borrowed funds resulted in additional interest
expense of $202,000 for the first quarter of 1999 compared with 1998. Interest
expense on deposits decreased by $138,000 for the three months ended March 31,
1999 to $1.8 million from $2.0 million for the same period in 1998, a decrease
of 7.1%. The decrease in interest expense on deposits was due to a 28 basis
point decrease in the average rate paid on deposits for the 1999 period compared
with the 1998 period, and a slight decrease of 1.1% in the average balance of
deposits.
PROVISION FOR CREDIT LOSSES. Total provisions for credit losses for the
three months ended March 31, 1999 totaled $45,000 compared with no provisions
made during the first three months of 1998. The allowance for credit losses was
$1.6 million or 1.20% of loans receivable at March 31, 999 as compared with $1.8
million or 1.29% of loans receivable at March 31, 1998. Although the allowance
for loan losses has decreased, non-performing assets have also decreased
representing 0.33% of total assets at March 31, 1999 compared with 0.49% of
total assets at March 31, 1998. Management continues to monitor changes in the
loan portfolio mix in response to the redirection of loan asset origination and
retention toward consumer and commercial business loans. The method utilized to
evaluate adequacy of the allowance level provides for the higher relative degree
of credit risk associated with this activity as compared with traditional
residential real estate lending. The allowance for loan losses increased by
$25,000 from December 31, 1998 to March 31, 1999.
OTHER INCOME. Other operating income increased by $29,000 for the three
month period ending March 31, 1999 compared with the same period in 1998 to
$235,000 from $206,000. The increase was primarily the result of improved
revenue on the Bank's secondary market loan sales and servicing activities which
increased by $31,000 to $57,000 in income for the first quarter of 1999 from
$26,000 for the first quarter of 1998.
OTHER EXPENSES. Operating and other expenses increased by $148,000 or
10.6%, to $1.5 million for the three months ended March 31, 1999 from $1.4
million. The increase was primarily due to an increase in compensation and
employee benefits, which increased to $879,000 for the first quarter of 1999
from $740,000 for the first quarter of 1998. This increase is due to the
recognition on an accrual basis during 1999, expense relative to the Bank's ESOP
and incentive compensation plans which in 1998 were charged entirely in the
fourth quarter. Total operating expense incurred during the first quarter of
1999 for these benefit plans was $86,000. Salary and related benefit expense
increases contributed toward the balance of the increase in operating and other
expenses for the first quarter of 1999 compared with the same period in 1998.
INCOME TAX. Income tax expense was $389,000 for the three months ended
March 31, 1999, an increase of $74,000 from the first quarter 1998 provision of
$315,000. The effective tax rate increased to 39.1% for the 1999 period from
37.0% for the first quarter of 1998.
Page 10 of 15
<PAGE>
MANAGEMENT OF MARKET RISK
The Bank is in the business of risk management. Various forms of market
risk are inherent in the business of the Bank including concentration risk,
liquidity management, credit risk and collateral risk among others. However, the
Bank's most significant form of market risk is interest rate risk, as the
majority of the Bank's assets and liabilities are sensitive to changes in
interest rates. Ongoing monitoring and management of this risk is an important
component of the Company's asset and liability management process. The Bank's
interest rate risk management program focuses primarily on evaluating and
managing the composition of the Bank's assets and liabilities in the context of
various interest rate scenarios. Factors beyond Management's control, such as
market interest rates and competition, also have an impact on interest income
and interest expense. The Bank has experienced no significant change in the risk
exposure or asset and liability management targets since December 31, 1998.
YEAR 2000. The Bank continues to actively prepare all aspects of its'
business for the turn of the century and the possibility of business
interruptions due to the inability of some computers and computer programs to
properly "read" the new year. The Bank installed a new in-house deposit and loan
processing system in 1998 and all testing has returned satisfactory results. The
Bank has also tested the vast majority of ancillary systems with all systems
either providing satisfactory results or scheduled for replacement by June 30,
1999. The FDIC recently completed their Phase II examination of Year 2000
preparedness and the Bank received satisfactory comments.
The Bank continues to develop a bank-wide contingency plan for the Year
2000 issue which is expected to be complete by June 30, 1999. As part of the
plan, the Bank will identify potential alternative suppliers of computer
services (including third party vendors) and processing methods. Management will
continue to monitor this issue and report to the Board of Directors on a monthly
basis until full compliance is obtained from all vendors.
Through March 31, 1999 the costs incurred to address the Year 2000 issue or
otherwise upgrade and test the Bank's computer capabilities have been
approximately $240,000. Additional costs related to the year 2000 issue will be
expensed as they are incurred except for costs for new hardware and software
that will be capitalized. The funds used to address the year 2000 issue have
been obtained from operating income. Management does not expect that the
additional costs to be incurred in connection with the year 2000 issue will have
a material impact on the Bank's financial condition or results of operations.
System replacement and testing has not delayed other information technology
projects to date.
ONEIDA FINANCIAL CORP.
SELECTED FINANCIAL RATIOS
At and for the Three Months Ended March 31, 1999 and March 31, 1998
(annualized where appropriate)
March March
1999 1998
----- -----
Performance Ratios:
Return on average assets 1.01% 1.02%
Return on average equity 5.53% 7.81%
Net interest margin 4.03% 4.12%
Efficiency Ratio 59.75 62.15%
Ratio of average interest-earning assets
to average interest-bearing liabilities 127.25% 116.71%
Asset Quality Ratios:
Non-performing assets to total assets 0.33% 0.49%
Allowance for loan losses to non-performing loans 191.69% 173.96%
Allowance for loan losses to loans receivable, net 1.20% 1.29%
Capital Ratios:
Total shareholders' equity to total assets 17.25% 13.01%
Average equity to average assets 18.17% 13.00%
Page 11 of 15
<PAGE>
ONEIDA FINANCIAL CORP.
AND SUBSIDIARIES
Part II - Other Information
Item 1 Legal Proceedings
The Company and its subsidiary are not involved in any litigation, nor is
the Company aware of any pending litigation, other than legal proceedings
incident to the business of the Company, such as foreclosure actions filed on
behalf of the Company. The Oneida Indian Nation (the "Oneidas") continues to
pursue their land claim over 270,000 acres on Central New York State which
includes much of the Bank's market area. To date neither the original claim nor
the amended mootion has had an adverse impact on the local economy or real
property values. Both the State of New York and the Oneidas have indicated in
their respective communications that individual landowners will not be adversely
affected by the ongoing litigation. Neither the Company nor the Bank is a named
defendant in the pending motion. Management, therefore, believes the results of
any current litigation would be immaterial to the consolidated financial
condition or results of operation of the Company.
Item 2 Changes in Securities
None
Item 3 Default Upon Senior Securities
Not applicable.
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
(a) All required exhibits are included in Part I under Consolidated
Financial Statements, Notes to Unaudited Consolidated Financial
Statements and Management's Discussion and Analysis of Financial
Condition and Results of Operations, and are incorporated by
reference, herein.
(b) Exhibits
(27) Financial Data Schedule
Page 12 of 15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed by the undersigned
thereunto duly authorized.
ONEIDA FINANCIAL CORP.
Date: May 11, 1999 By: /s/ Michael R. Kallet
---------------------------------------
Michael R. Kallet
President and Chief Executive Officer
Date: May 11, 1999 By: /s/ Eric E. Stickels
---------------------------------------
Eric E. Stickels
Senior Vice President and Chief
Financial Officer
Page 13 of 15
<PAGE>
PART I. FINANCIAL INFORMATION
Item I. Financial Statements
Page 14 of 15
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
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0
0
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</TABLE>
