SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-KSB/A
(Amendment No. 1)
(Mark One)
[X} Annual report under Section 13 or 15(d) of the Securities Exchange Act of
1934 (Fee required)
For the fiscal year ended March 31, 2000
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| | Transition report under Section 13 or 15(d) of the Securities Exchange Act
of 1934 (No fee required)
For the transition period from to
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SEC File Number: 000-25009
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SKIBO FINANCIAL CORP.
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(Name of Small Business Issuer in Its Charter)
United States 25-1820465
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(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
242 East Main Street, Carnegie, Pennsylvania 15106
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(Address of Principal Executive Offices) (Zip Code)
(412) 276-2424
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(Issuer's Telephone Number, Including Area Code)
Securities registered under Section 12(b) of the Exchange Act: None Securities
registered under Section 12(g) of the Exchange Act:
"Common Stock", par value $0.10 per share
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(Title of Class)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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
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Check if there is no disclosure of delinquent filers in response to
Item 405 of Regulation S-B is not contained in this form, and no disclosure will
be contained, to the best of the registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this Form 10-KSB
or any amendment to this Form 10-KSB. [X]
State issuer's revenues for its most recent fiscal year. $10,192,000
The registrant's voting stock is traded on the Nasdaq SmallCap Market
under the symbol "SKBO." The aggregate market value of the voting stock held by
non-affiliates of the registrant, based on the trading price of the registrant's
"Common Stock" as reported by the Nasdaq SmallCap Market on May 24, 2000 was
$6,958,491 ($6.31 per share based on 1,102,772 shares of "Common Stock"
outstanding). As of May 24, 2000, the registrant had 3,287,426 shares of "Common
Stock" outstanding.
Transitional Small Business Disclosure Format (check one)
Yes No X
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DOCUMENTS INCORPORATED BY REFERENCE
Part II -- Portions of the registrant's 2000 Annual Report to Stockholders and
1999 Annual Report to Stockholders.
<PAGE>
EXPLANATORY NOTE
Skibo Financial Corp. is amending its Annual Report on Form 10-KSB for
the year ended March 31, 2000 (the "Form 10-KSB"), to supplement the disclosure
contained therein regarding its loan loss allowance. However, there has been no
change to or restatement of amount of the provision for loan losses as
previously reported in the Company's Financial Statements for the years ended
March 31, 2000 and 1999.
In addition, as part of this amendment, the Company is filing a revised
Statement of Stockholders' Equity for the years ended March 31, 2000 and 1999,
as previously filed with the Form 10-KSB. With the concurrence of its auditors,
the Company is filing a revised Statement of Stockholders' Equity in order to
retroactively present the holding company reorganization that was completed by
the Company in October 1998. See Note 15 of the Notes to the Company's
Consolidated Financial Statements, as previously filed with the Form 10-KSB, for
a description of such reorganization.
This Form 10-KSB/A includes in Item 6 of Part II supplemental
disclosure regarding the Company's loan loss allowance. Such supplemental
disclosure should be read in conjunction with the subsection captioned
"Provision for Loan Losses" included in the section of the Company's 2000 Annual
Report to Stockholders captioned "Management's Discussion and Analysis of
Financial Condition and Results of Operations," which was incorporated into the
Form 10-KSB by reference. The Company's 2000 Annual Report to Stockholders was
included as Exhibit 13 to the Form 10-KSB.
This Form 10-KSB/A also includes in Item 7 of Part II a restated
Statement of Stockholders' Equity and restated Notes 3 and 16 of the Notes to
the Company's Consolidated Financial Statements for the years ended March 31,
2000 and 1999. The Financial Statements and related notes thereto were
incorporated into the Form 10-KSB by reference to the 2000 Annual Report to
Stockholders. The only changes to such previously filed statements are the
revisions to the Statement of Stockholders' Equity in order to present the
mutual holding company reorganization retroactively and the revisions made to
Notes 3 and 16 (to add explanatory statements regarding the loan loss
allowance).
Except for the noted portions of Items 6 and 7 of Part II, as described
above, no other information included in the original report on Form 10-KSB is
amended by this Form 10-KSB/A.
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<PAGE>
PART II
Item 6. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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Note: The following information supplements the information previously
incorporated into this Item 6 and is not a restatement of the previous
disclosure.
The Company has established procedures to review the adequacy of its
loan loss allowance. Each quarter management reviews in detail various factors
including the following: (1) delinquency of all loans (residential, consumer and
commercial), (2) past loss experience, (3) areas of concentration of credit
risks, (4) economic factors affecting the Bank, (5) financial condition of the
borrower, and (6) regulatory sensitivities with respect to setting the allowance
including the OTS and the SEC. In addition to the above, the Board of Directors
also reviews management estimates.
At the end of fiscal year ended March 31, 2000, management of the
Company in concurrence with the Board and following the same procedures as in
the previous quarters, determined that the overall level of reserves should be
adjusted. The fact that provisions were made in each of first three quarters of
fiscal year ended March 31, 2000 is not significant ($1,000 each quarter). The
specific facts and circumstances that resulted in the reversal of $153,000 of
the Company's loan loss reserve included the following. Management noted that,
based upon declining balance of commercial loans and various payoffs of certain
other credits deemed to be of higher risk, the overall allowance for losses
needed to be revised and it was adjusted accordingly. The Company's commercial
loan portfolio decreased from approximately $34,400,000 at March 31, 1999 to
$26,692,000 at March 31, 2000. In addition, approximately $1.2 million of higher
risk loans were resolved during the past year. Loans in general and particularly
commercial loans had declined. In addition, it was determined in the quarter
ended March 31, 2000 that the current direction of the Company was to refrain in
the future from increasing significantly the level of commercial loans
considered higher risk. The regulatory positions of the OTS and the SEC also
influenced management's decision. Historically, the position of the OTS, the
primary regulator of the Company, has been to encourage a setting of reserves at
the higher end of acceptable ranges of allowance estimation. The SEC, however,
has been critical of financial institutions maintaining levels of reserves that
could be considered too high, and the OTS has become less demanding with respect
to increasing reserves. Although the reduction in the loan loss reserve was
primarily the result of the factors noted above (i.e. resolution of higher risk
loans and reduction in loan portfolio), management's decision was also
influenced by the change in the position of the SEC and OTS.
The recording of loan allowances is an estimation process resulting in
a range of acceptable loan loss levels for financial statement and reporting
purposes. The adjustment in the fourth quarter was made to more fairly reflect
the allowance for loan losses and was within this acceptable range.
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<PAGE>
Item 7. Financial Statements
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The report of the Company's independent auditor relating to the
consolidated statement of financial condition of Skibo Financial Corp. and
subsidiaries as of March 31, 2000, and the related consolidated statements of
income and comprehensive income, stockholders' equity and cash flows for the
year then ended is incorporated herein by reference to the Company's 2000 Annual
Report to Stockholders, which was included as Exhibit 13 to the Form 10-KSB.
The report of the Company's prior independent auditor relating to the
consolidated statement of financial condition of Skibo Financial Corp. and
subsidiaries as of March 31, 1999, and the related consolidated statements of
income and comprehensive income, stockholders' equity and cash flows for the
year then ended is incorporated herein by reference to the Company's 1999 Annual
Report to Stockholders, which was included as Exhibit 13 to the Form 10-KSB for
the year ended March 31, 1999.
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<PAGE>
SKIBO FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
For the Years Ended March 31, 2000 and 1999
(In thousands, except per share data)
(RESTATED)
<TABLE>
<CAPTION>
========== ============== ========== ============ ========= ============= =============
Additional Unearned
Common Paid-in Treas. ESOP Retained
Stock Capital Stock Shares RSP Earnings Total
---------- -------------- ---------- ------------ --------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1998(1)................ $ 345 $ 9,685 $ -- $ (625) $ -- $ 15,575 $ 24,980
Cash dividends declared, net ($0.25 per share)(1) -- -- -- -- -- (357) (357)
Reduction of equity for restricted stock plan
(RSP) liability......................... -- -- -- -- (770) -- (770)
Excess of fair value above cost of ESOP shares
released or committed to be released... -- 70 -- -- -- -- 70
Amortization of ESOP liability............. -- -- -- 167 -- -- 167
Amortization of RSP liability.............. -- -- -- -- 378 -- 378
Treasury stock purchased, at cost
(5,228 shares)........................ -- -- (65) -- -- -- (65)
Net income................................. -- -- -- -- -- 727 727
---------- -------------- ---------- ----------- ---------- ------------- ------------
Balance at March 31, 1999.................. 345 9,755 (65) (458) (392) 15,945 25,130
Cash dividends declared, net ($0.30 per share) -- -- -- -- -- (406) (406)
Excess of fair value above cost of ESOP
shares released or committed to be released -- (15) -- -- -- -- (15)
Amortization of ESOP liability............. -- -- 191 -- -- 191
Amortization of RSP liability.............. -- -- -- -- 193 -- 193
Treasury stock purchased, at cost
(157,883 shares)...................... -- -- (1,054) -- -- -- (1,054)
Net income................................. -- -- -- -- -- 1,104 1,104
---------- -------------- ---------- ----------- ---------- ------------- ------------
Balance at March 31, 2000.................. $ 345 $ 9,740 $ (1,119) $ (267) $ (199) $ 16,643 $ 25,143
========== ============== ========== ============ ========= ============= =============
</TABLE>
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(1) Restated to reflect three-for-two stock exchange which occurred October 29,
1998.
See accompanying notes to consolidated financial statements.
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<PAGE>
SKIBO FINANCIAL CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
March 31, 2000 and 1999
(Dollars in thousands, except per share data)
NOTE 3 - LOANS RECEIVABLE (Restated)
Loans receivable are summarized as follows:
March 31,
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2000 1999
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Mortgage loans:
Conventional:
One- to four-family dwellings .................. $ 20,557 $ 21,839
Multi-family dwellings ......................... 2,332 2,510
FSA, FHA, and other government
agency guaranteed .............................. 11,739 12,814
Commercial ........................................ 11,080 13,175
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Total mortgage loans ................. 45,708 50,338
Net unamortized premiums .......................... 195 255
Unearned fees ..................................... (36) (50)
Loans in process .................................. -- (81)
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Net mortgage loans ................... 45,867 50,462
Consumer and commercial loans:
Small Business Administration guaranteed .......... 7,876 11,083
Other government agency guaranteed ................ 2,073 3,076
Loans secured by savings accounts ................. 390 350
Other ............................................. 621 757
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Total consumer and commercial loans .. 10,960 15,266
Net unamortized premiums .......................... 102 156
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Net consumer and commercial loans .... 11,062 15,422
Allowance for loan losses .............................. (425) (575)
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Net loans receivable ................. $ 56,504 $ 65,309
======== ========
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the contract. Commitments
generally have fixed expiration dates or other termination clauses and may
require payment of a fee. The Company evaluates each customer's credit
worthiness on a case-by-case basis. The amount of collateral obtained, if deemed
necessary by the Company upon extension of credit, is based on management's
credit evaluation of the borrower. The collateral consists primarily of real
estate and personal property.
As of March 31, 2000 and 1999, the Company had outstanding commitments to fund
fixed rate first mortgage and commercial non-mortgage loans of $0 and $492,
respectively; and outstanding commitments to fund adjustable rate first mortgage
and commercial non-mortgage loans of $0 and $247, respectively.
Non-accrual loans totaled $0 and $685 as of March 31, 2000 and 1999,
respectively. For the fiscal year ended March 31, 2000, there are no loans
accounted for on a non-accrual basis; therefore, all interest was recorded and
included in
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<PAGE>
the Company's interest income. For the fiscal year ended March 31, 1999 interest
that would have been recorded if all such loans were on a current status in
accordance with original terms was $65; the amount that was recorded was $57.
The Company is not committed to lend additional funds to debtors whose loans
have been placed on non-accrual status.
Allowance for Loan Losses
Activity with respect to the allowance for loan losses for the years ended March
31, 2000 and 1999 is summarized as follows:
2000 1999
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Balance at beginning of period.............. $ 575 $ 549
Provision for loan losses................... (150) 25
Charge-offs................................. -- --
Recoveries.................................. -- 1
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Balance at end of period.................... $ 425 $ 575
=== ===
The reserve balance in each period represents management's best estimate.
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<PAGE>
NOTE 16 - SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED AND RESTATED)
<TABLE>
<CAPTION>
Three Months Ended
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June 30 September 30 December 31 March 31
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<S> <C> <C> <C> <C>
Fiscal 2000
Interest income ........................ $ 2,486 $ 2,516 $ 2,539 $ 2,544
Interest expense ....................... 1,473 1,485 1,497 1,496
------- ------- ------- -------
Net interest income before provision for
loan losses ........................ 1,013 1,031 1,042 1,048
Provision for loan losses(1) ........... 1 1 1 (153)
Noninterest income ..................... 28 21 22 25
Noninterest expense .................... 639 624 599 704
------- ------- ------- -------
Income before income taxes ............. 401 427 464 522
Provision for income taxes ............. 174 141 184 211
------- ------- ------- -------
Net income ............................. $ 227 $ 286 $ 280 $ 311
======= ======= ======= =======
Basic earnings per share(2)............. $ 0.07 $ 0.08 $ 0.09 $ 0.10
======= ======= ======= =======
Diluted earnings per share(2)........... $ 0.07 $ 0.08 $ 0.09 $ 0.10
======= ======= ======= =======
Fiscal 1999
Interest income ........................ $ 2,477 $ 2,368 $ 2,401 $ 2,445
Interest expense ....................... 1,508 1,426 1,462 1,484
------- ------- ------- -------
Net interest income before provision for
loan losses ........................ 969 942 939 961
Provision for loan losses .............. 3 12 5 5
Noninterest income ..................... 21 26 17 22
Noninterest expense .................... 831 525 731 602
------- ------- ------- -------
Income before income taxes ............. 156 431 220 376
Provision for income taxes ............. 60 180 95 121
------- ------- ------- -------
Net income ............................. $ 96 $ 251 $ 125 $ 255
======= ======= ======= =======
Basic earnings per share(2)............. $ 0.03 $ 0.07 $ 0.04 $ 0.08
======= ======= ======= =======
Diluted earnings per share(2)........... $ 0 .03 $ 0.07 $ 0.04 $ 0.08
======= ======= ======= =======
</TABLE>
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1 The reversal of a portion of the loan loss reserve is an unusual,
infrequently occurring event.
2 Quarterly earnings per share may vary from annual earnings per share due to
rounding.
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<PAGE>
Item 13. Exhibits, List and Reports on Form 8-K
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23.1 Consent of Stokes Kelly & Hinds, LLC
23.2 Consent of KPMG LLP
-8-
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) 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.
SKIBO FINANCIAL CORP.
Date: August 14, 2000 By: /s/ Walter G. Kelly
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Walter G. Kelly
President and Chief Executive Officer
(Duly Authorized Representative)
Pursuant to the requirement of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
<S> <C>
/s/ Walter G. Kelly /s/ Carol A. Gilbert
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Walter G. Kelly Carol A. Gilbert
President , Chief Executive Officer and Director Chief Financial and Operating Officer and Treasurer
(Principal Executive Officer) (Principal Financial and Accounting Officer)
Date: August 14, 2000 Date: August 14, 2000
/s/ John C. Burne /s/ Alexander J. Senules
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John C. Burne Alexander J. Senules
Chairman of the Board and Director Vice President and Secretary and Director
Date: August 14, 2000 Date: August 14, 2000
</TABLE>
