10QSB
Form 10QSB
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, DC 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 June 30, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------- ----------
Commission File Number 0-24579
-------
CARNEGIE FINANCIAL CORPORATION
----------------------------------------------------------------
(Exact name of Registrant as specified in its Charter)
Pennsylvania 25-1806857
- ----------------------------------- ------------------------------
(State or other jurisdiction of incorporation I.R.S. Employer Identification
or organization) Number)
17 West Mall Plaza, Carnegie, Pennsylvania 15106
- ------------------------------------------ ------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (412) 276-1266
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 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.
X Yes No
----- -----
As of August 11, 1998, there were 238,050 shares of the Registrant's
common stock, par value $10.00 per share, outstanding. The Registrant has no
other classes of common equity outstanding.
Transitional small business disclosure format:
Yes X No
----- -----
<PAGE>
CARNEGIE FINANCIAL CORPORATION
AND SUBSIDARY
Carnegie, Pennsylvania
Index
PART I. Page(s)
- ------- --------
FINANCIAL INFORMATION - Not Applicable.....................................3
PART II.
- --------
OTHER INFORMATION
Item 1. Legal Proceedings.................................................4
Item 2. Changes in Securities.............................................4
Item 3. Defaults Upon Senior Securities...................................4
Item 4. Submission of matters to a Vote of Security Holders...............4
Item 5. Other Information.................................................4
Item 6. Exhibits and Reports on form 8-K..................................4
Signatures.................................................................5
2
<PAGE>
PART I - NOT APPLICABLE
The information as required by part 1 of the Form 10-QSB has been omitted
because the conversion from the mutual to stock form of ownership (the
"Conversion"), as described in the Form SB-2 (file no. 333-48655), was completed
after June 30, 1998. The Conversion was completed on July 10, 1998.
3
<PAGE>
OTHER INFORMATION
Part II.
Item 1. Legal Proceedings
-----------------
None
Item 2. Change in Securities
--------------------
Not Applicable
Item 3. Defaults Upon Senior Securities
-------------------------------
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
Not Applicable
Item 5. Other Information
-----------------
None
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
99 Financial Statements of Carnegie Savings Bank
No reports on Form 8-K were filed during the quarter ended June 30, 1998.
4
<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.
CARNEGIE FINANCIAL CORPORATION
Date: August 12, 1998 By /s/ Shirley Chiesa
----------------------- -----------------------
Shirley Chiesa
(President)
5
Exhibit 99
- ----------
CARNEGIE SAVINGS BANK
STATEMENTS OF CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
-------------- --------------
<S> <C> <C>
ASSETS
Cash and cash equivalents $ 2,975,157 $ 850,891
Certificate of deposit with other banks 100,000 100,000
Investment securities available for sale, net 1,670,603 1,615,685
Investment securities held to maturity, net
(market value of $881,636 and $922,716) 913,936 913,903
Mortgage-backed securities available for sale, net 981,377 906,869
Mortgage-backed securities held to maturity, net
(market value of $1,876,126 and $1,744,014) 1,351,949 1,721,250
Loans receivable (net of allowance for loan losses
of $97,564 and $114,832) 11,550,422 9,585,360
Accrued interest receivable 116,529 107,361
Property and equipment, net 205,199 184,878
Real estate owned - 480,326
Deferred tax asset 92,700 92,700
Other assets 204,847 164,245
----------- -----------
Total assets $20,162,719 $16,723,468
=========== ===========
LIABILITIES AND RETAINED EARNINGS
Deposits $18,449,805 $15,177,917
Advance payments by borrowers for taxes
and insurance 206,158 143,129
Deferred income taxes 34,252 33,698
Accrued income taxes payable - 6,316
Other liabilities 315,626 192,363
----------- -----------
Total liabilities 19,005,841 15,553,423
----------- -----------
Accumulated comprehensive income
Unrealized gains (losses) on securities available
for sale, net of tax benefit of $7,590 and ($7,036) 12,923 13,658
Retained earnings (Substantially restricted) 1,143,955 1,156,387
----------- -----------
Total retained earnings 1,156,878 1,170,045
----------- -----------
Total liabilities and retained earnings $20,162,719 $16,723,468
=========== ===========
</TABLE>
See accompanying notes to the unaudited financial statements.
6
<PAGE>
CARNEGIE SAVINGS BANK
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For Three Months Ended
June 30,
1998 1997
---------- ----------
<S> <C> <C>
INTEREST INCOME
Interest on loans $250,020 $225,323
Interest-bearing deposits with other banks 9,719 7,217
Interest on investments:
Taxable 21,895 35,588
Nontaxable 7,408 7,478
Mortgage-backed securities 40,411 52,978
--------- ---------
Total interest income 329,453 328,584
--------- ---------
INTEREST EXPENSE
Interest on certificates of deposit 144,618 145,647
Interest on other savings accounts 29,616 24,270
Interest on borrowings - -
--------- ---------
Total interest expense 174,234 169,917
--------- ---------
NET INTEREST INCOME 155,219 158,667
Provision for loan losses - -
--------- ---------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 155,219 158,667
--------- ---------
NONINTEREST INCOME (LOSS)
Service charges and fee income 15,576 13,533
Gain (loss) on sale of REO (55,124) 13,693
Net income (loss) - real estate owned (2,743) 369
Other income 496 40
--------- ---------
Total other income (41,795) 27,635
--------- ---------
NONINTEREST EXPENSES:
Wages, payroll taxes and benefits 81,173 70,110
General and administrative 27,309 28,723
Data processing charges 17,459 18,628
Depreciation and amortization 6,110 5,376
--------- ---------
Total other expenses 132,051 122,837
--------- ---------
NET INCOME (LOSS) BEFORE INCOME TAXES (18,627) 63,465
Income tax expense (benefit) (6,800) 18,169
--------- ---------
NET INCOME (LOSS) $ (11,827) $ 45,296
========= =========
</TABLE>
See accompanying notes to the unaudited financial statements.
7
<PAGE>
CARNEGIE SAVINGS BANK
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For Six Months Ended
June 30,
1998 1997
--------- ---------
<S> <C> <C>
INTEREST INCOME
Interest on loans $463,684 $432,448
Interest-bearing deposits with other banks 14,640 12,106
Interest on investments:
Taxable 50,158 59,657
Nontaxable 14,817 16,437
Mortgage-backed securities 83,933 88,017
--------- --------
Total interest income 627,232 608,665
--------- --------
INTEREST EXPENSE
Interest on certificates of deposit 289,015 277,823
Interest on other savings accounts 55,533 49,732
Interest on borrowings - 567
--------- --------
Total interest expense 344,548 328,122
--------- --------
NET INTEREST INCOME 282,684 280,543
Provision for loan losses - -
--------- --------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 282,684 280,543
--------- --------
NONINTEREST INCOME (LOSS)
Service charges and fee income 29,138 28,151
Gain (loss) on sale of REO (55,124) 13,693
Gain on sale of securities 2,147 -
Net loss - real estate owned (5,934) (7,617)
Other income 564 -
--------- --------
Total other income (loss) (29,209) 34,227
--------- --------
NONINTEREST EXPENSES:
Wages, payroll taxes and benefits 167,653 151,616
General and administrative 58,168 56,866
Data processing charges 35,200 32,130
Depreciation and amortization 11,686 10,750
--------- --------
Total other expenses 272,707 251,362
--------- --------
NET INCOME (LOSS) BEFORE INCOME TAXES (19,232) 63,408
Income tax expense (benefit) (6,800) 18,169
--------- --------
NET INCOME (LOSS) $ (12,432) $ 45,239
========= ========
</TABLE>
See accompanying notes to the unaudited financial statements.
8
<PAGE>
CARNEGIE SAVINGS BANK
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For Six Months Ended
June 30,
1998 1997
----------- -----------
<S> <C> <C>
CASH FLOWS FROM OPERATIONS:
Net income (loss) $ (12,432) $ 45,239
Adjustments to reconcile net income (loss) to
net cash provided by operations:
Depreciation and amortization 11,686 10,750
Deferred income taxes 554 (125)
Net amortization of premiums/discounts (10,359) (4,529)
Gain on sale of securities (2,147) --
(Gain) loss on sale of REO 55,124 (13,693)
Increase in accrued interest receivable (9,168) (20,833)
Increase in other assets (21,591) (21,923)
Increase (decrease) in income tax liabilities (13,116) 23,780
Increase in other liabilities 123,263 160,001
Decrease in income tax benefit (12,211) --
----------- -----------
Net cash provided by operations 109,603 178,667
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Investment securities available for sale:
Proceeds from sales and maturities 1,313,404 --
Purchases (1,361,364) (541,251)
Investment securities held to maturity:
Proceeds from maturities and principal repayments -- 250,000
Purchases -- (246,037)
Mortgage-backed securities available for sale:
Purchases (428,186) (631,750)
Maturities and principal repayments 354,877 (1,070)
Mortgage-backed securities held to maturity:
Purchases -- (265,248)
Maturity and principal repayments 372,882 139,701
Net increase in loans receivable (1,965,062) (117,287)
Investment in real estate owned 425,202 180,263
Purchase of equipment (32,007) (6,693)
----------- -----------
Net cash used by investing activities (1,320,254) (1,239,372)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from borrowers for taxes and insurance 63,029 22,152
Net increase in deposits 3,271,888 1,492,588
Net decrease in line of credit -- (300,000)
----------- -----------
Net cash provided by financing activities 3,334,917 1,214,740
----------- -----------
Net increase in cash 2,124,266 154,035
Cash, beginning of year 950,891 656,658
----------- -----------
Cash and cash equivalents, end of year $ 3,075,157 $ 810,693
=========== ===========
</TABLE>
See accompanying notes to the unaudited financial statements.
9
<PAGE>
CARNEGIE SAVINGS BANK
Notes to Financial Statements
(Unaudited)
1. Basis of Preparation
--------------------
The accompanying unaudited financial statements were prepared in accordance
with instructions for Form 10-QSB and therefore, do not include all
disclosures necessary for a complete presentation of the balance sheets,
statements of income and statements of cash flows in conformity with
generally accepted accounting principles. However, all adjustments which
are, in the opinion of management, necessary for the fair presentation of
the interim financial statements have been included. All such adjustments
are of a normal recurring nature. The statement of income for the three and
six month period ended June 30, 1998, is not necessarily indicative of the
results which may be expected for the fiscal year ended December 31, 1998,
or any other interim period.
It is suggested that these unaudited financial statements be read in
conjunction with the audited financial statements and notes thereto for the
Bank filed as part of the Form SB-2 file no. 333-48655.
2. Plan of Conversion
------------------
On December 15, 1997, The Board of Directors of the Bank, subject to
regulatory approval, ratified a Plan of Conversion to convert from a state
mutual savings bank to a federally insured stock savings bank and the
current formation of a holding company for the Bank (the "Conversion").
After approval by the regulatory authorities and the Bank's members, the
Conversion was completed on July 10, 1998. As a result of this transaction,
the Company was formed and the Bank became a wholly-owned subsidiary of the
Company. In connection with the completion of the Conversion on July 10,
1998, the Company completed the sale of 238,050 shares of common stock at
$10.00 per share.
The Bank may not declare or pay a cash dividend if the effect thereof would
cause its net worth to be reduced below either the amounts required for the
liquidation account discussed below or the regulatory capital requirements
imposed by federal regulations.
At the time of conversion, the Bank will establish a liquidation account,
which will be a memorandum account that does not appear on the balance
sheet, in an amount equal to its retained income as reflected in the latest
balance sheet used in the final conversion prospectus. The liquidation
account will be maintained for the benefit of eligible account holders who
continue to maintain their deposit accounts in the Bank after conversion.
In the event of a complete liquidation of the Bank (and only in such an
event), eligible depositors who continue to maintain accounts shall be
entitled to receive a distribution form the liquidation account before any
liquidation may be made with respect to common stock.
10
