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 March 31, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission File Number 333-48655
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CARNEGIE FINANCIAL CORPORATION
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(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
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (412) 276-1266
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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
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As of June 26, 1998, there were no 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
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<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
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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), has not yet
occurred. It is anticipated that the Conversion will be completed on or about
July 15, 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
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Not Applicable
Item 5. Other Information
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None
Item 6. Exhibits and Reports on Form 8-K
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99 Financial Statements of Carnegie Savings Bank
No reports on Form 8-K were filed during the quarter ended
March 31, 1998.
4
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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 CORP.
Date: June 26, 1998 By /s/ Shirley Chiesa
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Shirley Chiesa
(President)
Date: June 26, 1998 By /s/ Joseph Pigoni
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Joseph Pigoni
(Chief Financial Officer)
(Chief Accounting Officer)
5
EXHIBIT 99
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Exhibit 99
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CARNEGIE SAVINGS BANK
STATEMENTS OF CONDITION
(UNAUDITED)
March 31, December 31,
1998 1997
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ASSETS
Cash and cash equivalents $ 640,007 $ 850,891
Certificate of deposit with other banks 100,000 100,000
Investment securities available for sale, net 908,560 1,615,685
Investment securities held to maturity, net
(market value of $1,012,987 and $922,716) 913,919 913,903
Mortgage-backed securities available for sale, net 944,482 906,869
Mortgage-backed securities held to maturity, net
(market value of $1,630,400 and $1,744,014) 1,603,199 1,721,250
Loans receivable (net of allowance for loan losses
of $97,564 and $114,832) 10,543,156 9,585,360
Accrued interest receivable 102,225 107,361
Property and equipment, net 188,981 184,878
Real estate owned 477,349 480,326
Deferred tax asset 92,700 92,700
Other assets 100,636 164,245
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Total assets $16,615,214 $16,723,468
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LIABILITIES AND RETAINED EARNINGS
Deposits $15,028,598 $15,177,917
Advance payments by borrowers for taxes
and insurance 141,213 143,129
Deferred income taxes 35,630 33,698
Accrued income taxes payable (4,359) 6,316
Other liabilities 243,080 192,363
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Total liabilities 15,444,162 15,553,423
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Unrealized gains (losses) on securities available
for sale, net of tax of ($0) and ($7,036) 15,270 13,658
Retained earnings (Substantially restricted) 1,155,782 1,156,387
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Total retained earnings 1,171,052 1,170,045
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Total liabilities and retained earnings $16,615,214 $16,723,468
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See accompanying notes to the unaudited financial statements.
6
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CARNEGIE SAVINGS BANK
STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
For Three Months Ended
March 31,
1998 1997
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<S> <C> <C>
INTEREST INCOME
Interest on loans $213,664 $207,125
Interest-bearing deposits with other banks 4,921 4,889
Interest on investments:
Taxable 28,263 24,069
Nontaxable 7,409 8,959
Mortgage-backed securities 43,522 35,039
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Total interest income 297,779 280,081
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INTEREST EXPENSE
Interest on certificates of deposit 144,397 132,176
Interest on other savings accounts 25,917 25,462
Interest on borrowings -- 567
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Total interest income 170,314 158,205
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NET INTEREST INCOME 127,465 121,876
Provision for loan losses -- --
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NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 127,465 121,876
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NONINTEREST INCOME (LOSS)
Service charges and fee income 13,562 14,618
Gain on sale of securities 2,147 --
Net income (loss) - real estate owned (3,191) (7,986)
Other income 68 (40)
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Total other income 12,586 6,592
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NONINTEREST EXPENSES:
Wages, payroll taxes and benefits 86,480 81,506
General and administrative 30,859 28,143
Data processing charges 17,741 13,502
Depreciation and amortization 5,576 5,374
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Total other expenses 140,656 128,525
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NET INCOME (LOSS BEFORE INCOME TAXES) (605) (57)
Income tax expense (benefit) -- --
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NET INCOME (LOSS) $ (605) $ (57)
========= =========
</TABLE>
See accompanying notes to the unaudited financial statements
7
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CARNEGIE SAVINGS BANK
STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
For Three Months Ended
March 31,
1998 1997
CASH FLOWS FROM OPERATIONS: ------------ ------------
<S> <C> <C>
Net income (loss) $ (605) $ (57)
Adjustments to reconcile net income (loss) to
net cash provided (used) by operations:
Depreciation and amortization 5,576 5,374
Deferred income taxes 1,932 --
Net amortization of premiums/discounts (5,289) --
(Gain) loss on sale of securities (2,147) --
Increase (decrease) in cash due to changes in
assets and liabilities:
Accrued interest receivable 5,136 (385)
Other assets 63,609 (12,630)
Income tax liabilities (10,675) 5,612
Other liabilities 50,717 51,080
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Net cash provided (used) by operations 108,254 48,994
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CASH FLOWS FROM INVESTING ACTIVITIES:
Investment securities available for sale:
Proceeds from sales and maturities 810,460 245,239
Purchases (100,000) (544,537)
Investment securities held to maturity:
Proceeds from maturities and repayments -- 3,962
Purchases -- --
Mortgage-backed securities available for sale:
Purchases (322,233) (818,009)
Maturities and repayments 290,326 32,173
Mortgage-backed securities held to maturity:
Purchases -- --
Maturity and repayments 118,042 (182,231)
Net (increase) decrease in loans receivable (957,796) 348,542
Investment in real estate owned 2,977 --
Purchase of equipment (9,679) (5,725)
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Net cash used by investing activities (167,903) (920,586)
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CASH FLOWS FROM FINANCING ACTIVITIES:
Advances from borrowers for taxes and insurance (1,916) (13,131)
Net increase (decrease) in deposits (149,319) 1,077,040
Net increase (decrease) in line of credit -- (300,000)
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Net cash provided by financing activities (151,235) 763,909
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Net increase (decrease) in cash (210,884) (107,683)
Cash, beginning of year 950,891 656,658
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Cash and cash equivalents, end of year $ 740,007 $ 548,975
=========== ===========
</TABLE>
See accompanying notes to the unaudited financial statements.
8
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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
month period ended March 31, 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 Trustees of the Bank, subject to
regulatory approval, ratified a Plan of Conversion (the "Plan") to convert
from a state mutual savings bank to a federally insured stock savings bank
and the concurrent formation of a holding company for the Bank. The Plan
provides that the holding company will offer nontransferable subscription
rights to purchase common stock of the holding company. The rights will be
offered first to eligible account holders, the Bank's tax-qualified
employee stock benefits plans, supplemental eligible account holders, and
directors, officers, and employees. Any shares remaining may then be
offered to the general public. As of March 31, 1998, the Bank had incurred
conversion costs of approximately $78,000. If the conversion is ultimately
successful, actual conversion costs will be accounted for as a reduction in
gross proceeds. If the conversion is unsuccessful, the conversion costs
will be expensed.
The stockholders of the holding company will be asked to approve a proposed
stock option plan and a proposed restricted stock plan at a meeting of the
stockholders after the conversion. Shares issued to directors and employees
under these plans may be from authorized but unissued shares of common
stock or they may be purchased in the open market. In the event that
options or shares are issued under these plans, such issuances will be
included in the earnings per share calculation; thus, the interests of
existing stockholders would be diluted.
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.
9
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CARNEGIE FINANCIAL CORPORATION
Notes to Financial Statements, Continued
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.
3. Subsequent Event
----------------
On June 15, 1998, the Bank sold a piece of real estate owned with a
carrying value of approximately $477,300 for approximately $422,000,
resulting in a loss on the sale of approximately $55,300.
10
