<PAGE> 1
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 June 30, 1995
OR
/ / 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 33-8195
NORTH SIDE CAPITAL CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 22-2920600
---------------------------------- -------------------
(State or other jurisdiction (I.R.S. employer
of incorporation or organization) identification no.)
1105 North Market St., Suite 300, Wilmington, DE 19899
------------------------------------------------ -----
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code (302)427-8736
-------------
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. Yes X No
----- -----
Registrant had 1,000 shares of common stock outstanding (wholly-owned
by North Side Savings Bank) as of August 1, 1995.
THE REGISTRANT MEETS THE CONDITION FOR AND IS, THEREFORE, UTILIZING
THE REDUCED DISCLOSURE FORMAT PROVIDED BY GENERAL INSTRUCTION H(1)(a) AND (b)
OF FORM 10-Q.
<PAGE> 2
INDEX
NORTH SIDE CAPITAL CORPORATION
<TABLE>
<CAPTION>
Cover
Index Page
----- ----
<S> <C>
PART I
Item 1. - Financial Statements F-2 to F-6
Item 2. - Management's Discussion and
Analysis of Financial Condition
and Results of Operations F-7
PART II
Item 1. - Legal Proceedings 1
Item 2. - Changes in Securities 1
Item 3. - Defaults Upon Senior Securities 1
Item 4. - Submission of Matters to a Vote of
Security Holders 1
Item 5. - Other Information 1
Item 6. - Exhibits and Reports on Form 8-K 1
</TABLE>
<PAGE> 3
F-1
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
NORTH SIDE CAPITAL CORPORATION
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<S> <C>
Financial Statements
Balance Sheets as of June 30, 1995
and September 30, 1994 F-2
Statements of Income and Accumulated Deficit
for the Three and Nine Months Ended
June 30, 1995 and 1994 F-3
Statements of Cash Flows for the
Nine Months Ended June 30, 1995 and 1994 F-4
Notes to Financial Statements F-5 to F-6
</TABLE>
In the opinion of management, the accompanying unaudited Financial Statements
include all normal recurring adjustments necessary for a fair presentation of
the Corporation's financial condition and results of operations in accordance
with generally accepted accounting principles.
<PAGE> 4
NORTH SIDE CAPITAL CORPORATION
BALANCE SHEETS
JUNE 30, 1995 AND SEPTEMBER 30, 1994
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
ASSETS 1995 1994
------ ----------- -------------
<S> <C> <C>
Current Assets
CASH $ 384,505 $ 598,103
INTEREST RECEIVABLE 138,039 163,630
OTHER ASSETS 12,077 16,484
----------- -----------
TOTAL CURRENT ASSETS 534,621 778,217
INVESTMENT IN GNMA
MORTGAGE-BACKED
SECURITIES, AT COST 14,706,133 17,524,910
DEFERRED COSTS 32,637 62,637
----------- -----------
$15,273,391 $18,365,764
=========== ===========
<CAPTION>
LIABILITIES AND
STOCKHOLDER'S JUNE 30, SEPTEMBER 30,
EQUITY (DEFICIT) 1995 1994
---------------- ----------- -------------
<S> <C> <C>
Current Liabilities
ACCOUNTS PAYABLE $ 17,374 $ 24,094
INTEREST PAYABLE 272,181 324,052
----------- -----------
TOTAL CURRENT LIABILITIES 289,555 348,146
COLLATERALIZED MORTGAGE
OBLIGATIONS, SERIES 1
(INCLUDING PREMIUM OF
$38,962 AND $74,962) 15,005,149 18,047,485
Stockholder's Equity (Deficit)
COMMON STOCK, $1 PAR VALUE:
1,000 SHARESAUTHORIZED,
ISSUED AND OUTSTANDING 1,000 1,000
ACCUMULATED DEFICIT (22,313) (30,867)
----------- -----------
TOTAL STOCKHOLDER'S
EQUITY (DEFICIT) (21,313) (29,867)
----------- -----------
$15,273,391 $18,365,764
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
F-3
NORTH SIDE CAPITAL CORPORATION
STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
FOR THE THREE AND NINE MONTHS ENDED
JUNE 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
------------------ -----------------
June 30, June 30,
-------- --------
1995 1994 1995 1994
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME $416,022 $560,899 $1,319,111 $1,843,070
INTEREST EXPENSE 409,867 556,224 1,298,041 1,830,009
-------- -------- ---------- ----------
NET INTEREST INCOME 6,155 4,675 21,070 13,061
OPERATING AND ADMINISTRATIVE
EXPENSES 1,872 2,527 8,109 8,666
-------- -------- ---------- ----------
INCOME BEFORE PROVISION
FOR INCOME TAXES 4,283 2,148 12,961 4,395
PROVISION FOR INCOME TAXES 1,457 730 4,407 1,494
-------- -------- ---------- ----------
NET INCOME 2,826 1,418 8,554 2,901
ACCUMULATED DEFICIT
BEGINNING OF PERIOD (25,139) (32,287) (30,867) (33,770)
-------- -------- ---------- ----------
ACCUMULATED DEFICIT
END OF PERIOD $(22,313) $(30,869) $ (22,313) $ (30,869)
======== ======== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
F-4
NORTH SIDE CAPITAL CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED
JUNE 30, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
NET INCOME $ 8,554 $ 2,901
DECREASE IN INTEREST PAYABLE (51,871) (152,501)
DECREASE IN ACCOUNTS PAYABLE (6,720) (731)
DECREASE IN INTEREST RECEIVABLE 25,591 75,396
DECREASE IN OTHER ASSETS 4,407 1,494
AMORTIZATION OF PREMIUM ON GNMA
MORTGAGE-BACKED SECURITIES -- 77,182
AMORTIZATION OF PREMIUM ON
COLLATERALIZED MORTGAGE OBLIGATIONS (36,000) (219,063)
AMORTIZATION OF DEFERRED COSTS 30,000 144,503
----------- -----------
NET CASH USED BY OPERATING ACTIVITIES (26,039) (70,819)
----------- -----------
INVESTMENT ACTIVITIES
PRINCIPAL PAYDOWNS ON GNMA
MORTGAGE-BACKED SECURITIES 2,818,777 8,327,468
----------- -----------
FINANCING ACTIVITIES
PRINCIPAL PAYDOWNS ON COLLATERALIZED
MORTGAGE OBLIGATIONS (3,006,336) (8,502,297)
----------- -----------
TOTAL DECREASE IN CASH (213,598) (245,648)
CASH AT BEGINNING OF PERIOD 598,103 1,242,933
----------- -----------
CASH AT END OF PERIOD $ 384,505 $ 997,285
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
F-5
NORTH SIDE CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
JUNE 30, 1995
1. Organization
North Side Capital Corporation (the "Company") was incorporated on June 23,
1986 and is a limited purpose finance subsidiary of North Side Savings Bank
("North Side"). The Company was organized for the purpose of issuing one or
more series of Collateralized Mortgage Obligations (the "Bonds") collateralized
by "fully modified pass-through mortgage-backed certificates" ("GNMA
Certificates") guaranteed as to the full and timely payment of principal and
interest by the Government National Mortgage Association, which guarantee is
backed by the full faith and credit of the United States Government; by
guaranteed mortgage pass- through certificates ("FNMA Certificates") issued and
guaranteed as to the full and timely payment of principal and interest by the
Federal National Mortgage Association; by mortgage participation certificates
("FHLMC Certificates") issued and guaranteed as to the full and timely payment
of interest and the ultimate payment of principal by the Federal Home Loan
Mortgage Corporation; (the GNMA, FNMA, FHLMC Certificates hereinafter referred
to collectively as the "Certificates"); or by a combination of such
Certificates.
The Company began operations on February 25, 1988 with the issuance of
$100,100,000 Collateralized Mortgage Obligations, Series 1, at a premium of
$6,028,027, collateralized by $100,018,251 principal amount of 11.00% GNMA
Mortgage-Backed Securities. At issuance, the Bonds consisted of:
<TABLE>
<CAPTION>
Principal Interest
Class Amount Rate
----- --------- --------
<S> <C> <C>
1-A $ 59,800,000 9.15%
1-B 24,000,000 10.00%
1-C 14,000,000 9.375%
1-Z 2,200,000 10.00%
1-R 100,000 1,556.75%
------------
$100,100,000
============
</TABLE>
All of the Company's voting stock is held by North Side. As of June 30,
1995, 1,000 shares of the Company's common stock, par value $1.00 per share,
were issued and outstanding.
The Bonds were initially issued in 5 tranches, one of which is an accrual
bond (Class 1-Z). The first two tranches have been paid out and principal and
interest payments are now being received by holders of the third tranche.
Interest continues to accrue on the Class 1-Z tranche which has an unpaid
balance of $4,566,522 at June 30, 1995 compared to $4,237,878 at September 30,
1994.
<PAGE> 8
F-6
2. Summary of Significant Accounting Policies
Deferred costs:
The deferred syndicate costs, other deferred issuance costs and original
issue discount on the Bonds are being amortized using the interest method.
Income taxes:
Income taxes are provided for financial reporting purposes on the basis of
the Company filing a separate income tax return. For the three and nine months
ended June 30, 1995 and 1994, the Company made provisions for Federal income
taxes at the statutory rate of 34%. As there are no timing differences for
financial reporting and Federal income tax purposes, no provision has been made
in the accompanying financial statements for deferred taxes. Since the Company
is a Delaware corporation, no provision has been made for state income taxes.
3. Statement of Cash Flows
For purposes of reporting cash flows, cash and cash equivalents are
defined to included cash and due from banks.
4. Related Party Transactions
Certain directors and officers of the Company are also directors and
officers of North Side.
<PAGE> 9
F-7
Item 2. - Management's Discussion and Analysis of
Financial Condition and Results of Operations
The Corporation has not issued any additional Collateralized Mortgage
Obligation Bonds since the first issuance of such bonds on February 25, 1988.
Interest income, interest expense and administrative expenses decreased
$144,877, $146,357 and $655, respectively, for the three months ended June 30,
1995 compared to the like period in 1994, primarily due to paydowns of
principal on both the GNMA Mortgage-backed Securities and on the Collateralized
Mortgage Obligation Bonds ("CMO"). Interest income, interest expense and
administrative expenses decreased $523,959, $531,968 and $557, respectively,
for the nine months ended June 30, 1995 compared to the like period in 1994,
primarily due to paydowns as previously discussed.
<PAGE> 10
1
PART II - OTHER INFORMATION
The following items have been omitted as inapplicable or not required under the
applicable instructions:
Item 1. - Legal Proceedings
Item 2. - Changes in Securities
Item 3. - Defaults Upon Senior Securities
Item 4. - Submission of Matters to a Vote of Security Holders
Item 5. - Other Information
Item 6. - Exhibits and Reports on Form 8-K
<PAGE> 11
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.
NORTH SIDE CAPITAL CORPORATION
By: /s/ Thomas M. O'Brien
----------------------------
Thomas M. O'Brien
President, Chief Executive
Officer and Director
Date: August 10, 1995
Pursuant to the requirements 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>
SIGNATURE POSITION DATE
--------- -------- ----
<S> <C> <C>
/s/ Thomas M. O'Brien President, Chief August 10, 1995
------------------------- Executive Officer
Thomas M. O'Brien and Director
/s/ Donald C. Fleming Director, August 10, 1995
------------------------- Vice President and
Donald C. Fleming Treasurer (Principal
Financial and Accounting
Officer)
</TABLE>
<PAGE> 12
EXHIBIT INDEX
-------------
EXHIBIT 27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000799276
<NAME> NORTH SIDE CAPITAL CORP.
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-START> OCT-01-1994
<PERIOD-END> JUN-30-1995
<EXCHANGE-RATE> 1
<CASH> 384,505
<SECURITIES> 14,706,133
<RECEIVABLES> 138,039
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 534,621
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 15,273,391
<CURRENT-LIABILITIES> 289,555
<BONDS> 15,005,149
<COMMON> 1,000
0
0
<OTHER-SE> (22,313)
<TOTAL-LIABILITY-AND-EQUITY> 15,273,391
<SALES> 0
<TOTAL-REVENUES> 1,319,111
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 8,109
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,298,041
<INCOME-PRETAX> 12,961
<INCOME-TAX> 4,407
<INCOME-CONTINUING> 8,554
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,554
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
