<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
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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, 1996
OR
/ / 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 33-8195
NORTH SIDE CAPITAL CORPORATION
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(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
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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. Yes X No
--- ---
Registrant had 1,000 shares of common stock outstanding (wholly-owned
by North Side Savings Bank) as of August 1, 1996.
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
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<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>
<CAPTION>
Financial Statements
- --------------------
<S> <C>
Balance Sheets as of June 30, 1996
and September 30, 1995 F-2
Statements of Income and Accumulated Deficit
for the Three and Nine Months Ended
June 30, 1996 and 1995 F-3
Statements of Cash Flows for the
Nine Months Ended June 30, 1996 and 1995 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, 1996 AND SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
JUNE 30, SEPTEMBER 30,
ASSETS 1996 1995
- ------ ---- ----
<S> <C> <C>
Current Assets
CASH $ 308,129 $ 768,186
INTEREST RECEIVABLE 106,196 127,987
OTHER ASSETS 7,026 10,839
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TOTAL CURRENT ASSETS 421,351 907,012
INVESTMENT IN GNMA
MORTGAGE-BACKED
SECURITIES, AT COST 11,328,264 13,598,813
DEFERRED COSTS, NET -- 22,637
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$11,749,615 $14,528,462
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<CAPTION>
LIABILITIES AND
STOCKHOLDER'S JUNE 30, SEPTEMBER 30,
EQUITY (DEFICIT) 1996 1995
- ---------------- ---- ----
<S> <C> <C>
Current Liabilities
ACCOUNTS PAYABLE $ 11,642 $ 16,817
INTEREST PAYABLE 209,750 256,018
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TOTAL CURRENT LIABILITIES 221,392 272,835
COLLATERALIZED MORTGAGE
OBLIGATIONS, SERIES 1
(INCLUDING PREMIUM OF
$0 AND $26,962) 11,539,731 14,274,537
Stockholder's Equity (Deficit)
COMMON STOCK, $1 PAR VALUE:
1,000 SHARES AUTHORIZED,
ISSUED AND OUTSTANDING 1,000 1,000
ACCUMULATED DEFICIT (12,508) (19,910)
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TOTAL STOCKHOLDER'S
EQUITY (DEFICIT) (11,508) (18,910)
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$11,749,615 $14,528,462
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</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, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
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June 30, June 30,
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1996 1995 1996 1995
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
INTEREST INCOME $322,522 $416,022 $1,028,982 $1,319,111
INTEREST EXPENSE 318,827 409,867 1,013,144 1,298,041
-------- -------- ---------- ----------
NET INTEREST INCOME 3,695 6,155 15,838 21,070
OPERATING AND ADMINISTRATIVE
EXPENSES 1,449 1,872 4,623 8,109
-------- -------- ---------- ----------
INCOME BEFORE PROVISION
FOR INCOME TAXES 2,246 4,283 11,215 12,961
PROVISION FOR INCOME TAXES 764 1,457 3,813 4,407
-------- -------- ---------- ----------
NET INCOME 1,482 2,826 7,402 8,554
ACCUMULATED DEFICIT
BEGINNING OF PERIOD (13,990) (25,139) (19,910) (30,867)
-------- -------- ---------- ----------
ACCUMULATED DEFICIT
END OF PERIOD $(12,508) $(22,313) $ (12,508) $ (22,313)
======== ======== ========== ==========
</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, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
NET INCOME $ 7,402 $ 8,554
DECREASE IN INTEREST PAYABLE (46,268) (51,871)
DECREASE IN ACCOUNTS PAYABLE (5,175) (6,720)
DECREASE IN INTEREST RECEIVABLE 21,791 25,591
DECREASE IN OTHER ASSETS 3,813 4,407
AMORTIZATION OF PREMIUM ON
COLLATERALIZED MORTGAGE OBLIGATIONS (26,962) (36,000)
AMORTIZATION OF DEFERRED COSTS 22,637 30,000
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NET CASH USED BY OPERATING ACTIVITIES (22,762) (26,039)
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INVESTMENT ACTIVITIES
PRINCIPAL PAYDOWNS ON GNMA
MORTGAGE-BACKED SECURITIES 2,270,549 2,818,777
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FINANCING ACTIVITIES
PRINCIPAL PAYDOWNS ON COLLATERALIZED
MORTGAGE OBLIGATIONS (2,707,844) (3,006,336)
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TOTAL DECREASE IN CASH (460,057) (213,598)
CASH AT BEGINNING OF PERIOD 768,186 598,103
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CASH AT END OF PERIOD $ 308,129 $ 384,505
=========== ===========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
F-5
NORTH SIDE CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
June 30, 1996
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; and 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,
1996, 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 had an unpaid
balance of $5,044,697 at June 30, 1996 compared to $4,681,640 at September 30,
1995.
<PAGE> 8
F-6
2. Summary of Significant Accounting Policies
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, 1996 and 1995, 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 and interest expense decreased $93,500 and $91,040 respectively,
for the three months ended June 30, 1996 compared to the like period in 1995,
primarily due to paydowns of principal on both the GNMA Mortgage-backed
Securities and on the Collateralized Mortgage Obligation Bonds ("CMO"). Interest
income and interest expense have decreased $290,129 and $284,897 respectively,
for the nine months ended June 30, 1996 compared to the like period in 1995,
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 9, 1996
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 9, 1996
- --------------------- Executive Officer
Thomas M. O'Brien and Director
/s/ Donald C. Fleming Director, August 9, 1996
- --------------------- Vice President and
Donald C. Fleming Treasurer (Principal
Financial and Accounting
Officer)
</TABLE>
<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-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> JUN-30-1996
<EXCHANGE-RATE> 1
<CASH> 308,129
<SECURITIES> 11,328,264
<RECEIVABLES> 106,196
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 421,351
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 11,749,615
<CURRENT-LIABILITIES> 221,392
<BONDS> 11,539,731
0
0
<COMMON> 1,000
<OTHER-SE> (12,508)
<TOTAL-LIABILITY-AND-EQUITY> 11,749,615
<SALES> 0
<TOTAL-REVENUES> 1,028,982
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 4,623
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,013,144
<INCOME-PRETAX> 11,215
<INCOME-TAX> 3,813
<INCOME-CONTINUING> 7,402
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,402
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
