<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 December 31, 1995
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
- --------------------------------------------------------------------------------
(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 February 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.
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INDEX
NORTH SIDE CAPITAL CORPORATION
<TABLE>
<CAPTION>
Cover
Index Page
- ----- ----
<S> <C>
PART I
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Item 1. - Financial Statements F-1 to F-6
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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
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Security Holders 1
----------------
Item 5. - Other Information 1
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Item 6. - Exhibits and Reports on Form 8-K 1
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</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 December 31, 1995
and September 30, 1995 F-2
Statements of Income and Accumulated Deficit
for the Three Months Ended
December 31, 1995 and 1994 F-3
Statements of Cash Flows for the
Three Months Ended
December 31, 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.
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NORTH SIDE CAPITAL CORPORATION
BALANCE SHEETS
DECEMBER 31, 1995 AND SEPTEMBER 30, 1995
(UNAUDITED)
<TABLE>
<CAPTION>
LIABILITIES AND
DECEMBER 31, SEPTEMBER 30, STOCKHOLDER'S DECEMBER 31, SEPTEMBER 30,
ASSETS 1995 1995 EQUITY (DEFICIT) 1995 1995
- ------ ----------- ------------ ---------------- ----------- -------------
<S> <C> <C> <C> <C> <C>
Current Assets Current Liabilities
- -------------- -------------------
CASH $ 394,183 $ 768,186 ACCOUNTS PAYABLE $ 14,816 $ 16,817
INTEREST RECEIVABLE 120,593 127,987 INTEREST PAYABLE 238,613 256,018
OTHER ASSETS 9,376 10,839 TOTAL CURRENT LIABILITIES ---------- ----------
--------- ---------- 253,429 272,835
TOTAL CURRENT ASSETS 524,152 907,012
COLLATERALIZED MORTGAGE
INVESTMENT IN GNMA OBLIGATIONS, SERIES 1
MORTGAGE-BACKED (INCLUDING PREMIUM OF
SECURITIES, AT COST 12,849,972 13,598,813 $14,962 AND $26,962) 13,149,401 14,274,537
DEFERRED COSTS 12,637 22,637 Stockholder's Equity (Deficit)
------------------------------
COMMON STOCK, $1 PAR VALUE:
1,000 SHARES AUTHORIZED,
ISSUED AND OUTSTANDING 1,000 1,000
ACCUMULATED DEFICIT (17,069) (19,910)
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TOTAL STOCKHOLDER'S
EQUITY (DEFICIT) (16,069) (18,910)
---------- ---------- ---------- ----------
$13,386,761 $14,528,462 $13,386,761 $14,528,462
========== ========== ========== ==========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE> 5
F-3
NORTH SIDE CAPITAL CORPORATION
STATEMENTS OF INCOME AND ACCUMULATED DEFICIT
FOR THE THREE MONTHS ENDED
DECEMBER 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
INTEREST INCOME $364,684 $467,839
INTEREST EXPENSE 358,741 459,116
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NET INTEREST INCOME 5,943 8,723
OPERATING AND ADMINISTRATIVE EXPENSES 1,639 4,278
-------- --------
INCOME BEFORE PROVISION
FOR INCOME TAXES 4,304 4,445
PROVISION FOR INCOME TAXES 1,463 1,511
------ ------
NET INCOME 2,841 2,934
ACCUMULATED DEFICIT
BEGINNING OF PERIOD (19,910) (30,867)
-------- --------
ACCUMULATED DEFICIT
END OF PERIOD $ (17,069) $ (27,933)
========= =========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE> 6
F-4
NORTH SIDE CAPITAL CORPORATION
STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED
DECEMBER 31, 1995 AND 1994
(UNAUDITED)
<TABLE>
<CAPTION>
1995 1994
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
- --------------------
NET INCOME $ 2,841 $ 2,934
DECREASE IN INTEREST PAYABLE (17,405) (19,383)
DECREASE IN ACCOUNTS PAYABLE (2,001) ( 1,713)
DECREASE IN INTEREST RECEIVABLE 7,394 7,663
DECREASE IN OTHER ASSETS 1,463 1,511
AMORTIZATION OF PREMIUM ON
COLLATERALIZED MORTGAGE OBLIGATIONS (12,000) (12,000)
AMORTIZATION OF DEFERRED COSTS 10,000 10,000
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NET CASH USED BY OPERATING ACTIVITIES (9,708) (10,988)
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INVESTMENT ACTIVITIES
- ---------------------
PRINCIPAL PAYDOWNS ON GNMA
MORTGAGE-BACKED SECURITIES 748,841 1,314,503
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FINANCING ACTIVITIES
- --------------------
PRINCIPAL PAYDOWNS ON COLLATERALIZED
MORTGAGE OBLIGATIONS (1,113,136) (1,274,463)
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TOTAL DECREASE IN CASH (374,003) 29,052
CASH AT BEGINNING OF PERIOD 768,186 598,103
------- -------
CASH AT END OF PERIOD $ 394,183 $ 627,155
========= =======
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
F-5
NORTH SIDE CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 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>
The Company is a limited purpose finance subsidiary of North Side. All of
the Company's voting stock is held by North Side. As of December 31, 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 $4,799,659 at December 31, 1995 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 months ended
December 31, 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 include 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 $103,155 and $100,375
respectively, for the three months ended December 31, 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").
<PAGE> 10
PART II - OTHER INFORMATION
Item 4. - Submission of Matters to a Vote of Security Holders By
written consent of the Sole Stockholder dated as of December
15, 1995, Thomas M. O'Brien, Irvin L. Cherashore, Donald C.
Fleming and Donald J. Puglisi were re-elected as directors of
the Company.
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 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: February 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:
SIGNATURE POSITION DATE
- --------- -------- ----
/s/ Thomas M. O'Brien President, Chief February 9, 1996
- ------------------------- Executive Officer
Thomas M. O'Brien and Director
/s/ Donald C. Fleming Director, February 9, 1996
- ------------------------- Vice President and
Donald C. Fleming Treasurer (Principal
Financial and
Accounting Officer)
<PAGE> 12
EXHIBIT INDEX
Exhibit 27 - Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<CIK> 0000799276
<NAME> NORTH SIDE CAPITAL CORPORATION
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> DEC-31-1995
<CASH> 394,183
<SECURITIES> 12,849,972
<RECEIVABLES> 120,593
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 524,152
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 13,386,761
<CURRENT-LIABILITIES> 253,429
<BONDS> 13,149,401
1,000
0
<COMMON> 0
<OTHER-SE> (17,069)
<TOTAL-LIABILITY-AND-EQUITY> 13,386,761
<SALES> 0
<TOTAL-REVENUES> 364,684
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,639
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 358,741
<INCOME-PRETAX> 4,304
<INCOME-TAX> 1,463
<INCOME-CONTINUING> 2,841
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,841
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
