<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 December 31, 1996
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 as of February
10, 1997.
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
Cover
Index Page
PART I
Item 1. - Financial Statements F-1 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
<PAGE> 3
F-1
PART I - FINANCIAL INFORMATION
Item 1. - Financial Statements
NORTH SIDE CAPITAL CORPORATION
INDEX TO FINANCIAL STATEMENTS
Financial Statements
Balance Sheets as of December 31, 1996
and September 30, 1996 F-2
Statements of Income and Accumulated Deficit
for the Three Months Ended
December 31, 1996 and 1995 F-3
Statements of Cash Flows for the
Three Months Ended
December 31, 1996 and 1995 F-4
Notes to Financial Statements F-5 to F-6
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
DECEMBER 31, 1996 AND SEPTEMBER 30, 1996
(UNAUDITED)
<TABLE>
<CAPTION>
LIABILITIES AND
DECEMBER 31, SEPTEMBER 30, STOCKHOLDER'S DECEMBER 31, SEPTEMBER 30,
ASSETS 1996 1996 EQUITY (DEFICIT) 1996 1996
- ------ ---- ---- ---------------- ---- ----
<S> <C> <C> <C> <C> <C>
Current Assets Current Liabilities
CASH $ 251,880 $ 378,807 ACCOUNTS PAYABLE $ 9,109 $ 10,609
INTEREST RECEIVABLE 94,144 99,302 INTEREST PAYABLE 185,191 197,502
---------- -----------
OTHER ASSETS 5,936 6,653 TOTAL CURRENT LIABILITIES 194,300 208,111
----------- ---------
TOTAL CURRENT ASSETS 351,960 484,762
INVESTMENT IN GNMA COLLATERALIZED MORTGAGE
MORTGAGE-BACKED OBLIGATIONS, SERIES 1 10,183,667 10,920,169
SECURITIES 10,016,613 10,632,733
Stockholder's Equity (Deficit)
COMMON STOCK, $1 PAR VALUE:
1,000 SHARES AUTHORIZED,
ISSUED AND OUTSTANDING 1,000 1,000
ACCUMULATED DEFICIT (10,394) (11,785)
TOTAL STOCKHOLDER'S ----------- -----------
----------- ----------- EQUITY (DEFICIT) (9,394) (10,785)
----------- -----------
$10,368,573 $11,117,495 $ 10,368,573 $11,117,495
=========== =========== =========== ===========
</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, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
INTEREST INCOME $283,472 $364,684
INTEREST EXPENSE 280,092 358,741
------- -------
NET INTEREST INCOME 3,380 5,943
OPERATING AND ADMINISTRATIVE EXPENSES 1,272 1,639
----- -----
INCOME BEFORE PROVISION
FOR INCOME TAXES 2,108 4,304
PROVISION FOR INCOME TAXES 717 1,463
--- -----
NET INCOME 1,391 2,841
ACCUMULATED DEFICIT
BEGINNING OF PERIOD (11,785) (19,910)
------- -------
ACCUMULATED DEFICIT
END OF PERIOD $ (10,394) $ (17,069)
========= =========
</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, 1996 AND 1995
(UNAUDITED)
<TABLE>
<CAPTION>
1996 1995
---- ----
<S> <C> <C>
OPERATING ACTIVITIES
NET INCOME $ 1,391 $ 2,841
DECREASE IN INTEREST PAYABLE (12,311) (17,405)
DECREASE IN ACCOUNTS PAYABLE (1,500) (2,001)
DECREASE IN INTEREST RECEIVABLE 5,158 7,394
DECREASE IN OTHER ASSETS 717 1,463
AMORTIZATION OF PREMIUM ON
COLLATERALIZED MORTGAGE OBLIGATIONS -- (12,000)
AMORTIZATION OF DEFERRED COSTS -- 10,000
------ ------
NET CASH USED BY OPERATING ACTIVITIES (6,545) (9,708)
------ ------
INVESTMENT ACTIVITIES
PRINCIPAL PAYDOWNS ON GNMA
MORTGAGE-BACKED SECURITIES 616,120 748,841
------- -------
FINANCING ACTIVITIES
PRINCIPAL PAYDOWNS ON COLLATERALIZED
MORTGAGE OBLIGATIONS (736,502) (1,113,136)
-------- ----------
TOTAL DECREASE IN CASH (126,927) (374,003)
CASH AT BEGINNING OF PERIOD 378,807 768,186
------- -------
CASH AT END OF PERIOD $ 251,880 $ 394,183
=========== =========
</TABLE>
SEE ACCOMPANYING NOTES TO FINANCIAL STATEMENTS
<PAGE> 7
F-5
NORTH SIDE CAPITAL CORPORATION
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1996
1. Organization
North Side Capital Corporation (the "Company") was incorporated on June 23,
1986 and is a limited purpose finance subsidiary of North Fork Bank ("North
Fork"), acquired through the merger with North Side Savings Bank. 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 Fork. All of
the Company's voting stock is held by North Fork. As of December 31, 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 has an unpaid
balance of $5,302,246 at December 31, 1996 compared to $5,171,869 at September
30, 1996.
<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, 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 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 $78,212 and $78,649 respectively,
for the three months ended December 31, 1996 compared to the same period in
1995, 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
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: February 13, 1997
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 February 13, 1997
- --------------------- Executive Officer
Thomas M. O'Brien and Director
/s/ Daniel M. Healy Director, February 13, 1997
- ------------------- Vice President and
Daniel M. Healy Treasurer (Principal
Financial and Accounting
Officer)
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<EXCHANGE-RATE> 1
<CASH> 251,880
<SECURITIES> 10,016,613
<RECEIVABLES> 94,144
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 351,960
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 10,368,573
<CURRENT-LIABILITIES> 194,300
<BONDS> 10,183,667
0
0
<COMMON> 1,000
<OTHER-SE> (10,394)
<TOTAL-LIABILITY-AND-EQUITY> 10,368,573
<SALES> 0
<TOTAL-REVENUES> 283,472
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,272
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 280,092
<INCOME-PRETAX> 2,108
<INCOME-TAX> 717
<INCOME-CONTINUING> 1,391
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,391
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>
