<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
(Mark One)
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the fiscal year ended December 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
Commission file number : 00015580
St. Paul Federal Bank For Savings
Profit Sharing and Savings Plan
6700 West North Avenue
Chicago, Illinois 60707
-----------------------
(Full title and address of the plan)
St. Paul Bancorp, Inc.
6700 West North Avenue
Chicago, Illinois 60707
-----------------------
(Name and address of issuer of the
securities held pursuant to the plan)
<PAGE> 2
Information Included
<TABLE>
<S> <C>
Report of Independent Auditors 1
Financial Statements
Statements of Net Assets Available
for Plan Benefits 2
Statements of Changes in Net Assets
Available for Benefits 3
Notes to Financial Statements 4
Supplemental Schedules
Schedule of Assets Held for Investment Purposes 16
Schedule of Reportable Transactions 17
</TABLE>
Exhibits:
Exhibit 24 - Consent of Independent Auditors
<PAGE> 3
Financial Statements
and Supplemental Schedules
St. Paul Federal Bank For Savings
Profit Sharing and Savings Plan
Years ended December 31, 1998, 1997
and 1996 with Report of Independent Auditors
<PAGE> 4
St. Paul Federal Bank For Savings
Profit Sharing and Savings Plan
Financial Statements and
Supplemental Schedules
Years ended December 31, 1998, 1997 and 1996
CONTENTS
<TABLE>
<S> <C>
Report of Independent Auditors................................................1
Financial Statements
Statements of Net Assets Available for Plan Benefits..........................2
Statements of Changes in Net Assets Available for Plan Benefits...............3
Notes to Financial Statements.................................................4
Supplemental Schedules
Line 27a - Schedule of Assets Held for Investment Purposes...................16
Line 27d - Schedule of Reportable Transactions...............................17
</TABLE>
<PAGE> 5
[ERNST & YOUNG LLP LETTERHEAD]
Report of Independent Auditors
The Trustees
St. Paul Federal Bank For Savings
Profit Sharing and Savings Plan
We have audited the accompanying statements of net assets available for plan
benefits of St. Paul Federal Bank For Savings Profit Sharing and Savings Plan as
of December 31, 1998 and 1997, and the related statements of changes in net
assets available for plan benefits for each of the three years in the period
ended December 31, 1998. These financial statements are the responsibility of
the Plan's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan at
December 31, 1998 and 1997, and the changes in its net assets available for plan
benefits for each of the three years in the period ended December 31, 1998, in
conformity with generally accepted accounting principles.
Our audits were made for the purpose of forming an opinion on the financial
statements taken as a whole. The accompanying supplemental schedules of assets
held for investment purposes as of December 31, 1998, and reportable
transactions for the year then ended are presented for purposes of complying
with the Department of Labor's Rules and Regulations for Reporting and
Disclosure under the Employee Retirement Income Security Act of 1974 and are not
a required part of the financial statements. The supplemental schedules have
been subjected to the auditing procedures applied in our audit of the 1998
financial statements and, in our opinion, are fairly stated in all material
respects in relation to the 1998 financial statements taken as a whole.
June 23, 1999 /s/ Ernst & Young LLP
------------------------
Ernst & Young LLP
1
<PAGE> 6
St. Paul Federal Bank For Savings
Profit Sharing and Savings Plan
Statements of Net Assets Available for Plan Benefits
<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
-------------------------
<S> <C> <C>
ASSETS
Investments, at current value:
Cash and cash equivalents $ 60,083 $ 111,255
Mutual funds:
Equity 7,722,762 5,314,316
Money market 5,096,027 2,859,230
Small and medium capitalization equity 4,256,631 4,009,401
Total bond market 1,898,188 1,644,365
Balanced 1,629,932 730,168
High yield corporate bond 1,562,568 1,434,929
International equity 486,217 316,194
-------------------------
Total mutual funds 22,652,325 16,308,603
Common stock of St. Paul Bancorp, Inc. 28,840,395 27,592,790
Participant loans 866,005 646,457
-------------------------
Total investments 52,418,808 44,659,105
Receivables:
Participants' contributions 90,301 --
Accrued interest and dividends receivable 253 559
-------------------------
Total receivables 90,554 559
-------------------------
Total assets 52,509,362 44,659,664
-------------------------
LIABILITIES
Accrued expenses 14,713 39,085
-------------------------
Total liabilities 14,713 39,085
-------------------------
Net assets available for plan benefits $52,494,649 $44,620,579
=========================
</TABLE>
See accompanying notes.
2
<PAGE> 7
St. Paul Federal Bank For Savings
Profit Sharing and Savings Plan
Statements of Changes in Net Assets Available for Plan Benefits
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997 1996
--------------------------------------------
<S> <C> <C> <C>
Additions (deductions):
Income from investments:
Cash and cash equivalents $ 4,126 $ 17,785 $ 2,105
Participants loans 62,106 22,782 --
Common stock 536,477 492,838 263,805
Mutual funds 1,050,775 818,544 360,019
--------------------------------------------
1,653,484 1,351,949 625,929
Contributions:
St. Paul Federal Bank For Savings -- 2,861 31,109
Participants 2,605,769 1,931,221 1,711,953
--------------------------------------------
2,605,769 1,934,082 1,743,062
Asset transfers in 3,133,835 -- --
Realized and unrealized appreciation
in fair value of investments 2,772,645 13,142,035 3,468,349
Distributions (2,218,343) (2,094,342) (1,839,949)
Administrative expenses (73,320) (93,219) (91,799)
--------------------------------------------
Net increase 7,874,070 14,240,505 3,905,592
Net assets available for plan benefits
at beginning of year 44,620,579 30,380,074 26,474,482
--------------------------------------------
Net assets available for plan benefits
at end of year $ 52,494,649 $ 44,620,579 $ 30,380,074
============================================
</TABLE>
See accompanying notes.
3
<PAGE> 8
ST. PAUL FEDERAL BANK FOR SAVINGS
PROFIT SHARING AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1998
1. ACCOUNTING POLICIES
Investments are stated at current value. Investments traded on security
exchanges are valued at the last reported sales price on the last business day
of the calendar year. Mutual funds are valued at their reported net asset value.
The change between current value at the end of the year and current value at the
beginning of the year or cost, if the investment was acquired during the year,
is reflected as net unrealized appreciation or depreciation in current value of
investments.
Purchases and sales of securities are recorded on a trade-date basis. Sales are
recorded using an average cost method. Interest income is recorded on the
accrual basis. Dividends are recorded on the ex-dividend date.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the Plan's Management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements, as well as the reported amounts of income and expenses during the
reporting period. Actual results could differ from those estimates.
2. DESCRIPTION OF PLAN
St. Paul Federal Bank For Savings Profit Sharing and Savings Plan (the Plan) is
a defined-contribution profit-sharing plan for eligible employees of St. Paul
Federal Bank For Savings (the Bank) and its subsidiaries and affiliates. The
Plan is subject to certain provisions of the Employee Retirement Income Security
Act of 1974 (ERISA) and is intended to qualify as a profit-sharing and savings
plan, as described in section 401 of the Internal Revenue Code, as amended by
the Tax Reform Act of 1986.
During 1997 and prior years, employees were required to complete one year of
service before they could participate in the Plan. As of January 1, 1998, any
employee, as defined in the Plan, is eligible to participate immediately from
the date of hire. An employee must file a written notice of election with the
trustees together with an authorization for the participant
4
<PAGE> 9
ST. PAUL FEDERAL BANK FOR SAVINGS
PROFIT SHARING AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. DESCRIPTION OF PLAN (CONTINUED)
deductions. A participant must deposit at least 2% of annual compensation and
may deposit up to 15% of their annual compensation. Employees are permitted from
time to time to change their level of contributions within this range. The Board
of Directors of St. Paul Bancorp, Inc. (the Company), the holding company of the
Bank, may authorize the Bank to subsidize the purchase of Company stock by the
Plan. Such authorizations are restricted in that they must comply with
applicable laws and regulations. In 1997, the Bank discontinued subsidizing the
purchase of Company stock by the Plan.
The Plan is comprised of eight investment fund choices:
Vanguard 500 Index Fund: Seeks to provide long-term growth of capital and
income from dividends by holding all of the 500 stocks that make up the
unmanaged Standard & Poor's 500 Composite Stock Price Index, a widely
recognized benchmark of U.S. stock market performance.
Vanguard Prime Money Market Fund: Seeks to provide high income and a stable
share price of $1 by investing in short-term, high-quality money market
instruments issued by financial institutions, nonfinancial corporations,
the U.S. government, and federal agencies.
Vanguard Extended Market Index Fund: Seeks to provide long-term growth of
capital by attempting to match the performance of the Wilshire 4500 Equity
Index, an unmanaged index made up of mid- and small capitalization
companies.
Vanguard Total Bond Market Index Fund: Seeks to provide a high level of
interest income by attempting to match the performance of the unmanaged
Lehman Brothers Aggregate Bond Index, a widely recognized measure of the
entire taxable U.S. bond market.
Vanguard Wellington Fund: Seeks to provide income and long-term growth of
capital, without undue risk to capital, by investing about 65% of its
assets in stocks and the remaining 35% in bonds
5
<PAGE> 10
ST. PAUL FEDERAL BANK FOR SAVINGS
PROFIT SHARING AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. DESCRIPTION OF PLAN (CONTINUED)
Vanguard High-Yield Corporate Fund: Seeks to provide a high level of
interest income by investing in high-yield corporate bonds, or "junk"
bonds. These bonds pay higher interest rates because they are considered to
carry greater risk of default than bonds with higher credit ratings.
Vanguard International Growth Fund: Seeks to provide long-term growth of
capital by investing in stocks of high-quality, seasoned companies based
outside the United States. Stocks are selected from more than 15 countries.
St. Paul Bancorp Common Stock: Provides employees of St. Paul Federal Bank
with the opportunity to share in the potential growth and prosperity of the
Bank by investing in St. Paul Bancorp, Inc. stock and reinvesting
dividends.
Participants are periodically permitted to direct the trustees as to respective
percentages of participant account balances and contributions to be invested in
each Investment Fund. The number of fund choices expanded in 1997, when the Plan
changed trustees.
Prior to January 31, 1997, contributions were deposited in a trust fund
administered by First Trust Illinois, as trustee. On January 31, 1997, The
Vanguard Group became the trustee and recordkeeper of the Plan. At that time,
the Plan's investment options changed and new investment options were added to
the Plan. Funds invested in the Montgomery Funds Small Capitalization Fund were
transferred to the Vanguard Extended Market Index Fund and funds invested in the
Federated Income Trust were transferred to the Vanguard Total Bond Market Index
Fund. The Vanguard 500 Index Fund, Vanguard Prime Money Market Fund, and St.
Paul Bancorp, Inc. common stock continued to be investment options to the Plan
participants. The Plan added the following investment options: Vanguard
High-Yield Corporate Fund (a high yield corporate bond fund), Vanguard
Wellington Fund (a balanced fund), and Vanguard International Growth Fund (an
international equity fund).
As provided for in the Plan documents, contributions have been deposited in a
trust fund administered by The Vanguard Group, as trustee. All administrative
expenses were paid by the Plan.
6
<PAGE> 11
ST. PAUL FEDERAL BANK FOR SAVINGS
PROFIT SHARING AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
2. DESCRIPTION OF PLAN (CONTINUED)
The balance of a participant's account that represents contributions made by the
participant is fully vested and can be withdrawn under certain conditions. As of
January 31, 1997, participants are also allowed to borrow against assets held in
their account from the Plan.
Distributions from the Plan may be received upon termination of service in the
form of a lump-sum distribution. The Plan also allows for withdrawals under
certain hardship circumstances in accordance with the Internal Revenue Code.
On July 1, 1998, the Company merged with Beverly Bancorporation, Inc. (Beverly),
the bank holding company of Beverly National Bank and Beverly Trust Company.
Effective July 1, 1998, the Beverly Employees' Profit Sharing Plan was
terminated. Participant accounts were valued as of August 31, 1998, and
distributions occurred in 1998. Participants in the Beverly plan who remained
employed by the Bank and its subsidiaries and affiliates had the option of
rolling over their account balances into the Plan. Effective August 31, 1998,
the assets of the Beverly plan were merged into the Company's Plan. The Bank and
its related entities became sponsoring employers of the Plan with respect to
employees satisfying the eligibility requirements of the Plan.
The foregoing description of the Plan provides only general information. Further
details of the Plan are contained in the Summary Plan Description.
3. INVESTMENTS
The following table summarizes realized and unrealized appreciation in fair
value of investments for the years ended December 31:
<TABLE>
<CAPTION>
1998 1997 1996
---------------------------------------
<S> <C> <C> <C>
Common stocks $ 1,305,132 $11,447,046 $ 2,310,532
Mutual funds 1,467,513 1,694,989 1,157,817
---------------------------------------
$ 2,772,645 $13,142,035 $ 3,468,349
=======================================
</TABLE>
7
<PAGE> 12
ST. PAUL FEDERAL BANK FOR SAVINGS
PROFIT SHARING AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
3. INVESTMENTS (CONTINUED)
The current value of individual investments that represent 5% or more of the
Plan's assets is as follows:
<TABLE>
<CAPTION>
AT DECEMBER 31
1998 1997
------------------------------
<S> <C> <C>
St. Paul Bancorp, Inc. common stock $28,840,395 $27,592,790
Vanguard 500 Index Fund 7,722,762 5,314,316
Vanguard Prime Money Market Fund 5,096,027 2,859,230
Vanguard Extended Market Index Fund 4,256,631 4,009,401
</TABLE>
On June 20, 1997, the Company declared a three-for-two stock split to
shareholders of record as of June 30, 1997, that was distributed on July 14,
1997. On December 16, 1996, the Company declared a five-for-four stock split to
shareholders of record as of December 31, 1996, that was distributed on January
14, 1997. All share references in the accompanying financial statements have
been restated to reflect the stock splits.
4. TRANSACTIONS WITH PARTIES IN INTEREST
The following summarizes the account balances and results of transactions of the
Plan with the Bank and the Company.
<TABLE>
<CAPTION>
AS OF OR FOR THE YEAR
ENDED DECEMBER 31
1998 1997 1996
---------------------------------------
<S> <C> <C> <C>
St. Paul Bancorp, Inc. common stock $28,840,395 $27,592,790 $17,573,829
Dividend income on St. Paul Bancorp, Inc.
common stock 536,477 492,838 263,805
Contributions to the Plan from the Bank -- 2,861 31,109
Participants' contributions receivable from the Bank 90,301 -- --
</TABLE>
5. INCOME TAX STATUS
The Plan has received a determination letter from the Internal Revenue Service
dated June 1, 1995, stating that the Plan is qualified under section 401 (a) of
the Internal Revenue Code (the Code) and, therefore, the related trust is exempt
from taxation. The Plan has been amended since the last determination letter.
Once qualified, the Plan is required to operate in conformity with the Code to
maintain its qualification. The Plan administrator believes the Plan is being
operated in compliance with the applicable requirements of the Code and,
therefore, believes that the Plan is qualified and the related trust is tax
exempt.
8
<PAGE> 13
St. Paul Federal Bank For Savings
Profit Sharing and Savings Plan
Notes to Financial Statements (continued)
6. ALLOCATION OF ASSETS AVAILABLE FOR PLAN BENEFITS
The Plan's net assets are allocated among Investment Funds as follows:
<TABLE>
<CAPTION>
Small & Medium Money Total High Yield
Equity Capitalization Market Bond Corporate
Fund Equity Fund Fund Market Fund Bond Fund
------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ -- $ -- $ -- $ -- $ --
Mutual funds 5,314,316 4,009,401 2,859,230 1,644,365 1,434,929
Common stock of St. Paul Bancorp, Inc. -- -- -- -- --
Accrued interest and dividends receivable -- -- -- -- --
Participant notes receivable -- -- -- -- --
Accrued expenses -- -- -- -- --
------------------------------------------------------------------------------
Balance at December 31, 1997 $ 5,314,316 $ 4,009,401 $ 2,859,230 $ 1,644,365 $ 1,434,929
==============================================================================
Cash and cash equivalents $ -- $ -- $ -- $ -- $ --
Mutual funds 7,722,762 4,256,631 5,096,027 1,898,188 1,562,568
Common stock of St. Paul Bancorp, Inc. -- -- -- -- --
Accrued interest and dividends receivable -- -- -- -- --
Participant notes receivable -- -- -- -- --
Participants' contributions receivable 24,588 12,369 6,069 4,516 2,157
Accrued expenses -- -- -- -- --
------------------------------------------------------------------------------
Balance at December 31, 1998 $ 7,747,350 $ 4,269,000 $ 5,102,096 $ 1,902,704 $ 1,564,725
==============================================================================
</TABLE>
9
<PAGE> 14
St. Paul Federal Bank For Savings
Profit Sharing and Savings Plan
Notes to Financial Statements (continued)
6. ALLOCATION OF ASSETS AVAILABLE FOR PLAN BENEFITS (CONTINUED)
The Plan's net assets are allocated among Investment Funds as follows
(Continued):
<TABLE>
<CAPTION>
International St. Paul
Balanced Equity Bancorp, Inc. Participant
Fund Fund Stock Fund Loans Total
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Cash and cash equivalents $ -- $ -- $ 111,255 $ -- $ 111,255
Mutual funds 730,168 316,194 -- -- 16,308,603
Common stock of St. Paul Bancorp, Inc. -- -- 27,592,790 -- 27,592,790
Accrued interest and dividends receivable -- -- 559 -- 559
Participant notes receivable -- -- -- 646,457 646,457
Accrued expenses -- -- (39,085) -- (39,085)
--------------------------------------------------------------------------
Balance at December 31, 1997 $ 730,168 $ 316,194 $ 27,665,519 $ 646,457 $ 44,620,579
==========================================================================
Cash and cash equivalents $ -- $ -- $ 60,083 $ -- $ 60,083
Mutual funds 1,629,932 486,217 -- -- 22,652,325
Common stock of St. Paul Bancorp, Inc. -- -- 28,840,395 -- 28,840,395
Accrued interest and dividends receivable -- -- 253 -- 253
Accrued expenses -- -- (14,713) -- (14,713)
Participant notes receivable -- -- -- 866,005 866,005
Participants' contributions receivable 8,306 3,016 29,280 -- 90,301
--------------------------------------------------------------------------
Balance at December 31, 1998 $ 1,638,238 $ 489,233 $ 28,915,298 $ 866,005 $ 52,494,649
==========================================================================
</TABLE>
<PAGE> 15
St. Paul Federal Bank For Savings
Profit Sharing and Savings Plan
Notes to Financial Statements (continued)
6. ALLOCATION OF ASSETS AVAILABLE FOR PLAN BENEFITS (CONTINUED)
The Plan's transactions are allocated among Investment Funds as follows:
<TABLE>
<CAPTION>
Small & Medium Small Money Total U.S.
Equity Capitalization Capitalization Market Bond Government
Fund Equity Fund Equity Fund Fund Market Fund Bond Fund
---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 $ 3,122,446 $ -- $ 2,793,863 $ 3,440,972 $ -- $ 1,805,423
Income from investments 71,096 -- 206 173,962 -- 115,676
Contributions 297,109 -- 297,753 206,454 -- 130,193
Realized and unrealized appreciation
(depreciation) in fair value of
investments 662,083 -- 533,396 -- -- (37,662)
Distributions (462,087) -- (252,781) (414,295) -- (125,617)
Administrative expenses (14,266) -- (10,505) (13,158) -- (5,720)
Fund transfers 316,235 -- 249,812 128,222 -- (198,111)
---------------------------------------------------------------------------------------------
Balance at December 31, 1996 3,992,616 -- 3,611,744 3,522,157 -- 1,684,182
Income from investments 155,022 281,935 518 151,999 108,028 255
Contributions 385,603 301,006 31,550 194,406 100,272 10,462
Realized and unrealized appreciation
(depreciation) in fair value of
investments 1,164,515 465,766 38,910 -- 45,423 (8,220)
Distributions (260,857) (132,513) (104,966) (957,767) (9,115) (76,964)
Administrative expenses (3,175) (21,472) (2,679) (2,117) (522) (1,606)
Fund transfers (35,089) 3,202,450 (3,575,077) 10,143 1,418,106 (1,608,109)
Participant loan withdrawals (98,721) (106,435) -- (68,048) (21,652) --
Participant loan repayments 14,402 18,664 -- 8,457 3,825 --
---------------------------------------------------------------------------------------------
Balance at December 31, 1997 5,314,316 4,009,401 -- 2,859,230 1,644,365 --
Income from investments 113,105 328,144 -- 185,459 111,022 --
Contributions 597,749 363,570 -- 247,250 128,863 --
Realized and unrealized appreciation
(depreciation) in fair value of
investments 1,498,027 (7,919) -- -- 30,776 --
Distributions (270,293) (264,258) -- (370,139) (144,771) --
Administrative expenses (2,720) (3,761) -- (1,860) (622) --
Fund transfers 532,338 (117,460) -- (388,672) 144,539 --
Asset transfers in -- -- -- 2,602,350 -- --
Participant loan withdrawals (86,492) (74,211) -- (58,445) (23,927) --
Participant loan repayments 51,320 35,494 -- 26,923 12,459 --
---------------------------------------------------------------------------------------------
Balance at December 31, 1998 $ 7,747,350 $ 4,269,000 $ -- $ 5,102,096 $ 1,902,704 $ --
=============================================================================================
</TABLE>
11
<PAGE> 16
St. Paul Federal Bank For Savings
Profit Sharing and Savings Plan
Notes to Financial Statements (continued)
6. ALLOCATION OF ASSETS AVAILABLE FOR PLAN BENEFITS (CONTINUED)
The Plan's transactions are allocated among Investment Funds as follows
(Continued):
<TABLE>
<CAPTION>
High Yield International St. Paul
Corporate Balanced Equity Bancorp, Inc. Participant
Bond Fund Fund Fund Stock Fund Loans Total
--------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1996 $ -- $ -- $ -- $ 15,311,778 $ -- $ 26,474,482
Income from investments -- -- -- 264,989 -- 625,929
Contributions -- -- -- 811,553 -- 1,743,062
Realized and unrealized appreciation
(depreciation) in fair value of
investments -- -- -- 2,310,532 -- 3,468,349
Distributions -- -- -- (585,169) -- (1,839,949)
Administrative expenses -- -- -- (48,150) -- (91,799)
Fund transfers -- -- -- (496,158) -- --
--------------------------------------------------------------------------------------------
Balance at December 31, 1996 -- -- -- 17,569,375 -- 30,380,074
Income from investments 57,867 54,279 13,489 505,775 22,782 1,351,949
Contributions 7,257 53,651 43,501 806,374 -- 1,934,082
Realized and unrealized appreciation
(depreciation) in fair value of
investments 17,120 12,414 (40,939) 11,447,046 -- 13,142,035
Distributions (393) (183) (456) (547,576) (3,552) (2,094,342)
Administrative expenses (62) (313) (142) (61,131) -- (93,219)
Fund transfers 1,363,262 624,564 301,421 (1,701,671) -- --
Participant loan withdrawals (10,122) (16,015) (1,349) (417,565) 739,907 --
Participant loan repayments -- 1,771 669 64,892 (112,680) --
--------------------------------------------------------------------------------------------
Balance at December 31, 1997 $ 1,434,929 $ 730,168 $ 316,194 $ 27,665,519 $ 646,457 $ 44,620,579
Income from investments 131,610 171,885 9,551 540,602 62,106 1,653,484
Contributions 32,508 202,511 85,501 947,817 -- 2,605,769
Realized and unrealized appreciation
(depreciation) in fair value of
investments (53,153) (48,976) 48,758 1,305,132 -- 2,772,645
Distributions (532) (10,196) (7,842) (1,090,833) (59,479) (2,218,343)
Administrative expenses (145) (888) (272) (63,052) -- (73,320)
Fund transfers 24,597 597,043 36,430 (828,815) -- --
Asset transfers in -- -- -- 531,485 -- 3,133,835
Participant loan withdrawals (5,623) (21,432) (7,243) (216,401) 493,774 --
Participant loan repayments 534 18,123 8,156 123,844 (276,853) --
--------------------------------------------------------------------------------------------
Balance at December 31, 1998 $ 1,564,725 $ 1,638,238 $ 489,233 $ 28,915,298 $ 866,005 $ 52,494,649
============================================================================================
</TABLE>
12
<PAGE> 17
ST. PAUL FEDERAL BANK FOR SAVINGS
PROFIT SHARING AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
7. PLAN TERMINATION
Although it has not expressed any intent to do so, the Bank has the right under
the Plan to terminate the Plan subject to the provisions of ERISA. In 1997, the
Bank discontinued its contributions to the Plan in the form of subsidizing the
purchase of Company common stock.
8. DIFFERENCES BETWEEN FINANCIAL STATEMENTS AND FORM 5500
The following is a reconciliation of net assets available for plan benefits per
the financial statements to the Form 5500:
<TABLE>
<CAPTION>
DECEMBER 31
1998 1997
----------------------------
<S> <C> <C>
Net assets available for plan benefits per the
financial statements $ 52,494,649 $ 44,620,579
Amounts allocated to withdrawn participants (5,896,656) (148,526)
----------------------------
Net assets available for plan benefits per the Form 5500 $ 46,597,993 $ 44,472,053
============================
</TABLE>
The following is a reconciliation of benefits paid per the financial statements
to the Form 5500:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31
1998 1997 1996
-----------------------------------------
<S> <C> <C> <C>
Distributions per the financial statements $ 2,218,343 $ 2,094,342 $ 1,839,949
Add: Amounts allocated to withdrawn
participants 5,896,656 148,526 1,199,986
Less: Amounts allocated to withdrawn
participants in prior year (148,526) (1,199,986) (585,067)
-----------------------------------------
Distributions per the Form 5500 $ 7,966,473 $ 1,042,882 $ 2,454,868
=========================================
</TABLE>
Amounts allocated to withdrawn participants are recorded on the Form 5500 for
benefit claims that have been processed and approved for payment prior to
year-end but not paid.
13
<PAGE> 18
ST. PAUL FEDERAL BANK FOR SAVINGS
PROFIT SHARING AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
9. YEAR 2000 READINESS DISCLOSURE (UNAUDITED)
The Vanguard Group serves as the Plan's recordkeeper and trustee. Vanguard has
developed a plan to become Year 2000 compliant. The Year 2000 compliance issues
result from both certain computer programs and certain hardware recognizing only
the last two digits of the year instead of four digits. As a result,
transactions processed beginning in the Year 2000 may not be recognized by the
systems in the correct period. This issue could result in system failures and
miscalculations causing a disruption of operations, and among other things, the
inability to process transactions. In order to address the Year 2000 issue,
Vanguard established a Year 2000 project in 1996.
Based upon initial assessments, Vanguard determined that it will be required to
modify or replace portions of its software and hardware so that those systems
can properly process transactions beginning on January 1, 2000. Vanguard
currently believes that with these modifications and the replacement of certain
software and hardware components, the Year 2000 compliance issue will be
mitigated. However, if such modifications and upgrades do not succeed, or are
not made in a timely fashion, the Year 2000 compliance issue could have a
material impact on Vanguard's operations. Furthurmore, there can be no
assurances that Vanguard's assessment has not failed to uncover each possible
Year 2000 issue that relates to its business. Failure by Vanguard, and/or its
major vendors, third party providers, and other material service providers and
customers to adequately address their respective Year 2000 issues in a timely
manner (insofar as they relate to Vanguard's business) could have a material
adverse effect on Vanguard's operations. The amount of the potential liability,
if any, that relate to these risks, cannot be reasonably estimated at this time.
Vanguard is currently formulating a contingency plan for certain critical
applications. These plans include examining all critical processes to assess the
effect of unexpected failure related to the Year 2000 date change. Vanguard is
developing alternative methods for service in the event of such failure and
intends to monitor these processes through the rollover of 1999 into 2000 and to
be well prepared to implement its alternative solutions quickly, if necessary.
14
<PAGE> 19
ST. PAUL FEDERAL BANK FOR SAVINGS
PROFIT SHARING AND SAVINGS PLAN
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
10. SUBSEQUENT EVENTS
The Boards of Directors of St. Paul Bancorp, Inc., the Plan's sponsor, and
Charter One Financial, Inc., voted on May 17, 1999, to enter into a definitive
agreement to merge their operations through a stock-for-stock exchange. The
merger is expected to close in the fourth quarter of 1999 and is subject to
approval by the Office of Thrift Supervision, the Federal Reserve Board, and
each company's shareholders. The Plan will continue in its present state through
December 31, 1999.
15
<PAGE> 20
Supplemental Schedules
<PAGE> 21
ST. PAUL FEDERAL BANK FOR SAVINGS
PROFIT SHARING AND SAVINGS PLAN
LINE 27A - SCHEDULE OF ASSETS HELD FOR INVESTMENT PURPOSES
DECEMBER 31, 1998
<TABLE>
<CAPTION>
IDENTITY OF ISSUE, BORROWER, DESCRIPTION OF CURRENT
LESSOR, OR SIMILAR PARTY INVESTMENT COST VALUE
- --------------------------- -------------- ----------- -----------
<S> <C> <C> <C>
Cash and cash equivalents:
Vanguard Prime Money 60,083 shares
Market Fund variable rate $ 60,083 $ 60,083
--------------------------
Total cash and cash equivalents $ 60,083 $ 60,083
Mutual funds:
Vanguard 500 Index Fund 67,773 shares 5,503,711 7,722,762
Vanguard Extended Market
Index Fund 139,015 shares 3,899,076 4,256,631
Vanguard Prime Money
Market Fund 5,096,027 shares 5,096,027 5,096,027
Vanguard Total Bond Market
Index Fund 184,828 shares 1,837,495 1,898,188
Vanguard High-Yield
Corporate Fund 199,562 shares 1,596,411 1,562,568
Vanguard Wellington Fund 55,534 shares 1,681,666 1,629,932
Vanguard International
Growth Fund 25,904 shares 475,225 486,217
--------------------------
Total mutual funds 20,089,611 22,652,325
Common stock:
St. Paul Bancorp, Inc. 1,059,578 shares 9,236,765 28,840,395
--------------------------
Total common stock 9,236,765 28,840,395
Participant loans 8.5% - 9.5%
interest rate 866,005 866,005
--------------------------
Total investments $30,252,464 $52,418,808
==========================
</TABLE>
16
<PAGE> 22
St. Paul Federal Bank For Savings
Profit Sharing and Savings Plan
Line 27d - Schedule of Reportable Transactions
Year ended December 31, 1998
<TABLE>
<CAPTION>
CURRENT
MATURITY VALUE OF
PROCEEDS/ ASSET ON
DESCRIPTION OF ASSET, INCLUDING PURCHASE SELLING COST OF TRANSACTION GAIN
IDENTITY OF PARTY INVOLVED INTEREST RATE AND MATURITY PRICE PRICE ASSET DATE (LOSS)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Category (i) - Individual transactions in excess of 5% of the total Plan assets
- -------------------------------------------------------------------------------
The Vanguard Group Vanguard Prime Money Market Fund:
1 purchase $2,591,920 $ -- $2,591,920 $2,591,920 $ --
<CAPTION>
Category (iii) - A series of transactions with respect to securities of the same
issue which amount in the aggregate to more than 5% of the total Plan assets
- -------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
The Vanguard Group Vanguard 500 Index Fund:
80 purchases $1,588,824 $ -- $1,588,824 $1,588,824 $ --
93 sales -- 678,404 557,929 678,404 120,475
The Vanguard Group Vanguard Prime Money
Market Fund:
95 purchases 4,120,273 -- 4,120,273 4,120,273 --
86 sales -- 1,883,476 1,883,476 1,883,476 --
The Vanguard Group St. Paul Common Stock Fund:
88 purchases 2,810,430 -- 2,810,430 2,810,430 --
125 sales -- 2,895,064 1,528,412 2,895,064 1,366,652
</TABLE>
17
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
trustees (or other persons who administer the Plan) have duly caused this annual
report to be signed by the undersigned thereunto duly authorized.
ST. PAUL FEDERAL BANK FOR SAVINGS
PROFIT SHARING AND SAVINGS PLAN
Date: June 30, 1999 By: /s/ Joseph C. Scully
-----------------------------------
Joseph C. Scully
Chairman of the Board of
Directors of St. Paul Federal
Bank For Savings and Member of
the Administrative Committee
<PAGE> 24
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
24 Consent of Independent Auditors
<PAGE> 1
EXHIBIT 24
CONSENT OF INDEPENDENT AUDITORS
We consent to the incorporation by reference in the Registration Statement (Form
S-8 No. 33-11890) pertaining to the St. Paul Federal Bank For Savings Profit
Sharing and Savings Plan of our report dated June 23, 1999, with respect to the
financial statements and schedules of the St. Paul Federal Bank For Savings
Profit Sharing and Savings Plan included in this Annual Report (Form 11-K) for
the year ended December 31, 1998.
/s/ Ernst & Young LLP
------------------------------
Ernst & Young LLP
Chicago, Illinois
June 23, 1999
