FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended September 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 _________________
Commission File No. 0-18664
GLENWAY FINANCIAL CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 31-1297820
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
5535 Glenway Avenue Cincinnati, Ohio 45238
--------------------------------------------------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (513) 922-5959
Check whether the issuer (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act during the past 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 ___
As of November 8, 1996, the latest practicable date, 1,151,335 shares of the
registrant's common stock, $.01 par value, were outstanding.
<PAGE>
Glenway Financial Corporation and Subsidiary
INDEX
PART I FINANCIAL INFORMATION Page
Consolidated Statements of Financial Condition 3
Consolidated Statements of Operations 5
Consolidated Statements of Cash Flow 6
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II OTHER INFORMATION 13
SIGNATURES 14
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<PAGE>
<TABLE>
Glenway Financial Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
1996
----------------------------
ASSETS September 30, June 30,
(Dollars in thousands)
<S> <C> <C>
Cash and due from banks $ 3,187 $ 4,802
Federal funds sold 854 204
Interest-bearing deposits in other financial institutions 145 136
-------- --------
Cash and cash equivalents 4,186 5,142
Investment securities - at amortized cost, approximate market value of $5,517 5,551 5,549
and $5,499 at September 30, 1996 and June 30, 1996
Investment securities available for sale - at market 4,088 4,084
Mortgage-backed securities - at cost, approximate market value of $14,694 and 15,308 15,710
$15,354 at September 30, 1996 and June 30, 1996
Mortgage-backed securities available for sale - at market 14,421 14,761
Loans receivable - net 225,537 220,007
Loans held for sale - at lower of cost or market 1,091 1,094
Office premises and equipment - at depreciated cost 6,666 5,929
Real estate acquired through foreclosure 179 242
Federal Home Loan Bank stock - at cost 2,261 2,222
Accrued interest receivable on loans 1,151 1,103
Accrued interest receivable on mortgage-backed securities 161 181
Accrued interest receivable on investments and interest-bearing deposits 87 177
Cash surrender value - life insurance 1,473 1,457
Prepaid expenses and other assets 555 545
Prepaid federal income taxes 488 30
Goodwill and other intangible assets - net of accumulated amortization 524 576
-------- --------
Total assets $283,727 $278,809
======== ========
</TABLE>
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<PAGE>
<TABLE>
1996
----------------------------
LIABILITIES AND STOCKHOLDERS' EQUITY September 30, June 30,
<S> <C> <C>
Deposits $227,910 $222,768
Advances from Federal Home Loan Bank 23,773 25,634
Loan to Employee Stock Ownership Plan 209 213
Checks issued in excess of bank balance 1,593 1,034
Advances by borrowers for taxes and insurance 820 242
Accounts payable on mortgage loans serviced for others 152 599
Accrued interest payable 50 56
Other liabilities 2,366 999
Deferred federal income taxes 514 483
-------- --------
Total liabilities 257,387 252,028
Stockholders' equity
Serial preferred stock (500,000 shares of $.01 par value authorized; no - -
shares issued)
Common stock - authorized, 3,000,000 shares at $.01 par value; 1,187,369 and 12 11
1,130,854 shares issued at September 30, 1996 and June 30, 1996
Additional paid-in capital 13,344 12,102
Retained earnings - substantially restricted 13,980 15,749
Required contributions for shares acquired by employee benefit plans (415) (316)
Treasury stock - 36,034 and 39,157 shares at September 30, 1996 and June 30, (581) (756)
1996 - at cost
Unrealized losses on securities designated as available for sale, net of - (9)
-------- --------
related tax effects
Total stockholders' equity 26,340 26,781
-------- --------
Total liabilities and stockholders' equity $283,727 $278,809
======== ========
</TABLE>
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<PAGE>
<TABLE>
Glenway Financial Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF OPERATIONS
For the three months ended September 30,
1996 1995
------ ------
(Dollars in thousands)
Interest income
<S> <C> <C>
Loans $ 4,468 $ 4,211
Mortgage-backed securities 489 511
Investment securities 151 180
Interest-bearing deposits and other 53 40
------- -------
Total interest income 5,161 4,942
Interest expense
Deposits 2,766 2,620
Borrowings 305 380
------- -------
Total interest expense 3,071 3,000
------- -------
Net interest income 2,090 1,942
Provision for losses on loans 18 15
------- -------
Net interest income after provision for losses on loans 2,072 1,927
Other income
Gain on sale of loans 7 5
Gain on sale of office premises -- 79
Gain on sale of real estate acquired through foreclosure 21 2
Other operating 155 153
------- -------
Total other income 183 239
General, administrative and other expense
Employee compensation and benefits 788 795
Occupancy and equipment 115 111
Federal deposit insurance premiums 1,477 118
Franchise taxes 85 96
Data processing 57 51
Amortization of goodwill and other intangible assets 52 55
Other operating 335 301
------- -------
Total general, administrative and other expense 2,909 1,527
------- -------
Earnings (loss) before income taxes (credits) (654) 639
Federal income taxes (credits)
Current (241) 246
Deferred 26 (11)
------- -------
Total federal income taxes (credits) (215) 235
------- -------
NET EARNINGS (LOSS) $ (439) $ 404
======= =======
EARNINGS (LOSS) PER SHARE $ (.38) $ .36
======= =======
</TABLE>
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<PAGE>
<TABLE>
Glenway Financial Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the three months ended September 30,
1996 1995
------ ------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net earnings (loss) for the period $ (439) $ 404
Adjustments to reconcile net earnings (loss) to net cash provided
by (used in) operating activities:
Depreciation and amortization 62 50
Provision for losses on loans 18 15
Gain on sale of loans (7) (5)
Loans disbursed for sale in the secondary market (440) (777)
Proceeds from sale of loans 444 900
Amortization of deferred loan origination fees (32) (31)
Amortization of goodwill and other intangible assets 52 55
Amortization of premiums and discounts on loans, investments and 5 10
mortgage-backed securities - net
Gain on sale of real estate acquired through foreclosure (21) (2)
Gain on sale of office premises -- (79)
Federal Home Loan Bank stock dividends (39) (37)
Increases (decreases) in cash due to changes in:
Accrued interest receivable on loans (48) (41)
Accrued interest receivable on mortgage-backed securities 20 5
Accrued interest receivable on investment securities and
interest-bearing deposits 90 32
Prepaid expenses and other assets (10) 528
Accounts payable on mortgage loans serviced for others (447) 20
Other liabilities 1,362 (496)
Increase in checks issued in excess of bank balance 559 196
Federal income taxes
Current (458) 264
Deferred 26 (11)
-------- --------
Net cash provided by operating activities 697 1,000
Cash flows provided by (used in) investing activities:
Principal repayments on mortgage-backed securities 745 915
Loan principal repayments 12,240 14,263
Loan disbursements (17,861) (18,650)
Purchase of office premises and equipment (799) (36)
Proceeds from sale of office premises and equipment -- 195
Increase in cash surrender value of life insurance (16) (17)
Proceeds from sale of real estate acquired through foreclosure 195 396
-------- --------
Net cash used in investing activities (5,496) (2,934)
-------- --------
Net cash used in operating and investing activities
(subtotal carried forward) (4,799) (1,934)
-------- --------
</TABLE>
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<PAGE>
<TABLE>
Glenway Financial Corporation and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the three months ended September 30,
1996 1995
------ ------
(In thousands)
<S> <C> <C>
Net cash used in operating and investing
activities (subtotal brought forward) $ (4,799) $ (1,934)
Cash flows provided by (used in) financing activities:
Net increase in deposit accounts 5,142 6,301
Proceeds from Federal Home Loan Bank advances 14,950 11,250
Repayment of Federal Home Loan Bank advances (16,811) (13,950)
Repayment of loan to Employee Stock Ownership Plan (4) --
Advances by borrowers for taxes and insurance 578 534
Dividends paid on common stock (186) (181)
Issuance of shares under stock option and benefit plans 174 208
-------- --------
Net cash provided by financing activities 3,843 4,162
-------- --------
Net increase (decrease) in cash and cash equivalents (956) 2,228
Cash and cash equivalents at beginning of period 5,142 4,072
-------- --------
Cash and cash equivalents at end of period $ 4,186 $ 6,300
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes $ 215 $ --
======== ========
Interest on deposits and borrowings $ 3,077 $ 2,810
======== ========
Supplemental disclosure of noncash investing activities:
Transfer from loans to real estate acquired through foreclosure $ 117 $ 71
======== ========
Unrealized gains (losses) on securities designated as available for
sale, net of tax effects $ 9 $ (4)
======== ========
</TABLE>
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<PAGE>
Glenway Financial Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three month periods ended
September 30, 1996 and 1995
1. Basis of Presentation
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-QSB and, therefore, do not include
information or footnotes necessary for a complete presentation of financial
position, results of operations, and cash flows in conformity with generally
accepted accounting principles. However, all adjustments (consisting only of
normal recurring accruals) which, in the opinion of management, are necessary
for a fair presentation of the consolidated financial statements have been
included. The results of operations for the three month periods ended
September 30, 1996 and 1995 are not necessarily indicative of the results
which may be expected for an entire fiscal year.
2. Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
Glenway Financial Corporation (Glenway Financial or the Corporation) and its
wholly-owned subsidiary, Centennial Savings Bank (the Savings Bank or
Centennial). All significant intercompany items have been eliminated.
3. Earnings Per Share
Earnings per share for the three months ended September 30, 1996 and 1995, has
been computed based on 1,151,552 and 1,124,290 weighted-average shares
outstanding, respectively. Weighted-average shares outstanding for the three
months ended September 30, 1995, has been restated to give effect to the 5%
stock dividend issued during the 1996 quarter. Fully-diluted earnings per
share has not been presented as the dilutive effect of the Corporation's stock
option plan is not material.
4. Effects of Recent Accounting Pronouncements
In March 1995, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 121, "Accounting for the Impairment of Long-Lived Assets and Long-Lived
Assets to be Disposed Of." SFAS No. 121 requires that long-lived assets and
certain identifiable intangibles to be held and used by an entity be reviewed
for impairment whenever events or changes in circumstances indicate that the
carrying amount of an asset may not be recoverable. In performing the review
for recoverability, the entity should estimate the future cash flows expected
to result from the use of the asset and its eventual disposition. If the sum
of the expected future cash flows (undiscounted and without interest charges)
is less than the carrying amount of the asset, an impairment loss is
recognized. Measurement of an impairment for long-lived assets and
identifiable intangibles that an entity expects to hold and use should be
based on the fair value of the asset. SFAS No. 121 is effective for financial
statements for fiscal years beginning after December 15, 1995. Earlier
application is encouraged. Glenway Financial adoption SFAS No. 121 on July 1,
1996, without material effect on consolidated financial position or results of
operations.
In June 1994, the FASB issued SFAS No. 122, "Accounting for Mortgage Servicing
Rights," which requires that Glenway Financial recognize, as separate assets,
rights to service mortgage loans for others, regardless of how those servicing
rights are acquired. An institution that acquires mortgage servicing rights
through either the purchase or origination of mortgage loans and sells those
loans with servicing rights retained would allocate some of the cost of the
loans to the mortgage servicing rights. SFAS No. 122 requires that
securitizations of mortgage loans be accounted for as sales of mortgage loans
and acquisitions of mortgage-backed securities. Additionally, SFAS No. 122
requires that capitalized mortgage servicing rights and capitalized excess
servicing receivables be assessed for impairment. Impairment is measured based
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<PAGE>
Glenway Financial Corporation and Subsidiary
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the three month periods ended
September 30, 1996 and 1995
4. Effects of Recent Accounting Pronouncements (continued)
on fair value. SFAS No. 122 will apply prospectively to fiscal years beginning
after December 15, 1995, to transactions in which an entity acquires mortgage
servicing rights and to impairment evaluations of all capitalized mortgage
servicing rights and capitalized excess servicing receivables whenever
acquired. Retroactive application is prohibited. Management adopted SFAS No.
122 on July 1, 1996, without material effect on Glenway Financial's
consolidated financial position or results of operations.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-Based
Compensation," establishing financial accounting and reporting standards for
stock-based employee compensation plans. SFAS No. 123 encourages all entities
to adopt a new method of accounting to measure compensation cost of all
employee stock compensation plans based on the estimated fair value of the
award at the date it is granted. Companies are, however, allowed to continue
to measure compensation cost for those plans using the intrinsic value based
method of accounting, which generally does not result in compensation expense
recognition for most plans. Companies that elect to continue using their
existing accounting method are required to disclose in a footnote to the
financial statements pro forma net earnings and, if presented, earnings per
share, as if SFAS No. 123 had been adopted. The accounting requirements of
SFAS No. 123 are effective for transactions entered into during fiscal years
that begin after December 15, 1995; however, companies are required to
disclose information for awards granted in their first fiscal year beginning
after December 15, 1994. Management has determined that the Corporation will
continue to account for stock-based compensation pursuant to Accounting
Principles Board Opinion No. 25, and, therefore, adoption of SFAS 123 will not
have a material effect on Glenway Financial's financial condition or results
of operations.
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers of
Financial Assets, Servicing Rights, and Extinguishment of Liabilities," that
provides accounting guidance for transfers of financial assets, servicing of
financial assets, and extinguishment of liabilities. SFAS No. 125 introduces
an approach to accounting for transfers of financial assets that provides a
means of dealing with more complex transactions in which the seller disposes
of only a partial interest in the assets, retains rights or obligations, makes
use of special purpose entities in the transaction, or otherwise has
continuing involvement with the transferred assets. The new accounting method,
known as the financial components approach, provides that the carrying amount
of the financial assets transferred be allocated to components of the
transaction based on their relative fair values. SFAS No. 125 provides
criteria for determining whether control of assets has been relinquished and
whether a sale has occurred. If the transfer does not qualify as a sale, it is
accounted for as a secured borrowing. Transactions subject to the provisions
of SFAS No. 125 include, among others, transfers involving repurchase
agreements, securitizations of financial assets, loan participations,
factoring arrangements, and transfers of receivables with recourse. An entity
that undertakes an obligation to service financial assets recognizes either a
servicing asset or liability for the servicing contract (unless related to a
securitization of assets, and all the securitized assets are retained and
classified as held-to-maturity). A servicing asset or liability that is
purchased or assumed is initially recognized at its fair value. Servicing
assets and liabilities are amortized in proportion to and over the period of
estimated net servicing income or net servicing loss and are subject to
subsequent assessments for impairment based on fair value. SFAS No. 125
provides that a liability is removed from the balance sheet only if the debtor
either pays the creditor and is relieved of its obligation for the liability
or is legally released from being the primary obligor. SFAS No. 125 is
effective for transfers and servicing of financial assets and extinguishment
of liabilities occurring after December 31, 1996, and is to be applied
prospectively. Earlier or retroactive application is not permitted. SFAS No.
125 supersedes SFAS No. 122. Management does not believe that adoption of SFAS
No. 125 will have a material adverse effect on Glenway Financial's
consolidated financial position or results of operations.
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<PAGE>
Glenway Financial Corporation and Subsidiary
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
For the three month periods ended September 30, 1996 and 1995
Changes in Financial Condition
The Corporation's assets totaled $283.7 million at September 30, 1996, an
increase of $4.9 million, or 1.8%, from June 30, 1996, levels. The increase in
assets was funded primarily by a $5.1 million increase in deposits and an
increase in other liabilities of $1.4 million, which were offset by a $1.9
million reduction in Federal Home Loan Bank (FHLB) advances and a net loss of
$439,000. The increase in other liabilities is due to the special assessment
levied on all savings institutions insured by the Savings Association
Insurance Fund (SAIF). The one-time assessment to recapitalize the SAIF became
a liability of Glenway on September 30, 1996, and equaled 65.7 basis points on
the balance of SAIF-insured deposits at March 31, 1995. The amount expensed by
the Corporation totaled $1.35 million which amounted to $891,000 net of
federal income tax. Cash, interest-bearing deposits and investment securities
designated as held to maturity decreased by $954,000, or 8.9%, while
mortgage-backed securities designated as held to maturity decreased by
$402,000, or 2.6%, and investments and mortgage-backed securities designated
as available for sale declined $336,000, or 1.8%.
Loans receivable increased by $5.5 million, or 2.5%, during the current three
month period, as loan originations exceeded principal repayments by
approximately $6.1 million and were partially offset by loan sales totaling
$440,000. The majority of loans funded during the quarter were one-year
adjustable-rate mortgage loans (ARMs), reflecting a shift in consumer
preference toward adjustable-rate products, with initial ARM rates being
considerably lower than the rate on fixed-rate loans of similar terms.
Historically, the Savings Bank has retained ARMs because of the beneficial
effect on interest rate risk management. Management has decided to continue
its policy of holding ARM production and to use short-term FHLB advances to
fund loan originations.
Deposits increased by $5.1 million, or 2.3%, for the three month period ended
September 30, 1996, generally reflecting the increased demand for certificate
of deposit products in the current period. During July, consumers responded
favorably to a nine-month certificate offered at an interest rate of 5.84%.
Management continually strives to keep certificate of deposit rates
competitive in its market as deposits are still the Savings Bank's preferred
method of funding mortgage loans. However, alternative sources of funds,
including FHLB advances, are frequently reviewed and utilized, when
appropriate, in an effort to keep the cost of funds at acceptable levels.
Stockholders' equity declined by $441,000, or 1.6%, during the three months
ended September 30,1996, primarily as a result of the period loss of $439,000
and payment of cash dividends of $186,000. These decreases were partially
offset by a distribution of restricted shares in the amount of $147,000 and
the exercise of stock options which resulted in a $40,000 decrease in treasury
shares. During the quarter, the Corporation declared and distributed a 5%
stock dividend in addition to cash dividends paid.
The Federal Deposit Insurance Corporation (FDIC) has adopted minimum
regulatory capital ratio guidelines to which Centennial is subject. The Tier 1
leverage ratio (Tier 1 capital to adjusted total assets, as specified)
requires a minimum ratio of between 3% and 5%, depending on whether an
institution is anticipating or experiencing significant growth and has
well-diversified risk and in general is considered a strong institution.
Additionally, the Savings Bank is required to maintain a total risk-based
capital ratio of 8%.
At September 30, 1996, Centennial's Tier 1 capital of $22.7 million, or 8.1%,
exceeded the maximum Tier 1 leverage ratio of 5%, or $14.0 million, by $8.7
million. Centennial's risk-based capital of $23.8 million, or 13.1% of
risk-weighted assets, exceeded the 8% capital requirement of $14.5 million by
$9.3 million.
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<PAGE>
Glenway Financial Corporation and Subsidiary
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
For the three month periods ended September 30, 1996 and 1995
Comparison of Operating Results for the Three Month Periods Ended
September 30, 1996 and 1995
General
The Corporation reported a net loss of $439,000 for the three months ended
September 30, 1996, as compared to net earnings of $404,000 for the same
period of 1995, a decrease of $843,000, or 208.7%. The decrease in earnings is
attributable to the $1.35 million SAIF assessment, which amounted to $891,000
after tax.
Net Interest Income and Provision for Losses on Loans
Interest income on loans and mortgage-backed securities for the three months
ended September 30, 1996, increased by $235,000, or 5.0%, from the 1995
period. This increase resulted primarily from growth of $14.2 million in the
average portfolio outstanding year-to-year and higher yields during the 1996
period. Interest on investment securities and interest-bearing deposits
decreased during the quarter by $16,000, or 7.3%, from the 1995 period due
primarily to the decrease in yield levels on short-term deposits from year to
year.
Interest expense on deposits increased by $146,000, or 5.6%, for the three
months ended September 30, 1996. The increase resulted primarily from a $14.4
million increase in the average balance of deposits outstanding year to year.
Interest on borrowings decreased by $75,000, or 19.7%, due to a $4.0 million
decrease in the average of FHLB advances outstanding, as well as a slight
decrease in borrowing interest rates.
As a result of the foregoing, net interest income increased by $148,000, or
7.6%, to a total of $2.1 million for the three months ended September 30,
1996, compared to $1.9 million for the same quarter in 1995.
The provision for losses on loans increased by $3,000 for the three months
ended September 30, 1996, as compared to 1995. Additions to the provision
during the 1996 quarter reflected increases to the Savings Bank's general loan
loss allowance based on management's overall assessment of current and
anticipated economic conditions, coupled with portfolio growth year-to-year.
Nonperforming loans totaled $980,000 and $883,000 at September 30, 1996 and
June 30, 1996, respectively. The loan loss allowance totaled $603,000 and
$618,000 at September 30, 1996 and June 30, 1996, respectively, representing
61.5% and 70.0% of nonperforming loans at those respective dates.
Other Income
Other income for the three months ended September 30, 1996, decreased by
$56,000, or 23.4%, primarily as a result of a decrease in the gain on sale of
office premises of $79,000, which was partially offset by an increase of
$19,000 in gain on sale of real estate acquired through foreclosure.
-11-
<PAGE>
Glenway Financial Corporation and Subsidiary
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Three Month Periods Ended
September 30, 1996 and 1995 (continued)
General, Administrative and Other Expense
General, administrative and other expense increased by $1.4 million, or 90.5%,
for the three months ended September 30, 1996, compared to the same period in
1995, due primarily to a $1.4 million increase in federal deposit insurance
premiums due to the special SAIF assessment. Other increases included a
$34,000 increase in other operating expenses due to costs related to the
promotion of the grand opening of the new main office at Glenway Crossing and
a $6,000 increase in data processing expenses. These increases were partially
offset by decreases of $11,000 in franchise taxes and $7,000 in employee
benefits and compensation.
Legislation to recapitalize the SAIF provides for a special assessment of
$.657 per $100 of SAIF deposits held at March 31, 1995, in order to increase
SAIF reserves to the level required by law. The Savings Bank had $205.5
million in SAIF deposits at March 31, 1995, resulting in an assessment of
approximately $1.35 million, or $891,000 after tax, which was recorded as a
charge in the quarter ended September 30, 1996, and will be paid in November,
1996. In connection with the recapitalization, it is anticipated that the FDIC
will refund a portion of the premium for the calendar fourth quarter equal to
approximately five basis points of SAIF-insured deposits.
The legislation also provides for reduced premium rates for healthy savings
associations beginning in 1997, estimated to be a rate of $.064 per $100 of
SAIF-insured deposits.
A component of the recapitalization plan provides for the merger of the SAIF
and BIF on January 1, 1999, assuming there are no savings associations
chartered under federal law. Under separate proposed legislation, Congress is
considering the elimination of the federal thrift charter and separate federal
regulation of thrifts. If such legislations is passed, the Savings Bank will
be regulated as a bank under Federal laws which will subject it to the more
restrictive activity limits imposed on national banks.
Under separate legislation recently enacted, the Savings Bank is required to
recapture, as taxable income, approximately $1.0 million of its bad debt
reserve, which represents the post-1987 additions to the reserve, and will be
unable to utilize the percentage of earnings method to compute its tax bad
debt deduction in the future. The Savings Bank has provided deferred taxes for
this amount and is permitted to amortize the recapture of its post-1987
percentage of earnings bad debt deductions over six years.
Federal Income Taxes
Due to the September 30, 1996, pretax loss of $654,000, a tax credit of
$215,000 was recorded for federal income taxes. This represented a decrease of
$450,000 from the 1995 quarter.
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<PAGE>
Glenway Financial Corporation
PART II
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities
Not applicable
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
On October 23, 1996, the Corporation's Annual Meeting of the
Stockholders was held. Two directors were elected by the
following votes:
Robert R. Sudbrook
For: 922,361 Withheld: 4,212
Albert W. Moeller
For: 922,141 Withheld: 4,432
Other matters were submitted to the stockholders, for which
the following votes were cast:
Increase the number of shares available for issuance under
the Corporation's 1990 Stock Option Plan by 50,000.
For: 864,915 Against: 49,835 Abstain: 11,032
Ratification of the appointment of Grant Thornton LLP as the
Corporation's independent auditors for the fiscal year
ending June 30, 1997.
For: 870,447 Against: 20,814 Abstain: 35,312
ITEM 5. Other Information
On July 24, 1996, Glenway Financial declared a 5% stock
dividend. The record date for the stock dividend was
August 3, 1996, and the payment date was August 16, 1996.
ITEM 6. Exhibits and Reports on Form 8-K
None
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<PAGE>
Glenway Financial Corporation
SIGNATURES
Pursuant to the requirements 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.
Date: November 13, 1996 By: /s/Robert R. Sudbrook
__________________________________
Robert R. Sudbrook
President
Date: November 13, 1996 By: /s/David R. Kent
__________________________________
David R. Kent
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1
<CASH> 3,187
<INT-BEARING-DEPOSITS> 145
<FED-FUNDS-SOLD> 854
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 18,509
<INVESTMENTS-CARRYING> 20,859
<INVESTMENTS-MARKET> 20,211
<LOANS> 226,628
<ALLOWANCE> 603
<TOTAL-ASSETS> 283,727
<DEPOSITS> 227,910
<SHORT-TERM> 0
<LIABILITIES-OTHER> 5495
<LONG-TERM> 23982
0
0
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<INTEREST-TOTAL> 5,161
<INTEREST-DEPOSIT> 2,766
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<INTEREST-INCOME-NET> 2,090
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<INCOME-PRETAX> (654)
<INCOME-PRE-EXTRAORDINARY> (439)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (439)
<EPS-PRIMARY> (0.38)
<EPS-DILUTED> (0.38)
<YIELD-ACTUAL> 7.75
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<RECOVERIES> 0
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<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 603
</TABLE>
