<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------
FORM 10-QSB
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
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 0-19783
SUBURBFED FINANCIAL CORP.
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(Exact name of registrant as specified in its charter)
Delaware 36-3796361
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(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification or Number
3301 W. Vollmer Road, Flossmoor, Illinois 60422
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(Address of Principal executive offices) (Zip Code)
Registrant's telephone number, including area code:(708) 333-2200
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 [ ]
As of August 8, 1997, the Registrant had 1,262,195 shares of common stock
issued and outstanding.
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SUBURBFED FINANCIAL CORP.
Contents
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION Page
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<S> <C>
Item 1 Financial Statements
Consolidated Statements of Financial Condition,
June 30, 1997 (Unaudited) and
December 31, 1996 1
Consolidated Statements of Income, Three Months
and Six Months Ended June 30, 1997 and 1996
(Unaudited) 2
Consolidated Statements of Cash Flows, Six
Months Ended June 30, 1997 and 1996
(Unaudited) 3
Notes to Consolidated Financial Statements 4-5
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-12
PART II OTHER INFORMATION 13-15
</TABLE>
<PAGE> 3
SUBURBFED FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
JUNE 30 DECEMBER 31
1997 1996
(Unaudited)
<S> <C> <C>
ASSETS
Cash and amounts due from depository institutions $3,792,273 $3,545,166
Interest-bearing deposits 3,083,869 5,307,070
--------------------------
Total cash and cash equivalents 6,876,142 8,852,236
--------------------------
Investment securities held to maturity 5,949,355 3,974,167
(Fair value: 1997 - $5,971,719;1996 - $3,918,125)
Investment securities available for sale, at fair value 3,462,203 3,430,277
Investment securities held for trade 1,485,362 1,361,638
Mortgage-backed securities held to maturity 87,664,037 93,562,881
(Fair value: 1997 - $87,527,836;1996 - $93,408,866)
Mortgage-backed securities available for sale, at fair value 39,413,741 39,923,032
Loans receivable 270,345,277 241,815,183
Real estate owned 0 14,076
Stock in Federal Home Loan Bank of Chicago 3,300,000 3,300,000
Office properties and equipment 4,738,357 4,699,195
Accrued interest receivable 2,484,501 2,319,523
Prepaid expenses and other assets 881,094 713,523
Deposit base intangible 105,032 126,263
--------------------------
Total assets 426,705,101 404,091,994
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits 317,958,799 309,581,005
Federal Home Loan Bank advances 62,600,000 55,500,000
Other borrowed money 12,012,000 7,438,000
Advance payments by borrowers for taxes
and insurance 3,317,189 2,799,782
Other liabilities 3,155,523 2,519,525
--------------------------
Total liabilities 399,043,511 377,838,312
--------------------------
Stockholders' Equity:
Common stock 13,686 13,653
Additional paid-in capital 8,468,443 8,420,472
Treasury stock -1,605,915 -1,681,562
Retained earnings, substantially restricted 21,167,633 20,021,403
Unrealized loss on securities available for sale -256,289 -340,285
Common stock acquired by ESOP -125,968 -170,530
Common stock acquired by Bank Incentive Plan 0 -9,469
--------------------------
Total stockholders' equity 27,661,590 26,253,682
--------------------------
Total liabilities and stockholders'
equity $426,705,101 $404,091,994
==========================
</TABLE>
See notes to consolidated financial statements
1
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SUBURBFED FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED JUNE 30, SIX MONTHS ENDED JUNE 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Interest income:
Interest on loans $4,978,296 $3,372,961 $9,726,307 $6,401,102
Interest on mortgage-backed securities 2,212,417 2,855,112 4,450,608 5,836,914
Interest on investment securities 154,208 101,194 281,202 229,663
Interest on other financial assets 29,946 29,191 62,849 75,349
Dividends on FHLB stock 55,535 50,556 110,460 88,183
---------------------------------------------------
Total interest income 7,430,402 6,409,014 14,631,426 12,631,211
---------------------------------------------------
Interest expense:
Interest on deposits 3,532,301 3,348,510 7,140,700 6,605,653
Interest on borrowed money 986,133 510,211 1,761,867 1,021,540
---------------------------------------------------
Total interest expense 4,518,434 3,858,721 8,902,567 7,627,193
---------------------------------------------------
Net interest income before
provision for loan losses 2,911,968 2,550,293 5,728,859 5,004,018
Provision for loan losses 45,000 39,000 90,000 84,680
---------------------------------------------------
Net interest income after
provision for loan losses 2,866,968 2,511,293 5,638,859 4,919,338
---------------------------------------------------
Non-interest income:
Loan fees and service charges 209,944 254,103 365,282 437,564
Commission income 134,176 102,739 264,320 227,326
Gain on sale of loans and securities - net 65,456 7,252 147,713 98,001
Unrealized gain on securities held
for trade - net 122,139 4,486 146,587 4,348
Loss on sale of real estate owned 0 0 -6,282 0
Deposit-related fees and other income 365,069 369,479 740,078 742,250
---------------------------------------------------
Total non-interest income 896,784 738,059 1,657,698 1,509,489
---------------------------------------------------
Non-interest expense:
General and administrative:
Staffing costs 1,536,593 1,377,988 2,995,682 2,712,007
Advertising 63,403 76,144 111,813 134,075
Occupancy and equipment expenses 506,088 476,174 983,766 947,611
Data processing 81,371 80,888 161,273 154,591
Federal deposit insurance premiums 50,060 165,037 98,105 325,819
Other 429,319 382,420 834,841 791,014
Total general and administrative ---------------------------------------------------
expenses 2,666,834 2,558,651 5,185,480 5,065,117
Amortization of deposit base intangible 10,616 12,895 21,231 25,790
---------------------------------------------------
Total non-interest expense 2,677,450 2,571,546 5,206,711 5,090,907
---------------------------------------------------
Income before income taxes 1,086,302 677,806 2,089,846 1,337,920
Provision for income taxes 386,100 247,400 741,800 489,900
---------------------------------------------------
Net income $700,202 $430,406 $1,348,046 $848,020
===================================================
Earnings per share - primary $.52 $.33 $1.01 $.65
- fully diluted $.52 $.33 $1.01 $.65
Dividends declared per common share $.08 $.08 $.16 $.16
</TABLE>
See notes to consolidated financial statements
2
<PAGE> 5
SUBURBFED FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
SIX MONTHS ENDED
JUNE 30,
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net income $1,348,046 $848,020
Adjustments to reconcile net income
to net cash from operating activities:
Depreciation 336,771 334,396
Amortization of intangible 21,231 25,791
Amortization of cost of stock benefit plans 54,031 72,971
Amortization of discount on investment securities -8,125 -10,000
Provision for loan losses 90,000 84,680
Net gain on sale of loans and securities -147,713 -98,001
Net (gain) loss on sale of real estate owned 6,282 -13,106
Unrealized gain on investment securities -146,587 -4,348
Proceeds from sales of trading account securities 633,241 227,585
Purchase of trading account securities -379,975 -196,332
Net change in:
Accrued interest receivable -164,978 -90,059
Accrued interest payable 36,539 -43,666
Deferred income -191,436 -414,610
Deferred and accrued income taxes 466,741 324,696
Other liabilities 97,522 -144,730
Prepaid expenses and other assets -153,794 -398,552
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Net cash flows provided by operating activities 1,897,796 504,735
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Investing activities:
Proceeds from sale of investment securities 125,756 2,000,000
Purchases of investment securities -2,125,000 -750,000
Proceeds from sale of mortgage-backed securities 0 23,427,754
Proceeds from repayments of mortgage-backed securities 8,415,489 12,338,301
Purchases of mortgage-backed securities -1,968,747 -13,894,597
Purchase of Federal Home Loan Bank stock 0 -245,000
Proceeds from sale of loans 2,466,472 6,186,803
Disbursements for loans -54,683,745 -81,382,654
Loan repayments 23,784,275 36,175,663
Proceeds from sale of real estate owned 12,794 26,703
Property and equipment expenditures -375,933 -135,591
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Net cash flows used in investing activities -24,348,639 -16,252,618
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Financing activities:
Proceeds from exercise of stock options 31,717 28,481
Dividends paid on common stock -201,816 -201,424
Sale (purchase) of treasury stock 75,647 -449,437
Deposit receipts 463,222,062 466,887,567
Deposit withdrawals -461,199,297 -456,887,317
Interest credited to deposit accounts 6,355,029 5,842,919
Proceeds from borrowed money 122,565,000 87,715,000
Repayment of borrowed money -110,891,000 -88,447,000
Net increase in advance payments by
borrowers for taxes and insurance 517,407 427,357
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Net cash flows provided by financing activities 20,474,749 14,916,146
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Decrease in Cash and Cash Equivalents -1,976,094 -831,737
Cash and Cash Equivalents at beginning of period 8,852,236 10,519,464
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Cash and Cash Equivalents at end of period $6,876,142 $9,687,727
=========== ============
Cash paid during the period for:
Interest $8,892,451 $7,675,680
Income taxes 466,300 165,204
Non cash investing activities:
Loans securitized into mortgage-backed securities $0 $1,596,500
=========== ============
</TABLE>
See notes to consolidated financial statements.
3
<PAGE> 6
SUBURBFED FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - Statement of Information Furnished
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Form 10-Q instructions and Article 10 of Regulation
S-X, and in the opinion of management contains all adjustments (all of which
are normal and recurring in nature) necessary to present fairly the financial
position as of June 30, 1997, the results of operations for the three and six
month periods ended June 30, 1997 and 1996 and cash flows for the six months
ended June 30, 1997 and 1996. These results have been determined on the basis
of generally accepted accounting principles. The preparation of financial
statements in conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the reported amounts
of assets and liabilities and disclosures of contingent assets and liabilities
at the date of the financial statements and the reported amounts of revenues
and expenses during the reporting period. Actual results could differ from
those estimates. The attached consolidated statements are those of SuburbFed
Financial Corp. (the "Company") and its consolidated subsidiaries Suburban
Federal Savings, a Federal Savings Bank (the "Bank"); the Bank's wholly owned
subsidiaries, Suburban Mortgage Services, Inc. and South Suburban Securities
Corporation; and the wholly owned subsidiary of South Suburban Securities
Corporation, Suburban Insurance Resources Agency, Inc. The results of
operations for the three and six month periods ended June 30, 1997 are not
necessarily indicative of the results to be expected for the full year.
Note B - Stock Conversion
On September 12, 1991 the Board of Directors of Suburban Federal approved a
plan to convert from a federally chartered mutual association to a federally
chartered stock savings bank. The stock conversion plan included, as part of
the conversion, the concurrent formation of a holding company. The stock
offering of the Bank's parent, SuburbFed Financial Corp. (the "Company") was
closed on March 3, 1992 with the sale of 891,250 shares at $10.00 per share.
The Company purchased all the shares of stock of the Bank for $4,023,750 upon
completion of its stock offering.
Note C - Earnings Per Share
Earnings per share of common stock for the three and six month periods ended
June 30, 1997 and 1996 have been determined by dividing net income for the
period by the weighted average number of shares of common stock and common
stock equivalents outstanding. (See Exhibit 11 attached) Stock options are
regarded as common stock equivalents and are therefore considered in both the
primary and fully diluted earnings per share calculations. Common stock
equivalents are computed using the treasury stock method.
4
<PAGE> 7
Note D - Dividend Declaration
The Company declared a dividend of $.08 per share, representing its
twenty-first consecutive quarterly dividend payable July 15, 1997 to
shareholders of record July 1, 1997. The dividend, totaling $100,941, has been
recorded as of June 30, 1997 as a reduction of retained earnings in the
accompanying consolidated statements of financial condition.
5
<PAGE> 8
SUBURBFED FINANCIAL CORP.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
During the six month period ended June 30, 1997, total assets of the Company
increased by $22.6 million. This increase in assets was primarily funded by
$8.4 million of deposit growth plus $11.7 million of additional borrowed
money. Mortgage-backed securities declined by $6.4 million while loans
receivable grew $28.5 million. The strategy of increasing loan originations,
which began in 1995, continued during the first half of 1997 and will be
pursued for the remainder of the year.
The 1997 increase in loans receivable was the result of loan disbursements of
$54.7 million offset by repayments of $23.8 million and sales of $2.5 million
of one to four family, fixed rate loans, primarily to the Federal National
Mortgage Association. Comparable origination and repayment data for the six
month period ended June 30, 1996 shows disbursements of $81.4 million,
repayments of $36.2 million and sales of $6.2 million.
Mortgage-backed securities ("MBS") held to maturity decreased $5.9 million
during the most recent six month period due to repayments. Pursuant to the
Company's asset/liability management strategy, the Company's portfolio contains
MBS with adjustable interest rates or short effective terms (2 to 5 year
average lives).
Mortgage-backed securities available for sale remained constant during the six
month period ended June 30, 1997 as purchases offset prepayments.
The level of savings deposits is affected primarily by interest rates, the
total amount of funds consumers elect to save, and competition for savings from
alternative investments in the marketplace. Total savings deposit accounts
increased $8.4 million from $309.6 million on December 31, 1996 to $318.0
million on June 30, 1997. The Company experienced a net deposit inflow of $2.0
million for the six month period ended June 30, 1997 (before interest
credited).
The comparable data for the six month period ended June 30,1996 was an inflow
of $10.0 million (before interest credited). Interest credited was $6.4 million
and $5.8 million for the six months ended June 30, 1997 and 1996, respectively.
6
<PAGE> 9
During 1997, the Company increased Federal Home Loan Bank advances by $7.1
million and other borrowed money by $4.6 million to assist in funding loan
disbursements.
Stockholders' equity increased $1.4 million during the six month period ended
June 30, 1997 due in part to earnings of $1.3 million, $76,000 of proceeds from
the sale of treasury stock to fund shares purchased by employees under the
Company's 401(K) retirement plan and a decrease in unrealized losses on
securities available for sale of $84,000 offset by dividends paid of $202,000.
LIQUIDITY AND CAPITAL RESOURCES
The Company's principal sources of funds are deposits from customers into
interest bearing accounts, scheduled monthly repayments and prepayments of
principal and interest on loans and mortgage-backed securities, and borrowings.
Other potential sources of funds available to the Company include borrowings
from the Federal Home Loan Bank of Chicago. While scheduled loan and
mortgage-backed security payments are relatively predictable sources of funds,
the actual mix and amounts of funds from these sources are directly affected by
general interest rates, economic conditions and competition. The primary
business activity of the Company, that of making conventional mortgage loans on
residential housing, is likewise affected by economic conditions.
Current Office of Thrift Supervision regulations require the Bank to maintain
cash and eligible investments in an amount equal to at least 5% of customer
accounts and short-term borrowings to assure its ability to meet demands for
withdrawals and repayment of short-term borrowings. The Bank's average daily
liquidity ratio for the six monthly periods ending June 30, 1997 ranged from
5.0% to 5.6%, and it was 5.4% at June 30, 1997. The Bank's daily liquidity
ratio at December 31, 1996 was 5.7%. Liquid assets have been maintained at a
level above regulatory minimums.
The Company uses its capital resources principally to meet its ongoing
commitments to fund maturing certificates of deposits and deposit withdrawals,
repay borrowings, fund existing and continuing loan commitments, maintain its
liquidity and meet operating expenses. As of June 30, 1997, the Company had
approximately $9.6 million in outstanding commitments to originate mortgage
loans. The Company considers it liquidity and capital resources to be adequate
to meet its foreseeable short and long-term needs.
The Company expects to be able to fund or refinance, on a timely basis, its
material commitments and long-term liabilities.
7
<PAGE> 10
On December 7, 1989, new capital standards were imposed on the thrift industry
as a result of the Financial Institutions Reform, Recovery and Enforcement Act
( "FIRREA"). Regulatory standards impose the following capital requirements:
a risk-based capital standard expressed as a percent of risk-adjusted assets, a
leverage ratio of core capital to total adjusted assets, and a tangible capital
ratio expressed as a percent of total adjusted assets. As of June 30, 1997,
the Bank exceeded all regulatory capital standards.
At June 30, 1997, the Bank's tangible capital was $24.7 million or 5.8% of
adjusted total assets, which is in excess of the current 1.5% requirement by
$18.3 million. At June 30, 1997, the Bank had core capital of $24.7 million or
5.8% of adjusted total assets, which exceeds the current 3.0% requirement by
$12.0 million. The Bank had risk-based capital of $25.4 million at June 30,
1997, or 13.6% of risk-adjusted assets which exceeds the 8.0% risk-based
capital requirement by $10.4 million.
ANALYSIS OF OPERATIONS
Net income for the three and six month periods ended June 30, 1997 was
$700,000 and $1,348,000, respectively compared to $430,000 and $848,000 for the
same periods of the prior year. These increases are primarily attributable to
increases in net interest income of $362,000 and $725,000 resulting from
increases in average earning assets.
Net interest margin increased from 2.85% for the three month period ended June
30, 1996 to 2.87% for the three months ended June 30, 1997. Net interest margin
for the six month period ended June 30, 1997 was 2.85% as compared to 2.82% for
the six months ended June 30, 1996.
Interest income on loans and mortgage-backed securities for the three and six
month periods ended June 30, 1997 increased $1.0 million and $1.9 million
from the same periods in 1996. These increases resulted primarily from the
effect of net increases in average loans and mortgage-backed securities
outstanding of $46.9 million and $44.6 million for the three and six month
periods, respectively.
Interest expense on deposits increased by $184,000 and $535,000, respectively,
for the three and six month periods ended June 30, 1997 from the prior year
levels. The additional expense resulted from the effects of the increases in
average deposit account balances of $17.7 million and $21.0 million for the
three and six month periods ended June 30, 1997, respectively, from the prior
year levels. The average cost of the deposits changed less than .04% during the
two periods and had a minor effect on the increases in interest.
8
<PAGE> 11
Interest expense on borrowed money increased $476,000 and $740,000,
respectively, for the three and six month periods ended June 30, 1997 from the
same periods in 1996.
These increases are primarily attributable to increases of $30.3 million and
$23.9 million, respectively, in the average outstanding balance of borrowed
money for the three and six month periods ended June 30, 1997 as compared to
the same periods in 1996.
Management establishes specific reserves for estimated losses on loans when it
determines that losses are anticipated on these loans. The Company calculates
any allowance for possible loan losses based upon its ongoing evaluation of
pertinent factors underlying the types and quality of its loans. These factors
include but are not limited to current and anticipated economic conditions,
historical loan loss experience, a detailed analysis of individual loans for
which full collectability may not be assured, a determination of the existence
and realizable value of the underlying collateral, the ability of the borrower
to repay and the guarantees securing such loans. Management, as a result of
this review process, recorded provisions for loan losses in the amount of
$45,000 and $90,000 for the three and six month periods ended June 30, 1997 as
compared to $39,000 and $85,000 for the three and six month periods ended June
30, 1996. During the quarter ended March 31,1997, the Company received a final
settlement from the bankruptcy trustee for a development loan that had a
balance of $498,000. Settlement of this loan has resulted in a $182,000
charge-off which the Company had previously considered in determining the level
of loan loss allowance. Recoveries of $145,000 from the settlement of other
related lawsuits in connection with this loan have been recorded in prior
periods as increases to the loan loss allowance. The Company's remaining
nonaccrual loans consisting primarily of first mortgages secured by 1 to 4
family properties or consumer loans increased from $1.0 million to $2.1 million
during the quarter ended June 30, 1997 as a result of the significant growth in
loans receivable over the last two years.
The Company's general loan loss reserve balance as of June 30, 1997 was
$849,000. The December 31, 1996 general loan loss reserve balance was
$967,000. Including the charge-off mentioned above, net charge-offs for the
three and six month periods ending June 30, 1997 were $12,000 and $208,000,
respectively, as compared to $25,000 and $28,000 in the related 1996 periods.
Loan fees and service charges decreased $44,000 and $72,000, respectively,
during the three and six month periods ended June 30, 1997 as compared to the
same periods in 1996 due to decreases in loan disbursements of $17.3 million
and $26.7 million, respectively, during the three and six month periods ended
June 30, 1997, as compared to the same periods in 1996.
9
<PAGE> 12
Commission income from the sale of insurance products and mutual funds for the
three and six month periods ended June 30, 1997 increased $31,000 and $37,000,
respectively, from the comparable 1996 periods, as sales volumes increased.
Deposit related fees and other income remained relatively constant for each of
the reporting periods.
Net realized and unrealized gains on sale of loans and securities were $188,000
and $294,000 for the three and six month periods ended June 30, 1997 as
compared to $12,000 and $102,000 for the comparable 1996 periods. The increased
gains are primarily attributable to the Company's trading portfolio.
Total general and administrative expense increased $108,000 and $120,000
during the three and six month periods ended June 30, 1997, primarily as a
result of increased staffing costs of $159,000 and $283,000, respectively,
consisting primarily of additional incentive compensation, offset by
reductions of $115,000 and $228,000, respectively, in federal insurance
premiums which was the result of legislation enacted in September 1996 to
recapitalize the Savings Association Insurance Fund. The legislation allowed
highly rated institutions, such as the Bank, to pay substantially reduced
deposit premiums beginning January 1, 1997. The annual premium rate dropped
from 23 cents to 6.4 cents per $100 of insured deposits.
The provision for income taxes for the three and six month periods ended June
30, 1997 increased from the comparable 1996 periods due to increased earnings.
10
<PAGE> 13
IMPACT OF THE NEW ACCOUNTING STANDARDS
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities. In June 1996, the FASB issued SFAS No. 125 ("SFAS 125"),
"Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities." This statement, among other things, applies a
"financial-components approach" that focuses on control, whereby an entity
recognizes the financial and servicing assets it controls and the liabilities
it has incurred, derecognizes assets when control has been surrendered, and
derecognizes liabilities when extinguished. SFAS 125 provides consistent
standards for distinguishing transfers of financial assets that are sales from
transfers that are secured borrowings. SFAS 125 is effective for transfers and
servicing of financial assets and extinguishments of liabilities occurring
after December 31, 1996. The Company has adopted SFAS 125 effective January 1,
1997, resulting in no material impact on its consolidated financial condition
or results of operations.
Accounting for Transfers and Servicing of Financial Assets and Extinguishments
of Liabilities. In December 1996, the FASB issued Statement of Accounting
Standard No. 127 ("SFAS 127"), "Deferral of the Effective Date of Certain
Provisions of FASB Statement No. 125". The statement delays for one year the
implementation of SFAS 125, as it relates to (1) secured borrowings and
collateral, and (2) for the transfers of financial assets that are part of
repurchase agreement, dollar-roll, securities lending and similar transactions.
The Company has adopted portions of SFAS 125 (those not deferred by SFAS 127)
effective January 1, 1997. Adoption of these portions did not have a
significant effect on the Company's financial condition or results of
operations. Based on its review of SFAS 125, management does not believe that
adoption of the portions of SFAS 125 which have been deferred by SFAS 127 will
have a material effect on the Company.
ACCOUNTING FOR EARNINGS PER SHARE. In February 1997, the FASB issued SFAS No.
128 ("SFAS 128"), "Earnings Per Share". This statement is intended to simplify
the computation of earnings per share ("EPS") by replacing the presentation of
primary EPS with a presentation of basic EPS. Basic EPS does not include
potential dilution and is computed by dividing income available to common
stockholders by an average number of common shares outstanding.
Diluted EPS reflects the potential dilution of securities that could share in
the earnings of a company, similar to the fully diluted EPS currently used.
The statement requires dual presentation of basic and diluted EPS by companies
with complex capital structures. SFAS 128 is effective for financial
statements issued for periods ending after December 15, 1997. The Company does
not anticipate that this statement will have an impact on its consolidated
financial condition or results of operations.
11
<PAGE> 14
Disclosure of Information about Capital Structure.
In February 1997, the FASB issued Statement of Financial Accounting Standard
No. 129, "Disclosure of Information about Capital Structure" ("SFAS No. 129").
This statement establishes standards for disclosing information about an
entity's capital structure. It supersedes specific disclosure requirements of
APB Opinions No. 10, "Omnibus Opinion-1966," and No. 15, "Earnings Per
Share,"and SFAS No. 47, "Disclosure of Long-Term Obligations,"and consolidates
them in this statement for ease of retrieval and for greater visibility to
nonpublic entities. This statement is effective for financial statements for
periods ending after December 15, 1997. It contains no changes in disclosure
requirements for entities that were previously subject to the requirements of
Opinions No. 10 and No. 15 and SFAS No. 47, and, therefore, is not expected to
have a significant impact on the consolidated financial condition or results of
operations of the Company.
The foregoing does not constitute a comprehensive summary of all material
changes or developments affecting the manner in which the Company keeps its
books and records and performs its financial accounting responsibilities. It
is intended only as a summary of some of the recent pronouncements made by the
FASB which are of particular interest to financial institutions.
Stock Repurchase Program
On October 24, 1995, the Company announced that its Board of Directors had
authorized a second stock repurchase program which allows the Company to
repurchase up to 4.9% (62,925 shares) of the common stock outstanding in open
market transactions. As of August 8, 1997, the Company had purchased 43,907
shares.
12
<PAGE> 15
SUBURBFED FINANCIAL CORP.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, the Bank is a party to legal
proceedings in the ordinary course of business, wherein
it enforces its security interest. The Company and the
Bank are not engaged in any legal proceedings of a
material nature at the present time.
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
(a) The Holding Company held an Annual Meeting of
Stockholders on April 17,1997.
(b) The Annual Meeting involved the election of
four directors of the Company, the ratification
of the adoption of the 1997 Stock Option and
Incentive Plan, and the ratification of the
appointment of Cobitz, Vandenberg & Fennessy
as auditors for the Company for the fiscal year
ending December 31, 1997.
(c) A brief description of each of the matters voted
on and the voting tabulation on each item
presented at the meeting was as follows:
(i) The election of the following persons as
Directors of the Company for terms of
three years:
<TABLE>
<CAPTION>
FOR WITHHELD
<S> <C> <C>
Daniel P. Ryan 1,188,305 24,624
Vernon P. Vollbrecht 1,188,305 24,624
Bruce E. Huey 1,188,305 24,624
Robert L. Harris 1,188,305 24,624
</TABLE>
(ii) The ratification of the adoption of the
1997 Stock Option and Incentive Plan:
FOR AGAINST ABSTAIN
657,321 83,533 28,025
13
<PAGE> 16
(iii) The ratification of the appointment of
Cobitz, Vandenberg & Fennessy as the
Company's auditors for the fiscal year
ending December 31, 1997:
FOR AGAINST ABSTAIN
1,188,254 15,700 8,975
(d) Not applicable
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a)(1) Computation of earnings per share (Exhibit 11
filed herewith.)
(a)(2) Financial Data Schedule (Exhibit 27 filed
herewith.)
(b) Not applicable
14
<PAGE> 17
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Six Months
Ended Ended
June 30, 1997 June 30,1997
-------------- -------------
<S> <C> <C>
Net Income $700,202 $1,348,046
======== ==========
Weighted average
shares outstanding 1,261,423 1,259,188
Common stock
equivalents due to dilutive
effect of stock options 74,444 70,143
-------- --------
Total weighted average
common shares
and equivalents
outstanding 1,335,867 1,329,331
========== =========
Primary earnings
per share $.52 $1.01
==== =====
Total weighted average
common shares and
equivalents outstanding
for primary computation 1,335,867 1,329,331
Additional dilutive
shares using the end of
period market value versus
the average market value
when applying the treasury
stock method 8,613* 12,914*
--------- --------
Total weighted average
common shares and
equivalents outstanding for
fully diluted
computation 1,344,480 1,342,245
========== =========
Fully diluted
earnings per share $.52 $1.01
==== =====
</TABLE>
*Note: If the average share price is greater than the ending price, use
average price for both primary and fully diluted calculation.
15
<PAGE> 18
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
and Exchange Act of 1934, the Registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
SUBURBFED FINANCIAL CORP
-----------------------------
Registrant
DATE: August 8, 1997 BY:(s) /s/ Daniel P. Ryan
-----------------------------
Daniel P. Ryan
President and
Chief Executive Officer
DATE: August 8, 1997 BY:(s) /s/ Steven E. Stock
-----------------------------
Steven E. Stock
Senior Vice President
Chief Financial and
Accounting Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
The schedule contains summary financial information extacted from the Form 10-Q
for the quarter ended June 30, 1997 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> JUN-30-1997
<CASH> 3,792,273
<INT-BEARING-DEPOSITS> 3,083,869
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 1,485,362
<INVESTMENTS-HELD-FOR-SALE> 42,875,944
<INVESTMENTS-CARRYING> 93,613,392
<INVESTMENTS-MARKET> 93,499,555
<LOANS> 271,194,429
<ALLOWANCE> 849,152
<TOTAL-ASSETS> 426,705,101
<DEPOSITS> 317,958,799
<SHORT-TERM> 46,312,000
<LIABILITIES-OTHER> 6,472,712
<LONG-TERM> 28,300,000
0
0
<COMMON> 13,866
<OTHER-SE> 27,647,904
<TOTAL-LIABILITIES-AND-EQUITY> 426,705,101
<INTEREST-LOAN> 9,726,307
<INTEREST-INVEST> 4,905,119
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 14,631,426
<INTEREST-DEPOSIT> 7,140,700
<INTEREST-EXPENSE> 8,902,567
<INTEREST-INCOME-NET> 5,728,859
<LOAN-LOSSES> 90,000
<SECURITIES-GAINS> 294,300
<EXPENSE-OTHER> 5,206,711
<INCOME-PRETAX> 2,089,846
<INCOME-PRE-EXTRAORDINARY> 1,348,046
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,348,046
<EPS-PRIMARY> .52
<EPS-DILUTED> .52
<YIELD-ACTUAL> 2.85
<LOANS-NON> 2,057,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 967,360
<CHARGE-OFFS> 212,311
<RECOVERIES> 4,103
<ALLOWANCE-CLOSE> 849,152
<ALLOWANCE-DOMESTIC> 160,134
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 689,018
</TABLE>
