<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
----------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
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 of I.R.S. Employer Identification or Number
incorporation or organization)
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
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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 May 8, 1998, the Registrant had 1,270,483 shares of common stock issued
and outstanding.
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SUBURBFED FINANCIAL CORP.
TABLE OF CONTENTS
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PAGE
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PART I FINANCIAL INFORMATION 1-11
Item 1 Financial Statements
Consolidated Statements of Financial Condition
March 31, 1998 (Unaudited) and December 31, 1997 1
Consolidated Statements of Income (Unaudited)
Three Months Ended March 31, 1998 and 1997 2
Consolidated Statement of Changes in Stockholders' Equity 3
Three Months Ended March 31,1998 (Unaudited)
Consolidated Statements of Cash Flows (Unaudited)
Three Months Ended March 31, 1998 and 1997 4
Notes to Consolidated Financial Statements 5
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 6-11
PART II OTHER INFORMATION 12
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SUBURBFED FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
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<CAPTION>
MARCH 31 DECEMBER 31
1998 1997
(UNAUDITED)
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ASSETS
Cash and amounts due from depository institutions $ 3,649,228 $ 4,265,615
Interest-bearing deposits 4,163,252 3,911,510
--------------------------
TOTAL CASH AND CASH EQUIVALENTS 7,812,480 8,177,125
--------------------------
Investment securities held to maturity 1,991,667 3,988,542
(Fair Value: 1998 - $2,000,000; 1997 - $4,936,719)
Investment securities available for sale,
at fair value 5,008,114 3,696,349
Trading securities 1,907,889 1,740,883
Mortgage-backed securities held to maturity 76,840,059 77,161,513
(Fair Value: 1998 - $76,879,787;1997 - $89,846,124)
Mortgage-backed securities available for sale,
at fair value 46,586,265 37,426,637
Loans receivable 293,265,409 293,631,549
Real estate owned 268,394 135,361
Stock in Federal Home Loan Bank of Chicago 4,085,000 3,845,000
Office properties and equipment 4,979,743 5,043,797
Accrued interest receivable 2,622,800 2,597,917
Prepaid expenses and other assets 1,028,175 929,911
Deposit base intangible 78,656 87,448
--------------------------
TOTAL ASSETS 446,474,651 438,462,032
==========================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposits 320,968,223 316,655,755
Federal Home Loan Bank advances 80,700,000 76,200,000
Other borrowed money 8,662,000 8,844,000
Advance payments by borrowers for taxes
and insurance 2,838,113 3,052,895
Other liabilities 3,276,359 4,202,269
--------------------------
TOTAL LIABILITIES 416,444,695 408,954,919
==========================
STOCKHOLDERS' EQUITY:
Common stock 13,739 13,712
Additional paid-in capital 8,695,173 8,605,578
Treasury stock (1,576,377) (1,605,185)
Retained earnings, substantially restricted 22,891,490 22,407,548
Accumulated other comprehensive income 65,055 166,865
Common stock acquired by ESOP (59,124) (81,405)
Common stock acquired by Bank Incentive Plan 0 0
--------------------------
TOTAL STOCKHOLDERS' EQUITY 30,029,956 29,507,113
--------------------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $446,474,651 $438,462,032
==========================
</TABLE>
See notes to consolidated financial statements
1
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SUBURBFED FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
<TABLE>
<CAPTION>
QUARTER ENDED MARCH 31
1998 1997
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INTEREST INCOME:
Interest on loans $ 5,473,200 $ 4,748,011
Interest on mortgage-backed securities 1,939,936 2,238,191
Interest on investment securities 102,185 126,994
Interest on other financial assets 27,930 32,903
Dividends on FHLB stock 64,030 54,925
--------------------------
TOTAL INTEREST INCOME 7,607,281 7,201,024
--------------------------
INTEREST EXPENSE:
Interest on deposits 3,580,689 3,608,399
Interest on borrowed money 1,251,207 775,734
--------------------------
TOTAL INTEREST EXPENSE 4,831,896 4,384,133
--------------------------
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES 2,775,385 2,816,891
Provision for loan losses 60,000 45,000
--------------------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 2,715,385 2,771,891
--------------------------
NON-INTEREST INCOME:
Loan fees and service charges 186,621 155,338
Commission income 86,709 130,144
Gain on sale of loans and securities - Net 213,752 82,257
Unrealized gain on trading securities - Net 52,732 24,448
Loss on sale of real estate owned (16,264) (6,282)
Deposit-related fees and other income 390,701 375,009
--------------------------
TOTAL NON-INTEREST INCOME 914,251 760,914
--------------------------
NON-INTEREST EXPENSE:
General and administrative:
Staffing costs 1,521,251 1,459,089
Advertising 61,451 48,410
Occupancy and equipment expenses 530,498 477,678
Data processing 89,120 79,902
Federal deposit insurance premiums 49,166 48,045
Other 454,795 405,522
--------------------------
Total General and Administrative Expenses 2,706,281 2,518,646
Amortization of deposit base intangible 8,791 10,615
--------------------------
TOTAL NON-INTEREST EXPENSE 2,715,072 2,529,261
--------------------------
INCOME BEFORE INCOME TAXES 914,564 1,003,544
Provision for Income Taxes 329,000 355,700
--------------------------
NET INCOME $ 585,564 $ 647,844
==========================
Earnings Per Share - - Basic $ 0.46 $ 0.52
- Diluted $ 0.42 $ 0.49
Dividends Declared Per Common Share $ 0.08 $ 0.08
</TABLE>
See notes to consolidated financial statements
2
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SUBURBFED FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
(UNAUDITED)
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ACCUMULATED COMMON
ADDITIONAL OTHER STOCK
COMMON PAID-IN RETAINED COMPREHENSIVE TREASURY ACQUIRED
STOCK CAPITAL EARNINGS INCOME STOCK BY ESOP TOTAL
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Balance at December 31, 1997 $ 13,712 $ 8,605,578 $ 22,407,548 $ 166,865 $ (1,605,185) $ (81,405) $ 29,507,113
-
COMPREHENSIVE INCOME: -
Net income 585,564 585,564
Adjustment of securities -
available for sale to fair value,
net of tax effect (101,810) (101,810)
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COMPREHENSIVE INCOME: 585,564 (101,810) 483,754
Exercise of stock options 27 37,792 37,819
Tax benefit related to stock
options exercised 21,470 21,470
Treasury stock purchased by
employee benefit plan
(1,893 shares) 30.333 28,808 59,141
Contribution to fund ESOP loan 22,281 22,281
Dividends declared on common
stock (101,622) (101,622)
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BALANCE AT MARCH 31, 1998 $ 13,739 $ 8,695,173 $ 22,891,490 $ 65,055 $ (1,576,377) $ (59,124) $ 30,029,956
=========================================================================================
</TABLE>
See notes to consolidated financial statements
3
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SUBURBFED FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1998 1997
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 585,564 $ 647,844
Adjustments to reconcile net income to net cash
from operating activities:
Depreciation 196,622 164,200
Amortization of intangible 8,792 10,616
Amortization of cost of stock benefit plans 22,281 31,750
Amortization of discount on investment securities (3,125) (5,000)
Provision for loan losses 60,000 45,000
Proceeds from sale of loans held for sale 2,768,512 1,703,016
Origination of loans held for sale (3,062,983) (1,454,562)
Gain on sale of trading securites (19,975) (67,830)
Net gain on sale of loans and securities (193,777) (14,427)
Net loss on sale of real estate owned 16,264 6,282
Unrealized gain on trading securities (52,732) (24,448)
Proceeds from sales of trading account securities 142,675 395,240
Purchase of trading account securities (236,975) (159,225)
Net change in:
Accrued interest receivable (24,883) (128,822)
Accrued interest payable 28,198 8,668
Deferred income 83,213 (10,862)
Deferred and accrued income taxes 451,888 (723,810)
Other liabilities (1,316,458) 986,695
Prepaid expenses and other assets (78,363) 54,334
--------------------------
NET CASH FLOWS PROVIDED BY (USED IN)
OPERATING ACTIVITIES (625,262) 1,464,659
--------------------------
INVESTING ACTIVITIES:
Proceeds from sale of investment securities,
available for sale 362,576 25,755
Proceeds from maturities of investment
securities, held to maturity 2,000,000 0
Purchases of investment securities,
available for sale (1,600,000) (1,000,000)
Purchase of investment securities, held to maturity 0 (75,000)
Proceeds from sale of mortgage-backed securities,
available for sale 1,897,445 0
Proceeds from repayments of mortgage-backed
securities, available for sale 2,473,505 1,206,516
Proceeds from repayments of mortgage-backed
securities, held to maturity 5,523,017 3,052,739
Purchases of mortgage-backed securities,
available for sale (12,043,594) 0
Purchases of mortgage-backed securities,
held to maturity (5,201,562) 0
Purchase of Federal Home Loan Bank stock (240,000) 0
Disbursements for loans (29,718,446) (20,723,846)
Loan repayments 28,404,220 12,482,381
Proceeds from sale of real estate owned 125,000 12,794
Property and equipment expenditures (132,568) (99,990)
--------------------------
NET CASH FLOWS USED IN INVESTING ACTIVITIES (8,150,407) (5,118,651)
--------------------------
FINANCING ACTIVITIES:
Proceeds from exercise of stock options 37,820 31,717
Dividends paid on common stock (101,622) (100,875)
Proceeds from issuance of treasury stock 59,140 56,451
Net increase in deposits 4,312,468 16,392,726
Proceeds from borrowed money 46,161,000 35,402,000
Repayment of borrowed money (41,843,000) (48,629,000)
Net decrease in advance payments by borrowers
for taxes and insurance (214,782) (124,541)
--------------------------
NET CASH FLOWS PROVIDED BY FINANCING ACTIVITIES 8,411,024 3,028,478
--------------------------
Decrease in Cash and Cash Equivalents (364,645) (625,514)
Cash and Cash Equivalents at Beginning of Period 8,177,125 8,852,236
--------------------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 7,812,480 $ 8,226,722
==========================
CASH PAID DURING THE PERIOD FOR:
Interest $ 4,803,698 $ 4,375,465
Income taxes 7,344 0
NON CASH INVESTING ACTIVITIES:
Loans securitized into mortgage-backed securities 1,551,600 0
Transfer of loans to real estate owned $ 287,797 $ 0
</TABLE>
See notes to consolidated financial statements
4
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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 March 31, 1998, the results of operations for the three month periods ended
March 31, 1998 and 1997 and cash flows for the three months ended March 31,
1998 and 1997. 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
month period ended March 31, 1998 is not necessarily indicative of the results
to be expected for the full year.
Certain 1997 amounts have been reclassified to conform with the 1998
presentation.
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 basic share of common stock for the three month periods ended
March 31, 1998 and 1997 have been determined by dividing net income for the
period by the weighted average number of shares of both basic and diluted
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 the diluted earnings per share calculations. Common
stock equivalents are computed using the treasury stock method. Earnings per
share data for the three month period ended March 31,1997 has been restated for
comparative purposes to reflect the implementation of Statement of Financial
Accounting Standards No. 128.
5
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Note D - Dividend Declaration
The Company declared a dividend of $.08 per share, representing its
twenty-fourth consecutive quarterly dividend payable April 15, 1998 to
shareholders of record April 1, 1998. The dividend, totaling $101,622, has been
recorded as of March 31, 1998 as a reduction of retained earnings in the
accompanying consolidated statements of financial condition.
6
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SUBURBFED FINANCIAL CORP. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
During the three month period ended March 31, 1998, total assets of the Company
increased by $8.0 million. This increase in assets was primarily funded by
$4.3 million of deposit growth plus $4.3 million of additional borrowed money.
Mortgage-backed securities grew by $8.8 million while loans receivable declined
by $366,000. The strategy of increasing loan originations, which began in
1995, continued during the first three months of 1998 ,however, loan repayments
increased significantly and represented the primary cause of the decline in the
loans receivable balance.
The 1998 decrease in loans receivable was primarily the result of loan
repayments of $28.4 million, sales of $2.8 million of one to four family, fixed
rate loans to the Federal National Mortgage Association and loans securitized
of $1.6 million offset by loan disbursements of $32.8 million. Comparable
origination and repayment data for the three month period ended March 31,1997
shows disbursements of $22.2 million, repayments of $12.5 million and sales of
$1.7 million. No loans were securitized in the 1997 period.
Mortgage-backed securities ("MBS") held to maturity decreased $321,000 during
the most recent three month period due to repayments of $5.5 million offset by
purchases of $5.2 million. 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 at date of
purchase).
Mortgage-backed securities available for sale increased $9.2 million due to
purchases of $12.0 million and securitizations of $1.6 million offset by
repayments of $2.5 million and sales of $1.9 million during the three month
period ended March 31,1998.
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 $4.3 million from $316.7 million on December 31, 1997 to $321.0
million on March 31, 1998. The Company experienced a net deposit inflow of $1.1
million for the three month period ended March 31, 1998 (before interest
credited).The comparable data for the three month period ended March 31, 1997
was an inflow of $13.2 million (before interest credited). Interest credited
was $3.2 million for both of the three month ended March 31, 1998 and 1997.
During 1998, the Company increased Federal Home Loan Bank advances by $4.5
million to assist in funding the purchases of mortgage-backed securities.
Stockholders' equity increased $523,000 during the three month period ended
March 31, 1998 due in part to earnings of $586,000 and $59,000 of proceeds from
the sale of treasury stock to fund shares purchased by employees under the
Company's 401(K) retirement plan offset by a
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decrease in unrealized gains on securities available for sale of $102,000 and
dividends paid of $101,000.
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 4% of short-term
customer accounts and 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 three month period ending March 31, 1998 was 4.6%.
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 March 31, 1998, the Company had
approximately $12.3 million in outstanding commitments to originate mortgage
loans. The Company considers it's 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.
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 and
a leverage ratio of core capital to total adjusted assets. As of March 31,
1998, the Bank exceeded all regulatory capital standards.
At March 31, 1998, the Bank's core capital was $26.7 million or 6.02% of
adjusted total assets, which exceeds the current 4.00% requirement by $8.9
million. The Bank had risk-based capital of $27.4 million at March 31, 1998,
or 13.67% of risk-adjusted assets which exceeds the 8.00% risk-based capital
requirement by $11.4 million.
8
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ANALYSIS OF OPERATIONS
Net income for the three month period ended March 31, 1998 was $586,000
compared to $648,000 for the same period of the prior year. This decrease is
primarily attributable to the decrease in net interest income during the period
of $42,000, and the increase of $186,000 in non-interest expense, partially
offset by the increase in non-interest income of $153,000. Net interest margin
decreased from 2.85% for the three month period ended March 31, 1997 to 2.58%
for the three months ended March 31, 1998. The primary reasons for the decrease
in net interest income and the decrease in the net interest margin are the
effect of $58,000 of accelerated loan origination cost amortization and an
increase of $85,000 in the reserve for uncollected interest. The combined
effect of these factors accounted for a 14 basis point decrease in the margin
while the remaining decline can be attributed to interest rate compression
resulting from originating current loans at lower rates than those which are
repaying, without a comparable decline in the cost of funds.
The increase in the reserve for uncollected interest resulted primarily from a
$2.3 million loan on an office property in Matteson, Illinois becoming 90 days
delinquent. Under the Company's accounting policy all accrued interest was
fully reserved as of March 31, 1998. The loan was originated in January, 1996,
and the current delinquency was precipitated by the loss of a major and several
minor tenants in December 1996. The vacant space is being re-rented, however,
cashflow is not yet sufficient to service the loan.
Interest income on loans and mortgage-backed securities for the three period
ended March 31, 1998 increased $427,000 from the same period in 1997. This
increase resulted primarily from the effect of the net increase in average
loans and mortgage-backed securities outstanding of $34.6 million as compared
to the prior year period.
Interest expense on deposits decreased by $28,000 for the three month period
ended March 31, 1998 from the prior year level. The reduction in expense
resulted from the effect of the decrease in average deposit account balances of
$444,000 for the three month period ended March 31, 1998, from the prior year
level and an decrease of 3 basis points in the average cost of deposits for the
three month period ended March 31, 1998 as compared to the 1997 period.
Interest expense on borrowed money increased $475,000 for the three month
period ended March 31, 1998 from the same period in 1997. This increase is
primarily attributable to the effect of an increase in average borrowings
outstanding of $30.7 million for the three month period ended March 31, 1998 as
compared to the same period of 1997.
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
$60,000 for the three month period ended March 31, 1998 as compared to $45,000
for the three month period ended March 31, 1997. During the quarter ended March
31, 1997, the Company received a final settlement from the bankruptcy trustee
for a development loan that had
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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 non-accrual
loans at March 31, 1998 of $3.8 million include the $2.3 million loan on the
office property in Matteson, Illinois and various first mortgages secured by 1
to 4 family properties and consumer loans. Non-accrual loans at March 31,1997
were $879,000. The increase in residential non-accrual loans is primarily a
result of the increase in loans outstanding.
The Company's general loan loss reserve balance as of March 31, 1998 was
$745,000. The December 31, 1997 general loan loss reserve balance was
$731,000. Net charge-offs for the 1998 period were $46,000 compared to $201,000
for the 1997 period which included the charge-off noted above.
Loan fees and service charges increased $31,000 during the three month period
ended March 31, 1998 as compared to the same period in 1997 primarily due to an
increase in loan disbursements of $10.6 million as compared to the same period
in 1997.
Commission income from the sale of insurance products and mutual funds for the
three month period ended March 31,1998 decreased $43,000 from the comparable
1997 periods, as sales volumes decreased. Deposit related fees and other
income increased $15,000 from the comparable 1997 period due to increased
transaction volume.
Net realized and unrealized gains on sale of loans and securities were $266,000
for the three month period ended March 31, 1998 as compared to $107,000 for
the comparable 1997 period. The increased gains are primarily attributable to
the Company's trading portfolio of bank and thrift equity securities.
Total general and administrative expense increased $188,000 as compared to the
related 1997 period due to additional staffing costs of $62,000 and additional
occupancy costs of $53,000 consisting primarily of the cost of the Bank's new
call center.
The provision for income taxes for the three month period ended March 31, 1998
decreased from the comparable 1997 period due to decreased earnings.
10
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IMPACT OF THE NEW ACCOUNTING STANDARDS
Employers' Disclosures about Pension and Other Employee Benefits.
In February, 1998 the FASB issued Statement of Financial Accounting Standards
No. 132, "Employers' Disclosure about Pensions and Other Post-retirement
Benefits" ("SFAS No. 132"). SFAS No. 132 alters current disclosure requirements
regarding pensions and other post-retirement benefits in the financial
statements of employers who sponsor such benefit plans. The revised disclosure
requirements are designed to provide additional information to assist readers
in evaluating future costs related to such plans. Additionally, the revised
disclosures are designed to provide changes in the components of pension and
benefit costs in addition to the year end components of those factors in the
resulting asset or liability related to such plans. The statement is effective
for fiscal years beginning after December 15,1997 with earlier application
available. The Company has not yet determined the impact of adopting this
statement.
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.
PROPOSED MERGER
On December 29,1997, the Board of Directors announced the execution of a
definitive agreement pursuant to which the Company will merge with and into
Citizens Financial Services, FSB of Munster, Indiana. In connection with the
merger, Citizens Financial will undertake to convert from a mutual to a stock
institution and form a holding company. Under the terms of the agreement, each
share of the Company will be exchanged for shares of Citizens' common stock
with an initial conversion offering price equivalent to $36, based on the
initial public offering price of Citizens' common stock. Consummation of the
merger is subject to the approval of the Company's stockholders, the conversion
of Citizens and all regulatory approvals. The transaction is expected to close
in the third quarter of 1998.
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 May 8, 1998, the Company had purchased 43,907
shares. As part of the merger negotiations, the Company agreed to make no
further purchases of its stock.
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SUBURBFED FINANCIAL CORP.
<TABLE>
<S> <C>
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
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
</TABLE>
12
<PAGE> 15
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: May 8, 1998 BY:(s) /s/ Daniel P. Ryan
-------------------------
Daniel P. Ryan
Chairman
President and
Chief Executive Officer
DATE: May 8, 1998 BY:(s) /s/ Steven E. Stock
-------------------------
Steven E. Stock
Senior Vice President
Chief Financial and
Accounting Officer
14
<PAGE> 1
SUBURBFED FINANCIAL CORP
EXHIBIT 11
STATEMENT REGARDING COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1998
--------------
<S> <C>
Net Income $ 585,564
===========
Weighted average shares outstanding 1,269,208
===========
Basic earnings per share $ .46
===========
Total weighted average common shares
Outstanding for basic computation 1,269,208
Common stock equivalents due to
Dilutive effect of stock options 131,090
-----------
Total weighted average common shares and
Equivalents outstanding for diluted computation 1,400,298
===========
Diluted earnings per share $ .42
===========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
The schedule contains summary financial information extracted from the Form 10-Q
for the 3 month period ended March 31, 1998 and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 3,649,228
<INT-BEARING-DEPOSITS> 4,163,252
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 1,907,889
<INVESTMENTS-HELD-FOR-SALE> 51,594,379
<INVESTMENTS-CARRYING> 78,831,726
<INVESTMENTS-MARKET> 78,879,787
<LOANS> 294,010,448
<ALLOWANCE> 745,039
<TOTAL-ASSETS> 446,474,651
<DEPOSITS> 320,968,223
<SHORT-TERM> 26,662,000
<LIABILITIES-OTHER> 6,114,472
<LONG-TERM> 62,700,000
0
0
<COMMON> 13,739
<OTHER-SE> 30,016,217
<TOTAL-LIABILITIES-AND-EQUITY> 446,474,651
<INTEREST-LOAN> 5,473,200
<INTEREST-INVEST> 2,134,081
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 7,607,281
<INTEREST-DEPOSIT> 3,580,689
<INTEREST-EXPENSE> 4,831,896
<INTEREST-INCOME-NET> 2,775,385
<LOAN-LOSSES> 60,000
<SECURITIES-GAINS> 266,484
<EXPENSE-OTHER> 2,715,072
<INCOME-PRETAX> 914,564
<INCOME-PRE-EXTRAORDINARY> 585,564
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 585,564
<EPS-PRIMARY> 0.46
<EPS-DILUTED> 0.42
<YIELD-ACTUAL> 2.58
<LOANS-NON> 3,779,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 731,692
<CHARGE-OFFS> 46,653
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 745,039
<ALLOWANCE-DOMESTIC> 20,255
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 724,784
</TABLE>
