UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
___________________________
FORM 10-Q
___________________________
(Mark One)
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended 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 Number 0-20335
OSB Financial Corp.
----------------------------------------------------------
(Exact name of registrant as specified in its charter)
Wisconsin 39-1726499
-------------------------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) identification No.)
420 S. Koeller Street, Oshkosh, Wisconsin 54901
--------------------------------------------- --------
(Address of principal executive offices) Zip Code
Registrant's telephone number,
including area code: (414) 236-3680
--------------
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 twelve (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 ninety (90) days.
Yes __X__ No ____
As of October 31, 1996, there were 1,111,484 shares of the
Registrant's Common Stock, $.01 par value per share, issued and
outstanding.
<PAGE> 2
OSB FINANCIAL CORP
INDEX FORM 10-Q
Part I - Financial Information Page Number
-----------
Unaudited Consolidated Statements of Financial 3
Condition as of September 30, 1996 and
December 31, 1995
Unaudited Consolidated Statements of Income for the 4
Quarters Ended September 30, 1996 and 1995, and
Nine Month Periods Ended September 30, 1996 and 1995
Unaudited Consolidated Statements of Cash Flows for the 6
Quarters Ended September 30, 1996 and 1995,
and Nine Month Periods Ended September 30, 1996
and 1995
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial 10
Condition and Results of Operations
Part II - Other Information 16
Signatures 17
<PAGE> 3
Item 1. Financial Statements
OSB FINANCIAL CORP and SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands)
<TABLE>
<CAPTION>
at September 30, at December 31,
1996 1995
---------------- ---------------
ASSETS
<S> <C> <C>
Cash and Cash Equivalents $1,077 $3,789
Investment Securities Available for Sale, at fair market value 25,306 29,763
Mortgage-backed Securities Available for Sale, at fair market value 44,614 49,838
Loans Held for Sale 163 3,070
Loans Receivable 170,569 165,392
Other Assets 8,736 8,962
------------ ------------
TOTAL ASSETS $250,465 $260,814
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposit Accounts $161,802 $156,782
Borrowed Funds 50,710 64,335
Other Liabilities 6,907 7,064
------------ ------------
Total Liabilities 219,419 228,181
------------ ------------
Stockholders' Equity :
Common Stock (1,530,000 shares at $.01 par value at 15 15
September 30, 1996; 1,518,000 shares at December 31, 1995)
Additional Paid-in Capital 17,029 16,883
Retained Earnings, substantially restricted 24,147 23,909
Unearned Compensation, ESOP (544) (615)
Unearned Compensation, MRP's (681) (689)
Unrealized Loss on Securities Available for Sale - Net of Tax (486) (37)
------------ ------------
39,480 39,466
Less: 369,866 Shares of Treasury Common Stock at
September 30, 1996; 302,498 at December 31, 1995, at cost (8,434) (6,833)
------------ ------------
Total Stockholders' Equity 31,046 32,633
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $250,465 $260,814
============ ============
</TABLE>
See attached notes to Consolidated Financial Statements.
<PAGE> 4
OSB FINANCIAL CORP and SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
<TABLE>
<CAPTION>
For the Quarter For the Nine Months
Ended September 30, Ended Setpember 30,
1996 1995 1996 1995
---- ---- ---- ----
Interest Income on Loans
<S> <C> <C> <C> <C>
Mortgage Loans $2,570 $2,729 $8,074 $7,834
Other Loans 706 425 1,858 1,089
----------- ---------- ---------- ----------
Total Interest Income on Loans 3,276 3,154 9,932 8,923
----------- ----------- ---------- ----------
Interest and Dividend Income on Investment Securities
Investment Securities 357 450 999 1,415
Mortgage-backed Securities 864 806 2,474 2,456
Dividends - FHLB Stock 54 48 162 128
Interest-bearing Deposits 50 14 145 29
---------- ---------- ---------- ----------
Total Income on Investment Securities 1,325 1,318 3,780 4,028
---------- ---------- ---------- ----------
Total Interest and Dividend Income 4,601 4,472 13,712 12,951
---------- ---------- ---------- ----------
Interest Expense:
Deposit Accounts 1,986 1,946 5,777 5,759
Borrowed Funds 728 843 2,391 2,332
---------- ---------- ---------- ----------
Total Interest Expense 2,714 2,789 8,168 8,091
---------- ---------- ---------- ----------
Net Interest Income 1,887 1,683 5,544 4,860
Provision for Loan Losses 100 30 315 153
---------- ---------- ---------- ----------
Net Interest Income after Provision for Loan Losses 1,787 1,653 5,229 4,707
---------- ---------- ---------- ----------
Non-interest Operating Income:
Loan Fees and Charges 88 52 273 242
Savings Fees and Charges - net 88 60 239 163
Other Income 51 44 177 205
---------- ---------- ---------- ----------
Total Non-interest Operating Income 227 156 689 610
---------- ---------- ---------- ----------
Gains (Losses) on Sales
Gain (Loss) on Sale of Loans 42 44 178 173
Gain (Loss) on Sale of Investments (4) 7 10 12
Gain (Loss) on Sale of Other Assets 29 0 19 0
---------- ---------- ---------- ----------
Total Gains on Sales 67 51 207 185
---------- ---------- ---------- ----------
Net Income Before Taxes and Non-Interest Expense $2,081 $1,860 $6,125 $5,502
---------- ---------- ---------- ----------
</TABLE>
See attached notes to Consolidated Financial Statements.
<PAGE> 5
OSB FINANCIAL CORP and SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
<TABLE>
<CAPTION>
For the Quarter For the Nine Months
Ended September 30, Ended Setpember 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net Income Before Taxes and Non-Interest Expense $2,081 $1,860 $6,125 $5,502
---------- ---------- ---------- ----------
Non-Interest Expense:
Compensation and Benefits 658 703 1,893 1,951
Office Buildings & Equipment 147 182 493 551
Data Processing Expense 89 78 277 231
Federal Insurance Premium 1,143 92 1,335 276
Marketing Expense 53 40 166 147
Other Expense 255 299 825 846
---------- ---------- ---------- ----------
Total Non-interest Expense 2,345 1,394 4,989 4,002
---------- ---------- ---------- ----------
Income Before Income Taxes (264) 466 1,136 1,500
Income Taxes (113) 174 382 567
---------- ---------- ---------- ----------
Net Income (151) 292 754 933
========== ========== ========== ==========
Average Common Shares Outstanding 1,111,359 1,174,149 1,127,214 1,176,079
Earnings Per Share ($0.13) $0.25 $0.67 $0.79
========== ========== ========== ===========
Cash Dividends per Share $0.16 $0.14 $0.46 $0.42
========== ========== ========== ==========
</TABLE>
See attached notes to Consolidated Financial Statements.
<PAGE> 6
OSB FINANCIAL CORP and SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
<TABLE>
<CAPTION>
For the Quarter For the Nine Months
Ended September 30, Ended September 30,
1996 1995 1996 1995
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net cash provided by (used in) operating activities $1,711 $3,273 $1,199 $493
---------- ---------- ---------- ----------
Cash flows from investing activities
Proceeds from maturities of investment securities 1,500 1,021 4,500 3,558
Proceeds from sale of investment securities 530 0 8,158 0
Purchase of investment securities (4,511) 0 (8,511) 0
Principal repayments on mortgage-backed securities 663 497 2,196 1,313
Purchase of mortgage-backed securities 0 (1,652) 0 (1,652)
Sale of mortgage backed securities 0 0 2,708 0
Net (increase) decrease in loans (2,526) (5,305) (5,177) (18,533)
(Purchases) redemptions of FHLB Stock 0 (72) (101) (906)
Capital Expenditures 0 (29) (93) (261)
Capital Expenditures on Real Estate held for investment 0 (49) (1) (294)
Proceeds from sale of Real Estate held for investment 86 114 354 114
Proceeds from sale of Foreclosed Properties 0 0 47 78
---------- ---------- ---------- ----------
Net cash provided by (used in) investing activities (4,258) (5,475) 4,080 (16,583)
---------- ---------- ---------- ----------
Cash flows from financing activies
Net increase (decrease) in deposits 387 1,027 5,020 (3,003)
Net increase (decrease) in borrowed funds (1,505) 1,350 (13,625) 17,970
Net increase (decrease) in advance payments by
borrowers for taxes and insurance 766 853 2,548 2,715
Proceeds from sale of common stock 35 80 169 126
Dividends paid to stockholders (182) (166) (502) (494)
Purchase of 11,000 shares of Treasury Common Stock
from July through September, 1995 0 (264) (1,601) (691)
---------- ---------- ---------- ----------
Net cash provided by (used in) financing activities (489) 2,880 (7,991) 16,623
---------- ---------- ---------- ----------
Net increase (decrease) in cash and cash equivalents (3,036) 678 (2,712) 533
Cash and cash equivalents at beginning 4,113 1,305 3,789 1,450
---------- ---------- ---------- ----------
Cash and cash equivalents at end $1,077 $1,983 $1,077 $1,983
========== ========== ========== ==========
</TABLE>
See attached notes to Consolidated Financial Statements.
<PAGE> 7
Notes to Consolidated Financial Statements
OSB Financial Corp. and Subsidiaries
1. The accompanying consolidated financial statements include the
accounts of OSB Financial Corp ("Holding Company"); its wholly-
owned subsidiary, Oshkosh Savings Bank ("Bank"); and OSB
Investments, Inc and Oshkosh Financial, Inc. (OFI), both wholly-
owned subsidiaries of the Bank. The data as of and for the
periods ended September 30, 1996 and 1995 are unaudited but, in
the opinion of management, reflect all accruals and adjustments
necessary for a fair statement of financial condition and results
from operations at the dates and for the periods indicated. All
such accruals and adjustments are of a normal, recurring nature.
The results of operations for the quarter ended September 30,
1996 are not necessarily indicative of results to be expected for
the entire year of 1996.
2. On May 15, 1996 the Board of Directors authorized the repurchase
of up to 5% of stock outstanding, or 55,974 shares. As of
October 31, 1996, 8,500 shares have been purchased at an average
cost of $23.20 per share. There were no purchases made during
the quarter ended September 30, 1996.
3. As a member of the Federal Home Loan Bank (FHLB) system, the Bank
may utilize various borrowing alternatives, secured by pledges of
mortgage loans and FHLB stock.
At September 30, 1996, the Bank had $50.7 million in FHLB
Advances outstanding, $500,000 of which is on an overnight line
of credit with the interest rate adjusted daily (5.56% on
September 30, 1996). The balance, $50.2 million, are fixed term
advances ranging from 3 to 48 months. Interest is payable
monthly; principal at maturity. Prepayments of principal are
generally not allowed.
Scheduled maturities of fixed-term advances are:
Fixed Rate Variable Rate
($000 omitted) ---------- -------------
$ % $ %
--- --- --- ---
1996 $ 3,350 5.65% $ 4,710 5.79%
1997 18,400 5.28 16,900 5.56
1997 3,500 5.96 2,100 5.55
1998 1,250 5.77 -- --
-------- -------- -------- --------
Total $26,500 5.44% $23,710 5.61%
======== ======== ======== ========
<PAGE> 8
4. Effective January 1, 1996, the Bank adopted SFAS No. 122,
"Accounting for Mortgage Servicing Rights". SFAS No. 122
requires accounting recognition of the rights to service mortgage
loans for others. The total cost of the mortgage loan will be
allocated between the relative fair values of the loan and the
mortgage servicing rights ("MSRs"). The cost allocated to the
MSRs will be recognized as a separate asset and amortized over
the period of estimated servicing income. Activity during the
third quarter of 1996:
Balance 7/1/96 $132,780
Additions 33,632
Less: amortization <8,283>
--------
Balance 3/31/96 $158,129
========
Retroactive application of SFAS No. 122 was prohibited, so there
is no effect on prior years. Originated servicing rights
resulting from the above adoption of SFAS No. 122, are amortized
over the estimated lives of the loans using the level yield
method, adjusted for prepayments.
The Savings Bank originates mortgage servicing rights on single-
family residential mortgage loans only. In valuing the mortgage
servicing rights recorded on such loans, the Savings Bank
stratifies the loans by contractual interest rate, and original
term to maturity.
The value of mortgage servicing rights is subject to impairment
as a result of changes in loan prepayment expectations and in
market discount rates used to value the future cash flows
associated with such assets. If actual loan prepayment activity
associated with serviced loans exceeds that which was estimated
by management at the time the mortgage servicing rights were
originally recorded, a valuation adjustment is recorded against
such assets and against the Corporation's loan servicing fee
income in the period of the prepayment.
5. In connection with the conversion on June 30, 1992, the Board of
Directors adopted the 1992 Stock Option and Incentive Plan. The
Plan was approved by stockholders on April 22, 1993.
Under the Option Plan, a number of shares equal to 10% of the
Common Stock issued in the Conversion were reserved for future
issuance by the Holding Company upon exercise of stock options to
be granted to full time employees and non-employee directors of
the Holding Company and its subsidiaries from time to time under
the Option Plan. The purpose of the Option Plan is to increase
the incentive and encourage the continued employment of key
employees by facilitating their purchase of a stock interest in
the Holding Company. The Option Plan provides for a term of ten
years after which no awards may be made.
<PAGE> 9
Plan activity includes:
Outstanding at June 30, 1996 60,425
Exercised July - September, 1996 <500>
------
Balance at September 30, 1996 59,925
As of September 30, 1996, 25,500 shares are vested and currently
exercisable.
<PAGE> 10
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations
General
-------
Management's discussion and analysis of results of operations and
financial condition is intended to assist in understanding the results
of operations and financial condition of the Corporation and the
Savings Bank. The information contained in this section should be
read in conjunction with the Consolidated Financial Statements, and
the accompanying Notes to Consolidated Financial Statements.
Legislative Update
------------------
On September 30, 1996 President Clinton signed the Omnibus
spending bill (HR3610), which included the Thrift Fund Rescue and
Relief package. Key elements of this part of the bill include:
- One-Time Special Assessment to capitalize the Savings
Association Insurance Fund (SAIF) of 65.7 basis points,
based on March 31, 1995 deposits, to be charged in the third
quarter of 1996;
- From 1997 through 1999 SAIF members will pay annual premiums
of 6.44 basis points, down from the current 23 basis points,
while Bank Insurance Fund (BIF) members pay 1.29 basis
points;
- SAIF and BIF will be merged on January 1, 1999.
- As of January 1, 2000, all institutions will pay deposit
premiums of 2.43 basis points;
- The bill also provides a number of important changes to
reduce the regulatory burden on financial institutions.
Management sees this as a positive for the Savings Bank and the
thrift industry because it resolves an enormous level of uncertainty
and alleviates a significant competitive disadvantage.
The estimated One-Time Special Assessment is $1.05 million. The
assessment will be paid in November, 1996, and has been accrued as of
September 30, 1996. The after-tax affect is $674,000, or $0.60 per
share. The annual premium for deposit insurance for the years 1997
through 1999 will decrease about $260,000 per year based on the
current deposit base. Beginning in the year 2000, the annual premium
will be reduced an additional $60,000. Thus, the payback on the One-
Time Special Assessment is less than four years.
The chart below shows the effect of the one time special
assessment on the third quarter and year to date performance.
<PAGE> 11
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
($ in 000s, except per share amounts) 1996 1995 1996 1995
---- ---- ---- ----
<C> <C> <C> <C> <C>
Before One-Time Special Assessment
Net Income $523 $292 $1,428 $933
Earnings Per Share $.47 $.25 $1.27 $.79
After One-Time Special Assessment
Net Income ($151) $292 $754 $933
Earnings (Loss) Per Share ($.13) $.25 $.67 $.79
Affect of One-Time Special Assessment on
Net Income ($674) ($674)
Earnings Per Share ($.60) ($.60)
</TABLE>
Results of Operations
---------------------
The operating results of the Savings Bank depend primarily on its
net interest income, which is the difference between interest income
on interest-earning assets, primarily loans and securities available
for sale and securities to be held for maturity, and interest expense
on interest-bearing liabilities, primarily deposits and borrowings.
The Bank's net income also is affected by the establishment of
provisions for loan losses and the level of its other income,
including fees on loans sold, deposit service charges, the result of
real estate activities, gains or losses from the sale of assets, as
well as its other expenses and income tax provisions.
Net loss for the quarter ended September 30, 1996 equaled
$151,000, compared to net income of $292,000 for the quarter September
30, 1995. The primary cause for the difference was the special one-
time FDIC assessment of $1.049 million, as discussed above. The table
below shows the effect of the assessment, as well as other material
changes between the quarters. A discussion follows.
<PAGE> 12
<TABLE>
<CAPTION>
For the Quarter
Ended September 30, Effect on
1996 1995 Net Income
---- ---- ----------
<S> <C> <C> <C>
Interest income on mortgage loans $2,570 $2,729 $ (159)
Interest income on other loans 706 425 281
Interest expense on borrowed funds (728) (843) 115
Other changes in net interest income (33)
-------- -------- --------
204
Provision for loan losses (100) (30) (70)
Special one-time FDIC assessment (1,049) 0 (1,049)
Other changes in non-interest income and expense 185
Income taxes 113 (174) 287
-------- -------- --------
Net Income (151) 292 (443)
======== ======== ========
</TABLE>
The decrease in interest income on mortgage loans of $159,000 was
due to a decrease in outstanding balances in mortgage loans of $7.0
million from December 30, 1995 to September 30, 1996. The decrease
was due to the sale of long term, fixed rate mortgage loans to the
secondary market. In order to manage interest rate risk, it is the
Savings Bank's policy to sell fixed rate mortgage loans with a term of
15 years or greater.
Interest income on other loans increased $281,000, or 66%, for
the quarter ended September 30, 1996, compared to a year earlier. The
Savings Bank has made a concerted effort to increase balances in
commercial and consumer loans. The emphasis on consumer loans has
been home equity loans and home equity lines of credit. The results
of these efforts have been an increase in outstanding balances from
$18.2 million at September 30, 1995, to $32 million at the end of the
third quarter in 1996. The increase in interest income is a direct
result of the increase in volume.
The decrease in interest expense on borrowed funds of $115,000 is
the result of repayment of advances to the Federal Home Loan Bank.
Outstanding borrowings equal $50.7 million at September 30, 1996,
compared to $56.9 million a year earlier.
Provision for loan losses equaled $100,000 for the quarter ended
September 30, 1996, compared to $30,000 for the same quarter in 1995.
As mentioned above, the bank has increased outstanding balances in
commercial and consumer loans. These types of loans do present a
somewhat higher degree of risk than residential mortgage loans.
Therefore, the Savings Bank has increased the provision for loan
losses to $1.1 million at September 30, 1996 from $770,000 a year
earlier. There have been no serious problems with the quality of the
<PAGE> 13
loan portfolio. Non-performing loans equal just 0.34% of total loans
at September 30, 1996, up slightly from 0.20% at September 30, 1995.
The loan loss reserves equal 186.45% of non-performing assets at
September 30, 1996.
The special one-time FDIC assessment has been discussed above.
The change for provision for income taxes relates directly to net
income before taxes.
Net income for nine months ended September 30, 1996 was $754,000,
compared to $933,000 for the same period in 1995. The per share
numbers are $0.67 and $0.79, respectively. The table below summarizes
the activity for the two periods.
<TABLE>
<CAPTION>
For the Nine Months
Ended September 30, Effect on
1996 1995 Net Income
---- ---- ----------
<S> <C> <C> <C>
Net interest income 5,544 4,860 684
Provision for loan losses (315) (153) (162)
Non-interest income and gains on sales 896 795 101
Special one-time FDIC assessment (1,049) 0 (1,049)
Other non-interest expense (3,940) (4,002) 62
Income taxes (382) (567) 185
-------- -------- --------
754 933 (179)
======== ======== ========
</TABLE>
Again, the special one-time FDIC assessment is the primary reason
for the decrease. The other factors are the same as the discussion
for the third quarter above. The Savings Bank's emphasis on
commercial and consumer lending contributed to the increase in net
interest income. The spread, or difference between the yield of
interest earning assets and costs of interest paying liabilities, has
improved from 2.04% on September 30, 1995 to 2.61% on September 30,
1996. Non-interest expense excluding the FDIC assessment is actually
slightly less for the nine months ended September 30, 1996 than for
the same period in 1995. And, the effect of the FDIC assessment is
$674,000 after taxes, or $0.60 per share.
Financial Condition
-------------------
Total assets have declined $10.3 million, or 3.97%, from $260.8
million at December 31, 1995 to $250.5 million at September 30, 1996.
The factors causing the decrease are summarized in the table below,
with discussion to follow.
<PAGE> 14
<TABLE>
<CAPTION>
At Sept. 30, 1996 At Dec. 31, 1995 $ Change
<S> <C> <C> <C>
Cash and cash equivalents $ 1,077 $ 3,789 $ (2,712)
Investment and mortgage-backed securities 69,920 79,601 (9,681)
Loans receivable and held for sale 170,732 168,462 2,270
----------
(10,123)
--------
Deposits 161,802 156,782
Borrowed funds 50,710 64,335 5,020
Treasury stock (8,434) (6,833) (13,625)
(1,601)
----------
(10,206)
--------
</TABLE>
The Savings Bank made the decision to rely more on retail
deposits to fund operations, and less on borrowed funds. A number of
steps have been taken to accomplish this. First, a money market index
account was introduced in late 1995. To date, that account has
attracted an excess of $15 million. There has been a campaign to
increase the number of retail checking accounts, which was successful.
These efforts have resulted in the $5 million increase in deposits.
Borrowings at the Federal Home Loan Bank of Chicago have been re-paid
when possible, funded primarily by maturities and sales of investments
and mortgage-backed securities.
All these actions helped to improve the interest rate spread,
mentioned above. Lower cost deposits replaced higher cost borrowings.
Mutual funds with a relatively low yield were sold to pay off
borrowings. Though there was relatively small over all increase in
the loan portfolio, the composition of that portfolio changed
dramatically. Higher yielding commercial and consumer loans increased
to 18% of the loan portfolio at September 30, 1996 from less than 12%
at the end of 1995.
Capital Ratios
--------------
Federal regulations require the Savings Bank to meet certain
tangible, core, and risk-based capital requirements. Tangible capital
consists of stockholders' equity minus certain intangible assets and
an adjustment for unrealized gains or losses on available for sale
securities. Core capital consists of stockholders' equity and an
adjustment for unrealized gains or losses on available for sale
securities. The risk-based capital requirements address risk related
to both recorded assets and off-balance sheet commitments and
obligations.
<PAGE> 15
The following table summarizes the Savings Bank's capital ratios
and the ratios required by regulations of the Office of Thrift
Supervision at September 30, 1996:
<TABLE>
<CAPTION>
Tangible Core Risk-Based
Capital Capital Capital
------- ------- ----------
<S> <C> <C> <C>
Bank Regulatory Percentage 10.66% 10.66% 23.39%
Required Regulatory Percentage 1.50% 3.00% 8.00%
Excess Regulatory Percentage ------- -------- --------
9.16% 7.66% 15.39%
($ in Thousands)
Bank Regulatory Capital $27,123 $27,123 $28,188
Required Regulatory Capital 3,816 7,631 9,640
Excess Regulatory Capital -------- -------- --------
$23,207 $19,492 $18,548
</TABLE>
Future Accounting Changes
-------------------------
The Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("FAS") No. 125,
"Accounting for Transfers and Servicing of Financial Assets and
Extinguishments of Liabilities" in June 1996. FAS No. 125 provides
accounting and reporting standards for transfers and servicing of
financial assets and extinguishments of liabilities. The standards
are based on consistent application of a financial-components approach
that focuses on control. Under the financial-components approach, an
entity recognizes the financial and servicing assets it controls and
the liabilities it has incurred after a transfer of financial assets.
In addition, the entity derecognizes financial assets when control has
been surrendered and derecognizes liabilities when extinguished. This
statement is required to be adopted by the Corporation for transfers
and servicing of financial assets and extinguishments of liabilities
occurring after December 31, 1996. The adoption of FAS No. 125 is not
anticipated to have a significant impact on the Corporation's
financial condition or results of operations once implemented.
<PAGE> 16
OSB Financial Corp. and Subsidiaries
-----------------------------------
Part II - Other Information
ITEM 1, LEGAL PROCEEDINGS
Neither OSB Financial Corp. nor the Savings Bank is a party to any
material legal proceedings at this time. From time to time the
Savings Bank is involved in various claims and legal actions arising
in the ordinary course of business.
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
None
<PAGE> 17
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.
OSB Financial Corp.
Date: November 1, 1996 By: /s/ James J. Rothenback
------------------ ---------------------------
James J. Rothenbach
President and Chief Executive
Officer
(Duly Authorized Officer)
Date: November 1, 1996 By: /s/ David A. Hayford
------------------ ----------------------------
David A. Hayford
Vice President - Finance
(Principal Accounting Officer)
