SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended September 30, 1996 Commission File Number 0-22186
Prestige Financial Corp.
(Exact name of Registrant as specified in its charter)
New Jersey 22-3216510
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
1 Royal Road P.O. Box 2480 Flemington, New Jersey 08822
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code 908-806-6200
N / A
Former name, former address and former fiscal year, if changed since last
report
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
if 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such report(s), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
The number of shares outstanding of the Registrant's common stock, being
the only class of capital stock outstanding, was as follows as of November
1, 1996:
Common Stock (par value $.01) 2,644,042 Shares
Table of Contents Page
Part I. Financial information
Item 1. Financial statements
Consolidated Statements of Financial Condition as
of September 30, 1996, December 31, 1995 and
September 30, 1995 3
Consolidated Statements of Income for the Three Months
Ended and Nine Months Ended September 30, 1996
and 1995 4
Consolidated Statements of Changes in Stockholders'
Equity for the Nine Months Ended September 30,
1996 and 1995 5
Consolidated Statements of Cash Flows for the Nine
Months Ended September 30, 1996 and 1995 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 8
Part II. Other information
Item 5. Other information 17
Item 6. Exhibits and reports on Form 8-K 17
Signatures 18
Item 1. Financial Statements
Prestige Financial Corp. and Subsidiary
<TABLE>
Consolidated Statements of Financial Condition (Unaudited)
(Dollars in thousands)
<CAPTION>
09/30/96 12/31/95 09/30/95
<S> <C> <C> <C>
ASSETS:
Cash and due from banks $6,428 $5,531 $4,417
Federal funds sold and
short term investments 16,225 10,525 5,875
Total cash and cash
equivalents 22,653 16,056 10,292
Loans held for sale, net 15,233 10,241 10,457
Investment securities held
to maturity, net:
Taxable
(Market value $59,937,
$42,004, and $36,710
respectively) 61,418 41,810 36,352
Exempt from Federal
income tax
(Market value $3,504,
$1,472 and $3,174
respectively) 3,498 1,460 3,162
Loans, net 113,364 103,346 99,250
...Less allowance for loan losses 1,487 1,325 1,263
Net loans 111,877 102,021 97,987
Premises and equipment, net 2,475 1,931 1,917
Accrued interest receivable 1,281 958 894
Other assets 921 1,904 1,540
TOTAL ASSETS $219,356 $176,381 $162,601
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES
Deposits:
Non-interest bearing 31,507 23,793 19,615
Interest bearing 171,656 139,724 131,659
Total deposits 203,163 163,517 151,274
Accrued interest payable 320 249 252
Accrued expenses and
other liabilities 790 557 622
TOTAL LIABILITIES 204,273 164,323 152,148
STOCKHOLDERS' EQUITY
Preferred stock (the Bank),
no par value;
$100 stated value;
200,000 shares authorized;
0, 0, and 9,000 shares
issued and outstanding
at September 30, 1996,
December 31, 1995 and
September 30, 1995, respectively - - 900
Common stock, par value $.01;
5,000,000 shares authorized;
2,643,662, 1,972,539 and
1,770,613 shares issued
and outstanding at
September 30, 1996,
December 31, 1995 and
September 30, 1995,
respectively 26 20 18
Paid in capital 13,343 11,354 9,049
Retained earnings 1,714 684 486
TOTAL STOCKHOLDERS' EQUITY 15,083 12,058 10,453
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $219,356 $176,381 $162,601
</TABLE>
See accompanying notes to Consolidated Financial Statements
Prestige Financial Corp. and Subsidiary
<TABLE>
Consolidated Statements of Income (Unaudited)
(Dollars in thousands, except per share data)
<CAPTION>
Three Months Ended Three Months Ended
September 30 September 30
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest income:
Loans $3,028 $2,621 $8,689 $7,330
Federal funds sold and short 140 145 311 337
term investments
Investment Securities:
Taxable 939 453 2,599 1,073
Exempt from Federal income tax 34 38 63 104
TOTAL INTEREST INCOME 4,141 3,257 11,662 8,844
Interest expense:
Deposits $1,969 1,550 5,570 4,045
Federal funds purchased - - 3 -
TOTAL INTEREST EXPENSE 1,969 1,550 5,573 4,045
Net interest income 2,172 1,707 6,089 4,799
Provision for loan losses 120 96 265 246
NET INTEREST INCOME AFTER
PROVISION
FOR LOAN LOSSES 2,052 1,611 5,824 4,553
Non-interest income:
Service charges on deposit
accounts 64 43 161 115
Gain on sale of loans 371 118 780 326
Other income 34 9 57 34
TOTAL NON-INTEREST INCOME 469 170 998 475
Non-interest expense:
Salaries and employee benefits 824 556 2,255 1,604
Net occupancy expense 333 259 927 771
Advertising/business development 61 52 150 136
Federal deposit insurance 1 (6) 2 126
Data processing 87 47 222 139
Other expenses 313 278 941 760
TOTAL NON-INTEREST EXPENSE 1,619 1,186 4,497 3,536
Income before provision for 902 595 2,325 1,492
income taxes
Provision for income taxes 362 257 935 643
NET INCOME $540 $338 $1,390 $849
Net income per common share:
Primary $0.20 $0.14 $0.52 $0.35
Fully diluted $0.20 $0.14 $0.52 $0.35
Weighted average shares
outstanding - primary 2,731,262 2,279,845 2,695,702 2,296,313
Weighted average shares
outstanding - fully diluted 2,731,262 2,315,542 2,695,702 2,320,994
</TABLE>
See accompanying notes to Consolidated Financial Statements
Prestige Financial Corp. and Subsidiary
<TABLE>
Consolidated Statements of Changes in Stockholders' Equity
Nine Months Ended September 30, 1996 and 1995 (Unaudited)
(Dollars in thousands)
<CAPTION>
Number of Total
Common Preferred Common Paid-In Retained Stockholders'
Shares Stock Stock Capital Earnings Equity
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1994 1,570,944 $900 $16 $7,804 $786 $9,506
Common stock issuance:
Exercise of options 26,118 - 1 116 - 117
Common stock grants 6,800 - - 60 - 60
Dividend reinvestment
plan 8,400 - - 100 - 100
10% Common stock
dividend 158,351 - 1 969 (970) -
Common stock cash dividend - - - - (132) (132)
Preferred stock cash
dividend - - - - (47) (47)
Net income - - - - 849 849
Balance, September 30, 1995 1,770,613 $900 $18 $9,049 $486 $10,453
Balance, December 31, 1995 1,972,539 - 20 11,354 684 12,058
Common stock issuance:
Exercise of warrants 6,600 - - 51 - 51
Exercise of options 5,673 - - 35 - 35
Common stock grants 7,480 - - 59 - 59
Dividend reinvestment
plan 145,378 - 1 1,819 - 1,820
401(k) plan 1,877 - - 25 - 25
Five-for-four common
stock split 504,115 - 5 - (5) -
Common stock cash dividend - - - - (355) (355)
Net income - - - - 1,390 1,390
Balance, September 30, 1996 2,643,662 $ - $26 $13,343 $1,714 $15,083
</TABLE>
See accompanying notes to Consolidated Financial Statements.
Prestige Financial Corp. and Subsidiary
<TABLE>
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1996 and 1995 (Unaudited)
(Dollars in thousands)
<CAPTION>
Nine Months Ended
09/30/96 09/30/95
<S> <C> <C>
Cash flows from operating activities:
Net income $1,390 $849
Adjustments to reconcile net income to net cash
used in operating activities:
Provision for loan losses 265 246
Depreciation and amortization 265 221
Amortization (accretion) of investment 328 (324)
securities premiums and discounts, net
Amortization of organizational costs 11 15
Increase in accrued interest receivable (323) (428)
Decrease (increase) in other assets 972 (604)
Gain on sale of loans (780) (326)
Proceeds from sale of loans held for sale 17,688 6,845
Net increase in loans held for sale (21,900) (15,944)
Increase in accrued interest payable 71 115
Increase in accrued expenses and other
liabilities 233 132
(Decrease) increase in deferred loan fees and
unearned discounts (150) 256
Common stock grants 59 60
NET CASH USED IN OPERATING ACTIVITIES (1,871) (8,887)
Cash flows from investing activities:
Proceeds from maturities of investment
securities 19,025 10,239
Principal paydowns on mortgage-backed
securities 3,470 501
Purchases of investment and mortgage-backed
securities (44,469) (27,389)
Net increase in loans (9,971) (6,987)
Capital expenditures (809) (125)
NET CASH USED IN INVESTING ACTIVITIES (32,754) (23,761)
Cash flows from financing activities:
Net increase in demand deposits, money market,
NOW and savings accounts 27,017 5,994
Net increase in certificates of deposit 12,629 22,841
Proceeds from issuance of common stock, net 1,931 217
Dividends paid (355) (179)
NET CASH PROVIDED BY FINANCING ACTIVITIES 41,222 28,873
Increase (decrease) in cash and cash
equivalents 6,597 (3,775)
Cash and cash equivalents at begining of year 16,056 14,067
Cash and cash equivalents at end of period $22,653 $10,292
Supplemental disclosure of cash flow information-
Cash paid during the year for:
Interest $5,502 $3,930
Income taxes 849 467
Transfers from loans to OREO - 375
</TABLE>
See accompanying notes to Consolidated Financial Statements
Prestige Financial Corp. and Subsidiary
Notes to Consolidated Financial Statements
(Unaudited)
1. Principles of consolidation
Prestige State Bank (the "Bank") is a wholly-owned subsidiary of Prestige
Financial Corp. The accompanying unaudited consolidated financial
statements include the accounts of Prestige Financial Corp. and its
subsidiary (the "Corporation"). All significant intercompany accounts and
transactions have been eliminated in consolidation.
2. Basis of presentation
The accompanying unaudited financial statements have been prepared in
accordance with generally accepted accounting principles for interim
financial information. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation of the financial statements
have been included. Operating results for the three months ended September
30, 1996 and for the nine months ended September 30, 1996 are not
necessarily indicative of the results that may be expected for the year
ended December 31, 1996.
3. Stockholders' Equity
On August 16, 1996 the Board of Directors approved a five cent per share
cash dividend on common stock, paid on September 30, 1996 to shareholders
of record at September 20, 1996.
On May 28, 1996 the Board of Directors approved a five cent per share cash
dividend on common stock, paid on June 28, 1996 to shareholders of record
at June 18, 1996.
On February 23, 1996, the Board of Directors approved a five cent per share
cash dividend on common stock, paid on March 29, 1996 to shareholders of
record at March 20, 1996. The Board of Directors also approved a five-for-
four stock split on common stock, payable April 19, 1996 to shareholders of
record on April 10, 1996.
Prestige Financial Corp. and Subsidiary
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Financial Condition
At September 30, 1996, total assets had reached $219.4 Million which was a
$43.0 Million, or 24.4%, increase as compared to the December 31, 1995
balance of $176.4 Million; and a $56.8 Million, or 34.9%, increase when
compared to the September 30, 1995 balance of $162.6 Million. This growth
was funded primarily from deposits (mainly "core" demand and time accounts)
which increased by $39.7 Million, or 24.3%, to $203.2 Million at September
30, 1996 as compared to $163.5 Million at December 31, 1995; and by $51.9
Million, or 34.3%, when compared to the September 30, 1995 balance of
$151.3 Million. The opening of our fourth location in Clinton Township in
May of 1996 contributed to this growth as did several CD promotions run
earlier this year in order to insure funding for above budget loan
production. In addition, continuing industry consolidation has aided our
growth as customers seek the personal service of a true "community bank".
Total Stockholders' Equity stood at $15.1 Million as of September 30, 1996
and was $3.0 Million, or 25.1%, higher than the year-end 1995 balance of
$12.1 Million; and $4.6 Million, or 44.3%, higher than the September 30,
1995 balance of $10.5 Million. These increases were primarily attributable
to increased earnings, dividends reinvested and optional cash purchases
made by shareholders in accordance with a plan adopted in the third quarter
of 1995, and a private placement of 176,000 common shares which took place
in the fourth quarter of 1995. A portion of the proceeds from the private
placement was used to redeem all outstanding shares of preferred stock in
the fourth quarter of 1995.
Within the asset composition, the above growth was primarily utilized to
fund increases in the loan and investment portfolios. As of September 30,
1996 outstanding loans, including loans held for sale, totaled $128.6
Million which was $15.0 Million, or 13.2%, more than the December 31, 1995
balance of $113.6 Million; and $18.9 Million, or 17.2%, greater than the
September 30, 1995 balance of $109.7 Million. Loan growth exhibited during
the first nine months of 1996 was positively effected by increased Small
Business Administration (SBA) loan production, as the Bank continued to
benefit from its "Preferred SBA Lender" status. For the SBA's fiscal year
ended September 30, 1996, the Bank provided a total of $47.5 Million in SBA
loan accomodations and once again led all other lending institutions in New
Jersey with $40 Million within the state. This compared with $23.9
Million in approvals within New Jersey during the same period a year ago,
and earned Prestige State Bank the SBA's Diamond Award as New Jersey's
premier SBA lender for the second consecutive year.
Loans held for sale totaled $15.2 Million at September 30, 1996 vs. $10.2
Million at December 31, 1995 and $10.5 Million at September 30, 1995. The
loans held for sale category is comprised of SBA and residential mortgage
loans which provide attractive yields as well as a ready source of
liquidity and potential gains on sales.
Investment securities (all classified as held to maturity) at September 30,
1996 amounted to $64.9 Million, an increase of $21.6 Million, or 50.0% as
compared to the December 31, 1995 balance of $43.3 Million; and higher by
$25.4 Million, or 64.3%, when compared with the September 30, 1995 balance
of $39.5 Million. This growth resulted primarily from the purchase of
securities issued by the United States government and its agencies,
including mortgage-backed securities and SBA guaranteed loan pool
certificates.
At September 30, 1996, the allowance for possible loan losses stood at
$1.487 Million --$162 Thousand more than the year-end 1995 figure of $1.325
Million and $224 Thousand more than the September 30, 1995 balance of
$1.263 Million. The increase in the first nine months of 1996 from year-end
1995 resulted from provisions of $265 Thousand and net charge-offs of $103
Thousand. The allowance as a percentage of total outstanding loans as of
September 30, 1996 was 1.16% as compared to 1.17% as of December 31, 1995,
and 1.15% as of September 30, 1995.
Non-performing loans (also classified as impaired loans under Statement of
Financial Accounting Standards No. 114) totaled $772 Thousand (.60% of
total loans) as of September 30, 1996 as compared to $11 Thousand (.01% of
total loans) as of December 31, 1995, and $38 Thousand (.03% of total
loans) as of September 30, 1995. These are loans on which accrual of
interest has been discontinued; or loans on which interest is still being
accrued but that are contractually past due 90 days or more as to interest
or principal payments.
Considering the information in the previous two paragraphs as well as other
relevant factors, management believes that the allowance for possible loan
losses is adequate. While management uses available information to
recognize losses on loans, future additions to the allowance may be
necessary based on changes in economic conditions. In addition, various
regulatory agencies, as an integral part of their examination process,
periodically review the Bank's allowance for loan losses. Such agencies
may require the Bank to recognize additions to the allowance based on their
judgments of information available to them at the time of their
examination.
Capital Adequacy.
The Federal Reserve Board (FRB) in the case of bank holding companies such
as the Corporation and the Federal Deposit Insurance Corporation (FDIC) in
the case of state banks such as the Bank have adopted risk-based capital
guidelines which require a minimum ratio of 8% of total risk-based capital
to assets, as defined in the guidelines. At least one half of the total
capital, or 4%, is to be comprised of common equity and qualifying
perpetual preferred stock, less deductible intangibles (Tier 1 capital).
Risk-based capital ratios are expressed as percentages of capital to "risk
adjusted assets" and therefore relate capital to the risk factors inherent
within a company's asset base, including off-balance sheet risk exposure.
Various weightings are assigned to different asset categories as well as
off-balance sheet exposure depending upon the risk associated with each
category. In general, less capital is required for a less risky asset
composition.
At September 30, 1996, the Corporation's and the Bank's core (Tier 1) risk-
based capital ratios were 11.90% and 11.04%, respectively, versus 10.71%
and 9.91% at December 31, 1995; and 8.79% and 9.51% at September 30, 1995.
These ratios compare favorably to a minimum of 4% as required by the FRB
and the FDIC.
At September 30, 1996, the Corporation's and the Bank's total (Tier 1 plus
Tier 2) risk-based capital ratios were 13.08% and 12.22%, respectively,
versus 11.89% and 11.10% at December 31, 1995; and 9.96% and 10.68% at
September 30, 1995. These ratios also compare favorably to a minimum of 8%
as required by the FRB and the FDIC.
The FRB and the FDIC have supplemented the risk-based capital guidelines
with an additional capital ratio referred to as the leverage ratio or core
capital ratio. The regulations require financial institutions to maintain
a minimum leverage ratio of 4% to 5%, depending upon the condition of the
institution.
At September 30, 1996, the Corporation's and the Bank's leverage ratios
were 6.96% and 6.61%, respectively, versus 6.81% and 6.32% at December 31,
1995; and 5.85% and 6.33% at September 30, 1995. Again, these ratios
compare favorably with existing guidelines established by the FRB and the
FDIC.
It should be noted that additional capital raised by the Corporation via
the dividend reinvestment plan and the exercise of options and warrants
provide the ability to downstream capital from the parent company to the
Bank should the Bank's capital ratios require it.
Liquidity.
The liquidity position of the Corporation is dependent upon the successful
management of its assets and liabilities so as to meet the needs of both
deposit and credit customers. Liquidity needs arise principally to
accommodate possible deposit outflows and to meet customers' requests for
loans. Such needs can be satisfied by maturing loans and investments, short
term liquid assets, and the ability to raise short-term funds from external
sources.
So far, virtually all funding needs have been met via the acquisition of
deposits, and not through other sources such as borrowings or securities
sold under repurchase agreements. In addition, the total of all liquid
assets (e.g. Federal funds sold, short term investments, assets available
for sale) as measured against what may be considered volatile liabilities
(i.e. short term $100,000 certificates of deposit) produced liquidity
ratios of 488% for September 30, 1996, versus 332% for December 31, 1995,
and versus 261% for September 30, 1995. All of these are considered by
management to be satisfactory.
Interest Rate Sensitivity.
The management of interest rate risk is also important to the profitability
of the entity. Interest rate risk arises when an earning asset matures or
has its interest rate change in a time period different from that of a
supporting interest bearing liability; or when an interest bearing
liability matures or has its interest rate change in a time period
different from that of an earning asset that it supports. While the
Corporation does not match specific assets and liabilities, total earning
assets and interest bearing liabilities are grouped to determine the
overall interest rate risk within a number of specific time frames.
Interest sensitivity analysis attempts to measure the responsiveness of net
interest income to changes in interest rate levels. The difference between
interest sensitive assets and interest sensitive liabilities is referred to
as the interest sensitivity gap. At any given point in time, the
Corporation may be in an asset-sensitive position, meaning its interest-
sensitive assets exceed its interest-sensitive liabilities; or in a
liability-sensitive position, whereby its interest-sensitive liabilities
exceed its interest-sensitive assets. These positions may expose the
Corporation to possible future gain or loss of net interest income,
depending upon which way interest rates move.
Management attempts to keep interest sensitive assets and liabilities as
evenly matched as possible within the three, six, and twelve month time
frames.
As of September 30, 1996 there was a cumulative twelve month gap of
negative $24.1 Million as compared to a negative $18.1 Million gap as of
December 31, 1995 and a negative $20.6 Million gap as of September 30,
1995. In the worst of these cases, the percentage of imbalance from a
perfectly matched 100% was 23%. Management does not, however, consider
this to be of concern as this represents what is known as the "static gap"
measure of assets to liabilities.
From this simplistic static gap viewpoint, a negative gap may be expected
to cause reductions in net interest income in a rising rate environment and
enhance net interest income in a declining rate environment. However, the
repricing of liabilities can be, and often are, "lagged" behind earning
asset rate increases, or exaggerated when rates decrease, in order to
offset the gap's effects. In addition, rate sensitive assets may reprice
at different frequencies than rate sensitive liabilities within the twelve
month time frame, further offsetting the gap's effects. With such
considerations factored into a more meaningful "dynamic gap" model, the
Corporation's September 30, 1996 position indicated that an increase in
average interest rates would, in fact, have a positive impact on net
interest income. Conversely, a drop in rates would likely have a somewhat
negative impact on net interest income over the twelve months thereafter.
Incidentally, the introduction of a flat interest rate scenario into this
dynamic gap model projects improvement in the net interest margin for the
twelve months thereafter.
Results of Operations
Net income for the first nine months of 1996 amounted to $1.390 Million com-
pared to $849 Thousand for the same period in 1995. Related fully diluted
earnings-per-share data were: $.52 per share for the first nine months of
1996 versus $.35 per share for the same period in 1995. The annualized
return on average assets was .95% and .79% for the first nine months of
1996 and 1995, respectively. The annualized return on average shareholders'
equity was 13.92% and 11.38% for the first nine months of 1996 and 1995,
respectively.
Net income for the third quarter ended September 30, 1996 was $540 Thousand
compared to $338 Thousand for the same period in 1995. Related fully
diluted earnings per share were: $.20 per share for the third quarter of
1996 versus $.14 per share for the same period in 1995. The annualized
return on average assets was 1.02% and .87% for the third quarter of 1996
and 1995, respectively. The annualized return on average shareholders'
equity was 14.97% and 13.21% for the third quarter of 1996 and 1995,
respectively.
Net Interest Income.
The $1.290 Million, or 26.9%, increase in net interest income reflected in
the first nine months of 1996 (at $6.089 Million) over the same period in
1995 (at $4.799 Million) was attributable to an increase in higher yielding
loan and investment volume coupled with a decline in the cost of supporting
funds, as higher yielding certificates of deposit have run off and non-
interest bearing demand deposit accounts have grown.
The $465 Thousand, or 27.2%, increase in net interest income reflected in
the third quarter of 1996 (at $2.172 Million) over the same period in 1995
(at $1.707 Million) was attributable to the same factors as discussed in
the above comparisons of the first nine months of 1996 and 1995.
Noninterest Income.
For the first nine months of 1996 noninterest income increased $523
Thousand or 110.1% to $998 Thousand, up from $475 Thousand for the same
period in 1995.
This increase was primarily attributable to the gains from sales of loans
which amounted to $780 Thousand during the first nine months of 1996 versus
$326 Thousand in the first nine months of 1995. Virtually all of the
increase in gains on loan sales was due to a higher volume of loans sold.
As discussed earlier, SBA loan production is up considerably, with the Bank
recognized as the leading SBA lender in New Jersey and carrying the
designation of "Preferred Lender" in New York and Pennsylvania as well.
In addition, the Corporation's recently established residential mortgage
division has begun making contributions to the gains on loans sold,
accounting for $80 Thousand in gains during the first nine months of 1996
vs. no gains in 1995. Management expects the ongoing origination and sale
of residential mortgages to help control reliance on sales of SBA loans,
allowing the higher yielding SBA loans to accumulate and help maintain a
satisfactory net interest margin.
Partially offsetting gains on loan sales was a loss of $50 Thousand
incurred in July, 1996 on the sale of $5.5 Million in unguaranteed portions
of SBA loans as management took advantage of an opportunity to reduce
overall risk within the Bank's loan portfolio.
For the third quarter of 1996, noninterest income increased $299 Thousand
or 175.9% to $469 Thousand, up from $170 Thousand for the same period in
1995. This increase was primarily attributable to the gains from sales of
loans which amounted to $371 Thousand during the third quarter of 1996
versus $118 Thousand in the third quarter of 1995.
Noninterest Expense.
For the first nine months of 1996 as compared to the same period in 1995,
total noninterest expense increased by $961 Thousand, or 27.2%, to $4.497
Million from $3.536 Million.
Salaries and benefits accounted for $651 Thousand of the above increase due
to the January 1 effective date for all pay increases, the addition of
staff resulting from the opening of the Clinton Township branch in May
1996, and overall growth in personnel to service the Corporation's growing
customer base.
Occupancy related expenses increased $156 Thousand for the first nine
months of 1996 versus the same period in 1995 primarily due to the opening
of the Clinton Township branch and the leasing of additional office space
in the Bank's Royal Road Headquarters building. The additional space was
necessary to house the Bank's growing residential mortgage operation,
increased commercial lending staff, and increased operational staff
necessary to manage above-budget growth in both the number and dollar
volume of new business.
Federal deposit insurance premiums decreased by $124 Thousand for the first
nine months of 1996 versus the same period in 1995 despite deposit growth
because of a rate reductions on Federal deposit insurance premiums
instituted in mid-1995.
Data Processing costs contributed another $83 Thousand to the increase in
noninterest expense from the nine months ended September 30, 1996 compared
to the nine months ended September 30, 1995, primarily as a result of
increased volume.
Printing, stationery and supplies expense increased by $39 Thousand,
postage/telecommunications costs rose by $25 Thousand, and checkbook costs
rose by $33 Thousand for the first nine months of 1996 compared to the
first nine months of 1995. These increases in other expenses are
attributed to increased volume. In addition, professional, directors, and
supervisory exam fees for the nine months ended September 30, 1996 rose by
$63 Thousand versus the same period in 1995.
For the third quarter of 1996 compared to the same period in 1995, total
noninterest expenses rose by $433 Thousand, or 36.5%, to $1.619 Million
from $1.186 Million.
Salaries and benefits accounted for $268 Thousand of the above increase due
to the addition of staff for the Clinton Township branch and growth in
personnel to service the Corporation's growing customer base.
Occupancy related expenses increased $74 Thousand for the third quarter of
1996 versus the same period in 1995 for the reasons noted in the nine month
comparison above.
Data Processing costs contributed another $40 Thousand to the increase in
noninterest expense from the third quarter of 1996 compared to the third
quarter of 1995 as a result of increased volume.
Printing, stationery and supplies expense increased by $7 Thousand,
postage/telecommunications costs rose by $2 Thousand, and checkbook costs
rose by $7 Thousand for the third quarter of 1996 compared to the third
quarter of 1995. These increases in other expenses are attributed to
increased volume. In addition, professional, directors, and supervisory
exam fees for the third quarter ended September 30, 1996 rose by $18
Thousand versus the same period in 1995.
As some indication of the Corporation's control over noninterest expenses
(though combining it with a measure of the Corporation's ability to produce
noninterest income), the "efficiency ratio" (noninterest expense divided by
the sum of taxable equivalent net interest income and noninterest
income)improved to 63% from 65% for the first nine months of 1996 vs. the
first nine months of 1995; and to 61% from 62% for the third quarter 1996
vs. the third quarter 1995. More strictly directed at noninterest expense
control, the "overhead ratio" (annualized noninterest expense over average
assets for the period) also showed considerable improvement. This overhead
percentage was 3.07% and 3.06% for the first nine months and third quarter
1996, respectively; as compared to 3.30% and 3.05% for the first nine
months and third quarter 1995, respectively.
Provisions for Loan Losses.
For the first nine months of 1996 as compared to the first nine months of
1995, the provision for loan losses increased by $19 Thousand. For the
third quarter of 1996 as compared to the third quarter of 1995, the
provision for loan losses increased by $24 Thousand. Provisions are made
as necessary to maintain the allowance for loan losses at targeted levels
as measured against total loans and/or past due accounts. As discussed
previously, the Corporation's non-performing loans at September 30, 1996
amounted to just .60% of total loans.
Part II Other Information
Item 5. Other Information
On November 6,1996, the Corporation filed an amendment to its
Form S-3 Registration with the Securities Exchange Commission. The
amendment provides that the Corporation's Dividend Reinvestment Plan will
now allow shares of the Corporation's common stock to be purchased at a 5%,
rather than 10% discount from the market price, and optional quarterly cash
payments for purchases of shares may not exceed $5,000, rather than
$25,000.
Item 6. Exhibits and reports on Form 8-K
(a)(11) Statement on Computation of per-share earnings
Net income per-share is calculated as net income less preferred
stock dividends, if any, divided by weighted average shares outstanding (as
adjusted for the assumed exercise of dilutive common stock equivalents,
using the treasury stock method). All weighted average shares outstanding
reflect the five-for-four stock split effective on April 19, 1996 and
the 10% common stock dividend effective on March 31,1995.
(a)(27) Financial Data Schedule
(b) No reports on Form 8-K were filed during the quarter ended
September 30, 1996.
Prestige Financial Corp.
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.
Prestige Financial Corp.
(Registrant)
By: /s/ Robert J. Jablonski
Robert J. Jablonski
Chief Executive Officer and
Treasurer/Principal
Financial Officer
Date: November 12, 1996
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from SEC Form 10Q
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-30-1996
<PERIOD-END> SEP-30-1996
<CASH> 6,428
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 16,225
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 64,916
<INVESTMENTS-MARKET> 63,441
<LOANS> 128,597
<ALLOWANCE> 1,487
<TOTAL-ASSETS> 219,356
<DEPOSITS> 203,163
<SHORT-TERM> 0
<LIABILITIES-OTHER> 790
<LONG-TERM> 0
0
0
<COMMON> 26
<OTHER-SE> 15,057
<TOTAL-LIABILITIES-AND-EQUITY> 219,356
<INTEREST-LOAN> 8,689
<INTEREST-INVEST> 2,662
<INTEREST-OTHER> 311
<INTEREST-TOTAL> 11,662
<INTEREST-DEPOSIT> 5,570
<INTEREST-EXPENSE> 5,573
<INTEREST-INCOME-NET> 6,089
<LOAN-LOSSES> 265
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<EXPENSE-OTHER> 4,497
<INCOME-PRETAX> 2,325
<INCOME-PRE-EXTRAORDINARY> 1,390
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,390
<EPS-PRIMARY> .52
<EPS-DILUTED> .52
<YIELD-ACTUAL> 4.35
<LOANS-NON> 442
<LOANS-PAST> 330
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,325
<CHARGE-OFFS> 108
<RECOVERIES> 5
<ALLOWANCE-CLOSE> 1,487
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<ALLOWANCE-UNALLOCATED> 190
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