<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
(Amendment No. 2)<F1>
Pennwood Bancorp, Inc.
(Name of Issuer)
Common Stock, having $.01 par value
(Title of Class of Securities)
708904107
(CUSIP Number)
Jerome H. Davis
c/o David M. Perlmutter, Esq.
200 Park Ave., Suite 4515, New York, NY 10166
(212) 986-4900
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
February 11, 1998
(Date of Event Which Requires Filing of this Statement)
If the filing person has previously filed a statement on
Schedule 13G to report the acquisition which is the subject of this
Schedule 13D, and is filing this schedule because of Rule 13d-1
(b)(3) or (4), check the following box / /.
Note: Six copies of this statement, including all
exhibits, should be filed with the Commission. See Rule 13d-1(a)
for other parties to whom copies are to be sent.
(Continued on following pages)
_________________________
<F1>
1 The remainder of this cover page shall be filled out for a
reporting person's initial filing of this form with respect to the
subject class of securities, and for any subsequent amendment
containing information which would alter disclosures provided in a
prior cover page.
The information required on the remainder of this cover page shall
not be deemed to be "filed" for the purpose of Section 18 of the
Securities Exchange Act of 1934 or otherwise subject to the
liabilities of that section of the Act but shall be subject to all
other provisions of the Act (however, see the Notes).
Page 1 of 10 Pages
<PAGE>
CUSIP No. 708904107
_________________________________________________________________
1. Name of Reporting Person Jerome H. Davis
_________________________________________________________________
S.S. or I.R.S. Identification ###-##-####
No. of Above Person
_________________________________________________________________
2. Check the Appropriate Box (a)______
if a Member of a Group (b)___X__
(See Instructions)
_________________________________________________________________
3. SEC Use Only
_________________________________________________________________
4. Source of Funds (See Instructions)
PF
_________________________________________________________________
5. Check Box if Disclosure of Legal
Proceedings is Required / /
Pursuant to Items 2(d) or 2(e)
_________________________________________________________________
6. Citizenship or Place of
Organization United States
_________________________________________________________________
Number of 7. Sole Voting Power 9,100
Shares 8. Shared Voting
Beneficially Power 39,500*<F2>
Owned by 9. Sole Dispositive
Each Report- Power 9,100
ing Person 10. Shared Dispositive
with Power 39,500*<F2>
_________________________________________________________________
11. Aggregate Amount Beneficially
Owned by Each Reporting Person 48,600*<F2>
_________________________________________________________________
12. Check Box if the Aggregate Amount
in Row (11) Excludes Certain / /
Shares (See Instructions)
_________________________________________________________________
13. Percent of Class Represented
by amount in Row (11) 8.82%
_________________________________________________________________
14. Type of Reporting Person IN
(See Instructions)
_________________________________________________________________
<F2>
* See Items 5(a) and 5(b) of this Statement.
Page 2 of 10 Pages
<PAGE>
CUSIP No. 708904107
_________________________________________________________________
1. Name of Reporting Person Susan B. Davis
_________________________________________________________________
S.S. or I.R.S. Identification ###-##-####
No. of Above Person
_________________________________________________________________
2. Check the Appropriate Box (a)______
if a Member of a Group (b)___X__
(See Instructions)
_________________________________________________________________
3. SEC Use Only
_________________________________________________________________
4. Source of Funds (See Instructions)
PF
_________________________________________________________________
5. Check Box if Disclosure of Legal
Proceedings is Required / /
Pursuant to Items 2(d) or 2(e)
_________________________________________________________________
6. Citizenship or Place of
Organization United States
_________________________________________________________________
Number of 7. Sole Voting Power -0-
Shares 8. Shared Voting
Beneficially Power 48,600*<F3>
Owned by 9. Sole Dispositive
Each Report- Power -0-
ing Person 10. Shared Dispositive
with Power 48,600*<F3>
________________________________________________________________
11. Aggregate Amount Beneficially
Owned by Each Reporting Person 48,600*<F3>
_________________________________________________________________
12. Check Box if the Aggregate Amount
in Row (11) Excludes Certain / /
Shares (See Instructions)
_________________________________________________________________
13. Percent of Class Represented
by amount in Row (11) 8.82%
_________________________________________________________________
14. Type of Reporting Person IN
(See Instructions)
__________________________________________________________________
<F3>
* See Items 5(a) and 5(b) of this Statement. For purposes of
this Statement Susan B. Davis may be deemed, pursuant to Rules
13d-3(a)(1) and 13d-3(a)(2) under the Securities Exchange Act of
1934, as amended, to be the beneficial owner of 9,100 shares of
the Company's Common Stock, par value $.01 per share, held in the
name of her husband, Jerome H. Davis.
Page 3 of 10 Pages
<PAGE>
The Statement on Schedule 13D (the "Statement") of
Jerome H. Davis, with respect to the Common Stock, par value $.01
per share ("Common Stock") of Pennwood Bancorp, Inc., a
Pennsylvania corporation ("Pennwood") is hereby amended as set
forth below.
Item 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
"Mr. and Mrs. Davis paid an aggregate of $80,250.00 for
an aggregate of 4,000 shares of Common Stock in over-the-counter
transactions through standard brokerage accounts maintained by
them. All shares were purchased with personal funds of Mr. and
Mrs. Davis."
Item 4. PURPOSE OF TRANSACTION.
Item 4 of the Statement is hereby supplemented by the
addition of the following:
"Mr. and Mrs. Davis originally acquired the shares of
Common Stock for investment and without any purpose of changing or
influencing the control of Pennwood. However, following his review
of Pennwood's press release of February 10, 1998 regarding its
December quarterly earnings, Mr. Davis wrote to its Board of
Directors to share his recommendations for enhancing shareholder
value. A copy of Mr. Davis' February 11, 1998 letter to Pennwood's
Board of Directors containing his comments is attached hereto as
Exhibit No. 2.
In his letter Mr. Davis' comments on Pennwood's financial
results as a public company beginning with the quarter ending
September 30, 1996. During this six quarter period, Pennwood's
performance reveals the following:
- Its assets and deposits have remained stagnant;
- Interest rate spread and net interest margin are
declining;
- Its ratio of net interest income (after provision)
is to G&A is at its lowest level of the last six
quarters (1.30 to 1);
- Its ratio of G&A to assets is at its highest level
of the past 6 quarters.
Page 4 of 10 Pages
<PAGE>
Mr. Davis believes that Pennwood could have used its
capital more effectively during these past six quarters. Although
Pennwood has put some of its capital to work through repurchases of
Common Stock, it capital-to-assets ratio of 18% today remains
excessive. As a result, Pennwood's ROE of only 5.2% (annualized
for the December, 1997 quarter) remains inadequate and is the
lowest in all but one of the past six quarters. In view of these
figures, Mr. Davis states that the Common Stock trades at a lofty
and vulnerable stock price of $20.35. This is a rich 131% of book
and a rich PE multiple of 25.3 times earnings (based on $112,000 of
net income for the recent quarter, and full 550,641 shares
outstanding). According to Mr. Davis, Pennwood's financial results
does not justify the currently rich price of the Common Stock,
which may be subject to a substantial decline if Pennwood's
management does not take immediate action.
In order to improve its financial profile, Mr. Davis
believes that Pennwood should declare i) a special dividend of
$6.00 to $8.00 per share (either tax-free of taxable) and ii) a
stock split (or dividend). A special dividend of $8.00 will still
leave Pennwood with an ample capital ratio of approximately 9.5%
and result in a ROE above 9%, which is almost double its current
level. In view of Pennwood's present 18% capital ratio, Pennwood
should return a good portion of this capital to its shareholders,
with cash for reinvestment and improve Pennwood's balance sheet.
By issuing a stock split (or dividend), Pennwood will substantially
aid the liquidity of the Common Stock. Mr. Davis points out that
on February 11, 1998 the bid and asked prices for the Common Stock
were $20.25 - $22.50, a spread of two and a quarter points. This
is an enormous 11.1% of the bid.
Mr. Davis concludes his letter by stating his position
that implementing both of his recommendations will only result in
a substantial net benefit to all of Pennwood's shareholders. Mr.
Davis plans to engage in further communications and discussions
with Pennwood's Board of Directors and management regarding the
matters discussed in his letter. Other than as described above,
Mr. and Mrs. Davis do not have any plan or proposal which relates
to or would result in any of the actions enumerated in Item 4 of
Schedule 13D, except that Mr. and Mrs. Davis may dispose of some or
all of the Common Stock or may acquire additional shares of Common
Stock, from time to time, depending upon price and market
conditions, evaluation of alternative investments, and other
factors."
Page 5 of 10 Pages
<PAGE>
Item 5. INTEREST IN SECURITIES OF THE ISSUER.
A. Paragraphs (a) and (b) of Item 5 of the Statement
are amended and restated in their entirety to read as follows:
"(a) The aggregate number of shares of Common Stock
beneficially owned by Mr. and Mrs. Davis for the purpose of this
Statement is 48,600 shares, representing 8.82% percent of the
outstanding shares of Common Stock, based on 550,641 shares of
Common Stock disclosed by Pennwood as outstanding on February 12,
1998. Of such shares, 9,100 (1.65%) are held in the name of Mr.
Davis, and 39,500 (7.17%) are held in the name of Mr. and Mrs.
Davis.
(b) (i) Subject to the matters referred to in paragraph
(a) hereof, Mr. Davis has sole power to vote or direct the vote and
sole power to dispose or direct the disposition of the 9,100 shares
of Common Stock owned by him, and shared power to vote or direct
the vote and shared power to dispose or direct the disposition of
the 39,500 shares of Common Stock jointly owned by him and Mrs.
Davis.
(ii) Subject to the matter referred to in paragraphs
(a) and (b)(i) hereof, Mrs. Davis has shared power to vote or
direct the vote and shared power to dispose or direct the
disposition of the 39,500 shares of Common Stock jointly owned by
her and Mr. Davis, and may be deemed to have shared power to vote
or direct the vote and shared power to dispose or direct the
disposition of the 9,100 shares of Common Stock owned by Mr.
Davis."
B. Paragraph (c) of Item 5 is hereby supplemented by
the addition of the following:
"A description of all transactions in the shares of
Common Stock which have been effected by Mr. and Mrs. Davis since
December 11, 1997 (the date of the most recent amendment to the
Statement) is set forth in Schedule A attached hereto and is
incorporated herein by reference."
Item 7. MATERIALS TO BE FILED AS EXHIBITS.
The information in Item 7 is hereby supplemented
by the addition of the following:
"2. Letter dated February 11, 1998 from Jerome H. Davis
to the Board of Directors of Pennwood"
Page 6 of 10 Pages
<PAGE>
Signature.
After reasonable inquiry and to the best knowledge and
belief of the undersigned, the undersigned certify that the
information set forth in this amendment is true, complete and
correct.
2/11/98 Jerome H. Davis
Date (Signature)
2/11/98 Susan B. Davis
Date (Signature)
Page 7 of 10 Pages
<PAGE>
<TABLE>
Schedule A
Information with Respect to Transactions in the
Common Stock of Pennwood Bancorp, Inc.
By Jerome H. Davis and Susan B. Davis
<CAPTION>
Date of No. of Shrs Price Per Shr Where How
Transa- Purchased (excl. commis- Trans- Trans-
tion (Sold) sions) acted acted
<S> <C> <C> <C> <C>
Jerome H. and
Susan B. Davis:
1. 1/15/98 2,000 $20.00 OTC *<F4>
2. 1/15/98 2,000 $20.125 OTC *<F4>
_________________________________
<FN>
<F4>
* Transaction effected in the over-the-counter market ("OTC")
through a standard brokerage account maintained by Mr. and/or
Davis.
</FN>
</TABLE>
Page 8 of 10 Pages
Exhibit No. 2
February 11, 1998
The Board of Directors
Pennwood Savings Bank
683 Lincoln Ave.
Pittsburgh, PA 15202
To The Board:
I have examined your February 10th press release containing
second quarter earnings. I have compared your results for this
quarter (ended 12/31/97) to all your previous quarters as a public
company, starting with 9/30/96. I am disappointed by what I see,
and I am disappointed by what I don't see.
I see a company whose assets and deposits have remained
stagnant over these 6 quarters; a company whose book value per
share has increased only 5 cents per share, from $15.37 (at 12/96)
to $15.42 (12/97), based upon full shares outstanding at each
period (610,128 at 12/31/96 and 550,641 at 12/31/97). Interest
rate spread and net interest margin are declining. Your ratio of
net interest income (after provision) to G&A is at the lowest level
of the last 6 quarters (1.30 to 1, now). Your ratio of G&A to
assets is at the highest level of the past 6 quarters (3.17% now).
Capital could have been used more effectively over these past
6 quarters, as evidenced by your currently excessive capital-to-
assets ratio of 18%, and by your inadequate ROE of only 5.2%
(annualized for the December quarter). This is the lowest ROE of
any of the past 6 quarters, except one.
Yet our stock trades at a lofty and vulnerable (based on
financial results) stock price of $20.25, a rich 131% of book and
a rich PE multiple of 25.3 times earnings (based on $112,000 of net
income for the recent quarter, and full 550,641 shares). In my
view the numbers you are putting up do not justify such a rich
stock price, and I fear the stock will decline substantially if
management does not take action now.
Page 9 of 10 Pages
<PAGE>
The Board of Directors
Pennwood Savings Bank
February 11, 1998
Page 2
What I don't see:
A) A special dividend of $6.00 to $8.00 per share, either
tax-free or taxable. Even an $8.00 dividend leaves our company
with a more-than-adequate 9.5% capital ratio. And, the ROE almost
doubles to better than 9%.
You have been public 19 months and our company's profile
remains lackluster. With an 18% capital ratio, it is time to
return a generous portion of it to the owners of the company. The
balance sheet will look so much better and shareholders will have
cash-in-pocket for re-investment. And, the stock price, net of the
dividend, will improve further.
B) A stock split (or dividend). With only 550,641 shares
outstanding, our company stock lacks liquidity. The bid and asked
today is $20.25 - $22.50, a spread of 2.25 points, or a whopping
11.1% of the bid.
The effect of implementing both A and B will be of substantial
net benefit to all shareholders.
I ask for actions on my concerns.
Very truly yours,
Jerome H. Davis
cc: Charles Frank
Mary M. Frank
Paul S. Pieffer
John B. Mallon
C. Joseph Touhill
Robert W. Hannon
Michael Kotyk
H.J. Zoffer
Page 10 of 10 Pages
