<PAGE> 1
==============================================================================
U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1997
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 001-12212
DRUMMOND FINANCIAL CORPORATION
(Exact name of Registrant as specified in its charter)
Delaware 95-4426690
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
6 Rue Charles-Bonnet, 1206 Geneva, Switzerland
(Address of principal executive offices)
(41 22) 818 2999
(Registrant's telephone number)
Suite 1250, 400 Burrard Street, Vancouver, British Columbia, Canada V6C 3A6
(Former name, former address and former fiscal year
if changed since last report)
Check whether the Registrant (1) filed all reports required to be filed by
Section 13 or 15 (d) of the Exchange Act during the past 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
----- -----
State the number of shares outstanding of each of the Registrant's classes of
common equity, as of the latest practicable date:
Class Outstanding at February 12, 1998
----- --------------------------------
Common Stock, $0.01 2,718,600
par value
Transitional Small Business Disclosure Format: Yes No X
----- -----
==============================================================================
<PAGE> 2
FORWARD-LOOKING STATEMENTS
Statements in this report, to the extent that they are not based on historical
events, constitute forward-looking statements. Forward-looking statements
include, without limitation, statements regarding the outlook for future
operations, forecasts of future costs and expenditures, evaluation of market
conditions, the outcome of legal proceedings, the adequacy of reserves, or
other business plans. Investors are cautioned that forward-looking statements
are subject to an inherent risk that actual results may vary materially from
those described herein. Factors that may result in such variance, in addition
to those accompanying the forward-looking statements, include changes in
interest rates, prices, and other economic conditions; actions by competitors;
natural phenomena; actions by government authorities; uncertainties associated
with legal proceedings; technological development; future decisions by
management in response to changing conditions; and misjudgments in the course
of preparing forward-looking statements.
PART I. FINANCIAL INFORMATION
---------------------
ITEM 1. FINANCIAL STATEMENTS
DRUMMOND FINANCIAL CORPORATION
CONSOLIDATED FINANCIAL STATEMENTS
FOR THE SIX MONTHS ENDED DECEMBER 31, 1997
(Unaudited)
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<PAGE> 3
DRUMMOND FINANCIAL CORPORATION
Consolidated Balance Sheets
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
December 31, 1997 June 30, 1997
----------------- -------------
ASSETS
<S> <C> <C>
Cash and cash equivalents $ 795 $ 1,625
Finance receivables, net 5,851 8,142
Other receivables 10,095 10,948
Due from affiliates - 541
Investments 15,907 8,035
Investment - at equity 773 917
Deferred debt issuance costs, net of accumulated
amortization 1,218 1,348
Other assets 32 4
------------- ------------
$ 34,671 $ 31,560
============= ============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Accounts payable and accrued liabilities $ 600 $ 1,788
Interest payable 1,106 964
Accrued dividends payable 300 149
Note payable 7,000 -
Bonds payable, net of principal amount
of bonds held in treasury 21,515 23,002
------------- ------------
30,521 25,903
------------- ------------
SHAREHOLDERS' EQUITY
Capital stock
Preferred stock, $0.01 par value
5,000,000 shares authorized
3,000,000 shares issued and outstanding 30 30
Additional paid-in capital 5,970 5,970
------------- ------------
6,000 6,000
------------- ------------
Common stock, $0.01 par value
10,000,000 shares authorized
4,264,000 shares issued and outstanding 43 43
Additional paid-in capital 17,767 17,767
------------- ------------
17,810 17,810
------------- ------------
Deficit (16,604) (15,097)
------------- ------------
7,206 8,713
Less: 1,545,400 common shares held as treasury
stock (3,056) (3,056)
------------- ------------
4,150 5,657
------------- ------------
$ 34,671 $ 31,560
============= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 4
DRUMMOND FINANCIAL CORPORATION
Consolidated Statements of Operations
(Unaudited)
(dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
For the Six For the Six
Months Ended Months Ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Revenue
Interest and loan fee income $ 655 $ 860
Loss on securities (106) (564)
Dividend and other 221 607
--------------- ---------------
770 903
Costs and expenses
Interest 1,245 1,860
Recovery of credit losses (176) (1,704)
General and administrative 617 840
--------------- ---------------
1,686 996
--------------- ---------------
Operating loss (916) (93)
Equity in loss of an investee (924) -
--------------- ---------------
Loss before income tax expense
and extraordinary gain (1,840) (93)
Income tax expense 1 1
--------------- ---------------
Loss before extraordinary gain (1,841) (94)
Extraordinary gain on debt extinguishment 485 -
--------------- ---------------
Net loss (1,356) (94)
Accumulated deficit, beginning of period (15,097) (17,113)
Dividends payable (151) -
--------------- ---------------
Accumulated deficit, end of period $ (16,604) $ (17,207)
=============== ===============
Loss per share
Loss before extraordinary item $ (0.73) $ (0.09)
Extraordinary gain 0.18 -
--------------- ---------------
$ (0.55) $ (0.09)
=============== ===============
Weighted average number of shares
outstanding 2,718,600 2,718,600
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 5
DRUMMOND FINANCIAL CORPORATION
Consolidated Statements of Operations
(Unaudited)
(dollars in thousands except per share amounts)
<TABLE>
<CAPTION>
For the Three For the Three
Months Ended Months Ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Revenue
Interest and loan fee income $ 370 $ 419
Loss on securities (599) (670)
Dividend and other 132 607
--------------- ---------------
(97) 356
Costs and expenses
Interest 657 942
Recovery of credit losses (163) (1,589)
General and administrative 233 634
--------------- ---------------
727 (13)
--------------- ---------------
Operating (loss) gain (824) 369
Equity in loss of an investee (758) -
--------------- ---------------
(Loss) gain before extraordinary gain (1,582) 369
Extraordinary gain on debt extinguishment 117 -
--------------- ---------------
Net (loss) income (1,465) 369
Accumulated deficit, beginning of period (15,064) (17,576)
Dividends payable (75) -
--------------- ---------------
Accumulated deficit, end of period $ (16,604) $ (17,207)
=============== ===============
(Loss) earnings per share
(Loss) earinings before extraordinary
item $ (0.61) $ 0.11
Extraordinary gain 0.05 -
--------------- ---------------
$ (0.56) $ 0.11
=============== ===============
Weighted average number of shares
outstanding 2,718,600 2,718,600
=============== ===============
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 6
DRUMMOND FINANCIAL CORPORATION
Consolidated Statement of Cash Flows
(Unaudited)
(dollars in thousands)
<TABLE>
<CAPTION>
For the Six For the Six
Months Ended Months Ended
December 31, 1997 December 31, 1996
----------------- -----------------
<S> <C> <C>
Operating activities:
Net loss $ (1,356) $ (94)
Adjustments to reconcile
net loss to net cash
used by operating activities:
Extraordinary gain on early
extinguishment of debt (485) -
Recovery of credit losses (176) (1,704)
(Gain) loss on investments, net (106) 564
Equity in loss of an investee 924 -
Amortization of deferred debt
issuance costs 71 6
---------------- ----------------
(1,128) (1,228)
Changes in non-cash working capital
balances:
Receivables (2,069) (206)
Interest receivable 355 118
Commitment fees 22 (109)
Other assets (28) (172)
Due from affiliates (239) -
Interest payable 195 (53)
Accounts payable and accrued
liabilities (1,435) (546)
---------------- ----------------
(4,327) (2,196)
Purchase of trading securities (9,507) (21,831)
Proceeds from sales of trading
securities 4,657 12,995
---------------- ----------------
Net cash used in operating
activities (9,177) (11,032)
---------------- ----------------
Investing activities:
Advances on loan receivables (5,000) (1,100)
Payments received on loan receivables 7,254 3,138
Decrease in note receivable 85 -
---------------- ----------------
Net cash provided by investing
activities 2,339 2,038
---------------- ----------------
Financing activities:
Purchase of treasury bonds (992) -
Increase in note payable 7,000 -
---------------- ----------------
Net cash provided by financing
activities 6,008 -
---------------- ----------------
Net change in cash and cash equivalents (830) (8,994)
Cash and cash equivalents,
beginning of period 1,625 14,478
---------------- ----------------
Cash and cash equivalents,
end of period $ 795 $ 5,484
================ ================
Cash paid during the period for:
Interest expense $ 1,103 $ 1,913
Income taxes $ 1 $ 1
</TABLE>
The accompanying notes are an integral part of these financial statements.
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<PAGE> 7
DRUMMOND FINANCIAL CORPORATION
Notes to Consolidated Financial Statements
December 31, 1997
(Unaudited)
Note 1. Basis of Presentation
---------------------
In accordance with Item 310 of Regulation S-B promulgated by the U.S.
Securities and Exchange Commission, the consolidated financial statements and
accompanying notes thereto have been condensed and therefore do not contain
all disclosure required by generally accepted accounting principles. These
consolidated financial statements and accompanying notes thereto should be
read in conjunction with Drummond Financial Corporation's (the "Corporation")
audited consolidated financial statements and notes thereto contained in the
Corporation's Form 10-KSB Annual Report for the fiscal year ended June 30,
1997. All dollar amounts are rounded to the nearest thousand.
In the opinion of management, the accompanying unaudited consolidated
financial statements contain all adjustments necessary to present fairly the
Corporation's financial position as of December 31, 1997, and the results of
its operations and changes in its financial position for the periods ended
December 31, 1996 and 1997, respectively. All adjustments were of a normal
recurring nature. Results for interim periods are not necessarily indicative
of those to be expected for the full year.
Certain reclassifications have been made to the prior period's financial
statements to conform to the current period's presentation.
While the Corporation reported net income in fiscal 1997 principally as a
result of an extraordinary gain on early extinguishment of debt, the
Corporation had an accumulated deficit of $15.1 million as at June 30, 1997.
The Corporation now focuses on investment and merchant banking activities
while de-emphasizing asset-based commercial lending. However, there is no
assurance that such business strategies will improve future cash flow.
Note 2. Bonds Payable
-------------
The Corporation did not make its semi-annual Bond interest payment due on
January 25, 1998. The Corporation has advised the trustee that it will make
the payment on February 17, 1998, which is within the 30 day cure period
provided for under the terms of the Bond indenture.
Note 3. Adoption of Accounting Standard Regarding Impaired Loans
--------------------------------------------------------
Under the provisions of the Financial Accounting Standards Board ("FASB")
Statement No. 114, "Accounting by Creditors for Impairment of a Loan", when a
loan is impaired as defined in the statement, a lender shall measure
impairment at the present value of expected future cash flows discounted at
the loan's effective interest rate, or as a practical expedient, based on a
loan's observable market price or the fair value of the collateral if the loan
is collateral dependent. The
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<PAGE> 8
Corporation has adopted a measurement method on a loan-by-loan basis. By
definition, the Corporation's non-performing loans are impaired. A specific
reserve is established for each impaired loan equal to the amount by which the
Corporation's recorded investment in the loan exceeds the net present value of
the loan determined in accordance with FASB Statement No. 114.
The Corporation continued to apply FASB Statement No. 5, "Accounting for
Contingencies", to provide an allowance on a pool of unimpaired loans.
As of December 31, 1997, the Corporation had identified impaired finance
receivables with a recorded investment totaling $2.1 million and had
established a specific allowance for credit losses totaling $2.1 million in
connection therewith. Finance receivables, which are also referred to as
recorded investment in loans, include the outstanding loan balance (net of any
charge-offs), any accrued interest, deferred loan fees and reimbursable costs.
The activity with regard to the allowance for credit losses during the six
months ended December 31, 1997 is as follows:
Six Months
----------
(in thousands)
Balance, beginning of period $ 3,293
Decrease in provision (176)
Charge-offs (961)
---------
Balance, end of period $ 2,156
=========
Consisted of:
Specific allowance under FASB Statement No. 114 $ 2,100
General allowance under FASB Statement No. 5 56
---------
$ 2,156
=========
The following table summarizes the calculation of net finance receivables as
at December 31, 1997:
(in thousands)
Finance receivables, gross $ 8,007
Less allowance for credit losses (2,156)
---------
Finance receivables, net $ 5,851
=========
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<PAGE> 9
The following table summarizes the Corporation's specific reserve for credit
losses prepared in accordance with FASB Statement No. 114 as at December 31,
1997:
<TABLE>
<CAPTION>
Total future
expected cash Total related Net Specific
# of Recorded collections, net costs expected to present reserve under
loans investment of related costs(1) be incurred(1)(2) value FASB No. 114
----- ---------- ------------------ ---------------- ------- -------------
<S> <C> <C> <C> <C> <C> <C>
IMPAIRED LOANS
Future cash flows:
Bankruptcy and
ceased to operate 1 $ 2,100 $ - $ - $ - $ 2,100
UNIMPAIRED LOANS 3 5,907 56(3)
--- -------- --------
Grand total 4 $ 8,007 $ 2,156
=== ======== ========
</TABLE>
- -------------------
Notes:
1. The estimate of expected cash flows represents the Corporation's best
estimate based on reasonable and supportable assumptions and projections.
2. These amounts represent future costs to be incurred in connection with the
sale of collateral and/or the collection of the loans, and are subtracted from
the net future expected cash collections.
3. The general reserve is determined in accordance with FASB Statement No. 5
on a pool of unimpaired loans.
-9-
<PAGE> 10
PART I. FINANCIAL INFORMATION
---------------------
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion and analysis of the financial condition and results
of operations of Drummond Financial Corporation (the "Corporation") for the
six months ended December 31, 1997 should be read in conjunction with the
unaudited consolidated financial statements and related notes included
elsewhere herein.
Results of Operations - Six Months Ended December 31, 1997
- ----------------------------------------------------------
Revenues for the six months ended December 31, 1997 decreased to $0.8 million
from $0.9 million in the comparative period of 1996. Revenues from interest
and loan fees decreased to $0.7 million in the six months ended December 31,
1997 from $0.9 million in the six months ended December 31, 1996. The
Corporation's loans generally earn interest at the prime rate charged by a
major U.S. bank (the "Bank") plus 2% to 7%. The Bank's prime rate was 8.50%
during the six months ended December 31, 1997, compared to 8.25% during the
six months ended December 31, 1996. In the six months ended December 31, 1997,
the Corporation recognized a $0.1 million net loss on securities, compared to
$0.6 million in the comparative period of 1996. Revenues from dividends and
other activities decreased to $0.2 million for the six months ended December
31, 1997 from $0.6 million for the comparative period of 1996.
Costs and expenses increased to $1.7 million for the six months ended December
31, 1997 from $1.0 million in the comparative period of 1996. General and
administrative expenses decreased to $0.6 million for the six months ended
December 31, 1997 from $0.8 million for the comparative period of 1996,
primarily as a result of reduced legal fees and loan collection costs. In the
six months ended December 31, 1997, the Corporation reported a recovery of
credit losses of $0.2 million, compared to $1.7 million for the comparative
period of 1996.
Interest expense decreased to $1.2 million for the six months ended December
31, 1997 from $1.9 million for the comparative period of 1996, primarily as a
result of a reduction in the principal amount outstanding of the Corporation's
15 Year Variable Rate Bonds (the "Bonds"). For the six months ended December
31, 1997, interest was accrued at the rate of approximately 8.50% per annum,
compared to approximately 8.25% per annum for the six months ended December
31, 1996.
No income tax provision was recognized for the six months ended December 31,
1997 and 1996, respectively, except for the payment of a minimum tax of
$1,000. The Corporation has deferred tax benefits with respect to net
operating loss carry-forwards which have not been recognized as there is no
assurance that they will be realized.
In the six months ended December 31, 1997, the Corporation reported a loss of
$0.9 million as a result of equity accounting for its 30% interest in the
common shares of ICHOR Corporation ("Ichor"), a company quoted on the NASDAQ
SmallCap Market.
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<PAGE> 11
For the six months ended December 31, 1997, the Corporation recognized a net
loss of $1.4 million or $0.55 per share, compared to $0.1 million or $0.09 per
share in the comparative period of 1996. The Corporation's results of
operations for the six months ended December 31, 1997 included $0.5 million of
extraordinary gains on the early extinguishment of debt. The net loss in the
current period was primarily attributable to the decrease in the recovery of
credit losses, the Corporation's equity interest in the loss of Ichor and
reduced revenues from dividends and other activities, which were partially
offset by reduced interest expense and the extraordinary gain on debt
extinguishment.
Results of Operations - Three Months Ended December 31, 1997
- ------------------------------------------------------------
In the three months ended December 31, 1997, the Corporation had revenues of
$(0.1 million), compared to revenues of $0.4 million in the comparative
quarter of 1996. Revenues from interest and loan fees were $0.4 million in
the three months ended December 31, 1996 and 1997, respectively. The
Corporation's loans generally earn interest at the prime rate charged by the
Bank plus 2% to 7%. The Bank's prime rate was 8.50% during the three months
ended December 31, 1997, compared to 8.25% during the comparative period of
1996. In the three months ended December 31, 1997, the Corporation recognized
a $0.6 million net loss on securities, compared to $0.7 million in the
comparative period of 1996. Revenues from dividends and other activities
decreased to $0.1 million for the three months ended December 31, 1997 from
$0.6 million in the comparative period of 1996.
Costs and expenses were $0.7 million for the three months ended December 31,
1997, compared to a recovery of $13,000 in the comparative period in 1996.
General and administrative expenses decreased to $0.2 million for the three
months ended December 31, 1997 from $0.6 million for the comparative period of
1996, primarily as a result of reduced legal fees and loan collection costs.
In the three months ended December 31, 1997, the Corporation reported a
recovery of credit losses of $0.2 million, compared to $1.6 million for the
comparative period of 1996.
Interest expense decreased to $0.7 million for the three months ended December
31, 1997 from $0.9 million for the comparative period of 1996, primarily as a
result of a reduction in the principal amount outstanding of the Bonds. For
the three months ended December 31, 1997, interest was accrued at the rate of
approximately 8.50% per annum, compared to approximately 8.25% per annum for
the three months ended December 31, 1996.
In the three months ended December 31, 1997, the Corporation reported a loss
of $0.8 million as a result of equity accounting for its equity interest in
Ichor.
For the three months ended December 31, 1997, the Corporation recognized a net
loss of $1.5 million or $0.56 per share, compared to net income of $0.4
million or $0.11 per share in the comparative period of 1996. The
Corporation's results of operations for the three months ended December 31,
1997 included $0.1 million of extraordinary gains on the early extinguishment
of debt. The net loss in the current period was primarily attributable to the
decrease in the recovery of credit losses, the Corporation's equity interest
in the loss of Ichor and reduced revenues from dividends and other activities,
which were partially offset by reduced interest and general and administrative
expenses.
-11-
<PAGE> 12
Liquidity and Capital Resources
- -------------------------------
The Corporation's cash and cash equivalents at December 31, 1997 were $0.8
million, which represents a decrease of $0.8 million from June 30, 1997.
Cash used by operations for the six months ended December 31, 1997 was $9.2
million, compared to $11.0 million for the comparative period of 1996. The
Corporation used cash of $4.3 million in operating activities before any
activities in trading securities in the six months ended December 31, 1997,
compared to $2.2 million in the comparative period of 1996. An increase in
receivables used cash of $2.1 million in the six months ended December 31,
1997, compared to $0.2 million in the comparative period of 1996. A decrease
in accounts payable and accrued liabilities used cash of $1.4 million in the
six months ended December 31, 1997, compared to $0.5 million in the six months
ended December 31, 1996. A decrease in interest receivable provided cash of
$0.4 million in the current period of 1997, compared to $0.1 million in the
comparative period of 1996. In the six months ended December 31, 1997, an
increase in interest payable provided cash of $0.2 million, compared to a
decrease in interest payable using cash of $53,000 in the comparative period
of 1996.
Net purchases of trading securities used cash of $4.9 million in the six
months ended December 31, 1997, compared to $8.8 million in the six months
ended December 31, 1996.
Cash provided by investing activities was $2.3 million during the six months
ended December 31, 1997, compared to $2.0 million during the comparative
period of 1996. Collections on loan receivables provided cash of $7.3 million
in the six months ended December 31, 1997, compared to $3.1 million in the
same period of 1996, primarily as a result of the repayment in full of four
loans and the partial repayment of a fifth loan during the six months ended
December 31, 1997. During the six months ended December 31, 1997, one new
loan in the aggregate principal amount of $5.0 million with a term of one year
was advanced. The Corporation's net finance receivables at December 31, 1997
were $5.9 million, compared to $9.8 million at December 31, 1996.
Financing activities for the six months ended December 31, 1997 provided cash
of $6.0 million. An increase in indebtedness provided cash of $7.0 million
during the current period of 1997. During the six months ended December 31,
1997, the Corporation used cash of $1.0 million to purchase $1.5 million in
aggregate principal amount of the Bonds. As at December 31, 1997, the
Corporation had $45.0 million in principal amount of the Bonds issued, of
which approximately $23.5 million was repurchased and held by the
Corporation in treasury.
The Corporation did not make its semi-annual interest payment on the Bonds due
January 25, 1998. The Corporation has advised the trustee that it will make
the payment on February 17, 1998, which is within the 30 day cure period
provided for under the terms of the indenture governing the Corporation's
Bonds (the "Bond Indenture"). The next regularly scheduled interest payment
date is July 25, 1998. As of the date hereof, the Corporation is in
compliance with the terms of the Bond Indenture.
During the six months ended December 31, 1997, the Corporation proceeded to
collect and/or settle and restructure the non-performing loans in its
portfolio. The Corporation anticipates that its cash
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<PAGE> 13
and investments on hand, and its expected loan interest and principal
collections, will be sufficient to service the Corporation's debt costs and
cover the day-to-day general and administrative expenses of the Corporation
during the short-term.
Finance Receivables
- -------------------
The Corporation's loan portfolio at December 31, 1997 aggregated $8.0 million
in finance receivables (principal plus interest and reimbursable costs less
unamortized commitment fees) due from four borrowers, compared to an aggregate
of $12.0 million in finance receivables due from seven borrowers at December
31, 1996. During the six months ended December 31, 1997, the Corporation
advanced one new loan in the aggregate principal amount of $5.0 million and
loans to four borrowers, with finance receivables totaling $5.6 million, were
repaid in full.
At December 31, 1997, the Corporation's loan to Heartland, Inc., who had
finance receivables totaling $2.1 million, had been classified as non-
performing and the borrower had filed a petition for bankruptcy and had ceased
to operate. The Corporation designates finance receivables as non-performing
when interest and/or principal payments are contractually delinquent for more
than 90 days, or earlier if the Corporation has material evidence of the
borrower's inability to meet its commitments under the loan agreement (e.g.,
the borrower files for bankruptcy protection).
The Corporation maintains an allowance for credit losses against which amounts
deemed uncollectible are charged off and subsequent recoveries, if any, are
credited. See Note 3 to the unaudited consolidated financial statements
included elsewhere herein regarding the allowance for credit losses for the
six months ended December 31, 1997.
-13-
<PAGE> 14
PART II. OTHER INFORMATION
-----------------
ITEM 1. LEGAL PROCEEDINGS
Reference is made to the Corporation's annual report on Form 10-KSB for the
year ended June 30, 1997 for information concerning certain legal proceedings.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit
Number Description
- ------- -----------
27 Article 5 - Financial Data Schedule for the 2nd Quarter 1998
Form 10-QSB.
(b) Reports on Form 8-K
None.
-14-
<PAGE> 15
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Dated: February 13, 1998
DRUMMOND FINANCIAL CORPORATION
By: /s/ Michael J. Smith
-----------------------------------
Michael J. Smith, President, Chief
Executive Officer and Chief Financial Officer
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<PAGE> 16
EXHIBIT INDEX
Exhibit
Number Description
- ------- -----------
27 Article 5 - Financial Data Schedule for the 2nd Quarter 1998
Form 10-QSB.
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED FINANCIAL STATEMENTS AND NOTES INCLUDED IN THIS FORM 10-QSB AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-START> JUL-01-1997
<PERIOD-END> DEC-31-1997
<CASH> 795
<SECURITIES> 15,907
<RECEIVABLES> 5,851
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 0
<DEPRECIATION> 0
<TOTAL-ASSETS> 34,671
<CURRENT-LIABILITIES> 0
<BONDS> 21,515
0
30
<COMMON> 43
<OTHER-SE> 4,077
<TOTAL-LIABILITY-AND-EQUITY> 34,671
<SALES> 0
<TOTAL-REVENUES> 770
<CGS> 0
<TOTAL-COSTS> 1,686
<OTHER-EXPENSES> 0
<LOSS-PROVISION> (176)
<INTEREST-EXPENSE> 1,245
<INCOME-PRETAX> (1,840)
<INCOME-TAX> 1
<INCOME-CONTINUING> (1,841)
<DISCONTINUED> 0
<EXTRAORDINARY> 485
<CHANGES> 0
<NET-INCOME> (1,356)
<EPS-PRIMARY> (0.55)
<EPS-DILUTED> (0.55)
</TABLE>
