UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 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: 0-23374
MFB CORP.
(Exact name of registrant as specified in its charter)
Indiana 35-1907258
State or other jurisdiction of (I.R.S. Employer
incorporation or organization Identification Number)
121 South Church Street
P.O. Box 528
Mishawaka, Indiana 46546
(Address of principal executive offices,
including Zip Code)
(219) 255-3146
(Registrant's telephone number, including area code)
None
(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
of 1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
(1) Yes X No
(2) Yes X No
The number of shares of the registrant's common stock, without par value,
outstanding as of June 30, 1997 was 1,690,217.
MFB CORP. AND SUBSIDIARY
FORM 10-Q
INDEX
Page No.
Part I. Financial Information 2
Item 1. Financial Statements 2
Consolidated Balance Sheets, (Unaudited)
June 30, 1997 and September 30, 1996 2
Consolidated Statements of Income, (Unaudited)
Three and nine months ended June 30, 1997 and 1996 3
Consolidated Statements of Changes in Shareholders' Equity,
(Unaudited) Nine months ended June 30, 1997 and 1996 4
Consolidated Statements of Cash Flows, (Unaudited)
Nine months ended June 30, 1997 and 1996 5
Notes to Unaudited Consolidated Financial Statements June 30, 1997 7
Item 2. Management's Discussion and Analysis
of Financial Condition and Results of Operations 9
Part II. Other Information 13
Items 1-6. 13
Signatures 14
1
MFB CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS (UNAUDITED)
June 30, 1997 and September 30, 1996
(in thousands)
June 30, September 30,
1997 1996
ASSETS
Cash and due from financial institutions $ 2,697 $ 1,734
Interest-bearing deposits in other financial institutions --- ---
Cash and cash equivalents 2,697 1,734
Interest-bearing time deposits in other financial
institutions --- 495
Securities available-for-sale 53,227 66,763
Federal Home Loan Bank (FHLB) stock (at cost) 2,187 1,336
Total loans 187,001 152,392
Less allowance for loan losses (363) (340)
Loans receivable, net 186,638 152,052
Accrued interest receivable 836 818
Premises and equipment, net 2,521 1,969
Other assets 135 642
Total Assets $248,241 $225,809
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Noninterest-bearing demand deposits $1,385 $1,942
Savings, NOW and MMDA deposits 36,598 34,780
Other time deposits 129,534 122,243
Total Deposits $167,517 $158,965
Securities sold under agreements to repurchase(Note 3) 184 ---
Advances from borrowers for taxes and insurance 814 1,864
FHLB advances 43,735 24,500
Accrued expenses and other liabilities 2,100 2,881
Total Liabilities 214,350 188,210
Shareholders' Equity
Common Stock 13,116 18,317
Retained earnings 21,676 20,589
Unearned Employee Stock Ownership Plan (ESOP) Shares (722) (894)
Unearned Recognition and Retention Plan (RRP) Shares (135) (193)
Net unrealized depreciation on securities
available-for sale, net of tax (44) (220)
Total shareholders' equity 33,891 37,599
Total Liabilities and Shareholders' Equities $248,241 $225,809
2
MFB CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
Nine months ended June 30, 1997 and 1996
(In thousands)
Three Months Ended Nine Months Ended
June 30, June 30,
1997 1996 1997 1996
Interest income
Loans receivable
First mortgage loans $ 3,312 $ 2,524 $ 9,395 $ 7,251
Consumer and other loans 149 55 381 99
Financing leases and Commercial loans 112 30 240 76
Securities - taxable 921 925 2,795 2,484
Other interest-bearing assets 17 99 77 338
4,511 3,633 12,888 10,248
Interest expense
Deposits 2,067 1,886 6,062 5,568
FHLB advances 545 164 1,316 248
2,612 2,050 7,378 5,816
Net interest income 1,899 1,583 5,510 4,432
Provision for loan losses 7 8 22 23
Net interest income after
provision for loan losses 1,892 1,575 5,488 4,409
Noninterest income
Insurance commissions 37 38 99 94
Brokerage Commissions 7 --- 7 ---
Net realized gains from sales of
securities, available for sale (1) (12) 7 9
Other 65 65 193 192
Total noninterest income 108 91 306 295
Noninterest expense
Salaries and employee benefits 684 541 1,945 1,551
Occupancy and equipment 161 107 417 312
SAIF deposit insurance premium 26 83 121 249
Other 285 232 812 646
Total noninterest expense 1,156 963 3,295 2,758
Income before income taxes 844 703 2,499 1,946
Income tax expense 336 279 993 774
Net income $ 508 $ 424 $ 1,506 $ 1,172
Earnings per common and common equivalent
share (Note 2) $ 0.30 $ 0.22 $ 0.86 $ 0.60
Earnings per share-assuming full dilution $ 0.30 $ 0.22 $ 0.86 $ 0.60
(Note 2)
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
3
MFB CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
Nine months ended June 30, 1997 and 1996
(In thousands)
Net Unrealized
Depreciation
Unearned Unearned on Securities Total
Common Retained ESOP RRP Available Shareholders
Stock Earnings shares shares for-Sale Equity
Six months ended
June 30, 1996
Balance-10-1-95 $ 19,657 $ 19,732 $(1,100) $ (290) $ --- $ 37,999
Purchase and retire
ment of 103,893 shares
of common stock (1,499) (1,499)
Contribution to
fund ESOP --- --- 150 --- --- 150
Market adjustment of
ESOP shares 126 --- --- --- --- 126
Amortization of RRP
Contribution --- --- --- 80 --- 80
Change in securities
classification to
available for sale --- --- --- --- 119 119
Net change in unrealized
depreciation on securities
available for sale --- --- --- --- (456) (456)
Net income for the nine
months ended 6-30-96 --- 1,172 --- --- --- 1,172
Balance at 6-30-96 $ 18,284 $20,904 $ (950) $ (210) $ (337) $ 37,691
Nine months ended
June 30, 1997
Balance-10-1-96 $ 18,316 $20,589 $(894) $( 192) $ (220) $ 37,599
Purchase and retire
-ment of 287,263 shares
of common stock (5,365) --- --- --- --- (5,365)
Contribution to
fund ESOP --- --- 172 --- --- 172
Market adjustment of
ESOP shares committed
to be released 130 --- --- --- --- 130
Amortization of
RRP contribution --- --- --- 57 --- 57
Issuance of 3500 shares
of common stock-stock
option exercise 35 --- --- --- --- 35
Cash dividend declared
- $.08/share --- (419) --- --- --- (419)
Net change in unrealized
depreciation on securities
available for sale --- --- --- --- 176 176
Net income for the nine
months ended 6-30-97 --- 1,506 --- --- --- 1,506
Balance at 6-30-97 $ 13,116 $21,676 $ (722) $ (135) $ (44) $ 33,891
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
4
MFB CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine months ended June 30, 1997 and 1996
(In thousands)
Nine Months Ended
June 30,
1997 1996
Cash flows from operating activities
Net income $ 1,506 $ 1,172
Adjustments to reconcile net income to net
cash provided by operating activities
Depreciation and amortization, net of accretion 384 215
Amortization of RRP contribution 58 80
Provision for loan losses 23 23
Market adjustment of ESOP shares 129 127
ESOP expense 172 150
Net realized gains from sales of securities available for sale (7) (9)
Net change in:
Accrued interest receivable (18) (39)
Other assets 506 191
Accrued expenses and other liabilities (895) (1,977)
Total adjustments 352 (1,239)
Net cash provided by operating activities 1,858 (67)
Cash Flows from investing activities
Net change in loans receivable (34,608) (15,603)
Purchase of:
Securities available-for-sale (28,530) (36,771)
Financing leases --- ( 2,001)
Premises and equipment, net (694) (68)
Federal Home Loan Bank (FHLB) stock (851) ---
Proceeds from:
Maturities of securities held-to-maturity --- 4,300
Maturities of securities available-for-sale 18,300 9,050
Principal payments of mortgage-backed and related
securities available-for-sale 1,897 1,456
Sales of securities available-for-sale 21,924 8,215
Net change in interest-earning time deposits
in other financial institutions 495 889
Net cash used in investing activities (22,067) (30,533)
(Continued)
5
MFB CORP. AND
SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
Nine months ended June 30, 1997 and 1996
(In thousands)
Nine Months Ended
June 30,
1997 1996
Cash flows from financing activities
Net change in deposits 8,552 9,410
Net change in advances from borrowers for
taxes and insurance (1,051) (1,040)
Net proceeds from Federal Home Loan Bank advances 19,235 17,500
Net change in short term borrowings 184 ---
Purchase of MFB Corp. common stock (5,365) (1,499)
Proceeds from stock option exercise 35 ---
Cash dividends paid (418) ---
Net cash provided by financing activities 21,172 24,371
Net change in cash and cash equivalents 963 (6,229)
Cash and cash equivalents at beginning of period 1,734 7,454
Cash and cash equivalents at end of period $ 2,697 $ 1,225
Supplemental disclosures of cash flow information
Cash paid during the period for
Interest on deposits $ 6,057 $ 5,552
Income taxes 466 692
Supplemental schedule of non-cash investing activities
Transfer from:
Securities held-to-maturity to
securities available-for-sale $ --- $36,281,499
Mortgage-backed and related securities held-to-maturity
to mortgage-backed and related securities
available-for-sale $ --- $11,616,526
The accompanying notes are an integral part of these unaudited consolidated
financial statements.
6
MFB CORP. AND SUBSIDIARY
NOTES TO (UNAUDITED) CONSOLIDATED FINANCIAL STATEMENTS
June 30, 1997
NOTE 1 - BASIS OF PRESENTATION AND ACCOUNTING POLICIES
Nature of Operations: MFB Corp. is an Indiana corporation organized in
December, 1993, to become a unitary savings and loan holding company.
MFB Corp. became a unitary savings and loan holding company upon the
conversion of Mishawaka Federal Savings (the "Bank") from a federal mutual
savings and loan association to a federal stock savings bank in March, 1994.
On November 1, 1996, the Bank officially changed its name to MFB Financial.
MFB Corp. is the sole shareholder of the Bank. MFB Corp. and the Bank
(collectively referred to as the "Company) conduct business from five office
locations in St. Joseph and Elkhart counties in Indiana. The Bank offers a
variety of lending, deposit and other financial services to its retail and
commercial customers. The Bank's wholly-owned subsidiary, Mishawaka Financial
Services, Inc., is engaged in the sale of various insurance products for the
Bank's customers and the general public. In addition, a range of investment
and insurance related products are offered to customers through a contractual
relationship established with Financial Network Investment Corporation(FNIC),
a full service securities brokerage firm.
Basis of Presentation: The accompanying unaudited consolidated financial
statements were prepared in accordance with instructions for Form 10-Q and,
therefore, do not include all disclosures required by generally accepted
accounting principles for complete presentation of financial statements.
In the opinion of management, the consolidated financial statements contain
all adjustments necessary to present fairly the consolidated balance sheets
of MFB Corp. and its subsidiary MFB Financial as of June 30, 1997 and
September 30, 1996, and the consolidated statements of income for the three
and nine months ended June 30, 1997 and 1996, and the consolidated statements
of changes in shareholders' equity and the consolidated statements of cash
flows for the nine months ended June 30, 1997 and 1996. All significant inter-
company transactions and balances are eliminated in consolidated. The income
reported for the nine months ended June 30, 1997 is not necessarily indic-
ative of the results that may be expected for the full year.
New Accounting Standards Adopted: Several new accounting standards were
issued by the Financial Accounting Standards Board that will apply for the
year ending September 30, 1997. SFAS No. 121, "Accounting for the Impairment
of Long-Lived Assets and for Long-Lived Assets To Be Disposed Of," requires a
review of long-term assets for impairment of recorded value and resulting
write-downs if the value is impaired. SFAS No. 122, "Accounting for Mortgage
Servicing Rights," requires recognition of an asset when servicing rights are
retained or in-house originated loans are sold. SFAS No. 123, "Accounting for
Stocl-Based Compensation," encourages, but does not require, entities to use
a fair-value based method" to account for stock-based compensation plans and
requires disclosure of the pro-forma effect on net income and on earnings
per share had the accounting been adopted. SFAS No. 121, SFAS No. 122 and
SFAS No. 123 were adopted by the Company on October 1, 1996, and are not ex-
pected to have a material effect on the Company's consolidated financial
position or results of operation.
NOTE 2 - EARNINGS PER COMMON SHARE
Earnings per common and common equivalent share were computed by dividing
net income by the weighted average number of shares of common stock and
common stock equivalents outstanding. Employee and director stock options
are considered common stock equivalents. At June 30, 1997, the Company had
90,767 unallocated ESOP shares which are excluded from the weighted average
number of shares outstanding used to calculate the earnings per common and
common share equivalent. The weighted-average number of shares outstanding
for the calculation of earnings per common and common equivalent share were
1,697,465 at June 30, 1997 and 1,940,389 at June 30, 1996. The weighted
average number of shares outstanding for the calculation of fully-diluted
earnings per share were 1,695,820 at June 30, 1997 and 1,936,578 at June 30,
1996.
NOTE 3 - OTHER BORROWINGS
Securities sold under agreements to repurchase consist of obligations of the
Bank to other parties. These arrangements are all one-day retail repurchase
agreements and are secured by investment securities. Such collateral is held
by safekeeping agents of the Bank. Information concerning securities sold
under agreements to repurchase is summarized as follows:
Average daily balance during the year $ 92,038
Average interest rate during the year 4.25%
Maximum month end balance during the year $ 183,710
Securities underlying these agreements
at quarter end were as follows
Carrying value of securities $ 1,696,361
Fair value $ 1,686,157
There were no securities sold under agreements to repurchase at June 30, 1996.
8
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL
The principal business of MFB Financial (the "Bank") consists of providing
a variety of lending, deposit and selected financial services to retail and
commercial banking customers. The Bank and all other savings associations
are significantly affected by prevailing economic conditions, as well as
government policies and regulations concerning, among other things, monetary
and fiscal affairs, housing and financial institutions. Deposit flows are
influenced by a number of factors, including interest rates paid on competing
investments, account maturities and level of personal income and savings. In
addition, deposit growth is affected by how customers perceive the stability
of the financial services industry amid current events such as regulatory
changes, failures of other financial institutions and financing of the deposit
insurance fund. Lending activities are influenced by the demand for and supply
of housing lenders, the availability and cost of funds and various other
items. Sources of funds for lending activities of the Bank include deposits,
payments on loans and income provided from operations. The Company's earnings
are primarily dependent upon the Bank's net interest income, the difference
between interest income and interest expense.
Interest income is a function of the balances of loans and securities
outstanding during a given period and the yield earned on such loans and
securities. Interest expense is a function of the amount of deposits and
borrowings outstanding during the same period and interest rates paid on such
deposits and borrowings. The Company's earnings are also affected by the
Bank's provisions for loan and real estate losses, service charges, income
from subsidiary activities, operating expenses and income taxes.
LIQUIDITY
A standard measure of liquidity for savings associations is the ratio of cash
and eligible investments to a certain percentage of net withdrawable savings
and borrowings due within one year. The minimum required ratio is currently
set by OTS at 5% of which at least 1% must be comprised of short-term
investments (i.e., generally with a term of less than one year). At June 30,
1997, the Bank's liquidity ratio was 18.52% and the short-term liquidity
ratio was 5.25%. Therefore, the Bank's liquidity is well above the minimum
regulatory requirements.
Liquidity relates primarily to the Company's ability to fund loan demand,
meet deposit customers' withdrawal requirements and provide for operating
expenses. Assets used to satisfy these needs consists of cash, deposits with
other financial institutions, overnight interest-bearing deposits in other
financial institutions, interest-bearing time deposits in other financial
institutions and securities, excluding FHLB stock. These assets are commonly
referred to as liquid assets. Liquid assets were $55.9 million as of June 30,
1997 compared to $69.0 million as of September 30, 1996. This $13.1 million
decrease was primarily due to reductions of $13.5 million in securities and
$495,000 in time deposits in other financial institutions, offset by a
$963,000 increase in cash and cash equivalents. This decrease in liquidity
was primarily used to fund the $34.6 million increase in net loans from
September 30, 1996 to June 30, 1997.
The Company uses its liquidity mainly to fund existing and future loan
commitments. to fund deposit withdrawals, to invest in securities, and
to meet operating expenses. At June 30, 1997, the Company had commitments
to fund loan originations with borrowers totaling $28.3 million (including
$l2.0 million in available equity lines of credit). Management believes
that loan repayments and other sources of funds will be adequate to meet
the Company's liquidity needs. The cash flow statements provide an
indication of the Company's sources and uses of cash as well as an
indication of the ability of the Company to maintain an adequate level
of liquidity. A discussion of the changes in the cash flow staements
for the nine months ended June 30, 1997 and 1996 follows.
During the nine months ended June 30, 1997, net cash increased $1.0 million
from $1.7 million at September 30, 1996 to $2.7 million at June 30, 1997.
The Company experienced a $1.9 million net increase in cash from operating
activities for the period ended June 30, 1997, compared to $67,000 net
decrease for the period ended June 30, 1996. The increase in the most
recent period was primarily due to the $1.5 million net income generated
and increases in other assets. Offsetting these increases was an $895,000
decrease in accrued expenses and other liabilities resulting primarily
from the payment during the first quarter of the one time Savings
Assocation Insurance Fund assessment of $955,000.
For the nine months ended June 30, 1997 and 1996, the net cash used in
investing activities was $22.1 million and $30.5 million respectively.
The change in the most recent period resulted primarily from the $34.6
million increase in net loans and the $28.5 million of securities and
$851,000 ofFHLB stock purchased exceeding the reductions of mortgage-
backed securities. During the nine months ended June 30, 1996, the Bank
acquired $20.7 million in collateralized mortgage obligations, $2.0 million
of financing leases, $1.7 million of one to four family mortgage loans,
and sold $5.9 million of mortgage-backed securities in addition to the
normal maturities and reinvestments of securities.
Net cash provided by financing activities was $21.2 million and $24.4
million for the niine months ended June 30, 1997 and 1996, respectively.
$19.2 million in Federal Home Loan Bank advances and $8.6 million in
net deposits were used to fund the investing activities for the nine
months ended June 30, 1997, and to provide the funds for the purchase
and retirement of 287,263 shares of MFB Corp. common stock totaling
$5.4million. For the nine months ended June 30, 1996, the $17.5 million
in FHLB advances and the $9.4 million in net deposits were also used to
fund the investing activities during the period.
CAPITAL RESOURCES
Total shareholders' equity decreased $3.8 million from $37.7 million as
of September 30, 1996 to $33.9 million as of June 30, 1997. The decrease
is primarily the result of the repurchase and retirement of 287,263 shares
of common stock totaling $5.4 million and the payment of $419,000 in cash
dividends partially offset by net income for the nine months ended June
30, 1997 of $1.5 million.
Total shareholders' equity decreased $300,000 from $38.0 million as of
September 30, 1995 to $37.7 million as of June 30, 1996. This reduction
was primarily related to the outlay of $1.5 million to repurchase 5% of
the outstanding shares of common stock partially offset by $1.2 million
in net income for the nine months ended June 30, 1996.
Federal regulations require savings banks to have minimum regulatory
tangible capital equal to 1.5% of total assets, a 3% core capital ratio
and an 8.0% risk-based capital ratio. At June 30, 1997, the Bank meets
the regulatory tangible capital, core capital and risk-based capital
requirements. Tangible capital was $32.2 million or 13.0% of total
bank assets, core capital was $32.2 million or 13.0% of total bank assets
and risk-based capital was $32.6 million or 27.8% of risk-based assets.
As of June 30, 1997, management is not aware of any current recommendations
by regulatory authorities which, if they were to be implemented, would
have, or are reasonably likely to have, a material adverse efect on the
Company's liquidity, capital resources or operations.
MATERIAL CHANGES IN FINANCIAL CONDITION
June 30, 1997 Compared to September 30, 1996
Total assets increased $22.4 million from $225.8 million as of September
30, 1996 to $248.2 million as of June 30, 1997.
Net loans increased by $34.6 million from $152.0 million at September
30, 1996 to $l86.6 million at June 30, 1997 due to loan originations
exceeding principal payments by approximately $34.2 million along with
the purchase of $505,000 in mortgage loans. Securities available for
sale decreased during this same period from $66.8 million at September 30,
1996 to $53.2 million at June 30, 1997. As was discussed previously
$18.3 million of securities matured and $21.9 million of securities were
sold, exceeding reinvestments by $11.7 million, and principal payments
of $1.9 million were received on mortgage-backed securities.
Total liabilities increased from $188.2 millin at September 30, 1996 to
$214.3 million at June 30, 1997. Significant changes included a net
increase of $8.5 million in customer deposits primarily due to the
addition of $1.8 million in savings, NOW and MMDA deposits and $7.3
million in time deposits. Enhancement of our deposit based product
offerings and emphasis on core relationships and quality service has
contributed to this deposit increase. FHLB advances also increased by
$19.2 million during the nine months ended June 30, 1997, and were used
primarily to fund security investments during the period. Also, accrued
expenses and other liabilities decreased from $2.9 million at September
30, 1996 to $2.1 million at June 30, 1997 primarily due to the $955,000
payment of the special SAIF fund assessment.
The $43.7 million of Federal Home Loan Bank advances have a weighted
average interest rae of 5.67% and mature in three years or less. These
advances are collateralized by a blanket lien on qualified 1-to-4 family
whole mortgage loans and U.S. Treasury and Federal Agency securities
with the approximate carrying value of $223 million at June 30, 1997.
Interest on the advances is payaable monthly and the principal is payable
at maturity.
Securities sold under agreements to repurchase are financing arrangements
which are one-day retail repurchase agreements and the Bank retains custody
of the securities pledged.
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Three and nine months ended June 30, 1997 compared to the three and nine
months ended June 30, 1996
The Company's consolidated net income for the three and nine months ended
June 30, 1997 was $508,000 and $1.5 million compared to $424,000 and $1.2
million for the three and nine months ended June 30, 1996, increases of
$19.8% and 28.5%, respectively.
Net increase income after provision for loan losses for the most recent
six month periods totaled $1.89 and $5.49 million respectively compared
to $1.57 million and $4.41 million for the same periods one year ago.
During the three months ended June 30, 1997, total interest income increased
by $878,000 compared to the same period one year ago, primarily as a
result of a $40.2 million increase in first mortgage loan receivables
and a $7.7 million increase in commercial and consumer loan receivables.
Total interest expense increased $562,000 reflecting the growth in savings
account deposits and borrowed funds. For the nine months ended June 30,
1997, total interest income increased $2.6 million while total interest
expense increased $1.6 million.
Nointerest income increased from $91,000 for the three months ended June
30, 1996 to $108,000 for the three months ended June 30, 1997, while
there was no significant change for the comparable nine month periods.
Nointerest expense increased from $963,000 during the three months ended
June 30, 1996 to $1.2 million during the three months ended June 30, 1997,
and from $2.8 million to $3.3 million for the comparable nine month periods.
These nointerest expense increases are primarily related to increased
compensation expenses due to staff expansion, to expenses related to the
Bank's name change which took effect November 1,1996 and to expenses incurred
with the opening of a new full service branch facility on June 6, 1997.
SUPPLEMENTAL INFORMATION
The Company continues to maintain asset quality that compares favorably
to its industry peer group. The ratio of nonperforming asses to total
assets as of June 30, 1997 was .08% compared to .06% as of June 30, 1996.
IMPACT OF NEW ACCOUNTING STANDARDS
Several new accounting standards have been issued by the Financial Accounting
Standards Board that will apply for the year ending September 30, 1997.
SFAS No. 235, "Accounting for Transfer and Servicing of Financial Assets
and Extinguishment of Liabilities, "provides accounting and reporting
standards for transfers and servicing of financial assets and extinguishments
of liabilities and requires a consistent application of a financial-
components approach that focuses on control. Under that approach, after
a transfer of financial assets,an equity recognizes the financial and
servicing assets it controls and the liabilities it has incurred and
derecognizes liabilities when extinguished. SFAS No.125 also supersedes
SFAS No. 122, and requires that sevicing assets and liabilities be
subsequently measured by amortization in proportion to and over the period
of estimated net servicing income orloss and requires assessment for asset
impairment or increased obligation based on their fair values. SFAS No. 125
applies to transfers and extinguishments occuring after December 31, 1996,
and early or retroactive application is not permitted. Upon adoption,
this statement is not expected to have a material effect on the Company's
consolidated financial position or results of operations.
MFB CORP. AND SUBSIDIARY
Form 10-Q
Item 1. Legal Proceedings.
None
Item 2. Changes in Securities.
None
Item 3. Defaults Upon Senior Securities.
None
Item 4. Submission of Matters to a Vote of Security holders.
(a) The Annual Meeting of Shareholders was held on January 17,
1997.
(b) Each of the persons named in the proxy statement as a
nominee for director was elected.
(c) The voting results on each of the matters which were
submitted to the shareholders can be found in the From
10-Q filed for the quarter ended December 31, l996.
Item 5. Other Information.
None
Item 6. Exhibits and Reports on Form 8-K
(a) MFB Corp. filed two Form 8-K reports during the quarter
ended June 30, 1997.
Date of report: April 16, l997
Items reported: News release dated April 16, 1997 regarding
the announcement of second quarter earnings.
Date of report: April 18, 1997
Items reported: News release dated April 18, 1997 regarding
the declaration of a $.08 per share cash
dividend payable on May 13, 1997 to holders
of record on April 29, 1997.
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.
MFB CORP.
DATE________________________ BY___________________________
Charles J, Viater
President
DATE________________________ BY___________________________
Timothy C. Boenne
Vice President
<TABLE> <S> <C>
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<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-END> JUN-30-1997
<CASH> 2,697,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 53,227,000
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 187,001,000
<ALLOWANCE> 363,000
<TOTAL-ASSETS> 248,241,000
<DEPOSITS> 167,517,000
<SHORT-TERM> 43,919,000
<LIABILITIES-OTHER> 2,914,000
<LONG-TERM> 0
0
0
<COMMON> 13,116,000
<OTHER-SE> 20,775,000
<TOTAL-LIABILITIES-AND-EQUITY> 248,241,000
<INTEREST-LOAN> 3,573,000
<INTEREST-INVEST> 921,000
<INTEREST-OTHER> 17,000
<INTEREST-TOTAL> 4,511,000
<INTEREST-DEPOSIT> 2,067,000
<INTEREST-EXPENSE> 2,612,000
<INTEREST-INCOME-NET> 1,899,000
<LOAN-LOSSES> 7,000
<SECURITIES-GAINS> (1,000)
<EXPENSE-OTHER> 1,156,000
<INCOME-PRETAX> 844,000
<INCOME-PRE-EXTRAORDINARY> 844,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 508,000
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
<YIELD-ACTUAL> 3.14
<LOANS-NON> 0
<LOANS-PAST> 205,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 355,000
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 363,000
<ALLOWANCE-DOMESTIC> 363,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 363,000
</TABLE>
