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, 1998
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission file number: 0-23370
PERMANENT BANCORP, INC.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 35-1908797
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(State or other jurisdiction of (I.R.S. Employer
Incorporation or Origination) Identification No.)
101 Southeast Third Street, Evansville Indiana 47708
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code: (812) 428-6800
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.
Yes [ X ] No [ ]
As of August 3, 1998, there were 4,130,350 shares of the Registrant's Common
Stock outstanding.
<PAGE>
PERMANENT BANCORP, INC.
FORM 10-Q
INDEX
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Statements of Financial Condition
Consolidated Statements of Income
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations
Supplemental Data
Item 3. Quantitative & Qualitative Disclosures of Market Risk
PART II. OTHER INFORMATION
Signatures
<PAGE>
<TABLE>
<CAPTION>
PERMANENT BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
JUNE 30, 1998 MARCH 31, 1998
------------ ------------
<S> <C> <C>
ASSETS:
Cash ....................................................................... $ 9,157,203 $ 4,274,700
Interest-bearing deposits .................................................. 20,589,817 1,808,159
------------ ------------
Total cash and cash equivalents ............................................ 29,747,020 6,082,859
Securities available for sale - at fair value (amortized cost $100,287,316
and $105,529,613) ........................................................ 100,418,966 105,618,621
Mortgage-backed securities available for sale at fair value (amortized
cost $59,286,410 and $62,368,921) .......................................... 60,119,981 62,652,286
Mortgage-backed securities held to maturity (fair value $17,617,662
and $19,119,093) ......................................................... 17,398,009 18,861,416
Other investments .......................................................... 1,100,826 1,100,826
Loans (net of allowance for loan losses of $2,024,259 and $1,973,410) ...... 267,603,568 225,349,258
Interest receivable, net ................................................... 3,683,127 3,270,173
Office properties and equipment, net ....................................... 8,677,907 7,533,251
Real estate owned .......................................................... 40,587 93,182
Federal Home Loan Bank stock ............................................... 5,466,000 5,466,000
Cash surrender value of life insurance ..................................... 1,644,585 1,625,253
Goodwill (net of accumulated amortization of $1,940,470 and $1,909,003) .... 8,002,709 452,912
Other ...................................................................... 2,821,298 1,008,463
------------ ------------
TOTAL ASSETS .................................................................. $506,724,583 $439,114,500
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY:
LIABILITIES:
Deposits ................................................................... $360,294,804 $282,942,123
Federal Home Loan Bank advances ............................................ 85,229,932 99,352,678
Advance payments by borrowers for taxes and insurance ...................... 551,362 979,859
Interest payable ........................................................... 2,350,339 2,193,548
Other ...................................................................... 14,835,345 10,963,033
------------ ------------
TOTAL LIABILITIES ............................................................. 463,261,782 396,431,241
------------ ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERMANENT BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION -CONTINUED
(UNAUDITED)
JUNE 30, 1998 MARCH 31, 1998
------------ ------------
<S> <C> <C>
STOCKHOLDERS' EQUITY:
Serial Preferred Stock ($.01 par value) Authorized and unissued-
1,000,000 shares
Common Stock ($.01 par value) Authorized - 9,000,000 shares; issued -
4,927,000 shares; Outstanding - 4,130,350 and 4,102,094 shares ........... 49,241 49,241
Additional paid-in capital ................................................. 24,679,473 24,525,662
Treasury Stock - 664,390 and 682,674 shares ................................ (6,105,919) (6,255,083)
Retained Earnings - substantially restricted ............................... 25,206,382 25,127,127
Unrealized gain on securities available for sale, net of deferred tax of
$381,955 and $147,127 .................................................... 583,266 225,247
ESOP Borrowing ............................................................. (654,638) (714,150)
Unearned compensation - restricted stock awards ............................ (295,004) (274,785)
------------ ------------
TOTAL STOCKHOLDERS' EQUITY .................................................... 43,462,801 42,683,259
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ................................... $506,724,583 $439,114,500
============ ============
</TABLE>
See notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
PERMANENT BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30,
-------------------------
1998 1997
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<S> <C> <C>
INTEREST INCOME:
Loans ......................................... $4,447,255 $4,287,820
Mortgage-backed securities .................... 1,216,941 1,659,951
Investment securities ......................... 1,583,162 1,586,688
Deposits ...................................... 91,739 17,473
Dividends on Federal Home Loan Bank stock ..... 109,021 101,905
---------- ----------
7,448,118 7,653,837
---------- ----------
INTEREST EXPENSE:
Deposits ...................................... 3,421,324 3,404,019
Federal Home Loan Bank advances ............... 1,279,422 1,417,928
Short-term borrowings ......................... 28,951
---------- ----------
4,700,746 4,850,898
---------- ----------
NET INTEREST INCOME .............................. 2,747,372 2,802,939
PROVISION FOR LOAN LOSSES ........................ 75,000 77,386
---------- ----------
NET INTEREST INCOME AFTER LOAN LOSS
PROVISION ..................................... 2,672,372 2,725,553
---------- ----------
OTHER INCOME:
Service charges ............................... 381,914 226,811
Gain on sale of loans ......................... 26,205 19,371
Gain on sale of real estate owned ............. 32,453 13,241
Commissions ................................... 163,394 127,686
Gain on sale of investment and mortgage-backed
securities .................................. 64,815 6,269
Other ......................................... 113,028 103,657
---------- ----------
781,809 497,035
---------- ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERMANENT BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME - CONTINUED
(UNAUDITED)
THREE MONTHS ENDED
JUNE 30,
-------------------------
1998 1997
---------- ----------
<S> <C> <C>
OTHER EXPENSE:
Salaries and employee benefits ................ 1,242,653 1,122,767
Deposit insurance assessments ................. 67,561 68,956
Occupancy ..................................... 211,126 198,577
Equipment ..................................... 160,090 163,472
Computer service .............................. 154,760 125,083
Advertising ................................... 113,699 88,914
Postage and office supplies ................... 92,081 78,247
Other ......................................... 336,682 277,422
---------- ----------
2,378,652 2,123,438
---------- ----------
INCOME BEFORE INCOME TAXES ....................... 1,075,529 1,099,150
INCOME TAX PROVISION ............................. 448,181 461,228
---------- ----------
NET INCOME ....................................... $ 627,348 $ 637,922
========== ==========
EARNINGS PER SHARE OF COMMON STOCK
Basic ......................................... $ 0.15 $ 0.16
Diluted ....................................... $ 0.14 $ 0.15
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic ......................................... 4,109,308 4,023,342
Diluted ....................................... 4,374,732 4,262,776
</TABLE>
See notes to consolidated financial statements
<PAGE>
<TABLE>
<CAPTION>
PERMANENT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
THREE MONTHS ENDED JUNE 30,
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income .......................................... $ 627,348 $ 637,922
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation ................................... 125,949 133,007
Amortization and accretion ..................... (9,393) 135,066
Vesting of restricted stock awards ............. 4,760
Provisions for loan and real estate owned losses 50,849 18,675
Gain on sale of securities ..................... (64,814) (7,770)
Gain on sale of loans .......................... (27,531) (19,371)
Gain on sale of real estate owned .............. (32,453)
ESOP shares earned ............................. 133,609 80,020
Changes in assets and liabilities:
Proceeds from the sales of loans .................. 1,946,531 619,431
Orgination of loans for resale .................... (1,919,000) (600,060)
Other investments ................................. (121,885)
Interest receivable ............................... (412,954) 350,897
Deferred income tax ............................... (3,532)
Other assets ...................................... (1,749,076) (44,552)
Interest payable .................................. 156,791 328,957
Other liabilities ................................. 12,313,284 684,938
------------ ------------
Net cash provided by operating activities ........... 11,139,140 2,196,503
------------ ------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash acquired through branch acquisitions ........... 26,872,394 4,578,736
Loans originated .................................... (28,456,848) (17,814,339)
Loan principal repayments ........................... 29,651,038 15,732,151
Proceeds from:
Maturities of securities available for sale ...... 23,235,000 1,000,000
Sales of:
Securities available for sale ................ 6,055,625 10,961,520
Real estate owned ............................ 84,886
Purchases of:
Securities available for sale ................ (32,976,023) (11,825,781)
Mortgage-backed securities available for sale (4,274,459) (9,634,234)
Loans ........................................ (3,174,080)
FHLB Stock ................................... (221,400)
Office properties and equipment .............. (359,045) (293,147)
Payments on mortgage-backed securities .............. 8,743,325 3,704,484
Increase in cash surrender value of life insurance .. (19,332) (18,390)
Other ............................................... 162 (12,294)
------------ ------------
Net cash provided by (used in) investing activities . 28,556,723 (7,016,774)
------------ ------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
PERMANENT BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
(UNAUDITED)
THREE MONTHS ENDED JUNE 30,
------------------------------
1998 1997
------------ ------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Dividends paid ...................................... (225,306) (157,113)
Net change in deposits .............................. (1,396,076) (2,748,197)
Receipts from FHLB advances ......................... 27,000,000 71,150,000
Payments on FHLB advances ........................... (41,122,746) (66,063,336)
Principal repayment of ESOP borrowing ............... 59,513 59,513
Advance payments by borrowers for taxes and insurance (428,497) (504,560)
Net change in other borrowed funds .................. 359,654
Purchase of treasury stock .......................... (993,628)
Sale of common stock ................................ 81,410 44,310
------------ ------------
Net cash provided by (used in) financing activities . (16,031,702) 1,146,643
------------ ------------
NET INCREASE IN CASH AND CASH EQUIVALENTS .............. 23,664,161 (3,673,628)
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ....... 6,082,859 6,364,476
------------ ------------
CASH AND CASH DQUIVALENTS AT END OF PERIOD ............. $ 29,747,020 $ 2,690,848
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest ....................................... $ 4,543,955 $ 3,094,621
Income taxes ................................... 475,000 100,000
</TABLE>
See notes to consolidated financial statements.
<PAGE>
PERMANENT BANCORP, INC.
Notes to Consolidated Financial Statements
1. BASIS OF PRESENTATION - The consolidated financial statements include the
accounts of Permanent Bancorp, Inc. (the "Company"), its wholly owned
subsidiary, Permanent Federal Savings Bank, its wholly owned subsidiary,
Perma-Service Corp, and its wholly owned subsidiary, Permanent Insurance Agency,
Inc. (collectively the "Bank"). All significant intercompany accounts and
transactions have been eliminated. These consolidated interim financial
statements at June 30, 1998 and for the three month periods ended June 30, 1998
and 1997 have not been examined by independent auditors but reflect, in the
opinion of the Company's management, all adjustments (which include only normal
recurring adjustments) necessary to present fairly the financial position and
results of operations for such periods.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted. It is therefore suggested that these statements
be read in conjunction with the consolidated financial statements and related
notes which are incorporated by reference in the Company's Annual Report on Form
10-K for the year ended March 31, 1998.
2. BRANCH ACQUISITION - On June 26, 1998 the Company acquired four branch
banking offices from NBD, N.A. in a transaction to be accounted for as a
purchase. The Company acquired approximately $79 million of deposit liabilities
and $43 million of loans in the transaction. Included in the Consolidated
Statements of Financial Condition at June 30, 1998 is approximately $7.6 million
of goodwill related to the acquisition.
3. TWO -FOR-ONE STOCK SPLIT - In April, 1998 the Company announced a two-for-
one stock split effected in the form of a 100% stock dividend paid on April 14,
1998. The consolidated financial statements, notes and other references to share
and per share data have been retroactively restated for this stock dividend.
4. STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 130, "COMPREHENSIVE INCOME" -
This statement requires that changes in the amounts of certain items, including
foreign currency translation adjustments and unrealized gains and losses on
certain securities be shown in the annual financial statements. FAS 130 does not
require a specific format for the annual financial statement in which
comprehensive income is reported, but does require that an amount representing
total comprehensive income be reported in that statement. This statement was
adopted by the Company effective April 1, 1998 and all prior year financial
statements will be reclassified for comparative purposes.
<PAGE>
The following is a summary of the Company's total comprehensive income for the
interim three month periods ended June 30, 1998 and 1997 under FAS 130:
<TABLE>
<CAPTION>
Three Months Ended
June 30,
-------------------------
1998 1997
---------- ----------
<S> <C> <C>
Net income ......................................... $ 627,348 $ 637,922
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities:
Unrealized holding gains
arising during period .................... 352,275 925,321
Reclassification adjustment for
losses included in net income ............ 5,744 566
---------- ----------
Other comprehensive income ......................... 358,019 925,887
---------- ----------
COMPREHENSIVE INCOME ............................... $ 985,367 $1,563,809
========== ==========
</TABLE>
5. STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 131, "DISCLOSURES ABOUT
SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION". - The statement is not
required to be applied to interim reporting and will be applied in the Company's
fiscal 1999 annual financial statements. The statement requires financial
disclosure and descriptive information about reportable operating segments. Upon
its adoption, this statement may result in additional financial statement
disclosures.
6. STATEMENT OF FINANCIAL ACCOUNTING STANDARDS NO. 133, "ACCOUNTING FOR
DERIVATIVE INSTRUMENTS" - This statement was issued on June 16, 1998 and is
effective for all quarters of fiscal years beginning after June 15, 1999. This
statement establishes accounting and reporting standards for derivative
instruments, including derivative instruments embedded in financial contracts
and for hedging. The Company is currently evaluating the statement to determine
the impact, if any, that it will have on its results of operations or financial
condition.
7. CHANGES IN PRESENTATION - Certain amounts and items appearing in the
financial statements for the quarter ended June 30, 1997 have been reclassified
to conform with June 30, 1998 presentation.
<PAGE>
PERMANENT BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Permanent Bancorp, Inc. (the "Company") is a bank holding company which owns
100% of the capital stock of Permanent Federal Savings Bank (the "Bank") and has
no other subsidiaries. Material changes in the Consolidated Statements of
Financial Condition and Consolidated Statements of Income, except where noted
are primarily attributable to the operations of the Bank.
INFORMATION SYSTMES AND THE YEAR 2000
As is the case with most other companies using computers in its operations, the
Company is in the process of addressing the Year 2000 problem. The Company is
currently engaged in a comprehensive project to ascertain that the computer
programs it utilizes, both internally generated and those provided by outside
sources, will consistently and properly recognize the Year 2000. Many of the
Company's significant systems used to generate both internal reports and
external documents (such as account statements and year-end tax reports) are
generated by an outside provider of data processing services which has
represented these systems will be Year 2000 compliant. The Company has initiated
contingency processing plans should this supplier not become Year 2000 compliant
in a timely manner. The Company is in the process of obtaining assurances from
vendors that timely updates will be made available to make all remaining
purchased software Year 2000 compliant.
The Company has utilized and will continue to utilize both internal and external
resources to reprogram or replace and test all of its software for Year 2000
compliance and the Company expects to complete the project in early calendar
year 1999. The estimated cost for this project is being funded through operating
cash flows. No assurance can be given by the Company that either it or its
vendors will be Year 2000 compliant and failure by the Company and/or
significant vendors to complete Year 2000 compliance work in a timely manner
could have a material adverse effect on certain of the Company's operations.
QUARTER ENDED JUNE 30, 1998 COMPARED TO JUNE 30, 1997
NET INTEREST INCOME - Net interest income before provision for loan losses
decreased by $55,600 or approximately 2.0% for the quarter ended June 30, 1998
compared to the quarter ended June 30, 1997. This decrease was primarily
attributable to an eight basis point (.08%) decrease in interest rate spread
from the comparable quarter of 1997.
Net interest income after provision for loan losses decreased by $53,000, or
approximately 2.0% for the quarter ended June 30, 1998 compared to the quarter
ended June 30, 1997. The decrease was smaller than the decrease in net interest
income before provision for loan losses because of a slight decrease in the loss
provision reflecting a decrease in the level of non-performing loans.
INTEREST INCOME - Total interest income for the three months ended June 30, 1998
decreased $206,000, or approximately 2.7% from the three month period ended June
30, 1997. This decrease was primarily attributable to a decrease of 13 basis
points (.13%) on the interest rate earned on earning assets from the comparable
quarter of 1997. Average interest earning assets at the Bank decreased by
approximately $2.7 million from the quarter ended June 30, 1997 to the quarter
ended June 30, 1998.
<PAGE>
INTEREST EXPENSE - Total interest expense decreased by $150,000, or
approximately 3.1% during the three months ended June 30, 1998 compared to the
three months ended June 30, 1997, primarily due to a decrease in the cost of
interest-bearing liabilities of 5 basis points (.05%). Average interest-bearing
liabilities at the Bank decreased by approximately $8.1 from the comparable
quarter of 1997.
OTHER INCOME - Total other income increased by $285,000 during the quarter ended
June 30, 1998 compared to the quarter ended June 30, 1997. Service charges
increased $155,000 and commissions increased $36,000 during the quarter ended
June 30, 1998 compared to the same quarter of 1997. During the quarter ended
June 30, 1998 the Company had gains on sales of loans of $26,000 compared to
$19,000 during the quarter ended June 30, 1997 and recognized gains of $65,000
on sales of investment and mortgage-backed securities compared to gains of
$6,000 during the quarter ended June 30, 1997. The Company recognized gains on
the sale of real estate owned of $32,000 during the current year quarter
compared to gains of $13,000 during the previous year's quarter.
OTHER EXPENSE - Other expense increased a total of $255,000 during the quarter
ended June 30, 1998 compared to the quarter ended June 30, 1997. Salaries and
employee benefits increased by $120,000 during the quarter ended June 30, 1998
compared to the same period in 1997, with $51,000 of the increase representing
increased salaries and the balance representing higher benefit costs primarily
as a result of higher expense recognition on the Company's employee stock
ownership plan due to increased market value of Company stock. Occupancy
expenses increased by $13,000 and equipment and computer expenses increased by
$26,000 from the comparable period in the prior year. Advertising expenses were
$25,000 higher than during the quarter ended June 30, 1997 due principally to
costs incurred in conjunction with branch acquisitions. For this same reason
postage and office supplies were $14,000 higher during the quarter ended June
30, 1998 compared to the three months ended June 30, 1997. The remaining other
expense categories were $59,000 higher during the quarter ended June 30, 1998
than during the quarter ended June 30, 1997, with the most significant change
being an increase of $25,000 in loan related expense.
INCOME TAXES - Provisions for income taxes amounted to $448,000, or 41.7% of
income before taxes during the quarter ended June 30, 1998 compared to $461,000,
or 41.9% of income before taxes during the quarter ended June 30, 1997.
FINANCIAL CONDITION JUNE 30, 1998 COMPARED TO MARCH 31, 1998
The Company's total assets at June 30, 1998 were $506.7 million representing an
increase of $67.6 million, or 15.4%, from March 31, 1998. Investment and
mortgage-backed securities, including those classified as available for sale,
decreased by $9.2 million to $177.9 million at June 30, 1998 from $187.1 million
at March 31, 1998. Net loans increased by $42.3 million to $267.6 million at
June 30, 1998 compared to $225.3 million at March 31, 1998, as a result of the
Company's acquisition of additional branch offices.
During June, 1998 the Bank purchased deposits amounting to approximately $78.7
million, loans amounting to approximately $43.4 million, and certain other
assets of four branch offices of NBD, N.A. located in Evansville, Indiana. As
part of the transaction the Bank purchased two of the branch banking facilities,
including land, and assumed the lease liabilities for the other two branch
facilities.
<PAGE>
Loans acquired in the branch acquisition included consumer line of credit loans
of approximately $7.8 million, other consumer loans of approximately $11.4
million, commercial real estate loans of approximately $800,000 and commercial
loans of approximately $23.4 million. Approximately 86% of the Company's loan
growth from March 31, 1998 to June 30, 1998 was the result of this transaction.
Non-performing assets were at $904,000 and $1.1 at June 30, 1998, and at March
31, 1998, respectively, compared to $4.7 million at June 30, 1997. As of June
30, 1998, the Bank's loan loss allowance was $2,024,259. Although no assurance
can be provided, management believes this amount to be sufficient based upon
historical averages and current trends. Based on management's analysis of
classified and non-performing assets, loss histories and future projections, the
allowance for loan losses (presented below in tabular form) was deemed by
management to be adequate at June 30, 1998. The Bank conducts an on-going review
of its loan portfolio for potential problems and is currently focusing its
analysis on the loans acquired as part of the branch acquisition described
above.
1998 1997
---------- ----------
Balance, April 1 $1,973,410 $2,126,225
Provision for loan losses 75,000 77,386
Net charge offs (24,151) (58,711)
---------- ----------
Balance, June 30 $2,024,259 $2,144,900
========== ==========
Federal Home Loan Bank advances decreased by $14.1 million to $85.2 million at
June 30, 1998 compared to $99.4 million at March 31, 1998 and, as a result of
the acquisition described above, deposits increased by $77.4 million to $360.3
million at June 30, 1998 compared to $282.9 million at March 31, 1998.
Substantially all of the Company's deposit growth from March 31, 1998 to June
30, 1998 is attributable to the branch acquisitions.
Total stockholders' equity increased by $800,000 to $43.5 million at June 30,
1998 from $42.7 million at March 31, 1998. The increase was attributable to an
increase of $358,000 in net unrealized gains on securities available for sale,
retention of earnings, reduction of Employee Stock Ownership Plan liability,
vesting of restricted stock awards and through the exercise of stock options
resulting in the sale of 16,282 shares of treasury stock at $5.00 per share.
Decreases resulted from the declaration of $255,000 in dividends.
LIQUIDITY AND CAPITAL RESOURCES - The standard measure of liquidity for the
thrift industry is the ratio of cash and eligible investments to a certain
percentage of borrowings due within one year and net withdrawable deposit
accounts. The minimum required level is currently set by OTS regulation at 4%.
At June 30, 1998, the Bank's liquidity ratio was 66.15%. Historically, the Bank
has maintained its liquid assets which qualify for purposes of the OTS liquidity
regulations above the minimum requirements imposed by such regulations and at a
level believed adequate to meet requirements of normal daily activities,
repayment of maturing debt, and potential deposit outflows. Cash flow
projections are regularly reviewed and updated to assure that adequate liquidity
is maintained. Cash for these purposes is generated through the maturity of
investment securities and loan sales and repayments, and may be generated
through increases in deposits. Loan payments are a relatively stable source of
funds while deposit flows are influenced significantly by the level of interest
rates and general money market conditions.
<PAGE>
Borrowings may be used to compensate for reductions in other sources of funds
such as deposits. As a member of the FHLB system, the Bank may borrow from the
FHLB of Indianapolis. At June 30, 1998, the Bank had $85.2 million in such
borrowings. As of that date, the Bank had commitments to fund loans of
approximately $18 million (which includes unfunded lines and letters of credit
of approximately $12.7 million) and purchase investment securities of
approximately $12 million. In the opinion of management, the Bank has sufficient
cash flow and borrowing capacity to meet current and anticipated funding
commitments.
The following table sets forth the Bank's compliance with its capital
requirements at June 30, 1998.
<TABLE>
<CAPTION>
Amount Percent (*)
----------- -----
<S> <C> <C>
Core Capital:
Capital level .................... $31,189,589 6.28%
Requirement ...................... 19,862,039 4.00%
----------- -----
Excess ........................... $11,327,550 2.28%
=========== =====
Risk-Based Capital:
Capital level .................... $33,142,480 13.67%
Requirement ...................... 19,396,940 8.00%
----------- -----
Excess ........................... $13,745,540 5.67%
=========== =====
</TABLE>
(*) Core capital is computed as a percentage of adjusted total assets of
$496,550,975. Risk-based capital is computed as a percentage of risk-weighted
assets of $242,461,756.
<PAGE>
<TABLE>
<CAPTION>
SUPPLEMENTAL DATA
Three Months Ended
June 30,
1998 1997
------ -----
<S> <C> <C>
Weighted average interest rate earned on
total interest-earning assets ....................... 7.33% 7.46%
Weighted average cost of total
interest-bearing liabilities ........................ 4.99% 5.04%
Interest rate spread during period ..................... 2.34% 2.42%
Net yield on interest-earning assets
(net interest income divided by average
interest-earning assets on annualized basis) ........ 2.70% 2.73%
Total interest income divided by average
total assets (on annualized basis) .................. 6.98% 7.15%
Total interest expense divided by
average total assets (on annualized basis) .......... 4.41% 4.53%
Net interest income divided by average
total assets (on annualized basis) .................. 2.57% 2.62%
Return on assets (net income divided by
average total assets on annualized basis) ........... 0.59% 0.60%
Return on equity (net income divided by
average total equity on annualized basis) ........... 5.83% 6.48%
Interest rate spread at end of period .................. 2.49% 2.38%
<CAPTION>
Data as of
June 30, March 31,
1998 1998
------ ------
(IN THOUSANDS)
NONPERFORMING ASSETS:
<S> <C> <C>
Loans: Non-accrual ................................ $ 810 $ 911
Restructured .......................... 0 0
------ ------
Total nonperforming loans .......................... $ 810 $ 911
Real estate owned, net ................ 41 93
Other repossessed assets, net ......... 53 81
------ ------
Total Nonperforming Assets ......................... $ 904 $1,085
====== ======
Nonperforming assets divided by total assets ....... .18% .25%
Nonperforming loans divided by total loans ......... .30% .40%
Balance in Allowance for Loan Losses ............... $2,024 $1,973
</TABLE>
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
The Office of Thrift Supervision (OTS) requires each thrift institution to
calculate the estimated change in the institution's market value of portfolio
equity (MVPE) assuming an instantaneous, parallel shift in the Treasury yield
curve of 100 to 400 basis points either up or down in 100 basis point
increments. MVPE is defined as the net present value of an institution's
existing assets, liabilities and off-balance sheet instruments. The OTS permits
institutions to perform this MVPE analysis using their own internal model based
upon reasonable assumptions.
The Company has determined that, as of June 30, 1998, there has been no material
change in prepayment assumptions or the estimated sensitivity of the Company's
MVPE to parallel yield curve shifts in comparison to the disclosures set forth
in the Company's 1998 annual report to shareholders.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings
Other than ordinary routine litigation incidental to the business,
there are no material pending legal proceedings to which the Company
or the Bank are a party.
ITEM 2. Changes in Securities
None
ITEM 3. Defaults Upon Senior Securities
None
ITEM 4. Submission of Matters to a vote of Security Holders
None
ITEM 5. Other Information
If a stockholder proposal is not received by the Company by February
26, 1999, but otherwise meets the Company's eligibility requirements
to be presented at the next Annual Meeting of Stockholders, the
persons named in the Company's form of proxy and acting thereon will
have the discretion to vote on any such proposal in accordance with
their best judgement if the proposal is received at the Company's
main office later than April 21, 1999.
ITEM 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
A Form 8-K was filed on April 13, 1998, with the Securities and
Exchange Commission, regarding a press release dated April 9,
1998, announcing the election of Daniel L. Schenk as a director
of the registrant.
A Form 8-K was filed May 7, 1998, with the Securities and
Exchange Commission, regarding a press release dated April 30,
1998 announcing the date of the annual meeting and the record
date for voting purposes.
A Form 8-K was filed on June 23, 1998, with the Securities and
Exchange Commission, regarding a press release dated June 18,
1998, announcing an increase in the regular quarterly cash
dividend and the record date for payment purposes.
<PAGE>
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.
PERMANENT BANCORP, INC.
Date: August 13, 1998 By /s/ Donald P. Weinzapfel
--------------- -------------------------
Donald P. Weinzapfel,
Chairman of the Board,
President and Chief Executive Officer
(Principal Executive Officer)
Date: August 13, 1998 By /s/ Robert A. Cern
--------------- -------------------
Robert A. Cern
Chief Financial Officer and Secretary
(Principal Financial Accounting Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE QUARTERLY
REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED JUNE 30, 1998 AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-1999
<PERIOD-END> JUN-30-1998
<CASH> 9,157,203
<INT-BEARING-DEPOSITS> 20,589,817
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 160,538,947
<INVESTMENTS-CARRYING> 17,398,009
<INVESTMENTS-MARKET> 17,617,668
<LOANS> 269,627,827
<ALLOWANCE> 2,024,259
<TOTAL-ASSETS> 506,724,583
<DEPOSITS> 360,294,804
<SHORT-TERM> 23,526,678
<LIABILITIES-OTHER> 17,737,046
<LONG-TERM> 61,703,254
0
0
<COMMON> 49,241
<OTHER-SE> 43,413,560
<TOTAL-LIABILITIES-AND-EQUITY> 506,724,583
<INTEREST-LOAN> 4,447,255
<INTEREST-INVEST> 2,800,103
<INTEREST-OTHER> 200,760
<INTEREST-TOTAL> 7,448,118
<INTEREST-DEPOSIT> 3,421,324
<INTEREST-EXPENSE> 4,700,746
<INTEREST-INCOME-NET> 2,747,372
<LOAN-LOSSES> 75,000
<SECURITIES-GAINS> 64,815
<EXPENSE-OTHER> 2,378,652
<INCOME-PRETAX> 1,075,529
<INCOME-PRE-EXTRAORDINARY> 627,348
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 627,348
<EPS-PRIMARY> .15
<EPS-DILUTED> .14
<YIELD-ACTUAL> 7.33
<LOANS-NON> 810,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 3,290,580
<ALLOWANCE-OPEN> 1,973,410
<CHARGE-OFFS> 38,858
<RECOVERIES> 14,706
<ALLOWANCE-CLOSE> 2,024,259
<ALLOWANCE-DOMESTIC> 66,367
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,957,892
</TABLE>
