FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20552
(Mark One)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
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 No. 0-25300
HARVEST HOME FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Ohio 31-1402988
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification
Number)
3621 Harrison Avenue
Cheviot, Ohio 45211
(Address of principal (Zip Code)
executive office)
Registrant's telephone number, including area code: (513) 661-6612
Check whether the issuer (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 6, 1996, the latest practicable date, 934,857 shares of
the registrant's common stock, without par value, were issued and
outstanding.
<PAGE>
INDEX
Page
PART I - FINANCIAL INFORMATION
Consolidated Statements of Financial Condition 3
Consolidated Statements of Earnings 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 9
PART II - OTHER INFORMATION 13
SIGNATURES 14
<PAGE>
<TABLE>
Harvest Home Financial Corporation
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
<CAPTION>
June 30, September 30,
ASSETS 1996 1995
<S> <C> <C>
Cash and due from banks $ 2,496 $ 868
Federal funds sold 600 1,100
Interest-bearing deposits in other
financial institutions 306 345
Cash and cash equivalents 3,402 2,313
Investment securities designated as
available for sale - at market 13,090 -
Investment securities - at amortized cost,
approximate market value of $18,328
at September 30, 1995 - 18,032
Mortgage-backed securities designated as
available for sale - at market 15,713 -
Mortgage-backed securities - at cost,
approximate market value of $8,890
at September 30, 1995 - 9,009
Loans receivable - net 41,936 38,245
Office premises and equipment - at
depreciated cost 964 712
Real estate acquired through foreclosure - -
Stock in Federal Home Loan Bank - at cost 578 548
Accrued interest receivable on loans 211 186
Accrued interest receivable on mortgage-
backed securities 70 55
Accrued interest receivable on investments
and interest-bearing deposits 272 327
Prepaid expenses and other assets 164 89
Prepaid federal income taxes - 16
TOTAL ASSETS $76,399 $69,532
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <C> <C>
Deposits $58,226 $56,425
Advances from Federal Home Loan Bank 5,000 -
Advances by borrowers for taxes and
insurance 49 82
Accounts payable on mortgage loans
serviced for others 3 16
Accrued interest payable 56 24
Other liabilities 141 123
Accrued federal income taxes 17 -
Deferred federal income taxes 138 156
Total liabilities 63,630 56,826
<CAPTION>
STOCKHOLDERS' EQUITY
<S> <C> <C>
Common stock - 2,000,000 shares of no
par value authorized, 991,875 shares
issued and outstanding - -
Additional paid-in capital 9,518 9,473
Retained earnings - substantially
restricted 5,128 5,021
Shares acquired by Employee Stock Ownership
Plan (674) (794)
Shares acquired by Recognition and
Retention Plan (486) -
Unrealized loss on securities designated
as available for sale, net of
related tax effects (84) -
Less 57,018 and 90,093 shares of treasury
stock - at cost (633) (994)
Total stockholders' equity 12,769 12,706
TOTAL LIABILITIES AND STOCKHOLDERS'
EQUITY $76,399 $69,532
</TABLE>
<PAGE>
<TABLE>
Harvest Home Financial Corporation
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share data)
<CAPTION>
Nine months endedThree months ended
June 30, June 30,
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest income
Loans $2,335 $2,211$ 801$ 749
Mortgage-backed securities 484 422 213 149
Investment securities 801 793 248 286
Interest-bearing deposits and other 204 216 68 46
Total interest income 3,824 3,642 1,330 1,230
Interest expense
Deposits 2,122 1,869 713 643
Borrowings 50 - 50 -
Total interest expense 2,172 1,869 763 643
Net interest income 1,652 1,773 567 587
Provision for losses on loans - 9 - 3
Net interest income after
provision for losses on loans 1,652 1,764 567 584
Other operating income 42 49 15 24
General, administrative and other expense
Employee compensation and benefits 570 543 198 198
Occupancy and equipment 190 180 63 61
Federal deposit insurance premiums 97 105 33 36
Franchise taxes 90 58 34 22
Other 176 192 47 45
Total general, administrative
and other expense 1,123 1,078 375 362
Earnings before income taxes 571 735 207 246
Federal income taxes
Current 166 223 63 79
Deferred 25 27 5 5
Total federal income taxes 191 250 68 84
NET EARNINGS $ 380 $ 485 $ 139$ 162
EARNINGS PER SHARE $.45 N/A $.16 $.17
</TABLE>
<PAGE>
<TABLE>
The Harvest Home Financial Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended June 30,
(In thousands)
<CAPTION>
1996 1995
<S> <C> <C>
Cash flows provided by (used in) operating
activities:
Net earnings for the period $ 380 $ 485
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities:
Amortization of deferred loan origination
fees (28) (26)
Depreciation and amortization 37 32
Amortization of premiums on mortgage-backed
securities 35 16
Amortization of premiums on investment
securities 29 39
Amortization expense of employee benefit
plans 120 -
Provision for losses on loans - 9
Federal Home Loan Bank stock dividends (29) (25)
Increase (decrease) in cash due to changes in:
Accrued interest receivable on loans (25) (9)
Accrued interest receivable on mortgage-
backed securities (15) (13)
Accrued interest receivable on investments
and interest-bearing deposits 55 (136)
Prepaid expenses and other assets (75) 106
Accounts payable on mortgage loans
serviced for others (13) (19)
Accrued interest payable 32 (11)
Other liabilities 18 80
Federal income taxes
Current 33 42
Deferred 25 27
Net cash provided by operating activities 579 597
Cash flows provided by (used in) investing
activities:
Principal repayments on mortgage-backed
securities 995 679
Purchase of mortgage-backed securities (7,948) (2,013)
Purchase of investment securities - (10,028)
Proceeds from maturity of investment
securities 5,000 2,000
Principal repayments on loans 5,535 3,175
Loan disbursements (9,198) (4,694)
Proceeds from sale of real estate acquired
through foreclosure - 31
Purchase of office equipment (289) (23)
Net cash used in investing activities (5,905) (10,873)
Cash flows provided by (used in) financing
activities:
Net (decrease) in deposit accounts 1,801 (11,816)
Proceeds from Federal Home Loan Bank advances 5,000 -
Advances by borrowers for taxes and insurance (33) (32)
Proceeds from issuance of common stock - 8,680
Dividends paid on common stock (273) (200)
Purchase of treasury stock (80) (546)
Net cash provided by (used in) financing
activities 6,415 (3,914)
Net increase (decrease) in cash and cash
equivalents 1,089 (14,190)
Cash and cash equivalents at beginning of
period 2,313 16,333
Cash and cash equivalents at end of period $ 3,402 $ 2,143
Supplemental disclosure of cash flow
information:
Cash paid during the year for:
Federal income taxes $ 132 $ 199
Interest on deposits and borrowings $ 2,140 $ 1,880
Supplemental disclosure of noncash investing
activities:
Transfer of investment and mortgage-backed
securities to an available for sale
classification $25,732 $ -
Unrealized loss on securities designated
as available for sale, net of related
tax effects $ 84 $ -
</TABLE>
<PAGE>
Harvest Home Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine month periods ended
June 30, 1996 and 1995
In January 1994, Harvest Home Savings Bank's (the Savings Bank)
Board of Directors adopted an overall plan of conversion and
reorganization (the Plan) providing for the Savings Bank's
conversion to the stock form of ownership, followed by the
issuance of all of the Savings Bank's outstanding stock to a
newly formed holding company, Harvest Home Financial Corporation
(the Corporation). On October 7, 1994, the Savings Bank
completed its conversion to the stock form of ownership, and
issued all of the Savings Bank's outstanding shares to the
Corporation.
The common stock offering culminated in the sale of 991,875
shares to depositors at a price of $10.00 per share which, after
consideration of offering expenses totaling $446,000, and shares
purchased by employee benefit plans totaling $793,500, resulted
in net cash proceeds of $8.7 million. The financial statements
for the periods prior to October 1994 are those of the Savings
Bank prior to the conversion and reorganization.
1. Basis of Presentation
The accompanying unaudited consolidated financial statements were
prepared in accordance with instructions for Form 10-QSB and,
therefore, do not include information or footnotes necessary for
a complete presentation of consolidated financial position,
results of operations and cash flows in conformity with generally
accepted accounting principles. However, in the opinion of
management, all adjustments (consisting of only normal recurring
accruals) which are necessary for a fair presentation of the
consolidated financial statements have been included. The
results of operations for the three and nine month periods ended
June 30, 1996 and 1995, are not necessarily indicative of the
results which may be expected for an entire fiscal year.
2. Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of the Corporation and the Savings Bank. All
significant intercompany items have been eliminated.
3. Earnings Per Share
Earnings per share for the three and nine month periods ended
June 30, 1996 is computed based on 864,420 and 841,743 weighted-
average shares outstanding, respectively.
Earnings per share for the three month period ended June 30,
1995, is computed based on 942,282 weighted-average shares
outstanding.
<PAGE>
Harvest Home Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the three and nine month periods ended
June 30, 1996 and 1995
3. Earnings Per Share (continued)
Earnings per share for the nine month period ended June 30, 1995,
is not applicable as the Corporation completed its conversion to
the stock form of ownership in October 1994.
4. Effects of Recent Accounting Pronouncements
In May 1993, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards (SFAS) No. 114,
"Accounting by Creditors for Impairment of a Loan". This
Statement, which was amended by SFAS No. 118 as to certain income
recognition and financial statement disclosure provisions,
requires that impaired loans be measured based upon the present
value of expected future cash flows discounted at the loan's
effective interest rate or, as a practical expedient, at the
loan's observable market price or fair value of the collateral.
SFAS No. 114 was effective for years beginning after December 15,
1994 (fiscal 1996 as to the Corporation). The Corporation
adopted the Statement effective October 1, 1995, without material
effect on consolidated financial condition or results of
operations.
In May 1993, the Financial Accounting Standards Board issued SFAS
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities" (the Statement). SFAS No. 115 requires that
investments be categorized as held-to-maturity, trading, or
available for sale. Securities classified as held-to-maturity
are carried at cost only if the Corporation has the positive
intent and ability to hold these securities to maturity. Trading
securities and securities available for sale are carried at fair
value with resulting unrealized gains or losses recorded to
operations or stockholders' equity, respectively. The
Corporation adopted the Statement for the fiscal year beginning
October 1, 1994 by designating all investment and mortgage-backed
securities as held-to-maturity.
During September 1995, the Financial Accounting Standards Board
(FASB) granted financial institutions the opportunity to
reclassify the investment portfolios without violating SFAS No.
115. The Corporation took advantage of this opportunity by
reclassifying all of its investment and mortgage-backed
securities from held to maturity to available for sale. All
reclassifications were made on a single day in conformity with
the requirement. Management believes that such changes will
allow more flexibility in managing interest rate risk within the
investment and mortgage-backed securities portfolios.
<PAGE>
Harvest Home Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the three and nine month periods ended
June 30, 1996 and 1995
4. Effects of Recent Accounting Pronouncements (continued)
In October 1994, the FASB issued SFAS No. 123 entitled
"Accounting for Stock-Based Compensation." SFAS No. 123
establishes a fair value based method of accounting for stock-
based compensation paid to employees. The Statement recognizes
the fair value of an award of stock or stock options on the grant
date and is required to be adopted by fiscal 1997, although
earlier adoption is permitted. Management does not believe that
the disclosure provisions of SFAS No. 123 will have a material adverse
effect on the Corporation's consolidated financial position or
results of operations.
5. Pending Legislative Changes
The deposit accounts of the Savings Bank and of other savings
associations are insured by the FDIC in the Savings Association
Insurance Fund ("SAIF"). The reserves of the SAIF are below the
level required by law, because a significant portion of the
assessments paid into the fund have been used to pay the cost of
prior thrift failures. The deposit accounts of commercial banks
are insured by the FDIC in the Bank Insurance Fund ("BIF"),
except to the extent such banks have acquired SAIF deposits. The
reserves of the BIF met the level required by law in May 1995.
As a result of the disparity in the respective reserve levels of
the funds, deposit insurance assessments paid by healthy savings
associations exceeded those paid by healthy commercial banks by
approximately $.19 per $100 in deposits in 1995, and in 1996 BIF
assessments required of healthy commercial banks are limited to a
$2,000 minimum fee. This premium disparity could have a negative
competitive impact on the Savings Bank and other institutions
with SAIF deposits.
Congress is considering legislation to recapitalize the SAIF and
eliminate the significant premium disparity. Currently, that
recapitalization plan provides for a special assessment of
approximately $.85 per $100 of SAIF deposits held at March 31,
1995, in order to increase SAIF reserves to the level required by
law. In addition, the cost of prior thrift failures would be
shared by both the SAIF and the BIF. This would likely increase
BIF assessments by $.02 to $.025 per $100 in deposits. SAIF
assessments would initially be set at the same level as BIF
assessments and could never be reduced below the level for BIF
assessments. These projected assessment levels may change if
commercial banks holding SAIF deposits are provided some relief
from the special assessment or are allowed to transfer SAIF
deposits to the BIF.
<PAGE>
Harvest Home Financial Corporation
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the three and nine month periods ended
June 30, 1996 and 1995
5. Pending Legislative Changes (continued)
A component of the recapitalization plan provides for the merger
of the SAIF and BIF on January 1, 1998. However, the SAIF
recapitalization legislation currently provides for an
elimination of the thrift charter or of the separate federal
regulation of thrifts prior to the merger of the deposit
insurance funds. As a result, the Savings Bank would be
regulated as a bank under Federal laws which would subject it to
the more restrictive activity limits imposed on national banks.
The Corporation, as the holding company of the Savings Bank would
become a bank holding company, which would subject it to more
restrictive activity limits and to capital requirements similar
to those imposed on the Savings Bank. In a separate legislative
proposal, tax legislation would require the Savings Bank to
recapture post-1987 additions to its bad debt reserve, and the
Savings Bank would not be able to utilize the percentage of
taxable income method to compute its reserve in the future.
Under such legislation the Savings Bank may be required to
recapture approximately $360,000 of its bad debt reserve, which
represents post-1987 additions to the reserve.
The Savings Bank had $56.5 million in deposits at March 31, 1995.
If the special assessment is $.85 per $100 in deposits, the
Savings Bank will pay an additional assessment of $480,000. This
assessment should be tax deductible, but it will reduce earnings
and capital for the quarter in which it is recorded. It is
expected that quarterly SAIF assessments will be reduced to
approximately $.06 to $.065 per $100 in deposits.
No assurances can be given that the SAIF recapitalization plan
will be enacted into law or in what form it may be enacted. In
addition, the Corporation can give no assurances that the
disparity between BIF and SAIF assessments will be eliminated and
cannot predict the impact of being regulated as a bank holding
company, or the change in tax accounting for bad debt reserves,
until the legislation requiring such change is enacted.
Discussion of Financial Condition Changes from September 30, 1995
to June 30, 1996
At June 30, 1996, the Corporation had total assets of $76.4
million, an increase of $6.9 million, or 9.9%, from September 30,
1995. The increase in assets resulted primarily from a $1.8
million increase in deposits and a $5.0 million increase in
advances from the Federal Home Loan Bank.
<PAGE>
Harvest Home Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Discussion of Financial Condition Changes from September 30, 1995
to June 30, 1996 (continued)
Cash and due from banks and interest-bearing deposits in other
financial institutions increased by $1.1 million, to a total of
$3.4 million at June 30, 1996. Investment securities decreased
by $4.9 million, or 27.4%, primarily as a result of maturities in
the portfolio. Mortgage-backed securities increased by $6.7
million, or 74.4%, due primarily to the purchase of $5.0 million
in such securities via an arbitrage transaction with the Federal
Home Loan Bank.
Loans receivable increased by $3.7 million, or 9.7%, as loan
disbursements of $9.2 million exceeded principal repayments of
$5.5 million. Loan disbursements in the current nine month
period exceeded those during the nine months ended June 30, 1995
by $4.5 million, or 96.0%.
At June 30, 1996, Harvest Home's allowance for loan losses
totaled $111,000, which equaled the level maintained at September
30, 1995. The allowance for loan losses is evaluated by
management based upon an assessment of current and anticipated
economic conditions applied to the loan portfolio, as well as,
evaluating the quality of the portfolio. At June 30, 1996, the
Corporation had $147,000 in nonperforming loans, as compared to
$143,000 in nonperforming loans at September 30, 1995.
Deposits totaled $58.2 million at June 30, 1996, an increase of
$1.8 million, or 3.2%, from the $56.4 million of deposits
outstanding at September 30, 1995. This increase resulted from
management's efforts to achieve a moderate rate of growth through
advertising and deposit pricing strategies.
The Federal Deposit Insurance Corporation (FDIC) has adopted risk-
based capital ratio guidelines to which the Savings Bank is
subject. The guidelines establish a systematic analytical
framework that makes regulatory capital requirements more
sensitive to differences in risk profiles among banking
organizations. Risk-based capital ratios are determined by
allocating assets and specified off-balance sheet commitments to
four risk-weighted categories, with higher levels of capital
being required for the categories perceived as representing
greater risk.
These guidelines divide the Savings Bank's capital into two
tiers. The first tier ("Tier 1") includes common equity, certain
non-cumulative perpetual preferred stock (excluding auction rate
issues) and minority interests in equity accounts of consolidated
subsidiaries, less goodwill and certain other intangible assets
(except mortgage servicing rights and purchased credit card
relationships, subject to certain limitations). Supplementary
<PAGE>
Harvest Home Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Discussion of Financial Condition Changes from September 30, 1995
to June 30, 1996
(continued)
("Tier II") capital includes, among other items, cumulative
perpetual and long-term limited-life preferred stock, mandatory
convertible securities, certain hybrid capital instruments, term
subordinated debt and the allowance for loan losses, subject to
certain limitations, less required deductions. Savings banks are
required to maintain a total risk-based capital ratio of 8%, of
which 4% must be Tier 1 capital. The FDIC may, however, set
higher capital requirements when particular circumstances
warrant. Savings banks experiencing or anticipating significant
growth are expected to maintain capital ratios, including
tangible capital positions, well above the minimum levels.
In addition, the FDIC established guidelines prescribing a
minimum Tier 1 leverage ratio (Tier 1 capital to adjusted total
assets as specified in the guidelines). These guidelines provide
for a minimum Tier 1 leverage ratio of 3% for savings banks that
meet certain specified criteria, including that they have the
highest regulatory rating and are not experiencing or
anticipating significant growth. All other savings banks are
required to maintain a Tier 1 leverage ratio of 3% plus an
additional cushion of at least 100 to 200 basis points.
As of June 30, 1996, the Savings Bank's regulatory capital
substantially exceeded all minimum capital requirements.
Comparison of Operating Results for the Nine Month Periods Ended
June 30, 1996 and 1995
General
Net earnings for the nine months ended June 30, 1996 totaled
$380,000, a decrease of $105,000, or 21.6%, from the comparable
1995 period. The decrease in earnings resulted primarily from a
$121,000 decrease in net interest income and a $45,000 increase
in general, administrative and other expense, which were
partially offset by a $9,000 decrease in the provision for losses
on loans and a $59,000 decrease in the federal income tax
provision.
Net Interest Income
Interest income on loans for the nine months ended June 30, 1996,
increased by $124,000, or 5.6%, as compared to the nine months
ended June 30, 1995. The increase was primarily due to a $2.7
million increase in the weighted average portfolio balance year-
to-year. Interest income on mortgage-backed securities increased
<PAGE>
Harvest Home Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Nine Month Periods Ended
June 30, 1996 and 1995 (continued)
by $62,000, or 14.7%, due primarily to the increase in the
balance outstanding, as previously discussed. Interest income on
investment securities and other interest-earning assets decreased
by $4,000, or .4%. This increase was primarily the result of a
$3.1 million decline in the weighted average portfolio balance
outstanding year-to-year, which was partially offset by an
increase in yield.
Interest expense on deposits increased by $253,000, or 13.5%,
during the nine months ended June 30, 1996. This increase was
the result of an increase in the cost of deposits, coupled with
an increase in the weighted average balance of deposits
outstanding of approximately $900,000. The increase in the cost
of deposits generally reflects the increase in interest rates in
the economy.
As a result of the foregoing changes in interest income and
interest expense, net interest income decreased by $121,000, or
6.8%, during the nine months ended June 30, 1996, as compared to
the nine months ended June 30, 1995.
Provision for Loan Losses
The Savings Bank's provision for loan losses declined by
approximately $9,000 for the nine months ended June 30, 1996.
Management bases its decisions to record additions to the
provision on its assessment of the level of delinquent and
nonperforming loans and current and anticipated economic
conditions applied to the portfolio.
Other Income
Other income increased by $7,000 or 14.3%, during the nine months
ended June 30, 1996. This increase was due to an increase in
service charges and other fees on loans and deposits year-to-
year.
General, Administrative and Other Expense
General, administrative and other expense increased by
approximately $45,000, or 4.2%, during the nine months ended June
30, 1996, as compared to 1995. This increase was primarily the
result of a $27,000, or 5.0%, increase in employee compensation
and benefits, a $10,000, or 5.6%, increase in occupancy and
equipment and a $32,000, or 55.2%, increase in franchise taxes,
which were partially offset by an $16,000, or 8.3%, decline in
other expense. The increase in compensation expense generally
reflects normal merit increases, coupled with increased costs
attendant to employee benefit plans, which were partially offset
by an increase in deferred loan origination costs attendant to
the $4.5 million increase in loan origination volume year-to-
year. The increase in franchise taxes resulted from the
Corporation's growth in equity following the mutual-to-stock
conversion, while the increase in occupancy reflected pro-rata
increases in various operating costs. The decline in other
operating expense resulted primarily from a decline in
advertising costs relating to the Corporation's 75th Anniversary
promotion in the 1995 period.
Federal Income Taxes
The provision for federal income taxes decreased by $59,000, or
23.6%, during the nine months ended June 30, 1996, due primarily
to a decrease in earnings before income taxes of $164,000, or
22.3%. Harvest Home's effective tax rates amounted to 33.5% and
34.0% during the nine months ended June 30, 1996 and 1995,
respectively.
Comparison of Operating Results for the Three Month Periods Ended
June 30, 1996 and 1995
General
Net earnings for the three months ended June 30, 1996, totaled
$139,000, a decrease of $23,000, or 14.2%. The decrease in net
earnings resulted primarily from a $20,000 decrease in net
interest income and a $13,000 increase in general, administrative
and other expense, which were partially offset by a $16,000
decrease in the federal income tax provision.
Net Interest Income
Interest income on loans for the three months ended June 30,
1996, increased by $52,000, or 6.9%. Interest income on mortgage-
backed securities increased by $64,000, or 43.0%, due to an
increase in yield, coupled with an increase in the weighted
average portfolio balance outstanding year-to-year. Interest
income on investment securities and other interest-earning assets
decreased by $16,000, or 4.8%. This decrease was primarily the
result of a decrease in yields available on short term deposits
year-to-year.
Interest expense on deposits increased by $70,000, or 10.9%,
during the three months ended June 30, 1996. This increase was
the result of an increase in the cost of deposits, generally
reflecting an increase in interest rates in the economy.
<PAGE>
Harvest Home Financial Corporation
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Comparison of Operating Results for the Three Month Periods Ended
June 30, 1996 and 1995 (continued)
As a result of the foregoing changes in interest income and
interest expense, net interest income decreased by $20,000, or
3.4%, during the three months ended June 30, 1996, as compared to
the three months ended June 30, 1995.
Provision for Loan Losses
The Savings Bank's provision for loan losses declined by
approximately $3,000 for the three months ended June 30, 1996, as
compared to the 1995 quarter.
Other Income
Other income decreased by $9,000, or 37.5%, during the three
months ended June 30, 1996. This decrease was due to a decline
in service charges and other fees year-to-year.
General, Administrative and Other Expense
General, administrative and other expense increased by
approximately $13,000, or 3.6%, during the three months ended
June 30, 1996, as compared to 1995. This increase was primarily
the result of a $12,000, or 54.5%, increase in franchise taxes
and pro-rata increases in other operating costs. The increase in
franchise taxes resulted from the increase in the Corporation's
equity following the completion of its stock offering in fiscal
1995.
Federal Income Taxes
The provision for federal income taxes declined by $16,000, or
19.0%, during the three months ended June 30, 1996, due primarily
to an decline in earnings before income taxes of $39,000, or
15.9%. The Corporation's effective tax rates amounted to 32.9%
and 34.1% during the three months ended June 30, 1996 and 1995,
respectively.
<PAGE>
Harvest Home Financial Corporation
PART II
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities
Not applicable
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
None
ITEM 5. Other Materially Important Events
None
ITEM 6. Exhibits and Reports on Form 8-K
None
<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.
Date: August 12, 1996 By: /s/John E. Rathkamp
John E. Rathkamp
President, Chief Executive
Officer and Secretary
Date: August 12, 1996 By: /s/Dennis J. Slattery
Dennis J. Slattery
Executive Vice President,
Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0000919624
<NAME> HARVEST HOME FINANCIAL
<MULTIPLIER> 1,000
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0
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