<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
Commission File Number 0-24118
OTTAWA FINANCIAL CORPORATION
-------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 38-3172166
-------- ----------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization)
245 Central Avenue, Holland, Michigan 49423
--------------------------------------------
(Address of principal executive offices)
616-393-7000
------------
(Registrant's telephone number, including area code)
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
----- ------
Class:
Common stock, $.01 par value As of May 13, 1997, there were 4,920,551 shares
outstanding.
<PAGE> 2
OTTAWA FINANCIAL CORPORATION
FORM 10-Q
QUARTER ENDED MARCH 31, 1997
PART I - FINANCIAL INFORMATION
Interim Financial Information required by Rule 10-01 of Regulation S-X and Item
303 of Regulation S-K is included in this Form 10-Q as referenced below:
<TABLE>
<CAPTION>
Page
----
<S> <C>
ITEM 1 - FINANCIAL STATEMENTS
Consolidated Statements of Financial Condition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Cash Flows . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6
Note to the Consolidated Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8-13
Part II - Other Information
OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
EXHIBIT INDEX . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
</TABLE>
2
<PAGE> 3
PART 1
Item 1. OTTAWA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
<TABLE>
<CAPTION>
March 31, 1997 December 31, 1996
-------------- -----------------
ASSETS
<S> <C> <C>
Cash and due from financial institutions $ 14,345,656 $ 20,253,153
Interest-bearing demand deposits in other
financial institutions 17,155,602 2,547,943
---------- ------------
Total cash and cash equivalents 31,501,258 22,801,096
Securities available for sale 57,254,610 62,906,089
Federal Home Loan Bank stock 7,058,225 6,958,225
Loans receivable, net 722,647,222 715,550,668
Accrued interest receivable
Loans 3,904,834 3,893,220
Securities 865,807 797,827
Real estate owned and real
estate in judgment 31,786 37,767
Premises and equipment, net 14,458,804 14,533,545
Acquisition intangibles 15,161,535 15,473,518
Other assets 6,050,144 5,353,640
--------- -----------
Total Assets $858,934,225 $848,305,595
=========== ============
LIABILITIES
Deposits $635,969,268 $622,491,701
Federal funds purchased 2,000,000
Federal Home Loan Bank advances 136,169,897 139,169,897
Advances from borrowers for taxes
and insurance 994,436 270,319
Accrued expenses and other liabilities 9,853,782 7,457,728
--------- ------------
Total Liabilities 782,987,383 771,389,645
----------- ------------
SHAREHOLDERS' EQUITY
Common Stock, $.01 par value;
10,000,000 shares authorized; issued
5,965,853 shares at March 31, 1997
5,962,534 shares at December 31, 1996 59,659 59,625
Additional Paid-in Capital 61,217,991 61,048,978
Retained earnings, substantially
restricted 33,953,168 32,671,739
Net unrealized gain or (loss) on securities available
for sale, net of tax (236,068) (79,032)
Employee Stock Ownership Plan
(Unallocated Shares) (2,686,644) (2,806,280)
Management Recognition and
Retention Plan (Unearned Shares) (1,866,439) (1,977,393)
Less Cost of Common Stock in
Treasury - 925,666 shares at
March 31, 1997, 782,866 shares at
December 31, 1996 (14,494,825) (12,001,687)
------------ ------------
Total Shareholders' Equity 75,946,842 76,915,950
------------ ------------
Total Liabilities and
Shareholders' Equity $858,934,225 $848,305,595
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE> 4
OTTAWA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1997 1996
---- ----
<S> <C> <C>
Interest Income
Loans $14,456,567 $8,932,998
Investment securities and
equity investments 961,510 1,268,255
Other interest and dividend income 204,033 122,980
---------- ----------
15,622,110 10,324,233
---------- ----------
Interest Expense
Deposits 7,052,995 4,507,529
Federal Home Loan Bank advances 2,011,861 831,629
Other 3,968 2,519
--------- ---------
9,068,824 5,341,677
--------- ---------
NET INTEREST INCOME 6,553,286 4,982,556
Provision for loan losses 150,000 113,793
--------- ---------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES 6,403,286 4,868,763
--------- ---------
Noninterest income
Service charges and other fees 536,584 745,027
Mortgage servicing fees 63,364 58,343
Gain on sale of securities 63,745 12,023
Gain on sale of loans 15,959 54,398
Other 41,752 49,835
--------- ---------
721,404 919,626
--------- ---------
Noninterest expense
Compensation and benefits 2,340,673 1,896,628
Occupancy 330,431 235,147
Furniture, fixtures and equipment 256,184 140,130
Advertising 86,650 57,520
FDIC deposit insurance premium 23,502 233,332
State single business tax 90,000 71,444
Data processing 211,099 217,624
Professional services 80,510 93,531
Acquisition intangibles amortization 311,983 152,343
Other 692,733 667,609
--------- ---------
4,423,765 3,765,308
--------- ---------
INCOME BEFORE FEDERAL
INCOME TAX EXPENSE 2,700,925 2,023,081
Federal income tax expense 984,519 726,906
--------- ---------
NET INCOME $1,716,406 $1,296,175
========= =========
Earnings per common and common equivalent share .34 .24
=== ===
Dividends per common share .09 .08
=== ===
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> 5
OTTAWA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended
March 31
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $1,716,406 $1,296,175
Adjustments to reconcile net income to net cash
from operating activities
Depreciation 269,990 147,300
Net amortization of security premiums and discounts 91,217 32,103
Amortization of acquisition intangibles 311,983 152,343
Provision for loan losses 150,000 113,793
Loss on limited partnership investments 23,615 20,915
ESOP expense 220,477 203,363
MRP expense 143,319 139,347
Origination of loans for sale (3,342,665) (2,344,000)
Proceeds from sale of loans originated for sale 3,358,624 2,398,398
Gain on sale of loans (15,959) (54,398)
Gain on sale of securities (63,745) (12,023)
Changes in:
Other assets (1,188,700) (41,733)
Other liabilities 2,396,054 985,822
--------- ---------
Net cash from operating activities 4,070,616 3,037,405
CASH FLOWS FROM INVESTING ACTIVITIES
Net cash paid for acquisition of AmeriBank (see Note 2) (22,958,606)
Purchase of securities available for sale (95,815) (2,000,000)
Proceeds from calls and maturities of securities available for sale 3,700,000 3,373,435
Proceeds from sale of securities available for sale 160,620 18,236,280
Purchases of FHLB stock (100,000) (1,000,000)
Principal payments on mortgage-backed certificates 2,097,134 672,801
Purchases of loans (909,662) 0
Loan originations and principal payments on loans (6,336,892) (23,218,995)
Premises and equipment expenditures, net (195,249) (264,090)
--------- -------
Net cash from investing activities (1,679,864) (27,159,175)
</TABLE>
5
<PAGE> 6
OTTAWA FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
CONTINUED
<TABLE>
<CAPTION>
Three Months Ended
March 31
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 13,477,567 6,896,353
Net decrease in Federal funds purchased (2,000,000)
Proceeds from FHLB advances 16,000,000 28,000,000
Repayment of FHLB advances (19,000,000) (4,890,000)
Net increase in advances from borrowers 724,117 1,497,362
Proceeds from exercise of stock options 35,841 0
Cash dividends paid (434,977) (414,087)
Purchase of treasury shares (2,493,138) (1,154,500)
----------- ---------
Net cash from financing activities 6,309,410 29,935,128
----------- ----------
Net change in cash and cash equivalents 8,700,162 5,813,358
Cash and cash equivalents at beginning of year 22,801,096 15,867,787
---------- ----------
Cash and cash equivalents at end of year $31,501,258 $21,681,145
========== ==========
Supplemental disclosures of cash flow information
Cash paid during the year for
Interest $8,312,086 $3,950,695
Income taxes 0 0
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE> 7
OTTAWA FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTER ENDED MARCH 31, 1997
(UNAUDITED)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements include the
accounts of Ottawa Financial Corporation ("Corporation") and its wholly owned
subsidiary, AmeriBank ("Bank"). All significant intercompany accounts and
transactions have been eliminated in consolidation.
These interim financial statements are prepared without audit and
reflect all adjustments which, in the opinion of management, are necessary to
present fairly the consolidated financial position of the Corporation at March
31, 1997, and its results of operations and statement of cash flows for the
periods presented. All such adjustments are normal and recurring in nature.
The accompanying consolidated financial statements do not purport to contain
all the necessary financial disclosures required by generally accepted
accounting principles that might otherwise be necessary in the circumstances
and should be read in conjunction with the consolidated financial statements
and notes thereto of Ottawa Financial Corporation for the year ended December
31, 1996.
The acquisition of AmeriBank, Federal Savings Bank ("AFSB") was closed
on February 13, 1996, therefore the financial results for the three months
ended March 31, 1996 reflect the consolidation of financial information since
that date. The financial results for the three months ended March 31, 1997
reflect the consolidation of financial information for the entire quarter.
The provision for income taxes is based upon the effective tax rate
expected to be applicable for the entire year.
Earnings per common and common equivalent share for the quarter ended
March 31, 1997, were computed by dividing net income for the quarter ended
March 31, 1997 by 4,993,035, the weighted average number of shares outstanding
and the weighted average number of common equivalent shares resulting from
dilutive stock options and warrants for the quarter ended March 31, 1997.
In June 1996, the Financial Accounting Standards Board ("FASB") issued
Statement No. 125, Accounting for Transfers and Servicing of Financial Assets
and Extinguishments of Liabilities ("SFAS No. 125"). The Corporation adopted
SFAS No. 125 on January 1, 1997, as required. The standard provides that,
following a transfer of financial assets, an entity is to recognize the
financial and servicing assets it controls and the liabilities it has incurred,
derecognize financial assets when control has been surrendered, and derecognize
liabilities when extinguished. Management does not expect the Statement to
have a material impact on the consolidated financial condition or results of
operations of the Corporation for 1997.
In March 1997, the FASB issued Statement No. 128, Earnings Per Share
("SFAS No. 128"), revising the accounting requirements for calculating earnings
per share. The Statement will require the reporting of basic earnings per
share which is to be calculated solely on average common shares outstanding.
In addition, the statement requires the reporting of diluted earnings per share
which is to reflect the potential dilution of stock options and other potential
dilutive shares. All prior calculations will be restated in 1997 to meet the
new presentation requirements. The Corporation's earnings per common and
common equivalent share amounts as reported for the first quarter of 1997 and
prior years, are expected to be comparable in amount to the calculations of
basic earnings per share for such periods. As the Corporation has not had
significant dilution from its stock equivalents, basic earnings per share
amounts reported will not be significantly higher than diluted earnings per
share amounts for corresponding years.
7
<PAGE> 8
OTTAWA FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
The following discussion compares the financial condition of Ottawa
Financial Corporation ("Corporation") and its wholly owned subsidiary,
AmeriBank ("Bank") at March 31, 1997 to December 31, 1996 and the results of
operations for the three months ended March 31, 1997, compared to the same
period in 1996. This discussion should be read in conjunction with the interim
consolidated condensed financial statements and footnotes included herein.
When used in this Quarterly Report on Form 10-Q, the words or phrases
"will likely result", "are expected to", "is anticipated", "estimate",
"project" or similar expressions are intended to identify "forward-looking
statements" within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements are subject to certain risks and uncertainties -
including, changes in economic conditions in the Corporation's market area,
changes in policies by regulatory agencies, fluctuations in interest rates,
demand for loans in the Corporation's market area and competition, that could
cause actual results to differ materially from historical performance and those
presently anticipated or projected. The Corporation wishes to caution readers
not to place undue reliance on any such forward-looking statements, which speak
only as of the date made. The Corporation wishes to advise readers that the
factors listed above could affect the Corporation's financial performance and
could cause the Corporation's actual results for future periods to differ
materially from any opinions or statements expressed with respect to future
periods in any current statements.
The Corporation does not undertake - and specifically disclaims any
obligation - to publicly release the result of any revisions which may be made
to any forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.
FINANCIAL CONDITION
The Corporation's total assets increased to $858.9 million at March
31, 1997 from $848.3 million at December 31, 1996. Most of the growth was in
interest-bearing deposits with financial institutions and loans. The increase
in loans and liquid assets was funded from the proceeds received from the call
and maturity of securities and the significant growth in deposits.
Net loans receivable increased to $722.6 million at March 31, 1997
from $715.6 million at December 31, 1996. Most of this growth was in new
originations of one-to-four family first mortgage loans, which was funded
entirely by retail deposits as opposed to wholesale funding sources. While the
pace of growth during the first quarter of 1997 was not as significant as that
experienced during 1996, the increase in loans of $7.0 million reflects a
continued healthy loan demand in our market area.
Deposits increased $13.5 million to $636.0 million at March 31, 1997,
from $622.5 million at December 31, 1996. This represents an annualized growth
rate of 8.8%. Approximately 75% of this growth was in a special two year
Certificate of Deposit product, while the remaining increase was in money
market demand accounts. The growth in deposits is attributable to effective
matching of deposit products to market needs and advertising.
Federal Home Loan Bank advances decreased to $136.3 million at March
31, 1997 from $139.2 million at December 31, 1996. The increased liquidity
experienced from the growth in deposits enabled the institution to payoff
approximately $3.0 million in advances at the time of maturity.
8
<PAGE> 9
The primary change in total shareholders' equity related to additional
repurchases of the Corporation's outstanding shares of common stock. During
the first quarter of 1997, 142,800 shares were repurchased at an average price
of $17.46 per share. The stock buy back has enhanced the Corporation's return
on equity and earnings per share.
During the first quarter of 1997, the Corporation declared a cash
dividend of $.09 per share. Dividends declared as a percentage of earning per
share was 26.5% for the three month period ended March 31, 1997.
AVERAGE BALANCES, INTEREST RATES AND YIELDS
The following tables present for the periods indicated the total
dollar amount of interest income earned on average interest-earning assets and
the resultant yields, as well as the amount of interest expense paid on average
interest-bearing liabilities, and the resultant rates.
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
March 31, 1997 March 31, 1996
------------------------------------ ----------------------------------
Average Interest Average Interest
Outstanding Earned/ Yield/ Outstanding Earned Yield/
Balance Paid Rate Balance /Paid Rate
------------------------------------ ----------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-Earning Assets:
Loans receivable (1) (2) $718,216 $14,469 8.06% $439,353 $ 8,933 8.13%
Securities (2) 61,709 989 6.40 78,926 1,268 6.43
Other interest-earning assets 13,387 204 6.10 8,851 123 5.56
-------- ------ -------- ------
Total interest-earning assets $793,312 $15,662 7.90 $527,130 $10,324 7.84
-------- ------ -------- ------
Interest-Bearing Liabilities:
Demand and NOW deposits $146,594 $ 1,382 3.83 $ 77,406 $ 759 3.94
Savings deposits 66,724 403 2.45 59,243 377 2.56
Certificate accounts 386,560 5,268 5.54 248,155 3,372 5.47
FHLB advances 140,337 2,012 5.83 56,946 831 5.87
Other interest-bearing liabilities 197 4 8.16 134 3 8.96
-------- ------ -------- ------
Total interest-bearing liabilities $740,412 $ 9,069 4.97 $441,884 $ 5,342 4.86
-------- ------ -------- ------
Net interest income $ 6,593 $ 4,982
====== ======
Net interest rate spread 2.93% 2.98%
==== ====
Net earning assets $ 52,900 $ 85,246
======== ========
Net yield on average
interest-earning assets 3.32% 3.79%
==== ====
Average interest-earning assets
to average interest-bearing
liabilities 1.07x 1.19x
====== =======
</TABLE>
- --------------------
(1) Calculated net of deferred loan fees, loan discounts, loans in process,
and loan reserves.
(2) Tax exempt interest on loans and securities has been
converted to a fully - taxable equivalent basis.
9
<PAGE> 10
RATE/VOLUME ANALYSIS
The following table presents the dollar amount of changes in interest
income and interest expense for major components of interest- earning assets
and interest-bearing liabilities. It distinguishes between the change related
to changes in outstanding balances and that due to interest rate movements.
For each category of interest-earning assets and interest-bearing liabilities,
information is provided on changes attributable to (i) changes in volume (i.e.,
changes in volume multiplied by old rate) and (ii) changes in rate (i.e.,
changes in rate multiplied by old volume). For purposes of this table, changes
attributable to both rate and volume which cannot be segregated have been
allocated proportionately to the change due to volume and the change due to
rate.
<TABLE>
<CAPTION>
Three Months Ended
March 31
1997 vs. 1996
--------------------------------------
Increase
(Decrease)
Due to
----------------------- Total Increase
Volume Rate (Decrease)
--------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C>
Interest-earning assets:
Loans receivable $5,617 $(81) $5,536
Securities - Taxable (276) (3) (279)
Other interest-earning assets 68 13 81
----- ----- ------
Total interest-earning assets $5,409 $(71) $5,338
===== ===== ======
Interest-bearing liabilities:
Demand and NOW deposits 651 (28) 623
Savings deposits 44 (18) 26
Certificate accounts 1,886 10 1,896
Borrowings 1,195 (14) 1,181
Other interest-bearing liabilities 1 1
----- ----- ------
Total interest-bearing liabilities $3,777 $(50) $3,727
===== ===== ======
Net interest income $1,611
======
</TABLE>
RESULTS OF OPERATIONS
The acquisition of AmeriBank, Federal Savings Bank ("AFSB") was closed
on February 13, 1996, therefore the financial results for the three months
ended March 31, 1996 reflect the consolidation of financial information since
that date. The financial results for the three months ended March 31, 1997
reflect the consolidation of financial information for the entire quarter.
Net income after tax was $1.7 million or $.34 per share for the first
quarter of 1997, compared to net income of $1.3 million or $.24 per share for
the same period in 1996. This represents a 42% increase in earnings per share
("EPS"). In addition to the increase in net income, EPS was also positively
impacted by the stock buy back activity discussed above.
To supplement the EPS information typically disclosed, the Corporation
is providing "cash" or "tangible" EPS as an alternative measure for evaluating
the Corporation's ability to grow tangible capital. The calculations of cash
earnings per share were specifically formulated by the Corporation and may not
be comparable to similarly titled measures reported by other companies. This
measure is not intended to reflect
10
<PAGE> 11
cash flow per share. The cash EPS for the first quarter of 1997 was $.45,
which is $.11 per share higher than the standard EPS, compared to a cash EPS of
$.31 for the first quarter of 1996, showing a 45% improvement. This measure is
described more fully in the 1996 Annual Report to shareholders.
Net interest income increased $1.6 million on a tax equivalent basis
for the three months ended March 31, 1997 as compared to the same period in
1996. The yield on total interest-earning assets increased while the yield on
individual components of earning assets declined due to an increase in the loan
portfolio as a percent of total interest-earning assets. A shift in mix also
caused an increase in the total cost of interest-bearing liabilities even
though rates on individual components of liabilities remained relatively stable
or declined. The most significant mix change in liabilities was the increase
in FHLB advances to total liabilities.
With the net interest rate spread declining only slightly to 2.93% for
the three months ended March 31, 1997 from 2.98% for the same period in 1996,
the overall increase in net interest income reflects the positive impact of
volume increases caused by the AFSB acquisition and internal growth experienced
during 1996 and the first quarter of 1997. While the net interest rate spread
remained relatively consistent between the two periods, the net interest margin
decreased from 3.79% for the three months ended March 31, 1996 to 3.32% for the
three months ended March 31, 1997. The reduction in net interest margin was
primarily the result of the Corporation becoming more leveraged through
acquisition and internal growth. This increase in leveraging is reflected in
the ratio of average interest-earning assets to average interest- bearing
liabilities, which declined to 1.07x for the three months ended March 31, 1997
compared to 1.19x for the same period in 1996.
The provision for loan losses is a result of management's periodic
analysis of the adequacy of the allowance for loan losses. The provision of
$150,000 for the three months ended March 31, 1997 was for the purpose of
growing the allowance for loan loss balance to keep pace with the loan growth
and prepare for the higher risk of loss associated with management's intention
to increase the commercial and consumer loan portfolios.
The allowance is maintained by management at a level considered
adequate to cover possible loan losses that are currently anticipated based on
past loss experience, general economic conditions, information about specific
borrower situations, including their financial position and collateral values,
and other factors and estimates, which are subject to change over time.
Although the level of non-performing assets is considered in establishing the
allowance for loan losses balance, variations in non-performing loans have not
been meaningful based upon the Corporation's past loss experience and, as such,
have not had a significant impact on the overall level of the allowance for
loan losses. Delinquent loans more than 90 days are put on non-accrual status
unless they are adequately collateralized and in the process of collection (see
discussion on non-performing assets and allowance for loan losses).
Noninterest income declined $198,000 in the first quarter of 1997
compared to the same period in 1996. The decrease was primarily in the area of
deposit service charges which did not increase consistently with the growth in
deposits due to the composition of deposits and related terms for generating
service charge income. In addition, there was a decline in gains on sales of
loans due to rising interest rates for most of the first quarter.
Noninterest expense increased to $4.4 million for the three months
ended March 31, 1997 from $3.8 million for the three months ended March 31,
1996. The higher level of noninterest expense was due primarily to the
inclusion of AFSB for a full quarter in 1997 compared to only a partial quarter
in 1996. Noninterest expense items fluctuating consistent with the full
versus partial quarter relationship were compensation and benefits; occupancy;
furniture, fixtures and equipment; advertising; single business tax and
acquisition intangibles amortization.
There was a significant reduction in FDIC insurance due to the
lowering of insurance premiums for SAIF-insured deposits in 1997. The FDIC
insurance expense for the first quarter of 1997 also reflects a one-time refund
of insurance premium in the amount of $75,000, therefore expense for this
quarter would have
11
<PAGE> 12
been approximately $100,000 which is a level that will more likely be
representative of future quarters.
Data processing expense, although consistent in dollar level with
1996, reflects a decrease due to 1996 being a partial quarter with AFSB. This
decrease is the result of economies of operations achieved through the
acquisition. Other economies of operation have been achieved and are reflected
in the level of other noninterest expenses.
Income tax expense for the first quarter of 1997 was $985,000 compared
to $727,000 for the same period in 1996. The effective tax rate for the three
months ended March 31, 1997 was 36.45% compared to 35.93% for the three months
ended March 31, 1996. The primary reason for the increase in the effective tax
rate was due to the amortization of three months of goodwill related to the
AFSB acquisition, which is not deductible for tax purposes, for the first
quarter of 1997 compared to one and a half months worth of amortization for the
same period in 1996.
NON-PERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES
The Corporation's non-performing assets decreased $226,000 from $2.9 million at
December 31, 1996 to $2.7 million at March 31, 1997. At March 31, 1997, the
percentage of non-performing assets to total assets was .31% compared to .34%
at December 31, 1996. The Corporation's allowance for loan losses as a
percentage of non-performing assets at March 31, 1997 was 112.26% compared to
106.97% at December 31, 1996.
Non-accruing loans at March 31, 1997 consisted of $974,000 of residential
mortgage loans, $305,000 of consumer loans and $113,000 of commercial business
loans. Included in the non-accruing residential mortgage loans were $616,000
of loans to the same borrower secured by 22 individual rental units. The Bank
has exercised its assignment of rents provision under the mortgage documents
giving the Bank the right to receive the rents directly and to engage a new
property management company, which it has done. The loans have an estimated
loan-to-value ratio of 66%.
The table below sets forth the amounts and categories of
non-performing assets in the Bank's loan portfolio at March 31, 1997 and
December 31, 1996.
<TABLE>
<CAPTION>
March 31 December 31
1997 1996
---------- -----------
(Dollars in Thousands)
<S> <C> <C>
Non-accruing loans $1,391 $2,123
Accruing loans delinquent more than 90 days:
One- to four-family 414 132
Commercial and multi-family real estate 713 426
Consumer 0 55
----- -----
Total 2,518 2,736
----- -----
Foreclosed assets:
One- to four-family 32 38
Consumer 149 151
----- -----
Total 181 189
----- -----
Total non-performing assets $2,699 $2,925
===== =====
Total as a percentage of total assets .31% .34%
===== =====
</TABLE>
12
<PAGE> 13
LIQUIDITY
The Bank is required to maintain minimum levels of liquid assets of 5%
as defined by Bank regulators. The Bank's liquidity ratio of 9.27% at March
31, 1997 complies with minimum levels and is up from the December 31, 1996
level of 8.40%. The Bank anticipates it will have sufficient funds available
to meet current loan commitments through growth of deposits, amortization of
loans and additional FHLB borrowings, if necessary.
CAPITAL RESOURCES
The Bank is subject to capital to asset requirements in accordance
with Bank regulations. There has been no significant change in the level of
the Bank's regulatory capital relative to the requirements since December 31,
1996. The Bank remains well capitalized under the prompt corrective action
regulations.
13
<PAGE> 14
OTTAWA FINANCIAL CORPORATION
FORM 10-Q
QUARTER ENDED MARCH 31, 1997
PART II - OTHER INFORMATION
Item 1 Legal Proceedings:
There are no matters required to be reported under this item.
Item 2 Changes in Securities:
There are no matters required to be reported under this item.
Item 3 Defaults Upon Senior Securities:
There are no matters required to be reported under this item.
Item 4 Submission of Matters to a Vote of Security Holders:
There are no matters required to be reported under this item.
Item 5 Other Information:
There are no matters required to be reported under this item.
Item 6 Exhibits and Reports on Form 8-K:
(a) Exhibit 3(ii) - By-Laws, as amended
(b) Exhibit 11 Statement - Re: Computation of per Share Earnings
(c) Exhibit 27 - Financial Data Schedule (electronic filing only)
SIGNATURES
Pursuant to the requirement 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.
OTTAWA FINANCIAL CORPORATION
Date: May 13, 1997 /s/ Gordon L. Grevengoed
------------ ------------------------
Gordon L. Grevengoed
President and Chief Executive
Officer
Date: May 13, 1997 /s/ Jon W. Swets
------------ ------------------------
Jon W. Swets
Chief Financial Officer
14
<PAGE> 15
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
<S> <C>
3(ii) By - Laws, as amended
11 Statement - Re: Computation of per share earnings.
27 Financial Data Schedule (electronic filing only)
</TABLE>
15
<PAGE> 1
(a) Exhibit 3(ii) - BY-LAWS, AS AMENDED
OTTAWA FINANCIAL CORPORATION
BY-LAWS
ARTICLE I
STOCKHOLDERS
Section 1. Annual Meeting.
An annual meeting of the stockholders, for the election of directors
to succeed those whose terms expire and for the transaction of such other
business as may properly come before the meeting, shall be held at such place,
on such date, and at such time as the Board of Directors shall each year fix.
Section 2. Special Meetings.
Subject to the rights of the holders of any class or series of
preferred stock of the Corporation, special meetings of stockholders of the
Corporation may be called only by the Board of Directors pursuant to a
resolution adopted by a majority of the total number of directors which the
Corporation would have if there were no vacancies on the Board of Directors
(hereinafter the "Whole Board").
Section 3. Notice of Meetings.
Written notice of the place, date, and time of all meetings of the
stockholders shall be given, not less than ten (10) nor more than sixty (60)
days before the date on which the meeting is to be held, to each stockholder
entitled to vote at such meeting, except as otherwise provided herein or
required by law (meaning, here and hereinafter, as required from time to time
by the Delaware General Corporation Law or the Certificate of Incorporation of
the Corporation).
When a meeting is adjourned to another place, date or time, written
notice need not be given of the adjourned meeting if the place, date and time
thereof are announced at the meeting at which the adjournment is taken;
provided, however, that if the date of any adjourned meeting is more than
thirty (30) days after the date for which the meeting was originally noticed,
or if a new record date is fixed for the adjourned meeting, written notice of
the place, date and time of the adjourned meeting shall be given in conformity
herewith. At any adjourned meeting, any business may be transacted which might
have been transacted at the original meeting.
Section 4. Quorum.
At any meeting of the stockholders, the holders of at least one-third
of all of the shares of the stock entitled to vote at the meeting, present in
person or by proxy, shall constitute a quorum for all purposes, unless or
except to the extent that the presence of a larger number may be required by
law. Where a separate vote by a class or classes is required, a majority of
the shares of such class or classes, present in person or represented by proxy,
shall constitute a quorum entitled to take action with respect to that vote on
that matter.
If a quorum shall fail to attend any meeting, the chairman of the
meeting or the holders of a majority of the shares of stock entitled to vote
who are present, in person or by proxy, may adjourn the meeting to another
place, date or time.
16
<PAGE> 2
If a notice of any adjourned special meeting of stockholders is sent
to all stockholders entitled to vote thereat, stating that it will be held with
those present constituting a quorum, then except as otherwise required by law,
those present at such adjourned meeting shall constitute a quorum, and all
matters shall be determined by a majority of the votes cast at such meeting.
Section 5. Organization.
Such person as the Board of Directors may have designated or, in the
absence of such a person, the President of the Corporation or, in his or her
absence, such person as may be chosen by the holders of a majority of the
shares entitled to vote who are present, in person or by proxy, shall call to
order any meeting of the stockholders and act as chairman of the meeting. In
the absence of the Secretary of the Corporation, the secretary of the meeting
shall be such person as the chairman appoints.
Section 6. Conduct of Business.
(a) The chairman of any meeting of stockholders shall
determine the order of business and the procedure at the meeting, including
such regulation of the manner of voting and the conduct of discussion as seem
to him or her in order.
(b) At any annual meeting of the stockholders, only such
business shall be conducted as shall have been brought before the meeting (i)
by or at the direction of the Board of Directors or (ii) by any stockholder of
the Corporation who is entitled to vote with respect thereto and who complies
with the notice procedures set forth in this Section 6(b). For business to be
properly brought before an annual meeting by a stockholder, the stockholder
must have given timely notice thereof in writing to the Secretary of the
Corporation. To be timely, a stockholder's notice must be delivered or mailed
to and received at the principal executive offices of the Corporation not less
than ninety (90) days prior to the anniversary of the preceding year's annual
meeting; provided, however, that in the event that the date of the annual
meeting is advanced by more than twenty days, or delayed by more than sixty
days from such anniversary date, notice by the stockholder to be timely must be
so delivered not later than the close of business on the later of the 90th day
prior to such annual meeting or the 10th day following the day on which notice
of the date of the annual meeting was mailed or public announcement of the date
of such meeting is first made. A stockholder's notice to the Secretary shall
set forth as to each matter such stockholder proposes to bring before the
annual meeting (i) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (ii) the name and address, as they appear on the Corporation's
books, of the stockholder who proposed such business, (iii) the class and
number of shares of the Corporation's capital stock that are beneficially owned
by such stockholder and (iv) any material interest of such stockholder in such
business. Notwithstanding anything in these By-laws to the contrary, no
business shall be brought before or conducted at an annual meeting except in
accordance with the provisions of this Section 6(b). The officer of the
Corporation or other person presiding over the annual meeting shall, if the
facts so warrant, determine and declare to the meeting that business was not
properly brought before the meeting in accordance with the provisions of this
Section 6(b) and, if he should so determine, he shall so declare to the meeting
and any such business so determined to be not properly brought before the
meeting shall not be transacted.
At any special meeting of the stockholders, only such business
shall be conducted as shall have been brought before the meeting by or at the
direction of the Board of Directors.
(c) Only persons who are nominated in accordance with the
procedures set forth in these By-laws shall be eligible for election as
directors. Nominations of persons for election to the Board of Directors of
the Corporation may be made at a meeting of stockholders at which directors are
to be elected only (i) by or at the direction of the Board of Directors or (ii)
by any stockholder of the Corporation entitled to vote for the election of
directors at the meeting who complies with the notice procedures set forth in
this Section 6(c). Such nominations, other than those made by or at the
direction of the Board of Directors, shall be made by timely notice in writing
to the Secretary of the Corporation. To be timely, a stockholder's notice
shall be
17
<PAGE> 3
delivered or mailed to and received at the principal executive offices of the
Corporation not less than ninety (90) days prior to the date of the meeting;
provided, however, that in the event that less than 100 days' notice of the
date of the meeting is first given or made to stockholders, by public
announcement or mail, notice by the stockholder to be timely must be so
received not later than the close of business on the 10th day following the day
on which such notice of the date of the meeting was mailed or public
announcement was first made. Such stockholder's notice shall set forth (i) as
to each person whom such stockholder proposes to nominate for election or
re-election as a director, all information relating to such person that is
required to be disclosed in solicitations of proxies for election of directors,
or is otherwise required, in each case pursuant to Regulation 14A under the
Securities Exchange Act of 1934, as amended (including such person's written
consent to being named in the proxy statement as a nominee and to serving as a
director if elected); and (ii) as to the stockholder giving the notice: (x) the
name and address, as they appear on the Corporation's books, of such
stockholder and (y) the class and number of shares of the Corporation's capital
stock that are beneficially owned by such stockholder. At the request of the
Board of Directors, any person nominated by the Board of Directors for election
as a director shall furnish to the Secretary of the Corporation that
information required to be set forth in a stockholder's notice of nomination
which pertains to the nominee. No person shall be eligible for election as a
director of the Corporation unless nominated in accordance with the provisions
of this Section 6(c). The officer of the Corporation or other person presiding
at the meeting shall, if the facts so warrant, determine that a nomination was
not made in accordance with such provisions and, if he or she should so
determine, he or she shall so declare to the meeting and the defective
nomination shall be disregarded.
Section 7. Proxies and Voting.
At any meeting of the stockholders, every stockholder entitled to vote
may vote in person or by proxy authorized by an instrument in writing (or as
otherwise permitted under applicable law) by the stockholder or his duly
authorized attorney-in-fact filed in accordance with the procedure established
for the meeting. Proxies solicited on behalf of the management shall be voted
as directed by the stockholder or in the absence of such direction, as
determined by a majority of the Board of Directors. No proxy shall be valid
after eleven months from the date of its execution except for a proxy coupled
with an interest.
Each stockholder shall have one (1) vote for every share of stock
entitled to vote which is registered in his or her name on the record date for
the meeting, except as otherwise provided herein or in the Certificate of
Incorporation of the Corporation or as required by law.
All voting, including on the election of directors but excepting where
otherwise required by law, may be by a voice vote; provided, however, that upon
demand therefore by a stockholder entitled to vote or his or her proxy, a stock
vote shall be taken. Every stock vote shall be taken by ballot, each of which
shall state the name of the stockholder or proxy voting and such other
information as may be required under the procedure established for the meeting.
Every vote taken by ballot shall be counted by an inspector or inspectors
appointed by the chairman of the meeting.
All elections shall be determined by a plurality of the votes cast,
and except as otherwise required by law or as provided in the Certificate of
Incorporation, all other matters shall be determined by a majority of the votes
cast.
18
<PAGE> 4
Section 8. Stock List.
The officer who has charge of the stock transfer books of the
Corporation shall prepare and make, in the time and manner required by
applicable law, a list of stockholders entitled to vote and shall make such
list available for such purposes, at such places, at such times and to such
persons as required by applicable law. The stock transfer books shall be the
only evidence as to the identity of the stockholders entitled to examine the
stock transfer books or to vote in person or by proxy at any meeting of
stockholders.
Section 9. Consent of Stockholders in Lieu of Meeting.
Subject to the rights of the holders of any class or series of
preferred stock of the Corporation, any action required or permitted to be
taken by the stockholders of the Corporation must be effected at a duly called
annual or special meeting of stockholders of the Corporation and may not be
effected by any consent in writing by such stockholders.
Section 10. Inspectors of Election
The Board of Directors shall, in advance of any meeting of
stockholders, appoint one or more persons as inspectors of election, to act at
the meeting or any adjournment thereof and make a written report thereof, in
accordance with applicable law.
ARTICLE II
BOARD OF DIRECTORS
Section 1. General Powers, Number and Term of Office.
The business and affairs of the Corporation shall be managed by or
under the direction of the Board of Directors. The number of directors shall
be as provided for in the Certificate of Incorporation. The Board of Directors
shall annually elect a Chairman of the Board and a President from among its
members and shall designate, when present, either the Chairman of the Board or
the President to preside at its meetings.
The directors, other than those who may be elected by the holders of
any class or series of preferred stock, shall be divided into three classes, as
nearly equal in number as reasonably possible, with the term of office of the
first class to expire at the conclusion of the first annual meeting of
stockholders, the term of office of the second class to expire at the
conclusion of the annual meeting of stockholders one year thereafter and the
term of office of the third class to expire at the conclusion of the annual
meeting of stockholders two years thereafter, with each director to hold office
until his or her successor shall have been duly elected and qualified. At each
annual meeting of stockholders, commencing with the first annual meeting,
directors elected to succeed those directors whose terms expire shall be
elected for a term of office to expire at the third succeeding annual meeting
of stockholders after their election, with each director to hold office until
his or her successor shall have been duly elected and qualified.
No person 75 years of age shall be eligible for election, reelection,
appointment, or reappointment to the Board of the Corporation. No Director
shall serve as such beyond the annual meeting of the Corporation in the year
which the Director becomes 75. A Director's term will be adjusted, if
necessary, to expire in the year the Director turns 75. This age limitation
does not apply to Directors who have served on the Board of Directors of Ottawa
Savings Bank, FSB since 1990 or to an Emeritus Director.
19
<PAGE> 5
Section 2. Vacancies and Newly Created Directorships.
Subject to the rights of the holders of any class or series of
preferred stock then outstanding, newly created directorships resulting from
any increase in the authorized number of directors or any vacancies in the
Board of Directors resulting from death, resignation, retirement,
disqualification, removal from office or other cause may be filled only by a
majority vote of the directors then in office, though less than a quorum, and
directors so chosen shall hold office for a term expiring at the annual meeting
of stockholders at which the term of office of the class to which they have
been elected expires, and until such director's successor shall have been duly
elected and qualified. No decrease in the number of authorized directors
constituting the Board shall shorten the term of any incumbent director.
Section 3. Regular Meetings.
Regular meetings of the Board of Directors shall be held at such place
or places, on such date or dates, and at such time or times as shall have been
established by the Board of Directors and publicized among all directors. A
notice of each regular meeting shall not be required.
Section 4. Special Meetings.
Special meetings of the Board of Directors may be called by one-third
(1/3) of the directors then in office (rounded up to the nearest whole number)
or by the President and shall be held at such place, on such date, and at such
time as they or he or she shall fix. Notice of the place, date, and time of
each such special meeting shall be given to each director by whom it is not
waived by mailing written notice not less than five (5) days before the meeting
or by telegraphing or telexing or by facsimile transmission of the same not
less than twenty-four (24) hours before the meeting. Unless otherwise
indicated in the notice thereof, any and all business may be transacted at a
special meeting.
Section 5. Quorum.
At any meeting of the Board of Directors, a majority of the authorized
number of directors then constituting the Board shall constitute a quorum for
all purposes. If a quorum shall fail to attend any meeting, a majority of
those present may adjourn the meeting to another place, date, or time, without
further notice or waiver thereof.
Section 6. Participation in Meetings By Conference Telephone.
Members of the Board of Directors, or of any committee thereof, may
participate in a meeting of such Board or committee by means of conference
telephone or similar communications equipment by means of which all persons
participating in the meeting can hear each other and such participation shall
constitute presence in person at such meeting.
Section 7. Conduct of Business.
At any meeting of the Board of Directors, business shall be transacted
in such order and manner as the Board may from time to time determine, and all
matters shall be determined by the vote of a majority of the directors present,
except as otherwise provided herein or required by law. Action may be taken by
the Board of Directors without a meeting if all members thereof consent thereto
in writing, and the writing or writings are filed with the minutes of
proceedings of the Board of Directors.
Section 8. Powers.
The Board of Directors may, except as otherwise required by law,
exercise all such powers and do all such acts and things as may be exercised or
done by the Corporation, including, without limiting the generality of the
foregoing, the unqualified power:
20
<PAGE> 6
(1) To declare dividends from time to time in accordance
with law;
(2) To purchase or otherwise acquire any property, rights
or privileges on such terms as it shall determine;
(3) To authorize the creation, making and issuance, in
such form as it may determine, of written obligations of every kind, negotiable
or non-negotiable, secured or unsecured, and to do all things necessary in
connection therewith;
(4) To remove any officer of the Corporation with or
without cause, and from time to time to devolve the powers and duties of any
officer upon any other person for the time being;
(5) To confer upon any officer of the Corporation the
power to appoint, remove and suspend subordinate officers, employees and
agents;
(6) To adopt from time to time such stock, option, stock
purchase, bonus or other compensation plans for directors, officers, employees
and agents of the Corporation and its subsidiaries as it may determine;
(7) To adopt from time to time such insurance,
retirement, and other benefit plans for directors, officers, employees and
agents of the Corporation and its subsidiaries as it may determine; and,
(8) To adopt from time to time regulations, not
inconsistent with these By-laws, for the management of the Corporation's
business and affairs.
Section 9. Compensation of Directors.
Directors, as such, may receive, pursuant to resolution of the Board
of Directors, fixed fees and other compensation for their services as
directors, including, without limitation, their services as members of
committees of the Board of Directors.
Section 10. Qualifications of Directors.
Any member of the Board of Directors shall, in order to qualify to
stand for election or to continue to serve as a director, be domiciled in, have
a principal residence in or have his or her primary place of business located
in any county in which the Corporation or any of its subsidiaries has an
office.
ARTICLE III
COMMITTEES
Section 1. Committees of the Board of Directors.
The Board of Directors, by a vote of a majority of the Board of
Directors, may from time to time designate committees of the Board, with such
lawfully delegable powers and duties as it thereby confers, to serve at the
pleasure of the Board and shall, for those committees and any others provided
for herein, elect a director or directors to serve as the member or members,
designating, if it desires, other directors as alternate members who may
replace any absent or disqualified member at any meeting of the committee. Any
committee so designated may exercise the power and authority of the Board of
Directors to declare a dividend, to authorize the issuance of stock or to adopt
a certificate of ownership and merger pursuant to Section 253 of the Delaware
General Corporation Law if the resolution which designated the committee or a
supplemental resolution of the Board of Directors shall so provide. In the
absence or disqualification of any member of any
21
<PAGE> 7
committee and any alternate member in his or her place, the member or members
of the committee present at the meeting and not disqualified from voting,
whether or not he or she or they constitute a quorum, may by unanimous vote
appoint another member of the Board of Directors to act at the meeting in the
place of the absent or disqualified member.
Section 2. Conduct of Business.
Each committee may determine the procedural rules for meeting and
conducting its business and shall act in accordance therewith, except as
otherwise provided herein or required by law. Adequate provision shall be made
for notice to members of all meetings; one-third (1/3) of the members shall
constitute a quorum unless the committee shall consist of one (1) or two (2)
members, in which event one (1) member shall constitute a quorum; and all
matters shall be determined by a majority vote of the members present. Action
may be taken by any committee without a meeting if all members thereof consent
thereto in writing, and the writing or writings are filed with the minutes of
the proceedings of such committee.
Section 3. Nominating Committee.
The Board of Directors may appoint a Nominating Committee of the
Board, consisting of not less than three (3) members, one of which shall be the
President if, and only so long as, the President remains in office as a member
of the Board of Directors. The Nominating Committee shall have authority (a)
to review any nominations for election to the Board of Directors made by a
stockholder of the Corporation pursuant to Section 6(c)(ii) of Article I of
these By-laws in order to determine compliance with such By-law and (b) to
recommend to the Whole Board nominees for election to the Board of Directors to
replace those directors whose terms expire at the annual meeting of
stockholders next ensuing.
ARTICLE IV
OFFICERS
Section 1. Generally.
(a) The Board of Directors as soon as may be practicable
after the annual meeting of stockholders shall choose a President, a Secretary
and a Treasurer and from time to time may choose such other officers as it may
deem proper. The President shall be chosen from among the directors. Any
number of offices may be held by the same person.
(b) The term of office of all officers shall be until the
next annual election of officers and until their respective successors are
chosen, but any officer may be removed from office at any time by the
affirmative vote of a majority of the authorized number of directors then
constituting the Board of Directors.
(c) All officers chosen by the Board of Directors shall
each have such powers and duties as generally pertain to their respective
offices, subject to the specific provisions of this Article IV. Such officers
shall also have such powers and duties as from time to time may be conferred by
the Board of Directors or by any committee thereof.
Section 2. President.
The President shall be the chief executive officer and, subject to the
control of the Board of Directors, shall have general power over the management
and oversight of the administration and operation of the Corporation's business
and general supervisory power and authority over its policies and affairs. He
shall see that all orders and resolutions of the Board of Directors and of any
committee thereof are carried into effect.
22
<PAGE> 8
Each meeting of the stockholders and of the Board of Directors shall
be presided over by such officer as has been designated by the Board of
Directors or, in his absence, by such officer or other person as is chosen at
the meeting. The Secretary or, in his absence, the General Counsel of the
Corporation or such officer as has been designated by the Board of Directors
or, in his absence, such officer or other person as is chosen by the person
presiding, shall act as secretary of each such meeting.
Section 3. Vice President.
The Vice President or Vice Presidents, if any, shall perform the
duties of the President in his absence or during his disability to act. In
addition, the Vice Presidents shall perform the duties and exercise the powers
usually incident to their respective offices and/or such other duties and
powers as may be properly assigned to them from time to time by the Board of
Directors, the Chairman of the Board or the President.
Section 4. Secretary.
The Secretary or an Assistant Secretary shall issue notices of
meetings, shall keep their minutes, shall have charge of the seal and the
corporate books, shall perform such other duties and exercise such other powers
as are usually incident to such offices and/or such other duties and powers as
are properly assigned thereto by the Board of Directors, the Chairman of the
Board or the President.
Section 5. Treasurer.
The Treasurer shall have charge of all monies and securities of the
Corporation, other than monies and securities of any division of the
Corporation which has a treasurer or financial officer appointed by the Board
of Directors, and shall keep regular books of account. The funds of the
Corporation shall be deposited in the name of the Corporation by the Treasurer
with such banks or trust companies or other entities as the Board of Directors
from time to time shall designate. He shall sign or countersign such
instruments as require his signature, shall perform all such duties and have
all such powers as are usually incident to such office and/or such other duties
and powers as are properly assigned to him by the Board of Directors, the
Chairman of the Board or the President, and may be required to give bond,
payable by the Corporation, for the faithful performance of his duties in such
sum and with such surety as may be required by the Board of Directors.
Section 6. Assistant Secretaries and Other Officers.
The Board of Directors may appoint one or more assistant secretaries
and one or more assistants to the Treasurer, or one appointee to both such
positions, which officers shall have such powers and shall perform such duties
as are provided in these By-laws or as may be assigned to them by the Board of
Directors, the Chairman of the Board or the President.
Section 7. Action with Respect to Securities of Other Corporations
Unless otherwise directed by the Board of Directors, the President or
any officer of the Corporation authorized by the President shall have power to
vote and otherwise act on behalf of the Corporation, in person or by proxy, at
any meeting of stockholders of or with respect to any action of stockholders of
any other corporation in which this Corporation may hold securities and
otherwise to exercise any and all rights and powers which this Corporation may
possess by reason of its ownership of securities in such other Corporation.
23
<PAGE> 9
ARTICLE V
STOCK
Section 1. Certificates of Stock.
Each stockholder shall be entitled to a certificate signed by, or in
the name of the Corporation by, the President or a Vice President, and by the
Secretary or an Assistant Secretary, or the Treasurer or an Assistant
Treasurer, certifying the number of shares owned by him or her. Any or all of
the signatures on the certificate may be by facsimile.
Section 2. Transfers of Stock.
Transfers of stock shall be made only upon the transfer books of the
Corporation kept at an office of the Corporation or by transfer agents
designated to transfer shares of the stock of the Corporation. Except where a
certificate is issued in accordance with Section 4 of Article V of these
By-laws, an outstanding certificate for the number of shares involved shall be
surrendered for cancellation before a new certificate is issued therefore.
Section 3. Record Date.
In order that the Corporation may determine the stockholders entitled
to notice of or to vote at any meeting of stockholders, or to receive payment
of any dividend or other distribution or allotment of any rights or to exercise
any rights in respect of any change, conversion or exchange of stock or for the
purpose of any other lawful action, the Board of Directors may fix a record
date, which record date shall not precede the date on which the resolution
fixing the record date is adopted and which record date shall not be more than
sixty (60) nor less than ten (10) days before the date of any meeting of
stockholders, nor more than sixty (60) days prior to the time for such other
action as hereinbefore described; provided, however, that if no record date is
fixed by the Board of Directors, the record date for determining stockholders
entitled to notice of or to vote at a meeting of stockholders shall be at the
close of business on the day next preceding the day on which notice is given
or, if notice is waived, at the close of business on the day next preceding the
day on which the meeting is held, and, for determining stockholders entitled to
receive payment of any dividend or other distribution or allotment of rights or
to exercise any rights of change, conversion or exchange of stock or for any
other purpose, the record date shall be at the close of business on the day on
which the Board of Directors adopts a resolution relating thereto.
A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the
meeting; provided, however, that the Board of Directors may fix a new record
date for the adjourned meeting.
Section 4. Lost, Stolen or Destroyed Certificates.
In the event of the loss, theft or destruction of any certificate of
stock, another may be issued in its place pursuant to such regulations as the
Board of Directors may establish concerning proof of such loss, theft or
destruction and concerning the giving of a satisfactory bond or bonds of
indemnity.
Section 5. Regulations.
The issue, transfer, conversion and registration of certificates of
stock shall be governed by such other regulations as the Board of Directors may
establish.
24
<PAGE> 10
ARTICLE VI
NOTICES
Section 1. Notices.
Except as otherwise specifically provided herein or required by law,
all notices required to be given to any stockholder, director, officer,
employee or agent shall be in writing and may in every instance be effectively
given by hand delivery to the recipient thereof, by depositing such notice in
the mail, postage paid, by sending such notice by prepaid telegram or mailgram
or by sending such notice by facsimile machine or other electronic
transmission. Any such notice shall be addressed to such stockholder,
director, officer, employee or agent at his or her last known address as the
same appears on the books of the Corporation. The time when such notice is
received, if hand delivered, or dispatched, if delivered through the mail, by
telegram or mailgram or by facsimile machine or other electronic transmission,
shall be the time of the giving of the notice.
Section 2. Waivers.
A written waiver of any notice, signed by a stockholder, director,
officer, employee or agent, whether before or after the time of the event for
which notice is to be given, shall be deemed equivalent to the notice required
to be given to such stockholder, director, officer, employee or agent. Neither
the business nor the purpose of any meeting need be specified in such a waiver.
ARTICLE VII
MISCELLANEOUS
Section 1. Facsimile Signatures.
In addition to the provisions for use of facsimile signatures
elsewhere specifically authorized in these By-laws, facsimile signatures of any
officer or officers of the Corporation may be used whenever and as authorized
by the Board of Directors or a committee thereof.
Section 2. Corporate Seal.
The Board of Directors may provide a suitable seal, containing the
name of the Corporation, which seal shall be in the charge of the Secretary.
If and when so directed by the Board of Directors or a committee thereof,
duplicates of the seal may be kept and used by the Treasurer or by an Assistant
Secretary or Assistant Treasurer.
Section 3. Reliance upon Books, Reports and Records.
Each director, each member of any committee designated by the Board of
Directors, and each officer of the Corporation shall, in the performance of his
or her duties, be fully protected in relying in good faith upon the books of
account or other records of the Corporation and upon such information,
opinions, reports or statements presented to the Corporation by any of its
officers or employees, or committees of the Board of Directors so designated,
or by any other person as to matters which such director or committee member
reasonably believes are within such other person's professional or expert
competence and who has been selected with reasonable care by or on behalf of
the Corporation.
25
<PAGE> 11
Section 4. Fiscal Year.
The fiscal year of the Corporation shall be as fixed by the Board of Directors.
Section 5. Time Periods.
In applying any provision of these By-laws which requires that an act
be done or not be done a specified number of days prior to an event or that an
act be done during a period of a specified number of days prior to an event,
calendar days shall be used, the day of the doing of the act shall be excluded
and the day of the event shall be included.
ARTICLE VIII
AMENDMENTS
The By-laws of the Corporation may be adopted, amended or repealed as
provided in Article SEVENTH of the Certificate of Incorporation of the
Corporation.
26
<PAGE> 1
(b) Exhibit 11 - COMPUTATION OF EARNINGS PER COMMON AND COMMON
EQUIVALENT SHARES
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1997
-------------------
Primary
- -------
<S> <C>
Net income $1,716,406
=========
Weighted averages shares outstanding
Average Common shares 5,082,114
Average unallocated ESOP shares (274,646)
Common stock equivalents - options
and warrants 185,567
----------
Total weighted average shares outstanding
during period 4,993,035
==========
Earnings per common and common share equivalent - primary $.34
==========
Fully Diluted
- -------------
Net income $1,716,406
==========
Average common shares 5,082,114
Average unallocated ESOP shares (274,646)
Common stock equivalents - options and
warrants 298,215
----------
Total weighted average shares outstanding
during period 5,105,683
==========
Earnings per common and common share equivalent - fully diluted $.34
==========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 14,346
<INT-BEARING-DEPOSITS> 17,156
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 57,255
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 725,677
<ALLOWANCE> 3,030
<TOTAL-ASSETS> 858,934
<DEPOSITS> 635,969
<SHORT-TERM> 51,000
<LIABILITIES-OTHER> 10,848
<LONG-TERM> 85,170
0
0
<COMMON> 60
<OTHER-SE> 75,887
<TOTAL-LIABILITIES-AND-EQUITY> 858,934
<INTEREST-LOAN> 14,457
<INTEREST-INVEST> 962
<INTEREST-OTHER> 204
<INTEREST-TOTAL> 15,622
<INTEREST-DEPOSIT> 7,053
<INTEREST-EXPENSE> 9,069
<INTEREST-INCOME-NET> 6,553
<LOAN-LOSSES> 150
<SECURITIES-GAINS> 64
<EXPENSE-OTHER> 4,424
<INCOME-PRETAX> 2,701
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,716
<EPS-PRIMARY> 0.34
<EPS-DILUTED> 0.34
<YIELD-ACTUAL> 3.32
<LOANS-NON> 1,391
<LOANS-PAST> 1,127
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 3,129
<CHARGE-OFFS> 264
<RECOVERIES> 15
<ALLOWANCE-CLOSE> 3,030
<ALLOWANCE-DOMESTIC> 2,336
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 694
</TABLE>
