<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[x] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
SECURITIES EXCHANGE ACT OF 1934
Commission File Number 0 - 25072
SJS BANCORP, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 38-3203930
-------- ----------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation organization)
301 STATE STREET, ST. JOSEPH, MICHIGAN 49085
--------------------------------------------
(address of principal executive offices)
616-983-0134
------------
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months ( or for
such shorter period that the registrant was required to file such reports)
and (2) has been subject to such filing requirements for the past 90 days.
YES: x ; NO:
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
CLASS OUTSTANDING AT NOVEMBER 12,1996
----- -------------------------------
Common stock, $.01 par value 917,622 Shares
Transitional Small Business Disclosure Format
YES: ; NO: x
<PAGE>
SJS BANCORP, INC.
FORM 10-QSB
Quarter ended September 30, 1996
Part I - Financial Information
Interim Financial Information required by Item 310 (b) of Regulation S-B and
item 303 of Regulation S-B is included in this Form 10-QSB as referenced
below:
PAGE
-----
ITEM 1 - FINANCIAL STATEMENTS
Consolidated Statements of Financial Condition.....................1
Consolidated Statements of Operations..............................2
Consolidated Statements of Stockholders' Equity....................3
Consolidated Statements of Cash Flow...............................4
Notes to Consolidated Financial Statements.......................5-8
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS.......................................9-11
PART II - OTHER INFORMATION
OTHER INFORMATION...........................................................12
SIGNATURES..................................................................13
<PAGE>
SJS BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
SEPTEMBER 30, 1996 JUNE 30, 1996
------------------ -------------
<S> <C> <C>
ASSETS
Cash and due from financial institutions $2,552,587 $3,116,085
Interest-bearing demand deposits in other financial
institutions 612,525 14,832
------------ ------------
Total cash and cash equivalents 3,165,112 3,130,917
Interest-bearing deposits in other financial
institutions 190,000 190,000
Mortgage-Backed Securities available for sale 22,528,017 26,831,702
Mortgage-Backed Securities held to maturity
(estimated fair value on September 30, 1996
$9,111,883; June 30, 1996 $9,351,120) 9,246,708 9,379,310
Equity securities available for sale 63,300 63,280
Investment securities available for sale 5,610,841 5,566,705
Investment securities held to maturity
(estimated fair value on September 30, 1996
$3,141,476; June 30, 1996 $3,630,989) 3,167,816 3,667,929
Federal Home Loan Bank Stock 1,187,500 1,187,500
Loans, net 103,542,113 98,861,649
Accrued interest receivable 1,031,631 1,069,562
Premises and equipment 1,138,279 1,152,526
Other assets 1,009,331 795,564
------------ ------------
Total assets $151,880,648 $151,896,644
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $109,817,011 $107,927,968
Federal Home Loan Bank Advances 23,369,719 23,750,000
Advance payments by borrowers for taxes and insurance 913,342 1,249,689
Accrued interest payable on deposits 221,910 251,385
Accrued expenses and other liabilities 1,741,178 1,807,216
------------ ------------
Total liabilities 136,063,160 134,986,258
------------ ------------
------------ ------------
Common Stock 9,866 9,866
Paid in Surplus 9,529,806 9,519,762
Retained earnings, substantially restricted 9,170,065 9,635,294
Net unrealized gain(loss) on available-for-sale securities
(Applicable deferred income taxes on September 30,
1996 $241,030; June 30, 1996 $257,903) (467,882) (500,635)
Net unrealized gain(loss) on held-to-maturity securities
(Applicable deferred income taxes on September 30,
1996 $26,041; June 30, 1996 $26,777) (50,550) (51,979)
Employee Stock Ownership Plan (ESOP) (unallocated shares) (312,371) (322,140)
Management Recognition Plan (MRP)(unearned shares) (662,021) (675,532)
Treasury stock (69,000 shares at cost) (1,399,425) (704,250)
------------ ------------
Total Stockholders' Equity 15,817,488 16,910,386
------------ ------------
Total Liabilities and Stockholders' Equity $151,880,648 $151,896,644
------------ ------------
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE>
SJS BANCORP, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three months ended September 30,
1966 1995
---- ----
<S> <C> <C>
Interest income
Loans $2,085,395 $1,607,305
Investment securities 136,910 186,996
Mortgage-backed securities 509,273 555,604
Other interest income 53,540 59,863
---------- ----------
2,785,118 2,409,768
Interest Expenses
Deposits 1,386,090 1,355,589
Federal Home Loan Bank advances 356,790 101,721
---------- ----------
1,742,880 1,457,310
Net interest income 1,042,238 952,458
Provision for loan losses 55,000 2,000
---------- ----------
Net Interest Income after Provision for Loan Losses 987,238 950,458
---------- ----------
Non-interest Income
Service charges and other fees 102,056 103,768
Gain (loss) on sale of loans 1,963 (465)
Gain (loss) on sale of investment securities (17,160)
Other 39,965 30,855
---------- ----------
126,824 134,158
Non-interest expense
Compensation and benefits 404,649 336,571
Occupancy 53,626 55,590
Furniture, fixtures and equipment 23,133 18,351
Federal insurance premium 778,389 77,965
Data processing expense 74,905 75,133
Other operating expense 337,549 199,861
---------- ----------
1,672,251 763,471
Income before federal income tax expense (benefit) (558,189) 321,145
Federal income tax expense (benefit) (189,962) 102,793
---------- ----------
Net income (loss) ($368,227) $218,352
---------- ----------
---------- ----------
Earnings (loss) per share:
Primarily ($.41) $.24
----- ----
Fully diluted ($.41) $.24
----- ----
Dividends per common share $0.11 $.10
----- ----
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
SJS BANCORP , INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
Additional Net Unrealized Unallocated Unearned Total
Common Paid-In Retained Gain (Loss) ESOP MRP Treasury Shareholders'
STOCK CAPITAL EARNINGS ON SECURITIES SHARES SHARES STOCK EQUITY
------- ---------- --------- ------------- ----------- --------- --------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT JUNE 30, 1996 $9,866 $9,519,762 $9,635,294 $(552,614) $(322,140) $(675,532) $(704,250) $16,910,386
Net loss for the three months
ended September 30, 1996 (368,227) (368,227)
Cash dividends (97,002) (97,002)
Shares committed to be
released under the ESOP 10,044 9,769 19,813
Shares earned under the MRP 13,511 13,511
Acquisition of treasury shares
(at cost) (695,175) (695,175)
Change in net unrealized
gain (loss) on securities
net of tax 34,182 34,182
------ ---------- ---------- --------- --------- --------- ----------- -----------
BALANCE AT SEPTEMBER 30, 1996 $9,866 $9,529,806 $9,170,065 $(518,432) $(312,371) $(662,021) $(1,399,425) $15,817,488
------ ---------- ---------- --------- --------- --------- ----------- -----------
</TABLE>
See accompanying notes to consolidated financial statements
3
<PAGE>
SJS BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
--------------------------------
1996 1995
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss) $ (368,227) $ 218,352
Adjustments to reconcile net income to
net cash from operating activities:
Depreciation 22,079 20,011
Amortization 56,085 17,771
Provision for loan losses 55,000 2,000
ESOP and MRP expense 33,324 16,952
Gain on sale of loans (1,963) 465
Loss (gain) on sale of securities and
mortgage-backed securities 17,160 0
Proceeds from sale of loans 165,900 1,093,714
Loans originated for sale (113,377) (1,137,174)
Changes in assets and liabilities
Changes in assets (212,258) 138,807
Changes in liabilities (66,038) 1,734,977
---------- -----------
Net cash from operating activities (412,315) 2,105,875
---------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of equity securities (280) 0
Proceeds from sales of equity securities 260 0
Purchase of securities held to maturity 0 (450,000)
Proceeds from calls and maturities of securities
held to maturity 500,156 0
Purchase of mortgage-backed securities
available for sale (2,492,546) (500,000)
Proceeds from sales of mortgage-backed
securities available for sale 5,607,540 0
Principal payments on investment securities 1,255,662 1,763,705
Loan originations and principal payments
on loans, net (4,796,688) (9,467,742)
Premises and equipment expenditures (7,832) (7,087)
---------- -----------
Net cash from investing activities 66,272 8,661,124)
---------- -----------
Net change in deposits $1,889,043 $ 277,962
FHLB borrowing 2,350,000 6,750,000
Repayment of FHLB advances (2,730,281) (500,000)
Net change in advance payments by borrowers (336,347) (390,657)
Dividends paid (97,002) 0
Treasury stock purchase (695,175) 0
---------- -----------
Net cash from financing activities 380,238 5,746,648
---------- -----------
Net change in cash and cash equivalents 34,195 (417,944)
Cash and cash equivalents at beginning of year 3,130,917 3,515,180
---------- -----------
CASH AND CASH EQUIVALENTS AT END OF YEAR $ 3,165,112 $ 3,097,236
---------- -----------
</TABLE>
See accompanying notes to consolidated financial statements
4
<PAGE>
SJS BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTER ENDED SEPTEMBER 30, 1996
(UNAUDITED)
NOTE 1 - BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
The accompanying consolidated financial statements include the accounts
of SJS Bancorp, Inc. (the "Company") and its wholly-owned subsidiary, SJS
Federal Savings Bank (the "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 Company at September 30,
1996, and its results of operations and statement of cash flows for the
periods presented. All such adjustments are normal and recurring in nature.
The results of the periods presented are not necessarily representative of
the results of operations and cash flows which may be expected for the entire
year. 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 SJS Bancorp, Inc. for the fiscal
year ended June 30, 1996.
Earnings per Share:
Earnings per common share for the periods presented was computed by
dividing net income (loss) by the average number of shares outstanding during
the period. Employee and director stock options are considered common stock
equivalents. At September 30, 1996 the Company had 31,237 unallocated ESOP
shares which were excluded from the weighted number of shares outstanding
used to calculate the earnings per common and common share equivalent. The
weighted number of shares outstanding for the calculation of primary earnings
per common and common equivalent share was 892,620 at September 30, 1996 and
916,575 at September 30, 1995. The weighted number of shares outstanding for
the calculation of fully-diluted earnings per share was 896,876 at September
30, 1996 and 916,575 at September 30, 1995. Net income (loss) was ($368,227)
for the three months ended September 30,1996 and $218,352 for the three
months ended September 30, 1995.
NOTE 2 - IMPACT OF NEW ACCOUNTING STANDARDS
Several new accounting standards have been issued by the Financial
Accounting Standards Board that were adopted in fiscal 1996. Statement of
Financial Accounting Standards. No. 121, "Accounting for the impairment of
long-lived assets", requires a review of long-term assets for impairment of
recorded value and resulting write-downs if value is impaired. Statement of
Financial Accounting Standards No. 122, "Accounting for mortgage servicing
rights", requires recognition of an asset when servicing rights are
5
<PAGE>
retained on in-house originated loans that are sold. Statement of Financial
Accounting Standards No. 123, "Accounting for stock-based compensation ",
requires proforma disclosure of the effect on net income of valuing future
option grants at estimated fair value of the option granted. These
statements did not have a material effect on the Company's financial position
or results of operations for the three months ended September 30, 1996.
NOTE 3 - LOANS
<TABLE>
<CAPTION>
Loans are classified as follows: SEPTEMBER 30, 1996 JUNE 30,1996
------------------ ------------
<S> <C> <C>
First mortgage loans (principally conventional):
Secured by one- to- four family residences $ 74,246,804 $70,034,958
Secured by other properties 2,042,660 1,945,655
Construction loans 6,100,125 6,747,880
------------ -----------
82,389,589 78,728,493
Less:
Undisbursed portion of construction loans (3,115,943) (4,029,792)
Deferred fees and costs (70,980) (60,319)
------------ -----------
Total first mortgage loans 79,202,666 74,638,385
Consumer and other loans:
Auto loans 15,890,743 16,117,610
Home equity 2,330,948 2,299,820
Other 6,810,936 6,451,925
------------ -----------
25,032,627 24,869,355
------------ -----------
104,235,293 99,507,740
Less allowance for loan losses (693,180) (646,091)
------------ -----------
$103,542,113 $98,861,649
------------ -----------
Allowance for loan losses:
Activity in the allowance for losses is summarized as FISCAL 1996 FISCAL 1995
follows for the three months ended September 30: -1967 -1996
------------ -----------
Balance - July 1, $ 646,091 $ 558,654
Provisions charged to income 55,000 2,000
Loans charged-off (18,436) (7,927)
Recoveries 10,525 9,627
------------ -----------
Balance - September 30, $ 693,180 $ 562,354
------------ -----------
</TABLE>
6
<PAGE>
The Company had no impaired loans at September 30, 1996 or September 30, 1995.
NOTE 4 - SAIF SPECIAL ASSESSMENT
On September 30, 1996, federal legislation was enacted that requires the SAIF
to be recapitalized with a one-time assessment on virtually all SAIF-insured
institutions, such as the Bank, equal to 65.7 basis points on SAIF-insured
deposits maintained by those institutions as of March 31, 1995. This SAIF
assessment, which is to be paid to the FDIC by November 27, 1996 is
approximately $703,000 and has been accrued by the Company at September 30,
1996.
As a result of the SAIF recapitalization, the FDIC has proposed to amend its
regulation concerning the insurance premiums payable by SAIF-insured
institutions. Effective October 1, 1996 through December 31, 1996, the FDIC
has proposed that the SAIF insurance premium for all SAIF-insured
institutions that are required to pay the Financing Corporation (FICO)
obligation, such as the Bank, be reduced to a range of 18 to 27 basis points
from 23 to 31 basis points per $100 of domestic deposits. The Bank currently
qualifies for the minimum SAIF insurance premium of 23 basis points. The
FDIC has also proposed to further reduce the SAIF insurance premium to a
range of 0 to 27 basis points per $100 of domestic deposits, effective
January 1, 1997. Management cannot predict whether or in what form the
FDIC's final regulation may be promulgated.
NOTE 5 - INCOME TAXES
The effective income tax (benefit) rate for the three month period ended
September 30, 1996 is (34%) compared to 32% for the comparative period ended
September 30, 1995. The income tax benefit is due to the net loss for the
quarter ended September 30, 1996 resulting primarily from the aforementioned
SAIF special assessment.
NOTE 6 - FHLB ADVANCES
At June 30, 1996 the company had advances from the Federal Home Loan Bank of
Indianapolis totaling $23,750,000 with variable and fixed interest rates
ranging from 5.23% to 6.61%, respectively. At September 30, 1996, FHLB
advances totaled $23,369,719 with variable and fixed interest rates ranging
from 5.23% to 6.61%, respectively.
Maturities of Advances outstanding are as follows:
SEPTEMBER 30, 1996 JUNE 30, 1996
------------------ -------------
1996 $ 1,200,000 $ 3,650,000
1997 6,600,000 4,250,000
1998 8,050,000 8,050,000
2000 6,519,719 6,800,000
2001 1,000,000 1,000,000
----------- -----------
$23,369,719 $23,750,000
These advances are collateralized by Federal Home Loan Bank Stock and
specific securities with a carrying
7
<PAGE>
value of $28,447,107 for the period ended September 30, 1996 and $28,505,243
for the period ended June 30, 1996.
NOTE 7 - STOCK OPTION AND INCENTIVE PLAN ("SOP") AND MANAGEMENT
RECOGNITION PLAN ("MRP")
The Company's Board of Directors adopted a SOP and a MRP. The SOP and MRP
are administered by a Committee of directors of the Company. This Committee
selects recipients and terms of awards pursuant to the Plan. Total shares
available under the SOP and MRP plans were 95,220 and 38,088, respectively.
The Committee to-date has awarded under the SOP options to purchase 79,509
shares of common stock at an exercise price of $19.625 per share and awarded
under the MRP 34,422 shares of common stock. The SOP options granted vest
ratably over a five year period with a first award having vested October 1,
1996. The MRP awards vest in ten equal annual installments with the first
award to have vested on October 1, 1996, subject to the continuous employment
of the recipients and the achievement of specific performance criteria as
defined under such plans. No MRP awards vested on October 1, 1996 as the
Company did not meet the performance criteria under the plan. Accordingly,
no compensation expense was recorded during the fiscal 1996 period in
connection with the MRP award. For the three month period ended September
30, 1996, the company accrued $13,511 of compensation expense in
anticipation of meeting the performance criteria for the October 1, 1997
vesting date.
NOTE 8 - STOCK REPURCHASE PROGRAMS
During 1996, SJS Bancorp, Inc. received regulatory approval to repurchase up
to 85,698 shares of its common stock. Through September 30, 1996, 69,000
shares had been repurchased. The repurchase approval expires on March 1,
1997.
Repurchased shares are treated as treasury shares and are available for
general company purposes, including issuance in connection with stock based
compensation plans.
8
<PAGE>
SJS BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion compares the financial condition of SJS Bancorp,
Inc. (the "Company") and its wholly owned subsidiary, SJS Federal Savings
Bank (the "Bank") at September 30, 1996 to June 30, 1996 and the results of
operations for the three month period ended September 30, 1996, with the same
period in 1995. This discussion should be read in conjunction with the
interim consolidated condensed financial statements and notes thereto of SJS
Bancorp for the quarters ended September 30, 1996 included herein.
FINANCIAL CONDITION
Total assets of the Company decreased $15,996 from $151,896,644 at June 30,
1996 to $151,880,648 at September 30, 1996. Consistent with the Company's
strategic plan's focus on asset mix, net loans increased 4.7% from
$98,861,649 at June 30, 1996 to $103,542,113 at September 30, 1996. Growth
of the mortgage and consumer loan portfolios during this three month period
amounted to $4,727,553 and $163,272 respectively. The utilization of
commissioned loan originators and on going sales and marketing efforts
increased visibility and demand for the Company's mortgage loan products.
During the current three month period ended September 30, 1996, the Company
funded loan growth by decreasing its net holdings in mortgage-backed and
investment securities whereas in prior periods the primary source of loan
growth funding were Federal Home Loan Bank advances. The Company will
continue to focus on its business plan and continue to pursue additional loan
growth.
All securities, including mortgage backed, equity and investment securities
classified as available for sale and held to maturity, decreased $4,892,244
from $45,508,926 at June 30, 1996 to $40,616,682 as of September 30, 1996.
This is consistent with the Company's business plan, which emphasizes
deployment of funds primarily into loan growth.
Deposits increased $1,889,043 from $107,927,968 at June 30, 1996 to
$109,817,011 at September 30, 1996, a 1.8% increase for the three month
period. Growth in the deposit area was focused on short term certificates
through competitive pricing in the market area. Competition from other
financial and non-financial entities continues to limit deposit growth. The
Bank will continue to offer competitive interest rates on its products while
concentrating marketing efforts on establishing multiple deposit
relationships with individual customers.
Total stockholders' equity decreased by $1,092,898 from $16,910,386 at June
30, 1996 to $15,817,488 at September 30, 1996. This decrease was principally
the result of the net loss of $368,227, repurchases of common stock at a cost
of $695,175 and cash dividends of $97,002 paid on common stock.
RESULTS OF OPERATIONS
NET INCOME : The Company experienced a net loss for the three months ended
September 30, 1996 of $368,227 compared to net income of $218,352 for the
three months ended September 30, 1995, a
9
<PAGE>
decrease of $586,589 over the prior three month period. The loss for the
current three month period ended September 30, 1996 was primarily the result
of $151,171 related to legal, accounting, shareholder and other expenses
associated with the pending sale of the Company discussed in Item 5 of Part
II below, along with the one-time special SAIF recapitalization assessment of
$702,736. Excluding these two items, net income for the current three month
period would have amounted to approximately $190,000.
NET INTEREST INCOME: Net interest income for the three month period ended
September 30, 1996 increased $89,780, or 9.4% over the same three month
period ended September 30, 1995. Interest income increased $375,350, or
15.6% , from $2,409,768 for the three month period ended September 30, 1995
to $2,765,116 for the same period ended September 30, 1996. This
improvement is attributable to (a) net loan growth of $20.2 million from
$81.4 million at September 30, 1995 to $103.5 million at September 30, 1996
and (b) a reduction of $8.5 million during the same period in the lower
yielding security portfolio was redeployed into higher yielding loans. The
interest income increase was partially offset by a $285,570 increase in total
interest expense attributable to added higher FHLB advances and deposits
during the period. Management anticipates continued growth in net interest
income through increased earning assets, particularly in the lending area.
Earning asset growth, particularly loan growth, will continue to be funded
through various means including wholesale and retail sources.
PROVISION (CREDIT) FOR LOAN LOSSES: The Company's provision for loan losses
increased by $53,000 for the three month period ended September 30, 1996
compared to the three month period ended September 30, 1995. The Company's
provision for the three month period ended September 30, 1996 was $55,000
compared to $2,000 for the three month period ended September 30, 1995.
Current charge-offs (net of current recoveries) for the three months ended
September 30, 1996 amounted to $7,911. Continued strong loan growth of 4.7%
for the three month period ended September 30, 1996 totaling $4,680,464 was
the primary determinant of the loan loss provision of $55,000. Management
reviews the adequacy of the loan loss reserve and credit risk within the
Company's loan portfolio on a quarterly basis. As of September 30, 1996,
the allowance for loan losses totaled $693,180 representing .67% of gross
loans receivable and 338.6% of total non-performing loans. The Company
anticipates that as loan portfolio growth continues, provisions for loan
losses will continue to be made to maintain adequate loss reserves.
NON-INTEREST INCOME: Non-interest income for the three month period ended
September 30, 1996 decreased $7,334, or 5.5% , to $126,824 from $134,158 for
the prior three month period ended September 30, 1995. The primary reason
for the decrease was $17,160 in security investment losses, offset in part by
gains on loan sales, increased deposit service fees, and loan fee charges.
NON-INTEREST EXPENSE: Non-interest expense increased $908,780 for the three
months ended September 30, 1996 to $1,672,251 from $763,471 for the three
months ended September 30, 1995. The major item of increase was from the
one-time SAIF recapitalization charge of $702,736. Additionally, $151,171
of expenses incurred in the three months ended September 30, 1996 were due
primarily to legal, professional and accounting expenses associated with the
pending sale of the Company . Expenses relating to legal and accounting fees
for the three month period ended September 30, 1995 were $28,250.
Compensation and benefit expenses increased $68,076 from $336,571 for the
three month period ended September 30, 1995 to $404,649 for the same period
ended September 30, 1996 primarily due to increases of $14,776 in directors
fees and expenses, $16,372 of MRP and ESOP expenses, $12,863 of employee
compensation and $21,565 of loan origination expenses.
10
<PAGE>
Non-interest expense annualized as a percent of end-of-period assets for the
three month period ended September 30, 1996 was 1.10% compared to .56% for
the three months ended September 30, 1995. The Company does not expect a
significant adverse impact on normal non-interest expenditure levels as
earning asset growth continues. The Company does, however, expect
additional expenditures relating to the completion of the sale of the Company.
INCOME TAX EXPENSE (BENEFIT): The effective income tax (benefit) rate for
the three month period ended September 30, 1996 is (34%) compared to 32% for
the period ended September 30, 1995. The tax benefit is the result of the
one-time SAIF assessment.
LIQUIDITY
The Company's principal sources of funds are deposits, principal and
interest payments on loans, interest-bearing deposits and securities
classified as available for sale. While scheduled loan repayments and
maturing investments are relatively predictable, deposit flows and early loan
prepayments are more influenced by interest rates, general economic
conditions and competition. Additional sources of funds may be obtained from
the Federal Home Loan Bank (the "FHLB") of Indianapolis by utilizing an array
of available products to meet funding needs.
The Bank is required to maintain minimum levels of liquid assets as defined
by Bank regulators. The required percentage has varied from time to time
based upon economic conditions and savings flows and is currently 5% of net
withdrawal savings deposits and borrowings payable on demand or in one year
or less during the preceding calendar month. The Bank's liquidity ratio at
September 30, 1996 was 4.74%, while average liquidity for the three month
period ended September 30, 1996 was 6.20%. The $4.9 million net reduction of
securities along with deposit growth of $1.9 million were used to fund loan
demand.
Although management believes that deposit flows will continue to be a stable
source of funds, ongoing use of wholesale funding sources may be utilized to
meet demand in accordance with the Company's strategic plan. Wholesale
funding sources may allow the Company to obtain a lower cost of funds and
create a more efficient liability match to the asset being funded.
CAPITAL RESOURCES
The Bank is subject to three capital to asset requirements in accordance with
OTS regulations. The following table is a summary of the Bank's regulatory
capital requirements versus actual capital at September 30, 1996:
CAPITAL REQUIREMENTS:
Actual Required Excess
Amount/Percent Amount/Percent Amount/Percent
(Dollars in Thousands)
Tangible $13,985 9.22% $2,275 1.50% $11,710 7.72%
Core Leverage Capital 13,985 9.22% 6,067 4.00% 7,918 5.22%
Risk-Based Capital 14,462 18.72% 6,180 8.00% 8,282 10.72%
11
<PAGE>
SJS BANCORP, INC.
FORM 10-Q
Quarter Ended September 30, 1996
Part II- Other Information
Item 1 Legal Proceedings:
There are no new matters required to be reported under this item.
Item 2 Changes in Securities:
There are no new 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:
SJS Bancorp, Inc. announced on November 7, 1996 that they have signed a
plan of merger under which SJS Bancorp, Inc. would merge with and into
Shoreline Financial Corporation. Under the agreement, which is subject
to SJS Bancorp, Inc. shareholder and regulatory approvals, SJS Bancorp,
Inc. shareholders would receive $27.00 cash for each share of SJS
Bancorp, Inc. common stock, for a total value of approximately $25.4
million. The transaction is expected to be completed during the first
half of 1997.
There are no other matters required to be reported under this item.
Item 6 Exhibits and Reports on Form 8-K:
(a) Exhibits
27 - Financial Data Schedule
(b) Reports on Form 8-K. No reports on Form 8-K were
filed by the Registrant during the quarter ended September 30,
1996.
12
<PAGE>
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.
SJS BANCORP, INC.
Date: November 12, 1996 /S/ THOMAS G. WATSON
-----------------------------
President
Date: November 12, 1996 /S/ ARTHUR SKALE
-----------------------------
Chief Financial Officer
13
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> SEP-30-1996
<CASH> 3,165,112
<INT-BEARING-DEPOSITS> 190,000
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 28,202,158
<INVESTMENTS-CARRYING> 12,414,524
<INVESTMENTS-MARKET> 12,253,359
<LOANS> 104,235,293
<ALLOWANCE> 693,180
<TOTAL-ASSETS> 151,880,648
<DEPOSITS> 109,817,011
<SHORT-TERM> 6,800,000
<LIABILITIES-OTHER> 2,876,430
<LONG-TERM> 16,569,719
0
0
<COMMON> 9,866
<OTHER-SE> 15,807,622
<TOTAL-LIABILITIES-AND-EQUITY> 151,880,648
<INTEREST-LOAN> 2,085,395
<INTEREST-INVEST> 699,723
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 2,785,118
<INTEREST-DEPOSIT> 1,386,090
<INTEREST-EXPENSE> 1,742,880
<INTEREST-INCOME-NET> 1,042,238
<LOAN-LOSSES> 55,000
<SECURITIES-GAINS> (17,160)
<EXPENSE-OTHER> 143,984
<INCOME-PRETAX> (558,189)
<INCOME-PRE-EXTRAORDINARY> (558,189)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (368,227)
<EPS-PRIMARY> (.41)
<EPS-DILUTED> (.41)
<YIELD-ACTUAL> 7.617
<LOANS-NON> 204,697
<LOANS-PAST> 0
<LOANS-TROUBLED> 234,368
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 646,091
<CHARGE-OFFS> 18,436
<RECOVERIES> 10,525
<ALLOWANCE-CLOSE> 693,180
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 693,180
</TABLE>
