U.S. 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 March 31, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________ to ________
Commission file number 0-25518
SOBIESKI BANCORP, INC.
(Exact name of small business issuer as specified in its charter)
Delaware
(State or other jurisdiction of incorporation or organization)
35-1942803
(IRS Employer Identification No.)
2930 W. Cleveland Road, South Bend, Indiana 46628
(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (219) 271-8300
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 [ ]
As of May 12, 1998, there were 782,100 shares of the
registrant's common stock issued and outstanding.
SOBIESKI BANCORP, INC.
AND SUBSIDIARY
INDEX
Page Number
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Condensed Consolidated Statements
of Financial Condition 1
Condensed Consolidated Statements
of Income 2
Condensed Consolidated Statements
of Cash Flows 3
Notes to Condensed Consolidated
Financial Statements 4-6
Item 2. Management's Discussion and
Analysis of Financial Condition
and Results of Operations 7-10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 11
Item 2. Changes in Securities 11
Item 3. Defaults Upon Senior
Securities 11
Item 4. Submission of Matters To
a Vote of Security Holders 11
Item 5. Other Information 11
Item 6. Exhibits and Reports on
Form 8-K 11
SIGNATURES 12
i
PART I. Financial Information
Item 1. Financial Statements
Sobieski Bancorp, Inc. And Subsidiary
Condensed Consolidated Statements Of Financial
Condition March 31, 1998 and June 30, 1997
<TABLE>
<CAPTION>
March 31, June 30,
ASSETS 1998 1997
(Unaudited)
Cash, including interest-bearing
deposits in other financial
institutions of $1,064,893 and
$94,477, respectively
<S> <C> <C>
$ 2,284,474 $ 1,251,373
Certificates of deposit - 198,000
Investment securities,
available-for-sale (amortized
cost of $598,966 and $1,299,335,
respectively) 599,626 1,297,148
Investment securities,
held-to-maturity(market value
of approximately $1,012,900) - 1,000,000
Mortgage-backed securities,
available-for-sale (amortized
cost of $1,456,143 and $1,790,203,
respectively) 1,463,386 1,780,210
Mortgage-backed securities,
held-to-maturity (market value
of approximately $10,420,600
and $11,617,500, respectively) 10,489,943 11,929,352
Loans receivable, net 71,448,322 61,134,644
Real estate owned 153,356 11,037
Federal Home Loan Bank stock,
at cost 872,500 636,000
Property and equipment, net 1,961,556 2,028,310
Other assets 575,324 466,672
Total assets $ 89,848,487 $ 81,732,746
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 60,227,014 $ 59,386,630
Federal Home Loan Bank
advances 15,950,000 9,500,000
Advances from borrowers
for taxes and insurance 662,639 260,439
Accrued income taxes 112,198 80,628
Accrued interest and other
expenses 207,418 132,077
Deferred income taxes 20,104 12,177
Total liabilities 77,179,373 69,371,951
Stockholders' equity:
Preferred stock, $.01 par value:
500,000 shares authorized;
none issued - -
Common stock, $.01 par value:
3,500,000 shares authorized;
966,000 shares issued 9,660 9,660
Additional paid-in capital 9,155,718 9,147,176
Retained earnings, substantially
restricted 6,857,219 6,670,543
Net unrealized appreciation
(depreciation) of securities
available-for-sale 5,216 (7,356)
SubTotal 16,027,813 15,820,023
Less: Treasury stock, at cost,
201,870 and 206,368 shares,
respectively 2,817,101 2,879,878
Unallocated Employee Stock
Ownership Plan shares; 54,160
and 57,935 shares, respectively 541,600 579,350
Total stockholders' equity 12,669,114 12,360,795
Total liabilities and
stockholders' equity $ 89,848,487 $ 81,732,746
</TABLE>
See accompanying notes to condensed consolidated
financial statements.
1
Sobieski Bancorp, Inc. And Subsidiary
Condensed Consolidated Statements Of Income
for the three and nine months ended March 31, 1998
and 1997
<TABLE>
<CAPTION>
Three Months Nine Months
Ended March 31, Ended March 31,
1998 1997 1998 1997
(Unaudited) (Unaudited)
Interest Income:
<S> <C> <C> <C> <C>
Loans $1,389,466 $1,120,665 $3,965,947 $3,265,893
Mortgage-backed
securities 181,223 234,098 578,353 728,037
Interest-bearing
deposits 29,875 7,549 71,702 36,942
Investments and
other 26,033 61,191 99,723 216,668
Total interest
income 1,626,597 1,423,503 4,715,725 4,247,540
Interest expense:
Interest on
deposits 684,764 682,010 2,041,657 2,112,315
Interest on
borrowings 241,600 90,477 621,302 231,565
Total interest
expense 926,364 772,487 2,662,959 2,343,880
Net interest
income 700,233 651,016 2,052,766 1,903,660
Non-interest
income:
Fees and service
charges 31,298 44,647 90,177 126,698
Gain on sales of
securities 6,563 - 6,563 63,535
Other income 110 4,108 19,583 20,403
Total non-interest
income 37,971 48,755 116,323 210,636
Non-interest expenses:
Compensation and
benefits 284,126 257,712 855,754 747,516
Occupancy and
equipment 69,382 67,905 212,557 193,412
Federal deposit
insurance premiums 9,196 2,148 27,876 486,155
Advertising and
promotion 10,338 17,483 24,279 25,115
Service bureau
expense 35,760 24,841 107,002 75,916
Other operating
expenses 87,999 115,404 290,786 375,938
Total non-interest
expenses 496,801 485,493 1,518,254 1,904,052
Income before
income taxes 241,403 214,278 650,835 210,244
Provision for
income taxes 116,556 82,275 275,556 80,675
Net income $ 124,847 $ 132,003 $ 375,279 $ 129,569
Earnings per
common share:
Basic $ 0.18 $ 0.18 $ 0.53 $ 0.17
Fully diluted $ 0.17 $ 0.17 $ 0.52 $ 0.17
Dividends per common
share $ 0.08 $ 0.07 $ 0.24 $ 0.07
</TABLE>
See accompanying notes to condensed consolidated
financial statements.
2
Sobieski Bancorp, Inc. And Subsidiary
Condensed Consolidated Statements Of Cash Flows
for the nine months ended March 31, 1998 and 1997
<TABLE>
<CAPTION>
Nine Months
Ended March 31,
1998 1997
(Unaudited)
Cash flows provided by(used in)
operating activities:
<S> <C> <C>
Net income $ 375,279 $ 129,569
Adjustments to reconcile net
income to net cash provided by
(used in) operating activities:
Depreciation of property and
equipment 82,516 83,701
Gain on disposal of equipment - (250)
Gain on sale of investment
securities (6,563) (66,152)
Loss on sale of mortgage-backed
securities - 2,617
Gain on sale of real estate
owned, net (2,085) -
Contribution to Employee Stock
Ownership Plan 67,007 40,165
Contribution to Recognition and
Retention Plan 42,064 -
Amortization of premiums and
accretion of discounts, net 77,553 56,312
Amortization of deferred loan
fees (12,701) (34,440)
(Increase) decrease in other
assets (108,652) 23,432
Increase (decrease) in accrued
income taxes 31,570 (72,388)
Increase(decrease)in accrued
interest and other expenses 76,792 (32,126)
Net cash provided by operating
activities 622,780 132,440
Cash flows provided by
investing activities:
Purchase of investment
securities - (12,415)
Proceeds from maturities of
certificates of deposits 198,000 -
Proceeds from maturities of
investment securities 1,706,563 600,000
Principal reductions of
mortgage-backed securities 1,695,250 1,637,854
Proceeds from sale of
investment securities - 1,138,025
Proceeds from sale of
mortgage-backed securities - 294,137
Net increase in loans made to
customers and principal
collections on loans (10,454,333)(4,549,426)
Purchase ofFederal Home Loan
Bank stock (236,500) -
Proceeds from sale of equipment - 250
Proceeds from sale of real
estate owned 13,122 -
Purchase of property and
equipment (15,762) (26,603)
Net cash used in investing
activities (7,093,660) (918,178)
Cash flows provided by
(used in) financing
activities:
Net increase(decrease)in
deposits 840,384 (2,230,583)
Increase in advances from
borrowers for taxes and
insurance 402,200 323,840
Federal Home Loan Bank
advances 25,100,000 4,500,000
Repayment of Federal Home
Loan Bank advances (18,650,000) (400,000)
Purchase of treasury stock - (1,970,422)
Cash dividends (188,603) (59,415)
Net cash provided by financing
activities 7,503,981 163,420
Increase (decrease) in cash and
cash equivalents 1,033,101 (622,318)
Cash and cash equivalents,
beginning of period 1,251,373 1,385,520
Cash and cash equivalents,
end of period $ 2,284,474 $ 763,202
</TABLE>
See accompanying notes to condensed consolidated
financial statements.
3
Sobieski Bancorp, Inc. And Subsidiary
Notes To Condensed Consolidated Financial Statements
A. GENERAL.
The accompanying condensed consolidated financial statements
include the accounts of Sobieski Bancorp, Inc. (the "Company") and
its wholly owned subsidiary, Sobieski Federal Savings and Loan
Association of South Bend (the "Association").
The condensed consolidated financial statements included herein have been
prepared by the registrant pursuant to the rules and regulations
of the Securities and Exchange Commission. Certain information
and footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting
principles have been condensed or omitted pursuant to such rules
and regulations, although the registrant believes that the
disclosures are adequate to make the information presented not
misleading. In the opinion of management, the accompanying
unaudited condensed consolidated financial statements contain all
adjustments, consisting only of normal recurring accruals,
necessary for a fair presentation of the Company's consolidated
financial position, results of operations and cash flows for the
interim periods presented. The consolidated results of operations
for the interim periods presented are not necessarily indicative
of the results that may be expected for the full year. The
accompanying unaudited condensed consolidated financial statements
should be read in conjunction with the Company's consolidated
financial statements included in the Company's Annual Report on
Form 10-KSB for the year ended June 30, 1997.
The Company cautions that any forward looking statements contained
in this report, in a report incorporated by reference to this
report or made by management of the Company involve risks and
uncertainties and are subject to change based on various factors.
Actual results could differ materially from those expressed or
implied.
B. CONVERSION AND ISSUANCE OF COMMON STOCK.
On October 4, 1994, the Board of Directors of the Association
adopted a plan of conversion to convert the Association from a
federally chartered mutual savings and loan association to a
federally chartered stock savings and loan association (the
"Conversion"). The Association obtained the required regulatory
approval for the Conversion in February 1995 and on March 22, 1995
the plan of conversion was approved by a majority of the votes
eligible to be cast by the members of the Association.
The Company was organized as a Delaware corporation in December
1994 for the purpose of acquiring all of the issued and
outstanding capital stock of the Association issued in the
Conversion.
At the time of Conversion, the Association established a
liquidation account in an amount equal to the Association's
retained earnings as of September 30, 1994. The liquidation
account will be maintained for the benefit of depositors, as of
the eligibility record date and supplemental eligibility record
date, who continue to maintain their deposits with the Association
after the Conversion. In the event of a complete liquidation (and
only in such event), each eligible depositor will be entitled to
receive a liquidation distribution from the liquidation account,
in the proportionate amount of the then current adjusted balance
for deposits then held, before any liquidation distribution may be
made with respect to the stockholders.
4
Sobieski Bancorp, Inc. And Subsidiary
Notes To Condensed Consolidated Financial Statements, Continued
Current regulations allow the Company to pay cash dividends on its
stock if its regulatory capital would not thereby be reduced below
the amount then required for the aforementioned liquidation
account. Also, capital distribution regulations limit the
Company's ability to make capital distributions which include
dividends, stock redemptions, repurchases and other transactions
charged to the capital account based on its capital level and
supervisory condition. Federal regulations also preclude any
repurchase of the stock of the Company for three years after
conversion except for purchases of qualifying shares of a director
and repurchases pursuant to an offer made on a pro rata basis to
all stockholders and with prior approval of the Office of Thrift
Supervision or pursuant to an open-market stock repurchase program
with certain regulatory criteria.
C. ACCOUNTING POLICIES.
Securities
Securities that may be sold as part of the Association's
asset/liability or liquidity management or in response to or in
anticipation of changes in interest rates and resulting prepayment
risk, or for other similar factors, are classified as available-
forsale and carried at fair market value. Unrealized holding gains
and losses on securities classified as available-for-sale are reported
net of related deferred income taxes as a separate component of
stockholders' equity. Securities that the Association has the ability
and positive intent to hold to maturity are classified as held-to-maturity
and carried at amortized cost. Trading securities are carried at fair
market value with unrealized holding gains and losses included in
earnings. Gains and losses on all securities transactions are
recognized when sold as determined by the identified certificate
method. The Association had no trading securities at March 31,1998.
For the three and nine-month periods ended March 31, 1998, the
Association had realized gains of $6,563 from the sale of a held-to
maturity security. The security sale was made pending
a call notification at par. For the nine-month period
ended March 31, 1997, the Association had net realized gains
of $63,535 from the sales of investment and mortgage-
backed securities available-for-sale.
Allowance For Loan Losses
The allowance for loan losses is established through a provision
for loan losses based on management's evaluation of the risks
inherent in its loan portfolio and changes in the nature and
volume of its loan activity, including those loans which are being
specifically monitored by management. Such evaluation, which
includes a review of loans for which full collectibility may not
be reasonably assured, considers among other matters, loan
classification, the estimated fair value of the underlying
collateral, economic conditions, historical loan loss experience,
the amount of loans outstanding and other factors that warrant
recognition in providing for an adequate allowance for loan
losses. A significant factor considered in the Company's
allowance is its historically low level of loans other than one-
to-four family real estate loans. The Company's allowance for
loan losses at March 31, 1998 and 1997 was $200,000. For the three and
nine-minth periods ended March 31, 1998 and 1997, there were no
charge-offs. Nonaccrual loans at March 31, 1998 and 1997 aggregated
$103,911 and $196,468, respectively.
5
Sobieski Bancorp, Inc. And Subsidiary
Notes To Condensed Consolidated Financial Statements, Concluded
Earnings Per Common Share
In February 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings Per Share." This Statement established standards for
computing and presenting earnings per share, simplified the
standards for computation and made the calculation comparable to
international accounting standards. "Primary" earnings per share
was replaced by "basic" earnings per share and the Statement
requires that both "basic" and "diluted" earnings per share be
presented on the face of the income statement. SFAS No. 128 is
effective for periods ending after December 15, 1997 and requires
restatement of prior period earnings per share upon adoption.
The Company accounts for the shares of common stock acquired by
its Employee Stock Ownership Plan ("ESOP") and the restricted
shares awarded under its Recognition and Retention Plan ("RRP")
in accordance with Statement of Position 93-6 which prescribes
that shares held by the ESOP and the restricted shares awarded
under the RRP are not considered in the weighted average number
of shares outstanding until such shares are released for
allocation to an ESOP participant's individual account or
vested, in the case of the RRP.
Basic earnings per share are computed by dividing net income by
the weighted average number of shares of common stock
outstanding. Accordingly, for the three and nine-month periods
ended March 31, 1998, the weighted average number of common shares
used in the computation of basic earnings per share were
710,911 and 707,457, respectively. The weighted average number
of common shares for the same periods in 1997 were 748,791 and
773,898, respectively.
Diluted earnings per share are computed by dividing net income
by the weighted average number of shares of common stock
outstanding plus the dilutive effect of outstanding stock
options and nonvested shares awarded under the RRP. For the
three and nine month periods ended March 31, 1998, the weighted
average number of common shares used in the computation of
diluted earnings per share were 728,306 and 728,130
respectively. The weighted average number of common shares for
the same periods in 1997 were 757,679 and 781,318, respectively.
6
Item 2. Management's Discussion And Analysis of Financial
Condition And Results of Operations
Financial Condition
The Company's total assets increased $8.1 million during the
nine months ended March 31, 1998 to $89.8 million from $81.7
million at June 30, 1997. This increase was mainly due to
increases in interest bearing deposits in other banks and an
increase in net loans of $10.3 million offset by a decrease of $3.5
million in the security portfolio used to fund loan growth.
The increase in loans receivable was a result of purchasing
participation interests in commercial loans, and increased
originations for commercial, home equity and mortgage loans.
The Company's total liabilities increased $7.8 million from
$69.4 million at June 30, 1997 to $77.2 million at March 31,
1998. The increase was primarily attributable to an increase in
Federal Home Loan Bank ("FHLB") advances of $6.5 million. These
advances were primarily used to fund the increase in net
originated loans and purchases of participation interests in
commercial loans. Deposits increased $840,000 from $59.4
million at June 30, 1997 to $60.2 million at March 31, 1998.
Stockholders' equity increased by $308,000 from $12.36 million
at June 30, 1997 to $12.67 million at March 31, 1998,
principally the result of net income and increases in paid-in
capital, offset by cash dividends.
Results of Operations
General. The Company recorded net income for the three months
ended March 31, 1998 of $125,000 which is a decrease of $7,000
from net income of $132,000 for the same period in 1997. For
the nine months ended March 31, 1998, net income was $375,000
which is an increase of $245,000 over the reported net income of
$130,000 for the comparable period in the prior year. The prior
year nine-month income of $130,000 was negatively impacted by
the one-time assessment to recapitalize SAIF in the amount of
$250,100, net of tax.
Net Interest Income. The Company's net income is primarily
dependent upon net interest income. Net interest income was
$700,200 and $2.05 million for the three and nine-month periods
ended March 31, 1998, respectively, as compared to $651,000 and
$1.90 million for the same periods in the prior year. The
increases of $49,200 and $149,100 for the three and nine-month
periods, respectively, was primarily a result of increased
income earned on loans and a decrease in interest paid on deposits,
offset in part by interest paid on increased FHLB advances. The increase
in interest income earned on loans was generated by net
increased loan volume offset by lower loan rates and the reduced
investment portfolio.
Interest expense for the three and nine-month periods ended
March 31, 1998 was $926,400 and $2.66 million, respectively, as
compared to $772,500 and $2.34 million for the comparable
periods in the prior year. The increases in interest expense for the
three and nine-month periods ended March 31, 1998 was attributable to
interest paid on FHLB advances, offset by a decrease in interest paid
on deposits.
Provisions for Loan Losses. During the three and nine-month periods
ended March 31, 1998 and 1997, respectively, the Company had no
provision for loan losses.
At March 31, 1998, the Company's allowance for loan losses
totaled $200,000 or .28% of net loans receivable and 192% of
total non-performing loans.
7
Item 2. Management's Discussion And Analysis of Financial
Condition And Results of Operations, Continued
Although management believes that it uses the best information
available to determine the allowance, unforeseen market
conditions could result in adjustments and net income could be
significantly affected if circumstances differ substantially
from the assumptions used in making the final determination.
Future additions to the Company's allowance for loan losses
will be the result of periodic loan, property and collateral
reviews and thus cannot be predicted in advance. In
addition, federal regulatory agencies, as an integral part
of their oversight process, periodically review the Company's
allowance for loan losses. Such agencies may require the Company to
recognize additions to the allowance based upon their judgment of the
information available to them at the time of their examination.
Non-Interest Income.
Non-interest income consists primarily of fees and service charges on
deposit accounts and securities gains. Non-interest income decreased
$10,800 to $38,000 for the three months ended March 31, 1998 as compared
to $48,800 for the same period last year and decreased $94,300 to $116,300
for the nine months ended March 31, 1998 from $210,600 for the same period
in 1997. These decreases were due primarily to lower 1998 net security
gains of $57,000 and a decrease in quarterly service charges on savings
accounts and NSF fees.
Non-Interest Expenses.
Non-interest expenses were $496,800 and $1.52 million for the
three and nine-month periods ended March 31, 1998, respectively, compared
to $485,500 and $1.90 million for the same periods last year. The decrease
of $386,000 for the nine-month period ended March 31, 1998 was primarily
attributable to the one-time special assessment of $414,000 to
recapitalize the SAIF fund.
Income Taxes.
Income taxes for the nine months ended March 31,1998 were $275,600 on
pre-tax income of $650,800, an effective tax rate of 42.3%. For the
nine months ended March 31, 1997, income taxes were $80,700 on pre-tax income
of $210,200. The Company's effective tax rate for the nine-month
period ended March 31, 1997 was 38.4%. The primary reason for the
increase in the effective 1998 tax rate is the limited expense
deductibility of the Company's ESOP contributions for tax purposes.
Liquidity and Capital Resources
The Company's principal sources of funds are deposits and
principal and interest payments on loans and investments. 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. Additionally, the Company may borrow funds from the
Federal Home Loan Bank of Indianapolis ("FHLB") or utilize other
borrowings of funds based on need, comparative costs and
availability at the time.
Federal regulations require the Company to maintain minimum levels of
liquid assets. The required percentage has varied from time to time based
upon the economic conditions and savings flows and is currently 5% of net
withdrawable savings deposits and borrowings payable on demand or
in one year or less during the preceding calendar month. Liquid
assets for purposes of this ratio include cash, certain time
deposits, U.S. Government obligations, government agency and other
securities and obligations generally having remaining maturities
of less than five years. The Company has maintained its liquidity
ratio at levels in excess of those required. At March 31, 1998,
the Company's quarterly average liquidity ratio was 5.34%.
8
Item 2. Management's Discussion And Analysis of Financial
Condition And Results of Operations, Continued.
At March 31, 1998, the Company had $15,950,000 in outstanding
advances from the FHLB used primarily to fund purchases of
participation interests in commercial loans, internally
originated loans, and other investments.
The Company uses its liquidity resources principally to meet
ongoing commitments to fund maturing certificates of deposit
and deposit withdrawals and to meet operating expenses. At March
31, 1998, the Company had outstanding commitments to extend
credit which amounted to $5,960,000 (including $2,369,000 in
available home equity lines of credit). Management believes that
loan repayments and other sources of funds will be adequate to
meet the Company's foreseeable liquidity needs.
At March 31, 1998, the Association had tangible capital of
$9.1 million or 10.4% of adjusted total assets which was $7.8
million above the minimum capital requirement of $1.3 million
or 1.5% of adjusted total assets.
At March 31, 1998, the Association had core capital of
$9.1 million or 10.4% of adjusted total assets which was
$6.5 million above the minimum capital requirement of $2.6
million or 3.0% of adjusted total assets.
At March 31, 1998, the Association had total risk-based capital
of $9.3 million and risk-weighted assets of $41.2 million or
total risk-based capital of 22.5% of risk-weighted assets. This
amount was $6.0 million above the minimum regulatory riskbased
capital requirement of $3.3 million, or 8.0% of risk-weighted
assets.
Financial Accounting Developments
In June 1997, SFAS No. 130, "Reporting Comprehensive Income", was
issued. The objective of SFAS No. 130 is to report comprehensive
income which is defined as all changes in equity of an enterprise
that result from transactions and other economic events of the
period other than transactions with owners. SFAS No. 130
establishes standards for the reporting and display of comprehensive
income and its components in a full set of general-purpose
financial statements. This Statement is effective for fiscal
years beginning after December 15, 1997. Reclassification of
financial statements for earlier periods, provided for
comparative purposes, is required.
In June 1997, SFAS No. 131, "Disclosures about Segments of an
Enterprise and Related Information", was also issued.
SFAS No. 131 establishes standards for the way that public
business enterprises report information about operating segments
in annual financial statements and requires that those
enterprises report selected information about operating segments
in interim financial reports issued to shareholders. It also establishes
standards for related disclosures about products and services, geographic
areas and major customers. This Statement is effective for financial
statements for periods beginning after December 15,1997. In the year of
adoption, companies will not be required to disclose this information
for interim periods.
9
Item 2. Management's Discussion And Analysis of Financial
Condition And Results of Operations, Concluded
Regulatory Developments
On September 30, 1996, federal legislation was enacted that
required the Savings Association Insurance Fund ("SAIF") be
recapitalized with a one-time assessment on virtually all SAIF
insured institutions, such as the Association,
equal to 65.7 basis points on each $100 of SAIF-insured deposits
maintained by those institutions as of March 31, 1995. The
amount of the Company's special assessment was $414,000, which
was paid to the FDIC in November 1996.
As a result of the SAIF recapitalization, the FDIC amended its
regulation concerning the insurance premiums payable by SAIF
insured institutions. Effective January 1, 1997, the SAIF
insurance premium is 6.5 basis points per $100 of domestic
deposits, as a result of an assessment to fund repayment of the
financing corporation (FICO) bond obligation. BIF insured
institutions will pay 1.3 cents per $100 of deposits until the
year 2000 when the assessment will be imposed at
the same rate on all FDIC insured institutions.
Year 2000 Computer Issues
Many computer programs use only two digits to identify a year in
the date field and were apparently designed and developed without
considering the impact of the upcoming change in the century.
Such programs could erroneously read entries for the year 2000 as
the year 1900. This could result in major systems failures and
miscalculations. Rapid and accurate data processing is essential
to the operations of financial institutions, such as the
Association. The Company is currently assessing the extent to
which it and its outside vendors may be adversely affected by
Year 2000 computer problems. While the Company does not
anticipate that any Year 2000 computer problems or expenditures
required to correct such problems will materially affect its
financial condition and results of operations, no assurance can
be given in this regard.
10
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
Exhibit 27 Financial Data Schedule
(b) Reports on Form 8-K
None
11
SIGNATURES
In accordance with the requirements of the Exchange Act,
the registrant caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.
Sobieski Bancorp, Inc.
(Registrant)
Date: May 13, 1998
By: /s/s Thomas F. Gruber
Thomas F. Gruber
President and Chief Executive Officer
Date: May 13, 1998
By: /s/s Arthur Skale
Arthur Skale
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<CASH> 2,284,474
<SECURITIES> 12,552,955
<RECEIVABLES> 71,448,322
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,601,180
<PP&E> 1,961,556
<DEPRECIATION> 0
<TOTAL-ASSETS> 89,848,487
<CURRENT-LIABILITIES> 77,179,373
<BONDS> 0
0
0
<COMMON> 9,660
<OTHER-SE> 12,659,114
<TOTAL-LIABILITY-AND-EQUITY> 89,848,487
<SALES> 0
<TOTAL-REVENUES> 4,832,047
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,518,254
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 2,662,959
<INCOME-PRETAX> 650,834
<INCOME-TAX> 275,555
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 375,279
<EPS-PRIMARY> .53
<EPS-DILUTED> .52
</TABLE>
