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 December
31, 1997
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 35-1942803_________
(State or other jurisdiction of
(IRS Employer Identification No.)
incorporation or organization)
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 February 13, 1998, there were
784,000 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
Operations 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
Item1. Financial Statements
Sobieski Bancorp, Inc. And Subsidiary
Condensed Consolidated Statements Of Financial Condition
December 31, 1997 and June 30, 1997
<TABLE>
<CAPTION>
December 31, June 30,
ASSETS 1997 1997
(Unaudited)
Cash, including interest-bearing
deposits in other financial
institutions of $264,325 and $94,477,
<S> <C> <C>
respectively $ 937,008 $ 1,251,373
Certificates of deposit 99,000 198,000
Investment securities, available-
for-sale (amortized cost of $598,668
and $1,299,335, respectively) 598,532 1,297,148
Investment securities, held-to-maturity
(market value of approximately
$1,004,700 and $1,012,900,
respectively) 1,000,000 1,000,000
Mortgage-backed securities, available-
for-sale (amortized cost of $1,586,412
and $1,790,203, respectively) 1,596,362 1,780,210
Mortgage-backed securities, held-to-
maturity (market value of approximately
$10,829,600 and $11,617,500,
respectively) 10,915,994 11,929,352
Loans receivable, net 68,879,295 61,134,644
Real estate owned 152,391 11,037
Federal Home Loan Bank stock, at cost 872,500 636,000
Property and equipment, net 1,987,693 2,028,310
Other assets 514,292 466,672
Total assets $ 87,553,067 $ 81,732,746
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 57,611,290 $ 59,386,630
Federal Home Loan Bank advances 16,850,000 9,500,000
Advances from borrowers for taxes
and insurance 295,873 260,439
Accrued income taxes 28,791 80,628
Accrued interest and other expenses 144,711 132,077
Deferred income taxes 20,337 12,177
Total liabilities 74,951,632 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 9,156,646 9,147,176
Retained earnings, substantially
restricted 6,787,911 6,670,543
Net unrealized appreciation
(depreciation) of securities
available-for-sale 6,477 (7,356)
15,960,694 15,820,023
Less: Treasury stock, at cost,
201,910 and 206,368 shares,
respectively 2,817,659 2,879,878
Unallocated Employee Stock
Ownership Plan shares;
54,160 shares and 57,935 shares,
respectively 541,600 579,350
Total stockholders' equity 12,601,435 12,360,795
Total liabilities and
stockholders' equity $ 87,553,067 $ 81,732,746
</TABLE>
See accompanying notes to condensed consolidated financial statements.
1
Sobieski Bancorp, Inc. And Subsidiary
Condensed Consolidated Statements Of Operations
for the three and six months ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Three Months Six Months
Ended December 31, Ended December 31,
1997 1996 1997 1996
(Unaudited) (Unaudited)
Interest Income:
<S> <C> <C> <C> <C>
Loans $ 1,350,644 $ 1,086,728 $ 2,576,481 $ 2,145,228
Mortgage-backed
securities 190,399 238,315 397,130 493,939
Interest-bearing
deposits 22,824 12,986 41,827 29,393
Investments and
other 29,344 74,871 73,690 155,477
Total interest
income 1,593,211 1,412,900 3,089,128 2,824,037
Interest expense:
Interest on
deposits 683,745 709,929 1,356,894 1,430,305
Interest on
borrowings 221,242 80,701 379,701 141,088
Total interest
expense 904,987 790,630 1,736,595 1,571,393
Net interest
income 688,224 622,270 1,352,533 1,252,644
Non-interest income:
Fees and service
charges 31,444 41,876 58,879 82,051
Gain on sales
of securities - 67,652 - 67,652
Other income (434) 11,040 19,473 16,295
Total non-interest
income 31,010 120,568 78,352 165,998
Non-interest expenses:
Compensation
and benefits 284,206 267,575 571,628 489,804
Occupancy and
equipment 74,315 60,925 143,175 125,507
Federal deposit
insurance premiums 9,317 34,680 18,680 484,007
Advertising and
promotion 7,766 2,527 13,941 7,632
Service bureau expense 36,414 23,886 71,242 51,075
Other operating
expenses 116,406 140,238 202,787 264,651
Total non-interest
expenses 528,424 529,831 1,021,453 1,422,676
Income (loss) before
income taxes 190,810 213,007 409,432 (4,034)
Provision (credit)
for income taxes 64,000 82,000 159,000 (1,600)
Net income (loss) $ 126,810 $ 131,007 $ 250,432 $ (2,434)
Earnings (loss)per common share:
Basic $ 0.18 $ 0.16 $ 0.35 $ 0.00
Fully diluted$ 0.17 $ 0.16 $ 0.34 $ 0.00
Dividends per
common share $ 0.08 $ - $ 0.16 $ -
</TABLE>
See accompanying notes to condensed consolidated financial statements.
2
Sobieski Bancorp, Inc. And Subsidiary
Condensed Consolidated Statements Of Cash Flows
for the six months ended December 31, 1997 and 1996
<TABLE>
<CAPTION>
Six Months
Ended December 31,
1997 1996
(Unaudited)
Cash flows provided by (used in) operating activities:
<S> <C> <C>
Net income (loss) $ 250,432 $ ( 2,434)
Adjustments to reconcile net income
(loss) to net cash provided
by (used in) operating activities:
Depreciation of property and equipment 53,087 55,814
Gain on disposal of equipment - (250)
Gain on sale of investment securities - (70,269)
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 67,006 40,982
Contribution to Recognition and Retention
Plan 62,220 46,690
Amortization of premiums and accretion
of discounts, net 51,515 43,860
Amortization of deferred loan fees (26,471) (22,461)
(Increase) decrease in other assets (47,620) 64,768
Decrease in accrued income taxes (51,837) (129,305)
Increase (decrease)in accrued interest
and other expenses (13,704) (93,857)
Net cash provided by (used in)
operating activities 342,543 (63,845)
Cash flows provided by (used in)
investing activities:
Purchase of investment securities - (12,415)
Proceeds from maturities of
certificates of deposits 99,000 -
Proceeds from maturities of
investment securities 700,000 300,000
Principal reductions of
mortgage-backed securities 1,166,301 1,064,920
Proceeds from sale of investment
securities - 1,142,142
Proceeds from sale of mortgage-backed
securities - 294,137
Net increase in loans made to
customers and principal collections
on loans (7,870,571) (2,211,773)
Purchase of Federal 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 (12,470) (23,139)
Net cash provided by (used in)
investing activities (6,141,118) 554,122
Cash flows provided by (used in) financing activities:
Net decrease in deposits (1,775,340) (2,242,099)
Increase (decrease) in advances
from borrowers for taxes
and insurance 35,434 (13,204)
Federal Home Loan Bank advances 19,350,000 3,100,000
Repayment of Federal Home Loan
Bank advances (12,000,000) (400,000)
Purchase of treasury stock - (189,078)
Cash dividends (125,884) - .
Net cash provided by financing
activities 5,484,210 255,619
(Decrease) increase in cash and
cash equivalents (314,365) 745,896
Cash and cash equivalents,
beginning of period 1,251,373 1,385,520
Cash and cash equivalents,
end of period $ 937,008 $ 2,131,416
</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
Current regulations allow the
Company to pay 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-for-
sale 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 December 31, 1997.
For the three and six-month periods
ended December 31, 1997, the
Association had no sales of
investment and mortgage-backed
securities available-for-sale. For
the three and six-month periods
ended December 31, 1996, the
Association had realized gains in
the amount of $67,652 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 December 31, 1997 and 1996 was
$200,000. For both periods ended
December 31, there were no charge-
offs. Nonaccrual loans at December
31, 1997 and 1996 aggregated
$77,424 and $189,795, 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 establishes standards for
computing and presenting earnings
per share, simplifies the standards
for computation and makes 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 six-
month periods ended December 31,
1997, the weighted average number
of common shares used in the
computation of basic earnings per
share were 708,130 and 705,623,
respectively. The weighted average
number of common shares for the
same periods in 1996 were 819,372
and 821,742, 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 six-month
periods ended December 31, 1997,
the weighted average number of
common shares used in the
computation of diluted earnings per
share were 733,918 and 727,934,
respectively. The weighted average
number of common shares for the
same periods in 1996 were 830,683
and 829,639, respectively.
6
Item 2. Management's Discussion And
Analysis of Financial Condition And
Results of Operations
Financial Condition
The Company's total assets increased
$5.8 million during the six months ended
December 31, 1997 to $87.5 million from
$81.7 million at June 30, 1997. This
increase was mainly due to an increase
in net loans of $7.7 million offset by a
decrease of $1.9 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 $5.6 million from $69.4
million at June 30, 1997 to $75.0
million at December 31, 1997. The
increase was primarily attributable to
an increase in Federal Home Loan Bank
("FHLB") advances of $7.4 million. These
advances were primarily used to fund the
increase in net originated loans and
purchases of participation interests in
commercial loans. Deposits decreased
$1.8 million from $59.4 million at June
30, 1997 to $57.6 million at December
31, 1997. The decrease was the result of
customers continuing to seek higher
yield investment alternatives.
Stockholders' equity increased by
$240,000 from $12.361 million at June
30, 1997 to $12.601 million at December
31, 1997 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 December 31,
1997 of $127,000 which is an decrease of
$4,000 from net income of $131,000 for
the same period in 1996. For the six
months ended December 31, 1997, net
income was $250,400 which is an increase
of $252,800 over the reported net loss
of $2,400 for the comparable period in
the prior year. The prior year six-
month loss of $2,400 was a result of 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 $688,200 and $1.35 million for the
three and six-month periods ended
December 31, 1997, respectively, as
compared to $622,300 and $1.25 million
for the same periods in the prior year.
The increases of $65,900 and $100,000
for the three and six-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 six-
month periods ended December 31, 1997
was $905,000 and $1.74 million,
respectively, as compared to $790,600
and $1.57 million for the comparable
periods in the prior year. The increases
in interest expense for the three and
six-month periods ended December 31,
1997 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 six-months ended December 31,
1997 and 1996, respectively, the Company
had no provision for loan losses.
At December 31, 1997, the Company's
allowance for loan losses totaled
$200,000 or .29% of net loans receivable
and 258% 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 $89,600 to $31,000 for the
three months ended December 31, 1997 as
compared to $120,600 for the same period
last year and decreased $87,600 to
$78,400 for the six months ended
December 31, 1997 from $166,000 for the
same period in 1996. These decreases
were due primarily to nonrecurring 1996
gains on the sale of securities in the
amount of $67,000 and a decrease in
quarterly service charges on savings
accounts and nsf fees.
Non-Interest Expenses. Non-interest
expenses were $528,400 and $1.02 million
for the three and six-month periods
ended December 31, 1997, respectively,
compared to $530,000 and $1.42 million
for the same periods last year. The
decrease of $400,000 for the six-month
period ended December 31, 1997 was
primarily attributable to the one-time
special assessment of $414,000 to
recapitalize the SAIF fund.
Income Taxes/Benefit. Income taxes for
the six months ended December 31, 1997
were $159,000 on pre-tax income of
$409,400, an effective tax rate of
38.8%. For the six months ended
December 31, 1996, a tax benefit of
$1,600 resulted from the pre-tax loss of
$4,000 attributable to the $414,000
SAIF assessment. The Company's effective
tax benefit for the six-month period
ended December 31, 1996 was 39.7%.
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 have required 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 December 31,
1997, the Company's liquidity ratio was
5.63%.
8
Item 2. Management's Discussion And
Analysis of Financial
Condition And Results of Operations,
Continued.
At December 31, 1997, the Company had
$16,850,000 in outstanding advances from
the FHLB used primarily to fund
purchases of participation interest in
commercial loans, internally originated
loans, other investments and net savings
outflow.
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 December 31, 1997, the
Company had outstanding commitments to
extend credit which amounted to
$5,007,000 (including
$1,965,000 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 December 31, 1997, the Association
had tangible capital of $9.2 million or
10.5% of adjusted total assets which was
$7.9 million above the minimum capital
requirement of $1.3 million or 1.5% of
adjusted total assets.
At December 31, 1997, the Association
had core capital of $9.2 million or
10.5% of adjusted total assets which
was $6.6 million above the minimum
capital requirement of $2.6 million or
3.0% of adjusted total assets.
At December 31, 1997, the Association
had total risk-based capital of $9.4
million and risk-weighted assets of
$39.0 million or total risk-based
capital of 24.1% of risk-weighted
assets. This amount was $6.3 million
above the minimum regulatory risk-based
capital requirement of $3.1 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 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.
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 Sobieski
Federal Savings and Loan, 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 expenses
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) 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: February 16, 1998
By: /s/s Thomas F. Gruber
Thomas F. Gruber
President and Chief Executive
Officer
Date: February 16, 1998
By: /s/s Arthur Skale
Arthur Skale
Chief Financial Officer
12
<TABLE> <S> <C>
<ARTICLE> 5
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 937,008
<SECURITIES> 15,082,388
<RECEIVABLES> 68,879,295
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 666,683
<PP&E> 1,987,693
<DEPRECIATION> 0
<TOTAL-ASSETS> 87,553,067
<CURRENT-LIABILITIES> 74,951,632
<BONDS> 0
0
0
<COMMON> 9,660
<OTHER-SE> 12,591,775
<TOTAL-LIABILITY-AND-EQUITY> 87,553,067
<SALES> 0
<TOTAL-REVENUES> 3,167,480
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1,021,453
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 1,736,595
<INCOME-PRETAX> 409,432
<INCOME-TAX> 159,000
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 250,432
<EPS-PRIMARY> .35
<EPS-DILUTED> .34
</TABLE>
