FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended December 31, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to _______________
Commission File No. 0-25906
ASB FINANCIAL CORP.
_________________________________________________________________
(Exact name of registrant as specified in its charter)
OHIO 31-1429488
_______________________________ ______________________
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
503 Chillicothe Street
Portsmouth, Ohio 45662
______________________ __________
(Address of principal (Zip Code)
executive office)
Issuers' telephone number, including area code: (614) 354-3177
Check whether the issuer (1) has 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 7, 1997, the latest practicable date, 1,721,412 shares of the
registrant's common stock, without par value, were issued and outstanding.
Page 1 of 15 pages
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INDEX
Page
PART I - FINANCIAL INFORMATION
Consolidated Statements of Financial Condition 3
Consolidated Statements of Earnings 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
PART II - OTHER INFORMATION 14
SIGNATURES 15
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<TABLE>
ASB Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
December 31, June 30,
ASSETS 1996 1996
------ ------
<S> <C> <C>
Cash and due from banks $ 954 $ 411
Interest-bearing deposits in other financial institutions 5,926 3,425
--------- ---------
Cash and cash equivalents 6,880 3,836
Certificates of deposit in other financial institutions 5,626 6,702
Investment securities available for sale - at market 16,895 19,284
Mortgage-backed securities available for sale - at market 9,746 10,728
Loans receivable - net 69,027 68,455
Office premises and equipment - at depreciated cost 899 940
Real estate acquired through foreclosure - net 663 663
Federal Home Loan Bank stock - at cost 691 667
Accrued interest receivable on loans 71 120
Accrued interest receivable on mortgage-backed securities 88 110
Accrued interest receivable on investments and interest-
bearing deposits 396 479
Prepaid expenses and other assets 403 586
Prepaid federal income taxes 258 --
Deferred federal income taxes 181 352
--------- ---------
Total assets $ 111,824 $ 112,922
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 87,406 $ 83,395
Advances from the Federal Home Loan Bank 2,399 2,413
Other borrowed money 3,000 --
Advances by borrowers for taxes and insurance 134 162
Accrued interest payable 98 115
Other liabilities 1,224 1,219
Accrued federal income taxes -- 5
--------- ---------
Total liabilities 94,261 87,309
Shareholders' equity
Preferred stock, 1,000,000 shares authorized, no par
value; no shares issued -- --
Common stock, 4,000,000 shares authorized, no par
value; 1,721,412 and 1,713,960 shares issued and outstanding
at December 31, 1996 and June 30, 1996 -- --
Additional paid-in capital 8,023 16,496
Retained earnings 10,966 11,173
Shares acquired by stock benefit plans (1,921) (2,180)
Unrealized gains on securities designated as available for sale,
net of related tax effects 495 124
--------- ---------
Total shareholders' equity 17,563 25,613
--------- ---------
Total liabilities and shareholders' equity $ 111,824 $ 112,922
========= =========
</TABLE>
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ASB Financial Corp.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share data)
For the six months For the three months
ended December 31, ended December 31,
1996 1995 1996 1995
------ ------ ------ ------
<S> <C> <C> <C> <C>
Interest income
Loans $ 2,883 $ 2,688 $ 1,449 $ 1,339
Mortgage-backed securities 356 358 169 189
Investment securities 789 794 441 383
Interest-bearing deposits and other 185 202 89 105
------- ------- ------- -------
Total interest income 4,213 4,042 2,148 2,016
Interest expense
Deposits 2,234 2,119 1,123 1,063
Borrowings 65 11 33 6
------- ------- ------- -------
Total interest expense 2,299 2,130 1,156 1,069
------- ------- ------- -------
Net interest income 1,914 1,912 992 947
Provision for losses on loans 22 -- -- --
------- ------- ------- -------
Net interest income after provision for losses on loans 1,892 1,912 992 947
Other income
Gain on sale of investment securities 105 -- 105 --
Other 109 73 57 31
------- ------- ------- -------
Total other income 214 73 162 31
General, administrative and other expense
Employee compensation and benefits 698 566 360 263
Occupancy and equipment 59 59 31 30
Federal deposit insurance premiums 647 94 48 46
Franchise taxes 121 67 51 33
Data processing 86 84 43 39
Other operating 285 240 144 140
------- ------- ------- -------
Total general, administrative and other expense 1,896 1,110 677 551
------- ------- ------- -------
Earnings before income taxes 210 875 477 427
Federal income taxes
Current 94 288 198 147
Deferred (21) 12 (34) 3
------- ------- ------- -------
Total federal income taxes 73 300 164 150
------- ------- ------- -------
NET EARNINGS $ 137 $ 575 $ 313 $ 277
======= ======= ======= =======
EARNINGS PER SHARE $ .08 $ .36 $ .19 $ .17
======= ======= ======= =======
</TABLE>
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<TABLE>
ASB Financial Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the six months ended December 31,
(In thousands)
1996 1995
------ ------
<S> <C> <C>
Cash flows from operating activities:
Net earnings for the period $ 137 $ 575
Adjustments to reconcile net earnings to net cash
provided by (used in) operating activities:
Amortization of discounts and premiums on loans,
investments and mortgage-backed securities - net 47 69
Amortization of deferred loan origination fees (26) (26)
Depreciation and amortization 41 40
Amortization of expense related to employee benefit plans 290 211
Provision for losses on loans 22 --
Gain on sale of investment securities (105) --
Federal Home Loan Bank stock dividends (24) (22)
Increase (decrease) in cash due to changes in:
Accrued interest receivable 154 (12)
Prepaid expenses and other assets 183 102
Accrued interest payable (17) (28)
Other liabilities 5 (28)
Federal income taxes
Current (263) (15)
Deferred (21) 12
-------- --------
Net cash provided by operating activities 423 878
Cash flows provided by (used in) investing activities:
Proceeds from maturity of investment securities 5,949 5,313
Purchase of investment securities (3,207) (6,143)
Proceeds from sale of investment securities 105 --
Purchase of mortgage-backed securities -- (1,741)
Principal repayments on mortgage-backed securities 1,145 1,129
Loan principal repayments 10,497 7,959
Loan disbursements (11,065) (11,013)
Purchase of office equipment -- (16)
Decrease in certificates of deposit in other financial
institutions - net 1,076 1,505
-------- --------
Net cash provided by (used in) investing activities 4,500 (3,007)
-------- --------
Net cash provided by (used in) operating and investing
activities (subtotal carried forward) 4,923 (2,129)
-------- --------
</TABLE>
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<TABLE>
ASB Financial Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the six months ended December 31,
(In thousands)
1996 1995
------ ------
<S> <C> <C>
Net cash provided by (used in) operating and investing
activities (subtotal brought forward) $ 4,923 $ (2,129)
Cash flows provided by (used in) financing activities:
Net increase in deposit accounts 4,011 2,589
Repayment of Federal Home Loan Bank advances (14) (14)
Proceeds from other borrowed money 3,000 --
Advances by borrowers for taxes and insurance (28) (106)
Purchase of shares for employee benefit plans -- (88)
Proceeds from exercise of stock options 103 --
Dividends paid on common stock (8,951) (256)
-------- --------
Net cash provided by (used in) financing activities (1,879) 2,125
-------- --------
Net increase (decrease) in cash and cash equivalents 3,044 (4)
Cash and cash equivalents at beginning of period 3,836 5,926
-------- --------
Cash and cash equivalents at end of period $ 6,880 $ 5,922
======== ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes $ 367 $ 220
======== ========
Interest on deposits and borrowings $ 2,316 $ 2,158
======== ========
Supplemental disclosure of noncash investing activities:
Transfer of investment and mortgage-backed securities to an
available for sale classification in accordance with SFAS No. 115 $ -- $ 22,486
======== ========
Unrealized gains on securities designated as available for
sale, net of related tax effects $ 371 $ 516
======== ========
</TABLE>
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ASB Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three and six months ended December 31, 1996 and 1995
1. BASIS OF PRESENTATION
The accompanying unaudited financial statements were prepared in accordance
with instructions for Form 10-QSB and, therefore, do not include information
or footnotes necessary for a complete presentation of financial position,
results of operations and cash flows in conformity with generally accepted
accounting principles. Accordingly, these financial statements should be
read in conjunction with the consolidated financial statements and notes
thereto of ASB Financial Corp. included in the Annual Report on Form 10-KSB
for the year ended June 30, 1996. However, in the opinion of management, all
adjustments (consisting of only normal recurring accruals) which are
necessary for a fair presentation of the financial statements have been
included. The results of operations for the three and six month periods
ended December 31, 1996 and 1995 are not necessarily indicative of the
results which may be expected for an entire fiscal year.
2. PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
ASB Financial Corp. (the Corporation) and American Savings Bank, fsb (the
Savings Bank). All significant intercompany items have been eliminated.
3. EARNINGS PER SHARE
Earnings per share is computed based upon the weighted-average shares
outstanding during the period plus those stock options that are dilutive,
less shares in the ESOP that are unallocated and not committed to be
released. Weighted-average common shares deemed outstanding, which gives
effect to 95,482 unallocated ESOP shares, totaled 1,619,645 and 1,620,812
for the six and three month periods ended December 31, 1996, respectively.
Weighted-average common shares deemed outstanding, which gives effect to
111,352 unallocated ESOP shares, totaled 1,602,608 for each of the six and
three month periods ended December 31, 1995. There is no dilutive effect
associated with the Corporation's stock option plan.
4. EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS
In October 1995, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 123, "Accounting for
Stock-Based Compensation", establishing financial accounting and reporting
standards for stock-based employee compensation plans. SFAS No. 123
encourages all entities to adopt a new method of accounting to measure
compensation cost of all employee stock compensation plans based on the
estimated fair value of the award at the date it is granted. Companies are,
however, allowed to continue to measure compensation cost for those plans
using the intrinsic value based method of accounting, which generally does
not result in compensation expense recognition for most plans. Companies
that elect to remain with the existing accounting are required to disclose
in a footnote to the financial statements pro forma net earnings and, if
presented, earnings per share, as if SFAS No. 123 had been adopted. The
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ASB Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the three and six months ended December 31, 1996 and 1995
4. EFFECTS OF RECENT ACCOUNTING PRONOUNCEMENTS (continued)
accounting requirements of SFAS No. 123 are effective for transactions
entered into during fiscal years that begin after December 15, 1995;
however, companies are required to disclose information for awards granted
in their first fiscal year beginning after December 15, 1994. Management
has determined that the Corporation will continue to account for
stock-based compensation pursuant to Accounting Principles Board Opinion
No. 25, and therefore the disclosure provisions of SFAS No. 123 will have
no effect on its consolidated financial condition or results of operations.
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers of
Financial Assets, Servicing Rights, and Extinguishment of Liabilities",
that provides accounting guidance on transfers of financial assets,
servicing of financial assets, and extinguishment of liabilities. SFAS No.
125 introduces an approach to accounting for transfers of financial assets
that provides a means of dealing with more complex transactions in which
the seller disposes of only a partial interest in the assets, retains
rights or obligations, makes use of special purpose entities in the
transaction, or otherwise has continuing involvement with the transferred
assets. The new accounting method, referred to as the financial components
approach, provides that the carrying amount of the financial assets
transferred be allocated to components of the transaction based on their
relative fair values. SFAS No. 125 provides criteria for determining
whether control of assets has been relinquished and whether a sale has
occurred. If the transfer does not qualify as a sale, it is accounted for
as a secured borrowing. Transactions subject to the provisions of SFAS No.
125 include, among others, transfers involving repurchase agreements,
securitizations of financial assets, loan participations, factoring
arrangements, and transfers of receivables with recourse.
An entity that undertakes an obligation to service financial assets
recognizes either a servicing asset or liability for the servicing contract
(unless related to a securitization of assets, and all the securitized
assets are retained and classified as held-to-maturity). A servicing asset
or liability that is purchased or assumed is initially recognized at its
fair value. Servicing assets and liabilities are amortized in proportion to
and over the period of estimated net servicing income or net servicing loss
and are subject to subsequent assessments for impairment based on fair
value.
SFAS No. 125 provides that a liability is removed from the balance sheet
only if the debtor either pays the creditor and is relieved of its
obligation for the liability or is legally released from being the primary
obligor.
SFAS No. 125 is effective for transfers and servicing of financial assets
and extinguishment of liabilities occurring after December 31, 1997, and is
to be applied prospectively. Earlier or retroactive application is not
permitted. Management does not believe that adoption of SFAS No. 125 will
have a material adverse effect on the Corporation's consolidated financial
position or results of operations.
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ASB Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
DISCUSSION OF FINANCIAL CONDITION CHANGES FROM JUNE 30, 1996 TO
DECEMBER 31, 1996
At December 31, 1996, the Corporation's assets totaled $111.8 million, a
decrease of $1.1 million, or 1.0%, from the $112.9 million of total assets at
June 30, 1996. The decrease in assets resulted primarily from the $8.6 million
return of capital distribution paid in December 1996, which was partially offset
by growth in the deposit portfolio of $4.0 million and by an increase in
borrowings of $3.0 million.
Liquid assets (i.e. cash, interest-bearing deposits and certificates of deposit)
increased by $2.0 million over June 30, 1996 levels, to a total of $12.5 million
at December 31, 1996. Investment securities totaled $16.9 million at December
31, 1996, a decrease of $2.4 million, or 12.4%, from June 30, 1996 levels.
During the six months ended December 31, 1996, $1.5 million of investment
securities were sold and the proceeds utilized to fund a return of capital to
shareholders. In addition, maturities of investment securities totaled $4.4
million, which were partially offset by purchases of $3.2 million during the six
months ended December 31, 1996. Regulatory liquidity amounted to $16.5 million,
or 17.5%, at December 31, 1996.
Loans receivable increased by $572,000, or .8%, during the six month period, to
a total of $69.0 million at December 31, 1996. Loan disbursements amounted to
$11.1 million and were almost entirely offset by principal repayments of $10.5
million. The allowance for loan losses totaled $884,000 at December 31, 1996 and
June 30, 1996.
Deposits totaled $87.4 million at December 31, 1996, an increase of $4.0
million, or 4.8%, over June 30, 1996 levels. The growth in deposits can be
primarily attributed to management's efforts to maintain a moderate rate of
growth through marketing strategies.
Borrowings increased by $3.0 million during the six months ended December 31,
1996, to a total of $5.4 million. The increase resulted primarily from a $3.0
million short-term note used to partially fund the return of capital
distribution.
American is required to meet each of three minimum capital standards promulgated
by the Office of Thrift Supervision (OTS), hereinafter described as the tangible
capital requirement, the core capital requirement and the risk-based capital
requirement. The tangible capital requirement mandates maintenance of
shareholders' equity less all intangible assets equal to 1.5% of adjusted total
assets. The core capital requirement provides for the maintenance of tangible
capital plus certain forms of supervisory goodwill equal to 3% of adjusted total
assets, while the risk-based capital requirement mandates maintenance of core
capital plus general loan loss allowances equal to 8% of risk-weighted assets as
defined by OTS regulations.
At December 31, 1996, American's tangible and core capital totaled $17.8
million, or 16.0%, of adjusted total assets, which exceeded the minimum
requirements of $1.7 million and $3.3 million by $16.1 million and $14.5
million, respectively. American's risk-based capital of $18.4 million, or 35.6%
of risk-weighted assets, exceeded the current 8% requirement by $14.3 million.
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ASB Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
DISCUSSION OF FINANCIAL CONDITION CHANGES FROM JUNE 30, 1996 TO DECEMBER 31,
1996 (continued)
COMPARISON OF OPERATING RESULTS FOR THE SIX MONTH PERIODS ENDED DECEMBER 31,
1996 AND 1995
GENERAL
Net earnings amounted to $137,000 for the six months ended December 31, 1996, a
decrease of $438,000, or 76.2%, from the $575,000 of net earnings reported for
the same period in 1995. The decrease in earnings resulted primarily from a
$551,000 charge recorded as a result of the Savings Association Insurance Fund
(SAIF) recapitalization assessment, coupled with a $235,000 increase in general,
administrative and other expense and a $22,000 increase in the provision for
losses on loans, which were partially offset by a $141,000 increase in other
income and a $227,000 decrease in the provision for federal income taxes.
NET INTEREST INCOME
Net interest income remained constant for the six months ended December 31,
1996, compared to the 1995 period. Interest income on loans increased by
$195,000, or 7.3%, due primarily to a $5.8 million increase in the average
balance of loans outstanding year to year. Interest income on investment
securities and interest-bearing deposits and other decreased by $22,000, or
2.2%, due primarily to a decline in yield, which was partially offset by a $1.7
million increase in the average portfolio balance outstanding. Interest expense
on deposits increased by $115,000, or 5.4%, due primarily to a $4.7 million
increase in average deposits outstanding.
Interest expense on borrowings increased by $54,000, or 490.9%, due primarily to
a $2.0 million increase in the average balance of borrowings outstanding.
PROVISION FOR LOSSES ON LOANS
The allowance for loan losses totaled $884,000 at both December 31, 1996 and
June 30, 1996. Nonperforming loans totaled $1.2 million at both December 31,
1996 and June 30, 1996. The allowance for loan losses represented 75.2% and
76.3% of nonperforming loans as of December 31, 1996 and June 30, 1996,
respectively. A provision for losses on loans is charged to earnings to bring
the total allowance for loan losses to a level considered appropriate by
management based on historical experience, the volume and type of lending
conducted by the Savings Bank, the status of past due principal and interest
payments, general economic conditions, particularly as such conditions relate to
the Savings Bank's market area, and other factors related to the collectibility
of the Savings Bank's loan portfolio. As a result of such analysis, management
recorded a $22,000 provision for losses on loans during the six month period
ended December 31, 1996. There can be no assurance that the allowance for loan
losses of the Savings Bank will be adequate to cover losses on nonperforming
assets in the future.
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ASB Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
COMPARISON OF OPERATING RESULTS FOR THE SIX MONTH PERIODS ENDED DECEMBER 31,
1996 AND 1995 (continued)
PROVISION FOR LOSSES ON LOANS
(continued)
The foregoing statement is a "forward-looking" statement within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. Factors that could affect the
adequacy of the loan loss allowance include, but are not limited to, the
following: (1) changes in the national and local economy which may negatively
impact the ability of borrowers to repay their loans and which may cause the
value of real estate and other properties that secure outstanding loans to
decline; (2) unforeseen adverse changes in circumstances with respect to certain
large loan borrowers; (3) decreases in the value of collateral securing consumer
loans to amounts equal to less than the outstanding balances of the consumer
loans; and (4) determinations by various regulatory agencies that the Savings
Bank must recognize additions to its loan loss allowance based on such
regulators' judgment of information available to them at the time of their
examinations.
OTHER INCOME
Other income increased by $141,000, or 193.2%, for the six months ended December
31, 1996, compared to the same period in 1995, due primarily to a $105,000 gain
on sale of investment securities, coupled with a $30,000 increase in rental
income on real estate acquired via foreclosure.
GENERAL, ADMINISTRATIVE AND OTHER EXPENSE
General, administrative and other expense increased by $786,000, or 70.8%,
during the six months ended December 31, 1996, compared to the same period in
1995. This increase resulted primarily from the $551,000 charge recorded in 1996
in connection with the SAIF recapitalization, coupled with a $132,000, or 23.3%,
increase in employee compensation and benefits, a $54,000, or 80.6%, increase in
franchise taxes and a $45,000, or 18.8%, increase in other operating expenses.
The increase in employee compensation generally reflects normal merit increases
and increased costs attendant to the Corporation's stock benefit plans which
were implemented in conjunction with the Savings Bank's mutual-to-stock
conversion. The increase in franchise taxes resulted from the increase in the
Corporation's shareholders' equity following the conversion to stock form. The
increase in other operating expense resulted primarily from an increase in
professional fees related to the return of capital distribution.
Legislation to recapitalize the SAIF provided for a special assessment of $.657
per $100 of SAIF deposits held at March 31, 1995, in order to increase SAIF
reserves to the level required by law. The Savings Bank had $83.9 million in
SAIF deposits at March 31, 1995, resulting in an assessment of approximately
$551,000, or $364,000 after tax, which was recorded as a charge to operations in
the quarter ended September 30, 1996, and was paid in November 1996.
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ASB Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
COMPARISON OF OPERATING RESULTS FOR THE SIX MONTH PERIODS ENDED DECEMBER 31,
1996 AND 1995 (continued)
GENERAL, ADMINISTRATIVE AND OTHER EXPENSE (continued)
The legislation also provides for reduced premium rates for healthy savings
associations beginning in 1997, estimated to be a rate of $.064 per $100 of SAIF
insured deposits.
A component of the recapitalization plan provides for the merger of the SAIF and
BIF on January 1, 1999, and for the elimination of the federal thrift charter
and of the separate federal regulation of thrifts. Pursuant to the merger, the
Savings Bank would then be required to convert to a new charter and become
subject to federal regulation as a bank. At this time, management is unsure as
to what, if any, impact the more restrictive activity limits and capital
requirements of federal banking law would have on the Savings Bank or the
Corporation.
FEDERAL INCOME TAXES
The provision for federal income taxes decreased by $227,000, or 75.7%, for the
six months ended December 31, 1996, as compared to the same period in 1995. This
decrease resulted primarily from the decrease in net earnings before taxes of
$665,000, or 76.0%. The effective tax rates were 34.8% and 34.3% for the six
months ended December 31, 1996 and 1995, respectively.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTH PERIODS ENDED DECEMBER 31,
1996 AND 1995
GENERAL
Net earnings amounted to $313,000 for the three months ended December 31, 1996,
an increase of $36,000, or 13.0%, over the $277,000 of net earnings reported for
the same period in 1995. The increase in earnings resulted primarily from a
$45,000 increase in net interest income and a $131,000 increase in other income,
which were partially offset by a $126,000 increase in general, administrative
and other expense and a $14,000 increase in the provision for federal income
taxes.
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ASB Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTH PERIODS ENDED DECEMBER 31,
1996 AND 1995 (continued)
NET INTEREST INCOME
Net interest income increased by $45,000, or 4.8%, for the three months ended
December 31, 1996, compared to the 1995 period. Interest income on loans
increased by $110,000, or 8.2%, due primarily to a $5.5 million increase in the
average balance of loans outstanding year to year. Interest income on investment
securities and interest-bearing deposits increased by $42,000, or 8.6%, due
primarily to an increase in the average portfolio balance outstanding. Interest
expense on deposits increased by $60,000, or 5.6%, due primarily to a $4.9
million increase in the balance of deposits outstanding year to year. Interest
expense on borrowings increased by $27,000 due to an increase in the average
balance of borrowings outstanding year to year.
OTHER INCOME
Other income totaled $162,000 for the three months ended December 31, 1996, an
increase of $131,000, or 422.6%, over the comparable 1995 quarter. The increase
resulted primarily from a $105,000 gain on sale of investment securities in
1996, coupled with an increase in rental income from operation of a parcel of
real estate acquired through foreclosure.
GENERAL, ADMINISTRATIVE AND OTHER EXPENSE
General, administrative and other expense increased by $126,000, or 22.9%,
during the three months ended December 31, 1996, compared to the same period in
1995. This increase resulted primarily from a $97,000, or 36.9%, increase in
employee compensation and benefits and an $18,000, or 54.5%, increase in
franchise taxes. The increase in employee compensation generally reflects normal
merit increases and increased costs attendant to the Corporation's stock benefit
plans implemented in conjunction with the mutual-to-stock conversion. The
increase in franchise taxes resulted primarily from the increase in
shareholders' equity following the Corporation's conversion to stock form.
FEDERAL INCOME TAXES
The provision for federal income taxes increased by $14,000, or 9.3%, for the
three months ended December 31, 1996, as compared to the same period in 1995.
This increase resulted primarily from the increase in net earnings before taxes
of $50,000, or 11.7%. The effective tax rates were 34.4% and 35.1% for the three
months ended December 31, 1996 and 1995, respectively.
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ASB Financial Corp.
PART II
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Not applicable
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
Form 8-K None.
Financial data schedule for the six months ended December 31,
1996.
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ASB Financial Corp.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: February 10, 1997 By: /s/ Gerald R. Jenkins
_______________________________
Gerald R. Jenkins
President and Chief
Executive Officer
Date: February 10, 1997 By: /s/ Robert M. Smith
_______________________________
Robert M. Smith
Executive Vice President
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
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0
0
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</TABLE>
