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 March 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 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)
Registrant's 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 May 9, 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 16 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 15
SIGNATURES 16
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ASB Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
March 31, June 30,
ASSETS 1997 1996
--------- --------
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Cash and due from banks $ 334 $ 411
Interest-bearing deposits in other financial institutions 2,599 3,425
--------- ---------
Cash and cash equivalents 2,933 3,836
Certificates of deposit in other financial institutions 4,457 6,702
Investment securities available for sale - at market 17,547 19,284
Mortgage-backed securities available for sale - at market 9,187 10,728
Loans receivable - net 71,367 68,455
Office premises and equipment - at depreciated cost 891 940
Real estate acquired through foreclosure - net 663 663
Federal Home Loan Bank stock - at cost 703 667
Accrued interest receivable on loans 86 120
Accrued interest receivable on mortgage-backed securities 83 110
Accrued interest receivable on investments and interest-
bearing deposits 392 479
Prepaid expenses and other assets 569 586
Prepaid federal income taxes 77 --
Deferred federal income taxes 459 352
--------- ---------
Total assets $ 109,414 $ 112,922
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 87,324 $ 83,395
Advances from the Federal Home Loan Bank 2,391 2,413
Other borrowed money 500 --
Advances by borrowers for taxes and insurance 81 162
Accrued interest payable 637 115
Other liabilities 1,264 1,219
Accrued federal income taxes -- 5
--------- ---------
Total liabilities 92,197 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
March 31, 1997 and June 30, 1996 -- --
Additional paid-in capital 8,023 16,496
Retained earnings - restricted 11,028 11,173
Shares acquired by employee benefit plans (1,921) (2,180)
Unrealized gains on securities designated as available for sale,
net of related tax effects 87 124
--------- ---------
Total shareholders' equity 17,217 25,613
--------- ---------
Total liabilities and shareholders' equity $ 109,414 $ 112,922
========= =========
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ASB Financial Corp.
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except share data)
Nine months ended Three months ended
March 31, March 31,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Interest income
Loans $ 4,383 $4,074 $ 1,500 $1,386
Mortgage-backed securities 518 549 162 191
Investment securities 1,138 1,162 349 368
Interest-bearing deposits and other 253 293 68 91
------- ------ ------- ------
Total interest income 6,292 6,078 2,079 2,036
Interest expense
Deposits 3,374 3,196 1,140 1,077
Borrowings 113 20 48 9
------- ------ ------- ------
Total interest expense 3,487 3,216 1,188 1,086
------- ------ ------- ------
Net interest income 2,805 2,862 891 950
Provision for losses on loans 22 -- -- --
------- ------ ------- ------
Net interest income after provision
for losses on loans 2,783 2,862 891 950
Other income
Gain (loss) on sale of investment securities 103 -- (2) --
Other operating 178 123 69 50
------- ------ ------- ------
Total other income 281 123 67 50
General, administrative and other expense
Employee compensation and benefits 1,056 921 358 355
Occupancy and equipment 89 90 30 31
Federal deposit insurance premiums 650 141 3 47
Franchise taxes 175 133 54 66
Data processing 132 127 46 43
Other operating 400 352 115 112
------- ------ ------- ------
Total general, administrative and other expense 2,502 1,764 606 654
------- ------ ------- ------
Earnings before income taxes 562 1,221 352 346
Federal income taxes
Current 278 400 184 112
Deferred (88) 16 (67) 4
------- ------ ------- ------
Total federal income taxes 190 416 117 116
------- ------ ------- ------
NET EARNINGS $ 372 $ 805 $ 235 $ 230
======= ====== ======= ======
EARNINGS PER SHARE $ .23 $ .50 $ .14 $ .14
======= ====== ======= ======
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ASB Financial Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the nine months ended March 31,
(In thousands)
1997 1996
<S> <C> <C>
Cash flows from operating activities:
Net earnings for the period $ 372 $ 805
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 59 134
Amortization of deferred loan origination fees (38) (28)
Depreciation and amortization 60 60
Amortization of expense related to employee benefit plans 290 211
Provision for losses on loans 22 --
Gain on sale of investment securities (103) --
Federal Home Loan Bank stock dividends (36) (33)
Increase (decrease) in cash due to changes in:
Accrued interest receivable 148 (67)
Prepaid expenses and other assets 17 (137)
Accrued interest payable 522 482
Other liabilities 45 11
Federal income taxes
Current (82) (69)
Deferred (88) 16
-------- --------
Net cash provided by operating activities 1,188 1,385
Cash flows provided by (used in) investing activities:
Proceeds from maturity of investment securities 6,449 8,138
Proceeds from sales of investment securities designated as available for sale 103 865
Purchase of investment securities (4,804) (10,543)
Purchase of mortgage-backed securities -- (3,488)
Principal repayments on mortgage-backed securities 1,518 1,670
Loan principal repayments 13,555 11,254
Loan disbursements (16,451) (16,077)
Purchase of office premises and equipment (11) (18)
Decrease in certificates of deposit in other financial institutions - net 2,245 1,509
-------- --------
Net cash provided by (used in) investing activities 2,604 (6,690)
Cash flows provided by (used in) financing activities:
Net increase in deposit accounts 3,929 3,835
Proceeds from Federal Home Loan Bank advances 2,000 1,000
Repayment of Federal Home Loan Bank advances (2,022) (22)
Proceeds from other borrowed money 3,500 --
Repayment of other borrowed money (3,000) --
Advances by borrowers for taxes and insurance (81) (175)
Purchase of shares for employee benefit plans -- (909)
Proceeds from exercise of stock options 103 --
Distributions paid on common stock (9,124) (385)
-------- --------
Net cash provided by (used in) financing activities (4,695) 3,344
-------- --------
Net decrease in cash and cash equivalents (903) (1,961)
Cash and cash equivalents at beginning of period 3,836 5,926
-------- --------
Cash and cash equivalents at end of period $ 2,933 $ 3,965
======== ========
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ASB Financial Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the nine months ended March 31,
(In thousands)
1997 1996
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Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes $ 367 $ 383
======== =======
Interest on deposits and borrowings $ 2,965 $ 2,735
======== =======
Supplemental disclosure of noncash investing activities:
Transfers from loans to real estate acquired through foreclosure $ -- $ 138
======== =======
Transfer of investments and mortgage-backed securities to an available
for sale classification $ -- $22,486
======== =======
Unrealized gains (losses) on securities designated as available for sale,
net of related tax effects $ (37) $ 4
======== =======
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ASB Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the three and nine months ended March 31, 1997 and 1996
1. Basis of Presentation
The accompanying unaudited consolidated 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. (the "Corporation")
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 nine month periods ended March 31, 1997 and 1996, 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
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 Employee Stock Ownership Plan ("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 1,621,710 and 1,620,812 for the nine and three month periods ended
March 31, 1997, respectively. Weighted-average common shares deemed
outstanding, which gives effect to 111,352 unallocated ESOP shares, totaled
1,602,608 for each of the nine and three month periods ended March 31, 1996.
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 (the "FASB")
issued Statement of Financial Accounting Standards ("SFAS") No. 123,
"Accounting for Stock-Based Compensation", establishing financial accounting
and reporting standards for stock-based compensation plans. SFAS No. 123
encourages all entities to adopt a new method of accounting to measure
compensation cost of all 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
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ASB Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the three and nine months ended March 31, 1997 and 1996
4. Effects of Recent Accounting Pronouncements (continued)
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 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, 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.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the three and nine months ended March 31, 1997 and 1996
4. Effects of Recent Accounting Pronouncements (continued)
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share",
which requires companies to present basic earnings per share and, if
applicable, diluted earnings per share, instead of primary and fully
diluted earnings per share, respectively. Basic earnings per share is
computed without including potential common shares, i.e., no dilutive
effect. Diluted earnings per share is computed taking into
consideration common shares outstanding and dilutive potential common
shares, including options, warrants, convertible securities and
contingent stock agreements. SFAS No. 128 is effective for periods
ending after December 15, 1997. Early application is not permitted.
Based upon the provisions of SFAS No. 128, the Corporation's basic and
diluted earnings per share for the nine months ended March 31, 1997,
would have been $.23 and $.21, respectively. Basic and diluted earnings
per share for the three months ended March 31, 1997, would have been
$.14 and $.13, respectively.
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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 March 31, 1997
At March 31, 1997, the Corporation's assets totaled $109.4 million, a decrease
of $3.5 million, or 3.1%, 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 savings deposits of $3.9 million.
Liquid assets (i.e., cash, interest-bearing deposits and certificates of
deposit) decreased by $3.1 million from June 30, 1996 levels, to a total of $7.4
million at March 31, 1997. Investment securities totaled $17.5 million at March
31, 1997, a decrease of $1.7 million, or 9.0%, from June 30, 1996 levels. During
the nine months ended March 31, 1997, $1.5 million of investment securities were
sold to the Savings Bank and the proceeds utilized to fund a return of capital
to shareholders. In addition, maturities of investment securities totaled $6.4
million, which were partially offset by purchases of $4.8 million. Regulatory
liquidity amounted to $11.6 million, or 15.1%, at March 31, 1997.
Loans receivable increased by $2.9 million, or 4.3%, during the nine month
period, to a total of $71.4 million at March 31, 1997. Loan disbursements
amounted to $16.5 million and were partially offset by principal repayments of
$13.6 million.
Deposits totaled $87.3 million at March 31, 1997, an increase of $3.9 million,
or 4.7%, over June 30, 1996 levels. Management continued its efforts to obtain
moderate growth in the deposit portfolio through marketing and pricing
strategies.
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 March 31, 1997, American's tangible and core capital totaled $13.0 million,
or 12.2% of adjusted total assets, which exceeded the minimum requirements of
$1.6 million and $3.2 million by $11.4 million and $9.8 million, respectively.
American's risk-based capital of $13.7 million, or 27.0% of risk-weighted
assets, exceeded the current 8% requirement by $9.6 million.
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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 Nine Month Periods Ended March 31, 1997
and 1996
General
Net earnings amounted to $372,000 for the nine months ended March 31, 1997, a
decrease of $433,000, or 53.8%, from the $805,000 of net earnings reported for
the same period in 1996. The decrease in earnings resulted primarily from a
$551,000 charge recorded as a result of the one-time Savings Association
Insurance Fund ("SAIF") recapitalization assessment, coupled with a $187,000
increase in general, administrative and other expense, a $22,000 increase in the
provision for losses on loans and a $57,000 decrease in net interest income,
which were partially offset by a $158,000 increase in other income and a
$226,000 decrease in the provision for federal income taxes.
Net Interest Income
Net interest income decreased by $57,000, or 2.0%, for the nine months ended
March 31, 1997, as compared to the 1996 period. Interest income on loans
increased by $309,000, or 7.6%, due primarily to a $5.5 million increase in the
weighted-average balance of loans outstanding year-to-year. Interest income on
mortgage-backed securities decreased by $31,000, or 5.6%, due to a decrease in
the average balance outstanding. Interest income on investment securities and
interest-bearing deposits decreased by $64,000, or 4.4%, due primarily to a $2.0
million decrease in the weighted-average portfolio balance outstanding. The
decline in interest-earning assets was due primarily to the return of capital
distribution which was paid in December 1996. Interest expense on deposits
increased by $178,000, or 5.6%, due primarily to an increase in the cost of
deposits year to year, and a $4.7 million increase in the weighted-average
portfolio balance outstanding. Interest expense on borrowings increased by
$93,000, or 465.0%, due primarily to a $1.7 million increase in the average
balance of borrowings outstanding.
Provision for Losses on Loans
The allowance for loan losses totaled $884,000 at March 31, 1997 and June 30,
1996. Nonperforming loans totaled $1.1 million at March 31, 1997, as compared to
$1.2 million at June 30, 1996. The allowance for loan losses represented 82.5%
and 76.3% of nonperforming loans as of March 31, 1997 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 nine month period ended March
31, 1997. The provision in the 1997 period resulted primarily to growth in the
loan portfolio, as the level of nonperforming loans remained relatively constant
over the nine month period. 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 Nine Month Periods Ended March 31, 1997
and 1996 (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) decrease 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 $158,000, or 128.5%, for the nine months ended March
31, 1997, as compared to the same period in 1996, due primarily to a $103,000
gain on sale of investment securities, coupled with a $30,000 increase in rental
income on real estate acquired through foreclosure.
General, Administrative and Other Expense
General, administrative and other expense increased by $738,000, or 41.8%,
during the nine months ended March 31, 1997, compared to the same period in
1996. This increase resulted primarily from the $551,000 charge recorded in 1996
in connection with the SAIF recapitalization, coupled with a $135,000, or 14.7%,
increase in employee compensation and benefits, a $42,000, or 31.6%, increase in
franchise taxes and a $48,000, or 13.6%, increase in other operating expenses.
The increase in employee compensation and benefits generally reflects normal
merit increases and increased costs attendant to the Corporation's stock benefit
plans. The increase in franchise taxes resulted from the overall increase in the
Corporation's shareholders' equity. The increase in other operating expense
resulted primarily from non-recurring consulting costs in the 1997 period.
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.
The legislation also provides for reduced premium rates for healthy savings
associations beginning in 1997, at a rate of $.064 per $100 of SAIF insured
deposits.
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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 Nine Month Periods Ended March 31, 1997
and 1996 (continued)
General, Administrative and Other Expense (continued)
Congress is considering legislation to eliminate the federal savings and loan
charter and separate federal regulation of savings and loan associations.
Pursuant to such legislation, Congress may develop a common charter for all
financial institutions, eliminate the OTS and regulate the Savings Bank under
federal law as a bank or require the Savings Bank to change its charter. Such
changes would likely change the types of activities in which the Savings Bank
may engage and would probably subject the Savings Bank to more regulation by the
FDIC. In addition, the Corporation might become subject to different holding
company regulations.
Federal Income Taxes
The provision for federal income taxes decreased by $226,000, or 54.3%, for the
nine months ended March 31, 1997, as compared to the same period in 1996. This
decrease resulted primarily from a decrease in net earnings before tax of
$659,000, or 54.0%. The effective tax rates were 33.8% and 34.1% for the nine
months ended March 31, 1997 and 1996, respectively.
Comparison of Operating Results for the Three Month Periods Ended March 31, 1997
and 1996
General
Net earnings amounted to $235,000 for the three months ended March 31, 1997, an
increase of $5,000, or 2.2%, over the $230,000 of net earnings reported for the
same period in 1996. The increase in earnings resulted primarily from a $48,000
decrease in general, administrative and other expense and a $17,000 increase in
other income, which were partially offset by a $59,000 decrease in net interest
income.
Net Interest Income
Net interest income decreased by $59,000, or 6.2%, for the three months ended
March 31, 1997, as compared to the 1996 quarter. Interest income on loans and
mortgage-backed securities increased by $85,000, or 5.4%, due primarily to a
$4.3 million increase in the weighted-average balance outstanding. Interest
income on investment securities and interest-bearing deposits decreased by
$42,000, or 9.2%, due primarily to a $2.9 million decrease in the
weighted-average portfolio balance outstanding. The decline in interest-earning
assets was due primarily to such assets being redeployed to fund the return of
capital distribution which was paid in December 1996. Interest expense on
deposits and borrowings increased by $102,000, or 9.4%, due primarily to an $8.2
million increase in the weighted-average portfolio outstanding.
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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 March 31, 1997
and 1996 (continued)
Other Income
Other income totaled $67,000 for the quarter ended March 31, 1997, an increase
of $17,000, or 34.0%, over the comparable quarter in 1996. The increase was due
primarily to rental income received on a parcel of real estate acquired through
foreclosure.
General, Administrative and Other Expense
General, administrative and other expense decreased by $48,000, or 7.3%, during
the three months ended March 31, 1997, as compared to the same period in 1996.
This decrease resulted primarily from a $44,000, or 93.6%, decrease in federal
deposit insurance premiums and a $12,000, or 18.2%, decrease in franchise taxes.
The decrease in federal deposit insurance premiums resulted from the lower
premium rates following the one-time SAIF recapitalization assessment paid in
the second fiscal quarter. The decrease in franchise taxes resulted primarily
from the decrease in shareholders' equity following the Corporation's return of
capital distribution.
Federal Income Taxes
The provision for federal income taxes increased by $1,000, or .9%, for the
three months ended March 31, 1997, as compared to the same period in 1996. This
increase resulted primarily from the increase in net earnings before taxes of
$6,000, or 1.7%. The effective tax rates were 33.2% and 33.5% for the three
months ended March 31, 1997 and 1996, 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
None
ITEM 5. Other Materially Important Events
None
ITEM 6. Exhibits and Reports on Form 8-K
Exhibit 27: Financial Data Schedule for the nine month
period ended March 31, 1997
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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: 5/13/97 By: /s/ Gerald R. Jenkins
____________________________________
Gerald R. Jenkins
President
Date: 5/13/97 By: /s/ Robert M. Smith
____________________________________
Robert M. Smith
Executive Vice President
<TABLE> <S> <C>
<ARTICLE> 9
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