FORM 10-QSB
U. S. 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, 1999
----------------------------------
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 small business issuer 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)
Issuer's telephone number: (740) 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 9, 2000, the latest practicable date, 1,598,288 shares of the
registrant's common stock, without par value, were issued and outstanding.
Page 1 of 16 pages
<PAGE>
INDEX
Page
PART I - FINANCIAL INFORMATION
Consolidated Statements of Financial Condition 3
Consolidated Statements of Earnings 4
Consolidated Statements of Comprehensive Income 5
Consolidated Statements of Cash Flows 6
Notes to Consolidated Financial Statements 8
Management's Discussion and Analysis of
Financial Condition and Results of
Operations 10
PART II - OTHER INFORMATION 15
SIGNATURES 16
2
<PAGE>
<TABLE>
ASB Financial Corp.
<CAPTION>
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
December 31, June 30,
ASSETS 1999 1999
<S> <C> <C>
Cash and due from banks $ 1,456 $ 4,078
Interest-bearing deposits in other financial institutions !,273 3,488
------- -------
Cash and cash equivalents 2,729 7,566
Certificates of deposit in other financial institutions 194 293
Investment securities available for sale - at market 19,401 19,372
Mortgage-backed securities available for sale - at market 9,209 10,232
Loans receivable - net 89,942 82,430
Office premises and equipment - at depreciated cost 1,275 1,047
Federal Home Loan Bank stock - at cost 806 778
Accrued interest receivable on loans 84 78
Accrued interest receivable on mortgage-backed securities 53 66
Accrued interest receivable on investments and
interest-bearing deposits 307 290
Prepaid expenses and other assets 457 714
Prepaid federal income taxes 121 200
Deferred federal income tax assets 451 182
------- -------
Total assets $125,029 $123,248
======= =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $102,911 $100,954
Advances from the Federal Home Loan Bank 7,807 5,823
Advances by borrowers for taxes and insurance 152 168
Accrued interest payable 102 93
Other liabilities 1,060 1,170
------- -------
Total liabilities 112,032 108,208
Shareholders' equity
Preferred stock, 1,000,000 shares authorized, no par value;
no shares issued - -
Common stock, 4,000,000 no par value shares authorized;
1,740,854 shares issued - -
Additional paid-in capital 8,576 8,427
Retained earnings, restricted 7,649 8,909
Shares acquired by stock benefit plans (1,181) (1,418)
Accumulated comprehensive income, unrealized gains (losses)
on securities designated as available for sale,
net of related tax effects (255) 265
Less 142,566 and 86,066 shares of treasury stock - at cost (1,792) (1,143)
------- -------
Total shareholders' equity 12,997 15,040
------- -------
Total liabilities and shareholders' equity $125,029 $123,248
======= =======
</TABLE>
3
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<TABLE>
ASB Financial Corp.
<CAPTION>
CONSOLIDATED STATEMENTS OF EARNINGS
(In thousands, except per share data)
For the six months For the three months
ended December 31, ended December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Interest income
Loans $3,437 $3,200 $1,769 $1,591
Mortgage-backed securities 307 358 151 191
Investment securities 757 665 371 322
Interest-bearing deposits and other 9 46 4 16
----- ----- ----- -----
Total interest income 4,510 4,269 2,295 2,120
Interest expense
Deposits 2,445 2,440 1,230 1,217
Borrowings 162 169 88 70
----- ----- ----- -----
Total interest expense 2,607 2,609 1,318 1,287
----- ----- ----- -----
Net interest income 1,903 1,660 977 833
Provision for (recoveries of) losses on loans 1 (1) - (1)
----- ----- ----- -----
Net interest income after provision for
(recoveries of) losses on loans 1,902 1,661 977 834
Other income
Gain on sale of investment securities - 29 - 29
Other operating 155 130 77 71
----- ----- ----- -----
Total other income 155 159 77 100
General, administrative and other expense
Employee compensation and benefits 748 595 376 307
Occupancy and equipment 52 59 28 30
Federal deposit insurance premiums 29 27 14 13
Franchise taxes 88 102 37 52
Data processing 145 110 76 51
Other operating 252 222 158 120
----- ----- ----- -----
Total general, administrative and other expense 1,314 1,115 689 573
----- ----- ----- -----
Earnings before income taxes 743 705 365 361
Federal income taxes
Current 212 62 93 (10)
Deferred (1) 142 13 113
----- ----- ----- -----
Total federal income taxes 211 204 106 103
----- ----- ----- -----
NET EARNINGS $ 532 $ 501 $ 259 $ 258
===== ===== ===== =====
EARNINGS PER SHARE
Basic $.34 $.32 $.17 $.16
=== === === ===
Diluted $.34 $.31 $.17 $.16
=== === === ===
</TABLE>
4
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<TABLE>
ASB Financial Corp.
<CAPTION>
CONSOLIDATED STATEMENTS OF OTHER COMPREHENSIVE INCOME
(In thousands)
For the six months For the three months
ended December 31, ended December 31,
1999 1998 1999 1998
<S> <C> <C> <C> <C>
Net earnings $532 $501 $ 259 $258
Other comprehensive income, net of tax:
Unrealized holding gains (losses) on securities during
the period, net of tax of $268, $122, $152 and
$73 in each period, respectively (520) 236 (296) 141
Reclassification adjustment for realized gains
included in earnings, net of tax of $10 in 1998 - (19) - (19)
---- --- ---- ---
Comprehensive income (loss) $ 12 $718 $ (37) $380
==== === ==== ===
Accumulated comprehensive income (loss) $(255) $931 $(255) $931
==== === ==== ===
</TABLE>
5
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ASB Financial Corp.
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
For the six months ended December 31,
(In thousands)
1999 1998
<S> <C> <C>
Cash flows from operating activities:
Net earnings for the period $532 $ 501
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 16 37
Amortization of deferred loan origination fees (28) (32)
Depreciation and amortization 52 35
Amortization of expense related to stock benefit plans 325 310
Provision for (recoveries of) losses on loans 1 (1)
Federal Home Loan Bank stock dividends (28) (26)
Increase (decrease) in cash due to changes in:
Accrued interest receivable (10) 88
Prepaid expenses and other assets 257 (39)
Other liabilities (101) (174)
Federal income taxes
Current 79 (230)
Deferred (1) 142
------- ------
Net cash provided by operating activities 1,094 658
Cash flows provided by (used in) investing activities:
Proceeds from maturity of investment securities - 8,634
Purchase of investment securities (765) (13,858)
Purchase of mortgage-backed securities - (3,900)
Principal repayments on mortgage-backed securities 955 1,555
Loan principal repayments 8,563 14,564
Loan disbursements (16,048) (16,241)
Purchase of office equipment (280) (26)
Decrease in certificates of deposit in other financial institutions - net 99 880
Proceeds from sale of real estate acquired through foreclosure - 157
------- ------
Net cash used in investing activities (7,476) (8,235)
------- ------
Net cash used in operating and investing
activities (subtotal carried forward) (6,382) (7,577)
-------- ------
</TABLE>
6
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<TABLE>
ASB Financial Corp.
<CAPTION>
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
For the six months ended December 31,
(In thousands)
1999 1998
<S> <C> <C>
Net cash used in operating and investing
activities (subtotal brought forward) $(6,382) $ (7,577)
Cash flows provided by (used in) financing activities:
Net increase in deposit accounts 1,957 4,451
Proceeds from Federal Home Loan Bank advances 7,500 2,000
Repayment of Federal Home Loan Bank advances (5,516) (516)
Repayment of other borrowed money - (2,500)
Advances by borrowers for taxes and insurance (16) (4)
Purchase of treasury stock (649) -
Proceeds from exercise of stock options 61 -
Dividends paid on common stock (1,792) (130)
------- ------
Net cash provided by financing activities 1,484 3,301
------ ------
Net decrease in cash and cash equivalents (4,837) (4,276)
Cash and cash equivalents at beginning of period 7,566 13,890
------ ------
Cash and cash equivalents at end of period $ 2,729 $ 9,614
====== ======
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Federal income taxes $ 157 $ 302
====== ======
Interest on deposits and borrowings $ 2,598 $ 2,648
====== ======
Supplemental disclosure of noncash investing activities:
Unrealized gains (losses) on securities designated as available for
sale, net of related tax effects $ (520) $ 217
====== ======
</TABLE>
7
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ASB Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
For the six and three months ended December 31, 1999 and 1998
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,
1999. 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, 1999, are not
necessarily indicative of the results which may be expected for the entire
fiscal year.
2. Principles of Consolidation
The accompanying consolidated financial statements include the accounts of
the Corporation and its wholly owned subsidiary, American Savings Bank, fsb
("American" or the "Savings Bank"). All significant intercompany items have
been eliminated.
3. Earnings Per Share
Basic earnings per share is computed based upon the weighted-average shares
outstanding during the period, less shares in the ASB Financial Corp.
Employee Stock Ownership Plan (the "ESOP") that are unallocated and not
committed to be released. Weighted-average common shares outstanding, which
give effect to 51,432 unallocated ESOP shares, totaled 1,561,834 and
1,546,206 for the six and three month periods ended December 31, 1999.
Weighted-average common shares deemed outstanding, which give effect to
77,756 unallocated ESOP shares, totaled 1,557,032 for each of the six and
three month periods ended December 31, 1998.
Diluted earnings per share is computed taking into consideration common
shares outstanding and dilutive potential common shares to be issued under
the Corporation's stock option plan. Weighted-average common shares deemed
outstanding for purposes of computing diluted earnings per share totaled
1,578,686 and 1,556,030 for the six and three month periods ended December
31, 1999, and 1,598,441 and 1,594,061 for the six and three month periods
ended December 31, 1998.
Incremental shares related to the assumed exercise of stock options included
in the calculation of diluted earnings per share totaled 16,852 and 9,824
for the six and three month periods ended December 31, 1999, and 41,409 and
37,029 for the six and three month periods ended December 31, 1998.
8
<PAGE>
ASB Financial Corp.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
For the six and three months ended December 31, 1999 and 1998
4. Effects of Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133, "Accounting
for Derivative Instruments and Hedging Activities," which requires entities
to recognize all derivatives in their financial statements as either assets
or liabilities measured at fair value. SFAS No. 133 also specifies new
methods of accounting for hedging transactions, prescribes the items and
transactions that may be hedged, and specifies detailed criteria to be met
to qualify for hedge accounting.
The definition of a derivative financial instrument is complex, but in
general, it is an instrument with one or more underlyings, such as an
interest rate or foreign exchange rate, that is applied to a notional
amount, such as an amount of currency, to determine the settlement
amount(s). It generally requires no significant initial investment and can
be settled net or by delivery of an asset that is readily convertible to
cash. SFAS No. 133 applies to derivatives embedded in other contracts,
unless the underlying of the embedded derivative is clearly and closely
related to the host contract.
SFAS No. 133, as amended by SFAS No. 137, is effective for fiscal years
beginning after June 15, 2000. On adoption, entities are permitted to
transfer held-to-maturity debt securities to the available-for-sale or
trading category without calling into question their intent to hold other
debt securities to maturity in the future. SFAS No. 133 is not expected to
have a material impact on the Corporation's financial statements.
9
<PAGE>
ASB Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Note Regarding Forward-Looking Statements
In addition to historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties.
Economic circumstances, the Corporation's operations and the Corporation's
actual results could differ significantly from those discussed in the
forward-looking statements. Some of the factors that could cause or contribute
to such differences are discussed herein but also include changes in the economy
and interest rates in the nation and the Corporation's market area generally.
Some of the forward-looking statements included herein are the statements
regarding management's determination of the amount and adequacy of allowance for
losses on loans and the effect of certain recent accounting pronouncements.
Discussion of Financial Condition Changes from June 30, 1999 to December 31,
1999
At December 31, 1999, the Corporation's assets totaled $125.0 million, an
increase of $1.8 million, or 1.4%, over the $123.2 million of total assets at
June 30, 1999. The increase in assets was due primarily to growth in deposits of
$2.0 million and an increase in Federal Home Loan Bank advances totaling $2.0
million, which were partially offset by dividends on common stock of $1.8
million.
Liquid assets (i.e. cash, interest-bearing deposits and certificates of deposit)
decreased by $4.9 million from June 30, 1999 levels, to a total of $2.9 million
at December 31, 1999. Investment securities totaled $19.4 million at December
31, 1999, an increase of $29,000, or .1%, over June 30, 1999 levels. During the
six months ended December 31, 1999, purchases of investment securities totaling
$765,000 were partially offset by a decline from unrealized losses.
Mortgage-backed securities totaled $9.2 million at December 31, 1999, a decrease
of $1.0 million, or 10.0%, from the total at June 30, 1999. The decrease was due
primarily to principal repayments of $955,000.
Loans receivable increased by $7.5 million, or 9.1%, during the six month period
ended December 31, 1999, to a total of $89.9 million. Loan disbursements
amounted to $16.0 million and were partially offset by principal repayments of
$8.6 million. The allowance for loan losses totaled $728,000 and $733,000 at
December 31, 1999 and June 30, 1999, respectively. Nonperforming and nonaccrual
loans totaled $416,000 and $379,000 at December 31, 1999 and June 30, 1999,
respectively. The allowance for loan losses represented 175.0% and 193.4% of
nonperforming loans as of December 31, 1999 and June 30, 1999, respectively.
Although management believes that its allowance for loan losses at December 31,
1999, is adequate based upon the available facts and circumstances, there can be
no assurance that additions to such allowance will not be necessary in future
periods, which could adversely affect the Corporation's results of operations.
Deposits totaled $102.9 million at December 31, 1999, an increase of $2.0
million, or 1.9%, over June 30, 1999 levels. The growth in deposits was
primarily attributable to management's efforts to maintain a moderate rate of
deposit growth through marketing strategies.
10
<PAGE>
ASB Financial Corp.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS (CONTINUED)
Discussion of Financial Condition Changes from June 30, 1999 to December 31,
1999 (continued)
Advances from the Federal Home Loan Bank totaled $7.8 million at December 31,
1999, an increase of $2.0 million, or 34.1%, over June 30, 1999. Proceeds from
borrowings and deposit growth were generally used to fund new loan originations.
Shareholders' equity totaled $13.0 million at December 31, 1999, a decrease of
$2.0 million, or 13.6%, over June 30, 1999 levels. The decrease resulted
primarily from dividends on common shares totaling $1.8 million, treasury stock
purchases of $649,000 and a decrease in unrealized gains on securities
designated as available for sale of $520,000, which were partially offset by net
earnings of $532,000 and proceeds from the exercise of stock options totaling
$61,000.
American is required to meet minimum capital standards promulgated by the Office
of Thrift Supervision ("OTS"). At December 31, 1999, American's regulatory
capital was well in excess of the minimum capital requirements.
Comparison of Operating Results for the Six Month Periods Ended December 31,
1999 and 1998
General
Net earnings amounted to $532,000 for the six months ended December 31, 1999, an
increase of $31,000, or 6.2%, over the $501,000 of net earnings reported for the
same period in 1998. The increase in earnings resulted primarily from a $243,000
increase in net interest income, which was partially offset by a $199,000
increase in general, administrative and other expense and a $7,000 increase in
the provision for federal income taxes.
Net Interest Income
Net interest income increased by $243,000, or 14.6%, for the six months ended
December 31, 1999, compared to the 1998 period. Interest income on loans
increased by $237,000, or 7.4%, for the six month period ended December 31, 1999
compared to the 1998 period, due primarily to growth in the average portfolio
outstanding, while interest income on investment and mortgage-backed securities
and interest-bearing deposits and other increased by $4,000, or .4%, due
primarily to an increase in the average balance of the related assets.
Interest expense on deposits increased by $5,000, or .2%, due primarily to an
increase of $6.6 million in the average balance of deposits outstanding, which
was offset by a 32 basis point decrease in the weighted-average interest rate
outstanding. Interest expense on borrowings decreased by $7,000, or 4.1%, due
primarily to a 150 basis point decrease in the average cost of borrowings from
period to period, which was partially offset by a $1.3 million increase in the
average balance of advances outstanding.
Provision for Losses on Loans
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
11
<PAGE>
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,
1999 and 1998 (continued)
Provision for Losses on Loans (continued)
area, and other factors related to the collectibility of the Savings Bank's loan
portfolio. As a result of such analysis, management recorded minimal adjustments
to the provision for the six month period ended December 31, 1999. There can be
no assurance that the loan loss allowance will be adequate to absorb losses on
known nonperforming assets or that the allowance will be adequate to cover
losses on nonperforming assets in the future.
Other Income
Other income decreased by $4,000, or 2.5%, for the six months ended December 31,
1999, compared to the same period in 1998, due primarily to the effects of a
$29,000 gain recorded on sales of securities during the 1998 six month period,
which were partially offset by an increase in both fees on deposit accounts and
revenues from an agreement with a third-party vendor of alternative investment
products.
General, Administrative and Other Expense
General, administrative and other expense increased by $199,000, or 17.8%,
during the six months ended December 31, 1999, compared to the same period in
1998. This increase resulted primarily from a $153,000, or 25.7%, increase in
employee compensation and benefits and a $35,000, or 31.8%, increase in data
processing expense. The increase in employee compensation and benefits was due
primarily to an increase in expense related to the Corporation's stock benefit
plans coupled with normal merit increases. The increase in data processing
expense primarily reflects an increase in transaction costs, coupled with the
effects of the Corporation's overall growth year to year.
Federal Income Taxes
The provision for federal income taxes totaled $211,000 for the six months ended
December 31, 1999, an increase of $7,000, or 3.4%, compared to the same period
in 1998. This increase resulted primarily from the increase in net earnings
before taxes of $38,000, or 5.4%, coupled with the effects of tax credits from
the Savings Bank's investment in a low income housing partnership. The effective
tax rates were 28.4% and 28.9% for the six months ended December 31, 1999 and
1998, respectively.
Comparison of Operating Results for the Three Month Periods Ended December 31,
1999 and 1998
General
Net earnings amounted to $259,000 for the three months ended December 31, 1999,
an increase of $1,000, or .4%, over the $258,000 of net earnings reported for
the same period in 1998. The increase in earnings resulted primarily from a
$144,000 increase in net interest income, which was partially offset by a
$116,000 increase in general, administrative and other expense and a $23,000
decrease in other income.
12
<PAGE>
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,
1999 and 1998 (continued)
Net Interest Income
Net interest income increased by $144,000, or 17.3%, for the three months ended
December 31, 1999, compared to the 1998 period. Interest income on loans
increased by $178,000, or 11.2%, during the three month period ended December
31, 1999, compared to the 1998 period, due primarily to an increase in the
average portfolio balance outstanding, while interest income on investment and
mortgage-backed securities and interest-bearing deposits and other decreased by
$3,000, or .6%, due primarily to a decrease in the average balance of the
related assets.
Interest expense on deposits increased by $13,000, or 1.1%, due primarily to an
increase of approximately $5.5 million in the average balance of deposits
outstanding, which was partially offset by a 23 basis point decrease in the
average interest rate outstanding. Interest expense on borrowings increased by
$18,000, or 25.7%, due primarily to a 30 basis point increase in the average
cost of borrowings from period to period, and a $1.0 million increase in the
average balance of borrowings outstanding.
Provision for Losses on Loans
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
determined that the allowance for loan losses was adequate and did not record a
provision for losses on loans for the three month period ended December 31,
1999. There can be no assurance that the loan loss allowance will be adequate to
cover losses on nonperforming assets in the future.
Other Income
Other income decreased by $23,000, or 23.0%, for the three months ended December
31, 1999, compared to the same period in 1998, due primarily to the effects of a
$29,000 gain on sales of investments and mortgage-backed securities recorded in
the 1998 period.
General, Administrative and Other Expense
General, administrative and other expense increased by $116,000, or 20.2%,
during the three months ended December 31, 1999, compared to the same period in
1998. This increase resulted primarily from a $69,000, or 22.5%, increase in
employee compensation and benefits and a $25,000, or 49.0%, increase in data
processing expense. The increase in employee compensation and benefits was due
primarily to an increase in expense related to the Corporation's stock benefit
plans coupled with normal merit increases. The increase in data processing
expense primarily reflects an increase in transaction costs, coupled with the
effects of the Corporation's overall growth year to year.
13
<PAGE>
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,
1999 and 1998 (continued)
Federal Income Taxes
The provision for federal income taxes totaled $106,000 for the three months
ended December 31, 1999, an increase of $3,000, or 2.9%, compared to the same
period in 1998. This increase resulted primarily from the increase in net
earnings before taxes of $4,000, or 1.1%, coupled with the effects of tax
credits from the Savings Bank's investment in a low income housing partnership.
The effective tax rates were 29.0% and 28.5% for the three months ended December
31, 1999 and 1998, respectively.
Year 2000 Compliance Matters
During the periods leading up to January 1, 2000, the Savings Bank addressed the
potential problems associated with the possibility that the computers that
control or operate the Savings Bank's information technology system and
infrastructure may not have been programmed to read four-digit date codes and,
upon arrival of the year 2000, may have recognized the two-digit code "00" as
the year 1900, causing systems to fail to function or to generate erroneous
data.
The Savings Bank expended less than $10,000 through the periods ended December
31, 1999, in connection with its Year 2000 compliance program, and no additional
expense is anticipated. The Savings Bank experienced no significant problems
related to its information technology systems upon arrival of the Year 2000, nor
was there any interruption in service to its customers of any kind.
The Savings Bank could incur losses if year 2000 issues adversely affect its
depositors or borrowers. Such problems could include delayed loan payments due
to year 2000 problems affecting any significant borrowers or impairing the
payroll systems of large employers in the Savings Bank's primary market area.
Because the Savings Bank's loan portfolio is highly diversified with regard to
individual borrowers and types of businesses, the Savings Bank does not expect,
and to date has not realized, any significant or prolonged difficulties that
will affect net earning or cash flow.
14
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ASB Financial Corp.
PART II
ITEM 1. Legal Proceedings
Not applicable
ITEM 2. Changes in Securities and Use of Proceeds
Not applicable
ITEM 3. Defaults Upon Senior Securities
Not applicable
ITEM 4. Submission of Matters to a Vote of Security Holders
On October 27, 1999, the Corporation held its Annual Meeting
of Shareholders. In connection therewith, two matters were
submitted to the shareholders for a vote. First, shareholders
elected three directors by the following votes:
William J. Burke For: 1,416,685 Against: 1,520 Abstain: none
Lee O. Fitch For: 1,415,587 Against: 2,618 Abstain: none
Gerald R. Jenkins For: 1,416,688 Against: 1,520 Abstain: none
The shareholders also ratified the selection of Grant Thornton
LLP as the Corporation's auditors for the 2000 fiscal year by
the following vote:
For: 1,415,939 Against: none Abstain: 2,267
ITEM 5. Other Information
None.
ITEM 6. Exhibits and Reports on Form 8-K
Form 8-K: None.
Exhibits:
27 Financial data schedule for the six months ended
December 31, 1999.
15
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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 11, 2000 By: /s/Robert M. Smith
Robert M. Smith
President, Chief Executive Officer
and Chief Financial Officer
16
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 1,456
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<TOTAL-ASSETS> 125,029
<DEPOSITS> 102,911
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<LONG-TERM> 7,807
0
0
<COMMON> 0
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<EPS-BASIC> .34
<EPS-DILUTED> .34
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<ALLOWANCE-UNALLOCATED> 728
</TABLE>
