SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): July 20, 1998
Piedmont Bancorp, Inc.
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(Exact name of registrant as specified in its charter)
North Carolina 001-14070 56-1936232
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(State or other jurisdiction (Commission (IRS Employer
of incorporation) File Number) Identification No.)
260 South Churton Street
Hillsborough, North Carolina 27278
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(Address of principal executive offices)
Registrant's telephone number, including area code: (919) 732-2143
N/A
(Former name or former address, if changed since last report)
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Item 5. Other Events
On July 20, 1998, Piedmont Bancorp, Inc. (the "Registrant") announced
that its Board of Directors has adopted a stock repurchase plan. Under the stock
repurchase plan, the Registrant will be able to repurchase shares of its
outstanding common stock in the open market or in privately negotiated
transactions at appropriate times to allow it to enhance the value of its stock
for its shareholders and to manage its capital. The Board's action will allow
management to make repurchases, without further Board approval, when stock
repurchases are deemed prudent. The stock repurchase plan contemplates that
stock repurchases will be made in accordance with Rule 10b-18(b) of the
Regulations issued under the Securities Act of 1934. A copy of the press release
announcing the adoption of the stock repurchase plan is attached hereto as
Exhibit 99.
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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 hereunto duly authorized.
PIEDMONT BANCORP, INC.
Date: July 24, 1998
By: /s/D. Tyson Clayton
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D. Tyson Clayton, President
and Chief Executive Officer
By: /s/Thomas W. Wayne
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Thomas W. Wayne, Treasurer
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EXHIBIT INDEX
Exhibit No. Description
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99 Press Release of the Registrant distributed July 20, 1998
[GRAPHIC-PIEDMONT LOGO]
Piedmont Bancorp, Inc.
THE HOLDING COMPANY FOR HILLSBOROUGH SAVINGS BANK, INC., SSB
For Immediate Release
News Release
July 20, 1998
Contact: Thomas W. Wayne, Treasurer
Email: [email protected]
Phone: 919/732/2143
Fax: 919/732/6001
Web: http://www.hillsboroughbank.com
PIEDMONT BANCORP, INC. REPORTS YEAR-END EARNINGS, STOCK REPURCHASE PLAN
HILLSBOROUGH, N.C.--(BUSINESS WIRE)--July 20, 1998--Piedmont Bancorp, Inc.
(AMEX:PDB), the parent holding company for Hillsborough Savings Bank, Inc.,
reported consolidated net income for the year ended June 30, 1998 increased 4.7%
to $1,643,000, or $0.61 basic and diluted earnings per share, compared to
consolidated net income before non recurring items of $1,569,000 or $0.61 basic
and diluted earnings per share for the year ended June 30, 1997.
Return on average equity increased 169 basis points to 7.75% for the year ended
June 30, 1998 compared to return on average equity before nonrecurring items of
6.06% for the year ended June 30, 1997. Return on average assets was 1.27% for
the year ended June 30, 1998 compared to return on average assets before
nonrecurring items of 1.27% for the year ended June 30, 1997.
In the year ended June 30, 1997 the Company recorded a net loss and basic and
diluted loss per share after nonrecurring items of $534,000 and $0.20,
respectively. Earnings for the year ended June 30, 1997 were adversely impacted
by the following nonrecurring items: (1) $1,496,000 of compensation expense
associated with the release and allocation of approximately 126,000 shares of
common stock of the Company to participants of the Hillsborough Savings Bank,
Inc. Employee Stock Ownership Plan during the quarter ended December 31, 1996,
(2) a provision for loan losses of $597,000 recorded during the quarter ended
December 31, 1996 that resulted primarily from the charge off of approximately
$510,000 in unsecured loans to a single borrower, (3) losses of $106,000 on the
sale of investments that were sold in December of 1996 to fund the special
dividend of $7.00 a share, and (4) a special $487,000 assessment paid in the
first quarter of fiscal 1997 to the Federal Deposit Insurance Corporation to
recapitalize the Savings Association Insurance Fund.
Total assets increased 6.3% to $130.5 million at June 30, 1998 compared to
$122.8 million at June 30, 1997. The primary contributor to the growth was an
increase of 6.3% in net loans receivable to $106.5 million at June 30, 1998 from
$100.2 million at June 30, 1997. Funding the majority of the loan growth was (1)
a $5.0 million or 5.9% increase in deposits from June 30, 1997 to June 30, 1998
and (2) a $1.5 million or 9.1% increase in advances from the Federal Home Loan
Bank during the same period. Nonperforming assets increased to $928,000 at June
30, 1998 from $803,000 at June 30, 1997.
<PAGE>
PIEDMONT BANCORP, INC. REPORTS YEAREND EARNINGS, STOCK REPURCHASE PLAN
July 20, 1998
Page 2
In announcing the earnings, D. Tyson Clayton commented, "A strategic plan was
adopted and deployed in the fall of 1997 by the directors, management team and
employees that laid the foundation for future growth of the Company." Clayton
noted a number of initiatives completed as a result of the plan including:
The acquisition of new workstations for substantially all employees and
installation of a local area network in January and February of 1998.
The hardware and software acquisitions will aid the Company's efforts
to achieve Year 2000 compliance in accordance with FFIEC regulations.
The conversion to a new data center in February of 1998 that provides a
relational Microsoft Access(TM) database designed to identify cross
sale candidates for profitable bank or fee based investment products
offered by the Company. The Company already has done several direct
mail campaigns and has surveyed its customer's satisfaction and product
needs since the system has been installed.
The incorporation and establishment in March of 1998 of HSB Investment
Services, Inc., a wholly owned subsidiary of the Bank that provides a
complete range of investment and brokerage services.
The introduction in March of 1998 of a wide range of new deposit
products designed for customers at every stage of their lives.
The development of a web site in March of 1998 for current and future
use as another delivery channel for products and services to current
and potential customers.
Loan sales of $10 million from February to June 1998 that generated
gains of $75,000 and earned loan origination fees (net of origination
costs) of $59,000.
An increase in the quarterly dividend in June of 1998 from $0.10 to
$0.12 per common share.
Consistent with its financial strategy of increasing earnings per share and
return on equity to shareholders, the Company's Board of Directors approved a
stock repurchase plan on June 30, 1998. The plan will enable the Company to
repurchase stock from time to time in the open market or through privately
negotiated transactions. While current market conditions make this an excellent
time to initiate this plan, the timing and extent of the stock repurchased will
depend upon financial market conditions. Clayton noted that "The stock
repurchase plan and the increase in the quarterly dividend rate from $0.10 to
$0.12 per common share in June of 1998 are designed to enhance shareholder value
and provide future capital management tools."
Clayton concluded by saying, "I would like to thank all of the employees,
directors and the management team for their hard work during the last year in
achieving the goals as set forth in our strategic plan. During the next year we
intend to focus our efforts on employee product knowledge, customer sales and
service, streamlining internal operations, and continuing to expand our delivery
channels to current and potential customers."
Piedmont Bancorp, Inc., through its wholly owned subsidiary Hillsborough Savings
Bank, Inc., provides a complete line of banking and investment services to
individuals and businesses through its branch located in the Triangle region of
North Carolina. The Company is traded on the American Stock Exchange under the
symbol "PDB".
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<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
PIEDMONT BANCORP, INC. and SUBSIDIARY
(unaudited)
Three Months Ended June 30,
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(In thousands, except per share data) 1998 1997 Change
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<S> <C> <C> <C>
EARNINGS
Interest income ............................... $ 2,648 $ 2,344 13.0%
Interest expense .............................. 1,337 1,186 12.7%
Net interest income ........................... 1,311 1,158 13.2%
Provision for loan losses ..................... 24 20 20.0%
Noninterest income ............................ 166 72 130.6%
Noninterest expense ........................... 776 624 24.4%
Income (loss) before taxes .................... 677 586 15.5%
Income tax expense (benefit) .................. 258 244 5.7%
Net income (loss) ............................. $ 419 $ 342 22.5%
PER COMMON SHARE
Earnings (loss) per share - basic ............. $ 0.16 $ 0.13 23.1%
Earnings (loss) per share - diluted ........... 0.15 0.13 15.4%
Cash dividends declared ....................... 0.12 0.10 20.0%
Book value .................................... 7.85 7.42 5.8%
Closing market price .......................... 9.938 10.375 (4.2%)
FINANCIAL RATIOS
Return on average assets/3 .................... 1.26% 1.15% 11 bp
Return on average equity/3 .................... 7.74% 6.72% 102 bp
Equity to assets (average) .................... 16.33% 17.04% (71)bp
Efficiency Ratio /5 ........................... 51.46% 50.90% 56 bp
Net interest margin
(taxable-equivalent basis) ............... 4.11% 3.93% 18 bp
AVERAGE BALANCES
Assets ........................................ $ 132,621 $ 119,454 11.0%
Earning assets ................................ 129,331 116,157 11.3%
Loans receivable .............................. 111,220 98,087 13.4%
Investment Securities/4 ....................... 18,111 18,070 0.2%
Noninterest bearing deposits .................. 2,886 1,919 50.4%
Total deposits ................................ 88,666 82,573 7.4%
Borrowings .................................... 21,451 15,752 36.2%
Stockholders' equity .......................... 21,657 20,358 6.4%
PERIOD END BALANCES
Assets ........................................ $ 130,541 $ 122,761 6.3%
Earning assets ................................ 126,498 119,066 6.2%
Loans, net .................................... 106,500 100,173 6.3%
Investment securities/4 ....................... 19,998 18,893 5.8%
Noninterest bearing deposits .................. 2,844 2,074 37.1%
Total deposits ................................ 89,840 84,860 5.9%
Borrowings .................................... 18,000 16,500 9.1%
Stockholders' equity .......................... 21,606 20,416 5.8%
</TABLE>
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<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
PIEDMONT BANCORP, INC. and SUBSIDIARY
(unaudited)
(continued)
Three Months Ended June 30,
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(In thousands, except per share data) 1998 1997 Change
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<S> <C> <C> <C>
SHARES OUTSTANDING
Weighted average shares basic ................. 2,697 2,702 (0.2%)
Weighted average shares diluted ............... 2,714 2,702 0.4%
Outstanding ................................... 2,751 2,751 0.0%
ASSET QUALITY SUMMARY/2
Nonperforming assets .......................... $ 928 $ 803 15.6%
Allowance for loan losses ..................... 951 796 19.5%
Nonperforming assets to total assets .......... 0.71% 0.65% 6 bp
Allowance for loan
losses to loans ............................... 0.89% 0.79% 10 bp
Net charge-offs (recoveries) to average loans/3 (0.04%) (0.02%) (2)bp
</TABLE>
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<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
PIEDMONT BANCORP, INC. and SUBSIDIARY
(unaudited)
Year Ended June 30,
-----------------------------------------
1998 1997 Change
(In thousands, except per share data) --------- --------- -------
<S> <C> <C> <C>
EARNINGS
Interest income ............................... $ 10,217 $ 9,535 7.2%
Interest expense .............................. 5,191 4,603 12.8%
Net interest income ........................... 5,026 4,932 1.9%
Provision for loan losses ..................... 96 658 (85.4%)
Noninterest income ............................ 606 225 169.3%
Noninterest expense ........................... 2,963 4,716 (37.2%)
Income (loss) before taxes .................... 2,573 (217) N/A
Income tax expense (benefit) .................. 930 317 193.4%
Net income (loss) ............................. 1,643 $ (534)(1) N/A
PER COMMON SHARE
Earnings (loss) per share basic ............... $ 0.61 $ (0.20)(1) N/A
Earnings (loss) per share diluted ............. 0.61 (0.20)(1) N/A
Cash dividends declared ....................... 0.42 7.42 (94.3%)
Book value .................................... 7.85 7.42 5.8%
Closing market price .......................... 9.938 10.375 (4.2%)
FINANCIAL RATIOS
Return on average assets/3 .................... 1.27% (0.43%)(1) 170 bp
Return on average equity/3 .................... 7.75% (2.06%)(1) 981 bp
Equity to assets (average) .................... 16.46% 20.90% (444) bp
Efficiency Ratio /5 ........................... 51.49% 88.20% (3,671) bp
Net interest margin ........................... 4.10% 4.24% (14) bp
(taxable-equivalent basis)
AVERAGE BALANCES
Assets ........................................ $ 128,871 $ 123,896 4.0%
Earning assets ................................ 125,585 120,700 4.0%
Loans receivable .............................. 107,510 95,937 12.1%
Investment securities/4 ....................... 18,075 24,763 (27.0%)
Noninterest bearing deposits .................. 2,291 1,901 20.5%
Total deposits ................................ 86,648 78,720 10.1%
Borrowings .................................... 20,119 16,481 22.1%
Stockholders' equity .......................... 21,212 25,893 (18.1%)
PERIOD END BALANCES
Assets ........................................ $ 130,541 $ 122,761 6.3%
Earning assets ................................ 126,498 119,066 6.2%
Loans, net .................................... 106,500 100,173 6.3%
Investment securities/4 ....................... 19,998 18,893 5.8%
Noninterest bearing deposits .................. 2,844 2,074 37.1%
Total deposits ................................ 89,840 84,860 5.9%
Borrowings .................................... 18,000 16,500 9.1%
Stockholders' equity .......................... 21,606 20,416 5.8%
</TABLE>
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<TABLE>
<CAPTION>
FINANCIAL HIGHLIGHTS
PIEDMONT BANCORP, INC. and SUBSIDIARY
(unaudited)
Year Ended June 30,
-----------------------------------------
1998 1997 Change
(In thousands, except per share data) --------- --------- -------
<S> <C> <C> <C>
SHARES OUTSTANDING
Weighted average shares basic ................. 2,687 2,665 0.8%
Weighted average shares diluted ............... 2,711 2,665 1.7%
Outstanding ................................... 2,751 2,751 0.0%
ASSET QUALITY SUMMARY/2
Nonperforming assets .......................... $ 928 $ 803 15.6%
Allowance for loan losses ..................... 951 796 19.5%
Nonperforming assets to total assets .......... 0.71% 0.65% 6 bp
Allowance for loan losses to loans ............ 0.89% 0.79% 10 bp
Net charge-offs (recoveries) to average loans/3 (0.05%) 0.49% (54) bp
</TABLE>
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(1) Earnings for the year ended June 30, 1997 were adversely impacted by several
non-recurring items. Excluding these non-recurring items, net income (after tax)
would have been $1,569,000, earnings per share would have been $0.61, return on
average assets would have been 1.27%, return on average equity would have been
6.06% and the efficiency ratio would have been 52.13% for the year ended June
30, 1997.
bp Change is measured as difference in basis points.
(2) Balance sheet amounts are based on period end balances unless otherwise
noted.
(3) Data presented is annualized.
(4) Includes investment securities, mortgage-backed securities, interest-bearing
deposits and federal home loan bank stock.
(5) Other expense divided by sum of taxable-equivalent net interest income plus
other income.
