-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, MtlOG9srdCsQAimihmuufoN+dRz8OAZMhTHsevsHLSoVjfbW9qmjzjdoDD10t5C4 RCVBR3iY5YRi55O3NBYbUw== 0000914317-97-000536.txt : 19971114 0000914317-97-000536.hdr.sgml : 19971114 ACCESSION NUMBER: 0000914317-97-000536 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19970930 FILED AS OF DATE: 19971112 SROS: NASD FILER: COMPANY DATA: COMPANY CONFORMED NAME: PERMANENT BANCORP INC CENTRAL INDEX KEY: 0000916604 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 351908797 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: 10-Q SEC ACT: SEC FILE NUMBER: 000-23370 FILM NUMBER: 97714890 BUSINESS ADDRESS: STREET 1: 101 SOUTHEAST THIRD ST CITY: EVANSVILLE STATE: IN ZIP: 47708 BUSINESS PHONE: 8124286825 MAIL ADDRESS: STREET 1: 101 SOUTHEAST THIRD STREET CITY: EVANSVILLE STATE: IN ZIP: 47708 10-Q 1 PERMANENT BANCORP, INC. -- 10-Q SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q [ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the Quarterly Period Ended September 30, 1997 [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 Commission file number: 0-23370 PERMANENT BANCORP, INC. - -------------------------------------------------------------------------------- (Exact name of registrant as specified in its charter) DELAWARE 35-1908797 - -------------------------------------------------------------------------------- (State or other jurisdiction of (I.R.S. Employer Incorporation or Origination) Identification No.) 101 Southeast Third Street, Evansville Indiana 47708 - -------------------------------------------------------------------------------- (Address of principal executive offices) (Zip Code) Registrant's telephone number including area code: (812) 428-6800 Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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 October 7, 1997, there were 2,103,105 shares of the Registrant's Common Stock outstanding. PERMANENT BANCORP, INC. AND SUBSIDIARY FORM 10-Q INDEX PART I. FINANCIAL INFORMATION Item 1. Financial Statements (unaudited) Consolidated Statements of Financial Condition ......... Consolidated Statements of Income ...................... Consolidated Statements of Cash Flows .................. Notes to Consolidated Financial Statements ............ Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations ................... Supplemental Data .......................................... Regulatory Developments...................................... PART II. OTHER INFORMATION ................................................... Signatures .................................................
PERMANENT BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) SEPTEMBER 30,1997 MARCH 31, 1997 ------------- ------------- Cash .......................................................................... $ 4,114,126 $ 3,211,091 Interest-bearing deposits ..................................................... 26,510 3,153,385 ------------- ------------- Total cash and cash equivalents ............................................... 4,140,636 6,364,476 Securities available for sale - at fair value (amortized cost $85,851,253 and $87,020,254) ........................................................... 85,656,281 85,180,313 Mortgage-backed securities available for sale at fair value (amortized cost $81,580,475 and $74,846,178) .......................................... 81,845,349 74,052,253 Securities held to maturity (fair value $0 and $25,000) ....................... -- 25,000 Mortgage-backed securities held to maturity (fair value $25,117,433 and $27,197,070) ........................................................... 24,818,609 27,180,891 Other Investments ............................................................. 1,447,670 1,056,036 Loans (net of allowance for loan losses of $2,183,882 and $2,126,225) ......... 215,689,670 210,189,422 Interest receivable, net ...................................................... 3,541,786 3,539,085 Office properties and equipment, net .......................................... 7,863,559 6,968,587 Real estate owned, net ........................................................ 22,001 40,653 Deferred income tax ........................................................... 299,118 1,374,109 Federal Home Loan Bank stock .................................................. 5,466,000 5,192,600 Cash surrender value of life insurance ........................................ 1,589,655 1,552,875 Goodwill (net of accumulated amortization of $1,825,136 and $1,741,967) ....... 536,780 326,198 Other ......................................................................... 651,268 655,833 ------------- ------------- $ 433,568,382 $ 423,698,331 ============= ============= Deposits ...................................................................... $ 278,921,694 $ 280,753,353 Federal Home Loan Bank advances ............................................... 107,061,260 98,483,986 Advance payments by borrowers for taxes and insurance ......................... 920,412 1,014,598 Other borrowed funds .......................................................... 2,338,202 1,793,967 Interest payable .............................................................. 2,072,197 2,049,727 Other ......................................................................... 1,228,642 508,073 ------------- ------------- $ 392,542,407 $ 384,603,704 ------------- -------------
PERMANENT BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED) (continued) SEPTEMBER 30,1997 MARCH 31, 1997 ------------- ------------- Serial Preferred Stock ($.01 par value) Authorized and unissued - 1,000,000 shares Common Stock ($.01 par value) Authorized - 9,000,000 shares; Issued - 2,458,982 shares; Outstanding - 2,013,791 and 2,052,075 shares ............. $ 24,590 $ 24,590 Additional paid-in capital .................................................... 24,208,440 24,045,413 Treasury Stock - 356,177 and 317,893 shares ................................... (6,427,005) (5,547,823) Retained Earnings - substantially restricted .................................. 24,265,803 23,393,701 Unrealized gain (loss) on securities available for sale, net of deferred tax of $34,808 and $(1,043,275) ................................................... 50,525 (1,590,591) ESOP Borrowing ................................................................ (833,175) (952,200) Unearned compensation - restricted stock awards ............................... (263,203) (278,463) ------------- ------------- $ 41,025,975 $ 39,094,627 ------------- ------------- $ 433,568,382 $ 423,698,331 ============= =============
See notes to consolidated financial statements.
PERMANENT BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------ ------------------------------ 1997 1996 1997 1996 ------------ ------------ ------------ ------------ Loans ............................................... $ 4,372,781 $ 4,196,681 $ 8,660,601 $ 8,314,320 Mortgage-backed securities .......................... 1,818,734 1,435,494 3,478,685 2,961,832 Investment securities ............................... 1,465,321 1,671,767 3,052,009 3,151,122 Deposits ............................................ 14,372 34,583 31,845 54,384 Dividends on Federal Home Loan Bank stock ........... 112,875 97,715 214,780 180,699 ------------ ------------ ------------ ------------ 7,784,083 7,436,240 15,437,920 14,662,357 ------------ ------------ ------------ ------------ Deposits ............................................ 3,419,637 3,358,373 6,823,656 6,696,363 Federal Home Loan Bank advances ..................... 1,564,765 1,311,562 2,982,693 2,539,802 Short-term borrowings ............................... 16,876 41,260 45,827 46,412 ------------ ------------ ------------ ------------ 5,001,278 4,711,195 9,852,176 9,282,577 ------------ ------------ ------------ ------------ 2,782,805 2,725,045 5,585,744 5,379,780 75,164 88,486 152,550 148,486 ------------ ------------ ------------ ------------ PROVISION ........................................... 2,707,641 2,636,559 5,433,194 5,231,294 ------------ ------------ ------------ ------------ Service charges ..................................... 233,675 214,404 460,486 419,171 Gain on sale of loans ............................... 29,258 1,865 48,629 4,862 Net gain on real estate owned ....................... 27,436 5,020 40,677 2,191 Commissions ......................................... 171,837 162,588 299,523 257,901 Gain on sale of investment and mortgage-backed securities ......................................... 4,016 $ 8,201 10,285 $ 2,366 Other ............................................... 63,762 55,339 167,419 112,080 ------------ ------------ ------------ ------------ 529,984 447,417 1,027,019 798,571 ------------ ------------ ------------ ------------
PERMANENT BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED) THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, ------------------------------ ------------------------------ 1997 1996 1997 1996 ------------ ------------ ------------ ------------ Salaries and employee benefits ...................... 1,132,894 1,086,977 2,255,661 2,112,540 Deposit insurance assessments ....................... 69,223 1,952,115 138,179 2,134,106 Occupancy ........................................... 204,590 223,152 403,167 416,399 Equipment ........................................... 158,837 137,942 322,309 297,453 Computer service .................................... 138,460 118,912 263,543 249,023 Advertising ......................................... 84,038 67,947 172,952 153,147 Postage and office supplies ......................... 66,474 74,988 144,721 127,865 Other ............................................... 286,239 258,259 563,661 464,445 ------------ ------------ ------------ ------------ 2,140,755 3,920,292 4,264,193 5,954,978 ------------ ------------ ------------ ------------ 1,096,870 (836,316) 2,196,020 74,887 451,966 (275,822) 913,194 130,978 ------------ ------------ ------------ ------------ $ 644,904 $ (560,494) $ 1,282,826 $ (56,091) ============ ============ ============ ============ Primary ............................................. $ 0.30 $ (0.25) $ 0.60 $ (0.03) Fully Diluted ....................................... $ 0.30 $ (0.25) $ 0.60 $ (0.03) Primary ............................................. 2,136,661 2,217,005 2,132,991 2,214,058 Fully diluted ....................................... 2,137,989 2,220,109 2,133,466 2,217,162
See notes to consolidated financial statements.
PERMANENT BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) SIX MONTHS ENDED SEPTEMBER 30, -------------------------------- 1997 1996 ------------ ------------ CASH FLOWS FROM OPERATING ACTIVITIES: Net income ............................................. $ 1,282,826 $ (56,091) Adjustments to reconcile net income to net cash provided by operating activities: Depreciation ................................... 267,273 251,699 Deposit premium purchased ...................... (293,751) Amortization and accretion .................... 163,855 76,247 Vesting of restricted stock awards ............. 4,760 46,810 Provisions for loan and real estate owned losses 57,658 36,781 (Gain) on sale of securities ................... (3,518) (19,813) (Gain) on sale of mortgage-backed securities ... (1,265) (761) (Gain) on sale of loans ........................ (48,629) (4,862) Loss on sale of bank premises .................. 119 (Gain) on sale of real estate owned ............ (24,744) ESOP shares earned ............................. 165,597 77,310 Changes in assets and liabilities: Proceeds from the sales of loans ................... 1,921,689 514,847 Origination of loans for resale .................... (1,873,060) (509,985) Other investments .................................. (126,203) Interest receivable ................................ (2,701) (684,048) Deferred income tax ................................ (3,093) (439,645) Other assets ....................................... 4,565 (6,323) Interest payable ................................... 22,470 56,838 Other liabilities .................................. 720,569 1,622,388 ------------ ------------ Net cash provided by operating activities .............. 2,234,417 961,392 ------------ ------------ CASH FLOWS FROM INVESTING ACTIVITIES: Loans originated ....................................... (33,644,339) (32,924,343) Loan principal repayments .............................. 31,708,431 37,803,024 Proceeds from: Maturities of: Securities available for sale .................. 7,000,000 6,974,688 Securities held to maturity .................... 25,000 Sales of: Securities available for sale .................. 11,957,267 13,365,641 Mortgage-backed securities available for sale .. 338,691 7,694,935 Bank premises .................................. 1,781 Real estate owned .............................. 68,900
PERMANENT BANCORP, INC. AND SUBSIDIARY CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED) SIX MONTHS ENDED SEPTEMBER 30, -------------------------------- 1997 1996 ------------- ------------- Purchases of: Securities available for sale ................ (17,825,781) (47,920,625) Mortgage-backed securities available for sale (13,576,118) (11,757,132) Equity Investments ........................... (250,000) Loans ........................................ (3,701,614) (7,665,460) FHLB Stock ................................... (273,400) (1,689,000) Office properties, equipment and land ........ (1,164,145) (222,487) Payments on mortgage-backed securities ............... 8,886,296 8,800,181 Increase in cash surrender value of life insurance ... (36,780) (21,486) Payments on real estate owned ........................ (3,503) 8,439 ------------- ------------- Net cash used in investing activities ................ (10,489,314) (27,553,625) ------------- ------------- CASH FLOWS FROM FINANCING ACTIVITIES: Dividends paid ....................................... $ (367,165) $ (280,538) Net change in deposits ............................... (1,831,659) (8,276,878) Receipts from FHLB advances .......................... 131,800,000 80,350,000 Payments on FHLB advances ............................ (123,222,726) (48,511,910) Principal repayment of ESOP borrowing ................ 119,026 119,025 Advance payments by borrowers for taxes and insurance (94,186) 128,639 Net change in other borrowed funds ................... 544,235 1,972,871 Purchase of treasury stock ........................... (993,628) (83,750) Sale of common stock ................................ 77,160 11,980 ------------- ------------- Net cash provided by financing activities ............ 6,031,057 25,429,439 ------------- ------------- NET DECREASE IN CASH AND CASH EQUIVALENTS .............. (2,223,840) (1,162,794) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD ......... 6,364,476 4,916,421 ------------- ------------- CASH AND CASH EQUIVALENTS AT END OF PERIOD ............... 4,140,636 3,753,627 ============= ============= SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid during the period for: Interest ......................................... $ 6,821,479 $ 6,730,061 Income taxes ..................................... 703,000 505,000 Noncash transactions: Transfers from loans to real estate owned ........ 22,001 --
See notes to consolidated financial statements. PERMANENT BANCORP, INC. AND SUBSIDIARY Notes to Consolidated Financial Statements 1. BASIS OF PRESENTATION - The consolidated financial statements include the accounts of Permanent Bancorp, Inc. (the "Company"), its wholly owned subsidiary, Permanent Federal Savings Bank, its wholly owned subsidiary, Perma-Service Corp, and its wholly owned subsidiary, Permanent Insurance Agency, Inc. (collectively the "Bank"). All significant intercompany accounts and transactions have been eliminated. These consolidated interim financial statements at September 30, 1997 and for the three and six month periods ended September 30, 1997, and 1996, have not been examined by independent auditors, but reflect, in the opinion of the Company's management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position and results of operations for such periods. The preparation of financial statements in conformity with generally accepted accounting principals requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates most susceptible to change in the near term include the allowance for loan losses and the fair value of securities. These statements should be read in conjunction with the consolidated financial statements and related notes which are incorporated by reference in the Company's Annual Report on Form 10-K for the year ended March 31, 1997. 2. CHANGES IN PRESENTATION - Certain amounts and items appearing in the financial statements for the quarter and six months ended September 30, 1996 have been reclassified to conform with the presentation presented for the period ended September 30, 1997. 3. FINANCIAL ACCOUNTING STANDARDS NO. 128 (FAS 128) "EARNINGS PER SHARE" - FAS 128 applies to financial statements for public companies for periods ending after December 15, 1997. Accordingly, the Company will adopt FAS 128 in the third quarter of fiscal 1998. This statement establishes new accounting standards for the calculation of basic earnings per share as well as diluted earnings per share. The Company's basic and diluted earnings per share calculated in accordance with FAS 128 for the periods ended September 30, 1997 and 1996 is as follows:
Three Months Ended September 30, Six Months ended September 30, -------------------------------- ------------------------------ 1997 1996 1997 1996 ---- ---- ---- ---- Basic .32 (.26) .64 (.03) Diluted .30 (.25) .60 (.03)
The difference between basic and diluted earnings per share represents the dilutive impact of the Company's outstanding stock options. 4. FINANCIAL ACCOUNTING STANDARDS NO. 130 (FAS 130) "ACCOUNTING FOR COMPREHENSIVE INCOME" - FAS 130 requires that changes in the amounts of certain items, including foreign currency translation adjustments and gains and losses on certain securities be shown in the financial statements. FAS 130 does not require a specific format for the financial statement in which comprehensive income is reported, but does require that an amount representing total comprehensive income be reported in that statement. FAS 130 is effective for fiscal years beginning after December 15, 1997. FAS 130 will receive reclassification of earlier financial statements for comparative purposes. Management has not yet determined the effect, if any, of FAS 130 on the consolidated financial statements. 5. FINANCIAL ACCOUNTING STANDARDS NO. 131 (FAS 131) "DISCLOSURES ABOUT SEGMENTS OF AN ENTERPRISE AND RELATED INFORMATION" FAS 131 changes the way public companies report information about segments of their business in their annual financial statements and requires them to report selected segment information in their quarterly reports issued to shareholders. It also requires entity-wide disclosures about the products and services an entity provides, the material countries in which it holds assets and reports revenues, and its major customers. FAS 131 is effective for fiscal years beginning after December 15, 1997. Management has not yet determined the effect, if any, of FAS 131 on the consolidated financial statements. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Permanent Bancorp, Inc. (the "Company") is a bank holding company which owns 100% of the capital stock of Permanent Federal Savings Bank (the "Bank") and has no other subsidiaries. Material changes in the consolidated statements of Financial Condition and Results of Operations of the Company, except where noted, are attributed to the operations of the Bank; therefore the following analysis is centered on the activities of the Bank. QUARTER ENDED SEPTEMBER 30, 1997 COMPARED TO SEPTEMBER 30, 1996 NET INTEREST INCOME - Net interest income before provision for loan losses increased by $58,000 or 2.1% for the quarter ended September 30, 1997 compared to the quarter ended September 30, 1996. This increase was primarily attributable to an increase in interest earning assets which offset a slight decline in the interest rate spread (the difference between the rate earned on interest earning assets and the rate paid on interest bearing liabilities). Net interest income after loan loss provisions increased by $71,000, or 2.7% for the quarter ended September 30, 1997 compared to the quarter ended September 30, 1996. The increase was larger than the increase in net interest income before provision for loan losses because of a decrease in the loss provision. INTEREST INCOME - Total interest income for the three months ended September 30, 1997 increased $348,000, or 4.7%, from the three month period ended September 30, 1996. This increase was attributable to an increase of 4 basis points in the average rate earned on total interest earning assets and an increase of $17.4 million in average balances for the comparable periods. INTEREST EXPENSE - Total interest expense increased by $290,000, or 6.2%, during the three months ended September 30, 1997 compared to the three months ended September 30, 1996. Average interest bearing liabilities increased by $18.6 million and the average cost of such liabilities increased by 9 basis points, compared to the quarter ended September 30, 1996. OTHER INCOME - Total other income increased by $83,000 during the quarter ended September 30, 1997 compared to the quarter ended September 30, 1996. Service charges were $19,000 more and commissions were $9,000 more during the quarter ended September 30, 1997 than during the comparable quarter in 1996. During the quarter ended September 30, 1997 the Company recognized gains on sales of loans of $29,000 compared to $2,000 during the quarter ended September 30, 1996 and recognized gains of $27,000 on sales of real estate owned compared to gains of $5,000 during the quarter ended September 30, 1996. The remaining other income accounts were down by $6,000 during the current year quarter. OTHER EXPENSE - Other expense decreased a total of $1,780,000 during the quarter ended September 30, 1997 compared to the quarter ended September 30, 1996, largely because of the one time FDIC assessment in the amount of $1,766,000 paid during the quarter ended September 30, 1996. Deposit insurance assessments, excluding the one time assessment, decreased by $117,000 during the quarter ended September 30, 1997 compared to the quarter ended September 30, 1996 due to lower rates. Salaries and employee benefits increased by $46,000 or 4.2% during the quarter ended September 30, 1997 compared to the same period in 1996. Occupancy expenses decreased by $19,000 while equipment and computer expenses increased by $40,000 during the comparable periods. Advertising expenditures were $16,000 higher during the quarter ended September 30, 1997 than during the quarter ended September 30, 1996. Postage and office supplies were $9,000 lower during the quarter ended September 30, 1997. The remaining other expense categories were $29,000 higher during the current year quarter. INCOME TAXES - Provisions for income taxes amounted to $452,000, or 41.2% of income before taxes during the quarter ended September 30, 1997, compared to a credit of $276,000, or 33.0% of income before taxes during the quarter ended September 30, 1996. SIX MONTHS ENDED SEPTEMBER 30, 1997 COMPARED TO SIX MONTHS ENDED SEPTEMBER 30, 1996 NET INTEREST INCOME - Net interest income before provision for loan losses increased by $206,000 or 3.8% for the six months ended September 30, 1997 compared to the six months ended September 30, 1996. This increase was primarily attributable to an increase in interest earning assets. Net interest income after loan loss provisions increased by $202,000, or 3.9% for the six months ended September 30, 1997 compared to the six months ended September 30, 1996. The increase was smaller than the increase in net interest income before provision for loan losses because of an increase of $4,000 in the loss provision. INTEREST INCOME - Total interest income for the six months ended September 30, 1997 increased $776,000, or 5.3%, from the six month period ended September 30, 1996. This increase was attributable to an increase of $18.6 million in average balances which more than offset a decrease of 4 basis points in the average rate earned on total interest earning assets for the comparable periods. INTEREST EXPENSE - Total interest expense increased by $570,000, or 6.1%, during the six months ended September 30, 1997 compared to the six months ended September 30, 1996. Average interest bearing liabilities increased by $21.1 million, which more than offset the 3 basis point decrease in the average rate on such liabilities, compared to the six months ended September 30, 1996. OTHER INCOME - Total other income increased by $228,000 during the six months ended September 30, 1997 compared to the six months ended September 30, 1996. Service charges were $42,000 more and commissions were $42,000 more during the six months ended September 30, 1997 than during the comparable quarter in 1996. During the six months ended September 30, 1997 the Company earned gains on sales of loans of $48,000 compared to $5,000 during the six months ended September 30, 1996 and recognized gains of $10,000 on sales of investment and mortgage-backed securities compared to gains of $2,000 during the six months ended September 30, 1996. The Company recognized gains of $41,000 on the sale of real estate owned during the current year period compared to $2,000 during the prior year period. The remaining other income accounts were up by $54,000 during the current year period. OTHER EXPENSE - Other expense decreased a total of $1,691,000 during the six months ended September 30, 1997 compared to the six months ended September 30, 1996, largely because of the one time FDIC assessment in the amount of $1,766,000 paid during the 1996 period. Salaries and employee benefits increased by $143,000 or 6.8% during the six months ended September 30, 1997 compared to the same period in 1996. Occupancy expenses decreased by $13,000 and equipment and computer expenses increased by $39,000 during the comparable periods. Deposit insurance assessments, exclusive of the one time assessment, were $230,000 lower during the six months ended September 30, 1997 due to a decrease in deposit insurance rates paid. Advertising expenditures were $20,000 higher and postage and office supplies were $17,000 higher than during the six months ended September 30, 1996. The remaining other expense categories were up by $99,000 during the six months ended September 30, 1997 compared to the comparable period in 1996. INCOME TAXES - Provisions for income taxes were $913,000, or 41.6% of income before taxes during the six months ended September 30, 1997. During the six month period ended September 30, 1996 the Company recorded a tax liability of $131,000 even though income before tax amounted to only $75,000. This occurred because the Company incurred expenses, including loan loss provisions, which were not deductible for tax purposes. FINANCIAL CONDITION SEPTEMBER 30, 1997 COMPARED TO MARCH 31, 1997 The Company's total assets at September 30, 1997 were $433.6 million representing an increase of $9.9 million, or 2.3%, from March 31, 1997. Investment and mortgage-backed securities, including those classified as available for sale, increased by $5.9 million to $192.3 million at September 30, 1997 from $186.4 million at March 31, 1997. Net loans increased by $5.5 million to $215.7 million at September 30, 1997 compared to $210.2 million at March 31, 1997. During May, 1997 the Bank assumed the $5.7 million deposit liabilities and purchased the building and certain other assets of a branch of First Chicago/NBD Corp. located in Bell Oaks Shopping Center in Newburgh, Indiana. This branch is located in what is widely considered the prime banking and commercial area of Newburgh, an upscale and rapidly growing community immediately east of Evansville. On September 19, 1997, the Bank's existing Newburgh Branch at Stonegate Square was closed and the accounts transferred to the new location. The loan growth occurred in single family mortgage loans, commercial loans and through the purchase of commercial paper. Consumer loans decreased by $3.3 million during the period. By policy, the Bank retains all adjustable rate loans and all fixed rate loans with terms of 20 years or less in its portfolio, and sells all fixed rate loans with terms exceeding 20 years. Non-performing assets were at $4.7 million at September 30, 1997, and at March 31, 1997, compared to $7.2 million at September 30, 1996. As of September 30, 1997, the Bank's loan loss allowance was $2,183,882. Although no assurance can be provided, management believes this amount to be sufficient based upon historical averages and current trends. Based on management's analysis of classified assets, loss histories and future projections, the allowance for loan losses (presented below in tabular form) was deemed by management to be adequate at September 30, 1997.
1997 1996 ---------- ----------- Balance, April 1 $2,126,225 $2,237,804 Provision for loan losses 152,550 148,486 Net charge offs (94,893) (111,705) ---------- ---------- Balance, September 30 $2,183,882 $2,274,585
The loan growth and the increase in investment and mortgage-backed securities was funded through Federal Home Loan Bank advances which increased by $8.6 million to $107.1 million at September 30, 1997 compared to $98.5 million at March 31, 1997. Deposits decreased by $1.9 million to $278.9 million at September 30, 1997 compared to $280.8 million at March 31, 1997. Total stockholders' equity increased by $1.9 million to $41.0 million at September 30, 1997 from $39.1 million at March 31, 1997. The increase was attributable to a decrease of $1.6 million in unrealized losses on securities available for sale, retention of earnings, reduction of Employee Stock Ownership Plan liability, vesting of restricted stock awards and through the exercise of stock options. Decreases in stockholders' equity resulted from the repurchase of stock and the payment of dividends. LIQUIDITY AND CAPITAL RESOURCES - The standard measure of liquidity for the thrift industry is the ratio of cash and eligible investments to a certain percentage of borrowings due within one year and net withdrawable deposit accounts. The minimum required level is currently set by OTS regulation at 5%. At September 30, 1997, the Bank's liquidity ratio was 11.86%. Historically, the Bank has maintained its liquid assets which qualify for purposes of the OTS liquidity regulations above the minimum requirements imposed by such regulations and at a level believed adequate to meet requirements of normal daily activities, repayment of maturing debt, and potential deposit outflows. Cash flow projections are regularly reviewed and updated to assure that adequate liquidity is maintained. Cash for these purposes is generated through the maturity of investment securities and loan sales and repayments, and may be generated through increases in deposits. Loan payments are a relatively stable source of funds while deposit flows are influenced significantly by the level of interest rates and general money market conditions. Borrowings may be used to compensate for reductions in other sources of funds such as deposits. As a member of the FHLB system, the Bank may borrow from the FHLB of Indianapolis. At September 30, 1997, the Bank had $107,061,000 in such borrowings. As of that date, the Bank had commitments to fund loan origination's and construction loans of approximately $4.6 million and commitments to sell loans in the amount of $104,000. The Company had no commitments to purchase securities, but had commitments to sell approximately $9.0 million in mortgage pool securities and $1.0 million in U.S. Treasury securities. In the opinion of management, the Bank has sufficient cash flow and borrowing capacity to meet current and anticipated funding commitments. The following table sets forth the Bank's compliance with its capital requirements at September 30, 1997.
Amount Percent (*) ------ ----------- Tangible Capital: Capital level $36,113,994 8.38% Requirement 6,467,510 1.50% ----------- ---- Excess $29,646,484 6.88% ----------- ---- Core Capital: Capital level $36,400,401 8.44% Requirement 12,943,613 3.00% ----------- ---- Excess $23,456,788 5.44% ----------- ---- Risk-Based Capital: Capital level $38,235,582 21.01% Requirement 14,561,198 8.00% ----------- ----- Excess $23,674,384 13.01% ----------- -----
(*) Tangible capital is computed as a percentage of adjusted total assets of $431,167,366. Core capital is computed as a percentage of adjusted total assets of $431,453,773. Risk-based capital is computed as a percentage of risk-weighted assets of $182,014,980.
SUPPLEMENTAL DATA THREE MONTHS ENDED SIX MONTHS ENDED SEPTEMBER 30, SEPTEMBER 30, -------------------------- ------------------------ 1997 1996 1997 1996 ---- ---- ---- ---- Weighted average interest rate earned on total interest-earning assets 7.53% 7.49% 7.47% 7.51% Weighted average cost of total interest-bearing liabilities 5.18% 5.09% 5.10% 5.13% Interest rate spread during period 2.35% 2.40% 2.37% 2.38% Net yield on interest-earning assets (net interest income divided by average interest-earning assets on annualized basis) 2.68% 2.74% 2.73% 2.75% Total interest income divided by average total assets (on annualized basis) 7.18% 7.14% 7.20% 7.17% Total interest expense divided by average total assets (on annualized basis) 4.62% 4.53% 4.60% 4.54% Net interest income divided by average total assets (on annualized basis) 2.56% 2.61% 2.60% 2.63% Return on assets (net income divided by average total assets on annualized basis) 0.60% -0.54% 0.60% 0.03% Return on equity (net income divided by average total equity on annualized basis) 6.39% -5.59% 6.40% 0.28% Interest rate spread at end of period 2.37% 2.41% 2.37% 2.41% Data as of September 30, March 31, 1997 1997 ------ ------ (IN THOUSANDS) NONPERFORMING ASSETS: Loans: Non-accrual .......................... $2,425 $2,463 Restructured ........................ 2,109 2,128 ------ ------ Total nonperforming loans .................... $4,534 $4,591 Real estate owned, net ....................... 22 41 Other repossessed assets, net ................ 90 58 ------ ------ Total Nonperforming Assets ..................... $4,646 $4,690 Nonperforming assets divided by total assets ... 1.07% 1.11% Nonperforming loans divided by total loans ..... 2.10% 2.18% Balance in Allowance for Loan Losses ........... $2,184 $2,126
REGULATORY DEVELOPMENTS Legislation Regarding Bad Debt Reserves - Under Section 593 of the Internal Revenue Code of 1986, as amended (the "Code"), thrift institutions such as the Bank, which meet certain definitional tests primarily relating to their assets and the nature of their business, were permitted to establish a tax reserve for bad debts and to make annual additions thereto, which additions could, within specified limitations, be deducted in arriving at their taxable income. The Company's deduction with respect to "qualifying loans", which are generally loans secured by certain interests in real property, could previously be computed using an amount based on the Company's loss experience (the "experience method"), or a percentage equal to 8.0% of the Company's taxable income (the "percentage of taxable income method"), computed without regard to this deduction and with additional modifications and reduced by the amount of any permitted addition to the non-qualifying reserve. Under recently passed legislation, Section 593 of the Internal Revenue Code of 1986 has been repealed and the Bank will be permitted to use only the experience method of computing additions to its bad debt reserve. In addition, the Bank will be unable to make additions to its tax bad debt reserve, and will be permitted to deduct bad debts only as they occur. The legislation will affect the Company's tax calculation during the current fiscal year. Management can not now predict the impact of the legislation on the results of operations in the current or future fiscal years. PART II. OTHER INFORMATION ITEM 1. Legal Proceedings None. ITEM 2. Changes in Securities None. ITEM 3. Defaults Upon Senior Securities None. ITEM 4. Submission of Matters to a Vote of Security Holders The annual meeting of stockholder was held in Evansville, Indiana on July 22, 1997. A total of 1,662,918 shares of Common Stock, 79.2% of outstanding shares, were represented in person or by proxy. The following is a record of votes cast in the election of directors of the Company for 3-year terms expiring in 2000: FOR VOTES WITHHELD --- -------------- Daniel F. Korb 1,504,659 158,259 Robert L. Northerner 1,504,658 158,260 James W. Vogel 1,505,288 157,630 Accordingly, the individuals named above were declared to be duly elected directors of the Company. Messrs. Weinzapfel, Stone, Butterfield, Forster, McCarty, Brown, and Kinkel will continue as directors. The following is a record of the votes cast in respect of the proposal to ratify the appointment of Deloitte & Touche LLP as auditors of the Company for the fiscal year ending March 31, 1998. PERCENTAGE OF VOTES IN NUMBER ATTENDANCE OF VOTES AT THE MEETING -------- -------------- FOR 1,628,718 97.94% AGAINST 19,950 1.20 ABSTAIN 14,250 .86 Accordingly, the proposal described above was declared to be duly adopted by the stockholders of the company. ITEM 5. Other Information None ITEM 6. Exhibits and Reports on Form 8-K (a) Exhibits None. (b) Reports on Form 8-K None 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. PERMANENT BANCORP, INC. DATE: November 12, 1997 By: /s/Donald P. Weinzapfel, ----------------------- Donald P. Weinzapfel, Chairman of the Board President and Chief Executive Officer (Principal Executive Officer) DATE: November 12, 1997 By: /s/Joseph M. Schnapf -------------------- Joseph M. Schnapf Chief Financial Officer (Principal Financial Accounting Officer) EX-27 2
9 THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE QUARTERLY REPORT ON FORM 10-Q FOR THE FISCAL QUARTER ENDED SEPTEMBER 30, 1997 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 6-MOS MAR-31-1998 SEP-30-1997 4,114,126 26,510 0 0 167,501,630 24,818,609 25,117,433 217,873,552 2,183,882 433,568,382 278,921,694 83,788,202 4,221,251 25,618,040 24,590 0 0 41,001,385 433,568,382 8,660,601 6,530,694 246,625 15,437,920 6,823,656 9,852,176 5,433,194 152,550 10,285 4,264,193 2,196,020 913,194 0 0 913,194 0.60 0.60 7.47 2,425,000 0 2,109,000 300,699 2,126,225 137,963 43,070 2,183,882 343,702 0 1,840,180
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