-----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, R87bFhgplzj+tcouaQ5koszyeeXuO5SDXxdli08GDHprIxAY+9nX9AJUGK0WeJlp 4Lopx/CJgjjlLoz2Dw7kBA== 0001046386-99-000166.txt : 19991117 0001046386-99-000166.hdr.sgml : 19991117 ACCESSION NUMBER: 0001046386-99-000166 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 19990930 FILED AS OF DATE: 19991115 FILER: COMPANY DATA: COMPANY CONFORMED NAME: ASB FINANCIAL CORP /OH CENTRAL INDEX KEY: 0000944304 STANDARD INDUSTRIAL CLASSIFICATION: SAVINGS INSTITUTION, FEDERALLY CHARTERED [6035] IRS NUMBER: 311429488 STATE OF INCORPORATION: OH FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-25906 FILM NUMBER: 99752209 BUSINESS ADDRESS: STREET 1: 503 CHILLICOTHE ST CITY: PORTSMOUTH STATE: OH ZIP: 45662 BUSINESS PHONE: 6143543177 MAIL ADDRESS: STREET 1: 503 CHILLICTHE ST CITY: PORTSMOUTH STATE: OH ZIP: 45662 10QSB 1 QUARTERLY FINANCIAL STATEMENTS 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 September 30, 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 November 10, 1999, the latest practicable date, 1,610,358 shares of the registrant's common stock, without par value, were issued and outstanding. Page 1 of 15 pages 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 14 SIGNATURES 15 2 ASB Financial Corp.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (In thousands, except share data) September 30, June 30, ASSETS 1999 1999 Cash and due from banks $ 2,110 $ 4,078 Interest-bearing deposits in other financial institutions 1,338 3,488 ------- ------- Cash and cash equivalents 3,448 7,566 Certificates of deposit in other financial institutions 292 293 Investment securities available for sale - at market 19,812 19,372 Mortgage-backed securities available for sale - at market 9,560 10,232 Loans receivable - net 86,289 82,430 Office premises and equipment - at depreciated cost 1,225 1,047 Federal Home Loan Bank stock - at cost 792 778 Accrued interest receivable on loans 73 78 Accrued interest receivable on mortgage-backed securities 63 66 Accrued interest receivable on investments and interest-bearing deposits 319 290 Prepaid expenses and other assets 505 714 Prepaid federal income taxes 82 200 Deferred federal income tax assets 311 182 ------- ------- Total assets $122,771 $123,248 ======= ======= LIABILITIES AND SHAREHOLDERS' EQUITY Deposits $102,186 $100,954 Advances from the Federal Home Loan Bank 5,815 5,823 Advances by borrowers for taxes and insurance 83 168 Accrued interest payable 688 93 Other liabilities 1,258 1,170 ------- ------- Total liabilities 110,030 108,208 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; 1,746,924 and 1,740,854 shares issued - - Additional paid-in capital 8,488 8,427 Retained earnings, restricted 7,360 8,909 Shares acquired by stock benefit plans (1,418) (1,418) Unrealized gains on securities designated as available for sale, net of related tax effects 41 265 Less 136,566 and 86,066 shares of treasury stock - at cost (1,730) (1,143) ------- ------- Total shareholders' equity 12,741 15,040 ------- ------- Total liabilities and shareholders' equity $122,771 $123,248 ======= =======
3 ASB Financial Corp.
CONSOLIDATED STATEMENTS OF EARNINGS For the three months ended September 30, (In thousands, except share data) 1999 1998 Interest income Loans $1,668 $1,609 Mortgage-backed securities 156 167 Investment securities 386 343 Interest-bearing deposits and other 11 30 ----- ----- Total interest income 2,221 2,149 Interest expense Deposits 1,215 1,223 Borrowings 74 99 ----- ----- Total interest expense 1,289 1,322 ----- ----- Net interest income 932 827 Provision for losses on loans 1 - ----- ----- Net interest income after provision for losses on loans 931 827 Other operating income 72 59 General, administrative and other expense Employee compensation and benefits 372 288 Occupancy and equipment 24 29 Federal deposit insurance premiums 15 14 Franchise taxes 51 50 Data processing 69 59 Other operating 94 102 ----- ----- Total general, administrative and other expense 625 542 ----- ----- Earnings before income taxes 378 344 Federal income taxes Current 119 72 Deferred (14) 29 ----- ----- Total federal income taxes 105 101 ----- ----- NET EARNINGS $ 273 $ 243 ===== ===== EARNINGS PER SHARE Basic $.17 $.16 === === Diluted $.17 $.15 === ===
4 ASB Financial Corp.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME For the three months ended September 30, (In thousands) 1999 1998 Net earnings $273 $243 Other comprehensive income, net of tax: Unrealized holding gains (losses) on securities during the period, net of tax of $115 and $50 in 1999 and 1998, respectively (224) 95 --- --- Comprehensive income $ 49 $338 === === Accumulated comprehensive income $ 41 $809 === ===
5 ASB Financial Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS For the three months ended September 30, (In thousands) 1999 1998 Cash flows from operating activities: Net earnings for the period $ 273 $ 243 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 6 4 Amortization of deferred loan origination fees (29) (16) Depreciation and amortization 24 18 Federal Home Loan Bank stock dividends (14) (14) Provision for losses on loans 1 - Increase (decrease) in cash due to changes in: Accrued interest receivable (21) 18 Prepaid expenses and other assets 209 121 Accrued interest payable 595 649 Other liabilities 88 77 Federal income taxes Current 118 58 Deferred (14) 29 ----- ------ Net cash provided by operating activities 1,236 1,187 Cash flows provided by (used in) investing activities: Proceeds from maturity of investment securities - 4,560 Purchase of investment securities designated as available for sale (765) (6,501) Principal repayments on mortgage-backed securities 652 743 Purchase of mortgage-backed securities - (2,900) Loan principal repayments 4,206 8,179 Loan disbursements (8,037) (9,221) Purchase of office premises and equipment (202) (17) Decrease in certificates of deposit in other financial institutions - net 1 486 Proceeds from sale of real estate acquired through foreclosure - 157 ----- ------ Net cash used in investing activities (4,145) (4,514) Cash flows provided by (used in) financing activities: Net increase in deposit accounts 1,232 1,416 Proceeds from Federal Home Loan Bank advances 1,500 1,000 Repayment of Federal Home Loan Bank advances (1,508) (8) Repayment of other borrowed money - (2,500) Advances by borrowers for taxes and insurance (85) (75) Distributions paid on common shares (1,822) (164) Proceeds from exercise of stock options 61 - Purchase of treasury stock (587) - ----- ------ Net cash used in financing activities (1,209) (331) ----- ------ Net decrease in cash and cash equivalents (4,118) (3,658) Cash and cash equivalents at beginning of period 7,566 13,890 ----- ------ Cash and cash equivalents at end of period $3,448 $10,232 ===== ======
6 ASB Financial Corp.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED) For the three months ended September 30, (In thousands) 1999 1998 Supplemental disclosure of cash flow information: Cash paid during the period for: Federal income taxes $ - $ 10 ==== === Interest on deposits and borrowings $ 694 $673 ==== === Supplemental disclosure of noncash investing activities: Unrealized gains (losses) on securities designated as available for sale, net of related tax effects $(224) $ 95 ==== ===
7 ASB Financial Corp. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS For the three months ended September 30, 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 month period ended September 30, 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 62,795 unallocated ESOP shares, totaled 1,577,463 for the three month period ended September 30, 1999. Weighted-average common shares deemed outstanding, which give effect to 77,756 unallocated ESOP shares, totaled 1,557,590 for the three month period ended September 30, 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 1,600,851 and 1,584,344 for the three month periods ended September 30, 1999 and 1998, respectively. Incremental shares related to the assumed exercise of stock options included in the calculation of diluted earnings per share totaled 23,388 and 26,754 for the three month periods ended September 30, 1999 and 1998, respectively. 8 ASB Financial Corp. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED) For the three months ended September 30, 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 ASB Financial Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Discussion of Financial Condition Changes from June 30, 1999 to September 30, 1999 At September 30, 1999, the Corporation's assets totaled $122.8 million, a decrease of $477,000, or .4%, from the $123.2 million of total assets at June 30, 1999. The decrease in assets was due primarily to distributions on common shares totaling $1.8 million, which were partially offset by growth in deposits of $1.2 million. Liquid assets (i.e. cash, interest-bearing deposits and certificates of deposit) decreased by $4.1 million from June 30, 1999 levels, to a total of $3.7 million at September 30, 1999. Investment securities totaled $19.8 million at September 30, 1999, an increase of $440,000, or 2.3%, over June 30, 1999 levels. During the three months ended September 30, 1999, purchases of investment securities totaled $765,000. Mortgage-backed securities totaled $9.6 million at September 30, 1999, a decrease of $672,000, or 6.6%, from the total at June 30, 1999. The decrease was due primarily to principal repayments of $652,000. Loans receivable increased by $3.9 million, or 4.7%, during the three month period ended September 30, 1999, to a total of $86.3 million. Loan disbursements amounted to $8.0 million and were partially offset by principal repayments of $4.2 million. The allowance for loan losses totaled $732,000 and $733,000 at September 30, 1999 and June 30, 1999, respectively. Nonperforming and nonaccrual loans totaled $292,000 and $379,000 at September 30, 1999 and June 30, 1999, respectively. The allowance for loan losses represented 250.7% and 193.4% of nonperforming loans as of September 30, 1999 and June 30, 1999, respectively. Although management believes that its allowance for loan losses at September 30, 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 $102.2 million at September 30, 1999, an increase of $1.2 million, or 1.2%, 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. Shareholders' equity totaled $12.7 million at September 30, 1999, a decrease of $2.3 million, or 15.3%, from June 30, 1999 levels. The decrease resulted primarily from distributions on common shares totaling $1.8 million, treasury stock purchases of $587,000 and a decrease in unrealized gains on securities designated as available for sale of $224,000, which were partially offset by net earnings of $273,000 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 September 30, 1999, American's regulatory capital was well in excess of the minimum capital requirements. 10 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 September 30, 1999 and 1998 General Net earnings amounted to $273,000 for the three months ended September 30, 1999, an increase of $30,000, or 12.3%, over the $243,000 of net earnings reported for the same period in 1998. The increase in earnings resulted primarily from a $105,000 increase in net interest income and a $13,000 increase in other income, which were partially offset by an $83,000 increase in general, administrative and other expense and a $4,000 increase in the provision for federal income taxes. Net Interest Income Net interest income increased by $105,000, or 12.7%, for the three months ended September 30, 1999, compared to the 1998 period. Interest income on loans increased by $59,000, or 3.7%, during the respective periods, while interest income on investment and mortgage-backed securities and interest-bearing deposits and other increased by $13,000, or 2.4%, due primarily to an increase in the average balance of the related assets. Interest expense on deposits decreased by $8,000, or .7%, due primarily to a decrease of approximately 25 basis points in the weighted-average interest rate, which was partially offset by a $4.7 million increase in the average balance of deposits outstanding. Interest expense on borrowings decreased by $25,000, or 25.3%, due primarily to a 145 basis point decrease in the average cost of borrowings from period to period. 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 recorded a provision of $1,000 for the three month period ended September 30, 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 increased by $13,000, or 22.0%, for the three months ended September 30, 1999, compared to the same period in 1998, due primarily to an increase in both fees on deposit accounts and revenues from an agreement with a third-party vendor of alternative investment products. 11 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 September 30, 1999 and 1998 (continued) General, Administrative and Other Expense General, administrative and other expense increased by $83,000, or 15.3%, during the three months ended September 30, 1999, compared to the same period in 1998. This increase resulted primarily from an $84,000, or 29.2%, increase in employee compensation and benefits and a $10,000, or 16.9%, 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 $105,000 for the three months ended September 30, 1999, an increase of $4,000, or 4.0%, compared to the same period in 1998. This increase resulted primarily from the increase in net earnings before taxes of $34,000, or 9.9%, coupled with the effects of tax credits from the Savings Bank's investment in a low income housing partnership. The effective tax rates were 27.8% and 29.4% for the three months ended September 30, 1999 and 1998, respectively. Year 2000 Compliance Matters As with most providers of financial services, American's operations are heavily dependent on information technology systems. American is addressing the potential problems associated with the possibility that the computers that control or operate American's information technology system and infrastructure may not be programmed to read four-digit date codes and, upon arrival of the year 2000, may recognize the two-digit code "00" as the year 1900, causing systems to fail to function or to generate erroneous data. American's primary data processing applications are handled by a third-party service bureau, Intrieve, Inc. Intrieve has advised American that it has implemented a fully Year 2000 compliant processing system that has been fully tested as of January 1, 1999. Additionally, American's systems were tested in November 1998 with satisfactory results. Management has also reviewed American's ancillary equipment and is in the process of providing the appropriate remedial measures without material cost. American estimates its expenses related to the Year 2000 to be less than $10,000. 12 ASB Financial Corp. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (CONTINUED) Year 2000 Compliance Matters (continued) In addition to possible expense related to its own systems, American could incur losses if loan payments are delayed due to year 2000 problems affecting any major borrowers in American's primary market area. Because American's loan portfolio is highly diversified with regard to individual borrowers and types of businesses and American's primary market area is not significantly dependent upon one employer or industry, American does not expect any significant or prolonged difficulties that will affect net earnings or cash flow. American has developed a contingency plan in case Intrieve actually fails at Year 2000 critical dates. American deems the likelihood of failure of the service provider's efforts to renovate Year 2000 changes to the on-line core account processing system to be remote. The contingency plan, therefore, primarily addresses action to deal with the possibility that the service provider's system will be down for several days or weeks upon arrival of Year 2000. American can conduct and record transactions manually for a period of time until the service provider is operational. 13 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 None. 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 three months ended September 30, 1999. 14 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: November 12, 1999 By: /s/Robert M. Smith ---------------------- ----------------------------------- Robert M. Smith President, Chief Executive Officer and Chief Financial Officer 15 EX-27 2 FINANCIAL DATA SCHEDULE
9 1,000 3-MOS JUN-30-2000 JUL-01-1999 SEP-30-1999 2,110 1,338 0 0 29,664 0 0 86,289 732 122,771 102,186 0 2,029 5,815 0 0 0 12,741 122,771 1,668 542 11 2,221 1,215 1,289 932 1 0 625 378 273 0 0 273 .17 .17 3.18 99 193 0 0 733 2 0 732 0 0 732
-----END PRIVACY-ENHANCED MESSAGE-----