FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED MARCH 31, 1997
OR
[ ] TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from _______________ to _______________
Commission File No. 333-10347
MARKET FINANCIAL CORPORATION
_______________________________________________________
(Exact name of registrant as specified in its charter)
Ohio 31-1462464
____________________________ ______________________
(State or other jurisdiction (I.R.S. Employer
of incorporation of Identification Number)
organization)
7522 Hamilton Avenue
Mt. Healthy, OH 45231
_____________________ __________
(Address of principal (Zip Code)
executive office)
Registrant's telephone number, including area code: (513) 521-9772
Check whether the Registrant (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 _____ No __X__
As of May 9, 1997, the latest practicable date, 1,335,725 common shares of the
registrant, no par value, were issued and outstanding.
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INDEX
MARKET FINANCIAL CORPORATION
Page
PART I - FINANCIAL INFORMATION
Consolidated Statements of Financial Condition 3
Consolidated Statements of Earnings 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 7
Management's Discussion and Analysis of Financial
Condition and Results of Operations 10
PART II - OTHER INFORMATION 13
SIGNATURES 14
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Market Financial Corporation
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, September 30,
1997 1996
-------- --------
ASSETS (In thousands)
Cash and due from banks $ 879 $ 512
Federal funds sold 12,020 2,627
Interest-bearing deposits in other financial institutions 467 943
-------- -------
Cash and cash equivalents 13,366 4,082
Certificates of deposit in other financial institutions 6,640 7,040
Investment securities - at amortized cost, approximate
market value of $7,678 and $9,071 at March 31, 1997,
and September 30, 1996 7,690 9,062
Investment securities designated as available for sale - 795 712
at market
Mortgage-backed securities - at cost, approximate market
value of $1,521 and $1,612 at March 31, 1997
and September 30, 1996 1,482 1,549
Loans receivable - net 25,409 21,996
Office premises and equipment - at depreciated cost 155 168
Federal Home Loan Bank stock - at cost 376 364
Accrued interest receivable 315 339
Prepaid expenses and other assets 79 196
Prepaid federal income taxes 36 39
-------- -------
Total assets $ 56,343 $45,547
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits $ 36,114 $37,282
Advances by borrowers for taxes and insurance 55 50
Accrued interest payable 129 117
Other liabilities 133 273
Deferred federal income taxes 419 311
-------- -------
Total liabilities 36,850 38,033
Shareholders' equity
Preferred stock - 1,000,000 shares without par value
authorized; no shares issued and outstanding -- --
Common stock - 4,000,000 shares without par value
authorized; 1,335,725 shares issued and outstanding at -- --
March 31, 1997
Additional paid-in capital 12,832 --
Shares acquired by Employee Stock Ownership Plan (ESOP) (1,069) --
Retained earnings - substantially restricted 7,224 7,063
Unrealized gain on securities designated as available
for sale, net of related tax effects 506 451
-------- -------
Total shareholders' equity 19,493 7,514
-------- -------
Total liabilities and shareholders' equity $ 56,343 $45,547
======== =======
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Market Financial Corporation
CONSOLIDATED STATEMENTS OF EARNINGS
Six months ended March 31, Three months ended March 31,
1997 1996 1997 1996
-------- -------- -------- --------
(In thousands)
Interest income
Loans $ 961 $ 961 $501 $474
Mortgage-backed securities 67 87 33 39
Investment securities 249 270 102 130
Interest-bearing deposits and other 324 318 167 158
------ ------ ---- ----
Total interest income 1,601 1,636 803 801
Interest expense
Deposits 854 903 428 451
------ ------ ---- ----
Net interest income 747 733 375 350
Provision for losses on loans -- 13 -- 2
------ ------ ---- ----
Net interest income after
provision for 747 720 375 348
losses on loans
Other operating income 3 4 1 2
General, administrative and other
expense
Employee compensation and benefits 291 231 149 105
Occupancy and equipment 52 57 26 30
Federal deposit insurance premiums 23 38 1 16
Franchise taxes 54 49 30 22
Other operating 86 87 38 41
------ ------ ---- ----
Total general, administrative and
other expense 506 462 244 214
------ ------ ---- ----
Earnings before income taxes 244 262 132 136
Federal income taxes
Current 3 87 32 8
Deferred 80 6 13 39
------ ------ ---- ----
Total federal income taxes 83 93 45 47
------ ------ ---- ----
Net Earnings $ 161 $ 169 $ 87 $ 89
====== ====== ==== ====
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Market Financial Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended March 31,
1997 1997
-------- --------
(In thousands)
Cash flows from operating activities:
Net earnings for the period $ 161 $ 169
Adjustments to reconcile net earnings
to net cash provided by (used in)
operating activities:
Amortization of premiums and
discounts on investments and
mortgage-backed securities, net (28) (19)
Depreciation and amortization 15 19
Amortization of deferred loan
origination fees (12) (16)
Provision for losses on loans -- 13
Federal Home Loan Bank stock (12) (12)
dividends
Increase (decrease) in cash due to changes
in:
Accrued interest receivable 24 11
Accrued interest payable 12 15
Prepaid expenses and other assets 117 (40)
Other liabilities (140) 1
Federal income taxes
Current 3 6
Deferred 80 6
-------- -------
Net cash provided by operating
activities 220 153
Cash flows provided by (used in)
investing activities:
Principal repayments on
mortgage-backed securities 67 252
Proceeds from maturity of investment
securities 2,400 2,000
Loan disbursements (4,612) (1,166)
Principal repayments on loans 1,211 1,580
Purchase of investment securities
designated as held to maturity (1,000) (2,057)
Purchase of office equipment (2) (22)
Decrease in certificates of deposits
in other financial institutions - 400 299
-------- -------
net
Net cash provided by (used in)
investing activities (1,536) 886
Cash flows provided by (used in) financing
activities:
Net increase (decrease) in deposits (1,168) 469
Advances by borrowers for taxes and
insurance 5 5
Disbursement of loan to ESOP (1,069) --
Net proceeds from issuance of common
shares 12,832 --
-------- -------
Net cash provided by financing
activities 10,600 474
-------- -------
Net increase in cash and cash
equivalents (balance carried
forward) 9,284 1,513
-------- -------
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Market Financial Corporation
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six months ended March 31,
1997 1997
-------- --------
(In thousands)
Net increase in cash and cash
equivalents (balance brought
forward) $ 9,284 $ 1,513
Cash and cash equivalents at beginning
of period 4,082 4,013
-------- -------
Cash and cash equivalents at end of
period $ 13,366 $ 5,526
======== =======
Supplemental disclosure of cash flow
information: Cash paid during the
period for:
Federal income taxes $ -- $ 51
======== =======
Interest on deposits $ 842 $ 887
======== =======
Supplemental disclosure of noncash
investing activities:
Unrealized gain on securities
designated as available for sale,
net of related tax effects $ 55 $ 78
======== =======
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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARKET FINANCIAL CORPORATION
For the three and six month periods ended March 31, 1997 and 1996
On April 16, 1996, the Board of Directors of The Market Building and
Saving Company (the "Association") unanimously adopted a Plan of Conversion to
convert the Association from a mutual savings and loan association under Ohio
law to a stock savings and loan association under Ohio law with the concurrent
formation of the newly chartered holding company, Market Financial Corporation
("MFC"). The conversion was accomplished through amendment of the Association's
Articles of Incorporation and Constitution and the sale of MFC's common shares
in an amount equal to the pro forma market value of the Association after giving
effect to the conversion. A subscription offering of the shares of MFC to the
Association's members and to an employee stock benefit plan was conducted.
The conversion was completed on March 27, 1997, and resulted in the
issuance of 1,335,725 common shares of MFC which, after consideration of
offering expenses totaling approximately $525,000 and shares purchased by the
ESOP of approximately $1.1 million, resulted in net proceeds of $11.8 million.
At the time of conversion, the Association established a liquidation
account in an amount equal to its regulatory capital as of September 30, 1996.
The liquidation account will be maintained for the benefit of eligible
depositors who continue to maintain their accounts at the Association after the
conversion. The liquidation account will be reduced annually to the extent
eligible depositors have reduced their qualifying deposits. Subsequent increases
will not restore an eligible account holder's interest in the liquidation
account. In the event of complete liquidation, and only in such event, each
eligible depositor will be entitled to receive a distribution from the
liquidation account in an amount proportionate to the current adjusted
qualifying balances for accounts then held. The Association may not pay
dividends that would reduce shareholders' equity below the required liquidation
account balance.
Under OTS regulations, limitations have been imposed on all "capital
distributions", including cash dividends by savings institutions. The regulation
establishes a three-tiered system of restrictions, with the greatest flexibility
afforded to thrifts which are both well-capitalized and given favorable
qualitative examination ratings by the OTS.
The consolidated financial statements for periods prior to March 27,
1997, contained herein, are those of the Association prior to the completion of
its conversion to stock form.
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 complete presentation of
consolidated 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 financial statements
and notes thereto of The Market Building and Saving Company for the year ended
September 30, 1996. However, in the opinion of management, all adjustments
(consisting of only normal recurring accruals) which are necessary for fair
presentation of the consolidated financial statements have been included. The
results of operations for the three month and six month periods ended March 31,
1997 and 1996, are not necessarily indicative of the results which may be
expected for an entire fiscal year.
2. Principles of Consolidation
The accompanying financial statements include the accounts of MFC and
the Association. All significant intercompany items have been eliminated.
3. Effects of Recent Accounting Pronouncements
In May 1995, the FASB issued SFAS No. 122 "Accounting for Mortgage
Servicing Rights," which requires that the Association recognize as separate
assets rights to service mortgage loans for others, regardless of how those
servicing rights are acquired. An institution that acquires mortgage servicing
rights through either the purchase or origination of mortgage loans and sells
those loans with servicing rights retained would allocate some of the cost of
the loans to the mortgage servicing rights. SFAS No. 122 requires that
securitizations of mortgage loans be accounted for as sales of mortgage loans
and acquisitions of mortgage-backed securities. Additionally, SFAS No. 122
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requires that capitalized mortgage servicing rights and capitalized excess
servicing receivables be assessed for impairment. Impairment is measured based
on fair value. SFAS No. 122 was effective for fiscal years beginning after
December 15, 1995 (October 1, 1996, as to the Association), to transactions in
which an entity acquires mortgage servicing rights and to impairment evaluations
of all capitalized mortgage servicing rights and capitalized excess servicing
receivables whenever acquired. Retroactive application is prohibited, and
earlier adoption is encouraged. Management adopted SFAS No. 122 effective
October 1, 1996, as required, without material effect on the Association's
financial position or results of operations.
In October 1995, the FASB issued SFAS No. 123, "Accounting for
Stock-Based Compensation," establishing financial accounting and reporting
standards for stock-based employee compensation plans. SFAS No. 123 encourages
all entities to adopt a new method of accounting to measure the compensation
cost of all employee stock compensation plans based on the estimated fair value
of the award at the date it is granted. Companies are, however, allowed to
continue to measure compensation cost for those plans using the intrinsic value
based method of accounting, which generally does not result in compensation
expense recognition for most plans. Companies that elect to remain with the
existing accounting are required to disclose in a footnote to the financial
statements pro forma net earnings and, if presented, earnings per share, as if
SFAS No. 123 had been adopted. The accounting requirements of SFAS No. 123 are
effective for transactions entered into during fiscal years that begin after
December 15, 1995; however, companies are required to disclose information for
awards granted in their first fiscal year beginning after December 15, 1994.
Management has determined that MFC will continue to account for stock-based
compensation pursuant to Accounting Principles Board Opinion No. 25, and
therefore, the disclosure provisions of SFAS No. 123 will have no effect on its
consolidated financial condition or results of operations.
In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers of
Financial Assets, Servicing Rights and Extinguishment of Liabilities," that
provides accounting guidance on transfers of financial assets, servicing of
financial assets and extinguishment of liabilities. SFAS No. 125 introduces an
approach to accounting for transfers of financial assets that provides a means
of dealing with more complex transactions in which the seller disposes of only a
partial interest in the assets, retains rights or obligations, makes use of
special purpose entities in the transaction, or otherwise has continuing
involvement with the transferred assets. The new accounting method, the
financial components approach, provides that the carrying amount of the
financial assets transferred be allocated to components of the transaction based
on their relative fair values. SFAS No. 125 provides criteria for determining
whether control of assets has been relinquished and whether a sale has occurred.
If the transfer does not qualify as a sale, it is accounted for as a secured
borrowing. Transactions subject to the provisions of SFAS No. 125 include, among
others, transfers involving repurchase agreements, securitizations of financial
assets, loan participations, factoring arrangements and transfers of receivables
with recourse.
An institution that undertakes an obligation to service financial assets
recognizes either a servicing asset or liability for the servicing contract
(unless related to a securitization of assets, and all the securitized assets
are retained and classified as held to maturity). A servicing asset or liability
that is purchased or assumed is initially recognized at its fair value.
Servicing assets and liabilities are amortized in proportion to and over the
period of estimated net servicing income or net servicing loss and are subject
to subsequent assessments for impairment based on fair value.
SFAS No. 125 provides that a liability is removed from the balance sheet
only if the debtor either pays the creditor and is relieved of its obligations
for the liability or is legally released from being the primary obligor. SFAS
No. 125 supersedes SFAS No. 122 and is effective for transfers and servicing of
financial assets and extinguishment of liabilities occurring after December 31,
1997, and is to be applied prospectively. Earlier or retroactive application is
not permitted. Management does not believe that the adoption of SFAS No. 125
will have a material adverse effect on the Association's financial position or
results of operations.
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share," which
requires companies to present basic earnings per share and, if applicable,
diluted earnings per share, instead of primary and fully diluted earnings per
share, respectively. Basic earnings per share is computed without including
potential common shares, i.e., no dilutive effect. Diluted earnings per share is
computed taking into consideration common shares outstanding and dilutive
potential common shares, including options, warrants, convertible securities and
contingent stock agreements. SFAS No. 128 is effective for periods ending after
December 15, 1997. Early application is not permitted. The provisions of SFAS
No. 128 are not applicable to MFC's three month and six month periods ended
March 31, 1997 and 1996, as the conversion was completed in March 1997.
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4. Pending Legislative Changes
Congress has enacted legislation that would merge the Savings
Association Insurance Fund (the "SAIF") and the Bank Insurance Fund (the "BIF")
on January 1, 1999. The legislation currently provides for the elimination of
the thrift charter or separate thrift regulation under federal law prior to the
merger of the deposit insurance funds. The Association then might be regulated
as a bank under federal law and subject to the more restrictive activity limits
imposed on national banks.
5. Earnings Per Share
The provisions of Accounting Principles Board Opinion No. 15 "Earnings
Per Share," are not applicable to the six and three month periods ended March
31, 1997 and 1996, as the conversion from mutual to stock form was completed in
March 1997.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
MARKET FINANCIAL CORPORATION
In addition to historical information contained herein, the following
discussion contains forward-looking statements that involve risks and
uncertainties. Economic circumstances, the Association's operations and 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 Association's market area generally.
Some of the forward-looking statements included herein are the
statements regarding management's determination of the amount of allowance for
losses on loans, the adequacy of collateral on nonperforming loans, legislative
changes with respect to the federal thrift charter and the effect of certain
accounting pronouncements.
Discussion of Financial Condition Changes from September 30, 1996 to March 31,
1997
The Association's assets at March 31, 1997, totaled approximately $56.3
million, a $10.8 million, or 23.7%, increase over the $45.5 million total at
September 30, 1996. The increase was funded through the proceeds of the issuance
of common shares of MFC in March of 1997.
Liquid assets (cash and cash equivalents, certificates of deposit and
investment securities) totaled $28.5 million at March 31, 1997, an increase of
$7.6 million over the total at September 30, 1996. This increase resulted
primarily from the net proceeds from the offering of MFC common shares in March
1997, which was partially offset by the use of liquid assets to fund loan
originations during the six months ended March 31, 1997. Repayments from
mortgage-backed securities also provided funds for the growth in loans during
the period.
Loans receivable totaled $25.4 million at March 31, 1997, an increase of
$3.4 million, or 15.5%, over September 30, 1996. This increase resulted
primarily from loan originations of $4.6 million, which exceeded principal
repayments of $1.2 million. The Association's allowance for loan losses totaled
$52,000 at March 31, 1997, and September 30, 1996. The allowance represented
.20% and .24% of total loans at March 31, 1997, and September 30, 1996.
Nonperforming loans totaled $500,000 and $139,000, or 1.97% and .63% of total
loans, at March 31, 1997, and September 30, 1996, respectively. The increase of
$361,000 in nonperforming loans was primarily attributable to a nonresidential
real estate loan with an outstanding balance of $325,000. Management believes,
however, that the collateral on such property is adequate and anticipates no
loss on this loan.
Although management believes that its allowance for loan losses at March
31, 1997, was adequate based upon the available facts and circumstances, there
can be no assurances that additions to such allowance will not be necessary in
future periods, which could adversely affect the Association's results of
operations.
Deposits totaled $36.1 million at March 31, 1997, a decrease of $1.2
million, or 3.1%, from the total at September 30, 1996, primarily as a result of
depositors withdrawing funds to purchase common shares in the conversion. At
March 31, 1997, certificates of deposit that will mature within one year
accounted for 52.7% of the Association's deposit liabilities.
Shareholders' equity increased $12.0 million, or 159.4%, as a result of
net conversion proceeds of $12.8 million and net earnings of $161,000 for the
six months ended March 31, 1997, which were partially offset by the Market
Financial Corporation Employee Stock Ownership Plan (the "ESOP") purchase of MFC
common shares totaling $1.1 million.
The Association is required to meet each of three minimum capital
standards promulgated by the Office of Thrift Supervision (the "OTS"),
hereinafter described as the tangible capital requirement, the core capital
requirement and the risk-based capital requirement. The tangible capital
requirement provides for the maintenance of shareholders' equity less all
intangible assets equal to 1.5% of adjusted total assets. The core capital
requirement provides for the maintenance of tangible capital plus certain forms
of supervisory goodwill equal to 3% of adjusted total assets, while the
risk-based capital requirement mandates maintenance of core capital plus general
loan loss allowances equal to 8% of risk-weighted assets as defined by OTS
regulations. As of March 31, 1997, the Association's tangible and core capital
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totaled $12.6 million, or 22.6%, of adjusted total assets, which exceeded the
minimum requirements of $834,000 and $1.7 million by $11.7 million and $10.9
million, respectively. As of March 31, 1997, the Association's risk-based
capital was $12.6 million, or 68.8% of risk-weighted assets, exceeding the
minimum requirement by $11.2 million.
Comparison of Operating Results for the Three-Month Periods Ended March 31, 1997
and 1996
General. Net earnings totaled $87,000 for the three months ended March
31, 1997, a $2,000, or 2.2%, decrease from the $89,000 of net earnings recorded
for the three months ended March 31, 1996. The decrease in earnings resulted
primarily from a $30,000 increase in general, administrative and other expense,
which was partially offset by a $25,000 increase in net interest income, a
$2,000 decrease in the provision for losses on loans and a $2,000 decrease in
the provision for federal income taxes.
Net Interest Income. Interest income increased by $2,000, or .2%, for
the three months ended March 31, 1997, compared to the three months ended March
31, 1996. The increase resulted primarily from an increase in the weighted
average balance of loans outstanding during the period. Interest expense on
deposits decreased by $23,000, or 5.1%, due primarily to a decrease in the
deposit portfolio, resulting primarily from customers' use of deposits to
purchase common shares in the conversion in March 1997, coupled with a decrease
in the cost of deposits. Net interest income increased by $25,000, or 7.1%, for
the three months ended March 31, 1997, compared to the same quarter in 1996.
Provision for Losses on Loans. A provision for losses on loans is
charged to earnings to bring the total allowance to a level considered
appropriate by management based on historical experience, the volume and type of
lending conducted by the Association, the status of past due principal and
interest payments, general economic conditions, particularly as such conditions
relate to the Association's market area, and other factors related to the
collectibility of the Association's loan portfolio. As a result of such
analysis, management decided no additional provision for losses on loans was
necessary during the quarter ended March 31, 1997. There can be no assurance,
however, that the allowance for loan losses of the Association will be adequate
to cover losses on nonperforming assets in the future.
Other Operating Income. Other operating income, primarily service fees
on money orders and travelers' checks, totaled $1,000 and $2,000 for the
three-month periods ended March 31, 1997 and 1996, respectively.
General, Administrative and Other Expense. General, administrative and
other expense increased by $30,000, or 14.0%, for the quarter ended March 31,
1997, compared to the same quarter in 1996. The increase resulted primarily from
a $44,000, or 41.9%, increase in employee compensation and benefits due to
increased staffing and normal merit increases, which was partially offset by a
$15,000, or 93.8%, decrease in federal deposit insurance premiums..
Federal Income Tax. The provision for federal income taxes totaled
$45,000 for the three months ended March 31, 1997, compared to $47,000 for the
1996 quarter. The $2,000, or 4.3%, reduction resulted from a $4,000, or 2.9%,
decline in earnings before taxes. The effective tax rates were 34.1% and 34.6%
for the three months ended March 31, 1997 and 1996, respectively.
Comparison of Operating Results for the Six-Month Periods Ended March 31, 1997
and 1996
General. Net earnings totaled $161,000 for the six months ended March
31, 1997, an $8,000, or 4.7%, decrease from the $169,000 of net earnings
recorded for the six months ended March 31, 1996. The decrease in earnings
resulted primarily from a $44,000 increase in general, administrative and other
expense, which was partially offset by a $14,000 increase in net interest
income, a $13,000 decrease in the provision for losses on loans and a $10,000
decrease in the provision for federal income taxes.
Net Interest Income. Interest income decreased by $35,000, or 2.1%, for
the six months ended March 31, 1997, compared to the six months ended March 31,
1996. The decrease resulted primarily from a decrease in the weighted average
balances of mortgage-backed securities and investment securities during the
period. Interest expense on deposits decreased by $49,000, or 5.4%, due
primarily to a decrease in the deposit portfolio, due to customers' use of
deposits to purchase common shares in the conversion in March 1997, coupled with
a decrease in the cost of deposits. Net interest income increased by $14,000, or
1.9%, for the six months ended March 31, 1997, compared to the same period in
1996.
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Provision for Losses on Loans. A provision for losses on loans is
charged to earnings to bring the total allowance to a level considered
appropriate by management based on historical experience, the volume and type of
lending conducted by the Association, the status of past due principal and
interest payments, general economic conditions, particularly as such conditions
relate to the Association's market area, and other factors related to the
collectibility of the Association's loan portfolio. As a result of such
analysis, management decided no additional provision for losses on loans was
necessary during the six months ended March 31, 1997. There can be no assurance,
however, that the allowance for loan losses of the Association will be adequate
to cover losses on nonperforming assets in the future.
Other Operating Income. Other operating income, primarily service fees
on money orders and travelers' checks, totaled $3,000 and $4,000 for the
six-month periods ended March 31, 1997 and 1996, respectively.
General, Administrative and Other Expense. General, administrative and
other expense increased by $44,000, or 9.5%, for the six months ended March 31,
1997, compared to the same period in 1996. The increase resulted primarily from
a $60,000, or 26.0%, increase in employee compensation and benefits, due to
increased staffing and normal merit increases, which was partially offset by a
$15,000, or 39.5%, decrease in federal deposit insurance premiums.
Federal Income Tax. The provision for federal income taxes totaled
$83,000 for the six months ended March 31, 1997, compared to $93,000 for the
1996 period. The $10,000, or 10.8%, reduction resulted from an $18,000, or 6.9%,
decline in earnings before taxes. The effective tax rates were 34.0% and 35.5%
of the six months ended March 31, 1997 and 1996, respectively.
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PART II
MARKET FINANCIAL CORPORATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Materially Important Events
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
Exhibit 27 - Financial Data Schedule.
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SIGNATURES
MARKET FINANCIAL CORPORATION
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: May 13, 1997 By: /s/ John T. Larimer
________________________________
John T. Larimer, President and
Chief Executive Officer
Date: May 13, 1997 By: /s/ Julie M. Bertsch
________________________________
Julie M. Bertsch