SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
Mark One
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
Commission File Number: 333-36465
UNITED TENNESSEE BANKSHARES, INC.
---------------------------------
(Exact Name of Small Business Issuer as Specified
in its Charter)
TENNESSEE REQUESTED
--------- ---------
(State or Other Jurisdiction of (I.R.S. Employer
Incorporation or Organization) Identification No.)
344 BROADWAY, NEWPORT, TENNESSEE 37821
-------------------------------- -----
(Address of Principal Executive Offices) (Zip Code)
Issuer's Telephone Number, Including Area Code: (423) 623-6088
--------------
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 ninety days: Yes [] No [X]
State the number of shares outstanding of each of the issuer's
classes of common stock as of the latest practicable date: 0
---
Transitional Small Business Disclosure Format (Check one):
Yes [ ] No [X]
CONTENTS
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of
September 30, 1997 (Unaudited) and December 31, 1996
Consolidated Statements of Income for the Three-Month
and Nine-Month Periods Ended September 30, 1997 and
1996 (Unaudited)
Consolidated Statements of Changes in Equity for the
Nine-Month Period Ended September 30, 1997 (Unaudited)
Consolidated Statements of Cash Flows for the Nine-Month
Periods Ended September 30, 1997 and 1996 (Unaudited)
Notes to Consolidated Financial Statements for the
Nine-Month Period Ended September 30, 1997 (Unaudited)
Item 2. Management's Discussion and Analysis or Plan of
Operation
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults upon Senior Securities
Item 4. Submission of Matters to a Vote of Security
Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
United Tennessee Bankshares, Inc. does not have any assets
or liabilities. It is expected to become the holding company
for Newport Federal Savings and Loan Association following
Newport Federal's pending conversion from mutual to stock form.
This report presents information about United Tennessee
Bankshares, Inc. and/or Newport Federal, as appropriate. For
additional information, including definitions of terms not
defined herein, see United Tennessee Bankshares, Inc.'s
Registration Statement on Form SB-2 (File No. 333-36465).
NEWPORT FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
AS OF SEPTEMBER 30, 1997 AND DECEMBER 31, 1996
September 30,
1997 December 31,
(Unaudited) 1996
------------- -------------
ASSETS (In thousands)
------
Cash and amounts due from depository
institutions $ 3,321 $ 2,889
Investment securities:
Available for sale, at fair value 12,906 11,689
Held to maturity, at amortized cost 1,058 1,212
Loans receivable, net 46,779 44,230
Premises and equipment, net 201 228
Foreclosed real estate - held for sale 60 --
Accrued interest receivable 332 294
Other assets 203 69
----------- -----------
Total assets $ 64,860 $ 60,611
=========== ===========
LIABILITIES AND EQUITY
----------------------
Liabilities:
Deposits $ 57,087 $ 53,767
Accrued interest payable 259 226
Deferred income taxes 553 484
Other liabilities 210 31
----------- -----------
Total liabilities 58,109 54,508
----------- -----------
Commitments and contingencies -- --
Equity:
Retained earnings 6,064 5,632
Net unrealized gain on investment
securities - net of taxes 687 471
----------- -----------
Total equity 6,751 6,103
----------- -----------
Total liabilities and equity $ 64,860 $ 60,611
=========== ===========
The accompanying notes are an integral part of these financial
statements.
NEWPORT FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTH AND NINE MONTH PERIODS ENDED
SEPTEMBER 30, 1997 AND 1996
Three Months Ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
-------- -------- -------- --------
(Unaudited - Dollars in thousands)
Interest income:
Loans $ 1,037 $ 969 $ 2,995 $ 2,772
Investment securities 239 196 677 529
Other interest - earning assets 39 34 108 73
-------- -------- -------- --------
Total interest income 1,315 1,199 3,780 3,374
Interest expense on deposits 688 631 1,992 1,766
-------- -------- -------- --------
Net interest income 627 568 1,788 1,608
Provision for loan losses 30 -- 120 --
-------- -------- -------- --------
Net interest income after provision
for loan losses 597 568 1,668 1,608
-------- -------- -------- --------
Noninterest income:
Deposit account service charges 17 20 34 60
Loan service charges and fees 22 15 50 42
Net gain (loss) on sales of investment
securities available for sale -- -- -- (4)
Other 3 8 8 19
-------- -------- -------- --------
Total noninterest income 42 43 92 117
-------- -------- -------- --------
Noninterest expense:
Compensation and benefits 188 122 635 366
Occupancy and equipment 31 29 111 106
Federal deposit insurance premiums 9 353 32 419
Data processing fees 31 31 80 79
Advertising and promotion 12 6 36 33
Net (gain) loss on foreclosed real estate (1) -- (1) 1
Other 33 71 135 168
-------- -------- -------- --------
Total noninterest expense 303 612 1,028 1,172
-------- -------- -------- --------
Income (loss) before income taxes (benefit) 336 (1) 732 553
Income taxes (benefit) 141 (21) 300 163
-------- -------- -------- --------
Net income $ 195 $ 20 $ 432 $ 390
======== ======== ======== ========
Earnings per share-primary and fully diluted N/A N/A N/A N/A
======== ======== ======== ========
Weighted average number of shares-primary
and fully diluted N/A N/A N/A N/A
======== ======== ======== ========
The accompanying notes are an integral part of these financial
statements.
NEWPORT FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
FOR THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1997
Net
Unrealized
Gain On
Retained Investment Total
Earnings Securities Equity
---------- ---------- ----------
(Unaudited - In thousands)
Balances, beginning of period $ 5,632 $ 471 $ 6,103
Net income 432 -- 432
Change in net unrealized gain on investment
securities -- 216 216
---------- ---------- ----------
Balances, end of period $ 6,064 $ 687 $ 6,751
========== ========== ==========
The accompanying notes are an integral part of these financial
statements.
NEWPORT FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
Nine Months Ended
September 30,
--------------------
1997 1996
-------- --------
(Unaudited - In thousands)
Operating Activities:
Net income $ 432 $ 390
-------- --------
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 120 --
Depreciation 36 36
Net (gain) loss on sales of foreclosed
real estate -- (5)
Federal home loan bank stock dividends (28) (26)
Net (gain) loss on sales of investment
securities available for sale -- 4
Deferred income taxes (benefit) (64) --
(Increase) Decrease in:
Accrued interest receivable (38) (90)
Other assets (134) (47)
Increase (Decrease) in:
Accrued interest payable 33 61
Other liabilities 179 (20)
-------- --------
Total adjustments 104 (87)
-------- --------
Net cash provided by operating activities 536 303
-------- --------
Investing Activities:
Purchases of investment securities available
for sale (2,497) (3,473)
Proceeds from sales of investment securities
available for sale -- 1,003
Proceeds from maturities of investment
securities available for sale 120 500
Principal payments received on investment
securities available for sale 1,536 1,057
Purchases of investment securities held to
maturity (138) --
Proceeds from maturities of investment
securities held to maturity 292 --
Net increase in loans (2,728) (3,491)
Purchases of plant and equipment, net (9) (22)
Proceeds from sales of foreclosed real estate -- --
-------- --------
Net cash provided by (used in) investing
activities (3,424) (4,426)
-------- --------
The accompanying notes are an integral part of these financial
statements.
NEWPORT FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
FOR THE NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 AND 1996
Nine Months Ended
September 30,
--------------------
1997 1996
-------- --------
(Unaudited - In thousands)
Financing Activities:
Net increase (decrease) in deposits $ 3,320 $ 5,078
-------- --------
Net increase (decrease) in cash and
cash equivalents 432 955
Cash and cash equivalents, beginning of period 2,889 1,832
-------- --------
Cash and cash equivalents, end of period $ 3,321 $ 2,787
-------- --------
Supplementary disclosures of cash flow
information:
Cash paid during the period for:
Interest $ 1,959 $ 1,705
Income taxes $ 295 $ 150
Supplementary disclosures of noncash
investing activities:
Sale of foreclosed real estate
by origination of mortgage loans $ -- $ 61
Acquisition of foreclosed real estate $ 60 $ 49
Change in unrealized gain on investment
securities available for sale $ 348 $ (53)
Change in deferred income taxes associated
with unrealized gain on investment
securities available for sale $ 132 $ (20)
Change in net unrealized gain on investment
securities available for sale $ 216 $ (33)
The accompanying notes are an integral part of these financial
statements.
NEWPORT FEDERAL SAVINGS AND LOAN ASSOCIATION AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS FOR
THE NINE MONTH PERIOD ENDED SEPTEMBER 30, 1997 (UNAUDITED)
Note 1 - United Tennessee Bankshares, Inc.
United Tennessee Bankshares, Inc. ("Company") was incorporated
under the laws of the State of Tennessee for the purpose of
becoming the holding company of Newport Federal Savings and Loan
Association ("Association"), in connection with the
Association's conversion from a federally chartered mutual
savings and loan association to a federally chartered capital
stock savings bank. On November 20, 1997, the Company commenced
a subscription offering of its shares in connection with the
conversion of the Association, which has not been completed. The
Company had no assets prior to the conversion, and as of
September 30, 1997 no stock had been issued as a result of the
subscription offering.
Note 2 - Basis of Presentation and Principles of Consolidation
The accompanying unaudited consolidated financial statements
have been prepared in accordance with the instructions to Form
10-QSB and on the same basis as the Association's audited
financial statements. In the opinion of management, all
adjustments, consisting of normal recurring accruals, necessary
to present fairly the financial position, results of operations,
and cash flows for the interim periods presented have been
included. The results of operations for such interim periods
are not necessarily indicative of the results expected for the
full year.
The consolidated financial statements include the accounts of
the Association and its wholly owned subsidiary, NFS Service
Corporation. The subsidiary was a service corporation whose
only asset was a $15,000 investment in Data Services Corporation
of Cincinnati, Ohio, which provides data processing services to
the Association. The subsidiary had liabilities of $698 payable
to the Association and shareholder's equity of $14,302 as of
each of the interim dates presented. Results of operations of
the subsidiary were $-0- for each of the interim periods
presented. After September 30, 1997 the subsidiary's assets and
liabilities were transferred to the Association and the
subsidiary was dissolved. All intercompany accounts have been
eliminated.
Note 3 - Earnings Per Share
As of September 30, 1997 the Association had issued no shares of
common stock. Therefore, the consolidated statements of income
do not disclose earnings per share as would otherwise be
required.
Note 4 - Stock Conversion
In May 1997, the board of directors of the Association approved
a plan of conversion from a mutual savings and loan association
to a capital stock savings bank and the concurrent formation of
a holding company. The conversion will be accomplished through
amendment of the Association's charter and the sale of the
holding company's common stock in an amount equal to the
appraised consolidated pro forma market value of the holding
company and the Association after giving effect to the
conversion.
At the time of the conversion, the Association will establish a
liquidation account in an amount equal to its capital as of the
date of the latest consolidated statement of financial condition
appearing in the final prospectus. The liquidation account will
be maintained for the benefit of eligible accountholders who
continue to maintain their accounts at the Association after the
conversion. The liquidation account will be reduced annually to
the extent that eligible accountholders have reduced their
qualifying deposits as of each anniversary date. Subsequent
increases will not restore an eligible accountholder interest in
the liquidation account. In the event of a complete
liquidation, each eligible accountholder 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.
Conversion costs are being deferred and will be deducted from
the proceeds of the shares sold in the conversion. If the
conversion is not completed, all costs will be charged to
expense. As of September 30, 1997 the amount of conversion
costs that have been incurred and deferred was $63,220.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF
OPERATION
GENERAL
The principal business of Newport Federal Savings and Loan
Association ("we," "us," etc.) consists of accepting deposits
from the general public through our main office and branch
office and investing those funds in loans secured by one- to
four-family residential properties located in our primary market
area. We also maintain a portfolio of investment securities and
originate a limited amount of commercial real estate loans and
consumer loans. Our investment securities portfolio consists of
U.S. Treasury notes and U.S. government agency securities, local
municipal bonds and mortgage-backed securities which are
guaranteed as to principal and interest by the FHLMC, GNMA or
FNMA. We also maintain an investment in Federal Home Loan Bank
of Cincinnati common stock and FHLMC preferred stock.
Our net income primarily depends on our net interest
income, which is the difference between interest income earned
on loans and investment securities and interest paid on
customers' deposits. Our net income is also affected by
noninterest income, such as service charges on customers'
deposit accounts, loan service charges and other fees, and
noninterest expense, primarily consisting of compensation
expense, deposit insurance and other expenses incidental to our
operations. Based on our review of our internal bookkeeping
practices and our conferences with our third party service
companies, we do not expect to incur significant additional
bookkeeping, data processing or other expenses, and in
particular we do not expect to encounter significant
difficulties with our data processing service provider, in
connection with issues related to the upcoming millennium (that
is, "Year 2000" issues).
Our operations and those of the thrift industry as a whole
are significantly affected by prevailing economic conditions,
competition and the monetary and fiscal policies of governmental
agencies. Our lending activities are influenced by demand for
and supply of housing and competition among lenders and the
level of interest rates in our market area. Our deposit flows
and costs of funds are influenced by prevailing market rates of
interest, primarily on competing investments, account maturities
and the levels of personal income and savings in our market
area.
The conversion will increase our capital by the amount of
the net proceeds, after deduction of conversion-related expenses
and the shares to be sold to the ESOP. Funds withdrawn from our
deposits will decrease our interest-bearing liabilities, and new
funds will increase our interest-earning assets. While we
expect these changes to increase our net interest income, we
also expect the conversion to increase our noninterest expenses
by increasing our compensation and other operating expenses,
particularly if the management recognition plan is implemented.
For additional information, see also our holding company's
Registration Statement on Form SB-2 (File No. 333-36465).
COMPARISON OF FINANCIAL CONDITION AT SEPTEMBER 30, 1997 AND
DECEMBER 31, 1996
Total assets grew from December 31, 1996 to September 30,
1997 as total assets increased $4.2 million, or 7%, from $60.6
million at December 31, 1996 to $64.9 million at September 30,
1997. Investment securities available for sale increased $1.2
million or 10% from December 31, 1996 to September 30, 1997,
while investment securities held to maturity decreased slightly.
We purchased investment securities with funds received from
increases in deposit accounts and because of a slight reduction
in loan demand.
Loans receivable increased slightly from December 31, 1996
to September 30, 1997 as originations exceeded repayments for
the period by approximately $2.5 million. Our market area has
experienced an increase in refinancing activity during this
period.
Total deposits increased $3.3 million or 6% from $53.8
million at December 31, 1996 to $57.1 million at September 30,
1997. The growth has been primarily due to larger institutions
closing branches in the area and we have benefitted from new
customer growth.
Our equity increased $648,000 from $6,103,000 at December
31, 1996 to $6,751 at September 30, 1997. The increase was due
to $432,000 of net income and an increase in our net unrealized
gain on investment securities.
COMPARISON OF RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED
SEPTEMBER 30, 1997 AND 1996
Net income for the nine months ended September 30, 1997 was
$432,000, compared with $390,000 for the same period in 1996.
As discussed in more detail below, the $42,000 increase in net
income primarily resulted from a $180,000 increase in net
interest income, offset by $120,000 of additional provisions for
loan losses, a $144,000 decrease in noninterest expense and a
$137,000 increase in income tax expense.
Interest Income. Interest income increased $406,000 from
$3.4 million for the nine months ended September 30, 1996 to
$3.8 million for the nine months ended September 30, 1997. The
increase in total interest income was primarily due to a $1.9
million increase in the average balance of interest-earning
assets. The increase in the average balance of interest-earning
assets was primarily due to increases in loans funded with
similar increases in deposits. The average yield on
interest-earning assets increased slightly from 8.01% for the
nine months ended September 30, 1996 to 8.18% for the same
period in 1997.
The primary source of interest income during the nine
months ended September 30, 1997 and 1996 was interest earned on
loans receivable. Interest income from loans receivable
increased $223,000 from $2.8 million for the nine months ended
September 30, 1996 to $3.0 million for the same period in 1997.
The increase was due to the $1.9 million increase in the average
balance of loans receivable from $43.6 million for nine months
ended September 30, 1996 to $45.5 million for the nine months
ended September 30, 1997. The increase in interest income on
loans receivable was also due to the 9 basis point increase in
the average yield earned on loans receivable from 8.41% for the
nine months ended September 30, 1996 to 8.50% for the same
period in 1997. Interest income from investment securities
increased $145,000 from $529,000 for the nine months ended
September 30, 1996 to $674,000 for the same period in 1997. The
increase was due to a $3.1 million increase in the average
balance of investment securities coupled with a 2 basis point
decrease in the average yield earned on investment securities.
Other interest-earning assets also had slight increases in both
the dollar volume and average yields earned on those assets for
the nine months ended September 30, 1996 compared with the same
period in 1997.
Interest Expense. Interest expense consists of interest
paid on customers' deposits as we have had no borrowed funds.
Interest expense increased $226,000 from $1.8 million for the
nine months ended September 30, 1996 to $2.0 million for the
nine months ended September 30, 1997. The increase in interest
expense on deposits was primarily due to the $4.6 million
increase in the average balance of deposits. The average rate
paid on deposits also decreased slightly from 4.81% for the nine
months ended September 30, 1996 to 4.79% for the same period in
1997.
Net Interest Income. Net interest income was $1.8 million
and $1.6 million for the nine months ended September 30, 1997
and 1996, respectively. The increase in net interest income,
was due to the $5.0 million increase in the average balance of
interest-earning assets versus the $4.6 million increase in the
average balance of interest-bearing liabilities. Our net
interest rate spread remained relatively constant at 3.39% and
3.37% for the nine month periods ended September 30, 1997 and
1996, respectively.
Provision for Loan Losses. We expensed $120,000 in loan
loss provision for the nine months ended September 30, 1997,
including $30,000 for the three months then ended, due in part
to the continued growth in all categories of our loans
receivable, which caused us to increase our loan loss reserve
due to the inherent risks in all loans, especially new,
unseasoned, ones, and due in part to increases in all categories
of our nonperforming loans, which caused us to increase our loan
loss reserve due to the higher risks in these deteriorated
loans. We did not expense any provision for loan losses for the
nine months ended September 30, 1996, based on our analysis as
of that date, as described below.
Provision for loan losses is based on our analysis of
various factors which affect the loan portfolio and our desire
to maintain an allowance for loan losses to provide for losses.
In establishing the allowance for loan losses, we recognize that
a substantial portion of our loans, including loans 90 or more
days past due, are secured by mortgages on residential real
estate. At September 30, 1997, the allowance for loan losses
provided coverage of 127% of loans 90 or more days past due.
Nonperforming assets as a percentage of total assets were .75%
at September 30, 1997.
Ultimate losses may vary from their estimates; however,
estimates are reviewed periodically and, as adjustments become
necessary, they are reported in earnings in the periods in which
they become known. In addition, various regulatory agencies
periodically review our allowance for loan losses and may
require us to recognize additions to the allowance based on
judgments about information available to them at the time of
their review.
Noninterest Income. Noninterest income for the nine months
ended September 30, 1997 and 1996 was $92,000 and $117,000,
respectively. The decrease in noninterest income was primarily
due to a $23,000 reduction in deposit account service charges.
This reduction was a one-time adjustment on service charge
accounts and management anticipates that deposit account service
charges will return to historical levels in the future.
Noninterest Expense. Noninterest expense for the nine
months ended September 30, 1997 and 1996 totaled $1,028,000 and
$1,172,000, respectively. The $144,000 net decrease in
noninterest expense was primarily due to a $204,000 increase in
compensation expense partially offset by a $360,000 decrease in
federal deposit insurance premiums. The $204,000 increase in
compensation expense was due to the implementation of a
long-term incentive plan for our Board of Directors and general
salary increases. The decrease in federal deposit insurance
premiums is due to a decrease in the assessment rate imposed by
the FDIC in 1997 after a one- time special assessment of
$317,000 in 1996.
Our operating efficiency ratio (noninterest expense divided
by the total of net interest income and noninterest income) for
the nine months ended September 30, 1997 and 1996 was 58.41% and
67.96%. The lower operating efficiency ratio for 1997 was due
to one-time special FDIC assessment in 1996 which was partially
offset by the expense recognized upon the implementation of our
long-term incentive plan in 1997. Excluding these expenses, our
adjusted operating efficiency ratio would have been improved
slightly.
Income Taxes. Our effective tax rates for the nine months
ended September 30, 1997 and 1996 were 41% and 30%,
respectively. The higher effective tax rate for the nine months
ended September 30, 1997 was due to the effect of utilizing the
six-year moving average method to determine our tax bad debt
deductions and other changes as mandated by the Small Business
Job Protection Act that Congress enacted in late 1996. We
believe that our effective tax rate will be approximately 40% in
future years. Our effective tax rate is greater than the
statutory federal income tax rate of 34% primarily due to a 6%
state excise tax rate.
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
None.
Item 3. Defaults upon Senior Securities
None.
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
Exhibits:
The following exhibits are filed as a part of this report:
2 1/ Plan of Conversion of Newport Federal Savings
and Loan Association
3.1 1/ Charter of United Tennessee Bankshares, Inc.
3.2 1/ Bylaws of United Tennessee Bankshares, Inc.
4 1/ Form of Stock Certificate of United Tennessee
Bankshares, Inc.
10.1 1/ Form of United Tennessee Bankshares, Inc. Stock
Option and Incentive Plan
10.2 1/ Form of United Tennessee Bankshares, Inc.
Management Recognition Plan
10.3(a) 1/ Employment Agreements between Newport Federal
Savings and Loan Association and Richard G.
Harwood, Nancy L. Bryant and Peggy Holston
10.3(b) 1/ Forms of Guarantee Agreements between United
Tennessee Bankshares, Inc. and Richard G.
Harwood, Nancy L. Bryant and Peggy Holston
10.4 1/ Newport Federal Savings and Loan Association
Long-Term Incentive Plan
10.5 1/ Newport Federal Savings and Loan Association
Deferred Compensation Plan
27 Financial Data Schedule
_______________
1/ Incorporated by reference to United Tennessee Bankshares,
Inc.'s Registration Statement on Form SB-2, File No. 333-36465.
Reports on Form 8-K:
United Tennessee Bankshares, Inc. did not file a Current
Report on Form 8-K during the quarter covered by this report.
SIGNATURES
In accordance with the requirements of the Exchange Act,
the registrant caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
UNITED TENNESSEE BANKSHARES, INC.
Registrant
Date: December 23, 1997 /s/ Richard G. Harwood
----------------------
Richard G. Harwood
President and Chief Executive Officer
(Duly Authorized Representative and
Principal Financial and Accounting
Officer)