UNITED STATES
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 March 31, 2005
[_] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from __________ to ____________.
Commission File Number 0-22223
-------
PEOPLES-SIDNEY FINANCIAL CORPORATION
------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 31-1499862
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
101 E. Court Street, Sidney, Ohio 45365
---------------------------------------
(Address of principal executive offices)
(937) 492-6129
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months, and (2) has been
subject to such filing requirements for the past 90 days.
Yes [X] No [_]
As of May 10, 2005, the latest practicable date, 1,432,648 shares of the
issuer's common shares, $.01 par value, were issued and outstanding.
Transitional Small Business Disclosure Format (Check One):
Yes [_] No [X]
1.
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PEOPLES-SIDNEY FINANCIAL CORPORATION
INDEX
Page
----
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets.................................................... 3
Consolidated Statements of Income ............................................. 4
Consolidated Statements of Comprehensive Income................................ 5
Condensed Consolidated Statements of Changes in Shareholders' Equity........... 6
Consolidated Statements of Cash Flows ......................................... 7
Notes to Consolidated Financial Statements .................................... 8
Item 2. Management's Discussion and Analysis........................................... 15
Item 3. Controls and Procedures........................................................ 22
Part II - Other Information
Item 1. Legal Proceedings.............................................................. 23
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.................... 23
Item 3. Defaults Upon Senior Securities................................................ 23
Item 4. Submission of Matters to a Vote of Security Holders............................ 23
Item 5. Other Information.............................................................. 23
Item 6. Exhibits....................................................................... 23
SIGNATURES ................................................................................ 24
INDEX TO EXHIBITS.......................................................................... 25
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2.
PEOPLES-SIDNEY FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
- -------------------------------------------------------------------------------------------
Item 1. Financial Statements
March 31, June 30,
2005 2004
---- ----
(Unaudited)
ASSETS
Cash and due from financial institutions $ 1,318,606 $ 1,327,745
Interest-bearing deposits in other financial institutions 3,936,307 4,705,943
Overnight deposits -- 4,000,000
------------- -------------
Total cash and cash equivalents 5,254,913 10,033,688
Securities available for sale 5,342,490 5,288,280
Federal Home Loan Bank stock 1,653,800 1,601,400
Loans, net of allowance of $808,000 and $752,900 120,694,309 115,651,910
Accrued interest receivable 757,819 670,521
Premises and equipment, net 2,098,319 2,124,986
Real estate owned -- 99,085
Other assets 312,636 301,160
------------- -------------
Total assets $ 136,114,286 $ 135,771,030
============= =============
LIABILITIES
Deposits $ 87,108,703 $ 86,764,253
Borrowed funds 31,074,129 31,140,388
Accrued interest payable and other liabilities 280,001 435,476
------------- -------------
Total liabilities 118,462,833 118,340,117
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 500,000 shares
authorized, none issued and outstanding -- --
Common stock, $.01 par value, 3,500,000 shares
authorized, 1,785,375 shares issued 17,854 17,854
Additional paid-in capital 10,778,781 10,748,851
Retained earnings 11,694,378 11,642,982
Treasury stock, 352,727 shares, at cost (4,113,716) (4,113,716)
Unearned employee stock ownership plan shares (623,507) (727,121)
Accumulated other comprehensive income (102,337) (137,937)
------------- -------------
Total shareholders' equity 17,651,453 17,430,913
------------- -------------
Total liabilities and shareholders' equity $ 136,114,286 $ 135,771,030
============= =============
- -------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
3.
PEOPLES-SIDNEY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
- -------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
--------- ---------
2005 2004 2005 2004
---- ---- ---- ----
Interest income
Loans, including fees $ 1,895,017 $ 1,889,242 $ 5,568,223 $ 5,720,354
Securities 48,506 58,256 144,964 189,175
Demand, time and overnight deposits 14,802 3,549 44,101 29,208
Dividends on FHLB stock 18,150 15,615 52,548 46,804
------------- ------------- ------------- --------------
Total interest income 1,976,475 1,966,662 5,809,836 5,985,541
Interest expense
Deposits 390,888 398,481 1,139,381 1,348,334
Borrowed funds 404,888 414,750 1,221,717 1,261,325
------------- ------------- ------------- --------------
Total interest expense 795,776 813,231 2,361,098 2,609,659
------------- ------------- ------------- --------------
Net interest income 1,180,699 1,153,431 3,448,738 3,375,882
Provision for loan losses 30,278 5,198 57,747 29,183
------------- ------------- ------------- --------------
Net interest income after provision
for loan losses 1,150,421 1,148,233 3,390,991 3,346,699
Noninterest income
Service fees and other charges 30,612 33,164 95,284 100,490
Gain (loss) on sale of real estate owned (1,272) (12,103) (24,600) (4,379)
------------- ------------- ------------- --------------
Total noninterest income 29,340 21,061 70,684 96,111
Noninterest expense
Compensation and benefits 402,120 408,228 1,201,078 1,193,463
Director fees 24,300 24,300 72,900 72,900
Occupancy and equipment 107,188 105,824 303,816 304,952
Computer processing 64,369 64,119 185,089 187,197
State franchise taxes 49,763 52,799 155,610 151,872
Professional fees 23,319 25,680 87,822 91,346
Other 85,874 91,663 260,209 270,799
------------- ------------- ------------- --------------
Total noninterest expense 756,933 772,613 2,266,524 2,272,529
------------- ------------- ------------- --------------
Income before income taxes 422,828 396,681 1,195,151 1,170,281
Income tax expense 152,500 147,000 431,000 433,900
------------- ------------- ------------- --------------
Net income $ 270,328 $ 249,681 $ 764,151 $ 736,381
============= ============= ============= ==============
Earnings per common share - basic $ 0.20 $ 0.18 $ 0.56 $ 0.54
============= ============ ============= ==============
Earnings per common share - diluted $ 0.20 $ 0.18 $ 0.56 $ 0.54
============= ============ ============= ==============
- -------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
4.
PEOPLES-SIDNEY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
- -------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
--------- ---------
2005 2004 2005 2004
---- ---- ---- ----
Net income $ 270,328 $ 249,681 $ 764,151 $ 736,381
Other comprehensive income (loss)
Unrealized holding gains and (losses) on
available-for-sale securities (66,820) 118,190 53,941 (54,540)
Tax effect 22,718 (40,185) (18,341) 18,544
------------- ------------- ------------- --------------
Other comprehensive income (loss) (44,102) 78,005 35,600 (35,996)
------------- ------------- ------------- --------------
Comprehensive income $ 226,226 $ 327,686 $ 799,751 $ 700,385
============= ============= ============= ==============
- -------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
5.
PEOPLES-SIDNEY FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
(Unaudited)
- -------------------------------------------------------------------------------------------------------------------
Three Months Ended Nine Months Ended
March 31, March 31,
--------- ---------
2005 2004 2005 2004
---- ---- ---- ----
Balance, beginning of period $ 17,574,556 $ 17,258,687 $ 17,430,913 $ 17,384,280
Net income for period 270,328 249,681 764,151 736,381
Cash dividends, $.14 per share for the
three months ended March 31, 2005
and 2004, $.52 and $.50 per share for the
nine months ended March 31, 2005 and 2004 (191,896) (190,165) (712,755) (681,626)
Purchase of 6,853 shares of treasury
stock for the nine months ended March 31, 2004,
at cost -- -- -- (92,516)
Commitment to release 2,944 and 3,091
employee stock ownership plan shares for
the three months ended March 31, 2005 and 2004
and 8,831 and 9,273 employee stock
ownership plan shares for the nine months
ended March 31, 2005 and 2004, at fair value 42,567 51,298 133,544 136,983
Change in fair value on securities available for
sale, net of tax (44,102) 78,005 35,600 (35,996)
------------- ------------- ------------- --------------
Balance, end of period $ 17,651,453 $ 17,447,506 $ 17,651,453 $ 17,447,506
============= ============= ============= ==============
- -------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
6.
PEOPLES-SIDNEY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
- -------------------------------------------------------------------------------------------------------------------
Nine Months Ended
March 31,
---------
2005 2004
---- ----
Cash flows from operating activities
Net income $ 764,151 $ 736,381
Adjustments to reconcile net income to net cash from
operating activities
Depreciation 139,593 145,671
Provision for loan losses 57,747 29,183
Loss on sale of real estate owned 24,600 4,379
FHLB stock dividends (52,400) (46,700)
Compensation expense for ESOP shares 133,544 136,983
Change in:
Accrued interest receivable and other assets (99,043) (60,188)
Accrued expense and other liabilities (173,816) (251,498)
Deferred loan fees 2,526 17,346
-------------- ---------------
Net cash from operating activities 796,902 711,557
Cash flows from investing activities
Proceeds from maturities/calls of securities available for sale -- 4,000,000
Proceeds from sales of securities available for sale -- 2,000,000
Net change in loans (5,212,315) (2,028,120)
Premises and equipment expenditures (112,926) (446,415)
Proceeds from sale of real estate owned 184,128 358,250
-------------- ---------------
Net cash from investing activities (5,141,113) 3,883,715
Cash flows from financing activities
Net change in deposits 344,450 (5,872,615)
Repayments of long-term FHLB advances (1,566,259) (1,697,086)
Net change in short-term FHLB advances 500,000 --
Proceeds from long-term FHLB advances 1,000,000 1,000,000
Cash dividends paid (712,755) (681,626)
Purchase of treasury stock -- (92,516)
-------------- ---------------
Net cash from financing activities (434,564) (7,343,843)
-------------- ---------------
Net change in cash and cash equivalents (4,778,775) (2,748,571)
Cash and cash equivalents at beginning of period 10,033,688 12,300,598
-------------- ---------------
Cash and cash equivalents at end of period $ 5,254,913 $ 9,552,027
============== ===============
Supplemental disclosures of cash flow information
Cash paid during the period for
Interest $ 2,350,950 $ 2,622,342
Income taxes 425,000 442,000
Noncash transactions
Transfer from loans to other real estate owned $ 109,643 $ 296,654
- -------------------------------------------------------------------------------------------------------------------
See accompanying notes to consolidated financial statements.
7.
PEOPLES-SIDNEY FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation: The accompanying consolidated financial statements
- ---------------------------
include accounts of Peoples-Sidney Financial Corporation ("Peoples") and its
wholly-owned subsidiary, Peoples Federal Savings and Loan Association
("Association"), a federal stock savings and loan association, together referred
to as the Corporation. All significant intercompany transactions and balances
have been eliminated.
These interim consolidated financial statements are prepared without audit and
reflect all adjustments which, in the opinion of management, are necessary to
present fairly the financial position of the Corporation at March 31, 2005 and
its results of operations and cash flows for the periods presented. All such
adjustments are normal and recurring in nature. The accompanying consolidated
financial statements have been prepared in accordance with the instructions for
Form 10-QSB and, therefore, do not purport to contain all the necessary
financial disclosures required by accounting principles generally accepted in
the United States of America that might otherwise be necessary in the
circumstances, and should be read in conjunction with the consolidated financial
statements and notes thereto of the Corporation for the fiscal year ended June
30, 2004, included in the Corporation's 2004 Annual Report on Form 10-KSB for
the fiscal year ended June 30, 2004. Reference is made to the accounting
policies of the Corporation described in the notes to consolidated financial
statements contained in such report. The Corporation has consistently followed
these policies in preparing this Form 10-QSB.
Nature of Operations: The Corporation provides financial services through its
- --------------------
main office in Sidney, Ohio, and branch offices in Sidney, Anna and Jackson
Center, Ohio. Its primary deposit products are checking, savings and term
certificate accounts, and its primary lending products are residential mortgage,
commercial and installment loans. Substantially all loans are secured by
specific items of collateral including business assets, consumer assets and
commercial and residential real estate. Commercial loans are expected to be
repaid from cash flow from operations of businesses. Substantially all revenues
and services are derived from financial institution products and services in
Shelby County and contiguous counties. Management considers the Corporation to
operate primarily in one segment, banking.
Use of Estimates: To prepare financial statements in conformity with accounting
- ----------------
principles generally accepted in the United States of America, management makes
estimates and assumptions based on available information. These estimates and
assumptions affect the amounts reported in the financial statements and
disclosures provided, and actual results could differ. The allowance for loan
losses and fair values of financial instruments are particularly subject to
change.
Income Taxes: Income tax expense is based on the effective tax rate expected to
- ------------
be applicable for the entire year. Income tax expense is the total of the
current year income tax due or refundable and the change in deferred tax assets
and liabilities. Deferred tax assets and liabilities are the expected future tax
amounts for the temporary differences between the carrying amounts and tax basis
of assets and liabilities, computed using enacted tax rates. A valuation
allowance, if needed, reduces deferred tax assets to the amount expected to be
realized.
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(Continued)
8.
PEOPLES-SIDNEY FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Earnings Per Common Share: Basic earnings per common share ("EPS") is net income
- -------------------------
divided by the weighted average number of common shares outstanding during the
period. Employee stock ownership plan ("ESOP") shares are considered outstanding
for this calculation unless unearned. Management recognition plan ("MRP") shares
are considered outstanding as they become vested. Diluted EPS shows the dilutive
effect of additional common shares upon exercise of stock options.
Stock-Based Compensation: Employee compensation expense under stock option plans
- ------------------------
is reported using the intrinsic value method. No stock-based compensation cost
is reflected in net income, as all options granted had an exercise price equal
to or greater than the market price of the underlying common stock at the date
of grant. All outstanding options finished vesting during the year ended June
30, 2003.
NOTE 2 - SECURITIES AVAILABLE FOR SALE
Securities available for sale were as follows.
Gross Gross
Fair Unrealized Unrealized
Value Gains Losses
----- ----- ------
March 31, 2005
- --------------
U.S. Government agencies $ 5,342,490 $ 3,750 $ (158,804)
============= ============ =============
June 30, 2004
- -------------
U.S. Government agencies $ 5,288,280 $ 13,280 $ (222,275)
============= ============ =============
Contractual maturities of securities available for sale at March 31, 2005 were
as follows. Actual maturities may differ from contractual maturities because
borrowers may have the right to call or prepay obligations with or without call
or prepayment penalties.
Fair
Value
-----
Due after one year through five years $ 2,481,560
Due after five years through ten years 2,860,930
--------------
$ 5,342,490
There were no sales of securities available for sale during the three and nine
months ended March 31, 2005. Proceeds from the sale of securities available for
sale totaled $2,000,000 during the three and nine months ended March 31, 2005
and 2004. There was no gain or loss realized on this sale. No securities were
pledged as collateral at March 31, 2005 or June 30, 2004.
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(Continued)
9.
PEOPLES-SIDNEY FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 2 - SECURITIES AVAILABLE FOR SALE (Continued)
Securities with unrealized losses at March 31, 2005 and June 30, 2004,
aggregated by investment category and length of time that individual securities
have been in a continuous unrealized loss position, are as follows.
Less than 12 Months 12 Months or More Total
------------------- ----------------- -----
Fair Unrealized Fair Unrealized Fair Unrealized
Description of Securities Value Loss Value Loss Value Loss
- ------------------------- ----- ---- ----- ---- ----- ----
March 31, 2005
- --------------
U.S. Government agencies $ 1,977,810 $ (21,764) $ 2,860,930 $ (137,040) $ 4,838,740 $ (158,804)
============ ========= ============ =========== ============ ===========
June 30, 2004
- -------------
U.S. Government agencies $ 2,949,380 $ (50,109) $ 1,825,620 $ (172,166) $ 4,775,000 $ (222,275)
============ ========= ============ =========== ============ ===========
Unrealized losses on the investment securities have not been recognized into
income because the securities are of high credit quality, management has the
intent and ability to hold for the foreseeable future, and the decline in fair
value is largely due to changes in interest rates. The fair value is expected to
recover as the securities approach their maturity date or reset date.
NOTE 3 - LOANS
Loans were as follows.
March 31, June 30,
2005 2004
---- ----
Mortgage loans:
1-4 family residential $ 92,541,607 $ 89,974,734
Multi-family residential 1,304,704 1,330,844
Commercial real estate 12,649,289 11,847,794
Real estate construction and
development 3,839,195 3,056,172
Land 1,559,009 1,694,844
------------- -------------
Total mortgage loans 111,893,804 107,904,388
Consumer loans 4,746,075 4,211,193
Commercial loans 5,237,797 4,662,070
------------- -------------
Total loans 121,877,676 116,777,651
Less:
Allowance for loan losses (808,000) (752,900)
Deferred loan fees (375,367) (372,841)
------------- -------------
$ 120,694,309 $ 115,651,910
============= =============
- --------------------------------------------------------------------------------
(Continued)
10.
PEOPLES-SIDNEY FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 3 - LOANS (Continued)
Activity in the allowance for loan losses is summarized as follows.
Three Months Ended Nine Months Ended
March 31, March 31,
--------- ---------
2005 2004 2005 2004
---- ---- ---- ----
Balance at beginning of period $ 777,700 $ 757,900 $ 752,900 $ 766,000
Provision for losses 30,278 5,198 57,747 29,183
Charge-offs -- (34,353) (2,669) (66,877)
Recoveries 22 255 22 694
------------ ------------ ------------ ------------
Balance at end of period $ 808,000 $ 729,000 $ 808,000 $ 729,000
============ ============ ============ ============
Impaired loans were as follows.
March 31, June 30,
2005 2004
---- ----
Period-end impaired loans with no allowance for loan losses allocated $ -- $ --
Period-end impaired loans with allowance for loan losses allocated 166,000 129,000
Amount of the allowance allocated to impaired loans 134,000 129,000
Three Months Ended Nine Months Ended
March 31, March 31,
--------- ---------
2005 2004 2005 2004
---- ---- ---- ----
Average of impaired loans during the period $ 141,000 $ -- $ 153,000 $ --
Interest income recognized during the period 1,550 -- 6,926 --
Cash-basis interest income recognized 566 -- 1,635 --
Nonperforming loans were as follows.
March 31, June 30,
2005 2004
---- ----
Loans past due over 90 days still on accrual $ 662,000 $ 587,000
Nonaccrual loans 911,000 624,000
Nonperforming loans include smaller balance homogeneous loans, such as
residential mortgage and consumer loans that are collectively evaluated for
impairment.
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(Continued)
11.
PEOPLES-SIDNEY FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 4 - BORROWED FUNDS
At March 31, 2005 and June 30, 2004, the Association had a cash management line
of credit enabling it to borrow up to $8,000,000 from the Federal Home Loan Bank
of Cincinnati ("FHLB"). All cash management advances have an original maturity
of 90 days. The line of credit must be renewed on an annual basis. There were
$500,000 in outstanding borrowings on this line of credit at March 31, 2005 and
there were no outstanding borrowings at June 30, 2004.
As a member of the FHLB system, the Association has the ability to obtain
borrowings up to a maximum total of $66.2 million including the cash management
line of credit. Advances from the Federal Home Loan Bank were as follows.
March 31, June 30,
2005 2004
---- ----
Cash management advance, variable rate 3.02%
at March 31, 2005 $ 500,000 $ --
6.13% FHLB fixed-rate advance, due June 25, 2008 7,000,000 7,000,000
6.00% FHLB convertible advance, fixed-rate until
June 2005, due June 11, 2009 5,000,000 5,000,000
6.27% FHLB convertible advance, fixed-rate until
June 2005, due September 8, 2010 5,000,000 5,000,000
5.30% select pay mortgage-matched advance, final
maturity May 1, 2011 987,874 1,087,505
5.35% select pay mortgage-matched advance, final
maturity July 1, 2011 2,022,294 2,466,217
3.92% select pay mortgage-matched advance, final
maturity November 1, 2012 722,342 823,214
3.55% select pay mortgage-matched advance, final
maturity March 1, 2013 827,309 893,507
4.10% select pay mortgage-matched advance, final
maturity March 1, 2015 1,000,000 --
4.09% select pay mortgage-matched advance, final
maturity November 1, 2017 714,179 828,866
3.31% select pay mortgage-matched advance, final
maturity April 1, 2019 952,069 991,393
4.72% select pay mortgage-matched advance, final
maturity November 1, 2022 2,506,557 2,709,021
4.38% select pay mortgage-matched advance, final
maturity December 1, 2022 835,741 903,923
3.92% select pay mortgage-matched advance, final
maturity December 1, 2022 747,208 854,173
3.64% select pay mortgage-matched advance, final
maturity March 1, 2023 2,258,556 2,582,569
------------ ------------
$ 31,074,129 $ 31,140,388
============ ============
Advances under the borrowing agreements are collateralized by a blanket pledge
of the Association's residential mortgage loan portfolio and its FHLB stock.
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(Continued)
12.
PEOPLES-SIDNEY FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 4 - BORROWED FUNDS(Continued)
The interest rates on the convertible advances are fixed for a specified number
of years, then convertible to a variable rate at the option of the FHLB. If the
convertible option is exercised, the advance may be prepaid without prepayment
fee. The select pay mortgage-matched advances require monthly principal and
interest payments and annual additional principal payments.
Maturities of FHLB advances for the next five years and thereafter were as
follows.
Year ended March 31,
2006 $ 2,640,132
2007 1,875,767
2008 1,649,439
2009 8,455,183
2010 6,288,063
Thereafter 10,165,545
--------------
$ 31,074,129
==============
NOTE 5 - OFF-BALANCE-SHEET ACTIVITIES
Loss contingencies, including claims and legal actions arising in the ordinary
course of business, are recorded as liabilities when the likelihood of loss is
probable and an amount or range of loss can be reasonably estimated. Management
does not believe there now are such matters that will have a material effect on
the financial statements.
Some financial instruments, such as loan commitments, credit lines, letters of
credit and overdraft protection, are issued to meet customer financing needs.
These are agreements to provide credit or to support the credit of others, as
long as conditions established in the contract are met, and usually have
expiration dates. Commitments may expire without being used. Off-balance-sheet
risk of credit loss exists up to the face amount of these instruments, although
material losses are not anticipated. The same credit policies are used to make
such commitments as are used for loans, including obtaining collateral at
exercise of the commitment.
The contractual amount of financial instruments with off-balance-sheet risk was
as follows.
March 31, June 30,
2005 2004
---- ----
1-4 family residential real estate - fixed rate $ 145,000 $ 299,000
1-4 family residential real estate - variable rate 319,000 212,000
Commercial real estate - variable rate -- 265,000
Commercial lines of credit 2,736,000 3,186,000
Home equity lines of credit 910,000 823,000
The interest rate on fixed-rate commitments ranged from 6.625% to 7.25% at March
31, 2005 and 5.88% to 6.75% at June 30, 2004. Commitments to make loans are
generally made for a period of 30 days or less. The maximum maturity for
fixed-rate commitments range from 10 years to 20 years.
- --------------------------------------------------------------------------------
(Continued)
13.
PEOPLES-SIDNEY FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 5 - OFF-BALANCE-SHEET ACTIVITIES (Continued)
At March 31, 2005 and June 30, 2004, the Corporation was required to have
$1,094,000 and $3,454,000 on deposit with its correspondent banks as a
compensating clearing requirement.
The Corporation entered into employment agreements with certain of its officers.
The agreements provide for a term of one to three years and a salary and
performance review by the Board of Directors not less often than annually, as
well as inclusion of the employee in any formally established employee benefit,
bonus, pension and profit-sharing plans for which management personnel are
eligible. The agreements provide for extensions for a period of one year on each
annual anniversary date, subject to review and approval of the extension by
disinterested members of the Board of Directors of the Association. The
employment agreements also provide for vacation and sick leave.
NOTE 6 - EARNINGS PER SHARE
The factors used in the earnings per share computation follow.
Three Months Ended Nine Months Ended
------------------ -----------------
March 31, March 31,
--------- ---------
2005 2004 2005 2004
---- ---- ---- ----
Basic Earnings Per Common Share
Net income $ 270,328 $ 249,681 $ 764,151 $ 736,381
=========== =========== =========== ===========
Weighted average common shares
outstanding 1,432,648 1,432,648 1,432,648 1,435,962
Less: Average unallocated ESOP shares (54,607) (66,603) (57,551) (69,694)
----------- ----------- ----------- -----------
Weighted average common shares
outstanding for basic earnings
per common share 1,378,041 1,366,045 1,375,097 1,366,268
=========== =========== =========== ===========
Basic earnings per common share $ 0.20 $ 0.18 $ 0.56 $ 0.54
=========== =========== =========== ===========
Diluted Earnings Per Common Share
Net income $ 270,328 $ 249,681 $ 764,151 $ 736,381
=========== =========== =========== ===========
Weighted average common shares
outstanding for basic earnings
per common share 1,378,041 1,366,045 1,375,097 1,366,268
Add: Dilutive effects of assumed
exercises of stock options -- 3,972 122 1,324
----------- ----------- ----------- -----------
Weighted average common shares
and dilutive potential common
shares outstanding 1,378,041 1,370,017 1,375,219 1,367,592
=========== =========== =========== ===========
Diluted earnings per common share $ 0.20 $ 0.18 $ 0.56 $ 0.54
=========== =========== =========== ===========
Stock options not considered in calculation
because they were not dilutive 140,824 1,245 1,245 1,245
- --------------------------------------------------------------------------------
(Continued)
14.
PEOPLES-SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis
------------------------------------
Introduction
In the following pages, management presents an analysis of the consolidated
financial condition of the Corporation as of March 31, 2005, compared to June
30, 2004, and results of operations for the three and nine months ended March
31, 2005, compared with the same periods in 2004. This discussion is designed to
provide a more comprehensive review of operating results and financial position
than could be obtained from an examination of the financial statements alone.
This analysis should be read in conjunction with the interim financial
statements and related footnotes included herein.
Forward-Looking Statements
When used in this filing or future filings by the Corporation with the
Securities and Exchange Commission, or other public or shareholder
communications, or in oral statements made with the approval of an authorized
executive officer, the words or phrases "will likely result," "are expected to,"
"will continue," "is anticipated," "estimate," "project," "believe" or similar
expressions are intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. The Corporation
wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made, and to advise
readers that various factors, including regional and national economic
conditions, changes in levels of market interest rates, credit risks of lending
activities and competitive and regulatory factors, could affect the
Corporation's financial performance and could cause the Corporation's actual
results for future periods to differ materially from those anticipated or
projected.
The Corporation is not aware of any trends, events or uncertainties that will
have or are reasonably likely to have a material effect on its liquidity,
capital resources or operations except as discussed herein. The Corporation is
not aware of any current recommendations by regulatory authorities that would
have such effect if implemented.
The Corporation does not undertake, and specifically disclaims, any obligation
to publicly release the result of any revisions that may be made to any
forward-looking statements to reflect occurrence of anticipated or unanticipated
events or circumstances after the date of such statements.
Financial Condition
Total assets at March 31, 2005 were $136.1 million compared to $135.8 million at
June 30, 2004, an increase of $0.3 million. The increase in total assets was
primarily due to an increase in loans of $5.0 million, which was funded by cash
and cash equivalents, which decreased by $4.7 million, and by deposits which
increased by $300,000.
As the Federal Reserve Board continues to analyze market adjustments in interest
rates to control inflationary pressures, depositors and borrowers alike continue
to make a shift in the type of instrument that suits their immediate and
long-term needs. We are currently seeing increases in money market and demand
deposits as well as longer term certificates of deposit. On the lending side,
many borrowers are again considering adjustable rate mortgages as market
interest rates have pushed fixed rate mortgages to higher levels. We expect
rates to continue to increase during our fourth fiscal quarter.
- --------------------------------------------------------------------------------
(Continued)
15.
PEOPLES-SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
Cash and cash equivalents decreased $4.7 million from $10.0 million at June 30,
2004 to $5.3 million at March 31, 2005. These funds were used to fund the
increase in loans and repay FHLB advances.
The securities portfolio, which is classified as available for sale, increased
$54,000, from $5,288,000 at June 30, 2004 to $5,342,000 at March 31, 2005. The
increase is related to an increase in the fair market value of the securities
during the reporting period as no securities transactions occurred.
Federal Home Loan Bank stock increased $53,000 from $1,601,000 at June 30, 2004
to $1,654,000 at March 31, 2005 as a result of normal dividend payments.
Loans increased $5.0 million from $115.7 million at June 30, 2004 to $120.7
million at March 31, 2005. The most significant change was in one to four-family
residential loans, which increased $2.5 million from $90.0 million at June 30,
2004 to $92.5 million at March 31,2005. Commercial real estate loans increased
$0.8 million and real estate and construction and development loans increased
$0.7 million from June 30, 2004 to March 31, 2005. Consumer and commercial loans
also provided increases to the loan portfolio with growth of $0.5 million and
$0.5 million respectively from June 30, 2004 to March 31, 2005. Other loan
categories had nominal changes.
Premises and equipment decreased $ 27,000 from $2,125,000 at June 30, 2004 to
$2,098,000 at March 31, 2005. This decrease resulted from normal depreciation of
existing assets partially offset by equipment purchases and routine improvements
to the office building.
Total deposits increased $0.3 million from $86.8 million at June 30, 2004 to
$87.1 million at March 31, 2005 primarily due to an increase of $1.8 million in
money market accounts and an increase of $0.4 million in commercial checking
accounts. NOW accounts also increased $0.1 million. These increases were
partially offset by decreases of $1.2 million in passbook savings accounts and
$0.7 million in certificate accounts. However, even though total certificates of
deposit decreased, there were increases to some of the longer-term certificate
accounts.
Borrowed funds decreased $66,000 from $31,140,000 at June 30, 2004 to
$31,074,000 at March 31, 2005. This decrease was the result of scheduled
repayments of the long-term advances which offset the addition of a $500,000
million cash management advance.
Results of Operations
The operating results of the Corporation are affected by general economic
conditions, monetary and fiscal policies of federal agencies and regulatory
policies of agencies that regulate financial institutions. The Corporation's
cost of funds is influenced by interest rates on competing investments and
general market rates of interest. Demand for real estate loans and other types
of loans influence lending activities, which in turn is affected by interest
rates at which such loans are made, general economic conditions and availability
of funds for lending activities.
The Corporation's net income primarily depends on its net interest income, which
is the difference between interest income earned on interest-earning assets,
such as loans and securities and interest expense incurred on interest-bearing
liabilities, such as deposits and borrowings. The level of net interest income
is dependent on the interest rate environment and volume and composition of
interest-earning assets and interest-bearing liabilities. Net income is also
affected by provisions for loan losses, service charges, gains on the sale of
assets and other income, noninterest expense and income taxes.
- --------------------------------------------------------------------------------
(Continued)
16.
PEOPLES-SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
Three Months Ended March 31, 2005 Compared to the Three Months Ended March 31,
2004
Net Income. The Corporation earned net income of $270,000 for the three months
ended March 31, 2005 compared to $250,000 for the three months ended March 31,
2004. The increase of $20,000 in net income was primarily due to an increase in
net interest income and noninterest income coupled with a decrease in
noninterest expense partially offset by an increase in the provision for loan
losses and an increase in income tax expense.
Net Interest Income. Net interest income totaled $1,181,000 for the three months
ended March 31, 2005 compared to $1,153,000 for the three months ended March 31,
2004, representing an increase of $28,000. The increase was the result of an
increase in interest income on coupled with a decrease in interest expense on
deposits and borrowed funds.
Interest and fees on loans increased $6,000 from $1,889,000 for the three months
ended March 31, 2004 to $1,895,000 for the three months ended March 31, 2005.
The increase in interest income was due primarily to a higher average balance of
loans partially offset by a decline in the average yield earned. The average
balance of loans increased to $119.7 million with an average yield of 6.33% for
the three months ended March 31, 2005 from an average balance of $117.7 with an
average yield of 6.42% for the same three month period last year.
Interest on securities decreased $9,000 due to a lower average balance for the
current three-month period partially offset by a higher average interest rate.
This was offset by an $11,000 increase in interest on demand, time and overnight
deposits resulting from an increase in the average interest rate as compared to
the prior period.
Interest paid on deposits decreased $7,000 from $398,000 for the three months
ended March 31, 2004 to $391,000 for the three months ended March 31, 2005. The
decrease resulted from a lower average balance of deposits. The average balance
of deposits declined from $86.5 million for the three months ended March 31,
2004 to $85.6 million for the three months ended March 31 2005. The average cost
of funds remained unchanged at 1.85% for both three-month periods.
Interest paid on borrowed funds totaled $405,000 for the three months ended
March 31, 2005 compared to $415,000 for the three months ended March 31, 2004.
The decrease in interest expense on borrowed funds resulted from a decrease in
the average balance of borrowed funds. The average rate paid for borrowings also
remained unchanged at 5.33% for both three-month periods.
Provision for Loan Losses. The Corporation maintains an allowance for loan
losses in an amount that, in management's judgment, is adequate to absorb
probable losses in the loan portfolio. While management utilizes its best
judgment and information available, the ultimate adequacy of the allowance is
dependent upon a variety of factors, including the performance of the
Corporation's loan portfolio, the economy, changes in real estate values and
interest rates and the view of the regulatory authorities toward loan
classifications. The provision for loan losses is determined by management as
the amount to be added to the allowance for loan losses after net charge-offs
have been deducted to bring the allowance to a level that is considered adequate
to absorb probable incurred losses in the loan portfolio. The amount of the
provision is based on management's monthly review of the loan portfolio and
consideration of such factors as historical loss experience, general prevailing
economic conditions, changes in the size and composition of the loan portfolio
and specific borrower considerations, including the ability of the borrower to
repay the loan and the estimated value of the underlying collateral.
- --------------------------------------------------------------------------------
(Continued)
17.
PEOPLES-SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
The provision for loan losses for the three months ended March 31, 2005 totaled
$30,000 compared to $5,000 for the three months ended March 31, 2004. The
increase of $25,000 in the provision for losses was due to an increase in the
total outstanding balance of loans coupled with an increase in the balance of
loans placed on nonaccrual during the current three-month period compared to the
same period a year ago. The allowance for loan losses totaled $808,000, or 0.67%
of gross loans receivable net of deferred loan origination fees and 51.4% of
total nonperforming loans at March 31, 2005, compared with $729,000, or 0.62% of
gross loans receivable, net of deferred loan origination fees and 38.0% of total
nonperforming loans at March 31, 2004. The Corporation experienced $34,000 in
net charge-offs during the prior year three-month period primarily related to
one- to four-family residential loans and no charge-offs during the current
three-month period. Overall, the Corporation's charge-off history remains very
modest and is the product of a variety of factors, including the Corporation's
underwriting guidelines, which generally require a loan-to-value or projected
completed value ratio of 80% for purchase or construction of one- to four-family
residential properties and 75% for commercial real estate and land loans,
established income information and defined ratios of debt to income.
Noninterest income. Noninterest income includes service fees, other
miscellaneous income and the net gain or loss on the sale of real estate owned
and increased $8,000 from $21,000 for the three months ended March 31, 2004 to
$29,000 for the three months ended March 31, 2005. A decrease of $11,000 in net
losses on the sale of real estate owned offset a decrease of $2,000 in service
fees and other income.
Noninterest expense. Noninterest expense totaled $757,000 for the three months
ended March 31, 2005 compared to $773,000 for the three months ended March 31,
2004, a decrease of $16,000. The decrease was primarily related to a decrease in
compensation and benefits expense coupled with a net decrease in other
noninterest expenses. There was a decrease of $9,000 in ESOP compensation
expense resulting from the impact of a lower average stock price on the ESOP
plan and a decrease of $4,000 in real estate owned expense during the current
three-month period as compared to the same period last year.
Income Tax Expense. Income tax expense totaled $153,000 for the three months
ended March 31, 2005 compared to $147,000 for the three months ended March 31,
2004, representing an increase of $6,000. The increase in income tax expense is
reflective of the increase in net income before income taxes for the three
months ended March 31, 2005 as compared to the three months ended March 31,
2004. The effective tax rate was 36.1% and 37.1% for the three months ended
March 31, 2005 and 2004.
Nine Months Ended March 31, 2005 Compared to the Nine Months Ended March 31,
2004
Net Income. The Corporation earned net income of $764,000 for the nine months
ended March 31, 2005 compared to $736,000 for the nine months ended March 31,
2004, representing an increase of $28,000. An increase in net interest income
and a decrease in noninterest expense were offset, in part, by an increase in
the provision for loan losses and a decrease in noninterest income during the
current nine-month period.
Net Interest Income. Net interest income totaled $3,449,000 for the nine months
ended March 31, 2005 compared to $3,376,000 for the nine months ended March 31,
2004, an increase of $73,000. The increase was the result of a larger decrease
in interest expense on deposits and borrowed money compared to the decline in
interest income on loans and securities.
Interest and fees on loans decreased $152,000, or 2.7% from $5,720,000 for the
nine months ended March 31, 2004 to $5,568,000 for the nine months ended March
31, 2005. The decrease in interest income was due primarily to a lower average
yield earned on loans due to the lower interest rate environment partially
offset by an increase in the average balance. The yield on loans declined from
6.53% for the nine months ended March 31, 2004 to 6.30% for the nine months
ended March 31, 2005.
- --------------------------------------------------------------------------------
(Continued)
18.
PEOPLES-SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
Interest on securities decreased $44,000 due to a lower average balance for the
current nine-month period partially offset by a slightly higher average interest
rate.
Dividends on FHLB Stock and interest on demand, and overnight deposits totaled
$97,000 for the nine months ended March 31, 2005 compared to $76,000 for the
nine months ended March 31, 2004. The increase of $21,000 resulted from an
increase in the average dividend and interest yield as well as an increase in
the average balance of FHLB stock, partially offset by a decrease in the average
balances of demand and overnight deposits for the current nine month period.
Interest paid on deposits decreased $209,000, or 15.5% from $1,348,000 for the
nine months ended March 31, 2004 to $1,139,000 for the nine months ended March
31, 2005. The decrease resulted from a lower average interest rate coupled with
a lower average balance of deposits. The average cost of deposits declined from
2.01% for the nine months ended March 31, 2004 to 1.77% for the nine months
ended March 31, 2005.
Interest paid on borrowed funds totaled $1,222,000 for the nine months ended
March 31, 2005 compared to $1,261,000 for the nine months ended March 31, 2004.
The decrease of $39,000 in interest expense on borrowed funds resulted from a
decrease in the average balance of borrowed funds.
Provision for Loan Losses. The provision for loan losses for the nine months
ended March 31, 2005 totaled $58,000 compared to $29,000 for the nine months
ended March 31, 2004. The increase of $29,000 in the provision for losses was
due to an increase in the total outstanding balance of loans coupled with a
larger increase in nonperforming and nonaccrual loans during the current
nine-month period compared to the same period a year ago.
Noninterest income. Noninterest income includes service fees, other
miscellaneous income and the gain or loss realized on the sale of real estate
owned and decreased $25,000 from $96,000 for the nine months ended March 31,
2004 to $71,000 for the nine months ended March 31, 2005. This decrease resulted
primarily from a pre-tax loss of $27,000 relating to a valuation adjustment and
subsequent loss on a property held in real estate owned during the current
nine-month period.
Noninterest expense. Noninterest expense totaled $2,267,000 for the nine months
ended March 31, 2005 compared to $2,273,000 for the nine months ended March 31,
2004. The decrease of $6,000 was primarily related to an overall reduction of
noninterest expenses partially offset by normal increases in compensation and
benefits.
Income Tax Expense. Income tax expense totaled $431,000 for the nine months
ended March 31, 2005 compared to $434,000 for the nine months ended March 31,
2004, representing a decrease of $3,000. The decrease in income tax expense is
reflective of a decrease in the effective tax rate offset in part by an increase
in income before income taxes. The effective tax rate was 36.1% and 37.1% for
the nine months ended March 31, 2005 and 2004 respectively.
- --------------------------------------------------------------------------------
(Continued)
19.
PEOPLES-SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
Liquidity and Capital Resources
The Corporation's liquidity, primarily represented by cash and cash equivalents,
is a result of operating, investing and financing activities. These activities
are summarized below for the nine months ended March 31, 2005 and 2004.
Nine Months
Ended March 31,
---------------
2005 2004
---- ----
(Dollars in thousands)
Net income $ 764 $ 736
Adjustments to reconcile net income to net cash from
operating activities 33 (25)
-------- --------
Net cash from operating activities 797 711
Net cash from investing activities (5,141) 3,884
Net cash from financing activities (435) (7,344)
-------- --------
Net change in cash and cash equivalents (4,779) (2,749)
Cash and cash equivalents at beginning of period 10,034 12,301
-------- --------
Cash and cash equivalents at end of period $ 5,255 $ 9,552
======== ========
The Corporation's principal sources of funds are deposits, loan repayments,
maturities of securities and other funds provided by operations. While scheduled
loan repayments and maturing investments are relatively predictable, deposit
flows and early loan prepayments are more influenced by interest rates, general
economic conditions and competition. The Corporation maintains investments in
liquid assets based on management's assessment of the (1) need for funds, (2)
expected deposit flows, (3) yields available on short-term liquid assets and (4)
objectives of the asset/liability management program. Management believes that
loan repayments and other sources of funds will be adequate to meet the
Corporation's foreseeable liquidity needs.
The Corporation also has the ability to borrow from the FHLB up to a maximum
total of $66.2 million including the cash management line of credit. See Note 4
of the Notes to Consolidated Financial Statements for a detail of the
Corporation's borrowings from the FHLB at March 31, 2005.
At March 31, 2005, the Corporation had commitments to originate fixed-rate
residential real estate loans totaling $145,000 and variable-rate residential
real estate loans totaling $319,000. Loan commitments are generally for 30 days.
See Note 5 of the Notes to Consolidated Financial Statements for a detail of the
Corporation's loan commitments at March 31, 2005. The Office of Thrift
Supervision regulations require the Corporation's insured subsidiary to maintain
a safe and sound level of liquid assets. The Corporation considers its liquidity
and capital reserves sufficient to meet its outstanding short and long-term
needs, and believes it is in compliance with regulatory requirements.
The Association is subject to various regulatory capital requirements
administered by the federal regulatory agencies. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Association must meet specific capital guidelines that involve quantitative
measures of the Association's assets, liabilities and certain off-balance-sheet
items as calculated under regulatory accounting practices. Capital amounts and
classifications are also subject to qualitative judgments by the regulators.
Failure to meet minimum capital requirements can initiate regulatory action.
- --------------------------------------------------------------------------------
(Continued)
20.
PEOPLES-SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
- --------------------------------------------------------------------------------
Prompt corrective action regulations provide five classifications: well
capitalized, adequately capitalized, undercapitalized, significantly
undercapitalized, and critically undercapitalized, although these terms are not
used to represent overall financial condition. If adequately capitalized,
regulatory approval is required to accept brokered deposits. If
undercapitalized, capital distributions are limited, as is asset growth and
expansion, and capital restoration plans are required.
At March 31, 2005 and June 30, 2004, management believes the Association
complies with all regulatory capital requirements. Based on the Association's
computed regulatory capital ratios, the Association is considered well
capitalized under the Federal Deposit Insurance Act at March 31, 2005 and June
30, 2004. No conditions or events have occurred subsequent to the last
notification by regulators that management believes would have changed the
Association's category.
At March 31, 2005 and June 30, 2004, the Association's actual capital levels,
minimum required levels and levels to be considered "well capitalized" were as
follows.
To Be
Well Capitalized
For Capital Under Prompt Corrective
Actual Adequacy Purposes Action Regulations
------ ----------------- ------------------
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
(Dollars in Thousands)
----------------------
March 31, 2005
- --------------
Total capital (to risk-
weighted assets) $ 16,594 20.5% $ 6,465 8.0% $ 8,081 10.0%
Tier 1 (core) capital (to
risk-weighted assets) 15,810 19.6 3,232 4.0 4,849 6.0
Tier 1 (core) capital (to
adjusted total assets) 15,810 11.6 5,452 4.0 6,815 5.0
Tangible capital (to
adjusted total assets) 15,810 11.6 2,044 1.5 N/A
June 30, 2004
- -------------
Total capital (to risk-
weighted assets) $ 15,448 20.0% $ 6,176 8.0% $ 7,720 10.0%
Tier 1 (core) capital (to
risk-weighted assets) 14,855 19.2 3,088 4.0 4,632 6.0
Tier 1 (core) capital (to
adjusted total assets) 14,855 10.9 5,440 4.0 6,801 5.0
Tangible capital (to
adjusted total assets) 14,855 10.9 2,040 1.5 N/A
- --------------------------------------------------------------------------------
(Continued)
21.
PEOPLES-SIDNEY FINANCIAL CORPORATION
CONTROLS AND PROCEDURES
- --------------------------------------------------------------------------------
Item 3. Controls and Procedures
-----------------------
Any control system, no matter how well designed and operated, can provide only
reasonable (not absolute) assurance that its objectives will be met.
Furthermore, no evaluation of controls can provide absolute assurance that all
control issues and instances of fraud, if any, have been detected.
Disclosure Controls
Based upon that evaluation, our Chief Executive Officer and Chief Financial
Officer concluded that as of March 31, 2005 our disclosure controls and
procedures were effective to provide reasonable assurance that (i) the
information required to be disclosed by us in this Report was recorded,
processed, summarized and reported within the time periods specified in the
SEC's rules and forms, and (ii) information required to be disclosed by us in
our reports that we file or submit under the Exchange Act is accumulated and
communicated to our management, including our principal executive and principal
financial officers, or persons performing similar functions, as appropriate to
allow timely decisions regarding required disclosure.
Internal Control Over Financial Reporting
There have not been any changes in the Corporation's internal control over
financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f)
under the Exchange Act) during the fiscal quarter to which this report relates
that have materially affected, or are reasonably likely to materially affect,
the Corporation's internal control over financial reporting.
- --------------------------------------------------------------------------------
(Continued)
22.
PEOPLES-SIDNEY FINANCIAL CORPORATION
PART II - OTHER INFORMATION
- --------------------------------------------------------------------------------
Item 1. Legal Proceedings
-----------------
The Company is not involved in any pending legal proceedings other than
routine legal proceedings occurring in the ordinary course of business,
which, in the aggregate, involved amounts which are believed to be
immaterial to the consolidated financial condition and operations of
the Company.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds
-----------------------------------------------------------
None.
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
--------
(a) (1) Exhibits 31.1 and 31.2: Section 302 Certifications
(2) Exhibit 32: Section 906 Certifications
- --------------------------------------------------------------------------------
(Continued)
23.
PEOPLES-SIDNEY FINANCIAL CORPORATION
- --------------------------------------------------------------------------------
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the small
business issuer has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: May 16, 2005 /s/ Douglas Stewart
------------------------- -------------------------------------
Douglas Stewart
President and Chief Executive Officer
Date: May 16, 2005 /s/ Debra Geuy
------------------------- -------------------------------------
Debra Geuy
Chief Financial Officer
- --------------------------------------------------------------------------------
(Continued)
24.
PEOPLES-SIDNEY FINANCIAL CORPORATION
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
3.1 Articles of Incorporation of Incorporated by reference to the Registration Statement
Peoples-Sidney Financial on Form S-1 filed by Peoples-Sidney Financial Corporation
Corporation on January 27, 1997 (the "S-1") with the Securities and
Exchange Commission (the "SEC"), Exhibit 3.1.
3.2 Bylaws of Peoples-Sidney Financial Incorporated by reference to the S-1, Exhibit 3.2.
Corporation
10.1 Employee Stock Ownership Plan Incorporated by reference to the S-1, Exhibit 10.1
10.2 Form of Employment Agreement with Incorporated by Pre-Effective Amendment No. 1 to the S-1
Douglas Stewart filed with the SEC on March 12, 1997, Exhibit 10.2
10.3 Form of Employment Agreements with Incorporated by Pre-Effective Amendment No. 1 to the S-1
David R. Fogt, Gary N. Fullenkamp and filed with the SEC on March 12, 1997, Exhibit 10.3
Debra A. Geuy
10.4 Form of Severance Agreement with Incorporated by Pre-Effective Amendment No. 1 to the S-1
Steve Goins filed with the SEC on March 12, 1997, Exhibit 10.4
10.5 401 (k) Plan Incorporated by Pre-Effective Amendment No. 1 to the S-1
filed with the SEC on March 12, 1997, Exhibit 10.5
10.6 Peoples-Sidney Financial Corporation Filed as an exhibit to the Registrant's Annual Report on
Amended and Restated 1998 Stock Form 10-KSB for the fiscal year ended June 30, 1999 (File
Option and Incentive Plan No. 0-22223) and incorporate herein by reference.
10.7 Peoples-Sidney Financial Corporation Filed as an exhibit to the Registrant's Annual Report on
Amended and Restated 1998 Management Form 10-KSB for the fiscal year ended June 30, 1999 (File
Recognition Plan No. 0-22223) and incorporate herein by reference.
11 Statement Regarding Computation of See Note 6 to the consolidated financial statements.
Earnings per Share
31.1 Certification of Principal Executive
Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
31.2 Certification of Principal Financial
Officer Pursuant to Section 302 of
the Sarbanes-Oxley Act of 2002
- --------------------------------------------------------------------------------------------------------------------
25.
PEOPLES-SIDNEY FINANCIAL CORPORATION
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- ------ -----------
32 Certifications of the Chief Executive
Officer and the Chief Financial
Officer Pursuant to Section 906 of
the Sarbanes-Oxley Act of 2002
- --------------------------------------------------------------------------------
26.