UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 or 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from __________________ to _________________________
Commission File Number 0-23122
GREAT FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
DELAWARE 61-1251805
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
ONE FINANCIAL SQUARE, LOUISVILLE, KENTUCKY 40202
(Address of principal executive offices) (Zip Code)
(502) 562-6000
(Registrant's telephone number, including area code)
Not Applicable
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. X Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: Common Stock, 14,183,732 shares
as of August 12, 1996.
GREAT FINANCIAL CORPORATION
I N D E X
Page
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements:
Consolidated Balance Sheets 3
Consolidated Statements of Income 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12
PART II. OTHER INFORMATION 20
SIGNATURES 21
GREAT FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
June 30, December 31,
1996 1995
----------- ------------
(unaudited)
Assets
Cash and due from banks ......................... $ 48,329 $ 29,792
Federal funds sold .............................. 4,000 54,375
Available-for-sale securities, at fair value .... 618,083 461,330
Mortgage loans held for sale .................... 162,762 144,163
Loans receivable, net of allowance for loan
losses of $13,031 (1996) and $11,821 (1995) .. 1,814,763 1,667,363
Federal Home Loan Bank stock, at cost ........... 31,226 21,917
Property and equipment .......................... 32,936 26,871
Mortgage servicing rights ....................... 34,249 35,751
Other assets .................................... 61,744 44,694
----------- -----------
Total assets ......................................... $2,808,092 $2,486,256
=========== ===========
Liabilities
Deposits:
Non-interest bearing ............................ $ 146,584 $ 103,969
Interest bearing ................................ 1,616,972 1,354,892
----------- -----------
Total deposits ................................ 1,763,556 1,458,861
Borrowed funds .................................... 741,159 714,209
Other liabilities ................................. 28,536 26,076
----------- -----------
Total liabilities ............................. 2,533,251 2,199,146
----------- -----------
Commitments and contingencies
Stockholders' equity
Preferred stock, $1.00 par value; 1,000,000
shares authorized and unissued
Common stock, $.01 par value; 24,000,000
shares authorized; 16,531,250 shares issued .. 165 165
Additional paid-in capital ...................... 161,279 159,786
Retained earnings - subject to restrictions ..... 173,818 163,822
Treasury stock, 2,347,518 shares (1996) and
1,608,355 shares (1995), at cost ............. (46,891) (28,230)
Unearned ESOP shares ............................ (10,745) (11,296)
Unearned compensation - stock compensation plans (3,708) (4,359)
Net unrealized appreciation on
available-for-sale securities ................. 923 7,222
----------- -----------
Total stockholders' equity ................... 274,841 287,110
----------- -----------
Total liabilities and stockholders' equity ........... $2,808,092 $2,486,256
=========== ===========
See notes to consolidated financial statements.
3
GREAT FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share amounts)
Three Months Ended Six Months Ended
June 30, June 30,
-------------------- --------------------
1996 1995 1996 1995
--------- -------- --------- --------
(unaudited)
Interest income
Loans ................................... $38,292 $31,892 $75,826 $61,471
Securities .............................. 9,646 6,084 17,213 12,249
Federal funds sold ...................... 302 235 547 257
-------- -------- --------- --------
Total interest income ................ 48,240 38,211 93,586 73,977
-------- -------- --------- --------
Interest expense
Deposits ................................ 19,448 15,752 37,824 29,696
Borrowed funds .......................... 9,850 7,753 18,942 14,430
-------- -------- --------- --------
Total interest expense ............... 29,298 23,505 56,766 44,126
-------- -------- --------- --------
Net interest income .......................... 18,942 14,706 36,820 29,851
Provision for loan losses .................... 616 475 1,236 1,103
-------- -------- --------- --------
Net interest income after provision for loan
losses ...................................... 18,326 14,231 35,584 28,748
-------- -------- --------- --------
Non-interest income
Servicing fee income .................... 6,744 6,831 13,760 12,887
Amortization of mortgage servicing rights (1,948) (1,779) (3,789) (2,685)
Gain on sale of mortgage loans .......... 1,889 861 3,402 1,217
Gain on sale of mortgage servicing rights 1,240 52 1,303 52
Gain (loss) on sale of securities ....... (270) 227 386 227
Other ................................... 1,311 970 2,634 2,047
-------- -------- --------- --------
Net non-interest income .............. 8,966 7,162 17,696 13,745
-------- -------- --------- --------
Non-interest expense
Compensation and benefits ............... 8,243 6,582 16,025 12,935
Office occupancy and equipment .......... 2,148 1,713 4,224 3,381
Office supplies, postage and telephone .. 1,241 1,108 2,505 2,180
Advertising and marketing ............... 882 552 1,834 1,277
Federal deposit insurance premiums ...... 862 672 1,688 1,343
State tax on deposits ................... 393 321 767 649
Other ................................... 3,298 2,404 6,103 4,334
-------- -------- --------- --------
Total non-interest expense ........... 17,067 13,352 33,146 26,099
-------- -------- --------- --------
Income before income taxes ................... 10,225 8,041 20,134 16,394
Income tax expense ........................... 3,664 2,880 7,142 5,887
-------- -------- --------- --------
Net income ................................... $ 6,561 $ 5,161 $12,992 $10,507
======== ======== ========= ========
Earnings per share $ 0.46 $ 0.35 $ 0.90 $ 0.69
======== ======== ========= ========
See notes to consolidated financial statements.
4
GREAT FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Six Months Ended June 30,
----------------------------
1996 1995
----------- ----------
(unaudited)
Net cash used in operating activities ......... $ (4,907) $(21,360)
----------- ----------
Investing activities
Purchases of securities ................... (240,028) (6,344)
Maturities of securities .................. 62,756 22,822
Principal collected on mortgage-backed
securities ............................... 33,915 13,246
Proceeds from sale of available-for-sale
securities ............................... 33,884
Proceeds from sale of mortgage servicing
rights ................................... 1,375
Proceeds from sale of property and
equipment ................................ 48
Increase in loans receivable .............. (22,060) (161,179)
Purchase of Lexington Federal Savings
Bank, FSB, net of cash and cash
equivalents acquired ..................... (30,363)
Purchases of Federal Home Loan Bank stock . (6,771)
Purchases of property and equipment and
other assets ............................. (5,174) (1,234)
Purchases of mortgage servicing rights .... (51) (13,004)
Originations of mortgage servicing
rights ................................... (2,280)
Proceeds from sale of real estate owned ... 610
----------- ----------
Net cash used in investing activities . (174,139) (145,693)
----------- ----------
Financing activities
Increase in deposits ...................... 136,542 122,643
Decrease in short-term borrowings ......... (39,543) (22,957)
Long-term advances from Federal Home Loan
Bank ..................................... 90,750 115,985
Payments on long-term advances from Federal
Home Loan Bank ........................... (24,585) (1,940)
Increase in mortgage escrow funds ......... 5,702 8,767
Purchases of treasury stock ............... (18,794) (28,277)
Exercise of stock options ................. 100
Dividends paid ............................ (2,964) (2,640)
----------- ----------
Net cash provided by financing
activities ........................... 147,208 191,581
----------- ----------
Net increase (decrease) in cash and cash
equivalents .................................. (31,838) 24,528
Cash and cash equivalents, beginning of period 84,167 17,013
----------- ----------
Cash and cash equivalents, end of period ...... $ 52,329 $ 41,541
=========== ==========
Cash paid during the period for
Interest .................................. $ 57,030 $ 44,373
Income taxes .............................. $ 5,640 $ 3,941
Supplemental disclosure of noncash activities
Additions to real estate acquired in
settlement of loans ....................... $ 1,506 $ 1,556
Accrual of purchase of mortgage servicing
rights .................................... $ 2,278
Accrual of proceeds from sale of mortgage
servicing rights .......................... $ 1,083
See notes to consolidated financial statements.
5
GREAT FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of Great Financial Corporation (Company) and its subsidiaries,
Great Financial Bank, FSB (Great Financial), and First Federal Savings
Bank of Richmond, Kentucky (First Federal). All material intercompany
balances and transactions have been eliminated. The consolidated
financial statements have been prepared in accordance with generally
accepted accounting principles for interim financial information and with
the instructions to Form 10-Q and Article 10 of Regulation S-X.
Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete
consolidated financial statements. In the opinion of management, all
adjustments necessary for a fair presentation have been included. Such
adjustments consist only of normal recurring accruals. It is suggested
that these consolidated financial statements be read in conjunction with
the Company's audited financial statements included in its annual report
on Form 10-K for the year ended December 31, 1995. Results of operations
for interim periods are not necessarily indicative of the results that
may be expected for the entire fiscal year.
2. SECURITIES
June 30, 1996
---------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
(in thousands)
Available-for-sale securities:
U.S. Government and agency obligations $ 98,623 $ 215 $ (775) $ 98,063
Other debt securities ................ 1,993 40 2,033
--------- ---------- ---------- ---------
Total debt securities .............. 100,616 255 (775) 100,096
Mortgage-backed securities ........... 515,703 4,712 (3,750) 516,665
Equity securities .................... 344 980 (2) 1,322
--------- ---------- ---------- ---------
Total available-for-sale securities ... $616,663 $5,947 $(4,527) $618,083
========= ========== ========== =========
6
December 31, 1995
---------------------------------------------
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
(in thousands)
Available-for-sale securities:
U.S. Government and agency obligations $112,082 $ 793 $ (100) $112,775
Other debt securities ................ 2,077 34 2,111
--------- ---------- ---------- ---------
Total debt securities .............. 114,159 827 (100) 114,886
Mortgage-backed securities ........... 334,946 9,317 (171) 344,092
Equity securities .................... 1,115 1,237 2,352
--------- --------- --------- ---------
Total available-for-sale securities .... $450,220 $11,381 $ (271) $461,330
========= ========= ========= =========
Gross realized gains for the three and six months ended June 30, 1996
were $218,203 and $1,272,888, respectively. Gross realized losses for the
same periods were $489,022 and $887,325, respectively. Gross realized
gains for the three and six months ended June 30, 1995 were $226,684.
There were no losses on securities for the first six months of 1995. In
computing gains and losses, cost is determined by the specific
identification method for debt and mortgage-backed securities. Cost is
determined by the average cost method for equity securities.
3. ALLOWANCE FOR LOAN LOSSES
Activity in the allowance for loan losses is summarized as follows:
Three Months Six Months
Ended June 30, Ended June 30,
--------------------- ---------------------
1996 1995 1996 1995
-------- -------- -------- --------
(in thousands)
Balance, beginning of period ....... $12,214 $11,220 $11,821 $11,076
Provision charged to income ........ 616 475 1,236 1,103
Charge-offs ........................ (321) (527) (564) (1,051)
Recoveries ......................... 22 6 38 46
Acquired in merger ................. 500 500
-------- -------- -------- --------
Balance, end of period ............. $13,031 $11,174 $13,031 $11,174
======== ======== ======== ========
4. LOAN SERVICING
The Company was servicing a portfolio consisting of 75,700 and 79,300
mortgage loans at June 30, 1996 and December 31, 1995, respectively,
that are owned by investors and are not included in the accompanying
financial statements. Mortgage loans serviced for others are summarized
as follows:
June 30, December 31,
1996 1995
---------- ------------
(in thousands)
GNMA .............................. $2,974,657 $3,215,249
FNMA .............................. 1,089,369 1,226,666
FHLMC ............................. 563,021 510,068
Other investors ................... 259,761 215,567
---------- ------------
Total servicing portfolio ......... $4,886,808 $5,167,550
========== ============
7
In addition to servicing mortgage loans for others, the Company is a
subservicer for third-party servicing owners, including GNMA. At June
30, 1996 and December 31, 1995, the Company subserviced a total of 21,300
and 20,000 loans, respectively.
Custodial escrow balances maintained in connection with the foregoing
loan servicing were $111,219,000 and $108,424,000, at June 30, 1996 and
December 31, 1995, respectively, of which $101,528,000 and $86,554,000,
respectively, are included in deposits in the accompanying consolidated
balance sheets.
5. BORROWED FUNDS
June 30, 1996 December 31, 1995
------------------- -------------------
Weighted Weighted
Average Average
Amount Rate Amount Rate
-------- -------- -------- --------
(dollars in thousands)
Short-term borrowings:
Reverse repurchase agreements ........ $ 84,000 5.50% $176,433 6.03%
Advances from Federal Home Loan Bank . 60,200 5.77% 2,150 6.14%
Borrowings under lines of credit ..... 111,707 5.03% 116,875 5.27%
-------- --------
Total short-term borrowings ........ 255,907 295,458
-------- --------
Long-term borrowings from Federal Home
Loan Bank:
Adjustable rate advances, interest
based on Libor; 5.52% (1996) and
6.00%(1995) ......................... 150,000 100,000
Fixed rate advances, 6.28% (1996)
and 6.29% (1995) .................... 298,661 278,489
Mortgage matched and other advances
payable monthly through 2026 with
interest rates from 3.38% to 8.05% .. 36,591 40,262
-------- --------
Total long-term borrowings ......... 485,252 418,751
-------- --------
Total borrowed funds ................... $741,159 $714,209
======== ========
Information concerning borrowings under reverse repurchase agreements
is summarized as follows:
At or For the Three Months At or For the Six Months
Ended June 30, Ended June 30,
-------------------------- --------------------------
1996 1995 1996 1995
---------- ---------- ---------- ----------
(dollars in thousands)
Average balance during the period .......... $ 67,524 $191,797 $ 59,386 $136,364
Average interest rate during the period .... 5.44% 6.13% 5.51% 6.13%
Maximum month-end balance during the
period .................................... $111,741 $220,452 $111,741 $220,452
Mortgage-backed securities underlying
the agreements at end of period:
Carrying value .......................... $ 96,859 $138,251
Fair value .............................. $ 98,090 $141,149
8
Mortgage-backed securities sold under reverse repurchase agreements were
delivered to the broker-dealers who arranged the transactions. The
broker-dealers may have sold, loaned, or otherwise disposed of such
securities to other parties in the normal course of their operations, and
have agreed to resell to the Company identical securities at the
maturities of the agreements. The agreements at June 30, 1996 mature
within one year.
6. SEGMENT INFORMATION
The schedules on pages 10 and 11 present information concerning the
Company's operations which include two reportable segments: banking
and mortgage banking businesses. The banking segment is composed of those
operations involved in making loans held for investment, primarily on
single family residences; investing in government and government
agencies' securities and receiving deposits from customers. The mortgage
banking segment is made up of those operations involved in originating
and purchasing residential mortgage loans for resale in the secondary
mortgage market and in servicing loans for others. The Company's
operations involved in purchasing delinquent FHA and VA loans have
previously been classified within the banking segment. Since these
loans are purchased from GNMA pools the Company services in its
mortgage banking business and due to the unique servicing requirements
of these loans, the Company determined that these operations are more
properly classified within the mortgage banking segment and has so
classified the applicable income and expense for the three and six months
ended June 30, 1996 in the schedules which follows. The income and
expense applicable to these operations for the three and six months
ended June 30, 1995 have been reclassified to the mortgage banking
segment. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" for a further discussion of this
business activity. Intersegment interest income and expense represent (i)
interest on advances from the banking segment to the mortgage banking
segment to fund the origination of loans computed at a rate tied to a
short-term index and to fund the investment in mortgage servicing rights
computed at a rate tied to a medium-term index, (ii) interest on
custodial balances of the mortgage banking segment on deposit with the
banking segment computed at a rate tied to a medium-term index, (iii)
interest on advances from the Parent Company (in "other" segment) to the
banking segment computed at a rate tied to a short-term index, and (iv)
interest expense incurred by the banking segment on a loan from the
Parent Company to the ESOP computed at 6%.
7. ACQUISITION
On June 7, 1996, the Company completed the acquisition of LFS Bancorp,
Inc., parent company of Lexington Federal Savings Bank, FSB (Lexington
Federal). The acquisition was accounted for using the purchase method
of accounting, and accordingly, the results of operations of the acquired
bank prior to the acquisition date have not been included in the
consolidated statements of income. Lexington Federal merged with Great
Financial upon acquisition.
8. RECLASSIFICATIONS
Certain amounts have been reclassified in the previous year's financial
statements to conform with the current year's classifications.
9
SEGMENT INFORMATION
Three Months Ended June 30, 1996
----------------------------------------------------------------
Mortgage
Banking Banking Other Eliminations Consolidated
----------- ----------- ---------- ------------ ------------
(in thousands)
Interest income:
Unaffiliated customers $ 42,039 $ 6,197 $ 4 $ 48,240
Intersegment 3,261 2,144 252 $ (5,657)
----------- ----------- ---------- ------------ ------------
Total interest income 45,300 8,341 256 (5,657) 48,240
----------- ----------- ---------- ------------ ------------
Interest expense:
Unaffiliated customers 27,555 1,743 29,298
Intersegment 2,397 3,259 1 (5,657)
----------- ---------- ---------- ------------ ------------
Total interest expense 29,952 5,002 1 (5,657) 29,298
----------- ---------- ---------- ------------ ------------
Net interest income 15,348 3,339 255 18,942
Provision for loan losses (616) (616)
Non-interest income 752 10,208 275 (2,269) 8,966
Non-interest expense (9,890) (8,726) (720) 2,269 (17,067)
----------- ---------- ---------- ------------ ------------
Income before income taxes $ 5,594 $ 4,821 $ (190) $ 10,225
=========== ========== ========== ============ ============
Identifiable assets $2,497,961 $368,822 $261,362 $(320,053) $2,808,092
=========== ========== ========== ============ ============
Depreciation and amortization
of property and equipment $ 535 $ 320 $ 7 $ 862
=========== ========== ========== ============ ============
Three Months Ended June 30, 1995
----------------------------------------------------------------
Mortgage
Banking Banking Other Eliminations Consolidated
----------- ---------- ---------- ------------ ------------
(in thousands)
Interest income:
Unaffiliated customers $ 33,332 $ 4,876 $ 3 $ 38,211
Intersegment 2,516 1,449 616 $ (4,581)
----------- ---------- ---------- ------------ ------------
Total interest income 35,848 6,325 619 (4,581) 38,211
----------- ---------- ---------- ------------ ------------
Interest expense:
Unaffiliated customers 22,088 1,417 23,505
Intersegment 2,064 2,517 (4,581)
----------- ---------- ---------- ------------ ------------
Total interest expense 24,152 3,934 (4,581) 23,505
----------- ---------- ---------- ------------ ------------
Net interest income 11,696 2,391 619 14,706
Provision for loan losses (475) (475)
Non-interest income 1,191 7,876 138 (2,043) 7,162
Non-interest expense (8,355) (6,452) (588) 2,043 (13,352)
----------- ---------- ---------- ------------ ------------
Income before income taxes $ 4,057 $ 3,815 $ 169 $ 8,041
=========== ========== ========== ============ ============
Identifiable assets $1,922,655 $253,468 $259,354 $(314,719) $2,120,758
=========== ========== ========== ============ ============
Depreciation and amortization
of property and equipment $ 393 $ 297 $ 690
=========== ========== ========== ============ ============
10
Six Months Ended June 30, 1996
----------------------------------------------------------------
Mortgage
Banking Banking Other Eliminations Consolidated
----------- ----------- ---------- ------------ ------------
(in thousands)
Interest income:
Unaffiliated customers $ 81,613 $ 11,966 $ 7 $ 93,586
Intersegment 6,070 3,218 671 $ (9,959)
----------- ----------- ---------- ------------ ------------
Total interest income 87,683 15,184 678 (9,959) 93,586
----------- ----------- ---------- ------------ ------------
Interest expense:
Unaffiliated customers 53,231 3,535 56,766
Intersegment 3,890 6,068 1 (9,959)
----------- ---------- ---------- ------------ ------------
Total interest expense 57,121 9,603 1 (9,959) 56,766
----------- ---------- ---------- ------------ ------------
Net interest income 30,562 5,581 677 36,820
Provision for loan losses (1,236) (1,236)
Non-interest income 2,578 19,007 492 (4,381) 17,696
Non-interest expense (19,248) (17,021) (1,258) 4,381 (33,146)
----------- ---------- ---------- ------------ ------------
Income before income taxes $ 12,656 $ 7,567 $ (89) $ 20,134
=========== ========== ========== ============ ============
Identifiable assets $2,497,961 $368,822 $261,362 $(320,053) $2,808,092
=========== ========== ========== ============ ============
Depreciation and amortization
of property and equipment $ 1,043 $ 635 $ 9 $ 1,687
=========== ========== ========== ============ ============
Six Months Ended June 30, 1995
----------------------------------------------------------------
Mortgage
Banking Banking Other Eliminations Consolidated
----------- ---------- ---------- ------------ ------------
(in thousands)
Interest income:
Unaffiliated customers $ 64,685 $ 9,279 $ 13 $ 73,977
Intersegment 4,766 2,819 1,494 $ (9,079)
----------- ---------- ---------- ------------ ------------
Total interest income 69,451 12,098 1,507 (9,079) 73,977
----------- ---------- ---------- ------------ ------------
Interest expense:
Unaffiliated customers 41,359 2,767 44,126
Intersegment 4,313 4,766 (9,079)
----------- ---------- ---------- ------------ ------------
Total interest expense 45,672 7,533 (9,079) 44,126
----------- ---------- ---------- ------------ ------------
Net interest income 23,779 4,565 1,507 29,851
Provision for loan losses (700) (403) (1,103)
Non-interest income 2,258 15,178 288 (3,979) 13,745
Non-interest expense (16,884) (11,874) (1,320) 3,979 (26,099)
----------- ---------- ---------- ------------ ------------
Income before income taxes $ 8,453 $ 7,466 $ 475 $ 16,394
=========== ========== ========== ============ ============
Identifiable assets $1,922,655 $253,468 $259,354 $(314,719) $2,120,758
=========== ========== ========== ============ ============
Depreciation and amortization
of property and equipment $ 756 $ 589 $ 1,345
=========== ========== ========== ============ ============
11
GREAT FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The Company's consolidated results of operations are dependent primarily on net
interest income, which is the difference between the interest income earned on
interest-earning assets, such as loans and securities, and the interest expense
incurred on interest-bearing liabilities, such as deposits and borrowings. The
results are also significantly affected by its mortgage banking activities
which involve the origination, purchase, sale, servicing and subservicing of
residential mortgage loans. The Company also generates non-interest income such
as transactional fees and gain or loss on sale of mortgage loans, mortgage
servicing rights and securities. In addition, commissions are earned from the
sale of annuity and mutual fund products. The Company's operating expenses
consist primarily of employee compensation, occupancy expenses, federal deposit
insurance premiums and other general and administrative expenses. The Company's
results of operations are significantly affected by its periodic amortization of
mortgage servicing rights and by its provisions for loan losses. The Company's
results of operations are also significantly affected by general economic and
competitive conditions, particularly changes in market interest rates,
government policies and actions of regulatory agencies.
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1996 TO DECEMBER 31, 1995
Assets increased $321.8 million during the first six months of 1996 to $2.8
billion. Contributing significantly to this increase was the acquisition of
Lexington Federal, which was completed June 7, 1996. Total assets acquired from
Lexington Federal were approximately $240 million, including $128.2 million in
net loans receivable and $56.5 million in investment securities. Deposits
acquired from Lexington Federal totaled $168.2 million. The following balance
sheet comparisons include the effects of the acquisition of Lexington Federal.
Net loans receivable totaled $1.8 billion at June 30, 1996, increasing $147.4
million in the first six months of 1996. The Company continued to diversify its
loan portfolio and enhance portfolio yield by building the percentage of
consumer and commercial loans in the portfolio. The following table shows the
composition of the loan portfolio at June 30, 1996 in comparison to December
31, 1995:
Loan Portfolio Composition at
-----------------------------
June 30, December 31,
1996 1995
------------ ------------
Loan category:
One-to-four family residential ..... 75.7% 78.6%
Multi-family residential ........... 8.0% 7.8%
Commercial real estate ............. 4.7% 3.6%
Construction and land .............. 5.3% 5.1%
Non-mortgage, primarily installment. 6.3% 4.9%
------------ ------------
100.0% 100.0%
============ ============
The securities portfolio increased $156.8 million in the first six months of
1996 to a total of $618.1 million. This increase was primarily due to a $172.6
million increase in mortgage-backed securities, of which $37.2 million were
acquired from Lexington Federal. Purchases of mortgage-backed securities were
funded by borrowings from the Federal Home Loan Bank. The expected average lives
of the purchased securities were closely matched to the related borrowings to
enable the Company to grow without incurring significant interest rate risk.
12
Deposits increased $304.7 million or 21% during the first six months of 1996.
Approximately $120 million of this increase was due to growth in retail deposits
attracted through advertising, competitive deposit rates and increased retail
sales efforts. The balance of the increase was due to the Lexington Federal
acquisition and an increase in custodial account balances associated with the
portfolio of loans serviced for others.
Borrowed funds increased $27.0 million during the first six months of 1996, with
long-term FHLB advances increasing by $66.5 million and short-term borrowings
decreasing $39.6 million. The Company increased long-term fixed and variable
rate borrowings from the FHLB to fund purchases of mortgage-backed securities.
Growth in deposits enabled the Company to decrease short-term borrowings.
Stockholders' equity totaled $274.8 million at June 30, 1996 or 9.8% of total
assets, which was $12.3 million less than at year-end 1995. This decline in
total equity was the net result of the Company purchasing 739,163 shares of its
common stock at a cost of $18.7 million; after-tax net unrealized gains on
available-for-sale securities decreasing by $6.3 million; dividends of $3.0
million; and earnings of $13.0 million for the six months ended June 30, 1996.
RESULTS OF OPERATIONS
Overview. The Company's net income of $6.6 million for the three months ended
June 30, 1996 was $1.4 million or 27% greater than the second quarter of 1995.
For the six months ended June 30, 1996 net income of $13.0 million was 24%
greater than the same period last year. These results were primarily due to
increased net interest income and gains on sales of mortgage loans and mortgage
servicing rights, partially offset by increased non-interest expense.
Net Interest Income. For the second quarter 1996, net interest income increased
29%, or $4.2 million versus the second quarter of 1995. This increase was
primarily due to the growth in interest-earning assets and an increase in the
net interest spread. Average interest-earning assets and average
interest-bearing liabilities increased $489.7 million and $476.6 million,
respectively, in the second quarter of 1996 versus the second quarter of 1995,
resulting in a $3.0 million increase in net interest income. The average yield
on interest-earning assets rose slightly from 7.91% in the second quarter of
1995, to 7.99% in the second quarter of 1996. The average cost of
interest-bearing liabilities decreased from 5.75% in the 1995 second quarter to
5.56% in the second quarter of 1996. These average rate changes resulted in a
$1.3 million increase in net interest income and an increase in the interest
rate spread from 2.16% in the second quarter of 1995 to 2.43% in the 1996 second
quarter. Net interest margin increased to 3.14% in the second quarter of 1996
from 3.04% in the second quarter of 1995.
Net interest income was up $7 million, or 23%, for the first six months of 1996
compared to the same period of 1995. Average interest-earning assets and average
interest-bearing liabilities increased $454.8 million and $453.3 million,
respectively, in the first half of 1996 versus the same period of 1995,
resulting in a $5.3 million increase in net interest income. The average yield
on interest-earning assets increased from 7.89% for the first six months of 1995
to 8.03% for the first six months of 1996. The average cost of interest-bearing
liabilities remained almost constant at 5.58% for the first half of 1996 versus
5.59% for the first half of 1995. These rate changes resulted in a $1.7
million increase in net interest income and the interest rate spread increasing
to 2.45% in 1996, up from 2.30% in 1995. Net interest margin declined slightly
to 3.16% in the first half of 1996 from 3.18% in the same period last year.
13
AVERAGE BALANCE SHEETS AND ANALYSIS OF NET INTEREST INCOME
Net interest income represents the difference between income on interest-earning
assets and expense on interest-bearing liabilities. Net interest income depends
on the volume of interest-earning assets and interest-bearing liabilities and
the rates earned or paid on them. The following tables set forth certain
information relating to the Company's average consolidated balance sheets and
consolidated statements of income for the three and six month periods ended June
30,1996 and 1995. The yields and costs are derived by dividing income or expense
by the average balance of assets and liabilities, respectively. Average balances
for interest-earning assets and interest-bearing liabilities are derived from
daily balances. All other average balances are derived from month-end balances.
Management does not believe that the use of average monthly balances instead of
average daily balances has caused any material differences in the information
presented. The average balance of loans receivable includes loans on which the
Company has discontinued accruing interest. The yields and costs include fees
which are considered adjustments to yields and costs.
Three Months Ended June 30,
----------------------------------------------------------------
1996 1995
------------------------------- ------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost (4) Balance Interest Cost (4)
---------- -------- --------- ---------- -------- --------
(dollars in thousands)
Assets:
Interest-earning assets:
Loans receivable, net (1) ...... $1,867,216 $38,292 8.25% $1,581,613 $31,892 8.09%
Mortgage-backed securities ..... 443,778 8,192 7.42% 267,865 4,987 7.47%
Debt and equity securities ..... 67,818 1,000 5.93% 55,379 803 5.82%
Federal funds sold ............. 23,032 302 5.27% 15,706 235 5.99%
FHLB stock ..................... 26,176 454 6.98% 17,782 294 6.63%
---------- -------- --------- ---------- -------- --------
Total interest-earning assets . 2,428,020 48,240 7.99% 1,938,345 38,211 7.91%
-------- --------- -------- --------
Non-interest-earning assets ......... 161,551 113,891
---------- ----------
Total assets ................... $2,589,571 $2,052,236
========== ==========
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Passbook accounts .............. $ 130,477 998 3.08% $ 123,374 989 3.22%
Interest-bearing demand deposit
accounts ..................... 109,520 964 3.54% 49,426 334 2.71%
Money market accounts .......... 162,022 1,866 4.63% 112,809 1,403 4.99%
Certificate accounts ........... 1,065,799 15,620 5.89% 867,634 13,026 6.02%
Short-term borrowings .......... 187,765 2,844 6.09% 287,871 4,426 6.17%
Long-term borrowings ........... 462,113 7,006 6.10% 199,935 3,327 6.67%
---------- -------- --------- ---------- -------- --------
Total interest-bearing
liabilities ................. 2,117,696 29,298 5.56% 1,641,049 23,505 5.75%
-------- --------- -------- --------
Non-interest-bearing liabilities .... 197,134 136,748
---------- ----------
Total liabilities .............. 2,314,830 1,777,797
Stockholders' equity ................ 274,741 274,439
---------- ----------
Total liabilities and
stockholders' equity $2,589,571 $2,052,236
========== ==========
Net interest income / interest
rate spread (2) ...................... $18,942 2.43% $14,706 2.16%
Net interest earning assets / net ======== ========= ======== ========
interest margin (3) ................. $ 310,324 3.14% $ 297,296 3.04%
========== ========= ========== ========
Ratio of interest-earning assets
to interest-bearing liabilities ..... 114.65% 118.12%
========== ==========
- ---------------
<FN>
(1) Loans receivable, net include loans held for sale.
(2) Net interest rate spread represents the difference between the average
yield on average interest-earning assets and the average cost of average
interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average
interest-earning assets.
(4) For purposes of calculating these figures, all
interest income and interest costs are annualized.
</FN>
14
Six Months Ended June 30,
----------------------------------------------------------------
1996 1995
------------------------------- ------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost (4) Balance Interest Cost (4)
---------- -------- --------- ---------- -------- --------
(dollars in thousands)
Assets:
Interest-earning assets:
Loans receivable, net (1) ...... $1,836,984 $75,826 8.30% $1,536,032 $61,471 8.07%
Mortgage-backed securities ..... 395,937 14,384 7.31% 268,599 9,991 7.50%
Debt and equity securities ..... 66,732 1,966 5.92% 59,404 1,679 5.70%
Federal funds sold ............. 20,647 547 5.33% 8,654 257 5.98%
FHLB stock ..................... 24,839 863 6.99% 17,622 579 6.63%
---------- -------- --------- ---------- -------- --------
Total interest-earning assets . 2,345,139 93,586 8.03% 1,890,311 73,977 7.89%
-------- --------- -------- --------
Non-interest-earning assets ......... 173,376 112,336
---------- ----------
Total assets ................... $2,518,515 $2,002,647
========== ==========
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Passbook accounts .............. $ 127,893 1,954 3.07% $ 126,935 2,020 3.21%
Interest-bearing demand deposit
accounts ..................... 97,277 1,586 3.28% 48,927 640 2.64%
Money market accounts .......... 158,806 3,667 4.64% 110,146 2,641 4.84%
Certificate accounts ........... 1,040,010 30,617 5.92% 850,757 24,395 5.78%
Short-term borrowings .......... 178,678 5,437 6.12% 272,189 8,300 6.15%
Long-term borrowings ........... 443,390 13,505 6.13% 183,843 6,130 6.72%
---------- -------- --------- ---------- -------- --------
Total interest-bearing
liabilities ................. 2,046,054 56,766 5.58% 1,592,797 44,126 5.59%
-------- --------- -------- --------
Non-interest-bearing liabilities .... 192,685 129,985
---------- ----------
Total liabilities .............. 2,238,739 1,722,782
Stockholders' equity ................ 279,776 279,865
---------- ----------
Total liabilities and
stockholders' equity $2,518,515 $2,002,647
========== ==========
Net interest income / interest
rate spread (2) ...................... $36,820 2.45% $29,851 2.30%
Net interest earning assets / net ======== ========= ======== ========
interest margin (3) ................. $ 299,085 3.16% $ 297,514 3.18%
========== ========= ========== ========
Ratio of interest-earning assets
to interest-bearing liabilities ..... 114.62% 118.68%
========== ==========
- ---------------
<FN>
(1) Loans receivable, net include loans held for sale.
(2) Net interest rate spread represents the difference between the average
yield on average interest-earning assets and the average cost of average
interest-bearing liabilities.
(3) Net interest margin represents net interest income divided by average
interest-earning assets.
(4) For purposes of calculating these figures, all
interest income and interest costs are annualized.
</FN>
15
RATE / VOLUME ANALYSIS
The following table presents the extent to which changes in interest rates and
changes in the volume of interest-earning assets and interest-bearing
liabilities have affected the Company's interest income and interest expense
during the periods indicated. Information is provided in each category with
respect to (i) changes attributable to changes in volume (changes in volume
multiplied by prior rate), (ii) changes attributable to changes in rate
(changes in rate multiplied by prior volume), and (iii) the net change. The
changes attributable to the combined impact of volume and rate have been
allocated proportionately to the changes due to volume and the changes due to
rate.
Three Months Ended June 30, Six Months Ended June 30,
1996 vs. 1995 1996 vs. 1995
------------------------------- -------------------------------
Increase (Decrease) Due to Increase (Decrease) Due to
------------------------------- -------------------------------
Volume Rate Total Volume Rate Total
--------- -------- -------- --------- -------- --------
(in thousands)
Interest-earning assets:
Loans receivable, net .............. $5,768 $ 632 $ 6,400 $12,532 $1,823 $14,355
Mortgage-backed securities ......... 3,239 (34) 3,205 4,652 (259) 4,393
Debt and equity securities ......... 182 15 197 219 68 287
Federal funds sold ................. 98 (31) 67 321 (31) 290
FHLB stock ......................... 143 17 160 251 33 284
-------- -------- -------- --------- -------- ---------
Total ......................... 9,430 599 10,029 17,975 1,634 19,609
-------- -------- -------- --------- -------- ---------
Interest-bearing liabilities:
Passbook accounts .................. 54 (45) 9 16 (82) (66)
Demand deposit accounts ............ 503 127 630 760 186 946
Money market accounts .............. 571 (108) 463 1,139 (113) 1,026
Certificate accounts ............... 2,882 (288) 2,594 5,611 611 6,222
Short-term borrowings .............. (1,525) (57) (1,582) (2,816) (47) (2,863)
Long-term borrowings ............... 3,986 (307) 3,679 7,958 (583) 7,375
-------- -------- -------- --------- -------- ---------
Total ......................... 6,471 (678) 5,793 12,668 (28) 12,640
-------- -------- -------- --------- -------- ---------
Net change in net interest income ....... $2,959 $1,277 $ 4,236 $ 5,307 $1,662 $ 6,969
======== ======== ========= ========= ======== =========
16
Provision for Loan Losses. The provision for loan losses was $616,000 or 0.13%
(annualized) of average loans in the 1996 second quarter, compared to $475,000
or 0.12% of average loans in the second quarter last year. Net charge-offs
decreased from $521,000 or 0.13% of average loans in the second quarter last
year to $ 299,000 or 0.06% of average loans in this year's second quarter. The
provision for loan losses for the six months ended June 30, 1996 was $1.2
million or 0.14% of average loans during the period, compared to $1.1 million or
0.14% of average loans for the same period last year. Net charge-offs decreased
when comparing the two six-month periods, from $1.0 million or 0.13% of average
loans last year to $526,000 or 0.06% of average loans this year.
Non-Interest Income. The increases in non-interest income of $1.8 million and
$4.0 million for the three and six months ended June 30, 1996, respectively, in
comparison to the same periods of 1995 were primarily attributable to increases
in gains on sales of mortgage loans and mortgage servicing rights, partially
offset by losses on sale of securities and increased amortization of mortgage
servicing rights. Gain on sale of mortgage loans increased $1.0 million and $2.2
million for the three and six months ended June 30, 1996, respectively, versus
the same periods of 1995. The continued favorable interest rate environment
related to mortgage lending allowed the Company's mortgage banking business to
originate a larger portion of loans for sale in the secondary market. Gain on
sale of mortgage servicing rights increased $1.2 million for the first three and
six months of 1996 compared to the same periods of 1995, due to a bulk sale of
servicing rights related to approximately $103 million of mortgage loans. These
servicing rights were sold to manage prepayment risk and take advantage of
favorable market opportunities. The Company will consider possible future sales
of servicing rights should market conditions for such sales remain favorable.
The second quarter and year-to-date 1996 gains (loss) on sale of securities
includes losses of $489,000 and $839,000, respectively, related to the Company's
decision to discontinue retail trust operations. Gain on sale of securities for
the first half of 1996 were the result of restructuring a portion of the
Company's securities portfolio. The increased amortization of servicing rights
of $169,000 and $1.1 million for the three and six months ended June 30, 1996,
respectively, in comparison with 1995 were due to the effect of the acquisition
of servicing rights on a $1.0 billion GNMA servicing portfolio on March 31, 1995
and the Company's implementation of Statement of Financial Accounting Standard
No. 122, "Accounting for Mortgage Banking Activities," in July 1995, related to
originated mortgage servicing rights. Increases in other non-interest income for
the three and six months ended June 30, 1996 in comparison with the same periods
of 1995 are primarily attributable to increases in service charges on retail
banking products.
Non-Interest Expense. Non-interest expense for the three and six months ended
June 30, 1996 increased $3.7 million and $7.0 million, respectively, in
comparison to the same periods of 1995. While total non-interest expenses
increased, expenses for both the second quarter and the year-to-date 1996
periods, as a percentage of average assets, were 2.65%, compared to 2.61% and
2.63% for the same periods of 1995, respectively. Operating expenses for the
second quarter and year-to-date 1996 included expenses of First Federal,
acquired in July 1995, of $770,000 and $1.6 million, respectively. Increases in
compensation and benefits resulted primarily from a reduction in origination
costs deferred in connection with the shift in origination of single family
loans from portfolio production to secondary market production, as well as the
cost of additional staff required to deliver and support an expanded line of
retail banking and investment products. Office occupancy and equipment expense
increased as a result of banking office construction and renovation initiated to
enhance service to retail banking customers. The rise in other non-interest
expense was largely due to increased costs associated with the $1.0 billion GNMA
servicing portfolio acquired on March 31, 1995, and increased mortgage loan
production for sale in the secondary market.
Income Tax Expense. Income tax expense of $3.7 million and $2.9 million for the
three months ended June 30, 1996 and 1995, respectively, resulted in an
effective income tax rate of 35.8% on income before taxes. For the six months
ended June 30, 1996 and 1995, income tax expense resulted in effective income
tax rates of 35.5% and 35.9%, respectively. The decrease in the year-to-date
effective income tax rate, as of June 30, 1996 in comparison to June 30, 1995,
is primarily due to income tax credits earned in connection with the Company's
investment in low income housing partnerships as part of its community
reinvestment activities.
17
NON-PERFORMING ASSETS
The following table sets forth information regarding the Company's
non-performing assets at the dates indicated.
June 30, December 31,
1996 1995
--------- ------------
(dollars in thousands)
Non-performing loans:
Non-accrual loans ............................ $ 8,176 $ 7,446
Accruing loans which are contractually
past due 90 days or more:
FHA/VA loans (limited credit risk - see
discussion below) ......................... 79,975 88,852
Other loans ................................ 4,795 3,865
Restructured loans ........................... 2,013 2,033
--------- -----------
Total non-performing loans ................... 94,959 102,196
Real estate owned .............................. 2,157 1,136
--------- -----------
Total non-performing assets .................... $97,116 $103,332
========= ===========
Non-performing loans to total loans:
Including FHA/VA loans ....................... 4.68% 5.52%
Excluding FHA/VA loans ....................... 0.74% 0.72%
Non-performing assets to total assets:
Including FHA/VA loans ....................... 3.46% 4.16%
Excluding FHA/VA loans ....................... 0.61% 0.58%
Allowance for loan losses to total loans ....... 0.64% 0.64%
Allowance for loan losses to non-performing
loans:
Including FHA/VA loans ....................... 13.72% 11.57%
Excluding FHA/VA loans ....................... 86.96% 88.59%
Allowance for loan losses to non-performing
assets:
Including FHA/VA loans ....................... 13.42% 11.44%
Excluding FHA/VA loans ....................... 76.02% 81.63%
Accruing FHA/VA loans which were contractually past due 90 days or more were
purchased by the Company from GNMA pools it services. At June 30, 1996, the
Company held in its portfolio $132.4 million of FHA/VA loans which were
delinquent at the time of purchase. Such loans totaled $128.7 million at
December 31, 1995. As a servicer of GNMA pools, the Company is obligated to
remit to security holders interest at the coupon rate regardless of whether such
interest is actually received from the underlying borrower. The Company, by
purchasing such delinquent loans out of the pools, is able to retain the benefit
of the net interest rate differential between the coupon rate it would otherwise
be obligated to pay to the GNMA security holder and the Company's current cost
of funds. Most of the Company's investment in delinquent FHA and VA loans is
recoverable through claims made against the FHA or VA, and any credit losses
incurred are not greater or less than if the FHA/VA loans remained in the GNMA
pools and the Company remained as servicer. The same risk from foreclosure or
from loss of interest exists for the Company as servicer or owner of the loan,
and the Company, by purchasing delinquent FHA/VA loans, assumes only the
interest rate risk associated with investing in a fixed-rate loan if foreclosure
does not occur.
18
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds are deposits; principal and interest
payments on loans and mortgage-backed securities; proceeds from the sale of
available-for-sale securities; proceeds from maturing debt securities; advances
from the FHLB; other borrowed funds; and sale of stock. Another source of
funds is mortgage banking activities which generate loan servicing fees and
proceeds from the sale of loans. While scheduled maturities of securities and
amortization of loans are predictable sources of funds, deposit flows and
prepayments on mortgage loans and mortgage-backed securities are greatly
influenced by the general level of interest rates, economic conditions,
and competition.
Each of the Company's subsidiary banks is required to maintain an average daily
balance of liquid assets and short-term liquid assets as a percentage of net
withdrawable deposit accounts plus short-term borrowings as defined by OTS
regulations. The minimum required liquidity and short-term liquidity ratios are
currently 5% and 1%, respectively. For June 1996, each of the Company's
subsidiary banks had liquidity and short-term liquidity ratios of at least 7.8%
and 3.6%, respectively.
At June 30, 1996, the Company had outstanding commitments to originate for
portfolio first mortgage loans totaling $60.3 million. The Company anticipates
that it will have sufficient funds available to meet its current origination
commitments.
The Company's subsidiary banks are each required by federal regulations to
maintain minimum amounts of capital. Currently, the minimum required levels are
tangible capital of 1.5% of tangible assets, core capital of 3.0% of adjusted
tangible assets, and risk-based capital of 8.0% of risk-weighted assets. At
June 30, 1996, each of the Company's subsidiary banks had capital which
substantially exceeded each of the regulatory capital requirements.
PROPOSAL TO RECAPITALIZE THE SAVINGS ASSOCIATION INSURANCE FUND
During July 1995 hearings before the U. S. Senate Banking Committee regarding
the Savings Association Insurance Fund (SAIF), a plan was proposed by several
federal banking agencies to assess a special federal deposit insurance premium
in an amount sufficient to fully capitalize the SAIF. The Company's share of
such a special premium, if assessed at .75% of insured deposits as of June 30,
1996, would amount to approximately $13.2 million ($8.6 million net of income
tax benefit). The proposed plan also provides that, once the SAIF is fully
capitalized, regular federal deposit insurance rates applicable to SAIF deposits
would be reduced to be initially equal to the rates applicable to Bank Insurance
Fund (BIF) deposits. The Company is currently at a competitive disadvantage due
to the deposit premium differential between SAIF- and BIF-insured institutions.
A recent House Banking Committee compromise regarding the plan provides that,
following enactment of the legislation and payment of the special assessment,
BIF deposits would be assessed (in addition to their regular deposit insurance
premiums) for the annual Financing Corporation (FICO) payment in each year of
the three year period beginning January 1, 1997 equal to 1.27 basis points
(.0127%), while SAIF deposits would be assessed 6.35 basis points (.0635%).
Beginning January 1, 2000, until all FICO bonds are retired, the annual FICO
payment would be shared pro rate by all insured depository institutions,
currently estimated at 2.5 basis points (.025%). While many industry observers
believe legislation to recapitalize the SAIF is likely to eventually pass, the
likelihood of its passage this presidential election year cannot be determined.
MERGER OF GREAT FINANCIAL BANK AND FIRST FEDERAL SAVINGS BANK OF RICHMOND
In July 1996, the Company merged First Federal with Great Financial. The Company
believes that the merger will result in efficiencies and enhance its ability
to serve customers throughout the central Kentucky region.
19
GREAT FINANCIAL CORPORATION
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
As a result of a regular compliance examination by the OTS, a
regional office of the OTS has initially determined that the
Bank's Truth in Lending Disclosures on certain adjustable
rate mortgages were inaccurate and that certain unspecified
reimbursements to borrowers be made. Under applicable law
this decision is subject to further regulatory and judicial
appeals. Management of the Bank believes the ultimate outcome
of any proceedings will not have a material adverse effect
on the financial condition or results of operations of the
Bank or the Company.
Item 2. Changes in Securities
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
(a) Exhibit 11 - Statement regarding compution of per share
earnings.
(b) There have been no reports filed on Form 8-K during the
quarterly period ended June 30, 1996.
20
GREAT 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.
GREAT FINANCIAL CORPORATION
-------------------------------------
(Registrant)
Date: August 13, 1996 By Paul M. Baker
--------------------------------------------
Paul M. Baker
President and Chief Executive Officer
Date: August 13, 1996 By Richard M. Klapheke
--------------------------------------------
Richard M. Klapheke
Treasurer and Secretary
(Chief Accounting Officer)
21