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, 1997.
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File Number: 0-28076
PIONEER FINANCIAL CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
KENTUCKY 61-1273657
- ------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
25 EAST HICKMAN STREET, WINCHESTER, KENTUCKY 40391
- -------------------------------------------- ------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (606) 744-3972
--------------
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 ninety days.
Yes X No
----- -----
As of August 11, 1997, 208,233 shares of the registrant's common stock were
issued and outstanding.
Page 1 of 16 Pages Exhibit Index at Page N/A
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CONTENTS
PART I. FINANCIAL INFORMATION
---------------------
Item 1. Financial Statements
Consolidated Balance Sheets as of June 30, 1997 (unaudited)
and September 30, 1996........................................................ 3
Consolidated Statements of Income for the Three and Nine-Month Periods
Ended June 30, 1997 and 1996 (unaudited)...................................... 4
Consolidated Statements of Cash Flows for the Nine-Month Periods Ended
June 30, 1997 and 1996 (unaudited)............................................ 5
Notes to Consolidated Financial Statements...................................... 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations......................................................... 7
PART II. OTHER INFORMATION
-----------------
Item 1. Legal Proceedings............................................................... 14
Item 2. Changes in Securities........................................................... 14
Item 3. Defaults Upon Senior Securities................................................. 14
Item 4. Submission of Matters to a Vote of Security Holders............................. 15
Item 5. Other Information............................................................... 15
Item 6. Exhibits and Reports on Form 8-K................................................ 15
SIGNATURES
PIONEER FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
-----------------------
AS OF AS OF
JUNE 30, SEPTEMBER 30,
ASSETS 1997 1996
----------- -----------
(unaudited)
Cash $ 698,270 $ 732,573
Interest bearing deposits 2,805,212 1,529,881
Certificates of deposit 0 194,000
Federal Funds Sold 10,150,773 3,211,000
Available-for-sale securities 6,200,854 7,601,611
Held-to-maturity securities 19,580,223 23,972,497
Loans receivable, net 35,180,559 35,247,421
Loans held for sale 220,130 0
Accrued interest receivable 458,683 535,269
Premises and equipment, net 1,346,681 1,175,987
Prepaid expenses and other assets 188,662 200,898
----------- -----------
Total assets $76,830,047 $74,401,137
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $66,974,159 $64,335,165
FHLB Advances 660,157 698,798
Advance payments by borrowers for taxes and insurance 30,374 26,788
Federal income tax payable 276,430 138,040
Other liabilities 324,215 957,711
----------- -----------
Total liabilities 68,265,335 66,156,502
----------- -----------
Stockholders' equity:
Common stock, $1 par value, 500,000 shares authorized;
208,233 shares issued and outstanding 208,233 208,233
Additional paid-in capital 1,797,432 1,797,432
Retained earnings, substantially restricted 6,781,981 6,213,169
Unallocated Employee Stock Ownership Plan (ESOP Shares) (249,913)
Net unrealized appreciation on
available-for-sale securities 26,979 25,801
----------- -----------
Total stockholders' equity 8,564,712 8,244,635
----------- -----------
Total liabilities and stockholders' equity $76,830,047 $74,401,137
=========== ===========
See accompanying notes to consolidated financial statements.
3
PIONEER FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
--------------------
FOR THE THREE-MONTH PERIODS FOR THE NINE-MONTH PERIODS
ENDED JUNE 30, ENDED JUNE 30,
--------------------------- --------------------------
1997 1996 1997 1996
------------ ------------- ------------ ------------
Interest income:
Interest on loans $ 791,064 $ 772,802 $2,351,425 $2,273,106
Interest and dividends on securities 422,813 523,241 1,476,330 1,656,206
Other interest income 146,459 136,645 289,240 362,021
---------- ---------- ---------- ----------
Total interest income 1,360,336 1,432,688 4,116,995 4,291,333
---------- ---------- ---------- ----------
Interest expense:
Interest on deposits 670,947 711,222 1,977,256 2,141,973
Interest on FHLB advances 21,836 11,501 48,381 35,043
---------- ---------- ---------- ----------
Total interest expense 692,783 722,723 2,025,637 2,177,016
---------- ---------- ---------- ----------
Net interest income: 667,553 709,965 2,091,358 2,114,317
Provision for loan losses 0 8,433 0 27,433
---------- ---------- ---------- ----------
Net interest income after provision
for loan losses 667,553 701,532 2,091,358 2,086,884
---------- ---------- ---------- ----------
Non-interest income:
Loan and other service fees, net 92,157 104,397 282,493 301,112
Gain (loss) on sale of securities 0 0 0 33,310
Gain (loss) on sale of loans 19,224 8,291 71,392 7,415
---------- ---------- ---------- ----------
Total non-interest income 111,381 112,688 353,885 341,837
---------- ---------- ---------- ----------
Non-interest expense:
Compensation and benefits 240,033 231,813 694,160 660,887
Occupancy expense 28,197 40,159 130,670 137,576
Office supplies and postage 26,482 25,479 77,484 84,077
Federal and other insurance premiums 16,568 43,637 60,992 131,112
Advertising 8,869 5,918 23,681 19,322
Data processing expense 33,611 33,132 101,946 99,097
State franchise tax 16,386 16,386 49,159 48,404
Legal fees 644 14,283 10,394 32,677
Other operating expense 21,897 22,352 77,683 66,994
---------- ---------- ---------- ----------
Total non-interest expense 392,687 433,159 1,226,169 1,280,146
---------- ---------- ---------- ----------
Income before income tax expense 386,247 381,061 1,219,074 1,148,575
Provision for income taxes 128,605 133,261 412,097 400,651
---------- ---------- ---------- ----------
Net income $ 257,642 $ 247,800 $ 806,977 $ 747,924
========== ========== ========== ==========
Earnings per share $ 1.27 $ .91 $ 3.99 $ 2.74
========== ========== ========== ==========
See accompanying notes to consolidted financial statements.
4
PIONEER FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
-----------------
FOR THE NINE-MONTHS ENDING
JUNE 30,
1997 1996
----------- -----------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 806,977 $ 747,924
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 0 27,433
Amortization of investment premium (discount) 13,106 136,115
Amortization of organizational cost 10,131 0
Provision for depreciation 39,615 50,795
Amortization of loan fees (78,993) (72,114)
FHLB stock dividend (27,802) (27,400)
Securities gain (loss) 0 (33,310)
Loans originated for sale (7,107,789) (8,107,526)
Proceeds from loans held for sale 7,105,073 8,114,941
Loans held for sale (gain) loss 2,716 (7,415)
Change in:
Income taxes payable 138,390 155,950
Interest receivable 76,586 85,999
Interest payable (30,311) 40,085
Accrued liabilities (603,184) 290,745
Prepaid expense (12,236) 105,304
----------- -----------
Net cash provided by operating activities 332,279 1,507,526
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net (increase) decrease in loans (328,844) (1,641,650)
Matured Certificates of Deposit 194,000 94,000
Matured held-to-maturity securities 6,759,561 14,660,085
Purchase of held-to-maturity securities (4,986,379) (9,984,665)
Sale of FHLB stock 0 55,200
Purchase of premises and equipment (210,309) (9,702)
Purchase of available-for-sale securities 0 (3,614,506)
Sale of available-for-sale securities 0 0
Principal repayments on securities 4,056,022 4,944,564
----------- -----------
Net cash provided(used) by investing activities 5,484,051 4,503,326
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in demand deposits, NOW accounts
and savings accounts 2,021,337 2,519,351
Net increase (decrease) in certificates of deposit 617,657 (383,262)
Payments on FHLB advances (38,641) (32,451)
Cash dividend payments (239,468) (280,651)
Net increase (decrease) in custodial accounts 3,586 (1,972)
----------- -----------
Net cash provided (used) by financing activities 2,364,471 1,821,015
----------- -----------
Increase (decrease) in cash and cash equivalents 8,180,801 7,831,867
Cash and cash equivalents, beginning of period 5,473,454 5,664,527
----------- -----------
Cash and cash equivalents, end of period $13,654,255 $13,496,394
=========== ===========
Supplemental disclosures:
The Bank made income tax payments during the nine month periods ended June 30,
1997 and 1996, respectively of $310,000 and $385,000.
The Bank paid $2,025,637 and $2,177,016 in interest on deposits and other
borrowings during the nine month periods ended June 30, 1997 and 1996,
respectively.
See accompanying notes to consolidated financial statements.
5
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. BASIS OF PRESENTATION
---------------------
Pioneer Financial Corporation (the "Company") was formed at the direction
of Pioneer Federal Savings Bank (the "Bank") to become the holding company
of the Bank. The reorganization was completed on December 24, 1994 under an
Agreement and Plan of Reorganization, dated October 31, 1994. Since the
Reorganization, the Company's primary assets have been the outstanding
capital stock of the Bank, and its sole business is that of the Bank.
Accordingly, the consolidated financial statements and discussions herein
include both the Company and the Bank.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles
("GAAP") 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 GAAP for complete
financial statements. In the opinion of management, all adjustments
(consisting of only normal recurring accruals) necessary for fair
presentation have been included. The results of operations and other data
for the three and nine month periods ended June 30, 1997 are not
necessarily indicative of results that may be expected for the entire
fiscal year ending September 30, 1997.
2. EARNINGS PER SHARE
------------------
Earnings per share for the three month periods ended June 30, 1997 and 1996
amounted to $1.27 and $.91 per share, respectively, based on weighted
average common stock shares outstanding. Earnings per share for the nine
month periods ended June 30, 1997 and 1996 amounted to $3.99 and $2.74 per
share, respectively, based on weighted average common stock shares
outstanding. The weighted average number of common shares outstanding for
the three and nine month periods ended June 30, 1997 and 1996 was 208,233
and 272,477 shares respectively.
3. DIVIDENDS
---------
The Company paid dividends of $0.40 per share or $83,293 for the three
month period ended June 30, 1997 compared to $0.35 per share or $95,367 for
the same period in 1996. The Company paid dividends of $1.15 per share or
$239,468 for the nine month period ended June 30, 1997 compared to $1.03
per share or $280,656 for the same period in 1996.
6
4. MORTGAGE SERVICING RIGHTS
-------------------------
In May 1995 the Financial Accounting Standards Board (FASB) issued SFAS No.
122 "Accounting for Mortgage Servicing Rights", which amended SFAS No. 65
"Accounting for Certain Mortgage Banking Activities". SFAS No. 122 requires
a mortgage banking enterprise to recognize as separate assets the rights to
service mortgage loans for others however these servicing rights are
acquired. SFAS No. 122 was effective for the Company and the Bank on
October 1, 1996, and applies prospectively to mortgage banking transactions
occurring after that date.
The Company recognized mortgage servicing rights of $69,000 for the nine
month period ended June 30, 1997. The Bank sells certain residential loans,
primarily fixed rate loans secured by single family residences in the
secondary market. The fair value of the mortgage servicing rights was
determined by quoted prices in the secondary market. The mortgage servicing
rights on the loans sold in the secondary market are grouped by their
primary risk characteristics, which is the interest rate. At June 30, 1997
there was no allowance recognized for impairment recognized.
5. EMPLOYEE STOCK OWNERSHIP PLAN
-----------------------------
On April 11, 1997 the Board of Directors of the Company authorized a loan
to the ESOP Trust in the amount of $249,913. The ESOP Trust used the
proceeds of the loan to acquire 6,022 shares of the Company's outstanding
stock. The loan is to be repaid in ten annual installments, beginning
December 1, 1997. Interest is based on the prime rate published in the Wall
Street Journal and is adjusted annually The stock is pledged as collateral
on the loans. As the debt is repaid, ESOP shares which were initially
pledged as collateral are released from collateral and allocated to active
employees, based on the proportion of debt service paid in the year.
The Company accounts for its ESOP in accordance with the Statement of
Position 93-6, "Employers Accounting for Employee Stock Ownership Plans".
The Statement requires, among other things that:
a. for ESOP shares committed to be released in a period to compensate
employees directly, employers should recognize compensation costs equal
to the average fair value (as determined on a monthly basis) of the
shares committed to be released;
b. dividends on unallocated shares used to repay ESOP loans are not
considered dividends for financial reporting purposes;
c. for an internally leveraged ESOP, the Company loan receivable and the
ESOP note payable as well as the related income/expense is not reflected
in the consolidated financial statements;
d. For earnings per share computations, ESOP shares that have been
committed to be released should be considered outstanding. ESOP shares
that have not been committed to be released should not be considered
outstanding.
7
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL CONDITION
The Company's consolidated assets increased $2,429,000, or 3.3% to $76.8
million, at June 30, 1997 compared to $74.4 million at September 30, 1996.
Available-for-sale securities decreased by $1.4 million, held-to-maturity
securities decreased $4.4 million, loans decreased $67,000, cash and cash
equivalents plus certificates of deposit increased $8.0 million, loans held for
sale increased $220,000 and other non-interest earning assets decreased by
$82,000.
Available-for-sale securities decreased $1.4 million due to receipt of principal
repayments on mortgage backed securities and amortization of investment premium.
Held-to-maturity securities decreased $4.4 million due to the maturities of
mortgage backed securities of $1.8 million and $2.6 million in principal
repayments received on mortgage backed securities and amortization of premiums.
In accordance with SFAS No. 115, unrealized gains or losses on available-for-
sale securities are recorded net of deferred income tax as a separate component
of stockholders' equity. At June 30, 1997, the Company included gross
unrealized gains of $40,877, which net of the tax expense of $13,898, amount to
$26,979 as a separate component of stockholders' equity. Per SFAS No. 115, such
gains or losses will not be reflected as a charge or credit to earnings until
the underlying gain or loss, if any, is actually realized at the time of sale.
Liabilities of the Company increased $2.1 million to $68.3 million at June 30,
1997 compared to $66.2 million at September 30, 1996. The increase in
liabilities was primarily due to a net increase in deposits of $2.6 million
offset by the decrease in accrued expense of $633,000.
Stockholders' equity increased by $320,000 to $8.6 million at June 30, 1997
compared to $8.2 million at September 30, 1996. The increase is due to net
income of $807,000 offset by the payment of dividends totaling $239,000, a
increase in the net unrealized appreciation on available-for-sale securities of
$1,000 and a reduction in capital of $249,913 for 6,022 shares of unallocated
Employee Stock Ownership Plan stock.
8
The following summarizes the BANK'S capital requirements and position at June
------
30, 1997 and September 30, 1996.
JUNE 30, 1997 SEPTEMBER 30, 1996
-------------------- -------------------
(DOLLARS IN THOUSANDS)
AMOUNT PERCENT AMOUNT PERCENT
--------- --------- -------- ---------
Tangible capital $8,467 11.0% $8,143 10.9%
Tangible capital requirement 1,151 1.5% 1,117 1.5%
------ ----- ------ ------
Excess $7,316 9.5% $7,026 9.4%
====== ===== ====== ======
Core capital $8,467 11.0% $8,143 10.9%
Core capital requirement 2,303 3.0% 2,234 3.0%
------ ----- ------ ------
Excess $6,164 8.0% $5,909 7.9%
====== ===== ====== ======
Tangible capital $8,467 27.0% $8,143 26.1%
General valuation allowance 384 1.2% 364 1.2%
------ ----- ------ ------
Total capital 8,851 28.2% 8,507 27.3%
Risk-based capital requirement 2,511 8.0% 2,498 8.0%
------ ----- ------ ------
Excess $6,340 20.2% $6,009 19.3%
====== ===== ====== ======
RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1997 AND 1996
NET INCOME
- ----------
Net income increased by $10,000 or 4.0% for the three months ended June 30, 1997
as compared to the same period in 1996. The net increase of $10,000 was due to
a decrease of $42,000 in net interest income, a decrease in non-interest expense
of $41,000 and a decrease in provision for loan loss of $8,000, a decrease in
non-interest income of $2,000 and a decrease in income tax of $5,000.
INTEREST INCOME
- ---------------
Interest income decreased $73,000 for the quarter ended June 30, 1997 compared
to the same period in 1996. Interest income was $1.4 million or 7.41% of average
interest-earning assets for the quarter ended June 30, 1997 as compared to $1.4
million or 7.37% of interest-earning assets for the quarter ended June 30, 1996.
The decrease in interest income of $73,000 was due to a decrease in the average
balance of interest earning assets offset by the increase of 4 basis points on
the average rate earned on interest earning assets for the quarter ended June
30, 1997 compared to the same period in 1996.
INTEREST EXPENSE
- ----------------
Interest expense was $693,000 or 4.13% of average deposits and FHLB advances for
the quarter ended June 30, 1997 as compared to $723,000 or 4.11% of average
deposit and FHLB advances for the quarter ended June 30,
9
1996. The decrease of $30,000 was due primarily to the decrease in interest
paid on deposits. The decrease in interest paid on deposits was due to a $3.3
million decrease in the average balance of deposits during the quarter ended
June 30, 1997 compared to the same period in 1996.
PROVISION FOR LOAN LOSSES
- -------------------------
There was no provision for loan losses for the quarter ended June 30, 1997 as
compared to $8,000 to the quarter ended June 30, 1996. Management considers
many factors in determining the necessary level of the allowance for loan
losses, including an analysis of specific loans in the portfolio, estimated
value of the underlying collateral, assessment of general trends in the real
estate market, delinquency trends, prospective economic and regulatory
conditions, inherent loss in the loan portfolio, and the relationship of the
allowance for loan losses to outstanding loans. There can be no assurance that
management will not decide to increase the allowance for loan losses or that
regulators, when reviewing the Bank's loan portfolio in the future, will not
request the Bank to increase such allowance, either of which could adversely
affect the Bank's earnings. Further, there can be no assurance that the Bank's
actual loan losses will not exceed its allowance for loan losses.
NON-INTEREST INCOME
- -------------------
Non-interest income amounted to $111,000 and $112,000 for the quarters ended
June 30, 1997 and 1996, respectively. Non-interest income is primarily generated
from fees on loans and fees received for servicing loans. For the quarter ending
June 30, 1997 the Bank recognized an additional $23,000 gain on the sale of
loans as the result of retaining mortgage servicing rights pursuant to FASB No.
122 which was adopted October 1, 1996.
NON-INTEREST EXPENSE
- --------------------
Non-interest expense decreased $40,000 to $393,000 for the quarter ended June
30, 1997 compared to $433,000 for the same period in 1996. Non-interest expense
was 2.1% of average assets for the quarter ended June 30, 1997 and 2.1% of
average assets for the quarter ended June 30, 1996. The decrease of $40,000 was
due to the decrease in Federal Insurance premiums on deposits of $27,000,
occupancy expense decreased $12,000, legal fees decreased $13,000, offset by an
increase in compensation expense of $8,000, an increase in advertising of $3,000
and a increase in supplies expense of $1,000.
INCOME TAX EXPENSE
- ------------------
The provision for income tax expense amounted to $128,000 and $133,000 for the
quarters ended June 30, 1997 and 1996, respectively, which as a percentage of
income before income tax expense amounts to 33.3% for 1997 and 35.0% for 1996.
10
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30, 1997 AND 1996
NET INCOME
- ----------
Net income increased by $59,000 or 7.9% for the nine months ended June 30, 1997
as compared to the same period in 1996. The net increase of $59,000 was due to
an increase of $12,000 in non-interest income, a decrease in provision for loan
loss of $27,000, a decrease in non-interest expense of $54,000, offset by a
decrease of $23,000 in net interest income and a increase in income tax expense
of $11,000.
INTEREST INCOME
- ---------------
Interest income decreased $174,000 for the quarter ended June 30, 1997 compared
to the same period in 1996. Interest income was $4.1 million or 7.57% of average
interest-earning assets for the quarter ended June 30, 1997 as compared to $4.3
million or 7.30% of interest-earning assets for the quarter ended June 30, 1996.
The decrease in interest income of $174,000 was due to a decrease in the average
balance of interest earning assets offset by the increase of 27 basis points on
the average rate earned on interest earning assets for the quarter ended June
30, 1997 compared to the same period in 1996.
INTEREST EXPENSE
- ----------------
Interest expense was $2.0 million or 4.09% of average deposits and FHLB advances
for the nine month period ended June 30, 1997 as compared to $2.2 million or
4.10% of average deposit and FHLB advances for the nine month period ended June
30, 1996. The decrease of $151,000 was due primarily to the decrease in interest
paid on deposits. The decrease in interest paid on deposits was due to a 1 basis
point decrease in the average rate paid on deposits, and a $5.5 million decrease
in the average balance of deposits during the nine month period ended June 30,
1997 compared to the same period in 1996.
PROVISION FOR LOAN LOSSES
- -------------------------
There was no provision for loan losses for the nine month period ended June 30,
1997 as compared to $27,000 for the same period in 1996. Management considers
many factors in determining the necessary level of the allowance for loan
losses, including an analysis of specific loans in the portfolio, estimated
value of the underlying collateral, assessment of general trends in the real
estate market, delinquency trends, prospective economic and regulatory
conditions, inherent loss in the loan portfolio, and the relationship of the
allowance for loan losses to outstanding loans. There can be no assurance that
management will not decide to increase the allowance for loan losses or that
regulators, when reviewing the Bank's loan portfolio in the future, will not
request the Bank to increase such allowance, either of which could adversely
affect the Bank's earnings. Further, there can be no assurance that the Bank's
actual loan losses will not exceed its allowance for loan losses.
11
NON-INTEREST INCOME
- -------------------
Non-interest income amounted to $354,000 and $342,000 for the quarters ended
June 30, 1997 and 1996, respectively. Non-interest income is primarily generated
from fees on loans and fees received for servicing loans. For the nine month
period ending June 30, 1997 the Bank recognized an additional $69,000 gain on
the sale of loans as the result of recording mortgage servicing rights pursuant
to FASB No. 122 which was adopted October 1, 1996.
NON-INTEREST EXPENSE
- --------------------
Non-interest expense decreased $54,000 to $1,226,000 for the nine month period
ended June 30, 1997 compared to $1,280,000 for the same period in 1996. Non-
interest expense was 2.2% of average assets for the nine month period ended June
30, 1997 and 2.1% of average assets for the nine month period ended June 30,
1996. The decrease of $54,000 was due to the decrease in Federal Insurance
premiums on deposits of $70,000, a decrease in legal fees of $22,000, a decrease
in occupancy expense of $7,000, a decrease of office supplies expense of $7,000,
offset by an increase in compensation expense of $33,000, a $4,000 increase in
advertising, an increase in data processing expense of $3,000 and an $11,000
increase in other operating expenses.
INCOME TAX EXPENSE
- ------------------
The provision for income tax expense amounted to $412,000 and $401,000 for the
nine month period ended June 30, 1997 and 1996, respectively, which as a
percentage of income before income tax expense amounts to 33.8% for 1997 and
34.9% for 1996.
12
NON-PERFORMING ASSETS
- ---------------------
The following table sets forth information with respect to the Bank's non-
performing assets at the dates indicated. No loans were recorded as restructured
loans within the meaning of SFAS No. 15 at the dates indicated.
JUNE 30, 1997 SEPTEMBER 30 1996
-------------- ------------------
(amounts in thousands)
Loans accounted for on a non-accrual basis:(1)
Real Estate:
Residential $ 3 $ 3
Commercial
Consumer......................................... 4 15
---- ----
Total $ 7 $ 18
==== ====
Accruing loans which are contractually past due
90 days or more:
Real Estate:
Residential 129 205
Commercial
Consumer......................................... 0
---- ----
Total 129 205
==== ====
Total of loans accounted for as non-accrual or as
accruing past due 90 days or more................ $136 $223
==== ====
Percentage of total loans.......................... .38% .63%
==== ====
Other non-performing assets (2).................... $ $
==== ====
(1) Non-accrual status denotes loans which management believes may have defined
weaknesses whereby accrued interest is inadequately protected by the current
net worth and paying capacity of the obligor, or of the collateral pledged.
(2) Loans more than 90 days past due will continue to accrue interest when there
is no well defined weakness in the loan regarding net worth and paying
capacity of the obligor or of the collateral pledged which would cause
management to believe that interest accrued will be uncollectible.
If income on non-accrual loans had been accrued, such income would have amounted
to approximately $4,446 for the nine month period ended June 30, 1997.
At June 30, 1997, there were no loans identified by management which were not
reflected in the preceding table but as to which known information about
possible credit problems of borrowers caused management to have serious doubts
as to the ability of the borrowers to comply with present loan repayment terms.
13
MORTGAGE BANKING ACTIVITY
- -------------------------
Mortgage loans of $7.1 million were originated for sale during the nine month
period ended June 30, 1997; the Bank retained the servicing for all loans sold.
The portfolio of loans owned by others but serviced by the Bank increased 2.2%
to $51.2 million at June 30, 1997 compared to $50.3 million at September 30,
1996. All of the loans serviced by the Bank, but owned by others, were
originated by the Bank.
LIQUIDITY AND COMMITTED RESOURCES
- ---------------------------------
As of June 30, 1997, the liquidity ratio under applicable federal regulations
was 32.26% as compared to 24.81% at September 30, 1996. Principal sources of
funds during the nine months ended June 30, 1997 included loan principal
repayments, principal repayments on mortgage backed securities, proceeds from
matured and called securities and proceeds from the sale of loans.
As of June 30, 1997 loans approved but not closed amounted to $4.8 million. Of
these, none were evidenced by written commitments. The Bank anticipated selling
$2.2 million of the loans approved but not closed. As of June 30, 1997, there
were commitments to sell loans which had been closed totaling $220,000.
IMPACT OF INFLATION AND CHANGING PRICES
- ---------------------------------------
The consolidated financial statements and notes thereto presented herein have
been prepared in accordance with generally accepted accounting principles, which
require the measurement of financial position and operating results in terms of
historical dollars without considering the change in the relative purchasing
power of money over time and due to inflation. The impact of inflation is
reflected in the increased cost of the Company's operations. Unlike most
industrial companies, nearly all the assets and liabilities of the Company are
monetary in nature. As a result, interest rates have a greater impact on the
Company's performance than do the effects of general levels of inflation.
Interest rates do not necessarily move in the same direction or to the same
extent as the price of goods and services.
PART II. OTHER INFORMATION
-----------------
Item 1. LEGAL PROCEEDINGS None
Item 2. CHANGES IN SECURITIES None
Item 3. DEFAULTS UPON SENIOR SECURITIES None
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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
(1) The following exhibit is filed herewith:
Exhibit 27: Financial Data Schedule
(2) No Form 8-K was filed for the quarter ended June 30, 1997
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended,
the registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PIONEER FINANCIAL CORPORATION
Date: August 14, 1997 /s/ Carl C. Norton
--------------------------------------------
Carl C. Norton, President
(Duly Authorized Officer)
Date: August 14, 1997 /s/ Anthony D. Parrish
--------------------------------------------
Anthony D. Parrish, Chief Financial Officer
(Principal Financial and Accounting Officer)
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