SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Amendment No. 1)
(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, 2003
-------------
|_| Transition report pursuant to section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from to
--------------- ---------------
SEC File Number: 000-25009
---------
SKIBO FINANCIAL CORP.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
United States 25-1820465
- -------------------------------------------- ----------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
242 East Main Street, Carnegie, Pennsylvania 15106
- -------------------------------------------- -----------------------
(Address of principal executive offices) (Zip Code)
(412) 276-2424
- --------------------------------------------------------------------------------
(Registrant's telephone number, including area code)
Check whether the registrant: (1) filed all reports required to be
filed by Sections 13 or 15(d) of the Securities Exchange Act of 1934 subsequent
to 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. Yes X No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Number of shares outstanding of common stock
as of July 29, 2003
$0.10 Par Value Common Stock 3,153,344
- ---------------------------- ---------------------
Class Shares Outstanding
Transitional Small Business Disclosure Format (check one)
Yes No X
--- ---
SKIBO FINANCIAL CORP. AND SUBSIDIARIES
TABLE OF CONTENTS
Page
----
PART I. FINANCIAL INFORMATION
- ------- ---------------------
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of
June 30, 2003 (unaudited) and March 31, 2003.................1
Consolidated Statements of Income for the three
months ended June 30, 2003 and 2002 (unaudited)..............2
Consolidated Statement of Stockholders' Equity for the
three months ended June 30, 2003 (unaudited).................3
Consolidated Statements of Cash Flows for the three
months ended June 30, 2003 and 2002 (unaudited)..............4
Notes to Consolidated Financial Statements...................5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations................................7
Item 3. Controls and Procedures...........................................10
PART II. OTHER INFORMATION
- -------- -----------------
Item 1. Legal Proceedings.................................................11
Item 2. Changes in Securities.............................................11
Item 3. Defaults Upon Senior Securities...................................11
Item 4. Submission of Matters to a Vote of Security-Holders...............11
Item 5. Other Information.................................................11
Item 6. Exhibits and Reports on Form 8-K..................................11
Signatures
2
EXPLANATORY NOTE
Skibo Financial Corp. is amending its Quarterly Report on Form
10-QSB for the quarter ended June 30, 2003 (the "Form 10-QSB"), to revise its
disclosure under Item 3. Controls and Procedures and to file Exhibits 31 and 32.
Except for the revised disclosure under Item 3 and the inclusion of Exhibits 31
and 32, no other information included in the original report on Form 10-QSB has
changed.
SKIBO FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(Dollar amounts in thousands, except per share data)
June 30, March 31,
2003 2003
--------- ---------
ASSETS (Unaudited)
------
Cash and amounts due from depository institutions $ 859 $ 828
Interest-bearing deposits with other institutions 1,758 3,800
Investment securities:
Held-to-maturity (market value $10,150 and $8,465) 10,076 8,356
Mortgage-backed securities:
Held-to-maturity (market value $96,864 and $97,570) 95,031 95,305
Real estate owned, net 8 28
Loans receivable, net 40,462 39,672
Accrued interest receivable:
Investment securities 91 91
Mortgage-backed securities 473 506
Loans receivable 361 354
Federal Home Loan Bank stock, at cost 2,878 2,879
Premises and equipment, net 495 505
Prepaid expenses and other assets 4,921 4,935
--------- ---------
Total Assets $ 157,413 $ 157,259
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities:
Deposits $ 81,837 $ 81,842
Federal Home Loan Bank advances 48,000 48,000
Advances from borrowers for taxes and insurance 101 77
Accrued expenses and other liabilities 4,048 3,863
--------- ---------
Total Liabilities 133,986 133,782
Stockholders' Equity:
Preferred stock, 5,000,000 shares authorized; none issued -- --
Common stock, $0.10 par value; 10,000,000 shares authorized;
3,449,974 shares issued 345 345
Additional paid-in capital 9,777 9,777
Treasury stock, at cost (308,470 shares at both June 30, 2003
and March 31, 2003)(1) (2,149) (2,149)
Retained earnings, substantially restricted 15,454 15,504
--------- ---------
Total Stockholders' Equity 23,427 23,477
--------- ---------
Total Liabilities and Stockholders' Equity $ 157,413 $ 157,259
========= =========
(1)Included are shares held by the Bank's RSP totaling 11,840 at both June 30,
2003 and March 31, 2003.
See accompanying notes to consolidated financial statements.
1
SKIBO FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Income
For the Three Months Ended June 30, 2003 and 2002
(Dollar amounts in thousands, except per share data)
2003 2002
----------- -----------
(Unaudited)
Interest income:
Loans receivable $ 593 $ 784
Mortgage-backed securities 1,045 1,114
Investment securities 105 245
Other 28 30
----------- -----------
Total interest income 1,771 2,173
Interest expense:
Deposits 577 710
Federal Home Loan Bank advances 663 663
----------- -----------
Total interest expense 1,240 1,373
----------- -----------
Net interest income 531 800
Provision for loan losses -- --
----------- -----------
Net interest income after provision for loan losses 531 800
Other income:
Fees and service charges 11 16
Other 39 35
----------- -----------
Total other income 50 51
Other expenses:
Compensation and employee benefits 489 536
Premises and occupancy costs 44 49
Federal insurance premiums 3 4
Other operating expenses 115 76
----------- -----------
Total other expenses 651 665
----------- -----------
(Loss) income before income taxes (70) 186
(Benefit from) Provision for income taxes (20) 71
----------- -----------
Net (loss) income (50) 115
Other comprehensive (loss) income:
Unrealized gain on securities available-for-sale, net of tax -- --
----------- -----------
Total comprehensive (loss) income $ (50) $ 115
=========== ===========
Basic (loss) earnings per share $ (.02) $ .04
Diluted (loss) earnings per share $ (.02) $ .04
Weighted average shares outstanding - Basic 3,153,344 3,139,367
Weighted average shares outstanding - Diluted 3,225,963 3,212,531
See accompanying notes to consolidated financial statements.
2
SKIBO FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statement of Stockholders' Equity
For the Three Months Ended June 30, 2003 (unaudited)
(Dollar amounts in thousands, except per share data)
Additional
Common Paid-in Treasury Retained
Stock Capital Stock Earnings Total
----- ------- ----- -------- -----
Balance at March 31, 2003 $345 $9,777 $(2,149) $15,504 $23,477
Net loss -- -- -- (50) (50)
---- ------ ------- ------- -------
Balance at June 30, 2003 $345 $9,777 $(2,149) $15,454 $23,427
==== ====== ======= ======= =======
See accompanying notes to consolidated financial statements.
3
SKIBO FINANCIAL CORP. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Three Months Ended June 30, 2003 and 2002
(Dollar amounts in thousands)
2003 2002
------- -------
(Unaudited)
Operating activities:
Net (loss) income $ (50) $ 115
Adjustments to reconcile net (loss) income to net cash
(used in) provided by operating activities:
Depreciation 11 16
Loss on write-down of real estate owned 20 --
Compensation expense-RSP -- 4
Net accretion of premiums and discounts (81) (22)
Decrease in accrued interest receivable 26 90
Decrease (increase) in prepaid expenses 14 (47)
Increase in accrued interest payable 128 119
(Decrease) increase in accrued income taxes (119) 1
Other, net 155 437
------- -------
Net cash provided by operating activities 104 713
------- -------
Investing activities:
Purchases of premises and equipment (1) (2)
Purchases of investment securities held-to maturity (3,895) (300)
Purchases of mortgage-backed securities held-to-maturity (9,328) (9,150)
Proceeds from maturities/calls and principal repayments of:
Investment securities held-to-maturity 2,173 1,565
Mortgage-backed securities held-to-maturity 9,627 6,676
Loans purchased (5,260) (2,476)
Net principal repayments on loans 4,549 2,513
Decrease (increase) in Federal Home Loan Bank stock 1 (35)
------- -------
Net cash used in investing activities (2,134) (1,209)
------- -------
Financing activities:
Net (decrease) increase in deposits (5) 195
Net increase (decrease) in mortgage escrow 24 (4)
Treasury stock purchased -- (10)
Cash dividends paid -- (522)
------- -------
Net cash provided by (used in) financing activities 19 (341)
------- -------
Net decrease in cash and cash equivalents (2,011) (837)
Cash and cash equivalents, beginning of period 4,628 4,577
------- -------
Cash and cash equivalents, end of period $ 2,617 $ 3,740
======= =======
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest $ 1,112 $ 1,254
======= =======
Income taxes $ 101 $ 136
======= =======
See accompanying notes to consolidated financial statements.
4
SKIBO FINANCIAL CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
NOTE 1 - Basis of Presentation and Principles of Consolidation
-----------------------------------------------------
The accompanying unaudited consolidated financial statements include the
accounts of Skibo Financial Corp., its wholly- owned subsidiary First Carnegie
Deposit (the "Bank"), and the Bank's wholly owned subsidiary, Fedcar, Inc.
Fedcar, Inc. is a service corporation that is currently inactive.
These statements have been prepared in accordance with instructions for Form
10-QSB. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. However, such information presented reflects all adjustments
(consisting solely of normal recurring adjustments) which are, in the opinion of
the Company's management, necessary for a fair statement of results for the
interim period. All significant intercompany transactions and balances have been
eliminated in consolidation.
The results of operations for the three months ended June 30, 2003 are not
necessarily indicative of the results to be expected for the year ending March
31, 2004 or any other period. The unaudited consolidated financial statements
and notes thereto should be read in conjunction with the audited financial
statements and notes thereto for the year ended March 31, 2003.
NOTE 2 - Dividends on Common Stock
-------------------------
During the quarter ended June 30, 2003, the Company did not declare a dividend.
Skibo Financial Corp.'s common stock is currently listed on the Nasdaq SmallCap
Market, traded under the symbol of "SKBO" and listed in the Wall Street Journal
as "SkiboFn".
NOTE 3 - Comprehensive (Loss) Income
---------------------------
For the three months ended June 30, 2003 and 2002, the Company had total
comprehensive loss of $50,000 and total comprehensive income of $115,000,
respectively. Total comprehensive income or loss is comprised of net income and
other comprehensive income. For both three month periods, there was no other
comprehensive income.
NOTE 4 - Recent Accounting Pronouncements
--------------------------------
In April 2003, the FASB issued SFAS No. 149 "Amendment of Statement 133 on
Derivative Instruments and Hedging Activities" ("SFAS No. 149"), which was
issued to amend SFAS 133, "Derivative Instruments and Hedging Activities". The
effective date of this Statement is for contracts entered into or amended after
June 30, 2003. The Company does not believe that the adoption of SFAS No. 149
will have a significant impact on its consolidated financial statements.
In May 2003, the FASB issued SFAS No. 150 "Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity" ("SFAS No.
150"). The effective date for this Statement is for financial instruments
entered into or modified after May 31, 2003, and otherwise is effective at the
beginning of the first interim period beginning after June 15, 2003. The Company
does not believe that the adoption of SFAS No. 150 will have a significant
impact on its consolidated financial statements.
NOTE 5 - Earnings Per Share (EPS)
------------------------
Basic EPS is computed by dividing net income applicable to common stock by the
weighted average number of common shares outstanding during the period, without
considering any dilutive items. Diluted EPS is computed by dividing net income
applicable to common stock by the weighted average number of common shares and
common stock equivalents for items that are dilutive, net of shares assumed to
be repurchased using the treasury stock method at the average share price for
the Company's common stock during the period. Common stock equivalents arise
from the assumed conversion of outstanding stock options and unvested RSP
shares.
5
SKIBO FINANCIAL CORP. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(Unaudited)
The computation of basic and diluted (loss) earnings per share is shown in the
table below:
Three Months Ended
--------------------------
June 30, June 30,
2003 2002
----------- -----------
Basic EPS computation:
Numerator-Net (Loss) Income $ (50,000) $ 115,000
Denominator-Wt Avg common shares outstanding 3,153,344 3,139,367
Basic (loss) earnings per share $ (.02) $ .04
=========== ===========
Diluted EPS computation:
Numerator-Net (Loss) Income $ (50,000) $ 115,000
Denominator-Wt Avg common shares outstanding 3,153,344 3,139,367
Dilutive Stock Options 72,619 73,164
----------- -----------
Weighted avg common shares and common stock equivalents 3,225,963 3,212,531
Diluted (loss) earnings per share $ (.02) $ .04
=========== ===========
NOTE 6 - Income Taxes
------------
The Company joins with its wholly owned subsidiary, First Carnegie Deposit, in
filing a consolidated federal income tax return and accounts for income taxes
using the asset and liability method. The objective of the asset and liability
method is to establish deferred tax assets and liabilities for temporary
differences between the financial reporting and tax basis of the Company's
assets and liabilities based on enacted tax rates expected to be in effect when
such amounts are realized and settled.
6
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
General
The Company's results of operations are primarily dependent upon net interest
income, which is the difference between the interest income earned on
interest-earning assets, primarily loans, mortgage-backed securities, and
investments, and the interest expense on interest-bearing liabilities, primarily
deposits and borrowings. Net interest income may be affected significantly by
general economic and competitive conditions and policies of regulatory agencies,
particularly those with respect to market interest rates. The results of
operations are also significantly influenced by the level of noninterest
expenses, such as employee salaries and benefits, noninterest income, such as
loan-related fees and fees on deposit-related services, and the Company's
provision for loan losses.
The Management Discussion and Analysis section of this Form 10-QSB contains
certain forward-looking statements (as defined in the Private Securities
Litigation Reform Act of 1995). These forward-looking statements may involve
risks and uncertainties. Although management believes that the expectations
reflected in such forward-looking statements are reasonable, actual results may
differ from the results in these forward-looking statements.
Changes in Financial Condition
The Company's total assets of $157,413,000 at June 30, 2003, are reflective of
an increase of $154,000 or 0.1%, as compared to $157,259,000 at March 31, 2003.
The increase in total assets was due to increases in cash and amounts due from
depository institutions, loans receivable, and investment securities, offset by
decreases in mortgage-backed securities, Federal Home Loan Bank stock, real
estate owned, prepaid expenses and other assets, interest-bearing deposits with
other financial institutions, premises and equipment and accrued interest
receivable.
The increase in the Company's liabilities was due to increases in accrued
expenses and other liabilities and advances from borrowers for taxes and
insurance, offset by a decrease in deposits. Changes in the components of
assets, liabilities and equity are discussed herein.
Cash and Cash Equivalents. Cash and cash equivalents, which consist of
interest-bearing and noninterest-bearing deposits, totaled $2,617,000, a
decrease of $2,011,000 or 43.5% from the prior quarter. This decrease was
primarily due to decreased interest-bearing deposits maintained at the Federal
Home Loan Bank ("FHLB").
Investment Securities. Investment securities totaled $10,076,000 at June 30,
2003, an increase of $1,720,000 or 20.6%, as compared to $8,356,000 at March 31,
2003. The increase was primarily due to purchases of $3.9 million U.S. Agency
securities, offset by proceeds received from maturities, calls and payments
totaling $2.2 million.
Mortgage-backed Securities. Mortgage-backed securities totaled $95,031,000 at
June 30, 2003, a decrease of $274,000 or 0.3%, as compared to $95,305,000 at
March 31, 2003. The decrease was primarily due to principal repayments and
maturities totaling $9.6 million, partially offset by purchases of $9.3 million.
Loans Receivable, net. Net loans receivable at June 30, 2003 totaled
$40,462,000, an increase of $790,000 or 2.0%, as compared to $39,672,000 at
March 31, 2003. The increase was primarily due to the origination of $42,000 in
consumer loans, and purchases of $1.1 million conventional one- to four-family
mortgage loans, $160,000 insured Federal Housing Administration ("FHA") one- to
four-family mortgage loans, $2.8 million insured United States Department of
Agriculture ("USDA") farm loans, $937,000 insured Small Business Administration
("SBA") loans, and a $202,000 insured USDA operating loan, partially offset by
loan principal repayments totaling $4.6 million.
Deposits. Total deposits, after interest credited, decreased by $5,000 or 0.01%
to $81,837,000 at June 30, 2003, as compared to $81,842,000 at March 31, 2003.
The decrease was due to decreases in certificates of deposit and non-interest
bearing checking accounts, offset by increases in passbook savings, money
market, and interest- bearing checking accounts.
FHLB Advances. FHLB advances totaled $48,000,000 at both June 30, 2003 and March
31, 2003. The Company uses FHLB advances as a supplement to deposits to fund its
purchase of loans and investments.
Stockholders' Equity. Stockholders' equity totaled $23,427,000 at June 30, 2003,
as compared to $23,477,000 at March 31, 2003. The decrease of $50,000 or 0.2%
was due to losses for the three months ended June 30, 2003.
7
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Results of Operations for the Three Months Ended June 30, 2003 and 2002
Net (Loss) Income. The Company recorded net loss of $50,000 for the three months
ended June 30, 2003, as compared to net income of $115,000 for the three months
ended June 30, 2002. The $165,000 or 143.5% decrease in net income for the three
months ended June 30, 2003 was primarily the result of a decrease in net
interest income, partially offset by decreases in other expenses and provision
for income taxes. Changes in the components of income and expense are discussed
herein.
Net Interest Income. Net interest income decreased $269,000 or 33.6% for the
three months ended June 30, 2003, as compared to the three month period ended
June 30, 2002. The average balance of interest-earning assets increased $2.6
million or 1.8%, however, the average yield earned thereon decreased 117 basis
points. The average balance of interest- bearing liabilities increased by $3.3
million or 2.6%, however, the average rate paid thereon decreased 53 basis
points.
The net interest rate spread, which is the difference between the yield on
average interest-earning assets and the cost of average interest-bearing
liabilities, decreased to 0.86% for the three month period ended June 30, 2003
from 1.50% for the three month period ended June 30, 2002. The decrease in the
net interest rate spread was primarily the result of decreased yields on the
average balances of interest earning assets, partially offset by decreased rates
paid on the average balance of deposits.
Interest Income. Interest income decreased $402,000 or 18.5% to $1,771,000 for
the three month period ended June 30, 2003, as compared to $2,173,000 for the
three month period ended June 30, 2002.
Interest on loans receivable decreased $191,000 or 24.4% for the three months
ended June 30, 2003, as compared to the three months ended June 30, 2002. This
decrease was primarily the result of a $5.9 million decrease in the average
balance of loans receivable and an 89 basis point decrease in the average yield
earned thereon.
Interest income on mortgage-backed securities decreased $69,000 or 6.2% for the
three months ended June 30, 2003, as compared to the three months ended June 30,
2002. This decrease was primarily the result of a 112 basis point decrease in
the average yield earned on mortgage-backed securities, partially offset by a
$14.1 million increase in the average balance of mortgage-backed securities.
Interest income on investment securities decreased $140,000 or 57.1% for the
three months ended June 30, 2003, as compared to the three months ended June 30,
2002. The decrease in interest income on investment securities was primarily due
to a decrease of $7.9 million in the average balance of such securities and a
115 basis point decrease in the average yield earned thereon.
Interest income on other interest-earning assets decreased by $2,000 or 6.7% for
the three months ended June 30, 2003, as compared to the three months ended June
30, 2002. The decrease was primarily due to a 106 basis point decrease in the
average yield earned on other interest-earning assets, partially offset by a
$2.4 million increase in the average balance.
The average yield on the average balance of interest-earning assets was 4.71%
and 5.88% for the three month periods ended June 30, 2003 and 2002,
respectively.
Interest Expense. Interest expense totaled $1,240,000 for the three months ended
June 30, 2003, as compared to $1,373,000 for the three months ended June 30,
2002. The $133,000 or 9.7% decrease was primarily due to a 53 basis point
decrease in the average rate paid on the total average interest-bearing
liabilities, partially offset by a $3.3 million increase in the average balance
of deposits.
Interest expense on deposits (including escrows) totaled $577,000 for the three
months ended June 30, 2003, as compared to $710,000 for the three months ended
June 30, 2002. The $133,000 or 18.7% decrease was primarily due to an 81 basis
point decrease in the average rate paid on deposits and escrows, partially
offset by a $3.3 million increase in the average balance of deposits.
Interest on FHLB advances totaled $663,000 for both three month periods ended
June 30, 2003 and 2002. The Company uses FHLB advances as a funding source and
to supplement deposits, which are the Company's primary source of funds.
8
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Provision for Loan Losses. Based upon management's evaluation of the underlying
credit risk of the loan portfolio and the level of allowance for loan losses,
the Company established no provisions for loan losses during the three month
periods ended June 30, 2003 and 2002.
At June 30, 2003, the allowance for loan losses totaled $405,000 or 1.0% and
794.1% of total loans and total non-performing loans, respectively, as compared
to $425,000 or 1.1% and 904.3%, respectively, at March 31, 2003. The Company's
non- performing loans (non-accrual loans and accruing loans 90 days or more
overdue) totaled $51,000 and $47,000 at June 30, 2003 and March 31, 2003,
respectively, which represented 0.12% of the Company's total loans for both
periods. The Company's ratio of non-performing loans to total assets was 0.03%
at both June 30, 2003 and March 31, 2003.
Other Income. During the three months ended June 30, 2003, other income
decreased $1,000 or 2.0%, as compared to the three months ended June 30, 2002.
Other Expenses. Total other expenses decreased by $14,000 or 2.1% during the
three months ended June 30, 2003, as compared to the three months ended June 30,
2002. The decrease was primarily attributable to decreases of $47,000 in
compensation and employee benefits expense, $5,000 in premises and occupancy
costs, and $1,000 in federal insurance premiums, offset by an increase of
$39,000 in other operating expenses primarily due to increased legal fees. The
decrease in compensation and employee benefits expense was due to decreases of
$28,000 in compensation and employee benefits expense, $4,000 in RSP expense due
to the completion of the RSP awards on April 16, 2002, and $15,000 in the
Company's defined benefit plan, Supplemental Employee Retirement Plan ("SERP")
and Director's Retirement Plan ("DRP") costs.
Income Tax Expense. The income tax benefit totaled $20,000 for the three months
ended June 30, 2003, as compared to the provision for income tax of $71,000 for
the three months ended June 30, 2002. The $91,000 or 128.2% decrease was due to
decreased income.
Regulatory Capital Requirements
The Bank is subject to federal regulations that impose certain minimum capital
requirements. Quantitative measures, established by regulation to ensure capital
adequacy, require the Bank to maintain amounts and ratios of tangible and core
capital to adjusted total assets and of total risk-basked capital to
risk-weighted assets. On June 30, 2003, the Bank was in compliance with its
three regulatory capital requirements as follows:
Amount Percent
------ -------
(Dollars in thousands)
Tangible capital ..................................... $22,992 14.60%
Tangible capital requirement ......................... 2,362 1.50
------- -----
Excess over requirement .............................. $20,630 13.10%
======= =====
Core capital ......................................... $22,992 14.60%
Core capital requirement ............................. 4,724 3.00
------- -----
Excess over requirement .............................. $18,268 11.60%
======= =====
Risk based capital ................................... $23,397 60.52%
Risk based capital requirement........................ 3,093 8.00
------- -----
Excess over requirement .............................. $20,304 52.52%
======= =====
Management believes that under current regulations, the Bank will continue to
meet its minimum capital requirements in the foreseeable future. Events beyond
the control of the Bank, such as changes in interest rates or a downturn in the
economy in areas in which the Bank operates could adversely affect future
earnings and as a result, the ability of the Bank to meet its future minimum
capital requirements.
9
CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
Based on their evaluation of the Company's disclosure controls and procedures
(as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the
"Exchange Act")), the Company's principal executive officer and principal
financial officer have concluded that as of the end of the period covered by
this Quarterly Report on Form 10-QSB such disclosure controls and procedures are
effective to ensure that information required to be disclosed by the Company in
reports that it files or submits under the Exchange Act is recorded, processed,
summarized and reported within the time periods specified in Securities and
Exchange Commission rules and forms.
Changes in Internal Controls
During the quarter under report, there was no change in the Company's internal
control over financial reporting that has materially affected, or is reasonably
likely to materially affect, the Company's internal control over financial
reporting.
10
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
------------------
There are various claims and lawsuits in which the Company is
periodically involved, such as claims to enforce liens,
condemnation proceedings on properties in which the Company holds
security interests, claims involving the making and servicing of
real property loans and other issues incident to the Company's
business.
In February 2003, the Company's subsidiary, First Carnegie
Deposit, was served as a defendant in a lawsuit regarding a
previously completed sale of foreclosed real estate and sheriff
sales of two other properties resulting from a deficiency
judgment in connection therewith. The complaint (Civil Action
No.: GD00-8816) was filed on February 28, 2003 in the Court of
Common Pleas of Allegheny County, Pennsylvania, Civil Division,
and amended on July 2, 2003. The complaint contains causes of
action against First Carnegie Deposit for Statutory Damages
Pursuant to 42 PA C.S.A. Sec. 8104 (Count I), Wrongful Use of
Civil Proceedings Pursuant to 42 PA C.S.A. Sec. 8351 (Count II),
Abuse of Civil Process (Count III), Conversion (Count IV) and
Civil Conspiracy (Count V). The plaintiffs seek damages for the
costs to defend the prior litigation related to the foreclosure
and sheriff sales of properties owned by the plaintiffs, loss of
reputation, loss of use of their properties and extreme emotional
distress, as well as punitive damages. The Company is unable to
express an opinion as to the outcome of this lawsuit or any
potential loss to the Company.
Item 2. Changes in Securities.
----------------------
Not applicable.
Item 3. Defaults Upon Senior Securities.
--------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security-Holders.
----------------------------------------------------
Not applicable.
Item 5. Other Information.
------------------
Not applicable.
Item 6. Exhibits and Reports on Form 8-K.
---------------------------------
a) 31 - Certification pursuant to Section 302 of the
Sarbanes-Oxley Act of 2002
32 - Certification pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
b) On April 29, 2003, the Company filed a Form 8-K to report
earnings for the quarter and fiscal year ended March 31,
2003. (Items 7 and 12)
11
SIGNATURES
Pursuant to the requirements of Sections 13 or 15(d) 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.
SKIBO FINANCIAL CORP.
Date: August 13, 2003 By: /s/ Walter G. Kelly
---------------------------------------
Walter G. Kelly
President and Chief Executive Officer
(Duly Authorized Representative)
Pursuant to the requirement of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated.
/s/ Walter G. Kelly /s/ Carol A. Gilbert
- ------------------------------------- ---------------------------------------------------
Walter G. Kelly Carol A. Gilbert
President and Chief Executive Officer Chief Financial and Operating Officer,
(Principal Executive Officer) Secretary and Treasurer
(Principal Financial and Accounting Officer)
Date: August 13, 2003 Date: August 13, 2003