1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------------------------------
FORM 10-QSB/A
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15 (D) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM ______________ to _______________
Commission File Number 0-24898
MSB FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
MARYLAND 38-3203510
-------- ----------
(State or other jurisdiction of (I.R.S. Employer Identification
incorporation or organization Number)
PARK AND KALAMAZOO AVENUE, N.E., MARSHALL, MICHIGAN 49068
- --------------------------------------------------- -----
(Address of principal executive offices) (ZIP Code)
Registrant's telephone number, including area code: (616) 781-5103
Check 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.
Yes [X] No [ ]
As of November 6, 1998, there were 1,319,641 shares of the Registrant's common
stock issued and outstanding.
Transitional Small Business Disclosure Format (check one)
Yes [ ] No [X]
2
The following is an amended quarterly report on Form 10-QSB for the
period ended September 30, 1998. Due to an accounting error basic and
fully diluted earnings were reported incorrectly at $0.26 per share and
$0.25 per share, respectively. The report has been amended to reflect
the correct basic and fully diluted earnings values of $0.23 per share
and $0.22 per share, respectively.
3
MSB FINANCIAL, INC.
INDEX
PART I. FINANCIAL INFORMATION ................................... 1
Item 1. Financial Statements (Unaudited)......................... 1
Consolidated Condensed Statements of Financial Condition ......... 1
Consolidated Condensed Statements of Income ...................... 2
Consolidated Condensed Statements of Shareholders' Equity ........ 3
Consolidated Condensed Statements of Cash Flows .................. 4
Notes to Consolidated Condensed Financial Statements ............. 5
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations ..................... 6-9
PART II. OTHER INFORMATION........................................ 10
SIGNATURES............................................... 11
EXHIBIT INDEX............................................ 12
4
CONSOLIDATED CONDENSED STATEMENTS OF
FINANCIAL CONDITION
September 30, 1998 and June 30, 1998
- --------------------------------------------------------------------------------
September 30, June 30,
1998 1998
---- ----
(Unaudited)
ASSETS
Cash and due from financial institutions $ 1,657,496 $ 2,286,520
Interest-bearing deposits 1,029,709 994,193
--------------- ----------------
Total cash and cash equivalents 2,687,205 3,280,713
Securities held to maturity (fair value of $7,088 at
September 30, 1998 and $8,102 at June 30, 1998) 7,088 8,102
Loans held for sale 1,521,466 295,300
Loans receivable, net of allowance for loan losses of
$409,661 at September 30, 1998 and $391,148 at June 30, 1998 74,145,702 73,065,017
Federal Home Loan Bank stock 1,176,900 1,158,200
Accrued interest receivable 471,115 419,847
Premises and equipment, net 658,717 648,878
Mortgage servicing rights 215,321 177,006
Other assets 922,841 913,650
--------------- ----------------
Total Assets $ 81,806,355 $ 79,966,713
=============== ================
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities
Deposits $ 43,586,452 $ 42,815,148
Federal Home Loan Bank Advances 23,537,195 21,971,976
Advance payments by borrowers for taxes and insurance 392,891 524,739
Accrued interest payable 93,213 93,114
Accrued expenses and other liabilities 693,607 1,249,043
--------------- ----------------
Total Liabilities 68,303,358 66,654,020
Shareholders' equity
Preferred stock, $.01 par value: 2,000,000 shares
authorized; none outstanding
Common stock, par value $.01: 4,000,000 shares authorized; 1,631,315
shares issued and 1,332,941 shares outstanding at September 30, 1998 and
1,631,315 shares issued and 1,338,051 shares outstanding at
June 30, 1998 16,313 16,313
Additional paid-in capital 9,577,842 9,533,274
Retained earnings, substantially restricted 7,160,846 6,970,925
Unallocated Employee Stock Ownership Plan shares (302,980) (318,181)
Unearned Recognition and Retention Plan shares (131,389) (146,728)
Less cost of Common Stock in Treasury - 298,374 shares at
September 30, 1998 and 293,264 shares at June 30, 1998 (2,817,635) (2,742,910)
--------------- ----------------
Total Shareholders' Equity 13,502,997 13,312,693
--------------- ----------------
Total Liabilities & Shareholders' Equity $ 81,806,355 $ 79,966,713
=============== ================
- --------------------------------------------------------------------------------
See accompanying notes to consolidated condensed financial statements
1
5
CONSOLIDATED CONDENSED STATEMENTS
OF INCOME
Three months ended September 30, 1998 and 1997
(Unaudited)
- -------------------------------------------------------------------------------
Three Months
------------
1998 1997
---- ----
Interest and dividend income
Loans receivable, including fees $ 1,623,959 $ 1,539,707
Securities held to maturity 125 190
Other interest and dividend income 49,518 47,588
-------------- ---------------
1,673,602 1,587,485
Interest expense
Deposits 402,941 391,609
Federal Home Loan Bank advances 363,383 321,521
Other interest expense 3,435 2,201
-------------- ---------------
769,759 715,331
-------------- ---------------
NET INTEREST INCOME 903,843 872,154
Provision for loan losses 18,000 25,000
-------------- ---------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 885,843 847,154
Noninterest income
Loan servicing fees, net 19,767 21,106
Net gain on sales of loans held for sale 76,916 42,588
Service charges on deposit accounts 43,562 34,604
Profit on sale of real estate owned 10,666
Other income 44,162 32,720
-------------- ---------------
184,407 141,684
Noninterest expense
Salaries and employee benefits 262,524 245,223
Occupancy and equipment expense 68,184 50,035
Data processing expense 47,703 43,614
Year 2000 expense 8,576
Federal deposit insurance premium 13,312 12,942
Director fees 29,497 30,472
Correspondent bank charges 14,134 14,399
Michigan Single Business tax 17,000 18,000
Advertising expense 30,520 19,686
Professional fees 44,390 24,399
Supplies expense 17,861 13,319
Other 72,727 67,229
-------------- ---------------
626,428 539,318
-------------- ---------------
INCOME BEFORE FEDERAL INCOME TAX EXPENSE 443,822 449,520
Federal income tax expense 159,000 159,000
-------------- ---------------
NET INCOME $ 284,822 $ 290,520
============== ===============
Basic earnings per share $ 0.23 $ 0.26
============== ===============
Weighted average common shares outstanding 1,247,125 1,131,956
============== ===============
Diluted earnings per share $ 0.22 $ 0.25
============== ===============
Weighted average common and diluted
potential common shares outstanding 1,299,783 1,170,102
============== ===============
- --------------------------------------------------------------------------------
See accompanying notes to consolidated condensed financial statements
2
6
CONSOLIDATED CONDENSED STATEMENTS OF SHAREHOLDERS' EQUITY
Three months ended September 30, 1998 and 1997
(Unaudited)
- --------------------------------------------------------------------------------
Unallocated
Additional Employee Stock
Common Paid-In Retained Ownership
Stock Capital Earnings Plan Shares
----- ------- -------- -----------
BALANCE, JULY 1, 1997 $ 14,830 $ 7,096,776 $ 8,372,493 $ (383,006)
Net income 290,520
Shares committed to be released (3,564 shares)
under the Employee Stock Ownership Plan (ESOP) 33,479 16,200
Shares earned under the RRP
Cash dividends declared on common stock, net
of dividends on unallocated ESOP Shares (80,991)
Repurchase of 15,000 shares of Common Stock
----------- ----------- ----------- -----------
BALANCES, SEPTEMBER 30, 1997 $ 14,830 $ 7,130,255 $ 8,582,022 $ (366,806)
=========== =========== =========== ===========
BALANCES, JULY 1, 1998 $ 16,313 $ 9,533,274 $ 6,970,925 $ (318,181)
Net income 284,822
Shares committed to be released (3,506 shares)
under the Employee Stock Ownership Plan (ESOP) 44,799 15,201
Shares earned under the RRP
Cash dividends declared on common stock, net
of dividends on unallocated ESOP shares (94,901)
Repurchase of 5,110 shares of Common Stock
Payment of Fractional shares on 10% Dividend (231)
----------- ----------- ----------- -----------
BALANCES, SEPTEMBER 30, 1998 $ 16,313 $ 9,577,842 $ 7,160,846 $ (302,980)
=========== =========== =========== ===========
Unearned
Recognition Common Total
and Retention Stock in Shareholders'
Plan Shares Treasury Equity
----------- -------- ------
BALANCE, JULY 1, 1997 $ (208,084) $ (2,202,813) $12,690,196
Net income 290,520
Shares committed to be released (3,564 shares)
under the Employee Stock Ownership Plan (ESOP) 49,679
Shares earned under the RRP 15,339 15,339
Cash dividends declared on common stock, net
of dividends on unallocated ESOP Shares (80,991)
Repurchase of 15,000 shares of Common Stock (225,000) (225,000)
----------- ------------ -----------
BALANCES, SEPTEMBER 30, 1997 $ (192,745) $ (2,427,813) $12,739,743
=========== ============ ===========
BALANCES, JULY 1, 1998 $ (146,728) $ (2,742,910) $13,312,693
Net income 284,822
Shares committed to be released (3,506 shares)
under the Employee Stock Ownership Plan (ESOP) 60,000
Shares earned under the RRP 15,339 15,339
Cash dividends declared on common stock, net
of dividends on unallocated ESOP shares (94,901)
Repurchase of 5,110 shares of Common Stock (74,725) (74,725)
Payment of Fractional shares on 10% Dividend (231)
----------- ------------ -----------
BALANCES, SEPTEMBER 30, 1998 $ (131,389) $ (2,817,635) $13,502,997
=========== ============ ===========
- --------------------------------------------------------------------------------
See accompanying notes to consolidated condensed financial statements
3
7
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Three months ended September 30, 1998 and 1997
(Unaudited)
- --------------------------------------------------------------------------------
1998 1997
---- ----
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 284,822 $ 290,520
Adjustments to reconcile net income
to net cash from operating activities
Provision for loan losses 18,000 25,000
Depreciation 34,537 21,633
Amortization of mortgage servicing rights 7,335 436
Employee Stock Ownership Plan expense 60,000 49,679
Recognition and Retention Plan expense 15,339 15,339
Originations of loans held for sale (5,791,225) (2,781,527)
Proceeds from sales of loans held for sale 4,596,325 2,367,900
Net gains on sales of loans held for sale (76,916) (42,588)
Change in assets and liabilities
Accrued interest receivable (51,268) (24,697)
Other assets (9,191) 28,510
Accrued interest payable 99 10,839
Other expense and other liabilities (555,436) 273,880
-------------- ---------------
Net cash from operating activities (1,467,579) 234,924
CASH FLOWS FROM INVESTING ACTIVITIES
Principal paydowns on mortgage-backed securities 1,014 846
Purchase of FHLB stock (18,700) (19,400)
Net increase in loans (1,098,685) (1,249,058)
Net purchases of premises and equipment (44,376) (11,528)
-------------- ---------------
Net cash used in investing activities (1,160,747) (1,279,140)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits 771,304 218,718
Proceeds from Federal Home Loan Bank advances 4,000,000 8,000,000
Repayments on Federal Home Loan Bank advances (2,434,781) (6,112,891)
Decrease in advance payments
by borrowers for taxes and insurance (131,848) (123,798)
Payment of dividends on common stock (95,132) (80,991)
Repurchase of common stock (74,725) (225,000)
-------------- ---------------
Net cash from financing activities 2,034,818 1,676,038
-------------- ---------------
Net change in cash and cash equivalents (593,508) 631,822
Cash and cash equivalents at beginning of period 3,280,713 3,080,612
-------------- ---------------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $ 2,687,205 $ 3,712,434
============== ===============
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $ 769,661 $ 702,292
Income taxes 25,956
- --------------------------------------------------------------------------------
See accompanying notes to consolidated condensed financial statements.
4
8
MSB FINANCIAL, INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
Three months ended September 30,1998
(Unaudited)
- --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated condensed financial statements include the
accounts of MSB Financial, Inc. (the "Company") and its wholly-owned subsidiary,
Marshall Savings Bank, F.S.B. ("Bank") after the elimination of significant
intercompany transactions and accounts. The initial capitalization of the
Company and its acquisition of the Bank took place on February 6, 1995.
These interim financial statements are prepared in accordance with the
Securities and Exchange Commission's rules for quarterly financial information
without audit and reflect all adjustments which, in the opinion of management,
are necessary to present fairly the financial position of the Company at
September 30, 1998 and the results of its operations and its cash flows for the
periods presented. All such adjustments are normal and recurring in nature. The
accompanying consolidated condensed financial statements do not purport to
contain all the necessary disclosures required by generally accepted accounting
principles that might otherwise be necessary in the circumstances and should be
read in conjunction with the consolidated financial statements and notes thereto
included in the annual report of MSB Financial, Inc. for the year ended June 30,
1998. The results of the periods presented are not necessarily representative of
the results of operations and cash flows which may be expected for the entire
year.
The provision for income taxes is based upon the effective tax rate expected to
be applicable for the entire year.
Basic and diluted earnings per share for the periods presented in 1998 and 1997
were computed under a new accounting standard effective in the quarter ended
December 31, 1997. All prior amounts have been restated to be comparable. Basic
earnings per share is based on net income divided by the weighted average number
of common shares outstanding during the period, adjusted for Employee Stock
Ownership Plan (ESOP) shares not committed for release and Recognition and
Retention Plan (RRP) shares not yet vested. Diluted earnings per share shows the
dilutive effect of additional common shares issuable under stock option plans.
Net income was $284,822 for the three month period ended September 30, 1998. The
weighted average number of common shares outstanding for the three month period
ended September 30, 1998 was 1,247,125. The weighted average of number of common
and diluted potential common shares outstanding for the three month period ended
September 30, 1998 was 1,299,783. Net income was $290,520 for the three month
period ended September 30, 1997. The weighted average number of common shares
outstanding for the three month period ended September 30, 1997 was 1,131,956.
The weighted average of number of common and diluted potential common shares
outstanding for the three month period ended September 30, 1997 was 1,170,102.
NOTE 2 - REPURCHASES OF COMMON STOCK
During the quarter ended September 30, 1998, the Company repurchased 5,110
shares of its common stock at a total cost of $74,725, or $14.62 per share, as
compared to 16,500 shares during the quarter ended September 30, 1997 at a total
cost of $225,000 or $13.64 per share. The Company is currently in the process of
repurchasing an additional 5%, or 67,738 shares of its common stock and as of
September 30, 1998 had repurchased 21,830 shares under this program. Approval to
repurchase the remaining 45,908 shares expires on February 11, 1999. As of
September 30, 1998, a total of 298,374 shares of the Company's common stock had
been repurchased at a total cost of $2,817,635, or $9.44 per share.
- --------------------------------------------------------------------------------
5
9
Pursuant to the requirement 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.
SIGNATURES
MSB FINANCIAL, INC.
Registrant
Date: December 22, 1998 \s\Charles B. Cook
------------------
Charles B. Cook, President and Chief
Executive Officer (Duly Authorized
Officer)
Date: December 22, 1998 \s\Elaine R. Carbary
--------------------
Elaine R. Carbary, Chief Financial
Officer (Principal Financial Officer)
11
10
MSB FINANCIAL, INC.
EXHIBIT INDEX
Exhibit No. Description Page No.
- ----------- ----------- --------
27 Financial Data Schedule 13
12