================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2002
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 000-20715
PRESTIGE BANCORP, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1785128
- -------------------------------------------------- ----------------------
(State or other jurisdiction of incorporation or (I.R.S. Employer
organization) Identification Number)
710 Old Clairton Road
Pleasant Hills, Pennsylvania 15236
- ----------------------------------------------------- ----------------------
(Address of principal executive office) (Zip Code)
(412) 655-1190
---------------------------------------------------------------
(Registrant's telephone number, including area code)
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. Yes X No
----- -----
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of May 6, 2002 there were
1,059,371 shares of the registrant's common stock outstanding, par value $1.00
per share.
================================================================================
PRESTIGE BANCORP, INC.
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION PAGE
- ------- --------------------- ----
Item 1. Financial Statements
Consolidated Balance Sheets of Prestige Bancorp, Inc. as of
March 31, 2002 (unaudited) and December 31, 2001 1
Consolidated Statements of Income of Prestige Bancorp, Inc. for the three
months ended March 31, 2002 and 2001 (unaudited) 2
Consolidated Statements of Stockholders' Equity of Prestige Bancorp, Inc.
for the three months ended March 31, 2002 and 2001 (unaudited) 3
Consolidated Statements of Cash Flows of Prestige Bancorp, Inc. for the three
months ended March 31, 2002 and 2001 (unaudited) 4
Notes to Consolidated Financial Statements (unaudited) 5
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 13
Item 3. Quantitative and Qualitative Disclosures About Market Risk 18
PART II. OTHER INFORMATION
- -------- -----------------
Item 1. Legal Proceedings 19
Item 2. Changes in Securities 19
Item 3. Defaults upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security-Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
SIGNATURES 20
- ----------
PRESTIGE BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
March 31, December 31,
2002 2001
------------- -------------
ASSETS (Unaudited)
- ------
Cash and due from banks $ 652,674 $ 1,242,333
Interest-bearing deposits with banks 13,212,096 14,479,347
Investment securities:
Available for sale 24,871,194 25,045,805
Held to maturity (market value $5,773,473 and
$6,240,703 respectively) 5,731,975 6,173,341
Net loans 136,833,996 137,500,075
Federal Home Loan Bank stock, at cost 2,790,000 2,790,000
Premises and equipment, net 2,115,965 2,149,562
Accrued interest receivable 894,586 942,307
Deferred tax asset 2,164,563 2,152,870
Other assets 2,459,397 2,309,911
------------- -------------
Total assets $ 191,726,446 $ 194,785,551
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Non-interest-bearing deposits $ 7,001,665 $ 6,640,440
Interest-bearing deposits 117,256,733 117,810,263
------------- -------------
Total deposits 124,258,398 124,450,703
Federal Home Loan Bank advances 52,800,000 55,800,000
Advance payments by borrowers for taxes and insurance 980,929 734,813
Accrued interest payable 322,367 333,043
Other liabilities 1,672,635 1,709,744
------------- -------------
Total liabilities 180,034,329 183,028,303
------------- -------------
Stockholders' Equity:
Preferred stock, $1.00 par value;
5,000,000 shares authorized, none issued -- --
Common stock, $1.00 par value; 10,000,000 shares authorized,
1,301,511 shares issued at March 31, 2002 and December 31, 2001,
respectively 1,301,511 1,301,511
Treasury stock at cost: 242,140 shares at March 31, 2002
and December 31, 2001, respectively (2,699,348) (2,699,348)
Additional paid-in-capital 12,786,267 12,780,907
Unearned ESOP shares: 77,664 shares at March 31, 2002
and December 31, 2001, respectively (574,280) (574,280)
Retained earnings - substantially restricted 965,591 1,085,469
Accumulated other comprehensive loss (87,624) (137,011)
------------- -------------
Total stockholders' equity 11,692,117 11,757,248
------------- -------------
Total liabilities and stockholders' equity $ 191,726,446 $ 194,785,551
============= =============
The accompanying notes are an integral part of these financial statements.
1
PRESTIGE BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended
March 31,
-----------------------------
2002 2001
----------- -----------
Interest income:
Interest and fees on loans $ 2,362,380 $ 2,915,802
Interest on mortgage-backed securities 225,573 148,089
Interest and dividends on other investment securities 116,362 387,727
Interest on deposits in other financial institutions 50,242 71,214
----------- -----------
Total interest income 2,754,557 3,522,832
----------- -----------
Interest expense:
Interest on deposits 951,114 1,308,087
Advances from Federal Home Loan Bank 847,112 955,031
----------- -----------
Total interest expense 1,798,226 2,263,118
----------- -----------
Net interest income 956,331 1,259,714
Provision for loan losses 30,000 90,000
----------- -----------
Net interest income after provision for loan losses 926,331 1,169,714
----------- -----------
Other income:
Fees and service charges 202,513 204,945
Net gain on sale of investments 1,515 30,535
Loss on sale of assets (1,245) --
Other income, net 3,950 3,806
----------- -----------
Total other income 206,733 239,286
----------- -----------
Other expenses:
Salaries and employee benefits 557,379 611,863
Premises and occupancy costs 136,910 140,725
Federal deposit insurance premiums 15,292 15,146
Data processing costs 73,500 70,271
Advertising costs 24,804 35,258
Transaction processing costs 68,974 85,907
ATM transaction fees 41,015 39,365
Legal and professional expenses 257,766 200,402
Other expenses 138,538 153,959
----------- -----------
Total other expenses 1,314,178 1,352,896
----------- -----------
(Loss) income before income tax expense (181,114) 56,104
Income tax (benefit) expense (61,236) 22,954
----------- -----------
Net (loss) income $ (119,878) $ 33,150
=========== ===========
Basic (loss) earnings per share:
Net (loss) income $ (0.12) $ 0.03
Weighted average number of common shares outstanding 982,214 976,862
Diluted (loss) earnings per share:
Net (loss) income $ (0.12) $ 0.03
Weighted average number of common shares outstanding 982,587 976,862
The accompanying notes are an integral part of these financial statements.
2
PRESTIGE BANCORP, INC.
----------------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
-----------------------------------------------
FOR THE THREE MONTHS ENDED MARCH 31, 2002 AND 2001
--------------------------------------------------
(Unaudited)
Common
Stock Additional
Comprehensive $1.00 par Treasury Paid-in
Income value Stock Capital
============ ------------ ------------ ------------
BALANCE, December 31, 2001 $ 1,301,511 $ (2,699,348) $ 12,780,907
Allocation of 1,473 ESOP shares -- -- 5,360
Net loss $ (119,878) -- -- --
Net unrealized gains on available
for sale securities, net of tax
of $32,256 48,384 -- -- --
Reclassification adjustment for
gains realized in net income net
of tax of $512 1,003 -- -- --
------------
Comprehensive income $ (70,491)
============ ------------ ------------ ------------
BALANCE, March 31, 2002 $ 1,301,511 $ (2,699,348) $ 12,786,267
============ ============ ============
BALANCE, December 31, 2000 $ 1,162,313 $ (2,699,348) $ 11,588,778
Allocation of 1,375 ESOP shares -- -- 1,382
Net income $ 33,150 -- -- --
Net unrealized losses on available
for sale securities, net of tax
of $39,183 58,775 -- -- --
Reclassification adjustment for
gains realized in net income net
of tax of $12,495 18,040 -- -- --
------------
Comprehensive loss $ 109,965
============ ------------ ------------ ------------
BALANCE, March 31, 2001 $ 1,162,313 $ (2,699,348) $ 11,590,160
============ ============ ============
Accumulated
Other
Unearned Retained Comprehensive
ESOP Shares Earnings (Loss) Income Total
------------ ------------ ------------ ------------
BALANCE, December 31, 2001 $ (574,280) $ 1,085,469 $ (137,011) $ 11,757,248
Allocation of 1,473 ESOP shares -- -- -- 5,360
Net loss -- (119,878) -- (119,878)
Net unrealized gains on available
for sale securities, net of tax
of $32,256 -- -- 48,384 48,384
Reclassification adjustment for
gains realized in net income net
of tax of $512 -- -- 1,003 1,003
Comprehensive income
------------ ------------ ------------ ------------
BALANCE, March 31, 2002 $ (574,280) $ 965,591 $ (87,624) $ 11,692,117
============ ============ ============ ============
BALANCE, December 31, 2000 $ (615,670) $ 2,377,690 $ (263,831) $ 11,549,932
Allocation of 1,375 ESOP shares -- -- -- 1,382
Net income -- 33,150 -- 33,150
Net unrealized losses on available
for sale securities, net of tax
of $39,183 -- -- 58,775 58,775
Reclassification adjustment for
gains realized in net income net
of tax of $12,495 -- -- 18,040 18,040
Comprehensive loss
------------ ------------ ------------ ------------
BALANCE, March 31, 2001 $ (615,670) $ 2,410,840 $ (187,016) $ 11,661,279
============ ============ ============ ============
The accompanying notes are an integral part of these statements.
3
PRESTIGE BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Three Months Ended
March 31,
----------------------------
2002 2001
------------ ------------
Operating activities:
Net (loss) income $ (119,878) $ 33,150
------------ ------------
Adjustments to reconcile net (loss) income to net cash
(used)
provided by operating activities:
Depreciation of premises and equipment 57,306 69,373
Amortization of premiums and discounts, net 1,928 763
Non cash compensation expense related to MRP Plan 6,356 35,803
Non cash compensation expense related to ESOP benefit 18,200 14,222
Loss on disposal of assets 1,245 --
Gain on sale of equity securities (1,515) (28,967)
Gain on calls of held to maturity securities -- (1,568)
Provision for loan losses 30,000 90,000
Decrease in other liabilities (49,949) (113,304)
Decrease in accrued interest payable (10,676) (184,596)
Increase in deferred income taxes (46,286) (54,837)
Decrease in accrued interest receivable 47,721 80,606
(Increase) decrease in other assets (155,842) 103,796
------------ ------------
Total adjustments (101,512) 11,291
------------ ------------
Net cash (used) provided by operating activities (221,390) 44,441
------------ ------------
Investing activities:
Loan originations (11,489,268) (4,856,897)
Principal payments on loans 12,125,347 7,966,157
Principal payments on mortgage-backed securities available for
sale 211,649 99,934
Principal payments on mortgage-backed securities held to maturity 431,829 323,730
Principal payments on investment securities held to maturity 8,364 37,847
Proceeds from calls of held to maturity investment
securities -- 4,000,000
Proceeds from calls of available for sale investment
securities -- 1,500,000
Proceeds from sale of equity securities 97,937 118,768
Purchases of available for sale investment securities (50,235) (10,226)
Purchases of premises and equipment (24,954) (15,243)
Purchase of Federal Home Loan Bank stock -- (100)
------------ ------------
Net cash provided by investing activities 1,310,669 9,163,970
------------ ------------
Financing activities:
Net change in advance payments by borrowers for taxes and insurance 246,116 (139,363)
Payments on Federal Home Loan Bank advances (3,000,000) (7,500,000)
Net increase in Money Market, NOW and Passbook savings accounts 1,170,318 2,645,850
Net (decrease) increase in certificate accounts (1,362,623) 4,870,708
------------ ------------
Net cash used by financing activities (2,946,189) (122,805)
------------ ------------
Net (decrease) increase in cash and cash equivalents (1,856,910) 9,085,606
Cash and cash equivalents at beginning of period 15,721,680 5,871,023
------------ ------------
Cash and cash equivalents at end of period $ 13,864,770 $ 14,956,629
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes $ $ 21,400
Cash paid during the period for interest on deposits and
borrowings 1,808,902 2,447,714
Supplemental schedule of noncash investing activity:
Loans transferred to real estate owned $ -- $ --
The accompanying notes are an integral part of these financial statements.
4
PRESTIGE BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2002
(UNAUDITED)
1. BASIS OF ORGANIZATION:
----------------------
On February 14, 1996, the Board of Directors of Prestige Bank, F.S.B. (the Bank)
adopted a Plan of Conversion (the Plan) from a federally chartered mutual
savings bank to a federally chartered stock savings bank and the issuance of its
stock to Prestige Bancorp, Inc., (the Corporation), a Pennsylvania corporation.
The Corporation sold 963,023 shares of its common stock (including 77,041 shares
to its newly formed Employee Stock Ownership Trust (the ESOP)), at $10.00 per
share. Simultaneously there was a corresponding exchange of all of the Bank's
stock for approximately 50% of the net offering proceeds. The remaining portion
of the net proceeds was retained by the Corporation net of $770,410, which was
loaned to the ESOP for its purchase. The conversion and public offering were
completed on June 27, 1996 with net proceeds from the offering, net of the ESOP
loan, totaling $8,188,394, after offering expenses.
2. BASIS OF PRESENTATION:
----------------------
The accompanying unaudited financial statements have been prepared pursuant to
the rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual financial
statements prepared in accordance with accounting principles generally accepted
in the United States have been condensed or omitted pursuant to those rules and
regulations, although the Corporation believes that the disclosures made are
adequate to make the information presented not misleading. However, such interim
information reflects all adjustments (consisting solely of normal recurring
adjustments), which are, in the opinion of management, necessary for a fair
presentation of financial position and results of operations for the periods
presented. The results of operations for the three-month period ended March 31,
2002, are not necessarily indicative of the results to be expected for the year
ending December 31, 2002.
The unaudited financial statements and notes hereto should be read in
conjunction with the audited financial statements and notes thereto for the year
ended December 31, 2001, contained in the Corporation's Annual Report and Form
10-K.
EARNINGS PER COMMON SHARE
The Corporation follows Statement of Financial Accounting Standards ("SFAS") No.
128, "Earnings Per Share." Under SFAS No. 128, earnings per share are classified
as basic earnings per share and diluted earnings per share. Basic earnings per
share includes only the weighted average common shares outstanding. Diluted
earnings per share includes the weighted average common shares outstanding and
any dilutive common stock equivalent shares in the calculation. Treasury shares
are treated as retired for earnings per share purposes.
5
The following tables reflect the calculation of earnings per share under SFAS
No. 128.
Three Months Ended
---------------------------------
March 31, 2002 March 31, 2001
-------------- ---------------
Basic (loss) earnings per share:
Net (loss) income $(119,878) $ 33,150
Average shares outstanding 982,214 976,862
(Loss) earnings per share $ (0.12) $ 0.03
Diluted (loss) earnings per share:
Net (loss) income $(119,878) $ 33,150
Average shares outstanding 982,214 976,862
Stock Options 373 --
--------- ---------
Diluted average shares outstanding 982,587 976,862
(Loss) earnings per share $ (0.12) $ 0.03
For the three months ended March 31, 2002 and 2001, options to purchase 96,504
and 85,097 shares of common stock, respectively, were outstanding but not
included in the computation of diluted earnings per share because the options'
exercise price were greater than the average market price of the Corporation's
common shares for the period.
On May 16, 2001, the Board of Directors declared a stock dividend of 12% to
shareholders of record of June 1, 2001, which was paid on June 15, 2001. All per
share data have been restated to reflect the stock dividend.
COMPREHENSIVE INCOME
The Corporation follows SFAS No. 130, "Reporting Comprehensive Income." This
accounting standard requires the reporting of all changes in the equity of an
enterprise that result from recognized transactions and other economic events of
the period other than transactions with owners in their capacity as owners.
Prior to the issuance of this standard, some of those changes in equity were
displayed in the income statement, while others were included directly in
balances within a separate component of equity in the balance sheet.
OFFICE OF THRIFT SUPERVISION
The Corporation announced on September 25, 2000 that the Savings Bank entered
into a Supervisory Agreement with the Office of Thrift Supervision (the "OTS").
This Supervisory Agreement formalized the understandings of the OTS and the Bank
pursuant to an informal directive issued by the OTS to the Bank on May 17, 2000.
In conjunction with a routine regulatory examination of the Bank by the OTS, the
OTS requested the Bank to enter into the Supervisory Agreement. The Supervisory
Agreement was signed on September 20, 2000, (the "Effective Date") and, among
other things, places restrictions on the Bank's growth. The Bank may seek
modification of this limitation on growth by submission of a written request to
the Regional Director of the OTS ("Regional Director") and by obtaining the
prior written approval of the Regional Director. Under the Supervisory
Agreement, the Bank may not increase its assets in an amount exceeding net
interest credited on deposit liabilities (or earnings credited on share
accounts) during any calendar quarter, without prior written approval of the
Regional Director. Additionally, the Supervisory Agreement requires the Bank or
its Board of Directors to review and revise various policies including 1)
interest rate risk management, 2) strategic planning to direct the operations
and affairs of the Bank and in managing and reducing the interest rate risk of
the Bank, 3) investment and underwriting policies, 4) transactions with the
affiliates of the Bank,
6
and 5) internal loan and asset classifications policies. The Supervisory
Agreement continues the restriction imposed on the Bank by the directive not to
extend loans for a business purpose except for those business loans which the
Bank was committed to extend on or before May 17, 2000 or which were loans in
process. This restriction on the extension of new loans for a business purpose
also extends to renewals of business loans with revolving credit or balloon loan
features at maturity. The Bank may request that the Regional Director waive this
limitation on the extension of an individual commercial loan to a customer,
including any revised terms or renewal of a business loan. The restrictions on
the Bank's operations were immediately effective and the Supervisory Agreement
will remain in place until terminated by the OTS.
The Corporation has worked closely with the OTS to implement the Supervisory
Agreement and believes it has materially complied with the Agreement to date.
MERGER AGREEMENT
On February 7, 2002, Northwest Bancorp, Inc., the holding company for Northwest
Savings Bank, and Prestige Bancorp, Inc. (and certain affiliated entities)
entered into a definitive agreement under which Northwest Bancorp and Northwest
Savings Bank would acquire Prestige Bancorp and Prestige Bank, respectively.
Under the terms of the agreement, the shareholders of Prestige Bancorp will
receive $13.75 in cash for each share of Prestige Bancorp, resulting in a cash
payment by Northwest of approximately $14.7 million. Each of the Boards of
Directors has approved the transaction. Due diligence has been completed.
Prestige Bancorp and Northwest Bancorp are in the process of obtaining
regulatory approval from applicable banking regulators to complete the merger.
The transaction is expected to be completed by the beginning of the third
quarter 2002 and is subject to approval by the Prestige Bancorp shareholders and
applicable regulatory authorities.
7
3. INVESTMENT SECURITIES:
----------------------
The cost and market values of investment securities are summarized as follows:
Investment securities available for sale:
March 31, 2002
---------------------------
Amortized Market
Cost Value
----------- -----------
U.S. government and government
agency obligations:
Due after one and within five years $ 500,000 $ 505,315
Corporate Debentures 494,331 421,595
Federal Home Loan Mortgage
Corporation (FHLMC) certificates:
Due after ten years 1,422,774 1,433,690
Government National Mortgage Association
(GNMA) certificates:
Due after ten years 9,782,735 9,744,024
Federal National Mortgage Association
(FNMA) certificates:
Due after ten years 1,037,705 1,043,161
Mutual fund investment 10,851,073 10,849,022
Common stock portfolio 926,949 874,387
----------- -----------
$25,015,567 $24,871,194
=========== ===========
Investment securities held to maturity:
March 31, 2002
---------------------------
Amortized Market
Cost Value
----------- -----------
U.S. government and government
Agency obligations:
Due after ten years $ 1,099,089 $ 1,098,096
Federal Home Loan Mortgage
Corporation (FHLMC) certificates:
Due after five and within ten years 1,569,931 1,628,057
Due after ten years 650,319 646,270
Government National Mortgage
Association (GNMA) certificates:
Due after ten years 1,059,302 1,064,771
Federal National Mortgage
Association (FNMA) certificates:
Due after ten years 1,353,334 1,336,279
----------- -----------
$ 5,731,975 $ 5,773,473
=========== ===========
8
4. LOANS RECEIVABLE:
-----------------
Loans receivable are summarized as follows:
March 31,
2002
-------------
Real estate loans:
1-4 family $ 101,234,065
Construction 899,900
Commercial real estate 7,287,351
-------------
109,421,316
Less- Undisbursed loan proceeds 324,350
-------------
109,096,966
Commercial business loans: 10,413,086
Consumer loans:
Home equity 13,228,014
Student 2,434,129
Automobile 1,531,018
Collateral 538,003
Credit cards 376,925
Personal unsecured/other 360,698
-------------
18,468,787
-------------
137,978,839
Less- Allowance for loan losses 1,199,222
Deferred loan costs (54,379)
-------------
$ 136,833,996
=============
5. ALLOWANCE FOR LOAN LOSSES:
--------------------------
Activity with respect to the allowance for loan losses is summarized as follows:
Three Months Ended
March 31,
------------------------------
2002 2001
----------- -----------
Balance at beginning of period $ 1,166,606 $ 3,387,779
Provision for loan losses 30,000 90,000
Charge-offs (5,421) (71,558)
Recoveries 8,037 26,652
----------- -----------
Balance at end of period $ 1,199,222 $ 3,432,873
=========== ===========
9
6. DEPOSITS:
The scheduled maturities of the Bank's certificate accounts as of March 31, 2002
are as follows (amounts approximate):
April 1, 2002 to March 31, 2003 $37,726,376
April 1, 2003 to March 31, 2004 10,494,965
April 1, 2004 to March 31, 2005 4,707,935
April 1, 2005 to March 31, 2006 4,347,586
April 1, 2006 and thereafter 2,072,285
-----------
TOTAL $59,349,147
===========
Certificates of $100,000 or more $11,873,186
===========
7. INCOME TAXES:
-------------
The income tax (benefit) expense was as follows:
Three Months Ended
March 31,
--------------------------------
2002 2001
------------- -------------
Federal $ (60,194) $ 18,125
State (1,042) 4,829
------------- -------------
$ (61,236) $ 22,954
============= =============
8. RELATED PARTY TRANSACTIONS:
---------------------------
Certain directors and executive officers of the Bank, including their immediate
families and companies in which they are principal owners, are loan customers of
the Bank. In management's opinion, such loans were made in the normal course of
business and were granted on substantially the same terms and conditions as
loans to other individuals and businesses of comparable creditworthiness at the
time. Total loans to these persons at March 31, 2002, and December 31, 2001,
amounted to $402 and $7,502, respectively.
9. CAPITAL STOCK:
--------------
On April 23, 1997, at the annual stockholders meeting, the Board of Directors
and shareholders formally approved the Corporation's Stock Option Plan (the
Option Plan) and Management Recognition and Retention Plan and Trust (the MRP
Plan; the Option Plan and the MRP Plan herein are referred to as the Plans) as
fully described in the Corporation's proxy statement dated March 31, 1997. In
connection with the MRP Plan, the Corporation incurred compensation expense of
approximately $6,000 during the three months ended March 31, 2002, compared to
$36,000 for the comparable period of 2001.
The aforementioned approval of the Option Plan made 130,239 options available
for grant to employees and others who perform substantial services for the
Corporation. As of March 31, 2002, the Corporation had granted 132,338 options
of which 34,894 shares had been forfeited. The options are exercisable one year
from the grant date and vest in equal installments over a period of five years.
As of March 31, 2002, there had been 568 options exercised. The maximum term of
any option granted under the Plan cannot exceed 10 years.
10
On May 16, 2001, the Board of Directors declared a stock dividend of 12% to
shareholders of record of June 1, 2001 payable on June 15, 2001. All option data
above have been restated to reflect the stock dividends.
10. RETAINED EARNINGS AND REGULATORY CAPITAL:
-----------------------------------------
The Savings Bank's actual capital amounts and ratios are presented below in the
following table. There was no deduction from capital for interest-rate risk
(amounts in thousands).
To Be Well Capitalized
For Capital Adequacy Under Prompt Corrective
Actual Purposes Action Provisions
----------------- -------------------- -----------------------
Amount Ratio Amount Ratio Amount Ratio
------- ----- ------ ----- ------- -----
Total Capital (to Risk
Weighted Assets):
As of
March 31, 2002 $11,810 12.06% > $7,832 > 8.0% > $9,790 > 10.0%
- - - -
Tier 1 Capital (to Risk
Weighted Assets):
As of
March 31, 2002 $10,611 10.84% > $3,916 > 4.0% > $5,874 > 6.0%
- - - -
Tier 1 Capital (to
Average Assets):
As of
March 31, 2002 $10,611 5.55% > $7,648 > 4.0% > $9,560 > 5.0%
- - - -
11. COMMITMENTS AND CONTINGENT LIABILITIES:
---------------------------------------
The Corporation incurs off-balance sheet risks in the normal course of business
in order to meet the financing needs of its customers. These risks derive from
commitments to extend or receive credit. Such commitments involve, to varying
degrees, elements of credit risk in excess of the amount recognized in the
financial statements.
Commitments to extend credit are obligations to lend to a customer as long as
there is no violation of any condition established in the loan agreement.
Commitments generally have fixed expiration dates or other termination clauses.
A portion of the commitments is not expected to be drawn upon; thus, the total
commitment amounts do not necessarily represent future cash requirements. Each
customer's creditworthiness is evaluated on a case-by-case basis.
The Bank's exposure to credit loss in the event of nonperformance by the other
party to these commitments to extend credit is represented by their contractual
amounts. The Bank uses the same credit and collateral policies in making
commitments as for all other lending. The Bank has outstanding various
commitments to extend credit approximating $9.1 million as of March 31, 2002. In
the opinion of management, the funding of the credit commitments will not have a
material adverse effect on the Bank's financial position or results of
operations.
11
The Bank is involved in one case of lender liability and related claims. The
Bank has available to it a number of potentially bona fide defenses to this
case. Absent a position not asserted at this time by the insurance company, an
insurance policy the Bank maintains, in all probability, will indemnify the Bank
for compensatory damages and for fees and expenses. This policy has a deductible
of $50,000. The plaintiffs have alleged damages, but a claim for their damages
has not been quantified within the judicial process. The parties to the
litigation have been unsuccessful in effecting an amicable resolution of the
claims. At this preliminary stage, based solely upon facts known to this point,
the Bank's management, after discussion with outside counsel, believes it has
meritorious defenses to the plaintiffs' claims.
Please refer to Part II - Item 1. for a description of an additional potential
legal contingency.
Additionally, the Bank is also subject to asserted and unasserted potential
claims encountered in the normal course of business. In the opinion of
management and legal counsel, the resolution of these claims will not have a
material adverse effect on the Bank's financial position or results of
operations.
12. NEW ACCOUNTING STANDARDS:
-------------------------
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards (SFAS) No. 143, "Accounting for Asset Retirement
Obligations." This Statement addresses financial accounting and reporting for
obligations associated with the retirement of tangible long-lived assets and the
associated asset retirement costs. The provisions of this Statement are required
to be applied starting with fiscal years beginning after June 15, 2002. The
impact and adoption of this standard is not expected to materially affect the
Corporation's financial condition or results of operations.
The FASB has also issued SFAS No. 145, "Rescission of FASB Statements No. 4, 44,
and 64, Amendment of FASB Statement No. 13, and Technical Corrections." This
Statement rescinds SFAS No. 4, "Reporting Gains and Losses from Extinguishment
of Debt", and an amendment of that Statement, SFAS No. 64, "Extinguishments of
Debt Made to Satisfy Sinking-Fund Requirements". This Statement also rescinds
SFAS No. 44, "Accounting for Intangible Assets of Motor Carriers". This
Statement amends SFAS No. 13, "Accounting for Leases", to eliminate an
inconsistency between the required accounting for sale-leaseback transactions
and the required accounting for certain lease modifications that have economic
effects that are similar to sale-leaseback transactions. This Statement also
amends other existing authoritative pronouncements to make various technical
corrections, clarify meanings, or describe their applicability under changed
conditions. The provisions of this Statement were required to be applied
starting with fiscal years beginning after May 15, 2002. The impact and adoption
of this standard is not expected to materially affect the Corporation's
financial condition or results of operations.
12
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SUPERVISION AND REGULATION
The Corporation announced on September 25, 2000 that the Savings Bank
entered into a Supervisory Agreement with the Office of Thrift Supervision (the
"OTS"). This Supervisory Agreement formalized the understandings of the OTS and
the Bank pursuant to an informal directive issued by the OTS to the Bank on May
17, 2000.
In conjunction with a routine regulatory examination of the Bank by the OTS,
the OTS requested the Bank to enter into the Supervisory Agreement. The
Supervisory Agreement was signed on September 20, 2000, (the "Effective Date")
and, among other things, places restrictions on the Bank's growth. The Bank may
seek modification of this limitation on growth by submission of a written
request to the Regional Director of the OTS ("Regional Director") and by
obtaining the prior written approval of the Regional Director. Under the
Supervisory Agreement, the Bank may not increase its assets in an amount
exceeding net interest credited on deposit liabilities (or earnings credited on
share accounts) during any calendar quarter, without prior written approval of
the Regional Director. Additionally, the Supervisory Agreement requires the Bank
or its Board of Directors to review and revise various policies including 1)
interest rate risk management, 2) strategic planning to direct the operations
and affairs of the Bank and in managing and reducing the interest rate risk of
the Bank, 3) investment and underwriting policies, 4) transactions with the
affiliates of the Bank, and 5) internal loan and asset classifications policies.
The Supervisory Agreement continues the restriction imposed on the Bank by the
directive not to extend loans for a business purpose except for those business
loans which the Bank was committed to extend on or before May 17, 2000 or which
were loans in process. This restriction on the extension of new loans for a
business purpose also extends to renewals of business loans with revolving
credit or balloon loan features at maturity. The Bank may request that the
Regional Director waive this limitation on the extension of an individual
commercial loan to a customer, including any revised terms or renewal of a
business loan. The restrictions on the Bank's operations were immediately
effective and the Supervisory Agreement will remain in place until terminated by
the OTS.
The Corporation has worked closely with the OTS to implement the Supervisory
Agreement and believes it has materially complied with the Agreement to date.
MERGER AGREEMENT
On February 7, 2002, Northwest Bancorp, Inc., the holding company for Northwest
Savings Bank, and Prestige Bancorp, Inc. (and certain affiliated entities)
entered into a definitive agreement under which Northwest Bancorp and Northwest
Savings Bank would acquire Prestige Bancorp and Prestige Bank, respectively.
Under the terms of the agreement, the shareholders of Prestige Bancorp will
receive $13.75 in cash for each share of Prestige Bancorp, resulting in a cash
payment by Northwest of approximately $14.7 million. Each of the Boards of
Directors has approved the transaction. Due diligence has been completed.
Prestige Bancorp and Northwest Bancorp are in the process of obtaining
regulatory approval from applicable banking regulators to complete the merger.
The transaction is expected to be completed by the beginning of the third
quarter 2002 and is subject to approval by the Prestige Bancorp shareholders and
applicable regulatory authorities.
As part of the terms of the merger agreement, the Corporation has agreed that
from the date of the merger agreement until the completion of the merger it will
not make significant changes to its operations or make other decisions which may
have a material affect on the operations or assets of the Corporation and the
Savings Bank without the consent of Northwest Bancorp.
13
If the merger takes place, the Corporation and the Bank will cease to exist as
separate entities.
For a more detailed description of the merger agreement, including certain
provisions relating to restrictions on Prestige's considering competing
proposals, liquidated damage provisions and additional representations,
conditions and covenants, please see the information under "Proposal I" of the
Proxy Statement filed with the Securities and Exchange Commission on April 26,
2002, which accompanied the Corporation's Annual Report for the period ended
December 31, 2001. A copy of the merger agreement is attached as an exhibit to
the Proxy Statement.
FINANCIAL CONDITION
Assets held directly by the Corporation include all of the outstanding
capital stock of the Savings Bank, a loan receivable from the Prestige Bancorp
Employee Stock Ownership Trust (the "ESOP"), one loan totaling $175,000,
deposits maintained at the Savings Bank, common stock of mostly savings
associations or savings and loan holding companies and other assets
(collectively the "Directly Held Assets"). Each stock ownership interest in the
unrelated savings associations or savings and loan holding companies amounts to
less than a 1.25% interest in such entities. As of March 31, 2002, the
Corporation had outstanding borrowings of $303,000 from the Savings Bank to
support cash levels. The loan is adequately secured in accordance with
applicable law.
The following discussion of the financial condition and activities of the
Corporation should be read as the consolidated activities of the Corporation and
the Savings Bank. Unless the following discussion specifically identifies an
activity, event or condition as relating to the Directly Held Assets, it is
assumed that such activity, event or condition occurred as a result of a direct
action of the Savings Bank and an indirect action of the Corporation.
At March 31, 2002, the Corporation's total assets amounted to $191.7 million
compared with $194.8 million at December 31, 2001. During the first quarter
2002, total cash and cash equivalents decreased $1.9 million and net loans
decreased $666,000. The $1.9 million or 11.8% decrease in cash and cash
equivalents was primarily attributable to a $3.0 million decrease in Federal
Home Loan Bank advances that was partially offset by a decrease in net loans of
$666,000. The net loan decrease of $666,000 was primarily attributable to a
decrease in commercial business and commercial real estate loans of $543,000 or
3.0%. Total stockholders' equity amounted to $11.7 million or 6.10% of total
assets at March 31, 2002, compared to equity of $11.8 million or 6.04% of total
assets at December 31, 2001. The $65,000 decrease in stockholders' equity was
primarily attributable to a net loss of $120,000 for the quarter ended March 31,
2002. During 2000, the Board of Directors suspended its cash dividend to
preserve capital due to net losses recognized by the Corporation. The merger
agreement between the Corporation and Northwest Bancorp, Inc. described above
restricts the Corporation's power to declare and pay dividends.
The Corporation's nonperforming assets decreased $70,000 to $2.5 million at
March 31, 2002, compared to $2.6 million at December 31, 2001. The decrease was
primarily due to a decrease in nonperforming one-to-four family residential
loans from $496,000 at December 31, 2001 to $444,000 at March 31, 2002. At March
31, 2002, the $1.6 million of nonperforming commercial business loans was
comprised of five loans. One nonperforming commercial business relationship
accounts for $1.4 million or 85.3% of the total nonperforming commercial
business loans. The $1.4 million has an U.S. Government guarantee of the payment
of principal. Currently, this commercial business is in bankruptcy, and
management is working closely in the bankruptcy proceedings to protect its
interests. Non-performing assets decreased $4.0 million when comparing March 31,
2002 to March 31, 2001. A majority of the $4.0 million decrease was due to the
commercial loan sale that occurred during the fourth quarter 2001. This sale
resulted in a $2.6 million reduction in non-performing commercial business and
commercial real estate loans.
14
The following table sets forth the amounts and categories of the Savings
Bank's nonperforming assets at the dates indicated. The Savings Bank had no
loans classified as troubled debt restructurings during the periods indicated
below.
MARCH 31, DECEMBER 31, MARCH 31,
2002 2001 2001
---- ---- ----
(DOLLARS IN THOUSANDS)
Non-accruing loans:
One-to-four family residential......................................... $ 444 $ 496 $ 82
Construction loans..................................................... - - -
Consumer loans......................................................... 182 203 259
Commercial real estate................................................. 24 20 3,399
Commercial business loans.............................................. 1,588 1,589 2,687
-------- -------- --------
Total nonperforming loans............................................ 2,238 2,308 6,427
Real estate owned...................................................... 271 271 86
-------- -------- --------
Total nonperforming assets........................................... $ 2,509 $ 2,579 $ 6,513
======== ======== ========
Total nonperforming loans as a
Percentage of total loans............................................ 1.62% 1.66% 4.18%
======= ======== =======
Total nonperforming assets as a
Percentage of total assets........................................... 1.31% 1.32% 3.23%
======= ======== =======
RESULTS OF OPERATIONS
General--The Corporation recorded a net loss for the quarter ended March 31,
2002 of $120,000 or ($.12) per diluted share compared to net income of $33,000
or $.03 per diluted share for the same quarter in the prior year. The net loss
for the quarter ended March 31, 2002 of $120,000 reflects the excess of expenses
over income. The Corporation had $956,000 in net interest income and $203,000 in
income from fees and service charges. This was offset by $1.3 million in total
other expenses. Included in the $1.3 million in total other expenses were
$116,000 in merger related costs associated with the pending merger with
Northwest Bancorp, Inc. The $33,000 net income for the three months ended March
31, 2001 was attributable to $1.3 million in net interest income and $205,000 in
income from fees and service charges. This was partially offset by $1.4 million
in total other expenses.
INTEREST Income--The Corporation reported interest income of $2.8 million
for the three months ended March 31, 2002, as compared to $3.5 million for the
three months ended March 31, 2001. The interest income decrease of $768,000 or
21.8% for the quarter ended March 31, 2002, compared to the same period in the
prior year can be attributed to a $553,000 or 19.0% decrease in interest and
fees on loans. The decrease of $553,000 in interest and fees on loans was the
result of a decrease in the average yield earned on loans receivable and a
decrease in average loan balances. The average yield earned on loans receivable,
during the quarter ended March 31, 2002, was 6.85% compared to 7.54% for the
same period in 2001. Average loan balances for the first quarter 2002 were
$137.9 million compared to $154.8 million for the same period in 2001.
INTEREST Expense--Interest expense decreased $465,000 or 20.5% during the
three months ended March 31, 2002 as compared to the same period last year. This
decrease was due to a reduction in average interest-bearing liabilities and a
decrease in the weighted average interest rate paid on interest-bearing
liabilities. Average deposits and Federal Home Loan Bank (FHLB) of Pittsburgh
advances during the first quarter of 2002 were $123.0 million and $54.8 million,
respectively, compared to $125.8 million and $60.5
15
million, respectively, for the same period in 2001. The weighted average
interest rate on interest-bearing liabilities during the first quarter of 2002
was 4.05% compared to 4.86% for the same period in 2001.
Provision for Loan Losses--During the three months ended March 31, 2002, the
Corporation recorded provisions for losses on loans of $30,000 compared to
$90,000 for the comparable period in 2001. The Corporation establishes a
provision for loan losses that is charged to operations. The allowance for loan
losses is maintained at a level that is deemed to be appropriate based upon a
comprehensive methodology that is to be updated on a monthly basis. This
methodology includes:
- A detailed review of all criticized and impaired loans is performed to
determine if any specific reserve allocations are required on an
individual loan basis. The specific reserve established for these
criticized and impaired loans is based on analysis of the loan's
performance, the related collateral value, cash flow considerations and
the financial capability of any guarantor.
- The application of reserve allocations to all outstanding loans, except
commercial business and commercial real estate loans and certain
unfunded commitments is based upon review of historical losses and
qualitative factors, which include but are not limited to, economic
trends, delinquencies, concentrations of credit, trends in loan volume,
borrowers' experience and depth of management, examination and audit
results, effects of any changes in lending policies and trends in policy
exceptions.
- The application of reserve allocations for all commercial business and
commercial real estate loans are calculated by using a risk rating
system. All loans are assigned one of ten risk ratings based upon an
internal review. For those loans where specific reserves are not
established, reserve factors are applied to the outstanding loans in
each risk rating, for purposes of determining the required reserves.
- The maintenance of a general reserve occurs in order to provide for
management judgement and considers the impact of factors not fully
reflected in historical loss experience. It also considers the impact of
unknown events or circumstances that have occurred, but have not yet
been identified by the Savings Bank through its credit administration
process. It must be emphasized that a general unallocated reserve is
prudent recognition of the fact that reserve estimates, by definition,
lack precision.
After completion of this process, management evaluates the adequacy of the
existing reserve and establishes the provision level for the next month. When it
is determined that the prospects for recovery of the principal of a loan have
significantly diminished, the loan is charged against the allowance account;
subsequent recoveries, if any, are credited to the allowance account. In
addition, nonperforming, delinquent loans greater than ninety days and problem
loans are to be reviewed monthly to determine potential losses. Generally,
consumer loans are considered losses when 180 days past due. The Corporation's
management is unable to determine in what loan category future charge-offs and
recoveries may occur. Therefore, the entire allowance for loan losses is
available to absorb future loan losses in any loan category. During the quarter
ended March 31, 2002, the Corporation charged off three consumer loans totaling
approximately $5,000.
Although management utilizes its best judgment in providing for losses,
there can be no assurance that the Savings Bank will not have to increase its
provision for loan losses in the future as a result of future deterioration in
commercial and consumer loans, future changes in the economy or for other
adverse reasons discovered from the methodology described above. In addition,
various regulatory agencies, as an integral part of their examination process,
periodically review the Savings Bank's provision for loan losses and the
carrying value of its nonperforming assets based on their judgments from
information available at the time of their examination. The OTS last examined
the Savings Bank as of June 30, 2001. The Savings Bank will
16
continue its review of the commercial loan portfolio for any further
developments and the allowance for loan loss will be adjusted accordingly.
The Corporation's management is unable to determine in what loan category
future charge-offs and recoveries may occur. The following schedule sets forth
the allocation of the allowance for loan losses among various categories. The
entire allowance for loan losses is available to absorb future loan losses in
any loan category.
MARCH 31, 2002 DECEMBER 31, 2001 MARCH 31, 2001
-------------------- ------------------------- ----------------------
% OF % OF % OF
LOANS IN LOANS IN LOANS IN
EACH EACH EACH
CATEGORY CATEGORY CATEGORY
TO TOTAL TO TOTAL TO TOTAL
AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS
------ ----- ------ ----- ------ -----
(DOLLARS IN THOUSANDS)
One-to-four family residential............... $ 182 73.20% $ 196 72.68% $ 168 66.87%
Construction................................. 1 .65 38 .82 17 .69
Commercial business and
commercial real estate..................... 748 12.80 716 13.10 2,817 19.72
Consumer:
Automobile, home equity, student,
share and other consumer.................... 149 13.35 117 13.40 85 12.72
Allocation to general risk.................... 119 - 100 - 346 -
-------- -------- ------- ------- -------- -------
Total..................................... $ 1,199 100.00% $ 1,167 100.00% $ 3,433 100.00%
======== ======= ======= ======= ======== =======
OTHER INCOME--Total other income decreased $2,000, excluding net gains on
sale of investments, for the three months ended March 31, 2002, compared to same
period in 2001.
OTHER EXPENSES--Total other expenses decreased $39,000 or 2.8% for the
quarter ended March 31, 2002, as compared to the quarter ended March 31, 2001.
Major factors for the decrease in total other expenses were decreases of $55,000
in salaries and employee benefits, $17,000 in transaction processing costs, and
$15,000 in other expenses. This was partially offset by an increase in legal and
professional fees of $57,000. Included in legal and professional fees during the
quarter ended March 31, 2002 was $116,000 in merger related costs associated
with the pending merger with Northwest Bancorp, Inc.
INCOME TAXES-- The Corporation recorded an income tax benefit of $61,000 for
the three months ended March 31, 2002. This compares to a $23,000 income tax
expense for the same period in the prior year. Such decreases in income taxes
were due to the Corporation recognizing a loss before income taxes of $181,000
for the three months ended March 31, 2002, compared to income before income
taxes of $56,000, for the same period in 2001.
LIQUIDITY AND CAPITAL RESOURCES
The Corporation's primary sources of funds are dividends from the Savings
Bank, repayments by the ESOP of the loan it received from the Corporation, loan
repayments made by the Corporation, interest and dividends on debt and equity
investments in other companies and interest earned on deposits of the
Corporation held at Savings Bank and short-term investments. The primary sources
of funds for the Savings Bank are deposits, advances from the FHLB of
Pittsburgh, repayments, prepayments and maturities of outstanding loans and
mortgage-backed securities, maturities of investment securities and other
short-term investments, and funds provided from operations. While scheduled loan
and mortgage-backed securities repayments and maturing investment securities and
short-term investments are relatively predictable sources of funds, deposit
flows, loan and mortgage-backed securities prepayments, and investment
securities with
17
callable features are greatly influenced by the movement of interest rates in
general, economic conditions or competition. The Savings Bank manages the
pricing of its deposits to maintain a deposit balance deemed appropriate and
desirable by the Investment/Asset and Liability Committee ("ALCO"). In addition,
the Savings Bank invests in short-term interest-earning assets, which provides
liquidity to meet lending requirements. The Savings Bank has also utilized
advances from the FHLB of Pittsburgh. At March 31, 2002, the Savings Bank had
$52.8 million borrowed from the FHLB of Pittsburgh pursuant to various term
loans with maturities of less than ten years.
During the three months ended March 31, 2002, the Corporation's operating
activities used net cash of approximately $221,000. The primary reasons for the
$221,000 use of cash by operating activities was an increase in other assets of
$156,000 and a net loss of $120,000 for the three months ended March 31, 2002.
These were partially offset by $57,000 in depreciation of premises and
equipment. During the three months ended March 31, 2001, net cash provided by
operating activities was $44,000. The primary reasons for the $44,000 net cash
provided by operating activities during the three months ended March 31, 2001
were a $104,000 decrease in other assets, $90,000 in provision for loan losses,
$81,000 decrease in accrued interest receivable and $69,000 in depreciation of
premises and equipment which was partially offset by a $185,000 decrease in
accrued interest payable and a $113,000 decrease in other liabilities.
Net cash provided by investing activities was $1.3 million for the three
months ended March 31, 2002. The primary reason for the $1.3 million net cash
provided by investing activities was the Corporation had $12.1 million and
$644,000 in principal payments on loans and mortgage-backed securities,
respectively. This was partially offset by $11.5 million in loan originations.
This compares with net cash provided by investing activities of $9.2 million for
the three months ended March 31, 2001. The primary reason for the $9.2 million
net cash provided by investing activities was the Corporation had $4.0 million
and $1.5 million in investment securities held to maturity and available for
sale, respectively, which were called and $8.0 million in principal payments
received on existing loans. This was partially offset by $4.9 million in loan
originations.
Net cash used by financing activities for the three months ended March 31,
2002, was $2.9 million. This was primarily attributable to a decrease in FHLB
advances of $3.0 million. During the same period last year, the Corporation
experienced $123,000 in net cash used by financing activities. This was
attributable to decreases in net FHLB advances of $7.5 million and $139,000 in
advance payments by borrowers for taxes and insurance. This was partially offset
by increases in total deposits of $7.5 million.
The Savings Bank is required to maintain specified amounts of capital
pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of
1989 and regulations thereunder. Savings associations are required to maintain
tangible capital of 1.5%, core capital of 4.00% and risk-based capital of 8.00%.
At March 31, 2002, the Savings Bank's tangible, core, and risk-based capital
ratios amounted to 5.56%, 5.56%, and 12.06%, respectively, which exceeded
applicable requirements.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
No material changes in information relating to quantitative and qualitative
disclosures about market risk has occurred from the preceding fiscal year to the
date of the interim balance sheet contained in this report. See "Item 7.
Management's Discussion and Analysis of Financial Condition and Results of
Operations -- Asset and Liability Management." of the December 31, 2001 Form
10-K of Prestige Bancorp, Inc. for further details.
18
PRESTIGE BANCORP, INC.
PART II
Item 1. LEGAL PROCEEDINGS
On March 19, 2002, a writ of summons was filed in the Court of Common
Pleas of Allegheny County against Prestige Bank, the Bank's Chief Executive
Officer and its President by Donald A. and Carol L. Miller. On April 24, 2002, a
complaint was filed by the Millers in the same court against the defendants
named in the previous filing. The complaint demands approximately $389,000 in
damages resulting from the alleged breach of a certain real estate lease of
approximately 1800 square feet of space in connection with Prestige Bank's
previous Bethel Park branch office. The Bank intends to file a motion to dismiss
the action. Although counsel to the Bank and management anticipate that much of
the claim may not be sustainable, it is premature to suggest any expected
outcome at the present time.
Other than the legal claim described above and in Note 11 of the
Financial Statements, neither the Corporation nor the Bank is involved in any
pending legal proceedings other than nonmaterial legal proceedings occurring in
the ordinary course of business.
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
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
The Corporation filed a Form 8-K on February 8, 2002 disclosing
the proposed merger of the Corporation with Northwest Bancorp,
Inc.
19
SIGNATURES
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.
PRESTIGE BANCORP, INC.
Dated: May 6, 2002 By: /s/ Mark R. Schoen
------------------
Mark R. Schoen,
Chairman of the Board of Directors,
Chief Executive Officer and President
Dated: May 6, 2002 By: /s/ James M. Hein
-----------------------
James M. Hein,
Chief Financial Officer
20