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
FOR THE PERIOD ENDED SEPTEMBER 30, 2001
ACT OF 1934
For the fiscal year ended June 30, 2001
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 333-68802
PEOPLES OHIO FINANCIAL CORPORATION
---------------------------------
(Exact name of registrant as specified in its charter)
Ohio 6035 31-1795575
---- ---- ----------
(State or other jurisdiction of (Primary Standard I.R.S. Employer
incorporation or organization Industrial Classification Identification No.
Number)
635 South Market Street, Troy, Ohio 45373
-----------------------------------------
(Address of principal executive offices)
(937) 339-5000
--------------
(Registrant's telephone number)
Securities registered pursuant to Section 12(b) of the Act:
NONE
----
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, no par value per share
---------------------------------------
(Title of the Class)
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
---- ----
Peoples Ohio Financial Corporation ("Peoples Ohio") was incorporated in
July 2001 to become the holding company of Peoples Savings Bank of Troy
("Peoples Savings"). Peoples Ohio has no substantial assets or liabilities. AS a
result, Peoples Ohio is filing the Peoples Savings 10-K as its own. The
following information related solely to Peoples Savings.
PEOPLES SAVINGS BANK AND SUBSIDIARY
INDEX
PART I. FINANCIAL INFORMATION
ITEM I. Financial Statements
Consolidated Balance Sheets as of September
30, 2001 and June 30, 2001.
Consolidated Statements of Income for the
three months ended September 30, 2001 and
2000.
Consolidated Statement of Shareholders'
Equity for the three months ended September
30, 2001.
Consolidated Statements of Cash Flows for the three
months ended September 30, 2001 and 2000.
Notes to Consolidated Financial Statements.
ITEM II. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
ITEM III. Quantitative and Qualitative Disclosures about Market Risk
PART II. OTHER INFORMATION
Item I. Legal Proceedings
Item II. Changes in Securities
Item III. Defaults upon Senior Securities
Item IV. Submission of Matters to a Vote of Security Holders
Item V. Other Information
Item VI. Exhibits and Reports on Form 8-K
SIGNATURE PAGE
Peoples Savings Bank of Troy and Subsidiary
Consolidated Balance Sheets
September 30 June 30
2001 2001
Assets (Unaudited)
------ ------------ ------------
Cash on hand and in other financial institutions $ 3,913,282 $ 5,118,227
Investment securities, held to maturity, (fair value of 1,485,344
and $1,503,000 at September 30 and June 30 2001) 1,424,120 1,484,294
Loans, net of allowance for loan losses of 842,027 and 843,081 198,976,231 197,482,915
Office properties and equipment 4,111,859 4,193,858
Federal Home Loan Bank stock 4,870,300 4,785,900
Interest receivable 1,158,324 1,026,513
Other assets 603,013 749,118
------------ ------------
Total assets $215,057,129 $214,840,825
============ ============
Liabilities and Shareholders' Equity
------------------------------------
Liabilities:
Deposits 109,571,590 108,398,334
Federal Home Loan Bank (FHLB) advances 81,968,511 83,521,561
Interest payable 276,205 259,813
Other
liabilities 1,451,958 1,277,946
------------ ------------
Total liabilities 193,268,264 193,457,654
------------ ------------
Commitments and Contigent Liabilities -- --
Equity for ESOP Shares 462,089 381,498
Shareholders' equity:
Preferred stock, $1.00 par value, 10,000,000 shares
authorized; none issued or outstanding -- --
Common stock, $1.00 par value, 90,000,000 shares
authorized; 7,439,650 and 7,436,350 shares issued less
ESOP shares of 130,166 and 127,166 7,309,484 7,312,484
Additional paid-in capital 203,084 203,084
Retained earnings 13,814,208 13,486,105
------------ ------------
Total shareholders' equity 21,326,776 21,001,673
------------ ------------
$215,057,129 $214,840,825
============ ============
Three Months
Ended
September 30
2001 2000
---------- ----------
Interest income
Interest and fees on loans $3,928,550 $3,901,247
Interest on mortgage-backed securities and other securities 24,747 27,919
Other interest and dividend income 90,019 104,189
---------- ----------
Total interest income 4,043,316 4,033,355
---------- ----------
Interest expense
Deposits 962,262 1,069,407
Borrowings 1,143,435 1,257,737
---------- ----------
Total interest expense 2,105,697 2,327,144
---------- ----------
Net interest income 1,937,619 1,706,211
Provision for loan losses 2,000 --
---------- ----------
Net interest income after
provision for loan losses 1,935,619 1,706,211
---------- ----------
Other income
Service charges on deposit accounts and other 142,031 122,544
Fiduciary activities 188,536 206,565
Other income 53,266 27,113
---------- ----------
Total other income 383,833 356,221
---------- ----------
Other expenses
Salaries and employee benefits 633,379 538,163
Net occupancy expenses 100,663 85,954
Equipment expenses 36,085 28,771
Data processing fees 104,743 91,651
State of Ohio franchise taxes 56,250 48,115
Other expenses 428,687 325,809
---------- ----------
Total other expenses 1,359,807 1,118,464
---------- ----------
Income before Federal income tax 959,645 943,969
Federal income tax expense 330,761 322,500
---------- ----------
Net income $ 628,884 $ 621,469
========== ==========
Basic Earnings Per Share $ 0.08 $ 0.08
Diluted Earnings Per Share $ 0.08 $ 0.08
Dividends Per Share $ 0.030 $ 0.015
Peoples Savings Bank of Troy and Subsidiary
Consolidated Statements of Shareholders' Equity
For the three months ended September 30, 2001
(Unaudited)
Additional Total
Common paid-in Retained shareholders'
stock capital earnings equity
------------------------------------------------------------------------
Balance at June 30, 2001 $ 7,312,484 $ 203,084 $ 13,486,105 $ 21,001,673
Net income -- -- 628,884 628,884
Cash dividend declared
on common stock ($.030 per share) -- -- (223,190) (223,190)
Net change in equity from ESOP shares (3,000) (77,591) (80,591)
------------------------------------------------------------------------
Balance at September 30, 2001 $ 7,309,484 $ 203,084 $ 13,814,208 $ 21,326,776
------------------------------------------------------------------------
Three Months
Ended
September 30
2001 2000
------------- -------------
Operating Activities
Net income $ 628,884 $ 621,469
Adjustments to reconcile net income
to net cash provided by operating activities
Provision for loan losses 2,000 0
Depreciation and amortization 91,657 82,221
Amortization of deferred loan fees (12,008) (16,572)
Investment securities amortization (accretion), net (974) (49)
Federal Home Loan Bank stock dividends 84,400 (76,500)
Net change in other assets/
other liabilities (185,344) 535,051
Net cash provided by operating activities 608,615 1,145,620
------------- -------------
Investing Activities
Net change in loans (1,483,308) (4,414,135)
Federal Home Loan Bank stock purchased 0 (355,600)
Proceeds from maturities of securities held to maturity 59,200 88,817
Purchases of premises and equipment (9,658) (81,362)
------------- -------------
Net cash used
by investing activities (1,433,766) (4,762,280)
------------- -------------
Financing Activities
Net change in
Interest-bearing demand and savings deposits (298,340) (1,560,043)
Certificates of deposit 1,471,596 (5,550,927)
Proceeds from FHLB advances 99,000,000 68,000,000
Repayment of FHLB advances (100,553,050) (58,049,862)
Cash dividends 0 (111,595)
Purchase of stock 0 (212,532)
Proceeds from issuance of common stock -- 3,300
------------- -------------
Net cash provided by
financing activities (379,794) 2,518,341
------------- -------------
Net Change in Cash and Cash
Equivalents (1,204,945) (1,098,319)
Cash and cash equivalents,
Beginning of Period 5,118,227 4,082,300
------------- -------------
Cash and cash equivalents, End
of Period $ 3,913,282 $ 2,983,981
============= =============
Peoples Savings Bank and Subsidiary
Notes to Unaudited Consolidated Financial Statements
For the three months ended September 30, 2001
(1) Basis of Presentation
The consolidated balance sheets as of September 30, 2001 and the related
consolidated statements of income and cashflows for the three months ended
September 30, 2001 and 2000 and the consolidated statement of shareholders'
equity for the three months ended September 30, 2001 are unaudited. In the
opinion of management, all adjustments necessary for a fair presentation of such
financial statements have been included. Such adjustments consisted only of
recurring items. Interim results are not necessarily indicative of results for a
full year. The Bank's 2001 Annual Report should be read as a supplement to this
quarterly report. The statements were prepared in accordance with accounting
principles generally accepted in the United States of America for interim
financial statements and with the instructions to Form 10-Q and do not include
all of the information and footnotes required by accounting principles generally
accepted in the United States of America for complete financial statements.
(2) Loans
Loans are net of loan loss allowances of $842,027 at September 30, 2001 and
$843,081 as of June 30, 2001.
(3) Common Stock
The Bank currently has 7,439,650 shares of stock issued less ESOP shares of
130,166. As of September 30, 2001, Peoples had 947,686 stock options
outstanding. From June 30, 2001 to September 30, 2001 no options were exercised.
(4) Cash Dividend
A cash dividend of $.03 per common share was declared on September 25, 2001, to
shareholders of record on October 5, 2001, payable on October 16, 2001.
(5) Earnings Per Share
The following table is for the three-month periods ending September 30, 2001 and
2000 and reflects the weighted average number of shares of common stock for both
basic and diluted EPS as well as the dilutive effect of stock options.
Three Months Ended
September 30
Weighted average number of common shares 2001 2000
--------- ---------
outstanding (basic EPS) 7,439,650 7,437,964
Dilutive effect of stock options 247,866 323,496
--------- ---------
Weighted average number of common shares
and equivalents outstanding (diluted EPS) 7,687,516 7,761,460
========= =========
Peoples Savings Bank and Subsidiary
Notes to Unaudited Consolidated Financial Statements
For the three months ended September 30, 2001
(6) Segment Information
The Bank uses differences in products as the basis for defining its reportable
segments. The Bank reports one product segment: Bank operations.
The Bank operations segment consists of the business of offering savings
deposits through issuance of savings accounts, money market accounts and
certificates of deposit and lending or utilizing funds primarily for the
purchase, construction and improvement of real estate. The largest percentage of
the mortgage loans are fixed-rate mortgages. The Bank also attempts to originate
as many adjustable-rate mortgages as feasible. Mortgage loans are generally made
for up to thirty years in length. The Bank's principal sources of income are
interest on mortgage loans and fees for service charges, as well as interest and
dividends on investments.
In addition to the product segment, the Bank reports on personal trust services
in an Other segment. The Bank began trust operations in July 1995 and derives
revenue from management fees charged by the Trust Department for serving as
trustee, custodian of IRA accounts, and agent for personal investment accounts.
Fees are based on market values of each account and are charged quarterly as a
percentage of market value based on a published fee schedule. The Trust
Department sponsors no common, mutual, or proprietary funds.
The accounting policies of the segments are the same as those described in the
summary of the significant accounting policies of the Bank's 2001 Annual report.
There have been no changes since the 2001 Annual Report in the basis of
segmentation or on the basis of measurement of segment profit or loss. The Bank
evaluates performance of the segments based on net income. The Bank does not
evaluate assets by segment; therefore assets are not included in the table
below.
The following table summarizes the financial results of the Bank's business
segments for the three months ending September 30, 2001 and 2000.
Bank Operations Other Total
--------------- ----- -----
2001
----
Interest income $4,043,316 -- $4,043,316
Interest expense 2,105,697 -- 2,105,697
---------- ---------- ----------
Net interest income 1,937,619 -- 1,937,619
---------- ---------- ----------
Non-interest income 195,297 188,536 383,833
Federal income tax expense 313,207 17,554 330,761
Net income 595,558 33,326 628,884
Bank Operations Other Total
--------------- ----- -----
2000
----
Interest income $4,033,355 -- $4,033,355
Interest expense 2,327,144 -- 2,327,144
---------- ---------- ----------
Net interest income 1,706,211 -- 1,706,211
---------- ---------- ----------
Non-interest income 149,657 206,565 356,221
Federal income tax expense 296,626 25,874 322,500
Net income 571,242 50,227 621,469
Peoples Savings Bank of Troy
September 30, 2001
Management Discussion and Analysis of the Financial Condition and Results of
Operations.
General
During the first quarter of fiscal 2002, the Bank earned $628,884.
Compared to the first quarter of fiscal 2001, net income increased by $7,415, or
1.2%. The increase in income was due to an increase in net interest income as
well as non-interest income, partially offset by an increase in non-interest
expenses and Federal income taxes.
The asset size of the Bank grew by $216,304 from June 30, 2001 to
September 30, 2001. The asset growth was due to the growth in loan balances as a
result of the continued strong origination market in the Troy and Miami County
area. The Bank funded this loan growth primarily through an increase in
deposits.
The Bank's Core and Tangible Capital Ratios, as of September 30, 2001,
were 10.13% of Total Assets. As of September 30, 2001, the Bank's Risk-based
Capital Ratio was 16.85% of total risk-adjusted assets. The percentage of
nonperforming loans to gross loans was .17% on September 30, 2000 to .45% on
September 30, 2001. The percentage of nonperforming loans to gross loans was
.22% at June 30, 2001.
At September 30, 2001 the Bank had no impaired loans.
Note Regarding Forward Looking Statements
In addition to historical information contained herein, the following discussion
contains forward-looking statements that involve risks and uncertainties.
Economic circumstances, Peoples Savings Bank's operations and Peoples Savings
Bank's actual results could differ significantly from those discussed in the
forward-looking statements. Some of the factors that could cause or contribute
to such differences are discussed herein. But also include changes in the
economy and interest rates in the nation and Peoples Savings Bank's market area.
Changes in the allowance for loan losses are as follows:
September 30,
2001 2000
-------- --------
Allowance at beginning of period $843,081 $887,882
Provision charged to income 2,000 --
Recoveries of amounts previously charged off 1,614 115
Losses charged to allowance 4,668 2,732
Allowance at end of period $842,027 $885,265
======== ========
The following table compares loans greater than 90 days past due and on
non-accrual and those loans greater than 90 days and still accruing.
September 30,
2001 2000
-------- --------
Past due 90+ on non-accrual $100,298 $104,100
Past due 90+ and still accruing 806,229 183,200
-------- --------
Total loans 90+ past due 906,527 338,600
======== ========
The Trust Department had $141,667,000 in assets under management as of
September 30, 2001 compared to $154,400,000 as of September 30, 2000. At June
30, 2001 assets under management were $143,567,000.
Three Months Ended September 2001 Compared to September 2000
Overall
Peoples Savings Bank earned $628,884 for the first quarter of fiscal
2002 compared to $621,469 for the same period last year. The increase was
primarily due to the increase in net interest income as well as non-interest
income partially offset by an increase in non-interest expenses and Federal
income tax expense.
Interest Income
The Bank's interest income increased by $9,961 for the three-month
period ended September 30, 2001 over the same period in 2000. Although loan
balances increased by approximately $4.6 million from September 30, 2000 to
September 30, 2001 a corresponding interest income increase was partially offset
by lower interest rates on the loan growth.
Interest Expense
The decrease in interest expense during the three-month period ended
September 30, 2001 compared to September 30, 2000 of $221,447, was due to a
decrease in interest expense on both deposits and borrowings. The Bank's cost of
savings decreased by 66 basis points for the period ended September 30, 2001,
relative to September 30, 2001.
Net Interest Income
The Bank's net interest income increased by $231,408 for the
three-month period ended September 30, 2001 over the same period in 2000. The
net interest rate spread increased by 17 basis points for the period, and loans
increased by $1.49 million in the quarter. Management believes that the net
interest margin may increase somewhat in fiscal 2002 as a result of expected
stable loan originations a decrease in interest rates of the Bank's liabilities.
Provision for Loan Losses
Management recorded a $2,000 provision for loan loss in the first
quarter of fiscal 2002. This was a result of management's analysis of the
allowance accounts in relation to the current quality of the loan portfolio and
a decrease in the level of allowance during the fiscal year ended June 30, 2001.
If the quality of the portfolio diminishes or as the level of allowance
decreases, management may deem it necessary to provide for loan losses in future
periods.
Non-interest Income
Non-interest income increased by $27,612 for the period ended September
30, 2001 from the same period in 2000. Service charges and other miscellaneous
income increased by $45,640 for the period. This increase was partially offset
by a decrease in revenue from the Trust Department due to a decrease in the
market value of assets under management.
Non-interest Expenses
Non-interest expenses, for the three-month period ended September 2001,
increased by $241,343 as compared to the same period last year. The increase
resulted primarily from increases in compensation, advertising, professional and
legal expenses and State of Ohio franchise taxes. The Bank opened a full service
banking center in Clayton, Ohio in January 2001. In addition the Bank announced
its intentions in June 2001 to form a savings and loan holding company. These
items are in keeping with management's growth strategy, and while initial
startup expenses are expected to exceed revenues, management believes the branch
and the holding company will add to the long-term profitability of the
organization.
Federal Income Tax Expense
The Bank's federal income tax expense increased slightly by $8,260
during the period ended September 30, 2001, compared to the same period ended
2000, principally as a result of the increase in earnings.
Regulatory Capital Requirements
Savings and Loans are subject to regulatory capital requirements. The
Bank met all three tiers of the capital requirements as of September 30, 2001.
At that date, the Bank had tangible capital of $21,788,865 or 10.13% of total
assets, which was $18,563,008 in excess of the tangible requirement of 1.5% of
total assets or $3,225,857. The Bank's capital exceeded the core leverage
requirement of 3% of total assets or $6,451,714 by $15,337,151 with core capital
of $21,778,865 or 10.13% of total assets. The Bank had risk-based capital of
$22,630,892 or 16.85% of risk-adjusted assets, as defined by FIRREA, which was
$11,884,587 in excess of the requirement of $10,746,305 or 8% of risk-adjusted
assets. By meeting all three of these standards, Management believes it will not
be subject to any OTS restrictions as of September 30, 2001.
Liquidity
In accordance with the Office of Thrift Supervision regulations, Peoples
is required to maintain liquid assets equal to a quarterly average of not less
than a specified percentage of its net withdrawal savings deposits plus
short-term borrowings. This liquidity requirement is currently at 4%, but may be
changed from time-to-time by the OTS to any amount within the range of 4% to
10%. For September 2001 Peoples had average liquid assets of $6.05 million or
4.38% liquidity, which was $525 thousand in excess of its liquidity requirements
for such quarter.
Recent Accounting Pronouncements
In July 2001, the FASB (Financial Accounting Standards Board) issued
Statements (SFAS) No. 141, "Accounting for Business Combinations" and No. 142,
"Accounting for Goodwill and Intangible Assets". These Statements will have no
material effect on the Company at this time since it has not been involved in a
"business combination" subject to SFAS No. 141 and does not have goodwill or
other intangible assets subject to SFAS No. 142.
Item III. Quantitative and Qualitative Disclosures about Market Risk
There has been no significant change in the Bank's market risk since
June 30, 2001, except as discussed in the Management Discussion and Analysis.
Part II. OTHER INFORMATION
Item I. Legal Proceedings
The Bank is not engaged in any legal proceedings of a material nature
at the present time. From time to time the Association is a party to legal
proceedings in the ordinary course of business wherein it enforces its security
interest in loans made by it.
Item II. Changes in Securities
Not Applicable
Item III. Defaults upon Senior Securities
Not Applicable
Item IV. Submission of Matters to a vote of Security Holders
The Annual Meeting of shareholders of Peoples Savings Bank of Troy was held
on October 31, 2001 at The Market Square Community Room, Troy, Ohio at 3:00 p.m.
Proxies were solicited from shareholders pursuant to Regulation 14 of the
Securities Exchange Act of 1934. The meeting included the following matters
voted upon by shareholders:
1. Elected G. Joseph Reardon, R. Douglas Haines and Richard W. Wallace to
three-year terms on the Bank's Board of Directors. The vote was
6,289,555 in favor and 169,034 withheld for G. Joseph Reardon,
6,280,107 in favor and 178,482 withheld for R. Douglas Haines and
6,290,491 in favor and 168,098 withheld for Richard W. Wallace. G.
Joseph Reardon was serving on the Board at the time of election.
Incumbent Directors who were not nominees for election at the meeting
are: William J. McGraw, Ronald B. Scott, Peter E. Jenkins, William E.
Lukens, Thomas E. Robinson and James S. Wilcox. Donald Cooper and
Richard W. Klockner retired as Directors on October 31, 2001 due to
age limits for Directors. Elected. William E. Eickhoff to a one-year
term as Director Emeritus. The vote was 6,278,363 in favor and 180,226
withheld.
2. Approved the annual establishment of fiscal 2002 Directors fees under
Proposal II of the proxy statement. The vote was 6,130,569 in favor
and 232,030 against, with 95,990 abstaining.
3. Adopted the Peoples Savings 2001 Stock Option and Incentive Plan under
Proposal III of the proxy statement. The vote was 5,536,056 in favor
and 436,205 against, with 85,468 abstaining.
4. Adopted the Agreement of Merger under Proposal IV of the proxy
statement. The vote was 5,940,197 in favor and 91,722 against, with
26,260 abstaining.
Item V. Other Information
Not Applicable
Item VI. Exhibits and Reports on Form 8-K
Not Applicable
SIGNATURES
Pursuant to the requirement of the Securities Exchange Act of 1934, the small
business issuer has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 14, 2001 /s/ Ronald B. Scott
------------------------------------- --------------------------
Ronald B. Scott,
President and a Director
Date: November 14, 2001 /s/ Mark A. Douglas
------------------------------------- --------------------------
Mark A. Douglas,
Treasurer