SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OF 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 1997
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT
For the transition period from to
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Commission File Number 0-22535
Sistersville Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Delaware 31-1516424
- -------- ----------
(State or other jurisdiction of (IRS Employer Identification No.)
incorporation or organization)
726 Wells Street, Sistersville, WV 26175
(Address of principal executive offices)
(304) 652-3671
(Registrant's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or 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
--- ---
State the number of shares outstanding of each of the issuer's classes of
common equity as of the latest practicable date:
Class: Common Stock, par value $.10 per share
Outstanding at November 3, 1997: 661,428 shares
SISTERSVILLE BANCORP, INC.
INDEX
Page
Number
------
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheet (Unaudited) as of
September 30, 1997 and March 31, 1997 3
Consolidated Statement of Income (Unaudited)
for the Six Months ended September 30, 1997 and 1996 4
Consolidated Statement of Income (Unaudited)
for the Three Months ended September 30, 1997 and 1996 5
Consolidated Statement of Cash Flows (Unaudited)
for the Six Months ended September 30, 1997 and 1996 6
Notes to Unaudited Consolidated Financial Statements 7 - 8
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8 - 12
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 13
Item 2. Changes in Securities 13
Item 3. Default Upon Senior Securities 13
Item 4. Submissions of Matters to a Vote of Security Holders 13
Item 5. Other Information 13
Item 6. Exhibits and Reports on Form 8-K 13
SIGNATURES 14
SISTERSVILLE BANCORP, INC.
CONSOLIDATED BALANCE SHEET (UNAUDITED)
September 30, March 31,
1997 1997
------------ ------------
ASSETS
Cash and Cash Equivalents:
Cash and amounts due from banks $ 89,947 $ 81,065
Interest-bearing deposits with other institutions 1,063,241 1,713,394
------------ ------------
Total cash and cash equivalents 1,153,188 1,794,459
Investment Securities:
Securities held to maturity (fair value of $309,000
and $335,053) 298,903 328,053
Securities available for sale 7,738,184 2,319,633
------------ ------------
Total investment securities 8,037,087 2,647,686
Loans receivable, (net of allowance for loan losses
of $166,526 and $164,150) 22,800,422 21,724,869
Office properties and equipment, net 348,494 363,538
Accrued interest receivable 219,699 144,071
Other assets 9,128 142,127
------------ ------------
TOTAL ASSETS $ 32,568,018 $ 26,816,750
============ ============
LIABILITIES
Deposits $ 21,373,632 $ 21,699,725
Deferred income taxes 287,530 215,091
Accrued interest payable and other liabilities 114,304 98,620
------------ ------------
TOTAL LIABILITIES 21,775,466 22,013,436
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STOCKHOLDERS' EQUITY
Preferred Stock, $.10 par value;
500,000 shares authorized, none issued - -
Common Stock, $.10 par value;
661,428 shares authorized and outstanding 66,143 -
Additional paid-in capital 6,133,549 -
Retained Earnings-substantially restricted 4,597,735 4,410,275
Net unrealized gain on securities available for sale 511,037 393,039
Unearned Employee Stock Ownership Plan shares (ESOP) (515,912) -
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 10,792,552 4,803,314
------------ ------------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 32,568,018 $ 26,816,750
============ ============
See accompanying notes to the unaudited consolidated financial statements.
3
SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Six Months Ended September 30,
1997 1996
------------ ------------
INTEREST AND DIVIDEND INCOME
Taxable interest on loans $ 958,399 $ 883,565
Taxable interest on investments 189,226 121,449
Dividends on Federal Home Loan Bank Stock 6,498 5,833
Dividends on Federal Home Loan Mortgage Corporation Stock 4,541 3,973
------------ ------------
Total interest and dividend income 1,158,664 1,014,820
------------ ------------
INTEREST EXPENSE
Deposits 508,335 487,921
Advances from Federal Home Loan Bank - -
------------ ------------
Total interest expense 508,335 487,921
------------ ------------
NET INTEREST INCOME 650,329 526,899
Provision for loan losses 3,900 2,400
------------ ------------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 646,429 524,499
------------ ------------
NONINTEREST INCOME
Service charges 12,290 9,596
Other income 1,089 1,022
------------ ------------
Total noninterest income 13,379 10,618
------------ ------------
NONINTEREST EXPENSE
Compensation and employee benefits 202,123 204,308
Occupancy 17,998 19,489
Furniture and equipment expense 17,336 16,407
Deposit insurance premiums 6,831 153,911
Supervisory examination, audit and legal fees 24,761 11,101
Advertising and public relations 12,317 12,868
Service bureau expense 32,210 28,143
Franchise, payroll and other taxes 26,892 23,335
Other expenses 27,499 25,685
------------ ------------
Total noninterest expense 367,967 495,247
------------ ------------
Income before income taxes 291,841 39,870
Income taxes 104,381 13,871
------------ ------------
NET INCOME $ 187,460 $ 25,999
============ ============
Earnings per share (Note 4) .17 -
See accompanying notes to the unaudited consolidated financial statements.
4
SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENT OF INCOME (UNAUDITED)
Three Months Ended September 30,
1997 1996
------------ ------------
INTEREST AND DIVIDEND INCOME
Taxable interest on loans $ 482,501 $ 439,371
Taxable interest on investments 120,295 58,919
Dividends on Federal Home Loan Bank Stock 3,267 2,932
Dividends on Federal Home Loan Mortgage Corporation Stock 2,271 1,986
------------ ------------
Total interest and dividend income 608,334 503,208
------------ ------------
INTEREST EXPENSE
Deposits 247,221 246,351
Advances from Federal Home Loan Bank - -
------------ ------------
Total interest expense 247,221 246,351
------------ ------------
NET INTEREST INCOME 361,113 256,857
Provision for loan losses 1,950 1,200
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NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 359,163 255,657
------------ ------------
NONINTEREST INCOME
Service charges 6,416 4,254
Other income 609 499
------------ ------------
Total noninterest income 7,025 4,753
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NONINTEREST EXPENSE
Compensation and employee benefits 111,282 104,878
Occupancy 8,843 9,962
Furniture and equipment expense 8,866 7,444
Deposit insurance premiums 3,397 142,187
Supervisory examination, audit and legal fees 18,211 5,532
Advertising and public relations 5,822 6,225
Service bureau expense 14,876 14,044
Franchise, payroll and other taxes 16,503 11,568
Other expenses 12,941 11,227
------------ ------------
Total noninterest expense 200,741 313,067
------------ ------------
Income (loss) before income taxes 165,447 (52,657)
Income taxes (benefit) 62,837 (19,298)
------------ ------------
NET INCOME (LOSS) $ 102,610 $ (33,359)
============ ============
Earnings per share (Note 4) .17 -
See accompanying notes to the unaudited consolidated financial statements.
5
SISTERSVILLE BANCORP, INC.
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
Six Months Ended September 30,
1997 1996
------------ ------------
OPERATING ACTIVITIES
Net income $ 187,460 $ 25,999
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and accretion, net 18,805 17,674
Provision for loan losses 3,900 2,400
Deferred federal income taxes 11,445 (20)
ESOP amortization 18,793 -
Decrease (increase) in accrued interest receivable
and other assets 57,371 (11,989)
Increase in accrued interest payable
and other liabilities 25,786 125,764
Decrease in accrued federal income taxes (10,102) (86,729)
------------ ------------
Net cash provided by operating activities 313,458 73,099
------------ ------------
INVESTING ACTIVITIES
Purchase of term deposits - (900,000)
Purchase of available for sale securities (5,239,047) -
Maturities of held to maturity securities - 400,000
Principal collected on mortgage - backed securities 29,150 22,539
Net increase in loans (1,079,453) (1,073,017)
Purchases of office properties and equipment (4,273) -
------------ ------------
Net cash used for investing activities (6,293,623) (1,550,478)
------------ ------------
FINANCING ACTIVITIES
Net increase (decrease) in deposits (326,093) 83,607
Proceeds from sale of common stock 5,664,987 -
------------ ------------
Net cash provided by financing activities 5,338,894 83,607
------------ ------------
Decrease in cash and cash equivalents (641,271) (1,393,772)
CASH AND CASH EQUIVALENTS
AT BEGINNING OF PERIOD 1,794,459 2,424,571
------------ ------------
CASH AND CASH EQUIVALENTS
AT END OF PERIOD $ 1,153,188 $ 1,030,799
============ ============
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid during the period for:
Interest on deposits and borrowings $ 512,380 $ 487,269
Income taxes 67,000 66,000
See accompanying notes to the unaudited consolidated financial statements.
6
SISTERSVILLE BANCORP, INC.
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The consolidated financial statements of Sistersville Bancorp, Inc. (the
"Company"), include its wholly-owned subsidiary, First Federal Savings Bank
(the "Bank"). All significant intercompany balances and transactions have
been eliminated.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Form 10-QSB and, therefore, do
not necessarily include all information that would be included in audited
financial statements. The information furnished reflects all adjustments
which are, in the opinion of management, necessary for a fair statement of the
results of operations. All such adjustments are of a normal recurring nature.
The results of operations for the interim periods are not necessarily
indicative of the results to be expected for the fiscal year ended March 31,
1998.
These statements should be read in conjunction with the consolidated
statements as of and for the year ended March 31, 1997, and related notes
which are included on Form 10-KSB (file no. 0-22535).
NOTE 2 - CONVERSION TO STOCK FORM OF OWNERSHIP AND FORMATION OF HOLDING
COMPANY
On December 5, 1996, the Board of Directors of First Federal Savings and Loan
Association of Sistersville (the "Association") approved a plan of conversion
(the "Plan") whereby the Association was to convert from a federally
chartered mutual savings and loan to a federally chartered stock savings bank
and simultaneously reorganized into a holding company form of organization
(collectively, the "Conversion"). After approval by the regulatory
authorities and the Association's members, the Conversion was completed on
June 25, 1997. As a result of this transaction, the Company was formed and
the Bank became a wholly-owned subsidiary of the Company.
In connection with the Conversion on June 25, 1997, the Company completed the
sale of 661,428 shares of stock at $10.00 per share. From the proceeds,
$66,143 was allocated to common stock based on a par value of $.10 per share
and $6,127,984, which is net of conversion costs of $420,153, was allocated to
additional paid in capital.
NOTE 3 - PENDING ACCOUNTING STANDARDS
In June 1997, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income," which establishes standards for reporting and
displaying comprehensive income and its components (revenues, expenses, gains,
and losses) in a full set of general-purpose financial statements. SFAS No.
130 requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be reported in a
financial statement that is displayed with the same prominence as other
financial statements and requires that an enterprise (a) classify items of
other comprehensive income by their nature in a financial statement and (b)
display the accumulated balance of other comprehensive income separately from
retained earnings and additional paid-in capital in the equity section of the
balance sheet. Under existing accounting standards, other comprehensive
income shall be classified separately into foreign currency items, minimum
pension liability adjustments, and unrealized gains and losses on certain
investments in debt and equity securities. The provisions of SFAS No. 130 are
effective for fiscal years beginning after December 15, 1997. The effect on
the Company will be to classify unrealized gains and losses on investments
available-for-sale as a component of comprehensive income.
On March 3, 1997, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 128, "Earnings Per Share." This statement
re-defines the standards for computing earnings per share (EPS) previously
found in Accounting Principles Board Opinion No. 15, "Earnings Per Share."
Statement No. 128 establishes new standards for computing and presenting EPS
and requires dual presentation of "basic" and "diluted" EPS on the face of the
income statement for all entities with complex capital structures. Under
Statement No. 128, basic EPS is to be computed based upon income available to
common shareholders and the weighted average number of common shares
outstanding for the period. Diluted EPS is to reflect the potential dilution
that could occur if securities or other contracts to issue common stock were
exercised or converted into common stock or resulted in the issuance of common
stock that then shared in the earnings of the Company. Statement No. 128 also
requires the restatement of all prior-period EPS data presented. The Company
will adopt Statement
7
No. 128 on December 31, 1997, and based on current estimates, does not believe
the effect of adoption will have a significant impact on the Company's
financial position or results of operations.
NOTE 4 - EARNINGS PER SHARE
Earnings per share for the six months ended September 30, 1997, reflects
earnings for the period July 1 through September 30, 1997. Earnings for the
period from the closing of the conversion on June 25, 1997, to June 30, 1997,
was determined to be not meaningful.
MANAGEMENT'S DISCUSSION AND ANALYSIS
Comparison of Financial Condition at September 30, 1997, and March 31, 1997
- ----------------------------------------------------------------------------
On December 5, 1996, the Board of Directors of the Association approved the
Plan and the Conversion. After approval by the regulatory authorities and the
Association's members, the Conversion was completed on June 25, 1997, and as a
result, the holding company was formed (the "Company") and the Bank became a
wholly-owned subsidiary of the Company. In connection with the Conversion on
June 25, 1997, the Company completed the sale of 661,428 shares (the
"Offering") at $10 per share and received net proceeds of approximately
$5,665,000. The Company transferred approximately $3,097,000 of the net
proceeds to the Bank for the purchase of all of the capital stock of the Bank.
In addition, $529,140 was loaned to the Bank's Employee Stock Ownership Plan
("ESOP") for the purchase of shares in the Offering.
Total assets increased by approximately $5,751,000 to $32,568,000 at September
30, 1997, from $26,817,000 at March 31, 1997. The increase in assets was
directly attributable to the Offering. Investment securities increased
$5,389,000 from $2,648,000 at March 31, 1997, to $8,037,000 at September 30,
1997. The increase represented the investment of funds associated with the
subscription of orders received for the purchase of Common Stock in the
Offering. The increase in investments was in the available-for-sale
classification , as all investment purchases made during this six month period
were classified as available-for-sale. These securities have staggering
maturities ranging from one to seven years. Net loans receivable increased
$1,075,000 from $21,725,000 at March 31, 1997, to $22,800,000 at September 30,
1997. The increase in loans was attributable to an increase in one-to-four
family residential mortgage loans. Such increases primarily reflect the
economic health of the Bank's market area and the competitive pricing of the
Bank's loan product. The funding for loan growth was provided by funds
received in connection with the Offering and by a decrease in cash and cash
equivalents by $642,000 to $1,153,000 at September 30, 1997, from $1,795,000
at March 31, 1997. Deposits decreased approximately $326,000 to $21,374,000
at September 30, 1997, from $21,700,000 at March 31, 1997. This decrease
primarily represents funds withdrawn by depositors which were used to purchase
stock in the Offering.
Comparison of the Results of Operations for the Six Months Ended September
- ---------------------------------------------------------------------------
30, 1997 and 1996
- -----------------
Net income increased by $161,000 or 621.0% from net income of $26,000 for the
six months ended September 30, 1996, to net income of $187,000 for the six
months ended September 30, 1997.
Interest and dividend income increased $144,000, or 14.2%,to $1,159,000 for
the six months ended September 30, 1997, compared to $1,015,000 for the six
months ended September 30, 1996. The increase in interest income resulted
from an increase in earnings on loans of $75,000, or 8.5%, and an increase in
earnings on investments, including interest-bearing deposits, of $69,000, or
52.6%. These increases were due to an increase in the average balance of
loans of $1.8 million and investments, including interest-bearing deposits, of
$ 2.1 million for the six months ended September 30, 1997, compared with same
six month period ending in 1996. In addition, the yield on investments
increased from 4.75% for the six months ended September 30, 1996 to 5.2% for
the same six month period ended September 30, 1997. The yield on loans
remained relatively unchanged for the six months ended September 30, 1997,
compared to the same period in 1996 at 8.6% for both periods.
Interest expense increased $20,000 from $488,000 for the six months ended
September 30, 1996, to $508,000 for the six months ended September 30, 1997.
The increase in interest expense was attributable to an increase in the
average balance of interest-bearing liabilities to $21.5 million from $21.0
million, which was due primarily to the temporary holding of funds
8
received in connection with the offering. The cost of funds remained
relatively unchanged from the same period a year ago decreasing 2 basis points
from 4.63% for the 1996 period to 4.61% for the 1997 period.
Net interest income increased $123,000, or 23.4%, from $527,000 for the six
months ended September 30, 1996, to $650,000 for the six months ended
September 30, 1997. The increase is primarily attributable to an increase in
average interest-earning assets from $26.1 million for the six months ended
September 30, 1996 to $30.0 million for the six months ended September 30,
1997. The company's net yield on interest-earning assets increased from 4.04%
for the six months ended September 30, 1996 to 4.34% for the six months ended
September 30, 1997.
Management regularly performs an analysis to identify the inherent risk of
loss in its loan portfolio. This analysis includes evaluation of
concentrations of credit, past loss experience, current economic conditions,
amount and composition of the loan portfolio (including loans being
specifically monitored by management), estimated fair value of underlying
collateral, loan commitments outstanding, delinquencies, and other factors.
Based on this analysis, management established an allowance for loan losses.
The allowance for loan losses is adjusted periodically by a provision for loan
losses which is charged to operations based on management's evaluation of the
losses that may be incurred in the Bank's loan portfolio. The provision for
loan losses increased to $3,900 for the six months ended September 30, 1997,
from $2,400 for the six months ended September 30, 1996, based on inherent
risks associated with increased lending volume.
The Bank will continue to monitor its allowance for loan losses and make
future additions to the allowance through the provision for loan losses as
economic conditions dictate. Although the Bank maintains its allowance for
loan losses at a level that it considers to be adequate to provide for the
inherent risk of loss in its loan portfolio, there can be no assurance that
future losses will not exceed estimated amounts or that additional provisions
for loan losses will not be required in future periods. In addition, the
Bank's determination as to the amount of its allowance for loan losses is
subject to review by its primary federal regulator, the Office of Thrift
Supervision ("OTS"), as part of its examination process, which may result in
the establishment of an additional allowance based upon the judgment of the
OTS after a review of the information available at the time of the OTS
examination.
Noninterest income increased by $3,000 from $10,000 for the six months ended
September 30, 1996, to $13,000 for the six months ended September 30, 1997.
Noninterest income is comprised primarily of service charges on deposit
accounts.
Noninterest expense decreased by $127,000 from $495,000 for the six months
ended September 30, 1996, to $368,000 for the six months ended September 30,
1997. Noninterest expense decreased primarily as a result of a one-time charge
of $129,000 in federal insurance premiums during the six months ended
September 30, 1996. On September 30, 1996, the President signed into law
legislation which included the recapitalization of the Savings Association
Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation by a
one-time charge to SAIF-insured institutions of 65.7 basis points per one
hundred dollars of insurable deposits. In addition the Bank incurred a lower
base deposit insurance premium as a result of the legislation enacted from
$.23 per $100 of deposit premiums for the six months ended September 30,
1996, to $.065 per $100 of deposits for the six months ended September 30,
1997. Supervisory Examination, Audit, and Legal expenses increased by
$14,000 from $11,000 for the six months ended September 30, 1996 to $25,000
for the six months ended September 30, 1997, as a result of additional costs
associated with stock ownership.
Income tax expense increased from $14,000 for the six months ended September
30, 1996, to $104,000 for the six months ended September 30, 1997, as a
result of an increase in pre-tax income.
Comparison of the Results of Operations for the Three Months Ended September
- ----------------------------------------------------------------------------
30, 1997 and 1996
- -----------------
Net income increased by $136,000 or 407.6% from a net loss of $33,000 for the
three months ended September 30, 1996, to net income of $103,000 for the three
months ended September 30, 1997.
Interest and dividend income increased $105,000, or 20.9%,to $608,000 for the
three months ended September 30, 1997, compared to $503,000 for the three
months ended September 30, 1996. The increase in interest income resulted
from an increase in earnings on loans of $43,000, or 9.8%, and an increase in
earnings on investments, including interest-bearing deposits, of $62,000, or
97.1%. These increases were due to an increase in the average balance of
loans of $1.8 million and investments, including interest-bearing deposits of
$3.1 million for the three months ended September 30, 1997, compared with the
9
same three month period ending in 1996. In addition, the yield on investments
increased from 4.54% for the three months ended September 30, 1996 to 5.93%
for the same three month period ended September 30, 1997. The yield on loans
increased 10 basis points from 8.44% for the three month period ended
September 30, 1996 to 8.54% for the period ended September 30, 1997.
Interest expense increased $1,000 from $246,000 for the three months ended
September 30, 1996, to $247,000 for the three months ended September 30, 1997.
The increase in interest expense was attributable to an increase in the
average balance of interest-bearing liabilities to $21.2 million from $21.1
million. The cost of funds remained relatively unchanged from the same period
a year ago decreasing 3 basis points from 4.66% for the 1996 period to 4.63%
for the 1997 period.
Net interest income increased $104,000, or 40.6%, from $257,000 for the three
months ended September 30, 1996, to $361,000 for the three months ended
September 30, 1997. The increase is primarily attributable to an increase in
average interest- earning assets from $26.2 million for the three months ended
September 30, 1996 to $31.0 million for the three months ended September 30,
1997. The company's net yield on interest-earning assets increased from 3.92%
for the three months ended September 30, 1996 to 4.66% for the three months
ended September 30, 1997.
Management regularly performs an analysis to identify the inherent risk of
loss in its loan portfolio. This analysis includes evaluation of
concentrations of credit, past loss experience, current economic conditions,
amount and composition of the loan portfolio (including loans being
specifically monitored by management), estimated fair value of underlying
collateral, loan commitments outstanding, delinquencies, and other factors.
Based on this analysis, management established an allowance for loan losses.
The allowance for loan losses is adjusted periodically by a provision for loan
losses which is charged to operations based on management's evaluation of the
losses that may be incurred in the Bank's loan portfolio. The provision for
loan losses increased to $1,950 for the three months ended September 30, 1997,
from $1,200 for the three months ended September 30, 1996 based on inherent
risks associated with increased lending volume.
The Bank will continue to monitor its allowance for loan losses and make
future additions to the allowance through the provision for loan losses as
economic conditions dictate. Although the Bank maintains its allowance for
loan losses at a level that it considers to be adequate to provide for the
inherent risk of loss in its loan portfolio, there can be no assurance that
future losses will not exceed estimated amounts or that additional provisions
for loan losses will not be required in future periods. In addition, the
Bank's determination as to the amount of its allowance for loan losses is
subject to review by its primary federal regulator, the Office of Thrift
Supervision ("OTS"), as part of its examination process, which may result in
the establishment of an additional allowance based upon the judgment of the
OTS after a review of the information available at the time of the OTS
examination.
Noninterest income increased by $2,000 from $5,000 for the three months ended
September 30, 1996, to $7,000 for the three months ended September 30, 1997.
Noninterest income is comprised primarily of service charges on deposit
accounts.
Noninterest expense decreased by $112,000 from $313,000 for the three months
ended September 30, 1996, to $201,000 for the three months ended September 30,
1997. Noninterest expense decreased primarily as a result of a one-time charge
of $129,000 in federal insurance premiums during the three months ended
September 30, 1996. On September 30, 1996, the President signed into law
legislation which included the recapitalization of the Savings Association
Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation by a
one-time charge to SAIF-insured institutions of 65.7 basis points per one
hundred dollars of insurable deposits. In addition the Bank incurred a lower
base deposit insurance premium as a result of the legislation enacted from
$.23 per $100 of deposit premiums for the three months ended September 30,
1996, to $.065 per $100 of deposits for the three months ended September 30,
1997. Compensation and employee benefits increased by $6,000 from $105,000
for the three months ended September 30, 1996, to $111,000 for the three
months ended September 30, 1997. The increase is due to compensation costs
associated with the Employee Stock Ownership Plan which was partially offset
by the Bank operating with one less employee. Supervisory Examination,
Audit, and Legal expenses increased by $13,000 from $5,000 for the three
months ended September 30, 1996 to $18,000 for the three months ended
September 30, 1997, as a result of additional costs associated with stock
ownership.
Income tax expense increased by $82,000 from a tax benefit of $19,000 for the
three months ended September 30, 1996 to a tax expense of $63,000 for the
three months ended September 30, 1997. The increase is due to an increase in
pre-tax income.
10
Liquidity and Capital Resources
- -------------------------------
The Bank's primary sources of funds are deposits, amortization and prepayment
of loans, maturities of investment securities, and funds provided from
operations. While scheduled loan repayments are a relatively predictable
source of funds, deposit flows and loan prepayments are greatly influenced by
general interest rates, economic conditions, and competition. In addition,
the Bank invests excess funds in overnight deposits which provide liquidity to
meet lending requirements.
The Bank has other sources of liquidity if a need for additional funds arises.
Additional sources of funds include a line of credit with the Federal Home
Loan Bank ("FHLB") of Pittsburgh amounting to $1.9 million. As of September
30, 1997, the Bank had no outstanding advances from the FHLB.
As of September 30, 1997, the Bank had $567,000 in outstanding mortgage and
construction loan commitments. Management believes that it has adequate
sources to meet the actual funding requirements.
Management monitors both the Company's and the Savings Bank's tangible, core,
and risk-based capital ratios in order to assess compliance with OTS
regulations. At September 30, 1997, the Company and Bank exceeded the
minimum capital ratios requirements imposed by the OTS.
At September 30, 1997, the Bank and Company's capital ratios are as follows:
Bank Company
Requirement Actual Actual
----------- ------ ------
Tangible capital 1.50% 24.46% 30.57%
Core capital 3.00% 24.46% 30.57%
Risk-based capital 8.00% 48.94% 65.26%
Risk Elements
- -------------
The table below presents information concerning nonperforming assets including
nonaccrual loans, renegotiated loans, loans 90 days or more past due, other
real estate loans, and repossessed assets. A loan is classified as nonaccrual
when, in the opinion of management, there are serious doubts about
collectibility of interest and principal. At the time the accrual of interest
is discontinued, future income is recognized only when cash is received.
Renegotiated loans are those loans which terms have been renegotiated to
provide a reduction or deferral of principal or interest as a result of the
deterioration of the borrower.
September 30, March 31,
1997 1997
---------- ----------
(dollars in thousands)
Loans on nonaccrual basis $ 12 $ 10
Loans past due 90 days or more - 70
Renegotiated loans - -
---------- ----------
Total nonperforming loans 12 80
---------- ----------
Other real estate - -
Repossessed assets - -
---------- ----------
Total nonperforming assets $ 12 $ 80
========== ==========
Nonperforming loans as a percent of total loans 0.05% 0.36%
========== ==========
Nonperforming assets as a percent of total assets 0.04% 0.30%
========== ==========
Allowance for loan losses to nonperforming loans 1,387.72% 205.19%
========== ==========
11
Management monitors impaired loans on a continual basis. As of September 30,
1997, the company had no impaired loans.
During the six months ended September 30, 1997, loans increased $1,075,000 and
nonperforming loans decreased $68,000 while the allowance for loan losses
increased $2,000 for the same period. The percentage of allowance for loan
losses to loans outstanding remained .7% during this time period.
Nonperforming loans are primarily made up of one to four family residential
mortgages. The collateral requirements on such loans reduce the risk of
potential losses to an acceptable level in management's opinion.
12
PART II. OTHER INFORMATION
Item 1. Legal proceedings
The registrant was not engaged in any material pending legal proceedings as
of the date of this Report. From time to time, the Bank is a party to legal
proceedings within the normal course of business wherein it enforces its
security interest in loans made by it, and other matters of a like kind.
Item 2. Changes in securities
NONE
Item 3. Defaults upon senior securities
NONE
Item 4. Submission of matters to a vote of security holders
NONE
Item 5. Other information
NONE
Item 6. Exhibits and reports on Form 8-K
NONE
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned, thereunto duly authorized.
SISTERSVILLE BANCORP, INC.
Date: November 3, 1997 By: /s/ Stanley M. Kiser
-----------------------------------
Stanley M. Kiser
President and Chief Executive Officer
(Duly Authorized Officer)
Date: November 3, 1997 By: /s/ Stanley M. Kiser
-----------------------------------
Stanley M. Kiser
President and Chief Executive Officer
(Principal Executive and Financial Officer)
14