FIRESTONE FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
September 30, December 31,
ASSETS 1997 1996
- ------ ------------- ------------
CASH $ 20,927 $ 193,652
NOTES RECEIVABLE 81,816,599 79,622,175
FINANCE LEASE RECEIVABLES 3,466,862 2,810,578
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TOTAL RECEIVABLES 85,283,461 82,432,753
LESS - ALLOWANCE FOR CREDIT LOSSES 1,650,016 1,779,750
------------ ------------
NET RECEIVABLES 83,633,445 80,653,003
OTHER ASSETS 1,446,135 1,966,777
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$ 85,100,507 $ 82,813,432
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
NOTES PAYABLE TO BANKS $ 65,439,237 $ 61,775,719
ACCOUNTS PAYABLE AND ACCRUED EXPENSES 4,336,151 3,178,730
ACCRUED INCOME TAXES 42,930 82,027
DEALER RESERVES 992,213 344,930
SUBORDINATED NOTES PAYABLE 4,000,000
------------ ------------
TOTAL LIABILITIES 70,810,531 69,381,406
STOCKHOLDERS' EQUITY
Common stock, $0.01 par value, 2,750,000 shares
authorized, 2,000,000 shares outstanding 20,000 20,000
Additional paid-in-capital 1,231,000 1,231,000
Retained earnings 13,038,976 12,181,026
------------ ------------
TOTAL STOCKHOLDERS' EQUITY 14,289,976 13,432,026
------------ ------------
$ 85,100,507 $ 82,813,432
============ ============
The accompanying notes are an integral part of these financial statements.
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FIRESTONE FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- -----------------------------
1997 1996 1997 1996
------------ ----------- ----------- -----------
INTEREST AND FEE INCOME:
Interest and fees on loans $ 2,639,669 $ 2,657,325 $ 7,783,444 $ 7,915,420
Finance lease income and related fees 127,116 135,398 415,737 371,842
------------ ----------- ----------- -----------
Total interest income 2,766,785 2,792,723 8,199,181 8,287,262
INTEREST EXPENSE 1,250,726 1,321,677 3,637,142 3,850,381
------------ ----------- ----------- -----------
Net interest income 1,516,059 1,471,046 4,562,039 4,436,881
PROVISION FOR CREDIT LOSSES 48,000 144,000
------------ ----------- ----------- -----------
Net interest income after
provision for credit losses 1,516,059 1,423,046 4,562,039 4,292,881
NONINTEREST INCOME:
Other income 250,275 286,751 947,994 751,726
------------ ----------- ----------- -----------
Total noninterest income 250,275 286,751 947,994 751,726
NONINTEREST EXPENSE:
Salaries and wages 565,432 667,196 1,699,070 1,892,991
Merger related expenses 714,150 714,150
Other operating expenses 391,890 295,993 1,290,396 874,539
------------ ----------- ----------- -----------
Total noninterest expense 1,671,472 963,189 3,703,616 2,767,530
Income before provision
for income taxes 94,862 746,608 1,806,417 2,277,077
PROVISION FOR INCOME TAXES 304,064 302,721 948,467 918,650
------------ ----------- ----------- -----------
Net income (209,202) 443,887 857,950 1,358,427
RETAINED EARNINGS, beginning of year 12,181,026 12,181,026 12,181,026 12,181,026
------------ ----------- ----------- -----------
RETAINED EARNINGS, end of year $ 11,971,824 $12,624,913 $13,038,976 $13,539,453
============ =========== =========== ===========
The accompanying notes are an integral part of these financial statements.
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FIRESTONE FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Nine Months Ended September 30,
1997 1996
------------- ------------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 857,950 $ 1,358,427
Adjustments to reconcile net income
to net cash provided by operating activities:
Loss on writedown of assets 26,033 4,473
Depreciation and amortization 86,774 77,454
Amortization of residual value (302,605) (244,805)
Provision for credit losses 144,000
Income from real estate joint venture (66,978)
Changes in assets and liabilities
Increase in equipment held for re-lease (52,439) (28,252)
Decrease in other assets 169,386 116,915
Increase (decrease) in accounts payable and accruals 1,157,421 (335,295)
Increase (decrease) in accrued income taxes 235,903 (664,729)
Increase (decrease) in dealers' reserves 647,283 (418,622)
------------- ------------
Net cash provided by operating activities 2,758,728 9,566
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sales of leases and loans 376,684 784,478
Leases funded to customers (2,157,086) (1,875,520)
Loans made to customers (107,783,626) (90,869,303)
Lease principal payments 1,794,382 2,473,324
Loan principal repayments 105,091,809 87,243,370
Equipment and leasehold improvements purchased (29,971) (30,374)
Distributions received from real estate joint venture 112,837 36,068
------------- ------------
Net cash used in investing activities (2,594,971) (2,237,957)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 58,155,559 64,252,424
Repayment of notes payable to banks (54,492,041) (62,098,573)
Repayment of 1995 subordinated notes payable (4,000,000)
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Net cash (used in) provided by financing activities (336,482) 2,153,851
NET DECREASE IN CASH (172,725) (74,540)
CASH AT BEGINNING OF YEAR 193,652 102,625
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CASH AT SEPTEMBER 30, 1997 AND 1996 $ 20,927 $ 28,085
============= ============
SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ 3,946,924 $ 4,117,317
============= ============
Income taxes $ 792,071 $ 1,583,380
============= ============
The accompanying notes are an integral part of these consolidated financial
statements.
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FIRESTONE FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The consolidated financial statements of Firestone Financial
Corp. and its subsidiary (the "Company") included herein have been prepared by
the Company, without audit. Certain information and footnote disclosure normally
included in financial statements prepared in accordance with generally accepted
accounting principles have been condensed or omitted. In the opinion of
management, the financial statements reflect all adjustments (consisting
primarily of normal recurring accruals) necessary for a fair presentation of
such information. The financial statements should be read in conjunction with
the Company's financial statements and notes thereto for the fiscal year ended
December 31, 1996. The results of operations for the three and nine months ended
September 30, 1997 and 1996 are not necessarily indicative of the results of
operations for the full year or any other interim period.
(2) Merger of the Company
Subsequent to September 30, 1997, on October 15, 1997, the
Company was acquired by UST Corp. The transaction was accounted for as a pooling
of interests and was structured as a tax-free exchange of 0.59 shares of UST
Corp. common stock for each of the 2.0 million issued and outstanding shares of
Company common stock. As all of the regulatory contingencies related to
consummation of the transaction were satisfied as of September 30, 1997, the
Company recorded a one-time charge in the amount of $714 thousand in
nonrecurring costs associated with the transaction.
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