SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended September 30, 2002
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
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Commission file number 0-24353
THISTLE GROUP HOLDINGS, CO.
---------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2960768
- --------------------------------------------------------------------------------
(State or other jurisdiction of (IRS employer identification no.)
incorporation or organization)
6060 Ridge Avenue, Philadelphia, Pennsylvania 19128
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (215) 483-2800
N/A
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Former name, former address and former fiscal year,
if changed since last report.
Indicate by check whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
Yes X No
------------- -------------
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date, November 14, 2002.
Class Outstanding
- --------------------------------------------------------------------------------
$.10 par value common stock 5,244,424
THISTLE GROUP HOLDINGS, CO. AND SUBSIDIARIES
FORM 10-Q
FOR THE QUARTER ENDED SEPTEMBER 30, 2002
INDEX
Page
Number
------
PART I - UNAUDITED CONDENSED CONSOLIDATED FINANCIAL INFORMATION OF
THISTLE GROUP HOLDINGS, CO. AND SUBSIDIARIES
Item 1. Unaudited Condensed Consolidated Financial Statements and Notes Thereto.................................3
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations....................................................................10
Item 3. Quantitative and Qualitative Disclosures about Market Risk.............................................14
Item 4. Controls and Procedures................................................................................15
PART II - OTHER INFORMATION
Item 1. Legal Proceedings......................................................................................16
Item 2. Changes in Securities..................................................................................16
Item 3. Defaults upon Senior Securities........................................................................16
Item 4. Other Information......................................................................................16
Item 5. Exhibits and Reports on Form 8-K.......................................................................16
SIGNATURES ......................................................................................................
THISTLE GROUP HOLDINGS, CO. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS)
September 30, 2002 December 31, 2001
------------------ -----------------
ASSETS
Cash on hand and in banks ...................................................... $ 3,654 $ 3,909
Interest-bearing deposits ...................................................... 13,856 18,814
---------- ---------
Total cash and cash equivalents .............................. 17,510 22,723
Investments held to maturity
(approximate fair value of $62,558).......................... -- 63,824
Investments available for sale at fair value
(amortized cost of $66,369 and $16,654) ...................... 67,504 16,078
Mortgage-backed securities available for sale at fair value
(amortized cost of $333,240 and $295,998) .................... 341,003 299,216
Trading securities............................................................. 11,188 14,261
Loans receivable (net of allowance for loan losses of
$2,041 and $2,511) ........................................... 296,496 259,220
Accrued interest receivable .................................................... 4,239 4,056
FHLB stock - at cost ........................................................... 9,894 8,844
Real estate acquired through foreclosure - net ................................. 1,795 81
Office properties and equipment - net .......................................... 6,565 6,340
Cash surrender value of life insurance ......................................... 14,740 12,563
Excess of cost over fair value of net assets acquired .......................... 7,137 7,680
Prepaid expenses and other assets .............................................. 5,818 4,240
Prepaid income taxes............................................................ 805 538
Deferred income taxes .......................................................... -- 744
---------- ---------
TOTAL ASSETS ................................................. $ 784,694 $ 720,408
========== =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits ....................................................................... $ 473,700 $ 431,583
Accrued interest payable ....................................................... 932 918
Advances from borrowers for taxes and insurance ................................ 1,888 2,571
FHLB advances .................................................................. 197,884 176,884
Payable to brokers and dealers ................................................. 8,365 14,109
Accounts payable and accrued expenses .......................................... 9,632 7,360
Other borrowings ............................................................... 4,500 1,000
Dividends payable .............................................................. 481 528
Deferred income taxes........................................................... 1,168 --
---------- ---------
TOTAL LIABILITIES ............................................ 698,550 634,953
---------- ---------
Company-obligated mandatorily redeemable preferred securities of a subsidiary
trust holding solely junior subordinated debentures of the Company.............. 10,000 --
----------
Commitments and Contingencies
Stockholders' Equity:
Preferred stock, no par value - 10,000,000 shares authorized,
none issued in 2002 and 2001 ................................................... -- --
Common stock - $.10 par, 40,000,000 shares authorized, 8,999,989
issued in 2002 and 2001; 5,341,597 outstanding September 30, 2002
and 6,607,955 outstanding December 31, 2001 .................................... 900 900
Additional paid-in capital ..................................................... 92,884 92,889
Common stock acquired by stock benefit plans ................................... (5,748) (6,383)
Treasury stock at cost, 3,658,392 shares at September 30, 2002 and
2,392,034 shares at December 31, 2001 .......................................... (38,080) (21,626)
Accumulated other comprehensive income.......................................... 5,896 1,286
Retained earnings - partially restricted ....................................... 20,292 18,389
---------- ---------
Total stockholders' equity ................................... 76,144 85,455
---------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY ..................................... $ 784,694 $ 720,408
========== =========
See notes to unaudited condensed consolidated financial statements.
3
Thistle Group Holdings, Co. and subsidiaries
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS)
For the Three Months For the Nine Months
Ended September 30, Ended September 30,
------------------- -------------------
2002 2001 2002 2001
---- ---- ---- ----
INTEREST INCOME:
Interest on loans..................................... $ 6,419 $ 4,963 $ 16,791 $ 14,243
Interest on mortgage-backed securities................ 3,538 4,314 11,679 13,202
Interest and dividends on investments................. 1,168 1,909 3,961 6,686
--------- ---------- --------- --------
Total interest income............................. 11,125 11,186 32,431 34,131
--------- ---------- --------- --------
INTEREST EXPENSE:
Interest on deposits.................................. 3,376 4,318 10,262 13,687
Interest on borrowed money............................ 2,500 2,398 7,364 7,236
--------- ---------- --------- --------
Total interest expense............................ 5,876 6,716 17,626 20,923
--------- ---------- --------- --------
NET INTEREST INCOME 5,249 4,470 14,805 13,208
PROVISION FOR LOAN LOSSES................................ 150 187 500 427
--------- ---------- --------- --------
NET INTEREST INCOME AFTER PROVISION
FOR LOAN LOSSES....................................... 5,099 4,283 14,305 12,781
--------- ---------- --------- --------
OTHER INCOME:
Service charges and other fees........................ 749 352 1,213 759
Gain on sale of real estate owned..................... -- -- 6 --
Writedown on real estate owned........................ (585) -- (585) --
Gain (loss) on sale of mortgage-backed securities..... 353 (5) 708 136
Gain (loss) on sale of loans.......................... 27 -- 204 (11)
Gain (loss) on sale of investments.................... 2 221 (537) 221
Loss on SBIC investments -- (125) -- (428)
Rental income......................................... 59 56 166 152
Trading revenues from brokerage operations............ 436 703 1,418 1,598
Miscellaneous other income............................ -- 8 -- 91
--------- ---------- --------- --------
Total other income................................ 1,041 1,210 2,593 2,518
--------- ---------- --------- --------
OTHER EXPENSES:
Salaries and employee benefits........................ 2,383 2,066 6,312 5,745
Occupancy and equipment............................... 705 596 2,036 1,747
Federal insurance premium............................. 19 19 55 60
Professional fees..................................... 151 105 548 318
Advertising and promotion............................. 87 70 289 244
Amortization of excess of cost over fair value
of assets acquired.................................... 180 180 540 540
Interest on redeemable preferred securities........... 156 -- 292 --
Other................................................. 991 817 2,754 2,449
--------- ---------- --------- --------
Total other expenses.............................. 4,672 3,853 12,826 11,103
--------- ---------- --------- --------
INCOME BEFORE INCOME TAXES............................... 1,468 1,640 4,072 4,196
--------- ---------- --------- --------
INCOME TAXES............................................. 258 372 734 807
--------- ---------- --------- --------
NET INCOME............................................... $ 1,210 $ 1,268 $ 3,338 $ 3,389
========= ========== ========= ========
BASIC EARNINGS PER SHARE................................. $ .25 $ .20 $ .59 $ .52
DILUTED EARNINGS PER SHARE............................... $ .24 $ .20 $ .58 $ .52
WEIGHTED AVERAGE SHARES
OUTSTANDING - BASIC................................... 4,888,078 6,308,201 5,639,952 6,458,456
WEIGHTED AVERAGE SHARES
OUTSTANDING - DILUTED................................. 4,959,883 6,347,245 5,731,275 6,500,619
See notes to unaudited condensed consolidated financial statements.
4
THISTLE GROUP HOLDINGS, CO. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
For the Nine Months
Ended September 30,
-------------------
2002 2001
---- ----
OPERATING ACTIVITIES:
Net income.................................................................. $ 3,338 $ 3,389
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses................................................ 500 427
Depreciation............................................................. 968 767
Amortization of stock benefit plans...................................... 678 649
Amortization of excess of cost over fair value of net assets acquired.... 540 540
Amortization of net premiums (discounts) on:
Loans purchased........................................................ 73 53
Investments............................................................ (471) (790)
Mortgage-backed securities............................................. 3,482 1,071
(Gain) loss on sale of loans............................................. (204) 11
Gain on sale of mortgage-backed securities............................... (708) (136)
Loss (gain) on sale of investments....................................... 537 (221)
Writedown of real estate owned........................................... 585 --
Gain on sale of real estate owned........................................ (6) --
Net decrease in trading securities....................................... 3,073 1,431
Increase in other assets................................................. (4,494) (2,697)
(Decrease) increase in other liabilities................................. (3,503) 56
--------- -------
Net cash provided by operating activities................................... 4,388 4,550
-------- -------
INVESTING ACTIVITIES:
Principal collected on:
Mortgage-backed securities............................................... 108,909 80,392
Loans.................................................................... 85,763 45,073
Loans originated............................................................ (133,717) (82,732)
Loans acquired.............................................................. (346) --
Purchases of:
Investments ............................................................. (4,762) (103)
Mortgage-backed securities............................................... (194,900) (140,913)
Office properties and equipment.......................................... (1,193) (1,204)
FHLB stock............................................................... (1,050) (250)
Proceeds from the sale of mortgage-backed securities........................ 45,976 32,400
Proceeds from the sale of investments....................................... 16,101 13,829
Proceeds from the sale of loans............................................. 8,336 3,199
Proceeds from the sale of real estate owned................................. 72 --
Maturities and calls of investments......................................... 3,195 39,632
-------- -------
Net cash used in investing activities....................................... (67,616) (10,677)
--------- -------
FINANCING ACTIVITIES:
Net increase in deposits.................................................... 42,117 12,633
Net decrease in advances from borrowers for taxes and insurance............. (683) (728)
Net increase in FHLB borrowings............................................. 21,000 5,000
Net increase in other borrowings............................................ 3,500 1,250
Issuance of capital securities.............................................. 10,000 --
Purchase of treasury stock.................................................. (16,551) (4,286)
Net proceeds from exercise of stock options................................. 66 --
Cash dividends.............................................................. (1,434) (1,519)
--------- --------
Net cash provided by financing activities................................... 58,015 12,350
-------- -------
Net (decrease) increase in cash and cash equivalents........................ (5,213) 6,223
Cash and cash equivalents, beginning of period.............................. 22,723 20,320
-------- -------
Cash and cash equivalents, end of period.................................... $ 17,510 $ 26,543
======== ========
SUPPLEMENTAL DISCLOSURES
Interest paid on deposits and funds borrowed................................ $ 17,612 $ 20,985
Income taxes paid........................................................... 1,345 930
Noncash transfers from loans to real estate owned........................... 3,164 47
Noncash transfer of investments from available for sale to held to maturity. -- 75,446
Noncash transfer of investments from held to maturity to available for sale. 51,385 --
See notes to unaudited condensed consolidated financial statements.
5
THISTLE GROUP HOLDINGS, CO. AND SUBSIDIARIES
NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
NOTE 1 - PRINCIPLES OF CONSOLIDATION
Thistle Group Holdings, Co., (the "Company") organized in March of 1998, has
four wholly owned subsidiaries: TGH Corp., TGH Securities, Thistle Group
Holdings Capital Trust I, and Roxborough Manayunk Bank (the "Bank"). The Bank
has three wholly owned subsidiaries: RoxDel Corp., Montgomery Service Corp. and
Ridge Service Corp. The Company's business is conducted principally through the
Bank. All significant intercompany accounts and transactions have been
eliminated in consolidation.
NOTE 2 - BASIS OF PRESENTATION
The accompanying unaudited condensed consolidated financial statements were
prepared in accordance with instructions for Form 10-Q and, therefore, do not
include all information necessary for a complete presentation of consolidated
financial condition, results of operations, and cash flows in conformity with
accounting principles generally accepted in the United States of America.
However, all adjustments, consisting of normal recurring accruals, which, in the
opinion of management, are necessary for a fair presentation of the consolidated
financial statements, have been included. The results of operations for the
three and nine-month periods ended September 30, 2002 are not necessarily
indicative of the results which may be expected for the entire fiscal year or
any other future interim period.
These unaudited condensed consolidated financial statements should be read in
conjunction with the consolidated financial statements and related notes, which
are included in the Company's Annual Report to stockholders on Form 10-K for the
year ended December 31, 2001.
NOTE 3 - INVESTMENTS
Investments held to maturity at December 31, 2001 consisted of the following:
December 31, 2001
Amortized Approximate
Cost Fair Value
---- ----------
FHLB and FHLMC bonds - more than 10 years.......... $ 15,201 $ 14,408
Municipal bonds - 5 to 10 years.................... 777 789
Municipal bonds - more than 10 years............... 47,846 47,361
--------- ----------
Total.............................................. $ 63,824 $ 62,558
========= ==========
During the three months ended June 30, 2002, the Company sold $15,600 of FHLB
and FHLMC bonds, representing its entire portfolio of zero coupon agency
securities, previously classified as held to maturity, at a net loss of $709.
The Company executed the transaction to improve the interest-rate risk
characteristics of the Bank's balance sheet. As a result of this transaction the
Company was required to reclassify $51,385 of held to maturity investments to
available for sale.
Investments available for sale at September 30, 2002 and December 31, 2001
consisted of the following:
September 30, 2002 December 31, 2001
Amortized Approximate Amortized Approximate
Cost Fair Value Cost Fair Value
---- ---------- ---- ----------
Municipal bonds - 5 to 10 years......... $ 677 $ 713 $ -- $ --
Municipal bonds - more than 10 years.... 50,012 51,104 -- --
Mutual funds............................ 1,565 1,565 1,530 1,530
Capital trust securities................ 8,555 7,680 9,077 8,040
Equity investments...................... 4,025 4,907 4,528 4,989
Other................................... 1,535 1,535 1,519 1,519
--------- ---------- --------- ----------
Total................................... $ 66,369 $ 67,504 $ 16,654 $ 16,078
========= ========== ========= ==========
6
NOTE 4 - MORTGAGE-BACKED SECURITIES AVAILABLE FOR SALE
Mortgage-backed securities at September 30, 2002 and December 31, 2001 consisted
of the following:
September 30, 2002 December 31, 2001
Amortized Approximate Amortized Approximate
Cost Fair Value Cost Fair Value
---- ---------- ---- ----------
Agency pass-through certificates..................... $ 281,212 $ 288,649 $ 287,503 $ 290,539
Agency collateralized mortgage obligations........... 2,958 3,014 3,904 3,904
Agency real estate mortgage investment conduits...... 20,497 20,766 4,591 4,773
Non-agency collateralized mortgage obligations....... 28,573 28,574 -- --
--------- ---------- --------- ----------
Total................................................ $ 333,240 $ 341,003 $ 295,998 $ 299,216
========= ========== ========= ==========
NOTE 5 - TRADING SECURITIES
Trading securities are securities owned by TGH Securities, a wholly owned
broker/dealer subsidiary of the Company. Trading securities are recorded on a
trade date basis and are carried at fair value. These securities generally
consist of short-term municipal notes and bonds. Gains and losses, both realized
and unrealized, are included in operating income.
NOTE 6 - LOANS RECEIVABLE
Loans receivable at September 30, 2002 and December 31, 2001 consisted of the
following:
September 30, 2002 December 31, 2001
------------------ -----------------
Mortgage loans:
1 - 4 family residential............................. $ 126,692 $ 125,504
Commercial real estate............................... 91,579 62,532
Home equity lines of credit and improvement loans............. 29,069 20,923
Commercial non-mortgage loans................................. 23,386 28,866
Construction loans - net...................................... 27,524 23,677
Loans on savings accounts..................................... 634 637
Consumer loans ............................................ 1,083 879
---------- ----------
Total loans.......................................... 299,967 263,018
---------- ----------
Plus: unamortized premiums.................................... 192 267
Less:
Net discounts on loans purchased..................... (12) (13)
Deferred loan fees................................... (1,610) (1,541)
Allowance for loan losses............................ (2,041) (2,511)
---------- ----------
Total $ 296,496 $ 259,220
========== ==========
Loan losses at September 30, 2002 and December 31, 2001 were as follows:
September 30, 2002 December 31, 2001
------------------ -----------------
Balance, beginning............................................ $ 2,511 $ 1,682
Provision..................................................... 500 847
Charge-offs................................................... (970) (18)
----------- -----------
Balance ending................................................ $ 2,041 $ 2,511
========== ==========
NOTE 7 - DEPOSITS
The major types of deposits by amounts and percentages were as follows:
September 30, 2002 December 31, 2001
Amount % of Total Amount % of Total
------ ---------- ------ ----------
NOW accounts and
transaction checking $ 79,476 16.8% $ 47,372 11.0%
Money Market Demand accounts 45,204 9.5% 40,029 9.3%
Passbook accounts 123,696 26.1% 109,257 25.3%
Certificate accounts 225,324 47.6% 234,925 54.4%
---------- ------ ---------- ------
Total $ 473,700 100.0% $ 431,583 100.0%
========== ====== ========== ======
7
NOTE 8 - EARNINGS PER SHARE
Basic earnings per share excludes dilution and is computed by dividing
income available to common stockholders by the weighted-average number of common
shares outstanding for the period. Diluted earnings per share reflects 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. The
weighted average shares used in the basic and diluted earnings per share
computations for the three and nine-month periods ended September 30, 2002 and
2001 are as follows:
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
------------ ------------
2002 2001 2002 2001
---- ---- ---- ----
Average common shares outstanding- basic 4,888,078 6,308,201 5,639,952 6,458,456
Increase in shares due to dilutive options 71,805 39,044 91,323 42,163
----------- ----------- ----------- -----------
Adjusted shares outstanding - diluted 4,959,883 6,347,245 5,731,275 6,500,619
=========== =========== =========== ===========
NOTE 9 - COMPREHENSIVE INCOME
For the three and nine-month periods ended September 30, 2002, the Company
reported total comprehensive income of approximately $2,781 and $7,948,
respectively. For the three and nine-month periods of the prior year, the
Company reported total comprehensive income of approximately $4,400 and $10,200
respectively. Items of other comprehensive income consisted of unrealized gains
or (losses), net of taxes, on available for sale securities and reclassification
adjustments for gains or (losses) included in net income.
NOTE 10 - DIVIDENDS
On September 19, 2002, the Company declared a dividend of $.09 per share payable
October 15, 2002 to stockholders of record on September 30, 2002.
NOTE 11 - RECENT ACCOUNTING STANDARDS
In June 2001, the Financial Accounting Standards Board ("FASB") issued two new
pronouncements: SFAS No. 141, Business Combinations, and SFAS No. 142, Goodwill
and Other Intangible Assets. SFAS No. 141 is effective as follows: (a) use of
the pooling-of-interest method is prohibited for business combinations initiated
after June 30, 2001; and (b) the provisions of SFAS No. 141 also apply to all
business combinations accounted for by the purchase method that are completed
after June 30, 2001. SFAS No. 142 is effective for fiscal years beginning after
December 15, 2001 to all goodwill and other intangible assets recognized in an
entity's statement of financial position at that date, regardless of when those
assets were initially recognized. However, SFAS No. 142 did not change the
accounting prescribed for certain acquisitions by banking and thrift
institutions, resulting in continued amortization of the excess of cost over
fair value of net assets acquired under SFAS No. 72, Accounting for Certain
Acquisitions of Banking or Thrift Institutions. In October 2002, the FASB issued
SFAS No. 147, Acquisitions of Certain Financial Institutions, which provides
guidance on the accounting for the acquisition of a financial institution. This
statement requires that the excess of the fair value of liabilities assumed over
the fair value of tangible and identifiable intangible assets acquired in a
business combination represents goodwill that should be accounted for under SFAS
No. 142, Goodwill and Other Intangible Assets. Thus, the specialized accounting
guidance in paragraph 5 of SFAS No. 72, Accounting for Certain Acquisitions of
Banking or Thrift Institutions, will not apply after September 30, 2002. If
certain criteria in SFAS No. 147 are met, the amount of the unidentifiable
intangible asset will be reclassified to goodwill upon adoption of the
statement. Financial institutions meeting conditions outlined in SFAS No. 147
will be required to restate previously issued financial statements.
Additionally, the scope of SFAS No. 144, Accounting for the Impairment or
Disposal of Long-Lived Assets, is amended to include long-term
customer-relationship intangible assets such as depositor- and
borrower-relationship intangible assets and credit cardholder intangible assets.
This statement is effective for the Company beginning October 1, 2002. The
Company is reviewing its prior branch acquisitions against the criteria
established in SFAS No. 147 and has not made a final determination of the amount
the excess of cost over fair value of net assets acquired ($7,137 at September
30, 2002) that will be reclassified to goodwill. For the three and nine months
ended September 30, 2002, the Company amortized $180 and $540, respectively.
In April 2002, the FASB issued SFAS No. 145, Rescission of FASB Statements No.
4, 44, and 64, Amendment of FASB Statement No. 13, and Technical Corrections.
The provisions of this statement related to the rescission of SFAS No. 4 are
effective for fiscal years beginning after May 15, 2002. Management has not
determined the impact of applying these provisions. Certain provisions of the
statement relating to SFAS No. 13 are effective for transactions occurring after
May 15, 2002. All other provisions of the statement are effective for financial
statements issued on or after May 15, 2002. These provisions had no impact on
the Company's financial statements.
8
In July 2002, the FASB issued SFAS No. 146, Accounting for Costs Associated with
Exit or Disposal Activities. The standard requires companies to recognize costs
associated with exit or disposal activities when they are incurred rather than
at the date of a commitment to an exit or disposal plan. Examples of costs
covered by the standard include lease termination costs and certain employee
severance costs that are associated with a restructuring, discontinued
operation, plant closing, or other exit or disposal activity. SFAS No. 146 is to
be applied prospectively to exit or disposal activities initiated after December
31, 2002.
NOTE 12 - CAPITAL SECURITIES
On March 26, 2002, the Company formed a wholly-owned subsidiary, Thistle Group
Holdings Capital Trust I, a Delaware business trust (the "Trust"). On April 10,
2002, the Trust sold $10.0 million of pooled floating rate capital securities
(the "Capital Securities") to MM Community Funding III, Ltd., an unaffiliated
entity, with a stated value and liquidation preference of $1,000 per share. The
obligations of the Trust under the Capital Securities are fully and
unconditionally guaranteed by the Company and the Trust has no independent
operations. The entire proceeds from the sale of the Capital Securities were
used by the Trust to invest in floating rate junior subordinated debt securities
of the Company (the "Junior Subordinated Debt"). The Junior Subordinated Debt is
unsecured and ranks subordinate and junior in right of payment to all
indebtedness, liabilities and obligations of the Company. The Junior
Subordinated Debt is the sole asset of the Trust. Interest on the Capital
Securities is cumulative and payable semi-annually in arrears. The Capital
Securities mature in April 2032. The Company has the right to optionally redeem
the Junior Subordinated Debt prior to the maturity date, but no sooner than five
years after the issuance, at 100% of the stated liquidation amount, plus accrued
and unpaid distributions, if any, on the redemption date. Upon the occurrence of
certain events, the Company has the right to redeem the Junior Subordinated Debt
in whole, but not in part, at a special redemption price before five years have
elapsed. Proceeds from any redemption of the Junior Subordinated Debt will cause
a mandatory redemption of Capital Securities having an aggregate liquidation
amount equal to the principal amount of the Junior Subordinated Debt redeemed.
Additionally, under the terms of the Junior Subordinated Debt, the Company will
have the right, with certain limitations, to defer the payment of interest on
the Junior Subordinated Debt at any time for a period not exceeding twenty
consecutive quarterly periods. Consequently, distributions on the Capital
Securities would be deferred and accumulate interest, compounded quarterly. The
Capital Securities were issued without registration under the Securities Act of
1933, as amended, in reliance upon an exemption from registration as provided by
Regulation S. At September 30, 2002, the interest rate on the capital securities
and junior subordinated debt was 6.02%.
NOTE 13 - TENDER OFFER
During the quarter ended June 30, 2002, the Company completed its Issuer Tender
Offer ("ITO"), repurchasing 1,129,000 shares at a price of $13.00 per share. The
Company's ITO expired at midnight on the evening of June 20, 2002.
NOTE 14- SUBSEQUENT EVENT
Subsequent to September 30, 2002, the Company executed a Standstill Agreement
with Jewelcor Management, Inc., Seymour Holtzman, James A. Mitarotonda and
Barington Companies Equity Partners, L.P. (the "Group Members"). Such agreement
will remain effective for a period of five years. The primary terms of the
agreement include the following. The Company will make a cash payment of $75 to
the Group Members. The Group Members will withdraw and release the two lawsuits
pending in the Court of Common Pleas, Philadelphia, Pennsylvania, against the
Company and each of its directors. Additionally, each Group Member has agreed to
enter into this agreement and to refrain from purchasing or otherwise acquiring
the beneficial ownership of any shares of capital stock of the Company for a
period of five years. The Company has also agreed to repurchase approximately
97,000 shares of its common stock held by Group Members at $12.50 per share. In
connection with the agreement and repurchase of shares, the Company will
recognize a charge of $116 net of tax in the fourth quarter of 2002.
9
THISTLE GROUP HOLDINGS, CO. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The Private Securities Litigation Reform Act of 1995 contains safe harbor
provisions regarding forward-looking statements. When used in this discussion,
the words "believes", "anticipates", "contemplates", "expects", and similar
expressions are intended to identify forward-looking statements. Such statements
are subject to certain risks and uncertainties, which could cause actual results
to differ materially from those projected. Those risks and uncertainties include
changes in interest rates, risks associated with the effect of opening a new
branch, the ability to control costs and expenses, new legislation and
regulations and general market conditions.
Set forth below is the Company's earnings information for the quarter ended
September 30, 2002 as compared to the quarter ended June 30, 2002. (the "Linked
Quarter Highlights")
LINKED QUARTER HIGHLIGHTS
(Dollars in Thousands)
-------------------------------- ---------------- ----------------- ---------------------- ----------------------
QTR QTR INCREASE % INCREASE
9/30/02 6/30/02 (DECREASE) (DECREASE)
-------------------------------- ---------------- ----------------- ---------------------- ----------------------
Interest Income $ 11,125 $ 10,778 $ 347 3.2%
-------------------------------- ---------------- ----------------- ---------------------- ----------------------
Interest Expense 5,876 5,920 (44) (.7%)
-------------------------------- ---------------- ----------------- ---------------------- ----------------------
Net Interest Income 5,249 4,858 391 8.0%
-------------------------------- ---------------- ----------------- ---------------------- ----------------------
Provision for loan losses 150 200 (50) (25.0%)
-------------------------------- ---------------- ----------------- ---------------------- ----------------------
Non-interest Income 1,041 949 92 9.7%
-------------------------------- ---------------- ----------------- ---------------------- ----------------------
Non-interest Expense 4,672 4,193 479 11.4%
-------------------------------- ---------------- ----------------- ---------------------- ----------------------
Net Income 1,210 1,135 75 6.6%
-------------------------------- ---------------- ----------------- ---------------------- ----------------------
Loans 296,496 291,795 4,701 1.6%
-------------------------------- ---------------- ----------------- ---------------------- ----------------------
Deposits 473,700 466,258 7,442 1.6%
-------------------------------- ---------------- ----------------- ---------------------- ----------------------
Stockholders' Equity 76,144 73,936 2,208 3.0%
-------------------------------- ---------------- ----------------- ---------------------- ----------------------
o Interest income for the current quarter ended increased $347,000 due
primarily to $1 million of additional loan interest income related to the
payoff of a $5.7 million commercial loan. Such additional loan interest
income was offset by a decrease of $704,000 in interest income earned on
the Company's investment portfolio. Since June of 2002, the mortgage-backed
securities portfolio has generated a high level of prepayments thus
reducing the average life of such portfolio. Because of the current low
interest rate environment, such cash flows from prepayment of the
mortgage-backed securities portfolio have been and will continue to be
invested in a mix of adjustable rate and shorter term fixed rate
securities. Such investments at current market rates will lower the
portfolio yield, however, these investments will continue to produce future
cash flows to be reinvested in varying interest rate environments.
o Non-interest income for the quarter increased $92,000. Such increase was
the result of the following increases and decreases:
- Service charges and other fees increased $533,000 due primarily to the
recognition of a $460,000 fee on the payoff of the $5.7 million
commercial loan discussed above.
- TGH Securities' trading revenues decreased $247,000 due to the
seasonal nature of the municipal securities business. Salaries and
employee benefits for TGH Securities are directly related to its
trading revenues.
- The Company recorded a writedown of $585,000 on real estate owned. The
property was foreclosed on in the prior quarter and is currently being
marketed for sale. Such writedown is reflective of the current
disposition value of this asset.
- Gains on the sale of mortgage-backed securities for the current
quarter totaled $353,000.
o Non-interest expense increased $479,000 in the current quarter primarily
due to a $289,000 writedown of the cash surrender value of certain life
insurance policies, reflecting the continued downward trend exhibited
throughout the equities markets during the third quarter. Such writedown is
included in salaries and employee benefits.
o Loans receivable increased $4.7 million for the current quarter despite
heavy prepayments. Originations of $50 million for the quarter more than
offset sales and repayments of $45 million.
o Deposits increased $7.4 million for the quarter. Core deposits (checking,
money market, and passbook) increased $16.2 million or 7% while
certificates of deposit decreased by $8.8 million or 4%.
10
Comparison of Financial Condition at September 30, 2002 from December 31, 2001
- ------------------------------------------------------------------------------
Total assets were $784.7 million at September 30, 2002, representing an increase
of $64.3 million from the balance of $720.4 million at December 31, 2001. The
increase was due to an increase of $37 million in loans receivable and $29
million in investments which were funded by an increase in deposits of $42
million and additional FHLB borrowings of $21 million.
Investments held to maturity decreased $63.8 million due primarily to the
transfer of $51.4 million of municipal bonds to available for sale, the sale of
certain agency securities of $14.9 million and calls of municipal bonds of $2.0
million, offset by purchases of $4.7 million.
Investments available for sale increased $51.4 million primarily due to the
transfer of $51.4 million of municipal bonds from held to maturity to available
for sale.
Mortgage-backed securities increased $41.8 million mainly due to purchases of
$194.9 million offset by repayments of $108.9 million and sales of $46.0
million.
Loans receivable increased $37.3 million, or 14.4%, to $296.5 million at
September 30, 2002 from $259.2 million at December 31, 2001. This increase was
primarily the result of $133.7 million of loan originations, offset by principal
repayments of $85.8 million and sale of loans of $8.3 million.
Deposits increased $42.1 million, or 9.8%, to $473.7 million at September 30,
2002 from $431.6 million at December 31, 2001. NOW accounts, transaction
checking and money market accounts increased $37.3 million; passbook accounts
increased $14.4 million, and certificates decreased $9.6 million.
FHLB advances increased 21.0 million to $197.9 million at September 30, 2002
from $176.9 million at December 31, 2001. The increase was the result of $16.0
million in overnight borrowings and $5.0 million in one-year borrowing used to
fund purchases of mortgage-backed securities.
Total stockholders' equity decreased $9.3 million to $76.1 million at September
30, 2002 from $85.4 million at December 31, 2001 primarily due to treasury stock
purchases from the Company's issuer tender offer of $14.7 million, other stock
purchases of $1.7 million and dividends paid of $1.4 million offset by an a
increase in the accumulated other comprehensive income of $4.6 million as a
result of changes in the net unrealized gain on the available for sale
securities portfolio due to fluctuations in the interest rates and net income of
$3.3 million. Because of interest rate changes, the Company's accumulated other
comprehensive income (loss) may fluctuate for each interim and year-end period.
Non-performing Assets
- ---------------------
The following table sets forth information regarding non-performing loans and
real estate owned.
At At
September 30, 2002 December 31, 2001
------------------ -----------------
(Dollars in Thousands)
Total non-performing loans........................ $ 102 $ 3,178
Real estate owned................................. 1,795 81
-------- --------
Total non-performing assets....................... $ 1,897 $ 3,259
======== ========
Total non-performing loans to
total loans....................................... .03% 1.23%
Total non-performing assets to
total assets...................................... .24% .45%
Allowance for loan loss........................... $ 2,041 $ 2,511
Allowance for loan losses as a percentage
of total non-performing assets.................... 108% 77%
Allowance for loan losses as a percentage
of total non-performing loans..................... 2001% 79%
Allowance for loan losses as a percentage
of total average loans............................ .72% 1.05%
The decrease in non-performing loans from December 31, 2001 to September 30,
2002 is primarily due to one commercial real estate loan, which was foreclosed
on in the prior quarter and is currently being marketed for sale.
11
Comparison of Operations for the Three and Nine-Month Periods Ended September
30, 2002 and 2001
- --------------------------------------------------------------------------------
Net income for the quarter ended September 30, 2002 was $1.2 million or $.24
diluted earnings per share as compared to net income of $1.3 million or $.20
diluted earnings per share for the quarter ended September 30, 2001. Net income
for the nine months ended September 30, 2002 was $3.3 million or $.58 diluted
earnings per share as compared to $3.4 million or $.52 earnings per share for
the nine months ended September 30, 2001.
Net interest income for the quarter ended September 30, 2002 increased $779,000
or 17.4 % over the quarter ended September 30, 2001. Net interest income for the
nine months ended September 30, 2002 increased $1.6 million or 12.1% over the
nine months ended September 30, 2001.
Interest income for the quarter ended September 30, 2002 decreased $61,000 over
the quarter ended September 30, 2001, primarily due to a decrease in the average
yield of 72 basis points, partially offset by an increase of $74.0 million in
the average balance of interest-earning assets. Excluding the additional income
earned on the $5.7 million commercial loan that was repaid during the quarter,
the average yield would have decreased 125 basis points. Interest expense for
the quarter ended September 30, 2002 decreased $840,000 over the quarter ended
September 30, 2001 due to a decrease in the average cost of funds of 96 basis
points, partially offset by an increase in the average balance of
interest-bearing liabilities of $67.0 million.
Interest income for the nine months ended September 30, 2002 decreased $1.7
million over the nine months ended September 30, 2001 primarily due to a
decrease in the average yield of 86 basis points partially offset by an increase
of $56.4 million in the average balance of interest-earning assets. Excluding
the additional income earned on the commercial loan discussed above the average
yield would have decreased 104 basis points. Interest expense for the nine
months ended September 30, 2002 decreased $3.3 million over the nine months
ended September 30, 2001. The decrease in interest expense is due to a decrease
in the average cost of funds of 108 basis points partially offset by an increase
in the average balance of interest-bearing liabilities of $54.1 million.
The Company continues to collect low cost deposits and originate loans. Two
components of the Company's balance sheet, in this interest rate environment,
continue to put pressure on margins. The majority of the Company's FHLB advances
are priced well above current market rates and have approximately a 6 year
average life. The option to call or reprice these advances rests with the FHLB.
In addition, as discussed herein, the mortgage securities portfolio will
continue to generate cash flows that will be repriced at current market levels.
Collectively, these two components will continue to hinder the Company's ability
to increase earnings. However, management believes, though there is no
assurance, that the continued execution of the Company's business plan, core
deposit and loan growth, will mitigate the effect of lower investment returns.
Non-interest income for the quarter ended September 30, 2002 decreased $169,000
over the quarter ended September 30, 2001. See the "Linked Quarter Highlights"
discussion.
Non-interest income for the nine months ended September 30, 2002 increased
$75,000 over the nine months ended September 30, 2001. This increase was the
result of the following:
- Service charges and other fees increased $454,000.
- A writedown of $585,000 was recorded in the current period on real
estate owned.
- Trading revenues decreased $180,000.
- The prior year period contained a $428,000 loss on a subsidiary's
investment in small business investment companies.
Non-interest expense for the quarter and nine months ended September 30, 2002
increased $819,000 and $1.7 million, respectively, over the comparative 2001
periods.
- Salaries and employee benefits increased $317,000 and $567,000,
respectively, over the same periods of the prior year. The majority of
the increase for the quarter was the result of a $289,000 writedown in
the third quarter of 2002 of the cash surrender value of certain life
insurance policies. The increase for the nine months is due to the
above mentioned writedown, the addition of personnel in lending, the
opening of two new banking offices and normal salary increases.
- Occupancy and equipment costs increased $109,000 and $289,000,
respectively, over the same periods of the prior year. The increases
were due to depreciation expense in connection with the completion of
the installation of a new enterprise-wide telephone system in the
first quarter of 2002 as well as additional equipment purchases and
related expenses for two new banking offices.
12
- Professional fees increased $46,000 for the quarter ended September
30, 2002 versus the prior year period and increased $230,000 for the
nine months ended September 30, 2002 versus the prior year period. The
increase for the quarter was due to additional fees related to ongoing
litigation. The increase for the nine-month period was primarily
related to fees incurred in connection with the Company's contested
Annual Meeting held in April 2002.
- Interest on redeemable preferred securities was $156,000 and $292,000,
respectively, for the three and nine-month periods of the current year
due to the issuance of $10 million of capital trust certificates in
April 2002.
- Other expenses increased $174,000 and $305,000, respectively, over the
same periods of the prior year. The increase for the three-month
period was due to increases in telephone expenses, Office of Thrift
Supervision assessment fees and transfer agent expenses. The increase
for the nine-month period was due to increases in payroll taxes,
telephone expenses, and to other printing and mailing expenses
resulting from the Company's contested Annual Meeting.
Critical Accounting Policies
- ----------------------------
In Management's opinion, the most critical accounting policy impacting the
Company's financial statements is the evaluation of the allowance for loan
losses. Management carefully monitors the credit quality of the loan portfolio
and makes estimates about the amount of credit losses that have been incurred at
each financial statement date. Management evaluates the fair value of collateral
supporting the impaired loans using independent appraisals and other measures of
fair value. This process involves subjective judgments and assumptions and is
subject to change based on factors that may be outside the control of the
Company.
Liquidity and Capital Resources
- -------------------------------
On September 30, 2002 the Bank was in compliance with its three regulatory
capital requirements as follows:
Amount Percent
------ -------
(Dollars in Thousands)
Tangible capital........................ $ 53,717 7.24%
Tangible capital requirement............ 11,127 1.50%
--------- -------
Excess over requirement................. $ 42,590 5.74%
========= =======
Core capital............................ $ 53,717 7.24%
Core capital requirement................ 29,676 4.00%
--------- -------
Excess over requirement................. $ 24,041 3.24%
========= =======
Risk based capital...................... $ 55,758 15.64%
Risk based capital requirement.......... 28,529 8.00%
--------- -------
Excess over requirement................. $ 27,229 7.64%
========= =======
The Company's primary sources of funds are deposits, borrowings, and proceeds
from principal and interest payments on loans, mortgage-backed securities and
other investments. While maturities and scheduled amortization of loans and
mortgage-backed securities are a predictable source of funds, deposit flows and
mortgage prepayments are greatly influenced by general interest rates, economic
conditions, competition and the consolidation of the financial institution
industry.
The primary investment activity of the Company is the origination and purchase
of mortgage loans, mortgage-backed securities and other investments. During the
nine months ended September 30, 2002, the Company originated $133.7 million of
loans. The Company also purchases loans and mortgage-backed securities to reduce
liquidity not otherwise required for local loan demand. Purchases of
mortgage-backed securities totaled $194.9 million during the nine-month period
ended September 30, 2002. Other investment activities include investment in U.S.
government and federal agency obligations, municipal bonds, debt and equity
investments in financial services firms, FHLB of Pittsburgh stock, commercial
and consumer loans.
The Company's most liquid assets are cash and cash equivalents, which include
investments in highly liquid, short-term investments. The level of these assets
is dependent on the Company's operating, financing and investing activities
during any given period. At September 30, 2002, cash and cash equivalents
totaled $17.5 million. The Bank's liquidity ratio was 4.07 % at September 30,
2002.
The Company anticipates that it will have sufficient funds available to meet its
current commitments. As of September 30, 2002, the Company had $26.2 million in
commitments to fund loans. Certificates of deposit, which were scheduled to
mature in one year or less, as of September 30, 2002 totaled $141.3 million.
Management believes that a significant portion of such deposits will remain with
the Company.
13
Additional Key Operating Information and Ratios
- -----------------------------------------------
For the For the
Three Months Ended Nine Months Ended
September 30, September 30,
------------ ------------
2002(1) 2001(1) 2002(1) 2001(1)
Return on average assets .63% .71% .61% .76%
Return on average equity 6.39% 5.79% 5.46% 5.19%
Yield on average interest-earning assets 6.26% 6.98% 6.27% 7.13%
Cost of average interest-bearing liabilities 3.55% 4.51% 3.65% 4.72%
Interest rate spread (2) 2.71% 2.47% 2.63% 2.41%
Net interest margin 3.07% 2.93% 2.99% 2.91%
At September 30, 2002 At December 31, 2001
--------------------- --------------------
Tangible book value per share $12.92 $11.77
(1) The ratios for the three and nine-month periods are annualized and yields
were adjusted for the effects of tax-free investments using the statutory
tax rate.
(2) Interest rate spread represents the difference between the average yield on
interest-earning assets and the average cost of interest-bearing
liabilities.
Quantitative and Qualitative Disclosures about Market Risk
- ----------------------------------------------------------
Qualitative Analysis. There have been no material changes from the Qualitative
Analysis information regarding market risk disclosed under the heading "Net
Portfolio Value" in the Company's Management's Discussion and Analysis of
Financial Condition and Results of Operations included in the annual report on
Form 10-K for the year ended December 31, 2001.
Quantitative Analysis. Exposure to interest rate risk is actively monitored by
management. The Company's objective is to maintain a consistent level of
profitability within acceptable risk tolerances across a broad range of
potential interest rate environments. The Company uses the OTS Net Portfolio
Value ("NPV") Model to monitor its exposure to interest rate risk, which
calculates changes in net portfolio value. Reports generated from assumptions
provided and modified by management are reviewed by the Asset/Liability
Management Committee and reported to the Board of Directors quarterly. The
Interest Rate Sensitivity of the Net Portfolio Value Report shows the degree to
which balance sheet line items and net portfolio value are potentially affected
by a 100 to 300 basis point (1 basis point equals 1/100th of a percentage point)
upward and downward parallel shift (shock) in the Treasury yield curve.
Since the NPV Model measures exposure to interest rate risk of the Bank to
assure capital adequacy for the protection of the depositors, only the Bank's
financial information is used for the model. However, the Bank is the primary
subsidiary and most significant asset of the Company, therefore the OTS NPV
model provides a reliable basis upon which to perform the quantitative analysis.
The following table presents the Bank's NPV as of September 30, 2002. The NPV
was calculated by the OTS, based on information provided by the Bank.
Net Portfolio Value
Net Portfolio Value As a % of Assets
------------------- ----------------
Change in Rates Net Portfolio
In Basis Points Dollar Amount Dollar Change % Change Value Ratio Basis Point Change
- --------------- ------------- ------------- -------- ----------- ------------------
300 $ 31,442 $ (28,420) (47) % 4.31 % (334)
200 46,230 (13,632) (23) % 6.16 % (150)
100 56,259 (3,603) (6) % 7.32 % (34)
0 59,862 -- -- 7.66 % --
(100) 55,052 (4,810) (8) % 6.98 % (68)
(200) * * * * *
(300) * * * * *
* Scenario not used due to the low prevailing interest rate environment
14
Controls and Procedures
- -----------------------
(a) Evaluation of disclosure controls and procedures. Based on their
--------------------------------------------------
evaluation as of a date within 90 days of the filing date of this Quarterly
Report on Form 10-Q, the Registrant's principal executive officer and principal
financial officer have concluded that the Registrant's disclosure controls and
procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities
Exchange Act of 1934 (the "Exchange Act")) are effective to ensure that
information required to be disclosed by the Company in reports that it files or
submits under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in Securities and Exchange Commission rules
and forms.
(b) Changes in internal controls. There were no significant changes in
----------------------------
the Registrant's internal controls or in other factors that could significantly
affect these controls subsequent to the date of their evaluation, including any
corrective actions with regard to significant deficiencies and material
weaknesses.
15
THISTLE GROUP HOLDINGS, CO. AND SUBSIDIARIES
PART II
ITEM 1. LEGAL PROCEEDINGS
On or about October 17, 2002 Jewelcor Management, Inc. released and withdrew its
two legal proceedings against the Company and each of its directors. See "Notes
to Unaudited Condensed Consolidated Financial Statements - Note 14 - Subsequent
Event."
In addition, from time to time, the Company is a party to routine legal
proceedings in the ordinary course of business, such as claims to enforce liens,
condemnation proceedings on properties in which the Company holds a security
interest, claims involving the making and servicing of real property loans, and
other issues incident to the business of the Company. In the Company's opinion,
such lawsuits pending or known to be contemplated against the Company at
September 30, 2002 would have no material effect on the operations or income of
the Company or the Bank, taken as a whole.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
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
a) The following Exhibits are filed as part of this report:
3(i) Articles of Incorporation****
3(ii) Amended Bylaws*****
4.1 Shareholder Rights Plan**
10.1 1992 Stock Option Plan of Roxborough-Manayunk Federal Savings Bank*
10.2 1992 Management Stock Bonus Plan of Roxborough-Manayunk Bank*
10.3 1994 Stock Option Plan of Roxborough-Manayunk Bank*
10.4 1994 Management Stock Bonus Plan of Roxborough-Manayunk Bank*
10.5 Employment Agreement with John F. McGill, Jr.****
10.6 Employment Agreement with Jerry Naessens*
10.7 1999 Stock Option Plan ***
10.8 1999 Restricted Stock Plan***
99.0 Certification Pursuant to 18 U.S.C. Section 1350, as adopted pursuant to
Section 906 of the Sarbanes-Oxley Act of 2002
b) Reports on Form 8-K
On September 4, 2002 the Company filed a Form 8-K (Items 7 an 9)
which included its 2nd Quarter Report to Shareholders.
On October 18, 2002 the Company filed a Form 8-K (items 5 and 9) to
disclose that the Company executed a Standstill Agreement with
Jewelcor Management, Inc., Seymour Holtzman, James A. Mitarotonda and
Barington Companies Equity Partners, L.P.
- ---------------
* Incorporated by reference to the identically numbered exhibit to the
Company's Form S-1 Registration Statement No. 333-48749 filed on March 27,
1998.
** Incorporated by reference to Exhibit 1 to the Company's Form 8-A filed on
September 30, 1999.
*** Incorporated by reference to the appropriate exhibit of the Company's
proxy material filed on June 21, 1999.
**** Incorporated by reference to the identically numbered exhibits to the Form
10-K for December 31, 1999 filed on March 30, 2000.
***** Incorporated by reference to the identically numbered exhibit to the Form
10-K for December 31, 2001 filed on March 12, 2002.
16
THISTLE GROUP HOLDINGS, CO. AND SUBSIDIARIES
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.
THISTLE GROUP HOLDINGS, CO.
Date: November 14, 2002 By: /s/ John F. McGill, Jr.
-------------------------------------
John F. McGill, Jr.
President and Chief Executive Officer
(Principal Executive Officer)
Date: November 14, 2002 By: /s/ Jerry Naessens
-------------------------------------
Jerry Naessens
Chief Financial Officer
(Principal Financial Officer)
SECTION 302 CERTIFICATION
I, John F. McGill, Jr., certify that:
1. I have reviewed this quarterly report on Form 10-Q of Thistle Group
Holdings, Co.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure
controls and procedures as of a date within 90 days prior to the
filing date of this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on
our evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a sigificant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 14, 2002 /s/John F. McGill, Jr.
------------------------------------------
John F. McGill, Jr.
Chief Executive Officer
SECTION 302 CERTIFICATION
I, Jerry Naessens, certify that:
1. I have reviewed this quarterly report on Form 10-Q of Thistle Group
Holdings, Co.;
2. Based on my knowledge, this quarterly report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements made, in light of the circumstances under which such
statements were made, not misleading with respect to the period covered by
this quarterly report;
3. Based on my knowledge, the financial statements, and other financial
information included in this quarterly report, fairly present in all
material respects the financial condition, results of operations and cash
flows of the registrant as of, and for, the periods presented in this
quarterly report;
4. The registrant's other certifying officer and I are responsible for
establishing and maintaining disclosure controls and procedures (as defined
in Exchange Act Rules 13a-14 and 15d-14) for the registrant and we have:
(a) designed such disclosure controls and procedures to ensure that
material information relating to the registrant, including its
consolidated subsidiaries, is made known to us by others within those
entities, particularly during the period in which this quarterly
report is being prepared;
(b) evaluated the effectiveness of the registrant's disclosure controls
and procedures as of a date within 90 days prior to the filing date of
this quarterly report (the "Evaluation Date"); and
(c) presented in this quarterly report our conclusions about the
effectiveness of the disclosure controls and procedures based on our
evaluation as of the Evaluation Date;
5. The registrant's other certifying officer and I have disclosed, based on
our most recent evaluation, to the registrant's auditors and the audit
committee of registrant's board of directors (or persons performing the
equivalent functions):
(a) all significant deficiencies in the design or operation of internal
controls which could adversely affect the registrant's ability to
record, process, summarize and report financial data and have
identified for the registrant's auditors any material weaknesses in
internal controls; and
(b) any fraud, whether or not material, that involves management or other
employees who have a significant role in the registrant's internal
controls; and
6. The registrant's other certifying officer and I have indicated in this
quarterly report whether there were significant changes in internal
controls or in other factors that could significantly affect internal
controls subsequent to the date of our most recent evaluation, including
any corrective actions with regard to significant deficiencies and material
weaknesses.
Date: November 14, 2002 /s/Jerry Naessens
------------------------------------------
Jerry Naessens
Chief Financial Officer