- Quarterly Report (10-Q)

Table of Contents

 

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

 

FORM 10-Q

 

 

 

x	QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2010

 

¨	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from              To             

Commission File No. 000-53870

 

 

VERSAILLES FINANCIAL CORPORATION

(Exact name of registrant as specified in its charter)

 

 

 

Maryland		27-1330256
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)
27 East Main Street, Versailles, Ohio		45380
(Address of principal executive offices)		(Zip Code)

[phone]

(Registrant’s telephone number, including area code)

Not applicable

(Former name, former address and former fiscal year, if changed since last report)

 

 

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes   x     No   ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (232.05 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes   ¨     No   ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer		¨		Accelerated filer		¨
Non-accelerated filer		¨   (Do not check if smaller reporting company)		Smaller reporting company		x

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).    Yes   ¨     No   x

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

 

Common Stock, $.01 par value		Outstanding at November 15, 2010 427,504 Common Shares

 

 

 

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Explanatory Note

Versailles Financial Corporation (the “Registrant”), headquartered in Versailles, Ohio, was formed to serve as the stock holding company for Versailles Savings and Loan Company following its mutual-to-stock conversion and stock offering. The closing of the mutual to stock conversion and stock offering occurred on January 8, 2010. The financial statements for periods prior to such date are for Versailles Savings and Loan.

VERSAILLES FINANCIAL CORPORATION

FINANCIAL STATEMENTS

September 30, 2010

CONTENTS

 

FINANCIAL STATEMENTS
CONSOLIDATED BALANCE SHEETS September 30, 2010 (Unaudited) and June 30, 2010			1
CONSOLIDATED STATEMENTS OF INCOME Three months ended September 30, 2010 and 2009 (Unaudited)			2
CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY Three months ended September  30, 2010 and 2009 (Unaudited)			3
CONSOLIDATED STATEMENTS OF CASH FLOWS Three months ended September 30, 2010 and 2009 (Unaudited)			5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS			6
ITEM  2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS			15
ITEM 3 – NOT APPLICABLE FOR SMALLER REPORTING COMPANIES			24
ITEM 4 – CONTROLS AND PROCEDURES			24
OTHER INFORMATION
ITEM 1 – LEGAL PROCEEDINGS			25
ITEM 2 – UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS			25
ITEM 3 – DEFAULTS UPON SENIOR SECURITIES			25
ITEM 5 – OTHER INFORMATION			25
ITEM 6 – EXHIBITS			25
SIGNATURES			27

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VERSAILLES FINANCIAL CORPORATION

CONSOLIDATED BALANCE SHEETS

September 30, 2010 and June 30, 2010

 

		September 30, 2010				June 30, 2010
		(Unaudited)
ASSETS
Cash and cash equivalents due from financial institutions		$	1,212,757			$	1,672,815
Overnight deposits			1,700,000				3,200,000
Total cash and cash equivalents			2,912,757				4,872,815
Interest-bearing time deposits in other financial institutions			486,000				486,000
Securities, available-for-sale			709,072				707,569
Securities held to maturity (fair value of $864,448 at September 30, 2010 and $946,110 at June 30, 2010)			825,357				903,485
Federal Home Loan Bank stock			397,500				397,500
Loans, net of allowance of $190,817 and $190,817			37,413,184				36,722,899
Other real estate owned			40,000				160,000
Premises and equipment, net			178,791				174,645
Accrued interest receivable			137,132				134,889
Other assets			612,426				655,513
Total assets		$	43,712,219			$	45,215,315
LIABILITIES
Savings accounts		$	8,184,308			$	8,144,648
Certificates of deposit			17,642,391				17,792,043
Total deposits			25,826,699				25,936,691
Federal Home Loan Bank advances			6,000,000				7,500,000
Other liabilities			1,249,520				1,194,307
Total liabilities			33,076,219				34,630,998
SHAREHOLDERS’ EQUITY
Preferred stock, $.01 par value, 1,000,000 shares authorized, none issued and outstanding			—				—
Common stock, $.01 par value, 10,000,000 shares authorized, 427,504 shares issued			4,275				4,275
Additional paid-in capital			3,813,656				3,813,656
Retained earnings			7,999,176				7,954,578
Treasury stock, 35,460 shares, at cost			(354,600	)			(354,600	)
Unearned employee stock ownership plan shares			(329,180	)			(333,450	)
Accumulated other comprehensive loss			(497,327	)			(500,142	)
Total shareholders’ equity			10,636,000				10,584,317
Total liabilities and shareholders’ equity		$	43,712,219			$	45,215,315

See accompanying notes to financial statements.

 

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VERSAILLES FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)

Three months ended September 30, 2010 and 2009

 

		Three months ended September 30,
		2010				2009
Interest and dividend income
Loans, including fees		$	502,400			$	481,516
Securities available for sale			4,374				8,271
Securities held-to-maturity			7,306				9,835
FHLB dividends			4,460				4,852
Deposits with banks			5,540				7,024
Total interest income			524,080				511,498
Interest expense
Deposits			84,458				111,450
FHLB advances			74,252				93,719
Total interest expense			158,710				205,169
Net interest income			365,370				306,329
Provisions for loan losses			—				—
Net interest income after provisions for loan losses			365,370				306,329
Noninterest income
Other income			2,427				1,241
Gain (loss) on sale of other real estate owned			(2,294	)			—
Total noninterest income			133				1,241
Noninterest expense
Salaries and employee benefits			135,359				112,631
Occupancy and equipment			8,075				9,353
Directors’ fees			14,600				15,000
Data processing			17,087				15,597
Franchise taxes			20,673				21,619
Legal, accounting and exam fees			76,687				30,752
Federal deposit insurance			6,375				6,000
Other			19,749				15,349
Total noninterest expense			298,605				226,301
Income before income taxes			66,898				81,269
Income tax expense			22,300				27,200
Net income		$	44,598			$	54,069
Basic and diluted earnings per share		$	0.11			$	N/A

See accompanying notes to financial statements.

 

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VERSAILLES FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

Three months ended September 30, 2010 and 2009

 

		Common Stock				Additional Paid-In Capital				Retained Earnings				Treasury Stock				Unearned ESOP Shares				Accumulated Other Comprehensive Income (Loss)				Total
Balance at July 1, 2009		$	—			$	—			$	7,789,031			$	—			$	—			$	(410,390	)		$	7,378,641
Net income for the period ended September 30, 2009			—				—				54,069				—				—				—				54,069
Change in net unrealized gain (loss) on securities available for sale, net of tax effects of $6,577			—				—				—				—				—				12,768				12,768
Amortization of prior service cost for supplemental retirement plan, net of tax effects of $939			—				—				—				—				—				1,822				1,822
Balance at September 30, 2009		$	—			$	—			$	7,843,100			$	—			$	—			$	(395,800	)		$	7,447,300

See accompanying notes to financial statements.

 

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VERSAILLES FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (UNAUDITED)

Three months ended September 30, 2010 and 2009

 

		Common Stock				Additional Paid-In Capital				Retained Earnings				Treasury Stock				Unearned ESOP Shares				Accumulated Other Comprehensive Income (Loss)				Total
Balance, July 1, 2010		$	4,275			$	3,813,656			$	7,954,578			$	(354,600	)		$	(333,450	)		$	(500,142	)		$	10,584,317
Net income for the period ended September 30, 2010			—				—				44,598				—				—				—				44,598
Commitment to release 427 employee stock ownership plan shares			—				—				—				—				4,270				—				4,270
Change in net unrealized gain on securities available for sale, net of tax effects of $510			—				—				—				—				—				993				993
Amortization of prior service cost for supplemental retirement plan, net of tax effects of $939			—				—				—				—				—				1,822				1,822
Balance, September 30, 2010		$	4,275			$	3,813,656			$	7,999,176			$	(354,600	)		$	(329,180	)		$	(497,327	)		$	10,636,000

See accompanying notes to financial statements.

 

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VERSAILLES FINANCIAL CORPORATION

CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)

Three months ended September 30, 2010 and 2009

 

		Three months ended September 30,
		2010				2009
Cash flows from operating activities
Net income		$	44,598			$	54,069
Adjustments to reconcile net income to net cash provided from operating activities
Depreciation on premises and equipment			1,855				1,750
Net (discount)/premium accretion on securities and interest bearing time deposits			65				43
Loss (gain) on sale or disposal of premises and equipment			—				209
Loss on sale of other real estate owned			2,294				—
Compensation expense related to ESOP shares			4,270				—
Change in:
Deferred loan costs			(480	)			(290	)
Accrued interest receivable			(2,243	)			6,088
Other assets			41,639				(224,380	)
Other liabilities			57,973				(12,572	)
Net cash from operating activities			149,971				(175,083	)
Cash flow from investing activities
Maturities, repayments and calls of securities held to maturity			78,063				74,429
Proceeds from sales of securities available for sale			—				—
Loan originations and payments, net			(689,805	)			(1,297,668	)
Proceeds from sale of other real estate owned			117,706				—
Property and equipment purchases			(6,001	)			(6,271	)
Net cash from investing activities			(500,037	)			(1,229,510	)
Cash flow from financing activities
Net change in deposits			(109,992	)			(224,801	)
Proceeds from FHLB advances			—				1,000,000
Repayments of FHLB advances			(1,500,000	)			—
Net cash from financing activities			(1,609,992	)			775,199
Net change in cash and cash equivalents			(1,960,058	)			(629,394	)
Cash and cash equivalents, beginning of period			4,872,815				2,508,727
Cash and cash equivalents at end of period		$	2,912,757			$	1,879,333
Cash paid during the year for
Interest		$	170,217			$	212,650
Income taxes			—				12,497

See accompanying notes to financial statements.

 

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VERSAILLES FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Quarter ended September 30, 2010

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation : The accompanying unaudited consolidated financial statements include the accounts of Versailles Financial Corporation (“Versailles”) and its wholly owned subsidiary, Versailles Savings and Loan Company (“Association”). Versailles and its subsidiary are collectively referred to as the (“Company”). All material intercompany transactions have been eliminated. The accompanying unaudited consolidated financial statements of the Company have been prepared in accordance with U.S. generally accepted accounting principles (“GAAP”) for interim financial information and with the instructions to Form 10-Q and Rule 301 of Regulations S-X. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.

In the opinion of management, the accompanying unaudited financial statements contain all adjustments (consisting only of normal recurring accruals) necessary to present fairly the Company’s financial position as of September 30, 2010 and the results of operations and cash flows for the three months ended September 30, 2010 and 2009. All interim amounts have not been audited, and the results of operations for the interim periods herein are not necessarily indicative of the results of operations to be expected for the year. These financial statements should be read in conjunction with the Company’s audited financial statements and notes thereto filed as part of Versailles Financial Corporation’s Annual report dated September 28 2010, as filed with the Securities and Exchange Commission pursuant to Securities Act Rule 424(b)(3) on September 28, 2010.

Earnings Per Common Share : Basic earnings per common share is net income divided by the weighted average number of common shares outstanding during the period. ESOP shares are considered outstanding for this calculation unless unearned. Versailles had no potential common shares issuable under stock options or other agreements for the periods presented.

The Association converted from mutual to stock ownership with the concurrent formation of a holding company on January 8, 2010. Accordingly, no earnings per share is shown for the three months ended September 30, 2009, as prior to January 8, 2010, the Association was a mutual company. The weighted average number of shares outstanding for basic earnings per common share was 394,372 for the three months ended September 30, 2010.

Versailles established a Rabbi Trust and participants in the Association’s deferred compensation and supplemental retirement plans could elect to use all or some of the amounts in their accounts to purchase shares in the Company’s mutual to stock conversion. These shares are held in the trust and the obligation under the deferred compensation and supplemental retirement plans will be settled with these shares. As such, the shares are carried as treasury stock in the consolidated balance sheet and the shares are considered outstanding for the purpose of calculating earnings per share.

 

(Continued)

 

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VERSAILLES FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Quarter ended September 30, 2010

 

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)

 

Employee Stock Ownership Plan : The cost of shares issued to the Employee Stock Ownership Plan (“ESOP”), but not yet allocated to participants, is shown as a reduction of shareholders’ equity. Compensation expense is based on the market price of shares as they are committed to be released to participant accounts. Dividends on allocated ESOP shares reduce retained earnings; dividends on unearned ESOP shares reduce debt and accrued interest. Participants may exercise a put option and require the Corporation to repurchase their ESOP shares upon termination. As a result, an amount of equity equal to the fair value of the allocated shares will be reclassified out of shareholders’ equity. As of September 30, 2010 there are no allocated shares related to the ESOP plan. Compensation expense related to the plan was $4,270 for the three months ended September 30, 2010.

Reclassifications : Some items in prior financial statements have been reclassified to conform to the current presentation.

Adoption of New Accounting Standards:

In June 2009, the FASB amended previous guidance relating to transfers of financial assets and eliminates the concept of a qualifying special purpose entity. This guidance must be applied as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period and for interim and annual reporting periods thereafter. This guidance must be applied to transfers occurring on or after the effective date. Additionally, on and after the effective date, the concept of a qualifying special-purpose entity is no longer relevant for accounting purposes. Therefore, formerly qualifying special-purpose entities should be evaluated for consolidation by reporting entities on and after the effective date in accordance with the applicable consolidation guidance. The disclosure provisions were also amended and apply to transfers that occurred both before and after the effective date of this guidance. The impact of adopting this accounting standard was not material to the Company’s financial statements.

In June 2009, the FASB amended guidance for consolidation of variable interest entity guidance by replacing the quantitative-based risks and rewards calculation for determining which enterprise, if any, has a controlling financial interest in a variable interest entity with an approach focused on identifying which enterprise has the power to direct the activities of a variable interest entity that most significantly impact the entity’s economic performance and (1) the obligation to absorb losses of the entity or (2) the right to receive benefits from the entity. Additional disclosures about an enterprise’s involvement in variable interest entities are also required. This guidance is effective as of the beginning of each reporting entity’s first annual reporting period that begins after November 15, 2009, for interim periods within that first annual reporting period, and for interim and annual reporting periods thereafter. Early adoption is prohibited. The impact of adopting this accounting standard was not material to the Company’s financial statements.

 

(Continued)

 

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VERSAILLES FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Quarter ended September 30, 2010

 

NOTE 2 – SECURITIES

The amortized cost and fair value of available for sale securities and the related gross unrealized gains and losses recognized in accumulated other comprehensive income (loss) were as follows.

 

		September 30, 2010
		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
AMF Short US Government Fund		$	694,034			$	15,038			$	—			$	709,072
		June 30, 2010
		Amortized Cost				Gross Unrealized Gains				Gross Unrealized Losses				Fair Value
AMF Short US Government Fund		$	694,034			$	13,535			$	—			$	707,569

There were no sales of available for securities during the three months ending September 30, 2010 or 2009.

 

(Continued)

 

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VERSAILLES FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Quarter ended September 30, 2010

 

NOTE 2 – SECURITIES (Continued)

 

The carrying amount, unrecognized gains and losses, and fair value of securities held to maturity were as follows.

 

		September 30, 2010
		Carrying Amount				Gross Unrecognized Gains				Gross Unrecognized Losses				Fair Value
Government sponsored entities residential mortgage-backed:
FHLMC			364,743				14,082				—				378,825
GNMA			99,246				3,293				—				102,539
FNMA			361,368				21,716				—				383,084
		$	825,357			$	39,091			$	—			$	864,448
		June 30, 2010
		Carrying Amount				Gross Unrecognized Gains				Gross Unrecognized Losses				Fair Value
Government sponsored entities residential mortgage-backed:
FHLMC			405,452				13,894				—				419,346
GNMA			100,754				2,758				—				103,512
FNMA			397,279				25,973				—				423,252
		$	903,485			$	42,625			$	—			$	946,110

At September 30, 2010, the Company had no securities due at a single maturity date. Additionally, the Company had no securities at September 30, 2010 or June 30, 2010 in an unrealized loss position.

 

(Continued)

 

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VERSAILLES FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Quarter ended September 30, 2010

 

NOTE 3 – LOANS

Loans at September 30, 2010 and June 30, 2010 were as follows:

 

		September 30, 2010				June 30, 2010
Mortgage loans (principally conventional):
1-4 family real estate		$	27,857,626			$	27,555,970
Multi-family			266,153				188,607
Construction			430,037				171,391
Nonresidential real estate			7,161,571				7,254,207
			35,715,387				35,170,175
Deferred loan costs			55,407				54,927
Total mortgage loans			35,770,794				35,225,102
Commercial loans			463,228				473,419
Consumer loans:
Loans on deposits			109,473				93,024
Other consumer loans			1,260,506				1,122,171
Total consumer loans			1,369,979				1,215,195
Allowance for loan losses			(190,817	)			(190,817	)
		$	37,413,184			$	36,722,899

Activity in the allowance for loan losses was as follows for the three months ended September 30, 2010 and 2009.

 

		Three Months Ended September 30,
		2010				2009
Beginning balance, July 1		$	190,817			$	264,451
Provision for loan losses			—				—
Loans charged-off			—				—
Recoveries			—				—
Ending balance, September 30		$	190,817			$	264,451

 

(Continued)

 

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VERSAILLES FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Quarter ended September 30, 2010

 

NOTE 3 – LOANS (Continued)

 

Individually impaired loans were as follows.

 

		At September 30, 2010				At June 30, 2010
End of period loans with no allocated allowance for loan losses		$	90,181			$	90,181
End of period loans with allocated allowance for loan losses			—				—
Total		$	90,181			$	90,181
Amount of the allowance for loan losses allocated		$	—			$	—
		Three Months Ended September 30,
		2010				2009
Average of impaired loans during the period		$	90,181			$	300,254
Interest income recognized during impairment			—				1,273
Cash-basis interest income recognized			—				1,273

Nonperforming loans were as follows at period end.

 

		At September 30, 2010				At June 30, 2010
Loans past due over 90 days still accruing interest		$	—			$	—
Nonaccrual loans			93,878				90,181
Nonperforming loans to total loans			0.25	%			0.24	%
Allowance for loan losses to total nonperforming loans			203.26	%			211.59	%

Nonperforming loans includes both smaller balance homogeneous loans that are collectively evaluated for impairment and individually classified impaired loans.

 

(Continued)

 

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VERSAILLES FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Quarter ended September 30, 2010

 

NOTE 4 – FAIR VALUE

Fair value is the exchange price that would be received for an asset or paid to transfer a liability (exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. There are three levels of inputs that may be used to measure fair values:

Level 1: Quoted prices (unadjusted) for identical assets or liabilities in active markets that the entity has the ability to access as of the measurement date.

Level 2: Significant other observable inputs other than Level 1 prices such as quoted prices for similar assets or liabilities; quoted prices in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.

Level 3: Significant unobservable inputs that reflect a reporting entity’s own assumptions about the assumptions that market participants would use in pricing an asset or liability.

The fair values of securities available for sale are determined by obtaining quoted prices on nationally recognized securities exchanges (Level 1 inputs) or matrix pricing, which is a mathematical technique widely used to in the industry to value debt securities without relying exclusively on quoted prices for the specific securities but rather by relying on the securities’ relationship to other benchmark quoted securities (Level 2 inputs).

The fair value of impaired loans with specific allocations of the allowance for loan losses is generally based on recent real estate appraisals. These appraisals may utilize a single valuation approach or a combination of approaches including comparable sales and the income approach. Adjustments are routinely made in the appraisal process by the appraisers to adjust for differences between the comparable sales and income data available. Such adjustments are typically significant and result in a Level 3 classification of the inputs for determining fair value.

Assets and Liabilities Measured on a Recurring Basis :

Assets and liabilities measured at fair value on a recurring basis are summarized below.

 

		Fair Value Measurements at September 30, 2010 Using
		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Assets:
AMF Short US Government Fund		$	709,072			$	—			$	—

 

(Continued)

 

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VERSAILLES FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Quarter ended September 30, 2010

 

NOTE 4 – FAIR VALUE MEASUREMENT (Continued)

 

		Fair Value Measurements at June 30, 2010 Using
		Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Assets:
AMF Short US Government Fund		$	707,569			$	—			$	—

There were no assets or liabilities measured at fair value on a non-recurring basis at September 30, 2010 or June 30, 2010.

The carrying amount and estimated fair values of financial instruments were as follows at period-end.

 

		September 30, 2010								June 30, 2010
		Carrying Amount				Fair Value				Carrying Amount				Fair Value
Financial assets:
Cash and cash equivalents		$	2,912,757			$	2,912,757			$	4,872,815			$	4,872,815
Interest bearing time deposits in other financial institutions			486,000				486,000				486,000				486,000
Securities available for sale			709,072				709,072				707,569				707,569
Securities held to maturity			825,357				864,448				903,485				946,110
Net loans			37,413,184				39,900,000				36,722,899				39,161,000
FHLB stock			397,500				N/A				397,500				N/A
Accrued interest receivable			137,132				137,132				134,889				134,889
Financial liabilities:
Deposits			(25,826,699	)			(26,159,000	)			(25,936,691	)			(26,280,000	)
FHLB advances			(6,000,000	)			(6,321,000	)			(7,500,000	)			(7,903,000	)
Accrued interest payable			(60,487	)			(60,487	)			(71,994	)			(71,994	)

 

(Continued)

 

13.

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Table of Contents

VERSAILLES FINANCIAL CORPORATION

NOTES TO FINANCIAL STATEMENTS (UNAUDITED)

Quarter ended September 30, 2010

 

NOTE 4 – FAIR VALUE MEASUREMENT (Continued)

 

Carrying amount is the estimated fair value for cash and cash equivalents, interest bearing time deposits in other financial institutions, accrued interest receivable and payable, savings accounts and variable rate loans or deposits that reprice frequent and fully. Securities held to maturity are based on matrix pricing which is a mathematical technique to value debt securities through the securities’ relationship to other benchmark quoted securities. For fixed rate loans or deposits and for variable rate loans or deposits with infrequent repricing or repricing limits and interest bearing deposits, fair value is based on discounted cash flows using current market rates applied to the estimated life and credit risk. Fair value of Federal Home Loan Bank advances is based upon current rates for similar financing. It was not practical to determine fair value of FHLB stock due to restrictions placed on its transferability. The fair value of off-balance-sheet items is based on the current fees or cost that would be charged to enter into or terminate such arrangements.

 

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Table of Contents

VERSAILLES FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

and Results of Operations

 

ITEM 2 – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

We have historically operated as a traditional thrift institution. A significant majority of our assets consist of long-term, one- to four-family fixed-rate residential mortgage loans and mortgage-backed securities, which we have funded primarily with deposit accounts and Federal Home Loan Bank of Cincinnati advances. Our results of operations depend primarily on our net interest income. Net interest income is the difference between the interest income we earn on our interest-earning assets, consisting primarily of loans, investment securities (including U.S. Government agencies, AMF Short U.S. Government Fund and Government sponsored entities residential mortgage-backed securities) and other interest-earning assets, primarily interest-earning deposits at other financial institutions, and the interest paid on our interest-bearing liabilities, consisting primarily of savings accounts, certificates of deposit, and Federal Home Loan Bank of Cincinnati advances. Our results of operations also are affected by our provisions for loan losses, noninterest income and noninterest expense. Noninterest income currently consists primarily of service charges on deposit accounts and other income, gains or losses on the sale of available for sale securities and other-than-temporary impairment losses on securities. Noninterest expense currently consists primarily of salaries and employee benefits, occupancy and equipment expenses, data processing, franchise taxes, legal, accounting and exam fees, federal deposit insurance premiums and other operating expenses. Our results of operations also may be affected significantly by general and local economic and competitive conditions, changes in market interest rates, governmental policies and actions of regulatory authorities.

Forward-Looking Statements

This report contains forward-looking statements, which can be identified by the use of words such as “estimate,” “project,” “believe,” “intend,” “anticipate,” “plan,” “seek,” “expect,” “will,” “may” and words of similar meaning. These forward-looking statements include, but are not limited to:

 

•

Statements of our goals, intentions and expectations;

 

•

Statements regarding our business plans, prospects, growth and operating strategies;

 

•

Statements regarding the asset quality of our loan and investment portfolios; and

 

•

Estimates of our risks and future costs and benefits.

These forward-looking statements are based on our current beliefs and expectations and are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of which are beyond our control. In addition, these forward-looking statements are subject to assumptions with respect to future business strategies and decisions that are subject to change. We are under no duty to and do not take any obligation to update any forward-looking statements after the date of this report.

 

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VERSAILLES FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

and Results of Operations

 

 

The following factors, among others, could cause actual results to differ materially from the anticipated results or other expectations expressed in the forward-looking statements:

 

•

General economic conditions, either nationally or in our market area, that are worse than expected;

 

•

Our ability to successfully implement our plan to increase our non residential lending without significant decrease in asset quality;

 

•

Our success in building our new home office on a cost effective basis;

 

•

Our ability to offer new deposit products on a cost effective basis and develop and gather core deposits;

 

•

Our ability to manage our costs as a public company;

 

•

Our reliance on a small executive staff;

 

•

Competition among depository and other financial institutions;

 

•

Inflation and changes in the interest rate environment that reduce our margins or reduce the fair value of financial instruments;

 

•

Adverse changes in the securities markets;

 

•

Changes in laws or government regulations or policies affecting financial institutions, including changes in regulatory fees and capital requirements, additional consumer protection requirements and changes in the identity of our government regulators;

 

•

Our ability to enter new markets successfully and capitalize on growth opportunities;

 

•

Our ability to successfully integrate acquired entities, if any;

 

•

Changes in consumer spending, borrowing and savings habits;

 

•

Decrease in asset quality;

 

•

Future deposit insurance premium levels and special assessments;

 

•

Future compliance costs;

 

•

Changes in accounting policies and practices, as may be adopted by the bank regulatory agencies, the Financial Accounting Standards Board, the Securities and Exchange Commission and the Public Company Accounting Oversight Board;

 

•

Changes in our organization, compensation and benefit plans;

 

•

Changes in our financial condition or results of operations that reduce capital available to pay dividends; and

 

•

Changes in the financial condition or future prospects of issuers of securities that we own.

Because of these and a wide variety of other uncertainties, our actual future results may be materially different from the results indicated by these forward-looking statements.

 

(Continued)

 

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Table of Contents

VERSAILLES FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

and Results of Operations

 

 

Comparison of Financial Condition at September 30, 2010 and June 30, 2010

General . Our total assets decreased to $43.7 million at September 30, 2010 from $45.2 million at June 30, 2010. Cash and cash equivalents decreased $2.0 million, or 40.2%, to $2.9 million at September 30, 2010 from $4.9 million at June 30, 2010. This decrease was partially offset by an increase in net loans of $0.7 million, or 1.9%, to $37.4 million at September 30, 2010 from $36.7 million at June 30, 2010.

Loans . The increase in net loans reflected a continued demand for loans in our market area in a low interest rate environment. The growth in our loan portfolio during the three months ended September 30, 2010 was in one- to four-family residential real estate, including one- to four-family residential construction loans, which increased $0.6 million, or 2.0%, to $28.3 million at September 30, 2010 from $27.7 million at June 30, 2010. Non-mortgage loans increased $0.1 million, or 8.6%, to $1.8 million at September 30, 2010 from $1.7 million at June 30, 2010.

Investments . Investment securities decreased to $1.5 million at September 30, 2010 from $1.6 million at June 30, 2010. Net pay-downs in government sponsored mortgage-backed securities represented the $0.1 million decrease.

Cash and cash equivalents . Cash and cash equivalents decreased $2.0 million, or 40.2%, to $2.9 million at September 30, 2010 from $4.9 million at June 30, 2010. The decrease in cash and cash equivalents was due to utilization of the funds to satisfy two Federal Home Loan Bank advances that matured and to finance new lending.

Premises and equipment. The balance in premises and equipment increased to $179,000 at September 30, 2010 from $175,000 at June 30, 2010 due to the purchase of new equipment.

Other real estate owned. Other real estate owned decreased $120,000, or 75.0%, to $40,000 at September 30, 2010 from $160,000 at June 30, 2010 due to the sale of bank-owned property. The remaining $40,000 represents a single family home listed for sale in our local market area.

Deposits . Deposits decreased $0.1 million, or 0.4%, to $25.8 million at September 30, 2010 from $25.9 million at June 30, 2010. The minimal decrease reflects normal fluctuations in customer account balances.

Borrowings . Federal Home Loan Bank of Cincinnati advances decreased $1.5 million, or 20%, to $6.0 million at September 30, 2010 from $7.5 million at June 30, 2010. A $0.5 million advance with a rate of 5.93% matured in August and a $1.0 million advance with a rate of 6.27% matured in September. We continue to utilize borrowings as an alternative funding source. Our borrowings from the Federal Home Loan Bank of Cincinnati consist of advances with laddered terms of up to seven years. Subsequent to September 30, 2010, an additional $1.0 million advance with a rate of 1.14% for four years was acquired to satisfy a maturing $1.0 million advance with a rate of 5.79%.

 

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VERSAILLES FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

and Results of Operations

 

 

Equity . Total equity increased $52,000, or 0.5%, to $10,636,000 at September 30, 2010 from $10,584,000 at June 30, 2010. The change in equity is primarily a result of net income for the period and the allocation of unearned ESOP shares.

Comparison of Results of Operations for the Three Months Ended September 30, 2010 and the Three Months Ended September 30, 2009.

General . Net income decreased $9,000, or 17.5%, to $45,000 for the three months ended September 30, 2010 from $54,000 for the three months ended September 30, 2009. The decrease reflects additional expenses incurred as a result of our status as a publicly held corporation.

Net Interest Income. Net interest income represents the difference between the income we earn on interest-earning assets and the interest expense we pay on interest-bearing liabilities. Net interest income also depends upon the relative amounts of interest-earning assets and interest-bearing liabilities and the interest rates earned or paid on them. Net interest income increased $59,000, or 19.3%, to $365,000 for the three months ended September 30, 2010 from $306,000 for the three months ended September 30, 2009. This reflected an increase in our interest rate spread to 2.95% from 2.58% while our net interest margin increased to 3.41% from 3.07%. Our average interest earning assets to average interest bearing liabilities increased to 130.77% from 123.66%. Our net interest spread increased due to both a reduction in the average rate for advances combined with other interest bearing liabilities that repriced faster than interest earning assets in the current low interest rate environment.

Interest Income . Interest and dividend income increased $13,000, or 2.5%, to $524,000 for the three months ended September 30, 2010 from $511,000 for the three months ended September 30, 2009. The increase reflected an increase in average interest-earning assets to $42.9 million for the three months ended September 30, 2010 compared to $40.0 million for the three months ended September 30, 2009, offset by a decrease in the average yield on interest earning assets to 4.89% for the three months ended September 30, 2010 from 5.12% for the three months ended September 30, 2009.

Interest income on loans increased $21,000, or 4.3%, to $502,000 for the three months ended September 30, 2010 from $481,000 for the three months ended September 30, 2009, reflecting an increase in the average balance of loans to $37.4 million from $35.1 million, which was partially offset by lower average yields on such balances, to 5.37% for the three months ended September 30, 2010 from 5.44% for the three months ended September 30, 2009.

Interest income on investment securities decreased $6,000, or 35.5%, to $12,000 for the three months ended September 30, 2010 from $18,000 for the three months ended September 30, 2009, reflecting a decrease in the average balance of such securities to $1.6 million for the three months ended September 30, 2010 from $2.0 million for the three months ended September 30, 2009, as well as a decrease in the average yield on available for sale securities to 2.52% from 3.70% and a decrease in the average yield on held to maturity securities to 3.44% from 3.66%.

 

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VERSAILLES FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

and Results of Operations

 

 

Interest Expense . Interest expense decreased $46,000, or 22.6%, to $159,000 for the three months ended September 30, 2010 from $205,000 for the three months ended September 30, 2009. The decrease reflected a decrease in the average rate paid on deposits, including certificates of deposit and Federal Home Loan Bank of Cincinnati borrowings in the three months ended September 30, 2010 compared to the three months ended September 30, 2009, which more than offset the increase in the average balance of such deposits and borrowings.

Interest expense on certificates of deposit decreased to $82,000 for the three months ended September 30, 2010 from $109,000 for the three months ended September 30, 2009. The decrease in interest expense resulted from the average cost of such certificates dropping to 1.84% for the three months ended September 30, 2010 from 2.56% for the three months ended September 30, 2009. This decrease was partially offset by the average balance of such certificates increasing $0.6 million, or 3.9%, to $17.7 million for the three months ended September 30, 2010 from $17.1 million for September 30, 2009.

Interest expense on borrowings, consisting of advances from the Federal Home Loan Bank of Cincinnati, decreased $20,000, or 20.8%, to $74,000 for the three months ended September 30, 2010 from $94,000 for the three months ended September 30, 2009. The average balance of such borrowings decreased to $6.8 million for the three months ended September 30, 2010 from $7.8 million for the three months ended September 30, 2009. In addition, the decrease reflected the lower weighted average rate paid on such borrowings to 4.35% for the three months ended September 30, 2010 from 4.79% for the three months ended September 30, 2009.

The following tables set forth average balance sheets, average yields and costs, and certain other information for the three months ended September 30, 2010 and 2009. All average balances are monthly average balances. Non-accrual loans were included in the computation of average balances, but have been reflected in the tables as loans carrying a zero yield. The yields set forth below include the effect of deferred fees, discounts and premiums that are amortized or accreted to interest income.

 

(Continued)

 

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VERSAILLES FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

and Results of Operations

 

		(Dollars in thousands)
		Three months ended 09-30-2010												Three months ended 09-30-2009
		Average Balance				Interest and Dividends				Yield/Cost				Average Balance				Interest and Dividends				Yield/Cost
Assets:
Interest-earning assets:
Loans		$	37,400			$	502				5.37	%		$	35,401			$	481				5.44	%
Investment securities available for sale			709				4				2.52	%			912				8				3.70	%
Investment securities held to maturity			850				7				3.44	%			1,074				10				3.66	%
FHLB stock			398				5				4.49	%			389				5				4.99	%
Other interest-earning assets			3,502				6				0.63	%			2,190				7				1.28	%
Total interest-earning assets			42,859				524				4.89	%			39,966				511				5.12	%
Allowance for loan losses			(191	)											(265	)
Noninterest-earning assets			1,922												1,340
Total assets		$	44,590											$	41,041
Liabilities and equity:
Interest-bearing liabilities:
Savings deposits		$	8,204			$	3				0.14	%		$	7,405			$	2				0.13	%
Certificates of deposit			17,725				82				1.84	%			17,067				109				2.56	%
Total interest-bearing deposits			25,929				85				1.30	%			24,472				111				1.82	%
FHLB advances			6,833				74				4.35	%			7,833				94				4.79	%
Total interest-bearing liabilities			32,762				159				1.94	%			32,305				205				2.54	%
Other noninterest-bearing liabilities			1,204												1,311
Total liabilities			33,966												33,616
Total shareholders’ equity			10,624												7,425
Total liabilities and equity		$	44,590											$	41,041
Net interest income						$	365											$	306
Interest rate spread											2.95	%											2.58	%
Net interest margin											3.41	%											3.07	%
Average interest-earning assets to average interest-bearing liabilities			130.77	%											123.66	%

 

(Continued)

 

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Table of Contents

VERSAILLES FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

and Results of Operations

 

Provision for Loan Losses . We establish a provision for loan losses, which is charged to operations, in order to maintain the allowance for loan losses at a level we consider necessary to absorb credit losses incurred in the loan portfolio that are both probable and reasonably estimable at the balance sheet date. In determining the level of the allowance for loan losses, we consider past and current loss experience, evaluations of real estate collateral, current economic conditions, volume and type of lending, adverse situations that may affect a borrower’s ability to repay a loan and the levels of nonperforming loans. The amount of the allowance is based on estimates and the ultimate losses may vary from such estimates as more information becomes available or economic conditions change. This evaluation is inherently subjective as it requires estimates that are susceptible to significant revision as circumstances change or as more information becomes available. We assess the allowance for loan losses on a quarterly basis and make provisions for loan losses as required in order to maintain the allowance.

No provision for loan losses was recorded for the three months ended September 30, 2010 and September 30, 2009, respectively. The allowance for loan losses was $190,817, or 0.51% of total loans, at September 30, 2010 and $264,451, or 0.73% of total loans at September 30, 2009. Total nonperforming loans were $94,000 at September 30, 2010 compared to $320,000 at September 30, 2009. To the best of our knowledge, we have recorded all probable incurred credit losses for the period ended September 30, 2010 and September 30, 2009.

Noninterest Income . Our noninterest income was $133 for the three months ended September 30, 2010 compared to $1,241 for the three months ended September 30, 2009. The decrease in the noninterest income is attributed to the net loss on the sale of other real estate owned of $2,294.

Noninterest Expense . Noninterest expense increased $72,000, or 32.0%, to $299,000 for the three months ended September 30, 2010 from $226,000 for the three months ended September 30, 2009. The increase was due to salaries and employee benefits expense increasing to $135,000 for the three months ended September 30, 2010 from $113,000 for the three months ended September 30, 2009. The number of full time equivalent employees was eight in the 2010 period compared to seven in the 2009 period. For the same periods, legal, accounting and exam fees increased $42,000 as a result of the Company becoming subject to the federal securities laws.

Income Tax Expense . The provision for income taxes decreased to $22,000 for the three months ended September 30, 2010, compared to $27,000 for the three months ended September 30, 2009, a decrease of $5,000, or 18.0%, as a result of the decrease in net income before income taxes. The effective tax rate was 33.3% and 33.5%, respectively, for the three months ended September 30, 2010 and 2009.

 

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VERSAILLES FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

and Results of Operations

 

Liquidity and Capital Resources

Our primary sources of funds are deposits and the proceeds from principal and interest payments on loans and investment securities. We also utilize Federal Home Loan Bank advances. While maturities and scheduled amortization of loans and securities are predicable sources of funds, deposit flows and mortgage prepayments are greatly influenced by general interest rates, economic conditions and competition. We generally manage the pricing of our deposits to be competitive within our market and to increase core deposit relationships.

Our cash flows are comprised of three primary classifications: (i) cash flows provided by operating activities, (ii) investing activities, and (iii) financing activities. Net cash flows from operating activities were $149,971 for the three months ended September 30, 2010 and $(175,083) for the three months ended September 30, 2009.

Net cash from investing activities consisted primarily of disbursements for loan originations, offset by principal collections on loans, and proceeds from maturation and sales of securities. Net cash flows used in investing activities were $(500,037) for the three months ended September 30, 2010 and net cash flows used in investing activities were $(1,229,510) for the three months ended September 30, 2009. Net cash from financing activities consisted of activity in deposits and borrowings. Net cash flows used in financing activities were $(1,609,992) for the three months ended September 30, 2010 and net cash flows from financing activities were $775,199 for the three months ended September 30, 2009. The changes in net cash flows provided by and used for financing activities over the periods were primarily due to the proceeds from and repayments of FHLB advances.

Our most liquid assets are cash and short-term investments. The levels of these assets are dependent on our operating, financing, lending, and investing activities during any given period. At September 30, 2010 and June 30, 2010, cash and short-term investments totaled $2.9 million and $4.9 million, respectively. We may also utilize the sale of securities available-for-sale, federal funds purchased, Federal Home Loan Bank of Cincinnati advances and other borrowings as sources of funds.

At September 30, 2010 and June 30, 2010, we had outstanding commitments to originate loans of $512,000 and $436,000, respectively, and unfunded commitments under lines of credit of $7,500 and $7,500, respectively. We also had unfunded commitments for residential construction loans totaling $443,000 and $351,000, respectively, at September 30, 2010 and June 30, 2010. We anticipate that we will have sufficient funds available to meet our current loan commitments. Loan commitments have, in recent periods, been funded through liquidity and normal deposit flows. Certificates of deposit scheduled to mature in one year or less from September 30, 2010 totaled $10.2 million. Management believes, based on past experience, that a significant portion of such deposits will remain with us. Based on the foregoing, in addition to our level of core deposits and capital, we consider our liquidity and capital resources sufficient to meet our outstanding short-term and long-term needs.

 

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Table of Contents

VERSAILLES FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

and Results of Operations

 

Liquidity management is both a daily and long-term responsibility of management. We adjust our investments in liquid assets based upon management’s assessment of (i) expected loan demand, (ii) expected deposit flows, (iii) yields available on interest-earning deposits and investment securities, and (iv) the objectives of our asset/liability management program. Excess liquid assets are invested generally in interest-earning overnight deposits, federal funds sold, and short and intermediate-term U.S. Government and agency obligations and residential mortgage-backed securities of short duration. If we require funds beyond our ability to generate them internally, we have additional borrowing capacity with the Federal Home Loan Bank of Cincinnati. At September 30, 2010, we had $6.0 million in advances from the Federal Home Loan Bank of Cincinnati and an additional borrowing capacity of $10.5 million.

We are subject to various regulatory capital requirements. At September 30, 2010 and June 30, 2010, we were in compliance with all applicable capital requirements.

 

		Actual								To Be Well Capitalized Under Prompt Corrective Action Regulations
		Amount				Ratio				Amount				Ratio
		(Dollars in thousands)
September 30, 2010
Total capital (to risk-weighted assets)		$	9,650				37.5	%		$	2,574				10.0	%
Tier I (core) capital (to risk-weighted assets)			9,460				36.8				1,544				6.0
Tier I (core) capital (to adjusted total assets)			9,460				21.7				2,181				5.0
Tangible capital (to adjusted total assets)			9,460				21.7								N/A
June 30, 2010
Total capital (to risk-weighted assets)		$	9,570				35.5	%		$	2,694				10.0	%
Tier I (core) capital (to risk-weighted assets)			9,380				34.8				1,616				6.0
Tier I (core) capital (to adjusted total assets)			9,380				20.6				2,280				5.0
Tangible capital (to adjusted total assets)			9,380				20.6								N/A

 

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Table of Contents

VERSAILLES FINANCIAL CORPORATION

Management’s Discussion and Analysis of Financial Condition

and Results of Operations

 

ITEM 3 – QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Disclosures of quantitative and qualitative market risk are not required by smaller reporting companies, such as the Company.

ITEM 4 – CONTROLS AND PROCEDURES

We have adopted interim disclosure controls and procedures to facilitate our financial reporting. The interim disclosure controls currently consist of communications between the Chief Executive Officer, the Chief Financial Officer and each department head to identify any new transactions, events, trends or contingencies which may be material to our operations. In addition, our Chief Executive Officer, Chief Financial Officer, Audit Committee and independent registered accountants meet on a quarterly basis and discuss our material accounting policies. Our Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of these interim disclosure controls as of the end of the period covered by this report and found them to be effective.

During the quarter ended September 30, 2010, there have been no changes in the Company’s internal control over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

 

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24.

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Table of Contents

 

VERSAILLES FINANCIAL CORPORATION

Other Information

PART II – OTHER INFORMATION

Item 1 – Legal Proceedings – The Company is subject to various legal actions that are considered ordinary routine litigation incidental to the business of the Company, and no claim for money damages exceeds ten percent of the Company’s consolidated assets. In the opinion of management, based on currently available information, the resolution of these legal actions is not expected to have a material adverse effect on the Company’s results of operations.

Item 2 – Unregistered Sales of Equity Securities and Use of Proceeds – Not applicable.

Item 3 – Defaults Upon Senior Securities – None.

Item  5 – Other Information – None.

Item 6 – Exhibits

 

Exhibit Number		Document		Reference to Previous Filing, If Applicable
3.1		Articles of Incorporation of Versailles Financial Corporation			*
3.2		Bylaws of Versailles Financial Corporation			*
4		Form of Common Stock Certificate of Versailles Financial Corporation			*
10.1		Employee Stock Ownership Plan			*
10.2		Versailles Savings and Loan Company Deferred Compensation Plan			*
10.3		First Amendment to Versailles Savings and Loan Company Deferred Compensation Plan			*
10.4		Restated 2005 Sub-Plan to Versailles Savings and Loan Company Deferred Compensation Plan			*
10.5		First Amendment to Restated 2005 Sub-Plan to Versailles Savings and Loan Company Deferred Compensation Plan			*

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VERSAILLES FINANCIAL CORPORATION

Other Information

 

10.6		Trust Agreement for Versailles Savings and Loan Company Deferred Compensation Plan and Restated 2005 Sub-Plan to Versailles Savings and Loan Deferred Compensation Plan				*
10.7		Employment Agreement between Versailles Savings and Loan Company and Douglas P. Ahlers, dated January 8, 2010			*	*
10.8		Employment Agreement between Versailles Savings and Loan Company and Cheryl J. Leach, dated January 8, 2010			*	*
31.1		Certification of Chief Executive Officer, Rule 13a-14(a)/15d-14(a)
31.2		Certification of Chief Financial Officer, Rule 13a-14(a)/15d-14(a)
32		Certification of Chief Executive Officer and Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant To Section 906 of the Sarbanes Oxley Act of 2002

 

*	Incorporated by reference to the Company’s Registration Statement on Form S-1 filed on September 17, 2009

**	Incorporated by reference to the Company’s Current Report on Form 8-K filed with the SEC on January 11, 2010

 

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VERSAILLES FINANCIAL CORPORATION

Other Information

 

 

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.

 

				VERSAILLES FINANCIAL CORPORATION
				(Registrant)
Date: November 15, 2010				/ S /    D OUGLAS P. A HLERS
				Douglas P. Ahlers
				President & CEO (Principal Executive Officer)
Date: November 15, 2010				/ S /    C HERYL J. L EACH
				Cheryl J. Leach
				Vice President & Treasurer (Principal Accounting Officer)

 

(Continued)

 

27.