<PAGE> 1
================================================================================
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
--------------- --------------
Commission File Number 0-27522
PRESTIGE BANCORP, INC.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1785128
- ------------------------------- ----------------------
(State or other jurisdiction of (I.R.S.Employer
incorporation or organization) Identification Number)
710 Old Clairton Road
Pleasant Hills, Pennsylvania 15236
- --------------------------------------- ----------
(Address of principal executive office) (Zip Code)
(412) 655-1190
----------------------------------------------------
(Registrant's telephone number, including area code)
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 the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date: As of November 12, 1998, there
were 949,836 shares of the registrant's common stock outstanding, par value
$1.00 per share.
================================================================================
<PAGE> 2
PRESTIGE BANCORP, INC.
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I. FINANCIAL INFORMATION PAGE
- ------- --------------------- ----
<S> <C> <C>
Item 1. Financial Statements
Consolidated Balance Sheets of Prestige Bancorp, Inc. as of
September 30, 1998 (unaudited) and December 31, 1997 1
Consolidated Statements of Income of Prestige Bancorp, Inc. for the three
months ended September 30, 1998 and 1997 (unaudited) 2
Consolidated Statements of Income of Prestige Bancorp, Inc. for the nine
months ended September 30, 1998 and 1997 (unaudited) 3
Consolidated Statements of Stockholders' Equity of Prestige Bancorp, Inc.
for the nine months ended September 30, 1998 and 1997 (unaudited) 4
Consolidated Statements of Cash Flows of Prestige Bancorp, Inc. for the nine
months ended September 30, 1998 and 1997 (unaudited) 5
Notes to Consolidated Financial Statements (unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations 12
PART II. OTHER INFORMATION
- -------- -----------------
Item 1. Legal Proceedings 18
Item 2. Changes in Securities 18
Item 3. Defaults upon Senior Securities 18
Item 4. Submission of Matters to a Vote of Security-Holders 18
Item 5. Other Information 18
Item 6. Exhibits and Reports on Form 8-K 18
SIGNATURES 19
- ----------
</TABLE>
<PAGE> 3
PRESTIGE BANCORP, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
- ------
Cash and due from banks $ 904,578 $ 927,362
Interest-bearing deposits with banks 4,726,274 1,286,099
Investment securities:
Available for sale 6,893,782 11,017,858
Held to maturity (market value $32,406,292 and
$27,870,426, respectively) 32,042,129 27,741,398
Net loans 117,367,477 96,180,961
Federal Home Loan Bank stock, at cost 2,548,900 1,748,900
Premises and equipment, net 2,651,421 2,673,794
Accrued interest receivable 1,351,832 1,033,261
Other assets 1,496,956 653,077
------------- -------------
Total assets $ 169,983,349 $ 143,262,710
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Non-interest-bearing deposits $ 4,986,334 $ 4,000,085
Interest-bearing deposits 97,167,495 87,155,740
------------- -------------
Total deposits 102,153,829 91,155,825
Federal Home Loan Bank advances 50,977,000 34,677,000
Advance payments by borrowers for taxes and insurance 709,606 856,881
Income taxes payable 162,135 178,068
Accrued interest payable 218,124 153,336
Other liabilities 502,860 611,789
------------- -------------
Total liabilities 154,723,554 127,632,899
------------- -------------
Stockholders' Equity:
Preferred stock, $1.00 par value;
5,000,000 shares authorized, none issued -- --
Common stock, $1.00 par value; 10,000,000
shares authorized, 1,100,090 shares issued and
999,826 outstanding; 1,100,090 963,023
Treasury stock at cost, 107,969 shares at September 30, 1998;
55,372 at December 31, 1997 (1,492,020) (775,881)
Additional paid-in-capital 10,720,808 8,033,296
Unearned ESOP shares, 81,610 shares at September 30, 1998;
83,265 at December 31, 1997 (707,500) (724,050)
Retained earnings - substantially restricted 5,687,228 8,064,202
Net unrealized holding gains (losses) on
available for sale securities, net of taxes (48,811) 69,221
------------- -------------
Total stockholders' equity 15,259,795 15,629,811
------------- -------------
Total liabilities and stockholders' equity $ 169,983,349 $ 143,262,710
============= =============
</TABLE>
The accompanying notes are an integral part of these financial statements.
1
<PAGE> 4
PRESTIGE BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
September 30,
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 2,255,981 $ 1,804,706
Interest on mortgage-backed securities 135,718 187,896
Interest and dividends on other investment securities 581,360 451,033
Interest on deposits in other financial institutions 48,624 23,483
----------- -----------
Total interest income 3,021,683 2,467,118
----------- -----------
Interest expense:
Interest on deposits 1,020,171 938,687
Advances from Federal Home Loan Bank 696,374 462,048
----------- -----------
Total interest expense 1,716,545 1,400,735
----------- -----------
Net interest income 1,305,138 1,066,383
Provision for loan losses 42,000 30,000
----------- -----------
Net interest income after provision for loan losses 1,263,138 1,036,383
----------- -----------
Other income:
Fees and service charges 135,024 80,363
Loss on sale of investments (6,311) (3,200)
Gain on sale of assets 2,995 --
Loss on sale of foreclosed real estate (8,500) --
Other income, net 2,775 6,367
----------- -----------
Total other income 125,983 83,530
----------- -----------
Other expenses:
Salaries and employee benefits 502,552 403,344
Premises and occupancy costs 140,645 81,096
Federal deposit insurance premiums 14,469 14,190
Data processing costs 67,179 49,121
Advertising costs 40,724 28,710
Transaction processing costs 63,538 47,467
ATM transaction fees 28,799 24,037
Other expenses 191,146 146,795
----------- -----------
Total other expenses 1,049,052 794,760
----------- -----------
Income before income tax expense 340,069 325,153
Income tax expense 131,740 123,189
----------- -----------
Net income $ 208,329 $ 201,964
=========== ===========
Basic earnings per share:
Net income $ 0.22 $ 0.21
Weighted average number of common shares outstanding 958,313 967,009
Diluted earnings per share:
Net income $ 0.22 $ 0.21
Weighted average number of common shares outstanding 963,872 $ 969,148
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
PRESTIGE BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------
1998 1997
----------- -----------
<S> <C> <C>
Interest income:
Interest and fees on loans $ 6,320,723 $ 4,948,361
Interest on mortgage-backed securities 451,446 594,917
Interest and dividends on other investment securities 1,684,370 1,302,837
Interest on deposits in other financial institutions 154,999 57,196
----------- -----------
Total interest income 8,611,538 6,903,311
----------- -----------
Interest expense:
Interest on deposits 2,912,073 2,700,194
Advances from Federal Home Loan Bank 1,994,501 1,117,438
----------- -----------
Total interest expense 4,906,574 3,817,632
----------- -----------
Net interest income 3,704,964 3,085,679
Provision for loan losses 122,000 74,000
----------- -----------
Net interest income after provision for loan losses 3,582,964 3,011,679
----------- -----------
Other income:
Fees and service charges 351,578 232,751
Loss on sale of investments (13,511) (3,200)
Gain on sale of assets 26,250 --
Loss on sale of foreclosed real estate (8,500) --
Other income, net 14,596 23,333
----------- -----------
Total other income 370,413 252,884
----------- -----------
Other expenses:
Salaries and employee benefits 1,517,429 1,131,128
Premises and occupancy costs 388,248 238,879
Federal deposit insurance premiums 43,374 42,108
Data processing costs 194,989 148,471
Advertising costs 92,302 76,975
Transaction processing costs 185,690 140,868
ATM transaction fees 79,984 69,019
Other expenses 538,915 401,588
----------- -----------
Total other expenses 3,040,931 2,249,036
----------- -----------
Income before income tax expense 912,446 1,015,527
Income tax expense 355,804 384,849
----------- -----------
Net income $ 556,642 $ 630,678
=========== ===========
Basic earnings per share:
Net income $ 0.58 $ 0.64
Weighted average number of common shares outstanding 965,648 983,751
Diluted earnings per share:
Net income $ 0.57 $ 0.64
Weighted average number of common shares outstanding 977,690 984,506
</TABLE>
The accompanying notes are an integral part of these financial statements.
3
<PAGE> 6
<TABLE>
PRESTIGE BANCORP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(Unaudited)
<CAPTION>
Additional Unearned
Common Paid-In Treasury ESOP
Stock Capital Stock Shares
---------- ----------- ------------ ----------
<S> <C> <C> <C> <C>
Balance, December 31, 1997 $ 963,023 $ 8,033,296 ($ 775,881) ($724,050)
Net income
Allocation of 1,903 ESOP shares 38,556 16,550
Decrease in net unrealized holding gains on
available for sale securities, net of taxes
Cash dividends declared:
Common stock ( $0.10 per share on 914,873
shares; $.05 per share on 1,052,423 shares)
Stock dividend declared:
Common stock ( 15% per share on 914,873
shares) 137,067 2,648,956
Cash in lieu of stock
Treasury stock purchases, 52,597 shares (716,139)
---------- ----------- ----------- ---------
Balance, September 30, 1998 $1,100,090 $10,720,808 ($1,492,020) ($707,500)
========== =========== =========== =========
Balance, December 31, 1996 $ 963,023 $ 8,000,176 $ -- ($755,490)
Net income
Allocation of 1,776 ESOP shares 21,760 15,450
Increase in net unrealized losses on
available for sale securities, net of taxes
Cash dividends declared:
Common stock ( $0.03 per share on 963,023
shares;$0.06 per share on 914,873)
Treasury stock purchases, 48,150 shares (775,881)
---------- ----------- ----------- ---------
Balance, September 30, 1997 $ 963,023 $ 8,021,936 ($ 775,881) ($740,040)
========== =========== =========== =========
Net Unrealized
Holding Gains
(Losses) on
Available for Sale
Retained Securities,
Earnings Net of Taxes Total
----------- ------------------- -------------
<S> <C> <C> <C>
Balance, December 31, 1997 $ 8,064,202 $ 69,221 $ 15,629,811
Net income 556,642 556,642
Allocation of 1,903 ESOP shares 55,106
Decrease in net unrealized holding gains on
available for sale securities, net of taxes (118,032) (118,032)
Cash dividends declared:
Common stock ( $0.10 per share on 914,873
shares; $.05 per share on 1,052,423 shares) (144,109) (144,109)
Stock dividend declared:
Common stock ( 15% per share on 914,873
shares) (2,786,023) --
Cash in lieu of stock (3,484) (3,484)
Treasury stock purchases, 52,597 shares (716,139)
----------- --------- ------------
Balance, September 30, 1998 $ 5,687,228 ($ 48,811) $ 15,259,795
=========== ========= ============
Balance, December 31, 1996 $ 7,390,945 ($168,454) $ 15,430,200
Net income 630,678 630,678
Allocation of 1,776 ESOP shares 37,210
Increase in net unrealized losses on
available for sale securities, net of taxes 206,133 206,133
Cash dividends declared:
Common stock ( $0.03 per share on 963,023
shares;$0.06 per share on 914,873) (83,784) (83,784)
Treasury stock purchases, 48,150 shares (775,881)
----------- --------- ------------
Balance, September 30, 1997 $ 7,937,839 $ 37,679 $ 15,444,556
=========== ========= ============
</TABLE>
The accompanying notes are an integral part of these financial statements.
4
<PAGE> 7
PRESTIGE BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-------------------------------
1998 1997
------------ ------------
<S> <C> <C>
Operating activities:
Net income $ 556,642 $ 630,678
Adjustments to reconcile net income to net cash -- --
provided (used) by operating activities-
Depreciation of premises and equipment 223,480 131,768
Amortization of premiums and discounts, net (17,759) 6,066
Non cash compensation expense related to MRP Plan 99,835 54,871
Non cash compensation expense related to ESOP benefit 77,076 60,284
Loss on sale of mutual funds 14,700 3,200
Gain on sale of premises and equipment (37,971) --
Provision for loan losses 122,000 74,000
(Decrease) increase in other liabilities (52,972) 45,994
Increase (decrease) in accrued interest payable 64,788 (26,829)
(Decrease) increase in income taxes payable (51,978) 120,840
Increase in accrued interest receivable (318,571) (385,107)
(Increase) decrease in other assets (295,333) 20,116
------------ ------------
Total adjustments (172,505) 105,203
------------ ------------
Net cash provided by operating activities 384,137 735,881
------------ ------------
Investing activities:
Loan originations (48,921,937) (30,476,102)
Principal payments on loans 27,613,421 13,737,870
Principal payments on mortgage-backed securities available for sale 1,159,786 422,012
Principal payments on mortgage-backed securities held to maturity 1,336,875 1,442,231
Principal payments on investment securities held to maturity 105,319 --
Proceeds from calls of held to maturity securities 3,500,000 --
Proceeds from sale of available for sale mutual funds 660,500 101,000
Proceeds from calls of available for sale securities 4,600,000 --
Return of capital on investment securities 897 --
Purchases of available for sale securities (2,506,812) (211,747)
Purchases of held to maturity investment securities (9,227,081) (6,473,125)
Maturities of investment securities held to maturity -- 2,000,000
Proceeds from sale of premises and equipment 206,118 --
Purchases of premises and equipment (369,254) (541,419)
Purchase of Federal Home Loan Bank stock (800,000) (805,000)
------------ ------------
Net cash used by investing activities (22,642,168) (20,804,280)
------------ ------------
Financing activities:
Net change in advance payments by borrowers for taxes and insurance (147,275) (84,301)
Purchases of MRP shares (611,575) --
Proceeds from Federal Home Loan Bank advances 21,000,000 79,307,500
Payments on Federal Home Loan Bank advances (4,700,000) (62,607,500)
Net increase in Money Market, NOW and Passbook savings accounts 5,239,552 4,008,340
Net increase in certificate accounts 5,758,452 2,236,249
Purchases of treasury stock (716,139) (775,881)
Cash in lieu of stock dividend on fractional shares (3,484) --
Common stock cash dividends paid (144,109) (83,784)
------------ ------------
Net cash provided by financing activities 25,675,422 22,000,623
------------ ------------
Net increase in cash and cash equivalents 3,417,391 1,932,224
Cash and cash equivalents at beginning of period 2,213,461 2,147,678
------------ ------------
Cash and cash equivalents at end of period $ 5,630,852 $ 4,079,902
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes $ 405,000 $ 261,000
Cash paid during the period for interest on deposits and borrowings 4,841,785 3,729,582
============ ============
Supplemental schedule of noncash investing activity:
Loans transferred to real estate owned $ 250,000 $ --
</TABLE>
The accompanying notes are an integral part of these financial statements.
5
<PAGE> 8
PRESTIGE BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(UNAUDITED)
1. THE CORPORATION:
- -------------------
On February 14, 1996, the Board of Directors of Prestige Bank, F.S.B. (the Bank)
adopted a Plan of Conversion (the Plan) from a federally chartered mutual
savings bank to a federally chartered stock savings bank and the issuance of its
stock to Prestige Bancorp, Inc. (the Corporation), a Pennsylvania corporation.
The Corporation sold 963,023 shares of its common stock (including 77,041 shares
to its newly formed Employee Stock Ownership Trust (the ESOP)) at $10.00 a
share. Simultaneously there was a corresponding exchange of all the Bank's stock
for approximately 50% of the net offering proceeds. The remaining portion of the
net proceeds was retained by the Corporation net of $770,410 which was loaned to
the ESOP for its purchase. The conversion and public offering was completed on
June 27, 1996 with net proceeds from the offering, net of the ESOP loan,
totaling $8,188,394, after offering expenses.
2. BASIS OF PRESENTATION:
- --------------------------
The following unaudited financial statements have been prepared pursuant to the
rules and regulations of the Securities and Exchange Commission. Certain
information and note disclosures normally included in annual financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to those rules and regulations, although
the Corporation believes that the disclosures made are adequate to make the
information presented not misleading. However, such interim information reflects
all adjustments (consisting solely of normal recurring adjustments) which are,
in the opinion of management, necessary for a fair presentation of financial
position and results of operations for the periods presented. The results of
operations for the three and nine month periods ended September 30, 1998, are
not necessarily indicative of the results to be expected for the year ending
December 31, 1998.
The unaudited financial statements and notes hereto should be read in
conjunction with the audited financial statements and notes thereto for the year
ended December 31, 1997, contained in the Corporation's Annual Report and Form
10-K.
Earnings Per Common Share
- -------------------------
During the fourth quarter of 1997, the Company adopted SFAS No. 128, "Earnings
Per Share". Under SFAS No. 128, earnings per share are classified as basic
earnings per share and diluted earnings per share. Basic earnings per share
includes only the weighted average common shares outstanding. Diluted earnings
per share includes the weighted average common shares outstanding and any
dilutive common stock equivalent shares in the calculation. All prior periods
have been restated to reflect this adoption. Treasury shares are treated as
retired for earnings per share purposes.
6
<PAGE> 9
The following tables reflect the calculation of earnings per share under
SFAS No. 128.
<TABLE>
<CAPTION>
Three Months Ended
----------------------------------------------
September 30, 1998 September 30, 1997
------------------ ------------------
<S> <C> <C>
Basic earnings per share:
Net income $208,329 $201,964
Average shares outstanding 958,313 967,009
Earnings per share $ .22 $ .21
Diluted earnings per share:
Net income $208,329 $201,964
Average shares outstanding 958,313 967,009
Stock options 5,559 2,139
-------- --------
Diluted average shares outstanding 963,872 969,148
Earnings per share $ .22 $ .21
Nine Months Ended
-=--------------------------------------------
September 30, 1998 September 30, 1997
------------------ ------------------
Basic earnings per share:
Net income $556,642 $630,678
Average shares outstanding 965,648 983,751
Earnings per share $ .58 $ .64
Diluted earnings per share:
Net income $556,642 $630,678
Average shares outstanding 965,648 983,751
Stock options 12,042 755
-------- --------
Diluted average shares outstanding 977,690 984,506
Earnings per share $ .57 $ .64
</TABLE>
For the three and nine months ended September 30, 1998, options to purchase
1,633 shares of common stock were outstanding but not included in the
computation of diluted earnings per share because the options' exercise price
was greater than the average market price of the Corporation's common shares for
the periods.
On April 15, 1998 the Board of Directors declared a stock dividend of 15% to
shareholders of record of June 2, 1998 payable on June 19, 1998. All per share
data have been restated to reflect the stock dividend.
Comprehensive Income
- --------------------
The Company adopted SFAS No. 130, "Reporting Comprehensive Income", in the
quarter ended March 31, 1998. This accounting standard requires the reporting of
all changes in the equity of an enterprise that result from recognized
transactions and other economic events of the period other than transactions
with owners in their capacity as owners. Prior to the issuance of this standard,
some of those changes in equity were displayed in the income statement, while
others were included directly in balances within a separate component of equity
in a statement of financial position.
<TABLE>
<CAPTION>
Nine Months Ended
-----------------------------------------
September 30, 1998 September 30, 1997
------------------ ------------------
<S> <C> <C>
Net income $ 565,642 $630,678
Other comprehensive income, net of tax
Unrealized holding (loss) gain
arising during the period $(118,032) $206,133
--------- --------
Comprehensive income $ 447,610 $836,811
</TABLE>
7
<PAGE> 10
3. INVESTMENT SECURITIES:
- -------------------------
The cost and market values of investment securities are summarized as follows:
Investment securities held to maturity:
<TABLE>
<CAPTION>
September 30, 1998
----------------------------------
Amortized Market
Cost Value
----------- -----------
<S> <C> <C>
U.S. government and government
agency obligations:
Due within one year $ 499,954 $ 500,625
Due after one and within five years 4,013,344 4,074,113
Due after five and within ten years 13,998,554 14,084,899
Due after ten years 6,843,443 6,897,022
Federal Home Loan Mortgage
Corporation (FHLMC) certificates:
Due after one and within five years 377,096 382,466
Due after five and within ten years 3,147,737 3,234,522
Due after ten years 2,157,420 2,201,776
Government National Mortgage
Association (GNMA) certificates due
after ten years 1,004,581 1,030,869
=========== ===========
$32,042,129 $32,406,292
=========== ===========
</TABLE>
Investment securities available for sale:
<TABLE>
<CAPTION>
September 30, 1998
----------------------------------
Amortized Market
Cost Value
----------- -----------
<S> <C> <C>
U.S. government and government
agency obligations:
Due after one and within five years $1,004,084 $1,015,640
Due after five and within ten years 1,500,560 1,505,935
Corporate Debentures 493,572 484,795
Federal Home Loan Mortgage
Corporation (FHLMC) certificates:
Due within one year 122,142 121,805
Due after ten years 211,041 219,313
Federal National Mortgage Association
(FNMA) certificates due after one and
within five years 1,031,615 1,024,290
Mutual fund investment 1,257,660 1,254,414
Common stock portfolio 1,354,396 1,267,590
========== ==========
$6,975,070 $6,893,782
========== ==========
</TABLE>
8
<PAGE> 11
4. LOANS RECEIVABLE:
- --------------------
Loans receivable are summarized as follows:
<TABLE>
<CAPTION>
September 30,
1998
-------------
<S> <C>
Commercial, including commercial secured by real estate $ 22,520,304
Construction 1,214,800
Less- Undisbursed loan proceeds 887,231
Deferred loan fees 47,877
-------------
Total Commercial, including commercial secured by real estate 22,799,996
-------------
Real estate loans:
1-4 family 79,427,071
Construction 1,051,021
-------------
80,478,092
Less- Undisbursed loan proceeds 857,197
Deferred loan (costs) (34,359)
-------------
79,655,254
Consumer loans:
Collateral 577,205
Automobile 2,260,349
Home equity 9,741,704
Student 2,226,852
Credit cards 403,259
Other 171,066
Less- Deferred loan (costs) (17,594)
-------------
15,398,029
-------------
117,853,279
Less- Allowance for loan losses 485,802
=============
$ 117,367,477
=============
</TABLE>
5. ALLOWANCE FOR LOAN LOSSES:
- -----------------------------
Activity with respect to the allowance for loan losses is summarized as follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------
1998 1997
--------- ---------
<S> <C> <C>
Balance at beginning of period $ 402,964 $ 306,926
Provision for loan losses 122,000 74,000
Charge-offs (39,162) (8,446)
Recoveries -- 100
========= =========
Balance at end of period $ 485,802 $ 372,580
========= =========
</TABLE>
9
<PAGE> 12
6. DEPOSITS:
- ------------
The scheduled maturities of the Bank's certificate accounts as of September 30,
1998 are as follows (amounts approximate):
<TABLE>
<CAPTION>
<S> <C>
October 1, 1998 to September 30, 1999 $31,903,096
October 1, 1999 to September 30, 2000 10,320,589
October 1, 2000 to September 30, 2001 6,240,467
October 1, 2001 to September 30, 2002 1,248,703
October 1, 2002 and thereafter 1,848,796
===========
TOTAL $51,561,651
===========
Certificates of $100,000 or more $ 7,691,298
===========
</TABLE>
7. INCOME TAXES:
- ----------------
The provision for income taxes is as follows:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
---------------------
1998 1997
-------- --------
<S> <C> <C>
Federal $292,708 $313,068
State 63,096 71,781
======== ========
$355,804 $384,849
======== ========
</TABLE>
8. RELATED PARTY TRANSACTIONS:
- ------------------------------
Certain directors and executive officers of the Bank, including their immediate
families and companies in which they are principal owners, are loan customers of
the Bank. In management's opinion, such loans are made in the normal course of
business and were granted on substantially the same terms and conditions as
loans to other individuals and businesses of comparable creditworthiness at the
time. Total loans to these persons at September 30, 1998, and December 31, 1997,
amounted to $243,328 and $182,175, respectively. Additionally, the Bank has an
unfunded loan commitment for a director in the amount of $93,000 as of
September 30, 1998.
9. CAPITAL STOCK:
- -----------------
On April 23, 1997, at the annual stockholders meeting, the Board of Directors
and shareholders formally approved the Corporation's Stock Option Plan (the
Option Plan) and Management Recognition and Retention Plan and Trust (the MRP
Plan; the Option Plan and the MRP Plan herein are referred to as the Plans) as
fully described in the Corporation's proxy statement dated March 31, 1997. In
connection with the MRP Plan, the Corporation incurred compensation expense of
approximately $34,000 during the quarter ended September 30, 1998.
10
<PAGE> 13
The aforementioned approval of the Option Plan made 110,747 options available
for grant to employees and others who perform substantial services for the
Corporation. As of September 30, 1998, the Corporation has granted 89,885
options. The options are exercisable one year from the grant date in equal
installments over a period of five years and as of September 30, 1998 there have
been 483 shares exercised. The maximum term of any option granted under the Plan
cannot exceed 10 years.
On April 15, 1998 the Board of Directors declared a stock dividend of 15% to
shareholders of record of June 2, 1998 payable on June 19, 1998.
10. RETAINED EARNINGS AND REGULATORY CAPITAL:
- ---------------------------------------------
The Savings Bank's actual capital amounts and ratios are presented below in the
following table. Based on the asset size of the Savings Bank and its strong risk
based capital ratios, the Corporation believes that the Savings Bank does not
have to deduct any amount from capital for interest-rate risk (amounts in
thousands).
<TABLE>
<CAPTION>
To Be Well Capitalized
For Capital Adequacy Under Prompt Corrective
Actual Purposes Action Provisions
------------------ -------------------- -----------------------
Amount Ratio Amount Ratio Amount Ratio
-------- ------- -------- ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to Risk
Weighted Assets):
As of
September 30, 1998 $13,654 15.87% >$6,885 >8.0% >$8,606 >10.0%
Tier 1 Capital (to Risk
Weighted Assets):
As of
September 30, 1998 $13,168 15.30% >$3,442 >4.0% >$5,164 >6.0%
Tier 1 Capital (to
Average Assets):
As of
September 30, 1998 $13,168 8.14% >$6,474 >4.0% >$8,092 >5.0%
</TABLE>
11. FUTURE ACCOUNTING STANDARDS:
- --------------------------------
In February 1998, the Financial Accounting Standards Board issued SFAS No. 132,
"Employers' Disclosures about Pensions and Other Postretirement Benefits". SFAS
No. 132 revises employers' disclosures about pension and other postretirement
benefit plans, but does not change the measurement or recognition of those
plans. SFAS No. 132 standardizes the disclosure requirements for pensions and
other postretirement benefits, to the extent practicable; requires additional
information on changes in the benefit obligations and fair values of plan assets
that will facilitate financial analysis; and eliminates certain disclosures.
SFAS No. 132 will be effective for the Corporation's financial statements for
the year ended December 31, 1998.
In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities." SFAS No. 133
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and for
hedging activities. It requires that an entity recognize all derivatives as
either assets or liabilities in the statement of financial position and measure
those instruments at fair value. SFAS No. 133 will be effective for all fiscal
quarters and fiscal years beginning after June 15, 1999.
11
<PAGE> 14
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
- -------------------
The Corporation is a registered savings and loan holding company. The
financial activity of the Corporation is undertaken primarily through its sole
subsidiary Prestige Bank, A Federal Savings Bank (the "Savings Bank"). Assets
held directly by the Corporation includes all of the outstanding capital stock
of the Savings Bank, a loan receivable from the Prestige Bancorp Employee Stock
Ownership Trust (the "ESOP"), deposits maintained at the Savings Bank and common
stock of mostly savings associations or savings and loan holding companies
(collectively the "Directly Held Assets"). Each stock ownership interest in the
unrelated savings associations or savings and loan holding companies amounts to
less than a 1.25% interest in such entities.
The following discussion of the financial condition and activities of
the Corporation should be read as the consolidated activities of the Corporation
and the Savings Bank. Unless the following discussion specifically identifies an
activity, event or condition as relating to the Directly Held Assets, it is
assumed that such activity, event or condition occurred as a result of a direct
action of the Savings Bank and an indirect action of the Corporation.
As described in greater detail below, the Corporation and Savings Bank
intend to continue an emphasis on residential mortgage loans. However, as part
of the business strategy to increase profitability, the Savings Bank will
continue to widen its range of lending activities to include small business
commercial loans, commercial real estate loans and consumer loans. Although such
lending activities entail greater risk than residential mortgage lending,
management is willing to accept such risks because of its belief that there are
lending opportunities in its market area which are not being currently fulfilled
by other financial institutions and management believes it can properly manage
the risks of greater consumer and commercial lending.
At September 30, 1998, the Corporation's total assets amounted to
$170.0 million compared with $143.3 million at December 31, 1997. The $26.7
million or 18.6% increase was primarily due to an increase of $21.2 million or
22.0% in net loans receivable and an increase in cash and cash equivalents of
$3.4 million or 154.4%. The growth in net loans receivable was attributed to an
increase in commercial business and commercial real estate of $11.7 million or
104.9%, an increase of $7.0 million or 9.6% in one-to-four family residential
real estate loans, and an increase of $2.6 million or 20.4% in consumer loans.
Increased cash and cash equivalents of $3.4 million was primarily attributable
to increases in principal payments on loans and investment calls on investment
securities due to the low interest rate environment. Such increase in assets was
funded through an increase in deposits of $11.0 million or 12.1% and a $16.3
million or 47.0% increase in Federal Home Loan Bank advances. Total
stockholders' equity amounted to $15.3 million or 8.98% of total assets at
September 30, 1998, compared to equity of $15.6 million or 10.91% of total
assets at December 31, 1997. The $370,000 decrease in stockholders' equity was
the result of the Corporation's repurchase of 5.0% or 52,597 shares of its
common stock and quarterly dividends paid which was partially offset by net
income during the period. The Corporation paid a quarterly dividend of $.05 per
share during the first, second and third quarters of 1998 compared to $.03 per
share for the same periods in 1997.
The Corporation's nonperforming assets increased $61,000 or 10.0% to
$672,000 at September 30, 1998, compared to $611,000 at December 31, 1997. The
increase was due to an increase in one-to-four family real estate owned which
was partially offset by a decrease in nonperforming loans.
12
<PAGE> 15
RESULTS OF OPERATIONS
- ---------------------
GENERAL--The Corporation's net income for the quarter ended September
30, 1998 was $208,000 or $.22 per diluted share compared to net income of
$202,000 or $.21 per diluted share for the same quarter in the prior year. The
$6,000 or 3.0% increase in net income for the quarter ended September 30, 1998
as compared to the quarter ended September 30, 1997 was primarily the result of
$239,000 or 22.4% in net interest income before provision for loan losses and an
increase in other income of $42,000 or 50.0% which was partially offset by an
increase in total other expenses of $254,000 or 31.9%. The annualized return on
average assets and return on average equity for the quarter ended September 30,
1998, was .49% and 5.30%, respectively, compared to .59% and 5.27% for the same
period of 1997.
The Corporation's net income for the nine months ended September 30,
1998 was $557,000 or $.58 per diluted share compared to net income of $631,000
or $.64 per diluted share for the same nine months in the prior year. The
$74,000 decrease in net income for the nine months ended September 30, 1998 as
compared to the nine months ended September 30, 1997 can be traced primarily to
the additional expenses incurred in the opening and operating of (i) our first
supermarket branch in October 1997 and (ii) our Elizabeth, Pennsylvania branch
office in February 1998. Although the increased costs of these branches have
impacted earnings for the short term, management is seeking long term customer
growth, which should positively affect shareholder value. These factors
contributed significantly to the increase in other expenses of $792,000. Net
interest income before provision for loan losses increased $620,000 primarily
due to the Corporation's efforts to leverage its balance sheet, as discussed
above, and other income increased $117,000. The annualized return on average
assets and return on average equity for the nine months ended September 30,
1998, was .46% and 4.70%, respectively, compared to .64% and 5.53% for the same
period of 1997.
Net income for the quarter ended September 30, 1998 increased $13,000
or $.02 per diluted share when compared to the quarter ended June 30, 1998. The
primary reasons for the increase were increases of $61,000 in net interest
income before provision for loan losses which was partially offset by an
increase in total other expenses of $25,000 and a decrease in other income of
$17,000.
INTEREST INCOME--The Corporation reported interest income of $3.0
million for the three months ended September 30, 1998, as compared to $2.5
million for the three months ended September 30, 1997. The increase of $555,000
or 22.5% for the quarter ended September 30, 1998, compared to the same period
in the prior year can be attributed to a $451,000 or 25.0% increase in interest
and fees on loans and a $130,000 or 28.8% increase in interest and dividends on
other investment securities as the Corporation continued to leverage its capital
by expanding its loan and investment portfolios. Among the areas of focused
growth within the Corporation's lending portfolio was commercial business and
commercial real estate loans. Average balances for commercial business and
commercial real estate loans during the third quarter of 1998 were $20.6
million, compared to $9.0 million for the same period in 1997. The average
balances on loans receivable and investment securities, net of mortgage backed
securities, during the third quarter of 1998 were $114.8 million and $35.3
million, respectively, compared to $93.2 million and $26.1 million,
respectively, for the same period in 1997. In addition, the Corporation
benefited from earning higher yields on loans receivable. The weighted average
yield on loans receivable during the third quarter of 1998 was 7.9% compared to
7.7% for the same period in 1997.
The Corporation reported interest income of $8.6 million for the nine
months ended September 30, 1998, as compared to $6.9 million for the nine months
ended September 30, 1997. The increase of $1.7 million for the nine months ended
September 30, 1998, compared to the same period in the prior year can be
13
<PAGE> 16
attributed to a $1.4 million or 27.7% increase in interest and fees on loans and
a $381,000 or 29.2% increase in interest and dividends on other investment
securities as the Corporation continued to leverage its capital by expanding its
loan and investment portfolios. Among the areas of focused growth within the
Corporation's lending portfolio was commercial business and commercial real
estate loans. Average balances for commercial business and commercial real
estate loans during the first nine months of 1998 were $17.0 million, compared
to $6.9 million for the same period in 1997. The average balances on loans
receivable and investment securities, net of mortgage backed securities, during
the nine months of 1998 were $108.3 million and $35.3 million, respectively,
compared to $87.1 million and $26.2 million, respectively, for the same period
in 1997. In addition, the Corporation benefited from earning higher yields on
loans receivable. The weighted average yield on loans receivable during the
first nine months of 1998 was 7.8% compared to 7.6% for the same period in 1997.
INTEREST EXPENSE--Interest expense increased $316,000 or 22.6% during
the three months ended September 30, 1998 as compared to the same period last
year. This increase was primarily due to growth in average interest-bearing
liabilities. Average deposits and Federal Home Loan Bank (FHLB) of Pittsburgh
advances during the third quarter of 1998 were $101.3 million and $49.6 million,
respectively, compared to $89.8 million and $31.3 million, respectively, for the
same period in 1997. The weighted average interest rate on interest-bearing
liabilities during the third quarter of 1998 was 4.6% compared to 4.6% for the
same period in 1997.
Interest expense increased $1.1 million or 28.5% during the nine months
ended September 30, 1998 as compared to the same period last year. This increase
was primarily due to growth in average interest-bearing liabilities. Average
deposits and Federal Home Loan Bank (FHLB) of Pittsburgh advances during the
first nine months of 1998 were $96.7 million and $48.5 million, respectively,
compared to $87.9 million and $27.1 million, respectively, for the same period
in 1997. The weighted average interest rate on interest-bearing liabilities
during the first nine months of 1998 was 4.5% compared to 4.4% for the same
period in 1997.
PROVISION FOR LOAN LOSSES--During the three months and nine months
ended September 30, 1998 the Corporation recorded provisions for losses on loans
of $42,000 and $122,000, respectively, compared to $30,000 and $74,000,
respectively, for the comparable periods in 1997. The Corporation recorded such
provisions to adjust the Corporation's allowance for loan losses to a level
deemed appropriate based upon an assessment of the volume and type of lending
presently being conducted by the Corporation, industry standards, current
analysis of the existing portfolio of loans, and a review of the current
economic conditions in the Corporation's market area.
OTHER INCOME--Other income increased $42,000 or 50.0% and $117,000 or
46.2% for the three months and nine months ended September 30, 1998,
respectively, compared to same periods in 1997. The increases were primarily
attributed to increases in fees and service charges generated from an increase
in total transaction accounts.
OTHER EXPENSES-- Total other expenses increased $254,000 or 31.9% for
the quarter ended September 30, 1998, as compared to the quarter ended September
30, 1997. The increase occurred as a result of a $100,000 or 24.8% increase in
salaries and employee benefits due to additional employees at our two new branch
offices, approved salary increases, and additional compensation expense for the
Management Recognition and Retention Plans. Additionally, there was a $60,000
and $44,000 increase in premises and occupancy costs and other expenses,
respectively. These increases were primarily due to higher depreciation expenses
associated with furniture and equipment needed for the expansion of the
14
<PAGE> 17
corporate office and the two new branch locations, higher consulting expenses,
as the Corporation has outsourced some job functions, and increased general
operating expenses.
Total other expenses increased $792,000 or 35.2% for the nine months
ended September 30, 1998, as compared to the nine months ended September 30,
1997. The increase occurred as a result of a $386,000 or 34.1% increase in
salaries and employee benefits due to additional employees at our two new branch
offices, approved salary increases, and additional compensation expense of
$45,000 for the Management Recognition and Retention Plans. Additionally, there
was a $149,000 and $137,000 increase in premises and occupancy costs and other
expenses, respectively. These increases were primarily due to higher
depreciation expenses associated with furniture and equipment needed for the
expansion of the corporate office and the two new branch locations, higher
consulting expenses, as the Corporation has outsourced some job functions, and
increased general operating expenses.
INCOME TAXES--The Corporation incurred a provision for income taxes of
$132,000 for the three months ended September 30, 1998 as compared to $123,000
for the same period in the prior year. Such increase for 1998 as compared to
1997 was due to an increase in taxable income.
The Corporation incurred a provision for income taxes of $356,000 for
the nine months ended September 30, 1998 as compared to $385,000 for the same
period in the prior year. Such decrease for 1998 as compared to 1997 was due to
a decrease in taxable income.
LIQUIDITY AND CAPITAL RESOURCES.
- --------------------------------
The Corporation's primary sources of funds are deposits, repayments,
prepayments and maturities of outstanding loans and mortgage-backed securities,
maturities of investment securities and other short-term investments, and funds
provided from operations. While scheduled loan and mortgage-backed securities
repayments and maturing investment securities and short-term investments are
relatively predictable sources of funds, deposit flows and loan prepayments are
greatly influenced by the movement of interest rates in general, economic
conditions and competition. The Corporation manages the pricing of its deposits
to maintain a deposit balance deemed appropriate and desirable by its Board of
Directors. In addition, the Corporation invests in short-term interest-earning
assets, which provides liquidity to meet lending requirements. Although the
Corporation had historically relied on deposits for funding, the Corporation in
1996 began to use advances from the FHLB of Pittsburgh to leverage its strong
capital position. As of September 30, 1998, the Corporation had $51.0 million of
outstanding advances from the FHLB of Pittsburgh.
During the nine months ended September 30, 1998 and 1997, the
Corporation's operating activities provided net cash of approximately $384,000
and $736,000, respectively. The primary reasons for the $384,000 net cash
provided during the nine months ended September 30, 1998 were $557,000 in net
income, $223,000 in depreciation of premises and equipment, and a $65,000
increase in accrued interest payable, which was partially offset by a $319,000
and $295,000 increase in accrued interest receivable and other assets,
respectively. During the nine months ended September 30, 1997, the $736,000 net
cash provided was the result of $631,000 in net income, $132,000 in depreciation
of premises and equipment, and a $121,000 increase in income taxes payable,
which was partially offset by a $385,000 increase in accrued interest
receivable.
15
<PAGE> 18
Net cash used by investing activities was $22.6 million for the nine
months ended September 30, 1998. During the nine months ended September 30,
1998, the Corporation originated $21.3 million in new loans in excess of
principal payments received on existing loans and purchased $9.2 million of
investment securities designated held to maturity due to their longer term
maturity structure. In addition, $3.5 million of held to maturity securities and
$4.6 million of available for sale securities were called and $2.5 million
available for sale securities were purchased in the first nine months of 1998.
This compares with net cash used by investing activities of $20.8 million for
the nine months ended September 30, 1997. The primary reasons for the $20.8
million net cash used by investing activities was the Corporation had originated
$16.7 million in new loans in excess of principal payments received on existing
loans and purchased $6.5 million of investment securities designated held to
maturity due to their longer term maturity structure. In addition, a $2.0
million held to maturity security was called in the third quarter of 1997.
Net cash provided by financing activities for the nine months ended
September 30, 1998, was $25.7 million, attributable to increases in core
deposits and certificates of $11.0 million and increases in net Federal Home
Loan Bank advances of $16.3 million. During the same period last year, the
Corporation experienced a $22.0 million increase in net cash provided by
financing activities primarily due to a $6.2 million increase in core deposits
and certificates and increases in net Federal Home Loan Bank advances of $16.7
million.
The Savings Bank is required to maintain specified amounts of capital
pursuant to the Financial Institutions Reform, Recovery and Enforcement Act of
1989 and regulations thereunder. Savings associations are required to maintain
tangible capital of 1.5%, core capital of 4.00% and risk-based capital of 8.00%.
At September 30, 1998, the Savings Bank's tangible, core, and risk-based capital
ratios amounted to 7.81%, 7.81%, and 15.87%, respectively, which substantially
exceeded applicable requirements.
YEAR 2000 ISSUES.
- -----------------
The Year 2000 problem arises from the fact that many existing
information technology ("IT") hardware and software systems and non-information
technology ("non-IT") products containing embedded microchip processors were
originally programmed to represent any date with six digits (e.g., 12/31/99), as
opposed to eight digits (e.g., 12/31/1999). Accordingly, problems may arise for
many such products and systems when attempting to process information containing
dates that fall after December 31, 1999. In addition, many such products and
systems could experience miscalculations, malfunctions or disruptions caused by
other dates, such as September 9, 1999 (9/9/99), which was a date traditionally
used as a default date by computer programmers. This problem is commonly
referred to as the "Year 2000" problem, and the acronym "Y2K" is commonly
substituted for the phrase "Year 2000."
Although Prestige Bancorp is unable at this time to assess the possible
impact on its results of operations, liquidity, or financial condition of any
Y2K-related disruptions to its business caused by the malfunctioning of any IT
or non-IT systems and products that it uses or that third parties with which it
has material relationships use, management does not believe at the current time
that the cost of remediating the Company's internal Y2K problems will have a
material adverse impact upon its business, results of operations, liquidity or
financial condition.
16
<PAGE> 19
THE COMPANY'S STATE OF READINESS FOR ITS YEAR 2000 ISSUES.
- ----------------------------------------------------------
Prestige Bancorp and Prestige Bank began a process in 1997 assigned an
individual to begin investigating the issues. It was determined that Prestige
Bank relies on external processing vendors for all of its mission critical core
application processing and that its approach would be based on the five-phase
approach recommended by the Federal Financial Institutions Examination Council
("FFIEC"). The Board of Directors and senior management were apprised of the
Year 2000 issues.
In 1997, a Y2K team was formed consisting of the President, Chief
Financial Officer and two employees of Prestige Bank and a member of the Board
of Directors. The initial focus of the team was to identify all issues that may
be affected by the date problem. This included computer hardware and software,
third party processing vendors, environmental factors (i.e., vaults, elevators,
security systems, etc.), and miscellaneous items such as preprinted forms,
checkwriters, date stamps, etc. The issues were then categorized as to their
potential impact on the ability of Prestige Bank to service its customers and
ensure business continuity for its shareholders, customers and employees.
Communication was initiated with all of Prestige Bank's vendors; for some
vendors (i.e., PC and network vendors) Year 2000 information was available via
the Internet. Most products and services that we receive are Year 2000 ready or
are scheduled to be Year 2000 ready well in advance of the millennium. A few
products will not be Year 2000 ready and these have been replaced or are
scheduled to be replaced in late 1998 or early 1999. Prestige Bank continues to
monitor its suppliers of products and services to ensure their Year 2000
readiness. Contingency plans have been received from individual areas of
Prestige Bank and will be combined into an overall bank wide plan.
Prestige Bank has developed a testing plan that includes documentation
for each vendor or product tested. The testing of Prestige Bank's PCs and
networks is near completion. Core applications systems are to be tested for
compliancy by the first quarter of 1999. Prestige Bank has also volunteered to
participate in the ATM network testing. All remaining issues of serious
consequence will be tested by late 1998 through early 1999 with final testing of
all issues planned to be completed by mid-1999. Contingency plans will be
implemented as needed.
Although Prestige Bancorp's estimates for total Year 2000 project costs
and estimated times for completion are subject to certain risks and
uncertainties, Prestige Bancorp estimates that expenditures for the Year 2000
issues will not have a material impact on Prestige Bancorp's financial
condition, liquidity or results of operation.
17
<PAGE> 20
PRESTIGE BANCORP, INC.
PART II
Item 1. Legal Proceedings
-----------------
Neither the Corporation nor the Bank is involved in any pending
legal proceedings other than nonmaterial legal proceedings
occurring in the ordinary course of business.
Item 2. Changes in Securities
---------------------
Not applicable.
Item 3. Defaults upon Senior Securities
-------------------------------
Not applicable.
Item 4. Submission of Matters to a Vote of Security-Holders
---------------------------------------------------
Not applicable
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
None.
18
<PAGE> 21
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.
PRESTIGE BANCORP, INC.
Dated: November 12, 1998 By: /s/ Robert S. Zyla
-------------------------
Robert S. Zyla, President
Dated: November 12, 1998 By: /s/ James M. Hein
-------------------------
James M. Hein, Controller
19
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 905
<INT-BEARING-DEPOSITS> 4,726
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 6,894
<INVESTMENTS-CARRYING> 32,042
<INVESTMENTS-MARKET> 32,406
<LOANS> 117,367
<ALLOWANCE> 486
<TOTAL-ASSETS> 169,983
<DEPOSITS> 102,154
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,593
<LONG-TERM> 50,977
0
0
<COMMON> 9,622
<OTHER-SE> 5,638
<TOTAL-LIABILITIES-AND-EQUITY> 169,983
<INTEREST-LOAN> 6,321
<INTEREST-INVEST> 2,135
<INTEREST-OTHER> 155
<INTEREST-TOTAL> 8,611
<INTEREST-DEPOSIT> 2,912
<INTEREST-EXPENSE> 4,906
<INTEREST-INCOME-NET> 3,705
<LOAN-LOSSES> 122
<SECURITIES-GAINS> (14)
<EXPENSE-OTHER> 3,041
<INCOME-PRETAX> 912
<INCOME-PRE-EXTRAORDINARY> 912
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 557
<EPS-PRIMARY> .58
<EPS-DILUTED> .57
<YIELD-ACTUAL> 3.13
<LOANS-NON> 430
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 403
<CHARGE-OFFS> 39
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 486
<ALLOWANCE-DOMESTIC> 463
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 23
</TABLE>
