<PAGE> 1
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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 March 31, 2000
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 incorporation or (I.R.S. Employer
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 May 12, 2000 there were
947,116 shares of the registrant's common stock outstanding, par value $1.00 per
share.
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<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
March 31, 2000 (unaudited) and December 31, 1999 1
Consolidated Statements of Income of Prestige Bancorp, Inc. for the three
months ended March 31, 2000 and 1999 (unaudited) 2
Consolidated Statements of Stockholders' Equity of Prestige Bancorp, Inc.
for the three months ended March 31, 2000 and 1999 (unaudited) 3
Consolidated Statements of Cash Flows of Prestige Bancorp, Inc. for the three
months ended March 31, 2000 and 1999 (unaudited) 4
Notes to Consolidated Financial Statements (unaudited) 5
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>
March 31, December 31,
2000 1999
------------ ------------
<S> <C> <C>
ASSETS (Unaudited)
- ------
Cash and due from banks $ 842,311 $ 1,411,002
Interest-bearing deposits with banks 2,984,780 3,787,311
Investment securities:
Available for sale 10,700,384 10,985,172
Held to maturity (market value $22,768,454 and
$23,027,655 respectively) 24,091,551 24,361,002
Net loans 155,359,417 150,962,353
Federal Home Loan Bank stock, at cost 3,648,900 3,648,900
Premises and equipment, net 2,504,861 2,503,345
Accrued interest receivable 1,332,041 1,177,480
Deferred tax asset 641,717 548,118
Other assets 1,303,912 1,187,636
------------ ------------
Total assets $203,409,874 $200,572,319
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Liabilities:
Non-interest-bearing deposits $ 7,895,387 $ 7,537,107
Interest-bearing deposits 114,799,721 112,953,650
------------ ------------
Total deposits 122,695,108 120,490,757
Federal Home Loan Bank advances 63,477,000 62,977,000
Advance payments by borrowers for taxes and insurance 1,351,906 1,068,008
Income taxes payable 261,819 163,736
Accrued interest payable 592,645 422,971
Other liabilities 425,410 496,558
------------ ------------
Total liabilities 188,803,888 185,619,030
------------ ------------
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,
1,162,313 shares issued at March 31, 2000 and December 31, 1999 1,162,313 1,162,313
Treasury stock at cost: 215,197 and 172,349 shares at
March 31, 2000 and December 31, 1999, respectively (2,690,973) (2,246,618)
Additional paid-in-capital 11,586,006 11,581,741
Unearned ESOP shares: 77,861 and 79,007 shares at
March 31, 2000 and December 31, 1999, respectively (654,310) (654,310)
Retained earnings - substantially restricted 5,714,184 5,543,671
Accumulated other comprehensive income (511,234) (433,508)
------------ ------------
Total stockholders' equity 14,605,986 14,953,289
------------ ------------
Total liabilities and stockholders' equity $203,409,874 $200,572,319
============ ============
</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
March 31,
------------------------------
2000 1999
---------- ----------
<S> <C> <C>
Interest income:
Interest and fees on loans $2,964,231 $2,445,202
Interest on mortgage-backed securities 179,783 189,817
Interest and dividends on other investment securities 436,091 351,640
Interest on deposits in other financial institutions 35,467 114,727
---------- ----------
Total interest income 3,615,572 3,101,386
---------- ----------
Interest expense:
Interest on deposits 1,183,332 1,086,123
Advances from Federal Home Loan Bank 915,830 690,778
---------- ----------
Total interest expense 2,099,162 1,776,901
---------- ----------
Net interest income 1,516,410 1,324,485
Provision for loan losses 120,000 90,000
---------- ----------
Net interest income after provision for loan losses 1,396,410 1,234,485
---------- ----------
Other income:
Fees and service charges 206,566 161,517
Gain on sale of investments 7,546 39,250
Gain on sale of assets 1,995 1,995
Other income, net 3,419 3,398
---------- ----------
Total other income 219,526 206,160
---------- ----------
Other expenses:
Salaries and employee benefits 641,182 568,179
Premises and occupancy costs 151,535 145,613
Federal deposit insurance premiums 6,226 15,544
Data processing costs 67,546 63,446
Advertising costs 35,433 25,762
Transaction processing costs 87,049 76,656
ATM transaction fees 39,761 31,626
Other expenses 195,818 184,625
---------- ----------
Total other expenses 1,224,550 1,111,451
---------- ----------
Income before income tax expense 391,386 329,194
Income tax expense 151,576 124,786
---------- ----------
Net income $ 239,810 $ 204,408
========== ==========
Basic earnings per share:
Net income $ 0.26 $ 0.22
Weighted average number of common shares outstanding 906,327 913,971
Diluted earnings per share:
Net income $ 0.26 $ 0.22
Weighted average number of common shares outstanding 906,327 914,577
</TABLE>
The accompanying notes are an integral part of these financial statements.
2
<PAGE> 5
PRESTIGE BANCORP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
Common
Stock Additional
Comprehensive $1.00 par Treasury Paid-in Unearned
Income value Stock Capital ESOP Shares
------------- ---------- ------------ ----------- -----------
<S> <C> <C> <C> <C> <C>
BALANCE, December 31, 1999 $1,162,313 $(2,246,618) $11,581,741 $(654,310)
Allocation of 1,146 ESOP shares -- -- 4,265 --
Cash dividends declared:
Common stock ($.07 per share) -- -- -- --
Treasury stock purchases, 42,848 -- (444,355) -- --
shares
Net income $ 239,810 -- -- -- --
Net unrealized losses on available
for sale securities, net of tax (82,350) -- -- -- --
of $54,900
Reclassification adjustment for
gains realized in net income net
of tax of $2,922 4,624
---------
Comprehensive income $ 162,084
========= ---------- ----------- ----------- ---------
BALANCE, March 31, 2000 $1,162,313 $(2,690,973) $11,586,006 $(654,310)
========== =========== =========== =========
BALANCE, December 31, 1998 $1,100,090 $(2,161,243) $10,727,677 $(690,380)
Allocation of 1,070 ESOP shares -- -- 7,145 --
Cash dividends declared:
Common stock ($.06 per share) -- -- -- --
Stock dividend declared:
Common stock (5% per share) 62,223 -- 830,321 --
Cash in lieu of stock -- -- -- --
Net income $ 204,408 -- -- -- --
Net unrealized losses on available
for sale securities, net of tax (103,152) -- -- -- --
of $68,768
Reclassification adjustment for
gains realized in net income net
of tax of $14,895 24,355
---------
Comprehensive income $ 125,611
========= ---------- ----------- ----------- ---------
BALANCE, March 31, 1999 $1,162,313 $(2,161,243) $11,565,143 $(690,380)
========== =========== =========== =========
</TABLE>
<TABLE>
<CAPTION>
Accumulated
Other
Retained Comprehensive
Earnings Income Total
---------- ------------- ------------
<S> <C> <C> <C>
BALANCE, December 31, 1999 $5,543,671 $(433,508) $14,953,289
Allocation of 1,146 ESOP shares -- -- 4,265
Cash dividends declared:
Common stock ($.07 per share) (69,297) -- (69,297)
Treasury stock purchases, 42,848 -- -- (444,355)
shares
Net income 239,810 -- 239,810
Net unrealized losses on available
for sale securities, net of tax -- (82,350) (82,350)
of $54,900
Reclassification adjustment for
gains realized in net income net
of tax of $2,922 4,624 4,624
Comprehensive income
---------- --------- -----------
BALANCE, March 31, 2000 $5,714,184 $(511,234) $14,605,986
========== ========= ===========
BALANCE, December 31, 1998 $5,826,182 $ (42,421) $14,759,905
Allocation of 1,070 ESOP shares -- -- 7,145
Cash dividends declared:
Common stock ($.06 per share) (56,990) -- (56,990)
Stock dividend declared:
Common stock (5% per share) (892,544) -- --
Cash in lieu of stock (4,901) -- (4,901)
Net income 204,408 -- 204,408
Net unrealized losses on available
for sale securities, net of tax -- (103,152) (103,152)
of $68,768
Reclassification adjustment for
gains realized in net income net
of tax of $14,895 24,355 24,355
Comprehensive income
---------- --------- -----------
BALANCE, March 31, 1999 $5,076,155 $(121,218) $14,830,770
========== ========= ===========
</TABLE>
The accompanying notes are an integral part of these statements.
3
<PAGE> 6
PRESTIGE BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------------
2000 1999
------------ ------------
<S> <C> <C>
Operating activities:
Net income $ 239,810 $ 204,408
------------ ------------
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Depreciation of premises and equipment 85,005 84,921
Amortization of premiums and discounts, net 185 11,893
Non cash compensation expense related to MRP Plan 29,772 34,301
Non cash compensation expense related to ESOP benefit 17,105 19,985
Loss on sale of mutual funds -- 17,625
Gain on sale of equity securities (7,546) (56,875)
Provision for loan losses 120,000 90,000
Decrease in other liabilities (83,988) (43,839)
Increase (decrease) in accrued interest payable 169,674 (9,393)
Increase in income taxes payable 98,083 89,978
Increase in deferred income taxes (41,782) (35,191)
Increase in accrued interest receivable (154,561) (100,422)
(Increase) decrease in other assets (146,048) 136,618
------------ ------------
Total adjustments 85,899 239,601
------------ ------------
Net cash provided by operating activities 325,709 444,009
------------ ------------
Investing activities:
Loan originations (14,147,872) (15,700,086)
Principal payments on loans 9,630,808 10,957,978
Principal payments on mortgage-backed securities available for sale 145,682 248,436
Principal payments on mortgage-backed securities held to maturity 261,001 429,580
Principal payments on investment securities held to maturity 7,882 240,136
Proceeds from calls of held to maturity investment
securities -- 3,000,000
Proceeds from sale of available for sale mutual funds -- 733,931
Proceeds from sale of equity securities 26,000 115,000
Proceeds from calls of available for sale investment securities -- 1,000,000
Purchases of available for sale mortgage backed
securities -- (1,500,000)
Purchases of available for sale investment securities (8,508) (2,046,527)
Purchases of held to maturity investment securities -- (2,500,000)
Purchases of premises and equipment (86,521) (106,497)
------------ ------------
Net cash used by investing activities (4,171,528) (5,128,049)
------------ ------------
Financing activities:
Net change in advance payments by borrowers for taxes and insurance 283,898 10,791
Proceeds from Federal Home Loan Bank advances 14,000,000 --
Payments on Federal Home Loan Bank advances (13,500,000) (2,000,000)
Net increase in Money Market, NOW and Passbook savings accounts 2,035,342 2,956,091
Net increase in certificate accounts 169,009 1,765,869
Purchases of treasury stock (444,355) --
Cash in lieu of stock dividend on fractional shares -- (4,901)
Common stock cash dividends paid (69,297) (56,990)
------------ ------------
Net cash provided by financing activities 2,474,597 2,670,860
------------ ------------
Net decrease in cash and cash equivalents (1,371,222) (2,013,180)
Cash and cash equivalents at beginning of period 5,198,313 10,152,957
------------ ------------
Cash and cash equivalents at end of period $ 3,827,091 $ 8,139,777
============ ============
Supplemental disclosures of cash flow information:
Cash paid during the period for income taxes $ 95,275 $ 70,000
Cash paid during the period for interest on deposits and borrowings 1,929,488 1,786,293
============ ============
Supplemental schedule of noncash investing activity:
Loans transferred to real estate owned $ 17,000 $ --
</TABLE>
The accompanying notes are an integral part of these financial statements
4
<PAGE> 7
PRESTIGE BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 2000
(UNAUDITED)
1. BASIS OF ORGANIZATION:
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 Plan provided that the holding company offer nontransferable subscription
rights to purchase common stock of the holding company. The rights were offered
first to eligible account holders of record, a tax-qualified employee stock
ownership plan to be adopted by the Bank, supplemental eligible account holders,
certain other depositors and borrowers, and directors, officers and employees.
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 per
share. Simultaneously there was a corresponding exchange of all of the Bank's
stock for approximately 50% of the net offering proceeds. The remaining portion
of the net proceeds were 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 accounting principles generally accepted
in the United States 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-month period ended March 31,
2000, are not necessarily indicative of the results to be expected for the year
ending December 31, 2000.
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, 1999, contained in the Corporation's Annual Report and Form
10-K.
Earnings Per Common Share
The Corporation follows 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. Treasury shares are treated as retired for earnings
per share purposes.
5
<PAGE> 8
The following tables reflect the calculation of earnings per share under SFAS
No. 128.
<TABLE>
<CAPTION>
Three Months Ended
---------------------------
March 31, March 31,
2000 1999
-------- --------
<S> <C> <C>
Basic earnings per share:
Net income $239,810 $204,408
Average shares outstanding 906,327 913,971
Earnings per share $ 0.26 $ 0.22
Diluted earnings per share:
Net income $239,810 $204,408
Average shares outstanding 906,327 913,971
Stock options -- 606
-------- --------
Diluted average shares outstanding 906,327 914,577
Earnings per share $ 0.26 $ 0.22
</TABLE>
For the three months ended March 31, 2000 and 1999, options to purchase 107,426
and 92,725 shares of common stock, respectively, 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 period.
On February 17, 1999 the Board of Directors declared a stock dividend of 5% to
shareholders of record of March 2, 1999 which was paid on March 19, 1999. All
per share data have been restated to reflect the stock dividend.
Comprehensive Income
The Corporation follows SFAS No. 130, "Reporting Comprehensive Income". 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 the balance sheet.
6
<PAGE> 9
3. INVESTMENT SECURITIES:
----------------------
The cost and market values of investment securities are summarized as follows:
Investment securities held to maturity:
<TABLE>
<CAPTION>
March 31, 2000
--------------------------------
Amortized Market
Cost Value
----------- -----------
<S> <C> <C>
U.S. government and government
agency obligations:
Due within one year $ 1,000,480 $ 993,440
Due after one and within five years 505,341 475,248
Due after five and within ten years 8,495,559 7,999,185
Due after ten years 6,863,920 6,340,574
Federal Home Loan Mortgage
Corporation (FHLMC) certificates:
Due after five and within ten years 2,301,521 2,227,131
Due after ten years 1,381,779 1,363,292
Government National Mortgage
Association (GNMA) certificates:
Due after ten years 1,688,961 1,632,489
Federal National Mortgage
Association (FNMA) certificates:
Due after ten years 1,853,990 1,737,095
----------- -----------
$24,091,551 $22,768,454
=========== ===========
</TABLE>
Investment securities available for sale:
<TABLE>
<CAPTION>
March 31, 2000
--------------------------------
Amortized Market
Cost Value
----------- -----------
<S> <C> <C>
U.S. government and government
agency obligations:
Due within one year $ 1,000,280 $ 990,310
Due after one and within five years 3,500,000 3,349,025
Due after five and within ten years 500,000 470,315
Corporate Debentures 493,897 462,340
Federal Home Loan Mortgage
Corporation (FHLMC) certificates:
Due after ten years 1,956,001 1,847,471
Federal National Mortgage Association
FNMA) certificates:
Due within one year 711,989 704,199
Due after ten years 1,416,088 1,331,064
Mutual fund investment 561,295 553,912
Common stock portfolio 1,412,891 991,748
----------- -----------
$11,552,441 $10,700,384
=========== ===========
</TABLE>
7
<PAGE> 10
4. LOANS RECEIVABLE:
Loans receivable are summarized as follows:
<TABLE>
<CAPTION>
March 31,
2000
------------
<S> <C>
Real estate loans:
1-4 family $ 99,199,472
Construction 2,512,200
Commercial real estate 16,068,436
------------
117,780,108
Less- Undisbursed loan proceeds 1,014,510
------------
116,765,598
Commercial business loans: 21,895,719
Consumer loans:
Home equity 11,241,486
Student 2,418,085
Automobile 2,482,036
Collateral 594,990
Credit cards 551,870
Personal unsecured/other 501,503
------------
17,789,970
------------
156,451,287
Less- Allowance for loan losses 1,093,280
Deferred loan costs (1,410)
------------
$155,359,417
============
</TABLE>
5. ALLOWANCE FOR LOAN LOSSES:
Activity with respect to the allowance for loan losses is summarized as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
-----------------------------
2000 1999
---------- --------
<S> <C> <C>
Balance at beginning of period $ 982,588 $571,183
Provision for loan losses 120,000 90,000
Charge-offs (9,308) (9,647)
---------- --------
Balance at end of period $1,093,280 $651,536
========== ========
</TABLE>
8
<PAGE> 11
6. DEPOSITS:
The scheduled maturities of the Bank's certificate accounts as of March 31, 2000
are as follows (amounts approximate):
<TABLE>
<S> <C>
April 1, 2000 to March 31, 2001 $38,363,295
April 1, 2001 to March 31, 2002 9,386,753
April 1, 2002 to March 31, 2003 4,685,241
April 1, 2003 to March 31, 2004 2,964,499
April 1, 2004 and thereafter 2,588,314
-----------
TOTAL $57,988,102
===========
Certificates of $100,000 or more $10,598,726
===========
</TABLE>
7. INCOME TAXES:
The provision for income taxes is as follows:
<TABLE>
<CAPTION>
Three Months Ended
March 31,
--------------------------
2000 1999
-------- --------
<S> <C> <C>
Federal $123,547 $103,360
State 28,029 21,426
-------- --------
$151,576 $124,786
======== ========
</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 March 31, 2000, and December 31, 1999,
amounted to $623,316 and $634,845, respectively.
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 $30,000 during the three months ended March 31, 2000 compared to
$34,000 for the comparable period of 1999.
9
<PAGE> 12
The aforementioned approval of the Option Plan made 116,285 options available
for grant to employees and others who perform substantial services for the
Corporation. As of March 31, 2000, the Corporation had granted 109,079 options
of which 1,146 shares had been forfeited. The options are exercisable one year
from the grant date and vest in equal installments over a period of five years.
As of March 31, 2000, there had been 507 options exercised. The maximum term of
any option granted under the Plan cannot exceed 10 years.
On February 17, 1999 the Board of Directors declared a stock dividend of 5% to
shareholders of record of March 2, 1999 which was paid on March 19, 1999. All
option data above have been restated to reflect the stock dividend.
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 Under Prompt Corrective
Actual Adequacy Purposes Action Provisions
------------------------ ------------------------ ---------------------------
Amount Ratio Amount Ratio Amount Ratio
-------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to Risk
Weighted Assets):
As of
March 31, 2000 $15,083 13.74% >$8,783 >8.0% >$10,979 >10.0%
= = = =
Tier 1 Capital (to Risk
Weighted Assets):
As of
March 31, 2000 $13,990 12.74% >$4,392 >4.0% >$6,587 >6.0%
= = = =
Tier 1 Capital (to
Average Assets):
As of
March 31, 2000 $13,990 6.94% >$8,059 >4.0% >$10,074 >5.0%
= = = =
</TABLE>
11. COMMITMENTS AND CONTINGENT LIABILITIES:
The Corporation incurs off-balance sheet risks in the normal course of business
in order to meet the financing needs of its customers. These risks derive from
commitments to extend or receive credit. Such commitments involve, to varying
degrees, elements of credit risk in excess of the amount recognized in the
financial statements.
Commitments to extend credit are obligations to lend to a customer as long as
there is no violation of any condition established in the loan agreement.
Commitments generally have fixed expiration dates or other termination clauses.
A portion of the commitments is not expected to be drawn upon; thus, the total
commitment amounts do not necessarily represent future cash requirements. Each
customer's creditworthiness is evaluated on a case-by-case basis.
10
<PAGE> 13
The Bank's exposure to credit loss in the event of nonperformance by the other
party to these commitments to extend credit is represented by their contractual
amounts. The Bank uses the same credit and collateral policies in making
commitments as for all other lending. The Bank has outstanding various
commitments to extend credit approximating $13.7 million as of March 31, 2000.
In the opinion of management, the funding of the credit commitments will not
have a material adverse effect on the Bank's financial position or results of
operations.
Additionally, the Bank is also subject to asserted and unasserted potential
claims encountered in the normal course of business. In the opinion of
management and legal counsel, the resolution of these claims will not have a
material adverse effect on the Bank's financial position or results of
operations.
12. FUTURE ACCOUNTING STANDARDS:
The Financial Accounting Standards Board ("FASB") has issued SFAS 133,
"Accounting for Derivative Instruments and Hedging Activities," which
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments embedded in other contracts, and
hedging activities. As amended by SFAS 137, the standard is effective for fiscal
years beginning after June 15, 2000, and will be adopted by the Corporation for
the year ended December 31, 2001. The impact of adoption is not expected to
materially affect the Corporation's financial condition or results of
operations.
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 include all of the outstanding capital stock of
the Savings Bank, a loan receivable from the Prestige Bancorp Employee Stock
Ownership Trust (the "ESOP"), an officer loan, deposits maintained at the
Savings Bank, common stock of mostly savings associations or savings and loan
holding companies and other assets (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. As of March 31, 2000, the Corporation had outstanding borrowings of
$375,000 from the Savings Bank to support cash levels. The loan is adequately
secured in accordance with applicable law.
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 commercial business
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. In addition, management believes it can properly
manage the risks of greater consumer and commercial lending.
At March 31, 2000, the Corporation's total assets amounted to $203.4
million compared with $200.6 million at December 31, 1999. The $2.8 million or
1.4% increase was primarily due to increases of $4.4 million or 2.9% in net
loans receivable that was partially offset by a reduction in cash and cash
equivalents of $1.4 million or 26.4%. The growth in net loans receivable was
attributed to increases in commercial business and commercial real estate of
$983,000 or 2.7%, $3.0 million or 3.1% in one-to-four family residential real
estate loans and $457,000 or 2.6% in consumer loans. Decreased cash and cash
equivalents of $1.4 million were primarily attributable to $4.5 million in new
loans in excess of principal payments received on existing loans which was
partially offset by an increase in deposits and Federal Home Loan Bank ("FHLB")
advances of $2.2 million and $500,000, respectively. Total stockholders' equity
amounted to $14.6 million or 7.18% of total assets at March 31, 2000, compared
to equity of $15.0 million or 7.46% of total assets at December 31, 1999. The
$347,000 decrease in stockholders' equity was primarily attributable to stock
repurchases of $444,000 and cash dividends of $69,000. This was partially offset
by net income of $240,000. The Corporation paid dividends totaling $.07 per
share for the three months ended March 31, 2000 compared to $.06 per share for
the same period in 1999.
The Corporation's nonperforming assets increased $689,000 or 51.6% to
$2.0 million at March 31, 2000, compared to $1.3 million at December 31, 1999.
The increase was primarily due to an rise in
12
<PAGE> 15
nonperforming commercial business loans from $131,000 at December 31, 1999 to
$588,000 at March 31, 2000. The $588,000 of nonperforming commercial business
loans was comprised of ten loans. Management continues to take appropriate
measures to address these deficiencies and does not believe that it will sustain
a loss. However, these loans will continue to be monitored and appropriately
reserved under the allowance for loan losses.
There is one nonperforming commercial real estate loan of $458,000 at
December 31, 1999 that is backed by the Small Business Administration ("SBA").
This loan is 75% guaranteed by the SBA. After realization of the collateral,
management is of the opinion it may sustain a loss, but such loss has been
adequately reserved through the general allowance for loan loss and is not
expected to result in a material adverse effect on the Bank's financial position
or results of operations. In addition, there is one performing commercial
business loan that represents a potential problem. At March 31, 2000, the
balance outstanding of this loan was $339,000. In the opinion of management, the
resolution of this potential loan problem is not expected to have a material
adverse effect on the Bank's financial position or results of operations.
The following table sets forth the amounts and categories of the
Savings Bank's nonperforming assets at the dates indicated. The Savings Bank had
no loans during the periods indicated below which should be classified as
troubled debt restructurings.
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31, MARCH 31,
--------- ------------ ---------
2000 1999 1999
---- ---- ----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Non-accruing loans:
One-to-four family residential........ $ 364 $ 327 $ 449
Construction loans ................... 159 49 --
Consumer loans ....................... 230 116 144
Commercial real estate ............... 458 458 564
Commercial business loans ............ 588 131 --
------ ------ ------
Total nonperforming loans .......... 1,799 1,127 1,157
Real estate owned .................... 224 207 205
------ ------ ------
Total nonperforming assets ......... $2,023 $1,334 $1,362
====== ====== ======
Total nonperforming loans as a
percentage of total loans .......... 1.14% .74% .89%
====== ====== ======
Total nonperforming assets as a
percentage of total assets ......... .99% .67% .76%
====== ====== ======
</TABLE>
RESULTS OF OPERATIONS
GENERAL--The Corporation's net income for the quarter ended March 31,
2000 was $240,000 or $.26 per diluted share compared to net income of $204,000
or $.22 per diluted share for the same quarter in the prior year. Excluding gain
on sale of investments of $5,000, net of tax, core net income for the quarter
ended March 31, 2000 was $235,000 or $.26 per diluted share. This compares to
core net income of $180,000 or $.20 per diluted share for the quarter ended
March 31, 1999. The $55,000 or 30.6% increase in core net income for the quarter
ended March 31, 2000, as compared to the quarter ended March 31, 1999, was
primarily the result of an increase of $192,000 or 14.5% in net interest income
before provision for loan losses and an increase in fees and service charges of
$45,000 or 27.8%. That increase was partially offset by increases of $114,000 or
10.3% and $30,000 or 33.3% in total other expenses and provision for losses on
loans, respectively. The annualized return on average assets and return on
average equity for the three months ended March 31, 2000, excluding gain on sale
of investments, were .46% and 6.32%, respectively, compared to .40% and 4.85%,
respectively, for the same period of 1999.
13
<PAGE> 16
INTEREST INCOME--The Corporation reported interest income of $3.6
million for the three months ended March 31, 2000, as compared to $3.1 million
for the three months ended March 31, 1999. The increase of $515,000 or 16.6% for
the quarter ended March 31, 2000, compared to the same period in the prior year
can be attributed to a $519,000 or 21.2% increase in interest and fees on loans.
The increase of $519,000 in interest and fees on loans was primarily the result
of loan growth. Commercial business and commercial real estate loans were areas
of focused growth within the Corporation's lending portfolio. Average balances
for commercial business and commercial real estate loans, including net
construction loans, during the first quarter of 2000 were $38.0 million,
compared to $28.3 million for the same period in 1999. The average balances on
total loans receivable, net of undisbursed loan proceeds, during the first
quarter of 2000 were $154.7 million compared to $127.4 million for the same
period in 1999.
INTEREST EXPENSE--Interest expense increased $322,000 or 18.1% during
the three months ended March 31, 2000 as compared to the same period last year.
This increase was due to growth in average interest-bearing liabilities and a
rise in the weighted average interest rate paid on interest-bearing liabilities.
Average deposits and Federal Home Loan Bank (FHLB) of Pittsburgh advances during
the first quarter of 2000 were $121.9 million and $63.1 million, respectively,
compared to $113.3 million and $50.3 million, respectively, for the same period
in 1999. The weighted average interest rate on interest-bearing liabilities
during the first quarter of 2000 was 4.5% compared to 4.3% for the same period
in 1999.
PROVISION FOR LOAN LOSSES--During the three months ended March 31, 2000
the Corporation recorded provisions for losses on loans of $120,000 compared to
$90,000 for the comparable periods in 1999. The Corporation establishes a
provision for loan losses which is charged to operations. The allowance for loan
losses is maintained at a level which is deemed to be appropriate based upon a
comprehensive methodology and procedural discipline that is updated on a monthly
basis. This methodology includes:
o A detailed review of all criticized and impaired loans is performed to
determine if any specific reserve allocations are required on an
individual loan basis. The specific reserve established for these
criticized and impaired loans is based on careful analysis of the
loan's performance, the related collateral value, cash flow
considerations and the financial capability of any guarantor.
o The application of reserve allocations to all outstanding loans and
certain unfunded commitments is based upon review of historical losses
and qualitative factors, which include but are not limited to,
economic trends, delinquencies, concentrations of credit, trends in
loan volume, experience and depth of management, examination and audit
results, effects of any changes in lending policies and trends in
policy exceptions.
o The application of reserve allocations for all commercial and
commercial real estate loans are calculated by using a risk rating
system. All loans are assigned risk ratings based upon an internal
review. There are ten risk ratings, and each rating has a
corresponding reserve factor that is used to calculate the required
reserve.
o The maintenance of a general unallocated reserve occurs in order to
provide conservative positioning and protection against unknown events
or circumstances that have occurred, but have not yet been identified
by the Savings Bank through its credit administration process. It must
be emphasized that a general unallocated reserve is prudent
recognition of the fact that reserve estimates, by definition, lack
precision.
14
<PAGE> 17
After completion of this process, evaluation of the adequacy of the reserve
and the establishment of the provision level for the next month are performed.
The Corporation believes that the procedural discipline, systematic methodology
and documentation of this monthly process provide appropriate support for
accounting purposes.
When it is determined that the prospects for recovery of the principal of a
loan have significantly diminished, the loan is immediately charged against the
allowance account; subsequent recoveries, if any, are credited to the allowance
account. In addition, non-accrual, delinquent loans greater than sixty days and
problem loans are reviewed monthly to determine potential losses. Generally,
consumer loans are considered losses when they are 180 days past due. The
Savings Bank's management is unable to determine in what loan category future
charge-offs and recoveries may occur. Therefore, the entire allowance for loan
losses is available to absorb future loan losses in any loan category. During
the three months ended March 31, 2000, the Corporation charged off $5,000 in
one-to-four family residential loans and $4,000 in consumer loans.
Although management utilizes its best judgment in providing for losses,
there can be no assurance that the Savings Bank will not have to increase its
provision for loan losses in the future as a result of increases in higher risk
commercial and consumer loans, future changes in the economy or for other
adverse reasons discovered from the comprehensive methodology described above.
In addition, various regulatory agencies, as an integral part of their
examination process, periodically review the Savings Bank's provision for loan
losses and the carrying value of its other nonperforming assets based on their
judgments from information available at the time of their examination. The OTS
last examined the Savings Bank as of March 31, 1999. Management and the
directors of the Corporation and the Savings Bank believe that the allowance for
loan losses is currently adequate.
The Savings Bank's management is unable to determine in what loan category
future charge-offs and recoveries may occur. The following schedule sets forth
the allocation of the allowance for loan losses among various categories. The
entire allowance for loan losses is available to absorb future loan losses in
any loan category.
<TABLE>
<CAPTION>
MARCH 31, 2000 DECEMBER 31, 1999 MARCH 31, 1999
------------------ ----------------- -----------------
% OF % OF % OF
LOANS IN LOANS IN LOANS IN
EACH EACH EACH
CATEGORY CATEGORY CATEGORY
TO TOTAL TO TOTAL TO TOTAL
AMOUNT LOANS AMOUNT LOANS AMOUNT LOANS
------ ----- ------ ----- ------ -----
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
One-to-four family residential.................... $ 168 63.00% $169 62.78% $148 63.61%
Construction...................................... 15 1.60 16 1.77 4 1.60
Commercial business and
commercial real estate.......................... 585 24.11 638 24.14 423 22.42
Consumer:
Automobile, home equity, student,
share and other consumer........................ 81 11.30 72 11.31 44 12.37
Allocation to general risk........................ 244 -- 88 -- 33 --
------ ------ ---- ------ ---- ------
Total.......................................... $1,093 100.00% $895 100.00% $619 100.00%
====== ====== ==== ====== ==== ======
</TABLE>
OTHER INCOME--Total other income increased $45,000, net of gains and
losses on sales of investments and assets, for the three months ended March 31,
2000 compared to same period in 1999. The increases were attributed to increases
in fees and service charges generated from an increase in total transaction
accounts.
15
<PAGE> 18
OTHER EXPENSES-- Total other expenses increased $114,000 or 10.3% for
the quarter ended March 31, 2000, as compared to the quarter ended March 31,
1999. The increase in total other expenses occurred as a result of a $73,000 or
12.9% increase in salaries and employee benefits primarily attributable to two
additional employees hired as a result of the commercial loan expansion and
approved salary increases. Additionally, there was an increase of $10,000 in
transaction processing costs primarily due to growth in total transaction
accounts.
INCOME TAXES--The Corporation recorded a provision for income taxes of
$152,000 for the three months ended March 31, 2000 as compared to $125,000 for
the same period the prior year. Such increase for 2000 as compared to 1999 was
due to an increase 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 that provide 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 Federal Home Loan Bank ("FHLB") of
Pittsburgh to leverage its strong capital position. As of March 31, 2000, the
Corporation had $63.5 million of outstanding advances from the FHLB of
Pittsburgh.
During the three months ended March 31, 2000 and 1999, the
Corporation's operating activities provided net cash of approximately $326,000
and $444,000, respectively. The primary reasons for the $326,000 net cash
provided during the three months ended March 31, 2000 were $240,000 in net
income, $170,000 increase in accrued interest payable, and $120,000 in provision
for loan losses, which was partially offset by a $155,000 increase in accrued
interest receivable and a $146,000 increase in other assets. During the three
months ended March 31, 1999, the $444,000 net cash provided by operating
activities was the result of $204,000 in net income, $85,000 in depreciation of
premises and equipment, $90,000 in provision in loan losses and a $137,000
decrease in other assets, which was partially offset by a $100,000 increase in
accrued interest receivable.
Net cash used by investing activities was $4.2 million for the three
months ended March 31, 2000. The primary reason for the $4.2 million net cash
used by investing activities was the Corporation originated $4.5 million in new
loans in excess of principal payments received on existing loans. During the
three months ended March 31, 1999, the Corporation had originated $4.7 million
in new loans in excess of principal payments received on existing loans and
purchased $2.5 million and $2.0 million of investment securities designated held
to maturity and available for sale, respectively. These uses of cash by
investing activities were partially offset by $3.0 million and $1.0 million of
held to maturity securities and available for sale securities, respectively,
that were called.
Net cash provided by financing activities for the three months ended
March 31, 2000, was $2.5 million. This was attributable to increases in core
deposits and certificates of $2.2 million and $500,000 in net FHLB advances.
During the same period last year, the Corporation experienced a $2.7 million
increase
16
<PAGE> 19
in net cash provided by financing activities primarily due to a $4.7 million
increase in core deposits and certificates that was partially offset by a
decrease in net FHLB advances of $2.0 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 March 31, 2000, the Savings Bank's tangible, core, and risk-based capital
ratios amounted to 6.90%, 6.90%, and 13.74%, 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 were anticipated for many
such products and systems when attempting to process information containing
dates that fall after December 31, 1999. This problem was commonly referred to
as the "Year 2000" problems, and the acronym "Y2K" was commonly substituted for
the phrase "Year 2000."
The Corporation and the Savings Bank began a process in 1997 that assigned
an individual to begin investigating the Y2K issues. It was determined that the
Savings 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, two employees of the Savings 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, 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 the Savings Bank to service its customers and ensure business
continuity for its shareholders, customers and employees. Communication was
initiated with all of the Savings Bank's vendors; for some vendors (i.e., PC and
network vendors) Year 2000 information was available via the Internet.
Due to Corporation's Y2K preparation, the Corporation did not experience any
significant Y2K problems. Although the Corporation is unable at this time to
assess any future impact of any other dates which might cause Y2K failures,
management does not believe at the current time that the cost of remediating
these Y2K problems will have a material adverse impact upon its business,
results of operations, liquidity or financial condition.
The Corporation's costs associated with Year 2000 included replacement of
non-compliant computer, telephone, software, and related equipment. Excluding
costs of Corporation's personnel time, the Corporation estimated that the total
Year 2000 project costs would not exceed $131,000 (pre-tax). As of March 31,
2000, the Corporation estimated that it had incurred $116,000 in connection with
its Y2K project plan. Most of these costs related to equipment acquisitions and
accordingly have been capitalized.
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
a) An annual meeting of shareholders of the Corporation was
held on April 26, 2000 ("Annual Meeting").
b) 1. Charles P. McCullough, elected to new three year term
2. James M. Hein, elected to new three year term
3. John A. Stiver
4. Patricia A. White
5. Mark R. Schoen
6. Michael R. Macosko
7. Martin W. Dowling
c) There were 980,964 shares of Common Stock of the
Corporation eligible to be voted at the Annual Meeting and
846,423 shares were represented at the meeting by the
holders thereof, which constituted a quorum. The items
voted upon at the Annual Meeting and the vote for each
proposal were as follows:
1. Election of directors for a three-year term.
<TABLE>
<CAPTION>
For Withheld
--- --------
<S> <C> <C>
Charles P. McCullough................. 774,153 72,270
James M. Hein......................... 774,153 72,270
</TABLE>
2. Proposal to ratify the appointment of Arthur Andersen
LLP as the Corporation's independent auditors for the
year ending December 31, 2000.
<TABLE>
<CAPTION>
For Against Abstain
--- ------- -------
<S> <C> <C>
842,215 1,449 2,759
</TABLE>
Each of the proposals was adopted by the shareholders of
the Corporation.
d) 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: May 12, 2000 By: /s/ John A. Stiver
-------------------------------
John A. Stiver,
Chairman of the Board, Chief
Executive Officer and President
Dated: May 12, 2000 By: /s/ James M. Hein
-------------------------------
James M. Hein,
Chief Financial Officer
19
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<EXCHANGE-RATE> 1
<CASH> 842
<INT-BEARING-DEPOSITS> 2,985
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 10,700
<INVESTMENTS-CARRYING> 24,092
<INVESTMENTS-MARKET> 22,768
<LOANS> 156,451
<ALLOWANCE> 1,093
<TOTAL-ASSETS> 203,410
<DEPOSITS> 122,695
<SHORT-TERM> 0
<LIABILITIES-OTHER> 2,632
<LONG-TERM> 63,477
0
0
<COMMON> 9,403
<OTHER-SE> 5,203
<TOTAL-LIABILITIES-AND-EQUITY> 203,410
<INTEREST-LOAN> 2,964
<INTEREST-INVEST> 617
<INTEREST-OTHER> 35
<INTEREST-TOTAL> 3,616
<INTEREST-DEPOSIT> 1,183
<INTEREST-EXPENSE> 2,099
<INTEREST-INCOME-NET> 1,516
<LOAN-LOSSES> 120
<SECURITIES-GAINS> 8
<EXPENSE-OTHER> 1,225
<INCOME-PRETAX> 391
<INCOME-PRE-EXTRAORDINARY> 391
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 240
<EPS-BASIC> .26
<EPS-DILUTED> .26
<YIELD-ACTUAL> 307
<LOANS-NON> 1,799
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 797
<ALLOWANCE-OPEN> 983
<CHARGE-OFFS> 9
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,093
<ALLOWANCE-DOMESTIC> 849
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 244
</TABLE>
