<PAGE>
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1996
Commission file number 0-28080
-------
UNITED FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
MINNESOTA 81-0507591
- --------- ----------
(State or other jurisdiction of (I.R.S. Employer ID No.)
incorporation or organization)
P.O. Box 2509; 601 1st Ave. North, Great Falls, Montana 59403
- ---------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (406) 761-2200
--------------
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 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 [ ]
The number of shares of Registrant's $1.00 par value common stock outstanding
on September 30, 1996, was 1,223,312. No preferred shares were outstanding.
Registrant's common stock is traded Over-The-Counter on the NASDAQ National
Market System, symbol UBMT.
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UNITED FINANCIAL CORP.
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
Consolidated Statements of Financial Condition at September
30, 1996, September 30, 1995 and December 31, 1995 1 & 2
Consolidated Statements of Income - Three Months Ended
September 30, 1996 and September 30, 1995 3
Consolidated Statements of Income - Nine Months Ended
September 30, 1996 and September 30, 1995 3
Consolidated Statements of Cash Flows - Nine Months Ended
September 30, 1996 and September 30, 1995 4
Consolidated Statement of Changes in Stockholders'
Equity - Nine Months Ended September 30, 1996 5
Notes to Consolidated Financial Statements 6
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 17
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS 23
ITEM 2 CHANGE IN SECURITIES 23
ITEM 3 DEFAULTS ON SENIOR SECURITIES 23
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDER 23
ITEM 5 OTHER INFORMATION 23
ITEM 6 EXHIBITS 23
REPORTS ON FORM 8-K 23
SIGNATURES 24
ii
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PART I - FINANCIAL INFORMATION
ITEM 1 FINANCIAL STATEMENTS
UNITED FINANCIAL CORP. AND SUBSIDIARY
Consolidated Statements of Financial Condition
(Dollars in thousands, except equity/assets, share and per share data)
(Unaudited, except December 31)
September 30, December 31,
1996 1995 1995
ASSETS ------------------ ------------
Cash and cash equivalents:
Cash and amounts due from banks $ 673 $ 564 $ 805
Interest-earning deposits with banks 485 3,372 416
--------- --------- ---------
1,158 3,936 1,221
Investments:
Securities held-to-maturity 36,764 22,247 43,117
Securities available-for-sale 31,655 42,723 35,261
--------- --------- ---------
68,419 64,970 78,378
Loans receivable, net 33,585 30,481 30,352
Premises and equipment, net 1,432 1,526 1,494
Real estate owned 666 500 491
Accrued interest receivable 956 1,128 916
Federal Home Loan Bank stock, at cost 379 351 476
Other assets 1,350 1,321 1,112
--------- --------- ---------
$107,945 $104,213 $114,440
========= ========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
NOW and money market demand accounts $ 8,407 $ 7,935 $ 8,167
Savings deposits 30,317 33,437 32,461
Time deposits 39,568 36,777 37,663
--------- --------- ---------
78,292 78,149 78,291
Federal Home Loan Bank advances 3,650 10,500
Accrued interest payable 276 304 68
Advance payments by borrowers for
taxes and insurance 522 1,067 224
Income taxes payable 83 287 260
Other liabilities 802 194 409
--------- --------- ---------
83,625 80,001 89,752
1
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September 30, Dec. 31,
1996 1995 1995
------------------ ---------
Stockholders' equity:
Preferred stock, $1.00 par value
(2,000,000 shares authorized;
none outstanding)
Common stock, $1.00 par value
(8,000,000 shares authorized;
1,223,312 outstanding) 1,223 1,223 1,223
Paid-in capital 7,626 7,663 7,663
Retained earnings-partially restricted 15,991 15,769 16,046
Unrealized loss on securities
available-for-sale (520) (443) (244)
--------- --------- ---------
24,320 24,212 24,688
--------- --------- ---------
$107,945 $104,213 $114,440
========= ========= =========
Equity/Assets 22.5% 23.2% 21.6%
Book Value/Share $19.89 $19.80 $20.18
2
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UNITED FINANCIAL CORP. AND SUBSIDIARY
Consolidated Statements of Income
(Dollars in thousands, except per share data-unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
1996 1995 1996 1995
------------------ -----------------
Interest Income:
Loans $ 756 $ 721 $2,150 $2,158
Mortgage-backed securities 507 296 1,550 936
Investment securities 544 728 1,578 2,327
Interest-earning deposits 14 73 124 158
------------------ -----------------
1,821 1,818 5,402 5,579
Interest Expense:
Deposits 867 857 2,603 2,547
Borrowings 12 71 2
------------------ -----------------
879 857 2,674 2,549
Net interest income 942 961 2,728 3,030
Provision for losses on loans
------------------ -----------------
Net interest income after
provision for losses on loans 942 961 2,728 3,030
Noninterest Income:
Fees and discounts 137 115 325 269
FHLB stock dividends 7 6 24 17
Investment securities sales,
net gain 132 2
Other income 48 51 162 158
------------------ -----------------
192 172 643 446
Noninterest Expense:
Salaries and employee benefits 280 290 850 864
Net occupancy and equipment expense 63 66 184 187
Data processing expense 22 21 67 70
FDIC/SAIF deposit insurance 595 48 685 153
Other expenses 123 105 393 308
------------------ -----------------
1,083 530 2,179 1,582
------------------ -----------------
Income before income taxes 51 603 1,192 1,894
Provision for income taxes 14 225 440 706
------------------ -----------------
Net income $ 37 $ 378 $ 752 $1,188
================== =================
Weighed average shares outstanding 1,223,312 1,223,312 1,223,312 1,223,312
Earnings per share $.03 $.31 $.62 $.97
3
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UNITED FINANCIAL CORP. AND SUBSIDIARY
Consolidated Statements of Cash Flows (Dollars in thousands-unaudited)
September 30,
1996 1995
Operating Activities: -------- --------
Net income $ 752 $ 1,188
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization of bank
premises and equipment 86 86
Depreciation of real estate held for investment 27 28
Investment securities net (accretion) or amortization (174) (13)
Sales of available-for-sale securities, net gain (132) (2)
Loans originated for the secondary market (9,078) (6,025)
Proceeds from secondary market loan sales 8,978 6,136
Federal Home Loan Bank stock dividends (23) (17)
Net change in income taxes payable (177) (6)
Net change in accrued interest receivable (41) (122)
Net change in accrued interest payable 208 262
Net change in other assets 79 (21)
Net change in other liabilities 393 (76)
-------- --------
Net cash provided by operating activities 898 1,418
Investing Activities:
Purchases of held-to-maturity securities (17,047) (1,854)
Proceeds from matured held-to-maturity securities 1,000 1,195
Proceeds from called held-to-maturity securities 1,000 1,000
Mortgage-backed securities principal collections 21,590 3,291
Purchases of available-for-sale securities (6,908)
Proceeds from matured available-for-sale securities 5,000
Proceeds from called available-for-sale securities 2,000 2,294
Proceeds from sales of available-for-sale securities 3,139 6,004
Loans originated for portfolio (14,311) (8,422)
Proceeds from sales of portfolio loans 2,239 2,030
Loan principal collections 7,868 6,610
All other changes in loans, net 904 814
Purchases of premises and equipment (24) (301)
Net change in real estate owned (136) 35
Proceeds from Federal Home Loan Bank stock redemptions 120 57
-------- --------
Net cash provided by investing activities 6,434 12,753
Financing Activities:
Net increase (decrease) in deposits 1 (10,937)
Net repayment of Federal Home Loan Bank advances (6,850)
Net increase in advance escrow payments by borrowers 298 801
Capitalized holding company formation costs (37)
Cash dividends paid (807) (734)
-------- --------
Net cash (used) by financing activities (7,395) (10,870)
-------- --------
(Decrease) increase in cash and cash equivalents (63) 3,301
Cash and cash equivalents at beginning of year 1,221 635
-------- --------
Cash and cash equivalents at end of period $ 1,158 $ 3,936
======== ========
Supplemental Cash Flow Disclosure:
Cash payments for interest $ 2,466 $ 2,287
Cash payments for income taxes $ 481 $ 712
4
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UNITED FINANCIAL CORP. AND SUBSIDIARY
Consolidated Statement of Changes in Stockholders' Equity
(Dollars in thousands, except per share data)
(Unaudited, except December 31)
Nine Months Ended September 30, 1996
----------------------------------------------
Unrealized
holding
gains
Common Paid-In Retained (losses)
Stock Capital Earnings net Total
------- ------- -------- -------- -------
Balance-December 31, 1995 $1,223 $7,663 $16,046 $(244) $24,688
Net income 752 752
Cash dividends paid
($.66 per share) (807) (807)
Increase in unrealized
loss on investment
securities
available-for-sale (276) (276)
Capitalized holding
company formation
costs (37) (37)
------ ------- -------- ------ --------
Balance-September 30, 1996 $1,223 $7,626 $15,991 $(520) $24,320
====== ======= ======== ====== ========
5
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UNITED FINANCIAL CORP. AND SUBSIDIARY
Notes to Consolidated Financial Statements
(Unaudited)
Basis of Presentation -- The consolidated financial statements included herein
have been prepared in accordance with generally accepted accounting principles
for interim financial information and with instructions to Form 10-Q and Rule
10-01 of Securities and Exchange Commission Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by generally
accepted accounting principles for complete financial statements. In the
opinion of management, the information contained herein reflects all postings
and disclosures (consisting only of normal recurring adjustments) necessary
for a fair presentation of the consolidated financial condition, results of
operations, changes in stockholders' equity, and changes in cash flows for the
periods disclosed. Operating results for the three and nine months ended
September 30, 1996, are not necessarily indicative of the results anticipated
for the year ended December 31, 1996. For additional information, refer to
the consolidated audited financial statements and footnotes thereto included
in United Savings Bank's annual report and Form 10-K for the year ending
December 31, 1995.
Organizational Structure -- In the second quarter of 1996 a holding company
structure was approved by shareholders and regulators with United Savings Bank
becoming the wholly owned subsidiary of a newly formed Minnesota corporation,
United Financial Corp. Accordingly, the accompanying consolidated financial
statements include the accounts of United Financial Corp. (the Holding
Company) and its wholly owned and regulated thrift institution subsidiary,
United Savings Bank (the Bank). The consolidated financial statements also
include the Community Service Corporation, a wholly owned subsidiary of the
Bank. The Community Service Corporation, a Montana corporation, was formed in
1974 and engages in real estate management. All significant intercompany
balances and transactions have been eliminated in consolidation.
Cash Equivalents -- For purposes of the Consolidated Statements of Cash Flows,
all cash, daily interest and noninterest-bearing deposits with banks are
classified as cash equivalents.
Computation of Earnings Per Share -- Earnings per share are based on the
weighted average number of shares outstanding during the period. The weighted
average number of shares outstanding for the quarters and nine months ended
September 30, 1996, 1995, and for the year ended December 31, 1995, were
1,223,312 shares.
Dividends Declared -- On July 22, 1996, the Board of Directors of the Holding
Company declared a third-quarter 1996 cash dividend of $.225 per share, paid
August 26, 1996, to shareholders of record on August 12, 1996. On October 28,
1996, the Board of Directors of the Holding Company declared a fourth-quarter
1996 cash dividend of $.23 per share, payable November 25, 1996, to
shareholders of record on November 11, 1996.
6
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Material Contracts-Severance Agreements -- Beginning in 1993, and renewed each
year, the Board of Directors provided change of control severance agreements
to its President and each of its five Vice-Presidents. The agreements provide
for severance compensation in the event any company or person acquires control
of the Bank, as determined in accordance with applicable federal regulations.
Pursuant to his agreement upon a change of control, the Bank's President would
be entitled to lump-sum compensation equal to two times his annual base salary
plus any target bonuses, and 24 months of continued welfare and employee
benefits. The agreements with each of the five Vice-Presidents provide for
payment, upon a change of control, of lump-sum compensation equal to their
annual base salary, plus any target bonuses, and 12 months of continued
welfare and employee benefits.
New Legislation-FDIC/SAIF Insurance Special Assessment -- The omnibus
appropriations bill was signed into law on September 30, 1996. This
legislation includes a special assessment against the Bank and all thrifts to
capitalize the FDIC/SAIF deposit insurance fund to the statutory prescribed
1.25% of insured deposits level. For the Bank, this one-time special
assessment, to be paid no later than November 29, 1996, is $549,700, based
upon 65.7 basis points per $100 of the Bank's insured deposits on March 31,
1995. The Holding Company's financials, as of September 30, 1996, reflect
this additional FDIC/SAIF insurance expense, the after tax affect amounting to
a $338,300, or $.28 per share, reduction in 1996 third quarter and year-to-
date net income.
Beginning January 1, 1997, the Bank's FDIC/SAIF insurance premium is expected
to drop from its current rate of 23 basis points to 6.44 basis points per $100
of insured deposits. Commercial banks, now insured under the FDIC/BIF, are
expected to begin paying 1.29 basis points per $100 of insured deposits. In
addition, this new law provides for the merger of the BIF/SAIF on January 1,
1999, provided the bank and savings association charters have been merged by
that date. The Treasury Department is required to present recommendations to
Congress for establishment of a common depository insurance fund by March 31,
1997.
New Legislation-Repeal of the Thrift Bad Debt Reserve Method/Reserve
Recapture -- The Small Business Job Protection Act was signed into law on
August 20, 1996. This legislation includes, effective for tax years beginning
after December 31, 1995, the repeal of the thrift bad debt reserve method,
Internal Revenue Code (Code) section 593. The Bank, and all other thrifts,
now qualifying as a "small bank" (assets of $500 million, or less) will use
the "bank" experience method currently available under Code section 585. Large
thrifts (assets greater than $500 million) will use the "bank" specific
charge-off method of section 585.
Under the new law, a thrift is required to recapture any "applicable excess
reserves," i.e. the excess of the thrift's qualifying and non-qualifying bad
debt reserves, as of the close of the most recent taxable year prior to
January 1, 1996, over its base year reserves (qualifying and non-qualifying)
as of the close of its last taxable year beginning before January 1, 1988.
Since the Bank's bad debt reserves on December 31, 1995, are approximately the
same as its base year reserves ($3.2 million), the Bank will not have a
reserve recapture due to the repeal of Code section 593. The Bank's
supplemental reserve ($.9 million at December 31, 1995) is not subject to
recapture due to the repeal of the reserve method. However, pre-1988 base
year and supplemental reserves remain subject to recapture under the existing
provisions of Code section 593(e) which was not repealed. Certain events
7
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would still trigger a recapture of pre-1988 base year and supplemental
reserves. If a thrift liquidated, these reserves would be recaptured. If a
thrift redeems stock or pays dividends in excess of specified limits, a
portion of these reserves would be recaptured. If a thrift failed to qualify
as a "bank" (Code section 581) or merged into a non-bank entity, the reserves
would be recaptured. While the U.S. Treasury department has yet to promulgate
specific regulations regarding all applications of Code section 593(e),
generally, if the stock of a thrift with pre-1988 base year and supplemental
reserves is merged or liquidated tax free into a bank, the reserves would no
longer be subject to recapture. However, the new entity would remain subject
to Code section 593(e) recapture provisions.
The repeal of Code section 593 ends the 8% of taxable income bad debt
deduction, which in effect had reduced many thrifts' 34% marginal federal
corporate tax rate to approximately 31%. The Bank, beginning with its 1988
tax year, has not utilized the percentage of taxable income bad debt
deduction, and thus its 34% marginal federal corporate tax rate is unchanged
by the repeal of Code section 593.
What impact this new legislation, and other potential changes in federal law
regarding interstate banking and branching, Glass-Stegall Act revisions, the
potential merger of federal regulatory agencies, the continued consolidation
of the banking industry and other regulatory changes will have on the Bank's
operations cannot be predicted at this time.
Debt and Equity Investment Accounting -- In May 1993, the Financial Accounting
Standards Board (FASB) issued Statement No. 115, "Accounting for Investments
in Certain Debt and Equity Securities." This Statement addresses the
accounting and reporting for investments in equity securities that have
readily determinable fair values and all investments in debt securities.
These investments are to be classified into the following three categories and
accounted for as follows:
1) Debt securities purchased with the positive intent and ability to
hold to maturity are classified as held-to-maturity and reported at
amortized cost.
2) Debt and equity securities purchased and held principally for the
purpose of selling them in the near term are classified as trading
securities and reported at fair value, with unrealized gains and
losses included in earnings.
3) Debt and equity securities not classified as either held-to-maturity
securities or trading securities are classified as available-for-sale
and reported at fair value, with net unrealized gains and losses
excluded from earnings and reported (net of tax effect) as a separate
component of stockholders' equity.
Statement 115 was implemented January 1, 1994. The existing policy of not
maintaining a trading portfolio was retained. All investment securities are
classified as either held-to-maturity or available-for-sale. Held-to-maturity
investments, shown at cost, are comprised of mortgage-backed securities,
Federal Home Loan Bank certificates of deposit and U.S. Government securities
and agencies. Available-for-sale securities, shown at fair value with net
unrealized holding gains and losses, net of tax, reported in stockholders'
equity, are comprised of the Kemper U.S. Government bond fund and U.S.
Government securities and agencies.
8
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A comparison of the amortized cost and estimated fair value of investment
securities at the dates indicated is as follows:
(Unaudited, except December 31)
September 30, 1996
(Dollars in thousands)
----------------------------------------
Gross Gross Estimated
Amortized Unreal. Unreal. Fair
Cost Gains Losses Value
Held-to-Maturity: --------- ------- -------- -------
U.S. Government agencies $ 4,590 $ 17 $ 4,607
FHLB certificates of deposit 1,000 1,000
------- ------- ------- -------
U.S. Government agencies and other 5,590 17 5,607
GNMA fixed and adjustable rate 2,148 25 $ (6) 2,167
FNMA and FHLMC adjustable rate 5,800 29 (129) 5,700
FNMA and FHLMC 7 yr and
FHLMC 5 yr balloons 15,875 60 (32) 15,903
FNMA and FHLMC REMIC certificates 7,351 1 (24) 7,328
------- ------- ------- -------
Mortgage-backed securities 31,174 115 (191) 31,098
------- ------- ------- -------
$36,764 $132 $(191) $36,705
======= ======= ======= =======
Available-for-Sale:
U.S. Treasuries and U.S. Government
agencies $26,564 $ 79 $(158) $26,485
Kemper U.S. Government bond fund 5,996 (826) 5,170
------- ------- ------- -------
$32,560 $ 79 $(984) $31,655
======= ======= ======= =======
December 31, 1995
(Dollars in thousands)
Held-to-Maturity: ----------------------------------------
U.S. Treasuries and U.S. Government
agencies $ 2,901 $ 1 $ (1) $ 2,901
GNMA fixed and adjustable rate 2,339 35 (1) 2,373
FNMA and FHLMC adjustable rate 5,952 35 (31) 5,956
FNMA 7 yr and FHLMC 5 yr balloons 5,196 79 5,275
FNMA and FHLMC REMIC certificates 26,729 8 (43) 26,694
------- ------- ------- -------
Mortgage-backed securities 40,216 157 (75) 40,298
------- ------- ------- -------
$43,117 $158 $ (76) $43,199
======= ======= ======= =======
Available-for-Sale:
U.S. Treasuries and U.S. Government
agencies $29,678 $395 $(234) $29,839
Kemper U.S. Government bond fund 5,996 (574) 5,422
------- ------- ------- -------
$35,674 $395 $(808) $35,261
======= ======= ======= =======
9
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A comparison of the amortized cost and estimated fair values of held-to-
maturity and available-for-sale investment securities by contractual
maturities at September 30, 1996, is shown below. Estimated maturities may
differ from contractual maturities as some securities have call or prepayment
options. (Unaudited)
September 30, 1996
(Dollars in thousands)
---------------------------
Amortized Estimated
Cost Fair Value
--------- ----------
Held-to-Maturity:
Due in one year or less $ 1,000 $ 1,000
Due after one year through two years 600 602
Due after five years through six years 3,990 4,005
Mortgage-backed securities 31,174 31,098
------- -------
$36,764 $36,705
======= =======
Available-for-Sale:
Due in one year or less $ 6,556 $ 6,569
Due after one year through two years 14,056 13,956
Due after two years through five years 5,952 5,960
Kemper U.S. Government bond fund 5,996 5,170
------- -------
$32,560 $31,655
======= =======
During the nine months ended September 30, 1996, one available-for-sale
investment security with a book value of $3,007,090 was sold realizing a gain
of $132,363. During the nine months ended September 30, 1995, available-for-
sale investment securities with a book value of $6,001,458 were sold realizing
a net gain of $2,178.
Regulatory Capital -- United Savings Bank (the Bank), the wholly owned
regulated thrift institution of the Holding Company is required to meet three
FIRREA-enacted capital regulations: (1) a tangible capital requirement
(stockholders' equity adjusted for the effects of intangibles, investments and
advances to "nonincludable" subsidiaries and other factors) equal to not less
than 1.5% of tangible assets (as defined in the regulations), (2) a core
capital requirement, comprised of tangible capital adjusted for supervisory
goodwill and other defined factors equal to not less than 3% of tangible
assets, and (3) a risk-based capital requirement equal to 8% of all risk-
weighted assets. For risk-weighting, selected assets are given a risk
assignment of 0% to 100%. For example, cash and securities backed by the full
faith and credit of the U.S. Government are risk-weighted at 0% of book value,
while repossessed assets and delinquent loans over 90 days past due are
assigned a 100% factor, or a risk-weighting equal to their book value. The
Bank's total risk-weighted assets at September 30, 1996 were approximately
$32,926,000.
10
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The following table demonstrates as of September 30, 1996, the extent to which
the Bank exceeds in dollars and in percent, the three minimum regulatory
capital requirements:
Unaudited-Regulatory Capital
(Dollars in thousands)
----------------------------------------
Actual Requirement Excess
-------- ----------- --------
Tangible capital:
$ Amount $15,003 $1,483 $13,520
% of tangible assets 15.2% 1.5% 13.7%
Core capital:
$ Amount $15,003 $2,966 $12,037
% of tangible assets 15.2% 3.0% 12.2%
Risk-based capital:
$ Amount $15,038 $2,634 $12,404
% of risk-weighted assets 45.7% 8.0% 37.7%
Generally accepted accounting principles (GAAP) capital as shown on the
consolidated financial statements differs from tangible, core and risk-based
regulatory capital at September 30, 1996 as follows: (Unaudited)
(Dollars in thousands)
Consolidated GAAP capital $24,320
Holding company (8,990)
--------
Bank GAAP capital 15,330
Non-includable assets of Bank subsidiary (396)
Unrealized loss on certain securities
available-for-sale 69
--------
Tangible and core capital 15,003
General loan valuation allowances 75
Other assets required to be deducted (40)
--------
Risk-based capital $15,038
========
The Office of Thrift Supervision (OTS) is responsible for insuring that
capital standards reflect interest rate risk (IRR), defined as the potential
for the reduction of earnings and stockholders' equity resulting from changes
in market interest rates. The OTS has delayed implementation of a proposed
capital deduction for savings institutions with a greater than normal level of
IRR as calculated by an OTS Net Portfolio Value Model. Due to its current
capital position, most recent OTS calculated IRR and proposed exemption
criteria, the Bank would not have an IRR capital adjustment.
Failure to comply with applicable regulatory capital requirements can result
in capital directives from the director of the OTS, restrictions on growth,
and other limitations on a savings association's operations.
11
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The following table sets forth for the third quarter 1996, information
regarding (1) average balance sheets, (2) an analysis of net interest income,
and (3) other information regarding changes in interest-earning assets and
interest-bearing liabilities.
(Dollars in thousands-unaudited) Average Interest Average
Balance Earned/Pd Yield/Cost
ASSETS --------- --------- ----------
Loans receivable $ 32,347 $ 756 9.35%
Mortgage-backed securities 32,257 507 6.29%
Investments-other 36,241 544 6.01%
Interest-earning deposits 1,057 14 5.24%
--------- ------ -----
Total interest-earning assets 101,902 $1,821 7.15%
Reserve for loan losses (75) ====== =====
Cash and due from banks 520
Unreal. loss sec. available-for-sale (955)
FHLB stock 372
Bank premises and equipment 1,443
Accrued interest receivable 675
Non-earning assets 1,989
---------
Total assets $105,871
=========
LIABILITIES & STOCKHOLDERS' EQUITY
NOW/MMDA $ 8,401 $ 64 3.03%
Statement savings 30,205 267 3.54%
Time deposits 39,603 536 5.42%
--------- ------ -----
Deposits $ 78,209 867 4.44%
Borrowings 880 12 5.62%
--------- ------ -----
Total interest-bearing liabilities $ 79,089 $ 879 4.45%
========= ====== =====
Unreal. loss sec. available-for-sale $ (561)
Stockholders' equity 25,070
---------
Total stockholders' equity $ 24,509
=========
Net interest-earning assets $ 22,813
Net interest income $ 942
Net interest spread (1) 2.70%
Net interest margin (2) 3.70%
Net income $ 37
Return on average assets (3) .14%
Return on average equity (4) .60%
Equity to average assets ratio (5) 23.15%
Dividend payout ratio (6) 743%
Interest-earning assets to
interest-bearing liabilities ratio 1.29
Cash dividends paid $ 275
12
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The following table sets forth for the third quarter 1995, information
regarding (1) average balance sheets, (2) an analysis of net interest income,
and (3) other information regarding changes in interest-earning assets and
interest-bearing liabilities.
(Dollars in thousands-unaudited) Average Interest Average
Balance Earned/Pd Yield/Cost
ASSETS --------- --------- ----------
Loans receivable $ 30,689 $ 721 9.39%
Mortgage-backed securities 19,000 296 6.24%
Investments-other 46,773 728 6.23%
Interest-earning deposits 5,068 73 5.77%
--------- ------ -----
Total interest-earning assets 101,530 $1,818 7.16%
Reserve for loan losses (75) ====== =====
Cash and due from banks 515
Average balance adjustment (1,279)
Unreal. loss sec. available-for-sale (862)
FHLB stock 347
Bank premises and equipment 1,536
Accrued interest receivable 1,029
All other assets 1,783
---------
Total assets $104,524
=========
LIABILITIES & STOCKHOLDERS' EQUITY
NOW/MMDA $ 7,920 $ 60 3.04%
Statement savings 33,837 300 3.54%
Time deposits 36,946 497 5.38%
--------- ------ -----
Deposits $ 78,703 857 4.35%
Borrowings
--------- ------ -----
Total interest-bearing liabilities $ 78,703 $ 857 4.35%
========= ====== =====
Unreal. loss sec. available-for-sale $ (510)
Stockholders' equity 24,614
---------
Total stockholders' equity $ 24,104
=========
Net interest-earning assets $ 22,827
Net interest income $ 961
Net interest spread (1) 2.81%
Net interest margin (2) 3.79%
Net income $ 378
Return on average assets (3) 1.45%
Return on average equity (4) 6.27%
Equity to average assets ratio (5) 23.06%
Dividend payout ratio (6) 66%
Interest-earning assets to
interest-bearing liabilities ratio 1.29
Cash dividends paid $ 251
13
<PAGE>
The following table sets forth for the nine month period ended September 30,
1996, information regarding (1) average balance sheets, (2) an analysis of net
interest income, and (3) other information regarding changes in interest-
earning assets and interest-bearing liabilities.
(Dollars in thousands-unaudited)
Average Interest Average
Balance Earned/Pd Yield/Cost
ASSETS --------- --------- ----------
Loans receivable $ 30,892 $2,150 9.28%
Mortgage-backed securities 33,656 1,550 6.14%
Investments-other 35,061 1,578 6.00%
Interest-earning deposits 3,175 124 5.22%
--------- ------ -----
Total interest-earning assets 102,784 $5,402 7.01%
Reserve for loan losses (75) ====== =====
Cash and due from banks 543
Unreal. loss sec. available-for-sale (706)
FHLB stock 406
Bank premises and equipment 1,463
Accrued interest receivable 692
Non-earning assets 1,656
---------
Total assets $106,763
=========
LIABILITIES & STOCKHOLDERS' EQUITY
NOW/MMDA $ 8,472 $ 192 3.02%
Statement savings 30,910 815 3.52%
Time deposits 39,247 1,596 5.42%
--------- ------ -----
Deposits $ 78,629 2,603 4.41%
Borrowings 1,644 71 5.76%
--------- ------ -----
Total interest-bearing liabilities $ 80,273 $2,674 4.44%
========= ====== =====
Unreal. loss sec. available-for-sale $ (434)
Stockholders' equity 25,015
---------
Total stockholders' equity $ 24,581
=========
Net interest-earning assets $ 22,511
Net interest income $2,728
Net interest spread (1) 2.57%
Net interest margin (2) 3.54%
Net income $ 752
Return on average assets (3) .94%
Return on average equity (4) 4.08%
Equity to average assets ratio (5) 23.02%
Dividend payout ratio (6) 107%
Interest-earning assets to
interest-bearing liabilities ratio 1.28
Cash dividends paid $ 807
14
<PAGE>
The following table sets forth for the nine month period ended September 30,
1995, information regarding (1) average balance sheets, (2) an analysis of net
interest income, and (3) other information regarding changes in interest-
earning assets and interest-bearing liabilities.
(Dollars in thousands-unaudited)
Average Interest Average
Balance Earned/Pd Yield/Cost
ASSETS --------- --------- ----------
Loans receivable $ 30,896 $2,158 9.31%
Mortgage-backed securities 20,102 936 6.21%
Investments-other 49,859 2,327 6.22%
Interest-earning deposits 3,604 158 5.86%
--------- ------ -----
Total interest-earning assets 104,461 $5,579 7.12%
Reserve for loan losses (75) ====== =====
Cash and due from banks 500
Average balance adjustment (1,367)
Unreal. loss sec. available-for-sale (1,380)
FHLB stock 355
Bank premises and equipment 1,399
Accrued interest receivable 1,032
All other assets 1,899
---------
Total assets $106,824
=========
LIABILITIES & STOCKHOLDERS' EQUITY
NOW/MMDA $ 7,894 $ 181 3.06%
Statement savings 36,874 986 3.57%
Time deposits 36,694 1,380 5.01%
Avg. balance adjustment 405
--------- ------ -----
Deposits $ 81,867 2,547 4.15%
Borrowings 35 2 6.30%
--------- ------ -----
Total interest-bearing liabilities $ 81,902 $2,549 4.15%
========= ====== =====
Unreal. loss sec. available-for-sale $ (818)
Stockholders' equity 24,475
---------
Total stockholders' equity $ 23,657
=========
Net interest-earning assets $ 22,559
Net interest income $3,030
Net interest spread (1) 2.97%
Net interest margin (2) 3.87%
Net income $1,188
Return on average assets (3) 1.48%
Return on average equity (4) 6.69%
Equity to average assets ratio (5) 22.15%
Dividend payout ratio (6) 62%
Interest-earning assets to
interest-bearing liabilities ratio 1.28
Cash dividends paid $ 734
15
<PAGE>
The tables on pages 12, 13, 14, and 15 use the following formulas with the
corresponding parenthetical numbers.
(1) Average yield interest-earning assets minus average rate interest-bearing
liabilities
(2) Net interest income divided by average interest-earning assets
(3) Net income divided by average total assets
(4) Net income divided by average equity
(5) Average equity divided by average total assets
(6) Dividends paid per share divided by net income per share
16
<PAGE>
ITEM 2 MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS.
(1) MATERIAL CHANGES IN FINANCIAL CONDITION. COMPARISON OF THE
NINE-MONTH PERIOD FROM DECEMBER 31, 1995, TO SEPTEMBER 30, 1996.
(Unaudited, except December 31)
Selected Financial Condition Recap
(Dollars in thousands)
September 30, December 31,
1996 1995 Change
----------- ------------ ---------
Total assets $107,945 $114,440 $ (6,495)
Cash and cash equivalents 1,158 1,221 (63)
Investments (held-to-maturity) 36,764 43,117 (6,353)
Investments (available-for-sale) 31,655 35,261 (3,606)
Loans receivable, net 33,585 30,352 3,233
Real estate owned 666 491 175
Other assets 1,350 1,112 238
Deposits 78,292 78,291 1
Federal Home Loan Bank advances 3,650 10,500 (6,850)
Other liabilities 802 409 393
Total liabilities 83,625 89,752 (6,127)
Stockholders' equity, net 24,320 24,688 (368)
General -- Assets decreased $6.5 million, or 6%. The primary reason for this
change was a $10 million net decrease in investment securities. These
investment securities' cash flows were utilized to repay $6.9 million of FHLB
advances and increase loans receivable by $3.2 million.
Investments -- The two investment categories decreased a combined net $10.0
million, or 13%. This change was comprised primarily of $7.0 million of
matured and called available-for-sale securities, $2.0 million of matured and
called held-to-maturity securities, and $21.6 million of mortgage-backed
securities principal repayments, offset by $17.0 million of held-to-maturity
securities purchases, and $6.9 million of available-for-sale securities
purchases. In addition, $3.1 million of proceeds were received from the sale
of an available-for-sale security. A $132,400 gain was realized from this
sale.
Loans Receivable -- For the nine months ended September 30, 1996, net loans
receivable increased $3.2 million, or 11%, as follows: (Unaudited)
Loans originated for portfolio $14.3 million
Sales of portfolio loans (2.2) "
Payments and payoffs (7.9) "
Other changes (1.0) "
------
Net increase $ 3.2 million
======
For the nine months ended September 30, 1996, $9.1 million of loans were
originated for sale and $9.0 million of loans were sold to the secondary
market.
17
<PAGE>
Loans receivable at the dates indicated consisted of the following:
(Dollars in thousands-unaudited)
September 30, Dec. 31,
1996 1995 1995
Conventional: -------- -------- --------
1-4 residential $14,389 $13,765 $13,540
5 or more residential 4,607 3,828 3,987
Construction 5,492 3,684 3,373
Commercial and other non-residential 2,289 2,543 2,517
FHA insured or VA guaranteed 5,875 7,233 6,970
Home improvement and home consumer 1,211 1,160 1,136
Loans to depositors, savings secured 184 207 175
Recreational vehicle and auto 1,253 32 31
Other non-mortgage 872 263 306
------- ------- -------
Total loans 36,172 32,715 32,035
Less:
Loans in process 2,507 2,151 1,600
Discounts 5 8 8
Reserve for possible loan losses 75 75 75
------- ------- -------
Loans receivable, net $33,585 $30,481 $30,352
======= ======= =======
Real Estate Owned -- The $175,000, or 36%, increase consisted of a new
$232,000 foreclosed Great Falls residence, less the sale of a $29,000 Glendive
residence, less additional depreciation for properties held for investment.
The Glendive sale resulted in a $14,000 gain. At September 30, 1996,
approximately $394,000, or 59%, of real estate owned was comprised of two 24-
unit apartment complexes in Glendive, Montana, owned as depreciating
investments by the Bank's wholly-owned subsidiary; plus $272,000 of real
estate held for sale consisting of $40,000 for two Great Falls commercial lots
and the $232,000 Great Falls residence.
Other Assets -- This category increased $.2 million to $1.3 million. The
unrealized tax benefit relating to the FASB 115 adjustment for available-for-
sale securities increased $.2 million to $.4 million. At September 30, 1996,
other assets included $.8 million of loans receivable contracted for sale to
the secondary market.
Deposits -- Deposits remained at approximately $78.3 million. The Bank's
average cost of deposits for the first nine months of 1996 increased to 4.42%,
compared to an average cost of 4.15% for the same nine months in 1995. The
Bank's cost of deposits was 4.44% at September 30, 1996, 4.44% at December 31,
1995, 4.40% at September 30, 1995, and 3.94% at December 31, 1994.
The following table indicates the amounts and maturities of time certificates
of deposit of $100,000 or more outstanding as of September 30, 1996:
(Dollars in thousands, unaudited)
Maturity Amount
-------- ------
3 months or less $ 205
>3 months through 6 months 850
>6 months through 1 year 929
>1 year 1,883
------
$3,867
======
18
<PAGE>
Borrowings -- During the first nine months of 1996, the cash flows from
matured and called investment securities, together with mortgage-backed
securities repayments were utilized to repay $6.9 million of FHLB advances. At
September 30, 1996, $3.7 million of FHLB advances were outstanding. These
borrowings were repaid in October.
Other liabilities -- This category totalled $.8 million on September 30, 1996,
compared to $.4 million at December 31, 1995. This 96% increase was
primarily the result of the September 30, 1996, $.5 million FDIC/SAIF deposit
insurance special assessment payable no later than November 29, 1996.
Stockholders' Equity -- The less than $.4 million decrease in stockholders'
equity was comprised of $.7 million of net income, less $.8 million of cash
dividends paid and a $.3 million increase in the unrealized loss adjustment
for available-for-sale securities. In addition, capitalized holding company
formation costs were approximately $37,000. Book value per share decreased to
$19.89 at September 30, 1996, from $20.18 per share at December 31, 1995.
Stockholders' equity ratio (stockholders' equity divided by assets) was 22.5%
at September 30, 1996, compared to 21.6% at December 31, 1995. The ratio of
average interest-earning assets to average interest-bearing liabilities was
1.28 for the first nine months of 1996 and 1995.
Asset Quality and Loss Reserves -- Nonperforming assets consisting of
nonaccrual uninsured loans, accruing uninsured loans past due over 90 days,
restructured loans, and all real estate owned-held for sale (REO/HFS) were
approximately: $273,000 at September 30, 1996, and $78,000 at December 31,
1995, representing .25% and .07% of total assets, respectively.
(Dollars in thousands-unaudited, except December 31)
September 30, December 31,
1996 1995
------------- ------------
Loss reserves $75 $75
Loss reserves as a % of
nonperforming assets 28% 96%
Loss reserves as a % of
uninsured loans & REO/HFS .27% .32%
Federal regulations require the Bank to classify its assets as substandard
(distinct possibility that some loss will be sustained), doubtful (high
likelihood of loss), and loss (uncollectible). At September 30, 1996, the
Bank's substandard assets were approximately $40,000, with no asset classified
as doubtful or loss.
Given the continuing low level of nonperforming and classified assets, the
decrease in loans receivable, and the sale of the majority of new loan
production, no additional loss provision expense was deemed necessary (i.e.
both probable and estimable) during the quarters and nine-month periods ended
September 30, 1996.
19
<PAGE>
(2) MATERIAL CHANGES IN RESULTS OF OPERATIONS. COMPARISON OF THE
THREE MONTHS ENDED SEPTEMBER 30, 1996, AND SEPTEMBER 30, 1995.
(Dollars in thousands, unaudited)
INCOME RECAP
Three Months Ended September 30,
1996 1995 Change
------ ------ ------
Interest income $1,821 $1,818 $ 3
Interest expense 879 857 22
------ ------ ------
Net interest income 942 961 (19)
Noninterest income 192 172 20
Noninterest expense 1,083 530 553
------ ------ ------
Income before income taxes 51 603 (552)
Provision for income taxes 14 225 (211)
------ ------ ------
Net income $ 37 $ 378 $(341)
====== ====== ======
General -- Net income for the third quarter of 1996 was $37,000, a $341,000,
or 90%, decrease over the same period in 1995. This decrease resulted
primarily from the $549,700 before taxes, $338,300 net of taxes, increase in
noninterest expense for a one-time FDIC/SAIF special assessment. (see page 6 -
Notes to Consolidated Financial Statements.)
Third quarter 1996 return on average assets was .14%, compared to 1.45% for
the same 1995 quarter. Based on weighted average shares outstanding, third
quarter 1996 net income was $.03 per share, compared to $.31 per share for the
same 1995 quarter.
Interest Income and Expense -- Compared to the same 1995 quarter, average
third quarter 1996 interest-earning assets increased $.4 million, or less than
1%. The third quarter 1996 average yield for all interest-earning assets was
7.15%, compared to 7.16% for the same 1995 quarter. As a result, third
quarter 1996 interest income increased $3,000.
Compared to the same 1995 quarter, third quarter 1996 average deposits
decreased $.5 million, or less than 1%. However, due to higher interest rates
and time deposit repricing, deposit interest expense actually increased
$10,000, or approximately 1%. The average cost of deposits was 4.44% for the
third quarter of 1996, compared to 4.35% for the same 1995 quarter. Third
quarter 1996 average borrowings (FHLB advances) were $.9 million, average cost
was 5.62%, and borrowing expense was approximately $12,000. There were no
borrowings during the same 1995 quarter. The third quarter 1996 cost of all
interest-bearing liabilities was 4.45%, compared to 4.35% for the same quarter
in 1995.
Net Interest Income -- This category decreased $19,000, or 2%, for the reasons
cited above. Net interest spread (the difference between the average yield on
interest-earning assets less the average cost of interest-bearing liabilities)
was 2.70% for the third quarter of 1996, compared to 2.81% for the same 1995
quarter. Net interest margin (net interest income divided by average
interest-earning assets) was 3.70% for the third quarter of 1996, compared to
3.79% for the same 1995 quarter.
20
<PAGE>
Noninterest Income -- During the third quarter of 1996, this category
increased $20,000, or 12% to $192,000. The primary reason for this change was
a $22,000, or 19%, increase in loan origination fee and discount income.
Noninterest Expense -- This category increased $553,000, or 104%, due
primarily to the $549,700 FDIC/SAIF deposit insurance special assessment.
Salaries and employee benefits decreased $10,000, or 4%. Other expenses
increased $18,000, or 17%, due to higher advertising expense for an ongoing
marketing campaign.
Income Taxes -- Third quarter 1996 income before taxes was $51,000, a
$552,000, or 92%, decrease from the $603,000 earned for the same 1995 quarter.
Taxes decreased $211,000, or 94% to $14,000.
(3) MATERIAL CHANGES IN RESULTS OF OPERATIONS. COMPARISON OF THE
NINE MONTHS ENDED SEPTEMBER 30, 1996, AND SEPTEMBER 30, 1995.
(Dollars in thousands-unaudited)
INCOME RECAP
Nine Months Ended September 30,
1996 1995 Change
------ ------ ------
Interest income $5,402 $5,579 $(177)
Interest expense 2,674 2,549 125
------ ------ ------
Net interest income 2,728 3,030 (302)
Noninterest income 643 446 197
Noninterest expense 2,179 1,582 597
------ ------ ------
Income before income taxes 1,192 1,894 (702)
Provision for income taxes 440 706 (266)
------ ------ ------
Net income $ 752 $1,188 $(436)
====== ====== ======
General -- Net income for the first nine months of 1996 was $752,000, a
$436,000, or 37%, decrease when compared to the same nine months in 1995. This
decrease resulted primarily from the September 30, 1996, $549,700 FDIC/SAIF
deposit insurance special assesment previously discussed. In addition, net
interest income declined $302,000, or 10%, partially offset by a $132,000
noninterest income gain from the sale of a security classified as available-
for-sale and a $56,000, or 21%, increase in loan origination fees and discount
income. Year-to-date 1996 average interest-earning assets and average deposits
declined, and average borrowings increased. The year-to-date 1996 average
yield for interest-earning assets was lower, the average cost of deposits was
higher and borrowing expense was higher.
The return on average assets for the first nine months of 1996 was .94%,
compared to 1.48% for the same 1995 period. Based on weighted average shares
outstanding, year-to-date 1996 net income was $.62 per share, compared to $.97
per share for the same 1995 period.
Interest Income and Expense -- Compared to the first nine months of 1995,
average year-to-date 1996 interest-earning assets decreased $1.7 million, or
less than 2%. Due primarily to a decrease in investment securities yields, the
average yield for all interest-earning assets decreased to 7.01%, compared to
7.12% for the same 1995 period. As a result, year-to-date 1996 interest
income decreased $177,000, or 3%, when compared to the same 1995 period.
21
<PAGE>
Compared to the first nine months of 1995, year-to-date 1996 average deposits
decreased $3.2 million, or 4%. However, due to higher interest rates and time
deposit repricing, deposit interest expense actually increased $56,000, or 2%.
The average cost of deposits was 4.41% for the first nine months of 1996,
compared to 4.15% for the same 1995 period. Year-to-date 1996 average
borrowings (FHLB advances) were $1.6 million, average cost was 5.76%, and
borrowing expense was $71,000. For the same 1995 period, average borrowings
(FHLB advances) were less than $.1 million, average cost was 6.30%, and
borrowing expense was approximately $2,000. The year-to-date 1996 cost of all
interest-bearing liabilities was 4.44%, compared to 4.15% for the same period
in 1995.
Net Interest Income -- This category decreased $302,000, or 10%, for the
reasons cited above. Net interest spread (the difference between the average
yield on interest-earning assets less the average cost of interest-bearing
liabilities) was 2.57% for the first nine months of 1996, compared to 2.97%
for the same 1995 period. Net interest margin (net interest income divided by
average interest-earning assets) was 3.54% for the first nine months of 1996
compared to 3.87% for the same 1995 period.
Noninterest Income -- For the first nine months of 1996, this category
increased $197,000, or 44% to $643,000. The primary reason for this change was
a $132,000 gain from the sale of a $3.1 million available-for-sale investment
security. Loan origination fee and discount income increased $56,000, or 21%.
This improvement was the direct result of increased loan production. Year-to-
date 1996 loans originated for sale to the secondary market were $9.1 million
compared to $6.0 million for the same period in 1995, and year-to-date 1996
loans originated for portfolio were $14.3 million, compared to $8.4 million
for the same 1995 period.
Noninterest Expense -- This category increased $597,000, or 38%, due primarily
to the $549,700, September 30, 1996, FDIC/SAIF deposit insurance special
assessment previously discussed. Salaries and employee benefits decreased
$14,000, or 2%. Other expenses increased $85,000, or 28%, due primarily to
higher advertising expense for an ongoing marketing campaign.
Income Taxes -- Year-to-date 1996 income before taxes was $1,192,000, a
$702,000, or 37%, decrease from the $1,894,000 earned for the same 1995
period. Taxes decreased $266,000, or 38% to $440,000.
22
<PAGE>
PART II - OTHER INFORMATION
ITEM 1 LEGAL PROCEEDINGS.
There are no pending material legal proceedings to which the registrant or its
subsidiary is a party.
ITEM 2 CHANGE IN SECURITIES.
An Agreement and Plan of Reorganization approved by Directors, shareholders
and federal regulators during the quarter ended June 30, 1996, resulted in a
reorganization of United Savings Bank (the Bank) into the holding company form
of ownership. As a result of the reorganization, all of the issued and
outstanding shares of Bank Common Stock were converted, on a share for share
basis, into United Financial Corp. (the Holding Company) Common Stock.
ITEM 3 DEFAULTS ON SENIOR SECURITIES.
None.
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
None.
ITEM 5 OTHER INFORMATION.
None.
ITEM 6 EXHIBITS.
None.
REPORTS ON FORM 8-K.
None.
23
<PAGE>
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:
UNITED FINANCIAL CORP.
Date November 8, 1996 /s/ Bruce K. Weldele
------------------------- ----------------------------
Bruce K. Weldele
President, CEO and
Chairman of the Board
of Directors
Date November 8, 1996 /s/ G. Brent Marvosh
-------------------------- -----------------------------
G. Brent Marvosh, CPA
Vice President-Finance
and Treasurer
(Principal Finance and
Accounting Officer)
24
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<CURRENCY> U.S.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<EXCHANGE-RATE> 1.00
<CASH> 673
<INT-BEARING-DEPOSITS> 485
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 31,655
<INVESTMENTS-CARRYING> 36,764
<INVESTMENTS-MARKET> 36,705
<LOANS> 33,585
<ALLOWANCE> 75
<TOTAL-ASSETS> 107,945
<DEPOSITS> 78,292
<SHORT-TERM> 3,650
<LIABILITIES-OTHER> 1,683
<LONG-TERM> 0
0
0
<COMMON> 1,223
<OTHER-SE> 23,097
<TOTAL-LIABILITIES-AND-EQUITY> 107,945
<INTEREST-LOAN> 2,150
<INTEREST-INVEST> 3,128
<INTEREST-OTHER> 124
<INTEREST-TOTAL> 5,402
<INTEREST-DEPOSIT> 2,603
<INTEREST-EXPENSE> 71
<INTEREST-INCOME-NET> 2,728
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 132
<EXPENSE-OTHER> 2,179
<INCOME-PRETAX> 1,192
<INCOME-PRE-EXTRAORDINARY> 1,192
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 752
<EPS-PRIMARY> .62
<EPS-DILUTED> .62
<YIELD-ACTUAL> 7.01
<LOANS-NON> 0
<LOANS-PAST> 90
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 232
<ALLOWANCE-OPEN> 75
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 75
<ALLOWANCE-DOMESTIC> 75
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 75
</TABLE>
