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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
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 0-20867
PARK BANCORP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 36-4082530
- -----------------------------------------------------------------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
2740 WEST 55TH STREET, CHICAGO, ILLINOIS 60632
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(Address of principal executive offices) (Zip Code)
(773) 434-6040
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former addresses and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports), and (2) has
been subject to such filing requirements for the past 90 days. [X] Yes [_]
No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date: 2,527,366 shares
of common stock, par value $.01 per share, were outstanding as of May 15,
1997.
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PARK BANCORP, INC.
FORM 10-Q
INDEX
PAGE
PART I FINANCIAL INFORMATION
Item 1 Consolidated Statements of Financial Condition
March 31, 1997 and December 31, 1996 3
Consolidated Income Statements
Three Months Ended March 31, 1997 and 1996 4
Consolidated Statements of Cash Flows
Three Months Ended March 31, 1997 and 1996 5
Consolidated Statements of Stockholders' Equity
March 31, 1997 and December 31, 1996 6
Notes to Consolidated Financial Statements 7
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Item 3 Quantitative and Qualitative
Disclosures About Market Risks 11
PART II OTHER INFORMATION
Item 1 Legal Proceedings 11
Item 2 Changes in Securities 11
Item 3 Defaults Upon Senior Securities 11
Item 4 Submission of Matters to a Vote of
Securities Holders 11
Item 5 Other Information 11
Item 6 Exhibits and Reports on Form 8-K 11
SIGNATURES 12
2
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Park Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
March 31, December 31,
1997 1996
--------- ------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 865 $ 769
Interest-bearing deposit accounts in
other financial institutions 3,830 5,444
------- -------
Total cash and cash equivalents 4,695 6,213
Securities available-for-sale 49,711 50,109
Securities held-to-maturity
(fair value $49,306 and $47,553
in 1997 and 1996, respectively) 49,988 47,840
Loans receivable, net 65,680 66,179
Federal Home Loan Bank stock 756 756
Real estate held for development 2,812 2,871
Premises and equipment, net 2,547 2,150
Foreclosed real estate 60 60
Accrued interest receivable and other assets 1,732 2,016
------- -------
TOTAL ASSETS $177,981 $ 178,194
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $127,539 $ 128,852
Advances from borrowers for taxes and insurance 1,200 1,287
Federal Home Loan Bank advances 5,000 5,000
Accrued interest payable and other liabilities 5,645 598
-------- --------
Total liabilities 139,384 135,737
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 1,000,000
shares authorized and unissued - -
Common stock, $.01 par value, 9,000,000
shares authorized; 2,701,441 shares
issued; 2,527,366 and 2,701,441 shares
outstanding, respectively 27 27
Additional paid-in capital 27,552 26,088
Retained earnings, substantially restricted 19,009 18,518
Unearned ESOP shares (1,947) (1,994)
Unearned stock awards (1,326) -
Treasury stock at cost - 270,000 shares and
0 shares, respectively (4,219) -
Unrealized loss on securities available-for-
sale, net of taxes (499) (182)
-------- --------
Total stockholders' equity 38,597 42,457
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $177,981 $ 178,194
======== ========
</TABLE>
3
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Park Bancorp, Inc. and Subsidiary
Consolidated Income Statements
(Unaudited)
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
For The Three Months
Ended March 31,
--------------------
1997 1996
---- ----
<S> <C> <C>
Interest income:
Loans receivable $1,404 $1,394
Securities 1,698 1,187
Other 48 82
------ ------
Total 3,150 2,663
Interest expense:
Deposits 1,498 1,556
Federal Home Loan Bank advances 71 2
------ ------
Total 1,569 1,558
------ ------
Net interest income 1,581 1,105
Provision for loan losses - -
------ ------
Net interest income after provision
for loan losses 1,581 1,105
Noninterest income:
Income on sale of real estate 45 22
Service fee income 36 22
Other operating income 7 14
------ ------
Total noninterest income 88 58
Noninterest expense:
Compensation and benefits 591 436
Occupancy and equipment expense 120 122
Federal deposit insurance premiums 33 83
Data processing services 32 33
Advertising 23 18
Stationery, printing and supplies 34 24
Other operating expense 92 64
------ ------
Total noninterest expense 925 780
------ ------
Income before income taxes 744 383
Income tax expense 253 130
------ ------
Net income $ 491 $ 253
====== ======
Earnings per share $ .20 N/A
======
</TABLE>
4
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Park Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Three Months Ended
March 31,
------------------
1997 1996
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 491 $ 253
Adjustments to reconcile net income to
net cash from operating activities:
Net premium amortization (4) 14
Income on sale of real estate (45) (22)
Depreciation 45 42
Net change in accrued interest receivable
and other assets 284 (1,385)
Net change in accrued interest payable
and other liabilities 5,211 1,318
ESOP compensation expense 47 -
Stock-Based Incentive Plan
compensation expense 138 -
------- -------
Net cash from operating activities 6,167 220
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans 499 1,245
Proceeds from sales/calls/maturities of
securities available-for-sale 3,000 8,800
Proceeds from calls/maturities of
securities held-to-maturity 2,000 13,635
Principal repayments on mortgage-backed
securities available-for-sale 322 168
Principal repayments on mortgage-backed
securities held-to-maturity 851 1,308
Purchase of securities available-for-sale (3,400) (21,184)
Purchase of securities held-to-maturity (5,000) -
Purchase of FHLB stock - (80)
Net change in real estate held for development 104 151
Net change in real estate owned - (3)
Expenditures for premises and equipment (442) (363)
------- --------
Net cash from investing activities (2,066) 3,677
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits (1,313) (30)
Net change in advances from borrowers
for taxes and insurance (87) (94)
Net change in FHLB advances - (9,000)
Purchase of treasury stock (4,219) -
------- --------
Net cash from financing activities (5,619) (9,124)
------- --------
Net change in cash and cash equivalents (1,518) (5,227)
Cash and cash equivalents at
beginning of period 6,213 12,790
------- --------
Cash and cash equivalents at end of period $ 4,695 $ 7,563
======= ========
Supplemental disclosures of
cash flow information
Cash paid during the period for
Interest $ 1,567 $ 1,578
Income taxes 45 -
</TABLE>
5
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Park Bancorp, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Retained
Additional Earnings, Unearned-
Common Paid-in Substantially ESOP
Stock Capital Restricted Shares
<S> <C> <C> <C> <C>
Balance at December 31, 1995 $ - $ - $ 17,457 $ -
Issuance of common stock,
net of conversion
costs of $950 27 26,038 - (2,161)
ESOP shares released - 50 - 167
Net income - - 1,061 -
Depreciation of fair value
of securities classified
as available-for-sale,
net of income taxes of $142 - - - -
---- ------- ------- -------
Balance at December 31, 1996 27 26,088 18,518 (1,994)
Net income - - 491 -
Purchase of common stock - - - -
Grant of stock awards under
Stock-Based Incentive Plan - 1,464 - -
ESOP shares earned - - - 47
Stock awards earned - - - -
Depreciation in fair value of
securities classified as
available-for-sale, net of
income taxes of $161 - - - -
---- ------- ------- -------
Balance at March 31, 1997 $ 27 $ 27,552 $ 19,009 $ (1,947)
==== ======= ======= =======
</TABLE>
<TABLE>
<CAPTION>
Unrealized
Appreciation
(Depreciation)
Unearned- on Securities Stock-
Stock Treasury Available- holders'
Awards Stock for-Sale Equity
<S> <C> <C> <C> <C>
Balance at December 31, 1995 $ - $ - $ 77 $ 17,534
Issuance of common stock,
net of conversion
costs of $950 - - - 23,904
ESOP shares released - - - 217
Net income - - - 1,061
Depreciation of fair value
of securities classified
as available-for-sale,
net of income taxes of $142 - - (259) (259)
----- ------- ------ -------
Balance at December 31, 1996 - - (182) 42,457
Net income - - - 491
Purchase of common stock - (4,219) - (4,219)
Grant of stock awards under
Stock-Based Incentive Plan (1,464) - - -
ESOP shares earned - - - 47
Stock awards earned 138 - - 138
Depreciation in fair value of
securities classified as
available-for-sale, net of
income taxes of $161 - - (317) (317)
------ ------- ------ -------
Balance at March 31, 1997 $(1,326) $(4,219) $ (499) $ 38,597
====== ======= ====== =======
</TABLE>
6
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PARK BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1997
(Unaudited)
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of Park Bancorp, Inc. (Corporation) and its wholly-owned subsidiary,
Park Federal Savings Bank (Bank) and its subsidiaries, as of March 31, 1997
and December 31, 1996 and for the three-month periods ended March 31, 1997
and 1996, respectively. The consolidated financial statements for periods
prior to September 31, 1996 include only the accounts of the Bank and its
subsidiaries. Material intercompany accounts and transactions have been
eliminated in consolidation.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of 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,
all necessary adjustments, consisting only of normal recurring accruals
necessary for a fair presentation, have been included. The results of
operations for the three-month period ended March 31, 1997 are not
necessarily indicative of the results that may be expected for the entire
calendar year. These unaudited consolidated financial statements should be
read in conjunction with the consolidated financial statements for the year
ended December 31, 1996 and the notes thereto.
Note 2 - Conversion
On August 9, 1996, the Bank converted from a federally-chartered mutual
savings bank to a federally-chartered stock savings bank. The Bank issued
all of its common stock to the Corporation and at the same time the
Corporation issued 2,701,441 shares of common stock at $10.00 per share, all
pursuant to a plan of conversion (the Conversion).
Note 3 - Earnings Per Share
Earnings per share for periods subsequent to the Conversion is calculated by
dividing the net earnings by the weighted average number of shares
outstanding and common stock equivalents attributable to outstanding stock
options, when dilutive. The weighted average number of the Corporation's
shares of common stock used to calculate earnings per share for the quarter
ended March 31, 1997 was 2,525,850.
7
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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PARK BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
The following discussion compares the financial condition of Park Bancorp,
Inc. and its wholly-owned subsidiary, Park Federal Savings Bank, at March 31,
1997 to its financial condition at December 31, 1996 and the results of
operations for the three months ended March 31, 1997 to the same period in
1996. This discussion should be read in conjunction with the interim
financial statements and footnotes included herein.
FINANCIAL CONDITION
Total assets at March 31, 1997 were $178.0 million compared to $178.2 million
at December 31, 1996, a decrease of $0.2 million. During the three months
ended March 31, 1997, cash and cash equivalents decreased by $1.5 million and
securities held-to-maturity increased by $2.1 million as excess funds were
reinvested primarily in U.S. Treasury Notes.
Total liabilities at March 31, 1997 were $139.4 million compared to $135.7
million at December 31, 1996, an increase of $3.7 million. Accrued interest
payable and other liabilities increased by approximately $5.0 million,
primarily due to the purchase of 270,000 shares of the Company's common stock
on March 22, 1997 at a price of $15.625 per share. This transaction settled
on April 2, 1997. Total deposits decreased by approximately $1.3 million
during the three months ended March 31, 1997.
Stockholders' equity at March 31, 1997 was $38.6 million compared to $42.5
million at December 31, 1996, a decrease of $3.9 million. This decrease was
primarily attributable to the purchase of 270,000 shares of the Corporation's
common stock in the open market as previously discussed. During the first
quarter of 1997, the Corporation granted 92,925 shares of stock awards under
the 1997 Stock-Based Incentive Plan.
RESULTS OF OPERATIONS
Net income increased 94.1% from $253,000 for the quarter ended March 31, 1996
to $491,000 for the quarter ended March 31, 1997. Net interest income
increased 43.1% for the three-month period ended March 31, 1997 compared to
the same period in 1996. This increase was primarily attributable to an
increase in loans and securities as the net proceeds from the initial public
offering were converted to interest earning assets.
Noninterest income for the Corporation increased from $58,000 for the three-
month period ended March 31, 1996 to $88,000 for the same three-month period
in 1997. This increase was primarily due to an increase in income from the
sale of real estate held for development and increased fees on deposit
accounts.
Noninterest expense increased from $780,000 for the three-month period ended
March 31, 1996 to $925,000 for the three-month period ended March 31, 1997
primarily as a result of compensation expense associated with the recently
adopted ESOP and Management Retention Plan. The additional
8
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expense from these plans was partially offset by elimination of expenses
associated with the pension and profit sharing plans which were terminated
during 1996. The Corporation's federal income tax expense increased from
$130,000 for the three-month period ended March 31, 1996 to $253,000 for the
three-month period ended March 31, 1997. The change in income tax was
attributable to the increase in income before income taxes.
LIQUIDITY
The Bank is required to maintain minimum levels of liquid assets as defined
by Bank regulators. The Bank's general objective for liquidity is to be
above 9%; however, the Bank's liquidity ratio does fluctuate, but has been in
excess of the required and targeted levels. The Bank's regulatory liquidity
at March 31, 1997 was 57.8%.
At March 31, 1997, the Bank had $1.5 million in commitments to originate
loans and $1.7 million in standby letters of credit.
CAPITAL RESOURCES
The Bank is subject to three capital-to-asset requirements in accordance with
bank regulations. The following table summarizes the Bank's regulatory
capital requirements versus actual capital as of March 31, 1997:
<TABLE>
<CAPTION>
ACTUAL REQUIRED EXCESS
AMOUNT % AMOUNT % AMOUNT %
<S> <C> <C> <C> <C> <C> <C>
Tangible capital $ 27,759 16.9% $ 2,461 1.5% $ 25,298 15.4%
Core leverage capital 27,759 16.9 4,923 3.0 22,836 13.9
Risk-based capital 28,259 60.6 3,729 8.0 24,530 52.6
</TABLE>
NEW ACCOUNTING STANDARDS
In June 1996, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 125, "Accounting for
Transfers and Servicing of Financial Assets and Extinguishments of
Liabilities", which has been amended by SFAS No. 127. This statement, as
amended, provides authoritative guidance as to the accounting and financial
reporting for transfers and servicing of financial assets and extinguishments
of liabilities. Example transactions covered by SFAS No. 125 include asset
securitizations, repurchase agreements, wash sales, loan participations,
transfers of loans with recourse, and servicing of loans. SFAS No. 125 is
based on a consistent application of a financial components approach that
focuses on control and provides consistent standards for distinguishing
transfers of financial assets that are sales from transfers that are secured
borrowings. The statement also requires measuring instruments that have a
substantial prepayment risk at fair value, much like debt instruments
classified as available-for-sale or trading. SFAS No. 125, as amended by
SFAS No. 127, is effective on a prospective basis for some transactions in
1997 and others in 1998. The adoption of SFAS No. 125 will not have a
material impact on the Corporation.
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share." The
overall objective of SFAS No. 128 is to simplify the calculation of earnings
per share (EPS) and achieve comparability with the recently issued
9
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International Accounting Standard No. 33, "Earnings Per Share." Under this
statement, primary EPS computed in accordance with APB Opinion No. 15 will be
replaced with a new, simpler calculation called basic EPS. Basic EPS will be
calculated by dividing income available to common shareholders (i.e., net
income less preferred stock dividends) by the weighted average common shares
outstanding without consideration for common stock equivalents such as
options, warrants, and convertible securities. Fully diluted EPS will not
change significantly but has been renamed diluted EPS.
SFAS No. 128 is effective for both interim and annual financial statements
for periods ending after December 15, 1997. Earlier application is not
permitted. Upon adoption, the Corporation will be required to change the
method currently used to compute EPS and to restate all prior periods. The
impact of SFAS No. 128 on the calculation of primary and fully diluted EPS is
not expected to be material.
In February 1997, the FASB issued SFAS No. 129, "Disclosure of Information
about Capital Structure." SFAS No. 129, effective for financial statements
for periods ending after December 15, 1997, consolidates existing disclosure
reporting guidance about a company's capital structure under a single
standard. This standard will have no impact on the Corporation.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION
REFORM ACT OF 1995
This report contains certain forward-looking statements within the meaning of
Section 27a of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. The Corporation intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking statements contained in the Private Securities Reform Act of
1995, and is including this statement for purposes of these safe harbor
provisions. Forward-looking statements, which are based on certain
assumptions and describe future plans, strategies and expectations of the
Corporation, are generally identifiable by use of the words "believe",
"expect", "intend", "anticipate", "estimate", "project", or similar
expressions. The Corporation's ability to predict results or the actual
effect of future plans or strategies is inherently uncertain. Factors which
could have a material adverse affect on the operations and future prospects
of the Corporation and its wholly-owned subsidiary include, but are not
limited to, changes in: interest rates; general economic conditions;
legislative/regulatory provisions; monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Federal Reserve
Board; the quality or composition of the loan or investment portfolios;
demand for loan products; deposit flows; competition; demand for financial
services in the Corporation's market area; and accounting principles,
policies, and guidelines. These risks and uncertainties should be considered
in evaluating forward-looking statements and undue reliance should not be
placed on such statements. Further information concerning the Corporation
and its business, including additional factors that could materially affect
the Corporation's financial results, is included in the Corporation's filings
with the SEC.
10
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ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET
RISKS.
Not Applicable
PART II - - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS.
None
ITEM 2. CHANGES IN SECURITIES.
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES.
None
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITIES HOLDERS.
At a Special Meeting of shareholders on February 27, 1997, the
shareholders of Park Bancorp approved the Park Bancorp, Inc. 1997 Stock-Based
Incentive Plan. The results of the voting were as follows: for 1,683,249
shares; against 264,424 shares; and abstentions 42,340 shares.
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits - Not applicable.
(b) Reports on Form 8-K. No reports on Form 8-K were filed
by the registrant during the quarter ended March 31,
1997.
11
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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.
PARK BANCORP, INC.
/s/ David A. Remijas
-------------------------------------
Date: May 15, 1997 David A. Remijas
President and Chief Executive Officer
/s/ Steven J. Pokrak
-------------------------------------
Date: May 15, 1997 Steven J. Pokrak
Treasurer and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<CASH> 865
<INT-BEARING-DEPOSITS> 3,830
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 49,711
<INVESTMENTS-CARRYING> 49,988
<INVESTMENTS-MARKET> 49,306
<LOANS> 65,680
<ALLOWANCE> 500
<TOTAL-ASSETS> 177,981
<DEPOSITS> 127,539
<SHORT-TERM> 5,000
<LIABILITIES-OTHER> 7,845
<LONG-TERM> 0
0
0
<COMMON> 27
<OTHER-SE> 38,598
<TOTAL-LIABILITIES-AND-EQUITY> 177,981
<INTEREST-LOAN> 1,404
<INTEREST-INVEST> 1,698
<INTEREST-OTHER> 48
<INTEREST-TOTAL> 3,150
<INTEREST-DEPOSIT> 1,498
<INTEREST-EXPENSE> 1,569
<INTEREST-INCOME-NET> 1,581
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 925
<INCOME-PRETAX> 744
<INCOME-PRE-EXTRAORDINARY> 744
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 491
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
<YIELD-ACTUAL> 7.34
<LOANS-NON> 299
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 500
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 500
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 500
</TABLE>
