SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACTIVITIES OF 1934
For the quarterly period ended September 30, 1998
PARK BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State of incorporation)
36-4082530
(IRS Employer Identification No.)
5400 South Pulaski Road, Chicago, Illinois
(Address of Principal Executive Offices)
60632
(ZIP Code)
(773) 582-8616
(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 September 30, 1998, the Registrant had outstanding 2,119,878 shares of
common stock.
<PAGE>
PARK BANCORP, INC.
Form 10-Q Quarterly Report
Index
<TABLE>
<CAPTION>
<S> <C>
Page
PART I - Financial Information
Item 1 Financial Statements 1
Item 2 Management's Discussion and Analysis of
Financial Condition and Results of Operations 6
Item 3 Quantitative and Qualitative Disclosures About Market Risk 9
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
</TABLE>
SIGNATURES
<PAGE>
Park Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition
(In Thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
-------- -----------
ASSETS
<S> <C> <C>
Cash and due from banks $ 1,005 $ 1,119
Interest-bearing deposit accounts in other financial institutions 5,108 6,693
--------- ---------
Total cash and cash equivalents 6,113 7,812
Securities available-for-sale 109,101 37,101
Securities held-to-maturity (fair value in 1997 - $55,684) - 55,736
Loans receivable, net 74,747 68,327
Federal Home Loan Bank stock 804 841
Real estate held for development 2,711 2,270
Premises and equipment, net 2,567 2,489
Other real estate - 60
Accrued interest receivable 1,768 1,542
Other assets 496 494
--------- ---------
TOTAL ASSETS $ 198,307 $176,672
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $ 142,188 $131,865
Securities sold under repurchase agreements 5,981 4,250
Advances from borrowers for taxes and insurance 1,645 1,387
Federal Home Loan Bank advances 10,000 -
Accrued interest payable 258 175
Other liabilities 967 394
----------- ---------
Total liabilities 161,039 138,071
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 27 27
Additional paid-in capital 26,335 26,222
Retained earnings 21,718 20,060
Treasury stock at cost - 514,625 shares and 283,652 shares,
respectively (8,733) (4,693)
Unearned ESOP shares (1,673) (1,807)
Unearned MRP shares (1,006) (1,226)
Unrealized gain on securities available-for-sale, net of taxes 600 18
----------- ---------
Total stockholders' equity 37,268 38,601
----------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 198,307 $176,672
=========== =========
</TABLE>
<PAGE>
Park Bancorp, Inc. and Subsidiary
Consolidated Statements of Income
(In Thousands)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
--------------------- ----------------------
1998 1997 1998 1997
-------------------- ----------------------
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $ 1,569 $ 1,424 $ 4,621 $ 4,224
Securities 1,933 1,694 5,814 5,174
------- ------- ------- -------
Total 3,502 3,118 10,435 9,398
Interest expense:
Deposits 1,741 1,524 5,109 4,515
Federal Home Loan Bank advances 123 79 354 259
------- ------- ------- -------
Total 1,864 1,603 5,463 4,774
------- ------- ------- -------
Net interest income 1,638 1,515 4,972 4,624
Provision for loan losses - - - -
------- ------- ------- -------
Net interest income after provision for
loan losses 1,638 1,515 4,972 4,624
Noninterest income:
Gain on sale of real estate held for
development 246 140 701 265
Gain on sale of securities available-for-sale - 10 4 10
Service fee income 52 34 146 93
Other operating income 2 5 18 125
------- ------- ------- -------
Total noninterest income 300 189 869 493
Noninterest expense:
Compensation and benefits 704 616 2,106 1,852
Occupancy and equipment expense 131 122 395 356
Federal deposit insurance premiums 36 33 102 100
Data processing services 36 33 102 96
Advertising 46 22 157 91
Stationery, printing, and supplies 19 19 64 79
Other operating expense 131 184 378 430
------- ------- ------- -------
Total noninterest expense 1,103 1,029 3,304 3,004
------- ------- ------- -------
Income before income taxes 835 675 2,537 2,113
Income tax expense 278 226 879 713
------- ------- ------- -------
Net income $ 557 $ 449 $ 1,658 $ 1,400
======= ======= ======= =======
Basic earnings per share $ .27 $ .20 $ .78 $ .60
======= ======= ======= =======
Diluted earnings per share $ .26 $ .20 $ .77 $ .60
======= ======= ======= =======
</TABLE>
<PAGE>
Park Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows
(In Thousands)
<TABLE>
<CAPTION>
Nine Months Ended
--------------------
September 30,
1998 1997
------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 1,658 $ 1,400
Adjustments to reconcile net income to net cash from operating
activities:
Net premium amortization (discount accretion) (83) (14)
Gain on sale of securities available-for-sale (4) (10)
Gain on sale of real estate held for development (701) (265)
Loss on sale of other real estate owned 6 -
Depreciation 162 135
ESOP compensation expense 247 230
MRP compensation expense 220 341
Net change in:
Accrued interest receivable (226) 66
Accrued interest payable 83 5
Other assets (2) (57)
Other liabilities 274 1,493
------- -------
Net cash from operating activities 1,634 3,324
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from maturities and calls of securities available-for-sale 44,490 8,500
Proceeds from maturities and calls of securities held-to-maturity 21,000 12,000
Proceeds from sales of securities available-for-sale 756 586
Principal repayments on mortgage-backed securities 5,713 3,209
Purchase of securities available-for-sale (47,017) (5,370)
Purchase of securities held-to-maturity (40,238) (14,991)
Net increase in loans (6,420) (2,648)
Sale (purchase) of FHLB stock 37 (85)
Net change in real estate held for development 260 893
Proceeds from sale of other real estate owned 54 -
Purchase of premises and equipment (240) (448)
------- -------
Net cash from investing activities (21,605) 1,646
CASH FLOWS FROM FINANCING ACTIVITIES:
Net change in deposits 10,323 (590)
Net change in repurchase agreements 1,731 -
Net change in advances from borrowers for taxes and insurance 258 (598)
Federal Home Loan Bank advances 10,000 -
Repayments of Federal Home Loan Bank advances - (2,000)
Purchase of treasury stock (4,040) (4,221)
------- -------
Net cash from financing activities 18,272 (7,409)
------- -------
Net change in cash and cash equivalents (1,699) (2,439)
Cash and cash equivalents at beginning of period 7,812 6,213
------- -------
Cash and cash equivalents at end of period $ 6,113 $ 3,774
======= =======
</TABLE>
<PAGE>
Park Bancorp, Inc. and Subsidiary
Consolidated Statements of Stockholders' Equity
(In Thousands)
<TABLE>
<CAPTION>
Unrealized
Gain
(Loss) on
Additional Unearned Unearned Securities Stock-
Common Paid-in Retained Treasury ESOP MRP Available- holders'
Stock Capital Earnings Stock Shares Shares for-Sale Equity
------- ---------- ---------- ------------ ------- -------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997 $ 27 $ 26,088 $ 18,518 $ - $ (1,994) $ - $ (182) $ 42,457
Net income - - 1,400 - - - - 1,400
Change in fair value of securities
available-for-sale,
net of income taxes - - - - - - 172 172
------
Comprehensive income 1,572
Purchase of treasury stock - - - (4,221) - - - (4,221)
Grant of stock awards under Management
Recognition Plan (MRP) - 1,701 - - - (1,701) - -
ESOP shares earned - 90 - - 140 - - 230
MRP shares earned - - - - - 341 - 341
------ ------ ------ ------ ------ ------ ------ ------
Balance at September 30, 1997 $ 27 $ 27,879 $ 19,918 $ (4,221) $ (1,854) $ (1,360) $ (10) $ 40,379
====== ====== ====== ====== ====== ====== ====== ======
Balance at January 1, 1998 $ 27 $ 26,222 $ 20,060 $ (4,693) $ (1,807) $ (1,226) $ 18 $ 38,601
Net income - - 1,658 - - - - 1,658
Appreciation in fair value of
securities available-for-
sale, net of income taxes - - - - - - 582 582
------
Comprehensive income 2,240
Purchase of treasury stock - - - (4,040) - - - (4,040)
ESOP shares earned - 113 - - 134 - - 247
MRP shares earned - - - - - 220 - 220
------ ------ ------ ------ ------ ------ ------ ------
Balance at September 30, 1998 $ 27 $ 26,335 $ 21,718 $ (8,733) $ (1,673) $ (1,006) $ 600 $ 37,268
====== ====== ====== ====== ====== ====== ====== ======
</TABLE>
<PAGE>
PARK BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of Park Bancorp, Inc. (Corporation) and its wholly-owned subsidiaries,
Park Federal Savings Bank (Bank) and PBI Development Corporations and the Bank's
subsidiaries, GPS Corporation and GPS Development Corporation, as of September
30, 1998 and December 31, 1997 and for the nine-month periods ended September
30, 1998 and 1997, respectively. 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 nine-month period ended
September 30, 1998 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, 1997 and the notes thereto.
Note 2 - Summary of Significant Accounting Policies
Securities: Securities are classified as held to maturity and carried at
amortized cost when management has the positive intent and ability to hold them
to maturity. Securities are classified as available for sale when they might be
sold before maturity. Securities available for sale are carried at fair value,
with unrealized holding gains and losses reported separately in stockholders'
equity, net of tax. Realized gains are based on specific identification of
amortized cost Interest income includes amortization of purchase premium or
discount.
Effective July 1, 1998, the Corporation adopted the provisions of Statement of
Financial Accounting Standards (SFAS) No. 133, Accounting for Derivative
Instruments and Hedging Activities. As permitted by SFAS 133, the Corporation
reclassified all of its securities held-to-maturity to securities available-for-
sale. The securities which were reclassified had a book value of $73,155,000
and a fair value of $73,267,000 at July 1, 1998.
Loans: Loans are reported at the principal balance outstanding, net of unearned
interest, deferred loan fees and costs, and an allowance for loan losses.
Interest income is reported on the interest method and includes amortization of
net deferred loan fees and costs over the loan term.
Allowance for Loan Losses: The allowance for loan losses is a valuation
allowance for probable credit losses, increased by the provision for loan losses
and decreased by charge-offs less recoveries. Management estimates the
allowance balance required based on past loan loss experience, known and
inherent risks in the portfolio, information about specific borrower situations
and estimated collateral values, economic conditions, and other factors.
Allocations of the allowance may be made for specific loans, but the entire
allowance is available for any loan that, in management's judgment, should be
charged-off.
<PAGE>
Earnings Per Share: Basic and diluted earnings per share are computed under a
new accounting standard which became effective during the quarter ended December
31, 1997. All prior amounts have been restated to be comparable. Basic
earnings per share is based on net income divided by weighted average number of
shares outstanding during the period. Diluted earnings per share shows the
dilutive effect of additional common shares issuable under stock options and
unearned Management Recognition Plan (MRP) shares.
Note 3 - Earnings Per Share
The following table presents a reconciliation of the components used to compute
basic and diluted earnings per share for the nine and three-month periods ended
September 30, 1998 and 1997.
<TABLE>
<CAPTION>
1998 1997
------ ------
Basic earnings per share
Three Months Nine Months Three Months Nine Months
Ended Ended Ended Ended
September 30 September 30 September 30 September 30
---------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net income as reported $ 557,000 $ 1,658,000 $ 449,000 $ 1,400,000
Weighted average common
shares outstanding 2,093,674 2,135,274 2,254,015 2,326,669
-------------- ----------- ------------ ------------
Basic earnings per share $ .27 $ .78 $ .20 $ .60
============== =========== ============ ============
Diluted earnings per share
Net income available to
common shareholders $ 557,000 $ 1,658,000 $ 449,000 $ 1,400,000
Weighted average common
shares outstanding 2,093,674 2,135,274 2,254,015 2,326,669
Dilutive effect of MRP 1,510 4,733 - -
Dilutive effect of stock options 7,758 24,974 - -
-------------- ----------- ------------ ------------
2,102,942 2,164,981 2,254,015 2,326,669
-------------- ----------- ------------ ------------
Diluted earnings per share $ .26 $ .77 $ .20 $ .60
============== =========== ============ ============
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion compares the financial condition of Park Bancorp,
Inc.(Corporation) and its wholly-owned subsidiaries, Park Federal Savings Bank
(Bank) and PBI Development Corporation, and the Bank's subsidiaries, at
September 30, 1998 to its financial condition at December 31, 1997 and the
results of operations for the nine months ended September 30, 1998 to the same
period in 1997. This discussion should be read in conjunction with the interim
financial statements and footnotes included herein.
FINANCIAL CONDITION
Total assets at September 30, 1998 were $198.3 million compared to $176.7
million at December 31, 1997, an increase of $21.6 million. During the nine
months ended September 30, 1998, cash and cash equivalents decreased by $1.7
million and securities increased by $16.3 while loans increased $6.4 million.
Total liabilities at September 30, 1998 were $161.0 million compared to $138.1
million at December 31, 1997, an increase of $22.9 million, primarily due to
increases in FHLB advances of $10.0 million and an increase in repurchase
agreements used to fund the increases in securities and loans noted above, as
well as the repurchase of the Corporation's common stock described below.
Accrued interest payable and other liabilities increased by $756,000. Total
deposits increased by approximately $10.3 during the nine months ended September
30, 1998.
<PAGE>
Stockholders' equity at September 30, 1998 was $37.3 million compared
to $38.6 million at December 31, 1997, a decrease of $1.3 million. This decrease
was primarily attributable to the repurchase of Corporation common stock offset
by the net income of the Corporation and a $582,000 increase in the net
unrealized gain on securities available-for-sale.
RESULTS OF OPERATIONS
Net income increased 24% to $558,000 for the quarter ended September 30, 1998
from $449,000 for the quarter ended September 30, 1997. Net income for the nine-
month period ended September 30, 1998 increased 18% to $1,658,000 from
$1,400,000 for the same period in 1997.
Net interest income increased by $123,000 and $348,000 to $1.6 million and $5.0
million for the three- and nine-month periods ended September 30, 1998,
respectively, compared to the same periods in 1997. These increases were
primarily attributable to an increase in the average outstanding balance of
loans and securities.
Noninterest income for the Corporation increased to $300,000 for the quarter
ended September 30, 1998 from $189,000 for the quarter ended September 30, 1997.
Similarly, noninterest income increased from $493,000 for the nine-month period
ended to $869,000 for the same period in 1998. This increase was primarily due
to gains from the sale of real estate held for development from the Bank's
project in Naperville, Illinois.
Noninterest expense increased to $1,103,000 for the three-month period ended
September 30, 1998 from $1,029,000 for the three-month period ended September
30, 1997. For the nine-month period, noninterest expenses increased to
$3,304,000 as compared to $3,004,000 for the nine-month period ended September
30, 1997. This increase is attributable to increased compensation expense
associated with staff increases and advertising expenses due to the
Corporation's efforts to increase its deposit base.
The Corporation's income tax expense increased to $879,000 for the nine-month
period ended September 30, 1998 from $713,000 for the nine-month period ended
September 30, 1997. Income tax expense increased to $278,000 for the quarter
ended September 30, 1998 from $226,000 for the same period in 1997.
These changes in income tax were attributable to the increase in income before
income taxes.
LIQUIDITY
The Bank is required to maintain minimum levels of liquid assets of 5% as
defined by Bank regulators. The Bank's liquidity ratio does fluctuate, but has
been in excess of the required and targeted levels. The Bank's regulatory
liquidity at September 30, 1998 was 52.0%.
At September 30, 1998, the Bank had $772,000 in commitments to originate loans.
<PAGE>
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 September 30, 1998:
MINIMUM
ACTUAL REQUIRED EXCESS
AMOUNT % AMOUNT % AMOUNT %
------- ----- ----------- ---- ------- ----
Core leverage capital $ 20,373 11.1% $ 7,275 3.0% $ 13,098 8.1%
Risk-based capital 20,873 31.2 5,353 8.0 15,520 23.2
NEW ACCOUNTING STANDARDS
Statement of Financial Accounting Standards (SFAS) No. 130, Reporting
Comprehensive Income, became effective during the first quarter of 1998 and
requires that all components of comprehensive income be presented in a separate
statement. Disclosures of the components of comprehensive income are included
in the Consolidated Statements of Stockholders' Equity.
SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information, will also become effective during 1998. SFAS No. 131 establishes
standards for the way public companies report information about its operating
segments and requires that these standards be adhered to for interim reporting
as well. SFAS No. 131 requires companies to provide more descriptive
disclosures about its operating segments including the way in which the segment
was determined, the products and services provided by the segment, and the
profit or loss generated by the segment. Management does not anticipate that
SFAS No. 131 will have a significant impact on the Corporation's results of
operations or capital but will add disclosures about the Corporation's results
from its real estate held for development.
SFAS No. 133, Accounting for Derivative Instruments and Hedging Activities, was
adopted by the Corporation on July 1, 1998. SFAS No. 133 states that all
derivative instruments shall be recorded at fair value in the financial
statements. SFAS No. 133 addresses the accounting for derivative instruments
such as hedges and swaps, and also includes instruments with "embedded"
derivatives such as call options. As permitted by SFAS 133, the Corporation
reclassified all of its securities held-to-maturity to securities available-
for-sale.
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.
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The principal objective of the Bank's interest rate risk management function is
to evaluate the interest rate risk included in certain balance sheet accounts;
determine the level of risk appropriate given the Bank's business focus,
operating environment, capital and liquidity requirements, and performance
objectives; and manage the risk consistent with Board approved guidelines.
Through such management, the Bank seeks to reduce the vulnerability of its
operations to changes in interest rates. The Bank monitors its interest rate
risk as such risk relates to its operating strategies. The Bank's executive
committee meets regularly and reviews the Bank's interest rate risk position and
makes recommendations for adjusting such position. In addition, the Bank's Board
of Directors reviews on a quarterly basis the Bank's asset/liability position,
including simulations of the effect on the Bank's capital of various interest
rate scenarios.
The Bank's interest rate sensitivity is monitored by management through the use
of a model which estimates the change in net portfolio value ("NPV") over a
range of interest rate scenarios. NPV is the present value of expected cash
flows from assets, liabilities, and off-balance-sheet contracts. An NPV Ratio,
in any interest rate scenario, is defined as the NPV in that scenario divided by
the market value of assets in the same scenario. The Sensitivity Measure is the
decline in the NPV Ratio, in basis points, caused by a 2% increase or decrease
in rates, whichever produces a larger decline. The higher an institution's
Sensitivity Measure is, the greater its exposure to interest rate risk is
considered to be. The Bank utilizes a market value model prepared by the OTS
(the "OTS NPV model"), which is prepared quarterly, based on the Bank's
quarterly Thrift Financial Reports filed with the OTS. The OTS NPV model
measures the Bank's interest rate risk by approximating the Bank's NPV, which is
the net present value of expected cash flows from assets, liabilities, and any
off-balance-sheet contracts, under various market interest rate scenarios which
range from a 400 basis point increase to a 400 basis point decrease in market
interest rates. The interest rate risk policy of the Bank provides that the
maximum permissible change at a 400 basis point increase or decrease in market
interest rates is a 90% change in the net portfolio value. The OTS has
incorporated an interest rate risk component into its regulatory capital rule.
Under the rule, an institution whose sensitivity measure exceeds 2% would be
required to deduct an interest rate risk component in calculating its total
capital for purpose of the risk-based capital requirement. As of June 30, 1998,
the Bank's sensitivity measure, as measured by the OTS, resulting from a 200
basis point increase in interest rates was (0.85)% and would result in a $2.2
million reduction in the NPV of the Bank. Accordingly, increases in interest
rates would be expected to have a negative impact on the Bank's operating
results. The NPV Ratio sensitivity measure is below the threshold at which the
Bank could be required to hold additional risk-based capital under OTS
regulations.
Certain shortcomings are inherent in the methodology used in the above interest
rate risk measurements. Modeling changes in NPV require the making of certain
assumptions that may tend to oversimplify the manner in which actual yields and
costs respond to changes in market interest rates. First, the models assume that
the composition of the Bank's interest sensitive assets and liabilities existing
at the beginning of a period remain constant over the period being measured.
Second, the models assume that a particular change in interest rates is
reflected uniformly across the yield curve regardless of the duration to
maturity or repricing of specific assets and liabilities. Third, the model does
not take into account the impact of the Bank's business or strategic plans on
the structure of interest-earning assets and interest-bearing liabilities.
Accordingly, although the NPV measurement provides an indication of the Bank's
interest rate risk exposure at a particular point in time, such measurement is
not intended to and does not provide a precise forecast of the effect of changes
in market interest rates on the Bank's net interest income and will differ from
actual results. The results of this modeling are monitored by management and
presented to the Board of Directors, quarterly.
<PAGE>
The following table shows the NPV and projected change in the NPV of the Bank at
June 30, 1998 assuming an instantaneous and sustained change in market interest
rates of 100, 200, 300, and 400 basis points.
Interest Rate Sensitivity of Net Portfolio Value (NPV)
NPV as a % of
---------Net Portfolio Value-------- -----PV of Assets------
------------------- ------------
Change in Rates $ Amount $ Change % Change NPV Ratio Change
- ----------------- -------- --------- ---------- ------------ ----------
+ 400 bp $ 22,353 $ -5,146 -19% 12.65% -215 bp
+ 300 bp 23,854 -3,645 -13 13.32 -148 bp
+ 200 bp 25,331 -2,168 -8 13.95 -85 bp
+ 100 bp 26,653 -846 -3 14.50 -31 bp
0 bp 27,499 - - 14.80 -
- 100 bp 28,212 713 +3 15.04 +24 bp
- 200 bp 28,497 998 +4 15.08 +27 bp
- 300 bp 29,102 1,603 +6 15.25 +45 bp
- 400 bp 29,916 2,417 +9 15.51 +71 bp
Management has not yet completed the computation of NPV as of September 30,
1998, but estimates that the results would not be materially different than
those presented above.
<PAGE>
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.
None
ITEM 5. OTHER INFORMATION.
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K.
(a) Exhibits - Financial Data Schedule.
(b) Reports on Form 8-K. No reports on Form 8-K were filed by the registrant
during the quarter ended September 30, 1998.
<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.
PARK BANCORP, INC.
Date: November 11, 1998 /s/ David A. Remijas
--------------------
David A. Remijas
President and Chief Executive Officer
Date: November 11, 1998 /s/ Steven J. Pokrak
---------------------
Steven J. Pokrak
Treasurer and Chief Financial Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0001013554
<NAME> PARK BANCORP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 1,005
<INT-BEARING-DEPOSITS> 5,108
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0
0
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</TABLE>
