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, 2000
PARK BANCORP, INC.
(Exact name of registrant as specified in its charter)
0-20867 (Commission file number)
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 November 8, 2000, the Registrant had outstanding 1,551,471 shares of
common stock.
<PAGE>
PARK BANCORP, INC.
Form 10-Q Quarterly Report
Index
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I - Financial Information
Item 1 Financial Statements 1
Item 2 Management's Discussion and Analysis of Financial Condition and
Results of Operations 8
Item 3 Quantitative and Qualitative Disclosures About Market Risk 10
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
</TABLE>
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 Company 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 as amended, 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
Company, are generally identifiable by use of the words "believe," "expect,"
"intend," "anticipate," "estimate," "project," or similar expressions. The
Company'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 Company and its
wholly-owned subsidiaries 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 Company'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 Company and
its business, including additional factors that could materially affect the
Company's financial results, is included in the Company's filings with the
Securities and Exchange Commission.
<PAGE>
PARK BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
--------- ---------
<S> <C> <C>
ASSETS
Cash and due from banks $ 724 $ 1,389
Interest-bearing deposit accounts in other financial institutions 2,996 2,635
--------- ---------
Total cash and cash equivalents 3,720 4,024
Securities available-for-sale 122,190 124,359
Loans receivable, net 92,036 86,692
Federal Home Loan Bank stock 1,900 1,800
Real estate held for development 61 234
Premises and equipment, net 2,254 2,377
Accrued interest receivable 1,925 2,686
Other assets 3,605 3,855
--------- ---------
TOTAL ASSETS $ 227,691 $ 226,027
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits $ 148,163 $ 145,675
Securities sold under repurchase agreements 18,113 13,185
Federal Home Loan Bank advances 32,000 36,000
Advances from borrowers for taxes and insurance 958 1,593
Accrued interest payable 414 296
Other liabilities 1,661 1,920
--------- ---------
Total liabilities 201,309 198,669
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value, 1,000,000 shares authorized;
none issued or outstanding -- --
Common stock, $.01 par value, 9,000,000 shares authorized;
2,701,441 shares issued 27 27
Additional paid-in capital 26,472 26,436
Retained earnings 24,587 23,990
Treasury stock at cost - 1,106,736 and 860,436 shares, at cost (17,696) (14,294)
Unearned ESOP shares (1,332) (1,456)
Unearned MRP shares (305) (550)
Accumulated other comprehensive income (loss) (5,371) (6,795)
--------- ---------
Total stockholders' equity 26,382 27,358
--------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 227,691 $ 226,027
========= =========
</TABLE>
See notes to consolidated financial statements.
1
<PAGE>
PARK BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED SEPTEMBER 30, ENDED SEPTEMBER 30,
------------------------ ------------------------
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income
Loans receivable $ 1,760 $ 1,624 $ 5,163 $ 4,715
Securities and other 2,268 2,256 6,781 6,348
---------- ---------- ---------- ----------
Total 4,028 3,880 11,944 11,063
Interest expense
Deposits and repurchase agreements 2,015 1,693 5,735 5,093
Federal Home Loan Bank advances 553 451 1,516 844
---------- ---------- ---------- ----------
Total 2,568 2,144 7,251 5,937
---------- ---------- ---------- ----------
Net interest income 1,460 1,736 4,693 5,126
Provision for loan losses -- -- -- --
---------- ---------- ---------- ----------
Net interest income after provision for
loan losses 1,460 1,736 4,693 5,126
Noninterest income
Gain on sale of real estate held for development 71 1,164 222 1,500
Gain on sale of securities available-for-sale 69 13 76 32
Service fee income 51 49 170 128
Other operating income 4 21 20 64
---------- ---------- ---------- ----------
Total noninterest income 195 1,247 488 1,724
Noninterest expense
Compensation and benefits 763 787 2,273 2,278
Occupancy and equipment 159 159 431 454
Data processing 35 33 108 110
Advertising 73 75 173 171
Other operating expenses 167 185 513 555
---------- ---------- ---------- ----------
Total noninterest expense 1,197 1,239 3,498 3,568
---------- ---------- ---------- ----------
Income before income taxes 458 1,744 1,683 3,282
Income tax expense 159 583 563 1,098
---------- ---------- ---------- ----------
Net income $ 299 $ 1,161 $ 1,120 $ 2,184
========== ========== ========== ==========
Basic earnings per share $ .20 $ .61 $ .74 $ 1.12
Diluted earnings per share $ .20 $ .61 $ .74 $ 1.12
Comprehensive income (loss) $ 1,241 $ (9) $ 2,544 $ (2,042)
========== ========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
2
<PAGE>
PARK BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS OF DOLLARS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
2000 1999
---------- ----------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 1,120 $ 2,184
Adjustments to reconcile net income to net cash from
operating activities
Net discount accretion on securities (8) (87)
Gain on sale of securities available-for-sale (76) (32)
Gain on sale of real estate held for development (222) (1,500)
Depreciation 180 271
ESOP compensation expense 160 192
MRP compensation expense 245 288
FHLB stock dividends (100) --
Net change in:
Accrued interest receivable 761 250
Accrued interest payable 118 67
Other assets (483) (856)
Other liabilities (259) 1,157
---------- ----------
Net cash from operating activities 1,436 1,934
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of securities available-for-sale -- (61,447)
Maturities and calls of securities available-for-sale -- 27,930
Sales of securities available-for-sale 549 502
Principal repayments on mortgage-backed securities 3,861 5,812
Net change in loans (5,344) (11,594)
Purchases of FHLB stock -- (713)
Net change in real estate held for development 395 4,301
Purchase of premises and equipment (57) (155)
---------- ----------
Net cash from investing activities (596) (35,364)
CASH FLOWS FROM FINANCING ACTIVITIES
Net change in deposits 2,488 1,805
Net change in repurchase agreements 4,928 5,926
Net change in advances from borrowers for taxes and insurance (635) 423
Net change in Federal Home Loan Bank advances (4,000) 22,000
Dividends paid (523) (457)
Purchase of treasury stock (3,402) (3,491)
---------- ----------
Net cash from financing activities (1,144) 26,206
---------- ----------
Net change in cash and cash equivalents (304) (7,224)
Cash and cash equivalents at beginning of period 4,024 10,709
---------- ----------
Cash and cash equivalents at end of period $ 3,720 $ 3,485
========== ==========
Cash paid during the period for
Interest $ 7,140 $ 5,823
Income taxes 630 1,160
</TABLE>
See notes to consolidated financial statements.
3
<PAGE>
PARK BANCORP, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY NINE MONTHS ENDED SEPTEMBER 30,
2000 AND 1999 (IN THOUSANDS OF DOLLARS, EXCEPT SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Common Accumulated
Stock and Other Total
Additional Unearned Unearned Compre- Stock-
Paid-in Retained ESOP MRP Treasury hensive holders'
Capital Earnings Shares Awards Stock Income (Loss) Equity
--------- --------- --------- --------- --------- ------------- ---------
1999
----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1999 $ 26,380 $ 22,211 $ (1,628) $ (933) $ (8,733) $ (274) $ 37,023
Comprehensive income
Net income -- 2,184 -- -- -- -- 2,184
Change in fair value of securities
available-for-sale, net of reclassification
and tax effects -- -- -- -- -- (4,226) (4,226)
---------
Total comprehensive income (loss) (2,042)
Dividends declared ($.24 per share) -- (457) -- -- -- -- (457)
Purchase of 212,311 shares of treasury stock -- -- -- -- (3,491) -- (3,491)
ESOP shares earned 63 -- 129 -- -- -- 192
MRP shares earned -- -- -- 288 -- -- 288
--------- --------- --------- --------- --------- --------- ---------
Balance at September 30, 1999 $ 26,443 $ 23,938 $ (1,499) $ (645) $ (12,224) $ (4,500) $ 31,513
========= ========= ========= ========= ========= ========= =========
2000
----
Balance at January 1, 2000 $ 26,463 $ 23,990 $ (1,456) $ (550) $ (14,294) $ (6,795) $ 27,358
Comprehensive income
Net income -- 1,120 -- -- -- -- 1,120
Change in fair value of securities
available-for-sale, net of reclassification
and tax effects -- -- -- -- -- 1,424 1,424
---------
Total comprehensive income 2,544
Purchase of 246,300 shares of treasury stock -- -- -- -- (3,402) -- (3,402)
Dividends declared ($.36 per share) -- (523) -- -- -- -- (523)
ESOP shares earned 36 -- 124 -- -- -- 160
MRP shares earned -- -- -- 245 -- -- 245
--------- --------- --------- --------- --------- --------- ---------
Balance at September 30, 2000 $ 26,499 $ 24,587 $ (1,332) $ (305) $ (17,696) $ (5,371) $ 26,382
========= ========= ========= ========= ========= ========= =========
</TABLE>
See notes to consolidated financial statements.
4
<PAGE>
PARK BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(table amounts in thousands of dollars, except share data)
Note 1 - Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of Park Bancorp, Inc. (the Company) and its wholly-owned subsidiaries,
Park Federal Savings Bank (the Bank) and PBI Development Company (PBI), and the
Bank's subsidiaries, GPS Company and GPS Development Company (GPS), as of
September 30, 2000 and December 31, 1999 and for the nine-month and three-month
periods ended September 30, 2000 and 1999. Significant intercompany accounts and
transactions have been eliminated in consolidation.
The accompanying unaudited interim consolidated financial statements have been
prepared pursuant to the rules and regulations for reporting on Form 10-Q.
Accordingly, certain disclosures required by generally accepted accounting
principles are not included herein. These interim statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's 1999 Annual Report on Form 10-K filed with the
Securities and Exchange Commission. The December 31, 1999 balance sheet
presented herein has been derived from the audited financial statements included
in the Company's 1999 Annual Report on Form 10-K filed with the Securities and
Exchange Commission, but does not include all disclosures required by generally
accepted accounting principles.
Interim statements are subject to possible adjustment in connection with the
annual audit of the Company's financial statements for the year ending December
31, 2000. In the opinion of management of the Company, the accompanying
unaudited interim consolidated financial statements reflect all adjustments
(consisting of normal recurring adjustments) necessary for a fair presentation
of the consolidated financial position and consolidated results of operations
for the periods presented.
The results of operations for the nine-month and three-month periods ended
September 30, 2000 and 1999 are not necessarily indicative of the results to be
expected for the full year.
5
<PAGE>
Note 2 - Segment Information
The reportable segments are determined by the products and services offered,
primarily distinguished between banking and real estate development operations.
Loans, investments, and deposits provide the revenues in the banking operation,
and sales of single family-residence lots provide the revenues in real estate
development operations. All operations are domestic.
Information reported internally for performance assessment for the nine-month
and three-month periods ended September 30, 2000 and 1999 follows.
<TABLE>
<CAPTION>
Real Estate
Banking Development Total
------- ----------- -----
<S> <C> <C> <C>
Nine Months Ended September 30, 2000
------------------------------------
Net interest income $ 4,693 $ -- $ 4,693
Gain on sale of real estate held for development -- 222 222
Other revenue 266 -- 266
Other expenses 3,498 -- 3,498
Income tax expense 488 75 563
Segment profit 973 147 1,120
Three Months Ended September 30, 2000
--------------------------------------
Net interest income $ 1,460 $ -- $ 1,460
Gain on sale of real estate held for development -- 71 71
Other revenue 124 -- 124
Other expenses 1,197 -- 1,197
Income tax expense 135 24 159
Segment profit 252 47 299
Segment assets as of September 30, 2000 $ 227,630 $ 61 $ 227,691
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
Real Estate
Banking Development Total
------- ----------- -----
<S> <C> <C> <C>
Nine Months Ended September 30, 1999
------------------------------------
Net interest income $ 5,126 $ -- $ 5,126
Gain on sale of real estate held for development -- 1,500 1,500
Other revenue 224 -- 224
Other expenses 3,568 -- 3,568
Income tax expense 588 510 1,098
Segment profit 1,194 990 2,184
Three Months Ended September 30, 1999
-------------------------------------
Net interest income $ 1,736 $ -- $ 1,736
Gain on sale of real estate held for development -- 1,164 1,164
Other revenue 83 -- 83
Other expenses 1,239 -- 1,239
Income tax expense 187 396 583
Segment profit 393 768 1,161
Segment assets as of September 30, 1999 $ 229,584 $ 72 $ 229,656
</TABLE>
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 three-month and nine-month periods
ended September 30, 2000 and 1999.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income as reported $ 299 $ 1,161 $ 1,120 $ 2,184
Weighted average common
shares outstanding 1,467,769 1,910,046 1,511,698 1,945,169
---------- ---------- ---------- ----------
Basic earnings per share $ .20 $ .61 $ .74 $ 1.12
========== ========== ========== ==========
</TABLE>
The effects of stock options and stock awards could potentially dilute basic
earnings per share in the future but were not included in the computation of
diluted earnings per share for the three-month and nine-month periods ended
September 30, 2000 or 1999 because to do so would have been anti-dilutive.
7
<PAGE>
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.
(Company) and its wholly-owned subsidiaries, Park Federal Savings Bank (Bank)
and PBI Development Corporation, and the Bank's subsidiaries, at September 30,
2000 to its financial condition at December 31, 1999 and the results of
operations for the nine-month and three-month periods ended September 30, 2000
to the same periods in 1999. This discussion should be read in conjunction with
the interim financial statements and footnotes included herein.
FINANCIAL CONDITION
Total assets at September 30, 2000 were $227.7 million compared to $226.0
million at December 31, 1999, an increase of $1.7 million. The growth in total
assets was primarily funded by securities sold under repurchase agreements and
an increase in deposits. During the nine months ended September 30, 2000, loans
increased $5.3 million while securities available-for-sale decreased $2.2
million.
The allowance for loan losses was $500,000 at both September 30, 2000 and
December 31, 1999. There were no impaired loans at either date.
Total liabilities at September 30, 2000 were $201.3 million compared to $198.7
million at December 31, 1999, an increase of $2.6 million, primarily due to
increases in securities sold under repurchase agreements of $4.9 million and
deposits of $2.5 million, partially offset by a decrease in Federal Home Loan
Bank (FHLB) advances of $4.0 million. The net increase in these liabilities, as
well as the decrease in securities available-for-sale, was used to help fund the
growth in loans receivable and repurchase 246,300 shares of the Company's common
stock for treasury.
Stockholders' equity at September 30, 2000 was $26.4 million compared to $27.4
million at December 31, 1999, a decrease of $1.0 million. The decrease was
primarily attributable to the repurchase of 246,300 shares of the Company's
common stock and the declaration of dividends of $523,000, partially offset by
net income of $1.1 million and unrealized gains on securities
available-for-sale, net of tax, of $1.4 million.
RESULTS OF OPERATIONS
Net income decreased $862,000 to $299,000 for the quarter ended September 30,
2000 compared to the same period in 1999. Net income decreased $1.1 million to
$1.1 million for the nine months ended September 30, 2000 compared to the nine
months ended September 30, 1999. Fluctuations in net income are discussed below.
Net interest income was $1.5 million for the quarter ended September 30, 2000
compared to $1.7 million for the same period in 1999. Net interest income
decreased to $4.7 million for the nine-month period ended September 30, 2000
compared to $5.1 million for the same period in 1999. Although the Company's
assets grew during the 2000 period, the net interest margin decreased to 2.66%
and 2.87% for the three months and nine months ended September 30, 2000,
respectively, from 3.18% and 3.29% for the three months and nine months ended
September 30, 1999, respectively. The decreases in interest margins are
primarily due to higher market interest rates and higher average balances of
FHLB advances in 2000 compared to the same periods in 1999. FHLB advances
generally have higher interest rates than deposit liabilities. In addition, the
ratio of interest-earning assets to interest-bearing liabilities has continued
to decrease as a result of continued stock buybacks and the payment of
dividends. The ratio of average interest-earning assets to average
interest-bearing liabilities was 110.4% and 117.5% for the nine months ended
September 30, 2000 and 1999, respectively.
8
<PAGE>
The provision for loan losses was zero for the quarters and nine-month periods
ended September 30, 2000 and 1999. Management believes that the allowance is
adequate based on: the low level of past due loans in the portfolio; actual loss
experience; and current economic conditions. Most of the Company's loans are
secured by first mortgages on residential real estate.
Noninterest income decreased $1,052,000 to $195,000 and decreased $1,236,000 to
$488,000 for the three-month and nine-month periods ended September 30, 2000,
respectively, compared to the same periods in 1999. These decreases are
primarily due to lower gains on sales of real estate held for development. Lot
sales decreased in 2000 as a result of high demand early in the project
development stages during 1999 with few remaining lots available for sale in
2000.
Noninterest expense was $1.2 million for the quarters ended September 30, 2000
and 1999 and $3.5 million and $3.6 million for the nine months ended September
30, 2000 and 1999, respectively. There were no significant changes in the
various categories of noninterest expense during these comparative periods.
The Company's federal income tax expense decreased $424,000 to $159,000 for the
quarter ended September 30, 2000 compared to the same period in 1999, while
income tax expense decreased $535,000 to $563,000 for the nine-month period
ended September 30, 2000 compared to the same period in 1999. Income tax expense
was approximately 34% of pre-tax income in each period.
LIQUIDITY
The Bank is required to maintain minimum levels of liquid assets 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 average regulatory
liquidity at September 30, 2000 was 62%, approximately the same as in 1999.
At September 30, 2000, the Bank had $3.3 million in commitments to originate
loans and $4.1 million in standby letters of credit.
CAPITAL RESOURCES
The Bank is subject to 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, 2000:
<TABLE>
<CAPTION>
ACTUAL REQUIRED EXCESS
------ -------- ------
AMOUNT % AMOUNT % AMOUNT %
------ - ------ - ------ -
<S> <C> <C> <C> <C> <C> <C>
Core capital (to adjusted
total assets) $ 24,962 11.56% $ 8,635 4.00% $ 16,327 7.56%
Total risk-based capital
(to risk-weighted assets) 25,462 29.03 7,016 8.00 18,446 21.03
</TABLE>
9
<PAGE>
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Bank's interest rate sensitivity is monitored by management through the use
of a model that 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 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 purposes of the risk-based capital
requirement. As of June 30, 2000, the Bank's most recent sensitivity measure, as
measured by the OTS, resulting from a 200 basis point increase in interest rates
was (7.70)% and would result in a $17.0 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.
Certain shortcomings are inherent in the methodology used in the above interest
rate risk measurements. Modeling changes in NPV requires 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 remains 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.
The following table shows the NPV and projected change in the NPV of the Bank at
June 30, 2000 assuming an instantaneous and sustained change in market interest
rates of 100, 200, and 300 basis points.
<TABLE>
<CAPTION>
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
--------------- -------- -------- -------- --------- ------
<S> <C> <C> <C> <C> <C>
+ 300 bp $ (2,487) $ (24,553) (111)% (1.33)% (1,159) bp
+ 200 bp 5,024 (17,043) (77) 2.56 (770) bp
+ 100 bp 13,233 (8,834) (40) 6.45 (381) bp
0 bp 22,066 -- -- 10.26 0 bp
- 100 bp 30,719 8,653 39 13.67 +341 bp
- 200 bp 32,288 10,221 46 14.20 +394 bp
- 300 bp 33,037 10,970 50 14.41 +415 bp
</TABLE>
The Bank has experienced a significant increase in interest rate risk since
1998, primarily as a result of investing in callable fixed rate U.S. Government
Agency securities with maturities exceeding ten years. Management is currently
evaluating various alternatives to reduce interest rate risk, including using
the paydowns of mortgage-backed securities and fixed rate loans to reduce
outstanding advances. The Company has no plans in the foreseeable future to
purchase callable securities.
Management has not yet completed the computation of NPV as of September 30, 2000
but estimates that the results would not be materially different than those
presented above.
10
<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 - Not applicable.
(b) Reports on Form 8-K. No reports on Form 8-K were filed
by the registrant during the quarter ended September 30,
2000.
11
<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 14, 2000 /s/ David A. Remijas
--------------------------------------
David A. Remijas
President and Chief Executive Officer
Date: November 14, 2000 /s/ Steven J. Pokrak
--------------------------------------
Steven J. Pokrak
Treasurer and Chief Financial Officer
12
