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 June 30, 1998
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 0-28696
Home Bancorp of Elgin, Inc.
(Exact name of registrant as specified in its charter)
Delaware 36-4090333
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
16 North Spring Street, Elgin, Illinois 60120
(Address of principal executive offices)
(Zip Code)
(847) 742-3800
(Registrant's telephone number including area code)
N/A
---
(Former name, former address and former fiscal year,
if changed from 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 twelve 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.
Outstanding at
Class June 30, 1998
----- -------------
Common Stock,
par value $.01 6,855,799
<PAGE>
TABLE OF CONTENTS
<TABLE>
<S> <C> <C>
PART I -- FINANCIAL INFORMATION
Item 1. Financial Statements of Home Bancorp of Elgin, Inc.
Consolidated Balance Sheets (Unaudited) -- June 30, 1998
and December 31, 1997 ................................................................... 1
Consolidated Statements of Earnings (Unaudited) -- Three and six months ended
June 30, 1998 and 1997 .................................................................. 2
Consolidated Statements of Cash Flows (Unaudited) -- Three and six months ended
June 30, 1998 and 1997 .................................................................. 3
Notes to Unaudited Consolidated Financial Statements .................................... 4
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations ................................................................... 5
Item 3. Quantitative and Qualitative Disclosures About Market Risk.............................. 15
PART II -- OTHER INFORMATION
Item 1. Legal Proceedings ...................................................................... 15
Item 2. Changes in Securities and Use of Proceeds .............................................. 15
Item 3. Defaults upon Senior Securities ........................................................ 15
Item 4. Submission of Matters to a Vote of Security Holders .................................... 15
Item 5. Other Information ...................................................................... 16
Item 6. Exhibits and Reports on Form 8-K ....................................................... 16
Signatures........................................................................................ 17
</TABLE>
- i -
<PAGE>
Part I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HOME BANCORP OF ELGIN, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
June 30, December 31,
1998 1997
---- ----
(In thousands, except
share amounts)
<S> <C> <C>
ASSETS
Cash and due from banks..................................................... $ 4,768 $ 6,852
Interest-earning deposits................................................... 30,400 34,708
Loans receivable, net....................................................... 319,925 298,661
Government National Mortgage Association
mortgage-backed securities held to maturity............................... 72 92
Accrued interest receivable................................................. 1,554 1,437
Real estate owned and in judgment, at lower of cost or fair value........... 229 286
Federal Home Loan Bank of Chicago stock, at cost............................ 2,954 2,606
Office properties and equipment, net........................................ 6,910 7,113
Prepaid expenses and other assets........................................... 844 840
------------ ------------
Total assets.............................................................. $ 367,656 $ 352,595
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Savings deposits............................................................ $ 267,291 $ 248,218
Borrowed funds ............................................................. -- 5,000
Advance payment by borrowers for taxes and insurance........................ 2,378 2,285
Accrued interest payable and other liabilities.............................. 1,975 1,877
------------ ------------
Total liabilities......................................................... 271,644 257,380
------------ ------------
Stockholders' Equity:
Preferred stock, $.01 par value, 3,000,000 shares
authorized; none outstanding.............................................. -- --
Common stock, $.01 par value; 12,000,000 shares
authorized, 7,009,250 shares issued; 6,855,799 shares
outstanding at June 30, 1998 and at December 31, 1997.................... 70 70
Additional paid-in capital.................................................. 68,670 68,324
Retained earnings, substantially restricted................................. 37,926 38,095
Treasury stock, at cost (153,451 shares) ................................... (2,470) (2,470)
Common stock acquired by Recognition and Retention Plan..................... (3,449) (3,898)
Common stock acquired by Employee Stock Ownership Plan ..................... (4,735) (4,906)
Total stockholders' equity................................................ 96,012 95,215
------------ ------------
Total liabilities and stockholders' equity.................................. $ 367,656 $ 352,595
============ ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
- 1 -
<PAGE>
HOME BANCORP OF ELGIN, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
<TABLE>
<CAPTION>
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
--------------------------------- ---------------------------
1998 1997 1998 1997
---------------- ---------------- ---------------- ----------
(In thousands, except
per share amounts)
<S> <C> <C> <C> <C>
INTEREST INCOME
Loans secured by real estate.............................. $ 5,954 $ 5,281 $ 11,716 $ 10,382
Other loans............................................... 15 15 29 30
Mortgage-backed securities held to maturity............... 1 2 3 5
Investment securities held to maturity.................... -- 508 -- 1,189
Interest-earning deposits................................. 575 444 1,185 746
Federal Home Loan Bank of Chicago stock................... 47 44 90 89
------- ------- ------- -------
Total interest income.................................. 6,592 6,294 13,023 12,441
INTEREST EXPENSE
Savings deposits.......................................... 2,879 2,607 5,606 5,176
Borrowed funds............................................ -- 5 16 5
------- ------- ------- -------
Total interest expense................................. 2,879 2,612 5,622 5,181
------- ------- ------- -------
Net interest income before provision for loan losses...... 3,713 3,682 7,401 7,260
Provision for loan losses................................. 30 30 60 60
------- ------- ------- -------
Net interest income after provision for loan losses....... 3,683 3,652 7,341 7,200
------- ------- ------- -------
NON-INTEREST INCOME
Service fee income........................................ 255 245 485 495
Gain on sale of real estate owned......................... 13 -- 13 34
Other income.............................................. 8 6 16 194
------- ------- ------- -------
Total non-interest income.............................. 276 251 514 723
NON-INTEREST EXPENSE
Compensation and benefits................................. 1,470 1,357 3,069 2,589
Occupancy expense......................................... 394 405 799 802
Federal deposit insurance premiums........................ 59 63 119 94
Advertising and promotion................................. 108 111 223 208
Automated teller machines................................. 106 107 205 203
Professional services .................................... 98 92 308 215
Data processing........................................... 227 225 460 460
Other..................................................... 366 368 709 725
------- ------- ------- -------
Total non-interest expense............................. 2,828 2,728 5,892 5,296
------- ------- ------- -------
Income before income tax expense.......................... 1,131 1,175 1,963 2,627
Income tax expense........................................ 439 456 761 1,019
------- ------- ------- -------
Net income ............................................ $ 692 $ 719 $ 1,202 $ 1,608
======= ======= ======= =======
Earnings per share:
Basic .................................................... $ 0.11 $ 0.11 $ 0.19 $ 0.25
======= ======= ======= =======
Diluted................................................... $ 0.11 $ 0.11 $ 0.19 $ 0.25
======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
- 2 -
<PAGE>
HOME BANCORP OF ELGIN, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
June 30, June 30,
---------------------------------- ----------------------------
1998 1997 1998 1997
---------------- ----------------- ---------------- ----------
(In thousands)
<S> <C> <C> <C> <C>
Cash flows from operating activities:
Net income....................................................... $ 692 $ 719 $ 1,202 $ 1,608
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization ................................... 152 157 304 314
Provision for possible loan losses............................... 30 30 60 60
Accretion of discounts, net...................................... -- (166) --- (476)
Market adjustment for committed ESOP shares...................... 113 82 346 152
Cost of ESOP shares released .................................... -- 171 ---
Cost of RRP...................................................... 225 150 450 150
Increase (decrease) in deferred loan fees........................ 21 (70) 136 (119)
Gain on sale of real estate owned ............................... (13) -- (13) (34)
Real estate owned expense........................................ (3) -- 8 --
Increase in accrued interest receivable.......................... (110) (442) (117) (68)
Increase in prepaid expenses and other assets, net............... (29) (79) (4) (150)
Increase (decrease) in accrued interest payable and other
liabilities, net................................................ (239) 435 97 (368)
---- ------- ------ -------
Net cash provided by operating activities..................... 839 816 2,640 1,069
------ ------ ------ -------
Cash flows from investing activities:
Net increase in loans receivable................................. (18,297) (17,894) (21,460) (18,502)
Repayment of mortgage-backed securities held to maturity......... 8 18 19 28
Maturities of investment securities held to maturity............. -- 15,229 --- 20,374
Purchase of office properties and equipment...................... (82) (20) (101) (105)
Proceeds from the sale of REO.................................... 62 -- 62 359
Proceeds from the sale of office properties and equipment........ -- -- --- --
Redemption (purchase) of stock in the Federal Home Loan Bank
of Chicago..................................................... (348) 72 (348) 72
---- ------ ------ --------
Net cash provided by (used in) investing activities........... (18,657) (2,595) (21,828) 2,226
------- ------- ------- --------
Cash flows from financing activities:
Increase (decrease) in Federal Home Loan Bank of Chicago advances -- 5,000 (5,000) 5,000
Net increase (decrease) in savings deposits...................... (453) (3,950) 19,073 (2,708)
Purchase of RRP stock............................................ -- (4,498) -- (4,498)
Purchase of Treasury stock....................................... -- (2,470) -- (2,470)
Dividends paid on common stock................................... (686) (701) (1,371) (701)
Net increase (decrease) in advance payments by borrowers for
taxes and insurance............................................ (971) (885) 93 78
------- ------- ------- --------
Net cash used in financing activities............................ (2,110) (7,504) 12,795 (5,299)
------- ------- ------- --------
Decrease in cash and cash equivalents............................ 19,928 9,283 6,393 2,004
Cash and cash equivalents at beginning of period................. 55,096 35,282 41,561 28,003
------- ------- ------- --------
Cash and cash equivalents at end of period....................... $35,168 $25,999 $35,168 $ 25,999
======= ======= ======= ========
Supplemental disclosure of cash flow information:
Cash paid during the period for:
Interest.................................................. $2,879 $ 2,600 $5,630 $5,179
Income taxes.............................................. 868 445 1,034 496
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
- 3 -
<PAGE>
HOME BANCORP OF ELGIN, INC. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) Basis of Presentation
The consolidated financial statements included herein have been prepared
by the Company without audit. In the opinion of management, the quarterly and
six month unaudited consolidated financial statements include all adjustments,
consisting of normal recurring accruals, necessary for a fair presentation of
the financial position and results of operations at and for the periods
presented. Certain information and footnote disclosures normally included in
accordance with generally accepted accounting principles have been condensed or
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. The Company believes that the disclosures are adequate to make the
information presented not misleading, however, the results for the periods
presented are not necessarily indicative of results to be expected for the
entire year.
(2) Earnings Per Share
Earnings per share of common stock for the three and six months ended
June 30, 1998 have been calculated according to the guidelines of Statement of
Financial Accounting Standards No. 128, "Earnings Per Share" ("SFAS 128").
Earnings per share for the three and six months ended June 30, 1997 have been
restated to comply with the provisions of SFAS 128. ESOP shares are only
considered outstanding for earnings per share calculations when they are
released or committed to be released.
<TABLE>
<CAPTION>
For the Three For the Six
Months Ended Months Ended
June 30, June 30,
--------------------------------- ----------------------------
1998 1997 1998 1997
---------------- --------------- ----------------- ----------
(In thousands, except
per share amounts)
<S> <C> <C> <C> <C>
Basic:
Net Income............................................... $ 691,762 $ 719,187 $ 1,201,501 $ 1,607,571
Weighted average common shares outstanding .............. 6,382,302 6,438,921 6,381,164 6,450,660
------------ ----------- ------------- -------------
Basic earnings per share................................. $ 0.11 $ 0.11 $ 0.19 $ 0.25
============ =========== ============ =============
Diluted:
Net income............................................... $ 691,762 $ 719,187 $ 1,201,501 $ 1,607,571
Weighted average common shares outstanding............... 6,382,302 6,438,921 6,381,164 6,450,660
Stock options............................................ 88,133 31,635 108,420 12,093
------------- ----------- ------------- -------------
Diluted weighted average common shares
outstanding........................................... $ 6,470,435 $ 6,470,556 $ 6,489,584 $ 6,462,753
----------- ----------- ------------ ------------
Diluted earnings per share............................... $ 0.11 $ 0.11 $ 0.19 $ 0.25
============= ============ ============ =============
</TABLE>
(3) Definitive Merger Agreement
The Company executed a Definitive Merger Agreement on June 2, 1998 to
merge with State Financial Services Corporation ("State"), a bank holding
company headquartered in Hales Corners, Wisconsin. The organization resulting
from the merger will retain the name of State Financial Services Corporation.
The merger is expected to be accounted for as a pooling of interests and is
subject to several contingencies, including SEC registration, regulatory
approval, and shareholder approval from both the Company and State shareholders.
The Company and State have also entered into a Stock Option Agreement whereby,
subject to certain conditions, the Company would grant to State an option to
acquire up to 19.9% of the Company's outstanding shares.
(4) Commitments and Contingencies
At June 30, 1998, the Company had outstanding commitments to originate
mortgage loans of $9.0 million, of which $8.5 million were fixed-rate
commitments.
- 4 -
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
On September 26, 1996, Home Federal Savings and Loan Association of
Elgin ("Home Federal" or the "Association") completed its conversion from mutual
to stock form and became a wholly-owned subsidiary of Home Bancorp of Elgin,
Inc. ("Home Bancorp" or the "Company"). On such date, the Company sold 7,009,250
shares of its common stock, par value $.01 per share, to the public, at a per
share price of $10.00. The conversion and offering raised $62.4 million in net
proceeds.
Home Bancorp's sole business activity consists of the ownership of the
Association. The Company also invests in short-term investment grade marketable
securities and other liquid investments. The Association's principal business
consists of attracting deposits from the public and investing those deposits,
along with funds generated from operations, primarily in loans secured by
mortgages on one- to four-family residences. The Association's results of
operations are dependent primarily on net interest income, which is the
difference between the interest income earned on its interest-earning assets,
such as loans, interest-earning deposits and securities, and the interest
expense on its interest-bearing liabilities, such as savings deposits and
borrowed funds. The Association also generates non-interest income such as
service charges and other fees. The Association's non-interest expenses
primarily consist of employee compensation and benefits, occupancy expenses,
federal deposit insurance premiums, data processing fees and other operating
expenses. The Association's results of operations are also significantly
affected by general economic and competitive conditions (particularly changes in
market interest rates), government policies and actions of regulatory agencies.
- 5 -
<PAGE>
The selected financial ratios and other data of the Company set forth below
is derived in part from, and should be read in conjunction with, the Unaudited
Consolidated Financial Statements of the Company and Notes thereto presented
elsewhere in this report.
<TABLE>
<CAPTION>
At or For the At or For the
Three Months Ended Six Months Ended
June 30, June 30,
--------------------------- ---------------------------------
1998 1997 1998 1997
------------ ------------ -------------------- -----------
(Dollars in thousands, except
shares and per share amounts)
(Unaudited)
<S> <C> <C> <C> <C>
SELECTED FINANCIAL RATIOS(1):
PERFORMANCE RATIOS:
Return on average assets........................... 0.75% 0.81% 0.65% 0.90%
Return on average equity........................... 2.89 2.92 2.52 3.23
Average interest rate spread(2).................... 3.02 3.09 3.08 3.07
Net interest margin(3)............................. 4.17 4.29 4.20 4.25
Average interest-earning assets to average
interest-bearing liabilities..................... 135.65 139.59 135.07 138.98
Non-interest expense to average assets............. 3.06 3.06 3.20 2.97
CAPITAL RATIOS(1):
Average equity to average assets................... 25.85 27.57 25.96 27.87
Consolidated equity to total assets at end of period 26.11 26.70 26.11 26.70
Tangible capital(4)................................ 20.42 20.27 20.42 20.27
Core capital(4).................................... 20.42 20.27 20.42 20.27
Total risk-based capital(4)........................ 35.41 39.45 35.41 39.45
ASSET QUALITY RATIOS AND OTHER DATA(1):
Total non-performing loans(5)...................... $ 816 $ 1,214 $ 816 $ 1,214
Real estate owned, net............................. 229 225 229 225
Non-performing loans to total loans(6)............. 0.25% 0.43% 0.25% 0.43%
Non-performing assets to total assets.............. 0.28 0.41 0.28 0.41
Allowance for loan losses to:
Non-performing loans............................. 137.47 82.75 137.47 82.75
Total loans(6)................................... 0.35 0.36 0.35 0.36
Number of shares outstanding....................... 6,855,799 6,855,799 6,855,799 6,855,799
Book value per share............................... $ 14.00 $ 13.73 $ 14.00 $ 13.73
</TABLE>
- ------------
(1) With the exception of end-of-period ratios, all ratios are based on average
monthly balances during the indicated periods and are annualized where
appropriate. Capital Ratios and Asset Quality Ratios And Other Data are
end-of-period ratios and data.
(2) The average interest rate spread represents the difference between the
weighted-average yield on interest-earning assets and the weighted-average
cost of interest-bearing liabilities.
(3) The net interest margin represents net interest income as a percentage of
average interest-earning assets.
(4) These regulatory capital ratios are for Home Federal Savings and Loan
Association of Elgin only.
(5) Non-performing loans consist of non-accrual loans; the Company did not have
any loans that were 90 days or more past due and still accruing at any of
the dates referred to in the table above.
(6) Total loans represents gross loans less deferred loan fees and loans in
process.
- 6 -
<PAGE>
ANALYSIS OF NET INTEREST INCOME
Net interest income represents the difference between income on
interest-earning assets and expense on interest-bearing liabilities. Net
interest income depends upon the relative amounts of interest-earning assets and
interest-bearing liabilities and the interest rates earned or paid on them.
The following table sets forth certain information relating to the
Company's statements of financial condition and the statements of operations for
the three and six months ended June 30, 1998 and 1997, and reflects the average
yield on assets and average cost of liabilities for the periods indicated. Such
yields and costs are derived by dividing income or expense by the average
balance of assets or liabilities, respectively, for the periods shown. Average
balances are derived from average monthly balances. The yields and costs include
fees which are considered adjustments to yields.
- 7 -
<PAGE>
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
---------------------------------------------------------------------------
1998 1997
---------------------------------- ---------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Real estate loans(1)....................... $ 313,926 $ 5,954 7.59% $ 273,367 $ 5,281 7.73%
Other loans................................ 676 15 8.88 652 15 9.20
Mortgage-backed securities................. 75 1 5.33 122 2 6.56
Investment securities...................... -- -- -- 33,843 508 6.00
Interest-earning deposits.................. 38,316 575 6.00 32,563 444 5.45
FHLB of Chicago stock...................... 2,954 47 6.36 2,606 44 6.75
-------- ------- ----- --------- ------- ----
Total interest-earning assets........... 355,947 6,592 7.41% 343,153 6,294 7.34%
-------- ------- ----- --------- ------- ----
Allowance for loan losses..................... (1,111) (995)
Non-interest earning assets................... 15,250 14,593
-------- ---------
Total asset............................. $ 370,086 $ 356,751
======== ========
LIABILITIES AND EQUITY:
Interest-bearing liabilities:
NOW/Super NOW accounts..................... $ 43,643 $ 233 2.14% $ 42,072 $ 230 2.19%
Money market accounts...................... 15,542 126 3.24 16,450 130 3.16
Passbook accounts.......................... 60,438 470 3.11 63,260 484 3.06
Certificates of deposit.................... 142,770 2,050 5.74 123,714 1,763 5.70
Borrowed funds............................. -- -- -- 330 5 6.06
-------- ------- ----- -------- ------ -----
Total interest-bearing liabilities....... 262,393 2,879 4.39% 245,826 2,612 4.25%
-------- ------- ----- -------- ------ -----
Non-interest bearing NOW accounts............. 6,652 5,928
Other non-interest-bearing liabilities........ 5,377 6,632
-------- --------
Total liabilities....................... 274,422 258,386
-------- --------
Stockholders' equity........................ 95,664 98,365
-------- --------
Total liabilities and stockholders'
equity.............................. $ 370,086 $ 356,751
======= ========
Net interest income........................... $ 3,713 $ 3,682
======= ======
Interest rate spread(2)....................... 3.02% 3.09%
===== ====
Net interest margin(3)........................ 4.17% 4.29%
===== ====
Ratio of interest-earning assets to
interest-bearing liabilities................ 135.65% 139.59%
======= =======
</TABLE>
- -------------
(1) In computing the average balance of loans, non-accrual loans have been
included.
(2) Interest rate spread represents the difference between the average yield
earned on interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net interest margin represents net interest income as a percentage of
average interest-earning assets.
- 8 -
<PAGE>
<TABLE>
<CAPTION>
For the Six Months Ended June 30,
---------------------------------------------------------------------------
1998 1997
---------------------------------- ---------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Real estate loans(1).................... $ 306,206 $ 11,716 7.65% $ 267,492 $ 10,382 7.76 %
Other loans............................. 640 29 9.06 652 30 9.20
Mortgage-backed securities.............. 79 3 7.60 129 5 7.75
Investment securities................... -- -- -- 42,228 1,189 5.63
Interest-earning deposits............... 42,632 1,185 5.56 28,675 746 5.20
FHLB of Chicago stock................... 2,780 90 6.47 2,642 89 6.74
----- -- ---- ----- -- ----
Total interest-earning assets........ 352,337 13,023 7.39% 341,818 12,441 7.28%
------- ------ ---- ------- ------ ----
Allowance for loan losses.................. (1,097) (980)
Non-interest earning assets................ 16,566 15,907
------ ------
Total assets......................... $ 367,806 $ 356,745
========= =========
LIABILITIES AND EQUITY:
Interest-bearing liabilities:
NOW/Super NOW accounts.................. $ 43,339 $ 454 2.10% $ 42,297 $ 453 2.14%
Money market accounts................... 15,752 256 3.25 16,647 262 3.15
Passbook accounts....................... 60,284 922 3.06 63,033 962 3.05
Certificates of deposit................. 140,899 3,974 5.64 123,805 3,499 5.65
Borrowed funds.......................... 584 16 5.48 165 5 6.06
--- -- ---- --- - ----
Total interest-bearing liabilities... 260,858 5,622 4.31% 245,947 5,181 4.21%
------- ----- ---- ------- ----- ----
Non-interest bearing NOW accounts.......... 6,567 5,701
Other non-interest-bearing liabilities..... 4,876 5,657
----- -----
Total liabilities.................... 272,301 257,305
------- -------
Stockholders' equity..................... 95,505 99,440
------ ------
Total liabilities and stockholders'
equity.............................. $ 367,806 $ 356,745
========= =========
Net interest income........................ $ 7,401 $ 7,260
======== =======
Interest rate spread(2).................... 3.08% 3.07%
== ==== ====
Net interest margin(3)..................... 4.20% 4.25%
== ==== ====
Ratio of interest-earning assets to
interest-bearing liabilities..................... 135.07% 138.98%
====== ======
</TABLE>
- ---------
(1) In computing the average balance of loans, non-accrual loans have been
included.
(2) Interest rate spread represents the difference between the average yield
earned on interest-earning assets and the average cost of interest-bearing
liabilities.
(3) Net interest margin represents net interest income as a percentage of
average interest-earning assets.
- 9 -
<PAGE>
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1998 AND DECEMBER 31, 1997
TOTAL ASSETS. Total assets increased $15.1 million or 4.3% from $352.6
million at December 31, 1997 to $367.7 million at June 30, 1998. The increase in
total assets was primarily due to funds received from the $19.1 million increase
in savings deposits which were partially offset by disbursements of funds to
repay $5.0 million in borrowed funds.
CASH AND DUE FROM BANK. Cash and due from banks decreased $2.1 million
or 30.4% from $6.9 million at December 31, 1997 to $4.8 million at June 30,
1998. This decrease was primarily due to the use of funds for the increase in
loans receivable.
INTEREST-EARNING DEPOSITS. Interest-earning deposits decreased $4.3
million or 12.4% from $34.7 million at December 31, 1997 to $30.4 million at
June 30, 1998. This decrease was primarily due to the use of funds for the
increase in loans receivable.
LOANS RECEIVABLE. Loans receivable increased $21,264,000 or 7.1% from
$298,661,000 at December 31, 1997 to $319,925,000 at June 30, 1998. This
increase was primarily due to aggressive marketing of the Association's loan
products.
SAVINGS DEPOSITS. Savings deposits increased $19.1 million or 7.7% from
$248.2 million at December 31, 1997 to $267.3 million at June 30, 1998. This
increase was primarily due to the offering of a special rate short-term
certificate of deposit. The proceeds were used primarily for the increase in
loans receivable and the repayment of borrowed funds.
BORROWED FUNDS. Borrowed funds decreased $5.0 million as a result of
all borrowed funds being repaid with the proceeds from the increase in savings
deposits.
STOCKHOLDERS' EQUITY. Stockholders' equity increased $797,000 or 0.8%
from $95.2 million at December 31, 1997 to $96.0 million at June 30, 1998.
Additional paid-in capital increased $346,000 or 0.5% from $68,324,000 at
December 31, 1997 to $68,670,000 at June 30, 1998, primarily due to market value
adjustments on Employee Stock Ownership Plan (the "ESOP") shares released.
Common stock acquired by the Recognition and Retention Plan ("RRP") decreased
$449,000 or 11.5% from $3,898,000 at December 31, 1997 to $3,449,000 at June 30,
1998 due to RRP expense. Common stock acquired by the ESOP decreased $171,000 or
3.5% from $4.9 million at December 31, 1997 to $4.7 million at June 30, 1998 due
to the release of stock for the ESOP. Retained earnings decreased $169,000 or
0.4% from $38.1 million at December 31, 1997 to $37.9 million at June 30, 1998.
This decrease was due to $1,371,000 in dividends paid on common stock, which was
offset by $1,202,000 in net income for the six months ended June 30, 1998.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED
JUNE 30, 1998 AND 1997
GENERAL. Net income decreased $27,000 or 3.8% from $719,000 or $0.11
diluted earnings per share for the three months ended June 30, 1997 to $692,000
or $0.11 diluted earnings per share for the three months ended June 30, 1998.
The $27,000 decrease was primarily due to an increase of $100,000 in noninterest
expense which was partially offset by a $31,000 increase in net interest income,
a $25,000 increase in noninterest income and a decrease of $17,000 in income tax
expense.
INTEREST INCOME. Interest income increased $298,000 or 4.7% from $6.3
million for the three months ended June 30, 1997 to $6.6 million for the three
months ended June 30, 1998. This increase was primarily due to an increase in
the average yield on interest earning assets of 7 basis points from 7.34% for
the three months ended June 30, 1997 to 7.41% for the three months ended June
30, 1998 and an increase in the average balance of interest-earning assets of
$12,794,000 or 3.7% from $343,153,000 for the three months ended June 30, 1997
to $355,947,000 for the three months ended June 30, 1998. The increase in the
average yield was primarily due to a change in the composition of
interest-earning assets. The average balance of real estate loans increased
$40.6 million, which is a higher yielding asset, while investment securities and
interest-earning deposits decreased $28.1 million, which are lower yielding
assets. The increase in the average balance was primarily due to receipt of the
proceeds from the increase in savings deposits.
- 10 -
<PAGE>
INTEREST EXPENSE. Interest expense increased $267,000 or 10.2% from
$2,612,000 for the three months ended June 30, 1997 to $2,879,000 for the three
months ended June 30, 1998. This increase was primarily due to a 14 basis point
increase in the cost of average interest-bearing liabilities from 4.25% for the
three months ended June 30, 1997 to 4.39% for the three months ended June 30,
1998 and a $16.6 million increase in the average balance of interest-bearing
liabilities from $245.8 million for the three months ended June 30, 1997 to
$262.4 million for the three months ended June 30, 1998. The 14 basis point
increase in the cost of average interest-bearing liabilities was primarily due
to higher costing certificates of deposit. The increase in the average balance
of interest-bearing liabilities was primarily due to the Association's offering
of a special rate short-term certificate of deposit.
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest
income before provision for loan losses increased $31,000 or 0.8% from
$3,682,000 for the three months ended June 30, 1997 to $3,713,000 for the three
months ended June 30, 1998. This increase was primarily due to a $12,794,000 or
3.7% increase in the average balance of interest-earning assets from
$343,153,000 for the three months ended June 30, 1997 to $355,947,000 for the
three months ended June 30, 1998 and an increase of 7 basis points in the
average yield from 7.34% for the three months ended June 30, 1997 to 7.41% for
the three months ended June 30, 1998. These increases were partially offset by a
$16,567,000 increase in the average balance of interest-bearing liabilities from
$245,826,000 for the three months ended June 30, 1997 to $262,393,000 for the
three months ended June 30, 1998 and a 14 basis point increase in the average
cost from 4.25% for the three months ended June 30, 1997 to 4.39% for the three
months ended June 30, 1998.
PROVISION FOR LOAN LOSSES. The provision for loan losses was $30,000
for each period. Management determined that keeping the provision for loan
losses at the same level was appropriate in light of its current review of the
Association's loan portfolio, asset quality, delinquent and non-performing
loans, the historically low loan loss experience and the national and regional
economies. The ratio of the allowance for loan losses to non-performing loans
was 137.47% and 82.75% at June 30, 1998 and 1997, respectively, and the ratio of
the allowance for loan losses to total loans was 0.35% and 0.36% at such
respective dates. Management believes that the provision for loan losses and the
allowance for loan losses are reasonable and adequate to cover any known losses
and any losses reasonably expected in the existing loan portfolio. While
management estimates loan losses using the best available information, such as
independent appraisals on collateral, no assurance can be given that future
additions to the allowance will not be necessary based on changes in economic
and real estate market conditions, further information obtained regarding known
problem loans, identification of additional problem loans, regulatory
examinations and other factors, both within and outside of management's control.
NONINTEREST INCOME. Noninterest income increased $25,000 or 10.0% from
$251,000 for the three months ended June 30, 1997 to $276,000 for the three
months ended June 30, 1998. This increase was primarily due to a $10,000
increase in service fee income as a result of changes in the service fee rates
and a $13,000 gain on sale of real estate owned.
NONINTEREST EXPENSE. Noninterest expense increased $100,000 or 3.7%
from $2.7 million for the three months ended June 30, 1997 to $2.8 million for
the three months ended June 30, 1998. This increase was primarily due to an
increase in compensation and benefits expense which was partially offset by a
decrease in occupancy expense. Compensation and benefits expense increased
$113,000 or 8.3% from $1,357,000 for the three months ended June 30, 1997 to
$1,470,000 for the three months ended June 30, 1998. This increase was primarily
due to an increase in ESOP expense of $35,000 and an increase related to the
Company's RRP expense of $75,000 in 1998. The increase in ESOP expense was due
to a larger market value adjustment because of the increase in the Company's
average stock price. The RRP plan was not in effect for the entire three month
period ended June 30, 1997. Occupancy expense decreased $11,000 or 2.7% from
$405,000 for the three months ended June 30, 1997 to $394,000 for the three
months ended June 30, 1998 primarily due to a decrease in office building
repairs and maintenance expense.
- 11 -
<PAGE>
INCOME TAX EXPENSE. Income tax expense decreased $17,000 or 3.7% from
$456,000 for the three months ended June 30, 1997 to $439,000 for the three
months ended June 30, 1998. This decrease was primarily due to a lower level of
taxable income. The effective tax rate was 38.8% for the three months ended June
30, 1997 and 1998.
COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
GENERAL. Net income decreased $406,000 or 25.2% from $1,608,000 or
$0.25 diluted earnings per share for the six months ended June 30, 1997 to
$1,202,000 or $0.19 diluted earnings per share for the six months ended June 30,
1998. The $406,000 decrease was primarily due to a decrease of $209,000 in
noninterest income and a $596,000 increase in noninterest expense. These were
offset, in part, by a $141,000 increase in net interest income before provision
for loan losses and a $258,000 decrease in income tax expense.
INTEREST INCOME. Interest income increased $582,000 or 4.7% from $12.4
million for the six months ended June 30, 1997 to $13.0 million for the six
months ended June 30, 1998. This increase was primarily due to an increase in
the average yield on interest earning assets of 11 basis points from 7.28% for
the six months ended June 30, 1997 to 7.39% for the six months ended June 30,
1998 and an increase in the average balance of interest-earning assets of $10.5
million or 3.1% from $341.8 million for the six months ended June 30, 1997 to
$352.3 million for the six months ended June 30, 1998. The increase in the
average yield was primarily due to a change in the composition of
interest-earning assets. The average balance of real estate loans increased
$38.7 million, which is a higher yielding asset, while investment securities and
interest-earning deposits decreased $28.3 million, which are lower yielding
assets. The increase in the average balance was primarily due to receipt of the
proceeds from the increase in savings deposits.
INTEREST EXPENSE. Interest expense increased $441,000 or 8.5% from
$5,181,000 for the six months ended June 30, 1997 to $5,622,000 for the six
months ended June 30, 1998. This increase was primarily due to a 10 basis point
increase in the cost of average interest-bearing liabilities from 4.21% for the
six months ended June 30, 1997 to 4.31% for the six months ended June 30, 1998
and a $14.9 million increase in the average balance of interest-bearing
liabilities from $245.9 million for the six months ended June 30, 1997 to $260.9
million for the six months ended June 30, 1998. The 10 basis point increase in
the cost of average interest-bearing liabilities was primarily due to the $17.1
million increase in higher costing certificates of deposit. The increase in the
average balance of interest-bearing liabilities was primarily due to the
Association's offering of a special rate short-term certificate of deposit.
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest
income before provision for loan losses increased $141,000 or 1.9% from
$7,260,000 for the six months ended June 30, 1997 to $7,401,000 for the six
months ended June 30, 1998. This increase was primarily due to a $10,519,000 or
3.1% increase in the average balance of interest-earning assets from
$341,818,000 for the six months ended June 30, 1997 to $352,337,000 for the six
months ended June 30, 1998 and an increase of 11 basis points in the average
yield from 7.28% for the six months ended June 30, 1997 to 7.39% for the six
months ended June 30, 1998. These increases were partially offset by a
$14,911,000 increase in the average balance of interest-bearing liabilities from
$245,947,000 for the six months ended June 30, 1997 to $260,858,000 for the six
months ended June 30, 1998 and a 10 basis point increase in the average cost
from 4.21% for the six months ended June 30, 1997 to 4.31% for the six months
ended June 30, 1998.
PROVISION FOR LOAN LOSSES. The provision for loan losses was $60,000
for each period. Management determined that keeping the provision for loan
losses at the same level was appropriate in light of its current review of the
Association's loan portfolio, asset quality, delinquent and non-performing
loans, the historically low loan loss experience and the national and regional
economies. The ratio of the allowance for loan losses to non-performing loans
was 137.47% and 82.75% at June 30, 1998 and 1997, respectively, and the ratio of
the allowance for loan losses to total loans was 0.35% and 0.36% at such
respective dates. Management believes that the provision for loan losses and the
allowance for loan losses are reasonable and adequate to cover any known losses
and any losses reasonably expected in the existing loan portfolio. While
management estimates loan losses using the best available information, such as
independent appraisals on collateral, no assurance can be given that future
- 12 -
<PAGE>
additions to the allowance will not be necessary based on changes in economic
and real estate market conditions, further information obtained regarding known
problem loans, identification of additional problem loans, regulatory
examinations and other factors, both within and outside of management's control.
NONINTEREST INCOME. Noninterest income decreased $209,000 or 28.9% from
$723,000 for the six months ended June 30, 1997 to $514,000 for the six months
ended June 30, 1998. This decrease was primarily due to the $178,000 or 91.8%
decrease in other income from $194,000 for the six months ended June 30, 1997 to
$16,000 for the six months ended June 30, 1998. This decrease was due to the
receipt of $182,000 in excess funds from the liquidation of the Association's
pension plan in 1997 in connection with the Association's conversion to stock
form in September 1996, a non-recurring item. There was also a decrease of
$10,000 in service fee income and a $21,000 decrease in gain on real estate
owned.
NONINTEREST EXPENSE. Noninterest expense increased $596,000 or 11.3%
from $5.3 million for the six months ended June 30, 1997 to $5.9 million for the
six months ended June 30, 1998. This increase was primarily due to increases in
compensation and benefits, federal deposit insurance premiums, advertising,
promotion and professional services expenses, which were partially offset by a
decrease in other expense. Compensation and benefits expense increased $480,000
or 18.5% from $2,589,000 for the six months ended June 30, 1997 to $3,069,000
for the six months ended June 30, 1998. This increase was due, in part, to an
increase in ESOP expense of $198,000 which resulted, in part, from a market
value adjustment for shares released, due to the repayment of principal on the
ESOP loan by the ESOP trustee from plan earnings. There was no similar expense
in the six months ended June 30, 1997. There was also an increase in the amount
of the market value adjustment because of the increase in the Company's average
stock price. Expenses associated with the RRP increased $300,000 in 1998. The
RRP was not in effect in the first four months of 1997. Advertising and
promotion expense increased $15,000 or 7.2% from $208,000 for the six months
ended June 30, 1997 to $223,000 for the six months ended June 30, 1998. This
increase was primarily due to additional expenses incurred in connection with
the special rate short-term certificate of deposit offered during the six months
ended June 30, 1998. Professional services expense increased $93,000 or 43.3%
from $215,000 for the six months ended June 30, 1997 to $308,000 for the six
months ended June 30, 1998. This increase was primarily due to the Company's use
of additional professional consulting services in connection with evaluating the
Company's strategic options, and matters related to the State merger.
INCOME TAX EXPENSE. Income tax expense decreased $258,000 or 25.3% from
$1,019,000 for the six months ended June 30, 1997 to $761,000 for the six months
ended June 30, 1998. This decrease was primarily due to a lower level of taxable
income. The effective tax rate was 38.8% for the six months ended June 30, 1997
and 1998.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds are savings deposits, principal
and interest payments on loans and securities and, to a limited extent,
borrowings from the FHLB of Chicago. While maturities and scheduled amortization
of loans and securities provide an indication of the timing of the receipt of
funds, changes in interest rates, economic conditions and competition strongly
influence mortgage prepayment rates and savings deposit flows, reducing the
predictability of the timing of sources of funds.
The Association is required to maintain an average daily balance of
liquid assets as a percentage of net withdrawable savings deposit accounts plus
short-term borrowings, as defined by the regulations of the OTS. The minimum
required liquidity ratio is currently 4.0%. At June 30, 1998, the Association's
liquidity ratio was 5.82%. The levels of the Association's liquid assets are
dependent on the Association's operating, financing and investing activities
during any given period. Management believes it will have adequate resources to
fund all commitments on a short-term and long-term basis in accordance with its
business strategy.
- 13 -
<PAGE>
The primary investing activities of the Company are the origination of
mortgage and other loans and, to a much more limited extent, the purchase of U.
S. Government or U. S. Government agency securities. See the "Consolidated
Statements of Cash Flows" in the unaudited consolidated financial statements
included in this Form 10-Q for the sources and uses of cash flows for operating
activities, investing activities and financing activities for the three and six
month periods ended June 30, 1998 and 1997.
The Company has other sources of liquidity if a need for additional
funds arises, including the ability to obtain FHLB of Chicago advances of up to
$59.0 million based on the Association's current investment in FHLB of Chicago
stock. There were no borrowings outstanding at June 30, 1998.
At June 30, 1998, the Association had outstanding loan origination
commitments of $9.0 million, undisbursed loans in process of $778,000 and unused
lines of consumer credit of $254,000. The Association anticipates that it will
have sufficient funds available to meet its current origination and other
lending commitments. Certificates of deposit scheduled to mature in one year or
less from June 30, 1998 totaled $90.9 million. Based upon the Association's most
recent experience and pricing strategy, management believes that a significant
portion of such deposits will remain with the Association.
At June 30, 1998, the Association exceeded all of its regulatory
capital requirements with a tangible capital level of $71.1 million, or 20.42%
of total adjusted assets, which is above the required level of $5.2 million or
1.5%; core capital of $71.1 million, or 20.42% of total adjusted assets, which
is above the required level of $10.4 million or 3.0%; and total risk-based
capital of $72.2 million, or 35.41% of risk-weighted assets, which is above the
required level of $16.3 million, or 8.0%.
At June 30, 1998, the total stockholders' equity of Home Bancorp was
$96.0 million, and the ratio of stockholders' equity to total assets was 26.11%.
THE YEAR 2000 PROBLEM
The "Year 2000 Problem" centers on the inability of computer systems to
recognize the Year 2000. Many existing computer programs and systems were
originally programmed with six digit dates that provided only two digits to
identify the calendar year in the date field, without considering the upcoming
change in the century. With the impending millennium, these programs and
computers will recognize "00" as the year 1900 rather than the year 2000. Like
most financial service providers, the Company and the Association may be
significantly affected by the Year 2000 Problem due to the nature of financial
information. Furthermore, if computer systems are not adequately changed to
identify the Year 2000, many computer applications could fail or create
erroneous results.
In order to address the Year 2000 issue and to minimize its potential
adverse impact, management has begun a process to identify areas that will be
affected by the Year 2000 Problem, assess its potential impact on the operations
of the Association, monitor the progress of third party software vendors in
addressing the matter, test changes provided by these vendors and develop
contingency plans for any critical systems that are not effectively
reprogrammed. The Company's plan is divided into these five phases: (1)
awareness; (2) assessment; (3) renovation; (4) validation; and (5)
implementation.
The Company has substantially completed the first two phases of the
plan and is currently working internally and with external vendors on the final
three phases. Because the Company outsources its data processing and item
processing operations, a significant component of the Year 2000 plan is working
with external vendors to test and certify their systems as Year 2000 compliant.
The Company's external vendors have surveyed their programs to inventory the
necessary changes and have begun correcting the applicable computer programs and
replacing equipment so that the Company's information systems will be Year 2000
compliant prior to December 31, 1998. This will enable the Company to devote
substantial time to the testing of the upgraded systems prior to the arrival of
the millennium. The Company expects to complete its timetable for carrying out
its plans to address Year 2000 issues, and to finish initial testing by December
31, 1998.
- 14 -
<PAGE>
In addition, monitoring and managing the Year 2000 project will result
in additional direct and indirect costs to the Company and the Association. The
Company currently estimates that the aggregate direct and indirect costs will
not exceed $200,000 and does not believe that such costs will have a material
effect on its results of operations. Both direct and indirect costs of
addressing the Year 2000 Problem will be charged to earnings as incurred. Such
costs have not been material to date.
The costs of the project and the date on which the Company plans to
complete the Year 2000 modifications are based on management's best estimates,
which were derived utilizing numerous assumptions of future events including the
continued availability of certain resources, third party modification plans and
other factors. However, there can be no guarantee that these estimates will be
achieved, and actual results could differ materially from those plans. In
addition, there can be no guarantee that the systems of other companies on which
the Company's systems rely will be timely converted, or that a failure to
convert by another company, or a conversion that is incompatible with the
Company's systems, would not have a material adverse effect on the Company.
OTHER
The Office of Thrift Supervision approved the stock repurchase program
("Repurchase Program"), that was adopted by the Board of Directors of the
Company on June 18, 1998. The Repurchase Program authorizes the Company to
repurchase up to 342,789 shares, or five percent, of its 6,855,799 outstanding
common shares. The Repurchase Program is authorized to continue for a period up
to twelve months. The repurchases will be made from time to time at the
discretion of management.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
In management's opinion, there has not been a material change in market
risk from December 31, 1997 as reported in Item 7A of the Company's Form 10-K.
Part II -- OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities and Use of Proceeds
None
Item 3. Defaults upon Senior Securities
None
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual meeting of Stockholders (the "Meeting") on
April 16, 1998. The purpose of the meeting was to vote on the following
proposals:
1. The election of three directors for terms of three years each;
2. The ratification of the appointment of KPMG Peat Marwick LLP
as independent auditors of the Company for the year ending
December 31, 1998.
With respect to Proposal 1, all of the directors nominated by the
Company were elected at the Meeting. In addition, Proposal 2 was approved at the
Meeting. The voting results for the proposals were as follows:
- 15 -
<PAGE>
<TABLE>
<S> <C> <C> <C>
Proposal 1: Election of Directors George L. Perucco For 5,818,435
Against 204,817
Lyle N. Dolan For 5,818,435
Against 204,817
Donald E. Laird For 5,818,435
Against 204,817
Broker Non-Votes: None
Proposal 2: Ratification of For 5,869,612
Independent Auditors
Against 89,165
Abstain 64,475
Broker Non-Votes: None
</TABLE>
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit 27 -- Financial Data Schedule*
(b) Reports on Form 8-K
The Registrant filed a report on Form 8-K on June 15, 1998 and Amendment
No. 1 thereto on June 17, 1998 relating to the signing of a definitive merger
agreement, dated June 1, 1998, with State Financial Services Corporation.
- -------
* Submitted only with filing in electronic format.
- 16 -
<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.
Home Bancorp of Elgin, Inc.
----------------------------------
(Registrant)
By: /s/Lyle N. Dolan
----------------------------------
Lyle N. Dolan
Executive Vice President and Chief
Financial and Accounting Officer
July 30, 1998
- 17 -
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and the statements of income of Home Bancorp of
Elgin, Inc. and Subsidiary and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<CIK> 0001016325
<NAME> HOME BANCORP OF ELGIN, INC.
<MULTIPLIER> 1
<CURRENCY> US DOLLAR
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1.0000
<CASH> 4,768,618
<INT-BEARING-DEPOSITS> 30,399,651
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 72,414
<INVESTMENTS-MARKET> 73,617
<LOANS> 323,264,665
<ALLOWANCE> 1,121,226
<TOTAL-ASSETS> 367,656,466
<DEPOSITS> 267,291,443
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,352,395
<LONG-TERM> 0
0
0
<COMMON> 70,093
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<TOTAL-LIABILITIES-AND-EQUITY> 367,656,466
<INTEREST-LOAN> 11,745,180
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<INTEREST-TOTAL> 13,023,327
<INTEREST-DEPOSIT> 5,606,068
<INTEREST-EXPENSE> 5,622,403
<INTEREST-INCOME-NET> 7,400,924
<LOAN-LOSSES> 60,000
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5,891,727
<INCOME-PRETAX> 1,962,629
<INCOME-PRE-EXTRAORDINARY> 761,128
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,201,501
<EPS-PRIMARY> 0.19
<EPS-DILUTED> 0.19
<YIELD-ACTUAL> 4.20
<LOANS-NON> 815,625
<LOANS-PAST> 0
<LOANS-TROUBLED> 172,485
<LOANS-PROBLEM> 360,597
<ALLOWANCE-OPEN> 1,064,041
<CHARGE-OFFS> 2,815
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<ALLOWANCE-CLOSE> 1,121,226
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</TABLE>
