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 December 31, 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 0-21491
Big Foot Financial Corp.
(Exact name of registrant as specified in its charter)
ILLINOIS 36-4108480
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) (Identification No.)
1190 RFD, Long Grove, IL 60047-7304
(Address of principal executive offices)
(Zip Code)
(847) 634-2100
(Registrant's telephone number including area code)
NA
(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
requirement 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 FEBRUARY 11, 1999
----- -----------------
Common Stock, Par Value $.01 2,336,300
<PAGE>
TABLE OF CONTENTS
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements of Big Foot Financial Corp.
Consolidated Statements of Financial Condition
(Unaudited) December 31, 1998 and June 30, 1998............... Page 3
Consolidated Statements of Earnings (Unaudited) - Three
and Six months ended December 31, 1998 and 1997............... Page 4
Consolidated Statements of Cash Flows (Unaudited) - Six
months ended December 31, 1998 and 1997....................... Page 5
Notes to Unaudited Consolidated Financial Statements.......... Page 6
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations........................... Page 8
Item 3. Quantitative and Qualitative Disclosures About Market Risk.... Page 18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings............................................. Page 19
Item 2. Changes in Securities and Use of Proceeds..................... Page 19
Item 3. Defaults upon Senior Securities .............................. Page 19
Item 4. Submission of Matters to a Vote of Security Holders........... Page 19
Item 5. Other Information............................................. Page 19
Item 6. Exhibits and Reports on Form 8-K.............................. Page 19
Signatures
-2-
<PAGE>
Big Foot Financial Corp. and Subsidiary
Consolidated Statements of Financial Condition
(Unaudited)
(In thousands, except share data)
ASSETS December 31, June 30,
1998 1998
---- ----
Cash and due from banks ................................ $ 2,772 $ 3,345
Interest-earning deposits .............................. 14,948 9,801
Mortgage-backed securities held-to-maturity,
at amortized cost (Estimated fair value of $37,493;
$46,560) .............................................. 37,531 46,729
Mortgage-backed securities available-for-sale, at fair
value ................................................. 24,170 33,035
Investment in mutual funds, at fair value .............. 3,373 2,569
Loans receivable, net .................................. 123,615 115,472
Accrued interest receivable ............................ 970 968
Investment in real estate held for
sale and development .................................. 262 262
Stock in Federal Home Loan Bank of Chicago, at cost .... 2,600 3,400
Office properties and equipment, net ................... 4,908 4,667
Prepaid expenses and other assets ...................... 373 356
--------- ---------
Total assets ........................................... $ 215,522 $ 220,604
========= =========
LIABILITIES
Noninterest-bearing NOW accounts ....................... $ 5,889 $ 5,847
Interest-bearing NOW accounts .......................... 7,887 7,668
Money market demand accounts ........................... 11,728 11,797
Passbook accounts ...................................... 38,284 38,838
Certificates of deposit ................................ 58,900 59,685
--------- ---------
Total savings deposits ................................. $ 122,678 $ 123,835
Borrowed money ......................................... 52,000 53,000
Advance payments by borrowers for taxes and
insurance ............................................. 1,703 1,774
Accrued interest payable and other liabilities ......... 2,961 3,901
--------- ---------
Total liabilities ...................................... $ 179,342 $ 182,510
--------- ---------
STOCKHOLDERS' EQUITY
Preferred Stock, $.01 par value, 2,000,000 shares
authorized; none - issued ............................. -- --
Common Stock, $.01 par value, 8,000,000 shares
authorized; 2,512,750 shares issued ................... 25 25
Additional paid-in capital ............................. 24,471 24,224
Retained earnings-substantially restricted ............. 16,441 16,048
Treasury stock, at cost (107,150 shares at
December 31, 1998) .................................... (1,492) --
Common stock acquired by the ESOP ...................... (1,709) (1,709)
Common stock acquired by the Recognition
and Retention Plan .................................... (1,486) (531)
Accumulated other comprehensive income ................. (70) 37
--------- ---------
Total stockholders' equity ............................. 36,180 38,094
--------- ---------
Total liabilities and stockholders' equity ............. $ 215,522 $ 220,604
========= =========
(See accompanying notes to unaudited consolidated financial statements).
-3-
<PAGE>
<TABLE>
<CAPTION>
BIG FOOT FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
(In thousands, except per share data)
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
-------------------------- --------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
INTEREST INCOME:
Mortgage-backed securities held-to-maturity ........................ $ 564 $ 648 $1,204 $1,331
Mortgage-backed securities available-for-sale ...................... 411 869 884 1,833
Mutual funds and preferred stock ................................... 121 139 164 139
Loans receivable ................................................... 2,230 1,896 4,421 3,749
Interest-earning deposits .......................................... 177 89 335 114
FHLB of Chicago stock .............................................. 51 46 108 89
------ ------ ------ ------
Total interest income .............................................. 3,554 3,687 7,116 7,255
------ ------ ------ ------
INTEREST EXPENSE:
Savings deposits ................................................... 1,185 1,215 2,388 2,406
Borrowed money ..................................................... 743 791 1,490 1,567
------ ------ ------ ------
Total interest expense ............................................. 1,928 2,006 3,878 3,973
------ ------ ------ ------
Net interest income before provision for loan losses ............... 1,626 1,681 3,238 3,282
Provision for loan losses .......................................... -- -- -- --
------ ------ ------ ------
Net interest income after provision for loan losses ................ 1,626 1,681 3,238 3,282
------ ------ ------ ------
NONINTEREST INCOME:
Service fees ....................................................... 67 58 128 116
Gain on sale of securities available-for-sale ...................... -- 229 -- 229
Other .............................................................. 6 10 14 20
------ ------ ------ ------
Total noninterest income ........................................... 73 297 142 365
------ ------ ------ ------
NONINTEREST EXPENSE:
Compensation and benefits .......................................... 846 733 1,573 1,402
Office occupancy ................................................... 261 262 528 538
Federal deposit insurance premiums ................................. 19 20 38 40
Real estate held for development ................................... 11 10 23 21
Professional services .............................................. 76 69 148 169
Other .............................................................. 252 231 440 469
------ ------ ------ ------
Total noninterest expense .......................................... 1,465 1,325 2,750 2,639
------ ------ ------ ------
Income before income taxes.......................................... 234 653 630 1,008
Income tax expense.................................................. 93 200 238 323
------ ------ ------ ------
NET INCOME: $ 141 $ 453 $ 392 $ 685
====== ====== ====== ======
====================================================================================================================================
Earnings per share:
Basic ............................................................ $ 0.06 $ 0.20 0.17 $0.30
Diluted .......................................................... 0.06 0.19 0.17 0.29
(See accompanying notes to unaudited consolidated financial statements)
</TABLE>
-4-
<PAGE>
<TABLE>
<CAPTION>
BIG FOOT FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(In thousands)
FOR THE
SIX MONTHS ENDED
DECEMBER 31,
-------------------
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income................................................................................ $ 392 $ 685
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation ............................................................................. 208 201
Gain on sale of mortgage-backed securities available-for-sale............................. - (229)
Net amortization of deferred loan fees.................................................... (102) (37)
Net amortization of discounts and premiums................................................ 186 123
Increase in prepaid expenses and other assets............................................. (17) (64)
(Increase) decrease in accrued interest receivable........................................ (2) 73
Market adjustment for committed ESOP shares............................................... 49 111
Amortization of commited RRP shares....................................................... 255 -
Decrease in accrued interest payable and other liabilities, net........................... (940) (495)
------- -------
Net cash provided by operating activities................................................. (226) 368
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM INVESTING ACTIVITIES:
Origination of loans receivable........................................................... (19,068) (13,953)
Principal repayment of loans receivable................................................... 11,029 7,322
Principal repayments on mortgage-backed securities held-to-maturity....................... 9,045 4,345
Principal repayments on mortgage-backed securities available-for-sale..................... 8,800 6,766
Proceeds from sale of mortgage-backed securities available-for-sale....................... - 9,511
Purchase of investment securities available-for-sale...................................... (879) (832)
(Purchase) redemption of stock in Federal Home Loan Bank of Chicago....................... 800 (100)
Purchase of office properties and equipment............................................... (449) (98)
------- -------
Net cash provided by investing activities................................................. 9,278 12,961
- ------------------------------------------------------------------------------------------------------------------------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net decrease in savings deposits.......................................................... (1,157) (209)
Net increase (decrease) in borrowed money................................................. (1,000) 1,100
Increase (decrease) in advance payments by borrowers for taxes and insurance.............. (71) 16
Purchase of Recognition and Retention Plan stock.......................................... (1,013) -
Purchase of treasury stock................................................................ (1,492) -
------- -------
Net cash provided by (used in) financing activities....................................... (4,478) 907
- ------------------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents................................................. 4,574 14,236
Cash and cash equivalents at beginning of period.......................................... 13,146 3,892
------- -------
CASH AND CASH EQUIVALENTS AT THE END OF PERIOD............................................ $ 17,720 $ 18,128
- ------------------------------------------------------------------------------------------------------------------------
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest............................................................................. 3,871 3,936
Income taxes......................................................................... 325 318
(See accompanying notes to unaudited consolidated financial statements)
</TABLE>
-5-
<PAGE>
BIG FOOT FINANCIAL CORP. AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of Big Foot Financial Corp. (the "Company") and its wholly-owned
subsidiary, Fairfield Savings Bank, F.S.B. (the "Bank") as of December 31, 1998
and June 30, 1998, and for the three and six month periods ended December 31,
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. The preparation of
financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosures of contingent assets and
liabilities at the date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Actual results could differ
from those estimates. In the opinion of management the unaudited consolidated
financial statements include all necessary adjustments, consisting of normal
recurring accruals, necessary for a fair presentation for the periods presented.
These consolidated financial statements should be read in conjunction with the
audited financial statements for the year ended June 30, 1998, and the notes
thereto included in the Company's Form 10-K.
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 fiscal year.
(2) CAPITAL DISTRIBUTIONS
Capital distribution regulations of the Office of Thrift Supervision
("OTS") limit the Bank's ability to make capital distributions which include
dividends, stock redemptions or repurchases, cash-out mergers, interest payments
on certain convertible debt and other transactions charged to the capital
account based on the Bank's capital level and supervisory condition. Federal
regulations also preclude any repurchase of the stock of the Bank or its holding
company for three years after conversion except for repurchases pursuant to an
offer made on a pro rata basis to all stockholders and with prior approval of
the OTS; or pursuant to an open-market stock repurchase program that complies
with certain regulatory criteria.
(3) EARNINGS PER SHARE
Earnings per share of common stock for the three and six months ended
December 31, 1998 have been calculated according to the guidelines of the
Financial Accounting Standards Board's ("FASB") Statement of Financial
Accounting Standards ("SFAS") No. 128 "Earnings per Share" ("Statement 128").
Earnings per share of common stock for the three and six months ended December
31, 1997 have been restated under the provisions of Statement 128. ESOP shares
are only considered outstanding for earnings per share calculations when they
are committed to be released. Presented below are the calculations for basic and
diluted earnings per share:
-6-
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
----------------------------- ----------------------------
1998 1997 1998 1997
-------------- -------------- -------------- --------------
<S> <C> <C> <C> <C>
BASIC:
Net income.......................................... $ 141,000 $ 453,000 $ 392,000 $ 685,000
Weighted average shares outstanding................. 2,275,603 2,321,781 2,305,740 2,321,781
Basic earnings per share............................ 0.06 0.20 0.17 0.30
DILUTED:
Net income.......................................... $ 141,000 $ 453,000 392,000 685,000
Weighted average shares outstanding................. 2,275,603 2,321,781 2,305,740 2,321,781
Effect of dilutive stock options outstanding........ - 52,014 - 44,333
Diluted weighted average shares outstanding......... 2,275,603 2,373,795 2,305,740 2,366,114
Diluted earnings per share.......................... 0.06 0.19 0.17 0.29
</TABLE>
(4) COMPREHENSIVE INCOME
The FASB has issued SFAS No. 130, "Reporting Comprehensive Income", which
is effective for fiscal years beginning after December 15, 1997. This statement
establishes standards for reporting and display of comprehensive income and its
components (revenues, expenses, gains and losses) in a full set of general
purpose financial statements. This statement requires that all items that are
required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. The Company adopted SFAS No.
130 on July 1, 1998, and all annual required disclosures will be included
beginning with the Company's June 30, 1999 Annual Report.
The Company's comprehensive income for the three and six month periods
ended December 31, 1998 and 1997, is as follows:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED FOR THE SIX MONTHS
ENDED ENDED
DECEMBER 31, DECEMBER 31,
-------------------------- --------------------
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
Net income............................................................. $ 141,000 $ 453,000 $ 392,000 $ 685,000
Other comprehensive income, net of tax - unrealized gain on securities:
Unrealized holding gains (losses) arising during the period........... (124,000) (56,000) (107,000) 307,000
Less: reclassification adjustment for net gains realized in net income - (151,000) - (151,000)
--------- --------- --------- ---------
Subtotals.............................................................. $(124,000) $(207,000) $(107,000) $ 156,000
--------- --------- --------- ---------
Comprehensive income................................................... $ 17,000 $ 246,000 $ 285,000 $ 841,000
========= ========= ========= =========
</TABLE>
-7-
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
FORWARD LOOKING STATEMENTS
- --------------------------
This Quarterly Report on Form 10-Q contains certain forward looking
statements consisting of estimates with respect to the financial condition,
results of operations and business of the Company that are subject to various
factors which could cause actual results to differ materially from these
estimates. These factors include: changes in general, economic and market
conditions; the development of an adverse interest rate environment that
adversely affects the interest rate spread or other income anticipated from the
Company's operations and investments; depositor and borrower preferences; and
the factors described under "Management's Discussion and Analysis of Financial
Condition and Results of Operations - Year 2000."
GENERAL
- -------
Big Foot Financial Corp. (the "Company"), an Illinois corporation, is the
holding company for Fairfield Savings Bank, F.S.B. (the "Bank"), a federally
chartered stock savings bank. On December 19, 1996, the Bank completed its
conversion (the "Conversion") from a federally chartered mutual savings bank to
a federally chartered stock savings bank, and all of the capital stock of the
Bank was acquired by the Company. The Company issued and sold 2,512,750 shares
of its common stock, $.01 par value, at a price of $10.00 per share in a
subscription offering (the "Offering") to eligible members of the Bank and to
the Company's Employee Stock Ownership Plan ("ESOP"). Net proceeds from the
Offering amounted to $22.0 million.
The Company's principal business is its investment in the Bank, which is a
community-oriented financial institution providing a variety of financial
services to the communities which it serves. The Bank's principal business
consists of gathering savings deposits from the general public within its market
area and investing those funds primarily in mortgage loans secured by one- to
four-family owner occupied properties, mortgage-backed securities and
obligations of the U.S. Government. To a lesser extent, the Bank makes
multifamily residential loans, commercial real estate loans, land, construction
and development loans, consumer loans and commercial lines of credit. The Bank's
revenues are derived principally from interest on mortgage loans and interest
and dividends on investments, mortgage-backed securities and, to a much lesser
extent, short-term investments. The Bank also derives income from fees and
service charges. The Bank's primary sources of funds are savings deposits and,
to a lesser extent, advances from the Federal Home Loan Bank of Chicago (the
"FHLB"). The Bank does not have any subsidiaries.
On November 6, 1998, the OTS provided its non-objection to the Company's
second stock repurchase program to repurchase up to 119,356 shares of its common
stock ("Second Repurchase Program"), upon completion of its existing repurchase
program ("First Repurchase Program"). The First Repurchase Program and Second
Repurchase Program authorize the Company to repurchase a total of up to 244,993
shares, or 9.75 percent, of its 2,512,750 outstanding common shares. The
repurchases will be made from time to time at the discretion of management. As
of February 11, 1999, the Company had repurchased 176,450 shares of its common
stock at a cost of $2.4 million pursuant to the First and Second Repurchase
Program.
-8-
<PAGE>
On December 4, 1997, the OTS provided its non-objection to the Company's
notification that it would repurchase up to an additional 4% of its shares of
common stock, or 100,510 shares, for the Company's 1997 Recognition and
Retention Plan ("RRP"). The Company, as of December 31, 1998, had repurchased
all common stock needed for the RRP.
The selected financial ratios and other data of the Company set forth in
the table on the next page are derived in part from, and should be read in
conjunction with, the Unaudited Consolidated Financial Statements of the Company
presented elsewhere in this report.
-9-
<PAGE>
BIG FOOT FINANCIAL CORP.
FINANCIAL HIGHLIGHTS
(Dollars in thousands except per share)
<TABLE>
<CAPTION>
December 31, June 30,
1998 1998
------------ ----------
<S> <C> <C>
SELECTED FINANCIAL CONDITION DATA:
Total assets............................................ $ 215,522 $ 220,604
Loans receivable (net).................................. 123,615 115,472
Allowance for loan losses............................... 300 300
Mortgage-backed securities.............................. 61,701 79,764
Savings deposits........................................ 122,678 123,835
Borrowed funds.......................................... 52,000 53,000
Stockholders' equity.................................... 36,180 38,094
</TABLE>
<TABLE>
<CAPTION>
At or for the At or for the
Three Months ended Six Months ended
December 31, December 31,
1998 1997 1998 1997
---------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
SELECTED OPERATING DATA:
Net interest income before provision for loan losses............. $ 1,626 $ 1,681 $ 3,238 $ 3,282
Net income....................................................... 141 453 392 685
SELECTED FINANCIAL RATIOS:
Bank Capital ratios:
Tangible.................................................... 12.59% 12.38% 12.59% 12.38%
Core........................................................ 12.59 12.38 12.59 12.38
Risked-based................................................ 31.40 34.07 31.40 34.07
Return on average assets(1)...................................... 0.26 0.84 0.36 0.64
Return on average stockholders' equity(1......................... 1.54 4.80 2.11 3.66
Consolidated equity to assets at end of period................... 16.79 17.54 16.79 17.54
Noninterest expense to average assets(1)......................... 2.68 2.46 2.51 2.45
Non-performing assets as a percent of total assets............... 0.11 0.09 0.11 0.09
Allowance for loan losses as a percent of total loans............ 0.24 0.30 0.24 0.30
Allowance for loan losses as a percent of non-performing loans... 125.52 150.75 125.52 150.75
PER SHARE DATA:
Basic earnings per share......................................... $ 0.06 $ 0.20 $ 0.17 $ 0.30
Diluted earnings per share....................................... 0.06 0.19 0.17 0.29
Book value per share............................................. 15.04 15.09 15.04 15.09
STOCK QUOTES:
High............................................................. $ 15.000 $ 21.500 $ 15.000 $ 21.500
Low.............................................................. 13.250 17.750 12.750 16.000
At December 31................................................... 14.250 21.000 14.250 21.000
</TABLE>
- ---------------------------------------------------------------------
(1) Three and six month results have been annualized.
-10-
<PAGE>
COMPARISON OF FINANCIAL CONDITION AT DECEMBER 31, 1998 AND JUNE 30, 1998
Total assets decreased $5.1 million from $220.6 million at June 30, 1998 to
$215.5 million at December 31, 1998. The components of the Company's asset base
also changed from June 30, 1998 to December 31, 1998. Mortgage-backed securities
("MBS") (including both held-to-maturity and available-for-sale portfolios)
decreased $18.1 million from $79.8 million at June 30, 1998 to $61.7 million at
December 31, 1998. This decrease is primarily due to $17.8 million principal
repayments during the six month period. An increase of $8.1 million in loans
receivable was the result of loan originations of $19.1 million which exceeded
the $11.0 million of loan repayments. Interest earning deposits increased $5.1
million from $9.8 million at June 30, 1998 to $14.9 million at December 31,
1998. The excess cash flow from principal repayments from MBS was invested in
short-term overnight investments.
The allowance for loan losses at December 31, 1998 and June 30, 1998 was
$300,000. Management believes that the allowance for loan losses is adequate to
cover any known losses, and any losses reasonably expected in the loan
portfolio. While management estimates loan losses using the best available
information, no assurance can be made that future additions to the allowance
will not be necessary. The ratio of the allowance for loan losses to total loans
was 0.24% and 0.26% at December 31, 1998 and June 30, 1998, respectively. At
December 31, 1998 and June 30, 1998, the ratio of the allowance for loan losses
to non-performing loans was 125.52% and 87.72%, respectively. The Bank had five
non-performing loans totaling approximately $239,000 at December 31, 1998 and
three non-performing loans totaling approximately $342,000 at June 30, 1998.
There were no loan chargeoffs during the three and six month periods ending
December 31, 1998 and 1997.
Savings deposits decreased $1.2 million from June 30, 1998 to December 31,
1998; during this time, borrowed funds decreased by $1.0 million. The savings
categories of passbook accounts, money market demand accounts, and certificates
of deposit all had decreased balances, while interest-bearing NOW accounts
increased $219,000.
Stockholders' equity at December 31, 1998 was $36.2 million or $1.9 million
less than at June 30, 1998. This decline is due to the purchase of 62,850 shares
of the Company's common stock for the Recognition and Retention Plan and the
purchase of 107,150 shares of treasury stock under the Company's First
Repurchase Program. Accumulated comprehensive income declined $107,000 since
June 30, 1998. (See note 4 to Unaudited Consolidated Financial Statements).
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED
DECEMBER 31, 1998 AND 1997
GENERAL. For the three months ended December 31, 1998, net income was
$141,000 or $0.06 basic and diluted earnings per share, compared to net income
of $453,000 or $0.20 basic and $0.19 diluted earnings per share for the three
months ended December 31, 1997.
INTEREST INCOME. Interest income decreased $133,000 for the three months
ended December 31, 1998. The average balance of interest-earning assets
increased $1.9 million from $207.1 million for the three months ended December
31, 1997 to $209.0 million for the three months ended December 31, 1998. The
average yield on the Bank's interest-earning assets decreased 32 basis points
from 7.12% for the three months ended December 31, 1997 to 6.80% for the three
months ended December 31, 1998.
-11-
<PAGE>
INTEREST EXPENSE. Interest expense decreased $78,000 to $1.9 million for
the three months ended December 31, 1998, as compared to the same period in
1997. The average rate paid on interest-bearing liabilities decreased 23 basis
points from 4.71% for the three months ended December 31, 1997 to 4.48% for the
three months ended December 31, 1998. The average balance of interest-bearing
liabilities increased $1.7 million to $170.7 million for the three months ended
December 31, 1998 from $169.0 million for the three months ended December 31,
1997. The decrease in the cost of average interest-bearing liabilities resulted
primarily from the renewal of borrowed funds at lower rates than maturing
borrowed funds.
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest income
before provision for loan losses was $1.6 million for the three months ended
December 31, 1998, a decrease of $55,000 from the same period in 1997. The
average interest rate spread decreased nine basis points from 2.41% for the
three months ended December 31, 1997 to 2.32% for the comparable period in 1998.
Net interest margin declined 14 basis points and was 3.14% for the three months
ended December 31, 1998.
PROVISION FOR LOAN LOSSES. There was no provision for loan losses for the
three months ended December 31, 1998 or 1997. See "Comparison of Financial
Condition at December 31, 1998 and June 30, 1998".
NONINTEREST INCOME. Noninterest income was $73,000 for the three months
ended December 31, 1998, compared to $297,000 for the three months ended
December 31, 1997. The $224,000 decrease was primarily due to a gain on the sale
of mortgage-backed securities at a profit of $229,000 in 1997, a non-recurring
item.
NONINTEREST EXPENSE. Non-interest expense increased $140,000 from
$1,325,000 for the three months ended December 31, 1997 to $1,465,000 for the
comparable period in 1998.
Compensation expense for the three months ended December 31, 1998 increased
$113,000 over the similar period last year. This increase was due to the expense
associated with the Recognition and Retention Plan ("RRP") which amounted to
$159,000 in 1998; there was no RRP expense in 1997. The RRP expense in 1998
includes a payment of $63,000 made to the estate of a former Director. ESOP
expense declined $52,000 for the three months ended December 31, 1998 compared
to the same period in 1997.
Other noninterest expense was $252,000 for the three month period ending
December 31, 1998 compared to $231,000 for the three month period ended December
31, 1997. This increase was due to expenses of $15,000 relating to the Year 2000
issue and $11,000 increased expenses related to the growth in mortgage loan
origination volume.
INCOME TAX EXPENSE. Income tax expense decreased $107,000 from $200,000 for
the three months ended December 31, 1997 to $93,000 for the three months ended
December 31, 1998. This decrease was due to a reduction of $419,000 in pre-tax
income which was partially offset by an increase in the effective tax rate. The
effective tax rate was 39.7% and 30.6% for the three month periods ended
December 31, 1998 and 1997, respectively.
-12-
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED
DECEMBER 31, 1998 AND 1997
GENERAL. For the six months ended December 31, 1998, net income was
$392,000 or $0.17 basic and diluted earnings per share, compared to $685,000 or
$0.30 basic and $0.29 diluted earnings per share for the six months ended
December 31, 1997.
INTEREST INCOME. Interest income was $7.1 million for the six months ended
December 31, 1998, compared to $7.3 million for the six months ended December
31, 1997. The average balance of interest earning assets increased $2.6 million
from $207.0 million for the six months ended December 31, 1997 to $209.6 million
for the six months ended December 31, 1998. The average yield on the Bank's
interest-earning assets decreased 22 basis points from 7.01% for the six months
ended December 31, 1997 to 6.79% for the six months ended December 31, 1998.
INTEREST EXPENSE. Interest expense decreased $95,000 and was $3.9 million
for the six months ended December 31, 1998. This decrease was due primarily to a
lower cost of funds. The average rate paid on interest-bearing liabilities
decreased 17 basis points from 4.71% for the six months ended December 31, 1997
to 4.54% for the six months ended December 31, 1998. The average balance of
interest-bearing liabilities increased $2.0 million to $170.7 million for the
six months ended December 31, 1998 from $168.7 million for the six months ended
December 31, 1997.
NET INTEREST INCOME BEFORE PROVISION FOR LOAN LOSSES. Net interest income
before provision for loan losses decreased $44,000 and was $3.2 million for the
six months ended December 31, 1998 and $3.3 million for the comparable period in
1997. The average interest rate spread decreased five basis points from 2.30%
for the six months ended December 31, 1997 to 2.25% for the comparable period in
1998. Net interest margin declined eight basis points and was 3.09% for the six
months ended December 31, 1998.
PROVISION FOR LOAN LOSSES. There was no provision for loan losses for the
six months ended December 31, 1998 and for the comparable period in 1997. See
"Comparison of Financial Condition at December 31, 1998 and June 30, 1998".
NONINTEREST INCOME. Noninterest income was $142,000 for the six months
ended December 31, 1998 compared to $365,000 for the six months ended December
31, 1997. The primary reason for the decrease was due to a gain of $229,000 that
was realized from a sale in 1997 of $9.0 million mortgage-backed securities
classified as available-for-sale.
NONINTEREST EXPENSE. Noninterest expense increased $111,000 for the six
months ended December 31, 1998 as compared to the six months ended December 31,
1997.
Compensation expense for the six month period ending December 31, 1998 was
$1,573,000, an increase of $171,000 over the similar period last year. RRP
expense for the six months ended December 31, 1998 was $255,000 compared to no
expense for the six months ended December 31, 1997. The 1998 RRP expense
includes a payment of $63,000 made to the estate of a former Director. ESOP
expenses declined $62,000 for the six months ended December 31, 1998 compared to
the same period in 1997.
Professional services expense decreased $21,000 to $148,000 for the six
month period ended December 31, 1998. This decrease was primarily due to
non-recurring expenses in 1997 associated with the costs incurred in connection
with the incorporation of the Company and its operation as a public
-13-
<PAGE>
company. In addition legal fees were reduced in relation to an ongoing
litigation regarding a real estate development known as Olympia Fields.
Other noninterest expense was $440,000 for the six month period ended
December 31, 1998 compared to $469,000 for the six month period ended December
31, 1997. This decrease was due to a one time $40,000 State of Illinois
franchise payment in 1997. This decrease was offset by an expense of $25,000
relating to the Year 2000 issue and $13,000 related to the growth in mortgage
loan origination volume.
INCOME TAX EXPENSE. Income tax expense decreased $85,000 from a tax expense
of $323,000 for the six months ended December 31, 1997 to a $238,000 tax expense
for the six months ended December 31, 1998. This decrease was primarily due to a
decrease of $378,000 in pre-tax income which was partially offset by an increase
in the effective tax rate. The effective tax rate was 37.8% and 32.0% for the
six month periods ended December 31, 1998 and 1997, respectively.
YEAR 2000
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 could recognize "00" as the year 1900 rather than the year 2000. Like
most financial service providers, the Company and its operations may be
significantly affected by the Year 2000 Problem due to the nature of financial
information. Software, hardware, and equipment both within and outside the
Company's direct control and with which the Company electronically or
operationally interfaces (e.g. third party vendors providing data processing,
information system management, maintenance of computer systems, and credit
bureau information) are likely to be affected. Furthermore, if computer systems
are not adequately changed to identify the Year 2000, many computer applications
could fail or create erroneous results. As a result, many calculations which
rely on the date field information, such as interest, payments or due dates and
other operating functions, may generate results which could be significantly
misstated, and the Company could experience a temporary inability to process
transactions, send invoices or engage in similar normal business activities.
In addition, noninformation technology systems, such as telephones, copiers
and elevators may also contain embedded technology which controls its operation
and which may be affected by the Year 2000 Problem. When the Year 2000 arrives,
systems, including some of those with embedded chips, may not work properly
because of the way they store date information. They may not be able to deal
with the date 01/01/00, and may not be able to deal with operational `cycles'
such as `do x every 100 days'. Thus, even noninformation technology systems may
affect the normal operations of the Company upon the arrival of the Year 2000.
Under certain circumstances, failure to adequately address the Year 2000
Problem could adversely affect the viability of the Company's suppliers and
creditors and the creditworthiness of its borrowers. Thus, if not adequately
addressed, the Year 2000 Problem could result in a significant adverse impact on
the Company's products, services and competitive condition.
The Office of Thrift Supervision ("OTS"), the Company's primary federal
bank regulatory agency, along with the other federal bank regulatory agencies,
has published substantive guidance on the Year
-14-
<PAGE>
2000 Program and has included Year 2000 compliance as a substantive area of
examination for both regularly scheduled and special bank examinations. These
publications, in addition to providing guidance as to examination criteria, have
outlined requirements for creation and implementation of a compliance plan and
target dates for testing and implementation of corrective action, as discussed
below. As a result of the oversight by and authority vested in the federal bank
regulatory agencies, a financial institution that does not become Year 2000
compliant could become subject to administrative remedies similar to those
imposed on financial institutions otherwise found not to be operating in a safe
and sound manner, including remedies available under prompt corrective action
regulations.
In order to address the Year 2000 issue and to minimize its potential
adverse impact, management has implemented a process to identify areas that will
be affected by the Year 2000 Problem, assess its potential impact on the
operations of the Bank, 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 which are not effectively
reprogrammed. A committee of senior officers and employees of the Company has
been formed to evaluate the effects that the upcoming Year 2000 could have. The
Company's plan is divided into five phases: (1) Awareness Phase - define the
problem, obtain executive level support, develop an overall strategy. This phase
was completed in September 1997; (2) Assessment Phase - identify all systems and
criticality. This phase was completed in December 1997; (3) Renovation Phase -
program enhancements, hardware and software upgrades, system replacements, and
vendor certifications. This phase was completed in September 1998; (4)
Validation Phase - test and verify system changes and coordinate with outside
parties. This phase for internal applications was completed on December 31, 1998
and a scheduled completion date of June 30, 1999 is expected for external
applications; and (5) Implementation Phase - components certified as Year 2000
compliant and moved to production. All but one system has been completed at this
time. The single remaining system is expected to be implemented by June 30,
1999.
Third party vendors provide the majority of software used by the Company.
The Company has provided notice to its vendors concerning the Year 2000
situation. The Company's software vendors have provided upgraded or replacement
software which is stated to be Year 2000 compliant. 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 also utilizes the service of a third
party vendor to provide the software which is used to process and maintain most
customer-related accounts. This vendor has provided the Company with a software
version which has been stated to be Year 2000 compliant. Testing by the Company
to verify compliance for its applications and usage was completed in October,
1998. The Company presently believes that with modifications to existing
software and conversions to new software, the Year 2000 Problem, as it relates
to systems and other operations utilized by the Company, will be mitigated
without causing a material adverse impact on the operations of the Company.
However, if such modifications and conversions are not made, or are not
completed timely, the Year 2000 Problem could have an adverse impact on the
operations of the Company.
The Company's total Year 2000 project cost and estimates to complete
include the estimated costs and time associated with the impact of a third
party's Year 2000 Problem, and are based on presently available information.
However, there can be no guarantee that the systems of the 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. The
Company believes it has no exposure to contingencies related to the Year 2000
Problem for the products it has sold.
-15-
<PAGE>
In addition, monitoring and managing the Year 2000 project will result in
additional direct and indirect costs to the Company and the Bank. Direct costs
include potential charges by third party software vendors for product
enhancements, costs involved in testing software products for Year 2000
compliance, and any resulting costs for developing and implementing contingency
plans for critical software products which are not enhanced. Indirect costs will
principally consist of the time devoted by existing employees in monitoring
software vendor progress, testing enhanced software products and implementing
any necessary contingency plans. Both direct and indirect costs of addressing
the Year 2000 Problem will be charged to earnings as incurred. Total direct
costs to date are approximately $25,000. The Company currently estimates that
the aggregate direct costs should not exceed $50,000 and does not believe that
such costs will have a material effect on the results of operations.
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. Specific
factors that might cause such material differences include, but are not limited
to, the availability and cost of personnel trained in this area, the ability to
locate and correct all relevant computer codes, and similar uncertainties. The
critical application software and hardware for the Company's in-house computer
system has been tested by the respective service providers and internally, and
has been stated to be Year 2000 compliant. The Company has developed, and the
Board of Directors has approved, a Remediation Contingency Plan which is to
mitigate risks associated with the failure to successfully complete renovation,
validation or implementation of any applications. After an application is
implemented, the Company is allowed to drop the application from the Remediation
Contingency Plan. A second contingency plan, the Busines Resumption Contingency
Plan, is to mitigate the risks associated with the failure of applications at
critical dates. The Business Resumption Contingency Plan has been developed and
the Board of Directors has approved such plan. The Company will continue to
closely monitor the progress of its Year 2000 compliance plan.
There has been limited litigation filed against corporations regarding the
Year 2000 Problem and such corporations' compliance efforts. To date, no such
litigation has resulted in a decided case imposing liability on the corporate
entity. Nonetheless, the law in this area will likely continue to develop well
into the new millennium. Should the Company experience a Year 2000 failure,
exposure of the Company could be significant and material, unless there is
legislative action to limit such liability. Legislation has been introduced in
several jurisdictions regarding the Year 2000 Problem. However, no assurance can
be given that the legislation will be enacted in jurisdictions where the Company
does business that will have the effect of limiting any potential liability.
LIQUIDITY AND CAPITAL RESOURCES
The Bank's primary sources of funds are savings deposits, principal and
interest payments on loans and mortgage-backed securities, and borrowings from
the FHLB. While maturities and scheduled amortization of loans and
mortgage-backed 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 Bank is required by OTS to maintain an average daily balance of liquid
assets (cash, certain time deposits, bankers' acceptances, specified United
States Government, state or federal agency obligations,
-16-
<PAGE>
shares of certain mutual funds and certain corporate debt securities and
commercial paper) equal to a monthly average of not less than a specified
percentage of its net withdrawable deposit accounts plus short-term borrowings.
This liquidity requirement may be changed from time to time by the OTS to any
amount within the range of 4% to 10% depending upon economic conditions and the
savings flows of member institutions, and is currently 4%. At December 31, 1998,
the Bank's liquidity ratio was 59.39%. The Bank's liquidity ratio is high due to
the amount of mortgage-backed securities in the portfolio. The levels of the
Bank's short-term liquid assets are dependent on the Bank's operating, financing
and investing activities during any given period.
The primary investing activities of the Bank during the three months ended
December 31, 1998 were the origination of mortgage loans, and other loans.
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 and financing activities for the six
months ended December 31, 1998 and 1997.
At December 31, 1998, the Bank had outstanding loan origination commitments
of $2.1 million and unused lines of consumer credit of $440,000. The Bank
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 December 31, 1998 totaled $40.7 million. Based
upon the Bank's most recent pricing strategy, management believes that a
significant portion of such deposits will remain with the Bank. 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.
At December 31, 1998, the Bank exceeded all of its regulatory capital
requirements with a tangible capital level of $26.1 million, or 12.59% of total
adjusted assets, which is above the required level of $3.1 million or 1.5%; core
capital of $26.1 million, or 12.59% of total adjusted assets, which is above the
required level of $6.2 million or 3.0%; and total risk-based capital of $26.4
million, or 31.40% of risk-weighted assets, which is above the required level of
$6.7 million, or 8.0%.
IMPACT OF NEW ACCOUNTING STANDARDS
In June 1997, the financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards (SFAS) No. 131, "Disclosures about
Segments of an Enterprise and Related Information" (Statement 131) which
establishes standards for the way public business enterprises are to report
information about operating segments in annual financial statements and requires
those enterprises to report selected information about operatting segments in
interim financial reports issued to shareholders. Statement 131 is effective for
financial periods beginning after December 15, 1997 and is not expected to have
a material impact on the Company.
In February 1998, the FASB issued SFAS No. 132 "Employers' Disclosure about
Pensions and Other Postretirement Benefits" (Statement No. 132) which amends the
disclosure requirements of Statements No. 87, "Employers' Accounting for
Pensions" (Statement No. 87), No. 88, "Employers' Accounting for Settlements and
Curtailments of Defined Benefit Pension Plans and for Termination Benefits"
(Statement No. 88), and No. 106, "Employers' Accounting Postretirement Benefits
Other Than Pensions" (Statement No. 106).
-17-
<PAGE>
This Statement standardizes the disclosure requirements of Statements No.
87 and No. 106 to the extent practicable and recommends a parallel format for
presenting information about pensions and other postretirement benefits.
Statement No. 132 only addresses disclosure and does not change any of the
measurement of recognition provisions provided for in Statement No. 87, No. 88,
or No. 106. Statement 132 is effective for fiscal years beginning after December
15, 1997 and is not expected to have a material impact on the Company.
In June 1998, the FASB issued Statement No. 133, "Accounting for Derivative
Instruments and Hedging Activities". Statement No. 133 standardizes the
accounting for derivative instruments, including certain derivative instruments
imbedded in other contracts. Under the standard, entities are required to carry
all derivative instruments in the statement of financial position at fair value.
The accounting for the changes in fair value of a derivative instrument depends
on whether it has been designated and qualifies as part of a hedging
relationship and, if so, on the reason for holding it. The gain or loss due to
changes in fair value is recognized in earnings or as other comprehensive income
in the statement of shareholders' equity, depending on the type of instrument
and whether or not it is considered a hedge. Statement No. 133 is effective for
all fiscal quarters of all fiscal years beginning after June 15, 1999. The
Company has not yet determined the impact this new statement may have on its
future financial condition or its results of operations.
In October 1998, the FASB issued SFAS No. 134, "Accounting for
Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans
Held for Sale by a Mortgage Banking Enterprise, an amendement of FASB Statement
No. 65" (Statement No. 134). Statement No. 134 amends Statement No. 65,
"Accounting for Certain Mortgage Banking Activities" to conform the subsequent
accounting for securities retained after the securitization of mortgage loans by
a mortgage banking enterprise with the subsequent accounting for securities
retained after the securitization of other types of assets by a nonmortgage
banking enterprise. Statement No. 134 is effective for the first quarter
beginning after December 15, 1998 and is not expected to have a material impact
on the Company.
OTHER MATTERS
The Board of Directors presently consists of five members, with two
vacancies. The Company is actively seeking qualified candidates to appoint to
the Board of Directors and will nominate such individuals at the appropriate
time.
ITEM 3.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
There has been no material change in market risk from that disclosed in
Item 7A of the Company's 1998 Form 10-K for the year ended June 30, 1998.
-18-
<PAGE>
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 Shareholders
("Meeting") on October 20, 1998. All of the proposals submitted to
the shareholders at the Meeting were approved. The proposals
submitted to the shareholders and the tabulation of votes for each
proposal are as follows:
1. Electrion of two candidates to the Board of Directors,
each to serve for a term of three years.
The number of votes cast with respect to this matter was as
follows:
NOMINEE FOR WITHHELD BROKER NON-VOTES
------- --- -------- ----------------
Eugene W. Pilawski 2,196,730 20,558 0
Walter E. Powers 2,196,830 20,458 0
2. Ratification of the appointment of KPMG Peat Marwick LLP
as independent auditors for fiscal year ending June 30,
1999.
The number of votes cast with respect to this matter was as
follows:
FOR AGAINST ABSTAIN BROKER NON-VOTES
--- ------- ------- ----------------
2,201,917 9,722 5,649 0
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
None
*Submitted only with filing in electronic format.
-19-
<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.
BIG FOOT FINANCIAL CORP.
(Registrant)
By: /s/ Timothy L. McCue
------------------------
Timothy L. McCue
Vice President and Chief
Financial Officer
February 11, 1999
-20-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and the statements of income of Big Foot Financial
Corp and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<CIK> 0001022807
<NAME> Big Foot Financial Corp.
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> SEP-01-1998
<PERIOD-END> DEC-31-1998
<CASH> 2,771,993
<INT-BEARING-DEPOSITS> 14,947,512
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 24,170,248
<INVESTMENTS-CARRYING> 37,530,867
<INVESTMENTS-MARKET> 37,493,187
<LOANS> 123,614,850
<ALLOWANCE> 300,000
<TOTAL-ASSETS> 215,521,821
<DEPOSITS> 122,677,952
<SHORT-TERM> 1,000,000
<LIABILITIES-OTHER> 2,961,483
<LONG-TERM> 51,000,000
0
0
<COMMON> 25,128
<OTHER-SE> 36,154,446
<TOTAL-LIABILITIES-AND-EQUITY> 215,521,821
<INTEREST-LOAN> 2,229,822
<INTEREST-INVEST> 1,323,919
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 3,553,741
<INTEREST-DEPOSIT> 1,185,012
<INTEREST-EXPENSE> 1,928,040
<INTEREST-INCOME-NET> 1,625,701
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,464,793
<INCOME-PRETAX> 235,084
<INCOME-PRE-EXTRAORDINARY> 235,084
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 141,354
<EPS-PRIMARY> 0.06
<EPS-DILUTED> 0.06
<YIELD-ACTUAL> 6.80
<LOANS-NON> 231,978
<LOANS-PAST> 6,934
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 300,000
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 300,000
<ALLOWANCE-DOMESTIC> 300,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
