<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X]QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended June 30, 1999
[_]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 1-12305
FIRSTFED AMERICA BANCORP, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 04-3331237
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
ONE FIRSTFED PARK, SWANSEA, MASSACHUSETTS 02777
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(Address of principal executive offices)
Registrant's telephone number, including area code: (508) 679-8181
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No [_]
As of June 30, 1999 there were 7,092,030 shares of the Registrant's Common
Stock outstanding.
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<PAGE>
FIRSTFED AMERICA BANCORP, INC.
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
Page
----
<S> <C>
PART I FINANCIAL INFORMATION
Item 1.Consolidated Financial Statements
Consolidated Balance Sheets as of June 30, 1999 (unaudited) and March
31, 1999............................................................. 2
Consolidated Statements of Operations for the three months ended June
30, 1999 (unaudited) and 1998 (unaudited)............................ 3
Consolidated Statements of Changes in Stockholders' Equity for the
three months ended June 30, 1999 (unaudited)......................... 4
Consolidated Statements of Cash Flows for the three months ended June
30, 1999 (unaudited) and 1998 (unaudited)............................ 5
Notes to Unaudited Consolidated Financial Statements.................. 6
Item 2.Management's Discussion and Analysis of Financial Condition and
Results of Operations............................................. 7
Item 3.Quantitative and Qualitative Disclosures about Market Risk......... 14
PART II OTHER INFORMATION
Item 1.Legal Proceedings.................................................. 16
Item 2.Changes in Securities and Use of Proceeds.......................... 16
Item 3.Default Upon Senior Securities..................................... 16
Item 4.Submission of Matters to a Vote of Security Holders................ 16
Item 5.Other Information.................................................. 16
Item 6.Exhibits and Reports on Form 8-K................................... 17
SIGNATURES................................................................. 18
</TABLE>
1
<PAGE>
FIRSTFED AMERICA BANCORP, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands)
<TABLE>
<CAPTION>
June 30, March 31,
1999 1999
----------- ---------
(unaudited)
<S> <C> <C>
Assets
Cash on hand and due from banks............................ $ 22,448 24,598
Short-term investments..................................... 6,535 14,422
---------- ---------
Total cash and cash equivalents.......................... 28,983 39,020
Mortgage loans held for sale............................... 30,682 52,334
Investment in trading securities........................... 332 94
Investment securities available for sale (amortized cost of
$5,660 and $5,660)........................................ 5,894 5,575
Mortgage-backed securities available for sale
(amortized cost of $467,955 and $408,485)................. 465,798 408,451
Investment securities held to maturity (fair value of
$4,004 and $10,030)....................................... 4,000 9,998
Mortgage-backed securities held to maturity (fair value of
$4,290 and $5,733)........................................ 4,286 5,608
Stock in Federal Home Loan Bank of Boston, at cost......... 28,682 28,682
Loans receivable, net (net of allowance for loan losses of
$12,279 and $12,016)...................................... 758,889 766,687
Accrued interest receivable................................ 6,503 6,369
Office properties and equipment, net....................... 24,862 25,255
Mortgage servicing rights.................................. 6,975 6,537
Real estate owned, net..................................... 281 344
Bank-Owned Life Insurance.................................. 30,955 30,575
Prepaid expenses and other assets.......................... 11,519 7,708
---------- ---------
Total assets........................................... $1,408,641 1,393,237
========== =========
Liabilities and Stockholders' Equity
Liabilities:
Deposits................................................. $ 669,446 674,870
FHLB advances and other borrowings....................... 607,742 585,981
Advance payments by borrowers for taxes and insurance.... 5,562 5,660
Accrued interest payable................................. 3,199 3,058
Other liabilities........................................ 19,448 20,707
---------- ---------
Total liabilities...................................... 1,305,397 1,290,276
---------- ---------
Stockholders' equity:
Preferred stock, $.01 par value; 1,000,000 shares
authorized; none issued................................. -- --
Common stock, $0.01 par value; 25,000,000 shares
authorized; 8,707,152 shares issued and outstanding..... 87 87
Additional paid-in capital............................... 85,459 85,407
Retained earnings........................................ 58,239 56,892
Accumulated other comprehensive income (loss)............ (1,290) (150)
Unallocated ESOP shares.................................. (4,647) (4,647)
Unearned 1997 stock-based incentive plan................. (5,806) (5,869)
Treasury stock........................................... (28,798) (28,759)
---------- ---------
Total stockholders' equity............................. 103,244 102,961
---------- ---------
Total liabilities and stockholders' equity............. $1,408,641 1,393,237
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
FIRSTFED AMERICA BANCORP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
----------------------
1999 1998
---------- ----------
(unaudited)
<S> <C> <C>
Interest and dividend
income:
Loans..................... $ 14,784 17,078
Investment securities..... 297 555
Mortgage-backed
securities............... 6,026 3,290
Federal Home Loan Bank
stock.................... 469 299
---------- ---------
Total interest and
dividend income........ 21,576 21,222
---------- ---------
Interest expense:
Deposits.................. 6,309 7,480
Borrowed funds............ 7,719 5,930
---------- ---------
Total interest expense.. 14,028 13,410
---------- ---------
Net interest income
before provision for
loan losses............ 7,548 7,812
Provision for loan losses... 300 300
---------- ---------
Net interest income
after provision for
loan losses............ 7,248 7,512
---------- ---------
Non-interest income:
Loan servicing income..... 471 521
Gain (loss) on sale of
mortgage loans, net...... (474) 453
Service charges on deposit
accounts................. 295 256
Other income.............. 1,134 510
---------- ---------
Total non-interest
income................. 1,426 1,740
---------- ---------
Non-interest expense:
Compensation and employee
benefits................. 3,535 3,903
Office occupancy and
equipment................ 1,050 1,017
Advertising and business
promotion................ 251 299
Federal deposit insurance
premiums................. 99 164
Data processing........... 365 193
Other expense............. 950 962
---------- ---------
Total non-interest
expenses............... 6,250 6,538
---------- ---------
Income before income tax
expense................ 2,424 2,714
Income tax expense.......... 722 1,020
---------- ---------
Net income.............. $ 1,702 1,694
========== =========
Basic earnings per share.... $ 0.27 0.22
========== =========
Diluted earnings per share.. $ 0.27 0.22
========== =========
Basic shares outstanding--in
thousands.................. 6,336 7,643
========== =========
Diluted shares outstanding--
in thousands............... 6,336 7,710
========== =========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
FIRSTFED AMERICA BANCORP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
For the Three Months Ended June 30, 1999
(Dollars and shares in thousands)
(unaudited)
<TABLE>
<CAPTION>
Unallocated
1997
stock-
Accumu- based
Shares of Additional lated other Unallocated incentive
Preferred common Common paid-in Retained comprehensive ESOP plan (SIP) Treasury
stock stock stock capital earnings income (loss) shares shares stock
--------- --------- ------ ---------- -------- ------------- ----------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at March
31, 1999........... -- 8,707 $ 87 $ 85,407 $ 56,892 $ (150) $ (4,647) $ (5,869) $ (28,759)
Earned SIP stock
awards............ -- -- -- (4) -- -- -- 63 --
Earned ESOP shares
charged to
expense........... -- -- -- 56 -- -- -- -- --
Cash dividends
declared and paid
($0.05 per
share)............ -- -- -- -- (355) -- -- -- --
Common stock
acquired for
certain employee
benefit plans
(5,002 shares at
an average price
of $13.73 per
share)............ -- -- -- -- -- -- -- -- (68)
Common stock sold
from certain
employee benefit
plans (1,708
shares at an
average price of
$17.13 per
share)............ -- -- -- -- -- -- -- -- 29
Comprehensive
income (loss):
Net income........ -- -- -- -- 1,702 -- -- -- --
Other
comprehensive
income, net of
tax Unrealized
holding gains
(losses) on
available for
sale securities... -- -- -- -- -- (1,805) -- -- --
Reclassification
adjustment for
losses
(gains)included
in net income..... -- -- -- -- -- -- -- -- --
--------
Net unrealized
(losses) gains.... -- -- -- -- -- (1,805) -- -- --
Tax effect........ -- -- -- -- -- 665 -- -- --
--------
Net-of-tax
effect............ -- -- -- -- -- (1,140) -- -- --
Total
comprehensive
income.......... -- -- -- -- -- -- -- -- --
--- ----- ---- -------- -------- -------- -------- -------- ---------
Balance at June 30,
1999............... -- 8,707 $ 87 $ 85,459 $ 58,239 $ (1,290) $ (4,647) $ (5,806) $ (28,798)
=== ===== ==== ======== ======== ======== ======== ======== =========
<CAPTION>
Total
stockholders'
equity
-------------
<S> <C>
Balance at March
31, 1999........... $ 102,961
Earned SIP stock
awards............ 59
Earned ESOP shares
charged to
expense........... 56
Cash dividends
declared and paid
($0.05 per
share)............ (355)
Common stock
acquired for
certain employee
benefit plans
(5,002 shares at
an average price
of $13.73 per
share)............ (68)
Common stock sold
from certain
employee benefit
plans (1,708
shares at an
average price of
$17.13 per
share)............ 29
Comprehensive
income (loss):
Net income........ 1,702
Other
comprehensive
income, net of
tax Unrealized
holding gains
(losses) on
available for
sale securities... --
Reclassification
adjustment for
losses
(gains)included
in net income..... --
Net unrealized
(losses) gains.... --
Tax effect........ --
Net-of-tax
effect............ (1,140)
-------------
Total
comprehensive
income.......... 562
-------------
Balance at June 30,
1999............... $ 103,244
=============
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE>
FIRSTFED AMERICA BANCORP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Three Months
Ended June 30,
----------------------
1999 1998
---------- ----------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income............................................ $ 1,702 1,694
Adjustments to reconcile net income (loss) to net cash
provided by operating activities:
Amortization (accretion) of:
Premium (discount) on investment and mortgage-backed
securities held to maturity......................... -- 2
Premium (discount) on investment and mortgage-backed
securities available for sale....................... 400 123
Deferred loan origination fees (costs)............... 103 (16)
Mortgage servicing rights............................ 528 312
Provision for loan losses............................. 300 300
(Gains) losses on sales of:
Real estate owned.................................... (32) (107)
Mortgage loans....................................... 474 (453)
Office properties and equipment...................... (30) --
Net proceeds from sales of mortgage loans............. 118,908 177,218
Origination of mortgage loans held for sale........... (98,696) (156,985)
Unrealized gain on trading securities................. (138) --
Real estate owned valuation write-downs............... (43) --
Depreciation of office properties and equipment....... 616 525
Appreciation in fair value of ESOP shares............. 56 228
Earned SIP shares..................................... 59 --
Increase or decrease in:
Accrued interest receivable.......................... (134) (353)
Prepaid expenses and other assets.................... (3,526) (1,302)
Accrued interest payable............................. 141 545
Accrued income taxes and other liabilities........... (1,259) (12,301)
---------- ----------
Net cash provided by operating activities........... 19,429 9,430
---------- ----------
Cash flows from investing activities:
Purchase of trading securities........................ $ (100) (100)
Purchase of investment securities available for sale.. -- (2,252)
Purchase of mortgage-backed securities available-for-
sale................................................. (95,722) (69,806)
Payments received on mortgage-backed securities
available for sale................................... 35,852 18,734
Purchases of investment securities held to maturity... -- (24,968)
Maturities of investment securities held to maturity.. 6,000 6,000
Payments received on mortgage-backed securities held
to maturity.......................................... 1,320 1,704
Purchase of Federal Home Loan Bank stock.............. -- (4,269)
Net decrease in loans................................. 7,231 19,217
Proceeds from sales of real estate owned.............. 302 340
Proceeds from sale of office properties and
equipment............................................ 103 --
Purchases of office properties and equipment.......... (297) (951)
---------- ----------
Net cash used in investing activities............... (45,311) (56,351)
---------- ----------
Cash flows from financing activities:
Net decrease in deposits.............................. $ (5,424) (13,813)
Proceeds from FHLB advances and other borrowings...... 113,641 224,528
Repayments on FHLB advances and other borrowings...... (91,880) (154,272)
Net change in advance payments by borrowers for taxes
and insurance........................................ (98) (393)
Cash dividend paid.................................... (355) (413)
Payments to acquire stock-based incentive plan
shares............................................... -- (2,502)
Payments to acquire common stock for treasury stock... (39) (9,513)
---------- ----------
Net cash provided by financing activities........... 15,845 43,622
---------- ----------
Net (decrease) in cash and cash equivalents............ (10,037) (3,299)
Cash and cash equivalents at beginning of year......... 39,020 32,021
---------- ----------
Cash and cash equivalents at end of quarter............ $ 28,983 28,722
========== ==========
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest.............................................. $ 13,887 12,865
========== ==========
Income taxes.......................................... $ 1,695 1,872
========== ==========
Supplemental disclosures of noncash investing
activities:
Property acquired in settlement of loans.............. $ 164 81
========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
FIRSTFED AMERICA BANCORP, INC. AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Note 1. Basis of Presentation
The accompanying unaudited consolidated financial statements include the
accounts of FIRSTFED AMERICA BANCORP, INC. (the "Company"), and its wholly-
owned subsidiaries, First Federal Savings Bank of America (the "Bank"), FAB
FUNDING CORPORATION ("FAB FUNDING") and FIRSTFED INSURANCE AGENCY, LLC (the
"Agency"). First Federal Savings Bank of America includes its wholly-owned
subsidiaries, FIRSTFED MORTGAGE CORPORATION, FIRSTFED INVESTMENT CORPORATION,
and CELMAC INVESTMENT CORPORATION.
The interim consolidated financial statements reflect all normal and
recurring adjustments which are, in the opinion of management, considered
necessary for a fair presentation of the financial condition and results of
operations for the periods presented. The results of operations for the three
months ended June 30, 1999 are not necessarily indicative of the results of
operations that may be expected for all of fiscal year 2000.
Certain information and note disclosures normally included in financial
statements prepared in accordance with generally accepted accounting
principles have been condensed or omitted, pursuant to the rules and
regulations of the Securities and Exchange Commission.
These unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and notes
thereto included in the Company=s Annual Report to Stockholders on Form 10-K
for the fiscal year ended March 31, 1999.
Note 2. Impact of Recent Accounting Pronouncements
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, (collectively referred to as
derivatives) and for hedging activities. It requires that an entity recognize
all derivatives as either assets or liabilities in the balance sheet and
measure those instruments at fair value. Under this statement, an entity that
elects to apply hedge accounting is required to establish at the inception of
the hedge the method it will use for assessing the effectiveness of the
hedging derivative and the measurement approach for determining the
ineffective aspect of the hedge. This statement is effective for all fiscal
quarters of fiscal years beginning after June 15, 1999. In June 1999, the FASB
issued SFAS No. 137 which defers the effective date of SFAS No. 133 to all
fiscal quarters of all fiscal years beginning after June 15, 2000.
6
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Comparison of Financial Condition at June 30, 1999 and March 31, 1999
General
Total assets at June 30, 1999 were $1.409 billion, an increase of $15.4
million, or 1.1%, compared to $1.393 billion at March 31, 1999. Asset growth
was primarily attributable to growth in mortgage-backed securities available
for sale which increased $57.3 million, or 14.0%, to $465.8 million at June
30, 1999 from $408.5 million at March 31, 1999. Partially offsetting this
growth was a $21.7 million decrease in mortgage loans held for sale, a $7.9
million decrease in short-term investments, and a $7.8 million decrease in
loans receivable, net. Deposit balances declined by $5.4 million, to $669.4
million at June 30, 1999 from $674.9 million at March 31, 1999. Balance sheet
growth was primarily funded by a $21.8 million increase in Federal Home Loan
Bank of Boston advances and other borrowings during the first quarter.
Total stockholders' equity increased $283,000 to $103.2 million at June 30,
1999, from $103.0 million at March 31, 1999, primarily due to net income, a
dividend payment, and a decline in the fair value of securities available for
sale, net of tax. Stockholders' equity to assets was 7.33% at June 30, 1999,
down from 7.39% at March 31, 1999, the result of balance sheet growth.
Liquidity and Capital
The Company's primary sources of funds are deposits, principal and interest
payments on loans and mortgage-backed securities, proceeds from the sale of
loans, FHLB advances, and other borrowings. While maturities and scheduled
amortization of loans are predictable sources of funds, deposit flows and
mortgage prepayments are influenced by general interest rates, economic
conditions and competition. The Bank is required to maintain minimum levels of
liquid assets as defined by Office of Thrift Supervision ("OTS") regulations.
This requirement, which may be varied at the direction of the OTS depending
upon economic conditions and deposit flows, is based upon a percentage of the
Bank's deposits and short-term borrowings ("liquidity ratio"). At June 30,
1999 and March 31, 1999, the Bank's liquidity ratio was 38.67% and 30.38%
respectively. The OTS required liquidity ratio is 4.0%.
The Company's most liquid assets are cash, short-term investments, mortgage
loans held for sale, investments in trading securities, investment securities
available for sale, and mortgage-backed securities available for sale. The
levels of these assets are dependent on the Company's operating, financing,
lending and investing activities during any given period. At June 30, 1999,
cash, short-term investments, mortgage loans held for sale, investments in
trading securities, investment securities available for sale, and mortgage-
backed securities available for sale totaled $531.7 million, or 37.7% of total
assets.
The Company has other sources of liquidity if a need for additional funds
arises, including a $25 million FHLB secured line of credit, FHLB advances,
and other borrowings from securities dealers. At June 30, 1999, the Company
had $607.7 million in advances outstanding from the FHLB and other borrowings,
and an additional borrowing capacity from the FHLB of $242.1 million. The
Company uses FHLB advances and other borrowings to fund asset growth and other
cash flow needs, and may continue to do so in the future, depending on market
conditions, the pricing of deposit products, and the pricing of FHLB advances
and other borrowings.
At June 30, 1999, the Company had commitments to originate loans and unused
outstanding lines of credit and undistributed balances of construction loans
totaling $111.9 million. The Company anticipates that it will have sufficient
funds available to meet its current loan origination commitments. Certificate
of deposit accounts scheduled to mature in less than one year from June 30,
1999 totaled $339.1 million. The Company expects that it will retain a
majority of maturing certificate accounts.
7
<PAGE>
At June 30, 1999, the consolidated stockholders' equity to total assets
ratio was 7.33%. At June 30, 1999, the Bank exceeded all of its regulatory
capital requirements. The Bank's tangible capital of $99.2 million, or 7.06%,
of total adjusted assets, was above the required level of $28.1 million or
2.0%; core capital of $99.2 million, or 7.06% of total adjusted assets, was
above the required level of $56.2 million, or 4.0%; risk-based capital of
$107.4 million, or 16.47% of risk-weighted assets, was above the required
level of $52.1 million or 8.0%, and Tier 1 risk-based capital of $99.2
million, or 15.22% of risk-weighted assets, was above the required level of
$26.1 million or 4.0%. The Bank is considered a "well capitalized" institution
under the OTS prompt corrective action regulations.
Year 2000 Project
Included in other non-interest expenses are charges incurred in connection
with the modification or replacement of software and hardware to address the
"Year 2000 issue," which will allow for the Company's computer,
communications, and other related non-technology systems to properly recognize
dates beyond December 31, 1999. The Company has developed a plan that is based
upon the Federal Financial Institutions Examination Council ("FFIEC")
recommended phases and time frames for insuring Year 2000 readiness. These
phases include awareness, assessment, renovation, validation and
implementation.
The Company has utilized both internal and external resources to test and
reprogram or replace software and hardware (including non-technology systems)
for Year 2000 modifications. The Company has completed renovation and testing
of all mission critical processing systems. Testing and remediation of non-
critical applications will continue throughout 1999 and will be completed
prior to September 30, 1999.
The Company has worked with all of its mission critical vendors and service
providers to determine the extent to which the Company is vulnerable to any
failure of those third parties to remedy their own Year 2000 issues and has
received written assurances of readiness from all such parties. However, there
can be no guarantee that the systems of other companies on which the Company's
systems rely will be remedied in a timely manner or that there will be no
adverse effect on the Company's systems. Therefore, to the extent that other
entities not affiliated with the Company are unsuccessful in properly
addressing this issue, the Company could be negatively impacted. The Company's
total Year 2000 project costs, as discussed below, include the estimated costs
and time associated with the impact of third party Year 2000 issues.
In the unlikely event the Company experiences problems due to either
internal and/or external systemic failure, a contingency plan has been
developed outlining alternative methods of processing until the affected
systems have been corrected or replaced. The Bank's worst case scenario
relates to a general failure of multiple processing systems supporting
mission-critical loan and deposit platforms. Accordingly, the Bank has
developed a contingency plan outlining alternate processing routines to
protect the integrity of deposit and loan data while maintaining an acceptable
level of customer service during such an outage. Testing of the viability of
alternative processing methods will continue throughout the remainder of 1999.
In addition, the Company has performed a risk assessment of significant
existing customers to determine their exposure to Year 2000 related issues and
on the customer's ability to perform in accordance with contractual
agreements. Management has determined the Company's exposure to this risk is
low. Furthermore, a Year 2000 risk assessment is performed on all new
customers entering into a significant relationship with the Company.
The total cost of the Year 2000 project is estimated at $200,000 to
$300,000. This estimate has been revised based on favorable results of
mission-critical system testing and lower than projected expenditures for
software and hardware upgrades. A significant portion of the costs are not
incremental to the Company, but rather represent a reprioritization of
existing internal systems technology resources. The Company does not
explicitly track internal costs associated with the Year 2000 project. For the
three months ended June 30, 1999 and for the entire project through June 30,
1999, the Company has expensed approximately $10,000 and $150,000,
respectively, toward Year 2000 remediation efforts. In addition, in
preparation for the Year 2000 project, the Company underwent a February, 1998
conversion to a new processing system for all loan and deposit applications at
a cost of approximately $700,000.
8
<PAGE>
The costs of the project and the date on which the Company plans to complete
Year 2000 related modifications are based on management's best estimates,
which are 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 anticipated. 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
code, and similar uncertainties.
Asset Quality
At June 30, 1999, non-accrual loans totaled $2.3 million and real estate
owned ("REO") totaled $281,000. The Company ceases to accrue interest on loans
90 days or more past due and charges off all accrued interest. Foregone
interest on non-accrual loans for the three months ended June 30, 1999 was
$26,000. The following table sets forth information regarding non-accrual
loans and REO.
<TABLE>
<CAPTION>
At June 30, At March 31,
1999 1999
----------- ------------
(Dollars in thousands)
<S> <C> <C>
Non-accrual loans:
Mortgage loans:
One- to four-family........................... $ 697 $ 971
Multi-family.................................. -- --
Commercial real estate........................ 1,142 1,142
Construction and land......................... 117 117
------ ------
Total mortgage loans........................ 1,956 2,230
------ ------
Commercial loans................................ 314 280
------ ------
Consumer loans:
Home equity lines............................. -- 36
Second mortgages.............................. 10 --
Other consumer loans.......................... 20 4
------ ------
Total consumer loans........................ 30 40
------ ------
Total nonaccrual loans...................... 2,300 2,550
Real estate owned, net(1)....................... 281 344
------ ------
Total non-performing assets..................... $2,581 $2,894
====== ======
Allowance for loan losses as a percent percent of
loans(2)......................................... 1.59% 1.54%
Allowance for loan losses as percent of non-
performing loans(3).............................. 533.87% 471.22%
Non-performing loans as a percent of loans(2)(3).. 0.30% 0.33%
Non-performing assets as a percent of total
assets(4)........................................ 0.18% 0.21%
</TABLE>
- --------
(1) REO balances are shown net of related valuation allowances.
(2) Loans includes loans receivable, net, excluding allowance for loan losses.
(3) Non performing loans consist of all loans 90 days or more past due and
other loans which have been identified by the Company as presenting
uncertainty with respect to the collectability of interest or principal.
(4) Non performing assets consist of non performing loans and REO.
9
<PAGE>
Cautionary Statement
This report contains certain forward-looking statements within the meaning
of Section 27A of the Securities Act of 1933, as amended, and Section 21E of
the Securities Exchange Act of 1934, as amended. The Company intends such
forward-looking statements to be covered by the safe harbor provisions for
forward-looking
statements contained in the Private Securities Reform Act of 1995, and is
including this statement for purposes of these safe harbor provisions.
Forward-looking statements, which are based on certain assumptions and
describe future plans, strategies and expectations of the Company, are
generally identified by use of the words "believe," "expect," "intend,"
"anticipate," "estimate," "project," or similar expressions. The Company's
ability to predict results or the actual effect of future plans or strategies
is inherently uncertain. Factors which could have a material adverse effect on
the operations of the Company and the subsidiaries include, but are not
limited to, changes in: interest rates, general economic conditions,
legislative/regulatory changes, monetary and fiscal policies of the U.S.
Government, including policies of the U.S. Treasury and the Federal Reserve
Board, the quality or composition of the loan or investment portfolios, demand
for loan products, deposit flows, competition, demand for financial services
in the Company's market area and accounting principles and guidelines. These
risks and uncertainties should be considered in evaluating forward-looking
statements and undue reliance should not be placed on such statements. Further
information about the Company and it's business, including additional factors
that could materially affect the Company's financial results, is included in
the Company's other filings with the Securities and Exchange Commission.
10
<PAGE>
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED
JUNE 30, 1999 AND THE THREE MONTHS ENDED JUNE 30, 1998
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 is a function of both 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
for the three months ended June 30, 1999 and 1998. The average yields and
costs are derived by dividing income or expense by the average balance of
interest earning assets or interest bearing liabilities, respectively, for the
periods shown. Average balances are derived from average month-end balances.
Management does not believe that the use of average monthly balances instead
of average daily balances causes any material differences in the information
presented. The yields and the costs include fees, premiums and discounts which
are considered adjustments to yields.
<TABLE>
<CAPTION>
For the Three Months Ended June 30,
-----------------------------------------------------------
1999 1998
----------------------------- -----------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
----------- -------- ------- ----------- -------- -------
(Dollars in thousands) (Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning
assets:
Loans receivable,
net and mortgage
loans held for
sale............... $ 800,322 $14,784 7.41% $ 908,593 $17,078 7.54%
Investment
securities......... 54,685 766 5.62 60,690 854 5.64
Mortgage-backed
securities......... 431,428 6,026 5.60 228,423 3,290 5.78
----------- ------- ---- ----------- ------- ----
Total interest-
earning assets... 1,286,435 21,576 6.72 1,197,706 21,222 7.11
------- ---- ------- ----
Noninterest-earning
assets............... 99,105 68,018
----------- -----------
Total assets...... $ 1,385,540 $ 1,265,724
=========== ===========
Liabilities and
Stockholders' Equity:
Interest-bearing
liabilities:
Deposits............ $ 613,868 6,309 4.12 $ 641,600 7,480 4.68
FHLB advances and
other borrowings... 582,295 7,719 5.32 408,156 5,930 5.83
----------- ------- ---- ----------- ------- ----
Total interest-
bearing
liabilities...... 1,196,163 14,028 4.70 1,049,756 13,410 5.12
------- ---- ------- ----
Noninterest-bearing
liabilities.......... 81,080 94,487
-----------
Total
liabilities...... 1,277,243 1,144,243
----------- -----------
Stockholders' equity.. 108,297 121,481
----------- -----------
Total liabilities
and stockholders'
equity............. $ 1,385,540 $ 1,265,724
=========== ===========
Net interest rate
spread................. $ 7,548 2.02% $ 7,812 1.99%
======= ==== ======= ====
Net interest margin..... 2.35% 2.62%
==== ====
Ratio of interest-
earning assets to
interest-bearing
liabilities............ 107.55% 114.09%
=========== ===========
</TABLE>
11
<PAGE>
General
Net income was unchanged at $1.7 million, for the first quarters of fiscal
year 2000 and 1999. Net interest income before loan loss provision decreased
$264,000, or 3.4%, to $7.5 million for the three months ended June 30, 1999.
Non-interest income decreased by $314,000 primarily due to losses on the sale
of mortgage loans. Non-interest expense decreased by $288,000 and income tax
expense decreased by $298,000.
Interest Income
Interest and dividend income for the three months ended June 30, 1999 was
$21.6 million, compared to $21.2 million for the three months ended June 30,
1998, an increase of $354,000, or 1.7%. The increase in interest and dividend
income is primarily attributable to a $88.7 million increase in average
interest-earning assets which increased to $1.286 billion for the three months
ended June 30, 1999 from $1.198 billion for the three months ended June 30,
1998. The increase in average interest-earning assets was mainly due to an
increase in mortgage-backed securities available for sale. The increase in
average interest-earning balances was accompanied by a 39 basis point decrease
in average yield on interest-earning assets from 7.11% for the three months
ended June 30, 1998 to 6.72% for the three months ended June 30, 1999. This
decline was primarily the result of the addition of adjustable-rate and
shorter-term fixed-rate mortgage-backed securities and to lower yields on the
Company's loan portfolio due to lower market rates and the subsequent
refinancing of "higher" fixed-rate mortgages.
Interest income on loans receivable, net and mortgage loans held for sale
for the three months ended June 30, 1999 decreased by $2.3 million, or 13.4%,
to $14.8 million compared to $17.1 million for the three months ended June 30,
1998. This decrease was attributable to a decrease of $108.3 million in the
average loan balance and a 13 basis point decrease in yield on loans
receivable and mortgage loans held for sale. About $29.9 million of the $108.3
million decline in average loan balance was in mortgage loans held for sale.
Interest and dividend income from investment securities was $766,000 for the
three months ended June 30, 1999, compared to $854,000 for the comparable
three months in 1998. Investment securities decreased by $6.0 million to an
average of $54.7 million during the three months ending June 30, 1999 from
$60.7 million during the three months ended June 30, 1998.
Interest on mortgage-backed securities for the three months ended June 30,
1999 increased by $2.7 million to $6.0 million, compared to $3.3 million for
the three months ended June 30, 1998. This increase in income is attributable
to a $203.0 million increase in the average mortgage-backed securities
balance, partially offset by a 18 basis point decrease in the average yield,
from 5.78% to 5.60%, during the three months ended June 30, 1999 versus the
three months ended June 30, 1998. This reduction in yield was the result of
the addition of low initial coupon adjustable rate mortgage-backed securities.
Interest Expense
Interest expense for the three months ended June 30, 1999 was $14.0 million,
compared to $13.4 million for the three months ended June 30, 1998, an
increase of $618,000, or 4.6%. The increase in interest expense during this
time period was the net effect of an increase in average interest-bearing
liabilities and a decrease in their associated cost. Average interest-bearing
liabilities increased $146.4 million, or 13.9%, to $1.196 billion for the
three months ended June 30, 1999, from $1.150 billion for the three months
ended June 30, 1998. Of this amount, average deposits declined $27.7 million,
or 4.3%, from $641.6 during the three months ended June 30, 1998 to $613.9
million during the three months ended June 30, 1999. The average cost of
deposits for the three months ended June 30, 1999 fell 56 basis points
compared to the three months ended June 30, 1998 due to a decline in the
general level of interest rates and to the Company's less aggressive deposit
pricing strategy.
Average Federal Home Loan Bank advances and other borrowings grew 42.7% to
$582.3 million during the three months ended June 30, 1999 versus $408.2
million during the comparable period in 1998. Because of a decline in market
interest rates and the maturities of several "higher" rate advances, the cost
of Federal Home Loan Bank advances and other borrowings fell 51 basis points
during this time period, from 5.83% to 5.32%.
12
<PAGE>
Net Interest Income
Net interest income before loan loss provision decreased $264,000, or 3.4%,
to $7.5 million from $7.8 million, for the three months ended June 30, 1999
and 1998, respectively. This decrease was due to a re-deployment of funds from
interest-earning assets to purchase $30.0 million of Bank-Owned Life Insurance
("BOLI") and a $13.2 million decrease in average stockholders' equity
primarily due to the Company's capital stock repurchase program. Earnings from
BOLI are reported as non-interest income. The Company's interest rate spread
increased to 2.02%, compared to 1.99%, for the same period in fiscal years
2000 and 1999, respectively.
Provision for Loan Losses
The Company's provision for loan losses remained at $300,000 for the three
months ended June 30, 1999 and 1998. The Company's allowance for loan losses
was $12.3 million, or 1.59% of loans receivable at June 30, 1999, up from
$12.0 million, or 1.54% of loans receivable at March 31, 1999. Allowance for
loan losses was 534% and 471% of non-performing loans at June 30, 1999 and
March 31, 1999, respectively. To the extent the Company experiences increases
in the balance of its loan portfolio or increases its concentration of loans
which bear a higher degree of risk than one- to four-family loans, the Company
anticipates further increases in its allowance for loan losses through
continued provisions for loan losses.
Non-performing loans at June 30, 1999 decreased $250,000 to $2.3 million, or
0.30% of loans receivable, from $2.6 million, or 0.33% of loans receivable at
March 31, 1999. At June 30, 1999, the Company's non-performing assets, which
include non-performing loans and foreclosed properties (real estate owned),
decreased $313,000 to $2.6 million compared to $2.9 million at March 31, 1999.
Decreases in non-performing loans and assets are primarily a result of
continued strengthening in the local economy and conservative loan
underwriting.
Non-interest Income
Non-interest income decreased $314,000, or 18.1%, to $1.4 million from $1.7
million for the three months ended June 30, 1999 and 1998, respectively. The
decrease is primarily attributable to a $927,000 decrease in gain (loss) on
sale of mortgage loans, partially offset by $380,000 earnings on Bank-Owned
Life Insurance, a $137,000 unrealized gain on trading securities, and $107,000
in commissions earned by the FIRSTFED INSURANCE AGENCY, LLC. The decrease in
gain (loss) on sale of mortgage loans is due primarily to unfavorable
secondary market conditions that existed during the first quarter of fiscal
year 2000 as compared to the first quarter of fiscal year 1999. During the
recent quarter, mortgage interest rates rose significantly, having a negative
impact on the price of loans sold in the secondary market. A significant
offset to the loss on sale of mortgage loans is an unrecognized increase in
the market value of the Company's mortgage servicing rights ("MSR").
Non-interest Expense
Non-interest expense decreased $288,000, or 4.4%, to $6.3 million from $6.5
million, for the three months ended June 30, 1999 and 1998, respectively. The
decrease is primarily attributable to a $368,000 decrease in compensation and
benefits expense and a $65,000 decrease in deposit insurance premiums.
Partially offsetting these decreases was a $172,000 increase in data
processing costs. Decreases in compensation and benefits were the result of
lower costs associated with stock-based benefit plans including the Employee
Stock Ownership Plan ("ESOP") and the 1997 Stock-based Incentive Plan ("SIP").
Data processing costs increased as a result of an increase in number of
customers and their transactions.
Income Taxes
Income tax expense decreased $298,000, or 29.2%, from $1.0 million in the
three months ended June 30, 1998 to $722,000 for the three months ended June
30, 1999. This decrease is a result of the Company's implementation of certain
tax strategies and the purchase of Bank-Owned Life Insurance during the
second-half of fiscal year 1999. Overall, the Company's effective tax rate was
reduced to 29.8% during the first quarter of fiscal year 2000, from 37.6% for
the first quarter of fiscal year 1999.
13
<PAGE>
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The principal market risk affecting the Company is interest-rate risk. The
principal objective of the Company's interest rate risk management function is
to evaluate the interest rate risk included in certain balance sheet accounts,
determine the level of risk appropriate given the Company's business strategy,
operating environment, capital and liquidity requirements and performance
objectives, and manage the risk consistent with Board of Directors' approved
guidelines. Through such management, the Company seeks to reduce the
vulnerability of its operations to changes in interest rates. The Company
monitors its interest rate risk as such risk relates to its operating
strategies. The Company's Board of Directors has established an
Asset/Liability Committee, responsible for reviewing its asset/liability
policies and interest rate risk position, which meets on a monthly basis and
reports trends and interest rate risk position to the Board of Directors on a
quarterly basis. The extent of the movement of interest rates is an
uncertainty that could have a negative impact on the earnings of the Company.
In recent years, the Company has primarily utilized the following strategies
to manage interest rate risk: (1) emphasizing the origination and retention of
adjustable-rate and shorter-term (generally twelve years or less) fixed-rate,
one- to four-family mortgage loans; (2) selling in the secondary market
longer-term, fixed-rate mortgage loans originated while generally retaining
the servicing rights on such loans; (3) investing primarily in adjustable rate
mortgage-backed securities and short-term fixed-rate collateralized mortgage
obligations ("CMOs"); and (4) reducing the overall interest rate sensitivity
of liabilities by emphasizing longer-term deposits and longer-term FHLB
advances to replace rate sensitive deposits and fund asset growth. In
addition, the Company engaged in two interest rate swap agreements with a
total notional principal amount of $50 million to synthetically lengthen its
liability maturities.
The matching of assets and liabilities may be analyzed by examining the
extent to which such assets and liabilities are "interest rate sensitive" and
by monitoring a bank's interest rate sensitivity "gap." An asset or liability
is said to be interest rate sensitive within a specific time period if it will
mature or reprice within that time period. The interest rate sensitivity gap
is defined as the difference between the amount of interest-earning assets
maturing or repricing within a specific time period and the amount of
interest-bearing liabilities maturing or repricing within that same time
period.
At June 30, 1999, the Company's cumulative one year interest rate gap (which
is the difference between the amount of interest-earning assets and the amount
of interest-bearing liabilities maturing or repricing within one year) as a
percentage of total assets was a positive 2.03%. Accordingly, during a period
of falling interest rates, the Company's interest-earning assets would reprice
downward at a faster rate than its interest-bearing liabilities, which,
consequently, may negatively affect the Company's net interest income. During
a period of rising interest rates, the Company's interest-earning assets would
reprice upward at a faster rate than its interest-bearing liabilities which,
consequently, may positively affect the Company's net interest income.
Certain shortcomings are inherent in gap analysis. For example, although
certain assets and liabilities may have similar maturities or periods to
repricing, they may react in different degrees to changes in market interest
rates. Also, the interest rates on certain types of assets and liabilities may
fluctuate in advance of changes in market interest rates, while interest rates
on other types may lag behind changes in market rates. Additionally, certain
assets, such as adjustable-rate loans, have features which restrict changes in
interest rates both on a short-term basis and over the life of the asset.
Further, in the event of change in interest rates, prepayment and early
withdrawal levels would likely deviate significantly from those assumed in
calculating the table. Finally, the ability of some borrowers to service their
adjustable-rate loans may decrease in the event of an interest rate increase.
The Company's interest rate sensitivity is also monitored by management
through the use of a model which generates estimates of the change in the
Company's net interest income ("NII") and net portfolio value ("NPV") over a
range of interest rate scenarios. NPV is the present value of expected cash
flows from assets, liabilities, and off-balance sheet contracts. The NPV
ratio, under any interest rate scenario, is defined as the NPV in that
14
<PAGE>
scenario divided by the estimated market value of assets in the same scenario.
The OTS produces a similar analysis for the Bank using its own model, based
upon data submitted on the Bank's quarterly Thrift Financial Report, the
results of which may vary from the Company's internal model primarily due to
differences in assumptions utilized between the Company's internal model and
the OTS model, including estimated loan prepayment rates, reinvestment rates
and deposit renewal rates. The Company monitors the change in estimated NPV
versus limits imposed by the Company's Board of Directors, and as of June 30,
1999, was in full compliance with those limits. See the Company's Annual
Report on Form 10-K for the year ended March 31, 1999 for detailed gap and NPV
tables.
As in the case with the Gap Table, certain short-comings are inherent in the
methodology used in the above interest rate risk measurements. Modeling
changes in NPV require certain assumptions which may or may not reflect the
manner in which actual yields and costs respond to changes in market interest
rates. In this regard, the NPV model presented incorporates an assumption that
the composition of the Company's interest sensitive assets and liabilities
existing at the beginning of a period remains constant over the period being
measured, and that a particular change in interest rates is reflected
uniformly across the yield curve regardless of the duration to maturity or
repricing of specific assets and liabilities. Accordingly, although the NPV
measurements and net interest income models provide an indication of the
Company's interest rate risk exposure at a particular point in time, such
measurements are not intended to and do not provide a precise forecast of the
effect of changes in market interest rates on the Company's net interest
income and will differ from actual results.
During fiscal year-end 2000, the Company continues to follow its practice of
selling certain fixed-rate and adjustable-rate mortgage loans while generally
retaining the servicing rights. In conjunction with this mortgage banking
activity, the Company uses forward contracts in order to reduce exposure to
interest-rate risk. The amount of forward coverage of the "pipeline" of
mortgages is managed on a day-to-day basis by an operating officer, within
Board approved policy guidelines, based on the Company's assessment of the
general direction of interest rates and levels of mortgage origination
activity.
15
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not engaged in any legal proceedings of a material nature at
the present time. From time to time, the Company is a party to routine legal
proceedings within the normal course of business. Such routine legal
proceedings in the aggregate are believed by management to be immaterial to
the Company's financial condition or results of operations.
Item 2. Changes in Securities and Use of Proceeds
Not Applicable
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to Vote of Security Holders
The annual meeting of stockholders was held July 29, 1999. The following
proposals were voted on by the stockholders:
<TABLE>
<CAPTION>
Withheld/ Broker
Proposal For Against Abstain Non-Votes
-------- --------- ------- --------- ---------
<S> <C> <C> <C> <C>
1)Election of Directors:
Richard W. Cederberg.................. 5,777,291 -- 234,347 --
Gilbert C. Oliveira................... 5,768,784 -- 242,854 --
Dr. Paul A. Raymond................... 5,780,656 -- 230,982 --
2)Ratification of KPMG LLP as independent
auditors of the Company for the
fiscal year ending March 31, 2000... 5,969,193 26,719 15,726 --
</TABLE>
Item 5. Other Information
Not Applicable
16
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
<TABLE>
<C> <S>
3.1 Certificate of Incorporation of FIRSTFED AMERICA BANCORP, INC. (1)
3.2 Bylaws of FIRSTFED AMERICA BANCORP, INC. (1)
4.0 Stock Certificate of FIRSTFED AMERICA BANCORP, INC. (1)
10.1 FIRSTFED AMERICA, INC. 1997 Stock-based Incentive Plan, as
amended (2)(3)
10.2 FIRSTFED AMERICA, INC. 1998 Stock Option Plan (3)
27 Financial Data Schedule ( filed herewith )
</TABLE>
b) Reports on Form 8-K
None
- --------
(1) Incorporated into this document by reference from the Exhibits to Form S-
1, Registration Statement, filed on September 27, 1996, as amended,
Registration No. 333-12855.
(2) Incorporated into this document by reference from the proxy statement
dated June 20, 1997 and filed with the SEC on June 20, 1997 (SEC No. 1-
12305).
(3) Incorporated into this document by reference from Appendices A (Amendments
to the FIRSTFED AMERICA BANCORP, INC. 1997 Stock-Based Incentive Plan) and
B (FIRSTFED AMERICA, INC. 1998 Stock Option Plan), respectively, of the
proxy statement dated June 15, 1998 and filed with the SEC on June 15,
1998 (SEC No. 1-12305).
17
<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, there unto duly authorized.
Firstfed America Bancorp, Inc.
Registrant
Date: August 16, 1999
/s/ Robert F. Stoico
_____________________________________
President and Chief Executive
Officer and
Chairman of the Board
(Principal Executive Officer)
Date: August 16, 1999
/s/ Edward A. Hjerpe III
_____________________________________
Executive Vice President and
Chief Operating Officer and
Chief Financial Officer
(Principal Accounting and Financial
Officer)
18
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY INFORMATION EXTRACTED FROM THE FORM 10-Q AND IS
QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> JUN-30-1999
<CASH> 28,983
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 332
<INVESTMENTS-HELD-FOR-SALE> 471,692
<INVESTMENTS-CARRYING> 8,286
<INVESTMENTS-MARKET> 8,294
<LOANS> 758,889<F1>
<ALLOWANCE> 12,279
<TOTAL-ASSETS> 1,408,641
<DEPOSITS> 669,446
<SHORT-TERM> 282,696
<LIABILITIES-OTHER> 28,209
<LONG-TERM> 325,046
0
0
<COMMON> 87
<OTHER-SE> 103,157
<TOTAL-LIABILITIES-AND-EQUITY> 1,408,641
<INTEREST-LOAN> 14,784
<INTEREST-INVEST> 6,323
<INTEREST-OTHER> 469
<INTEREST-TOTAL> 21,576
<INTEREST-DEPOSIT> 6,309
<INTEREST-EXPENSE> 14,028
<INTEREST-INCOME-NET> 7,548
<LOAN-LOSSES> 300
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 6,250
<INCOME-PRETAX> 2,424
<INCOME-PRE-EXTRAORDINARY> 2,424
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,702
<EPS-BASIC> .27
<EPS-DILUTED> .27
<YIELD-ACTUAL> 2.35
<LOANS-NON> 2,300
<LOANS-PAST> 0
<LOANS-TROUBLED> 1,456
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 12,016
<CHARGE-OFFS> 40
<RECOVERIES> 2
<ALLOWANCE-CLOSE> 12,279
<ALLOWANCE-DOMESTIC> 12,279
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,449
<FN>
<F1>LOANS HELD TO MATURITY
</FN>
</TABLE>
