<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-QSB
(Mark One)
[X] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
For the period ended: SEPTEMBER 30, 1997
[ ] 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 000-22103
HEMLOCK FEDERAL FINANCIAL CORP.
(Exact Name of Registrant as Specified In Its Charter)
DELAWARE 36-4126192
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
5700 WEST 159TH STREET 60452
(Address of Principal Executive Offices) (Zip Code)
708-687-9400
(Registrant's telephone number, including area code)
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
YES X NO ___
Indicate the number of shares outstanding of each the issuer's classes of common
stock, as of the latest practicable date:
Class Outstanding at November 10, 1997
Common Stock, par value $.01 1,921,293 shares
-1-
<PAGE>
HEMLOCK FEDERAL FINANCIAL CORP.
AND SUBSIDIARY
INDEX
Part I. Financial Information
Item 1. Financial Statements
Condensed Consolidated Statements of Condition as of September 30, 1997
and December 31, 1996..................................................3
Condensed Consolidated Statements of Income for the three months and nine
months ended September 30, 1997 and 1996...............................4
Condensed Consolidated Statements of Cash Flows for the nine
months ended September 30, 1997 and 1996...............................5
Condensed Consolidated Statements of Changes in Stockholders' Equity
for the nine months ended September 30, 1997 and 1996..................6
Notes to the Condensed Consolidated Financial Statements as of
September 30, 1997.....................................................7
Item 2. Management's Discussion and Analysis of the Financial Condition
and Results of Operation...............................................8
Part II. Other Information..................................................13
-2-
<PAGE>
HEMLOCK FEDERAL FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CONDITION
(In thousands, except share data)
September 30, December 31,
1997 1996
---- ----
ASSETS
Cash on hand and due from banks $9,209 $17,410
Securities available-for-sale, at fair value 40,009 42,619
Securities held-to-maturity (fair value: 48,396 29,537
1997 - $50,260, 1996 - $30,322)
Loans Receivable, net 60,155 53,536
Property, plant and equipment, net 2,118 1,043
FHLB Stock at cost 987 901
Accrued interest and other assets 1,031 1,359
-------- --------
Total Assets $161,905 $146,405
-------- --------
-------- --------
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $128,875 $131,243
FHLB advances - 1,500
Advances from borrowers for taxes and insurance 335 681
Acrued interest and other liabilities 1,433 866
-------- --------
Total Liabilities 130,643 134,290
Stockholders' equity
Common stock, $.01 par value: 3,100,000 shares
authorized; 1,921,293 shares outstanding 21 0
Surplus 20,067 0
Unearned ESOP, 155,032 shares (1,551) 0
Retained earnings 11,911 11,508
Net unrealized gain on securities
available-for-sale, net of tax 814 607
-------- --------
Total Stockholders' Equity 31.262 12,115
-------- --------
Total Liabilities and Stockholders' Equity $161,905 $146,405
-------- --------
-------- --------
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<PAGE>
HEMLOCK FEDERAL FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except share data)
<TABLE>
<CAPTION>
Three months ended Nine Months Ended
September 30, September 30,
1997 1996 1997 1996
<S> <C> <C> <C> <C>
Interest and Dividend Income $1,157 $1,068 $3,323 $3,040
Loans 1,508 1,304 4,161 4,098
Investment securities 171 219 730 567
------ ------ ------ ------
Total Interest Income 2,834 2,591 8,214 7,705
Interest expense
Deposits 1,385 1,379 4,145 4,123
FHLB advances 21 38 94 112
------ ------ ------ ------
Total Interest Expense 1,406 1,417 4,239 4,235
Net interest income 1,428 1,174 3,975 3,470
Provision for loan losses 0 75 0 75
------ ------ ------ ------
Net interest income after provision for loan losses 1,428 1,099 3,976 3,395
Non-interest income
Service fees 51 49 156 144
Other income 82 68 212 225
------ ------ ------ ------
Total Non-Interest Income 133 117 368 369
Non-interest expenses
Salaries and employee benefits 483 449 1,344 1,325
Occupancy and equipment expense 180 199 472 514
Computer service fees 52 48 176 153
Foundation contribution 0 0 1,000 0
Other expenses 210 1,162 500 1,617
------ ------ ------ ------
Total Non-Interest Expense 905 1,858 3,492 3,609
------ ------ ------ ------
Income before income fees 658 (642) 851 155
Provision for income taxes 236 (242) 323 47
------ ------ ------ ------
Net income $ 420 $ (400) $ 528 $ 108
------ ------ ------ ------
------ ------ ------ ------
Earnings per share $ 0.22 N/A N/A N/A
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
-4-
<PAGE>
HEMLOCK FEDERAL FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
Nine months ended
Sept. 30, Sept. 30,
1997 1996
---- ----
Cash flows from operating activities
Net income $ 528 $ 108
Adjustments to reconcile net income to net
cash provided by operating activities
Provision for depreciation 89 116
Net amortization of security premium/discounts 211 123
Decrease in deferred loan fees (66) (76)
Loss on sale of securities 2 80
Provision for loan losses 0 76
Change in deferred income taxes 0 (315)
Increase in accrued interest receivable (117) 261
Decrease in other assets 445 (122)
Increase in accrued interest payable and
other liabilities 435 774
ESOP compensation 161 0
-------- --------
Net cash provided by operating activities 1,688 1,025
Cash flows from investing activities
Purchase of securities available-for-sale (12,053) (20,959)
Proceeds from sales of securities available for sale 596 2,920
Principal payments of mortgage-backed
securities and collateralized mortgage obligations 14,538 18,103
Proceeds from maturities and calls of securities 15,100 12,305
Purchase of FHLB stock (86) (52)
Net increase in loans (6,552) (7,889)
Purchases of securities held-to-maturity (34,305) (325)
Purchases of building and equipment, net (1,164) (107)
-------- --------
Net cash used in investing activities (23,926) 3,996
Cash flows from financing activities
Net increase (decrease) in deposits (2,368) (1,582)
Decrease in advance payments by borrowers
for taxes and insurance (346) (364)
Issuance of Common Stock 18,346 0
Repayment of FHLB Advances (1,500) 0
Stock conversion expense 30 0
Dividends Paid (126) 0
-------- --------
Net cash provided by financing activities 14,037 (1,946)
Net increase (decrease) in cash and cash equivalents (8,201) 3,075
Cash and cash equivalents at beginning of period 17,410 13,301
-------- --------
Cash and cash equivalents at end of period $ 9,209 $ 16,376
-------- --------
-------- --------
Supplemental disclosure of cash flow information
Cash paid during period for
Interest $ 2,837 $ 4,239
Income taxes 83 316
-5-
<PAGE>
HEMLOCK FEDERAL FINANCIAL CORP. AND SUBSIDIARY
CONDENSED CONSOLIDATED STATEMENT OF CHANGES
IN STOCKHOLDERS' EQUITY
For Nine Months Ended September 30, 1997 and 1996
(In thousands, except share data)
<TABLE>
<CAPTION>
Net Unrealized
Gain (Loss)
on Securities Total
Available- Unearned
Common Retained for-Sale, Stockholder
Stock Surplus Earnings Net of Tax ESOP Equity
----- ------- -------- --------------- ---- -----------
<S> <C> <C> <C> <C>
Balance at December 31, 1995 $ - $ - $11,346 $ 531 $ - $11,877
Net income for nine months
ended September 30, 1996 - - 108 - - 108
Change in unrealized gain on
securities available-for-sale,
net of tax - - - (12) - (12)
----- ------- -------- --------------- ---- -----------
Balance at September 30, 1996 $ $ $11,454 $ 519 $ - $11,973
----- ------- -------- --------------- ---- -----------
----- ------- -------- --------------- ---- -----------
Balance at December 31, 1996 $ - $ - $11,508 $ 607 $ - $12,115
Issuance of Common Stock 21 19,986 - - (1,661) 18,346
Net income for nine months
ended September 30, 1997 - - 528 - - 528
ESOP shares earned - 51 - - 110 161
Change in unrealized gain on
securities available-for-sale,
net of tax - - - 207 - 207
Conversion Costs - 30 - - - 30
Dividends Paid - - (125) - - (125)
Balance at September 30, 1997 $ 21 $20,067 $11,911 $ 814 $(1,551) $31,262
----- ------- -------- --------------- ---- -----------
----- ------- -------- --------------- ---- -----------
</TABLE>
-6-
<PAGE>
HEMLOCK FEDERAL FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1997
NOTE 1
Hemlock Federal Financial Corp. (Corporation) is a one thrift holding company
which owns 100% of the voting stock of Hemlock Federal Bank for Savings
(Bank), a federally chartered thrift located in Oak Forest, Illinois. The
Corporation was incorporated under Delaware law in December of 1996. In
the opinion of management, the accompanying condensed consolidated financial
statements contain all adjustments (consisting of normally recurring items)
necessary to present fairly the Corporation's consolidated financial position
as of September 30, 1997 and December 31, 1996, and the results of its
consolidated operations, for the three month and nine month periods ended
September 30, 1997 and September 30, 1996, and its consolidated cash flows
and changes in stockholders' equity for the three month period ended
September 30, 1997. The results of operations for the period ended September
30, 1997 are not necessarily indicative of the results to be expected for the
full year.
The financial statements and notes are presented as permitted by Form 10-Q
and do not contain certain information included in the Corporation's annual
financial statements and notes thereto.
NOTE 2
On March 31, 1997, Hemlock Federal Bank for Savings (Bank) converted from a
federally chartered mutual thrift to a federally chartered stock thrift.
The Bank issued all of its common stock at $10.00 per share to the ESOP,
certain depositors of the Bank, and certain members of the general public,
all pursuant to a plan of conversion.
The ESOP purchased 166,106 shares of common stock representing 8% of the
total issued shares. The ESOP borrowed $1,661,060 from the Corporation to
purchase the stock using the stock as collateral for the loan. The loan is
to be paid principally from the Bank's contributions to the ESOP over a
period of up to 10 years.
NOTE 3
The Bank had the following contractual amounts of financial instruments
outstanding at September 30, 1997 (in 000's):
Commitments to originate loans $ 1,889
Standby letters of credit 0
NOTE 4
Earnings per share is calculated by dividing the net earnings by the weighted
average number of common shares outstanding, net of unearned ESOP shares.
In1997, earnings per share is computed using net earnings from the date that
the Bank converted to stock ownership.
-7-
<PAGE>
HEMLOCK FEDERAL FINANCIAL CORP. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS
September 30, 1997
The following discussion focuses on the consolidated financial condition
of Hemlock Federal Financial Corp. and Subsidiary at September 30, 1997 and
the consolidated results of operations for the three month and nine month
periods ended September 30, 1997, compared to the same period in 1996. For
the purposes of this Form 10-QSB, the results of operations in 1996 presented
herein are for Hemlock Federal Bank for Savings(Bank) as the predecessor
entity to the Corporation. The purpose of this discussion is to provide a
better understanding of the condensed consolidated financial statements and
the operations of the Corporation and its subsidiary, the Bank. This
discussion should be read in conjunction with the interim condensed
consolidated financial statements and notes thereto included herein.
RESULTS OF OPERATIONS
Consolidated net income of the Corporation for the third quarter of 1997
totaled $420,000, compared to a net loss of $400,000 for the third quarter of
1996, an increase of $820,000. Consolidated net income for the Corporation
was $528,000 for the nine month period ending September 30, 1997, as compared
to $108,000 for same period one year ago The $820,000 increase in net income
for the third quarter of 1997 and the increase of $420,000 for the nine month
period ending September 30, 1997, were primarily attributable to the
$529,000 after tax one time payment to recapitalize the Savings Association
Insurance Fund, which occurred in September, 1996. In addition, the
investment of net proceeds from the initial public offering into interest
earning assets resulted in an increase in net interest income. These items
were partially offset by the $650,000 after tax accrual to establish the
Hemlock Federal Charitable Foundation, which took place in March, 1997.
NET INTEREST INCOME
Net interest income after provisions for loan losses increased by $329,000
and $580,000, to $1.43 million and $3.98 million for the three and nine month
periods ending September 30, 1997 respectively, as compared to the same
periods in 1996. This increase is due primarily to an increase in securities
and loans as the net proceeds from the initial public offering were invested
in interest earning assets. The increase is also attributable to an increase
in yield on securities, as a result of upward adjustments in rates on
adjustable rate mortgage-backed securities.
PROVISION FOR LOAN LOSSES
The Bank's allowance for loan losses was $745,000 as of September 30, 1997.
The allowance was equal to 1.24% of total loans as of September 30, 1997.
The bank had no non-performing assets as of September 30, 1997. Management
believes the existing level of reserves is adequate, given current economic
conditions as well as loss experience and credit demand. No additional
-8-
<PAGE>
HEMLOCK FEDERAL FINANCIAL CORP. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS
September 30, 1997
provisions were made for the nine month period ending September 30, 1997.
Additional provisions totaling $75,000 were made during the nine month period
ended September 30, 1996.
CHANGES IN NON-INTEREST INCOME AND NON-INTEREST EXPENSE
Non-interest income increased $16,000 to $133,000 for the three month period
ended September 30, 1997. The increase is primarily attributable to
additional fee income on ATM transactions. Non-interest income decreased
$1,000 to $368,000 for the nine month period ended September 30, 1996.
Non-interest expense decreased $953,000 for the period ended September 30,
1997, to $905,000 from $1.86 million for the period ended September 30, 1996.
The $953,000 decrease is primarily attributable to the payment of $861,000 to
recapitalize the Savings Association Insurance Fund in September, 1996.
Non-interest expense for the nine month period ending September 30, 1997 was
$3.49 million, as compared to $3.61 million for the same period one year ago.
A $1.00 million accrual to fund the Hemlock Federal Charitable Foundation
took place on March 31, 1997, and the payment of $861,000 to recapitalize the
Savings Association Insurance Fund occurred on September 30, 1996. Excluding
the impact of the foundation accrual and the one time payment to the Savings
Association Insurance Fund, non interest expense for the nine month period
ending September 30, 1997 was $2.49 million, as compared to $2.75 million for
the same period one year ago. The $260,000 difference was primarily
attributable to the reduction in deposit insurance cost during the nine
months ended September 30, 1997. In addition, an $81,000 loss on the sale
of securities occurred in September, 1996.
PROVISION FOR INCOME TAXES
The Bank's federal and state income tax expense increased from ($242,000) for
the three month period ended September 30, 1996 to $236,000 for the three
month period ended September 30, 1997. The $478,000 increase in income tax
was the result of the increase in net income before income taxes.
The federal and state income tax expense for the nine month period ending
September 30, 1997 was $323,000, as compared to $47,000 for the same period
one year ago. The $276,000 increase in income tax was the result of the
decrease in net income before income taxes.
-9-
<PAGE>
HEMLOCK FEDERAL FINANCIAL CORP. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS
September 30, 1997
FINANCIAL CONDITION
Consolidated total assets aggregated $161.91 million and $146.41 million at
September 30, 1997 and December 31, 1996, respectively. The increase in
total assets is primarily attributable to the proceeds raised in the
corporation's initial public offering. The net proceeds were invested in
securities held-to-maturity and mortgage loans as of September 30, 1997,
resulting in an increase in securities held-to-maturity of $18.86 million and
an increase in loans receivable of $6.62 million. This was partially offset
by a decrease in cash on hand and due from banks of $8.20 million.
Total liabilities at September 30, 1997 were $130.64 million compared to
$134.29 million at December 31, 1996. Total deposits decreased by $2.36
million, from $131.24 million at December 31, 1996 to $128.88 million at
September 30, 1997, due principally to the purchase of common stock in the
initial public offering by Bank depositors.
Shareholders' equity at September 30, 1997 was $31.26 million compared to
$12.12 million at December 31, 1996, an increase of $19.14 million, due
primarily to net proceeds of the initial public offering that was completed
on March 31, 1997.
CAPITAL RESOURCES AND COMMITMENTS
The Bank is subject to three capital to asset requirements in accordance with
bank regulations. The following table summarizes the Bank's regulatory
capital requirements versus actual capital as of September 30, 1997 and
December 31, 1996.
Regulatory Actual
Requirement 9/30/97 12/31/96
----------- ------- --------
Tangible capital 1.5% 13.16% 7.87%
Core leverage capital 3.0% 13.16% 7.87%
Risk-based capital 8.0% 38.90% 24.58%
The bank has purchased land in Lemont, Illinois, a southwest suburb of
Chicago, for the purpose of establishing a full service branch facility. The
purchase price of the land was $975,000. Building and equipment investment
is estimated at $1.2 million. The branch is expected to be completed and
open for business during the second quarter of 1998.
-10-
<PAGE>
HEMLOCK FEDERAL FINANCIAL CORP. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS
September 30, 1997
LIQUIDITY
Liquidity measures the ability of the Corporation to meet maturing
obligations and its existing commitments, to withstand fluctuations in
deposit levels, to fund operations, and to provide for customers' credit
needs. The liquidity of the Corporation principally depends on cash flows
from operating activities, investment in and maturity of assets, changes in
balances of deposits and borrowings, and its ability to borrow funds in the
money or capital markets.
The Bank's regulatory liquidity ratio at September 30, 1997 was 22.22%, a
portion of which includes interest-earning assets with terms of 5 years or
less. This is primarily as a result of the reinvestment of the proceeds
raised in the initial public offering into short-term securities. Loan
commitments outstanding totaled $1.89 million at September 30, 1997.
IMPACT OF NEW ACCOUNTING STANDARDS
In June 1996, the FASB issued Statement of Financial Accounting Standards No.
125 ("SFAS No. 125"), "Accounting for Transfers and Extinguishments of
Liabilities." SFAS No. 125 provides accounting and reporting standard for
transfers and servicing of financial assets and extinguishments of
liabilities. SFAS No. 125 requires a consistent application of a
financial-components approach that focuses on control. Under that approach,
after a transfer of financial assets, an entity recognizes the financial and
servicing assets it controls and the liabilities it has incurred, and
derecognizes liabilities when extinguished. SFAS No. 125 also supersedes
SFAS No. 122 and requires that servicing assets and liabilities be
subsequently measured by amortization in proportion to and over the period of
estimated net servicing income or loss and requires assessment for asset
impairment or increases obligation based on their fair values.
SFAS No. 125 applies to transfers and extinguishments occurring after
December 31, 1996, and early or retroactive application is not permitted.
Because the volume and variety of certain transactions will make it difficult
for some entities to comply, some provision have been delayed by SFAS No.
127. The adoption of SFAS No. 125 did not have a material impact on the
results of operations or financial condition of the Bank.
On March 3, 1997, the Financial Accounting Standards Board (FASB) issued
Statement 128, "Earnings Per Share", which is effective for financial
statements beginning with year end 1997. Statement 128 simplifies the
calculation of earnings per share (EPS) by replacing primary EPS with basic
EPS. It also requires dual presentation of basic EPS and diluted EPS for
entities with complex capital structures. Basis EPS include no dilution and
is computed by dividing income available to common shareholders by the
weighted-average common shares outstanding for the period. Diluted EPS
reflects the potential dilution of securities that could share in earnings,
such as stock options, warrants or other common stock equivalents. The
Company expects Statement
-11-
<PAGE>
HEMLOCK FEDERAL FINANCIAL CORP. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF THE FINANCIAL CONDITION AND RESULTS OF OPERATIONS
September 30, 1997
128 to have little impact on its earnings per share calculations in future
years, other than changing terminology from primary EPS to basic EPS. All
prior period EPS data will be restated to conform with the new presentation.
SAFE HARBOR STATEMENT
This report contains 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 identifiable by use of the words "believe", "expect",
"intend", "anticipate", "estimate", "project" or similar expressions. The
Company's ability to predict results or the actual effect of future plans or
strategies is inherently uncertain. Factors which could have a material
adverse affect on the operations and future prospects of the Company and 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, policies and guidelines. These risks and
uncertainties should be considered in evaluating forward-looking statements
and undue reliance should not be placed on such statements. Further
information concerning the Company and its business, including additional
factors that could materially affect the Company's financial results, is
included in the Company's filings with the Securities and Exchange Commission.
-12-
<PAGE>
HEMLOCK FEDERAL FINANCIAL CORP. AND SUBSIDIARY
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 a special meeting of stockholders on
October 22, 1997. At the meeting, proposals to (i) ratify the Company's 1997
Stock Option and Incentive Plan, and (ii) ratify the Company's 1997
Recognition and Retention Plan were approved. The votes cast for and against
these proposals, and the number of abstentions and broker non-votes with
respect to each of these proposals, were as follows:
Approval of 1997 Employee Stock Option and Incentive Plan
---------------------------------------------------------
For Against Abstentions Broker Non-Votes
1,174,781 245,996 10,348 0
Approval of 1997 Recognition and Retention Plan
-----------------------------------------------
For Against Abstentions Broker Non-Votes
1,099,533 316,959 14,633 0
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K.
a. Exhibits - None
Reports on Form 8-K - none
SIGNATURES
-13-
<PAGE>
HEMLOCK FEDERAL FINANCIAL CORP. AND SUBSIDIARY
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.
HEMLOCK FEDERAL FINANCIAL CORP.
(Registrant)
/s/ Maureen G. Partynski
------------------------------------
Maureen G. Partynski
Chief Executive Officer
November __, 1997
/s/ Michael R. Stevens
------------------------------------
Michael R. Stevens
President
November 10, 1997
-14-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
STATEMENTS OF CONDITION AND INCOME OF HEMLOCK FEDERAL FINANCIAL CORPORATION AS
OF SEPTEMBER 30, 1997, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JUL-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 9,209
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 40,009
<INVESTMENTS-CARRYING> 48,396
<INVESTMENTS-MARKET> 50,260
<LOANS> 60,155
<ALLOWANCE> 745
<TOTAL-ASSETS> 161,905
<DEPOSITS> 128,875
<SHORT-TERM> 0
<LIABILITIES-OTHER> 1,433
<LONG-TERM> 0
0
0
<COMMON> 21
<OTHER-SE> 31,241
<TOTAL-LIABILITIES-AND-EQUITY> 161,905
<INTEREST-LOAN> 3,323
<INTEREST-INVEST> 4,161
<INTEREST-OTHER> 730
<INTEREST-TOTAL> 8,214
<INTEREST-DEPOSIT> 4,145
<INTEREST-EXPENSE> 4,239
<INTEREST-INCOME-NET> 3,775
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 3,492
<INCOME-PRETAX> 851
<INCOME-PRE-EXTRAORDINARY> 851
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 528
<EPS-PRIMARY> .46
<EPS-DILUTED> .46
<YIELD-ACTUAL> 7.19
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 595
<ALLOWANCE-OPEN> 745
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 745
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 745
</TABLE>
