FORM 10-QSB
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ]
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
[ ]
TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from __________ to ____________.
Commission File Number 0-22223
PEOPLES-SIDNEY FINANCIAL CORPORATION
------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 31-1499862
-------- ----------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
101 E. Court Street, Sidney, Ohio 45365
---------------------------------------
(Address of principal executive offices)
(937) 492-6129
--------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 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 November 9, 1999, the latest practicable date, 1,664,622 shares of the
issuer's common shares, $.01 par value, were issued and outstanding.
Transitional Small Business Disclosure Format (Check One):
Yes [ ] No [ X ]
<PAGE>
PEOPLES-SIDNEY FINANCIAL CORPORATION
INDEX
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements (Unaudited)
Consolidated Balance Sheets
Consolidated Statements of Income
Consolidated Statements of Comprehensive Income
Condensed Consolidated Statements of Changes in Shareholders'
Equity
Consolidated Statements of Cash Flows
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis
Part II - Other Information
Item 1. Legal Proceedings
Item 2. Changes in Securities and Use of Proceeds
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
PEOPLES-SIDNEY FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------
Item 1. Financial Statements
September 30, June 30,
1999 1999
---- ----
<S> <C> <C>
ASSETS
Cash and due from banks $ 897,276 $ 1,298,357
Interest-bearing deposits in other financial institutions 535,119 634,621
Overnight deposits 1,700,000 --
--------------- ----------------
Total cash and cash equivalents 3,132,395 1,932,978
Time deposits in other financial institutions 1,400,000 400,000
Securities available for sale 8,780,850 7,858,111
Federal Home Loan Bank stock 924,200 907,700
Loans receivable, net 105,785,115 102,802,845
Accrued interest receivable 813,917 759,913
Premises and equipment, net 1,964,034 1,985,608
Other assets 172,061 235,104
--------------- ----------------
Total assets $ 122,972,572 $ 116,882,259
=============== ================
LIABILITIES
Deposits $ 88,206,983 $ 84,310,492
Borrowed funds 17,000,000 14,800,000
Accrued interest payable and other liabilities 320,738 409,550
--------------- ----------------
Total liabilities 105,527,721 99,520,042
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 500,000 shares
authorized, none issued and outstanding
Common stock, $.01 par value, 3,500,000 shares
authorized, 1,785,375 shares issued 17,854 17,854
Additional paid-in capital 10,776,131 10,779,941
Retained earnings 10,666,836 10,643,040
Treasury stock, 120,753 shares at cost (1,766,399) (1,766,399)
Unearned employee stock ownership plan shares (1,477,078) (1,520,139)
Unearned management recognition plan shares (699,034) (746,692)
Accumulated other comprehensive income (73,459) (45,388)
--------------- ----------------
Total shareholders' equity 17,444,851 17,362,217
--------------- ----------------
Total liabilities and shareholders' equity $ 122,972,572 $ 116,882,259
=============== ================
- - -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
PEOPLES-SIDNEY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------
Three Months Ended
September 30,
-------------
1999 1998
---- ----
<S> <C> <C>
Interest income
Loans, including fees $ 2,007,976 $ 1,872,303
Securities 130,145 64,033
Interest-bearing demand, time and overnight deposits 40,860 48,727
Dividends on Federal Home Loan Bank stock 16,587 15,469
-------------- ---------------
Total interest income 2,195,568 2,000,532
Interest expense
Deposits 1,011,861 977,941
Borrowed funds 250,789 108,314
-------------- ---------------
Total interest expense 1,262,650 1,086,255
-------------- ---------------
Net interest income 932,918 914,277
Provision for loan losses 17,301 36,780
-------------- ---------------
Net interest income after provision for loan losses 915,617 877,497
Noninterest income
Service fees and other charges 22,733 14,291
Noninterest expense
Compensation and benefits 364,425 383,034
Director fees 30,000 30,000
Occupancy and equipment 77,707 47,302
Computer processing expense 47,479 42,882
FDIC deposit insurance premiums 12,203 11,910
State franchise taxes 75,323 68,356
Professional fees 29,477 33,371
Other 77,669 91,620
-------------- ---------------
Total noninterest expense 714,283 708,475
-------------- ---------------
Income before income taxes 224,067 183,313
Income tax expense 92,816 66,137
-------------- ---------------
Net income $ 131,251 $ 117,176
============== ===============
Earnings per common share - basic $ 0.09 $ 0.07
============== ==============
Earnings per common share - diluted $ 0.09 $ 0.07
============== ==============
- - -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PEOPLES-SIDNEY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------
Three Months Ended
September 30,
-------------
1999 1998
---- ----
<S> <C> <C>
Net income $ 131,251 $ 117,176
Other comprehensive income
Unrealized holding gain (loss) on available for
sale securities arising during the period (42,531) 12,843
Tax effect 14,460 (4,366)
-------------- ---------------
Other comprehensive income (28,071) 8,477
-------------- ---------------
Comprehensive income $ 103,180 $ 125,653
============== ===============
- - -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PEOPLES-SIDNEY FINANCIAL CORPORATION
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN
SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------
Three Months
Ended September 30,
-------------------
1999 1998
---- ----
<S> <C> <C>
Balance, beginning of period $ 17,362,217 $ 19,626,016
Net income for period 131,251 117,176
Cash dividends, $.07 per share in 1999 and 1998 (107,455) (114,280)
Purchase of 30,000 shares of treasury stock in 1998, at cost -- (578,750)
Commitment to release 2,856 management recognition plan shares 47,658 --
Commitment to release 3,671 and 3,812 employee stock ownership
plan shares in 1999 and 1998, at fair value 39,251 77,703
Change in fair value on securities available for sale, net of tax (28,071) 8,477
--------------- ----------------
Balance, end of period $ 17,444,851 $ 19,136,342
=============== ================
- - -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PEOPLES-SIDNEY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
- - -----------------------------------------------------------------------------------------------------------------------
Three Months Ended
September 30,
1999 1998
Cash flows from operating activities
<S> <C> <C>
Net income $ 131,251 $ 117,176
Adjustments to reconcile net income to net cash from
operating activities
Depreciation 38,204 13,580
Provision for loan losses 17,301 36,780
FHLB stock dividends (16,500) (15,400)
Compensation expense for ESOP shares 39,251 77,703
Compensation expense for MRP shares 47,658 --
Change in:
Accrued interest receivable and other assets 8,447 38,310
Accrued expense and other liabilities (74,351) 27,076
Deferred loan fees 8,414 7,716
-------------- ---------------
Net cash from operating activities 199,675 302,941
Cash flows from investing activities
Purchases of securities available for sale (1,000,000) --
Maturities of securities available for sale -- 500,000
Principal repayments on mortgage-backed securities 35,321 --
Purchases of time deposits in other financial institutions (1,000,000) --
Net increase in loans (3,007,985) (2,114,173)
Premises and equipment expenditures (16,630) (592,354)
-------------- ---------------
Net cash from investing activities (4,989,294) (2,206,527)
Cash flows from financing activities
Net change in deposits 3,896,491 633,236
Net change in short-term borrowings (2,800,000) 1,000,000
Proceeds form long-term borrowings 5,000,000 --
Cash dividends paid (107,455) (114,280)
Purchase of treasury stock -- (578,750)
-------------- ---------------
Net cash from financing activities 5,989,036 940,206
-------------- ---------------
Net change in cash and cash equivalents 1,199,417 (963,380)
Cash and cash equivalents at beginning of period 1,932,978 4,947,253
-------------- ---------------
Cash and cash equivalents at end of period $ 3,132,395 $ 3,983,873
============== ===============
Supplemental disclosures of cash flow information
Cash paid during the period for
Interest $ 1,260,290 $ 982,737
Income taxes 65,000 --
- - -----------------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to consolidated financial statements
<PAGE>
PEOPLES-SIDNEY FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- - --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements include accounts of
Peoples-Sidney Financial Corporation ("Peoples") and its wholly-owned
subsidiary, Peoples Federal Savings and Loan Association ("Association"), a
federal stock savings and loan association, together referred to as the
Corporation. All significant intercompany transactions and balances have been
eliminated.
These interim consolidated financial statements are prepared without audit and
reflect all adjustments which, in the opinion of management, are necessary to
present fairly the financial position of the Corporation at September 30, 1999
and its results of operations and cash flows for the periods presented. All such
adjustments are normal and recurring in nature. The accompanying consolidated
financial statements have been prepared in accordance with the instructions of
Form 10-QSB and, therefore, do not purport to contain all the necessary
financial disclosures required by generally accepted accounting principles that
might otherwise be necessary in the circumstances, and should be read in
conjunction with the consolidated financial statements and notes thereto of the
Corporation for the fiscal year ended June 30, 1999, included in its 1999 Annual
Report. Reference is made to the accounting policies of the Corporation
described in the notes to consolidated financial statements contained in its
1999 Annual Report. The Corporation has consistently followed these policies in
preparing this Form 10-QSB.
The Corporation provides financial services through its main office in Sidney,
Ohio, and branch offices in Anna and Jackson Center, Ohio. Its primary deposit
products are checking, savings and term certificate accounts, and its primary
lending products are residential mortgage, commercial and installment loans.
Substantially all loans are secured by specific items of collateral including
business assets, consumer assets and real estate. Commercial loans are expected
to be repaid from cash flow from operations of businesses. Real estate loans are
secured by both residential and commercial real estate. Substantially all
revenues and services are derived from financial institution products and
services in Shelby County and contiguous counties.
To prepare financial statements in conformity with generally accepted accounting
principles, management makes estimates and assumptions based on available
information. These estimates and assumptions affect the amounts reported in the
financial statements and disclosures provided, and future results could differ.
The allowance for loan losses, fair values of financial instruments and status
of contingencies are particularly subject to change.
<PAGE>
Income tax expense is based on the effective tax rate expected to be applicable
for the entire year. Income tax expense is the total of the current-year income
tax due or refundable and the change in deferred tax assets and liabilities.
Deferred tax assets and liabilities are the expected future tax consequences of
temporary differences between the carrying amounts and tax basis of assets and
liabilities, computed using enacted tax rates. A valuation allowance, if needed,
reduces deferred tax assets to the amount expected to be realized.
Basic earnings per share ("EPS") is based on net income divided by the weighted
average number of shares outstanding during the period. Unallocated ESOP shares
are not considered outstanding for this calculation. Management recognition plan
("MRP") shares are considered outstanding as they become vested. Diluted EPS
shows the dilutive effect of MRP shares and the additional common shares
issuable under stock options.
<PAGE>
PEOPLES-SIDNEY FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
- - --------------------------------------------------------------------------------
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
A reconciliation of the numerators and denominators used in the computation of
the basic earnings per common share and diluted earnings per common share is
presented below:
<TABLE>
<CAPTION>
Three Months Ended
September 30,
-------------
1999 1998
---- ----
<S> <C> <C>
Basic Earnings Per Common Share
Numerator
Net income $ 131,251 $ 117,176
=========== ===========
Denominator
Weighted average common shares outstanding 1,664,622 1,769,822
Less: Average unallocated ESOP shares (127,716) (142,893)
Less: Average unearned MRP shares (43,319) --
----------- -----------
Weighted average common shares outstanding for
basic earnings per common share 1,493,587 1,626,929
=========== ===========
Basic earnings per common share $ 0.09 $ 0.07
=========== ===========
Diluted Earnings Per Common Share
Numerator
Net income $ 131,251 $ 117,176
=========== ===========
Denominator
Weighted average common shares outstanding for
basic earnings per common share 1,493,587 1,626,929
Add: Dilutive effects of average unearned MRP shares -- --
Add: Dilutive effects of assumed exercises of stock options -- --
----------- -----------
Weighted average common shares and dilutive
potential common shares outstanding 1,493,587 1,626,929
=========== ===========
Diluted earnings per common share $ 0.09 $ 0.07
=========== ===========
</TABLE>
Unearned MRP shares and stock options granted did not have a dilutive effect on
EPS for the three months ended September 30, 1999 as the fair value of the MRP
shares on the date of grant and the exercise price of outstanding options was
greater than the average market price for the period. For the three months ended
September 30, 1998, stock options granted did not have a dilutive effect on EPS
as the exercise price of outstanding options was greater than the average market
price for the period. Unearned MRP shares did not have a dilutive effect on EPS,
as no shares had been purchased by the MRP plan as of September 30, 1998.
<PAGE>
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Continued)
Statement of Financial Accounting Standards (SFAS) No. 133, "Accounting for
Derivative Instruments and Hedging Activities" requires companies to record
derivatives on the balance sheet as assets or liabilities, measured at fair
value. Gains or losses resulting from changes in the values of those derivatives
would be accounted for depending on the use of the derivative and whether it
qualifies for hedge accounting. The key criterion for hedge accounting is that
the hedging relationship must be highly effective in achieving offsetting
changes in fair value or cash flows. SFAS 133 does not allow hedging of a
security which is classified as held to maturity. Accordingly, upon adoption of
SFAS 133, companies may reclassify any security from held to maturity to
available for sale if they wish to be able to hedge the security in the future.
SFAS 133, as amended by SFAS 137, is effective for fiscal years beginning after
June 15, 2000 with early adoption encouraged for any fiscal quarter beginning
July 1, 1998 or later, with no retroactive application. Management does not
expect the adoption SFAS 133 to have a significant impact on the Corporation's
financial statements.
NOTE 2 - SECURITIES
<TABLE>
<CAPTION>
Securities were as follows:
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
---- ----- ------ -----
<S> <C> <C> <C> <C>
September 30, 1999
- - ------------------
Securities available for sale
U.S. Government agencies $ 3,998,379 $ -- $ (56,358) $ 3,942,021
Mortgage-backed securities 4,893,772 -- (54,943) 4,838,829
--------------- ---------- ----------- --------------
Total $ 8,892,151 $ -- $ (111,301) $ 8,780,850
=============== ========== =========== ==============
June 30, 1999
- - -------------
Securities available for sale
U.S. Government agencies $ 2,998,229 $ -- $ (41,509) $ 2,956,720
Mortgage-backed securities 4,928,652 -- (27,261) 4,901,391
--------------- ---------- ----------- --------------
Total $ 7,926,881 $ -- $ (68,770) $ 7,858,111
=============== ========== =========== ==============
</TABLE>
<PAGE>
NOTE 2 - SECURITIES (Continued)
Contractual maturities of securities at September 30, 1999 were as follows.
Actual maturities could differ from contractual maturities because borrowers may
have the right to call or prepay obligations with or without call or prepayment
penalties. Securities not due at a single maturity, primarily mortgage-backed
securities, are shown separately.
<TABLE>
<CAPTION>
Estimated
Amortized Fair
Cost Value
---- -----
<S> <C> <C>
Securities available for sale
Due after one year through five years $ 3,998,379 $ 3,942,021
Mortgage-backed securities 4,893,772 4,838,829
-------------- ---------------
$ 8,892,151 $ 8,780,850
============== ===============
</TABLE>
No securities were sold during the three month period ended September 30, 1999
and 1998. No securities were pledged as collateral at September 30, 1999 or June
30, 1999.
NOTE 3 - LOANS RECEIVABLE
<TABLE>
<CAPTION>
Loans receivable were as follows:
September 30, June 30,
1999 1999
---- ----
<S> <C> <C> <C>
Mortgage loans:
1-4 family residential $ 86,085,474 $ 84,165,483
Multi-family residential 1,345,031 1,358,906
Commercial real estate 9,241,428 9,407,998
Real estate construction and
development 7,173,450 5,930,241
Land 844,812 866,988
Total mortgage loans 104,690,195 101,729,616
Consumer and other loans 4,457,154 4,131,469
--------------- ----------------
Total loans receivable 109,147,349 105,861,085
Less:
Allowance for loan losses (546,199) (528,898)
Loans in process (2,589,648) (2,311,369)
Deferred loan fees (226,387) (217,973)
--------------- ----------------
$ 105,785,115 $ 102,802,845
=============== ================
</TABLE>
<PAGE>
NOTE 3 - LOANS RECEIVABLE (Continued)
<TABLE>
<CAPTION>
Activity in the allowance for loan losses is summarized as follows:
Three Months Ended
September 30,
-------------
1999 1998
---- ----
<S> <C> <C>
Balance at beginning of period $ 528,898 $ 425,642
Provision for losses 17,301 36,780
Charge-offs -- (16,277)
Recoveries -- --
------------ ------------
Balance at end of period $ 546,199 $ 446,145
============ ============
</TABLE>
As of and for the three months ended September 30, 1999 and 1998, loans
considered impaired within the scope of SFAS No. 114 were not material.
NOTE 4 - BORROWED FUNDS
At September 30, 1999 and June 30, 1999, the Association had a cash management
line of credit enabling it to borrow up to $5,360,000 from the Federal Home Loan
Bank of Cincinnati ("FHLB"). All cash management advances have an original
maturity of 90 days. The line of credit must be renewed on an annual basis. No
borrowings were outstanding on this line of credit at September 30, 1999.
Borrowings outstanding on this line of credit at June 30, 1999 were $2,800,000
with interest rates of 4.90% and 6.02%.
As a member of the FHLB system, the Association has the ability to obtain
borrowings up to a maximum total of $18,484,000 at September 30, 1999, including
the cash management line-of-credit. Advances from the Federal Home Loan Bank at
September 30, 1999 and June 30, 1999 were as follows:
<TABLE>
<CAPTION>
September 30, June 30,
1999 1999
---- ----
<S> <C> <C>
4.90% FHLB cash management advance,
due September 17, 1999 $ -- $ 2,300,000
4.90% FHLB cash management advance,
due September 22, 1999 -- 300,000
6.02% FHLB cash management advance,
due September 28, 1999 -- 200,000
6.13% FHLB advance, due June 25, 2008 7,000,000 7,000,000
6.00% FHLB advance, due June 11, 2009 5,000,000 5,000,000
5.84% FHLB advance, due April 4, 2000 5,000,000 --
--------------- ----------------
$ 17,000,000 $ 14,800,000
=============== ================
</TABLE>
Advances under the borrowing agreements are collateralized by a blanket pledge
of the Association's residential mortgage loan portfolio and its FHLB stock.
<PAGE>
NOTE 5 - COMMITMENTS, CONTINGENCIES AND FINANCIAL INSTRUMENTS WITH
OFF-BALANCE-SHEET RISK
Various contingent liabilities are not reflected in the financial statements,
including claims and legal actions arising in the ordinary course of business.
In the opinion of management, after consultation with legal counsel, the
ultimate disposition of these matters is not expected to have a material effect
on financial condition or results of operations.
Some financial instruments are used in the normal course of business to meet
financing needs of customers and reduce exposure to interest rate changes. These
financial instruments include commitments to extend credit, standby letters of
credit and financial guarantees. These involve, to varying degrees, credit and
interest rate risk in excess of amounts reported in the financial statements.
Exposure to credit loss if the other party does not perform is represented by
the contractual amount for commitments to extend credit, standby letters of
credit and financial guarantees written. The same credit policies are used for
commitments and conditional obligations as are used for loans. The amount of
collateral obtained, if deemed necessary, on extension of credit is based on
management's credit evaluation and generally consists of residential or
commercial real estate.
Commitments to extend credit are agreements to lend to a customer as long as
there is no violation of any condition established in the commitment.
Commitments generally have fixed expiration dates or other termination clauses
and may require payment of a fee. Since many of the commitments are expected to
expire without being used, the total commitments do not necessarily represent
future cash requirements.
As of September 30, 1999 and June 30, 1999, the Corporation had commitments to
make fixed-rate commercial and residential real estate mortgage loans at current
market rates approximating $454,000 and $375,000, and variable-rate commercial
and residential real estate mortgage loans at current market rates approximating
$773,000 and $394,000. Loan commitments are generally for 30 days. The interest
rates on fixed-rate commitments ranged from 7.75% to 8.25% at September 30, 1999
and ranged from 7.00% to 7.75% at June 30, 1999. The interest rates on
variable-rate commitments ranged from 7.00% to 8.00% at September 30, 1999 and
7.00% to 7.75% at June 30, 1999.
The Corporation also had unused lines of credit approximating $1,612,000 and
$1,434,000 at September 30, 1999 and June 30, 1999.
At September 30, 1999 and June 30, 1999, the Association was required to have
$485,000 and $532,000 on deposit with its correspondent banks as a compensating
clearing requirement.
The Association entered into employment agreements with certain officers of the
Corporation. The agreements provide for a term of one to three years and a
salary and performance review by the Board of Directors not less often than
annually, as well as inclusion of the employee in any formally established
employee benefit, bonus, pension and profit-sharing plans for which management
personnel are eligible. The agreements provide for extensions for a period of
one year on each annual anniversary date, subject to review and approval of the
extension by disinterested members of the Board of Directors of the Association.
The employment agreements also provide for vacation and sick leave.
- - --------------------------------------------------------------------------------
<PAGE>
NOTE 6 - EMPLOYEE STOCK OWNERSHIP PLAN
The Corporation offers an employee stock ownership plan ("ESOP") for the benefit
of substantially all employees of the Corporation. During July 1997, the ESOP
received a favorable determination letter from the Internal Revenue Service on
the qualified status of the ESOP under applicable provisions of the Internal
Revenue Code.
The ESOP borrowed funds from Peoples in order to acquire common shares of
Peoples. The loan is secured by the shares purchased with the loan proceeds and
will be repaid by the ESOP with funds from the Association's discretionary
contributions to the ESOP and earnings on ESOP assets. All dividends on
unallocated shares received by the ESOP are used to pay debt service. When loan
payments are made, ESOP shares are allocated to participants based on relative
compensation.
During fiscal 1998, the Corporation declared and paid a $4.00 per share
distribution of which $3.99 was a tax-free return of capital distribution. The
ESOP received approximately $539,000 on 134,262 unallocated shares from the
return of capital distribution. The ESOP used the proceeds to purchase 26,000
additional shares. The additional shares are held in suspense and allocated to
participants in a manner similar to the shares originally in the ESOP.
Shares pledged as collateral are reported as unearned ESOP shares in the
Consolidated Balance Sheets. As shares are released from collateral, the
Corporation reports compensation expense equal to the current market price of
the shares and the shares become outstanding for earnings-per-share
computations. Dividends on allocated ESOP shares are recorded as a reduction of
retained earnings; dividends on unallocated ESOP shares are recorded as a
reduction of debt and accrued interest. ESOP compensation expense was $39,251
and $77,703 for the three months ended September 30, 1999 and 1998.
<TABLE>
<CAPTION>
ESOP shares as of September 30, 1999 and June 30, 1999 were as follows:
September 30, June 30,
1999 1999
<S> <C> <C>
Allocated shares 39,279 39,279
Shares committed to be released for allocation 3,671 --
Unreleased shares 125,880 129,551
-------------- ---------------
Total ESOP shares 168,830 168,830
============== ===============
Fair value of unreleased shares $ 1,321,740 $ 1,295,510
============== ===============
</TABLE>
<PAGE>
NOTE 7 - STOCK OPTION AND INCENTIVE PLAN
The Stock Option and Incentive Plan was approved by the shareholders of the
Corporation on May 22, 1998. The Board of Directors has granted options to
purchase shares of common stock at an exercise price ranging from $16.01 to
$18.75 to certain employees, officers and directors of the Corporation. The
exercise price for options granted prior to June 10, 1998, were reduced by the
$3.99 return of capital distribution. One-fifth of the options awarded become
first exercisable on each of the first five anniversaries of the date of grant.
The option period expires 10 years from the date of grant. 141,824 options were
outstanding at September 30, 1999 and June 30, 1999. 28,365 options were
exercisable at September 30, 1999 and June 30, 1999. In addition, 36,714 options
to purchase common stock are reserved for future grants at September 30, 1999
and June 30, 1999.
NOTE 8 - MANAGEMENT RECOGNITION PLAN
A Management Recognition Plan ("MRP") was adopted by the Board of Directors and
approved by the shareholders of the Corporation on May 22, 1998 to purchase
71,415 common shares, which is equal to 4% of the common shares sold in
connection with the conversion. The MRP will be used as a means of providing
directors and certain key employees of the Corporation with an ownership
interest in the Corporation in a manner designed to compensate such directors
and key employees for services to the Corporation.
In conjunction with the adoption of the MRP on May 22, 1998, the Board of
Directors awarded 57,128 shares to certain directors, officers and employees of
the Corporation. No shares had been previously awarded. One-fifth of such shares
will be earned and nonforfeitable on each of the first five anniversaries of the
date of the award. At September 30, 1999 and June 30, 1999, 11,429 shares have
vested. In the event of the death or disability of a participant or a change in
control of the Corporation, however, the participant's shares will be deemed
earned and nonforfeitable upon such date. At June 30, 1999, there were 14,287
shares reserved for future awards and held as treasury stock. Compensation
expense related to MRP shares is based upon the cost of the shares, which
approximates fair value at the date of grant. For the three months ended
September 30, 1999 and 1998, compensation expense totaled $47,658 and $60,000.
<PAGE>
PEOPLES-SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS
(Continued)
- - --------------------------------------------------------------------------------
Item 2. Management's Discussion and Analysis
Introduction
In the following pages, management presents an analysis of the consolidated
financial condition of Peoples-Sidney Financial Corporation (the "Corporation")
as of September 30, 1999, compared to June 30, 1999, and results of operations
for the three months ended September 30, 1999, compared with the same period in
1998. This discussion is designed to provide a more comprehensive review of
operating results and financial position than could be obtained from an
examination of the financial statements alone. This analysis should be read in
conjunction with the interim financial statements and related footnotes included
herein.
When used in this discussion or future filings by the Corporation with the
Securities and Exchange Commission, or other public or shareholder
communications, or in oral statements made with the approval of an authorized
executive officer, the words or phrases "will likely result," "are expected to,"
"will continue," "is anticipated," "estimate," "project," "believe" or similar
expressions are intended to identify "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995. The Corporation
wishes to caution readers not to place undue reliance on any such
forward-looking statements, which speak only as of the date made, and to advise
readers that various factors, including regional and national economic
conditions, changes in levels of market interest rates, credit risks of lending
activities and competitive and regulatory factors, could affect the
Corporation's financial performance and could cause the Corporation's actual
results for future periods to differ materially from those anticipated or
projected.
The Corporation is not aware of any trends, events or uncertainties that will
have or are reasonably likely to have a material effect on its liquidity,
capital resources or operations except as discussed herein. The Corporation is
not aware of any current recommendations by regulatory authorities that would
have such effect if implemented.
The Corporation does not undertake, and specifically disclaims, any obligation
to publicly release the result of any revisions which may be made to any
forward-looking statements to reflect occurrence of anticipated or unanticipated
events or circumstances after the date of such statements.
Financial Condition
Total assets at September 30, 1999 were $123.0 million compared to $116.9
million at June 30, 1999, an increase of $6.1 million, or 5.2%. The increase in
total assets was due to increases in loans, cash and cash equivalents, time
deposits in other financial institutions and securities available for sale
funded by proceeds from increased deposits and borrowings.
<PAGE>
Loans receivable increased $3.0 million from $102.8 million at June 30, 1999 to
$105.8 million at September 30, 1999. The increase was primarily in real estate
construction and development loans which increased $1.2 million and one- to
four-family residential loans which increased $1.9 million. Changes in other
types of mortgage loans were not significant. The overall increase in total
mortgage loans is reflective of a strong local economy coupled with attractive
loan rates and products compared to local competition. Expansion into new market
areas through the Association's two new Branch banking facilities also
contributed to the growth.
The Corporation's consumer and other loan portfolio increased $326,000 between
June 30, 1999 and September 30, 1999. The increase was primarily related to new
auto loans and commercial lines of credit originated at the Association's two
new branch locations. Even with the increase, consumer and other loans remain a
small portion of the entire loan portfolio and represented only 4.1% and 3.9% of
gross loans at September 30, 1999 and June 30, 1999.
Cash and cash equivalents increased $1.2 million, time deposits in other
financial institutions increased $1.0 million and securities available for sale
increased $900,000 primarily as temporary earning sources until loan growth
utilizes all the funds provided from time deposit growth.
Total deposits increased $3.9 million from $84.3 million at June 30, 1999 to
$88.2 million at September 30, 1999. The deposit growth was the result of a new
15-month certificate of deposit. This product totaled $7.1 million at September
30, 1999. NOW accounts declined $367,000 and savings accounts declined $651,000
since June 30, 1999. Money market accounts and noninterest-bearing demand
deposits had little change since June 30, 1999.
Borrowed funds were $17.0 million at September 30, 1999 compared to $14.8
million at June 30, 1999. Borrowings at September 30, 1999 consisted entirely of
long-term fixed-rate advances.
Results of Operations
The operating results of the Corporation are affected by general economic
conditions, monetary and fiscal policies of federal agencies and regulatory
policies of agencies that regulate financial institutions. The Corporation's
cost of funds is influenced by interest rates on competing investments and
general market rates of interest. Lending activities are influenced by demand
for real estate loans and other types of loans, which in turn is affected by
interest rates at which such loans are made, general economic conditions and
availability of funds for lending activities.
The Corporation's net income primarily depends on its net interest income, which
is the difference between interest income earned on interest-earning assets,
such as loans and securities and interest expense incurred on interest-bearing
liabilities, such as deposits and other borrowings. The level of net interest
income is dependent on the interest rate environment and volume and composition
of interest-earning assets and interest-bearing liabilities. Net income is also
affected by provisions for loan losses, service charges, gains on the sale of
assets and other income, noninterest expense and income taxes.
Net Income. The Corporation earned net income of $131,000 for the three months
ended September 30, 1999 compared to $117,000 for the three months ended
September 30, 1998. The increase in net income was primarily due to an increase
in net interest income and lower provision for loan losses.
<PAGE>
Net Interest Income. Net interest income totaled $933,000 for the three months
ended September 30, 1999 compared to $914,000 for the three months ended
September 30, 1998. The increase was the result of higher income on loans and
securities partially offset by an increase in interest expense on deposits and
borrowings.
Interest and fees on loans increased $136,000, or 7.2% from $1,872,000 for the
three months ended September 30, 1998 to $2,008,000 for the three months ended
September 30, 1999. The increase in interest income was due to a higher average
balance of loans partially offset by a decline in the yield earned on loans.
Interest earned on securities increased $66,000 for the three months ended
September 30, 1999 as compared to the same period in the prior year. The
increase was the result of having a much higher balance in securities than a
year ago. Securities were increased and funded with borrowings to leverage the
Corporation's capital position.
Interest paid on deposits increased $34,000 for the three months ended September
30, 1999 compared to the three months ended September 30, 1998. The average rate
paid on deposits declined. However, the effect of an increase in the average
balance of deposits offset the decrease in the average cost.
Interest paid on borrowed funds totaled $251,000 for the three months ended
September 30, 1999 compared to $108,000 for the three ended September 30, 1998.
The increase in interest expense on borrowed funds resulted from a higher
average balance of borrowed funds.
Provision for Loan Losses. The Corporation maintains an allowance for loan
losses in an amount that, in management's judgment, is adequate to absorb
probable losses inherent in the loan portfolio. While management utilizes its
best judgment and information available, the ultimate adequacy of the allowance
is dependent upon a variety of factors, including the performance of the
Corporation's loan portfolio, the economy, changes in real estate values and
interest rates and the view of the regulatory authorities toward loan
classifications. The provision for loan losses is determined by management as
the amount to be added to the allowance for loan losses after net charge-offs
have been deducted to bring the allowance to a level which is considered
adequate to absorb probable losses inherent in the loan portfolio. The amount of
the provision is based on management's monthly review of the loan portfolio and
consideration of such factors as historical loss experience, general prevailing
economic conditions, changes in the size and composition of the loan portfolio
and specific borrower considerations, including the ability of the borrower to
repay the loan and the estimated value of the underlying collateral.
<PAGE>
The provision for loan losses for the three months ended September 30, 1999
totaled $17,000 compared to $37,000 for the three months ended September 30,
1998. No charge-offs occurred during the three months ended September 30, 1999,
which was the primary reason for the decline in the provision for loan losses.
Past charge-offs experienced by the Corporation have primarily related to
consumer and other non-real estate loans. As indicated previously, such loans
make up an insignificant portion of the Corporation's total loan portfolio. The
Corporation's low historical charge-off history is the product of a variety of
factors, including the Corporation's underwriting guidelines, which generally
require a loan-to-value or projected completed value ratio of 90% for purchase
or construction of one- to four-family residential properties and 75% for
commercial real estate and land loans, established income information and
defined ratios of debt to income. Notwithstanding the historical charge-off
history, as well as a low volume of nonperforming loans, management believes it
is prudent to continue to increase the allowance for loan losses as total loans
increase. The allowance for loan losses totaled $546,000, or .51 % of loans
receivable, net of loans in process, at September 30, 1999 compared to $529,000,
or .51% of loans receivable, net of loan in process, at June 30, 1999.
Noninterest income. Noninterest income includes service fees and other
miscellaneous income and totaled $23,000 for the three months ended September
30, 1999 and $14,000 for the three months ended September 30, 1998. The increase
was primarily due to an increase in service charges on deposit accounts.
Noninterest expense. Noninterest expense totaled $714,000 for the three months
ended September 30, 1999 compared to $708,000 for the three months ended
September 30, 1998, an increase of $6,000, or 0.8%. The increase was the result
of an increase in occupancy and equipment expense due to the two new branches.
<PAGE>
Income Tax Expense. The volatility of income tax expense is primarily
attributable to the change in income before income taxes. Income tax expense
totaled $93,000 for the three months ended September 30, 1999 compared to
$66,000 for the three months ended September 30, 1998, representing an increase
of $27,000, or 40.3 %. The effective tax rate was 41.4% and 36.1% for the three
months ended September 30, 1999 and 1998.
Liquidity and Capital Resources
The Corporation's liquidity, primarily represented by cash and cash equivalents,
is a result of operating, investing and financing activities. These activities
are summarized below for the three months ended September 30, 1999 and 1998.
<TABLE>
<CAPTION>
Three Months
Ended September 30,
-------------------
1999 1998
---- ----
(Dollars in thousands)
<S> <C> <C>
Net income $ 131 $ 117
Adjustments to reconcile net income to net cash from
operating activities 68 186
------------ ------------
Net cash from operating activities 199 303
Net cash from investing activities (4,989) (2,206)
Net cash from financing activities 5,989 940
------------ ------------
Net change in cash and cash equivalents 1,199 (963)
Cash and cash equivalents at beginning of period 1,933 4,947
------------ ------------
Cash and cash equivalents at end of period $ 3,132 $ 3,984
============ ============
</TABLE>
The Corporation's principal sources of funds are deposits, loan repayments,
maturities of securities and other funds provided by operations. The Association
also has the ability to borrow from the FHLB. While scheduled loan repayments
and maturing investments are relatively predictable, deposit flows and early
loan prepayments are more influenced by interest rates, general economic
conditions and competition. The Association maintains investments in liquid
assets based on management's assessment of the (1) need for funds, (2) expected
deposit flows, (3) yields available on short-term liquid assets and (4)
objectives of the asset/liability management program.
<PAGE>
OTS regulations presently require the Association to maintain an average daily
balance of investments in United States Treasury, federal agency obligations and
other investments in an amount equal to 4% of the sum of the Association's
average daily balance of net withdrawable deposit accounts and borrowings
payable in one year or less. The liquidity requirement, which may be changed
from time to time by the OTS to reflect changing economic conditions, is
intended to provide a source of relatively liquid funds on which the Association
may rely, if necessary, to fund deposit withdrawals or other short-term funding
needs. At September 30, 1999, the Association's regulatory liquidity was 14.5%.
At such date, the Corporation had commitments to originate fixed-rate commercial
and residential real estate loans totaling $454,000 and variable-rate commercial
and residential real estate mortgage loans totaling $773,000. Loan commitments
are generally for 30 days. The Corporation considers its liquidity and capital
reserves sufficient to meet its outstanding short and long term needs. See Note
5 of the Notes to Consolidated Financial Statements.
<PAGE>
The Association is subject to various regulatory capital requirements
administered by the federal regulatory agencies. Under capital adequacy
guidelines and the regulatory framework for prompt corrective action, the
Association must meet specific capital guidelines that involve quantitative
measures of the Association's assets, liabilities and certain off-balance-sheet
items as calculated under regulatory accounting practices. The Association's
capital amounts and classifications are also subject to qualitative judgments by
the regulators about the Association's components, risk weightings and other
factors. Failure to meet minimum capital requirements can initiate certain
mandatory actions that, if undertaken, could have a direct material effect on
the Corporation's financial statements. At September 30, 1999 and June 30, 1999,
management believes the Association complies with all regulatory capital
requirements. Based on the Association's computed regulatory capital ratios, the
Association is considered well capitalized under the Federal Deposit Insurance
Act at September 30, 1999 and June 30, 1999. No conditions or events have
occurred subsequent to the last notification by regulators that management
believes would have changed the Association's category.
At September 30, 1999 and June 30, 1999, the Association's actual capital levels
and minimum required levels were:
<TABLE>
<CAPTION>
Minimum Minimum
Required To Be Required To Be
Adequately Capitalized Well Capitalized
Under Prompt Corrective Under Prompt Corrective
Actual Action Regulations Action Regulations
Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
September 30, 1999
Total capital (to risk-
weighted assets) $ 13,929 17.6% $ 6,317 8.0% $ 7,896 10.0%
Tier 1 (core) capital (to
risk-weighted assets) 13,389 17.0 3,158 4.0 4,738 6.0
Tier 1 (core) capital (to
adjusted total assets) 13,389 10.9 4,923 4.0 6,153 5.0
Tangible capital (to
adjusted total assets) 13,389 10.9 1,846 1.5 N/A
June 30, 1999
Total capital (to risk-
weighted assets) $ 13,634 18.0% $ 6,069 8.0% $ 7,586 10.0%
Tier 1 (core) capital (to
risk-weighted assets) 13,152 17.3 3,035 4.0 4,552 6.0
Tier 1 (core) capital (to
adjusted total assets) 13,152 11.2 4,677 4.0 5,847 5.0
Tangible capital (to
adjusted total assets) 13,152 11.2 1,754 1.5 N/A
</TABLE>
<PAGE>
Year 2000 ("Y2K") Issue
The Corporation's lending and deposit activities are almost entirely dependent
upon computer systems which process and record transactions, although the
Corporation can effectively operate with manual systems for brief periods when
its electronic systems malfunction or cannot be accessed. The Corporation uses
the services of a nationally-recognized data processing service bureau that
specializes in data processing for financial institutions. In addition to its
basic operating activities, the Corporation's facilities and infrastructure,
such as security systems and communications equipment, are dependent, to varying
degrees, upon computer systems.
The Corporation began by identifying mission critical systems in the fourth
quarter of 1997. Every system was reviewed and inventoried and determined to be
"mission critical" or "nonmission critical." Mission critical systems are those
critical to providing service to the customers by maintaining customer records,
general accounting functions and those that would impact the Corporation's
liquidity if they should fail.
The following systems were identified as mission critical by management. A brief
description on the status of each system is listed below.
1. File servers and Novell network
2. Teller equipment and NCR BMS teller and new accounts software
3. Other personal computers
4. NCR Starcom account processing including ACH items and EDS (Jeannie)
5. IPS accounting software
6. Federal Home Loan Bank
7. Bankers Systems, Inc. new loan software
8. EDS
File Servers and Novell Network
Due to two new branches, two new Compaq file servers were purchased in 1998 and
have been verified as Y2K compliant. The Novell operating software was either
upgraded or purchased and has been verified as Y2K compliant. One file server at
a branch location will not rollover the date into the next century, but can be
manually set and will correctly handle dates forward including leap year. The
file server and software were tested at the Sidney location in August 1998 by
advancing the date to the next century and performing daily teller functions.
Teller Equipment and NCR Software
All personal computer-based equipment and NCR software were updated and then
tested in August 1998. The testing included running of transactions in Year 2000
environment against an on-line test file. Review of the results showed the
processing operated correctly and is Y2K compliant.
<PAGE>
PEOPLES-SIDNEY FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
- - --------------------------------------------------------------------------------
NCR Starcom Account Processing
The Starcom account processing was tested in August 1998 in conjunction with the
teller equipment and software. The results of these tests were reviewed and
showed that the system operated as expected and is Y2K compliant. An additional
test was performed in July 1999 for items that had been added since the previous
test. The results of this test indicate these items will operate as expected.
NCR also tested with EDS (Jeannie) and the ACH networks on a proxy basis and
have certified that they are compliant.
IPS Accounting Software
The IPS accounting was presented as being Y2K compliant by the manufacturer and
was tested in December 1998 by the Corporation. The test results were as
expected and showed the system to be compliant.
Federal Home Loan Bank
The FHLB is the primary correspondent of the Corporation and provides the
Corporation with liquidity through advances, and cash and also acts as
settlement agent with the Federal Reserve Bank. The FHLB has reported completion
of all mission-critical testing.
Bankers Systems, Inc. Loan Processing Software
The Bankers Systems, Inc. loan processing software has been certified as Y2K
compliant by the manufacturer and was tested in December 1998 by the
Corporation. All tests showed the software to be compliant.
EDS
EDS provides the Corporation with on-us check clearing, statement mailing, check
encoding and depositing. They have reported being Y2K compliant.
Bank Security
All security systems have been certified as Y2K compliant or do not use a date
function in the operation of the system.
Other Nonmission Critical Systems
All nonmission critical systems have been reviewed and made Y2K ready or will be
removed from service prior to year-end.
<PAGE>
Y2K Costs
The total direct cost of upgrading equipment and software, personnel and testing
associated fees will be approximately $21,000. Some other indirect costs were
incurred due to upgrading equipment that would have needed to be replaced over
the coming year.
Business Resumption Contingency Plan
The Corporation's contingency plans have been reviewed and updated. A special
Y2K addendum was also added to cover special concerns and needs of the century
change. These included liquidity and cash needs of the Association. The
Corporation has secured a guaranteed Y2K line from the FHLB to be used in
addition to the normal line of credit that has been recently renewed. The
Corporation plans to maintain higher levels of liquidity the remainder of 1999
through maturing investments, normal cash flows and FHLB advances. As part of
the contingency plan, however, the Corporation has determined that if such
service providers were to have their systems fail, the Corporation would
implement manual systems until such systems could be re-established. The
Corporation does not anticipate that such short term manual systems would have a
material adverse effect on the Corporation's operations. The expense of any
change in suppliers or servicers is not expected to be material to the
Corporation.
In addition to the possible expense related to its own systems, the Corporation
could incur losses if loan payments are delayed due to Year 2000 problems
affecting any of the Corporation's significant borrowers or impairing the
payroll systems of large employers in the Corporation's primary market area.
Because the Corporation's loan portfolio is highly diversified with regard to
individual borrowers and types of businesses and the Corporation's primary
market area is not significantly dependent on one employer or industry, the
Corporation does not expect any significant or prolonged Year 2000 related
difficulties will affect net earnings or cash flow.
<PAGE>
PEOPLES-SIDNEY FINANCIAL CORPORATION
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
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
There were no matters brought to a vote of security holders during
the quarter ended September 30, 1999.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibit No. 27: Financial Data Schedule
(b) Form 8-K was filed on July 16, 1999. Under Item 5, Other
Events, the Corporation reported the issuance of a press
release to announce the quarterly and year-end earning
and declare a dividend.
<PAGE>
SIGNATURES
- - --------------------------------------------------------------------------------
Pursuant to the requirement of the Securities Exchange Act of 1934, the small
business issuer has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Date: November 9, 1999 /s/ Douglas Stewart
---------------------- ------------------------
Douglas Stewart
President
Date: November 9, 1999 /s/ Debra Geuy
---------------------- ------------------------
Debra Geuy
Chief Financial Officer
<PAGE>
INDEX TO EXHIBITS
EXHIBIT
NUMBER DESCRIPTION
- - ------ -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THE SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILES AS
PART OF THE QUARTERLY REPORT ON 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> JUN-30-2000
<PERIOD-END> JUL-01-1999
<CASH> 897
<INT-BEARING-DEPOSITS> 1,935
<FED-FUNDS-SOLD> 1,700
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 9,705
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 105,785
<ALLOWANCE> 546
<TOTAL-ASSETS> 122,973
<DEPOSITS> 88,207
<SHORT-TERM> 0
<LIABILITIES-OTHER> 321
<LONG-TERM> 17,000
0
0
<COMMON> 18
<OTHER-SE> 17,427
<TOTAL-LIABILITIES-AND-EQUITY> 122,973
<INTEREST-LOAN> 2,008
<INTEREST-INVEST> 147
<INTEREST-OTHER> 41
<INTEREST-TOTAL> 2,196
<INTEREST-DEPOSIT> 1,012
<INTEREST-EXPENSE> 1,263
<INTEREST-INCOME-NET> 933
<LOAN-LOSSES> 17
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 714
<INCOME-PRETAX> 224
<INCOME-PRE-EXTRAORDINARY> 131
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 131
<EPS-BASIC> .09
<EPS-DILUTED> .09
<YIELD-ACTUAL> 3.22
<LOANS-NON> 591
<LOANS-PAST> 342
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 529
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 546
<ALLOWANCE-DOMESTIC> 546
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 47
</TABLE>
