<PAGE> 1
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999.
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from --------------- to ---------------
Commission File No. 333-30469
EQUALITY BANCORP, INC.
----------------------
(Exact name of small business issuer as specified in its charter)
DELAWARE 43-1785126
- --------------------------------------- --------------------------------
(State or other jurisdiction (I.R.S. Employer ID Number)
of incorporation or organization)
9920 WATSON ROAD, ST. LOUIS, MO 63126
- ------------------------------------------------------------------------------
(Address of principal executive offices) (zip code)
Issuer's telephone number, including area code (314) 965-7090
--------------
Check whether the issuer (1) has 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
----- -----
State the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Shares Outstanding at November 12, 1999
- ----------------------------- ---------------------------------------
Common Stock, Par Value $0.01 2,531,717
Traditional Small Business Disclosure Format (Check one): Yes No X
----- -----
<PAGE> 2
<TABLE>
INDEX TO FORM 10-QSB
<CAPTION>
PAGE
NO.
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
- Consolidated Balance Sheets 1
- Consolidated Statements of Income 2
- Consolidated Statement of Stockholders' Equity 3
- Consolidated Statements of Cash Flows 4
- Consolidated Statements of Comprehensive Income 5
- Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis or Plan of 7
Operation
PART II OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities and Use of Proceeds 20
Item 3. Defaults Upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 20
SIGNATURES 21
</TABLE>
<PAGE> 3
<TABLE>
EQUALITY BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
September 30, 1999 and March 31, 1999
(Unaudited)
<CAPTION>
Sept. 30, March 31,
1999 1999
--------- ---------
<S> <C> <C>
Assets
------
Cash, primarily interest-bearing demand accounts $ 5,732,237 6,449,613
Interest-bearing deposits 495,000 1,085,000
Investment securities:
Available for sale, at market value 117,256,165 81,635,339
Held to maturity, at cost 600,000 600,000
Mortgage-backed securities available
for sale, at market value 76,272,082 90,810,783
Loans receivable, net 97,693,699 90,230,677
Investment in real estate 58,054 58,054
Stock in Federal Home Loan Bank 8,000,200 6,911,100
Mortgage servicing rights 2,126,454 1,479,631
Office properties and equipment, net 6,989,796 6,451,357
Accrued interest receivable and other assets 3,689,062 2,725,620
------------ -----------
318,912,749 288,437,174
============ ===========
Liabilities and Stockholders' Equity
------------------------------------
Savings deposits 130,328,154 128,953,826
Accrued interest payable on savings deposits 158,299 200,280
Borrowed money 163,346,663 132,010,050
Advance payments by borrowers for taxes and insurance 85,887 69,634
Income tax payable 165,954 203,588
Deferred income taxes -- 873,343
Accrued expenses and other liabilities 770,368 518,723
------------ -----------
Total liabilities 294,855,325 262,829,444
Commitments and contingencies
Stockholders' equity:
Preferred stock, $.01 par value per share;
200,000 shares authorized; none issued -- --
Common stock, $.01 par value per share; 4,000,000 shares
authorized; 2,520,684 and 2,519,793 shares issued
and outstanding at September 30, 1999 and
March 31, 1999, respectively 25,207 25,198
Additional paid-in capital 16,121,623 16,108,269
Retained earnings - substantially restricted 11,490,539 11,255,324
Accumulated other comprehensive income (loss) (1,383,941) 139,464
Treasury stock, at cost, 68,202
and 18,500 shares respectively (590,366) (166,431)
Unamortized restricted stock awards (542,952) (619,325)
Unearned ESOP shares (1,062,686) (1,134,769)
------------ -----------
Total stockholders' equity 24,057,424 25,607,730
------------ -----------
$318,912,749 288,437,174
============ ===========
See accompanying notes to consolidated financial statements.
</TABLE>
1
<PAGE> 4
<TABLE>
EQUALITY BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three and Six months ended September 30, 1999 and 1998
(Unaudited)
<CAPTION>
Three months Six
months
ended September 30 ended
September 30
1999 1998 1999
1998
---- ---- ----
- ----
<S> <C> <C> <C>
<C>
Interest income:
Loans receivable $1,913,816 1,891,722 3,738,333
3,963,982
Investment securities 2,027,868 963,806 3,642,154
2,064,080
Mortgage-backed securities 1,159,389 1,293,120 2,415,132
2,260,446
Interest-bearing deposits 22,112 86,792 32,032
212,109
Other 123,826 106,616 233,459
202,909
---------- --------- ---------- -
- --------
Total interest income 5,247,011 4,342,056 10,061,110
8,703,526
---------- --------- ---------- -
- --------
Interest expense:
Savings deposits 1,364,772 1,344,625 2,738,455
2,667,375
Advances from the Federal Home Loan Bank 2,117,622 1,725,317 3,938,599
3,270,704
Other borrowed money 17,423 16,717 29,225
29,895
---------- --------- ---------- -
- --------
Total interest expense 3,499,817 3,086,659 6,706,279
5,967,974
---------- --------- ---------- -
- --------
Net interest income 1,747,194 1,255,397 3,354,831
2,735,552
Provision for losses on loans -- -- --
- --
---------- --------- ---------- -
- --------
Net interest income after
provision for losses on loans 1,747,194 1,255,397 3,354,831
2,735,552
---------- --------- ---------- -
- --------
Noninterest income:
Gain on sale of mortgage loans 264,088 499,827 595,221
938,581
Loan servicing fees and late charges 303,735 294,115 614,858
586,692
Equity in loss of joint ventures -- (17,194) --
(54,430)
Rental income 45,490 43,626 81,816
69,287
Gain (loss) on sale of investment
and mortgage backed securities
available for sale (21,807) 30,539 8,896
36,936
Other 166,258 119,801 307,864
230,372
---------- --------- ---------- -
- --------
Total noninterest income 757,764 970,714 1,608,655
1,807,438
Noninterest expense:
Salaries and employee benefits 1,162,692 1,130,064 2,322,558
2,167,783
Occupancy 237,034 143,138 420,646
258,157
Data processing 120,817 79,156 211,948
152,337
Advertising 76,835 110,954 156,371
195,058
Deposit insurance premiums 18,783 18,343 37,295
36,603
Other 451,725 427,705 962,830
836,467
---------- --------- ---------- -
- --------
Total noninterest expense 2,067,886 1,909,360 4,111,648
3,645,405
---------- --------- ---------- -
- --------
Income before income tax expense 437,072 316,751 851,838
896,585
Income tax expense 166,865 120,311 336,305
349,200
---------- --------- ---------- -
- --------
Net income $ 270,207 196,440 515,533
547,385
========== ========= ==========
=========
Basic earnings per share $ .12 .08 .22
.23
========== ========= ==========
=========
Diluted earnings per share $ .11 .08 .22
.23
========== ========= ==========
=========
See accompanying notes to consolidated financial statements.
</TABLE>
2
<PAGE> 5
<TABLE>
EQUALITY BANCORP, INC. AND SUBSIDIARY
Consolidated Statement of Stockholders' Equity
Six months ended September 30, 1999
(Unaudited)
<CAPTION>
Accumu-
lated
other
compre- Unamortized
Total
Common Stock Additional hensive restricted
Unearned stock-
------------ paid-in Retained income Treasury stock
ESOP holders'
Shares Amount capital earnings (loss) stock awards
shares equity
------ ------ ---------- ---------- ---------- -------- ---------- ----
- ------ -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
<C>
Balance,
March 31, 1999 2,519,793 $25,198 16,108,269 11,255,324 139,464 (166,431) (619,325)
(1,134,769) $25,607,730
Net income 515,533
515,533
Exercise of
stock options 891 9 3,291
3,300
Purchase of
Treasury stock,
at cost (423,935)
(423,935)
Amortization
of restricted
stock awards 11,025 76,373
87,398
Amortization
of ESOP awards (962)
72,083 71,121
Dividend declared
on common stock
at $.12 per
share (280,318)
(280,318)
Change in accu-
mulated other
comprehensive
income (loss) (1,523,405)
(1,523,405)
--------- ------- ---------- ---------- ---------- -------- -------- ----
- ------ -----------
Balance,
Sept. 30, 1999 2,520,684 $25,207 16,121,623 11,490,539 (1,383,941) (590,366) (542,952)
(1,062,686) $24,057,424
========= ======= ========== ========== ========== ======== ========
========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
3
<PAGE> 6
<TABLE>
EQUALITY BANCORP, INC.
Consolidated Statements of Cash Flows
Six months ended September 30, 1999 and 1998
(Unaudited)
<CAPTION>
1999
1998
----
- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 515,533
547,385
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization:
Office properties and equipment 209,815
83,494
Real estate investments --
5,631
Premiums and discounts, net (589,215)
(168,504)
Mortgage servicing rights 322,508
258,818
Restricted stock awards 76,373
27,629
Increase in accrued interest receivable (737,632)
(83,052)
Gain on sale of investment and mortgage-backed
securities available for sale (8,896)
(36,936)
Increase (decrease) in accrued interest payable on savings deposits (41,981)
27,048
Change in income tax payable (37,634)
(549,867)
Equity in loss of joint ventures --
54,430
Other, net (63,825)
(1,886,848)
Origination and purchase of loans held for sale (58,485,155)
(76,218,533)
Proceeds from sales of loans held for sale 58,589,886
78,196,657
------------ ---
- --------
Net cash provided by (used in) operating activities (250,223)
257,352
------------ ---
- --------
Cash flow from investing activities:
Net change in loans receivable (8,506,253)
8,163,054
Decrease in interest-bearing deposits 590,000
194,000
Principal repayments on investment securities, AFS 9,114
25,313
Principal repayments on mortgage-backed securities, AFS 12,582,326
11,020,111
Proceeds from the sale of investment securities, AFS 5,013,280
9,305,049
Proceeds from the maturity of investment securities, AFS 20,190,000
37,850,000
Proceeds from the sale of mortgage-backed securities, AFS 5,650,348
6,244,094
Proceeds from the maturity of investment securities, HTM --
2,000,000
Purchase of investment securities, AFS (60,884,425)
(31,332,122)
Purchase of mortgage-backed securities, AFS (5,300,430)
(60,655,178)
Decrease in joint venture borrowings --
6,941
Purchase of stock in Federal Home Loan Bank (1,089,100)
(1,321,600)
Purchase of office properties and equipment, net (748,254)
(771,822)
------------ ---
- --------
Net cash used in investing activities (32,493,394)
(19,272,160)
------------ ---
- --------
Cash flow from financing activities:
Net increase in savings deposits 1,374,328
914,113
Proceeds from Federal Home Loan Bank advances 30,000,000
36,500,000
Repayment of Federal Home Loan Bank advances (218,502)
(10,103,674)
Proceeds from other borrowed money 1,555,115
1,950,839
Increase in advance payments by borrowers
for taxes and insurance 16,253
63,655
Cash dividends paid (280,318)
(283,777)
Purchase of treasury stock (423,935)
- --
Proceeds from exercise of stock options 3,300
50,405
Stock purchased for restricted stock awards --
(165,762)
------------ ---
- --------
Net cash provided by financing activities 32,026,241
28,925,799
------------ ---
- --------
Net increase (decrease) in cash and cash equivalents (717,376)
9,910,991
Cash and cash equivalents, beginning of period 6,449,613
1,070,538
------------ ---
- --------
Cash and cash equivalents, end of period $ 5,732,237
10,981,529
============
===========
Supplemental disclosure of cash flow information:
Interest paid $ 6,726,010
5,940,926
Income taxes paid, net 360,660
960,012
See accompanying notes to consolidated financial statements.
</TABLE>
4
<PAGE> 7
<TABLE>
EQUALITY BANCORP, INC.
Consolidated Statements of Comprehensive Income
Six months ended September 30, 1999 and 1998
(Unaudited)
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Net Income $ 515,533 547,385
Other comprehensive income (loss):
Net unrealized gain (loss) on investment and mortgage-
backed securities available for sale, net of tax (1,389,368) 106,644
Less adjustment for gain on sale of investment and
mortgage-backed securities available for sale
realized in net income, net of tax of $3,469
and $14,405 for the six months ended September 30,
1999 and 1998, respectively (5,427) (22,531)
----------- -------
Total other comprehensive income (loss) (1,383,941) 84,113
----------- -------
Comprehensive income (loss) $ (868,408) 631,498
=========== =======
See accompanying notes to consolidated financial statements.
</TABLE>
5
<PAGE> 8
EQUALITY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
September 30, 1999
(Unaudited)
(1) Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements have been
prepared in accordance with instructions for Form 10-QSB and,
therefore, do not include information for footnotes necessary for a
complete presentation of financial position, results of operations,
and cash flows in conformity with generally accepted accounting
principles. However, all adjustments (consisting only of normal
recurring accruals) which, in the opinion of management, are
necessary for a fair presentation of the consolidated financial
statements have been included in the results of operations for the
three and six months ended September 30, 1999 and 1998.
Operating results for the six months ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the
year ending March 31, 2000.
(2) Principles of Consolidation
---------------------------
The accompanying unaudited consolidated financial statements include the
accounts of Equality Bancorp, Inc. and its wholly owned subsidiary,
Equality Savings Bank (the Bank) as well as Equality Savings Bank's
wholly owned subsidiaries, Equality Commodity Corporation (ECC) and
Equality Mortgage Corporation (EMC). All significant intercompany
accounts and transactions have been eliminated in consolidation.
(3) Earnings Per Share
------------------
Basic earnings per share for the six month periods ended September 30,
1999 and 1998 were computed based upon net income for the period
using weighted average common shares outstanding of 2,343,930 and
2,365,349, respectively. For the three month periods ended
September 30, 1999 and 1998, basic earnings per share were computed
upon net income for the period using weighted average common shares
outstanding of 2,337,322 and 2,372,657, respectively.
Diluted earnings per share for the six month periods ended September 30,
1999 and 1998 were computed based upon net income for the period
using weighted average common shares and dilutive potential common
shares outstanding of 2,370,419 and 2,400,480, respectively. Stock
options are the only dilutive potential common shares. For the
three month periods ended September 30, 1999 and 1998, diluted
earnings per share were computed using average common shares
outstanding of 2,362,966 shares and 2,406,085 shares, respectively.
6
<PAGE> 9
EQUALITY BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS OR
PLAN OF OPERATION
The following discussion reviews the financial condition and results of
operations of Equality Bancorp, Inc., and its subsidiary, Equality
Savings Bank, with subsidiaries, as of September 30, 1999 and for the
three and six months then ended.
The Company does not undertake, and specifically disclaims any obligation, to
update any forward-looking statements to reflect the occurrence of
anticipated or unanticipated events or circumstances after the date of
such statements.
CHANGES IN FINANCIAL CONDITION
The total assets of the Company increased $30.5 million, or 10.6%, to
$318.9 million at September 30, 1999 from $288.4 million at March 31,
1999. This increase in asset size primarily relates to an increase in
investment securities and loans receivable which were funded through
Federal Home Loan Bank of Des Moines (FHLB) advances, the proceeds from
repayment of mortgage-backed securities, increased savings deposits,
and excess cash.
Cash, primarily interest bearing demand accounts, decreased $717,000, or
11.1%, to $5.7 million at September 30, 1999 from $6.4 million at March
31, 1999. This decrease is primarily the result of increased
investment securities and loans receivable offset by increased FHLB
advances and decreased mortgage-backed securities.
Interest bearing deposits decreased $590,000, or 54.4%, to $495,000 at
September 30, 1999 from $1.1 million at March 31, 1999. The decrease
is due to the maturity of six certificates of deposit at other
financial institutions. The Company is consciously reducing its
investment in this area as certificates of deposit mature.
Investment securities available for sale increased $35.6 million, or 43.6%,
to $117.3 million at September 30, 1999 from $81.6 million at March 31,
1999. The increase is due primarily to $60.9 million of purchases of
securities offset by $20.2 million of maturities, sales proceeds of
$5.0 million, and a mark to market adjustment of $742,000 to reflect
the unrealized loss on investment securities at September 30, 1999.
Investment securities held to maturity totaled $600,000 at September 30, 1999
and March 31, 1999, respectively.
Mortgage-backed securities available for sale decreased $14.5 million, or
16.0%, to $76.3 million at September 30, 1999 from $90.8 million at
March 31, 1999. This decrease is the result of principal repayments of
$12.6 million, sales proceeds of $5.7 million, and a mark to market
adjustment of $1.5 million to reflect the unrealized loss on
mortgage-backed securities at September 30, 1999 offset by purchases of
$5.3 million.
Loans receivable, net, increased $7.5 million, or 8.3%, to $97.7 million at
September 30, 1999, from $90.2 million at March 31, 1999. Loans held
for investment increased $8.5 million, or 10.2%, to $91.7 million at
September 30, 1999 from $83.3 million at March 31, 1999. This increase
reflects Equality's efforts to prudently increase its loan portfolio
while developing an expanded retail banking presence in its market
area. Loans held for sale decreased $1.1 million, or 15.3%, to
$5.9 million at September 30, 1999 from $7.0 million at March 31, 1999.
This decrease is the result of EMC mortgage loan originations totaling
$56.7 million and mortgage loan purchases of $773,00, offset by
mortgage loan sales of $58.6 million at September 30, 1999.
7
<PAGE> 10
EQUALITY BANCORP, INC.
The following table sets forth composition of the Company's loan portfolio in
dollars and in percentages of total loans at the dates indicated:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1999 MARCH 31, 1999
------------------ -------------------
AMOUNT PERCENT AMOUNT PERCENT
------ ------- ------ -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Loans secured by real estate:
Residential:
One to four family:
Conventional $61,419 62.6% $54,525 60.1%
FHA/VA 9,585 9.8 10,629 11.7
Loans held for sale 5,947 6.1 7,021 7.8
Multifamily 1,367 1.4 1,430 1.6
Commercial 4,169 4.2 4,382 2.5
------- ----- ------- -----
Total Real Estate Loans 82,487 84.1 77,987 86.0
Commercial Business Loans 12,290 12.5 9,642 10.6
------- ----- ------- -----
Consumer Loans:
Loans secured by savings deposits 235 0.2 254 .3
Property improvement loans 1,429 1.5 1,482 1.6
Automobile loans 1,411 1.4 1,042 1.2
Other consumer loans 256 0.3 268 .3
------- ----- ------- -----
Total Consumer Loans 3,331 3.4 3,046 3.4
------- ----- ------- -----
Total Loans 98,108 100.0% 90,675 100.0%
LESS:
Deferred loan fees 14 25
Unearned discounts 23 5
Allowance for loan losses 366 366
Valuation reserve on loans held for sale 11 48
------- -------
Total loans receivable, net $97,694 $90,231
======= =======
</TABLE>
Office properties and equipment increased $538,000, or 8.3%, to $7.0 million
at September 30, 1999 from $6.5 million at March 31, 1999. The
increase resulted from additional improvements to the Bank's branch
network during the six months ended September 30, 1999 including the
opening of new full service branches in St. Peters, Missouri and
Arnold, Missouri.
Savings deposits increased $1.4 million, or 1.1%, to $130.3 million at
September 30, 1999 from $129.0 million at March 31, 1999. Interest
credited during the six months ended September 30, 1999 was
approximately $2.2 million.
FHLB advances increased $29.8 million, or 22.9%, to $160.0 million at
September 30, 1999 from $130.2 million at March 31, 1999. Proceeds
from these advances were used to fund purchases of investment
securities and the origination of loans receivable.
Other borrowed money increased $1.6 million, or 85.2%, to $3.4 million at
September 30, 1999 from $1.8 million at March 31, 1999. These short
term borrowings relate to a warehouse line of credit established with
an independent bank and maintained by EMC, the proceeds of which were
invested solely in residential mortgage loans.
8
<PAGE> 11
EQUALITY BANCORP, INC.
Total stockholders' equity decreased $1.6 million, or 6.1%, to $24.1 million
at September 30, 1999 from $25.6 million at March 31, 1999. The
decrease was primarily attributable to the Company's purchase of
treasury stock of $424,000, payment of quarterly dividends totaling
$280,000, and a mark to market adjustment on securities available for
sale of $1.5 million, offset by net income of $516,000, a reduction in
ESOP indebtedness of $72,000, and a reduction of unamortized restricted
stock awards of $76,000.
9
<PAGE> 12
<TABLE>
EQUALITY BANCORP, INC.
UNAUDITED CONSOLIDATED AVERAGE BALANCE SHEET,
INTEREST AND DIVIDENDS EARNED OR PAID,
AND RELATED INTEREST YIELDS AND RATES
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
- ------------------------------------------------------------------------------------------------------------
- -------------------
1999
1998
- ------------------------------------------------------------------------------------------------------------
- -------------------
INTEREST
INTEREST
AVERAGE AND YIELD/ AVERAGE
AND YIELD/
BALANCE<F1> DIVIDENDS COST<F2> BALANCE<F1>
DIVIDENDS COST<F2>
- ------------------------------------------------------------------------------------------------------------
- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
<C> <C>
Interest-earning assets:
Loans Receivable<F3> $ 99,314 $1,914 7.71% $ 97,730
$1,892 7.74%
Investment securities 110,573 2,028 7.34 58,812
964 6.56
Mortgage-backed securities 78,905 1,159 5.88 92,447
1,293 5.59
Interest-bearing deposits 3,811 22 2.31 9,863
87 3.53
Investment in FHLB 7,803 124 6.36 6,307
106 6.72
-------- ------ -------- -
- -----
Total interest-earning
assets 300,406 5,247 6.99 265,159
4,342 6.55
------ -
- -----
Other assets 13,120 12,183
-------- --------
Total assets 313,526 277,342
======== ========
Interest bearing liabilities:
Regular savings 21,375 20,212
NOW accounts 17,984 15,572
Money market accounts 9,571 6,220
Certificates of deposit 81,103 78,136
-------- --------
Total savings deposits 130,033 1,365 4.20 119,840
1,345 4.49
FHLB advances 154,003 2,118 5.50 126,098
1,725 5.47
Other interest-bearing
liabilities 3,228 17 2.11 3,300
17 2.06
-------- ------ -------- -
- -----
Total interest bearing
liabilities 287,264 3,500 4.87 249,238
3,087 4.95
------ -
- -----
Other liabilities 1,978 1,861
-------- --------
Total liabilities 289,242 251,099
Stockholders' equity 24,284 26,243
-------- --------
Total liabilities and
stockholders' equity $313,526 $277,342
======== ========
Net interest income $1,747
$1,255
======
======
Interest rate spread 2.12%
1.60%
======
======
Net interest margin<F4> 2.33%
1.89%
======
======
Ratio of average interest-
earning assets to
average interest-bearing
liabilities 1.05X
1.06X
====
====
<FN>
<F1> Average balances are computed on a monthly basis (month-end balances).
<F2> Annualized.
<F3> Does not include interest on loans 90 days or more past due.
<F4> Net interest income divided by average interest-earning assets.
</TABLE>
10
<PAGE> 13
EQUALITY BANCORP, INC.
THREE MONTH PERIODS ENDED SEPTEMBER 30, 1999 AND 1998
NET INCOME
Net income increased $74,000, or 37.6%, to $270,000 for the three months
ended September 30, 1999 from $196,000 for the three months ended
September 30, 1998. The increase was primarily the result of increased
net interest income of $492,000, or 39.2%, offset by decreased
noninterest income of $213,000, or 21.9%, increased noninterest expense
of $159,000, or 8.3%, and increased income taxes of $47,000, or 38.7%,
for the three months ended September 30, 1999.
INTEREST INCOME
Interest income increased $905,000, or 20.8%, to $5.2 million for the three
months ended September 30, 1999 from $4.3 million for the three months
ended September 30, 1998. The increase is primarily due to increased
average loans receivable of $1.6 million to $99.3 million for the three
months ended September 30, 1999 from $97.7 million for the three months
September 30, 1999 and increased average investment securities of $51.8
million to $110.6 million for the three months ended September 30, 1999
from $58.8 million for the three months ended September 30, 1999 offset
by decreased average mortgage-backed securities of $13.5 million to
$78.9 million for the three months ended September 30, 1999 from $92.4
million for the three months ended September 30, 1998. The weighted
average yield on total interest-earning assets increased to 6.99% for
the three months ended September 30, 1999 from 6.55% for the three
months ended September 30, 1998 due to the investment of proceeds of
mortgage loan repayments and investment securities maturities at
current market rates.
INTEREST EXPENSE
Interest expense increased $413,000, or 13.4%, to $3.5 million for the three
months ended September 30, 1999 from $3.1 million for the three months
ended September 30, 1998. The increase is primarily due to increased
average FHLB advances of $27.9 million to $154.0 million for the three
months ended September 30, 1999 from $126.1 million for the three
months ended September 30, 1999 and increased average savings deposits
of $10.2 million to $130.0 million for the three months ended September
30, 1999 from $119.8 million for the three months ended September 30,
1998. This increase is due primarily to the opening of three new branch
facilities and increased general marketing efforts. Weighted average
cost of funds decreased to 4.87% for the three months ended September
30, 1999 from 4.95% for the three months ended September 30, 1998.
PROVISION FOR LOSSES ON LOANS
The Company had no provision for losses on loans for the three month periods
ended September 30, 1999 or September 30, 1998. 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
losses inherent in the loan portfolio. The Bank's allowance for loan
losses totaled $366,000 at September 30, 1999 and March 31, 1999. The
allowance for loan losses is established through a provision for loan
losses charged to expense. While the Bank maintains its allowance for
losses at a level which it considered to be adequate, there can be no
assurances that further additions will not be made to the allowance or
that such losses will not exceed the estimated amounts.
NONINTEREST INCOME
Noninterest income decreased $213,000, or 21.9%, to $758,000 for the three
months ended September 30, 1999 from $971,000 for the three months
ended September 30, 1998. This decrease was due primarily to decreased
gain on sale of loans of $236,000, or 47.2%,
11
<PAGE> 14
EQUALITY BANCORP, INC.
to $264,000 for the three months ended September 30, 1999 from $500,000
for the three months ended September 30, 1998, and decreased gain on
sale of investment securities of $52,000, or 171.4%, to a loss of
$22,000 for the three months ended September 30, 1999 from a gain of
$31,000 for the three months ended September 30, 1998, offset by
decreased equity in loss of joint ventures of $17,000, or 100.0%, for
the three months ended September 30, 1999 as compared to the three
months ended September 30, 1999, due to the Company's sale of its joint
venture interest during 1998. Increased other noninterest income of
$46,000, or 38.8%, to $166,000 for the three months ended September 30,
1999 from $120,000 for the three months ended September 30, 1999 and
increased loan servicing fees and late charges of $10,000, or 3.3%, to
$304,000 for the three months ended September 30, 1999 from $294,000
for the three months ended September 30, 1998. For the three months
ended September 30, 1999, the Company, through EMC, sold $22.1 million
of mortgage loans as compared to sales of $37.3 million for the three
months ended September 30, 1998. The decreased volume of sales
resulted in decreased gain on sale for the comparable periods.
However, the Company's efforts at retaining servicing on loans sold
increased the average loan servicing portfolio $34.3 million, or 9.9%,
to $382.1 million for the three months ended September 30, 1999 from
$347.8 million for the three months ended September 30, 1998.
NONINTEREST EXPENSE
Noninterest expense increased $159,000, or 8.3%, to $2.1 million for the
three months ended September 30, 1999 from $1.9 million for the three
months ended September 30, 1998. The increase was due primarily to
increased salary and employee benefits of $33,000, or 2.9%, to $1.2
million for the three months ended September 30, 1999 from $1.1 million
for the three months ended September 30, 1999, increased occupancy
expense of $94,000, or 65.6%, to $237,000 for the three months ended
September 30, 1999 from $143,000 for the three months ended September
30, 1998, increased data processing expenses of $42,000, or 52.6%, to
$121,000 for the three months ended September 30, 1999 from $79,000 for
the three months ended September 30, 1998 and increased other expenses
of $24,000, or 5.6%, to $452,000 for the three months ended September
30, 1999 from $428,000 for the three months ended September 30, 1998,
offset by decreased advertising expense of $34,000, or 30.8%, to
$77,000 for the three months ended September 30, 1999 from $111,000 for
the three months ended September 30, 1998. Salary and employee
benefits increased primarily due to an increase of six Bank personnel
to staff three newly opened branch facilities in Washington, Missouri,
St. Peters, Missouri, and Arnold, Missouri, as well as additional
employment needs in the Bank's subsidiaries including commission loan
officers and insurance sales producers. The increase in occupancy,
data processing and other expenses is also reflective of the three new
branches which have been opened.
INCOME TAXES
Income tax expense increased $47,000, or 38.7%, to $167,000 for the three
months ended September 30, 1999 from $120,000 for the three months
ended September 30, 1998. This increase was primarily due to an
increase in income before income tax of $120,000, or 38.0%. The
effective tax rate was approximately 38.2% and 38.0% for the three
month periods ended September 30, 1999 and 1998, respectively.
12
<PAGE> 15
<TABLE>
EQUALITY BANCORP, INC.
UNAUDITED CONSOLIDATED AVERAGE BALANCE SHEET,
INTEREST AND DIVIDENDS EARNED OR PAID,
AND RELATED INTEREST YIELDS AND RATES
<CAPTION>
SIX MONTHS ENDED SEPTEMBER 30,
- ------------------------------------------------------------------------------------------------------------
- -------------------
1999
1998
- ------------------------------------------------------------------------------------------------------------
- -------------------
INTEREST
INTEREST
AVERAGE AND YIELD/ AVERAGE
AND YIELD/
BALANCE<F1> DIVIDENDS COST<F2> BALANCE<F1>
DIVIDENDS COST<F2>
- ------------------------------------------------------------------------------------------------------------
- -------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
<C> <C>
Interest-earning assets:
Loans Receivable<F3> $ 98,300 $ 3,738 7.61% $100,331
$3,964 7.90%
Investment securities 102,138 3,642 7.13 64,789
2,064 6.37
Mortgage-backed securities 81,662 2,415 5.91 77,348
2,261 5.85
Interest-bearing deposits 3,338 32 1.92 11,699
212 3.62
Investment in FHLB 7,443 234 6.29 6,087
203 6.67
-------- ------- -------- -
- -----
Total interest-earning
assets 292,881 10,061 6.87 260,254
8,704 6.69
------- -
- -----
Other assets 12,776 11,685
-------- --------
Total assets 305,657 271,939
======== ========
Interest bearing liabilities:
Regular savings 21,209 20,261
NOW accounts 17,103 14,652
Money market accounts 8,998 6,377
Certificates of deposit 81,852 77,965
-------- --------
Total savings deposits 129,162 2,738 4.24 119,255
2,667 4.47
FHLB advances 146,641 3,939 5.37 121,715
3,271 5.37
Other interest-bearing
liabilities 2,826 29 2.50 2,944
30 2.50
-------- ------- -------- -
- -----
Total interest bearing
liabilities 278,629 6,706 4.81 243,914
5,968 4.89
------- -
- -----
Other liabilities 2,265 1,865
-------- --------
Total liabilities 280,894 245,779
Stockholders' equity 24,763 26,160
-------- --------
Total liabilities and
stockholders' equity $305,657 $271,939
======== ========
Net interest income $ 3,355
$2,736
=======
======
Interest rate spread 2.06%
1.80%
=======
======
Net interest margin<F4> 2.29%
2.10%
=======
======
Ratio of average interest-
earning assets to
average interest-bearing
liabilities 1.05X
1.07X
====
====
<FN>
<F1> Average balances are computed on a monthly basis (month-end balances).
<F2> Annualized.
<F3> Does not include interest on loans 90 days or more past due.
<F4> Net interest income divided by average interest-earning assets.
</TABLE>
13
<PAGE> 16
EQUALITY BANCORP, INC.
SIX MONTH PERIODS ENDED SEPTEMBER 30, 1999 AND 1998
NET INCOME
Net income decreased $32,000, or 5.8%, to $516,000 for the six months ended
September 30, 1999 from $547,000 for the six months ended September 30,
1998. The decrease was primarily the result of increased noninterest
expense of $465,000, or 12.8%, and decreased noninterest income of
$199,000, or 11.0%, offset by increased net interest income of
$619,000, or 22.6%, and decreased income taxes of $13,000, or 3.7%.
INTEREST INCOME
Interest income increased $1.4 million, or 15.6%, to $10.1 million for the
six months ended September 30, 1999 from $8.7 million for the six
months ended September 30, 1998. Interest on loans receivable
decreased by $226,000, or 5.7% to $3.7 million for the six months ended
September 30, 1999. This decrease was the result of a decrease in the
average balance of loans outstanding of $2.0 million from $100.3
million for the six months ended September 30, 1998 to $98.3 million
for the six months ended September 30, 1999, accompanied by a decrease
in the yield on loans from 7.90% for the six months ended September 30,
1998 to 7.61% for the six months ended September 30, 1999. The lower
average balance of loans outstanding for the six months ended September
30, 1999 reflects a decrease in mortgage lending due to rising interest
rates offset by increased secured commercial lending. Interest on
investment securities increased $1.6 million, or 76.5%, from $2.1
million for the six months ended September 30, 1998 to $3.6 million for
the six months ended September 30, 1999, due to an increase in the
average balance of investment securities of $37.3 million from $64.8
million for the six months ended September 30, 1998 to $102.1 million
for the six months ended September 30, 1999. During the same period
the yield on investment securities increased from 6.37% for the six
months ended September 30, 1998 to 7.13% for the six months ended
September 30, 1999. Interest income on mortgage-backed securities
increased $155,000, or 6.8% from $2.3 million for the six months ended
September 30, 1998 to $2.4 million for the six months ended September
30, 1999 due to an increase in the average balances of $4.3 million
from $77.3 million for the six months ended September 30, 1998 to $81.7
million for the six months ended September 30, 1999, accompanied by an
increase in the yield on mortgage-backed securities from 5.85% for the
six months ended September 30, 1998 to 5.91% for the six months ended
September 30, 1999.
INTEREST EXPENSE
Interest expense increased $738,000, or 12.4%, to $6.7 million for the six
months ended September 30, 1999 from $6.0 million for the six months
ended September 30, 1998. The increase resulted primarily from
increased average deposits and FHLB advances. Average deposit balances
increased $9.9 million from $119.3 million for the six months ended
September 30, 1998 to $129.2 million for the six months ended September
30, 1999. During the same three month periods, the weighted average
cost of deposits decreased from 4.47% for the six months ended
September 30, 1998 to 4.24% for the six months ended September 30,
1999. The increase in average savings deposits is primarily due to the
Bank's opening of three new branch facilities and general marketing
efforts.
Average advances from the FHLB increased $24.9 million from $121.7 million
for the six months ended September 30, 1998 to $146.6 million for the
six months ended September 30, 1999. The increase as primarily the
result of borrowings used to fund increased investment securities. The
weighted average cost of advances remained unchanged at 5.37% for the
six months ended September 30, 1998 and 1999, respectively.
14
<PAGE> 17
EQUALITY BANCORP, INC.
PROVISION FOR LOSSES ON LOANS
The Company had no provision for losses on loans for the six months ended
September 30, 1999 or September 30, 1998. The provision for loan
losses is determined by management as the amount to be added to the
allowance for loan losses after net chargeoffs have been deducted to
bring the allowance to a level which is considered adequate to absorb
losses inherent in the loan portfolio. The Bank's allowance for loan
losses totaled $366,000 at September 30, 1999 and March 31, 1999,
respectively. The allowance for loan losses is established through a
provision for loan losses charged to expense. While the Bank maintains
its allowance for losses at a level which it considered to be adequate,
there can be no assurances that further additions will not be made to
the allowance or that such losses will not exceed the estimated
amounts.
NONINTEREST INCOME
Noninterest income decreased $199,000, or 11.0%, to $1.6 million for the six
months ended September 30, 1999 from $1.8 million for the six months
ended September 30, 1998. The decrease is due primarily to gain on
sale of mortgage loans which decreased $343,000 from $939,000 for the
six months ended September 30, 1998, to $595,000 for the six months
ended September 30, 1999, and decreased gain on sale of investment
securities which decreased $28,000 from $37,000 for the six months
ended September 30, 1998 to $9,000 for the six months ended September
30, 1999 offset by the equity in loss of joint ventures which decreased
$54,000 as a result of the Company's sale of its joint venture interest
in 1998, increased loan servicing fees and late charges of $28,000 and
increased other noninterest income of $77,000. For the six months
ended September 30, 1999, the Bank, through EMC, sold $58.6 million of
mortgage loans as compared to $78.2 million in the comparable period in
1998. The deceased sales volume of $19.7 resulted in decreased gain on
sale of mortgage loans. Loan servicing fees and late charges increased
due primarily to an increase in the average servicing portfolio of EMC.
Average loan servicing by EMC increased $34.3 million, or 9.9%, from
$347.8 million for the six months ended September 30, 1998 to $382.1
million for the six months ended September 30, 1999.
NONINTEREST EXPENSE
Noninterest expense increased $465,000, or 12.8%, to $4.1 million for the six
months ended September 30, 1999 from $3.6 million for the six months
ended September 30, 1998 due primarily to increased salaries and
employee benefits of $155,000, or 7.1%, from $2.2 million for the six
months ended September 1998 to $2.3 million for the six months ended
September 30, 1999, increased occupancy expenses of $162,000, or 62.9%,
from $258,000 for the six months ended September 30, 1998 to $421,000
for the six months ended September 30, 1999, increased data processing
expenses of $60,000, or 39.1%, from $152,000 for the six months ended
September 30, 1998 to $212,000 for the six months ended September 30,
1999, and increased other expenses of $126,000 or 15.1%, from $836,000
for the six months ended September 30, 1998 to $963,000 for the six
months ended September 30, 1999. Salary and employee benefits
increased primarily due to an increase of six Bank personnel to staff
three newly opened branch facilities in Washington, Missouri, St.
Peters, Missouri, and Arnold, Missouri, as well as additional
employment needs in the Bank's subsidiaries including commission loan
officers and insurance sales producers. The increase in occupancy,
data processing and other expenses is also reflective of the three new
branches which have been opened.
INCOME TAXES
Income tax expense decreased $13,000, or 3.7%, to $336,000 for the six months
ended September 30, 1999 from $349,000 for the six months ended
September 30, 1998. The decrease was the result of the decrease in
income before income tax expense of $45,000.
15
<PAGE> 18
EQUALITY BANCORP, INC.
The effective tax rate was approximately 39.5% and 39.0% for the six
month periods ended September 30, 1999 and 1998, respectively.
NONPERFORMING ASSETS
At September 30, 1999, nonperforming assets were approximately $735,000,
which represents a increase of $15,000, or 2.1%, as compared to March
31, 1999. A summary of nonperforming assets by category is summarized
as follows:
<TABLE>
<CAPTION>
September 30, March 31,
1999 1999
------------ ---------
(in thousands)
<S> <C> <C>
Nonaccruing loans:
One to four family <F1> $724 650
Commercial real estate -- 51
Consumer and other 11 15
---- ---
Total nonaccruing loans 735 716
Repossessed assets -- 4
---- ---
Total nonperforming assets $735 720
==== ===
Nonaccruing loans as a percent of net loans .75% .79%
==== ===
Nonaccruing loans as a percent of
total assets .23% .25%
==== ===
Nonperforming assets as a percent of
total assets .23% .25%
==== ===
<FN>
<F1> Includes $547,000 and $486,000 of FHA/VA loans, the principal and
interest payments of which are either issued by FHA or guaranteed by
the VA at September 30, 1999 and March 31, 1999, respectively.
</TABLE>
Loans are placed on nonaccrual status when either principal or interest is
more than 90 days past due or at such time when contractual amounts due
are deemed uncollectible, whichever is sooner. Interest accrued and
unpaid at the time a loan is placed on nonaccrual status is charged
against interest income. Subsequent payments are either applied to the
outstanding principal balance or recorded as interest income, depending
on the assessment of the ultimate collectibility of the loan.
LIQUIDITY AND CAPITAL RESOURCES
The Office of Thrift Supervision (OTS) requires minimum levels of liquid
assets. OTS regulations presently require the Bank to maintain an
average daily balance of liquid assets equal to a monthly average of
not less than 4.0% of net withdrawable accounts plus short-term
borrowings. Such requirements may be changed from time to time by the
OTS to reflect changing economic conditions. Such investments are
intended to provide a source of relatively liquid funds upon which the
Bank may rely, if necessary, to fund deposit withdrawals and other
short-term funding needs. The Bank's regulatory liquidity at September
30, 1999 was 27.4%.
The Bank's primary sources of funds consist of deposits bearing market rates
of interest and loan repayments. Other potential sources of funds
available to the Bank include borrowings from FHLB. At September 30,
1999, the Bank had such outstanding FHLB borrowings of $160.0 million.
The Bank uses its liquidity resources principally to
16
<PAGE> 19
EQUALITY BANCORP, INC.
meet ongoing commitments, to fund maturing certificates of deposit and
deposit withdrawals, to invest, to fund existing and future loan
commitments, to maintain liquidity, and to meet operating expenses.
Management believes that loan repayments and other sources of funds
will be adequate to meet and exceed the Bank's liquidity needs,
including meeting its commitments to buy or fund loans. At September
30, 1999, the Bank had approximately $1.1 million in outstanding
commitments to originate loans, approximately $37,000 of which were
adjustable rate loans. The interest rate on fixed rate commitments
ranged from 7.1% to 8.125% at September 30, 1999. The majority of the
loans will be sold into the secondary market upon origination.
REGULATORY CAPITAL
Federally insured savings associations such as the Bank are required to
maintain a minimum level of regulatory capital. The capital
regulations require institutions to have tangible capital equal to 1.5%
of total adjusted assets (as defined by regulation), a minimum core
capital ratio of 3% of adjusted total assets, and a risk-based capital
ratio of 8% of risk-based assets (as defined by regulation). The
risk-based capital requirement is calculated based on the credit risk
presented by both on-balance-sheet assets and off-balance-sheet
commitments and obligations. Assets are assigned a credit-risk
weighting based upon their relative risk ranging from 0% for assets
backed by the full faith and credit of the United States or that pose
no credit risk to the institution to 100% for assets such as delinquent
or repossessed assets.
A reconciliation of stockholders' equity at September 30, 1999, as reported
in the financial statements of the Bank, to the three capital
standards, as required under the Financial Institutions Reform,
Recovery and Enforcement Act of 1989 (FIRREA), is as follows:
<TABLE>
<CAPTION>
Regulatory Capital
-------------------------------------
Tangible Core Risk-based
capital capital capital
-------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C>
Stockholders' equity $23,292 23,292 23,292
Accumulated other comprehensive
loss 1,384 1,384 1,384
------- ------ ------
Adjusted stockholders' equity 24,676 24,676 24,676
Additional capital item - general
loan loss reserves -- -- 366
------- ------ ------
Regulatory capital, as computed 24,676 24,676 25,042
Minimum capital requirement 4,812 9,624 12,238
------- ------ ------
Regulatory capital in excess of
minimum capital requirement $19,864 15,052 12,804
======= ====== ======
Regulatory capital ratio 7.69% 7.69% 16.37%
======= ====== ======
</TABLE>
Management believes that under current regulations, the Bank will continue to
meet its minimum capital requirements in the foreseeable future.
Events beyond the control of the Bank could adversely affect future
earnings and as a result, the ability of the Bank to meet its future
minimum capital requirements.
17
<PAGE> 20
EQUALITY BANCORP, INC.
IMPACT OF INFLATION AND CHANGING PRICES
The unaudited consolidated financial statements and related data presented
herein have been prepared in accordance with generally accepted
accounting principles, which require the measurement of financial
position and results of operations in the measurements of historical
dollars without considering changes in the relative purchasing power of
money over time because of inflation.
Unlike most industrial companies, virtually all of the assets and liabilities
of the Company are monetary in nature. As a result, interest rates
have a more significant impact on the Company's performance than the
effects of general levels of inflation. Interest rates do not
necessarily move in the same direction or in the same magnitude as the
prices of goods and services. In the present interest rate
environment, the liquidity, maturity structure, and quality of the
Company's assets and liabilities are important factors in the
maintenance of acceptable performance levels.
IMPACT OF NEW ACCOUNTING PRONOUNCEMENTS
ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING ACTIVITIES
In December, 1998, the Financial Accounting Standards Board (FASB) issued
Statement of Financial Accounting Standards No. 133, Accounting for
--------------
Derivative Instruments and Hedging Activities, (SFAS 133). SFAS 133
---------------------------------------------
establishes standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging
activities. It requires an entity to recognize all derivatives as
either assets or liabilities in the statement of financial position and
measure those instruments at fair value. In September, 1999, the FASB
issued Statement of Financial Accounting Standards No. 137, Accounting
----------
for Derivative Instruments and Hedging Activities - Deferral of the
-------------------------------------------------------------------
Effective Date of FASB Statement No. 133, an Amendment of FASB
--------------------------------------------------------------
Statement No. 133, which defers the effective date of SFAS 133 from
-----------------
fiscal years beginning after June 15, 1999 to fiscal years beginning
after June 15, 2000. Earlier application of SFAS 133, as amended, is
encouraged but should not be applied retroactively to financial
statements of prior periods. The Company is currently evaluating the
requirements and impact of SFAS 133, as amended.
In October, 1998, the FASB issued Statement of Financial Accounting Standards
No. 134, Accounting for Mortgage-Backed Securities Retained after the
------------------------------------------------------------
Securitization of Mortgage Loans Held for Sale by a Mortgage Banking
--------------------------------------------------------------------
Enterprise (SFAS 134) which conforms the subsequent accounting for
----------
securities retained after the securitization of mortgage loans by a
mortgage banking enterprise with the subsequent accounting for
securities retained after the securitization of other types of assets
by a nonmortgage banking enterprise. SFAS 134 is effective for the
first fiscal quarter beginning after December 15, 1998. Since the
Company does not securitize and retain mortgage loans, SFAS 134 has no
impact on the Company's consolidated financial position and results of
operations.
YEAR 2000 COMPLIANCE
The Company's Year 2000 committee constantly monitors the readiness of the
Year 2000 project using guidance from its regulatory agencies. The
Company's action plan contains five phases: awareness, assessment,
renovation, validation and implementation.
18
<PAGE> 21
EQUALITY BANCORP, INC.
To date, the awareness, assessment, renovation, validation and
implementation phases of the action plan have been completed by the
Company. Contingency plans have been developed by the committee and
can be implemented in the unlikely event that the core application
providers are not compliant with Year 2000 issues.
The Company is primarily a retail banking and mortgage banking provider
specializing in single family residential mortgages and family related
retail deposit relationships. Year 2000 risk associated with this type
of business are considered to have a minimal impact on the Company.
The Board of Directors has initially budgeted $148,000 for year 2000 issues
in addition to in-house compensation expenditures of committee members.
To date, $91,000 has been expended. The Year 2000 committee reports to
the Board of Directors on a monthly basis and management does not
expect the cost of Year 2000 compliance to be material to the business,
financial condition, or results of operation of the Company.
19
<PAGE> 22
EQUALITY BANCORP, INC.
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
---------------------------------------------------
On August 13, 1999, Equality Bancorp, Inc. held its Annual
Shareholder's Meeting for the purpose of the election of three
directors.
For election of directors:
<TABLE>
<CAPTION>
FOR WITHHELD
--------- --------
<S> <C> <C>
Daniel C. Aubuchon 2,079,948 64,451
Stacey W. Braswell 2,081,154 63,245
Richard C. Fellhauer 2,081,154 63,245
</TABLE>
Item 5. Other information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Exhibits: None.
Reports on Form 8-K: None.
20
<PAGE> 23
EQUALITY BANCORP, INC.
SIGNATURES
Pursuant to the requirement 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.
EQUALITY BANCORP, INC.
Registrant
Date: November 12, 1999 /s/Richard C. Fellhauer
------------------------------ ------------------------------------
Richard C. Fellhauer, President,
Chief Executive Officer and
Chairman of the Board
Date: November 12, 1999 /s/Michael A. Deelo
------------------------------ ------------------------------------
Michael A. Deelo,
Chief Financial Officer
21
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 5,732
<INT-BEARING-DEPOSITS> 495
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 193,528
<INVESTMENTS-CARRYING> 600
<INVESTMENTS-MARKET> 555
<LOANS> 97,694
<ALLOWANCE> 366
<TOTAL-ASSETS> 318,913
<DEPOSITS> 130,328
<SHORT-TERM> 33,058
<LIABILITIES-OTHER> 1,503
<LONG-TERM> 129,966
0
0
<COMMON> 25
<OTHER-SE> 24,032
<TOTAL-LIABILITIES-AND-EQUITY> 318,913
<INTEREST-LOAN> 3,738
<INTEREST-INVEST> 6,057
<INTEREST-OTHER> 265
<INTEREST-TOTAL> 10,061
<INTEREST-DEPOSIT> 2,738
<INTEREST-EXPENSE> 6,706
<INTEREST-INCOME-NET> 3,355
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 9
<EXPENSE-OTHER> 4,112
<INCOME-PRETAX> 852
<INCOME-PRE-EXTRAORDINARY> 852
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 516
<EPS-BASIC> .22
<EPS-DILUTED> .22
<YIELD-ACTUAL> 6.87
<LOANS-NON> 735
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 366
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 366
<ALLOWANCE-DOMESTIC> 366
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
