<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 December 31, 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 February 14, 2000
----------------------------- ---------------------------------------
Common Stock, Par Value $0.01 2,544,094
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 22
Item 2. Changes in Securities and Use of Proceeds 22
Item 3. Defaults Upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 22
SIGNATURES 23
</TABLE>
<PAGE> 3
<TABLE>
EQUALITY BANCORP, INC. AND SUBSIDIARY
Consolidated Balance Sheets
December 31, 1999 and March 31, 1999
(Unaudited)
<CAPTION>
Dec. 31, March 31,
1999 1999
-------- ---------
Assets
------
<S> <C> <C>
Cash, primarily interest-bearing demand accounts $ 4,170,869 6,449,613
Interest-bearing deposits 395,000 1,085,000
Investment securities:
Available for sale, at market value 124,878,659 81,635,339
Held to maturity, at cost 600,000 600,000
Mortgage-backed securities available
for sale, at market value 72,820,289 90,810,783
Loans receivable, net 102,830,402 90,230,677
Investment in real estate 58,054 58,054
Stock in Federal Home Loan Bank 8,348,300 6,911,100
Mortgage servicing rights 1,955,804 1,479,631
Office properties and equipment, net 6,962,453 6,451,357
Deferred income taxes 660,128 --
Accrued interest receivable and other assets 3,635,963 2,725,620
------------ -----------
327,315,921 288,437,174
============ ===========
Liabilities and Stockholders' Equity
------------------------------------
Savings deposits 133,351,110 128,953,826
Accrued interest payable on savings deposits 139,402 200,280
Federal Home Loan Bank advances 165,854,038 130,184,267
Other borrowed money 4,000,000 1,825,783
Advance payments by borrowers for taxes and insurance 52,994 69,634
Income tax payable 274,674 203,588
Deferred income taxes -- 873,343
Accrued expenses and other liabilities 421,555 518,723
------------ -----------
Total liabilities 304,093,773 262,829,444
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; 2,544,094 and 2,519,793
shares issued and outstanding at December 31,
1999 and March 31, 1999, respectively 25,441 25,198
Additional paid-in capital 16,200,538 16,108,269
Retained earnings - substantially restricted 11,616,223 11,255,324
Accumulated other comprehensive income (loss) (2,259,042) 139,464
Treasury stock, at cost, 97,857
and 18,500 shares respectively (827,004) (166,431)
Unamortized restricted stock awards (507,231) (619,325)
Unearned ESOP shares (1,026,777) (1,134,769)
------------ -----------
Total stockholders' equity 23,222,148 25,607,730
------------ -----------
$327,315,921 288,437,174
============ ===========
See accompanying notes to consolidated financial statements.
</TABLE>
1
<PAGE> 4
<TABLE>
EQUALITY BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Income
Three and Nine months ended December 31, 1999 and 1998
(Unaudited)
<CAPTION>
Three months Nine months
ended December 31 ended December 31
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Loans receivable $ 1,973,631 1,922,850 5,711,964 5,886,832
Investment securities 2,265,208 680,764 5,907,362 2,744,844
Mortgage-backed securities 1,106,903 1,609,043 3,522,035 3,869,489
Interest-bearing deposits 7,691 107,133 39,723 319,242
Other 132,363 106,847 365,822 309,756
----------- --------- ---------- ----------
Total interest income 5,485,796 4,426,637 15,546,906 13,130,163
----------- --------- ---------- ----------
Interest expense:
Savings deposits 1,413,605 1,409,298 4,152,060 4,076,673
Advances from the Federal Home Loan Bank 2,238,409 1,789,485 6,177,008 5,060,189
Other borrowed money 20,802 21,909 50,027 51,804
----------- --------- ---------- ----------
Total interest expense 3,672,816 3,220,692 10,379,095 9,188,666
----------- --------- ---------- ----------
Net interest income 1,812,980 1,205,945 5,167,811 3,941,497
Provision for losses on loans -- -- -- --
----------- --------- ---------- ----------
Net interest income after pro-
vision for losses on loans 1,812,980 1,205,945 5,167,811 3,941,497
----------- --------- ---------- ----------
Noninterest income:
Gain on sale of mortgage loans 100,867 557,821 696,088 1,496,402
Loan servicing fees and late charges 300,359 352,290 915,217 938,982
Equity in loss of joint ventures -- -- -- (54,430)
Rental income 54,902 43,640 136,718 112,927
Gain on sale of real estate -- 146,655 -- 146,655
Gain on sale of investment and
mortgage backed securities
available for sale 25,890 116 34,786 37,052
Other 183,422 171,675 491,286 402,047
----------- --------- ---------- ----------
Total noninterest income 665,440 1,272,197 2,274,095 3,079,635
Noninterest expense:
Salaries and employee benefits 1,069,480 1,186,785 3,392,038 3,354,568
Occupancy 224,217 175,014 644,863 433,171
Data processing 122,576 84,501 334,524 236,838
Advertising 111,550 54,419 267,921 249,477
Deposit insurance premiums 19,034 17,396 56,329 53,999
Other 491,272 490,916 1,454,102 1,327,383
----------- --------- ---------- ----------
Total noninterest expense 2,038,129 2,009,031 6,149,777 5,655,436
----------- --------- ---------- ----------
Income before income tax expense 440,291 469,111 1,292,129 1,365,696
Income tax expense 175,344 179,695 511,649 528,895
----------- --------- ---------- ----------
Net income $ 264,947 289,416 780,480 836,801
=========== ========= ========== ==========
Basic earnings per share $ .11 .12 .33 .35
=========== ========= ========== ==========
Diluted earnings per share $ .11 .12 .33 .35
=========== ========= ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
2
<PAGE> 5
<TABLE>
EQUALITY BANCORP, INC.
Consolidated Statement of Stockholders' Equity
Nine months ended December 31, 1999
(Unaudited)
<CAPTION>
Accumulated
other Total
Common Stock Additional comprehen- Unamortized Unearned stock-
------------ paid-in Retained sive income Treasury restricted ESOP holders'
Shares Amount capital earnings (loss) stock 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 780,480 780,480
Exercise of
stock
options 24,301 243 81,817 82,060
Purchase of
Treasury
stock,
at cost (660,573) (660,573)
Amortization
of restricted
stock awards 14,185 112,094 126,279
Amortization of
ESOP awards (3,733) 107,992 104,259
Dividend
declared
on common
stock at
$.18 per share (419,581) (419,581)
Change in
accumulated
other
comprehensive
income (loss) (2,398,506) (2,398,506)
--------- ------- ---------- ---------- ---------- -------- -------- ---------- -----------
Balance,
Dec.31,
1999 2,544,094 $25,441 16,200,538 11,616,223 (2,259,042) (827,004) (507,231) (1,026,777) $23,222,148
========= ======= ========== ========== ========== ======== ======== ========== ===========
See accompanying notes to consolidated financial statements.
</TABLE>
3
<PAGE> 6
<TABLE>
EQUALITY BANCORP, INC.
Consolidated Statements of Cash Flows
Nine months ended December 31, 1999 and 1998
(Unaudited)
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 780,480 836,801
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Depreciation and amortization:
Office properties and equipment 326,743 166,847
Real estate investments -- 7,508
Premiums and discounts, net (890,402) (208,341)
Mortgage servicing rights 488,036 508,433
Restricted stock awards 112,094 69,070
Increase (decrease) in accrued interest receivable (849,297) 6,176
Gain on sale on investment in real estate -- (146,655)
Gain on sale of investment and mortgage-backed
securities available for sale (34,786) (37,052)
Increase (decrease) in accrued interest payable on savings deposits (60,878) 41,599
Change in income tax payable 71,086 (420,173)
Equity in loss of joint ventures -- 54,430
Other, net (192,296) (4,186,845)
Origination and purchase of loans held for sale (74,890,299) (134,384,072)
Proceeds from sales of loans held for sale 75,862,298 126,725,334
------------ ------------
Net cash provided by (used in) operating activities 722,779 (10,966,940)
------------ ------------
Cash flow from investing activities:
Net change in loans receivable (14,490,371) 12,252,494
Decrease in interest-bearing deposits 690,000 194,000
Principal repayments on investment securities, AFS 12,174 33,968
Principal repayments on mortgage-backed securities, AFS 15,625,330 22,183,823
Proceeds from the sale of investment securities, AFS 14,971,450 15,767,256
Proceeds from the maturity of investment securities, AFS 20,690,000 57,520,704
Proceeds from the sale of mortgage-backed securities, AFS 5,650,348 18,053,568
Proceeds from the maturity of investment securities, HTM -- 2,000,000
Purchase of investment securities, AFS (79,801,523) (58,533,316)
Purchase of mortgage-backed securities, AFS (5,300,430) (84,969,267)
Decrease in joint venture borrowings -- 649,048
Purchase of stock in Federal Home Loan Bank (1,437,200) (1,321,600)
Purchase of office properties and equipment, net (837,839) (853,217)
------------ ------------
Net cash used in investing activities (44,228,061) (17,022,539)
------------ ------------
Cash flow from financing activities:
Net increase in savings deposits 4,397,284 7,412,636
Proceeds from Federal Home Loan Bank advances 36,000,000 36,500,000
Repayment of Federal Home Loan Bank advances (330,229) (10,208,910)
Proceeds from other borrowed money 2,174,217 2,321,306
Increase (decrease) in advance payments by borrowers
for taxes and insurance (16,640) 4,322
Cash dividends paid (419,581) (425,733)
Purchase of treasury stock (660,573) --
Proceeds from exercise of stock options 82,060 50,405
Stock purchased for restricted stock awards -- (496,661)
------------ ------------
Net cash provided by financing activities 41,226,538 35,157,365
------------ ------------
Net increase (decrease) in cash and cash equivalents (2,278,744) 7,167,886
Cash and cash equivalents, beginning of period 6,449,613 1,070,538
------------ ------------
Cash and cash equivalents, end of period $ 4,170,869 8,238,424
============ ============
Supplemental disclosure of cash flow information:
Interest paid $ 10,389,199 9,147,067
Income taxes paid, net 455,660 960,012
See accompanying notes to consolidated financial statements.
</TABLE>
4
<PAGE> 7
<TABLE>
EQUALITY BANCORP, INC.
Consolidated Statements of Comprehensive Income
Three and Nine months ended December 31, 1999 and 1998
(Unaudited)
<CAPTION>
Three months Nine months
ended December 31 ended December 31
1999 1998 1999 1998
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Net Income $ 264,947 289,416 780,480 836,801
Other comprehensive income (loss):
Net unrealized gain (loss) on investment and mortgage-
backed securities available for sale, net of tax (890,894) (104,166) (2,419,725) (42,584)
Less adjustment for gain on sale of investment and
mortgage-backed securities available for sale
realized in net income, net of tax of $10,097
and $45 for the three months ended December 31,
1999 and 1998, and $13,567 and $14,450 for the
nine months ended December 31, 1999 and 1998,
respectively 15,793 71 21,219 22,602
--------- -------- ---------- -------
Total other comprehensive loss (875,101) (104,095) (2,398,506) 19,982
--------- -------- ---------- -------
Comprehensive income (loss) $(610,154) 185,321 (1,618,026) 816,819
========= ======== ========== =======
See accompanying notes to consolidated financial statements.
</TABLE>
5
<PAGE> 8
EQUALITY BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 31, 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 nine months ended December 31, 1999 and 1998.
Operating results for the nine months ended December 31, 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 nine month periods ended December
31, 1999 and 1998 were computed based upon net income for the period
using weighted average common shares outstanding of 2,336,947 and
2,369,359, respectively. For the three month periods ended December
31, 1999 and 1998, basic earnings per share were computed upon net
income for the period using weighted average common shares
outstanding of 2,322,980 and 2,377,377, respectively.
Diluted earnings per share for the nine month periods ended December
31, 1999 and 1998 were computed based upon net income for the period
using weighted average common shares and dilutive potential common
shares outstanding of 2,360,422 and 2,403,043, respectively. For the
three month periods ended December 31, 1999 and 1998, diluted
earnings per share were computed using average common shares
outstanding of 2,340,428 shares and 2,407,667 shares, respectively.
Stock options are the only dilutive potential common shares.
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 December 31, 1999 and for the
three and nine 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 $38.9 million, or 13.5%, to $327.3
million at December 31, 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 $2.3 million, or
35.3%, to $4.2 million at December 31, 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 $690,000, or 63.6%, to $395,000 at
December 31, 1999 from $1.1 million at March 31, 1999. The decrease is
due to the maturity of seven 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 $43.2 million, or 53.0%,
to $124.9 million at December 31, 1999 from $81.6 million at March 31,
1999. The increase is due primarily to $79.8 million of purchases of
securities offset by $20.7 million of maturities, sales proceeds of
$15.0 million, and a mark to market adjustment of $2.5 million to
reflect the unrealized loss on investment securities at December 31,
1999.
Investment securities held to maturity totaled $600,000 at December 31, 1999
and March 31, 1999.
Mortgage-backed securities available for sale decreased $18.0 million, or
19.8%, to $72.8 million at December 31, 1999 from $90.8 million at
March 31, 1999. This decrease is the result of principal repayments of
$15.6 million, sales proceeds of $5.7 million, and a mark to market
adjustment of $1.4 million to reflect the unrealized loss on mortgage-
backed securities at December 31, 1999 offset by purchases of $5.3
million.
Loans receivable, net, increased $12.6 million, or 14.0%, to $102.8 million
at December 31, 1999, from $90.2 million at March 31, 1999. Loans held
for investment increased $14.5 million, or 17.4%, to $97.7 million at
December 31, 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 $1.9 million, or 27.6%, to $5.1
million at December 31, 1999 from $7.0 million at March 31, 1999. This
decrease is the result of EMC mortgage loan originations
7
<PAGE> 10
EQUALITY BANCORP, INC.
totaling $73.2 million and mortgage loan purchases of $773,00, offset by
mortgage loan sales of $75.8 million at December 31, 1999.
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>
DECEMBER 31, 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 $ 66,105 64.0% $54,525 60.1%
FHA/VA 9,273 9.0 10,629 11.7
Loans held for sale 5,085 4.9 7,021 7.8
Multifamily 1,355 1.3 1,430 1.6
Commercial 4,133 4.0 4,382 4.8
-------- ----- ------- -----
Total Real Estate Loans 85,951 83.2 77,987 86.0
Commercial Business Loans 13,784 13.4 9,642 10.6
-------- ----- ------- -----
Consumer Loans:
Loans secured by savings deposits 224 0.2 254 .3
Property improvement loans 1,514 1.5 1,482 1.6
Automobile loans 1,476 1.4 1,042 1.2
Other consumer loans 288 0.3 268 .3
-------- ----- ------- -----
Total Consumer Loans 3,502 3.4 3,046 3.4
-------- ----- ------- -----
Total Loans 103,237 100.0% 90,675 100.0%
LESS:
Deferred loan fees 13 25
Unearned discounts 29 5
Allowance for loan losses 364 366
Valuation reserve on loans held
for sale 1 48
-------- -------
Total loans receivable, net $102,830 $90,231
======== =======
</TABLE>
Office properties and equipment increased $511,000, or 7.9%, to $7.0 million
at December 31, 1999 from $6.5 million at March 31, 1999. The increase
resulted from additional improvements to the Bank's branch network
during the nine months ended December 31, 1999 including the opening of
new full service branches in St. Peters, Missouri and Arnold, Missouri.
Savings deposits increased $4.4 million, or 3.4%, to $133.4 million at
December 31, 1999 from $129.0 million at March 31, 1999. Interest
credited during the nine months ended December 31, 1999 was
approximately $3.4 million.
FHLB advances increased $35.7 million, or 27.4%, to $165.9 million at
December 31, 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.
8
<PAGE> 11
EQUALITY BANCORP, INC.
Other borrowed money increased $2.2 million, or 119.1%, to $4.0 million at
December 31, 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.
Total stockholders' equity decreased $2.4 million, or 9.3%, to $23.2 million
at December 31, 1999 from $25.6 million at March 31, 1999. The decrease
was primarily attributable to the Company's purchase of treasury stock
of $661,000, payment of quarterly dividends totaling $420,000, and a
mark to market adjustment on securities available for sale of $2.4
million, offset by net income of $780,000, a reduction in ESOP
indebtedness of $108,000, and a reduction of unamortized restricted
stock awards of $112,000.
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 DECEMBER 31,
- ---------------------------------------------------------------------------------------------------------------------------
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> $101,595 $1,974 7.77% $102,183 $1,923 7.53%
Investment securities 127,084 2,265 7.13 47,705 681 5.71
Mortgage-backed securities 75,605 1,107 5.86 108,727 1,609 5.92
Interest-bearing deposits 2,990 8 1.07 11,575 107 3.70
Investment in FHLB 8,348 132 6.32 6,522 107 6.56
-------- ------ -------- ------
Total interest-earning
assets 315,622 5,486 6.95 276,712 4,427 6.40
------ ------
Other assets 12,409 15,332
-------- --------
Total assets 328,031 292,044
======== ========
Interest bearing liabilities:
Regular savings 20,702 19,966
NOW accounts 17,436 17,502
Money market accounts 10,742 6,824
Certificates of deposit 83,793 82,794
-------- --------
Total savings deposits 132,673 1,414 4.26 127,086 1,409 4.43
FHLB advances 166,558 2,238 5.37 130,326 1,790 5.49
Other interest-bearing
liabilities 3,729 21 2.25 3,897 22 2.26
-------- ------ -------- ------
Total interest bearing
liabilities 302,960 3,673 4.85 261,309 3,221 4.93
------ ------
Other liabilities 1,330 4,596
-------- --------
Total liabilities 304,290 265,905
Stockholders' equity 23,741 26,139
-------- --------
Total liabilities and
stockholders' equity $328,031 $292,044
======== ========
Net interest income $1,813 $1,206
====== ======
Interest rate spread 2.10% 1.47%
====== ======
Net interest margin<F4> 2.30% 1.74%
====== ======
Ratio of average interest-
earning assets to
average interest-bearing
liabilities 1.04X 1.06X
==== ====
<FN>
<F1> Average balances are computed on a monthly basis (month-end balances).
<F2> Annualized.
<F3> Does not include accrued 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 DECEMBER 31, 1999 AND 1998
NET INCOME
Net income decreased $24,000, or 8.5%, to $265,000 for the three months ended
December 31, 1999 from $289,000 for the three months ended December 31,
1998. The decrease was primarily the result of decreased noninterest
income of $607,000, or 47.7%, and increased noninterest expense of
$29,000, or 1.5%, offset by increased net interest income of $607,000,
or 50.3%, and decreased income taxes of $4,000, or 2.4%, for the three
months.
INTEREST INCOME
Interest income increased $1.1 million, or 23.9%, to $5.5 million for the
three months ended December 31, 1999 from $4.4 million for the three
months ended December 31, 1998. The increase is primarily due to
increased average investment securities of $79.4 million to $127.1
million for the three months ended December 31, 1999 from $47.7 million
for the three months ended December 31, 1998 offset by decreased average
loans receivable of $588,000 to $101.6 million for the three months
ended December 31, 1999 from $102.2 million for the three months
December 31, 1998 and decreased average mortgage-backed securities of
$33.1 million to $75.6 million for the three months ended December 31,
1999 from $108.7 million for the three months ended December 31, 1998.
The weighted average yield on total interest-earning assets increased to
6.95% for the three months ended December 31, 1999 from 6.40% for the
three months ended December 31, 1998 due to the investment of proceeds
of mortgage loan repayments and investment securities maturities at
current market rates.
INTEREST EXPENSE
Interest expense increased $452,000, or 14.0%, to $3.7 million for the three
months ended December 31, 1999 from $3.2 million for the three months
ended December 31, 1998. The increase is primarily due to increased
average FHLB advances of $36.2 million to $166.6 million for the three
months ended December 31, 1999 from $130.3 million for the three months
ended December 31, 1998 and increased average savings deposits of $5.6
million to $132.7 million for the three months ended December 31, 1999
from $127.1 million for the three months ended December 31, 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 4.85% for the three months ended December 31, 1999 from
4.93% for the three months ended December 30, 1998.
PROVISION FOR LOSSES ON LOANS
The Company had no provision for losses on loans for the three month periods
ended December 31, 1999 or December 31, 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 $364,000 at December 31, 1999 and $366,000 at 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.
11
<PAGE> 14
EQUALITY BANCORP, INC.
NONINTEREST INCOME
Noninterest income decreased $607,000, or 47.7%, to $665,000 for the three
months ended December 31, 1999 from $1.3 million for the three months
ended December 31, 1998. This decrease was due primarily to decreased
gain on sale of loans of $457,000, or 81.9%, to $101,000 for the three
months ended December 31, 1999 from $558,000 for the three months ended
December 31, 1998, and decreased loan servicing fees and late charges of
$52,000, or 14.7%, to $300,000 for the three months ended December 31,
1999 from $352,000 for the three months ended December 31, 1998, offset
by increased gain on sale of investment securities of $26,000, to
$26,000 for the three months ended December 31, 1999 from no gain or
loss for the three months ended December 31, 1998, increased other
noninterest income of $12,000, or 6.8%, to $183,000 for the three months
ended December 31, 1999 from $172,000 for the three months ended
December 31, 1998. For the three months ended December 31, 1999, the
Company, through EMC, sold $17.3 million of mortgage loans as compared
to sales of $48.4 million for the three months ended December 31, 1998.
The decreased volume of sales due to rising interest rates resulted in
decreased gain on sale for the comparable periods. During the period
the average loan servicing portfolio increased $51.9 million, or 14.8%,
to $403.3 million from $351.4 million for the three months ended
December 31, 1998.
NONINTEREST EXPENSE
Noninterest expense increased $29,000, or 1.5%, to $2.0 million for the three
months ended December 31, 1999 from $2.0 million for the three months
ended December 31, 1998. The increase was due primarily to increased
occupancy expense of $49,000, or 28.1%, to $224,000 for the three months
ended December 31, 1999 from $175,000 for the three months ended
December 31, 1998, increased data processing expenses of $38,000, or
45.1%, to $123,000 for the three months ended December 31, 1999 from
$85,000 for the three months ended December 31, 1998, increased
advertising expense of $57,000, or 105.0%, to $112,000 for the three
months ended December 31, 1999 from $54,000 for the three months ended
December 31, 1998 offset by decreased salary and employee benefits of
$117,000, or 9.9%, to $1.1 million for the three months ended December
31, 1998 from $1.2 million for the three months ended December 31, 1998.
Salary and employee benefits decreased primarily due to a decrease in
loan officer commission expense of $128,000, or 68.4%, to $59,000 for
the three months ended December 31, 1999 from $188,000 for the three
months ended December 31, 1998, offset by an increase salaries due to
hiring of six additional Bank personnel. The increase in occupancy,
data processing and other expenses is reflective of the two new branches
which have been opened.
INCOME TAXES
Income tax expense decreased $4,000, or 2.4%, to $175,000 for the three
months ended December 31, 1999 from $180,000 for the three months ended
December 31, 1998. This decrease was primarily due to a decrease in
income before income tax of $29,000, or 6.1%. The effective tax rate
was approximately 39.8% and 38.3% for the three month periods ended
December 31, 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>
NINE MONTHS ENDED DECEMBER 31,
- ---------------------------------------------------------------------------------------------------------------------------
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> $ 99,494 $ 5,712 7.65% $100,966 $ 5,887 7.77%
Investment securities 110,453 5,907 7.13 59,094 2,745 6.19
Mortgage-backed securities 79,643 3,522 5.90 87,807 3,869 5.88
Interest-bearing deposits 3,222 40 1.66 11,658 319 3.65
Investment in FHLB 7,745 366 6.30 6,232 310 6.63
-------- ------- -------- -------
Total interest-earning
assets 300,557 15,547 6.90 265,757 13,130 6.59
------- -------
Other assets 12,558 12,884
-------- --------
Total assets 313,115 278,641
======== ========
Interest bearing liabilities:
Regular savings 21,046 20,163
NOW accounts 17,214 15,602
Money market accounts 9,580 6,526
Certificates of deposit 82,481 79,575
-------- --------
Total savings deposits 130,321 4,152 4.25 121,866 4,077 4.46
FHLB advances 153,280 6,177 5.37 124,586 5,060 5.42
Other interest-bearing
liabilities 3,127 50 2.13 3,261 52 2.13
-------- ------- -------- -------
Total interest bearing
liabilities 286,728 10,379 4.83 249,713 9,189 4.91
------- -------
Other liabilities 1,965 2,775
-------- --------
Total liabilities 288,693 252,488
Stockholders' equity 24,422 26,153
-------- --------
Total liabilities and
stockholders' equity $313,115 $278,641
======== ========
Net interest income $ 5,168 $ 3,941
======= =======
Interest rate spread 2.07% 1.68%
======= =======
Net interest margin<F4> 2.29% 1.98%
======= =======
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 accrued 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.
NINE MONTH PERIODS ENDED DECEMBER 31, 1999 AND 1998
NET INCOME
Net income decreased $56,000, or 6.7%, to $780,000 for the nine months ended
December 31, 1999 from $837,000 for the nine months ended September 30,
1998. The decrease was primarily the result of increased noninterest
expense of $494,000, or 8.7%, and decreased noninterest income of
$806,000, or 26.2%, offset by increased net interest income of $1.2
million, or 31.1%, and decreased income taxes of $17,000, or 3.3%.
INTEREST INCOME
Interest income increased $2.4 million, or 18.4%, to $15.5 million for the
nine months ended December 31, 1999 from $13.1 million for the nine
months ended December 31, 1998. Interest on loans receivable decreased
by $175,000, or 3.0% to $5.7 million for the nine months ended December
31, 1999. This decrease was the result of a decrease in the average
balance of loans outstanding of $1.5 million from $101.0 million for the
nine months ended December 31, 1998 to $99.5 million for the nine months
ended December 31, 1999, accompanied by a decrease in the yield on loans
from 7.77% for the nine months ended December 31, 1998 to 7.65% for the
nine months ended December 31, 1999. The lower average balance of loans
outstanding for the nine months ended December 31, 1999 reflects a
decrease in mortgage lending due to rising interest rates offset by
increased secured commercial lending. Interest on investment securities
increased $3.2 million, or 115.2%, from $2.7 million for the nine months
ended December 31, 1998 to $5.9 million for the nine months ended
December 31, 1999, due to an increase in the average balance of
investment securities of $51.4 million from $59.1 million for the nine
months ended December 31, 1998 to $110.5 million for the nine months
ended December 31, 1999. During the same period the yield on investment
securities increased from 6.19% for the nine months ended December 31,
1998 to 7.13% for the nine months ended December 31, 1999. Interest
income on mortgage-backed securities decreased $347,000, or 9.0% from
$3.9 million for the nine months ended December 31, 1998 to $3.5 million
for the nine months ended December 31, 1999 due to a decrease in the
average balances of $8.2 million from $87.8 million for the nine months
ended December 31, 1998 to $79.6 million for the nine months ended
December 31, 1999, offset by an increase in the yield on mortgage-backed
securities from 5.88% for the nine months ended December 31, 1998 to
5.90% for the nine months ended December 31, 1999.
INTEREST EXPENSE
Interest expense increased $1.2 million, or 13.0%, to $10.4 million for the
nine months ended December 31, 1999 from $9.2 million for the nine
months ended December 31, 1998. The increase resulted primarily from
increased average deposits and FHLB advances. Average deposit balances
increased $8.5 million from $121.9 million for the nine months ended
December 31, 1998 to $130.3 million for the nine months ended December
31, 1999. During the same nine month periods, the weighted average cost
of deposits decreased from 4.46% for the nine months ended December 31,
1998 to 4.25% for the nine months ended December 31, 1999. The increase
in average savings deposits is primarily due to the Bank's opening of
three new branch facilities and deposit marketing efforts.
14
<PAGE> 17
EQUALITY BANCORP, INC.
Average advances from the FHLB increased $28.7 million from $124.6 million
for the nine months ended December 31, 1998 to $153.3 million for the
nine months ended December 31, 1999. The increase as primarily the
result of borrowings used to fund increased investment securities. The
weighted average cost of advances decreased to 5.37% for the nine
months ended December 31, 1999, from 5.42% for the nine months ended
December 31, 1998.
PROVISION FOR LOSSES ON LOANS
The Company had no provision for losses on loans for the nine months ended
December 31, 1999 or December 31, 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 $364,000 at December 31, 1999 and $366,000 at 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 $806,000, or 26.2%, to $2.3 million for the nine
months ended December 31, 1999 from $3.1 million for the nine months
ended December 31, 1998. The decrease is due primarily to gain on sale
of mortgage loans which decreased $800,000 from $1.5 million for the
nine months ended December 31, 1998, to $696,000 for the nine months
ended December 31, 1999, and decreased gain on sale of investment
securities which decreased $2,000 from $37,000 for the nine months ended
December 31, 1998 to $35,000 for the nine months ended December 31, 1999
and decreased loan servicing fees and late charges of $24,000 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, and
increased other noninterest income of $89,000. For the nine months
ended December 31, 1999, the Bank, through EMC, sold $75.8 million of
mortgage loans as compared to $126.7 million in the comparable period in
1998. The deceased sales volume of $50.8 resulted in decreased gain on
sale of mortgage loans and a corresponding decrease in fees related to
reduced originations. Average loan servicing by EMC increased $36.2
million, or 10.3%, from $353.0 million for the nine months ended
December 31, 1998 to $389.2 million for the nine months ended December
31, 1999.
NONINTEREST EXPENSE
Noninterest expense increased $494,000, or 8.7%, to $6.1 million for the nine
months ended December 31, 1999 from $5.7 million for the nine months
ended Depember 31, 1998 due primarily to increased salaries and employee
benefits of $37,000, or 1.1%, from $3.4 million for the nine months
ended December 31, 1998 to $3.4 million for the nine months ended
December 31, 1999, increased occupancy expenses of $212,000, or 48.9%,
from $433,000 for the nine months ended December 31, 1998 to $645,000
for the nine months ended December 31, 1999, increased data processing
expenses of $98,000, or 41.3%, from $237,000 for the nine months ended
December 31, 1998 to $335,000 for the nine months ended December 31,
1999, and increased other expenses of $127,000 or 9.6%, from $1.3
million for the nine months ended December 31, 1998 to $1.5 for the nine
months ended December 31, 1999. Salary and employee benefits increased
primarily due to an increase of six Bank personnel to staff two newly
opened branch facilities in St. Peters, Missouri, and Arnold, Missouri,
as well as additional employment needs in the Bank's
15
<PAGE> 18
EQUALITY BANCORP, INC.
subsidiaries including commission loan officers and insurance sales
producers offset by reduced commissions paid on reduced mortgage loan
originations for comparable periods. The increase in occupancy, data
processing and other expenses is also reflective of the new branches
which have been opened.
INCOME TAXES
Income tax expense decreased $17,000, or 3.3%, to $512,000 for the nine
months ended December 31, 1999 from $529,000 for the nine months ended
December 31, 1998. The decrease was the result of the decrease in
income before income tax expense of $74,000. The effective tax rate was
approximately 39.6% and 38.7% for the nine month periods ended December
31, 1999 and 1998, respectively.
NONPERFORMING ASSETS
At December 31, 1999, nonperforming assets were approximately $507,000, which
represents a decrease of $213,000, or 29.6%, as compared to March 31,
1999. A summary of nonperforming assets by category is summarized as
follows:
<TABLE>
<CAPTION>
December 31, March 31,
1999 1999
------------ ---------
(in thousands)
<S> <C> <C>
Nonaccruing loans:
One to four family <F1> $ 494 650
Commercial real estate -- 51
Consumer and other 13 15
------ ------
Total nonaccruing loans 507 716
Repossessed assets -- 4
------ ------
Total nonperforming assets $ 507 720
====== ======
Nonaccruing loans as a percent of net loans .49% .79%
====== ======
Nonaccruing loans as a percent of
total assets .15% .25%
====== ======
Nonperforming assets as a percent of
total assets .15% .25%
====== ======
<FN>
<F1> Includes $404,000 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 December 31, 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.
16
<PAGE> 19
EQUALITY BANCORP, INC.
LIQUIDITY AND CAPITAL RESOURCES
The Bank's primary sources of funds are deposits, advances from the FHLB,
repayments, prepayments and maturities of outstanding loans, maturities
of investment securities and other short-term investments, and funds
provided from operations. While scheduled loan repayments and maturing
investment securities and short-term investments are relatively
predictable sources of funds, deposit flows and loan prepayments are
greatly influenced by the movement of interest rates in general,
economic conditions and competition. The Bank manages the pricing of
its deposits to maintain a deposit balance deemed appropriate and
desirable. In addition, the Bank invests in short-term investment
securities and interest-earning assets which provide liquidity to meet
lending requirements. Although the Bank's deposits have historically
represented the majority of its total liabilities, the Bank also
utilizes other borrowing sources, primarily advances from the FHLB which
totaled $165.9 million at December 31, 1999. At December 31, 1999, the
Bank had approximately $1.3 million in outstanding commitments to
originate loans, approximately $697,000 of which were adjustable rate
loans. The interest rate on fixed rate commitments ranged from 6.77% to
8.50% at December 31, 1999. The majority of the loans will be sold into
the secondary market upon origination.
Liquidity management is both a daily and long-term function. Excess
liquidity is generally invested in short-term investments such as cash
and cash equivalents, and U.S. Government agency securities. On a
longer-term basis, the Bank invests in various loans, mortgage-backed
securities, and investment securities. The Bank uses its sources of
funds primarily to meet its ongoing commitments to pay maturing savings
certificates and savings withdrawals, fund loan commitments and maintain
an investment securities portfolio. Management of the Bank believes
that the Bank has adequate resources, including principal prepayments
and repayments of loans and maturing investments, to fund all of its
commitments to the extent required. Based upon its historical run-off
experience, management believes that a significant portion of maturing
deposits will remain with the Bank.
REGULATORY CAPITAL
Under federal regulations, the Bank is required to maintain specific amounts
of regulatory capital. The capital regulations require institutions to
have Tier 1 leverage capital equal to 4.0% of adjusted total assets (as
defined by regulation), a minimum Tier 1 risk-based capital ratio of
4.0% of risk-based total assets, and a total risk-based capital ratio of
8.0% 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.
17
<PAGE> 20
EQUALITY BANCORP, INC.
The following table sets forth certain information concerning the Bank's
regulatory capital:
<TABLE>
<CAPTION>
Regulatory Capital
----------------------------------------------------------
Tier I Tier I Total
Leverage Risk-Based Risk Based
Capital Capital Capital
----------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C>
Stockholders' equity $ 24,950 24,950 24,950
Additional capital item - general
loan loss reserves -- -- 364
-------- ------- -------
Total regulatory capital 24,950 24,950 25,314
Minimum capital requirement 8,878 6,448 12,896
-------- ------- -------
Excess regulatory capital 16,072 18,502 12,418
======== ======= =======
Adjusted total assets $221,938 161,204 161,204
======== ======= =======
Regulatory capital ratio 11.24% 15.48% 15.70%
======== ======= =======
</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.
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
18
<PAGE> 21
EQUALITY BANCORP, INC.
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.
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.
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, $92,000 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.
To date, the Company has not experienced any significant disruptions to its
financial or operating activities caused by failure of computerized
systems resulting from Year 2000 issues. Management does not expect
Year 2000 issues to have a material adverse effect on the Company's
operations or fnancial results in 2000.
19
<PAGE> 22
EQUALITY BANCORP, INC.
INDUSTRY SEGMENT INFORMATION
The business segment results which follow are consistent with Equality's
internal reporting system which is consistent, in all material respects,
with generally accepted accounting principles.
<TABLE>
<CAPTION>
DECEMBER 31, 1999
- ------------------------------------------------------------------------------------------------------------------
EQUALITY EQUALITY CORPORATE
SAVINGS MORTGAGE AND
BANK CORPORATION OTHER TOTAL
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance sheet information:
Investment and mortgage-
backed securities 198,211,218 -- 87,730 198,298,948
Loans receivable, net 99,413,610 5,071,685 (1,654,893) 102,830,402
Total assets 322,767,947 8,008,082 (3,460,108) 327,315,921
Savings deposits 133,627,815 (276,705) 133,351,110
Stockholders' equity 22,691,093 2,184,098 (1,653,043) 23,222,148
=========== ========= ========== ===========
Statement of income information:
Total interest income 15,214,835 452,961 (120,890) 15,546,906
Total interest expense 10,415,365 310,096 (346,366) 10,379,095
Net interest income 4,799,470 142,865 225,476 5,167,811
Provision for losses on loans -- -- -- --
Noninterest income 153,662 1,752,491 367,942 2,274,095
Noninterest expense 3,567,900 2,040,114 541,763 6,149,777
Income tax expense 586,376 (56,660) (18,067) 511,649
Net income (loss) 798,856 (88,098) 69,722 780,480
=========== ========= ========== ===========
Capital expenditures 817,662 12,952 7,226 837,839
=========== ========= ========== ===========
</TABLE>
20
<PAGE> 23
<TABLE>
<CAPTION>
EQUALITY BANCORP, INC.
DECEMBER 31, 1998
- ------------------------------------------------------------------------------------------------------------------
EQUALITY EQUALITY CORPORATE
SAVINGS MORTGAGE AND
BANK CORPORATION OTHER TOTAL
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance sheet information:
Investment and mortgage-
backed securities 158,089,049 -- 87,730 158,176,779
Loans receivable, net 100,020,617 21,217,092 (18,382,742) 102,854,967
Total assets 283,886,313 25,333,848 (20,109,376) 289,110,785
Savings deposits 127,256,430 -- (542,418) 126,714,012
Stockholders' equity 25,249,759 2,164,798 (1,404,764) 26,009,793
=========== ========== =========== ===========
Statement of income information:
Total interest income 12,718,689 684,788 (273,314) 13,130,163
Total interest expense 9,241,930 468,030 (521,294) 9,188,666
Net interest income 3,476,759 216,758 247,980 3,941,497
Provision for losses on loans -- -- -- --
Noninterest income 565,049 3,090,444 (68,834) 3,586,659
Noninterest expense 2,921,999 2,793,343 447,118 6,162,460
Income tax expense 296,882 200,381 31,632 528,895
Net income (loss) 822,927 313,478 (299,604) 836,801
=========== ========== =========== ===========
Capital expenditures 674,141 7,907 28,914 710,962
=========== ========== =========== ===========
</TABLE>
21
<PAGE> 24
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
---------------------------------------------------
Item 5. Other information
-----------------
On December 28, 1999, the Bank converted from a federally chartered
savings and loan association, regulated by the OTS, to a state
chartered savings bank, regulated by the Missouri Division of Finance
and the Federal Deposit Insurance Corporation. The Company, a unitary
thrift holding company, remains regulated by the OTS.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
Exhibits: None.
Reports on Form 8-K: None.
22
<PAGE> 25
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: February 14, 2000 /s/ Richard C. Fellhauer
---------------------------- ----------------------------------
Richard C. Fellhauer, President,
Chief Executive Officer and
Chairman of the Board
Date: February 14, 2000 /s/ Michael A. Deelo
---------------------------- ----------------------------------
Michael A. Deelo,
Chief Financial Officer
23
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> MAR-31-2000
<PERIOD-START> APR-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 4,171
<INT-BEARING-DEPOSITS> 395
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 197,699
<INVESTMENTS-CARRYING> 600
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<DEPOSITS> 133,351
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<LONG-TERM> 165,854
0
0
<COMMON> 25
<OTHER-SE> 23,197
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<INTEREST-TOTAL> 15,547
<INTEREST-DEPOSIT> 4,152
<INTEREST-EXPENSE> 10,379
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<EXPENSE-OTHER> 6,150
<INCOME-PRETAX> 1,292
<INCOME-PRE-EXTRAORDINARY> 1,292
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<EPS-BASIC> .33
<EPS-DILUTED> .33
<YIELD-ACTUAL> 6.90
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<ALLOWANCE-DOMESTIC> 364
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
