<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
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 Number 0-23817
--------
Northwest Bancorp, Inc.
------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2900888
-------------------------------- ----------------
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification No.)
Liberty Street at Second Avenue, Warren Pennsylvania 16365
- ---------------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(814) 726-2140
--------------
(Registrant's telephone number, including area code)
Not applicable
-----------------------------------------------
(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ______
------
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date:
Common Stock (.10 par value) 46,864,620 shares outstanding as of September 30,
1998.
<PAGE>
NORTHWEST BANCORP, INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
PART I FINANCIAL INFORMATION PAGE
<S> <C> <C>
Item 1. Financial Statements 1 - 7
- Consolidated Statements of Financial Condition
- Consolidated Statements of Income
- Consolidated Statements of Shareholders' Equity
- Consolidated Statements of Cash Flows
- Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of 8 - 17
Financial Condition and Results of
Operations
Item 3. Market Risk 17 - 18
PART II OTHER INFORMATION 19 - 21
</TABLE>
<PAGE>
ITEM 1. FINANCIAL STATEMENTS
NORTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
SEPTEMBER 30, JUNE 30,
ASSETS 1998 1998
- --------------------------------------------------------- ----------------- -----------------
<S> <C> <C>
CASH AND CASH EQUIVALENTS $ 26,482 16,992
INTEREST-EARNING DEPOSITS IN OTHER FINANCIAL
INSTITUTIONS 49,612 42,403
MARKETABLE SECURITIES AVAILABLE-FOR-SALE 305,770 316,715
MARKETABLE SECURITIES HELD-TO-MATURITY (MARKET
VALUE OF $186,274 AND $192,817) 187,294 193,262
----------------- -----------------
TOTAL CASH, INTEREST-EARNING DEPOSITS AND
MARKETABLE SECURITIES 569,158 569,372
LOANS RECEIVABLE, NET OF ALLOWANCE FOR ESTIMATED
LOSSES OF $16,092 AND $15,769 2,009,012 1,907,289
ACCRUED INTEREST RECEIVABLE 13,844 13,254
REAL ESTATE OWNED, NET 3,471 3,506
FEDERAL HOME LOAN BANK STOCK, AT COST 14,508 13,444
PREMISES AND EQUIPMENT, NET 26,750 26,239
GOODWILL AND OTHER INTANGIBLES 24,474 22,065
OTHER ASSETS 6,040 7,415
----------------- -----------------
TOTAL ASSETS $ 2,667,257 2,562,584
================= =================
LIABILITIES AND SHAREHOLDERS' EQUITY
- ---------------------------------------------------------
LIABILITIES:
DEPOSITS $ 2,081,885 2,022,503
BORROWED FUNDS 338,866 289,706
ADVANCES BY BORROWERS FOR TAXES AND INSURANCE 8,305 15,348
ACCRUED INTEREST PAYABLE 4,163 2,932
OTHER LIABILITIES 12,185 12,303
----------------- -----------------
TOTAL LIABILITIES 2,445,404 2,342,792
MINORITY INTEREST IN SUBSIDIARY 0 1,913
SHAREHOLDERS' EQUITY:
COMMON STOCK, $.10 PAR VALUE: 100,000,000 SHARES
AUTHORIZED, 46,864,620 AND 46,840,970 ISSUED
AND OUTSTANDING, RESPECTIVELY 4,686 4,684
PAID-IN CAPITAL 67,376 67,248
RETAINED EARNINGS 148,394 145,259
ACCUMULATED OTHER COMPREHENSIVE INCOME:
NET UNREALIZED GAIN ON SECURITIES AVAILABLE-
FOR-SALE, NET OF INCOME TAXES 4,080 3,371
UNEARNED EMPLOYEE STOCK OWNERSHIP PLAN SHARES (1,412) (1,412)
UNEARNED RECOGNITION AND RETENTION PLAN SHARES (1,271) (1,271)
----------------- -----------------
221,853 217,879
----------------- -----------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 2,667,257 2,562,584
================= =================
</TABLE>
See accompanying notes to unaudited consolidated financial statements
1
<PAGE>
NORTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
<TABLE>
<CAPTION>
THREE MONTHS
ENDED SEPTEMBER 30,
1998 1997
---------- ----------
<S> <C> <C>
INTEREST INCOME:
LOANS RECEIVABLE $ 40,923 33,905
MORTGAGE-BACKED SECURITIES 4,592 4,788
INVESTMENT SECURITIES 3,298 2,136
INTEREST-EARNING DEPOSITS 145 107
----------- --------
TOTAL INTEREST INCOME 48,958 40,936
INTEREST EXPENSE:
DEPOSITS 23,339 19,804
BORROWED FUNDS 4,396 2,360
------------ --------
TOTAL INTEREST EXPENSE 27,735 22,164
NET INTEREST INCOME 21,223 18,772
PROVISION FOR POSSIBLE LOAN LOSSES 790 660
------------ --------
NET INTEREST INCOME AFTER PROVISION
FOR POSSIBLE LOAN LOSSES 20,433 18,112
NONINTEREST INCOME:
LOAN SERVICE CHARGES 294 269
SERVICE FEES ON DEPOSIT ACCOUNTS 714 492
GAIN ON SALE OF MARKETABLE SECURITIES, NET 46 0
LOSS ON SALE OF LOANS, NET (153) (180)
GAIN/(LOSS) ON SALE OF REAL ESTATE OWNED 92 (66)
DIVIDENDS ON FHLB STOCK 240 210
OTHER OPERATING INCOME 783 803
------------ --------
TOTAL NONINTEREST INCOME 2,016 1,528
NONINTEREST EXPENSES:
COMPENSATION AND EMPLOYEE BENEFITS 8,160 6,671
PREMISES AND OCCUPANCY COSTS 1,584 1,324
OFFICE OPERATIONS EXPENSE 985 832
FEDERAL INSURANCE PREMIUMS 277 254
DATA PROCESSING 430 301
CHECK PROCESSING AND ATM EXPENSE 535 336
BANK SERVICE CHARGES 310 241
MARKETING 313 340
LEGAL, AUDIT AND PROFESSIONAL EXPENSE 258 260
REAL ESTATE OWNED EXPENSE 185 184
AMORTIZATION OF INTANGIBLES 634 272
OTHER EXPENSES 447 329
------------ --------
TOTAL NONINTEREST EXPENSE 14,118 11,344
INCOME BEFORE INCOME TAXES 8,331 8,296
STATE AND FEDERAL INCOME TAXES 3,324 3,459
MINORITY INTEREST IN NET LOSS OF SUBSIDIARY 3 0
------------ --------
NET INCOME $ 5,010 4,837
============ ========
BASIC AND DILUTED EARNINGS PER SHARE $ 0.11 0.10*
============ ========
</TABLE>
* EARNINGS PER SHARE ADJUSTED FOR STOCK SPLIT EFFECTIVE NOVEMBER 14, 1997
See accompanying notes to unaudited consolidated financial statements.
2
<PAGE>
NORTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Accum. Unearned Unearned
Other Employee Recognition
Compre- Stock and Total
Common Stock Paid-in Retained hensive Ownership Retention Shareholders'
----------------------
Shares Amount Capital Earnings Income Plan Shares Plan Shares Equity
------------ --------- ------- -------- ------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning balance at 6/30/97 * 46,752,000 $ 2,338 67,854 131,423 1,026 (2,358) (1,789) 198,494
Comprehensive income:
Net income - - - 4,837 - - - 4,837
Change in unrealized gain on
securities, net of tax - - - - 975 - - 975
-------------
Total comprehensive income 5,812
Exercise of stock options 1,120 - 6 - - - - 6
ESOP shares released - - - - - - - 0
RRP shares released - - - - - - - 0
Dividends declared - - - (1,870) - - - (1,870)
------------ --------- ------- -------- ------- ----------- ----------- -------------
Ending balance at 9/30/97 46,753,120 $ 2,338 67,860 134,390 2,001 (2,358) (1,789) 202,442
============ ========= ======= ======== ======= =========== =========== =============
Accum. Unearned Unearned
Other Employee Recognition
Compre- Stock and Total
Common Stock Paid-in Retained hensive Ownership Retention Shareholders'
----------------------
Shares Amount Capital Earnings Income Plan Shares Plan Shares Equity
------------ --------- ------- -------- ------- ----------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Beginning balance at 6/30/98 46,840,970 $ 4,684 67,248 145,259 3,371 (1,412) (1,271) 217,879
Comprehensive income:
Net income - - - 5,010 - - - 5,010
Change in unrealized gain on
securities, net of tax - - - - 709 - - 709
-------------
Total comprehensive income 5,719
Exercise of stock options 23,650 2 128 - - - - 130
ESOP shares released - - - - - - - 0
RRP shares released - - - - - - - 0
Dividends declared - - - (1,875) - - - (1,875)
------------ --------- ------- -------- ------- ----------- ----------- -------------
Ending balance at 9/30/98 46,864,620 $ 4,686 67,376 148,394 4,080 (1,412) (1,271) 221,853
============ ========= ======= ======== ======= =========== =========== =============
</TABLE>
* Adjusted for stock split effective November 14, 1997
<PAGE>
NORTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (UNAUDITED)
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
9/30/98 9/30/97
------------ ------------
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $ 5,010 4,837
Adjustments to reconcile net income to net cash
provided by operations:
Provision for possible loan losses 790 660
Net loss on sales of assets 15 246
Purchase of marketable securities, trading (5,284) -
Proceeds from sale of marketable securities, trading 5,330 -
Depreciation and amortization expense 1,085 796
Accretion of deferred loan fees (402) (93)
Decrease in other assets 1,096 1,042
Increase in other liabilities 1,823 2,580
Accretion of discounts on marketable securities (34) (97)
Noncash compensation expense related to
stock benefit plans 716 651
Other 226 -
------------ ------------
Net cash provided by operating activities 10,371 10,622
INVESTING ACTIVITIES
Purchase of marketable securities held-to-maturity (1,000) (5,415)
Purchase of marketable securities available-for-sale (1,761) (18,622)
Proceeds from maturities and principal reductions
of marketable securities held-to-maturity 7,009 3,158
Proceeds from maturities and principal reductions
of marketable securities available-for-sale 13,228 10,455
Proceeds from sales of marketable securities,
available-for-sale -
Loan originations (222,898) (152,139)
Proceeds from loan maturities and principal reductions 116,232 97,496
Proceeds from loan sales 3,976 9,860
Purchase of Federal Home Loan Bank Stock (1,064) -
Proceeds from sale of real estate owned 553 393
Purchase of real estate for investment (343) (261)
Purchase of premises and equipment (962) (939)
Acquisitions, net of cash received (4,970) -
------------ ------------
Net cash used by investing activities (92,000) (56,014)
</TABLE>
4
<PAGE>
NORTHWEST BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CASH FLOWS (CONTINUED)
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
9/30/98 9/30/97
------------------- -----------------
<S> <C> <C>
FINANCING ACTIVITIES
Increase in deposits, net $ 59,382 48,147
Proceeds from long-term borrowings 85,624 11,769
Repayments of long-term borrowings (49,312) (16,289)
Net increase (decrease) in short-term borrowings 11,422 (35,065)
Decrease in advances by borrowers for
taxes and insurance (7,043) (6,354)
Cash dividends paid (1,875) (1,870)
Proceeds from options exercised 130 -
------------------- -----------------
Net cash provided by financing activities 98,328 338
Net increase (decrease) in cash and cash equivalents $ 16,699 (45,054)
=================== =================
Cash and cash equivalents at beginning of period $ 59,395 71,512
Net increase (decrease) in cash and cash equivalents 16,699 (45,054)
=================== =================
Cash and cash equivalents at end of period $ 76,094 26,458
=================== =================
Cash paid during the year for:
Interest on deposits and borrowings (including interest
credited to deposit accounts of $16,347 and $13,133,
respectively) $ 26,504 20,154
=================== =================
Income taxes $ 1,898 1,218
=================== =================
Business acquisitions:
Fair value of assets acquired $ 3,057 -
Cash paid (4,970) -
Minority interest 1,913 -
------------------- -----------------
Liabilities assumed $ 0 -
=================== =================
Non-cash activities:
Loans transferred to real estate owned $ 426 521
=================== =================
Sale of real estate owned financed by the Company $ 89 2
=================== =================
</TABLE>
5
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) BASIS OF PRESENTATION
---------------------
The accompanying unaudited consolidated financial statements have been prepared
in accordance with instructions for form 10-Q and, accordingly, 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. In the opinion of management, all adjustments,
consisting of normal recurring adjustments, have been included which are
necessary for a fair presentation of financial position and results of
operations. The consolidated statements have been prepared using the accounting
policies described in the financial statements included in Northwest Bancorp,
Inc.'s Annual Report and on Form 10-K for the fiscal year ended June 30, 1998.
Certain items previously reported have been reclassified to conform with the
current period's reporting format. The results of operations for the three
months ended September 30, 1998 are not necessarily indicative of the results
that may be expected for the entire year.
(2) PRINCIPLES OF CONSOLIDATION
---------------------------
The accompanying unaudited consolidated financial statements include the
accounts of Northwest Bancorp, Inc. and its wholly owned subsidiaries, Northwest
Savings Bank, Jamestown Savings Bank, Northwest Consumer Discount Company,
Northwest Finance Company, Northwest Mortgage Corporation, Northwest Financial
Services, Inc., Northwest Capital Group, Inc., Rid Fed, Inc. and Great Northwest
Corporation. All significant intercompany items have been eliminated.
(3) ACCOUNTING DEVELOPMENTS
-----------------------
In June 1997, the FASB released SFAS 130 "Reporting Comprehensive Income" ("SFAS
130"), which establishes standards for reporting and display of comprehensive
income and its components in a full set of general purpose financial statements
for fiscal years beginning after December 15, 1997. As such, the Company
adopted this statement in the current fiscal quarter by adding the required
disclosure in both the Consolidated Statement of Financial Condition and the
Consolidated Statement of Changes in Shareholders' Equity. The adoption of SFAS
130 had no effect on the reported earnings or operations of the Company.
In June 1997, the FASB released SFAS 131 "Disclosures about Segments of an
Enterprise and Related Information" ("SFAS 131"). SFAS 131 establishes
standards for reporting financial information from operating segments in annual
and interim financial statements. It also establishes standards for related
disclosures about products and services, geographic areas, and major customers.
SFAS 131 uses a "management approach" concept as the basis for identifying
6
<PAGE>
reportable segments which focuses on financial information as used internally by
an enterprise's decision makers. This statement is effective for periods
beginning after December 15, 1997 and did not have a material impact on the
consolidated financial statements of the Company.
In February 1998, the FASB released SFAS 132 "Employers' Disclosures about
Pensions and Other Postretirement Benefits, an amendment of FASB Statements No.
87, 88, and 106" (SFAS 132"). SFAS 132 standardizes disclosure requirements for
pensions and postretirement benefits where applicable and suggests a combined
format for presentation purposes, requires additional information on changes in
the benefit obligations and fair values of plan assets, and eliminates certain
disclosures that are no longer useful. This statement, however, does not change
the measurement or recognition requirements of pension or postretirement benefit
plans. SFAS 132 is effective for fiscal years beginning after December 15, 1997
and requires restatement of earlier periods if the information is readily
available. The impact of this statement is not expected to have a material
effect on the Company's financial statements.
In June 1998, the FASB released SFAS 133 "Accounting for Derivative Instruments
and Hedging Activities" ("SFAS 133"). SFAS 133 establishes accounting and
reporting standards for derivative instruments and hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial position and measure those instruments
at fair value. The accounting for changes in the fair value of a derivative
(that is, gains and losses) depends on the intended use of the derivative and
the resulting designation. This statement is effective for all fiscal quarters
of fiscal years beginning after June 15, 1999. Earlier application is
encouraged, however, this statement should not be applied retroactively to
financial statements of prior periods. The Company does not currently
participate in any activity that qualifies as derivative or hedging and,
therefore, does not expect this statement to have a material effect on the
financial statements.
7
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
DISCUSSION OF FINANCIAL CONDITION CHANGES FROM JUNE 30, 1998 TO SEPTEMBER 30,
- -----------------------------------------------------------------------------
1998
- ----
ASSETS
- ------
At September 30, 1998, the Company had total assets of $2.667 billion, an
increase of approximately $104.7 million, or 4.1%, from $2.563 billion at June
30, 1998. This increase was funded primarily by a $59.4 million increase in
deposits, a $49.2 million increase in borrowed funds and net income of $5.0
million.
Cash and cash equivalents, interest-earning deposits and marketable securities
totaled $569.2 million at September 30, 1998, a decrease of $214,000 from $569.4
million at June 30, 1998. Net loans receivable increased by $101.7 million, or
5.3%, to $2.009 billion at September 30, 1998 from $1.907 billion at June 30,
1998 as loan demand remained strong in all of the Company's market areas.
LIABILITIES
- -----------
Deposits increased by $59.4 million, or 2.9%, to $2.082 billion at September 30,
1998 from $2.023 billion at June 30, 1998. This increase resulted primarily
from normal internal deposit growth as well as the opening of a new office in
Stonybrook, York County, Pennsylvania. Borrowed funds increased by $49.2
million, or 17.0%, to $338.9 million at September 30, 1998 from $289.7 million
at June 30, 1998 as an additional means to fund loan growth. Advances by
borrowers for taxes and insurance decreased by $7.0 million, or 45.8%, to $8.3
million at September 30, 1998 from $15.3 million at June 30, 1998. This
decrease typically occurs in the third calendar quarter of each year as real
estate taxes are paid for a substantial number of the Company's mortgage
customers.
CAPITAL RESOURCES AND LIQUIDITY
- -------------------------------
Total capital at September 30, 1998 was $221.9 million, an increase of $4.0
million, or 1.8%, from $217.9 million at June 30, 1998. This increase was
primarily attributable to net income for the three month period of $5.0 million
which was partially offset by the payment of dividends in the amount of $1.9
million. Also contributing to this increase in capital was a $700,000 increase
in the net unrealized gain on securities available-for-sale.
The Company and its subsidiaries are subject to various regulatory capital
requirements administered by the federal banking agencies. Failure to meet
minimum capital requirements can initiate certain mandatory - and possibly
additional discretionary - actions by the regulators that, if undertaken, could
have a direct material effect on the Company's financial statements. Under
8
<PAGE>
capital adequacy guidelines and the regulatory framework for prompt corrective
action, the Company must meet specific capital guidelines that involve
quantitative measures of the Company's assets, liabilities and certain off-
balance sheet items as calculated under regulatory accounting practices. The
Company's capital amounts and classification are also subject to qualitative
judgements by the regulators about components, risk weightings and other
factors.
Quantitative measures established by regulation to ensure capital adequacy
require the Company to maintain minimum amounts and ratios (set forth in the
table below) of Total and Tier I capital (as defined in the regulations) to
risk-weighted assets (as defined), and of Tier I capital to average assets (as
defined).
As of September 30, 1998, all regulatory capital requirements were exceeded.
The actual, required, and well capitalized levels as of September 30, 1998 and
June 30, 1998 are as follows: (in thousands)
<TABLE>
<CAPTION>
September 30, 1998
To be well
Actual Required Capitalized
------------------ ------------------ ----------------
Amount Ratio Amount Ratio Amount Ratio
-------- ------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to risk
weighted assets):
Northwest Bancorp, Inc. $ 209,742 14.84% 113,066 8.00% 141,333 10.00%
Northwest Savings Bank 205,388 14.78% 111,143 8.00% 138,929 10.00%
Jamestown Savings Bank 5,484 19.59% 2,240 8.00% 2,800 10.00%
Tier 1 Capital (to risk
weighted assets):
Northwest Bancorp, Inc. $ 193,650 13.70% 56,533 4.00% 84,800 6.00%
Northwest Savings Bank 189,554 13.64% 55,571 4.00% 83,357 6.00%
Jamestown Savings Bank 5,226 18.66% 1,120 4.00% 1,680 6.00%
Tier 1 Capital (core)
(to average assets):
Northwest Bancorp, Inc. $ 193,650 7.42% 78,336 3.00%(*) 130,561 5.00%
Northwest Savings Bank 189,554 7.44% 76,433 3.00%(*) 127,388 5.00%
Jamestown Savings Bank 5,226 8.40% 1,865 3.00%(*) 3,109 5.00%
</TABLE>
9
<PAGE>
<TABLE>
<CAPTION>
June 30, 1998
To be well
Actual Required Capitalized
-------------------- ----------------- ----------------
Amount Ratio Amount Ratio Amount Ratio
-------- --------- -------- ------- -------- -------
<S> <C> <C> <C> <C> <C> <C>
Total Capital (to risk
weighted assets):
Northwest Bancorp, Inc. $210,483 15.52% 108,469 8.00% 135,587 10.00%
Northwest Savings Bank 200,669 15.12% 106,182 8.00% 132,728 10.00%
Jamestown Savings Bank 5,520 20.70% 2,133 8.00% 2,667 10.00%
Tier 1 Capital (to risk
weighted assets):
Northwest Bancorp, Inc. $194,714 14.36% 54,235 4.00% 81,352 6.00%
Northwest Savings Bank 185,131 13.95% 53,091 4.00% 79,637 6.00%
Jamestown Savings Bank 5,273 19.77% 1,067 4.00% 1,600 6.00%
Tier 1 Capital (core)
(to average assets):
Northwest Bancorp, Inc. $194,714 7.82% 74,657 3.00%(*) 124,428 5.00%
Northwest Savings Bank 185,131 7.63% 72,763 3.00%(*) 121,271 5.00%
Jamestown Savings Bank 5,273 9.12% 1,734 3.00%(*) 2,890 5.00%
</TABLE>
* The FDIC has indicated that the most highly rated institutions which meet
certain criteria will be required to maintain a ratio of 3%, and all other
institutions will be required to maintain an additional capital cushion of 100
to 200 basis points. As of September 30, 1998, the Company had not been advised
of any additional requirements in this regard.
The Company is required to maintain a sufficient level of liquid assets, as
determined by management and defined and reviewed for adequacy by the FDIC
during their regular examinations. The Company's internal liquidity requirement
is based upon liquid assets as a percentage of deposits and borrowings
("liquidity ratio"). The Company has always maintained a level of liquid assets
in excess of regulatory and internal requirements, and the liquidity ratio at
September 30, 1998 was 22.42%. The Company adjusts its liquidity levels in
order to meet funding needs for deposit outflows, payment of real estate taxes
and insurance on mortgage loan escrow accounts, repayment of borrowings, when
applicable, and loan commitments.
NONPERFORMING ASSETS
- --------------------
The following table sets forth information with respect to the Company's
nonperforming assets. Nonaccrual loans are those loans on which the accrual of
interest has ceased. Loans are placed on nonaccrual status when they are more
than 90 days contractually delinquent. Other nonperforming assets represent
property acquired by the Company through foreclosure or repossession.
Foreclosed property is carried at the lower of its fair value or the principal
balance of the related loan. Nonperforming assets increased $1.8 million, or
14.9%, to $13.9 million at September 30, 1998 from $12.1 million at June 30,
1998. Management believes that the Company's asset quality remains
exceptionally strong and that this increase in nonperforming
10
<PAGE>
assets is cyclical in nature and does not indicate a permanent downward trend in
the Company's asset quality.
<TABLE>
<CAPTION>
September 30, 1998 June 30, 1998
------------------- --------------
<S> <C> <C>
Loans accounted for on a nonaccrual basis:
One-to four family residential loans $ 6,419 $ 6,013
Multifamily and commercial loans 1,536 929
Consumer loans 2,381 1,631
Commercial business loans 66 39
------- ------
Total $ 10,402 $ 8,612
======= ======
Total nonperforming loans as a
percentage of net loans receivable .52% .45%
======= ======
Total real estate acquired through
foreclosure and other real estate owned $ 3,471 $ 3,506
------- ------
Total nonperforming assets $ 13,873 $ 12,118
======= ======
Total nonperforming assets as a
percentage of total assets .52% .47%
======= ======
</TABLE>
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 1998
- -----------------------------------------------------------------------------
AND 1997
- --------
GENERAL
- -------
Northwest Bancorp, Inc. had net income for the three months ended September 30,
1998 of $5.0 million compared to $4.8 million for the three months ended
September 30, 1997. This increase in net income resulted primarily from a $2.4
million increase in net interest income and a $500,000 increase in noninterest
income which were partially offset by a $2.8 million increase in noninterest
expense.
NET INTEREST INCOME
- -------------------
For the three months ended September 30, 1998, total interest income increased
by $8.1 million, or 19.8%, to $49.0 million compared to $40.9 million for the
three months ended September 30, 1997. This increase primarily resulted from a
$505.1 million, or 25.2%, increase in average interest earning assets to $2.513
billion for the three months ended September 30, 1998 from $2.008 billion for
the three months ended September 30, 1997. The yield on average interest
earning assets decreased to 7.79% for the three months ended September 30, 1998
from 8.15% for the same period last year. In addition to substantial internal
growth and new office openings,
11
<PAGE>
the increase in average interest earning assets was assisted by the acquisition
of Jamestown Savings Bank on March 24, 1998 with assets of $55.7 million. The
decrease in the overall yield on interest earning assets is reflective of the
lower market interest rates in general.
Interest income on loans receivable increased by $7.0 million, or 20.6%, to
$40.9 million for the quarter ended September 30, 1998 compared to $33.9 million
during the same quarter last year. This increase resulted primarily from a
$400.9 million, or 25.8%, increase in average loans outstanding to $1.958
billion for the quarter ended September 30, 1998 from $1.557 billion for the
first quarter last year. Loan balances increased because of strong loan demand
throughout the Company's market area as well as the addition of Jamestown
Savings Bank which contributed net loans of approximately $27.7 million.
Partially offsetting the increase in volume was a decrease in the yield on
average loans to 8.36% for the three months ended September 30, 1998 from 8.71%
for the comparable period last year primarily as a result of mortgage loan
prepayments, the proceeds from which were used to fund additional loans at lower
rates of interest.
Interest income on mortgage-backed securities decreased by $196,000, or 4.1%, to
$4.6 million for the three months ended September 30, 1998 compared to $4.8
million for the three months ended September 30, 1997. This decrease resulted
primarily from a decrease in the average yield to 6.11% for the quarter ended
September 30, 1998 from 6.61% for the same quarter last year. The average yield
on mortgage-backed securities declined as a result of a large percentage of the
portfolio having variable interest rates which repriced at lower market rates.
Partially offsetting the decrease in the average yield was an increase in the
average balance of mortgage-backed securities by $10.9 million, or 3.8%, to
$300.4 million for the three months ended September 30, 1998 from $289.5 million
for the three months ended September 30, 1997. The average balance increased
primarily because of the purchase of approximately $32.0 million of mortgage-
backed securities throughout the second and third quarters of fiscal 1998.
Interest income on investment securities increased by $1.2 million, or 57.1%, to
$3.3 million for the three months ended September 30, 1998 from $2.1 million for
the three months ended September 30, 1997. This increase resulted primarily
from a $69.0 million, or 52.6%, increase in the average balance of investment
securities to $200.2 million for the three months ended September 30, 1998 from
$131.2 million for the three months ended September 30, 1997. The increase in
average balance was primarily due to the investment of deposits and borrowings
in an attempt to improve net interest income as well as approximately $17.7
million from the addition of Jamestown Savings Bank's investment portfolio.
Contributing to the increase in interest income on investment securities was an
increase in the average yield to 6.59% for the quarter ended September 30, 1998
from 6.51% for the same quarter last year. This increase in yield resulted
primarily from the purchase of approximately $30 million of fixed-rate trust
preferred securities from other financial institutions throughout the last
fiscal year which have higher market yields compared to other securities
typically purchased by the Company. Partially offsetting the higher yields on
the trust preferred securities was the lower nominal interest rates received on
approximately $24 million of tax exempt securities that the Company purchased
during the last twelve months.
12
<PAGE>
Interest income on interest-earning deposits increased by $38,000, or 35.5%, to
$145,000 for the three months ended September 30, 1998 from $107,000 for the
three months ended September 30, 1997. This increase resulted primarily from a
$24.2 million, or 78.8%, increase in the average balance of overnight funds to
$54.9 million for the three months ended September 30, 1998 from $30.7 million
for the three months ended September 30, 1997. Partially offsetting the
increase in average balance was a decrease in average yield for the quarter
ended September 30, 1998 to 1.06% from 1.40% for the same period last year. This
decrease in average yield is reflective of lower market interest rates in
general.
Interest expense increased by $5.5 million, or 24.8%, to $27.7 million for the
three months ended September 30, 1998 from $22.2 million for the three months
ended September 30, 1997. This increase resulted primarily from an increase of
$510.0 million, or 27.4%, in the average balance of interest-bearing liabilities
to $2.371 billion for the quarter ended September 30, 1998 from $1.861 billion
for the quarter ended September 30, 1997. Partially offsetting the increase in
volume was a decrease in the average cost of funds to 4.68% for the three months
ended September 30, 1998 from 4.76% for the comparable period last year. The
increase in average interest-bearing liabilities resulted primarily from a
$419.6 million increase in the average balance of deposits attributed primarily
to the acquisition of 10 branch offices in December 1997 and the addition of
Jamestown Savings Bank which contributed deposits of $166.1 million and $49.8
million, respectively. In addition, above average internal growth and new
office openings accounted for the remaining increase in deposits. Also
contributing to the increase in interest-bearing liabilities was an increase of
$120.3 million, or 62.8%, in average borrowed funds to $311.8 million for the
quarter ended September 30, 1998 from $191.5 million for the quarter ended
September 30, 1997. Borrowings increased in order to fund growing loan demand
and to fund the purchase of marketable securities in order to enhance the
Company's net interest income. The decrease in the average cost of funds was
primarily the result of lower market rates on deposit accounts and borrowed
funds.
As a result of the foregoing changes in interest income and interest expense,
net interest income increased by $2.4 million, or 12.8%, to $21.2 million for
the three months ended September 30, 1998 compared to $18.8 million for the
three months ended September 30, 1997.
PROVISION FOR LOAN LOSSES
- -------------------------
The provision for possible loan losses increased by $130,000, or 19.7%, to
$790,000 for the three months ended September 30, 1998 from $660,000 for the
three months ended September 30,1997. The Company has increased its provision
for possible loan losses primarily in response to significant growth in its loan
portfolio over the past twelve months as credit quality has remained
consistently strong.
13
<PAGE>
NONINTEREST INCOME
- ------------------
Noninterest income increased by $488,000, or 31.9%, to $2.0 million for the
three months ended September 30, 1998 from $1.5 million for the three months
ended September 30, 1997. This increase was primarily due an increase in fee
income as a result of the introduction of a debit card program with related
transaction fee income.
NONINTEREST EXPENSE
- -------------------
Noninterest expense increased by $2.8 million, or 24.8%, to $14.1 million for
the three months ended September 30, 1998 from $11.3 million for the three
months ended September 30, 1997. This increase was primarily attributable to an
increase in compensation and benefits of $1.5 million, or 22.4%, to $8.2 million
for the quarter ended September 30, 1998 from $6.7 million for the same period
last year primarily as a result of adding employees to support the Company's
expanded menu of services and its additional banking facilities. Also
contributing to the increase in noninterest expense was an increase in
amortization expense of $362,000 as a result of the increase in intangibles
created from the previously mentioned branch acquisitions. Other increases
relating to inflation and growth were experienced in premises and occupancy
costs which increased $260,000, or 19.6%, office operations expense which
increased $153,000, or 18.4%, data processing expense which increased $129,000,
or 42.9%, and check processing and ATM expense which increased $199,000, or
59.2%.
INCOME TAXES
- ------------
The provision for income taxes for the three months ended September 30, 1998
decreased by $135,000, or 3.9%, to $3.3 million compared $3.5 million for the
same period last year. This was primarily due to a lower effective tax rate as
a result of the Company's increased emphasis on investing in tax exempt assets.
YEAR 2000
- ---------
The Company has devoted substantial resources to address the possible impact of
issues relating to the year 2000 ("Y2K") on the Company and its operations.
After several years of assessing the potential problems, the Company adopted a
formal plan addressing the Y2K issue in 1997.
The Company's most critical operating system is its core application processing
and the Company plans to eliminate potential Y2K problems by converting to a new
core application processing system in the fourth quarter of 1998. Although the
system's Y2K capabilities have already been tested by other users, on-site
testing of the computer system's Y2K readiness, as well as all mission critical
processes, is expected to be completed by the Company by June 30, 1999. The
14
<PAGE>
approximate cost of this conversion is $2,000,000, which will be capitalized and
expensed over various periods ranging from five to ten years.
Other than the core application conversion, costs relating to Y2K issues are not
expected to be material and are not expected to have a material effect on the
results of operations of the Company.
The Company is continuously monitoring relationships with material third
parties, including large deposit and loan customers, to assess the progress of
their Y2K efforts. It is possible that the Company could be negatively impacted
in the year 2000 because external parties have not successfully addressed their
Y2K issues. Although the effects of such third party problems are not known, the
Company does not foresee any problems which will be material in nature. To
mitigate its exposure to the failure of third parties, the Company is actively
designing a contingency plan which will allow it to continue services in the
event unforeseeable external factors disrupt normal operations in the year 2000.
However, there can be no assurance that any contingency plans will completely
mitigate the effects of any such failure.
15
<PAGE>
AVERAGE BALANCE SHEET
(Dollars in Thousands)
The following table sets forth certain information relating to the Company's
average balance sheet and reflects the average yield on assets and average cost
of liabilities for the periods indicated. Such yields and costs are derived by
dividing income or expense by the average balance of assets or liabilities,
respectively, for the periods presented. Average balances are derived from
month-end balances.
<TABLE>
<CAPTION>
Three Months Ended September 30,
1998 1997
-------------------------------- ------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------------------------------- ------------------------------
<S> <C> <C> <C> <C> <C> <C>
Assets:
- ------------------------------------------
Interest earning assets:
Loans receivable (a) (b) $1,957,578 40,923 8.36% 1,556,659 33,905 8.71%
Mortgage-backed securities (c) (d) 300,417 4,592 6.11 289,534 4,788 6.61
Investment securities (b) (c) (d) (e) 200,184 3,298 6.59 131,152 2,136 6.51
Other interest-earning deposits 54,894 145 1.06 30,662 107 1.40
---------- ------- ---------- ----------
Total interest earning assets 2,513,073 48,958 7.79 2,008,007 40,936 8.15
Noninterest earning assets 110,408 83,670
---------- ----------
Total assets $2,623,481 2,091,677
========== ==========
Liabilities and Shareholders' Equity:
- ------------------------------------------
Interest bearing liabilities:
Passbook and statement savings $ 327,763 2,831 3.45 285,089 2,483 3.48
Now accounts 327,857 1,152 1.41 228,679 1,114 1.95
Money market demand accounts 114,565 1,059 3.70 83,103 703 3.38
Certificate accounts 1,289,380 18,297 5.68 1,073,076 15,504 5.78
Borrowed funds (f) 311,841 4,396 5.64 191,474 2,360 4.93
---------- ------- ---------- ----------
Total interest bearing liabilities 2,371,406 27,735 4.68 1,861,421 22,164 4.76
Noninterest bearing liabilities 31,407 30,463
---------- ----------
Total liabilities 2,402,813 1,891,884
Minority interest in subsidiary 957 0
Shareholders' equity 219,711 199,793
---------- ----------
Total liabilities and equity $2,623,481 2,091,677
========== ==========
Net interest income/Interest rate spread $21,223 3.11% $ 18,772 3.39%
======= ==========
Net interest earning assets $ 141,667 $ 146,586
========== ==========
Net interest margin 3.38% 3.74%
Ratio of interest earning assets to
interest bearing liabilities 1.06 X 1.08 X
========== =======
</TABLE>
(a) Average loans receivable includes loans held as available-for-sale and loans
placed on nonaccrual status.
(b) Interest income on tax-free loans and investment securities is not presented
on a taxable equivalent basis.
(c) Average balances include the effect of unrealized gains or losses on
securities held as available-for-sale.
(d) Interest income on marketable securities does not include market value
adjustments for securities available for sale.
(e) Average balances include FNMA and FHLMC stock but do not include FHLB stock.
(f) Average balances include FHLB borrowings, securities sold under agreements
to repurchase and other borrowings.
16
<PAGE>
RATE/VOLUME ANALYSIS
(Dollars in Thousands)
The following table represents the extent to which changes in interest rates and
changes in the volume of interest-earning assets and interest-bearing
liabilities have affected the Company's interest income and interest expense
during the periods indicated. Information is provided in each category with
respect to (i) changes attributable to changes in volume (changes in volume
multiplied by prior rate), (ii) changes attributable to changes in rate (changes
in rate multiplied by prior volume), (iii) changes in rate-volume (changes in
rate multiplied by changes in volume), and (iv) the net change.
Three months ended September 30, 1998 and 1997
<TABLE>
<CAPTION>
Rate/ Net
Rate Volume Volume Change
-------- ------ ------- -------
<S> <C> <C> <C> <C>
Interest earning assets:
Loans receivable $(1,363) 8,732 (351) 7,018
Mortgage-backed securities (362) 180 (14) (196)
Investment securities 25 1,124 13 1,162
Other interest-earning deposits (26) 85 (21) 38
------- ------ ---- -----
Total interest earning assets (1,726) 10,121 (373) 8,022
Interest bearing liabilities:
Passbook and statement savings (21) 372 (3) 348
Now accounts (310) 483 (135) 38
Money market demand accounts 65 266 25 356
Certificate accounts (276) 3,125 (56) 2,793
Borrowed funds 39 1,484 213 2,036
------- ------ ---- -----
Total interest bearing liabilities (203) 5,730 44 5,571
Net change in interest income $(1,523) 4,391 (417) 2,451
======= ====== ==== =====
</TABLE>
ITEM 3. MARKET RISK
As a bank holding company, the Company's primary market risk is interest rate
risk. Interest rate risk is the sensitivity of net interest income to
variations in interest rates over a specified time period. This sensitivity
results from differences in the time periods in which interest rate sensitive
assets and liabilities mature or reprice. The Company attempts to control
interest rate risk by more closely matching, within acceptable limits, the
repricing periods of its assets and liabilities. Because the Company's interest
sensitive liabilities typically have repricing periods or maturities of short
duration, the Company has attempted to shorten the maturities of its assets by
emphasizing the origination of short-term, fixed-rate consumer loans, one-to-
four family residential mortgage loans with terms of fifteen years or less and
adjustable rate mortgage loans, consumer loans and commercial loans. In
addition, the Company has purchased shorter term or adjustable-rate investment
securities and adjustable-rate mortgage-backed securities.
The Company has a Risk Management Committee comprised of certain members of the
Board of Directors which meets quarterly and reviews interest rate risks and
trends, the Company's interest
17
<PAGE>
sensitivity position, the Company's liquidity position and the market value of
the Company's investment portfolio.
In an effort to assess market risk, the Company utilizes a simulation model to
determine the effect of immediate incremental increases and decreases in
interest rates on net interest income and the market value of the Company's
equity. Certain assumptions are made regarding loan prepayments and decay rates
of passbook and NOW accounts. Because it is difficult to accurately project the
market reaction of depositors and borrowers, the effects of actual changes in
interest on these assumptions may differ from simulated results. The Company
has established the following guidelines for assessing interest rate risk:
Net interest margin simulation. Given a parallel shift of 2% in interest rates,
the estimated net interest margin may not change by more than 30% within a one-
year period.
Market value of equity simulation. The market value of the Company's equity is
the present value of the Company's assets and liabilities. Given a parallel
shift of 2% in interest rates, the market value of equity may not decrease by
more than 50% of total shareholders' equity.
The following table illustrates the simulated impact of a 1% or 2% upward or
downward movement in interest rates on net income, return on average equity,
earnings per share and market value of equity. This analysis was prepared
assuming that interest-earning asset levels at September 30, 1998 remain
constant. The impact of the rate movements was computed by simulating the
effect of an immediate and sustained shift in interest rates over a twelve month
period from the September 30, 1998 levels.
<TABLE>
<CAPTION>
Increase Decrease
------------------ ---------------
<S> <C> <C> <C> <C>
Parallel shift in interest rates over the next 12 months 1.0% 2.0% 1.0% 2.0%
----- ----- ----- -----
Projected percentage increase/(decrease) in net income (3.5%) (9.2%) 5.0% 11.3%
Projected increase/(decrease) in return on average equity (0.3%) (0.8%) 0.5% 1.0%
Projected increase/(decrease) in earnings per share ($.01) ($.04) $ .02 $ .05
Projected percentage increase/(decrease) in market value of equity (11.5%) (30.7%) 12.1% 24.8%
</TABLE>
The figures included in the table above represent projections which were
computed based upon certain assumptions including prepayment rates and decay
rates which cannot be accurately predicted. There are no assurances that these
assumptions and the resultant impact on the Company's financial ratios will
approximate the figures presented above.
18
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
- -------------------------
Northwest Savings Bank and Northwest Bancorp MHC, along with unrelated parties,
have been named as defendants in a class action lawsuit filed in the Allegheny
County Court of Common Pleas. This lawsuit is brought on behalf of purchasers of
common stock in the Bank's initial public offering in November 1994. It alleges
that the defendants breached their contractual obligations and fiduciary duties
by carrying out the offering at a price that allegedly was not justified by
market and financial conditions. The defendants previously obtained the
dismissal of a lawsuit brought by the same counsel in federal court making
similar allegations under federal law. Management intends to vigorously defend
this lawsuit.
The Company and its subsidiaries are subject to a number of other asserted and
unasserted claims encountered in the normal course of business. Management
believes that the aggregate liability, if any, that may result from such
potential litigation will not have a material adverse effect on the Company's
financial statements.
ITEM 2. CHANGES IN SECURITIES
- -----------------------------
Not applicable.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
- ---------------------------------------
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
- -----------------------------------------------------------
Not applicable.
ITEM 5. OTHER INFORMATION
- -------------------------
HOLDING COMPANY REORGANIZATION
- ------------------------------
On February 17, 1998 Northwest Savings Bank reorganized into a two-tier holding
company structure. The Bank formed a new, state chartered stock holding
company, Northwest Bancorp, Inc., which is 69.2% owned by Northwest Bancorp MHC.
As a result of this reorganization, Northwest Bancorp, Inc. became the parent
company of Northwest Savings Bank and owns 100% of the Bank's common stock. The
previous shareholders of Northwest Savings Bank stock received an equivalent
number of shares of the new publicly traded entity, Northwest Bancorp, Inc.
Aside from this two-tier holding company structure giving the Company greater
flexibility
19
<PAGE>
by maintaining the benefits of the mutual holding company while capitalizing on
the additional opportunities available to stock holding companies, the
operations remain unchanged.
The reorganization was accounted for in a manner similar to a pooling of
interests. Accordingly, the prior years' consolidated financial statements of
Northwest Bancorp, Inc. are identical to that of Northwest Savings Bank.
BUSINESS COMBINATIONS
- ---------------------
In August 1998, Northwest Bancorp, Inc. successfully completed its tender offer
for all remaining outstanding shares of Jamestown Savings Bank increasing its
ownership to 100%. Jamestown Savings Bank operates three full service offices
in Chautauqua County, New York.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
- ----------------------------------------
(a) Exhibit No. 11 Statement re: computation of per share earnings
<TABLE>
<CAPTION>
Three Months Three Months
Ended Ended
September 30, 1998 September 30, 1997
------------------ ------------------
<S> <C> <C>
Net income applicable to common stock $ 5,009,533 $ 4,837,188
Weighted-average common shares outstanding 46,559,719 46,271,118*
----------- ------------
Basic earnings per share $ 0.11 $ 0.10*
=========== ============
Weighted-average common shares outstanding 46,559,719 46,271,118*
Common stock equivalents due to effect of stock options 612,985 559,690*
----------- ------------
Total weighted-average common shares and equivalents 47,172,704 46,830,808*
Diluted earnings per share $ 0.11 $ 0.10*
=========== ============
</TABLE>
* Adjusted for stock split effective November 14, 1997
Exhibit No. 27 Financial Data Schedule attached
(b) On August 14, 1998 form 8-K was filed regarding the Company's
agreement with National City Bank of Pennslyvania to purchase eight
community banking offices in Western Pennsylvania with deposits of
approximately $198 million.
20
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
NORTHWEST BANCORP, INC.
Date: November 12, 1998 By: /s/ John O. Hanna
--------------------
John O. Hanna
President and Chief Executive Officer
Date: November 12, 1998 By: /s/ William J. Wagner
----------------------
William J. Wagner
Chief Operating Officer
Chief Financial Officer
21
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> SEP-30-1998
<CASH> 26,482
<INT-BEARING-DEPOSITS> 49,612
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 305,770
<INVESTMENTS-CARRYING> 187,294
<INVESTMENTS-MARKET> 186,274
<LOANS> 2,009,012
<ALLOWANCE> 16,092
<TOTAL-ASSETS> 2,667,257
<DEPOSITS> 2,081,885
<SHORT-TERM> 178,747
<LIABILITIES-OTHER> 24,653
<LONG-TERM> 160,119
0
0
<COMMON> 4,686
<OTHER-SE> 217,167
<TOTAL-LIABILITIES-AND-EQUITY> 2,667,257
<INTEREST-LOAN> 40,923
<INTEREST-INVEST> 7,890
<INTEREST-OTHER> 145
<INTEREST-TOTAL> 48,958
<INTEREST-DEPOSIT> 23,339
<INTEREST-EXPENSE> 27,735
<INTEREST-INCOME-NET> 21,223
<LOAN-LOSSES> 790
<SECURITIES-GAINS> 46
<EXPENSE-OTHER> 14,118
<INCOME-PRETAX> 8,331
<INCOME-PRE-EXTRAORDINARY> 8,331
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,010
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
<YIELD-ACTUAL> 7.79
<LOANS-NON> 10,402
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 15,769
<CHARGE-OFFS> 650
<RECOVERIES> 183
<ALLOWANCE-CLOSE> 16,092
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 16,092
</TABLE>
