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 quarter 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 number 0-23533
MYSTIC FINANCIAL, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 04-3401049
- --------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
60 HIGH STREET
MEDFORD, MASSACHUSETTS 02155
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (781) 395-2800
--------------
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
----- -----
As of February 10, 2000, 2,206,504 shares of the registrant's common stock
were outstanding.
MYSTIC FINANCIAL, INC. AND SUBSIDIARY
INDEX
PART I FINANCIAL INFORMATION Page
--------------------- ----
Item 1 Financial Statements:
Consolidated Balance Sheets - December 31, 1999
and June 30, 1999 3
Consolidated Statements of Income - Three and Six Months
Months Ended December 31, 1999 and 1998 4
Consolidated Statement of Changes in Stockholders'
Equity - Six Months Ended December 31, 1999 and 1998 5
Consolidated Statements of Cash Flows - Six Months
Ended December 31, 1999 and 1998 6
Notes to Unaudited Consolidated Financial Statements -
December 31, 1999 7
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Item 3 Quantitative and Qualitative Disclosures About
Market Risk 25
PART II OTHER INFORMATION
-----------------
Item 6 Exhibits and Reports on Form 8-K 25
SIGNATURES 25
----------
Mystic Financial, Inc. and Subsidiary
Part I - Financial Information
Item 1 - Financial Statements
Consolidated Balance Sheets
(In Thousands)
<TABLE>
<CAPTION>
December 31, 1999 June 30, 1999
----------------- -------------
(Unaudited)
<S> <C> <C>
Assets
Cash and due from banks $ 7,585 $ 6,442
Federal funds sold 3,996 11,674
Short-term investments 176 605
---------------------------
Total cash and cash equivalents 11,757 18,721
Securities available for sale, at fair value 30,547 31,772
Securities held to maturity, at amortized cost - 1,500
Federal Home Loan Bank stock, at cost 1,698 1,080
Loans, net of allowance for loan losses of $1,456
and $1,348, respectively 175,461 154,689
Mortgage loans held for sale, net 433 406
Bank premises and equipment, net 2,559 2,657
Real estate held for investment, net 1,701 1,730
Accrued interest receivable 1,210 1,265
Due from Co-operative Central Bank 929 929
Other assets 1,178 465
---------------------------
$227,473 $215,214
===========================
Liabilities and Stockholders' Equity
Deposits $159,809 $160,867
Federal Home Loan Bank borrowings 33,964 18,978
Mortgagors' escrow accounts 702 547
Accrued interest payable 400 334
Accrued expenses and other liabilities 543 436
---------------------------
Total liabilities 195,418 181,162
---------------------------
Stockholders' equity
Preferred stock, $.01 par value, 1,000,000 shares
authorized; none issued - -
Common stock, $.01 par value, 5,000,000 shares
authorized, 2,711,125 issued 27 27
Additional paid-in capital 25,651 25,688
Retained earnings 14,750 14,128
Treasury stock, at cost - 388,490 and 266,247 shares
at December 31, 1999 and June 30, 1999, respectively (4,937) (3,485)
Accumulated other comprehensive income 124 394
Unearned ESOP shares (2,508) (2,700)
Unearned RRP stock (1,052) -
---------------------------
Total stockholders' equity 32,055 34,052
---------------------------
$227,473 $215,214
===========================
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
Mystic Financial, Inc. and Subsidiary
Part I - Financial Information
Item 1 - Financial Statements
Consolidated Statements of Income
(In Thousands, Except Per Share Data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
-------------------- --------------------
December December December December
31, 1999 31, 1998 31, 1999 31, 1998
-------- -------- -------- --------
(Unaudited)
<S> <C> <C> <C> <C>
Interest and dividend income:
Interest and fees on loans $ 3,382 $ 2,811 $ 6,505 $ 5,584
Interest and dividends on investment securities 462 294 937 642
Other interest 94 243 220 447
-------------------------------------------
Total interest and dividend income 3,938 3,348 7,662 6,673
-------------------------------------------
Interest expense
Deposits 1,345 1,219 2,637 2,448
Federal Home Loan Bank borrowings 431 277 742 530
-------------------------------------------
Total interest expense 1,776 1,496 3,379 2,978
-------------------------------------------
Net interest income 2,162 1,852 4,283 3,695
Provision for loan losses 75 30 115 90
-------------------------------------------
Net interest income, after provision for loan losses 2,087 1,822 4,168 3,605
-------------------------------------------
Other income:
Customer service fees 148 134 289 269
Gain on sales of mortgage loans 2 80 2 89
Gain on sales of securities available for sale, net 36 - 67 61
Co-operative Central Bank Share Insurance Fund
Special Dividend 35 51 35 51
Miscellaneous 50 55 94 93
-------------------------------------------
Total other income 271 320 487 563
-------------------------------------------
Operating expenses:
Salaries and employee benefits 1,035 810 1,971 1,646
Occupancy and equipment expenses 164 118 328 233
Data processing expenses 77 78 143 149
Other general and administrative expenses 430 455 757 774
-------------------------------------------
Total operating expenses 1,706 1,461 3,199 2,802
-------------------------------------------
Income before income taxes 652 681 1,456 1,366
Provision for income taxes 255 272 572 542
-------------------------------------------
Net income $ 397 $ 409 $ 884 $ 824
===========================================
Earnings per share basic and diluted $ 0.19 $ 0.16 $ 0.41 $ 0.32
===========================================
Weighted average shares outstanding - basic 2,094 2,574 2,155 2,602
===========================================
Weighted average shares outstanding - diluted 2,094 2,574 2,155 2,602
===========================================
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
Mystic Financial, Inc. and Subsidiary
Part I - Financial Information
Item 1 - Financial Statements
Consolidated Statements of Changes in Stockholders' Equity
Six Months Ended December 31, 1999 and 1998
(In Thousands)
<TABLE>
<CAPTION>
Accumulated
Additional Other Unearned Unearned Total
Common Paid-In Retained Treasury Comprehensive ESOP RRP Stockholders'
Stock Capital Earnings Stock Income Shares Stock Equity
------ ---------- -------- -------- ------------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at June 30, 1999 $27 $25,688 $14,128 $(3,485) $394 $(2,700) $ - $34,052
Comprehensive income:
Net income - - 884 - - - - 884
Change in net unrealized gain
on securities available for
sale, net of tax effects (270) - (270)
-------
Total comprehensive income 614
-------
Dividend paid ($0.12 per share) (262) (262)
Decrease in unearned ESOP shares (37) 192 - 155
Purchase of RRP stock (1,295) (1,295)
Purchase of treasury stock (1,452) (1,452)
Decrease in unearned RRP stock 243 243
------------------------------------------------------------------------------------------
Balance at December 31, 1999 $27 $25,651 $14,750 $(4,937) $124 $(2,508) $(1,052) $32,055
==========================================================================================
Balance at June 30, 1998 $27 $25,710 $13,173 $ (21) $432 $(3,194) $ - $36,127
-------
Comprehensive income:
Net income - - 824 - - - - 824
Change in net unrealized gain
on securities available for
sale, net of tax effects 217 - 217
-------
Total comprehensive income 1,041
-------
Dividend paid ($.10 per share) (264) - (264)
Purchase of treasury stock (1,967) - (1,967)
Decrease in unearned ESOP shares 319 - 319
------------------------------------------------------------------------------------------
Balance at December 31, 1998 $27 $25,710 $13,733 $(1,988) $649 $(2,875) $ - $35,256
==========================================================================================
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
Mystic Financial, Inc. and Subsidiary
Part I - Financial Information
Item 1 - Financial Statements
Consolidated Statements of Cash Flows
(In Thousands)
<TABLE>
<CAPTION>
Six Months Ended
--------------------------------------
December 31, 1999 December 31, 1998
----------------- -----------------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 884 $ 824
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses 115 90
Net amortization (accretion) of securities (8) 19
Gain on sales of securities available for sale (67) (61)
Gain on sale of loans - (89)
Amortization of unearned ESOP shares 155 319
Amortization of unearned RRP stock 243 -
Depreciation expense 186 166
Net change in mortgage loans held for sale (27) 80
Decrease in accrued interest receivable 55 83
Increase in other assets (567) (173)
Increase in accrued interest payable 66 56
Increase (decrease) in accrued expenses and other liabilities 107 (609)
-----------------------------
Net cash provided by operating activities 1,142 705
-----------------------------
Cash flows from investing activities:
Maturities of securities held to maturity 1,500 7,500
Sales of securities available for sale 3,707 1,097
Principal pay downs on mortgage-backed securities 110 -
Purchase of securities available for sale (2,933) (1,765)
Purchase of Federal Home Loan Bank Stock (618) (8)
Loans originated, net of payments received (20,887) (12,315)
Proceeds from sale of loans - 7,820
Purchases of banking premises and equipment (59) (362)
-----------------------------
Net cash (used) provided by investing activities (19,180) 1,967
-----------------------------
Cash flows from financing activities:
Net (decrease) increase in deposits (1,058) 8,056
Proceeds from borrowings 24,702 3,600
Repayment of borrowings (9,716) (13)
Net increase in mortgagors' escrow accounts 155 194
Dividends paid (262) (264)
Purchase of treasury stock (1,452) (1,967)
Purchase of RRP stock (1,295) -
-----------------------------
Net cash provided by financing activities 11,074 9,606
-----------------------------
Net change in cash and cash equivalents (6,964) 12,278
Cash and cash equivalents at beginning of period 18,721 25,979
-----------------------------
Cash and cash equivalents at end of period $ 11,757 $ 38,257
=============================
Supplemental cash flow information:
Interest paid $ 3,313 $ 2,922
Income taxes paid 835 813
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
Mystic Financial, Inc. and Subsidiary
Part I - Financial Information
Item 1 - Financial Statements
Notes to Unaudited Consolidated Financial Statements
December 31, 1999
1) Basis of Presentation and Consolidation
The unaudited consolidated interim financial statements of Mystic Financial,
Inc. and subsidiary ("Mystic" or the "Company") presented herein should be
read in conjunction with the consolidated financial statements for the year
ended June 30, 1999, included in the annual report on Form 10-K of Mystic
Financial, Inc., the holding company for Medford Co-operative Bank (the
"Bank").
The unaudited consolidated interim financial statements herein have been
prepared in accordance with generally accepted accounting principles for
interim financial information and with the instructions to Form 10-Q and
Article 10 of Regulation S-X. Accordingly, they do not include all of the
information and footnotes required by generally accepted accounting principles
for complete financial statements.
In the opinion of management, the consolidated financial statements reflect
all adjustments (consisting solely of normal recurring accruals) necessary for
a fair presentation of such information. Interim results are not necessarily
indicative of results to be expected for the entire year.
2) Commitments and Contingencies
At December 31, 1999, the Bank had outstanding commitments to originate loans
amounting to approximately $10.2 million, and unadvanced funds on construction
loans and lines of credit amounting to approximately $3.1 million and $9.3
million, respectively.
3) Earnings Per Share
Earnings per share for the three and six months ended December 31, 1999 were
$0.19 and $0.41, respectively, on a basic and diluted basis compared to $0.16
and $0.32 on a basic and diluted basis for the three and six months ended
December 31, 1998, respectively.
Basic earnings per share represents income available to common stock divided
by the weighted-average number of common shares outstanding during the period.
In calculating basic earnings per share, the number of shares of common stock
outstanding is reduced by the number of shares held by Mystic's Employee Stock
Ownership Plan (the "ESOP") that have not been allocated or are not committed
for release to participants' individual accounts. Diluted earnings per share
reflects additional common shares that would have been outstanding if dilutive
potential common shares had been issued, as well as any adjustment to income
that would result from the assumed conversion. Potential common shares that
may be issued by the Company relate solely to outstanding stock options and
unearned RRP shares and are determined using the treasury stock method.
4) Book Value Per Share
Book value per share of common stock was $15.50 as of December 31, 1999. In
calculating book value per share, the number of shares of common stock
outstanding is reduced by the number of shares held by the ESOP that have not
been allocated or are not committed to be released to participants' individual
accounts, unearned RRP shares and treasury stock. There were 2,068,649 shares
of common stock outstanding as of December 31, 1999 for purposes of
calculating the Company's book value per share.
5) 1999 Recognition and Retention Plan
On March 24, 1999, the Company's stockholders approved the Company's adoption
of the 1999 Recognition and Retention Plan (the "RRP"), which allows the
Company to grant restricted stock awards ("Awards") to certain officers,
employees and outside directors. As of September 30, 1999 the company's RRP
Trust had completed the purchase of the authorized 102,942 shares in the open
market at a cost of $1,295,000. Shares vest at a rate of 20% per year with
the first vesting period ending December 31, 1999. At December 31, 1999,
Awards were granted with respect to 96,342 shares. The aggregate purchase
price of all shares acquired by the RRP will be reflected as a reduction of
stockholders' equity and amortized to compensation expense as the Company's
employees and directors become vested in their stock awards.
6) Stock Repurchases
On October 14, 1999, the Company's Board of Directors adopted a stock
repurchase program authorizing the Company to repurchase up to 122,243 or 5%
of its outstanding shares of common stock. On November 16, 1999, the Company
completed its third repurchase program acquiring 122,243 shares at a cost of
approximately $1,452,000. On January 12, 2000, the Company's Board of
Directors adopted another stock repurchase program authorizing the Company to
repurchase up to 116,131 shares or 5% of its outstanding shares of common
stock. On January 28, 2000, the Company completed its fourth repurchase
program acquiring 116,131 shares at a cost of approximately $1,306,000.
7) Investment Securities
The following table sets forth the Company's investment securities at the
dates indicated.
<TABLE>
<CAPTION>
December 31, 1999 June 30, 1999
------------------- -------------------
Amortized Fair Amortized Fair
Cost Value Cost Value
--------- ----- --------- -----
(In Thousands)
<S> <C> <C> <C> <C>
Securities available for sale:
U.S. Government & federal
agency obligations $21,832 $21,257 $24,323 $24,027
Mortgage-backed securities 1,849 1,827 - -
Other bonds & obligations 3,857 3,730 4,556 4,498
Marketable equity securities 2,818 3,733 2,287 3,247
------------------------------------------
Total $30,356 $30,547 $31,166 $31,772
==========================================
Securities held to maturity:
U.S. Government & federal
agency obligations $ - $ - $ 500 $ 501
Other bonds & obligations - - 1,000 1,001
------------------------------------------
Total $ - $ - $ 1,500 $ 1,502
==========================================
</TABLE>
8) Loans
The following table presents selected data relating to the composition of the
Company's loan portfolio by type of loan on the dates indicated.
<TABLE>
<CAPTION>
December 31, 1999 June 30, 1999
------------------ -----------------
Amount Percent Amount Percent
------ ------- ------ -------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Residential mortgage loans $119,553 68.1% $107,216 69.3%
Commercial real estate loans 39,818 22.7% 33,980 22.0%
Commercial loans 8,937 5.1% 7,109 4.6%
Consumer loans 1,455 0.8% 1,546 1.0%
Home equity loans 2,795 1.6% 2,076 1.3%
Construction loans 7,395 4.2% 7,021 4.5%
---------------------------------------
Total loans 179,953 102.5% 158,948 102.7%
Less:
Deferred loan origination fees 3 0.0% 12 0.0%
Unadvanced principal 3,033 1.7% 2,899 1.8%
Allowance for loan losses 1,456 0.8% 1,348 0.9%
---------------------------------------
Loans, net $175,461 100.0% $154,689 100.0%
=======================================
</TABLE>
9) Allowance for Loan Losses
The following table analyzes activity in the Company's allowance for loan
losses for the periods indicated.
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
December 31, 1999 December 31, 1998
----------------- -----------------
(Dollars in Thousands)
<S> <C> <C>
Average loans, net $165,227 $140,910
=============================
Period-end net loans $175,461 $143,087
=============================
Allowance for loan losses at beginning of period $ 1,348 $ 1,236
Provision for loan losses 115 90
Plus recoveries 1 2
Loans charged-off (8) (17)
-----------------------------
Allowance for loan losses at end of period $ 1,456 $ 1,311
=============================
Non-performing loans $ 14 $ 2
=============================
Ratios:
Allowance for loan losses to period-end net loans 0.83% 0.92%
Net charge-offs to average loans, net 0.01% 0.02%
</TABLE>
10) Deposits and Borrowed Funds
The following tables set forth the various types of deposit accounts at the
Company and the balances in these accounts as well as the borrowings of the
Company at the dates indicated.
<TABLE>
<CAPTION>
December 31, 1999 June 30, 1999
------------------ ------------------
Amount Percent Amount Percent
------ ------- ------ -------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Deposits:
Savings deposits $ 40,496 25.3% $ 40,903 25.4%
NOW accounts 24,225 15.2% 29,361 18.3%
Money market deposits 6,588 4.1% 7,020 4.4%
Demand deposits 9,771 6.1% 8,556 5.3%
Certificates of deposit 78,729 49.3% 75,027 46.6%
---------------------------------------
Total deposits $159,809 100.0% $160,867 100.0%
=======================================
Borrowed funds:
Advances from Federal Home Loan Bank of Boston:
Maturities less than one year $ 9,200 27.1% $ 2,400 12.6%
Maturities greater than one year 24,764 72.9% 16,578 87.4%
---------------------------------------
Total borrowed funds $ 33,964 100.0% $ 18,978 100.0%
=======================================
</TABLE>
Mystic Financial, Inc. and Subsidiary
Part I - Financial Information
Item 2 - Management's Discussion and Analysis of Financial Condition
and Results of Operations
December 31, 1999
General
The following discussion compares the financial condition of Mystic
Financial, Inc. ("Mystic" or the "Company") and its wholly owned subsidiary,
Medford Co-operative Bank (the "Bank"), at December 31, 1999 to June 30, 1999,
and the results of operations for the three and six months ended December 31,
1999, compared to the same periods in 1998. This discussion and analysis
should be read in conjunction with the consolidated financial statements and
related notes thereto included within this report.
The Company and the Bank may from time to time make written or oral
"forward-looking statements." These forward-looking statements may be
contained in this quarterly filing with the Securities and Exchange Commission
(the "SEC"), the Annual Report to Shareholders, other filings with the SEC,
and in other communications by the Company and the Bank, which are made in
good faith pursuant to the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995. The words "may," "could," "should," "would,"
"believe," "anticipate," "estimate," "expect," "intend," "plan" and similar
expressions are intended to identify forward-looking statements.
Forward-looking statements include statements with respect to the
Company's beliefs, plans, objectives, goals, expectations, anticipations,
estimates and intentions, that are subject to significant risks and
uncertainties. The following factors, many of which are subject to change
based on various other factors beyond the Company's control, and other factors
discussed in this Form 10-Q, as well as other factors identified in the
Company's filings with the SEC and those presented elsewhere by management
from time to time, could cause its financial performance to differ materially
from the plans, objectives, expectations, estimates and intentions expressed
in such forward-looking statements:
* the strength of the United States economy in general and the
strength of the local economies in which the Company and the Bank
conduct operations;
* the effects of, and changes in, trade, monetary and fiscal policies
and laws, including interest rate policies of the Federal Reserve
Board;
* inflation, interest rate, market and monetary fluctuations;
* the timely development of and acceptance of new products and services
and the perceived overall value of these products and services by
users, including the features, pricing and quality compared to
competitors' products and services;
* the willingness of users to substitute competitors' products and
services for the Company's and the Bank's products and services;
* the Company's and the Bank's success in gaining regulatory approval
of their products and services, when required;
* the impact of changes in financial services' laws and regulations
(including laws concerning taxes, banking, securities and insurance);
* the impact of technological changes;
* acquisitions;
* changes in consumer spending and saving habits; and
* the Company's and the Bank's success at managing the risks involved
in their business.
This list of important factors is not exclusive. The Company or the
Bank does not undertake to update any forward-looking statement, whether
written or oral, that may be made from time to time by or on behalf of the
Company or the Bank.
The Company's profitability depends primarily on its net interest
income, which is the difference between the interest income it earns on its
loans and investment portfolio and its cost of funds, which consists mainly of
interest paid on deposits and on borrowings from the Federal Home Loan Bank of
Boston. Net interest income is affected by the relative amounts of interest-
earning assets and interest-bearing liabilities and the interest rates earned
or paid on these balances. When interest-earning assets approximate or exceed
interest-bearing liabilities, any positive interest rate spread will generate
net interest income.
The level of other income and operating expenses also affects the
Company's profitability. Other income consists primarily of service fees,
loan servicing and other loan fees, and gains on sales of investment
securities available for sale. Operating expenses consist of salaries and
benefits, occupancy related expenses, and other general operating expenses.
Average Balances, Interest and Average Yields
The following tables set forth certain information relating to the
Company's average balance sheet and reflect the interest earned on assets and
interest cost of liabilities for the periods indicated and the average yields
earned and rates paid for the periods indicated. Such yields and costs are
derived by dividing income or expense by the average monthly balances of
assets and liabilities, respectively, for the periods presented. Average
balances are derived from daily balances. Loans on nonaccrual status are
included in the average balances of loans shown in the tables. The investment
securities in the following tables are presented at amortized cost.
MYSTIC FINANCIAL, INC. AND SUBSIDIARY
AVERAGE BALANCES, INTEREST AND AVERAGE YIELDS
THREE MONTHS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Three Months Ending December 31, 1999 Three Months Ending December 31, 1998
------------------------------------- -------------------------------------
Average Interest Yield/ Average Interest Yield/
Balance Income/Expense Rate Balance Income/Expense Rate
------- -------------- ---- ------- -------------- ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Total loans, net $171,450 $3,382 7.89% $142,007 $2,811 7.92%
Investments 31,872 462 5.80% 21,687 294 5.42%
Other earning assets 7,408 94 5.08% 20,020 243 4.86%
----------------------- -----------------------
Total interest-earning assets 210,730 3,938 7.48% 183,714 3,348 7.29%
------ ------
Cash and due from banks 5,053 3,936
Other assets 6,736 6,193
-------- --------
Total assets $222,519 $193,843
======== ========
INTEREST-BEARING LIABILITES:
Regular and other deposits $ 40,552 237 2.34% $ 40,544 250 2.47%
NOW accounts 22,994 88 1.53% 23,588 94 1.59%
Money market deposits 6,755 39 2.31% 6,381 39 2.44%
Certificates of deposit 77,696 981 5.05% 61,541 836 5.43%
----------------------- -----------------------
Total interest-bearing deposits 147,997 1,345 3.64% 132,054 1,219 3.69%
FHLB borrowings 29,262 431 5.89% 18,624 277 5.95%
----------------------- -----------------------
Total interest-bearing liabilities 177,259 1,776 4.01% 150,678 1,496 3.97%
------ ------
Demand deposit accounts 11,351 7,170
Other liabilities 1,465 1,267
-------- --------
Total liabilities 190,075 159,115
Stockholders' equity 32,444 34,728
-------- --------
Total liabilities and stockholders' equity $222,519 $193,843
======== ========
Net interest income $2,162 $1,852
====== ======
Interest rate spread 3.47% 3.32%
Net interest margin 4.10% 4.03%
Interest-earning assets/interest-bearing
liabilities 1.19x 1.22x
</TABLE>
MYSTIC FINANCIAL, INC. AND SUBSIDIARY
AVERAGE BALANCES, INTEREST AND AVERAGE YIELDS
SIX MONTHS ENDED DECEMBER 31, 1999 AND 1998
<TABLE>
<CAPTION>
Six Months Ending December 31, 1999 Six Months Ending December 31, 1998
------------------------------------- -------------------------------------
Average Interest Yield/ Average Interest Yield/
Balance Income/Expense Rate Balance Income/Expense Rate
------- -------------- ---- ------- -------------- ------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Total loans, net $165,227 $6,505 7.87% $140,910 $5,584 7.93%
Investments 32,262 937 5.81% 23,400 642 5.49%
Other earning assets 8,550 220 5.15% 17,691 447 5.05%
----------------------- -----------------------
Total interest-earning assets 206,039 7,662 7.44% 182,001 6,673 7.33%
------ ------
Cash and due from banks 4,673 3,767
Other assets 6,544 6,188
-------- --------
Total assets $217,256 $191,956
======== ========
INTEREST-BEARING LIABILITES:
Regular and other deposits $ 41,000 473 2.31% $ 40,912 525 2.57%
NOW accounts 23,516 177 1.51% 23,133 184 1.59%
Money market deposits 6,643 77 2.32% 6,426 81 2.52%
Certificates of deposit 76,036 1,910 5.02% 60,520 1,658 5.48%
----------------------- -----------------------
Total interest-bearing deposits 147,198 2,637 3.58% 130,991 2,448 3.74%
FHLB borrowings 25,209 742 5.89% 17,612 530 6.02%
----------------------- -----------------------
Total interest-bearing liabilities 172,407 3,379 3.92% 148,603 2,978 4.01%
------ ------
Demand deposit accounts 10,540 7,133
Other liabilities 1,340 1,164
-------- --------
Total liabilities 184,287 156,900
Stockholders' equity 32,969 35,056
-------- --------
Total liabilities and stockholders' equity $217,256 $191,956
======== ========
Net interest income $4,283 $3,695
====== ======
Interest rate spread 3.52% 3.32%
Net interest margin 4.16% 4.06%
Interest-earning assets/interest-bearing liabilities 1.20x 1.22x
</TABLE>
Rate/Volume Analysis
The following table sets forth certain information regarding changes in
interest income and interest expense of the Company for the periods indicated.
For each category of interest-earning asset and interest-bearing liability,
information is provided on changes attributable to: (i) changes in volume
(changes in volume multiplied by old rate); and (ii) changes in rates (change
in rate multiplied by old volume). Changes in rate-volume (changes in rate
multiplied by the changes in volume) are allocated between changes in rate and
changes in volume.
<TABLE>
<CAPTION>
Three Months Ended December 31,
1999 vs 1998
Increase (decrease)
-------------------------------
Due To
------------------
Rate Volume Total
---- ------ -----
(In Thousands)
<S> <C> <C> <C>
Interest and dividend income:
Loans, net $ (12) $ 583 $ 571
Investments 22 146 168
Other earning assets 11 (160) (149)
------------------------------
Total 21 569 590
------------------------------
Interest expense:
Deposits (17) 143 126
Borrowed funds (3) 157 154
------------------------------
Total (20) 300 280
------------------------------
Change in net interest income $ 41 $ 269 $ 310
==============================
<CAPTION>
Six Months Ended December 31,
1999 vs 1998
Increase (decrease)
-------------------------------
Due To
------------------
Rate Volume Total
---- ------ -----
(In Thousands)
<S> <C> <C> <C>
Interest and dividend income:
Loans, net $ (43) $ 964 $ 921
Investments 39 256 295
Other earning assets 9 (236) (227)
------------------------------
Total 5 984 989
------------------------------
Interest expense:
Deposits (107) 296 189
Borrowed funds (12) 224 212
------------------------------
Total (119) 520 401
------------------------------
Change in net interest income $ 124 $ 464 $ 588
==============================
</TABLE>
Financial Condition and Results of Operations
Comparison of Financial Condition at December 31, 1999 and at June 30, 1999
Total assets increased to $227.5 million at December 31, 1999 from
$215.2 million at June 30, 1999, an increase of $12.3 million or 5.7%. The
increase in total assets is principally due to continued loan growth.
Cash and cash equivalents decreased to $11.8 million at December 31,
1999 from $18.7 million at June 30, 1999, a decrease of $7.0 million or 37.2%.
The decrease primarily results from the Company's deposit relationship with a
law firm which maintains large, short-term deposits in real estate
conveyancing accounts that carry significant fluctuations in its deposit
account balances. A decrease in investment securities of $2.1 million or 6.1%
to $32.2 million at December 31, 1999 from $34.4 million at June 30, 1999
resulted primarily from the Company's loan growth.
Net loans increased by $20.8 million or 13.4% to $175.5 million or 77.1%
of total assets at December 31, 1999 as compared to $154.7 million or 71.9% of
total assets at June 30, 1999 as the Company continued its emphasis on
originating and retaining residential mortgage loans and commercial and
commercial real estate loans.
Total deposits decreased by $1.1 million 0.7% to $159.8 million at
December 31, 1999 from $160.9 million at June 30, 1999. The decrease in
deposits is principally due to the volatile nature of the IOLTA accounts which
are included in the NOW accounts category.
Total borrowings increased by $15.0 million to $34.0 million at December
31, 1999 from $19.0 million at June 30, 1999. The Company's continued use of
borrowed funds reflects additional funding used to fund larger commercial real
estate loans, generally those exceeding $1.0 million, with matching funds from
the Federal Home Loan Bank of Boston ("FHLBB") to reduce interest rate risk.
In addition, the Company has match-funded 30-year fixed-rate residential
mortgage loans held for portfolio. The retention of these loans is helping
the Company leverage the capital it raised in the conversion.
Stockholders' equity decreased by $2.0 million to $32.1 million at
December 31, 1999 from $34.1 million at June 30, 1999 as a result of the
repurchase of 122,243 shares of common stock held in treasury at a cost of
$1.5 million, the repurchase of 102,942 shares of common stock at a cost of
$1.3 million to fund the Company's Recognition and Retention Plan (the "RRP"),
dividends paid of $262,000 and a decrease in the net unrealized gain on
securities available for sale of $270,000, offset by net income of $884,000
and a decrease in unearned ESOP shares and unearned RRP stock.
Comparison of the Operating Results for the Three and Six Months Ended
December 31, 1999 and 1998
Net Income. Net income was $397,000 and $884,000 for the three and six
months ended December 31, 1999, respectively, compared to $409,000 and
$824,000 for the three and six months ended December 31, 1998, respectively.
Return on average assets was .71% and .81% for the three and six months ended
December 31, 1999, respectively, compared to .84% and .86% for the three and
six months ended December 31, 1998, respectively. Return on average equity
was 4.89% and 5.36% for the three and six months ended December 31, 1999,
respectively, compared to 4.71% and 4.70% for the three and six months ended
December 31, 1998, respectively. The decrease in the return on average assets
is due to higher operating expenses while the increase in the return on
average equity resulted from achieving net income on a smaller average balance
of stockholders' equity, principally caused by repurchases of common stock.
The decrease in net income for the three months ended December 31, 1999
compared to the three months ended December 31, 1998 was attributable to an
increase in net interest income of $310,000 and a decrease in the provision
for income taxes of $17,000 offset by a decrease in other income of $49,000,
an increase of $45,000 in provision for loan losses, and an increase in
operating expenses of $245,000. The increase in net income for the six months
ended December 31, 1999 compared to the six months ended December 31, 1998 was
attributable to an increase in net interest income of $588,000 offset by a
decrease in other income of $76,000, an increase of $25,000 in provision for
loan losses, an increase in operating expenses of $397,000 and an increase in
the provision for income taxes of $30,000.
Interest Income. Total interest and dividend income increased by
$590,000 or 17.6% to $3.9 million for the three months ended December 31, 1999
from $3.3 million for the three months ended December 31, 1998. The increase
in interest income was a result of an increase in the average balance of loans
and investment securities, partially offset by a decrease in the average
balance of other earning assets. The average balance of net loans for the
three months ended December 31, 1999 was $171.5 million compared to $142.0
million for the three months ended December 31, 1998. The average yield on
net loans was 7.89% for the three months ended December 31, 1999 compared to
7.92% for the three months ended December 31, 1998. The decrease in the yield
on net loans reflects the result of residential mortgage loan refinancing
activity at lower interest rates.
The average balance of investment securities for the three months ended
December 31, 1999 was $31.9 million compared to $21.7 million for the three
months ended December 31, 1998. The average yield on investment securities
was 5.80% for the three months ended December 31, 1999 compared to 5.42% for
the three months ended December 31, 1998. The average balance of other
earning assets for the three months ended December 31, 1999 was $7.4 million
compared to $20.0 million for the three months ended December 31, 1998. The
average yield on other earning assets was 5.08% for the three months ended
December 31, 1999 compared to 4.86% for the three months ended December 31,
1998. The increase in the average yield on investment securities and other
earning assets reflects the general increase in market interest rates since
the prior period.
Total interest and dividend income increased by $989,000 or 14.8% to
$7.7 million for the six months ended December 31, 1999 from $6.7 million for
the six months ended December 31, 1998. The increase in interest income was a
result of an increase in the average balance of loans and investment
securities, partially offset by a decrease in the average balance of other
earning assets. The average balance of net loans for the six months ended
December 31, 1999 was $165.2 million compared to $140.9 million for the six
months ended December 31, 1998. The average yield on net loans was 7.87% for
the six months ended December 31, 1999 compared to 7.93% for the six months
ended December 31, 1998. The decrease in the yield on net loans reflects the
result of residential mortgage loan refinancing activity at lower interest
rates.
The average balance of investment securities for the six months ended
December 31, 1999 was $32.3 million compared to $23.4 million for the six
months ended December 31, 1998. The average yield on investment securities
was 5.81% for the six months ended December 31, 1999 compared to 5.49% for the
six months ended December 31, 1998. The average balance of other earning
assets for the six months ended December 31, 1999 was $8.6 million compared to
$17.7 million for the six months ended December 31, 1998. The average yield
on other earning assets was 5.15% for the six months ended December 31, 1999
compared to 5.05% for the six months ended December 31, 1998. The increase in
the average yield on investment securities and other earning assets reflects
the general increase in market interest rates since the prior period.
Interest Expense. Total interest expense increased by $280,000 or 18.7%
to $1.8 million for the three months ended December 31, 1999 from $1.5 million
for the three months ended December 31, 1998. Interest expense increased
primarily due to the increase in certificates of deposit balances and the
increase in FHLBB borrowings. The Company's continued use of borrowed funds
reflects additional funding used to fund larger commercial real estate loans,
generally those exceeding $1.0 million, with matching funds from the FHLBB to
reduce interest rate risk. In addition, the Company has match-funded 30-year
fixed-rate residential mortgage loans held for portfolio with borrowings of
various maturities.
Average interest-bearing deposits increased by $15.9 million or 12.1% to
$148.0 million while the average rate decreased five basis points to 3.64%
from 3.69% for the three months ended December 31, 1999. Average borrowings
increased by $10.6 million to $29.3 million for the three months ended
December 31, 1999 from $18.6 million while the average rate decreased six
basis points to 5.89% from 5.95% for the three months ended December 31, 1998.
Total interest expense increased by $401,000 to $3.4 million for the six
months ended December 31, 1999 from $3.0 million for the six months ended
December 31, 1998. Interest expense increased primarily due to the increase
in certificates of deposit and the increase in FHLBB borrowings. The
Company's continued use of borrowed funds reflects additional funding used to
fund larger commercial real estate loans, generally those exceeding $1.0
million, with matching funds from the FHLBB to reduce interest rate risk. In
addition, the Company has match-funded 30-year fixed-rate residential mortgage
loans held for portfolio with borrowings of various maturities.
Average interest-bearing deposits increased by $16.2 million or 12.4% to
$ 147.2 million while the average rate decreased 16 basis points to 3.58% from
3.74% for the six months ended December 31, 1999. Average borrowings
increased by $7.6 million to $25.2 million for the six months ended December
31, 1999 from $17.6 million while the average rate decreased 13 basis points
to 5.89% from 6.02% for the six months ended December 31, 1998.
Net Interest Income. Net interest income for the three months ended
December 31, 1999 was $2.2 million as compared to $1.9 million for the three
months ended December 31, 1998. The $310,000 or 16.7% increase can be
attributed to a combination of the $590,000 increase in interest and dividend
income and the $280,000 increase in interest expense on deposits and borrowed
funds. The average yield on interest earning assets increased 19 basis points
to 7.48% for the three months ended December 31, 1999 from 7.29% for the three
months ended December 31, 1998, while the average cost on interest-bearing
liabilities increased by four basis points to 4.01% for the three months ended
December 31, 1999 from 3.97% for the three months ended December 31, 1998. As
a result, the interest rate spread increased to 3.47% for the three months
ended December 31, 1999 from 3.32% for the three months ended December 31,
1998.
Net interest income for the six months ended December 31, 1999 was $4.3
million as compared to $3.7 million for the six months ended December 31,
1998. The $588,000 or15.9% increase can be attributed to a combination of the
$989,000 increase in interest and dividend income and the $401,000 increase in
interest expense on deposits and borrowed funds. The average yield on
interest earning assets increased 11 basis points to 7.44% for the six months
ended December 31, 1999 from 7.33% for the six months ended December 31, 1998,
while the average cost on interest-bearing liabilities decreased by nine basis
points to 3.92% for the six months ended December 31, 1999 from 4.01% for the
six months ended December 31, 1998. As a result, the interest rate spread
increased to 3.52% for the six months ended December 31, 1999 from 3.32% for
the six months ended December 31, 1998.
Provision for Loan Losses. The provision for loan losses for the three
and six months ended December 31, 1999 was $75,000 and $115,000, respectively,
compared to $30,000 and $90,000 for the three and six months ended December
31, 1998, respectively. The increases reflect the increase in net loans and
the Company's continuing emphasis on small business lending. At December 31,
1999, the balance of the allowance for loan losses was $1,456,000 or .83% of
net loans. During the six months ended December 31, 1999, $8,000 was charged
against the allowance for loan losses while $1,000 in recoveries was credited
to the allowance for loan losses. At December 31, 1998, the balance of the
allowance for loan losses was $1,311,000 or .92% of net loans. During the six
months ended December 31, 1998, $17,000 was charged against the allowance for
loan losses while $2,000 in recoveries was credited to the allowance for loan
losses.
Other Income. Other income was $271,000 for the three months ended
December 31, 1999 compared to $320,000 for the three months ended December 31,
1998. The $49,000 decrease was primarily the result of a $78,000 decrease in
the gain on the sales of mortgage loans partially offset by an increase in the
gain on sales of securities available for sale of $36,000. Other income was
$487,000 for the six months ended December 31, 1999 compared to $563,000 for
the six months ended December 31, 1998. The $76,000 decrease was primarily
the result of an $87,000 decrease in the gain on the sales of mortgage loans.
Operating Expenses. Operating expenses increased by $245,000 or 16.8%
to $1.7 million for the three months ended December 31, 1999 from $1.5 million
for the three months ended December 31, 1998. Salaries and employee benefits
increased by $225,000. This increase was caused in part by expenses related
to the opening of a branch office in Lexington, Massachusetts, in late
November 1998, the adoption of the Company's RRP, and general salary
increases. Occupancy and equipment expenses increased by $46,000 due
primarily to the opening of the branch office. A decrease in other general
and administrative expenses of $25,000 was caused by a reduction in marketing
and promotional expenses related to the branch office in Lexington,
Massachusetts.
Operating expenses increased by $397,000 or 14.2% to $3.2 million for
the six months ended December 31, 1999 from $2.8 million for the six months
ended December 31, 1998. Salaries and employee benefits increased by
$325,000. This increase was caused in part by the opening of a branch office
in Lexington, Massachusetts, in late November 1998, the adoption of the
Company's RRP, and general salary increases. A decrease in other general and
administrative expenses of $17,000 was caused by a reduction in marketing and
promotional expenses related to the branch office. The opening of the
Lexington office also resulted in an increase of $95,000 in occupancy and
equipment expenses for the six months ended December 31, 1999 as compared to
the same period last year. Annual operating expenses are also expected to
increase in future periods due to the increased cost of operating as a
publicly held stock institution and the ongoing operating costs of the
Lexington office.
Asset/Liability Management
A principal operating objective of the Company is to produce stable
earnings by achieving a favorable interest rate spread that can be sustained
during fluctuations in prevailing interest rates. Since the Company's
principal interest-earning assets have longer terms to maturity than its
primary source of funds, (i.e. deposit liabilities), increases in general
interest rates will generally result in an increase in the Company's cost of
funds before the yield on its asset portfolio adjusts upward. Banking
institutions have generally sought to reduce their exposure to adverse changes
in interest rates by attempting to achieve a closer match between the periods
in which their interest-bearing liabilities and interest-earning assets can be
expected to reprice through the origination of adjustable-rate mortgages and
loans with shorter terms and the purchase of other shorter term interest-
earning assets.
The term "interest rate sensitivity" refers to those assets and
liabilities, which mature and reprice periodically in response to fluctuations
in market rates and yields. Thrift institutions have historically operated in
a mismatched position with interest-sensitive liabilities exceeding interest-
sensitive assets in the short-term time periods. As noted above, one of the
principal goals of the Bank's asset/liability program is to more closely match
the interest rate sensitivity characteristics of the asset and liability
portfolios.
In order to properly manage interest rate risk, the Board of Directors
has established an Asset/Liability Management Committee ("ALCO") made up of
members of management to monitor the difference between the Company's maturing
and repricing assets and liabilities and to develop and implement strategies
to decrease the "negative gap" between the two. The primary responsibilities
of the committee are to assess the Company's asset/liability mix, recommend
strategies to the Board that will enhance income while managing the Company's
vulnerability to changes in interest rates and report to the Board the results
of the strategies used.
Since the early 1980s, the Bank has stressed the origination of
adjustable-rate residential mortgage loans and adjustable-rate home equity
loans. Historically, the Bank has attempted to sell fixed-rate loans with
terms in excess of 15 years. However, following the conversion, the Bank has
retained a greater portion of its fixed rate loans. A substantial portion of
the fixed-rate loans retained in portfolio has been funded with borrowings
from the FHLBB.
Since 1995, the Bank has also emphasized commercial loans with short-
term maturities or repricing intervals as well as commercial real estate
mortgages with short-term repricing intervals. In addition, the Company has
used borrowings from the FHLBB to match-fund the maturity or repricing
interval of several larger commercial real estate mortgages.
Liquidity and Capital Resources
The Company's primary sources of funds consist of deposits, borrowings,
repayment and prepayment of loans, sales and participations of loans,
maturities of investments and interest-bearing deposits, and funds provided
from operations. While scheduled repayments of loans and maturities of
investment securities are predictable sources of funds, deposit flows and loan
prepayments are greatly influenced by the general level of interest rates,
economic conditions, and competition. The Company uses its liquidity
resources primarily to fund existing and future loan commitments, to fund net
deposit outflows, to invest in other interest-earning assets, to maintain
liquidity, and to meet operating expenses.
The Company is required to maintain adequate levels of liquid assets.
This guideline, which may be varied depending upon economic conditions and
deposit flows, is based upon a percentage of deposits and short-term
borrowings. The Company has historically maintained a level of liquid assets
in excess of regulatory requirements. The Company's liquidity ratio at
December 31, 1999 was 42.7%, using the short-term assets to short-term
liabilities formula defined under the Federal Deposit Insurance Corporation's
Uniform Bank Performance Reports.
A major portion of the Company's liquidity consists of cash and cash
equivalents, short-term U.S. Government and federal agency obligations, and
corporate bonds. The level of these assets is dependent upon the Company's
operating, investing, lending and financing activities during any given
period.
Liquidity management is both a daily and long-term function of
management. If the Company requires funds beyond its ability to generate them
internally, the Company believes it could borrow additional funds from the
FHLBB. At December 31, 1999, the Company had borrowings of $34.0 million from
the FHLBB.
At December 31, 1999, the Company had $10.2 million in outstanding
commitments to originate loans. The Company anticipates that it will have
sufficient funds available to meet its current loan origination commitments.
Certificates of deposit, which are scheduled to mature in one year or less
totaled $62.5 million at December 31, 1999. Based upon historical experience,
management believes that a significant portion of such deposits will remain
with the Bank.
At December 31, 1999, the Company and the Bank exceeded all of their
regulatory capital requirements.
Year 2000
Based on a review of the Bank's and the Company's business since January
1, 2000, the Company has not experienced any material effects of the Year 2000
problem. Although the Company has not been informed of any material risks
associated with the Year 2000 problem from third parties, there can be no
assurance that the Company will not be affected in the future. The Company
will continuously monitor its business applications and maintain contact with
its third party vendors and key business partners to resolve any Year 2000
problems that may arise in the future.
Monitoring and managing the Year 2000 project has resulted in direct and
indirect costs to the Company and the Bank. Total direct and indirect costs
associated with the Year 2000 problem incurred to date are approximately
$159,300. The company currently estimates that no additional material direct
costs will be incurred and does not believe that such costs will have a
material effect on results of operations. Both direct and indirect costs of
addressing the year 2000 problem have been changed to earnings as incurred.
The Company developed a Year 2000 contingency plan that was not
implemented. The Company will continue to closely monitor the progress of its
Year 2000 compliance plan as mandated by the FDIC.
Financial Services Modernization Bill
On November 12, 1999 President Clinton signed the Gramm-Leach-Bliley
Financial Services Modernization Act of 1999, federal legislation intended to
modernize the financial services industry by establishing a comprehensive
framework to permit affiliations among commercial banks, insurance companies,
securities firms and other financial service providers. Generally, the Act
(i) repeals the historical restrictions and eliminates many federal and state
law barriers to affiliations among banks, securities firms, insurance
companies and other financial service providers, (ii) provides a uniform
framework for the functional regulation of the activities of banks, savings
institutions and their holding companies, (iii) broadens the activities that
may be conducted by national banks, banking subsidiaries of bank holding
companies and their financial subsidiaries, (iv) provides an enhanced
framework for protecting the privacy of consumer information, (v) adopts a
number of provisions related to the capitalization, membership, corporate
governance and other measures designed to modernize the Federal Home Loan Bank
system, (vi) modifies the laws governing the implementation of the Community
Reinvestment Act and (vii) addresses a variety of other legal and regulatory
issues affecting both day-to-day operations and long-term activities of
financial institutions.
Bank holding companies will be permitted to engage in a wider variety of
financial activities than permitted under prior law, particularly with respect
to insurance and securities activities. In addition, in a change from prior
law, bank holding companies will be in a position to be owned, controlled or
acquired by any company engaged in financially-related activities.
The Company does not believe that the Act will have a material adverse
effect on the Company's operations in the near term. However, to the extent
that the Act permits banks, securities firms and insurance companies to
affiliate, the financial services industry may experience further
consolidation. This could result in a growing number of larger financial
institutions that offer a wider variety of financial services than the Company
currently offers and that can aggressively compete in the markets currently
served by the Company.
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There has been no material change in market risk since June 30, 1999.
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
27.1 Financial Data Schedule
(b) Reports on Form 8-K
None
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
MYSTIC FINANCIAL, INC.
Date: February 10, 2000 By: /s/ Robert H. Surabian
------------------- -------------------------------------
Robert H. Surabian
President and Chief Executive Officer
Date: February 10, 2000 By: /s/ Ralph W. Dunham
------------------- -------------------------------------
Ralph W. Dunham
Executive Vice-President, Chief
Financial Officer, and Treasurer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-2000
<CASH> 7,585
<INT-BEARING-DEPOSITS> 176
<FED-FUNDS-SOLD> 3,996
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 30,547
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 175,461
<ALLOWANCE> 1,456
<TOTAL-ASSETS> 227,473
<DEPOSITS> 159,809
<SHORT-TERM> 9,200
<LIABILITIES-OTHER> 1,645
<LONG-TERM> 24,764
0
0
<COMMON> 27
<OTHER-SE> 32,028
<TOTAL-LIABILITIES-AND-EQUITY> 227,473
<INTEREST-LOAN> 6,505
<INTEREST-INVEST> 937
<INTEREST-OTHER> 220
<INTEREST-TOTAL> 7,662
<INTEREST-DEPOSIT> 2,637
<INTEREST-EXPENSE> 3,379
<INTEREST-INCOME-NET> 4,283
<LOAN-LOSSES> 115
<SECURITIES-GAINS> 67
<EXPENSE-OTHER> 3,199
<INCOME-PRETAX> 1,456
<INCOME-PRE-EXTRAORDINARY> 1,456
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 884
<EPS-BASIC> 0.41
<EPS-DILUTED> 0.41
<YIELD-ACTUAL> 4.16
<LOANS-NON> 14
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
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<ALLOWANCE-OPEN> 1,348
<CHARGE-OFFS> 8
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<ALLOWANCE-CLOSE> 1,456
<ALLOWANCE-DOMESTIC> 1,456
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