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U. S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-QSB
[ X ] Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarterly period ended March 31, 2000
[ ] Transition Report Under Section 13
or 15(d) of the Exchange Act
For the transition period ended_______________
Commission File Number 0-23521
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GREAT PEE DEE BANCORP, INC.
(Exact name of small business issuer as specified in its charter)
DELAWARE 56-2050592
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
515 MARKET STREET, CHERAW, SC 29520
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(Address of principal executive office)
(843) 537-7656
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(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act of 1934 during the past 12 months (or for such
shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes X No
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As of May 1, 2000, 1,775,461 shares of the issuer's common stock, $.01 par
value, were outstanding. The registrant has no other classes of securities
outstanding.
This report contains 12 pages.
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Page No.
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Part l. FINANCIAL INFORMATION
Item 1 - Financial Statements (Unaudited)
Consolidated Statements of Financial Condition
<S> <C>
March 31, 2000 and June 30, 1999................................................. 3
Consolidated Statements of Operations
Three Months and Nine Months Ended March 31, 2000 and 1999....................... 4
Consolidated Statements of Cash Flows
Nine Months Ended March 31, 2000 and 1999........................................ 5
Notes to Consolidated Financial Statements....................................... 6
Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations.. 7
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K......................................... 11
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Part l. FINANCIAL INFORMATION
Item 1 - Financial Statements
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Great Pee Dee Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition
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March 31,
2000 June 30,
ASSETS (Unaudited) 1999*
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(In Thousands)
<S> <C> <C>
Cash on hand and in banks $ 2,158 $ 857
Interest-bearing balances in other banks 9,245 726
Investment securities available for sale, at fair value 406 450
Investment securities held to maturity, at amortized cost 4,416 3,621
Loans receivable, net 81,427 64,411
Loans held for sale - 525
Accrued interest receivable 549 357
Premises and equipment, net 1,103 740
Stock in the Federal Home Loan Bank, at cost 524 524
Real estate acquired in settlement of loans 23 33
Deposit premium 1,837 -
Other assets 759 357
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TOTAL ASSETS $ 102,447 $ 72,601
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposit accounts $ 66,695 $ 41,332
Advances from Federal Home Loan Bank 9,200 1,200
Accrued interest payable 133 51
Advance payments by borrowers for property taxes and insurance 73 63
Accrued expenses and other liabilities 84 142
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TOTAL LIABILITIES 76,185 42,788
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STOCKHOLDERS' EQUITY
Preferred stock, no par value, 400,000 shares
authorized, no shares issued and outstanding - -
Common stock, $.01 par value, 3,600,000
shares authorized; 2,224,617 shares issued 22 22
Additional paid in capital 21,632 21,530
Unearned compensation (1,640) (1,938)
Retained earnings, substantially restricted 12,064 12,006
Unrealized holding loss, net of tax (63) -
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32,015 31,620
Cost of common stock in treasury, 476,156 and
138,664 shares, respectively (5,753) (1,807)
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TOTAL STOCKHOLDERS' EQUITY 26,262 29,813
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TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 102,447 $ 72,601
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* Derived from audited financial statements
See accompanying notes.
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Great Pee Dee Bancorp, Inc. and Subsidiary
Consolidated Statements of Operations (Unaudited)
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Three Months Ended Nine Months Ended
March 31, March 31,
----------------------------- -----------------------------
2000 1999 2000 1999
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(In Thousands Except
Per Share Amounts)
INTEREST INCOME
<S> <C> <C> <C> <C>
Loans $ 1,389 $ 1,169 $ 3,895 $ 3,397
Investments 79 66 238 199
Deposits in other banks and federal funds sold 68 24 104 154
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TOTAL INTEREST INCOME 1,536 1,259 4,237 3,750
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INTEREST EXPENSE
Savings deposits 615 480 1,621 1,456
Borrowed funds 138 - 268 -
------------ ------------ ------------- -------------
TOTAL INTEREST EXPENSE 753 480 1,889 1,456
------------ ------------ ------------- -------------
NET INTEREST INCOME 783 779 2,348 2,294
PROVISION FOR LOAN LOSSES 98 - 98 96
------------ ------------ ------------- -------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN LOSSES 685 779 2,250 2,198
------------ ------------ ------------- -------------
NON-INTEREST INCOME 39 13 93 45
------------ ------------ ------------- -------------
NON-INTEREST EXPENSES
Personnel costs 206 433 703 736
Occupancy 37 25 102 72
Deposit insurance premiums 2 6 14 17
Other 301 98 497 295
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TOTAL NON-INTEREST EXPENSES 546 562 1,316 1,120
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INCOME BEFORE INCOME TAXES 178 230 1,027 1,123
PROVISION FOR INCOME TAXES 55 89 372 429
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NET INCOME $ 123 $ 141 $ 655 $ 694
============ ============ ============= =============
NET INCOME PER SHARE
Basic $ 0.08 $ 0.07 $ 0.38 $ 0.34
Assuming dilution 0.08 0.07 0.38 0.34
WEIGHTED AVERAGE SHARES OUTSTANDING
Basic 1,649,607 2,034,971 1,743,983 2,027,132
Assuming dilution 1,679,607 2,043,465 1,745,665 2,029,922
CASH DIVIDEND PER SHARE $ 0.10 $ 0.09 $ 0.29 $ 0.27
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See accompanying notes.
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Great Pee Dee Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
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Nine Months Ended
March 31,
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2000 1999
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(In Thousands)
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income $ 655 $ 694
Adjustments to reconcile net income to net cash provided by operating
activities:
Depreciation and amortization 83 38
Provision for loan losses 98 96
Release of ESOP shares 117 91
Amortization of stock awards under recognition
and retention plan 204 269
Decrease in loans held for sale 525 -
Change in assets and liabilities:
Increase in accrued interest receivable (115) (38)
Decrease in accrued interest payable (39) (7)
Other (185) (212)
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NET CASH PROVIDED BY
OPERATING ACTIVITIES 1,343 931
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CASH FLOWS FROM INVESTING ACTIVITIES
Purchases of:
Available for sale investment securities (50) (269)
Held to maturity investment securities (900) (900)
Proceeds from maturities of held-to-maturity investments 105 641
Net increase in loans (6,217) (6,402)
Purchases of property and equipment (89) (532)
Net cash received in branch acquisition 11,572 -
Other 10 (39)
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NET CASH PROVIDED (USED)
BY INVESTING ACTIVITIES 4,431 (7,501)
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CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposit accounts 510 3,074
Proceeds from FHLB advances 8,000 -
Decrease in advances from borrowers - (12)
Purchase of treasury stock (3,946) (1,746)
Cash dividends paid (518) (546)
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NET CASH PROVIDED
BY FINANCING ACTIVITIES 4,046 770
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NET INCREASE (DECREASE) IN
CASH AND CASH EQUIVALENTS 9,820 (5,800)
CASH AND CASH EQUIVALENTS, BEGINNING 1,583 6,923
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CASH AND CASH EQUIVALENTS, ENDING $ 11,403 $ 1,123
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See accompanying notes.
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Great Pee Dee Bancorp, Inc. and Subsidiary
Notes to Consolidated Financial Statements
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NOTE A - BASIS OF PRESENTATION
In management's opinion, the financial information, which is unaudited, reflects
all adjustments (consisting solely of normal recurring adjustments) necessary
for a fair presentation of the financial information as of and for the three and
nine month periods ended March 31, 2000 and 1999, in conformity with generally
accepted accounting principles. The financial statements include the accounts of
Great Pee Dee Bancorp, Inc. (the "Company") and its wholly-owned subsidiary,
First Federal Savings and Loan Association of Cheraw ("First Federal" or the
"Bank"). Operating results for the three and nine month periods ended March 31,
2000 are not necessarily indicative of the results that may be expected for the
fiscal year ending June 30, 2000.
The organization and business of the Company, accounting policies followed by
the Company and other information are contained in the notes to the financial
statements filed as part of the Company's annual report on Form 10-KSB. This
quarterly report should be read in conjunction with such annual report.
NOTE B - NET INCOME PER SHARE
Basic income per share has been computed by dividing net income by the weighted
average number of shares of common stock outstanding during the period. In
accordance with generally accepted accounting principles. ESOP shares are only
considered outstanding for earnings per share calculations when they are earned
or committed to be released.
Diluted net income per share reflects the dilutive effects of unearned
recognition and retention shares and outstanding common stock options.
NOTE C - ACQUISITION OF BRANCH OFFICE
On March 3, 2000, First Federal completed the purchase from Coastal Federal
Savings Bank of a branch office located in Florence, South Carolina, acquiring
customer deposits of $24.9 million, loans receivable of $10.9 million and liquid
assets of $11.6 million. In connection with this acquisition, First Federal paid
a premium of $1,850,000 for the deposits and a non-compete payment of $250,000.
The deposit premium and the non-compete payment are being amortized using the
straight-line method over ten and three years, respectively.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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Comparison of Financial Condition at March 31, 2000 and June 30, 1999
The Company's total assets increased by $29.9 million during the nine months
ended March 31, 2000, from $72.6 million at June 30, 1999 to $102.4 million at
the period end. As discussed in Note C to the accompanying consolidated
financial statements, approximately $25 million of this substantial increase
resulted from the purchase on March 3, 2000 of a branch facility located in
Florence, South Carolina. The Company received liquid assets of $11.6 million in
this branch acquisition, and as a result cash and cash equivalents increased
from $1.6 million at the beginning of the current fiscal year to $11.4 million
at March 31, 2000. An increase of $8.0 million in Federal Home Loan Bank
advances, together with cash of $1.3 million generated by operations, were the
primary sources for funding of an increase of $6.2 million in loans receivable
and for stock repurchases during the nine months. During the nine months ended
March 31, 2000, the Company purchased 337,492 treasury shares at a total cost of
approximately $3.9 million. Total stockholders' equity was $26.3 million at
March 31, 2000 as compared with $29.8 million at June 30, 1999, a decrease of
$3.5 million which resulted principally from the purchase of treasury shares. At
March 31, 2000, the Bank continued to significantly exceed all applicable
regulatory capital requirements.
Comparison of Results of Operations for the Three Months Ended March 31, 2000
and 1999
Net Income. Net income for the quarter ended March 31, 2000 was $123,000, or
$.08 per share, as compared with net income of $141,000, or $.07 per share, for
the three months ended March 31, 1999, a net income decrease of $18,000. Net
income was most significantly impacted during the current quarter by the
Company's acquisition of a full service branch in Florence, South Carolina.
During the current quarter, the Company recorded a loan loss provision of
$98,000 to increase the loan loss allowance because of the $10.9 million of
loans acquired in that branch purchase. In addition, during the current quarter
the Company recognized $154,000 of non-recurring expenses incurred in connection
with that branch acquisition. There was no provision for loan losses made during
the quarter ended March 31, 1999. During that quarter, however, the Company
recognized costs of $269,000 associated with the Recognition and Retention Plan
("RRP"), as compared with RRP costs of $42,000 recognized during the current
quarter. Net income per share increased because treasury share repurchases
resulted in a reduction in the weighted average number of common shares
outstanding.
Net Interest Income. Net interest income for the quarter ended March 31, 2000
was $783,000 as compared with $779,000 during the quarter ended March 31, 1999,
an increase of $4,000. The Company's net interest margin was 2.53% during the
quarter ended March 31, 2000 as compared with to 2.51% for the quarter ended
March 31, 1999. Prior to the branch purchase in March 2000, the positive effects
of a larger concentration of interest-earning assets in higher yielding loans
was being largely offset by a decrease in the average balance of net interest
earning assets (the average balance of interest-earning assets for the period
minus the average balance of interest-bearing liabilities for the period). This
decrease in net interest earning assets resulted principally from the purchase
of treasury shares.
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Provision for Loan Losses. A provision for loan losses of $98,000 was made
during the quarter ended March 31, 2000, as compared with none for the quarter
ended March 31, 1999. The provision during the current quarter was made as a
result of the loan increase of $10.9 million resulting from the Florence branch
acquisition. There were no net loan charge-offs during the quarter ended March
31, 2000. At March 31, 2000, nonaccrual loans aggregated $310,000 while the
allowance for loan losses stood at $532,000.
Non-Interest Expenses. Non-interest expenses decreased to $546,000 during the
quarter ended March 31, 2000 as compared with $562,000 for the quarter ended
March 31, 1999, a decrease of $16,000. A decrease of $227,000 in costs of the
Company's RRP, adopted and implemented in January of 1999, was largely offset by
non-recurring costs of $154,000 recognized in connection with the branch
acquisition and an increase in operating costs for the new branch.
Provision for Income Taxes. The provision for income taxes, as a percentage of
income before income taxes, was 30.1% and 38.7% for the quarters ended March 31,
2000 and 1999, respectively.
Comparison of Results of Operations for the Nine months Ended March 31, 2000 and
1999
Net Income. Net income for the nine months ended March 31, 2000 was $655,000, or
$.38 per share, as compared with net income of $694,000, or $.34 per share, for
the nine months ended March 31, 1999, a net decrease of $39,000. This decrease
in net income resulted principally because of the non-recurring costs of
$154,000 recognized during the current fiscal year in connection with the
acquisition of the full service branch office in Florence, South Carolina.
Net Interest Income. Net interest income for the nine months ended March 31,
2000 was $2.3 million as compared with $2.3 million during the nine months ended
March 31, 1999, an increase of $54,000. The Company's net interest margin
increased from 2.29% during the nine months ended March 31, 1999 to 2.48% for
the nine months ended March 31, 2000. The weighted average yield on
interest-earning assets increased by 8 basis points while the weighted average
cost of interest-bearing liabilities decreased by 11 basis points. The increase
in the weighted average yield resulted principally from a larger concentration
of interest-earning assets in higher yielding loans, while the decrease in the
weighted average cost of interest-bearing liabilities resulted from lower rates
paid on customer deposit accounts. The effects of the increased margin, however,
were largely offset by a decrease of $4.4 million in the average balance of net
interest earning assets during the current nine months as compared with the
corresponding nine months of the previous year. This decrease in net interest
earning assets resulted principally from the purchase of treasury shares. The
increase in net interest earning assets resulting from the Florence branch
acquisition occurred too late during the current period to significantly impact
the average level of net interest earning assets for the period.
Provision for Loan Losses. There was a provision for loan losses of $98,000 made
during the nine months ended March 31, 2000, as compared with a provision of
$96,000 for the nine months ended March 31, 1999. There were net loan
charge-offs of $10,000 during the nine months ended March 31, 2000. At March 31,
2000, nonaccrual loans aggregated $310,000 while the allowance for loan losses
stood at $532,000.
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Non-Interest Expenses. Non-interest expenses increased to $1.3 million during
the nine months ended March 31, 2000 as compared with $1.1 million for the nine
months ended March 31, 1999, an increase of $196,000 arising principally as a
result of non-recurring costs of $154,000 recognized in connection with the
branch acquisition and an increase in operating costs for the new branch
Provision for Income Taxes. The provision for income taxes, as a percentage of
income before income taxes, was 36.2% and 38.2% for the nine months ended March
31, 2000 and 1999, respectively.
Liquidity and Capital Resources
The objective of the Company's liquidity management is to ensure the
availability of sufficient cash flows to meet all financial commitments and to
capitalize on opportunities for expansion. Liquidity management addresses First
Federal's ability to meet deposit withdrawals on demand or at contractual
maturity, to repay borrowings as they mature, and to fund new loans and
investments as opportunities arise.
The Company's primary sources of internally generated funds are principal and
interest payments on loans receivable and cash flows generated from operations.
External sources of funds include increases in deposits and advances from the
FHLB of Atlanta.
First Federal is required under applicable federal regulations to maintain
specified levels of "liquid" investments in qualifying types of United States
Government, federal agency and other investments having maturities of five years
or less. Current OTS regulations require that a savings association maintain
liquid assets of not less than 4% of its average daily balance of net
withdrawable deposit accounts and borrowings payable in one year or less.
Monetary penalties may be imposed for failure to meet applicable liquidity
requirements. At March 31, 2000, First Federal's liquidity, as measured for
regulatory purposes, was 19.2%, or $11.9 million in excess of the minimum OTS
requirement.
First Federal is 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
regulators that, if undertaken, could have a direct material effect on First
Federal's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, First Federal must meet
specific capital guidelines that involve quantitative measures of First
Federal's assets, liabilities, and certain off-balance sheet items as calculated
under regulatory accounting practices. First Federal's capital amounts and
classifications are also subject to qualitative judgments by the regulators
about components, risk weightings, and other factors. At March 31, 2000, First
Federal's level of capital substantially exceeded all applicable requirements.
Year 2000 Compliance Issues
The Year 2000 issue has posed business risks to most business organizations,
including the Company. In response, the Company formed a Year 2000 project team,
consisting of senior officers within the Company's operations, information
systems, financial and management areas, to ensure that the Company attained
Year 2000 compliance. All date sensitive systems were evaluated for Year 2000
compliance, with complete upgrading and testing of systems completed well in
advance of the Year 2000 date change. The Company also developed contingency
plans for its computer processes, including the use of alternative systems and
the
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manual processing of certain critical operations. In addition, the Company
had undertaken extensive efforts to ensure that significant vendor and customer
relationships are Year 2000 compliant. The Company's management is pleased, but
not surprised, that business continued as normal without adverse impact to the
Company during the critical date change. In coming months, the Bank will
continue monitoring external entities to assure that they have not experienced
any Year 2000 problems that could impact their relationship with the Company.
The Company estimates that its total Year 2000 compliance costs have aggregated
approximately $175,000, including capital expenditures of approximately $141,000
and other expenses charged to operations of approximately $34,000. In addition
to the estimated costs of its Year 2000 compliance, the Company routinely makes
annual investments in technology in its efforts to improve customer service and
to efficiently manage its product and service delivery systems.
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Part II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
(27) Financial data schedule
(b) Reports on Form 8-K.
One report on Form 8-K was filed during the quarter ended
March 31, 2000. This report was filed to report the March 3,
2000 branch acquisition discussed in Note C to the
accompanying consolidated financial statements.
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GREAT PEE DEE BANCORP, INC.
Date: May 8, 2000 By: /s/ Herbert W. Watts
--------------------
Herbert W. Watts
Chief Executive Officer
Date: May 8, 2000 By: /s/ Johnnie L. Craft
--------------------
Johnnie L. Craft
Chief Financial Officer
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-1-1999
<PERIOD-END> MAR-31-2000
<CASH> 2,158
<INT-BEARING-DEPOSITS> 9,245
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 406
<INVESTMENTS-CARRYING> 4,416
<INVESTMENTS-MARKET> 4,272
<LOANS> 81,959
<ALLOWANCE> 532
<TOTAL-ASSETS> 102,447
<DEPOSITS> 66,695
<SHORT-TERM> 0
<LIABILITIES-OTHER> 290
<LONG-TERM> 9,200
0
0
<COMMON> 22
<OTHER-SE> 26,240
<TOTAL-LIABILITIES-AND-EQUITY> 102,447
<INTEREST-LOAN> 3,895
<INTEREST-INVEST> 238
<INTEREST-OTHER> 104
<INTEREST-TOTAL> 4,237
<INTEREST-DEPOSIT> 1,621
<INTEREST-EXPENSE> 1,889
<INTEREST-INCOME-NET> 2,348
<LOAN-LOSSES> 98
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,316
<INCOME-PRETAX> 1,027
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 655
<EPS-BASIC> 0.38
<EPS-DILUTED> 0.38
<YIELD-ACTUAL> 4.15
<LOANS-NON> 310
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 229
<ALLOWANCE-OPEN> 444
<CHARGE-OFFS> 10
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 532
<ALLOWANCE-DOMESTIC> 410
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 122
</TABLE>
