UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------------------------
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1998
[ ] 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 0-23971
GASTON FEDERAL BANCORP, INC.
----------------------------
(Exact name of registrant as specified in its charter)
UNITED STATES 56-2063438
------------- ----------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
245 WEST MAIN AVENUE, GASTONIA, NORTH CAROLINA 28052-4140
---------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (704)-868-5200
- --------------------------------------------------------------------------------
Former name, former address and former fiscal year, if changed since last report
Indicate by check |X| 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 [ ]
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: There were 4,496,500 shares
of the Registrant's common stock outstanding as of August 14, 1998.
1
<PAGE>
GASTON FEDERAL BANCORP, INC.
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements....................... 1
Consolidated Statements of Financial Condition as of
June 30, 1998 and September 30, 1997........................ 1
Consolidated Statements of Operations for the three and nine
months ended June 30, 1998 and 1997......................... 2
Consolidated Statements of Cash Flows for the nine months
ended June 30, 1998 and 1997................................... 3
Notes to Consolidated Financial Statements..................... 4
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations................................ 5
PART II. OTHER INFORMATION.............................................. 9
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
GASTON FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
JUNE 30, SEPT. 30,
1998 1997
-------- --------
(UNAUDITED)
(IN THOUSANDS)
ASSETS
- ------
Cash and due from banks.............................. $ 3,098 $ 2,422
Interest-earning bank balances....................... 6,689 2,203
-------- -------
Cash and cash equivalents............................ 9,787 4,625
Investment securities available-for-sale,
at fair market..................................... 20,145 8,248
Investment securities held-to-maturity,
at amortized cost.................................. 16,336 10,407
Mortgage-backed securities available for sale,
at fair value...................................... 4,473 0
Mortgage-backed securities held-to-maturity,
at amortized cost.................................. 6,950 10,087
Loans, net........................................... 139,080 134,491
Premises and equipment, net.......................... 2,194 2,140
Accrued interest receivable.......................... 956 981
Federal Home Loan Bank stock......................... 1,276 1,276
Other assets......................................... 1,418 1,215
-------- --------
Total assets....................................... $202,615 $173,470
======== ========
LIABILITIES AND EQUITY
Deposits............................................. $139,789 $145,444
Advances from borrowers for taxes and insurance...... 848 1,042
Advances from Federal Home Loan Bank................. 18,500 3,500
Other liabilities.................................... 2,371 2,616
------- -------
Total liabilities.................................. 161,508 152,602
Retained earnings (substantially restricted)......... 21,184 19,769
Capital stock and paid in capital, net of $1,641
ESOP loan.......................................... 18,590 0
Unrealized gain on securities available-for-sale,
net of tax......................................... 1,333 1,099
------ -------
Total equity....................................... 41,107 20,868
------- -------
Total liabilities and equity......................... $202,615 $173,470
======== ========
3
<PAGE>
GASTON FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
THREE MONTHS NINE MONTHS
ENDED JUNE 30, ENDED JUNE 30,
--------------- ----------------
1998 1997 1998 1997
------ ------ ------- -------
(IN THOUSANDS)
INTEREST INCOME
Loans.................................... $2,774 $2,710 $8,248 $7,737
Investment securities.................... 741 316 1,645 1,185
Mortgage-backed and related securities... 140 190 449 608
----- ----- ----- -----
Total interest income.................. 3,655 3,216 10,342 9,530
INTEREST EXPENSE
Deposits................................. 1,421 1,693 4,889 5,124
Borrowed funds........................... 297 34 404 93
----- ----- ----- -----
Total interest expense................. 1,718 1,727 5,293 5,217
----- ----- ----- -----
Net interest income...................... 1,937 1,489 5,049 4,313
Provision for loan losses................ 90 59 240 177
----- ----- ----- -----
Net interest income after provision
for loan losses...................... 1,847 1,430 4,809 4,136
NONINTEREST INCOME
Service charges on deposit accounts...... 67 50 203 164
Gain on sale of securities............... 0 0 185 51
Gain on sale of real estate owned........ 0 0 0 103
Other income............................. 142 84 256 220
----- ----- ----- -----
Total noninterest income............... 209 134 644 538
NONINTEREST EXPENSE
Compensation and benefits................ 614 534 1,839 1,622
Occupancy and equipment expense.......... 145 101 358 314
Other expenses........................... 375 259 1,078 852
----- ----- ----- -----
Total noninterest expense.............. 1,134 894 3,275 2,788
Income before income taxes............... 922 670 2,178 1,886
Provision for income taxes............... 312 274 763 775
----- ----- ----- -----
Net income............................... $ 610 $ 396 $1,415 $1,111
===== ===== ====== ======
EARNINGS PER SHARE....................... $0.14 NA NA NA
Weighted average outstanding shares ..... 4,496,500 NA NA NA
4
<PAGE>
GASTON FEDERAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
NINE MONTHS ENDED
JUNE 30,
-----------------
1998 1997
------ ------
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income............................................. $ 1,415 $ 1,111
Adjustments to reconcile net income to net cash
provided by operating activities:
Provision for loan losses............................ 240 177
Depreciation......................................... 238 162
Gain on sale of investment securities................ (185) (51)
Gain on sale of real estate owned.................... 0 (103)
Decrease (increase) in other assets.................. (200) (994)
Increase (decrease) in other liabilities............. (245) 489
-------- -------
Net cash provided by operating activities........... 1,263 791
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Net increase in loans made to customers................ (4,806) (4,680)
Proceeds from sale of investment securities............ 2,713 1,608
Proceeds from maturities of investment securities...... 6,431 6,500
Purchases of investments............................... (25,989) (6,922)
Maturities and prepayments of mortgage-backed
securities........................................... 2,532 2,052
Purchases of mortgage backed securities................ (4,430) 0
Net cash flows from other investing activities......... (293) (47)
-------- --------
Net cash provided by (used in) investment
activities........................................ (23,842) (1,489)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase (decrease) in deposits.................... (5,655) 1,726
Net increase (decrease) in borrowed money.............. 15,000 (250)
Increase (decrease) in advances from borrowers for
insurance and taxes................................ (194) (8)
Net proceeds from sale of common stock................. 18,590 0
------- -------
Net cash provided by (used in) financing activities. 27,741 1,468
------- -------
Net increase (decrease) in cash and cash equivalents..... 5,162 770
Cash and cash equivalents at beginning of period......... 4,625 2,164
------- -------
Cash and cash equivalents at end of period............... $ 9,787 $ 2,934
======= =======
5
<PAGE>
GASTON FEDERAL BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
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 June 30, 1998 and 1997, in conformity with
generally accepted accounting principles. The financial statements include the
accounts of Gaston Federal Bancorp, Inc. (the "Company") and its wholly-owned
subsidiary Gaston Federal Bank (the "Bank"). Operating results for the three and
nine month periods ended June 30, 1998, are not necessarily indicative of the
results that may be expected for the fiscal year ending September 30, 1998.
The organization and business of the Company, accounting policies followed
and other information are contained in the notes to the consolidated financial
statements of the Company as of and for the years ended September 30, 1997 and
1996, filed as part of the Company's registration statement on Form SB-2. These
consolidated financial statements should be read in conjunction with the annual
consolidated financial statements.
NOTE B - PLAN OF REORGANIZATION AND STOCK OFFERING
On July 14, 1997, the Board of Directors of Gaston Federal Savings and
Loan Association (now known as "Gaston Federal Bank") adopted the Gaston Federal
Savings and Loan Association Plan of Reorganization from Mutual Savings
Association to Mutual Holding Company and Stock Issuance Plan (the "Plan of
Reorganization"). Pursuant to the Plan of Reorganization, on April 9, 1998, the
Bank converted from a federally chartered mutual savings and loan association to
a federally chartered stock savings bank and became the wholly-owned subsidiary
of Gaston Federal Bancorp, Inc., a Federal corporation (the "Reorganization").
The Company was incorporated on March 18, 1998, to serve as the Bank's holding
company, and prior to April 9, 1998, had no operations and insignificant assets
and liabilities. In addition, pursuant to the Plan of Reorganization, the
Company sold 2,113,355 shares of its common stock to the Bank's customers for
$10.00 per share (the "Offering"), and issued 2,383,145 shares of its common
stock to Gaston Federal Holdings, MHC (the "Mutual Holding Company"), a federal
mutual holding company formed as part of the Reorganization. At the conclusion
of the Offering, the Mutual Holding Company owned 53.0% of the Company's
outstanding shares of common stock and purchasers in the Offering owned 47.0%.
Gross proceeds of the Offering totaled $21,133,550, expenses totaled
approximately $853,000, and purchases by the Bank's employee stock ownership
plan formed in connection with the Offering totaled $1,690,680 for net proceeds
of approximately $18,590,000.
NOTE C - EARNINGS PER SHARE
Earnings per share has been determined under the provisions of the
Statement of Financial Accounting Standards No. 128, Earnings Per Share. For the
quarter ended June 30, 1998, earnings per share has been computed based upon the
weighted average common shares outstanding of 4,496,500. For purposes of
computing weighted average shares, shares issued in the Offering on April 9,
1998, were assumed to have been outstanding since April 1, 1998. Earnings per
share for the quarter ended June 30, 1997, is not presented since there was no
outstanding common stock issued or outstanding.
The Company has no outstanding potential stock as defined in the Statement of
Financial Accounting Standards No. 128, Earnings Per Share.
6
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
The following discussion may contain "forward-looking" statements, as
defined by (i) the Private Securities Litigation Reform Act of 1995 and (ii) in
releases made by the Securities and Exchange Commission from time to time. Such
statements should be read in conjunction with the cautionary factors described
in the "Risk Factors" section included in the Company's Registration Statement
on Form SB-2 and incorporated into this discussion by this reference and the
consolidated financial statements and related notes. The Company's future
operating results may be affected by various trends and factors beyond the
Company's control. Accordingly, past results and trends should not be used by
investors to anticipate future results or trends.
COMPARISON OF FINANCIAL CONDITION AT JUNE 30, 1998 AND SEPTEMBER 30, 1997
ASSETS. Total assets of the Company increased by $29.1 million, or 16.8%,
from $173.5 million as of September 30, 1997, to $202.6 million as of June 30,
1998. One reason for the increase was the receipt of $18.6 million in net
proceeds from the stock offering. Also, management engaged in a $15.0 million
leverage strategy whereby borrowed funds were used to purchase investment
securities and mortgage-backed securities. As a result of the stock conversion
and leverage strategy, cash and cash equivalents increased by $5.2 million, or
111.6%, from $4.6 million to $9.8 million, investment securities increased by
$17.8 million, or 95.7%, from $18.6 million to $36.4 million, and
mortgage-backed securities increased $1.3 million, or 13.0% from $10.1 million
to $11.5 million. Management plans that from time to time it may continue to
pursue attractive leverage strategies, which will increase the Company's total
assets.
Loans receivable, net, increased by $4.6 million, or 3.4%, from $134.5
million to $139.1 million due, in part, to the addition of our wholesale lending
department. Management's strategy is to grow its loan portfolio in a safe and
sound manner with an emphasis on short-term, high-yielding non-mortgage loans.
LIABILITIES. Total liabilities increased by $8.9 million, or 5.8%, from
$152.6 million as of September 30, 1997, to $161.5 million as of June 30, 1998.
The primary reason for the change was a $15.0 million increase in borrowed money
from $3.5 million to $18.5 million. This borrowed money was part of a leverage
strategy in which the funds were used to purchase investment securities and
mortgage-backed securities. The borrowed money is comprised of (1) $10 million
in Federal Home Loan Bank ("FHLB") advances at a fixed interest rate of 4.97%
with a 10 year term and a quarterly call option by the FHLB to convert the
advance to a quarterly adjustable rate based on the prevailing three month LIBOR
beginning June 19, 1999, and (2) $5.0 million in FHLB advances at a fixed
interest rate of 5.51% with a 10 year term and a one-time option by the FHLB to
convert the advance to a quarterly adjustable rate based on the prevailing three
month LIBOR on June 23, 2003. Total deposits decreased by $5.7 million, or 3.9%,
from $145.4 million to $139.8 million. This decrease was primarily the result of
depositors using funds to purchase the Company's stock in the initial public
offering in April 1998. Management plans to unveil a new menu of personal and
business accounts in the near future that will be marketed aggressively in order
to gain market share in the local community.
EQUITY. Total equity increased by $20.2 million, or 97.0%, from $20.9
million as of September 30, 1997, to $41.1 million as of June 30, 1998. This
increase was primarily due to the receipt of $18.6 million in net proceeds from
the recent stock sale, $1.4 million in earnings during the nine month period
ended June 30, 1998, and a $234,000 increase in the unrealized gain on
securities classified as available-for-sale.
8
<PAGE>
COMPARISON OF RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 1997
AND 1998
GENERAL. Net income for the Company for the three months ended June 30,
1998, amounted to $610,000, as compared to $396,000 for the three months ended
June 30, 1997. This represents an increase of $214,000, or 54.0%.
NET INTEREST INCOME. Net interest income amounted to $1.9 million for the
three months ended June 30, 1998, as compared to $1.5 million for the three
months ended June 30, 1997. This represents an increase of $448,000, or 30.1%.
This increase was due to a $439,000 increase in total interest income and a
$9,000 reduction in interest expense. Interest income improved as a result of an
increase in the amount of interest-earning assets. This increase was primarily
due to the deployment of $18.6 million of offering proceeds into
interest-earning assets. The decrease in interest expense was due to a $272,000
reduction in interest paid on deposit accounts which was partially offset by a
$263,000 increase in interest paid on borrowed money. These changes were
primarily due to changes in the volume of deposits and borrowed money.
PROVISION FOR LOAN LOSSES. The provision for loan losses amounted to
$90,000 for the three months ended June 30, 1998, as compared to $59,000 for the
three months ended June 30, 1997. This represents an increase of $31,000, or
52.5%. The provision for loan losses is expected to increase as the Company
increases its loan portfolio. The ratio of loan loss reserves to gross loans was
0.96% as of June 30, 1998. Management plans to increase the loan loss reserve
ratio to 1.0% of gross loans by September 30, 1998.
NONINTEREST INCOME. Total noninterest income amounted to $209,000 for the
three months ended June 30, 1998, as compared to $134,000 for the three months
ended June 30, 1997. This represents an increase of $75,000, or 56.0%. This
increase was primarily due to additional fee income derived from loan and
deposit products.
NONINTEREST EXPENSE. Total noninterest expense amounted to $1.1 million
for the three months ended June 30, 1998, as compared to $894,000 for the three
months ended June 30, 1997. This represents an increase of $240,000 or 26.8%.
This difference was primarily due to an increase in the number of personnel,
additional expenses associated with implementing new products and services, and
expenses associated with changing the Bank's name and logo.
INCOME TAXES. Income taxes amounted to $312,000 for the three month period
ended June 30, 1998, as compared to $274,000 for the three month period ended
June 30, 1997. This represents an increase of $38,000, or 13.9%. This difference
was primarily due to a $252,000 increase in net income before taxes for the
three months ended June 30, 1998. Also, a higher portion of interest income
earned in 1998 was derived from investments that are exempt from state income
taxes.
9
<PAGE>
COMPARISON OF RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED JUNE 30, 1997
AND 1998
GENERAL. Net income for the nine months ended June 30, 1998, amounted to
$1,415,000 as compared to $1,111,000 for the nine months ended June 30, 1997.
This represents an increase of $304,000, or 27.4%.
NET INTEREST INCOME. Net interest income amounted to $5.0 million for the
nine months ended June 30, 1998, as compared to $4.3 million for the nine months
ended June 30, 1997. This represents an increase of $736,000, or 17.1%. This
change was due to a $812,000 increase in total interest income which was
partially offset by a $76,000 increase in interest expense. The improvement in
interest income was primarily due to an increase in the amount of
interest-earning assets that resulted from the receipt of $18.6 million from the
offering and $15.0 million in investment and mortgage-backed securities acquired
using borrowed funds. The increase in interest expense was due to the $15.0
million increase in borrowed money. For the nine months ended June 30, 1998,
total interest income amounted to $10.3 million, while total interest expense
amounted to $5.3 million. For the nine months ended June 30, 1997, total
interest income amounted to $9.5 million, while total interest expense amounted
to $5.2 million. Net interest income is expected to increase as a result of the
additional capital raised in the stock offering and the implementation of
additional wholesale leverage strategies.
PROVISION FOR LOAN LOSSES. The provision for loan losses amounted to
$240,000 for the nine months ended June 30, 1998, as compared to $177,000 for
the nine months ended June 30, 1997. This represents an increase of $63,000, or
35.6%. The provision for loan losses is expected to increase as the Company
increases its loan portfolio. The ratio of loan loss reserves to gross loans was
0.96% as of June 30, 1998. Management plans to increase the loan loss reserve
ratio to 1.0% of gross loans by September 30, 1998.
NONINTEREST INCOME. Total noninterest income amounted to $644,000 for the
nine months ended June 30, 1998, as compared to $538,000 for the nine months
ended June 30, 1997. This represents an increase of $106,000, or 19.7%. The
change was due, in part, to additional fee income derived from loan and deposit
products. The increase was also attributed to a net gain on the sale of
investments in the amount of $134,000 during the nine month period ended June
30, 1998. The nine month period ended June 30, 1997, included a gain on sale of
real estate owned of $103,000. The gains on sales of investments and real estate
owned are non-recurring items.
NONINTEREST EXPENSE. Total noninterest expense amounted to $3.3 million
for the nine months ended June 30, 1998, as compared to $2.8 million for the
nine months ended June 30, 1997. This represents an increase of $487,000 or
17.5%. This difference was primarily due to an increase in the number of
personnel, additional expenses associated with implementing new products and
services, and expenses associated with changing the Bank's name and logo.
INCOME TAXES. Income taxes amounted to $763,000 for the nine months ended
June 30, 1998, as compared to $775,000 for the nine months ended June 30, 1997.
This represents a decrease of $12,000, or 1.6%. This decrease was primarily due
to a higher portion of interest income being derived from investments that are
exempt from state income taxes.
10
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The objective of the Bank'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 the
Bank'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 Bank'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
Federal Home Loan Bank of Atlanta.
The Bank 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 bank maintain
liquid assets of not less that 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 June 30, 1998, the Bank's liquidity, as measured for regulatory
purposes, was 19.2%, or $31.8 million in excess of the minimum OTS requirement.
The Bank is subject to various regulatory capital requirements
administered by the banking regulatory agencies. Failure to meet minimum capital
requirements can initiate certain mandatory and possibly discretionary actions
by the regulators that, if undertaken, could have a direct material effect on
the Bank's financial statements. Under capital adequacy guidelines and the
regulatory framework for prompt corrective action, the Bank must meet specific
capital guidelines that involve quantitative measures of the Bank's assets,
liabilities, and certain off-balance sheet items as calculated under regulatory
accounting practices. The Bank's capital amounts and classifications are subject
to qualitative judgments by the regulators about components, risk-weightings,
and other factors. As June 30, 1998, Gaston Federal Bank's level of capital
substantially exceeded all applicable regulatory requirements.
THE YEAR 2000
There is concern among industry experts that commencing January 1, 2000,
computer-based information systems will be unable to "read" the new year and
there may be widespread computer malfunctions. The Company has established a
Year 2000 Committee to assess the effects of the Year 2000 on the Company's
operating plans and systems. The Company is developing a plan for identifying,
renovating, testing, and implementing its systems for Year 2000 processing and
internal controls. The cost for becoming Year 2000 compliant has not yet been
determined; however, management believes that the effect will not be material to
the Company's financial statements.
11
<PAGE>
PART II. OTHER INFORMATION
LEGAL PROCEEDINGS
There are various claims and lawsuits in which the Bank is periodically
involved incidental to the Bank's business. In the opinion of management, no
material loss is expected from any of such pending claims or lawsuits.
USE OF PROCEEDS FROM REGISTERED SECURITIES
The Company's initial registration statement (No. 333-42951) on From SB-2
was declared effective on February 11, 1998. The offering commenced on February
11, 1998, and expired on March 17, 1998. Trident Securities, Inc. was the
managing underwriter in the offering. The sale in the offering of 2,113,355
of the Company's $1.00 par value common shares closed on April 9, 1998, for
gross proceeds of $21.1 million. Net of offering costs and expenses of
approximately $853,000, the offering generated net proceeds of $20.3 million.
Of such proceeds, $1.7 million was in the form of a loan to the Company's bank
subsidiary's ESOP for the purchase by the ESOP of 169,068 common shares in the
offering, $10.6 million was paid to the Company's bank subsidiary in exchange
for the common stock of the bank subsidiary issued in its conversion from a
federally-chartered mutual savings and loan association to a federally-chartered
stock savings bank, $1.5 million was invested in investment securities and $7.3
million was invested in interest-earning deposits. Of the $10.6 million paid
to the Company's bank subsidiary, $8.4 million was used to fund deposit
withdrawals of customers who used such funds to purchase shares in the Company's
Offering and $2.2 million was invested in investment securities.
DEFAULTS UPON SENIOR SECURITIES
Not Applicable.
SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no meetings of the Company's stockholders during the fiscal
quarter ended June 30, 1998.
EXHIBITS AND REPORT ON FORM 8-K.
No Form 8-K reports were filed during the quarter.
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.
GASTON FEDERAL BANCORP, INC.
Date: August 14, 1998 By: /s/ Kim S. Price
-------------------------------
Kim S. Price
President and Chief Executive
Officer
Date: August 14, 1998 By: /s/ Gary F. Hoskins
--------------------------------
Gary F. Hoskins
Treasurer and Chief Financial
Officer
12
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<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> JUN-30-1998
<CASH> 3,098
<INT-BEARING-DEPOSITS> 6,689
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 24,619
<INVESTMENTS-CARRYING> 23,286
<INVESTMENTS-MARKET> 24,917
<LOANS> 139,080
<ALLOWANCE> 1,351
<TOTAL-ASSETS> 202,615
<DEPOSITS> 139,789
<SHORT-TERM> 1,500
<LIABILITIES-OTHER> 3,219
<LONG-TERM> 17,000
0
0
<COMMON> 20,231
<OTHER-SE> 20,876
<TOTAL-LIABILITIES-AND-EQUITY> 202,615
<INTEREST-LOAN> 8,248
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<INTEREST-TOTAL> 10,342
<INTEREST-DEPOSIT> 4,889
<INTEREST-EXPENSE> 5,293
<INTEREST-INCOME-NET> 5,049
<LOAN-LOSSES> 240
<SECURITIES-GAINS> 185
<EXPENSE-OTHER> 3,275
<INCOME-PRETAX> 2,178
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<NET-INCOME> 1,415
<EPS-PRIMARY> 0.14
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<LOANS-NON> 776
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