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, 2000
|_| 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.
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(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
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(Address of principal executive offices)
Registrant's telephone number, including area code: (704)-868-5200
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--------------------------------------------------------------------------------
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 4,218,934 shares
of the Registrant's common stock outstanding as of August 8, 2000.
<PAGE>
GASTON FEDERAL BANCORP, INC.
INDEX
Page
----
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements ........................... 2
Consolidated Statements of Financial Condition as of
June 30, 2000 and September 30, 1999 ............................ 2
Consolidated Statements of Operations for the three and
nine months ended June 30, 2000 and 1999 ........................ 3
Consolidated Statements of Comprehensive Income for the
nine months ended June 30, 2000 and 1999 ........................ 4
Consolidated Statements of Cash Flows for the nine months ended
June 30, 2000 and 1999 .......................................... 5
Notes to Consolidated Financial Statements ........................ 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations ................................... 8
PART II. OTHER INFORMATION ................................................ 12
1
<PAGE>
PART I. FINANCIAL INFORMATION
ITEM 1. Consolidated Financial Statements
Gaston Federal Bancorp, Inc. and Subsidiary
Consolidated Statements of Financial Condition (unaudited)
(in thousands)
<TABLE>
<CAPTION>
June 30, September 30,
2000 1999
--------- -------------
<S> <C> <C>
Assets
Cash and cash equivalents ......................................... 2,814 12,583
Investment securities available-for-sale, at fair value ........... 19,948 15,777
Investment securities held-to-maturity, at amortized cost ......... 12,864 12,865
Mortgage-backed securities available-for-sale, at fair value ...... 17,703 16,167
Mortgage-backed securities held-to-maturity, at amortized cost .... 3,003 3,825
Loans, net ........................................................ 177,267 168,044
Premises and equipment, net ....................................... 3,886 2,503
Accrued interest receivable ....................................... 1,125 1,244
Federal Home Loan Bank stock ...................................... 2,177 1,775
Other assets ...................................................... 4,701 2,670
--------- ---------
Total assets .................................................... $ 245,488 $ 237,453
========= =========
Liabilities and Equity
Deposits .......................................................... $ 160,821 $ 159,425
Advances from borrowers for taxes and insurance ................... 1,004 761
Borrowed money .................................................... 43,050 35,500
Other liabilities ................................................. 2,206 2,059
--------- ---------
Total liabilities ............................................... 207,081 197,745
Retained earnings, substantially restricted ....................... 23,477 22,653
Common stock and additional paid in capital, net of ESOP loan ..... 15,174 16,879
Unrealized gain/(loss) on securities available-for-sale, net of tax (244) 176
--------- ---------
Total equity .................................................... 38,407 39,708
--------- ---------
Total liabilities and equity ...................................... $ 245,488 $ 237,453
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
2
<PAGE>
Gaston Federal Bancorp, Inc. and Subsidiary
Consolidated Statements of Operations (unaudited)
(in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended June 30, Ended June 30,
----------------------- -----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Interest income
Loans ............................................... $ 3,306 $ 3,088 $ 9,569 $ 8,902
Investment securities ............................... 590 562 1,597 1,856
Mortgage-backed and related securities .............. 275 236 973 606
---------- ---------- ---------- ----------
Total interest income ............................. 4,171 3,886 12,139 11,364
Interest Expense
Deposits ............................................ 1,766 1,602 5,104 4,738
Borrowed funds ...................................... 619 398 1,637 1,060
---------- ---------- ---------- ----------
Total interest expense .............................. 2,385 2,000 6,741 5,798
---------- ---------- ---------- ----------
Net interest income ................................. 1,786 1,886 5,398 5,566
Provision for loan losses ........................... 8 25 23 90
---------- ---------- ---------- ----------
Net interest income after provision for loan losses 1,778 1,861 5,375 5,476
Noninterest Income
Service charges on deposit accounts ................. 150 103 413 262
Gain on sale of assets .............................. 226 1,198 226 1,342
Other income ........................................ 377 164 836 459
---------- ---------- ---------- ----------
Total noninterest income .......................... 753 1,465 1,475 2,063
Noninterest Expense
Compensation and benefits ........................... 995 1,807 2,702 3,168
Occupancy and equipment expense ..................... 152 104 472 313
Other expenses ...................................... 427 461 1,316 1,440
---------- ---------- ---------- ----------
Total noninterest expense ......................... 1,574 2,372 4,490 4,921
Income before income taxes .......................... 957 954 2,360 2,618
Provision for income taxes .......................... 338 338 783 939
---------- ---------- ---------- ----------
Net income .......................................... $ 619 $ 616 $ 1,577 $ 1,679
========== ========== ========== ==========
Basic earnings per share ............................ $ 0.15 $ 0.14 $ 0.37 $ 0.38
Diluted earnings per share .......................... $ 0.15 $ 0.14 $ 0.37 $ 0.38
Basic weighted average outstanding shares ........... 4,234,044 4,461,911 4,283,731 4,464,578
Diluted weighted average outstanding shares ......... 4,234,044 4,473,623 4,285,206 4,468,482
Dividends paid per share ............................ $ 0.06 $ 0.055 $ 0.18 $ 0.155
</TABLE>
3
<PAGE>
Gaston Federal Bancorp, Inc. and Subsidiary
Consolidated Statements of Comprehensive Income (unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
------------------
2000 1999
------- -------
<S> <C> <C>
Net income .............................................................. $ 1,577 $ 1,679
Other comprehensive income, net of tax:
Unrealized gains on securities:
Unrealized holding gains/(losses) arising during period ............ (275) (271)
Reclassification adjustment for (gains)/losses included in net income (145) (753)
------- -------
Other comprehensive income ............................................ (420) (1,024)
------- -------
Comprehensive income .................................................... $ 1,157 $ 655
------- -------
</TABLE>
4
<PAGE>
Gaston Federal Bancorp, Inc. and Subsidiary
Consolidated Statements of Cash Flows (unaudited)
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
June 30,
--------------------
2000 1999
-------- --------
<S> <C> <C>
Cash flows from operating activities:
Net income .................................................. $ 1,577 $ 1,679
Adjustments to reconcile net income to net cash provided
by operating activities:
Provision for loan losses ................................. 23 90
Depreciation .............................................. 256 245
(Gain) on sale of investment securities ................... (227) (1,177)
(Gain) loss on sale of other assets ....................... 1 (138)
(Increase) in other assets ................................ (1,969) (170)
Increase (decrease) in other liabilities .................. 146 (957)
-------- --------
Net cash provided by (used for) operating activities .... (193) (428)
-------- --------
Cash flows from investing activities:
Net (increase) in loans receivable .......................... (9,092) (30,566)
Sale of investment securities ............................... 2,050 5,727
Sale of mortgage-backed securities .......................... 615 0
Maturities and prepayments of investment securities ......... 2,936 7,734
Maturities and prepayments of mortgage-backed securities .... 2,820 3,705
Purchases of investments .................................... (9,350) (10,639)
Purchases of mortgage-backed securities ..................... (4,149) (6,480)
Net cash flows from other investing activities .............. (2,041) (746)
-------- --------
Net cash provided by (used for) investment activities ... (16,211) (31,265)
-------- --------
Cash flows from financing activities:
Net increase in deposits .................................... 1,396 10,526
Dividends to stockholders ................................... (753) (697)
Repurchase of common stock .................................. (1,801) (2,427)
Net increase in borrowed money .............................. 7,550 13,500
(Decrease) in advances from borrowers for insurance and taxes 244 (334)
-------- --------
Net cash provided by financing activities ............... 6,636 21,236
-------- --------
Net (decrease) in cash and cash equivalents ................... (9,769) (10,457)
Cash and cash equivalents at beginning of period .............. 12,583 13,798
-------- --------
Cash and cash equivalents at end of period .................... $ 2,814 $ 3,341
======== ========
</TABLE>
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, 2000 and 1999, 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, 2000, are not necessarily indicative of
the results that may be expected for future periods.
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,
1999 and 1998, filed as part of the Company's annual report on Form 10-KSB.
These consolidated financial statements should be read in conjunction with the
annual consolidated financial statements.
Note B - 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
quarters ended June 30, 2000 and 1999, basic earnings per share has been
computed based upon the weighted average common shares outstanding of 4,234,044
and 4,461,911, respectively. For the nine months ended June 30, 2000 and 1999,
basic earnings per share has been computed based upon the weighted average
common shares outstanding of 4,285,206 and 4,464,578, respectively.
The only potential stock of the Company as defined in the Statement of
Financial Accounting Standards No. 128, Earnings Per Share, is stock options
granted to various directors and officers of the Bank. The following is a
summary of the diluted earnings per share calculation for the three and nine
months ended June 30, 2000, and 1999: (in thousands, except per share data)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended June 30, Ended June 30,
----------------------- -----------------------
2000 1999 2000 1999
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income ........................ $ 619 $ 616 $ 1,577 $ 1,679
Weighted average outstanding shares 4,234,044 4,461,911 4,283,731 4,464,578
Dilutive effect of stock options .. 0 11,712 1,475 3,904
---------- ---------- ---------- ----------
Weighted average diluted shares ... 4,234,044 4,473,623 4,285,206 4,468,482
Diluted earnings per share ....... $ 0.15 $ 0.14 $ 0.37 $ 0.38
</TABLE>
Options were excluded from the calculation of diluted earnings per share
for the three months ended June 30, 2000, because the exercise prices of $12.00
for 192,569 shares and $13.00 for 10,000 shares exceeded the average market
price of $10.87 for the period. There was no potential stock outstanding as of
June 30, 1999.
6
<PAGE>
Note C - Stock Compensation Plans
On April 12, 1999, the Company's shareholders, among other actions,
approved the Gaston Federal Bank 1999 Recognition and Retention Plan.
Subsequently, 84,534 shares of common stock were awarded under the plan to
directors and management. All such awards vested during the quarter ended June
30, 1999. In addition, the Company's shareholders approved the Gaston Federal
Bank 1999 Stock Option Plan that provided for the issuance of 211,335 options
for directors and officers to purchase the Company's common stock. As of June
30, 2000, 202,569 options had been awarded under the plan at a weighted average
exercise price of $12.05 and a weighted average contractual life of 106 months.
There were 111,627.6 options fully vested as of June 30, 2000. The Company
applies the provisions of Accounting Principles Board Opinion No. 25 in
accounting for the Stock Option Plan described above and, accordingly, no
compensation expense has been recognized in connection with the granting of the
stock options.
7
<PAGE>
ITEM 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
From time to time, the Company may publish forward-looking statements
relating to such matters as anticipated financial performance, business
prospects, technological developments, new products, and similar matters. The
Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements provided that the Company notes that a variety of
factors could cause the Company's actual results to differ materially from the
anticipated results expressed in the Company's forward-looking statements. The
risks and uncertainties that may affect the operations, performance, and results
of the Company's business include, but are not limited to, changes in economic
conditions, changes in interest rates, and changes in laws and regulations.
Accordingly, past results and trends should not be used by investors to
anticipate future results or trends. Statements included in this report should
be read in conjunction with the Company's Annual Report on Form 10-KSB and are
incorporated into this discussion by this reference.
Comparison of Financial Condition
Assets. Total assets of the Company increased by $8.0 million, or 3.3%,
from $237.5 million as of September 30, 1999, to $245.5 million as of June 30,
2000. During the nine month period ended June 30, 2000, cash and cash
equivalents decreased by $9.8 million to $2.8 million. These funds were used to
fund $9.2 million in additional loans outstandings, $2.0 million investment in
bank-owned life insurance, $1.8 million in common stock repurchases, $1.0
million in facilities and equipment for the new Dallas branch, and $753,000 in
cash dividends. During the period, mortgage loans decreased by $5.6 million, or
3.9%, to $136.9 million, while nonmortgage loans increased by $14.8 million, or
57.8%, to $40.4 million. This shift in the loan portfolio composition reflects
management's efforts to make the Company's balance sheet more reflective of a
community bank. Management plans to continue to grow the loan portfolio in a
safe and sound manner with an emphasis on short-term, high-yielding nonmortgage
loans. Also during the period, investment securities increased by $4.1 million
to $32.8 million, and mortgage-backed securities increased by $715,000 to $20.7
million.
Liabilities. Total liabilities increased by $9.4 million, or 4.5%, from
$197.7 million as of September 30, 1999, to $207.1 million as of June 30, 2000.
The primary reason for the change was a $7.6 million increase in borrowed money
to $43.1 million and a $1.4 million increase in total deposits to $160.8
million. Management plans to continue in its efforts to gain deposit market
share through new product development, aggressive marketing, and branch
expansion with an emphasis on demand deposits. The borrowed money is primarily
comprised of various callable and fixed-term Federal Home Loan Bank advances
with a weighted average interest rate of 5.8%.
Equity. Total equity decreased by $1.3 million, or 3.4%, from $39.7
million as of September 30, 1999, to $38.4 million as of June 30, 2000. This
decrease was primarily due to the repurchase of 150,700 shares of common stock
for $1.8 million at a weighted average price of $11.95 per share, the payment of
$753,000 in cash dividends, or $0.18 per share, and a $420,000 reduction in
unrealized gains on available for sale securities. This decrease in equity was
partly offset by $1,577,000 in earnings for the period. Management plans to
continue repurchasing its common stock in the open market when such actions are
considered to be financially prudent. The Company has been authorized to
repurchase a total of 303,894 shares of common stock, or 131,976 additional
shares.
8
<PAGE>
Comparison of Results of Operations for the Three Months Ended June 30, 2000 and
1999
General. Net income for the Company for the three months ended June 30,
2000, amounted to $619,000, or $0.15 per share, as compared to $616,000, or
$0.14 per share, for the three months ended June 30, 1999.
Net interest income. Net interest income decreased slightly to $1.8
million for the three months ended June 30, 2000, from $1.9 million for the
three month period ended June 30, 1999. Interest income increased by $285,000,
primarily due to a $9.0 million increase in total loans and a $2.1 million
increase in investment and mortgage-backed securities, coupled with an increase
in interest rates. In addition, interest expense increased by $385,000,
primarily due to a $6.4 million increase in total deposits and a $10.0 million
increase in borrowed money, coupled with an increase in interest rates.
Provision for loan losses. The provision for loan losses amounted to
$7,500 for the three months ended June 30, 2000, as compared to $25,000 for the
three months ended June 30, 1999. This represents a decrease of $17,500. The
amount of the provision for loan losses was reduced, in part, due to an overall
reduction in the percentage of nonperforming assets to 0.06% of total assets as
of June 30, 2000, from 0.23% of total assets as of June 30, 1999. The ratio of
loan loss reserves to gross loans was 0.86% as of June 30, 2000, and 0.92% as of
June 30, 1999.
Noninterest income. Total operating noninterest income amounted to
$527,000 for the three months ended June 30, 2000, as compared to $267,000 for
the three months ended June 30, 1999. This increase of $260,000, or 97.4%, was
primarily due to additional commissions paid on the sale of uninsured financial
products through the Bank's wholly-owned subsidiary and additional fee income
derived from loan and deposit products. Management plans to continue in its
efforts to increase its outstanding balance of fee-generating demand deposit
accounts through targeted advertising and branch expansion. Outstanding demand
deposit accounts increased by 20.2% during the past 12 months to $20.3 million
as of June 30, 2000.
Noninterest income for the quarter ended June 30, 2000, also included a
$226,000 gain on the sale of investment securities and real estate owned.
Noninterest income for the quarter ended June 30, 1999, included a $1.2 million
gain on the sale of investment securities and mortgage loans. These items are
not recurring and should not be considered a part of operating income.
Noninterest expense. Total noninterest expense amounted to $1.6 million
for the three months ended June 30, 2000, as compared to $2.4 million for the
three months ended June 30, 1999. During the June 1999 quarter, the Company
incurred a nonrecurring $1.0 million increase in compensation as a result of the
implementation of the 1999 Gaston Federal Bank Recognition and Retention Plan
that was adopted by the shareholders in April 1999. Excluding this nonrecurring
item, noninterest expense increased by $202,000, or 14.8%. This increase was
primarily due to the expenses associated with the opening of the Bank's fifth
full-service branch office in February 2000 and the operation of the Bank's new
loan production office that opened in October 1999. The Company plans to break
ground on its sixth full-service branch later this summer with an estimated
completion date of December 2000.
Income taxes. Income taxes amounted to $338,000, or 35.3% of taxable
income, for the three month period ended June 30, 2000, as compared to $338,000,
or 35.4% of taxable income, for the three month period ended June 30, 1999.
9
<PAGE>
Comparison of Results of Operations for the Nine Months Ended June 30, 2000 and
1999
General. Net income for the Company for the nine months ended June 30,
2000, amounted to $1,577,000, or $0.37 per share, as compared to $1,679,000, or
$0.38 per share, for the nine months ended June 30, 1999.
Net interest income. Net interest income decreased slightly to $5.4
million for the nine months ended June 30, 2000, from $5.5 million for the nine
months ended June 30, 1999. Interest income increased by $775,000, or 6.8%,
primarily due to a $9.0 million increase in total loans and a $2.1 million
increase in investment and mortgage-backed securities, coupled with an increase
in interest rates. In addition, interest expense increased by $943,000, or
16.3%, primarily due to a $6.4 million increase in total deposits and a $10.0
million increase in borrowed money, coupled with an increase in interest rates.
Provision for loan losses. The provision for loan losses amounted to
$22,500 for the nine months ended June 30, 2000, as compared to $90,000 for the
nine months ended June 30, 1999. This represents a decrease of $67,500. The
amount of the provision for loan losses was reduced, in part, due to an overall
reduction in the percentage of nonperforming assets to 0.06% of total assets as
of June 30, 2000, from 0.23% of total assets as of June 30, 1999. The ratio of
loan loss reserves to gross loans was 0.86% as of June 30, 2000, and 0.92% as of
June 30, 1999.
Noninterest income. Total operating noninterest income amounted to
$1,249,000 for the nine months ended June 30, 2000, as compared to $721,000 for
the nine months ended June 30, 1999. This increase of $528,000, or 73.2%, was
primarily due to additional commissions paid on the sale of uninsured financial
products through the Bank's wholly-owned subsidiary and additional fee income
derived from loan and deposit products. Management plans to continue in its
efforts to increase its outstanding balance of fee-generating demand deposit
accounts through targeted advertising and branch expansion. Outstanding demand
deposit accounts increased by 20.2% during the past 12 months to $20.3 million
as of June 30, 2000.
Noninterest income for the nine month period ended June 30, 2000, also
included a $226,000 gain on the sale of investment securities and real estate
owned. Noninterest income for the nine month period ended June 30, 1999,
included a $1.3 million gain on the sale of investment securities and mortgage
loans. These items are not recurring and should not be considered a part of
operating income.
Noninterest expense. Total noninterest expense amounted to $4.5 million
for the nine months ended June 30, 2000, as compared to $4.9 million for the
nine months ended June 30, 1999. During the June 1999 period, the Company
incurred a nonrecurring $1.0 million increase in compensation as a result of the
implementation of the 1999 Gaston Federal Bank Recognition and Retention Plan
that was adopted by the shareholders in April 1999. Excluding this nonrecurring
item, noninterest expense increased by $568,000, or 14.5%. This increase was
primarily due to the expenses associated with the opening of the Bank's fifth
full-service branch office in February 2000 and the operation of the Bank's new
loan production office that opened in October 1999. The Company plans to break
ground on its sixth full-service branch later this summer with an estimated
completion date of December 2000.
Income taxes. Income taxes amounted to $783,000, or 33.2% of taxable
income, for the nine month period ended June 30, 2000, as compared to $939,000,
or 35.9% of taxable income, for the nine month period ended June 30, 1999. This
represents a decrease of $156,000, or 16.6%. This difference was primarily due
to a $258,000 decrease in net income before taxes for the nine months ended June
30, 2000, and an increase in interest income from tax-advantaged securities such
as bank-qualified municipal securities, government agency securities, and
bank-owned life insurance.
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 investments having
maturities of five years or less. Current OTS regulations require that a savings
bank 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 June 30, 2000, the Bank's liquidity, as measured for regulatory
purposes, was 16.1%, or $20.0 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 of June 30, 2000, Gaston Federal Bank's level of capital
substantially exceeded all applicable regulatory requirements.
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.
Changes in Securities
Not applicable.
Defaults Upon Senior Securities
Not applicable.
Submission of Matters to a Vote of Security Holders
There were no meetings of the Company's shareholders during the quarter
ended June 30, 2000.
Exhibits and Report on Form 8-K.
No Form 8-K reports were filed during the quarter.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed by the undersigned thereunto
duly authorized.
GASTON FEDERAL BANCORP, INC.
Date: August 9, 2000 By: /s/ Kim S. Price
--------------------------------------
Kim S. Price
President and Chief Executive Officer
Date: August 9, 2000 By: /s/ Gary F. Hoskins
--------------------------------------
Gary F. Hoskins
Senior Vice President, Chief Financial
Officer and Treasurer
13
