UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington , D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[X] 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: 0-25191
Willow Grove Bancorp, Inc.
(Exact name of registrant as specified in its charter)
United States 23-2986192
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
Welsh and Norristown Roads, Maple Glen, Pennsylvania 19002
(Address of principal executive offices)
(215) 646-5405
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports 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.
The Registrant had 5,143,487 shares of Common Stock issued and outstanding
as of May 11, 1999.
1
<PAGE>
WILLOW GROVE BANCORP, INC.
INDEX
<TABLE>
<CAPTION>
Page No.
--------
<S> <C>
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)
Consolidated Statements of Financial Condition at March 31,
1999 and June 30, 1998 3
Consolidated Statements of Operations - For the Three
and Nine-Month Periods Ended March 31, 1999 and 1998 4
Consolidated Statements of Cash Flows - For the Nine-Months
Ended March 31, 1999 and 1998 5
Notes to Financial Statements 6
Item 2. Management's Discussion and Analysis 11
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 19
PART II OTHER INFORMATION
Item 1: Legal Proceedings 20
Item 2: Changes in Securities and Use of Proceeds 20
Item 3: Defaults upon Senior Securities 20
Item 4: Submission of Matters to a Vote of Security Holders 20
Item 5: Other Information 20
Item 6: Exhibits and Reports on Form 8-K 21
</TABLE>
2
<PAGE>
Willow Grove Bancorp, Inc.
Consolidated Statements of Financial Condition
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
Assets March 31, 1999 June 30, 1998
- --------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents:
Cash on hand and non-interest bearing
deposits $ 4,036 $ 2,932
Interest-bearing deposits 9,359 15,359
--------- ---------
Total cash and cash equivalents 13,395 18,291
Assets available for sale:
Securities (amortized cost of $83,212 and $47,984,
respectively) 82,702 48,111
Loans -- 12,152
Loans (net of allowance for loan losses of
$2,990 and $2,665, respectively) 345,131 315,705
Accrued income receivable 2,408 2,109
Property and equipment, net 5,004 4,772
Intangible assets 2,052 2,360
Other assets 2,237 1,874
- --------------------------------------------------------------------------------------------------
Total Assets $ 452,929 $ 405,374
- --------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
- --------------------------------------------------------------------------------------------------
Deposits $ 375,448 $ 340,793
Federal Home Loan Bank advances 12,000 21,000
Advance payments from borrowers for taxes and insurance 3,690 4,481
Accrued interest payable 520 389
Other liabilities 2,719 2,766
Total Liabilities $ 394,377 $ 369,429
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value; (25,000,000
authorized; 5,143,487 issued and
outstanding as of March 31, 1999) 51 --
Additional paid-in capital 22,295 --
Retained earnings 38,270 35,865
Unallocated common stock held by
employee stock ownership plan (ESOP) (1,748) --
Accumulated other comprehensive income (loss) (316) 80
- --------------------------------------------------------------------------------------------------
Total Stockholders' Equity $ 58,552 $ 35,945
Total Liabilities and Stockholders' Equity $ 452,929 $ 405,374
- --------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements
3
<PAGE>
Willow Grove Bancorp, Inc.
Consolidated Statements of Operations
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
March 31, March 31,
-----------------------------------------------------------
1999 1998 1999 1998
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest and dividend income:
Loans receivable $6,776 $6,411 $20,221 $18,744
Securities, primarily taxable 1,294 836 3,208 2,424
- ----------------------------------------------------------------------------------------------------------------
Total interest income 8,070 7,247 23,429 21,169
- ----------------------------------------------------------------------------------------------------------------
Interest expense:
Deposits 3,777 3,613 11,472 10,846
Borrowings 177 135 572 313
Advanced payment from borrowers for taxes 7 9 19 23
- ----------------------------------------------------------------------------------------------------------------
Total interest expense 3,961 3,757 12,063 11,183
- ----------------------------------------------------------------------------------------------------------------
Net interest income 4,109 3,490 11,366 9,986
Provision for loan losses 121 90 351 270
- ----------------------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 3,988 3,400 11,015 9,716
- ----------------------------------------------------------------------------------------------------------------
Non-interest income:
Service charges and fees 206 154 633 448
Loss on sale of securities available
for sale -- -- -- (55)
Gain on sale of loans available
for sale -- 19 11 24
Loan servicing income, net 8 28 150 142
- ----------------------------------------------------------------------------------------------------------------
Total non-interest income 214 200 794 558
- ----------------------------------------------------------------------------------------------------------------
Non-interest expense:
Compensation and employee benefits 1,384 1,112 3,948 3,334
Occupancy 143 134 424 398
Furniture and equipment 84 67 226 195
Federal insurance premium 52 49 151 145
Amortization of intangible assets 103 103 308 308
Data Processing 113 93 313 259
Advertising 109 83 299 255
Foundation expense -- -- 896 --
Community enrichment 38 109 138 291
Other expense 465 287 1,185 869
- ----------------------------------------------------------------------------------------------------------------
Total non-interest expense 2,491 2,037 7,888 6,053
- ----------------------------------------------------------------------------------------------------------------
Income before income taxes 1,711 1,563 3,921 4,221
Income taxes 578 543 1,416 1,499
Net income 1,133 $1,020 $2,505 $2,722
- ----------------------------------------------------------------------------------------------------------------
Earnings per share:
Basic .23 NM NM NM
Diluted $ .23 NM NM NM
- ----------------------------------------------------------------------------------------------------------------
</TABLE>
NM: Earnings per share presentation for periods prior to quarter ended March
31, 1999 is not meaningful.
See accompanying notes to the consolidated financial statements
4
<PAGE>
Willow Grove Bancorp, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(In Thousands)
<TABLE>
<CAPTION>
For the Nine Months Ended March 31,
-----------------------------------
1999 1998
- -----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net cash flows from operating activities:
Net income $2,505 $2,722
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation 294 270
Amortization of premium and accretion of discount, net 147 125
Amortization of intangible assets 308 308
Foundation expense 896 --
Provision for loan losses 351 270
Gain on sale of loans available for sale (11) (55)
Decrease in deferred loan fees (240) (136)
Decrease in (increase) in accrued income receivable (299) 32
Decrease in other assets 120 45
Increase in accrued interest payable 131 299
Deferred income tax expense (benefit) (304) --
Increase (decrease) in other liabilities (147) 62
Expense of allocated ESOP shares 46 --
Originations and purchases of loans available for sale (2,865) (15,319)
Proceeds from sale of loans available for sale 15,028 16,350
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities $15,960 $4,973
- -----------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Net increase in loans ($29,475) ($27,675)
Purchase of securities available for sale (76,618) (46,749)
Proceeds from maturities and calls of securities held to maturity -- 3,999
Proceeds from sales and calls of securities available for sale 31,100 38,970
Principal repayments of securities available for sale 10,143 3,179
Purchase of property and equipment, net (526) (980)
- -----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities ($65,376) ($29,256)
- -----------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase in deposits $34,655 $21,367
Net increase (decrease) in FHLB advances with
original maturity less than 90 days (5,000) 2,000
Repayment of FHLB advances with original maturity greater than 90 days (4,000) 5,000
Net decrease in advance payments from borrowers for taxes and insurance (791) (465)
Repayment of notes payable -- (500)
Proceeds from stock issuance, net 19,656 --
- -----------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities 44,520 $27,402
- -----------------------------------------------------------------------------------------------------------------
Net increase (decrease) in cash and cash equivalents ($4,896) $3,119
Cash and cash equivalents:
Beginning of period $18,291 $4,204
- -----------------------------------------------------------------------------------------------------------------
End of period $13,395 $7,323
- -----------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash and cash flow information:
Interest paid $11,932 $10,844
Income taxes paid $1,755 $1,574
- -----------------------------------------------------------------------------------------------------------------
Noncash items:
Change in unrealized gain (loss) on securities available for sale
(net of taxes of ($241) and $117 in 1999 and 1998, respectively) ($637) $306
</TABLE>
See accompanying notes to the consolidated financial statements
5
<PAGE>
WILLOW GROVE BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Financial Statement Presentation
The accompanying consolidated financial statements were prepared in
accordance with instructions to Form 10-Q, and therefore, do not include
information or footnotes necessary for a complete presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. However, all normal, recurring adjustments
which, in the opinion of management, are necessary for a fair presentation of
these financial statements, have been included. These financial statements
should be read in conjunction with the audited financial statements and the
notes thereto for the period ended June 30, 1998 contained in the Willow Grove
Bancorp, Inc's (the "Company's") Prospectus dated November 12, 1998 and the
Company's Form 10-Q for the period ended December 31, 1998. The results for the
interim periods presented are not necessarily indicative of the results that may
be expected for the year ended June 30, 1999. During the second quarter of
fiscal year 1999 the Company recorded a pre-tax expense of $896,000 in
conjunction with the formation of the Willow Grove Foundation (the
"Foundation").
2. Summary of Significant Accounting Policies
On December 23, 1998, the Company completed the reorganization of Willow
Grove Bank, a federally chartered mutual savings bank ("Willow Grove" or the
"Bank"), into the federal mutual holding company form of ownership, whereby the
Bank converted into a federally chartered stock savings bank as a wholly owned
subsidiary of the Company, and the Company became a majority-owned subsidiary of
Willow Grove Mutual Holding Company, a federally chartered mutual holding
company (the "MHC") (the "Reorganization"). In connection with the
Reorganization, the Company sold 2,240,878 shares of Company common stock, par
value $0.01 per share ("Company Common Stock") at $10.00 per share to total,
which net of issuance costs generated proceeds of $21.4 million, including
shares issued to the employee stock ownership plan ("ESOP"). The Company also
issued 2,812,974 shares of Company Common Stock to the MHC. As an integral part
of the Reorganization and in furtherance of Willow Grove's commitment to the
communities that it serves, Willow Grove and the Company have established a
charitable foundation known as the Foundation and have contributed 89,635 shares
to the Foundation. The Foundation will provide funding to support charitable
causes and community development activities which will complement Willow Grove's
existing community activities. In addition, the Company established an ESOP for
the employees of the Company and the Bank which became effective with the
completion of the Reorganization.
Additional information regarding the Reorganization is included in the
Company's Registration Statement on Form S-1 filed on September 18, 1998, as
amended.
6
<PAGE>
3. Earnings Per Share
Earnings per share, basic and diluted, were $0.23 and $0.23, respectively
for the three months ended March 31, 1999. Due to the Bank's recent conversion
and formation of the Company, earnings per share figures for prior periods are
not applicable.
The following is a reconciliation of the numerators and denominators of the
basic and diluted earnings per share calculations.
<TABLE>
<CAPTION>
For the Three Months Ended March 31, 1999
-----------------------------------------
(Dollars in thousands, except per share data)
Per share
Net income Shares Amount
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average common stock outstanding $1,113 4,964,217 $0.23
Allocated ESOP shares -- 2,241 --
- --------------------------------------------------------------------------------------------------------
Basic earnings per share $1,113 4,966,458 $0.23
<CAPTION>
Per share
Net income Shares Amount
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average common stock outstanding $1,113 4,964,217 $0.23
Allocated ESOP shares -- 2,241 --
- --------------------------------------------------------------------------------------------------------
Diluted earnings per share $1,113 4,966,458 $0.23
</TABLE>
4. Loan Portfolio
The Bank's Loan Portfolio consisted of the following at the dates
indicated:
<TABLE>
<CAPTION>
March 31, 1999 June 30, 1998
---------------------------------------------------------
Percent of Percent of
Amount Total Amount Total
--------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Mortgage Loans:
Single-family residential $221,182 61.3% $230,979 70.3%
Multi-family residential 8,499 2.4% 7,500 2.3%
Commercial real estate 47,117 13.0% 24,478 7.4%
Construction 20,136 5.6% 13,627 4.2%
Home equity 46,753 12.9% 41,366 12.6%
------------------------------------------------------------------------------------------------------------
Total mortgage loans $343,687 95.2% $317,950 96.8%
------------------------------------------------------------------------------------------------------------
Non-mortgage consumer loans $ 6,406 1.8% $ 4,930 1.5%
------------------------------------------------------------------------------------------------------------
Commercial business loans $ 10,916 3.0% $ 5,437 1.7%
------------------------------------------------------------------------------------------------------------
Total loans receivable $361,009 100.0% $328,317 100.0%
Less:
Undisbursed portion of loan proceeds (12.036) (8,855)
Allowance for loan losses (2,990) (2,665)
Deferred loan origination fees (852) (1,092)
------------------------------------------------------------------------------------------------------------
Loans receivable, net $345,131 $315,705
------------------------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
5. Securities
The amortized cost of available-for-sale securities and their estimated
fair values at March 31, 1999 and June 30, 1998 are as follows:
<TABLE>
<CAPTION>
At March 31, 1999
- -------------------------------------------------------------------------------------------------------------
Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- -------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Equity Securities:
Mutual fund $8,010 ($39) $7,971
Federal Home Loan
Mortgage Corporation
common stock 89 $29 118
Federal National
Mortgage Association
stock 8 20 28
Federal Home Loan Bank
of Pittsburgh stock 2,732 -- -- 2,732
U.S. Government and
government agency
securities 34,996 5 (386) 34,615
Mortgage-Backed securities:
Federal Home Loan
Mortgage Corporation 2 -- -- 2
Federal National Mortgage
Association 22,772 55 (195) 22,632
Government National
Mortgage Association 7,389 83 (59) 7,413
Municipal securities 1,214 -- (23) 1,191
Federal Home Loan Bank
Certificates of Deposit 6,000 -- -- 6,000
- -------------------------------------------------------------------------------------------------------------
Total $83,212 $192 ($702) $82,702
- -------------------------------------------------------------------------------------------------------------
<CAPTION>
At June 30, 1998
- -------------------------------------------------------------------------------------------------------------
Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
- -------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Equity Securities:
Mutual fund $7,010 ($25) $6,985
Federal Home Mortgage
Loan Corporation
preferred stock 100 $1 -- 101
Federal Home Loan
Mortgage Corporation
common stock 89 5 -- 94
Federal National
Mortgage Association
stock 8 16 -- 24
Federal Home Loan Bank
of Pittsburgh
stock 2,733 -- -- 2,733
U.S. Government and
government agency
securities 20,004 30 (35) 19,999
Mortgage-Backed Securities:
Federal Home Loan 3 -- -- 3
Mortgage Corporation
Federal National Mortgage
Association 13,532 112 (100) 13,544
Government National
Mortgage Association 4,405 127 -- 4,532
Municipal security 100 (4) 96
- -------------------------------------------------------------------------------------------------------------
Total $47,984 $291 ($164) $48,111
- -------------------------------------------------------------------------------------------------------------
</TABLE>
8
<PAGE>
6. Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133 "Accounting for
Derivative Instruments and Hedging Activities." This Statement standardizes the
accounting for derivative instruments, including certain derivative instruments
imbedded in other contracts, and those used for hedging activities, by requiring
that an entity recognize those items as assets or liabilities in the statement
of financial position and measure them at fair value. The Statement categorized
derivatives used for hedging purposes as either fair value hedges, cash flow
hedges, foreign currency fair value hedges, foreign currency cash flow hedges,
or hedges of certain foreign currency exposures. The Statement generally
provides for matching of gain or loss recognition on the hedging instrument with
the recognition of the changes in the fair value of the hedged asset or
liability that are attributable to the hedged risk, so long as the hedge is
effective. Prospective application of SFAS No. 133 is required for all fiscal
years beginning after June 15, 1999, however earlier application is permitted.
Currently, the Company does not use any derivative instruments nor does it
engage in any hedging activities. The Company has not yet determined the impact,
if any, of this Statement, including its provisions for the potential
reclassification of investment securities, on results of operations, financial
condition or equity.
In October 1998, the FASB issued SFAS No. 134 "Accounting for
Mortgage-Backed Securities Retained after the Securitization of Mortgage Loans
Held for Sale by a Mortgage Banking Enterprise." This Statement requires that
after the securitization of a mortgage loan held for sale, an entity engaged in
mortgage banking activities classify any retained mortgage-backed securities
based on the ability and intent to sell or hold those investments, except that a
mortgage banking enterprise must classify as trading any retained
mortgage-backed securities that it commits to sell before or during the
securitization process. This Statement is effective for the first fiscal quarter
beginning after December 15, 1998 with earlier adoption permitted. This
Statement provides a one-time opportunity for an enterprise to reclassify, based
on the ability and intent on the date of adoption of this Statement,
mortgage-backed securities and other beneficial interests retained after
securitization of mortgage loans held for sale from the trading category, except
for those with commitments in place. The Company does not expect any impact on
earnings, financial condition or equity from this Statement since it does not
currently engage in the securitization of mortgage loans held for sale.
9
<PAGE>
7. Comprehensive Income
On July 1, 1998, the Company adopted SFAS No. 130, "Reporting Comprehensive
Income." The following table displays net income and the components of other
comprehensive income to arrive at total comprehensive income. For the Company,
the only component of other comprehensive income is the change in the estimated
fair value of investment securities available-for-sale.
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, March 31,
- ----------------------------------------------------------------------------------
1999 1998 1999 1998
- ----------------------------------------------------------------------------------
Comprehensive income: (Dollars in Thousands)
Comprehensive income:
<S> <C> <C> <C> <C>
Net income $1,133 $1,020 $2,505 $2,722
Other Comprehensive Income net of tax:
Net change in unrealized gain (loss) (457) (153) (396) 189
Less: Reclassification adjustments -- -- -- 136
Other Comprehensive Income (loss) (457) (153) (396) 53
- ----------------------------------------------------------------------------------
Comprehensive Income: $ 676 $ 867 $2,109 $2.775
====== ====== ====== ======
</TABLE>
10
<PAGE>
Item 2. Management's Discussion and Analysis
This Form 10-Q contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995, and may be
identified by the use of such words as "believe," "expect," "anticipate,"
"should," "planned," "estimated" and "potential." Examples for forward-looking
statements include, but are not limited to, estimates with respect to the
financial condition, results of operations and business of the Company that are
subject to various factors which could cause actual results to differ materially
from these estimates. These factors include, but are not limited to, general
economic conditions, changes in interest rates, deposit flows, loan demand, real
estate values, and competition; changes in accounting principles, policies, or
guidelines; changes in legislation or regulation; and other economic,
competitive, governmental, regulatory, and technological factors affecting the
Company's operations, pricing, products and services.
Changes in Financial Condition
General. Total assets of the Company increased by $47.5 million or 11.7% to
$452.9 million at March 31, 1999 compared to $405.4 million at June 30, 1998.
This increase is reflected primarily as an increase of $34.6 million in
securities and an increase of $29.4 million in portfolio loans. The increases in
assets were funded by increases of $34.6 million in deposits and $19.7 million
of net stock subscription cash proceeds (net of Reorganization costs of
$960,000).
Cash and cash equivalents. Cash and cash equivalents amounted to $13.4
million and $18.3 million at March 31, 1999 and June 30, 1998, respectively.
Assets Available for Sale. At March 31, 1999, the Company's assets
available for sale consisted of $82.7 million in securities compared to $48.1
million in securities and $12.2 million in loans, respectively, at June 30,
1998. This increase in assets available for sale of $22.4 million or 37.1% was
related to the purchase of additional mortgage-backed securities, government and
agency securities and bank qualified municipal securities, as a means of
deploying a significant portion of the recently raised equity capital.
At March 31, 1999 the Company had an unrealized loss, net of taxes, on
securities available for sale of $316,000, which is a decrease of $396,000
compared to June 30, 1998.
Loans. The net loan portfolio of the Company increased from $315.7 million
at June 30, 1998 to $345.1 million at March 31, 1999. The increase in the Bank's
net loan portfolio was due, in large part, to the Bank's efforts to expand its
lending activities, other than to single-family residential first mortgage
loans.
During the nine months ended March 31, 1999, the Company's single-family
residential mortgage loans in portfolio declined by $9.8 million or 4.2%. During
the same period, the Company's commercial real estate mortgage loans increased
by $22.6 million or 92.5% and its multi-family residential mortgage loans,
construction loans, home equity loans and non-mortgage consumer loans all
increased. Such changes in the Bank's loan portfolio reflect the Company's
continuing efforts to diversify its loan portfolio and increase its holdings in
loans which generally have higher yields and shorter terms to maturity and/or
repricing than single-family residential mortgage loans. However, commercial
real estate loans, multi-family residential mortgage loans, construction loans,
home equity loans and consumer loans all
11
<PAGE>
generally are deemed to have increased risk characteristics in comparison to
single-family residential mortgage loans.
The following table sets forth information with respect to non-performing
assets identified by the Bank, including non-accrual loans and other real estate
owned.
March 31, 1999 June 30, 1998
---------------------------------
(Dollars in Thousands)
Accruing loans 90 days or more past due:
Mortgage loans $ 5 $ 142
------ ------
Total $ 5 $ 142
Non-accrual loans:
Mortgage loans:
Single-family residential 1,230 1,249
Multi-family residential -- --
Commercial real estate -- --
Construction 64 --
Home equity 1 --
Non-mortgage consumer loans 48 2
Commercial business loans -- 96
------ ------
Total $1,343 $1,347
------ ------
Total non-performing loans $1,348 $1,489
------ ------
Other real estate owned, net -- --
Total non-performing assets $1,348 $1,489
====== ======
Non-performing loans to total loans 0.39% 0.47%
Non-performing assets to total assets 0.30% 0.37%
Intangible Assets. The Company's intangible assets amounted to $2.1 million
and $2.4 million at March 31, 1999 and June 30, 1998, respectively. Such assets
are comprised of goodwill and a core deposit intangible resulting from the
Bank's purchase of three branch offices from another institution in March 1994.
The goodwill is being amortized on a straight-line basis over 15 years while the
core deposit intangible is being amortized on an accelerated basis over 10
years.
Other Assets. The Company's other assets increased $363,000 or 19.4% to
$2.2 million at March 31, 1999 compared to $1.9 million at June 30, 1998. The
primary reason for this increase was due to the increase in the Company's
deferred tax asset.
Liabilities. The Company's total liabilities increased by $25.0 million, or
6.8%, to $394.4 million at March 31, 1999 compared to $369.4 million at June 30,
1998. The primary reason for such increase was a $34.6 million increase in
deposits, which was partially offset by a $9.0 million decrease in Federal Home
Loan Bank ("FHLB") advances. The Company attributes the growth in deposits to
its increase in certificates of deposit and to its continued efforts in
soliciting non-interest checking and business accounts.
Equity. Total equity of the Company amounted to $58.6 million or 12.9% of
assets at March 31, 1999 compared to $35.9 million or 8.9% of total assets at
June 30, 1998. The primary reason for the significant increase to equity was the
$19.7 million net proceeds raised from the Company's initial public offering.
Total equity of the Company included an unrealized loss of $316,000 and an
unrealized gain of $80,000, net of taxes on securities available for sale at
March 31, 1999 and June 30, 1998, respectively. The increase in retained
earnings from June 30, 1998
12
<PAGE>
to March 31, 1999 reflects the income for the nine month period of $2.4 million,
net of capitalization of the MHC.
Results of Operations
General - Net income for the three month and nine month periods ended March
31, 1999 was $1.1 and $2.5 million, respectively. This compares to net income of
$1.0 and $2.7 million for the same respective periods of the prior year. Net
income grew as a result of a larger asset base in part resulting from the
Company's initial public offering in December 1998. This increased income helped
offset the $896,000 initial expense to the Foundation incurred during the
current period as compared to the corresponding prior period.
Net Interest Income - Net interest income increased $619,000 and $1.4
million during the three and nine months ended March 31, 1999 from the prior
respective periods. Increases in the average balances of interest-earning assets
during each of the periods more than offset declines in net interest spreads
during such periods. Average interest earning assets grew faster than average
interest bearing liabilities mostly as a result of the Company's initial public
offering in December 1998. Typically, this type of effect enhances net interest
income.
13
<PAGE>
The following tables set forth, for the periods indicated, information
regarding (i) the total dollar amount of interest income of the Company from
interest-earning assets and the resultant average yields; (ii) the total dollar
amount of interest expense on interest-bearing liabilities and the resultant
average rate; (iii) net interest income; (iv) interest rate spread; and (v) net
interest margin. Information is based on average daily balances during the
indicated periods. Given that the Company had only nominal amounts of tax-exempt
investments, the data below is shown without tax effects.
<TABLE>
<CAPTION>
Nine Months Ended March 31,
---------------------------------------------------------------------
1999 1998
---------------------------------------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
- --------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable: (1)
Mortgage loans $320,097 $19,247 8.02% $299,835 $18,345 8.16%
Non-mortgage consumer loans 5,674 281 6.60 3,806 181 6.34
Commercial business loans 7,717 693 11.96 2,758 219 10.58
-------- ------- -------- -------
Total loans $333,488 $20,221 8.08 $306,399 $18,744 8.15
Securities 50,317 2,267 6.00 44,277 2,189 6.59
Other interest-earning assets 26,906 941 4.66 6,663 235 4.70
-------- ------- -------- -------
Total interest-earning assets $410,711 $23,429 7.60 357,339 $21,168 7.89
Non-interest-earning assets 11,002 ------- 10,440 -------
-------- --------
Total assets $421,713 $367,779
======== ========
Interest-bearing liabilities:
Deposits:
NOW and money market accounts $ 44,283 $ 797 2.40 $ 41,835 $ 667 2.12
Savings accounts 41,793 657 2.09 36,329 392584 2.14
Certificates of deposit 239,612 10,018 5.57 225,219 9,596 5.68
-------- ------- -------- -------
Total deposits $355,473 11,472 4.69 319,450 $10,846 4.76
Total borrowings 13,874 572 5.49 7,529 313 5.54
Total escrows 3,266 19 0.77 3,035 23 1.01
-------- ------- -------- -------
Total interest-bearing liabilities 372,613 $12,063 4.69 $330,014 $11,182 4.75
Non-interest-bearing liabilities 33,665 ------- 18,384 -------
-------- --------
Total liabilities 376,493 $332,331
Total equity 44,220 35,448
-------- --------
Total liabilities and equity $421,713 $367,779
======== ========
Net interest-earning assets $ 38,098 $ 27,325
======== ========
Net interest income/interest rate spread $11,366 2.91% $ 9,986 3.15%
======= ==== ======= ====
Net interest margin 3.69% 3.72%
==== ====
Ratio of average interest-earning assets
to average interest-bearing liabilities 119.80% 113.82%
====== ======
</TABLE>
- ----------------
(1) The average balance of loans receivable includes loans available-for-sale
and nonperforming loans, interest on which is recognized on a cash basis.
14
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended March 31,
---------------------------------------------------------------------
1999 1998
---------------------------------------------------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
- -------------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans receivable: (1)
Mortgage loans $325,682 $6,444 7.91% $306,019 $6,226 8.14%
Non-mortgage consumer loans 5,984 104 7.05 4,494 71 6.41
Commercial business loans 8,853 228 10.44 3,793 114 12.19
-------- ------ -------- ------
Total loans $340,519 $6,776 8.07 $314,306 $6,411 8.27
Securities $68,181 $1,044 6.21 46,235 $757 6.64
Other interest-earning assets 23,805 250 4.26 7,209 79 4.44
-------- ------ --------
Total interest-earning assets $432,505 $8,070 7.57 $367,750 $7,247 7.99
------ ------
Non-interest-earning assets 11,241 9,884
-------- --------
Total assets $443,746 $377,634
======== ========
Interest-bearing liabilities:
Deposits:
NOW and money market accounts $ 41,100 $ 270 2.66 $ 43,008 $ 223 2.10
Savings accounts 42,936 217 2.05 37,034 192 2.10
Certificates of deposit 243,058 3,290 5.49 228,871 3,198 5.67
-------- ------ -------- ------
Total deposits $364,583 $3,777 4.68 $326,437 $3,613 4.74
Total borrowings 13,239 177 5.42 9,889 135 5.54
Total escrows 3,712 7 0.76 3,632 9 1.00
-------- ------ -------- ------
Total interest-bearing liabilities $381,534 $3,961 4.67 $339,958 $3,757 4.73
------ ------
Non-interest- bearing liabilities 41,525 19,601
-------- --------
Total liabilities $385,570 $342,035
Total equity 58,176 35,599
-------- --------
Total liabilities and equity $443,746 $377,634
======== ========
Net interest-earning assets $ 50,971 $ 27,792
======== ========
Net interest income/interest rate spread $4,109 2.90% $3,490 3.27%
====== ==== ====== ====
Net interest margin 3.85% 3.85%
==== ====
Ratio of average interest-earning assets
to average interest-bearing liabilities 125.71% 114.05%
====== ======
</TABLE>
- ------------------
(1) The average balance of loans receivable includes loans available-for-sale
and nonperforming loans, interest on which is recognized on a cash basis.
Interest Income - Interest income increased $823,000 and $2.2 million for
the three and nine months ended March 31, 1999 as compared to the respective
prior year periods. These increases resulted primarily from increases in the
average balances of loans and investments; a significant portion of which is due
to the deployment of proceeds from the Company's December 1998 stock offering.
Interest Expense - Interest expense on deposits increased $164,000 and
$626,000, respectively, for the three and nine month periods ended March 31,
1999. Management has continued to be competitive with interest rates paid on
deposits. Also, savings balances increased during the three month and nine month
periods ended March 31, 1999 due to the Bank's continuing promotional efforts to
attract new customers during the period.
15
<PAGE>
Provision for Loan Losses - The Company's provision for loan losses was
$121,000 and $351,000 for the three month and nine month periods ended March 31,
1999, respectively. This compares to provision for loan losses of $90,000 and
$270,000 for the same respective periods of the prior year.
For the Nine Months Ended
-------------------------
1999 1998
---------------------------------------------------------------------------
(Dollars in Thousands)
Allowance at beginning of period $2,665 $1,678
------ ------
Provisions 351 270
Charge-offs:
Mortgage loans -- --
Non-mortgage consumer loans 23 2
Commercial business loans 3 --
------ ------
Total charge-offs 26 2
Recoveries -- --
------ ------
Allowance at end of period $2,990 $1,946
====== ======
Allowance for loan losses to total nonperforming
loans at end of period 221.79% 130.69%
====== ======
Allowance for loan losses to total loans at end of
period 0.86% 0.62%
====== ======
Ratio of charge-offs to average loans 0.008% 0.001%
====== ======
Non-interest Income - Non-interest income increased $14,000 and $236,000,
respectively, for the three and nine months ended March 31, 1999 as compared to
the same respective periods in the prior year. The three month period increase
was due to an increase in service charges and fees. The nine month period
increase was due to increased net loan servicing income and a net loss of
$55,000 on sale of securities available-for-sale in the prior nine month period.
Non-interest Expense - Non-interest expense increased $454,000 and $1.8
million, respectively, for the three and nine months ended March 31, 1999
compared to the same periods in the prior year. The Company had a pre-tax
expense of $896,000 as a result of the initial contribution to the Foundation.
Compensation and employee benefits expense increased due to general increases in
salary levels and benefits and in the number of employees at the Bank. Furniture
and fixture expense increases were the result of management's continuing efforts
to update equipment and facilities and the opening of the eighth full-service
banking office. Data processing costs increased due to general increased levels
of numbers of accounts and testing and preparation for Year 2000 contingencies.
Advertising expense increased due to management's efforts to utilize a more
targeted approach to marketing.
Income Tax Expense - The provision for income taxes for the three and nine
month periods ended March 31, 1999 was comparable to the respective periods in
the prior year.
Liquidity and Commitments
The Company's liquidity, represented by cash and cash equivalents, is a
product of its operating, investing, and financing activities. The Company's
primary sources of funds are deposits, amortizations, prepayments and maturities
of outstanding loans and mortgage-backed securities, maturities of investment
securities and other short-term investments and funds
16
<PAGE>
provided from operations. The Company also utilizes borrowings, generally in the
form of FHLB advances, as a source of funds. While scheduled payments from the
amortization of loans and mortgage related securities and maturing investment
securities and short-term investments are relatively predictable sources of
funds, deposit flows and loan prepayments are greatly influenced by general
interest rates, economic conditions and competition. In addition, the Company
invests excess funds in short-term interest earning assets which provide
liquidity to meet lending requirements.
Liquidity management is both a daily and long term function of business
management. Excess liquidity is generally invested in short-term investments
such as U.S. Treasury Securities. The Company uses its sources of funds
primarily to meet its ongoing commitments, to pay maturing certificates of
deposit and savings withdrawals, fund loan commitments and maintain a portfolio
of mortgage backed and mortgage related securities and investment securities. At
March 31, 1999, the total approved investment and loan origination commitments
outstanding amounted to $23.3 million. Certificates of deposit scheduled to
mature in one year or less at March 31, 1999 totaled $147.2 million. Investment
securities scheduled to mature in one year or less at March 31, 1999 totaled
$7.0 million. Based on historical experience, management believes that a
significant portion of maturing deposits will remain with the Company. The
Company anticipates that it will continue to have sufficient funds, together
with borrowings, to meet its current commitments.
Capital
At March 31, 1999 and June 30, 1998, the Bank had regulatory capital which
was well in excess of regulatory limits set by the Office of Thrift Supervision.
The current requirements and the Bank's actual capital levels are detailed
below:
<TABLE>
<CAPTION>
To be Well
For Capital Capitalized Under
Adequacy Prompt Corrective
Actual Capital Purposes Action Provisions
-----------------------------------------------------------------------
Amount Ratio Amount Ratio Amount Ratio
--------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
As of March 31, 1999:
Tangible capital
(to tangible assets) $44,940 10.0% 6,792 1.5% N/A N/A
Core Capital
(to adjusted tangible assets) 44,940 10.0 13,531 3.0 22,552 5.0
Tier 1 capital
(to risk-weighted assets) 44,940 17.7 9,783 4.0 15,199 6.0
Risk-based capital
(to risk-weighted assets) 47,939 18.9 20,265 8.0 25,331 10.0
As of June 30, 1998:
Tangible capital
(to tangible assets) $33,505 8.3 $6,038 1.5 N/A N/A
Core capital
(to adjusted tangible assets) 33,505 8.3 12,075 3.0 $20,126 5.0
Tier 1 capital
(to risk-weighted assets) 33,505 13.8 9,719 4.0 14,578 6.0
Risk-based capital
(to risk-weighted assets) 36,170 14.9 19,438 8.0 24,297 10.0
</TABLE>
Year 2000 Considerations
In order to be ready for the year 2000 (the "Year 2000 Issue"), the Company
has developed a Year 2000 Action and Assessment Plan (the "Action Plan") which
was presented to the Board of Directors during February 1998. The Action Plan
was developed using the guidelines outlined in the Federal Financial
Institutions Examination's Council's "The Effect of
17
<PAGE>
2000 on Computer Systems". The Company's Board of Directors assigned
responsibility for the Action Plan to the Company's Year 2000 Committee which
reports to the Board of Directors on a quarterly basis. The Action Plan
recognizes that the Company's operating, processing and accounting operations
are computer reliant and could be affected by the Year 2000 Issue. The Company's
Action Plan addressed the potential impact of the Year 2000 Issue on both its
information technology ("IT") systems and non-IT systems (such as security
systems, elevators, electrical, heating and air conditioning, telephone,
check-signing equipment, etc.). Pursuant to its Action Plan, the Company has
reviewed its IT systems and non-IT systems for the Year 2000 Issue and has
tested all of its IT and non-IT systems and equipment for Year 2000 readiness
and believes that it has identified all equipment which needs to be upgraded or
replaced. Commencing in early 1998, the Company began a program of upgrading or
replacing all such equipment in order to ensure that the Company's equipment is
Year 2000 compliant on or before September 30, 1999. The Company is primarily
reliant on third party vendors for its computer output and processing, as well
as other significant non-IT functions and services (i.e., securities safekeeping
services, securities pricing information, etc.). The Year 2000 Committee is
currently working with these third party vendors to assess their year 2000
readiness. Such vendors generally are reluctant to guarantee or provide firm
assurance that their products will be Year 2000 compliant in a timely fashion.
In addition, the Company believes that it would be difficult to prevail on legal
claims against such vendors with respect to Year 2000 issues. Instead, the
Company's approach has been that it is primarily responsible for identifying and
correcting Year 2000 compliance issues. A major factor in the Company's
operations is the data processing software which is used on a Company-wide
basis. Such software is maintained by a third party vendor. The Company has been
working closely with such vendor, whose clients include many depository
institutions, in an effort to ensure the Company's Year 2000 preparedness. In
this respect, the Company has, on three occasions during non-banking hours,
tested its operation systems, both IT and non-IT systems, for Year 2000
readiness. Such tests revealed only minor problems, which are being corrected,
with the Company's systems with respect to Year 2000. By the end of the third
test, all issues were corrected. Based upon the initial assessment, management
presently believes that with planned modifications to existing software and
hardware and planned conversions to new software and hardware, the Company's
third party vendors are taking the appropriate steps to ensure critical systems
will function properly. The Company's Action Plan contemplates that all of its
software vendors will be Year 2000 compliant by September 30, 1999. If any of
its vendors cannot assure the Company of their Year 2000 readiness by such date,
the Company intends to evaluate and use alternative vendors and products where
possible. As of the date hereof, the Bank has completed the awareness (i.e.,
education), assessment (i.e., assessing the potential Year 2000 problems in its
IT and non-IT systems and software), renovation (i.e., developing plans to
remedy Year 2000 issues) and validation (i.e., testing all critical application
units and systems) phases of its Year 2000 Action Plan. The Company currently is
completing the implementation phase (i.e., replacing certain equipment
identified as not being Year 2000 compliant). The Company is approximately 30%
complete on the implementation phase. To date, the Company's assessment is that
two of its ATM's software and its remote flood plain certification software are
not Year 2000 compliant. The Company does not believe that any of such
non-compliant systems will have a critical effect on the Company's operations if
they are not Year 2000 compliant by the turn of the century. While no assurance
can be given as to actual systems operations upon the turn of the century,
18
<PAGE>
based on information currently known to it and upon consideration of its testing
efforts to date, management believes that in the worst case scenario, the
Company will suffer only a slight interruption of business practices as a result
of minor application failures of its IT and non-IT systems and software as the
result of the Year 2000. However, if the appropriate modifications and
conversions are not made, or are not completed on a timely basis, the Year 2000
Issue could have a material impact on the operations of the Company.
The results from the Year 2000 mailing to the Company's commercial
customers indicated that the commercial customers that use software have updated
or will update their software packages by December 31, 1999. Many of the
customers use outsource services such as payroll companies who are assuring the
customers that they are Year 2000 compliant. It has been determined that no Bank
customers are facing a high risk of business disruption because of technological
defaults.
The Company has completed its own company-wide Year 2000 contingency plan.
Individual contingency plans concerning specific software and hardware issues
have been formulated for the specific departments of the Company. Such plans
include the identification of Company operations that can be done on a manual
basis or with stand alone personal computers and printers. The Company has
identified phone lines within the Company which should not be affected by any
Year 2000 problems and it also has identified alternative electric power
sources.
The costs of modifications to the existing software are being primarily
absorbed by the third party vendors; however the Company recognized that the
need exists to purchase new hardware and software. Based upon current estimates,
the Bank has identified $300,000 in total costs, including hardware, software,
and other issues, for completing its Year 2000 project. Of that amount,
approximately $141,000 was expensed for the Year 2000 project through March 31,
1999. It is anticipated that the remaining $159,000 will be expensed over the
next nine months.
Item 3. Quantitative and Qualitative Disclosure About Market Risk
For a discussion of the Company's asset and liability management policies
as well as the potential impact of interest rate changes upon the market value
of the Company's portfolio equity, see "Management's Discussion and Analysis of
Financial Condition and Results of Operation" in the Company's prospectus
included in the registration statement on Form S-1 filed with the Securities and
Exchange Commission (the "Commission") on September 18, 1998, as subsequently
amended and as declared effective by the Commission by order dated November 12,
1998. Management, as part of its regular practices, performs periodic reviews of
the impact of interest rate changes upon the market value of the Company's
portfolio equity. Based on, among other factors, such reviews, management
believes that there are no material change in the market risk of the Company's
asset and liability position since June 30, 1998.
19
<PAGE>
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Use of Proceeds From Registered Securities
The Company's initial registration statement (No. 333-63737) on Form
S-1 was declared effective on November 12, 1998. The subscription offering
commenced on November 12, 1998 and terminated on December 15, 1998. Charles Webb
& Co., a division of Keefe, Bruyette & Woods, Inc., assisted the Company, on a
best efforts basis, in the offering. The sale in the offering of 2,240,878 of
the Company's common stock, par value $.01 per share ("Common Stock"), closed on
December 23, 1998 for gross proceeds of $22,408,780. Net of offering costs and
expenses of $960,000, the offering generated net proceeds of $21.4 million. Of
such proceeds, $1.8 million was loaned to the Company's ESOP for the purchase by
the ESOP of 179,270 shares of Common Stock, $9.8 million was paid to the Bank in
exchange for the common stock of the Bank issued in its reorganization from a
federally-chartered mutual savings bank to a federally-chartered stock savings
bank, and the remaining $9.8 million is held and due from the Bank. As of March
31, 1999, the $21.4 million was invested in $8.0 million of loans and $13.4
million of investment securities.
Item 3. Defaults Upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
20
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) List of Exhibits (filed herewith unless otherwise noted)
2.1 Plan of Reorganization* 2.2 Plan of Stock Issuance*
3.1 Federal Stock Charter of Willow Grove Bancorp, Inc.*
3.2 Bylaws of Willow Grove Bancorp, Inc.*
4.0 Form of Stock Certificate of Willow Grove Bancorp, Inc.*
10.1 Form of Employment Agreement entered into between Willow Grove Bank and
Frederick A. Marcell, Jr.*
10.2 Form of Employment Agreement entered into between Willow Grove Bank and
each of Thomas M. Fewer, John J. Foff, Jr. and John T. Powers*
10.3 Supplemental Executive Retirement Agreement*
10.4 Non-Employee Director's Retirement Plan*
27.0 Financial Data Schedule
- -------------
* Incorporated by Reference from the Company's Registration Statement on Form
S-1 filed on September 18, 1998, as amended, and declared effective on
November 12, 1998.
(b) Not applicable
21
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
WILLOW GROVE BANCORP, INC.
Date: May 11, 1999 By: /S/Frederick A. Marcell, Jr.
-----------------------------------------
Frederick A. Marcell, Jr.
President and Chief Executive Officer
Date: May 11, 1999 By: /S/John J. Foff, Jr.
-----------------------------------------
John J. Foff, Jr., Senior Vice President,
Chief Financial Officer and Treasurer
22
<TABLE> <S> <C>
<ARTICLE> 9
<CIK> 0001070543
<NAME> WILLOW GROVE BANCORP, INC.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> MAR-31-1999
<CASH> 4,036
<INT-BEARING-DEPOSITS> 9,359
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 82,702
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 345,131
<ALLOWANCE> 2,990
<TOTAL-ASSETS> 452,929
<DEPOSITS> 375,448
<SHORT-TERM> 2,000
<LIABILITIES-OTHER> 2,237
<LONG-TERM> 10,000
0
0
<COMMON> 51
<OTHER-SE> 58,501
<TOTAL-LIABILITIES-AND-EQUITY> 452,929
<INTEREST-LOAN> 20,221
<INTEREST-INVEST> 3,208
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 23,429
<INTEREST-DEPOSIT> 11,472
<INTEREST-EXPENSE> 12,063
<INTEREST-INCOME-NET> 11,366
<LOAN-LOSSES> 351
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 7,888
<INCOME-PRETAX> 3,921
<INCOME-PRE-EXTRAORDINARY> 2,505
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,505
<EPS-PRIMARY> .23
<EPS-DILUTED> .23
<YIELD-ACTUAL> 7.60
<LOANS-NON> 1,343
<LOANS-PAST> 5
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,348
<ALLOWANCE-OPEN> 2,665
<CHARGE-OFFS> 26
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 2,990
<ALLOWANCE-DOMESTIC> 2,990
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 799
</TABLE>