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 December 31, 1999
OR
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from ____________ to ____________
Commission file number: 0-25191
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
February 11, 2000.
1
<PAGE>
WILLOW GROVE BANCORP, INC.
INDEX
Page No.
--------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements (unaudited)...................... 3
Consolidated Statements of Financial Condition at
December 31, 1999 and June 30, 1999................... 3
Consolidated Statements of Operations - For the
Three and Six Months Ended December 31, 1999 and 1998. 4
Consolidated Statements of Cash Flows - For the Six
Months Ended December 31, 1999 and 1998............... 5
Notes to Consolidated Financial Statements............ 6
Item 2. Management's Discussion and Analysis.................. 10
Item 3. Quantitative and Qualitative Disclosures about Market
Risk.................................................. 18
PART II OTHER INFORMATION
Item 1. Legal Proceedings..................................... 18
Item 2. Changes in Securities and Use of Proceeds............. 18
Item 3. Defaults upon Senior Securities....................... 18
Item 4. Submission of Matters to a Vote of Security Holders... 18
Item 5. Other Information..................................... 19
Item 6 Exhibits and Reports on Form 8-K...................... 19
2
<PAGE>
Willow Grove Bancorp, Inc.
Consolidated Statements of Financial Condition
(Unaudited)
(Dollars in thousands, except share data)
<TABLE>
<CAPTION>
December 31, June 30,
Assets 1999 1999
- ------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Cash and cash equivalents:
Cash on hand and non-interest bearing deposits $ 6,619 $ 3,447
Interest-bearing deposits 5,578 1,442
----------------------
Total cash and cash equivalents 12,197 4,889
Securities available for sale (amortized cost of $76,842 and $82,296, respectively) 72,986 80,055
Loans (net of allowance for loan losses of $3,711 and $3,138, respectively) 424,555 374,584
Accrued income receivable 2,465 2,519
Property and equipment, net 5,412 5,135
Intangible assets 1,744 1,950
Other assets 3,825 2,907
- ------------------------------------------------------------------------------------------------------------
Total Assets $ 523,184 $ 472,039
- ------------------------------------------------------------------------------------------------------------
Liabilities and Stockholders' Equity
Deposits $ 407,687 $ 390,681
Federal Home Loan Bank (FHLB) advances 50,784 14,986
Advance payments from borrowers for taxes 3,334 4,403
Accrued interest payable 586 706
Other liabilities 2,172 2,821
----------------------
Total Liabilities 464,563 413,597
Commitments and contingencies
Stockholders' equity:
Common stock, $0.01 par value; (25,000,000
authorized; 5,143,487 issued and
outstanding as of December 31, and June 30, 1999) 51 51
Additional paid-in capital 22,288 22,295
Retained earnings 41,282 39,211
Unallocated common stock held by (1,673) (1,703)
employee stock ownership plan (ESOP)
Unamortized common stock held by recognition (898) --
and retention plan trust (RRP)
Accumulated other comprehensive income (loss) (2,429) (1,412)
Total stockholders' equity 58,621 58,442
----------------------
Total liabilities and stockholders' equity $ 523,184 $ 472,039
- ------------------------------------------------------------------------------------------------------------
</TABLE>
See accompanying notes to the consolidated financial statements
3
<PAGE>
Willow Grove Bancorp, Inc.
Consolidated Statements of Operations
(Unaudited)
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
For the
For the Three Months Ended Six Months Ended
December 31 December 31
-------------------------- --------------------
1999 1998 1999 1998
- --------------------------------------------------------------------------- --------------------
<S> <C> <C> <C> <C>
Interest and dividend income:
Loans $ 8,174 $ 6,697 $15,830 $13,445
Securities, primarily taxable 1,161 1,058 2,403 1,914
- ----------------------------------------------------------------------------------------------------
Total interest income $ 9,335 $ 7,755 $18,233 $15,359
- ----------------------------------------------------------------------------------------------------
Interest expense:
Deposits $ 4,090 $ 3,955 $ 8,023 $ 7,695
Borrowings 509 180 837 395
Advance payment from borrowers for taxes 4 5 9 12
- ----------------------------------------------------------------------------------------------------
Total interest expense $ 4,603 $ 4,140 $ 8,869 $ 8,102
- ----------------------------------------------------------------------------------------------------
Net interest income 4,732 3,615 9,364 7,257
Provision for loan losses 221 140 491 230
- ----------------------------------------------------------------------------------------------------
Net interest income after provision for loan losses $ 4,511 $ 3,475 $ 8,873 $ 7,027
- ----------------------------------------------------------------------------------------------------
Non-interest income:
Service charges and fees $ 262 $ 211 $ 514 $ 426
Gain(loss) on sale of loans available for sale -- (1) -- 11
Loan servicing income, net 13 69 22 141
- ----------------------------------------------------------------------------------------------------
Total non-interest income $ 275 $ 279 $ 536 $ 578
- ----------------------------------------------------------------------------------------------------
Non-interest expense:
Compensation and employee benefits $ 1,698 $ 1,300 $ 3,269 $ 2,564
Occupancy 218 136 397 280
Furniture and equipment 114 75 222 143
Federal insurance premium 57 49 111 100
Amortization of intangible assets 103 103 205 205
Data processing 125 105 248 200
Advertising 89 122 168 190
Foundation expense -- 896 -- 896
Community enrichment 37 -- 75 100
Other expense 464 407 974 719
- ----------------------------------------------------------------------------------------------------
Total non-interest expense $ 2,905 $ 3,193 $ 5,669 $ 5,397
- ----------------------------------------------------------------------------------------------------
Income before income taxes $ 1,881 $ 561 $ 3,740 $ 2,208
Income taxes 665 226 1,317 837
- ----------------------------------------------------------------------------------------------------
Net Income $ 1,216 $ 335 $ 2,423 $ 1,371
====================================================================================================
Earnings per share:
Basic $ 0.25 NA $ 0.49 NA
Diluted $ 0.24 NA $ 0.49 NA
</TABLE>
NA: Earnings per share presentation for periods prior to January 1, 1999 are
not applicable.
See accompanying notes to the consolidated financial statements
4
<PAGE>
Willow Grove Bancorp, Inc.
Consolidated Statements of Cash Flows
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
For the Six Months Ended December 31,
-------------------------------------
1999 1998
- ----------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Net cash flows from operating activities:
Net income $ 2,423 $ 1,371
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation 255 192
Amortization of premium and accretion of discount, net 6 42
Amortization of intangible assets 205 205
Foundation expense -- 896
Provision for loan losses 491 230
Gain on sale of loans available for sale -- (11)
Increase(decrease) in deferred loan fees 103 (228)
Decrease in accrued income receivable 54 117
(Increase)decrease in other assets (323) 485
Decrease in accrued interest payable (120) (24)
Deferred income tax benefit -- (304)
Decrease in other liabilities (649) (612)
Expense related to ESOP & RRP shares 55 --
Originations and purchases of loans available for sale -- (2,865)
Proceeds from sale of loans available for sale -- 15,028
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities $ 2,500 $ 14,522
- ----------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Net increase in loans (50,843) (18,137)
Purchase of securities available for sale (3,981) (53,521)
Proceeds from sales and calls of securities available for sale 6,506 17,000
Principal repayments of securities available for sale 2,923 9,203
Proceeds from sale of other real estate owned 281 --
Purchase of property and equipment, net (532) (275)
- ----------------------------------------------------------------------------------------------------------------
Net cash used in investing activities $(45,646) $(45,730)
- ----------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Net increase in deposits 17,006 23,265
Net increase (decrease) in FHLB advances with
original maturity less than 90 days 28,000 (7,000)
Increase in FHLB advances with original maturity greater than 90 days 17,000 --
Repayment of FHLB advances with original maturity greater than 90 days (9,202) (2,000)
Net decrease in advance payments from borrowers for taxes (1,069) (1,374)
Dividends paid (352) --
Purchase of RRP shares (929) --
Proceeds from stock issuance, net -- 19,656
- ----------------------------------------------------------------------------------------------------------------
Net cash provided by financing activities $ 50,454 $ 32,547
- ----------------------------------------------------------------------------------------------------------------
Net increase in cash and cash equivalents $ 7,308 $ 1,339
Cash and cash equivalents:
Beginning of period 4,889 18,291
- ----------------------------------------------------------------------------------------------------------------
End of period $ 12,197 $ 19,630
- ----------------------------------------------------------------------------------------------------------------
Supplemental disclosures of cash and cash flow information:
Interest paid 8,989 8,126
Income taxes paid 1,610 1,190
Non-cash items:
Change in unrealized gain (loss) on securities available for sale (1,615) 61
(net of taxes of $598 and $(39) in 1999 and 1998, respectively)
Loans transferred to other real estate owned 281 --
</TABLE>
See accompanying notes to the consolidated financial statements
5
<PAGE>
WILLOW GROVE BANCORP, INC.
NOTES TO THE 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, 1999. The results for the interim
periods presented are not necessarily indicative of the results that may be
expected for the year ended June 30, 2000.
2. Summary of Significant Accounting Policies
On December 23, 1998, Willow Grove Bancorp, Inc. (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") (collectively, 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, 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 established a charitable foundation known as the
Willow Grove Foundation (the "Foundation") and contributed 89,635 shares to the
Foundation during fiscal 1999. The Foundation provides funding to support
charitable causes and community development activities which complements 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.
3. Earnings Per Share
Earnings per share, basic and diluted, were $0.25 and $0.24, respectively,
for the three months ended December 31, 1999. Earnings per share, basic and
diluted, were $0.49 and $0.49, respectively, for the six months ended December
31, 1999. Due to the Bank's recent conversion and formation of the Company,
earnings per share for periods prior to January 1, 1999 are not applicable.
The following is a reconciliation of the numerators and denominators of
the basic and diluted earnings per share calculations.
6
<PAGE>
For the Three Months Ended December 31, 1999
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Net Income
Allocable To
Common Per Share
Stockholders Shares Amount
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average common stock outstanding 4,874,582
Allocated ESOP shares 10,458
- --------------------------------------------------------------------------------------------------------
Basic earnings per share $ 1,208 4,885,040 $ 0.25
Effect of allocated RRP shares 64,538
Effect of dilutive stock options 2,048
- --------------------------------------------------------------------------------------------------------
Diluted earnings per share $ 1,208 4,951,626 $ 0.24
</TABLE>
For the Six Months Ended December 31, 1999
(Dollars in thousands, except per share data)
<TABLE>
<CAPTION>
Net Income
Allocable To
Common Per Share
Stockholders Shares Amount
- --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Weighted average common stock outstanding 4,905,817
Allocated ESOP shares 8,964
- --------------------------------------------------------------------------------------------------------
Basic earnings per share $ 2,415 4,914,781 $ 0.49
Effect of allocated RRP shares 33,126
Effect of dilutive stock options 2,048
- --------------------------------------------------------------------------------------------------------
Diluted earnings per share $ 2,415 4,949,955 $ 0.49
</TABLE>
Net income allocable to common stockholders differs from net income due to
dividends paid on RRP shares.
4. Loan Portfolio
The Bank's loan portfolio consisted of the following at the dates
indicated:
<TABLE>
<CAPTION>
December 31, 1999 June 30, 1999
--------------------------- --------------------------
(Dollars in thousands) Percentage of Percentage of
Amount Total Amount Total
- -----------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Mortgage loans:
Single-family residential $ 244,021 56.8% $ 231,498 61.2%
Multi-family residential 13,239 3.1% 12,938 3.4%
Commercial real estate 73,508 17.1% 52,769 13.9%
Construction 9,316 2.2% 7,773 2.1%
Home Equity 63,430 14.8% 54,090 14.3%
- -----------------------------------------------------------------------------------------------
Total mortgage loans $ 403,514 94.0% $ 359,068 94.9%
- -----------------------------------------------------------------------------------------------
Non-mortgage consumer loans 7,588 1.8% 6,431 1.7%
Commercial business loans 18,067 4.2% 13,023 3.4%
- -----------------------------------------------------------------------------------------------
Total loans receivable $ 429,169 100.0% $ 378,522 100.0%
Less:
Allowance for loan losses (3,711) (3,138)
Deferred loan origination fees (903) (800)
- -----------------------------------------------------------------------------------------------
Loans receivable, net $ 424,555 $ 374,584
- -----------------------------------------------------------------------------------------------
</TABLE>
7
<PAGE>
5. Securities
The amortized cost of available-for-sale securities and their estimated
fair values at December 31, 1999 and June 30, 1999 are as follows:
<TABLE>
<CAPTION>
December 31, 1999
-------------------------------------------------------
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Market Value
- ------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Equity Securities:
Mutual Fund $ 8,010 $ -- $ (103) $ 7,907
FHLB of Pittsburgh stock 2,961 -- -- 2,961
FHLMC common stock 92 2 -- 94
US Government and government agency securities 33,000 -- (2,071) 30,929
Mortgage Backed Securities:
Federal Home Loan Mortgage Corp. 2 -- -- 2
Federal National Mortgage Association 21,382 (1,040) 20,342
Government National Mortgage Association 9,395 -- (471) 8,924
Municipal Securities 2,000 -- (173) 1,827
- ------------------------------------------------------------------------------------------------------------
Total $76,842 $ 2 $(3,858) $72,986
============================================================================================================
<CAPTION>
June 30, 1999
-------------------------------------------------------
Amortized Unrealized Unrealized Estimated
Cost Gains Losses Market Value
- ------------------------------------------------------------------------------------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C>
Equity Securities:
Mutual Fund $ 8,010 $ -- $ (63) $ 7,947
FHLB of Pittsburgh stock 2,961 -- -- 2,961
FHLMC common stock 89 27 -- 116
FNMA common stock 8 20 -- 28
US Government and government agency securities 35,000 -- (1,123) 33,877
Mortgage Backed Securities:
Federal Home Loan Mortgage Corp. 2 -- -- 2
Federal National Mortgage Association 25,065 -- (740) 24,325
Government National Mortgage Association 9,162 56 (309) 8,909
Municipal Securities 1,999 -- (109) 1,890
- ------------------------------------------------------------------------------------------------------------
Total $82,296 $ 103 $(2,344) $80,055
============================================================================================================
</TABLE>
6. Recent Accounting Pronouncements
Accounting for Derivative Instruments and Hedging Activities
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, as amended,
establishes accounting and reporting standards for derivative instruments,
including certain derivative instruments imbedded in other contracts,
(collectively referred to as derivatives) and for hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of financial condition and measure those
instruments at fair value. The accounting for changes in the fair value of a
derivative depends on the intended use of the derivative and the resulting
designation. If certain conditions are met, a
8
<PAGE>
derivative may be specifically designated as (a) a hedge of certain exposure to
changes in the fair value of a recognized asset or an unrecognized firm
commitment, (b) a hedge of an exposure to variable cash flows of a forecasted
transaction, or (c) a hedge of a foreign currency exposure. This statement, as
amended, is effective for all fiscal quarters of fiscal years beginning after
June 15, 2000. Earlier adoption is permitted. The Company has not yet determined
the impact, if any, of this statement, including its provisions for the
potential reclassification of investment securities, on operations, financial
condition, and equity. However, the Company currently has no derivatives covered
by this statement and currently conducts no hedging activities.
7. 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 Six Months Ended
(Dollars in thousands) December 31, December 31,
- -----------------------------------------------------------------------------------------------------------
1999 1998 1999 1998
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Comprehensive income:
Net income $ 1,216 $ 335 $ 2,423 $ 1,371
Other comprehensive income (loss) net of tax
Net change in unrealized gain (loss) (697) (82) (1,017) 61
- -----------------------------------------------------------------------------------------------------------
Comprehensive income: $ 519 $ 253 $ 1,406 $ 1,432
- -----------------------------------------------------------------------------------------------------------
</TABLE>
8. Benefit Plans
The Company approved its 1999 Stock Option Plan (the "Option Plan") and
the 1999 Recognition and Retention Plan and Trust Agreement (the "RRP") on July
27, 1999 at a special shareholders meeting.
RRP
Pursuant to the RRP, the Company acquired 89,635 shares at a cost of
$929,000. On October 26, 1999, 89,635 shares were awarded to directors and
management from the RRP Trust. Compensation expense on RRP shares granted is
recognized ratably over the vesting period in an amount which totals the market
price of the Company's stock at the date of grant. As of December 31, 1999, no
granted shares were vested pursuant to the terms of the Plan. For the
three-month period ended December 31, 1999, the Company recognized $27,000 of
compensation expense related to the RRP.
Stock Option Plan
On October 26, 1999, 167,100 stock options were awarded to directors,
management and key employees of the Company. The Company accounts for its Option
Plan in accordance with the provisions of Accounting Principles Board ("APB")
Opinion No. 25, "Accounting for Stock Issued to Employees," and related
interpretations, as permitted by SFAS No. 123, "Accounting for Stock-based
Compensation." As such, compensation expense is recognized at the date of an
option grant only if the current market price of the underlying stock exceeds
the exercise price of the option.
9
<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 of 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 $51.2 million or 10.8%
to $523.2 million at December 31, 1999 compared to $472.0 million at June 30,
1999. This increase is reflected primarily in an increase of $50.0 million in
loans, partially offset by a decrease of $7.1 million in securities available
for sale at December 31, 1999 compared to June 30, 1999. The increases in loans
were funded by increases of $17.0 million in deposits and $35.8 million in
Federal Home Loan Bank ("FHLB") borrowings.
Cash and cash equivalents. Cash and cash equivalents amounted to $12.2
million and $4.9 million at December 31, 1999 and June 30, 1999, respectively.
Cash increases at December 31, 1999 were partially due to increases in vault
balances for potential Y2K related withdrawals.
Assets Available for Sale. At December 31, 1999, the Company's assets
available for sale consisted of $73.0 million in securities compared to $80.1
million in securities at June 30, 1999. This decrease in securities was due
primarily to normal amortization payments on mortgage-backed securities and the
sale of $5.5 million of government agency, mortgage-backed and equity securities
during the previous quarter. The sale of the securities was executed to take
advantage of the demand for higher yielding loans.
At December 31, 1999 the Company had unrealized losses on securities
available for sale of $3.9 million compared to unrealized losses on securities
available for sale of $2.2 million at June 30, 1999.
Loans. The net loan portfolio of the Company increased from $374.6 million
at June 30, 1999 to $424.6 million at December 31, 1999. The increase in the
Company's net loan portfolio was due, in large part, to the Company's continuing
efforts to expand its lending activities with a concentrated effort to expand
multi-family, commercial real estate, consumer and business loans.
During the six months ended December 31, 1999, the Company's single-family
residential mortgage loans in portfolio increased by $12.5 million or 5.4%.
During the same period, the Company's commercial real estate mortgage loans
increased by $20.7 million or 39.3%, construction loans increased $1.5 million
or 19.9%, multi-family loans increased $301,000 or 2.3% and home equity loans
increased $9.3 million or 17.3%. Additionally the Company's non-mortgage
consumer loans increased $1.2 million or 18.0% and commercial business loans
increased $5.0 million or 38.7 %. 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 generally
are deemed to have increased credit risk characteristics in comparison to
single-family residential mortgage loans.
10
<PAGE>
The following table sets forth information with respect to non-performing
assets identified by the Company, including non-accrual loans and other real
estate owned.
<TABLE>
<CAPTION>
December 31 June 30
1999 1999
--------------------------
(Dollars in Thousands)
<S> <C> <C>
Accruing loans past due 90 days or more
Mortgage loans $ -- $ 4
------ ------
Total $ -- $ 4
------ ------
Non-accrual loans:
Mortgage loans
Single-family residential $1,111 $1,006
Home Equity 1 37
Non-mortgage consumer loans -- 8
Commercial business loans 4 13
------ ------
Total $1,116 $1,064
------ ------
Total non-performing loans $1,116 $1,068
------ ------
Total non-performing assets $1,116 $1,068
------ ------
Non-performing loans to total loans, net of deferred fees 0.26% 0.29%
Non-performing assets to total assets 0.21% 0.23%
</TABLE>
Intangible Assets. The Company's intangible assets amounted to $1.7
million and $2.0 million at December 31, 1999 and June 30, 1999, 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 over 10 years.
Other Assets. The Company's other assets increased $918,000 or 31.6% to
$3.8 million at December 31, 1999 compared to $2.9 million at June 30, 1999. The
primary reason for this increase was due to an increase in the Company's
deferred tax asset.
Liabilities. The Company's total liabilities increased by $51.0 million, or
12.3%, to $464.6 million at December 31, 1999 compared to $413.6 million at June
30, 1999. The primary reason for such increase was a $35.8 million increase in
FHLB advances and increases in deposits of $17.0 million. The Company continued
its efforts in soliciting non-interest checking and business accounts.
Stockholders' Equity. Total stockholders' equity of the Company amounted to
$58.6 million or 11.2% of assets at December 31, 1999 compared to $58.4 million
or 12.4% of total assets at June 30, 1999. Total stockholders' equity of the
Company included net unrealized losses, net of taxes, of $2.4 million and $1.4
million on securities available for sale at December 31, 1999 and June 30, 1999,
respectively. The Company paid cash dividends, $0.09 and $0.08 per share during
the quarter ended December 31, 1999 and September 30, 1999, respectively. These
regular dividends totaled $352,000. The Company executed the repurchase of
89,635 of Company Common Stock shares for the RRP authorized at the special
shareholders meeting on July 27, 1999. The shares were purchased at a market
price of $929,000. The unamortized cost of these shares is reflected as a contra
equity component of stockholders' equity and these shares are being amortized
over the five year vesting period.
Results of Operations
General - Net income for the three month and six month periods ended
December 31, 1999 was $1.2 million and $2.4 million, respectively. This compares
to net income of $335,000 and $1.4 million for the respective prior year
periods. Net interest income grew as a result of a continuing larger
interest-earning asset base in part resulting
11
<PAGE>
from the Company's initial public offering in December 1998. For the three-month
period ended December 31, 1999, net income improved as a result of reduction in
non-interest expense compared to the same period in the prior year. For the
six-month period ended December 31, 1999 net interest income was partially
offset by increases in the provision for loan losses and non-interest expense
compared to the six months ended December 31, 1998.
Net Interest Income - Net interest income is determined by our interest
rate spread (i.e., the difference between the yields on interest-earning assets
and the rates paid on interest-bearing liabilities) and also the amount of
interest-earning assets relative to interest-bearing and non-interest-bearing
deposit liabilities.
For the three-month and six-month periods ended December 31, 1999, net
interest income increased $1.1 million and $2.1 million or 30.9% and 29.0%,
respectively, compared to the three-month and six-month periods ended December
31, 1998. The increase was a result of increases in interest rate spread and
ratio of interest-earning assets to interest-bearing liabilities. Specifically,
the interest rate spread increased twenty-three basis points from 2.81% to 3.04%
and fifteen basis points from 2.93% to 3.08% for the three-month and six-month
periods ended December 31, 1999, respectively, compared to the same periods in
the prior year.
Average interest-earning assets increased $82.0 million and $80.5 million
or 20.0% and 20.1% for the three-month and six-month periods ended December 31,
1999, respectively, compared to the periods in the prior year. The increase in
interest-earning assets more than offset the increase in interest-bearing
liabilities which for the three-month and six-month periods ended December 31,
1999 increased on average $57.2 million and $52.8 million, respectively, over
the same period one year ago. The ratio of average interest-earning assets to
average interest-bearing liabilities increased to 120.85% and 121.42 % for the
three-month and six-month periods ended December 31, 1999, respectively,
compared to 117.15% and 116.65% for the respective prior year periods. The
combination of increases in interest rate spread and ratio of interest earning
assets to interest bearing liabilities resulted in an increase in our net
interest margin. Net interest margin increased thirty-one basis points and
twenty-seven basis points for the comparative three-month and six-month periods
ended December 31, 1999 and December 31, 1998, respectively.
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 not presented on a tax equivalent basis:
12
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended December 31,
-----------------------------------------------------------------------
1999 1998
--------------------------------- -----------------------------------
(Dollars in Thousands)
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Interest Earning Assets:
Loans Receivable :
Mortgage loans $ 390,579 $7,657 7.84% $ 315,164 $6,414 8.14%
Non-Mortgage Consumer loans 7,078 120 6.73% 5,780 92 6.31%
Commercial loans 16,164 397 9.74% 8,446 191 8.97%
-------------------- --------------------
Total Loans $ 413,821 $8,174 7.84% $ 329,390 $6,697 8.07%
Securities $ 71,887 $1,123 6.20% $ 39,234 $ 562 5.68%
Other interest-earning assets 6,467 38 2.33% 41,534 496 4.74%
-------------------- --------------------
Total interest-earning assets $ 492,175 $9,335 7.52% $ 410,158 $7,755 7.50%
------ ------
Noninterest-earning assets 14,745 10,632
--------- ---------
Total assets $ 506,920 $ 420,790
========= =========
Interest-bearing liabilities:
Deposits:
NOW and money market accounts $ 57,000 $ 324 2.26% $ 47,208 $ 272 2.29%
Savings accounts 51,779 268 2.05% 41,454 222 2.12%
Certificates of deposit 260,499 3,498 5.33% 245,586 3,461 5.59%
-------------------- --------------------
Total deposits $ 369,278 $4,090 4.39% $ 334,248 $3,955 4.69%
Total borrowings 35,458 509 5.70% 13,293 180 5.37%
Total Escrows 2,529 4 0.63% 2,559 5 0.78%
-------------------- --------------------
Total interest-bearing liabilities $ 407,265 $4,603 4.48% $ 350,100 $4,140 4.69%
------ ------
Noninterest bearing liabilities 39,979 32,242
--------- ---------
Total liabilities $ 447,244 $ 382,342
Total equity 59,676 38,448
--------- ---------
Total liabilities and equity $ 506,920 $ 420,790
========= =========
Net interest-earning assets $ 84,910 $ 60,058
Net interest income/interest rate spread $4,732 3.04% $3,615 2.81%
================= ==================
Net interest margin 3.81% 3.50%
======= =======
Ratio of average interest-earning assets
to average interest-bearing liabilities 120.85% 117.15%
======= =======
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended December 31,
---------------------------------------------------------------------
1999 1998
-------------------------------- ---------------------------------
(Dollars in Thousands)
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ---- ------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Interest Earning Assets:
Loans Receivable :
Mortgage loans $ 379,252 $ 14,878 7.85% $ 317,019 $ 12,924 8.15%
Non-Mortgage Consumer loans 6,830 235 6.83% 5,522 177 6.36%
Commercial loans 14,700 717 9.68% 7,507 344 9.09%
------------------- --------------------
Total Loans $ 400,782 $ 15,830 7.84% $ 330,048 $ 13,445 8.08%
Securities 73,919 2,337 6.27% 41,579 1,222 5.83%
Other interest-earning assets 5,865 66 2.23% 28,424 692 4.83%
------------------- --------------------
Total interest-earning assets $ 480,566 $ 18,233 7.53% $ 400,051 $ 15,359 7.62%
-------- --------
Noninterest-earning assets 13,443 10,328
--------- ---------
Total assets $ 494,009 $ 410,379
========= =========
Interest-bearing liabilities:
Deposits:
NOW and money market accounts $ 57,628 $ 661 2.28% $ 46,559 $ 527 2.25%
Savings accounts 50,678 523 2.05% 41,234 440 2.12%
Certificates of deposit 254,964 6,839 5.32% 237,926 6,728 5.61%
------------------- --------------------
Total deposits $ 363,270 $ 8,023 4.38% $ 325,719 $ 7,695 4.69%
Total borrowings 29,567 837 5.62% 14,185 395 5.52%
Total Escrows 2,963 9 0.60% 3,048 12 0.78%
------------------- --------------------
Total interest-bearing liabilities $ 395,800 $ 8,869 4.45% $ 342,952 $ 8,102 4.69%
-------- --------
Noninterest bearing liabilities 38,781 29,581
--------- ---------
Total liabilities $ 434,581 $ 372,533
Total equity 59,428 37,846
--------- ---------
Total liabilities and equity $ 494,009 $ 410,379
========= =========
Net interest-earning assets $ 84,766 $ 57,099
Net interest income/interest rate spread $ 9,364 3.08% $ 7,257 2.93%
=================== ===================
Net interest margin 3.87% 3.60%
======= =======
Ratio of average interest-earning assets
to average interest-bearing liabilities 121.42% 116.65%
======= =======
</TABLE>
14
<PAGE>
Interest Income - Interest income on loans increased $1.5 million and $2.4
million or 22.1% and 17.8% for the three and six-month periods ended December
31, 1999, respectively, compared to the prior year periods. The increase in
average loan balances more than offset the decline in average loan rates.
Interest income on securities increased $561,000 and $1.1 million or 100.0% and
91.2% for the three-month and six-month periods ended December 31, 1999,
respectively, compared to the prior year periods. The increase in average
securities balances and increase in average securities rates accounted for the
increase. The increases in average balances were partially a result of the
deployment of proceeds from the Company's December 1998 stock offering.
Interest Expense - Interest expense on deposit accounts increased $135,000
and $328,000 or 3.4% and 4.3% for the three-month and six-month periods ended
December 31, 1999, respectively, compared to the prior year periods. The
increase in average balances on deposits was partially offset by a decrease in
average deposit rates. Interest expense on borrowings increased $329,000 and
$442,000 or 182.8% and 111.9%, respectively, for the three-month and six-month
periods ended December 31, 1999 compared to the respective prior year period.
The increase in borrowings was in part to assist the Company in acquiring loans
in our market area as part of our plan to diversify the loan portfolio.
Management has continued to be competitive with interest rates paid on deposits.
Savings balances continue to increase during the six months ended December 31,
1999 due to the Company's continued promotional efforts to attract new customers
during the period.
Provision for Loan Losses - The Company's provision for loan losses was
$221,000 and $491,000, respectively, for the three-month and six-month period
ended December 31, 1999. This compares to the provision for loan losses of
$140,000 and $230,000 for the same periods in the prior year. The increase is a
result of continued loan growth and the Company's desire to make appropriate
provisions given the increasing inherent risk of a diversifying loan portfolio.
For the Six Months Ended
December 31,
-----------------------
1999 1998
- --------------------------------------------------------------------------------
(Dollars in Thousands)
Allowance at beginning of period $3,138 $2,665
------ ------
Provisions 491 230
Charge-offs:
Mortgage loans 51 --
Non-mortgage loans 13 --
Commercial business loans -- --
------ ------
Total charge-offs 64 --
Recoveries 146 --
------ ------
Allowance for loan losses at end of period $3,711 $2,895
------ ------
Allowance for loan losses to total non-performing
loans at end of period 309.51% 188.97%
------ ------
Allowance for loan losses to loans net of deferred
fees at end of period 0.87% 0.86%
------ ------
Ratio of charge-offs to average loans 0.02% N/A
------ ------
Non-interest Income - Non-interest income decreased $4,000 and $42,000 for
the three-month and six-month periods ended December 31, 1999, respectively, as
compared to the same periods in the prior year. Decreases were primarily in net
loan servicing income, which declined $56,000 and $120,000 from the respective
prior year periods. Net loan servicing income declined due to a reduction in
mortgage servicing rights recognized as a result of reduced mortgage loan sale
activity. The decline in servicing income was partially offset by an increase of
$51,000 and $88,000 in other service charges and fees for the three-months and
six-months ended December 31, 1999, respectively, compared to the same periods
in the prior year.
15
<PAGE>
Non-interest Expense - Non-interest expense, net of the $896,000 one time
Foundation expense, increased $608,000 and $1.2 million for the three-month and
six-month periods ended December 31, 1999 compared to the similar periods in the
prior year. Compensation and employee benefits expense increased due to general
increases in salary levels, compensation charges related to the ESOP, RRP and
the increase in Company employees as a result of opening two additional banking
offices and the expansion of our lending function to support the Company's loan
diversification plan. Furniture and fixture expense increases were the result of
management's continuing efforts to update equipment and facilities and the
opening of its eighth and ninth full-service banking offices as well as the
opening of an operations center to better service the Company's needs. Data
processing costs increased due to a general increase in the number of accounts
and testing, preparation and equipment replacement for Year 2000 contingencies.
Other operating expenses increased primarily as a result of the operational
expenses of servicing increasing loan and deposit portfolios as well as
professional costs associated with the operation of a public company.
Income Tax - The provision for income taxes for the three-month and
six-month periods ended December 31, 1999 were $665,000 and $1.3 million,
respectively. This compares to $226,000 and $837,000 for the three-month and
six-month periods, respectively, ended December 31, 1998. The increase in
provision for taxes primarily relates to increases in pre-tax income for the
corresponding three-month and six-month periods ended December 31, 1999 compared
to the respective prior year periods.
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 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
December 31, 1999, the total approved investment and loan origination
commitments outstanding amounted to $22.4 million. Certificates of deposit
scheduled to mature in one year or less at December 31, 1999 totaled $159.1
million. There are no investment securities scheduled to mature in one year or
less at December 31, 1999. Based on historical experience, management believes
that a significant portion of maturing deposits will remain with the Company.
The Company is required to maintain a minimum of 4% of its assets in regulatory
eligible liquid investments. As of December 31, 1999, the Company had 20.4% in
eligible liquid investments. The Company anticipates that it will continue to
have sufficient funds, together with borrowings, to meet its current
commitments.
Capital
At December 31, 1999 and June 30, 1999, 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:
16
<PAGE>
<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 December 31, 1999
Tangible capital $ 47,877 9.1% $ 7,848 1.5% $ 10,464 2.0%
(to tangible assets)
Core capital 47,877 9.1% 20,956 4.0% 26,195 5.0%
(to adjusted tangible assets)
Tier I capital 47,877 15.3% N/A N/A 18,807 6.0%
(to risk-weighted assets)
Risk-based capital 51,588 16.5% 25,077 8.0% 31,346 10.0%
(to risk-weighted assets)
As of June 30, 1999
Tangible capital $ 46,180 9.8% $ 7,079 1.5% $ 9,438 2.0%
(to tangible assets)
Core capital 46,180 9.8% 18,855 4.0% 23,568 5.0%
(to adjusted tangible assets)
Tier I capital 46,180 16.9% N/A N/A 16,352 6.0%
(to risk-weighted assets)
Risk-based capital 49,318 18.1% 21,803 8.0% 27,253 10.0%
(to risk-weighted assets)
</TABLE>
Year 2000 Considerations
In order to be ready for the year 2000 (the "Year 2000 Issue"), we
developed a Year 2000 Action and Assessment Plan (the "Action Plan") which was
presented to the Board of Directors in February 1998. The Action Plan was
developed using the guidelines outlined in the Federal Financial Institutions
Examination's Council's "The Effect of 2000 on Computer Systems." The Action
Plan recognizes that our operating, processing and accounting operations are
computer reliant and could be affected by the Year 2000 Issue. Pursuant to our
Action Plan, we reviewed our Information Technology ("IT") systems and non-IT
systems (such as security, elevators, heating and air-conditioning, telephone,
check-signing equipment, etc.) for year 2000 readiness. Commencing in early
1998, we began a program of upgrading or replacing all such equipment in order
to ensure that our equipment is year 2000 compliant on or before December 31,
1999. We are primarily reliant on third party vendors for our computer output
and processing, as well as other significant non-IT functions and services (i.e.
securities safekeeping services, securities pricing information, etc.). As of
December 31, 1999, we had completed the awareness, assessment, renovation,
validation, and implementation phases of our Action Plan.
We have completed a company-wide year 2000 contingency plan. Individual
contingency plans concerning specific software and hardware issues have been
formulated for specific departments. These plans include the identification of
our operations that can be done on a manual basis or with stand-alone personal
computers and printers.
Third party vendors are primarily absorbing the costs of modifications to
our existing software; however, we recognized the need to purchase new software
and hardware. Our estimated total cost to complete the year 2000 project
including hardware, software and other issues was $300,000. Through December 31,
1999, approximately $ 293,000 has been expended for the year 2000 project.
Commercial customers who rely on computer systems that are not year 2000
compliant may suffer interruptions in their businesses that may affect their
cash flows and ability to meet scheduled debt payments. The result of a mailing
to our commercial customers has indicated that none of our commercial customers
appear to be facing a high risk of business disruption because of the Year 2000
Issue.
17
<PAGE>
As of the date of this filing, the Company has not experienced any
significant year 2000 problems relating to its internal or third party computer
systems. Nor has the Company experienced any issues regarding the ability of
commercial customers to meet debt service as a result of Year 2000 Issues. The
Company will continue to monitor systems for problems in the future, however,
the costs related to that process are not expected to be significant.
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 June 30, 1999
Form 10-K. 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 changes in the market risk of the
Company's asset and liability position since its annual report of June 30, 1999.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in routine legal proceedings in the normal course
of business which, in the aggregate, are believed by management to be immaterial
to the financial condition of the Company.
Item 2. Changes in Securities and Use of Proceeds
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
a. An annual meeting of stockholders of the Company was held on November 9,
1999 ("Annual Meeting").
b. Not applicable.
c. There were 5,143,487 shares of common stock of the Company eligible to be
voted at the Annual Meeting, and the holders represented shares at the
meeting thereof, which constituted a quorum. The items voted upon at the
Annual Meeting and the vote for each proposal were as follows:
1. Election of directors for a three-year term expiring in 2002.
For Withheld
--- --------
William W. Langan 4,826,139 32,299
A. Brent O'Brien 4,823,796 34,642
Samuel H. Ramsey, III 4,827,056 31,382
Election of director for a one-year term expiring in 2000.
For Withheld
--- --------
Elizabeth H. Gemmill 4,823,898 34,540
18
<PAGE>
2. Proposal to ratify the appointment of KPMG LLP as the Company's
independent auditors for the year ending June 30, 2000.
For Against Abstain
--- ------- -------
4,842,942 3,596 11,900
d. Not applicable.
Item 5. Other Information
Not applicable.
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*
10.5 1999 Stock Option Plan**
10.6 1999 Recognition and Retention Plan and Trust Agreement**
27.0 Financial Data Schedule
- -------------
* Incorporated by reference from the Company's Registration Statement on
Form S-1 as filed on September 18, 1998, as amended, and declared
effective on November 12, 1998 (File No. 333-63737)
** Incorporated by reference from the Company's Proxy Statement on Schedule
14A as filed on June 23, 1999 (File No. 000-25191).
(b) Not applicable
19
<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: February 11, 2000 By: /s/Frederick A. Marcell, Jr.
-----------------------------------------
Frederick A. Marcell, Jr.
President and Chief Executive Officer
Date: February 11, 2000 By: /s/John J. Foff, Jr.
-----------------------------------------
John J. Foff, Jr., Senior Vice President,
Chief Financial Officer and Treasurer
20
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-START> JUL-01-1999
<PERIOD-END> DEC-31-1999
<CASH> 6619
<INT-BEARING-DEPOSITS> 5578
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 72986
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 424555
<ALLOWANCE> 3711
<TOTAL-ASSETS> 523184
<DEPOSITS> 407687
<SHORT-TERM> 41000
<LIABILITIES-OTHER> 2172
<LONG-TERM> 9784
0
0
<COMMON> 51
<OTHER-SE> 58570
<TOTAL-LIABILITIES-AND-EQUITY> 523184
<INTEREST-LOAN> 15830
<INTEREST-INVEST> 2403
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 18233
<INTEREST-DEPOSIT> 8023
<INTEREST-EXPENSE> 8869
<INTEREST-INCOME-NET> 9364
<LOAN-LOSSES> 491
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 5669
<INCOME-PRETAX> 3740
<INCOME-PRE-EXTRAORDINARY> 2423
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2423
<EPS-BASIC> .49
<EPS-DILUTED> .49
<YIELD-ACTUAL> 7.53
<LOANS-NON> 1116
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1116
<ALLOWANCE-OPEN> 3138
<CHARGE-OFFS> 64
<RECOVERIES> 146
<ALLOWANCE-CLOSE> 3711
<ALLOWANCE-DOMESTIC> 3711
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1165
</TABLE>
