FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
(Mark One)
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended................September 30, 2000
------------------
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------- -----------------
Commission File Number 0-26993
EVERTRUST FINANCIAL GROUP, INC.
----------------------------------------------------
(Exact name of registrant as specified in its charter)
Washington 91-1613658
------------------------------- ----------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2707 Colby Ave. Suite 600, Everett, Washington 98201
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(Address of principal executive offices and Zip code)
(425) 258-3645
--------------
(Registrant's telephone number, including area code)
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NA
----------------
(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check whether the registrant (1) has filed all reports required to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
(1) 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.
Title of class : As of November 6, 2000
---------------- ----------------------
Common stock, no par value 7,395,683
<PAGE>
EVERTRUST FINANCIAL GROUP, INC.
Table of Contents
Page
PART 1 - FINANCIAL INFORMATION ----
ITEM 1 - Financial Statements. The Consolidated Financial Statements
of EverTrust Financial Group, Inc. filed as a part of the
report are as follows:
Consolidated Statements of Financial Condition as of
September 30, 2000 and March 31, 2000 . . . . . . . . . . . . 1
Consolidated Statements of Operations for the three and six
months ended September 30, 2000 and 1999. . . . . . . . . . . 2
Consolidated Statements of Comprehensive Income for the six
months ended September 30, 2000 and 1999. . . . . . . . . . . 3
Consolidated Statements of Changes in Equity for the six
months ended September 30, 2000 and 1999. . . . . . . . . . . 3
Consolidated Statements of Cash Flows for the six months
ended September 30, 2000 and 1999 . . . . . . . . . . . . . . 4
Notes to Consolidated Financial Statements. . . . . . . . . . 5
ITEM 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations
General . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Comparison of Financial Condition at September 30 and
March 31, 2000. . . . . . . . . . . . . . . . . . . . . . . . 9
Comparison of Operating Results for the three months ended
September 30, 2000 and 1999 . . . . . . . . . . . . . . . . . 11
Comparison of Operating Results for the six months ended
September 30, 2000 and 1999 . . . . . . . . . . . . . . . . . 14
Liquidity and Capital Resources . . . . . . . . . . . . . . . 16
ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk
Asset and Liability Management and Market Risk. . . . . . . . 17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings. . . . . . . . . . . . . . . . . . 18
Item 2. Changes in Securities. . . . . . . . . . . . . . . . 18
Item 3. Defaults upon Senior Securities . . . . . . . . . . 18
Item 4. Submission of Matters to Vote of Stockholders. . . . 19
Item 5. Other Information . . . . . . . . . . . . . . . . . 19
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Item 6. Exhibits and Reports on Form 8-K. . . . . . . . . . 20
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
EXHIBIT 27 - FINANCIAL DATA SCHEDULE
ii
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EverTrust Financial Group, Inc.
Consolidated Statement of Financial Condition
September 30, 2000 and March 31, 2000
(dollars amounts in thousands)
September 30, March 31,
2000 2000
---- ----
ASSETS (Unaudited)
Cash and cash equivalents, including interest
bearing deposits of $1,774 and $1,790 $ 9,448 $ 7,652
Securities available for sale, amortized cost
of $79,600 and $97,710 78,644 95,988
Securities held to maturity, fair value
of $11,361 and $12,136 11,232 12,066
Federal Home Loan Bank stock 4,505 4,288
Loans receivable, net 473,253 416,116
Loans held for sale 208 -
Accrued interest receivable 3,953 3,653
Premises and equipment 9,141 8,138
Prepaid expenses and other assets 6,773 7,311
-------- --------
Total Assets $597,157 $555,212
======== ========
LIABILITIES AND EQUITY
Liabilities:
Deposit accounts $387,968 $382,986
Federal Home Loan Bank advances and
other borrowings 75,604 34,423
Accounts payable and other liabilities 4,543 4,274
-------- --------
Total Liabilities 468,115 421,683
-------- --------
Equity:
Common stock - no par value, 49,000,000 shares
authorized, 7,850,137 shares and 8,536,937
shares outstanding at September 30, 2000 and
March 31, 2000, respectively 81,166 83,978
Employee Stock Ownership debt (1,584) (1,584)
Retained earnings 53,553 52,271
Carrying value of shares held in trust for stock
related compensation plans (3,462) -
Accumulated other comprehensive income (631) (1,136)
-------- --------
Total Equity 129,042 133,529
-------- --------
Total Liabilities and Equity $597,157 $555,212
======== ========
1
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<TABLE>
EverTrust Financial Group, Inc.
Consolidated Statement of Operations
For the Three and Six Months Ended September 30, 2000 and 1999
(Dollar amounts in thousands, except per share amounts)
Three Months Ended Six Months Ended
September 30, September 30,
2000 1999 2000 1999
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans receivable $10,207 $7,805 $19,381 $15,294
Investment securities:
Taxable interest income 1,356 1,368 2,781 2,434
Tax-exempt interest income 95 102 192 204
Dividend income 162 133 330 263
--------- --------- --------- ---------
Total investment security income 1,613 1,603 3,303 2,901
--------- --------- --------- ---------
Total interest income 11,820 9,408 22,684 18,195
INTEREST EXPENSE:
Deposit accounts 4,816 4,642 9,358 8,964
Federal Home Loan Bank advances
and other borrowings 1,169 306 1,856 598
--------- --------- --------- ---------
Total interest expense 5,985 4,948 11,214 9,562
--------- --------- --------- ---------
Net interest income 5,835 4,460 11,470 8,633
PROVISION FOR LOAN LOSSES 375 135 675 410
--------- --------- --------- ---------
Net interest income after provision
for loan losses 5,460 4,325 10,795 8,223
OTHER INCOME:
Loan service fees 161 142 337 321
Gain (loss) on sale of securities 157 - 218 170
Gain (loss) on sale of loans 34 (156) 51 (638)
Other, net 366 254 750 495
--------- --------- --------- ---------
Total other income 718 240 1,356 348
--------- --------- --------- ---------
OTHER EXPENSES:
Salaries and employee benefits 2,863 1,617 4,777 3,255
Occupancy and equipment 665 1,236 1,353 1,884
Information processing costs 214 170 416 339
Other, net 986 6,293 2,003 6,994
--------- --------- --------- ---------
Total other expenses 4,728 9,316 8,549 12,472
--------- --------- --------- ---------
Earnings before federal income taxes 1,450 (4,751) 3,602 (3,901)
FEDERAL INCOME TAXES 414 (1,696) 1,068 (1,487)
--------- --------- --------- ---------
NET INCOME $1,036 ($3,055) $2,534 ($2,414)
========= ========= ========= =========
Net income per common share - basic (1) $0.13 n/a $0.31 n/a
Net income per common share - diluted (1) $0.13 n/a $0.31 n/a
Weighted average shares
outstanding-basic (1) 7,950,594 - 8,102,473 -
Weighted average shares
outstanding-diluted (1) 7,950,594 - 8,102,473 -
(1) The Company converted from a mutual to public company on September 30, 1999.
</TABLE>
2
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EverTrust Financial Group, Inc.
Consolidated Statement of Comprehensive Income (in thousands)
For the Six Months Ended September 30, 2000 and 1999
2000 1999
---- ----
Net Income (Loss) $ 2,534 $ (2,414)
Other Comprehensive Income, net of income taxes:
Gross unrealized gain (loss) on securities:
Unrealized hold gain (loss) during the period,
net of deferred income tax expense (benefit)
of $334 and $(69) 649 (358)
Less adjustment of gains included in net income,
net of income tax of $(74) and $(58) (144) (112)
------- --------
Other comprehensive income (loss) 505 (470)
------- --------
Comprehensive Income $ 3,039 $ (2,884)
======= ========
<TABLE>
EverTrust Financial Group, Inc.
Consolidated Statements of Changes in Equity
For the Six Months Ended September 30, 2000 and 1999
(Dollar amounts in thousands, Unaudited)
Shares held Accum
in trust for Other
Common Stock (1) stock related Compre-
Number of Debt related Retained compensation hensive
Shares Amount to ESOP Earnings plans Income Total
---------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at March 31, 1999 n/a $ - $ - $52,147 $ - $ 116 $ 52,263
Common stock issued 8,986,250 88,213 88,213
Loan to ESOP (1,797) (1,797)
Net income (2,414) (2,414)
Other comprehensive income,
net of income taxes (470) (470)
---------------------------------------------------------------------------
Balance at September 30, 1999 8,986,250 $88,213 ($1,797) $49,733 $ - ($354) $135,795
===========================================================================
Balance at March 31, 2000 8,536,937 $83,978 ($1,584) $52,271 $ - ($1,136) $133,529
Common stock repurchased (686,800) (7,147) (7,147)
Net income 2,534 2,534
Dividends paid (1,252) (1,252)
Restricted stock issued to MRP
compensation plan 4,335 (4,335) -
Amortization of compensation
related to MRP 873 873
Other comprehensive income, net of
income taxes 505 505
---------------------------------------------------------------------------
Balance at September 30, 2000 7,850,137 $81,166 ($1,584) $53,553 ($3,462) ($631) $129,042
===========================================================================
(1) Stock offering completed on September 30, 1999.
</TABLE>
3
<PAGE>
EverTrust Financial Group, Inc.
Consolidated Statement of Cash Flows
For the Six Months Ended September 30, 2000 and 1999
(In thousands, Unaudited)
2000 1999
-------- ---------
Operating Activities:
Net income $ 2,534 $ (2,414)
Adjustments to reconcile earnings to net cash
provided by operating activities:
Depreciation and amortization of premises
and equipment 527 428
Stock dividends and accretion of investment
security discounts (226) (189)
Loss (gain) on sale of premises and equipment
and real estate owned (218) (141)
Amortization of investment security premiums 94 154
Book loss on limited partnerships 54 65
Provision for losses on loans and real estate owned
and mark to market loss on saleable loans 675 410
Amortization of deferred loan fees and costs (457) (936)
Loan fees deferred 1,014 675
Proceeds from the sale of loans 2,936 29,772
Loans originated for sale (3,172) (5,506)
Stock contributed to charitable foundation - 3,900
Amortization of compensation related to MRP 873 -
Cash provided (used) by changes in operating
assets and liabilities:
Accrued interest receivable (300) (97)
Prepaid expenses and other assets 653 (1,478)
Accounts payable and other liabilities 269 (465)
Deferred taxes (429) (2,008)
-------- ---------
Net cash provided by operating activities 4,827 22,170
-------- ---------
Investing Activities:
Proceeds from maturities of securities available
for sale 22,660 8,692
Proceeds from maturities of securities held to
maturity 848 1,128
Proceeds from sale of securities available for sale 1,524 4,195
Purchase of securities available for sale (5,881) (35,421)
Purchase of FHLB stock (75) -
Loan principal prepayments 37,146 48,282
Loans originated or acquired (95,487) (74,179)
Net additions to premises and equipment (1,530) (781)
-------- ---------
Net cash used by investing activities (40,795) (48,084)
-------- ---------
Financing Activities:
Net increase in deposit accounts 4,982 61,702
Proceeds from Federal Home Loan Bank advances 109,235 9,700
Repayment of Federal Home Loan Bank activities (83,369) (9,726)
Proceeds from other borrowings 17,445 1,000
Repayment of other borrowings (2,130) (515)
Repurchase shares of common stock (7,147) -
Dividends paid on common stock (1,252) -
Proceeds from the sale of stock - 84,313
Loan to Employee Stock Ownership Plan (ESOP) - (1,797)
-------- ---------
Net cash provided by financing activities 37,764 144,677
-------- ---------
Net Increase in Cash and Cash Equivalents 1,796 118,763
Cash and Cash Equivalents:
Beginning of year 7,652 13,230
-------- ---------
End of quarter $ 9,448 $ 131,993
======== =========
Supplemental Disclosure of Cash Flow Information:
Cash paid during the period for:
Interest on deposits $ 9,293 $ 8,935
Federal income taxes 1,496 520
Interest on borrowings 1,516 607
4
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EverTrust Financial Group, Inc.
Notes to Consolidated Financial Statements
Six Months Ended September 30, 2000
(Unaudited)
Note 1 - Basis of Presentation
------------------------------
The unaudited consolidated financial statements of EverTrust Financial Group,
Inc. (EverTrust or the Company) and its subsidiaries reflect all adjustments
which are, in the opinion of management, necessary to present fairly the
statement of financial position and results of operations for the interim
periods presented. All such adjustments are of a normal recurring nature.
The consolidated financial statements include EverTrust's wholly owned
subsidiaries, Everett Mutual Bank (EMB), Commercial Bank of Everett (CBE), I-
Pro, Inc. (I-Pro), and Mutual Bancshares Capital Inc. (MB Cap). All
significant intercompany accounts and transactions have been eliminated in
consolidation.
The balance sheet data as of March 31, 2000 was derived from audited financial
statements, but does not include all disclosures which have been omitted
pursuant to the rules and regulations of the Securities and Exchange
Commission (SEC) rules pertaining to the presentation of interim financial
statements. The results of operations for the three and six months ended
September 30, 2000 and 1999 are not necessarily indicative of the results
which may be expected for the entire year. It is suggested that these
consolidated financial statements and notes be read in conjunction with the
consolidated financial statements and notes included in EverTrust's Form 10-K
dated June 6, 2000.
Note 2 - Recent Events
----------------------
The Company's Board of Directors adopted the EverTrust Financial Group, Inc.
2000 Stock Option Plan (Plan) and Management Recognition Plan (MRP) on March
20, 2000. These plans were approved by shareholders at the Company's annual
meeting held July 25, 2000. The Company has reserved 898,625 and 359,450
shares of Common Stock for issuance under the Plan and MRP, respectively. On
August 29, 2000, the Compensation Committee granted 698,566 and 359,450 shares
for the Plan and MRP, respectively. Options were granted under the Plan at a
price of $12.06 per share which was equal to the fair market value at the date
of the grant. The first vesting date for both programs is October 1, 2000.
During the current reporting period, the Company began purchasing shares of
its common stock for the MRP. As of September 30, 2000, 141,000 shares of the
Company's common stock had been purchased for this plan.
Note 3 - Stock Repurchases
--------------------------
On March 20, 2000, the Board of Directors approved a 5% repurchase
(approximately 426,847 shares) of the Company's outstanding common stock. On
May 22, 2000, the Board of Directors amended the March 20, 2000 stock
repurchase plan, increasing the
5
<PAGE>
number of shares authorized for repurchase to 10% (approximately 853,694
shares). At September 30, 2000, the Company had repurchased 545,800 shares of
its common stock.
Note 4 Earnings per share
---------------------------
EverTrust's basic earnings per common share are computed by dividing net
income by the weighted-average number of common shares outstanding during the
period. EverTrust's diluted earnings per common share are computed by
dividing net income by the diluted weighted-average number of shares
outstanding during the period. For the quarter and six-months ended September
30, 2000, the weighted-average shares outstanding for both basic and diluted
was 7,950,594 and 8,102,473, respectively. Earnings per share are not
meaningful for the quarter and six months ended September 30, 1999 as the
Company's public offering was not completed until September 30, 1999.
Note 5 - Lines of Business
--------------------------
EverTrust manages the business activities of EMB, CBE, I-Pro and MB Cap. The
operating results of EverTrust, MB Cap and I-Pro have been included in Other
as their results are not significant when taken on an individual basis.
Financial highlights by lines of business are as follows:
Six Months Ended September 30, 2000
-----------------------------------
(In thousands)
EMB CBE Other Eliminations Totals
--- --- ----- ------------ ------
Condensed income
statement:
Net interest income
after Provision for
loan loss $8,958 $602 $1,235 $ - $10,795
Other income 1,223 93 3,385 (3,345) 1,356
Other expense 5,693 681 2,494 (319) 8,549
------ ---- ------ ------- -------
Income before income
taxes 4,488 14 2,126 (3,026) 3,602
Income taxes 1,366 6 (304) - 1,068
------ ---- ------ ------- -------
Net income (loss) $3,122 $8 $2,430 ($3,026) $ 2,534
====== ==== ====== ======= =======
September 30, 2000
------------------
(In thousands)
EMB CBE Other Eliminations Totals
--- --- ----- ------------ --------
Total assets $544,611 $27,387 $134,635 ($109,476) $597,157
======== ======= ======== ========= ========
6
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Six Months Ended September 30, 1999
-----------------------------------
(In thousands)
EMB CBE Other Eliminations Totals
--- --- ------ ------------- ------
Condensed income statement:
Net interest income after
Provision for loan loss $7,683 $402 $138 $ - $8,223
Other income 315 78 1,704 (1,749) 348
Other expense 5,581 481 6,587 (177) 12,472
------ ---- ----- -------- ------
Income before income taxes 2,417 (1) (4,745) (1,572) (3,901)
Income taxes 662 - (2,149) - (1,487)
------ ---- ------ ------ ------
Net income (loss) $1,755 ($1) ($2,596) ($1,572) ($2,414)
====== ==== ====== ====== ======
September 30, 1999
------------------
(In thousands)
EMB CBE Other Eliminations Totals
--- --- ------ ------------- ------
Total Assets $562,799 $25,355 $141,915 ($132,752) $597,317
======== ====== ======== ======== ========
Note 6 Additional Information Regarding Investment Securities
---------------------------------------------------------------
The following table sets forth additional detail on EverTrust's investment
securities (in thousands):
September 30, 2000 March 31, 2000
Carrying Fair Carrying Fair
Value Value Value Value
----- ----- ----- -----
Available for sale:
U.S. Government Agency obligations $ 9,411 $ 9,419 $12,198 $ 12,119
Corporate obligations 31,730 31,343 41,359 40,650
Municipal obligations 5,493 5,428 5,661 5,537
Equity securities 6,704 6,237 12,223 11,821
Certificate of deposits 190 190 185 185
Mortgage-backed securities 26,072 26,027 26,084 25,676
------- ------- -------- --------
Total available for sale 79,600 78,644 97,710 95,988
------- ------- -------- --------
Held to maturity:
U.S. Government Agency obligations 2,511 2,554 2,514 2,538
Corporate obligations 989 1,007 1,486 1,505
Municipal obligations 5,789 5,819 5,996 6,003
Certificate of deposits 495 495 481 481
Mortgage-backed securities 1,448 1,486 1,589 1,609
------- ------- -------- --------
Total held to maturity 11,232 11,361 12,066 12,136
------- ------- -------- --------
Total investment securities $90,832 $90,005 $109,776 $108,124
======= ======= ======== ========
At September 30, 2000 equity securities were comprised of, at cost, $2.3
million ($2.0 million fair value) in common stock of publicly traded
companies, $2.0 million ($1.8 million fair value) in trust preferred
securities and $2.4 million ($2.4 million fair value) in money market mutual
funds.
7
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Note 7 - Additional Information Regarding Federal Home Loan Bank advances and
other borrowings
----------------------------------------------------------------------------
The following table sets forth maturity detail on EverTrust's Federal Home
Loan Bank advances and other borrowings (in thousands):
September 30, 2000 March 31, 2000
------------------ --------------
Due within 1 year $53,735 $20,028
Due after 1 year but within 3 years 7,750 4,000
Due after 3 years 14,119 10,395
------- -------
$75,604 $34,423
======= =======
Note 8 - Recently issued accounting standards adopted in these financial
statements
-----------------------------------------------------------------------------
In March 2000, the Financial Accounting Standards Board (FASB) issued
Interpretation No. 44, Accounting for Certain Transaction Involving Stock
Compensation. The Interpretation became effective July 1, 2000 and applies to
grants of new stock options or awards and changes to existing awards that
occur on or after that date. The Interpretation must also be applied on a
prospective basis to stock option repricings and grants to nonemployees that
occur after December 15, 1998, and to stock options that are modified to add a
reload feature after January 12, 2000. This statement does not affect the
results of operations or financial condition of the Company. FASB
Interpretation No. 44 was adopted by the Company on July 1, 2000.
Note 9 - Recently issued accounting standards not yet adopted
-------------------------------------------------------------
In June 1998, the FASB issued SFAS No. 133, Accounting for Derivative
Instruments and Hedging Activities. In June 2000, the FASB issued SFAS No.
138, which amends certain provisions of SFAS 133 to clarify four areas causing
difficulties in implementation. The Company will adopt SFAS 133 and the
corresponding amendments under SFAS 138 on April 1, 2001. SFAS 133, as
amended by SFAS 138, is not expected to have a material impact on EverTrust's
consolidated results of operations, financial position or cash flow.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
General. EverTrust, a Washington corporation, is primarily engaged in the
business of planning, directing and coordinating the business of its wholly
owned subsidiaries, EMB, CBE, I-Pro and MB Cap. EMB conducts business through
its 11 full service offices located throughout Snohomish County, Washington,
and a loan office in Bellevue (King County), Washington. EMB considers the
communities in Snohomish County, Washington, as its primary market area for
making loans and attracting deposits. EMB also makes loans in King and Pierce
Counties and, to a much lesser extent, other counties in Western Washington.
EMB's principal business is attracting deposits from the general public and
using those funds to originate multifamily, commercial real estate and
construction loans as well as residential mortgage loans. CBE offers business
loans and deposit services to individuals and local businesses through its
office located in Everett,
8
<PAGE>
Washington. I-Pro is located in Kent, Washington, and provides backroom
banking services for EMB and CBE. MB Cap is a start-up venture capital
company located in Bothell, Washington, which was organized to provide equity
to regionally-based high- technology companies and companies that make medical
instruments at the beginning or early stages of development.
Comparison of Financial Condition at September 30, and March 31, 2000
---------------------------------------------------------------------
Total assets increased $42.0 million from $555.2 million at March 31, 2000 to
$597.2 million at September 30, 2000. The majority of the increase was the
result of growth in the loan portfolio partially offset by decreases in the
investment portfolio.
The investment portfolio (including FHLB stock) decreased $17.9 million, or
15.9%, from $112.3 million at March 31, 2000 to $94.4 million at September 30,
2000. The decrease is due primarily to maturities which were used to fund
growth in the loan portfolio.
Loans receivable increased $57.2 million, or 13.7%, from $416.1 million at
March 31, 2000 to $473.3 million at September 30, 2000. The increase was due
primarily to growth in the multifamily construction loan portfolio of $36.5
million, from $32.3 million at March 31, 2000 to $68.8 million at September
30, 2000, and the commercial real estate loan portfolio of $21.2 million, from
$128.9 million at March 31, 2000 to $150.1 million at September 30, 2000.
The following table is provided to disclose additional detail on EverTrust's
loans (in thousands):
September 30, March 31,
2000 2000
---- ----
Real Estate:
1-4 family residential $71,376 $70,042
1-4 family construction and land development 38,969 37,266
Income property:
Commercial construction 27,870 23,871
Commercial real estate 150,120 128,892
Multifamily construction 68,831 32,304
Multifamily residential 137,145 136,727
Consumer:
Residential mortgages 6,102 5,211
Home equity and second mortgages 19,413 18,090
Credit cards 1,933 1,375
Automobiles 1,508 1,038
Other installment loans 5,021 4,243
Business loans 27,118 16,494
-------- --------
555,406 475,553
Less:
Undisbursed loan proceeds (70,735) (49,460)
Deferred loan fees and other (4,051) (3,493)
Reserve for loan losses (7,159) (6,484)
-------- --------
473,461 416,116
Loans receivable held for sale (208) -
-------- --------
Loans receivable, net $473,253 $416,116
======== ========
9
<PAGE>
At September 30, 2000, EverTrust had $293,000 in loans accounted for on a
non-accrual basis ($283,000 in one to four family mortgage loans and $10,000
in consumer loans) compared to $406,000 at March 31, 2000. The following
table provides the activity of EverTrust's allowance for loan loss (in
thousands):
Six Months Ended
September 30,
-------------
2000 1999
---- ----
Allowance at beginning of period $6,484 $5,672
Provision for loan losses 675 410
Charge-offs 4 -
Recoveries 4 18
------ -------
Balance at end of period $7,159 $6,100
====== =======
Total deposits of EverTrust increased by $5.0 million from $383.0 million at
March 31, 2000 to $388.0 million at September 30, 2000. The change is due
primarily to an increase in certificate of deposits of $14.5 million from
$198.3 million at March 31, 2000 to $212.8 million at September 30, 2000
partially offset by decreases in money market accounts of $9.5 million from
$129.5 million at March 31, 2000 to $120.0 million at September 30, 2000.
The following table sets forth the balances of deposits in the various types
of accounts offered by EverTrust at the dates indicated (dollars in
thousands):
At September 30, 2000 At March 31, 2000
Percent Percent
of of
Amount Total Amount Total
------ ----- ------ -----
Non-interest bearing accounts $ 8,221 2.1% $ 7,902 2.1%
Savings accounts 10,030 2.6 10,523 2.7
Demand deposit accounts 36,857 9.5 36,712 9.6
Money market deposit accounts 120,011 30.9 129,522 33.8
Fixed rate certificates which mature:
Within 1 year 141,939 36.6 132,410 34.6
After 1 year, but within 2 years 21,510 5.5 24,102 6.3
After 2 years, but within 5 years 40,902 10.6 39,787 10.4
Certificates maturing thereafter 8,498 2.2 2,028 0.5
-------- ----- -------- -----
Total $387,968 100.0 % $382,986 100.0 %
======== ===== ======== =====
Federal Home Loan Bank advances and other borrowings increased $41.2 million
from $34.4 million at March 31, 2000 to $75.6 million at September 30, 2000.
The increased borrowings were used primarily to fund growth in the loan
portfolio.
10
<PAGE>
Total equity at September 30, 2000 was $129.0 million compared to $133.5
million at March 31, 2000, a decrease of $4.5 million. Earnings of $2.5
million for the six months ending September 30, 2000 were more than offset by
the repurchase of shares of the Company's common stock for $7.1 million and
dividends paid of $1.3 million.
Comparison of Operating Results for the Three Months Ended September 30, 2000
and 1999
-----------------------------------------------------------------------------
General. Net income for the three months ended September 30, 2000 was $1.0
million compared to a loss of $3.1 million for the same period in the prior
year. The prior year's loss included a one-time $5.2 million pre-tax
contribution to establish the Company's charitable foundation in connection
with EverTrust's conversion to a public company.
Net Interest Income. Net interest income increased $1.3 million, or 28.9%
from $4.5 million for the three months ended September 30, 1999 to $5.8
million for the three months ended September 30, 2000. The change is due
primarily to higher average balances of loans receivable.
Interest income increased $2.4 million from $9.4 million for the three months
ended September 30, 1999 to $11.8 million for the same period in 2000. During
this same period, the average balance of interest-earning assets increased
from $480.8 million for the three months ended September 30, 1999 to $573.3
million for the three months ended September 30, 2000 resulting in increased
income of $1.9 million. The yield on interest-earning assets increased from
7.83% for the three months ended September 30, 1999 to 8.25% for the same
period in 2000 increasing income $529,000. Increased average balances are due
primarily to the overall growth of the loan portfolio. This growth was funded
by proceeds received from the public offering, loan sales and increased
borrowings. The increase in yields is due primarily to interest rate
increases from period to period and a shift in assets from short-term cash and
cash equivalents to higher yielding loans and investment securities.
Interest expense increased $1.1 million from $4.9 million for the three months
ended September 30, 1999 to $6.0 million for the same period in 2000. The
average balance of interest-bearing liabilities increased 3.1% during this
same time period. The average balance for interest-bearing deposits and
borrowings for the three months ended September 30, 1999 was $430.9 million
compared to $444.1 million for the same period in 2000. This increase
resulted in higher expense from period to period of $151,000. Interest
expense increased an additional $862,000 due to an increase in the yield on
interest-bearing liabilities from 4.59% for the three months ended September
30, 1999 to 5.39% for the same period in 2000. The increased yield is due
primarily to a change in the composition of interest-bearing liabilities. The
average balance of borrowings comprised 15.4% of interest-bearing liabilities
for the quarter ended September 30, 2000 compared to 4.9% for the same period
in 1999.
The following table provides additional comparative data on the Company's net
interest income and margin:
11
<PAGE>
Quarter Ended
Average Balance September 30,
--------------- -------------
(in thousands) 2000 1999
---- ----
Interest-earning assets:
Loans receivable, net $472,757 $367,117
Investment securities 93,782 80,604
Federal Home Loan Bank stock 4,435 4,067
Cash and cash equivalents 2,310 28,997
-------- --------
Total interest-earning assets 573,284 480,785
Noninterest-earning assets 10,838 16,204
-------- --------
Total average assets $584,122 $496,989
======== ========
Interest-bearing liabilities:
Savings accounts $ 10,223 $ 36,073
NOW accounts 35,930 35,480
Money market deposit accounts 121,017 142,056
Certificates of deposits 208,633 196,039
-------- --------
Total deposits 375,803 409,648
Federal Home Loan Bank advances and other borrowings 68,271 21,296
-------- --------
Total interest-bearing liabilities 444,074 430,944
Noninterest-bearing liabilities 12,463 12,532
-------- --------
Total average liabilities 456,537 443,476
Average equity 127,585 53,513
-------- --------
Total average liabilities and equity $584,122 $496,989
======== ========
Interest Rate Yield/Expense (rates are annualized)
Quarter Ended
September 30,
2000 1999
---- ----
Interest Rate Yield:
Loans receivable, net 8.64 % 8.50 %
Investment securities 6.35 5.81
Federal Home Loan Bank stock 6.49 7.31
Cash and cash equivalent 9.18 4.92
---- ----
Total interest rate yield on interest-earning assets 8.25 7.83
---- ----
Interest Rate Expense:
Savings accounts 2.90 2.84
NOW accounts 2.61 2.62
Money market deposit accounts 4.54 4.25
Certificate of deposits 6.01 5.39
---- ----
Total deposits 5.13 4.53
Federal Home Loan Bank advances and other borrowings 6.84 5.74
---- ----
Total interest rate expense on interest-bearing
liabilities 5.39 4.59
---- ----
Interest rate spread 2.86 % 3.24 %
==== ====
Net interest margin on interest-earning assets 4.07 % 3.71 %
==== ====
Provision for Loan Losses. During the three months ended September 30, 2000,
the provision for loan losses was $375,000, compared to $135,000 for the same
period in 1999, an increase of $240,000. The increase resulted from continued
loan portfolio
12
<PAGE>
growth in the higher-risk lending categories of commercial and multifamily
loans, business loans and credit card loans during the period. The allowance
for loan losses increased $675,000 from $6.5 million at March 31, 2000 to $7.2
million at September 30, 2000. The allowance for loan losses as a percentage
of net loans (loans receivable excluding allowance for losses) was 1.49% at
September 30, 2000 and 1.53% at March 31, 2000.
The allowance for losses on loans is maintained at a level sufficient to cover
losses inherent in the loan portfolio but not yet apparent to management. The
risk of loss will vary with the type of loan being made, the creditworthiness
of the borrower, general economic conditions and, in the case of a secured
loan, the quality of the security for the loan. EverTrust's management
reviews the adequacy of the allowance at least quarterly, as computed by a
consistently applied formula-based methodology, supplemented by management's
assessment of current economic conditions, past loss and collection
experience, and risk characteristics of the loan portfolio. In addition,
various regulatory agencies, as an integral part of their examination process,
periodically review the Company's allowance for loan losses. Such agencies
may require the Company to provide additions to the allowance based on
judgment different from management. Although management uses the best
information available, future adjustments to the allowance may be necessary
due to economic, operating, regulatory and other conditions beyond EverTrust's
control.
Non-interest Income. Non-interest income increased $478,000 from $240,000 for
the three months ended September 30, 1999 to $718,000 for the same period in
2000. The change is due primarily to gains earned on the sale of loans and
investments. For the three months ended September 30, 2000, the Company
recognized $34,000 in gains on the sale of loans compared to a loss of
$156,000 for the same period in 1999. Gains of $157,000 were recorded on the
sale of available for sale investment securities for the three months ended
September 30, 2000. There were no investment security gains or losses for the
same period in 1999.
Non-interest Expense. Non-interest expense decreased $4.6 million from $9.3
million for the three months ended September 30, 1999 to $4.7 million for the
same period in 2000. The decrease is due primarily to a one-time charitable
contribution to the EverTrust Foundation for $5.2 million during the three
months ended September 30, 1999. This was partially offset by $885,000 in
costs associated with the Company's Management Recognition Plan (MRP), which
was approved by shareholders during the quarter ended September 30, 2000. The
MRP expense incurred during the quarter represents a full one-fifth of the
total cost of the plan. The remaining cost is expected to be recognized
ratably over the next four years and will end September 2004.
Provision for Income Taxes. Federal income taxes increased from a benefit of
$1.7 million for the three months ended September 30, 1999 to an expense of
$414,000 for the same period in 2000. The change is due to increased taxable
earnings.
13
<PAGE>
Comparison of Operating Results for the Six Months Ended September 30, 2000
and 1999
-----------------------------------------------------------------------------
General. Net income for the six months ended September 30, 2000 was $2.5
million compared to a loss of $2.4 million for the same period in the prior
year. The prior year's loss included a one-time $5.2 million pre-tax
contribution to establish the Company's charitable foundation in connection
with EverTrust's conversion to a public company.
Net Interest Income. Net interest income increased $2.9 million from $8.6
million for the six months ended September 30, 1999 to $11.5 million for the
six months ended September 30, 2000. The change is due primarily to higher
average balances of interest-earning assets.
Interest income increased $4.5 million from $18.2 million for the six months
ended September 30, 1999 to $22.7 million for the same period in 2000. During
this same period, the average balance of interest-earning assets increased
from $464.1 million for the six months ended September 30, 1999 to $559.1
million for the six months ended September 30, 2000 resulting in increased
income of $4.0 million. The yield on interest- earning assets increased from
7.84% for the six months ended September 30, 1999 to 8.11% for the same period
in 2000 increasing income $526,000. Increased average balances are due
primarily to the overall growth of the loan portfolio. This growth was funded
by proceeds received from the public offering, loan sales and increased
borrowings. The increase in yields is due primarily to interest rate
increases from period to period and a shift in assets from short-term cash and
cash equivalents to higher yielding loans and investment securities.
Interest expense increased $1.6 million from $9.6 million for the six months
ended September 30, 1999 to $11.2 million for the same period in 2000. The
average balance of interest-bearing liabilities increased $17.2 million from
$412.4 million for the six months ended September 30, 1999 to $429.7 million
for the same period in 2000. This increase resulted in higher interest
expense from period to period of $449,000. Interest expense increased an
additional $1.2 million due to an increase in the yield on interest-bearing
liabilities from 4.64% for the six months ended September 30, 1999 to 5.22%
for the same period in 2000. The increased yield is due primarily to a change
in the composition of interest-bearing liabilities. The average balance of
borrowings comprised 13.0% of interest-bearing liabilities for the six months
ended September 30, 2000 compared to 4.9% for the same period in 1999.
The following table provides additional comparative data on the Company's net
interest income and margin:
14
<PAGE>
Six Months Ended
Average Balance September 30,
--------------- -------------
(in thousands) 2000 1999
---- ----
Interest-earning assets:
Loans receivable, net $455,000 $361,511
Investment securities 97,485 78,393
Federal Home Loan Bank stock 4,387 4,031
Cash and cash equivalents 2,239 20,193
-------- --------
Total interest-earning assets 559,111 464,128
Noninterest-earning assets 11,590 13,800
-------- --------
Total average assets $570,701 $477,928
======== ========
Interest-bearing liabilities:
Savings accounts $ 10,202 $ 24,056
NOW accounts 35,678 34,874
Money market deposit accounts 122,696 138,798
Certificates of deposits 205,410 194,578
-------- --------
Total deposits 373,986 392,306
Federal Home Loan Bank advances and other borrowings 55,671 20,154
-------- --------
Total interest-bearing liabilities 429,657 412,460
Noninterest-bearing liabilities 12,107 12,374
-------- --------
Total average liabilities 441,764 424,834
Average equity 128,937 53,094
-------- --------
Total average liabilities and equity $570,701 $477,928
======== ========
Interest Rate Yield/Expense (rates are annualized)
Six Months Ended
September 30,
-------------
2000 1999
---- ----
Interest Rate Yield:
Loans receivable, net 8.52% 8.46%
Investment securities 6.32 5.78
Federal Home Loan Bank stock 6.50 7.27
Cash and cash equivalent 7.06 4.85
---- ----
Total interest rate yield on interest-earning assets 8.11 7.84
---- ----
Interest Rate Expense:
Savings accounts 2.86 2.72
NOW accounts 2.59 2.60
Money market deposit accounts 4.44 4.23
Certificate of deposits 5.87 5.40
---- ----
Total deposits 5.00 4.57
Federal Home Loan Bank advances and other borrowings 6.66 5.94
---- ----
Total interest rate expense on interest-bearing
liabilities 5.22 4.64
---- ----
Interest rate spread 2.89% 3.20%
==== ====
Net interest margin on interest-earning assets 4.10% 3.72%
==== ====
Provision for Loan Losses. During the six months ended September 30, 2000,
the provision for loan losses was $675,000, compared to $410,000 for the same
period in 1999, an increase of $265,000. The increase resulted from continued
loan portfolio growth in the higher-risk lending categories of commercial and
multifamily loans,
15
<PAGE>
business loans and credit card loans during the period. For additional
discussion about the allowance for losses on loans, see "Comparison of
Operating Results for the Three Months Ended September 30, 2000 and 1999
Provision for Loan Losses."
Non-interest Income. Non-interest income increased $1.0 million from $348,000
for the six months ended September 30, 1999 to $1.4 million for the same
period in 2000. The change is due primarily to gains earned on the sale of
mortgage loans. For the six months ended September 30, 1999, the Company
recognized a loss of $638,000 compared to gain of $51,000 for the same period
in 2000. Also, the Company's subsidiary, Mutual Bancshares Capital, Inc.,
earned management fees from its venture capital investments. For the six
months ended September 30, 2000, the Company earned fees of $96,000. During
the same period in 1999, no fees were earned. Commission earned on the sale
of mutual funds and annuities increased from $51,000 for the six months ended
September 30, 1999 to $110,000 for the same period in 2000.
Non-interest Expense. Non-interest expense decreased $4.0 million from $12.5
million for the six months ended September 30, 1999 to $8.5 million for the
same period in 2000. The decrease is due primarily to a one-time charitable
contribution to the EverTrust Foundation for $5.2 million during the six
months ended September 30, 1999. This was partially offset by higher
compensation costs. Salary and employee benefits increased $1.5 million from
$3.3 million for the six months ended September 30, 1999 to $4.8 million for
the six months ended September 30, 2000. Compensation expense increased as
the result of the recognition of $885,000 in costs associated with the MRP,
ESOP expense, increased staffing levels and general salary increases as
compared to the prior year. The Company incurred $216,000 in ESOP expense
during the current period. During the same period last year, there were no
ESOP costs as the plan was not yet in place. This was partially offset by
reduced costs of $62,000 related to the defined benefit plan (this plan was in
effect during the first six months of the prior year but was later terminated
in the third quarter of fiscal 2000).
Provision for Income Taxes. Federal income taxes increased from a benefit of
$1.5 million for the six months ended September 30, 1999 to an expense of $1.1
million for the same period in 2000. The change is due to increased taxable
earnings.
Liquidity and Capital Resources
-------------------------------
EverTrust's primary source of funds are deposits, proceeds from principal and
interest payments on loans and securities, and Federal Home Loan Bank of
Seattle advances and other borrowings. While maturities and scheduled
amortization of loan and securities are a predictable source of funds, deposit
flows and mortgage prepayments are greatly influenced by general interest
rates, economic conditions and competition.
The primary investing activity of EverTrust is the origination of commercial
real estate, multifamily and one-to-four family mortgage loans. A secondary,
but increasing activity of the Company is the origination of business loans.
During the six months ended September 30, 2000, the Company funded $95.5
million in new loans. In addition,
16
<PAGE>
during this same period, funds were used to purchase $5.9 million in
investment securities and to repurchase shares of the Company's common stock
for $7.1 million. These activities were funded by loan repayments, proceeds
from the maturities of investment securities and proceeds from Federal Home
Loan Bank of Seattle advances and other borrowings.
EverTrust must maintain adequate levels of liquidity to ensure the
availability of sufficient funds to support loan growth and deposit
withdrawals, to satisfy financial commitments and to take advantage of
investment opportunities. The source of funds include deposits, principal and
interest payments from loans and investments and Federal Home Loan Bank of
Seattle advances and other borrowings.
The management of EverTrust believes it has adequate resources to fund all
loan commitments by deposits, Federal Home Loan Bank of Seattle advances and
other borrowings and the sale of mortgage loans. It can also adjust the
offering rates of deposit accounts to retain deposits in changing interest
rate environments.
Capital Requirements. EverTrust, as a financial holding company, is regulated
by the Federal Reserve Board (FRB). The FRB's minimum risk-based capital
ratio guidelines for Tier 1 and total capital are 4% and 8%, respectively.
The actual regulatory capital ratios calculated for EverTrust along with the
minimum capital amounts and ratios for capital adequacy purposes were as
follows (dollars in thousands):
Minimum for Capital
Actual adequacy purposes
------ ------------------
Amount Ratio Amount Ratio
-------- ----- ------- -----
September 30, 2000:
Total capital to risk-weighted assets $135,963 25.66 % $42,395 8.00 %
Tier 1 capital to risk-weighted assets 129,332 24.41 21,197 4.00
Tier 1 leverage capital to average assets 129,332 22.12 23,390 4.00
Asset and Liability Management and Market Risk
----------------------------------------------
EverTrust's profitability depends primarily on its net interest income, which
is the difference between the income it receives on its loan and investment
portfolio and its cost of funds, which consists of interest paid on deposits
and borrowings. Net income is further affected by gains and losses on loans
held for sale, which can be affected by changes in interest rates. Net
interest income is also affected by the relative amounts of interest-earning
assets and interest-bearing liabilities. When interest-earning assets equal
or exceed interest-bearing liabilities, any positive interest rate spread will
generate net interest income. EverTrust continues to actively manage the
impact of interest rate changes on net interest income and capital by
emphasizing the origination of adjustable rate and short-term fixed rate
loans, selling 30 year fixed rate mortgages, and purchasing
17
<PAGE>
investment securities that better match the duration of its deposits.
EverTrust's profitability is also affected by the level of non-interest income
and expenses. Non-interest income includes service charges and fees on
accounts and gains on sale of investments and loans. Non-interest expenses
primarily include compensation and benefits, occupancy and equipment expenses,
deposit insurance premiums and data processing expenses. EverTrust's results
of operations are also significantly affected by general economic and
competitive conditions, particularly changes in market interest rates,
government legislation and regulation and monetary and fiscal policies.
EverTrust does not maintain a trading account for any class of financial
instrument nor does it purchase high-risk derivative instruments. EMB is
authorized to engage in limited hedging activities for its saleable loan
pipeline, however, no such hedges were in place at September 30, 2000.
Furthermore, EverTrust has no commodity price risk, and only a limited amount
of foreign currency exchange rate risk as a result of holding Canadian
currency in the normal course of business.
Forward-looking Statements
---------------------------
Certain matters discussed in this Form 10-Q may constitute forward-looking
statements within the meaning of the Private Securities Litigation Reform Act
of 1995. These forward looking statements relate to, among other things,
expectations of the business environment in which the Company operates,
projections of future performance, perceived opportunities in the market, and
statements regarding the Company's mission and vision. These forward-looking
statements are based upon current management expectations, and may therefore
involve risks and uncertainties. The Company's actual results, performance,
or achievements may differ materially from this suggested, expressed, or
implied by forward looking statements due to a wide range of factors
including, but not limited to, non-bank financial services providers,
regulatory changes, and other risks detailed in the Company's reports filed
with the Securities and Exchange Commission.
Part II - Other Information
Item 1. Legal Proceedings
From time to time the Company or its subsidiaries are engaged in legal
proceedings in the ordinary course of business, none of which are considered
to have a material impact on the Company's financial position or results of
operations.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
Not applicable.
18
<PAGE>
Item 4. Submission of Matters to a Vote of Shareholders
The Company's Annual Meeting of Stockholders ("Meeting") was held on July
25, 2000. The results of the vote on the matters presented at the Meeting
were as follows:
1. The following individuals were elected as directors for the terms
specified:
Vote For Vote Withheld
--------- -------------
Michael B. Hansen (term expires 2001) 6,536,208 161,133
George S. Newland (term expires 2001) 6,539,585 157,756
William J. Rucker (term expires 2001) 6,540,646 156,695
Michael R. Deller (term expires 2002) 6,540,115 157,226
Robert A. Leach, Jr. (term expires 2002) 6,526,984 170,357
Thomas R. Collins (term expires 2002) 6,540,646 156,695
Margaret B. Bavasi (term expires 2003) 6,540,646 156,695
R. Michael Kight (term expires 2003) 6,540,646 156,695
Thomas J. Gaffney (term expires 2003) 6,540,615 156,726
2. The appointment of the Company's auditors, Deloitte & Touche LLP, as
independent auditors for the fiscal year ending March 31, 2001 was
approved by stockholders by the following vote:
For 6,615,323; Against 21,977; Abstain 60,021
3. The Company's 2000 Stock Option Plan was approved by stockholders by the
following vote:
For 3,577,933; Against 496,858; Abstain 114,576; Non-Voted 2,507,974
4. The Company's 2000 Management Recognition Plan was approved by
stockholders by the following vote:
For 3,384,249; Against 682,559; Abstain 122,560; Non-Voted 2,507,973
Item 5. Other Information
None.
19
<PAGE>
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
3.1 Articles of Incorporation of the Registrant (1)
3.2 Bylaws of the Registrant (1)
10.1 401(k) Employee Savings and Profit Sharing Plan and Trust (1)
10.2 Employee Severance Compensation Plan (2)
10.3 Employee Stock Ownership Plan (1)
10.4 Employment Agreement with Michael B. Hansen (2)
10.5 Employment Agreement with Michael R. Deller (2)
10.6 Employment Agreement with Jeffrey R. Mitchell (2)
10.7 2000 Stock Option Plan (3)
10.8 2000 Management Recognition Plan (3)
27 Financial Data Schedule
-----------------------------------------------------------------------
(1) Filed as an exhibit to the Registrant's Registration Statement on Form
S-1 (333-81125).
(2) Filed as an exhibit to the Registrant's Annual Report on Form 10-K for
the year ended March 31, 2000.
(3) Filed as an exhibit to the Registrant's Annual Meeting Proxy Statement
dated June 19, 2000.
------------------------------
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended September
30, 2000.
20
<PAGE>
Signatures
----------
Pursuant to the requirement of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
EverTrust Financial Group, Inc.
November 9, 2000 /s/Michael B. Hansen
-------------------------------
Michael B. Hansen
President and Chief Executive Officer
(Principal Executive Officer)
November 9, 2000 /s/Jeffrey R. Mitchell
--------------------------------
Jeffrey R. Mitchell
Chief Financial Officer
(Principal Financial and Accounting Officer)
21
<PAGE>
Exhibit 27 - Financial Data Schedule
Financial Data
As of or for the six months
Item Number Ended September 30, 2000 Item Description
----------- --------------------------- ----------------
9-03 (1) 7,674 Cash and due from Banks
9-03 (2) 1,774 Interest-bearing deposits
9-03 (3) - Federal funds sold-purchased
securities for resale
9-04 (4) - Trading account assets
9-03 (6) 78,644 Investment and mortgage backed
securities held for sale
9-03 (6) 11,232 Investment and mortgage backed
securities held to maturity -
carrying value
9-03 (6) 11,361 Investment and mortgage backed
securities held to maturity -
market value
9-03 (7) 473,253 Loans
9-03 (7)(2) 7,159 Allowance for losses
9-03 (11) 597,157 Total assets
9-03 (12) 387,968 Deposits
9-03 (13) 53,735 Short-term borrowings
9-03 (15) 4,543 Other liabilities
9-03 (16) 21,869 Long-term debt
9-03 (19) - Preferred stock - mandatory
redemption
9-03 (20) - Preferred stock - no mandatory
redemption
9-03 (21) 81,166 Common stock
9-03 (22) 47,876 Other stockholders' equity
9-03 (23) 597,157 Total liabilities and stockholders'
equity
9-04 (1) 19,381 Interest and fees on loans
9-04 (2) 3,303 Interest and dividends on
investments
9-04 (4) - Other interest income
9-04 (5) 22,684 Total interest income
9-04 (6) 9,358 Interest on deposits
9-04 (9) 11,214 Total interest expense
9-04 (10) 11,470 Net interest income
9-04 (11) 675 Provision for loan losses
9-04 (13)(h) 218 Investment securities
gains/(losses)
9-04 (14) 8,549 Other expense
9-04 (15) 3,602 Income/loss before income tax
9-04 (17) 3,602 Income/loss before extraordinary
items
9-04 (18) - Extraordinary items, loss tax
9-04 (19) - Cumulative change in accounting
principal
9-04 (20) 2,534 Net income or loss
9-04 (21) 0.31 Earnings per share basic
9-04 (21) 0.31 Earnings per share fully diluted
I.B.5 4.07 Net yield interest earning assets
actual
III.C.1.(a) 293 Loans on non-accrual
III.C.1.(b) - Accruing loans past due 90 days or
more
III.C.2.(c) - Trouble debt restructuring
III.C.2 - Potential problem loans
IV.A.1 6,484 Allowance for loan losses-beginning
of period
IV.A.2 4 Total charge-offs
IV.A.3 4 Total recoveries
IV.A.4 7,159 Allowance for loan losses-end of
period
IV.B.1 7,159 Loan loss allowance allocated to
domestic loans
IV.B.2 - Loan loss allowance allocated to
foreign loans
IV.B.3 - Loan loss allowance unallocated
1
<PAGE>
