SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
X Quarterly report pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended September 30, 1995 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 2-77519-LA
SARATOGA BANCORP
(Exact name of registrant as specified in its charter)
California 94-2817587
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12000 Saratoga-Sunnyvale Road
Saratoga, California 95070
(Address of principal executive offices) (Zip Code)
Registrant's telephone number including area code (408) 973-1111
NONE
(Former name, former address and former fiscal year, if changed
since last report)
Indicate by check mark whether the registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days.
Yes X No
Indicate the number of shares outstanding of each of the
issuer's classes of common stock as of the latest practicable date.
CLASS SHARES OUTSTANDING AT NOVEMBER 4, 1995
Common Stock 1,030,972
Page 1 of 20 pages
<PAGE>
<TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Consolidated Condensed Financial Statements
SARATOGA BANCORP AND SUBSIDIARY
CONSOLIDATED CONDENSED BALANCE SHEETS
<CAPTION>
September 30, December 31,
1995 1994*
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $3,211,000 $6,514,000
Federal funds sold 14,000,000 3,500,000
Short-term interest bearing
deposits in other banks - 250,000
Total cash and equivalents 17,211,000 10,264,000
Investments available for sale 12,730,000 14,810,000
Investment held to maturity 22,078,000 23,963,000
Loans, net 33,909,000 32,803,000
Other real estate owned 1,735,000 1,717,000
Premises and equipment 2,030,000 2,195,000
Other assets 1,765,000 1,784,000
TOTAL ASSETS $91,458,000 $87,536,000
=========== ===========
LIABILITIES
Deposits:
Non-interest bearing $16,530,000 $19,555,000
Interest bearing 55,601,000 54,317,000
Total deposits 72,131,000 73,872,000
Federal funds purchased - 1,500,000
Other borrowings 7,586,000 2,000,000
Accrued expenses and
other liabilities 1,199,000 537,000
TOTAL LIABILITIES 80,916,000 77,909,000
SHAREHOLDERS' EQUITY
Common stock, no par value;
Authorized: 20,000,000 shares;
Issued and outstanding:
1,030,972 shares 4,427,000 4,427,000
Retained earnings 6,497,000 6,019,000
Unrealized loss on investments
available for sale (382,000) (819,000)
SHAREHOLDERS' EQUITY 10,542,000 9,627,000
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $91,458,000 $87,536,000
=========== ===========
<FN>
*Derived from the December 31, 1994 audited balance sheet included
in the Company's 1994 Annual Report on Form 10-K.
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
SARATOGA BANCORP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS (Unaudited)
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
1995 1994 1995 1994
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans $ 950,000 $792,000 $2,801,000 $2,504,000
Investment securities 572,000 500,000 1,814,000 1,294,000
Federal funds sold 134,000 63,000 215,000 178,000
Total interest income 1,656,000 1,355,000 4,830,000 3,976,000
INTEREST EXPENSE:
Deposits 640,000 485,000 1,822,000 1,398,000
Other 94,000 3,000 228,000 6,000
Total interest expense 734,000 488,000 2,050,000 1,404,000
NET INTEREST INCOME 922,000 867,000 2,780,000 2,572,000
Provision (credit) for
credit losses - (75,000) - (481,000)
Net interest income after
provision (credit) for
credit losses 922,000 942,000 2,780,000 3,053,000
Other income 182,000 102,000 505,000 306,000
Other expense 793,000 793,000 2,316,000 2,598,000
INCOME BEFORE INCOME TAXES 311,000 251,000 969,000 761,000
Provision for income taxes 125,000 86,000 388,000 261,000
NET INCOME $186,000 $165,000 $581,000 $500,000
========== ========== ========== ==========
NET INCOME PER COMMON
AND EQUIVALENT SHARE $0.17 $0.15 $0.54 $0.45
========== ========== ========== ==========
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
<TABLE>
SARATOGA BANCORP AND SUBSIDIARY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS (Unaudited)
<CAPTION>
Nine Months Ended
September 30,
<S> 1995 1994
OPERATIONS:
<C> <C>
Net income $581,000 $500,000
Adjustments to reconcile net income to
net cash provided by (used in)operating
activities:
Provision(credit) for credit losses - (481,000)
Depreciation and amortization 204,000 106,000
Provision for OREO losses 35,000 325,000
Other, net 693,000 (863,000)
Net cash provided by (used in)operating
activities 1,513,000 (413,000)
INVESTING ACTIVITIES:
Proceeds from sale of investments
available for sale 2,624,000 2,161,000
Proceeds from maturities of investments
held to maturity 4,537,000 396,000
Purchase of investment securities (2,639,000) (9,302,000)
Proceeds from maturities of longer term
deposits in other banks - 694,000
Net (increase) decrease in loans (1,788,000) 3,623,000
Purchases of premises and equipment (39,000) (46,000)
Proceeds from sale of OREO 735,000 529,000
Increase in other assets (238,000) -
Net cash provided by investing activities 3,192,000 (1,945,000)
FINANCING ACTIVITIES:
Net (decrease) increase in deposits (1,741,000) 3,691,000
Repurchase of common stock - (832,000)
Cash dividend paid (103,000) -
Increase in other borrowings 5,586,000 -
Decrease in federal funds purchased (1,500,000) (2,000,000)
Net cash provided by financing activities 2,242,000 859,000
NET INCREASE (DECREASE) IN CASH AND EQUIVALENTS 6,947,000 (1,499,000)
Cash and equivalents at beginning of period 10,264,000 11,292,000
Cash and equivalents at end of period $17,211,000 $9,793,000
=========== ===========
<FN>
See notes to consolidated condensed financial statements.
</TABLE>
<PAGE>
SARATOGA BANCORP AND SUBSIDIARY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
1. The unaudited consolidated condensed financial statements reflect all
adjustments (which include only normal recurring adjustments) which are, in
the opinion of management, necessary to state fairly the results for the
periods presented. The results for the periods are not necessarily
indicative of the results to be expected for the full fiscal year.
2. Per share amounts are calculated using the weighted average shares
outstanding plus the dilutive effect of shares issuable under stock options.
The number of shares used to compute income per share was 1,075,230 shares
and 1,060,254 shares for the three and nine month periods ended September
30, 1995 (1,098,906 shares and 1,130,791 shares for the comparable periods in
1994).
3. For the nine months ended September 30, 1995 and 1994, cash paid for
taxes was $75,000 and $665,000, respectively. For the nine months ended
September 30, 1995 and 1994, cash paid for interest was $1,763,000 and
$1,400,000, respectively.
4. In May, 1993, the FASB issued SFAS No. 115, "Accounting for Certain
Investments in Debt and Equity Securities." SFAS No. 115 became effective in
the first quarter of 1994 and requires the Company to classify debt and
equity securities into one of three categories at acquisition: held-to-maturity,
trading or available-for-sale. Investments in debt securities
shall be classified as held-to-maturity and measured at amortized cost only
if the Company has the positive intent and ability to hold such securities to
maturity. All other investments in debt and equity securities that have
readily determinable fair values shall be classified either as trading
securities, which are bought and held principally for the purpose of selling
them in the near term and are carried at market value with a corresponding
recognition of unrealized holding gain or loss in results of operations, or
as available-for-sale securities, which are all other securities and are
carried at market value with a corresponding recognition of the unrealized
holding gain or loss as a net amount in a separate component of shareholders'
equity until realized.
5. On January 1, 1995, the Company adopted SFAS Statement No.
114, "Accounting by Creditors for Impairment of a Loan." This
standard was further modified by SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan----Income Recognition and
Disclosures." SFAS No. 114 and 118 require the Company to measure
impaired loans based upon the present value of expected future cash
flows discounted at the loan's effective interest rate, except as
<PAGE>
a practical expedient, a creditor may measure impairment based
on a loan's observable market price, or the fair value of the
collateral if the loan is collateral dependent. A loan is
impaired when, based upon current information and events, it is
probable that a creditor will be unable to collect all amounts due
according to the contractual terms of the loan agreement. Applying
the provisions of these statements did not have a material effect on
the Company's financial position or results of operations.
<PAGE>
SARATOGA BANCORP AND SUBSIDIARY
-------------------------------
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations.
Summary of financial results
- ----------------------------
At September 30, 1995, total assets were $91,458,000, a 4.4%
increase from $87,536,000 at December 31, 1994. Net loans
increased $1,106,000 (3.4%) from $32,803,000 at December 31, 1994
to $33,909,000 at September 30, 1995. The increase was primarily in
the longer term real estate loan portfolio. Total deposits
decreased $1,741,000 (2.4%) from $73,872,000 at year-end 1994 to
$72,131,000 at September 30, 1995.
Net income for the third quarter of 1995 was $186,000 or $.17 per
share compared to $165,000 ($.15 per share) for the comparable
period in 1994. Net income for the first nine months of 1995 was
$581,000 or $.54 per share compared to $500,000 or $.45 per share
for the comparable period in 1994.
The increase in income resulted primarily from an increase in the
volume of earning assets and a gain on sale of Other Real Estate
Owned (OREO), offset in part by an increase in interest expense due
to the increased volume of interest-bearing liabilities and a
credit provision to the reserve for credit losses in 1994.
RESULTS OF OPERATIONS
- ---------------------
THIRD QUARTER OF 1995 AND 1994
- ------------------------------
An analysis of the results of operations of the Company for the
third quarter of 1995 compared to the third quarter of 1994 is
presented below:
<PAGE>
Net interest income
- -------------------
Net interest income, the difference between interest earned on
loans and investments and interest paid on deposits, is the
principal component of the Bank's earnings. The components of net
interest income are as follows:
<TABLE>
<CAPTION>
Three months ended September 30,
1995 1994
Average Average Average Average
Balance Interest Yield(1) Balance Interest Yield(1)
(In thousands, except percentages)
<S>
Assets:
Earning assets: <C> <C> <C> <C> <C> <C>
Loans (2) $34,371 $ 950 11.1% $30,703 $ 792 10.5%
Investment
securities 35,882 572 6.4% 27,336 500 7.3%
Federal funds sold 9,336 134 5.7% 11,952 63 2.1%
Total interest
earning assets 79,589 1,656 8.3% 69,361 1,355 7.8%
Cash and due from
banks 3,584 4,726
Other assets (3) 5,232 5,360
$88,405 $79,447
======= =======
Liabilities and
Shareholders'
Equity:
Interest-bearing
liabilities:
Demand deposits $28,637 218 3.0% $29,140 207 2.8%
Time deposits 27,675 422 6.1% 23,295 278 4.8%
Other borrowings 5,088 94 7.4% 261 3 4.6%
Total interest-
bearing
liabilities 61,400 734 4.8% 52,676 488 3.7%
Demand deposits 15,509 16,244
Other liabilities 1,015 720
Total liabilities 77,924 69,640
Shareholders' equity 10,481 9,807
$88,405 $79,447
======= =======
Net interest income and margin $922 4.6% $867 5.0%
====== ======
<FN>
(1) Annualized.
(2) Loan interest income included loan fee income of $86,000 and
$109,000 for the quarters ended September 30, 1995 and 1994,
respectively.
(3) Includes the average allowance for credit losses of $768,000
and $950,000 and deferred loan fees of $242,000 and $224,000
for the quarters ended September 30, 1995 and 1994, respectively.
</TABLE>
<PAGE>
Provision for credit losses
- ---------------------------
The Bank maintains an allowance for possible credit losses which is
based, in part, on the Bank's historical loss experience, the
impact of forecasted economic conditions within the Bank's market
area, and, as applicable, the State of California, the value of the
underlying collateral, loan performance and inherent risks in the
loan portfolio. The allowance is reduced by charge-offs and
increased by provisions for credit losses charged to operating
expense and recoveries of previously charged-off loans. During the
third quarter of 1995 the Bank did not provide any additional
provision for credit losses. During the third quarter of 1994 the
Bank reversed $75,000 from the allowance for credit losses. There
were $9,000 in loans charged-off and $13,000 in recoveries in the
third quarter of 1995, as compared to $129,000 in loans charged-off
and $4,000 in recoveries in the third quarter of 1994.
At September 30, 1995, the allowance for credit losses was $766,000
or 2.2% of total loans, compared to $738,000 or 2.2% at December
31, 1994. There were no nonaccrual loans at September 30, 1995
($707,000 at December 31, 1994).
At September 30, 1995 and December 31, 1994, there were no loans
past due 90 days or more as to principal or interest and still
accruing interest. There was one loan at September 30, 1995 in the
amount of $196,000 which was a troubled debt restructuring as
defined in Statement of Financial Accounting Standards No. 15,
"Accounting by Debtors and Creditors for Troubled Debt
Restructuring." At September 30, 1995, there were six potential
problem loans having a combined principal balance of $1,226,000
($1,030,000 at December 31, 1994). Potential problem loans are
loans which are generally current as to principal and interest but
have been identified by the Company as potential problem loans due
either to a decrease in the underlying value of the property
securing the credit or some other deterioration in the
creditworthiness of the borrower. All of the six loans identified
as potential problem loans are secured by real estate and personal
property.
OREO totalled $1,735,000 at September 30, 1995 ($1,717,000 at
December 31, 1994). OREO consisted of a single family residence
and a 12 lot subdivision with appraised values in excess of the
Bank's carrying values. The Company does not intend to hold the
properties but will actively market the properties as market
conditions improve.
<PAGE>
Nonperforming loans and other real estate owned are summarized
below:
<TABLE>
<CAPTION>
<S> September 30, 1995 December 31, 1994
Nonperforming loans: <C> <C>
Past due 90 days or more $ - $ -
Nonaccrual - 707,000
Total - 707,000
Other real estate owned 1,735,000 1,717,000
Total nonperforming loans and
other real estate owned $1,735,000 $2,424,000
========== ==========
</TABLE>
Management is of the opinion that the allowance for credit losses
is maintained at an adequate level for known and currently
anticipated future risks inherent in the loan portfolio. However,
the Bank's loan portfolio, which includes approximately $23,000,000
in real estate loans representing approximately 66% of the
portfolio, could be adversely affected if California economic
conditions and the real estate market in the Bank's market area
were to weaken. The effect of such events, although uncertain at
this time, could result in an increase in the level of
nonperforming loans and OREO and the level of the allowance for
loan losses which could adversely affect the Company's and the
Bank's future growth and profitability.
Noninterest income
- ------------------
Other income consists of service charges on deposit accounts,
income from assets acquired for lease and fees for other
miscellaneous services. Total other income increased from $102,000
in the third quarter of 1994 to $182,000 in the third quarter of
1995. This increase is primarily attributable to a gain on sale of
OREO of $55,000, rental income on OREO property and a gain on sale
of securities of $10,000.
Noninterest expense
- -------------------
Other expenses were $793,000 in the third quarter of 1994 and 1995.
As a percentage of average earning assets, other expenses for the
third quarter, on an annualized basis, decreased from 4.6% in 1994
to 4.0% in 1995.
<PAGE>
During the third quarter of 1995 the Company received a refund of
$43,000 as part of the recapitalization of the Bank Insurance Fund,
as compared to assessment expense of $39,000 for the third quarter
of 1995. Based upon the current risk assessment rate system, the
refund and the Bank's current level of deposits, the Bank estimates
that its annual non-interest assessment expense will decrease
during 1995.
NINE MONTHS ENDED SEPTEMBER 30, 1995 AND 1994
- ---------------------------------------------
An analysis of the results of operations of the Company for the
nine month period ended September 30, 1995 compared to the
comparable period in 1994 is as follows:
<PAGE>
Net interest income
- -------------------
Net interest income, the difference between interest earned on
loans and investments and interest paid on deposits, is the
principal component of the Bank's earnings. The components of net
interest income are as follows:
<TABLE>
<CAPTION>
Nine months ended September 30,
1995 1994
------------------------- -------------------------
Average Average Average Average
Balance Interest Yield(1) Balance Interest Yield(1)
(In thousands, except percentages) Assets:
(Unaudited)
<S>
Earning assets: <C> <C> <C> <C> <C> <C>
Loans (2) $33,596 $2,801 11.1% $32,931 $2,504 10.1%
Investment
securities 37,689 1,814 6.4% 30,782 1,294 5.6%
Federal funds sold 5,022 215 5.7% 6,304 178 3.8%
Total interest
earning assets 76,307 4,830 8.4% 70,017 3,976 7.6%
Cash and due from
banks 3,631 4,541
Other assets (3) 5,315 4,008
$85,253 $78,566
======= =======
Liabilities and
Shareholders'
Equity:
Interest-bearing
liabilities:
Demand deposits $28,534 644 3.0% $27,988 461 2.2%
Time deposits 26,789 1,178 5.9% 23,333 937 5.4%
Other borrowings 3,981 228 7.6% 190 6 4.2%
Total interest-
bearing
liabilities 59,304 2,050 4.6% 51,511 1,404 3.6%
Demand deposits 14,930 16,196
Other liabilities 906 688
Total liabilities 75,140 68,395
Shareholders' equity 10,113 10,171
$85,253 $78,566
======= =======
Net interest income and margin $2,780 4.9% $2,572 4.9%
====== ======
<FN>
(1) Annualized.
(2) Loan interest income included loan fee income of $245,000 and
$316,000 for the nine months ended September 30, 1995 and
1994, respectively.
(3) Includes the average allowance for loan losses of $768,000 and
$1,072,000, and deferred loan fees of $232,000 and $216,000
for the nine months ended September 30, 1995 and 1994,
respectively.
</TABLE>
<PAGE>
Provision for credit losses
- ---------------------------
During the first nine months of 1995, the Bank did not provide any
additional funds to the provision for credit losses. During the
first nine months of 1994, the Bank reversed $481,000 from the
allowance for credit losses. There were $45,000 in loans charged
off and $73,000 in recoveries for the nine months ending September
30, 1995, compared to $63,000 charged off and $67,000 in recoveries
for the first nine months of 1994.
Noninterest income
- ------------------
Other income consists of service charges on deposit accounts,
income on assets acquired for lease and fees for other
miscellaneous services. Total other income increased from $306,000
in 1994 to $505,000 in 1995. The increase is primarily attributable
to a gain on sale of securities of $42,000, rental income on OREO
property of $104,000 and a gain on sale of OREO of $55,000.
Noninterest expense
- -------------------
Other expenses have decreased from $2,598,000 in 1994 to $2,316,000
in 1995 due primarily to a decrease of $290,000 in the amount added
to the reserve for OREO losses. As a percentage of average earning
assets, other expenses, on an annualized basis, decreased from 4.9%
in 1994 to 4.0% in 1995.
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Bank manages its liquidity to provide adequate funds at an
acceptable cost to support borrowing requirements and deposit flows
of its customers. At September 30, 1995 liquid assets as a
percentage of deposits were 42% (34% at December 31, 1994). In
addition to cash and due from banks, liquid assets include short-
term time deposits with other banks, Federal funds sold and
investment securities available for sale. The Bank has $8.0
million in Federal funds lines of credit available with
correspondent banks to meet liquidity needs.
Management regularly reviews general economic and financial
conditions, both external and internal, and determines whether the
positions taken with respect to liquidity and interest rate
sensitivity continue to be appropriate. The Bank also utilizes a
monthly "Gap" report which identifies rate sensitivity over the
short- and long-term.
The following table sets forth the distribution of repricing
opportunities, based on contractual terms, of the Company's earning
assets and interest-bearing liabilities at September 30, 1995, the
interest rate sensitivity gap (i.e. interest rate sensitive assets
less interest rate sensitive liabilities), the cumulative interest
rate sensitivity gap, the interest rate sensitivity gap ratio (i.e.
interest rate sensitive assets divided by interest rate sensitive
liabilities) and the cumulative interest rate sensitivity gap
ratio.
Based on the contractual terms of its assets and liabilities, the
Bank is currently liability sensitive in terms of its short-term
exposure to interest rates. In other words, the Bank's liabilities
reprice faster than its assets in the short-term.
<PAGE>
DISTRIBUTION OF REPRICING OPPORTUNITIES
At September 30, 1995
(Dollars in thousands)
After Three After Six After One
Within Months But Months But Year But After
Three Within Six Within One Within Five
Months Months Year Five Years Years Total
----- ---------- ---------- ---------- ----- -------
Federal funds
sold $14,000 - - - - $14,000
Municipal
securities - $200 $ 165 $ 2,613 $772 3,750
U.S. Treasury
and agency
securities 4,488 - 5,682 9,531 10,038 29,739
FRB stock - - - - 1,319 1,319
Loans 23,366 $ 1,013 1,003 6,935 2,590 34,907
------- ------- ------- ------- ------- -------
Total earning
assets $41,854 $ 1,213 $ 6,850 $19,079 $14,719 $83,715
------- ------- ------- ------- ------- -------
Interest
bearing
demand
deposits 23,368 - - - - 23,368
Savings
accounts 4,442 - - - - 4,442
Time
certificates
of deposit
of $100,000
or more 4,001 $1,591 $1,752 $2,292 - 9,636
Other time
deposits 6,491 1,521 4,038 6,105 - 18,155
Other
borrowings - 2,000 1,570 275 $3,741 7,586
------ ------ ------ ------ ------ ------
Total
interest
bearing
liabilities $38,302 $5,112 $ 7,360 $ 8,672 $3,741 $63,187
Interest rate
sensitivity
gap $ 3,552 $(3,899) $ (510) $10,407 $10,978 $20,528
======= ======= ======= ======= ======= =======
Cumulative
interest
rate
sensitivity
gap $ 3,552 $ (347) $ (857) $ 9,950 $20,528
======= ======= ======== ======= =======
Interest rate
sensitivity
gap ratio 1.09% 0.24% 0.93% 2.20% N/A
Cumulative
interest rate
sensitivity
gap ratio 1.09% 0.99% 0.98% 1.16% 1.41%
<PAGE>
The Company and the Bank are subject to capital adequacy guidelines
issued by the Board of Governors of the Federal Reserve System (the
"BGFRS") and the Office of the Comptroller of the Currency ("OCC").
The Company and the Bank are required to maintain total capital
equal to at least 8% of assets and commitments to extend credit,
weighted by risk, of which at least 4% must consist primarily of
common equity including retained earnings (Tier 1 capital) and the
remainder may consist of subordinated debt, cumulative preferred
stock or a limited amount of loan loss reserves. Certain assets
and commitments to extend credit present less risk than others and
will be assigned to lower risk-weighted categories requiring less
capital allocation than the 8% total ratio. For example, cash and
government securities are assigned to a 0% risk-weighted category,
most home mortgage loans are assigned to a 50% risk-weighted
category requiring a 4% capital allocation and commercial loans are
assigned to a 100% risk-weighted category requiring an 8% capital
allocation. As of September 30, 1995, the Company's total risk-
based capital ratio was approximately 22.6% (approximately 22.2%
for the Bank) compared to approximately 22.2% (approximately 21.6%
for the Bank) at December 31, 1994.
The BGFRS adopted a 3% minimum leverage ratio for banking
organizations as a supplement to the risk-weighted capital
guidelines. The minimum leverage ratio is intended to limit the
ability of banking organizations to leverage their equity capital
base by increasing assets and liabilities without increasing
capital proportionately. The 3% minimum leverage ratio constitutes
a minimum ratio for well-run banking organizations. Organizations
experiencing or anticipating significant growth or failing to meet
certain BGFRS standards will be required to maintain a minimum
leverage ratio ranging from 100 to 200 basis points in excess of
the 3% ratio.
The following table reflects the Company's leverage, Tier 1 and
total risk-based capital ratios for the quarter ended September 30,
1995 and the year ended December 31, 1994.
September 30, 1995 December 31, 1994
------------------ -----------------
Leverage ratio 11.7% 12.2%
Tier 1 capital ratio 21.4% 20.9%
Total risk-based capital ratio 22.6% 22.2%
On December 19, 1991, the President signed the Federal Deposit
Insurance Corporation Improvement Act of 1991 ("FDICIA").
FDICIA, among other matters, substantially revised banking
regulations and established a framework for determination of
capital adequacy of financial institutions. Under FDICIA,
financial institutions are placed into one of five capital
adequacy catagories as follows: (1) "Well capitalized" -
<PAGE>
consisting of institutions with a total risk-based capital
ratio of 10% or greater, a Tier 1 risk-based capital ratio of
6% or greater and a leverage ratio of 5% or greater, and the
institution is not subject to an order, written agreement,
capital directive or prompt corrective action directive; (2)
"Adequately capitalized" - consisting of institutions with a
total risk-based capital ratio of 8% or greater, a Tier 1
risk-based capital ratio of 4% or greater and a leverage ratio
of 4% or greater, and the institution does not meet the
definition of a "well capitalized" institution; (3)
"Undercapitalized" - consisting of institutions with a total
risk-based capital ratio less than 8%, a Tier 1 risk-based
capital ratio of less than 4%, or a leverage ratio of less
than 4%; (4) "Significantly undercapitalized" - consisting of
institutions with a total risk-based capital ratio of less
than 6%, a Tier 1 risk-based capital ratio of less than 3%, or
a leverage ratio of less than 3%; (5) "Critically
undercapitalized" - consisting of an institution with a ratio
of tangible equity to total assets that is equal to or less
than 2%.
Financial institutions classified as undercapitalized or below
are subject to various limitations including, among other
matters, certain supervisory actions by bank regulatory
authorities and restrictions related to (i) growth of assets,
(ii) payment of interest on subordinated indebtedness, (iii)
payment of dividends or other capital distributions, and (iv)
payment of management fees to a parent holding company.
FDICIA requires bank regulatory authorities to initiate
corrective action regarding financial institutions which fail
to meet minimum capital requirements. Such action may result
in orders to, among other matters, augment capital and reduce
total assets. Critically undercapitalized financial
institutions may also be subject to appointment of a receiver
or implementation of a capitalization plan.
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable
Item 2. Changes in Securities
Not applicable
Item 3. Defaults upon Senior Securities
Not applicable
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable
Item 5. Other Information
Not applicable
Item 6. Exhibits and Reports on Form 8-K
(a) (3) Exhibits
27.1 Financial Data Schedules
SIGNATURES
PURSUANT TO THE REQUIREMENTS 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.
SARATOGA BANCORP
Date: November 10, 1995 -------------------------
Mary Page Rourke, Treasurer
(Principal Financial and
Accounting Officer)
<PAGE>
INDEX TO EXHIBITS
Sequentially
Numbered
Number Exhibits Page
27.1 Financial Data Schedule 20
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1995
<CASH> 3211
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 14000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 12730
<INVESTMENTS-CARRYING> 20759
<INVESTMENTS-MARKET> 20806
<LOANS> 33909
<ALLOWANCE> 766
<TOTAL-ASSETS> 91458
<DEPOSITS> 72131
<SHORT-TERM> 3570
<LIABILITIES-OTHER> 1199
<LONG-TERM> 4016
<COMMON> 4427
0
0
<OTHER-SE> 6115
<TOTAL-LIABILITIES-AND-EQUITY> 91458
<INTEREST-LOAN> 2801
<INTEREST-INVEST> 1814
<INTEREST-OTHER> 215
<INTEREST-TOTAL> 4830
<INTEREST-DEPOSIT> 1822
<INTEREST-EXPENSE> 228
<INTEREST-INCOME-NET> 2050
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 11
<EXPENSE-OTHER> 2316
<INCOME-PRETAX> 969
<INCOME-PRE-EXTRAORDINARY> 581
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 581
<EPS-PRIMARY> .55
<EPS-DILUTED> .54
<YIELD-ACTUAL> 8.4
<LOANS-NON> 0
<LOANS-PAST> 0
<LOANS-TROUBLED> 196
<LOANS-PROBLEM> 1226
<ALLOWANCE-OPEN> 738
<CHARGE-OFFS> 45
<RECOVERIES> 73
<ALLOWANCE-CLOSE> 766
<ALLOWANCE-DOMESTIC> 433
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 333
</TABLE>
