U.S. Securities and Exchange Commission
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT
For the transition period from _____________ to _____________
Commission file number 0-22288
Fidelity Bancorp, Inc.
(Exact name of registrant as specified in its charter)
Pennsylvania 25-1705405
------------ ----------
(State or other jurisdiction (IRS Employer Identification No.)
of incorporation or organization
1009 Perry Highway, Pittsburgh, Pennsylvania, 15237 (Address of
---------------------------------------------------------------
principal executive offices)
412-367-3300
------------
(Issuer's telephone number)
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 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 ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents
and reports required to be filed by Section 12,
13 or 15(d) of the Exchange Act after the
distribution of securities under a
plan confirmed by a court. Yes No
------ ------
APPLICABLE ONLY TO CORPORATE ISSUERS
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date: 1,976,082 shares, par value
$0.01, at April 30, 1999
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Index
Part I - Financial
- ------------------
Information
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of
September 30, 1998 and March 31, 1999 (Unaudited)
Consolidated Statements of Income (Unaudited) for the
Three and Six Months Ended March 31, 1998 and 1999
Consolidated Statements of Cash Flows (Unaudited) for
the Six Months Ended March 31, 1998 and 1999
Consolidated Statement of Changes in Stockholders' Equity
(Unaudited) for the Six Months Ended March 31, 1998 and 1999
Notes to Consolidated Financial Statements (unaudited)
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures About Market Risk
Part II - Other Information
- ---------------------------
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holders
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Signatures
<PAGE>
Part I - Financial Information
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(in thousands)
<TABLE>
<CAPTION>
March 31, September 30,
1999 1998
---- ----
(Unaudited)
<S> <C> <C>
Cash and amounts due from
depository institutions $ 6,636 $ 2,539
Interest-earning demand deposits with
other institutions 240 613
Investment securities held-to-maturity 3,628 6,625
Investment securities available-for-sale 73,196 57,590
Loans receivable, net (Notes 5 and 6) 240,211 218,892
Mortgage-backed securities held-to-maturity 15,668 19,913
Mortgage-backed securities available-for-sale 96,836 82,957
Real estate owned, net -- 21
Federal Home Loan Bank stock - at cost 7,357 5,050
Accrued interest receivable, net 2,667 2,573
Office premises and equipment, net 3,896 3,446
Deferred tax asset 1,086 700
Prepaid expenses and sundry assets 5,377 5,125
--------- ---------
Total Assets $ 456,798 $ 406,044
========= =========
</TABLE>
(continued)
<PAGE>
<TABLE>
<CAPTION>
March 31, September 30,
1999 1998
---- ----
(Unaudited)
<S> <C> <C>
Liabilities and Net worth
-------------------------
Liabilities:
Savings deposits $ 264,573 $ 261,735
Federal Home Loan Bank advances 145,500 100,200
Reverse repurchase agreements 2,594 1,870
Advance deposits by borrowers for
taxes and insurance 2,365 1,126
Accrued interest on savings and other deposits 36 92
Accrued income taxes payable -- 171
Other accrued expenses and sundry liabilities 2,192 1,579
Guaranteed preferred beneficial interest in
Company's debentures 10,250 10,250
--------- ---------
Total Liabilities 427,510 377,023
--------- ---------
Stockholders' equity (Notes 3 and 4):
Common stock, $0.01 par value per share,
10,000,000 shares authorized; 1,981,052
and 1,978,543 shares issued and outstanding,
respectively 20 20
Treasury stock, at cost (5,000 shares) (89) --
Additional paid-in capital 14,248 14,168
Retained earnings - substantially restricted 15,236 14,106
Accumulated other comprehensive income,
net of tax (127) 727
--------- ---------
Total Stockholders' Equity 29,288 29,021
--------- ---------
Total Liabilities and Stockholders' Equity $ 456,798 $ 406,044
========= =========
</TABLE>
See accompanying notes to financial statements
-1-
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income (Unaudited)
(in thousands except per share data)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Loans $ 4,612 $ 3,960 $ 9,291 $ 7,944
Mortgage-backed securities 1,709 1,952 3,350 4,037
Investment securities:
Taxable 666 636 1,313 1,310
Tax-exempt 457 278 873 528
Deposits with other institutions 7 29 20 33
-------- -------- -------- --------
Total interest income 7,451 6,855 14,847 13,852
-------- -------- -------- --------
Interest expense:
Savings deposits 2,621 2,724 5,449 5,395
Guaranteed preferred beneficial interest
in subordinated debt 256 256 512 512
Borrowed funds 1,751 1,321 3,293 2,706
-------- -------- -------- --------
Total interest expense 4,628 4,301 9,254 8,613
-------- -------- -------- --------
Net interest income before provision
for loan losses 2,823 2,554 5,593 5,239
Provision for loan losses 100 110 205 225
-------- -------- -------- --------
Net interest income after provision
for loan losses 2,723 2,444 5,388 5,014
-------- -------- -------- --------
Other income:
Service fee income 28 30 73 64
Gain (loss) on sale of investment
and mortgage-backed securities, net 74 (1) 74 8
Gain (loss) on sale of loans 1 7 5 9
Other operating income 315 271 591 444
-------- -------- -------- --------
Total other income 418 307 743 525
-------- -------- -------- --------
</TABLE>
(continued)
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Operating expenses:
Compensation and employee benefits 1,183 1,003 2,375 2,047
Occupancy and equipment expense 209 161 419 299
Depreciation and amortization 149 127 295 250
Federal insurance premiums 40 38 78 76
(Gain) loss on real estate owned, net 6 1 (39) 10
Other operating expenses 484 421 929 830
-------- -------- -------- --------
Total operating expenses 2,071 1,751 4,057 3,512
-------- -------- -------- --------
Income before income tax provision 1,070 1,000 2,074 2,027
Income tax provision 286 335 587 694
-------- -------- -------- --------
Net income $ 784 $ 665 $ 1,487 $ 1,333
======== ======== ======== ========
Basic earnings per common share (Note 3) $ 0.40 $ 0.34 $ 0.75 $ 0.68
======== ======== ======== ========
Diluted earnings per common share (Note 3) $ 0.39 $ 0.33 $ 0.73 $ 0.65
======== ======== ======== ========
Dividends per common share (Note 3) $ 0.090 $ 0.072 $ 0.180 $ 0.144
======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended March 31,
--------------------------
1999 1998
---- ----
<S> <C> <C>
Operating Activities:
Net income $ 1,487 $ 1,333
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 205 225
(Gain) loss on real estate owned (39) 10
Depreciation of premises and equipment 295 250
(158) (66)
Deferred loan fee amortization
Amortization of investment and mortgage-backed securities
discounts/premiums, net 196 205
Net (gain) loss on sale of investment securities (127) (6)
Net (gain) loss on sale of mortgage-backed securities 53 (3)
Net (gain) loss on sale of loans (5) (9)
Origination of loans held-for-sale (477) (68)
Proceeds from sale of loans held-for-sale 479 68
(Increase) decrease in interest receivable (94) (136)
(Increase) decrease in deferred tax asset (386) (180)
Increase (decrease) in accrued income taxes (171) 316
Increase (decrease) in interest payable (56) (107)
Other changes, net 941 (946)
-------- --------
Net cash provided (used) by operating activities 2,143 886
</TABLE>
<TABLE>
<CAPTION>
Six Months Ended March 31,
--------------------------
1999 1998
---- ----
<S> <C> <C>
Investing Activities:
Proceeds from sales of investment securities available-for-sale 1,558 8,001
Proceeds from maturities and principal repayments of
investment securities available-for-sale 9,008 2,005
Purchases of investment securities available-for-sale (26,375) (11,764)
Proceeds from sales of mortgage-backed securities available-for-sale 3,171 14,042
Proceeds from maturities and principal repayments of mortgage-
backed securities available-for-sale 15,342 8,066
Purchases of mortgage-backed securities available-for-sale (33,515) (24,192)
Proceeds from maturities and principal repayments of investment
securities held-to-maturity 5,000 5,129
Purchases of investment securities held-to-maturity (2,004) (7,997)
Purchases of mortgage-backed securities held-to-maturity -- --
Proceeds from principal repayments of mortgage-backed
securities held-to-maturity 4,201 5,845
Net (increase) decrease in loans (21,738) (19,426)
Proceeds from sale of other loans 251 269
Additions to office premises and equipment (746) (195)
Net purchases of FHLB Stock (2,307) (40)
-------- --------
Net cash provided (used) by investing activities (48,154) (20,257)
-------- --------
</TABLE>
-3-
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited) (Cont'd.)
(in thousands)
<TABLE>
<CAPTION>
Six Months Ended March 31,
1999 1998
---- ----
<S> <C> <C>
Financing Activities:
Net increase (decrease) in savings deposits 2,838 18,814
Increase (decrease) in reverse repurchase agreements 724 575
Net increase (decrease) in FHLB advances 45,300 (600)
Increase in advance payments by borrowers for
taxes and insurance 1,239 1,015
Cash dividends paid (357) (281)
Stock options exercised 52 45
Proceeds from sale of stock 28 114
Repurchase of stock (89) --
-------- --------
Net cash provided (used) by financing activities 49,735 19,682
-------- --------
Increase (decrease) in cash and cash equivalents 3,724 311
Cash and cash equivalents at beginning of period 3,152 3,975
-------- --------
Cash and cash equivalents at end of period $ 6,876 $ 4,286
======== ========
Supplemental Disclosure of Cash Flow Information
Cash paid during the period for:
Interest on deposits and other borrowings $ 9,195 $ 8,575
Income taxes $ 750 $ 785
-------- --------
</TABLE>
See accompanying notes to financial statements.
-4-
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statement of Changes in Stockholders' Equity (Unaudited)
(in thousands)
<TABLE>
<CAPTION>
Accumulated
Additional Other Compre-
Common Paid-in Treasury Retained hensive Income
Stock Capital Stock Earnings Net of Tax Total
----- ------- ----- -------- ---------- -----
<S> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1997 $ 16 $ 13,810 $ 0 $ 11,822 $ 233 $ 25,881
Net income 1,333 1,333
Cash dividends paid (Note 3) (281) (281)
5/4 Stock Split 4 (4) 0
Cash paid on stock split in
lieu of fractional shares (5) (5)
Net change in unrealized gain
(loss) on securities available-
for-sale, net of taxes 466 466
Sale of stock through Dividend
Reinvestment Plan 114 114
Stock options exercised 45 45
---------- ---------- ---------- -------- ---------- ---------
Balance at March 31, 1998 $ 20 $ 13,965 $ 0 $ 12,869 $ 699 $ 27,553
========== ========== ========== ======== ========== ========
Balance at September 30, 1998 $ 20 $ 14,168 $ 0 $ 14,106 $ 727 $ 29,021
Net income 1,487 1,487
Cash dividends paid (Note 3) (357) (357)
Net change in unrealized gain
(loss) on securities available-
for-sale, net of taxes (854) (854)
Repurchase - 5,000 shares (89) (89)
Sale of stock through Dividend
Reinvestment Plan 28 28
Stock options exercised 52 52
---------- ---------- ---------- -------- ---------- ---------
Balance at March 31, 1999 $ 20 $ 14,248 $ (89) $ 15,236 $ (127) $ 29,288
========== ========== ========== ======== ========== ========
</TABLE>
-5-
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - (Unaudited)
September 30, 1998 and March 31, 1999
(1) Consolidation
- -----------------
The consolidated financial statements contained herein for Fidelity Bancorp,
Inc. (the "Company") include the accounts of Fidelity Bancorp, Inc. and its
wholly-owned subsidiaries, Fidelity Bank, PaSB (the "Bank") and FB Capital Trust
(the "Trust"). All significant inter-company balances and transactions have been
eliminated.
(2) Basis of 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 the financial statements,
have been included. These financial statements should be read in conjunction
with the audited financial statements and the accompanying notes thereto
included in the Company's Annual Report for the period ended September 30, 1998.
The results for the three and six month periods ended March 31, 1999 are not
necessarily indicative of the results that may be expected for the fiscal year
ending September 30, 1999 or any other period.
(3) Earnings Per Share
- ----------------------
In February 1997, the Financial Accounting Standards Board ("FASB") issued SFAS
No. 128, "Earnings per Share". SFAS No. 128 provides revised reporting standards
for earnings per share ("EPS") and is effective for financial statement periods
ending after December 15, 1997. SFAS No. 128 eliminates primary and fully
diluted EPS disclosures and adds new disclosures of basic and diluted EPS. Basic
EPS excludes dilution and is computed by dividing income available to common
stockholders by the weighted average number of common shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised or converted
into common stock or resulted in the issuance of common stock that then shared
in the earnings of the Company. The Company adopted SFAS No. 128 as of December
31, 1997. The following table sets forth the computation of basic and diluted
earnings per share (amounts in thousands, except per share data):
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1999 1998 1999 1998
------------------ ----------------
Numerator:
<S> <C> <C> <C> <C>
Net income $ 784 $ 665 $1,487 $1,333
Numerator for basic and
diluted earnings per share $ 784 $ 665 $1,487 $1,333
Denominator:
Denominator for basic earnings
per share - weighted average shares 1,983 1,959 1,981 1,953
Effect of dilutive securities:
Employee stock options 47 86 47 86
Denominator for diluted earnings
per share - weighted average
shares and assumed conversions 2,030 2,045 2,028 2,039
Basic earnings per share $ .40 $ .34 $ .75 $ .68
Diluted earnings per share $ .39 $ .33 $ .73 $ .65
</TABLE>
-6-
<PAGE>
Per share amounts have been restated to give retroactive effect to the 25%
common stock split declared by the Company's Board of Directors and paid on
March 31, 1998.
(4) Securities
The Company accounts for investments in debt and equity securities in accordance
with SFAS No. 115, which requires that investments be classified as either: (1)
Securities Held-to- Maturity - reported at amortized cost, (2) Trading
Securities - reported at fair value, or (3) Securities Available-for-Sale -
reported at fair value. Unrealized gains and losses for securities
available-for-sale are reported as other comprehensive income in stockholders'
equity. Unrealized losses of $127,000, net of tax, on investments classified as
available-for-sale are recorded at March 31, 1999.
(5) Loans Receivable
Loans receivable are comprised of the following
(dollar amounts in thousands):
<TABLE>
<CAPTION>
March 31, September 30,
1999 1998
<S> <C> <C>
First mortgage loans:
Conventional:
1-4 family dwellings $ 132,930 $ 115,559
Multi-family dwellings 3,715 4,262
Commercial 23,786 21,881
Construction 14,633 21,212
--------- ---------
175,064 162,914
--------- ---------
Less:
Loans in process (10,718) (12,916)
Unearned discounts and fees (1,220) (1,142)
--------- ---------
163,126 148,856
--------- ---------
Installment loans:
Home equity 44,697 42,290
Consumer loans 2,091 2,359
Other 4,940 4,473
--------- ---------
51,728 49,122
--------- ---------
Commercial business loans and leases:
Commercial business loans 23,500 19,509
Commercial leases 4,194 3,648
--------- ---------
27,694 23,157
--------- ---------
Less: Allowance for loan losse (2,337) (2,243)
--------- ---------
Loans receivable, net $ 240,211 $ 218,892
========= =========
</TABLE>
<PAGE>
(6) Changes in the allowance for loan losses for the six months ended March 31,
1999 and 1998 are as follows (dollar amounts in thousands):
<TABLE>
<CAPTION>
1999 1998
------ ------
<S> <C> <C>
Balance at beginning of the fiscal year $2,243 $1,931
Provision for loan losses 205 225
Charge-offs (113) (46)
Recoveries 2 4
------ ------
Balance at March 31, $2,337 $2,114
====== ======
</TABLE>
-7-
<PAGE>
The provision for loan losses charged to expense is based upon past loan and
loss experience and an evaluation of probable losses in the current loan
portfolio, including the evaluation of impaired loans under SFAS Nos. 114 and
118. A loan is considered to be impaired when, based upon current information
and events, it is probable that the Bank will be unable to collect all amounts
due according to the contractual terms of the loan. An insignificant shortfall
in payments does not necessarily result in a loan being identified as impaired.
For this purpose, delays less than 90 days are considered to be insignificant.
Impairment losses are included in the provision for loan losses. SFAS Nos. 114
and 118 do not apply to large groups of smaller balance, homogeneous loans that
are collectively evaluated for impairment, except for those loans restructured
under a troubled debt restructuring. Loans collectively evaluated for impairment
include consumer loans and residential real estate loans, and are not included
in the following data.
At March 31, 1999, the recorded investment in loans that are considered to be
impaired under SFAS No. 114 was $506,000. Included in this amount is $506,000 of
impaired loans for which the related allowance for loan losses is $243,000, and
no impaired loans that as a result of write-downs do not have an allowance for
loan losses. The average recorded investment in impaired loans during the six
months ended March 31, 1999 was $334,000. For the six months ended March 31,
1999, the Company recognized interest income on those impaired loans of $6,000
using the cash basis of income recognition.
(7) Comprehensive Income
- ------------------------
In June 1997, the FASB issued SFAS No. 130, "Reporting Comprehensive Income ."
SFAS No. 130 establishes standards for reporting and display of comprehensive
income and its components (revenue, expenses, gains, and losses) in a full set
of general purpose financial statements. SFAS No. 130 requires that all items
that are required to be recognized under accounting standards as components of
comprehensive income be reported in a financial statement that is displayed with
the same prominence as other financial statements. SFAS No. 130 requires that an
enterprise (a) classify items of other comprehensive income by their nature in a
financial statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and additional paid-in
capital in the equity section of a statement of financial position. For the six
months ended March 31, 1999 and 1998, the Company's total comprehensive income
was $633,000 and $1.8 million, respectively. Total comprehensive income is
comprised of net income of $1.5 million and $1.3 million and other comprehensive
income of ($854,000) and $466,000, net of tax, respectively. Other comprehensive
income consists of unrealized gains and losses on investment securities and
mortgage-backed securities available-for-sale.
(8) On October 1, 1998, the Bank opened its ninth full service branch office at
2034 Penn Avenue in Pittsburgh's Strip District. The building in which the
branch is located is leased from an independent third party.
-8-
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Comparison of Financial Condition at September 30, 1998 and March 31, 1999
- --------------------------------------------------------------------------
Total assets of the Company increased $50.8 million or 12.5% to $456.8 million
at March 31, 1999 from $406.0 million at September 30, 1998. Significant changes
in individual categories were increases in loans receivable of $21.3 million,
investment securities available-for-sale of $15.6 million, mortgage-backed
securities available-for-sale of $13.9 million, and decreases in investment
securities held-to-maturity of $3.0 million and mortgage-backed securities
held-to-maturity of $4.2 million.
Total liabilities of the Bank increased by $50.5 million or 13.4% to $427.5
million at March 31, 1999 from $377.0 million at September 30, 1998. The
increase primarily reflects a $45.3 million increase in Federal Home Loan Bank
advances and a $2.8 million increase in savings deposits.
Stockholders' equity increased $267,000 or .9% to $29.3 million at March 31,
1999, compared to September 30, 1998. The increase reflects net income for the
six month period ended March 31, 1999 of $1.49 million, stock options exercised
of $52,000 and stock issued under the Dividend Reinvestment Plan of $28,000.
Partially offsetting these increases were common stock cash dividends paid of
$357,000, a decrease in unrealized holding gains on securities
available-for-sale of $854,000, and the purchase of treasury stock at cost for
$89,000.
Non-Performing Assets
- ---------------------
The following table sets forth information regarding non-accrual loans and real
estate owned by the Bank at the dates indicated. The Bank did not have any
accruing loans which were 90 days or more overdue or any loans which were
classified as troubled debt restructuring during the periods presented. (Dollar
amounts in thousands):
<TABLE>
<CAPTION>
March 31, September 30,
1999 1998
---- ----
<S> <C> <C>
Non-accrual residential real
estate loans (one-to-four-family) $ 211 $ 224
Non-accrual construction, multi-family
residential and commercial real estate loans 1,544 199
Non-accrual installment and
commercial business loans 587 129
------ ------
Total non-performing loans $2,342 $ 552
====== ======
Total non-performing loans as
a percent of net loans receivable .97% .25%
====== ======
Total real estate owned,
net of related reserves $ - $ 21
====== ======
Total non-performing loans and real estate
owned as a percent of total assets .51% .14%
====== ======
</TABLE>
-9-
<PAGE>
Included in non-performing loans at March 31, 1999 are four single-family
residential real estate loans totaling $211,000, four commercial real estate
loans totaling $1.5 million, 16 installment loans totaling $138,000, six
commercial business loans totaling $411,000 and three commercial business leases
totaling $37,000.
At March 31, 1999, the Bank had an allowance for loan losses of $2.3 million or
.97% of net loans receivable, as compared to an allowance of $2.2 million or
1.02% of net loans receivable at September 30, 1998. The allowance for loan
losses equals 99.8% of non-performing loans at March 31, 1999.
Management has evaluated these non-performing loans and the overall allowance
for loan losses and is satisfied that the allowance for losses on loans at March
31, 1999 is appropriate.
There was no real estate owned at March 31, 1999.
Comparison of Results of Operations
for the Three and Six Months Ended March 31, 1999 and 1998
Net Income
- ----------
Net income for the three months ended March 31, 1999 was $784,000 compared to
$665,000 for the same period in 1998, an increase of $119,000 or 17.9%. The
increase reflects an increase in net interest income of $269,000 or 10.5%, an
increase in other income of $111,000 or 36.2%, a decrease in the provision for
loan losses of $10,000 or 9.1%, and a decrease in the provision for income taxes
of $49,000 or 14.6%. Partially offsetting these factors was an increase in other
operating expenses of $320,000 or 18.3%.
Net income for the six months ended March 31, 1999 was $1.487 million compared
to $1.333 million for the same period in 1998, an increase of $154,000 or 11.6%.
The increase reflects an increase in net interest income of $354,000 or 6.8%, an
increase in other income of $218,000 or 41.5%, a decrease in the provision for
loan losses of $20,000 or 8.9% and a decrease in the provision for income taxes
of $107,000 or 15.4%. Partially offsetting these factors was an increase in
other operating expenses of $545,000 or 15.5%.
Interest Rate Spread
- --------------------
The Bank's interest rate spread, the difference between yields calculated on a
tax-equivalent basis on interest-earning assets and the cost of funds, increased
to 2.59% in the three months ended March 31, 1999 from 2.56% in the same period
in 1998. The following table shows the average yields earned on the Bank's
interest-earning assets and the average rates paid on its interest-bearing
liabilities for the periods indicated, the resulting interest rate spreads, and
the net yields on interest-earning assets.
-10-
<PAGE>
<TABLE>
<CAPTION>
Three Months Ended March 31,
1999 1998
---- ----
<S> <C> <C>
Average yield on:
Mortgage loans 7.55% 7.74%
Mortgage-backed securities 6.09 6.38
Installment loans 8.09 8.21
Commercial business loans 8.77 9.62
Interest-earning deposits with other
institutions, investment securities,
and FHLB stock (1) 6.57 6.91
---- ----
Total interest-earning assets 7.12 7.32
---- ----
Average rates paid on:
Savings deposits 3.96 4.26
Borrowed funds 5.58 5.94
---- ----
Total interest-bearing liabilities 4.53 4.76
---- ----
Average interest rate spread 2.59% 2.56%
==== ====
Net yield on interest-earning assets 2.81% 2.80%
==== ====
</TABLE>
(1) Interest income on tax-free investments has been adjusted for federal
income tax purposes using a rate of 34%.
The Bank's tax-equivalent interest rate spread decreased to 2.66% in the six
months ended March 31, 1999 from 2.68% in the same period in fiscal 1998. The
following table shows the average yields earned on the Bank's interest-earning
assets and the average rates paid on its interest-bearing liabilities for the
periods indicated, the resulting interest rate spreads, and the net yields on
interest-earning assets.
<PAGE>
<TABLE>
<CAPTION>
Six Months Ended March 31,
1999 1998
<S> <C> <C>
Average yield on:
Mortgage loans 7.80% 8.00%
Mortgage-backed securities 6.09 6.44
Installment loans 8.22 8.32
Commercial business loans 9.05 10.12
Interest-earning deposits with other
institutions, investment securities,
and FHLB stock (1) 6.69 6.95
--- ----
Total interest-earning assets 7.27 7.45
---- ----
Average rates paid on:
Savings deposits 4.09 4.25
Borrowed funds 5.64 5.31
0 ---- ----
Total interest-bearing liabilities 4.61 4.77
---- ----
Average interest rate spread 2.66% 2.68%
==== ====
Net yield on interest-earning assets 2.85% 2.89%
==== ====
</TABLE>
(1) Interest income on tax-free investments has been adjusted for federal income
tax purposes using a rate of 34%.
-11-
<PAGE>
Interest Income
- ---------------
Interest on loans increased $652,000 or 16.5% to $4.6 million for the three
months ended March 31, 1999, compared to the same period in 1998. The increase
reflects an increase in the average loan balance outstanding during 1999,
partially offset by a decrease in the yield earned on the loan portfolio.
Interest on loans increased $1.3 million or 17.0% to $9.3 for the six months
ended March 31, 1999, compared to the same period in fiscal 1998. The increase
is attributable to an increase in the average loan balance outstanding during
the 1999 period, partially offset by a decrease in the yield earned on these
assets in the fiscal 1999 period as compared to the same period in fiscal 1998.
The increase in the average balance of the loan portfolio in the fiscal 1999
periods reflects management's continued strategy of emphasizing and increasing
loans. The lower yield earned on the portfolio reflects the lower long term
interest rate environment that has existed for much of fiscal 1999, as both new
loans originated are at lower rates and more existing borrowers refinanced into
lower rate loans.
Interest on mortgage-backed securities decreased $243,000 or 12.4% to $1.7
million and $687,000 or 17.0% to $3.4 million for the three and six months ended
March 31, 1999, respectively, as compared to the same periods in 1998. The
decrease for both the three and six month periods ended March 31, 1999, reflects
both a decrease in the average balance of mortgage-backed securities owned in
the fiscal 1999 periods, as compared to fiscal 1998, and a decrease in the
average yield earned on the portfolio.
Interest on interest-earning deposits with other institutions and investment
securities increased $187,000 or 19.8% to $1.1 million for the three month
period ended March 31, 1999, as compared to the same period in 1998. The
increase reflects an increase in the average balance in the portfolio, partially
offset by a decrease in the yield earned on these investments. For the six month
period ended March 31, 1999, interest on interest-earning deposits with other
institutions and investment securities increased $335,000 or 17.9% to $2.2
million, as compared to the same period in the prior year. The increase reflects
an increase in the average balance of such securities and deposits, partially
offset by a decrease in the yield earned on these investments.
<PAGE>
Interest Expense
- ----------------
Interest on savings deposits decreased $103,000 or 3.8% to $2.6 million and
increased $54,000 or 1.0% to $5.4 million for the three and six month periods
ended March 31, 1999, respectively, as compared to the same periods in fiscal
1998. The decrease for the three month period in fiscal 1999 as compared to
fiscal 1998 reflects a decrease in the average cost of deposits, partially
offset by an increase in the average balance of savings deposits. The increase
for the six month period in fiscal 1999 reflects an increase in the average
balance of savings deposits in the fiscal 1999 period, partially offset by a
decrease in the average cost of the deposits. The cost of deposits has decreased
in fiscal 1999 as interest rates have generally been lower than in the same
periods in fiscal 1998.
Interest on borrowed funds increased $430,000 or 32.6% to $1.8 million and
$587,000 or 21.7% to $3.3 million for the three and six month periods ended
March 31, 1999, respectively, as compared to the same periods in fiscal 1998.
The increases for both periods in fiscal 1999 as compared to fiscal 1998 reflect
an increase in the Federal Home Loan Bank ("FHLB") advances and reverse
repurchase agreements outstanding during the fiscal 1999 periods, partially
offset by a decrease in the cost of those borrowings for the three month period;
the cost of those borowings increased for the six month period. The Bank
continues to rely on these wholesale funding sources in fiscal 1999 as an
additional way to fund growth.
-12-
<PAGE>
Interest on guaranteed preferred beneficial interest in subordinated debt was
$256,000 and $512,000 for the three and six month periods ended March 31, 1999
and 1998. The Preferred Securities were issued in May 1997.
Net Interest Income Before Provision for Loan Losses
- ----------------------------------------------------
The Bank's net interest income before provision for loan losses increased
$269,000 or 10.5% to $2.8 million, and $354,000 or 6.8% to $5.6 million for the
three and six month periods ended March 31, 1999, respectively, as compared to
the same periods in fiscal 1998. The increase for both periods is primarily
attributable to an increase in net interest-earning assets.
Provision for Loan Losses
- -------------------------
The provision for loan losses decreased $10,000 or 9.1% to $100,000 and $20,000
or 8.9% to $205,000 for the three and six month periods ended March 31, 1999,
respectively, as compared to the same periods in fiscal 1998. The provision for
both years reflects management's evaluation of the loan portfolio, current
economic conditions, and other factors as described below. The allowance for
loan losses has increased from $2.1 million at March 31, 1998 to $2.3 million at
March 31, 1999.
A monthly review is conducted by management to determine that the allowance for
loan losses is appropriate to absorb estimated loan losses. In determining the
level of allowances for loan losses, consideration is given to general economic
conditions, the diversification of the loan portfolio, historical loss
experience, identified credit problems, delinquency levels and the adequacy of
collateral. Although management believes that the current allowance for loan
losses is appropriate, future additions to the reserve may be necessary due to
changes in economic conditions. In addition, various regulatory agencies review
the adequacy of the allowance for loan losses as part of their examination
process and may require additions to the allowance based on their judgment.
<PAGE>
Other Income
- ------------
Total non-interest or other income increased $111,000 or 36.2% to $418,000 and
$218,000 or 41.5% to $743,000 for the three and six month periods ended March
31, 1999, respectively, as compared to the same periods in fiscal 1998.
Service fee income, which includes late charges on loans and fees for loans
serviced for others, decreased $2,000 or 6.7% to $28,000 for the three month
period ended March 31, 1999, as compared to the same period in the prior year.
The decrease is primarily attributable to a decrease in late charges on loans
and loan servicing fee income. Service fee income increased $9,000 or 14.1% to
$73,000 for the six month period ended March 31, 1999, as compared to the same
period in fiscal 1998. The increase is primarily attributable to an increase in
late charges on mortgage loans and the imposition of an annual fee on lines of
credit, partially offset by a decrease in loan servicing fee income.
Gain on the sale of investment and mortgage-backed securities was $74,000 for
the three month period ended March 31, 1999, as compared to a loss of $1,000 in
the same period in 1998. For the six month period ended March 31, 1999, a gain
of $74,000 was recorded, as compared to a gain of $8,000 for the same period in
fiscal 1998. All sales were made from the available-for-sale portfolio in the
periods and were done to reflect current economic conditions and asset/liability
management strategies, as well as changing market conditions.
-13-
<PAGE>
Gain on sale of loans was $1,000 and $5,000 for the three and six month periods
ended March 31, 1999, respectively, as compared to gains of $7,000 and $9,000 in
the comparable periods in fiscal 1998. The Bank sells education loans to the
Student Loan Marketing Association ("SLMA"). Such sales generally result in some
gain or loss being realized and are being done to reduce the Bank's position in
these loans, which are generally lower yielding and subject to extensive and
costly government regulation. The Bank does not intend to originate additional
student loans for its portfolio, except those that will be serviced by SLMA.
Results generally reflect the timing of such sales.
Other operating income includes miscellaneous sources of income which consist
primarily of various fees related to checking accounts, fees from the sale of
cashiers checks and money orders, and safe deposit box rental income. Other
operating income increased $44,000 or 16.2% to $315,000 and increased $147,000
or 33.1% to $591,000 for the three and six month periods ended March 31, 1999,
as compared to the same periods in fiscal 1998. The increase for both the three
and six month periods is primarily due to increases in fees related to returned
checks, increased automatic teller machine fees, and increased safe deposit box
fees, partially offset by decreased fees on the sale of accident and health
insurance on loans. In addition, fiscal 1999 results reflect increased earnings
on the cash surrender value of life insurance policies on certain executive
officers, and fees earned from a program, introduced in July 1998, to sell
non-insured investment products such as mutual funds and annuities to both Bank
and nonbank customers.
Other Expenses
- --------------
Total operating expenses increased $320,000 or 18.3% to $2.1 million and
$545,000 or 15.5% to $4.1 million for the three and six month periods ended
March 31, 1999, respectively, as compared to the same period in fiscal 1998.
Compensation, payroll taxes and fringe benefits, the largest component of
operating expenses, increased $180,000 or 18.0% to $1.2 million and $328,000 or
16.0% to $2.4 million for the three and six month periods ended March 31, 1999,
respectively, compared to the same periods in fiscal 1998. Factors contributing
to the increase were normal salary increases, higher bonuses awarded in fiscal
1999, an increase in the number of employees on the payroll, and an increase in
retirement and health care expenses. The increase in the number of employees
primarily reflects staffing additions for the new branch office opened in
Pittsburgh's Strip District in October 1998, as well as staffing for the Bank's
new brokerage services program.
Office occupancy and equipment expense increased $48,000 or 29.8% to $209,000
and $120,000 or 40.1% to $419,000 for the three and six month periods ended
March 31, 1999, respectively, compared to the same periods in fiscal 1998. In
both the three and six month periods, the increases partially reflect costs
associated with renovating and opening the Bank's new Strip District branch in
October 1998, which is a leased facility. Additionally, the increase reflects
increased equipment costs, a portion of which was incurred dealing with the Year
2000 problem.
Depreciation and amortization increased $22,000 or 17.3% to $149,000 and $45,000
or 18.0% to $295,000 for the three and six month periods ended March 31, 1999,
respectively, compared to the same periods in fiscal 1998. The results reflect
additional depreciation on equipment added or updated during the past year,
depreciation on renovations completed on the Bank's data processing and back
office location, and amortization of leasehold improvements on the Bank's new
Strip District office.
-14-
<PAGE>
Federal deposit insurance premiums increased $2,000 or 5.3% to $40,000 and
$2,000 or 2.6% to $78,000 for the three and six month periods ended March 31,
1999, respectively, compared to the same periods in fiscal 1998. The insurance
payments reflect the average level of savings deposits outstanding.
Net loss on real estate owned was $6,000 for the three months ended March 31,
1999, as compared to a net loss of $1,000 in the comparable period in fiscal
1998. Net gain on real estate owned was $39,000 for the six month period ended
March 31, 1999, compared to a net loss of $10,000 in the prior year period.
Results for the periods reflect the sale of property held as real estate owned.
At March 31, 1999, the Bank had no property classified as real estate owned.
Other operating expenses, which consists of check processing costs, consulting
fees, legal and audit fees, advertising, bank charges and other administrative
expenses, increased $63,000 or 15.0% to $484,000 and $99,000 or 11.9% to
$929,000 for the three and six month periods ended March 31, 1999, respectively,
as compared to the same periods in fiscal 1998. Significant variations between
both the three and six month periods in fiscal 1999, as compared to fiscal 1998,
include increases in consulting fees, telephone expenses, legal fees, and
expenses relating to credit cards issued by the Bank, partially offset by a
decrease in stationary and supplies expense.
Income Taxes
- ------------
Income taxes decreased $49,000 or 14.6% to $286,000 and $107,000 or 15.4% to
$587,000 for the three and six month periods ended March 31, 1999, respectively,
compared to the same periods in fiscal 1998. The decrease in taxes for both the
three and six month periods ended March 31, 1998, as compared to the same
periods in the prior year, primarily results from a decrease in taxable income.
The decrease in taxable income is primarily attributable to an increase in
tax-exempt investments generating non-taxable income. The effective tax rate
decreased to 28.3% for the six month period ended March 31, 1999, from 34.2% in
the comparable fiscal 1998 period.
Capital Requirements
- --------------------
The Federal Reserve Board measures capital adequacy for bank holding companies
on the basis of a risk-based capital framework and a leverage ratio. The
guidelines include the concept of Tier 1 capital and total capital. Tier 1
capital is essentially common equity, excluding net unrealized gain (loss) on
securities available-for-sale and goodwill, plus certain types of preferred
stock, including the Preferred Securities issued by the Trust in 1997. The
Preferred Securities may comprise up to 25% of the Company's Tier 1 capital.
Total capital includes Tier 1 capital and other forms of capital such as the
allowance for loan losses, subject to limitations, and subordinated debt. The
guidelines establish a minimum standard risk-based target ratio of 8%, of which
at least 4% must be in the form of Tier 1 capital. At March 31, 1999, the
Company had Tier 1 capital as a percentage of risk-weighted assets of 15.12% and
total risk-based capital as a percentage of risk-weighted assets of 16.18%.
In addition, the Federal Reserve Board has established minimum leverage ratio
guidelines for bank holding companies. These guidelines currently provide for a
minimum ratio of Tier 1 capital as a percentage of total assets (the "Leverage
Ratio") of 3% for bank holding companies that meet certain criteria, including
that they maintain the highest regulatory rating. All other bank holding
companies are required to maintain a Leverage Ratio of at least 100 to 200 basis
points above the minimum.
At March 31, 1999, the Company had a Leverage Ratio of 8.81%.
-15-
<PAGE>
The FDIC has issued regulations that require insured institutions, such as the
Bank, to maintain minimum levels of capital. In general, current regulations
require a leverage ratio of Tier 1 capital to average total assets of not less
than 3% for the most highly rated institutions and an additional 1% to 2% for
all other institutions. At March 31, 1999, the Bank complied with the minimum
leverage ratio having Tier 1 capital of 6.50% of average total assets, as
defined.
The Bank is also required to maintain a ratio of qualifying total capital to
risk-weighted assets and off-balance sheet items of a minimum of 8%. At March
31, 1999, the Bank's total capital to risk-weighted assets ratio calculated
under the FDIC capital requirement was 12.10%.
A reconciliation of Stockholders' Equity for the Bank to Regulatory Capital is
as follows:
<TABLE>
<CAPTION>
<S> <C>
Stockholder's equity at March 31, 1999 (1) $28,432,335
Plus: Unrealized losses on debt securities 66,273
-----------
Tier 1 Capital at March 31, 1999 28,498,608
Plus: Qualifying loan loss allowance 2,337,258
-----------
Total capital at March 31, 1999 $30,835,866
===========
</TABLE>
(1) Represents equity capital of the Bank as reported to the FDIC and the
Pennsylvania Department of Banking on Form 032.
Liquidity
- ---------
The Bank's primary sources of funds have historically consisted of deposits,
amortization and prepayments of outstanding loans, borrowings from the FHLB of
Pittsburgh and other sources, including sales of securities and, to a limited
extent, loans. At March 31, 1999, the total of approved loan commitments
amounted to $4.3 million. In addition, the Bank had $10.7 million of undisbursed
loan funds at that date. The amount of savings certificates which mature during
the next twelve months totals approximately $96.0 million, a substantial portion
of which management believes, on the basis of prior experience, will remain in
the Bank.
<PAGE>
Year 2000
- ---------
The Year 2000 problem exists because many computer systems use only the last two
digits to refer to a year. This convention could affect date-sensitive
calculations that treat "00" as the year 1900, rather than 2000. An additional
issue is that 1900 was not a leap year, whereas the year 2000 is. Therefore,
some programs may not properly provide for February 29, 2000. This anomaly could
result in miscalculations when processing critical date-sensitive information
after December 31, 1999.
The following discussion of the implications of the Year 2000 problem for the
Company contains numerous forward-looking statements based on inherently
uncertain information. The cost of the project and the date on which the Company
plans to complete Year 2000 modifications are based on management's best
estimates, which are derived utilizing a number of assumptions of future events
including the continued availability of internal and external resources, third
party modifications and other factors. However, there can be no guarantee that
these statements will be achieved and actual results could differ. Moreover,
although management believes it will be able to make the necessary modifications
in advance, there can be no guarantee that failure to modify the systems would
not have a material adverse impact on the Company.
-16-
<PAGE>
In May 1997 the Company established a Year 2000 Compliance Committee (the
"Committee") and subsequently developed a Year 2000 Compliance Plan (the
"Plan"). The objectives of the Plan and the Committee are to prepare the Company
for the new millennium. The Plan encompasses the following phases: Awareness,
Assessment, Renovation, Validation and Implementation. These phases will enable
the Company to identify risks, develop an action plan, perform adequate testing
and complete affirmation that its processing systems will be Year 2000 ready.
Execution of the Plan is currently on target. Prioritization of the most
critical software applications and hardware configurations has been addressed,
along with contract and service agreements. A significant portion of the
Company's data processing software is provided by third party vendors. The
Company has maintained ongoing contact with these vendors so that modification
of the software for Year 2000 readiness is a top priority. The Company, in
coordination with these vendors, has successfully completed testing all
significant applications. In addition, all significant hardware that required
replacement or upgrade has been purchased and installed or the upgrade
completed. Testing of this equipment has also been substantially completed. The
Company has contacted all other material vendors and suppliers regarding their
Year 2000 state of readiness. Each of these third parties has delivered written
assurance to the Company that they expect to be Year 2000 compliant prior to the
Year 2000. The Company has completed contacting all material customers and
non-information technology suppliers (i.e., utility systems, telephone systems
and security systems) regarding their Year 2000 state of readiness. The
Validation phase is now substantially complete. The Implementation Phase is to
certify that systems are Year 2000 ready, along with assurances that any new
systems are compliant on a going-forward basis.
The Implementation Phase is targeted for completion by June 30, 1999.
Monitoring and managing the Year 2000 project will result in additional direct
and indirect costs to the Company. Direct costs include potential charges by
third party software vendors for product enhancements, the replacement of
computer hardware and related equipment that was not Year 2000 ready with
equipment that is, costs involved in testing software and hardware products for
Year 2000 compliance, and any resulting costs for developing and implementing
contingency plans for critical software and hardware products which are not
enhanced. Indirect costs will principally consist of the time devoted by
existing employees in managing vendor progress, testing enhanced software and
hardware products and implementing any necessary contingency plans. Total direct
costs are estimated not to exceed $500,000, but are not expected to be material
to the Company's results of operations in any one quarter or fiscal year. As of
March 31, 1999, approximately $350,000 had already been incurred. This estimate
includes the cost, and resulting depreciation, of accelerating the replacement
of computer equipment that is currently fully depreciated, or would have been by
the Year 2000, and that would have been replaced in the ordinary course of
business over the next two years. Year 2000 remediation costs are not expected
to have a material adverse impact on the long-term results of operations,
liquidity or consolidated financial position of the Company. The company does
not separately track the internal costs incurred for the Year 2000 project; such
costs are principally the related payroll costs for its information systems
group and other employees involved in the project.
<PAGE>
The Company is developing remediation contingency plans and business resumption
plans specific to the Year 2000. Remediation contingency plans address the
actions to be taken if the current approach to remediating a system is falling
behind schedule or otherwise appears to be in jeopardy of failing to deliver a
year 2000 ready system when needed. Business resumption contingency plans
address the actions that would be taken if critical business functions cannot be
carried out in the normal manner upon entering the next century due to system or
supplier failure.
Despite the best efforts of management to address this issue, the vast number of
external entities that have direct and indirect business relationships with the
Company, such as customers, vendors, payment system providers and other
financial institutions makes it impossible to assure that failure to achieve
compliance by one or more of these entities would not have material adverse
impact on the operations of the Company.
-17-
<PAGE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk
There have been no material changes in information regarding
quantitative and qualitative disclosures about market risk from the
information presented as of September 30, 1998 (in the Company's Form
10-K) to March 31, 1999.
-18-
<PAGE>
Part II - Other Information
Item. 1 Legal Proceedings
The Bantk is not involved in any pending legal proceedings other
than non-material legal proceedings undertaken in the ordinary
course of business.
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
Not Applicable
Item 4. Submission of Matters to a Vote of Security Holders
On February 2, 1999, the Company held its annual meeting of
stockholders and the following items were presented:
Election of Directors Robert F. Kastelic, Oliver D. Keefer and Charles
E. Nettrour for terms of three years ending in 2002. Mr. Kastelic
received 1,407,200 votes in favor and 104,859 votes withheld. Mr Keefer
received 1,407,200 votes in favor and 104,859 withheld. Mr. Nettrour
received 1,407,200 votes in favor and 104,859 votes withheld
Ratification of the appointment of KPMG LLP as the Company's auditors
for the 1999 fiscal year. KPMG LLP was ratified as the Company's
auditors with 1,492,377 votes for, 9,282 votes against, and 10,399
abstentions.
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
-19-
<PAGE>
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.
FIDELITY BANCORP, INC.
Date: May 14, 1999 By: /s/ William L. Windisch
-------------------------------------
William L. Windisch
President and Chief Executive Officer
Date: May 14, 1999 By: /s/ Richard G. Spencer
-------------------------------------
Richard G. Spencer
Vice President and Chief Financial Officer
<PAGE>
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.
FIDELITY BANCORP, INC.
Date: May 14, 1999 By: /s/ William L. Windisch
------------------------------------------
William L. Windisch
President and Chief Executive Officer
Date: May 14, 1999 By: /s/ Richard G. Spencer
------------------------------------------
Richard G. Spencer
Vice President and Chief Financial Officer
-20-
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-END> MAR-31-1999
<CASH> 6,636
<INT-BEARING-DEPOSITS> 240
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 170,032
<INVESTMENTS-CARRYING> 19,296
<INVESTMENTS-MARKET> 19,478
<LOANS> 242,548
<ALLOWANCE> 2,337
<TOTAL-ASSETS> 456,798
<DEPOSITS> 264,573
<SHORT-TERM> 35,094
<LIABILITIES-OTHER> 4,593
<LONG-TERM> 123,250
0
0
<COMMON> 20
<OTHER-SE> 29,268
<TOTAL-LIABILITIES-AND-EQUITY> 456,798
<INTEREST-LOAN> 9,291
<INTEREST-INVEST> 5,536
<INTEREST-OTHER> 20
<INTEREST-TOTAL> 14,847
<INTEREST-DEPOSIT> 5,449
<INTEREST-EXPENSE> 9,254
<INTEREST-INCOME-NET> 5,593
<LOAN-LOSSES> 205
<SECURITIES-GAINS> 74
<EXPENSE-OTHER> 4,057
<INCOME-PRETAX> 2,074
<INCOME-PRE-EXTRAORDINARY> 2,074
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,487
<EPS-PRIMARY> .75
<EPS-DILUTED> .73
<YIELD-ACTUAL> 2.85
<LOANS-NON> 2,342
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,243
<CHARGE-OFFS> 113
<RECOVERIES> 2
<ALLOWANCE-CLOSE> 2,337
<ALLOWANCE-DOMESTIC> 2,337
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
