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 June 30, 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 of (IRS Employer Identification No.)
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: 1,950,110 shares, par value
$0.01, at July 31, 1999
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Index
<TABLE>
<CAPTION>
<S> <C>
Part I - Financial Information Page
- ------------------------------ ----
Item 1. Financial Statements
Consolidated Statements of Financial Condition as of September 30, 1998
and June 30, 1999 (Unaudited) 1
Consolidated Statements of Income (Unaudited) for the Three and Nine Months Ended
June 30, 1998 and 1999 2
Consolidated Statements of Cash Flows (Unaudited) for the Nine Months Ended
June 30, 1998 and 1999 3-4
Consolidated Statement of Changes in Stockholders' Equity (Unaudited) for the Nine
Months Ended June 30, 1998 and 1999 5
Notes to Consolidated Financial Statements (Unaudited) 6
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations 9
Item 3. Quantitative and Qualitative Disclosures About Market Risk 18
Part II - Other Information
Item 1. Legal Proceedings 19
Item 2. Changes in Securities 19
Item 3. Defaults Upon Senior Securities 19
Item 4. Submission of Matters to a Vote of Security Holders 19
Item 5. Other Information 19
Item 6. Exhibits and Reports on Form 8-K 19
Signatures 20
</TABLE>
<PAGE>
Part I - Financial Information
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
----------------------------------------------
(in thousands)
<TABLE>
<CAPTION>
June 30, September 30,
Assets 1999 1998
------ ---- ----
(Unaudited)
<S> <C> <C>
Cash and amounts due from
depository institutions $5,149 $2,539
Interest-earning demand deposits with
other institutions 480 613
Investment securities held-to-maturity 3,626 6,625
Investment securities available-for-sale 76,570 57,590
Loans receivable, net (Notes 5 and 6) 257,255 218,892
Mortgage-backed securities held-to-maturity 14,473 19,913
Mortgage-backed securities available-for-sale 93,642 82,957
Real estate owned, net 108 21
Federal Home Loan Bank stock - at cost 7,830 5,050
Accrued interest receivable, net 2,783 2,573
Office premises and equipment, net 4,672 3,446
Deferred tax asset 2,469 700
Prepaid expenses and sundry assets 5,188 5,125
---------------- --------------
Total Assets $ 474,245 $ 406,044
================ ==============
Liabilities and Net worth
Liabilities:
Savings deposits $270,055 $261,735
Federal Home Loan Bank advances 157,300 100,200
Reverse repurchase agreements 3,792 1,870
Advance deposits by borrowers for
taxes and insurance 3,228 1,126
Accrued interest on savings and other deposits 53 92
Accrued income taxes payable 163 171
Other accrued expenses and sundry liabilities 2,491 1,579
Guaranteed preferred beneficial interest in
Company's debentures 10,250 10,250
---------------- ------------
Total Liabilities 447,332 377,023
---------------- ------------
Stockholders' equity (Notes 3 and 4):
Common stock, $0.01 par value per share,
10,000,000 shares authorized; 1,988,377
and 1,978,543 shares issued and outstanding,
respectively 20 20
Treasury stock, at cost (28,500 shares) (511) -
Additional paid-in capital 14,281 14,168
Retained earnings - substantially restricted 15,920 14,106
Accumulated other comprehensive income,
net of tax (2,797) 727
---------------- -------------
Total Stockholders' Equity 26,913 29,021
---------------- -------------
Total Liabilities and Stockholders' Equity $ 474,245 $ 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 Nine Months Ended
June 30, June 30,
-------- --------
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Interest income:
Loans $ 4,862 $ 4,231 $ 14,152 $ 12,175
Mortgage-backed securities 1,727 1,877 5,077 5,914
Investment securities:
Taxable 762 627 2,076 1,937
Tax-exempt 486 342 1,358 870
Deposits with other institutions 7 12 27 44
-------- ------- -------- --------
Total interest income 7,844 7,089 22,690 20,940
-------- ------- -------- --------
Interest expense:
Savings deposits 2,527 2,766 7,975 8,161
Guaranteed preferred beneficial interest
in Company's debentures 263 256 775 768
Borrowed funds 2,025 1,351 5,319 4,056
-------- ------- -------- --------
Total interest expense 4,815 4,373 14,069 12,985
-------- ------- -------- --------
Net interest income before provision
for loan losses 3,029 2,716 8,621 7,955
Provision for loan losses 155 90 360 315
-------- -------- -------- --------
Net interest income after provision
for loan losses 2,874 2,626 8,261 7,640
-------- -------- -------- --------
Other income:
Service fee income 34 29 106 93
Gain (loss) on sale of investment
And mortgage-backed securities, net -- 60 74 68
Gain (loss) on sale of loans 1 (3) 6 6
Other operating income 337 230 928 674
-------- -------- -------- --------
Total other income 372 316 1,114 841
-------- -------- -------- --------
Operating expenses:
Compensation and employee benefits 1,165 1,097 3,540 3,143
Occupancy and equipment expense 216 167 635 467
Depreciation and amortization 139 132 434 382
Federal insurance premiums 40 39 118 115
(Gain) loss on real estate owned, net (1) 2 (40) 11
Other operating expenses 471 421 1,399 1,252
-------- -------- -------- --------
Total operating expenses 2,030 1,858 6,086 5,370
-------- -------- -------- --------
Income before income tax provision 1,216 1,084 3,289 3,111
Income tax provision 334 349 921 1,043
-------- -------- -------- --------
Net income $ 882 $ 735 $ 2,368 $ 2,068
======== ======== ======== ========
Basic earnings per common share (Note 3) $ 0.45 $ 0.37 $ 1.20 $ 1.06
======== ======== ======== ========
Diluted earnings per common share (Note 3) $ 0.44 $ 0.36 $ 1.17 $ 1.02
======== ======== ======== ========
Dividends per common share (Note 3) $ 0.10 $ 0.09 $ 0.28 $ 0.234
======== ======== ======== ========
</TABLE>
See accompanying notes to financial statements.
-2-
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited)
-------------------------------------------------
(in thousands)
<TABLE>
<CAPTION>
Nine Months Ended June 30,
--------------------------
1999 1998
---- ----
<S> <C> <C>
Operating Activities:
Net income $ 2,368 $ 2,068
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 360 315
(Gain) loss on real estate owned (40) 11
Depreciation of premises and equipment 434 382
Deferred loan fee amortization (211) (137)
Amortization of investment and mortgage-backed securities
Discounts/premiums, net 276 315
Net (gain) loss on sale of investment securities (127) (186)
Net (gain) loss on sale of mortgage-backed securities 53 118
Net (gain) loss on sale of loans (6) (6)
Origination of loans held-for-sale (477) (80)
Proceeds from sale of loans held-for-sale 479 81
(Increase) decrease in interest receivable (210) (157)
Increase (decrease) in accrued income taxes (8) 11
Increase (decrease) in interest payable (39) (83)
Other changes, net 933 4,003
-------- --------
Net cash provided (used) by operating activities 3,785 6,655
-------- --------
Investing Activities:
Proceeds from sales of investment securities available-for-sale 1,558 16,322
Proceeds from maturities and principal repayments of
investment securities available-for-sale 11,508 2,005
Purchases of investment securities available-for-sale (34,787) (20,261)
Proceeds from sales of mortgage-backed securities available-for-sale 3,171 40,145
Proceeds from maturities and principal repayments of mortgage-
backed securities available-for-sale 21,971 14,467
Purchases of mortgage-backed securities available-for-sale (38,532) (43,544)
Proceeds from maturities and principal repayments of investment
securities held-to-maturity 5,000 5,202
Purchases of investment securities held-to-maturity (2,004) (7,997)
Proceeds from principal repayments of mortgage-backed
securities held-to-maturity 5,379 10,054
Net (increase) decrease in loans (38,959) (31,813)
Proceeds from sale of other loans 335 460
Additions to office premises and equipment (1,660) (235)
Net purchases of FHLB Stock (2,780) (165)
-------- --------
Net cash provided (used) by investing activities (69,800) (15,360)
-------- --------
</TABLE>
-3-
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Unaudited) (Cont'd.)
-----------------------------------------------------------
(in thousands)
Nine Months Ended June 30,
--------------------------
1999 1998
---- ----
Financing Activities:
- ---------------------
Net increase (decrease) in savings deposits 8,320 16,542
Increase (decrease) in reverse repurchase agreements 1,922 1,019
Net increase (decrease) in FHLB advances 57,100 (6,700)
Increase in advance payments by borrowers for
taxes and insurance 2,102 1,773
Cash dividends paid (554) (459)
Stock options exercised 36 150
Proceeds from sale of stock 77 84
Purchase of treasury stock (511) --
-------- --------
Net cash provided (used) by financing activities 68,492 12,409
-------- --------
Increase (decrease) in cash and cash equivalents 2,477 3,704
Cash and cash equivalents at beginning of period 3,152 3,975
-------- --------
Cash and cash equivalents at end of period $ 5,629 $ 7,679
======== ========
Supplemental Disclosure of Cash Flow Information
- ------------------------------------------------
Cash paid during the period for:
Interest on deposits and other borrowings $ 13,978 $ 12,970
Income taxes 915 1,025
Transfer of loans to real estate owned 135 --
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
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 2,068 2,068
Cash dividends paid (Note 3) (459) (459)
5/4 Stock Split 4 (4) -0-
Cash paid on stock split in
lieu of fractional shares (4) (4)
Net change in unrealized gain
(loss) on securities available-
for-sale, net of taxes 362 362
Sale of stock through Dividend
Reinvestment Plan 84 84
Stock options exercised 150 150
---------- --------- -------- -------- --------- ---------
Balance at June 30, 1998 $ 20 $ 14,040 $ 0 $ 13,427 $ 595 $ 28,082
=========== ======== ========= ======== ========= =========
Balance at September 30, 1998 $ 20 $ 14,168 $ 0 $ 14,106 $ 727 $ 29,021
Net income 2,368 2,368
Cash dividends paid (554) (554)
Net change in unrealized gain
(loss) on securities available-
for-sale, net of taxes (3,524) (3,524)
Repurchase - 28,500 shares (511) (511)
Sale of stock through Dividend
Reinvestment Plan 77 77
Stock options exercised 36 36
---------- --------- -------- -------- -------- ---------
Balance at June 30, 1999 $ 20 $ 14,281 $ (511) $ 15,920 $ (2,797) $ 26,913
========== ========= ======== ======== ======== =========
</TABLE>
-5-
<PAGE>
FIDELITY BANCORP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements - (Unaudited)
September 30, 1998 and June 30, 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 nine month periods ended June 30, 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):
Three Months Ended Nine Months Ended
June 30, June 30,
1999 1998 1999 1998
------------------- ------------------
Numerator:
Net income $ 882 $ 735 $2,368 $2,068
------ ------ ------ ------
Numerator for basic and
diluted earnings per share $ 882 $ 735 $2,368 $2,068
------ ------ ------ ------
Denominator:
Denominator for basic earnings
per share - weighted average shares 1,969 1,970 1,977 1,959
Effect of dilutive securities:
Employee stock options 46 77 46 71
------ ------ ------ ------
Denominator for diluted earnings
per share - weighted average
shares and assumed conversions 2,015 2,047 2,023 2,030
====== ====== ====== ======
Basic earnings per share $ .45 $ .37 $ 1.20 $ 1.06
====== ====== ====== ======
Diluted earnings per share $ .44 $ .36 $ 1.17 $ 1.02
====== ====== ====== ======
-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 $2.8 million, net of tax, on investments classified
as available-for-sale were recorded at June 30, 1999.
(5) Loans Receivable
----------------
Loans receivable are comprised of the following (dollar amounts in
thousands):
June 30, September 30,
1999 1998
---- ----
First mortgage loans:
Conventional:
1-4 family dwellings $ 125,126 $ 115,559
Multi-family dwellings 4,180 4,262
Commercial 28,492 21,881
Construction 37,644 21,212
--------- ---------
195,442 162,914
--------- ---------
Less:
Loans in process (18,305) (12,916)
Unearned discounts and fees (1,343) (1,142)
--------- ---------
175,794 148,856
--------- ---------
Installment loans:
Home equity 50,402 42,290
Consumer loans 1,843 2,359
Other 5,222 4,473
--------- ---------
57,467 49,122
--------- ---------
Commercial business loans and leases:
Commercial business loans 21,245 19,509
Commercial leases 5,057 3,648
--------- ---------
26,302 23,157
--------- ---------
Less: Allowance for loan losses (2,308) (2,243)
--------- ---------
Loans receivable, net $ 257,255 $ 218,892
========= =========
(6) Changes in the allowance for loan losses for the nine months ended June 30,
1999 and 1998 are as follows (dollar amounts in thousands)
1999 1998
------- -------
Balance at beginning of the fiscal year $ 2,243 $ 1,931
Provision for loan losses 360 315
Charge-offs (312) (53)
Recoveries 17 6
------- -------
Balance at June 30, $ 2,308 $ 2,199
======= =======
-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 June 30, 1999, the recorded investment in loans that are considered to be
impaired under SFAS No. 114 was $323,000. Included in this amount is $323,000 of
impaired loans for which the related allowance for loan losses is $60,000, 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 nine
months ended June 30, 1999 was $331,000. For the nine months ended June 30,
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
three months ended June 30, 1999 and 1998, the company's total comprehensive
income (loss) was ($1.8 million) and $631,000, respectively. Total comprehensive
income (loss) is comprised of net income of $882,000 and $735,000 and other
comprehensive loss of ($2.67 million) and ($104,000). For the nine months ended
June 30, 1999 and 1998, the Company's total comprehensive income (loss) was
($1.2 million) and $2.4 million, respectively. Total comprehensive income (loss)
is comprised of net income of $2.368 million and $2.068 million and other
comprehensive income (loss) of ($3.523 million) and $362,000, 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 was leased from an independent third party until it was
purchased by the Bank in June 1999.
-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 June 30, 1999
- -------------------------------------------------------------------------
Total assets of the Company increased $68.2 million or 16.8% to $474.2 million
at June 30, 1999 from $406.0 million at September 30, 1998. Significant changes
in individual categories were increases in loans receivable of $38.4 million,
investment securities available-for-sale of $19.0 million, and mortgage-backed
securities available-for-sale of $10.7 million, and decreases in investment
securities held-to-maturity of $3.0 million and mortgage-backed securities
held-to-maturity of $5.4 million.
Total liabilities of the Bank increased by $70.3 million or 18.6% to $447.3
million at June 30, 1999 from $377.0 million at September 30, 1998. The increase
primarily reflects a $57.1 million increase in Federal Home Loan Bank advances
and a $8.3 million increase in savings deposits. Advances were used to fund
asset growth that was not supported by deposit increases.
Stockholders' equity decreased $2.1 million or 7.3% to $26.9 million at June 30,
1999, compared to September 30, 1998. This result reflects net income for the
nine month period ended June 30, 1999 of $2.37 million, stock options exercised
of $36,000 and stock issued under the Dividend Reinvestment Plan of $77,000.
Offsetting these increases were common stock cash dividends paid of $554,000, an
increase in unrealized holding losses, net of gains, on securities
available-for-sale of $3.5 million, and the purchase of treasury stock at cost
for $511,000.
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):
June 30, September 30,
1999 1998
------ ------
Non-accrual residential real
estate loans (one-to-four-family) $ 326 $ 224
Non-accrual construction, multi-family
residential and commercial real estate loans 1,443 199
Non-accrual installment and
commercial business loans 743 129
------ ------
Total non-performing loans $2,512 $ 552
====== ======
Total non-performing loans as
a percent of net loans receivable .98% .25%
====== ======
Total real estate owned $ 108 $ 21
====== ======
Total non-performing loans and real estate
owned as a percent of total assets .55% .14
====== ======
-9-
<PAGE>
Included in non-performing loans at June 30, 1999 are six single-family
residential real estate loans totaling $326,000, six commercial real estate
loans totaling $1.4 million, 10 installment loans totaling $74,000, six
commercial business loans totaling $616,000 and three commercial business leases
totaling $53,000.
At June 30, 1999, the Bank had an allowance for loan losses of $2.3 million or
.90% 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 98.6% of non-performing loans at June 30, 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 June
30, 1999 is appropriate. See also "Provision for Loan Losses."
Real estate owned at June 30, 1999, consists of one single-family residential
property located in Pittsburgh, Pennsylvania totaling $108,000. The property is
currently for sale and management believes that the carrying value of the
property at June 30, 1999 approximates the fair value less costs to sell.
However, while management uses the best information available to make such
determinations, future adjustments may become necessary.
Comparison of Results of Operations
-----------------------------------
for the Three and Nine Months Ended June 30, 1999 and 1998
----------------------------------------------------------
Net Income
- ----------
Net income for the three months ended June 30, 1999 was $882,000 compared to
$735,000 for the same period in 1998, an increase of $147,000 or 20.0%. The
increase reflects an increase in net interest income of $313,000 or 11.5%, an
increase in other income of $56,000 or 17.7%, an increase in the provision for
loan losses of $65,000 or 72.2%, an increase in other operating expenses of
$172,000 or 9.3% and a decrease in the provision for income taxes of $15,000 or
4.3%.
Net income for the nine months ended June 30, 1999 was $2.368 million compared
to $2.068 million for the same period in 1998, an increase of $300,000 or 14.5%.
The increase reflects an increase in net interest income of $666,000 or 8.4%, an
increase in other income of $273,000 or 32.5%, an increase in the provision for
loan losses of $45,000 or 14.3%, an increase in other operating expenses of
$716,000 or 13.3% and a decrease in the provision for income taxes of $122,000
or 11.7%.
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, decreased
to 2.75% in the three months ended June 30, 1999 from 2.77% 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>
Three Months Ended June 30,
1999 1998
---- ----
Average yield on:
Mortgage loans 7.49% 7.96%
Mortgage-backed securities 6.23 6.39
Installment loans 8.06 8.63
Commercial business loans 8.87 9.71
Interest-earning deposits with other
institutions, investment securities,
and FHLB stock (1) 6.76 6.97
------- -------
Total interest-earning assets 7.19 7.49
------- -------
Average rates paid on:
Savings deposits 3.79 4.23
Borrowed funds 5.50 5.91
------- -------
Total interest-bearing liabilities 4.44 4.72
------- -------
Average interest rate spread 2.75% 2.77%
======= =======
Net yield on interest-earning assets 2.89% 2.96%
======= =======
- ----------------------
(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 2.70% in the nine
months ended June 30, 1999 from 2.72% 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.
Nine Months Ended June 30,
1999 1998
---- ----
Average yield on:
Mortgage loans 7.68% 7.99%
Mortgage-backed securities 6.15 6.46
Installment loans 8.14 8.43
Commercial business loans 9.05 9.97
Interest-earning deposits with other
institutions, investment securities,
and FHLB stock (1) 6.72 6.96
---- ----
Total interest-earning assets 7.25 7.48
---- ----
Average rates paid on:
Savings deposits 3.98 4.25
Borrowed funds 5.59 5.97
---- ----
Total interest-bearing liabilities 4.55 4.76
---- ----
Average interest rate spread 2.70% 2.72%
==== ====
Net yield on interest-earning assets 2.86% 2.92%
==== ====
- --------------------------
(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 $631,000 or 14.9% to $4.9 million for the three
months ended June 30, 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 $2.0 million or 16.2% to $14.2 million for the nine
months ended June 30, 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
new loans originated are at lower rates and more existing borrowers refinanced
into lower rate loans.
Interest on mortgage-backed securities decreased $150,000 or 8.0% to $1.7
million and $837,000 or 14.2% to $5.1 million for the three and nine months
ended June 30, 1999, respectively, as compared to the same periods in 1998. The
decrease for both the three and nine month periods ended June 30, 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 $274,000 or 27.9% to $1.3 million for the three month
period ended June 30, 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 nine month
period ended June 30, 1999, interest on interest-earning deposits with other
institutions and investment securities increased $610,000 or 21.4% to $3.5
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.
Interest Expense
- ----------------
Interest on savings deposits decreased $239,000 or 8.6% to $2.5 million and
$186,000 or 2.3% to $8.0 million for the three and nine month periods ended June
30, 1999, respectively, as compared to the same periods in fiscal 1998. The
decrease for both the three and nine month periods 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.
Interest on borrowed funds increased $674,000 or 49.9% to $2.0 million and $1.3
million or 31.1% to $5.3 million for the three and nine month periods ended June
30, 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 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. 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 Company's debentures was
$263,000 and $256,000 for the three month periods ended June 30, 1999 and 1998,
and $775,000 and $768,000 for the nine month periods ended June 30, 1999 and
1998, respectively. 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
$313,000 or 11.5% to $3.0 million, and $666,000 or 8.4% to $8.6 million for the
three and nine month periods ended June 30, 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 increased $65,000 or 72.2% to $155,000 and $45,000
or 14.3% to $360,000 for the three and nine month periods ended June 30, 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 $2.2 million at June 30, 1998 to $2.3 million at
June 30, 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.
Other Income
- ------------
Total non-interest or other income increased $56,000 or 17.7% to $372,000 and
$273,000 or 32.5% to $1.1 million for the three and nine month periods ended
June 30, 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, increased $5,000 or 17.2% to $34,000 for the three month
period ended June 30, 1999, as compared to the same period in the prior year.
The increase is not attributable to any individually significant items. Service
fee income increased $13,000 or 14.0% to $106,000 for the nine month period
ended June 30, 1999, as compared to the same period in fiscal 1998. The increase
is primarily attributable to an increase in late charges on 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 $60,000 for
the three month period ended June 30, 1998. There were no sales of securities in
the 1999 period. For the nine month period ended June 30, 1999, a gain of
$74,000 was recorded, as compared to a gain of $68,000 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 $6,000 for the three and nine month periods
ended June 30, 1999, respectively, as compared to a loss of $3,000 and a gain of
$6,000 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. Currently all new education loans
originated are sold to SLMA. Results generally reflect the timing of such sales.
In addition, the Bank sells a portion of loans originated under low income
housing programs in which it participates in the Pittsburgh area.
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 $107,000 or 46.5% to $337,000 and increased $254,000
or 37.7% to $928,000 for the three and nine month periods ended June 30, 1999,
as compared to the same periods in fiscal 1998. The increase for both the three
and nine month periods is primarily due to increases in fees related to returned
checks, increased automated teller machine fees, increased service charges on
checking accounts and increased safe deposit box fees. 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 $172,000 or 9.3% to $2.0 million and $716,000
or 13.3% to $6.1 million for the three and nine month periods ended June 30,
1999, respectively, as compared to the same period in fiscal 1998.
Compensation, payroll taxes and fringe benefits, the largest component of
operating expenses, increased $68,000 or 6.2% to $1.2 million and $397,000 or
12.6% to $3.5 million for the three and nine month periods ended June 30, 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 $49,000 or 29.3% to $216,000
and $168,000 or 36.0% to $635,000 for the three and nine month periods ended
June 30, 1999, respectively, compared to the same periods in fiscal 1998. In
both the three and nine month periods, the increases partially reflect costs
associated with renovating and opening the Bank's new Strip District branch in
October 1998, which was a leased facility until the Bank purchased the branch in
June 1999. Additionally, the increase reflects increased equipment costs, a
portion of which was incurred addressing the Year 2000 problem.
Depreciation and amortization increased $7,000 or 5.3% to $139,000 and $52,000
or 13.6% to $434,000 for the three and nine month periods ended June 30, 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 $1,000 or 2.6% to $40,000 and
$3,000 or 2.6% to $118,000 for the three and nine month periods ended June 30,
1999, respectively, compared to the same periods in fiscal 1998. The insurance
payments reflect the average level of savings deposits outstanding.
Net gain on real estate owned was $1,000 for the three months ended June 30,
1999, as compared to a net loss of $2,000 in the comparable period in fiscal
1998. Net gain on real estate owned was $40,000 for the nine month period ended
June 30, 1999, compared to a net loss of $11,000 in the prior year period.
Results for the periods reflect the sale of property held as real estate owned.
At June 30, 1999, the Bank had one single family 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 $50,000 or 11.9% to $471,000 and $147,000 or 11.7% to $1.4
million for the three and nine month periods ended June 30, 1999, respectively,
as compared to the same periods in fiscal 1998. Significant variations between
both the three and nine 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 $15,000 or 4.3% to $334,000 and $122,000 or 11.7% to
$921,000 for the three and nine month periods ended June 30, 1999, respectively,
compared to the same periods in fiscal 1998. The decrease in taxes for both the
three and nine month periods ended June 30, 1999, as compared to the same
periods in the prior year, primarily results from a decrease in the effective
tax rate. The decrease in the effective tax rate primarily is attributable to an
increase in tax-exempt investments generating non-taxable income. The effective
tax rate decreased to 28.0% for the nine month period ended June 30, 1999, from
33.5% 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 June 30, 1999, the Company
had Tier 1 capital as a percentage of risk-weighted assets of 14.34% and total
risk-based capital as a percentage of risk-weighted assets of 15.22%.
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 4% or be subject
to prompt corrective action by the Federal Reserve. At June 30, 1999, the
Company had a Leverage Ratio of 8.66%.
-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 June 30, 1999, the Bank complied with the minimum
leverage ratio having Tier 1 capital of 6.80% 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 June
30, 1999, the Bank's total capital to risk-weighted assets ratio calculated
under the FDIC capital requirement was 12.11%.
A reconciliation of Stockholders' Equity for the Bank to Regulatory Capital is
as follows:
Stockholder's equity at June 30, 1999 (1) $28,510,175
Plus: Unrealized losses on debt securities 2,725,068
-----------
Tier 1 Capital at June 30, 1999 31,235,243
Plus: Qualifying loan loss allowance 2,308,396
-----------
Total capital at June 30, 1999 $33,543,639
===========
- -----------------------
(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 June 30, 1999, the total of approved loan commitments amounted
to $7.6 million. In addition, the Bank had $18.3 million of undisbursed loan
funds at that date. The amount of savings certificates which mature during the
next twelve months totals approximately $104.6 million, a substantial portion of
which management believes, on the basis of prior experience, will remain in the
Bank.
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 critical
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 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 and is now substantially complete.
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
June 30, 1999, approximately $400,000 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.
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. The Company is currently on schedule with
all remediation efforts. Business resumption contingency plans, which are
substantially complete, 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 June 30, 1999.
-18-
<PAGE>
Part II - Other Information
- ---------------------------
Item. 1 Legal Proceedings
The Bank 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
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits.
The following exhibits are filed as part of this Report.
2 Agreement and Plan of Reorganization(1)
3.1 Articles of Incorporation(1)
3.2 Bylaws(1)
4 Common Stock Certificate(2)
10.1 Employee Stock Ownership Plan, as amended(2)
10.2 1988 Employee Stock Compensation Program(2)
10.3 1993 Employee Stock Compensation Program(3)
10.4 1997 Employee Stock Compensation Program(4)
10.5 1993 Directors' Stock Option Plan(3)
10.6 Employment Agreement between the Company, the Bank and William
L. Windisch(2)
10.7 1998 Group Term Replacement Plan
10.8 1998 Salary Continuation Plan Agreement by and between
W.L. Windisch, the Company and the Bank
10.9 1998 Salary Continuation Plan Agreement by and between R.G.
Spencer, the Company and the Bank
10.10 1998 Salary Continuation Plan Agreement by and between M.A.
Mooney, the Company and the Bank
27 Financial Data Schedule (in electronic filing only)
- ---------------------------
(1) Incorporated by reference from the exhibits attached to the Prospectus and
Proxy Statement of the Company included in its Registration Statement on
Form S-4 (registration No. 33-55384) filed with the SEC on December 3, 1992
(the "Registration Statement").
(2) Incorporated by reference from the Registration Statement.
(3) Incorporated by reference from an exhibit in Form S-8 filed with the SEC on
May 2, 1997.
(4) Incorporated by reference from an exhibit in Form S-8 filed with the SEC on
March 12, 1998.
(b) 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: August 5, 1999 By: /s/ William L. Windisch
-----------------------------------------
William L. Windisch
President and Chief Executive Officer
Date: August 5, 1999 By: /s/ Richard G. Spencer
-----------------------------------------
Richard G. Spencer
Executive Vice President and
Chief Financial Officer
-20-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM
THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL INFORMATION.
</LEGEND>
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> Sep-30-1999
<PERIOD-END> Jun-30-1999
<CASH> 5,149
<INT-BEARING-DEPOSITS> 480
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 170,212
<INVESTMENTS-CARRYING> 18,099
<INVESTMENTS-MARKET> 17,923
<LOANS> 259,563
<ALLOWANCE> 2,308
<TOTAL-ASSETS> 474,245
<DEPOSITS> 270,055
<SHORT-TERM> 38,092
<LIABILITIES-OTHER> 5,935
<LONG-TERM> 125,250
0
0
<COMMON> 20
<OTHER-SE> 26,893
<TOTAL-LIABILITIES-AND-EQUITY> 474,245
<INTEREST-LOAN> 14,152
<INTEREST-INVEST> 8,511
<INTEREST-OTHER> 27
<INTEREST-TOTAL> 22,690
<INTEREST-DEPOSIT> 7,975
<INTEREST-EXPENSE> 14,069
<INTEREST-INCOME-NET> 8,621
<LOAN-LOSSES> 360
<SECURITIES-GAINS> 74
<EXPENSE-OTHER> 6,086
<INCOME-PRETAX> 3,289
<INCOME-PRE-EXTRAORDINARY> 3,289
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,368
<EPS-BASIC> 1.20
<EPS-DILUTED> 1.17
<YIELD-ACTUAL> 2.86
<LOANS-NON> 2,512
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,243
<CHARGE-OFFS> 312
<RECOVERIES> 17
<ALLOWANCE-CLOSE> 2,308
<ALLOWANCE-DOMESTIC> 2,308
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
