U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
X Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934 for
the Quarterly Period Ended March 31, 1996,
or
Transition Report Under Section 13 or
15(d) of the Exchange Act for the
Transition Period from _________________
to _________________.
Commission file number 0-14555
FIRST LEESPORT BANCORP, INC.
(Exact name of Small Business Issuer as specified in its charter)
PENNSYLVANIA
(State or other jurisdiction of
incorporation or organization)
23-2354007
(I.R.S. Employer
Identification No.)
133 North Centre Avenue
Leesport, Pennsylvania 19533
(Address of principal executive offices) (Zip Code)
(610) 926-2161
(Registrant's telephone number, including area code)
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 [ ]
State the number of shares outstanding of each of the issuer's classes
of common equity, as of the latest practicable date.
Class Outstanding at April 1, 1996
Common Stock ($5.00 par value) 1,191,171 Shares
<PAGE>
<TABLE>
Part I - FINANCIAL INFORMATION
FIRST LEESPORT BANCORP, INC. AND SUBSIDIARY
UNAUDITED, CONSOLIDATED, CONDENSED BALANCE SHEETS
(Amounts in thousands)
<CAPTION>
Mar.31 Dec. 31
ASSETS 1996 1995
<S> <C> <C>
Cash and Due from Banks $ 4,044 $ 4,828
Interest-bearing Balances 207 215
Total Cash and Balances Due from Banks 4,251 5,043
Federal Funds Sold 0 601
Securities Available for Sale 37,972 37,849
Loans, Net of Unearned Income 108,943 105,271
Less: Allowance for Loan Losses (1,235) (1,179)
Net Loans 107,708 104,092
Bank Premises and Equipment 3,309 3,314
Other Real Estate Owned 230 69
Other Assets 1,407 1,434
Total Assets 154,877 152,402
LIABILITIES
Demand Deposits, Non-interest Bearing $ 16,254 $ 15,791
Demand Deposits, Interest Bearing 27,628 27,140
NOW, Money Market, and Savings Deposits 24,637 23,263
Time Deposits, $100,000 and over 3,515 4,607
Time Deposits 63,624 62,637
Total Deposits 135,658 133,438
Federal Funds Purchased 1,166 0
Other Borrowed Funds 500 0
Long-term Debt 0 1,000
Accrued Interest Payable 655 762
Other Liabilities 669 925
Total Liabilities 138,648 136,125
STOCKHOLDERS' EQUITY
Common Stock, $5.00 Par Value per Share; Authorized 2,000,000
Shares, Issued 1,200,000 Shares. $ 6,000 $ 6,000
Surplus 3,000 3,000
Retained Earnings 7,180 6,896
Net Unrealized Appreciation on Securities
Available for Sale, Net of Taxes 170 502
Treasury Stock, 8,829 Shares at Cost (121) (121)
Total Stockholders' Equity 16,229 16,277
Total Liabilities and Stockholders' Equity 154,877 152,402
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
<PAGE>
<TABLE>
FIRST LEESPORT BANCORP, INC. AND SUBSIDIARY
UNAUDITED, CONSOLIDATED, CONDENSED STATEMENTS OF INCOME
(Amounts in thousands, except per share data)
<CAPTION>
(in thousands)
Three Months
Ended Mar.31
1996 1995
<S> <C> <C>
INTEREST INCOME
Interest & Fees on Loans $ 2,453 $ 2,193
Interest on Federal Funds Sold 9 7
Interest on Securities:
Taxable Securities 392 317
State and Municipal Bonds 165 166
_____ _____
TOTAL INTEREST INCOME 3,019 2,683
INTEREST EXPENSE
Interest on Deposits 1,321 1,032
Interest on Borrowed Funds 18 157
_____ _____
TOTAL INTEREST EXPENSE 1,339 1,189
_____ _____
NET INTEREST INCOME 1,680 1,494
Provision for Loan Losses 82 110
Net Interest Income after _____ _____
Provision for Loan Losses 1,598 1,384
OTHER INCOME
Customer Service Fees 77 65
Other Income 64 48
___ ___
TOTAL OTHER INCOME 141 113
OTHER EXPENSES
Salaries and Benefits 584 581
Occupancy Expense 103 91
Furniture and Equipment Expense 75 72
Computer Services 73 69
Federal Deposit Insurance Premiums 1 66
Other Operating Expenses 334 317
_____ _____
TOTAL OTHER EXPENSES 1,170 1,196
_____ _____
Income Before Income Taxes 569 301
Federal Income Taxes 142 55
_____ _____
NET INCOME 427 246
PER SHARE DATA
Based on Average Shares Outstanding 1,191,171 1,191,171
Net Income 0.36 0.21
Dividends 0.12 0.11
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
<PAGE>
<TABLE>
FIRST LEESPORT BANCORP, INC. AND SUBSIDIARY
UNAUDITED CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
Amounts in thousands, except per share data)
<CAPTION>
Three Months Ended
March 31,
1996 1995
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income $ 427 $ 246
Provision for loan losses 82 110
Provision for depreciation and amortization 75 70
Net amortization of security premiums and discounts (5) (19)
Loans originated for sale 0 (910)
Proceeds from sales of loans 0 919
(Gain) Loss on sales of loans 0 (9)
(Increase) Decrease in accrued interest receivable
and other assets 214 106
Increase (Decrease) in accrued interest payable
and other liabilities (363) 187
_____ _____
NET CASH PROVIDED BY OPERATING ACTIVITIES 430 691
CASH FLOWS FROM INVESTING ACTIVITIES
Held-to-maturity securities:
Proceeds from maturities of securities 0 398
Purchase of securities 0 (300)
Available-for-sale securities:
Proceeds from maturities of securities 3,045 315
Proceeds from sales of securities 0 0
Purchase of securities (3,868) (400)
Net (Increase) decrease in federal funds sold 601 (597)
Loans made to customers, net of principal collected (3,673) (2,128)
Purchases of bank premises and equipment (70) (6)
_____ _____
NET CASH (USED IN) INVESTING ACTIVITIES (3,965) (2,718)
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits 2,220 2,616
Net increase (decrease) in federal funds purchased 1,166 (5,493)
Net increase (decrease) in other borrowed funds 500 4,000
Proceeds from long-term debt (1,000) 0
Dividends paid (143) (131)
_____ _____
NET CASH PROVIDED BY (USED IN) FINANCING ACTIVITIES 2,743 992
_____ _____
Increase (decrease) in cash and cash equivalents (792) (1,035)
_____ _____
Cash and cash equivalents: Beginning 5,043 5,337
_____ _____
Ending 4,251 4,302
_____ _____
SUPPLEMENTAL DISCLOSURES OF CASH FLOWS:
Interest paid $ 1,426 $ 1,177
Income taxes paid 0 55
<FN>
The accompanying notes are an integral part of these condensed financial
statements.
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(UNAUDITED)
1. The financial information included herein is unaudited, however, such
information reflects all adjustments (consisting solely of normal recurring
adjustments) which are, in the opinion of management, necessary for a fair
statement of the results for the interim periods.
2. The results of operations for the three-month period ended March 31, 1996
are not necessarily indicative of the results to be expected for the full
year.
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
Financial Condition
The Company's resources increased by 1.6% or $2,475,000 from December 31, 1995
to March 31, 1996. Total assets now amount to $154,877,000. Loan growth
provided the majority of the increase and was partially funded by the
decreases in cash and due from banks and federal funds sold.
Cash and balances due from other banks, combined, decreased by $792,000 or
15.7% from $5,043,000 at December 31, 1995 to $4,251,000 at March 31, 1996.
Management's continuing focus on redeploying excess cash resulted in this
decrease. Federal funds sold also decreased, falling from $601,000 to $0
between the two dates.
Securities remained relatively stable with a net increase of only $123,000 to
$37,972,000 at March 31, 1996. Maturing securities were replaced, but no
additional investments were made.
Loans, net of unearned income and the allowance for possible loan losses,
increased by $3,616,000 to $107,708,000 at March 31, 1996 from $104,092,000 at
December 31, 1995, an increase of 3.5%. The growth within the loan portfolio
was realized in mortgage loans which grew by $4,314,000 between the two dates.
All of the other types of loans actually decreased between the two dates.
There were no mortgage sales into the secondary market during the first
quarter of 1996 although the Bank does intend to utilize this capacity during
the year.
Other assets increased by $134,000 representing 8.9% from $1,503,000 at
December 31, 1995 to $1,637,000 at March 31, 1996. Included within these
numbers are increased levels of other real estate owned which increased by
$161,000. Other real estate owned represents properties upon which the Bank
has foreclosed. Even with this growth in non-earning assets, the ratio of
earning assets to total assets remained stable at 94% between the two dates.
Total deposits increased by $2,220,000, or 1.7%, growing from $133,438,000 to
$135,658,000 from December 31, 1995 to March 31, 1996. Demand, savings and
time deposits under $100,000 increased, while time deposits over $100,000
decreased as the Bank decreased its exposure to these relatively volatile
types of deposits.
Demand deposits, including interest bearing and non-interest bearing,
increased by $951,000 and totalled $43,882,000 at March 31, 1996. Savings
deposits increased by $1,374,000 or 5.9% from $23,263,000 to $24,637,000
between the two dates. These deposits include the money-market types of
deposits. Time deposits with balances less than $100,000 increased by $987,000
while time deposits with balances over $100,000 decreased by $1,092,000.
Borrowed funds, including federal funds purchased, and long-term debt,
increased by a net of $666,000 from $1,000,000 at December 31, 1995 to
$1,666,000 at March 31, 1996. The terms and structures of these borrowings
have changed, however, and all of these borrowings mature during the second
quarter of 1996.
Stockholders' Equity decreased by $48,000 from December 31, 1995 to March 31,
1996 despite an increase in retained earnings of $284,000. The unrealized
appreciation on securities available for sale component in stockholders'
equity, net of taxes, decreased by $332,000 or 66.1% from December 31, 1995 to
March 31, 1996 as a result of changing interest rates and market conditions.
Results of Operations
Three Month Periods Ended March 31, 1996 and 1995
Total interest income increased by $336,000 or 12.5% between the first quarter
of 1995 and the first quarter of 1996 growing from $2,683,000 to $3,019,000,
respectively. Interest and fees on loans accounted for 77.4% of this increase
due primarily to increased loan volumes. Interest on securities increased by
$75,000 as a result of improved yields within the portfolio.
Total interest expense increased by $150,000 or 12.6% between the two quarters
ended March 31, 1995 and 1996. A significant shift within the categories of
liabilities on which interest is paid took place between the two periods.
Interest on deposits increased by $289,000 due to growth within the deposit
portfolio as well as the increased cost of deposits while interest on borrowed
funds decreased by $139,000 as borrowings outstanding were reduced between the
periods.
The interest margin before providing for possible loan losses improved by
$186,000 or 12.5% from $1,494,000 for the three months ended March 31, 1995 to
$1,680,000 for the three months ended March 31, 1996. A reduction in the
amount of funds provided for loan losses from $110,000 to $82,000 for the two
periods contributed to an overall improvement in the net interest margin after
the provision for loan losses of $214,000 or 15.5% between the first quarter
of 1995 and the first quarter of 1996. A problem credit, identified during the
first quarter of 1995, and its associated provision for loan losses in 1995
contributed to this difference.
Total other income increased from $113,000 for the first quarter of 1995 to
$141,000 for the first quarter of 1996, an improvement of $28,000 or 24.8%.
Included within this increase, customer service fees increased by $12,000 and
other income, which includes fees from mortgage banking activities, increased
by $16,000.
Other expenses decreased by $26,000, net, between the three months ended March
31, 1995 and 1996, primarily as a result of the decrease of $65,000 in the
amount paid for deposit insurance. Absent this reduction, other expenses
actually increased by a modest $39,000 or 3.5%. Management's ongoing focus on
controlling these expenses helped to minimize this increase.
Income before taxes increased by $268,000 or 89.0% from $301,000 for the first
quarter of 1995 to $569,000 for the first quarter of 1996. This increase
resulted in an increased level of applicable income taxes. Income tax expenses
increased by $87,000 or 158.2% between the two periods, and amounted to
$142,000 for the first quarter of 1996.
Net income increased to $427,000 for the first quarter of 1996 from $246,000
for the first quarter of 1995, an improvement of $181,000 or 73.6%. Expressed
as earnings per share, income grew from $0.21 to $0.36 per share between the
two periods. Dividends in the amount of $0.12 and $0.11 per share were paid
during the two respective quarters.
Liquidity and Interest Rate Sensitivity
The banking industry has been required to adapt to an environment in which
interest rates have been volatile and deposit deregulation has provided
customers with the opportunity to invest in liquid, interest rate-sensitive
deposits. The banking industry has adapted to this environment by utilizing a
process known as asset/liability management.
Adequate liquidity means the ability to obtain sufficient cash to meet all
current and projected needs promptly and at a reasonable cost. These needs
include deposit withdrawal, liability runoff and increased loan demand. The
principal sources of liquidity are cash and due from banks, money market
investments, and all unpledged investment securities maturing within one
year. Maturing loans and loan payments are another source of liquidity. The
Bank can also package and sell residential mortgage loans in the secondary
market. Other sources of liquidity are the federal funds market, term
borrowings from the Federal Home Loan Banking System, and the discount window
of the Federal Reserve Banking System. In view of all factors involved, the
Banks's management believes that liquidity is being maintained at an adequate
level.
Asset/liability management is intended to provide for adequate liquidity and
interest rate sensitivity by matching interest rate-sensitive assets and
liabilities and coordinating maturities on assets and liabilities.
Approximately 26% of the commercial loan portfolio is sensitive to interest
rate changes. Other loans are written for relatively short terms and, except
for the majority of residential mortgage loans, provide for a readjustment of
the interest rate at specified times during the term of the loan. In
addition, interest rates offered for all types of deposit instruments are
reviewed weekly and are established on a basis consistent with funding needs
and maintaining a desirable spread between cost and return. The Bank does not
utilize repurchase agreements, reverse repurchase agreements, interest rate
swaps, or other derivative products in its asset/liability management
practices at this time.
<PAGE>
<TABLE>
The following table shows the repricing periods of interest earning assets and
interest bearing liabilities as of March 31, 1996:
INTEREST RATE SENSITIVITY
(Amounts in thousands)
<CAPTION>
Repricing Period
Within One Year to Over
One Year Five Years Five Years Total
<S> <C> <C> <C> <C>
Assets
Interest-bearing Balances $ 207 $ 0 $ 0 $ 207
Federal Funds Sold 0 0 0 0
Securities 11,294 22,440 4,238 37,972
Net Loans 36,922 19,501 51,285 107,708
______ ______ ______ _______
Total $ 48,423 $ 41,941 $ 55,523 $145,887
Liabilities
Total Interest-Bearing
Deposits $ 93,795 $ 25,609 $ 0 $119,409
Other Borrowed Funds 1,666 0 0 1,666
______ ______ ______ _______
Total $ 95,461 $ 25,609 $ 0 $121,070
______ ______ ______ ______
Rate Sensitivity Gap $(47,038) $ 16,332 $ 55,523 $ 24,817
______ ______ ______ ______
<FN>
</TABLE>
Capital Adequacy
The following table provides information about the capital of the Bank as it
relates to regulatory minimums as of selected Balance Sheet dates:
<TABLE>
<CAPTION>
Actual
Regulatory Mar.31, Dec. 31,
Minimum 1996 1995
<S> <C> <C> <C>
Tier I Capital to Risk-Adjusted Assets 4.00% 16.30% 16.26%
Total Capital to Risk-Adjusted Assets 8.00% 17.55% 17.48%
Leverage Ratio 3.00% 10.40% 10.34%
</TABLE>
<PAGE> PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
None
Item 4. Submission of Matters to Vote of Security Holders
None
Item 5. Other Information
The Board of Directors of First Leesport Bancorp, Inc. at its
March 12, 1996 meeting, declared a $.12 per share cash dividend to
be paid April 1, 1996 to holders of record on April 15, 1996.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None
(b) Reports on Form 8-K
None
<PAGE> SIGNATURES
In accordance with the requirements of the Exchange Act, the Registrant
caused this report to be signed on its behalf by the undersigned, thereunto
duly authorized.
FIRST LEESPORT BANCORP, INC.
(Registrant)
Dated: May 10, 1996 By John T. Connelly
John T. Connelly
President and
Chief Executive Officer
Dated: May 10, 1996 By Frederick P. Henrich
Frederick P. Henrich
Treasurer and
Chief Accounting Officer
<PAGE>
[ARTICLE] 9
<TABLE>
<S> <C>
[PERIOD-TYPE] QTR-1
[FISCAL-YEAR-END] DEC-31-1996
[PERIOD-END] MAR-31-1996
[CASH] 4044
[INT-BEARING-DEPOSITS] 207
[FED-FUNDS-SOLD] 0
[TRADING-ASSETS] 0
[INVESTMENTS-HELD-FOR-SALE] 0
[INVESTMENTS-CARRYING] 0
[INVESTMENTS-MARKET] 37972
[LOANS] 108943
[ALLOWANCE] 1235
[TOTAL-ASSETS] 154877
[DEPOSITS] 135658
[SHORT-TERM] 1666
[LIABILITIES-OTHER] 1324
[LONG-TERM] 0
[COMMON] 6000
[PREFERRED-MANDATORY] 0
[PREFERRED] 0
[OTHER-SE] 10229
[TOTAL-LIABILITIES-AND-EQUITY] 154877
[INTEREST-LOAN] 2453
[INTEREST-INVEST] 557
[INTEREST-OTHER] 9
[INTEREST-TOTAL] 3019
[INTEREST-DEPOSIT] 1321
[INTEREST-EXPENSE] 1339
[INTEREST-INCOME-NET] 1680
[LOAN-LOSSES] 82
[SECURITIES-GAINS] 0
[EXPENSE-OTHER] 1170
[INCOME-PRETAX] 569
[INCOME-PRE-EXTRAORDINARY] 069
[EXTRAORDINARY] 0
[CHANGES] 0
[NET-INCOME] 427
[EPS-PRIMARY] .36
[EPS-DILUTED] .36
[YIELD-ACTUAL] 4.67
[LOANS-NON] 821
[LOANS-PAST] 577
[LOANS-TROUBLED] 1,303
[LOANS-PROBLEM] 0
[ALLOWANCE-OPEN] 1,179
[CHARGE-OFFS] 45
[RECOVERIES] 19
[ALLOWANCE-CLOSE] 1,235
[ALLOWANCE-DOMESTIC] 0
[ALLOWANCE-FOREIGN] 0
[ALLOWANCE-UNALLOCATED] 1,235
</TABLE>
