15
THIS PAPER DOCUMENT IS BEING SUBMITTED PURSUANT TO
RULE 901(d) OF REGULATION S-T.
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For Quarter Ended March 31, 1996
Commission File No. 0-14995
YORK FINANCIAL CORP.
(Exact name of Registrant as specified in its charter)
Pennsylvania
(State or other jurisdiction of incorporation or
organization)
23-2427539
(I.R.S. employer identification number)
101 South George Street York, Pa. 17401
(Address of principal executive offices) (Zip code)
(717) 846-8777
Registrant's telephone number, including area code
Indicate by check mark whether the Registrant (1) has
filed all reports required to be filed by Section 13
or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months, and (2) has been subject to such
filing requirements for the past 90 days.
Yes [ X ]
No [ ]
Indicate the number of shares outstanding of each of the
issuer's classes of common stock, as of the latest
practicable date.
Common stock, par value $1.00 per share 6,049,983 shares
outstanding as of March 31, 1996.
YORK FINANCIAL CORP.
INDEX
Page
Part I. FINANCIAL INFORMATION
Number
Item 1. Financial Statements
Consolidated balance sheets
March 31, 1996 and June 30, 1995 (unaudited) 3
Consolidated statements of income,
three months and nine months ended March 31,
1996 and 1995 (unaudited) 4
Consolidated statements of cash flows,
nine months ended March 31, 1996
and 1995 (unaudited) 5
Notes to consolidated financial statements 6
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 8
Part II. OTHER INFORMATION
Item 1. Legal Proceedings 15
Item 2. Changes in Securities 15
Item 3. Defaults upon Senior Securities 15
Item 4. Submission of Matters to a Vote of
Security Holders 15
Item 5. Other Information 15
Item 6. Exhibits and Reports on Form 8-K 15
SIGNATURES 16
<TABLE>
YORK FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands, unaudited)
March 31 June 30
1996 1995
ASSETS
<S> <C> <C>
Cash and due from banks:
Noninterest-earning $ 22,520 $ 19,468
Interest-earning 2,141 19,861
24,661 39,329
Loans held for sale, net 22,640 6,450
Securities held for trading --- 4,451
Securities available for sale 49,133 31,569
Securities held to maturity (fair value at
March 31, 1996 - $9,509 and June 30, 9,772 29,293
1995 - $28,902)
Loans receivable, net 886,621 845,205
Real estate, net 13,679 17,656
Premises and equipment 14,217 12,536
Federal Home Loan Bank stock, at cost 6,733 5,177
Accrued interest receivable 7,184 6,460
Other assets 9,434 8,091
Investments in joint ventures 4,599 3,701
Total Assets $1,048,673 $1,009,918
LIABILITIES AND STOCKHOLDERS'
EQUITY
Liabilities:
Deposits $ 914,708 $ 832,056
Federal Home Loan Bank advances and 18,883 65,759
other borrowings
Advances from borrowers for taxes and 3,124 5,098
insurance
Other liabilities 19,880 21,675
Total Liabilities 956,595 924,588
Stockholders' Equity:
Preferred Stock: 10,000,000 shares --- ---
authorized and unissued
Common Stock, $1.00 par value:
Authorized 10,000,000 shares;
issued March 31, 1996 -
6,049,983;June 30, 1995 - 6,050 5,422
5,421,949
Additional capital 67,312 55,911
Retained earnings 19,616 24,946
Unrealized gains 160 244
Unearned ESOP shares (1,060) (1,193)
Total Stockholders' Equity 92,078 85,330
Total Liabilities and Stockholders' Equity $1,048,673 $1,009,918
See notes to consolidated financial
statements
</TABLE>
<TABLE>
YORK FINANCIAL CORP. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands except per share
data, unaudited)
Three Nine
Months Months
Ended Ended
March 31 March 31
1996 1995 1996 1995
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $ 18,989 $ 15,682 $ 56,210 $ 44,358
Interest on securities held 61 76 226 138
for trading
Interest on securities 849 882 2,196 2,621
available for sale
Interest and dividends on
securities held to 199 525 1,134 1,533
maturity
Other interest income 196 201 726 800
Total interest income 20,294 17,366 60,492 49,450
Interest expense:
Interest on deposits 10,689 8,764 31,523 24,664
Interest on borrowings 604 783 2,932 1,006
Total interest expense 11,293 9,547 34,455 25,670
Net interest income 9,001 7,819 26,037 23,780
Provision for loan losses 500 500 1,800 1,840
Net interest income after
provision for loan 8,501 7,319 24,237 21,940
losses
Other income:
Mortgage banking 603 585 2,123 1,571
Gain (Loss) on sales of 133 101 1,071 3
real estate
Fees and service charges 585 574 1,821 1,646
Other operating income 584 (4) 1,611 562
Total other income 1,905 1,256 6,626 3,782
Other expenses:
Salaries and employee 3,235 2,885 8,775 8,320
benefits
Occupancy 687 650 1,989 1,919
Federal deposit insurance 497 451 1,448 1,367
Real estate 344 446 710 537
Data processing 248 242 753 662
Other 1,859 1,356 4,382 3,873
Total other expenses 6,870 6,030 18,057 16,678
Income before income taxes 3,536 2,545 12,806 9,044
Provision for income taxes 1,198 991 4,910 3,478
Net income $ 2,338 $ 1,554 $ 7,896 $ 5,566
Per share data:
Net income $ 0.37 $ 0.25 $ 1.26 $ 0.91
Cash dividends paid $ 0.140 $ 0.136 $ 0.412 $ 0.384
Weighted average shares 6,320,806 6,100,488 6,280,518 6,086,926
See notes to consolidated
financial statements
</TABLE>
<TABLE>
YORK FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands, unaudited)
Nine Months Ended
March 31
1996 1995
<S> <C> <C>
OPERATING ACTIVITIES
Net income $ 7,896 $ 5,566
Adjustments to reconcile net income to net
cash provided by operating activities:
Amortization and accretion on (1,581) (1,115)
securities, net
Provision for loan losses 1,800 1,840
Provision for real estate losses 401 320
Depreciation and amortization 1,115 1,121
Loans originated for sale (117,096) (37,717)
Proceeds from sales of trading 71,954 26,168
securities
Realized (gains) losses on trading (125) 66
securities
Realized (gains) losses on sales of
securities available for sale (358) (78)
Decrease (increase) in other assets (372) (722)
Increase (decrease) in other (1,535) (76)
liabilities
Other (2,882) 174
Net cash (used in) provided by operating (40,783) (4,453)
activities
INVESTING ACTIVITIES
Proceeds from sales of securities 25,268 3,931
available for sale
Purchases of securities held to maturity &
Federal Home Loan Bank Stock (1,556) (320)
Proceeds from maturities of securities 4,170 250
held to maturity
Principal repayments on securities 4,685 5,591
Loans originated or acquired, net of
increase in deferred loan fees (179,273 (233,848)
Principal collected on loans 132,584 109,308
Proceeds from sales of loans 1,637 2,334
Purchases of real estate (137) (242)
Proceeds from sales of real estate 9,141 7,764
Purchases of premises and equipment, net (3,847) (1,552)
Other (1,122) 771
Net cash used in investing activities (8,450) (106,013)
FINANCING ACTIVITIES
Net increase (decrease) in demand
deposits, NOW accounts,
savings accounts, and 31-day 56,194 (62,041)
certificates of deposit
Net increase (decrease) in certificates of 26,458 73,488
deposit
Net increase (decrease) in short-term (46,735) 50,172
borrowings
Repayments of Federal Home Loan Bank
advances and other borrowings (141) (8)
Issuance of common stock 1,234 1,195
Cash dividends paid (2,473) (2,253)
Acquisition of Treasury Stock --- (495)
Exercise of stock options 48 416
Cash in lieu of fractional shares (20) (21)
Net cash provided by financing activities 34,565 60,453
Increase (decrease) in cash and cash (14,668) (50,013)
equivalents
Cash and cash equivalents at beginning of 39,329 71,669
year
Cash and cash equivalents at end of year $24,661 $21,656
</TABLE>
YORK FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1996
Note A -- Basis Of Presentation
The accompanying unaudited condensed consolidated
financial statements have been prepared in accordance with
generally accepted accounting principles for interim
financial information and with the instructions to Form 10-
Q and Article 10 of Regulation S-X. Accordingly, they do
not include all of the information and footnotes required
by generally accepted accounting principles for complete
financial statements. In the opinion of management, all
adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been
included. Operating results for the nine month period
ended March 31, 1996 are not necessarily indicative of the
results that may be expected for the year ended June 30,
1996. For further information, refer to the consolidated
financial statements and footnotes thereto included in the
Company's annual report on Form 10-K for the year ended
June 30, 1995.
Cash Flow Information: For purposes of the statements of
cash flows, cash equivalents include cash and amounts due
from banks. During the nine months ended March 31, 1996
and 1995, the Association exchanged loans for mortgage-
backed securities in the amounts of $99.2 million and
$39.5 million respectively. During the nine months ended
March 31, 1996 and 1995, the Association transferred
unpaid loan balances from loans to real estate acquired
due to foreclosures of $4.9 million and $3.2 million
respectively. Upon implementation of SFAS No. 114,
$200,000 of loans classified as in-substance foreclosures
were reclassified from real estate to loans receivable
during the period ended March 31, 1996.
Reclassifications: Certain reclassifications have been
made to the fiscal 1995 consolidated financial statements
to conform with the fiscal 1996 presentation.
Note B -- Earnings Per Share Data
Net income per share is computed based on the weighted
average number of common shares outstanding and dilutive
common stock equivalents, adjusted for stock dividends.
Cash dividends paid per share are based on the number of
common shares outstanding at each declaration date,
adjusted for stock dividends. On October 20, 1995, the
Corporation declared a 10% stock dividend to shareholders
of record on November 3, 1995, payable November 15, 1995.
Note C -- Accounting for Mortgage Servicing Rights
In May 1995 the Financial Accounting Standard Board
("FASB") issued Statement of Financial Accounting
Standards No. 122 ("SFAS 122"). "Accounting for Mortgage
Servicing Rights an amendment of FASB Statement No. 65."
This statement requires the Corporation to capitalize
retained mortgage servicing rights on loans sold or
securitized by allocating the total cost of the mortgage
loans between the mortgage servicing rights and the loans
(without the servicing rights) based on their respective
fair values. The new statement also specifies new
procedures for assessing impairment of capitalized
mortgage servicing rights, whenever capitalized, and
requires that impairment shall be recognized through a
valuation allowance for individual portfolio
stratifications based on the fair value of those rights.
The Corporation adopted SFAS 122 effective July 1, 1995
which resulted in an increase in mortgage banking income
of $867,000 for the nine months ended March 31, 1996. In
accordance with SFAS 122, prior period financial
statements have not been restated. The total book value
of the capitalized mortgage servicing rights at March 31,
1996 was $1.7 million and the aggregate fair market value
totaled $1.9 million. A valuation model that calculates
the present value of future cash flows was used to
estimate fair value. In using this valuation method, the
Company incorporated assumptions that market participants
would use in estimating future net servicing income, which
included estimates of the cost of servicing per loan, the
discount rate, float value and prepayment speeds.
For purposes of measuring impairment, the following risk
characteristics were used to stratify the post
implementation originated mortgage servicing rights:
product type, term of loan, and interest rates. Based on
these measurement factors no valuation allowance was
required at March 31, 1996.
Note D -- Accounting by Creditors for Impairment of a Loan
In May 1993, the FASB issued Statement No. 114 ("SFAS
114") "Accounting by Creditors for Impairment of a Loan"
as amended by Statement No. 118, "Accounting by Creditors
for Impairment of a Loan - Income Recognition and
Disclosures." As a result of applying the new rules,
certain loans which are deemed to be impaired are reported
at the present value of expected future cash flows using
the loan's effective interest rate, or as a practical
expedient, at the loans observable market price or the
fair value of the collateral if the loan is collateral
dependent. The Corporation adopted these statements July
1, 1995.
At March 31, 1996, no loans were considered to be impaired
under FAS Statement 114.
Note E -- Accounting for Certain Investments in Debt and
Equity Securities
In November 1995, the FASB issued a Guide to
Implementation of Statement 115, "Accounting for Certain
Investments in Debt and Equity Securities." The guide
stated that no later than December 31, 1995, an enterprise
may reassess the appropriateness of the classifications of
all securities held at that time and account for any
resulting reclassifications at fair value.
Reclassifications from the held-to-maturity category that
result from this one-time reassessment will not call into
question the intent of an enterprise to hold other debt
securities to maturity in the future. During the quarter
ended December 31, 1995 the Corporation transferred held-
to-maturity securities with a fair value of $14.3 million
to available-for-sale with the resulting net unrealized
gains of $29,000, net of taxes, reported as a component of
stockholders' equity.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS
OF YORK FINANCIAL CORP.
General
York Financial Corp. ("York Financial" or
"Corporation") is a unitary savings and loan holding
company with it's principal offices located in York,
Pennsylvania. York Federal Savings and Loan Association
("York Federal" or "Association"), a federally chartered
savings and loan association, is the primary operating
unit of the Corporation.
The Corporation's net income is highly dependent on
the interest rate spread between the average rate earned
on loans and securities and the average rate paid on
deposits and borrowings as well as the amount of the
respective assets and liabilities outstanding. Other
operating income is a supplement to interest income and
is primarily the result of mortgage banking activities.
Other operating income also includes fees and service
charges assessed on loan and deposit transactions.
Asset/Liability Management
In an effort to maintain control over net
interest income, management of York Federal focuses its
attention on managing the interest rate sensitivity of
assets and liabilities and controlling the volume of
lending, investment and borrowing activity. By managing
the ratio of interest sensitive assets to interest
sensitive liabilities repricing in the same periods, the
Corporation seeks to minimize the negative effect of
interest rate fluctuations.
The asset sensitivity gap at the one year time period
decreased $36.9 million in the nine months ended March 31,
1996 to $67.4 million. This decrease was primarily
attributable to retention of intermediate term fixed rate
loans and mortgage backed securities funded by a decrease
in liquid assets and a changing composition within the
liability portfolio including growth in short term
borrowings and variable rate deposit products.
<TABLE>
Interest Sensitivity Gap Analysis
Subject to Repricing
March 31 June 30
1996 1995
(Dollars in thousands)
<S> <C> <C>
Earning assets maturing or repricing
within one year $649,952 $682,228
Interest bearing liabilities maturing
or repricing within one year 582,588 578,004
Interest sensitivity gap within one
year $ 67,364 $104,224
Cumulative interest sensitivity gap
within one year as a percent of
total assets 6.42% 10.32%
</TABLE>
The Corporation also monitors its interest rate risk
in accordance with regulatory direction. Fluctuations in
net interest income and the market value of portfolio
equity are determined in various interest rate scenarios
and monitored against acceptable limitations established
by management and approved by the Board of Directors.
Interest rate risk as indicated through balance sheet
simulations at March 31, 1996 is considered to be within
acceptable limits. The management of York Federal is
committed to managing the asset portfolio in order to
maximize the yield and maintain an interest rate
sensitivity of York Federal's earning assets that
insulates it from the potential negative effect of
interest rate fluctuations.
Asset Quality
Management is aware of the risks inherent in
lending and continually monitors risk characteristics of
the loan portfolio. The Association's policy is to
maintain the allowance for loan losses at a level believed
adequate by management to absorb potential loan losses
within the portfolio. Management's determination of the
adequacy of the allowance is performed by an internal loan
review committee and is based on risk characteristics of
loans, past loss experience, loan portfolio growth trends,
economic conditions and such other factors that deserve
recognition. Additions to the allowance are charged to
operations.
An analysis of the allowance for loan losses, for the
periods indicated is as follows:
<TABLE>
Nine Fiscal Year
Months
Ended Ended
March 31 June 30
1996 1995
<S> <C> <C>
(Dollars in thousands)
Total allowance for loan losses at $ 5,840 $ 4,492
beginning of period
Loans charged-off:
Real Estate - mortgage:
Residential 956 1,138
Commercial 615 6
Consumer 85 127
Total loans charged-off 1,656 1,270
Recoveries:
Real Estate - mortgage:
Residential 120 185
Commercial 162 92
Consumer --- 1
Total recoveries 282 278
Net loans charged-off 1,374 992
Provision for loan losses 1,800 2,340
Total allowance for loan losses at end $ 6,266 $ 5,840
of period
Percentage of net charge-offs to
average loans
outstanding during the period 0.15% 0.13%
Percentage of allowance for loan losses
to adjusted total loans 0.70% 0.69%
</TABLE>
The allowance for loan losses totaled $6.3 million or
.70% of adjusted total loans of $892.9 million at March
31, 1996. Such amount is considered adequate relative to
management's assessment of risk characteristics inherent
in the loan portfolio. While management uses available
information to recognize losses on loans, future additions
to the allowance may be necessary based on specific
circumstances related to problem loans as well as changes
in economic conditions.
An analysis of nonperforming assets is summarized as
follows:
<TABLE>
March 31 June 30
1996 1995
<S> <C> <C>
(Dollars in thousands)
Loans accounted for on a
nonaccrual basis:
Real estate-mortgage:
Commercial $1,620 $ 3,498
Accruing loans which are
contractually
past due 90 days or more:
Real estate-mortgage:
Residential 10,962 9,133
Consumer 659 433
Total of 90 days past due 11,621 9,566
loans
Total of nonaccrual and 90 days $13,241 $ 13,064
past due loans
As a percent of total loans 1.46% 1.53%
Real estate owned:
Real estate acquired through
foreclosure
or repossession by loan type:
Reside ntial $4,979 $ 5,981
Commercial 2,020 2,278
Land 3,927 5,107
Loans classified as in-substance --- 200
foreclosures
Allowance for real estate losses (791) (630)
Total real estate owned $ 10,135 $ 12,936
As a percent of total assets 0.97% 1.28%
Total nonperforming assets $23,376 $ 26,000
As a percent of total assets 2.23% 2.57%
</TABLE>
Management recognizes the risk of potential
diminution of value of real estate owned during the
holding period and provides for such risk by maintaining a
general allowance for real estate losses (such reserve is
separate from and in addition to the allowance for loan
losses). Management continually monitors the risk profile
of real estate owned and maintains an allowance for real
estate losses at a level believed adequate to absorb
potential losses within the
real estate portfolio. For the first nine months of
fiscal 1996, additions to the allowance in the amount of
$401,000 which was offset by charge offs net of recoveries
of $240,000 resulted in an increase in the allowance for
Real Estate Owned losses of $161,000 to $791,000 at March
31, 1996.
Results of Operations
Nine months Ended March 31, 1996 Compared to March 31,
1995
Net Interest Income
York Financial's earnings are significantly affected
by the level of York Federal's net interest income, the
difference between the income it receives on its loan
portfolio and other investments and its cost of money,
consisting primarily of interest paid on deposits and
borrowings. Net interest income is affected by the
average yield on interest-earning asset, the average rate
on interest-bearing liabilities, and the ratio of interest-
earning assets to interest-bearing liabilities.
Net interest income for the nine months ended
March 31, 1996 was $26.0 million compared to $23.8 million
for the same period last year. The increase in net
interest income was attributable to an increase in average
earning assets primarily due to the retention of
intermediate term assets. The margin on interest-earning
assets decreased to 3.55% from 3.79% for the nine months
ended March 31, 1996 and 1995, respectively. The impact
of rising loan and investment rates resulted in a 35 basis
point increase to the average yield on interest earning
assets to 8.23% for the nine months ended March 31, 1996
as compared to 7.88% in the same period in the prior year.
The increasing cost of deposits and other borrowings
during the first nine months of fiscal 1996 was caused by
a shift in composition within interest bearing liabilities
from lower cost transaction deposit accounts and variable
rate certificates of deposits to higher cost money fund
accounts and increased short-term borrowings resulting in
an increase to the average rate on interest bearing
liabilities to 4.97% as compared to 4.24% in the same
period last year. The net effect caused the interest rate
spread for the current period to decrease to 3.26% from
3.63% in the same period last year.
Provision for Loan Losses
Management is aware of the risks inherent in lending
and continually monitors risk characteristics of the loan
portfolio. See "Asset Quality".
Other Income
Other income was $6.6 million for the nine months
ended March 31, 1996, an increase of 75.2% from the nine
months ended March 31, 1995. On July 1, 1995, the
Corporation implemented SFAS 122 (see note C), resulting
in a favorable impact to earnings of $867,000. Mortgage
banking income for the nine months ended March 31, 1996
increased $552,000 to $2.1 million or 35.1% as compared to
the same period in 1995 and includes the adoption of SFAS
122, net gains on sales of loans and trading securities
and income from servicing fees. The portfolio of loans
serviced for others totaled $611.2 million at March 31,
1996 as compared to $561.8 million at March 31, 1995. The
servicing rate earned on the portfolio of loans serviced
for others for the nine months ended March 31, 1996
decreased to .246% from .291% in the same period in 1995.
Fees and service charges for the nine months ended March
31, 1996 increased by 10.6% to 1.8 million compared to 1.6
million in the same period in 1995. Other operating
income was $1.6 million in the first nine months of fiscal
1996 as compared to $562,000 in the first nine months of
fiscal 1995. This increase is primarily a result of a gain
on the sale of investment in real estate and an increase
in the market value of an equity investment. Other
operating income also includes income from operations of
subsidiaries, including commissions earned from discount
brokerage activities, appraisal and construction
inspection services provided to independent third parties
and equity in earnings of joint ventures.
Other Expenses
Other expenses of $18.1 million increased $1.4
million or 8.3% for the nine months ended March 31, 1996
as compared to the same period in 1995. Salaries and
employee benefits increased $455,000 or 5.5% over the same
period in 1995 and is primarily attributable to the
implementation of revisions to the salary administration
program. Real estate expenses increased $173,000 over
March 31, 1995 and is primarily attributable to an
increase in the provision for possible real estate losses
(see asset quality), increased carrying costs of $92,000
related to maintaining the portfolio of properties and
settlement and legal fees related to disposition of
properties. Data processing costs increased $91,000 or
13.7% and are primarily attributed to the increased cost
of services. Other expenses increased primarily due to a
charitable donation of $250,000 made during the quarter.
This donation qualifies for state tax credits which
contributed to a slight reduction in the effective tax
rate.
Provision for Income Taxes
The provision for income taxes of $4.9 million for
the nine months ended March 31, 1996 represents an
effective tax rate of 38.3% as compared to 38.5% for the
same period last year.
Liquidity and Capital Resources
Under current regulations, York Federal is required
to maintain liquid assets at 5.0% or more of its net
withdrawable deposits plus short-term borrowings.
Throughout the nine months ended March 31, 1996 and fiscal
year ended June 30, 1995, York Federal maintained an
average liquidity level which was in compliance with the
regulatory requirements. At March 31, 1996, the
Association's liquidity level was 5.12%.
Thrifts must comply with three separate capital
standards. The following table sets forth the capital
position of the Association as of March 31, 1996:
<TABLE>
Dollars in Thousands
Requirements Actual
Dollars Percent Dollars Percent Excess
<S> <C> <C> <C> <C> <C>
Tangible Capital $15,598 1.5% $80,651 7.8% $65,053
Core Capital $31,196 3.0% $80,651 7.8% $49,455
Risk-Based $55,739 8.0% $86,770 12.5% $31,031
Capital
</TABLE>
At March 31, 1996, York Federal is considered a well
capitalized association for capital distribution purposes
and therefore, its capital distributions may be made up to
100% of its net income to date during the calendar year
plus an amount that would reduce its surplus capital ratio
at the beginning of the calendar year by one-half. At
March 31, 1996, the total allowable capital distribution
was $16.6 million. Transactions with affiliates are
limited to 10% of capital and surplus per affiliate with
an aggregate limit on all such transactions with
affiliates to 20% of capital and surplus. At March 31,
1996, such transactions are within these regulatory
limits.
York Federal is insured by the FDIC through the
Savings Association Insurance Fund ("SAIF) and pays annual
insurance fees equal to a percentage of insured deposits.
The FDIC insures commercial banks and certain savings
banks through the Bank Insurance Fund ("BIF"), which
lowered their insurance rates in September 1995 since
commercial banks have reached the required capitalization
level of $1.25 for each $100 in deposits. Under the new
assessment schedule approximately 92% of BIF members pay
only the statutory minimum annual assessment of $2,000.
This BIF and SAIF insurance premium disparity places SAIF
insured institutions at a significant competitive
disadvantage since the average SAIF premium currently
remains at 24 basis points.
Proposed legislation to accelerate the
recapitalization of the SAIF by assessing a one time
charge of approximately 85 basis points on the amount of
deposits held by a SAIF member institution at March 31,
1995 is under consideration. If enacted, this one time
assessment could result in a pre-tax charge to the
Association's earnings of approximately $6.9 million. Such
charge will not impact York Federal's status as a well-
capitalized institution qualifying for the lowest SAIF
insurance premium. Management expects that the existing
annual SAIF premium paid by the Association will be
lowered to as low as 4 basis points as a result of the
proposed one time assessment resulting in a favorable
impact to earnings in future years. It cannot be
determined at this time what the outcome of these events
and proposals will be.
York Federal's primary sources of funds to support
lending and other general business activities are
operations, loan repayments including monthly amortization
and prepayments, the sale of loans and mortgage-backed
securities, deposits, short and long-term advances from
FHLB of Pittsburgh and Federal Reserve Bank of
Philadelphia and other short-term borrowings. Deposits
increased $82.7 million or 9.9% over prior year end
levels. In addition, at March 31, 1996, York Federal has
FHLB advances outstanding in the amount of $17.8 million
at a weighted average interest rate of 5.35%. In
accordance with the stated credit policy of the FHLB of
Pittsburgh, additional borrowings of approximately $116.8
million are available to York Federal at March 31, 1996.
However, York Federal may increase its borrowings over
amounts currently available by purchasing additional FHLB
stock.
Amortization and prepayments of loans and proceeds
from loan sales within the Association's mortgage banking
activity represent a substantial source of funds to York
Federal. These sources amounted to $239.8 million for the
nine months ended March 31, 1996.
The principal use of York Federal funds is the
origination of mortgage and other loans. Loan demand
resulted in total originations of $330.8 million for the
period ended March 31, 1996 compared to $277.1 million for
the same period in 1995. The $53.7 million increase in
loan originations over the prior fiscal year is due to an
increase in expanded mortgage broker relationships with
related volume favorably impacted by a relatively low rate
environment in the first nine months of fiscal 1996.
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. OTHER INFORMATION
None
ITEM 5. EXHIBITS AND REPORTS ON FORM 8-K
The following exhibit is included herein:
(11) Statement re: computation of earnings per share
The company did not file any reports on Form 8-K during the nine months
ended March 31, 1996.
SIGNATURES
Pursuant to the requirements of the Securities Exchange
Act of 1934, the registrant has duly caused this report
to be signed on its behalf by the undersigned thereunto
duly authorized.
York Financial Corp.
(Registrant)
Date May 14, 1996
/s/ Robert W. Pullo
Robert W. Pullo, President - Chief Executive Officer
Date May 14, 1996
/s/ James H. Moss
James H. Moss, Senior Vice President - Chief Financial
Officer/ Treasurer
<TABLE>
<S> <C> <C>
Per share amount $1.26 $1.01
Fully diluted:
Average shares outstanding 5,928,957 5,269,677
Net effect of dilutive stock options --
based on the treasury stock method
using
quarter end market price or average
market price whichever is greater 375,058 269,846
Totals 6,304,015 5,539,523
Net income $ 7,896 $ 5,566
Per share amount $ 1.25 $ 1.00
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-END> MAR-31-1996
<CASH> 24661
<INT-BEARING-DEPOSITS> 2141
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 49133
<INVESTMENTS-CARRYING> 9772
<INVESTMENTS-MARKET> 9509
<LOANS> 892887
<ALLOWANCE> 6266
<TOTAL-ASSETS> 1048673
<DEPOSITS> 914708
<SHORT-TERM> 17500
<LIABILITIES-OTHER> 19880
<LONG-TERM> 1383
0
0
<COMMON> 6050
<OTHER-SE> 86028
<TOTAL-LIABILITIES-AND-EQUITY> 1048673
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<INTEREST-INVEST> 3556
<INTEREST-OTHER> 726
<INTEREST-TOTAL> 60492
<INTEREST-DEPOSIT> 31523
<INTEREST-EXPENSE> 34455
<INTEREST-INCOME-NET> 26037
<LOAN-LOSSES> 1800
<SECURITIES-GAINS> 475
<EXPENSE-OTHER> 18057
<INCOME-PRETAX> 12806
<INCOME-PRE-EXTRAORDINARY> 12806
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7896
<EPS-PRIMARY> 1.26
<EPS-DILUTED> 1.25
<YIELD-ACTUAL> 3.55
<LOANS-NON> 1633
<LOANS-PAST> 11621
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5840
<CHARGE-OFFS> 1656
<RECOVERIES> 282
<ALLOWANCE-CLOSE> 6266
<ALLOWANCE-DOMESTIC> 3863
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2403
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