16
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 December 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 6,792,435 shares
outstanding as of December 31, 1996.
YORK FINANCIAL CORP.
INDEX
Part I. FINANCIAL INFORMATION Page
Number
Item 1. Financial Statements
Consolidated balance sheets
December 31, 1996 and June 30, 1996 (unaudited) 3
Consolidated statements of income,
three months and six months ended December 31, 1996
and 1995 (unaudited) 4
Consolidated statements of cash flows,
six months ended December 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 7
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) December June
31 30
1996 1996
<S> <C> <C>
ASSETS
Cash and due from banks:
Noninterest-earning $20,509 $21,864
Interest-earning 1,581 2,207
22,090 24,071
Loans held for sale, net 5,966 5,686
Securities held for trading 2,368 21,736
Securities available for sale 52,122 53,115
Securities held to maturity (fair value at
Dec. 31,1996 - $8,736 and June 30, 1996 -
$8,948) 9,038 9,275
Loans receivable, net 1,006,872 938,570
Real estate, net 17,008 13,361
Premises and equipment 16,957 16,398
Federal Home Loan Bank stock, at cost 6,733 6,733
Accrued interest receivable 7,732 7,370
Other assets 8,146 8,142
Investments in joint ventures 5,003 5,347
Total Assets $1,160,035 $1,109,804
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $942,888 $908,123
Federal Home Loan Bank advances and
other borrowings 106,374 74,380
Advances from borrowers for taxes and
insurance 2,460 4,237
Other liabilities 13,784 29,524
Total Liabilities 1,065,506 1,016,264
Stockholders' Equity:
Preferred Stock: 10,000,000 shares --- ---
authorized and unissued
Common Stock, $1.00 par value:
Authorized 10,000,000 shares; issued
Dec. 31,1996 - 6,792,435; June 30, 1996 -
6,087,722 6,792 6,088
Additional capital 79,228 67,809
Retained earnings 9,567 21,154
Unrealized gains (losses) 2 (451)
Unearned ESOP shares (1,060) (1,060)
Total Stockholders' Equity 94,529 93,540
Total Liabilities and Stockholders'Equity $1,160,035 $1,109,804
See notes to consolidated financial statements
</TABLE>
<TABLE>
YORK FINANCIAL CORP. AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Months Six Months
Ended Ended
December 31 December 31
1996 1995 1996 1995
<S> <C> <C> <C> <C>
(In thousands except per share
data, unaudited)
Interest income:
Interest and fees on loans $20,501 $18,842 $40,203 $37,221
Interest on securities held
for trading 242 74 624 165
Interest on securities
available for sale 871 770 1,759 1,347
Interest and dividends on
securities held to maturity 236 403 469 935
Other interest income 228 296 403 530
Total interest income 22,078 20,385 43,458 40,198
Interest expense:
Interest on deposits 11,509 10,566 22,721 20,834
Interest on borrowings 1,692 1,280 3,130 2,328
Total interest expense 13,201 11,846 25,851 23,162
Net interest income 8,877 8,539 17,607 17,036
Provision for loan losses 903 700 1,806 1,300
Net interest income after
provision for loan losses 7,974 7,839 15,801 15,736
Other income:
Mortgage banking 1,273 831 2,026 1,520
Gain (loss) on sales of
real estate 13 1,203 (40) 938
Fees and service charges 776 651 1,453 1,236
Income (loss) from joint
ventures 206 557 (421) 693
Other operating income 242 170 484 334
Total other income 2,510 3,412 3,502 4,721
Other expenses:
Salaries and employee
benefits 2,484 2,787 5,441 5,540
Occupancy 875 647 1,685 1,302
Federal deposit insurance 415 486 946 951
SAIF special assessment --- --- 5,310 ---
Real estate 87 187 184 366
Data processing 278 261 527 505
Other 1,604 1,240 3,046 2,523
Total other expenses 5,743 5,608 17,139 11,187
Income before income taxes 4,741 5,643 2,164 9,270
Provision for income taxes 1,871 2,256 887 3,712
Net income $2,870 $3,387 $1,277 $5,558
Per share data:
Net income $ 0.40 $ 0.49 $ 0.18 $ 0.81
Cash dividends paid $0.136 $0.124 $0.273 $0.248
Weighted average shares 7,138,017 6,904,437 7,088,178 6,886,214
See notes to consolidated financial statements
</TABLE>
<TABLE>
YORK FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended
December December
31 31
1996 1995
<S> <C> <C>
(In thousands, unaudited)
OPERATING ACTIVITIES
Net income $1,277 $5,558
Adjustments to reconcile net income to
net cash provided by operating activities:
Amortization and accretion on
securities, net (357) (1,109)
Provision for loan losses 1,806 1,300
Provision for real estate losses --- 200
Depreciation and amortization 838 748
Loans originated for sale (44,914) (75,618)
Proceeds from sales of trading
securities 60,406 48,783
Realized (gains) losses on trading
securities 158 (57)
Realized (gains) losses on sales of
securities available for sale --- (68)
Decrease (increase) in other assets 515 (2,290)
Increase (decrease) in other
liabilities (15,928) (4,950)
Other (1,101) (2,485)
Net cash provided by (used in) operating
activities 2,700 (29,988)
INVESTING ACTIVITIES
Proceeds from sales of securities available
for sale --- 12,102
Purchases of securities held to maturity (57) ---
Proceeds from maturities of securities held
to maturity 57 ---
Principal repayments on securities 4,354 7,322
Loans originated or acquired, net of change
in deferred loan fees (163,558)(131,017)
Principal collected on loans 86,894 82,784
Proceeds from sales of loans 1,643 892
Purchases of real estate (82) (99)
Proceeds from sales of real estate 1,686 6,121
Purchases of premises and equipment, net (1,338) (313)
Other (297) (2,892)
Net cash used in investing activities (70,698) (25,100)
FINANCING ACTIVITIES
Net increase (decrease) in demand deposits,
NOW accounts, savings accounts, and
31-day certificates of deposit (23,283) 21,846
Net increase (decrease) in certificates of
deposit 58,047 21,349
Net increase (decrease) in short-term
borrowings 7,000 4,765
Increase in Federal Home Loan Bank advances
and other borrowings 25,000 ---
Repayments of Federal Home Loan Bank
advances and other borrowings (6) (6)
Issuance of common stock :
Dividend reinvestment plan 1,016 778
Stock option plans 97 12
Cash dividends paid (1,833) (1,630)
Cash in lieu of fractional shares (21) (20)
Net cash provided by financing activities 66,017 47,094
Increase (decrease) in cash and cash
equivalents (1,981) (7,994)
Cash and cash equivalents at beginning of year 24,071 39,329
Cash and cash equivalents at end of year $22,090 $31,335
</TABLE>
YORK FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
December 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 six month period
ended December 31, 1996 are not necessarily indicative of the
results that may be expected for the year ended June 30, 1997.
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, 1996.
Cash Flow Information: For purposes of the statements of cash
flows, cash equivalents include cash and amounts due from banks.
During the six months ended December 31, 1996 and 1995, the
Association exchanged loans for mortgage-backed securities in the
amounts of $43.0 million and $67.5 million respectively. During
the six months ended December 31, 1996 and 1995, the Association
transferred unpaid loan balances from loans to real estate
acquired due to foreclosures of $6.6 million and $2.6 million
respectively.
Reclassifications: Certain reclassifications have been made to
the fiscal 1996 consolidated financial statements to conform with
the fiscal 1997 presentation.
Note B -- Per Share Data
On October 18, 1996, the Corporation declared a 10% stock
dividend to shareholders of record on November 4, 1996, paid
November 15, 1996. 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.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
CONSOLIDATED FINANCIAL CONDITION AND RESULTS OF OPERATIONS OF
YORK FINANCIAL CORP.
Financial Review
The purpose of this discussion is to provide additional
information about York Financial Corp. ("York Financial" or
"Corporation"), its financial condition and results of
operations. Readers of this report should refer to the
consolidated financial statements and other financial data
presented throughout this report to fully understand the
following discussion and analysis.
York Financial is a unitary savings and loan holding company
incorporated in Pennsylvania in September 1985 and in August 1986
became the sole stockholder of York Federal Savings and Loan
Association ("York Federal" or "Association"), a federally
chartered stock savings and loan association. Presently, the
primary business of York Financial is the business of York
Federal. At December 31, 1996, the Corporation had consolidated
assets of $1.2 billion, total deposits of $943.0 million and
stockholders' equity of $94.5 million. The Association is a
member of the Federal Home Loan Bank ("FHLB") of Pittsburgh and
is subject to supervision, examination and regulation by the
Office of Thrift Supervision ("OTS") and the Federal Deposit
Insurance Corporation ("FDIC"). The Association is primarily
engaged in the business of attracting deposits and investing
these deposits into loans secured by residential and commercial
real property, consumer loans and securities. York Federal
conducts its business through twenty-two offices located in south
central Pennsylvania and Maryland. In addition, York Federal
maintains a commissioned mortgage origination staff as well as
mortgage broker relationships which originate residential
mortgage loans for the Association primarily in Pennsylvania,
Maryland, Virginia and Delaware. The Association's deposits are
insured up to applicable limits by the Savings Association
Insurance Fund ("SAIF") of the FDIC.
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 strong supplement to
York Federal's interest income and is primarily the result of
mortgage banking activities including gains on sales of mortgage-
backed securities created from loan originations and the
resulting service fee income derived from the portfolio of loans
serviced for others. Other operating income also includes gains
and losses on sales of real estate and fees and service charges
assessed on loan and deposit transactions, as well as income/loss
from equity investments.
Interest Rate Sensitivity 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.
Management reviews the Association's interest sensitivity
position on an ongoing basis and prepares strategies to adjust
that sensitivity to maximize the yield on the asset portfolio
while maintaining the interest rate sensitivity on earning assets
at acceptable levels to insulate it from the effects of interest
rate fluctuations. The Corporation originates for portfolio
principally short and intermediate term and adjustable rate loans
and sells most fixed rate loan originations. The funding sources
for these portfolio loans are deposits with various maturities
and short term borrowings. The result of this origination and
funding activity was a $61.1 million liability sensitive gap at
the one year time period at December 31, 1996.
<TABLE>
Interest Sensitivity Gap Analysis
Subject to Repricing
December June
31 30
1996 1996
<S> <C> <C>
(Dollars in thousands)
Earning assets maturing or repricing
within one year $629,777 $645,432
Interest bearing liabilities maturing or
repricing within one year 690,829 641,677
Interest sensitivity gap within one year
$(61,052) $ 3,755
Cumulative interest sensitivity gap
within one year as a percent
of total assets (5.26)% 0.34%
</TABLE>
The Corporation also monitors its interest rate risk in
accordance with regulatory guidance. 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 December 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 including loans deemed impaired in
accordance with FASB Statement No. 114, past loss experience,
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>
Six Fiscal
Months Year
Ended Ended
December June
31 30
1996 1996
<S> <C> <C>
(Dollars in thousands)
Total allowance for loan losses at beginning
of period $6,609 $5,840
Loans charged-off:
Real estate - mortgage:
Residential 695 1,151
Commercial 1,195 620
Consumer 106 100
Total charged-offs 1,996 1,871
Recoveries:
Real estate - mortgage:
Residential 145 156
Commercial 155 184
Consumer 1 ---
Total recoveries 301 340
Net loans charged-off 1,695 1,531
Provision for loan losses 1,806 2,300
Total allowance for loan losses at end of
period $6,720 $6,609
Percentage of net charge-offs to average
loans outstanding during the period 0.17% 0.17%
Percentage of allowance for loan losses to
adjusted total loans 0.66% 0.70%
</TABLE>
The allowance for loan losses totaled $6.7 million or .66%
of adjusted total loans of $1.0 billion at December 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>
December June
31 30
1996 1996
<S> <C> <C>
(Dollars in thousands)
Loans accounted for on a
nonaccrual basis:
Real estate-mortgage:
Commercial $1,135 $1,481
Land 200 200
Total nonaccrual loans $1,335 $1,681
Accruing loans which are contractually
past due 90 days or more:
Real estate-mortgage:
Residential 11,464 10,029
Consumer 683 383
Total of 90 days past due loans 12,147 10,412
Total of nonaccrual and 90 days
past due loans $13,482 $12,093
As a percent of total loans 1.33% 1.28%
Real Estate Owned:
Real Estate acquired through
foreclosure or repossession by
loan type:
Real Estate:
Residential $5,803 $4,913
Commercial 5,195 2,370
Land 3,001 3,349
Allowance for real estate losses (616) (955)
Total real estate owned 13,383 9,677
As a percent of total assets 1.15% 0.87%
Total nonperforming assets 26,865 21,770
As a percent of total assets 2.32% 1.96%
</TABLE>
Management recognizes the risk of potential reduction in
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). For the first six months of fiscal
1997, no additions were made to the allowance. Charge offs net
of recoveries of $339,000 resulted in a decrease in the allowance
for Real Estate Owned losses to $616,000 at December 31, 1996.
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.
Liquidity
The primary purpose of asset/liability management is to
maintain adequate liquidity and a desired balance between
interest sensitive assets and liabilities. Liquidity management
focuses on the ability to meet the cash flow requirements of
customers wanting to withdraw or borrow funds for their personal
or business needs. Interest rate sensitivity management focuses
on consistent growth of net interest income in times of
fluctuating interest rates. The management of liquidity and
interest rate sensitivity must be coordinated since decisions
involving one may influence the other.
Liquidity needs can be met by either reducing assets or
increasing liabilities. Sources of asset liquidity include short
term investments, securities available for sale, maturing and
repaying loans and monthly cash flows from mortgage-backed
securities. The loan portfolio provides an additional source of
liquidity due to York Federal's participation in the secondary
mortgage market. Liquidity needs can be met by attracting
deposits and utilizing borrowing arrangements with the FHLB of
Pittsburgh and the Federal Reserve Bank of Philadelphia for short
and long term advances as well as other short term borrowings.
Deposits represent the Association's primary source of
funds. The Association does not rely on brokered deposits as a
source of funds. During the first six months of fiscal 1997, the
Association's deposits increased $34.8 million. In addition,
York Federal has supplemented its deposit gathering efforts
through borrowings from the FHLB of Pittsburgh. At December 31,
1996, York Federal had $105.3 million in FHLB advances
outstanding at a weighted average interest rate of 6.30%.
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 six months
ended December 31, 1996, York Federal maintained an average
liquidity level which was in compliance with the regulatory
requirements. At December 31, 1996, the Association's liquidity
level was 5.07%.
Amortization and prepayments of loans and proceeds from loan
and securities sales within the Association's mortgage banking
activity represent a substantial source of funds to York Federal.
These sources amounted to $153.5 million for the first six months
of fiscal 1997.
The principal use of York Federal funds is the origination
of mortgage and other loans. Loan demand resulted in total
originations of $215.3 million for the period ended December 31,
1996. Loan originations were obtained through various channels
including the retail branch system, commissioned mortgage
origination staff, tele-mortgage activity and expanded mortgage
broker relationships. The volume of originations was favorably
impacted by a relatively stable interest rate environment and
included traditional long term fixed rate loans primarily
originated for sale as well as adjustable rate and residential
construction loan products. In addition, in response to changing
customer preferences intermediate term mortgage products, i.e.
seven year balloon loans and 5/1 CMT adjustable rate loans (fixed
rate for the first five years with annual adjustments
thereafter), became a more significant component of origination
volume.
Capital
The management of capital provides the foundation for future
asset and profitability growth and is a major strategy in the
management of York Financial Corp. Stockholders' equity at
December 31, 1996 totaled $94.5 million compared to $90.2 million
at December 31, 1995, an increase of $4.3 million or 4.8%. This
growth was a result of a combination of factors including
earnings growth, cash dividends paid, issuance of shares in
connection with various benefit and dividend reinvestment plans
and the impact of unrealized losses on "available for sale"
securities.
OTS regulated thrifts must comply with various capital
standards:
Tangible Capital. Generally, common stock plus retained
earnings must equal at least 1.5% of adjusted total assets.
Core Capital to total assets. Tangible capital plus
qualifying supervisory goodwill (arising from the purchase of a
troubled savings association) and other qualifying intangible
assets must equal at least 3.0% of adjusted total assets.
Risk-Based Capital. Risk-based capital must equal at least
8.0% of risk-weighted assets, as defined in the regulations.
Core capital component of risk-based capital, as defined above,
must equal at least 4.0% of risk weighted assets.
At December 31, 1996, York Federal's tangible and core
capital both equaled 7.2% ($83.0 million), substantially in
excess of the minimum regulatory requirements of 1.5% and 3.0%,
respectively, as indicated above. York Federal's total assets do
not include any goodwill. York Federal's core capital to risk
weighted assets equaled 10.7% ($83.0 million) at December 31,
1996, which exceeds its required level of 4.0%. Finally, York
Federal's risk-based capital ratio equaled 11.6% ($89.6 million)
at December 31, 1996, which exceeds its required level of 8.0% by
$27.6 million.
Results of Operations
Six months Ended December 31, 1996 Compared to December 31, 1995
Net Interest Income
York Financial's earnings are 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 assets, the average rate on interest-
bearing liabilities, and the ratio of interest-earning assets to
interest-bearing liabilities.
Net interest income for the six months ended December
31, 1996 was $17.6 million compared to $17.0 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 3.27% from 3.52% for the six
months ended December 31, 1996 and 1995, respectively. The impact
of a lower interest rate environment, a decrease in deferred fee
income recognition and a higher level of non-accrual loans
resulted in a 26 basis point decrease to the average yield on
interest earning assets to 7.97% for the six months ended
December 31, 1996 as compared to 8.23% in the same period in the
prior year. The higher level of interest-bearing liabilities
during the first six months of fiscal 1997 resulted from
increases in higher cost guaranteed money fund and certificate
accounts and short-term borrowings which were offset by decreases
in savings and regular money market accounts. This resulting
composition shift offset the lower levels of interest rates
resulting in no change to the average rate on interest bearing
liabilities of 4.98%. The net effect caused the interest rate
spread for the current period to decrease to 3.00% from 3.24% 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 $3.5 million for the six months ended
December 31, 1996, a decrease of 25.8% from the six months ended
December 31, 1995. Mortgage banking income for the six months
ended December 31, 1996 increased $506,000 to $2.0 million or
33.3% as compared to the same period in 1995 and includes net
gains on sales of loans, trading securities and servicing and
income from servicing fees. The portfolio of loans serviced for
others totaled $505.7 million at December 31, 1996 as compared to
$601.1 million at December 31, 1995. Included in the change in
the balance serviced for others was the sale of servicing rights
on approximately $96.7 million of loans serviced for others
consummated in December 1996 at a net gain of $510,000. The
servicing rate earned on the portfolio of loans serviced for
others for the six months ended December 31, 1996 decreased to
..248 % from .249% in the same period in 1995. Gain(loss) on
sales of real estate was a loss of $40,000 for the six months
ended December 31, 1996 as compared to a gain of $938,000 for the
six months ended December 31, 1995. This gain in the prior period
is primarily attributed to the sale of real estate held for
investment which resulted in a $1.3 million gain partially offset
by losses on sale of other real estate sold during the period.
Fees and service charges for the six months ended December 31,
1996 increased by 17.6% to 1.5 million compared to 1.2 million in
the same period in 1995. The Corporation is a partner in various
joint ventures. These joint ventures during the first six months
of fiscal 1997 had losses of $421,000.These losses were primarily
related to the Corporation's share in the net losses of a venture
capital partnership resulting from the decreased market value of
underlying portfolio investments. Other operating income was
$484,000 in the first six months of fiscal 1997 as compared to
$334,000 in the first six months of fiscal 1996. Other operating
income includes income from operations of subsidiaries, including
commissions earned from discount brokerage activities and
appraisal and construction inspection services provided to
independent third parties.
Other Expenses
Other expenses of $17.1 million increased $6.0 million or
53.2% for the six months ended December 31, 1996 as compared to
the same period in 1995.
The Deposit Insurance Funds Act of 1996 was enacted
September 30, 1996 and included provisions for a one-time special
assessment to recapitalize the SAIF (Savings Association
Insurance fund) of the FDIC. This Act required SAIF institutions
to pay a one-time special assessment of 65.7 basis points on the
deposit premium assessment base as of March 31, 1995 resulting
in a $5.3 million pre-tax charge recognized in the six months
ended December 31, 1996. Future SAIF insurance premiums
will be paid at a substantially lower rate which will be more
consistent with the deposit insurance premiums paid by BIF (Bank
Insurance Fund) insured institutions.
Salaries and employee benefits decreased $99,000 or 1.8%
over the same period in 1995 and is primarily attributable to
increases in salaries due to the implementation of revisions to
the salary administration program offset by substantially reduced
profit sharing expense due to reduced profitability of the
Corporation caused by recognition of the one-time SAIF
assessment. Occupancy expense increased $383,000 or 29.4% over
the same period in 1995 and is primarily attributed to operating
cost related to a new office facility occupied in June 1996. Real
estate expenses decreased $182,000 when compared to December 31,
1995 and is primarily attributable to a decrease in provision for
possible real estate losses (see asset quality), decreased net
carrying costs related to maintaining the portfolio of properties
and settlement and legal fees related to disposition of
properties. Other expenses includes a loss accrual of $100,000
related to the expected settlement of litigation initiated in
1991 and increased advertising expenses of $166,000 related to
the promotion of various loan and deposit product offerings over
the same period in 1995.
Provision for Income Taxes
The provision for income taxes of $887,000 for the six
months ended December 31, 1996 represents an effective tax rate
of 41.0% as compared to 40.0% for the same period last year.
Regulatory Matters
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
December 31, 1996 such transactions are within these regulatory
limits.
Effects of Inflation and Changing Prices
The consolidated financial statements and related financial
data presented herein have been prepared in accordance with
generally accepted accounting principles, which require the
measurement of financial position and operating results in terms
of historical dollars, without considering changes in relative
purchasing power over time due to inflation.
Unlike most industrial companies, virtually all of the
assets and liabilities of a financial institution are monetary in
nature. As a result, interest rates generally have a more
significant impact on a financial institution's performance than
does the effect of inflation. Interest rates do not necessarily
move in the same direction or in the same magnitude as the price
of goods and services since such prices are affected by
inflation. In the current interest rate environment, the
liquidity and maturity structures of York Federal's assets and
liabilities are critical to the maintenance of acceptable
performance levels.
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 six months ended
December 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 February 11, 1997 /s/ Robert W. Pullo
Robert W. Pullo, President -
Chief Executive Officer
Date February 11, 1997 /s/ James H. Moss
James H. Moss, Senior Vice President
- Chief Financial Officer/Treasurer
(11) -- Statement re: Computation of Earnings Per Share
<TABLE>
Six Months Ended
December 31
1996 1995
(Dollars in thousands, except per share data)
<S> <C> <C>
Primary:
Average shares outstanding 6,663,705 6,504,810
Net effect of dilutive stock
options -- based on the
treasury stock method
using average market price 424,473 381,404
Totals 7,088,178 6,886,214
Net income $1,277 $5,558
Per share amount $ 0.18 $ 0.81
Fully diluted:
Average shares outstanding 6,663,705 6,504,810
Net effect of dilutive stock
options -- based on the treasury
stock method using quarter end
market price or average market
price whichever is greater 435,672 381,820
Totals 7,099,377 6,886,630
Net income $1,277 $5,558
Per share amount $ 0.18 $ 0.81
</TABLE>
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<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> DEC-31-1996
<CASH> 22090
<INT-BEARING-DEPOSITS> 1581
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 2368
<INVESTMENTS-HELD-FOR-SALE> 52122
<INVESTMENTS-CARRYING> 9038
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<LOANS> 1012838
<ALLOWANCE> 6720
<TOTAL-ASSETS> 1160035
<DEPOSITS> 942888
<SHORT-TERM> 105000
<LIABILITIES-OTHER> 13784
<LONG-TERM> 1374
6792
0
<COMMON> 0
<OTHER-SE> 87737
<TOTAL-LIABILITIES-AND-EQUITY> 1160035
<INTEREST-LOAN> 40203
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<INTEREST-TOTAL> 43458
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<INCOME-PRETAX> 2164
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<EXTRAORDINARY> 0
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<LOANS-NON> 1335
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