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, 1997
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 6,971,191 shares
outstanding as of March 31, 1997.
YORK FINANCIAL CORP.
INDEX
Part I. FINANCIAL INFORMATION Page
Number
Item 1. Financial Statements
Consolidated balance sheets
March 31, 1997 and June 30, 1996 (unaudited) 3
Consolidated statements of income,
three months and nine months ended March 31, 1997
and 1996 (unaudited) 4
Consolidated statements of cash flows,
nine months ended March 31, 1997
and 1996 (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
March 31 June 30
(In thousands, unaudited) 1997 1996
ASSETS
<S> <C> <C>
Cash and due from banks:
Noninterest-earning $ 21,135 $ 21,864
Interest-earning 943 2,207
22,078 24,071
Loans held for sale, net 3,998 5,686
Securities held for trading 11,540 21,736
Securities available for sale 56,280 53,115
Securities held to maturity (fair
value at
March 31, 1997 - $8,852 and
June 30, 1996 - $8,948) 9,025 9,275
Loans receivable, net 992,718 938,570
Real estate, net 15,267 13,361
Premises and equipment 16,910 16,398
Federal Home Loan Bank stock, at 7,907 6,733
cost
Accrued interest receivable 7,851 7,370
Other assets 8,987 8,142
Investments in joint ventures 4,795 5,347
Total Assets $ 1,157,356 $ 1,109,804
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $ 977,715 $ 908,123
Federal Home Loan Bank advances
and other borrowings 63,239 74,380
Advances from borrowers
for taxes and insurance 3,388 4,237
Other liabilities 15,456 29,524
Total Liabilities 1,059,798 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
March 31, 1997 - 6,971,191;
June 30, 1996 - 6,087,722 6,971 6,088
Additional capital 80,076 67,809
Retained earnings 11,577 21,154
Unrealized gains (losses) (138) (451)
Unearned ESOP shares (928) (1,060)
Total Stockholders' Equity 97,558 93,540
Total Liabilities and Stockholders' $ 1,157,356 $ 1,109,804
Equity
See notes to consolidated financial statements
</TABLE>
<TABLE>
YORK FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
Three Nine
Months Months
Ended Ended
March 31 March 31
1997 1996 1997 1996
(In thousands except per share data, unaudited)
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $20,349 $18,989 $ 60,552 $ 56,210
Interest on securities
held for trading 360 61 984 226
Interest on securities
available for sale 951 849 2,710 2,196
Interest and dividends on
securities held to
maturity 231 199 700 1,134
Other interest income 218 196 621 726
Total interest income 22,109 20,294 65,567 60,492
Interest expense:
Interest on deposits 11,530 10,689 34,251 31,523
Interest on borrowings 1,396 604 4,526 2,932
Total interest expense 12,926 11,293 38,777 34,455
Net interest income 9,183 9,001 26,790 26,037
Provision for loan losses 370 500 2,176 1,800
Net interest income after
provision for loan losses 8,813 8,501 24,614 24,237
Other income:
Mortgage banking 794 313 2,820 1,765
Gain on sales of securities
available for sale --- 290 --- 358
Gain on sales of real estate 78 133 38 1,071
Gain on sale of joint venture 1,223 --- 1,223 ---
Fees and service charges 657 585 2,110 1,821
Income (loss) from joint
ventures (198) 445 (619) 1,138
Other operating income 301 139 785 473
Total other income 2,855 1,905 6,357 6,626
Other expenses:
Salaries and employee benefits 3,082 3,235 8,523 8,775
Occupancy 891 687 2,576 1,989
Federal deposit insurance 150 497 1,096 1,448
SAIF assessment --- --- 5,310 ---
Real estate 616 344 800 710
Data processing 269 248 796 753
Other 1,642 1,859 4,688 4,382
Total other expenses 6,650 6,870 23,789 18,057
Income before income taxes 5,018 3,536 7,182 12,806
Provision for income taxes 1,968 1,198 2,855 4,910
Net income $3,050 $2,338 $ 4,327 $ 7,896
Per share data:
Net income $0.42 $ 0.34 $ 0.61 $ 1.14
Cash dividends paid $0.150 $0.127 $ 0.423 $ 0.375
Weighted average shares 7,220,821 6,952,887 7,134,840 6,908,570
See notes to consolidated financial statements
</TABLE>
<TABLE>
YORK FINANCIAL CORP. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended
March 31
1997 1996
(In thousands, unaudited)
<S> <C> <C>
OPERATING ACTIVITIES
Net income $4,327 $7,896
Adjustments to reconcile net income to net cash
provided
by operating activities:
Amortization and accretion on securities, net (498) (1,581)
Provision for loan losses 2,176 1,800
Provision for real estate losses 533 401
Depreciation and amortization 1,266 1,115
Loans originated for sale (92,588)(117,096)
Proceeds from sales of trading securities 95,221 71,954
Realized (gains) on trading securities (465) (125)
Realized (gains) on sales of securities --- (358)
available for sale
Realized (gain) on sale of joint venture (1,223) ---
Decrease (increase) in other assets 44 (372)
Decrease in other liabilities (14,180) (1,535)
Other (1,061) (2,882)
Net cash used in operating activities (6,448)(40,783)
INVESTING ACTIVITIES
Proceeds from sales of securities available for
sale --- 25,268
Purchases of securities held to maturity (1,231) (1,556)
Proceeds from maturities of securities held to
maturity 57 4,170
Principal repayments on securities 5,933 4,685
Loans originated or acquired, net of change in
deferred loan fees (194,076)(179,273)
Principal collected on loans 129,251 132,584
Proceeds from sales of loans 1,643 1,637
Purchases of real estate (278) (137)
Proceeds from sales of real estate 4,634 9,141
Proceeds from sale of joint venture 1,344 ---
Purchases of premises and equipment, net (1,666) (3,847)
Other 1,056 (1,122)
Net cash used in investing activities (53,333) (8,450)
FINANCING ACTIVITIES
Net increase (decrease) in demand deposits, NOW
accounts, savings accounts, and 31-day
certificates of deposits (3,646) 56,194
Net increase in certificates of deposit 73,237 26,458
Net decrease in short-term borrowings (36,000)(46,735)
Increase in Federal Home Loan Bank advances
and other borrowings 25,000 ---
Repayments of Federal Home Loan Bank advances
and other borrowings (9) (141)
Issuance of common stock :
Dividend reinvestment plan 1,583 1,234
Stock option plans 518 48
Cash dividends paid (2,874) (2,473)
Cash in lieu of fractional shares (21) (20)
Net cash provided by financing activities 57,788 34,565
Decrease in cash and cash equivalents (1,993)(14,668)
Cash and cash equivalents at beginning of year 24,071 39,329
Cash and cash equivalents at end of year $22,078 $24,661
</TABLE>
YORK FINANCIAL CORP. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 1997
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, 1997 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 nine months ended March 31, 1997 and 1996, the
Association exchanged loans for mortgage-backed securities in the
amounts of $92.6 million and $99.2 million, respectively. During
the nine months ended March 31, 1997 and 1996, the Association
transferred unpaid loan balances from loans to real estate
acquired due to foreclosures of $8.6 million and $4.9 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.
Note C -- Recently Issued Accounting Guidance
In February 1997, the FASB issued Statement No. 128, "Earnings
per Share", which establishes standards for computing and
presenting earnings per share (EPS) and applies to entities with
publicly held common stock or potential common stock. The
Statement simplifies the standards for computing earnings per
share previously found in APB Opinion No. 15, "Earnings per
Share", and makes them comparable to international EPS standards.
The Corporation will adopt Statement No. 128 on January 1, 1998
and all prior-period EPS data presented will be restated. The
Corporation has not completed its assessment of the impact of
adopting Statement No. 128.
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 March 31, 1997, the Corporation had consolidated
assets of $1.2 billion, total deposits of $977.7 million and
stockholders' equity of $97.6 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 related
value of servicing rights. 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 $63.6 million liability sensitive gap at
the one year time period at March 31, 1997.
<TABLE>
Interest Sensitivity Gap Analysis
Subject to
Repricing
March 31 June 30
1997 1996
(Dollars in thousands)
<S> <C> <C>
Earning assets maturing or repricing
within one year $605,738 $645,432
Interest bearing liabilities maturing
or repricing within one year 669,317 641,677
Interest sensitivity gap within one year $(63,579) $3,755
Cumulative interest sensitivity gap
within one year as a percent of total (5.49)% 0.34%
assets
</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 limitations
established by management and approved by the Board of Directors.
Interest rate risk as indicated through balance sheet simulations
at March 31, 1997 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>
Nine Fiscal
Months Year
Ended Ended
March 31 June 30
1997 1996
(Dollars in thousands)
<S> <C> <C>
Total allowance for loan losses at beginning of
period $ 6,609 $5,840
Loans charged-off:
Real estate - mortgage:
Residential 1,113 1,151
Commercial 1,354 620
Consumer 186 100
Total charged-offs 2,653 1,871
Recoveries:
Real estate - mortgage:
Residential 176 156
Commercial 234 184
Consumer 3 ---
Total recoveries 413 340
Net loans charged-off 2,240 1,531
Provision for loan losses 2,176 2,300
Total allowance for loan losses at end of
period $ 6,545 $ 6,609
Percentage of net charge-offs to average loans
outstanding during the period 0.23% 0.17%
Percentage of allowance for loan losses
to adjusted total loans 0.65% 0.70%
</TABLE>
The allowance for loan losses totaled $6.5 million or .65%
of adjusted total loans of $999.3 million at March 31, 1997.
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
1997 1996
(Dollars in thousands)
<S> <C> <C>
Loans accounted for on a nonaccrual
basis:
Real estate-mortgage:
Commercial $1,035 $1,481
Land 200 200
Total nonaccrual loans $1,235 $1,681
Accruing loans which are contractually
past due 90 days or more:
Real estate-mortgage:
Residential 11,571 10,029
Consumer 646 383
Total of 90 days past due 12,217 10,412
loans
Total of nonaccrual
and 90 days past due loans $13,452 $12,093
As a percent of total loans 1.35% 1.28%
Real estate owned:
Real estate acquired through
foreclosure or
repossession by loan type:
Real estate:
Residential $5,985 $4,913
Commercial 3,866 2,370
Land 3,014 3,349
Allowance for real estate losses (1,049) (955)
Total real estate owned $11,816 $9,677
As a percent of total assets 1.02% 0.87%
Total nonperforming assets $25,268 $21,770
As a percent of total assets 2.18% 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 nine months of fiscal
1997, additions to the allowance in the amount of $533,000 which
was offset by charge offs net of recoveries of $439,000 resulted
in an increase in the allowance for Real Estate Owned losses to
$1.0 million at March 31, 1997. 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 nine months of fiscal 1997,
the Association's deposits increased $71.1 million. In addition,
York Federal has supplemented its deposit gathering efforts
through borrowings from the FHLB of Pittsburgh. At March 31,
1997, York Federal had $62.3 million in FHLB advances outstanding
at a weighted average interest rate of 6.21%.
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, 1997, York Federal maintained an average
liquidity level which was in compliance with the regulatory
requirements. At March 31, 1997, 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 $231.6 million for the first nine
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 $297.5 million for the period ended March 31,
1997. 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 March
31, 1997 totaled $97.6 million compared to $92.1 million at March
31, 1996, an increase of $5.5 million or 6.0%. 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, the impact of
unrealized losses on "available for sale" securities and the
payment of ESOP indebtedness.
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 March 31, 1997, York Federal's tangible and core capital
both equaled 7.3% ($84.3 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 11.0% ($84.3 million) at March 31, 1997,
which exceeds its required level of 4.0%. Finally, York
Federal's risk-based capital ratio equaled 11.8 % ($90.7 million)
at March 31, 1997, which exceeds its required level of 8.0 % by
$29.4 million.
Results of Operations
Nine months ended March 31, 1997 compared to March 31, 1996
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 nine months ended March 31,
1997 was $26.8 million compared to $26.0 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 3.26% from 3.55% for the
nine months ended March 31, 1997 and 1996, 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 25 basis point decrease to the average yield
on interest earning assets to 7.98% for the nine months ended
March 31, 1997 as compared to 8.23% in the same period in the
prior year. The higher level of interest-bearing liabilities
during the first nine 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 partially offset the generally lower levels of
interest rates resulting in an increase to the average rate on
interest bearing liabilities to 4.98% as compared to 4.97% in the
same period last year. The net effect caused the interest rate
spread for the current period to decrease to 3.00% from 3.26% 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 $6.4 million for the nine months ended
March 31, 1997, a decrease of 4.1% from the nine months ended
March 31, 1996. Mortgage banking income for the nine months ended
March 31, 1997 increased $1.1 million to $2.8 million or 59.8%
as compared to the same period in 1996 and includes net gains on
sales of loans, trading securities and servicing rights and
income from loan servicing fees. The portfolio of loans serviced
for others totaled $534.3 million at March 31, 1997 as compared
to $611.2 million at March 31, 1996. 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 net
servicing rate earned on the portfolio of loans serviced for
others for the nine months ended March 31, 1997 decreased to
.220% from .246% in the same period in 1996. Gain on sales of
real estate was $38,000 for the nine months ended March 31, 1997
as compared to a gain of $1.1 million for the nine months ended
March 31, 1996. 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. A $1.2 million
gain was realized during the third quarter on the disposition of
an interest in a joint venture. Fees and service charges for the
nine months ended March 31, 1997 increased by 15.9% to $2.1
million compared to 1.8 million in the same period in 1996. The
Corporation is a partner in various joint ventures; these joint
ventures during the first nine months of fiscal 1997 had net
losses of $619,000. 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
$785,000 in the first nine months of fiscal 1997 as compared to
$473,000 in the first nine 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 $23.8 million increased $5.7 million or
31.7% for the nine months ended March 31, 1997 as compared to the
same period in 1996.
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
nine months ended March 31, 1997. Current SAIF insurance
premiums are being paid at a substantially lower rate which is
more consistent with the deposit insurance premiums paid by BIF
(Bank Insurance Fund) insured institutions.
Salaries and employee benefits decreased $252,000 or 2.9%
over the same period in 1996 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 $587,000 or 29.5% over
the same period in 1996 and is primarily attributed to operating
cost related to a new office facility occupied in June 1996. Real
estate expenses increased $90,000 when compared to March 31, 1996
and is primarily attributable to an increase in the provision for
possible real estate losses (see asset quality) 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 $184,000 related to the promotion of
various loan and deposit product offerings over the same period
in 1996.
Provision for Income Taxes
The provision for income taxes of $2.9 million for the nine
months ended March 31, 1997 represents an effective tax rate of
39.8% as compared to 38.3% 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
March 31, 1997 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 nine months ended March 31, 1997.
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 9, 1997 /s/ Robert W. Pullo
Robert W. Pullo, President -
Chief Executive Officer
Date May 9, 1997 /s/ James H. Moss
James H. Moss, Senior Vice
President - Chief Financial
Officer/Treasurer
(11) -- Statement re: Computation of
Earnings Per Share
<TABLE>
Nine Months Ended
March 31
1997 1996
(Dollars in thousands, except per share
data)
<S> <C> <C>
Primary:
Average shares outstanding 6,728,933 6,521,853
Net effect of dilutive stock
options -- based on the treasury
stock method using average
market price 405,907 386,717
Totals 7,134,840 6,908,570
Net income $ 4,327 $ 7,896
Per share amount $ 0.61 $ 1.14
Fully diluted:
Average shares outstanding 6,728,933 6,521,853
Net effect of dilutive stock options --
based on the treasury stock method
using quarter end market price or
average market price whichever is
greater 464,589 412,564
Totals 7,193,522 6,934,417
Net income $ 4,327 $ 7,896
Per share amount $ 0.60 $ 1.14
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-END> MAR-31-1997
<CASH> 22078
<INT-BEARING-DEPOSITS> 943
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 11540
<INVESTMENTS-HELD-FOR-SALE> 56280
<INVESTMENTS-CARRYING> 9025
<INVESTMENTS-MARKET> 8852
<LOANS> 996716
<ALLOWANCE> 6545
<TOTAL-ASSETS> 1157356
<DEPOSITS> 977715
<SHORT-TERM> 62000
<LIABILITIES-OTHER> 15456
<LONG-TERM> 1239
0
0
<COMMON> 6971
<OTHER-SE> 90587
<TOTAL-LIABILITIES-AND-EQUITY> 1157356
<INTEREST-LOAN> 60552
<INTEREST-INVEST> 4394
<INTEREST-OTHER> 621
<INTEREST-TOTAL> 65567
<INTEREST-DEPOSIT> 34251
<INTEREST-EXPENSE> 38777
<INTEREST-INCOME-NET> 26790
<LOAN-LOSSES> 2176
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 23789
<INCOME-PRETAX> 7182
<INCOME-PRE-EXTRAORDINARY> 7182
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 4327
<EPS-PRIMARY> 0.61
<EPS-DILUTED> 0.60
<YIELD-ACTUAL> 3.26
<LOANS-NON> 1235
<LOANS-PAST> 12347
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 6609
<CHARGE-OFFS> 2653
<RECOVERIES> 413
<ALLOWANCE-CLOSE> 6545
<ALLOWANCE-DOMESTIC> 3926
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2619
</TABLE>
