SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For quarterly period ended
September 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0-16455
NEWMIL BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 06-1186389
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
19 Main St., P.O. Box 600, New Milford, Conn. 06776
(Address of principal executive offices) (Zip Code)
(860) 355-7600
(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 (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
The number of shares of Common Stock outstanding as of September 30, 1995 is
4,492,979.
NEWMIL BANCORP, INC. and SUBSIDIARY
TABLE OF CONTENTS
Page
PART I FINANCIAL INFORMATION
Item 1 Financial Statements:
Consolidated Balance Sheets as of
September 30, 1995 and June 30, 1995 . . . . . . . . . . . . . . .3
Consolidated Statement of Income
for the three month periods ended
September 30, 1995 and 1994. . . . . . . . . . . . . . . . . . . .4
Consolidated Statements of Cash Flows
for the three month periods ended
September 30, 1995 and 1994. . . . . . . . . . . . . . . . . . . .5
Notes to Consolidated Financial Statements . . . . . . . . . . . .7
Item 2 Management's Discussion and Analysis
of Financial Condition and Results
of Operations. . . . . . . . . . . . . . . . . . . . . . . . . . 14
PART II OTHER INFORMATION
Item 1 Legal Proceedings. . . . . . . . . . . . . . . . . . . . . . . . 25
Item 4 Submission of matters to a vote of
security holders . . . . . . . . . . . . . . . . . . . . . . . . 25
Item 5 Other information. . . . . . . . . . . . . . . . . . . . . . . . 25
Item 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . 25
<TABLE>
NewMil Bancorp, Inc. and Subsidiary
CONSOLIDATED BALANCE SHEETS
(dollars in thousands)
(unaudited)
<CAPTION>
September 30, June 30,
1995 1995
<S> <C> <C>
ASSETS
Cash and due from banks $ 5,531 $ 5,791
Federal funds sold 5,800 8,500
Securities:
Available-for-sale at market 6,575 7,102
Held-to-maturity at amortized cost
(market value: $117,925 and $119,948) 118,252 120,092
Loans (net of allowance for
loan losses: $5,242 and $5,372) 149,077 150,442
Real estate acquired
(net of valuation reserve: $485 and $313) 2,955 1,676
Bank premises and equipment, net 6,051 6,125
Accrued income 2,113 1,918
Deferred tax asset, net 6,114 6,397
Other assets 791 628
Total Assets $303,259 $308,671
LIABILITIES and SHAREHOLDERS' EQUITY
Deposits
Demand (non-interest bearing) $ 8,425 $ 8,224
NOW accounts 20,846 21,921
Money market 61,339 63,059
Savings and other 39,055 41,349
Certificates of deposit 120,622 117,867
Total deposits 250,287 252,420
Securities sold under agreement to repurchase 12,626 15,499
Federal Home Loan advances 4,500 5,000
Accrued interest and other liabilities 2,637 3,031
Total Liabilities 270,050 275,950
Commitments and contingencies - -
Shareholders' Equity
Common stock - $.50 per share par value
Authorized - 20,000,000 shares
Issued - 5,967,388 and 5,965,888 shares 2,984 2,983
Paid-in capital 44,151 44,145
Retained earnings 4,329 3,915
Unrealized gains on securities
available-for-sale, net 97 91
Unrealized losses on securities transferred
to held-to-maturity, net (2,548) (2,609)
Treasury stock, at cost - 1,474,409 shares (15,804) (15,804)
Total Shareholders' Equity 33,209 32,721
Total Liabilities and Shareholders' Equity $303,259 $308,671
</TABLE>
NewMil Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENT OF INCOME
(in thousands except per share amounts)
(unaudited)
<TABLE>
<CAPTION>
Three months ended
September 30,
1995 1994
<S> <C> <C>
INTEREST AND DIVIDEND INCOME
Interest and fees on loans $3,472 $2,664
Interest on securities 1,983 2,095
Dividend income 24 20
Interest on federal funds sold 22 17
Total interest and dividend income 5,501 4,796
INTEREST EXPENSE
Deposits 2,486 1,709
Borrowed funds 174 595
Total interest expense 2,660 2,304
Net interest and dividend income 2,841 2,492
PROVISION FOR LOAN LOSSES 100 100
Net interest and dividend
income after provision for loan losses 2,741 2,392
NON-INTEREST INCOME
Service charges on deposit accounts 195 200
Securities gains, net 10 -
Gains on mortgage loans, net 5 4
Loan servicing fees 32 32
Other 69 64
Total non-interest income 311 300
NON-INTEREST EXPENSE
Salaries 854 776
Employee benefits 224 214
Occupancy 179 182
Equipment 171 138
Insurance 22 174
Collection and real estate acquired 216 280
Professional services 124 96
Marketing 35 32
Other 364 324
Total non-interest expense 2,189 2,216
INCOME BEFORE INCOME TAXES 863 476
Provision for income taxes 358 12
NET INCOME $ 505 $ 464
Earnings per share $0.11 $0.10
Dividends per share $0.02 $0.02
</TABLE>
NewMil Bancorp, Inc. and Subsidiary
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
<TABLE>
<CAPTION>
Three months
ended
September 30,
1995 1994
<S> <C> <C>
Operating Activities
Net income $ 505 $ 464
Adjustments to reconcile net income
to net cash provided
by operating activities:
Provision for loan losses 100 100
Provision for losses on
real estate acquired 172 455
Provision for depreciation and
amortization 136 122
Decrease in deferred income tax asset 283 -
Amortization and accretion of securities
premiums and discounts, net 104 193
Securities gains, net (10) -
Realized gains on loan sales, net (5) (4)
Realized gains on sales of real
estate acquired, net (172) (480)
Decrease in mortgage loans held for sale - 30
Increase in accrued income (195) (32)
Decrease in accrued interest
and other liabilities (415) (27)
(Increase) decrease in other
assets, net (202) 95
Net cash provided by
operating activities 301 916
Investing Activities
Proceeds from sales of securities
available-for-sale - 2,910
Proceeds from maturities and principal
repayments of securities 1,207 2,284
Purchases of securities available-for-sale - (3,252)
Principal collected on mortgage backed
securities 1,177 1,772
Loan (advances) repayments, net (628) 43
Purchases of loans - (819)
Proceeds from sale of real estate
acquired 989 2,760
Payments to improve real estate acquired (374) (452)
Net purchases of Bank premises
and equipment (63) (57)
Net cash provided by
investing activities 2,308 5,189
Financing Activities
Net decrease in deposits (2,112) (2,756)
Net repayments of repurchase agreements (2,873) (4,993)
Net (repayments of) proceeds from
FHLB advances (500) 3,000
Cash dividends paid (90) -
Proceeds from exercise of stock options 6 -
Net cash used by
financing activities (5,569) (4,749)
(Decrease) increase in cash and
cash equivalents (2,960) 1,356
Cash and federal funds sold, beginning
of year 14,291 4,732
Cash and federal funds sold, end of year $11,331 $ 6,088
Cash paid during year
Interest to depositors $ 2,465 $ 1,712
Interest on borrowings and
interest rate swaps 182 592
Income taxes 36 7
Non-cash transfers
From securities available-for-sale
to securities held-to-maturity - 51,325
From loans to real estate acquired 1,894 172
</TABLE>
NEWMIL BANCORP, INC. and SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(unaudited)
NOTE 1 - BASIS OF PRESENTATION
The interim consolidated financial statements of NewMil Bancorp, Inc.
(the "Company") include those of the Company and its wholly-owned
subsidiary, New Milford Savings Bank (the "Bank"). Certain prior period
amounts in the statements of operations and balance sheets have been
reclassified to conform with the current financial presentation. In the
opinion of management, the interim unaudited consolidated financial
statements include all adjustments (consisting of normal recurring
adjustments ) necessary to present fairly the financial position of the
Company and the statements of operations and cash flows for the interim
periods presented.
The financial statements necessarily include some amounts that are based
on estimates, the most significant of which relate to the adequacy of
the allowance for loan losses and the valuation of real estate acquired.
As these estimates are highly susceptible to changes in the state of the
general economic environment, actual results could differ significantly
from such estimates.
Certain financial information which is normally included in financial
statements prepared in accordance with generally accepted accounting
principles, but which is not required for interim reporting purposes,
has been condensed or omitted. Operating results for the three month
period ended September 30, 1995 are not necessarily indicative of the
results that may be expected for the year ended June 30, 1996. The
accompanying condensed financial statements should be read in
conjunction with the financial statements and notes thereto included in
the Company's Annual Report for the year ended June 30, 1995.
NOTE 2 - SECURITIES
Securities classified available-for-sale (carried at fair value) are as
follows:
<TABLE>
<CAPTION>
(dollars in thousands) Estimated Gross Amort-
fair unrealized ized
value gains losses cost
<S> <C> <C> <C> <C>
September 30, 1995
U.S. Government Agencies
Within 5 years $1,013 $ 13 $ - $1,000
Mortgage backed securities 3,735 155 6 3,586
Collateralized mortgage
obligations 280 - - 280
Total debt securities 5,028 168 6 4,866
Federal Home Loan Bank stock 1,547 - - 1,547
Total securities
available-for-sale $6,575 $168 $ 6 $6,413
June 30, 1995
U.S. Government Agencies
Within 5 years $1,018 $ 17 $ - $1,001
Mortgage backed securities 4,149 142 7 4,014
Collateralized mortgage
obligations 388 - - 388
Total debt securities 5,555 159 7 5,403
Federal Home Loan Bank stock 1,547 - - 1,547
Total securities
available-for-sale $7,102 $159 $ 7 $6,950
</TABLE>
Securities classified held-to-maturity (carried at amortized cost) are
as follows:
<TABLE>
<CAPTION>
(dollars in thousands) Gross Estimated
Amortized unrealized fair
cost(a) gains losses value
<S> <C> <C> <C> <C>
September 30, 1995
U.S. Government Agencies
After 5 and within 10 years $ 915 $ 56 $ - $ 971
Mortgage backed securities 19,490 134 149 19,475
Collateralized mortgage
obligations 97,847 2,001 2,369 97,479
Total securities
held-to-maturity $118,252 $2,191 $2,518 $117,925
June 30, 1995
U.S. Government Agencies
After 5 but within 10 years $ 915 $ 68 $ - $ 983
Mortgage backed securities 20,245 82 169 20,158
Collateralized mortgage
obligations 98,932 1,670 1,795 98,807
Total securities
held-to-maturity $120,092 $1,820 $1,964 $119,948
</TABLE>
(a) Securities transferred from available-for-sale are carried at
estimated fair value as of the transfer date and adjusted for
subsequent amortization.
During the three month period ended September 30, 1995 there were no
securities transferred between available-for-sale and held-to-maturity.
Securities aggregating $15,218,000 at amortized cost were pledged as
collateral against repurchase agreements, interest rate swaps and public
funds at September 30, 1995.
Cash proceeds and realized gains and losses from sales of securities
during the three month periods ended September 30 are as follows:
<TABLE>
<CAPTION>
(dollars in thousands) Cash Realized Realized
proceeds gains losses
<S> <C> <C> <C>
Three months ended September 30, 1995
Marketable equity securities
Available-for-sale (a) $ 10 $ 10 $ -
Total $ 10 $ 10 $ -
Three months ended September 30, 1994
Collateralized mortgage obligations
Available-for-sale $2,910 $ - $ -
Total $2,910 $ - $ -
</TABLE>
(a) Represents the settlement proceeds from a class action suit
relating to a previously held equity security.
NOTE 3 - LOANS
Effective July 1, 1995 the Company adopted the provisions of Statement
of Financial Accounting Standards No. 114 "Accounting by Creditors for
Impairment of a Loan" ("SFAS 114"). Under SFAS 114, a loan is
considered impaired, based on current information and events, if it is
probable that the Company will be unable to collect the scheduled
payments of principal of interest when due according to the contractual
terms of the loan agreement. The measurement of impaired loans is
generally based on the present value of expected future cash flows
discounted at the historical effective interest rate, except that all
collateral-dependent loans are measured for impairment based on the fair
value for the collateral. The adoption of SFAS 114 resulted in no
additional provision for loan losses, determined at July 1, 1995. Prior
to the adoption of SFAS 114, loans for which foreclosure was probable
were accounted for as in-substance foreclosed and classified as real
estate acquired. Under SFAS 114 such loans are accounted for as loans.
Consistent with the Company's adoption of SFAS 114, loans previously
classified as in-substance foreclosed but for which the Company had not
taken possession of the collateral have been reclassified to loans.
This reclassification did not impact the Company's financial condition
or results of operations. All prior period data has been reclassified
to conform to current period classifications.
Major classifications of loans are as follows:
<TABLE>
<CAPTION>
September 30, June 30,
(in thousands) 1995 1995
<S> <C> <C>
Real estate mortgages:
One-four family residential $ 95,069 $ 98,766
Five or more family residential 3,058 3,171
Commercial 27,841 29,068
Land 11,308 12,067
Commercial and industrial 3,110 3,201
Home equity lines of credit 11,961 7,785
Installment and other 2,311 2,187
Total loans, gross 154,658 156,245
Deferred loan origination fees, net (339) (431)
Allowance for loan losses (5,242) (5,372)
Total loans, net $149,077 $150,442
Impaired loans
With valuation allowance $4,475 $3,399
With no valuation allowance 4,740 5,324
Total impaired loans 9,215 8,723
Valuation allowance 1,630 1,373
</TABLE>
Changes in the allowance for loan losses for the three month periods
ended September 30, are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
(in thousands) 1995 1994
Balance, beginning of period $5,372 $5,246
Provision for losses 100 100
Charge-offs (232) (48)
Recoveries 2 -
Balance, end of period $5,242 $5,298
</TABLE>
The following table shows the allocation of the allowance for loan
losses among the broad categories of the loan portfolio and the
percentage of loans in each category to total loans at September 30,
1995 and June 30, 1995. Although the allowance is allocated among loan
categories for the purpose of this table, it should be realized that the
allowance is applicable to the entire portfolio. Furthermore, charge-
offs in the future may not necessarily occur in these amounts or
proportions.
<TABLE>
<CAPTION>
(dollars in thousands) September 30, 1995 June 30, 1995
Allowance Loans(1) AllowanceLoans(1)
<S> <C> <C> <C> <C>
Real estate mortgage:
One-four family $1,422 61.48% $1,466 64.26%
Five or more family 872 1.98 725 2.06
Commercial 1,812 18.00 1,865 18.91
Land 567 7.31 781 6.20
Home equity lines of credit 125 7.73 83 5.06
Total mortgage loans 4,798 96.50 4,920 96.49
Commercial and industrial 74 2.01 71 2.08
Installment 8 0.17 6 0.18
Other - 1.32 - 1.25
Un-allocated allowance 362 - 375 -
Total allowance
for loan losses $5,242 100.00 $5,372 100.00
</TABLE>
(1) Percent of loans in each category to total loans.
NOTE 4 - NON-PERFORMING ASSETS
The components of non-performing assets were as follows:
<TABLE>
<CAPTION>
September 30, June 30,
(in thousands) 1995 1995
<S> <C> <C>
Non-accrual loans $5,367 $7,175
Accruing loans past due
90 days or more - 34
Accruing troubled debt
restructured loans - -
Total non-performing loans 5,367 7,209
Real estate acquired 3,440 1,989
Allowance for estimated losses (485) (313)
Total real estate acquired, net 2,955 1,676
Total non-performing assets $8,322 $8,885
</TABLE>
Real estate acquired includes collateral acquired through foreclosure,
forgiveness of debt or otherwise in lieu of debt, or loans where the
Company has taken physical possession of the collateral. Consistent
with the Company's adoption of SFAS 114, loans previously classified as
in-substance foreclosed but for which the Company had not taken
possession of the collateral have been reclassified to loans.
Changes in the real estate acquired valuation reserve for the three
month periods ended September 30 are as follows:
<TABLE>
<CAPTION>
<S> <C> <C>
(in thousands) 1995 1994
Valuation reserve at beginning of period $313 $367
Charge-offs - -
Provision 172 455
Valuation reserve at end of period $485 $822
</TABLE>
The components of collection and real estate acquired expense for the
three month periods ended September 30 are as follows:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
<S> <C> <C>
Gains on sales of real estate
acquired, net $(172) $(480)
Provision to valuation reserve 172 455
Holding and Collection cost 216 305
Total collection and real
estate acquired expense $ 216 $ 280
</TABLE>
NOTE 5 - INCOME TAXES
The components of the provision for income taxes for the three month
periods ended September are as follows:
<TABLE>
<CAPTION>
(in thousands) 1995 1994
<S> <C> <C>
Current provision
Federal $ 293 $ 162
State 97 55
Benefit from net operating
loss carry forwards
Federal (287) (156)
State (91) (49)
Total 12 12
Deferred
Federal 276 -
State 70 -
Total 346 -
Income tax provision $ 358 $ 12
</TABLE>
At September 30, 1995 the Company had Federal net operating loss
carryforwards of approximately $4.2 million (expiring in 2007) and State
net operating loss carryforwards of approximately $12.8 million
(expiring in 1996 and 1997) which can be applied to reduce future
Federal and State income taxes. At September 30, 1995 the Company also
had Federal and State capital loss carryforwards of approximately $16.0
million and $20.4 million (expiring principally in 1996), respectively,
which it does not expect to utilize because of the discontinuation of
investing in marketable equity securities.
NOTE 6 - COMMITMENTS AND CONTINGENT LIABILITIES
In the normal course of business there are various commitments and
contingent liabilities outstanding pertaining to the purchase and sale
of securities and the granting of loans and lines of credit which are
not reflected in the accompanying financial statements. At September
30, 1995 the Company had commitments under outstanding construction
mortgages of $245,000, unused lines of credit of $10,766,000 and
outstanding commitments to fund loans of $2,645,000. The Company does
not anticipate any material losses as a result of these transactions.
NOTE 7 - SHAREHOLDERS' EQUITY
Capital Requirements
The Company and the Bank are subject to minimum capital requirements
established, respectively, by the Federal Reserve Board (the "FRB") and
the Federal Deposit Insurance Corporation (the "FDIC"). The Company's
and the Bank's regulatory capital ratios at September 30, 1995, were as
follows:
<TABLE>
<CAPTION>
<S> <C> <C>
Company Bank
Leverage ratio 10.62% 10.23%
Tier I risk-based ratio 20.55% 19.80%
Total risk-based ratio 21.82% 21.08%
</TABLE>
The Company and the Bank are categorized as "well capitalized". A well
capitalized institution, as defined by the Prompt Corrective Action
rules issued by the FDIC and the FRB, is one which maintains a total
risk-based ratio of 10% or above, a Tier I risk-based ratio of 6% or
above and a leverage ratio of 5% or above. In addition to meeting these
numerical thresholds, well capitalized institutions may not be subject
to any written order, written agreement, capital directive, or prompt
corrective action directive to meet and maintain a specific capital
level.
Restrictions on Subsidiary's Dividends and Payments
The Company's ability to pay dividends is dependent on the Bank's
ability to pay dividends to the Company. There are certain restrictions
on the payment of dividends and other payments by the Bank to the
Company. Under Connecticut law the Bank is prohibited from declaring a
cash dividend on its common stock except from its net earnings for the
current year and retained net profits for the preceding two years.
Consequently, the maximum amount of dividends payable by the Bank to the
Company for the three month period ended September 30, 1995 is $515,000.
In some instances, further restrictions on dividends may be imposed on
the Company by the Federal Reserve Bank.
NewMil Bancorp, Inc. and Subsidiary
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Management's discussion and analysis of financial condition and results
of operations of the Company and its subsidiary should be read in
conjunction with the Company's Annual Report on Form 10-K for the year
ended June 30, 1995.
BUSINESS
NewMil Bancorp, Inc. (the "Company"), a Delaware corporation, is a bank
holding company for New Milford Savings Bank (the "Bank"), a
Connecticut-chartered and Federal Deposit Insurance Corporation (the
"FDIC") insured savings bank headquartered in New Milford, Connecticut.
The principal business of the Company consists of the business of the
Bank. The Bank is engaged in customary banking activities, including
general deposit taking and lending activities, and conducts its business
from twelve offices in Litchfield and northern Fairfield Counties. The
Company and the Bank were formed in 1987 and 1858, respectively.
RESULTS OF OPERATIONS
For the three month periods ended September 30, 1995 and 1994
Overview
The Company earned net income of $505,000, or $0.11 per share, for the
quarter ended September 30, 1995, the first fiscal quarter of the
Company's fiscal year. This compares with net income of $464,000, or
$0.10 per share, for the quarter ended September 30, 1994, an
improvement of 9%.
Net income before tax for the quarter grew 81.3% to $863,000, up from
$476,000 for the same period in 1994. The increase reflects an
improvement in net interest margin of 3.96% versus 3.33% a year ago.
The Company returned to a fully-taxable reporting basis on July 1, 1995
following the recognition of substantially all of its deferred tax asset
at June 30, 1995. Net income for the quarter included an income tax
provision of $358,000, or 41%, as compared with a provision of $12,000
a year ago.
During the quarter the Company received a refund on previously-paid FDIC
insurance premiums. This refund offset the impact of a one-time expense
associated with the near term disposition of a non-performing asset.
Non-performing assets declined $563,000, or 6.34%, during the past three
month period, to $8,322,000, or 2.74% of assets at September 30, 1995.
Analysis of net interest and dividend income
Net interest and dividend income increased $349,000, or 14.0%, for the
quarter ended September 30, 1995 as compared with the prior year period.
This increase resulted from a 63 basis points increase in net interest
margin (to 3.96% from 3.33%) offset by a $12.5 million, or 4.18%
decrease in average earning assets. The improvement in net interest
margin was driven by both changes in asset mix and the benefit, over the
past year, from higher interest rates on the Company's assets whose
rates have increased more than deposit liabilities.
The following table set forth the components of the Company's net
interest income and yields on average interest-earning assets and
interest-bearing funds for the three month periods ended September 30,
1995 and 1994.
<TABLE>
<CAPTION>
Three months ended September 30, 1995 Average Income/ Average
(dollars in thousands) balance expense yield/rate
<S> <C> <C> <C>
Loans(a) $154,935 $3,472 8.96%
Mortgage backed securities 24,073 352 5.85
Other securities(b) 107,764 1,677 6.23
Total earning assets 286,772 5,501 7.67
Other assets 12,756
Total assets $299,528
NOW accounts $22,242 83 1.49
Money market accounts 62,379 476 3.05
Savings & other 40,818 269 2.64
Certificates of deposit 119,014 1,658 5.57
Total interest-bearing deposits 244,453 2,486 4.07
Borrowings 11,546 174 6.06
Total interest-bearing funds 255,999 2,660 4.15
Demand deposits 8,368
Other liabilities 1,919
Shareholders' equity 33,242
Total liabilities and
shareholders' equity $299,528
Net interest income $2,841
Spread on interest-bearing funds 3.52
Net interest margin(c) 3.96
Three months ended September 30, 1994 Average Income/ Average
(dollars in thousands) balance expense yield/rate
Loans(a) $141,829 $2,664 7.51%
Mortgage backed securities 51,156 634 4.96
Other securities(b) 106,312 1,498 5.64
Total earning assets 299,297 4,796 6.41
Other assets 13,066
Total assets $312,363
NOW accounts $22,886 85 1.49
Money market accounts 83,996 551 2.62
Savings & other 46,728 317 2.71
Certificates of deposit 75,388 756 4.01
Total interest-bearing deposits 228,998 1,709 2.99
Borrowings 49,438 595 4.81
Total interest-bearing funds 278,436 2,304 3.31
Demand deposits 7,361
Other liabilities 1,084
Shareholders' equity 25,482
Total liabilities and
shareholders' equity $312,363
Net interest income $2,492
Spread on interest-bearing funds 3.10
Net interest margin(c) 3.33
</TABLE>
(a) Includes non-accrual loans.
(b) Includes interest-bearing deposits in other banks and federal funds
sold.
(c) Net interest income divided by average interest-earning assets.
<TABLE>
<CAPTION>
Three months ended September 30, 1995 versus 1994
(dollars in thousands) Change in interest due to
Volume Rate Vol/rate Net
<S> <C> <C> <C> <C>
Interest-earning assets:
Loans $ 246 $ 515 $ 48 $ 808
Mortgage backed securities (336) 114 (60) (282)
Other securities 20 157 2 179
Total (70) 785 (10) 705
Interest-bearing liabilities:
Deposits 253 376 148 777
Borrowings (456) 154 (118) (420)
Interest rate swaps, net - - (1) (1)
Total (203) 530 29 356
Net change to interest income $ 133 $ 255 $ (39) $ 349
</TABLE>
Interest income
Total interest and dividend income increased $705,000, or 14.7%, for the
quarter ended September 30, 1995 as compared with the same period a year
ago.
Loan interest and fee income increased $808,000, or 30.3%, for the
quarter ended September 30, 1995 as compared with the prior year period
as a result of the upward repricing of adjustable rate loans caused by
higher interest rates and loan growth, primarily in higher yielding
Prime based loans. Average loan balances increased $13.1 million, or
9.2%.
Investment and fed funds income decreased $103,000, or 4.8%, for the
quarter ended September 30, 1995 as compared with the prior year period
as a result of a $25.6 million, or 16.3%, decrease in average
investments offset by higher yields on floating rate securities. Over
the past year the Company has sought to grow the loan portfolio and fund
this growth by downsizing the investments portfolio. Average investment
yield increased to 6.16% for 1995 from 5.42% in 1994 as a result of the
upward repricing of floating rate securities.
Interest expense
Interest expense for the quarter ended September 30, 1995 increased
$356,000, or 15.5%, as compared to the same quarter of the prior year as
a result of increases in deposit and borrowings rates, changes in
funding mix. Total average balances for deposits and borrowings
decreased by $22.4 million, or 8.1%, for the period.
Deposit expense increased $777,000, or 45.5%, as a result of higher
deposit rates (savings accounts declined slightly), a change in deposit
mix resulting from transfers from money market and savings accounts into
certificates of deposit accounts, and deposit growth of $15.5 million,
or 6.7%. Bank deposit rates, particularly savings and money market
rates, have lagged increases in Treasury yields over the past year.
This lag has been a principal contributor to the increase in the
Company's net interest margin.
Interest expense on borrowings decreased by $420,000, or 70.6%, as a
result of lower average balances, offset in part by higher borrowing
rates. Average borrowings decreased $37.9 million, or 76.6%. The
average cost of borrowings increased 125 basis points to 6.06% in 1995
from 4.81% in 1994, as a result of the higher interest rate environment
in 1995. The Company's borrowing rates generally follow the one-month
LIBOR index.
Provision and Allowance for loan losses
The Company provided $100,000 for loan losses during the quarter ended
September 30, 1995, unchanged from the prior year period provision. The
following table details changes in the allowance for loan losses during
the three month periods ended September 30:
<TABLE>
<CAPTION>
1995 1994
(dollars in thousands)
<S> <C> <C>
Balance, beginning of period $5,372 $5,246
Provision for losses 100 100
Charge-offs (232) (48)
Recoveries 2 -
Balance, end of period $5,242 $5,298
Ratio of allowance for loan losses:
to non-performing loans 97.67% 70.24%
to total gross loans 3.40 3.69
</TABLE>
The increase in the reserve coverage to non-performing loans results
from the $2,176,000 decrease in non-performing loans. For a discussion
of non-performing loans see "Asset Quality and Portfolio Risk". The
decrease in reserve coverage to total loans results from new loan
originations, changes in loan mix and ongoing credit administration
efforts, all of which contribute to improvements in the risk profile of
the portfolio.
The Bank determines its allowance and provisions for loan losses based
upon a detailed evaluation of the loan portfolio through a process which
considers numerous factors, including estimated credit losses based upon
internal and external portfolio reviews, delinquency levels and trends,
estimates of the current value of underlying collateral, concentrations,
portfolio volume and mix, changes in lending policy, historical loan
loss experience, current economic conditions and examinations performed
by regulatory authorities. Determining the level of the allowance at
any given period is difficult, particularly during deteriorating or
uncertain economic periods. Management must make estimates using
assumptions and information which is often subjective and changing
rapidly. The review of the loan portfolio is a continuing event in the
light of a changing economy and the dynamics of the banking and
regulatory environment. In management's judgement the allowance for
loan losses at September 30, 1995, is adequate. Should the economic
climate begin to deteriorate, borrowers may experience difficulty and
the level of non-performing loans, charge-offs and delinquencies could
rise and require increased provisions. In addition, various regulatory
agencies, as an integral part of their examination process, periodically
review the Company's allowance for loan losses. Such agencies could
require the Company to recognize additions to the allowance based on
their judgements of information available to them at the time of their
examination. The Bank was examined by the State of Connecticut,
Department of Banking, in April 1995. No additions to the allowance
were requested as a result of this examination.
Non-interest income
The following table details the principal categories of non-interest
income for the three month periods ended September 30.
<TABLE>
<CAPTION>
(in thousands) 1995 1994 Change
<S> <C> <C> <C> <C>
Service charges on
deposit accounts $195 $200 $ (5) (2.5)%
Securities gains, net 10 - 10 100.0
Gains on loans, net 5 4 1 25.0
Loan servicing 32 32 - -
Other 69 64 5 7.8
Total non-interest income $311 $300 $ 11 3.7
</TABLE>
Service charges on deposit accounts decreased $5,000, or 2.5%,
reflecting the decreased in service charge activity as a result of lower
NOW and Savings balances. During the quarter the Company realized a net
gain of $10,000 from the settlement of a class action suit on a
marketable equity security issue that had been held by the Bank several
years ago. Gains on loan sales and serving income for the first quarter
in 1996 changed little from the prior year period. At September 30,
1995 the loan servicing portfolio totaled $34.6 million compared to
$35.2 million at September 30, 1994.
Operating expenses
The following table details the principal categories of operating
expenses for the three month periods ended September 30.
<TABLE>
<CAPTION>
(in thousands) 1995 1994 Change
<S> <C> <C> <C> <C>
Salaries $ 854 $ 776 $ 78 10.1 %
Employee benefits 224 214 10 4.7
Occupancy 179 182 (3) (1.7)
Equipment 171 138 33 23.9
Insurance 22 174 (152) (87.4)
Collections and REA 216 280 (64) (22.9)
Professional services 124 96 28 29.2
Postage and telecommunications 70 58 12 20.7
Marketing 35 32 3 9.4
Other operating 294 266 28 10.5
Total operating expenses $2,189 $2,216 $ (27) (1.2)
</TABLE>
Salaries expense increased for the quarter ended September 30, 1995 as
compared with the prior year period due primarily to increases in
staffing, primarily in lending, annual salary increases of approximately
4% and a reduction in deferred loan origination expense due to lower
mortgage loan origination activity. Employee benefits expense increased
primarily as a result of increased taxes related to the increased salary
and wages. Insurance expense decreased $152,000, or 87.4%, as a result
of a refund on previously-paid FDIC insurance premiums. This refund
offsets the impact of a one-time collection expense associated with the
near term resolution of a non-performing asset. Despite this,
collection and real estate acquired expense decreased $64,000, or 22.9%,
due primarily to reductions in non-performing assets over the past year.
Changes in other operating expenses, including legal and professional,
postage and phone, office, shareholders relationship and other, result
from normal changes in operating activities.
Income taxes
The Company returned to a fully-taxable reporting basis on July 1, 1995
following the recognition of substantially all of its deferred tax asset
at June 30, 1995. Net income for the quarter included an income tax
provision of $358,000, representing a 41% effective rate, as compared
with a provision of only $12,000 a year ago.
As of June 30, 1995, the Company had recognized 100% of its remaining
available Federal income tax benefits (expiring 2007), excluding any
capital loss carry forwards, together with that portion of its remaining
available State income tax benefits (expiring 1997) which the Company
expects to utilize, and other book/tax temporary differences.
The Company's income tax expense of $358,000 for the quarter ended
September 30, 1995 represents deferred federal and state taxes totaling
$346,000 and minimum federal and state taxes net of federal and state
tax benefits of $287,000 and $91,000, respectively, from the utilization
of net operating loss carryforwards.
The Company's income tax expense of $12,000 for the quarter ended
September 30, 1994 represents minimum federal and state taxes net of
federal and state tax benefits of $156,000 and $49,000, respectively,
from the utilization of net operating loss carryforwards.
ASSET QUALITY AND PORTFOLIO RISK
Non-performing assets
The following table details changes in non-performing assets during the
three month periods ended September 30.
<TABLE>
<CAPTION>
(in thousands) 1995 1994
<S> <C> <C>
Balance, beginning of year $8,885 $13,685
Loans placed on non-accrual status 423 625
Decrease in accruing loans past
due 90 or more days, net (34) (379)
Payments to improve REA 374 452
Loan payments (106) (161)
Loans returned to accrual status - -
Loan charge-offs (231) (48)
Gross proceeds from REA sales (989) (2,761)
Gains on REA sales, net 172 480
Provision to REA valuation reserve (172) (455)
Balance, end of period $8,322 $11,438
Percent of total assets 2.74% 3.68%
</TABLE>
During the quarter ended September 30, 1995 non-performing assets
decreased $563,000, or 6.34%, due principally to sales of real estate of
$989,000 offset by net additions to non-performing loans and capital
improvements to real estate acquired. Additions to non-accrual loans
generally represent loans which had previously been classified on the
Company's internally monitored list and had been adequately reserved.
The following table details the composition of non-performing assets as
of September 30, 1995.
<TABLE>
<CAPTION>
Non-Performing Assets Accruing Total
(dollars in thousands) loans non-
Non- past due Restruc- Real Valuat-perform-
accrual 90 or tured estate ion ing
loans more days loans (a)acquired reserve assets
<S> <C> <C> <C> <C> <C> <C>
September 30,
1995
Real estate:
Residential $2,101 $ - - $ 949 $ - $3,050
Commercial 762 - - 307 - 1,069
Land and land
development 2,500 - - 2,184 - 4,684
Collateral and
installment loans 4 - - - - 4
Valuation reserve - - - - (485) (485)
Totals $5,367 $ - $ - $3,440 $(485) $8,322
</TABLE>
(a) Includes accruing troubled debt restructurings.
The Company pursues the resolution of all non-performing assets through
restructurings, credit enhancements or collections. When collection
procedures do not bring a loan into performing or restructured status,
the Company generally initiates action to foreclose the property or to
acquire it by deed in lieu of foreclosure. Included in land and land
development real estate owned is a 34 lot residential sub-division with
a carrying value of $1.3 million which the Company is developing under
a joint venture with a residential construction firm. The Company
expects to recover its carrying value and future site development costs
through sales of lots over the next two-to-three years. The Company
actively markets all real estate owned. The REA valuation reserve at
September 30, 1995 totaled $485,000, or 14.1% of real estate acquired.
There continues to be an oversupply of commercial and residential real
estate in New England and any decline in the real estate market could
adversely affect the market values of the Company's real estate acquired
which could require additional provisions to the valuation reserve and
reductions in the carrying values of properties.
FINANCIAL CONDITION
Total assets declined $5.4 million, or 1.75%, to $303.3 million in the
three month period from June 30, 1995 through September 30, 1995. The
decrease resulted from a $2.4 million decrease in the securities
portfolio, through principal repayments, lower federal funds sold
balances and a decrease in loans. Net loan advances for the period were
offset by the reclassification of $1.9 million of non-performing assets
from loans to real estate acquired.
Loans
The following table details the composition of the loan portfolio as of
the periods presented.
<TABLE>
<CAPTION>
(in thousands) September 30, June 30,
1995 1994
<S> <C> <C>
Real estate mortgages
One-four family residential $ 98,069 $ 98,766
Five or more family residential 3,058 3,171
Commercial 27,841 29,068
Land and land development 11,308 12,067
Commercial and industrial 3,110 3,201
Home equity lines of credit 11,961 7,785
Installment and other 2,311 2,187
Total loans, gross $154,658 $156,245
</TABLE>
The decrease in loans resulted from the reclassification of $1.9 million
of non-performing loans to real estate acquired, offset in part by net
loan advances for the period. Predominately all of the Company's loans
are adjustable rate. Originations of fixed rate mortgage loans are
generally sold on a servicing retained basis.
Securities
The securities portfolio consists primarily of collateralized mortgage
obligations ("CMOs") and mortgage-backed securities ("MBSs"), and to a
lesser extent, agency obligations and Federal Home Loan Bank stock.
There are no structured notes, inverse floaters, or interest-only or
principal-only strips in the portfolio. At September 30, 1995 49.2% of
the portfolio was invested in fixed rate securities, principally CMOs
and MBSs. The fixed rate portfolio had a consensus weighted average
duration and life of 3.0 years and 3.6 years, respectively. Fixed rate
CMOs and MBSs are generally in securities with relatively stable cash
flows. The Company actively monitors the prepayment of its CMOs and
MBSs. At September 30, 1995 49.6% of the portfolio was invested in
floating rate CMOs and MBSs which generally reprice monthly based on
pre-determined spreads to underlying index, subject to life-time caps
and floors. The floating rate portfolio had a consensus weighted
average duration and life of -0.01 years and 13.1 years, respectively.
The floating rate securities are tied to several indices including the
eleventh district cost of funds index ("EDCOFI"), one-month LIBOR and
Treasury indices. Securities tied to EDCOFI are match funded with core
deposits while securities tied to the one-month LIBOR index and Treasury
indices are generally matched against borrowings whose rates generally
follow the one-month LIBOR index. The remaining 1.2% of the portfolio
at September 30, 1995, was represented by Federal Home Loan Bank stock.
At September 30, 1995, securities totaling $118.3 million, or 94.7%,
were classified held-to-maturity and securities totaling $6.6 million,
or 5.3%, were classified available-for-sale.
All held-to-maturity securities are part of the Company's core portfolio
which the Company has the ability and positive intent to hold to
maturity. Included in shareholders' equity at September 30, 1995 is an
adjustment of $2,548,000 relating to securities transferred from
available-for-sale to held-to-maturity, representing net unrealized
holding losses at the time of transfer adjusted for subsequent principal
amortization and net of taxes.
Substantially all of the Company's securities were purchased in 1993 and
early 1994. Subsequent movements in interest rates and market
conditions have resulted in a net decline in fair market value. At
September 30, 1995 net unrealized losses on both securities available-
for-sale and held-to-maturity totaled $4.1 million. No credit losses
are expected and all gains and losses are expected to reverse as
securities approach maturity. Fluctuations in fair market value caused
by movements in interest rates and market conditions will not
necessarily adversely impact future earnings.
LIQUIDITY
The Company manages its liquidity position to ensure that there is
sufficient funding availability at all times to meet both anticipated
and unanticipated deposit withdrawals, new loan originations, securities
purchases and other operating cash outflows. The principal sources of
liquidity for the Company are principal payments and maturities of
securities and loans, short term borrowings through repurchase
agreements and Federal Home Loan Bank advances, net deposit growth and
funds provided by operations. Liquidity can also be provided through
sales of loans and available-for-sale securities.
Operating activities for the three month period ended September 30, 1995
provided net cash of $301,000. Investing activities provided net cash
of $2.3 million principally from securities principal repayments and
sales of real estate acquired, offset in part by net loan advances and
capitalized improvements to real estate acquired. Funds provided by
investing and operating activities, together with a decrease cash and
cash equivalents of $2.9 million, were used to reduce short term
borrowings by $3.4 million, fund net deposit withdrawals of $2.1 million
and pay shareholder dividends.
Operating activities for the three month period ended September 30, 1994
provided net cash of $916,000. Investing activities provided net cash
of $5.2 million principally from securities principal repayments and
sales of real estate acquired, offset in part by net loan purchases and
capitalized improvements to real estate acquired. Funds provided by
investing and operating activities were used to reduce short term
borrowings by $2.0 million, fund net deposit withdrawals of $2.8 million
and increase cash and cash equivalents by $2.9 million
At September 30, 1995, the Company's liquidity ratio, as represented by
cash, short term available-for-sale securities, marketable assets and
the ability to borrow against held-to-maturity securities and loans
through unused FHLB and other short term borrowing capacity, of
approximately $153.1 million, to net deposits and short term unsecured
liabilities, was 65.3%, well in excess of the Company's minimum
guideline of 15%. At September 30, 1995, the Company had outstanding
commitments to fund new loan originations of $2.6 million, construction
mortgage commitments of $245,000 and unused lines of credit of $10.8
million. These commitments will be met in the normal course of
business. The Company believes that its liquidity sources will continue
to provide funding sufficient to support operating activities, loan
originations and commitments, and deposit withdrawals.
INTEREST RATE SENSITIVITY
At September 30, 1995, the Company had a negative cumulative one year
gap of $18.7 million, or 6.2% of assets, and, as a result, the net
interest margin could be adversely affected by a sudden increase in
interest rates. For the purposes of this analysis, money market,
savings and NOW deposit accounts have been included in the within one
year category, however, the elasticity of these accounts cannot be tied
to any one time category.
For the three month period ended September 30, 1995 the Company's net
interest margin increased 63 basis points as compared with the prior
year period. This improvement in net interest margin was driven by both
changes in asset mix and the benefit, over the past year, from higher
interest rates on the Company's assets whose rates have increased more
than deposit liabilities. The Company's deposit rates, in particular
savings and money market rates, have lagged increases in Treasury yields
over the past year and this lag has contributed to the increase in the
Company's net interest margin. A sudden increase in rates on money
market and savings accounts would adversely impact the Company's net
interest margin. However, the Company believes that this effect would
be offset over time as the Company's adjustable rate loans and
securities reprice and as principal repayments from securities, loans
and non-performing assets are reinvested into higher yielding loans.
A significant factor in determining the Company's ability to maintain
its spread in a changing interest rate environment is its ability to
manage its core deposit rates. Essentially all of the Company's deposit
base is composed of local retail deposit accounts which tend to be
somewhat less sensitive to moderate interest fluctuations than other
funding sources and, therefore, provide a reasonably stable and cost-
effective source of funds. The Company also structures its loan and
securities portfolios to provide for portfolio repricing consistent with
its interest rate risk objectives.
CAPITAL RESOURCES
Shareholders' equity and book value per share increased $488,000, or
$0.10 per share, to $33,209,000 and $7.39, during the three month period
ended September 30, 1995. This increase resulted from the Company's
earnings of $505,000, or $0.11 per share, together with a $67,000
decrease in the adjustment to shareholders' equity for net unrealized
holding losses on securities net of taxes and proceeds of $6,000 from
the exercise of stock options, offset in part by shareholder dividend
payments of $90,000. Shareholders' equity at September 30, 1995
included an adjustment for unrealized holding losses, net of taxes, of
$2.5 million on securities transferred from available-for-sale to held-
to-maturity and net unrealized holding gains, net of taxes, of $97,000
on securities available-for-sale.
The Company and the Bank are subject to minimum capital requirements
established, respectively, by the Federal Reserve Board (the "FRB") and
the FDIC. At September 30, 1995 the Company's leverage capital ratio
was 10.62% and its tier I and total risk-based capital ratios were
20.55% and 21.82%, respectively. At September 30, 1995 the Bank's
leverage capital ratio was 10.23% and its tier I and total risk-based
capital ratios were 19.80% and 21.08%, respectively. The Company and
the Bank are categorized as "well capitalized". A well capitalized
institution, which is the highest capital category for an institution as
defined by the Prompt Corrective regulations issued by the FDIC and the
FRB, is one which maintains a total risk-based ratio of 10% or above, a
Tier I risk-based ratio of 6% or above and a leverage ratio of 5% or
above, and is not subject to any written order, written agreement,
capital directive, or prompt corrective action directive to meet and
maintain a specific capital level.
Dividends
The Company's ability to pay dividends is dependent on the Bank's
ability to pay dividends to the Company. There are certain restrictions
on the payment of dividends and other payments by the Bank to the
Company. Under Connecticut law the Bank is prohibited from declaring a
cash dividend on its common stock except from its net earnings for the
current year and retained net profits for the preceding two years.
Consequently, the maximum amount of dividends payable by the Bank to the
Company for the three month period ended September 30, 1995 is $515,000.
In some instances, further restrictions on dividends may be imposed on
the Company by the Federal Reserve Bank.
The Company believes that the payment of cash dividends to its
shareholders is appropriate, provided that such payment considers the
Company's capital needs, asset quality, and overall financial condition
and does not adversely affect the financial stability of the Company or
the Bank. The continued payment of cash dividends by the Company will
be dependent on the Company's future core earnings, financial condition
and capital needs, regulatory restrictions, and other factors deemed
relevant by the Board of Directors of the Company.
PART II. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
There are no material legal proceedings pending against the Company or
the Bank or any of their properties, other than ordinary routine
litigation incidental to the Company's business.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The annual shareholders' meeting was held on October 20, 1995. The
following matters were considered and voted on, as certified by the
election officer at the annual meeting:
(1) Laurie G. Gonthier, Dr. John V. Haxo and Suzanne L. Powers were
each elected to the office of Director for a three year term. All
received at least 3,003,687 votes, or 80%.
(2) To amend the 1986 Stock Option and Incentive Plan for key officer
and employees. The shares were voted as follows: 2,532,094 or 68%
FOR.
(3) To amend the 1992 Stock Option Plan for outside directors. The
shares were voted as follows: 2,541,801 or 68% FOR.
(5) Coopers and Lybrand L.L.P., Certified Public Accountants, were
approved as independent auditors for the fiscal year ending June
30, 1996. The shares were voted as follows: 3,394,288 or 91% FOR.
Item 5. OTHER INFORMATION
None
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
11. Computation of earnings per share.
(b) Report on Form 8-K.
None
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.
NEWMIL BANCORP, INC.
November 9, 1995 By /s/ Anthony J. Nania
Anthony J. Nania,
Chairman of the Board and
Chief Executive Officer
November 9, 1995 By /s/ B. Ian McMahon
B. Ian McMahon,
Chief Financial Officer
Exhibit 11.1
NEWMIL BANCORP, INC.
COMPUTATION OF NET INCOME PER COMMON SHARE
(in thousands except per share amounts)
<TABLE>
<CAPTION>
Three months
ended
September 30.
1995 1994
<S> <C> <C>
Net income
Net income - primary and fully diluted $505 $464
Weighted Average Common and Common
Equivalent Stock
Weighted average common stock
outstanding 4,492 4,486
Assumed conversion as of the
beginning of each period or upon
issuance during a period of stock
options outstanding at the end
of each period 298 205
Assumed purchase of treasury stock
during each period with proceeds
from conversion of stock options
outstanding at the end of each
period (204) (141)
Weighted average common and common
equivalent stock outstanding
- primary 4,586 4,550
Weighted average common stock
outstanding 4,492 4,486
Assumed conversion as of the
beginning of each period or upon
issuance during a period of stock
options outstanding at the end
of each period 319 251
Assumed purchase of treasury stock
during each period with proceeds
from conversion of stock options
outstanding at the end of each
period (234) (192)
Weighted average common and common
equivalent stock outstanding
- fully diluted 4,577 4,545
Earnings Per Common and Common
Equivalent Share
Primary $0.11 $0.10
Fully diluted $0.11 $0.10
</TABLE>
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.
NEWMIL BANCORP, INC.
November 9, 1995 By
Anthony J. Nania,
Chairman of the Board and
Chief Executive Officer
November 9, 1995 By
B. Ian McMahon,
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
registrant's September 30, 1995 unaudited balance sheet, income statement and
cash flow statement, and notes thereto, and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> SEP-30-1995
<CASH> 5,531,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5,800,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 6,575,000
<INVESTMENTS-CARRYING> 118,252,000
<INVESTMENTS-MARKET> 117,925,000
<LOANS> 154,319,000
<ALLOWANCE> 5,242,000
<TOTAL-ASSETS> 303,259,000
<DEPOSITS> 250,287,000
<SHORT-TERM> 17,126,000
<LIABILITIES-OTHER> 2,637,000
<LONG-TERM> 0
<COMMON> 2,984,000
0
0
<OTHER-SE> 30,225,000
<TOTAL-LIABILITIES-AND-EQUITY> 303,259,000
<INTEREST-LOAN> 3,472,000
<INTEREST-INVEST> 2,007,000
<INTEREST-OTHER> 22,000
<INTEREST-TOTAL> 5,501,000
<INTEREST-DEPOSIT> 2,486,000
<INTEREST-EXPENSE> 2,660,000
<INTEREST-INCOME-NET> 2,841,000
<LOAN-LOSSES> 100,000
<SECURITIES-GAINS> 10,000
<EXPENSE-OTHER> 2,189,000
<INCOME-PRETAX> 863,000
<INCOME-PRE-EXTRAORDINARY> 863,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 505,000
<EPS-PRIMARY> .11
<EPS-DILUTED> .11
<YIELD-ACTUAL> 3.96
<LOANS-NON> 5,367,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,372,000
<CHARGE-OFFS> 232,000
<RECOVERIES> 2,000
<ALLOWANCE-CLOSE> 5,242,000
<ALLOWANCE-DOMESTIC> 4,880,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 362,000
</TABLE>
