SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
For the quarterly period ended June 30, 1996
Commission File Number 0-16825
BFS Bankorp, Inc.
(Exact name of registrant as specified in its charter)
Delaware 13-3475050
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification Number)
110 William Street, New York, New York 10038
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (212) 227-4040
Not applicable
(Former name, former address and former fiscal year, if changed
since last report)
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 and 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 [ ]
Number of shares of common stock, par value $.01 per share
outstanding (net of treasury stock) as of July 31, 1996: 1,635,488.
PAGE
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BFS Bankorp Inc. & Subsidiaries
Form 10-Q
Table of Contents
<TABLE>
<CAPTION>
PART 1 - FINANCIAL INFORMATION PAGE
<S> <C>
Item 1. Consolidated Financial Statements (Unaudited)
Consolidated Statements of Financial Condition 3
as of June 30, 1996 and September 30, 1995
Consolidated Statements of Income for the three 4
and nine months ended June 30, 1996 and 1995
Consolidated Statements of Changes in
Stockholders' Equity for the nine months ended 5
June 30, 1996
Consolidated Statements of Cash Flows for the 6
three and nine month periods ended June 30, 1996
and 1995
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of the 9
Financial Condition and Results of Operation
PART 2 - OTHER INFORMATION
Item 1. Legal Proceedings 20
Item 2. Changes in Securities 20
Item 3. Defaults upon Senior Securities 20
Item 4. Submission of Matters to a Vote of Security
Holders 20
Item 5. Other Information 20
Item 6. Exhibits and Reports on Form 8-K 21
Signature Page 22
</TABLE>
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BFS Bankorp, Inc. & Subsidiaries
Consolidated Statements of Financial Condition
(Unaudited)
<TABLE>
<CAPTION>
June 30, 1996 September 30, 1995
- -------------------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C>
Assets:
Cash and due from banks $ 6,377 $ 5,978
Federal funds and interest-
bearing deposits 5,000 14,000
Securities held to maturity, net
(estimated market value of $20,345
and $16,163 at June 30, 1996 and
September 30, 1995, respectively) 20,548 16,135
Mortgage-backed securities held to
maturity, net (estimated market
value of $14,822 and $17,426 at
June 30, 1996 and September 30,
1995, respectively) 14,852 17,194
First mortgage and other loans 568,785 496,246
Allowance for loan losses (6,149) (5,359)
- -------------------------------------------------------------------------------
Loan, net 562,636 490,887
Premises and equipment, net 3,069 2,671
Real estate owned 610 369
Accrued interest receivable 4,567 4,259
Other assets 3,665 3,658
Total assets $621,324 $555,151
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- -------------------------------------------------------------------------------
Liabilities:
Deposits 399,629 388,562
Borrowed funds 137,950 94,600
Collateralized mortgage
obligatiosn (CMOs) 13,171 15,183
Mortgagors' escrow payments 12,953 10,237
Accrued expenses and other
liabilities 9,001 5,757
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Total liabilities 572,704 514,339
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Stockholders' equity:
Preferred stock, $.01 par value,
2,000,000 shares authorized,
none issued
Common stock, $.01 par value,
6,000,000 shares authorized,
1,695,428 issued with 1,635,488
outstanding at June 30, 1996
and 1,694,567 issued and
1,634,627 outstanding at
September 30, 1995, respectively 17 17
Additional paid-in capital 10,742 10,711
Retained earnings 38,445 30,670
Common stock acquired for
Management Recognition Plan (MRP) (19) (21)
Common stock in Treasury, at cost;
59,940 shares at March 31, 1996
and September 30, 1995,
respectively (565) (565)
- -------------------------------------------------------------------------------
Total stockholders' equity 48,620 40,812
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Total liabilities and stockholders'
equity $621,324 $555,151
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<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE>
BFS Bankorp, Inc. & Subsidiaries
Consolidated Statements of Financial Condition
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
- --------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995
- --------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Interest income:
First mortgage and other loans $12,910 $ 9,372 $37,723 $24,812
Mortgage-backed securities 276 2,962 867 8,269
Securities held to maturity 343 389 1,033 1,050
Federal funds 66 156 367 370
- --------------------------------------------------------------------------------------------------------------------
Total interest income 13,595 12,879 39,990 34,501
- --------------------------------------------------------------------------------------------------------------------
Interest expense:
Deposits 4,131 3,668 12,228 10,096
Borrowed funds 1,919 1,501 5,313 4,188
Collateralized mortgage obligatiosn 354 410 1,125 1,273
- --------------------------------------------------------------------------------------------------------------------
Total interest expense 6,404 5,579 18,666 15,557
- --------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------
Net interest income 7,191 7,300 21,324 18,944
Provision for loan losses -- 545 -- 749
- --------------------------------------------------------------------------------------------------------------------
Net interest income after provision
for loan losses 7,191 6,755 21,324 18,195
Other income:
Loan fees and service charges 355 218 964 904
Other fees, service charges and other income 249 260 719 727
Gain (loss) on sale of assets, net 201 (5) 207 (44)
Net gain on sale of assets -- 101 1,101 10
- --------------------------------------------------------------------------------------------------------------------
Total other income 805 574 2,901 1,597
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- --------------------------------------------------------------------------------------------------------------------
Other expenses:
Compensation and benefits 1,916 1,619 5,510 4,969
Occupancy and equipment 605 537 1,711 1,565
Marketing, professional fees and services 249 207 902 652
SAIF deposit insurance premiums 232 215 682 673
Data processing service fees 158 142 477 435
Provision for real estate losses -- 37 -- 203
Other 304 300 954 956
- --------------------------------------------------------------------------------------------------------------------
Total other expenses 3,464 3,057 10,236 9,453
- --------------------------------------------------------------------------------------------------------------------
Income before provision for income tax expense 4,532 4,272 13,989 10,339
Provision for income tax expense 2,014 2,037 6,214 4,962
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Net income $ 2,518 $ 2,235 $ 7,775 $ 5,377
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Primary earnings per share $1.44 $1.30 $4.44 $3.14
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Fully diluted earnings per share $1.44 $1.30 $4.44 $3.13
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</TABLE>
<PAGE>
<PAGE>
BFS Bankorp, Inc.
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
<TABLE>
<CAPTION>
Common
Additional Stock
Common Paid-in Retained Acquired Treasury
(In thousands) Stock Capital Earnings for MRP Stock Total
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Nine Months Ended June 30, 1996
Balance at September 30, 1995 $ 17 $10,711 $30,670 $(21) $(565) $40,812
Net income for quarter ended
December 31, 1995 -- -- 2,279 -- -- 2,279
Amortization of MRP stock -- -- -- 1 -- 1
- ---------------------------------------------------------------------------------------------
Balance at December 31, 1995 17 10,711 32,949 (20) (565) 43,092
Net income for quarter ended
June 30, 1996 -- -- 2,978 -- -- 2,978
Incentive stock plan for outside
directors issuance -- 31 -- -- -- 31
Amortization of MRP stock -- -- -- 1 -- 1
- ---------------------------------------------------------------------------------------------
Balance at March 31, 1996 $ 17 $10,742 $35,927 $(19) $(565) $46,102
- ---------------------------------------------------------------------------------------------
- ---------------------------------------------------------------------------------------------
Net income for quarter ended
June 30, 1996 -- -- 2,518 -- -- 2,518
- ---------------------------------------------------------------------------------------------
Balance at June 30, 1996 $ 17 $10,742 $38,445 $(19) $(565) $48,620
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<FN>
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
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BFS Bankorp, Inc. & Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
- ----------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Net cash flows from operating activities: $ 2,518 $ 2,235 $ 7,775 $ 5,377
Net income
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Amortization of MRP and ESOP -- 4 2 11
Accretion of discounts, net of amortization
of premiums (201) (208) (939) (304)
(Increase) decrease in other assets (495) 2,628 (7) 530
Increase in accrued expenses and other liabilities (21) (1,867) 3,244 44
Increase in accrued interest receivable (299) (267) (308) (699)
Provisions ofr loan and real estate losses -- 582 -- 952
(Gain) loss on sale of assets, net -- (101) (1,011) (10)
Incentive stock plan for outside directors issuance -- -- 31 31
Depreciation and amortization 207 153 555 475
- ----------------------------------------------------------------------------------------------------------------------
Net cash provided by operating activities 1,709 3,159 9,342 6,407
- ----------------------------------------------------------------------------------------------------------------------
Cash flows from investing activities:
Principal payments on mortgage and other loans 18,390 5,150 60,061 18,074
Principal payments on mortgage-backed securities 747 4,179 2,329 10,397
Mortgage and other loans sold -- -- 7,699 6,762
Real estate owned sold -- 3,005 6,761 6,020
Investments in mortgage and other loans (71,874) (33,682) (146,479) (86,913)
Investments in mortgage-backed securities -- -- -- (7,170)
Maturities of securities held to maturity 4,490 2,710 18,040 10,238
Purchases of securities held to maturity (4,109) (3,738) (20,383) (14,015)
Net additions in premises and equipment (272) (118) (930) (367)
- ----------------------------------------------------------------------------------------------------------------------
Net cash used in operating activities (52,628) (22,494) (72,902) (56,974)
- ----------------------------------------------------------------------------------------------------------------------
Cash flows from financing activities:
Increase in deposits, net of interest credited 10,637 9,185 11,067 13,253
Increase in other borrowings 43,650 9,935 43,350 41,935
Principal payments on collateralized mortgage
obligations (691) (637) (2,174) (1,979)
Stock options exercised -- 97 -- 174
(Decrease) increase in advance payments by
borrowers (973) (2,249) 2,716 1,699
- ----------------------------------------------------------------------------------------------------------------------
Net cash (used in) provided by financing activities 52,323 16,331 54,959 55,082
- ----------------------------------------------------------------------------------------------------------------------
Net (decrease) increase in cash and cash equivalents 1,404 (3,004) (8,601) 4,515
Cash and cash equivalents at beginning of period 9,973 21,264 19,978 13,745
- ----------------------------------------------------------------------------------------------------------------------
Cash and cash equivalents at ending of period $ 11,377 $ 18,260 $ 11,377 $ 18,260
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Supplemental disclosures of cash flow information:
Cash paid during the period for:
Income taxes $ 2,891 $ 2,559 $ 5,040 $ 4,669
Interest on deposits and borrowed money $ 6,404 $ 5,579 $ 18,666 10,153
Non-cash transactiosn:
Transfer from loans to real estate owned $ 51 $ -- $ 5,821 $ 384
Transfer of mortgage-backed securities held for
sale, net to mortgage-backed securities held
for maturity $ -- $ -- $ -- $103,354
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- ----------------------------------------------------------------------------------------------------------------------
<FN>
See accompanying notes to unaudited consolidated financial statements.
</TABLE>
<PAGE>
<PAGE>
BFS Bankorp, Inc. & Subsidiaries
Notes to Unaudited Consolidated Financial Statements
June 30, 1996
Note 1:
The accompanying unaudited consolidated financial statements
include the accounts of BFS Bankorp, Inc. ("Company") and its
wholly owned subsidiary, Bankers Federal Savings FSB ("Bank") and
the Bank's wholly owned subsidiaries, BFED I Corporation, Bankers
Federal Service Corporation, Fayette Properties, Inc., BFS Credit
Corporation, BFS Finance Corporation and the inactive John Street
Service Corporation, as of June 30, 1996 and September 30, 1995 and
for the three and nine month periods ended June 30, 1996 and 1995.
The accompanying unaudited consolidated financial statements
have been prepared in accordance with generally accepted accounting
principles ("GAAP") for interim financial information and with the
instructions to Form 10-Q and Article 10 of Regulation S-X and
should be read in conjunction with the consolidated financial
statements of the Company for the fiscal year ended September 30,
1995, as presented on form 10-K. As such, they do not include all
of the information and footnotes required by GAAP for complete
financial statements. In the opinion of Management, all necessary
adjustments, consisting of normal recurring accruals necessary for
fair presentation, have been included. Certain amounts in the 1995
financial statements have been reclassified to conform to the 1996
financial statement presentation. The results of operations for
the nine month period ended June 30, 1996 are not necessarily
indicative of the results that may be expected for the entire
fiscal year.
Note 2:
Primary and fully diluted earnings per share are computed
based on net income for the three and nine month periods ended June
30, 1996 and 1995. The weighted average number of shares of common
stock and common stock equivalents used in the computation of
primary and fully diluted earnings per share are as follows:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
- ----------------------------------------------------------------------------------------------------------------------
1996 1995 1996 1995
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Number of shares used in the calculation of:
Primary earnings per share 1,753,918 1,719,576 1,751,818 1,714,989
Fully diluted earnings per share 2,754,179 1,721,858 1,752,045 1,715,290
</TABLE>
Note 3:
In the normal course of business, there are outstanding
commitments and contingent liabilities which are not reflected in
the accompanying financial statements. At June 30, 1996, the Bank
had commitments outstanding to originate mortgage loans of
approximately $32,658,000, all of which will be secured by multi-
family residential properties. In addition, unused lines of credit
approximated $158,000 at June 30, 1996. Loans serviced by the Bank
for the benefit of others totaled approximately $48,945,000 at June
30, 1996, all of which are on a non-recourse basis. In June, 1996,
the Bank renewed an overnight line of credit with the Federal Home
Loan Bank of New York ("FHLBNY") in the amount of $28,155,350,
which
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expires in June, 1997. The Bank utilizes the line of credit as is
necessary to meet temporary cash needs and expects to renew the
line of credit come June, 1997. As of June 30, 1996, the balance
outstanding on the line of credit was $-0-.
Note 4:
In the first quarter of fiscal 1996, the Company adopted
Statement of Financial Standards ("SFAS") No. 114 "Accounting by
Creditors for Impairment of a Loan". SFAS 114 generally requires
all creditors to account for impaired loans, with the exception of
those loans that are accounted for at fair value or at a lower of
cost or fair value, at the present value of the expected future
cash flows discounted at the loan's effective interest rate.
Also in the first quarter of fiscal 1996, the Company adopted
SFAS No. 118 "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures". SFAS 118 amends SFAS 114 to
permit creditors to use existing methods for recording interest
income by eliminating the income recognition provisions of SFAS
114. Creditors may continue to use a cost recovery or cash basis
method (or some combination of both) to account for interest income
on impaired loans.
SFAS No. 114 also provides that in-substance foreclosed loans
should not be included in Real Estate Owned but in the loan
portfolio for financial reporting purposes. Accordingly, $479,000
of in-substance foreclosed loans at September 30, 1995 were
reclassified from Real Estate Owned to First Mortgage and Other
Loans.
Under SFAS No. 114, a loan is considered impaired when, based
on current information, it is probable that the borrower will be
unable to pay contractual interest or principal payments as
scheduled in the loan agreement. The Company's impaired loans are
those non-consumer loans currently reported as nonaccrual.
Impaired loans for which the discounted cash flows, collateral
value or market price exceeds the carrying value of the loan do not
require an allowance under SFAS No. 114. The allowance for
impaired loans for which the discounted cash flows, collateral
value or market price is less than the carrying value of the loan
is included in the Company's overall allowance for credit losses.
The Company recognizes interest income on these loans to the extent
received in cash.
The following table sets forth impaired loan disclosures (in
thousands) as of and for the nine months ended June 30, 1996:
<TABLE>
<CAPTION>
<S> <C>
Impaired loans with an allowance $ --
Impaired loans without an allowance 7,842
-------
Total impaired loans $ 7,842
-------
-------
Allowance for impaired loans $ --
-------
-------
Average balance of impaired loans
during the period $10,455
-------
-------
Interest income recognized on impaired
loans during the period $ 102
-------
-------
</TABLE>
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BFS Bankorp, Inc. & Subsidiaries
Management's Discussion and Analysis of
Financial Condition and Results of Operations
General
BFS Bankorp, Inc., a Delaware business corporation, is a
holding company whose principal subsidiary is Bankers Federal
Savings FSB. The Bank is a federally-chartered savings bank,
headquartered in New York City, New York and is insured by the
Federal Deposit Insurance Corporation ("FDIC") through the Savings
Association Insurance Fund ("SAIF"). The Company was organized at
the direction of the Bank in connection with the Bank's conversion
from mutual to stock form of organization on May 11, 1988.
The primary activity of the Company at this time is its
ownership of all outstanding capital stock of the Bank. The Bank
is principally engaged in the business of originating multi-family
residential first mortgage loans and funding said loans by
attracting retail deposits from the general public. At its
discretion, the Bank may borrow funds from the FHLBNY as a source
of funds in lieu of or in addition to savings growth. The Bank
maintains a portion of its assets in investment securities
including, but not limited to, US Government and agency securities,
mortgage-backed securities and federal funds.
Financial Condition
The Company's total assets increased by $66.2 million to
$621.3 million at June 30, 1996 from $555.2 million at September
30, 1995. The Company's total stockholders' equity increased by
$7.8 million to $48.6 million at June 30, 1996 from $40.8 million
at September 30, 1995. This increase is primarily the result of
the net income recorded by the Company during the nine month period
ended June 30, 1996. Origination of first mortgage loans totaled
$146.5 million and $7.7 million of single family mortgage loans
were sold. The funding for these new origination's came primarily
from and increase in FHLB Advances of $43.4 million, an increase in
Deposits of $11.1 million, a decrease of $9.0 million in Fed funds
and the cash inflows associated with the repayments on loans and
mortgage-backed securities, and increased mortgagors' escrow
payments.
Non-performing assets decreased to $7.5 million, or 1.21% of
total assets at June 30, 1996, as compared to $13.7 million, or
2.46% of total assets at September 30, 1995. Loans 90 or more days
delinquent decreased to $6.9 million or 1.22% of total loans at
June 30, 1996 as compared to $13.3 million and 2.69% of total loans
at September 30, 1995. Non-performing assets continue to decline
through individual sales of real estate owned, resolutions of
previously non-performing assets and minimal new non-performing
assets.
The following tables illustrate the segregation of the amount
of non-performing assets (in thousands) by property type at the
dates indicated:
<TABLE>
<CAPTION>
Construction 1-4 Family Multi-family Total
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
As of June 30, 1996
Loans 90 days or more delinquent $ -- $1,139 $ 5,775 $ 6,914
Real estate owned -- 293 317 610
- ----------------------------------------------------------------------------------------------------------------------
$ -- $1,432 $ 6,092 $ 7,524
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
As of September 30, 1995
Loans 90 days or more delinquent $ 170 $1,732 $11,410 %13,312
Real estate owned -- 265 104 369
- ----------------------------------------------------------------------------------------------------------------------
$ 170 $1,997 $11,514 $13,681
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</TABLE>
The following table is an analysis of the Bank's general
allowance for loan losses (in thousands) for the periods indicated:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
----------------------- ------------------------
1996 1995 1996 1995
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Beginning Balance $5,866 $4,824 $5,359 $4,684
Provision for loan losses -- 545 -- 749
Chargeoffs
One to four family 12 -- 22 26
Multi family -- 249 -- 287
Recoveries - multi-family (295) -- (812) --
- ----------------------------------------------------------------------------------------------------------------------
Net (recoveries) chargeoffs (283) 249 (790) 313
- ----------------------------------------------------------------------------------------------------------------------
Ending balance $6,149 $5,120 $6,149 $5,120
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Ratio of net chargeoffs to average loans (0.05)% 0.06% (0.15)% 0.09%
- ----------------------------------------------------------------------------------------------------------------------
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Ratio of allowance to total loans 1.08% 1.05% 1.08% 1.05%
- ----------------------------------------------------------------------------------------------------------------------
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Ratio of allowance to non-performing loans 88.94% 25.37% 88.94% 25.37%
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</TABLE>
The following table is an analysis of the Bank's general
allowance for real estate losses (in thousands) for the periods
indicated:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
June 30, June 30,
----------------- -------------------
1996 1995 1996 1995
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Beginning Balance $ -- $ -- $ -- $ 207
Provision for loan losses -- 37 -- 203
Chargeoffs
One to four family -- -- -- 34
Multi family -- 37 -- 376
Recoveries - multi-family -- -- -- --
- ----------------------------------------------------------------------------------------------------------------------
Net (recoveries) chargeoffs -- 37 -- 410
- ----------------------------------------------------------------------------------------------------------------------
Ending balance $ -- $ -- $ -- $ --
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- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
Liquidity and Capital Resources
The Bank is required to maintain an average daily balance of liquid
assets (cash, certain time deposits, bankers' acceptances,
specified United States Government, state or federal agency
obligations, shares of certain mutual funds and certain corporate
debt securities and commercial paper) equal to a monthly average of
not less than a specified percentage of its net withdrawable
deposit accounts plus short term borrowings. This liquidity
requirement, which is currently 5%, may be changed from time to
time by the Office of Thrift Supervision ("OTS") to any amount
within the range of 4% to 10%, depending upon economic conditions
and the savings flow of member institutions. OTS regulations also
require each
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member savings institution to maintain an average daily balance of
short term liquid assets at a specified percentage (currently 1%)
of the total of its net withdrawable deposit accounts and
borrowings payable in one year or less. Monetary penalties may be
imposed for failure to meet these liquidity requirements. The
liquidity of the Bank at June 30, 1996 was 5.89%, which exceeded
the then applicable 5% liquidity requirement. The Bank's short
term liquidity ratio at June 30, 1996 was 3.37%.
The OTS requires the Bank to maintain minimum capital
applicable to three categories as defined in the Financial
Institutions Reform, Recovery and Enforcement Act of 1989
("FIRREA"). The three categories are: (1) tangible capital, which
is required to be no less than 1.5% of total assets; (2) core or
leverage capital, which is required to be no less than 3% of total
assets; and (3) risk-based capital, which is required to be no less
than 8% of risk-weighted assets. In April, 1991, the OTS proposed
raising its core or leverage capital requirement such that all but
the highest rated institutions would have a requirement of between
4% and 5% of total assets. The implementation of this proposal
could increase the Bank's core or leverage capital requirement. In
July, 1992, the OTS announced its revised interest rate risk
regulation, which it has adopted and expects to implement shortly.
The regulation requires thrifts with "above normal" interest rate
risk (measured as a loss of economic value that exceeds 2 percent
of an institutions assets under a hypothetical 200 basis point
shock in interest rates) to hold capital in an amount equal to half
the difference between measured risk and 2 percent, times the
requirement. Management's measurement of this risk on the Bank
indicates that no additional capital would have been required at
the last measurement date.
The following table depicts the Bank's regulatory capital for
the periods indicated:
<TABLE>
<CAPTION>
Tangible Capital Core Capital Risk-based Capital
Amount Percent Amount Percent Amount Percent
-------- --------- ------ ------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
As of June 30, 1996:
Regulatory capital $47,955 7.72% $47,955 7.72% $52,703 13.93%
Regulatory requirement 9,320 1.50% 18,640 3.00% 30,276 8.00%
- ----------------------------------------------------------------------------------------------------------------------
Excess capital $38,635 6.22% $29,315 4.72% $22,427 5.93%
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
As of September 30, 1995:
Regulatory capital $40,080 7.22% $40,080 7.22% $44,418 12.83%
Regulatory requirement 8,328 1.50% 16,655 3.00% 27,687 8.00%
- ----------------------------------------------------------------------------------------------------------------------
Excess capital $31,752 5.72% $23,425 4.22% $16,731 4.83%
- ----------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
In September, 1992, the OTS, jointly with the other Bank
Regulatory agencies, issued regulations implementing the prompt
correction provisions of the Federal Deposit Insurance Corporation
Improvement Act of 1991 ("FDICIA"). The regulations define three
categories of capital that institutions will be measured against:
(1) a risk-based capital ratio which is the ratio of risk-based
capital to risk-weighted assets; (2) a Tier 1 capital ratio which
is the ratio of Tier 1 or core capital to risk-weighted assets; and
(3) a leverage capital ratio which is the ratio of core capital to
adjusted total assets. An institution will be deemed well
capitalized if its risk-based capital ratio is 10% or more, its
Tier 1 capital is 6% or more, and its leverage capital is 5% or
more and it is not subject to an OTS Order or Directive to meet and
maintain any other capital level. An institution will be
deemed adequately capitalized if its risk-based capital ratio is
not less than 8%, its Tier 1 capital is not less than 4%, and its
leverage capital is not less than 4%. Any institution with capital
levels lower than these would be deemed to be undercapitalized.
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An institution is deemed significantly undercapitalized if its
risk-based capital ratio is less than 6% or its Tier 1 capital
ratio is less than 3%. An institution is deemed critically
undercapitalized if its Tier 1 capital ratio is less than 2%.
Based upon this criteria, the Bank would be deemed to be well
capitalized at June 30, 1996.
The FDIC Board has reduced the insurance premium assessed on
deposits insured by the Bank Insurance Fund ("BIF"). The FDIC
reduced the BIF premiums from a range of 23 to 31 basis points,
which is the range of premiums currently paid on deposits insured
by the SAIF, to a range of 0 to 31 basis points. The FDIC
estimated that in excess of 90% of banks whose deposits are insured
through the BIF would be assessed at the lowest premium rate. Due
to the reserve levels of the SAIF, the FDIC has not proposed a
reduction in the SAIF insurance premiums and it is not expected
that, absent legislative developments, the insurance premiums
assessed on SAIF deposits could be reduced until the end of the
decade. The deposits held by the Bank are insured through the SAIF
and, although the Bank currently pays the lowest premium assessed
on SAIF deposits, the reduction in BIF premiums, without a similar
reduction in SAIF premiums, places the Bank at a competitive
disadvantage since BIF insured institutions can either: (1) pass
through to depositors in the form of higher rates the reduction in
deposit premiums, which would cause the Bank to increase rates on
its deposits without an offsetting reduction in premium expense;
(2) increase BIF insured institutions profitability, which may not
be available to the Bank; or (3) a combination of both. Management
continues to monitor the situation and is working with the various
trade associations the Bank is affiliated with to achieve equality
in the insurance premium assessment.
Legislation has been proposed in Congress to recapitalize the
SAIF fund and possibly consolidate the BIF and SAIF funds. One
feature of this proposal calls for a special one-time assessment on
all SAIF- insured institutions of up to 80 basis points to bring
the SAIF fund up to its required level of capitalization. It is
assumed that after this assessment takes place, that the on-going
level of insurance premium assessments for the SAIF-insured
institutions would be reduced to the same range as the BIF-insured
institutions. Based upon the Bank's deposit base at June 30, 1996,
the special assessment could cause a charge to earnings of
approximately $3.1 million, while a reduction in the insurance
premium assessment rate from 23 basis points to 4 basis points
would reduce annual premium expenses by approximately $.7 million.
It is not known at this time when and if this legislation will be
approved and implemented.
Results of Operations for the Three Months Ended June 30, 1996 and
1995
Net income for the three months ended June 30, 1996 was
$2,518,000 as compared to $2,235,000 for the same quarter in 1995.
Increased volume of new multi-family originations, lower non-
performing assets, and improved margins were the primary reasons
for the $283,000 or 12.7% improvement. The following is a detailed
analysis of the components of net income for this period.
Interest Income
Total interest income for the quarter ended June 30, 1996
increased by $716,000, or 5.6% to $13,595,000 as compared to
$12,879,000 for the quarter ended June 30, 1995. Average interest
earning assets increased by $61,695,000 to $590,716,000 and the
yield on
PAGE
<PAGE>
these assets increased by 16 basis points to 9.21% for the period
ended June 30, 1996 as compared to $529,021,000 and 9.05% for the
same quarter in 1995. The increase was primarily due to increased
multi-family mortgage originations and lower non-performing assets.
Interest income on first mortgage and other loans increased by
$3,538,000, or 37.8% to $12,910,000 for the quarter ended June 30,
1996 as compared to $9,372,000 for the same quarter in 1995. The
average balance of first mortgage and other loans increased by
$157,549,000 to $544,834,000 and the yield decreased by 20 basis
points to 9.48% as compared to $387,285,000 and 9.68% for the same
quarter in 1995. The current quarter increase was primarily the
result of the increased lending activity over the past four
quarters at attractive interest rates and the dissolution of the
multi-family mortgage-backed securities in June, 1995.
Interest income on mortgage-backed securities decreased by
$2,686,000, or 90.7% to $276,000 for the quarter ended June 30,
1996 as compared to $2,962,000 for the same quarter in 1995.
Amortization, prepayments and the dissolution of approximately
$102,711,000 of mortgage-backed securities in June, 1995 decreased
the average balance by $89,071,000 to $15,223,000 and the yield
decreased to 7.25% as compared to $104,294,000 and 7.85% for the
same quarter in 1995.
Interest income on investment securities decreased by $46,000,
or 11.8% to $343,000 for the quarter ended June 30, 1996 as
compared to $389,000 for the same quarter in 1995. The average
balance decreased by $1,352,000 to $25,439,000 for the current
quarter as compared to $26,791,000 for the same quarter in 1995 and
the lower interest rate environment over the past twelve months
decreased the average yield by 41 basis points to 5.39% from 5.81%.
Interest income on federal funds decreased by $90,000, or
57.7% to $66,000 for the quarter ended June 30, 1996 as compared to
$156,000 for the same quarter in 1995. The primary reason for the
decrease was a 51.0% decrease in the average balance during the
current quarter and a decrease in the average yield of 83 basis
points to 5.00% for the quarter ended June 30, 1996 as compared to
5.83% for the same quarter in 1995.
Interest Expense
Total interest expense increased by $825,000, or 14.8% to
$6,404,000 for the quarter ended June 30, 1996 as compared to
$5,579,000 for the same quarter in 1995. The increase was
primarily the result of an increase in average interest bearing
liabilities of $49,937,000 to $522,874,000 from $472,937,000 and an
increase in the average cost of funds of 19 basis points to 4.92%
from 4.73% for the quarter ended June 30, 1996 as compared to the
same quarter in 1995. The increase occurred as part of the funding
mechanism for the increased mortgage originations which took place
during the past four quarters.
Interest expense on deposits increased by $463,000, or 12.6%
to $4,131,000 for the quarter ended June 30, 1996 as compared to
$3,668,000 for the same quarter in 1995. The primary reason for
the increase was an increase in the average balance of $23,955,000
to $395,094,000 for the quarter ended June 30, 1996 as compared to
$371,139,000 for the same quarter in 1995. The average cost of
deposits increased by 24 basis points to 4.21% for the quarter
ended June 30, 1996 as compared to 3.96% for the same quarter in
1995.
PAGE
<PAGE>
Interest expense on borrowed funds increased by $418,000, or 27.9%
to $1,919,000 for the quarter ended June 30, 1996 as compared to
$1,501,000 for the same quarter in 1995. The primary reason for
the increase was an increase in the average balance of borrowed
funds of $29,759,000 to $114,058,000 for the quarter ended June 30,
1996 as compared to $84,299,000 for the same quarter in 1995. The
increase in volume was offset by a decline in the average cost of
borrowed funds which dropped by 37 basis points to 6.77% as
compared to 7.14%. This decrease in the average cost of borrowed
funds was primarily the result of higher rate borrowings that
matured during the past four quarters and were replaced by lower
rate borrowings.
Interest expense on CMO's declined by $56,000, or 13.7% to
$354,000 for the quarter ended June 30, 1996 as compared to
$410,000 for the same quarter in 1995. The decrease was primarily
the result of a $3,777,000 decrease in the average balance of this
category due to principal reductions of the debt obligation. This
decrease is expected to continue as the average balance declines
and the Bank currently has no intention of issuing any new CMO's.
Net Interest Income
Net interest income decreased by $109,000, or 1.5% to
$7,191,000 for the quarter ended June 30, 1996 as compared to
$7,300,000 for the same quarter in 1995. The decrease is the
result of the net changes to each of the interest income and
interest expense generating categories as previously discussed.
The Bank's interest spread decreased by 3 basis points to 4.29% for
the quarter ended June 30, 1996 as compared to 4.32% for the same
quarter in 1995 while the interest margin increased by 4 basis
points to 4.86% as compared to 4.82%. The ratio of average
interest earning assets to average interest bearing liabilities
increased to 113.0% for the quarter ended June 30, 1996 as compared
to 111.9% for the same quarter in 1995.
Provision for Loan Losses
The provision for loan losses decreased by $545,000 to $-0-
for the quarter ended June 30, 1996 as compared to $545,000 for the
same quarter in 1995. The zero provision quarter was predicated
upon the continuing trend of decreased delinquencies and the
adequate level of allowances as determined during the quarter end
review. The amount of loans delinquent 90 days or more has
continued to decline as illustrated in the following table:
<TABLE>
<CAPTION>
June 30,
----------------- Dollar Percent
1996 1995 Change Change
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Delinquent construction loans $ -- $ 170 $ (170) $(100.00)%
Delinquent one to four family loans 1,139 1,960 (821) (41.89)%
Delinquent multi-family loans 5,775 18,050 (12,275) (68.01)%
- -----------------------------------------------------------------------------------------------------------
Total delinquent loans $6,914 $20,180 $(13,266) (65.74)%
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
The decline has been a result of completed foreclosures, loan
workouts and minimal new delinquencies in addition to a
stabilization in property values due to an improving local real
estate market. While this trend is positive for the Bank, it
should be noted that the type of lending (multi-family residential)
that the Bank has done and intends to do in the future
<PAGE>
<PAGE>
involves larger loans and higher concentration risk and any
downturn in the real estate market or non-payment on a large loan
could cause this trend to reverse.
Other Income
Other income increased by $231,000, or 40.2% to $805,000 for
the quarter ended June 30, 1996 as compared to $574,000 for the
same quarter in 1995. The primary reason for the increase is an
increase net income from real estate operations (receiver proceeds
on previously foreclosed properties) and loan fees and service
charges (fees from loan prepayments) offset by lower gains on sale
of assets.
Other Expenses
Other expenses increased by $407,000, or 13.3% to $3,464,000
for the quarter ended June 30, 1996 as compared to $3,057,000 for
the same quarter in 1995. Compensation and benefits increased by
$297,000 or 18.3%, primarily as a result of senior staff expansion
and merit increases. Occupancy and equipment increased by $68,000
or 12.7%, due to branch refurbishing and computer upgrades.
Marketing, professional fees and services increased by $42,000 or
20.3%, primarily as a result of increased advertising. These
increases were offset by a zero provision for real estate losses.
Income Taxes
Provision for income taxes decreased by $23,000 to $2,014,000
for the quarter ended June 30, 1996 as compared to $2,037,000 for
the same quarter in 1995 as a result of higher income before
provision for income tax expense offset by the permanent benefit
gained from the utilization of the percentage of taxable income
method for the bad debt deductions in the calculation of state and
local income taxes. Legislation is currently pending at the
Federal level which would eliminate utilizing the percentage of
taxable income method of bad debt reserves in future years; cause
no recapture of pre-1988 bad debt reserves; and cause the recapture
of post-1987 bad debt reserves over a six year period. In the
absence of any state legislation to the contrary, the passage of
the federal legislation would also cause a recapture through
expense for previous permanent differences related to bad debt
deductions taken at the state and local levels. This federal
legislation is tied to the health insurance bill, the timing of the
passage of which is uncertain at the present time. Management
continues to monitor the situation at the federal and state levels
through its' trade association to ensure a fair resolution of this
issue.
Results of Operations for the Nine months Ended June 30, 1996 and
1995
Net income for the nine months ended June 30, 1996 was
$7,775,000 as compared to $5,377,000 for the same period in 1995.
Increased volume of new multi-family originations, lower non-
performing assets, improved margins and increased gains on sale of
REO were the primary reasons for the $2,398,000 or 44.6%
improvement. The following is a detailed analysis of the
components of net income for this period.
Interest Income
Total interest income for the nine month period ended June 30,
1996 increased by $5,489,000, or 15.9% to $39,990,000 as compared
to $34,501,000 for the nine month period ended June 30, 1996.
Average interest earning assets increased by $58,789,000 to
<PAGE>
<PAGE>
$567,960,000 and the yield on these assets increased by 59 basis
points to 9.39% for the nine month period ended June 30, 1996 as
compared to $509,171,000 and 8.80% for the same period in 1995.
The increase was primarily due to increased multi-family mortgage
originations at favorable interest rates and lower non-performing
assets.
Interest income on first mortgage and other loans increased by
$12,911,000, or 52.0% to $37,723,000 for the nine month period
ended June 30, 1996 as compared to $24,812,000 for the same period
in 1995. The average balance of first mortgage and other loans
increased by $160,105,000 to $518,714,000 and the yield increased
by 47 basis points to 9.70% as compared to $358,609,000 and 9.23%
for the same period in 1995. The current period increase was
primarily the result of the increased lending activity over the
past four quarters at higher interest rates and the dissolution of
the multi-family mortgage-backed securities in June, 1995.
Interest income on mortgage-backed securities decreased by
$7,402,000, or 89.5% to $867,000 for the nine month period ended
June 30, 1996 as compared to $8,269,000 for the same period in
1995. Amortization, prepayments and the dissolution of
approximately $102,711,000 of mortgage-backed securities in June,
1995 decreased the average balance by $100,833,000 to $15,992,000
and the yield decreased to 7.24% as compared to $116,825,000 and
8.39% for the same period in 1995.
Interest income on investment securities increased by $17,000,
or 1.6% to $1,033,000 for the nine month period ended June 30, 1996
as compared to $1,050,000 for the same period in 1995.
Interest income on federal funds decreased by $3,000, or 0.8%
to $367,000 for the nine month period ended June 30, 1996 as
compared to $370,000 for the same period in 1995.
Interest Expense
Total interest expense increased by $3,109,000, or 20.0% to
$18,666,000 for the nine month period ended June 30, 1996 as
compared to $15,557,000 for the same period in 1995. The increase
was primarily the result of an increase in average interest bearing
liabilities of $48,980,000 to $505,183,000 from $456,203,000 and an
increase in the average cost of funds of 37 basis points to 4.93%
from 4.56% for the nine month period ended June 30, 1996 as
compared to the same period in 1995. The increase occurred as part
of the funding mechanism for the increased mortgage originations
which took place during the past four quarters.
Interest expense on deposits increased by $2,132,000, or 21.1%
to $12,228,000 for the nine month period ended June 30, 1996 as
compared to $10,096,000 for the same period in 1995. The primary
reasons for the increase was an increase in the average balance of
$27,322,000 to $389,259,000 for the nine month period ended June
30, 1996 as compared to $361,937,000 for the same period in 1995.
The average cost of deposits increased by 47 basis points to 4.20%
for the nine month period ended June 30, 1996 as compared to 3.73%
for the same period in 1995.
Interest expense on borrowed funds increased by $1,125,000, or
26.9% to $5,313,000 for the nine month period ended June 30, 1996
as compared to $4,188,000 for the same
PAGE
<PAGE>
period in 1995. The primary reason for the increase was an
increase in the average balance of borrowed funds of $25,432,000 to
$101,531,000 for the nine month period ended June 30, 1996 as
compared to $76,099,000 for the same period in 1995. The increase
in volume was offset by a decline in the average cost of borrowed
funds which dropped by 37 basis points to 6.99% as compared to
7.36%. This decrease in the average cost of borrowed funds was
primarily the result of higher rate borrowings that matured during
the past four quarters and were replaced by lower rate borrowings.
Interest expense on CMO's declined by $148,000, or 11.6% to
$1,125,000 for the nine month period ended June 30, 1996 as
compared to $1,273,000 for the same period in 1995. The decrease
was primarily the result of a $3,774,000 decrease in the average
balance of this category due to principal reductions of the debt
obligation. This decrease is expected to continue as the average
balance declines and the Bank currently has no intention of issuing
any new CMO's.
Net Interest Income
Net interest income increased by $2,380,000, or 12.6% to
$21,324,000 for the nine month period ended June 30, 1996 as
compared to $18,944,000 for the same period in 1995. The increase
is the result of the net changes to each of the interest income and
interest expense generating categories as previously discussed.
The Bank's interest spread increased by 22 basis points to 4.46%
for the nine month period ended June 30, 1996 as compared to 4.24%
for the same period in 1995 while the interest margin increased by
29 basis points to 5.00% as compared to 4.71%. The ratio of
average interest earning assets to average interest bearing
liabilities increased to 112.4% for the nine month period ended
June 30, 1996 as compared to 111.6% for the same period in 1995.
Provision for Loan Losses
The provision for loan losses decreased by $749,000 to $-0-
for the nine month period ended June 30, 1996 as compared to
$749,000 for the same period in 1995. The zero provision for the
first nine months of the fiscal year was predicated upon the
continuing trend of decreased delinquencies and the adequate level
of allowances as determined during the quarter end review. The
amount of loans delinquent 90 days or more has continued to decline
as illustrated in the following table:
<TABLE>
<CAPTION>
June 30,
----------------- Dollar Percent
1996 1995 Change Change
-------- -------- -------- ---------
<S> <C> <C> <C> <C>
Delinquent construction loans $ -- $ 170 $ (170) $(100.00)%
Delinquent one to four family loans 1,139 1,960 (821) (41.89)%
Delinquent multi-family loans 5,775 18,050 (12,275) (68.01)%
- -----------------------------------------------------------------------------------------------------------
Total delinquent loans $6,914 $20,180 $(13,266) (65.74)%
- -----------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------
</TABLE>
The decline has been a result of completed foreclosures, loan
workouts and minimal new delinquencies in addition to a
stabilization in property values due to an improving local real
estate market. While this trend is positive for the Bank, it
should be noted that the type of lending (multi-family residential)
that the Bank has done and intends to do in the future involves
larger loans and higher concentration risk and any downturn in the
real estate market or non-payment on a large loan could cause this
trend to reverse.
PAGE
<PAGE>
Other Income
Other income increased by $1,304,000, or 81.7% to $2,901,000
for the nine month period ended June 30, 1996 as compared to
$1,597,000 for the same period in 1995. The primary reason for the
increase is an increase in the gain on sale of assets, net in the
current period due to the sale of several REO properties at prices
in excess of the recorded book value and net income from real
estate operations.
Other Expenses
Other expenses increased by $783,000, or 8.3% to $10,236,000
for the nine month period ended June 30, 1996 as compared to
$9,453,000 for the same period in 1995. Compensation and benefits
increased by $541,000 or 10.9%, primarily as a result of senior
staff expansion and merit increases. Occupancy and equipment
increased by $146,000, or 9.3% primarily due to branch refurbishing
and computer upgrades. Marketing, professional fees and services
increased by $250,000 or 38.3%, primarily as a result of an
increased provision for expected legal fees related to past
foreclosures and increased advertising. These increases were
offset by a zero provision for real estate losses.
Income Taxes
Provision for income taxes increased by $1,252,000 to
$6,214,000 for the nine month period ended June 30, 1996 as
compared to $4,962,000 for the same period in 1995 as a result of
higher income before provision for income tax expense offset by the
permanent benefit gained from the utilization of the percentage of
taxable income method for the bad debt deductions in the
calculation of state and local income taxes. Legislation is
currently pending at the Federal level which would eliminate
utilizing the percentage of taxable income method of bad debt
reserves in future years; cause no recapture of pre-1988 bad debt
reserves; and cause the recapture of post-1987 bad debt reserves
over a six year period. In the absence of any state legislation to
the contrary, the passage of the federal legislation would also
cause a recapture through expense for previous permanent
differences related to bad debt deductions taken at the state and
local levels. This federal legislation is tied to the health
insurance bill, the timing of the passage of which is uncertain at
the present time. Management continues to monitor the situation at
the federal and state levels through its' trade association to
ensure a fair resolution of this issue.
PAGE
<PAGE>
Part 2 - Other Information
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
None.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter
ended June 30, 1996.
<PAGE>
<PAGE>
Signatures
Pursuant to the requirements of the Securities and Exchange
Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned duly authorized.
BFS Bankorp, Inc.
(Registrant)
Date: August 12, 1996 By: (s) James A. Randall
---------------------------
James A. Randall
President, Chief Executive
Officer
Date: August 12, 1996 By: (s) Gerard A. Perri
---------------------------
Gerard A. Perri
Senior Vice President,
Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-END> JUN-30-1996
<CASH> 6377
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 5000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 35400
<INVESTMENTS-MARKET> 35167
<LOANS> 568785
<ALLOWANCE> 6149
<TOTAL-ASSETS> 621324
<DEPOSITS> 399629
<SHORT-TERM> 137950
<LIABILITIES-OTHER> 35125
<LONG-TERM> 0
<COMMON> 10759
0
0
<OTHER-SE> 37861
<TOTAL-LIABILITIES-AND-EQUITY> 621324
<INTEREST-LOAN> 37723
<INTEREST-INVEST> 1033
<INTEREST-OTHER> 1234
<INTEREST-TOTAL> 39990
<INTEREST-DEPOSIT> 12228
<INTEREST-EXPENSE> 18666
<INTEREST-INCOME-NET> 21324
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 10236
<INCOME-PRETAX> 13989
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7775
<EPS-PRIMARY> 4.44
<EPS-DILUTED> 4.44
<YIELD-ACTUAL> 9.39
<LOANS-NON> 6914
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5359
<CHARGE-OFFS> 22
<RECOVERIES> 812
<ALLOWANCE-CLOSE> 6149
<ALLOWANCE-DOMESTIC> 6149
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
