<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the quarterly period ended....................................June 30, 1996
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 0R 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition quarter from.....................to.........................
Commission file number..................................................0-18046
FIRST FEDERAL CAPITAL CORP
------------------------------------------------------
(Exact name of Registrant as specified in its charter)
Wisconsin 39-1651288
------------------------------- -------------------
(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
605 State Street
La Crosse, Wisconsin 54601
- - --------------------------------------- ----------
(Address of principal executive office) (Zip code)
605 State Street, La Crosse, Wisconsin 54601
--------------------------------------------------
(Address of principal executive office) (Zip code)
(608) 784-8000
----------------------------------------------------
(Registrant's Telephone Number, including area code)
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 Exchange Act of
1934 during the preceding 12 months (or for such shorter quarter 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
--- ---
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class: Common Stock--$.10 Par Value Outstanding at August 14, 1996: 6,191,277
---------------------------- ---------
<PAGE> 2
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Consolidated Statements of Financial Condition
June 30, 1996, and December 31, 1995
<TABLE>
<CAPTION>
June 30 December 31
1996 1995
ASSETS (Unaudited)
<S> <C> <C>
Cash and due from banks $ 20,529,692 $ 30,384,484
Interest-bearing deposits 15,649,691 4,051,288
Investment securities available for sale, at
fair value 66,641,933 80,325,428
Mortgage-backed and related securities:
Available for sale, at fair value 71,128,147 84,172,997
Held for investment, at cost (fair value of
$156,597,230 and $169,365,825,
respectively) 161,377,663 171,493,244
Loans held for sale 12,725,435 23,976,063
Loans held for investment, net 968,190,739 932,083,879
Federal Home Loan Bank stock 14,764,000 16,855,100
Accrued interest receivable, net 10,576,522 10,133,211
Office properties and equipment 26,682,736 27,176,063
Mortgage servicing rights, net 11,495,303 10,292,604
Intangible assets 5,430,988 5,642,719
Other assets 3,970,305 5,891,607
-------------- --------------
Total assets $1,389,163,154 $1,402,478,687
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposit liabilities $ 998,967,949 $ 969,422,519
Federal Home Loan Bank advances and
other borrowings 279,530,033 322,295,781
Advance payments by borrowers for taxes and
insurance 8,124,264 3,740,518
Accrued interest payable 2,155,832 2,632,658
Other liabilities 5,107,138 5,448,217
-------------- --------------
Total liabilities 1,293,885,216 1,303,539,693
-------------- --------------
Preferred stock, $.10 par value, 5,000,000
shares authorized, none outstanding - -
Common stock, $.10 par value, 20,000,000
shares authorized, 6,628,468 and 6,612,305
shares issued and outstanding, including
397,300 and 47,500 shares of treasury stock,
respectively 662,847 661,231
Additional paid-in capital 35,463,499 35,192,795
Unearned restricted stock (595,026) (817,250)
Securities valuation allowance, net (2,978,240) (1,609,161)
Retained earnings 70,776,921 66,370,129
Treasury stock, at cost (8,052,063) (858,750)
-------------- --------------
Total stockholders' equity 95,277,938 98,938,994
-------------- --------------
Commitments and contingencies (Note 3)
-------------- --------------
Total liabilities and stockholders' equity $1,389,163,154 $1,402,478,687
============== ==============
</TABLE>
See accompanying notes to consolidated financial statements.
1
<PAGE> 3
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Consolidated Statements of Operations
Three Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
Three Months Ended
June 30
-----------------------------------------
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
Interest on loans $19,962,938 $16,013,100
Interest on mortgage-backed and related
securities 3,710,438 4,002,084
Interest and dividends on investments 1,353,256 1,664,363
----------- -----------
Total interest income 25,026,632 21,679,547
----------- -----------
Interest on deposit liabilities 11,485,572 9,555,078
Interest on FHLB advances and other borrowings 3,734,776 3,974,681
----------- -----------
Total interest expense 15,220,348 13,529,759
----------- -----------
Net interest income 9,806,284 8,149,788
Provision for loan losses -- --
----------- -----------
Net interest income after
provision for loan losses 9,806,284 8,149,788
----------- -----------
Retail banking fees and service charges 2,531,240 2,041,450
Commissions on annuity and insurance sales 516,173 228,322
Loan servicing fees 624,387 649,064
Gain on sales of loans 1,134,187 782,869
Gain (loss) on sale of investment securities (136,408) 10,548
Other income 286,775 423,244
----------- -----------
Total non-interest income 4,956,354 4,135,497
----------- -----------
Compensation and employee benefits 4,912,324 4,594,150
Occupancy and equipment 1,633,883 1,387,215
Federal deposit insurance premiums 552,446 440,268
Advertising and marketing 455,026 562,114
Other expenses 1,982,935 1,622,004
----------- -----------
Total non-interest expense 9,536,614 8,605,751
----------- -----------
Income before income taxes 5,226,024 3,679,534
Income tax expense 1,969,546 1,311,601
----------- -----------
Net income $ 3,256,478 $ 2,367,933
=========== ===========
Primary earnings per share $ 0.48 $ 0.38
Fully-diluted earnings per share 0.48 0.38
Dividends paid per share 0.16 0.14
</TABLE>
2
<PAGE> 4
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Consolidated Statements of Operations
Six Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
Six Months Ended
June 30
--------------------------------------
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
Interest on loans $39,970,797 $31,027,373
Interest on mortgage-backed and related
securities 7,583,090 8,070,017
Interest and dividends on investments 2,815,625 3,340,856
----------- -----------
Total interest income 50,369,512 42,438,246
----------- -----------
Interest on deposit liabilities 22,941,506 17,878,271
Interest on FHLB advances and other borrowings 8,067,426 8,193,775
----------- -----------
Total interest expense 31,008,932 26,072,046
----------- -----------
Net interest income 19,360,580 16,366,200
Provision for loan losses -- --
----------- -----------
Net interest income after
provision for loan losses 19,360,580 16,366,200
----------- -----------
Retail banking fees and service charges 4,834,795 3,833,216
Commissions on annuity and insurance sales 1,005,386 504,983
Loan servicing fees 828,962 1,286,544
Gain on sales of loans 2,680,728 923,901
Gain (loss) on sale of investment securities (190,137) 10,548
Other income 631,253 654,177
----------- -----------
Total non-interest income 9,790,987 7,213,369
----------- -----------
Compensation and employee benefits 9,718,649 8,972,336
Occupancy and equipment 3,310,957 2,838,762
Federal deposit insurance premiums 1,114,450 877,009
Advertising and marketing 721,534 1,125,599
Other expenses 4,158,462 3,240,697
----------- -----------
Total non-interest expense 19,024,052 17,054,403
----------- -----------
Income before income taxes 10,127,515 6,525,166
Income tax expense 3,801,712 2,284,919
----------- -----------
Net income $ 6,325,803 $ 4,240,247
=========== ===========
Primary earnings per share $ 0.93 $ 0.69
Fully-diluted earnings per share 0.93 0.69
Dividends paid per share 0.30 0.27
</TABLE>
3
<PAGE> 5
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Three Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
Three Months Ended
June 30
---------------------------------------
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 3,256,478 $ 2,367,933
Adjustments to reconcile net income to net
cash provided (used) by operations:
Depreciation and amortization 1,442,264 1,130,408
Gains on sales of loans (997,779) (793,417)
Increase in accrued interest receivable (149,674) (430,128)
Decrease in accrued interest payable (490,981) (118,408)
Decrease in current and deferred income taxes (672,205) (764,914)
Other, net (174,352) (51,788)
------------ ------------
Net cash provided by operations before loan
originations and sales 2,213,751 1,339,686
Loans originated for sale (60,677,284) (43,151,775)
Sales of loans originated for sale 78,708,775 33,701,577
------------ ------------
Net cash (used) provided by operations 20,245,242 (8,110,512)
------------ ------------
Cash flows from investing activities:
Net increase in interest-bearing deposits (6,836,121) (1,939,961)
Purchases of investment securities (6,201,585) (4,485,329)
Maturities of investment securities 10,093,316 4,080,768
Sales of investment securities 2,004,640 5,010,543
Mortgage-backed and related securities
principal repayments 11,799,635 5,696,338
Loans originated for investment (111,669,490) (73,736,258)
Loans purchased for investment - (100,000)
Loan principal repayments 70,571,963 45,081,466
Sales of loans originated for investment 629,398 325,968
Additions to office properties and equipment (852,304) (2,043,411)
Other, net 2,247,251 (378,565)
------------ ------------
Net cash used by investing activities (28,213,297) (22,488,441)
------------ ------------
(Continued)
</TABLE>
4
<PAGE> 6
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
Three Months Ended
June 30
------------------------------------------
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from financing activities:
Net increase in deposit liabilities $ 3,694,352 $62,697,186
Long-term advances from Federal Home Loan Bank - 25,000,000
Repayment of long-term Federal Home Loan
Bank advances (33,300,000) (6,275,000)
Net increase (decrease) in short-term Federal
Home Loan Bank borrowings 30,422,000 (46,465,000)
Increase in advance payments to borrowers
for taxes and insurance 3,248,657 2,778,791
Purchase of treasury stock (1,571,250) -
Dividends paid (987,470) (814,291)
Other, net 3,593,465 1,385,189
------------ -----------
Net cash provided by financing activities 5,099,754 38,306,875
------------ -----------
Net increase (decrease) in cash (2,868,301) 7,707,922
Cash at beginning of period 23,397,994 19,513,219
------------ -----------
Cash at end of period $ 20,529,693 $27,221,141
============ ===========
Supplemental disclosures of cash flow information:
Interest and dividends received on loans
and investments $ 21,249,419 $21,249,419
Interest paid on deposits and borrowings 13,648,167 13,648,167
Income taxes paid 2,078,483 2,078,483
</TABLE>
5
<PAGE> 7
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1996 and 1995
<TABLE>
<CAPTION>
Six Months Ended
June 30
------------------------------------------
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income $ 6,325,803 $ 4,240,247
Adjustments to reconcile net income to net
cash provided (used) by operations:
Depreciation and amortization 3,309,431 2,147,216
Gains on sales of loans (2,490,591) (934,449)
Increase in accrued interest receivable (443,311) (1,120,624)
Increase (decrease) in accrued interest payable (476,826) 15,920
Increase in current and deferred income taxes 1,117,009 32,799
Other, net (669,266) (1,084,060)
------------- ------------
Net cash provided by operations before loan
originations and sales 6,672,249 3,297,049
Loans originated for sale (150,559,397) (56,387,071)
Sales of loans originated for sale 157,850,150 43,578,909
------------- ------------
Net cash provided (used) by operations 13,963,002 (9,511,113)
------------- ------------
Cash flows from investing activities:
Net increase in interest-bearing deposits (11,598,403) (3,068,331)
Purchases of investment securities (11,260,884) (4,485,329)
Sales of investment securities 5,013,779 5,010,543
Maturities of investment securities 19,256,065 5,282,408
Mortgage-backed and related securities
principal repayments 21,040,525 12,366,173
Loans originated for investment (189,202,124) (135,319,631)
Loans purchased for investment (2,000) (1,968,075)
Loan principal repayments 148,992,356 79,503,693
Sales of loans originated for investment 7,995,662 797,444
Additions to office properties and equipment (1,040,525) (3,534,870)
Other, net 5,064,052 (2,225,655)
------------- ------------
Net cash used by investing activities (5,741,497) (47,641,630)
------------- ------------
(Continued)
</TABLE>
6
<PAGE> 8
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
<TABLE>
<CAPTION>
Six Months Ended
June 30
----------------------------------------
1996 1995
(Unaudited) (Unaudited)
<S> <C> <C>
Cash flows from financing activities:
Net increase in deposit liabilities $ 29,545,430 $ 92,807,908
Deposits purchased - 5,336,084
Long-term advances from Federal Home Loan Bank 100,000,000 25,000,000
Repayment of long-term Federal Home Loan
Bank advances (126,050,000) (29,225,000)
Net decrease in short-term Federal Home
Loan Bank borrowings (22,713,000) (39,790,000)
Increase in advance payments to borrowers
for taxes and insurance 4,383,746 3,895,189
Purchase of treasury stock (7,193,313) -
Dividends paid (1,904,583) (1,563,556)
Other, net 5,855,423 1,553,807
------------- ------------
Net cash provided (used) by financing
activities (18,076,297) 58,014,432
------------- ------------
Net increase (decrease) in cash (9,854,792) 861,689
Cash at beginning of period 30,384,484 26,359,452
------------- ------------
Cash at end of period $ 20,529,692 $ 27,221,141
============= ============
Supplemental disclosures of cash flow information:
Interest and dividends received on loans
and investments $ 41,317,622 $ 41,317,622
Interest paid on deposits and borrowings 26,056,126 26,056,126
Income taxes paid 2,257,908 2,257,908
</TABLE>
7
<PAGE> 9
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements
June 30, 1996
(1) Principles of Consolidation
The consolidated financial statements include the accounts and balances
of First Federal Capital Corp (the "Corporation"), First Federal Savings
Bank La Crosse-Madison (the "Bank"), and the Bank's wholly-owned
subsidiaries. All significant intercompany accounts and transactions
have been eliminated in consolidation.
Unconsolidated partnership interests are accounted for using the equity
method.
(2) Basis of Presentation
The accompanying interim consolidated financial statements are unaudited
and do not include information or footnotes necessary for a complete
presentation of financial condition, results of operations, or cash flows
in accordance with generally accepted accounting principles. However, in
the opinion of management, all adjustments (consisting of normal
recurring accruals) necessary for a fair presentation of the consolidated
financial statements have been included. Operating results for the three
and six month periods ended June 30, 1996, are not necessarily indicative
of the results which may be expected for the entire year ending
December 31, 1996.
Certain 1995 balances have been reclassified to conform with the 1996
presentation.
(3) Contingencies
The Corporation and its subsidiaries are engaged in various routine legal
proceedings occurring in the ordinary course of business which in the
aggregate are believed by management to be immaterial to the consolidated
financial condition of the Corporation.
In November 1995, the United States Congress passed the Balanced Budget
Act of 1995 (the "Act"). Title II of the Act provides, among other
things, that the Federal Deposit Insurance Corporation ("FDIC") impose a
one-time special assessment against the deposits of financial
institutions whose deposits are insured by the Savings Association
Insurance Fund ("SAIF"), which would include the deposits of the Bank.
Although the Act has been vetoed by the President, it is possible that
provisions similar to that of Title II of the Act could be incorporated
into final legislation. Management of the Corporation cannot predict,
however, when and in what form such legislation would become effective.
However, if provisions similar to those included in Title II of the Act
are included in final legislation, the special assessment against the
8
<PAGE> 10
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Notes to Consolidated Financial Statements (continued)
Bank's deposits would be between 70 and 85 basis points per $100 of
SAIF-insured deposits. Based on the Bank's deposits as of June 30, 1996,
the special assessment would amount to as much as $5.1 million, net of
income taxes. Payment of this assessment would have the effect of
reducing the Bank's earnings and capital by the amount of the assessment,
net of income taxes. Following the payment of the special assessment, it
is possible that the Bank would benefit from a reduction in the ongoing
insurance premiums paid by SAIF-insured institutions, although there can
be no assurances. Such premium is currently 23 cents per $100 in
deposits.
9
<PAGE> 11
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Item 2--Management's Discussion and Analysis
June 30, 1996
Results of Operations
Net Income The Corporation's earnings for the three month periods ended
June 30, 1996, and 1995, were $3.26 million or $0.48 per share and $2.37
million or $0.38 per share, respectively. The increase in earnings
between these two periods was primarily attributable to a $1.7 million
increase in net interest income and an $0.8 million increase in total
non-interest income. These developments were only partially offset by a
$0.9 million increase in total non-interest expense and a $0.7 million
increase in income tax expense. Earnings for these two periods
represented a return on average assets of 0.96% and 0.79%, respectively,
and a return on average equity of 13.83% and 11.83%, respectively.
The Corporation's earnings for the six month periods ended June 30, 1996
and 1995, were $6.33 million or $0.93 per share and $4.24 million or
$0.69 per share, respectively. The increase in earnings between these
two periods was primarily attributable to a $3.0 million increase in net
interest income and a $2.6 million increase in total non-interest income.
These developments were only partially offset by a $2.0 million increase
in total non-interest expense and a $1.5 million increase in income tax
expense. Earnings for these two periods represented a return on average
assets of 0.92% and 0.71%, respectively, and a return on average equity
of 13.18% and 10.68%, respectively.
The following paragraphs discuss the aforementioned changes in the
Corporation's earnings in more detail as well as changes in other
components of earnings during the three and six month periods ended
June 30, 1996 and 1995.
Net Interest Income Net interest income increased by $1.7 million or
20.3% and $3.0 million or 18.3% during the three and six month periods
ended June 30, 1996, respectively, as compared to the same periods in the
previous year. Net interest income was favorably impacted by a $149.9
million or 13.2% increase and a $169.1 million or 15.0% increase in the
Corporation's average interest-earning assets during the three and six
month periods ended June 30, 1996, respectively, as compared to the same
periods in the previous year. These increases were primarily due to the
purchase of Rock Financial Corp ("RFC") in December 1995. Also
contributing to these increases, however, were increases in originations
of mortgage and consumer loans that were funded primarily by increases in
deposit liabilities (refer to "Financial Condition" for additional
discussion).
10
<PAGE> 12
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Item 2--Management's Discussion and Analysis (Continued)
Also contributing to the increase in net interest during the three month
period ended June 30, 1996, as compared to the same period in the
previous year, was a fourteen basis point increase in the Corporation's
average interest rate spread during the most recent period as compared to
the same period in the previous year. Management attributes this increase
to a combination of the lag effects of a generally lower interest rate
environment throughout 1995, a steeper yield curve in 1996, and the
Corporation's negative funding gap position (refer to "Asset/Liability
Management" for additional discussion).
The tables on the next two pages set forth information regarding (i) the
total dollar amount of interest income from interest-earning assets and
the resultant average yields, (ii) the total dollar amount of interest
expense from interest-bearing liabilities and the resultant average
costs, (iii) net interest income, (iv) interest rate spread, (v) net
interest margin, and (vi) the ratio of average interest-earning assets to
average interest-bearing liabilities. The information is based on
average monthly balances during the three and six month periods ended
June 30, 1996, and 1995, respectively.
11
<PAGE> 13
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Item 2--Management's Discussion and Analysis (Continued)
<TABLE>
<CAPTION>
Three Months Ended Three Months Ended
Dollars in thousands June 30, 1996 June 30, 1995
------------------------------------- --------------------------------
Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans held for investment and loans held for sale $ 957,973 $19,963 8.34% $ 772,442 $16,013 8.29%
Mortgage-backed and related securities 240,452 3,710 6.17 260,635 4,002 6.14
Investment securities 69,824 1,031 5.91 86,717 1,363 6.29
Interest-bearing deposits 5,062 73 5.77 2,636 47 7.13
Other earning assets 14,764 250 6.77 15,733 255 6.48
---------- ------- ------ ---------- ------- ------
Total interest-earning assets 1,288,075 25,027 7.77% 1,138,163 21,680 7.62%
------- ====== ------- ======
Non-interest-earning assets:
Office properties and equipment, net 26,916 24,349
Real estate, net 176 62
Other non-interest-earning assets 48,785 39,826
---------- ----------
Total assets $1,363,952 $1,202,400
========== ==========
Interest-bearing liabilities:
Deposit liabilities $ 911,665 $11,486 5.04% $ 775,208 $ 9,555 4.93%
FHLB advances 261,621 3,624 5.54 275,909 3,964 5.75
Other borrowed funds 12,429 110 3.54 6,198 11 0.71
---------- ------- ------ ---------- ------- ------
Total interest-bearing liabilities 1,185,715 15,220 5.13% 1,057,315 13,530 5.12%
------- ====== ------- ======
Non-interest-bearing liabilities:
Non-interest-bearing deposits 75,750 57,692
Other liabilities 8,293 7,328
---------- ----------
Total liabilities 1,269,758 1,122,335
Stockholders' equity 94,194 80,065
---------- ----------
Total liabilities and stockholders' equity $1,363,952 $1,202,400
========== ==========
Net interest income $ 9,806 $ 8,150
======= =======
Interest rate spread 2.64% 2.50%
====== ======
Net yield on interest-earning assets 3.05% 2.86%
====== ======
Average earning assets to average
interest-bearing liabilities 108.63% 107.65%
====== ======
</TABLE>
12
<PAGE> 14
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Item 2--Management's Discussion and Analysis (Continued)
<TABLE>
<CAPTION>
Six Months Ended Six Months Ended
Dollars in thousands June 30, 1996 June 30, 1995
---------------------------------- ----------------------------------
Average Average
Balance Interest Yield/Cost Balance Interest Yield/Cost
<S> <C> <C> <C> <C> <C> <C>
Interest-earning assets:
Loans held for investment and loans held for sale $ 955,406 $39,971 8.37% $ 756,267 $31,027 8.21%
Mortgage-backed and related securities 245,733 7,583 6.17 263,428 8,070 6.13
Investment securities 73,446 2,169 5.91 87,634 2,757 6.29
Interest-bearing deposits 4,500 128 5.69 2,760 90 6.52
Other earning assets 15,699 519 6.61 15,617 494 6.33
---------- ------- ------ ---------- ------- ------
Total interest-earning assets 1,294,784 50,370 7.78% 1,125,706 42,438 7.54%
------- ====== ------- ======
Non-interest-earning assets:
Office properties and equipment, net 26,986 23,825
Real estate, net 137 81
Other non-interest-earning assets 51,303 39,323
---------- ----------
Total assets $1,373,210 $1,188,935
========== ==========
Interest-bearing liabilities:
Deposit liabilities $ 903,692 $22,942 5.08% $ 757,763 $17,878 4.72%
FHLB advances 281,448 7,871 5.59 286,512 8,174 5.71
Other borrowed funds 10,247 196 3.83 5,090 20 0.79
---------- ------- ------ ---------- ------- ------
Total interest-bearing liabilities 1,195,387 31,009 5.19% 1,049,365 26,072 4.97%
------- ====== ------- ======
Non-interest-bearing liabilities:
Non-interest-bearing deposits 72,783 53,470
Other liabilities 9,038 6,665
----------- ----------
Total liabilities 1,277,208 1,109,500
Stockholders' equity 96,002 79,435
---------- ----------
Total liabilities and stockholders' equity $1,373,210 $1,188,935
========== ==========
Net interest income $19,361 $16,366
======= =======
Interest rate spread 2.59% 2.57%
====== ======
Net yield on interest-earning assets 2.99% 2.91%
====== ======
Average earning assets to average
interest-bearing liabilities 108.32% 107.27%
====== ======
</TABLE>
13
<PAGE> 15
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Item 2--Management's Discussion and Analysis (Continued)
Provision for Loan Losses Management of the Corporation elected to not
record additional loan loss provisions during the first six months of
1996 and 1995 as a result of its low levels of non-performing and other
classified assets as well as its low levels of loan and real estate
charge-offs (refer to "Financial Condition" for additional discussion).
As of June 30, 1996, and December 31, 1995, the Corporation's allowance
for loan losses were $8.1 million and $8.2 million, respectively.
Although management believes that the Corporation's present level of
allowance for loan losses is adequate, there can be no assurance that
future adjustments to the allowance won't be necessary, which could
adversely affect the Corporation's results of operations.
Non-Interest Income Non-interest income increased by $821,000 or 19.8%
during the three months ended June 30, 1996, compared to the same period
in the previous year. This increase was principally due to a $490,000 or
24.0% increase in retail banking fees which was due primarily to a
general increase in deposit-related service charges and a 23% increase
since December 31, 1994, in the number of checking accounts serviced by
the Corporation. Approximately 43% of this growth came from banking
offices opened or acquired in 1995 and 1996.
Commissions on annuity and insurance sales increased by $288,000 or
approximately 125% during the three months ended June 30, 1996, compared
to the same period in the previous year. This increase was primarily
attributable to an increase in sales of tax deferred annuity products and
sales of credit life insurance policies on consumer loan products.
Gain on sales of mortgage loans increased by $351,000 or 44.9% during the
three months ended June 30, 1996, compared to the same period in the
previous year. This increase was due primarily to an increase in gains
related to the Corporation's adoption of Statement of Financial
Accounting Standards No. 122, "Accounting for Mortgage Servicing Rights"
("SFAS 122"). The Corporation adopted SFAS 122 in the second quarter of
1995. Also contributing to the increase was an increase in gain on sales
of Federal Housing Authority ("FHA") and Veterans Administration ("VA")
loans, due primarily to an increase in origination of such loans during
the period.
Excluding the effect of SFAS 122, gain on sales of mortgage loans
increased by $55,000 or 12.3% during the three months ended June 30,
1996, compared to the same period in the previous year. This increase
was due to a $45.3 million increase in the Corporation's mortgage loan
sales during the most recent period due primarily to a lower interest
rate environment in late 1995 and early 1996 which increased consumer
demand for fixed-rate loans. The Corporation sells substantially all of
its fixed-rate loan production in the secondary market. However, recent
increases in market interest rates have reduced consumers' preferences
14
<PAGE> 16
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Item 2--Management's Discussion and Analysis (Continued)
for fixed-rate mortgage loans, in favor of adjustable-rate mortgage
loans which could reduce the Corporation's gains on sales of mortgage
loans in future periods.
Gain (loss) on sale of investment securities amounted to ($136,000) and
$11,000 during the three months ended June 30, 1996, compared to the same
period in the previous year. The loss during the most recent period was
principally due to the sale of a portion of the Bank's investment in
certain mutual funds.
Other income decreased by $136,000 or 32.2% during the three months
ended June 30, 1996, compared to the same period in the previous year.
This decrease was due primarily to timing differences between the
receipt of fee income from mortgage loan borrowers for loan closing
services such as appraisal fees and abstract fees and the payment for
these services to third-party vendors.
During the six months ended June 30, 1996, non-interest income increased
by $2.6 million or 35.7%. This increase was due primarily to a $1.0
million or 26.1% increase in retail banking fees, a $0.5 million or 99.1%
increase in commissions on annuity and insurance sales, and a $1.8
million or approximately 190% increase in gain on sales of loans. These
increases were partially offset by a $0.2 million decrease in gain (loss)
on sale of investments. Reasons for these changes are similar to those
discussed in previous paragraphs.
The increase in non-interest income described in the previous paragraph
was partially offset by a $458,000 or 35.6% decrease in loan servicing
fees during the six months ended June 30, 1996, compared to the same
period in the previous year. This decrease was primarily caused by
losses related to the Corporation's mortgage servicing rights. A lower
interest rate environment in 1995 and early 1996 resulted in an increase
in mortgage refinance activity during the first half of 1996 which
resulted in increased loan prepayment activity. As a result of this
activity, the value of the Corporation's mortgage servicing rights was
estimated to have declined by $623,000. Recent increases in market
interest rates, however, have reduced prepayment activity which could
result in reduced losses on the Corporation's mortgage servicing rights
in future periods, although there can be no assurances.
Excluding the effects of the aforementioned loss, loan servicing fees
would have increased by $165,000 or 12.9%. This increase was primarily
attributable to a $289.6 million or 33.5% increase in average mortgage
loans serviced for third parties during the six month period ended
June 30, 1996, compared to the same period in the previous year. This
growth was primarily attributable to the Corporation's purchase of
mortgage servicing rights relating to $287.7 million of mortgage loans
during the second quarter of 1995. Also contributing to the growth,
15
<PAGE> 17
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Item 2--Management's Discussion and Analysis (Continued)
however, was the Corporation's own originations of fixed-rate,
single-family residential loans which were sold in the secondary market.
As is the Corporation's normal practice, the servicing rights to such
loans were generally retained after the sale.
Non-Interest Expense Non-interest expense increased by $931,000 or 10.8%
during the three months ended June 30, 1996, compared to the same period
in the previous year. The following paragraphs discuss the primary
reasons for this change.
Compensation and employee benefits increased by $318,000 or 6.9% during
the three months ended June 30, 1996, compared to the same period in the
previous year. This increase was due in part to normal annual merit
increases as well as the Corporation's recent purchase of RFC, which
added 42 employees and four banking locations to the Corporation's
operations. Also contributing to the increase, however, was a general
increase in compensation paid to employees in the Corporation's
Residential Lending Division caused primarily by increases in
originations of mortgage loans, as previously described. In addition,
since March 31, 1995, the Corporation has opened grocery store banking
facilities in Neenah, Sheboygan, Green Bay, and Eau Claire, Wisconsin.
Within the next several months, the Corporation intends to open up to
three retail banking facilities in new and existing market areas of
Wisconsin, although there can be no assurances. As of June 30, 1996, the
Corporation employed 642 full-time equivalent employees. This compares
to 623 and 615 at December 31, 1995, and June 30, 1995, respectively.
Occupancy and equipment expense increased by $247,000 or 17.8% during the
three months ended June 30, 1996, compared to the same period in the
previous year. This increase was primarily attributable to the RFC
purchase and the opening of the aforementioned grocery store banking
facilities in the Corporation's market areas. In addition, in July 1995
the Corporation completed the construction of a separate facility located
in La Crosse, Wisconsin, which houses a large portion of the
Corporation's retail support operations.
Federal insurance premiums increased by $112,000 or 25.5% during the
three months ended June 30, 1996, compared to the same period in the
previous year. This increase was primarily attributable to increases in
the Corporation's deposit liabilities (refer to "Financial Condition" for
additional discussion).
Advertising and marketing expense decreased by $107,000 or 19.1% during
the three months ended June 30, 1996, compared to the same period in the
previous year. This decrease was due primarily to a decrease in
expenditures related to savings and certificate of deposit promotions,
checking promotions, image advertising, and other customer mailings.
16
<PAGE> 18
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Item 2--Management's Discussion and Analysis (Continued)
Other non-interest expenses increased by $361,000 or 22.3% during the
three months ended June 30, 1996, compared to the same period in the
previous year. This increase was due primarily to goodwill amortization
associated with the RFC acquisition. Also contributing to the increase,
however, was an increase in automated teller machine ("ATM") charges
resulting from increased usage by the Corporation's customers of ATMs
owned by other financial institutions, and an increase in expenses
associated with customer collections and check returns.
During the six months ended June 30, 1996, non-interest expense increased
by $2.0 million or 11.5%. This increase was due primarily to a $746,000
or 8.3% increase in compensation and employee benefits, a $472,000 or
16.6% increase in occupancy and equipment expense, a $237,000 or 27.1%
increase in federal insurance premiums, and a $918,000 or 28.3% increase
in other expenses. These increases were only partially offset by a
$404,000 or 35.9% decrease in advertising and marketing expenses.
Reasons for these changes were similar to those discussed in previous
paragraphs.
Income Tax Expense Income tax expense for the three months ended
June 30, 1996 and 1995, was $2.0 million and $1.3 million, respectively,
on pretax income of $5.2 million and $3.7 million, respectively. The
effective tax rates for the three months ended June 30, 1996 and 1995,
were 37.7% and 35.6%, respectively.
Income tax expense for the six months ended June 30, 1996 and 1995, was
$3.8 million and $2.3 million, respectively, on pretax income of $10.1
million and $6.5 million, respectively. The effective tax rates for the
six months ended June 30, 1996 and 1995, were 37.5% and 35.0%,
respectively.
The Corporation's effective tax rate has increased in recent periods due
to a higher mix of taxable earnings in the State of Wisconsin relative to
the State of Nevada, where the Corporation has established a wholly-owned
investment subsidiary.
Financial Condition
The Corporation's total assets declined by $13.3 million or 0.9% during
the six months ended June 30, 1996. This decline was primarily the
result of a $36.8 million or 11.0% decrease in the aggregate of the
Corporation's investment and mortgage-backed security portfolios. These
decreases were principally due to periodic maturities or normal
amortization of the mortgage loans that support the mortgage-backed
securities. The proceeds from such maturities and/or amortization were
used to reduce overnight borrowings at the Federal Home Loan Bank of
Chicago ("FHLB").
17
<PAGE> 19
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Item 2--Management's Discussion and Analysis (Continued)
The Corporation's loans held for investment increased by $36.1 million or
3.9% during the six month period ended June 30, 1996, which was only
partially offset by an $11.3 million or 46.9% decrease in loans held for
sale during the same period. These changes were primarily the result of
a higher interest rate environment in recent months which has encouraged
borrowers to shift their preferences to adjustable-rate mortgage loans,
rather than fixed-rate mortgage loans. Since the Corporation generally
retains all of its adjustable-rate loan production in portfolio, the
Corporation has experienced an increase in loans held for investment and
a decline in loans held for sale. Also contributing to the increase in
loans held for investment, however, were increased originations of second
mortgage loans and education loans. The former increase was due
primarily to the Corporation's competitive interest rate offerings during
the period and the latter was due to enrollment increases at educational
institutions in the Corporation's market areas.
Deposit liabilities increased by $29.5 million or 3.0% during the six
months ended June 30, 1996. The majority of this growth occurred in the
Corporation's certificate of deposit accounts. Also contributing to the
increase, however, was an increase in non-interest-bearing deposits and
custodial accounts.
FHLB advances and other borrowings decreased by $42.8 million or 13.3%
during the six months ended June 30, 1996. This decrease was due
primarily to increases in the Corporation's deposit liabilities and
decreases in its investment and mortgage-backed security portfolios, as
previously described.
The Corporation's non-performing assets (consisting of non-accrual loans,
real estate acquired through foreclosure or deed-in-lieu thereof, and
real estate in judgement) were $1.6 million or 0.11% of total assets at
June 30, 1996, compared to $1.4 million or 0.10% at December 31, 1995.
The Corporation's other classified assets were $10.1 million or 0.84% of
total assets at June 30, 1996, compared to $10.0 million or 0.72% at
December 31, 1995.
Asset/Liability Management
The Corporation manages the exposure of its operations to changes in
interest rates by monitoring its ratio of interest-earning assets to
interest-bearing liabilities within specified maturities and/or repricing
dates. Management has sought to control this ratio, thereby improving
the Corporation's ability to adjust its operations to changes in interest
rates, by, among other things, selling substantially all new originations
of long-term, fixed-rate, single-family mortgage loans in the secondary
market, investing in adjustable-rate or medium-term, fixed-rate,
single-family residential loans, investing in short- to medium-term CMOs,
18
<PAGE> 20
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Item 2--Management's Discussion and Analysis (Continued)
and to a lesser degree, investing in consumer loans, which generally have
shorter terms to maturity and higher interest rates than mortgage loans.
The Corporation also originates multi-family residential and commercial
real estate loans, which generally have adjustable or floating interest
rates and/or shorter terms to maturity than conventional single-family
residential loans. It is management's intent to hold the percentage of
mix of multi-family residential and commercial real estate loans in the
Corporation's portfolio near current levels.
Long-term, fixed-rate, single-family mortgage loans originated for sale
in the secondary market are generally committed for sale at the time the
interest rate is locked with the borrower. As such, these loans pose
little interest rate risk to the Corporation.
Although management believes that its asset/liability management
strategies have reduced the potential effects of changes in interest
rates on the Corporation's operations, material and prolonged changes in
interest rates would adversely affect the Corporation's operations
because the Corporation's interest-bearing liabilities which mature or
reprice within one year are greater than the Corporation's interest-
earning assets which mature or reprice within the same period.
Alternatively, material and prolonged decreases in interest rates may
benefit the Corporation's operations.
The table on the next page summarizes the anticipated maturities or
repricing of the Corporation's interest-earning assets and interest-
bearing liabilities as of June 30, 1996.
19
<PAGE> 21
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Item 2--Management's Discussion and Analysis (Continued)
<TABLE>
<CAPTION>
- - ------------------------------------------------------------------------------------------------------------------------------
More Than More Than More Than
6 Months 6 Months 1 Year to 3 years to Over
Dollars in thousands or Less to 1 Year 3 Years 5 years 5 Years Total
- - ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Earning assets (1):
Mortgage and other loans:
Fixed $ 55,889 $ 18,806 $ 39,699 $ 29,364 $ 30,737 $ 174,495
Variable 177,105 133,480 233,116 1,905 - 545,606
Consumer loans 157,242 22,535 61,594 19,369 7,846 268,586
Mortgage-backed and related securities 27,240 21,924 69,728 58,582 58,269 235,743
Investment securities and other earning assets 62,351 5,014 15,770 - 14,764 97,899
- - ------------------------------------------------------------------------------------------------------------------------------
Total earning assets $ 479,827 $ 201,759 $419,907 $109,220 $111,616 $1,322,329
==============================================================================================================================
Interest-bearing liabilities (2):
Deposit liabilities:
Regular savings and checking accounts (3) 144,915 - - - - 144,915
Money market deposit accounts 118,639 - - - - 118,639
Variable-rate IRA accounts 3,882 - - - - 3,882
Time deposits 433,436 130,390 69,760 16,162 29 649,777
Borrowings 216,164 31,154 28,963 3,214 35 279,530
- - ------------------------------------------------------------------------------------------------------------------------------
Total interest-bearing liabilities $ 917,036 $ 161,544 $98,723 $ 19,376 $ 64 $1,196,743
==============================================================================================================================
Excess (deficiency) of earning assets over
interest-bearing liabilities $ (437,209) $ 40,215 $321,184 $ 89,844 $111,552
==============================================================================================================================
Cumulative excess (deficiency) of earning
assets over interest-bearing liabilitie $ (437,209) $(396,994) ($75,810) $ 14,034 $125,586
==============================================================================================================================
Cumulative excess (deficiency) of earning
assets over interest-bearing liabilities as
a percentage of total assets -31.47% -28.58% -5.46% 0.94% 8.97%
==============================================================================================================================
Cumulative interest-sensitive assets as a
percentage of interest-sensitive liabilities 52.32% 63.19% 93.56% 101.09% 110.41%
==============================================================================================================================
</TABLE>
(1) The mortgage prepayment assumptions used reflect the Corporation's
historical experience which is more conservative than the OTS's
prepayment assumptions. Non-accrual loans totaling $1.2 million have been
excluded from the loan categories. Loans held for sale totaling $12.7
million are included in the "six months or less" loan category.
(2) Does not include non-interest-bearing checking accounts.
(3) If regular savings and checking accounts were deemed to reprice after one
year, rather than within six months, the Corporation's one-year
cumulative interest sensitivity gap would have been $(252.1) million or
-18.15% of total assets.
20
<PAGE> 22
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Item 2--Management's Discussion and Analysis (Continued)
Liquidity and Capital Resources
The Bank is required under applicable federal regulations to maintain
specified levels of liquid investments in qualifying types of U.S.
Government, federal agency, and other securities. Regulations currently
in effect require the Bank to maintain liquid assets maturing in five
years or less of not less than 5% of its net withdrawable accounts and
short-term borrowings, of which liquid assets maturing in one year or
less must consist of not less than 1%. The Bank's long-term regulatory
liquidity ratio averaged 5.3% during the six months ended June 30, 1996,
and was 5.0% on June 30, 1996.
The Corporation's stockholder's equity ratio as of June 30, 1996, was
6.86% of total assets. The Corporations long-term objective is to
maintain its stockholders' equity ratio in a range of approximately 6.7%
to 7.2%, which is consistent with return on asset and return on equity
goals of 1% and 15%, respectively.
The Corporation paid cash dividends of $1.0 million and $0.8 million
during the three months ended June 30, 1996 and 1995, respectively, and
$1.9 million and $1.6 million during the six months ended June 30, 1996
and 1995, respectively. These amounts equated to dividend payout ratios
of 30.8% and 34.4%, respectively, and 28.3% and 36.9%, respectively, of
the net income in such periods. It is the Corporation's long-term
objective to maintain its dividend payout ratio in a range of 25% to 35%
of net income. However, the Corporation's dividend policy and/or
dividend payout ratio will be impacted by considerations such as the
level of stockholders' equity in relation to the Corporation's stated
goal, as previously described, regulatory capital requirements for the
Bank, described in a subsequent paragraph, and certain dividend
restrictions in effect for the Bank. Furthermore, unanticipated or
non-recurring fluctuations in earnings may impact the Corporation's
ability to pay dividends and/or maintain a given dividend payout ratio.
On July 23, 1996, the Board of Directors of the Corporation declared a
$0.16 dividend payable on September 5, 1996, to shareholders of record
on August 15, 1996.
On January 24, 1995, and January 23, 1996, the Corporation's Board of
Directors authorized the repurchase of up to 288,000 and 328,000 shares
respectively, of the Corporation's outstanding common stock. Such
repurchases may be made from time-to-time in open market transactions
during the next twelve months as conditions permit (the repurchase plan
approved in 1995 was extended an additional twelve months on January 23,
1996). The repurchased shares will be held as treasury stock and will be
available for general corporate purposes. As of June 30, 1996, the
Corporation had repurchased 397,300 shares at an average cost of $20.267.
As of that date, all 288,000 of the shares authorized under the
repurchase plan approved in 1995 had been repurchased.
21
<PAGE> 23
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Item 2--Management's Discussion and Analysis (Continued)
The Bank is also required to maintain specified amounts of capital
pursuant to regulations promulgated by the Office of Thrift Supervision
("OTS"). The Bank's long-term objective is to maintain its regulatory
capital in an amount sufficient to be classified in the highest
regulatory capital category (i.e., as a "well capitalized" institution).
At June 30, 1996, the Bank's regulatory capital exceeded all regulatory
minimum requirements as well as the minimum amount required to be
classified as a "well capitalized" institution.
The OTS has developed a new regulatory capital requirement which will add
an interest rate risk component to the current risk-based capital
requirements. Thrift institutions with a greater than normal interest
rate risk exposure, as computed by the OTS, will be required to take a
deduction from their total capital to meet their risk-based capital
requirement. The OTS has delayed, until further notice, the
implementation of the interest rate risk component pending the testing of
the OTS appeals process. Estimates received by the Bank from the OTS for
the quarter ended December 31, 1995, indicated that the Bank did not have
a greater than normal exposure to interest rate risk. Given this
estimate, it is not expected that the Bank will be required to take a
deduction against its risk-based capital on future filings, although
there can be no assurances.
Forward-Looking Statements
The discussion in this report includes certain forward-looking statements
based on current management expectations. Factors which could cause
future results to differ from these expectations include the following:
general economic conditions; legislative and regulatory initiatives;
monetary and fiscal policies of the Federal government; deposit flows;
the cost of funds; general market rates of interest; interest rates on
competing investments; demand for loan products; demand for financial
services; changes in accounting policies or guidelines; and changes in
the quality or composition of the Corporation's loan and investment
portfolios. Additional factors are described in the Corporation's other
reports filed with the Securities and Exchange Commission.
22
<PAGE> 24
FIRST FEDERAL CAPITAL CORP AND SUBSIDIARIES
Part II--Other Information
June 30, 1996
Item 1--Legal Proceedings.
Refer to Note 3 of the Corporation's Consolidated Financial Statements.
Item 2--Changes in Securities.
Not applicable.
Item 3--Defaults Upon Senior Securities.
Not applicable.
Item 4--Submission of Matters to Vote of Security Holders.
Not applicable.
Item 5--Other Information.
Not applicable.
Item 6--Exhibits and Reports on Form 8-K.
Not applicable.
23
<PAGE> 25
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST FEDERAL CAPITAL CORP
Date: August 14, 1996 By: /s/Thomas W. Schini
--------------- ------------------------------
Thomas W. Schini, Chairman of
the Board, President, and
Chief Executive Officer
(duly authorized officer)
Date: August 14, 1996 By: /s/Jack C. Rusch
--------------- ------------------------------
Jack C. Rusch,
Executive Vice President,
Treasurer, and Chief
Financial Officer
23
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORM
10-Q FOR THE SIX MONTH PERIOD ENDED JUNE 30, 1996 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FORM 10-Q
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-START> JAN-01-1996
<PERIOD-END> JUN-06-1996
<CASH> 20,529,692
<INT-BEARING-DEPOSITS> 15,649,691
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 137,770,080
<INVESTMENTS-CARRYING> 176,141,663
<INVESTMENTS-MARKET> 171,361,230
<LOANS> 1,018,971,004
<ALLOWANCE> 8,077,007
<TOTAL-ASSETS> 1,389,163,154
<DEPOSITS> 998,967,949
<SHORT-TERM> 247,313,000
<LIABILITIES-OTHER> 15,387,234
<LONG-TERM> 32,217,033
0
0
<COMMON> 36,126,346
<OTHER-SE> 59,151,592
<TOTAL-LIABILITIES-AND-EQUITY> 1,389,163,154
<INTEREST-LOAN> 39,970,797
<INTEREST-INVEST> 10,398,715
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 50,369,512
<INTEREST-DEPOSIT> 22,941,506
<INTEREST-EXPENSE> 31,008,932
<INTEREST-INCOME-NET> 19,360,580
<LOAN-LOSSES> 0
<SECURITIES-GAINS> (190,137)
<EXPENSE-OTHER> 19,024,052
<INCOME-PRETAX> 10,127,515
<INCOME-PRE-EXTRAORDINARY> 10,127,515
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,325,803
<EPS-PRIMARY> 0.93
<EPS-DILUTED> 0.93
<YIELD-ACTUAL> 7.78
<LOANS-NON> 1,195,756
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 10,490,995
<ALLOWANCE-OPEN> 8,186,077
<CHARGE-OFFS> 118,827
<RECOVERIES> 9,757
<ALLOWANCE-CLOSE> 8,077,007
<ALLOWANCE-DOMESTIC> 8,077,007
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
