SECURITIES AND EXCHANGE COMMISSION
WASHINGTON DC 20549
FORM 10-QSB
[ X ] Quarterly Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the quarterly period ended December 30, 1997
Or
[ ] Transition Report Pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934
For the transition period from __________ to __________
Commission File No.: 0-18833
Chester Valley Bancorp Inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Pennsylvania 23-2598554
- --------------------------------------------------------------------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
100 E. Lancaster Ave., Downingtown PA 19335
------------------------------------- --------
(Address Of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (610) 269-9700
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. YES [ X ] NO [ ]
Transitional Small Business Disclosure Format. YES [ ] NO [ X ]
Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Common Stock ($1.00 par value) 2,177,505
------------------------------ ----------
(Title of Each Class) (Number of Shares Outstanding
as of February 1, 1998)
<PAGE>
CHESTER VALLEY BANCORP INC. AND SUBSIDIARY
INDEX
PART 1. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
December 31, 1997 and June 30, 1997 (Unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended December 31, 1997 and 1996 (Unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS
Six Months Ended December 31, 1997 and 1996 (Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended December 31, 1997 and 1996 (Unaudited)
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
PART 2. OTHER INFORMATION
Item 1. LEGAL PROCEEDINGS
Item 2. CHANGES IN SECURITIES
Item 3. DEFAULTS UPON SENIOR SECURITIES
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
Item 5. OTHER INFORMATION
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
SIGNATURES
<PAGE>
<TABLE>
<CAPTION>
CHESTER VALLEY BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands)
December 31, June 30,
1997 1997
--------- ---------
<S> <C> <C>
ASSETS:
Cash in banks ............................................................... $ 5,322 $ 2,610
Interest-bearing deposits ................................................... 3,973 6,844
Investment securities available for sale .................................... 24,411 27,566
Investment securities (market value - December 31, $17,317; June 30, $19,393) 17,352 19,469
Accrued interest receivable ................................................. 1,780 2,108
Loans held for sale ......................................................... 285 106
Loans receivable, less allowance for loan losses of $3,080 and $2,855 ....... 264,577 257,040
Property and equipment ...................................................... 4,902 4,724
Other assets ................................................................ 3,041 3,206
--------- ---------
Total Assets ........................................................... $ 325,643 $ 323,673
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposit accounts ............................................................ $ 266,648 $ 260,750
Securities sold under agreements to repurchase .............................. 179 12
Advance payments by borrowers for taxes and insurance ....................... 1,950 2,999
Employee Stock Ownership Plan ("ESOP") debt ................................. 241 333
Federal Home Loan Bank advances ............................................. 24,436 30,198
Other borrowings ............................................................ 306 249
Accrued interest payable .................................................... 838 788
Other liabilities ........................................................... 2,339 1,279
--------- ---------
Total Liabilities ...................................................... 296,937 296,608
--------- ---------
Stockholders' Equity:
Preferred stock - $1.00 par value; 5,000,000 shares authorized; none issued . -- --
Common stock - $1.00 par value; 15,625,000 shares authorized; 2,174,689 and
2,072,083 shares issued at December 31 and June 30, respectively .......... 2,175 2,072
Additional paid-in capital .................................................. 14,890 12,772
Common stock acquired by ESOP ............................................... (241) (333)
Retained earnings - partially restricted .................................... 11,699 12,750
Net unrealized gain on securities available for sale, net of taxes .......... 298 3
--------- ---------
Subtotal .................................................................. 28,821 27,264
Treasury stock, at cost (6,147 shares and 13,213 shares at December 31 and
June 30, respectively) .................................................... (115) (199)
--------- ---------
Total Stockholders' Equity ............................................. 28,706 27,065
--------- ---------
Total Liabilities and Stockholders' Equity ............................. $ 325,643 $ 323,673
========= =========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CHESTER VALLEY BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except for Per Share Amounts)
Six Months Ended
December 31,
-----------------------------
1997 1996
----------- ------------
<S> <C> <C>
INTEREST INCOME:
Loans ................................................. $ 5,569 $ 5,138
Investment securities and interest-bearing deposits ... 791 468
----------- -----------
Total interest income .............................. 6,360 5,606
----------- -----------
INTEREST EXPENSE:
Deposits .............................................. 2,883 2,548
Securities sold under agreements to repurchase ........ 2 24
Short-term borrowings ................................. 303 80
Long-term borrowings .................................. 165 200
----------- -----------
Total interest expense ............................. 3,353 2,852
----------- -----------
NET INTEREST INCOME ..................................... 3,007 2,754
Provision for loan losses ............................. 120 164
----------- -----------
Net interest income after provision for loan losses 2,887 2,590
----------- -----------
OTHER INCOME:
Service charges and fees .............................. 282 236
Loss on sale of loans held for sale ................... (2) --
Gain on sale of securities available for sale ......... 79 20
Other ................................................. 40 51
----------- -----------
Total other income ................................. 399 307
----------- -----------
OPERATING EXPENSES:
Salaries and employee benefits ........................ 992 885
Occupancy and equipment ............................... 427 379
Data processing ....................................... 177 158
Deposit insurance premiums ............................ 41 131
Other ................................................. 480 410
----------- -----------
Total operating expenses ........................... 2,117 1,963
----------- -----------
Income before income taxes ............................ 1,169 934
Income tax expense .................................... 338 276
----------- -----------
NET INCOME .............................................. $ 831 $ 658
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CHESTER VALLEY BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except for Per Share Amounts)
(continued)
Six Months Ended
December 31,
-----------------------------
1997 1996
----------- ------------
<S> <C> <C>
EARNINGS PER SHARE (1):
Basic ................................................. $ 0.38 $ 0.31
=========== ===========
Diluted ............................................... $ 0.38 $ 0.30
=========== ===========
DIVIDENDS PER SHARE PAID DURING PERIOD (1) .............. $ 0.11 $ 0.08
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING (1):
Basic ................................................. 2,163,109 2,146,914
=========== ===========
Diluted ............................................... 2,197,982 2,158,905
=========== ===========
</TABLE>
(1) Earnings per share, dividends per share and weighted average shares
outstanding have been restated to reflect the effects of the 5% stock
dividend paid in September 1997 and the five-for-four stock split effected
in the form of a dividend in March 1997.
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CHESTER VALLEY BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except for Per Share Amounts)
Six Months Ended
December 31,
-----------------------------
1997 1996
----------- ------------
<S> <C> <C>
INTEREST INCOME:
Loans ................................................. $ 11,071 $ 9,993
Investment securities and interest-bearing deposits ... 1,584 992
----------- -----------
Total interest income .............................. 12,655 10,985
----------- -----------
INTEREST EXPENSE:
Deposits .............................................. 5,724 5,012
Securities sold under agreements to repurchase ........ 3 51
Short-term borrowings ................................. 547 152
Long-term borrowings .................................. 347 382
----------- -----------
Total interest expense ............................. 6,621 5,597
----------- -----------
NET INTEREST INCOME ..................................... 6,034 5,388
Provision for loan losses ............................. 240 260
----------- -----------
Net interest income after provision for loan losses 5,794 5,128
----------- -----------
OTHER INCOME:
Service charges and fees .............................. 583 508
Gain (loss) on sale of loans held for sale ............ (1) 3
Gain on sale of securities available for sale ......... 166 68
Other ................................................. 85 97
----------- -----------
Total other income ................................. 833 676
----------- -----------
OPERATING EXPENSES:
Salaries and employee benefits ........................ 2,007 1,802
Occupancy and equipment ............................... 851 738
Data processing ....................................... 343 308
SAIF special assessment ............................... -- 1,387
Deposit insurance premiums ............................ 79 261
Other ................................................. 966 802
----------- -----------
Total operating expenses ........................... 4,246 5,298
----------- -----------
Income before income taxes ............................ 2,381 506
Income tax expense .................................... 697 49
----------- -----------
NET INCOME .............................................. $ 1,684 $ 457
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CHESTER VALLEY BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except for Per Share Amounts)
(continued)
Six Months Ended
December 31,
-----------------------------
1997 1996
----------- ------------
<S> <C> <C>
EARNINGS PER SHARE (1):
Basic ................................................. $ 0.78 $ 0.21
=========== ===========
Diluted ............................................... $ 0.77 $ 0.21
=========== ===========
DIVIDENDS PER SHARE PAID DURING PERIOD (1) .............. $ 0.21 $ 0.15
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING (1):
Basic ................................................. 2,162,436 2,150,686
=========== ===========
Diluted ............................................... 2,193,681 2,160,939
=========== ===========
</TABLE>
(1) Earnings per share, dividends per share and weighted average shares
outstanding have been restated to reflect the effects of the 5% stock
dividend paid in September 1997 and the five-for-four stock split effected
in the form of a dividend in March 1997.
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
CHESTER VALLEY BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Six Months Ended December 31,
--------------------------------
1997 1996
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income .................................................................. $ 1,684 $ 457
Add (deduct) items not affecting cash flows from operating activities:
Depreciation ............................................................. 324 284
Provision for losses on loans ............................................ 240 260
Loss (gain) on sale of loans held for sale ............................... 1 (3)
Gain on sale of securities available for sale ............................ (166) (68)
Amortization of deferred loan fees, discounts and premiums ............... (271) (242)
Decrease (increase) in accrued interest receivable ....................... 328 (66)
Decrease (increase) in other assets ...................................... (165) (502)
Increase in other liabilities ............................................ 1,060 148
Increase in accrued interest payable ..................................... 50 4
--------- ---------
Net cash flows from operating activities .................................... 3,415 272
--------- ---------
Cash flows from (used in) investment activities:
Capital expenditures ..................................................... (502) (855)
Net increase in loans and loans held for sale ............................ (9,621) (17,687)
Proceeds from sale of loans held for sale ................................ 1,742 162
Proceeds from maturities, payments and calls of investment securities .... 2,644 2,835
Purchase of investment securities ........................................ (533) (20)
Purchase of securities available for sale ................................ (138,102) (29,064)
Proceeds from sale of securities available for sale ...................... 141,917 26,334
Proceeds from real estate owned .......................................... -- 86
--------- ---------
Net cash flows used in investment activities ................................ (2,455) (18,209)
--------- ---------
Cash flows from (used in) financing activities:
Net increase (decrease) in deposits before interest credited ............. 1,009 10,249
Interest credited to deposits ............................................ 4,889 4,272
Proceeds under securities sold under agreements to repurchase ............ 167 --
Proceeds from FHLB advances .............................................. 6,275 4,815
Repayments of FHLB advances .............................................. (12,037) (1,455)
Decrease in advance payments by borrowers for taxes and insurance ........ (1,049) (1,070)
Proceeds from other borrowings ........................................... 57 250
Cash dividends on common stock ........................................... (572) (353)
Repayments of principal on ESOP debt ..................................... (92) (88)
Sale of common stock under the dividend reinvestment plan ................ 273 (4)
Payment for fractional shares ............................................ (7) (10)
Stock options exercised .................................................. 32 216
Reduction of common stock acquired by ESOP ............................... 92 88
Stock repurchased as treasury stock ...................................... (156) (324)
--------- ---------
Net cash flows from (used in) financing activities .......................... (1,119) 16,586
--------- ---------
Decrease in cash and cash equivalents ....................................... (159) (1,351)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CHESTER VALLEY BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Six Months Ended December 31,
--------------------------------
1997 1996
--------- ---------
<S> <C> <C>
Cash and cash equivalents:
Beginning of period ...................................................... 9,454 10,312
========= =========
End of period ............................................................ $ 9,295 $ 8,961
========= =========
Supplemental disclosures:
Cash payments during the year for:
Taxes ................................................................. $ 850 $ 317
Interest .............................................................. $ 6,571 $ 5,593
Non-cash items:
Acquisition of real estate in settlement of loans ........................ $ -- $ 50
Stock dividend issued .................................................... $ 2,155 $ 1,516
Net unrealized gain on investment securities available for sale .......... $ 482 $ 71
Tax effect on unrealized gain on investment securities available for sale $ 187 $ 25
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
<PAGE>
CHESTER VALLEY BANCORP INC.
AND SUBSIDIARY
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1 - BASIS OF PRESENTATION
The accompanying consolidated financial statements have been
prepared in accordance with instructions to Form 10-QSB.
Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles
("GAAP") for complete financial statements. However, such
information reflects all adjustments which are, in the opinion
of management, necessary for a fair presentation of results
for the unaudited interim periods.
The results of operations for the three- and six-month periods
ended December 31, 1997, are not necessarily indicative of the
results to be expected for the fiscal year ending June 30,
1998. The consolidated financial statements presented herein
should be read in conjunction with the audited consolidated
financial statements and the notes thereto included in Chester
Valley Bancorp Inc.'s Annual Report to Stockholders for the
fiscal year ended June 30, 1997.
NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
Principles of Consolidation
The accompanying consolidated financial statements include the
accounts of Chester Valley Bancorp Inc. (the "Company" or
"Chester Valley"), its wholly-owned subsidiary, First
Financial Bank (the "Bank" or "First Financial"), a
Pennsylvania-chartered stock savings association, and the
Bank's wholly-owned subsidiary, D & S Service Corp., which
owns D & F Projects and Wildman Projects, Inc., both of which
are wholly-owned subsidiaries thereof. All material
inter-company balances and transactions have been eliminated
in consolidation. Prior period amounts are reclassified when
necessary to conform with the current period's presentation.
Cash and Cash Equivalents
For the purpose of the consolidated statements of cash flows,
cash and cash equivalents include cash and interest-bearing
deposits with an original maturity of generally three months
or less.
Investment Securities
The Company divides its securities portfolio into three
segments: (a) held to maturity; (b) available for sale; and
(c) trading. Securities in the held to maturity category are
accounted for at amortized cost. Trading securities, if any,
are accounted for at quoted market prices with changes in
market values being recorded as gain or loss in the income
statement. All other securities are included in the available
for sale category and are accounted for at fair value with
unrealized gains or losses, net of taxes, being reflected as
adjustments to stockholders' equity.
<PAGE>
Investment securities held for investment are carried at cost,
adjusted for amortization of premiums and accretion of
discounts using a method which approximates a level yield,
based on the Company's intent and ability to hold the
securities until maturity. At the time of purchase, the
Company makes a determination on whether or not it will hold
the investment securities to maturity, based upon an
evaluation of the probability of the occurrence of certain
future events. Investment securities which the Company
believes may be involved in interest rate risk, liquidity, or
other asset/liability management decisions which might
reasonably result in such securities not being held until
maturity, are classified as available for sale. If investment
securities are sold, any gain or loss is determined by
specific identification and reflected in the operating results
for the period in which such sale occurs.
Allowance for Loan Losses
The allowance for loan losses is maintained at a level that
management considers adequate to provide for potential losses
based upon an evaluation of known and inherent risks in the
loan portfolio. Management's evaluation is based upon, among
other things, delinquency trends, the volume of non-performing
loans, prior loss experience of the portfolio, current
economic conditions, and other relevant factors. Although
management believes it has used the best information available
to it in making such determinations, and that the present
allowance for loan losses is adequate, future adjustments to
the allowance may be necessary, and net income may be
adversely affected if circumstances differ substantially from
the assumptions used in determining the level of the
allowance. In addition, various regulatory agencies, as an
integral part of their examination process, periodically
review the Company's allowance for losses on loans. Such
agencies may require the Company to recognize additions to the
allowance based on their judgments about information available
to them at the time of their examination. The allowance is
increased by the provision for loan losses which is charged to
operations. Loan losses, other than those incurred on loans
held for sale, are charged directly against the allowance and
recoveries on previously charged-off loans are generally added
to the allowance.
For purposes of applying the measurement criteria for impaired
loans, the Company excludes large groups of smaller-balance
homogeneous loans, primarily consisting of residential real
estate loans and consumer loans as well as commercial business
loans with balances of less than $100,000. For applicable
loans, the Company evaluates the need for impairment
recognition when a loan becomes non-accrual or earlier if,
based on management's assessment of the relevant facts and
circumstances, it is probable that the Company will be unable
to collect all proceeds due according to the contractual terms
of the loan agreement. At and during the six-month period
ended December 31, 1997, the recorded investment in impaired
loans was not material. The Company's policy for the
<PAGE>
recognition of interest income on impaired loans is the same
as for non-accrual loans discussed below. Impaired loans are
charged off when the Company determines that foreclosure is
probable and the fair value of the collateral is less than the
recorded investment of the impaired loan.
Loans, Loan Origination Fees and Uncollected Interest
Loans (other than loans held for sale) are recorded at cost
net of unearned discounts, deferred fees and allowances.
Discounts and premiums on purchased loans are amortized using
the interest method over the remaining contractual life of the
portfolio, adjusted for actual prepayments. Loan origination
fees and certain direct origination costs are deferred and
amortized over the life of the related loans as an adjustment
of the yield on the loans.
Uncollected interest receivable on loans is accrued to income
as earned. Non-accrual loans are loans on which the accrual of
interest has ceased because the collection of principal or
interest payments is determined to be doubtful by management.
It is the policy of the Company to discontinue the accrual of
interest when principal or interest payments are delinquent 90
days or more (unless the loan principal and interest are
determined by management to be fully secured and in the
process of collection), or earlier, if the financial condition
of the borrower raises significant concern with regard to the
ability of the borrower to service the debt in accordance with
the current loan terms. Interest income on such loans is not
accrued until the financial condition and payment record of
the borrower once again demonstrate the ability to service the
debt.
9
Loans Held for Sale
The Company periodically identifies certain loans as held for
sale at the time of origination. These loans consist primarily
of fixed-rate, single-family residential mortgage loans which
meet the underwriting characteristics of certain
government-sponsored enterprises (conforming loans). Loans
held for sale are carried at the lower of aggregate cost or
fair value, with the resulting gain or loss included in other
income for the period. Realized gains or losses are included
in other income for the period.
Real Estate Owned ("REO")
Real estate acquired through foreclosure or by deed in lieu of
foreclosure is classified as REO. REO is carried at the lower
of cost (lesser of carrying value of the loan or fair value of
the property at date of acquisition) or fair value less
selling expenses. Costs relating to the development or
improvement of the property are capitalized; holding costs are
charged to expense.
<PAGE>
Property and Equipment
Property and equipment are stated at cost, less accumulated
depreciation. Depreciation is computed using the straight-line
method over the estimated useful lives of the assets. When
assets are retired or otherwise disposed of, the cost and
related accumulated depreciation are removed from the
accounts. The cost of maintenance and repairs is charged to
expense as incurred and renewals and betterments are
capitalized.
Deferred Income Taxes
The Company accounts for income taxes under the asset and
liability method. Deferred tax assets and liabilities are
recognized for the future tax consequences attributable to
differences between the financial statement carrying amounts
of existing assets and liabilities and their respective tax
bases and operating loss and tax credit carryforwards.
Deferred tax assets and liabilities are measured using the
enacted tax rates expected to apply to taxable income in the
years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income
in the period that includes the enactment date.
Earnings Per Share
In February 1997 the Financial Accounting Standards Board
("FASB") issued SFAS No. 128, "Earnings Per Share." This
statement establishes standards for computing and presenting
earnings per share (EPS) and applies to entities with publicly
held common stock or potential common stock. This statement
simplifies the standards for computing earnings per share
previously found in APB Opinion No. 15, Earnings per Share,
and makes them comparable to international EPS standards. It
replaces the presentation of primary EPS with a presentation
of basic EPS. It also requires dual presentation of basic and
diluted EPS on the face of the income statement for all
entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic
EPS computation to the numerator and denominator of the
diluted EPS computation. This statement is effective for
financial statements issued for periods ending after December
15, 1997, including interim periods; earlier application is
not permitted. This statement requires restatement of all
prior-period EPS data presented. The Company adopted SFAS No.
128 as of December 31, 1997. Accordingly, the EPS has been
restated for all periods presented.
<PAGE>
The following table presents the reconciliation of the
numerators and denominators of the basic and diluted EPS
computations.
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
------------------------- -------------------------
(Dollars in Thousands)
Basic EPS Computation 1997 1996 1997 1996
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Numerator: ............... $ 831 $ 658 $ 1,684 $ 457
Denominator:
Weighted average common
shares outstanding .... 2,163,109 2,146,914 2,162,436 2,150,686
Basic EPS ................ $ .38 $ .31 $ .78 $ .21
========== ========== ========== ==========
Diluted EPS Computation
Numerator: ............... $ 831 $ 658 $ 1,684 $ 457
Denominator:
Weighted average common
shares outstanding .... 2,163,109 2,146,914 2,162,436 2,150,686
Options outstanding 34,873 11,991 31,245 10,253
---------- ---------- ---------- ----------
Total shares ....... 2,197,982 2,158,905 2,193,681 2,160,939
========== ========== ========== ==========
Diluted EPS .............. $ .38 $ .30 $ .77 $ .21
========== ========== ========== ==========
</TABLE>
Earnings per share and weighted average shares outstanding
have been adjusted to reflect the effects of the 5% stock
dividend paid in September 1997 and the five-for-four stock
split effected in the form of a dividend in March 1997.
<PAGE>
NOTE 3 - LOANS RECEIVABLE
Loans receivable are summarized as follows:
<TABLE>
<CAPTION>
At December 31, At June 30,
1997 1997
--------- ---------
(Dollars in Thousands)
<S> <C> <C>
First mortgage loans:
Residential ........................... $ 158,952 $ 159,431
Construction-residential .............. 11,000 9,873
Land acquisition and
development ........................ 7,495 6,763
Commercial ............................ 33,309 33,981
Construction-commercial ............... 8,941 6,271
Commercial business ...................... 11,921 7,863
Consumer ................................. 48,973 47,343
--------- ---------
Total loans .............................. 280,591 271,525
--------- ---------
Less:
Undisbursed loan proceeds:
Construction-residential ........... (7,181) (6,599)
Construction-commercial ............ (4,217) (3,494)
Deferred loan fees - net .............. (1,536) (1,537)
Allowance for loan losses ............. (3,080) (2,855)
--------- ---------
Net loans ................................ $ 264,577 $ 257,040
========= =========
</TABLE>
NOTE 4 - COMMITMENTS
Commitments to potential mortgagors of the Bank amounted to
$4.54 million as of December 31, 1997, of which $1.12 million
was for variable-rate loans. The balance of the commitments
represents $3.42 million of fixed-rate loans bearing interest
rates of between 6.00% and 7.20%. At December 31, 1997, the
Company had $11.40 million of undisbursed construction loan
funds as well as $13.89 million of undisbursed remaining
credit line balances.
<PAGE>
NOTE 5 - REGULATORY CAPITAL
The Bank is required by regulations of the Office of Thrift
Supervision ("OTS") to maintain minimum levels of capital as
measured by three ratios. Savings institutions are currently
required to maintain a minimum regulatory tangible capital
equal to 1.5% of total assets, minimum core capital of 3% of
total assets, and risk-based capital equal to 8% of total
risk-weighted assets. At December 31, 1997, and June 30, 1997,
the Bank exceeded all regulatory capital requirements. The
following sets forth the reconciliation of the Bank's
compliance with each of the regulatory capital requirements
(dollars in thousands):
<TABLE>
<CAPTION>
December 31, 1997 June 30, 1997
------------------------------------------ ------------------------------------------
Tangible Core Risk-based Tangible Core Risk-based
Capital Capital Capital Capital Capital Capital
---------- ---------- --------- ========== ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Total Regulatory Capital ... $ 27,780 $ 27,780 $ 29,740 $ 26,750 $ 26,750 $ 29,057
Minimum Required Regulatory 4,880 9,760 16,345 4,855 9,710 15,689
---------- ---------- --------- ========== ---------- ----------
Excess Regulatory Capital .. $ 22,900 $ 18,020 $ 13,395 $ 21,895 $ 17,040 $ 13,368
========== ========== ========= ========== ========== ==========
Regulatory Capital as a
Percentage of Assets ..... 8.54% 8.54% 14.56% 8.26% 8.26% 14.82%
Minimum Capital Required as
a Percentage of Assets ..... 1.50 3.00 8.00 1.50 3.00 8.00
========== ========== ========= ========== ========== ==========
Excess Regulatory Capital
as a Percentage of Assets .. 7.04% 5.54% 6.56% 6.76% 5.26% 6.82%
========== ========== ========= ========== ========== ==========
</TABLE>
The Bank is not under any agreement with the regulatory authorities, nor is it
aware of any current recommendations by the regulatory authorities which, if
they were to be implemented, would have a material effect on the liquidity,
capital resources or operations of the Company.
<PAGE>
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
Certain information in this Form 10-QSB may constitute forward-looking
information that involves risks and uncertainties that could cause actual
results to differ materially from those estimated. Persons are cautioned that
such forward-looking statements are not guarantees of future performance and are
subject to various factors which could cause actual results to differ materially
from these estimated. These factors include changes in general economic and
market conditions and the development of an interest rate environment that
adversely affects the interest rate spread or other income from the Company's
and the Bank's investments and operations.
The Company's total assets increased to $325.64 million at December 31, 1997,
from $323.67 million at June 30, 1997, largely as the result of an increase in
deposits from $260.75 million to $266.65 million, which funded growth in the
loan portfolio from $257.04 million to $264.58 million during the period. This
increase in net loans was offset by a decrease in cash, investments, and
interest-bearing deposits from $56.49 million to $51.06 million. This decrease
in cash, investments, and interest-bearing deposits was concurrent with the
decrease in Federal Home Loan Bank of Pittsburgh advances from $30.20 million to
$24.44 million.
Stockholders' equity increased to $28.71 million at December 31, 1997, from
$27.07 million at June 30, 1997, primarily as a result of net income of $1.68
million, the recognition of an increase in net unrealized gains on securities
available for sale, net of taxes, of $295,000, the sale of $273,000 of common
stock in connection with the Company's dividend reinvestment plan, $32,000
received as a result of the exercise of stock options, and the reduction in the
principal balance of the ESOP debt by $92,000. The increase in stockholders'
equity was offset, in large part, by the payment of cash dividends totaling
$572,000 combined with the repurchase of $156,000 of the Company's common stock
during the six month period ended December 31, 1997.
RESULTS OF OPERATIONS
Net interest income, on a fully tax equivalent basis, increased 10.6% to $3.12
million for the three-month period ended December 31, 1997, and 13.4% to $6.25
million for the six-month period ended December 31, 1997, compared to $2.82
million and $5.51 million for the same periods in 1996. Total interest income,
on a fully tax equivalent basis, increased to $6.47 million and $12.87 million
for the three- and six-month periods ended December 31, 1997, from $5.67 million
and $11.11 million for the same periods in 1996, primarily as a result of the
combined effects of the increase in both the average balance of interest-earning
assets and the average yield on such assets.
The average balance of interest-earning assets increased to $312.71 million and
$312.55 million for the three- and six-month periods ended December 31, 1997,
respectively, from $276.51 million and $272.66 million, respectively, for the
same periods in 1996. In addition, the average yield on interest-earning assets
increased to 8.28% and 8.24% for the three- and six-month periods ended December
31, 1997, from 8.20% and 8.15% for the same periods in 1996.
<PAGE>
Loan originations of $46.39 million during the six months ended December 31,
1997, contributed to both the increase in the average balance of
interest-earning assets as well as the increase in the average yield on
interest-earning assets. The increase in the average yield of such assets
reflects the results of the Bank's increased origination of commercial real
estate as well as small business loans and consumer installment loans which
generally bear higher interest rates than single-family residential loans. Such
loans accounted for 52% of the loan originations during the six months ended
December 31, 1997, and contributed to a shift in the composition of the Bank's
loan portfolio from lower-yielding residential mortgages to higher-yielding
consumer and small business loans. Also contributing to the increase in the
average yield was a slight increase in market interest rates in the 1997 period
as compared to the 1996 period.
Total interest expense increased to $3.35 million and $6.62 million from $2.85
million and $5.60 million for the respective three- and six-month periods in
1997 and 1996, largely as a result of the increase in the average balance of
interest-bearing liabilities to $269.63 million and $269.83 million for the
three and six months ended December 31, 1997, respectively, as compared to
$239.70 million and $235.24 million for the same periods in 1996. Also
contributing to the increase in interest expense was an increase in the average
rate paid on those liabilities to 4.97% and 4.91% for the respective three-and
six-month periods ended December 31, 1997, from 4.76% for the same periods in
1996, respectively.
The tax equivalent interest rate spread decreased to 3.33% from 3.39%, and the
average net yield on interest-earning assets decreased to 4.00% from 4.04% for
the six-month periods ended December 31, 1997 and 1996, respectively, due to the
reasons discussed above.
Provision for Loan Losses
The Company provided $120,000 and $240,000 for loan losses during the three- and
six-month periods ended December 31, 1997, respectively, as compared to $164,000
and $260,000, respectively, for the same periods in 1996. These provisions have
been added to the Company's allowance for possible loan losses due to current
economic conditions and management's assessment of the inherent risk of loss
existing in the loan portfolio. At December 31, 1997, the allowance for loan
losses totaled $3.08 million or 1.15% of net loans (before the allowances),
compared to $2.86 million or 1.10% of net loans and $2.91 million or 1.21% of
net loans at June 30, 1997, and December 31, 1996, respectively. As a percentage
of non-performing assets, the allowance for possible loan losses was 386% at
December 31, 1997, compared to 220% at June 30, 1997, and further compared to
160% at December 31, 1996.
Other Income
Total other income increased to $399,000 and $833,000 during the three- and
six-month periods ended December 31, 1997, respectively, as compared to $307,000
and $676,000 during the same periods in 1996 due to increases in service charges
and fees, primarily as a result of an increase in the number of demand deposit
accounts as well as an increase in gains on sale of securities. Service charges
and fees increased to $583,000 from $508,000 during the six-month periods ended
December 31, 1997 and 1996, respectively. Gains on sales of securities increased
to $166,000 for the six months ended December 31, 1997, from $68,000 for the
same period in 1996.
<PAGE>
Operating Expenses
Total operating expenses for the three-month period ended December 31, 1997,
increased to $2.12 million from $1.96 million for the same three-month period in
1996. Total operating expenses for the six-month period ended December 31, 1997,
decreased to $4.25 million from $5.30 million for the same period in 1996.
Operating expenses for the six months ended December 31, 1996, included $1.39
million attributable to the payment of the one-time Savings Institution
Insurance Fund ("SAIF") special assessment charged during the first quarter of
fiscal 1997 to all insured institutions having SAIF-insured deposits. The
one-time assessment was part of legislation adopted to recapitalize the SAIF and
required the Bank to pay $.65 for every $100 of deposits as of March 31, 1995.
However, in connection with the special assessment, deposit insurance premium
rates were decreased from $.23 per $100 of deposits to $.06 per $100 of deposits
beginning in the third fiscal quarter of 1997.
Excluding the $1.39 million one-time SAIF assessment, the Company's operating
expenses would have increased during the six months ended December 31, 1997, as
compared to the same period in 1996. The increase in operating expenses for the
three- and six-month periods in fiscal 1998 was due to (i) normal salary
increases combined with benefits expense and increased number of staff
associated with the addition of the Bank's new Call Center and its new Trust and
Investment Services Division established during the summer and fall of 1997,
respectively; (ii) an increase in data processing expenses related to an
increased number of accounts in usage; (iii) an increase in occupancy and
equipment expenses related to the refurbishment of the Bank's Operations Center
and the purchase of imaging equipment used for the processing of customers'
statements, and (iv) the opening of the Bank's Brandywine Square office in
October 1996, whereby expenses for this office were incurred during the entire
six-month period of fiscal 1998 as opposed to only the three-month period in
fiscal 1997.
Income Tax Expense
Income tax expense was $338,000 and $697,000 for the three- and six-month
periods ended December 31, 1997, respectively, as compared to $276,000 and
$49,000 for the same periods in 1996, reflecting the increased profitability of
the Company in the 1997 periods.
ASSET QUALITY
Non-performing assets are comprised of non-accrual loans and REO and totaled
$798,000 and $748,000 at December 31, 1997, and June 30, 1997, respectively.
Non-accrual loans are loans on which the accrual of interest has ceased because
the collection of principal or interest payments is determined to be doubtful by
management. It is the policy of the Company to discontinue the accrual of
interest when principal or interest payments are delinquent 90 days or more
(unless the loan principal and interest are determined by management to be fully
secured and in the process of collection), or earlier, if the financial
condition of the borrower raises significant concern with regard to the ability
of the borrower to service the debt in accordance with the current loan terms.
Interest income is not accrued until the financial condition and payment record
of the borrower once again demonstrate the ability to service the debt. At
December 31, 1997, the Company did not have any loans greater than 90 days
<PAGE>
delinquent which were accruing interest. Non-performing assets to total assets
and non-performing loans to total assets were .25% at December 31, 1997,
compared to .23% at June 30, 1997, and .64% and .61%, respectively, at December
31, 1996. Non-performing loans, which totaled $798,000 at December 31, 1997,
consisted of eight residential mortgage loans aggregating $627,000, one
construction loan totaling $55,000, and $116,000 in consumer loans.
At December 31, 1997, the Company's classified assets, which consisted of assets
classified as substandard, doubtful or loss, as well as REO, totaled $1.38
million compared to $1.40 million at June 30, 1997, and further compared to
$1.97 million at December 31, 1996. Included in the assets classified
substandard at December 31, 1997 and 1996, and at June 30, 1997, were all loans
90 days past due and loans which were less than 90 days delinquent but
inadequately protected by the current paying capacity of the borrower or of the
collateral pledged, or which were subject to one or more well-defined weaknesses
which may jeopardize the satisfaction of the debt. The $584,000 of classified
assets which were not considered non-performing at December 31, 1997, were
comprised primarily of three loans to one borrower totaling $256,000 and three
loans to another borrower totaling $255,000, which were classified substandard
but were performing in accordance with the terms and conditions of the loans.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary sources of funds have historically consisted of deposits,
regular principal payments and prepayments of outstanding loans, and borrowings
from the Federal Home Loan Bank of Pittsburgh and other sources. During the
first six months of fiscal 1998, the Company used its capital resources
primarily to meet its ongoing commitments to fund maturing savings certificates
and deposit withdrawals, fund existing and new loan commitments, and maintain
its liquidity. At December 31, 1997, the total of approved mortgage loan
commitments amounted to $4.54 million. In addition, at such date the Company had
$11.40 million of undisbursed construction loan funds and $13.89 million of
undisbursed remaining credit line balances. Certificates of deposit totaling
$75.22 million are scheduled to mature during the remainder of fiscal 1998, the
majority of which the Company believes, on the basis of prior experience, will
be reinvested with the Company.
The Company's current dividend policy is to declare a regular quarterly dividend
with the intent that the level of the dividend per share be reviewed by the
Board of Directors on a quarterly basis. Dividends will be in the form of cash
and/or stock after giving consideration to all aspects of the Company's
performance for the quarter. On November 19, 1997, the Board of Directors
declared a quarterly cash dividend of $.11 per share, which was paid on December
18, 1997, to stockholders of record as of December 4, 1997.
The Bank, which is the Company's wholly-owned subsidiary, is required, under
applicable federal regulations, to maintain specified levels of liquid
investments and qualifying types of United States Treasury, federal agency and
other investments having maturities of five years or less. Regulations currently
in effect require the Bank to maintain a liquid asset ratio of not less than 5%
of its net withdrawable accounts plus short-term borrowings, of which short-term
liquid assets must amount to not less than 1%. These levels are changed from
time to time by the OTS to reflect economic conditions. First Financial's
average regulatory liquidity ratio for the month ended December 31, 1997 was
8.40%.
<PAGE>
ASSET AND LIABILITY MANAGEMENT
The principal objective of the Company's asset and liability management function
is to maximize the Company's net interest margin while maintaining an
appropriate level of risk given the Company's business focus, operating
environment, capital and liquidity requirements and performance objectives.
Through such management, the Company seeks to reduce the vulnerability of its
operations to changes in interest rates and to manage the ratio of interest
rate-sensitive assets to interest rate-sensitive liabilities within specified
maturity periods or repricing dates. The Company's actions in this regard are
taken under the guidance of the Asset-Liability Management Committee.
Interest rate risk is derived from timing differences in the repricing of assets
and liabilities, loan prepayments, deposit withdrawals, and differences in
lending and funding rates. One measure of interest rate risk is the GAP ratio,
which is defined as the difference between the dollar volume of interest-earning
assets and interest-bearing liabilities maturing or repricing within the same
specified period of time expressed as a percentage of total assets.
The Company's asset and liability management strategy currently is to emphasize
the origination of adjustable-rate mortgages, short-term consumer and commercial
business loans, and floating-rate construction loans and commercial real estate
loans. As of December 31, 1997, $117.47 million, or 37.3% of the Company's
interest-sensitive assets and $154.70 million of its interest-sensitive
liabilities were scheduled to reprice within a one-year period, and the
Company's cumulative one-year interest rate GAP was negative 11.4%. The table on
page 21 summarizes the contractual maturities or repricing periods of the
Company's interest-earning assets and interest-bearing liabilities as of
December 31, 1997. Adjustable- and floating-rate assets are included in the
period in which interest rates are next scheduled to adjust, rather than in the
period for which they are contractually due. Fixed-rate loans are included in
the periods in which they are anticipated to be repaid. The analysis on page 21
takes into consideration the timing of the repricing but does not take into
consideration any restrictions on the magnitude of the repricing
interest-sensitive assets.
Rates of interest paid on deposits are priced to be sufficiently competitive in
the Company's primary market area to meet its asset and liability management
objectives and requirements. The Company generally maintains a pricing program
for its certificate accounts which entails paying higher rates of interest on
longer-term certificates to encourage customers to invest in certificates of
deposit for longer maturities. This strategy has assisted the Company in
controlling its cost of funds and supported its goal of extending the maturity
of its liabilities.
The Company periodically identifies certain loans as held for sale at the time
of origination, primarily consisting of fixed-rate, single-family residential
mortgage loans which meet the underwriting characteristics of certain
government-sponsored enterprises (conforming loans). The Company regularly
re-evaluates its policy and revises it as deemed necessary. The majority of
loans sold to date have consisted of sales to Freddie Mac of whole loans and 95%
participation interests in long-term, fixed-rate, single-family residential
mortgage loans in furtherance of the Company's goal of better matching the
maturities and interest-rate sensitivity of its assets and liabilities. When
selling loans, the Company has generally retained servicing in order to increase
its non-interest income. At December 31, 1997, the Company serviced $26.43
million of mortgage loans for others. Sales of loans produce future servicing
income and provide funds for additional lending and other purposes.
<PAGE>
RECENT ACCOUNTING PRONOUNCEMENTS
In February 1997 the Financial Accounting Standards Board ("FASB") issued SFAS
No. 128, "Earnings Per Share." This statement establishes standards for
computing and presenting earnings per share (EPS) and applies to entities with
publicly held common stock or potential common stock. This statement simplifies
the standards for computing earnings per share previously found in APB Opinion
No. 15, Earnings per Share, and makes them comparable to international EPS
standards.
It replaces the presentation of primary EPS with a presentation of basic EPS. It
also requires dual presentation of basic and diluted EPS on the face of the
income statement for all entities with complex capital structures and requires a
reconciliation of the numerator and denominator of the basic EPS computation to
the numerator and denominator of the diluted EPS computation. This statement is
effective for financial statements issued for periods ending after December 15,
1997, including interim periods; earlier application is not permitted. This
statement requires restatement of all prior-period EPS data presented. The
Company adopted SFAS No. 128 as of December 31, 1997. Accordingly, the EPS has
been restated for all periods presented.
In June 1997 the FASB issued SFAS No. 130, "Reporting Comprehensive Income."
This statement establishes standards for the reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. SFAS No. 130 requires that all items that are required to
be recognized as components of comprehensive income be reported in a financial
statement that is displayed with the same prominence as other financial
statements. The statement does not require a specific format for that financial
statement but requires that an enterprise display an amount representing total
comprehensive income for the period in that financial statement. SFAS No. 130 is
effective for fiscal years beginning after December 15, 1997. Management has not
yet determined the impact, if any, of this statement on the Company.
In June 1997 the FASB issued SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information." SFAS No. 131 establishes standards for the
way that public business enterprises report information about operating segments
in annual financial statements and requires that those enterprises report
selected information about operating segments in interim financial reports
issued to shareholders. It also establishes standards for related disclosures
about products and services, geographic areas, and major customers. SFAS No. 131
is effective for financial statements for periods beginning after December 15,
1997. Management has not yet determined the impact, if any, of this statement on
the Company.
<PAGE>
<TABLE>
<CAPTION>
Interest Rate Sensitivity Analysis at December 31, 1997
(Dollars in thousands)
More Than More Than More Than More Than
Three Months Six Months One Year Three Years
Three Months Through Through Through Through
or Less Six Months One Year Three Years Five Years
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
INTEREST-EARNING ASSETS:
Loans (1):
Adjustable- and floating-rate mortgages (2) $ 22,391 $ 15,105 $ 31,157 $ 20,090 $ 6,474
Balloon and fixed-rate mortgages (2) ...... 5,809 2,906 7,887 24,591 24,542
Consumer (2) (3) .......................... 7,763 1,170 2,410 10,687 8,934
Commercial business ....................... 6,528 238 474 1,845 1,767
Securities and interest-bearing deposits (4) .. 7,632 1,799 4,199 9,272 3,411
-------- -------- -------- -------- --------
Total interest-earning assets ................. $ 50,123 $ 21,217 $ 46,126 $ 66,484 $ 45,128
-------- -------- -------- -------- --------
INTEREST-BEARING LIABILITIES:
Savings accounts (5) .......................... $ 501 $ 500 $ 999 -- --
NOW accounts (5) .............................. 450 450 900 -- --
Money market accounts (5) ..................... 28,272 -- -- -- --
Certificate accounts .......................... 53,195 21,933 32,535 35,886 12,414
Securities sold under agreements to repurchase 179 -- -- -- --
Borrowings .................................... 12,171 517 2,097 5,682 2,518
-------- -------- -------- -------- --------
Total interest-bearing liabilities ............ $ 94,768 $ 23,400 $ 36,531 $ 41,568 $ 14,932
-------- -------- -------- -------- --------
Cumulative excess of interest-earning assets
to interest-bearing liabilities ............... ($44,645) ($46,828) ($37,233) ($12,317) $ 17,879
======== ======== ======== ======== ========
Cumulative ratio of interest rate-sensitive
assets to interest rate-sensitive liabilities . 53% 60% 76% 94% 108%
======== ======== ======== ======== ========
Cumulative difference as a percentage of
total assets .................................. (13.7%) (14.4%) (11.4%) (3.8%) 5.5%
======== ======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Interest Rate Sensitivity Analysis at December 31, 1997
(Dollars in thousands)
(continued)
More Than
Five Years Total
-------- --------
<S> <C> <C>
INTEREST-EARNING ASSETS:
Loans (1):
Adjustable- and floating-rate mortgages (2) $ 1,040 $ 96,255
Balloon and fixed-rate mortgages (2) ...... 46,311 112,044
Consumer (2) (3) .......................... 18,009 48,973
Commercial business ....................... 1,069 11,921
Securities and interest-bearing deposits (4) .. 19,423 45,736
-------- --------
Total interest-earning assets ................. $ 85,851 $314,929
-------- --------
INTEREST-BEARING LIABILITIES:
Savings accounts (5) .......................... $ 23,080 $ 25,080
NOW accounts (5) .............................. 27,680 29,480
Money market accounts (5) ..................... -- 28,272
Certificate accounts .......................... 4,221 160,184
Securities sold under agreements to repurchase -- 179
Borrowings .................................... 1,998 24,983
-------- --------
Total interest-bearing liabilities ............ $ 56,979 $268,178
-------- --------
Cumulative excess of interest-earning assets
to interest-bearing liabilities ............... $ 46,751 $ 46,751
======== ========
Cumulative ratio of interest rate-sensitive
assets to interest rate-sensitive liabilities . 117% 117%
======== ========
Cumulative difference as a percentage of
total assets .................................. 14.4% 14.4%
======== ========
</TABLE>
(1) Net of undisbursed loan proceeds.
(2) Assumes market prepayment rates.
(3) Includes home improvement, home equity, automobile and other consumer
loans.
(4) Includes investment securities, mortgage-backed securities and
interest-bearing deposits.
(5) Balances distributed among the various repricing time intervals based on
historical and anticipated repricing patterns.
<PAGE>
Part II. Other Information
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
None
Item 3. Defaults Upon Senior Securities
Not Applicable.
Item 4. Submission of Matters to a Vote of Security Holders
None
Item 5. Other Information
None
Item 6. Exhibits and Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Chester Valley Bancorp Inc.
Date 2-12-98 /s/Ellen Ann Roberts
--------------------
Ellen Ann Roberts
Chairman and Chief Executive Officer
Date 2-12-98 /s/Christine N. Dullinger
Christine N. Dullinger
Treasurer and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> DEC-31-1997
<CASH> 5,322
<INT-BEARING-DEPOSITS> 3,973
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 24,411
<INVESTMENTS-CARRYING> 17,352
<INVESTMENTS-MARKET> 17,317
<LOANS> 267,657
<ALLOWANCE> 3,080
<TOTAL-ASSETS> 325,643
<DEPOSITS> 266,648
<SHORT-TERM> 0
<LIABILITIES-OTHER> 5,306
<LONG-TERM> 24,983
0
0
<COMMON> 2,175
<OTHER-SE> 26,531
<TOTAL-LIABILITIES-AND-EQUITY> 325,643
<INTEREST-LOAN> 11,071
<INTEREST-INVEST> 1,584
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 12,655
<INTEREST-DEPOSIT> 5,724
<INTEREST-EXPENSE> 6,621
<INTEREST-INCOME-NET> 6,034
<LOAN-LOSSES> 240
<SECURITIES-GAINS> 166
<EXPENSE-OTHER> 4,246
<INCOME-PRETAX> 2,381
<INCOME-PRE-EXTRAORDINARY> 2,381
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,684
<EPS-PRIMARY> .78
<EPS-DILUTED> .77
<YIELD-ACTUAL> 4.00
<LOANS-NON> 863
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,382
<ALLOWANCE-OPEN> 2,976
<CHARGE-OFFS> 20
<RECOVERIES> 4
<ALLOWANCE-CLOSE> 3,080
<ALLOWANCE-DOMESTIC> 1,323
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,757
</TABLE>
