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 March 31, 1998
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) 2,188,716
------------------------------ ---------
(Title of Each Class) (Number of Shares Outstanding
as of May 1, 1998)
<PAGE>
CHESTER VALLEY BANCORP INC. AND SUBSIDIARY
INDEX
PART 1. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, 1998 and June 30, 1997 (Unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS
Three Months Ended March 31, 1998 and 1997 (Unaudited)
CONSOLIDATED STATEMENTS OF OPERATIONS
Nine Months Ended March 31, 1998 and 1997 (Unaudited)
CONSOLIDATED STATEMENTS OF CASH FLOWS
Nine Months Ended March 31, 1998 and 1997 (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)
March 31, June 30,
1998 1997
--------- ---------
<S> <C> <C>
ASSETS:
Cash in banks ....................................................... $ 4,432 $ 2,610
Interest-bearing deposits ........................................... 6,172 6,844
Investment securities available for sale ............................ 41,569 27,566
Investment securities (market value - March 31, $15,616; June 30,
$19,393)........................................................... 15,565 19,469
Accrued interest receivable ......................................... 2,059 2,108
Loans held for sale ................................................. 133 106
Loans receivable, less allowance for loan losses of $3,251 and $2,855 264,227 257,040
Property and equipment .............................................. 6,969 5,442
Other assets ........................................................ 2,739 2,488
--------- ---------
Total Assets ................................................... $ 343,865 $ 323,673
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY:
Deposit accounts .................................................... $ 278,370 $ 260,750
Securities sold under agreements to repurchase ...................... 197 12
Advance payments by borrowers for taxes and insurance ............... 2,267 2,999
Employee Stock Ownership Plan ("ESOP") debt ......................... 195 333
Federal Home Loan Bank advances ..................................... 30,667 30,198
Other borrowings .................................................... 303 249
Accrued interest payable ............................................ 932 788
Other liabilities ................................................... 1,137 1,279
--------- ---------
Total Liabilities .............................................. 314,068 296,608
--------- ---------
Stockholders' Equity:
Preferred stock - $1.00 par value; 5,000,000 shares authorized; none
issued ............................................................ -- --
Common stock - $1.00 par value; 10,000,000 shares authorized;
2,184,753 and 2,072,083 shares issued at March 31 and June 30,
respectively ...................................................... 2,185 2,072
Additional paid-in capital .......................................... 15,127 12,772
Common stock acquired by ESOP ....................................... (195) (333)
Retained earnings - partially restricted ............................ 12,363 12,750
Net unrealized gain on securities available for sale, net of taxes .. 317 3
--------- ---------
Subtotal .......................................................... 29,797 27,264
Treasury stock, at cost (13,213 shares at June 30) .................. -- (199)
--------- ---------
Total Stockholders' Equity ..................................... 29,797 27,065
--------- ---------
Total Liabilities and Stockholders' Equity ..................... $ 343,865 $ 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)
Three Months Ended
March 31,
----------------------------
1998 1997
----------- ------------
<S> <C> <C>
INTEREST INCOME:
Loans ................................................. $ 5,557 $ 5,029
Investment securities and interest-bearing deposits.... 836 541
----------- -----------
Total interest income .............................. 6,393 5,570
----------- -----------
INTEREST EXPENSE:
Deposits .............................................. 2,794 2,572
Securities sold under agreements to repurchase ........ 3 --
Short-term borrowings ................................. 191 79
Long-term borrowings .................................. 288 213
----------- -----------
Total interest expense ............................. 3,276 2,864
----------- -----------
NET INTEREST INCOME ..................................... 3,117 2,706
Provision for loan losses ............................. 201 97
----------- -----------
Net interest income after provision for loan losses 2,916 2,609
----------- -----------
OTHER INCOME:
Service charges and fees .............................. 266 228
Gain (loss) on sale of loans held for sale ............ 10 (2)
Gain on sale of securities available for sale ......... 231 30
Other ................................................. 62 40
----------- -----------
Total other income ................................. 569 296
----------- -----------
OPERATING EXPENSES:
Salaries and employee benefits ........................ 1,043 978
Occupancy and equipment ............................... 435 379
Data processing ....................................... 195 142
Deposit insurance premiums ............................ 41 9
Advertising ........................................... 83 36
Other ................................................. 438 357
----------- -----------
Total operating expenses ........................... 2,235 1,901
----------- -----------
Income before income taxes ............................ 1,250 1,004
Income tax expense .................................... 346 275
----------- -----------
NET INCOME .............................................. $ 904 $ 729
=========== ===========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CHESTER VALLEY BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except for Per Share Amounts)
(continued)
Three Months Ended
March 31,
----------------------------
1998 1997
----------- ------------
<S> <C> <C>
EARNINGS PER SHARE (1):
Basic ................................................. $ 0.42 $ 0.34
=========== ===========
Diluted ............................................... $ 0.41 $ 0.34
=========== ===========
DIVIDENDS PER SHARE PAID DURING PERIOD (1) .............. $ 0.11 $ 0.08
=========== ===========
WEIGHTED AVERAGE SHARES OUTSTANDING (1):
Basic ................................................. 2,178,362 2,151,374
=========== ===========
Diluted ............................................... 2,212,732 2,160,747
=========== ===========
</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 SUBSIDIAR
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except for Per Share Amounts)
Nine Months Ended
March 31,
-------------------------
1998 1997
---------- ----------
<S> <C> <C>
INTEREST INCOME:
Loans ................................................. $ 16,628 $ 15,022
Investment securities and interest-bearing deposits ... 2,420 1,533
---------- ----------
Total interest income .............................. 19,048 16,555
---------- ----------
INTEREST EXPENSE:
Deposits .............................................. 8,518 7,584
Securities sold under agreements to repurchase ........ 6 51
Short-term borrowings ................................. 738 231
Long-term borrowings .................................. 635 595
---------- ----------
Total interest expense ............................. 9,897 8,461
---------- ----------
NET INTEREST INCOME ..................................... 9,151 8,094
Provision for loan losses ............................. 441 357
---------- ----------
Net interest income after provision for loan losses 8,710 7,737
---------- ----------
OTHER INCOME:
Service charges and fees .............................. 849 736
Gain on sale of loans held for sale ................... 9 1
Gain on sale of securities available for sale ......... 397 98
Other ................................................. 147 137
---------- ----------
Total other income ................................. 1,402 972
---------- ----------
OPERATING EXPENSES:
Salaries and employee benefits ........................ 3,050 2,780
Occupancy and equipment ............................... 1,286 1,117
Data processing ....................................... 538 450
SAIF special assessment ............................... -- 1,387
Deposit insurance premiums ............................ 120 270
Advertising ........................................... 202 169
Other ................................................. 1,285 1,026
---------- ----------
Total operating expenses ........................... 6,481 7,199
---------- ----------
Income before income taxes ............................ 3,631 1,510
Income tax expense .................................... 1,043 324
---------- ----------
NET INCOME .............................................. $ 2,588 $ 1,186
========== ==========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CHESTER VALLEY BANCORP INC. AND SUBSIDIAR
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except for Per Share Amounts)
(continued)
Nine Months Ended
March 31,
-------------------------
1998 1997
---------- ----------
<S> <C> <C>
EARNINGS PER SHARE (1):
Basic ................................................. $ 1.19 $ 0.55
========== ==========
Diluted ............................................... $ 1.18 $ 0.55
========== ==========
DIVIDENDS PER SHARE PAID DURING PERIOD (1) .............. $ 0.32 $ 0.23
========== ==========
WEIGHTED AVERAGE SHARES OUTSTANDING (1):
Basic ................................................. 2,167,667 2,150,912
========== ==========
Diluted ............................................... 2,199,719 2,160,870
========== ==========
</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)
Nine Months Ended March 31,
---------------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net income ......................................................................... $ 2,588 $ 1,186
Add (deduct) items not affecting cash flows from operating activities:
Depreciation
Provision for losses on loans ................................................... 516 426
Gain on sale of loans held for sale ............................................. 441 357
Gain on sale of securities available for sale ................................... (9) (1)
Amortization of deferred loan fees, discounts and premiums ...................... (397) (98)
Decrease (increase) in accrued interest receivable .............................. (422) (392)
Increase in other assets ........................................................ 49 (224)
Increase (decrease) in other liabilities ........................................ (251) (618)
Increase in accrued interest payable ............................................ (142) 536
144 133
--------- ---------
Net cash flows from operating activities ........................................... 2,517 1,305
--------- ---------
Cash flows from (used in) investment activities:
Capital expenditures ............................................................ (2,043) (510)
Net increase in loans and loans held for sale ................................... (11,532) (21,672)
Proceeds from sale of loans held for sale ....................................... 4,099 905
Proceeds from maturities, payments and calls of investment securities ........... 4,431 4,066
Purchase of investment securities ............................................... (533) (221)
Purchase of securities available for sale ....................................... (243,340) (69,909)
Proceeds from sale of securities available for sale ............................. 230,263 50,776
Proceeds from real estate owned ................................................. -- 86
--------- ---------
Net cash flows used in investment activities ....................................... (18,655) (36,479)
--------- ---------
Cash flows from (used in) financing activities:
Net increase in deposits before interest credited ............................... 10,335 7,716
Interest credited to deposits ................................................... 7,285 6,382
Proceeds under securities sold under agreements to repurchase ................... 185 169
Proceeds from FHLB advances ..................................................... 21,275 18,914
Repayments of FHLB advances ..................................................... (20,806) (1,474)
Decrease in advance payments by borrowers for taxes and insurance ............... (732) (806)
Net increase in other borrowings ................................................ 54 250
Cash dividends on common stock .................................................. (812) (533)
Repayments of principal on ESOP debt ............................................ (138) (132)
Sale of common stock under the dividend reinvestment plan ....................... 408 (9)
Payment for fractional shares ................................................... (7) (17)
Stock options exercised ......................................................... 268 290
Reduction of common stock acquired by ESOP ...................................... 138 132
Stock repurchased as treasury stock ............................................. (165) (324)
--------- ---------
Net cash flows from financing activities ........................................... 17,288 30,558
--------- ---------
Increase (decrease) in cash and cash equivalents ................................... 1,150 (4,616)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
CHESTER VALLEY BANCORP INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
(continued)
Nine Months Ended March 31,
---------------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash and cash equivalents:
Beginning of period ............................................................. 9,454 10,312
--------- ---------
End of period ................................................................... $ 10,604 $ 5,696
========= =========
Supplemental disclosures:
Cash payments during the year for:
Taxes ........................................................................ $ 1,081 $ 617
Interest...................................................................... $ 9,753 $ 8,328
Non-cash items:
Acquisition of real estate in settlement of loans ............................... $ -- $ 448
Stock dividend issued............................................................ $ 2,155 $ 1,516
Net unrealized gain (loss)on investment securities available for sale ........... $ 513 $ (240)
Tax effect on unrealized gain (loss) on investment securities available for sale. $ 199 $ (82)
</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 nine-month
periods ended March 31, 1998, 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
<PAGE>
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.
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 as to 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,
<PAGE>
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 nine-month period
ended March 31, 1998, the recorded investment in impaired
loans was not material. The Company's policy for the
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.
Loans Held for Sale
The Company periodically identifies certain loans as held for
sale at the time of their 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
<PAGE>
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.
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 EPS
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. This statement requires
restatement of all prior-period EPS data presented. The
Company adopted SFAS No. 128 as of December 31, 1997.
Accordingly, 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 Nine Months Ended
March 31, March 31,
------------------------- -------------------------
(Dollars in Thousands)
Basic EPS Computation 1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Numerator ............. $ 904 $ 729 $ 2,588 $ 1,186
Denominator:
Weighted average
common shares
outstanding....... 2,178,362 2,151,374 2,167,667 2,150,912
Basic EPS ............. $ .42 $ .34 $ 1.19 $ .55
========== ========== ========== ==========
Diluted EPS Computation
Numerator ............. $ 904 $ 729 $ 2,588 $ 1,186
Denominator:
Weighted average
common shares
outstanding ...... 2,178,362 2,151,374 2,167,667 2,150,912
Options outstanding 34,370 9,373 32,052 9,958
---------- ---------- ---------- ----------
Total shares ....... 2,212,732 2,160,747 2,199,719 2,160,870
========== ========== ========== ==========
Diluted EPS ........... $ .41 $ .34 $ 1.18 $ .55
========== ========== ========== ==========
</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 March 31, At June 30,
1998 1997
--------- ---------
(Dollars in Thousands)
<S> <C> <C>
First mortgage loans:
Residential ........................... $ 156,259 $ 159,431
Construction-residential .............. 10,722 9,873
Land acquisition and
development ........................ 6,713 6,763
Commercial ............................ 35,482 33,981
Construction-commercial ............... 7,669 6,271
Commercial business ...................... 11,039 7,863
Consumer ................................. 50,273 47,343
--------- ---------
Total loans .............................. 278,157 271,525
--------- ---------
Less:
Undisbursed loan proceeds:
Construction-residential ........... (6,103) (6,599)
Construction-commercial ............ (3,044) (3,494)
Deferred loan fees - net .............. (1,532) (1,537)
Allowance for loan losses ............. (3,251) (2,855)
--------- ---------
Net loans ................................ $ 264,227 $ 257,040
========= =========
</TABLE>
NOTE 4 - COMMITMENTS
Commitments to potential mortgagors of the Bank amounted to
$8.52 million as of March 31, 1998, of which $895,000 was for
variable-rate loans. The balance of the commitments represents
$7.63 million of fixed-rate loans bearing interest rates of
between 5.50% and 9.625%. At March 31, 1998, the Company had
$9.15 million of undisbursed construction loan funds as well
as $15.26 million of undisbursed remaining consumer and
commercial 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 March 31, 1998, 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>
March 31, 1998 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 $ 28,731 $ 28,731 $ 30,632 $ 26,750 $ 26,750 $ 29,057
Minimum Required Regulatory 6,870 13,740 16,746 4,855 9,710 15,689
---------- ----------- ------------- ----------- ---------- ------------
Excess Regulatory Capital $ 21,861 $ 14,991 $ 13,886 $ 21,895 $ 17,040 $ 13,368
========== =========== ============= =========== ========== ============
Regulatory Capital as a
Percentage of Assets 8.36% 8.36% 14.63% 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 6.86% 5.36% 6.63% 6.76% 5.26% 6.82%
========== =========== ============= =========== ========== ============
</TABLE>
Neither the Company nor the Bank is under any agreement with regulatory
authorities, nor are they aware of any current recommendations by regulatory
authorities which, if they were to be implemented, would have a material effect
on the liquidity, capital resources or operations of the Company and the Bank,
taken as a whole.
NOTE 6 - PENDING ACQUISITION
On December 10, 1997 the Company entered into a definitive
agreement to acquire Philadelphia Corporation for Investment
Services ("PCIS"). PCIS is a securities broker/dealer and
investment advisor with offices in Wayne and Philadelphia,
Pennsylvania. It is registered as a broker/dealer in all 50
states and the District of Columbia, and as an investment
<PAGE>
advisor with the Securities and Exchange Commission ("SEC").
Under the terms of the agreement, PCIS shareholders will
receive 23.4239 shares of Chester Valley Bancorp common stock
for each PCIS share owned. The transaction will be accounted
for as a pooling-of-interest and is subject to regulatory and
PCIS shareholder approvals. As of March 31, 1998 the total
value of the transaction is approximately $4.71 million and is
subject to change based on the Company's stock price prior to
finalization of the acquisition. When consummated, the
transaction will enhance both the Company's and PCIS's ability
to meet customers' complete financial services needs while
continuing to provide the personal service and professional
trust which are so important in fiduciary relationships and
which is a basic corporate tenant of the Company's operating
philosophy.
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATION
FINANCIAL CONDITION
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, but are not limited to, changes in
general economic and market conditions, 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 and other factors
discussed in documents filed by the Company with the SEC periodically.
The Company's total assets increased to $343.87 million at March 31, 1998, from
$323.67 million at June 30, 1997, principally due to a $14.00 million increase
in investment securities available for sale accompanied by a $7.19 million
increase in loans receivable. Such increases were funded in large part by an
increase in deposits from $260.75 million to $278.37 million during the same
period.
Stockholders' equity increased to $29.80 million at March 31, 1998, from $27.07
million at June 30, 1997, primarily as a result of net income of $2.59 million,
the recognition of an increase in net unrealized gains on securities available
for sale, net of taxes, of $314,000, the sale of $408,000 of common stock in
connection with the Company's dividend reinvestment plan, $268,000 received as a
result of the exercise of stock options, and the reduction in the principal
balance of the ESOP debt by $138,000. The increase in stockholders' equity was
partially offset by the payment during the period of cash dividends totaling
$812,000 combined with the repurchase of $165,000 of the Company's common stock
during the nine month period ended March 31, 1998.
<PAGE>
RESULTS OF OPERATIONS
Net interest income, on a fully tax equivalent basis, increased 15.8% to $3.22
million for the three-month period ended March 31, 1998, and 14.2% to $9.48
million for the nine-month period ended March 31, 1998, compared to $2.78
million and $8.30 million, respectively, for the same periods in 1997. Total
interest income, on a fully tax equivalent basis, increased to $6.50 million and
$19.38 million for the three- and nine- month periods ended March 31, 1998, from
$5.64 million and $16.76 million for the same periods in 1997, primarily as a
result of the combined effects of both an increase in both the average balance
of interest-earning assets as well as the average yield earned on such assets.
The average balance of interest-earning assets increased to $318.47 million and
$315.11 million for the three- and nine-month periods ended March 31, 1998,
respectively, from $283.16 million and $276.30 million, respectively, for the
same periods in 1997. In addition, the average yield on interest-earning assets
increased to 8.16% and 8.20% for the three- and nine-month periods ended March
31, 1998, from 7.97% and 8.09% for the same periods in 1997.
Loan originations of $69.88 million during the nine months ended March 31, 1998,
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 49% of the loan
originations during the nine months ended March 31, 1998, 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.
Total interest expense increased to $3.28 million and $9.90 million from $2.86
million and $8.46 million for the respective three- and nine-month periods in
1998 and 1997, largely as a result of the increase in the average balance of
interest-bearing liabilities to $275.86 million and $272.43 million for the
three and nine months ended March 31, 1998, respectively, as compared to $245.93
million and $238.79 million for the same periods in 1997. Also contributing to
the increase in interest expense was an increase in the average rate paid on
such liabilities to 4.76% and 4.85% for the respective three- and nine-month
periods ended March 31, 1998, from 4.65% and 4.72% for the same periods in 1997,
respectively.
The tax equivalent interest rate spread decreased to 3.36% from 3.37%, and the
average net yield on interest-earning assets remained the same at 4.01% for the
nine-month periods ended March 31, 1998 and 1997, respectively, due to the
reasons discussed above.
Provision for Loan Losses
The Company provided $201,000 and $441,000 for loan losses during the three- and
nine-month periods ended March 31, 1998, respectively, as compared to $97,000
and $357,000, respectively, for the same periods in 1997. These provisions have
been added to the Company's allowance for loan losses due to current economic
conditions and management's assessment of the inherent risk of loss existing in
the loan portfolio. At March 31, 1998, the allowance for loan losses totaled
$3.25 million or 1.22% of net loans (before allowance), compared to $2.86
<PAGE>
million or 1.10% of net loans and $2.71 million or 1.10% of net loans at June
30, 1997, and March 31, 1997, respectively. As a percentage of non-performing
assets, the allowance for possible loan losses was 390% at March 31, 1998,
compared to 220% at June 30, 1997, and further compared to 187% at March 31,
1997.
Other Income
Total other income increased to $569,000 and $1.40 million during the three- and
nine-month periods ended March 31, 1998, respectively, as compared to $296,000
and $972,000 during the same periods in 1997 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 $849,000 from $736,000 during the nine-month periods ended
March 31, 1998 and 1997, respectively. Gains on sales of securities increased to
$397,000 for the nine months ended March 31, 1998, from $98,000 for the same
period in 1997.
Operating Expenses
Total operating expenses for the three-month period ended March 31, 1998,
increased to $2.24 million from $1.90 million for the same three-month period in
1997. Total operating expenses for the nine-month period ended March 31, 1998,
decreased to $6.48 million from $7.20 million for the same period in 1997.
Operating expenses for the nine months ended March 31, 1997 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 quarter ending December 31, 1996.
Excluding the $1.39 million one-time SAIF assessment, the Company's operating
expenses would have increased during the nine months ended March 31, 1998, as
compared to the same period in 1997. The increase in operating expenses for the
three- and nine- 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
nine-month period of fiscal 1998 as opposed to only the six-month period in
fiscal 1997.
Income Tax Expense
Income tax expense was $346,000 and $1.04 million for the three- and nine-month
periods ended March 31, 1998, respectively, as compared to $275,000 and $324,000
for the same periods in 1997, reflecting the increased profitability of the
Company in the 1998 periods.
<PAGE>
ASSET QUALITY
Non-performing assets are comprised of non-accrual loans and REO and totaled
$833,000 and $748,000 at March 31, 1998, 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 March
31, 1998, the Company did not have any loans greater than 90 days delinquent
which were accruing interest. Non-performing assets to total assets and
non-performing loans to total assets were .24% at March 31, 1998, compared to
.23% at June 30, 1997, and .47% and .32%, respectively, at March 31, 1997.
Non-performing loans, which totaled $833,000 at March 31, 1998, consisted of
eight residential mortgage loans aggregating $584,000, one construction loan
totaling $55,000, and $194,000 in consumer loans.
At March 31, 1998, the Company's classified assets, which consisted of assets
classified as substandard, doubtful or loss, as well as REO, totaled $1.24
million compared to $1.40 million at June 30, 1997, and further compared to
$1.87 million at March 31, 1997. Included in the assets classified substandard
at March 31, 1998 and 1997, 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 $409,000 of classified assets which were not
considered non-performing at March 31, 1998, were comprised primarily of three
loans to one borrower totaling $254,000. Such loans 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 nine 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 March 31, 1998, the total of approved mortgage loan
commitments amounted to $8.52 million. In addition, at such date the Company had
$9.15 million of undisbursed construction loan funds and $15.26 million of
undisbursed remaining consumer and commercial line balances. Certificates of
deposit totaling $53.02 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 February 18, 1998, the Board of Directors
declared a quarterly cash dividend of $.11 per share, which was paid on March
19, 1998, to stockholders of record as of March 5, 1998.
<PAGE>
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 4%
of its net withdrawable accounts plus short-term borrowings. 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 March 31,
1998 was 13.38%.
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 March 31, 1998, $125.38 million, or 37.7% of the Company's
interest-sensitive assets and $156.79 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 9.1%. The table on
page 23 summarizes the contractual maturities or repricing periods of the
Company's interest-earning assets and interest-bearing liabilities as of March
31, 1998. 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 23 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.
<PAGE>
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 March 31, 1998, the Company serviced $27.13 million
of mortgage loans for others. Sales of loans produce future servicing income and
provide funds for additional lending and other purposes.
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 or periods set forth in that financial
statement. SFAS No. 130 is effective for fiscal years beginning after December
15, 1997. The disclosures contained in this Form 10-QSB are in compliance with
SFAS No.130.
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>
In February 1998, the FASB issued SFAS No. 132, "Employer's Disclosures about
Pensions and other Post Retirement Benefits." This statement revises employer's
disclosures about pension and other postretirement benefit plans. It does not
change the measurement or recognition of those plans. It standardizes the
disclosure requirements for pensions and other postretirement benefits to the
extent practicable, requires additional information on changes in the benefit
obligations and fair values of plan assets that will facilitate financial
analysis, and eliminates certain disclosures that are no longer as useful as
they were when FASB Statements No. 87, "Employers' Accounting for Pensions," No.
88, "Employers" Accounting for Settlements and Curtailments of Defined Benefit
Pension Plans and for Termination Benefits," and No. 106, "Employers' Accounting
for Other Than Pensions," were issued. This statement, requires changes in
disclosures and would not effect the financial condition of the Company. This
Statement is effective for fiscal years beginning after December 15, 1997.
<PAGE>
<TABLE>
<CAPTION>
Interest Rate Sensitivity Analysis at March 31, 1998
(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) $ 23,128 $ 14,915 $ 23,356 $ 20,644 $ 6,832
Balloon and fixed-rate mortgages (2) ...... 4,661 3,630 10,861 23,172 26,585
Consumer (2) (3) .......................... 7,677 1,223 2,523 11,173 8,977
Commercial business ....................... 5,708 264 522 2,035 1,954
Securities and interest-bearing deposits (4) .. 13,329 8,322 5,264 6,484 6,063
-------- -------- -------- -------- --------
Total interest-earning assets ................. $ 54,503 $ 28,354 $ 42,526 $ 63,508 $ 50,411
-------- -------- -------- -------- --------
INTEREST-BEARING LIABILITIES:
Savings accounts (5) .......................... $ 500 $ 498 $ 1,002 -- --
NOW accounts (5) .............................. 450 450 900 -- --
Money market accounts (5) ..................... 31,040 -- -- -- --
Certificate accounts .......................... 53,519 21,651 35,461 38,416 11,803
Securities sold under agreements to
repurchase ................................. 197 -- -- -- --
Borrowings .................................... 8,909 1,270 939 7,191 9,728
-------- -------- -------- -------- --------
Total interest-bearing liabilities ............ $ 94,615 $ 23,869 $ 38,302 $ 45,607 $ 21,531
-------- -------- -------- -------- --------
Cumulative excess of interest-earning assets
to interest-bearing liabilities ............... ($40,112) ($35,627) ($31,403) ($13,502) $ 15,378
======== ======== ======== ======== ========
Cumulative ratio of interest rate-sensitive
assets to interest rate-sensitive liabilities . 57.6% 69.9% 80.0% 93.3% 106.9%
======== ======== ======== ======== ========
Cumulative difference as a percentage of
total assets .................................. (11.7%) (10.4%) (9.1%) (3.9%) 4.5%
======== ======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
Interest Rate Sensitivity Analysis at March 31, 1998
(Dollars in thousands)
More Than
Five Years Total
-------- --------
<S> <C> <C>
INTEREST-EARNING ASSETS:
Loans (1):
Adjustable- and floating-rate mortgages (2) $ 916 $ 89,792
Balloon and fixed-rate mortgages (2) ...... 48,998 117,906
Consumer (2) (3) .......................... 18,700 50,273
Commercial business ....................... 556 11,039
Securities and interest-bearing deposits (4) .. 23,844 63,306
-------- --------
Total interest-earning assets ................. $ 93,014 $332,316
-------- --------
INTEREST-BEARING LIABILITIES:
Savings accounts (5) .......................... $ 24,867 $ 26,867
NOW accounts (5) .............................. 28,382 30,182
Money market accounts (5) ..................... -- 31,040
Certificate accounts .......................... 2,867 163,717
Securities sold under agreements to
repurchase ................................. -- 197
Borrowings .................................... 3,128 31,165
-------- --------
Total interest-bearing liabilities ............ $ 59,244 $283,168
-------- --------
Cumulative excess of interest-earning assets
to interest-bearing liabilities ............... $ 49,148 $ 49,148
======== ========
Cumulative ratio of interest rate-sensitive
assets to interest rate-sensitive liabilities . 117.4% 117%
======== ========
Cumulative difference as a percentage of
total assets .................................. 14.3% 14.3%
======== ========
</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
Exhibit 27 Financial Data Schedules
<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 5-12-98 /s/Ellen Ann Roberts
--------------------
Ellen Ann Roberts
Chairman and Chief Executive Officer
Date 5-12-98 /s/Christine N. Dullinger
-------------------------
Christine N. Dullinger
Treasurer and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C> <C>
<PERIOD-TYPE> 3-MOS 9-MOS
<FISCAL-YEAR-END> JUN-30-1998 JUN-30-1998
<PERIOD-END> MAR-31-1998 MAR-31-1998
<CASH> 4,432 4,432
<INT-BEARING-DEPOSITS> 6,172 6,172
<FED-FUNDS-SOLD> 0 0
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 41,569 41,569
<INVESTMENTS-CARRYING> 15,565 15,565
<INVESTMENTS-MARKET> 19,393 19,393
<LOANS> 267,478 267,478
<ALLOWANCE> 3,251 3,251
<TOTAL-ASSETS> 343,865 343,865
<DEPOSITS> 278,370 278,370
<SHORT-TERM> 0 0
<LIABILITIES-OTHER> 4,728 4,728
<LONG-TERM> 30,970 30,970
0 0
0 0
<COMMON> 2,185 2,185
<OTHER-SE> 27,612 27,612
<TOTAL-LIABILITIES-AND-EQUITY> 343,865 343,865
<INTEREST-LOAN> 5,557 16,628
<INTEREST-INVEST> 836 2,420
<INTEREST-OTHER> 0 0
<INTEREST-TOTAL> 6,396 19,048
<INTEREST-DEPOSIT> 2,794 8,518
<INTEREST-EXPENSE> 3,276 9,897
<INTEREST-INCOME-NET> 3,117 9,151
<LOAN-LOSSES> 201 441
<SECURITIES-GAINS> 231 397
<EXPENSE-OTHER> 2,235 6,481
<INCOME-PRETAX> 1,250 3,631
<INCOME-PRE-EXTRAORDINARY> 1,250 3,631
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 904 2,588
<EPS-PRIMARY> .42 1.19
<EPS-DILUTED> .41 1.18
<YIELD-ACTUAL> 4.04 4.01
<LOANS-NON> 833 833
<LOANS-PAST> 0 0
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 1,242 1,242
<ALLOWANCE-OPEN> 3,080 2,855
<CHARGE-OFFS> 30 50
<RECOVERIES> 1 5
<ALLOWANCE-CLOSE> 3,251 3,251
<ALLOWANCE-DOMESTIC> 3,251 3,251
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 1,959 1,959
</TABLE>
