<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1996
-------------
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------- ------------------
Commission File Number: 0-18126
-------
FINANCIAL BANCORP, INC.
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 06-1391814
-------- ----------
(State or other jurisdiction (I.R.S. Employer identification No.)
incorporation or organization)
42-25 Queens Boulevard, Long Island City, NY 11104
---------------------------------------------------
(Address of principal executive offices) (Zip Code)
(718) 729-5002
--------------
(Registrant's telephone number, including area code)
Not Applicable
- --------------------------------------------------------------------------------
(Former name, former address and former fiscal year, if changed last
report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15 (d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. (1) X Yes No
----- ----
(2) X Yes No
----- ----
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
There were 1,796,122 shares of the Registrant's common stock outstanding
as of August 12, 1996.
-1-
<PAGE> 2
FINANCIAL BANCORP, INC.
Form 10-Q
Index
Part I - Financial Information Page
- ------------------------------ ----
Item 1. Financial Statements
Consolidated Statements of Financial Condition
as of June 30, 1996 (Unaudited) and September 30, 1995 3
Consolidated Statements of Income for the
Three and Nine Months ended June 30, 1996 and 1995
(Unaudited) 4
Consolidated Statements of Cash Flows for the
Nine Months ended June 30, 1996 and 1995 (Unaudited) 5-6
Consolidated Statement of Changes in
Stockholders' Equity Nine Months
ended June 30, 1996 (Unaudited) 7
Notes to Consolidated Financial Statements 8-12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13-19
Part II - Other Information
- ---------------------------
Item 1. Legal Proceedings 20
Item 2. Changes in Securities
Not applicable. 20
Item 3. Defaults Upon Senior Securities
Not applicable. 20
Item 4. Submission of Matters to a Vote of Security
Holders
Not applicable. 20
Item 5. Other Information 20
Item 6. Exhibits
Exhibit 11: Computation of per share earnings 22
Reports on Form 8-K
Signature Page 23
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<PAGE> 3
<TABLE>
<CAPTION>
FINANCIAL BANCORP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(UNAUDITED)
JUNE 30, SEPTEMBER 30,
1996 1995
-------------- ----------------
ASSETS
- ------
<S> <C> <C>
Cash and amounts due from depository institutions $2,423,581 $2,395,316
Federal funds sold and securities purchased under agreements
to resell 2,750,000 5,458,000
------------- -------------
Total cash and cash equivalents 5,173,581 7,853,316
Investment securities available for sale 3,592,812 0
Investment securities held to maturity, net; estimated fair
value of $46,410,000 and $38,857,000 at June 30, 1996
and September 30, 1995, respectively 48,088,855 38,935,960
Mortgage-backed securities available for sale 5,076,828 0
Mortgage-backed securities held to maturity, net;
estimated fair value of $52,228,000 and $62,544,000 at
June 30, 1996 and September 30, 1995, respectively 52,284,590 62,008,234
Loans receivable, net 137,017,711 110,061,579
Real estate owned, net 597,991 591,027
Investments in real estate, net 3,485,761 3,531,166
Premises and equipment, net 2,538,732 1,862,127
Federal Home Loan Bank of New York stock, at cost 1,675,800 1,423,000
Accrued interest receivable, net 1,774,318 1,575,020
Other assets 1,190,200 981,927
------------ ------------
Total assets $262,497,179 $228,823,356
============ ============
Liabilities and stockholders' equity
- ------------------------------------
Deposits $200,646,155 $186,491,588
Advance payments by borrowers for taxes and insurance 1,021,281 954,080
Advances from Federal Home Loan Bank of New York 15,825,000 5,375,000
Securities sold under agreements to repurchase 7,728,750 7,126,250
Treasury tax and loan account and other short term borrowings 9,437,203 0
Other liabilities 1,614,567 1,697,410
------------ -----------
Total liabilities 236,272,956 201,644,328
------------ -----------
Stockholders' equity
Preferred stock, $0.01 par value, 2,500,000 shares
authorized; none issued,
Common stock, $0.01 par value, 6,000,000 shares authorized;
2,185,000 shares issued, 1,796,122 and 1,971,963 shares
outstanding at June 30, 1996 and September 30, 1995,
respectively 21,850 21,850
Additional paid-in capital 20,133,192 20,130,021
Retained earnings - substantially restricted 12,674,542 11,544,464
Common stock acquried by Employee Stock Ownership Plan (ESOP) (1,213,886) (1,335,278)
Common stock acquired by Recognition & Retention Plan (RRP) (488,287) (590,487)
Unrealized loss on securities available for sale, net
of income taxes (7,327) 0
Treasury stock, at cost; 388,878 and 213,037 shares at June 30,
1996 and at September 30, 1995, respectively (4,895,861) (2,591,542)
---------- ----------
Total stockholders' equity 26,224,223 27,179,028
---------- ----------
Total liabilities and stockholders' equity $262,497,179 $228,823,356
============ ============
See accompanying notes to consolidated financial statements.
</TABLE>
-3-
<PAGE> 4
<TABLE>
<CAPTION>
FINANCIAL BANCORP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
---------------------- -------------------
JUNE 30, JUNE 30,
---------------------- --------------------
1996 1995 1996 1995
---------- ---------- --------- ---------
<S> <C> <C> <C> <C>
Interest income:
Loans $2,723,674 $1,917,207 $7,562,761 $5,388,279
Mortgage-backed securities 957,329 1,130,628 3,042,021 3,104,347
Investments 837,766 775,012 2,499,764 1,594,206
Federal funds sold and securities purchased
under agreements to resell 13,086 20,813 32,321 123,403
---------- --------- ---------- ----------
Total interest income 4,531,855 3,843,660 13,136,867 10,210,235
---------- --------- ---------- ----------
Interest expense:
Deposits 1,867,413 1,757,720 5,658,326 4,251,395
Advances and other borrowed money 263,534 29,835 713,386 57,672
---------- --------- ---------- ---------
Total interest expense 2,130,947 1,787,555 6,371,712 4,309,067
Net interest income 2,400,908 2,056,105 6,765,155 5,901,168
Provision for loan losses 159,453 32,391 289,453 98,183
--------- --------- --------- ---------
Net interest income after provision for loan losses 2,241,455 2,023,714 6,475,702 5,802,985
Non-interest income:
Fees and service charges 111,026 78,929 282,870 206,499
Gain (loss) on investment securities 31,009 0 51,029 (3,984)
(Loss) from real estate operations (265,797) (25,000) (307,845) (101,074)
Miscellaneous 14,225 6,878 33,513 16,395
--------- --------- --------- ---------
Total non-interest income (109,537) 60,807 59,567 117,836
--------- --------- --------- ---------
Non-interest expenses:
Salaries and employee benefits 647,863 661,664 1,959,045 1,977,160
Net occupancy expense of premises 121,744 145,789 353,077 397,171
Equipment 141,559 127,600 417,969 367,769
Advertising 12,880 41,708 57,947 117,748
Loss from real estate owned 36,768 10,802 82,715 36,054
Federal insurance premium 98,051 97,485 285,832 282,885
Miscellaneous 272,470 247,130 829,487 802,057
--------- -------- -------- --------
Total non-interest expenses 1,331,335 1,332,178 3,986,072 3,980,844
Income before income taxes 800,583 752,343 2,549,197 1,939,977
Income taxes 295,388 317,157 1,065,643 816,857
--------- -------- --------- ---------
Net income $505,195 $435,186 $1,483,554 $1,123,120
========= ======== ========== ==========
Net income per common share & common stock
equivalents $0.29 $0.22 $0.82 $0.55
========= ======== ========== ==========
Weighted average number of common shares & common
stock equivalents 1,748,700 2,006,000 1,805,300 2,056,200
========= ========= ========= =========
See accompanying notes to consolidated financial statements
</TABLE>
-4-
<PAGE> 5
<TABLE>
<CAPTION>
Financial Bancorp, Inc.
And Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
----------------------------------
June 30,
----------------------------------
1996 1995
--------------- ----------------
<S> <C> <C>
Cash flow from operating activities:
Net income $1,483,554 $1,123,120
Adjustments to reconcile net income to net cash
provided by operating activities
Loss on write-down of investment securities 0 3,984
Loss (Gain) on sale of real estate owned (5,837) (10,459)
(Gain) on sale of securities available for sale (51,029) 0
Net amortization of premiums and accretion
of discounts on investment securities (38,317) 21,280
Net amortization of premiums and accretion
of discounts on mortgage-backed securities 4,923 (40,194)
Accretion of deferred loan fees and discounts (67,587) (22,872)
Depreciation and amortization of premises
and equipment 223,998 229,421
Provision for loan losses 289,453 98,183
Provision for losses on real estate owned 43,229 15,021
Cost of ESOP and RRP 226,763 192,592
Writedown of investment in real estate 262,500 0
Deferred income taxes 18,282 (13,594)
(Increase) in accrued interest receivable, net (199,298) (862,962)
(Increase) decrease in refundable income taxes (251,524) 241,603
(Increase) decrease in other assets 30,726 (87,285)
(Decrease) increase in other liabilities (82,843) 582,495
----------- -----------
Net cash provided by operating activities 1,886,993 1,470,333
----------- -----------
Cash flows from investing activities:
Purchases of investment securities available for sale (8,596,719) 0
Purchases of investment securities (43,040,000) (27,413,729)
Proceeds from sales of investment securities available for sale 7,028,594 0
Proceeds from maturities of investment securities 31,930,000 0
Purchase of mortgage securities available for sale (5,068,148) 0
Purchases of mortgage-backed securities held to maturity 0 (19,294,196)
Purchases of mortgage loans (14,873,829) 0
Proceeds from principal repayments on
mortgage-backed securities 9,718,721 4,309,652
Loan originations, net of repayments (12,403,138) (13,484,854)
Additions to premises and equipment (1,088,198) (500,584)
Proceeds from sale of and insurance recoveries
on real estate owned 65,486 701,080
Capitalized expenses on real estate owned (10,873) (60,655)
Purchase of FHLB of NY stock (252,800) (155,100)
Net cash received on acquisition of branch 0 14,678,227
Net (increase) in investments in real estate (29,500) (1,259,549)
----------- -----------
Net cash used in investing activities (36,620,404) (42,479,708)
----------- -----------
See accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
Financial Bancorp, Inc.
And Subsidiaries
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
Nine Months Ended
-------------------------------------
June 30,
-------------------------------------
1996 1995
------------- -------------
<S> <C> <C>
Cash flows from financing activities:
Net increase in deposits $14,154,567 $26,860,289
Proceeds from FHLB of NY advances 9,200,000 0
Net increase in short-term borrowings from FHLB of NY 1,250,000 9,249,831
Proceeds from reverse repurchase agreements 25,828,750 2,102,500
Repayments of reverse repurchase agreements (25,226,250) 0
Net increase in other short-term borrowings 9,437,203 0
Conversion expenses 0 (43,099)
Increase in advance payments by
borrowers for taxes and insurance 67,201 (116,050)
Dividends paid (353,476) (198,471)
Purchase of RRP shares 0 (681,331)
Purchase of treasury stock (2,304,319) (1,177,094)
----------- -----------
Net cash provided by financing activities 32,053,676 35,996,575
----------- -----------
Net (decrease) in cash and cash equivalents (2,679,735) (5,012,800)
Cash and cash equivalents - beginning 7,853,316 14,479,514
---------- ----------
Cash and cash equivalents - ending $5,173,581 $9,466,714
========== ==========
Supplemental schedule of noncash investing and
financing activities:
Loans transferred to real estate owned $247,469 $509,250
======== ========
Loans to facilitate sale of real estate owned $148,500 $0
======== ========
Property transferred to investment in real estate $195,724 $0
======== ========
Transfer to investment securities available for sale
Investment securities $1,989,839 $0
========== ========
Unrealized (loss) on investment securities and mortgage -
backed securities available for sale ($13,084) $0
Deferred income taxes 5,757 0
--------- --------
($7,327) $0
=========== ========
Supplemental disclosures of cash flow information:
Cash paid (net of refunds received) during the year for:
Federal, state and city income taxes 1,299,000 553,800
========== ========
Interest on deposits and borrowed funds $6,361,568 $4,313,617
========== ==========
Assets acquired in connection with acquisition of branch:
Cash and cash equivalents - $14,678,227
Other assets - 8,539
---------- -----------
- $14,686,766
========== ===========
Liabilities assigned in connection with acquisition of branch:
Deposits - $14,813,335
========== ===========
Excess of cost over assets acquired - $126,569
========== ===========
See Accompanying notes to consolidated financial statements.
</TABLE>
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<PAGE> 7
<TABLE>
<CAPTION>
Financial Bancorp. Inc.
And Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
Unrealized
Gain on
Investment
Addi- Retained Common Common Securities
ional Earnings - Stock Stock Available for
Common Paid-in Substantially Acquired Acquired sale Net of Treasury
Stock Capital Restricted By ESOP By RRP Income Taxes Stock Total
-------- ---------- ------------ --------- ---------- ------------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1995 $21,850 $20,130,021 $11,544,464 ($1,335,278) ($590,487) $0 ($2,591,542) $27,179,028
Net Income for the nine months
ended June 30, 1996 - - 1,483,554 - - - - 1,483,554
Common shares repurchased
(186,766 shares) - - - - - - (2,441,319) ($2,441,319)
Amortization relating to
allocation of ESOP stock
and earned portion
of RRP stock - 37,039 - 121,392 102,200 - - $260,631
Adjustment to valuation reserve
on securities available for
sale - - - - - (7,327) - ($7,327)
Stock issued upon exercise of
stock options - (33,868) - - - - 137,000 $103,132
Cash dividends paid on common
stock - - (353,476) - - - - (353,476)
------- ----------- ----------- ---------- -------- ------- ----------- ---------
Balance at June 30, 1996 $21,850 $20,133,192 $12,674,542 ($1,213,886)($488,287) ($7,327) ($4,895,861)$26,224,223
======= =========== =========== ========== ======== ======= =========== ============
See accompanying notes to consolidated financial statements.
</TABLE>
-7-
<PAGE> 8
FINANCIAL BANCORP, INC. AND SUBSIDIARIES
Notes to Unaudited Consolidated Financial Statements
BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements include the
accounts of Financial Bancorp, Inc. (the "Company"), its wholly owned
subsidiaries, 842 Manhattan Avenue Corp. which manages real property, and
Financial Federal Savings Bank (the "Bank") a federally chartered stock
association, and the Bank's wholly owned subsidiaries, Finfed Development Corp.,
which participates in a joint venture for the development of land and sale of
lots, Finfed Funding Ltd., which serves as a conduit for funding investments in
Finfed Development Corp., and F.S. Agency Inc., which is engaged in the sale of
annuities. All significant intercompany accounts and transactions have been
eliminated in consolidation.
Certain information and footnote disclosures required under generally accepted
accounting principles have been condensed or omitted from the following
consolidated financial statements pursuant to the rules and regulations of the
Securities and Exchange Commission. Financial Bancorp, Inc. (the "registrant" or
the "Company") believes that the disclosures presented are adequate to assure
that the information presented is not misleading in any material respect. It is
suggested that the following consolidated financial statements be read in
conjunction with the year-end consolidated financial statements and notes
thereto included in the registrant's Annual Report on Form 10-K for the year
ended September 30, 1995.
The results of operations for the three and nine months ended June 30, 1996 are
not necessarily indicative of the results that may be expected for the entire
fiscal year.
ACCOUNTING STANDARDS
In May 1993, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standards No. 115 ("SFAS 115"), "Accounting for Certain
Investments in Debt and Equity Securities" which is effective for fiscal years
beginning after December 15, 1993. SFAS 115 establishes standards of financial
accounting and reporting for investments in equity securities that have readily
determinable fair values and for all investments in debt securities. Those
investments are required to be classified into one of three categories: held to
maturity, available for sale, or trading. Pursuant to SFAS 115, investments in
debt securities that the enterprise has the positive intent and ability to hold
to maturity are classified as held to maturity securities and reported at
amortized cost. Debt and equity Securities that are bought and held principally
for the purpose of selling them in the near term are classified as trading
securities and are reported at fair value, with unrealized gains and losses
included in earnings. Debt and equity securities not classified as trading
securities nor as held-to-maturity securities shall be classified as available
for sale securities and reported at fair value, with unrealized holding gains or
losses reported in a separate component of stockholders' equity. The initial
application of SFAS 115, effective October 1, 1994 did not result in any
reclassification of securities to the available for sale category, as the Bank
elected to maintain its original intent of holding its investments and
mortgage-backed securities until maturity.
-8-
<PAGE> 9
As permitted by the FASB's "A Guide to Implementation of SFAS 115 on Accounting
for Certain Investments in Debt and Equity Securities", the Bank reassessed the
classification of its held to maturity portfolio during the quarter ended
December 31, 1995. As a result of such reassessment, the Bank transferred
investment securities with a book value of $1,989,839 and a fair value of
$2,005,630 from held to maturity to available for sale. In connection with such
transfer, the unrecognized gain, net of deferred income taxes, of $ 8,843 was
recognized and classified as a separate component of stockholders' equity.
In May 1993, the FASB issued Statement of Financial Accounting Standards No.
114, ("SFAS 114"), "Accounting by Creditors for Impairment of a Loan. "SFAS 114
generally would require all creditors to account for impaired loans, except
those loans that are accounted for at fair value or at the lower of cost or fair
value, at the present value of the expected future cash flows discounted at the
loan's effective interest rate. SFAS 114 also provides that in-substance
foreclosed loans should not be included in real estate owned for financial
reporting purposes, but rather should be included in the loan portfolio. SFAS
114 is effective for fiscal years beginning after December 15, 1994, and earlier
application is encouraged. In October 1994, the FASB amended certain provisions
of SFAS 114 via the issuance of Statement of Financial Accounting Standards No.
118 ("SFAS 118"), "Accounting by Creditors for Impairment of a Loan - Income
Recognition and Disclosures." SFAS 118 amends SFAS 114 by eliminating provisions
describing how a creditor should report income on an impaired loan and
increasing disclosure requirements as to information on recorded investments in
certain impaired loans and how a creditor recognizes related interest income.
The effective date of SFAS 118 is the same as for SFAS 114. SFAS 114, as amended
by SFAS 118, was adopted effective October 1, 1995. Such adoption did not have a
material adverse effect on the Company's consolidated financial condition or
results of operations.
Certain amounts for the three and nine months ended June 30, 1995 have been
reclassified to conform with the current period's presentation.
IMPACT OF NEW ACCOUNTING STANDARDS
In October 1995, FASB issued Statement of Financial Accounting Standards No.
123, ("SFAS 123") "Accounting for Stock-Based Compensation". SFAS 123
establishes financial accounting and reporting standards for stock-based
employee compensation plans. Those plans include all arrangements by which
employees receive shares of stock or other equity instruments of the employer or
the employer incurs liabilities to employees in amounts based on the price of
the employer's stock. SFAS 123 defines a fair value based method of accounting
for an employee stock option or similar equity instrument and encourages all
entities to adopt that method of accounting for all their employee stock
compensation plans. However, it also allows an entity to continue to measure
compensation costs for those plans using the intrinsic valued based method of
accounting prescribed by APB Opinion No. 25, "Accounting for Stock Issued to
Employees". Entities electing to continue the use of the accounting method under
APB Opinion 25 must make pro forma disclosures of net income and, if presented,
earnings per share, as if the fair value based method of accounting defined in
SFAS 123 had been applied. SFAS 123 is effective for transactions entered into
during fiscal years that begin after December 15, 1995. SFAS 123, when adopted,
is not expected to have a material adverse effect on the Company's consolidated
condition or results of operations.
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<PAGE> 10
EARNINGS PER SHARE
Net income per common share and common stock equivalents is computed by dividing
net income by the weighted average number of shares of common stock outstanding
adjusted for the unallocated shares held by the ESOP. Stock options granted are
considered in earnings per share as common stock equivalents, if dilutive, using
the treasury stock method.
INVESTMENT SECURITIES
The following table sets forth information regarding the carrying and estimated
fair value of the Bank's investment securities at the dates indicated:
<TABLE>
<CAPTION>
JUNE 30, 1996 SEPTEMBER 30, 1995
----------------------- ----------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
----------- ---------- ----------- --------
(in thousands)
<S> <C> <C> <C> <C>
Investment Securities:
Held to maturity
U.S. Treasury securities and other governmental
agencies $48,074 $46,395 $38,921 $38,842
Other securities 15 15 15 15
-------- ------- ------- -------
Total investment securities held to maturity $48,089 $46,410 $38,936 $38,857
======== ======= ======= =======
Available for sale
U.S. Treasury securities $ 2,915 $2,902 - -
Equity securities 700 691 - -
Less: Unrealized (loss) (22) - - -
------- ------- ------- -------
Total investment securities available for sale $ 3,593 $3,593 - -
======= ======= ======= =======
</TABLE>
The Bank's investment securities held to maturity portfolio consists primarily
of medium-term U.S. Government Agency securities with various features such as
calls and/or interest rate "step-ups". As of June 30, 1996, the Company held
$45.0 million of various medium-term U.S. Government Agency securities, with
various call features and $3.6 million of similar securities with interest rates
that step-up and increase the coupon of the security if the security is not
called by the issuer.
The Bank's investment securities available for sale portfolio consists primarily
of short-term U.S. Treasury securities. Unrealized gains on investment
securities available for sale are recorded as an adjustment to the carrying
value of the securities and as a separate component of stockholders' equity, net
of the income tax effect. At June 30, 1996, the investment securities available
for sale portfolio had a net unrealized loss of $22,000, while decreasing
stockholders' equity by $12,000, net of income taxes.
MORTGAGE-BACKED SECURITIES
Mortgage-backed securities ("MBS's") consist of mortgage pass through
certificate securities that are issued or guaranteed by Government National
Mortgage Association ("GNMA"), Federal Home Loan Mortgage Corporation ("FHLMC")
Federal National Mortgage Association ("FNMA") and other privately issued
mortgage-backed securities. At June 30, 1996, the MBS available for sale
portfolio had a net unrealized gain of $9,000, while increasing stockholders'
equity by $5,000, net of taxes.
-10-
<PAGE> 11
The following table sets forth information regarding the carrying and estimated
fair value of the Bank's MBS's at the dates indicated:
<TABLE>
<CAPTION>
JUNE 30, 1996 SEPTEMBER 30, 1995
----------------------- ----------------------
CARRYING FAIR CARRYING FAIR
VALUE VALUE VALUE VALUE
----------- ---------- ----------- --------
(in thousands)
<S> <C> <C> <C> <C>
Mortgage-backed securities:
Held to maturity
GNMA certificates $28,291 $28,313 $33,144 $33,488
FHLMC securities 19,157 19,102 22,979 23,191
FNMA certificates 2,792 2,769 3,388 3,368
Other pass-through certificates 2,044 2,044 2,497 2,497
-------- ------- ------- -------
Total mortgage-backed securities held to maturity $52,284 $52,220 $62,008 $62,544
======== ======= ======= =======
Available for sale
FHLMC certificates $ 5,068 $5,077 - -
Add: Unrealized gain 9 - - -
------- ------- ------- -------
Total mortgage-backed securities available for sale $ 5,077 $5,077 - -
======= ======= ======= =======
</TABLE>
LOANS RECEIVABLE, NET
The following table sets forth the composition of the Bank's loan portfolio as
of the dates indicated:
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
-------- -------------
(in thousands)
<S> <C> <C>
Real estate mortgages:
One-to-four family $114,162 $93,361
Equity and second mortgages 3,090 3,806
Multi-family 5,717 4,296
Commercial 13,511 8,031
-------- --------
136,480 109,494
-------- --------
Construction/land 3,319 3,080
-------- --------
Consumer:
Passbook or certificate 179 152
Home improvement 8 10
Student education guaranteed by
the State of New York 202 214
Personal 24 28
-------- --------
413 404
Commercial, including lines of credit 152 123
-------- --------
Total loans 140,364 113,101
-------- --------
Less: Loans in process 1,725 1,485
Allowance for loan losses 1,320 1,243
Deferred loan fees and discounts 301 311
-------- --------
3,346 3,039
-------- --------
Total loans receivable, net $137,018 $110,062
======== ========
</TABLE>
-11-
<PAGE> 12
ADVANCES FROM FEDERAL HOME LOAN BANK OF NEW YORK ("FHLB")
As a member of the FHLB, the Bank has access to a pre-approved overnight line of
credit for up to 5% of its total assets or $11,165,200 and the capacity to
borrow up to the value of the Bank's eligible collateral. The following table
sets forth the composition of the Bank's FHLB advances as of the dates
indicated:
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
-------- -------------
(in thousands)
<S> <C> <C>
FHLB advances:
Fixed rate:
5.133% due February 1997 $1,200 $0
5.597% due December 1997 2,000 -
5.670% due December 1998 6,000 -
------ ------
Total fixed rate 9,200 0
Overnight line of credit:
6.625% due October 1995 - 5,375
5.625% due July 1996 6,625 -
------ ------
Total overnight line of credit 6,625 5,375
------ ------
Total FHLB advances $15,825 $5,375
======= ======
</TABLE>
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities sold under agreements to repurchase consist of borrowings
collateralized by investment securities. Information concerning the composition
of the Bank's borrowings collateralized by securities sold under agreements to
repurchase are summarized as follows:
<TABLE>
<CAPTION>
June 30, September 30,
1996 1995
-------- -------------
(in thousands)
<S> <C> <C>
5.78% due November 1995 $0 $5,112
5.75% due January 1996 - 2,014
5.35% due July 1996 2,910 -
5.45% due September 1996 4,819 -
------ ------
Total securities sold under agreements to repurchase $7,729 $7,126
====== ======
</TABLE>
These borrowings are collateralized by investment securities with carrying
values of $7,901,600 and $6,988,000 and estimated fair values of $7,715,000 and
$7,047,000 at June 30, 1996 and September 30, 1995, respectively.
-12-
<PAGE> 13
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
Financial Bancorp, Inc. is the holding company for Financial Federal Savings
Bank, which converted to a federally chartered stock savings association on
August 17, 1994 and to a federally chartered stock savings bank on October 20,
1994. Financial Federal is headquartered in Long Island City, New York and
operates four full service branches in Queens and one in Brooklyn. Deposits of
the Bank are insured up to the applicable limits of the Federal Deposit
Insurance Corporation ("FDIC"). The Bank is subject to regulation by the Office
of Thrift Supervision ("OTS") and the FDIC. The Company is listed on The Nasdaq
Stock Market under the symbol "FIBC".
The Company's results of operations are generally dependent on the Bank. The
Bank's sources of earnings primarily consist of net interest income, which is
the difference between the income earned on interest earning assets and the
interest paid on interest bearing liabilities. The results of operations are
also affected, to a lesser extent, by non-interest income, which includes loan
servicing fees and charges, and other miscellaneous income. In addition,
operations are impacted by non-interest expenses such as employee salaries and
benefits, office occupancy, data processing and federal deposit insurance
premiums.
The Bank is primarily engaged in the origination of one-to-four family
residential mortgage loans, and to a lesser extent multi-family and commercial
real estate mortgage loans, and residential and commercial construction loans.
As a community-oriented institution, the Bank is generally engaged in attracting
retail deposits from the areas surrounding its branch offices.
FINANCIAL CONDITION
As of June 30, 1996, the Company's total assets were $262.5 million,
representing a $33.7 million, or 14.7%, increase from $228.8 million as of
September 30, 1995. During the same period, deposits increased by $14.2 million,
or 7.6%, to $200.6 million as of June 30, 1996, from $186.4 million as of
September 30, 1995. Furthermore, advances from the FHLB increased by $10.4
million to $15.8 million, at June 30, 1996, as compared to $5.4 million at
September 30, 1995. The treasury tax and loan account and other short-term
borrowings increased to $9.4 million at June 30, 1996, from zero at September
30, 1995. Securities sold under agreements to repurchase increased by $600,000,
to $7.7 million at June 30, 1996, from $7.1 million at September 30, 1995. Asset
growth was funded by a combination of both the $14.2 million increase in the
Bank's deposit base, the $10.4 million increase in FHLB advances, in addition to
the $10.0 million increase in other short-term borrowings and securities sold
under agreements to repurchase.
Investment securities available for sale increased to $3.6 million, at June 30,
1996, as compared to zero at September 30, 1995. Furthermore, mortgage-backed
securities available for sale
-13-
<PAGE> 14
increased to $5.1 million, at June 30, 1996, as compared to zero at September
30, 1995. During the quarter ended June 30, 1996, the Bank purchased a $5.1
million mortgage-backed security and a $3.0 million U.S. Treasury note, and
classified both securities as available for sale. In accordance with an
implementation guide for SFAS 115, "Accounting for Certain Investments in Debt
and Equity Securities," released by FASB on November 15, 1995, which permitted a
one-time reassessment and related reclassification, no later than December 31,
1995, the Bank, during this window period, realigned its investment securities
portfolio to provide greater flexibility by transferring $2.0 million of U.S.
Treasury securities from the held to maturity to the available for sale
portfolio. The Bank realigned its investment securities portfolio in order to
provide greater flexibility and to maximize its total rate of return.
As of June 30, 1996, investment securities held to maturity, primarily consisted
of medium-term U.S. Government Agency securities, with features such as calls
and/or interest rate "step-ups", increased by $9.2 million, or 23.7%, to $48.1
million from $38.9 million at September 30, 1995, exclusive of $2.0 million in
investment securities which were classified as available for sale.
Mortgage-backed securities decreased by $9.7 million, or 15.6%, as a result of
principal repayments, to $52.3 million as of June 30, 1996 from $62.0 million as
of September 30, 1995. Loans receivable increased by $26.9 million, or 24.4%, to
$137.0 million as of June 30, 1996 from $110.1 million as of September 30, 1995.
This $26.9 million, or 24.4% increase in loans receivable primarily resulted
from the origination of $24.7 million in mortgage loans, and the purchase of
$14.9 million of one-to-four family, adjustable rate residential mortgage loans,
partially offset by normal amortization, prepayments and satisfactions.
Non-performing loans totaled $2.0 million, or 1.4% of total loans at June 30,
1996 as compared to $1.9 million, or 1.7% of total loans at September 30, 1995.
At June 30, 1996, non-performing assets totalled $5.9 million, or 2.2% of total
assets as compared to $6.1 million, or 2.7% of total assets as of September 30,
1995. The Company's allowance for loan losses totalled $1.3 million at June 30,
1996, which represents a ratio of allowance for loan losses to non-performing
assets and to total loans of 22.5% and 0.94%, respectively, as compared to 20.5%
and 1.10%, respectively, at September 30, 1995.
Total deposits at June 30, 1996, increased by $14.2 million, or 7.6%, to $200.6
million from $186.4 million at September 30, 1995. Furthermore, advances from
the FHLB, increased by $10.4 million, or 194.4%, to $15.8 million at June 30,
1996, from $5.4 million at September 30, 1995. During the nine month period
ended June 30, 1996, the treasury tax and loan account and other short-term
borrowings increased to $9.4 million, from zero at September 30, 1995. In
addition, securities sold under agreements to repurchase increased by $600,000,
or 8.5%, to $7.7 million at June 30, 1996, from $7.1 million at September 30,
1995. The increase in deposits and borrowings enabled the Bank to fund new loan
originations, the purchase of one-to-four family adjustable rate loans and the
purchase of investment and mortgage-backed securities.
Total stockholders' equity, at June 30, 1996, was $26.2 million at June 30,
1996, reflecting a $955,000, or a 3.5% decrease from $27.2 million at September
30, 1995. The decrease in stockholders' equity was the result of the Company
completing its third repurchase program and the commencement of its fourth
repurchase program. During the nine months ended June 30, 1996, the Company has
repurchased 186,766 common shares, at an aggregate cost of $2.4
-14-
<PAGE> 15
million, or at an average price per common share of $13.07. At June 30,
1996, the Company had 1,796,122 common shares outstanding and the book value per
share was $14.60.
ANALYSIS OF OPERATIONS
COMPARISON OF THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 1996 AND 1995
Net income for the three months ended June 30, 1996 totalled $505,195, or $0.29
per share as compared to net income of $435,186, or $0.22 per share for the
quarter ended June 30, 1995. The $70,009, or 16.1% increase was primarily
attributable to a $688,195, or 17.9%, increase in interest income, offset in
part by a $343,392 increase in interest expense and a $240,797 increase in loss
from real estate operations. For the nine month period ended June 30, 1996, net
income increased $360,434, or 32.1%, to $1,483,554, or $0.82 per share, from
$1,123,120, or $0.55 per share for the same period in 1995.
The return on average assets equalled 0.81% and 0.83% for the quarter ended and
the nine months ended June 30, 1996, respectively, as compared to 0.81% and
0.77% for the quarter ended and the nine months ended June 30, 1995,
respectively. The Company's return on average equity equalled 7.57% and 7.34%
for the quarter ended and nine months ended June 30, 1996, respectively,
compared with 6.09% and 5.13% for the quarter ended and the nine months ended
June 30, 1995, respectively.
The Company's net interest income increased $344,803, or 16.8%, to $2.4 million
for the quarter ended June 30, 1996, from $2.1 million for the quarter ended
June 30, 1995. For the nine month period ended June 30, 19965, net interest
income increased $863,987, or 14.6%, to $6.8 million, from $5.9 million for the
same period in 1995. The increase in net interest income for the three and nine
months ended June 30, 1996 was primarily due to the continued leveraging and
growing of the balance sheet, by utilizing low cost borrowings and deposit
growth to fund new loan originations, loan purchases and the purchase of
investment and mortgage-backed securities.
As a result, for the quarter ended June 30, 1996, average interest-earning
assets increased by $35.9 million, or 17.8%, to $238.0 million from $202.1
million for the quarter ended June 30, 1996. The increase in average
interest-earning assets was partially offset by a $32.0 million, or 17.9%,
increase in average interest-bearing liabilities to $210.3 million for the
quarter ended June 30, 1996 from $178.3 million for the quarter ended June 30,
1995. For the nine months ended June 30, 1996, average interest-earning assets
increased by $45.3 million, or 24.6%, to $229.2 million from $183.9 million for
the same period in 1995. The increase in average interest-earning assets was
offset by a $44.5 million, or 27.8%, increase in interest-bearing liabilities to
$204.3 million for the nine months ended June 30, 1996, as compared to $159.8
million for the same period in 1995.
The Company's net interest margin slightly decreased by 2 basis points to 4.04%,
for the quarter ended June 30, 1996, as compared to 4.06% for the quarter ended
June 30, 1995. For the nine month period ended June 30, 1996, the net interest
margin decreased by 34 basis points to 3.93%, as compared to 4.27% for the same
period in 1995. The Company's net interest spread
-15-
<PAGE> 16
decreased 3 basis points and 32 basis points to 3.55% and 3.47%, for the quarter
ended and the nine months ended June 30, 1996, respectively, compared with 3.58%
and 3.79% for the same periods in 1995, respectively. For the quarter ended June
30, 1996, the modest decline in the net interest margin and spread reflects the
recent 12 basis point decrease in the average cost of interest-bearing
liabilities to 4.07% as of June 30, 1996, as compared to 4.19% as of March 31,
1996. During the nine months ended June 30, 1996, the narrowing of the interest
rate spread and margin was primarily caused by the Bank's competitive deposit
pricing in an effort to attract new certificate of deposits during the middle of
fiscal 1995 and the corresponding leveraging of the balance sheet in an effort
to increase net interest income. The average yield in interest-earning assets
was 7.62% for the quarter ended June 30, 1996, as compared to 7.61% for the same
period in 1995, an the average cost of interest-bearing liabilities was 4.07%
for the quarter ended June 30, 1996, as compared to 4.03% for the same period in
1995. For the nine months ended June 30, 1996, the average yield on
interest-earning assets was 7.63%, as compared to 7.40% for the same period in
1995, and the average cost of interest-bearing liabilities was 4.16%, as
compared to 3.61% for the same period in 1995.
The Company's provision for loan losses for the quarter ended June 30, 1996 and
the nine months ended June 30, 1996, increased by $127,062 and $191,270, to
$159,453 and $289,453, respectively. The increase in the provisions for the
quarter ended and the nine months ended June 30, 1996, is partially attributable
to an increase in loan loss provisions as a result of the Bank's most recent
regulatory examination. In addition, the increase in provisions is reflective of
the significant increase in loan originations and the purchase of one-to-four
family mortgage loans.
Non-interest income, for the quarter ended June 30, 1996, decreased by $170,344,
to ($109,537) from $60,807 for the quarter ended June 30, 1995. For the nine
months ended June 30, 1996, non-interest income decreased by $58,269, to
$59,567, as compared to $117,836 for the same period in 1995. The decrease in
non-interest income is primarily attributable a $262,500 provision for loss on a
real estate joint venture, in which a service corporation of the Bank has a
one-third interest. Management does not anticipate substantial additional
provisions on this project in that the joint venture partners received, in July
1996, the required approvals from the New York City Planning Commission for
development of the site. For the quarter ended June 30, 1996, the decline in
non-interest income was offset, in part, by an increase in fees and service
charges of $32,097, or 40.7%, to $111,026 from $78,929 for the same period in
1995. In addition, for the quarter ended June 30, 1996, the Company realized a
$31,009 gain on the sale of investment securities, as compared to zero for the
same period in 1995.
Non-interest expenses marginally decreased by $843, for the quarter ended June
30, 1996, to $1,331,335 from $1,332,178 during the same period in 1995. During
the nine months ended June 30, 1996, non-interest expenses modestly increased by
$5,228, to $4.0 million. For the quarter ended and nine months ended June 30,
1996, the ratio of operating expenses to average assets decreased by 38 basis
points and 53 basis points, to 2.08% and 2.17%, respectively, as compared to
2.46% and 2.70% for the same periods in 1995. The Company has been successful in
controlling operating expenses, as evidenced by the Company's efficiency ratio
of 51.1% for the quarter ended June 30, 1996, as compared to 61.5% for the same
period in 1995.
-16-
<PAGE> 17
During the quarter ended June 30, 1996, salaries and employee benefits decreased
by $13,801, or 2.1%, to $647,863, from $661,664 for the quarter ended June 30,
1995. This modest decrease in salaries and employee benefits was partially due
to the postponement of salary increase for officers, reductions in overall
employee staffing by means of attrition and a decline in pension related
contributions. For the nine month period ended June 30, 1996, salaries and
employee benefits decreased by $18,115, or 0.9%, to $1,959,045 from $1977,160
for the same nine month period in 1995. For the quarter ended June 30, 1996,
occupancy expense decreased by $24,045, to $121,744 from $145,789 for the
quarter ended June 30, 1995. For the nine months ended June 30, 1996, occupancy
expense decreased by $44,094, to $353,077 from $397,171 for the same period in
1995. The decrease for the quarter ended and the nine months ended June 30,
1996, was primarily attributable to the collection of rental income on its Bank
owned properties. Equipment expense, for the quarter and nine months ended June
30, 1996, increased by $13,959 and $50,200, to $141,559 and $417,969,
respectively, from $127,600 and $367,769, respectively, for the same periods in
1995. The increase in equipment expense for the quarter and nine months ended
June 30, 1996, represents increased costs associated with deposit and check
processing servicing fees and other vendor related services and contracts.
Advertising expense, for the quarter and nine months ended June 30, 1996,
decreased by $28,828 and $59,801, to $12,880 and $57,947, respectively, from
$41,708 and $117,748, respectively, for the same periods in 1995. The Company
has limited its advertising expenditures in an effort to bolster earnings.
For the quarter ended June 30, 1996, income tax expense decreased by $21,769, to
$295,388 as compared to $317,157, for the same quarter in 1995. For the nine
month period ended June 30, 1996, income tax expense increased by $248,786 to
$1,065,643, from $816,857 for the same period in 1995, as a result of the
increase in income before taxes.
LEGISLATIVE MATTERS
Legislation is pending in Congress to mitigate the effect of the Bank Insurance
Fund ("BIF") Savings Association Insurance Fund ("SAIF") premium disparity.
Under the legislation a special assessment would be imposed on the amount of
deposits held by SAIF member institutions, including the Bank, as of a specified
date, currently March 31, 1995, to recapitalize the SAIF. The amount of the
special assessment would be left to the discretion of the FDIC but is generally
estimated at between 79 to 85 basis points of insured deposits. The legislation
would also require that the BIF and SAIF be merged, provided that subsequent
legislation is enacted requiring federal savings associations to become national
banks or state chartered banks or thrifts and that the Financing Insurance
Company ("FICO") payments be spread across all BIF and SAIF members. The payment
of the special assessment would have the effect of immediately reducing the
capital of SAIF-member institutions, net of any tax effect; however, it would
not affect the Bank's compliance with its regulatory capital requirements.
Management cannot predict whether legislation imposing such an assessment will
be enacted, or, if enacted, the specific terms of such legislation including the
amount of any special assessment and when and whether ongoing SAIF premiums will
be reduced to a level equal to that of BIF premiums. Management can also not
predict whether or when the BIF and SAIF will merge. A significant increase in
SAIF insurance premiums or a significant special assessment to recapitalize the
SAIF would likely have an adverse effect on the operating expenses of the
Company. The assessment
-17-
<PAGE> 18
of an 79 to 85 basis point fee to recapitalize the SAIF would result in a
$773,000 to $832,000 payment on an after-tax basis.
Legislation regarding bad debt recapture has been passed by Congress and sent to
the President for signature. The legislation requires the recapture of reserves
accumulated after 1987. The recapture tax on post 1987 reserves must be paid
over a six year period starting in 1996. The payment of the tax can be deferred
in 1996 and 1997 if an institution originates at least the same average annual
principal amount of mortgage loans that it originated in the six years prior to
1996. Management has determined that the impact of this legislation will not
have a material adverse effect on the financial statements of the Company.
No assurance can be given as to whether legislation as discussed above will be
enacted or, if enacted, what the terms of such legislation would be.
LIQUIDITY AND CAPITAL RESOURCES
The Bank is required to maintain an average daily balance of liquid assets (as
defined in the regulations) equal to a monthly average of not less than the
specified percentage of its net withdrawable deposit accounts plus short-term
borrowings. This liquidity requirement is currently 5%. OTS regulations also
require each member savings institution to maintain an average daily balance of
short-term liquid assets at a specified percentage (currently 1%) of the total
of its net withdrawable deposit accounts and borrowings payable in one year or
less. Monetary penalties may be imposed for failure to meet these liquidity
requirements. The liquidity of the Bank at June 30, 1996 was 9.9%, which
exceeded the applicable 5% liquidity requirement. Its short-term liquidity ratio
at June 30, 1996, was 2.1%.
The primary investment activities of the Bank are the origination and purchase
of mortgage loans and the purchase of investment securities and mortgage-backed
securities. The Company's primary sources of funds are the Bank's deposit
accounts, proceeds from principal and interest payments on loans and
investments, and to a lesser extent, advances and overnight borrowings from the
FHLB, as well as reverse repurchase agreements and other short-term borrowings.
While maturities and scheduled amortization of loans, mortgage-backed securities
and investment securities are predictable sources of funds, deposit flows,
mortgage prepayments and callable investment securities are greatly influenced
by market interest rates, general economic conditions and competition within the
financial industry.
At June 30, 1996, the Bank had outstanding loan commitments to originate
mortgage loans of $10.3 million, and management anticipates that it will have
sufficient funds available and borrowing capability to meet its current loan
originations. Certificates of deposit, which are scheduled to mature in one-year
or less from June 30, 1996 totalled $64.5 million, of which $14.6 million
represent "Silver Certificate of Deposit" accounts, which allow one withdrawal
of principal per quarter without an early withdrawal penalty for direct deposit
customers 62 years of age or older.
The Bank generally maintains competitive pricing of its deposits in order to
maintain a steady deposit growth balance and, when necessary supplements its
deposit base with advances and
-18-
<PAGE> 19
other borrowings.
Although the OTS capital regulations require savings institutions to meet a 1.5%
tangible capital ratio and a 3.0% leverage (core) capital ratio, the prompt
corrective action standards also establish, in effect, a minimum 2.0% tangible
capital standard, a 4.0% leverage (core) capital ratio (3.0% for institutions
receiving the highest rating on the CAMEL financial institution rating system).
The Bank's tangible capital and core capital totalled $19.0 million, or 7.39% at
June 30, 1996, far in excess of the regulatory requirements. The Bank's
risk-based capital ratio as of June 30, 1996, was $19.3 million, or 19.01%, also
well in excess of the regulatory capital requirement of 8.0%.
-19-
<PAGE> 20
FINANCIAL BANCORP, INC.
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not presently engaged in any legal proceeding of a
material nature.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters to a Vote
of Security-Holders
Not applicable.
Item 5. Other information
On April 12, 1996, the Company announced that it received regulatory
approval from the Office of Thrift Supervision to commence its
fourth repurchase program through August 17, 1996. The Company is
currently in the process of repurchasing 93,668, or 5% of its common
stock outstanding. As of August 12, 1996, the Company has
repurchased 88,168 common shares through open-market transaction as
part of its fourth repurchase program.
On July 24, 1996, the Holding Company declared its regular quarterly
cash dividend for the period ended June 30, 1996, of $0.075 per
share, payable on August 20, 1996 to stockholders of record on
August 6, 1996.
On August 6, 1996, Stuart G. Hoffer tendered his resignation as
President and Chief Executive Officer and as a member of the Board
of Directors of the Company and Bank, and all the Bank's affiliates
and subsidiaries, in order to pursue other business interests. The
Board of Directors appointed Frank S.Latawiec as President and Chief
Executive Officer of the Company and Bank. Mr. Latawiec is also a
director of the Company and Bank. A Form 8-K was filed in
connection with these events on August 13, 1996.
-20-
<PAGE> 21
Item 6. (A) Exhibits
Exhibit 3.1 Certificate of Incorporation of Financial Bancorp, Inc.*
Exhibit 3.2 Bylaws of Financial Bancorp, Inc.*
Exhibit 11 Earnings Per Share
Exhibit 27 Financial Data Schedule
(B) Reports on Form 8-K
None
* Incorporated herein by reference to Form S-1, Registration Statement, as
amended, filed on March 18, 1994, Registration Number 33-76664
-21-
<PAGE> 22
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.
Financial Bancorp, Inc.
(Registrant)
Date: August 14, 1996 By: /s/ Frank S. Latawiec
-------------------------------------
Frank S. Latawiec
President and Chief Executive Officer
Date: August 14, 1996 By: /s/ P. James O'Gorman
-------------------------------------
P. James O'Gorman
Senior Vice President and
Chief Financial Officer
-22-
EXHIBIT 11 - EARNINGS PER SHARE
<TABLE>
<CAPTION>
THREE MONTHS NINE MONTHS
ENDED ENDED
COMPUTATION OF PER SHARE EARNINGS JUNE 30, 1996 JUNE 30, 1996
------------- -------------
<S> <C> <C>
Net income $505,195 $1,483,554
-------- ----------
Weighted average common shares outstanding 1,719,400 1,776,000
Common stock equivalents due to dilutive effect of stock options 29,300 29,300
------ ------
Total weighted average common shares and equivalents outstanding 1,748,700 1,805,300
========= =========
Earnings per common share and common share equivalent $0.29 $0.82
===== =====
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary information extracted from the Form 10-Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000855932
<NAME> FINANCIAL BANCORP INC.
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1995
<PERIOD-END> JUN-30-1996
<CASH> 2,423,581
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 2,750,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 8,669,640
<INVESTMENTS-CARRYING> 100,373,445
<INVESTMENTS-MARKET> 98,638,000
<LOANS> 137,017,711
<ALLOWANCE> 1,320,000
<TOTAL-ASSETS> 262,497,179
<DEPOSITS> 200,646,155
<SHORT-TERM> 32,990,953
<LIABILITIES-OTHER> 2,635,848
<LONG-TERM> 0
0
0
<COMMON> 21,850
<OTHER-SE> 26,202,373
<TOTAL-LIABILITIES-AND-EQUITY> 262,497,179
<INTEREST-LOAN> 7,562,761
<INTEREST-INVEST> 5,541,785
<INTEREST-OTHER> 32,321
<INTEREST-TOTAL> 43,136,867
<INTEREST-DEPOSIT> 5,658,326
<INTEREST-EXPENSE> 6,311,712
<INTEREST-INCOME-NET> 6,765,955
<LOAN-LOSSES> 289,453
<SECURITIES-GAINS> 51,029
<EXPENSE-OTHER> 3,986,072
<INCOME-PRETAX> 2,549,197
<INCOME-PRE-EXTRAORDINARY> 1,483,554
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,483,554
<EPS-PRIMARY> 0.82
<EPS-DILUTED> 0.82
<YIELD-ACTUAL> 7.62
<LOANS-NON> 1,456,000
<LOANS-PAST> 512,000
<LOANS-TROUBLED> 922,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,243,000
<CHARGE-OFFS> 213,000
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,320,000
<ALLOWANCE-DOMESTIC> 1,320,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 813,000
</TABLE>
