<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 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 Number: 0-18126
-------
FINANCIAL BANCORP, INC.
-----------------------
(Exact name of registrant as specified in its charter)
Delaware 06-1391814
-------- ----------
(State or other jurisdiction of (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 1,706,660 shares of the Registrant's common stock outstanding
as of May 13, 1998.
<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 March 31, 1998 (Unaudited) and September 30, 1997 3
Consolidated Statements of Income for the
Three and Six Months ended March 31, 1998 and 1997 (Unaudited) 4
Consolidated Statement of Changes in
Stockholders' Equity for the Six Months
ended March 31, 1998 (Unaudited) 5
Consolidated Statements of Cash Flows for the
Six Months ended March 31, 1998 and 1997 (Unaudited) 6-7
Notes to Consolidated Financial Statements 8-12
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 13-18
Item 3. Quantitative and Qualitative Disclosures About Market Risk 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 20
Item 5. Other Information 21
Item 6. Exhibits and Reports on Form 8-K 21
Signature Page 22
Exhibits
Exhibit 11: Computation of per share earnings
Exhibit 27: Financial Data Schedule
Statements contained in this form 10-Q which are not historical facts are
forward-looking statements, as that term is defined in the Private Litigation
Reform Act of 1995. Such forward-looking statements are subject to risk and
uncertainties which could cause actual results to differ materially from those
projected. Such risks and uncertainties include potential changes in interest
rates, competitive factors in the financial services industry, general economic
conditions, the effect of new legislation and other risks detailed in documents
filed by the Company with the Securities and Exchange Commission from time to
time.
<PAGE> 3
<TABLE>
<CAPTION>
FINANCIAL BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
March 31, September 30,
1998 1997
---------------- -----------------
(Unaudited)
<S> <C> <C>
Assets
- ------
Cash and amounts due from depository institutions $ 4,026,358 $ 2,738,392
Federal funds sold and securities purchased under agreements to resell 36,000,000 10,650,000
---------------- ----------------
Total cash and cash equivalents 40,026,358 13,388,392
Investment securities available for sale 737,750 730,750
Investment securities held to maturity, net; estimated fair value of $26,622,000 and
$69,223,000 at March 31, 1998 and September 30, 1997, respectively 26,581,892 69,410,103
Mortgage-backed securities available for sale 24,378,833 9,357,048
Mortgage-backed securities held to maturity, net; estimated fair value of $34,456,000
and $39,129,000 at March 31, 1998 and September 30, 1997, respectively 33,959,457 38,521,050
Loans receivable, net 172,122,242 153,291,828
Real estate owned, net 720,074 471,417
Investments in real estate, net 3,557,341 3,543,453
Premises and equipment, net 2,313,808 2,431,570
Federal Home Loan Bank of New York stock, at cost 2,110,400 1,845,000
Accrued interest receivable, net 1,724,482 2,248,578
Other assets 1,858,274 1,716,727
---------------- ----------------
Total assets $310,090,911 $296,955,916
================ ================
Liabilities and Stockholders' Equity
- ------------------------------------
Deposits $228,616,660 $213,394,282
Advance payments by borrowers for taxes and insurance 1,543,894 1,267,896
Advances from Federal Home Loan Bank of New York 6,000,000 8,000,000
Securities sold under agreements to repurchase 32,000,000 25,000,000
Treasury tax and loan account and other short term borrowings 11,099,658 20,000,000
Other liabilities 2,787,685 2,437,504
---------------- ----------------
Total liabilities 282,047,897 270,099,682
---------------- ----------------
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,
1,706,666 shares outstanding at March 31, 1998 and 1,709,700 outstanding
at September 30, 1997, respectively 21,850 21,850
Additional paid-in capital 20,346,388 20,239,758
Retained earnings - substantially restricted 15,188,757 14,111,882
Common stock acquried by Employee Stock Ownership Plan (ESOP) (930,638) (1,011,566)
Common stock acquired by Recognition & Retention Plan (RRP) (282,888) (317,955)
Unrealized gain on securities available for sale, net of income taxes 82,032 91,604
Treasury stock, at cost; 478,334 shares at March 31, 1998 and 475,300 shares
at September 30, 1997, respectively (6,382,487) (6,279,339)
---------------- ----------------
Total stockholders' equity 28,043,014 26,856,234
---------------- ----------------
Total liabilities and stockholders' equity $310,090,911 $296,955,916
================ ================
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE> 4
<TABLE>
<CAPTION>
FINANCIAL BANCORP, INC. & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
----------------------------- ------------------------------
March 31, March 31,
----------------------------- -----------------------------
1998 1997 1998 1997
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Interest income:
Loans $3,241,584 $2,966,415 $6,441,668 $5,865,708
Mortgage-backed securities 1,062,123 970,279 2,045,859 1,925,788
Investments and other interest-earning assets 753,142 850,692 1,804,688 1,892,574
Federal funds sold and securities purchased
under agreements to resell 337,927 21,389 420,881 37,178
---------- ---------- ---------- ---------
Total interest income 5,394,776 4,808,775 10,713,096 9,721,248
---------- ---------- ---------- ---------
Interest expense:
Deposits 2,256,226 1,964,254 4,452,414 3,955,468
Borrowings 713,828 365,570 1,319,822 842,335
---------- ---------- ---------- ---------
Total interest expense 2,970,054 2,329,824 5,772,236 4,787,803
---------- ---------- ---------- ---------
Net interest income 2,424,722 2,478,951 4,940,860 4,933,445
Provision for loan losses 85,120 96,000 194,770 195,600
---------- ---------- ---------- ---------
Net interest income after provision for loan losses 2,339,602 2,382,951 4,746,090 4,737,845
---------- ---------- ---------- ---------
Non-interest income (loss):
Fees and service charges 204,819 136,075 354,453 267,355
Gain on sale of securities available for sale 94,462 0 94,462 26,353
Gain (loss) from real estate operations 10,043 26,081 23,867 (1,972)
Miscellaneous 23,124 8,761 42,366 19,390
---------- ---------- ---------- ---------
Total non-interest income 332,448 170,917 515,148 311,126
---------- ---------- ---------- ---------
Non-interest expenses:
Salaries and employee benefits 643,841 1,003,416 1,349,191 1,745,463
Net occupancy expense of premises 120,702 138,217 242,831 270,728
Equipment 177,394 160,999 346,774 311,345
Advertising 21,849 6,465 60,716 16,052
Loss from real estate owned 15,424 (10,071) 31,846 8,313
Federal insurance premium 30,886 30,456 61,289 112,228
Miscellaneous 349,573 329,966 622,675 580,009
---------- ---------- ---------- ---------
Total non-interest expenses 1,359,669 1,659,448 2,715,322 3,044,138
---------- ---------- ---------- ---------
Income before income taxes 1,312,381 894,420 2,545,916 2,004,833
Income taxes 574,559 314,894 1,108,541 831,868
---------- ---------- ---------- ---------
Net income $737,822 $579,526 $1,437,375 $1,172,965
========== ========== ========== ==========
Basic earnings per share $0.46 $0.35 $0.89 $0.71
========== ========== ========== ==========
Diluted earnings per share $0.44 $0.35 $0.85 $0.70
========== ========== ========== ==========
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
Financial Bancorp. Inc.
And Subsidiaries
Consolidated Statements of Changes in Stockholders' Equity
(Unaudited)
Retained Common Common Unrealized Gain
Additional Earnings - Stock Stock on Securities
Common Paid-in Substantially Acquired Acquired Available For Sale, Treasury
Stock Capital Restricted By ESOP By RRP Net of Income Taxes Stock Total
---------- ----------- ------------- -------- -------- ------------------- -------- -----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at September 30, 1997 $21,850 $20,239,758 $14,111,882 ($1,011,566) ($317,955) $91,604 ($6,279,339) $26,856,234
Net Income for the six months
ended March 31, 1998 - - 1,437,375 - - - - 1,437,375
Purchase of 5,000 shares of
treasury stock - - - - - - (129,375) (129,375)
Amortization relating to
allocation of ESOP stock
and earned portion of
RRP stock - 114,298 - 80,928 35,067 - - 230,293
Adjustment to valuation reserve
on securities available for sale - - - - - (9,572) - (9,572)
Stock issued upon exercise of
options - (7,668) - - - - 26,227 18,559
Cash dividends paid on common
stock - - (360,500) - - - - (360,500)
------- ------------ ------------ ---------- ---------- -------- ------------ ------------
Balance at March 31, 1998 $21,850 $20,346,388 $15,188,757 ($930,638) ($282,888) $82,032 ($6,382,487) $28,043,014
======= ============ ============ ========== ========== ======== ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 6
<TABLE>
<CAPTION>
FINANCIAL BANCORP, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
SIX MONTHS ENDED
---------------------------
MARCH 31,
---------------------------
1998 1997
------------- ----------
<S> <C> <C>
Cash flow from operating activities:
Net income $1,437,375 $1,172,965
Adjustments to reconcile net income to net cash
provided by operating activities
Loss (Gain) on sale of real estate owned 3,512 5,411
(Gain) on sale of securities available for sale (94,462) (26,353)
Net amortization of premiums and accretion
of discounts on investment securities (116,789) (99,291)
Net amortization of premiums and accretion
of discounts on mortgage-backed securities 37,635 17,270
Accretion of deferred loan fees and discounts (68,781) (57,253)
Depreciation and amortization 141,687 146,132
Provision for loan losses 194,770 195,600
Cost of ESOP and RRP 230,293 196,512
Deferred income taxes 0 (7,492)
Decrease (increase) in accrued interest receivable, net 524,096 (47,370)
Decrease (increase) in refundable income taxes 119,582 (212,598)
(Increase) in other assets (253,608) (183,987)
Increase (decrease) in other liabilities 350,181 (833,322)
-------------- ------------
Net cash provided by operating activities 2,505,491 266,224
-------------- ------------
Cash flows from investing activities:
Purchases of investment securities available for sale 0 (4,938,672)
Purchases of investment securities held to maturity (16,145,000) (8,840,000)
Proceeds from sales of investment securities available for sale 0 2,947,031
Proceeds from maturities and calls of investment securities held to maturity 59,090,000 16,000,000
Purchases of mortgage-backed securities available for sale (21,719,234) (5,046,497)
Proceeds from sale of mortgage-backed securities available for sale 3,797,846 0
Purchase of mortgage-backed securities held to maturity (376,553) 0
Proceeds from principal repayments on
mortgage-backed securities 7,870,483 4,924,319
Purchases of mortgage loans (10,337,077) 0
Loan originations, net of repayments (8,994,840) (6,945,777)
Additions to premises and equipment (17,813) (158,686)
Proceeds from sale of and insurance recoveries
on real estate owned 123,345 276,499
Purchase of Federal Home Loan Bank of N.Y. stock (265,400) (95,100)
Net (increase) decrease in investments in real estate (20,000) 7,000
-------------- ------------
Net cash provided by (used in) investing activities 13,005,757 (1,869,883)
-------------- ------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE> 7
<TABLE>
<CAPTION>
Financial Bancorp, Inc.
And Subsidiaries
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
Six Months Ended
-----------------------------------
March 31,
-----------------------------------
1998 1997
--------------- --------------
<S> <C> <C>
Cash flows from financing activities:
Net increase in deposits $15,222,378 $3,296,021
Repayments of FHLB of NY advances (2,000,000) (1,725,000)
Proceeds from reverse repurchase agreements 7,000,000 5,000,000
Repayments of reverse repurchase agreements 0 (14,046,000)
Net (decrease) increase in treasury tax
account borrowings (8,900,342) 10,119,030
Increase in advance payments by
borrowers for taxes and insurance 275,998 218,964
Dividends paid (360,500) (298,750)
Reissuance of treasury stock 18,559 38,365
Purchase of treasury stock (129,375) (663,938)
------------ --------------
Net cash provided by financing activities 11,126,718 1,938,692
------------ --------------
Net increase in cash and cash equivalents 26,637,966 335,033
Cash and cash equivalents - beginning 13,388,392 5,102,223
------------ --------------
Cash and cash equivalents - ending $40,026,358 $5,437,256
============ ==============
Supplemental schedule of noncash investing and
financing activities:
Loans transferred to real estate owned $375,514 $0
============ ==============
Loans to facilitate sale of real estate owned $0 $96,000
============ ==============
Unrealized loss on securities available for sale ($17,093) ($71,851)
Deferred income taxes 7,521 31,615
------------ --------------
($9,572) ($40,236)
============ ==============
Supplemental disclosures of cash flow information:
Cash paid (net of refunds received) during the year for:
Federal, state and city income taxes $988,859 $1,051,957
============ ==============
Interest paid on deposits and borrowed funds $5,672,147 $4,790,337
============ ==============
</TABLE>
See accompanying notes to consolidated financial statements.
<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 "registrant" or the "Company"), its
wholly owned subsidiaries, and Financial Federal Savings Bank (the "Bank") a
federally chartered stock savings bank and 842 Manhattan Avenue Corp., which
manages real property, 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. 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, 1997.
The results of operations for the three and six months ended March 31, 1998 are
not necessarily indicative of the results that may be expected for the entire
fiscal year.
Certain amounts for the three and six months ended March 31, 1997 have been
reclassified to conform with the current period's presentation.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board (the "FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income." SFAS No. 130 requires that all items that are components
of "comprehensive income" be reported in a financial statement that is displayed
with the same prominence as other financial statements. Comprehensive income is
defined as the "change in equity [net assets] of a business enterprise during a
period from transactions and other events and circumstances form nonowner
sources. It includes all changes in equity during a period except those
resulting from investments by owners and distributions to owners." Companies
will be required to (a) classify items of other comprehensive income by their
nature in the financial statements and (b) display the accumulated balance of
other comprehensive income separately from retained earnings and additional
paid-in capital in the equity section of a statement of financial position. SFAS
No. 130 is effective for fiscal years beginning after December 15, 1997 and
requires reclassification of prior periods presented. As the requirements of
SFAS No. 130 are disclosure-related, its
<PAGE> 9
implementation will have no impact on the Company's financial condition or
results of operations.
In June 1997, the FASB issued SFAS No. 131, "Disclosures About Segments of an
Enterprise and Related Information" ("SFAS No. 131"). SFAS No. 131 requires
disclosures for each segment that are similar to those required under current
standards with the addition of quarterly disclosure requirements and a finer
partitioning of geographic data by country, as opposed to broader geographic
regions as permitted under current standards. SFAS No. 131 is effective for
fiscal years beginning after December 15, 1997 with earlier application
permitted. As the requirements of SFAS No. 131 are disclosure-related, its
implementation will have no impact on the Company's financial condition or
results of operations.
The forgoing does not constitute a comprehensive summary of all anticipated
material changes of developments affecting the manner in which the Company keeps
its books and records and performs its financial accounting responsibilities. It
is intended only as a summary of some of the recent pronouncements made by the
FASB which are of particular interest to financial institutions.
EARNINGS PER SHARE
Basic EPS is computed by dividing net income by the weighted average number of
common shares outstanding for the period. Diluted EPS reflects the potential
dilution that could occur if securities or other contracts to issue common stock
were exercised or converted into common stock. Earnings per share data for the
three and six months ended March 31, 1997 has been restated as the result of the
implementation of SFAS No. 128, "Earnings per Share."
INVESTMENT SECURITIES
The following table sets forth certain information regarding the carrying and
estimated fair value of the Company's investment securities at March 31, 1998
and September 30, 1997, respectively.
<TABLE>
<CAPTION>
March 31, 1998 September 30, 1997
----------------------------- -----------------------------
Carrying Fair Carrying Fair
Value Value Value Value
------------- ------------- ------------- -------------
(in thousands)
<S> <C> <C> <C> <C>
Investment Securities:
Available for sale
FNMA preferred stock $701 $738 $701 $731
Add: Unrealized gain 37 - 30 -
------------- ------------- ------------- -------------
Total investment securities available for sale $738 $738 $731 $731
============= ============= ============= =============
Held to maturity
U.S. Government and agency obligations $23,694 $23,734 $69,410 $69,223
Corporate debt securities 2,888 2,888 - -
------------- ------------- ------------- -------------
Total investment securities held to maturity $26,582 $26,622 $69,410 $69,223
============= ============= ============= =============
</TABLE>
<PAGE> 10
MORTGAGE-BACKED SECURITIES
The following table sets forth certain information regarding the carrying and
estimated fair value of the Company's mortgage-backed security portfolio at
March 31, 1998 and September 30, 1997, respectively.
<TABLE>
<CAPTION>
March 31, 1998 September 30, 1997
------------------------------ ------------------------------
Carrying Fair Carrying Fair
Value Value Value Value
------------- ------------- ------------- -------------
(in thousands)
<S> <C> <C> <C> <C>
Mortgage-backed securities:
Aailable for sale
FHLMC certificates $13,040 $13,096 $4,422 $4,510
FNMA certificates 11,229 11,283 4,801 4,847
Add: Unrealized gain 110 - 134 -
---------- ----------- ----------- -----------
Total mortgage-backed securities $24,379 $24,379 $9,357 $9,357
available for sale ========== =========== =========== ===========
Held to maturity
GNMA certificates $20,366 $20,689 $23,335 $23,752
FHLMC certificates 9,680 9,850 11,299 11,480
FNMA certificates 2,035 2,039 1,988 1,998
Other pass-through certificates 1,878 1,878 1,899 1,899
---------- ----------- ----------- -----------
Total mortgage-backed securities $33,959 $34,456 $38,521 $39,129
held to maturity ========== =========== =========== ===========
</TABLE>
<PAGE> 11
LOANS RECEIVABLE, NET
The following table sets forth the composition of the Company's loan portfolio
at March 31, 1998 and September 30, 1997, respectively.
<TABLE>
<CAPTION>
March 31, September 30,
1998 1997
----------------------- ------------------------
(in thousands)
<S> <C> <C>
Real estate mortgages:
One- to four-family $140,933 $126,440
Equity and second mortgages 2,742 2,637
Multi-family 14,141 11,779
Commercial 15,287 13,217
----------------------- ------------------------
173,103 154,073
----------------------- ------------------------
Construction 275 574
----------------------- ------------------------
Consumer:
Loans on deposit accounts 218 176
Home improvement 2 4
Guaranteed student loans 238 214
Personal 21 23
----------------------- ------------------------
479 417
Commercial, including lines of credit 78 77
----------------------- ------------------------
Total loans 173,935 155,141
----------------------- ------------------------
Less: Loans in process 57 201
Allowance for loan losses 1,616 1,405
Deferred loan fees and discounts 140 243
----------------------- ------------------------
1,813 1,849
----------------------- ------------------------
Total loans receivable, net $172,122 $153,292
======================= ========================
</TABLE>
<PAGE> 12
ADVANCES FROM FEDERAL HOME LOAN BANK OF NEW YORK ("FHLB")
As a member of the FHLB, the Bank has an available overnight line of credit
subject to the terms and conditions of the lender's overnight advance program in
the amount of $29,657,700 at March 31, 1998. The following table sets forth the
composition of the Bank's FHLB advances as of March 31, 1998 and September 30,
1997, respectively.
<TABLE>
<CAPTION>
March 31, September 30,
1998 1997
------------------ -------------------
(in thousands)
<S> <C> <C>
FHLB advances:
Fixed rate:
5.597% due December 1997 $0 $2,000
5.670% due December 1998 6,000 6,000
------------------ -------------------
Total fixed rate 6,000 8,000
------------------ -------------------
Overnight line of credit - -
------------------ -------------------
Total FHLB advances $6,000 $8,000
================== ===================
</TABLE>
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities sold under agreements to repurchase consist of borrowings
collateralized by mortgage-backed and investment securities. The following table
sets forth the composition of the Company's borrowings collateralized by
securities sold under agreements to repurchase as of March 31, 1998 and
September 30, 1997, respectively.
<TABLE>
<CAPTION>
March 31, September 30,
1998 1997
--------------- -----------------
(in thousands)
<S> <C> <C>
Securities sold under agreements to repurchase:
5.291% due December 2001, callable December 1997 $0 $5,000
5.813% due May 2002, callable May 1998 10,000 10,000
5.620% due August 2002, callable August 1999 10,000 10,000
5.963% due November 2004, callable October 2002 5,000 -
5.930% due December 2004, callable December 2002 7,000 -
--------------- -----------------
Total securities sold under agreements to repurchase $32,000 $25,000
=============== =================
</TABLE>
<PAGE> 13
Item 2.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
GENERAL
The Company is the holding company for the 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. The Bank is headquartered in
Long Island City, New York and operates five full service branches, four 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
expenses 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, multi-family and commercial real estate mortgage
loans, and to a lesser extent residential construction loans. As a
community-oriented institution, the Bank is generally engaged in attracting
retail deposits from the areas surrounding its branch offices. In addition, the
Bank may borrow funds from the FHLB or through reverse repurchase agreements.
These funds are then generally concentrated in lending activities throughout the
New York City metropolitan area.
FINANCIAL CONDITION
As of March 31, 1998, the Company's total assets were $310.1 million,
representing a $13.1 million, or 4.4%, increase from $297.0 million at of
September 30, 1997. Loans receivable increased by $18.8 million, or 12.3%, to
$172.1 million at March 31, 1998, from $153.3 million at September 30, 1997.
Mortgage-backed securities, inclusive of available for sale, increased by $10.4
million, or 21.7%, to $58.3 million at March 31, 1998 from $47.9 million at
September 30, 1997. The increase in the above assets was offset by a $17.5
million, or 21.7%, decrease in investment securities, inclusive of available for
sale and federal funds sold, to $63.3 million at March 31, 1998, from $80.8
million at September 30, 1997. This overall decrease in investment securities
and federal funds sold is a direct result of the Bank's callable investment
securities held to maturity portfolio experiencing $59.1 million in investment
securities being called since September 30, 1997 due to the flattening of the
yield curve. The Bank has been redeploying the proceeds of such investment
securities into adjustable-rate mortgage loans and other adjustable-rate loan
related assets with shorter durations and positive
<PAGE> 14
convexity. Asset growth was funded by a $15.2 million, or 7.1%, increase in
deposits to $228.6 million at March 31, 1998, from $213.4 million at September
30, 1997. Furthermore, securities sold under agreements to repurchase increased
by $7.0 million, or 28.0%, to $32.0 million at March 31, 1998, from $25.0
million at September 30, 1997, while advances from the FHLB decreased by $2.0
million, or 25.0%, to $6.0 million, at March 31, 1998, as compared to $8.0
million at September 30, 1997. The treasury tax and loan account borrowings
decreased by $8.9 million, or 44.5%, to $11.1 million at March 31, 1998, from
$20.0 million at September 30, 1997. In the aggregate, borrowings as of March
31, 1998 totalled $49.1 million, a reduction of $3.9 million from the $53.0
million outstanding at September 30, 1997. The increase in deposits enabled the
Bank to reduce borrowings and to fund new loan originations and to purchase
adjustable rate mortgages and mortgage-backed securities.
Total stockholders' equity was $28.0 million at March 31, 1998, reflecting a
$1.2 million, or 4.4%, increase from $26.8 million at September 30, 1997. The
increase in stockholders' equity was the result of earnings, partially offset by
the payment of the Company's quarterly cash dividend. At March 31, 1998, the
Company had, exclusive of shares repurchased, 1,706,666 common shares
outstanding. During the six months ended March 31, 1998, the Company's tangible
and stated book value per share of common stock increased by $0.73 and $0.72,
respectively, to $16.36 and $16.43, from $15.63 and $15.71, respectively, at
September 30, 1997.
Non-performing loans totaled $3.0 million, or 1.70% of total loans at March 31,
1998, as compared to $2.8 million, or 1.83% of total loans at September 30,
1997. At March 31, 1998, non-performing assets totalled $7.0 million, or 2.27%
of total assets, as compared to $6.7 million, or 2.25% of total assets at
September 30, 1997. The Company's allowance for loan losses totalled $1.6
million at March 31, 1998, which represents a ratio of allowance for loan losses
to non-performing assets and to total loans of 22.93% and 0.93%, respectively,
as compared to 21.07% and 0.91%, respectively, at September 30, 1997.
ANALYSIS OF OPERATIONS
COMPARISON OF THE THREE MONTHS AND SIX MONTHS ENDED MARCH 31, 1998 AND 1997
Net income for the three months ended March 31, 1998 totalled $737,822, or
diluted earnings per share of $0.44, as compared to net income of $579,526, or
diluted earnings per share of $0.35, for the three months ended March 31, 1997.
The $158,296 or 27.3% increase was primarily attributable a $161,531, or 94.5%
increase in non-interest income, and a $299,779 decrease in non-interest
expense, offset in part by a $54,229 decrease in net interest income and a
$259,665 increase in income taxes. For the six month period ended March 31,
1998, net income increased $264,410, or 22.5%, to $1,437,375, or diluted
earnings per share of $0.85, from $1,172,965, or diluted earnings per share of
$0.70, for the same period in 1997.
The return on average assets equalled 0.96% and 0.95% for the quarter and the
six months ended March 31, 1998, respectively, as compared to 0.88% and 0.89%
for the quarter and the six months ended March 31, 1997, respectively. The
Company's return on average equity
<PAGE> 15
equalled 10.62% and 10.47% for the quarter and six months ended March 31, 1998,
respectively, compared with 8.92% and 9.06% for the quarter and the six months
ended March 31, 1997, respectively.
Net interest income decreased $54,229, or 2.2%, to $2,424,722 for the quarter
ended March 31, 1998, from $2,478,951 for the quarter ended March 31, 1997. For
the six month period ended March 31, 1998, net interest income increased $7,415,
or 0.2%, to $4,940,860, from $4,933,445 for the same period in 1997. The
decrease in net interest income for the quarter ended March 31, 1998, was
primarily due to continued leveraging of the balance sheet, utilization of
borrowings and deposit growth to fund mortgage loan originations and purchases
of investment securities and mortgage-backed securities with lower yields, which
were caused by the declining rate environment and overall flattening of the
yield curve.
As a result, for the quarter ended March 31, 1998, average interest-earning
assets were $290.6 million, which represents a $40.9 million, or a 16.3%
increase, from $250.7 million, for the same period in 1997. The increase in
average interest-earning assets was offset by a $35.3 million, or a 15.7%
increase in average interest-bearing liabilities to $259.5 million for the
quarter ended March 31, 1998, from $224.2 million for the same quarter last
year. For the six months ended March 31, 1998, average interest-earning assets
increased by $32.3 million, or 12.8%, to $285.1 million, from $252.8 million for
the same period last year. The increase in average interest-earning assets was
offset by a $28.3 million, or 12.5%, increase in average interest-bearing
liabilities to $255.7 million for the six months ended March 31, 1998, as
compared to $227.4 million for the same six month period in 1997. The average
yield on interest-earning assets was 7.40% for the quarter ended March 31, 1998,
as compared to 7.67% for the quarter ended March 31, 1997, and the average cost
of interest-bearing liabilities was 4.64% for the quarter ended March 31, 1998,
as compared to 4.21% for the quarter ended March 31, 1997. For the six month
period ended March 31, 1998, the average yield on interest-earning assets was
7.52%, as compared to 7.69% for the same period in 1997, and the average cost of
interest-bearing liabilities was 4.53%, as compared to 4.22% for the same period
in 1997.
The Company's net interest margin decreased by 63 basis points to 3.33%, for the
quarter ended March 31, 1998, as compared to 3.96% for the quarter ended March
31, 1997. For the six month period ended March 31, 1998, the net interest margin
decreased by 43 basis points to 3.47%, as compared to 3.90% for the same period
in 1997. The net interest spread decreased 70 basis points and 48 basis points
to 2.76% and 2.99%, for the quarter and the six months ended March 31, 1998,
respectively, as compared with 3.46% and 3.47% for the same periods in 1997,
respectively. The significant decrease in the net interest margin and the net
interest spread reflects the effects of a flattening yield curve which has
decreased the yields on the Bank's assets and simultaneously increased the costs
associated with the leveraging the balance sheet and deposit growth. The overall
flattening of the yield curve has also contributed to $59.1 million of
investment securities being called for the six month period ending March 31,
1998, as compared to $16.0 million of investment securities being called for the
six month period ending March 31, 1997.
The Company's provision for loan losses for the quarter and the six months ended
March 31,
<PAGE> 16
1998 increased by $10,180 and $830 respectively, to $85,120 and $194,770,
respectively. The provisions for loan losses reflects management's on-going
effort to maintain adequate allowances.
Non-interest income, for the quarter ended March 31, 1998, increased $161,531,
or 94.5%, to $332,448, as compared to $170,917 for the quarter ended March 31,
1997. For the six month period ended March 31, 1998, non-interest income
increased $204,022, or 65.6%, to $515,148 from $311,126 for the six month period
ended March 31, 1997. The $161,531 increase in non-interest income for the
quarter ended March 31, 1998, is attributable to a $68,744 increase in income
realized from additional service fee income from increased amounts of demand
deposit accounts and automated teller machine (ATM) related service fees and a
$94,462 increase in the gain on sale of mortgage-backed securities available for
sale from zero for the same period in 1997. For the six months ending March 31,
1998, non-interest income increased primarily due to the reasons mentioned
above, in addition to a decrease in provisions for losses on investments in real
estate, in which a subsidiary of the bank has a one-third interest.
Non-interest expenses decreased by $299,779, or 18.1%, to $1,359,669 for the
quarter ended March 31, 1998, from $1,659,448 for the same period in 1997.
During the six month period ended March 31, 1998, non-interest expenses
increased by $328,816, or 10.8%, to $2,715,322, from $3,044,138 for the six
month period ended March 31, 1997. For the quarter ended March 31, 1998,
salaries and employee benefits decreased by $359,575, or 35.8%, to $643,841 from
$1,003,416 for the same period in 1997. For the six months ended March 31, 1998,
salaries and employee benefits decreased by $396,272, or 22.7%, to $1,349,191,
from $1,745,463 for the six months ended March 31, 1997. The decrease in
salaries and employee benefits is primarily attributable to a non-recurring
charge of $268,000 for the retirement of a senior officer in the March 1997
quarter. In addition the Company has aggressively reduced certain costs
associated with the Bank's staffing, overtime pay, pension, medical and bonus
plans, which are offset in part by costs associated with the Company's ESOP
Plan.
For the quarter ended March 31, 1998, occupancy expense decreased by $17,515 to
$120,702 from $138,217 for the same period last year. For the six months ended
March 31, 1998, occupancy expense decreased by $27,897, to $242,831 from
$270,728 for the same period in 1997. The decrease in occupancy expense is
primarily attributable to the additional rental income collected on Bank owned
properties. Equipment expense for the quarter and six months ended March 31,
1998, increased by $16,395 and $35,429 respectively, to $177,394 and $346,774,
respectively, from $160,999 and $311,345, respectively for the same periods in
1997. The increase in equipment expense for the quarter and six months ended
March 31, 1998, represents costs associated with the Bank's data processing
servicer. Advertising expense, for the quarter and six months ended March 31,
1998, increased by $15,384 and $44,664, respectively, to $21,849 and $60,716,
respectively. The increase in advertising expense is primarily attributable to
costs associated with an increase in loan and deposit marketing efforts, in
addition to the Bank's 50th anniversary and related gift campaigns. The Company
has been very successful in controlling operating expenses, as evidenced by the
efficiency ratios of 50.48% and 50.05%, for the quarter and six months ended
March 31, 1998, respectively, as compared to 53.41% and 53.02% for the same
periods in 1997.
<PAGE> 17
For the quarter ended March 31, 1998, income tax expense increased by $259,665
to $574,559 as compared to $314,894 for the same quarter in 1997, as a result of
an increase in income before taxes. For the six month period ended March 31,
1998, income tax expense increased by $276,673 to $1,108,541 as compared to
$831,868 for the same period in 1997, as a result of the increase in income
before taxes.
LIQUIDITY AND CAPITAL RESOURCES
The Bank is required to maintain an average daily balance of specified 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 was 5% for fiscal 1997, but is
subject to change from time to time by the OTS to any amount within the range of
4% to 10% depending upon economic conditions and the savings flows of member
institutions. In 1997, OTS regulations also required each savings institution to
maintain an average daily balance of short-term liquid assets of at least 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 OTS has recently lowered the liquidity requirement
from 5% to 4% and eliminated the 1% short term liquid asset requirement. The
Bank's liquidity ratio for March 31, 1998 was 24.50%, which exceeded the
applicable requirements. The Bank has never been subject to monetary penalties
for failure to meet its liquidity requirements.
The primary investment activities of the Bank are the origination 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, advances and
overnight borrowings from the FHLB, as well as reverse repurchase agreements.
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 March 31, 1998, the Bank had outstanding loan commitments to originate
mortgage loans of $10.2 million. Management anticipates that it will have
sufficient funds available and borrowing capability to meet its current loan
originations and loan purchase commitments. Certificates of deposit, which are
scheduled to mature in one-year or less from March 31, 1998 totalled $79.2
million, of which $17.5 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.
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 and 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 $20.9 million, or 6.8% at
March 31, 1998, in excess of the regulatory requirements. The Bank's risk-based
capital ratio as of March 31, 1998, was $22.1 million, or 17.6%, also in excess
of the regulatory capital
<PAGE> 18
requirement of 8.0%.
YEAR 2000 COMPLIANCE
As the year 2000 approaches, a critical business issue has emerged regarding how
existing application software programs and operating systems can accommodate
this date value. In brief, many existing application software products in the
marketplace were designed to only accommodate a two digit date position which
represents the year (e.g., '95 is stored on the system and represents the year
1995). The Company, through a series of phases, has identified the process of
implementing a program designed to ensure that all software used in connection
with the Company's business will manage and manipulate data involving the
transition from 1999 to 2000 without functional or data abnormality and without
inaccurate results related to such data. To the extent the Company's systems are
not fully year 2000 compliant, there can be no assurance that potential systems
interruptions to update software would not have a material adverse effect on the
Company's business. The Company has completed both the Organizational Awareness
Phase and Assessment Phase. The Company has drafted a compliance plan and
established a steering committee. In the Assessment Phase, the Company has
performed a complete inventory of internal business hardware and software as
well as an inventory of environmental systems and critical vendor applications.
Critical applications and a risk assessment in the event of non-compliance have
been defined and the Company has identified resources needed to implement the
Year 2000 Plan. The Company is now in the Renovation Phase which involves
implementing required system hardware and software upgrades and obtaining
various vendor certifications. As such, the Company anticipates that costs
associated to complete its Year 2000 Plan will not exceed $400,000. The Company
anticipates that substantially all of the costs will consists of newly purchased
hardware and will not materially affect the Company's operating results or
financial condition.
<PAGE> 19
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
The Bank does not purchase derivative financial instruments or other financial
instruments for trading purposes. Further, the Bank is not subject to any
foreign currency exchange rate risk, commodity price risk or equity price risk.
The Bank is, however, subject to interest rate risk to the extent that its
interest-bearing liabilities reprice or mature more or less frequently than its
interest-earning assets. The Bank's interest rate risk management policy has
been structured to monitor and maintain the Bank's interest sensitivity to
within the Board prescribed limits while attempting to maximize net interest
income. In connection with its interest rate risk management strategy,
management has emphasized the origination of shorter-term fixed-rate one- to
four- family and mixed-use mortgage loans and the purchase of adjustable-rate
mortgage loans, or mortgage-backed securities, along with limiting investment
purchases to securities with a final maturity or which reprice within five years
or less. However, there can be no assurances that the Bank will be able to
originate adjustable rate loans or acquire mortgage-backed securities with terms
and characteristics which conform with the Bank's underwriting standards,
investment criteria or interest rate risk policies. This strategy is necessary
to reduce the Bank's exposure to interest rate risk. On the liability side,
management closely monitors the pricing of its deposit products, and has made a
conscious effort to extend deposit maturities, and secure fixed-rate borrowings
when market conditions are favorable.
The actual duration of mortgage loans, mortgage-backed securities and callable
investment securities can be significantly impacted by changes in mortgage
prepayment and market interest rates. Mortgage prepayment rates will vary due to
a number of factors, including the regional economy in the area where the
underlying mortgages were originated, seasonal factors, demographic variables
and the assumability of the underlying mortgages. However, the largest
determinants of prepayment rates are prevailing interest rates and related
mortgage refinancing opportunities. Management monitors interest rate
sensitivity so that adjustments in the asset and liability mix, when deemed
appropriate, can be made on a timely basis.
At March 31, 1998, $116.0 million, or 39.2%, of the Bank's interest-earning
assets were in adjustable-rate loans and mortgage-backed securities or floating
rate investments. The Bank's loan portfolio totalled $173.9 million, of which
$69.7 million, or 40.1%, were adjustable-rate loans and $104.2 million, or 59.9%
were fixed-rate loans. At March 31, 1998, the mortgage-backed securities
held-to-maturity portfolio totalled $34.0 million, of which $18.9 million or
55.6% of the mortgage-backed portfolio were adjustable rate securities and $15.1
million or 44.4% were fixed-rate securities. The mortgage-backed securities
portfolio classified as available-for-sale totalled $24.4 million, of which 100%
were adjustable-rate securities. During the six months ended March 31, 1998, the
Bank purchased approximately $21.7 million of adjustable-rate mortgage-backed
securities and $10.3 million of adjustable-rate mortgage loans.
<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
The Company held its Annual Meeting of Shareholders on January 22,
1998. At the said meeting 1,709,700 shares of Common Stock were
eligible to vote, of which 1,507,458 shares were present in person
or by proxy. The following matters were voted upon at the Annual
Meeting and the number of affirmative votes, negative votes and
abstentions with respect to the matters are as follows:
1. At the Annual Meeting, two directors were elected for three year
terms. The nominees were Dominick L. Segrete and Frank S. Latawiec.
FOR WITHHELD
--- --------
Dominick L. Segrete 1,495,188 12,270
Frank S. Latawiec 1,489,288 18,170
The names of each of the directors whose term of office continued
after the Annual Meeting and their respective term expirations are
as follows:
Peter S. Russo 2000
Richard J. Hickey 1999
Raymond M. Calamari 1999
2. The appointment of Radics & Co., LLC as independent auditors of
Financial Bancorp, Inc. for the fiscal year ending September 30,
1998, was ratified and approved in all respects.
FOR AGAINST ABSTAIN
--- ------- -------
1,494,708 9,500 3,250
<PAGE> 21
Item 5. Other information
On September 4, 1997, the Company announced that its Board of
Directors authorized its sixth common stock repurchase program. The
Company is authorized to purchase up to 170,970 or 10% of its common
stock outstanding, from time to time, through open-market
transactions, subject to the availability of stock, during a two
year period. Since September 4, 1997, the Company repurchased 5,000
shares at an average price of $25.875.
On April 29, 1998, the Company declared its regular quarterly cash
dividend for the quarter ended March 31, 1998, of $0.125 per share,
payable on May 27, 1998 to stockholders of record on May 12, 1998.
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 into this document from Exhibits to
Form S-1, Registration Statement and amendments thereto, initially
filed on March 18, 1994, Registration No. 33-76664
<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: May 14, 1998 By: /s/ Frank S. Latawiec
-------------------------
Frank S. Latawiec
President and Chief
Executive Officer
Date: May 14, 1998 By: /s/ P. James O'Gorman
-------------------------
P. James O'Gorman
Executive Vice President and
Chief Financial Officer
<PAGE> 1
<TABLE>
<CAPTION>
Item 6.
- -------
Exhibit 11
----------
Three Months Six Months
Ended Ended
March 31, 1998 March 31, 1998
--------------- ----------------
<S> <C> <C>
Computation of per share earnings
Net income $737,822 $1,437,375
-------- ----------
Weighted average common shares outstanding 1,613,148 1,611,512
Common stock equivalents due to dilutive effect of stock options 73,020 71,619
-------- ----------
Total weighted average common shares and equivalents outstanding 1,686,168 1,683,131
---------- ----------
Basic earnings per common share $0.46 $0.89
----- -----
Diluted earnings per common share $0.44 $0.85
----- -----
</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.
<MULTIPLIER> 1
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 4,026,358
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 36,000,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 25,116,583
<INVESTMENTS-CARRYING> 60,541,349
<INVESTMENTS-MARKET> 61,078,000
<LOANS> 172,122,242
<ALLOWANCE> 1,616,000
<TOTAL-ASSETS> 310,090,911
<DEPOSITS> 228,616,660
<SHORT-TERM> 49,099,658
<LIABILITIES-OTHER> 4,331,579
<LONG-TERM> 0
0
0
<COMMON> 0
<OTHER-SE> 28,043,014
<TOTAL-LIABILITIES-AND-EQUITY> 310,090,911
<INTEREST-LOAN> 6,441,668
<INTEREST-INVEST> 3,850,547
<INTEREST-OTHER> 420,881
<INTEREST-TOTAL> 10,713,096
<INTEREST-DEPOSIT> 4,452,414
<INTEREST-EXPENSE> 5,772,236
<INTEREST-INCOME-NET> 4,940,860
<LOAN-LOSSES> 194,770
<SECURITIES-GAINS> 94,462
<EXPENSE-OTHER> 2,715,322
<INCOME-PRETAX> 2,545,916
<INCOME-PRE-EXTRAORDINARY> 2,545,916
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,437,375
<EPS-PRIMARY> 0.89
<EPS-DILUTED> 0.85
<YIELD-ACTUAL> 7.52
<LOANS-NON> 2,712,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
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<ALLOWANCE-OPEN> 1,526,000
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<RECOVERIES> 5,000
<ALLOWANCE-CLOSE> 1,616,000
<ALLOWANCE-DOMESTIC> 1,616,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,180,000
</TABLE>
