<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, 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 August 12, 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 June 30, 1998 (Unaudited) and September 30, 1997 3
Consolidated Statements of Income for the
Three and Nine Months ended June 30, 1998 and 1997
(Unaudited) 4
Consolidated Statement of Changes in
Stockholders' Equity for the Nine Months
ended June 30, 1998 (Unaudited) 5
Consolidated Statements of Cash Flows for the
Nine Months ended June 30, 1998 (Unaudited) 6-7
Notes to Consolidated Financial Statements 8-11
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 12-17
Part II- Other Information
- ---------------------------
Item 1. Legal Proceedings 18
Item 2. Changes in Securities and Use of Proceeds
Not applicable. 18
Item 3. Defaults Upon Senior Securities
Not applicable. 18
Item 4. Submission of Matters to a Vote of Security Holders 18
Not applicable.
Item 5. Other Information 19
Item 6. Reports on Form 8-K 19
Exhibits 19
Exhibit 11: Computation of per share earnings 20
Signature Page 21
<PAGE> 3
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> 4
<TABLE>
<CAPTION>
FINANCIAL BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
June 30, September 30,
1998 1997
------------------ ------------------
(Unaudited)
Assets
- ------
<S> <C> <C>
Cash and amounts due from depository institutions $3,033,891 $2,738,392
Federal funds sold and securities purchased under agreements to resell 29,375,000 10,650,000
------------------ ------------------
Total cash and cash equivalents 32,408,891 13,388,392
Investment securities available for sale 5,903,500 730,750
Investment securities held to maturity, net; estimated fair value of $44,306,000 and
$69,223,000 at June 30, 1998 and September 30, 1997, respectively 44,235,008 69,410,103
Mortgage-backed securities available for sale 23,045,597 9,357,048
Mortgage-backed securities held to maturity, net; estimated fair value of $31,182,000
and $39,129,000 at June 30, 1998 and September 30, 1997, respectively 30,850,973 38,521,050
Loans receivable, net 191,821,678 153,291,828
Real estate owned, net 731,116 471,417
Investments in real estate, net 3,599,285 3,543,453
Premises and equipment, net 2,287,494 2,431,570
Federal Home Loan Bank of New York stock, at cost 2,110,400 1,845,000
Accrued interest receivable, net 1,941,407 2,248,578
Other assets 2,063,227 1,716,727
------------------ ------------------
Total assets $340,998,576 $296,955,916
================== ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
- ------------------------------------
Deposits $229,026,898 $213,394,282
Advance payments by borrowers for taxes and insurance 1,396,426 1,267,896
Advances from Federal Home Loan Bank of New York 6,000,000 8,000,000
Securities sold under agreements to repurchase 42,000,000 25,000,000
Treasury tax and loan account and other short term borrowings 30,000,000 20,000,000
Other liabilities 3,844,815 2,437,504
------------------ ------------------
Total liabilities 312,268,139 270,099,682
------------------ ------------------
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 June 30, 1998 and 1,709,700 outstanding
at September 30, 1997, respectively 21,850 21,850
Additional paid-in capital 20,415,375 20,239,758
Retained earnings - substantially restricted 15,765,587 14,111,882
Common stock acquried by Employee Stock Ownership Plan (ESOP) (890,174) (1,011,566)
Common stock acquired by Recognition & Retention Plan (RRP) (281,888) (317,955)
Unrealized gain on securities available for sale, net of income taxes 82,175 91,604
Treasury stock, at cost; 478,334 shares at June 30, 1998 and 475,300 shares
at September 30, 1997, respectively (6,382,488) (6,279,339)
------------------ ------------------
Total stockholders' equity 28,730,437 26,856,234
------------------ ----------------
Total liabilities and stockholders' equity $340,998,576 $296,955,916
================== ================
See accompanying notes to consolidated financial statements
</TABLE>
<PAGE> 5
<TABLE>
<CAPTION>
FINANCIAL BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
THREE MONTHS ENDED NINE MONTHS ENDED
------------------------- ----------------------------
June 30, June 30,
------------------------- ----------------------------
1998 1997 1998 1997
----------- ----------- ------------- -------------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Loans $3,604,576 $3,088,028 $10,046,244 $8,953,736
Mortgage-backed securities 909,996 938,701 2,955,855 2,864,489
Investments and other interest-earning assets 732,059 1,024,865 2,536,747 2,917,439
Federal funds sold and securities purchased
under agreements to resell 320,992 18,217 741,873 55,395
----------- ----------- ------------- -------------
Total interest income 5,567,623 5,069,811 16,280,719 14,791,059
----------- ----------- ------------- -------------
Interest expense:
Deposits 2,254,763 2,034,239 6,707,177 5,979,707
Borrowings 707,107 492,858 2,026,929 1,335,193
----------- ----------- ------------- -------------
Total interest expense 2,961,870 2,527,097 8,734,106 7,314,900
Net interest income 2,605,753 2,542,714 7,546,613 7,476,159
Provision for loan losses 118,412 111,000 313,182 306,600
----------- ----------- ------------- -------------
Net interest income after provision for loan losses 2,487,341 2,431,714 7,233,431 7,169,559
----------- ----------- ------------- -------------
Non-interest income (loss):
Fees and service charges 238,413 145,392 592,866 412,747
Gain on sale of securities available for sale 36,750 3,034 131,212 29,387
Gain on sale of loans 2,760 0 2,760 0
Gain from real estate operations 24,077 15,400 41,276 13,428
Miscellaneous 12,124 11,898 54,490 31,288
----------- ----------- ------------- -------------
Total non-interest income 314,124 175,724 822,604 486,850
----------- ----------- ------------- -------------
Non-interest expenses:
Salaries and employee benefits 845,189 734,612 2,194,380 2,480,075
Net occupancy expense of premises 129,589 126,445 372,420 397,173
Equipment 175,372 159,002 522,146 470,347
Advertising 16,016 7,952 76,732 24,004
(Income) loss from real estate owned (9,987) (79) 21,859 8,234
Federal insurance premium 31,725 30,425 93,014 142,653
Miscellaneous 377,517 387,066 993,524 967,075
----------- ----------- ------------- -------------
Total non-interest expenses 1,565,421 1,445,423 4,274,075 4,489,561
----------- ----------- ------------- -------------
Income before income taxes 1,236,044 1,162,015 3,781,960 3,166,848
Income taxes 457,023 500,637 1,565,564 1,332,505
----------- ----------- ------------- -------------
Net income $779,021 $661,378 $2,216,396 $1,834,343
=========== =========== ============= =============
Basic earnings per share $0.48 $0.41 $1.37 $1.12
=========== =========== ============= =============
Diluted earnings per share $0.46 $0.40 $1.31 $1.10
=========== =========== ============= =============
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 6
<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
nine months ended
June 30, 1998 - - 2,216,396 - - - - 2,216,396
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 - 183,285 - 121,392 36,067 - - 340,744
Adjustment to valuation
allowance on securities
available for sale - - - - - (9,429) - (9,429)
Stock issued upon exercise
of options - (7,668) - - - - 26,226 18,558
Cash dividends paid on
common stock - - (562,691) - - - - (562,691)
-------- ----------- ------------ ----------- ---------- --------------- ------------ ------------
Balance at June 30, 1998 $21,850 $20,415,375 $15,765,587 ($890,174) $281,888) $82,175 ($6,382,488) $28,730,437
======== =========== =========== =========== ========== =============== ============ ============
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 7
<TABLE>
<CAPTION>
Financial Bancorp, Inc.
And Subsidiaries
Consolidated Statements of Cash Flows
(Unaudited)
Nine Months Ended
-----------------------------------
June 30,
-----------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Cash flow from operating activities:
Net income $2,216,396 $1,834,343
Adjustments to reconcile net income to net cash
provided by operating activities
Loss (Gain) on sale of real estate owned (18,603) (9,262)
(Gain) on sale of securities available for sale (131,212) (29,387)
Net amortization of premiums and accretion
of discounts on investment securities (169,648) (150,205)
Net amortization of premiums and accretion
of discounts on mortgage-backed securities 62,936 27,303
Accretion of deferred loan fees and discounts (103,984) (89,911)
Depreciation and amortization 207,885 226,841
Provision for loan losses 313,182 306,600
Cost of ESOP and RRP 340,744 298,152
Writedown of investment in real estate 0 14,673
Deferred income taxes (113,534) (76,881)
Decrease (increase) in accrued interest receivable, net 307,171 (52,866)
Decrease (increase) in refundable income taxes 66,388 (240,000)
(Increase) in other assets (291,935) (143,348)
Increase (decrease) in other liabilities 1,407,311 (798,278)
------------- -------------
Net cash provided by operating activities 4,093,097 1,117,774
------------- -------------
Cash flows from investing activities:
Purchases of investment securities available for sale (5,850,375) (4,938,672)
Purchases of investment securities held to maturity (42,884,375) (20,091,000)
Proceeds from sales of investment securities available for sale 736,750 7,890,781
Proceeds from maturities and calls of investment securities held to
maturity 68,227,500 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 12,273,390 7,216,705
Purchases of mortgage loans (24,301,571) (6,668,211)
Loan originations, net of repayments (15,205,227) (6,498,927)
Additions to premises and equipment (54,641) (199,774)
Proceeds from sale of and insurance recoveries
on real estate owned 526,654 276,499
Purchase of Federal Home Loan Bank of N.Y. stock (265,400) (159,200)
Net (increase) decrease in investments in real estate (65,000) (31,895)
------------- -------------
Net cash (used in) provided by investing activities (25,160,236) (12,250,191)
------------- -------------
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 8
<TABLE>
<CAPTION>
Financial Bancorp, Inc.
And Subsidiaries
Consolidated Statements of Cash Flows (Continued)
(Unaudited)
Nine Months Ended
-----------------------------------
June 30,
-----------------------------------
1998 1997
------------- -------------
<S> <C> <C>
Cash flows from financing activities:
Net increase in deposits $15,632,616 $6,494,035
Repayments of FHLB of NY advances (2,000,000) (1,200,000)
Proceeds from reverse repurchae agreements 22,000,000 15,000,000
Repayments of reverse repurchase agreements (5,000,000) (14,046,000)
Net (decrease) increase in treasury tax
account borrowings 10,000,000 9,545,675
Increase in advance payments by
borrowers for taxes and insurance 128,530 73,818
Dividends paid (562,691) (450,063)
Reissuance of treasury stock 18,558 81,270
Purchase of treasury stock (129,375) (1,158,463)
------------- -------------
Net cash provided by financing activities 40,087,638 14,340,272
------------- -------------
Net increase in cash and cash equivalents 19,020,499 3,207,855
Cash and cash equivalents - beginning 13,388,392 5,102,223
------------- -------------
Cash and cash equivalents - ending $32,408,891 $8,310,078
============= =============
Supplemental schedule of noncash investing and
financing activities:
Loans transferred to real estate owned $767,750 $137,006
============= =============
Loans to facilitate sale of real estate owned $0 $96,000
============= =============
Unrealized (gain) loss on securities available for sale ($16,848) ($85,855)
Deferred income taxes 7,419 37,776
------------- -------------
($9,429) ($48,079)
============= =============
Supplemental disclosures of cash flow information:
Cash paid (net of refunds received) during the year for:
Federal, state and city income taxes $1,612,710 $1,649,384
============= =============
Interest paid on deposits and borrowed funds $5,672,000 $7,255,336
============= =============
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 9
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, 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. 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 nine months ended June 30, 1998 are
not necessarily indicative of the results that may be expected for the entire
fiscal year.
Certain amounts for the three and nine months ended June 30, 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 from 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> 10
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 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 year
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.
In April 1998, the FASB issued FASB No. 132, "Employers' Disclosures About
Pensions and Other Post Retirement Benefits." SFAS No. 132 standardizes the
disclosure requirements for these plans and it requires additional information
about changes in the benefit obligations and fair value of plan assets. The
statement is effective for fiscal years beginning after December 15, 1997 and
information for previous periods presented for comparative purposes is required
to be restated. As the statement does not change measurement or recognition
standards for these plans and is only 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 or developments affecting the manner in which the Company keeps
its books and records and performs its financial accounting responsibilities.
It's 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 (EPS)
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. EPS data for the three and nine
months ended June 30, 1997 has been restated as the result of the implementation
of SFAS No. 128, "Earnings Per Share."
<PAGE> 11
<TABLE>
<CAPTION>
INVESTMENT SECURITIES
The following table sets forth certain information regarding the carrying and
estimated fair value of the Company's investment securities at June 30, 1998 and
September 30, 1997, respectively.
June 30, 1998 September 30, 1997
-------------------- -------------------------
Estimated Estimated
Carrying Fair Carrying Fair
Value Value Value Value
------- --------- --------- -----------
(in thousands)
<S> <C> <C> <C> <C>
Investments Securities:
Available for sale
FNMA preferred stock $0 $0 $701 $731
Corporate debt securities 5,853 5,904 0 0
Add: Unrealized gain 51 0 30 0
------ ------ ----- -----
Total investment securities available for sale $5,904 $5,904 $731 $731
====== ====== ===== =====
Held maturity
U.S. Government and agency obligations $43,735 $43,806 $69,410 $69,223
Corporate debt securities 500 500 0 0
------- ------- ------- -------
Total investment securities held to maturity $44,235 $44,306 $69,410 $69,223
</TABLE>
<TABLE>
<CAPTION>
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 June
30, 1998 and September 30, 1997, respectively.
June 30, 1998 September 30, 1997
-------------------- -------------------------
Estimated Estimated
Carrying Fair Carrying Fair
Value Value Value Value
------- --------- --------- -----------
(in thousands)
<S> <C> <C> <C> <C>
Mortgage-backed securities:
Available for sale
FHLMC certificates $12,149 $12,176 $4,422 $4,510
FNMA certificates 10,801 10,870 4,801 4,847
Add: Unrealized gain 96 0 134 0
Total mortgage-backed securities available for ------- ------- ------ ------
sale $23,046 $23,046 $9,357 $9,357
======= ======= ====== ======
Held to maturity
GNMA certificates $18,804 $19,018 $23,335 $23,752
FHLMC certificates 8,420 8,539 11,299 11,480
FNMA certificates 1,875 1,873 1,988 1,998
Other pass-through certificates 1,752 1,752 1,899 1,899
------- ------- ------- -------
Total mortgage-backed securities held to maturity $30,851 $31,182 $38,521 $39,129
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
LOANS RECEIVABLE, NET
The following table sets forth the composition of the Company's loan portfolio
at June 30, 1998 and September 30, 1997, respectively.
June 30, September 30,
1998 1997
------------- --------------
(in thousands)
<S> <C> <C>
Real estate mortgages:
One- to four-family $156,629 $126,440
Equity and second mortgages 2,537 2,637
Multi-family 15,714 11,779
Commercial 17,478 13,217
--------- ---------
192,358 154,073
--------- ---------
Construction 925 574
--------- ---------
Consumer:
Loans on deposit accounts 327 176
Home improvement 2 4
Guaranteed student loans 230 214
Personal 19 23
--------- ---------
578 417
Commercial, including lines of credit 75 77
--------- ---------
Total loans 193,936 155,141
--------- ---------
Less:Loans in process 446 201
Allowance for loan losses 1,681 1,405
Deferred loan fees and discounts (13) 243
--------- ---------
2,114 1,849
--------- ---------
Total loans receivable, net $191,822 $153,292
========= =========
</TABLE>
<PAGE> 13
<TABLE>
<CAPTION>
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 June 30, 1998. The following table sets forth the
composition of the Bank's FHLB advances as of June 30, 1998 and September 30,
1997, respectively.
June 30, 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 0 0
------------- --------------
Total FHLB advances $6,000 $8,000
============= ==============
</TABLE>
<TABLE>
<CAPTION>
SECURITIES SOLD UNDER AGREEMENTS TO REPURCHASE
Securities sold under agreements to repurchase consist of borrowings
collateralized by investment securities. The following table sets forth the
composition of the Company's borrowings collateralized by securities sold under
agreements to repurchase as of June 30, 1998 and September 30, 1997,
respectively.
June 30, 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 0
5.930% due December 2004, callable December 2002 7,000 0
5.050% due June 2008, callable June 1999 10,000 0
--------- ---------
Total securities sold under agreements to repurchase $42,000 $25,000
========= =========
</TABLE>
<PAGE> 14
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 June 30, 1998, the Company's total assets were $341.0 million,
representing a $44.0 million, or 14.8%, increase from $297.0 million at of
September 30, 1997. Loans receivable increased by $38.5 million, or 25.1%, to
$191.8 million at June 30, 1998, from $153.3 million at September 30, 1997.
Mortgage-backed securities, inclusive of available for sale, increased by $6.0
million, or 12.5%, to $53.9 million at June 30, 1998 from $47.9 million at
September 30, 1997. Investment securities, inclusive of available for sale,
decreased by $20.0 million or 28.5% from $70.1 million at September 30, 1997 to
$50.1 million at June 30, 1998 predominantly due to calls and maturities. Asset
growth was funded by a $15.6 million, or 7.3%, increase in deposits to $229.0
million at June 30, 1998, from $213.4 million at September 30, 1997.
Furthermore, securities sold under agreements to repurchase increased by $17.0
million, or 68.0%, to $42.0 million at June 30, 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 June 30, 1998, as compared to $8.0 million at
September 30, 1997. The treasury tax and loan account borrowings increased by
$10.0 million, or 50.0%, to $30.0 million at June 30, 1998, from $20.0 million
at September 30, 1997. In the aggregate, borrowings
<PAGE> 15
as of June 30, 1998 totalled $78.0 million, an increase of $25.0 million from
the $53.0 million outstanding at September 30, 1997. The increase in deposits
and borrowings enabled the Bank to fund new loan originations and to purchase
adjustable rate mortgages and mortgage-backed securities.
Total stockholders' equity was $28.7 million at June 30, 1998, reflecting a $1.9
million, or 7.0%, 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 June 30, 1998, the
Company had, exclusive of shares repurchased, 1,706,666 common shares
outstanding. During the nine months ended June 30, 1998, the Company's tangible
and stated book value per share of common stock increased by $1.14 and $1.12,
respectively, to $16.77 and $16.83, from $15.63 and $15.71, respectively, at
September 30, 1997.
Non-performing loans totaled $2.9 million, or 1.49% of total loans at June 30,
1998, as compared to $2.8 million, or 1.83% of total loans at September 30,
1997. At June 30, 1998, non-performing assets totalled $7.0 million, or 2.06% of
total assets, as compared to $6.7 million, or 2.25% of total assets at September
30, 1997. Excluding the Company's $3.4 million Joint Venture Investment in AFT
Associates, non-performing assets to total assets would decrease to 1.06%. The
Company's allowance for loan losses totalled $1.7 million at June 30, 1998,
which represents a ratio of allowance for loan losses to non-performing assets
and to total loans of 23.88% and 0.87%, respectively, as compared to 21.07% and
0.91%, respectively, at September 30, 1997.
ANALYSIS OF OPERATIONS
COMPARISON OF THE THREE MONTHS AND NINE MONTHS ENDED JUNE 30, 1998 AND 1997
Net income for the three months ended June 30, 1998 totalled $779,021, or
diluted earnings per share of $0.46 per share, as compared to net income of
$661,378, or diluted earnings per share of $0.40 per share for the three months
ended June 30, 1997. The $117,643 or 17.8% increase was primarily attributable a
$55,627 or a 2.3% increase in net interest income after provisions for loan
losses, a $138,400, or a 78.8% increase in non-interest income, and a $43,614 or
an 8.7% decrease in income taxes, offset part by a $119,998 or 8.3% increase in
non-interest expenses. For the nine month period ended June 30, 1998, net income
increased $382,053, or 20.8%, to $2,216,396, or diluted earnings per share of
$01.37, from $1,834,343, or diluted earnings per share of $1.10, for the same
period in 1997.
The return on average assets equalled 0.99% and 0.96% for the quarter and the
nine months ended June 30, 1998, respectively, as compared to 0.97% and 0.91%
for the quarter ended and the nine months ended June 30, 1997, respectively. The
Company's return on average equity equalled 10.98% and 10.64%, for the quarter
and nine months ended June 30, 1998, respectively, compared with 10.08% and
9.40%, for the quarter and the nine months ended June 30, 1997, respectively.
Net interest income increased $63,039, or 2.5%, to $2,605,753 for the quarter
ended June 30, 1998, from $2,542,714 for the quarter ended June 30, 1997. For
the nine month period ended June 30, 1998, net interest income increased
$70,454, or 0.9%, to $7,546,613, from $7,576,159 for the same
<PAGE> 16
period in 1997. The increase in net interest income for the quarter and nine
months ended June 30, 1998, was primarily due to the continued leveraging of the
balance sheet, utilizing low cost borrowings and deposit growth to fund mortgage
loan originations with higher yields.
As a result, for the quarter ended June 30, 1998, average interest-earning
assets were $299.3 million, which represents a $37.8 million, or a 14.4%
increase, from $261.5 million, for the same period in 1997. The increase in
average interest-earning assets was offset by a $32.0 million, or a 13.7%
increase in average interest-bearing liabilities to $266.0 million for the
quarter ended June 30, 1998, from $234.0 million for the same quarter last year.
For the nine months ended June 30, 1998, average interest-earning assets
increased by $35.1 million, or 13.7%, to $291.2 million, from $256.1 million for
the same period last year. The increase in average interest-earning assets was
offset by a $29.3 million, or a 12.8%, increase in average interest-bearing
liabilities to $259.0 million for the nine months ended June 30, 1998, as
compared to $229.7 million for the same nine month period in 1997. The average
yield on interest-earning assets was 7.44% for the quarter ended June 30, 1998,
as compared to 7.75% for the quarter ended June 30, 1997, and the average cost
of interest-bearing liabilities was 4.47% for the quarter ended June 30, 1998,
as compared to 4.33% for the quarter ended June 30, 1997. For the nine month
period ended June 30, 1998, the average yield on interest-earning assets was
7.45%, as compared to 7.70% for the same period in 1997, and the average cost of
interest-bearing liabilities was 4.51%, as compared to 4.26% for the same period
in 1997.
The Company's net interest margin decreased by 42 basis points to 3.48%, for the
quarter ended June 30, 1998, as compared to 3.90% for the quarter ended June 30,
1997. For the nine month period ended June 30, 1998, the net interest margin
decreased by 43 basis points to 3.46%, as compared to 3.89% for the same period
in 1997. The net interest spread decreased 45 basis points and 49 basis points
to 2.97% and 2.95%, for the quarter and the nine months ended June 30, 1998,
respectively, as compared with 3.42% and 3.44% for the same periods in 1997,
respectively. The decline in the net interest margin and net interest spread for
the quarter and nine months ended June 30, 1998 reflects the effects of
leveraging of the balance sheet.
The Company's provision for loan losses for the quarter ended and the nine
months ended June 30, 1998 increased by $7,412 and $6,582, to $118,412 and
$313,182 respectively. The provisions for loan losses reflects management's
on-going effort to maintain adequate allowances.
Non-interest income, for the quarter ended June 30, 1998, increased $138,400, or
78.8%, to $314,424, as compared to $175,724 for the quarter ended June 30, 1997.
For the nine month period ended June 30, 1998, non-interest income increased
$335,754, or 69.0%, to $822,604 from $486,850 for the nine month period ended
June 30, 1997. The $138,400 increase in non-interest income for the quarter
ended June 30, 1998, is primarily attributable to the $93,021 increase in income
realized from additional service fee income from increased amounts of demand
deposit accounts and automated teller machines (ATM's) related service fees. In
addition, the increase in non-interest income was attributable to a $33,716
increase in the gain on sale of investment securities to $36,750 for the quarter
ended June 30, 1998, as compared to $3,034 for the same period in 1997. For the
nine months ended June 30, 1998, non-interest income increased primarily
<PAGE> 17
due to the reasons stated 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 increased by $119,998, or 8.3%, to $1,565,421 for the
quarter ended June 30, 1998, from $1,445,423 for the same period in 1997. During
the nine month period ended June 30, 1998, non-interest expenses decreased by
$215,486, or 4.8%, to $4,274,075, from $4,489,561 for the nine month period
ended June 30, 1997.
For the quarter ended June 30, 1998, salaries and employee benefits increased by
$110,577, or 15.1%, to $845,189 from $734,612 for the same period in 1997. For
the nine months ended June 30, 1998, salaries and employee benefits decreased by
$285,695, or 11.5%, to $2,194,380, from $2,480,075 for the nine months ended
June 30, 1997. The increase in salaries and employee benefits for the quarter
ended June 30, 1998 is primarily attributable to higher compensation and
employee benefits as a result of the continued increase in the Company's stock
paid, whick is used to calculate the expense related to the Company Employee
Stock Owners Plan (ESOP). In addition, compensation expense was also affected by
normal accruals for annual incentive awards. The decrease in salaries and
employee benefits for the nine month period ended June 30, 1998 is primarily
attributable to a non-recurring charge of $268,000 for the retirement of a
senior officer during the March 1997 quarter.
For the quarter ended June 30, 1998, occupancy expense increased by $3,144 to
$129,589 from $126,445 for the same period last year. For the nine months ended
June 30, 1998, occupancy expense decreased by $24,753, to $372,420 from $397,173
for the same period in 1997. Equipment expense for the quarter and nine months
ended June 30, 1998, increased by $16,370 and $51,799, to $175,372 and $522,146,
respectively, from $159,002 and $470,347, respectively for the same periods in
1997. The increase in equipment expense for the quarter and nine months ended
June 30, 1998, represents costs associated with the Bank's data processing
servicer. Advertising expense, for the quarter and nine months ended June 30,
1998, increased by $8,064 and $52,728, to $16,016 and $76,732, 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
successful in controlling operating expenses, as evidenced by the efficiency
ratio of 54.71% and 51.64%, for the quarter and nine months ended June 30, 1998,
respectively, as compared to 53.54% and 53.20% for the same periods in 1997.
For the quarter ended June 30, 1998, income tax expense decreased by $43,614 to
$457,023 as compared to $500,637 for the same quarter in 1997. For the nine
month period ended June 30, 1998, income tax expense increased by $233,059 to
$1,565,564 as compared to $1,332,505 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
<PAGE> 18
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 June 30, 1998 was 28.29%, 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 June 30, 1998, the Bank had outstanding loan commitments to originate
mortgage loans of $15.8 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 June 30, 1998 totalled $76.0
million, of which $16.5 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 4.0% 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 $21.8 million, or 6.5% at
June 30, 1998, in excess of the regulatory requirements. The Bank's risk-based
capital ratio as of June 30, 1998, was $23.0 million, or 16.7%, also in excess
of the regulatory capital 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
<PAGE> 19
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> 20
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's 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 June 30, 1998, $125.6 million, or 38.3%, 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 $193.9 million, of which
$79.4 million, or 40.9%, were adjustable-rate loans and $114.5 million, or 59.1%
were fixed-rate loans. At June 30, 1998, the mortgage-backed securities
held-to-maturity portfolio totalled $30.9 million, of which $17.1 million or
55.5% of the mortgage-backed portfolio were adjustable rate securities and $13.7
million or 44.5% were fixed-rate securities. The mortgage-backed securities
portfolio classified as available-for-sale totalled $23.0 million, of which 100%
were adjustable-rate securities. During the nine months ended June 30, 1998, the
Bank purchased approximately $21.4 million of adjustable-rate mortgage-backed
securities and $24.1 million of adjustable-rate mortgage loans.
<PAGE> 21
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 and Use of Proceeds
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 July 20, 1998, Financial Bancorp, Inc. and Dime Community
Bancshares, Inc. the holding company for the Dime Savings Bank of
Williamsburgh, entered into a definitive merger agreement pursuant
to which Dime Community will acquire Financial Bancorp, Inc.,
subject to regulatory and shareholder approval.
On September 4, 1997, the Company announced that its Board of
Directors authorized its sixth 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 July 29, 1998, the Holding Company declared its regular quarterly
cash dividend for the quarter ended June 30, 1998, of $0.125 per
share, payable on August 12, 1998 to stockholders of record on
August 26, 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
On July 20, 1998, Financial Bancorp, Inc. and Dime Community
Bancshares, Inc. the holding company for the Dime Savings Bank of
Williamsburgh, entered into a definitive merger agreement pursuant
to which Dime Community will acquire Financial Bancorp, Inc.,
subject to regulatory and shareholder approval. Subsequently on July
23, 1998, Financial Bancorp, Inc. filed a Form 8-K, which reported
the terms of the merger. The Merger Agreement was filed as an
exhibit thereto.
<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, 1998 By: /s/ Frank S. Lataweic
----------------------
Frank S. Latawiec
President and Chief
Executive Officer
Date: August 14, 1998 By: /s/ P. James O'Gorman
----------------------
P. James O'Gorman
Senior Vice President and
Chief Financial Officer
<PAGE> 1
<TABLE>
<CAPTION>
Item 6.
Exhibit 11
Three Months Nine Months
Ended Ended
June 30, 1998 June 30, 1998
---------------- ----------------
<S> <C> <C>
Computation of per share earnings
Net income $779,021 $2,216,396
---------- ----------
Weighted average common shares outstanding 1,614,972 1,612,675
---------- ----------
Common stock equivalents due to dilutive effect of stock options 81,998 75,079
---------- ----------
Total weighted average common shares and equivalents outstanding 1,696,970 1,687,754
---------- ----------
Basic earnings per common share $0.48 $1.37
---------- ----------
Diluted earnings per common share $0.46 $1.31
---------- ----------
</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> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> APR-01-1998
<PERIOD-END> JUN-30-1998
<EXCHANGE-RATE> 1
<CASH> 3,033,891
<INT-BEARING-DEPOSITS> 229,026,898
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 5,903,500
<INVESTMENTS-CARRYING> 75,085,981
<INVESTMENTS-MARKET> 75,488,000
<LOANS> 191,821,678
<ALLOWANCE> 1,681,000
<TOTAL-ASSETS> 340,998,576
<DEPOSITS> 229,026,898
<SHORT-TERM> 78,000,000
<LIABILITIES-OTHER> 5,241,241
<LONG-TERM> 0
0
0
<COMMON> 0
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 340,998,576
<INTEREST-LOAN> 10,046,244
<INTEREST-INVEST> 5,492,602
<INTEREST-OTHER> 741,873
<INTEREST-TOTAL> 16,280,719
<INTEREST-DEPOSIT> 6,707,177
<INTEREST-EXPENSE> 8,734,106
<INTEREST-INCOME-NET> 7,546,613
<LOAN-LOSSES> 313,182
<SECURITIES-GAINS> 131,212
<EXPENSE-OTHER> 4,274,075
<INCOME-PRETAX> 3,781,960
<INCOME-PRE-EXTRAORDINARY> 3,781,960
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,216,396
<EPS-PRIMARY> 1.37
<EPS-DILUTED> 1.31
<YIELD-ACTUAL> 7.44
<LOANS-NON> 1,865,000
<LOANS-PAST> 542,000
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,616,000
<CHARGE-OFFS> 65,000
<RECOVERIES> 12,000
<ALLOWANCE-CLOSE> 1,681,000
<ALLOWANCE-DOMESTIC> 1,681,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,203,000
</TABLE>
