SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended December 31, 1999
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: 0-18782
ES&L BANCORP, INC.
(Exact name of registrant as specified in its charter)
Delaware 16-1387158
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
300 W. Water St., Elmira, New York 14901
(Address of principal executive offices) (Zip Code)
Registrant's telephone no., including area code: (607) 733-5533
Former name, former address and former fiscal year, if
changed since last report.
Indicate by check X 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 shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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. 830,082
<PAGE>
ES&L BANCORP, INC. AND SUBSIDIARIES
December 31, 1999
Index Page
Part I - Financial Information
Item 1 - Financial Statements:
Consolidated Statements of Financial 1
Condition as of December 31, 1999
(Unaudited) and June 30, 1999
Consolidated Statements of Income 2
(Unaudited) for the three months and six
months ended December 31, 1999 and 1998
Consolidated Statements of Cash Flows 3
(Unaudited) for the six months ended
December 31, 1999 and 1998
Notes to Consolidated Financial Statements 4
Item 2 - Management's Discussion and Analysis of 5
Financial Condition and Results of Operations
Non-Performing Loans at December 31, 1999
and June 30, 1999
Risk-Based Capital Information at
December 31, 1999 and June 30, 1999
Part II - Other Information
Signatures
<PAGE>
<TABLE>
E S & L BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition as of
December 31, 1999(Unaudited) and June 30, 1998
<CAPTION>
DEC 31, JUNE 30,
1999 1999
(Unaudited) (1)
<S> <C> <C>
ASSETS --------------------------
Cash and Cash Equivalents $2,915,923 $792,510
Investment Securities Held for Sale $140,935 $162,287
Investment Securities $5,393,751 $4,398,669
Other Investments $6,175,682 $1,710,000
Mortgage-Backed Securities Held for Sale $849,148 $888,745
Mortgage-Backed Securities $2,854,371 $3,134,602
Mortgage Loans Held For Sale $2,518,003 $5,541,981
Loans Recievable, Net $138,018,539 $129,286,692
Federal Home Loan Bank Stock, at cost $2,001,600 $1,313,100
Foreclosed Real Estate-Real Estate Owned $55,999 $34,000
Investment In Joint Venture:
Acquisition, Development & Construction $620,991 $480,272
Projects
Mortgage Banking Partnership $172,646 $182,334
Property and Equipment, Net $2,833,552 $2,811,006
Accured Interest Recievable $862,776 $815,858
Other Assets $2,183,638 $2,129,752
---------------------------
Total Assets $167,597,554 $153,681,808
===========================
LIABILITIES & STOCKHOLDERS' EQUITY
- -----------------------------------------
Liabilities:
Deposits $108,729,654 $111,586,295
Advances - FHLB of NY $39,180,938 $22,586,951
Other Borrowings $0 $0
Accrued Interest Payable:
Deposits $202 $4,090
Borrowings $97,440 $85,356
Advances From Borrowers For
Taxes and Insurance $3,720,192 $3,192,995
Other Liabilities $431,684 $587,021
---------------------------
Total Liabilities $152,160,110 $138,042,708
---------------------------
Stockholders' Equity:
Serial Preferred Stock, 280,000
Shares Authorized; None Issued $0 $0
Common Stock, $.01 Par Value;
1,667,988 Shares Authorized,
866,166 Shares Issued $8,662 $8,662
Additional Paid-In-Capital $2,711,666 $2,711,666
Retained Earnings - Substantially
Restricted $13,376,592 $13,527,648
Net Unrealized Gain/(Loss) on
Invsetments Held for Sale $8,093 $15,643
Treasury Stock (35,771 & 34,131 shares,
respectively, at cost ($667,569) ($624,519)
---------------------------
Total Stockholders' Equity $15,437,444 $15,639,100
Total Liabilities & Stockholder Equity $167,597,554 $153,681,808
===========================
Shares Outstanding 830,395 832,035
===========================
(1): Amounts at June 30, 1999 have been extracted from the audited
financial statements at that date and condensed.
BOOK VALUE $18.59 $18.80
</TABLE>
<PAGE>
<TABLE>
E S & L BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<CAPTION>
3 MONTHS ENDING 6 MONTHS ENDING
DEC. 31, DEC. 31, DEC. 31, DEC. 31,
1999 1998 1999 1998
(Unaudited)(Unaudited)(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Interest Income:
Loans $2,850,064 $2,755,299 $5,665,003 $5,597,564
Investment Securities $114,910 $24,019 $219,734 $48,814
Mortgage-Backed Securities $66,084 $19,901 $134,652 $43,195
Interest-Earning Deposits &
Other $67,349 $14,002 $92,772 $32,021
---------------------------------------------
Total Interest Income $3,098,407 $2,813,221 $6,112,161 $5,721,594
Interest Expense:
Deposits $1,198,297 $1,276,439 $2,418,782 $2,611,575
Borrowings $465,461 $202,656 $874,594 $406,910
---------------------------------------------
Total Interest Expense $1,663,758 $1,479,095 $3,293,376 $3,018,485
Net Interest Income $1,434,649 $1,334,126 $2,818,785 $2,703,109
Provision For Loan Losses $0 $0 $0 $0
---------------------------------------------
Net Interest Income After $1,434,649 $1,334,126 $2,818,785 $2,703,109
Provision for Losses
Other Income:
Service Fees And Other Charges $43,480 $41,246 $83,399 $84,065
Gain on the Sale of Investment $0 $7,344 $0 $7,344
Income From Loan Servicing $91,418 $42,331 $114,829 $87,385
Other Operating Income $42,794 $67,499 $131,693 $203,912
Income from Joint Venture $7,000 $3,500 $21,000 $14,000
Gain on Sale of Mortgages $70,768 $153,100 $297,747 $291,257
---------------------------------------------
Total Other Income $255,460 $315,020 $648,668 $687,963
Other Expenses:
Employee Comp. & Benefits $484,563 $483,663 $1,005,775 $988,850
Office Occupancy & Equip. $142,244 $149,393 $295,298 $281,044
FDIC Premiums $26,442 $27,832 $52,391 $56,518
Other $192,046 $168,886 $405,888 $363,709
---------------------------------------------
Total Other Expenses $845,295 $829,774 $1,759,352 $1,690,121
---------------------------------------------
Income Before Taxes $844,814 $819,372 $1,708,101 $1,700,951
Income Taxes $299,420 $279,544 $611,887 $615,197
---------------------------------------------
NET INCOME $545,394 $539,828 $1,096,214 $1,085,754
=============================================
Earnings Per Share: $0.66 $0.65 $1.32 $1.30
=============================================
Dividend Per Common Share $0.25 $0.25 $1.50 $0.50
=============================================
Average Common Shares
Outstanding 830,570 831,873 830,802 832,868
=============================================
</TABLE>
<PAGE>
<TABLE>
E S & L BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<CAPTION>
SIX MONTHS ENDED DEC. 31,
1999 1998
(Unaudited) (Unaudited)
<S> <C> <C>
CASH FLOWS FROM OPERATION ACTIVITIES
Net Income $1,096,214 $1,085,754
Adjustments To Reconcile Net Income To Net
Cash Provided from Operating Activities:
Depreciation $98,392 $94,516
Provision For Loan Losses $0 $0
Net Amortization of Premiums & Discounts $265,122 $203,028
Deferred Loan Origination Fees ($326) ($9,327)
(Income)/Loss from ADC Joint Venture ($21,000) ($14,000)
Changes in Certain Assets and Liabilities:
Mortgage Loans Held For Sale $3,023,978 ($2,577,747)
Foreclosed Real Estate ($21,999) $260,226
Accured Interest Receivable ($46,918) $78,889
Other Assets ($53,886) ($58,668)
Accrued Interest Payable $8,196 ($9,469)
Advances From Borrowers For
Taxes and Insurance $527,197 ($128,511)
Other Liabilities ($155,337) ($57,694)
-------------------------
Net Cash (Used For) Provided From Operating $4,719,633 ($1,133,003)
CASH FLOWS FROM INVESTMENT ACTIVITIES:
Net Other Increase In Loans Receivable ($8,982,818) $3,623,768
Investment In Joint Ventures ($131,031) $141,422
Purchase of FHLB Stock ($688,500) $0
Net Investment Security Activity ($5,439,412) $1,014,903
Net Mortgage Backed Security Acitvity $319,828 $287,571
Purchases Of Property & Equipment, Net ($120,938) ($31,412)
-------------------------
Net Cash Provided From (Used For) Investing ($15,042,871) $5,036,252
CASH FLOWS FROM FINANCING ACTIVITIES:
Interest Credited To Dep. Accts., Excl. Escrow $3,285,748 $2,606,166
Net Other (Decrease) Increase in Deposits ($6,142,389)($4,820,886)
Net Increase (Decrease) FHLB Advances $16,593,987 ($6,304,991)
Proceeds From Exercise of Stock Options $0 $24,176
Purchase of Treasury Stock ($43,050) ($157,225)
Dividends Paid on Common Stock ($1,247,645) ($417,374)
-------------------------
Net Cash (Used For) Provided From Financing $12,446,651 ($9,070,134)
Net Increase (Decrease) In Cash Equivalents $2,123,413 ($5,166,885)
Cash and Cash Equivalents At Beginning Of
Period $792,510 $7,367,355
-------------------------
Cash and Cash Equivalents At End of Period $2,915,923 $2,200,470
=========================
</TABLE>
<PAGE>
ES&L BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation:
The consolidated financial statements include the accounts
of the Corporation and its wholly-owned subsidiary, Elmira
Savings and Loan, F.A. (the Bank), as well as the Bank's wholly
owned subsidiaries, Brilie Corporation (d/b/a ES&L Financial
Services) and ES&L Mortgage Corporation (d/b/a Cayuga Mortgage
Company). All significant inter-company accounts have been
eliminated.
The consolidated financial statements for the six months
ending December 31, 1999 and 1998 are unaudited and do not
include information or footnotes necessary for a complete
presentation of financial condition and results of operations and
changes in cash flows in conformity with generally accepted
accounting principles, but reflect, in the opinion of management,
all adjustments, consisting of normal recurring accruals,
necessary to present fairly these consolidated financial
statements. The results for the six months ending December 31,
1999 are not necessarily indicative of the results to be expected
for the entire fiscal year ending June 30, 2000.
2. Net Income Per Common Share:
Net income per common share is based on the weighted average
total shares outstanding during the respective periods. Weighted
average total shares outstanding for the periods included herein
are as follows:
Dec. 31, 1999 Dec. 31,1998
Three Months Ended 830,570 831,873
Six Months Ended 830,802 832,868
<PAGE>
MANAGEMENT DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
MANAGEMENT DISCUSSION AND ANALYSIS:
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL:
ES&L Bancorp, Inc., (the "Corporation") is a Delaware
Corporation whose primary asset is the stock of Elmira
Savings & Loan, F.A. (the "Bank"). The Bank, a federally
chartered savings association, founded in 1888, operates
through one full service office located in Elmira, New
York, and a "cashless" deposit office in Ithaca, NY.
The Corporation, through the Bank, is primarily engaged
in the business of accepting deposits from the general
public and originating loans secured by residential real
estate. The Bank also engages in commercial real estate
lending in its' primary market area and, to a lesser
extent, consumer lending and invests in government, federal
agency obligations, and high grade corporate debt
securities.
The Bank's operations include two wholly owned
subsidiaries, Brilie Corporation (d/b/a ES&L Financial
Services) and ES&L Mortgage Corporation (d/b/a Cayuga
Mortgage Company). Brilie Corporation is a provider of
nontraditional investment and insurance products to the
Bank's customers and the general public. The investment
products, which include life insurance and annuity
contracts, health insurance and mutual funds, are offered
under an agency relationship with major insurance companies
and third party mutual funds providers. ES&L Mortgage
Corporation is engaged in mortgage banking activities
through the origination of mortgage loans for sale to
investors, one of whom is the Bank.
FINANCIAL CONDITION:
At December 31, 1999 the Corporation's total assets equaled
$167,597,554, an increase of $13,915,746, or 9.05%,
compared to total assets of $153,681,808, at the beginning
of the fiscal year. The Corporation operates on a fiscal
year, which ends each year on June 30th. The increase in
assets is reflected in a $8,731,847 increase in net loans'
receivable, combined with a $5,439,412 net increase in
investments and a $2,123,413 increase in cash and cash
equivalents. The Corporation's mortgage loans held for
sale decreased by $3,023,978 during the six months ending
December 31, 1999. The growth in assets includes a $5.0
million short term investment, which the Corporation
intends to redeem at its' maturity in March 2000.
Redemption of this asset will reduce the size of the
Corporation's assets at the end of the next quarter.
<PAGE>
The growth in the Corporation's assets has been funded by
an increase in borrowings, specifically Advances from the
Federal Home Loan Bank of New York (FHLB Advances), which
have increased by $16,593,987 since the start of the 2000
fiscal year, and totaled $39,180,938 at December 31, 1999.
Part of the increase in borrowings includes a $5.0 million
FHLB Advance which the Corporation incurred as part of its'
Y2K contingency plan. Customer deposits have decreased by
$2,856,641 to $108,729,654 during the same six month
period.
The Corporation's stockholders' equity decreased by
$201,656 to $15,437,444 at December 31, 1999. While the
Corporation has posted record earnings ($1,096,214) for the
semi-annual period ending December 31, 1999, during the
same period it paid cash dividends to its' stockholders in
the amount of $1,247,645. Included in the dividends paid
to stockholders was a one time, special $1.00 per share
cash dividend, paid in July 1999, which totaled $832,035.
RESULTS OF OPERATION: QUARTER ENDING DECEMBER 31, 1999 AND
DECEMBER 31, 1998.
For the quarter ending December 31, 1999, the Corporation's
net interest income increased by $100,523, or 7.53%, to
$1,434,649.
Volume increases, within each category of the Corporation's
interest earning assets, were responsible for a $285,186,
or 10.14% increase in total interest income. The majority
of the interest income earned by the Corporation is
generated from its' loan portfolio. For the quarter ending
December 31, 1999, interest earned on the loan portfolio
totaled $2,850,064, an increase of $94,765, or 3.44%,
compared to the quarter ending December 31, 1998. The
increase is largely attributable to a $7.6 million increase
in the average balance of the loan portfolio, which more
than offset an 18 basis point decrease in the average yield
of the portfolio. For the three months ending December 31,
1999 the loan portfolio had an average balance of $141.4
million, yielding 8.06%, compared to $133.8 million,
yielding 8.24%, for the three months ending December 31,
1998. The same scenario occurred with the Corporation's
mortgage backed security (MBS) portfolio, where the average
balance increased by $2.7 million, from $1.1 million during
the December 1998 quarter to $3.8 million for the quarter
ending December 31, 1999. During the same comparative
period, the average yield on the portfolio decreased
slightly, from 7.03% during the 1998 quarter to 6.97% for
the current quarter. As a result interest generated from
the MBS portfolio increased by $46,183 to $66,084 for the
December 1999 quarter. Increases in both the average
balance and yield prompted increased earnings on the
Corporation's investment security portfolio and interest
<PAGE>
earning deposits. The average balance of the Corporation's
investment security portfolio equaled $7.5 million,
yielding 6.13%, and generated interest and dividend income
totaling $114,910 for the three months ending December 31,
1999. During the December 31, 1998 quarter this portfolio
generated interest and dividend income of $24,019, with an
average balance of $1.6 million and an average yield of
5.99%. Interest earned on the Corporation's interest
earning deposits totaled $67,349 for the three months
ending December 31, 1999, an increase of $53,347, compared
to the December 1998 quarter. The average balance of
interest earning deposits were $4.1 million, yielding
6.59%, and $1.2 million, yielding 4.80%, for the quarters
ending December 31, 1999 and 1998, respectively.
As was previously identified, the growth in the
Corporation's assets have been funded by FHLB Advances,
which averaged $34.7 million during the December 1999
quarter, compared to an average balance of $14.6 million
during the same quarter a year ago. Interest expense
related to FHLB Advances totaled $465,461 during the
recently concluded quarter, compared to $202,656 during the
December 1998 period. The average cost of the borrowings
has decreased by 19 basis points, from 5.56% for the 1998
quarter to 5.37% for the current quarter. Included in
borrowing's outstanding at December 31, 1999 was a $5.0
million four month FHLB Advance, which was a part of the
Bank's Y2K contingency planning. This borrowing was an
attempt to fund any Y2K related liquidity issues that might
have arisen at year end. No liquidity issues ever
materialized. No similar borrowings were outstanding
during the comparative period. A decrease in the average
cost of deposits prompted a $78,142 decrease in deposit
interest expense. Deposit interest expense totaled
$1,198,297 and $1,276,439 for the quarters ending December
31, 1999 and 1998, respectively. The average balance and
cost of total deposits for the three months ending December
31, 1999 was $112.5 million, costing 4.26%, compared to an
average balance of $111.9 million, costing 4.56%, for the
quarter ending December 31, 1998. The increase in
borrowings, relative to retail deposits, is based upon
Management's belief that, at the time, this was the most
cost effective means of funding asset growth.
Total other income earned by the Corporation during the
quarter ending December 31, 1999 was $255,460, a decrease
of $59,560, or 18.91%, compared to total other income of
$315,020 recorded during the December 1998 quarter. The
majority of the decrease is directly related to a decrease
in residential mortgage originations. The Bank and its'
mortgage banking affiliates originate the majority of their
fixed rate residential mortgages for sale in the national
secondary mortgage market. A higher interest rate
<PAGE>
environment existed during the December 1999 quarter and
has slowed residential mortgage originations, especially
refinance activity. As a result, gains recorded on the
sale of mortgages have decreased from $153,100 in the
December 1998 period, to $70,768 in the current quarter.
Similarly revenue generated by, ES&L Mortgage Corporation
decreased by $18,700 during the December 1999 quarter.
This reduction accounted for the majority of the decline in
other operating income, which decreased by $24,705, to
$42,794 for the three months ending December 31, 1999,
compared to $67,499 for the December 1998 three month
period. During the December 1999 quarter the Corporation's
income from loan servicing increased by $49,087 to $91,418,
compared to $42,331 for the December 1998 quarter. The
increase is a result of the growth in the outstanding loan
servicing balances, as well as a change in expense
amortization calculations of mortgage servicing rights as
defined by Financial Accounting Standards No. 122 (SFAS
122). This change was a result of operating within a much
higher interest rate environment, which has greatly
extended the average life of the loans being serviced by
the Corporation.
The Corporation's other operating expense totaled $845,295
for the quarter ending December 31, 1999, an increase of
$15,521, or 1.87%, compared to $829,774 for the comparable
quarter. The increase is largely related to the
Corporation's other expenses, which increased $23,160 to
$192,046 during the December 1999 period. Marketing and
advertising expenses rose $10,600 and an additional $5,000
in office supply expense accounted for the majority of the
increase which was incurred during the current quarter.
The net impact of employee compensation, office occupancy &
equipment and FDIC insurance expenses decreased during
December 1999 quarter, in comparison to the December 1998
period.
The Corporation's income tax provision totaled $299,420 for
the quarter ending December 31, 1999, an increase of
$19,876 compared to the quarter ending December 31, 1998.
RESULTS OF OPERATION: SIX MONTHS ENDED DECEMBER 31, 1999
AND DECEMBER 31, 1998.
Net interest income generated by the Corporation totaled
$2,818,785 for the six months ending December 31, 1999, an
increase of $115,676, or 4.28%, compared to the six months
ending December 31, 1998.
Interest income earned by the Corporation increased by
$390,567, or 6.83%, and totaled $6,112,161 for the period
ending December 31, 1999, compared to total interest income
of $5,721,594, generated during the comparable six month
period in 1998. The majority of the interest income
recorded by the Corporation is generated from its' loan
<PAGE>
portfolio. Interest earned on loans totaled $5,665,003, an
increase of $67,439, or 1.20%, compared to $5,597,564
earned during the comparative six month period. The
increase is attributable to an increase in the average loan
balance outstanding, which more than offset a decrease in
the average yield of the portfolio. For the six months
ending December 31, 1999 the average balance of the loan
portfolio was $141.3 million, yielding 8.02%, compared to
an average balance of $134.4 million, yielding 8.33% during
the six months ending December 31, 1998. The same is true
of the Corporation's MBS portfolio, which grew in average
balance from $1.2 million, yielding 7.29%, for the six
months ending December 31, 1998, to $3.9 million, yielding
6.96%, for the semi-annual period ending December 31, 1999.
This resulted in a $91,457 increase in interest income
earned on the MBS portfolio. Increases in both the average
balance and the average yield of the Corporation's
investment portfolio and its' interest earning deposits
provided increased income of $170,920 and $60,751,
respectively. The average balance of the investment
portfolio totaled $7.2 million, yielding 6.78%, for the
1999 period, compared to an average balance of $1.7
million, yielding 5.58%, during the 1998 six month period.
The average balance of interest earning deposits has grown
from $1.9 million, yielding 3.41%, for the 1998 period, to
$3.1 million, yielding 4.34%, for the 1999 period.
Earlier in the filing it was identified that it was
Management's belief that, at the present time, the most
cost effective way of financing its' asset growth was
through an increase in FHLB Advances, as opposed to an
increase in retail deposits. As a result of this decision,
the average balance of borrowings has increased from $15.5
million, costing 5.26%, for the December 1998 six month
period to $32.0 million, costing 5.47%, for the current six
month period. Correspondingly, interest expense paid on
borrowings has risen and totaled $874,594 for the six month
period ending December 31, 1999 more than double the
$406,910 paid during the comparable six month period in
1998. Interest paid on deposits decreased by $192,793, or
7.38%, to $2,418,782 for the December 1999 period. Average
deposits outstanding remained fairly stable during the
average six month periods ($113.8 million and $113.0
million for the periods ending December 31, 1999 and 1998,
respectively). However the average cost of deposits
declined by 37 basis points, from 4.62% for the 1998 six
month period to 4.25%, for the current period.
Total other income generated by the Corporation equaled
$648,668 for the December 1999 period, a decrease of
$39,295, or 5.71%, compared to the December 1998 period.
As was identified earlier in this filing, the Corporation,
after an extensive review, has adjusted its' policies
regarding the calculation of the expense related to the
amortization of mortgage servicing rights, as required by
<PAGE>
Financial Accounting Standard No. 122 (SFAS 122). The
resulting change, combined with an increase in the
outstanding balance of serviced loans, prompted an increase
in income from loan servicing, which rose by 31.4% to
$114,829 for the six months ending December 31, 1999. Loans
serviced for others, for which the Corporation is either
paid a servicing fee, or receives tax credits, totaled
$184.5 million and $162.6 million at December 31, 1999 and
1998, respectively. The Corporation's other operating
income declined by $72,219 from $203,912 for the six months
ending December 1998 to $131,693 for the current period.
During the 1998 period the Corporation had recorded profits
on the sale of foreclosed property of nearly $57,000.
During the 1999 period the Corporation has owned much less
foreclosed real estate and therefore gains on property
sales during the 1999 period have been reduced and total
approximately $6,500. The Corporation's two subsidiaries
have also experienced decreases in revenues during the 1999
period. Investment and insurance sales from ES&L Financial
Services are down nearly $19,000 during the six months
ending December 1999, while ES&L Mortgage Corporation's
revenue have decreased $11,600.
The Corporation's total other expense increased by 4.10%,
or $69,231, to $1,759,352 for the six months ending
December 31, 1999. The expense related to employee
compensation and benefits increased by $16,925, or 1.71%,
and totaled $1,005,775 for the December 1999 six month
period. Office occupancy and equipment expense increased by
$14,254 to $295,298 during the current quarter, primarily
as a result of increased service bureau and depreciation
related expenses. The Corporation's other expenses totaled
$405,888 for the December 1999 period, an increase of
$42,179 over the comparable six month period. More than
half of the increase is related to marketing and
advertising expense, while at the same time the additional
expense in smaller increments have been incurred for audit
and accounting fees, office supplies and expenses related
to loan originations. The Corporation also spent nearly
$6,600 in Y2K related expenses during the 1999 period,
nearly $5,000 more than the comparable period.
The Corporation's income tax allowance was nearly identical
during the two six month periods and totaled $611,887 and
$615,197 for the 1999 and 1998 periods, respectively.
<PAGE>
ELMIRA SAVINGS & LOAN, F.A.
NON-PERFORMING LOANS
Loans are reviewed on a monthly basis and are placed on
non-accrual status when the opinion of management, the collection
of additional interest is doubtful. Residential and commercial
mortgage loans are generally placed on non-accrual when
either principal or interest is more than 90 days past due.
Interest accrued and unpaid at the time a loan is placed on
non-accrual status is charged again interest income. Subsequent
payments are either applied to the outstanding principal balance
or recorded as interest income, depending on the assessment
ultimate collectibility of the loan. Consumer loans are
generally charged off or before the loan becomes 120 days
delinquent, although collection efforts continue.
The following table sets forth information with respect to
the Association's non-performing assets at December 31, 1999 and
June 30, 1999, respectively:
<TABLE>
<CAPTION>
12-31-99 06-30-99
<S> <C> <C>
Loans accounted for on a
non-accrual basis:
Real Estate:
Residential $68,576.08 $73,475.92
Commercial $66,389.43 $66,129.28
Commercial/Line of Credit $0.00 $0.00
Consumer/Home Equity $0.00 $0.00
Commercial (Non-Mortgage) $0.00 $0.00
Education $0.00 $0.00
Consumer $0.00 $0.00
Other $0.00 $0.00
Total $134,965.51 $139,605.20
Accuring loans which are
contractually past due
90 days or more:
Real Estate:
Residential $0.00 $182,283.54
Commercial $0.00 $75,308.43
Commercial/Line of Credit $0.00 $0.00
Consumer/Home Equity $0.00 $0.00
Commercial (Non-Mortgage) $0.00 $0.00
Education $0.00 $0.00
Consumer $0.00 $0.00
Other $0.00 $0.00
Total $0.00 $257,591.97
Total of non-accrual and
90 days past due loans $134,965.51 $397,197.17
Percentage of total loans 0.10% .29%
Other non-performing assets $55,999.08 $34,000.00
</TABLE>
<PAGE>
ELMIRA SAVINGS & LOAN, F.A.
RISK BASED CAPITAL CALCULATION
<TABLE>
The table below presents the Association's capital position elative to
its various minimum statutory and regulatory equirements at December 31, 1999
and June 30, 1999 respectively:
<CAPTION>
AMOUNT % AMOUNT %
<S> <C> <C> <C> <C>
Tangible Capital......... $14,348,519.80 8.69% $15,004,638.20 9.79%
Tangible Capital Requirement $2,464,854.94 1.50% $2,299,111.96 1.50%
Excess $11,883,664.86 7.19% $12,705,526.24 8.29%
Core Capital................ $14,348,519.80 8.69% $15,004,638.20 9.79%
Core Capital Requirement.... $4,929,709.87 3.00% $4,598,223.91 3.00%
Excess $9,418,809.93 5.69% $10,406,414.29 6.79%
Core and Supplementary Capital $15,617,087.94 14.86% $16,270,429.27 16.07%
Current Risk-Based Capital
Requirement................. $8,495,052.72 8.00% $8,100,840.70 8.00%
Excess $7,122,035.22 6.86% $8,169,588.57 8.07%
<FN>
(1) Based upon tangible assets for purposes of the tangible
capital and core capital requirements and risk-weighted assets
for purpose of the risk-based capital requirement.
</TABLE>
<TABLE>
<CAPTION>
12-31-99 06-30-99
<S> <C> <C>
Tangible Assets - 164,323,662.41 153,274,130.36
Risk Weighted Assets - 106,188,159.01 101,260,508.80
</TABLE>
<PAGE>
ES&L BANCORP, INC.
PART II
OTHER INFORMATION
Item 1 - Legal Proceedings
Not Applicable
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.
(a) The registrant held its 1999 annual meeting of stockholders
on Monday, October 25, 1999.
(b) The item is inapplicable since (i) proxies for the
Registrant's annual meeting were solicited pursuant to
Regulation 14 under the Securities Exchange Act of 1934,
(ii) there were no solicitation in opposition to
management's nominees as listed in the proxy statement and
(iii) all of such nominees were elected.
(c) The matters voted upon at the annual meeting were: (i) the
election of directors; (ii) the ratification of the
appointment of Mengel, Metzger, Barr & Co., LLP as
independent auditors for the Corporation for the fiscal
year ending June 30, 2000; and (iii) the ammendment of the Corporation's
Certificate of Incorporation which reduced the number of common and
preferred shares authorized to be issued by the Corporation.
1. Election of Directors: For Against
Gerald F. Schichtel 751,983 1,687
Robert E. Butler 752,950 720
William A. McKenzie 752,950 720
2. Ratification of Appointment of Auditors:
For Against Abstain
752,500 665 505
3. Reduction of common and preferred shares outstanding:
For Against Abstain
695,664 4,780 1,122
(d) This item is inapplicable since the registrant's
stockholders did not receive any solicitation subject to
Rule 14a-11 in connection with the annual meeting.
Item 5 - Other Information
On January 18, 2000, the Board of Directors of ES&L Bancorp,
Inc. declared a cash dividend of $0.25 per share. The total of
dividends to be paid will be $207,521. The dividend will be paid
on February 25, 2000 to stockholders of record on February 11,
2000.
Item 6 - Exhibits and Reports on Form 8-K
Not Applicable
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ES&L BANCORP, INC.
WILLIAM A. McKENZIE
President and Chief Executive Officer
(Duly Authorized Officer)
J. MICHAEL ERVIN
Sr. Vice President and Chief
Financial Officer
(Principal Financial Officer)
Date: February 11, 2000
<TABLE> <S> <C>
<ARTICLE> 5
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-2000
<PERIOD-END> DEC-31-1999
<CASH> 2915923
<SECURITIES> 17415487
<RECEIVABLES> 142667886
<ALLOWANCES> (1268568)
<INVENTORY> 0
<CURRENT-ASSETS> 0
<PP&E> 2833552
<DEPRECIATION> 0
<TOTAL-ASSETS> 167597554
<CURRENT-LIABILITIES> 152160110
<BONDS> 0
0
0
<COMMON> 8662
<OTHER-SE> 15428782
<TOTAL-LIABILITY-AND-EQUITY> 167597554
<SALES> 0
<TOTAL-REVENUES> 6760829
<CGS> 0
<TOTAL-COSTS> 0
<OTHER-EXPENSES> 1759352
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3293376
<INCOME-PRETAX> 1708101
<INCOME-TAX> 611887
<INCOME-CONTINUING> 1096214
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1096214
<EPS-BASIC> 1.32
<EPS-DILUTED> 1.32
</TABLE>
