<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED JUNE 30, 1997
COMMISSION FILE NUMBER 0-19829
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ARGO BANCORP, INC.
----------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Delaware 36-3620612
- --------------------------------- ------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
7600 W. 63rd Street, Summit, Illinois 60501-1830
------------------------------------------------
(Address of principal executive offices)
(708) 496-6010
---------------------------
(Issuer's telephone number)
Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the registrant was required to file such report(s), and (2) has been
subject to such filing requirements for the past 90 days. Yes X No
---- ----
The registrant had 489,584 shares outstanding as of July 31, 1997.
Transitional Small Business Disclosure Format (check one): Yes No X
---- ----
<PAGE>
ARGO BANCORP, INC. AND SUBSIDIARIES
FORM 10-QSB
INDEX
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<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE NO.
- ------------------------------ --------
<S> <C> <C>
Item 1 Financial Statements
Consolidated Statements of Financial Condition
as of June 30, 1997, (unaudited) and
December 31, 1996.......................................... 3
Consolidated Statements of Income for the Six
Months ended June 30, 1997, and 1996 (unaudited)........... 4
Consolidated Statements of Stockholders' Equity
for the Six Months Ended June 30, 1997,
and 1996 (unaudited)....................................... 5
Consolidated Statements of Cash Flows for the
Six Months ended June 30, 1997 and
1996 (unaudited)........................................... 6
Notes to Consolidated Financial Statements................. 7
Item 2 Management Discussion and Analysis of Financial
Condition and Results of Operations........................ 11
Part II - Other Information
- ---------------------------
Item 1 Legal Proceedings......................................... 20
Item 2 Changes in Securities..................................... 20
Item 3 Default Upon Senior Securities............................ 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
</TABLE>
2
<PAGE>
ARGO BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
<TABLE>
<CAPTION>
(Dollars in Thousands)
ASSETS: 06/30/97 12/31/96
----------- --------
(Unaudited)
<S> <C> <C>
Cash............................................................ $ 7,142 $ 12,518
Interest-earning deposits...................................... 4,113 758
FHLB of Chicago Stock........................................... 3,271 3,428
Securities Available for Sale................................... 5,630 5,788
Loans receivable, net........................................... 136,314 125,704
Discounted loans receivable..................................... 37,279 47,725
Accrued interest receivable..................................... 1,943 2,089
Foreclosed real estate.......................................... 4,413 3,913
Premises and equipment, net..................................... 11,355 9,856
Goodwill........................................................ 213 333
Purchased mortgage servicing rights............................. 6,740 5,264
Prepaid expenses and other assets............................... 11,443 11,908
----------- ---------
LIABILITIES AND STOCKHOLDERS' EQUITY: $ 229,856 $ 229,284
=========== =========
Liabilities:
Deposits...................................................... $ 170,380 $ 150,627
Borrowed money................................................ 30,148 50,879
Interest-bearing custodial escrow balances
for loans serviced.......................................... 2 76
Custodial escrow balances for loans serviced.................. 5,497 5,706
Advance payments by borrowers for taxes and insurance......... 881 24
Other liabilities............................................. 4,737 5,412
----------- ---------
Total liabilities........................................... $ 211,645 $ 212,724
----------- ---------
Stockholders' Equity:
Preferred stock, $0.01 par value;
Authorized 500,000 shares; none issued or outstanding....... --- ---
Common Stock:
Class A, $0.01 par value; Authorized
3,020,000 shares; issued and outstanding
489,584 shares........................................... 5 4
Class B, $0.01 par value; Authorized
340,000 shares; none issued or outstanding................ --- ---
Class C, $0.01 par value; Authorized
340,000 shares; none issued or outstanding................ --- ---
Class D, $0.01 par value; Authorized
800,000 shares; none issued or outstanding................ --- ---
Additional paid-in capital.................................... 8,534 7,382
Retained earnings - substantially restricted.................. 9,893 9,444
Net unrealized gain (loss) on securities available for sale,
net of tax.................................................. (24) 12
Common stock acquired by:
Employee Stock Ownership Plan............................... (87) (117)
Management Recognition Plan................................. (110) (165)
----------- ---------
Total stockholders' equity................................ 18,211 16,560
----------- ---------
</TABLE>
Commitments and contingencies (Note E)
See Notes to accompanying unaudited consolidated financial statements
3
<PAGE>
ARGO BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
For the Three Months Ended For the Six Months Ended
(Dollars in thousands, except per share data) 06/30/97 06/30/96 06/30/97 06/30/96
=================================================================================================================================
(Unaudited)
<S> <C> <C> <C> <C>
Interest income:
Loans receivable............................................... $ 3,464 $ 3,153 $ 6,438 $ 6,146
Discounted loans receivable.................................... 1,754 415 3,210 798
Mortgage-backed securities..................................... 76 90 156 186
Interest-earning deposits...................................... 140 164 286 322
-------- -------- -------- --------
Total interest income........................................ 5,434 3,822 10,090 7,452
-------- -------- -------- --------
Interest expense:
Deposits....................................................... 2,154 1,517 4,124 3,033
Custodial escrow balances for loans
serviced..................................................... 2 33 5 67
Borrowed money................................................. 924 537 1,695 1,141
-------- -------- -------- --------
Total interest expense....................................... 3,080 2,087 5,824 4,241
-------- -------- -------- --------
Net interest income before provision
for loan losses............................................ 2,354 1,735 4,266 3,211
Provision for loan losses........................................ --- 30 60 55
-------- -------- -------- --------
Net interest income after provision
for loan losses................................................ 2,354 1,705 4,206 3,156
-------- -------- -------- --------
Non-interest income:
Purchased mortgage servicing income, net....................... 67 86 169 198
Mortgage banking............................................... 203 19 350 32
Gain (loss) on sale of mortgage servicing rights, loans
receivable, discounted loans receivable, mortgage-backed
securities, other real estate owned and securities available
for sale..................................................... (40) 359 342 764
Fees for other customer services............................... 129 103 222 187
Data processing income......................................... 2,904 2,755 5,509 5,484
Other.......................................................... 34 14 66 95
-------- -------- -------- --------
Total non-interest income.................................... 3,297 3,336 6,658 6,760
-------- -------- -------- --------
Non-interest expense:
Compensation and benefits...................................... 2,256 2,078 4,529 4,194
Occupancy and equipment........................................ 1,263 1,012 2,353 2,083
Federal deposit insurance premiums............................. 25 75 47 148
Data processing cost of services............................... 507 358 946 684
Other general and administrative fees.......................... 1,144 858 2,155 1,430
Amortization of goodwill....................................... 26 27 53 54
-------- -------- -------- --------
Total non-interest expense................................... 5,221 4,408 10,083 8,593
-------- -------- -------- --------
Earnings before provision for
income tax expense............................................. 430 633 781 1,323
Provision for income tax expense................................. 64 200 157 425
-------- -------- -------- --------
Net earnings..................................................... 366 433 624 898
-------- -------- -------- --------
Primary net earnings per share................................... .72 1.19 1.22 2.48
-------- -------- -------- --------
Fully diluted earnings per share................................. .71 1.18 1.22 2.44
-------- -------- -------- --------
</TABLE>
4
<PAGE>
ARGO BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Net
Unrealized
Gain (loss) Common
Common Additional on Securities Stock Stock Total
Stock paid-in Retained Available acquired acquired Stockholders'
Class A Capital earnings for Sale by ESOP by MRP Equity
------- ---------- -------- ------------- -------- -------- -------------
<S> <C> <C> <C> <C> <C> <C> <C>
Six months ended June 30, 1996
- --------------------------------
Balance at December 31, 1995............... $ 3 2,739 8,322 42 (177) (50) 10,879
Net income................................. --- --- 898 --- --- --- 898
Change in unrealized loss on securities
available for sale, net.................. --- --- --- (66) --- --- (66)
Principal payments on ESOP loan............ --- --- --- --- 30 --- 30
Purchase of MRP stock...................... --- --- --- --- --- (85) (85)
Proceeds from exercise of stock options... --- 5 --- --- --- --- 5
Fair value adjustment for committed ESOP
shares.................................... --- 19 --- --- --- --- 19
Cash dividends............................. --- --- (106) --- --- --- (106)
------- ---------- -------- ------------- -------- -------- ------------
Balance at June 30, 1996................... $ 3 2,763 9,114 (24) (147) (135) 11,574
======= ========== ======== ============= ======== ======== ============
Six months ended June 30, 1997
- -------------------------------
Balance at December 31, 1996............... $ 4 7,382 9,444 12 (117) (165) 16,560
Net income................................. --- --- 624 --- --- --- 624
Proceeds from issuance of stock............ 1 411 --- --- --- --- 412
Change in unrealized loss on securities
available for sale, net.................. --- --- --- (36) --- --- (36)
Principal payments on ESOP loan............ --- --- --- --- 30 --- 30
Purchase of MRP stock...................... --- --- --- --- --- --- ---
Amortization of purchase price of MRP
stock..................................... --- --- --- --- --- 55 55
Proceeds from exercise of stock options.... --- 525 --- --- --- --- 525
Tax benefits of stock options exercised.... --- 193 --- --- --- --- 193
Fair value adjustment for committed ESOP
shares.................................... --- 23 --- --- --- --- 23
Cash dividends............................. --- --- (175) --- --- --- (175)
------- ---------- -------- ------------- -------- -------- ------------
Balance at June 30, 1997................... $ 5 8,534 9,893 (24) (87) (110) 18,211
======= ========== ======== ============= ======== ======== ============
</TABLE>
- --------------------------------------------------------------------------------
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE>
ARGO BANCORP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
(Dollars in Thousands)
Six Months Ended June 30,
1997 1996
------------ ----------
(Unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net income................................................................................. $ 624 $ 898
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
Depreciation........................................................................... 1,020 853
Accretion of discounts and deferred loan fees.......................................... (731) (373)
Provision for losses on loans receivable and foreclosed real estate.................... 98 181
(Gain) loss on sale of:
Securities available for sale........................................................ (207) (4)
Loans receivable..................................................................... (31) (94)
Discounted loans receivable.......................................................... (23) (666)
Foreclosed real estate............................................................... (81) 109
Loans originated and purchased for sale................................................ (12,998) (20,653)
Proceeds from sale of loans receivable................................................. 27,092 26,707
Proceeds from sale of discounted loans receivable...................................... 14,125 2,227
Amortization of goodwill............................................................... 120 54
Amortization of purchased mortgage servicing rights.................................... 94 ---
Amortization of purchase price of MRP and ESOP stock................................... 85 30
Recognition of fair value of ESOP shares scheduled to be released....................... 23 19
FHLB stock redemption................................................................... 157 ---
(Increase) decrease in accrued interest receivable, prepaid expenses, and other assets. 826 319
Increase (decrease) in accrued interest payable and other liabilities ................. (675) (341)
------------ ----------
Net cash provided by operating activities.................................................... 29,518 9,266
------------ ----------
Cash flows from investing activities:
Loans originated and purchased for portfolio............................................... (45,718) (29,615)
Discounted loans receivable purchased...................................................... (8,731) (11,164)
Principal repayments on:
Loans receivable and discounted loans receivable......................................... 24,644 25,302
Mortgage-backed securities............................................................... 333 372
Proceeds from sale of:
Foreclosed real estate................................................................... 1,698 962
Securities available for sale............................................................ 2,079 32
Proceeds from maturities of investment securities............................................ --- 600
Proceeds from liquidating dividend........................................................... --- 67
Purchase of:
FHLB stock............................................................................... --- (10)
Loan servicing rights.................................................................... (1,570) (120)
Securities available for sale............................................................ (2,113) (25)
Premises and equipment................................................................... (2,519) (1,387)
Contribution to MRP...................................................................... --- (85)
------------ ----------
Net cash provided by (used in) investing activities................................ (31,897) (15,071)
------------ ----------
Cash flows from financing activities:
Net increase in deposits................................................................... 19,753 8,493
Proceeds from borrowed funds............................................................... 66,919 56,566
Repayment of borrowed funds................................................................ (87,650) (55,275)
Proceeds from stock issuance............................................................... 412 ---
Proceeds from exercise of stock options.................................................... 525 5
Dividends paid............................................................................. (175) (106)
Net increase (decrease) in advance payments by borrowers for taxes and insurance........... 857 (95)
Net increase (decrease) in custodial escrow balances for loans serviced.................... (283) (3,609)
------------ ----------
Net cash provided by financing activities.............................................. 358 5,979
------------ ----------
Net increase (decrease) in cash and cash equivalents................................... (2,021) 174
Cash and cash equivalents at beginning of year............................................. 13,276 11,061
------------ ----------
Cash and cash equivalents at end of year................................................... $ 11,255 11,235
============ ==========
Supplemental disclosures of cash flow information:
Cash paid during the period for:
Interest expense......................................................................... 5,268 $ 4,189
Income taxes............................................................................. 70 400
Non-cash investing activity - transfer of loans to foreclosed real estate.................. $ 2,130 543
=========== =========
</TABLE>
See accompanying notes to unaudited financial statements.
6
<PAGE>
ARGO BANCORP, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been prepared
in accordance with generally accepted accounting principles ("GAAP") for interim
financial information and with the instructions to Form 10-QSB and Regulation S-
X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments including normal
recurring accruals, considered necessary for fair presentation have been
included. The results of operations for the six months ended June 30, 1997, are
not necessarily indicative of the results that may be expected for the year
ending December 31, 1997.
The unaudited consolidated financial statements include the accounts of Argo
Bancorp, Inc. ("Argo Bancorp," the "Corporation" or "Holding Company") and its
wholly owned subsidiaries, On-Line Financial Services, Inc. ("On-Line"), Argo
Federal Savings Bank, FSB ("Argo Savings" or "Savings Bank") and Argo Savings'
wholly owned subsidiaries, Argo Mortgage Corporation, Dolton-Riverdale Savings
Service Corporation, and Argo Savings' majority owned subsidiary Margo Financial
Services LLC ("Margo"). The statements also include Argo Bancorp's majority
owned limited liability corporation, Argo / Empire Mortgage LLC. Significant
intercompany accounts and transactions have been eliminated in consolidation.
NOTE B - STOCK BENEFIT PLANS
The Savings Bank adopted the Argo Federal Savings 401(k) Plan ("Plan") effective
October 1, 1988, for the exclusive benefit of eligible employees of the Savings
Bank. The Plan is a qualified plan covering all employees of the Savings Bank
who have completed at least 1,000 hours of service within a twelve (12)
consecutive month period and are age twenty-one (21) or older. Participants may
make contributions to the Plan from 1.0% to 12.0% of their earnings, subject to
Internal Revenue Service limitations. Matching contributions of 50.0% of each
participant's contribution up to 12.0% are made at the Savings Bank's discretion
each Plan year. The Savings Bank made contributions of $41,000 and $31,000, to
the Plan for the six months ended June 30, 1997, and 1996. The Plan also
provides benefits in the event of death, disability, or other termination of
employment.
On-Line has a 401(k) Plan covering all employees who have completed one or more
years of service. Participants may make contributions to the Plan from 1.0% to
12.0% of their earnings, subject to Internal Revenue Service limitations.
Matching contributions of 50.0% of each participant's contribution up to 6.0% of
the participant's contribution is made at On-Line's discretion each year. On-
Line made contributions of $28,000 and $40,000 to the Plan for the six months
ended June 30, 1997, and 1996, respectively.
7
<PAGE>
In conformity with Internal Revenue Service (IRS) rules governing separate lines
of business, the 401(k) Plan for On-Line will continue to be operated separately
from the 401(k) Plan for the Savings Bank.
In connection with the Merger Conversion, as hereinafter defined, Argo Savings
formed an Employee Stock Ownership Plan ("ESOP") for eligible employees. The
ESOP borrowed funds from an unrelated third party lender in the amount of
$60,180 in order to purchase 7.0% of the Common Stock to be issued in the Merger
Conversion (5,233 shares at $11.50 per share). The ESOP has subsequently
borrowed additional funds from the same third party lender in the amount of
$245,000 in order to purchase additional shares. The ESOP has purchased an
additional 13,020 shares at an average price of $18.79 per share. Argo Savings
will make scheduled discretionary cash contributions to the ESOP sufficient to
service the amounts borrowed. The unpaid balance of the ESOP has been included
in borrowed funds on the unaudited consolidated statement of condition and
stockholders' equity has been reduced by a similar amount. Contributions of
$34,000 and $37,000 were made to the ESOP to fund principal and interest for the
six months ended June 30, 1997, and 1996, respectively.
On January 1, 1994, Argo Bancorp adopted the provisions of Statement of Position
93-6, ("SOP 93-6"). "Employer's Accounting for Employee Stock Ownership Plans,"
issued by the American Institute of Certified Public Accountants. SOP 93-6
requires Argo Bancorp to consider outstanding only those shares of the ESOP that
are committed to be released when calculating both primary and fully diluted
earnings per share. SOP 93-6 also requires the Savings Bank to record the
difference between the fair value of the shares committed to be released and the
cost of those shares to the ESOP as a charge to additional paid-in-capital with
the corresponding increase or decrease to compensation expense. Additional
paid in capital increased by $23,000 for the six months ended June 30, 1997.
On-Line does not offer an ESOP for On-Line employees. On-Line employees are not
eligible for participation under the Savings Bank's ESOP.
The Board of Directors of Argo Savings formed a Management Recognition Plan and
Trust ("MRP") effective October 31, 1991, which purchased 6.8% or 15,400 shares,
of the Corporation's authorized but unissued common stock in December 1991. In
addition, Argo Savings contributed $34,385 to allow the MRP to purchase 2,990
shares in the merger conversion or on the open market. All initial MRP shares
have been awarded to employees in key management positions with the Savings Bank
and are fully vested.
On April 26, 1995, an amendment to the MRP was approved, which increased the
amount of shares available to be awarded under the MRP to 24,498. As of June
30, 1996, an additional 1,907 shares have been purchased under the MRP and none
have been awarded. Employees earn the awards over a three-year period. Once
awarded the aggregate purchase price of the shares will be amortized to expense
as a portion of annual compensation as the employees become vested in their
stock awards and the amortized cost is reflected as a reduction of stockholders'
equity. Amortization expense amounted to $55,000 and $30,000 for the six months
ended June 30, 1997, and 1996, respectively.
8
<PAGE>
The Board of Directors of Argo Bancorp formed a new MRP effective September 1,
1996, which purchased 12,500 shares of Argo Bancorp stock on September 24, 1996,
for $115,000. Under this plan, employees in key management positions with Argo
Bancorp and all its subsidiaries are eligible for participation. During the six
months ended June 30, 1997, 1,575 shares were awarded to certain key On-Line
employees. Amortization expense amounted to $6,000 for the six months ended
June 30, 1997.
Argo Bancorp's Board of Directors adopted the 1991 Stock Option and Incentive
Plan (the 1991 Stock Option Plan), which was approved by its shareholders
effective December 23, 1991, under which up to 107,450 shares of Argo Bancorp's
common stock were reserved for issuance by Argo Bancorp upon exercise of
incentive stock options to be granted to full-time employees of Argo Bancorp and
its subsidiaries from time to time. Argo Bancorp awarded all 107,450 options
under the 1991 Stock Option Plan. The exercise price for the options awarded
was equal to the fair market value of the common stock at the date of grant. To
date there have been 53,838 options exercised and 23,997 options were exercised
during the six months ended June 30, 1997. At June 30, 1997, options to purchase
53,612 shares were outstanding.
Argo Bancorp's Board of Directors adopted the Non-Qualified Stock Option Plan
for Non-Employee Directors (Non-Qualified Stock Option Plan), which was approved
by its shareholders effective December 23, 1991, under which up to 107,450
shares of Argo Bancorp's common stock were reserved for issuance by Argo Bancorp
upon exercise of non-incentive stock options to be granted to non-employee
directors of the Corporation and its subsidiaries from time to time. At June 30,
1997, Argo Bancorp has awarded 56,100 options for shares under the Non-Qualified
Stock Option Plan. To date, options to acquire 13,200 shares have been
exercised of which 8,500 shares were exercised during the six months ended June
30, 1997. The exercise price for the options awarded was equal to the fair
market value of the common stock at the date of grant. At June 30, 1997,
options to purchase 42,900 shares were outstanding under the Non-Qualified Stock
Option Plan.
On-Line does not offer a stock option plan for On-Line employees. On-Line
employees are not eligible for participation under Argo Bancorp's Stock Option
Plan.
NOTE C - REGULATORY CAPITAL
Pursuant to the Office of Thrift Supervision ("OTS") regulations, savings
institutions must meet three separate minimum capital-to-assets requirements:
(1) a risk-based capital requirement of 8.0% of risk-weighted assets, (2) a
leverage ratio of 3.0% core capital to total adjusted assets, and (3) a tangible
capital requirement of 1.5% tangible core capital to total assets. Although the
minimum capital requirement is 3.0%, the OTS Regulations provide that an
institution with less than 4.0% core capital is deemed to be "under-
capitalized." The following table summarizes, as of June 30, 1997, Argo
Savings' capital requirements under OTS regulations and its actual capital
ratios at that date:
9
<PAGE>
<TABLE>
<CAPTION>
Required Actual Required Actual Excess
Capital Capital Capital Capital Capital
Percentage Percentage Balance Balance Balance
---------- ---------- ------- ------- -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C>
Risk-based 8.0% 12.83% $9,323 $14,954 $ 5,631
Core 3.0 6.65 6,414 14,229 7,815
Tangible 1.5 6.65 3,207 14,229 11,022
</TABLE>
NOTE D - EARNINGS PER SHARE
Primary earnings per share is based on a weighted average number of shares
outstanding of 509,732 and 362,629 for the six months ended June 30, 1997, and
1996, respectively. Fully diluted earnings per share for the six months ended
June 30, 1997, and 1996, is based upon 512,510 and 368,436, respectively. The
common stock equivalents due to the dilutive effect of stock options are 32,283
shares for primary earnings per share and 35,061 shares for fully diluted
earnings per share.
NOTE E - COMMITMENTS AND CONTINGENCIES
At June 30, 1997, Argo Savings had loan commitments totaling $5.7 million, and
$4.6 million in unused lines of credit. Commitments to fund loans have credit
risk essentially the same as that involved in extending loans to customers and
are subject to Argo Savings' normal credit policies. Argo Savings also had
Community Reinvestment Act ("CRA") investment commitments outstanding of $2.0
million.
10
<PAGE>
ARGO BANCORP, INC.
MANAGEMENT DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
In addition to historical information, this Annual Report may include certain
forward looking statements based on current management expectations. The
Company's actual results could differ materially from those management
expectations. Factors that could cause future results to vary from current
management expectations include, but are not limited to, general economic
conditions, legislative and regulatory changes, monetary and fiscal policies of
the federal government, changes in tax policies, rates and regulations of
federal, state and local tax authorities, changes in interest rates, deposit
flows, the cost of funds, demand for loan products, demand for financial
services, competition, changes in the quality or composition of the Bank's loan
and investment portfolios, changes in accounting principles, policies or
guidelines and other economic, competitive, governmental and technological
factors affecting the Company's operations, markets, products, services and
prices. Further description of the risks and uncertainties to the business are
included in detail in Item 1, "Business" of the Company's 1996 Form 10-KSB.
GENERAL
Argo Bancorp was incorporated in August 1987, for the sole purpose of acquiring
Argo Savings. Argo Bancorp was originally capitalized through the sale of 300
shares (which split in December of 1991 at 700/1) of common stock to three
investors for total proceeds of $60,000. Argo Bancorp acquired Argo Savings on
November 17, 1987, for a capital infusion of $1.1 million. On May 26, 1992, the
Corporation completed a merger conversion whereby Dolton-Riverdale Savings
converted from a state chartered mutual association to a federally chartered
stock association and simultaneously merged with and into Argo Savings with Argo
Savings as the surviving entity (the "Merger Conversion"). The transaction was
accounted for under the pooling of interests method. There was no goodwill or
other intangible assets recorded as a result of the transaction. As part of the
merger conversion with Dolton-Riverdale Savings, the Corporation sold an
additional 74,750 shares of common stock at an issuance price of $11.50. Net
proceeds from the merger conversion were $326,000 after the deduction of the
conversion expenses. The Corporation retained 50.0% of the net proceeds from
the merger conversion and injected the remaining 50.0% into Argo Savings. All
proceeds were used for general business uses.
Argo Bancorp is a unitary savings and loan company and is registered as such
with the OTS. The Corporation is an active holding company with assets
consisting of Argo Savings stock, On-Line stock, marketable securities,
interest-earning deposits and a majority interest in Argo/Empire Mortgage LLC, a
limited liability corporation that engages in the purchase and disposition of
loans. Argo Bancorp is a Federal Housing Authority ("FHA") approved originator
and servicer, a licensed Illinois mortgage banker and an approved Federal
National Mortgage Association ("FNMA") servicer.
11
<PAGE>
The principal business of Argo Savings consists of attracting deposits from the
general public and investing those deposits, together with custodial escrow
accounts associated with purchased mortgage servicing rights and funds generated
internally, primarily in one-to-four family mortgage loans. Argo Savings is a
member of the Federal Home Loan Bank ("FHLB") System, and its deposits are
insured to the maximum allowable amount by the Federal Deposit Insurance
Corporation ("FDIC").
Argo Savings operates one (1) wholly-owned service corporation subsidiary.
Dolton-Riverdale Savings Service Corporation is a wholly-owned subsidiary which
offers life insurance annuities to the customer base of Argo Savings. Argo
Savings also has two (2) operating subsidiaries, Argo Mortgage Corporation and
Margo Financial Services LLC. Argo Mortgage Corporation is a wholly-owned
operating subsidiary, which engages in mortgage brokerage activities that focus
on purchase and sale of mortgage loans into the secondary market. Margo
Financial Services LLC is a majority owned operating subsidiary, which was
incorporated and fully operational on August 20, 1996. The activities of Margo
relate to the origination, investment, sale and servicing of mortgage loans.
Argo Savings' results of operations are dependent primarily on net interest
income, representing the difference between the interest income earned on its
loans, mortgage-backed securities, investment securities and interest-earning
deposits and its cost of funds, consisting of the interest paid on its deposits,
escrows and borrowings. Argo Savings' operating results are also affected by
the fees generated by its investment in purchased mortgage servicing rights and,
to a lesser extent, the profit recognized on the sale of mortgage loans,
customer service charges and other income. Argo Savings' operating expenses
consist of employee compensation, occupancy expenses, federal insurance
premiums, amortization of goodwill, and other general and administrative
expenses. Results of operations are also significantly affected by general
economic and competitive conditions, particularly changes in market interest
rates, government policies and actions of regulatory authorities.
Through activities conducted by its Argo Mortgage Corporation subsidiary, in
recent years Argo Savings has acquired mortgage loans at a deep discount for
which the borrowers are either not current as to principal and interest payments
or there is doubt to the borrower's ability to pay in full the contractual
principal and interest outstanding. In determining the amount it will bid to
acquire such loans at private sales and auctions, the Company estimates the
amounts it will realize through foreclosure, collection efforts, or other
resolution of each loan and the length of time required to complete the
collection process. Investment in these assets has resulted in higher than
market interest yields and significant gains as a result of the ultimate sale of
properties acquired through these purchases. However, losses have also been
incurred from certain properties through other real estate owned activity.
On October 31, 1995, Argo Bancorp acquired On-Line, an Oak Brook, Illinois based
computer services bureau, serving bank and thrift clients throughout the
Midwest. The purchase transaction was consummated through the use of a wholly-
owned subsidiary, OLF Acquisition Corporation,
12
<PAGE>
which acquired shares of three separate state chartered savings and loan
services corporations which owned, in the aggregate, 98.9% of the outstanding
shares of On-Line. Sale of the remaining 1.1% of On-Line shares was made by a
single institutional stockholder which held shares in On-Line directly. The
intervening acquisition subsidiary and state chartered savings and loan service
corporation shells were liquidated and merged by Argo Bancorp during 1996.
Financial terms of the transaction included a cash sweep to shareholders of On-
Line funds on hand on the closing date, less amounts necessary to establish
certain agreed-upon escrow balances, a two (2) year asset note of approximately
$1,026,000, representing the closing date net book value of On-Line; a twenty-
six (26) month escrow note in the amount of $460,000, representing funds held
for future performance under a third party computer lease; and a structured
schedule of contingent payments based on future revenues of On-Line over the
next seven (7) years. The total transaction value, including asset notes and
contingent payments, will not exceed $10.0 million.
On-Line is a third party provider of electronic data processing services to
financial institutions located throughout the Midwest. On-Line currently
provides data processing services to thrifts, community banks, savings banks,
and mortgage brokers representing over 1.5 million customer accounts in six
Midwestern states. On-Line has historically marketed its services to
institutions with assets of less than $1.0 billion, where On-Line's orientation
toward superior customer service and specialized products allows it to
effectively compete. On-Line's customer base include institutions with total
assets ranging from $13.0 million to $850.0 million, with an average of
approximately $95.0 million. The acquisition by Argo Bancorp has promoted the
development and sale of technological advances in the systems, programs, and
services offered by On-Line, which includes resale of software produced by
Information Technology Incorporated, integrated check and document imaging
systems, and computer output laser disc storage technology. These services are
in addition to new offerings by On-Line in the planning and deployment of wide
area and local area network systems, the sale of all related hardware and
services, expanded technical and communications support, consultation and
training, and the maintenance of in-house systems. On-Line's strategy to
implement and offer computer output laser disc storage technology and a full
line of document imaging services has been realized and is now being marketed to
a wide array of users of advanced technology. Together with aggressive
marketing to small and mid-size commercial and community banks, On-Line's
business plan to expand its traditional thrift institution client base is being
implemented.
LIQUIDITY AND CAPITAL RESOURCES
Argo Savings' primary sources of funds are deposits, proceeds from principal and
interest payments on the loan and mortgage-backed securities portfolio,
custodial deposit accounts related to loans serviced for others, and the sale of
newly originated fixed rate long-term mortgage loans. The most liquid assets are
cash and short-term investments. The levels of these assets are dependent on
the operating, financing and investing activities during any given period. Cash
and interest-earning deposits totaled $11.3 million at June 30, 1997.
13
<PAGE>
The primary investment activity of Argo Savings is the origination and purchase
of mortgage loans. During the six months ended June 30, 1997, and 1996, Argo
Savings originated and purchased mortgage loans in the principal amounts of
$67.4 million and $61.4 million, respectively. During the six months ended June
30, 1997, and 1996, these investing activities were primarily funded by
principal repayments on loans receivable, discounted loans receivable, and
mortgage-backed securities of $24.6 million and $25.3 million, respectively, and
the proceeds from the sale of loans receivable and discounted loans receivable
of $41.2 million and $28.9 million, respectively. During the six months ended
June 30, 1997, additional funding was provided by the increase in deposits of
$19.8 million offset by the decrease in borrowings of $20.7 million.
Argo Savings is required to maintain minimum levels of liquid assets as defined
by OTS regulation. At June 30, 1997, Argo Savings liquid assets represented
5.76% of its liquidity base as compared to the required level of 5.0%. The
level of liquidity maintained is believed by management to be adequate to meet
the requirements of normal operations, potential deposit outflows, and the
current loan demand.
Liquidity management for Argo Savings is both a daily and long-term function of
the Argo Savings' senior management. Argo Savings' management meets on a daily
basis and monitors interest rates, current and projected commitments to purchase
loans and the likelihood of funding such commitments, and projected cash flows.
Excess funds are generally invested in short-term investments such as federal
funds. Cash flow projections are updated regularly to assure necessary
liquidity.
At June 30, 1997, Argo Savings' capital exceeded all of the capital requirements
of the OTS on a current and fully phased-in basis. The Savings Bank's tangible,
core and risk-based capital ratios were 6.65%, 6.65%, and 12.83%, respectively.
The OTS regulatory capital requirements also incorporate an interest rate risk
component. Savings institutions with "above normal" interest rate risk exposure
are subject to a deduction from total capital for purposes of calculating their
risk-based capital requirements. A savings institution's interest rate risk is
measured by the decline in the net portfolio value of its assets (i.e., the
difference between incoming and outgoing discounted cash flows from assets,
liabilities, and off-balance sheet contracts) that would result from a
hypothetical 200 basis point increase or decrease in market interest rates
divided by the estimated economic value of the institution's assets. In
calculating its total capital under the risk-based capital rule, a savings
institution whose measured interest rate risk exposure exceeds 2.0% must deduct
an amount equal to one-half of the difference between the institution's measured
interest rate risk and 2.0% multiplied by the estimated economic value of the
institution's interest rate risk component on a case-by-case basis. A savings
institution with assets of less than $300.0 million and risk-based capital
ratios in excess of 12.0% is not subject to the interest rate risk component,
unless the OTS determines otherwise. For the present time, the OTS has deferred
implementation of the interest rate risk component. At June 30, 1997, the
Savings Bank met each of its capital requirements, and it is anticipated that
Argo Savings will not be subject to the interest rate risk component.
14
<PAGE>
CHANGES IN FINANCIAL CONDITION
Total assets increased $572,000 to $229.9 million at June 30, 1997, from $229.3
million at December 31, 1996.
Cash and interest-earning deposits decreased $2.0 million to $11.3 million at
June 30, 1997, primarily due to liquidity management. Because Argo Savings is
leveraged, all excess funds not necessary to meet regulatory liquidity are used
to reduce borrowings.
Loans receivable and discounted loans receivable increased $164,000 to $173.6
million at June 30, 1997, due to the origination and purchase of $67.4 million
of loans, and discount accretion of $1.1 million, partially offset by principal
repayments of $24.6 million, the sale of $41.2 million of loans receivable and
discounted loans receivable, and the transfer of $2.1 million of loans and
discounted loans receivable to foreclosed real estate.
Deposits increased $19.8 million to $170.4 million at June 30, 1997, from $150.6
million at December 31, 1996. The increase can primarily be attributed to an
aggressive marketing effort during the first six months of 1997, aimed at
attracting a larger customer base and interest credited of $4.1 million for the
six months ended June 30, 1997. Brokered deposits taken in during the six
months ended June 30, 1997, totaled $8.7 million and had a weighted average
maturity of one (1) year.
Borrowings decreased $20.7 million to $30.1 million at June 30, 1997, from $50.9
million at December 31, 1996. The decrease in advances was due to the proceeds
from the sale of loans receivable and discounted loans receivable.
Custodial escrow balances for loans serviced decreased $283,000 to $5.5 million
at June 30, 1997, from $5.8 million at December 31, 1996. This decrease
reflects normal fluctuations within these accounts. The custodial accounts
pertain to escrowed payments of taxes and insurance and the float on principal
and interest payments on loans serviced either for Argo Savings or on behalf of
others by an independent mortgage servicing operation. The custodial accounts
related to loans serviced by others are maintained at Argo Savings in both
interest-bearing and non-interest bearing accounts. The custodial accounts
associated with loans or purchased mortgage servicing rights serviced for Argo
Savings are maintained in non-interest bearing accounts. At June 30, 1997, $5.5
million of all custodial escrow balances pertain to loans subserviced on behalf
of Argo Savings for portfolio loans, servicing retained loans, and purchased
mortgage servicing rights.
Stockholders' equity increased $1.7 million to $18.2 million at June 30, 1997,
from $16.6 million at December 31, 1996. The increase was caused by the
issuance of stock totaling $412,000, the exercise of stock options for $525,000,
a $193,000 tax benefit related to the exercise of non-qualified options and net
income of $624,000.
15
<PAGE>
INTEREST RATE RISK
Argo Savings' financial objective is to reduce the sensitivity of its earnings
to interest rate fluctuations by attempting to achieve a match between the
interest rate sensitivity of its assets and liabilities. The major strategies
Argo Savings has implemented are (i) the origination and purchase of adjustable
rate loans and mortgage-backed securities; (ii) the origination of balloon
mortgages; (iii) the sale of newly originated long-term fixed rate mortgages;
(iv) the investment in purchased mortgage servicing rights which provide a
source of non-interest income and also act as a hedge against the decline in the
value of fixed rate mortgages in a rising interest rate environment; (v) the
increase of non-interest bearing custodial accounts related to the purchased
mortgage servicing rights; and (vi) the control of deposit growth and
maintenance of long-term deposits. The strategies listed have been implemented
by Argo Savings and are monitored on a monthly basis by management. Argo
Savings does not use any artificial hedge products to reduce its exposure to
interest rate risk.
As part of its asset/liability strategy, Argo Savings' objective is to maintain
the cumulative one-year hedged gap within a range of plus or minus 15.0% of
total assets, which helps maintain a more stable net interest spread in various
interest rate environments. The gap ratio fluctuates as a result of market
conditions and management's expectations of future interest rate trends.
Argo Savings had an excess of interest sensitive liabilities, which mature or
reprice within one year over interest sensitive assets of $55.6 million or 26.0%
of total assets at June 30, 1997. As a result of the excess of interest
sensitive liabilities over interest sensitive assets, Argo Savings is "Net
Liability Sensitive" which would indicate that its earnings would be negatively
affected by rising interest rates. In periods of falling interest rates,
however, the opposite effect on net interest income is expected.
In determining the gap position, Argo Savings has assumed that passbook
accounts, NOW accounts, money market accounts, and interest-bearing escrows are
withdrawn based on assumptions prepared by the OTS in its latest gap analysis
report. The assumptions used, although standardized, may not be indicative of
the actual withdrawals experienced by Argo Savings. Fixed maturity deposits
reprice at maturity. The combined effect of these assumptions on passbook, NOW,
money market accounts and interest-bearing escrows assumes 17.0% of these
accounts withdrawn within three years, and 15.0% per year, thereafter.
Management believes that these decay rate assumptions are reasonable.
ACCOUNTING DEVELOPMENTS
In February 1997, the FASB issued Statement of Financial Accounting Standards
No. 128, "Earnings Per Share" ("SFAS No. 128"). The Statement is effective for
periods ending after December 15, 1997, and will require restatement of all
prior-period earnings per share ("EPS") data presented. The Statement
establishes standards for computing and presenting EPS, and requires dual
presentation of basic and diluted EPS on the face of the income statement.
Basic
16
<PAGE>
EPS is computed by dividing income available to common stockholders 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.
Based on its review of the Statement, management believes the adoption of SFAS
No. 128 will not have a material effect on per share disclosures of the Company.
ASSET QUALITY
Argo Bancorp and Argo Savings regularly review assets to determine proper
valuation. Loans are reviewed on a regular basis and an allowance for possible
loan losses is established when, in the opinion of management, the net
realizable value of the property collateralizing the loan is less than the
outstanding principal and interest and the collectibility of the loan's
principal and interest becomes doubtful.
At June 30, 1997, Argo Savings had one hundred twenty-two (122) properties, for
$4.4 million classified as foreclosed real estate, as compared to ninety-five
(95) properties for $3.9 million at December 31, 1996. The underlying
properties on June 30, 1997, consisted primarily of single family residences.
The foreclosed real estate has been written down to its estimated fair value at
June 30, 1997. The total amount of loans receivable ninety (90) days or more
past due at June 30, 1997, was $4.8 million or 3.52% of total loans receivable
compared to $3.9 million or 3.12% of total loans on December 31, 1996. At June
30, 1997, loans ninety (90) days or more past due totaling $4.8 million were
secured by one-to-four family residences. Total non-performing assets at June
30, 1997, totaled $5.5 million or 2.40% of total assets compared to $7.9 million
or 3.43% of total assets at December 31, 1996. Excluded from this total is the
$5.0 million of discounted loans ninety (90) days or more past due, and $3.7
million in foreclosed real estate attributable to the discounted loans
receivable portfolio. Discounted loans that are often purchased with the intent
to foreclose and sell the underlying property are excluded from non-performing
loans.
RESULTS OF OPERATIONS - COMPARISON OF OPERATING RESULTS FOR THE SIX MONTHS ENDED
JUNE 30, 1997, AND 1996.
GENERAL
Net income for the six months ended June 30, 1997, was $624,000 or $1.22 per
share (primary) compared to net income of $898,000 or $2.48 per share (primary)
for the six months ended June 30, 1996. Net income for the three months ended
June 30, 1997, was $366,000 or $0.72 per share (primary) as compared to $433,000
or $1.19 per share (primary) for the three months ended June 30, 1996. The
decrease in comparable six month and three month earnings resulted primarily
from decreases in On-Line's net income and decreases in the gains recognized on
the sale of loans receivable and discounted loans receivable, partially offset
by the increase in net interest income.
17
<PAGE>
INTEREST INCOME
Interest income for the six months ended June 30, 1997, totaled $10.1 million,
as compared to $7.5 million for the comparable 1996 period. The $2.6 million
increase was the result of a $45.4 million increase in average interest-earning
assets to $200.9 million for the six months ended June 30, 1997, and the forty-
six (46) basis point increase in the weighted average yield on interest-earning
assets to 10.04% for the six months ended June 30, 1997.
Interest income for the three months ended June 30, 1997, totaled $5.4 million
as compared to $3.8 million for the comparable 1996 period. The $1.6 million
increase in the comparable three month interest income was the result of the
$53.1 million increase in average interest-earning assets and the sixty (60)
basis point increase in the weighted average yield.
INTEREST EXPENSE
Interest expense for the six months ended June 30, 1997, totaled $5.8 million as
compared to $4.2 million for the comparable 1996 period. The $1.6 million
increase was the result of a $49.8 million increase in average interest-bearing
liabilities to $212.7 million for the six months ended June 30, 1997, and a
twenty-seven (27) basis point increase in the weighted average cost of interest-
bearing liabilities to 5.48% for the six months ended June 30, 1997.
Interest expense for the three months ended June 30, 1997, totaled $3.1 million
as compared to $2.1 million for the comparable 1996 period. The $993,000
increase was the result of the $54.2 million increase in average interest-
bearing liabilities and the fifty-six (56) basis point increase in the weighted
average cost of interest-bearing liabilities to 5.64% for the three months ended
June 30, 1997.
NET INTEREST INCOME
Net interest income totaled $4.3 million for the six months ended June 30, 1997,
reflecting an increase of $1.1 million from the amount recorded in the
comparable 1996 period. The increase in net interest income for the six months
ended June 30, 1997, resulted from a $45.4 million increase in average interest-
earning assets and a nineteen (19) basis point increase in the effective net
spread to 4.56% from 4.37% for the comparable 1996 period, partially offset by
the $49.8 million increase in the average dollar amount of interest-bearing
liabilities.
Net interest income for the three months ended June 30, 1997, was $2.4 million
as compared to $1.7 million for the comparable 1996 period. The $649,000
increase was caused by the $53.1 million increase in average interest-earning
assets and a four (4) basis point increase in the effective net spread to 4.75%
from 4.71%, partially offset by the $54.2 million increase in interest-bearing
liabilities.
18
<PAGE>
PROVISION FOR LOAN LOSSES
A general loan loss provision of $60,000 was recorded during the six months
ended June 30, 1997, as compared to $30,000 for the six months ended June 30,
1996. Management believes that loan loss provisions are adequate and will
continue to monitor the mortgage portfolio and substandard assets for loss
exposure.
NON-INTEREST INCOME
Non-interest income decreased $102,000 and $39,000 for the six and three month
period ended June 30, 1997, respectively. These decreases were the result of
the $422,000 and the $399,000 decrease in gains on sale of loans receivable for
the six and three month period, respectively. Offsetting this decrease was a
$318,000 and a $248,000 increase in mortgage banking income for the six and
three month period, respectively.
NON-INTEREST EXPENSE
Non-interest expense increased $1.5 million and $813,000 for the six and three
month period ended June 30, 1997, respectively. These increases are primarily
due to increases in compensation, occupancy, data processing services, and other
general and administrative fees. Compensation increased $335,000 and $178,000
for the six and three month period ended June 30, 1997, respectively, primarily
due to the addition of staff at the new operating subsidiary, MARGO Financial
Services LLC. The $270,000 and $251,000 increase in occupancy and equipment for
the six and three month period ended June 30, 1997, respectively, is due to
significant leasehold improvements at On-Line, as well as the opening of Argo
Savings' permanent branch location on the Westside of Chicago, Illinois. The
$262,000 and $149,000 increase in data processing cost of services for the six
and three month period ended June 30, 1997, respectively, is due to software and
hardware upgrades at On-Line. The increase in other general and administrative
expenses for the six month and three month period ended June 30, 1997,
respectively, was caused by increases in accounting, legal, advertising, loan
expense, and other expenses.
INCOME TAX EXPENSE
The provision for income tax expense decreased $268,000 to $136,000 for the six
and three month period ended June 30, 1997, respectively, as compared to the
1996 period. The decreases are due to the utilization of affordable housing tax
credits and the decrease in pretax earnings.
19
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Argo Bancorp and Argo Savings are not engaged in any legal proceedings of a
material nature at the present time.
ITEM 2. CHANGES IN SECURITIES
Not applicable.
Item 3. Default Upon Senior Securities
Not applicable.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Annual Meeting of Shareholders was held May 28, 1997, with the following
resolutions ratified and approved in all respects:
I. Election of Directors: The election of Arthur Byrnes for a three
(3) year term:
<TABLE>
<CAPTION>
<S> <C> <C>
For: 470,068 votes 96.3% Withheld: 2 votes 0.0% Broker Non-votes: 0 votes 0.0%
</TABLE>
II. Election of Directors: The election of Frances M. Pitts for a
three (3) year term:
<TABLE>
<CAPTION>
<S> <C> <C>
For: 468,700 votes 96.0% Withheld: 1,370 votes 0.3% Broker Non-votes: 0 votes 0.0%
</TABLE>
In addition, the following directors continue in office:
John G. Yedinak, President, Chief Executive Officer, and Chairman of the
Board
Sergio Martinucci, Vice President and Director
President and Owner, Coldwell Banker-Stanmeyer Realtors
Donald G. Wittmer, Director
President and Owner, Wittmer Financial Services, Ltd.
III. The ratification of the appointment of KPMG Peat Marwick, LLP as
independent auditors of Argo Bancorp, Inc. for fiscal year ending
December 31, 1997 .
<TABLE>
<CAPTION>
<S> <C> <C>
For: 469,059 votes 96.1% Against: 1,000 votes 0.2% Abstain: 2 votes 0.0%
Broker Non-votes: 0 votes 0.0%
</TABLE>
20
<PAGE>
ITEM 5. OTHER INFORMATION
During the second quarter, 1997, 1,000 stock options were exercised at a price
of $30.50. These shares were issued from the authorized but not yet issued
shares.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
A. Exhibits
The following exhibits are incorporated herein by reference:
(3) The Certificate of Incorporation and By-Laws.
3.1 Certificate of Incorporation of Argo Bancorp, Inc. *
3.2 By-Laws of Argo Bancorp, Inc. *
4.0 Stock Certificate of Argo Bancorp, Inc. *
27.0 Financial Data Schedule (filed herewith)
B. Reports of Form 8-K
None.
- -------------------------------------------------------------------------------
* Incorporated herein by reference into this document from Exhibits to Form S-1,
Registration Statement filed on January 28, 1992, and amended thereto,
Registration No. 33-45222.
21
<PAGE>
SIGNATURES
Pursuant to the requirement of the Securities and Exchange Act of 1934, the
Registrant had duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ARGO BANCORP, INC.
Date: August 11, 1997 /s/ John G. Yedinak
--------------- --------------------------------
John G. Yedinak,
President of the Board
and Chief Executive Officer
Date: August 11, 1997 /s/ Frank J. Lis
--------------- --------------------------------
Frank J. Lis,
Vice President and Interim Chief
Financial Officer
22
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the Form
10-QSB and is qualified in its entirety by reference to such financial
statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 7,142
<INT-BEARING-DEPOSITS> 4,113
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 5,630
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 0
<ALLOWANCE> 0
<TOTAL-ASSETS> 229,856
<DEPOSITS> 170,380
<SHORT-TERM> 30,148
<LIABILITIES-OTHER> 11,117
<LONG-TERM> 0
0
0
<COMMON> 5
<OTHER-SE> 18,206
<TOTAL-LIABILITIES-AND-EQUITY> 229,856
<INTEREST-LOAN> 9,648
<INTEREST-INVEST> 156
<INTEREST-OTHER> 286
<INTEREST-TOTAL> 10,090
<INTEREST-DEPOSIT> 4,124
<INTEREST-EXPENSE> 5,824
<INTEREST-INCOME-NET> 4,266
<LOAN-LOSSES> 60
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 10,083
<INCOME-PRETAX> 781
<INCOME-PRE-EXTRAORDINARY> 781
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 624
<EPS-PRIMARY> 1.22
<EPS-DILUTED> 1.22
<YIELD-ACTUAL> 0<F1>
<LOANS-NON> 4,787
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 4,991
<ALLOWANCE-OPEN> 0
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 0<F1>
<ALLOWANCE-DOMESTIC> 0<F1>
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0<F1>
<FN>
<F1>This information is not disclosed in the Form 10-QSB
</FN>
</TABLE>
