<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-QSB
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1997
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
Commission File No. 0 - 21328
FORT BEND HOLDING CORP.
A Delaware Corporation I.R.S. Employer Identification
No. 76-0391720
Address Telephone Number
3400 Avenue H (281) 342-5571
Rosenberg, Texas 77471
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding twelve months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No .
------ -----
There were 1,840,242 shares and 1,663,894 shares of Common Stock ($0.01 par
value) issued and outstanding, respectively as of October 28, 1997.
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
FORT BEND HOLDING CORP.
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION
(Unaudited)
<TABLE>
<CAPTION>
ASSETS September 30, 1997 March 31, 1997
<S> <C> <C>
Cash and due from banks $ 7,046,352 $ 6,369,675
Short-term investments 39,866,399 14,220,516
Certificates of deposit 200,000 200,000
------------ ------------
Total cash and cash equivalents 47,112,751 20,790,191
Investment securities available
for sale, at market 2,898,861 2,810,270
Investment securities held to
maturity (estimated market value
of $9,849,596 and $10,789,440
at September 30, 1997 and
March 31, 1997, respectively) 10,237,730 11,234,763
Mortgage-backed securities available
for sale, at market 386,092 520,869
Mortgage-backed securities held to
maturity (estimated market
value of $90,565,900 and $96,684,430
at September 30, 1997 and
March 31, 1997, respectively) 90,476,983 97,084,501
Loans held for sale 6,834,406 2,660,415
Loans receivable, net 141,527,320 138,227,705
Accrued interest receivable 1,763,992 1,816,415
Real estate, net 47,908 470,996
Federal Home Loan Bank stock, at cost 1,464,900 1,933,000
Premises and equipment, net 4,802,525 4,970,011
Mortgage servicing rights, net 7,103,962 7,537,571
Prepaid expenses and other assets 3,145,693 3,398,198
Deferred income taxes 307,512 305,961
Goodwill, net 1,303,221 1,319,232
------------ ------------
Total assets $319,413,856 $295,080,098
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $269,083,871 $250,218,152
Convertible Subordinated
Debentures 12,020,000 12,080,000
Borrowings 4,109,196 4,226,676
Advances from borrowers for
taxes and insurance 8,926,757 4,750,945
Accounts payable, accrued
expenses and other liabilities 3,037,667 2,868,177
------------ ------------
Total liabilities 297,177,491 274,143,950
------------ ------------
Minority interest in consolidated
subsidiary 2,565,334 2,508,214
------------ ------------
Stockholders' equity:
Serial preferred stock, $.01 par
value - 1,000,000 shares
authorized, none outstanding
Common Stock $.01 par value,
4,000,000 shares authorized
1,832,102 shares issued and
1,655,754 shares outstanding at
September 30,1997 and 1,820,950
shares issued and 1,644,602
shares outstanding at
March 31, 1997 18,321 18,209
Additional paid-in capital 8,982,487 8,695,882
Unearned employee stock ownership
plan shares (215,442) (307,125)
Deferred compensation (113,887) (82,324)
Net unrealized appreciation
(depreciation) on available for
sale securities 8,342 (6,107)
Retained earnings (substantially
restricted) 12,447,711 11,565,900
Treasury stock, at cost -
176,348 shares (1,456,501) (1,456,501)
------------ ------------
Total stockholders' equity 19,671,031 18,427,934
------------ ------------
Total liabilities and
stockholders' equity $319,413,856 $295,080,098
============ ============
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
2
<PAGE>
FORT BEND HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30, September 30,
-------------------------- --------------------------
1997 1996 1997 1996
---------- ---------- ----------- ----------
<S> <C> <C> <C> <C>
Interest Income:
Loans $3,367,186 $2,389,598 $ 6,731,290 $4,520,287
Short-term investments 436,376 231,586 595,383 418,981
Investment securities 215,436 202,532 456,726 350,528
Mortgage-backed securities 1,523,850 1,755,901 3,099,313 3,585,160
---------- ---------- ----------- ----------
Total interest income 5,542,848 4,579,617 10,882,712 8,874,956
---------- ---------- ----------- ----------
Interest expense:
Deposits 2,787,267 2,467,155 5,455,295 4,787,306
Borrowings 323,805 335,644 660,852 665,694
---------- ---------- ----------- ----------
Total interest expense 3,111,072 2,802,799 6,116,147 5,453,000
---------- ---------- ----------- ----------
Net interest income before provision for loan losses 2,431,776 1,776,818 4,766,565 3,421,956
Provision for loan losses 15,000 43,000 77,980 68,000
---------- ---------- ----------- ----------
Net interest income after provision for loan losses 2,416,776 1,733,818 4,688,585 3,353,956
---------- ---------- ----------- ----------
Noninterest income:
Loan fees and charges 753,514 131,092 1,481,054 244,510
Loan servicing income 275,084 110,737 572,535 216,118
Service charges on deposit accounts 220,458 174,139 430,335 328,632
Gain on sale of loans 156,111 56,350 253,451 106,299
Other income 127,766 142,893 316,508 267,538
---------- ---------- ----------- ----------
Total noninterest income 1,532,933 615,211 3,053,883 1,163,097
---------- ---------- ----------- ----------
Noninterest expenses:
Compensation and benefits 1,803,103 938,549 3,552,431 1,770,420
Office occupancy and equipment 436,484 242,525 883,064 429,545
Federal insurance premiums 40,358 133,307 80,270 257,589
Data Processing Fees 130,883 64,668 256,658 110,735
Savings Association Insurance Fund Assessment --- 1,492,686 --- 1,492,686
Insurance and surety bond expense 37,561 37,923 74,428 71,539
Other 628,800 339,402 1,146,045 669,851
---------- ---------- ----------- ----------
Total noninterest expenses 3,077,189 3,249,060 5,992,896 4,802,365
---------- ---------- ----------- ----------
Income (loss) before income tax and minority interest 872,520 (900,031) 1,749,572 (285,312)
Income tax provision (benefit) 269,125 (321,200) 547,468 (112,200)
---------- ---------- ----------- ----------
Income (loss) before minority interest 603,395 (578,831) 1,202,104 (173,112)
Minority interest in net income of consolidated subsidiary 100,249 --- 179,620 ---
---------- ---------- ----------- ----------
Net income (loss) $ 503,146 $ (578,831) $ 1,022,484 $ (173,112)
========== ========== =========== ==========
Primary earnings (loss) per common share $ 0.29 $ (0.34) $ 0.59 $ (0.10)
========== ========== =========== ==========
Fully diluted earnings (loss) per common share $ 0.24 $ (0.34) $ 0.49 $ (0.10)
========== ========== =========== ==========
Dividends per common share $ 0.05 $ 0.04 $ 0.09 $ 0.07
========== ========== =========== ==========
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
3
<PAGE>
FORT BEND HOLDING CORP.
CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS
(Unaudited)
<TABLE>
<CAPTION>
Six Months Ended
September 30,
--------------------------------
1997 1996
----------- -------------
<S> <C> <C>
Operating activities:
Net income (loss) $ 1,022,484 $ (173,112)
Adjustments to reconcile net income (loss) to net cash
provided by (used in) operating activities:
Provision for losses on loans and real estate 77,980 68,000
Depreciation 275,071 134,898
Compensation charge related to release of ESOP shares 165,916 33,538
Amortization of deferred compensation 30,837 24,597
Amortization of debt issue costs 41,682 40,218
Amortization of premiums and discounts on securities, net 11,079 6,064
Amortization of loan premium, discount, and deferred fees, net (170,424) (119,248)
Amortization of goodwill 46,315 6,796
Amortization of mortgage servicing rights 828,647 147,037
Amortization of unearned income --- (6,070)
Deferred income tax benefit (9,839) (9,172)
Minority interest in income of consolidated subsidiary 179,620 ---
Gain on sale of real estate (45,535) (31,087)
Net gain on sale of loans (253,451) (92,864)
Dividends on Federal Home Loan Bank Stock (43,600) (48,100)
Origination of loans held for sale (34,819,398) (6,264,911)
Proceeds from sale of loans 30,898,858 7,205,340
Other, net 464,587 640,110
------------ ------------
Net cash provided by (used in) operating activities (1,299,171) 1,562,034
------------ ------------
Investing activities:
Purchase of investment securities available for sale (65,810) (58,473)
Purchase of investment securities held to maturity (1,991,953) (22,984,496)
Proceeds from maturities of investment securities held to
maturity 3,000,000 10,000,000
Principal collected on mortgage-backed securities 6,720,198 6,838,219
Net increase in loans receivable (2,994,787) (9,171,383)
Purchase of premises and equipment (107,585) (373,595)
Purchase or origination of mortgage servicing rights (395,038) (1,379,410)
Improvements to real estate (14,102) ---
Proceeds from sale of real estate 204,546 37,233
Proceeds from redemption of FHLB stock 511,700 ---
Net cash acquired in acquisition --- 3,541,250
------------ ------------
Net cash provided by (used in) investing activities 4,867,169 (13,550,655)
------------ ------------
Financing activities:
Net increase in deposits 18,865,719 4,658,394
Payment on long-term borrowings (25,797) (24,250)
Increase in advances from borrowers for taxes and insurance 4,175,812 4,606,230
Net proceeds from issuance of common stock 2,000 ---
Dividends paid to minority stockholder (122,500) ---
Dividends paid (140,672) (114,688)
------------ ------------
Net cash provided by financing activities 22,754,562 9,125,686
------------ ------------
Net increase (decrease) in cash and cash equivalents 26,322,560 (2,862,935)
Cash and cash equivalents at beginning of period 20,790,191 17,193,662
------------ ------------
Cash and cash equivalents at end of period $ 47,112,751 $ 14,330,727
============ ============
</TABLE>
The accompanying notes are an integral part of the condensed
consolidated financial statements.
4
<PAGE>
Financial Statements, Continued
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
The unaudited information for the three and six months ended
September 30, 1997 and 1996 includes the results of operations of Fort Bend
Holding Corp. (the "Holding Corp.") and its wholly-owned subsidiary Fort Bend
Federal Savings and Loan Association of Rosenberg (the "Association"). The
Association's financial statements includes its 51% owned subsidiary Mitchell
Mortgage Company, L.L.C. ("Mitchell") (see Note 3). In the opinion of
management, the information reflects all adjustments (consisting only of normal
recurring adjustments) which are necessary for a fair presentation of the
results of operations for such periods but should not be considered as
indicative of results for a full year.
The March 31, 1997 condensed consolidated statement of financial
condition data was derived from the audited financial statements, but does not
include all disclosures required by generally accepted accounting principles.
Accordingly, the condensed consolidated financial statements should be read in
conjunction with the audited consolidated financial statements.
2. COMMON STOCK SPLIT
On August 21, 1997, the Board of Directors declared a two-for-one stock
split in the form of a 100% stock dividend payable October 1, 1997 to
shareholders of record on September 11, 1997. The effect of the split is
presented retroactively within stockholders' equity at September 30, 1997 by
transferring the par value for the additional shares issued from the additional
paid-in capital account to the common stock account.
All share and per share data, including conversion price, recognition
and retention plan and convertible subordinated debenture information, has been
retroactively restated to reflect the stock split.
3. BUSINESS COMBINATION
On January 2, 1997 the Association executed an agreement with The
Woodlands Corporation to acquire a controlling interest in a new limited
liability company, Mitchell Mortgage Company, L.L.C. ("Mitchell"). Mitchell was
formed for the purpose of engaging in the mortgage banking business, including
the origination and servicing of single-family purchase loans, single-family
construction loans and commercial and multifamily real estate loans. The
Woodlands Corporation contributed certain mortgage loans and its mortgage
servicing portfolio and liabilities of its wholly-owned mortgage banking
subsidiary, Mitchell Mortgage Company ("Old Mitchell"), in exchange for 49%
ownership interest in Mitchell and the Association contributed cash of
approximately $2.6 million in exchange for a 51% ownership interest in Mitchell.
In connection with the transaction, Old Mitchell (and The Woodlands Corporation,
as successor) was granted
5
<PAGE>
Financial Statements, Continued
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
an option to convert, upon the occurrence of certain events, its ownership
interest in Mitchell into shares of the common stock of the Company, at a rate
of 82.304 shares for each $1,000 of ownership interest in Mitchell, or $12.15
per share, in an amount not to exceed 9.9% of the Company's outstanding common
stock. Any amount that would otherwise be required to be issued exceeding 9.9%
of the Company's outstanding common stock will be paid in cash. The option
becomes exercisable on January 2, 1998 and expires on January 2, 2002.
4. RECOGNITION AND RETENTION PLAN
The Holding Corp. has a Recognition and Retention Plan ("RRP") as a
method of providing key officers with a proprietary interest in the Holding
Corp. in a manner designed to encourage such individuals to remain with the
Holding Corp. or the Association. All outstanding awards vest at a rate of 20%
per year. On April 1, 1997, an additional 5,200 shares were granted under the
RRP. A total of 52,650 shares have been authorized of which 48,904 shares had
been granted under the RRP as of September 30, 1997.
5. NON-PERFORMING ASSETS
Impaired loans decreased $135,000 during the three months ended
September 30, 1997 and $137,000 during the six months ended September 30, 1997.
The decline resulted from the payoff of one commercial loan and the loan
amortization from scheduled payments made on two of the loans, partially offset
by an increase in a third loan attributed to loan modification and partial
capitalization of interest due. Each of these loans was previously recognized as
impaired. Foreclosed assets decreased $323,000 during the six months ended
September 30, 1997, which primarily reflects the sale of a single family house
and a commercial property.
The following table summarizes impaired loan information as of
September 30, 1997.
Impaired loans $670,634
Impaired loans which have a specific
reserve of $111,300 for loan losses
calculated under SFAS 114 $273,189
Impaired loans which do not have a
specific reserve for loan losses
calculated under SFAS 114 $397,445
6
<PAGE>
Financial Statements, Continued
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
6. CONVERTIBLE SUBORDINATED DEBENTURES AND OTHER BORROWINGS
Borrowings at September 30, 1997 included a $4.0 million advance from
the Federal Home Loan Bank of Dallas bearing a rate of 6.205% amortizing based
on a 30 year term and maturing on June 20, 2000. The advance is collateralized
by mortgage-backed securities and has a balance of $3,893,754 at September 30,
1997. Borrowings also included an ESOP loan with a balance of $215,442 at
September 30, 1997 with principal payments due each June 30 and December 31 and
maturing June 30, 2001.
The following is a schedule by fiscal year of future principal payments
required under the amortizing advance agreement and the ESOP loan:
FHLB Advances ESOP Loan
------------- ---------
1998 $ 26,609 $43,875
1999 55,752 87,750
2000 59,312 83,817
2001 3,752,081
In December 1995, the Holding Corp. issued $12.1 million of 8%
Convertible Subordinated Debentures due December 1, 2005. Interest is payable
June 1 and December 1 of each year through maturity. The debentures are
convertible at any time prior to maturity at the rate of 92.592 shares of common
stock for each $1,000 of principal or $10.80 per share. The debentures may be
redeemed at the option of the Holding Corp., in whole or in part, at any time on
or after December 1, 1998 which would result in the issuance of 1,112,956
shares.
7. EARNINGS PER COMMON SHARE
Primary earnings per common share for the three months and six months
ended September 30, 1997 have been computed based on net income adjusted for the
Mitchell option (see Note 3) divided by the weighted average number of common
shares and common share equivalents outstanding during the period. Stock options
are included as share equivalents using the treasury stock method. Additionally,
net income and shares outstanding are adjusted to assume the conversion of the
Convertible Subordinated Debentures for fully diluted earnings per common share.
For purposes of determining primary earnings per share the weighted
average number of common shares and common share equivalents outstanding for the
three and six months ended September 30, 1997 was 1,926,091 and 1,915,855
shares, respectively. For fully-diluted earnings per share the weighted average
number of common shares and common share equivalents outstanding was 3,039,047
and 3,028,811 for the three and six months ended September 30, 1997,
respectively.
7
<PAGE>
Financial Statements, Continued
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS, Continued
(Unaudited)
8. SUBSEQUENT EVENTS
On October 16, 1997, the Holding Corp. declared a cash dividend of $.10
per share payable on November 26, 1997 to shareholders of record on November 6,
1997.
8
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition And
Results Of Operations
GENERAL
Fort Bend Holding Corp. (the "Holding Corp.") was incorporated under the laws of
the State of Delaware to become a savings and loan holding company with Fort
Bend Federal Savings and Loan Association of Rosenberg (the "Association") as
its subsidiary. The Holding Corp. was incorporated at the direction of the Board
of Directors of the Association, and on June 30, 1993 acquired all of the
capital stock of the Association upon its conversion from mutual to stock form
(the "Conversion"). Prior to the Conversion, the Holding Corp. did not engage in
any material operations and at September 30, 1997, it had no significant assets
or liabilities other than the investment in the capital stock of the
Association, investment securities, deferred charges from the subordinated
debenture issue, cash and cash equivalents and the subordinated debentures. In
January, 1997 the Association acquired, and has consolidated in its financial
statements, a 51% interest in Mitchell Mortgage Company, L.L.C. ("Mitchell").
Unless the context otherwise requires, all references herein to the Holding
Corp. include the Holding Corp. and the Association on a consolidated basis.
The Association is principally engaged in the business of attracting retail
savings deposits from the general public and investing those funds in first
mortgage loans on owner occupied, single-family residences, mortgage-backed
securities and investment securities. The Association originates residential,
construction and commercial real estate loans. The Association also originates
consumer loans, including loans for the purchase of automobiles and home
improvement loans. Mitchell engages in similar lending activities with an
emphasis on construction and multifamily lending and loan servicing.
The most significant outside factors influencing the operations of the
Association and other banks and savings institutions include general economic
conditions, competition in the local market place and the related monetary and
fiscal policies of agencies that regulate financial institutions. More
specifically, the cost of funds, primarily consisting of deposits, is influenced
by interest rates offered on competing investments and general market rates of
interest. Lending activities are influenced by the demand for real estate
financing and other types of loans, which in turn is affected by the interest
rates at which such loans may be offered and other factors affecting loan demand
and funds availability.
In November 1997, the voters approved home equity lending in Texas. Beginning in
January 1998, the Association will be able to lend on the equity in homesteads
in Texas. Management is unable to determine what effect home equity lending will
have on operations.
In order to continue to meet the financial services needs of the communities it
serves, the Association intends to grow in a reasonable, prudent manner which
may include expansion of the branch network or the acquisition of other
financial institutions and related companies operating generally within a 100
mile radius of Rosenberg, Texas. As a part of this intended growth, the
Association has increased the portfolio allocation of single-family construction
lending, commercial real estate lending and consumer lending, including the
origination of speculative loans to qualified builders. Residential construction
loans to owner-occupants are generally underwritten using the same criteria as
for one- to four-family residential loans. Loan proceeds
9
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition And
Results Of Operations
Continued
are disbursed in increments as construction progresses and inspections warrant.
Two additional branch offices were added during fiscal 1997 which management
believes has resulted in the expansion of the Association's core deposit base.
Loan servicing has been one of the stable income providers for the Association
and will continue to be expanded, to the extent possible, through the retention
of servicing for loans originated and sold into the secondary market, as well as
through the purchase of mortgage servicing rights, to the extent deemed
appropriate (and subject to market conditions at the time). At September 30,
1997, the Association had loans serviced for others of approximately $276
million and Mitchell Mortgage Company, L.L.C. ("Mitchell") had loans serviced
for others of approximately $572 million for a total of $848 million of loans
serviced for others for the Holding Corp. Management believes purchases of loan
servicing rights may allow the Holding Corp. to take advantage of some economies
of scale related to servicing.
Interest rates have moderated slightly subsequent to the fiscal year ended March
31, 1997. The impact of these changes may be a higher volume of permanent single
family lending activity. It is difficult to determine the impact of changing
interest rates on the net interest margin. The Association's one year interest
sensitivity gap was positive 17.59% at June 30, 1997 (the most current
information available). A positive gap indicates there are more interest-earning
assets repricing during a stated period than interest-bearing liabilities,
potentially resulting in an increase in the spread on such assets and
liabilities in a rising rate environment and a decrease in the spread in a
declining rate environment. A negative gap would have the opposite effect.
At September 30, 1997, the Holding Corp. had unrealized gains and losses in its
investment securities and mortgage-backed securities which are being held to
maturity. The Holding Corp. has both the intent and ability to hold these
securities until maturity. Management believes the Holding Corp. will be able to
collect all amounts due according to the contractual terms of the debt
securities and is not aware of any information that would indicate the inability
of any issuer of such securities to make contractual payments in a timely
manner. Therefore, management believes that none of the unrealized losses should
be considered other than temporary.
Most of the mortgage-backed securities are agency securities and are either
guaranteed by the full faith and credit of the United States Government (GNMA)
or are insured by a Government Sponsored Enterprise (FNMA or FHLMC). Private
issue mortgage-backed securities consist of the "A" piece of "A-B" structured
securities where the "B" piece is subordinate to the "A" piece and which were
initially rated one of the two highest categories by one or several of the
rating agencies. These securities have pool insurance and/or reserve funds in
addition to the subordination of the "B" piece. Collateral for these securities
is whole mortgage loans. None of these securities are considered "high risk" as
defined by the Office of Thrift Supervision and none have failed to pass the
Federal Financial Institution Examination Council (FFIEC) mandatory test for
"high risk" securities. The Association does not invest in "high risk"
securities.
10
<PAGE>
Item 2.
Management's Discussion and Analysis of Financial Condition And
Results Of Operations
Continued
The management of the investment portfolio is not designed to be the primary
source of funds for the Association's operations. Rather, it is viewed as a use
of funds generated by the Association to be invested in interest-earning assets
to be held to maturity. Cash flow mismatches between sources and uses of funds
should not require any of the securities to be liquidated. While cash flows from
the securities vary depending on the prepayment speeds associated with each
particular security, the variance in the prepayment speeds does not impact the
over-all cash flow requirements of the Association since the Association has the
ability to borrow funds from the Federal Home Loan Bank of Dallas. As of
September 30, 1997, the Association had the ability to borrow up to an
additional $155 million from the Federal Home Loan Bank of Dallas if cash flow
requirements cannot be met by attracting deposits from its customer base (its
primary source of funds) or from repayment of loans and other sources.
The following schedule provides detail of the investment securities and the
mortgage-backed securities portfolio which are held to maturity, along with the
related unrealized gains and losses, at September 30, 1997 and March 31, 1997.
11
<PAGE>
SCHEDULE OF INVESTMENT AND MORTGAGE-BACKED SECURITIES
HELD TO MATURITY
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997 MARCH 31, 1997
------------------------------------------------- ----------------------------------------------------
UNREALIZED UNREALIZED
TYPE OF SECURITY BOOK MARKET ----------------------- BOOK MARKET -------------------------
VALUE VALUE GAINS LOSSES VALUE VALUE GAINS LOSSES
----------- ----------- ---------- ----------- ----------- ----------- ---------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
INVESTMENT SECURITIES:
U.S. Treasury Notes $ 997,776 $ 1,004,060 $ 6,284 $ $ 999,218 $ 999,766 $ 548 $
World Bank Bond & FHLB
Debentures 5,246,538 4,942,204 11,291 315,625 7,240,703 6,917,342 4,920 328,281
FNMA & FHLMC Debentures 3,993,416 3,903,332 5,725 95,809 2,994,842 2,872,332 122,510
----------- ----------- ---------- -------- ----------- ----------- -------- ----------
Total held to
maturity $10,237,730 $ 9,849,596 $ 23,300 $411,434 $11,234,763 $10,789,440 $ 5,468 $ 450,791
=========== =========== ========== ======== =========== =========== ======== ==========
MORTGAGE-BACKED
SECURITIES:
FNMA
Fixed $ 9,008,228 $ 9,395,415 $ 394,251 $ 7,064 $ 9,646,216 $ 9,933,315 $322,154 $ 35,055
Adjustable 13,150,049 13,063,822 79,442 165,669 14,146,181 14,002,041 77,136 221,276
FHLMC
Fixed 4,608,582 4,720,928 119,703 7,357 5,564,950 5,624,926 81,704 21,728
Adjustable 14,325,234 14,225,568 102,963 202,629 15,339,418 15,171,045 107,024 275,397
GNMA
Fixed 2,219,537 2,334,960 115,423 2,378,421 2,462,218 83,797
Adjustable 6,060,493 6,181,024 120,531 6,709,957 6,795,714 90,650 4,893
Private Issue
Adjustable 3,483,063 3,468,358 8,489 23,194 3,858,558 3,842,010 9,025 25,573
CMO
Fixed
FNMA 11,666,203 11,599,428 22,922 89,697 11,898,545 11,768,345 10,269 140,469
FHLMC 10,404,338 10,406,998 35,315 32,655 11,258,437 11,147,713 23,595 134,319
Private 3,367,154 3,410,106 45,034 2,082 3,796,851 3,819,229 26,276 3,898
Adjustable
FNMA 2,934,928 2,805,069 10,976 140,835 2,934,718 2,828,209 1,391 107,900
FHLMC 6,694,066 6,435,452 17,533 276,147 6,826,509 6,604,949 20,569 242,129
Private 2,555,108 2,518,772 36,336 2,725,740 2,684,716 41,024
----------- ----------- ---------- -------- ----------- ----------- -------- ----------
Total held to
maturity $90,476,983 $90,565,900 $1,072,582 $983,665 $97,084,501 $96,684,430 $853,590 $1,253,661
=========== =========== ========== ======== =========== =========== ======== ==========
</TABLE>
12
<PAGE>
Management's Discussion and Analysis of Financial Condition And
Results Of Operations
Continued
FORWARD-LOOKING STATEMENTS
When used in this Form 10-QSB, the words or phrases "will likely result", "are
expected to", "will continue", "is anticipated", "estimate", "project" or
similar expressions are intended to identify "forward-looking statements" within
the meaning of the Private Securities Litigation Reform Act of 1995. Such
statements are subject to certain risks and uncertainties including changes in
economic conditions in the Holding Corp.'s market area, changes in policies by
regulatory agencies, fluctuations in interest rates, demand for loans in the
Holding Corp.'s market area and competition, that could cause actual results to
differ materially from historical earnings and those presently anticipated or
projected. The Holding Corp. wishes to caution readers not to place undue
reliance on any such forward-looking statements, which speak only as of the date
made. The Holding Corp. wishes to advise readers that the factors listed above
could affect the Holding Corp.'s financial performance and could cause the
Holding Corp.'s actual results for future periods to differ materially from any
opinions or statements expressed with respect to future periods in any current
statements.
The Holding Corp. does not undertake - and specifically disclaims any
obligation - to publicly release the results of any revisions which may be made
to any forward-looking statements to reflect events or circumstances after the
date of such statements or to reflect the occurrence of anticipated or
unanticipated events.
RESULTS OF OPERATIONS
Comparison of Three Months ended September 30, 1997 and 1996
The Holding Corp. had net income of $503,000 or $0.29 primary earnings per share
and $0.24 fully diluted earnings per share for the three months ended September
30, 1997 compared to a net loss of $579,000 or ($0.34) primary and fully diluted
loss per share for the same period in fiscal 1997.
Net interest income, before provision for loan losses, increased $655,000 to
$2.4 million during the three months ended September 30, 1997. Interest income
increased $963,000 to $5.5 million and primarily reflected a $49.5 million
increase in the average balance of interest-earning assets, and an increase of
.03% in the average yield on interest-earning assets to 7.60% for the three
months September 30, 1997 compared to 7.57% for the three months ended September
30, 1996. The increase in average yield reflected the reinvestment of principal
repayments on mortgage-backed securities with an average rate of 6.62% into
portfolio loans with an average rate of 8.98%. An increase of $40.9 million in
the average balance of loans receivable and $22.3 million in investments,
partially offset by a decrease of $13.6 million in mortgage-backed securities,
contributed to the increase in interest-earning assets. The increase in the
average loan balance reflected approximately $24 million from the Mitchell loan
portfolio, of which $15.6 million were construction loans. The remaining
increase reflected the increase in the Association's portfolio including loans
acquired through the August, 1996 acquisition of FirstBanc which initially added
approximately $20 million.
13
<PAGE>
Management's Discussion and Analysis of Financial Condition And
Results Of Operations
Continued
Interest expense increased $308,000 and primarily reflected an increase of $27.4
million in the average balance of interest-bearing liabilities. Average deposits
increased $27.6 million reflecting the acquisition of FirstBanc and average
borrowings decreased $263,000 primarily reflecting a decrease in the ESOP loan
and subordinated debt of $136,000 and $77,000, respectively. The average rate
paid on interest-bearing liabilities decreased to 4.88% for the three months
ended September 30, 1997 compared to 4.92% for the three months ended September
30, 1996. The cause of this decrease is two-fold: (1) interest rates have
declined at September 30, 1997 when compared to rates at September 30, 1996; and
(2) the average cost of deposits at FirstBanc was 34 basis points lower than the
Association's average cost of deposits.
Management determines the amount of the allowance for loan losses which covers
specific loans as well as estimated losses inherent in the loan portfolio. The
level of the allowance is based on such factors as the amount of non-performing
assets, historical loss experience, regulatory policies, general economic
conditions, the estimated fair value of the underlying collateral and other
factors related to the collectibility of the loans. The allowance for loan
losses at September 30, 1997 was $1,619,000 or 90% of total non-performing
assets. Management reviews the asset quality of the loan portfolio on a
quarterly basis.
Non-interest income increased $918,000 to $1.5 million for the three months
ended September 30, 1997 compared to $615,000 for the same period in fiscal
1997. The increase was primarily due to an increase in loan fees and charges of
$622,000 to $754,000 which reflected $573,000 of fees included from Mitchell and
an increase of $46,000 in loan and appraisal fees of the Association for the
three months ended September 30, 1997. Loan servicing income increased $164,000
to $275,000 for the three months ended September 30, 1997 compared to $111,000
for the same period in fiscal 1997. This increase primarily reflects an increase
of $609 million in loans serviced for others of which $572 million was serviced
by Mitchell. Gain on sale of loans increased $100,000 and primarily reflected
$63,000 of gains from Mitchell.
Non-interest expense decreased $172,000 to $3.1 million for the three months
ended September 30, 1997 compared to $3.2 million for the same period in fiscal
1997. This decrease is attributable to a special assessment of $1.5 million
recorded on September 30, 1996. This special assessment was levied against all
savings and loans and amounted to 65.7 basis points on deposits as of March 31,
1995. This decrease was partially offset by an increase in compensation and
benefits of $865,000 that primarily reflected additional personnel retained from
the acquisition of FirstBanc, Mitchell personnel, and normal salary increases
within the Association. Also contributing to the increase in compensation and
benefits is the appreciation in ESOP shares released from collateral on the ESOP
debt. The non-cash charge to earnings for the appreciation in shares released
under the ESOP increased $104,000 to $123,000, which represents $0.06 per
primary share outstanding, for the three months ended September 30, 1997
compared to $19,000 for the same period in fiscal 1997. The increase is
primarily attributable to the increase in FBHC's stock price during the quarter
from $14.63 at June 30, 1997 to $20.00 at September 30, 1997. Prices were
relatively stable during the same period in fiscal 1997. Office occupancy
increased $193,000 to $436,000 for the three months ended September 30, 1997
compared to $243,000 for the same period in fiscal year 1997 and primarily
reflects Mitchell's occupancy expense of $154,000 and the
14
<PAGE>
Management's Discussion and Analysis of Financial Condition
And Results Of Operations
Continued
addition of FirstBanc. In addition, the Association had an increase of $12,000
in depreciation, $10,000 in rent and utilities and $12,000 in telephone expense.
Income tax provision was $269,000 for the three months ended September 30, 1997
compared to a benefit of ($321,000) for the same period in fiscal 1997. The
increase primarily reflected the increase in income before tax.
Comparison of Six Months Ended September 30, 1997 and 1996
The Holding Corp. had net income of $1.0 million or $0.59 primary earnings per
share and $0.49 fully diluted earnings per share for the six months ended
September 30, 1997 compared to a net loss of $173,000 or ($0.10) primary and
fully diluted loss per share for the same period in fiscal 1997.
Net interest income, before provision for loan losses, increased $1.3 million to
$4.8 million during the six months ended September 30, 1997, compared to the
same period in fiscal 1997. Interest income increased $2.0 million and primarily
reflected an increase of $45.7 million in the average balance of interest-
earning assets and an increase of .21% in the average yield on interest-earning
assets to 7.70% for the six months ended September 30, 1997 compared to 7.49%
for the six months ended September 30, 1996. The increase in average yield
reflected the reinvestment of principal repayments on mortgage-backed securities
with an average rate of 6.62% into portfolio loans with an average rate of
8.95%. An increase of $46.2 million in the average balance of loans receivable
and $13.2 million in investments, partially offset by a decrease of $13.6
million in mortgage-backed securities, contributed to the increase in interest-
earning assets. The increase in the average loan balance reflected approximately
$24 million from the Mitchell loan portfolio, of which $15.5 million were
construction loans. The remaining increase reflected the increase in the
Association's portfolio including loans acquired through the August, 1996
acquisition of FirstBanc which initially added approximately $20 million.
Interest expense increased approximately $663,000 and primarily reflected an
increase of $29.6 million in the average balance of interest-bearing
liabilities. Average deposits increased $30.5 million, primarily reflecting the
acquisition of FirstBanc, and average borrowings decreased $910,000 primarily
reflecting a decrease in Federal Home Loan Bank advances and the ESOP loan of
$717,000 and $120,000, respectively. The average rate paid on interest-bearing
liabilities decreased to 4.83% for the six months ended September 30, 1997
compared to 4.88% for the six months ended September 30, 1996.
Management determines the amount of the allowance for loan losses which covers
specific loans as well as estimated losses inherent in the loan portfolio. The
level of the allowance is based on such factors as the amount of non-performing
assets, historical loss experience, regulatory policies, general economic
conditions, the estimated fair value of the underlying collateral and other
factors related to the collectibility of the loans. The provision for loan
losses for the six
15
<PAGE>
Management's Discussion and Analysis of Financial Condition And
Results Of Operations
Continued
months ended September 30, 1997 increased $10,000 as compared to the same period
in the last fiscal year, and was provided for estimated losses believed by
management to be inherent in the loan portfolio.
Non-interest income increased $1.9 million to $3.1 million for the six months
ended September 30, 1997 compared to $1.2 million for the same period in fiscal
1997. The increase was primarily due to an increase in loan fees and charges of
$1.2 million to $1.5 million which reflected $1.1 million of fees included from
Mitchell for the six months ended September 30, 1997. Loan servicing income
increased $356,000 to $572,000 for the six months ended September 30, 1997
compared to $216,000 for the same period in fiscal 1997. This increase primarily
reflected an increase of $609 million in loans serviced for others of which $572
million was serviced by Mitchell. Gain on sale of loans increased $147,000 which
reflected $98,000 of gains included from Mitchell.
Non-interest expense increased $1.2 million to $6.0 million for the six months
ended September 30, 1997 compared to $4.8 million for the same period in fiscal
1997. Compensation and benefits increased $1.8 million and primarily reflected
additional personnel retained from the acquisition of FirstBanc, Mitchell
personnel and normal salary increases within the Association. Also contributing
to the increase in compensation and benefits is the appreciation in ESOP shares
released from collateral on the ESOP debt. The non-cash charge to earnings for
the appreciation in shares released under the ESOP increased $200,000 to
$234,000, which represents $0.12 per primary share outstanding, for the six
months ended September 30, 1997 compared to $34,000 for the same period in
fiscal 1997. The increase is primarily attributable to the increase in FBHC's
stock price during the year from $12.38 at March 31, 1997 to $20.00 at September
30, 1997. Prices were relatively stable during the same period in fiscal 1997.
Office occupancy increased $453,000 to $883,000 for the six months ended
September 30, 1997 compared to $430,000 for the same period in fiscal year 1997
and primarily reflects Mitchell's occupancy expense of $296,000. In addition,
the Association experienced an increase of $70,000 in depreciation, $40,000 in
rent and utilities and $26,000 in telephone expense associated with the addition
of the new branch in Katy, Texas and the acquisition of FirstBanc. Other
expenses increased $476,000 to $1.1 million for the six months ended September
30, 1997 compared to $670,000 for the same period in fiscal 1997. The increase
was primarily due to expenses of Mitchell of $350,000, the largest of which was
credit report and appraisal fees of $103,000. Partially offsetting these
increased expenses is the one time Savings Association Insurance Fund Assessment
of $1.5 million recorded on September 30, 1996.
Income tax provision was $547,000 for the six months ended September 30, 1997
compared to a benefit of ($112,000) for the same period in fiscal 1996. The
increase primarily reflected the increase in income before tax.
16
<PAGE>
Management's Discussion and Analysis of Financial Condition And
Results Of Operations
Continued
ASSET/LIABILITY MANAGEMENT
The Holding Corp. attempts to maximize net interest income by achieving a
positive interest rate spread that can be sustained during fluctuations in
prevailing interest rates. The Holding Corp.'s policies are designed to reduce
the impact of changes in interest rates on its net interest income by
maintaining a favorable match between the maturities or repricing dates of its
interest-earning assets and interest-bearing liabilities (interest sensitivity
gap). The Holding Corp. has implemented these policies by generally selling
long-term fixed rate mortgage loan originations, retaining its adjustable rate
mortgage loans, originating and retaining short-term consumer loans and
purchasing adjustable rate or short-term maturity loans. As a result of these
policies, the Holding Corp.'s cumulative one year interest sensitivity gap at
June 30, 1997 (the most current information available) was a positive 17.59%.
Changes in interest rates, prepayments rates and early withdrawal levels will
affect the interest sensitivity gap of the Holding Corp.
ASSET QUALITY
The allowance for loan losses is established through a provision for loan losses
based on management's quarterly asset classification review and evaluation of
the risk inherent in its loan portfolio and changes in the nature and volume of
its loan activity.
As a result of this review process, management recorded a $15,000 provision for
loan losses during the three months ended September 30, 1997 and a $78,000
provision for the six months ended September 30, 1997. Net charge-offs for the
six months ended September 30, 1997 totaled $110,000, attributed primarily to
one commercial real estate loan, of which $62,000 was charged off and the
remainder paid off, and the charge off of one unsecured consumer loan acquired
in the FirstBanc Savings acquisition. The Association's allowance for loan
losses decreased to $1,619,000 or 1.13% of total loans at September 30, 1997,
compared to $1,701,000 or 1.22% of total loans at March 31, 1997. While
management believes it uses the best information available to make
determinations regarding the adequacy of the allowance, there is no assurance
that the subsequent evaluations of the loan portfolio may not require additional
provisions for loan losses.
17
<PAGE>
Management's Discussion and Analysis of Financial Condition And
Results Of Operations
Continued
The non-performing assets to total assets ratio is one indicator of the exposure
to credit risk. Non-performing assets of the Association consist of non-accruing
loans, troubled debt restructurings, and real estate which was acquired as a
result of foreclosure. The following table summarizes the various categories of
the Holding Corp.'s non-performing assets.
September 30, 1997 March 31, 1997
------------------ --------------
Non-accruing loans $1,205,664 $ 489,251
Troubled debt restructurings 559,334 405,097
Foreclosed assets 34,740 357,880
---------- ----------
Total non-performing assets $1,799,738 $1,252,228
========== ==========
Total non-performing assets
as a percentage of total
assets 0.56% 0.42%
Total non-performing assets increased $548,000 for the six months ended
September 30, 1997. The increase in nonaccrual loans is primarily the result of
a $957,000 increase in residential loans over 90 days delinquent, of which
$252,000 are two loans held by Mitchell Mortgage with the remainder consisting
of Fort Bend Federal loans, the largest of which totals $346,000. This increase
was partially offset by the transfer of a $275,000 commercial real estate loan
from non-accrual to troubled debt restructurings. A specific reserve of $111,000
was set up against this loan balance at the date of the transfer. The decrease
in foreclosed assets was primarily the result of the sale of a single family
residence and a commercial real estate property, which totaled $323,000.
At September 30, 1997, foreclosed assets consisted of a repossessed automobile
and a 5% participation in 26 residential lots. All of the lots and the
automobile are being marketed for sale.
LIQUIDITY AND CAPITAL RESOURCES:
The Association's primary sources of funds are deposits, sales of mortgage
loans, principal and interest payments on loans and mortgage-backed securities,
borrowings and funds provided by operations. While scheduled loan and mortgage-
backed securities principal repayments are a relatively predictable source of
funds, deposit flows, prepayments of loan and mortgage-backed securities
principal, and sales of mortgage loans are greatly influenced by general
interest rates, economic conditions, and competition. Current Office of Thrift
Supervision ("OTS") regulations require the Association to maintain cash and
eligible investments in an amount equal to at least 5% of customer accounts and
short-term borrowings to assure its ability to meet demands for withdrawals and
repayment of short-term borrowings. As of September 30, 1997, the Association's
liquidity ratio was 20.08%, which was in excess of the minimum regulatory
requirements.
18
<PAGE>
Management's Discussion and Analysis of Financial Condition And
Results Of Operations
Continued
During the six months ended September 30, 1997, total deposits increased
approximately $18.9 million. The increase primarily reflects a $9.9 million
increase in escrow deposits of Mitchell Mortgage. In addition, the Association
added two branches in fiscal 1997 that have contributed to the expansion of the
Association's core deposit base. Escrow deposits will be paid out over the next
quarter ending December 31, 1997.
The Association uses its capital resources principally to meet its ongoing
commitments to fund maturing certificates of deposit and loan commitments,
maintain its liquidity and meet operating expenses. At September 30, 1997, the
Association had commitments to originate loans totaling $14.2 million. The
Association considers its liquidity and capital resources to be adequate to meet
its foreseeable short- and long-term needs. The Association expects to be able
to fund or refinance, on a timely basis, its material commitments and long-term
liabilities.
During the six months ended September 30, 1997, the borrowings from the Federal
Home Loan Bank of Dallas decreased $26,000 and ESOP debt decreased $91,000. It
is anticipated that the amount of outstanding borrowings will fluctuate during
the 1998 fiscal year depending upon cash flows from the various sources of funds
and financing to be provided to Mitchell Mortgage Company, L.L.C.
On October 16, 1997, the Holding Corp. declared a cash dividend of $0.10 per
share payable on November 26, 1997 to the shareholders of record on November 6,
1997.
The Association is required to maintain specific amounts of regulatory capital
pursuant to regulations of the OTS. As of June 5, 1997, the Association was
notified by the OTS that based on its reported capital position, the Association
is considered to be "well capitalized" in accordance with the Prompt Corrective
Action provision of Section 38 of the Federal Deposit Insurance Act. The table
below presents the Association's capital position at September 30, 1997 relative
to the existing regulatory capital requirements. Such requirements may increase
if proposed capital regulations are implemented. Management believes the
Association will meet the requirements of the proposed capital regulations.
Amount Percent of
(000's) Assets(1)
------- ----------
Tangible capital $21,253 6.7%
Tangible capital requirement 4,739 1.5
------- ----
Excess $16,514 5.2%
======= ====
Core capital $21,253 6.7%
Capital requirement 12,666 4.0
------- ----
Excess $ 8,587 2.7%
======= ====
Total capital (i.e., core
& supplemental capital) $22,621 14.8%
Risk-based capital
requirement 12,202 8.0
------- ----
Excess $10,419 6.8%
======= ====
(1) Based upon adjusted assets for purposes of the tangible capital and core
capital requirements, and risk-weighted assets for purposes of the risk-
based capital requirement.
19
<PAGE>
Management's Discussion and Analysis of Financial Condition And
Results Of Operations
Continued
IMPACT OF NEW ACCOUNTING STANDARDS
In February 1997, the Financial Accounting Standards Board issued Statement No.
128, "Earnings per Share." Statement 128 is effective for both interim and
annual periods ending after December 15, 1997, and replaces the presentation of
primary and fully diluted earnings per share with a presentation of basic and
diluted earnings per share.
In February 1997, the Financial Accounting Standards Board issued Statement No.
129, "Disclosure of Information about Capital Structure." Statement 129 is
effective for financial statements for periods ending after December 15, 1997.
Statement 129 consolidates the existing requirements to disclose certain
information about an entity's capital structure.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 130,
"Accounting for Comprehensive Income." Statement 130 is effective for financial
statements for fiscal years beginning after December 15, 1997, with earlier
application permitted. Statement 130 defines comprehensive income as the change
in equity of a business enterprise during a period from transactions and other
events and circumstances from nonowner sources.
In June 1997, the Financial Accounting Standards Board issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related Information." Statement
131 is effective for fiscal years beginning after December 15, 1997, with
earlier application encouraged. Statement 131 specifies revised guidelines for
determining an entity's operating segments and the type and level of financial
information to be disclosed.
The adoption of these statements is not expected to have a material impact on
financial conditions, results of operations or cash flows reported by the
Holding Corp. The Holding Corp. does not anticipate early adoption of any of
these new accounting standards.
20
<PAGE>
PART II - OTHER INFORMATION
Item 1. - LEGAL PROCEEDINGS
There are no material legal proceedings to which the Holding Corp. or the
Association is a party or of which any of their property is subject. From time-
to-time, the Association is a party to various legal proceedings incident to its
business.
Item 2. - CHANGES IN SECURITIES
None
Item 3. - DEFAULTS UPON SENIOR SECURITIES
None
Item 4. - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
Item 5. - OTHER INFORMATION
None
Item 6. - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
Exhibit 11 - Computation of earnings per share (attached)
Exhibit 27 - Financial Data Schedule (attached)
(b) Reports on Form 8-K
Fort Bend Holding Corp. filed the following Forms 8-K during the three
months ended September 30, 1997.
July 29, 1997 - The registrant issued an earnings release announcing the
declaration of a cash dividend and earnings for the quarter ended June 30, 1997.
August 1, 1997 - The registrant issued a press release announcing the
results of the Annual Meeting.
August 22, 1997 - The registrant issued a press release declaring a
2-for-1 stock split in the form of a 100% stock dividend.
21
<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 hereunto duly authorized.
FORT BEND HOLDING CORP.
Registrant
Date: November 12, 1997 /s/ Lane Ward
------------------------------------
Lane Ward
Vice Chairman, President and Chief
Executive Officer
Date: November 12, 1997 /s/ David D. Rinehart
------------------------------------
David D. Rinehart
Executive Vice President and Chief
Financial Officer
22
<PAGE>
Exhibit 11
COMPUTATION OF EARNINGS PER SHARE
For the three and six months ended September 30, 1997 and 1996
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
September 30 September 30,
---------------------------- ---------------------------
Primary Earnings per Share 1997 1996 1997 1996
---------- ----------- ---------- -----------
<S> <C> <C> <C> <C>
Net income (loss) applicable to common stock $ 503,146 $ (578,831) $1,022,484 $ (173,112)
Minority interest in net income of consolidated
subsidiary, net of tax 66,164 --- 118,549 ---
---------- ---------- ---------- ----------
Net income (loss), adjusted $ 569,310 $ (578,831) $1,141,033 $ (173,112)
========== ========== ========== ==========
Weighted average number of common shares
outstanding 1,655,318 1,638,396 1,654,472 1,638,396
Weighted average common shares issuable under
employee stock option plan 197,455 117,634 173,299 117,634
Weighted average common shares issuable
under the Mitchell acquisition agreement 181,930 --- 181,930 ---
Less weighted average shares assumed
repurchased with proceeds (108,612) (69,644) (93,846) (69,644)
---------- ---------- ---------- ----------
Weighted average common shares and common
share equivalents outstanding 1,926,091 1,686,386 1,915,855 1,686,386
========== ========== ========== ==========
Primary earnings (loss) per common share $ 0.29 $ (0.34) $ 0.59 $ (0.10)
========== ========== ========== ==========
Fully diluted earnings per share
Net income (loss) applicable to common stock $ 503,146 $ (578,831) $1,022,484 $ (173,112)
Minority interest in net income of consolidated
subsidiary, net of tax 66,164 --- 118,549 ---
Interest on convertible subordinated debentures 171,853 172,991 345,058 345,981
---------- ---------- ---------- ----------
Net income (loss), adjusted $ 741,163 $ (405,840) $1,486,091 $ 172,869
========== ========== ========== ==========
Weighted average common shares and
common share equivalents outstanding 1,926,091 1,686,386 1,915,855 1,686,386
Weighted average common shares issuable with
the conversion of debentures to common stock 1,112,956 1,120,364 1,112,956 1,120,364
---------- ---------- ---------- ----------
Weighted average common shares and common
share equivalents outstanding 3,039,047 2,806,750 3,028,811 2,806,750
========== ========== ========== ==========
Fully diluted earnings (loss) per common share $ 0.24 $ (0.14) $ 0.49 $ 0.06
========== ========== ========== ==========
</TABLE>
Fully diluted earnings (loss) per share are not disclosed on the statement of
operations for the three and six months ended September 30, 1996 as they are
anti-dilutive.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM FORT BEND
HOLDING CORP.'S 9/30/97 FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> MAR-31-1998
<PERIOD-START> APR-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 7,046,352
<INT-BEARING-DEPOSITS> 40,066,399
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3,284,953
<INVESTMENTS-CARRYING> 100,714,713
<INVESTMENTS-MARKET> 100,415,496
<LOANS> 149,981,095
<ALLOWANCE> 1,619,369
<TOTAL-ASSETS> 319,413,856
<DEPOSITS> 269,083,871
<SHORT-TERM> 0
<LIABILITIES-OTHER> 11,964,424
<LONG-TERM> 16,129,196
0
0
<COMMON> 18,321
<OTHER-SE> 21,430,198
<TOTAL-LIABILITIES-AND-EQUITY> 319,413,856
<INTEREST-LOAN> 6,731,290
<INTEREST-INVEST> 4,151,422
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 10,882,712
<INTEREST-DEPOSIT> 5,455,295
<INTEREST-EXPENSE> 6,116,147
<INTEREST-INCOME-NET> 4,766,565
<LOAN-LOSSES> 77,980
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 1,146,045
<INCOME-PRETAX> 1,569,952
<INCOME-PRE-EXTRAORDINARY> 1,569,952
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,022,484
<EPS-PRIMARY> 0.59
<EPS-DILUTED> 0.49
<YIELD-ACTUAL> 3.37
<LOANS-NON> 1,205,664
<LOANS-PAST> 0
<LOANS-TROUBLED> 559,334
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,701,008
<CHARGE-OFFS> 109,620
<RECOVERIES> 50,000
<ALLOWANCE-CLOSE> 1,619,369
<ALLOWANCE-DOMESTIC> 251,039
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,368,330
</TABLE>
