<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 2000 OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ________________ to ________________
Commission File Number: 000-21628
HAVEN BANCORP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE
(State or other jurisdiction of incorporation or organization)
11-3153802
(I.R.S. Employer Identification No.)
615 MERRICK AVENUE, WESTBURY, NEW YORK 11590
(Address of principal executive offices) (Zip Code)
(516) 683-4100
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. X Yes No
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
There were 9,070,981 shares of the Registrant's common stock
outstanding as of May 12, 2000.
<PAGE>
HAVEN BANCORP, INC.
FORM 10-Q
INDEX
PART I - FINANCIAL INFORMATION PAGE
Item 1. Financial Statements (Unaudited)
Consolidated Statements of Financial Condition
as of March 31, 2000 and December 31, 1999 3
Consolidated Statements of Income for the
Three months ended March 31, 2000 and 1999 4
Consolidated Statement of Changes in
Stockholders' Equity for the Three months
ended March 31, 2000 5
Consolidated Statements of Cash Flows for the
Three months ended March 31, 2000 and 1999 6
Notes to Consolidated Financial Statements 7-10
Item 2. Management's Discussion and Analysis of
Financial Condition and Results of Operations 10-22
Item 3. Quantitative and Qualitative Disclosures
about Market Risk 22
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 23
Item 2. Changes in Securities and Use of Proceeds 23
Item 3. Defaults Upon Senior Securities 23
Item 4. Submission of Matters to a Vote of Security
Holders 23
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 24
Signature Page
2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS (UNAUDITED)
HAVEN BANCORP, INC.
Consolidated Statements of Financial Condition
(Dollars in thousands, except for share data)
(Unaudited)
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
-------- ------------
<S> <C> <C>
ASSETS
Cash and due from banks $ 51,740 $ 41,479
Money market investments 6,104 1,238
Securities available for sale (Note 2) 943,435 937,299
Loans held for sale 49,384 82,709
Federal Home Loan Bank of NY stock, at cost 27,865 27,865
Loans receivable:
First mortgage loans 1,793,622 1,777,208
Cooperative apartment loans 4,048 3,669
Other loans 24,348 25,948
--------- ---------
Total loans receivable 1,822,018 1,806,825
Less allowance for loan losses (16,836) (16,699)
--------- ---------
Loans receivable, net 1,805,182 1,790,126
Premises and equipment, net 35,002 35,928
Accrued interest receivable 15,564 15,825
Other assets 31,636 33,381
--------- ---------
Total assets $2,965,912 $2,965,850
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Liabilities:
Deposits $2,150,944 $2,080,613
Borrowed funds 680,987 749,232
Due to broker 871 -
Other liabilities 30,369 30,422
--------- ---------
Total liabilities 2,863,171 2,860,267
--------- ---------
Stockholders' Equity:
Preferred stock, $.01 par value, 2,000,000
shares authorized, none issued - -
Common stock, $.01 par value, 30,000,000 shares authorized,
9,918,750 shares issued; 9,026,661 and 9,000,237 shares
outstanding at March 31, 2000 and December 31, 1999, respectively 100 100
Additional paid-in capital 52,556 52,336
Retained earnings, substantially restricted 88,525 89,083
Accumulated other comprehensive loss (28,101) (25,465)
Treasury stock, at cost (892,089 and 918,513 shares at March
30, 2000 and December 31, 1999, respectively) (8,759) (8,934)
Unallocated common stock held by Bank's ESOP (864) (934)
Unearned common stock held by Bank's Recognition Plans and Trusts (218) (231)
Unearned compensation (498) (372)
--------- ---------
Total stockholders' equity 102,741 105,583
--------- ---------
Total liabilities and stockholders' equity $2,965,912 $2,965,850
========= =========
</TABLE>
See accompanying notes to consolidated financial statements.
3
<PAGE>
HAVEN BANCORP, INC.
Consolidated Statements of Income
(Dollars in thousands, except per share data)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------
2000 1999
---- ----
<S> <C> <C>
Interest income:
Mortgage loans $33,900 $24,885
Other loans 507 850
Mortgage-backed securities 12,857 12,650
Money market investments 147 30
Debt and equity securities 4,326 2,065
------ ------
Total interest income 51,737 40,480
------ ------
Interest expense:
Deposits:
Savings accounts 4,516 4,669
NOW accounts 382 324
Money market accounts 529 419
Certificate accounts 15,571 11,753
Borrowed funds 11,147 7,109
------ ------
Total interest expense 32,145 24,274
------ ------
Net interest income before provision for loan losses 19,592 16,206
Provision for loan losses 565 675
------ ------
Net interest income after provision for loan losses 19,027 15,531
------ ------
Non-interest income:
Loan fees and servicing income 264 505
Mortgage banking income 1,084 2,268
Retail banking fees 4,866 3,079
Net gain on sales of interest-earning assets 126 335
Insurance, annuity and mutual fund fees 2,169 1,975
Other 94 135
------ ------
Total non-interest income 8,603 8,297
------ ------
Non-interest expense:
Compensation and benefits 11,037 11,040
Occupancy and equipment 3,609 3,344
Real estate owned operations, net (176) (151)
Federal deposit insurance premiums 108 254
Restructuring charges (Note 3) 7,057 -
Other 5,840 5,138
------ ------
Total non-interest expense 27,475 19,625
------ ------
Income before income tax expense 155 4,203
Income tax expense 54 1,603
------ ------
Net income $ 101 $2,600
====== ======
Net income per common share: Basic $ 0.01 $ 0.30
====== ======
Diluted $ 0.01 $ 0.29
====== ======
</TABLE>
See accompanying notes to consolidated financial statements.
4
<PAGE> HAVEN BANCORP, INC.
Consolidated Statement of Changes in Stockholders' Equity
Three months ended March 31, 2000 (Unaudited)
<TABLE>
<CAPTION>
Accumulated
Other Unallocated Unearned
Additional Comprehen- Common Common
Common Paid-In Retained sive Treasury Stock Held Stock Held Unearned
Total Stock Capital Earnings Loss Stock by ESOP by RRP Compensation
(Dollars in thousands) ----- ------ ---------- -------- ---------- -------- ----------- ---------- ------------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1999 $105,583 100 52,336 89,083 (25,465) (8,934) (934) (231) (372)
Comprehensive Loss:
Net income 101 - - 101 - - - - -
Other comprehensive income, net of tax
Net unrealized depreciation on
securities available for sale, net
of reclassification adjustment (1) (2,636) - - - (2,636) - - - -
-------
Comprehensive Loss (2,535) - - - - - - - -
Dividends declared (note 5) (659) - - (659) - - - - -
Treasury stock issued for RRP and deferred
compensation plan (14,592 shares) - - 112 - - 97 - (209)
Stock options exercised, net of tax
effect (11,832 shares) (note 4) 60 - (18) - - 78 - - -
Allocation of ESOP stock and
amortization of award of RRP stock
and related tax benefits 209 - 126 - - - 70 13 -
Amortization of deferred compensation plan 83 - - - - - - - 83
------- --- ------ ------ ------ ------ ------ ----- -----
Balance at March 31, 2000 $102,741 100 52,556 88,525 (28,101) (8,759) (864) (218) (498)
======= === ====== ====== ====== ====== ====== ===== =====
(1) Disclosure of reclassification adjustment:
(in thousands) Three months Ended
March 31, 2000
------------------
Net unrealized holding loss arising during period $ (2,554)
Less: reclassification adjustment for net gains included in net income 82
------
Net unrealized loss on securities available for sale $ (2,636)
======
</TABLE>
See accompanying notes to consolidated financial statements.
5
<PAGE>
HAVEN BANCORP, INC.
Consolidated Statements of Cash Flows
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three months ended
March 31,
------------------
2000 1999
---- ----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 101 $ 2,600
Adjustments to reconcile net income to net cash provided by
(used in) operating activities:
Amortization of cost of stock benefit plans 293 358
Amortization of net deferred loan origination fees (667) (23)
Amortization of premiums and accretion of discounts on loans,
mortgage-backed and debt securities (47) (70)
Provision for loan losses 565 675
Provision for losses on real estate owned 35 -
Deferred income taxes 109 (404)
Net gain on sales of interest-earning assets (126) (335)
Net decrease (increase) in loans held for sale 33,325 (5,252)
Depreciation and amortization 1,330 1,178
Decrease (increase) in accrued interest receivable 261 (1,478)
Increase (decrease) in due to broker 871 (87,458)
(Decrease) increase in other liabilities (53) 14,762
Decrease in other assets 3,081 6,187
------ ------
Net cash provided by (used in) operating activities 39,078 (69,260)
------ ------
Cash flows from investing activities:
Net increase in loans (15,164) (113,517)
Proceeds from disposition of assets (including REO) 128 22
Purchases of securities available for sale (72,447) (191,880)
Principal repayments and maturities on securities available for sale 24,101 64,373
Proceeds from sales of securities available for sale 38,347 71,214
Purchases of FHLB stock, net - (265)
Net (increase) decrease in premises and equipment (404) 259
------- -------
Net cash used in investing activities (25,439) (169,794)
------- -------
Cash flows from financing activities:
Net increase in deposits 70,331 82,085
Net (decrease) increase in short term borrowed funds (99,268) 168,061
Increase (decrease) in long term borrowed funds 31,023 (22,077)
Payment of common stock dividends (657) (665)
Stock options exercised 59 22
------- -------
Net cash provided by financing activities 1,488 227,426
------- -------
Net increase (decrease) in cash and cash equivalents 15,127 (11,628)
Cash and cash equivalents at beginning of period 42,717 44,808
------ -------
Cash and cash equivalents at end of period $57,844 $ 33,180
====== =======
Supplemental information:
Cash paid during the period for:
Interest $32,281 $ 24,011
Income taxes 1,089 2,139
Additions to real estate owned 190 284
Securities purchased, not yet received 871 10,000
======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
6
<PAGE>
HAVEN BANCORP, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
March 31, 2000 and 1999
(Unaudited)
NOTE 1 - BASIS OF PRESENTATION. The accompanying unaudited
consolidated financial statements include the accounts of Haven
Bancorp, Inc. ("Haven Bancorp" or the "Company") and its wholly-
owned subsidiary, CFS Bank ("CFS" or the "Bank") and subsidiaries,
as of March 31, 2000 and December 31, 1999 and for the three-month
periods ended March 31, 2000 and 1999, respectively. Material
intercompany accounts and transactions have been eliminated in
consolidation. Certain reclassifications have been made to prior
period amounts to conform to the current period presentation.
The accompanying unaudited consolidated financial statements have
been prepared in accordance with generally accepted accounting
principles for interim financial information and with the
instructions to Form 10-Q and Article 10 of 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
necessary adjustments, consisting only of normal recurring accruals
necessary for a fair presentation, have been included. The results
of operations for the three-month period ended March 31, 2000 are
not necessarily indicative of the results that may be expected for
the entire fiscal year.
These unaudited consolidated financial statements should be read in
conjunction with the audited consolidated financial statements and
notes thereto included in the Company's Annual Report to
Stockholders for the fiscal year ended December 31, 1999.
7
<PAGE>
NOTE 2 - SECURITIES AVAILABLE FOR SALE.
The amortized cost and estimated fair values of securities
available for sale at March 31, 2000 are summarized as follows:
<TABLE>
<CAPTION>
Gross Gross Estimated
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
--------- ---------- ---------- ---------
(In thousands)
<S> <C> <C> <C> <C>
Debt and equity securities available for sale:
U.S. Government and Agency obligations $ 110,965 58 (5,041) 105,982
Corporate debt securities 103,842 - (938) 102,904
Preferred Stock 10,650 - (1,570) 9,080
------- ----- ------ -------
225,457 58 (7,549) 217,966
------- ----- ------ -------
MBSs available for sale:
GNMA Certificates 2,192 18 - 2,210
FNMA Certificates 120,897 232 (5,188) 115,941
FHLMC Certificates 30,971 240 (210) 31,001
CMOs and REMICS 607,133 404 (31,220) 576,317
------- ----- ------ -------
761,193 894 (36,618) 725,469
--------- ----- ------ -------
Total $ 986,650 952 (44,167) 943,435
========= ===== ====== =======
</TABLE>
The net unrealized loss on securities available for sale at March
31, 2000, was reported as a separate component of stockholders'
equity in the amount of $28.1 million, which is net of a tax effect
of $15.1 million.
NOTE 3 - RESTRUCTURING CHARGES.
The Company recorded a pre-tax restructuring charge of
approximately $6.8 million in the first quarter of 2000 related to
the completed sale of parts of its residential mortgage origination
division to M&T Mortgage Corporation, the anticipated sale of its
Fishkill, NY office and the reorganization of the remainder of the
division.
The Company also recorded a pre-tax restructuring charge of
approximately $300,000 in the first quarter of 2000 related to
severance payments.
8
<PAGE>
NOTE 4 - STOCK PLANS. Changes in outstanding options for the
benefit of directors, officers and other key employees of the Bank
for the three months ended March 31, 2000 are as follows:
<TABLE>
<CAPTION>
Weighted Average
Options Exercise Price
------- ----------------
<S> <C> <C>
Balance at December 31, 1999 1,387,580 $10.13
Granted 8,332 15.83
Forfeited (33,800) 18.50
Exercised (11,832) 5.00
--------- -----
Balance at March 31, 2000 1,350,280 10.00
========= =====
Options exercisable at March 31, 2000 1,144,649 $ 8.76
========= =====
</TABLE>
NOTE 5 - DIVIDENDS PAYABLE. On March 23, 2000, the Company's Board
of Directors approved a quarterly cash dividend of $0.075 per
share, payable on April 21, 2000, to shareholders of record as of
March 31, 2000.
NOTE 6 - RECENT ACCOUNTING PRONOUNCEMENTS. In June 1998, the
Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards ("SFAS") No. 133, "Accounting for
Derivative Instruments and Hedging Activities". SFAS No. 133
establishes accounting and reporting standards for derivative
instruments and for hedging activities. It requires that an entity
recognize all derivatives as either assets or liabilities in the
statement of financial condition and measure those instruments at
fair value. The accounting for changes in the fair value of a
derivative (that is, gains and losses) depends on the intended use
of the derivative and the resulting designation. SFAS No. 133 is
effective for fiscal years beginning after June 15, 1999 and does
not require restatement of prior periods. The implementation of
SFAS No. 133 has not had a material impact on the Company's
financial condition or results of operations.
In June 1999, the FASB issued SFAS No. 137, "Accounting for
Derivative Instruments and Hedging Activities - Deferral of the
Effective Date of FASB Statement No. 133". SFAS No. 137 delays the
effective date of SFAS No. 133 to January 1, 2000, for calendar
year entities such as the Company. Management of the Company
currently believes the implementation of SFAS No. 133 will not have
a material impact on the Company's financial condition or results
of operations.
9
<PAGE>
NOTE 7 - NET INCOME PER SHARE OF COMMON STOCK. There were
8,841,435 basic weighted average shares outstanding and 9,188,828
diluted weighted average shares outstanding for the three months
ended March 31, 2000. The weighted average number of shares
outstanding does not include 172,771 unallocated shares which are
owned by the Employee Stock Ownership Plan ("ESOP") as of March 31,
2000 in accordance with American Institute of CPAs Statement of
Position 93-6, "Employers' Accounting for ESOPs".
NOTE 8 - COMPREHENSIVE LOSS - Comprehensive loss was $2.5 million
for the three-month period ended March 31, 2000, and $452,000 for
the three-month period ended March 31, 1999.
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
GENERAL
Haven Bancorp, Inc. ("Haven Bancorp" or the "Company") is the
holding company for CFS Insurance Agency, Inc. and CFS Bank ("CFS"
or the "Bank"), a federally chartered stock savings bank. CFS
converted from a mutual to a stock savings bank on September 23,
1993 in conjunction with the issuance of the Bank's capital stock
to Haven Bancorp.
Haven Bancorp's business currently consists primarily of the
business of the Bank. The Bank's principal business has been and
continues to be attracting retail deposits from the general public
and investing those deposits, together with funds generated from
operations primarily in one- to four-family, owner occupied
residential mortgage loans. In addition, the Bank will invest in
debt, equity and mortgage-backed securities ("MBSs") to supplement
its lending portfolio. The Bank also invests, to a lesser extent,
in multi-family residential mortgage loans, commercial real estate
loans and other marketable securities. The Bank's results of
operations are dependent primarily on its net interest income,
which is the difference between the interest income earned on its
loan and securities portfolios and its cost of funds, which
primarily consist of the interest paid on its deposits and borrowed
funds. The Bank's net income also is affected by its non-interest
income, its provision for loan losses and operating expenses
consisting primarily of compensation and benefits, occupancy and
equipment, real estate owned operations, net, federal deposit
insurance premiums and other general and administrative expenses.
The earnings of the Bank are significantly affected by general
economic and competitive conditions, particularly changes in market
interest rates, and to a lesser extent, by government policies and
actions of regulatory authorities.
On March 24, 2000, the Company announced that it retained the
10
<PAGE>
investment banking firm of Lehman Brothers Inc. to advise the Board
of Directors on strategic alternatives for the Company. In
connection with this action, the Company formed a Special Committee
of the Board of Directors, consisting of three outside Board
members to work with Lehman Brothers in these efforts. The
committee is chaired by Michael A. McManus, Jr. and includes Robert
M. Sprotte and Hanif Dahya. The committee was recently expanded to
five members with the addition of Richard J. Lashley and Garrett
Goodbody of PL Capital Group ("PL Capital").
ANALYSIS OF CHANGES IN FINANCIAL CONDITION FROM DECEMBER 31, 1999
TO MARCH 31, 2000
ASSETS
The Company had total assets of $2.97 billion at March 31, 2000 and
December 31, 1999. Securities available for sale ("AFS") increased
by $6.1 million, or 0.7% to $943.4 million at March 31, 2000 from
$937.3 million at December 31, 1999 primarily due to purchases for
the AFS portfolio. During the three months ended March 31, 2000,
the Bank purchased $27.5 million of MBSs and $44.9 million of debt
and equity securities. The emphasis on debt and equity securities
was due to the availability of more favorable rates and shorter
durations. These increases were partially offset by sales and
principal payments of $38.3 million and $24.1 million,
respectively.
Net loans increased by $15.1 million, or 0.8% to $1.80 billion at
March 31, 2000 from $1.79 billion at December 31, 1999. Loan
originations and purchases during the three-month period ended
March 31, 2000 totaled $166.1 million (comprised of $133.1 million
of residential one- to four-family mortgage loans, $1.5 million of
home equity loans and lines of credit, $11.7 million of multi-
family loans, and $19.8 million of commercial real estate loans).
Residential loan originations and purchases include loans
originated or purchased for sale in the secondary market for the
three months ended March 31, 2000 totaling $95.8 million. During
the first three months of 2000, the Bank sold $128.7 million of
residential loans on a servicing released basis to third party
investors. During the first three months of 2000, principal
repayments totaled $55.9 million.
LIABILITIES
Deposits increased by $70.3 million, or 3.4% to $2.15 billion at
March 31, 2000 from $2.08 billion at December 31, 1999 primarily
due to deposit inflows in the Bank's supermarket branches. The
Bank had 62 supermarket bank branches as of March 31, 2000 compared
to 63 supermarket branches at December 31, 1999. During the first
quarter of 2000, the Bank closed one branch in an Edwards
Superstore in Bayshore, New York and relocated another branch from
the Pathmark Supermarket in Woodmere, New York to Springfield
Gardens, New York.
11
<PAGE>
Deposits in the supermarket branches totaled $898.5 million at
March 31, 2000 compared to $842.3 million at December 31, 1999.
Core deposits (comprised of checking, savings and money market
accounts) were equal to 49.1% of total supermarket branch deposits
at March 31, 2000 compared to 45.2% in the Bank's eight traditional
branches. Core deposits for the supermarket branches included
$230.7 million of "Liquid Asset" account balances at March 31,
2000. This account was introduced at the supermarket branches in
the second quarter of 1998 and currently pays an initial rate of
4.25% for balances over $2,500. Overall, core deposits represented
48.4% of total deposits at March 31, 2000 compared to 45.4% at
December 31, 1999. Borrowed funds decreased by $68.2 million, or
9.1% to $681.0 million at March 31, 2000 from $749.2 million at
December 31, 1999 primarily due to the fact that deposit in-flows
during the first quarter were used to pay down borrowings due to
lower loan demand.
STOCKHOLDERS' EQUITY
Haven Bancorp's stockholders' equity decreased to $102.7 million at
March 31, 2000 from $105.6 million at December 31, 1999. The
decrease in stockholders' equity was primarily due to unrealized
depreciation of $2.6 million in the value of securities available
for sale and dividends declared totaling $0.7 million. The
unrealized depreciation on AFS securities is the result of an
increase in interest rates during the three months ended March 31,
2000 as evidenced by the two year treasury note which increased 25
basis points from December 31, 1999. These decreases were
partially offset by net income of $101,000 for the three months
ended March 31, 2000, and by $352,000 in amortization of awards of
shares of stock by the Bank's ESOP and RRPs, the amortization of
the deferred compensation plan, and stock options exercised.
12
<PAGE>
NON-PERFORMING ASSETS
The following table sets forth information regarding all non-
accrual loans (which consist of loans 90 days or more past due and
restructured loans that have not yet performed in accordance with
their modified terms for the required three-month seasoning
period), restructured loans and real estate owned ("REO").
<TABLE>
<CAPTION>
March 31, December 31,
2000 1999
------------ ------------
(Dollars in Thousands)
<S> <C> <C>
Non-accrual loans
One- to four-family $ 3,879 3,663
Cooperative 317 206
Multi-family 274 1,139
Non-residential and other 2,049 1,986
------ ------
Total non-accrual loans 6,519 6,994
------ ------
Restructured loans
One- to four-family 186 314
Cooperative 177 178
Multi-family 220 225
------ ------
Total restructured loans 583 717
------ ------
Total non-performing loans 7,102 7,711
------ ------
REO
One- to four-family 364 268
Cooperative 21 56
------ ------
Total REO 385 324
Less allowance for REO 9 -
------ ------
REO, net 376 324
------ ------
Total non-performing assets $ 7,478 8,035
====== ======
Non-performing loans to total loans 0.39% 0.42
Non-performing assets to total assets 0.25 0.27
Non-performing loans to total assets 0.24 0.26
</TABLE>
13
<PAGE>
The decrease in non-performing assets was primarily due to a
decrease of $475,000 in non-accrual loans from December 31, 1999 to
March 31, 2000. The ratios of non-performing loans to total loans,
non-performing assets to total assets, and non-performing loans to
total assets each declined from December 31, 1999 to March 31,
2000, primarily due to the growth in the mortgage loan portfolio
and a decline in non-performing assets.
The Bank maintains an allowance for loan losses and an allowance
for REO, which it believes are adequate for possible losses at each
period end. Management's judgment as to possible losses is based
on its review of the loan and REO portfolios and its judgment
regarding prevailing and anticipated economic conditions and a
variety of other factors which have an impact on those portfolios.
Although management believes that the allowances are adequate as of
the period end, additional provisions may be required in the
future.
ALLOWANCE FOR LOAN LOSSES
The following table sets forth the changes in the allowance for
loan losses for the three months ended March 31, 2000 and 1999:
<TABLE>
<CAPTION> March 31, March 31,
2000 1999
------------ -------------
(Dollars in Thousands)
<S> <C> <C>
Balance at beginning of period $ 16,699 13,978
Charge-offs:
Residential (77) (64)
Cooperative - -
Multi-family - -
Non-residential and other (366) (260)
------ ------
Total charge-offs (443) (324)
Recoveries 15 244
------ ------
Net charge-offs (428) (80)
Provision for loan losses 565 675
------ ------
Balance at end of period $16,836 14,573
====== ======
Ratio of net charge-offs during the period to
average loans outstanding during the period 0.09% 0.02
Ratio of allowance for loan losses to
total loans at the end of the period 0.92 1.02
Ratio of allowance for loan losses to non-
performing loans at the end of the period 237.00 144.37
</TABLE>
14
<PAGE>
The ratio of net charge-offs to average loans outstanding during
the first three months of 2000 increased compared to the same
period in 1999 primarily due to an increase of $348,000 in net
charge-offs for the first three months of 2000 compared to the
first three months of 1999. The ratio of the allowance for loan
losses to total loans decreased for the period due to the increase
in average loans outstanding for the three months ended March 31,
2000. The ratio of the allowance for loan losses to non-performing
loans increased between the periods due primarily to an increase of
$2.3 million in the allowance for loan losses, as well as a $3.0
million decline in non-performing loans. The Bank's allowance for
loan losses was $16.8 million and $14.6 million at March 31, 2000
and March 31, 1999, respectively, while non-performing loans
totaled $7.1 million and $10.1 million, respectively, on those
dates.
ASSET/LIABILITY MANAGEMENT
The Company has attempted to reduce its exposure to interest rate
risk through the origination and purchase of ARM loans, debt
securities and MBSs, maintaining an AFS portfolio and extending
liability maturities in its certificate of deposit and borrowings
portfolio. During the first three months of 2000, the Bank
originated or purchased for its portfolio $36.2 million of
residential ARM loans and $31.5 million of adjustable-rate multi-
family, commercial real estate and construction loans. During the
three-month period, the Bank purchased $54.6 million of adjustable-
rate debt securities and MBSs. At March 31, 2000, $266.1 million,
or 28.2% of the Company's AFS portfolio were adjustable-rate
securities and $677.3 million, or 71.8% of the portfolio were
fixed-rate securities.
Historically, the Company has been able to maintain a substantial
level of core deposits (comprised of checking, savings and money
market accounts) which the Company believes helps to limit interest
rate risk by providing a relatively stable, low cost, long-term
funding base. At March 31, 2000, core deposits represented 48.4%
of deposits compared to 45.4% of deposits at December 31, 1999.
During the first three months of 2000, savings accounts increased
by $16.8 million, net of interest, whereas, certificates of deposit
decreased by $13.7 million, net of interest. The number of
checking accounts increased by 6,517, or 3.4% to 200,095 at March
31, 2000 from 193,578 at December 31, 1999. Most of the increase,
5,818 accounts, is attributable to the Bank's supermarket branches.
The Company expects to attract a higher percentage of core deposits
from its supermarket branch locations as the supermarket branching
program continues to mature. During the first quarter of 2000, the
Bank replaced $50 million of shorter-term borrowed funds with ten-
year, fixed-rate borrowed funds, which can be called after three
years of the borrowing date.
15
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Bank is required to maintain minimum levels of liquid assets as
defined by regulations of the Office of Thrift Supervision ("OTS").
This requirement, which may be varied by the OTS depending upon
economic conditions and deposit flows, is based upon a percentage
of withdrawable deposits and short-term borrowings. The required
ratio is currently 4%. The Bank's ratio was 4.76% at March 31,
2000 compared to 4.31% at December 31, 1999.
The Company's primary sources of funds are deposits, advances from
the Federal Home Loan Bank of New York ("FHLB-NY"), principal and
interest payments on loans and MBSs and retained earnings.
Proceeds from the sale of AFS securities and loans held for sale
are also a source of funding, as are, to a lesser extent, the sales
of insurance, annuities and securities brokerage activities
conducted by the Company's subsidiary, CFS Insurance Agency, Inc.
and the Bank's subsidiary, CFS Investments, Inc. While maturities
and scheduled amortization of loans and MBSs are somewhat
predictable sources of funds, deposit flows and mortgage
prepayments are greatly influenced by general interest rates,
economic conditions, competition and regulatory changes.
The Company's most liquid assets are cash and short-term
investments. The levels of these assets are dependent on the
Company's operating, financing, lending and investing activities
during any given period. At March 31, 2000 and December 31, 1999,
cash and short-term investments totaled $57.8 million and $42.7
million, respectively.
The Company and the Bank have other sources of liquidity which
include debt securities maturing within one year, loans held for
sale and AFS securities. Other sources of funds include FHLB
advances, which at March 31, 2000 totaled $489.5 million. An
additional source of funds are sales of securities under repurchase
agreements, which totaled $140.1 million at March 31, 2000.
As of March 31, 2000, the Bank exceeded all regulatory capital
requirements as detailed in the following table:
<TABLE>
<CAPTION>
Tangible Capital Core Capital Risk-Based Capital (3)
-------------------- -------------------- -----------------------
Amount Ratio (1) Amount Ratio (1) Amount Ratio (1)
------ ---------- ------ ---------- ------ ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Capital for regulatory purposes $172,273 5.72% $172,273 5.72% $188,020 12.08%
Minimum regulatory requirement 60,211 2.00(2) 120,422 4.00(2) 124,494 8.00
------- ---- ------- ---- ------- ----
Excess $112,062 3.72% $ 51,851 1.72% $ 63,526 4.08%
======= ==== ======= ==== ======= ====
</TABLE>
16
<PAGE>
(1) For tangible and core capital, the ratio is to adjusted total
assets. For risk-based capital, the ratio is to total risk-
weighted assets.
(2) Under the OTS's prompt corrective action regulations, (i) the
tangible capital requirement was effectively increased from 1.50%
to 2.00% since OTS regulations stipulate that an institution with
less than 2.00% tangible capital will be deemed to be classified as
"critically undercapitalized," and (ii) the core capital
requirement was effectively increased from 3.00% to 4.00% because
under the OTS regulations an institution with less than 4.00% core
capital is classified as "undercapitalized".
(3) The OTS requirement that an interest rate risk component be
incorporated into its existing risk-based capital standard has been
indefinitely deferred by the OTS. However, the Bank does not
believe that its risk-based capital requirement would be materially
affected as a result of the interest rate risk component.
ANALYSIS OF CORE EARNINGS
The Company's profitability is primarily dependent upon net inter-
est income, which represents the difference between income on
interest-earning assets and expenses on interest-bearing
liabilities. Net interest income is dependent on the average
balances and rates received on interest-earning assets and the
average balances and rates paid on interest-bearing liabilities.
Net income is further affected by the provision for loan losses,
non-interest income, non-interest expense and income taxes.
17
<PAGE>
The following table sets forth certain information relating to the
Company's average consolidated statements of financial condition
and consolidated statements of income for the three months ended
March 31, 2000 and 1999, respectively, and reflects the average
yield on assets and average cost of liabilities for the periods
indicated. Such yields and costs are derived by dividing income or
expense annualized by the average balance of assets or liabilities,
respectively, for the periods shown. Average balances were derived
from average daily balances. The average balance of loans includes
loans on which the Company has discontinued accruing interest. The
yields and costs include fees which are considered adjustments to
yields.
<TABLE>
<CAPTION> Three months ended March 31,
2000 1999
------------------------ ------------------------
Average Average
Average Yield/ Average Yield/
Balance Interest Cost Balance Interest Cost
------- -------- ------- ------- -------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
Mortgage loans $1,854,895 $33,900 7.31% $1,377,235 $24,885 7.23%
Other loans 25,223 507 8.04 37,178 850 9.15
Mortgage-backed securities 734,530 12,857 7.00 762,234 12,650 6.64
Money market investments 11,902 147 4.94 1,516 30 7.92
Debt and equity securities 228,406 4,326 7.58 133,067 2,065 6.21
--------- ------ --------- ------
Total interest-earning assets 2,854,956 51,737 7.25 2,311,230 40,480 7.01
Non-interest earning assets 123,305 ------ 147,604 ------
--------- ---------
Total assets 2,978,261 2,458,834
========= =========
Liabilities and stockholders' equity:
Interest-bearing liabilities:
Savings accounts 630,899 4,516 2.86 576,044 4,669 3.24
Certificate accounts 1,141,035 15,571 5.46 892,050 11,753 5.27
NOW accounts 260,657 382 0.59 222,499 324 0.58
Money market accounts 70,272 529 3.01 57,986 419 2.89
Borrowed funds 723,653 11,147 6.16 530,099 7,109 5.36
--------- ------ --------- ------
Total interest-bearing liabilities 2,826,516 32,145 4.55 2,278,678 24,274 4.26
Other liabilities 47,319 ------ 60,133 ------
--------- ---------
Total liabilities 2,873,835 2,338,811
Stockholders' equity 104,426 120,023
--------- ---------
Total liabilities and stockholders' equity $2,978,261 $2,458,834
========= =========
Net interest income/net interest rate spread $19,592 2.70% $16,206 2.75%
====== ==== ====== ====
Net interest earning assets/net interest margin $28,440 2.74% $32,552 2.80%
====== ==== ====== ====
Ratio of interest-earning assets to
interest-bearing liabilities 101.01% 101.43%
====== ======
</TABLE>
18
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS
ENDED MARCH 31, 2000 AND 1999
GENERAL. The Company reported net income of $101,000 for the three
months ended March 31, 2000 compared to net income of $2.6 million
for the three months ended March 31, 1999. The decrease was due to
pre-tax restructuring charges of $7.1 million recognized in the
first quarter of 2000. The Company recorded a restructuring charge
of approximately $6.8 million related to the completed sale of
parts of the residential mortgage origination division to M&T
Mortgage Corporation, the anticipated sale of the Fishkill, New
York office and the reorganization of the remainder of the
division. The Company also implemented a plan to reduce operating
expenses through a reduction in the Company's workforce and the
elimination of certain discretionary expenses. The Company
recorded an additional restructuring charge of approximately
$300,000 during the first quarter related to severance payments.
Excluding the restructuring charges, non-interest expense increased
by $793,000 over the prior year period. Net interest income
increased $3.4 million from the prior year period and non-interest
income increased $306,000 from the prior year period. Income tax
expense decreased $1.5 million due to a decrease of $4.0 million in
pre-tax income.
NET INTEREST INCOME. Net interest income increased by $3.4
million, or 20.9% to $19.6 million for the three months ended March
31, 2000 from $16.2 million for the three months ended March 31,
1999. The increase was primarily due to an increase in the total
average balance of interest-earning assets of $543.7 million, or
23.5% to $2.85 billion for the three months ended March 31, 2000
from $2.31 billion for the same period last year. This growth is
mainly due to growth in the Bank's residential mortgage loan and
debt and equity securities portfolios. The average yield on
interest-earning assets increased to 7.25% for the three-month
period ended March 31, 2000 from 7.01% for the three-month period
in 1999, resulting from the general increase in market interest
rates in 1999 and the first quarter of 2000. The average cost of
interest-bearing liabilities increased to 4.55% from 4.26% for the
three months ended March 31, 2000 and 1999, respectively. The net
interest spread was 2.70% for the three months ended March 31, 2000
compared to 2.75% for the comparable period in 1999.
Interest income increased by $11.3 million, or 27.8% to $51.7
million for the three months ended March 31, 2000 from $40.5
million for the three months ended March 31, 1999. The increase
was primarily the result of a $9.0 million increase in interest
income on mortgage loans and an increase of $2.3 million in
interest income on debt and equity securities.
Interest income on mortgage and other loans increased by $8.7
million, or 33.7% to $34.4 million for the three months ended March
19
<PAGE>
31, 2000, from $25.7 million for the comparable three-month period
in 1999, primarily as a result of an increase in average balances
of mortgage loans of $477.7 million. The Company expects that
mortgage loan growth will slow as a result of the aforementioned
sale and reorganization of its residential mortgage origination
division.
Interest income on debt and equity securities increased by $2.3
million, or 109.5% to $4.3 million for the three months ended March
31, 2000 from $2.1 million for the comparable three-month period in
1999, primarily as a result of an increase in the average balance
outstanding of $95.3 million and an increase in yield of 137 basis
points. The increase in average balances between the periods was
primarily due to the leverage strategy related to Haven Capital
Trust II which was issued in May 1999.
Interest expense increased by $7.9 million, or 32.4% to $32.1
million for the three months ended March 31, 2000 from $24.3
million for the three months ended March 31, 1999. The increase
was the result of a $3.8 million increase in interest expense on
deposits and an increase of $4.0 million in interest expense on
borrowings.
Interest on deposits increased by $3.8 million, or 22.3% to $21.0
million for the three months ended March 31, 2000 from $17.2
million for the comparable three-month period in 1999. This
increase was primarily due to the average balance which increased
by $354.3 million, or 20.3% to $2.10 billion for the three months
ended March 31, 2000 from $1.75 billion for the comparable three-
month period in 1999. The increase in deposits was primarily
attributable to the Bank's supermarket banking expansion during
1999. At March 31, 2000, the Bank had 62 supermarket branches
operating with deposits totaling $898.5 million compared to 59
supermarket branches at March 31, 1999 with deposits totaling
$578.1 million. The increase in average balance was primarily due
to certificate account balances which increased by $249.0 million,
or 27.9% to $1.14 billion for the three months ended March 31, 2000
from $892.1 million for the comparable three-month period in 1999.
Interest expense on certificate accounts increased by $3.8 million,
or 32.5% to $15.6 million for the three months ended March 31, 2000
from $11.8 million in the same period in 1999. The average cost of
certificate accounts was 5.46% for the first quarter of 2000
compared to 5.27% for the first quarter of 1999, primarily due to
the general rise in market interest rates between the periods. The
overall average cost of deposits was 3.99% for the three months
ended March 31, 2000 compared to 3.93% for the first quarter of
1999.
Interest on borrowed funds increased by $4.0 million, or 56.8% to
$11.1 million for the three months ended March 31, 2000 from $7.1
million for the comparable three-month period in 1999. Borrowed
20
<PAGE>
funds on an average basis increased by $193.6 million between the
periods due primarily to the addition of short-term FHLB advances
and securities sold under agreements to repurchase during 2000 in
order to complement deposit growth as a funding mechanism for
mortgage loan originations and to purchase AFS securities as part
of the leverage strategy related to Haven Capital Trust II which
was issued in May 1999. The average rate paid on borrowings
increased to 6.16% for the three months ended March 31, 2000 from
5.36% for the prior year period due to an increase in market
interest rates during 1999 and the first quarter of 2000.
PROVISION FOR LOAN LOSSES. The Bank provided $565,000 for loan
losses for the three months ended March 31, 2000 compared to
$675,000 for the comparable three-month period in 1999. The
provision for loan losses is established based on management's
periodic review and evaluation of the loan portfolio and reflects
the decrease in the overall growth in the Bank's loan portfolio.
NON-INTEREST INCOME. Non-interest income increased by $306,000, or
3.7% for the three months ended March 31, 2000 to $8.6 million from
$8.3 million for the comparable three-month period in 1999. Non-
interest income for the first quarter of 2000 included $1.1 million
of mortgage banking income compared to mortgage banking income of
$2.3 million in the first quarter of 1999. The decrease in
mortgage banking income is due to a decrease in the Bank's loans
held for sale volume as a result of the reorganization of the
Bank's residential mortgage origination operation. Retail banking
fees increased by $1.8 million, or 58.0% to $4.9 million for the
first quarter of 2000 compared to $3.1 million for the same period
last year. The increase in savings and checking fees is primarily
due to the number of checking accounts which increased by 33,659,
or 20.2% to 200,095 accounts at March 31, 2000 from 166,436
accounts at March 31, 1999. A significant portion of this growth
is attributable to the Bank's supermarket banking program. The
supermarket branches generated savings and checking fees of $3.6
million for the first quarter of 2000 compared to $2.2 million for
the first quarter of last year. Insurance, annuity and mutual fund
fees for the first quarter of 2000 increased by $194,000, or 9.8%
to $2.2 million from $2.0 million for the same period last year.
The net gain realized on sales of interest-earning assets was
$126,000 for the three months ended March 31, 2000 compared to
$335,000 for the same period last year.
NON-INTEREST EXPENSE. Non-interest expense increased by $7.9
million, or 40.0% for the three months ended March 31, 2000 to
$27.5 million from $19.6 million for the comparable three-month
period in 1999. The increase was primarily the result of
restructuring charges totaling $7.1 million. Excluding the
restructuring charges, non-interest expense increased by $793,000,
or 4.04%, in the 2000 quarter over the prior year period.
Compensation and benefits costs remained flat at $11.0 million
21
<PAGE>
between the periods. Occupancy and equipment costs increased by
$266,000, or 7.9% to $3.6 million for the first quarter of 2000
from $3.3 million for the same period last year primarily due to
the addition of three supermarket branches. The costs incurred for
the Federal deposit insurance premiums decreased by $146,000, or
57.5% to $108,000 for the three months ended March 31, 2000 from
$254,000 for the same period last year due to a legislative change
effective January 1, 2000. The assessment booked for the first
quarter of 2000 represented the Bank's share of interest due on the
Financing Corporation bonds. The Bank is no longer subject to a
quarterly premium for the SAIF fund due to its current risk
classification. Other operating costs increased by $702,000, or
13.7% to $5.8 million for the three months ended March 31, 2000
from $5.1 million for the same period last year, due primarily to
the addition of supermarket branches.
INCOME TAX EXPENSE. Income tax expense was $54,000 for an
effective tax rate of 34.8% for the three months ended March 31,
2000 compared to income tax expense of $1.6 million for an
effective tax rate of 38.1% for the comparable period in 1999. The
improvement in the effective tax rate was due to additional tax
savings realized from the formation of the Bank's wholly-owned
subsidiary, CFS Investments New Jersey, Inc., a New Jersey
Investment Company.
FORWARD LOOKING STATEMENTS
Statements made herein that are forward-looking in nature within the
meaning of the Private Securities Litigation Reform Act of 1995, are
subject to risks and uncertainties that could cause actual results
to differ materially. Such risks and uncertainties include, but are
not limited to, those related to overall business conditions,
particularly in the consumer financial services, mortgage and
insurance markets in which Haven operates, fiscal and monetary
policy, competitive products and pricing, credit risk management,
changes in regulations affecting financial institutions and other
risks and uncertainties discussed in Haven's SEC filings, including
its Annual Report on Form 10-K for 1999. Haven disclaims any
obligation to publicly announce future events or developments, which
may affect the forward-looking statements contained herein.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
In management's opinion, there has not been a material change in
market risk from December 31, 1999 as reported in Item 7A of the
Company's Annual Report on Form 10-K for 1999.
22
<PAGE>
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
In February, 1983, a burglary of the contents of safe deposit boxes
occurred at a branch office of the Bank. At March 31, 2000, the
Bank has a lawsuit related thereto pending, whereby the plaintiffs
are seeking recovery of approximately $12.4 million in actual
damages and an additional $12.4 million of unspecified damages. The
Bank's ultimate liability, if any, which might arise from the
disposition of these claims cannot presently be determined.
Management believes it has meritorious defenses against this action
and has and will continue to defend its position.
Accordingly, no provision for any liability that may result upon
adjudication has been recognized in the accompanying consolidated
financial statements.
On May 18, 1999, the Bank was served with a complaint naming it as
a defendant in a lawsuit. The lawsuit was commenced by the former
president of the Bank's residential mortgage lending division in the
Superior Court of New Jersey, Law Division, Middlesex County. The
plaintiff alleges in this complaint that the Bank terminated his
employment without "cause" as defined in his employment agreement
and further alleges that the Bank breached the employment agreement
and its obligation of good faith and fair dealing. The plaintiff
seeks, among other things, unspecified money damages, including
severance benefits, as well as bonus compensation in accordance with
the employment agreement. The plaintiff also seeks a declaratory
judgment that certain post-employment non-compete and non-
solicitation covenants should no longer be effective. The Company
denies these allegations and intends to vigorously defend this
action. Although the Company cannot assure the outcome of this
action, it does not believe it will have a material effect on its
financial condition.
The Company is involved in various other legal actions arising in
the ordinary course of business, which, in the aggregate, are
believed by management to be immaterial to the financial position of
the Company.
ITEM 2. CHANGES IN SECURITIES AND USE OF PROCEEDS
None.
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None.
23
<PAGE>
ITEM 5. OTHER INFORMATION
During the first quarter of 2000, the Company and PL Capital
announced the resolution of their dispute resulting in the
appointment of Richard Lashley and Garrett Goodbody to the Boards of
Directors of the Company and the Bank, which expanded both boards of
directors from nine members to eleven members. PL Capital has
withdrawn its proxy statement and agreed to vote its shares in favor
of the Company's nominees for election to the Board of Directors at
its Annual Stockholders' Meeting to be held May 17, 2000. Messrs.
Lashley and Goodbody were appointed to various committees of the
Company and the Bank, and both now serve on the existing Special
Committee of the Board of Directors, expanding that committee to
five members. The Company agreed to reimburse PL Capital for all
costs and expenses incurred in connection with the dispute.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits - 27.1 Financial Data Schedule.
(b) Reports on Form 8-K - The Company filed a Form 8-K on
April 24, 2000, which reported information under
Item 5 - "Other Events."
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its
behalf by the undersigned thereunto duly authorized.
HAVEN BANCORP INC.
(Registrant)
Date: May 15, 2000 By: /s/ Philip S. Messina
---------------------------
Philip S. Messina
President and Chief Executive
Officer
Date: May 15, 2000 By: /s/ Catherine Califano
---------------------------
Catherine Califano
Senior Vice President
and Chief Financial Officer
24
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Consolidated Statement of Financial Condition at March 31, 2000 and the
Consolidated Statement of Operations for the 3 months ended March 31, 2000 and
and is qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-END> MAR-31-2000
<CASH> 51,740
<INT-BEARING-DEPOSITS> 2,016,747
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 943,435
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,822,018
<ALLOWANCE> 16,836
<TOTAL-ASSETS> 2,965,912
<DEPOSITS> 2,150,944
<SHORT-TERM> 329,989
<LIABILITIES-OTHER> 30,369
<LONG-TERM> 351,869
0
0
<COMMON> 100
<OTHER-SE> 102,641
<TOTAL-LIABILITIES-AND-EQUITY> 2,965,912
<INTEREST-LOAN> 34,407
<INTEREST-INVEST> 17,330
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 51,737
<INTEREST-DEPOSIT> 20,998
<INTEREST-EXPENSE> 32,145
<INTEREST-INCOME-NET> 19,592
<LOAN-LOSSES> 565
<SECURITIES-GAINS> 126
<EXPENSE-OTHER> 27,475
<INCOME-PRETAX> 155
<INCOME-PRE-EXTRAORDINARY> 155
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 101
<EPS-BASIC> .01
<EPS-DILUTED> .01
<YIELD-ACTUAL> 7.25
<LOANS-NON> 6,519
<LOANS-PAST> 0
<LOANS-TROUBLED> 583
<LOANS-PROBLEM> 6,837
<ALLOWANCE-OPEN> 16,699
<CHARGE-OFFS> 443
<RECOVERIES> 15
<ALLOWANCE-CLOSE> 16,836
<ALLOWANCE-DOMESTIC> 16,836
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
