<PAGE> 1
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Quarterly Report Under Section 13 or 15(d) of the Securities Exchange Act of
1934
____________________
For the Quarterly Period Ended December 31, 1996 Commission File #0-21942
FIRST PALM BEACH BANCORP, INC.
(Exact name of registrant as specified in its charter)
DELAWARE 65-0418027
(State of Incorporation) (I.R.S. Employer Identification No.)
450 SOUTH AUSTRALIAN AVENUE
WEST PALM BEACH, FLORIDA 33401
(Address of principal executive offices) (Zip Code)
REGISTRANT'S TELEPHONE NUMBER: (561) 655-8511
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. Yes X No
----- -----
The number of shares outstanding of the issuer's common stock, par
value $.01 per share, was 4,985,097 at February 3, 1997.
<PAGE> 2
FIRST PALM BEACH BANCORP, INC. AND SUBSIDIARY
FORM 10-Q
Index
<TABLE>
<CAPTION>
Page
----
<S> <C>
Safe Harbor Statement Under the Private Securities Litigation
Reform Act of 1995 for Foward-Looking Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Part I. Financial Information
- ------------------------------
Item 1 Financial Statements
Consolidated Statements of Financial Condition
as of September 30, 1996 and December 31, 1996
(unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Statements of Operations for the
Three Months ended December 31, 1995 and 1996
(unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4
Consolidated Statements of Changes in
Stockholders' Equity for the Three Months ended
December 31, 1995 and 1996 (unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5-6
Consolidated Statements of Cash Flows for the
Three Months ended December 31, 1995 and 1996
(unaudited) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7-8
Notes to Unaudited Consolidated Financial
Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9-11
Item 2 Management's Discussion and Analysis of Financial
Condition and Results of Operations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12-16
Part II. Other Information
- ---------------------------
Item 1 Legal Proceedings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 2 Changes in Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 3 Default upon Senior Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 4 Submission of Matters to a Vote
of Security Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 5 Other Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Item 6 Exhibits and Reports on Form 8-K . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Signature Page. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Exhibit 11 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19
</TABLE>
<PAGE> 3
Safe Harbor Statement Under the Private Securities Litigation Reform Act of
1995 for Forward-Looking Information
In connection with the "safe harbor" provisions of the Private Securities
Litigation Reform Act of 1995 (the "Reform Act"), the Bank is hereby filing
cautionary statements identifying important factors that could cause the Bank's
actual results to differ materially from those projected in "forward-looking
statements" (as such term is defined in the Reform Act) of the Bank made by or
on behalf of the Bank which are made orally, whether in presentations, in
response to questions or otherwise, or in writing in this report or any other
future filings by the Bank with the Securities and Exchange Commission, in the
Bank's press releases or other public or shareholder communications. Any
statements that express, or involve discussions as to, expectations, beliefs,
plans, objectives, assumptions or future events or performance (often, but not
always, through the use of words or phrases such as "will likely result," "are
expected to," "will continue," "is anticipated," "estimated," "projection,"
"outlook") are not historical facts and may be forward-looking and,
accordingly, such statements involve estimates, assumptions, and uncertainties
which could cause actual results to differ materially from those expressed in
the forward-looking statements. Accordingly, any such statements are qualified
in their entirety by reference to, and are accompanied by, the following
important factors that could cause the Bank's actual results to differ
materially from those contained in forward-looking statements of the Bank made
by or on behalf of the Bank.
The Bank cautions that the following important factors could cause actual
results or outcomes to differ materially from those expressed in any
forward-looking statements of the Bank made by or on behalf of the Bank. Any
forward-looking statement speaks only as of the date on which such statement is
made, and the Bank undertakes no obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time and it is not possible for
management to predict all of such factors, nor can it assess the impact of each
such factor on the business or the extent to which any factor, or combination
of factors, may cause actual results to differ materially from those contained
in any forward-looking statements.
Some important factors that could cause actual results or outcomes to differ
materially from those discussed in the forward-looking statements include those
related to the national economic environment, particularly in the region in
which the Bank operates, competition, fiscal and monetary policies of the U.S.
government, changes in governmental legislation and regulations affecting
financial institutions, including regulatory fees and capital requirements,
changes in prevailing interest rates, credit risk management and
asset/liability management, the financial and securities markets, deposit
flows, changes in the quality or composition of the Bank's loan and investment
portfolios, and the availability of and cost associated with sources of
liquidity.
All such factors are difficult to predict, contain uncertainties which may
materially affect actual results and are beyond the control of the Bank.
2
<PAGE> 4
Part I - Financial Information
FIRST PALM BEACH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Financial Condition
September 30, 1996 and December 31, 1996
(Dollars in thousands)
<TABLE>
<CAPTION>
(Unaudited)
Sept. 30, Dec. 31,
1996 1996
--------- -----------
<S> <C> <C>
Assets
- ------
Cash and amounts due from
depository institutions $ 19,438 $ 25,463
Interest earning deposits 141,975 92,940
---------- ----------
Total cash and cash equivalents 161,413 118,403
Securities available-for-sale 27,551 44,070
Securities held-to-maturity 6,981 22,423
Mortgage-backed and related
securities available-for-sale 105,866 86,059
Mortgage-backed and related
securities held-to-maturity 126,407 129,672
Loans receivable - net of allowance
for loan losses 1,007,881 1,044,116
Real estate owned 1,626 1,694
Repossessed automobiles 1,602 1,739
Office properties and equipment, net 23,077 27,113
Federal Home Loan Bank stock 10,053 10,050
Accrued interest receivable 8,147 8,315
Goodwill 2,825 2,776
Other assets 6,591 6,548
---------- ----------
Total assets $1,490,020 $1,502,978
========== ==========
Liabilities and Stockholders' Equity
- ------------------------------------
Deposit accounts $1,136,722 $1,167,769
Advances from Federal Home Loan Bank 201,025 201,000
Securities sold under agreements
to repurchase 10,000 10,000
Advances from borrowers for taxes
and insurance 14,657 2,749
Other liabilities 27,756 20,791
Deferred income taxes (5,565) (5,490)
---------- ----------
Total liabilities $1,384,595 $1,396,819
Stockholders' equity:
Preferred stock ($.01 par value)
authorized 1,000,000 shares;
none outstanding - -
Common stock ($.01 par value) authorized
10,000,000 shares; issued 5,496,375 shares;
outstanding 5,093,096 and 5,040,097
(net of treasury stock) at September 30, 1996
and December 31, 1996, respectively 55 55
Additional paid-in capital 52,891 53,077
Retained earnings, substantially restricted 65,064 66,577
Treasury stock, at cost
(403,279 shares at September 30, 1996
and 456,278 shares at December 31, 1996) (8,660) (9,881)
Common stock purchased by:
Employee stock ownership plan (1,769) (1,580)
Recognition and retention plans (161) (207)
Unrealized decrease in fair value on
available-for-sale securities
(net of applicable income taxes) (1,995) (1,882)
---------- ----------
Total stockholders' equity 105,425 106,159
---------- ----------
Total liabilities and stockholders' equity $1,490,020 $1,502,978
========== ==========
</TABLE>
These financial statements should be read in conjunction with the Notes to
Unaudited Consolidated Financial Statements on Pages 9, 10 and 11 herein and
the Notes to Consolidated Financial Statements appearing in First Palm Beach
Bancorp, Inc.'s 1996 Annual Report to Stockholders.
3
<PAGE> 5
FIRST PALM BEACH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Operations
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended
--------------------------------
Dec. 31, Dec. 31,
Interest Income: 1995 1996
- ---------------- ---------- ---------
<S> <C> <C>
Loans $18,143 $21,067
Securities available-for-sale 463 2,055
Securities held-to-maturity 465 268
Mortgage-backed and related
securities available-for-sale 1,325 1,312
Mortgage-backed and related
securities held-to-maturity 2,568 2,098
Other 197 188
------- -------
Total interest income 23,161 26,988
------- -------
Interest Expense:
- -----------------
Deposits 10,645 13,796
Advances from Federal Home Loan Bank 2,866 2,623
Securities sold under agreements
to repurchase 269 149
------- -------
Total interest expense 13,780 16,568
------- -------
Net interest income 9,381 10,420
Provision for loan losses 627 802
------- -------
Net interest income after
provision for loan losses 8,754 9,618
------- -------
Other Income:
- -------------
Servicing income and other fees 772 1,002
Net gain (loss) on sale of loans and
mortgage-backed and related securities 39 531
Net gain on sale of securities
available-for-sale 405 -
Miscellaneous 341 374
------- -------
Total other income 1,557 1,907
------- -------
Other Expenses:
- ---------------
Employee compensation and benefits 3,664 4,083
Occupancy and equipment 972 1,394
Federal deposit insurance premium 510 412
Provision for losses and net losses
(gains) on sale of real estate owned (10) (38)
Advertising and promotion 127 372
Miscellaneous 846 1,515
------- -------
Total other expenses 6,109 7,738
------- -------
Income before provision for income taxes 4,202 3,787
Provision for income taxes 1,678 1,514
------- -------
Net income $ 2,524 $ 2,273
======= =======
Earnings per share:
Primary and fully diluted $ 0.50 $ 0.45
</TABLE>
These financial statements should be read in conjunction with the Notes to
Unaudited Consolidated Financial Statements on Pages 9, 10 and 11 herein and
the Notes to Consolidated Financial Statements appearing in First Palm Beach
Bancorp, Inc.'s 1996 Annual Report to Stockholders.
4
<PAGE> 6
FIRST PALM BEACH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
Three Months Ended December 31, 1995 and 1996
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Common Common
Additional Stock Stock
Common Paid-in Retained Treasury Purchased Purchased
Stock Capital Earnings Stock by ESOP by RRP
------ ---------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Three months ended December 31, 1995
Balance at September 30, 1995 $55 $51,733 $66,592 $(7,283) $(2,509) $ (621)
Net income - - 2,524 - - -
Accretion of unrealized gain on
securities and mortgage-backed and
related securities transferred from
available-for-sale to held-to-maturity,
net of income taxes - - - - - -
Change in unrealized losses on
securities available-for-sale
and mortgage-backed and related
securities available-for-sale,
net of income taxes - - - - - -
Amortization of deferred compensation
Employee Stock Ownership Plan and
Recognition and Retention Plans - 150 - - 171 180
Issue 299,478 shares of Treasury Stock
for purchase of Palm Beach Savings - 496 - 6,130 - -
Purchase of Treasury Stock at cost
(45,853 shares) - - - (1,101) - -
Exercise of stock options by certain
directors and employees - (21) - 41 - -
Declaration of dividends of $0.10
per share - - (503) - - -
--- ------- ------- ------- ------- -------
Balance at December 31, 1995 $55 $52,358 $68,613 $(2,213) $(2,338) $ (441)
=== ======= ======= ======= ======= =======
<CAPTION>
Unrealized
(Decrease)
Increase
In Fair
Value on
Available- Total
for-Sale Stockholders'
Securities Equity
---------- -------------
<S> <C> <C>
Three months ended December 31, 1995
Balance at September 30, 1995 $(3,356) $104,611
Net income - 2,524
Accretion of unrealized gain on
securities and mortgage-backed and
related securities transferred from
available-for-sale to held-to-maturity,
net of income taxes (28) (28)
Change in unrealized losses on
securities available-for-sale
and mortgage-backed and related
securities available-for-sale,
net of income taxes 1,642 1,642
Amortization of deferred compensation
Employee Stock Ownership Plan and
Recognition and Retention Plans - 501
Issue 299,478 shares of Treasury Stock
for purchase of Palm Beach Savings - 6,626
Purchase of Treasury Stock at cost
(45,853 shares) - (1,101)
Exercise of stock options by certain
directors and employees - 20
Declaration of dividends of $0.10
per share - (503)
------- --------
Balance at December 31, 1995 $(1,742) $114,292
======= ========
</TABLE>
These financial statements should be read in conjunction with the Notes to
Unaudited Consolidated Financial Statements on Pages 9, 10 and 11 herein and the
Notes to Consolidated Financial Statements appearing in First Palm Beach
Bancorp, Inc.'s 1996 Annual Report Stockholders.
5
<PAGE> 7
FIRST PALM BEACH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Changes in Stockholders' Equity
Three Months Ended December 31, 1995 and 1996
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Common Common
Additional Stock Stock
Common Paid-in Retained Treasury Purchased Purchased
Stock Capital Earnings Stock by ESOP by RRP
------ ---------- -------- -------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
Three months ended December 31, 1996
- ------------------------------------
Balance at September 30, 1996 $55 $52,891 $65,064 $ (8,660) $(1,769) $ (161)
Net income - - 2,273 - - -
Accretion of unrealized gain on
securities and mortgage-backed and
related securities transferred from
available-for-sale to held-to-maturity,
net of income taxes - - - - - -
Change in unrealized losses on
securities available-for-sale
and mortgage-backed and related
securities available-for-sale,
net of income taxes - - - - - -
Amortization of deferred compensation
Employee Stock Ownership Plan and
Recognition and Retention Plans - 198 - - 189 (46)
Purchase of Treasury Stock at cost
(54,000 shares) - - - (1,243) - -
Exercise of stock options by certain
directors and employees - (12) - 22 - -
Declaration of dividends of $0.15
per share - - (760) - - -
--- ------- ------- -------- ------- -------
Balance at December 31, 1996 $55 $53,077 $66,577 $ (9,881) $(1,580) $ (207)
=== ======= ======= ======== ======= =======
<CAPTION>
Unrealized
(Decrease)
Increase
In Fair
Value on
Available- Total
for-Sale Stockholders'
Securities Equity
---------- -------------
<S> <C> <C>
Three months ended December 31, 1996
- ------------------------------------
Balance at September 30, 1996 $(1,995) $105,425
Net income - 2,273
Accretion of unrealized gain on
securities and mortgage-backed and
related securities transferred from
available-for-sale to held-to-maturity,
net of income taxes (10) (10)
Change in unrealized losses on
securities available-for-sale
and mortgage-backed and related
securities available-for-sale,
net of income taxes 123 123
Amortization of deferred compensation
Employee Stock Ownership Plan and
Recognition and Retention Plans - 341
Purchase of Treasury Stock at cost
(54,000 shares) - (1,243)
Exercise of stock options by certain
directors and employees - 10
Declaration of dividends of $0.15
per share - (760)
------- --------
Balance at December 31, 1996 $(1,882) $106,159
======= ========
</TABLE>
These financial statements should be read in conjunction with the Notes to
Unaudited Consolidated Financial Statements on Pages 9, 10 and 11 herein and
the Notes to Consolidated Financial Statements appearing in First Palm Beach
Bancorp, Inc.'s 1996 Annual Report to Stockholders.
6
<PAGE> 8
FIRST PALM BEACH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Three Months Ended December 31, 1995 and December 31, 1996
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Dec. 31, Dec. 31,
1995 1996
---------- --------
<S> <C> <C>
Cash flow from (for) operating activities:
Net Income $ 2,524 $ 2,273
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 256 381
Employee Stock Ownership Plan and Recognition
and Retention Plan compensation expense 501 341
Accretion of discounts, amortization of
premiums, and other deferred yield items (231) (173)
Amortization of goodwill - 49
Provision for loan losses 627 802
Provision for losses and net (gains) losses
on sales of real estate owned (10) (38)
Net (gain) loss on sale of:
Loans (39) (18)
Other securities (405) (504)
Increase in loans held-for-sale (5,099) -
Change in assets and liabilities net of
effects from purchase of PBS Financial Corp.:
Increase in accrued interest receivable (292) (168)
(Increase) decrease in other assets (2,989) 43
Increase (decrease) in other liabilities
Net of change in dividends payable 4,962 (7,216)
-------- --------
Net cash provided by operating
activities (195) (4,228)
-------- --------
Cash flow from (for) investing activities:
Loan originations and principal payments
on loans (94,943) (44,428)
Principal payments received on mortgage-
backed and related securities 10,795 12,426
Purchases of:
Loans (15) (102)
Mortgage-backed and related securities
held-to-maturity - (14,223)
Mortgage-backed and related securities
available-for-sale - (12,769)
Securities held-to-maturity - (15,413)
Securities available-for-sale (48,000) (46,820)
Office properties and equipment (707) (4,417)
Proceeds from sales of:
Loans 6,853 4,426
Mortgage-backed and related securities
available-for-sale - 31,990
Securities available-for-sale 78,502 15,000
Repossessed automobiles 943 5,678
Real estate acquired in settlement of loans 274 403
(Purchase) Sale of Federal Home Loan Bank stock (528) 3
Proceeds from maturities of securities 9,587 15,297
Cash acquired through purchase of PBS Financial
Corp. net of cash payments relating
to purchase 9,873 -
Other investing activities (457) (3,205)
-------- --------
Net cash used for investing activities $(27,823) $(56,154)
-------- --------
</TABLE>
These financial statements should be read in conjunction with the Notes to
Unaudited Consolidated Financial Statements on Pages 9, 10 and 11 herein and
the Notes to Consolidated Financial Statements appearing in First Palm Beach
Bancorp, Inc.'s 1996 Annual Report to Stockholders.
(Continued)
7
<PAGE> 9
FIRST PALM BEACH BANCORP, INC. AND SUBSIDIARY
Consolidated Statements of Cash Flows
Three Months Ended December 31, 1995 and December 31, 1996
(Dollars in thousands)
(Unaudited)
<TABLE>
<CAPTION>
Dec. 31, Dec. 31,
1995 1996
-------- --------
<S> <C> <C>
Cash flow from (for) financing activities:
Purchase of treasury stock at cost $ (1,101) $ (1,243)
Exercise of stock options 20 10
Net increase (decrease) in:
NOW accounts, demand deposits, and
savings accounts 31,478 14,309
Certificates of deposit 5,996 16,738
Advances from Federal Home Loan Bank 29,975 (25)
Securities sold under agreement to repurchase (8,427) -
Advances by borrowers for taxes and
insurance (10,650) (11,908)
Dividends paid on stock (263) (509)
-------- --------
Net cash provided by financing activities 47,028 17,372
-------- --------
Net increase in cash and cash equivalents 19,010 (43,010)
Cash and cash equivalents, beginning of period 25,132 161,413
-------- --------
Cash and cash equivalents, end of period $ 44,142 $118,403
======== ========
Supplemental disclosure of cash flows
Supplemental disclosure of cash flow
information:
Cash paid for income taxes $ 83 $ 0
======== ========
Cash paid for interest on deposits
and other borrowings $ 13,386 $ 17,350
======== ========
Supplemental schedule of noncash investing
and financing activities:
Repossessed automobiles acquired in
settlement of loans $ 1,632 $ 5,918
======== ========
Real estate acquired in settlement of loans
and in-substance foreclosed loans $ 51 $ 463
======== ========
Change in unrealized loss (gain) on
available-for-sale securities,
net of income taxes $ (1,614) $ (113)
======== ========
On December 8, 1995 the Company purchased all
of the stock of PBS Financial Corp. ("PBS")
Consideration paid for PBS:
Cash $ 1,107 -
Capital stock issued 6,626 -
--------
Total purchase price 7,733 -
Fair value of net assets acquired (4,763) -
--------
Goodwill $ 2,970 -
========
</TABLE>
These financial statements should be read in conjunction with the Notes to
Unaudited Consolidated Financial Statements on Pages 9, 10 and 11 herein and
the Notes to Consolidated Financial Statements appearing in First Palm Beach
Bancorp, Inc.'s 1996 Annual Report to Stockholders.
8
<PAGE> 10
FIRST PALM BEACH BANCORP, INC. AND SUBSIDIARY
Notes to Unaudited Consolidated Financial Statements
(1) Basis of Presentation
The accompanying unaudited consolidated financial statements have been
prepared in accordance with Generally Accepted Accounting Principles
(GAAP) for interim financial information and with the instructions to
Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not
include all of the information and footnotes required by GAAP for
complete financial statements. In the opinion of management, all
material adjustments (consisting of only normal recurring accruals)
necessary for a fair presentation have been included. The results of
operations and other data for the three months ended December 31, 1996
are not necessarily indicative of results that may be expected for the
entire fiscal year ending September 30, 1997.
The unaudited consolidated financial statements include the accounts
of First Palm Beach Bancorp, Inc. (the "Company") and its wholly-owned
subsidiary, First Bank of Florida (the "Bank"), and the Bank's
wholly-owned subsidiaries - The Big First, Inc., Retail Investment
Corporation, First Corporate Center, Inc., First Bank of Florida
Mortgage Corporation and PBS Service Corporation. Material
intercompany accounts and transactions have been eliminated in
financial statement consolidation. Certain amounts included in prior
periods' consolidated financial statements have been reclassified to
conform to the current period's presentation.
(2) Conversion to Stock Ownership
The Company was organized in May 1993 as the holding company for the
Bank in connection with the Bank's conversion (the "Conversion") from
a federally chartered mutual savings and loan association to a
federally chartered stock savings and loan association. On September
29, 1993, the Company completed its initial public offering and sold
5,496,375 shares of common stock at $10.00 per share to depositors,
borrowers, and the employees of the Bank during the subscription
offering. The proceeds from the Conversion after recognizing
Conversion expenses and underwriting costs of $2.5 million were $52.5
million and are recorded as common stock and additional paid-in
capital in the accompanying consolidated statements of financial
condition. The Company utilized $25.2 million of the net proceeds to
purchase all of the capital stock of the Bank.
In connection with the Conversion, the Bank established for eligible
employees an Employee Stock Ownership Plan ("ESOP"). The ESOP
borrowed $4.2 million from the Company and purchased 423,200 common
shares issued in the Conversion. The Bank is expected to make
scheduled discretionary cash contributions to the ESOP sufficient to
service the amount borrowed. The $4.2 million in stock issued by the
Company was reflected as a charge to unearned compensation and a
credit to common stock and additional paid-in capital. The
unamortized balance of unearned compensation is shown as a deduction
from stockholders' equity. The unpaid balance of the ESOP loan is
eliminated in consolidation. For the quarters ended December 31, 1996
and 1995, ESOP expenses of $349,000 and $301,000, respectively, were
recognized.
In 1993, the Bank established two Recognition and Retention Plans
("RRPs") which purchased in the aggregate 211,600 shares of common
stock in the Conversion and contributed $2.1 million to fund the
purchase of the RRP shares. Awards which were made at the date of
Conversion vested in three equal annual installments commencing on
September 29, 1994, the first anniversary date of the effective date
of these awards. As of December 31, 1996, all of the awards made
under the RRPs had vested except two awards totaling 10,600 shares
made to two non-employee directors which vest at a rate of 33 1/3%
per year beginning September 17, 1997 and one award of 1,000 shares
made to an officer which will vest July 15, 1997.
9
<PAGE> 11
The aggregate purchase price of these shares is amortized as
compensation expense over the vesting period. The unamortized cost of
the RRPs is reflected as a reduction of stockholders' equity. For the
quarter ended December 31, 1996 the Bank reversed an overaccrual of
$76,000 resulting in a net reversal in RRP expense of $46,000. An
expense of $180,000 was recorded during the quarter ended December 31,
1995.
In 1993, the Company adopted stock option plans for the benefit of
directors, officers, and other key employees of the Bank. The number
of shares of common stock reserved for issuance under the stock option
plans was equal to 10% of the total number of common shares issued
pursuant to the Conversion. In January 1997, the stockholders
approved the reservation of an additional 250,000 shares of common
stock for issuance under the 1993 First Palm Beach Bancorp, Inc.
Incentive Stock Option Plan. Under the stock option plans, the option
exercise price cannot be less than the fair value of the underlying
common stock as of the date of the option grant, and the maximum
option term cannot exceed ten years. The stock options awarded to
non-employee directors may be exercised at any time after grant. At
December 31, 1996, there were 133,210 options outstanding to
non-employee directors and 26,500 options available for future
grants.
The stock options granted to officers and employees are exercisable
based on a schedule approved by the Bank's Board of Directors. At
December 31, 1996, 149,846 stock options were outstanding to officers
and employees of which 129,846 are currently exercisable. There are
currently 251,968 options available for future grants.
(3) Earnings Per Share
Earnings per share of common stock for the quarters ended December 31,
1996 and 1995 were determined by dividing net income for the period by
the weighted average number of shares of common stock and common stock
equivalents outstanding which were 5,038,596 and 5,061,571,
respectively, excluding unallocated shares held by the ESOP. Stock
options are regarded as common stock equivalents and, therefore, are
considered in both primary and fully diluted earnings per share
calculations. Common stock equivalents are computed using the
treasury stock method. Including stock options in the calculation of
primary earnings per share reduces earnings per share by $0.01 for the
three months ended December 31, 1996 and December 31, 1995.
(4) Commitments and Contingencies
Commitments to originate loans of $33.4 million at December 31, 1996
represent the total principal amounts which the Bank plans to fund
within the normal commitment period of 60 to 90 days. As of December
31, 1996, the Bank had $30.5 million in commitments to purchase
mortgage pool or investment securities.
(5) Accounting for Impairment of Loans
In May 1993, the Financial Accounting Standards Board ("FASB") issued
SFAS No. 114, "Accounting by Creditors for Impairment of a Loan." The
Statement generally requires all creditors to account for impaired
loans, except those loans that are accounted for at fair value or at
the lower of cost or fair value, at the present value of the expected
future cash flows discounted at the loan's effective interest rate.
In October 1994, the FASB issued SFAS No. 118, "Accounting by
Creditors for Impairment of a Loan - Income Recognition and
Disclosures." This Statement amends SFAS No. 114 to allow a creditor
to use existing methods for recognizing interest income on an impaired
loan. SFAS No. 118 does not change the provisions in SFAS No. 114
that require a creditor to measure impairment based on the present
value of expected future cash flows discounted at the loan's effective
interest rate, or at the market price of the loan or the fair value of
the collateral if the loan is collateral dependent. The Bank adopted
the provisions of SFAS No. 114 as amended by SFAS No. 118 effective
October 1, 1995.
10
<PAGE> 12
An analysis of the changes in the allowance for loan losses for the
three months ended December 31, 1996 and fiscal year ended September
30, 1996, is as follows:
<TABLE>
<CAPTION>
Fiscal Three
Year Months
Ended Ended
Sept. 30, Dec. 31,
1996 1996
------- -------
(In thousands)
<S> <C> <C>
Balance at beginning of period $ 2,157 $11,855
Increase in allowance due to acquisition
of PBS Financial Corp. 2,253 -
Current provision 15,704 802
Charge-offs - net (8,259) (2,939)
------- -------
Ending balance $11,855 $ 9,718
======= =======
</TABLE>
At December 31, 1996 the Bank's impaired loans consisted of the
following:
<TABLE>
<CAPTION>
December 31, 1996
-------------------
Loan Related
Balances Allowance
--------------------
(In thousands)
<S> <C> <C>
Impaired loan balances and related
allowance for loan losses $ 7,659 $ 1,126
</TABLE>
(6) Subsequent Event
Subsequent to December 31, 1996 a home builder in Palm Beach County,
who is the contractor of record on 24 loans to individual borrowers
totaling $5.1 million at December 31, 1996, ceased his operations.
The Bank is currently analyzing each loan to determine what funds, in
excess of the funds available in the construction account, will be
needed to complete each home and who will be responsible. At this
time, the extent of the cost to complete the homes, over the amount
available in the construction account, remains to be determined.
11
<PAGE> 13
FIRST PALM BEACH BANCORP, INC. AND SUBSIDIARY
Management's Discussion and Analysis of Financial Condition
and Results of Operations
This discussion should be read in conjunction with the Notes to Unaudited
Consolidated Financial Statements contained herein and with Management's
Discussion and Analysis of Financial Condition and Results of Operations
appearing in First Palm Beach Bancorp, Inc.'s 1996 Annual Report to
Stockholders.
General
First Palm Beach Bancorp, Inc. (the "Company") was formed as the holding
company for First Bank of Florida (the "Bank") in connection with the Bank's
conversion (the "Conversion") from a federally chartered mutual savings and
loan association to a federally chartered stock savings and loan association on
September 29, 1993. On that date, the Company issued and sold 5,284,775 shares
of common stock, par value $0.01 per share, at $10.00 per share to complete the
Conversion. An additional 211,600 shares were purchased by the Bank's
Recognition and Retention Plans ("RRPs") at $10.00 per share. Net proceeds to
the Company after $2.5 million in expenses and underwriting costs were $52.5
million. The Company used $25.2 million of the net proceeds to purchase all
the capital stock of the Bank, and lent $4.2 million to the Bank's Employee
Stock Ownership Plan ("ESOP"). The remaining proceeds of $23.0 million were
advanced to the Bank under a note agreement carrying an interest rate tied to
the one month short-term credit advance of the Federal Home Loan Bank ("FHLB")
of Atlanta. The rate on the note was 5.44% during the quarter ended December
31, 1996 and the balance on the note at December 31, 1996 was $7.4 million.
On December 8, 1995 (the "Effective Date"), the Company completed the
acquisition of PBS Financial Corp. ("PBS") by means of the merger (the
"Merger") of PBS with and into the Company, pursuant to an Agreement and Plan
of Merger between the Company and PBS dated as of May 31, 1995 (the
"Agreement"). Concurrently with the Merger, Palm Beach Savings and Loan,
F.S.A. ("Palm Beach Savings"), the savings and loan subsidiary of PBS, merged
with and into the Bank in accordance with a Plan of Merger and Combination
dated as of May 31, 1995 between Palm Beach Savings and the Bank. In
conjunction with and as a part of the Merger, each of the 283,700 shares of PBS
Class A common stock issued and outstanding and 419,300 shares of PBS Class B
common stock issued and outstanding at the Effective Date was converted into
(i) .426 of a share of the Company's Common Stock and (ii) a cash payment of
$0.75 per share of PBS common stock. Based on an aggregate of 703,000 shares
of PBS Class A and Class B common stock issued and outstanding, the Company
issued in the aggregate 299,478 shares of the Company's Common Stock and made
$527,250 in cash payments. Also in conjunction with the Merger, the Company
paid $88,544 in exchange for all outstanding PBS Options, and $459,536 in
exchange for all outstanding PBS Warrants.
The Company's consolidated results of operation are primarily those 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 and borrowings, primarily in one-to-four
family, owner-occupied, residential mortgage loans, consumer loans, and, to a
lesser extent, construction loans, commercial real estate loans, and
multi-family residential mortgage loans. In addition, the Bank invests in
mortgage-backed securities, securities issued by the U. S. Government and
government agencies, and other investments permitted by federal laws and
regulations. The Bank is a member of the FHLB system and its deposits are
insured to the applicable limits by the Federal Deposit Insurance Corporation
(the "FDIC"). The Bank is subject to regulation by the Office of Thrift Super-
vision (the "OTS") as its chartering agency and the FDIC as its deposit
insurer.
The Bank has 37 full-service branches in Palm Beach, Martin, Broward, Dade and
Lee Counties, Florida. Three loan production offices are located in Palm Beach
County. As of December 31, 1996, the Bank operated four of its branches inside
of Winn-Dixie stores and seven inside of Albertson's stores.
12
<PAGE> 14
The Bank intends to open additional supermarket locations at Albertson's in the
future. During the quarter ended December 31, 1996, the Bank opened four
full-service supermarket branches.
The Bank has five wholly-owned subsidiaries: First Bank of Florida Mortgage
Corporation which provides mortgage brokerage services to the Bank; The Big
First, Inc. which develops residential real estate; Retail Investment
Corporation which previously collected rent and commissions from Liberty
Securities Corporation which offered mutual funds and annuities to customers of
the Bank; First Corporate Center, Inc. which engages in maintenance and
management of improved real estate; and PBS Service Corporation which was
acquired in the Merger. Only First Bank of Florida Mortgage Corporation is
currently active.
The Bank's results of operations depend primarily on net interest income, which
is the difference between the interest income earned on its loans and
investment portfolio, and its cost of funds, consisting of the interest paid on
deposits and borrowings. The Bank's operating results also are affected, to a
lesser extent, by fee income and by gains or losses on the sale of loans,
securities and mortgage-backed securities available-for-sale, and real estate
owned. The Bank's operating expenses consist primarily of employee
compensation, occupancy expenses, FDIC insurance premiums and other general and
administrative expenses. The Bank's results of operations are also
significantly affected by general economic and competitive conditions,
particularly changes in market interest rates, government policies and actions
of regulatory authorities.
Liquidity and Capital Resources
The Bank's most liquid assets are cash, amounts due from depository
institutions and interest-bearing deposits. The levels of these assets depend
on the Bank's lending, investing, operating and deposit activities during any
given period. At December 31, 1996, cash, amounts due from depository
institutions and interest-earning deposits totaled $118.4 million.
The Bank's primary sources of funds are deposits, proceeds from principal and
interest payments on loans, proceeds from the amortization of, the maturing of
and sales of securities, advances from the FHLB and securities sold under
agreements to repurchase ("reverse repurchase agreements"). While maturity and
scheduled amortization of loans and securities are predictable sources of
funds, deposit inflows and mortgage prepayments are greatly influenced by local
market conditions, general interest rates and regulatory changes.
Under OTS regulations, the Bank is required to maintain liquid assets of at
least 5% of the average daily balance of the sum of its net withdrawable
deposit accounts, plus short-term borrowings during the preceding calendar
month. For purposes of these regulations, liquid assets consist of cash,
amounts due from depository institutions, interest-bearing deposits and short
and intermediate term U. S. Government and government agency securities. The
Bank historically has maintained a level of liquid assets in excess of this
regulatory requirement. The Bank's liquidity ratio was 14.8% and 16.3% at
December 31, 1996 and September 30, 1996, respectively. Liquidity management
for the Bank is a daily and long-term function of the Bank's management
strategy. If the Bank requires liquid funds beyond its ability to generate
them internally, additional sources of funds are available through the use of
FHLB advances and reverse repurchase agreements.
The primary investment activity of the Bank is the origination of mortgage and
consumer loans. During the three months ended December 31, 1996 the Bank
originated mortgage and consumer loans in the aggregate amount of $96.5 million
as compared to $142.7 million for the three months ended December 31, 1995. A
primary component of the Bank's current strategic plan is to continue
increasing its originations of mortgage and consumer loans, except indirect
loans. At September 30, 1996, the Bank discontinued its indirect automobile
lending program, because indirect loans produced higher delinquency rates and
more repossessed assets, resulting in higher loan loss provisions. Repossessed
automobiles increased from $1.6 million at September 30, 1996 to $1.7 million
at December 31, 1996. The Bank also invests in U. S. Treasury and agency
securities, collateralized mortgage obligations, municipal bonds and FHLB
overnight funds. During periods when the Bank's loan demand is lower, the Bank
may purchase short-term investment securities to obtain a higher yield than
otherwise would be available.
13
<PAGE> 15
At December 31, 1996, the Bank had outstanding commitments to originate $33.4
million of loans and had $30.5 million in commitments to purchase mortgage pool
or investment securities. Management is of the opinion that the Bank will have
sufficient funds available to meet all of these commitments. At December 31,
1996, certificates of deposits scheduled to mature in one year or less after
December 31, 1996 totaled $566.1 million. Based on the Bank's past experience
and current market conditions, management is of the opinion that a significant
portion of these funds will remain with the Bank.
At December 31, 1996, the Bank exceeded each of the three OTS capital
requirements. The Bank's ratios were: 6.28% tangible capital ratio; 6.28% core
capital ratio; and 12.20% risk-based capital ratio. The OTS minimum regulatory
capital ratio requirements at December 31, 1996 were 1.5%, 3.0%, and 8.0%,
respectively.
Changes in Financial Condition
Total assets increased $13.0 million to $1.503 billion at December 31, 1996
from $1.490 billion at September 30, 1996. Cash and cash equivalents,
securities held-to-maturity, securities available-for-sale, mortgage-backed and
related securities held-to-maturity and mortgage-backed and related securities
available-for-sale decreased $27.6 million to $400.6 million at December 31,
1996 from $428.2 million at September 30, 1996. Office properties and
equipment increased by $4.0 million to $27.1 million at December 31, 1996 from
$23.1 million at September 30, 1996 due to the addition of four new branch
locations and capitalized improvements related to the relocation of the Bank's
corporate offices. Loans receivable increased by $36.2 million to $1.044
billion at December 31, 1996 from $1.008 billion at September 30, 1996. Loans
originated amounted to $96.5 million (which included $82.9 million in mortgage
loans and $13.6 million of consumer loans) during the quarter ended December
31, 1996 compared to $142.7 million (which included $74.5 million of mortgage
loans and $68.2 million of consumer loans) during the quarter ended December
31, 1995. Indirect automobile loan balances decreased to $130.5 million at
December 31, 1996 from $148.2 million at September 30, 1996.
Deposits increased $31.1 million from $1.137 billion at September 30, 1996 to
$1.168 billion at December 31, 1996. The average interest rate paid on
deposits increased to 4.89% as of December 31, 1996 from 4.87% as of September
30, 1996.
Advances from the FHLB and other borrowed funds decreased from $211.1 million
at September 30, 1996 to $211.0 million at December 31, 1996. Stockholders'
equity increased to $106.2 million at December 31, 1996 from $105.4 million at
September 30, 1996. The increase in stockholders' equity was primarily the
result of net income of $2.3 million for the quarter ended December 31, 1996.
This increase was offset, however, by increases in treasury stock from $8.7
million at September 30, 1996 to $9.9 million at December 31, 1996 as a result
of the repurchase during the quarter ended December 31, 1996 of 54,000 shares
of common stock at an average price of $23.02.
Interest Rate Sensitivity
The matching of assets and liabilities may be analyzed by examining the extent
to which assets and liabilities are "interest rate sensitive" and by monitoring
an institution's interest rate sensitivity "gap." An asset or liability is
"interest rate sensitive" within a specific time period if it will mature or
reprice within that time period. The interest rate sensitivity gap is defined
as the difference between the aggregate amount of interest-earning assets
maturing or anticipated to reprice, based upon certain assumptions, within a
specified time period and the aggregate amount of interest-bearing liabilities
maturing or anticipated to reprice, based upon certain assumptions, within that
time period. A gap is considered negative when the amount of interest rate
sensitive liabilities maturing or repricing within a specified time frame
exceeds the amount of interest rate sensitive assets maturing or repricing
within that same time frame.
The Bank's policy has been to manage its exposure to interest rate risk by
attempting to match the maturities of its interest rate sensitive assets and
liabilities, in part, by emphasizing the origination of adjustable rate
mortgages ("ARM") and short term residential construction loans. As of
December 31, 1996, these loans made up approximately 53% of outstanding
14
<PAGE> 16
mortgage loans. Approximately 10% of outstanding mortgage loans are loans with
seven and ten year fixed rates which become one year adjustable loans. These
are classified as ARM loans. The Bank also manages its exposure by purchasing
short term securities and short average life and adjustable-rate collateralized
mortgage obligations. The Bank's one year interest rate sensitivity gap as a
percentage of total assets was a negative 8.6% at December 31, 1996, as
compared to a negative 4.5% at September 30, 1996. During a period of rising
interest rates, a negative gap would tend to result in a decrease in net
interest income while a positive gap would tend to increase net interest
income.
Asset Quality
The Company and the Bank regularly review interest earning assets to determine
proper valuation of those assets. Management monitors the asset portfolio by
reviewing historical loss experience, known and inherent risks in the
portfolio, the value of any underlying collateral, prospective economic
conditions and the regulatory environment. During the quarter ended December
31, 1996, non-performing assets increased $169,000 to $16.2 million from $16.1
million at September 30, 1996. Repossessed assets increased $137,000 to $1.7
million at December 31, 1996 from $1.6 million at September 30, 1996. As
previously discussed, the Bank discontinued its indirect lending program as of
September 30, 1996.
The following table sets forth information regarding the Bank's non-performing
loans, repossessed assets and real estate owned at the dates indicated. The
Bank generally discontinues accruing interest on loans that are 90 days or more
past due, at which time the accrued but uncollected interest is excluded from
interest income.
ASSET QUALITY
(Dollars in thousands)
<TABLE>
<CAPTION>
Sept. 30, Dec. 31,
1996 1996
------- -------
<S> <C> <C>
Non-performing mortgage loans
delinquent more than 90 days $11,279 $10,942
Non-performing other loans
delinquent more than 90 days 1,552 1,853
------- -------
Total non-performing loans $12,831 $12,795
Real estate owned,
net of related allowance 1,626 1,694
Repossessed assets, net of
related allowance 1,602 1,739
------- -------
Total non-performing assets $16,059 $16,228
======= =======
Non-performing loans to
total loans 1.20% 1.16%
Non-performing assets to
total assets 1.08% 1.08%
Allowance for loan losses to
non-performing loans 92.40% 75.95%
</TABLE>
RESULTS OF OPERATIONS
Comparison of results in this section are for the three month periods ended
December 31, 1996 and December 31, 1995.
General
Net income for the quarter ended December 31, 1996 was $2.3 million as
compared to $2.5 million for the quarter ended December 31, 1995. This
reduction was primarily due to an increase in other expenses which exceeded
growth in net interest margin and other income.
15
<PAGE> 17
Net Interest Income
Net interest income before provision for loan losses was $10.4 million for the
quarter ended December 31, 1996 as compared to $9.4 million for the quarter
ended December 31, 1995. The increase in net interest income before provision
for loan loss was primarily due to loan growth of $51.0 million to $1.044
billion at December 31, 1996 from $993.0 million at December 31, 1995.
Provision for Loan Losses
During the three months ended December 31, 1996, the provision for loan losses
was $802,000 as compared to $627,000 for the three months ended December 31,
1995.
Other Income
Other income increased to $1.9 million for the quarter ended December 31, 1996
from $1.6 million for the quarter ended December 31, 1995. Servicing income
and other fees increased $230,000 to $1.0 million for the three months ending
December 31, 1996 from $772,000 for the same period in 1995. Net gains on
sales of loans, mortgage-backed securities and investments was $522,000 for the
quarter ended December 31, 1996 compared to $444,000 for the quarter ended
December 31, 1995.
In November 1995, the Financial Accounting Standards Board issued "A Guide to
Implementation of SFAS No. 115 on Accounting for Certain Investments in Debt
and Equity Securities - Questions and Answers" ("SFAS 115 Q&A Guide"). SFAS
115 Q&A Guide included a one-time opportunity for entities which had previously
adopted the provisions of SFAS 115 to reconsider their ability and intent to
hold securities to maturity and to allow such entities to transfer securities
from the held-to-maturity category to available-for-sale without calling into
question the intent to hold securities to maturity. SFAS 115 Q&A Guide
required that any one-time reclassification occur between November 15, 1995 and
December 31, 1995. In November 1995, the Bank reclassified $20.0 million of
U.S. Treasury notes and $10.5 million of municipal securities from
held-to-maturity to available-for-sale. During the quarter ended December 31,
1995, the Bank sold $5.6 million of the reclassified municipal securities and
recognized a gain of approximately $404,000 on the sale.
Other Expenses
Other expenses increased to $7.7 million for the quarter ended December 31,
1996 as compared to $6.1 million for the quarter ended December 31, 1995. The
quarter ended December 31, 1996 reflects the expenses of adding ten additional
branch locations and closing one branch since December 31, 1995, as well as
marketing expenses which increased $245,000 during the current quarter to
$372,000 from $127,000 for the quarter ended December 31, 1995. These
marketing expenses were primarily due to expenses related to the corporate name
change which occurred in October, 1996.
16
<PAGE> 18
Part II - Other Information
FIRST PALM BEACH BANCORP, INC. AND SUBSIDIARY
Item 1 Legal Proceedings
Neither the Company nor its subsidiaries are involved in any
pending legal proceedings, other than routine legal matters occurring
in the ordinary course of business which in the aggregate involve
amounts which, in management's opinion, are not material to the
consolidated financial condition or results of operations of the
Company.
Item 2 Changes in Securities
Not applicable.
Item 3 Default upon Senior Securities
Not applicable.
Item 4 Submission of Matters to a Vote of Security Holders
Not applicable.
Item 5 Other Information
Not applicable.
Item 6 Exhibits and Reports on Form 8-K.
(a) The following exhibits are filed as part of this report:
11 Statement Re: Computation of Per Share Earnings.
27 Financial Data Schedule (for SEC use only).
(b) Form 8-K was filed on October 21, 1996 to report
the discontinuation of the indirect lending program and
additional loan loss provisions relating to that program.
Form 8-K was filed on December 13, 1996 to report
additional loan loss reserves and restatement of
earnings for the fiscal year ended September 30,
1996.
17
<PAGE> 19
FIRST PALM BEACH BANCORP, INC. AND SUBSIDIARY
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.
First Palm Beach Bancorp, Inc.
------------------------------
(Registrant)
/s/ Louis O. Davis, Jr.
Date: -------------------------------------
February 13, 1997 Louis O. Davis, Jr.
President and Chief Executive Officer
(Duly Authorized Officer)
/s/ R. Randy Guemple
Date: -------------------------------------
February 13, 1997 R. Randy Guemple
Treasurer and Chief Financial Officer
(Principal Financial Officer)
18
<PAGE> 1
EXHIBIT 11
Statement Re: Computation of Per Share Earnings
<TABLE>
<CAPTION>
Quarter Ended
-------------------------------
Dec. 31, 1995 Dec. 31, 1996
------------- -------------
<S> <C> <C> <C>
1. Net income $2,524,000 $2,273,000
========== ==========
2. Weighted average common
shares outstanding 4,925,506 4,896,238
3. Common stock equivalents due to
dilutive effect of stock options 136,064 142,358
---------- ----------
4. Total weighted average common
shares and equivalents outstanding
for primary earnings per
share computation 5,061,571 5,038,596
========== ==========
5. Primary earnings per share $ 0.50 $ 0.45
========== ==========
6. Weighted average common
shares outstanding 5,061,571 5,038,596
7. Additional dilutive shares
using the higher of the end
of period market value versus
average market value for the
period utilizing the treasury
stock method regarding
stock options - -
---------- ----------
8. Total weighted average
common shares and equivalents
outstanding for fully diluted
earnings per share computation 5,061,571 5,038,596
========== ==========
9. Fully diluted earnings per share $ 0.50 $ 0.45
========== ==========
</TABLE>
19
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION FOR THE PERIOD ENDED DECEMBER 31,
1996 AND THE CONSOLIDATED STATEMENT OF OPERATIONS FOR THE PERIOD ENDED DECEMBER
31, 1996 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS FILED WITH FORM 10-Q FOR THE PERIOD ENDED DECEMBER 31, 1996.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-1997
<PERIOD-START> OCT-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 25,463
<INT-BEARING-DEPOSITS> 92,940
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 130,129
<INVESTMENTS-CARRYING> 152,095
<INVESTMENTS-MARKET> 153,983
<LOANS> 1,053,834
<ALLOWANCE> 9,718
<TOTAL-ASSETS> 1,502,978
<DEPOSITS> 1,167,769
<SHORT-TERM> 110,000
<LIABILITIES-OTHER> 20,791
<LONG-TERM> 101,000
0
0
<COMMON> 55
<OTHER-SE> 106,104
<TOTAL-LIABILITIES-AND-EQUITY> 1,502,978
<INTEREST-LOAN> 21,067
<INTEREST-INVEST> 5,733
<INTEREST-OTHER> 188
<INTEREST-TOTAL> 26,988
<INTEREST-DEPOSIT> 13,796
<INTEREST-EXPENSE> 16,568
<INTEREST-INCOME-NET> 10,420
<LOAN-LOSSES> 802
<SECURITIES-GAINS> 504
<EXPENSE-OTHER> 7,738
<INCOME-PRETAX> 3,787
<INCOME-PRE-EXTRAORDINARY> 2,273
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,273
<EPS-PRIMARY> .45
<EPS-DILUTED> .45
<YIELD-ACTUAL> 2.93
<LOANS-NON> 12,613
<LOANS-PAST> 182
<LOANS-TROUBLED> 1,730
<LOANS-PROBLEM> 6,533
<ALLOWANCE-OPEN> 11,855
<CHARGE-OFFS> 3,659
<RECOVERIES> 720
<ALLOWANCE-CLOSE> 9,718
<ALLOWANCE-DOMESTIC> 9,718
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
