<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
1.c. For the Quarterly Period Ended SEPTEMBER 30, 1996
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Transition Period from __________ To _________
COMMISSION FILE NUMBER: 0-23146
REDFED BANCORP INC.
(Exact name of registrant as specified in its charter)
DELAWARE 33-0588105
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
300 EAST STATE STREET, REDLANDS, CALIFORNIA 92373
(Address of principal executive offices) (Zip code)
Registrant's telephone number, including area code: (909) 335-3551
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 filing requirements
for the past 90 days.
[X] YES [_] NO
The Registrant had 7,082,781 shares of common stock outstanding at October 31,
1996.
<PAGE>
REDFED BANCORP INC. AND SUBSIDIARIES
INDEX
<TABLE>
<CAPTION>
Page
----
<S> <C> <C>
PART I FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements (unaudited)
RedFed Bancorp Inc.
Consolidated Statements of Financial Condition
as of September 30, 1996 and December 31, 1995 3
Consolidated Statements of Operations for the
Three and Nine Months Ended September 30,
1996 and 1995 4
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1996 and 1995 5
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 9
PART II OTHER INFORMATION
Item 1. Legal Proceedings 22
Item 2. Changes in Securities 22
Item 3. Default upon Senior Securities 22
Item 4. Submission of Matters to a Vote of Security Holders 22
Item 5. Other Information 22
Item 6. Exhibits and Reports on Form 8-K 22
Exhibit 11.1 Computation of Earnings per Share 23
Signatures 24
</TABLE>
2
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Consolidated Financial Statements
---------------------------------
REDFED BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Financial Condition
(dollars in thousands)
<TABLE>
<CAPTION>
September 30, December 31,
1996 1995
------------- ------------
(Unaudited)
---------
Assets
------
<S> <C> <C>
Cash and cash equivalents $ 18,838 30,985
Loans held-for-sale at lower of cost or market value 5,145 4,578
Mortgage-backed securities available-for-sale 23,924 26,501
Investment securities held-to-maturity 42,789 41,655
Mortgage-backed securities held-to-maturity 25,403 25,615
Loans receivable, net 707,315 678,406
Accrued interest receivable 5,264 5,014
Federal Home Loan Bank stock, at cost 6,387 6,914
Real estate acquired through foreclosure, net 5,452 24,560
Real estate held for sale or investment, net 1,651 1,698
Premises and equipment, net 17,946 17,619
Prepaid expenses and other assets 6,155 8,269
------------- ------------
Total assets $866,269 871,814
============= ============
Liabilities and Stockholders' Equity
------------------------------------
Liabilities:
Deposits $761,328 776,528
FHLB advances 10,000 10,000
Other borrowed money 4,418 21,133
Accrued expenses and other liabilities 20,655 16,075
------------- ------------
Total liabilities 796,401 823,736
------------- ------------
Stockholders' equity:
Common stock 74 44
Additional paid-in capital 56,931 32,608
Retained earnings, substantially restricted 16,539 18,570
Deferred compensation (2,010) (2,430)
Treasury Stock (802) (888)
Unrealized gains (losses) on securities available-for-sale (864) 174
------------- ------------
Total stockholders' equity 69,868 48,078
------------- ------------
Total liabilities and stockholders' equity $866,269 871,814
============= ============
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
3
<PAGE>
REDFED BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Operations
(dollars in thousands, except per share amounts)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------------------- ------------------------------
1996 1995 1996 1995
-------------- ------------ -------------- --------------
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
Interest income:
Loans receivable and mortgage-backed securities $14,205 14,950 42,882 45,985
Investment securities and deposits 994 1,004 2,849 2,497
------- ------- ------- -------
Total interest income 15,199 15,954 45,731 48,482
------- ------- ------- -------
Interest expense:
Deposits 7,913 9,183 23,822 26,204
Other borrowed money 187 566 861 2,969
------- ------- ------- -------
Total interest expense 8,100 9,749 24,683 29,173
------- ------- ------- -------
Net interest income 7,099 6,205 21,048 19,309
Provision for losses on loans 371 404 2,449 4,943
------- ------- ------- -------
Net interest income after provision
for losses on loans 6,728 5,801 18,599 14,366
------- ------- ------- -------
Non-interest income:
Letter of credit and other fee income 1,323 1,727 4,297 4,687
Gain (loss) on sale of loans 0 (22) (11) 635
Gain on sale of servicing 6 0 752 0
Gain on defined benefit plan curtailment 0 61 0 3,390
Other income 56 70 261 133
------- ------- ------- -------
Total non-interest income 1,385 1,836 5,299 8,845
------- ------- ------- -------
Non-interest expense:
General and administrative expense:
Compensation and benefits 2,907 2,682 8,397 9,222
Occupancy and equipment 1,950 1,803 5,260 5,615
Federal deposit insurance premiums 572 618 1,821 1,786
FDIC special assessment 5,421 0 5,421 0
Other expense, net 549 632 1,819 2,305
------- ------- ------- -------
Total general and administrative expense 11,399 5,735 22,718 18,928
------- ------- ------- -------
Other non-interest expense:
Real estate operations, net 334 (107) 1,167 948
Provision for losses on letters of credit 590 0 2,002 194
Provision for losses on real estate 0 1,410 0 6,446
------- ------- ------- -------
Total other non-interest expense 924 1,303 3,169 7,588
------- ------- ------- -------
Total non-interest expense 12,323 7,038 25,887 26,516
------- ------- ------- -------
Earnings (loss) before income taxes (4,210) 599 (1,989) (3,305)
Income taxes 0 102 7 124
------- ------- ------- -------
Net earnings (loss) $(4,210) 497 $(1,996) (3,429)
======= ======= ======= =======
Earnings (loss) per share $ (0.77) 0.13 $ (0.44) (0.86)
======= ======= ======= =======
</TABLE>
See accompanying notes to unaudited consolidated financial statements
4
<PAGE>
REDFED BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
----------------------------------------
1996 1995
-------------- ------------
(unaudited)
<S> <C> <C>
Cash flows from operating activities:
Net loss $(1,996) (3,429)
Adjustments to net loss:
Loan fees collected 92 333
Depreciation and amortization, net 1,045 (516)
Provision for losses on:
Loans 2,449 4,943
Real estate 0 6,446
Letters of credit 2,002 194
Net (gain) loss on sales of loans, investments and
mortgage-backed securities 11 (635)
Net gain on sales of real estate, and premises and equipment (322) (161)
Federal Home Loan Bank stock dividends received (285) (314)
Proceeds from sale of loans 216 65,944
Increase (decrease) in:
Accrued expenses and other liabilities 2,831 (2,765)
Deferred income (93) (339)
Accrued interest receivable (250) (421)
Prepaid expenses and other assets 2,114 2,075
-------- --------
Net cash provided by operating activities 7,814 71,355
-------- --------
Cash flows from investing activities:
Proceeds from maturities of investment securities held-to-maturity 30,500 17,500
Purchases of investments securities held-to-maturity (31,592) (25,265)
Proceeds from maturities of mortgage-backed securities available-for-sale 1,543 378
Proceeds from maturities of mortgage-backed securities held-to-maturity 212 3,986
Proceeds from sale of mortgage-backed securities available-for-sale 0 15,587
Loans originated for investment (61,226) (93,614)
Loans purchased (51,582) (439)
Sale of Federal Home Loan Bank stock, net 812 2,066
Principal payments and reductions of loans 72,657 45,263
Proceeds from sale of real estate 20,138 16,030
Proceeds from sale of premises and equipment 189 219
Purchases of premises and equipment (1,609) (124)
-------- --------
Net cash used in investing activities (19,958) (18,413)
-------- --------
(Continued)
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
5
<PAGE>
REDFED BANCORP INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (Continued)
(dollars in thousands)
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
-----------------------------------------
1996 1995
------------- --------------
<S>
Cash flows from financing activities: <C> (Unaudited) <C>
Deposits, net $(15,200) 6,135
Proceeds from Federal Home Loan Bank advances 10,000 10,000
Repayment of Federal Home Loan Bank advances (10,000) (60,000)
Repayment of other borrowed money (9,073) (2,175)
Proceeds from stock options exercised 232 0
Proceeds from issuance of common stock, net 24,073 0
Payment to acquire treasury stock (35) 0
-------- --------
Net cash used in financing activities (3) (46,040)
-------- --------
Increase (decrease) in cash and cash equivalents (12,147) 6,902
Cash and cash equivalents, beginning of period 30,985 23,074
-------- --------
Cash and cash equivalents, end of period $ 18,838 29,976
======== ========
Supplemental information:
Interest credited to deposits $ 21,187 23,477
======== ========
Transfers from loans receivable to real estate 8,009 9,431
======== ========
Loans to facilitate the sale of real estate 6,030 7,207
======== ========
Real estate acquired subject to bond financing 0 (5,830)
======== ========
Real estate sold subject to bond financing 7,642 0
======== ========
Bond financing subject to real estate acquisitions 0 5,830
======== ========
Bond financing subject to real estate sales (7,642) 0
======== ========
Transfer from loans held-to-maturity to loans available for sale 0 17,277
======== ========
</TABLE>
See accompanying notes to unaudited consolidated financial statements.
6
<PAGE>
REDFED BANCORP INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
1. The consolidated statements of financial condition of RedFed Bancorp Inc.
and subsidiaries (the "Company") as of September 30, 1996, the related
consolidated statements of operations for the three and nine months ended
September 30, 1996 and 1995 and the related consolidated statements of cash
flows for the nine months ended September 30, 1996 and 1995 are unaudited.
These statements reflect, in the opinion of management, all material
adjustments, consisting only of normal recurring accruals, necessary for a
fair presentation of the consolidated financial condition of the Company as
of September 30, 1996, and results of consolidated operations for the three
and nine months ended September 30, 1996 and 1995 and consolidated cash
flows for the nine months ended September 30, 1996 and 1995. The results of
consolidated operations for the unaudited periods are not necessarily
indicative of the results of consolidated operations to be expected for the
entire year of 1996.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the instructions to Securities and Exchange
Commission ("SEC") Form 10-Q and, therefore, do not include all information
and footnotes normally included in consolidated financial statements
prepared in conformity with generally accepted accounting principles.
Accordingly, 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 on SEC Form 10-K for
the year ended December 31, 1995.
2. The net loss per share for the three and nine months ended September 30,
1996 of $0.77 and $0.44 per share, respectively, were based on net losses
of $4.2 million and $2.0 million, with weighted-average common shares and
equivalent shares outstanding during those periods of 5,448,730 and
4,551,536 (net of unearned Employee Stock Ownership Plan ("ESOP") and
Recognition and Retention Plan ("RRP") shares, and treasury stock and
including outstanding stock options as to which the current market price
exceeds the exercise price and that are not anti-dilutive). This compares
with net earnings per share for the three months ended September 30, 1995
of $0.13 and a net loss per share for the nine months ended September 30,
1995 of $0.86 per share, respectively, based on net earnings of $497,000
and a net loss of $3.4 million, with weighted-average common shares
outstanding during those periods of 3,981,868 and 3,981,551 (net of
unearned ESOP and RRP shares and treasury stock).
3. In May 1995, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards No. 122, "Accounting for
Mortgage Servicing Rights" ("SFAS 122"), an amendment to Statement of
Financial Accounting Standards No. 65. SFAS 122 requires an institution
that purchases or originates mortgage loans and sells or securitizes those
loans with servicing rights retained to allocate the total cost of the
mortgage loans to the mortgage servicing rights and the loans (without the
mortgage servicing rights) based on their relative fair values. In
addition, institutions are required to assess impairment of the capitalized
mortgage servicing portfolio based on the fair value of those rights on a
stratum-by-stratum basis with any impairment recognized through a valuation
allowance for each impaired stratum. Capitalized mortgage servicing rights
should be stratified based upon one or more of the predominate risk
characteristics of the underlying loans such as loan type, size, note rate,
date of origination, term and/or geographic location. SFAS 122 is effective
for fiscal years beginning after December 15, 1995. The Company has adopted
SFAS 122, and such adoption did not have a material impact on the Company's
consolidated financial statements.
In June 1996, the FASB issued Statement of Financial Accounting Standards
No. 125 ("SFAS 125"), "Accounting for Transfers and Servicing of Financial
Assets and Extinguishments of Liabilities". SFAS 125 provides accounting
and reporting standards for transfers and servicing of financial assets and
extinguishments of liabilities based on consistent application of a
financial-components approach that focuses on control. It distinguishes
transfers of financial assets that are sales from transfers that are
secured borrowings. Under the financial-components approach, after a
transfer of financial assets, an entity recognizes all financial and
servicing assets it controls and liabilities it has incurred and
derecognizes all financial and servicing assets it no longer controls and
liabilities that have been extinguished. The
7
<PAGE>
financial-component approach focuses on the assets and liabilities that
exist after the transfer. Many of these assets and liabilities are
components of financial assets that existed prior to the transfer. If a
transfer does not meet the criteria for a sale, the transfer is accounted
for as a secured borrowing with pledge of collateral. SFAS 125 is effective
for transfers and servicing of financial assets and extinguishments of
liabilities occurring after December 31, 1996 and should be applied
prospectively. Management has not yet evaluated the effect of SFAS 125, if
any, on the Company's financial condition or operations.
8
<PAGE>
REDFED BANCORP, INC. AND SUBSIDIARIES
ITEM 2. Management's Discussion and Analysis of Financial Condition and
---------------------------------------------------------------
Results of Operations
---------------------
GENERAL
RedFed Bancorp Inc. is a Delaware corporation, organized by Redlands Federal
Bank (the "Bank") for the purpose of acquiring all of the capital stock of the
Bank issued in the conversion of the Bank from a federally chartered mutual
savings association to a federally chartered stock savings bank. The Company's
common stock is traded on NASDAQ under the symbol "REDF".
The Company is primarily engaged in attracting deposits from the general public
in the areas in which its branches are located and investing such deposits and
other available funds in loans secured by one- to four family residential
mortgages, including spot (non-tract) construction loans, which are combination
construction and permanent loans made to borrowers who will occupy the completed
home as their primary residences. At September 30, 1996, the Bank operated
fourteen retail banking offices located in San Bernardino and Riverside
counties, and three loan production offices.
The Company is subject to significant competition from other financial
institutions in its market area. The Bank is regulated by certain federal
agencies and undergoes periodic examinations by those regulatory authorities.
SECONDARY OFFERING
On August 19, 1996 the Company completed a secondary stock offering for
2,990,000 shares of common stock. The shares were issued at $8.75 per share, and
the net proceeds to the Company from the offering were approximately $24.1
million. The Company contributed $21.2 million of the net proceeds to the
Bank to increase the Bank's regulatory capital.
FINANCIAL CONDITION
The Company's consolidated assets were $866.3 million at September 30, 1996
compared to $871.8 million at December 31, 1995. The decrease of $5.5 million
was primarily the result of a decrease in cash and cash equivalents and real
estate acquired through foreclosure ("REO") offset by an increase in loans
receivable. The decrease in consolidated liabilities consisted primarily of a
decrease in the deposit base and a reduction in other borrowed money, partially
offset by an increase in accrued expenses and other liabilities of $4.6 million.
This increase is a result of the accrual of $5.4 million for the payment of a
one-time assessment imposed as of September 30, 1996 by the Federal Deposit
Insurance Corporation ("FDIC") under recent federal legislation on thrift
institutions whose customer deposits are insured by the FDIC's Savings
Association Insurance Fund ("SAIF").
Loans receivable, net increased to $707.3 million at September 30, 1996, from
$678.4 million at December 31, 1995. The increase of $28.9 million for the nine
months ended September 30, 1996 consisted primarily of loan purchases of
approximately $51.6 million and loan originations of approximately $61.2
million offset by loan principal payments of $72.7 million and the transfer of
$10.7 million of loans to REO before initial write-down to fair value. REO
declined $19.1 million during the nine months ended September 30, 1996
primarily as a result of $27.8 million of sales of REO offset by net transfers
to REO from loans of $8.0 million.
Savings deposits at September 30, 1996 totaled $761.3 million compared to $776.5
million at December 31, 1995. The decrease of $15.2 million in savings deposits
is due primarily to the maturities of higher yielding certificates of deposit
resulting in deposit outflows. The Company reduced net borrowings by $16.7
million during the nine months ended September 30, 1996 as a result of the sale
of REO properties and the reduction of related borrowings. Stockholders' equity
increased to $69.9 million at September 30, 1996 from $48.1 million at December
31, 1995 as a result of the stock offering of approximately $24.1 million,
partially offset by a loss of
9
<PAGE>
approximately $2.0 million for the nine months ended September 30, 1996, and by
a $1.0 million change in the unrealized loss on securities available for sale.
CAPITAL RESOURCES AND LIQUIDITY
The Company's primary sources of funds are deposits, principal and interest
repayments on loans and investments, retained earnings, and, to a lesser extent,
FHLB advances and other short-term borrowings. While maturities and scheduled
amortization of loans are predictable sources of funds, deposit flows and
mortgage prepayments are greatly influenced by general interest rates, economic
conditions and competition.
The Bank is required to maintain minimum levels of liquid assets as defined by
Office of Thrift Supervision ("OTS") regulations. This requirement, which may be
varied by the OTS depending upon economic conditions and deposit flows, is based
upon a percentage of deposits and short-term borrowings. The required ratio is
currently 5%. The Bank's average liquidity ratios for the three months ended
September 30, 1996 and December 31, 1995 were 8.00% and 7.72%, respectively. The
Bank currently attempts to maintain a liquidity ratio as close to the minimum
requirements as possible, since loan originations provide higher interest rates,
in addition to loan fees, than are available from liquid investments.
RESULTS OF OPERATIONS
COMPARISON OF THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 1996 AND
1995.
General. The Company recorded a net loss of $4.2 million for the three months
- -------
ended September 30, 1996, or $0.77 per share, as compared to net earnings of
$497,000, or $0.13 per share, for the three months ended September 30, 1995. The
loss was the result of the one time FDIC/SAIF special assessment in the amount
of $5.4 million described above. The Company recorded a net loss of $2.0 million
for the nine months ended September 30, 1996, or $0.44 per share, as compared to
a net loss of $3.4 million, or $0.86 per share, for the nine months ended
September 30, 1995. Net operating results for the three months ended September
30, 1996 were favorably impacted by a decrease in interest expense of
approximately $1.6 million partially offset by a decrease in interest income of
approximately $755,000 and a decrease in noninterest income of $385,000. General
and administrative expense ("G&A"), after excluding the SAIF special assessment,
increased $303,000. Other non-interest expense, which includes real estate
operations and provisions for losses on off-balance sheet letters of credit
("LOCs") and real estate, decreased approximately $373,000. The Company would
have had net earnings of approximately $1.2 million for the three months ended
September 30, 1996 if the special assessment had not been required. Net
operating results for the nine months ended September 30, 1996 were favorably
impacted by an increase in net interest income of approximately $1.7 million and
a reduction in provisions for losses on loans, LOCs, and real estate of $7.1
million, partially offset by an increase in G&A of $3.9 million which includes
the SAIF special assessment and a reduction in non-interest income of $3.4
million. The Company would have recorded net earnings of approximately $3.4
million for the nine months ended September 30, 1996, if the SAIF assessment
were excluded.
Interest income. Interest income for the three months ended September 30, 1996
- ---------------
was $15.2 million compared to $16.0 million for the same period in the previous
year. Interest income for the nine months ended September 30, 1996 was $45.7
million compared to $48.5 million for the same period in the previous year. The
decrease in interest income for the three months ended September 30, 1996 is due
in part to a decrease in average interest-earning assets of approximately $62.2
million, partially offset by an increase in the average yield for interest-
earning assets from 7.37% for the three months ended September 30, 1995 to 7.60%
for the three months ended September 30, 1996. The decrease in interest income
for the nine months ended September 30, 1996 is due in part to a decrease in
average interest-earning assets of approximately $88.9 million, partially offset
by an increase in the average yield for interest-earning assets from 7.07% for
the nine months ended September 30, 1995 to 7.66% for the nine months ended
September 30, 1996. Also included in interest income for the nine months ended
September 30, 1995 was approximately $1.6 million of income due to the
recognition of net deferred fees.
Interest expense. Interest expense for the three months ended September 30,
- ----------------
1996 was $8.1 million compared to $9.7 million for the same three months in the
previous year. Interest expense for the nine months ended September
10
<PAGE>
30, 1996 was $24.7 million compared to $29.2 million for the same period in the
previous year. This decrease in interest expense for the three months ended
September 30, 1996 was the result of a decrease in average interest-bearing
liabilities of $79.7 million and a decrease in the average yield for interest-
bearing liabilities from 4.60% for the three months ended September 30, 1995 to
4.29% for the three months ended September 30, 1996. The decrease in interest
expense for the nine months ended September 30, 1996 was the result of a
decrease in average interest-bearing liabilities of approximately $98.3 million
and a decrease in the average cost of interest-bearing liabilities from 4.50% to
4.29% for the nine months ended September 30, 1995 and 1996, respectively.
Net interest income. The net interest income for the three months ended
- -------------------
September 30, 1996 was $7.1 million, which represents an interest rate spread of
3.31%. This compares to net interest income of $6.2 million, which represents
an interest rate spread of 2.77%, for the same period in 1995. The net
interest income for the nine months ended September 30, 1996 was $21.0 million,
which represents an interest rate spread of 3.37%. This compares to net
interest income of $19.3 million, which represents an interest rate spread of
2.57%,for the same period in the prior year. The 54 basis point increase in
the interest rate spread for the three months ended September 30, 1996 compared
to the three months ended September 30, 1995 was a result of an increase in the
average yield for interest-earning assets of 23 basis points and a decrease in
the average cost for interest-bearing liabilities of 31 basis points. The 80
basis point increase in the interest rate spread for the nine months ended
September 30, 1996 as compared to the nine months ended September 30, 1995 was
a result of an increase in the average yield for interest-earning assets of 59
basis points and a decrease in the average cost for interest-bearing liabilities
of 21 basis points.
The following table displays average dollar amounts and interest rates on the
Company's interest-earning assets and interest-bearing liabilities:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED SEPTEMBER 30, FOR THE NINE MONTHS ENDED SEPTEMBER 30,
-------------------------------------------------- -----------------------------------------------
1996 1995 1996 1995
--------------------- ------------------------ --------------------- ---------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Average dollar amount of and
average yield earned on assets:
Loans and mortgage-backed
securities $730,728 7.78% $788,685 7.55% $729,275 7.84% $821,741 7.21%
Investment securities 69,102 5.76 73,343 5.46 66,779 5.69 63,172 5.27
-------- ---- -------- ---- -------- ---- -------- ----
Interest-earning assets $799,830 7.60% $862,028 7.37% $796,054 7.66% $884,913 7.07%
-------- ---- -------- ---- -------- ---- -------- ----
Average dollar amount of and
average rate paid on
liabilities:
Deposits $744,926 4.27% $801,804 4.54% $748,633 4.25% $804,957 4.35%
Borrowings 16,384 4.86 39,172 5.67 20,118 5.75 62,046 6.37
-------- ---- -------- ---- -------- ---- -------- ----
Interest-bearing liabilities $761,310 4.29% $840,976 4.60% $768,751 4.29% $867,003 4.50%
-------- ---- -------- ---- -------- ---- -------- ----
Interest rate spread 3.31% 2.77% 3.37% 2.57%
==== ==== ==== ===
Net interest margin 3.52% 2.88% 3.52% 2.67%
==== ==== ==== ===
Ratio of interest-earning
assets to interest-bearing
liabilities 105.06% 102.50% 103.55% 102.07%
======== ======== ======== ========
</TABLE>
Provision for Loan Losses. The provision for loan losses was $371,000 for the
- -------------------------
three months ended September 30, 1996 compared to $404,000 for the same period
last year. The Company also recognized a provision for losses on LOCs of
$590,000 for the three months ended September 30, 1996 and a provision for
losses on real estate of $1.4 million for the three months ended September 30,
1995, which are included in "Other non-interest expense." The provision for
loan losses was $2.4 million for the nine months ended September 30, 1996,
compared to $4.9 million
11
<PAGE>
for the same period last year. The Company also recognized a provision for
losses on LOCs of $2.0 million for the nine months ended September 30, 1996
compared to provisions of $194,000 for losses on LOCs and $6.4 million for
losses on real estate for the nine months ended September 30, 1995, which are
included in "Other non-interest expense." The loss provisions reflects
management's assessment of the loan, LOC and real estate portfolios in light of
the Southern California real estate market, borrowers' ability to perform and
certain other factors.
The allowances for losses on loans, LOCs and real estate are established through
provisions based on management's evaluation of the risks inherent in its
portfolios and the local real estate economy. The allowances are maintained at
amounts management considers adequate to cover losses which are deemed probable
and estimable. The allowances are based upon a number of factors, including
asset scoring and classification, collateral values, management's assessment of
the credit risk inherent in the portfolio, historical loan loss experience, a
loss migration analysis, and the Company's underwriting policies.
12
<PAGE>
The following is a summary of the activity in the loan, LOC and real estate
valuation allowances for the periods indicated:
<TABLE>
<CAPTION>
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED ENDED
SEPTEMBER 30, SEPTEMBER 30,
-------------------------- ------------------------
1996 1995 1996 1995
------- ------- ------- -------
(Dollars in thousands)
<S> <C> <C> <C> <C>
ALLOWANCE FOR LOSSES ON LOANS:
Balance at beginning of period $11,242 20,002 14,745 18,874
Charge-offs, net of recoveries (1,464) (4,531) (7,045) (7,942)
Provisions charged to income 371 404 2,449 4,943
------- ------- ------- -------
Balance at end of period 10,149 15,875 10,149 15,875
------- ------- ------- -------
ALLOWANCE FOR LOSSES ON LOCS:
Balance at beginning of period $ 6,606 6,158 7,447 6,908
Charge-offs, net of recoveries 28 (829) (2,225) (1,773)
Provisions charged to income 590 0 2,002 194
------- ------- ------- -------
Balance at end of period 7,224 5,329 7,224 5,329
------- ------- ------- -------
Total allowance for losses on loans and LOCs $17,373 21,204 17,373 21,204
======= ======= ======= =======
ALLOWANCE FOR LOSSES ON REAL ESTATE:
Balance at beginning of period $ 2,841 8,667 9,496 4,378
Charge-offs, net of recoveries (601) (1,208) (7,256) (1,955)
Provisions charged to income 0 1,410 0 6,446
------- ------- ------- -------
Balance at end of period $ 2,240 8,869 2,240 8,869
======= ======= ======= =======
TOTAL ALLOWANCE FOR LOSSES ON LOANS, LOCS AND
REAL ESTATE $19,613 30,073 19,613 30,073
======= ======= ======= =======
General $17,588 17,813 17,588 17,813
Specific 2,025 12,260 2,025 12,260
------- ------- ------- -------
TOTAL $19,613 30,073 19,613 30,073
======= ======= ======= =======
</TABLE>
The allowance for losses on loans, LOCs and real estate decreased to $19.6
million at September 30, 1996 from $31.7 million at December 31, 1995. The
ratio of general valuation allowance ("GVA") for losses on loans, LOCs and real
estate to nonperforming assets and LOCs increased to 74.11% at September 30,
1996 from 39.30% at December 31, 1995 as a result of a decrease in nonperforming
assets. Included in the allowance for losses on loans, LOCs and real estate
were specific allowances against individual loans, LOCs and real estate of $2.0
million at September 30, 1996 and $14.5 million at December 31, 1995.
Management continues to address the levels of allowance for losses in relation
to the local real estate economy. As a result of changes in certain real estate
markets, adjustments in the valuation allowances may be required in future
periods. In addition, various regulatory agencies, as an integral part of their
examination process,
13
<PAGE>
periodically review the Company's valuation allowance. These agencies may
require additional valuation allowances, based on their judgments of the
information available to them at the time of the examination.
Non-Interest Income. Non-interest income for the three months ended September
- --------------------
30, 1996 was $1.4 million compared to $1.8 million for the same period last
year. Non-interest income for the nine months ended September 30, 1996 was $5.3
million compared to $8.7 million for the same period in 1995. The decrease in
LOC and other fees for the three months ended September 30, 1996 is primarily
the result of this and fee income from subsidiaries. The decrease in non-
interest income for the nine months ended September 30, 1996 was primarily the
result of nonrecurring income in the form of a curtailment gain of $3.4 million
in the nine month period ended September 30, 1995 resulting from freezing the
Company's employee defined benefit plan.
General and administrative expense. General and administrative expense for the
- -----------------------------------
three months ended September 30, 1996 increased to $11.4 million from $5.7
million for the three months ended September 30, 1995. The expense for the nine
months ended September 30, 1996 was $22.7 million compared to $18.8 million for
the same period in 1995. The increase for the three months and nine months ended
September 30, 1996 was primarily the result of a one-time special assessment
imposed by the FDIC on deposits insured by SAIF of $5.4 million. G&A expenses
excluding the special assessment increased $303,000 for the three months ended
September 30, 1996, when compared to the same period in 1995, primarily as a
result of costs associated with a branch-wide data processing conversion. The
Company's efficiency ratio improved from 71.87% for the three months ended
September 30, 1995 to 70.46% for the three months ended September 30, 1996 and
from 76.43% for the nine months ended September 30, 1995 to 65.65% for the nine
months ended September 30, 1996, excluding the SAIF special assessment and, for
the nine months ended September 30, 1995, excluding curtailment gain on
retirement plan of $3.4 million.
Other Non-Interest Expense. Other non-interest expense for the three months
- ---------------------------
ended September 30, 1996 was $924,000 compared to $1.3 million for the same
period last year. Non-interest expense for the nine months ended September 30,
1996 was $3.2 million compared to $7.6 million for the same period last year.
The decrease for the three months ended September 30, 1996 resulted primarily
from a decrease in the provision for losses on LOCs and real estate of $820,000.
The decrease for the nine months ended September 30, 1996 resulted primarily
from a decrease in the provision for losses on LOCs and real estate of $4.6
million.
14
<PAGE>
NONPERFORMING ASSETS
The following table sets forth information regarding nonaccrual loans,
nonperforming LOCs and real estate acquired through foreclosure and in-substance
foreclosed loans, net of specific valuation allowances:
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31,
NONPERFORMING ASSETS: 1996 1995
---------------------------------
(dollars in thousands)
<S> <C> <C>
NONACCRUAL LOANS:
Nonaccrual loans:
One- to four-family $10,802 8,818
Multi-family 766 6,115
Commercial real estate 77 223
Spot construction 418 418
Developed lots 343 1,036
Tract construction and land 128 581
Consumer loans 268 413
------- -------
Total nonaccrual loans 12,802 17,604
------- -------
NONPERFORMING LOCS: 4,500 0
------- -------
REO AND IN-SUBSTANCE FORECLOSED LOANS(1):
One- to four-family 3,333 5,393
Multi-family (2) 422 17,807
Commercial real estate 390 536
Developed lots 1,793 1,836
Tract construction and land 476 463
Consumer loans 16 43
------- -------
Total real estate acquired
through foreclosure and
in-substance foreclosed loans 6,430 26,078
------- -------
Total nonperforming assets $23,732 43,682
======= =======
</TABLE>
___________
(1) Does not include effect of general valuation allowances of $978,000 and $1.5
million at September 30, 1996 and December 31, 1995, respectively.
(2) Includes properties securing LOCs acquired through foreclosure.
Nonaccrual loans net of specific valuation allowances at September 30, 1996 were
$12.8 million, which represents a decrease of $4.8 million from the December 31,
1995 balance of $17.6 million. This decrease since December 31, 1995 resulted
from an increase in single family loans of $2.0 million, offset by a decrease in
multi-family loans of $5.3 million and a decrease of $1.4 million in all other
loan categories. Nonperforming letters of credit at September 30, 1996 increased
by $4.5 million. This increase since December 31, 1995 is the result of one
multi-family project moving from special mention to the substandard
classification.
The Company's general nonaccrual policy provides that interest accruals cease
once a loan is past due for a period of 90 days or more, or the notice of
default is filed, whichever is earlier. Loans may also be placed on nonaccrual
status even though they are less than 90 days past due
15
<PAGE>
if management concludes that it is probable that the borrower will not be able
to comply with the repayment terms of the loan. The Company defines
nonperforming loans as nonaccrual loans and nonperforming LOCs.
REO decreased to $6.4 million at September 30, 1996 from $26.1 million at
December 31, 1995 primarily as a result of the sale of three multi-family LOC
properties, seven multi-family properties and a number of single family
residences and lots previously acquired through foreclosure, partially offset by
foreclosures during the same period. REO consists of real estate acquired
through foreclosure and loans accounted for as in-substance foreclosures. REO is
initially recorded at the fair value of the related assets at the date of
foreclosure, less costs to sell. Subsequent write-downs for estimated losses are
recognized if the carrying value of real estate exceeds fair value, less costs
to sell.
Nonperforming assets were $23.7 million, or 2.44% of total assets and LOCs, at
September 30, 1996, compared to $43.7 million, or 4.53% of total assets and
LOCs, at December 31, 1995. Restructured loans, which are currently performing
under their restructured terms are excluded from nonperforming assets. The
balance of restructured loans was $10.4 million and $6.9 million at September
30, 1996 and December 31, 1995, respectively. The increase since December
31,1995 was the result of the restructure of four multi-family and four single
family residences.
Nonperforming assets are defined as nonperforming loans (as defined above) and
real estate acquired through foreclosure, and in-substance foreclosed loans. The
Company does not include troubled debt restructured loans that are performing in
accordance with their restructured terms as nonperforming assets.
Management continues to reduce the amount of nonperforming assets by
concentrating efforts on early detection through the asset classification
process and by taking an aggressive stance to quickly resolve nonperforming
assets by working with borrowers to restore nonaccrual loans to performing
status where possible, by foreclosing upon security property where workouts are
determined to be impracticable and by selling existing REO.
CLASSIFIED ASSETS
Federal regulations and the Company's Classification of Assets Policy provide
for the classification of loans and other assets. "Substandard" assets are those
that are characterized by the "distinct possibility" that the institution will
sustain "some loss" if the deficiencies are not corrected. Assets classified as
"Doubtful" have all of the weaknesses inherent in those classified "Substandard"
with the added characteristic that the weaknesses present make "collection or
liquidation in full," on the basis of currently existing facts, conditions, and
values, "highly questionable and improbable." Assets classified as "Loss" are
those considered "uncollectible" and of such little value that their continuance
as assets without the establishment of a specific loss allowance is not
warranted.
16
<PAGE>
<TABLE>
The following table sets forth the classified assets, which include the
substandard and doubtful categories, net of specific valuation allowance. The
amount of specific valuation allowances at September 30, 1996 and December 31,
1995 was $1,771 and $12,800, respectively.
At September 30, At December 31,
1996 1995
---------------- ---------------
(Dollars in thousands)
Substandard
Loans:
<S> <C> <C>
One- to four-family $12,137 6,790
Multi-family 4,491 14,566
Commercial real estate 737 879
Construction single family 144 418
Developed lots 1,056 1,114
Tract construction and land 589 1,058
Consumer loans 252 218
------- -------
Total 19,406 25,043
------- -------
REO:
One- to four-family 3,333 5,393
Multi-family 422 17,807
Commercial real estate 390 536
Developed lots 1,793 1,836
Tract construction and land 476 463
Consumer loans 16 43
------- -------
Total 6,430 26,078
------- -------
Real estate held for sale or investment 280 280
------- -------
Off-balance sheet LOCs 4,500 7,524
------- -------
Total substandard 30,616 58,925
------- -------
Doubtful
Multi-family 159 0
------- -------
Total classified assets $30,775 58,925
======= =======
</TABLE>
17
<PAGE>
IMPAIRED LOANS
A loan is considered impaired when, based on current information and events, it
is probable that a creditor will be unable to collect all amounts due according
to the contractual terms of the loan agreement. The Company measures impairment
based on (1) the present value of expected future cash flows discounted at the
loan's effective interest rate, (2) the observable market price of the impaired
loan or (3) the fair value of the collateral of a collateral-dependant loan. If
the value of the impaired loan is less than the recorded investment in the loan,
the Company recognizes an impairment by recording a valuation allowance with a
corresponding charge to the provision for losses on loans. The Company will
charge-off a portion of an impaired loan against the valuation allowance when it
is probable that there is no possibility of recovering the full amount of the
impaired loan. Loans are classified as in-substance foreclosed and included in
REO only when the Company has physical possession of the underlying collateral
but not legal title. The following table identifies the Company's total recorded
investment in impaired loans by type at the dates indicated, net of specific
valuation allowances:
<TABLE>
<CAPTION>
AT SEPTEMBER 30, AT DECEMBER 31,
1996 1995
---------------- ---------------
<S> <C> <C>
(Dollars in thousands)
NONACCRUAL LOANS:
Multi-family $ 766 $6,115
Commercial 0 223
Tract construction and land 163 581
RESTRUCTURED LOANS 10,359 6,888
OTHER IMPAIRED LOANS:
Multi-family 3,314 5,187
LOCs 4,500 0
Commercial 0 656
Tract construction and land 0 432
------- -------
$19,102 $20,082
======= =======
</TABLE>
REGULATORY CAPITAL
Under OTS capital regulations, the Bank must meet three capital tests. First,
the tangible capital requirement mandates that the Bank's equity less intangible
assets be at least 1.50% of adjusted total assets as defined in the capital
regulations. Second, the core capital requirement currently mandates that core
capital (tangible capital plus qualifying supervisory goodwill) be at least
3.00% of adjusted total assets as defined in the capital regulations. Third, the
risk-based capital requirement presently mandates that core capital plus
supplemental capital as defined by the OTS be at least 8.00% of risk-weighted
assets as prescribed in the capital regulations. The capital regulations assign
specific risk weightings to all assets and off-balance sheet items.
The Bank was in compliance with all current capital requirements in effect at
September 30, 1996, and had sufficient capital to be considered a "well
capitalized" institution under the OTS regulations.
18
<PAGE>
The following table presents information regarding the Bank's capital at
September 30, 1996 and December 31, 1995:
<TABLE>
<CAPTION>
At September 30, 1996 At December 31, 1995
------------------------------ ----------------------------
PERCENT OF PERCENT OF
AMOUNT ASSETS (1)(2) AMOUNT ASSETS (1)(2)
------------------------------ ----------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C>
TANGIBLE CAPITAL:
Capital level $64,617 7.55% $45,193 5.24%
Requirement 12,830 1.50 12,933 1.50
------- ---- ------- ----
Excess $51,787 6.05% $32,260 3.74%
======= ==== ======= ====
CORE CAPITAL:
Capital level $64,617 7.55% $45,193 5.24%
Requirement 25,660 3.00 25,866 3.00
------- ---- ------- ----
Excess $38,957 5.55% $19,327 2.24%
======= ==== ======= ====
RISK-BASED CAPITAL:
Capital level $72,889 11.16% 53,463 8.17%
Requirement 52,270 8.00 52,341 8.00
------- ---- ------- ----
Excess $20,619 3.16% 1,122 0.17%
======= ==== ======= ====
</TABLE>
_________
(1) Tangible capital levels are shown as a percentage of tangible assets and
core capital is shown as a percentage of total adjusted assets. Risk-based
capital levels are shown as a percentage of risk-weighted assets.
(2) Requirements under OTS regulations for an "adequately capitalized"
institution at September 30, 1996 and December 31, 1995 are 4.00% for
core and Tier 1 risk-based capital and 8.00% for risk-based capital.
19
<PAGE>
<TABLE>
<CAPTION>
SELECTED CONSOLIDATED RATIOS OF THE COMPANY
At or For the At or For the
Three Months Ended September 30, Nine Months Ended December 31,
---------------------------------- ---------------------------------
1996 1995 1996 1995
---------------------------------- ---------------------------------
PERFORMANCE RATIOS:
<S> <C> <C> <C> <C>
Return on average assets
(1)(2): (1.76)% (0.20)% (0.28)% (0.44)%
Return on average equity (2) (27.67) 3.74 (4.99) (8.61)
Equity to total assets 8.07 5.83 8.07 5.83
Interest rate spread during
the period (2) 3.31 2.77 3.37 2.57
Net interest margin 3.52 2.88 3.52 2.67
Average interest-earning
assets to average
interest-bearing liabilities 105.06 102.50 103.55 102.07
G&A to average assets (1)(2)(3) 2.51 2.26 2.41 2.42
Efficiency ratio (4) 70.46 71.87 65.65 76.43
AT AT
SEPTEMBER 30, DECEMBER 31,
1996 1995
------------- ------------
REGULATORY CAPITAL RATIOS:
Tangible and core capital 7.55% 5.24%
Risk-based capital 11.16 8.17
ASSET QUALITY RATIOS:
Nonaccrual loans to total loans 1.74% 2.45%
Nonperforming assets to total assets and LOCs (5) 2.44 4.53
Allowance for losses on loans and LOCs to total loans
and LOCs 2.06 2.73
Allowance for losses on loans, LOCs and real estate to
total assets and LOCs 2.02 3.28
General valuation allowance for losses on loans to
nonaccrual loans 73.32 56.53
General valuation allowance for losses on loans, LOCs
and real estate to nonperforming assets (5) 74.11 39.30
Classified assets to total assets and LOCs 3.17 6.11
General valuation allowance to classified assets 57.15 29.13
___________________
(1) LOCs have been added to average assets for purposes of this calculation.
(2) Ratios for the three and nine month periods have been annualized.
(3 For the three and nine months ended September 30, 1996 excludes SAIF special assessment of $5.4 million.
(4) G&A to net interest income plus total non-interest income. Excludes provisions for losses on loans and other non-interest
expense, and, for the three and nine months ended September 30, 1996 excludes SAIF special assessment of $5.4 million,
and, for the nine months ended September 30, 1995, excludes curtailment gain on retirement plan of $3.4 million.
(5) Excludes troubled debt restructures which are currently performing under their restructured terms.
</TABLE>
20
<PAGE>
SUBSEQUENT EVENTS
The Company has received approval from the OTS to acquire deposits from a local
institution of approximately $24.0 million of which would include checking
accounts, savings account and certificates of deposits. The deposits will be
merged into an existing branch facility. The deposit premium to be paid by the
Company in this transaction is expected to be 0.50%. The transaction is expected
to close in December, 1996.
21
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
The Bank is named as a defendant in two wrongful termination lawsuits
filed in the Superior Court of the State of California for San
Bernardino by two former officers whose positions were eliminated in a
May, 1995 reduction in force. The first lawsuit, which was filed by
Maurice A. Calderon on October 24, 1995, was resolved by settlement in
October of 1996. The amount paid in settlement was not material to the
overall operations of the Bank. The second lawsuit was filed by Ruth
Mariani on March 25, 1996, and alleges that the plaintiff had an oral
employment agreement with the Bank which was breached by the
plaintiff's termination, and that such termination was a result of age
discrimination. Ms. Mariani's suit seeks unspecified amounts of
damages, and the Bank has denied any liability and has engaged outside
counsel to defend it against the claims of Ms. Mariani.
The Bank is also named a defendant in a lawsuit filed on January 9,
1996 in the Superior Court of the State of California for San
Bernardino County by Developer's Insurance Company, a bonding company,
which alleges that the Bank must reimburse it for certain sums paid by
the bonding company to complete a construction project formerly
financed by the Bank. The lawsuit seeks an unspecified amount of
damages. The Bank disputes the claim, and has engaged outside counsel
to defend it.
The Bank is also a named defendant in a lawsuit filed on August 14,
1996 in the Superior Court of the State of California for San
Bernardino County by Thomas T. Klorer, a former senior officer of the
Bank who retired in August of 1995. Mr. Klorer alleges that his early
retirement was in fact a constructive discharge, and he asserts various
claims for breach of contract and tortious wrongdoing. The damage
demand filed by Mr. Klorer asserts $3,000,000 in damages, primarily in
the form of punitive damage claims. The Bank denies all liability, and
has engaged outside counsel to defend it against the claims. The Bank
has removed the action to the United States District Court for the
Central District of California.
The Company is not involved in any other litigation, other than routine
legal proceedings occurring in the ordinary course of business. All of
such legal proceedings in the aggregate are believed by management to
be immaterial to the Company.
Items 2, 3, 4 and 5 are not applicable.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) Exhibits - 11.1 - Computations of Earnings Per Share
Exhibit 27.1 - Financial Data Schedule
(b) Reports on Form 8-K - No reports on Form 8-K were filed by the
registrant during the three months ended September 30, 1996
22
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. 11.1 COMPUTATION OF EARNINGS PER SHARE
(DOLLARS IN THOUSANDS EXCEPT PER SHARE DATA)
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, 1996 SEPTEMBER 30, 1996
------------------ ------------------
<S> <C> <C>
Net loss $ (4,210) $ (1,996)
============ ============
Weighted average shares outstanding 5,448,730 4,551,536
Common stock equivalents due to 0 0
dilutive effect of stock options ------------ ------------
Total weighted average common shares
and equivalents outstanding 5,448,730 4,551,536
============ ============
Loss per share ($0.77) ($0.44)
============ ============
Total weighted average common shares
and equivalents outstanding 5,448,730 4,551,536
Additional dilutive shares using the
end of period market value versus
the average market value 0 0
------------ ------------
Total weighted average common shares
and equivalents outstanding for
fully diluted computation 5,448,730 4,551,536
============ ============
Loss per share ($0.77) ($0.44)
============ ============
</TABLE>
23
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: November 13, 1996 REDFED BANCORP INC.
By: /s/Anne Bacon
------------------------------
Anne Bacon
President and
Chief Executive Officer
By: /s/David C. Gray
------------------------------
David C. Gray
Treasurer and
Chief Financial Officer
24
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND THE CONSOLIDATED STATEMENT OF INCOME FILED AS
PART OF THE QUARTERLY REPORT ON FORM 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY
REFERENCE TO SUCH QUARTERLY REPORT ON FORM 10-Q.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> SEP-30-1996
<CASH> 18,838
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 23,924
<INVESTMENTS-CARRYING> 68,192
<INVESTMENTS-MARKET> 0<F1>
<LOANS> 712,460
<ALLOWANCE> 10,149
<TOTAL-ASSETS> 866,269
<DEPOSITS> 761,328
<SHORT-TERM> 10,000
<LIABILITIES-OTHER> 20,655
<LONG-TERM> 4,418
0
0
<COMMON> 74
<OTHER-SE> 69,794
<TOTAL-LIABILITIES-AND-EQUITY> 866,269
<INTEREST-LOAN> 14,205
<INTEREST-INVEST> 994
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 15,199
<INTEREST-DEPOSIT> 7,913
<INTEREST-EXPENSE> 8,100
<INTEREST-INCOME-NET> 7,099
<LOAN-LOSSES> 371
<SECURITIES-GAINS> 6
<EXPENSE-OTHER> 12,323
<INCOME-PRETAX> (4,210)
<INCOME-PRE-EXTRAORDINARY> (4,210)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (4,210)
<EPS-PRIMARY> (0.77)
<EPS-DILUTED> (0.77)
<YIELD-ACTUAL> 7.52
<LOANS-NON> 12,802
<LOANS-PAST> 0<F1>
<LOANS-TROUBLED> 10,359
<LOANS-PROBLEM> 19,102
<ALLOWANCE-OPEN> 11,242
<CHARGE-OFFS> 1,511
<RECOVERIES> 47
<ALLOWANCE-CLOSE> 10,149
<ALLOWANCE-DOMESTIC> 10,149
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0<F1>
<FN>
<F1>THIS INFORMATION IS NOT DISCLOSED IN THE FORM 10-Q
</FN>
</TABLE>
