<PAGE>
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
(Mark One) [ X ] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
--------------
OR
[ ]TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the transition period from ________________ to ____________________
Commission File Number 0-25204
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GATEWAY BANCORP, INC.
--------------------------------------------
(Exact name of small business issuer as specified in its charter)
KENTUCKY 61-1269067
-------------- (IRS Employer Identification No.)
(State or other jurisdiction of
incorporation or organization)
2717 LOUISA STREET, CATLETTSBURG, KENTUCKY 41129
--------------------------------------------------------------
(Address of principal executive offices)
(Zip Code)
(606) 739-4126
-----------------------------------------------------
(Issuer's telephone number, including area code)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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
--- ---
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date:
As of May 8, 1997, there were issued and outstanding 1,075,754 shares of
the Registrant's Common Stock.
Transitional Small Business Disclosure Format (check one):
YES NO X
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GATEWAY BANCORP, INC. AND SUBSIDIARY
TABLE OF CONTENTS
Part I. Financial Information
Item 1. Consolidated Financial Statements
Consolidated Balance Sheets (as of March 31, 1997
(unaudited) and December 31, 1996)............................. 3
Consolidated Statements of Income (for the three
months ended March 31, 1997 and 1996 (unaudited)).............. 4
Consolidated Statements of Changes in
Stockholders' Equity (for the three months
ended March 31, 1997 (unaudited) and the year
ended December 31, 1996)....................................... 5
Consolidated Statements of Cash Flows (for the three
months ended March 31, 1997 and 1996 (unaudited)).............. 6
Notes to Consolidated Financial Statements..................... 7-9
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations............................. 10-12
Part II. Other Information
Item 1. Legal Proceedings............................................... 13
Item 2. Changes in Securities........................................... 13
Item 3. Defaults Upon Senior Securities................................. 13
Item 4. Submission of Matters to a Vote of Security Holders............. 13
Item 5. Other Information............................................... 13
Item 6. Exhibits and Reports on Form 8-K................................ 13
Signatures............................................................... 14
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GATEWAY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
ASSETS 1997 1996
------ ------------- -------------
(UNAUDITED)
<S> <C> <C>
CASH AND CASH EQUIVALENTS...................................... $ 3,219,736 $ 1,348,415
INVESTMENT SECURITIES HELD TO MATURITY......................... 15,339,051 17,523,931
LOANS RECEIVABLE, net.......................................... 20,009,261 19,075,792
MORTGAGE-BACKED SECURITIES HELD TO MATURITY.................... 26,542,019 27,663,022
ACCRUED INTEREST RECEIVABLE.................................... 304,143 430,055
OFFICE PROPERTIES AND EQUIPMENT................................ 353,899 358,497
INCOME TAXES REFUNDABLE........................................ -- 15,323
OTHER ASSETS................................................... 26,827 23,902
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$ 65,794,936 $ 66,438,937
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LIABILITIES AND STOCKHOLDERS' EQUITY
DEPOSITS....................................................... $ 48,358,410 $ 49,194,746
INCOME TAXES PAYABLE:
Current....................................................... 5,793 --
Deferred...................................................... 142,362 111,808
ACCRUED INTEREST PAYABLE....................................... 34,266 32,864
OTHER LIABILITIES.............................................. 88,544 70,866
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Total liabilities........................................... 48,629,375 49,410,284
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STOCKHOLDERS' EQUITY:
Common stock................................................... 10,758 10,758
Employee benefit plans......................................... (882,637) (918,319)
Additional paid-in capital..................................... 7,941,886 7,930,355
Retained earnings-substantially restricted..................... 10,095,554 10,005,859
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Total stockholders' equity.................................. 17,165,561 17,028,653
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$ 65,794,936 $ 66,438,937
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</TABLE>
3
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GATEWAY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED
------------------------
<S> <C> <C>
MARCH 31, MARCH 31,
1997 1996
----------- -----------
(UNAUDITED) (UNAUDITED)
INTEREST INCOME:
Loans receivable-
Mortgage loans.................................................... $ 355,102 $ 319,332
Other loans....................................................... 9,017 11,759
Investment securities.............................................. 251,036 299,953
Mortgage-backed and related securities............................. 462,224 466,303
Other interest-earning assets...................................... 37,268 86,766
----------- -----------
Total interest income........................................... 1,114,647 1,184,113
----------- -----------
INTEREST EXPENSE:
Passbook savings.................................................. 24,743 70,630
Certificates of deposit........................................... 559,161 624,047
FHLB advances..................................................... 5,729 --
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Total interest expense.......................................... 589,633 694,677
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Net interest income............................................. 525,014 489,436
PROVISION FOR LOAN LOSSES.......................................... -- --
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Net interest income after provision for loan losses............ 525,014 489,436
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NON-INTEREST INCOME................................................ 4,369 6,177
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NON-INTEREST EXPENSE:
Compensation and benefits......................................... 108,635 95,786
Occupancy and equipment........................................... 8,746 10,273
SAIF deposit insurance premium.................................... 6,616 30,455
Professional services............................................. 43,614 35,663
Other taxes....................................................... 14,310 13,620
Other............................................................. 57,534 55,962
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Total non-interest expense...................................... 239,455 241,759
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INCOME BEFORE PROVISION FOR INCOME TAXES........................... 289,928 253,854
PROVISION FOR INCOME TAXES......................................... 96,669 83,655
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NET INCOME......................................................... $ 193,259 $ 170,199
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NET INCOME PER SHARE............................................... $ .19 $ .15
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</TABLE>
4
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GATEWAY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
<TABLE>
<CAPTION>
RETAINED
EMPLOYEE ADDITIONAL EARNINGS- TOTAL
COMMON BENEFIT PAID-IN SUBSTANTIALLY STOCKHOLDERS'
STOCK PLANS CAPITAL RESTRICTED EQUITY
------------- ------------ ------------- ------------- -------------
<S> <C> <C> <C> <C> <C>
BALANCES, December 31, 1995............ $ 11,970 $ (1,098,907) $ 9,502,671 $ 10,062,529 $ 18,478,263
NET INCOME, year ended
December 31, 1996...................... -- -- -- 529,582 529,582
DIVIDENDS DECLARED, $.40 per share -- -- (432,777) -- (432,777)
ESOP SHARES RELEASED, 6,461 shares...... -- 64,610 (108) -- 64,502
RRP STOCK AMORTIZED, 7,998 shares....... -- 115,978 -- -- 115,978
PURCHASE OF 121,216
TREASURY SHARES......................... (1,212) -- (1,139,431) (586,252) (1,726,895)
------------- ------------ ------------- ------------- -----------
BALANCES, December 31, 1996............. 10,758 (918,319) 7,930,355 10,005,859 17,028,653
NET INCOME, three months ended March 31,
1997 (unaudited)...................... -- -- -- 193,259 193,259
DIVIDENDS DECLARED, $.10 per share
(unaudited)........................... -- -- 5,000 (102,576) (97,576)
ESOP SHARES RELEASED, 1,457 shares
(unaudited)........................... -- 14,570 6,531 (988) 20,113
RRP STOCK AMORTIZED, 1,456 shares
(unaudited)........................... -- 21,112 -- -- 21,112
------------- ------------ ------------- ------------- -----------
BALANCES, MARCH 31, 1997
(unaudited)............................. $10,758 $(882,637) $ 7,941,886 $10,095,554 $ 17,165,561
------------ ------------- ------------- -------------- --------------
</TABLE>
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GATEWAY BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
--------------------------
<S> <C> <C>
MARCH 31, MARCH 31,
1997 1996
OPERATING ACTIVITIES:
----------- -------------
(UNAUDITED) (UNAUDITED)
Net income....................................................... $ 193,259 $ 170,199
Adjustments to reconcile net income to net cash provided by
operating activities-Provision for depreciation................ 5,086 5,142
Amortization and accretion....................................... (14,654) (14,800)
Provision (credit) for deferred income taxes..................... 30,554 (3,344)
ESOP compensation................................................ 20,113 3,000
RRP compensation................................................. 21,112 22,736
FHLB stock dividends............................................. (13,700) (12,900)
Net change in--
Accrued interest receivable..................................... 125,912 185,949
Other assets.................................................... (2,924) (43,625)
Income taxes refundable......................................... 15,323 --
Accrued interest payable........................................ 1,402 4,677
Other liabilities............................................... 17,677 40,313
Federal income taxes payable.................................... 5,793 (17,700)
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Net cash provided by operating activities..................... 404,953 339,647
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INVESTING ACTIVITIES:
Net increase in loans........................................... (933,469) (432,049)
Purchases of investment securities.............................. -- (10,541,057)
Maturities of investment securities............................. 2,200,000 8,425,000
Purchases of mortgage-backed securities......................... -- (2,408,740)
Principal collected on mortgage-backed securities............... 1,134,237 1,468,675
Purchases of office properties and equipment.................... (488) (11,468)
----------- -------------
Net cash provided by (used for) investing activities.......... 2,400,280 (3,499,639)
----------- -------------
FINANCING ACTIVITIES:
Net increase in savings accounts................................ 30,000 43,110
Net increase (decrease) in certificates of deposit.............. (866,336) 1,124,780
Advances from the FHLB.......................................... 1,250,000 --
Repayment of FHLB advances...................................... (1,250,000) --
Purchase of RRP stock
Dividends paid.................................................. (97,576) (1,481,417)
Purchase of common stock........................................ -- (309,475)
----------- -------------
Net cash used for financing activities........................ (933,912) (623,002)
----------- -------------
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS................. 1,871,321 (3,782,994)
CASH AND CASH EQUIVALENTS, beginning of period.................. 1,348,415 6,542,257
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CASH AND CASH EQUIVALENTS, end of period......................... $ 3,219,736 $ 2,759,263
----------- -------------
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SUPPLEMENTAL DISCLOSURES OF
CASH FLOW INFORMATION:
Income taxes paid............................................... $ 45,000 $ 28,000
----------- --------------
----------- --------------
Interest paid................................................... $ 588,231 $ 690,000
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</TABLE>
6
<PAGE>
GATEWAY BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BASIS OF FINANCIAL STATEMENT PRESENTATION
Gateway Bancorp, Inc. (the "Company") was incorporated under Kentucky law
in October 1994 by Catlettsburg Federal Savings and Loan Association in
connection with its conversion (the "Conversion") to a federally-chartered
stock savings bank known as "Catlettsburg Federal Savings Bank" (the "Bank").
The Conversion was completed on January 18, 1995. See Note 2 herein.
The accompanying consolidated financial statements were prepared in
accordance with instructions to Form 10-QSB, and therefore, do not include
information or footnotes necessary for a complete presentation of financial
position, results of operations and cash flows in conformity with generally
accepted accounting principles. However, all normal, recurring adjustments
which, in the opinion of management, are necessary for a fair presentation of
the financial statements, have been included. These financial statements
should be read in conjunction with the audited financial statements and the
notes thereto for the year ended December 31, 1996. The results for the three
months ended March 31, 1997 are not necessarily indicative of the results
that may be expected for the year ended December 31, 1997.
BUSINESS
The Company's principal business is conducted through the Bank which
conducts business from its main office located in Catlettsburg, Kentucky, and
one full-service branch located in Grayson, Kentucky. The Bank's deposits are
insured by the Savings Association Insurance Fund ("SAIF") to the maximum
extent permitted by law. The Bank is subject to examination and comprehensive
regulation by the Office of Thrift Supervision ("OTS"), which is the Bank's
chartering authority and primary regulator. The Bank is also subject to
regulation by the Federal Deposit Insurance Corporation ("FDIC"), as the
administrator of the SAIF, and to certain reserve requirements established by
the Federal Reserve Board ("FRB"). The Bank is a member of the Federal Home
Loan Bank of Cincinnati ("FHLB").
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include the accounts of the
Company, the Bank, and the Bank's one wholly-owned subsidiary. All
significant intercompany transactions have been eliminated in consolidation.
Additionally, certain reclassifications may have been made in order to
conform with the current period's presentation. The accompanying consolidated
financial statements have been prepared on the accrual basis.
7
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(2) CONVERSION TRANSACTION
On January 18, 1995, (i) the Bank converted from a federally-chartered
mutual savings and loan association to a federally-chartered stock savings
bank and (ii) the Company acquired all of the common stock of the Bank in the
Conversion. As part of the Conversion, the Company issued 1,244,570 shares of
its Common Stock. Total proceeds of $12,445,700 were reduced by $500,000 for
shares to be purchased by the Employee Stock Ownership Plan ("ESOP") and by
approximately $737,200 for conversion expenses. As a result of the
Conversion, the Company contributed approximately $5,900,000 of additional
capital to the Bank and retained the balance of the proceeds.
(3) NET INCOME PER SHARE
Net income per share for the three months ended March 31, 1997 and 1996
was computed using the weighted average (1,040,748 and 1,154,755,
respectively) number of shares outstanding. Shares which have not been
committed to be released to the ESOP are not considered to be outstanding for
purposes of calculating net income per share.
(4) DIVIDENDS PER SHARE
For purposes of recording dividends, dividends paid on unallocated ESOP
shares are not considered dividends for financial reporting purposes, and are
used for debt service. There were 15,664 and 10,764 shares released to the
ESOP at March 31, 1997 and March 31, 1996, respectively. Dividends on
allocated shares used for debt service are charged to retained earnings and
paid by releasing additional shares to the ESOP with the same corresponding
value.
(5) PURCHASE OF COMMON STOCK
Through March 31, 1997, the Company had purchased 168,816 shares of its
outstanding common stock on the open market at an aggregate cost of
$2,416,160. In accordance with the 1988 amendment to the Kentucky Business
Corporation Act, the purchase of these shares has been recorded as a purchase
of common stock shares, which are authorized but unissued. The shares are
available for reissuance.
(6) EMPLOYEE STOCK OWNERSHIP PLAN
The Company has established the ESOP for employees of the Company and the
Bank effective upon the Conversion. Full-time employees of the Company and
the Bank who have been credited with at least 1,000 hours of service during a
twelve month period and who have attained age 21 are eligible to participate
in the ESOP. The Company loaned the ESOP $500,000 for the initial purchase of
the ESOP shares. The loan is due and payable in forty (40) equal quarterly
installments of $12,500 beginning March 31, 1995, plus interest at the rate
of 8.75% per annum. The Company will make scheduled discretionary cash
contributions to the ESOP sufficient to amortize the principal and interest
on the loan. The Company accounts for its ESOP in accordance with Statement
of Position 93-6, "Employer's Accounting For Employee Stock Ownership Plans."
As shares are committed to be released to participants, the Company reports
compensation expense equal to the average market price of the shares during
the period. ESOP compensation expense recorded during the three months ended
March 31, 1997 and 1996 was $20,113 and $3,000, respectively.
8
<PAGE>
(7) RECOGNITION AND RETENTION PLAN AND TRUST
The Company has established a Recognition and Retention Plan and Trust
("RRP"). As of March 31, 1997, the Company had purchased 49,782 shares in the
open market to fund the RRP at an aggregate cost of $721,839. As of March 31,
1997, 32,352 of the shares available under the RRP have been awarded to the
Company's Board of Directors and the Bank's executive officers and other key
employees, subject to vesting and other provisions of the RRP.
At March 31, 1997, the deferred cost of unearned RRP shares totaled
$539,277 and is recorded as a charge against stockholders' equity.
Compensation expense will be recognized ratably over the five year vesting
period only for those shares awarded. The Company recorded compensation
expense related to the RRP of $21,120 and $22,736 for the three months ended
March 31, 1997 and 1996, respectively.
(8) STOCK OPTION PLAN
The Company established a Stock Option Plan (the "Plan") in 1995. A total
of 124,457 shares may be issued pursuant to the Plan. Through March 31, 1997
an aggregate of 74,667 stock options have been granted to the Company's Board
of Directors, and the Bank's executive officers and other key employees.
These options are subject to vesting provisions as well as other provisions
of the Plan. Such options were not dilutive during the three months ended
March 31, 1997 and 1996. No options have been exercised as of March 31, 1997.
No compensation expense has been recognized in these interim financial
statements for the value of stock options earned as permitted by Statement of
Financial Accounting Standards No. 123, Accounting for Stock Based
Compensation.
(9) SAIF INSURANCE ASSESSMENT
Beginning January 1, 1997, the Bank's SAIF assessments were reduced to
$.064 for every $100 of insured deposits, from the prior level of $.23 per
$100 of insured deposits. Such reduction reflects the consequences of the
1996 legislation which eliminated the deposit insurance premium differential
between SAIF-insured institutions and Bank Insurance Fund-insured
institutions.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FINANCIAL CONDITION
ASSETS. Total assets decreased $.6 million, or .9%, from $66.4 million
at December 31, 1996 to $65.8 million at March 31, 1997. The decrease
consisted primarily of decreases in investment securities and mortgage-backed
securities of $2.2 million and $1.2 million, respectively, partially offset
by increases in cash and cash equivalents and loans receivable of $1.9
million and $.9 million, respectively.
CASH AND CASH EQUIVALENTS. The $1.9 million increase in cash and cash
equivalents is the result of management's decision to retain the proceeds
from maturing investment securities and mortgage-backed securities in order
to increase liquidity levels, and to have funds available to fund continuing
loan demand.
INVESTMENT SECURITIES. The Company's investment portfolio declined $2.2
million, or 12.6%, from $17.5 million at December 31, 1996 to $15.3 million
at March 31, 1997. There were no purchases of investments during the three
month period ending March 31, 1997. Proceeds from maturing investment
securities of approximately $2.2 million were used to fund loan demand,
increase interest-bearing cash balances, and payout maturing savings deposits.
LOANS RECEIVABLE. Loans receivable increased $.9 million, or 4.7%, from
$19.1 million at December 31, 1996 to $20.0 million at March 31, 1997. The
majority of the increase was the result of single family dwelling loan
originations.
MORTGAGE-BACKED SECURITIES. Mortgage-backed securities decreased $1.2
million, or 4.3%, from $27.7 million at December 31, 1996 to $26.5 million at
March 31, 1997. There were no purchases of mortgage-backed securities during
the three month period. Principal repayments of approximately $1.2 million
were used to fund loan demand, increase interest-bearing cash balances, and
payout maturing savings deposits during the period.
DEPOSITS. Deposits decreased $.8 million, or 1.6%, from $49.2 million at
December 31, 1996 to $48.4 million at March 31, 1997. The Company continues
to offer competitive interest rates on deposits, and has ample liquidity and
borrowing capacity from the FHLB sufficient to meet its commitments.
STOCKHOLDERS' EQUITY. Stockholders' equity increased $.2 million, or
1.2%, from $17.0 million at December 31, 1996 to $17.2 million at March 31,
1997. The increase was largely due to the addition of net income for the
period, partially offset by the payment of a $.10 per share, regular
quarterly dividend.
RESULTS OF OPERATIONS--THREE MONTHS ENDED MARCH 31, 1997 AS COMPARED TO
THREE MONTHS ENDED MARCH 31, 1996
NET INCOME. Net income increased $23,060, or 13.5%, from $170,199 ($.15
per share) for the three months ended March 31, 1996 to $193,259 ($.19 per
share) for the three months ended March 31, 1997. The increase resulted from
an increase in net interest income of $35,578 and a decrease in non-interest
expense of $2,304, offset by a reduction in non-interest income of $1,808 and
an increase in the provision for income taxes of $13,014.
10
<PAGE>
NET INTEREST INCOME. The $35,578, or 7.3%, increase in net interest
income, from $489,436 for the three months ended March 31, 1996 to $525,014
for the comparable 1997 period, resulted from a $105,044 reduction in
interest expense which was offset by a $69,466 decline in interest income.
INTEREST INCOME. The $69,466, or 5.9%, decline in interest income, from
$1,184,113 for the 1996 quarter to $1,114,647 for the 1997 quarter, resulted
primarily from a decline in the level of average interest-earning assets from
$51.2 million to $48.8 million. Mortgage loan interest increased by $35,770,
but was offset by decreases in all other categories of interest-earning
assets. Interest income from investment securities declined $48,917, or
16.3%, while interest income from interest-bearing cash balances with other
institutions declined $49,498, or 57.0%. Such declines are consistent with
management's plan to increase the volume of the loan portfolio, and to fund
such increase from lower yielding investment securities.
INTEREST EXPENSE. The $105,044, or 15.1%, decrease in interest expense,
from $694,677 for the three months ended March 31, 1996 to $589,633 for the
three months ended March 31, 1997, resulted from a decline in the average
balances of interest-bearing liabilities from approximately $51.2 million to
$48.8 million. During the three months ended March 31, 1997, the Bank
borrowed, and subsequently repaid, $1,250,000 from the FHLB to meet
short-term liquidity needs.
PROVISION FOR LOAN LOSSES. No provision for loan losses was deemed
necessary during the 1997 or 1996 quarter, reflecting the continuing low
level of past due loans and adversely classified assets during both periods.
NON-INTEREST INCOME. For the three months ended March 31, 1997 as
compared to March 31, 1996, non-interest income decreased $1,808, to $4,369,
the result of lower credit life insurance premiums earned due to decreased
loan closings during the 1997 quarter as compared to 1996. The Company
historically has not generated significant levels of non-interest income.
NON-INTEREST EXPENSE. Non-interest expense remained fairly constant,
totaling $239,455 for the 1997 quarter as compared to $241,759 for the 1996
quarter. This was accomplished primarily due to a reduction in SAIF deposit
insurance premiums of $23,839, which helped offset increases in compensation
and benefits expenses of $12,849 and professional services expenses of
$7,951. The reduction in the SAIF insurance premiums reflects the
consequences of the 1996 legislation which lowered the Bank's deposit
insurance assessment from $.23 per hundred of insured deposits to $.064 per
hundred. The increase in compensation and benefits reflects increased costs
associated with the Company's employee benefit plans, while professional
services expenses increased due to the increased costs associated with
operating the Company as a public company.
PROVISION FOR INCOME TAXES. The provision for income taxes increased
$13,014, or 15.6%, from $83,655 for the 1996 period to $96,669 for the 1997
comparable quarter, due to increased pretax income. The Company's effective
tax rate was 33.4% and 33.0% for the 1997 and 1996 quarter, respectively.
11
<PAGE>
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity, represented by cash and cash equivalents, is a
product of its operating, investing and financing activities. The Company's
primary sources of funds are deposits, amortization, prepayments and
maturities of outstanding loans and mortgage-backed securities, maturities of
investment securities and other short-term investments and funds provided
from operations. While scheduled payments from the amortization of loans and
mortgage-backed securities and maturing investment securities and short-term
investments are relatively predictable sources of funds, deposit flows and
loan prepayments are greatly influenced by general interest rates, economic
conditions and competition. In addition, the Bank invests excess funds in
overnight deposits and other short-term interest-earning assets which provide
liquidity to meet lending requirements. At March 31, 1997, the Bank had no
outstanding advances from the Federal Home Loan Bank of Cincinnati or other
borrowings. During the three months ended March 31, 1997, the Bank borrowed,
and subsequently repaid, $1,250,000 from the FHLB to meet short-term
liquidity needs.
Liquidity management is both a daily and long-term function of business
management. Excess liquidity is generally invested in short-term investments
such as overnight deposits. On a longer-term basis, the Bank maintains a
strategy of investing in various investment and mortgage-backed securities
and residential mortgage loans. The Bank uses its sources of funds primarily
to meet its ongoing commitments, to pay maturing savings certificates and
savings withdrawals, to fund loan commitments and to maintain a portfolio of
mortgage-backed and investment securities. At March 31, 1997, the total
approved loan commitments outstanding amounted to $273,500. At the same date,
there were no commitments under unused lines of credit. Certificates of
deposit scheduled to mature in one year or less at March 31, 1997, totaled
$20.3 million. Management believes that a significant portion of maturing
deposits will remain with the Bank. The Bank anticipates that with interest
rates at higher levels than have been experienced in recent months, it will
continue to have sufficient funds to meet its current commitments. At March
31, 1997, the Bank had a liquidity ratio of 11.2%, which exceeded the
required minimum liquid asset ratio of 5.0%.
At March 31, 1997, the Bank had regulatory capital which was well in
excess of applicable limits. At March 31, 1997, the Bank was required to
maintain tangible capital of 1.5% of adjusted total assets, core capital of
3.0% of adjusted total assets and risk-based capital of 8.0% of adjusted
risk-weighted assets. At March 31, 1997, the Bank's tangible capital was
$15.1 million or 23.6% of adjusted total assets, core capital was $15.1
million or 23.6% of adjusted total assets and risk-based capital was $15.2
million or 84.0% of adjusted risk-weighted assets, exceeding the requirements
by $14.1 million, $13.2 million and $13.7 million, respectively.
12
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PART II--OTHER INFORMATION
Item 1. Legal Proceedings
There are no material legal proceedings to which the Registrant
or any of its subsidiaries is a part, or to which any of their
property is subject.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults 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) Exhibits:
No. Description Page
----
27 Financial Data Schedule E-1
b) No Form 8-K reports were filed during the quarter.
13
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned, thereunto duly authorized.
GATEWAY BANCORP, INC.
DATE: MAY 8, 1997 BY: / S/ REBECCA R. JACKSON
--------------- -------------------------------------
REBECCA R. JACKSON, PRESIDENT AND
CHIEF EXECUTIVE OFFICER
DATE: MAY 8, 1997 BY: /S/ PAMELA HOWARD
--------------- --------------------------------------
PAMELA HOWARD, ASSISTANT SECRETARY/
TREASURER (CHIEF ACCOUNTING OFFICER)
14
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from Gateway
Bancorp Inc's balance sheet as of March 31, 1997 and the related statement of
income for the three months the ended and is qualified in its entirety by
reference to such financial statements.
</LEGEND>
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 347,386
<INT-BEARING-DEPOSITS> 2,872,350
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 0
<INVESTMENTS-CARRYING> 41,881,070
<INVESTMENTS-MARKET> 41,386,850
<LOANS> 20,090,019
<ALLOWANCE> 80,758
<TOTAL-ASSETS> 65,794,931
<DEPOSITS> 48,358,410
<SHORT-TERM> 0
<LIABILITIES-OTHER> 270,965
<LONG-TERM> 0
0
0
<COMMON> 10,758
<OTHER-SE> 17,154,803
<TOTAL-LIABILITIES-AND-EQUITY> 65,794,931
<INTEREST-LOAN> 364,119
<INTEREST-INVEST> 713,260
<INTEREST-OTHER> 37,268
<INTEREST-TOTAL> 1,114,647
<INTEREST-DEPOSIT> 583,904
<INTEREST-EXPENSE> 589,633
<INTEREST-INCOME-NET> 525,014
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 239,455
<INCOME-PRETAX> 289,928
<INCOME-PRE-EXTRAORDINARY> 289,928
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 193,259
<EPS-PRIMARY> .19
<EPS-DILUTED> .19
<YIELD-ACTUAL> 2.03
<LOANS-NON> 393,527
<LOANS-PAST> 117,969
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 80,758
<CHARGE-OFFS> 0
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 80,758
<ALLOWANCE-DOMESTIC> 80,758
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
