UNITED STATES
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
For the quarterly period ended December 31, 1998
[ ] 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 0-25666
BANK WEST FINANCIAL CORPORATION
(Exact name of registrant as specified in its charter)
Michigan 38-3203447
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2185 Three Mile Road, N.W., Grand Rapids, Michigan 49544
(Address of principal executive offices)
Registrant's telephone number, including area code: (616) 785-3400
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 [ ]
Shares of common stock, par value $.01 per share, outstanding as of February 12,
1999: 2,623,629.
<PAGE>
BANK WEST FINANCIAL CORPORATION
FORM 10-Q
Quarter Ended December 31, 1998
PART I - FINANCIAL INFORMATION
Interim Financial Information required by Rule 10-01 of Regulation S-X and Item
303 of Regulation S-K is included in this Form 10-Q as referenced below:
ITEM 1 - Financial Statements
Consolidated Balance Sheets -
December 31, 1998 (unaudited) and June 30, 1998
Consolidated Statements of Income (unaudited) -
For The Three and Six Months Ended December 31, 1998 and 1997
Consolidated Statements of Comprehensive Income (unaudited) -
For The Six Months Ended December 31, 1998 and 1997
Consolidated Statements of Cash Flows (unaudited) -
For The Six Months Ended December 31, 1998 and 1997
Notes to Consolidated Financial Statements
ITEM 2 - Management's Discussion and Analysis of Financial Condition and Results
of Operations
ITEM 3 - Quantitative and Qualitative Disclosures About Market Risk Not
applicable since the registrant is a small business issuer.
PART II - OTHER INFORMATION
ITEM 1 - Legal Proceedings
ITEM 2 - Changes in Securities and Use of Proceeds
ITEM 3 - Defaults upon Senior Securities
ITEM 4 - Submission of Matters to a Vote of Security Holders
ITEM 5 - Other Information
ITEM 6 - Exhibits and Reports on Form 8-K
SIGNATURES
<PAGE>
<TABLE>
<CAPTION>
BANK WEST FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
December 31, June 30,
1998 1998
------------- -------------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and due from banks $ 3,479,918 $ 2,408,476
Interest-bearing deposits 3,867,868 1,797,063
------------- -------------
Total cash and cash equivalents 7,347,786 4,205,539
Securities available for sale (Note 5) 34,119,616 32,167,697
Securities held to maturity
(fair value: $12,921,760 at December 31 , 1998, 13,127,994 11,084,361
$11,079,178 at June 30, 1998) (Note 5)
Loans held for sale (Note 6) 6,870,562 8,156,572
Loans, net (Note 7) 132,894,542 118,905,611
Federal Home Loan Bank stock 2,650,000 2,100,000
Premises and equipment 3,130,255 3,164,905
Accrued interest receivable 896,010 879,082
Mortgage servicing rights 274,287 280,869
Real estate owned 0 192,080
Other assets 354,542 332,136
------------- -------------
Total assets $ 201,665,594 $ 181,468,852
============= =============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits $ 126,418,557 $ 119,979,379
Federal Home Loan Bank borrowings 51,121,053 37,000,000
Accrued interest payable 233,783 253,037
Advance payments by borrowers
for taxes and insurance 264,578 512,538
Deferred federal income tax 213,438 335,182
Other liabilities 331,529 114,029
------------- -------------
Total liabilities 178,582,938 158,194,165
------------- -------------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BANK WEST FINANCIAL CORPORATION
CONSOLIDATED BALANCE SHEETS
(continued)
December 31, June 30,
1998 1998
------------- -------------
(Unaudited)
<S> <C> <C>
Stockholders' Equity:
Common stock, $.01 par value; 10,000,000 shares authorized;
2,623,629 issued at December 31, 1998
and at June 30, 1998 26,237 26,237
Additional paid-in-capital 11,605,179 11,551,136
Retained earnings, substantially restricted 12,777,283 12,928,028
Net unrealized gain (loss) on securities available for
sale, net of tax benefit of $(121,744) at
December 31, 1998 and tax of $2,644 at June 30, 1998 (231,197) 5,132
Unallocated ESOP shares (Note 3) (810,048) (874,848)
Unearned Management Recognition Plan shares (Note 4) (284,798) (360,998)
------------- -------------
Total stockholders' equity 23,082,656 23,274,687
------------- -------------
Total liabilities and stockholders' equity $ 201,665,594 $ 181,468,852
============= =============
</TABLE>
See accompanying notes to consoldiated financial statements.
<PAGE>
<TABLE>
<CAPTION>
BANK WEST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
Three Months Ended Six Months Ended
December 31, December 31,
1998 1997 1998 1997
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Interest and dividend income
Loans $ 2,661,927 $ 2,441,005 $ 5,254,972 $4,817,396
Securities 668,567 598,220 1,301,501 1,128,636
Other interest-bearing deposits 46,463 35,962 89,584 64,158
Dividends on FHLB stock 49,195 38,532 92,271 75,069
----------- ----------- ----------- ----------
3,426,152 3,113,719 6,738,328 6,085,259
----------- ----------- ----------- ----------
Interest expense
Deposits 1,490,137 1,394,933 2,989,827 2,730,493
FHLB borrowings 623,044 506,366 1,157,641 996,438
----------- ----------- ----------- ----------
2,113,181 1,901,299 4,147,468 3,726,931
----------- ----------- ----------- ----------
Net interest income 1,312,971 1,212,420 2,590,860 2,358,328
Provision for loan losses 30,000 18,000 57,000 36,000
----------- ----------- ----------- ----------
Net interest income after provision
for loan losses 1,282,971 1,194,420 2,533,860 2,322,328
----------- ----------- ----------- ----------
Other income
Gain (loss) on sale of securities (4,509) 5,490 (282,572) 12,595
Gain (loss) on trading securities -- (390,742) -- 169,302
Gain on sale of loans 236,119 158,759 395,184 318,612
Fees and service charges 60,273 78,903 127,852 168,544
Miscellaneous income 442 4,113 6,698 5,616
----------- ----------- ----------- ----------
292,325 (143,477) 247,162 674,669
----------- ----------- ----------- ----------
Other expenses
Compensation and benefits 710,131 684,987 1,439,662 1,343,541
Professional fees 223,777 84,165 280,269 162,268
Federal Deposit Insurance 17,014 15,943 34,517 31,480
Occupancy 90,296 73,672 175,695 137,324
Furniture, fixtures and equipment 48,349 35,016 91,206 68,762
Data processing 64,357 49,291 127,887 92,628
Advertising 27,335 29,926 53,737 55,616
State taxes 22,500 18,500 40,000 47,978
Miscellaneous 157,725 150,673 308,441 251,969
----------- ----------- ----------- ----------
1,361,484 1,142,173 2,551,414 2,191,566
----------- ----------- ----------- ----------
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
BANK WEST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(continued)
Three Months Ended Six Months Ended
December 31, December 31,
1998 1997 1998 1997
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Income (loss) before federal income tax expense 213,812 (91,230) 229,608 805,431
Federal income tax expense (benefit) 79,250 (31,040) 88,210 273,260
----------- ----------- ----------- ----------
Net income (loss) $ 134,562 ($ 60,190) $ 141,398 $ 532,171
=========== =========== =========== ==========
Earnings (loss) per share (Note 2) $ .06 $ (.03) $ .06 $ .23
=========== =========== =========== ==========
Earnings (loss) per share assuming dilution (Note 2) $ .06 $ (.02) $ .06 $ .22
=========== =========== =========== ==========
Dividends per share $ .06 $ .05 $ .12 $ .10
=========== =========== =========== ==========
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
BANK WEST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(Unaudited)
Six Months Ended
December 31,
1998 1997
--------- --------
<S> <C> <C>
Net Income $ 141,398 $532,171
Other comprehensive income, net of tax:
Unrealized gains (losses) on securities available
for sale (236,329) 136,119
--------- --------
Comprehensive income ($ 94,931) $668,290
========= ========
</TABLE>
See accompanying notes to consolidated fianancial statements.
<PAGE>
<TABLE>
<CAPTION>
BANK WEST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
Six Months Ended
December 31,
1998 1997
------------ ------------
<S> <C> <C>
Cash flows from operating activities
Net income $ 141,398 $ 532,171
Adjustments to reconcile net income to
net cash from operating activities
Origination and purchase of loans for sale (21,431,201) (21,362,888)
Proceeds from sale of mortgage loans 23,112,395 21,536,769
Purchase of trading securities -- (2,230,635)
Proceeds from sale of trading securities -- 3,081,185
Net (gain) loss on sales of:
Loans (395,184) (318,612)
Securities 282,572 (181,897)
Real estate owned 2,501 (2,241)
Depreciation 123,405 98,228
Amortization of premiums, net 156,647 22,554
ESOP expense 118,843 174,909
MRP expense 76,200 76,200
Provision for loan losses 57,000 36,000
Change in:
Deferred loan fees (52,312) (94,824)
Other assets (32,750) (539,913)
Other liabilities (49,716) (421,945)
------------ ------------
Net cash from operating activities 2,109,798 405,061
------------ ------------
Cash flows from investing activities
Purchases of securities available for sale (21,087,786) (15,191,249)
Purchases of securities held to maturity (2,074,375) (2,879,260)
Proceeds from sale of securities 10,691,302 10,575,313
Proceeds from maturities, calls and principal
payments of securities available for sale 7,678,015 1,335,121
Loan originations, net of repayments (10,168,219) (3,103,222)
Loans purchased for portfolio (3,825,400) (1,644,475)
Purchase of FHLB stock (550,000) (400,000)
Proceeds from sale of real estate owned 189,579 22,153
Property and equipment expenditures (88,755) (141,152)
------------ ------------
Net cash from investing activities (19,235,639) (11,426,771)
------------ ------------
Cash flows from financing activities
Proceeds from FHLB borrowings 22,121,053 23,000,000
Repayment of FHLB borrowings (8,000,000) (16,000,000)
Increase in deposits 6,439,178 6,686,078
Repurchase of common stock -- (105,937)
Dividends paid on common stock (292,143) (245,529)
------------ ------------
Net cash from financing activities 20,268,088 13,334,612
------------ ------------
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<TABLE>
<CAPTION>
BANK WEST FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
(Unaudited)
Six Months Ended
December 31,
1998 1997
----------- ----------
<S> <C> <C>
Net change in cash and cash equivalents 3,142,247 2,312,902
Cash and cash equivalents at beginning of period 4,205,539 3,673,256
---------- ----------
Cash and cash equivalents at end of period $7,347,786 $5,986,158
========== ==========
Supplemental disclosures of cash flow information
Cash paid during the period for:
Interest $4,166,722 $3,651,394
Income taxes 175,000 528,119
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
BANK WEST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Three and Six Months Ended December 31, 1998
(Unaudited)
NOTE 1 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying consolidated financial statements consist of the accounts of
Bank West Financial Corporation (the Company), its wholly owned subsidiary, Bank
West (the Bank) and Sunrise Mortgage Corporation. All significant intercompany
accounts and transactions have been eliminated in consolidation.
The accompanying unaudited consolidated financial statements were prepared in
accordance with instructions for Form 10-Q 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 adjustments (consisting only of
normal recurring accruals) which, in the opinion of management, are necessary
for a fair presentation of the consolidated financial statements have been
included.
The results of operations for the three and six months ended December 31, 1998
are not necessarily indicative of the results to be expected for the year ending
June 30, 1999. The unaudited consolidated financial statements and notes thereto
should be read in conjunction with the consolidated financial statements and
notes thereto, for the fiscal year ended June 30, 1998, included in the
Company's 1998 Annual Report.
In 1997, the Financial Accounting Standards Board ("FASB") issued Statement of
Financial Accounting Standards No. 130, Reporting Comprehensive Income ("SFAS
No. 130"). The Company adopted SFAS No. 130 retroactively beginning with the
quarter ended September 30, 1998. Under this standard, comprehensive income is
defined as all changes in equity other than those resulting from investments by
owners and distributions to owners, and therefore includes both net income and
other comprehensive income. Other comprehensive income includes the change in
unrealized gains and losses on securities available for sale.
NOTE 2 - EARNINGS PER SHARE
Earnings Per Share and Earnings Per Share Assuming Dilution were computed under
the provisions of SFAS No. 128, "Earnings Per Share," which was adopted
retroactively beginning with the quarter ended December 31, 1997. All earnings
per share data for prior periods have been restated to be comparable. Earnings
Per Share is calculated by dividing net income by the weighted average number of
shares outstanding during the period, including shares that have been released
or committed to be released by the Employee Stock Ownership Plan (ESOP) and
fully vested Management Recognition Plan (MRP) shares. Earnings Per Share
Assuming Dilution further assumes the issuance of dilutive potential common
shares relating to outstanding stock options and unvested MRP shares. All
earnings and dividends per share amounts have been retroactively adjusted for
the three-for-two stock split in December 1997.
<PAGE>
BANK WEST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three and Six Months Ended December 31, 1998
(Unaudited)
NOTE 2 - EARNINGS PER SHARE (Continued)
A reconciliation of the numerators and denominators of Earnings Per Share and
Earnings Per Share Assuming Dilution for the three and six months ended December
31, 1998 and 1997 are as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
December 31, December 31,
1998 1997 1998 1997
---------- ----------- ---------- ----------
<S> <C> <C> <C> <C>
Earnings Per Share
Net Income $ 134,562 $ (60,190) $ 141,398 $ 532,171
========== =========== ========== ==========
Weighted average common shares
outstanding 2,401,196 2,348,025 2,398,159 2,347,237
========== =========== ========== ==========
Earnings Per Share $ .06 $ (.03) $ .06 $ .23
========== =========== ========== ==========
Earnings Per Share Assuming Dilution
Net Income $ 134,562 $ (60,190) $ 141,398 $ 532,171
========== =========== ========== ==========
Weighted average common shares
outstanding 2,401,196 2,348,025 2,398,159 2,347,237
Add: dilutive effects of assumed
exercise of stock options
and unvested MRP's
Stock options 56,063 119,426 77,341 85,888
MRP shares 3,265 27,445 10,460 19,013
---------- ----------- ---------- ----------
Weighted average common and dilutive
potential common shares outstanding 2,456,254 2,494,896 2,485,960 2,452,138
========== =========== ========== ==========
Earnings Per Share Assuming Dilution $ .05 $ (.02) $ .06 $ .22
========== =========== ========== ==========
</TABLE>
NOTE 3 - EMPLOYEE STOCK OWNERSHIP PLAN
The Company has established an Employee Stock Ownership Plan (ESOP) for the
benefit of employees who have completed at least twelve consecutive months of
service and have been credited with at least 500 hours of service with the Bank.
The Company has received a favorable determination letter from the Internal
Revenue Service that the ESOP is a tax-qualified plan.
<PAGE>
BANK WEST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three and Six Months Ended December 31, 1998
(Unaudited)
NOTE 3 - EMPLOYEE STOCK OWNERSHIP PLAN (Continued)
To fund the ESOP, $1,296,048 was borrowed from the Company for the purpose of
purchasing 243,009 shares of common stock at $5.33 per share. Principal and
interest payments on the loan are due in quarterly installments, with the final
payment of principal and accrued interest being due and payable at maturity,
which is June 30, 2005. Interest is payable during the term of the loan at a
fixed rate of 7.0%. The loan is collateralized by the shares of the Company's
common stock purchased with the proceeds. As the Bank periodically makes
contributions to the ESOP to repay the loan, shares are allocated among
participants on the basis of total compensation, as defined. The unallocated
ESOP shares are shown as a reduction to stockholders' equity in the accompanying
consolidated balance sheets. ESOP expense of $58,000 and $119,000 was recorded
for the three and six months ended December 31, 1998.
NOTE 4 - STOCK BASED COMPENSATION PLANS
An employee and a directors' stock option plan (SOPs) and an officers' and a
directors' management recognition plan (MRPs) were authorized by the
shareholders at the October 25, 1995 annual meeting. The employee stock option
plan and the officers' MRP are administered by a committee of non-employee
directors of the Company, while grants under the directors' stock option plan
and the directors' MRP are pursuant to formulas set forth in the plans. Total
shares made available under the SOPs and MRPs were 347,155 and 138,862,
respectively. The Committee has awarded under the SOPs options to purchase
347,134 shares of common stock at exercise prices between $6.625 and $13.25 per
share, which represent the average of the high and low sales prices of the
Company's stock on the dates of the awards. Both the option shares and grant
prices have been adjusted for the three-for-two stock split in December 1997. At
December 31, 1998, there were 21 option shares reserved for future grants. As of
December 31, 1998, 1,000 options have been exercised. No compensation expense
was recognized in connection with the issuance of the options. Management has
concluded that the Company will not adopt the accounting provisions of SFAS No.
123 and will continue to apply its current method of accounting. Accordingly,
SFAS No. 123 will have no impact on the Company's consolidated financial
position or results of operations.
On November 13, 1995, the Company repurchased 4% of its then outstanding shares
and placed them in a trust for the exclusive use of the MRPs. The Committee has
awarded 72,320 shares of common stock under the officers' MRP and 41,657 shares
of common stock under the directors' MRP. MRP awards vest in five equal annual
installments, with the first award vesting on October 25, 1996. Compensation
expense for the MRPs is recognized on a pro-rata basis over the vesting period
of the awards. During the three and six months ended December 31, 1998, $38,100
and $76,200 was charged to compensation expense for the MRPs. The unearned
compensation value of the MRPs is shown as a reduction to stockholders' equity
in the accompanying consolidated balance sheets.
<PAGE>
BANK WEST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three and Six Months Ended December 31, 1998
(Unaudited)
NOTE 5 - SECURITIES
The amortized cost and estimated fair values of securities at December 31, 1998
and June 30, 1998 are as follows:
<TABLE>
<CAPTION>
Available for Sale
Gross Gross
Amortized Unrealized Unrealized Fair
Cost Gains Losses Value
----------- -------- ----------- -----------
<S> <C> <C> <C> <C>
December 31, 1998 (unaudited)
U.S. agencies $ 4,996,135 $ 8,865 $ -- $ 5,005,000
Equity securities 830,525 -- 143,627 686,898
Mortgage-backed securities 2,689,772 13,093 12,789 2,690,076
Collateralized mortgage obligations 25,953,482 32,967 248,807 25,737,642
----------- -------- ----------- -----------
$34,469,914 $ 54,925 $ 405,223 $34,119,616
=========== ======== =========== ===========
June 30, 1998
U.S. agencies $ 3,995,488 $ -- $ 3,613 $ 3,991,875
Equity securities 2,750,960 61,250 59,885 2,752,325
Mortgage-backed securities 817,236 -- 9,916 807,320
Collateralized mortgage obligations 24,596,237 230,029 210,089 24,616,177
----------- -------- ----------- -----------
$32,159,921 $291,279 $ 283,503 $32,167,697
=========== ======== =========== ===========
Held to Maturity
December 31, 1998 (unaudited)
Collateralized mortgage obligations $13,127,994 $ -- $ 206,234 $12,921,760
=========== ======== =========== ===========
June 30, 1998
Collateralized mortgage obligations $11,084,361 $ 42,498 $ 47,681 $11,079,178
=========== ======== =========== ===========
</TABLE>
During September of 1998, equity securities were written-down by $401,000
relating to what management believes to be an other-than-temporary decline in
the market value of these investments resulting from the recent downturn in the
U.S. stock market, especially in small cap stocks.
<PAGE>
BANK WEST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three and Six Months Ended December 31, 1998
(Unaudited)
NOTE 6 - SECONDARY MARKET MORTGAGE ACTIVITIES
The following summarizes the Company's secondary market mortgage activities,
which consist solely of one- to four-family real estate loans:
<TABLE>
<CAPTION>
Six Months Ended
December 31,
1998 1997
------------ ------------
<S> <C> <C>
Loans held for sale - beginning of period $ 8,156,572 $ 2,231,151
Activity during the periods:
Loans originated and purchased for sale 21,431,201 21,362,888
Proceeds from sale of loans originated
and purchased for sale (23,112,395) (21,536,769)
Gain on sale of loans 395,184 318,612
------------ ------------
Loans held for sale - end of period $ 6,870,562 $ 2,375,882
============ ============
</TABLE>
The unpaid principal balance of mortgage loans serviced for others amounted to
$30.4 million and $33.2 million at December 31, 1998 and June 30, 1998,
respectively. Custodial escrow balances maintained in connection with the
foregoing loans serviced for others were approximately $65,000 and $192,000 at
December 31, 1998 and June 30, 1998, respectively.
<PAGE>
BANK WEST FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
Three and Six Months Ended December 31, 1998
(Unaudited)
NOTE 7 - LOANS
Loans are classified as follows:
<TABLE>
<CAPTION>
December 31, June 30,
1998 1998
------------- -------------
<S> <C> <C>
Real estate loans:
One-to four-family residential - fixed rate $ 15,507,450 $ 15,383,013
One-to four-family residential - balloon 39,472,078 24,413,846
One-to four-family residential - adjustable 24,190,348 32,599,924
Construction and land development 27,261,753 25,406,303
Commercial mortgages 9,216,660 6,485 449
Home equity lines of credit 10,719,818 9,877,359
Second mortgages 8,960,563 8,148,412
------------- -------------
Total mortgage loans 135,328,670 122,314,306
Consumer loans 1,789,282 1,665,606
Commercial non-mortgage 3,395,779 3,253,091
------------- -------------
Total 140,513,731 127,233,003
Less:
Loans in process 7,564,702 8,248,310
Deferred fees and costs (262,926) (210,614)
Allowance for loan losses 317,413 289,696
------------- -------------
$ 132,894,542 $ 118,905,611
</TABLE>
Provisions for losses on loans are charged to operations based on management's
evaluation of potential losses in the portfolio. In addition to providing
reserves on specific loans where a decline in value has been identified, general
provisions for losses are established based upon the overall portfolio
composition and general market conditions. In establishing both specific and
general valuation allowances, management reviews individual loans, recent loss
experience, current and future impact of economic conditions, the overall
balance and composition of the portfolio, and such other factors which, in
management's judgment, deserve recognition in estimating possible losses.
Management believes the allowance for loan losses is adequate. While management
uses available information to recognize losses on loans, future additions to the
allowance may be necessary based on changes in economic conditions and borrower
circumstances.
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion compares the consolidated financial condition of Bank
West Financial Corporation, its wholly owned subsidiary, Bank West, and Sunrise
Mortgage Corporation a wholly-owned subsidiary of Bank West, at December 31,
1998 and June 30, 1998 and the consolidated results of operations for the three
and six months ended December 31, 1998 with the same periods in 1997. This
discussion should be read in conjunction with the interim consolidated financial
statements and footnotes included herein.
This quarterly report on Form 10-Q includes statements that may constitute
forward-looking statements, usually containing the words "believe," "estimate,"
"project," "expect," "intend" or similar expressions. These statements are made
pursuant to the safe harbor provisions of the Private Securities Litigation
Reform Act of 1995. Forward-looking statements inherently involve risks and
uncertainties that could cause actual results to differ materially from those
reflected in the forward-looking statements. Factors that could cause future
results to vary from current expectations include, but are not limited to, the
following: changes in economic conditions (both generally and more specifically
in the markets in which Bank West operates); changes in interest rates, deposit
flows, loan demand, real estate values and competition; changes in accounting
principles, government legislation and regulation; and other risks detailed in
this quarterly report on Form 10-Q and in the Company's other Securities and
Exchange Commission filings. Readers are cautioned not to place undue reliance
on these forward-looking statements, which reflect management's analysis only as
of the date hereof. The Company undertakes no obligation to publicly revise
these forward-looking statements to reflect events or circumstances that arise
after the date hereof.
Bank West Financial Corporation is the holding company for Bank West, a state
chartered savings bank. Substantially all of the Company's assets are currently
held in, and its operations are conducted through, its sole subsidiary Bank
West. The Company's business consists primarily of attracting deposits from the
general public and using such deposits, together with Federal Home Loan Bank
(FHLB) advances, to make loans for the purchase and construction of residential
properties. The Company also originates commercial loans, home equity loans and
various types of consumer loans.
FINANCIAL CONDITION
Total assets increased by $20.2 million or 11.1% from $181.5 million at June 30,
1998 to $201.7 million at December 31, 1998. The increase in total assets was
primarily attributable to an increase in total loans by $14.0 million or 11.8%.
Total loans increased as greater emphasis was placed on originating one- to
four-family balloon mortgages to offset prepayments of adjustable-rate and
longer term fixed-rate mortgages in the current interest rate environment. In
addition, greater emphasis was placed on originating home equity, second
mortgages and commercial loans. Management expects continued growth in these
types of portfolio lending activities which is expected to improve the Bank's
net interest income.
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
The Bank's mortgage banking activities consist of selling newly originated and
purchased loans into the secondary market. The dollar amount of loans originated
and purchased for resale in the three months ended December 31, 1998 increased
by $4.5 million or 47.9% to $13.9 million compared to $9.4 million in the
December 31, 1997 quarter. The increase in loan originations and purchases for
resale is primarily the result of much stronger refinance volume due to the
current low interest rate environment. The mortgage loans originated and
purchased for resale in the current quarter have consisted primarily of 30-year
fixed-rate and ten year balloon loans. The Bank's recent strategy has been to
sell 30-year fixed-rate loans and to portfolio ten year balloons. The Bank has
portfolioed ten year balloon loans in an effort to offset the prepayments of
adjustable-rate and longer-term fixed-rate mortgages. Also, the current strategy
will leverage the balance sheet which is expected to provide additional net
interest income. Total loans sold amounted to $13.0 million and $11.1 million in
the three months ended December 31, 1998 and 1997, respectively. Loans held for
sale amounted to $6.9 million and $2.4 million at December 31, 1998 and 1997,
respectively. The Bank continues to increase the number of correspondent lending
relationships and is exploring additional options to increase retail loan
volume.
During December 1997, the Bank formed Sunrise Mortgage Corporation, a
wholly-owned subsidiary engaged to originate and purchase non-conforming first
and second mortgage loans including sub-prime mortgage loans for resale. Each of
the loans originated and purchased must have a commitment in place to sell the
loan to an investor on a servicing released basis and on a per loan basis.
Sunrise Mortgage Corporation is nearing break-even and is expected to contribute
additional revenues as loan volume increases.
Collateralized mortgage obligations have increased from $35.7 million at June
30, 1998 to $38.9 million at December 31, 1998. Generally, collateralized
mortgage obligations have been purchased with floating interest rates (prime
rate or LIBOR) and have been collateralized by mortgages with a weighted average
coupon of approximately 7.0%. The recent decline in overall interest rates and
the corresponding increase in prepayment speeds has negatively impacted the
market values of the Bank's collateralized mortgage obligations classified as
available for sale resulting in an unrealized loss of approximately $143,000,
net of taxes, and is shown as a reduction of stockholders' equity. The
unrealized loss on collateralized mortgage obligations held to maturity was
$136,000, net of taxes . Management feels that the recent decline in the market
values of these securities is temporary.
Equity securities have decreased from $2.7 million at June 30, 1998 to $687,000
at December 31, 1998. The Bank has continued to orderly liquidate the equity
securities portfolio. During the first quarter, the Company recorded a
write-down totaling $401,000 relating to what management believes to be an
other-than-temporary market decline on certain equity securities. At December
31, 1998, the unrealized loss on the remaining equity investments is
approximately $95,000, net of taxes and is shown as a reduction of stockholders'
equity. Management does not anticipate any further write-downs of equity
securities.
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Total deposits increased by $6.4 million or 5.3% from June 30, 1998 to December
31, 1998 primarily due to an increase in certificates of deposit and money
market accounts. The variety of deposit accounts offered by the Bank has allowed
it to be competitive in obtaining funds and to respond with flexibility to
changes in consumer demand. The Bank has become more susceptible to short-term
fluctuations in deposit flows, as customers have become more interest rate
conscious. Based on its experience, the Bank believes that its passbook savings,
statement savings, NOW and demand accounts are relatively stable sources of
deposits. However, the ability of the Bank to attract and maintain certificates
of deposit, and the rates paid on these deposits, has been and will continue to
be affected by market conditions.
When deposit growth does not match the growth of assets, other funding sources
such as FHLB advances are utilized. During the three months ended December 31,
1998, the Bank increased FHLB advances by $7.8 million since loan growth
exceeded deposit growth. FHLB advances have generally been used to fund the
Bank's loan growth and mortgage banking activities.
Stockholders' equity decreased from $23.3 million at June 30, 1998 to $23.1
million at December 31, 1998. The decrease was due to dividends of $292,000 paid
during the six month period and a change in the net unrealized loss on
securities available for sale by $236,000 primarily from collateralized mortgage
obligations and equity securities. These amounts were partially offset by net
income of $141,000.
NON-PERFORMING ASSETS AND ALLOWANCE FOR LOAN LOSSES
The table below sets forth the amounts and categories of non-performing assets
at December 31, 1998 and June 30, 1998:
<TABLE>
<CAPTION>
December 31, June 30,
1998 1998
(Dollars in Thousands)
<S> <C> <C>
Non-accrual loans
One- to four-family $ 958 $ 682
Commercial -- 32
Consumer 67 127
------ ------
Total 1,025 841
Foreclosed assets
One- to four-family -- 192
------ ------
Total non-performing assets $1,025 $1,033
====== ======
Total as a percentage of total assets .51% .57%
====== ======
</TABLE>
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Non-performing assets in the one- to four-family category consists of seven
construction spec loans to builders. Non-performing loans are concentrated to
four builders in the western and southwestern Michigan area. These loans which
are collateralized by single-family homes require a loan-to-value ratio of 75%.
The majority of these homes are substantially complete. Management believes that
these loans are adequately collateralized. Accordingly, no specific reserves
have been assigned to these loans at December 31, 1998. The allowance for loan
losses totalled $317,000 or 30.9% of total non-performing loans at December 31,
1998, and no portion of the allowance for loan losses was allocated to specific
loans. During the three months ended December 31, 1998, there were $29,283 of
charge-offs. At December 31, 1998, $106.4 million or 75.7% of the Bank's total
loan portfolio was collateralized by first liens on one-to four-family
residences, and the net loan portfolio amounted to 65.9% of total assets.
RESULTS OF OPERATIONS
Net Income. Net income increased by $195,000 in the quarter ended December 31,
1998 from a loss of $60,000 in the December 31, 1997 period to net income of
$135,000 in the current quarter. The increase was primarily due to a loss of
$391,000 on equity trading activities during the quarter ended December 31, 1997
compared to none in the current quarter.
For the six months ended December 31, 1998, net income decreased by $391,000
from net income of $532,000 in the December 31, 1997 period to $141,000 in the
December 31, 1998 period. The decrease was primarily due to a loss of $283,000
on equity securities in the current year compared to gains of $169,000 on equity
securities including trading securities in the 1997 period. See Other Income
section for more information. In addition, professional fees were higher by
$118,000 primarily due to litigation expense associated with a purported class
action lawsuit. See Other Expenses section for more information. These amounts
were partially offset by an increase in net interest income by $233,000 or 9.9%.
Net Interest Income. Net interest income increased by $101,000 or 8.3% in the
quarter ended December 31, 1998 over the comparable 1997 period. Net interest
income increased due to higher average interest-earning assets by $18.4 million
or 10.8% primarily due to an increase in loans and collateralized mortgage
obligations. The increase in average interest-earning assets was partially
offset by a decrease in the interest rate spread to 2.29% from 2.54%. The
decreased spread was primarily due to an decrease in the yield on
interest-earning assets to 7.24% from 7.85% reflecting the flat yield curve
resulting in refinances of adjustable-rate and 30-year loans with higher rates
into lower rate mortgages. The cost of interest-bearing liabilities decreased to
4.95% from 5.31%reflecting certificates of deposit and FHLB advances repricing
to lower rates as a result of the recent decline in the overall interest rate
environment.
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Net interest income increased by $233,000 or 9.9% in the six months ended
December 31, 1998 over the comparable 1997 period. Net interest income increased
due to higher average interest-earning assets by $26.3 million or 16.9%
primarily due to an increase in loans and collateralized mortgage obligations.
The increase in average interest-earning assets was partially offset by a
decrease in the interest rate spread to 2.36%from 2.51%. The decreased spread
was primarily due to a decrease in the yield on interest-earning assets to 7.41%
from 7.82%, reflecting the flat yield curve resulting in refinances of
adjustable-rate and 30-year loans with higher rates into lower rate mortgages.
The cost of interest-bearing liabilities decreased to 5.05% from 5.31%reflecting
certificates of deposit and FHLB advances repricing to lower rates as a result
of the recent decline in the overall interest rate environment.
Provision for Loan Losses. The provision for loan losses increased by $12,000 or
66.7% in the three months ended December 31, 1998 and by $21,000 or 58.3% in the
six months ended December 31, 1998 over the comparable 1997 periods. The
allowance for loan losses totalled approximately $317,000 or .23% of the total
loan portfolio and 30.9% of non-performing loans at December 31, 1998. The
non-performing loans at December 31, 1998 were comprised primarily of one- to
four-family construction spec loans to builders which require a loan-to-value
ratio of 75%.
The Bank's management establishes allowances for loan losses. On a quarterly
basis, management evaluates the loan portfolio and determines the amount that
must be added. These allowances are charged against income in the year they are
established. When establishing the appropriate levels for the provision and the
allowance for loan losses, management considers a variety of factors, in
addition to the fact that an inherent risk of loss always exists in the lending
process. Consideration is also given to the current and future impact of
economic conditions, the diversification of the loan portfolio, historical loss
experience, delinquency rates, the review of loans by loan review personnel, the
individual borrower's financial and managerial strengths, and the adequacy of
underlying collateral.
Other Income. Total other income increased by $435,000 in the three months ended
December 31, 1998 from the comparable prior period. The increase was primarily
due to a $391,000 mark to market loss sustained on equity investments during the
three months ended December 31, 1997 compared to none in the current quarter.
For the six months ended December 31, 1998, total other income decreased by
$428,000 or 63.4%. The decrease was due to in part to a loss on available for
sale securities of $283,000 relating to a first quarter's write-down of a
portion of the Company's remaining equity securities to reflect what management
believes to be an other-than-temporary market decline resulting from the recent
downturn in the U.S. stock market, especially in small cap stocks. Also, during
the six months ended December 31, 1997, the Company had $169,000 of gains from
trading equity securities compared to none in the current year. At December 31,
1998, the remaining equity securities portfolio was valued at $687,000.
Management intends to continue to orderly liquidate the remaining equity
securities portfolio and does not anticipate any additional write-downs.
Gain on sale of loans increased by $77,000 or 48.4% and by $76,000 or 23.8% in
the three and six months ended December 31, 1998, respectively, over the
comparable 1997 periods. The increases are primarily attributable to increases
in loans sold due to higher refinancing volume in the current low interest rate
environment.
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
Fees and service charges decreased by $19,000 or 24.1% and by $41,000 or 24.3%
during the three and six months December 31, 1998, respectively, over the
comparable 1997 periods reflecting higher amortization of mortgage servicing
rights as a result of higher prepayments of the Bank's mortgage servicing
portfolio.
Other Expenses. Total other expenses increased by $219,000 or 19.2% in the
quarter ended December 31, 1998 over the comparable 1997 period. The increase
was primarily due to higher professional fees of $140,000 or 166.7% attributable
to legal costs associated with a purported class action lawsuit filed on July
17, 1998 by a Bank West borrower. Bank West is one of several institutions that
have been targeted in similar actions alleging the "practice of law." Bank West
possesses meritorious defenses and believes that filling in blanks on mortgage
instruments drafted by attorneys does not constitute the "practice of law."
Compensation and benefits expenses increased by $25,000 or 3.6% due to higher
overall staff levels versus the prior year. However, management believes that
the recent reduction of overall staff levels by approximately 5% is expected to
level-off compensation and benefits for the remainder of the fiscal year.
Occupancy expense increased by $16,000 or 21.6% due to leasing expenses incurred
by Sunrise Mortgage Corp. that did not exist in the December 31, 1997 quarter,
and one-time repairs and maintenance expenses. Data processing expenses
increased by $15,000 or 30.6% due to Year 2000 pass-through charges by the
Bank's outside vendor which handles the core data processing. The other
categories of miscellaneous expenses and other expenses did not significantly
change in the quarter ended December 31, 1998 when compared to the December 31,
1997 quarter.
For the six months ended December 31, 1998, total other expenses increased by
$359,000 or 16.4% over the comparable 1997 period. The increase was primarily
due to higher professional fees by $118,000 or 72.8%, compensation and benefits
by $96,000 or 7.1%, occupancy expenses by $39,000 or 28.5% and data processing
expense by $35,000 or 37.6% for the same reasons mentioned in the preceding
paragraph. The other categories of miscellaneous expenses and other expenses did
not significantly change in the six months ended December 31, 1998 when compared
to the December 31, 1997 period.
Federal Income Tax Expense. Federal income tax expense increased by $110,000 and
decreased by $185,000 in the three and six months ended December 31, 1998 over
the comparable 1997 periods, respectively due to different pretax income levels.
LIQUIDITY
The Bank maintains a level of liquidity consistent with management's assessment
of expected loan demand, proceeds from loan sales, deposit flows and yields
available on interest-earning deposits and investment securities. When overnight
deposits fall below management's targeted level, management generally borrows
FHLB advances instead of selling securities.
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
The Bank's principal sources of liquidity are deposits, principal and interest
payments on loans, proceeds from loan sales, maturities of securities, sales of
securities available for sale and FHLB advances. While scheduled loan repayments
and maturing investments are relatively predictable, deposit flows and loan
prepayments are more influenced by interest rates, general economic conditions
and competition.
The Bank routinely borrows FHLB advances when overnight deposits are drawn to
low levels. These borrowings are made pursuant to the blanket collateral
agreement with the FHLB. At December 31, 1998, the Bank has approximately $22.3
million of excess borrowing capacity based on eligible collateral under the
blanket collateral agreement with the FHLB.
The Company (excluding the Bank) also has a need for, and sources of, liquidity.
Dividends from the Bank and interest income and gains on investments are its
primary sources. The Company also has modest operating costs and has paid a
regular quarterly cash dividend.
The Bank is subject to three capital to asset requirements in accordance with
banking regulations. Bank West's capital ratios are well in excess of minimum
capital requirements specified by federal banking regulations.
YEAR 2000
Management and a committee of the Board of Directors have developed a formal
action plan which outlines the Bank's process for preparing itself for Year 2000
issues. The Bank's core data processing software is provided by Fiserv
Milwaukee, Inc. ("Fiserv"), an outside vendor. Fiserv represents that they are
substantially completed with their Year 2000 testing and expect to be fully
compliant before June 30, 1999. During the quarter ended December 31, 1998, the
Bank successfully tested the Fiserv applications the Bank utilizes. In addition,
the Bank successfully tested all but one third party software that integrates
with Fiserv. This third party software application as well as those others which
do not integrate with Fiserv are scheduled to be testing during the quarter
ended March 31, 1999. Overall, the Bank has substantially completed its testing
stage and has begun the renovation stage which is expected to be completed by
June 30, 1999.
Management has performed a review of its commercial borrowers to determine if
there are any Year 2000 issues or concerns of the borrower that could affect
repayment of the Bank's loan. To-date, no issues or concerns have been
identified. Accordingly, no specific reserve has been assigned to these loans.
Management presently anticipates that the costs of addressing the Year 2000 will
approximate $175,000 to $225,000 which includes approximately $75,000 of
anticipated obsolescence charges. The remaining $100,00 - $150,000 will be for
the replacement of depreciable assets, primarily personal computers. The costs
associated with Year 2000 readiness are based on management's best estimates. As
testing continues and more progress is made, management will continuously be
assessing the estimated Year 2000 costs. As of December 31, 1998, the Bank
incurred approximately $25,000 representing data processing pass-through charges
relating to Year 2000 readiness and the compensation and benefits expense
associated with staff time.
<PAGE>
BANK WEST FINANCIAL CORPORATION
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS (Continued)
NEW ACCOUNTING STANDARDS
A new accounting standard, SFAS No. 131, Disclosures About Segments of an
Enterprise and Related Information, will require future reporting of additional
information related to material business segments beginning with the year ended
June 30, 1999. The Company is in the process of determining whether the new
standard would result in the identification of additional reportable business
segments.
A new accounting standard, SFAS No. 133, Accounting for Derivative Instruments
and Hedging Activities, will require all derivatives to be recognized at fair
value as either assets or liabilities in the Consolidated Balance Sheets
beginning with the quarter ended September 30, 1999. Changes in the fair value
of derivatives not designated as hedging instruments are to be recognized
currently in earnings. Gains or losses on derivatives designated as hedging
instruments are either to be recognized currently in earnings or are to be
recognized as a component of other comprehensive income, depending on the
intended use of the derivatives and the resulting designations. The Company does
not believe adoption of this new standard will have a material impact on its
consolidated financial position or results of operations.
<PAGE>
BANK WEST FINANCIAL CORPORATION
Form 10-Q
Quarter Ended December 31, 1998
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings:
Other than the litigation filed by Kristine Cowles, discussed
in the Company's Quarterly Report on Form 10-Q for the fiscal quarter ended
September 30, 1998, there are no material legal proceedings to which the Company
or its subsidiaries is a party or to which any of their property is subject.
Subsequent to the events described in that Report, plaintiff amended her
complaint to add additional allegations under the federal Truth in Lending Act
("TILA") and on December 30, 1998 filed a motion to have the case certified as a
class action. Although extensive discovery has been taken, discovery has not
been completed. Plaintiff's motion for class certification nevertheless asserts
that the class consists of no less than 2,862 loan customers, of which plaintiff
statistically calculates that about 2,582 loans included the questioned document
preparation charge. Plaintiff's damages claims include a demand for the
disgorgement of the entire document preparation fee, which plaintiff alleges
were $250 for most loans; plaintiff also seeks other damages including statutory
damages for alleged TILA violations, and attorneys fees; plaintiff also seeks
injunctive relief. The Company continues to vigorously defend this action.
Item 2 - Changes in Securities and Use of Proceeds:
There are no matters required to be reported under this item.
Item 3 - Defaults Upon Senior Securities:
There are no matters required to be reported under this item.
Item 4 - Submission of Matters to a Vote of Security-Holders:
There are no matters required to be reported under this item
Item 5 - Other Information:
There are no matters required to be reported under this item.
Item 6 - Exhibits and Reports on Form 8-K:
(a) Exhibits: The following exhibit is filed herewith:
Exhibit No. Description
----------- -----------
27.1 Financial Data Schedule
(b) Reports on Form 8-K:
No reports on Form 8-K were filed by the Registrant during
the quarter ended December 31, 1998.
<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.
BANK WEST FINANCIAL CORPORATION
Registrant
Date: February 11, 1999 /s/Paul W. Sydloski
-------------------
Paul W. Sydloski, President and
Chief Executive Officer
(Duly Authorized Officer)
Date: February 11, 1999 /s/Kevin A. Twardy
-------------------
Kevin A. Twardy, Vice President and
Chief Financial Officer
(Principal Financial Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-END> DEC-31-1998
<CASH> 3,479,918
<INT-BEARING-DEPOSITS> 3,867,868
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 34,119,616
<INVESTMENTS-CARRYING> 13,127,994
<INVESTMENTS-MARKET> 12,921,760
<LOANS> 132,894,562
<ALLOWANCE> 317,413
<TOTAL-ASSETS> 201,665,594
<DEPOSITS> 126,418,557
<SHORT-TERM> 24,121,053
<LIABILITIES-OTHER> 1,043,328
<LONG-TERM> 27,000,000
0
0
<COMMON> 26,327
<OTHER-SE> 23,056,419
<TOTAL-LIABILITIES-AND-EQUITY> 201,665,594
<INTEREST-LOAN> 5,254,972
<INTEREST-INVEST> 1,393,772
<INTEREST-OTHER> 89,584
<INTEREST-TOTAL> 6,738,328
<INTEREST-DEPOSIT> 2,989,827
<INTEREST-EXPENSE> 4,147,468
<INTEREST-INCOME-NET> 2,590,860
<LOAN-LOSSES> 57,000
<SECURITIES-GAINS> (282,572)
<EXPENSE-OTHER> 2,551,414
<INCOME-PRETAX> 229,608
<INCOME-PRE-EXTRAORDINARY> 229,608
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 141,398
<EPS-PRIMARY> .06
<EPS-DILUTED> .06
<YIELD-ACTUAL> 7.41
<LOANS-NON> 1,025,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 289,696
<CHARGE-OFFS> 29,283
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 317,413
<ALLOWANCE-DOMESTIC> 287,532
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 29,881
</TABLE>
