UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
(Mark One)
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1996
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF TH
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
-------------------- -------------------------
Commission File Number 0-25664
SGV BANCORP, INC.
- - -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
DELAWARE 95-4524789
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(State or other jurisdiction of (I. R. S. Employer Identification No.)
incorporation or organization)
225 NORTH BARRANCA STREET, WEST COVINA, CALIFORNIA 91791
- - -------------------------------------------------------------------------------
(Address of principal executive offices)
(818) 859-4200
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(Registrant's telephone number, including area code)
Not Applicable
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(Former name, former address and former fiscal year, if changed since last
report)
Indicate by check mark whether the registrant (1) has filed all reports
require to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. x Yes No
--- ---
APPLICABLE ONLY TO CORPORATE ISSUERS:
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date: 2,727,656 shares of common
stock, par value $0.01 per share, were outstanding as of May 9, 1996.
<PAGE> 2
SGV BANCORP, INC.
FORM 10-Q
INDEX
PART I FINANCIAL INFORMATION PAGE
----
Item 1 Consolidated Statements of Financial Condition:
March 31, 1996 and June 30, 1995...............................1
Consolidated Statements of Operations:
For the Nine Months Ended March 31, 1996 and 1995 and for the
Three Months Ended March 31, 1996 and 1995 ....................2
Consolidated Statements of Cash Flows:
For the Nine Months Ended March 31, 1996 and 1995..............3
Notes to Consolidated Financial Statements.....................5
Item 2 Management's Discussion and Analysis of
Results of Operations and Financial Condition..................9
PART II OTHER INFORMATION
Item 1 Legal Proceedings..............................................19
Item 2 Changes in Securities..........................................19
Item 3 Defaults Upon Senior Securities................................19
Item 4 Submission of Matters to a Vote of Security Holders............19
Item 5 Other Information..............................................19
Item 6 Exhibits and Reports on Form 8-K...............................20
SIGNATURES.................................................................21
<PAGE> 3
<TABLE>
<CAPTION>
SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(IN THOUSANDS, EXCEPT SHARE DATA) (UNAUDITED)
- - -----------------------------------------------------------------------------------------
March 31, June 30,
1996 1995
---- ----
<S> <C> <C>
ASSETS:
Cash and cash equivalents, including short-term bank
obligations of $5,575 at March 31, 1996 and $18,850
at June 30, 1995 $9,238 $23,387
Investment securities available for sale, amortized cost of
$10,000 at March 31, 1996 and $1,000 at June 30, 1995 9,940 1,000
Investment securities held to maturity, estimated fair
value of $3,190 June 30, 1995 - 3,200
Mortgage-backed securities available for sale, amortized
cost of $18,151 at March 31, 1996 and $3,674 at June 30, 1995 17,999 3,614
Mortgage-backed securities held to maturity, estimated fair
value of $23,552 at March 31, 1996 and $15,667 at June 30, 1995 23,782 15,735
Loans receivable held for sale 1,626
Loans receivable held for investment, net of allowance for
estimated loan losses of $802 at March 31, 1996 and $792
at June 30, 1995 258,303 217,399
Accrued interest receivable 2,584 2,054
Stock of Federal Home Loan Bank of San Francisco, at cost 3,706 2,865
Real estate acquired through foreclosure, net 2,184 822
Premises and equipment, net 3,063 2,868
Excess servicing fees receivable 22 34
Prepaid expenses and other assets, net 617 418
-------------- --------------
Total assets $333,064 $273,396
============== ==============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposit accounts $223,148 $204,264
Federal Home Loan Bank advances 74,115 33,447
Accrued expenses and other liabilities 3,220 2,679
-------------- --------------
Total liabilities 300,483 240,390
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 2,000,000 shares authorized;
none issued
Common stock, $.01 par value; 10,000,000 shares authorized; 27 27
2,727,656 issued
Additional paid-in capital 20,680 20,666
Retained earnings, substantially restricted 14,183 13,876
Net unrealized loss on investment securities and mortgage-backed
securities available for sale, net of taxes (125) (35)
Deferred stock compensation (2,184) (1,528)
-------------- --------------
Total stockholders' equity 32,581 33,006
-------------- --------------
Total liabilities and stockholders' equity $333,064 $273,396
============== ==============
</TABLE>
1
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<TABLE>
<CAPTION>
SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(IN THOUSANDS, EXCEPT PER SHARE DATA)(UNAUDITED)
- - --------------------------------------------------------------------------------------
FOR THE THREE MONTHS FOR THE NINE MONTHS
ENDED MARCH 31, ENDED MARCH 31,
1996 1995 1996 1995
------------------------ --------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME:
Interest on loans $4,425 $3,949 $12,828 $11,554
Interest on investment securities 211 65 394 250
Interest on mortgage-backed securities 546 340 1,458 1,047
Other 137 132 536 320
---------- ---------- ----------- ------------
Total interest income 5,319 4,486 15,216 13,171
---------- ---------- ----------- ------------
INTEREST EXPENSE:
Interest on deposit accounts 2,495 2,115 7,391 5,846
Interest on borrowings 829 674 2,105 1,996
---------- ---------- ----------- ------------
Total interest expense 3,324 2,789 9,496 7,842
---------- ---------- ----------- ------------
Net interest income before provision
for estimated loan losses 1,995 1,697 5,720 5,329
PROVISION FOR ESTIMATED LOAN LOSSES 144 126 319 360
---------- ---------- ----------- ------------
Net interest income after provision for
estimated loan losses 1,851 1,571 5,401 4,969
OTHER INCOME (EXPENSE):
Loan servicing and other fees 112 110 325 334
Secondary marketing activity, net (4) (18) (21) (56)
Gain (loss) on sale or redemption of
securities available for sale, net 30 29 (78)
Other income 105 108 350 354
Net loss on real estate acquired through
foreclosure (211) (56) (308) (170)
---------- ---------- ----------- ------------
Total other income 32 144 375 384
---------- ---------- ----------- ------------
GENERAL AND ADMINISTRATIVE EXPENSES:
Compensation and other employee expenses 935 763 2,735 2,578
Office occupancy 196 207 598 669
Equipment 187 184 555 553
Advertising 38 21 80 100
FDIC insurance premiums 116 115 352 343
Other operating expenses 399 289 928 838
---------- ---------- ----------- ------------
Total general and administrative
expenses 1,871 1,579 5,248 5,081
---------- ---------- ----------- ------------
EARNINGS BEFORE INCOME TAXES 12 136 528 272
INCOME TAXES 6 56 222 114
---------- ---------- ----------- ------------
NET EARNINGS $6 $80 $306 $158
========== ========== =========== ============
EARNINGS PER SHARE $0.01 N/A $0.12 N/A
========== ========== =========== ============
Weighted Average Shares Outstanding
(000's) 2,475 2,521
========== ===========
</TABLE>
2
<PAGE> 5
<TABLE>
<CAPTION>
SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)
- - -----------------------------------------------------------------------------------------
FOR THE NINE MONTHS
ENDED MARCH 31,
1996 1995
-----------------------------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 306 $ 158
Adjustments to reconcile net earnings to net
cash used in operating activities:
Depreciation and amortization 280 328
Loans originated for sale (8,921) (160)
Proceeds from sale of loans 8,937 163
Gain on sale of loans, net (16) (3)
Loss on sale or redemption of investment securities
available for sale, net (33) 78
Federal Home Loan Bank stock dividend (110) (114)
Increase in prepaid expenses and other assets (200) (288)
Amortization of deferred loan fees (59) (65)
Deferred loan origination costs (131) (141)
Increase (decrease) in accrued expenses and other
liabilities 347 (1,324)
Provision for estimated loan losses 319 360
Provision for estimated real estate losses 239 103
Premium amortization, net 150 129
Increase in accrued interest receivable (529) (69)
Amortization of excess servicing fees receivable 10 10
Other, net 236 (278)
-------------- ---------------
Net cash provided by (used in) operating activities 825 (1,113)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities available for sale (27,650) (1,000)
Proceeds from sale and redemption of investment securities
available for sale 18,683 4,895
Proceeds from sale and redemption of investment
securities held to maturity 3,200
Purchase of mortgage-backed securities available for sale (11,914)
Purchase of mortgage-backed securities held to maturity (15,936)
Principal repayments on mortgage-backed securities 5,176 3,584
Loans funded, net (13,130) (25,306)
Loans purchased, net (48,297)
Principal repayments on loans 17,008 14,973
Purchase of FHLB Stock (730)
Proceeds from sale of real estate 312 473
Purchase of premises and equipment (479) (182)
Other, net 4 (27)
-------------- ---------------
Net cash used in investing activities (73,753) (2,590)
</TABLE>
3
<PAGE> 6
<TABLE>
<CAPTION>
SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)
- - -----------------------------------------------------------------------------------------
FOR THE NINE MONTHS
ENDED MARCH 31,
1996 1995
-----------------------------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in certificate accounts $ 20,635 $ 13,303
Net decrease in passbook , money market savings
NOW and noninterest-bearing accounts (1,749) (9,291)
Proceeds from Federal Home Loan Bank advances 42,000 24,000
Repayment of Federal Home Loan Bank advances (1,332) (22,249)
Purchase of shares for stock compensation plans (775)
-------------- ---------------
Net cash provided by financing activities 58,779 5,763
NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS (14,149) 2,060
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 23,387 6,817
-------------- ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 9,238 $ 8,817
============== ===============
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the period for:
Interest $ 9,471 $ 7,858
Income taxes, net 284 479
NONCASH INVESTING ACTIVITIES DURING THE PERIOD:
Real estate acquired through foreclosure 2,305 464
Transfer of mortgage-backed securities from held to
maturity to available for sale classification 4,775
Loans to facilitate sales of real estate acquired through
foreclosure 319 85
Change in net unrealized loss on investment securities and
mortgage-backed securities available for sale, net of taxes (90) 24
</TABLE>
4
<PAGE> 7
SGV BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1996
(UNAUDITED)
1. Basis of Presentation:
---------------------
SGV Bancorp, Inc. (SGV) is a savings and loan holding company incorporated
in the state of Delaware that was organized for the purpose of acquiring all of
the capital stock of First Federal Savings and Loan Association of San Gabriel
Valley (the Association) upon its conversion from a federally chartered mutual
savings and loan association to a federally chartered stock savings and loan
association. On June 28, 1995, SGV completed its sale of 2,727,656 shares of its
common stock through subscription and community offerings to the Association's
depositors, the Employee Stock Ownership Plan and the public and used
approximately 60% of the net proceeds from such sales to purchase all of the
Association's common stock issued in the Association's conversion to stock form.
Such business combination was accounted for at historical cost in a manner
similar to a pooling of interests.
SGV engages only in limited business operations primarily involving
investments in federal agency securities and mortgage-backed securities, and as
a result, substantially all of the net earnings and performance figures herein
reflect the results of the Association.
The Association 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 primarily in mortgage loans secured by
one-to-four family residences. To a lesser extent, the Association invests in
multi-family residential mortgages, commercial real estate, land and other
loans. As of March 31, 1996, the Association operated six branch offices located
in the San Gabriel Valley.
The consolidated financial statements include the accounts of SGV Bancorp,
Inc. and its wholly-owned subsidiary, First Federal Savings and Loan Association
of San Gabriel Valley and its wholly-owned subsidiary, First Covina Service
Company, which is substantially inactive (collectively, the Company). All
material intercompany balances and transactions have been eliminated in
consolidation.
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management all necessary adjustments, consisting
only of normal recurring adjustments necessary for a fair presentation have been
included. The results of operations for the three-month and the nine-month
period ended March 31, 1996 are not necessarily indicative of the results that
may be expected for the entire fiscal year.
5
<PAGE> 8
These consolidated financial statements and the information under the
heading "Management's Discussion and Analysis of Results of Operations and
Financial Condition" should be read in conjunction with the audited consolidated
financial statements and notes thereto of SGV Bancorp, Inc. for the year ended
June 30, 1995 included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1995.
2. Earnings Per Share
------------------
Earnings per share for the three months and nine months ended March 31,
1996 are based on the weighted average common shares outstanding of 2,727,656 as
adjusted for weighted average unallocated shares under the ESOP plan and the
stock compensation plan. The weighted average number of shares unallocated under
the ESOP for the three months and nine months ended March 31, 1996 were 172,752
and 179,571, respectively, in accordance with SOP 93-6, "Employers' Accounting
for Employee Stock Ownership Plans." In regards to the stock compensation plan,
the weighted average number of shares reducing shares outstanding for earnings
per share for the three months and nine months ended March 31, 1996 were 81,829
and 27,059 shares, respectively.
Earnings per share information is not presented for periods prior to the
Association's conversion to stock form, as the Association was a mutual savings
and loan association and no stock was outstanding.
3. Accounting Principles
---------------------
In May 1993, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards (SFAS) No. 114, "Accounting by
Creditors for Impairment of a Loan." SFAS No. 114, as amended by SFAS No. 118,
"Accounting by Creditors for Impairment of a Loan - Income Recognition and
Disclosures," generally requires all creditors to account for impaired loans,
except those loans that are accounted for at fair value or at the lower of cost
or fair value, at the present value of the expected future cash flows discounted
at the loan's effective interest rate or, as a practical expedient, at the
loan's observable market price or the fair value of the collateral if the loan
is collateral dependent. SFAS No. 114 indicates that a creditor should evaluate
the collectibility of both contractual interest and contractual principal when
assessing the need for a loss accrual. SFAS No. 114, as amended by SFAS No. 118,
was adopted by the Company as of July 1, 1995; there was no impact upon
adoption.
The Company considers a loan impaired when it is probable that the Company
will be unable to collect all contractual principal and interest payments under
the terms of the loan agreement. Loans are evaluated for impairment as part of
the Company's normal internal asset review process. The Company applies the
measurement provisions of SFAS No. 114 to all loans in its portfolio with the
exception of one- to four-family residential mortgage loans and consumer lines
of credit which are evaluated on a collective basis. Also, loans which have
delays in payments of less than 4 months are not necessarily considered
6
<PAGE> 9
impaired unless other factors apply to the loans. The accrual of interest income
on impaired loans is discontinued when, in management's opinion, the borrower
may be unable to meet payments as they become due. When the interest accrual is
discontinued, all unpaid accrued interest is reversed. Interest income is
subsequently recognized only to the extent cash payments are received. Where
impairment is considered permanent, a charge-off is recorded; where impairment
is considered temporary, an allowance is established. Impaired loans which are
performing under the contractual terms are reported as performing loans, and
cash payments are allocated to principal and interest in accordance with the
terms of the loan. At March 31, 1996, the Company had classified $1.6 million of
its loans as impaired with no specific reserves set aside as of March 31, 1996
as determined in accordance with SFAS No. 114. In addition, the Company has
$850,000 in loans which are collectively evaluated for impairment with no
specific reserves set aside as of March 31, 1996. The average recorded
investment in impaired loans, inclusive of those evaluated collectively, during
the nine months ended March 31, 1996, was $2.5 million.
In November 1995, the FASB issued a "Guide to Implementation of Statement
115 on Accounting for Certain Investments in Debt and Equity Securities:
Questions and Answers" (the "Guide"). The Guide allows for a one time
reassessment of the classification of securities and, in connection with such a
reassessment, permits the reclassification of securities from the
held-to-maturity classification to the available-for-sale classification as of a
single date no later than December 31, 1995, without calling into question
management's intent to hold to maturity the remaining securities classified as
held-to-maturity. On December 31, 1995, the Company transferred $4.8 million of
securities from held-to-maturity to the available-for-sale classification to
provide for greater liquidity and flexibility. The transfer resulted in an
unrealized loss of $36,000, net of tax, which is included in the unrealized
gains/losses on available-for-sale securities set forth as a separate component
of stockholders' equity.
The FASB has issued Statement of Financial Accounting Standards No. 122
"Accounting for Mortgage Servicing Rights, an amendment of FASB Statement No.
65" (SFAS No. 122). This statement amends certain provisions of SFAS No. 65 to
eliminate the accounting distinction between rights to service mortgage loans
for others that are acquired through loan origination activities and those
acquired through purchase transactions. The statement requires that if the
Company sell or securitizes loans and retains the mortgage servicing rights, the
Company should 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 of the mortgage servicing rights and the mortgage
loans (without the mortgage servicing rights), the entire cost of acquiring the
loans should be allocated to the mortgage loans. This statement is to be applied
prospectively for fiscal years beginning after December 15, 1995. The adoption
of this statement is not expected to have a material impact on the results of
operations or the financial position of the Company.
In October 1995, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 123, "Accounting for Stock-Based
Compensation" (SFAS No. 123) which will be effective for the Company beginning
January 1, 1996. SFAS
7
<PAGE> 10
No. 123 requires expanded disclosures of stock-based compensation arrangements
with employees and encourages (but does not require) compensation cost to be
measured based on the fair value of the equity instrument awarded. Companies are
permitted, however, to continue to apply APB Opinion No. 25, which recognizes
compensation cost based on the intrinsic value of the equity instrument awarded.
The Company will continue to apply APB Opinion No. 25 to its stock based
compensation awards to employees and will disclose the required pro forma effect
on net income and earnings per share.
4. Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
5. Approved Stock Compensation Plans
---------------------------------
At the Company's Annual Meeting of Shareholders on January 17, 1996, the
shareholders approved the SGV Bancorp, Inc. 1995 Master Stock Option Plan, the
First Federal Savings and Loan Association of San Gabriel Valley 1995 Master
Stock Compensation Plan and the First Federal Savings and Loan Association of
San Gabriel Valley 1995 Directors' Deferred Fee Stock Unit Plan (the Plans). The
Master Stock Option Plan authorizes the granting of 272,765 shares to its
outside directors, officers and employees. The Association contributed funds to
the Master Stock Compensation Plan trust to purchase 81,829 shares of Common
Stock through purchases in the open market. The Master Stock Compensation Plan
is reflected as deferred compensation representing a reduction in stockholders'
equity in the consolidated statements of financial condition as of March 31,
1996. These Plans became effective as of the date of approval.
8
<PAGE> 11
Item 2. Management's Discussion and Analysis of Results of Operations and
----------------------------------------------------------------------
Financial Condition
-------------------
This Management's Discussion and Analysis should be read in conjunction
with the Management's Discussion and Analysis contained in the Company's Annual
Report on Form 10-K, which focuses upon relevant matters occurring during the
year ended June 30, 1995. Accordingly, the ensuing discussion focuses upon the
material matters at and for the nine months and three months ended March 31,
1996.
GENERAL
- - -------
The principal business of the Company is attracting retail deposits from
the general public and investing those deposits, together with funds generated
from operations and borrowings, primarily in one- to four-family residential
mortgage loans. To a lesser extent, the Company engages in secondary marketing
activities and invests in multi-family, commercial real estate, construction,
land and consumer loans. Loan sales come from loans held in the Company's
portfolio designated as being held for sale or originated during the period and
being so designated. The Company retains virtually all the servicing rights of
loans sold. The Company's revenues are derived principally from interest on its
mortgage loans, and to a lessor extent, interest and dividends on its investment
and mortgage-backed securities and income from loan servicing. The Company's
primary sources of funds are deposits, principal and interest payments on loans,
advances from the FHLB and, to lessor extent, proceeds from the sale of loans.
RESULTS OF OPERATIONS
- - ---------------------
The Company recorded net earnings of $6,000 for the three months ended
March 31, 1996 compared to net earnings of $80,000 for the same period in fiscal
1995. The decline in net earnings for the quarter ended March 31, 1996 compared
to the quarter ended March 31, 1995 was due primarily to the increase in the net
loss on real estate operations and to the increase in general and administrative
expenses. For the nine months ended March 31, 1996, net earnings were $306,000
compared to $158,000 for the nine months ended March 31, 1995. For the three
months ended March 31, 1996 and for the nine months ended March 31, 1996, the
net earnings per share were $.01 and $.12, respectively. The earnings per share
for the comparable periods in the prior year were not applicable as the
Association did not convert to stock form until June 1995. A discussion of the
specific components of net earnings is set forth below.
Net Interest Income
- - -------------------
Net interest income before the provision for estimated loan losses was $2.0
million for the three months ended March 31, 1996 and $1.7 million for the same
period ended March 31, 1995. The net interest income before the provision for
estimated loan losses for the nine
9
<PAGE> 12
months ended March 31, 1996 was $5.7 million and $5.3 million for the nine
months ended March 31, 1995.
Interest Income
- - ---------------
Total interest income for the three months ended March 31, 1996 was $5.3
million, an increase of $0.8 million from the comparable period a year ago. The
increase in interest income was primarily related to the $43.9 million increase
in the average balance of interest-earning assets to $294.4 million for the
three months ended March 31, 1996 from $250.5 million for the same period a year
ago. The average balance of loans receivable outstanding increased to $237.8
million for the three months ended March 31, 1996 from $217.3 million for the
same period a year ago due primarily to the purchase of $32.7 million in
adjustable rate one-to four-family mortgage loans at the end of March 1996. The
interest income on mortgage-backed securities increased to $546,000 for the
three months ended March 31, 1996 from $340,000 from the three months ended
March 31, 1995, primarily as a result of the increase in average balances
outstanding. The yield on total interest-earning assets was 7.23% for the three
months ended March 31, 1996 compared to 7.16% for the comparable period a year
ago.
Total interest income for the nine months ended March 31, 1996 was $15.2
million, an increase of $2.0 million from $13.2 million in interest income for
the nine months ended March 31, 1995. The increase in interest income was
primarily due to the $13.9 increase in the average balance of loans receivable
outstanding to $227.6 million for the nine months ended March 31, 1996 from
$213.7 million for the same period a year ago. The increase in interest income
was also due to a 30 basis point increase in the average yield of the average
loans receivable to 7.51% for the nine months ended March 31, 1996 from 7.21%
for the nine months ended March 31, 1995. Interest income on mortgage-backed
securities increased to $1.5 million for the nine months ended March 31, 1996
compared to $1.0 million for the comparable period a year ago. This increase was
due primarily to the increase in the average balance of mortgage-backed
securities to $30.6 million for the nine months ended March 31, 1996 from $21.6
million for the nine months ended March 31, 1995.
Interest Expense
- - ----------------
Total interest expense for the three months ended March 31, 1996 was $3.3
million, an increase of $0.5 million from the three months ended March 31, 1995.
The increase in interest expense was primarily due to the increase in the
average balance of interest-bearing liabilities to $267.7 million for the three
months ended March 31, 1996 from $243.6 million for the three months ended March
31, 1995. The increase in average interest-bearing liabilities was comprised of
the $9.2 million increase in average savings accounts and $14.8 million in
average borrowings from the FHLB. The increase in FHLB borrowings was related to
the purchase of loans and mortgage-backed securities. The increase in interest
expense was also due to the 39 basis point increase in the average cost of
interest-bearing liabilities to 4.97% for the three months ended March 31, 1996
from 4.58% for the same period a year ago. The increase in the average cost of
interest-bearing liabilities was due to the increase in
10
<PAGE> 13
market interest rates during the period and due to the increase in borrowings
from the FHLB, which have a higher average cost than the association's deposits.
Total interest expense for the nine months ended March 31, 1996 was $9.5
million, an increase of $1.7 million from the comparable period ended March 31,
1995. The increase in interest expense was primarily due to the 74 basis point
increase in the average cost of interest-bearing liabilities to 5.07% for the
nine months ended March 31, 1996 from 4.33% for the same period a year ago. The
increase in the average cost of interest-bearing liabilities was due to the
increase in market interest rates during the period. Contributing to the
increase in interest expense was the increase in average interest-bearing
liabilities to $249.6 million for the nine months ended March 31, 1996 from
$241.6 million for the nine months ended March 31, 1995.
Analysis of Net Interest Income
- - -------------------------------
The following table sets forth average interest rates on the Company's
interest-earning assets and interest-bearing liabilities for the three and nine
month periods ended March 31, 1996 and March 31, 1995 (dollars are in thousands
and average balances are based on month-end amounts):
<TABLE>
<CAPTION>
Three Months Ended March 31, Nine months Ended March 31,
----------------------------- ----------------------------
1996 1995 1996 1995
---- ---- ---- ----
Average Yield Average Yield Average Yield Average Yield
Balance Rate Balance Rate Balance Rate Balance Rate
-------------- -------------- -------------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Loans receivable $237,848 7.44% $217,297 7.27% $227,630 7.51% $213,774 7.21%
Mortgage-backed securities 35,121 6.22 20,433 6.66 30,588 6.36 21,599 6.46
Investment securities and other 21,473 6.48 12,781 6.17 20,229 6.13 13,528 5.62
-------- -------- -------- --------
Total interest-earning assets 294,412 7.23% 250,511 7.16% 278,447 7.29% 248,901 7.06%
Non-interest earning assets 11,316 9,193 8,768 9,241
-------- -------- -------- --------
Total assets $305,728 $259,704 $287,215 $258,142
======== ======== ======== ========
LIABILITIES AND EQUITY:
Interest-bearing liabilities:
Savings accounts $212,163 4.70% $202,961 4.58% $206,140 4.78% $201,493 3.87%
Borrowings 55,508 5.97 40,649 6.63 37,443 6.46 40,087 5.62
-------- -------- -------- --------
Total interest-bearing liabilities 267,671 4.97% 243,610 4.58% 249,596 5.07% 241,580 4.33%
Non-interest-bearing liabilities 4,875 2,388 4,443 2,857
Stockholders' equity 33,182 13,706 33,176 13,705 5.62
-------- -------- -------- --------
Total liabilities and equity $305,728 $259,704 $287,215 $258,142 5.62
======== ======== ======== ========
Net interest rate spread 2.26% 2.58% 2.22% 2.73%
Net interest margin 2.71% 2.71% 2.74% 2.85%
Ratio of interest-earning assets
to interest-bearing liabilities 109.99% 102.83% 111.56% 103.03%
</TABLE>
11
<PAGE> 14
The Company's average net interest margin was unchanged at 2.71% for the
three months ended March 31, 1996 as compared to the three months ended March
31, 1995.
The net interest spread declined to 2.26% for the three months ended March 31,
1996 from 2.58% for the comparable period a year ago. The net interest margin
for the nine months ended March 31, 1996 declined by 11 basis points to 2.74%
from 2.85% for the comparable period a year ago. The decrease in the Company's
net interest margin and net interest spread were primarily the result of
interest-bearing liabilities repricing upward more quickly than the
interest-earning assets due to higher market interest rates paid on the
Association's deposits and the increase in the amount of borrowings from the
FHLB. Also, the interest-earning assets repriced more slowly than the
interest-bearing liabilities primarily due to the majority of mortgage loans
having adjustable rates indexed to the Eleventh District Cost of Funds, a
lagging index.
The average yield on loans receivable increased to 7.44% for the three
months ended March 31, 1996 from 7.27% for the comparable period ended March 31,
1995. For the nine months ended March 31, 1996, the average yield on loans
receivable increased to 7.51% from 7.21% for the comparable period a year ago.
The increase in yield was primarily the result of the effect of changes in the
lagging index on the Company's adjustable rate mortgage loan portfolio. The
Company's average investment in mortgage-backed securities increased
approximately $14.7 million to $35.1 million for the three months ended March
31, 1996 from $20.4 million for the comparable period a year ago. For the nine
months ended March 31, 1996, the average investment in mortgage-backed
securities increased to $30.6 million from $21.6 million. The yield on
mortgage-backed securities for the nine month period ended March 31, 1996
decreased slightly to 6.36% from 6.46% for the comparable period a year ago.
The majority of the Company's savings accounts are relatively short term
(less than two years) and therefore the average cost of deposits adjusts
relatively rapidly to market rates. The average cost of savings accounts
increased by 53 basis points to 4.70% for the three months ended March 31, 1996
from 4.17% for the comparable period a year ago. For the nine months ended March
31, 1996, the average cost of savings accounts increased to 4.78% from 3.87% for
the nine months ended March 31, 1995.
Provision for Estimated Loan Losses
- - -----------------------------------
The provision for estimated loan losses for the three months ended March
31, 1996 was $144,000 compared with $126,000 for the three months ended March
31, 1995. For the nine months ended March 31, 1996, the provision for estimated
loan losses was $319,000 compared with $360,000 for the nine months ended March
31, 1995. The increase in the provision for estimated loan losses for the three
months ended March 31, 1996 was due primarily to an increase in the losses
related to fair value adjustments for the loans foreclosed on during the
quarter. The higher than expected provision for loan losses for the nine months
ended March 31, 1996 was due to the continuing weak local real estate market and
decline in real estate values. See "Financial Condition."
12
<PAGE> 15
Other Income (Expense)
- - ----------------------
Other income for the three months ended March 31, 1996 was only $32,000 as
compared to $144,000 for the three months ended March 31, 1995. The decline in
other income was primarily the result of the increase in the net loss from real
estate operations to $211,000 for the three months ended March 31, 1996 versus
$56,000 for the comparable period a year ago. The increase in the net loss from
real estate operations was due primarily to the subsequent fair value
adjustments on real estate owned as a result of further declines in local real
estate market conditions. Other income totaled $375,000 for the nine months
ended March 31, 1996 compared to $384,000 for the nine months ended March 31,
1995. The decline in other income was primarily the result of the increase in
the net loss on real estate operations.
General and Administrative Expenses
- - -----------------------------------
For the three months ended March 31, 1996, general and administrative
expenses increased by $292,000 to $1.9 million compared to $1.6 million for the
three months ended March 31, 1995. The increase was due to the $172,000 increase
in compensation costs following the conversion of the association to a stock
form and the non-recurrence of an $86,000 reversal of accrued compensation
expenses related to a bonus plan in the quarter ended March 31, 1995. The
increase in other operating expenses of $110,000 in the three months ended March
31, 1996 as compared to the quarter ended March 31, 1995 includes approximately
$40,000 in costs related to the review of the $32.7 million loan purchase
completed at the end of March 1995. The general and administrative expenses
increased by $167,000 to $5.2 million for the nine months ended March 31, 1996
from $5.1 million for the nine months ended March 31, 1995. The increase for the
nine month period ended March 31, 1996 was due to the increase in compensation
expense and other operating expenses mentioned above.
Income Taxes
- - ------------
The income tax expense for the Company for the three months ended March
31, 1996 was $6,000, a $74,000 decrease compared to $80,000 for the three months
ended March 31, 1995. The decrease in taxes for the three months ended March 31,
1996 was due entirely to the reduction in earnings before taxes. For the nine
months ended March 31, 1996, the income tax expense was $222,000, an increase of
$108,000 from the nine months ended March 31, 1995. The effective tax rate for
the nine months ended March 31, 1996 and March 31, 1995 was approximately 42.0%
and 41.9%, respectively.
13
<PAGE> 16
FINANCIAL CONDITION
- - -------------------
The Company's total assets were $333.1 million at March 31, 1996, an
increase of $59.7 million from the $273.4 million in total assets at June 30,
1995. The Company increased its loans receivable outstanding by $42.5 million to
$259.9 million at March 31, 1996 as compared to $217.4 million at June 30, 1995.
The increase in loans receivable
outstanding was primarily the result of purchases of adjustable rate loans
totaling $48.3 million during the nine months ending March 31, 1996. The loans
purchased are single-family residential mortgages, secured by properties located
in Southern California, and have adjustable rates which are indexed to the 11th
District Cost of Funds with repricing frequencies within one year. The Company
increased its investment in mortgage-backed securities by $22.4 million to $41.8
million at March 31, 1996 from $19.4 million at June 30, 1995. The increase in
loans receivable outstanding and mortgage-backed securities was funded by the
$18.9 million increase in deposit accounts, the $14.1 million decrease in cash
and short-term bank obligations and the increase of $40.7 million in FHLB
borrowings over the same period.
During the nine months ended March 31, 1996, the Company originated $22.1
million in loans, representing a $3.2 million decrease from the $25.3 million in
loans originated in the nine month period ended March 31, 1995. As stated above,
the Company's growth in its loans receivable outstanding was the result of the
purchase of $48.3 million in residential mortgage loans. The net result was an
increase in loans receivable outstanding of $42.5 million for the nine months
ended March 31, 1996. The Company also sold $8.9 million in mortgage loans to
the secondary market during the nine months ended March 31, 1996 as compared to
$163,000 for the same period a year ago.
The Company's non-performing assets totaled $4.6 million at March 31, 1996
compared to $2.7 million at June 30, 1995. The increase in non-performing
assets, which primarily consist of $2.4 million in loans on non-accrual and $2.2
million in real estate owned (primarily one-to four-family properties), is due
to continued weakness in the economic conditions in the Company's local area,
which has adversely affected both the ability of some borrowers to service their
loans and the value of the underlying properties. During the three months ended
March 31, 1996, the Company foreclosed on four single-family residential loans
which, in total, had $1.3 million in remaining principal balance. The Company's
ratio of non-performing assets to total assets increased to 1.38% at March 31,
1996 from 1.00% at June 30, 1995. From March 31, 1996 through May 9, 1996, the
Company had reduced its non-performing assets by $715,000 related to the sale of
14
<PAGE> 17
foreclosed properties. The following table sets forth the non-performing assets
at March 31, 1996 and June 30, 1995:
<TABLE>
<CAPTION>
March 31, 1996 June 30, 1995
-------------- -------------
(dollars in thousands)
<S> <C> <C>
Non-accrual loans $2,407 $1,922
Real estate acquired through foreclosure 2,184 822
------ ------
Non-performing assets $4,591 $2,744
------ ------
Non-performing assets as a percent of total
assets 1.38% 1.00%
Non-performing loans as a percent of gross
loans receivable 0.93% 0.88%
</TABLE>
The Company adopted SFAS No. 114, as amended by SFAS No. 118 as of July 1,
1995 in regards to the accounting for impaired loans. As of the date of
adoption, there was no impact to the Company. See Note 3 of Notes to
Consolidated Financial Statements for a further discussion of the Company's
adoption of SFAS No. 114. The Company considers a loan impaired when it is
probable that the Company will be unable to collect all contractual principal
and interest payments under the terms of the loan agreement. Loans are evaluated
for impairment as part of the Company's normal internal asset review process.
The Company applies the measurement provisions of SFAS No. 114 to all loans in
its portfolio with the exception of one- to four-family residential mortgage
loans and consumer lines of credit which are evaluated on a collective basis for
impairment. Also, loans which have delays in payments of less than 4 months are
not necessarily considered impaired unless other factors apply to the loans. The
accrual of interest income on impaired loans is discontinued when, in
management's opinion, the borrower may be unable to meet payments as they become
due. When the interest accrual is discontinued, all unpaid accrued interest is
reversed. Interest income is subsequently recognized only to the extent cash
payments are received. Where impairment is considered permanent, a charge-off is
recorded; where impairment is considered temporary, an allowance is established.
Impaired loans which are performing under the contractual terms are reported as
performing loans, and cash payments are allocated to principal and interest in
accordance with the terms of the loan. At March 31, 1996, the Company had
classified $1.6 million of its loans as impaired with no specific reserves set
aside as of March 31, 1996 as determined in accordance with SFAS No. 114. In
addition, the Company has $850,000 in loans which are collectively evaluated for
impairment with no specific reserves set aside as of March 31, 1996. The average
recorded investment in impaired loans, inclusive of those evaluated
collectively, during the nine months ended March 31, 1996, was $2.5 million.
The Company, in consideration of the current economic environment and the
diversity of the loan portfolio, maintained the allowance for estimated loan
losses at March 31, 1996 at $802,000. The allowance for estimated loan losses is
maintained at an amount
15
<PAGE> 18
management considers adequate to cover estimated losses in loans receivable
which are deemed probable and estimable. The allowance is based upon a number of
factors, including current economic conditions, actual loss experience and
industry trends. The Company's non-performing loans are primarily made up of
one-to four-family residential mortgage loans. The following table sets forth
the activity in the Company's allowance for estimated loan losses for the nine
months ended March 31, 1996:
<TABLE>
<CAPTION>
Activity for the nine months ended
March 31, 1996
--------------
<S> <C>
Balance at June 30, 1995 $792,000
Add:
Provision for estimated loan losses 319,000
Recoveries of previous charge-offs 1,000
Less:
Charge-offs 310,000
--------
Balance at March 31, 1996 $802,000
========
</TABLE>
The Company's total liabilities increased to $300.4 million at March 31,
1996 from $240.4 million at June 30, 1995. Total deposit accounts increased
$18.9 million to $223.1 million at March 31, 1996 from $204.3 million at June
30, 1995. The Company also increased its Federal Home Loan Bank (FHLB) advances
during the nine months ended March 31, 1996 to $74.1 million at March 31, 1996
from $33.4 million at June 30, 1995. The increase in FHLB advances were
primarily used to aid in funding the loan and mortgage-backed security purchases
during the nine months ended March 31, 1996 and to assist in lengthening the
average life of the total liabilities of the Company. The Company utilizes FHLB
advances as part of its asset and liability management strategy.
The Company's stockholders' equity decreased from $33.0 million at June
30, 1995 to $32.6 million at March 31, 1996 primarily as a result of the
increase in the deduction from stockholders' equity attributable to deferred
compensation.
MANAGEMENT OF INTEREST RATE RISK
- - --------------------------------
The Company's profitability is dependent to a large extent upon its net
interest income, which is the difference between its interest income on
interest-earning assets, such as loans and investments, and its interest expense
on interest-bearing liabilities, such as deposits and borrowings. To manage its
interest rate risk, the Company has utilized the following strategies : (i)
emphasizing the origination and/or purchase of adjustable-rate one- to
four-family mortgage loans for portfolio; (ii) selling to the secondary market
substantially all fixed-rate mortgage loans originated; (iii) holding primarily
short-term mortgage-backed and investment securities; and (iv) attempting to
reduce the overall interest rate sensitivity of liabilities by emphasizing core
and longer-term deposits and utilizing FHLB advances.
16
<PAGE> 19
LIQUIDITY
- - ---------
The Company's primary sources of funds are deposits, principal and
interest payments on loans and mortgage-backed securities, FHLB advances and
increases in deposits and, to a lesser extent, proceeds from the sale of loans
and investments. 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 Association, by regulation, must maintain its liquidity ratio at no
less than 5.0% of deposits and short-term borrowings. Liquidity represents cash
and certain investments which are not committed or pledged to specific
liabilities. The Association's average liquidity ratio for March 31, 1996 and
March 31, 1995 was 10.13% and 6.06%, respectively.
COMMITMENTS AND CONTINGENT LIABILITIES
- - --------------------------------------
At March 31, 1996, there were no material changes to the Company's
commitments or contingent liabilities from the period ended June 30, 1995 as
discussed in the Company's notes to the consolidated financial statements
reflected in the audited consolidated financial statements of SGV Bancorp, Inc.,
for the year ended June 30, 1995 included in the Annual Report on Form 10-K for
the year ended June 30, 1995. At March 31, 1996, the Company had outstanding
loan commitments of $2.5 million as compared to $1.1 million at June 30, 1995.
REGULATORY CAPITAL
- - ------------------
The Office of Thrift Supervision (OTS) capital regulations require savings
institutions to meet three minimum capital requirements: a 1.5% tangible capital
ratio, a 3% leverage (core capital) ratio and an 8% risk-based capital ratio.
The core capital requirement has been effectively increased to 4% because the
prompt corrective action legislation provides that institutions with less than
4% core capital will be deemed "undercapitalized". In addition, the OTS, under
the prompt corrective action regulation can impose various constraints on
institutions depending on their level of capitalization ranging from
well-capitalized to critically undercapitalized. At March 31, 1996, the
Association was considered "well-capitalized".
17
<PAGE> 20
The Association was in compliance with the capital requirements in effect
as of March 31, 1996. The following table reflects the required ratios and the
actual capital ratios of the Association at March 31, 1996:
<TABLE>
<CAPTION>
Capital
-------
Actual Required Excess Actual Required
Capital Capital Amount Percent Percent
------- ------- ------ ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Tangible $25,056 $ 4,950 $20,106 7.59% 1.50%
Core $25,056 $ 9,901 $15,155 7.59% 3.00%
Risk-based $25,858 $12,737 $13,121 16.24% 8.00%
</TABLE>
PENDING LEGISLATION
- - -------------------
Legislative initiatives regarding the recapitalization of the Savings
Association Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation
("FDIC"), deposit insurance premiums, FICO bond interest payments, the merger of
SAIF and the Bank Insurance Fund ("BIF"), financial industry regulatory
structure, bad debt recapture and revision of thrift and bank charters are still
pending before Congress. Management cannot predict the ultimate impact any final
legislation or regulatory actions may have on the operations of the Company.
Without passage of legislation addressing the FDIC insurance premium disparity,
the Company, like other thrifts, will continue to pay deposit insurance premiums
significantly higher than banks. As long as such premium differential continues,
it may have adverse consequences on the Company's earnings and the Company may
be placed at a substantial competitive disadvantage to commercial banking
organizations insured by the BIF.
18
<PAGE> 21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved as plaintiff or defendant in various legal actions
incident to its business, none of which is believed by management to be material
to the financial condition of the Company.
Item 2. Changes in Securities
---------------------
None.
Item 3. Defaults in Securities
----------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
---------------------------------------------------
The Company held its Annual Meeting of Shareholders on January 17, 1996.
At the Annual Meeting, the shareholders elected Irven G. Reynolds and Benjamin
S. Wong to three year terms. Directors Barrett G. Andersen, Royce A. Stutzman,
John D. Randall and Thomas A. Patronite have terms of office that continued
after the Annual Meeting. The shareholders also approved the SGV Bancorp, Inc.
1995 Stock Option Plan, the First Federal Savings and Loan Association of San
Gabriel Valley 1995 Master Stock Compensation Plan, the First Federal Savings
and Loan Association of San Gabriel Valley 1995 Directors' Deferred Fee Stock
Unit Plan and ratified the appointment of Deloitte & Touche, LLP as independent
auditors of the Company for the year ending June 30, 1996.
The vote on each matter was as follows.
1. For Directors
BROKER
FOR WITHHELD NON-VOTES
Irven G. Reynolds 2,619,048 29,625 --
Benjamin S. Wong 2,614,923 33,750 --
2. Other Matters
BROKER
FOR AGAINST ABSTAIN NON-VOTES
Approval of SGV Bancorp, Inc.
1995 Master Stock Option Plan 1,640,815 253,772 14,140 739,946
Approval of First Federal Savings
and Loan Association of San Gabriel
Valley 1995 Master Stock
Compensation Plan 1,538,190 251,156 115,841 743,486
19
<PAGE> 22
2. Other Matters (cont.)
BROKER
FOR AGAINST ABSTAIN NON-VOTES
Approval of First Federal Savings
and Loan Association of San Gabriel
Valley 1995 Directors' Deferred
Fee Stock Unit Plan 2,130,327 385,150 13,266 119,930
Ratification of the appointment of
Deloitte & Touche, LLP as
independent auditors for the
Company 2,569,702 72,873 4,850 1,248
Item 5. Other Information
-----------------
None.
Item 6. Exhibits and Reports on Form 8-K
--------------------------------
(a) The following exhibits are filed as part of this report:
3.1 Certificate of Incorporation of SGV Bancorp, Inc. *
3.2 Bylaws of SGV Bancorp, Inc. *
11.0 Computation of per share earnings (filed herewith).
27.0 Financial data schedule (filed herewith).
(b) No reports on Form 8-K were filed by the Company during the quarter
ended March 31, 1996.
- - -------------------
* Incorporated herein by reference from the Exhibits to the Registration
Statement on Form S-1, as amended, filed on March 6, 1995, Registration No.
33-90018.
20
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SGV BANCORP, INC.
May 14, 1996 /s/ Barrett G. Andersen
- - -------------- -------------------------
Date Barrett G. Andersen
President and Chief Executive Officer
May 14, 1996 /s/ Ronald A. Ott
- - ------------ --------------------
Date Ronald A. Ott
Executive Vice President
Chief Financial Officer and Treasurer
21
<PAGE>
SGV BANCORP, INC.
EXHIBIT NO. 11: STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
March 31, 1996 March 31, 1996
-------------- --------------
(in thousands except per share amounts)
<S> <C> <C>
Net Income $ 6 $ 306
========= =========
Weighted average shares outstanding 2,474 2,534
Common stock equivalents due to dilutive
effect on stock options 0 0
--------- ---------
Total weighted average common shares
and equivalents outstanding 2,474 2,534
Primary earnings per share $ 0.01 $ 0.12
========= ========
Total weighted average common shares
and equivalent outstanding 2,474 2,534
Additional dilutive shares using
the end of period market value versus the
average market value when applying the treasury
stock method 0 0
---------- --------
Total weighted average common shares and
equivalent outstanding for fully diluted
computation 2,474 2,534
========== ========
Fully diluted earnings per share $ 0.01 $ 0.12
========== ========
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary information extracted from the Form 10-Q and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<CIK> 0000940511
<NAME> SGV Bancorp, Inc.
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1995
<PERIOD-END> MAR-31-1996
<CASH> 4,269
<INT-BEARING-DEPOSITS> 2,969
<FED-FUNDS-SOLD> 2,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 27,939
<INVESTMENTS-CARRYING> 23,782
<INVESTMENTS-MARKET> 23,552
<LOANS> 260,731
<ALLOWANCE> 802
<TOTAL-ASSETS> 333,064
<DEPOSITS> 223,148
<SHORT-TERM> 35,500
<LIABILITIES-OTHER> 3,220
<LONG-TERM> 38,615
0
0
<COMMON> 27
<OTHER-SE> 32,554
<TOTAL-LIABILITIES-AND-EQUITY> 333,064
<INTEREST-LOAN> 12,828
<INTEREST-INVEST> 1,852
<INTEREST-OTHER> 536
<INTEREST-TOTAL> 15,216
<INTEREST-DEPOSIT> 7,391
<INTEREST-EXPENSE> 9,496
<INTEREST-INCOME-NET> 5,720
<LOAN-LOSSES> 319
<SECURITIES-GAINS> 29
<EXPENSE-OTHER> 5,248
<INCOME-PRETAX> 528
<INCOME-PRE-EXTRAORDINARY> 528
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 306
<EPS-PRIMARY> 0.12
<EPS-DILUTED> 0.12
<YIELD-ACTUAL> 7.29
<LOANS-NON> 2,407
<LOANS-PAST> 0
<LOANS-TROUBLED> 1,546
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 792
<CHARGE-OFFS> 310
<RECOVERIES> 1
<ALLOWANCE-CLOSE> 802
<ALLOWANCE-DOMESTIC> 802
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0<F1>
<FN>
<F1> This information is not contained in the Form 10-Q.
</FN>
</TABLE>
