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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 December 31, 1996
or
[_] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from_______________________to_________________________
Commission File Number 0-25664
SGV BANCORP, INC.
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(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
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(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: 2,332,176 shares of common
stock, par value $0.01 per share, were outstanding as of February 10, 1996.
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SGV BANCORP, INC.
Form 10-Q
Index
Part I FINANCIAL INFORMATION PAGE
----
Item 1 Consolidated Statements of Financial Condition:
December 31, 1996 and June 30, 1996...............................1
Consolidated Statements of Operations:
For the Six Months Ended December 31, 1996 and 1995 and for the
Three Months Ended December 31, 1996 and 1995 ....................2
Consolidated Statements of Cash Flows:
For the Six Months Ended December 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.....................10
PART II OTHER INFORMATION
Item 1 Legal Proceedings.................................................21
Item 2 Changes in Securities.............................................21
Item 3 Defaults Upon Senior Securities...................................21
Item 4 Submission of Matters to a Vote of Security Holders...............21
Item 5 Other Information.................................................21
Item 6 Exhibits and Reports on Form 8-K..................................21
SIGNATURES....................................................................22
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SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(in thousands, except share data) (unaudited)
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December 31, June 30,
1996 1996
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ASSETS:
Cash and cash equivalents, including short-term bank obligations of $6,030
at December 31, 1996 and $4,025 at June 30, 1996 $ 11,059 $ 8,884
Investment securities available for sale, amortized cost of $12,000
at December 31, 1996 and $15,000 at June 30, 1996 11,975 14,904
Mortgage-backed securities available for sale, amortized cost of
$25,230 at December 31, 1996 and $16,863 at June 30, 1996 25,141 16,614
Mortgage-backed securities held to maturity, estimated fair value of
$25,453 at December 31, 1996 and $27,124 at June 30, 1996 25,647 27,701
Loans receivable held for sale 186 723
Loans receivable held for investment, net of allowance for estimated
loan losses of $1,114 at December 31, 1996 and $1,058 at June 30, 1996 284,658 255,953
Accrued interest receivable 2,748 2,588
Stock of Federal Home Loan Bank of San Francisco, at cost 3,867 3,747
Real estate acquired through foreclosure, net 770 1,489
Premises and equipment, net 2,940 3,015
Prepaid expenses and other assets, net 832 437
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Total assets $ 369,823 $ 336,055
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LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposit accounts $ 248,459 $ 234,039
Federal Home Loan Bank advances 77,303 67,509
Securities sold under agreements to repurchase 9,600
Accrued expenses and other liabilities 3,344 2,921
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Total liabilities 338,706 304,469
STOCKHOLDERS' EQUITY:
Preferred stock, $.01 par value; 2,000,000 shares authorized; none
issued
Common stock, $.01 par value; 10,000,000 shares authorized;
2,727,656 issued; 2,521,276 shares outstanding 27 27
Additional paid-in capital 20,719 20,684
Retained earnings, substantially restricted 14,422 14,470
Net unrealized loss on investment securities and mortgage-backed
securities available for sale, net of taxes (66) (202)
Deferred stock compensation (2,076) (2,153)
Treasury stock (1,909) (1,240)
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Total stockholders' equity 31,117 31,586
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Total liabilities and stockholders' equity $ 369,823 $ 336,055
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SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)(Unaudited)
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For the Three Months For the Six Months
Ended December 31, Ended December 31,
1996 1995 1996 1995
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INTEREST INCOME:
Interest on loans $ 5,063 $ 4,266 $ 9,973 $ 8,402
Interest on investment securities 263 98 575 183
Interest on mortgage-backed securities 964 541 1,703 913
Other 151 146 298 399
----------- ----------- ----------- -----------
Total interest income 6,441 5,051 12,549 9,897
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INTEREST EXPENSE:
Interest on deposit accounts 2,902 2,470 5,698 4,896
Interest on borrowings 1,218 679 2,285 1,275
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Total interest expense 4,120 3,149 7,983 6,171
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Net interest income before provision
for estimated loan losses 2,321 1,902 4,566 3,726
PROVISION FOR ESTIMATED LOAN LOSSES 105 64 294 175
----------- ----------- ----------- -----------
Net interest income after provision for
estimated loan losses 2,216 1,838 4,272 3,551
OTHER INCOME (EXPENSE):
Loan servicing and other fees 114 107 223 213
Secondary marketing activity, net (16) (1) (26) (15)
Gain (loss) on sale or redemption of securities
available for sale, net 161 (1) 161 (1)
Other income 103 133 245 243
Net loss on real estate acquired through foreclosure (12) (80) (69) (97)
----------- ----------- ----------- -----------
Total other income 350 158 534 343
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GENERAL AND ADMINISTRATIVE EXPENSES:
Compensation and other employee expenses 982 922 1,894 1,800
Office occupancy 181 202 370 402
Equipment 187 191 370 368
Advertising 40 18 70 42
FDIC insurance premiums 134 119 261 236
FDIC special assessment 1,332
Other operating expenses 316 285 585 529
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Total general and administrative expenses 1,840 1,737 4,882 3,377
----------- ----------- ----------- -----------
EARNINGS(LOSS) BEFORE INCOME TAXES 726 259 (76) 517
INCOME TAXES 310 107 (28) 216
----------- ----------- ----------- -----------
NET EARNINGS(LOSS) $ 416 $ 152 $ (48) $ 301
=========== =========== =========== ===========
EARNINGS(LOSS) PER SHARE $ 0.18 $ 0.06 $ (0.02) $ 0.12
=========== =========== =========== ===========
Weighted Average Shares Outstanding (000's) 2,325 2,545 2,343 2,548
=========== =========== =========== ===========
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SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
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For the Six Months
Ended December 31,
1996 1995
-----------------------------------
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ (48) $ 301
Adjustments to reconcile net earnings to net
cash used in operating activities:
Depreciation and amortization 165 178
Loans originated for sale (3,295) (2,817)
Proceeds from sale of loans 3,301 2,838
Gain on sale of loans, net (6) (21)
Gain on sale of mortgage-backed securities
available for sale, net (161)
Federal Home Loan Bank stock dividend (117) (73)
Decrease (increase) in prepaid expenses and other assets (401) 35
Amortization of deferred loan fees (9) (45)
Deferred loan origination costs (115) (67)
Increase (decrease) in accrued expenses and other liabilities 186 (556)
Provision for estimated loan losses 294 175
Provision for estimated real estate losses 30 59
Premium amortization, net 108 86
Increase in accrued interest receivable (160) (230)
Other, net 270 172
-------------- --------------
Net cash provided by operating activities 42 35
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities available for sale (28,651) (6,000)
Proceeds from redemption of investment securities
available for sale 31,650 3,000
Proceeds from redemption of investment securities held to maturity 3,200
Purchase of mortgage-backed securities available for sale (19,999) (11,914)
Purchase of mortgage-backed securities held to maturity (5,607)
Proceeds from sale of mortgage-backed securities available for sale 9,866
Principal repayments on mortgage-backed securities 3,873 3,039
Loans funded, net (14,682) (9,488)
Loans purchased, net (29,894) (15,576)
Principal repayments on loans 14,637 9,863
Proceeds from sale of real estate 2,168 148
Purchase of premises and equipment (90) (436)
Other, net (3) 1
-------------- --------------
Net cash used in investing activities (31,125) (29,770)
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SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands) (Unaudited)
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For the Six Months
Ended December 31,
1996 1995
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in certificate accounts $ 9,811 $ 5,983
Net decrease in passbook, money market savings
NOW and noninterest-bearing accounts 4,610 (2,200)
Proceeds from Federal Home Loan Bank advances 29,000 16,000
Repayment of Federal Home Loan Bank advances (19,206) (223)
Proceeds from reverse repurchase agreements, net 9,600
Purchase of treasury stock (669)
Other, net 112 118
-------------- -------------
Net cash provided by financing activities 33,258 19,678
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS 2,175 (10,057)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 8,884 23,387
-------------- -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 11,059 $ 13,330
============== =============
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the period for:
Interest $ 8,117 $ 6,159
Income taxes, net of refunds received 50
NONCASH INVESTING ACTIVITIES DURING THE PERIOD:
Real estate acquired through foreclosure 1,469 1,185
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
Change in net unrealized loss on investment securities and
mortgage-backed securities available for sale, net of taxes 136 (32)
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4
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SGV BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 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. The Association's revenues are derived principally from interest on its
mortgage loans, and to a lesser extent, interest and dividends on its investment
and mortgage-backed securities and income from loan servicing. The Association's
primary sources of funds are deposits, principal and interest payments on loans,
advances from the Federal Home Loan Bank of San Francisco (the FHLB) and, to a
lesser extent, proceeds from the sale of loans. As of December 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
5
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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 six-month period ended December 31, 1996 are not necessarily
indicative of the results that may be expected for the entire fiscal year.
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, 1996 included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1996.
2. Earnings Per Share
------------------
Earnings per share for the three months and six months ended December 31,
1996 and December 31, 1995 are based on the common shares of 2,727,656 as
adjusted for treasury stock, the ESOP plan and the stock compensation plan. The
weighted average number of shares unallocated under the ESOP for the three
months ended December 31, 1996 and December 31, 1995 were 153,053 and 180,329,
respectively, and for the six months ended December 31, 1996 and December 31,
1995 were 157,599 and 184,875, 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 six months ended
December 31, 1996 and December 31, 1995 were 81,829 and 81,829, respectively.
The stock compensation plan was approved by shareholders on January 17, 1996,
therefore, no reduction in outstanding shares was applicable for the three
months or six months ended December 31, 1995. Also, in regards to treasury
stock, the weighted average number of shares reducing shares outstanding for
earnings per share for the three and six months ended December 31, 1996 were
168,047 and 145,428, respectively.
3. Loans Receivable
----------------
On July 1, 1995, the Company adopted Statement of Financial Accounting
Standards (SFAS) No. 114, "Accounting by Creditors for Impairment of a Loan," as
amended by SFAS No. 118, "Accounting by Creditors for Impairment of a Loan -
Income Recognition and Disclosures." These statements generally require 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.
The adoption of these statements did not have a material impact on the results
of operations or the financial position of the Company, taken as a whole.
6
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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 four 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 December 31, 1996, the Company had
classified no loans as impaired with no specific reserves set aside as of
December 31, 1996 as determined in accordance with SFAS No. 114. In comparison,
as of June 30, 1996, the Company had classified $1.1 million of its loans as
impaired with $91,000 in specific reserves. In addition, as of December 31,
1996, the Company had $1.4 million in loans which were collectively evaluated
for impairment compared to $821,000 in loans collectively evaluated at June 30,
1996. The average recorded investment in impaired loans, inclusive of those
evaluated collectively, during the six months ended December 31, 1996, was $1.2
million, whereas, the average for the twelve months ended June 30, 1996 was $2.4
million.
4. Accounting Principles
---------------------
The FASB has issued SFAS No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed Of" and SFAS No. 122,
"Accounting for Mortgage-Servicing Rights" which the Company adopted effective
July 1, 1996. There was no material impact on the Company's financial condition
and results of operations upon adoption of these statements.
In October 1995, the FASB issued SFAS No. 123, "Accounting for Stock-
Based Compensation" which became effective for the Company beginning January 1,
1996. SFAS 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.
7
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In June 1996, the FASB issued SFAS No. 125, "Accounting for Transfers and
Servicing of Financial Assets and Extinguishments of Liabilities" ("SFAS No.
125") which was amended by SFAS No. 127. This Statement provides accounting and
reporting standards for transfers and servicing of financial assets and
extinguishments of liabilities based on consistent application of a financial-
components approach that focuses on control. It distinguishes transfers of
financial assets that are sales from transfers that are secured borrowings.
Under the financial-components approach, after a transfer of financial assets,
an entity recognizes all financial and servicing assets it controls and
liabilities it has incurred and derecognizes financial assets it no longer
controls and liabilities that have been extinguished. The financial-components
approach focuses on the assets and liabilities that exist after the transfer. If
a transfer does not meet the criteria for a sale, the transfer is accounted for
as a secured borrowing with a pledge of collateral. The Statement is effective
for transfers and servicing of financial assets and extinguishments of
liabilities occurring after December 31, 1996. Retroactive application of this
Statement is not permitted. The Company does not anticipate that the
implementation of SFAS No. 125 will have a material impact on its results of
operations or financial condition.
5. 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.
6. 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 options to purchase 272,765
shares to the Company's 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 December 31, 1996. These Plans became effective as
of the date of approval.
7. FDIC Special Assessment
-----------------------
On September 30, 1996, federal legislation was enacted to recapitalize
the SAIF insurance fund of the Federal Insurance Deposit Corporation through a
one-time special assessment on SAIF-insured deposits. The recapitalization of
SAIF will result in lower deposit
8
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insurance costs for the Association in future periods. This one-time special
assessment of $1.3 million represents 65.7 basis points of the deposits held by
the Association as of March 31, 1995. Although the Association paid this
assessment in November 1996, the Association was required to accrue for the
assessment as of September 30, 1996.
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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, 1996. Accordingly, the ensuing discussion focuses upon the
material matters at and for the three months and six months ended December 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 of the servicing rights
of loans sold. The Company's revenues are derived principally from interest on
its mortgage loans, and to a lesser 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 a lesser extent, proceeds from the sale
of loans.
RESULTS OF OPERATIONS
- ---------------------
The Company recorded net earnings of $416,000 for the three months ended
December 31, 1996 compared to net earnings of $152,000 for the three months
ended December 31, 1995. For the six months ended December 31, 1996, the Company
recorded a net loss of $48,000 compared to net earnings of $301,000 for the six
months ended December 31, 1995. For the three months ended December 31, 1996 and
December 31, 1995, the net earnings per share were $0.18 and $0.06,
respectively. The net loss per share for the six months ended December 31, 1996
was $0.02 per share compared to net earnings per share of $0.12 for the six
months ended December 31, 1995. The loss for the six months ended December 31,
1996 was due to the payment of the one-time special assessment to recapitalize
the SAIF insurance fund. This one-time special assessment was approximately $1.3
million on a pre-tax basis and represented 65.7 basis points of the deposits
held by the Association as of March 31, 1995. Excluding the accrual for the
special assessment, the net earnings for the six months ended December 31, 1996
would have been approximately $718,000, or $0.31 per share.
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Net Interest Income
- -------------------
Net interest income before the provision for estimated loan losses was
$2.3 million for the three months ended December 31, 1996 and $1.9 million for
the three months ended December 31, 1995. For the six months ended December 31,
1996 and December 31, 1995, net interest income before the provision for
estimated loan losses were $4.6 million and $3.7 million, respectively.
Interest Income
- ---------------
Total interest income for the three months ended December 31, 1996
increased to $6.4 million from $5.1 million for the three months ended December
31, 1995 due primarily to the increase in average balances of interest-earning
assets. Interest income on loans increased to $5.1 million for the three months
ended December 31, 1996 from $4.3 million for the three months ended December
31, 1995 primarily due to the increase in the average balance of loans
receivable outstanding to $267.9 million for the three months ended December 31,
1996 from $222.5 million for the three months ended December 31, 1995. Interest
income on mortgage-backed securities increased to $964,000 for the three months
ended December 31, 1996 from $541,000 from the three months ended December 31,
1995 due primarily to the increase in the average balance of mortgage-backed
securities to $55.4 million for the three months ended December 31, 1996 from
$33.5 million for the three months ended December 31, 1995. The increase in
interest income on investment securities and other investments to $414,000 for
the three months ended December 31, 1996 from $244,000 for the three months
ended December 31, 1995 was primarily due to the increase in average balances to
$25.7 million for the three months ended December 31, 1996 from $15.3 million
for the three months ended December 31, 1995.
Total interest income for the six months ended December 31, 1996 was
$12.5 million as compared to $9.9 million for the six months ended December 31,
1995 due primarily to the increase in the average balances of interest-earning
assets. Interest income on loans increased to $10.0 million for the six months
ended December 31, 1996 from $8.4 million for the six months ended December 31,
1995 due primarily to the increase in the average balance of loans receivable to
$262.8 million for the six months ended December 31, 1996 from $220.3 million
for the six months ended December 31, 1995. Interest income from mortgage-backed
securities increased to $1.7 million for the six months ended December 31, 1996
from $0.9 million for the six months ended December 31 1995 due primarily to the
increase in the average balances to $50.3 million for the six months ended
December 31, 1996 from $28.4 million for the six months ended December 31, 1995.
The interest income on other investment securities and other investments
increased to $873,000 for the six months ended December 31, 1996 from $582,000
for the six months ended December 31, 1995. The increase was due primarily to
the increase in the average balances to $27.5 million for the six months ended
December 31, 1996 from $19.0 million for the six months ended December 31, 1995.
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Interest Expense
- ----------------
Total interest expense for the three months ended December 31, 1996 was
$4.1 million as compared to $3.1 million for the three months ended December 31,
1995. The increase in expense was due primarily to the increase in the average
balance of interest-bearing liabilities. Interest expense from savings accounts
increased to $2.9 million for the three months ended December 31, 1996 from $2.5
million for the three months ended December 31, 1995 due primarily to the
increase the average balances to $242.1 million for the three months ended
December 31, 1996 from $203.9 million for the three months ended December 31,
1995. The interest expense from borrowings increased to $1.2 million for the
three months ended December 31, 1996 from $0.7 million for the three months
ended December 31, 1995 due primarily to the increase in average balances to
$80.1 million for the three months ended December 31, 1996 from $40.2 million
for the three months ended December 31, 1995.
Total interest expense for the six months ended December 31, 1996 was
$8.0 million as compared to $6.2 million for the six months ended December 31,
1995. The increase in expense was due primarily to the increase in the average
balance of interest-bearing liabilities. Interest expense from savings accounts
increased to $5.7 million for the six months ended December 31,1996 from $4.9
million for the six months ended December 31, 1995 due primarily to the increase
in the average balance of savings accounts to $238.5 million for the six months
ended December 31, 1996 from $202.8 million for the three months ended December
31, 1995. Interest expense from borrowings increased to $2.3 million for the six
months ended December 31, 1996 from $1.3 million for the six months ended
December 31, 1995 due primarily to the increase in the average balance of
borrowings to $74.9 million for six months ended December 31, 1996 from $37.4
million for the six months ended December 31, 1995.
12
<PAGE>
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 month
period ended December 31, 1996 and December 31, 1995 (dollars are in thousands
and average balances are based on month-end amounts):
<TABLE>
<CAPTION>
Three Months Ended December 31, Six Months Ended December 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 $267,871 7.56% $222,513 7.67% $262,766 7.59% $220,287 7.63%
Mortgage-backed securities 55,403 6.96 33,530 6.45 50,338 6.77 28,439 6.42
Investment securities and other 25,734 6.44 15,320 6.37 27,538 6.34 19,028 6.12
-------- -------- -------- --------
Total interest-earning assets 349,008 7.38% 271,363 7.45% 340,642 7.37% 267,754 7.39%
Noninterest-earning assets 11,682 9,918 11,061 9,714
-------- -------- -------- --------
Total assets $360,690 $281,281 $351,703 $277,468
======== ======== ======== ========
Liabilities and Equity:
Interest-bearing liabilities:
Savings accounts $242,093 4.79% $203,902 4.85% $238,515 4.78% $202,759 4.83%
Borrowings 80,076 6.08 40,180 6.77 74,861 6.10 37,443 6.82
-------- -------- -------- --------
Total interest-bearing liabilities 322,169 5.12% 244,082 5.16% 313,376 5.09% 240,202 5.14%
Noninterest-bearing liabilities 7,248 3,894 6,868 4,062
Stockholders' equity 31,273 33,305 31,459 33,204
-------- -------- -------- --------
Total liabilities and equity $360,690 $281,281 $351,703 $277,468
======== ======== ======== ========
Net interest rate spread 2.26% 2.29% 2.28% 2.25%
Net interest margin 2.66% 2.80% 2.68% 2.78%
Ratio of interest-earning assets
to interest-bearing liabilities 108.33% 111.18% 108.70% 111.47%
</TABLE>
The Company's average net interest spread decreased slightly to 2.26% for
the three months ended December 31, 1996 as compared 2.29% for the three months
ended December 31, 1995. The decrease was due partially to the decrease in the
yield on interest earning assets to 7.38% for the three months ended December
31, 1996 from 7.45% for the three months ended December 31, 1995 and partially
offset by the decrease in the cost of interest-bearing liabilities to 5.12% for
the three months ended December 31, 1996 from 5.16% for the three months ended
December 31, 1995.
The average yield on loans receivable decreased to 7.56% for the three
months ended December 31, 1996 from 7.67% for the three months ended December
31, 1995. The decrease in yield was due primarily to the decrease in yield from
adjustable rate mortgage loans indexed to the Eleventh Cost of Funds Index
(COFI). The COFI decreased an average of 28 basis points from the last three
months in 1996 versus the same period in 1995. The average yield on mortgage-
backed securities increased to 6.96% for the three months ended December 31,
1996 from 6.45% for the three months ended December 31,
13
<PAGE>
1995. The increase was due to the Company's purchase of fixed and adjustable
rate mortgage-backed securities with higher yields during the past year. Also,
the average balance of mortgage-backed securities increased to $55.4 million for
the three months ended December 31, 1996 from $33.5 million for the three months
ended December 31, 1995.
The majority of the Association's savings accounts are relatively short
term (less than two years) and therefore the average cost of deposits may adjust
relatively rapidly to market rates. The average cost of savings accounts
decreased by 6 basis points to 4.79% for the three months ended December 31,
1996 from 4.85% for the three months ended December 31, 1995. The average
balance of savings accounts increased to $242.1 million for the three months
ended December 31, 1996 from $203.9 million for the three months ended December
31, 1995. Also, the average balance of borrowings, principally from the FHLB,
increased to $80.1 million for the three months ended December 31, 1996 from
$40.2 million for the three months ended December 31, 1995. The average cost of
borrowings decreased to 6.08% for the three months ended December 31, 1996 from
6.77% for the three months ended December 31, 1995. The decrease in the average
cost of borrowings is the result of generally lower interest rates on new
borrowings and the use of short-term borrowings (less than one year to maturity)
to correspond to the increase in adjustable rate loans. The increase in savings
accounts and borrowings funded the growth of the interest-earning assets.
The net interest spread increased slightly to 2.28% for the six months
ended December 31, 1996 as compared 2.25% for the six months ended December 31,
1995. The majority of the increase in the spread was the result of the decrease
in the average cost of interest-bearing liabilities to 5.09% for the six months
ended December 31, 1996 from 5.14% for the six months ended December 31, 1995.
Provision for Estimated Loan Losses
- -----------------------------------
The provision for estimated loan losses for the three months ended December
31, 1996 was $105,000 compared with $64,000 for the three months ended December
31, 1995. The increase in the provision for estimated loan losses for the three
months ended December 31, 1996 was due primarily to the $30.5 million increase
in the mortgage loan portfolio during the three months ended December 31, 1996
which is in large part the basis of management's determination of the adequacy
of its allowance for loan losses. The provision for loan losses for the six
months ended December 31, 1996 was $294,000 compared to $175,000 for the six
months ended December 31, 1995. The increase was due primarily to the increase
in the mortgage loan portfolio and the fair value writedown of approximately
$100,000 related to one multi-family residential loan. See "Financial
Condition."
14
<PAGE>
Other Income (Expense)
- ----------------------
Other income (expense) increased to $350,000 for the three months ended
December 31, 1996 from $158,000 for the three months ended December 31, 1995.
The increase was due to the $68,000 reduction in net losses resulting from real
estate acquired through foreclosure and to the $161,000 gain on sales of
mortgage-backed securities used to fund loan purchases. For the six months ended
December 31, 1996, other income (expense) increased to $534,000 from $343,000
for the six months ended December 31,1995. The increase was due primarily to the
gains on sales of the mortgage-backed securities occurring in the three months
ended December 31, 1996. See "Financial Condition."
General and Administrative Expenses
- -----------------------------------
For the three months ended December 31, 1996, general and administrative
expenses increased to $1.8 million from $1.7 million for the three months ended
December 31, 1995. Of this increase, approximately $60,000 was related to the
compensation costs related to the stock compensation plans which were approved
in the annual meeting of shareholders in January 1996. Other operating expenses
increased by $31,000 primarily due to the review costs related to the purchase
of loans. For the six months ended December 31, 1996, general and administrative
costs increased to $4.9 million from $3.4 million for the six months ended
December 31, 1995. The increase was due primarily to the $1.3 million (pre-tax)
accrual for the one-time special assessment to recapitalize the SAIF insurance
fund. Excluding this special assessment, general and administrative expenses
increased by $173,000 in the six months ended December 31, 1996 compared to the
three months ended December 31, 1995, due primarily to the $94,000 increase
related to stock compensation plans.
Income Taxes
- ------------
The income tax expense for the three months ended December 31, 1996 was
$310,000, as compared to $107,000 for the three months ended December 31, 1995.
The effective tax rate for the three months ended December 31, 1996 and December
31, 1995 was 42.6% and 41.3%, respectively. The Company recorded a tax benefit
of approximately $28,000 for the six months ended December 31, 1996 related to
the loss for the period. In comparison, the Company recorded $216,000 in income
tax expense for the six months ended December 31, 1995.
FINANCIAL CONDITION
- -------------------
The Company's total assets were $369.8 million at December 31, 1996, an
increase of $33.7 million from the $336.1 million in total assets at June 30,
1996. The Company's loans receivable held for investment increased by $28.7
million to $284.7 million at December 31, 1996 as compared to $256.0 million at
June 30, 1996. The increase is primarily due to the purchase of $29.9 million in
adjustable rate mortgage loans during the
15
<PAGE>
six months ending December 31, 1996. The loans purchased were indexed to COFI
and were collateralized by single-family residences and multi-family residences
of $25.8 million and $4.1 million, respectively. The Company also increased its
investment in mortgage-backed securities by $6.5 million to $50.8 million at
December 31, 1996 from $44.3 million at June 30, 1996.
During the six months ended December 31, 1996, the Company originated $14.7
million and purchased for investment $29.9 million in mortgage loans, which was
significantly higher than the $9.9 million originated and $15.6 million
purchased in the six month period ended December 31, 1995. The Company also
originated and sold $3.3 million in mortgage loans to the secondary market
during the six months ended December 31, 1996 as compared to approximately $2.8
million for the same period a year ago. As stated above, the Company also
purchased approximately $20 million in mortgage-backed securities in the six
months ended December 31, 1996, as compared to $11.9 million in mortgage-backed
securities purchased in the six months ended December 31, 1995. The Company sold
approximately $9.9 million of mortgage-backed securities available for sale in
the three months ended December 31, 1996 to assist in the funding of the loan
purchases made during the period. The net purchases of loans and mortgage-backed
securities were made with the intent to enhance net interest income.
The Company's non-performing assets totaled $1.8 million at December 31,
1996 compared to $3.4 million at June 30, 1996. The decrease in non-performing
assets was due primarily to the substantial reduction in the amount of loans on
non-accrual status and to the reduction of real estate owned (REO) at December
31, 1996 related to the sales of REOs in comparison to the amount at June 30,
1996. The result of this improvement in non-performing assets was a decrease in
the Company's ratio of non-performing assets to total assets to 0.49% at
December 31, 1996 from 1.03% at June 30, 1996. The following table sets forth
the non-performing assets at December 31, 1996 and June 30, 1996:
<TABLE>
<CAPTION>
December 31, 1996 June 30, 1996
----------------- -------------
(dollars in thousands)
<S> <C> <C>
Non-accrual loans $ 1,049 $ 1,962
Real estate acquired through foreclosure 770 1,489
------- -------
Non-performing assets $ 1,819 $ 3,451
======= =======
Non-performing assets as a percent of total
assets 0.49% 1.03%
Non-performing loans as a percent of gross
loans receivable 0.37% 0.76%
</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
16
<PAGE>
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 four 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 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 December 31, 1996, the Company had classified no loans as
impaired with no specific reserves set aside as of December 31, 1996 as
determined in accordance with SFAS No. 114. In comparison, as of June 30, 1996,
the Company had classified $1.1 million of its loans as impaired with $91,000 in
specific reserves. In addition, as of December 31, 1996, the Company had $1.4
million in loans which were collectively evaluated for impairment compared to
$821,000 at June 30, 1996. The average recorded investment in impaired loans,
inclusive of those evaluated collectively, during the six months ended December
31, 1996, was $1.2 million, whereas, the average for the twelve months ended
June 30, 1996 was $2.4 million.
The Company, in consideration of the current economic environment and the
condition of the loan portfolio, maintained the allowance for estimated loan
losses at December 31, 1996 at $1.1 million. The allowance for estimated loan
losses is maintained at an amount 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 six months ended December 31, 1996:
<TABLE>
<CAPTION>
Activity for the six months ended
December 31, 1996
-----------------
<S> <C>
Balance at June 30, 1996 $1,058,000
Add:
Provision for estimated loan losses 294,000
Recoveries of previous charge-offs -
Less:
Charge-offs 238,000
----------
Balance at December 31, 1996 $1,114,000
==========
</TABLE>
17
<PAGE>
The Company's total liabilities increased to $338.7 million at December 31,
1996 from $304.5 million at June 30, 1996. Total deposit accounts increased
$14.5 million to $248.5 million at December 31, 1996 from $234.0 million at June
30, 1996 primarily due to changes in products offered and also due to pricing.
The Company also increased its borrowings from the FHLB and from securities sold
under agreements to repurchase during the six months ended December 31, 1996.
The Company increased its total borrowings to $86.9 million at December 31, 1996
compared to the total of $67.5 million at June 30, 1996. The increase in deposit
accounts and borrowings were in tandem with the growth in the interest-earning
asset growth of the Company. The Company will utilize FHLB advances and other
forms of borrowings as part of its asset and liability management strategy.
The Company's stockholders' equity decreased to $31.1 million at
December 31, 1996 from $31.6 million at June 30, 1996 primarily due to the loss
from operations resulting from the accrual for the one-time special assessment
to recapitalize the SAIF insurance fund and due to the repurchase of 70,000
shares of treasury stock. The Company currently has approval to repurchase up to
259,000 shares of its outstanding common stock. As of December 31, 1996, the
Company had repurchased 70,000 shares under this program.
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.
LIQUIDITY
- ---------
The Company's primary sources of funds are deposits, principal and interest
payments on loans and mortgage-backed securities, FHLB advances, securities sold
under agreements to repurchase, increases in deposit accounts 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 December 31, 1996 and
December 31, 1995 was 9.41% and 8.66%, respectively.
18
<PAGE>
COMMITMENTS AND CONTINGENT LIABILITIES
- --------------------------------------
At December 31, 1996, there were no material changes to the Company's
commitments or contingent liabilities from the period ended June 30, 1996 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, 1996 included in the Annual Report on Form 10-K for
the year ended June 30, 1996. At December 31, 1996, the Company had outstanding
commitments to originate or purchase mortgage loans of $2.2 million as compared
to $1.1 million at June 30, 1996.
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 December 31, 1996, the
Association was considered "well-capitalized".
The Association was in compliance with the capital requirements in effect
as of December 31, 1996. The following table reflects the required ratios and
the actual capital ratios of the Association at December 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 $25,384 $ 5,496 $19,888 6.93% 1.50%
Core $25,384 $10,991 $14,393 6.93% 3.00%
Risk-based $26,498 $14,321 $12,177 14.80% 8.00%
</TABLE>
Recent Legislative Developments
- -------------------------------
On September 30, 1996, the President signed into law the Deposit Insurance
Funds Act of 1996 (the "Funds Act") which, among other things, imposes a special
one-time assessment on SAIF member institutions, including the Association, to
recapitalize the SAIF. As required by the Funds Act, the FDIC imposed a special
assessment of 65.7 basis points on SAIF assessable deposits held as of March 31,
1995, payable November 27, 1996. The
19
<PAGE>
special assessment was recognized as an expense in the quarter ended September
30, 1996, and is tax deductible. The Association took a pre-tax charge of $1.3
million as a result of the FDIC special assessment.
The Funds Act also spreads the obligations for payment of the Financing
Corporation ("FICO") bonds across all SAIF and BIF members. Beginning on January
1, 1997, BIF deposits will be assessed for FICO payments at a rate of 20% of the
rate assessed on SAIF deposits. Based on current estimates by the FDIC, BIF
deposits will be assessed a FICO payment of 1.3 basis points, while SAIF
deposits will pay an estimated 6.4 basis points on the FICO bonds. Full pro rata
sharing of the FICO payments between BIF and SAIF members will occur on the
earlier of January 1, 2000, or the date the BIF and SAIF are merged. The Funds
Act specifies that the BIF and SAIF will be merged on January 1, 1999 provided
no savings associations remain as of that time.
As a result of the Funds Act, the FDIC recently lowered SAIF assessments to
0 to 27 basis points effective January 1, 1997, a range comparable to that of
BIF members. However, SAIF members will continue to make the higher FICO
payments described above. Management cannot predict the level of FDIC insurance
assessments on an on-going basis whether the savings association charter will be
eliminated or whether the BIF and SAIF will eventually be merged.
20
<PAGE>
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
---------------------------------------------------
None.
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) Reports on Form 8-K
None.
- -------------------
* 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.
21
<PAGE>
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.
February 14, 1997 /s/ Barrett G. Andersen
- ----------------- ----------------------------------
Date Barrett G. Andersen
President and Chief Executive Officer
February 14, 1997 /s/ Ronald A. Ott
- ----------------- ----------------------------------
Date Ronald A. Ott
Executive Vice President
Chief Financial Officer and Treasurer
22
<PAGE>
SGV BANCORP, INC.
EXHIBIT NO. 11: STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
<TABLE>
<CAPTION>
Six Months Ended
December 31, 1996
-----------------
(in thousands except per share amounts)
<S> <C>
Net Loss $ (48)
========
Weighted average shares outstanding 2,343
Common stock equivalents due to dilutive
effect on stock options 0
--------
Total weighted average common shares
and equivalents outstanding 2,343
========
Primary earnings per share $ (0.02)
========
Total weighted average common shares
and equivalent outstanding 2,343
Additional dilutive shares using the end of
period market value versus the average
market value when applying the treasury
stock method 0
--------
Total weighted average common shares and
equivalent outstanding for fully diluted
computation 2,343
========
Fully diluted earnings per share $ (0.02)
========
</TABLE>
<TABLE> <S> <C>
<PAGE>
<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>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> JUN-30-1997
<PERIOD-START> JUL-01-1996
<PERIOD-END> DEC-31-1996
<CASH> 5,029,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,030,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 37,116,000
<INVESTMENTS-CARRYING> 25,647,000
<INVESTMENTS-MARKET> 25,453,000
<LOANS> 285,958,000
<ALLOWANCE> 1,114,000
<TOTAL-ASSETS> 369,823,000
<DEPOSITS> 248,459,000
<SHORT-TERM> 9,600,000
<LIABILITIES-OTHER> 3,344,000
<LONG-TERM> 77,303,000
0
0
<COMMON> 27,000
<OTHER-SE> 31,090,000
<TOTAL-LIABILITIES-AND-EQUITY> 369,823,000
<INTEREST-LOAN> 9,973,000
<INTEREST-INVEST> 2,278,000
<INTEREST-OTHER> 298,000
<INTEREST-TOTAL> 12,549,000
<INTEREST-DEPOSIT> 5,698,000
<INTEREST-EXPENSE> 7,983,000
<INTEREST-INCOME-NET> 4,566,000
<LOAN-LOSSES> 294,000
<SECURITIES-GAINS> 161,000
<EXPENSE-OTHER> 4,509,000
<INCOME-PRETAX> (76,000)
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (48,000)
<EPS-PRIMARY> (0.02)
<EPS-DILUTED> (0.02)
<YIELD-ACTUAL> 7.37
<LOANS-NON> 1,049,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 1,367,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,058,000
<CHARGE-OFFS> 238,000
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,114,000
<ALLOWANCE-DOMESTIC> 1,114,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
