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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 March 31, 1998
or
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
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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
incorporation or organization) Identification No.)
225 NORTH BARRANCA STREET, WEST COVINA, CALIFORNIA 91791
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(Address of principal executive offices)
(626) 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: 2,345,340 shares of common
stock, par value $0.01 per share, were outstanding as of May 10, 1998.
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SGV BANCORP, INC.
FORM 10-Q
INDEX
PART I FINANCIAL INFORMATION PAGE
----
Item 1 Consolidated Statements of Financial Condition:
March 31, 1998 (unaudited) and June 30, 1997....................1
Consolidated Statements of Operations (unaudited):
For the Nine Months Ended March 31, 1998 and 1997 and
for the Three Months Ended March 31, 1998 and 1997 .............2
Consolidated Statements of Cash Flows (unaudited):
For the Nine Months Ended March 31, 1998 and 1997...............3
Notes to Consolidated Financial Statements......................5
Item 2 Management's Discussion and Analysis of
Results of Operations and Financial Condition...................8
Item 3 Quantitative and Qualitative Disclosures About Market Risk.....17
PART II OTHER INFORMATION
Item 1 Legal Proceedings..............................................18
Item 2 Changes in Securities..........................................18
Item 3 Defaults Upon Senior Securities................................18
Item 4 Submission of Matters to a Vote of Security Holders............18
Item 5 Other Information..............................................18
Item 6 Exhibits and Reports on Form 8-K...............................18
SIGNATURES...................................................................19
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<TABLE>
<CAPTION>
SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
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MARCH 31, JUNE 30,
1998 1997
---- ----
ASSETS: (Unaudited)
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Cash and cash equivalents, including short-term bank obligations of
$4,500 at March 31, 1998 and $18,600 at June 30, 1997 $ 8,361 $ 22,664
Investment securities available for sale, amortized cost of $15,748
at March 31, 1998 and $12,500 at June 30, 1997 15,745 12,467
Mortgage-backed securities available for sale, amortized cost of
$21,244 at March 31, 1998 and $37,323 at June 30, 1997 21,198 37,164
Mortgage-backed securities held to maturity, estimated fair value of
$33,376 at March 31, 1998 and $38,783 at June 30, 1997 33,253 39,072
Loans receivable held for sale 907 230
Loans receivable held for investment, net of allowance for estimated
loan losses of $1,423 at March 31, 1998 and $1,263 at June 30, 1997 307,985 284,608
Accrued interest receivable 2,787 2,911
Stock of Federal Home Loan Bank of San Francisco, at cost 4,173 3,987
Real estate acquired through foreclosure, net 1,757 1,150
Premises and equipment, net 3,657 3,866
Prepaid expenses and other assets, net 1,242 1,221
----------------- ------------------
Total assets $ 401,065 $ 409,340
================= ==================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposit accounts $ 290,122 $ 288,339
Federal Home Loan Bank advances 69,131 77,907
Securities sold under agreements to repurchase 6,000 9,430
Accrued expenses and other liabilities 4,178 3,761
------------------ ------------------
Total liabilities 369,431 379,437
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; 2,345,340 shares outstanding at March 31, 1998 and
2,342,176 shares outstanding at June 30, 1997 27 27
Additional paid-in capital 21,082 20,789
Retained earnings, substantially restricted 16,257 15,201
Net unrealized loss on investment securities and mortgage-backed
securities available for sale, net of taxes (28) (110)
Deferred stock compensation (1,614) (1,880)
Treasury stock, 382,316 shares at March 31,1998 and
385,480 shares at June 30, 1997 (4,090) (4,124)
------------------ ------------------
Total stockholders' equity 31,634 29,903
------------------ ------------------
Total liabilities and stockholders' equity $ 401,065 $ 409,340
================== ==================
</TABLE>
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<TABLE>
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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 NINE MONTHS
ENDED MARCH 31, ENDED MARCH 31,
1998 1997 1998 1997
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INTEREST INCOME:
Interest on loans $ 6,158 $ 5,413 $ 17,616 $ 15,387
Interest on investment securities 241 272 817 847
Interest on mortgage-backed securities 904 989 3,157 2,692
Other 131 191 627 488
------------- ------------- ------------- -------------
Total interest income 7,434 6,865 22,217 19,414
------------- ------------- ------------- -------------
INTEREST EXPENSE:
Interest on deposit accounts 3,323 3,133 10,356 8,831
Interest on borrowings 1,210 1,298 3,834 3,583
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Total interest expense 4,533 4,431 14,190 12,414
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Net interest income before provision for
estimated loan losses 2,901 2,434 8,027 7,000
PROVISION FOR ESTIMATED LOAN LOSSES 115 194 458 487
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Net interest income after provision for
estimated loan losses 2,786 2,240 7,569 6,513
OTHER INCOME (EXPENSE):
Loan servicing and other fees 138 109 401 332
Secondary marketing activity, net (1) (10) 8 (36)
Gain (loss) on sale or redemption of securities
available for sale, net 2 (13) 39 148
Other income 208 119 553 362
Net loss on real estate acquired through foreclosure (70) (10) (133) (78)
------------- ------------- ------------- -------------
Total other income 277 195 868 728
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GENERAL AND ADMINISTRATIVE EXPENSES:
Compensation and other employee expenses 1,228 1,070 3,610 2,964
Office occupancy 260 215 801 584
Equipment 75 51 197 145
Data Processing 221 227 628 503
Advertising 42 37 120 107
FDIC insurance premiums 46 11 135 273
FDIC special assessment 1,332
Other operating expenses 344 331 1,120 916
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Total general and administrative expenses 2,216 1,942 6,611 6,824
------------- ------------- ------------- -------------
EARNINGS BEFORE INCOME TAXES 847 493 1,826 417
INCOME TAXES 356 208 770 180
------------- ------------- ------------- -------------
NET EARNINGS $ 491 $ 285 $ 1,056 $ 237
============= ============= ============= =============
EARNINGS PER SHARE - Basic $ 0.21 $ 0.12 $ 0.45 $ 0.09
============= ============= ============= =============
EARNINGS PER SHARE - Diluted $ 0.20 $ 0.11 $ 0.43 $ 0.09
============= ============= ============= =============
</TABLE>
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<TABLE>
<CAPTION>
SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)
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FOR THE NINE MONTHS
ENDED MARCH 31,
1998 1997
-----------------------------------------
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings $ 1,056 $ 237
Adjustments to reconcile net earnings to net
cash provided by (used in) operating activities:
Depreciation and amortization 509 260
Loans originated for sale (13,791) (4,471)
Proceeds from sale of loans 13,142 4,476
Gain on sale of loans, net (33) (5)
Gain on sale of investments available for sale, net (6) (148)
Gain on sale of mortgage-backed securities available for sale, net (33)
Federal Home Loan Bank stock dividend (187) (179)
Increase in prepaid expenses and other assets (108) (791)
Amortization of deferred loan fees (88) (21)
Deferred loan origination costs (218) (147)
Increase (decrease) in accrued expenses and other liabilities 358 (26)
Provision for estimated loan losses 458 487
Provision for estimated real estate losses 111 73
Premium amortization, net 294 156
Decrease (increase) in accrued interest receivable 124 (269)
Other, net 19 338
-------------- -----------------
Net cash provided by (used in) operating activities 1,607 (30)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities available for sale (25,748) (41,451)
Proceeds from sale and redemption of investment securities
available for sale 22,506 44,936
Purchase of mortgage-backed securities available for sale (5,080) (35,229)
Purchase of mortgage-backed securities held to maturity (15,451)
Proceeds from sale of mortgage-backed securities available for sale 16,566 9,866
Principal repayments on mortgage-backed securities 10,240 5,909
Loans funded, net (23,048) (23,621)
Loans purchased, net (40,623) (33,344)
Principal repayments on loans 37,979 22,986
Purchase of FHLB Stock (3)
Proceeds from sale of real estate 1,448 2,798
Purchase of premises and equipment (220) (906)
Other, net (99)
--------------- -----------------
Net cash used in investing activities (6,079) (63,510)
</TABLE>
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<TABLE>
<CAPTION>
SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)(CONTINUED)
- ----------------------------------------------------------------------------------------------------------------------------------
FOR THE NINE MONTHS
ENDED MARCH 31,
1998 1997
---------------------------------------------------
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in certificate accounts $ (20,068) $ 19,503
Net increase in passbook , money market savings
NOW and noninterest-bearing accounts 21,851 8,257
Purchase of deposit accounts 20,159
Proceeds from Federal Home Loan Bank advances 45,000
Repayment of Federal Home Loan Bank advances (8,777) (36,305)
Proceeds from reverse repurchase agreements, net 9,600
Repayment of securities sold under agreements to repurchase (150)
Purchase of treasury stock (3,430) (2,884)
Other, net 593 304
-------------------- ---------------------
Net cash (used in) provided by financing activities (9,831) 63,484
NET DECREASE IN CASH AND CASH
EQUIVALENTS (14,303) (56)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 22,664 8,884
-------------------- ---------------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 8,361 $ 8,828
==================== =====================
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the period for:
Interest $ 14,218 $ 12,561
Income taxes, net 536
NONCASH INVESTING ACTIVITIES DURING THE PERIOD:
Real estate acquired through foreclosure 2,135 2,129
Loans to facilitate sales of real estate acquired through foreclosure 152
Change in net unrealized loss on investment securities and
mortgage-backed securities available for sale, net of taxes 82 (183)
</TABLE>
4
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SGV BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
MARCH 31, 1998
(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 March 31, 1998, the
Association operated eight 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 (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
period ended March 31, 1998 are not necessarily indicative of the results that
may be expected for the entire fiscal year.
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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, 1997 included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1997.
2. Earnings Per Share
------------------
As required in SFAS No. 128, Earnings Per Share, which became
effective for periods ending after December 15, 1997, basic earnings per share
for the three months ended and nine months ended March 31, 1998 and 1997 are
based on the weighted average common shares outstanding, net of treasury stock.
The total issued shares of 2,727,656 have been adjusted for the average treasury
stock outstanding of 382,316 and 290,930 for the three months ended March 31,
1998 and 1997, respectively, and 384,171 and 203,200 for the nine months ended
March 31, 1998 and 1997, respectively. Diluted earnings per share represent
basic earnings per share adjusted for the common stock equivalent of stock
options granted and unexercised. The common stock equivalent shares of stock
options for diluted earnings per share calculations are 121,074 and 58,908 for
the three months ended March 31, 1998 and 1997, respectively, and 122,278 and
27,011 for the nine months ended March 31, 1998 and 1997, respectively. The
numerator for earnings per share for all periods is represented by net earnings
with no adjustments.
3. Accounting Principles
---------------------
In February 1997, the FASB issued SFAS No. 128, which is effective for
financial statements issued for periods ending after December 15, 1997. It
replaces the presentation of primary earnings per share with the presentation of
basic earnings per share. It also requires the presentation of diluted earnings
per share for entities with complex capital structures. Diluted earnings per
share takes into account the potential dilution that could occur if securities
or other contracts to issue common stock, such as options, were exercised or
converted into common stock. The Company adopted SFAS No. 128 effective with
the financial reports of December 31, 1997. Previous periods have been restated
to reflect the requirements of this statement.
In February 1997, the FASB issued SFAS No. 129, Disclosure of
Information About Capital Structure. The statement establishes standards for
disclosing information about an entity's capital structure. The disclosure
requirements of SFAS No. 129 are effective for periods ending after December 15,
1997. The Company does not believe that the adoption of SFAS No. 129 will have a
significant impact on its financial statements.
In June 1997, the FASB issued SFAS No. 130, Reporting Comprehensive
Income and SFAS No. 131, Disclosures about Segments of an Enterprise and Related
Information. SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. SFAS No. 131 establishes standards of reporting by
publicly-held business enterprises and disclosure of information about operating
segments in annual financial statements to a lesser extent, in interim financial
reports issued to shareholders. SFAS No. 130 and 131 are effective for fiscal
years beginning after December 15, 1997. As both SFAS No. 130 and 131 deal with
financial statement disclosure, the Company does not anticipate that the
adoption of these new standards will have a material impact on its financial
statements.
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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. Recent Developments
The Year 2000 Issue concerns the potential impact of historic computer
software code that only utilizes two digits to represent the calendar year (e.g.
"98" for "1998"). Software so developed could produce inaccurate or
unpredictable results upon January 1, 2000, when current and future dates
present a lower two digit year number than dates in the prior century. The
Company, similar to most financial services providers, is subject to the
potential impact of the "Year 2000 Issue" due to the nature of financial
information. Potential impacts to the Company may arise from software, hardware,
and equipment both within the Company's direct control and outside of the
Company's ownership, yet with which the Company electronically or operationally
interfaces (e.g. vendors providing credit bureau information).
Financial institution regulators have recently increased their focus
upon Year 2000 issues, issuing guidance concerning the responsibilities of
senior management and directors. Year 2000 testing and certification is being
addressed as a key safety and soundness issue in conjunction with regulatory
exams.
In order to address the Year 2000 issue, the Company has developed and
implemented a five phase plan divided into the following major components:
o awareness
o assessment
o renovation
o validation
o implementation
The Company has completed the first two phases of the plan and is
currently working internally and with external vendors on the final three
phases. Because the Company outsources its data processing and item processing
operations, a significant component of the Year 2000 plan is to work with
external vendors to test and certify their systems as Year 2000 compliant.
Another important segment of the Year 2000 plan is to identify those loan
customers whose possible lack of Year 2000 preparedness might expose the Bank to
financial loss.
The Company expects its Year 2000 date conversion project to be
completed on a timely basis. During the execution of this project the Company
will incur internal staff costs as well as consulting and other expenses related
to enhancements necessary to prepare the systems for the
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Year 2000. The expense of the Year 2000 project as well as the related potential
effect on the Company's earnings is not expected to have a material effect on
its financial position or results of operations.
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, 1997. Accordingly, the ensuing
discussion focuses upon the material matters at and for the three months and
nine months ended March 31, 1998.
In addition to historical information, this Form 10-Q may include
forward looking statements based on current management expectations. The
Company's actual results could differ materially from those management
expectations. Factors that could cause future results to vary from current
management expectations include, but are not limited to, general economic
conditions, legislative and regulatory changes, monetary and fiscal policies of
the federal government, changes in tax policies, rates and regulations of
federal, state and local tax authorities, changes in interest rates, deposit
flows, the cost of funds, demand for loan products, demand for financial
services, competition, changes in the quality or composition of the Company's
loan and investment portfolios, changes in accounting principles, policies or
guidelines, and other economic, competitive, governmental and technological
factors affecting the Company's operations, markets products, services and
prices. Further description of the risks and uncertainties to the business of
the Company are included in detail in the Company's Form 10-K for the fiscal
year ended June 30, 1997.
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 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, securities sold under agreements to
repurchase and, to a lesser extent, proceeds from the sale of loans.
RESULTS OF OPERATIONS
- ---------------------
The Company posted net earnings of $491,000 for the three months ended
March 31, 1998 compared to net earnings of $285,000 for the three months ended
March 31, 1997. For the nine months ended March 31, 1998, the Company's net
earnings were $1,056,000, as compared to a net earnings of $237,000 for the nine
months ended March 31, 1997. For the three months
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ended March 31, 1998, the net earnings were $0.21 per share - basic, compared
to $0.12 per share - basic for the three months ended March 31, 1997. For the
nine months ended March 31, 1998, the net earnings were $0.45 per share - basic,
compared to $0.09 per share - basic for the nine months ended March 31, 1997.
The net earnings for the nine months ended March 31, 1997 reflects the payment
of the one-time special assessment to recapitalize the SAIF insurance fund.
This one-time special assessment (of approximately $1.3 million on a pre-tax
basis) represented 65.7 basis points of the deposits held by the Association
as of March 31, 1995. A discussion of the specific components of net earnings is
set forth in the Notes to Consolidated Financial Statements.
Net Interest Income
- -------------------
Net interest income before the provision for estimated loan losses was
$2.9 million for the three months ended March 31, 1998 compared to $2.4 million
for the three months ended March 31, 1997. For the nine months ended March 31,
1998, net interest income was $8.0 million compared to $7.0 million for the nine
months ended March 31, 1997.
Interest Income
- ---------------
Total interest income for the three months ended March 31, 1998 was
$7.4 million, an increase of $0.6 million from the comparable period a year ago.
The increase in interest income was primarily due to the $17.9 million increase
in the average balance of interest-earning assets to $391.5 million for the
three months ended March 31, 1998 from $373.6 million for the three months ended
March 31, 1997. The interest income on loans increased to $6.2 million for the
three months ended March 31, 1998 from $5.4 million for the three months ended
March 31, 1997. The increase in interest on loans was due to the increase in the
average balance of loans receivable outstanding to $312.7 million for the three
months ended March 31, 1998 from $285.4 million for the three months ended March
31, 1997. The increase in interest on loans was also due to the increase in the
average yield on loans to 7.88% for the three months ended March 31, 1998 from
7.59%, partially as a result of the purchase in December 1997 of approximately
$10 million of equity lines of credit yielding in excess of 13%. The interest
income on mortgage-backed securities decreased to $904,000 for the three months
ended March 31, 1998 compared to $989,000 for the three months ended March 31,
1997. The decrease in interest income was due primarily to the decrease in
average balance of mortgage-backed securities to $54.6 million for the three
months ended March 31, 1998 from $61.1 million for the three months ended March
31, 1997. The total yield on total interest-earning assets increased to 7.60%
for the three months ended March 31, 1998 as compared to 7.35% for the three
months ended March 31, 1997 primarily as a result of the increased yield on the
loans receivable.
Total interest income for the nine months ended March 31, 1998 was
$22.2 million, an increase of $2.8 million from the comparable period a year
ago. The increase in interest income was primarily due to the $42.4 million
increase in the average balance of interest-earning assets to $394.6 million for
the nine months ended March 31, 1998 from $352.2 million for the nine months
ended March 31, 1997. The interest income on loans increased to $17.6 million
for the nine months ended March 31, 1998 from $15.4 million for the nine months
ended March 31, 1997. The increase in interest on loans was due to the increase
in the average balance of loans receivable outstanding to $302.5 million for the
nine months ended March 31, 1998 from $269.6 million for the nine months ended
March 31, 1997. Also, the increase was due to the increase in
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the average yield on loans to 7.77% for the nine months ended March 31, 1998
from 7.61% for the nine months ended March 31, 1997 resulting from repricing of
adjustable rate mortgages, primarily as a result of the increase in COFI, and to
the purchase in December 1997 of equity lines of credit with yields in excess of
13%. The interest income on mortgage-backed securities increased to $3.2 million
for the nine months ended March 31, 1998 compared to $2.7 million for the nine
months ended March 31, 1997. The increase in interest on mortgage-backed
securities was due to the increase in average balances to $61.7 million for the
nine months ended March 31, 1998 from $54.6 million for the nine months ended
March 31, 1997. Also, the increase was due to the increase in yield to 6.82% for
the nine months ended March 31, 1998 from 6.57% for the nine months ended March
31, 1997 as a result of the purchase of securities with higher yields.
Interest Expense
- ----------------
Total interest expense for the three months ended March 31, 1998 was
$4.5 million, an increase of $102,000 from $4.4 million for the three months
ended March 31, 1997. The increase in interest expense was primarily due to the
increase in the average balance of interest-bearing liabilities to $360.8
million for the three months ended March 31, 1998 from $347.5 million for the
three months ended March 31, 1997. This increase was partially offset by the
decrease in the overall average cost of funds to 5.03% for the three months
ended March 31, 1998 from 5.12% for the three months ended March 31, 1997. The
increase in the average balance of interest-bearing savings accounts was
primarily due to the purchase of a $20 million branch from another financial
institution in February 1997 and the establishment of a de novo branch in March
1997 which has generated approximately $12.0 million in total deposits as of
March 31, 1998. The average cost of funds for interest-bearing savings accounts
decreased to 4.69% for the three months ended March 31, 1998 from 4.77% for the
three months ended March 31, 1997 primarily as a result of lower renewal rates
on maturing certificates of deposits and the increase in average core deposits
(passbook accounts, NOW accounts, money market savings and checking accounts).
Total interest expense was $14.2 million for the nine months ended
March 31, 1998 as compared to $12.4 million for the nine months ended March 31,
1997. The increase in expense was primarily due to the $40.2 million increase in
average interest-bearing liabilities to $365.4 million for the nine months ended
March 31, 1998 from $325.2 million for the nine months ended March 31, 1997.
Interest expense on interest-bearing savings accounts increased by $1.5 million
as a result of the increase in average interest-bearing savings accounts to
$284.6 million for the nine months ended March 31, 1998 as compared to $247.5
million for the nine months ended March 31, 1997 due partially to the branch
acquisition and growth of the de novo branch. Interest expense on savings
accounts also increased due to the increase in the average cost of savings
accounts to 4.85% for the nine months ended March 31, 1998 from 4.76% for the
same period a year ago. Interest expense from borrowings increased by $251,000
due to the increase in the average cost of funds to 6.33% for the nine months
ended March 31, 1998 from 6.15% for the nine months ended March 31, 1997 and to
the slight increase in the average borrowings to $80.8 million for the nine
months ended March 31, 1998 compared to $77.7 million for the same period a year
ago.
10
<PAGE> 13
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 and
nine month periods ended March 31, 1998 and March 31, 1997 (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,
1998 1997 1998 1997
---- ---- ---- ----
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 $312,720 7.88% $285,428 7.59% $302,483 7.77% $269,623 7.61%
Mortgage-backed securities 54,617 6.62 61,087 6.48 61,723 6.82 54,593 6.57
Investment securities and other 24,134 6.17 27,118 6.83 30,385 6.34 27,936 6.37
-------- -------- -------- --------
Total interest-earning assets 391,471 7.60% 373,633 7.35% 394,591 7.51% 352,152 7.35%
Noninterest-earning assets 13,560 11,867 13,511 11,256
-------- -------- -------- --------
Total assets $405,031 $385,500 $408,102 $363,408
======== ======== ======== ========
LIABILITIES AND EQUITY:
Interest-bearing liabilities:
Savings accounts $283,598 4.69% $262,547 4.77% $284,626 4.85% $247,497 4.76%
Borrowings 77,192 6.27 84,996 6.11 80,768 6.33 77,662 6.15
-------- -------- -------- --------
Total interest-bearing liabilities 360,790 5.03% 347,543 5.12% 365,394 5.18% 325,159 5.09%
Noninterest-bearing liabilities 13,010 7,755 12,029 7,259
Stockholders' equity 31,231 30,202 30,679 30,990
-------- -------- -------- --------
Total liabilities and equity $405,031 $385,500 $408,102 $363,408
======== ======== ======== ========
Net interest rate spread 2.57% 2.25% 2.33% 2.26%
Net interest margin 2.96% 2.61% 2.71% 2.65%
Ratio of interest-earning assets
to interest-bearing liabilities 108.50% 107.51% 107.99% 108.30%
</TABLE>
The Company's average net interest spread increased to 2.57% for the
three months ended March 31, 1998 from 2.25% for the three months ended March
31, 1997. The increase was the combination of an increase in the average yield
on interest-earning assets with a decrease in the average cost of funds for
interest-bearing liabilities for the three months ended March 31, 1998 as
compared to the three months ended March 31, 1997. The average yield on
interest-earning assets improved to 7.60% for the three months ended March 31,
1998 as compared to 7.35% for the three months ended March 31, 1997. The average
cost of funds for interest-bearing liabilities decreased to 5.03% for the three
months ended March 31, 1998 from 5.12% for the three months ended March 31,
1997.
The average yield on loans receivable increased to 7.88% for the three
months ended March 31, 1998 from 7.59% for the three months ended March 31,
1997. The increase in yield was due partially to the increase in yields on new
loans originated or purchased which have adjustable rate features, primarily
indexed to COFI and the repricing of adjustable rate loans, indexed to COFI and
to the One-Year Treasury Constant Maturity Index (CMT), resulting in higher
current rates. The increase in yield was also due to the purchase of
approximately $10 million in equity lines of credit in December 1997 with yields
in excess of 13%. The average yield on mortgage-backed securities increased
slightly to 6.62% for the three months ended March 31, 1998 from 6.48% for the
three months ended March 31, 1997 as a result of mortgage-
11
<PAGE> 14
backed securities acquired with slightly higher yields in the past twelve
months, replacing mortgage-backed securities sold during the same period.
The majority of the Association'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
decreased by 8 basis points to 4.69% for the three months ended March 31, 1998
from 4.77% for the three months ended March 31, 1997. The decrease was due to
the renewal of certificates of deposit at rates lower than those maturing and
also due to an increase in the Association's core deposits to $75.1 million for
the three months ended March 31, 1998 from $52.8 million for the three months
ended March 31, 1997. Also, the average balance of borrowings, principally from
the FHLB, decreased to $77.2 million in borrowings for the three months ended
March 31, 1998 compared to $85.0 million for the comparable period a year ago.
The average balance of borrowings decreased as a result of the increase of the
average savings accounts. The average cost of borrowings increased to 6.27% for
the three months ended March 31, 1998 from 6.11% for the same period a year ago
as a result of lengthening the average maturity of such borrowings to reduce the
Company's sensitivity to changes in interest rates.
The net interest spread increased to 2.33% for the nine months ended
March 31, 1998 from 2.26% for the comparable period a year ago as a result of
the increase in the average yield on interest-earning assets partially offset by
the increase in the average cost of interest-bearing liabilities. The average
yield on interest-earning assets improved to 7.51% for the nine months ended
March 31, 1998 from 7.35% for the nine months ended March 31, 1997. The increase
was due to the increase in the average yields for loans receivable and
mortgage-backed securities related to higher yields on recent purchases and
originations. The average cost of interest bearing liabilities increased by 9
basis points to 5.18% for the nine months ended March 31, 1998 from 5.09% for
the nine months ended March 31, 1997. The increase for the nine months ended
March 31, 1998 was primarily due to promotional rates on new accounts for the
new branch and to the lengthening of the average maturity of the Company's
borrowings.
Provision for Estimated Loan Losses
- -----------------------------------
The provision for estimated loan losses for the three months ended
March 31, 1998 was $115,000 compared with $194,000 for the three months ended
March 31, 1997. The decrease in the provision for estimated loan losses was due
primarily to the decrease in charge-offs related to fair value writedowns as
compared to the comparable period a year ago. For the nine months ended March
31, 1998, the provision for estimated loan losses totaled $458,000 as compared
to $487,000 for the same period a year ago. The decrease was due to a decrease
in charge-offs in the nine months ended March 31, 1998 as compared to the same
period a year ago. See "Financial Condition."
Other Income
- ------------
Other income increased to $277,000 for the three months ended March
31, 1998 from $195,000 for the three months ended March 31, 1997. The increase
was primarily due to the increase in fees from savings deposit activities to
$125,000 for the three months ended March 31, 1998 as compared to $78,000 for
the three months ended March 31, 1997. Also contributing to the increase was
increased loan fee income to $138,000 from $109,000 and an increase in fees
12
<PAGE> 15
generated by the Association's subsidiary, First Covina Service Company, related
to sales of mutual funds and annuities. Partially offseting these increases was
the increase in the net loss resulting from real estate owned operations to
$70,000 for the three months ended December 31, 1997 from $10,000 for the same
period a year ago. For the nine months ended March 31, 1998, other income
increased to $868,000 from $728,000 primarily as a result of increased fee
income on savings account activities and the increase in loan related fees. See
"Financial Condition."
General and Administrative Expenses
- -----------------------------------
For the three months ended March 31, 1998, general and administrative
expenses increased to $2.2 million from $1.9 million for the three months ended
March 31, 1997. The increase was primarily due to the $158,000 increase in
compensation and benefits expense related to stock compensation programs which
increased as a result of the appreciation in the Company's Common Stock and to
the increase in personnel related to the addition of two branches. Also
contributing to the increased general and administrative expenses were increases
totaling $63,000 related to building, equipment and data processing expenses
associated with these two additional branches as well as increases in
depreciation expenses for the purchase of new hardware to replace outdated
equipment in coordination with the transfer to a new data processor. Included in
other expenses for the three months ended March 31, 1998 was $27,000 in
amortization of the core deposit intangible related to the deposits purchased in
February 1997.
For the nine months ended March 31, 1998, the Company's general and
administrative expenses increased to $6.6 million as compared to $5.5 million
(excluding the $1.3 million one-time special assessment to recapitalize the
insurance fund) for the comparable period a year ago. The increase in the
current period was due to the increase in costs related to stock compensation
programs, two additional branches and the amortization of the core deposit
intangible. Partially offsetting these increases was the reduction in FDIC
assessments as a result of the lowering of premiums subsequent to the
recapitalization of the insurance fund.
Income Taxes
- ------------
The Company recorded $356,000 in income taxes for the three months
ended March 31, 1998 compared to $208,000 for the three months ended March 31,
1997. The effective tax rates for the three months ended March 31, 1998 and
March 31, 1997 were approximately 42.0% and 42.2%, respectively. For the nine
months ended March 31, 1998, the income taxes recorded was $770,000 as compared
to $180,000 for the same period a year ago.
FINANCIAL CONDITION
- -------------------
The Company's total assets were $401.1 million at March 31, 1998, a
slight decrease from the $409.3 million in total assets at June 30, 1997. The
Company's loans receivable held for investment increased by $23.4 million to
$308.0 million at March 31, 1998 as compared to $284.6 million at June 30, 1997.
The increase is due primarily to the purchase of approximately $30.2 million in
adjustable rate mortgage loans and $10.4 million in home equity lines of credit
indexed to COFI. The Company reduced its investment in overnight federal funds
sold and sold approximately $16.7 million in mortgage-backed securities to aid
in the funding of these purchases. The Company purchased the loans with the
intent on increasing interest income and to reduce its sensitivity to changes in
interest rates.
13
<PAGE> 16
During the nine months ended March 31, 1998, the Company originated
and purchased for investment a total of $63.7 million in mortgage and home
equity loans as compared to the $57.0 million purchased and originated in the
nine month period ended March 31, 1997. The loans purchased in the nine months
ended March 31, 1998 were adjustable rate and primarily indexed to COFI. The
Company also originated $13.8 million in mortgage loans for sale to the
secondary market and sold approximately $13.1 million through March 31, 1998 as
compared to the origination and sale of approximately $4.5 million for the same
period a year ago.
The Company's non-performing assets totaled $5.1 million at March 31,
1998 compared to $2.8 million at June 30, 1997. The increase in non-performing
assets was due primarily to the increase in the amount of loans on non-accrual
status to $3.3 million at March 31, 1998 compared to $1.7 million at June 30,
1997. The increase in non-accrual loans was due to the continuation of an
uncertain local real estate market throughout most of this year. Also, real
estate owned increased to $1.7 million at March 31, 1998 compared to $1.1
million at June 30, 1997. The overall result was an increase in the Company's
ratio of non-performing assets to total assets to 1.26% at March 31, 1998 from
0.70% at June 30, 1997.
The following table sets forth the non-performing assets at March 31, 1998 and
June 30, 1997:
<TABLE>
<CAPTION>
March 31, 1998 June 30, 1997
-------------- -------------
(dollars in thousands)
<S> <C> <C>
Non-accrual loans $3,296 $1,699
Real estate acquired through foreclosure 1,757 1,150
------ ------
Non-performing assets $5,053 $2,849
====== ======
Non-performing assets as a percent of total
assets 1.26% 0.70%
Non-performing loans as a percent of gross
loans receivable 1.06% 0.59%
</TABLE>
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 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 March 31, 1998, the
Company had classified one loan with a balance of $615,000 as impaired with
$100,000 in specific reserves set aside as of March 31, 1998 as determined in
accordance with SFAS No.
14
<PAGE> 17
114. In comparison, as of June 30, 1997, the Company had classified $530,000 of
its loans as impaired with $100,000 in specific reserves. In addition, as of
March 31, 1998, the Company had $2.6 million in loans which were collectively
evaluated for impairment compared to $1.7 million at June 30, 1997. The average
recorded investment in impaired loans, inclusive of those evaluated
collectively, during the nine months ended March 31, 1998, was $3.0 million,
whereas, the average for the twelve months ended June 30, 1997 was $1.6 million.
The Company, in consideration of the current local economic
environment and the condition of the loan portfolio, maintained the allowance
for estimated loan losses at March 31, 1998 at $1.4 million. Although loans on
non-accrual status have increased to $3.3 million at March 31, 1998 from $1.7
million at June 30, 1997, 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. However, there can be no
assurance losses will not exceed the reserves established or that the reserves
will not have to be increased in the future. 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 three
months ended March 31, 1998:
<TABLE>
<CAPTION>
Activity for the three months ended
March 31, 1998
--------------
<S> <C>
Balance at June 30, 1997 $1,263,000
Add:
Provision for estimated loan losses 458,000
Recoveries of previous charge-offs -
Less:
Charge-offs 298,000
----------
Balance at March 31, 1998 $1,423,000
==========
</TABLE>
The Company's total liabilities decreased slightly to $369.4 million
at March 31, 1998 from $379.4 million at June 30, 1997. Total deposit accounts
increased $1.8 million to $290.1 million at March 31, 1998 from $288.3 million
at June 30, 1997, primarily as a result of the growth in deposit accounts at the
bank's new branch office and due to interest credited to accounts. Total core
deposits increased approximately $21.9 million to $87.8 million at March 31,
1998 as the Company continued its focus on increasing customer relationships
with checking, passbook and money market savings accounts. The growth in core
deposits was partially offset by the $20.1 million decrease in certificates of
deposit to $202.3 million at March 31, 1998 from $222.4 million at June 30,
1997. The Company reduced its borrowings from the FHLB by $8.8 million and its
securities sold under agreements to repurchase by $3.4 million during the nine
months ended March 31, 1998. The Company continues to utilize FHLB advances and
securities sold under agreements to repurchase as part of its asset and
liability management strategy.
The Company's stockholders' equity increased to $31.6 million at March
31, 1998 from $29.9 million at June 30, 1997 primarily due to the net earnings
from operations and the reduction of the net unrealized loss on securities
available for sale.
15
<PAGE> 18
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, utilizing FHLB advances and securities sold under
agreements to repurchase.
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 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 4.0% 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, 1998 and
March 31, 1997 was 16.79% and 9.29%, respectively.
COMMITMENTS AND CONTINGENT LIABILITIES
- --------------------------------------
At March 31, 1998, there were no material changes to the Company's
commitments or contingent liabilities from the period ended June 30, 1997 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, 1997 included in the Annual Report on Form 10-K for
the year ended June 30, 1997. At March 31, 1998, the Company had outstanding
commitments to originate or purchase mortgage loans of $3.3 million as compared
to $1.4 million at June 30, 1997.
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, 1998, the
Association was considered "well-capitalized".
16
<PAGE> 19
The Association was in compliance with the capital requirements in
effect as of March 31, 1998. The following table reflects the required ratios
and the actual capital ratios of the Association at March 31, 1998:
<TABLE>
<CAPTION>
Capital
-------
Actual Required Excess Actual Required
Capital Capital Amount Percent Percent
------- ------- ------ ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Tangible $27,343 $ 5,996 $21,347 6.84% 1.50%
Core $27,343 $11,993 $15,350 6.84% 3.00%
Risk-based $28,666 $15,828 $12,838 14.54% 8.00%
</TABLE>
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
----------------------------------------------------------
See the discussion under "Management of Interest Rate Risk" on page 16
for certain disclosures about market risk. There have been no material changes
in information regarding quantitative and qualitative disclosures about market
risk as of March 31, 1998 from the information as of June 30, 1997, which was
disclosed in the Company's 1997 Form 10-K.
17
<PAGE> 20
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 and declared
effective on May 9, 1995, Registration No. 33-90018.
18
<PAGE> 21
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 10, 1998 /s/ Barrett G. Andersen
- -------------------------------- -------------------------------------
Date Barrett G. Andersen
President and Chief Executive Officer
May 10, 1998 /s/ Ronald A. Ott
- -------------------------------- ------------------------------------
Date Ronald A. Ott
Executive Vice President
Chief Financial Officer and Treasurer
19
<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
<CURRENCY> U.S. Dollars
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JUN-30-1998
<PERIOD-END> MAR-31-1998
<EXCHANGE-RATE> 1
<CASH> 3,861,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 4,500,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 36,943,000
<INVESTMENTS-CARRYING> 33,253,000
<INVESTMENTS-MARKET> 33,376,000
<LOANS> 310,315,000
<ALLOWANCE> 1,423,000
<TOTAL-ASSETS> 401,065,000
<DEPOSITS> 290,122,000
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,178,000
<LONG-TERM> 75,131,000
0
0
<COMMON> 27,000
<OTHER-SE> 31,607,000
<TOTAL-LIABILITIES-AND-EQUITY> 401,065,000
<INTEREST-LOAN> 17,616,000
<INTEREST-INVEST> 3,974,000
<INTEREST-OTHER> 627,000
<INTEREST-TOTAL> 22,217,000
<INTEREST-DEPOSIT> 10,356,000
<INTEREST-EXPENSE> 14,190,000
<INTEREST-INCOME-NET> 8,027,000
<LOAN-LOSSES> 458,000
<SECURITIES-GAINS> 39,000
<EXPENSE-OTHER> 5,782,000
<INCOME-PRETAX> 1,826,000
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,056,000
<EPS-PRIMARY> 0.45
<EPS-DILUTED> 0.43
<YIELD-ACTUAL> 7.51
<LOANS-NON> 3,296,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 763,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,263,000
<CHARGE-OFFS> 298,000
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,423,000
<ALLOWANCE-DOMESTIC> 1,423,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
