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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, 1997
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 (I. R. S. Employer
of 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 February 6, 1998.
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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, 1997 (unaudited) and June 30, 1997.....................1
Consolidated Statements of Operations (unaudited):
For the Six Months Ended December 31, 1997 and 1996 and for the
Three Months Ended December 31, 1997 and 1996 ......................2
Consolidated Statements of Cash Flows (unaudited):
For the Six Months Ended December 31, 1997 and 1996.................3
Notes to Consolidated Financial Statements..........................5
Item 2 Management's Discussion and Analysis of
Results of Operations and Financial Condition.......................7
PART II OTHER INFORMATION
Item 1 Legal Proceedings..................................................19
Item 2 Changes in Securities..............................................19
Item 3 Defaults Upon Senior Securities....................................19
Item 4 Submission of Matters to a Vote of Security Holders................19
Item 5 Other Information..................................................19
Item 6 Exhibits and Reports on Form 8-K...................................20
SIGNATURES...................................................................21
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<TABLE>
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SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
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DECEMBER 31, JUNE 30,
1997 1997
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ASSETS: (Unaudited)
Cash and cash equivalents, including short-term bank obligations of
$6,200 at December 31, 1997 and $18,600 at June 30, 1997 $ 9,610 $ 22,664
Investment securities available for sale, amortized cost of $13,749
at December 31, 1997 and $12,500 at June 30, 1997 13,734 12,467
Mortgage-backed securities available for sale, amortized cost of
$19,437 at December 31, 1997 and $37,323 at June 30, 1997 19,411 37,164
Mortgage-backed securities held to maturity, estimated fair value of
$36,183 at December 31, 1997 and $38,783 at June 30, 1997 36,063 39,072
Loans receivable held for sale 458 230
Loans receivable held for investment, net of allowance for estimated
loan losses of $1,330 at December 31, 1997 and $1,263 at June 30, 1997 315,398 284,608
Accrued interest receivable 2,827 2,911
Stock of Federal Home Loan Bank of San Francisco, at cost 4,113 3,987
Real estate acquired through foreclosure, net 1,363 1,150
Premises and equipment, net 3,704 3,866
Prepaid expenses and other assets, net 1,140 1,221
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Total assets $ 407,821 $ 409,340
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposit accounts $ 295,551 $ 288,339
Federal Home Loan Bank advances 71,221 77,907
Securities sold under agreements to repurchase 6,000 9,430
Accrued expenses and other liabilities 4,259 3,761
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Total liabilities 377,031 379,437
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 December 31, 1997 and
2,342,176 shares outstanding at June 30, 1997 27 27
Additional paid-in capital 20,915 20,789
Retained earnings, substantially restricted 15,766 15,201
Net unrealized loss on investment securities and mortgage-backed
securities available for sale, net of taxes (23) (110)
Deferred stock compensation (1,805) (1,880)
Treasury stock, 382,316 shares at December 31,1997 and
385,480 shares at June 30, 1997 (4,090) (4,124)
------------ ------------
Total stockholders' equity 30,790 29,903
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Total liabilities and stockholders' equity $ 407,821 $ 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 SIX MONTHS
ENDED DECEMBER 31, ENDED DECEMBER 31,
1997 1996 1997 1996
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INTEREST INCOME:
Interest on loans $ 5,980 $ 5,063 $ 11,458 $ 9,973
Interest on investment securities 263 263 576 575
Interest on mortgage-backed securities 985 964 2,253 1,703
Other 231 151 496 298
------------ ------------ ------------- -------------
Total interest income 7,459 6,441 14,783 12,549
------------ ------------ ------------- -------------
INTEREST EXPENSE:
Interest on deposit accounts 3,558 2,902 7,033 5,698
Interest on borrowings 1,282 1,218 2,624 2,285
------------ ------------ ------------- -------------
Total interest expense 4,840 4,120 9,657 7,983
------------ ------------ ------------- -------------
Net interest income before provision
for estimated loan losses 2,619 2,321 5,126 4,566
PROVISION FOR ESTIMATED LOAN LOSSES 268 105 343 294
------------ ------------- ------------- -------------
Net interest income after provision for
estimated loan losses 2,351 2,216 4,783 4,272
OTHER INCOME (EXPENSE):
Loan servicing and other fees 137 114 263 223
Secondary marketing activity, net 14 (16) 9 (26)
Gain (loss) on sale or redemption of securities
available for sale, net 161 37 161
Other income 176 103 345 245
Net loss on real estate acquired through foreclosure (75) (12) (63) (69)
------------ ------------- ------------- -------------
Total other income 252 350 591 534
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GENERAL AND ADMINISTRATIVE EXPENSES:
Compensation and other employee expenses 1,194 982 2,382 1,894
Office occupancy 272 181 541 370
Data Processing and Equipment 275 187 529 370
Advertising 26 40 78 70
FDIC insurance premiums 45 134 89 261
FDIC special assessment 1,332
Other operating expenses 387 316 776 585
------------ ------------- ------------- -------------
Total general and administrative expense 2,199 1,840 4,395 4,882
------------ ------------- ------------- -------------
EARNINGS(LOSS) BEFORE INCOME TAXES 404 726 979 (76)
INCOME TAXES 170 310 414 (28)
------------ ------------- ------------- -------------
NET EARNINGS(LOSS) $ 234 $ 416 $ 565 $ (48)
============ ============= ============= =============
EARNINGS(LOSS) PER SHARE - Basic $ 0.10 $ 0.16 $ 0.24 $ (0.02)
============ ============= ============= =============
EARNINGS(LOSS) PER SHARE - Diluted $ 0.09 $ 0.16 $ 0.23 $ (0.02)
============ ============= ============= =============
</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 SIX MONTHS
ENDED DECEMBER 31,
1997 1996
-----------------------------------
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 565 $ (48)
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 328 165
Loans originated for sale (7,258) (3,295)
Proceeds from sale of loans 7,055 3,301
Gain on sale of loans, net (25) (6)
Gain on sale of investments available for sale, net (7)
Gain on sale of mortgage-backed securities available for sale, net (31) (161)
Federal Home Loan Bank stock dividend (126) (117)
Decrease (increase) in prepaid expenses and other assets 20 (401)
Amortization of deferred loan fees (36) (9)
Deferred loan origination costs (121) (115)
Increase in accrued expenses and other liabilities 435 186
Provision for estimated loan losses 343 294
Provision for estimated real estate losses 56 30
Premium amortization, net 118 108
Decrease (increase) in accrued interest receivable 84 (160)
Other, net (125) 270
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Net cash provided by operating activities 1,275 42
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities available for sale (21,748) (28,651)
Proceeds from sale and redemption of investment securities
available for sale 20,507 31,650
Purchase of mortgage-backed securities available for sale (19,999)
Proceeds from sale of mortgage-backed securities available for sale 14,480 9,866
Principal repayments on mortgage-backed securities 6,328 3,873
Loans funded, net (13,267) (14,682)
Loans purchased, net (40,623) (29,894)
Principal repayments on loans 21,778 14,637
Proceeds from sale of real estate 1,069 2,168
Purchase of premises and equipment (113) (90)
Other, net (69) (3)
------------- -------------
Net cash used in investing activities (11,658) (31,125)
</TABLE>
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<TABLE>
<CAPTION>
SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)(CONTINUED)
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FOR THE THREE MONTHS
ENDED DECEMBER 31,
1997 1996
--------------------------------
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CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in certificate accounts $ (5,985) $ 9,811
Net increase in passbook , money market savings
NOW and noninterest-bearing accounts 13,197 4,610
Proceeds from Federal Home Loan Bank advances 29,000
Repayment of Federal Home Loan Bank advances (6,686) (19,206)
Proceeds from reverse repurchase agreements, net 9,600
Repayment of securities sold under agreements to repurchase (3,430)
Purchase of treasury stock (669)
Other, net 233 112
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Net cash (used in) provided by financing activities (2,671) 33,258
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS
EQUIVALENTS (13,054) 2,175
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 22,664 8,884
------------ -------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 9,610 $ 11,059
============ =============
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the period for:
Interest $ 9,652 $ 8,117
Income taxes, net 536
NONCASH INVESTING ACTIVITIES DURING THE PERIOD:
Real estate acquired through foreclosure 1,312 1,469
Change in net unrealized loss on investment securities and
mortgage-backed securities available for sale, net of taxes 87 136
</TABLE>
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SGV BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
DECEMBER 31, 1997
(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, 1997, 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, which is substantially inactive (collectively, the Company). All
material intercompany balances and transactions have been eliminated in
consolidation.
The accompanying consolidated financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
information and with the instructions to Form 10-Q and Article 10 of Regulation
S-X. Accordingly, they do not include all of the information and footnotes
required by generally accepted accounting principles for complete financial
statements. In the opinion of management all necessary adjustments, consisting
only of normal recurring adjustments necessary for a fair presentation have been
5
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included. The results of operations for the three-month period ended December
31, 1997 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, 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 six months ended December 31, 1997 and 1996 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 384,580 and 163,880 for the three months ended December 31, 1997
and 1996, respectively, and 384,966 and 152,094 for the six months ended
December 31, 1997 and 1996, 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 128,568 for the three
months ended December 31, 1997 and 122,880 for the six months ended December 31,
1997. The numerator for earnings per share for all periods is represented by net
earnings (or loss) 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
6
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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.
4. Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
5. Approved Stock Compensation Plans
---------------------------------
At the Company's Annual Meeting of Shareholders on November 20, 1997, the
shareholders approved the SGV Bancorp, Inc. 1997 Stock-Based Incentive Plan.
This plan authorizes the granting of options to purchase Common Stock,
option-related awards and awards of Common Stock equivalent to one percent of
the adjusted average Common Stock outstanding used to calculate diluted earnings
per share as reported in the annual report for the preceding year for each
calendar year from 1997 through 2006. In no event will more than 230,000 shares
be granted under this plan which is available to all officers, other employees
and outside Directors. This plan became effective November 20, 1997.
6. 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 significantly 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.
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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 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 six months ended December 31,
1997.
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.
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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 sal 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 $234,000 for the three months ended
December 31, 1997 compared to net earnings of $416,000 for the three months
ended December 31, 1996. For the six months ended December 31, 1997, the
Company's net earnings were $565,000, as compared to a net loss of $48,000 for
the six months ended December 31, 1996. For the three months ended December 31,
1997, the net earnings were $0.10 per share - basic, compared to $0.16 per share
- - basic for the three months ended December 31, 1996. For the six months ended
December 31, 1997, the net earnings were $0.24 per share - basic, compared to a
net loss of $0.02 per share - basic for the six months ended December 31, 1996.
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 (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
$2.6 million for the three months ended December 31, 1997 compared to $2.3
million for the three months ended December 31, 1996. For the six months ended
December 31, 1997, net interest income was $5.1 million compared to $4.6 million
for the six months ended December 31, 1996.
Interest Income
- ---------------
Total interest income for the three months ended December 31, 1997 was
$7.5 million, an increase of $1.1 million from the comparable period a year ago.
The increase in interest income was primarily due to the $48.5 million increase
in the average balance of interest-earning assets to $397.5 million for the
three months ended December 31, 1997 from $349.0 million for the three months
ended December 31, 1996. The interest income on loans increased to $6.0 million
for the three months ended December 31, 1997 from $5.1 million for the three
months ended
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December 31, 1996. The increase in interest on loans was due to the increase in
the average balance of loans receivable outstanding to $310.0 million for the
three months ended December 31, 1997 from $267.9 million for the three months
ended December 31, 1996. The increase in interest on loans was also due to the
increase in the yield on loans to 7.72% for the three months ended December 31,
1997 from 7.56% for the three months ended December 31, 199 resulting from
repricing of adjustable rate mortgages as a result of the increase in the Cost
of Funds Index (COFI). The interest income on mortgage-backed securities was
relatively unchanged as it totaled $985,000 for the three months ended December
31, 1997 compared to $964,000 for the three months ended December 31, 1996. The
total yield on total interest-earning assets increased to 7.51% for the three
months ended December 31, 1997 as compared to 7.38% for the three months ended
December 31, 1996.
Total interest income for the six months ended December 31, 1997 was $14.8
million, an increase of $2.2 million from the comparable period a year ago. The
increase in interest income was primarily due to the $55.9 million increase in
the average balance of interest-earning assets to $396.5 million for the six
months ended December 31, 1997 from $340.6 million for the six months ended
December 31, 1996. The interest income on loans increased to $11.5 million for
the six months ended December 31, 1997 from $10.0 million for the six months
ended December 31, 1996. The increase in interest on loans was due to the
increase in the average balance of loans receivable outstanding to $298.6
million for the six months ended December 31, 1997 from $262.8 million for the
six months ended December 31, 1996. The increase in interest on loans was also
due to the increase in the yield on loans to 7.68% for the six months ended
December 31, 1997 from 7.59% for the six months ended December 31, 1996
resulting from repricing of adjustable rate mortgages, primarily as a result of
the increase in COFI. The interest income on mortgage-backed securities
increased to $2.3 million for the six months ended December 31, 1997 compared to
$1.7 million for the six months ended December 31, 1996. The total yield on
total interest-earning assets increased to 7.46% for the six months ended
December 31, 1997 as compared to 7.37% for the six months ended December 31,
1996.
Interest Expense
- ----------------
Total interest expense for the three months ended December 31, 1997 was
$4.8 million, an increase of $0.7 million from $4.1 million for the three months
ended December 31, 1996. The increase in interest expense was primarily due to
the increase in the average balance of interest-bearing liabilities to $368.5
million for the six months ended December 31, 1997 from $322.2 million for the
six months ended December 31, 1996. The increase in average interest-bearing
liabilities was comprised primarily of the $46.2 million increase in average
interest-bearing savings accounts as average borrowings remained unchanged. The
increase in interest-bearing savings accounts was partially 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 December 31, 1997. The
average cost of funds increased to 5.25% for the three months ended December 31,
1997 from 5.12% for the three months ended December 31, 1996 due primarily to
the higher cost of funds paid on new and renewing certificates of deposit.
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Total interest expense was $9.7 million for the six months ended December
31, 1997 as compared to $8.0 million for the six months ended December 31, 1996.
The increase in expense was primarily due to the $54.8 million increase in
average interest-bearing liabilities to $368.2 million for the six months ended
December 31, 1997 from $313.4 million for the comparable period a year ago.
Interest expense on interest-bearing savings accounts increased by $1.3 million
as a result of the increase in average interest-bearing savings accounts to
$285.8 million for the six months ended December 31, 1997 as compared to $238.5
million for the six months ended December 31, 1996 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 4.92% for the six months ended December 31, 1997 from 4.78% for the
same period a year ago. Interest expense from borrowings increased by $339,000
due to the increase in average borrowings to $82.4 million for the six months
ended December 31, 1997 compared to $74.9 million for the same period a year
ago.
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
six month periods ended December 31, 1997 and December 31, 1996 (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,
------------------------------- -----------------------------
1997 1996 1997 1996
---- ---- ---- ----
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 $309,957 7.72% $267,871 7.56% $298,555 7.68% $262,766 7.59%
Mortgage-backed securities 57,057 6.91 55,403 6.96 64,890 6.94 50,338 6.77
Investment securities and other 30,468 6.49 25,734 6.44 33,052 6.49 27,538 6.34
-------- -------- -------- --------
Total interest-earning assets 397,482 7.51% 349,008 7.38% 396,497 7.46% 340,642 7.37%
Noninterest-earning assets 13,269 11,682 13,288 11,061
-------- -------- -------- --------
Total assets $410,751 $360,690 $409,785 $351,703
======== ======== ======== ========
LIABILITIES AND EQUITY:
Interest-bearing liabilities:
Savings accounts $288,287 4.94% $242,093 4.79% $285,773 4.92% $238,515 4.78%
Borrowings 80,194 6.39 80,076 6.08 82,377 6.37 74,861 6.10
-------- -------- -------- --------
Total interest-bearing liabilities 368,481 5.25% 322,169 5.12% 368,150 5.25% 313,376 5.09%
Noninterest-bearing liabilities 11,678 7,248 11,255 6,868
Stockholders' equity 30,592 31,273 30,380 31,459
-------- -------- -------- --------
Total liabilities and equity $410,751 $360,690 $409,785 $351,703
======== ======== ======== ========
Net interest rate spread 2.26% 2.26% 2.21% 2.28%
Net interest margin 2.64% 2.66% 2.59% 2.68%
Ratio of interest-earning assets
to interest-bearing liabilities 107.87% 108.33% 107.70% 108.70%
</TABLE>
The Company's average net interest spread was unchanged at 2.26% for the
three months ended December 31, 1997 to the three months ended December 31,
1996. Although the actual spread did not change, both the yield on
interest-earning assets and the cost of interest-bearing
11
<PAGE> 14
liabilities did increase by 13 basis points in the three months ended December
31, 1997 as compared to the same period a year ago. In regards to the six months
ended December 31, 1997, the net interest spread declined by seven basis points
to 2.21% from 2.28% for the comparable period a year ago. The decrease was due
primarily to the increase in the cost of interest-bearing liabilities which
increased to 5.25% for the six months ended December 31, 1997 from 5.09% for the
six months ended December 31, 1996. The increase in the cost of interest-bearing
liabilities was due to the increase in the rates offered on new and renewing
certificates of deposit and on promotional rates offered to attract customers to
money market accounts at the de novo branch.
The average yield on loans receivable increased to 7.72% for the three
months ended December 31, 1997 from 7.56% for the three months ended December
31, 1996. 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 average yield on mortgage-backed securities decreased
slightly to 6.91% for the three months ended December 31, 1997 from 6.96% for
the three months ended December 31, 1996.
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
increased by 15 basis points to 4.94% for the three months ended December 31,
1997 from 4.79% for the three months ended December 31, 1996. As stated earlier,
the increase was due to the higher rates offered on new and renewing
certificates of deposits and to promotional rate an account offerings related to
the new branch. The average balance of savings accounts increased to $288.3
million for the three months ended December 31, 1997 from $242.1 million for the
three months ended December 31, 1996 due partially to the purchase of a branch
from another institution and the growth in deposits in a de novo branch opened
at the end of March 1997. Also, the average balance of borrowings, principally
from the FHLB, remained virtually unchanged with $80.2 million in borrowings for
the three months ended December 31, 1997 compared to $80.1 million for the
comparable period a year ago. Although the balance remained approximately the
same, the cost of borrowings increased to 6.39% for the three months ended
December 31, 1997 from 6.08% 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 declined to 2.21% for the six months ended
December 31, 1997 from 2.28% for the comparable period a year ago primarily as a
result of the increase in the average cost of interest-bearing liabilities. The
average cost of interest bearing liabilities increased by 16 basis points to
5.25% for the six months ended December 31, 1997 from 5.09% for the six months
ended December 31, 1996. As stated above, the increase was due to the higher
cost of deposits on new and renewing certificates, promotional rates on new
accounts for a new branch and due to the lengthening of the average maturity of
the Company's borrowings.
12
<PAGE> 15
Provision for Estimated Loan Losses
- -----------------------------------
The provision for estimated loan losses for the three months ended
December 31, 1997 was $268,000 compared with $105,000 for the three months ended
December 31, 1996. The increase in the provision for estimated loan losses was
due primarily to an increase in charge-offs related to fair value writedowns of
four non-performing assets of approximately $200,000 in the three months ended
December 31, 1997 as compared to no charge-offs for the comparable period a year
ago. For the six months ended December 31, 1997, the provision for estimated
loan losses totaled $343,000 as compared to $294,000 for the same period a year
ago. The increase was due to an increase in fair value writedowns in the six
months ended December 31, 1997 as compared to the same period a year ago. See
"Financial Condition."
Other Income
- ------------
Other income decreased to $252,000 for the three months ended December 31,
1997 from $350,000 for the three months ended December 31, 1996. The decrease
was partially due to the increase in the net loss resulting from real estate
owned operations to $75,000 for the three months ended December 31,1997 from
$12,000 for the same period a year ago. Also, the Company realized $161,000 in
net gains on sales of investments and mortgage-backed securities in the three
months ended December 31, 1996 which did not recur in the current period.
Partially offsetting these decreases was the increase in other income,
specifically fees from savings deposit activities, which totaled $176,000 for
the three months ended December 31, 1997 versus $103,000 for the comparable
period a year ago. For the six months ended December 31, 1997, other income
increased to $591,000 from $534,000 primarily as a result of increased fee
income on savings account activities. See "Financial Condition."
General and Administrative Expenses
- -----------------------------------
For the three months ended December 31, 1997, general and administrative
expenses increased to $2.2 million from $1.8 million for the three months ended
December 31, 1996. The increase was primarily due to the $212,000 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
in the costs for building, equipment and data processing 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 the expenses for the three months
ended December 31, 1997 was $27,000 in amortization of the core deposit
intangible related to the deposits purchased in February 1997.
For the six months ended December 31, 1997, the Company's general and
administrative expenses increased to $4.4 million as compared to $3.6 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
13
<PAGE> 16
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 $170,000 in income taxes for the three months ended
December 31, 1997 compared to $310,000 for the three months ended December 31,
1996. The effective tax rates for the three months ended December 31, 1997 and
December 31, 1996 were approximately 42.1% and 42.7%, respectively. For the six
months ended December 31, 1997, the income taxes recorded was $414,000 as
compared to a tax benefit of $28,000 for the same period a year ago.
FINANCIAL CONDITION
- -------------------
The Company's total assets were $407.8 million at December 31, 1997, 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 $30.8 million to
$315.4 million at December 31, 1997 as compared to $284.6 million at June 30,
1997. The increase is due primarily to the purchase of approximately $30.4
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 $14.5 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.
During the six months ended December 31, 1997, the Company originated and
purchased for investment a total of $53.4 million in mortgage and home equity
loans as compared to the $44.6 million purchased and originated in the six month
period ended December 31, 1996. The loans purchased in the six months ended
December 31, 1997 were adjustable rate and primarily indexed to COFI. The
Company also originated and sold approximately $7.2 million in mortgage loans to
the secondary market during the six months ended December 31, 1997 as compared
to approximately $3.3 million for the same period a year ago.
The Company's non-performing assets totaled $4.2 million at December 31,
1997 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 $2.9 million at December 31, 1997 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. Also, real estate owned increased slightly
to $1.4 million at December 31, 1997 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 1.04% at December 31, 1997 from 0.70% at June 30,
1997.
14
<PAGE> 17
The following table sets forth the non-performing assets at December 31, 1997
and June 30, 1997:
<TABLE>
<CAPTION>
December 31, 1997 June 30, 1997
----------------- -------------
(dollars in thousands)
<S> <C> <C>
Non-accrual loans $2,872 $1,699
Real estate acquired through foreclosure 1,363 1,150
------ ------
Non-performing assets $4,235 $2,849
====== ======
Non-performing assets as a percent of total
assets 1.04% 0.70%
Non-performing loans as a percent of gross
loans receivable 0.90% 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 December 31, 1997, the Company had
classified one loan with a balance of $610,000 as impaired with $100,000 in
specific reserves set aside as of December 31, 1997 as determined in accordance
with SFAS No. 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 December 31, 1997, the Company had $2.3 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 three months ended December 31, 1997, was
$2.8 million, whereas, the average for the twelve months ended June 30, 199 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 December 31, 1997 at $1.3 million. Although loans on non-accrual
status have increased to $2.9 million at December 31, 1997 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. 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
15
<PAGE> 18
mortgage loans. The following table sets forth the activity in the Company's
allowance for estimated loan losses for the three months ended December 31,
1997:
<TABLE>
<CAPTION>
Activity for the three months ended
December 31, 1997
-----------------
<S> <C>
Balance at June 30, 1997 $1,263,000
Add:
Provision for estimated loan losses 343,000
Recoveries of previous charge-offs -
Less:
Charge-offs 276,000
----------
Balance at December 31, 1997 $1,330,000
==========
</TABLE>
The Company's total liabilities decreased slightly to $377.0 million at
December 31, 1997 from $379.4 million at June 30, 1997. Total deposit accounts
increased $7.3 million to $295.6 million at December 31, 1997 from $288.3
million at June 30, 1997, primarily as a result of the growth in deposit
accounts at the de novo branch and due to interest credited to accounts. Of the
total increase in deposits, approximately $13.7 million represented core
deposits as the Company is continuing to focus on increasing customer
relationships with checking, passbook and money market savings accounts. Core
deposits increased to approximately $80 million at December 31, 1997 from
approximately $66 million at June 30, 1997. The growth in core deposits was
partially offset by the $6.0 million decrease in certificates of deposit to
$216.4 million at December 31, 1997 from $222.4 million at June 30, 1997. As a
result of the net increase in the Company's deposit accounts, the Company
reduced its borrowings from th FHLB by $6.7 million and its securities sold
under agreements to repurchase by $3.4 million during the six months ended
December 31, 1997. 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 $30.8 million at December
31, 1997 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.
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.
16
<PAGE> 19
LIQUIDITY
- ---------
The Company's primary sources of funds are deposits, principal and
interest payments on loans and mortgage-backed securities, FHLB advances,
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 December 31, 1997 and
December 31, 1996 was 8.18% and 9.41%, respectively.
COMMITMENTS AND CONTINGENT LIABILITIES
- --------------------------------------
At December 31, 1997, 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 December 31, 1997, the Company had outstanding
commitments to originate or purchase mortgage loans of $2.0 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 December 31, 1997, the
Association was considered "well-capitalized".
17
<PAGE> 20
The Association was in compliance with the capital requirements in effect
as of December 31, 1997. The following table reflects the required ratios and
the actual capital ratios of the Association at December 31, 1997:
<TABLE>
<CAPTION>
Capital
-------
Actual Required Excess Actual Required
Capital Capital Amount Percent Percent
------- ------- ------ ------- -------
(dollars in thousands)
<S> <C> <C> <C> <C> <C>
Tangible $26,598 $ 6,084 $20,514 6.56% 1.50%
Core $26,598 $12,168 $14,430 6.56% 3.00%
Risk-based $27,828 $16,170 $11,658 13.72% 8.00%
</TABLE>
18
<PAGE> 21
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
-----------------
The Company is involved as plaintiff or defendant in various legal actions
incident to its business, none of which is believed by management to be material
to the financial condition of the Company.
Item 2. Changes in Securities
---------------------
None.
Item 3. Defaults in Securities
----------------------
None.
Item 4. Submission of Matters to a Vote of Security Holders
The Company held its Annual Meeting of Shareholders on November 20, 1997.
At the Annual Meeting, the shareholders elected Barrett G. Andersen and Royce A.
Stutzman to three year terms. Directors Irven G. Reynolds, Benjamin S. Wong,
Thomas Patronite and John D. Randall have terms of office that continued after
the Annual Meeting. The shareholders also approved the SGV Bancorp, Inc. 1997
Stock-Based Incentive Plan and ratified the appointment of Deloitte & Touche LLP
as independent auditors of the Company for the year ending June 30, 1998.
<TABLE>
<CAPTION>
The vote on each matter was as follows:
1. For Directors: BROKER
FOR WITHHELD ABSTAIN NON-VOTES
<S> <C> <C> <C> <C>
Barrett G. Andersen 1,922,303 71,212 -- --
Royce A. Stutzman 1,922,663 70,852 -- --
2. Other Matters:
Approval of SGV Bancorp, Inc.
1997 Stock-Based Incentive Plan 1,209,137 189,648 20,100 574,630
Ratification of the appointment
of Deloitte & Touche LLP as
independent auditors for the
Company 1,942,935 47,580 3,000 --
</TABLE>
Item 5. Other Information
-----------------
None.
19
<PAGE> 22
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.
20
<PAGE> 23
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
SGV BANCORP, INC.
February 9, 1998 /s/ Barrett G. Andersen
- ------------------------------------ -------------------------------------
Date Barrett G. Andersen
President and Chief Executive Officer
February 9, 1998 /s/ Ronald A. Ott
- ------------------------------------- -------------------------------------
Date Ronald A. Ott
Executive Vice President
Chief Financial Officer and Treasurer
21
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial 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> 6-MOS
<FISCAL-YEAR-END> Jun-30-1998
<PERIOD-START> Jul-01-1997
<PERIOD-END> Dec-31-1997
<EXCHANGE-RATE> 1
<CASH> 3,410,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,200,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 33,145,000
<INVESTMENTS-CARRYING> 36,063,000
<INVESTMENTS-MARKET> 36,183,000
<LOANS> 317,186,000
<ALLOWANCE> 1,330,000
<TOTAL-ASSETS> 407,821,000
<DEPOSITS> 295,551,000
<SHORT-TERM> 0
<LIABILITIES-OTHER> 4,259,000
<LONG-TERM> 77,221,000
0
0
<COMMON> 27,000
<OTHER-SE> 30,763,000
<TOTAL-LIABILITIES-AND-EQUITY> 407,821,000
<INTEREST-LOAN> 11,458,000
<INTEREST-INVEST> 2,829,000
<INTEREST-OTHER> 496,000
<INTEREST-TOTAL> 14,783,000
<INTEREST-DEPOSIT> 7,033,000
<INTEREST-EXPENSE> 9,657,000
<INTEREST-INCOME-NET> 5,126,000
<LOAN-LOSSES> 343,000
<SECURITIES-GAINS> 37,000
<EXPENSE-OTHER> 3,841,000
<INCOME-PRETAX> 979,000
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 565,000
<EPS-PRIMARY> 0.24
<EPS-DILUTED> 0.23
<YIELD-ACTUAL> 7.46
<LOANS-NON> 2,872,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 769,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,263,000
<CHARGE-OFFS> 276,000
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,330,000
<ALLOWANCE-DOMESTIC> 1,330,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
