<PAGE> 1
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 September 30, 1998
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.
- --------------------------------------------------------------------------------
(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
- --------------------------------------------------------------------------------
(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: 2,218,823 shares of common
stock, par value $0.01 per share, were outstanding as of November 9, 1998.
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SGV BANCORP, INC.
FORM 10-Q
INDEX
PART I FINANCIAL INFORMATION PAGE
----
Item 1 Consolidated Statements of Financial Condition:
September 30, 1998 (unaudited) and June 30, 1998..................1
Consolidated Statements of Operations (unaudited):
For the Three Months Ended September 30, 1998 and 1997............2
Consolidated Statements of Cash Flows(unaudited):
For the Three Months Ended September 30, 1998 and 1997............3
Notes to Consolidated Financial Statements........................5
Item 2 Management's Discussion and Analysis of
Results of Operations and Financial Condition.....................7
Item 3 Quantitative and Qualitative Disclosure Regarding Market Risk....18
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.................................19
SIGNATURES...................................................................20
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<TABLE>
<CAPTION>
SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(In thousands, except share data)
- --------------------------------------------------------------------------------------------------------------
September 30, June 30,
1998 1998
--------------- ----------------
(Unaudited)
<S> <C> <C>
ASSETS:
Cash and cash equivalents, including short-term bank obligations of
$41,850 at September 30, 1998 and $16,202 at June 30, 1998 $ 46,459 $ 20,008
Investment securities available for sale, amortized cost of $12,199
at September 30, 1998 and $19,241 at June 30, 1998 12,061 19,221
Mortgage-backed securities available for sale, amortized cost of
$30,204 at September 30, 1998 and $29,386 at June 30, 1998 30,240 29,383
Mortgage-backed securities held to maturity, estimated fair value of
$37,314 at September 30, 1998 and $30,089 at June 30, 1998 37,145 29,936
Loans receivable held for sale 1,616 391
Loans receivable held for investment, net of allowance for estimated
loan losses of $1,449 at September 30, 1998 and $1,425 at June 30, 1998 311,643 295,739
Accrued interest receivable 2,916 2,774
Stock of Federal Home Loan Bank of San Francisco, at cost 5,202 4,234
Real estate acquired through foreclosure, net 1,084 1,902
Premises and equipment, net 3,409 3,537
Prepaid expenses and other assets, net 1,202 1,221
--------------- ----------------
Total assets $ 452,977 $ 408,346
=============== ================
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES:
Deposit accounts $ 302,049 $ 295,281
Federal Home Loan Bank advances 104,037 70,543
Securities sold under agreements to repurchase 10,300 6,000
Accrued expenses and other liabilities 5,690 4,289
--------------- ----------------
Total liabilities $ 422,076 376,113
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; 2,218,823 shares outstanding at September 30, 1998
and 2,348,068 shares outstanding at June 30, 1998 27 27
Additional paid-in capital 21,195 21,147
Retained earnings, substantially restricted 17,254 16,688
Accumulated other comprehensive income (60) (13)
Deferred stock compensation (1,462) (1,555)
Treasury stock; 508,833 shares at September 30, 1998 and
379,588 shares at June 30, 1998 (6,053) (4,061)
--------------- ----------------
Total stockholders' equity 30,901 32,233
--------------- ----------------
Total liabilities and stockholders' equity $ 452,977 $ 408,346
=============== ================
</TABLE>
1
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<TABLE>
<CAPTION>
SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)(Unaudited)
- --------------------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS
ENDED SEPTEMBER 30,
1998 1997
--------------- ----------------
<S> <C> <C>
INTEREST INCOME:
Interest on loans $ 5,939 $ 5,478
Interest on investment securities 365 313
Interest on mortgage-backed securities 1,024 1,268
Other 209 265
--------------- ----------------
Total interest income 7,537 7,324
--------------- ----------------
INTEREST EXPENSE:
Interest on deposit accounts 3,397 3,475
Interest on borrowings 1,278 1,342
--------------- ----------------
Total interest expense 4,675 4,817
--------------- ----------------
Net interest income before provision
for estimated loan losses 2,862 2,507
PROVISION FOR ESTIMATED LOAN LOSSES 269 75
--------------- ----------------
Net interest income after provision for
estimated loan losses 2,593 2,432
OTHER INCOME:
Loan servicing and other fees 145 126
Deposit account fees 144 128
Secondary marketing activity, net 21 (5)
Gain on sale of securities available for sale, net 7 37
Other income 96 41
Net gain on real estate acquired through foreclosure 145 12
--------------- ----------------
Total other income 558 339
--------------- ----------------
GENERAL AND ADMINISTRATIVE EXPENSES:
Compensation and other employee expenses 1,229 1,188
Office occupancy 266 269
Equipment 277 254
Advertising 30 52
FDIC insurance premiums 44 44
Other operating expenses 343 389
--------------- ----------------
Total general and administrative expenses 2,189 2,196
--------------- ----------------
EARNINGS BEFORE INCOME TAXES 962 575
INCOME TAXES 396 244
--------------- ----------------
NET EARNINGS $ 566 $ 331
=============== ================
EARNINGS PER SHARE-Basic $ 0.25 $ 0.14
=============== ================
EARNINGS PER SHARE-Diluted $ 0.24 $ 0.14
=============== ================
2
</TABLE>
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<TABLE>
<CAPTION>
SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)
- -------------------------------------------------------------------------------------------------------------
FOR THE THREE MONTHS
ENDED SEPTEMBER 30,
1998 1997
-------------- ---------------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net earnings (loss) $ 566 $ 331
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Depreciation and amortization 172 162
Loans originated for sale (6,145) (3,099)
Proceeds from sale of loans 4,960 2,992
Gain on sale of loans, net (40) (10)
Gain on sale of investments available for sale, net (10) (6)
Gain on sale of mortgage-backed securities available for sale, net (2) (31)
Federal Home Loan Bank stock dividend (62) (61)
Increase in prepaid expenses and other assets (6) (11)
Amortization of deferred loan fees (27) (25)
Deferred loan origination costs (119) (56)
Increase (decrease) in accrued expenses and other liabilities (1,434) (227)
Provision for estimated loan losses 269 75
(Recapture of) provision for estimated real estate losses (45) 9
Premium amortization, net 168 60
(Increase) decrease in accrued interest receivable (143) 71
Other, net (222) 257
-------------- --------------
Net cash provided by operating activities 748 431
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of investment securities available for sale (6,948) (11,500)
Proceeds from sale and redemption of investment securities
available for sale 14,010 11,506
Purchase of mortgage-backed securities available for sale (10,153)
Proceeds from sale of mortgage-backed securities available for sale 6,931 14,480
Purchase of mortgage-backed securities held to maturity (10,030)
Principal repayments on mortgage-backed securities 5,124 3,211
Loans funded, net (16,102) (5,277)
Loans purchased, net (22,015) (29,003)
Principal repayments on loans 21,531 9,323
Proceeds from sale of real estate 1,582 511
Purchase of premises and equipment (17) (81)
Purchase of Federal Home Loan Bank Stock (906)
Other, net (15) (32)
-------------- --------------
Net cash used in investing activities (17,008) (6,862)
3
</TABLE>
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<TABLE>
<CAPTION>
SGV BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS) (UNAUDITED)(CONTINUED)
- -----------------------------------------------------------------------------------------------
FOR THE THREE MONTHS
ENDED SEPTEMBER 30,
-----------------------------------
1998 1997
--------------- ---------------
<S> <C> <C>
CASH FLOWS FROM FINANCING ACTIVITIES:
Net increase in certificate accounts $ 5,865 $ 801
Net increase (decrease) in passbook, money market savings
NOW and non-interest-bearing accounts 902 3,816
Proceeds from Federal Home Loan Bank advances 35,000
Repayment of Federal Home Loan Bank advances (1,505) (2,094)
Proceeds from securities sold under agreements to repurchase 4,300
Repayment of securities sold under agreements to repurchase (3,430)
Purchase of treasury stock (1,992)
Other, net 141 70
-------------- ---------------
Net cash (used in) provided by financing activities 42,711 (837)
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS 26,451 (7,268)
CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD 20,008 22,664
-------------- ---------------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 46,459 $ 15,396
============== ===============
SUPPLEMENTAL CASH FLOW DISCLOSURES
Cash paid during the period for:
Interest $ 4,646 $ 4,845
Income taxes, net 375 60
NONCASH INVESTING ACTIVITIES DURING THE PERIOD:
Real estate acquired through foreclosure 692 304
Change in net unrealized loss on investment securities and
mortgage-backed securities available for sale, net of taxes (47) 105
</TABLE>
4
<PAGE> 7
SGV BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 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 September 30, 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 September
30, 1998 are not necessarily indicative of the results that may be expected for
the entire fiscal year.
5
<PAGE> 8
These consolidated financial statements and the information under the
heading "Management's Discussion and Analysis of Results of Operations and
Financial Condition" should be read in conjunction with the audited consolidated
financial statements and notes thereto of SGV Bancorp, Inc. for the year ended
June 30, 1998 included in the Company's Annual Report on Form 10-K for the
fiscal year ended June 30, 1998.
<TABLE>
<CAPTION>
2. Earnings Per Share
------------------
Earnings per share reconciliation is as follows:
WEIGHTED
AVERAGE
INCOME SHARES PER SHARE
(NUMERATOR) (DENOMINATOR) AMOUNT
------------- --------------- -----------
SEPTEMBER 30, 1998
----------------------------------------------
<S> <C> <C> <C>
BASIC EPS
Income available to common stockholders $ 566,000 2,291,000 $ 0.25
EFFECT OF DILUTIVE SECURITIES
Incremental shares from assumed exercise
of outstanding options - 98,000 (0.01)
-------------- -------------- --------------
DILUTED EPS
Income available to common stockholders $ 566,000 2,389,000 $ 0.24
============== ============== ==============
</TABLE>
<TABLE>
<CAPTION>
SEPTEMBER 30, 1997
----------------------------------------------
<S> <C> <C> <C>
BASIC EPS
Income available to common stockholders $ 331,000 2,342,000 $ 0.14
EFFECT OF DILUTIVE SECURITIES
Incremental shares from assumed exercise
of outstanding options - 117,000 -
-------------- -------------- --------------
DILUTED EPS
Income available to common stockholders $ 331,000 2,459,000 $ 0.14
============== ============== ==============
</TABLE>
3. Comprehensive Income
--------------------
The Company adopted Statement of Financial Accounting Standards No. 130,
Reporting Comprehensive Income, effective July 1, 1998. The standard requires
that comprehensive income and its components be disclosed in the financial
statements. The Company's comprehensive income includes all items which comprise
net income plus the unrealized holding losses on available-for-sale securities.
For the three months ended September 1998 and 1997, the Company's comprehensive
income was as follows:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 SEPTEMBER 30, 1997
------------------ ------------------
(Dollars in thousands)
<S> <C> <C>
Net income $ 566 $ 331
Other comprehensive income (47) 105
(loss)
----------------- ------------------
Total comprehensive income $ 519 $ 436
================== ==================
</TABLE>
6
<PAGE> 9
4. Accounting Principles
---------------------
In June 1997, the FASB issued SFAS No. 131, DISCLOSURES ABOUT SEGMENTS OF
AN ENTERPRISE AND RELATED INFORMATION. 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. 131 is effective for
fiscal years beginning after December 15, 1997. Since the primary business of
the Company is performed through the Association, there is no material
difference in the information already presented in the financial statements
contained herein and those required under SFAS No. 131 for information about
operating segments. At this time, no additional disclosure is required.
SFAS No. 133, ACCOUNTING FOR DERIVATIVE INSTRUMENTS AND HEDGING
ACTIVITIES, was issued in June 1998 and establishes accounting and reporting
standards for derivative instruments, including certain derivative instruments
embedded in other contracts, (collectively referred to as derivatives) and for
hedging activities. SFAS No. 133 is effective for all fiscal quarters of fiscal
years beginning after June 15, 1999. Earlier application is encouraged, but it
is permitted only as of the beginning of any fiscal quarter that begins after
June 1998. The adoption of the provisions of SFAS No. 133 is not expected to
have a material impact on the results of operations or the financial position of
the Company.
5. Use of Estimates in the Preparation of Financial Statements
-----------------------------------------------------------
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
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, 1998. Accordingly, the ensuing discussion focuses upon the
material matters at and for the three months ended September 30, 1998.
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.
7
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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 $566,000 for the three months ended
September 30, 1998 compared to net earnings of $331,000 for the three months
ended September 30, 1997. For the three months ended September 30, 1998, the net
earnings were $0.25 per share-basic compared to net earnings of $0.14 per
share-basic for the three months ended September 30, 1997. 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 September 30, 1998 compared to $2.5
million for the three months ended September 30, 1997.
Interest Income
- ---------------
Total interest income for the three months ended September 30, 1998 was
$7.5 million, an increase of $0.2 million from the comparable period a year ago.
The increase in interest income was primarily due to the $13.7 million increase
in the average balance of interest-earning assets to $409.1 million for the
three months ended September 30, 1998 from $395.4 million for the three months
ended September 30, 1997. The interest income on loans increased to $5.9 million
for the three months ended September 30, 1998 from $5.5 million for the three
months ended September 30, 1997. The increase in interest on loans was due
partially to the increase in the average balance of loans receivable
outstanding to $304.9 million for the three months ended September 30, 1998 from
$289.9 million for the three months ended September 30, 1997. The increase was
also due to the increase in the average yield on loans receivable to 7.79% for
the three months ended September 30, 1998 compared to 7.56% for the three months
ended September 30, 1997 partially related to the purchase of higher yielding
equity lines of credit in December 1997. The interest income on mortgage-backed
securities decreased to $1.0 million for the three months ended September 30,
1998 from $1.3 million from the three months ended September 30, 1997 as a
result of the decrease in average balances outstanding to $63.8 million for the
three months ended September 30, 1998 from $71.2 million for the three months
ended September 30, 1997. The decrease in interest income on mortgage-backed
securities was also due to the decrease in the average yield to 6.42% for the
three months ended September 30, 1998 compared to 7.13% for the three months
ended September 30, 1997 primarily due to the purchase of lower yielding
securities during the past year and to the increase in prepayments resulting in
a faster amortization of premiums on previously purchased securities. The
interest income on investment securities and other securities was approximately
the same for both periods which resulted from the increase in the average
balance outstanding to $40.5 million for the three months ended September 30,
8
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1998 from $34.4 million for the same period a year ago being offset by the
decrease in the average yield to 5.67% for the three months ended September 30,
1998 from 6.73% for the same period a year ago.
Interest Expense
- ----------------
Total interest expense for the three months ended September 30, 1998 was
$4.7 million, a decrease of $142,000 from $4.8 million for the three months
ended September 30, 1997. The decrease in interest expense was primarily due to
the decrease in the average cost of interest bearing liabilities to 4.98% for
the three months ended September 30, 1998 from 5.24% for the same period a year
ago, partially offset by the $7.8 million increase in the average balance of
interest-bearing liabilities to $375.8 million for the three months ended
September 30, 1998 from the same period a year ago. Interest expense on savings
accounts decreased to $3.4 million for the three months ended September 30, 1998
from $3.5 million for the same period a year ago. This decrease was related to
the decrease in the average cost of savings accounts to 4.72% for the three
months ended September 30, 1998 from 4.90% for the same period a year ago
partially offset by the increase in the average balance of savings accounts to
$288.0 million for the three months ended September 30, 1998 from $283.4 million
for the same period a year ago. Interest expense on borrowings decreased by
$64,000 in a period-to-period comparison due primarily to the decrease in the
average cost of borrowings to 5.83% for the three months ended September 30,
1998 from 6.34% for the same period a year ago.
9
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Analysis of Net Interest Income
- -------------------------------
The following table sets forth average interest rates on the Company's
interest-earning assets and interest-bearing liabilities for the three month
period ended September 30, 1998 and September 30, 1997 (dollars are in thousands
and average balances are based on month-end amounts):
<TABLE>
<CAPTION>
THREE MONTHS ENDED SEPTEMBER 30,
---------------------------------------------------
1998 1997
---------------------------------------------------
AVERAGE YIELD AVERAGE YIELD
BALANCE RATE BALANCE RATE
------------ --------- -------------- ----------
<S> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Loans receivable $ 304,853 7.79% $ 289,899 7.56%
Mortgage-backed securities 63,802 6.42 71,168 7.13
Investment securities and other 40,466 5.67 34,352 6.73
------------ --------------
Total interest-earning assets 409,121 7.37% 395,419 7.39%
Non-interest-earning assets 13,553 13,199
------------ --------------
Total assets $ 422,674 $ 408,618
============ ==============
LIABILITIES AND EQUITY:
Interest-bearing liabilities
Savings accounts $ 288,007 4.72% $ 283,426 4.90%
Borrowings 87,782 5.83 84,571 6.34
------------ --------------
Total interest-bearing liabilities 375,789 4.98% 367,997 5.24%
Non-interest-bearing liabilities 15,228 10,445
Stockholders' equity 31,657 30,176
------------ --------------
Total liabilities and equity $ 422,674 $ 408,618
============ ==============
Net interest rate spread 2.39% 2.17%
Net interest margin 2.80% 2.54%
Ratio of interest-earning assets
to interest-bearing liabilities 108.87% 107.45%
</TABLE>
The Company's average net interest spread increased to 2.39% for the three
months ended September 30, 1998 as compared 2.17% for the three months ended
September 30, 1997. The increase was due primarily to the decrease in the cost
of interest-bearing liabilities which decreased to 4.98% for the three months
ended September 30, 1998 from 5.24% for the three months ended September 30,
1997. The decrease in the cost of interest-bearing liabilities was due to the
significant increase in the average balance of core deposits (passbook, money
market and interest-bearing checking accounts) and to the overall lower interest
rate environment enabling the Company to renew existing certificates of deposit
and borrowings at lower interest rates. The Company was able to maintain
its yield on interest-bearing assets at similar levels on a period-to-
10
<PAGE> 13
period comparison by increasing its investment in higher yielding assets such as
equity lines of credit and non-residential real estate loans.
The average yield on loans receivable increased to 7.79% for the three
months ended September 30, 1998 from 7.56% for the three months ended September
30, 1997. The increase in yield was due primarily to the origination and
purchase of higher yielding loans such as equity lines of credit and
non-residential real estate loans during the past twelve months. In regards to
the equity lines of credit, the portfolio has provided the Company a yield in
excess of 13% since acquisition in December 1997. The Company recognizes that
the portfolio of equity lines of credit also has a higher credit risk profile
than the rest of the Company's loan portfolio. As part of the performance
monitoring of this portfolio, the Company reviews the entire portfolio at least
annually. The average yield on mortgage-backed securities decreased to 6.42% for
the three months ended September 30, 1998 from 7.13% for the three months ended
September 30, 1997. The decrease was due to the Company's purchase of fixed
rate mortgage-backed securities with lower yields during the past year and to
the increase in prepayments resulting from the lower overall interest rate
environment which have required the Company to accelerate the amortization of
related premiums. The average yield on investment securities and other
securities decreased to 5.67% for the three months ended September 30, 1998 from
6.73% for three months ended September 30, 1997 as a result of the overall
lower interest rate environment.
The decrease in the average cost of savings accounts to 4.72% for the
three months ended September 30, 1998 from 4.90% for the same period a year ago
was the result of the $26.5 million increase in the average balance of core
deposits (passbook, money market and interest-bearing checking accounts), which
generally have a lower cost of funds than certificates of deposit, to $87.9
million for the three months ended September 30, 1998 from $61.4 million for the
same period a year ago. There was also a corresponding reduction in the average
balance of certificates of deposit which decreased to $200.1 million for the
three months ended September 30, 1998 from $222.0 million for the same period a
year ago. The Company's average cost of borrowings decreased to 5.83% for the
three months ended September 30, 1998 from 6.34% for the same period a year ago
as the Company renewed existing borrowings with those of lower rates in relation
to the decrease in the overall interest rate environment. The Company also
borrowed additional funds during the three months ended September 30, 1998 at an
average rate below 5.00% with a weighted average term in excess of three years.
The borrowings were entered into to facilitate the growth of the
interest-earning assets of the Company.
Provision for Estimated Loan Losses
- -----------------------------------
The provision for estimated loan losses totaled $269,000 for the three
months ended September 30, 1998 as compared to $75,000 for the three months
ended September 30, 1997. The increase was due primarily to the initial fair
value writedowns on two recently foreclosed properties totaling $168,000 and the
charge-off of several home equity lines of credit totaling approximately
$70,000. See "Financial Condition."
Other Income
- ------------
Other income increased to $558,000 for the three months ended September
30, 1998 from $339,000 for the three months ended September 30, 1997. The
increase was due partially to the
11
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$145,000 in net gains on real estate operations for the three months ended
September 30, 1998 as compared to $12,000 for the same period a year ago. The
increase in real estate operations was related to the gains recognized upon
the sale of several real estate owned properties. Also, the Company experienced
an increase in other income derived from the net income of its subsidiary, First
Covina Service Company, related to the increased commissions earned on the sale
of tax-deferred annuities and other investment vehicles. Fee income derived from
loan operations, savings accounts and secondary marketing also reflected slight
increases for the three months ended September 30, 1998 as compared to the same
period a year ago. See "Financial Condition."
General and Administrative Expenses
- -----------------------------------
The Company's general and administrative expenses totaled $2.2 million for
the three months ended September 30, 1998 and 1997. The $41,000 increase in
compensation and other employee expenses to $1.2 million for the three months
ended September 30, 1998 as compared to the same period a year ago was due
primarily to additional staffing for open positions. This increase was offset by
the $46,000 decrease in other operating expenses to $343,000 for the three
months ended September 30, 1998 as compared to the same period a year ago
related to the decrease in general office expense requirements.
Income Taxes
- ------------
The Company's income taxes increased to $396,000 for the three months
ended September 30, 1998 compared to $244,000 in income taxes for the three
months ended September 30, 1996 related to the increase in pre-tax earnings on a
period-to-period comparison. The effective tax rates for the three months ended
September 30, 1998 and September 30, 1997 were approximately 41.2% and 42.4%,
respectively.
FINANCIAL CONDITION
- -------------------
The Company's total assets increased to $453.0 million at September 30,
1998 from $408.3 million in total assets at June 30, 1998. The Company's loans
receivable held for investment increased by $15.9 million to $311.6 million at
September 30, 1998 compared to $295.7 million at June 30, 1998. Although there
was a substantial increase in loan prepayments in the three months ended
September 30, 1998, the Company was able to increase the loan portfolio as a
result of the purchase of $22.0 million in adjustable rate mortgage loans. The
Company's investment in overnight federal funds sold increased to $41.9 million
at September 30, 1998 from $16.2 million at June 30, 1998 as a result of the
delay in the funding of a $35 million loan purchase. This loan purchase,
comprised of well-seasoned single-family adjustable rate mortgage loans, was
initially scheduled to close on September 30, 1998 but was delayed until October
2, 1998 at which time the purchase was consummated. The Company's earlier
purchases of loans and the commitment to purchase the $35 million in loans at
September 30 were entered into with the intent on increasing interest income,
replacing loans which prepaid early and reducing its sensitivity to changes in
interest rates.
During the three months ended September 30, 1998, the Company originated
and purchased for investment a total of $38.1 million in mortgage loans as
compared to the $34.3
12
<PAGE> 15
million purchased and originated in the three month period ended September 30,
1997. The loans purchased in the three months ended September 30, 1998 were
adjustable rate and primarily indexed to COFI. The COFI is a lagging market
index and therefore may adjust more slowly than the cost of the Association's
interest-bearing liabilities. As the determination of the COFI becomes
concentrated in fewer institutions, funding decisions by a relatively few large
institutions could potentially further reduce the correlation of COFI to changes
in general market interest rates and the Company's cost of funds. The Company
also originated $6.1 million in loans held for sale and sold approximately
$5.0 million in mortgage loans to the secondary market during the three months
ended September 30, 1998 as compared to approximately $3.0 million originated
and sold for the same period a year ago.
The Company's non-performing assets totaled $2.8 million at September 30,
1998 compared to $3.8 million at June 30, 1998. The decrease in non-performing
assets was due primarily to the decrease in the balance of real estate acquired
in settlement of loans which totaled $1.1 million at September 30, 1998 versus
$1.9 million at June 30, 1998. The Company's non-performing loans decreased
slightly to $1.7 million at September 30, 1998 from $1.9 million at June 30,
1998. This change reduced the Company's ratio of non-performing assets to total
assets to 0.62% at September 30, 1998 from 0.93% at June 30, 1998.
The following table sets forth the non-performing assets at September 30,
1998 and June 30, 1998:
<TABLE>
<CAPTION>
SEPTEMBER 30, 1998 JUNE 30, 1998
---------------------- -----------------
(Dollars in thousands)
<S> <C> <C>
Non-accrual loans $ 1,738 $ 1,911
Real estate acquired through foreclosure 1,084 1,902
------------ ------------
Non-performing assets $ 2,822 $ 3,813
============ ============
Non-performing assets as a percent
of total assets 0.62% 0.93%
Non-performing loans as a percent
of gross loans receivable 0.55% 0.64%
</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
13
<PAGE> 16
principal and interest in accordance with the terms of the loan. At September
30, 1998, the Company had no classified loans considered impaired with no
specific reserves set aside as of September 30, 1998 as determined in accordance
with SFAS No. 114. In comparison, as of June 30, 1998, the Company had
classified $569,000 of its loans as impaired with $100,000 in specific
reserves. In addition, as of September 30, 1998 the Company had $1.7 million
in loans which were collectively evaluated for impairment with $49,000 in
specific reserves established compared to $1.3 million at June 30, 1998
collectively evaluated for impairment with no specific reserves set aside.
The average recorded investment in impaired loans, inclusive of those evaluated
collectively, during the three months ended September 30, 1998, was $1.9
million, whereas, the average for the twelve months ended June 30, 1998 was $2.9
million.
The Company, in consideration of the current economic environment and the
condition of the loan portfolio, maintained the allowance for estimated loan
losses at September 30, 1998 at $1.4 million. Although loans on non-accrual
status have decreased to $1.7 million at September 30, 1998 from $1.9 million at
June 30, 1998, the allowance for estimated loan losses is maintained at an
amount management considers adequate to cover estimated losses in loans
receivable which are deemed probable and estimable. The allowance is based upon
a number of factors, including current economic conditions, actual loss
experience and industry trends. The Company's non-performing loans are primarily
made up of one- to four-family residential mortgage loans. The following table
sets forth the activity in the Company's allowance for estimated loan losses for
the three months ended September 30, 1998:
<TABLE>
<CAPTION>
Activity for the three months ended
September 30, 1998
----------------------------------------
(Dollars in thousands)
<S> <C>
Balance at June 30, 1998 $ 1,425,000
Add:
Provision for estimated loan losses 269,000
Recoveries of previous charge-offs -
Less:
Charge-off of consumer loans 76,000
Charge-off of real estate loans 169,000
Balance at September 30, 1998 $ 1,449,000
=================
</TABLE>
The Company's total liabilities increased to $422.1 million at September
30, 1998 from $376.1 million at June 30, 1998. Total deposit accounts increased
$6.7 million to $302.0 million at September 30, 1998 from $295.3 million at
June 30, 1998, primarily as a result of the increase in the balance of
certificates of deposit, which provided partial funding for the loan purchases
made and committed to, and due to interest credited to accounts. The Company
increased its borrowings from the FHLB by $33.5 million and its securities sold
under agreements to repurchase by $4.3 million during the three months ended
September 30, 1998 to provide the majority of funding for the purchased loan
portfolios and the commitment for the loan purchase funded on October 2, 1998.
The Company continues to utilize FHLB advances and securities sold under
agreements to repurchase as part of its asset and liability management strategy.
14
<PAGE> 17
The Company's stockholders' equity decreased to $30.9 million at September
30, 1998 from $32.2 million at June 30, 1997 due primarily to the completion of
a 5% stock repurchase program whereby the Company repurchased 117,245 shares at
an average cost of $15.67 per share. The Company also announced its intent to
repurchase an additional 5% of its outstanding common stock and to date has
repurchased 12,000 shares. The reduction in stockholders' equity resulting from
the stock repurchases was partially offset by the net earnings posted for the
period.
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 the majority of the Company's investments which are not committed or pledged
to specific liabilities. The Association's average liquidity ratio for September
30, 1998 and September 30, 1997 was 26.16% and 11.76%, respectively.
COMMITMENTS AND CONTINGENT LIABILITIES
- --------------------------------------
At September 30, 1998, other than the Company's commitment to purchase
approximately $35 million in single-family adjustable rate mortgage loans from
another financial institution, there were no material changes to the Company's
commitments or contingent liabilities from the period ended June 30, 1998 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, 1998 included in the Annual Report on Form 10-K for
the year ended June 30, 1998. At September 30, 1998, the Company had outstanding
commitments to originate or purchase mortgage loans of $37.3 million, including
the approximate $35 million bulk loan purchase discussed earlier, as compared to
$3.0 million at June 30, 1998.
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 September 30, 1998, the
Association was considered "well-capitalized".
15
<PAGE> 18
The Association was in compliance with the capital requirements in effect
as of September 30, 1998. The following table reflects the required ratios and
the actual capital ratios of the Association at September 30, 1998:
<TABLE>
<CAPTION>
CAPITAL
------------------------
ACTUAL REQUIRED EXCESS ACTUAL REQUIRED
CAPITAL CAPITAL AMOUNT PERCENT PERCENT
---------- ------------ ----------- ---------- ------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C>
Tangible $ 28,664 $ 6,783 $ 21,881 6.34% 1.50%
Core $ 28,664 $ 13,567 $ 15,097 6.34% 3.00%
Risk-based $ 30,064 $ 16,619 $ 13,445 14.47% 8.00%
</TABLE>
PRIVATE SECURITIES LITIGATION REFORM ACT SAFE HARBOR STATEMENT
- --------------------------------------------------------------
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, 1998.
YEAR 2000
- ---------
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 (i.e., vendors providing or receiving service bureau information).
16
<PAGE> 19
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. The
Company replaced its internal retail branch computer system and its back office
computer systems in 1997 with personal computers which are year 2000 ready. The
software used in these systems, both purchased and related to our external data
processing vendors, is currently being tested for year 2000 readiness. Also, the
Company is currently testing its primary data processor for year 2000 readiness.
The Company has contacted its primary vendors and others with whom it relies on
to assure their systems will be year 2000 ready. However, there can be no
assurance that these systems of other vendors will be year 2000 ready or that
any such failure in readiness by such vendors would not have an adverse effect
on the Company's operations. Another important segment of the Year 2000 Plan is
to identify those loan customers whose possible lack of year 2000 preparedness
might expose the Association to financial loss. It is management's belief that
the Company does not have any material financial exposure in regards to its loan
portfolio as the portfolio is comprised primarily of loans to individuals and,
to a lessor extent, to businesses secured by real estate. In management's
estimation, loans secured by real estate are less likely to be impacted by any
year 2000 issues.
Upon completion of its review and testing of both internal operations and
external vendors, the Company will complete its contingency plans. The Company
has recently completed testing of its data processing provider, which presents
the Company with its largest exposure to year 2000 readiness issues, and is in
the process of evaluating the results. Also, the Company has participated in the
initial testing of the Federal Reserve Bank wire transfer system and is also in
the process of evaluating the results of this test. The Company is
participating, through proxy testing, with its data processor in third party
interfaces for year 2000 readiness. After evaluation of such test results, the
Company will finalize its contingency plans. It is expected that such
contingency plans will be completed by January 31, 1999.
The Company expects its year 2000 date conversion project to be completed
by March 31, 1999. 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. Since the
Company replaced many of the internal systems with year 2000 compliant
17
<PAGE> 20
personal computers in 1997, the expenses incurred to bring the Company to year
2000 compliance will be expensed as incurred, with the majority of such costs
being the reallocation of current staff to bring about this readiness. As stated
earlier, the Company replaced the majority of its internal computer hardware and
software in early 1997. The capitalized costs of this replacement was in excess
of $700,000 and is being amortized over several years in compliance with the
Company's normal depreciation of such hardware or software. The future expenses
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. Management does not expect the future costs
of the year 2000 project to exceed $200,000, which is primarily related to the
reallocation of internal staff's resources.
Item 3. Quantitative and Qualitative Disclosure about Market Risk
---------------------------------------------------------
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.
The Company's interest rate sensitivity is monitored by management through
the use of an interest rate risk (IRR) model. Based on internal IRR modeling,
management does not believe that there has been a material change in the
Company's interest rate sensitivity from June 30, 1998 to September 30, 1998.
All methods used to measure interest rate sensitivity involve the use of
assumptions, which may tend to oversimplify the manner in which actual yields
and costs respond to changes in market interest rates. The Company's interest
rate sensitivity should be reviewed in conjunction with the financial statements
and notes thereto contained in the Company's Annual Report for the fiscal year
ended June 30, 1998.
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
---------------------------------------------------
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.
<PAGE> 22
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.
November 9, 1998 /s/ Barrett G. Andersen
- ---------------------------- -------------------------------------
Date Barrett G. Andersen
President and Chief Executive Officer
November 9, 1998 /s/ Ronald A. Ott
- ---------------------------- -------------------------------------
Date Ronald A. Ott
Executive Vice President
Chief Financial Officer and Treasurer
20
<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> 3-MOS
<FISCAL-YEAR-END> JUN-30-1999
<PERIOD-START> JUL-01-1998
<PERIOD-END> SEP-30-1998
<EXCHANGE-RATE> 1
<CASH> 4,609,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 41,850,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 42,301,000
<INVESTMENTS-CARRYING> 37,145,000
<INVESTMENTS-MARKET> 37,314,000
<LOANS> 314,708,000
<ALLOWANCE> 1,449,000
<TOTAL-ASSETS> 452,977,000
<DEPOSITS> 302,049,000
<SHORT-TERM> 0
<LIABILITIES-OTHER> 5,690,000
<LONG-TERM> 114,337,000
0
0
<COMMON> 27,000
<OTHER-SE> 30,874,000
<TOTAL-LIABILITIES-AND-EQUITY> 452,977,000
<INTEREST-LOAN> 5,939,000
<INTEREST-INVEST> 1,389,000
<INTEREST-OTHER> 209,000
<INTEREST-TOTAL> 7,537,000
<INTEREST-DEPOSIT> 3,397,000
<INTEREST-EXPENSE> 4,675,000
<INTEREST-INCOME-NET> 2,862,000
<LOAN-LOSSES> 269,000
<SECURITIES-GAINS> 7,000
<EXPENSE-OTHER> 1,638,000
<INCOME-PRETAX> 962,000
<INCOME-PRE-EXTRAORDINARY> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 566,000
<EPS-PRIMARY> 0.25
<EPS-DILUTED> 0.24
<YIELD-ACTUAL> 7.37
<LOANS-NON> 1,738,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 759,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,425,000
<CHARGE-OFFS> 245,000
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,449,000
<ALLOWANCE-DOMESTIC> 1,449,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>