SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
Quarterly Report Pursuant to Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the Quarter Ended June 30, 1998 Commission File #0-26546
STATEWIDE FINANCIAL CORP.
(Exact name of registrant as specified in its charter)
New Jersey 22 3397900
(State of Incorporation) (I.R.S. Employer Identification
Number)
70 Sip Avenue, Jersey City, New Jersey 07306
(Address of registrant's principal executive offices,
including zip code)
(201) 795-4000
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant: (1) has filed all
reports required 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:
Yes X No
The number of shares outstanding of each of the registrant's classes
of common stock, as of July 31, 1998: Common Stock, No Par Value:
4,363,767 shares issued and 4,359,821 shares outstanding.
STATEWIDE FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME (UNAUDITED)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE DATA)
Three Months Ended Six Months
June 30, Ended June 30,
------------- ------------
1998 1997 1998 1997
---- ---- ---- ----
Interest income:
Interest and fees on loans $ 6,617 $ 6,514 $13,082 $ 12,962
Interest on mortgage-backed
securities 4,102 5,423 8,943 10,693
Interest and dividends on debt
and equity securities 863 625 1,337 1,270
Dividends on Federal Home Loan
Bank of New York ("FHLBNY")
stock 191 128 378 252
------- ------- ------- -------
Total interest and dividend
income 11,773 12,690 23,740 25,177
------- ------- ------- -------
Interest expense:
Deposits 3,840 4,219 7,705 8,453
Borrowed funds 2,026 2,216 4,066 4,216
------- ------- ------- -------
Total interest expense 5,866 6,435 11,771 12,669
------- ------- ------- -------
Net interest income 5,907 6,255 11,969 12,508
Provision for loan losses 150 125 300 250
------- ------- ------- -------
Net interest income after
provision for loan losses 5,757 6,130 11,669 12,258
------- ------- ------- -------
Non-interest income:
Service charges 331 204 567 422
Loans and other fees 238 139 449 269
Other income 378 47 465 72
------- ------- ------- -------
Total non-interest income 947 390 1,481 763
------- ------- ------- -------
Non-interest expense:
Salaries and employee benefits 2,647 2,385 5,138 4,773
Occupancy, net 588 563 1,162 1,140
Federal deposit insurance
premiums 68 74 137 146
Professional fees 236 185 413 329
Insurance premiums 56 76 53 171
Data processing fees 177 143 339 313
Foreclosed real estate
expense, net 6 7 26 14
Other 961 844 1,835 1,681
------- ------- ------- -------
Total non-interest expense 4,739 4,277 9,103 8,567
------- ------- ------- -------
Income before income taxes 1,965 2,243 4,047 4,454
Income taxes 751 852 1,529 1,679
------- ------- ------- -------
Net income $ 1,214 $ 1,391 $ 2,518 $ 2,775
======= ======= ======= ========
Earnings per common share:
Basic $ 0.30 $ 0.33 $ 0.63 $ 0.65
====== ====== ====== ======
Assuming dilution $ 0.29 $ 0.32 $ 0.60 $ 0.64
====== ====== ====== ======
Weighted average number of
common shares
Basic 4,002,384 4,190,605 4,015,878 4,242,006
Assuming dilution 4,203,942 4,321,626 4,216,774 4,362,659
========= ========= ========= =========
See accompanying notes to consolidated financial statements.
STATEWIDE FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(DOLLARS IN THOUSANDS)
June 30, December 31,
1998 1997
---- ----
(UNAUDITED)
Assets:
Cash and amounts due from depository
institutions $ 8,438 $ 6,767
Federal funds sold 16,200 -
Mortgage-backed securities available
for sale 226,286 290,044
Debt and equity securities available
for sale 47,029 19,093
Loans receivable, net 331,783 332,509
Accrued interest receivable, net 3,693 3,969
Real estate owned, net 606 440
Premises and equipment, net 6,768 6,064
FHLBNY stock, at cost 10,260 10,260
Excess of cost over fair value of
net assets acquired 91 106
Other assets 5,481 6,064
-------- --------
Total assets $656,635 $675,316
======== ========
Liabilities and shareholders' equity:
Liabilities:
Deposits $440,491 $443,878
Borrowed funds:
Securities sold under agreements
to repurchase 146,248 146,150
FHLBNY advances - 14,150
-------- --------
Total borrowed funds 146,248 160,300
Advance payments by borrowers for
taxes and insurance 1,832 1,749
Accounts payable and other
liabilities 4,254 4,482
-------- --------
Total liabilities 592,825 610,409
-------- --------
Shareholders' equity 63,810 64,907
-------- --------
Total liabilities and
shareholders' equity $656,635 $675,316
======== ========
See accompanying notes to consolidated financial statements
STATEWIDE FINANCIAL CORP. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
(DOLLARS IN THOUSANDS)
Six Months Ended
June 30,
---------
1998 1997
---- ----
Cash flows from operating activities:
Net income $ 2,518 $ 2,775
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for loan losses 300 250
Depreciation and amortization 558 487
Net amortization of deferred premiums and
unearned discounts 882 368
Amortization of RRP awards and allocation
of ESOP shares 712 589
Net gain on sale of real estate owned (23) (13)
Net gain on sale of deposits (306) -
Gain on sale of premises and equipment (10) -
Changes in assets and liabilities:
Decrease (increase) in accrued interest and
dividends receivable 276 (103)
Increase in accrued interest payable 74 44
Decrease in other assets 1,034 84
(Decrease) increase in accounts payable and
other liabilities (281) 335
------- -------
Net cash provided by operating activities 5,734 4,816
------- -------
Cash flows from investing activities:
Net receipts (disbursements) from lending
activities 254 (612)
Purchase of loans (412) (2,097)
Proceeds from sale of loans 95 -
Proceeds from mortgage-backed securities
principal repayments 61,225 22,756
Purchase of mortgage-backed securities - (67,102)
Proceeds from debt securities principal
repayments 4,000 10,000
Purchase of debt securities (31,428) -
Increase in short-term investments (16,200) -
Purchase of FHLBNY stock - (497)
Proceeds from collection and sale of real
estate owned 236 339
Purchases and improvements of premises and
equipment (1,458) (436)
Proceeds from the sale of premises and
equipment 221 -
------- -------
Net cash provided by (used in)
investing activities 16,533 (37,649)
------- -------
Cash flows from financing activities:
Net increase (decrease) in deposits 3,127 (8,586)
Repayment for sale of deposits (6,208) -
Repayment of borrowings (27,000) (517,650)
Proceeds from borrowings 12,948 564,350
Increase in advance payments by borrowers
for taxes and insurance 83 134
Cash dividends paid (906) (880)
Proceeds from exercise of stock options 65 -
Purchase of common stock (2,705) (3,811)
------- -------
Net cash (used in) provided by financing
activities (20,596) 33,557
------- -------
Net increase in cash and cash equivalents 1,671 724
Cash and cash equivalents at beginning of
period 6,767 6,586
------- -------
Cash and cash equivalents at end of period $ 8,438 $ 7,310
======= =======
Supplemental disclosures of cash flow
information:
Cash paid during the period for:
Income taxes $ 1,569 $ 1,175
======= =======
Interest $11,702 $12,625
======= =======
Transfer from loans receivable to real
estate owned, net $ 379 $ 37
======= =======
Change in unrealized gain, net of income tax,
on securities available for sale $ (802) $ (128)
======= =======
See accompanying notes to consolidated financial statements
STATEWIDE FINANCIAL CORP. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The consolidated financial statements include the accounts of
Statewide Financial Corp. (the "Company") and its wholly owned
subsidiary, Statewide Savings Bank, S.L.A. (the "Bank"), and the
Bank's wholly owned subsidiaries, Seventy Sip Corporation, Statewide
Atlantic Corporation and Statewide Financial Services Inc. All
significant intercompany balances and transactions have been
eliminated in consolidation. The Bank and Statewide Financial
Services Inc. are the only active subsidiaries at June 30, 1998. The
Bank operates sixteen banking offices in Hudson, Union and Bergen
counties. Through its wholly owned subsidiary, Statewide Financial
Services, Inc., the Bank also engages in the sale of annuity products.
Both the Company and the Bank are subject to supervision and
regulation by various agencies including the New Jersey Department of
Banking and Insurance, the Office of Thrift Supervision ("OTS") and
the Federal Deposit Insurance Corporation.
The consolidated financial statements contained herein have been
prepared without audit in accordance with the rules and regulations of
the Securities and Exchange Commission and reflect all adjustments
which, in the opinion of management, are necessary for a fair
statement of the results for interim periods. All adjustments made
were of a normal recurring nature. These consolidated financial
statements should be read in conjunction with the consolidated
financial statements and the notes thereto that are included in the
Company's Annual Report on Form 10-K for the year ended December 31,
1997.
2. Adoption of Recently Issued Accounting Standards
On January 1, 1998, the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 130, "Reporting
Comprehensive Income". SFAS No. 130 establishes standards for
reporting and display of comprehensive income and its components in a
full set of general purpose financial statements. Under SFAS No. 130,
comprehensive income is divided into net income and other
comprehensive income. Other comprehensive income includes items
previously recorded directly in equity, such as unrealized gains or
losses on securities available for sale.
Comprehensive income during the periods is as follows:
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
1998 1997 1998 1997
---- ---- ---- ----
Net income $1,214 $1,391 $2,518 $2,775
Other comprehensive income, net
of income tax:
Unrealized holding (loss) gain
on securities available for
sale (521) 2,234 (802) (128)
------ ------ ------ ------
Comprehensive income $ 693 $3,625 $1,716 $2,647
====== ====== ====== ======
3. Shareholders' Equity
The components of shareholders' equity were as follows:
June 30, December 31,
1998 1997
---- ----
(Dollars in thousands)
Preferred stock, no par value, 2,000,000
shares authorized; no shares issued or
outstanding $ - $ -
Common Stock, no par value, 12,000,000
shares authorized; 4,400,767 shares issued
and 4,396,821 shares outstanding at June
30, 1998, and 4,518,767 shares issued
and 4,509,531 shares outstanding at
December 31, 1997 - -
Additional paid in capital 37,107 39,533
Cost of unallocated Employee Stock Ownership
Plan ("ESOP") shares (3,068) (3,280)
Cost of unearned Recognition and Retention
Plan ("RRP") shares (1,514) (1,755)
Retained earnings - substantially restricted 31,192 29,580
Treasury stock, at cost, 3,946 and 9,236
shares at June 30, 1998 and December 31,
1997 (53) (119)
Accumulated other comprehensive income:
Net unrealized gain on securities available
for sale, net of income tax 146 948
------- -------
Total shareholders' equity $63,810 $64,907
======= =======
4. Earnings Per Share
Basic earnings per share is computed by dividing net income by the
weighted average number of common shares outstanding during the
period. Earnings per share, assuming dilution, starts with the
calculation of basic earnings per share and adds to it the effect of
common stock equivalents. Such equivalents are the number of shares
which would be issued assuming exercise of in-the-money options, and
vesting of restricted awards, net of shares which could be purchased
in the open market with proceeds from the assumed exercise of such
options and from tax benefits and the future amortization associated
with vesting of restricted awards.
Three Months Six Months
Ended June 30, Ended June 30,
--------------- --------------
1998 1997 1998 1997
---- ---- ---- ----
(Dollars in thousands, except per share data)
Numerator:
Net income available to
common shareholders $1,214 $1,391 $2,518 $2,775
====== ====== ====== ======
Denominator:
Weighted average shares
outstanding - basic 4,002,384 4,190,605 4,015,878 4,242,006
Common stock equivalents 201,558 131,021 200,896 120,653
--------- --------- --------- ---------
Weighted average shares
outstanding - assuming
dilution 4,203,942 4,321,626 4,216,774 4,362,659
========= ========= ========= ========
Earnings per common share:
Basic $ 0.30 $ 0.33 $ 0.63 $ 0.65
====== ====== ====== ======
Assuming dilution $ 0.29 $ 0.32 $ 0.60 $ 0.64
====== ====== ====== ======
5. Recent Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board ("FASB") issued
Statement of Financial Accounting Standards ("SFAS") No. 133,
"Accounting for Derivative Instruments and Hedging Activities". This
statement establishes accounting and reporting standards for
derivative instruments and hedging activities. SFAS No. 133
supersedes the disclosure requirements in SFAS Nos. 80, 105 and 119.
This statement is effective for periods ending after June 15, 1999.
The adoption of SFAS No. 133 is not expected to have an impact on the
financial position or results of operations of the Company.
6. Non-Performing Loans and the Allowance for Loan Losses
Non-performing loans were as follows:
June 30, December 31,
1998 1997
-------- ------------
(Dollars in thousands)
Loans delinquent 90 days or more:
Non-accrual $2,177 $2,212
Accruing 319 291
------ ------
Total net loans delinquent 90 days or more $2,496 $2,503
====== ======
Loans delinquent 90 days or more as a
percentage of total net loans outstanding 0.75% 0.75%
=== ===
An analysis of the allowance for loan losses follows:
Three Months Six Months
Ended June 30, Ended June 30,
-------------- --------------
1998 1997 1998 1997
---- ---- ---- ----
(Dollars in thousands)
Balance at beginning of period $2,890 $2,665 $2,833 $2,613
Provision charged to operations 150 125 300 250
Charge offs, net (71) (43) (164) (116)
------ ------ ------ ------
Balance at end of period $2,969 $2,747 $2,969 $2,747
====== ====== ====== ======
STATEWIDE FINANCIAL CORP. AND SUBSIDIARY
SELECTED FINANCIAL AND REGULATORY RATIOS AND OTHER DATA
At or For At or For
Three Months Six Months
Ended Ended
June 30, June 30,
--------- ---------
1998 1997 1998 1997
---- ---- ---- ----
Selected financial ratios (1):
Return on average assets 0.74% 0.82% 0.76% 0.82%
Return on average shareholders' equity 7.46% 8.78% 7.77% 8.67%
Capital to assets 9.72% 9.73% 9.72% 9.73%
Net interest rate spread (2) 3.40% 3.46% 3.42% 3.46%
Net interest margin (3) 3.70% 3.77% 3.72% 3.77%
Non-interest income to average assets 0.58% 0.23% 0.45% 0.23%
Non-interest expense to average assets 2.88% 2.51% 2.75% 2.53%
Efficiency ratio (4) 72.37% 65.60% 69.57% 65.79%
Ratio of interest-earning assets to
interest-bearing liabilities 108.21% 107.77%108.26% 108.05%
June 30, December 31,
1998 1997
---- ------
Regulatory capital ratios:
Tangible capital ratio 9.04% 8.96%
Core capital ratio 9.04% 8.96%
Risk-based capital ratio 21.23% 22.93%
Asset quality ratios:
Non-performing loans to total net
loans 0.75% 0.75%
Non-performing loans to total assets 0.38% 0.37%
Non-performing assets to total assets 0.47% 0.44%
Allowance for loan losses to non-
performing loans 118.95% 113.18%
Allowance for loan losses to total
net loans 0.89% 0.85%
Other data:
Number of deposit accounts 53,337 54,677
Number of offices (5) 16 16
Notes to Selected Financial Ratios
(1) Ratios are annualized where appropriate.
(2) Interest rate spread represents the difference between the
weighted average yield on average interest-earning assets
and the weighted average cost of average interest-bearing
liabilities.
(3) Net interest margin represents net interest income as a
percent of average interest-earning assets.
(4) Efficiency ratio represents total non-interest expense divided by
the sum of net interest income after provision for loan losses,
and recurring non-interest income.
(5) The Passaic branch was sold to Banco Popular FSB as of the close
of business on April 10, 1998, and the North Arlington branch
opened for business on May 9, 1998.
STATEWIDE FINANCIAL CORP. AND SUBSIDIARY
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
OVERVIEW
The following discussion and analysis refers to Statewide Financial
Corp. (the "Company") and its wholly-owned subsidiary, Statewide
Savings Bank, S.L.A. (the "Bank").
The Company realized net income of $1,214,000, or $0.29 per share,
assuming dilution, for the quarter ended June 30, 1998 as compared to
$1,391,000, or $0.32 per share, assuming dilution, for the same
quarter of the prior year. Basic earnings per share were $0.30 for
second quarter of 1998, compared $0.33 per share for the second
quarter of 1997. Net income for the six months ended June 30, 1998
was $2,518,000, or $0.60 per share, assuming dilution, as compared to
$2,775,000, or $0.64, per share, assuming dilution, for the six months
ended June 30, 1997. Basic earnings per share were $0.63 for the six
months ended June 30, 1998, compared $0.65 per share for the same
period of the prior year.
The decrease in net income for the three and six months ended June 30,
1998 from their respective year ago periods reflects a decrease in net
interest income after provision for loan losses, an increase in non-
interest expense, and an increase in higher non-interest income. Net
interest income reflects a decline in average interest-earning assets
from the same periods last year, and continuation of a low interest
rate environment. Non-interest expense reflects start-up costs
related to new business initiatives and normal cost increases.
Increased non-interest income reflects fee structure changes
implemented during mid second quarter of 1998, the sale of a bank
branch, and overall increased business activity as the Company
continues to seek to build strong customer relationships.
FINANCIAL CONDITION
At June 30, 1998, total assets were $656.6 million. This was $14.0
million less than March 31, 1998 and $18.7 million less than total
assets at December 31, 1997. The principal reason for these declines
was the low interest rate environment and consequent accelerated
prepayments of mortgages, reducing both the mortgage-backed securities
and one-to-four family mortgage portfolios. Partially offsetting
these declines were: growth in the Company's commercial business and
mortgage loan portfolios, partially related to the launch of Statewide
Funding, the Company's mortgage funding initiative; investments in
Federal agency debt securities; and temporary investments through sale
of Federal funds. In May 1998, the Company started Statewide Funding,
a division on the Bank which specializes in short-term lending to
mortgage bankers utilizing first mortgages as collateral. During
June, its first full month of operation, this division originated
$18.8 million in loans, and at June 30, 1998, had extended $28.0
million in lines of credit, with $10.1 million in loans outstanding
against such lines.
Specifically, during the second quarter, the commercial business and
mortgage loan portfolio grew $17.1 million, or 32.9%, to $69.3 million
at June 30, 1998. The inception of Statewide Funding was a
significant reason for this growth, and continued expansion of
commercial lending efforts was the cause for the remainder.
Offsetting this growth was the reduction in mortgage related
investments as the mortgage-backed securities portfolio decreased
$37.0 million to $226.3 million, and the one-to-four family mortgage
portfolio decreased $13.8 million to $221.4 million. Twenty-two
million dollars of the cash generated through this net reduction of
assets was reinvested into lower yielding, shorter duration, Federal
agency debt and $2.5 million was reinvested into temporary investments
through sales of Federal funds in anticipation of loan demand during
the remainder of 1998.
At June 30, 1998 the mortgage-backed securities portfolio declined
$63.8 million, or 21.98%,from December 31, 1997 and the one-to-four
family mortgage portfolio decreased $23.0 million, or 9.42%.
Partially offsetting these reductions were growth in the commercial
business and loan portfolio of $21.8 million, or 46.0%, investment in
Federal agency debt which caused the balance of debt and equity
securities to increase $27.9 million and temporary investments through
sales of Federal funds of $16.2 million
Borrowed funds were $146.2 million at June 30, 1998. Of this amount
$146.0 million have final maturity dates ranging from July 2000 to
September 2002. All are callable earlier at the lender's option.
Borrowed funds of $86.0 million with interest rates ranging from 5.43%
to 5.54% are callable in the third quarter 1998, and borrowed funds of
$60.0 million with an interest rate of 5.52% are first callable in
November 1999. Borrowed funds increased $0.2 million over the
preceding quarter and decreased $14.1 million from December 31, 1997.
During 1998, the Company repaid its short-term borrowed funds with the
cash flow from its securities and residential mortgage portfolios.
Deposits totaled $440.5 million at June 30, 1998, as compared to
$452.0 million at March 31, 1998 and $443.9 million at December 31,
1997. The decrease in total deposits from the prior quarter resulted
primarily from the sale of deposits from the Passaic branch on April
10, 1998, coupled with further controlled runoff of certificates of
deposit. Excluding the sale of the deposits of the Passaic branch,
total deposits increased $3.1 million between December 31, 1997 and
June 30, 1998, with core deposits increasing $6.2 million or 2.4% and
certificates of deposit decreasing $3.1 million, or 1.7%.
Shareholders' equity decreased $2.1 million and $1.1 million during
the three and six months ended June 30, 1998, respectively, to $63.8
million, from $65.9 million at March 31, 1998 and from $64.9 million
at December 31, 1997. The decreases during these periods resulted
principally from the repurchase and retirement of 118,000 shares of
the Company's common stock for $2.7 million during the second quarter
of 1998, along with the payment of quarterly dividends and the
reduction during the three and six months ended June 30, 1998 of $0.5
million and $0.8 million, respectively, in the market value (net of
taxes) of the Company's investment portfolio. These decreases were
partially offset by net income of $1.2 million and $2.5 million for
the three and six months ended June 30, 1998, respectively, stock
issued from options exercised, and the allocation of ESOP shares and
other employee benefit plans during these periods.
RESULTS OF OPERATIONS
THREE-MONTH PERIODS ENDING JUNE 30, 1998 AND 1997
Net Income. For the three months ended June 30, 1998, net income
decreased $0.2 million, to $1.2 million from $1.4 million for the same
period of the prior year. Net income per share, assuming dilution,
for the period was $0.29 per share compared to $0.32 per share for the
same period of the prior year. Basic earnings per share were $0.30
per share compared to $0.33 per share for the same period of the prior
year. The decrease in net income primarily resulted from a decrease
in net interest income before provision for loan losses of $0.3
million and an increase in non-interest expense, partially offset by
an increase in non-interest income.
Interest Income. Interest and dividend income totaled $11.8 million
for the three months ended June 30, 1998 as compared to $12.7 million
for the three months ended June 30, 1997. The reduction in interest
income between the periods results from a decline of $23.2 million in
average interest-earning assets and a decrease of 27 basis points in
the average yield. Lower long-term interest rates and record level
refinancings have accelerated prepayments in the one-to-four family
residential mortgage loan and securities portfolios. Average balances
of one-to-four family mortgages decreased $31.5 million and normal
amortization along with accelerated prepayments of mortgage-backed
securities of $95.0 million offset the purchase of $81.1 million of
these securities since the prior year period. Purchases of $41.0
million of debt securities offset maturities and calls between these
periods increasing the average balance in this portfolio $2.8 million.
New purchases of mortgage-backed securities and debt securities have
generally provided lower yields than the investments they replaced.
In addition, amortization of premiums associated with the purchase of
mortgage-backed securities accelerated during this period compared to
the year ago quarter, contributing to a lower effective yield during
this year current quarter. Partially offsetting the declines in the
portfolios mentioned above were growth in commercial business and
mortgage loans, and consumer loans. Commercial business and mortgage
loans increased $28.6 million, or 81.4%, and consumer loans increased
$3.4 million, or 9.7%, over the prior-year period.
Interest Expense. Interest expense decreased $569,000, or 8.84%,
during the current quarter as compared to the same quarter of the
prior year due to a $23.9 million decrease in average deposits and
borrowed funds coupled with a 21 basis point decline in average cost.
Average core deposits increased $7.8 million, or 3.08%, to $260.3
million for the current quarter over the $252.5 million in the prior-
year period while average certificates of deposit decreased $18.8
million, or 9.34%, to $182.6 million for the current quarter from
$201.4 million in the prior-year period. The cost of total deposits
declined 25 basis points from the prior-year period due to a 35 basis
point decline in the cost of core deposits resulting from an increase
of $8.6 million in the average balance of no cost checking, a decrease
of 100 basis points in the rates paid on NOW accounts and a decrease
of 13 basis points in the average rate paid on money market deposit
accounts, partially offset by an increase of 6 basis points in the
cost of certificates of deposit. Average borrowed funds decreased
$12.9 million to $146.0 million for the current quarter over the
$158.9 million in the prior-year period. The cost of borrowed funds
declined slightly for the current quarter to 5.57% from 5.59% for the
prior-year period. These results reflect the Company's continued
efforts to build and sustain core deposit relationships, while
offering competitive certificate of deposit rates which are in line
with the cost of alternate sources of funds.
Net Interest Income. For the quarter ended June 30, 1998, net
interest income decreased $348,000, or 5.56%, from the comparable
prior-year period. The decrease reflects the decline in average
interest-earning assets during the current period and the continued
overall downward trend in market yields on interest sensitive
products, coupled with costs incurred in the repurchase of the
Company's common stock. This was partially offset by lower costs of
core deposits, and a decrease in the average balance of certificates
of deposit and borrowed funds. The tightening of spreads between
interest earning-assets and deposits and borrowed funds is reflected
in the net interest margin which was 3.70% for the current quarter as
compared to 3.77% during the quarter ended June 30, 1997.
Table 1 following presents a summary of the Company's average
interest-earning assets and their average yields, average deposits and
borrowed funds and their average costs, and average shareholders'
equity for the three months ending June 30, 1998 and 1997. Average
loans include non-accrual loans, and related yields include loan fees
which are considered adjustments to yields. Prior-year balance
information has been reclassified to conform with current year
presentation.
Table 1
<TABLE>
Three Months Ended June 30,
--------------------------------------
1998 1997
---------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Average InterestAverage Average Interest Average
Balance Yield/ Balance Yield/
Cost Cost
------- -------- ---- ------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Assets:
Interest-earning assets:
First mortgage loans $269,507 $ 5,287 7.85% $279,209 $ 5,348 7.66%
Consumer and other loans 38,974 902 9.28 35,540 859 9.69
Commercial business 19,876 428 8.64 13,052 307 9.43
Mortgage-backed securities 245,928 4,102 6.68 288,294 5,423 7.47
Debt securities 33,373 594 7.19 36,222 625 6.95
Money market investments 19,361 269 5.63 - - -
FHLBNY Stock 10,260 191 7.45 8,193 128 6.25
-------- ------- -------- -------
Total interest-earning
assets 637,279 11,773 7.40 660,510 12,690 7.67%
------- ------- ----
Non-interest-earning assets 20,841 20,164
-------- --------
Total assets $658,120 $680,674
======== ========
Liabilities and share-
holders' equity:
Deposits and borrowed funds:
Savings accounts $145,029 1,042 2.88 $141,147 1,018 2.89%
Demand and NOW accounts 72,140 168 0.93 66,908 342 2.05
Money market accounts 43,089 325 3.03 44,424 350 3.16
Certificates of deposit 182,649 2,305 5.06 201,467 2,509 5.00
Borrowed funds 146,022 2,026 5.57 158,931 2,216 5.59
-------- ------- -------- -------
Total deposits and borrowed
funds 588,929 5,866 4.00% 612,877 6,435 4.21%
-------- ------- -------- ------- ----
Other liabilities 4,067 4,416
-------- -------
Total liabilities 592,996 617,293
Shareholders' equity 65,124 63,381
-------- --------
Total liabilities and
shareholders' equity $658,120 $680,674
======== ========
Net interest income $ 5,907 $ 6,255
======= =======
Net interest rate spread 3.40% 3.46%
==== ====
Net interest margin 3.70% 3.77%
==== ====
Ratio of interest-earning
assets to deposits and
borrowed funds 108.21% 107.77%
======
</TABLE>
Provision for Loan Losses. The provision for loan losses for the
three months ended June 30, 1998 was $150,000, an increase of $25,000
over the prior year period. The provision for the three months ended
June 30, 1998 was determined by management after review of, among
other things, the Company's loan portfolio, the risk inherent in the
Company's lending activities, composition and volume of the Company s
loan portfolio and the economy in the Company's market areas. Further
provisions for loan losses will continue to be based upon management's
assessment of the loan portfolio and its underlying collateral, trends
in non-performing loans, current economic conditions and other factors
which warrant recognition in order to maintain the allowance for loan
losses at levels sufficient to provide for estimated losses. As of
June 30, 1998, non-performing loans decreased to $2.5 million and as a
percentage of total net loans outstanding equaled 0.75% as compared to
$2.6 million and 0.79%, respectively, for the same period of the prior
year. At June 30, 1998, the allowance for loan losses was $3.0
million, or 118.95% of total non-performing loans, compared to 113.18%
of total non-performing loans at December 31, 1997.
Non-Interest Income. Total non-interest income increased $557,000, or
142.82%, to $947,000 for the current quarter from $390,000 for the
same period of the prior year. Included in non-interest income for
the current quarter is a $306,000 gain on the sale of the Passaic
branch. Excluding this gain, the Company recorded increases in non-
interest income of $251,000, or 64.36% for the three months ended June
30, 1998 over the same period of the prior year. This increase
reflected, in part, the Company's fee enhancement initiatives
implemented during mid second quarter of 1998 and growth in core
deposits and commercial lending which resulted in increased service
charges on deposit accounts, and increased loan fees and charges. In
addition, higher ATM surcharges to non-customers, and more annuity
sales generated through the bank's branch network were realized in the
current-year period.
Non-Interest Expense. Total non-interest expense for the three months
ended June 30, 1998 totaled $4.7 million, an increase of $462,000, or
10.80%, from $4.3 million incurred during the same period of the prior
year.
Salaries and employee benefits expense was the largest component
within non-interest expenses. This category increased $262,000, or
10.99%, during the second quarter in 1998 over the same period last
year. This increase reflects increased staffing for the newly formed
mortgage funding group and increases in staff for the commercial
lending group during the current quarter. In addition, normal wage
increases and higher expense associated with the Company's ESOP
program, partially offset by lower management incentive plan expense,
contributed to the rise in this category. The cost of the Company's
ESOP program is recorded as compensation expense based upon the
average market value of the Company's common stock, which was higher
during the quarter ended June 30, 1998 compared to the same quarter
last year.
Professional fees increased $51,000, or 27.57%, for the current
quarter as compared to the same period of the prior year. The
increase for the current period resulted primarily from costs related
to fee enhancement and cost reduction studies, ESOP structure and
allocation review, and other benefit review costs.
Data processing expense increased $34,000, or 23.78%, for the current
quarter over the same quarter of the previous year. The higher costs
in this category primarily reflect increased loan and deposit
transaction activity generated through relationship building
initiatives, and increased external payroll processing service costs.
The remaining components of non-interest expense increased $115,000,
or 7.35%, for the current quarter as compared to the same quarter a
year ago. This increase principally resulted from greater marketing
cost related to bank product and name recognition, advertising for the
opening of a branch in North Arlington, New Jersey, occupancy cost due
to the new branch opening and other facilities and equipment
modernization, postage expense due to fee structure notice changes and
higher loan and deposit volume, partially offset by lower
correspondent bank and branch operating and literature and printing
costs.
Income Tax Expense. The decrease in income tax for the period is the
result of the tax effect of the decrease in pre-tax income recorded
during the period.
SIX-MONTH PERIODS ENDING JUNE 30, 1998 AND 1997
Net Income. For the six months ended June 30, 1998, net income
decreased $0.3 million to $2.5 million from $2.8 million for the same
period last year. Net income per share, assuming dilution, for the
period was $0.60 per share compared to $0.64 per share for the same
period of the prior year. Basic earnings per share were $0.63 per
share compared to $0.65 per share for the same period of the prior
year. The decrease in net income resulted from a decrease in net
interest income and an increase in non-interest expense, partially
offset by an increase in non-interest income.
Interest Income. Interest and dividend income was $23.7 million for
the six months ended June 30, 1998 as compared to $25.2 million for
the six months ended June 30, 1997. The decline in interest income
between the periods results from a decline of $15.2 million in average
interest-earning assets and a decrease of 24 basis points in the
average yield. Lower long-term interest rates and record level
refinancing have accelerated prepayments in the one-to-four family
residential mortgage loan and securities portfolios. The average
balances of one-to-four family mortgages decreased $27.9 million, and
mortgage-backed securities decreased $21.6 million during the current
six-month period as compared to the same period of the prior-year. In
addition, calls and maturities which out paced purchases of debt
securities throughout 1997 and 1998 reduced the average balance in
that portfolio $9.0 million during the current six-month period as
compared to the same period of the prior year. Amortization of
premiums associated with the purchase of mortgages and securities
accelerated, contributing to lower effective yields during this
period. In addition, yields on new securities were lower than those
on the assets they replaced. Partially offsetting the declines in the
portfolios mentioned above were growth in commercial business and
mortgage loans and consumer loans which earn higher yields than those
assets being repaid. Average commercial business and mortgage loans
increased $26.4 million, or 82.40%, and consumer loans increased $3.6
million, or 10.24%, over the prior year period. In addition, average
short-term investments increased $11.0 million during the six-month
period ended June 30, 1998 as compared to the same period last year.
Interest Expense. Interest expense decreased $898,000, or 7.09%,
during the six months ended June 30, 1998 as compared to the same
period of the prior year due to a $15.2 million decrease in average
deposits and borrowed funds, coupled with a 20 basis point decline in
average cost. Average core deposits increased $11.3 million, or
4.50%, to $261.1 million for the current six-month period over the
$249.9 million in the prior year six-month period while average
balances on certificates of deposit decreased $21.4 million, or
10.39%, to $184.5 million for the current six-month period from $205.9
million in the prior year six-month period. The cost of total
deposits declined 25 basis points from the prior-year period due to a
34 basis point decline in the cost of core deposits resulting from an
increase of $9.5 million in the average balance of no cost checking, a
decrease of 100 basis points in the rates paid on NOW accounts, and
the decrease of 17 basis points in the average rate paid on money
market deposit accounts, partially offset by an increase of 9 basis
points in the cost of certificates of deposit. Average borrowed fund
declined $5.0 million to $147.3 million for the six-month period ended
June 30, 1998 from $152.3 million for the same period of the prior
year. The cost of borrowed funds declined one basis point to 5.57%
from 5.58% for the prior year six-month period. These results reflect
the Company's efforts to build and sustain core deposit relationships,
while offering competitive certificate of deposit rates which are in
line with the cost of alternate sources of funds. Management repaid
short-term borrowed funds rather than reinvesting these funds into
assets with excessive duration risk as significant levels of one-to-
four family loans and mortgage backed securities prepayments were
experienced during the current-year period.
Net Interest Income. For the six months ended June 30, 1998, net
interest income decreased $539,000, or 4.31%, from the comparable
prior-year period. The decrease reflects the decline in average
interest-earning assets during the current year period, and the
continued overall downward trends in the market yields on interest-
sensitive products, coupled with the carrying cost for the repurchase
of the Company's common stock. This was partially offset by lower
costs of core deposits, and a decrease in average certificates of
deposit and borrowed funds. The tightening of spreads between
interest-earning assets and deposits and borrowed funds is reflected
in the net interest margin, which equaled 3.72% for the six-month
period ended June 30, 1998 as compared to 3.77% during the same period
last year.
Table 2 following presents a summary of the Company's average
interest-earning assets and their average yields, average deposits and
borrowed funds and their average costs, and average shareholders'
equity for the six months ending June 30, 1998 and 1997. Average
loans include non-accrual loans, and related yields include loan fees
which are considered adjustments to yields. Prior-year balance
information has been reclassified to conform with current-year
presentation.
Table 2
<TABLE>
Six Months Ended June 30,
--------------------------------------
1998 1997
---------------------- ---------------------
<S> <C> <C> <C> <C> <C> <C>
Average Interest Average Average InterestAverage
Balance Yield/ Balance Yield/
Cost Cost
------- ------- ---- ------- -------- ----
<S> <C> <C> <C> <C> <C> <C>
Assets
Interest-earning assets:
First mortgage loans $272,596 $10,517 7.72% $279,790 $10,699 7.65%
Consumer and other loans 38,844 1,804 9.37 35,237 1,697 9.71
Commercial business 17,629 761 8.71 11,945 566 9.56
Mortgage-backed securities 262,951 8,942 6.82 284,505 10,693 7.49
Debt securities 28,538 1,036 7.35 37,516 1,270 6.79
Money market investments 11,038 302 5.52 9 - 5.35
FHLBNY stock 10,260 378 7.37 8,053 252 6.26
-------- ------- -------- -------
Total interest-earning
assets 641,856 23,740 7.42 657,055 25,177 7.66
------- ------- ----
Non-interest-earning assets 20,917 19,698
-------- --------
Total assets $662,773 $676,753
======== ========
Liabilities and
shareholders' equity:
Deposits and borrowed funds:
Savings accounts 144,352 2,072 2.89% $139,949 2,004 2.89%
Demand and NOW accounts 73,313 352 0.97 65,588 670 2.06
Money market accounts 43,470 652 3.02 44,347 701 3.19
Certificates of deposits 184,504 4,629 5.06 205,896 5,078 4.97
Borrowed funds 147,269 4,066 5.57 152,313 4,216 5.58
-------- ------- -------- -------
Total deposits and borrowed
funds 592,908 11,771 4.00% 608,093 12,669 4.20%
-------- ------- ---- -------- ------- ----
Other liabilities 5,053 4,656
-------- --------
Total liabilities 597,961 612,749
Shareholders' equity 64,812 64,004
-------- --------
Total liabilities and
shareholders' equity $662,773 $676,753
======== ========
Net interest income $11,969 $12,508
======= =======
Net interest rate spread 3.42% 3.46%
==== ====
Net interest margin 3.72% 3.77%
==== ====
Ratio of interest-earning
asset to interest-bearing
liabilities 108.26% 108.05%
====== ======
</TABLE>
Provision for Loan Losses. The provision for loan losses for the six
months ended June 30, 1998 was $300,000, an increase of $50,000 over
the prior year period. The provision for the six months ended June
30, 1998 was determined by management after review of, among other
things, the Company's loan portfolio, the risk inherent in the
Company's lending activities, composition and volume of the Company s
loan portfolio and the economy in the Company's market areas. Further
provisions for loan losses will continue to be based upon management's
assessment of the loan portfolio and its underlying collateral, trends
in non-performing loans, current economic conditions and other factors
which warrant recognition in order to maintain the allowance for loan
losses at levels sufficient to provide for estimated losses. At June
30, 1998, the allowance for loan losses was $3.0 million, or 118.95%
of total non-performing loans, and 0.89% of total net loans compared
to 113.18% of non-performing loans, and 0.85% of total net loans at
December 31, 1997.
Non-Interest Income. Total non-interest income increased $718,000, or
94.10%, to $1,481,000 for the six months ended June 30, 1998 from
$763,000 for the same period of the prior year. Included in non-
interest income for the current six-month period is a gain of $306,000
on the sale of the Passaic branch. Excluding this gain, the Company
still recorded increases in non-interest income of $412,000, or
54.00%, for the six months ended June 30, 1998 over the same period of
the prior year. This increase reflected in part the Company's fee
enhancement initiatives implemented during mid second quarter of 1998
and growth in core deposits and commercial lending which resulted in
increased service charges on deposit accounts, and increased loan fees
and charges. In addition, higher ATM surcharges to non-customers, and
more annuity sales generated through the Bank's branch network were
realized in the current-year period.
Non-Interest Expense. Total non-interest expense for the six months
ended June 30, 1998 was $9.1 million, an increase of $536,000, or
6.26%, from $8.6 million recorded during the same period of the prior
year. This increase primarily reflects increases in salaries and
benefits, professional fees, and branch and bank operations cost
offset by lower insurance expense.
Salaries and employee benefits expense was the largest component
within non-interest expenses. This category increased $365,000, or
7.65% during the first six months of 1998 over the same period last
year. This increase reflects increased staffing for the newly formed
mortgage funding group and increases in staff for the commercial
lending group during the second quarter of 1998. In addition normal
wage increases and higher expense associated with the Company's ESOP
program, partially offset by lower management incentive plan expense
contributed to the rise in this category. The cost of the Company's
ESOP program is recorded as compensation expense based upon the
average market value of the Company's common stock, which was higher
during the six months ended June 30, 1998 compared to the same period
last year.
Professional fees increased $84,000, or 25.53%, for the six months
ended June 30, 1998 over the same period of the prior year. The
increase resulted primarily from costs related to fee enhancement and
cost reduction studies, ESOP structure and allocation review, and
other benefit review costs.
Insurance premiums decreased $118,000, or 69.01%, for the six months
ended June 30, 1998 over the same period last year. This decrease
resulted primarily from the change in the cash surrender value of
Company owned life insurance policies on certain officers of the
Company and the Bank.
Data processing expense increased $26,000, or 8.31%, for the six
months ended June 30, 1998 over the same period of the prior year
principally reflecting increased loan and deposit transaction activity
generated through relationship building initiatives.
The remaining components of non-interest expense increased $179,000,
or 6.00%, from $2,981,000 for the six months ended June 30, 1997 to
$3,160,000 for the six months ended June 30, 1998. This increase
resulted primarily from greater marketing cost related to bank product
and name recognition, advertising for the opening of the North
Arlington branch, occupancy cost due to the new branch opening and
other facilities and equipment modernization, communication and
postage expense due to higher loan and deposit transaction volume and
fee structure notice changes, and higher foreclosed real estate
carrying costs. These increased costs were partially offset by lower
literature, printing and correspondent bank and branch operating
costs.
Income Tax Expense. The decrease in income tax for the period is the
result of the tax effect of the decrease in pre-tax income recorded
during the period.
LIQUIDITY AND CAPITAL RESOURCES
The Company's liquidity is a measure of its ability to fund loans and
withdrawals of deposits in a cost-effective manner. The Company's
primary financing sources are deposits obtained in its own market
area, advances from the FHLBNY and securities sold under repurchase
agreements. Other sources of funds include scheduled amortization and
prepayments of loan principal and mortgage-backed securities,
maturities and calls of debt securities and funds provided by
operations. At June 30, 1998, the Company had total liquid assets
(consisting of cash and due from banks, federal funds sold, debt and
mortgage-backed securities having final maturities within one year,
and accrued interest from debt and mortgage-backed securities) which
represent 3.74% of total assets and 5.58% of total deposits at June
30, 1998. At June 30, 1998, the Company had available to it $33.7
million under a line of credit with the FHLBNY, expiring October 31,
1998, and approximately $54.5 million of excess collateral pledged
with the FHLBNY. In addition, the Company has approximately $38.6
million of unpledged debt, equity and mortgage-backed securities which
are classified as available for sale, and approximately $221.4 million
of loans which could be used to collateralize additional borrowings or
sold to provide liquidity.
At June 30, 1998, capital resources were sufficient to meet
outstanding loan commitments of $33.7 million, commitments on unused
lines of credit of $20.4 million and commercial letters of credit of
$2.0 million. Certificates of deposit, which are scheduled to mature
in one year or less from June 30, 1998, totaled $153.9 million.
Management is unable to predict the amount of such deposits that will
renew with the Company. As a result of the Company's liquidity
position, management does not believe the Company's operation will be
materially affected by a failure to renew these deposits. However,
trends and the Company's prior experience indicate that a significant
portion of such deposits should remain with the Company.
During the six months ended June 30, 1998, proceeds from pay downs,
calls and maturities of investment securities and cash provided from
operating activities represented the primary source of funds.
Maturities and principal repayments on mortgage-backed and debt
securities out paced purchases of debt securities by $33.8 million.
In addition, funds of $5.7 million were provided by operating
activities during this period. The funds were primarily used to
decrease short-term borrowings by $14.1 million, increase short-term
investments by $16.2 million, fund the reduction in deposits of $3.1
million (which primarily resulted from the sale of the Passaic branch)
and repurchase the Company's common stock of $2.7 million.
During the six months ended June 30, 1997, investment and lending
activities represented the primary funding need. Purchase of
mortgage-backed securities exceeded maturities and principal
repayments of mortgage-backed and debt securities by $34.3 million.
In addition, $2.7 million was used for loan disbursements, net of
repayments, $8.6 million was required for net deposit withdrawals and
$3.8 million was used to repurchase common stock of the Company. The
principal source of funding these activities were increases in
borrowings, net of repayments, from the FHLBNY of $46.7 million and
cash provided by operating activities of $4.8 million.
At June 30, 1998, the Bank exceeded each of the regulatory capital
requirements applicable to it. The table below presents the Bank's
actual capital amounts and ratios at June 30, 1998 as compared to the
OTS minimum capital adequacy requirements and the OTS requirements for
classification as a well-capitalized institution.
The Bank OTS Requirements
-------------- ----------------------------------
Minimum Capital For Classification
Adequacy As Well-Capitalized
--------------- -------------------
(dollars in thousands) Amount Ratio Amount Ratio Amount Ratio
------ ----- ------ ----- ------ -----
Tangible Capital $59,333 9.04% $ 9,840 1.50%
Tier 1 (core)Capital 59,333 9.04 26,240 4.00 $32,800 5.00%
Risk Based Capital:
Tier 1 59,333 20.29 11,700 4.00 17,549 6.00
Total $62,084 21.23% $23,399 8.00% $29,249 10.00%
QUANTATIVE AND QUALITIVE DISCLOSURES ABOUT MARKET RISK
There have been no material changes to information required regarding
quantative and qualitive disclosures about market risk from the end of
the preceding fiscal year to the date of the most recent interim
balance sheet.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
There are various claims and lawsuits in which the Bank is
periodically involved incidental to the Bank's business. In
the opinion of management, no material loss is expected from
any such pending claims or lawsuits.
Item 2. Changes in Securities.
Not applicable.
Item 3. Defaults upon Senior Securities.
Not applicable.
Item 4. Submission of Matters to a Vote of Security Holders.
The Company held its Annual Meeting of Shareholders during
the quarter ended June 30, 1998. The following is the
information required by this item:
(a) The Annual Meeting of Shareholders was held on
Wednesday, May 6, 1998.
(b) Directors Thomas J. Sharkey, Sr. and Thomas V. Whelan
were elected to new terms on the Board of Directors
expiring in 2001. The term of office of each of the
following directors continues beyond the annual
meeting: Victor M. Richel, Maria F. Ramirez, Walter G.
Scott and Stephen R. Tilton.
(c) The following matters were voted upon at the annual
meeting:
Proposal I - The election of Thomas J. Sharkey, Sr. and
Thomas V. Whelan each to three year terms on the Board
of Directors.
Name Votes Votes
In Favor Against
---- -------- -------
Thomas J. Sharkey, Sr. 3,886,422 12,265
Thomas V. Whelan 3,887,396 11,291
Item 5. Other Information.
Not applicable.
Item 6. Exhibits and Report of Form 8-K.
(a) Exhibits.
Number Description
------ -----------
27 Financial Data Schedule
(b) Reports on Form 8-K.
1.) The Registrant filed a Current Report on Form 8-K
dated April 22, 1998 announcing the Registrant's
earnings for the first quarter ended March 31,
1998.
2.) The Registrant filed a Current Report on Form 8-K
dated May 26, 1998 announcing the Registrant's
quarterly dividend.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf
by the undersigned thereunto duly authorized.
STATEWIDE FINANCIAL CORP.
Date: August 14, 1998 By: Bernard F. Lenihan
BERNARD F. LENIHAN
Senior Vice President and Chief
Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 8,438
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 16,200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 273,315
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 334,752
<ALLOWANCE> 2,969
<TOTAL-ASSETS> 656,635
<DEPOSITS> 440,491
<SHORT-TERM> 146,248
<LIABILITIES-OTHER> 6,086
<LONG-TERM> 0
0
0
<COMMON> 0
<OTHER-SE> 63,810
<TOTAL-LIABILITIES-AND-EQUITY> 656,635
<INTEREST-LOAN> 6,617
<INTEREST-INVEST> 4,965
<INTEREST-OTHER> 191
<INTEREST-TOTAL> 11,773
<INTEREST-DEPOSIT> 3,840
<INTEREST-EXPENSE> 5,866
<INTEREST-INCOME-NET> 5,907
<LOAN-LOSSES> 150
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,739
<INCOME-PRETAX> 1,965
<INCOME-PRE-EXTRAORDINARY> 1,214
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,214
<EPS-PRIMARY> .30
<EPS-DILUTED> .29
<YIELD-ACTUAL> 3.70
<LOANS-NON> 2,177
<LOANS-PAST> 319
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,979
<ALLOWANCE-OPEN> 2,890
<CHARGE-OFFS> 77
<RECOVERIES> 6
<ALLOWANCE-CLOSE> 2,969
<ALLOWANCE-DOMESTIC> 2,969
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
