SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the Quarterly Period Ended June 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission File Number: 0-26556
KLAMATH FIRST BANCORP, INC.
(Exact name of registrant as specified in its charter)
Oregon 93-1180440
(State or other jurisdiction of incorporation (I.R.S. Employer
or organization) Identification Number)
540 Main Street, Klamath Falls, Oregon 97601
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (541) 882-3444
Securities registered pursuant to Section 12(b) of the Act: None
Securities registered pursuant to
Section 12(g) of the Act: Common Stock, par value $.01 per share
(Title of Class)
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 .
As of July 22, 1998, there were issued 9,916,766 shares of the Registrant's
Common Stock. The Registrant's voting common stock is traded over-the-counter
and is listed on the Nasdaq National Market under the symbol "KFBI."
<PAGE>
KLAMATH FIRST BANCORP, INC. AND SUBSIDIARY
TABLE OF CONTENTS
Part I. Financial Information
- ------- ----------------------
Item 1. Financial Statements Page
-------
Consolidated Statements of Financial Condition
(As of June 30, 1998 and September 30, 1997) 3
Consolidated Statements of Earnings (For the three months
and nine months ended June 30, 1998 and 1997) 4
Consolidated Statement of Shareholders' Equity
(For the years ended September 30, 1997 and 1996 and for
the nine months ended June 30, 1998) 5
Consolidated Statements of Cash Flows (For the nine
months ended June 30, 1998 and 1997) 6 - 7
Notes to Consolidated Financial Statements 8 - 10
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11 - 15
Part II. Other Information
- -------- -------------------
Item 1. Legal Proceedings 16
Item 2. Changes in Securities 16
Item 3. Defaults Upon Senior Securities 16
Item 4. Submission of Matters to a Vote of Security Holders 16
Item 5. Other Information 16
Item 6. Exhibits and Reports on Form 8-K 16
Signatures 17
2
<PAGE>
<TABLE>
<CAPTION>
KLAMATH FIRST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
AS OF JUNE 30, 1998 AND SEPTEMBER 30, 1997
(Unaudited)
June 30, 1998 September 30, 1997
ASSETS --------------- ---------------
<S> <C> <C>
Cash and due from banks ................................................. $ 22,003,622 $ 24,503,768
Interest earning deposits with banks .................................... 7,575,691 1,431,087
Federal funds sold and securities purchased under agreements to resell .. 20,918,913 6,108,341
--------------- ---------------
Total cash and cash equivalents ...................................... 50,498,226 32,043,196
Investment securities available for sale, at fair value
(amortized cost: $217,827,959 and $261,869,234) ....................... 219,190,532 261,846,320
Investment securities held to maturity, at amortized cost (fair
value: $3,076,288 and $22,968,997) .................................... 3,039,654 22,937,314
Mortgage backed and related securities available for sale, at fair
value (amortized cost: $47,281,107 and $64,097,246) ................... 47,681,455 64,868,633
Mortgage backed and related securities held to maturity, at amortized
cost (fair value: $4,111,904 and $5,518,648) .......................... 4,079,097 5,446,957
Loans receivable, net ................................................... 640,759,774 551,463,590
Real estate owned ....................................................... -- --
Premises and equipment, net ............................................. 12,206,220 11,671,124
Stock in Federal Home Loan Bank of Seattle, at cost ..................... 8,910,700 7,150,400
Accrued interest receivable ............................................. 8,636,943 7,626,164
Core deposit intangible ................................................. 11,844,187 13,083,695
Other assets ............................................................ 1,841,479 1,940,655
--------------- ---------------
Total assets ......................................................... $ 1,008,688,267 $ 980,078,048
=============== ===============
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposit liabilities ................................................... $ 679,263,285 $ 673,977,901
Accrued interest on deposits .......................................... 1,185,124 1,215,745
Advances from borrowers for taxes and insurance ....................... 6,663,561 8,915,486
Advances from Federal Home Loan Bank of Seattle ....................... 160,000,000 129,000,000
Short term borrowings ................................................. 14,025,000 17,077,500
Accrued interest on borrowings ........................................ 293,485 512,716
Pension liabilities ................................................... 823,087 727,140
Deferred federal and state income taxes ............................... 2,334,273 1,911,573
Other liabilities ..................................................... 3,063,004 2,277,544
--------------- ---------------
Total liabilities ................................................... 867,650,819 835,615,605
--------------- ---------------
SHAREHOLDERS' EQUITY
Preferred stock, $.01 par value, 500,000 shares authorized; none issued -- --
Common stock, $.01 par value, 35,000,000 shares authorized,
June 30, 1998 -- 9,916,766 issued, 8,801,107 outstanding;
September 30, 1997 -- 10,429,534 issued, 9,235,582 outstanding ...... 99,168 104,295
Additional paid-in-capital ............................................ 82,305,875 92,601,639
Retained earnings-substantially restricted ............................ 69,175,655 64,744,995
Unearned shares issued to ESOP ........................................ (7,095,212) (7,829,200)
Unearned shares issued to MRDP ........................................ (4,541,048) (5,623,340)
Net unrealized gain on securities available for sale, net of tax ...... 1,093,010 464,054
--------------- ---------------
Total shareholders' equity .......................................... 141,037,448 144,462,443
--------------- ---------------
Total liabilities and shareholders' equity .......................... $ 1,008,688,267 $ 980,078,048
=============== ===============
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
3
<PAGE>
<TABLE>
<CAPTION>
KLAMATH FIRST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF EARNINGS
(Unaudited)
Three Months Three Months Nine Months Nine Months
Ended Ended Ended Ended
June 30, June 30, June 30, June 30,
1998 1997 1998 1997
-------------- -------------- -------------- --------------
INTEREST INCOME
<S> <C> <C> <C> <C>
Loans receivable ....................................... $ 12,805,756 $ 10,421,417 $ 36,285,128 $ 29,894,602
Mortgage backed and related securities ................. 815,350 1,163,693 3,003,161 3,558,732
Investment securities .................................. 3,610,547 1,318,728 11,506,858 3,984,913
Federal funds sold and securities purchased
under agreements to resell .......................... 223,879 158,120 563,839 606,464
Interest earning deposits .............................. 254,666 19,251 476,387 48,663
-------------- -------------- -------------- --------------
Total interest income ................................ 17,710,198 13,081,209 51,835,373 38,093,374
-------------- -------------- -------------- --------------
INTEREST EXPENSE
Deposit liabilities .................................... 7,261,297 5,367,615 21,617,957 15,665,078
Advances from FHLB of Seattle .......................... 2,210,515 1,629,471 5,648,181 4,569,220
Other .................................................. 238,422 306,714 753,397 783,440
-------------- -------------- -------------- --------------
Total interest expense ............................... 9,710,234 7,303,800 28,019,535 21,017,738
-------------- -------------- -------------- --------------
Net interest income .................................. 7,999,964 5,777,409 23,815,838 17,075,636
Provision for loan losses ................................ 198,000 45,000 364,000 315,000
-------------- -------------- -------------- --------------
Net interest income after provision for
loan losses ........................................ 7,801,964 5,732,409 23,451,838 16,760,636
-------------- -------------- -------------- --------------
NON-INTEREST INCOME
Fees and service charges ............................... 591,528 84,094 1,747,028 232,564
Gain on sale of investments available for sale ......... 189,661 -- 189,661 2,143
Gain on sale of real estate owned ...................... -- -- -- 27,946
Other income ........................................... 42,180 19,030 159,842 54,717
-------------- -------------- -------------- --------------
Total non-interest income ............................ 823,369 103,124 2,096,531 317,370
-------------- -------------- -------------- --------------
NON-INTEREST EXPENSE
Compensation, employee benefits and related expense .... 2,361,607 1,588,430 7,258,946 4,820,042
Occupancy expense ...................................... 508,317 203,229 1,544,687 545,144
Data processing expense ................................ 246,640 87,226 720,339 303,237
Insurance premium expense .............................. 43,007 65,214 216,205 310,321
Loss on sale of investments available for sale ......... -- -- -- 14,530
Amortization of core deposit intangible ................ 413,169 -- 1,239,508 --
Other expense .......................................... 1,259,609 499,561 3,569,060 1,496,686
-------------- -------------- -------------- --------------
Total non-interest expense ........................... 4,832,349 2,443,660 14,548,745 7,489,960
-------------- -------------- -------------- --------------
Earnings before income taxes ............................. 3,792,984 3,391,873 10,999,624 9,588,046
Provision for income tax ................................. 1,302,438 1,342,100 4,155,231 3,143,909
-------------- -------------- -------------- --------------
Net earnings ............................................. $ 2,490,546 $ 2,049,773 $ 6,844,393 $ 6,444,137
============== ============== ============== ==============
Basic earnings per share ................................. $ 0.28 $ 0.22 $ 0.75 $ 0.68
Earnings per share - assuming full dilution .............. $ 0.26 $ 0.22 $ 0.71 $ 0.66
Weighted average number of shares outstanding ............ 8,995,455 9,132,741 9,155,540 9,536,833
Weighted average number of shares - assuming full dilution 9,441,551 9,464,496 9,637,894 9,804,425
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
4
<PAGE>
<TABLE>
<CAPTION>
KLAMATH FIRST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED SEPTEMBER 30, 1996 AND 1997 AND THE NINE MONTHS ENDED JUNE 30, 1998
(Unaudited)
Unrealized
Unearned gain (loss)
Common Common Additional Unearned shares on securities Total
Stock Stock paid-in Retained ESOP shares issued to available shareholders'
Shares Amount capital earnings at cost MRDP Trust for sale equity
---------- -------- ------------ ----------- ----------- ------------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance at October 1, 1995 ... 11,254,475 $122,331 $119,230,653 $ 55,811,362 $(9,786,500) $ -- $ (692,781) $164,685,065
Cash dividends ............... -- -- -- (2,838,680) -- -- -- (2,838,680)
ESOP contribution ............ 97,865 -- 417,652 -- 978,650 -- -- 1,396,302
Unrealized loss on securities
available for sale ......... -- -- -- -- -- -- (355,206) (355,206)
Unearned shares issued to MRDP
Trust ...................... (489,325) -- -- -- -- (6,694,470) -- (6,694,470)
Stock repurchased and retired (620,655) (6,207) (8,885,627) -- -- -- -- (8,891,834)
Net earnings ................. -- -- -- 6,109,797 -- -- -- 6,109,797
---------- -------- ------------ ------------ ----------- ------------- ------------- -------------
Balance at September 30, 1996 10,242,360 116,124 110,762,678 59,082,479 (8,807,850) (6,694,470) (1,047,987) 153,410,974
Cash dividends ............... -- -- -- (2,895,234) -- -- -- (2,895,234)
Unrealized gain on securities
available for sale ......... -- -- -- -- -- -- 1,512,041 1,512,041
Stock repurchased and retired (1,182,936) (11,829) (18,866,299) -- -- -- -- (18,878,128)
ESOP contribution ............ 97,865 -- 705,260 -- 978,650 -- -- 1,683,910
MRDP contribution ............ 78,293 -- -- -- -- 1,071,130 -- 1,071,130
Net earnings ................. -- -- -- 8,557,750 -- -- -- 8,557,750
---------- -------- ------------ ------------ ----------- ------------- ------------- -------------
Balance at September 30, 1997 9,235,582 104,295 92,601,639 64,744,995 (7,829,200) (5,623,340) 464,054 144,462,443
Cash dividends ............... -- -- -- (2,413,733) -- -- -- (2,413,733)
Unrealized gain on securities
available for sale ......... -- -- -- -- -- -- 628,956 628,956
Stock repurchased and retired (544,085) (5,440) (11,556,044) -- -- -- -- (11,561,484)
ESOP contribution ............ -- -- 849,558 -- 733,988 -- -- 1,583,546
MRDP contribution ............ 78,293 -- -- -- -- 1,082,292 -- 1,082,292
Exercise of stock options .... 31,317 313 410,722 -- -- -- -- 411,035
Net earnings ................. -- -- -- 6,844,393 -- -- -- 6,844,393
---------- -------- ------------ ------------ ----------- ------------- ------------- ------------
Balance at June 30, 1998 ..... 8,801,107 $ 99,168 $ 82,305,875 $ 69,175,655 $(7,095,212)$ (4,541,048)$ 1,093,010 $141,037,448
========== ======== ============ ============ =========== ============= ============= ============
<FN>
See notes to consolidated financial statements.
</FN>
</TABLE>
5
<PAGE>
<TABLE>
<CAPTION>
KLAMATH FIRST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
Nine Months Ended Nine Months Ended
June 30, June 30,
1998 1997
--------------- ---------------
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net earnings ........................................................ $ 6,844,393 $ 6,444,137
ADJUSTMENTS TO RECONCILE NET EARNINGS TO
NET CASH PROVIDED BY OPERATING ACTIVITIES
Depreciation and amortization ....................................... 2,099,424 276,792
Provision for loan losses ........................................... 343,226 313,631
Compensation expense related to ESOP benefit ........................ 1,583,544 1,199,156
Compensation expense related to MRDP Trust .......................... 1,082,292 1,071,130
Net amortization of premiums (discounts) paid on
investment and mortgage backed and related securities ............. (118,332) 329,399
Increase in deferred loan fees, net of amortization ................. 957,607 626,530
Net amortization of premiums (discounts) on purchased loans ......... 14,673 (244)
Net gain on sale of real estate owned and
premises and equipment ............................................ -- (3,234)
Net (gain) loss on sale of investment and mortgage
backed and related securities ..................................... (189,661) 12,387
FHLB stock dividend ................................................. (444,100) (353,700)
CHANGES IN ASSETS AND LIABILITIES
Accrued interest receivable ......................................... (1,010,779) (551,886)
Other assets ........................................................ (20,824) (2,822,158)
Accrued interest on deposit liabilities ............................. (30,621) (13,436)
Accrued interest on borrowings ...................................... (219,231) 372,092
Pension liabilities ................................................. 95,947 101,511
Deferred federal and state income taxes ............................. 37,210 652,825
Other liabilities ................................................... 926,963 (1,849,030)
--------------- ---------------
Net cash provided by operating activities ............................... 11,951,731 5,805,902
--------------- ---------------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from maturity of investment securities
held to maturity .................................................. 20,000,000 31,949,466
Proceeds from maturity of investment securities
available for sale ................................................ 77,180,000 2,000,000
Principal repayments received on mortgage
backed and related securities held to maturity ................... 1,345,395 845,737
Principal repayments received on mortgage
backed and related securities available for sale ................. 17,092,223 14,430,838
Principal repayments received on loans .............................. 85,321,765 40,509,940
Loan originations ................................................... (170,838,668) (99,355,177)
Loans purchased ..................................................... (5,094,787) --
Purchase of investment securities held
to maturity ....................................................... -- (41,843,264)
Purchase of investment securities available
for sale .......................................................... (41,817,595) (7,862,997)
Purchase of mortgage backed and related
securities available for sale ..................................... (10,040,575) (14,850,705)
Purchase of FHLB stock .............................................. (1,316,200) (4,307,500)
Proceeds from sale of FHLB stock .................................... -- 2,425,900
Proceeds from sale of investment securities
available for sale ................................................ 9,014,539 16,066,044
Proceeds from sale of mortgage backed and related
securities available for sale ..................................... 9,656,938 5,743,267
Proceeds from sale of real estate owned and
premises and equipment ............................................ -- 72,717
Purchases of premises and equipment ................................. (1,275,012) (642,325)
--------------- ---------------
Net cash used in investing activities ................................... (10,771,977) (54,818,059)
--------------- ---------------
</TABLE>
6
<PAGE>
<TABLE>
<CAPTION>
KLAMATH FIRST BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED JUNE 30, 1998 AND 1997
(Unaudited)
(Continued)
Nine Months Ended Nine Months Ended
June 30, June 30,
1998 1997
--------------- ---------------
CASH FLOWS FROM FINANCING ACTIVITIES
<S> <C> <C>
Net increase/(decrease) in deposit
liabilities ........................................................ $ 5,285,384 $ 18,531,965
Proceeds from FHLB advances ......................................... 139,000,000 157,000,000
Repayments of FHLB advances ......................................... (108,000,000) (110,000,000)
Proceeds from short term borrowings ................................. 70,156,821 56,538,250
Repayments of short term borrowings ................................. (73,209,321) (52,559,650)
Stock retirement .................................................... (11,561,483) (18,878,128)
Stock options exercised ............................................. 411,035 --
Net change in advances from borrowers for tax and insurance ......... (2,251,925) (1,670,321)
Dividends paid ...................................................... (2,555,235) (2,409,588)
--------------- ---------------
Net cash provided by financing activities ............................... 17,275,276 46,552,528
--------------- ---------------
Net (decrease) increase in cash and cash
equivalents ........................................................... 18,455,030 (2,459,629)
Cash and cash equivalents at beginning
of period ............................................................. 32,043,196 16,179,633
--------------- ---------------
Cash and cash equivalents at end of period .............................. $ 50,498,226 $ 13,720,004
=============== ===============
SUPPLEMENTAL SCHEDULE OF INTEREST AND
INCOME TAXES PAID
Interest paid ....................................................... $ 28,171,707 $ 20,659,080
Income taxes paid ................................................... 4,195,275 2,431,459
SUPPLEMENTAL SCHEDULE OF NONCASH
INVESTING ACTIVITIES
Net unrealized gain on securities
available for sale ................................................ $ 628,956 $ 1,158,512
Dividends declared and accrued in other
liabilities ....................................................... 892,509 783,842
<FN>
See notes to consolidated financial statements
</FN>
</TABLE>
7
<PAGE>
KLAMATH FIRST BANCORP, INC. AND SUBSIDIARY
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. BASIS OF PRESENTATION
In the opinion of Management, the accompanying unaudited consolidated statements
contain all adjustments necessary for a fair presentation of Klamath First
Bancorp, Inc.'s (the "Company") financial condition as of June 30, 1998, the
results of operations for the three and nine months ended June 30, 1998 and 1997
and the cash flows for the nine months ended June 30, 1998 and 1997. Certain
information and note disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles have been
omitted pursuant to the rules and regulations of the Securities and Exchange
Commission. These consolidated financial statements should be read in
conjunction with the consolidated financial statements and notes thereto
included in the Company's Annual Report on Form 10- K. The results of operations
for the three and nine months ended June 30, 1998 are not necessarily indicative
of the results which may be expected for the entire fiscal year.
2. ALLOWANCE FOR LOAN LOSSES
<TABLE>
<CAPTION>
Activity in allowance for loan losses is summarized as follows:
June 30, September 30,
1998 1997
--------------- ---------------
<S> <C> <C>
Balance, beginning of year ............. $ 1,296,451 $ 927,820
Charge-offs ............................ (20,774) (1,369)
Additions .............................. 364,000 370,000
--------------- ---------------
Balance, end of period ................. $ 1,639,677 $ 1,296,451
=============== ===============
</TABLE>
3. ADVANCES FROM FEDERAL HOME LOAN BANK
Borrowings at June 30, 1998 consisted of four short term advances totaling $43.0
million and ten long term advances totaling $117.0 million from the Federal Home
Loan Bank of Seattle ("FHLB"). The advances are collateralized in aggregate by
certain mortgages or deeds of trust, securities of the U.S. Government and
agencies thereof and cash on deposit with the FHLB.
Scheduled maturities of advances from the FHLB were as follows:
<TABLE>
June 30, 1998 September 30, 1997
------------ ----------- ------------- ------------ ---------- -------------
Range of Weighted Range of Weighted
interest average interest average
Amount rates interest rate Amount rates interest rate
------------ ----------- ------------- ------------ ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Due within one year $ 43,000,000 5.56%-5.80% 5.65% $ 59,000,000 5.57%-6.70% 5.66%
After one but within
five years ......... 117,000,000 5.09%-5.74% 5.41% 70,000,000 5.39%-5.84% 5.59%
------------- ------------
$160,000,000 $129,000,000
============= ============
</TABLE>
8
<PAGE>
4. SHORT TERM BORROWINGS
Securities sold under agreements to repurchase totaled $14.0 million with an
interest rate of 5.70%. All of the agreements are due within 60 days.
5. REGULATORY CAPITAL
The following table illustrates the compliance by Klamath First Federal Savings
and Loan Association (the "Association") with currently applicable regulatory
capital requirements at June 30, 1998:
<TABLE>
<CAPTION>
Categorized as "Well
For Capital Capitalized" Under
Adequacy Prompt Corrective
Actual Purposes Action Provision
------------ ----- ------------ ----- ------------ -----
Amount Ratio Amount Ratio Amount Ratio
------------ ----- ------------ ----- ------------ -----
As of June 30, 1998:
<S> <C> <C> <C> <C> <C> <C>
Total Capital: ........... $106,553,041 21.8% $ 39,023,248 8.0% $ 48,779,060 10.0%
(To Risk Weighted Assets)
Tier I Capital: .......... 104,913,364 21.5% N/A N/A 29,267,436 6.0%
(To Risk Weighted Assets)
Tier I Capital: .......... 104,913,364 10.9% 28,815,625 3.0% 48,026,042 5.0%
(To Total Assets)
Tangible Capital: ........ 104,913,364 10.9% 14,407,813 1.5% N/A N/A
(To Tangible Assets)
</TABLE>
6. SHAREHOLDERS' EQUITY
In April 1998, the Company received approval from the Office of Thrift
Supervision to repurchase 5%, or 521,477, of its outstanding shares. The
repurchase program was begun on April 24, 1998 and completed by May 31,1998. The
shares were repurchased at an average price of $21.22. On April 9, 1998, 22,608
shares were repurchased at $22.03 per share related to release of shares for
MRDP awards.
7. EARNINGS PER SHARE
Earnings per share ("EPS") is computed in accordance with Statement of Financial
Accounting Standards ("SFAS") No. 128, "Earnings per Share," which was adopted
by the Company as of December 31, 1997. EPS for all prior periods have been
restated to reflect the adoption. Diluted EPS is computed using the treasury
stock method, giving effect to potential additional common shares that were
outstanding during the period. Potential dilutive common shares include shares
held by the Company's Employee Stock Ownership Plan ("ESOP") that are committed
for release, shares awarded but not released under the Company's Management
Recognition and Development Plan ("MRDP"), and stock options granted under the
Stock Option
9
<PAGE>
Plan. Following is a summary of the effect of dilutive securities on weighted
average number of shares (denominator) for the basic and diluted EPS
calculations. There are no resulting adjustments to net earnings.
<TABLE>
<CAPTION>
For the Nine Months Ended
June 30, 1998 June 30, 1997
--------------- ---------------
<S> <C> <C>
Effect of Dilutive Securities on Number of Shares
MRDP shares ........................................... 66,256 40,476
ESOP shares ........................................... 36,599 36,599
Stock options ......................................... 379,499 190,517
--------------- ---------------
Total Dilutive Securities ............................. 482,354 267,592
=============== ===============
</TABLE>
<TABLE>
<CAPTION>
For the Three Months Ended
June 30, 1998 June 30, 1997
--------------- ---------------
Effect of Dilutive Securities on Number of Shares
<S> <C> <C>
MRDP shares ........................................... 37,651 35,758
ESOP shares ........................................... 60,998 60,995
Stock options ......................................... 347,447 235,002
--------------- ---------------
Total Dilutive Securities ............................. 446,096 331,755
=============== ===============
</TABLE>
8. BRANCH ACQUISITION
On March 5, 1997, the Company entered into a definitive agreement to purchase 25
branches from Wells Fargo Bank, N.A. The transaction closed as scheduled on July
18, 1997. The transaction was accounted for as a purchase under generally
accepted accounting principles. The purchase included assumption of
approximately $241.3 million in deposit liabilities and purchase of branch
facilities and other assets of approximately $6.3 million. As a result of the
transaction, the Company recorded $13.4 million in core deposit intangible which
is being amortized over 8.1 years. The acquired branches are located in rural
Oregon communities, extending the Association's market to 33 offices in 22
counties throughout the state.
9. RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS
In June 1997, the Financial Accounting Standards Board ("FASB") issued SFAS No.
130, "Reporting Comprehensive Income." SFAS No. 130 establishes requirements for
disclosure of comprehensive income and becomes effective for years beginning
after December 15, 1997. Reclassification of earlier financial statements for
comparative purposes is required. In June 1997, the FASB also issued SFAS No.
131, "Disclosures about Segments of an Enterprise and Related Information." SFAS
No.131 redefines how operating segments are determined and requires disclosure
of certain financial and descriptive information about the Company's operating
segments. This statement supercedes SFAS No. 14, "Financial Reporting for
Segments of Business Enterprises." The new standard becomes effective for years
beginning after December 15, 1997, and requires that comparative information
from earlier periods be restated to conform to the requirements of this
standard. The adoption of these statements is not expected to be material to the
Company.
10
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS
Safe Harbor Clause. This report contains certain "forward-looking statements."
The Company desires to take advantage of the "safe harbor" provisions of the
Private Securities Litigation Reform Act of 1995 and is including this statement
for the express purpose of availing itself of the protection of such safe harbor
with respect to all of such forward-looking statements. These forward-looking
statements, which are included in Management's Discussion and Analysis, describe
future plans or strategies and include the Company's expectations of future
financial results. The words "believe," "expect," "anticipate," "estimate,"
"project," and similar expressions identify forward-looking statements. The
Company's ability to predict results or the effect of future plans or strategies
is inherently uncertain. Factors which could affect actual results include
interest rate trends, the general economic climate in the Company's market area
and the country as a whole, loan delinquency rates, and changes in federal and
state regulation. These factors should be considered in evaluating the
forward-looking statements, and undue reliance should not be placed on such
statements.
General
The Company, an Oregon corporation, became the unitary savings and loan holding
company for the Association upon the Association's conversion from a federally
chartered mutual to a federally chartered stock savings and loan association
("Conversion") on October 4, 1995. At June 30, 1998, the Company had total
consolidated assets of $1,008.7 million and consolidated shareholders' equity of
$141.0 million. The Company is currently not engaged in any business activity
other than holding the stock of the Association and investing excess cash in
investment securities. Accordingly, the information set forth in this report,
including financial statements and related data, relates primarily to the
Association.
As a traditional, community-oriented, savings and loan, the Association focuses
on customer service within its principal market area. The Association's primary
market activity is attracting deposits from the general public and using those
and other available sources of funds to originate permanent residential one- to
four-family real estate loans within its market area and, to a lesser extent,
loans on commercial property and multi-family dwellings. To supplement internal
growth generated through its branch network, the Association also purchases
Oregon-based commercial real estate and multi-family residential loans from
other Oregon financial institutions, as well as using mortgage brokers to locate
mortgage loans that meet our existing conservative underwriting standards within
and outside of the current branch market areas.
Net interest income, which is the difference between interest and dividend
income on interest-earning assets, primarily loans and investment securities,
and interest expense on interest-bearing deposits and borrowings, is the major
source of profit for the Company. Because the Company depends primarily on net
interest income for its earnings, the focus of the Company's management is to
create and implement strategies that will provide stable, positive spreads
between the yield on interest-earning assets and the cost of interest-bearing
liabilities. Such strategies include a variable rate home equity lending program
that has an interest rate tied to the Wall Street Journal published prime rate
with an additional margin of 2.0% and expansion of non- interest bearing
checking accounts through the branch acquisition and new deposit products. To a
lesser degree, the net earnings of the Company rely on the level of its
non-interest income. The Company is aggressively pursuing strategies to improve
its service charge and fee income, and control its non-interest expense, which
includes employee compensation and benefits, occupancy and equipment expense,
deposit insurance premiums, core deposit premium amortization, and miscellaneous
other expenses, as well as federal and state income tax expense. The Wells Fargo
branch acquisition continues to contribute to improvement of the Company's
non-interest income by providing a larger customer base to generate service
charge and fee income.
The Association is regulated by the Office of Thrift Supervision ("OTS") and its
deposits are insured up to applicable limits under the Savings Association
Insurance Fund ("SAIF") of the Federal Deposit Insurance Corporation ("FDIC").
The Association is a member of the Federal Home Loan Bank of Seattle, conducting
its business through thirty-three office facilities, with the main office
located in Klamath Falls, Oregon. The primary market areas of the Association
are the state of Oregon and adjoining areas of California and Washington.
11
<PAGE>
Year 2000 Readiness
As with other organizations, the data processing programs used by the Company
were originally designed to recognize calendar years by their last two digits.
Calculations performed using these truncated fields may not work properly with
dates beyond 1999. Correct processing of date oriented information is critical
to the operation of all financial institutions. Failure of these processes could
severely hinder the ability to continue operations and provide customer service.
Because of the critical nature of the issue, the Company established a committee
early in 1997 to address "Year 2000" issues. The committee has chosen to use the
Office of Thrift Supervision Year 2000 Checklist as a guide for Year 2000
preparation. The committee is also using a Year 2000 Testing Guide and
Contingency Guide provided by Sheshunoff Information Systems, Inc. to complement
the OTS checklist. Additionally, the Association recently hired a full time Year
2000 coordinator to further implement our Year 2000 plan on a timely basis. Data
processing for the Company is provided by a third party service bureau. Software
purchased from a service bureau affiliate is used for applications such as
accounts payable, investment portfolio accounting, and fixed assets. The service
bureau has stated that all their processing, including application software used
for fixed assets, accounts payable, and investment portfolio accounting, is Year
2000 ready as of June 30, 1998. The Company will commence testing procedures of
service bureau applications in December 1998.
Critical data processing applications, in addition to those provided by the
service bureau, have been identified. These include applications such as
electronic processing through the Federal Reserve Bank and ATM processing.
Testing procedures for these applications are in the process of development.
Contingency plans are also being developed by each department. The contingency
plans address actions to be taken to continue operations in the event of system
failure due to areas that cannot be tested in advance, such as power and
telephone service, which are vital to business continuation.
All personal computers ("PCs") and related software throughout the Company have
been inventoried and tested for Year 2000 capability. The company is using two
testing methods for PC certification of Year 2000 compatibility. PCs must pass
both tests to be considered ready for Year 2000. As of June 30, 1998, over 90%
of the Company's PCs and software are Year 2000 compatible. Those PCs identified
as non-Year 2000 compatible will be replaced by the end of 1998. The Company
believes that the Year 2000 issue will not pose significant operational problems
and is not anticipated to be material to its financial position or results of
operations in any given year. As of June 30, 1998, the Company estimates that
total Year 2000 implementation costs will not exceed $200,000 and are expected
to be expensed over the next 18 months, impacting fiscal years ending September
1998, 1999, and 2000. This estimate is based on information available at June
30, 1998, and may be revised as additional information and actual costs become
available.
Branch Acquisition
The Association completed the purchase of 25 branches in rural Oregon
communities from Wells Fargo Bank, N.A. on July 18, 1997. The transaction
included purchase of approximately $241.3 million in deposits and purchase of
branch facilities including buildings, improvements and furniture and fixtures
with a book value of $2.0 million. This acquisition expanded the Association's
market area to include 32 branches and one loan center in 22 Oregon counties. In
twelve of the locations, the newly acquired branch is the only financial
institution in the community. The acquired offices are located in communities
which are compatible with, and complement, the Association's current markets and
philosophy. While no loans were acquired in the transaction, the addition of
these branches creates new markets for the Association's lending products,
including the expanded consumer and commercial product offerings. Based on the
latest branch profitability analysis, all the branches are now profitable.
The purchase of deposit liabilities increased total Association deposits by
approximately $241.3 million and increased the number of deposit accounts from
40,000 to 82,000. Approximately 23,000 of the purchased accounts, $140.9
million, were demand deposits carrying a lower interest cost than the
Association's previous deposit mix. As a result the Association experienced a
reduction in cost of funds. The acquisition also resulted in the recording of
$13.4 million of core deposit intangible, which is being amortized over 8.1
years. The impact of the branch acquisition is evident in comparison of the
results of operations for the three and nine months ended June 30, 1998 and
1997, as discussed under non-interest income and non-interest expense.
12
<PAGE>
Changes in Financial Condition
At June 30, 1998, the consolidated assets of the Company totaled $1,008.7
million, an increase of $28.6 million, or 2.92%, from $980.1 million at
September 30, 1997. The increase in total assets was primarily the result of
loan growth which was funded by maturities of investments and additional
borrowing from the FHLB of Seattle.
Net loans receivable increased by $89.3 million, or 16.19%, to $640.8 million at
June 30, 1998, compared to $551.5 million at September 30, 1997. The increase
was primarily the result of continued new loan demand exceeding loan repayments,
augmented by the Company's purchase of $5.1 million in higher yielding loans on
multi-family residential and commercial properties in Oregon during the nine
months ended June 30, 1998.
Investment securities decreased $62.6 million, or 21.97%, from $284.8 million at
September 30, 1997 to $222.2 million at June 30, 1998. This decrease was the
result of scheduled maturities plus $49.2 million in securities called. A call
provision grants the issuer of a security the option of buying back all or part
of the issue prior to maturity. The Company also sold $19.0 million of U.S.
Treasury and mortgage backed securities during the quarter ended June 30, 1998
to fund loan demand.
Deposit liabilities increased $5.3 million, or 0.79%, from $674.0 million at
September 30, 1997 to $679.3 million at June 30, 1998. Management attributes the
increase to the maintaining of competitive rates in our market areas as well as
the use of an automated on-line personal computer-based system to market
deposits nationally. Interest credited on accounts also contributed to the
increase. The increase in deposits has been experienced throughout the network
of 32 branches.
Advances from borrowers for taxes and insurance decreased $2.2 million from
September 30, 1997 to June 30, 1998. The decrease is the result of using the
reserves to pay the required real estate taxes due on the Association's loan
receivable portfolio in December partially offset by collection of taxes from
borrowers.
Advances from the FHLB of Seattle increased $31.0 million, or 24.03%, from
$129.0 million at September 30, 1997 to $160.0 million at June 30, 1998.
Proceeds from borrowings were used to fund loan originations.
Total shareholders' equity decreased $3.5 million, or 2.37%, from $144.5 million
at September 30, 1997 to $141.0 million at June 30, 1998. The decrease is
primarily the result of the 5% stock repurchase program which began on April 24,
1998 and was completed by May 31, 1998. Through this program, the Company
repurchased 521,477 shares, reducing equity by $11.6 million. This decrease was
partially offset by the addition of $6.8 million in earnings for the year to
date, augmented by $628,956 in unrealized gains on securities available for sale
during the nine month period from September 30, 1997 to June 30, 1998.
Results of Operations
Comparison of Nine Months Ended June 30, 1998 and 1997
General. Income before taxes increased $1.4 million, or 14.72%, from $9.6
million for the nine months ended June 30, 1997 to $11.0 million for the same
period ended June 30, 1998. Due to an increase in the effective tax rate from
32.8% for the nine months ended June 30, 1997 to 37.8% for the nine months ended
June 30, 1998, net earnings increased at a lower level of 6.21% for the
comparable nine month periods. See further discussion under "Income Taxes."
Increases in net interest income and non-interest income were partially offset
by increases in non-interest expense.
Interest Income. Additional interest income generated by the $260.7 million
increase in average interest earning assets contributed to an increase of $13.7
million in interest income for the nine months ended June 30, 1998 compared to
1997. Of this increase, $7.5 million is attributable to increased interest
income on investment securities and $6.4 million to increased income on loans
receivable, partially offset by a decrease in interest income on mortgage backed
and related securities. The average yield on interest earning assets decreased
12 basis points to 7.34% for the nine months ended June 30, 1998 compared to
7.46% for the same period ended June 30, 1997. Average yield decreased because
investments, which have a lower yield than loans, represented a larger
proportion of earning assets for the nine months ended June 30, 1998 than for
the same period ended June 30, 1997. Investments increased as a proportion of
13
<PAGE>
earning assets after proceeds from the branch acquisition were invested in
securities until the funds can be rolled into loans. Changes in the yield curve
during the last year, which has shifted downward more than 100 basis points at
the long end and has flattened at the short end, also contributed to the
decrease in yield on earning assets. Offsetting the decrease in yield is the
Company's increased investment in higher yielding construction lending in the
Portland, Oregon metropolitan area. In spite of the lower yields experienced for
the period, interest rate spread (the difference between the rates earned on
interest earning assets and the rates paid on interest bearing liabilities)
improved from 2.23% to 2.57% and interest rate margin (net interest income
divided by average interest earning assets) improved from 3.34% to 3.37%
comparing the nine month periods.
Interest Expense. Interest expense on deposit liabilities increased $6.0 million
for the nine months ended June 30, 1998 compared to the same period in 1997 due
to deposit balances added through the branch acquisition. Although total
deposits increased by $261.1 million comparing June 30, 1997 to 1998, the
average interest paid on interest-bearing deposits decreased 56 basis points
from 5.12% for the nine months ended June 30, 1997 to 4.56% for the same period
ended June 30, 1998. Both the increase in deposit balances and the decrease in
the rate paid on deposits are primarily a result of the deposits acquired with
the Wells Fargo branch acquisition which consisted of 17% non-interest bearing
deposit accounts. The average balance of FHLB advances increased from $108.5
million for the nine months ended June 30, 1997 to $133.4 million for the same
period ended June 30, 1998 resulting in an increase in interest on FHLB advances
of $1.1 million for the nine months ended June 30, 1998 compared with the same
period ended June 30, 1997.
Provision for Loan Losses. The provision for loan losses was $364,000 and there
were charge offs of $20,000 during the nine months ended June 30, 1998 compared
to a $315,000 provision and charge offs of $1,369 during the nine months ended
June 30, 1997. At June 30, 1998 the allowance for loan losses was equal to
356.52% of non-performing assets compared to 510.24% at September 30, 1997. The
decrease in the coverage ratio was the result of an increase in non-performing
loans from $254,000 at September 30, 1997 to $460,000 at June 30, 1998. The
increase in non-performing loans relates to the addition of one loan on a single
family dwelling.
Non-Interest Income. Non-interest income increased $1.8 million, or 560.6%, to
$2.1 million for the nine months ended June 30, 1998 from $317,370 for the nine
months ended June 30, 1997. The increase was attributable to $189,661 gains on
sales of U.S. Treasury and mortgage backed securities as well as a $1.5 million
increase in fee income related to the increase in deposit accounts subject to
service charges.
Non-Interest Expense. Non-interest expense increased $7.0 million to $14.5
million for the nine months ended June 30, 1998, from $7.5 million for the
comparable period in 1997. Of this increase, $2.4 million was attributable to an
increase in compensation and benefit expense in 1998, reflecting addition of
staff related to the Wells Fargo acquisition and an increase in compensation
expense for the ESOP. Occupancy expense increased from $545,144 for the nine
months ended June 30, 1997 to $1,544,687 for the nine months ended June 30, 1998
due to the addition of the 25 acquired branches. Amortization of core deposit
intangible related to the acquisition totaled $1.2 million for the nine months
ended June 30, 1998. There was no comparable expense in the prior year. The
branch acquisition also impacted other expense which increased $2.1 million for
the nine months ended June 30, 1998 from the same period of 1997. Increases were
primarily seen in postage and courier, telephone, and supply expenses which were
up $529,130 year to date. Expansion of checking accounts and their related
servicing, debit card service, and ATM machines and card servicing resulted in a
$719,790 increase in the related expenses which are also included in other
expense. These increases were partially offset by a $94,116 reduction in deposit
insurance premiums resulting from reduced assessment rates beginning January 1,
1997. The ratio of non-interest expense to average total assets was 1.96% and
1.44% for the nine months ended June 30, 1998 and 1997, respectively.
Income Taxes. The provision for income taxes increased $1.0 million for the nine
months ended June 30, 1998 compared with the prior year. During the quarter
ended March 31, 1997, the Company recognized a tax benefit of $648,837 related
to loss on sale of the U.S. federal securities bond fund in the fiscal year
ended September 30, 1996. Recognition of the benefit reduced the effective tax
rate for the nine months ended June 30, 1997 as compared to the same period this
year. The balance of the increase is attributable to higher earnings for this
period.
Comparison of Three Months Ended June 30, 1998 and 1997
General. Earnings before taxes increased $401,111, or 11.83%, from $3.4 million
for the quarter ended June 30, 1997 to $3.8 million for this quarter 1998. Net
14
<PAGE>
income increased $440,773, or 21.5%, from $2.0 million for the three months
ended June 30, 1997 to $2.5 million for the three months ended June 30, 1998.
Increases in net interest income and non-interest income were partially offset
by increases in non-interest expense. These changes are all resultant from the
branch acquisition in July 1997 which doubled the number of employees and
tripled the number of branches for the Association. The acquisition also
resulted in the recording of core deposit intangible which amortizes at a rate
of $413,169 per quarter, representing the price paid for lower cost deposits.
Interest Income. Additional interest income generated by the $269.6 million
increase in average interest earning assets contributed to an increase of $4.6
million in interest income for the three months ended June 30, 1998 compared to
1997. Of this increase, $2.3 million is attributable to increased interest
income on investment securities and $2.4 million to increased income on loans
receivable. The average yield on interest earning assets decreased 18 basis
points to 7.33% for the three months ended June 30, 1998 compared to 7.51% for
the same period ended June 30, 1997. Average yield decreased for the reasons
noted previously, because investments, which have a lower yield than loans,
represented a larger proportion of earning assets for the three months ended
June 30, 1998 than for the same period ended June 30, 1997 and overall yields
are lower due to the downward shift in the yield curve. In spite of the lower
yields experienced for the period, interest rate spread (the difference between
the rates earned on interest earning assets and the rates paid on interest
bearing liabilities) improved from 2.26% to 2.55%, influenced by lower cost of
deposits and higher yielding construction lending in the Portland, Oregon
metropolitan area. Interest rate margin (net interest income divided by average
interest earning assets) remained consistent when comparing the three month
periods.
Interest Expense. Interest expense on deposit liabilities increased $1.9 million
for the three months ended June 30, 1998 compared to the same period in 1997.
Although total deposits increased by $261.1 million comparing June 30, 1997 to
1998, the average interest paid on interest-bearing deposits decreased 56 basis
points from 5.13% for the three months ended June 30, 1997 to 4.57% for the same
period ended June 30, 1998. Both the increase in deposit balances and the
decrease in the rate paid on deposits are primarily a result of the deposits
acquired with the Wells Fargo branch acquisition which consisted of 17%
non-interest bearing deposit accounts. The average balance of FHLB advances
increased from $114.6 million for the three months ended June 30, 1997 to $159.7
million for the same period ended June 30, 1998 resulting in an increase in
interest on FHLB advances of $581,044 for the three months ended June 30, 1998
compared with the same period ended June 30, 1997.
Provision for Loan Losses. The provision for loan losses was $198,000 and there
were charge offs of $20,000 during the three months ended June 30, 1998 compared
to a $45,000 provision and $1,369 of charge offs during the three months ended
June 30, 1997. During the quarter ended June 30, 1998, the provision was
increased in response to the high level of loan portfolio growth.
Non-Interest Income. Non-interest income increased $720,245, or 698.43%, to
$823,369 for the three months ended June 30, 1998 from $103,124 for the three
months ended June 30, 1997. The increase was primarily attributable to a
$507,434 increase in fee income related to the increase in deposit accounts
subject to service charges and $189,661 of gains on sales of U.S. Treasury and
mortgage backed securities.
Non-Interest Expense. Non-interest expense increased $2.4 million to $4.8
million for the three months ended June 30, 1998, from $2.4 million for the
comparable period in 1997. Of this increase, $773,177 was attributable to an
increase in compensation and benefit expense in 1998, reflecting addition of
staff related to the Wells Fargo acquisition and an increase in compensation
expense for the ESOP. Occupancy expense increased from $203,229 for the three
months ended June 30, 1997 to $508,317 for the three months ended June 30, 1998
due to the addition of the 25 acquired branches. Other expense increased
$760,048 from $499,561 for the three months ended June 30, 1997 to $1.3 million
for the same period ended June 30, 1998. This increase reflects the impact of
the branch acquisition, with postage and courier, telephone, and supply expenses
increasing $175,473 and expenses related to ATMs, debit cards, and checking
accounts increasing $195,071. The ratio of non- interest expense to average
total assets was 1.90% and 1.38% for the three months ended June 30, 1998 and
1997, respectively.
Income Taxes. The provision for income taxes decreased $39,662 for the three
months ended June 30, 1998 compared with the prior year. The effective tax rate
for the fiscal year ended September 30, 1998 is lower than the prior year due to
a reduction in the state tax rate for the current year.
15
<PAGE>
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
The Company is involved in various claims and legal actions arising in
the normal course of business. Management believes that these
proceedings will not result in a material loss to the Company.
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
Not applicable.
Item 5. Other Information
Not applicable.
Item 6. Exhibits and Reports on Form 8-K
a) Not applicable.
b) No Current Reports on Form 8-K were filed during the quarter ended
June 30, 1998.
16
<PAGE>
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.
KLAMATH FIRST BANCORP, INC.
Date: August 14, 1998 By: /s/ Gerald V. Brown
-------------------------------
Gerald V. Brown, President and
Chief Executive Officer
Date: August 14, 1998 By: /s/ Marshall Jay Alexander
--------------------------------
Marshall Jay Alexander, Vice President
and Chief Financial Officer
17
<PAGE>
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.
KLAMATH FIRST BANCORP, INC.
Date: August 14, 1998 By:
--------------------------------------
Gerald V. Brown, President and
Chief Executive Officer
Date: August 14, 1998 By:
--------------------------------------
Marshall Jay Alexander, Vice President
and Chief Financial Officer
17
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE SECOND
QUARTER 10-Q AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH 10-Q.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-END> JUN-30-1998
<CASH> 22,003,622
<INT-BEARING-DEPOSITS> 7,575,691
<FED-FUNDS-SOLD> 20,918,913
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 266,871,987
<INVESTMENTS-CARRYING> 7,118,751
<INVESTMENTS-MARKET> 7,188,192
<LOANS> 640,759,774
<ALLOWANCE> 1,639,677
<TOTAL-ASSETS> 1,008,688,267
<DEPOSITS> 679,263,285
<SHORT-TERM> 57,025,000
<LIABILITIES-OTHER> 14,362,534
<LONG-TERM> 117,000,000
0
0
<COMMON> 99,168
<OTHER-SE> 140,938,280
<TOTAL-LIABILITIES-AND-EQUITY> 1,008,688,267
<INTEREST-LOAN> 36,285,128
<INTEREST-INVEST> 14,510,019
<INTEREST-OTHER> 1,040,226
<INTEREST-TOTAL> 51,835,373
<INTEREST-DEPOSIT> 21,617,957
<INTEREST-EXPENSE> 28,019,535
<INTEREST-INCOME-NET> 23,815,838
<LOAN-LOSSES> 364,000
<SECURITIES-GAINS> 189,661
<EXPENSE-OTHER> 14,548,745
<INCOME-PRETAX> 10,999,624
<INCOME-PRE-EXTRAORDINARY> 10,999,624
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 6,844,393
<EPS-PRIMARY> 0.75
<EPS-DILUTED> 0.71
<YIELD-ACTUAL> 3.37
<LOANS-NON> 459,695
<LOANS-PAST> 0
<LOANS-TROUBLED> 7,309
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 1,296,451
<CHARGE-OFFS> 20,744
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 1,639,677
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 1,639,677
</TABLE>
