10-Q 1 c70984e10vq.txt FORM 10-Q FOR QUARTER ENDING JUNE 30, 2002 UNITED STATES 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, 2002 OR [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to ---------------------- ---------------------- Commission file number: 000-21167 ---------- Chester Bancorp, Inc. (Exact name of registrant as specified in its charter) ---------- Delaware 37-1359570 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1112 State Street, Chester, Illinois 62233 (Address of principal executive offices) (Zip Code) Registrant's telephone number, including area code: (618) 826-5038 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 outstanding shares of the registrant's Common Stock, par value $.01 per share, was 897,668 on August 5, 2002. ================================================================================ FORM 10-Q Index

PART I. FINANCIAL INFORMATION Item 1. Financial Statements 3 CHESTER BANCORP, INC. AND SUBSIDIARIES Consolidated Balance Sheets June 30, 2002 and December 31, 2001 (Unaudited)

See accompanying notes to unaudited consolidated financial statements. 4 CHESTER BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Income Three Months Ended June 30, 2002 and 2001 (Unaudited)

See accompanying notes to unaudited consolidated financial statements. 5 CHESTER BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Income Six Months Ended June 30, 2002 and 2001 (Unaudited)

See accompanying notes to unaudited consolidated financial statements. 6 CHESTER BANCORP, INC. AND SUBSIDIARIES Consolidated Statement of Stockholders' Equity Six Months Ended June 30, 2002 (Unaudited)

See accompanying notes to unaudited consolidated financial statements. 7 CHESTER BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Six months ended June 30, 2002 and 2001 (Unaudited)

8 CHESTER BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Cash Flows Six months ended June 30, 2002 and 2001 (Continued)

See accompanying notes to unaudited consolidated financial statements. 9 CHESTER BANCORP, INC. AND SUBSIDIARIES Consolidated Statements of Comprehensive Income (Unaudited)

See accompanying notes to unaudited consolidated financial statements. 10 CHESTER BANCORP, INC. AND SUBSIDIARIES Notes to Unaudited Consolidated Financial Statements (1) Basis of Presentation The accompanying unaudited consolidated financial statements were prepared in accordance with instructions for Form 10-Q and, therefore, do not include all information and notes necessary for a complete presentation of financial position, results of operations, changes in stockholders' equity, and cash flows in conformity with accounting principles generally accepted in the United States of America. However, all adjustments (consisting only of normal recurring accruals) which, in the opinion of management are necessary for a fair presentation of the unaudited consolidated financial statements, have been included in the consolidated financial statements as of June 30, 2002 and December 31, 2001 and for the three and six months ended June 30, 2002 and 2001. Operating results for the three months ended June 30, 2002 are not necessarily indicative of the results that may be expected for the year ending December 31, 2002. The Company has not included disclosures regarding specific segments since management makes operating decisions and assesses performance based on the Company as a whole. (2) Earnings Per Share (EPS) Basic EPS is computed by dividing income available to common stockholders by the weighted average number of common shares outstanding for the period. Diluted EPS reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock or resulted in the issuance of common stock that then shared in the earnings of the Company. The computation of EPS for the three and six months ended June 30, 2002 and 2001 follows:

11 (3) Employee Stock Ownership Plan (ESOP) During 1996, the Company established a tax-qualified ESOP. The plan covers substantially all employees who have attained the age of 21 and completed one year of service. In connection with the conversion to a stock corporation, the ESOP purchased 174,570 shares of the Company's common stock at a subscription price of $10.00 per share using funds loaned by the Company. All shares are held in a suspense account for allocation among the participants as the loan is repaid with level principal payments over 30 years. Shares released from the suspense account are allocated among the participants based upon their pro rata annual compensation. The purchases of the shares by the ESOP were recorded by the Company as unearned ESOP shares in a contra equity account. As ESOP shares are committed to be released to compensate employees, the contra equity account is reduced and the Company recognizes compensation expense equal to the fair value of the shares committed to be released. Dividends on allocated ESOP shares are recorded as a reduction of retained earnings; dividends on unallocated ESOP shares are recorded as a reduction of debt. Compensation expense related to the ESOP was $53,735 and $46,014 for the six months ended June 30, 2002 and 2001, respectively. The ESOP shares as of June 30, 2002 are as follows: Allocated shares 32,558 Committed to be released shares 2,748 Unreleased shares 139,264 ------------ Total ESOP shares 174,570 ============ Fair value of unreleased shares $ 2,924,544 ============

(4) Restricted Stock Awards On April 4, 1997, the Company adopted the 1997 Management Recognition and Development Plan. The plan provides that 82,921 common shares can be issued to directors and employees in key management positions to encourage such directors and key employees to remain with the Company. Interest in the plan for each participant vests in five equal installments beginning April 4, 1998. The adoption of the plan has been recorded in the consolidated financial statements through a $1,160,894 credit to additional paid-in capital with a corresponding charge to a contra equity account for restricted shares. The contra equity account is amortized to compensation expense over the vesting period. Compensation expense was $61,092 and $83,098 for the six months ended June 30, 2002 and 2001, respectively. 12 ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL The principal business of Chester Bancorp, Inc. and its subsidiaries (the Company) consists of attracting deposits from the general public and using these funds to originate mortgage loans secured by one-to four-family residences and to invest in securities of the U. S. government, mortgage-backed securities, and other securities. To a lesser extent, the Company engages in various forms of consumer lending. The Company's profitability depends primarily on its net interest income, which is the difference between the interest income it earns on its loans, mortgage-backed securities and investment portfolio and its cost of funds, which consists mainly of interest paid on deposits, and FHLB advances. The operations of the Company are significantly influenced by general economic conditions and related monetary and fiscal policies of financial institutions regulatory agencies. Deposit flows and the cost of funds are influenced by interest rates on competing investments and general market rates of interest. Lending activities are affected by the demand for financing real estate and other types of loans, which in turn is affected by the interest rates at which such financing may be offered and other factors affecting loan demand and the availability of funds. When used in this report the words or phrases "will likely result," "are expected to," "is anticipated," "estimate," "project," or similar expressions are intended to identify "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements are subject to certain risks and uncertainties, including, among other things, changes in economic conditions in the Company's market area, changes in policies by regulatory agencies, fluctuations in interest rates, demand for loans in the Company's market area and competition, that could cause actual results to differ materially from the historical earnings and those presently anticipated or projected. The Company wishes to caution readers not to place undue reliance on any such forward-looking statements, which speak only as of the date made. The Company wishes to advise readers that the factors listed above could affect the Company's financial performance and could cause the Company's actual results for future periods to differ materially from any opinions or statements expressed with respect to future periods in any current statements. The Company does not undertake, and specifically declines any obligation, to publicly release the results of any revisions which may be made to any forward-looking statements to reflect events or circumstances after the date of such statements or to reflect the occurrence of anticipated or unanticipated events. FINANCIAL CONDITION ASSETS. The Company's total assets decreased by $1.5 million, or 1.3%, to $110.3 million at June 30, 2002 from $111.8 million at December 31, 2001. The decrease in the Company's asset size was mainly attributable to a $2.1, or 2.3%, decrease in savings deposits. Loans receivable deceased $3.8 million, or 9.2%, to $37.3 million at June 30, 2002 from $41.1 million at December 31, 2001. The decrease in loans receivable resulted from a combined impact of decreased loan origination volume and an increase in principal repayments on loans receivable. During this period of record low interest rates and economic instability, management has decided to continue to focus on originating high quality loans. Management has also decided not to aggressively compete on rate terms with other lenders in the Banks' market area. As a result, the Company has experienced some constriction in the loan portfolio. Mortgage-backed securities at June 30, 2002 were $4.4 million compared to $7.1 million at December 31, 2001. Investment securities, including nonmarketable equity securities, increased $629,000, or 1.6%, to $40.4 million at June 30, 2002, from $39.8 million at December 31, 2001. As a function of 13 management's plan to re-align the mix of interest earning assets, proceeds from maturities, calls and sales of investment securities and mortgage-backed securities, along with principal repayments on loans and mortgage-backed securities, were re-invested in short-term, callable investment securities. Cash, interest-bearing deposits, certificates of deposits, and federal funds sold, on a combined basis, increased $4.2 million, or 20.1%, to $25.3 million at June 30, 2002 from $21.0 million at December 31, 2001. The overall increase in cash, cash equivalents and certificates of deposit was a direct result of the re-alignment of interest earning assets. In addition, excess deposits in interest bearing accounts and federal funds sold were invested in higher yielding certificates of deposit. LIABILITIES. Savings deposits decreased $2.1 million, or 2.3%, during the six months ended June 30, 2002. Borrowed money was $5.0 million at June 30, 2002 and December 31, 2001. Over the last several years, the Company has maintained a deposit relationship with Gilster-Mary Lee Corporation, (Gilster-Mary Lee), a food manufacturing and packaging company headquartered in Chester, Illinois. The Chairman of the Board of the Company is also the Executive Vice President, Treasurer and Secretary of Gilster-Mary Lee. That relationship has provided as much as $25 million in funds on deposit, typically with short terms. At June 30, 2002 and December 31, 2001, the balance of funds on deposit with the Company was $20.4 million, and $21.8 million, respectively. RESULTS OF OPERATIONS The Company's operating results depend primarily on its level of net interest income, which is the difference between the interest income earned on its interest-earning assets (loans, mortgage-backed securities, investment securities, certificates of deposit and interest-bearing deposits) and the interest expense paid on its interest-bearing liabilities (deposits and borrowings). Operating results are also significantly affected by provisions for loan losses, noninterest income, and noninterest expense. Each of these factors is significantly affected not only by the Company's policies, but, to varying degrees, by general economic and competitive conditions and by policies of federal regulatory authorities. NET INCOME. The Company's net income for the three and six months ended June 30, 2002 was $240,635 and $487,649, respectively, compared to $279,830 and $526,593 for the three and six months ended June 30, 2001, respectively. The $39,000 decrease in net income for the three and six months ended June 30, 2002, respectively, was the result of a decline in net interest income, positively offset by a decline in interest expense, a decrease in noninterest expense and a decrease in income tax expense. NET INTEREST INCOME. Net interest income totaled $823,000 for the three months ended June 30, 2002 compared to $865,000 for the three months ended June 30, 2001. The $42,000, or 4.8%, decrease in net interest income was the result of a decrease in the ratio of average interest-earning assets to average interest-bearing liabilities of 112.7% for the three months ended June 30, 2002 compared to 116.5% for the three months ended June 30, 2001. The decrease was positively offset by an increase in the Company's interest rate spread to 2.95% for the three months ended June 30, 2002 from 2.45% for the three months ended June 30, 2001. Net interest income totaled $1.6 million for the six months ended June 30, 2002 compared to $1.7 million for the six months ended June 30, 2001. The $99,000, or 5.7%, decrease in net interest income was the result of a decrease in the ratio of average interest-earning assets to average interest-bearing liabilities of 112.3% for the six months ended June 30, 2002 compared to 116.3% for the six months ended June 30, 2001. The decrease was positively offset by an increase in the Company's interest rate spread to 2.93% for the six months ended June 30, 2002 from 2.44% for the six months ended June 30, 2001. INTEREST INCOME. Interest income on loans receivable decreased $210,000, or 22.5%, for the three months ended June 30, 2002. The decrease in interest income on loans receivable was the result of a $8.2 million, or 17.9%, decrease in the average balance of loans receivable, coupled with a decline in the 14 average yield on loans receivable to 7.69% for the three months ended June 30, 2002 from 8.15% for the three months ended June 30, 2001. Interest income on loans receivable decreased $437,000, or 22.8%, for the six months ended June 30, 2002. The decrease in interest income on loans receivable was the result of a $7.9 million, or 17.1%, decrease in the average balance of loans receivable for the six months ended June 30, 2002. The average yield on loans receivable was 7.71% and 8.28% for the six months ended June 30, 2002 and June 30, 2001, respectively. Interest income on mortgage-backed securities decreased $148,000, or 69.6%, for the quarter and decreased $304,000, or 66.1%, for the six months ended June 30, 2002. The decrease in interest income on mortgage-backed securities for the three months ended June 30, 2002 was the result of a $9.1 million, or 65.3%, decrease in the average balance of mortgage-backed securities, combined with a 73 basis point decrease in the average yield on mortgage-backed securities. The decrease in interest income on mortgage-backed securities for the six months ended June 30, 2002 was the result of a $9.4, or 62.8%, decrease in the average balance of mortgage-backed securities, combined with a decrease in the average yield to 5.62% for the six months ended June 30, 2002 from 6.16% for the six months ended June 30, 2001. Management invested the funds received from the repayments of mortgage-backed securities into short-term, interest-bearing deposits. Interest earned on investment securities was $578,000 for the three months ended June 30, 2002, compared to $588,000 for the three months ended June 30, 2001. The $9,300, or 1.6% decrease in interest income on investment securities was the result of a decrease in the average yield on investment securities to 5.52% for the three months ended June 30, 2002 from 6.48% for the three months ended June 30, 2001, positively offset by an increase in the average balance of investment securities of $5.9 million, or 15.2% for the three months ended June 30, 2002. Interest earned on investment securities was $1.1 million for the six months ended June 30, 2002 compared to $1.2 million for the six months ended June 30, 2001. The $47,000, or 4.1% decrease on investment securities was the result of a 93 basis point decline in the average yield on investment securities, positively offset by a $4.5 million, or 11.9%, increase in the average balance of investment securities for the six months ended June 30, 2002. Interest income on interest-bearing deposits decreased $139,000, or 65.6%, during the three months ended June 30, 2002. The decrease primarily resulted from a decrease in the average yield on interest-bearing deposits to 1.56% for the three months ended June 30, 2002 from 4.17% for the three months ended June 30, 2001, combined with a $1.5 million, or 7.5%, decrease in the average balance of interest-bearing deposits. Interest income on interest-bearing deposits decreased $282,000, or 66.7%, during the six months ended June 30, 2002. The decrease was the result of a decrease in the average yield on interest-bearing deposits to 1.47% for the six months ended June 30, 2002 from 4.53% for the six months ended June 30, 2001. INTEREST EXPENSE. Interest expense on savings deposits decreased $464,000, or 45.5%, to $556,000 for the three months ended June 30, 2002 from $1.0 million for the three months ended June 30, 2001. The decrease in interest expense was the result of an $8.1 million, or 8.4%, decrease in the average balance of deposits, combined with a decrease in the average cost of deposits to 2.50% for the three months ended June 30, 2002 from 4.21% for the three months ended June 30, 2001. Interest expense on savings deposits decreased $981,000, or 46.1%, to $1.1 million for the six months ended June 30, 2002 from $2.1 million for the six months ended June 30, 2001. The decrease in interest expense on savings deposits was the result of a $7.7 million, or 8.0%, decrease in the average balance of deposits. The average cost of deposits decreased between the two periods with an average rate of 2.57% for 15 the six months ended June 30, 2002 compared to 4.39% for the six months ended June 30, 2001. Interest expense on borrowed money remained constant at $61,000 for the three months ended June 30, 2002 and 2001, respectively. The average balance on borrowed money was $5.0 million for both the three month periods ended June 30, 2002 and 2001. Interest expense on borrowed money increased $10,000, or 9.0%, to $121,000 for the six months ended June 30, 2002 from $111,000 for the six months ended June 30, 2001. The increase in interest expense on borrowed money was the result of a $414,000, or 9.0%, increase in the average balance of borrowed money. PROVISION FOR LOAN LOSSES. The allowance for loan losses is established through a provision for loan losses charged to expense based on management's evaluation of the risk inherent in its loan portfolio and the general economy. Such evaluation considers numerous factors including general economic conditions, loan portfolio composition, prior loss experience, the estimated fair value of the underlying collateral, and other factors that warrant recognition in providing for an adequate loan loss allowance. During the quarters ended June 30, 2002 and 2001, the provision for loan losses was zero as no significant problem loans were identified and the allowance for loan losses was deemed by management to be adequate. The Company's allowance for loan losses was $576,000, or 1.5%, of loans outstanding at June 30, 2002 compared to $591,000, or 1.4%, of loans outstanding at December 31, 2001. The Company's level of net loans charged-off during the six months ended June 30, 2002 was $14,000, which represents a minimal percentage of average loans outstanding. Based on current levels of the allowance for loan losses in relation to loans receivable and delinquent loans, management's continued effort to favorably resolve problem loan situations, and the low level of charge-offs in recent years, management believes the allowance is adequate at June 30, 2002. At June 30, 2002, loans 90 days or more delinquent totaled $35,000, or .09% of net loans receivable, compared to $129,000, or .31% of net loans receivable at December 31, 2001, and $256,000, or .56% of net loans receivable at June 30, 2001. The breakdown of general loss allowances and specific loss allowances is made for regulatory accounting purposes only. General loan loss allowances are added back to capital to the extent permitted in computing risk-based capital. Both general and specific loss allowances are charged to expense. The financial statements of the Company are prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) and, accordingly, provisions for loan losses are based on management's assessment of the factors set forth above. The Company regularly reviews its loan portfolio, including problem loans, to determine whether any loans are impaired, require classification and/or the establishment of appropriate reserves. Management believes it has established its existing allowance for loan losses in accordance with GAAP, however, future additions may be necessary if economic conditions or other circumstances differ substantially from the assumptions used in making the initial determination. NONINTEREST INCOME. Noninterest income was $62,000 for the three months ended June 30, 2002, compared to $98,000 for the three months ended June 30, 2001. The decrease in noninterest income for the three months ended June 30, 2002 was mainly attributable to a $28,000 decrease in other income. The Company did not realize any net gains during the three months ended June 30, 2002, compared to a realized net gain on the sale of available for sale mortgage-backed securities of $9,000 during the comparable three month period ending June 30, 2001. Noninterest income was $131,000 for the six months ended June 30, 2002, compared to $160,000 for the six months ended June 30, 2002. The decrease was attributable to a $29,000 decrease in other income, positively offset by an $8,000 increase in fee income. During the six months ended June 30, 2002, the Company realized $11,000 net gain on the sale of available for sale investment securities and mortgage-backed securities compared to a $19,000 net gain realized on the sale of investment securities and 16 mortgage-backed securities during the comparable six month period ended June 30, 2001. NONINTEREST EXPENSE. Noninterest expense decreased $19,000, or 3.2%, for the three months ended June 30, 2002. The decrease in noninterest expense for the three months ended June 30, 2002 resulted from a $12,000 decrease in compensation expense, a $5,000 decrease in occupancy expense and a $5,000 decrease in professional fees, partially offset by a $4,000 increase in other expense. Each of these fluctuations is the result of normal operating procedures. Noninterest expense decreased $21,000, or 1.8%, for the six months ended June 30, 2002. The decrease in noninterest expense for the six months ended June 30, 2002 resulted from a $14,000 decrease in compensation expense, a $6,000 decrease in occupancy expense and a $2,000 decrease in advertising expense, partially offset by a $2,000 increase in data processing expense and $2,000 increase in other expense. These fluctuations are the result of normal operating procedures. INCOME TAX EXPENSE. Income tax expense for the three and six months ended June 30, 2002 was $86,000 and $137,000 compared to $106,000 and $206,000 for the three and six months ended June 30, 2001. The Company's effective tax rate for the three and six months ended June 30, 2002 was 26.6% and 22.0%, respectively, compared to 27.5% and 28.1% for the three and six months ended June 30, 2001. The effective tax rate for each period was below the statutory rate of 34% due to the Company's investment in tax-exempt securities. The Company recorded an adjustment of $26,000 to income tax expense during the first quarter 2002. This adjustment was the result of a reevaluation of estimated tax expense in conjunction with the year-end tax return. Before the effect of this transaction, the effective tax rate for the three and six month period ending June 30, 2002 would have been 34.2% and 26.1%, respectively. LIQUIDITY AND CAPITAL RESOURCES The Company's primary sources of funds consist of deposits, federal funds purchased, FHLB advances, repayments and prepayments of loans and mortgage-backed securities, maturities of investments and interest-bearing deposits, and funds provided from operations. While scheduled repayments of loans and mortgage-backed securities and maturities of investment securities are predictable sources of funds, deposit flows and loan prepayments are greatly influenced by general interest rates, economic conditions and competition. The Company manages the pricing of its deposits to maintain a steady deposit base. The Company uses its liquidity resources principally to fund existing and future loan commitments, to fund maturing certificates of deposit and deposit withdrawals, to invest in other interest-bearing assets, to maintain liquidity, and to meet operating expenses. Management believes that loan repayments and other sources of funds will be adequate to meet the Company's liquidity needs for the remainder of 2002. A major portion of the Company's liquidity consists of cash and cash equivalents, which include investments in highly liquid, short-term deposits. The level of these assets is dependent on the Company's operating, investing, lending and financing activities during any given period. At June 30, 2002, cash and cash equivalents, including certificates of deposits, totaled $25.3 million. The primary investing activities of the Company include origination of loans and purchase of mortgage-backed securities and investment securities. During the six months ended June 30, 2002, purchases of investment securities and mortgaged-backed securities totaled $18.7 million while loan originations totaled $2.2 million. These investments were funded primarily from loan and mortgage-backed security repayments of $8.6 million and investment securities and sales, calls and maturities of $20.6 million. Liquidity management is both a daily and long-term function of business management. If the Company requires funds beyond its ability to generate them internally, the Company believes that it could borrow by purchasing federal funds or borrow funds from the Federal Home Loan Bank (FHLB). At June 30, 2002, the Company had $5.0 million in outstanding advances from the FHLB. 17 At June 30, 2002, the Company exceeded all of its regulatory capital requirements. The Company and the Company's subsidiary banks actual and required capital amounts and ratios as of June 30, 2002 are as follows:

IMPACT OF INFLATION AND CHANGING PRICES The consolidated financial statements and related data presented herein have been prepared in accordance with accounting principles generally accepted in the United States of America, which require the measurement of financial position and results of operations in terms of historical dollars without considering changes in the relative purchasing power of money over time because of inflation. Unlike most industrial companies, virtually all of the assets and liabilities of the Company are monetary in nature. As a result, interest rates have a more significant impact on the Company's performance than the effects of general levels of inflation. Interest rates do not necessarily move in the same direction or in the same magnitude as the prices of goods and services. 18 NONPERFORMING ASSETS The following table sets forth information with respect to the Company's nonperforming assets at the dates indicated.

(1) Tax exempt state and municipal securities are presented on a tax equivalent basis. 20

(1) Tax exempt state and municipal securities are presented on a tax equivalent basis. 21 ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS There has been no material change to the market risk position of the Company from the end of the last fiscal year on December 31, 2001. 22 PART II. OTHER INFORMATION Item 1. Legal Proceedings. Neither the Company nor the Banks are a party to any material legal proceedings at this time. From time to time, the Banks are involved in various claims and legal actions arising in the ordinary course of business. Item 2. Changes in Securities. None Item 3. Defaults upon Senior Securities. None Item 4. Submission of Matters to a Vote of Security Holders. None Item 5. Other Information. None Item 6. Exhibits and Reports on Form 8-K. A. Exhibits

B. Reports on Form 8-K None 23 SIGNATURE Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report on Form 10-Q to be signed on its behalf by the undersigned, thereunto duly authorized. Chester Bancorp, Inc. By: /s/ Michael W. Welge ---------------------------------------- Michael W. Welge Chairman of the Board, President and Chief Financial Officer (Duly Authorized Officer) Dated: August 9, 2002 24

CHESTER BANCORP INC 10-Q