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 quarterly period ended September 30, 1998 OR TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 0-18782 ES&L BANCORP, INC. (Exact name of registrant as specified in its charter) Delaware 16-1387158 (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 300 W. Water St., Elmira, New York 14901 (Address of principal executive offices) (Zip Code) Registrant's telephone no., including area code: (607) 733-5533 Former name, former address and former fiscal year, if changed since last report. Indicate by check X 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 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 APPLICABLE ONLY TO CORPORATE ISSUERS: Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. 831,874 ES&L BANCORP, INC. AND SUBSIDIARIES September 30, 1998 Index Page Part I - Financial Information Item 1 - Financial Statements: Consolidated Statements of Financial 1 Condition as of September 30, 1998 (Unaudited) and June 30, 1998 Consolidated Statements of Income 2 (Unaudited) for the three months ended September 30, 1998 and 1997 Consolidated Statements of Cash Flows 3 (Unaudited) for the three months ended September 30, 1998 and 1997 Notes to Consolidated Financial Statements Item 2 - Management's Discussion and Analysis of Financial Condition and Results of Operations Year 2000 Information Non-Performing Loans at Sept. 30, 1998 and June 30, 1998 Risk-Based Capital Information at Sept. 30, 1998 and June 30, 1998 Part II - Other Information Signatures 16 E S & L BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION SEPT. 30, JUNE 30, 1998 1998 (Unaudited) (1) ASSETS -------------------------- - ------ Cash and Cash Equivalents $1,621,739 $7,367,355 Investment Securities Held for Sale $72,151 $81,915 Investment Securities, Approximate market value of	 $23,655 $1,025,244 $23,620 & $1,026,199 at 09/30/98 and 06/30/98 respectively. Mortgage-Backed Securities Held for Sale $1,129,005 $1,212,122 Mortgage-Backed Securities, Approximate market value of $135,631 $136,478 $135,631 at 09/30/98 and $136,478 at 06/30/98, respectively Mortgage Loans Held For Sale $6,047,395 $8,231,474 Loans Recievable, Net $125,693,064 $126,181,335 Federal Home Loan Bank Stock, at cost $1,313,100 $1,313,100 Foreclosed Real Estate-Real Estate Owned $47,296 $485,226 Investment In Joint Venture: Acquisition, Development & Construction Project $539,775 $765,952 Mortgage Banking Partnership $193,046 $197,646 Property and Equipment, Net $2,864,041 $2,901,870 Accured Interest Recievable $743,885 $775,316 Other Assets $1,590,478 $1,485,171 -------------------------- Total Assets $142,014,261 $152,160,204 ========================== LIABILITIES & STOCKHOLDERS' EQUITY - ---------------------------------- Liabilities: Deposits $109,409,905 $112,179,831 Advances - Federal Home Loan Bank of N. Y. $13,744,615 $21,897,091 Other Borrowings $365,224 $0 Accrued Interest Payable: Deposits $6,055 $7,607 Borrowings $81,778 $84,614 Advances From Borrowers For Taxes and Insurance $2,923,544 $2,982,958 Other Liabilities $710,616 $507,433 -------------------------- Total Liabilities $127,241,737 $137,659,534 -------------------------- Stockholders' Equity: Serial Preferred Stock, 500,000 Shares Authorized; None Issued 0 0 Common Stock, $.01 Par Value; 3,000,000 Shares Authorized, 855,967 and 855,967 Shares Issued $8,628 $8,560 Additional Paid-In-Capital $2,671,155 $2,599,654 Retained Earnings - Substantially Restricted $12,556,064 $12,219,481 Net Unrealized Gain/(Loss) on Invsetments Held for Sale $57,293 $57,069 Treasury Stock (22,194 & 8,933 shared, respectively), ($520,616) ($384,093) at cost -------------------------- Total Stockholders' Equity $14,772,524 $14,500,670 Total Liabilities & Stockholders' Equity $142,014,261 $152,160,204 ========================== Shares Outstanding 832,717 831,773 ========================== E S & L BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME THREE MONTHS ENDING Sept. 30 Sept. 30 1998 1997 (Unaudited) (Unaudited) Interest Income: Loans $2,842,265 $3,016,408 Investment Securities $24,795 $89,987 Mortgage-Backed Securities $23,294 $29,086 Interest-Earning Deposits & 	Other	 	 $18,019 $3,243 -------------------------- Total Interest Income $2,908,373 $3,138,724 Interest Expense: Deposits $1,335,136 $1,396,492 Borrowings $204,254 $326,478 -------------------------- Total Interest Expense $1,539,390 $1,722,970 Net Interest Income $1,368,983 $1,415,754 Provision For Loan Losses $0 $75,000 -------------------------- Net Interest Income After Provision for Losses $1,368,983 $1,340,754 Other Income: Service Fees & Other 	Charges		 $42,819 $43,319 Gain on the Sale of 	Investments	 	 $0 $846 Income From Loan Servicing $45,054 $67,768 Other Operating Income $136,413 $67,123 Income from Joint Venture $10,500 $3,500 Gain on Sale of Mortgages $138,157 $102,980 -------------------------- Total Other Income	 $372,943 $285,536 Other Expenses: Employee Compensation & 	Benefits	 $505,187 $476,901 Office Occupancy & Equipment $131,651 $119,195 FDIC Premiums $28,686 $27,976 Other $194,823 $183,555 -------------------------- Total Other Expense $860,347 $807,627 -------------------------- Income Before Taxes $881,579 $818,663 Income Taxes $335,653 $300,168 -------------------------- NET INCOME $545,926 $518,495 ========================== Earnings Per Share: $1 $1 ========================== Dividend Per Common Share $0 $1 ========================== Avg. Common Shares Outstanding 833,866 845,039 ========================== E S & L BANCORP, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS THREE MONTHS ENDED SEPTEMBER 30, 1998 1997 (Unaudited) (Unaudited) CASH FLOWS FROM OPERATION ACTIVITIES Net Income $545,926 $518,495 Adjustments To Reconcile Net Income To Net Cash Provided from Operating Activities: Depreciation $37,829 $42,371 Provision For Loan Losses $0 $75,000 Net Amortization of Premiums & Discounts	 	 	 $94,738 $37,057		 Deferred Loan Origination Fees ($9,349) ($5,771) (Income)/Loss from ADC Joint Ventur ($10,500) ($3,500) Changes in Certain Assets and Liabilities: Mortgage Loans Held For Sale $2,184,079 ($1,208,789) Foreclosed Real Estate $437,930 ($68,972) Accured Interest Receivable $31,431 $13,572 Other Assets ($105,307) ($194,685) Accrued Interest Payable ($4,388) $15,435 Advances From Borrowers For Taxes and Insurance ($59,414) $34,908 $365,224 $103,492 Other Liabilities $203,183 $207,884 -------------------------- Net Cash (Used For) Provided From Operating Activities $3,711,382 ($433,503) CASH FLOWS FROM INVESTMENT ACTIVITIES: Net Other Decrease In Loans Receivable $471,137 ($1,807,377) Investment In Joint Ventures $230,777 $8,626 Proceeds from Maturities of Investments $1,001,589 $999,729 Change in Mark to Market Adjustment Items ($373) ($10,577) Principal Reductions On MBS $83,964 $33,358 Purchases Of Property & Equipment, Net $0 ($2,950) -------------------------- Net Cash Provided From (Used For) Investing Activities $1,787,094 ($779,191) CASH FLOWS FROM FINANCING ACTIVITIES: Interest Credited To Dep. Accts., Excl. Escrow Accounts $1,331,963 $1,394,685 Net Other(Decrease)Increase in Deposits ($4,101,889) ($1,631,188) Payments On Advances From FHLB ($8,152,476)($21,452,326) Proceeds From Advances From FHLB $0 $24,100,000 Proceeds From Exercise of Stock Options $24,176 $0 Purchase of Treasury Stock ($136,523) ($217,720) Dividends Paid on Common Stock ($209,343) ($990,927) -------------------------- Net Cash (Used For) Provided from Financing			 ($11,244,092) $1,202,524 Net Increase (Decrease) In Cash Equivalents 				 ($5,745,616) ($10,170) Cash & Cash Equivalents At Beg. Of Per. $7,367,355 $722,932 -------------------------- Cash & Cash Equivalents At End of Per. $1,621,739 $712,762 ========================== ES&L BANCORP, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Basis of Presentation: The consolidated financial statements include the accounts of the Corporation and its wholly-owned subsidiary, Elmira Savings and Loan, F.A. (the Bank), as well as the Bank's wholly owned subsidiaries, Brilie Corporation (d/b/a ES&L Financial Services) and ES&L Mortgage Corporation (d/b/a Cayuga Mortgage Company). All significant inter-company accounts have been eliminated. The consolidated financial statements for the three months ending September 30, 1998 and 1997 are unaudited and do not include information or footnotes necessary for a complete presentation of financial condition and results of operations and changes in cash flows in conformity with generally accepted accounting principles, but reflect, in the opinion of management, all adjustments, consisting of normal recurring accruals, necessary to present fairly these consolidated financial statements. The results for the three months ending September 30, 1998 are not necessarily indicative of the results to be expected for the entire fiscal year ending June 30, 1999. 2. Net Income Per Common Share: Net income per common share is based on the weighted average total shares outstanding during the respective periods. Weighted average total shares outstanding for the periods included herein are as follows: Sept 30, 1998 Sept. 30, 1997 Three Months Ended 833,866 845,039 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS GENERAL: ES&L Bancorp, Inc., (the "Corporation") is a Delaware Corporation whose primary asset is the stock of Elmira Savings & Loan, F.A. (the "Bank"). The Bank, a federally chartered savings association, founded in 1888, operates through one office located in Elmira, New York. The Corporation, through the Bank, is primarily engaged in the business of accepting deposits from the general public and originating loans secured by residential real estate. The Bank also engages in commercial real estate lending in its primary market area and, to a lesser extent, consumer lending and invests in government, federal agency obligations, and high grade corporate debt securities. The Bank's operations include two wholly-owned subsidiaries, Brilie Corporation (d/b/a ES&L Financial Services) and ES&L Mortgage Corporation (d/b/a Cayuga Mortgage Company). Brilie Corporation is a provider of nontraditional investment and insurance products to the Bank's customers and the general public. The investment products, which include life insurance and annuity contracts, health insurance and mutual funds, are offered under an agency relationship with major insurance companies and third party mutual funds providers. ES&L Mortgage Corporation is engaged in mortgage banking activities through the origination of mortgage loans for sale to investors, one of whom is the Bank. MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL CONDITION AND RESULTS OF OPERATION FINANCIAL CONDITION: At September 30, 1998 total assets of the Corporation were $142,014,261, a reduction of $10,145,943, or 6.67% from the July 1, 1998 start of the 1999 fiscal year when total assets equaled $152,160,204. The majority of the decline is related to cash and cash equivalents, which has decreased $5,745,616, and the Corporation's net loan portfolio, including mortgage loans held for sale, which has decreased by $2,672,350. The decrease is a result of the continuation of a relatively flat interest rate yield curve, during which long term interest rates have remained low for an extended period of time and has prompted an increased in mortgage origination, and refinance activity, for the Corporation. Unlike many institutions, the Corporation sells substantially all of its fixed rate mortgage originations in the national secondary mortgage market while keeping adjustable rate mortgages and short term consumer loans in its loan portfolio. Given the current interest rate environment the Corporation has experienced a reduction in both total assets and its' loan portfolio. The Corporation believes that utilizing the national secondary market is an appropriate tool for managing interest rate risk, and that the short term benefits of assuming long term interest rate risk does not out weigh the potential negative long term implications. As a result, the Corporation's loan portfolio has decreased while at the same time it's portfolio of loans serviced for others increased by $9.1 million, during the first quarter of the 1999 fiscal year, and totaled $160.2 million at September 30, 1998. The funds generated by the reduction in the Corporation's total assets have been used to reduce borrowings, which are primarily represented by Advances from the Federal Home Loan Bank (FHLB Advances), and to fund deposits outflows as certain depositors search for higher yielding investment products outside of traditional bank insured deposit accounts. Since the beginning of the 1999 fiscal year FHLB Advances have been reduced by $8,152,476, or 37.23%, to $13,744,615, while deposits have decreased by $2,769,926, or 2.47%, to $109,409,905. The Corporation's stockholders' equity increased by $271,854, or 1.87%, to $14,772,524 at September 30, 1998, largely as a result of net income earned during the recently concluded quarter. RESULTS OF OPERATION: QUARTER ENDING SEPTEMBER 30, 1998 AND SEPTEMBER 30, 1997: Net interest income for the quarter ending September 30, 1998 was $1,368,983, $46,771, or 3.30% less than net interest income of $1,415,754 recorded during the quarter ending September 30, 1997. As was previously mentioned, long term interest rates have fallen substantially and at the end of the quarter were not significantly greater than short term rates, thus the existence of a relatively flat interest rate yield curved has contributed to shrinking net interest margins. Interest income earned by the Corporation decreased by $230,351, or 7.34% from $3,138,724 for the quarter ending September 30, 1997 to $2,908,373 for the quarter ending September 30, 1998. The majority of the interest income earned by the Corporation is generated from its' loan portfolio. A combination of a decreased average balance and a reduced average yield prompted a $174,143, or 5.77% decrease in interest income recorded from the loan portfolio. Loan interest income totaled $2,842,265 and $3,016,408 for the quarters ending September 30, 1998 and 1997, respectively. As has been previously mentioned, the current low interest rate environment has prompted a flurry of mortgage refinance activity and in the case of the Corporation it has represented the shifting of adjustable rate loans, and in some cases short term consumer debt, into loans serviced by the Corporation for national secondary mortgage market investors. For the quarter ending September 30, 1998 the average balance of loans outstanding equaled $134.8 million, yielding 8.43%, compared to average loans totaling $139.9 million, yielding 8.63% for the quarter ending September 30, 1997. A reduction in the average balance and average yield of the Corporation's investment security portfolio has prompted a $65,192 decrease in interest earned from this asset. For the quarter ending September 30, 1998 interest earned on investments totaled $24,795, compared to $89,987 earned during the comparable 1997 quarter. The majority of the volume decrease is related to the fact that, during the previous fiscal year, several individual investments within the portfolio contained callable features and were redeemed by their issuers. The Corporation reported earnings totaling $18,019 from interest earning deposits during the September 1998 quarter, an increase of $14,776 over the September 1997 quarter. As a result of the restructuring and reduction of total assets during the 1998 period, the Corporation has recognized an increase in cash and cash equivalents and has invested these funds on a short term basis, typically through federal funds sold, in an attempt to enhance interest income. Total interest expense paid by the Corporation totaled $1,539,390 for the quarter ending September 30, 1998, a decrease of $183,580, or 10.65%, compared to total interest expense of $1,722,970 for the quarter ending September 30, 1997. The majority of the decrease is the result of a reduction in interest expense paid on the Corporation's FHLB Advances, which decreased by $122,224, or 37.44% to $204,254 for the recently concluded quarter. The decline is attributable to a reduction in the average balance and cost of the Advances. For the three months ending September 30, 1998 the average balance of FHLB Advances was $16.0 million, costing 5.10%, compared to $22.2 million, costing 5.89% for the comparable 1997 quarter. Additionally, a $1.4 million reduction in the average balance and a 15 basis point reduction in the average cost of deposits prompted a $61,356, or 4.39%, decrease in interest paid to depositors. For the quarter ending September 30, 1998 total deposit interest expense equaled $1,335,136, compared to $1,396,492 for the comparable 1997 period. The average balance of deposits was $113.9 million, costing 4.69%, and $115.3 million, costing 4.84%, for the quarters ending September 30, 1998 and 1997, respectively. Provisions for loan losses are charged to earnings to bring the total allowance to a level considered appropriate based on historical experience, the volume and type of lending conducted by the Corporation, industry standards, the status of past due principal and interest payments, general economic conditions - particularly as they relate to the Corporation's market area - and other factors related to the collectibility of the Corporation's loan portfolio. During the quarter ending September 30, 1997 the Corporation's provision for loan loss totaled $75,000. No provision was charged to earnings during the quarter ending September 30, 1998. At September 30, 1998 the Corporation's total allowance for loan loss was $1,476,797, compared to $1,426,003 at September 30, 1997. Total other income earned by the Corporation equaled $372,943 for the quarter ending September 30, 1998, an increase of $87,407, or 30.61%, over the comparable quarter. The majority of the other income earned by the Corporation was from the gain on the sale of mortgages. As was previous mentioned, the Corporation sells substantially all of its' fixed rate mortgages in the national secondary mortgage market, and the low interest rate environment has increased the demand for fixed rate mortgages. During the quarter ending September 30, 1998 the Corporation recorded gains of $138,157 from the sale of mortgages, an increase of $35,177, or 34.16%, compared to $102,980 recorded during the quarter ending September 30, 1997. The organization also recognized a substantial increase in other operating income during the September 1998 quarter, which totaled $136,413, compared to $67,123 during the September 1997 quarter. Of the $69,290 increase, approximately $51,000 is directly related to gains recorded on the sale of foreclosed real estate. No similar gains were generated during the comparable 1997 quarter. During the September 1998 quarter, the Corporation's financial services subsidiary recorded a $ 23,000 increase in commission revenue,from the sale of non traditional, uninsured, investment products. Despite a significant increase in the balance of mortgages serviced by the Corporation in the national secondary mortgage market, income from loan servicing decreased by $22,714, or 33.52%, to $45,054 for the quarter ending September 30, 1998. The actual income generated from servicing loans totaled $ 124,513, an increase of $ 27,904, but was offset by the amortization of the value of mortgage servicing as required by Financial Accounting Standards No. 122 (SFAS 122) entitled "Accounting for Mortgage Servicing Rights," which has increased from $ 28,841, for the quarter ending September 30, 1997, to $ 79,459 for the quarter ending September 30, 1998. Total other expenses increased by $52,720, or 6.53%, to $860,347 for the quarter ending September 30, 1998, compared to $807,627 for the quarter ending September 30, 1997. Employee compensation and benefit expenses equaled $505,187 during the 1998 quarter, an increase of $28,286, or 5.93%, compared to the September 1997 quarter. The increase is directly related to annual salary adjustments for employee wages and directors' fees, as well as an increase in the cost of some employee benefits. Office occupancy and equipment expense increased by $12,456, or 10.45%, to $131,651 for the quarter ending September 30, 1998. During the 1997 quarter expenses from service providers were lower as a result of certain offsets which did not occur during the 1998 period. Other operating expenses equaled $194,823 for the three months ending September 30, 1998, an increase of $11,268, or 6.14%, compared to $183,555 for the comparable quarter. The increase is largely attributable to the expenses related to the increase in mortgage originations, as well as from the utilization of outside service providers. The Corporation's income tax provision totaled $335,653 for the quarter ending September 30, 1998 and $300,168 for the quarter ending September 30, 1997. The increase is directly related to the increase in pre-tax net income. YEAR 2000 CONSIDERATIONS: A great deal of information has been disseminated about the global computer crash that may occur in the year 2000. Many computer programs that can only distinguish the final two digits of the year entered (a common programming practice in earlier years) are expected to read entries for the year 2000 as 1900 and compute payment, interest or delinquency based on the wrong date or are expected to be unable to compute payment, interest or delinquency. Rapid and accurate data processing is essential to the operations of the Corporation. During 1997, the Corporation developed a Year 2000 preparedness plan which was submitted and approved by the Corporation's Board of Directors on July 10, 1997 and was subsequently submitted to the Office of Thrift Supervision (OTS). The plan established procedures to contact and monitor the Year 2000 preparedness of all third party servicers, including NCR Corporation - the company responsible for the Bank's customer account processing. NCR has a plan in place which has been reviewed by external audit organizations, as well as Federal Bank examiners. NCR is currently in the process of testing their plan. All other service providers have been contacted and have responded identifying the plan they have developed and have provided testing dates to verify the resolution of any potential problems. The Corporation has a plan in place to complete testing of all critical internal systems and to date all milestones in the plan have been successfully met. Additionally, the Corporation has surveyed its commercial loan customer base asking for information on how those companies are addressing any potential problems. At the present time, the Corporation anticipates no significant financial expenditure will be necessary with regard to year 2000 compliance. ELMIRA SAVINGS & LOAN, F.A. NON-PERFORMING LOANS Loans are reviewed on a monthly basis and are placed on non-accrual status when the opinion of management, the collection of additional interest is doubtful. Residential and commercial mortgage loans are generally placed on non-accrual when either principal or interest is more than 90 days past due. Interest accrued and unpaid at the time a loan is placed on non-accrual status is charged again interest income. Subsequent payments are either applied to the outstanding principal balance or recorded as interest income, depending on the assessment ultimate collectibility of the loan. Consumer loans are generally charged off or before the loan becomes 120 days delinquent, although collection efforts continue. The following table sets forth information with respect to the Association's non-performing assets at September 30, 1998 and June 30, 1998, respectively: 9-30-98 06-30-98 Loans accounted for on a non-accrual basis: Real Estate: Residential $ 130,312.57 $ 183,402.11 Commercial 341,955.13 29,393.54 Commercial/Line of Credit 88,474.93 50,824.75 Consumer/Home Equity 33,103.43 32,306.68 Commercial(Non-Mortgage) 72,157.30 0.00 Education 0.00 0.00 Consumer 17,059.74 17,059.74 Other 0.00 0.00 Total $ 683,063.10 $ 312,986.82 Accruing loans which are contractually past due 90 days or more: Real Estate: Residential $ 124,949.06 $ 0.00 Commercial 104,989.61 0.00 Commercial/Line of Credit 24,638.45 0.00 Consumer/Home Equity 0.00 0.00 Commercial(Non-Mortgage) 110,900.00 0.00 Education 0.00 0.00 Consumer 0.00 0.00 Other 0.00 0.00 Total $ 365,477.12 $ 0.00 Total of non-accrual & 90 days past due loans $1,048,540.22 $ 312,986.82 Percentage of total loans 0.80% .23% Other non-performing assets $ 47,295.77 $ 485,226.45 ELMIRA SAVINGS & LOAN, F.A. RISK BASED CAPITAL CALCULATION The table below presents the Association's capital position relative to its various minimum statutory and regulatory requirements at Septyember 30, 1998 and June 30, 1998 respectively: 09-30-98 06-30-98 PERCENT PERCENT OF OF AMOUNT ASSETS (1) AMOUNT ASSETS (1) Tangible Capital 14,064,654.39 9.93% 13,539,631.76 8.94% Tangible Capital Requirement 2,123,938.75 1.50% 2,272,853.87 1.50% Excess 11,940,715.64 8.43% 11,266,777.89 7.44% Core Capital 14,064,654.39 9.93% 13,539,631.76 8.94% Core Capital Requirement 4,247,877.52 3.00% 4,545,707.74 3.00% Excess 9,816,776.87 6.93% 8,993,924.02 5.94% Core and Supplementary Capital 15,290,881.38 15.62% 14,805,014.30 14.65% Current Risk-Based Capital Requirement. 7.833,247.15 8.00% 8,087,251.21 8.00% Excess 7,457,634.23 7.62% 6,717,763.09 6.65% <FN> (1) Based upon tangible assets for purposes of the tangible capital and core capital requirements and risk-weighted assets for purpose of the risk-based capital requirement. 03-31-98 06-30-97 Tangible Assets - 148,809,169.68 149,634,675.66 Risk Weighted Assets - 101,218,895.14 98,842,904.78 ES&L BANCORP, INC. PART II OTHER INFORMATION Item 1 - Legal Proceedings Not Applicable 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 On October 20, 1998, the Board of Directors of ES&L Bancorp, Inc. declared a cash dividend of $0.25 per share. The total of dividends to be paid will be $207,969. The dividend will be paid on November 27, 1998 to stockholders of record on November 13, 1998. Item 6 - Exhibits and Reports on Form 8-K Not Applicable SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the egistrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. ES&L BANCORP, INC. WILLIAM A. McKENZIE President and Chief Executive Officer (Duly Authorized Officer) J. MICHAEL ERVIN Sr. Vice President and Chief Financial Officer (Principal Financial Officer) Date: November 16, 1998