<PAGE>
<PAGE>
FORM 10-QSB
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
Quarterly Report under Section 13 or 15 (d)
of the Securities and Exchange Act of 1934
For Quarter Ended September 30, 1997
Commission File Number: 0-28442
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Heartland Bancshares, Inc.
-------------------------------------------------------
(Exact name of registrant as specified in its charter)
Illinois 37-1356594
- ------------------------ ---------------------
(State of incorporation) (I.R.S. Employer
Identification Number)
318 South Park Avenue, Herrin, Illinois 62948-3604
- --------------------------------------- ------------
(Address of principal executive officer) (Zip Code)
Issuer's telephone number, including area code: (618) 942-7373
--------------
Check whether the issuer (1) filed all reports required to
be filed by Section 13 or 15(d) of the Exchange Act 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 ninety days:
Yes X No
As of November 8, 1997, there were 876,875 shares of the
registrant's Common Stock, par value $0.01 per share, issued and
outstanding.
Transitional small business disclosure format (check one):
Yes No X
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<PAGE>
<PAGE>
PART I FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
HEARTLAND BANCSHARES, INC.
--------------------------
AND SUBSIDIARY
--------------
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
----------------------------------------------
(IN THOUSANDS)
-------------
<TABLE>
<CAPTION>
September 30, December 31,
1997 1996
---------- ------------
(Unaudited)
<S> <C> <C>
Cash and cash equivalents
Interest-bearing $ 1,120 $ 658
Noninterest-bearing 1,678 1,214
Certificates of deposit 194 293
Investment securities available-for-sale
at estimated market value 1,710 2,108
Investment securities held-to-maturity 6,501 9,030
Mortgage-backed and related securities
available-for-sale at estimated market value 1,328 2,814
Mortgage-backed and related securities
held-to-maturity 5,979 6,663
Loans receivable, net 46,104 41,466
Investments required by law 577 489
Property, equipment, and property held
for investment, net 476 479
Accrued interest receivable 343 316
Prepaid expenses and other assets 44 56
Prepaid income taxes - 73
Foreclosed real estate 134 133
Deferred tax asset 105 64
-------- --------
TOTAL ASSETS $ 66,293 $ 65,856
- ------------ ======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
------------------------------------
Liabilities
Deposits $ 52,047 $ 52,832
Advances from Federal Home Loan Bank 1,750 -
Accrued interest payable 65 49
Accrued income taxes 51 -
Advances from borrowers for taxes
and insurance 162 252
Other liabilities 124 107
-------- --------
Total Liabilities $ 54,199 $ 53,240
----------------- -------- --------
Commitments and Contingencies
- -----------------------------
Stockholders' Equity
Preferred stock, 1,000,000 shares
authorized, - 0 - issued $ - $ -
Common stock, $.01 par value per share:
4,000,000 shares authorized; 876,875
shares issued and outstanding at
September 30, 1997 and December 31, 1996 9 9
Additional paid-in capital 8,181 8,153
Unearned ESOP shares (580) (632)
Management recognition plan shares (511) -
Retained earnings - substantially restricted 5,000 5,101
Unrealized gain (loss) on securities
available-for-sale, net of tax (5) (15)
-------- --------
Total Stockholders' Equity $ 12,094 $ 12,616
-------- --------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 66,293 $ 65,856
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.<PAGE>
<PAGE>
HEARTLAND BANCSHARES, INC.
AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
(IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30, September 30,
------------------ -----------------
1997 1996 1997 1996
------ ------- ------- ------
<S> <C> <C> <C> <C>
Interest Income
- ---------------
Interest on first mortgage loans $ 835 $ 713 $2,454 $2,094
Interest on other loans 48 30 125 92
Interest on investments, securities,
and deposits with banks 152 223 510 661
Interest on mortgage backed securities 132 155 423 432
------ ------ ------ ------
Total Interest Income $1,167 $1,121 $3,512 $3,279
Interest Expense
- ----------------
Interest on deposits $ 641 $ 669 $1,923 $2,061
Interest on borrowings 23 - 56 -
------ ------ ------ ------
Total Interest Expense $ 664 $ 669 $1,979 $2,061
------ ------ ------ ------
Net Interest Income $ 503 $ 452 $1,533 $1,218
Provision for Loan Losses 60 - 70 -
------ ------ ------ ------
Net Interest Income After Provision
for Loan Losses $ 443 $ 452 $1,463 $1,218
------ ------ ------ ------
Non-Interest Income
- -------------------
Initial service charges and other
loan fees $ 13 $ 19 $ 38 $ 57
Gain on sale of investments 7 - 11 13
Gain on sale of other real estate - 2 12 2
Other 28 38 90 112
------ ------ ------ ------
Total Non-Interest Income $ 48 $ 59 $ 151 $ 184
------ ------ ------ ------
Non-Interest Expense
- --------------------
Compensation to directors, officers,
and employees $ 187 $ 162 $ 536 $ 403
Pension expense and other employee
benefits 36 61 130 94
Legal and professional service 44 18 202 30
Office properties and equipment
expense including depreciation 32 30 96 82
Advertising 11 11 35 29
Federal insurance premiums 13 33 30 96
Stationery, postage, and office supplies 13 19 53 43
Checking account expense 37 39 108 113
Service bureau expense 25 17 67 53
Other 54 43 163 119
Loss on sale of investments - - - 3
Loss on sale of other real estate 1 - 1 -
Loss on sale of property held for
investment - - - 6
SAIF special assessment - 351 - 351
------ ------ ------ ------
Total Non-Interest Expense $ 453 $ 784 $1,421 $1,422
------ ------ ------ ------
Income Before Income Taxes $ 38 $ (273) $ 193 $ (20)
------ ------ ------ ------
Income Tax Expense 8 (568) 50 (479)
------ ------ ------ ------
Net Income (Loss) $ 30 $ 295 $ 143 $ 459
====== ====== ====== ======
Earnings per Share - Primary $ .04 $ .36 $ .17 $ .36
====== ====== ====== ======
- Fully Diluted $ .04 $ .36 $ .17 $ .36
====== ====== ====== ======
</TABLE>
See accompanying notes to consolidated financial statements.<PAGE>
<PAGE>
HEARTLAND BANCSHARES, INC.
--------------------------
AND SUBSIDIARY
--------------
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
-----------------------------------------------
(IN THOUSANDS)
-------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
Net
Unrealized
Management Gain (Loss)
Additional Unearned Recognition on Securities
Common Paid-in ESOP Plan Retained Available
Stock Capital Shares Shares Earnings for Sale Total
------ ---------- -------- -------- --------- ---------- -----
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at December 31, 1996 $ 9 $ 8,153 $ (632) $ - $5,101 $(15) $12,616
- ---------------------------
Net income - - - - 143 - 143
Cash dividends paid - - - - (244) - (244)
Purchase of shares for management
recognition plan - - - (552) - - (552)
Amortization of ESOP expense - 28 52 - - - 80
Amortization of management
recognition plan expense - - - 41 - - 41
Change in net unrealized gain
(loss) on securities available
for sale - - - - - (10) (10)
----- ------- ----- ----- ------ ---- -------
Balance at September 30, 1997 $ 9 $ 8,181 $(580) $(511) $5,000 $ (5) $12,094
- ----------------------------- ===== ======= ===== ===== ====== ==== =======
</TABLE>
See accompanying notes to consolidated financial statements.
<PAGE>
<PAGE>
HEARTLAND BANCSHARES, INC. AND SUBSIDIARY
-----------------------------------------
CONSOLIDATED STATEMENTS OF CASH FLOWS
-------------------------------------
(IN THOUSANDS)
--------------
(UNAUDITED)
-----------
<TABLE>
<CAPTION>
Nine Months Ended
---------------------
September 30,
1997 1996
-------- --------
<S> <C> <C>
Cash Flows From Operating Activities
- ------------------------------------
Net income $ 143 $ 459
------- -------
Adjustments to reconcile net income to net cash
provided (used) by operating activities
Depreciation $ 40 $ 37
Discount accretion/premium amortization-securities (net) (2) 7
Amortization of deferred loan origination fees (17) (36)
Amortization of ESOP expense 80 41
Amortization of MRP expense 41 -
Provision for loan losses 70 -
(Gain) loss on sale of investments (11) (10)
(Gain) loss on sale of property held for investment - 6
(Gain) loss on sale of other real estate (10) (2)
(Increase) decrease in accrued interest receivable (27) (123)
(Increase) decrease in prepaid expenses 12 (48)
(Increase) decrease in prepaid income taxes 73 14
(Increase) decrease in deferred income taxes (47) (454)
(Increase) decrease in other assets - 28
Increase (decrease) in accrued interest payable 16 (18)
Increase (decrease) in accrued income taxes 51 -
Increase (decrease) in other liabilities 17 375
------- -------
Total Adjustments $ 286 $ (183)
------- -------
Net Cash Provided by Operating Activities $ 429 $ 276
------- -------
Cash Flows From Investing Activities
Net (increase) decrease in certificates of deposit $ 99 $ 490
Proceeds from maturities of investment
securities and mortgage-backed securities 3,135 4,035
Principal payments on mortgage-backed securities 1,105 1,036
Net (increase) decrease in loans receivable (4,787) (4,209)
Purchases of property and equipment (37) (39)
Purchase of investment securities held-to-maturity (251) (4,685)
Purchase of investment securities available-for-sale (200) (1,985)
Purchase of mortgage-backed securities held-to-maturity - (4,150)
Purchase of mortgage-backed securities available-for-sale - (248)
Proceeds from sale of mortgage-backed securities available-for-sale 1,085 4,015
Proceeds from sale of investment securities available-for-sale 252 -
Proceeds from sale of property held for investment - 112
Purchase of Federal Home Loan Bank stock (88) (24)
Purchase of Federal Reserve Bank stock - (124)
Proceeds from sale of other real estate 105 63
------- -------
Net Cash (Used) Provided by Investing Activities $ 418 $(5,713)
------- -------
Cash Flows From Financing Activities
Net increase (decrease) in deposits $ (785) $(2,950)
Net increase (decrease) in mortgage escrow funds (90) (124)
Proceeds from Federal Home Loan Bank advances 4,250 -
Payments on Federal Home Loan Bank advances (2,500) -
Shares acquired by management recognition plan (552) -
Dividends on common stock (244) (81)
Sale of stock - 7,446
------- -------
Net Cash Provided by Financing Activities $ 79 $ 4,291
------- -------
Net Increase in Cash and Cash Equivalents $ 926 $(1,146)
Cash and Cash Equivalents at Beginning of Period 1,872 4,263
------- -------
Cash and Cash Equivalents at End of Period $ 2,798 $ 3,117
======= =======
Supplemental Disclosures
Cash Paid (Received) During the Period for:
Interest $ 1,963 $ 2,079
Income taxes $ (27) $ (29)
Loans Transferred to Foreclosed Real Estate During Period $ 106 $ 61
</TABLE>
See accompanying notes to consolidated financial
statements. <PAGE>
<PAGE>
HEARTLAND BANCSHARES, INC. AND SUBSIDIARY
-----------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------
(Unaudited)
-----------
September 30, 1997 and 1996
---------------------------
1. Stock Conversion
----------------
On June 28, 1996, First Federal Savings and Loan Association of
Herrin (the "Association") completed its conversion from a
federal mutual savings and loan association to a federal stock
savings and loan association, and then from a stock association
to a national bank known as Heartland National Bank (the
"Bank"), while simultaneously being acquired by Heartland
Bancshares, Inc. (the "Company"), an Illinois corporation, which
was formed to act as the holding company of the Bank. At the
date of the conversion, the Company completed the sale of
876,875 shares of common stock, $.01 par value at $10.00 per
share. Net proceeds from the above transactions, after
deducting offering expenses, underwriting fees, and amounts
retained to fund the Company's employee stock ownership plan
(ESOP) totaled approximately $7.4 million.
The Company is primarily engaged in the business of directing,
planning and coordinating the business activities of the Bank.
These activities primarily consist of accepting deposits from
the general public and investing these funds in loans in the
Bank's market area and in investment securities and
mortgage-backed securities. In the future, the holding company
structure will permit the Company to expand the financial
services currently offered through the Bank, although there are
no definitive plans or arrangements for such expansion at
present.
2. Basis of Presentation
---------------------
The accompanying unaudited consolidated financial statements
were prepared in accordance with the instructions for Form
10-QSB and, therefore, do not include all information and
footnotes necessary for a complete presentation of financial
position, results of operations, changes in stockholders'
equity, and cash flows in conformity with generally accepted
accounting principles. However, all adjustments which, in the
opinion of management, are necessary for a fair presentation of
the unaudited consolidated financial statements for the three
months and nine months ended September 30, 1997 and 1996 have
been recorded. Operating results for the three months and nine
months ended September 30, 1997 are not necessarily indicative
of the results that may be expected for the year ending December
31, 1997.
Prior to the acquisition of the Association on June 28, 1996,
and the Association's simultaneous conversion to the Bank, the
Company had not issued any stock, had no assets or liabilities,
and had not engaged in any business activities other than that
of an organizational nature. Accordingly, the unaudited
consolidated financial statements included herein reflect the
operations of the Association only for periods prior to June 28,
1996.
Certain reclassifications have been made for the three months
and nine months ended September 30, 1996 to conform with the
financial statement presentation for the three months and nine
months ended September 30, 1997. The reclassifications had no
effect on previously reported net income or retained earnings.
<PAGE>
<PAGE>
3. Principles of Consolidation
---------------------------
The accompanying unaudited consolidated financial statements
include the accounts of Heartland Bancshares, Inc., Heartland
National Bank, and Herrin First Service Corporation, a wholly
owned subsidiary of Heartland National Bank. All significant
intercompany items have been eliminated.
4. Earnings per Share
------------------
Primary and fully diluted earnings per share amounts are
computed based on the weighted average number of shares actually
outstanding plus the shares that would be outstanding assuming
exercise of stock options, all of which are considered to be
common stock equivalents. The number of shares that would be
issued from the exercise of stock options has been reduced by
the number of shares that could have been purchased from the
proceeds at the average market price of the Company's stock. In
accordance with Statement of Position 93-6, "Employers'
Accounting for Employee Stock Ownership Plans" (SOP 93-6), only
employee stock ownership plan (ESOP) shares that have been
committed to be released are considered outstanding shares. The
weighted average numbers of shares used for primary
earnings per share for the three months and nine months ended
September 30, 1997 were 825,954 and 823,900, respectively. The
weighted average numbers of shares used for fully diluted
earnings per share for the three months and nine months ended
September 30, 1997 were 822,570 and 823,908, respectively. The
weighted average number of shares used for the three months and
nine months ended September 30, 1996 was 808,498. Earnings per
share for the nine months ended September 30, 1996 have been
computed based upon net income for the period from July 1, 1996
to September 30, 1996 (the period during which shares were
outstanding). The effect on earnings per share for the
period June 28, 1996 to June 30, 1996 is not considered
significant.
5. Dividends per Share
-------------------
In accordance with the provisions of SOP 93-6, dividends paid on
unallocated ESOP shares are not considered dividends for
financial reporting purposes.
6. Employee Stock Ownership Plan
-----------------------------
The Company has established the ESOP for employees of the
Company and its subsidiary. Employees who have attained age 21
and completed one year of service are eligible to participate in
the plan. On June 28, 1996, the Company loaned the ESOP
$701,500 to finance the plan's initial purchase of 70,150
shares. The loan is due and payable in ten (10) annual payments
of principal and interest, beginning December 31, 1996. The
principal is to be repaid in equal installments, with interest
at a variable rate of 1% above prime. The Company intends to
contribute sufficient funds to the ESOP to enable it to repay
the loan, plus such other amounts as the Company's Board of
Directors may determine in its discretion. The Company accounts
for its ESOP in accordance with Statement of Position 93-6,
"Employers' Accounting for Employee Stock Ownership Plans". As
shares are committed to be released to participants, the Company
reports employee benefits expense based on the average market
price of the shares during the period. ESOP benefits expense
recorded during the three months and nine months ended September
30, 1997 was $33,278 and $99,580, respectively. ESOP benefits
expense recorded during the three months and nine months ended
September 30, 1996 was $46,744.
7. Director Retirement Plan
------------------------
In connection with the stock conversion of the Association to
the Bank, the Board of Directors of the Association (now the
Bank) has adopted a director retirement plan, effective December
31, 1995, for its directors who are members of the Board of
Directors at some time on or after the plan's effective date.
Under the plan, a bookkeeping account in each participant's name
is credited with "Performance Units" according to the following
formula: (i) 70 Performance Units for each full year of service
as a director prior to 1996, plus (ii) 100 Performance Units for
each full year of service as a director after 1995, with the
value of each Performance Unit equal to the average fair market
value of one share of
<PAGE>
<PAGE>
the Company's common stock as of December 31st of each of the
three years preceding the determination date (or such shorter
period as to which trading information is available). Additional
Performance Units are to be credited at the end of each year
after 1995, based upon the amount of dividends paid on the
Company's common stock. A participant's vested interest in
Performance Units credited on the plan's effective date equals
50% if the participant serves on the Board for less than a year
after 1995, 75% after the second year, and 100% after the third
year. In the event a participant's service on the Board is
terminated due to death or disability, the vested percentage
becomes 100% regardless of the number of years of service.
Performance Units credited after the plan's effective date
are fully vested at all times.
As of September 30, 1997, a liability of $68,840 has been
recognized in the financial statements based on the vested value
of the interests in the director retirement plan as of that
date. The amount of expense recognized in the financial
statements for the three months and nine months ended September
30, 1997 was $8,307 and $24,921, respectively. The amount of
expense recognized in the financial statements for the three
months and nine months ended September 30, 1996 was $34,500.
8. Management Recognition Plan
---------------------------
On January 28, 1997, the stockholders of the Company approved a
management recognition plan ("MRP"). With funds contributed by
the Company, the MRP has purchased, in the aggregate, 35,075
shares of the Company's common stock (the maximum number of
shares allowed to be purchased). Such shares were purchased in
the open market. In June, 1997, the MRP's administrative
committee voted to grant awards of common stock totaling 21,917
shares to certain executive officers and directors of the
Company and the Bank. These awards are deemed to be effective
as of the date of stockholder approval of the MRP. Common stock
granted under the MRP vests over a five year period at twenty
percent per year. Under current accounting standards, when MRP
awards are granted, the Company will recognize compensation
expense based on the fair market value of the common stock on
the date the awards are granted with such amount being amortized
over the expected vesting period for the award. As of September
30, 1997, 35,075 shares had been purchased on the open market by
the MRP to fund the plan at a total cost of approximately
$552,000. This amount has been recorded in the consolidated
financial statements as an increase in a contra equity account.
This contra equity account will be amortized to expense over the
period over which the MRP awards become vested. The amount of
expense recognized in the financial statements for the three
months and nine months ended September 30, 1997 was $15,342 and
$40,912, respectively.
9. Stock Option and Incentive Plan
-------------------------------
Also on January 28, 1997, the stockholders of the Company
approved a stock option and incentive plan. The option plan
provides for the granting of stock options and stock
appreciation rights to certain employees and directors of the
Company and the Bank and has a term of ten years from the
effective date of the plan after which no awards may be granted.
The plan reserves 87,687 authorized, but unissued shares (or
treasury shares) of common stock for issuance upon the future
exercise of options or stock appreciation rights. Options to
purchase a total of 65,762 shares of common stock have been
awarded under the plan to certain officers and directors at an
exercise price of $14.00 per share. The plan provides for
one-fifth of the options granted to be exercisable on each of
the first five anniversaries of the date the option was granted.
Recognition of compensation expense for stock options is not
required when options are granted at an exercise price equal to
or exceeding the fair market value of the Company's common stock
on the date the option is granted. Therefore, no expense
related to the stock option plan is reflected on the
accompanying financial statements. The stock options are
considered common stock equivalents for purposes of computing
primary and fully diluted earnings per share (as shown in Note
4).<PAGE>
<PAGE>
10. Advances from Federal Home Loan Bank
------------------------------------
As of September 30, 1997, the Bank has outstanding borrowings
from the Federal Home Loan Bank of Chicago of $1,750,000. These
borrowings mature at various times from November, 1997 to
January, 1998 at interest rates ranging from 5.86% to 5.91%.
11. Regulatory Capital
------------------
The Bank is required to maintain certain levels of regulatory
capital. At September 30, 1997, the Bank was in compliance with
all regulatory capital requirements. In addition to these
requirements, the Bank must maintain sufficient capital for the
"liquidation account" for the benefit of eligible account
holders. In the event of a complete liquidation of the Bank,
eligible depositors would have an interest in the account.
12. Deferred Income Tax Adjustment
------------------------------
Prior to the Association's decision to convert to a stock
institution and national bank, the Association computed
its income taxes allowing for the effect of the special bad debt
deduction available to a savings and loan association
under the Internal Revenue Code if certain conditions are met.
In general, this special tax bad debt deduction represents
the greater of amounts deducted based upon historical loss
experience or 8% of taxable income. Based upon the
Association's decision to convert to bank status, the law in
effect at that time required that the entire amount of excess
bad debt deductions referred to above would be restored to
income, and taxes thereon would become due. As a result,
income taxes totaling $450,000 were accrued in the Association's
1995 financial statements as a component of income tax expense.
This accrual recognized a deferred liability for the tax effect
of bad debt reserves not previously recorded (those arising
before 1988).
During the third quarter of 1996, the Small Business Job
Protection Act of 1996 (Small Business Act) was enacted into
law. Under this law, for years beginning after 1995, thrift
institutions (such as the Association) are required to recapture
"excess bad debt reserves" over a six-year period. However,
pre-1988 reserves are not included in these excess bad debt
reserves. As the conversion of the Association to the Bank had
not taken place as of December 31, 1995 (the effective date of
the new law), the Bank was still a thrift institution as of that
date. Therefore, it was the judgment of management that, due to
the change enacted by the Small Business Act, the pre-1988
reserves will not be required to be recaptured into taxable
income. As a result, in accordance with the provisions of
Statement of Financial Accounting Standards No. 109, "Accounting
for Income Taxes", the $450,000 increase in income taxes made
during 1995 was reversed during the third quarter of 1996 as a
change to income from continuing operations, leading to a
$450,000 decrease in income tax expense and deferred income
taxes as of September 30, 1996.
13. SAIF Special Assessment
-----------------------
On September 30, 1996, a bill was signed into law which required
financial institutions which are members of the Savings
Association Insurance Fund (SAIF) to pay a special one-time
assessment on insured deposits. Subsequent to that date, the
Bank was informed that the amount of the special assessment to
be paid by the Bank was approximately $351,000. This amount was
recorded on the financial statements as of and for the three
months ended September 30, 1996 as a charge to expense.
<PAGE>
<PAGE>
Item 2. Management's Discussion and Analysis or Plan of
Operations
- ---------------------------------------------------------
General
- -------
The following discussion reviews the consolidated financial
condition of Heartland Bancshares, Inc. (the "Company"),
Heartland National Bank (the "Bank"), and Herrin First Service
Corporation, a wholly owned subsidiary of Heartland National
Bank, as of September 30, 1997 and December 31, 1996, and the
results of operations for the three months and nine months ended
September 30, 1997 and 1996.
As the completion of the conversion of First Federal Savings and
Loan Association of Herrin (the "Association") to the Bank, and
the simultaneous acquisition of the institution and issuance of
stock by the Company took place on June 28, 1996, this
discussion of financial condition and results of operations will
relate to the Association (now the Bank) as pertains to
operations before that date.
The business of the Bank has historically been to function as a
financial intermediary, accepting deposits from the general
public and investing these funds primarily in loans for one- to
four-family residences located in the Bank's market area. To a
lesser extent, the Bank engages in various forms of consumer and
home equity lending and invests in mortgage-backed securities,
U.S. Government and federal agency securities, municipal
securities and interest-bearing deposits.
The Company is currently primarily investing the funds received
from its issuance of common stock in mortgage-backed securities,
U.S. Government and federal agency securities, municipal
securities and interest-bearing deposits.
The Bank's net income is dependent primarily on its net interest
income, which is the difference between interest income earned
on loans and investments, and the interest paid on interest-
bearing liabilities, primarily deposits. Net interest income is
determined by (i) the difference between yields earned on
interest-earning assets and rates paid on interest-bearing
liabilities ("interest rate spread") and (ii) the relative
amounts of interest-earning assets and interest-bearing
liabilities. The Bank's interest rate spread is affected by
regulatory, economic and competitive factors that influence
interest rates, loan demand and deposit flows. The Bank's net
earnings are also affected by the level of non-interest income,
which primarily consists of fees and service charges, and by the
level of its operating expenses and provisions for loan losses.
The operations of the Bank are significantly affected by
prevailing economic conditions, competition and the monetary,
fiscal and regulatory policies of governmental agencies.
Lending activities are influenced by the demand for and supply
of housing, competition among lenders, the level of interest
rates and the availability of funds. Deposit flows and costs of
funds are influenced by prevailing market rates of interest,
primarily on competing investments, account maturities and the
levels of personal income and savings in the Bank's market area.
Liquidity and Capital Resources
- -------------------------------
As a holding company, the Company conducts its business through
its subsidiary, the Bank. The Bank's primary sources of funds
are deposits and proceeds from maturing investment securities,
maturing mortgage-backed and related securities and principal
and interest payments on loans, investment securities and
mortgage-backed and related securities. While maturities and
scheduled amortization of investment securities, mortgage-backed
and related securities and loans are a predictable source of
funds, deposit flows and mortgage prepayments are greatly
influenced by general interest rates, economic conditions,
competition and other factors. The Bank uses its liquidity
resources principally to fund the origination of loans, to
purchase investment securities and mortgage-backed and related
securities, to fund deposit withdrawals, to maintain liquidity,
and to meet operating expenses. Management believes that its
sources of funds will be adequate to meet the Bank's liquidity
needs for the immediate future.<PAGE>
<PAGE>
A portion of the Bank's liquidity consists of cash and cash
equivalents, which include investments in highly liquid,
short-term deposits. The levels of these assets are dependent
on the Bank's operating, financing, and investing activities
during any given period. At September 30, 1997 and December 31,
1996, the consolidated amounts of cash and cash equivalents
totaled $2.8 million and $1.9 million, respectively.
Liquidity management is both a daily and long-term function of
business management. The Company has other sources of liquidity
if there is a need for funds. The Company has a portfolio of
investment securities and mortgage-backed and related securities
with a consolidated aggregate market value of $3.0 million at
September 30, 1997 classified as available for sale. Another
source of liquidity is the Bank's ability to obtain advances
from the Federal Home Loan Bank of Chicago ("FHLB"). At
September 30, 1997, the Bank had outstanding advances from the
FHLB in the amount of $1,750,000.
At September 30, 1997, the Bank had $1,309,000 in outstanding
commitments to extend credit. The Bank anticipates that it will
have sufficient funds available to meet its current loan
origination commitments.
The Bank is required to maintain certain levels of regulatory
capital. At September 30, 1997, the Bank was in compliance with
all regulatory capital requirements.
Financial Condition
- -------------------
Total assets increased by $437,000, or 66 basis points, from
$65.9 million at December 31, 1996 to $66.3 million at September
30, 1997.
The Bank's loan portfolio increased by $4.6 million, or 11.19%,
from $41.5 million at December 31, 1996 to $46.1 million at
September 30, 1997. The increase in loan activity during the
period is attributed to increased loan marketing activities and
increased loan demand in the Company's market area.
The Bank's allowance for loan losses totaled $300,000 at
September 30, 1997 and December 31, 1996. During the nine
months ended September 30, 1997, loan charge-offs amounted to
$70,000. An additional provision of $70,000 was made during the
period.
The Company's consolidated investment securities portfolio
totaled $8.2 million at September 30, 1997, a decrease of $2.9
million from $11.1 million at December 31, 1996. This decrease
was primarily due to maturities and sales of investment
securities totaling $3.4 million exceeding purchases of such
securities totaling $451,000 for the nine months ended September
30, 1997. The Company's mortgage-backed and related securities
portfolio totaled $7.3 million as of September 30, 1997, a
decrease of $2.2 million from $9.5 million at December 31, 1996.
This decrease was primarily due to $1.1 million in principal
payments and $1.1 million in proceeds received from sales of
mortgage-backed and related securities. During the nine months
ended September 30, 1997, the institution's portfolio of
investment securities and mortgage-backed and related securities
classified as available for sale increased capital by $10,000
(net of taxes) as a result of an increase in the market value of
such securities classified as available for sale pursuant to
Statement of Financial Accounting Standards ("SFAS") No. 115.
Total liabilities increased by $959,000, or 1.80%, from $53.2
million at December 31, 1996 to $54.2 million at September 30,
1997. Total deposits decreased by $785,000 from $52.8 million
at December 31, 1996 to $52.0 million at September 30, 1997.
The increase in total liabilities is primarily attributable to
the $1.8 million increase in borrowings from the Federal Home
Loan Bank incurred by the Bank during the nine months ended
September 30, 1997, together with the $785,000 decrease in
deposits.
Stockholders' equity decreased by $522,000 during the nine
months ended September 30, 1997. This decrease is primarily due
to the $552,000 purchase of shares on the open market for the
Company's management recognition plan, as well as dividends of
$244,000 paid <PAGE>
<PAGE>
on Company stock. These decreases were offset by amortization
of ESOP and MRP expense of $121,000, as well as net income of
$143,000 for the period.
Results of Operations
- ---------------------
Net Income. Net income was $30,000 for the three months ended
September 30, 1997, as compared to $295,000 for the three months
ended September 30, 1996. The decrease of $265,000, or 89.83%,
reflects an increase of $51,000, or 11.28%, in net interest
income, an increase of $60,000 in the provision for loan losses,
a decrease of $11,000, or 18.64%, in non-interest income, a
decrease of $331,000, or 42.22%, in non-interest expense, and a
$576,000 increase in the provision for income taxes. The
decrease in net income was primarily due to the reversal during
1996 of a $450,000 1995 tax accrual for the tax effect of a
probable recapture of excess bad debt deductions, offset by
increased expense during 1996 resulting from a special
$351,000 assessment from the SAIF. The net effect of these
factors resulted in net income for the three months ended
September 30, 1996 being higher than normal.
Net income was $143,000 for the nine months ended September 30,
1997, as compared to $459,000 for the nine months ended
September 30, 1996. The decrease of $316,000, or 68.85%,
reflects an increase of $315,000, or 25.86%, in net interest
income, a $70,000 increase in the provision for loan losses, a
decrease of $33,000, or 17.93%, in non-interest income, a
decrease of $1,000 in non-interest expense, and a $529,000
increase in the provision for income taxes. The decrease in net
income for the nine month periods is again primarily due to the
combined effect of the 1996 income tax reversal and the 1996
special SAIF assessment.
Net Interest Income. Net interest income increased $51,000, or
11.28%, to $503,000 for the three months ended September 30,
1997, as compared to $452,000 for the three months ended
September 30, 1996. This increase was primarily due to an
increase in the net interest margin from 1.99% for the three
months ended September 30, 1996 to 2.35% for the three months
ended September 30, 1997, which was offset by a decrease in the
ratio of average interest-earning assets to average interest-
earing liabilities from 120.13% for the three months ended
September 30, 1996 to 119.62% for the three months ended
September 30, 1997. The increase in net interest income
reflects the net increase in loans, bearing a rate of return
relatively higher than other investments.
Net interest income increased $315,000, or 25.86%, to $1.5
million for the nine months ended September 30, 1997, as
compared to $1.2 million for the nine months ended September 30,
1996. This increase was primarily due to an increase in the
ratio of average interest-earning assets to average interest-
bearing liabilities from 111.12% for the nine months ended
September 30, 1996 to 119.91% for the nine months ended
September 30, 1997, along with an increase in the net interest
margin from 2.11% for the nine months ended September 30, 1996
to 2.38% for the nine months ended September 30, 1997. The
increase in net interest income is attributed to the investment
of the net proceeds from the Company's initial public stock
offering and the net increase in loans.
Interest Income. Total interest income increased by $46,000, or
4.10%, to $1.2 million for the three months ended September 30,
1997 as compared to $1.1 million for the three months ended
September 30, 1996. This increase was primarily due to an
increase of $6.6 million in the average balance of the loan
portfolio during the three months ended September 30, 1997 as
compared to the three months ended September 30, 1996 resulting
from ongoing loan origination efforts. The increase in interest
income also reflects an increase of 31 basis points in the
average yield on interest-earning assets for the three months
ended September 30, 1997 as compared to the three months ended
September 30, 1996.
Total interest income increased by $233,000, or 7.11%, to $3.5
million for the nine months ended September 30, 1997 as compared
to $3.3 million for the nine months ended September 30, 1996.
The increase in interest income is primarily the result of an
increase of $1.6 million, or 2.51%, in average interest-earning
assets from $62.4 million for the nine months ended September
30, 1996 to $63.9 million for the nine months ended
<PAGE>
<PAGE>
September 30, 1997. The increase in interest income also
reflects a 32 basis point increase in the average yield on
interest-earning assets for the nine months ended September 30,
1997 compared to the nine months ended September 30, 1996. This
increase reflects the increase in the average total loan balance
and the investment of the proceeds from the Company's initial
public stock offering.
Interest Expense. Interest expense decreased by $5,000, or 75
basis points, to $664,000 for the three months ended September
30, 1997 as compared to $669,000 for the three months ended
September 30, 1996. This decrease was primarily due to a
decrease of 5 basis points in the average cost of interest-
bearing liabilities for the three months ended September 30,
1997 as compared to the three months ended September 30, 1996.
Interest expense was also affected by an increase of $101,000 in
the average balance of interest-bearing liabilities from $53.1
million for the three months ended September 30, 1996 to $53.2
million for the three months ended September 30, 1997.
Interest expense decreased by $82,000, or 3.98%, from $2.1
million for the nine months ended September 30, 1996 to $2.0
million for the nine months ended September 30, 1997. This
decrease was primarily due to a decrease of $2.8 million in the
average balance of interest-bearing liabilities from $56.1
million for the nine months ended September 30, 1996 to $53.3
million for the nine months ended September 30, 1997. This
decrease was predominantly due to decreases in deposit accounts
by customers using those deposit accounts to purchase Company
stock during the conversion. The decrease in the average
balance of interest-bearing liabilities was offset by a 5 basis
point increase in the average cost of those liabilities for the
nine months ended September 30, 1997 as compared to the nine
months ended September 30, 1996.
Provision for Loan Losses. The allowance for loan losses is
established through a provision for loan losses based on
management's evaluation of the risk inherent in its loan
portfolio and the general economy. Such evaluation is based on
an analysis of various factors, including the market value of
the underlying collateral, growth and composition of the loan
portfolio, the relationship of the allowance for loan losses to
outstanding loans, historical loss experience, delinquency
trends and prevailing and projected economic conditions. A
$60,000 provision for loan losses was made during the three
months ended September 30, 1997, while no provision was made for
the three months ended September 30, 1996. A $70,000 provision
for loan losses was made during the nine months ended September
30, 1997, while no provision was made for the nine months ended
September 30, 1996. The increased provision in the 1997 period
was deemed necessary as a result of charge-offs of $60,000
during the period. Although the Company believes that the
present level of the allowance for loan losses is adequate to
reflect the risks inherent in its loan portfolio, there can be
no assurance that the Company will not experience increases in
its nonperforming assets, that it will not increase the level of
the allowance for loan losses in the future or that significant
provisions for losses will not be required based on factors such
as deterioration in market conditions, changes in borrowers'
financial conditions, delinquencies and defaults.
Non-Interest Income. Non-interest income decreased $11,000, or
18.64%, from $59,000 for the three months ended September 30,
1996 to $48,000 for the three months ended September 30, 1997.
The largest components of non-interest income for the three
month periods ended September 30, 1997 and 1996 included $13,000
and $19,000, respectively, in loan and other service fees and
$28,000 and $38,000, respectively, in other service charges and
other miscellaneous operating income. In addition, the Company
recognized $7,000 of realized gains on the sale of investments
and other real estate during the three months ended September
30, 1997, compared to $2,000 of gains during the three months
ended September 30, 1996.
Non-interest income decreased $33,000, or 17.93%, from $184,000
for the nine months ended September 30, 1996 to $151,000 for the
nine months ended September 30, 1997. The largest components of
non-interest income for the nine month periods ended September
30, 1997 and 1996 included $38,000 and $57,000, respectively, in
loan and other service fees and $90,000 and $112,000,
respectively, in other service charges and other miscellaneous
operating income. In addition, the Company recognized $23,000
of realized gains on sales of investments and other real estate
in the nine months
<PAGE>
<PAGE>
ended September 30, 1997 compared to $15,000 of realized gains
for the nine months ended September 30, 1996.
Non-Interest Expense. Non-interest expense decreased $331,000,
or 42.22%, from $784,000 for the three months ended September
30, 1996 to $453,000 for the three months ended September 30,
1997. This decrease was primarily due to the special SAIF
assessment of $351,000 which was expensed in the three months
ended September 30, 1996. This was a one-time assessment
imposed by the FDIC in 1996 on institutions insured by the
Savings Association Insurance Fund ("SAIF"). This decrease was
partially offset by net increases of $20,000 in various other
expense items for the three months ended September 30, 1997 as
compared with the three months ended September 30, 1996.
Non-interest expense stayed essentially level for the nine
months ended September 30, 1997 and 1996, totaling $1.4 million
for both periods. The SAIF assessment imposed in 1996 caused an
increase in the expenses for the nine months ended September 30,
1996 of $351,000. In comparing the expenses for the nine months
ended September 30, 1997 with the corresponding period of the
prior year, the increased SAIF assessment in the prior period is
offset by increases of $169,000 in compensation and employee
benefits expense, $172,000 in legal and professional fees, and
net increases of $9,000 in various other expense items. The
increase in compensation and employee benefits expense is
primarily a result of the recognition of expense related to
items which have been incurred subsequent to the formation
of the Company in June, 1996, such as the ESOP, director
retirement, and management recognition plans, and additional
director fees paid by the Company. The increase in legal and
professional fees for the same period reflects ongoing
legal, accounting and consulting expenses resulting primarily
from the Company's proxy contest in connection with its
Annual Meeting as well as expenses associated with the Company's
initial periods of operation as a public company. Legal and
professional fees incurred pursuant to the initial issuance of
stock were offset against stock proceeds, and are not reflected
on the Company's income statement.
Income Tax Expense. Income tax expense was $8,000 for the three
months ended September 30, 1997 as compared with $(568,000) for
the three months ended September 30, 1996. For the nine months
ended September 30, 1997, income tax expense was $50,000, as
compared to $(479,000) for the nine months ended September 30,
1996. The large increases in income tax expense are primarily
the result of the $450,000 reversal in the third quarter of 1996
of a 1995 addition to deferred tax expense. This 1995 addition
related to the expected recapture into taxable income of excess
bad debt deductions upon the completion of the conversion from
thrift institution to bank. With the enactment of the Small
Business Job Protection Act of 1996, management believed that
the pre-1988 excess bad debt deductions which gave rise to the
original deferred tax addition will not be required to be
recaptured. Therefore, in accordance with SFAS No. 109,
"Accounting for Income Taxes," the effects of the change in the
tax law were reflected in the financial statements in the third
quarter of 1996, which was the period of the law's enactment.
The other major component of the increase in income tax expense
for both the three month and nine month periods ended September
30, 1997 is the increase in taxable income caused by the absence
in 1997 of the special SAIF assessment of $351,000.
Impact of Inflation and Changing Prices
- ---------------------------------------
The unaudited consolidated financial statements and related data
presented herein have been prepared in accordance with generally
accepted accounting principles, which require the measurement of
financial position and operating results in terms of historical
dollars without considering the change in the relative
purchasing power of money over time and due to inflation. The
impact of inflation is reflected in the increased cost of the
Bank's operations. Unlike most industrial companies, nearly all
the assets and liabilities of the Bank are monetary in nature.
As a result, interest rates have a greater impact on the Bank's
performance than do the effects of general levels of inflation.
Interest rates do not necessarily move in the same direction or
to the same extent as the price of goods and services.
<PAGE>
<PAGE>
Impact of New Accounting Standards
- ----------------------------------
Accounting for Transfers and Servicing of Financial Assets. In
June, 1996, the Financial Accounting Standards Board ("FASB")
issued SFAS No. 125, "Accounting for Transfers and Servicing of
Financial Assets and Extinguishments of Liabilities." SFAS No.
125 establishes accounting and reporting standards for transfers
and servicing of financial assets and extinguishments of
liabilities based on the consistent application of the financial
components approach. This approach requires the recognition of
financial assets and servicing assets that are controlled
by the reporting entity, the derecognition of financial assets
when control is surrendered, and the derecognition of
liabilities when they are extinguished. Specific criteria are
established for determining when control has been surrendered in
the transfer of financial assets. SFAS No. 125 is effective for
transfers and servicing of financial assets and extinguishments
of liabilities occurring after December 31, 1996. Subsequent to
the issuance of SFAS No. 125, the FASB issued SFAS No. 127,
"Deferral of the Effective Date of Certain Provisions of FASB
Statement No. 125." This statement defers for one year the
effective date of SFAS No. 125 as applies to secured borrowings
and collateral and certain other transactions. The Company has
adopted the relevant provisions of the statement during 1997,
and will adopt the provisions of the statement which become
effective in 1998 at that time. The provisions of the statement
adopted in 1997 did not have a material effect on the Company's
financial position or operating results, and management does not
currently believe that the future adoption of additional
provisions of this statement will have such an effect.
Accounting for Stock-Based Compensation. SFAS No. 123,
"Accounting for Stock-Based Compensation" was issued by the FASB
in October, 1995. SFAS No. 123 establishes a fair value-based
method of accounting for stock options and other equity
instruments. It requires the use of that method for
transactions with other than employees and encourages its use
for transactions with employees. It permits entities to
continue to use the intrinsic value method included in
Accounting Principles Board ("APB") Opinion No. 25, "Accounting
for Stock Issued to Employees", but regardless of the method
used to account for the compensation cost associated with stock
option and similar plans, it requires employers to disclose
information in accordance with SFAS No. 123. The general
principle underlying SFAS No. 123 is that equity instruments are
recognized at the fair value of the consideration received for
them. If the fair value of the consideration received cannot be
reasonably determined, the fair value of the equity instrument
itself may be used. The fair value method of accounting for
stock options and other instruments applies this general
principle measuring compensation cost for employers as the
excess of the fair value of the equity instrument over the
amount paid by the employee. The definition of fair value in
SFAS No. 123 is the same as that included in SFAS No. 121,
"Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed of".
SFAS No. 123 requires significantly expanded disclosures,
including disclosure of the pro forma amount of net income (and
earnings per share for public entities) as if the fair
value-based method were used to account for stock-based
compensation if the intrinsic value method of APB-25 is
retained.
The recognition requirements for transactions with other than
employees apply for transactions entered into after December 15,
1995. The recognition alternative of the fair value-based
method for transactions with employees may be implemented
immediately upon issuance of SFAS No. 123. The disclosure
requirements, which apply regardless of the recognition method
chosen, are applicable for financial statements for fiscal years
beginning after December 15, 1995.
With the adoption in 1997 of stock-based compensation plans, the
Company intends to follow the SFAS No.123 guidelines as
appropriate upon the <PAGE>
<PAGE>
granting of stock-based compensation under those plans.
Earnings per Share. In February, 1997, the FASB issued SFAS No.
128, "Earnings per Share". SFAS No. 128 establishes standards
for computing and presenting earnings per share ("EPS") and
applies to entities with publicly held common stock or potential
common stock. The statement simplifies the standards for
computing earnings per share previously found in APB Opinion No.
15, "Earnings per Share", and makes them comparable to
international EPS standards. It replaces the presentation of
primary EPS a presentation of basic EPS. It also requires dual
presentation of basic and diluted EPS on the face of the income
statement for all entities with complex capital structures, and
requires a reconciliation of the two computations. This
statement is effective for financial statements issued for
periods ending after December 15, 1997, with earlier application
not permitted. The management of the Company plans to adopt the
provisions of the statement at December 31, 1997, and does not
currently believe that the future adoption of this statement
will have a material effect on the Company's financial position
or operating results.
Comprehensive Income. In June, 1997, the FASB issued SFAS No.
130, "Reporting Comprehensive Income". SFAS No. 130 establishes
standards for reporting and display of comprehensive income and
its components (revenues, expenses, gains, and losses) in a full
set of general-purpose financial statements. This statement
requires that all items that are required to be recognized under
accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the
same prominence as other financial statements.
This statement requires that an enterprise (a) classify items of
other comprehensive income by their nature in a financial
statement and (b) display the accumulated balance of other
comprehensive income separately from retained earnings and
additional paid-in capital in the equity section of a statement
of financial position. This statement is effective for fiscal
years beginning after December 15, 1997. The management of the
Company plans to adopt the provisions of the statement at
December 31, 1997, and does not currently believe that the
future adoption of this statement will have a material effect on
the Company's financial position or operating results.
Disclosures about Segments of an Enterprise and Related
Information. In June, 1997, the FASB issued SFAS No. 131,
"Disclosures about Segments of an Enterprise and Related
Information". SFAS No. 131 establishes standards for the way
that public business enterprises report information about
operating segments in annual financial statements and requires
that those enterprises report selected information about
operating segments in interim financial reports issued to
shareholders. It also establishes standards for related
disclosures about products and services, geographic areas, and
major customers. This statement is effective for financial
statements for periods beginning after December 15, 1997. The
management of the Company plans to adopt the appropriate
provisions of the statement at December 31, 1997, and does not
currently believe that the future adoption of this statement
will have a material effect on the Company's financial position
or operating results.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
From time to time, the Company and its subsidiaries may be
a party to various legal proceedings incident to its or their
business. At September 30, 1997, there were no legal
proceedings to which the Company or any subsidiary was a party,
or to which any of their property was subject, which were
expected by management to result in a material loss.
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
None.
The following exhibits are filed as a part of this report:
Exhibit 27 Financial Data Schedule (EDGAR Only)
<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.
HEARTLAND BANCSHARES, INC.
Date: November 12, 1997 By: /s/ Roger O. Hileman
------------------------
Roger O. Hileman
(Principal Executive,
Accounting and Financial
Officer)
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> SEP-30-1997
<CASH> 1,678
<INT-BEARING-DEPOSITS> 1,314
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3,038
<INVESTMENTS-CARRYING> 12,480
<INVESTMENTS-MARKET> 12,167
<LOANS> 46,404
<ALLOWANCE> 300
<TOTAL-ASSETS> 66,293
<DEPOSITS> 52,047
<SHORT-TERM> 1,750
<LIABILITIES-OTHER> 402
<LONG-TERM> 0
<COMMON> 9
0
0
<OTHER-SE> 12,085
<TOTAL-LIABILITIES-AND-EQUITY> 66,293
<INTEREST-LOAN> 2,579
<INTEREST-INVEST> 933
<INTEREST-OTHER> 0
<INTEREST-TOTAL> 3,512
<INTEREST-DEPOSIT> 1,923
<INTEREST-EXPENSE> 1,979
<INTEREST-INCOME-NET> 1,533
<LOAN-LOSSES> 70
<SECURITIES-GAINS> 11
<EXPENSE-OTHER> 1,421
<INCOME-PRETAX> 193
<INCOME-PRE-EXTRAORDINARY> 193
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 143
<EPS-PRIMARY> .17
<EPS-DILUTED> .17
<YIELD-ACTUAL> 3.20
<LOANS-NON> 594
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 300
<CHARGE-OFFS> 70
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 300
<ALLOWANCE-DOMESTIC> 300
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
