<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
------------------
FORM 10-QSB
------------------
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ending March 31, 1999
--------------------
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 0-28120
-----------------------------------------
Lexington B & L Financial Corp.
-------------------------------
Missouri 43-1739555
- ------------------------------------ --------------------
(State or other jurisdiction of I.R.S. (I.R.S. Employer
Employer Incorporation or organization) Identification NO.)
919 Franklin Avenue, Lexington, Mo 64067
- ---------------------------------------- --------------------
(Address of principal executive offices) (Zip Code)
816-259-2247
- ---------------------------
(Registrant's telephone number)
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 twelve months (or for such shorter period that the registrant was
required to file such reports). and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--------- ----------
As of May 12, 1999, there were 1,008,645 shares of the Registrant's Common
Stock, $.01 par value per share, outstanding.
Transitional Small Business Disclosure Format
Yes No X
--------- -----------
<PAGE> 2
LEXINGTON B & L FINANCIAL CORP.
FORM 10-QSB
MARCH 31, 1999
INDEX PAGE
- ----- ----
PART I - FINANCIAL INFORMATION
- ------------------------------
ITEM 1 - FINANCIAL STATEMENTS (UNAUDITED)
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION 1
CONSOLIDATED STATEMENTS OF INCOME 2
CONSOLIDATED STATEMENTS OF CASH FLOWS 3
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY 4
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 5-9
ITEM 2 - MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 10-15
PART II - OTHER INFORMATION
- ---------------------------
ITEM 1 - LEGAL PROCEEDINGS 16
ITEM 2 - CHANGES IN SECURITIES 16
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES 16
ITEM 4 - SUBMISSION OF MATTERS TO VOTE OF SECURITY-HOLDERS 16
ITEM 5 - OTHER INFORMATION 16
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K 16
SIGNATURES
<PAGE> 3
<TABLE>
<CAPTION>
LEXINGTON B & L FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in thousands)
MARCH 31, September 30,
1999 1998
---- ----
. (Unaudited)
ASSETS
<S> <C> <C>
Cash and due from banks............................................... $ 2,336 $ 1,890
Interest-bearing deposits............................................. 9,559 7,095
Investment securities
Available-for-sale, at fair value.................................... 3,130 2,373
Held-to-maturity (estimated market value of $25,732
at March 31, 1999 and $15,189 at September 30, 1998)................ 25,546 14,965
Federal funds sold.................................................... 650 975
Stock in Federal Home Loan Bank of Des Moines ("FHLB")................ 535 520
Loans receivable, less allowance for loan losses of $596
at March 31, 1999 and $599 at September 30, 1998..................... 62,068 62,315
Premises and equipment................................................ 1,045 956
Foreclosed real estate................................................ 36 --
Cost in excess of net assets acquired................................. 974 1,012
Other assets.......................................................... 1,803 1,660
---------- ----------
TOTAL ASSETS $ 107,682 $ 93,761
========== ==========
LIABILITIES
Deposits.............................................................. $ 85,493 $ 76,764
Advances from borrowers for taxes and insurance....................... 78 166
Advances from FHLB.................................................... 5,224 140
Notes payable......................................................... 368 368
Other liabilities..................................................... 666 730
---------- ---------
TOTAL LIABILITIES 91,829 78,168
STOCKHOLDERS' EQUITY
Preferred stock, $.01 par value per share; 500,000 shares
authorized, none outstanding......................................... -- --
Common stock, $.01 par value per share; 8,000,000 shares
authorized, 1,265,000 issued and outstanding......................... 13 13
Additional paid-in-capital............................................ 12,268 12,261
Retained earnings - substantially restricted.......................... 8,664 8,547
Unearned ESOP shares.................................................. (715) (767)
Unearned MRDP shares.................................................. (254) (354)
Treasury stock at cost, 256,315 shares................................ (4,130) (4,130)
Accumulated other comprehensive income................................ 7 23
---------- ---------
TOTAL STOCKHOLDERS' EQUITY 15,853 15,593
---------- ---------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $ 107,682 $ 93,761
=========== =========
</TABLE>
See accompanying notes to Consolidated Financial Statements.
-1-
<PAGE> 4
<TABLE>
<CAPTION>
LEXINGTON B & L FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in thousands, except per share amounts)
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
1999 1998 1999 1998
---- ---- ---- ----
(Unaudited) (Unaudited)
<S> <C> <C> <C> <C>
INTEREST INCOME
Mortgage loans............................................... $ 1,010 $ 995 $ 1,968 $ 2,060
Other loans.................................................. 342 378 712 691
Investment securities and interest-bearing deposits.......... 504 343 897 692
Federal funds sold........................................... 23 30 44 55
---------- -------- ---------- ----------
TOTAL INTEREST INCOME 1,879 1,746 3,621 3,498
INTEREST EXPENSE
Deposits..................................................... 1,010 908 1,978 1,824
Advances from FHLB........................................... 67 5 90 11
Notes payables............................................... 9 11 18 23
---------- -------- ---------- ----------
TOTAL INTEREST EXPENSE 1,086 924 2,086 1,858
---------- -------- ---------- ----------
NET INTEREST INCOME 793 822 1,535 1,640
Provision for loan losses..................................... 13 4 26 9
----------- -------- ---------- ----------
NET INTEREST INCOME AFTER
PROVISION FOR LOANS LOSSES 780 818 1,509 1,631
----------- -------- ---------- ----------
NON-INTEREST INCOME
Service charges and other fees............................... 58 50 112 121
Commission, net.............................................. 26 7 37 21
Income from foreclosed assets................................ -- -- 1 1
Gain (loss) on sale of investments........................... 1 1 7 --
Other........................................................ 14 25 27 40
----------- -------- ---------- ----------
TOTAL NON-INTEREST INCOME 99 83 184 183
----------- -------- ---------- ----------
NON-INTEREST EXPENSE
Employee compensation and benefits........................... 394 421 761 832
Occupancy costs.............................................. 51 48 100 90
Advertising.................................................. 7 10 21 20
Data processing.............................................. 32 30 60 56
Federal insurance premiums................................... 8 11 16 21
Other........................................................ 191 179 320 306
----------- -------- ---------- ----------
TOTAL NON-INTEREST EXPENSE 683 699 1,278 1,325
----------- -------- ---------- ----------
INCOME BEFORE INCOME TAXES 196 202 415 489
Income Taxes.................................................. 72 81 147 182
----------- -------- ---------- ----------
NET INCOME $ 124 $ 121 $ 268 $ 307
=========== ======== ========== ==========
Basic Earnings Per Share...................................... $ 0.14 $ 0.12 $ 0.30 $ 0.31
=========== ======== ========== ==========
Diluted Earnings Per Share.................................... $ 0.14 $ 0.12 $ 0.30 $ 0.30
=========== ======== ========== ==========
</TABLE>
See accompanying notes to Consolidated Financial
Statements.
-2-
<PAGE> 5
<TABLE>
<CAPTION>
LEXINGTON B & L FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in thousands)
SIX MONTHS ENDED
March 31,
1999 1998
---- ----
(Unaudited)
CASH FLOWS FROM OPERATING ACTIVITIES
<S> <C> <C>
Net income........................................................................... $ 268 $ 307
Adjustments to reconcile net income to net cash provided by operating activities
Depreciation and amortization....................................................... 39 48
Amortization of premiums and discounts.............................................. 4 (1)
Provisions for loan losses.......................................................... 26 9
Amortization of cost in excess of net assets acquired............................... 37 37
ESOP shares released................................................................ 59 86
Loss (gain) on called securities held-to-maturity................................... 7 --
Amortization of MRDP................................................................ 100 177
Amortization of salary continuation plan costs...................................... 39 29
Changes to assets and liabilities increasing (decreasing) cash flows
Accrued interest receivable......................................................... (122) 5
Other assets........................................................................ (15) (57)
Other liabilities................................................................... (101) 16
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES 341 656
CASH FLOW FROM INVESTING ACTIVITIES
Proceeds from maturity/sale of securities available-for-sale......................... 550 399
Proceeds from maturity/call of securities held-to-maturity........................... 8,069 6,564
Purchase of securities available-for-sale............................................ (1,324) (93)
Purchase of securities held-to-maturity.............................................. (18,668) (6,067)
Net (increase) decrease in Federal funds sold........................................ 325 (150)
Loans originated, net of repayments.................................................. 186 (244)
Purchase of premises and equipment................................................... (128) (246)
Cash paid in the acquisition of Lafayette Bancshares, Inc. .......................... -- (1,245)
Cash acquired in acquisition of Lafayette Bancshares, Inc. .......................... -- 1,551
--------- ---------
NET CASH PROVIDED BY (USED IN) INVESTING ACTIVITIES (10,990) 469
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase in deposits............................................................. 8,729 2,041
Net decrease in advances from borrowers for property taxes and insurance............. (88) (92)
Repayment of notes payable........................................................... -- (125)
Proceeds from FHLB advances.......................................................... 5,150 --
Repayment of FHLB advances........................................................... (66) --
Dividends............................................................................ (151) (168)
Purchase of FHLB stock............................................................... (15) --
Purchase of treasury stock........................................................... -- (555)
--------- ---------
NET CASH USED IN FINANCING ACTIVITIES 13,559 1,101
--------- ---------
NET INCREASE (DECREASE) IN CASH 2,910 2,226
Cash and cash equivalents, beginning of period....................................... 8,985 6,818
--------- ---------
CASH AND CASH EQUIVALENTS, END OF PERIOD $ 11,895 $ 9,044
========= =========
</TABLE>
See accompanying notes to Consolidated Financial Statements.
-3-
<PAGE> 6
<TABLE>
<CAPTION>
LEXINGTON B & L FINANCIAL CORP.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY
(Dollars in thousands)
Accumulated
Additional Unearned Other Unearned Total
Common Paid-in Retained ESOP Comprehensive MRDP Treasury Stockholders'
Stock Capital Earnings Shares Income Shares Stock Equity
----- ------- -------- ------ ------ ------ ----- ------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BALANCE AT SEPTEMBER 30, 1997 $ 13 $ 12,116 $ 8,225 $ (869) $ 29 $ (656) $ (3,206) $ 15,652
Net income.......................... -- -- 658 -- -- -- -- 658
Release of ESOP shares.............. -- 64 -- 102 -- -- -- 166
Change in accumulative other
comprehensive income............... -- -- -- -- (6) -- -- (6)
Repurchase of common stock.......... -- -- -- -- -- -- (2,390) (2,390)
Amortization of MRDP................ -- -- -- -- -- 302 -- 302
Dividend declared ($.30 per share).. -- -- (336) -- -- -- -- (336)
Record acquisition of Lafayette
County Bank........................ -- 81 -- -- -- -- 1,466 1,547
------ -------- ------- ------- ------ ------ -------- --------
BALANCE AT SEPTEMBER 30, 1998 13 12,261 8,547 (767) 23 (354) (4,130) 15,593
(Unaudited)
Net income.......................... -- -- 268 -- -- -- -- 268
Release of ESOP shares.............. -- 7 -- 52 -- -- -- 59
Change in accumulative other -- -- -- -- -- -- -- --
comprehensive income............... -- -- -- -- (16) -- -- (16)
Amortization of MRDP shares......... -- -- -- -- -- 100 -- 100
Dividend declared ($.15 per share).. -- -- (151) -- -- -- -- (151)
------ -------- ------- ------- ------ ------ -------- --------
BALANCE AT MARCH 31, 1999 $ 13 $ 12,268 $ 8,664 $ (715) $ 7 $ (254) $ (4,130) $ 15,853
====== ======== ======= ======= ====== ====== ======== ========
</TABLE>
See accompanying notes to Consolidated Financial Statements.
-4-
<PAGE> 7
LEXINGTON B & L FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
NOTE A--Basis of Presentation
- -----------------------------
The consolidated interim financial statements as of March 31, 1999 and for the
period then ended include the accounts of Lexington B & L Financial Corp. and
its wholly-owned subsidiaries, B & L Bank, Lafayette County Bank, and B & L
Mortgage, Inc. and a wholly-owned subsidiary of B & L Bank. This report has been
prepared by Lexington B & L Financial Corp. ("Registrant" or "Company") without
audit. In the opinion of management, all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation are reflected in the March
31, 1999, interim financial statements. The results of operations for the period
ended March 31, 1999, are not necessarily indicative of the operating results
that may be expected for the full year. The consolidated interim financial
statements as of March 31, 1999, should be read in conjunction with the
Registrant's audited consolidated financial statements as of September 30, 1998
and for the year then ended included in the Registrant's 1998 Annual Report to
Shareholders. The significant accounting policies followed in the preparation of
the quarterly financial statements are the same as disclosed in the 1998 Annual
Report to Shareholders to which reference is made.
In November 1998 the Company formed a mortgage banking subsidiary, B & L
Mortgage, Inc., with a capitalization of $500,000. The mortgage banking
subsidiary will operate within the markets served by the Company's subsidiary
banks originating residential mortgages for sale into the secondary mortgage
market.
NOTE B--Allowance for Loan Losses
- ---------------------------------
The following is a summary of the allowance for loan losses (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Balance, beginning of period........................................... $ 601 $ 592 $ 599 $ 221
Allowance for loan losses of acquired bank...................... -- -- -- 392
Provision for loan losses........................................... 13 4 26 9
Recoveries on loans charged-off..................................... 2 9 4 13
Charge offs......................................................... (20) ( 6) (33) (36)
---- ---- --- --
Balance, end of period................................................. $ 596 $ 599 $ 596 $ 599
=== === === ===
</TABLE>
At March 31, 1999, non-performing assets were $366,000, which was .58% of total
loans and .34% of total assets. This balance consisted of $296,000 in loans not
accruing interest, $40,000 of foreclosed / repossessed assets and $30,000 in
loans past due 90 days or more and still accruing interest.
NOTE C--Investment Securities
- -----------------------------
Investment securities, consist of the following at March 31, 1999 and September
30, 1998 (in thousands):
<TABLE>
<CAPTION>
March 31, September 30,
1999 1998
---- ----
<S> <C> <C>
Available-for-Sale, at fair value:
U.S. Government and federal agency obligations........................................ $ 3,130 $ 2,373
------- ------
Held-to-Maturity, at amortized cost:
U.S. Government and federal agency obligations........................................ $ 21,268 $13,044
State and municipal obligations....................................................... 4,278 1,921
------- ------
Total held-to-maturity........................................................ $ 25,546 $14,965
------- ------
</TABLE>
-5-
<PAGE> 8
LEXINGTON B & L FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE D--Earnings Per Share
- --------------------------
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.
The following table presents the computation of EPS (in thousands, except for
per share amounts):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Basic earnings per share:
Income available to common stockholders............................................ $ 124 $ 121 $ 268 $ 307
Average common shares outstanding.................................................. 892 987 892 982
Basic earnings per share.............................................................. $ 0.14 $0.12 $0.30 $0.31
==== ==== ==== ===
Diluted earnings per share:
Income available to common stockholders............................................ $ 124 $ 121 $ 268 $ 307
Average common shares outstanding.................................................. 892 987 892 982
Dilutive potential common shares outstanding due to common stock options
and awards.................................................................... 23 39 19 38
-- -- -- --
Average number of common shares and dilutive potential shares outstanding.......... 915 1,026 911 1,020
Diluted earnings per share............................................................ $0.14 $0.12 $0.30 $0.30
==== ==== ==== ====
</TABLE>
NOTE E--Statement of Comprehensive Income
- ------------------------------------------
In June 1997, the FASB issued SFAS No. 130 "Reporting Comprehensive Income"
which requires the reporting and display of comprehensive income, defined
as the change in equity (net assets) of a business enterprise from transactions
and other events and circumstances from nonowner sources. This Statement is
effective for fiscal years beginning after December 31, 1997. The adoption of
this Statement did not have an impact on the Company's consolidated financial
position, results of operations or cash flows. The Company's reportable source
of comprehensive income is from the unrealized holding gains (losses) on
available-for-sale securities. The following sets forth the Statement of
Comprehensive Income for the three and six month periods ending March 31, 1999
and 1998 (in thousands):
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
March 31, March 31,
1999 1998 1999 1998
---- ---- ---- ----
(Unaudited)
<S> <C> <C> <C> <C>
Net income $ 124 $ 121 $ 268 $ 307
Other comprehensive income, net of tax:
Unrealized holding gains (losses) arising during the period ( 4) ( 9) (16) (20)
---- --- --- --
Comprehensive income $ 120 $ 112 $ 252 $ 287
==== === === ===
</TABLE>
-6-
<PAGE> 9
LEXINGTON B & L FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE F--Employee Stock Ownership Plan
- -------------------------------------
In connection with its conversion to stock form, B & L Bank established an ESOP
for the exclusive benefit of participating employees (all salaried employees who
have completed at least 1000 hours of service in a twelve-month period and have
attained the age of 21). The ESOP borrowed funds from the Company in an amount
sufficient to purchase 101,200 shares (8% of the Common Stock issued in the
stock offering). The loan is secured by the shares purchased and will be repaid
by the ESOP with funds from contributions made by B & L Bank, dividends received
by the ESOP and any other earnings on ESOP assets. B & L Bank presently expects
to contribute approximately $149,600, including interest, annually to the ESOP.
Contributions will be applied to repay interest on the loan first, then the
remainder will be applied to principal. The loan is expected to be repaid in
approximately 10 years. Shares purchased with the loan proceeds are held in a
suspense account for allocation among participants as the loan is repaid.
Contributions to the ESOP and shares released from the suspense account are
allocated among participants in proportion to their compensation relative to
total compensation of all active participants. Benefits generally become 25%
vested after each year of credited service beyond one year. Vesting is
accelerated upon retirement, death or disability of the participant. Forfeitures
are returned to B & L Bank or reallocated to other participants to reduce future
funding costs. Benefits may be payable upon retirement, death, disability or
separation from service. Since B & L Bank's annual contributions are
discretionary, benefits payable under the ESOP cannot be estimated.
The Company accounts for its ESOP in accordance with Statement of Position
("SOP") 93-6, EMPLOYERS' ACCOUNTING FOR EMPLOYEE STOCK OWNERSHIP PLANS.
Accordingly, the debt of the ESOP is eliminated in consolidation and the shares
pledged as collateral are reported as unearned ESOP shares in the consolidated
statements of financial condition. Contributions to the ESOP shall be sufficient
to pay principal and interest currently due under the loan agreement. As shares
are committed to be released from collateral, the Company reports compensation
expense equal to the average market price of the shares for the respective
period, and the shares become outstanding for earnings per share computations.
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 and accrued interest. ESOP compensation expense was $28,545 and $58,780 for
three and six months ended March 31, 1999, respectively, compared to $42,815 and
$ 86,191 for the three and six months ended March 31, 1998, respectively.
<TABLE>
<CAPTION>
A summary of ESOP shares at March 31, 1999 is as follows:
<S> <C>
Shares Allocated 24,524
Shares released for allocation 5,112
Unreleased shares 71,564
---------
TOTAL 101,200
=======
Fair value of unreleased shares $ 773,607
=========
</TABLE>
NOTE G--Management Recognition and Development Plan
- ---------------------------------------------------
The Board of Directors adopted (November 27, 1996) and the shareholders
subsequently approved (January 27, 1997) a management recognition and
development plan ("MRDP"). Under the MRDP, 50,600 shares of common stock were
awarded to certain directors, officers and employees of the Company and the B&L
Bank. The award will not require any payment by the recipients and will vest
over five years beginning one year after the date of the award (June 11, 1997).
At March 31, 1999, 10,120 shares were vested. The Company recognized $49,651 and
$99,302 as MRDP compensation expense for the three and six months ended March
31, 1999, respectively, and $88,341 and $176,682 for the three and six months
ended March 31, 1998, respectively. The amortization method used attributes a
higher percentage of compensation cost to earlier years than to the later years
of the service period.
-7-
<PAGE> 10
LEXINGTON B & L FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE H--Stock Options
- ---------------------
The Company has authorized the adoption of a stock option plan. Under the stock
option plan, options to acquire 126,500 shares of the Company's common stock may
be granted to certain officers, directors and employees of the Company or the
Bank. The options will enable the recipient to purchase stock at an exercise
price equal to the fair market value of the stock at the date of the grant. On
June 11, 1997, the Company granted options for 101,200 shares for $15.125 per
share. The options will vest over the five years following the date of grant and
are exercisable for up to ten years.
NOTE I--Acquisition
- -------------------
On October 1, 1997, the Company acquired Lafayette Bancshares, Inc., the holding
company for Lafayette County Bank, for $2,587,000 comprised of $1,039,000 in
cash and 96,111 shares of stock valued at $1,548,000. In addition, the Company
acquired the remaining minority interest of Lafayette County Bank for cash
amounting to $196,000. Also, approximately $185,000 of expenses were incurred in
connection with the acquisition. The transaction was accounted for under the
purchase method of accounting, with $1,063,000 recorded as cost in excess of net
assets acquired.
NOTE J--Year 2000
- -----------------
The Federal Financial Institutions Examination Council requires all insured
financial institutions to complete an inventory of core computer functions and
set priorities for meeting the Year 2000 conversion goals. The Company has
completed the assessment, analysis and planning phases of its Year 2000 plan and
is well into the execution phase. The Company's comprehensive Year 2000 plan
addresses all computer functions, such as those data processing applications
processed in-house and those preformed by third parties, and other non-computer
critical functions, such as building facilities and security systems, to insure
they will be operational when Year 2000 arrives.
As part of the plan, the Company identified those systems and business
applications which are mission critical, that is, systems and business
applications which, if they failed, would render the Company incapable of
performing core business processes. As of March 31, 1999, renovation and
certification of Year 2000 compliant of such identified mission-critical
applications was completed.
In addition to Year 2000 compatibility of all the Company's applications, the
Year 2000 plan addresses the relationship with loan customers, vendors and
service providers, which the failure of any of these parties to address Year
2000 issues could result in significant disruptions of business and costs to the
Company. The Company has assessed such relationships which are considered to be
material and from the responses received all third-party vendors and service
providers are addressing their Year 2000 readiness. Third-party vendors and
service providers were identified by an analysis of each banking operation
performed.
As a part of the Company's Year 2000 business resumption contingency plan,
provisions have been adopted to follow up on the progress of third-party vendors
and service providers to ascertain their progress in achieving Year 2000
readiness. Such follow up provisions are summarized as follows:
<TABLE>
<CAPTION>
Activating Contingency
Follow up Date Plan- Trigger Date
<S> <C> <C>
Third-party vendors:
Mission-critical suppliers of data/software that interfaces
with our mission-critical banking systems June 30, 1999 August 31, 1999
Service providers:
Mission-critical providers of utilities i.e. electric
telephone, water and gas June 30, 1999 September 30,1999
</TABLE>
If progress is not satisfactory by trigger dates, the contingency plan dictates
the Company is to pursue alternatives.
-8-
<PAGE> 11
LEXINGTON B & L FINANCIAL CORP.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Continued)
NOTE J --Year 2000 Cont
- -----------------------
All compliance certifications received to date have been reviewed and related
software/hardware has been tested in-house to verify Year 2000 readiness. As
future certifications are received they will be tested and verified.
In addition to the analysis of the core banking operations, loan officers
reviewed the potential effect of Year 2000 on the Company's major commercial and
multi-family borrowers. The results of the assessment showed that there was
little or no exposure from any of the Company's large borrowers and no reserves
were considered necessary.
Since all mission-critical software/hardware has been tested , Management's
worst-case Year 2000 scenario is that it would be unable to operate such
software/hardware because of electric or telephone failure. Management's plan to
meet this contingency will be to print out all customer and banking records at
December 31, 1999 and to manually post transactions until such power or
telephone failures are restored.
The Company has not engaged any independent reviews to report on the Company's
Year 2000 exposure. However the Company has used third-party proxy testing of
mission-critical banking systems/hardware. Third-party proxy tests and our own
independent tests on banking processes performed in-house have been completed.
The results of those tests revealed that all mission-critical software/
hardware is Year 2000 compliant. Mission-critical banking processes performed
by service providers has been tested by third-party proxy tests and has
been certified Year 2000 compliant.
The Company estimates that its total costs for Year 2000 remediation will be
approximately $131,000. Expenditures to date total approximately $85,000. Cost
for hardware and software upgrade are the largest components of the total
estimated costs. Personnel cost for the Company's own employees and outside
proxy testing cost are included in the estimate of Year 2000 remediation. Year
2000 expenditures are expensed as incurred. It is not expected that Year 2000
costs or activities will have a material adverse impact on operations of the
Company.
-9-
<PAGE> 12
LEXINGTON B & L FINANCIAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
GENERAL
The discussion and analysis included herein covers material changes in
results of operations during the three and six month periods ended March 31,
1999 and 1998 as well as those material changes in liquidity and capital
resources that have occurred since September 30, 1998.
In November 1998, the Company formed a mortgage banking subsidiary, B & L
Mortgage, Inc. The mortgage banking subsidiary was capitalized with $500,000 and
will be originating residential mortgages for resale in the secondary mortgage
market. The operations of the new mortgage subsidiary are included in the
accompanying operating income for the three and six months ended March 31, 1999.
The following should be read in conjunction with the Company's 1998 Annual
Report to Shareholders, which contains the latest audited financial statements
and notes thereto, together with Management's Discussion and Analysis of
Financial Condition and Results of Operations contained therein. Therefore, only
material changes in financial condition and results of operation are discussed
herein.
<TABLE>
<CAPTION>
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, MARCH 31,
1999 1998 1999 1998
---- ---- ---- ----
<S> <C> <C> <C> <C>
Per Share Data
Basic earnings per share...................... $ 0.14 $ 0.12 $ 0.30 $ 0.31
Diluted earnings per share.................... $ 0.14 $ 0.12 $ 0.30 $ 0.30
Cash dividends................................ -- -- $ 15 $ 0.15
Selected Ratios
Return on average assets...................... 0.47% 0.52% 0.53% 0.66%
Return on average stockholders' equity........ 3.16% 2.87% 3.26% 3.66%
Efficiency ratio.............................. 74.55% 75.25% 72.25% 70.71%
</TABLE>
<TABLE>
<CAPTION>
--------------AT---------------
March 31, September 30,
1999 1998
---- ----
<S> <C> <C>
Book value..................................... $ 15.72 $ 15.46
Market price (closing price at end of period).. $ 10.81 $ 13.00
Selected Ratios
Loans to deposits............................. 73.30% 81.96%
Allowance for loan losses to loans............ 0.95% 0.95%
Equity to total assets........................ 14.72% 16.63%
</TABLE>
SUMMARY
Consolidated net income for the six month period ended March 31, 1999 was
$268,000, a $39,000 decline or 12.7% from the same period last year. Basic
earnings per share of 30 cents declined 1 cent or 3.2% from a year ago and
diluted earnings per share were unchanged. The decrease in net income for the
six month period can be attributed to lower net interest income which declined
$105,000 and to a $17,000 increase in the provision for loan losses, offset by a
$47,000 decline in non-interest expenses.
-10-
<PAGE> 13
LEXINGTON B & L FINANCIAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
SUMMARY (CON'T)
Consolidated net income for the three month period ended March 31, 1999 was
$124,000; a $3,000 or 2.5% increase over the same period last year. Basic
earnings per share of 14 cents increased 2 cents or 16.7% compared to the same
period ended March 31, 1998. Diluted earnings per share increased 2 cents from
the 12 cents per share earned for the three month period ended March 31, 1998.
The increase in net income for the quarter ended March 31, 1999 compared to the
same period a year ago was the result of lower non-interest expense.
NET INTEREST INCOME
The following table summarizes the changes in net interest income, by major
categories of earning assets and interest bearing liabilities, identifying
changes related to volume and rate. Changes not solely due to volume or rate
changes are allocated pro rata to volume and rate. Management believes this
allocation method, applied on a consistent basis, provides meaningful
comparisons between periods (in thousands):
<TABLE>
<CAPTION>
Analysis of change in net interest income
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, 1999 VS 1998 MARCH 31, 1999 VS 1998
CHANGE DUE TO CHANGE DUE TO
AVERAGE AVERAGE AVERAGE AVERAGE
Analysis of change in net interest income VOLUME RATE TOTAL VOLUME RATE TOTAL
------ ---- ----- ------ ---- -----
Interest income:
<S> <C> <C> <C> <C> <C> <C>
Loans................................................. $ (42) $ 21 $ (21) $ (69) $ (2) $ (71)
Investment securities & interest bearing deposits 204 (43) 161 273 (68) 205
Federal funds sold.................................... (9) 2 (7) (4) (7) (11)
-------- -------- --------- ------- ------- ---------
Total interest income.......................... 153 (20) 133 200 (77) 123
Interest expense
Deposits.............................................. 108 (6) 102 152 2 154
Advances from FHLB.................................... 63 (1) 62 81 (2) 79
Notes payable......................................... (2) - (2) (5) - (5)
-------- -------- -------- ------- ------- ---------
Total interest expense........................ 169 (7) 162 228 - 228
-------- -------- -------- ------- ------- ---------
Net interest income..................................... (16) (13) $ (29) $ (28) $ (77) $ (105)
======== ======== ======== ======= ======= =========
</TABLE>
-11-
<PAGE> 14
<TABLE>
<CAPTION>
LEXINGTON B & L FINANCIAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
Analysis of change in net interest income
THREE MONTHS ENDED SIX MONTHS ENDED
MARCH 31, 1998 VS 1997 MARCH 31, 1998 VS 1997
CHANGE DUE TO CHANGE DUE TO
AVERAGE AVERAGE AVERAGE AVERAGE
Analysis of change in net interest income VOLUME RATE TOTAL VOLUME RATE TOTAL
------ ---- ----- ------ ---- -----
<S> <C> <C> <C> <C> <C> <C>
Interest income:
Loans........................................... $ 403 $ 32 $ 435 $ 789 $ 74 $ 863
Investment securities & interest bearing deposits 210 (72) 138 431 (154) 277
Federal funds sold.............................. 15 15 30 28 27 55
------- ------- ------- ------- ------- --------
Total interest income.................... 628 (25) 603 1,248 (53) 1,195
Interest expense
Deposits........................................ 378 (38) 340 751 (75) 676
Advances from FHLB.............................. 3 2 5 6 5 11
Notes payable................................... 5 6 11 11 12 23
------- ------- ------- ------- ------- --------
Total interest expense.................. 386 (30) 356 768 (58) 710
------- ------- ------- ------- ------- --------
Net interest income............................... $ 242 $ 5 $ 247 $ 480 $ 5 $ 485
======= ======= ======= ======= ======= ========
</TABLE>
Total interest income for the three and six month periods ended March 31, 1999
increased $133,000 and $123,000, respectively, over the comparable periods a
year ago. Interest expense for the three and six month periods ended March 31,
1999, increased $162,000 and $228,000, respectively, over the same periods a
year ago. The following table provides summaries of average assets and
liabilities and the corresponding average rates earned/paid (in thousands).:
<TABLE>
<CAPTION>
SIX MONTHS ENDED SIX MONTHS ENDED
MARCH 31, 1999 MARCH 31, 1998
INTEREST INTEREST
AVERAGE INCOME/ YIELD AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
------- ------- ---- ------- ------- ----
<S> <C> <C> <C> <C> <C> <C>
Interest Earning Assets
Loans.............................................. $ 61,982 $ 2,680 8.67% $ 63,579 $ 2,751 8.68%
Investment securities & interest-bearing deposits 22,199 700 6.32% 18,344 587 6.42%
Interest-bearing deposits.......................... 10,217 197 3.87% 4,395 105 4.79%
Federal funds sold................................. 1,838 44 4.80% 2,007 55 5.50%
--------- -------- ---- --------- --------- ----
Total Earning Assets/Average Yield............... 96,236 3,621 7.55% 88,325 3,498 7.95%
Interest Bearing Liabilities
Deposits........................................... 76,088 1,978 5.21% 70,237 1,824 5.21%
Advances from FHLB................................. 3,336 90 5.41% 340 11 6.49%
Notes payable...................................... 368 18 10.00% 473 23 10.00%
--------- -------- ----- --------- --------- -----
Total Interest Bearing Liabilities/Average Rate $ 79,792 2,086 5.25% $ 71,050 1,858 5.25%
-------- ---------
Net Interest Income.................................. $ 1,535 $ 1,640
======== =========
Net Interest Spread.................................. 2.30% 2.70%
Net Interest Margin.................................. 3.20% 3.72%
</TABLE>
-12-
<PAGE> 15
<TABLE>
<CAPTION>
LEXINGTON B & L FINANCIAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
NET INTEREST INCOME - CONTINUED
THREE MONTHS ENDED THREE MONTHS ENDED
MARCH 31, 1999 MARCH 31, 1998
INTEREST INTEREST
AVERAGE INCOME/ YIELD/ AVERAGE INCOME/ YIELD/
BALANCE EXPENSE RATE BALANCE EXPENSE RATE
------- ------- ---- ------- ------- ----
<S> <C> <C> <C> <C> <C> <C>
Interest Earning Assets
Loans........................................... $ 62,003 $ 1,352 8.84% $ 63,927 $ 1,373 8.71%
Investment securities & interest-bearing deposits 25,895 401 6.28% 18,148 292 6.52%
Interest-bearing deposits....................... 11,658 107 3.72% 4,528 51 4.57%
Federal funds sold.............................. 1,601 19 4.81% 2,210 30 5.50%
--------- -------- ---- --------- -------- ----
Total Earning Assets/Average Yield............ 101,157 1,879 7.53% 88,813 1,746 7.97%
Interest Bearing Liabilities
Deposits........................................ 79,335 1,010 5.16% 70,920 908 5.19%
Advances from FHLB.............................. 5,266 67 5.16% 340 5 5.96%
Notes payable................................... 368 9 10.00% 463 11 10.00%
--------- -------- ----- --------- -------- -----
Total Interest Bearing Liabilities/Average Rate $ 84,969 1,086 5.18% $ 71,723 924 5.22%
-------- --------
Net Interest Income............................... $ 793 $ 822
======== ========
Net Interest Spread....................................... 2.35% 2.75%
Net Interest Margin........................................ 3.18% 3.75%
</TABLE>
Net interest income for the three and six month periods ended March 31,
1999 was $793,000 and $1,535,000, respectively, decreased $29,000 and
$105,000,respectively, from the same periods last year. The decrease in net
interest income can be attributed to utilization of earning assets to repurchase
the Company's common stock and a narrowing interest spread. The net interest
spread declined 40 basis points in the quarter and six month periods ended
March 31, 1999 compared with the comparable period a year ago. The narrower net
interest spread can be partly attributed to competitive pressures which kept the
Company from lowering interest rates paid on retail deposits. The cost of funds
decreased 4 basis points during the quarter ended March 31, 1999 compared to the
same period a year ago. For the six months ended March 31, 1999, the Company's
cost of funds of 5.25% was unchanged from the comparable period last year.
RISK ELEMENTS OF LOAN PORTFOLIO
Non-performing assets include non-accrual loans, loans 90 days or more
delinquent and still accruing interest, foreclosed real estate and other
repossessed assets. The following table presents non-performing assets for the
periods indicated, (in thousands):
<TABLE>
<CAPTION>
March 31, September 30,
1999 1998
---- ----
<S> <C> <C>
Non-accrual loans................................................. $ 296 $ 524
Loans past due 90 days or more and still accruing interest........ 30 57
Foreclosed real estate and other repossessed assets............... 40 9
-- -
Total non-performing assets................................. $ 366 $ 590
=== ===
</TABLE>
Non-performing assets at March 31, 1999 were .34% of total assets, compared
to .63% of total assets at September 30, 1998. Non-accrual loans at March 31,
1999 consisted primarily of residence real estate loans, commercial and
commercial real estate loans.
-13-
<PAGE> 16
LEXINGTON B & L FINANCIAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
PROVISION FOR LOAN LOSSES/ALLOWANCE FOR LOAN LOSSES
The provision for loan losses increased $9,000 and $17,000, respectively,
for the three and six months ended March 31, 1999 compared to the same periods a
year ago. Loan charge offs totaled $20,000 and $33,000 for the three and six
month periods ended March 31, 1999 compared to $6,000 and $36,000, respectively,
during the three and six month periods ended March 31, 1998. Loan recoveries
were $4,000 for the six months ended March 31, 1999 compared to $13,000 for the
same period last year. The allowance for loan losses at March 31, 1999 was
$596,000 or .95% of outstanding loans compared to $599,000 or .95% at September
30, 1998.
NON-INTEREST INCOME
Non-interest income for the three month period ended March 31, 1999 of
$99,000 increased $16,000 over the three month period ended March 31, 1998. For
the six month period ended March 31, 1999 non-interest income of $184,000
increased $1,000 over the $183,000 reported for the same period last year. The
increase in non-interest income resulted from primarily from an increase in
insurance commissions.
NON-INTEREST EXPENSE
Non-interest expense of $683,000 and $1,278,000, respectively, for the
three and six months ended March 31, 1999, decreased $16,000 and $47,000,
respectively, from the comparable periods a year ago. Salaries and benefit cost
decreased $27,000 and $71,000, respectively, during the three and six months
ended March 31, 1999 from the same periods last year. The decrease in salaries
and benefits is primarily from a reduction in the cost of Management Recognition
and Development Plan and the ESOP Plan. The Management Recognition Development
Plan expense decreased $39,000 and $77,000, respectively, during the quarter and
six months ended March 31, 1999, compared to the same periods last year. ESOP
expense decreased $14,000 and $27,000, respectively, during the three and six
months ended March 31, 1999, from amount expensed in the comparable periods a
year ago.
LIQUIDITY AND CAPITAL RESOURCES
- -------------------------------
The Company's subsidiaries, B & L Bank and Lafayette County Bank, must
maintain an adequate level of liquidity to ensure availability of sufficient
funds to support loan growth and deposit withdrawals, satisfy financial
commitments and to take advantage of investment opportunities.
The primary source of liquidity for the Company's subsidiaries is liability
liquidity, which is the ability to raise new funds and renew maturing
liabilities. Principal sources of liability liquidity are customer deposits and
advances from Federal Home Loan Bank, of which both bank subsidiaries are
members. Asset liquidity is typically provided through proceeds from principal
and interest payments on loans, mortgage-backed securities, investment
securities and net operating income. While scheduled maturities and amortization
of loans, investment securities and mortgage-backed securities are somewhat
predictable sources of funds; deposit flows and mortgage prepayments are greatly
influenced by general interest rates, economic conditions and competition.
Liquid funds necessary for normal daily operations are maintained with the
Federal Home Loan Bank of Des Moines (FHLB) and correspondent banks. Excess
funds over balances required to cover bank charges for services, are sold in
overnight Federal funds or transferred to time deposit accounts at the FHLB.
At March 31, 1999, total stockholders' equity of $15,853,000 represented
14.7% of total assets compared to $15,593,000 or 16.6% of total assets at
September 30, 1998. These levels of primary capital exceed regulatory
requirements and the Company's peer group average.
-14-
<PAGE> 17
LEXINGTON B & L FINANCIAL CORP.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(continued)
LIQUIDITY AND CAPITAL RESOURCES-CONTINUED
B & L Bank
The Office of Thrift Supervision currently requires a thrift institution to
maintain an average daily balance of liquid assets (cash and eligible
investments) equal to at least 4% of the average daily balance of its net
withdrawable deposits and short-term borrowing. B & L Bank's liquidity ratio
was 27.7% at March 31, 1999. B & L Bank consistently maintains liquidity levels
in excess of regulatory requirements, and believes this is an appropriate
strategy for proper asset and liability management.
The Office of Thrift Supervision requires institutions such as B & L Bank to
meet certain tangible, core, and risk-based capital requirements. Tangible
capital generally consists of stockholders' equity minus certain intangible
assets. Core capital generally consists of stockholders' equity. The risk-based
capital requirements presently address risk related to both recorded assets and
off-balance sheet commitments and obligations. The following table summarizes
B & L Bank's capital ratios and the ratios required by regulation at March 31,
1999.
<TABLE>
<CAPTION>
Minimum
B & L Bank Required
Ratios at Capital
March 31, 1999 Ratios
-------------- ------
<S> <C> <C>
Risk-based capital............................... 30.1% 8.0%
Core capital..................................... 15.5% 3.0%
Tangible capital................................. 15.5% 1.5%
</TABLE>
Lafayette County Bank
The Federal Deposit Insurance Corporation adopted capital-related
regulations under FDICA. Under those regulations, a bank will be adequately
capitalized if it: (I) had a risk-based capital ratio of 8% or greater; (ii) had
a ratio of Tier I capital to risk-adjusted assets of 4% or greater, (iii) had a
ratio of Tier I capital to adjusted total assets of 4% or greater, (iv) was not
subject to an order, written agreement, capital directive, or prompt corrective
action directive to meet and maintain a specific capital level for any capital
measure.
<TABLE>
<CAPTION>
Lafayette Minimum
County Bank Required
Ratios at Capital
March 31, 1998 Ratios
-------- ------
<S> <C> <C>
Risk-based capital............................... 14.2% 8.0%
Tier 1 capital to net risk-weighted assets....... 13.0% 4.0%
Tangible equity ratio............................ 6.8% 4.0%
</TABLE>
-15-
<PAGE> 18
LEXINGTON B & L FINANCIAL CORP.
PART II - OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Neither the Registrant nor its banking subsidiaries, B & L Bank or Lafayette
County Bank, are a party to any material legal proceedings at this time. From
time to time the Company's banking subsidiaries are involved in various claims
and legal actions arising in the ordinary course of business.
ITEM 2. CHANGES IN SECURITIES
Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY-HOLDERS
The Annual Meeting of Stockholders' of the Company ("Meeting") was held on
January 26, 1999. The results of the vote on the matters presented at the
Meeting is as follows:
1. The following individuals were elected as directors, each for a three-year
term:
<TABLE>
<CAPTION>
Vote For Vote Withheld
-------- -------------
<S> <C> <C>
Erwin Oetting, Jr. 837,253 96,050
Steve Oliaro 838,103 95,200
</TABLE>
The terms of Directors Norman Vialle, Charles R. Wilcoxon, E Steva Vialle, and
Glenn H. Tweete continued on after the meeting.
Broker non-votes totaled -0-
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
None
ITEM 27 FINANCIAL DATA SCHEDULE
<PAGE> 19
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of 1934, the
registrant caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized.
Lexington B & L Financial Corp.
Date 5/10/99 By: /s/ Williams J. Huhmann
-------------- -----------------------------
William J. Huhmann
Date 5/07/99 By: /s/ E. Steva Vialle
-------------- -----------------------------
E. Steva Vialle
-17-
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL
STATEMENTS OF UNION FINANCIAL BANCSHARES, INC. FOR THE YEAR TO DATE PERIOD ENDED
DECEMBER 31, 1998 AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH
FINANCIAL STATEMENTS.
</LEGEND>
<CIK> 0001008598
<NAME> Lexington B & L Financial Corp.
<MULTIPLIER> 1
<CURRENCY> U.S Dollars
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> SEP-30-1999
<PERIOD-START> OCT-01-1998
<PERIOD-END> MAR-31-1999
<EXCHANGE-RATE> 1
<CASH> 2,336
<INT-BEARING-DEPOSITS> 9,559
<FED-FUNDS-SOLD> 650
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 3,130
<INVESTMENTS-CARRYING> 25,546
<INVESTMENTS-MARKET> 25,732
<LOANS> 62,664
<ALLOWANCE> 596
<TOTAL-ASSETS> 107,682
<DEPOSITS> 85,493
<SHORT-TERM> 251
<LIABILITIES-OTHER> 744
<LONG-TERM> 5,341
0
0
<COMMON> 13
<OTHER-SE> 15,840
<TOTAL-LIABILITIES-AND-EQUITY> 107,682
<INTEREST-LOAN> 2,680
<INTEREST-INVEST> 897
<INTEREST-OTHER> 44
<INTEREST-TOTAL> 3,621
<INTEREST-DEPOSIT> 1,978
<INTEREST-EXPENSE> 2,086
<INTEREST-INCOME-NET> 1,535
<LOAN-LOSSES> 26
<SECURITIES-GAINS> 7
<EXPENSE-OTHER> 1,278
<INCOME-PRETAX> 415
<INCOME-PRE-EXTRAORDINARY> 268
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 268
<EPS-PRIMARY> .30
<EPS-DILUTED> .30
<YIELD-ACTUAL> 1.60
<LOANS-NON> 296
<LOANS-PAST> 30
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,198
<ALLOWANCE-OPEN> 599
<CHARGE-OFFS> 33
<RECOVERIES> 4
<ALLOWANCE-CLOSE> 596
<ALLOWANCE-DOMESTIC> 500
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 96
</TABLE>
