UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-Q
(Mark One)
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1998
- OR -
_ TRANSACTION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
Commission file number 0-20987
Grand Premier Financial Inc.
(Exact Name of Registrant as Specified in its Charter)
Delaware 36-4077455
(State or Other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
486 W. Liberty St., Wauconda, IL 60084-2489
(Address of Principal Executive Office) (Zip Code)
Registrant's telephone number, including area code: (847) 487-1818
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months (or for such shorter
period that the registrant was required to file such reports) and (2) has
been subject to such filing requirements for the past 90 days. Yes X
or No
The number of shares of the registrant's Common Stock outstanding on
October 30, 1998 was 21,987,627 shares.
GRAND PREMIER FINANCIAL INCORPORATED
FORM 10-Q: QUARTERLY REPORT
FOR QUARTER ENDED SEPTEMBER 30, 1998
TABLE OF CONTENTS
PART I. FINANCIAL INFORMATION Page
Item 1. Financial Statements
Consolidated Balance Sheets (unaudited)
September 30, 1998 and December 31, 1997. 2 - 3
Consolidated Statements of Income (unaudited)
Nine Months Ended September 30, 1998 and 1997 4 - 5
Three Months Ended September 30, 1998 and 1997 6 - 7
Consolidated Statements of Cash Flow (unaudited)
Nine Months Ended September 30, 1998 and 1997 8 - 9
Notes to Unaudited Consolidated Financial Statements 10 - 12
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations. 13 - 19
Item 3. Quantitative and Qualitative Disclosures About
Market Risk 20
PART II. OTHER INFORMATION
Item 5. Other Information 21
Item 6. A. Exhibits 21 - 23
B. Reports on Form 8-K 24
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
ASSETS
(000's omitted
except share data)
September 30, December 31,
1998 1997
Cash and non-interest bearing deposits $ 38,099 $ 63,502
Interest bearing deposits 1,677 159
Federal funds sold 55,661 -
Cash and cash equivalents 95,437 63,661
Securities available for sale, at fair value 515,899 454,400
Securities purchased under agreements to resell 13,775 19,922
Loans 951,686 1,028,863
Less: Unearned discount (934) (991)
Allowance for possible loan losses (12,917) (15,404)
Net loans 937,835 1,012,468
Bank premises and equipment 34,628 35,154
Excess cost over fair value of net
net assets acquired, net 15,682 16,885
Accrued interest receivable 12,510 12,994
Other assets 15,479 30,896
Total assets $1,641,245 $1,646,380
The accompanying notes are an integral
part of these financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(continued)
LIABILITIES AND STOCKHOLDERS' EQUITY
(000's omitted
except share data)
September 30, December 31,
1998 1997
Liabilities
Non-interest bearing deposits $ 185,073 $ 187,943
Interest bearing deposits 1,170,760 1,142,588
Total deposits 1,355,833 1,330,531
Short-term borrowings 11,439 47,598
Long-term borrowings 70,000 70,000
Other liabilities 22,234 25,736
Total liabilities 1,459,506 1,473,865
Stockholders' equity
Preferred stock - $1 par value, 2,000,000
shares authorized:
Series B convertible, $1,000 stated value,
8.00%, 7,250 shares authorized, issued
and outstanding 7,250 7,250
Series C perpetual, $1,000 stated value,
8.00%, 2,000 shares authorized, issued
and outstanding 2,000 2,000
Common stock - $.01 par value
Number of Shares 9/30/98 12/31/97
Authorized 30,000,000 30,000,000
Issued 22,048,103 22,002,819
Outstanding 21,987,627 22,002,819 220 220
Surplus 79,082 79,029
Retained earnings 87,439 69,467
Accumulated other comprehensive income 6,366 14,549
Treasury stock, at cost
(60,476 shares at 9/30/98) (618) -
Stockholders' equity 181,739 172,515
Total liabilities &
stockholders' equity $1,641,245 $1,646,380
The accompanying notes are an integral
part of these financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(000's omitted
except per share data)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
1998 1997
Interest income
Interest and fees on loans $66,281 $67,019
Interest and dividends on
investment securities:
Taxable 13,416 17,061
Exempt from federal income tax 6,263 5,731
Other interest income 1,851 637
Total interest income 87,811 90,448
Interest expense
Interest on deposits 36,779 39,322
Interest on short-term borrowings 772 2,059
Interest on long-term borrowings 3,246 1,435
Total interest expense 40,797 42,816
Net interest income 47,014 47,632
Provision for possible loan losses 2,700 2,285
Net interest income after provision
for possible loan losses 44,314 45,347
Other income
Service charges on deposits 4,269 4,282
Trust fees 2,547 2,151
Investment securities gains, net 20,132 3,496
Other income 3,195 3,670
Total other income 30,143 13,599
Other expenses
Salaries 14,204 14,973
Pension, profit sharing and other
employee benefits 3,805 3,472
Net occupancy of bank premises 3,365 3,519
Furniture and equipment 2,990 2,702
Amortization of excess cost over fair
value of net assets acquired 1,203 1,203
Other 11,726 11,049
Total other expenses 37,293 36,918
The accompanying notes are an integral
part of these financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Continued)
(000's omitted
except per share data)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
1998 1997
Income before income taxes $37,164 $22,028
Applicable income taxes 13,229 7,370
Net income $23,935 $14,658
Earnings per share
Basic $ 1.06 $ .64
Diluted $ 1.03 $ .63
The accompanying notes are an integral
part of these financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(000's omitted
except per share data)
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
1998 1997
Interest income
Interest and fees on loans $21,644 $23,453
Interest and dividends on
investment securities:
Taxable 4,755 5,172
Exempt from federal income tax 2,134 1,931
Other interest income 890 160
Total interest income 29,423 30,716
Interest expense
Interest on deposits 12,540 13,070
Interest on short-term borrowings 166 945
Interest on long-term borrowings 1,094 483
Total interest expense 13,800 14,498
Net interest income 15,623 16,218
Provision for possible loan losses 900 925
Net interest income after provision
for possible loan losses 14,723 15,293
Other income
Service charges on deposits 1,428 1,472
Trust fees 849 718
Investment securities gains, net 18,206 672
Other income 1,212 1,342
Total other income 21,695 4,204
Other expenses
Salaries 4,703 4,974
Pension, profit sharing and other
employee benefits 1,289 1,028
Net occupancy of bank premises 1,192 1,157
Furniture and equipment 1,000 967
Amortization of excess cost over fair
value of net assets acquired 401 401
Other 4,570 3,700
Total other expenses 13,155 12,227
The accompanying notes are an integral
part of these financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Continued)
(000's omitted
except per share data)
THREE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
1998 1997
Income before income taxes $23,263 $ 7,270
Applicable income taxes 8,747 2,503
Net income $14,516 $ 4,767
Earnings per share
Basic $ .65 $ .21
Diluted $ .62 $ .20
The accompanying notes are an integral
part of these financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(000's omitted)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
1998 1997
Cash flows from operating activities:
Net income $23,935 $ 14,658
Adjustments to reconcile net earnings to
net cash from operating activities:
Amortization net, related to:
Investment securities 1,051 710
Excess of cost over net assets acquired 1,203 1,203
Other 251 702
Depreciation 3,079 2,611
Provision for possible loan losses 2,700 2,285
Gain on sale related to:
Investment securities (20,132) (3,496)
Loans sold to secondary market (367) (166)
Loans originated for sale (52,149) (20,845)
Loans sold to secondary market 52,516 21,011
Change in:
Other assets 21,237 (10,066)
Other liabilities (3,506) 2,964
Net cash from operating activities 29,818 11,571
Cash flows from investing activities:
Purchase of securities available for sale (268,452) (94,354)
Proceeds from:
Maturities of securities available for sale 157,575 77,776
Sales of securities available for sale 55,048 90,290
Net (increase) decrease in loans 71,606 (74,969)
Purchase of bank premises and equipment (2,585) (4,061)
Net (increase) decrease in securities under
resale agreements 6,147 (6,012)
Net cash from investing activities 19,339 (11,330)
Cash flows from financing activities
Net increase (decrease) in deposits 25,302 (63,632)
Net increase (decrease) in short term borrowings (36,159) 58,837
Proceeds from exercise of stock options 53 65
Purchase of treasury stock (618) -
Dividends paid (5,959) (5,357)
Net cash from financing activities (17,381) (10,087)
Net increase (decrease) in cash and cash equivalents 31,776 (9,846)
Cash and cash equivalents at beginning of year 63,661 65,955
Cash and cash equivalents at end of period $95,437 $ 56,109
The accompanying notes are an integral
part of these financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(continued)
(000's omitted)
NINE MONTHS ENDED SEPTEMBER 30, 1998 AND 1997
1998 1997
Supplemental disclosure of cash flow information:
Cash paid during the year for:
Interest 41,232 42,775
Income taxes 2,650 8,811
Non-cash activities:
Loans transferred to other real estate owned 108 965
The accompanying notes are an integral
part of these financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
1. The accompanying consolidated financial statements include the
financial information of Grand Premier and its subsidiaries, all of
which are wholly owned. Significant intercompany balances and
transactions have been eliminated. The consolidated financial
statements for the three months and nine months ended September 30,
1998 and 1997 are unaudited. In the opinion of management, the
interim financial statements reflect all adjustments (consisting
only of adjustments of a normal recurring nature) necessary for a
fair presentation of Grand Premier's financial position, results of
operations and cash flows for the interim periods presented. The
results for such interim periods are not necessarily indicative of
the results for the full year. The consolidated financial statements
and notes to the consolidated financial statements contained in the
Annual Report on Form 10-K for the year ended December 31, 1997,
should be read in conjunction with these consolidated financial
statements. Certain amounts for 1997 have been reclassified to
conform to the 1998 presentation.
2. In 1997, the Company adopted Statement of Financial Accounting
Standards No. 128, "Earnings per share" ("SFAS No. 128"). Under SFAS
No. 128, basic earnings per share is computed by dividing net income
less preferred stock dividends by the average number of common
shares outstanding during the period. Diluted earnings per share is
computed by dividing net income less preferred stock dividends
excluding dividends on convertible preferred stock by the average
number of common shares outstanding during the period plus the
average number of shares that would be issued upon exercise of
dilutive stock options using the treasury method plus the average
number of shares that would be issued upon conversion of dilutive
convertible preferred stock. Earnings per share amounts for the
nine months and three months ended September 30, 1997 have been
restated.
The following schedule reconciles net income to income available to
common stockholders and the number of average shares used in the
computation of basic and diluted earnings per share. Share data has
been adjusted for a 10% stock dividend declared September 28, 1998.
Per
Income Shares Share
(Numerator) (Denominator) Amount
(in thousands)
Nine months ended September 30, 1998:
Net income $23,935
Less: Preferred stock dividends (555)
Basic EPS
Income available to
common stockholders 23,380 21,974,413 $1.06
Effect of Dilutive securities:
Stock options 311,375
Convertible preferred stock 435 936,852
Diluted EPS
Income available to common
stockholders and assumed
conversions $23,815 23,222,640 $1.03
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
2. (Continued)
Nine months ended September 30, 1997:
Net income $14,658
Less: Preferred stock dividends (555)
Basic EPS
Income available to
common stockholders 14,103 22,001,906 $ .64
Effect of Dilutive securities:
Stock options 235,765
Convertible preferred stock 435 936,852
Diluted EPS
Income available to common
stockholders and assumed
conversions $14,538 23,174,523 $ .63
Three months ended September 30, 1998:
Net income $14,516
Less: Preferred stock dividends (185)
Basic EPS
Income available to
common stockholders 14,331 21,985,843 $ .65
Effect of Dilutive securities:
Stock options 262,832
Convertible preferred stock 145 936,852
Diluted EPS
Income available to common
stockholders and assumed
conversions $14,476 23,185,527 $ .62
Three months ended September 30, 1997:
Net income $ 4,767
Less: Preferred stock dividends (185)
Basic EPS
Income available to
common stockholders 4,582 22,002,819 $ .21
Effect of Dilutive securities:
Stock options 273,439
Convertible preferred stock 145 936,852
Diluted EPS
Income available to common
stockholders and assumed
conversions $ 4,727 23,213,110 $ .20
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS
(continued)
3. In 1998, the Company adopted Statement of Financial Accounting
Standards No. 130, "Reporting Comprehensive Income" ("SFAS 130")
which establishes standards for reporting and the display of
comprehensive income and its components in a full set of general
purpose financial statements. SFAS 130 requires all items to be
recognized under accounting standards as components of comprehensive
income be reported in a financial statement that is displayed in
equal prominence with other financial statements. The Company is
required to classify items of "other comprehensive income" by their
nature in the financial statement and display the balance of other
comprehensive income separately in the stockholders' equity section
of the balance sheet. For interim reporting purposes, the
disclosure of other comprehensive income may be included in the
notes to the interim financial statements.
The Company's comprehensive income includes net income and other
comprehensive income comprised entirely of unrealized gains or
losses on securities available for sale, net of tax.
Nine months ended
September 30,
1998 1997
Net income $23,935 $14,658
Other comprehensive income, net of tax
Unrealized gains on securities:
Unrealized gain arising
during the period 1,995 11,048
Reclassification adjustment for
(gains) losses included in net income (10,178) (1,879)
Other comprehensive income (8,183) 9,169
Comprehensive income $15,752 $23,827
Three months ended
September 30,
1998 1997
Net income $14,516 $ 4,767
Other comprehensive income, net of tax
Unrealized gains on securities:
Unrealized gain arising
during the period 1,649 4,148
Reclassification adjustment for
(gains) losses included in net income (11,672) 368
Other comprehensive income (loss) (10,023) 4,516
Comprehensive income $ 4,493 $ 9,283
4. The Company declared a 10% stock dividend on September 28, 1998. The
stock dividend will be distributed on December 1, 1998 to
stockholders of record on November 15, 1998. All share and per share
amounts for all periods presented have been restated to reflect the
stock dividend.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
This discussion provides an analysis of the Company's financial condition
and results of operations, and is intended to cover significant factors
affecting the Company's overall performance during the interim periods
presented. It is designed to provide shareholders with a more
comprehensive review of the operating results and financial condition
that are not otherwise apparent from the consolidated financial
statements included in this report, and should be read in conjunction
with the consolidated financial statements, accompanying notes and other
financial information included elsewhere in this report and in the 1997
Annual Report on Form 10-K.
Statements or comments contained in the following discussion and analysis
of financial condition and results of operations that are not historical
facts may contain forward looking information that involve substantial
risks and uncertainties. Actual results, performance or achievements
could differ materially from the results, performance or achievements
expressed or implied by these forward looking statements. For a
discussion of these risks and uncertainties, see the "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
in the 1997 Annual Report on Form 10-K.
The Company declared a 10% stock dividend on September 28, 1998. Share
and per share amounts for all periods presented have been adjusted to
reflect the stock dividend.
Results of Operations
Net income for the quarter ended September 30, 1998 totaled $14.5
million, or $.62 per diluted share, compared to $4.8 million, or $.20 per
diluted share for quarter ended September 30, 1997. During the third
quarter 1998, the Company sold its portfolio of listed equity securities.
Total after tax securities gains realized during the quarter were
approximately $11 million, or $.47 diluted earnings per share. In the
similar quarter of 1997, the Company realized securities gains of
approximately $405,000, or $.02 per diluted share. Excluding securities
gains net of tax, net income was $3.5 million, or $.15 per diluted share,
for the third quarter 1998 compared to $4.3 million, or $.18 per diluted
share, in 1997. Net income for the nine months ended September 30, 1998
totaled $23.9 million, or $1.03 per diluted share, compared to $14.7
million, or $.63 per diluted share for the nine months ended September
30, 1997. Year-to-date after tax securities gains contributed $12.1
million, or $.52 per diluted share, and $2.1 million, or $.09 per diluted
share, for 1998 and 1997, respectively. Excluding the after tax
securities gains, year-to-date net income totaled $11.8 million, or $.51
per diluted share, in 1998 compared to $12.6 million, or $.54 per diluted
share, in 1997.
Taxable equivalent net interest income for the nine month period totaled
$50.4 million in 1998, down from $51.1 million in 1997. Average earning
assets were $1.49 billion in 1998, down from $1.52 billion in 1997. The
average yield on earning assets through September 30, was 8.20% in 1998
compared to 8.26% in 1997. During the periods, average loan yield
increased from 8.96% on average loans of $1.0 billion in 1997 to 9.04%
on average loans of $982 million in 1998. The increase in the loan yield
was more than offset by a decline in investment yields from 6.95% in 1997
to 6.64% in 1998. Average investments decreased from $502 million in 1997
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(continued)
to $464 million in 1998. While the yield on earning assets decreased, the
average cost of funds also decreased from 3.76% in 1997 to 3.67% in 1998.
The Company's net interest margin improved to 4.54% in 1998 compared to
4.50% in 1997, however the lower base of earning assets resulted in a
decline in net interest income.
During the third quarter 1998, taxable equivalent net interest income
totaled $16.8 million compared to $17.5 million in the similar quarter of
1997. The declining trend in net interest income is mainly attributable
to the effects of declining interest rates and weakened loan demand.
Average accruing loan balance during the third quarter of 1998 was $952
million compared to $1.03 billion a year ago. During the third quarter,
the 9.02% average rate earned on loans decreased slightly compared to
9.06% in the similar quarter of 1997. The decline in loan demand
resulted in an increase in lower yielding short-term investments (federal
funds sold and securities purchased under agreements to resell) and the
investment portfolio. Average investment securities totaled $493 million
for the quarter ended September 1998, compared to $483 million in 1997.
The average taxable equivalent yield on investment securities was 6.48%
during the third quarter 1998, 27 basis points lower than 6.75% last
year. The decline in investment yield is the combined result of increased
purchases of securities in the lower interest rate environment and
additional premium amortization due to accelerated prepayments on
mortgage-backed investment securities. With all factors combined, the
average yield on earning assets declined to 8.05% during the third
quarter compared to 8.32% a year ago. At the same time, the Company's
quarterly average cost of funds decreased to a lesser extent from 3.77%
in 1997 to 3.63% in 1998. During the quarters ended September 30, the
Company's net interest margin was 4.42% in 1998 compared to 4.55% in
1997.
The Company's provision for possible loan losses was $900,000 for the
third quarter of 1998 compared to $925,000 in the similar quarter of
1997. The year to date provisions for 1998 and 1997 were $2.7 million and
$2.3 million, respectively. The Company's provision is based on periodic
evaluations by management of the adequacy of the allowance for possible
loan losses. These evaluations consider numerous factors including, but
not limited to, current economic conditions, loan portfolio composition,
prior loss experience, and an estimation of potential losses. The
allowance for possible loan losses was $12.9 million (1.36% of gross
loans) at September 30, 1998 and $15.4 million (1.50% of gross loans) at
December 31, 1997.
Nonperforming loans (nonaccrual loans, loans past due 90 days or more and
still accruing, and renegotiated loans) totaled $9.3 million at September
30, 1998 compared to $8.0 million at December 31, 1997. The change is
mainly attributable to a $3.2 million increase in loans secured by
nonfarm nonresidential properties partially offset by a $1.4 million
decrease in nonaccrual indirect auto loans and a $.6 million decrease in
commercial loans not secured by real estate. During the first nine
months, net charge-offs totaled $5.2 million in 1998 compared to $1.9
million in 1997. Net charge-offs from the indirect auto loan portfolio
were $4.3 million and $1.2 million during the respective periods. The
Company made a provision for possible loan losses of approximately $6
million during the final quarter of 1997 as a result of deterioration
specifically identified in the indirect auto loan portfolio. At that
time, the Company also announced its intention to immediately discontinue
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(continued)
originating new indirect loans. Management believes the allowance for
possible loan losses is adequate to absorb future losses in the loan
portfolio.
Other income increased substantially to $30.1 million for the nine months
ended September 30, 1998 compared to $13.6 million for the similar period
in 1997. The Company sold its portfolio of listed equity securities
during the third quarter of 1998. Total securities gains contributed
$20.1 million to other income in 1998 compared to $3.5 million in 1997.
Excluding securities gains, other income was comparable at $10.0 million
in 1998 and $10.1 in 1997. Service charges on deposits were relatively
unchanged at $4.3 million for both years. Growth in managed assets and
the number of clients served generated an 18% increase in trust fees from
$2.2 million in 1997 to $2.5 million in 1998. Net gains on the sale of
loans, offset by a $266,000 loss on a sale of approximately $8.1 million
of indirect loans, contributed $370,000 to other income in 1998 compared
to $166,000 in 1997.
During the third quarter 1998, the Company's $18.2 million in security
gains caused a large fluctuation in other income which rose to $21.7
million. Other income in the third quarter 1997 was $4.2 million
including $672,000 in securities gains. Excluding securities gains, other
income was approximately $3.5 million for both years. Service charges on
deposits, $1.43 million in 1998 and $1.48 million in 1997, continue to be
the largest source of recurring other income. Trust fees, up 18% from
$718,000 in 1997 to $849,000 in 1998, also remain a large contributor.
Third quarter other income also includes gains on sales of loans,
$182,000 in 1998 and $84,000 in 1997, and a one time gain of
approximately $135,000 from the 1997 sale of the property and casualty
product lines of the Company's insurance subsidiary.
Other expenses totaled $37.3 million year to date for 1998 compared to
$36.9 million in 1997. Salaries and benefits declined from $18.4 million
in 1997 to $18.0 million in 1998. Salary expense decreased $769,000 but
was partially offset by a $333,000 increase in benefits. Net occupancy
expenses decreased slightly from $3.5 million in 1997 to $3.4 million in
1998. Furniture and equipment expense increased from $2.7 million in 1997
to $3.0 million primarily as the result of the Company's standardization
of computer equipment in 1997. Other expenses increased from $11.0
million in 1997 to $11.7 million in 1998. The 1998 increase is primarily
the result of a write off of an obsolete computer software system, costs
associated with the closing of two branches, and increased loan
collection expenses mainly attributable to the indirect auto loan
portfolio.
During third quarter of 1998, other expenses increased $928,000 to $13.2
million when compared to the same quarter of 1997. A $271,000 decrease in
salary expense was nearly offset by a $261,000 increase in benefits when
comparing the quarters. Combined occupancy and equipment expense
increased a modest 3.2% from $2.1 million in 1997 to $2.2 million in
1998. Other expenses increased from $3.7 million in 1997 to $4.6 million
in 1998. The increase is mainly attributable to the write off of a
computer software system, the closing of two branches, and loan
collection expenses in 1998 totaling approximately $899,000 compared to
the closing of a branch and loan collection expenses of approximately
$231,000 in 1997.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(continued)
Year to date income tax expense increased from $7.4 million in 1997 to
$13.2 million in 1998. The effective tax rate for the nine months ended
September 30, 1998 was 35.6% compared to 33.5% in 1997. The increase in
the effective tax rate is primarily the result of changes in the amount
of interest income exempt from federal income taxes as a percentage of
income before taxes. The considerable amount of securities gains realized
in 1998 makes this change more noticeable than in previous periods.
Financial Condition
Total assets were $1.64 billion at September 30, 1998, slightly lower
than $1.65 billion at December 31, 1997. While total assets are
essentially unchanged, asset composition did change. Cash and cash
equivalents increased from $64 million at year-end to $95 million at
September 30, 1998. During the nine months, investment securities
increased 13.5% from $454 million at year-end to $516 million at
September 30. The increase in cash, cash equivalents and investment
securities is due, in large part, to weakened loan demand. Gross loans
decreased 7.5% from $1.029 billion to $951 million at December 31, 1997
and September 30, 1998, respectively. Part of the decline in loan volume
is the result of Company's decision to exit the indirect auto loan
market. Through normal principal repayments and a sale of loans totaling
approximately $8.1 million, the balance of the indirect portfolio
decreased from $88.4 million at December 31, 1997 to $48.2 million at
September 30, 1998.
Deposits remained relatively stable at $1.36 billion at September 30,
1998 compared to $1.33 billion at year-end. Short-term borrowings,
mainly federal funds purchased, declined $36 million from $48 million at
December 31, 1997. Shareholders' equity increased $9.2 million, primarily
from undistributed net earnings. The realization of substantial
securities gains during the third quarter created a shift from
accumulated other comprehensive income to retained earnings.
Current Accounting Developments
The Financial Accounting Standards Board (FASB) has issued Statement of
Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" (SFAS 131), which is effective for
fiscal years beginning after December 15, 1997. This statement
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. The Company adopted
SFAS 131 on January 1, 1998 and required disclosures will be included
beginning with the Company's 1998 Form 10-K Annual Report. The Company
operates as a single segment.
The FASB has issued Statement of Financial Accounting Standards No. 132,
"Employer's Disclosures about Pensions and Other Post-Retirement
Benefits" (SFAS 132), which is effective for fiscal years beginning after
December 15, 1997. This statement revises employers' disclosures about
pension and other post-retirement benefit plans. It does not change the
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(continued)
measurement of recognition of those plans. It standardizes the disclosure
requirements for pensions and other post-retirement benefits to the
extent practicable, requires additional information on changes in the
benefit obligations and fair values of plan assets that will facilitate
financial analysis, and eliminates certain disclosures that are no longer
as useful. The Company adopted SFAS 132 on January 1, 1998. The adoption
of SFAS 132 did not have a material impact on the Company's consolidated
financial statements.
The FASB has issued Statement of Financial Accounting Standards No. 133,
"Accounting for Derivative Instruments and Hedging Activities" (SFAS 133)
in June 1998. SFAS 133 standardizes the accounting for derivative
instruments, including certain derivative instruments embedded in other
contracts. Under the standard, entities are required to carry all
derivative instruments in the statement of financial position at fair
value. The accounting changes in the fair value (i.e. gains or losses)
of a derivative instrument depends on whether it has been designated and
qualifies as part of a hedging relationship and, if so, on the reason for
holding it. If certain conditions are met, entities may elect to
designate a derivative instrument as a hedge of exposures to changes in
fair values, cash flows, or foreign currencies. If the hedged exposure
is a fair value exposure, the gain or loss on the derivative instrument
is recognized in earnings in the period of change together with the
offsetting loss or gain on the hedged item attributable to the risk being
hedged. If the hedged exposure is a cash flow exposure, the effective
portion of the gain or loss on the derivative instrument is reported
initially as a component of other comprehensive income (outside earnings)
and subsequently reclassified into earnings when the forecasted
transaction affects earnings. Any amounts excluded from the assessment
of hedge effectiveness as well as the ineffective portion of the gain or
loss is reported in earnings immediately. Accounting for foreign
currency hedges is similar to the accounting for fair value and cash flow
hedges. If the derivative instrument is not designated as a hedge, the
gain or loss is recognized in earnings in the period of change. The
adoption of SFAS 133 is not expected to have a material impact on the
Company's consolidated financial statements.
In October 1998, the FASB issued Statement of Financial Accounting
Standards No. 134, "Accounting for Mortgage-Backed Securities Retained
after the Securitization of Mortgage Loans Held for Sale by a Mortgage
Banking Enterprise" (SFAS 134). SFAS 134 amends Statement No. 65,
"Accounting for Certain Mortgage Banking Activities" to conform the
subsequent accounting for securities retained after the securitization of
mortgage loans by a mortgage banking enterprise with the subsequent
accounting for securities retained after the securitization of other
types of assets by a nonmortgage banking enterprise. SFAS 134 is
effective for the first quarter beginning after December 15, 1998 and
enterprises may reclassify mortgage-backed securities and other
beneficial interests retained after the securitization of mortgage loans
held for sale from the trading category, except for those with sales
commitments in place. The reclassification is to be done only by those
enterprises covered by SFAS 134 and is to be done when the statement is
initially applied. The adoption of SFAS 134 is not expected to have a
material impact on the Company's consolidated financial statements.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(continued)
Year 2000
Many existing computer programs use only two digits to identify a year in
a date field. These programs were designed and developed without
considering the impact of a change in century. If not corrected, many
computer programs could fail, or create erroneous results which could
affect a company's ability to do business prior to, at, or after
December 31, 1999.
Financial service organizations such as Grand Premier are heavily reliant
upon computer systems in processing and accounting for services provided
to customers. Substantially all of the Company's major computer systems
are contracted with third party providers. Although the contracted
vendors bear the responsibility of making their systems "year 2000
compliant", assuming the costs associated with necessary changes, keeping
the Company appraised of their progress in meeting established
benchmarks, and certifying to the Company that the systems are in fact
"year 2000 ready", the Company bears ultimate responsibility for
testing, due diligence and assurance that its major vendors will continue
to provide service without interruption due to the change in century at
year-end 1999.
In mid 1997, the Company established an internal task force to identify
and or resolve issues related to the year 2000 change. In addition to
the internal task force, the Company employs one full time specialist as
well as outside consultants dedicated to the year 2000 project. The task
force has developed a comprehensive inventory of all of the systems used
by the Company. Further the Company has identified those systems which
are deemed "mission critical" to its business.
The Company maintains regular communications with vendors who provide
critical systems to the Company to verify that 1) their time-lines and
benchmarks are met, 2) testing is performed regularly and according to
schedule, and 3) necessary changes are being identified and addressed.
Similarly, the task force has established its own benchmarks and time-
lines for managing the "year 2000 project", for evaluating and changing
(if necessary) other systems used internally by the Company, and for
prioritizing efforts with regard to overall year 2000 issues as they
apply to the Company.
Management has developed contingency plans in the event that efforts to
remedy the Company's systems are not fully successful or are not
completed in accordance with current expectations. The contingency plans
are being designed to address any failure to remedy the Company's
internal systems and to address failures of any third party vendors. The
contingency plans primarily include the use of substitute third party
service providers, and/or a shift to manual processes.
The Company has begun testing of all mission critical systems. Mission
critical testing for third party systems is partially dependent on the
vendor and accomplished mostly through user group and/or proxy testing.
Mission critical testing for in house systems is being performed by the
Company's year 2000 task force members, key members of the technology
group, and outside consultants. Management plans on having all testing
completed by June 30, 1999.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATION
(continued)
In August of 1998, the Company entered into an agreement to switch core
data processing systems. The new system is more in line with the
Company's business plan and will assist the Company in focusing on
relationship banking. Conversion to the new system is anticipated to
occur early in the second quarter of 1999. The new data processing
system will be purchased software operated "in house". The vendor has
asserted that its system is fully "year 2000 ready". Current user groups
have reviewed the vendor's testing and determined the testing to be
satisfactory and the system "year 2000 compliant".
As a part of its credit analysis process, the Company has also developed
a project plan for assessing the Year 2000 readiness of its significant
credit customers. Initial information has been obtained from significant
borrowers relative to their year 2000 preparedness. The Company will
continue correspondence with these significant customers to ensure
continued progress and preparedness for year 2000.
The projected total cost of the year 2000 project is currently estimated
at approximately $150,000 and is comprised primarily of the salary for
the internal specialist, as well as external consultant fees. As of
September 30, 1998, a cumulative total of approximately $40,000 had been
spent on the Year 2000 project. All costs associated with the year 2000
project are being charged to expense as incurred.
The costs of the project are based on management's best estimates, which
were derived utilizing numerous assumptions of future events including
the continued availability of certain resources, third party testing and
modification plans, and other factors. However, there can be no
assurance that these estimates will be achieved and actual results could
differ materially from those plans. Specific factors that might cause
such material differences include, but are not limited to, the
availability and cost of personnel trained in this area, the inability to
control third party modification plans, and similar uncertainties.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
QUANTITATIVE AND QUALITATIVE DISCLOSURES
ABOUT MARKET RISK
The Company's exposure to market risk arises from changes in interest
rates and equity prices. Managing these risks is the responsibility of
the Company's Asset/Liability Management Committee ("ALCO") established
by the Board of Directors. ALCO meets periodically, at least quarterly,
to evaluate the Company's market risk exposure.
In August 1998, the Company sold its portfolio of listed equity
securities. As a result of the sales, the Company eliminated its risk
exposure to adverse changes in equity prices.
Based upon ALCO's most recent evaluation, management does not believe the
Company's interest rate risk position at September 30, 1998 has changed
materially from year-end 1997 which is more thoroughly discussed in the
Company's Form 10-K.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
PART II. OTHER INFORMATION
Item 5. Other Information
The Company entered into agreements to sell four of its branch offices
located in Polo, Mount Carroll, Stockton and Warren along with
approximately $84 million in deposits associated with the branches.
Under the terms of the agreements, the Company will receive premiums
on the deposits upon the consummation of the transactions aggregating
to approximately $7.9 million . The sales are subject to regulatory
approval of applications filed by the potential purchasers. Pending
approval, the transactions are expected to be completed during the
first quarter of 1999.
Item 6. Exhibits and Reports on Form 8-K
(A) Exhibits as follows
The following exhibits are filed with, or incorporated by
reference in, this report. Each management contract or
compensatory plan or arrangement required to be filed as an
exhibit to this report has been marked with an asterisk.
2.1 Agreement and Plan of Merger, dated January 22, 1996, among
Northern Illinois Financial Corporation, Premier Financial
Services, Inc and the Company (incorporated by reference to
Exhibit 2.1 to the Company's Registration Statement on Form
S-4, as amended, File No. 333-03327), as amended by the
First Amendment thereto, dated March 18, 1996 (incorporated
by reference to Exhibit 2.2 to the Company's Registration
Statement on Form S-4, as amended, File No. 333-03327), and
the Second Amendment thereto (incorporated by reference to
Exhibit 2.3 to the Company's Current Report on Form 8-K,
dated August 22, 1996, Commission File No. 0-20987).
3.1 Amended and Restated Certificate of Incorporation of the
Company (incorporated by reference to Appendix F to the
final proxy-statement prospectus included in the Company's
Registration Statement on Form S-4, as amended, File No.
333-03327).
3.2 By-laws of the Company (incorporated by reference to
Exhibit 3.4 to the Company's Registration Statement on Form
S-4, as amended, File No. 333-03327).
4 Rights Agreement, dated as of July 8, 1996, between Grand
Premier Financial, Inc. and Premier Trust Services, Inc.
(incorporated by reference to the Company's Registration
Statement on Form S-4, as amended, File No. 333-03327).
10.1* Form of Change in Control Agreement, dated October (2)/(8),
1996, entered into between the Company and each of Richard
L. Geach, David L. Murray, Kenneth A. Urban, Steven E.
Flahaven and Scott Dixon (incorporated by reference to the
Company's Quarterly Report on Form 10-Q dated September 30,
1996, Commission file No. 0-20987).
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
10.2* Form of Change in Control Agreement, dated October (2)/(8),
1996, entered into between the Company and each of Robert
Hinman, Alan Emerick, Jack Emerick, Joseph Esposito,
William Theobald, Reid French, Larry O'Hara and Ralph Zicco
(incorporated by reference to the Company's Quarterly
Report on Form 10-Q dated September 30, 1996, Commission
file No. 0-20987).
10.3* Grand Premier Financial, Inc. 1996 Non-Qualified Stock
Option Plan, as amended (incorporated by reference to
Exhibit 10.3 of the Company's Annual Report on Form 10-K
dated December 31, 1997, Commission file No. 0-20987).
10.4* Premier Financial Services, Inc. 1995 Non-Qualified Stock
Option Plan, as amended (incorporated by reference to
Exhibit 10.4 of the Company's Annual Report on Form 10-K
dated December 31, 1997, Commission file No. 0-20987).
10.5* Premier Financial Services, Inc. 1988 Non-Qualified Stock
Option Plan, as amended (incorporated by reference to
Exhibit 10.5 of the Company's Annual Report on Form 10-K
dated December 31, 1997, Commission file No. 0-20987).
10.6* Premier Financial Services, Inc. Senior Leadership and
Directors Deferred Compensation Plan, as amended
(incorporated by reference to Exhibit 4.1 to the Company's
Registration Statement on Form S-8, File No. 333-11645).
10.7* Consulting Agreement, dated February, 17, 1995, between
Howard A. McKee and Grand National Bank (incorporated by
reference to Exhibit 10.1 to the Company's Registration
Statement on Form S-4, as amended, File No. 333-03327).
10.8* Grand Premier Financial, Inc. Deferred Compensation Plan
(incorporated by reference to Exhibit 10.8 of the Company's
1996 Annual Report on Form 10-K, File No. 0-20987).
10.9* Grand Premier Financial, Inc. Savings and Stock Plan and
Trust (incorporated by reference to Exhibit 10.9 of the
Company's 1996 Annual Report on Form 10-K, File No. 0-
20987).
10.10*Employment and Consulting Agreement, dated May 1, 1997,
between Grand Premier Financial, Inc., and Howard A. McKee
(incorporated by reference to Exhibit 10.10 to the
Company's Quarterly Report on Form 10-Q dated June 30,
1997, Commission file No. 0-20987.)
10.11*Grand Premier Financial, Inc. Non-Employee Directors Stock
Option Plan (incorporated by reference to Appendix A of the
Company's definitive Proxy Statement dated April 13, 1998.)
11. Statement re computation of per share earnings (See Note 2
to the Consolidated Financial Statements for the three and
nine months ended September 30, 1998).
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
27.1 Financial Data Schedule, for the nine months ended
September 30, 1998
27.2 Restated Financial Data Schedule, for the six months ended
June 30, 1998.
27.3 Restated Financial Data Schedule, for the three months
ended March 31, 1998.
27.4 Restated Financial Data Schedule, for the twelve months
ended December 31, 1997.
27.5 Restated Financial Data Schedule, for the nine months ended
September 30, 1997.
27.6 Restated Financial Data Schedule, for the six months ended
June 30, 1997.
27.7 Restated Financial Data Schedule, for the three months
ended March 31, 1997.
27.8 Restated Financial Data Schedule, for the twelve months
ended December 31, 1996.
27.9 Restated Financial Data Schedule, for the nine months ended
September 30, 1996.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
(B) Reports on Form 8-K
On September 8, 1998, the Company filed a current report on
Form 8-K announcing that it had sold its portfolio of listed
equity securities.
GRAND PREMIER FINANCIAL, INC.
AND SUBSIDIARIES
SIGNATURES
Pursuant to the requirements of the Securities Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
GRAND PREMIER FINANCIAL, INC
(Registrant)
November 10, 1998 /s/ David L. Murray
Date David L. Murray, Senior Executive Vice
President and Chief Financial Officer
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<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 38,099,000
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0
9,250,000
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<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
Article 9 financial data schedule is restated for 10% stock dividend declared
September 28, 1998.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
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0
9,250,000
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<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
Article 9 financial data schedule is restated for 10% stock dividend declared
September 28, 1998.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> MAR-31-1998
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0
9,250,000
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<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
Article 9 financial data schedule is restated for 10% stock dividend declared
September 28, 1998.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 12-MOS
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<PERIOD-END> DEC-31-1997
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0
9,250,000
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<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
Article 9 financial data schedule is restated for 10% stock dividend declared
September 28, 1998.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1997
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<INT-BEARING-DEPOSITS> 298,000
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
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0
9,250,000
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<EPS-DILUTED> .63
<YIELD-ACTUAL> 4.19
<LOANS-NON> 4,391,000
<LOANS-PAST> 7,621,000
<LOANS-TROUBLED> 446,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 10,116,000
<CHARGE-OFFS> 2,548,000
<RECOVERIES> 687,000
<ALLOWANCE-CLOSE> 10,540,000
<ALLOWANCE-DOMESTIC> 10,540,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
Article 9 financial data schedule is restated for 10% stock dividend declared
September 28, 1998.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> JUN-30-1997
<CASH> 66,539,000
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 9,860,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 490,044,000
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,029,232,000
<ALLOWANCE> 10,856,000
<TOTAL-ASSETS> 1,673,953,000
<DEPOSITS> 1,371,415,000
<SHORT-TERM> 85,169,000
<LIABILITIES-OTHER> 18,243,000
<LONG-TERM> 30,000,000
0
9,250,000
<COMMON> 220,000
<OTHER-SE> 159,656,000
<TOTAL-LIABILITIES-AND-EQUITY> 1,673,953,000
<INTEREST-LOAN> 43,566,000
<INTEREST-INVEST> 15,689,000
<INTEREST-OTHER> 477,000
<INTEREST-TOTAL> 59,732,000
<INTEREST-DEPOSIT> 26,252,000
<INTEREST-EXPENSE> 28,318,000
<INTEREST-INCOME-NET> 31,414,000
<LOAN-LOSSES> 1,360,000
<SECURITIES-GAINS> 2,824,000
<EXPENSE-OTHER> 24,691,000
<INCOME-PRETAX> 14,758,000
<INCOME-PRE-EXTRAORDINARY> 14,758,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 9,891,000
<EPS-PRIMARY> .43
<EPS-DILUTED> .42
<YIELD-ACTUAL> 4.17
<LOANS-NON> 4,714,000
<LOANS-PAST> 2,532,000
<LOANS-TROUBLED> 446,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 10,116,000
<CHARGE-OFFS> 1,011,000
<RECOVERIES> 391,000
<ALLOWANCE-CLOSE> 10,856,000
<ALLOWANCE-DOMESTIC> 10,856,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
Article 9 financial data schedule is restated for 10% stock dividend declared
September 28, 1998.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> MAR-31-1997
<CASH> 45,691,000
<INT-BEARING-DEPOSITS> 1,557,000
<FED-FUNDS-SOLD> 10,030,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 514,175,000
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 1,001,416,000
<ALLOWANCE> 9,867,000
<TOTAL-ASSETS> 1,646,655,000
<DEPOSITS> 1,388,498,000
<SHORT-TERM> 49,943,000
<LIABILITIES-OTHER> 18,218,000
<LONG-TERM> 30,000,000
0
9,250,000
<COMMON> 220,000
<OTHER-SE> 150,526,000
<TOTAL-LIABILITIES-AND-EQUITY> 1,646,655,000
<INTEREST-LOAN> 20,831,000
<INTEREST-INVEST> 7,987,000
<INTEREST-OTHER> 281,000
<INTEREST-TOTAL> 29,099,000
<INTEREST-DEPOSIT> 13,204,000
<INTEREST-EXPENSE> 14,020,000
<INTEREST-INCOME-NET> 15,079,000
<LOAN-LOSSES> 410,000
<SECURITIES-GAINS> 3,440,000
<EXPENSE-OTHER> 12,440,000
<INCOME-PRETAX> 9,007,000
<INCOME-PRE-EXTRAORDINARY> 5,907,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,907,000
<EPS-PRIMARY> .26
<EPS-DILUTED> .25
<YIELD-ACTUAL> 4.34
<LOANS-NON> 3,926,000
<LOANS-PAST> 1,995,000
<LOANS-TROUBLED> 451,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 10,116,000
<CHARGE-OFFS> 776,000
<RECOVERIES> 117,000
<ALLOWANCE-CLOSE> 9,867,000
<ALLOWANCE-DOMESTIC> 9,867,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
Article 9 financial data schedule is restated for 10% stock dividend declared
September 28, 1998.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> DEC-31-1996
<CASH> 49,441,000
<INT-BEARING-DEPOSITS> 3,114,000
<FED-FUNDS-SOLD> 13,400,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 535,687,000
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 965,482,000
<ALLOWANCE> 10,116,000
<TOTAL-ASSETS> 1,642,538,000
<DEPOSITS> 1,417,394,000
<SHORT-TERM> 23,486,000
<LIABILITIES-OTHER> 13,569,000
<LONG-TERM> 30,000,000
0
9,250,000
<COMMON> 220,000
<OTHER-SE> 148,619,000
<TOTAL-LIABILITIES-AND-EQUITY> 1,642,538,000
<INTEREST-LOAN> 79,816,000
<INTEREST-INVEST> 33,656,000
<INTEREST-OTHER> 898,000
<INTEREST-TOTAL> 114,370,000
<INTEREST-DEPOSIT> 52,258,000
<INTEREST-EXPENSE> 56,558,000
<INTEREST-INCOME-NET> 57,812,000
<LOAN-LOSSES> 2,875,000
<SECURITIES-GAINS> 3,838,000
<EXPENSE-OTHER> 54,051,000
<INCOME-PRETAX> 18,602,000
<INCOME-PRE-EXTRAORDINARY> 13,317,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 13,317,000
<EPS-PRIMARY> .57
<EPS-DILUTED> .56
<YIELD-ACTUAL> 7.96
<LOANS-NON> 4,718,000
<LOANS-PAST> 1,946,000
<LOANS-TROUBLED> 510,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 9,435,000
<CHARGE-OFFS> 2,766,000
<RECOVERIES> 572,000
<ALLOWANCE-CLOSE> 10,116,000
<ALLOWANCE-DOMESTIC> 10,116,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
Article 9 financial data schedule is restated for 10% stock dividend declared
September 28, 1998.
</LEGEND>
<RESTATED>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1996
<PERIOD-END> SEP-30-1996
<CASH> 57,612,000
<INT-BEARING-DEPOSITS> 1,038,000
<FED-FUNDS-SOLD> 9,125,000
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 555,047,000
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 957,311,000
<ALLOWANCE> 10,292,000
<TOTAL-ASSETS> 1,655,289,000
<DEPOSITS> 1,389,042,000
<SHORT-TERM> 82,226,000
<LIABILITIES-OTHER> 19,121,000
<LONG-TERM> 15,000,000
0
9,250,000
<COMMON> 219,000
<OTHER-SE> 140,431,000
<TOTAL-LIABILITIES-AND-EQUITY> 1,655,289,000
<INTEREST-LOAN> 59,159,000
<INTEREST-INVEST> 25,626,000
<INTEREST-OTHER> 511,000
<INTEREST-TOTAL> 85,296,000
<INTEREST-DEPOSIT> 38,662,000
<INTEREST-EXPENSE> 42,032,000
<INTEREST-INCOME-NET> 43,264,000
<LOAN-LOSSES> 2,425,000
<SECURITIES-GAINS> 783,000
<EXPENSE-OTHER> 41,519,000
<INCOME-PRETAX> 10,828,000
<INCOME-PRE-EXTRAORDINARY> 7,976,000
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 7,976,000
<EPS-PRIMARY> .33
<EPS-DILUTED> .33
<YIELD-ACTUAL> 7.91
<LOANS-NON> 4,769,000
<LOANS-PAST> 2,608,000
<LOANS-TROUBLED> 517,000
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 9,436,000
<CHARGE-OFFS> 2,033,000
<RECOVERIES> 465,000
<ALLOWANCE-CLOSE> 10,293,000
<ALLOWANCE-DOMESTIC> 10,293,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
