<PAGE> 1
==============================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934--For the quarterly period ended
September 30, 1999
[ ] 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: ___________________
ENTERBANK HOLDINGS, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE 43-1706259
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
150 NORTH MERAMEC, CLAYTON, MO 63105
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 314-725-5500
-----------------
Indicate by check mark whether the Registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
Registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes X No
------ ------
Indicate the number of shares outstanding of each of the registrant's classes
of common stock as of November 5, 1999:
Common Stock, $.01 par value----7,140,636 shares outstanding
==============================================================================
<PAGE> 2
<TABLE>
TABLE OF CONTENTS
<CAPTION>
Page
----
<S> <C>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets
At September 30, 1999 and December 31, 1998 1
Consolidated Statements of Income
Three Months and Nine Months Ended September 30, 1999 and 1998 2
Consolidated Statements of Comprehensive Income
Three Months and Nine Months Ended September 30, 1999 and 1998 4
Consolidated Statements of Cash Flows
Nine Months Ended September 30, 1999 and 1998 5
Notes to Consolidated Financial Statements 6
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations 11
Item 3. Quantitative and Qualitative Disclosures Regarding Market Risk -
There have been no material changes from the information provided
in the Registrant's June 30, 1999 Form 10-Q.
PART II - OTHER INFORMATION
Item 4. Submissions of Matters to a Vote of Security Holders 22
Item 6. Exhibits and Reports on Form 8-K 23
Signatures 24
</TABLE>
<PAGE> 3
<TABLE>
PART I - ITEM 1
ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets (unaudited)
<CAPTION>
At September 30, At
December 31,
1999
1998
---------------- ------
- ---------
<S> <C> <C>
Assets
------
Cash and due from banks $ 17,656,180 $
29,701,018
Federal funds sold 15,975,000
14,250,000
Interest-bearing deposits 3,550
5,035
Investments in debt and equity securities:
Trading, at fair value 707,546
- --
Available for sale, at estimated fair value 13,984,416
45,592,327
Held to maturity, at amortized cost
(estimated fair value of $656,782 at September 30,
1999, and $704,723 at December 31, 1998) 683,315
698,609
------------ ------
- ------
Total investments in debt and equity securities 15,375,277
46,290,936
------------ ------
- ------
Loans held for sale 650,434
6,272,124
Loans, less unearned loan fees 377,690,225
273,817,522
Less allowance for loan losses 3,900,000
3,200,000
------------ ------
- ------
Loans, net 373,790,225
270,617,522
------------ ------
- ------
Other real estate owned 806,072
806,072
Office equipment and leasehold improvements 3,017,546
3,063,123
Accrued interest receivable 2,249,895
1,648,775
Minority interest in Enterprise Merchant Banc LLC 156,219
- --
Investment in Enterprise Fund, L.P. 554,922
424,484
Prepaid expenses and other assets 2,571,500
2,224,829
------------ ------
- ------
Total assets $432,806,820
$375,303,918
============
============
Liabilities and Shareholders' Equity
------------------------------------
Deposits:
Demand $ 63,303,460 $
61,114,961
Interest-bearing transaction accounts 28,339,620
24,234,717
Money market accounts 191,137,870
149,177,922
Savings 1,759,475
1,471,647
Certificates of deposit:
$100,000 and over 42,068,382
43,326,061
Other 60,841,642
59,854,862
------------ ------
- ------
Total deposits 387,450,449
339,180,170
Notes payable 5,000,000
- --
Federal Home Loan Bank advances 6,930,592
6,000,000
Accrued interest payable 773,395
608,056
Accounts payable and accrued expenses 906,200
275,563
------------ ------
- ------
Total liabilities 401,060,636
346,063,789
------------ ------
- ------
Shareholders' equity:
Common stock, $.01 par value; authorized
20,000,000 shares; issued and outstanding
7,140,636 shares at September 30, 1999 and
7,115,511 shares at December 31, 1998 <F1> 71,406
71,155
Surplus 19,278,987
19,216,564
Retained earnings 12,434,986
9,941,792
Accumulated other comprehensive income (loss) (39,195)
10,618
------------ ------
- ------
Total shareholders' equity 31,746,184
29,240,129
------------ ------
- ------
Total liabilities and shareholders' equity $432,806,820
$375,303,918
============
============
<FN>
- --------------------
See accompanying notes to consolidated financial statements.
<F1>Adjusted to give retroactive effect to a 3-for-1 stock split effective
September 29, 1999.
</TABLE>
1
<PAGE> 4
<TABLE>
ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Income (unaudited)
<CAPTION>
Three months ended Nine months
ended
September 30, September 30,
1999 1998 1999
1998
---------- ---------- ----------- -----
- ------
<S> <C> <C> <C> <C>
Interest income:
Interest and fees on loans $7,961,273 $5,978,595 $21,299,752
$16,970,395
Interest on debt securities:
Taxable 195,251 204,589 757,832
496,733
Nontaxable 6,663 6,956 19,217
19,505
Interest on federal funds sold 232,700 508,851 696,098
1,032,336
Interest on interest earning deposits 307 1,848 444
5,322
---------- ---------- ----------- -----
- ------
Total interest income 8,396,194 6,700,839 22,773,343
18,524,291
---------- ---------- ----------- -----
- ------
Interest expense:
Interest-bearing transaction accounts 131,091 125,980 363,004
375,489
Money market accounts 2,043,624 1,457,902 5,526,863
3,721,467
Savings 10,903 9,531 31,307
27,423
Certificates of deposit:
$100,000 and over 520,966 562,605 1,520,907
1,558,271
Other 755,788 984,951 2,267,746
2,896,602
Federal Home Loan Bank Advances 86,241 -- 244,953
- --
Federal funds purchased 1,597 -- 1,597
- --
Notes payable 47,869 -- 51,363
- --
---------- ---------- ----------- -----
- ------
Total interest expense 3,598,079 3,140,969 10,007,740
8,579,252
---------- ---------- ----------- -----
- ------
Net interest income 4,798,115 3,559,870 12,765,603
9,945,039
Provision for loan losses 446,146 121,106 683,691
642,035
---------- ---------- ----------- -----
- ------
Net interest income after
provision for loan losses 4,351,969 3,438,764 12,081,912
9,303,004
---------- ---------- ----------- -----
- ------
Noninterest income:
Service charges on deposit accounts 181,563 70,373 449,933
182,325
Financial advisory income 388,379 -- 443,813
- --
Other service charges and fee income 21,825 64,196 167,397
212,607
Gain on sale of mortgage loans 195,691 296,368 702,218
899,115
Income from minority interest in Enterprise
Merchant Banc LLC 21,630 -- 21,630
- --
Gain (Loss) on investment in Enterprise
Fund, L.P. (2,362) 327 449
(748)
---------- ---------- ----------- -----
- ------
Total noninterest income 806,726 431,264 1,785,440
1,293,299
---------- ---------- ----------- -----
- ------
Noninterest expense:
Salaries 1,890,658 1,307,331 5,038,080
3,584,518
Payroll taxes and employee benefits 375,985 256,922 1,027,115
749,042
Occupancy 255,007 230,632 724,837
655,714
Furniture and equipment 121,331 102,927 319,307
279,800
FDIC insurance 20,514 7,845 30,139
22,810
Data processing 109,913 82,719 339,422
218,035
Other 751,214 623,089 2,333,406
1,682,626
---------- ---------- ----------- -----
- ------
Total noninterest expense 3,524,622 2,611,465 9,812,306
7,192,545
---------- ---------- ----------- -----
- ------
Income before income tax expense 1,634,073 1,258,563 4,055,046
3,403,758
Income tax expense 598,745 481,643 1,469,172
1,300,943
---------- ---------- ----------- -----
- ------
Income before cumulative effect of
a change in accounting principle $1,035,328 $ 776,920 $ 2,585,874 $
2,102,815
========== ========== ===========
===========
Cumulative effect on prior years of a change in
asset classification -- -- 121,491
- --
---------- ---------- ----------- -----
- ------
Net income $1,035,328 $ 776,920 $ 2,707,365 $
2,102,815
========== ========== ===========
===========
</TABLE>
2
<PAGE> 5
<TABLE>
ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Income (unaudited), continued
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1999 1998 1999
1998
---------- ---------- ---------- ------
- ----
<S> <C> <C> <C> <C>
Per share amounts<F1>
Basic earnings per share:
Income before cumulative effect of
change in accounting principle $ 0.14 $ 0.11 $ 0.36 $
0.30
Cumulative effect on prior years of a
change in asset classification $ 0.00 $ 0.00 $ 0.02 $
0.00
---------- ---------- ---------- ------
- ----
Net income $ 0.14 $ 0.11 $ 0.38 $
0.30
========== ========== ==========
==========
Basic weighted average common shares
common stock equivalents
outstanding 7,140,636 7,095,600 7,133,868
7,035,411
Diluted earnings per share:
Income before cumulative effect of a
change in accounting principle $ 0.13 $ 0.10 $ 0.33 $
0.28
Cumulative effect on prior years of a
change in asset classification $ 0.00 $ 0.00 $ 0.02 $
0.00
---------- ---------- ---------- ------
- ----
Net income $ 0.13 $ 0.10 $ 0.35 $
0.28
========== ========== ==========
==========
Diluted weighted average common
shares and common stock
equivalents outstanding<F1> 7,718,737 7,554,098 7,675,931
7,531,308
<FN>
- --------------------------
See accompanying notes to consolidated financial statements.
<F1>Share data has been adjusted to give retroactive effect to a 3-for-1 stock
split effective September 29, 1999.
</TABLE>
3
<PAGE> 6
<TABLE>
ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive Income (unaudited)
<CAPTION>
Three months ended September 30, Nine months ended
September 30,
1999 1998 1999
1998
---------- -------- ---------- ------
- ----
<S> <C> <C> <C> <C>
Net income $1,035,328 $776,920 $2,707,365
$2,102,815
Other comprehensive income (loss), before tax:
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising
during period (11,208) 34,342 (75,475)
32,436
---------- -------- ---------- ------
- ----
Other comprehensive income (loss), before tax (11,208) 34,342 (75,475)
32,436
Income tax benefit (expense) related to items of
other comprehensive income 3,811 (11,676) 25,662
(11,028)
---------- -------- ---------- ------
- ----
Other comprehensive income (loss), net of taxes (7,397) 22,666 (49,813)
21,408
---------- -------- ---------- ------
- ----
Comprehensive income $1,027,931 $799,586 $2,657,552
$2,124,223
========== ======== ==========
==========
- --------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
4
<PAGE> 7
<TABLE>
ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows (unaudited)
<CAPTION>
Nine months ended September
30,
1999
1998
------------ -------
- -----
<S> <C> <C>
Cash flows from operating activities:
Net income $ 2,707,365 $
2,102,815
Adjustments to reconcile net income to net cash
provided by operating activities:
Cumulative effect of change in accounting principle, net of tax (121,491)
- --
Depreciation and amortization 441,686
343,456
Provision for loan losses 683,691
642,035
Net accretion of debt securities (228,614)
(94,223)
Net increase in trading securities asset (586,055)
- --
(Gain) loss on investment in Enterprise Fund, L.P. (449)
748
Mortgage loans originated (47,835,261)
(64,128,620)
Proceeds from mortgage loans sold 54,159,169
62,794,506
Gain on sale on mortgage loans (702,218)
(899,115)
Increase in accrued interest receivable (601,120)
(297,808)
(Increase) decrease in prepaid expenses and other assets (346,671)
32,260
Increase in accounts payable and accrued expenses 821,638
93,269
------------ -------
- -----
Net cash provided by operating activities 8,391,670
1,488,438
------------ -------
- -----
Cash flows from investing activities:
Purchases of interest-bearing deposits 1,485
- --
Purchases of available-for-sale debt securities (15,388,250)
(21,795,027)
Purchases of available-for-sale equity securities (250,700)
(320,000)
Purchases of held to maturity debt securities (100,000)
(256,689)
Proceeds from maturities of available-for-sale debt securities 47,400,000
12,000,000
Proceeds from maturities and principal paydowns on
held-to-maturity debt securities 103,000
460,486
Proceeds from the maturity of interest-bearing deposits --
104,409
Net increase in loans (103,856,394)
(36,661,272)
Purchases of office equipment and leasehold improvements (383,815)
(1,035,742)
Write-down of office equipment and leasehold improvements --
3,252
Proceeds from sale of other real estate owned --
97,781
Investment in Enterprise Merchant Banc L.L.C. (156,219)
- --
Investment in Enterprise Fund, L.P. (129,989
(201,000)
------------ -------
- -----
Net cash provided by (used in) investing activities (72,760,882)
(47,603,802)
------------ -------
- -----
Cash flows from financing activities:
Net increase in demand and savings accounts 48,541,178
49,650,269
Net increase (decrease) in certificates of deposit (270,899)
14,517,032
Net increase in Federal Home Loan Bank advances 930,592
- --
Increase in notes payable 5,000,000
- --
Cash dividends paid (214,171)
(175,892)
Proceeds from the exercise of common stock options 62,674
343,400
------------ -------
- -----
Net cash provided by financing activities 54,049,374
64,334,809
------------ -------
- -----
Net decrease (increase) in cash and due from banks (10,319,838)
18,219,445
Cash and due from banks, beginning of year 43,951,018
46,722,054
------------ -------
- -----
Cash and due from banks, end of year $ 33,631,180 $
64,941,499
============
============
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 9,842,401 $
8,477,069
Income taxes 1,474,000
1,480,266
Transfer of held to maturity security to held for trading $ 510,000 $
- --
Transfer to other real estate owned in settlement of loans $ -- $
97,781
- ------------------------
See accompanying notes to consolidated financial statements.
</TABLE>
5
<PAGE> 8
ENTERBANK HOLDINGS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
(1) BASIS OF PRESENTATION
The accompanying consolidated financial statements of Enterbank
Holdings, Inc. and subsidiaries (the "Company") are unaudited and
should be read in conjunction with the consolidated financial
statements and notes thereto contained in the Company's Annual Report
on Form 10-K for the year ended December 31, 1998. In the opinion of
management, all adjustments consisting of normal recurring accruals
considered necessary for a fair presentation of the results of
operations for the interim periods presented herein have been included.
Operating results for the nine month period ended September 30, 1999
are not necessarily indicative of the results that may be expected for
any other interim period or for the year ending December 31, 1999.
The consolidated financial statements include the accounts of Enterbank
Holdings, Inc. and its subsidiaries. All significant intercompany
accounts and transactions have been eliminated.
Certain amounts in the consolidated financial statements for the year
ended December 31, 1998 have been reclassified to conform to the 1999
presentation. Such reclassifications had no effect on previously
reported consolidated net income or shareholders' equity.
(2) ORGANIZATION
On August 18, 1999 the board of directors approved, pending shareholder
approval, a 3 for 1 stock split, in the form of a stock dividend, of
the Company's common stock for shareholders of record on September 29,
1999. On September 29, 1999, the Company's shareholders approved an
amendment to the Company's Certificate of Incorporation to increase the
number of authorized shares of common stock from 3,500,000 to
20,000,000. On the same day, the Company filed the amendment with the
Delaware Secretary of State. All share and per share amounts have
been restated to reflect the split.
(3) SUBSEQUENT EVENTS
On October 25, 1999, EBH Capital Trust I ("EBH Trust"), a newly-formed
Delaware business trust and a subsidiary of Enterbank Holdings, issued
1,375,000 shares of 9.40% Cumulative Trust Preferred Securities
("Preferred Securities") at $8.00 per share in an underwritten public
offering. The Preferred Securities are fully, irrevocably and
unconditionally guaranteed on a subordinated basis by Enterbank
Holdings. The proceeds of the Preferred Securities were invested in
junior subordinated debentures of Enterbank Holdings. The net proceeds
to Enterbank Holdings from the sale of the junior subordinated
debentures, after deducting underwriting commissions and estimated
offering expenses, were approximately $10.27 million. Distributions
payable on the Preferred Securities will be payable quarterly on March
15, June 15, September 15, and December 15 of each year that the
Preferred Securities are outstanding, commencing December 15, 1999.
The Preferred Securities will be classified as long-term debt, while
the distributions will be recorded as interest expense in the Company's
consolidated financial statements.
A portion of the proceeds from the offering were used to repay the $5
million of outstanding indebtedness of Enterbank Holdings. Enterbank
Holdings currently has $2.5 million of available debt under its
revolving credit facility and uses it for general corporate purposes,
including investments from time to time in Enterprise Bank in the form
of additional capital.
6
<PAGE> 9
(4) ENTERPRISE MERCHANT BANC
The Company restructured the ownership of the merchant banking
operations in which it is involved. In July of 1999, a preliminary
closing took place for a merchant banking fund ("Fund II") that is not
a Small Business Investment Company ("SBIC") regulated by the Small
Business Administration ("SBA"). Due to the current Federal Reserve
regulations, the Company cannot have control of an investment company
that is not an SBIC. Therefore, the Company restructured its ownership
and control positions of the various merchant banking operations. The
result of this restructuring is that the Company maintains ownership of
the wholly owned subsidiary, Enterprise Merchant Banc, Inc., which in
turn has a minority interest in Enterprise Merchant Banc, LLC. The
minority interest in Enterprise Merchant Banc, LLC is based on a 4.9%
voting common stock ownership and a 24.9% economic benefit. This
structure provides the Company the ability to maintain a similar level
of return in the form of income that would have been realized under the
previous structure, yet satisfies the regulations concerning ownership
and control. This structure also allows Enterprise Merchant Banc, LLC
to be involved in a broader array of activities and opportunities than
were previously allowed.
Future reporting, with respect to merchant banking, will be referred to
as "merchant banking activities" which includes the activities from the
investment in the various merchant banking funds, the investment in
Enterprise Merchant Banc, LLC, as well as the income earned from
Enterprise Merchant Banc, Inc. (the wholly owned subsidiary of the
Company). Such activities will include the returns earned on the
Funds' investments, the carried interest, and the pro-rata share of the
distribution of Enterprise Merchant Banc, LLC income as well as fees
earned by Enterprise Merchant Banc, Inc.
(5) COMPREHENSIVE INCOME
Effective January 1, 1998, the Company adopted Statement of Financial
Accounting Standards (SFAS) No. 130, "Reporting Comprehensive Income."
This statement requires presentation of the components of comprehensive
earnings, including the changes in equity from non-owner sources such
as unrealized gains or losses on securities. The Company's
comprehensive earnings adjustments for the nine-month period ending
September 30, 1999 and 1998 were as follows:
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1999
---------------------------------------------
- --
Tax
Before-Tax (Expense) Net-of-
Tax
Amount or Benefit Amount
---------- ---------- --------
- --
<S> <C> <C> <C>
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising
during period $(75,475) $ 25,662
$(49,813)
-------- -------- -------
- -
Other comprehensive income (loss) $(75,475) $ 25,662
$(49,813)
======== ========
========
<CAPTION>
Nine Months Ended September 30, 1998
---------------------------------------------
- --
Tax
Before-Tax (Expense) Net-of-
Tax
Amount or Benefit Amount
---------- ---------- --------
- --
<S> <C> <C> <C>
Unrealized gains (losses) on securities:
Unrealized holding gains (losses) arising
during period $ 32,436 $(11,028) $
21,408
-------- -------- -------
- -
Other comprehensive income (loss) $ 32,436 $(11,028) $
21,408
======== ========
========
</TABLE>
7
<PAGE> 10
The Company did not sell any investments in debt and equity securities
during the nine months ended September 30, 1999 and 1998.
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1999
---------------------------------------
Accumulated
Unrealized Other
Gains (Losses) Comprehensive
On Securities Income (Loss)
----------------- -------------
<S> <C> <C>
Beginning balance $ 10,618 $ 10,618
Current-period change (49,813) (49,813)
-------- --------
Ending balance $(39,195) $(39,195)
======== ========
<CAPTION>
Nine Months Ended September 30, 1998
---------------------------------------
Accumulated
Unrealized Other
Gains (Losses) on Comprehensive
On Securities Income (Loss)
----------------- -------------
<S> <C> <C>
Beginning balance $(1,473) $(1,473)
Current-period change 21,408 21,408
------- -------
Ending balance $19,935 $19,935
======= =======
</TABLE>
(6) SEGMENT DISCLOSURE
Statement of Financial Accounting Standards (SFAS) No. 131, Disclosures
about Segments of an Enterprise and Related Information requires
operating segment reporting in financial statements for periods
beginning after December 15, 1997. An operating segment is defined
under SFAS 131 as a component of an enterprise that engages in business
activities that generate revenue and expense for which operating
results are reviewed by the chief operating decision maker in the
determination of resource allocation and performance.
Management of the Company reviews the financial performance of its
operating segments on an after-tax basis. The Company's four major
operating segments in 1998 and 1999 include Enterbank Holdings, Inc.,
Enterprise Bank, Enterprise Financial Advisors and Enterprise Merchant
Banc. Enterbank Holdings incurs general corporate expenses not
allocated to the operating segments and operates as a holding company
for Enterprise Bank and Enterprise Merchant Banc operating segments.
Enterprise Bank provides a full range of commercial banking services.
These services include, but are not limited to loans, deposit accounts,
safe deposit boxes, and lock boxes and cash management services.
Enterprise Financial Advisors, a division of Enterprise Bank, offers
financial planning and trust services. Enterprise Merchant Banc offers
merchant banking and venture capital services.
8
<PAGE> 11
The following are the financial results for each of the Company's
operating segments for the three-month periods ended September 30, 1999
and 1998:
<TABLE>
<CAPTION>
Three Months Ended September 30, 1999
------------------------------------------------------------------------
- ------------
Enterbank Enterprise Enterprise
Holdings Enterprise Financial Merchant Elimi-
Inc. Bank Advisors Banc nations
Consolidated
------------------------------------------------------------------------
- ------------
<S> <C> <C> <C> <C> <C>
<C>
Interest income $ -- $ 8,396,204 $ -- $ -- $ (10) $
8,396,194
Interest expense 47,879 3,550,210 -- -- (10)
3,598,079
Net interest margin (47,879) 4,845,984 -- -- --
4,798,115
Provision for loan losses -- 446,146 -- -- --
446,146
Gross income prior to
direct expenses -- 383,613 453,379 19,539 --
856,531
Direct expenses -- -- 49,805 -- --
49,805
Noninterest income -- 383,613 403,574 19,539 --
806,726
Noninterest expenses 225,023 2,930,599 290,768 78,232 --
3,524,622
Income (loss) before income
tax expense (benefit) (272,902) 1,852,852 112,806 (58,693) --
1,634,073
Income tax expense (benefit) (90,707) 696,256 37,228 (44,032) --
598,745
---------- ------------ --------- --------- --------- -
- -----------
Net income (loss) $ (182,195) $ 1,156,606 $ 75,578 $ (14,661) $ -- $
1,035,328
========== ============ ========= ========= =========
============
Total assets $1,653,251 $430,475,382 $ 35,442 $ 916,180 $(273,435)
$432,806,820
---------- ------------ --------- --------- --------- -
- -----------
<CAPTION>
Three Months Ended September 30, 1998
------------------------------------------------------------------------
- --------------
Enterbank Enterprise Enterprise
Holdings Enterprise Financial Merchant Elimi-
Inc. Bank Advisors Banc nations
Consolidated
------------------------------------------------------------------------
- --------------
<S> <C> <C> <C> <C> <C>
<C>
Interest income $ -- $ 6,700,839 $ -- $ -- $ --
$ 6,700,839
Interest expense -- 3,140,969 -- -- --
3,140,969
Net interest margin -- 3,559,870 -- -- --
3,559,870
Provision for loan losses -- 121,106 -- -- --
121,106
Gross income prior to
direct expenses 36 387,876 -- 43,352 --
431,264
Direct expenses -- -- -- -- --
- --
Noninterest income 36 387,876 -- 43,352 --
431,264
Noninterest expenses 214,858 2,249,513 -- 147,094 --
2,611,465
Income before income tax
expense (benefit) (214,822) 1,577,127 -- (103,742) --
1,258,563
Income tax expense (65,500) 586,779 -- (39,636) --
481,643
---------- ------------ --------- --------- -----------
- ------------
Net income (loss) $ (149,322) $ 990,348 $ -- $ (64,106) $ --
$ 776,920
========== ============ ========= ========= ===========
============
Total assets $1,950,130 $356,873,074 $ -- $ 243,289 $(1,138,309)
$357,928,184
---------- ------------ --------- --------- -----------
- ------------
</TABLE>
As shown on the table, Enterprise Bank ("the Bank") is the primary
source of income and assets for the Company. The Bank contributed $74
million more in assets at September 30, 1999 compared to assets at
September 30, 1998. Most of the asset growth experienced by the Company
is attributable to the Bank. The Bank also provides much of the income
to the Company. Enterprise Financial Advisors began operations during
the second half of 1998. Enterprise Financial Advisors received
several financial planning fees during the three months ended September
30, 1999. These fees were the result of the completion of one
significant transaction and several smaller transactions. This is the
first quarter Enterprise Financial Advisors earned such fees.
Enterprise Merchant Banc increased
9
<PAGE> 12
activity during 1999 with the recent restructuring. Enterbank Holdings has
some assets in the form of small investments and working capital borrowings.
Enterbank Holdings also has noninterest expenses related to consolidated items
of the Company and interest expense on a line of credit.
The following are the financial results for each of the Company's
operating segments for the nine-month periods ended September 30, 1999
and 1998:
<TABLE>
<CAPTION>
Nine Months Ended September 30, 1998
------------------------------------------------------------------------
- ------------
Enterbank Enterprise Enterprise
Holdings Enterprise Financial Merchant Elimi-
Inc. Bank Advisors Banc nations
Consolidated
------------------------------------------------------------------------
- ------------
<S> <C> <C> <C> <C> <C>
<C>
Interest income $ -- $ 22,773,343 $ -- $ 10 $ (10)
$ 22,773,343
Interest expense 51,363 9,956,387 -- -- (10)
10,007,740
Net interest margin (51,363) 12,816,956 -- 10 --
12,765,603
Provision for loan losses -- 683,691 -- -- --
683,691
Gross income prior to
direct expenses 1,175 1,212,839 543,244 112,855 --
1,870,113
Direct expenses -- -- 84,673 -- --
84,673
Noninterest income 1,175 1,212,839 458,571 112,855 --
1,785,440
Noninterest expenses 560,509 8,106,052 732,533 413,212 --
9,812,306
Income (loss) before income
tax expense (benefit) (610,697) 5,240,052 (273,962) (300,347) --
4,055,046
Income tax expense (benefit) (218,246) 1,933,060 (106,380) (139,262) --
1,469,172
---------- ------------ --------- --------- ---------
- ------------
Income before cumulative
effect of a change in
accounting principle (392,451) 3,306,992 (167,582) (161,085) --
2,585,874
Cumulative effect on prior
years of a change in asset
classification 121,491 -- -- -- --
121,491
---------- ------------ --------- --------- ---------
- ------------
Net income (loss) $ (270,960) $ 3,306,992 $(167,582) $(161,085) $ --
$ 2,707,365
========== ============ ========= ========= =========
============
Total assets $1,653,251 $430,475,382 $ 35,442 $ 916,180 $(273,435)
$432,806,820
---------- ------------ --------- --------- ---------
- ------------
<CAPTION>
Nine Months Ended September 30, 1998
------------------------------------------------------------------------
- --------------
Enterbank Enterprise Enterprise
Holdings Enterprise Financial Merchant Elimi-
Inc. Bank Advisors Banc nations
Consolidated
------------------------------------------------------------------------
- --------------
<S> <C> <C> <C> <C> <C>
<C>
Interest income $ -- $ 18,524,291 $ -- $ 2 $ (2)
$ 18,524,291
Interest expense -- 8,579,254 -- -- (2)
8,579,252
Net interest margin -- 9,945,037 -- 2 --
9,945,039
Provision for loan losses -- 642,035 -- -- --
642,035
Gross income prior to
direct expenses 2,856 1,131,706 -- 158,737 --
1,293,299
Direct expenses -- -- -- -- --
- --
Noninterest income 2,856 1,131,706 -- 158,737 --
1,293,299
Noninterest expenses 690,638 6,109,776 -- 392,131 --
7,192,545
Income before income
tax expense (benefit) (687,782) 4,324,932 -- (233,392) --
3,403,758
Income tax expense (benefit) (243,000) 1,631,079 -- (87,136) --
1,300,943
---------- ------------ --------- --------- -----------
- ------------
Net income (loss) $ (444,782) $ 2,693,853 $ -- $(146,256) $ --
$ 2,102,815
========== ============ ========= ========= ===========
============
Total assets $1,950,130 $356,873,074 $ -- $ 243,289 $(1,138,309)
$357,928,184
---------- ------------ --------- --------- -----------
- ------------
</TABLE>
The Bank experienced a 23% increase in net income during the nine-month
period ended September 30, 1999 compared to the same period in 1998.
The Company experienced a 29% increase in net income for the same
period. The other operating segments are experiencing net losses
primarily because they are in early stages of growth. Enterbank
Holdings also has noninterest expenses related to consolidated items of
the Company and interest expense related to a line of credit used to
provide working capital.
10
<PAGE> 13
(7) CHANGE IN ACCOUNTING PRINCIPLES
Effective May 1, 1999, the Company adopted SFAS 133, "Accounting for
Derivative Instruments and Hedging Activities." This statement
establishes standards for derivative instruments embedded in other
contracts, and for hedging activities. It requires an entity to
recognize all derivatives as either assets or liabilities in the
balance sheet and measure those instruments at fair value.
In connection with the adoption of SFAS 133, the Company elected to
reclassify an equity investment from held-to-maturity to trading. The
Company recorded a $197,546 gain on marking the asset to market, which
is treated as a cumulative effect of change in accounting principle.
ITEM 2: MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT
OF 1995
Readers should note that in addition to the historical information contained
herein, this Form 10-Q contains forward-looking statements which are
inherently subject to risks and uncertainties that could cause actual results
to differ materially from those contemplated by such statements. Factors
that could cause or contribute to such differences include, but are not
limited to, the effect that changes in interest rates and our cost of funds
have on our earnings and assets, our level of loan defaults and
delinquencies, our ability to successfully grow and realize profits from our
commercial banking operations and our strategic non-banking lines of
business, concentrations of our loans in one geographic area, our ability to
retain key personnel, the degree and nature of our competition, and changes
in government regulation of our business, as well as those discussed in the
Company's 1998 Annual Report on Form 10-K.
INTRODUCTION
The discussion summarizes the significant factors affecting the consolidated
financial condition, results of operations, liquidity and cash flows of the
Company for the three and nine month periods ended September 30, 1999
compared to the three and nine month periods ended September 30, 1998 and the
year ended December 31, 1998. This discussion should be read in conjunction
with the consolidated financial statements and notes thereto contained in the
Company's Annual Report on Form 10-K for the year ended December 31, 1998.
FINANCIAL CONDITION
Total assets at September 30, 1999 were $433 million, an increase of $58
million, or 15%, over total assets of $375 million at December 31, 1998.
Loans and leases, net of unearned loan fees, were $378 million, an increase
of $104 million, or 38%, over total loans and leases of $274 million at
December 31, 1998. The increase in loans and leases is in part attributable
to the Company's investment in additional business development officers.
Federal funds sold and investment securities were $31 million, a decrease of
$30 million, or 49%, from total federal funds sold and investment securities
of $61 million at December 31, 1998. The decrease resulted from the shift in
earnings assets from short-term investments into loans during the first nine
months of 1999.
Total deposits at September 30, 1999 were $387 million, an increase of $48
million over total deposits of $339 million at December 31, 1998.
Total shareholders' equity at September 30, 1999 was $31.7 million, an
increase of $2.5 million over total shareholders' equity of $29.2 million at
December 31, 1998. The increase in equity is due to an increase in retained
11
<PAGE> 14
earnings of $2.5 million for the nine months ended September 30, 1999, and
the exercise of incentive stock options by employees, less dividends paid to
shareholders.
RESULTS OF OPERATIONS - THREE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Net income was $1,035,328 for the three month period ended September 30,
1999, an increase of 33% over net income of $776,920 for the same period in
fiscal 1998. Basic earnings per share for the three-month periods ended
September 30, 1999 and 1998 were $0.14 and $0.11, respectively. Diluted
earnings per share for the three-month periods ended September 30, 1999 and
1998 were $0.13 and $0.10, respectively.
NET INTEREST INCOME
Net interest income (presented on a tax equivalent basis) was $4.8 million,
or 4.88% of average earnings assets, for the three months ended September 30,
1999, compared to $3.6 million, or 4.62% of average earning assets, for the
same period in 1998. The $1,240,000, or 35%, increase in net interest income
for the three months ended September 30, 1999 resulted primarily from an $86
million increase in average earnings assets to $393 million, from $307
million during the same period in 1998. This increase in earning asset
balances was offset by a decrease in the earning asset yield from 8.69% to
8.51%. The increase in earning assets is attributable to the continued
calling efforts of the Company's relationship officers and sustained economic
growth in the local market served by the Company. The yield on average
earning assets decreased to 8.51% for the three month period ended September
30, 1999 compared to 8.69% for the three month period ended September 30,
1998. The decrease in asset yield was primarily due to a general decline in
the Prime rate during the twelve-month period ended September 30, 1999. The
0.18% decrease in the earning asset yield is also attributable to a general
decrease in the average yield on loans. The increase in net interest income
was offset by a $72 million increase in average interest-bearing liabilities
to $324 million for the three months ended September 30, 1999 from $252
million during the same period in 1998. The yield on interest-bearing
liabilities decreased to 4.40% for the three months ended September 30, 1999
compared to 4.96% for the same period in 1998. This decrease is attributed
to the above-mentioned decline in the Prime rate and a change in the mix of
interest-bearing liabilities from higher yielding certificates of deposits to
lower yielding transaction and money market accounts.
12
<PAGE> 15
The following table sets forth, on a tax-equivalent basis, certain
information relating to the Company's average balance sheet and reflects the
average yield earned on interest-earning assets, the average cost of
interest-bearing liabilities and the resulting net interest income for the
three month periods ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
Three Months Ended September 30,
-----------------------------------------------------------------------
- ----------
1999 1998
---------------------------------------- -----------------------------
- ----------
Percent Interest Average Percent
Interest Average
Average of Total Income/ Yield/ Average of Total
Income/ Yield/
Balance Assets Expense Rate Balance Assets
Expense Rate
------- -------- -------- ------- ------- -------- -------
- - -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
Assets
- ------
Interest-earning assets:
Loans <F1> $358,642 86.43% $7,992 8.84% $256,422 77.79% $6,005
9.29%
Taxable investments in debt
securities 15,062 3.63 195 5.14 14,754 4.48 205
5.51
Non-taxable investments in
debt securities <F2> 638 0.15 10 6.28 663 0.20 11
6.59
Federal funds sold 18,483 4.45 233 5.00 35,242 10.69 508
5.72
Interest earning deposits 31 0.01 0 3.74 131 0.04 2
6.05
-------- ------ ------ -------- ------ ------
Total interest-earning assets 392,856 94.67 8,430 8.51 307,211 93.19 6,731
8.69
Non-interest-earning assets:
Cash and due from banks 16,287 3.93 17,887 5.43
Office equipment and
leasehold improvements 3,302 0.80 2,889 0.88
Prepaid expenses and other
assets 6,010 1.45 4,713 1.43
Allowance for possible
loan losses (3,513) (0.85) (3,048) (0.92)
-------- ------ -------- ------
Total assets $414,942 100.00% $329,652 100.00%
======== ====== ======== ======
Liabilities and
Shareholders' Equity
- --------------------
Interest-bearing liabilities:
Interest-bearing transaction
accounts $ 26,182 6.31% $131 1.98% $ 20,321 6.16% $ 139
2.71%
Money market 187,338 45.15 2,043 4.33 123,999 37.62 1,457
4.66
Savings 1,754 0.42 11 2.47 1,534 0.47 9
2.33
Certificates of deposit 98,730 23.79 1,277 5.13 106,501 32.31 1,547
5.76
Notes payable 3,233 0.78 48 5.87 -- -- --
- --
Federal Home Loan Bank advances 7,046 1.70 86 4.86 -- -- --
- --
Federal funds purchased 109 0.03 2 5.47 -- -- --
- --
-------- ------ ------ -------- ------ ------
Total interest-bearing
liabilities 324,392 78.18 3,598 4.40 252,354 76.55 3,152
4.96
Noninterest-bearing liabilities:
Demand deposits 57,945 13.96 48,008 14.56
Other liabilities 1,147 0.28 1,167 0.35
-------- ------ -------- ------
Total liabilities 383,484 92.42 301,530 91.47
Shareholders' equity 31,458 7.58 28,121 8.53
-------- ------ -------- ------
Total liabilities and
shareholders' equity $414,942 100.00% $329,652 100.00%
======== ====== ======== ======
Net interest income $4,832 $3,579
====== ======
Net interest margin 4.88%
4.62%
<FN>
- ---------------------------------------
<F1> Average balances include non-accrual loans. The income on such loans is
included in interest but is recognized only upon receipt.
Loan fees included in interest income are approximately $265,000 and
$160,000, for 1999 and 1998, respectively.
<F2> Non-taxable investment income is presented on a fully tax-equivalent
basis assuming a tax rate of 34%.
</TABLE>
13
<PAGE> 16
RESULTS OF OPERATIONS - NINE MONTHS ENDED SEPTEMBER 30, 1999 AND 1998
Net income was $2,707,365 for the nine month period ended September 30, 1999,
an increase of 29% over net income of $2,102,815 for the same period in
fiscal 1998. Basic earnings per share for the nine-month periods ended
September 30, 1999 and 1998 were $0.38 and $0.30, respectively. Diluted
earnings per share for the nine-month periods ended September 30, 1999 and
1998 were $0.35 and $0.28, respectively.
NET INTEREST INCOME
Net interest income (presented on a tax equivalent basis) was $12.8 million,
or 4.70% of average earnings assets, for the nine months ended September 30,
1999, compared to $10.0 million, or 4.72% of average earning assets, for the
same period in 1998. The $2.8 million, or 29% increase, in net interest
income for the nine months ended September 30, 1999 resulted primarily from
an $84 million increase in average earnings assets to $366 million, from
$282 million during the same period in 1998. This increase in earning asset
balances was offset by a 0.44% decrease in the earning asset yield from 8.80%
to 8.36%. The increase in earning assets is attributable to the continued
calling efforts of the Company's relationship officers and sustained economic
growth in the local market served by the Company. The yield on average
earning assets decreased to 8.36% for the nine month period ended September
30, 1999 compared to 8.80% for the nine month period ended September 30,
1998. The decrease in asset yield was primarily due to a general decline in
the Prime rate during the twelve-month period ended September 30, 1999. The
0.44% decrease in the earning asset yield is also attributable to a general
decrease in average yield on loans. The increase in net interest income was
offset by a $73 million increase in average interest-bearing liabilities to
$304 million for the nine months ended September 30, 1999 from $231 million
during the same period in 1998. Eight million of the $73 million increase in
interest-bearing liabilities represents an increase in notes payable and
Federal Home Loan Bank advances as of September 30, 1999 as compared to
September 30, 1998. The yield on interest-bearing liabilities decreased to
4.40% for the nine months ended September 30, 1999 compared to 4.99% for the
same period in 1998. This decrease is attributable to the above-mentioned
declines in the Prime rate and a concerted effort by management to decrease
the interest paid on deposits.
14
<PAGE> 17
The following table sets forth, on a tax-equivalent basis, certain
information relating to the Company's average balance sheet and reflects the
average yield earned on interest-earning assets, the average cost of
interest-bearing liabilities and the resulting net interest income for the
nine month periods ended September 30, 1999 and 1998:
<TABLE>
<CAPTION>
Nine Months Ended September 30,
-----------------------------------------------------------------------
- ----------
1999 1998
---------------------------------------- -----------------------------
- ----------
Percent Interest Average Percent
Interest Average
Average of Total Income/ Yield/ Average of Total
Income/ Yield/
Balance Assets Expense Rate Balance Assets
Expense Rate
------- -------- -------- ------- ------- -------- -------
- - -------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C> <C>
<C>
ASSETS
- ------
Interest-earning assets:
Loans <F1> $326,216 83.60% $21,378 8.76% $244,765 80.93% $17,023
9.30%
Taxable investments in debt
securities 19,422 4.98 758 5.22 11,866 3.92 497
5.60
Non-taxable investments in
debt securities <F2> 611 0.16 29 6.37 602 0.20 30
6.66
Federal funds sold 19,542 5.01 696 4.76 24,954 8.25 1,031
5.52
Interest earning deposits 20 0.01 0 2.95 126 0.04 5
5.30
-------- ------ ------- -------- ------ -------
Total interest-earning assets 365,811 93.76 22,861 8.36 282,313 93.35 18,586
8.80
Non-interest-earning assets:
Cash and due from banks 18,979 4.86 15,967 5.28
Office equipment and
leasehold improvements 3,135 0.80 2,562 0.85
Prepaid expenses and other
assets 5,613 1.44 4,519 1.49
Allowance for possible
loan losses (3,356) (0.86) (2,924) (0.97)
-------- ------ -------- ------
Total assets $390,182 100.00% $302,438 100.00%
======== ====== ======== ======
LIABILITIES AND
SHAREHOLDERS' EQUITY
- --------------------
Interest-bearing liabilities:
Interest-bearing transaction
accounts $26,085 6.69% $ 363 1.86% $ 20,437 6.76% $ 413
2.70%
Money market 171,058 43.84 5,527 4.32 106,485 35.21 3,721
4.67
Savings 1,696 0.43 31 2.47 1,486 0.49 27
2.43
Certificates of deposit 97,107 24.89 3,789 5.22 102,261 33.81 4,455
5.82
Notes payable 1,372 0.35 51 5.00 -- -- --
- --
Federal Home Loan Bank advances 6,741 1.73 245 4.86 -- -- --
- --
Federal Funds Purchased 37 0.01 2 5.83 -- -- --
- --
-------- ------ ------- -------- ------ -------
Total interest-bearing
liabilities 304,096 77.94 10,008 4.40 230,669 76.27 8,616
4.99
Noninterest-bearing liabilities:
Demand deposits 54,536 13.98 43,377 14.34
Other liabilities 997 0.25 1,081 0.36
-------- ------ -------- ------
Total liabilities 359,629 92.17 275,127 90.97
Shareholders' equity 30,553 7.83 27,311 9.03
-------- ------ -------- ------
Total liabilities and
shareholders' equity $390,182 100.00% $302,438 100.00%
======== ====== ======== ======
Net interest income $12,853 $ 9,970
======= =======
Net interest margin 4.70%
4.72%
<FN>
- --------------
<F1> Average balances include non-accrual loans. The income on such loans is
included in interest but is recognized only upon receipt.
Loan fees included in interest income are approximately $774,000 and
$462,000, for 1999 and 1998, respectively.
<F2> Non-taxable investment income is presented on a fully tax-equivalent
basis assuming a tax rate of 34%.
</TABLE>
15
<PAGE> 18
PROVISION FOR POSSIBLE LOAN LOSSES
The provision for possible loan losses was $446,000 and $684,000 for the
three-month and nine-month periods ended September 30, 1999, respectively,
compared to $121,000 and $642,000 for the same periods in 1998. The
Company's asset quality remained strong with net recoveries of $16,000 for
the nine months ended September 30, 1999 compared to net charge-offs of
$23,000 for the same period in 1998. Loan growth remained strong during the
first nine months of 1999, exceeding the Company's expectations. Due to the
strong growth in the loans in the third quarter, the Company increased the
reserve for possible loan losses by charging provision expense $446,000. The
increase in provision expense in the third quarter of 1999 as compared to the
same period in 1998 was made to maintain an appropriate level of loan loss
reserve to loans. Such increases were not due to asset quality concerns.
The following table summarizes changes in the allowance for loan losses
arising from loans charged off and recoveries on loans previously charged
off, by loan category, and additions to the allowance that have been charged
to expense:
<TABLE>
<CAPTION>
Nine Months Ended
September 30,
--------------------------
1999 1998
-------- --------
(Dollars in Thousands)
<S> <C> <C>
Allowance at beginning of year $ 3,200 $ 2,510
Loans charged off:
Commercial and industrial -- 30
Real estate:
Commercial 15 19
Construction -- --
Residential -- --
Consumer and other -- --
-------- --------
Total loans charged off 15 49
-------- --------
Recoveries of loans previously charged off:
Commercial and industrial -- 18
Real estate:
Commercial 18 8
Construction 11 --
Residential -- --
Consumer and other 2 --
-------- --------
Total recoveries of loans previously charged off 31 26
-------- --------
Net loans (recovered) charged off (16) 23
-------- --------
Provisions charged to operations 684 642
-------- --------
Allowance at end of period $ 3,900 $ 3,129
======== ========
Average loans $326,216 $244,765
Total loans $377,690 $262,101
Nonperforming loans $ 319 $ 108
Net charge-offs to average loans 0.00% 0.01%
Allowance for possible loan losses to loans 1.03% 1.19%
Allowance for possible loan losses to
non-performing loans N/M N/M
</TABLE>
16
<PAGE> 19
The Company's credit management policy and procedures focus on identifying,
measuring and controlling credit exposure. These procedures employ a
lender-initiated system of rating credits, which is ratified in the loan
approval process and subsequently tested in internal loan reviews, external
audits and regulatory bank examinations. The system requires rating all loans
at the time they are made.
Adversely rated credits, including loans requiring close monitoring which
would not normally be considered criticized credits by regulators, are
included on a monthly loan watch list. Loans may be added to the watch list
for reasons which are temporary and correctable, such as the absence of
current financial statements of the borrower or a deficiency in loan
documentation. Other loans are added whenever any adverse circumstance is
detected which might affect the borrower's ability to meet the terms of the
loan. This could be initiated by the delinquency of a scheduled loan
payment, a deterioration in the borrower's financial condition identified in
a review of periodic financial statements, a decrease in the value of the
collateral securing the loan, or a change in the economic environment in
which the borrower operates. Loans on the watch list require detailed loan
status reports prepared by the responsible officer every four months, which
are then discussed in formal meetings with the loan review and loan
administration staffs. Downgrades of loan risk ratings may be initiated by
the responsible loan officer at any time. However, upgrades of risk ratings
may only be made with the concurrence of the loan review and credit
administration staffs generally at the time of the formal watch list review
meetings.
Each month, loan administration provides management with a detailed list of
loans on the watch list and summaries of the entire loan portfolio
categorized by risk rating. These are coupled with an analysis of changes in
the risk profiles of the portfolios, changes in past due and non-performing
loans and changes in watch list and classified loans over time. In this
manner, the overall increases or decreases in the levels of risk in the
portfolios are monitored continually. Factors are applied to the loan
portfolios for each category of loan risk to determine acceptable levels of
allowance for possible loan losses. These factors are derived primarily from
the actual loss experience and from published national surveys of norms in
the industry. The calculated allowances required for the portfolios are then
compared to the actual allowance balances to determine the provisions
necessary to maintain the allowances at appropriate levels. In addition,
management exercises judgment in its analysis of determining the overall
level of the allowance for possible loan losses. In its analysis, management
considers the change in the portfolio, including growth and composition, and
the economic conditions of the region in which the Company operates. Based
on this quantitative and qualitative analysis, the allowance for possible
loan losses is adjusted. Such adjustments are reflected in the consolidated
statements of income.
The Company does not engage in foreign lending. Additionally, the Company
does not have any concentrations of loans exceeding 10% of total loans which
are not otherwise disclosed in the loan portfolio composition table. The
Company does not have a material amount of interest-bearing assets which
would have been included in non-accrual, past due or restructured loans if
such assets were loans.
Management believes the allowance for loan losses is adequate to absorb
losses in the loan portfolio. While management uses available information to
recognize loan losses, future additions to the allowance may be necessary
based on changes in economic conditions. In addition, various regulatory
agencies, as an integral part of their examination process, periodically
review the allowance for loan losses. Such agencies may require the Company
to increase the allowance for loan losses based on their judgments and
interpretations about information available to them at the time of their
examinations.
While the Company has benefited from very low historical net charge-offs
during an extended period of rapid loan growth, management remains cognizant
that historical loan loss and non-performing asset experience may not be
indicative of future results. Were the experience to deteriorate, and
additional provisions for loan losses were required, future operational
results would be negatively impacted. Both management and the Board of
Directors continually monitor changes in asset quality, market conditions,
concentration of credit and other factors, all of which impact the credit
risk associated with the Company's loan portfolio.
17
<PAGE> 20
The following table sets forth information concerning the Company's
non-performing assets as of the dates indicated:
<TABLE>
<CAPTION>
September 30, December 31,
1999 1998
------------- ------------
(Dollars in Thousands)
<S> <C> <C>
Non-accrual loans $ 319 $ 2
Loans past due 90 days or more
and still accruing interest -- --
Restructured loans -- --
-------- --------
Total nonperforming loans 319 2
Foreclosed property 806 806
-------- --------
Total non-performing assets $ 1,125 808
======== ========
Total assets $432,807 $375,304
Total loans $377,690 $273,818
Total loans plus foreclosed property $378,496 $274,624
Nonperforming loans to loans 0.08% 0.00%
Nonperforming assets to loans plus
foreclosed property 0.30% 0.29%
Nonperforming assets to total assets 0.26% 0.22%
</TABLE>
NONINTEREST INCOME
Noninterest income was $807,000 and $1,785,000 for the three month and nine
month periods ended September 30, 1999, respectively, compared to $431,000
and $1,293,000 for the same periods in 1998. The increase is primarily
attributable to increased service charges on deposit accounts and financial
advisory fees. Service charges on deposit accounts were $182,000 and
$450,000 for the three month and nine month periods ended September 30, 1999,
respectively, compared to $70,000 and $182,000 for the same periods in 1998.
The increase in service charges is due to a concerted effort by the Company's
management to alter service charges and other fees to stay competitive in the
marketplace. Financial advisory and Trust fees were $453,000 and $543,000 for
the three month and nine month periods ended September 30, 1999, respectively
as compared to $0 for the same periods in 1998. The Company began offering
financial advisory and trust services in October 1998. The above mentioned
increases were offset by a $101,000 and $197,000 decrease in the gain on the
sale of mortgage loans for the three month and nine month periods ended
September 30, 1999 compared to the same periods ended September 30, 1998.
This decrease is due to an increase in interest rates during the last half of
the year in 1998 and throughout 1999. Over half of the gain on sale of
mortgage loans for the three and nine month periods ended September 30, 1998
were due to refinancing. The demand for mortgage loans dramatically
decreased with the rise in interest rates.
NONINTEREST EXPENSE
Noninterest expense was $3.5 million and $9.8 million for the three month and
nine month periods ended September 30, 1999 respectively, compared to $2.6
million and $7.2 million for the same periods in 1998. The increase is
primarily due to increases in salaries and benefits expense, occupancy and
equipment expense and other operating expenses. Increases in salaries and
benefits and occupancy and equipment expenses are primarily due to: 1) the
personnel, occupancy and equipment expenses for the new trust and financial
planning operations initiated in late 1998; 2) salaries
18
<PAGE> 21
and benefits related to continued growth in the banking facilities opened in
1996; and 3) normal increases associated with growth. Expenses related to
other operations were $1,557,006 and $4,083,340 for the three month and nine
month periods ended September 30, 1999, respectively, an increase of
$361,827, or 30%, and $706,051 or 21% over the three month and nine month
periods ended September 30, 1998. This increase is attributed to normal
operating expenses associated with growth.
The following is a breakdown of noninterest expenses by the above units:
<TABLE>
<CAPTION>
Three months ended September 30, Nine months ended
September 30,
1999 versus 1998 1999 versus 1998
----------------------------------- ----------------------------
- ---------
$ Change 1999 1998 $ Change 1999
1998
--------- ---------- ---------- ----------- ---------- -
- ---------
<S> <C> <C> <C> <C> <C>
<C>
Merchant Banking Division $(68,399) $ 80,324 $ 148,723 $ (19,965) $ 412,764 $
392,799
St. Peters and Sunset Hills
banking units 358,036 1,406,413 1,048,377 1,080,766 3,909,762
2,828,996
Mortgage operations 29,222 194,163 164,941 128,721 657,792
529,071
Enterprise Financial Advisors 250,471 304,716 54,245 684,258 748,648
64,390
Other operations 343,827 1,539,006 1,195,179 706,051 4,083,340
3,377,289
-------- ---------- ---------- ---------- ---------- -
- ---------
Total noninterest expense $913,157 $3,524,622 $2,611,465 $2,619,761 $9,812,306
$7,192,545
======== ========== ========== ========== ==========
==========
</TABLE>
YEAR 2000
Overview
The Year 2000 ("Y2K") issue refers to the ability of a date-sensitive
computer program to recognize a two-digit date field designated "00" as the
year 2000. Mistaking "00" for 1900 could result in a system failure or
miscalculations causing a disruption to operations and normal business
activities. This is a significant issue for many companies, including banks,
and the implications of the Y2K issue cannot be predicted with any high
degree of certainty.
The Company's State of Readiness:
The Company has developed a Y2K compliance program with five primary phases.
These are: 1) Awareness, 2) Assessment, 3) Renovations, 4) Validation and
5) Implementation. As of September 30, 1999 all five phases were complete
and all systems have been reviewed for Y2K compliance. The scope of the
Assessment phase included all areas of technology for the Company and its
subsidiaries including, but not limited to, the phone system, voice mail
system, computer network, banking mainframe and related software. The
Company completed its contingency plan related to Y2K on June 30, 1999.
Contingency plan training is currently underway and will be completed by
November 30, 1999. The Company feels its primary Y2K exposure is in its core
banking software, which is leased from a third party bank software vendor
providing the same software to hundreds of other banks. This vendor is
working closely with the Company to address any Y2K issues that may be
discovered and has indicated to the Company that there should be no material
Y2K problems.
The Cost of Y2K Compliance:
The total cost to the Company to assess, correct and verify Y2K issues is
estimated at $103,000, consisting of $45,000 in salaries and benefit costs
allocated to Y2K projects and $58,000 in software and hardware expenses
required for upgrading and testing of the Company's systems. This cost
estimate does not include the cost associated with regulatory reporting,
legal review of regulatory requirements, auditing requirements or other costs
incurred related only to the disclosure requirements and not actual software
or hardware issues. Such costs are difficult to determine as these
requirements change frequently. If these non-systems related costs become
significant and quantifiable, they will be disclosed at that time.
19
<PAGE> 22
What Risks Exist for the Company:
The most likely risk the Company faces with respect to Y2K issues is in the
core banking software. This system identifies and calculates payments due
the Company's subsidiary bank for loans made to customers and amounts due to
the bank's customers for deposits. The loss of these records or inability to
accurately perform these calculations could cause the bank to incur
additional expenses such as loan losses, underpayments of amounts due on
loans, overpayments of amounts due to depositors or increased personnel
expenses required to track this information manually. Such expenses are not
currently quantifiable, but could be material to the operations and financial
performance of the Company and its subsidiaries.
Contingency Plans:
Management believes the Company will be Y2K compliant by December 31, 1999.
The Company is currently testing its contingency plans. However, as a
precautionary measure, the Company will create electronic and paper based
reports of every account as a back up. The back up reports will include the
necessary information to calculate balance and payment information. If
necessary, the electronic version of this information can be used by other
common software applications such as Lotus 1-2-3 or Microsoft Excel to
perform many of the calculations performed by the bank's core software
system. The back up reports can also be used to manually calculate customer
information indefinitely if needed. Training for bank personnel on the
contingency plan is currently underway and should be completed by November
30, 1999.
LIQUIDITY AND INTEREST RATE SENSITIVITY
Liquidity is provided by the Company's earning assets, including short-term
investments in federal funds sold, maturities in the loan portfolio,
maturities in the investment portfolio, amortization of term loans, deposit
inflows, proceeds from borrowings, and retained earnings.
The Company's deposit growth has not kept pace with the loan growth. Loan
growth far exceeded the Company's initial expectations, which caused a
decrease in short term assets as they were converted into loans. The Company
monitors its liquidity on an ongoing basis. The Company is making a
concerted effort to increase deposits through calling efforts and additional
certificates of deposits from the national network of time depositors. As an
additional precaution for Y2K liquidity, the Bank obtained a line of credit
from the Federal Reserve for $114 million.
Since inception, the Company has experienced rapid loan and deposit growth
primarily due to the aggressive direct calling efforts of the Company's
relationship officers and sustained economic growth in the local market
served by the Company. Management has pursued privately held businesses who
desire a close working relationship with a locally managed, full service
bank. Due to the relationships developed with these customers, management
views deposits from this source as a stable deposit base. Additionally, the
Company belongs to a national network of time depositors (primarily credit
unions) which places time deposits with the Company, typically in increments
of $99,000. The Company has used this source of deposits for over four years
and considers it to be a stable source of deposits enabling the Company to
acquire funds at a cost below its alternative cost of funds. There were
$21 million and $29 million of deposits from the national network with the
Company at September 30, 1999 and December 31, 1998, respectively.
20
<PAGE> 23
The following table sets forth the amount and maturity of certificates of
deposit that had balances of more than $100,000 at September 30, 1999:
<TABLE>
<CAPTION>
Remaining Maturity Amount
--------------------------------------- ----------
(Dollars in Thousands)
<S> <C>
Three months or less $13,811
Over three through six months 9,964
Over six through twelve months 16,225
Over twelve months 2,068
-------
$42,068
=======
</TABLE>
The asset/liability management process, which involves management of the
components of the balance sheet to allow assets and liabilities to reprice at
approximately the same time, is an ever-changing process essential to
minimizing the effect of interest rate fluctuations on net interest income.
CAPITAL ADEQUACY
In March 1999, the Company obtained a $2,500,000 unsecured line of credit
from Jefferson Bank and Trust. In July 1999, the Company increased the line
to $5,000,000. The line of credit matures on March 31, 2000 and is an
interest only note accruing interest at a variable rate of Prime minus 0.50%.
The outstanding principal balance on the loan as of September 30, 1999 was
$5,000,000. The Company used a portion of the proceeds from the Preferred
Securities offering to pay off this debt.
Risk-based capital guidelines for financial institutions were adopted by
regulatory authorities effective January 1, 1991. These guidelines were
designed to relate regulatory capital requirements to the risk profile of the
specific institution and to provide for uniform requirements among the
various regulators. Currently, the risk-based capital guidelines require the
Company to meet a minimum total capital ratio of 8.0% of which at least 4.0%
must consist of Tier 1 capital. Tier 1 capital generally consists of (a)
common shareholders' equity (excluding the unrealized market value
adjustments on the available-for-sale securities), (b) qualifying perpetual
preferred stock and related surplus subject to certain limitations specified
by the FDIC, (c) minority interests in the equity accounts of consolidated
subsidiaries less (d) goodwill, (e) mortgage servicing rights within certain
limits, and (f) any other intangible assets and investments in subsidiaries
that the FDIC determines should be deducted from Tier 1 capital. The FDIC
also requires a minimum leverage ratio of 3.0%, defined as the ratio of Tier
1 capital less purchased mortgage servicing rights to total assets, for
banking organizations deemed the strongest and most highly rated by banking
regulators. A higher minimum leverage ratio is required of less highly rated
banking organizations. Total capital, a measure of capital adequacy,
includes Tier 1 capital, allowance for possible loan losses, and debt
considered equity for regulatory capital purposes.
21
<PAGE> 24
The following table summarizes the Company's risk-based capital and leverage
ratios at the dates indicated:
<TABLE>
<CAPTION>
To Be
Well
Capitalized Under
For Capital Prompt
Corrective
Actual Adequacy Purposes Action
Provisions
-------------------- -------------------- -----------
- ---------
Amount Ratio Amount Ratio Amount
Ratio
----------- ------ ----------- ----- -----------
- ------
<S> <C> <C> <C> <C> <C>
<C>
At September 30, 1999:
Total Capital
(to Risk Weighted Assets)
Enterbank Holdings, Inc. $35,899,551 9.28% $30,955,445 8.00% $38,694,307
10.00%
Enterprise Bank $38,448,483 10.00% $30,771,766 8.00% $38,464,707
10.00%
Tier I Capital
(to Risk Weighted Assets)
Enterbank Holdings, Inc. $31,999,551 8.27% $15,477,723 4.00% $23,216,584
6.00%
Enterprise Bank $34,548,483 8.98% $15,385,883 4.00% $23,078,824
6.00%
Tier I Capital
(to Average Assets)
Enterbank Holdings, Inc. $31,999,551 7.51% $11,705,461 3.00% $19,509,102
5.00%
Enterprise Bank $34,548,483 8.89% $11,664,785 3.00% $19,441,308
5.00%
At December 31, 1998:
Total Capital
(to Risk Weighted Assets)
Enterbank Holdings, Inc. $32,400,862 10.97% $23,618,397 8.00% $29,522,997
10.00%
Enterprise Bank $30,809,159 10.48% $23,520,774 8.00% $29,400,967
10.00%
Tier I Capital
(to Risk Weighted Assets)
Enterbank Holdings, Inc. $29,200,862 9.89% $11,809,199 4.00% $17,713,798
6.00%
Enterprise Bank $27,609,159 9.39% $11,760,387 4.00% $17,640,580
6.00%
Tier I Capital
(to Average Assets)
Enterbank Holdings, Inc. $29,200,862 9.16% $9,558,703 3.00% $15,931,172
5.00%
Enterprise Bank $27,609,159 8.69% $9,526,209 3.00% $15,877,015
5.00%
</TABLE>
EFFECT OF INFLATION
Changes in interest rates may have a significant impact on a commercial
bank's performance because virtually all assets and liabilities of commercial
banks are monetary in nature. Interest rates do not necessarily move in the
same direction or in the same magnitude as the prices of goods and services.
Inflation does have an impact on the growth of total assets in the banking
industry, often resulting in a need to increase equity capital at higher than
normal rates to maintain an appropriate equity-to-assets ratio.
PART II- ITEM 4
Submissions of Matters to a Vote of Security Holders
A Special Meeting of Shareholders of the Company was held on September 29,
1999. A proposal to amend the Company's Certificate of Incorporation to
increase the authorized shares of the Company's common stock, par value $.01
per share, from 3,500,000 shares to 20,000,000 shares, was approved. Of the
2,380,212 shares entitled to vote at such meeting, 2,039,693 shares were
present at the meeting in person or by proxy. At the meeting, 2,014,445
votes were cast in favor of the amendment, 17,498 votes were cast against the
amendment and 7,750 votes abstained or were withheld.
22
<PAGE> 25
Item 6. -- Exhibits and Reports on Form 8-K
(a). Exhibits.
Exhibit
Number Description
------- -----------
3.1 Amendment to the Certificate of Incorporation of the
Registrant
11.1 Statement regarding computation of per share earnings.
27.1 Financial Data Schedule. (EDGAR only)
(b). During the three months ended September 30, 1999, the Registrant
filed one Current Report on Form 8-K, dated October 7, 1999, in
which the Registrant reported the issuance of a press release
announcing its preliminary operating results for the quarter ended
September 30, 1999.
23
<PAGE> 26
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, as
amended, the Registrant has duly caused this report to be signed on its
behalf by the undersigned; thereunto duly authorized, in the City of Clayton,
State of Missouri on the 10th day of November, 1999.
ENTERBANK HOLDINGS, INC.
By: ________________________________
Fred H. Eller
Chief Executive Officer
By: ________________________________
James C. Wagner
Chief Financial Officer
24
<PAGE> 1
ENTERBANK HOLDINGS, INC.
CERTIFICATE OF AMENDMENT
OF CERTIFICATE OF INCORPORATION
ENTERBANK HOLDINGS, INC., a corporation organized and existing under and
by virtue of the General Corporation Law of the State of Delaware, does
hereby certify that the following amendment to the Certificate of
Incorporation of said Corporation has been duly adopted in accordance with
the provisions of Section 242 of the General Corporation Law of the State of
Delaware:
Article FOUR of the Certificate of Incorporation of the Corporation is
amended to read as follows:
"The aggregate number of shares which the corporation shall have
authority to issue shall be twenty million (20,000,000) shares of common
stock, par value $.01 each.
The distinguishing preferences, qualifications, imitations, restrictions
and special or relative rights in respect to the common stock as
follows:
In all elections of Directors of the Corporation, each common
shareholder shall have the right to cast as many votes as shall
equal (x) the number of shares held by him or her, and multiplied
by (y) the number of Directors to be elected, and he or she may cast
all such votes for a single Director or may distribute them among
the number of directors to be elected, or any two (2) or more of
them, as such shareholder may deem fit."
IN WITNESS WHEREOF, said corporation has caused this Certificate to be
signed by its duly authorized officer, this 29th day of September, 1999.
ENTERBANK HOLDINGS, INC.
By:__________________________________
Fred H. Eller,
Chief Executive Officer
<PAGE> 1
<TABLE>
<CAPTION>
EXHIBIT 11.1
STATEMENT REGARDING CALCULATION OF EARNINGS PER SHARE <F1>
Basic Diluted
EPS number EPS number Net Basic
Diluted
of shares of shares Income EPS
EPS
---------------------------------------------------------
- -------
<S> <C> <C> <C> <C>
<C>
THREE MONTHS ENDED SEPTEMBER 30, 1998 7,095,600 7,554,098 $776,920 $0.11
$0.10
THREE MONTHS ENDED SEPTEMBER 30, 1999 7,140,636 7,718,737 $1,035,328 $0.14
$0.13
THREE MONTHS ENDED SEPTEMBER 30, 1998 Basic Diluted
--------- ----------
Average Shares Outstanding 7,095,600 7,095,600
Options - Plan 1 69,000
Average Option Price $2.25
Total Exercise Cost $155,020
Shares Repurchased 15,916
Net Shares from Option - Plan 1 53,084
Options - Plan 2 220,200
Average Option Price $2.55
Total Exercise Cost $560,776
Shares Repurchased 57,575
Net Shares from Option - Plan 2 162,625
Options - Plan 3 546,555
Average Option Price $5.41
Total Exercise Cost $2,958,684
Shares Repurchased 303,766
Net Shares from Option - Plan 3 242,789
--------- ----------
Gross Shares 7,095,600 7,554,098
Price $9.74
THREE MONTHS ENDED SEPTEMBER 30, 1999 Basic Diluted
--------- ----------
Average Shares Outstanding 7,140,636 7,140,636
Options - Plan 1 30,000
Average Option Price $2.33
Total Exercise Cost $69,900
Shares Repurchased 4,663
Net Shares from Option - Plan 1 25,337
Options - Plan 2 217,200
Average Option Price $2.55
Total Exercise Cost $553,860
Shares Repurchased 36,949
Net Shares from Option - Plan 2 180,251
Options - Plan 3 555,300
Average Option Price $5.68
Total Exercise Cost $3,154,104
Shares Repurchased 210,414
Net Shares from Option - Plan 3 344,886
Options - EFA Non-qualified 84,000
Average Option Price $10.06
Total Exercise Cost $845,040
Shares Repurchased 56,374
Net Shares from Option - EFA Non-qualified 27,626
--------- ----------
Gross Shares 7,140,636 7,718,737
Price $14.99
<FN>
<F1> Adjusted to give retroactive effect to a 3-for-1 stock split effective
September 29, 1999
25
<PAGE> 2
<CAPTION>
EXHIBIT 11.1 (CONTINUED)
STATEMENT REGARDING CALCULATION OF EARNINGS PER SHARE <F1>
Basic Diluted
EPS number EPS number Net Basic
Diluted
of shares of shares Income EPS
EPS
---------------------------------------------------------
- -------
<S> <C> <C> <C> <C>
<C>
NINE MONTHS ENDED SEPTEMBER 30, 1998 7,035,411 7,531,308 $2,102,815 $0.30
$0.28
NINE MONTHS ENDED SEPTEMBER 30, 1999 7,133,868 7,675,931 $2,707,365 $0.38
$0.35
NINE MONTHS ENDED SEPTEMBER 30, 1998 Basic Diluted
--------- ----------
Average Shares Outstanding 7,035,411 7,035,411
Options - Plan 1 152,199
Average Option Price $1.93
Total Exercise Cost $293,744
Shares Repurchased 32,882
Net Shares from Option - Plan 1 119,317
Options - Plan 2 220,683
Average Option Price $2.54
Total Exercise Cost $559,799
Shares Repurchased 62,664
Net Shares from Option - Plan 2 158,019
Options - Plan 3 546,912
Average Option Price $5.36
Total Exercise Cost $2,933,271
Shares Repurchased 328,351
Net Shares from Option - Plan 3 218,561
--------- ----------
Gross Shares 7,035,411 7,531,308
Price $8.93
NINE MONTHS ENDED SEPTEMBER 30, 1999 Basic Diluted
--------- ----------
Average Shares Outstanding 7,133,868 7,133,868
Options - Plan 1 35,985
Average Option Price $2.29
Total Exercise Cost $82,406
Shares Repurchased 6,257
Net Shares from Option - Plan 1 29,728
Options - Plan 2 217,793
Average Option Price $2.55
Total Exercise Cost $555,372
Shares Repurchased 42,169
Net Shares from Option - Plan 2 175,624
Options - Plan 3 552,040
Average Option Price $5.61
Total Exercise Cost $3,096,944
Shares Repurchased 235,151
Net Shares from Option - Plan 3 316,889
Options-EFA Non-qualified 83,945
Average Option Price $10.06
Total Exercise Cost $844,487
Shares Repurchased 64,122
Net Shares from Option-EFA Non-qualified 19,823
--------- ----------
Gross Shares 7,133,868 7,675,931
Price $13.17
<FN>
<F1> Adjusted to give retroactive effect to a 3-for-1 stock split effective
September 29, 1999
</TABLE>
26
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 17,656,180
<INT-BEARING-DEPOSITS> 3,550
<FED-FUNDS-SOLD> 15,975,000
<TRADING-ASSETS> 707,546
<INVESTMENTS-HELD-FOR-SALE> 13,984,416
<INVESTMENTS-CARRYING> 683,315
<INVESTMENTS-MARKET> 656,782
<LOANS> 377,690,225
<ALLOWANCE> 3,900,000
<TOTAL-ASSETS> 432,806,820
<DEPOSITS> 387,450,449
<SHORT-TERM> 5,000,000
<LIABILITIES-OTHER> 1,679,595
<LONG-TERM> 6,930,592
0
0
<COMMON> 71,406
<OTHER-SE> 31,674,778
<TOTAL-LIABILITIES-AND-EQUITY> 432,806,820
<INTEREST-LOAN> 21,299,752
<INTEREST-INVEST> 777,049
<INTEREST-OTHER> 696,542
<INTEREST-TOTAL> 22,773,343
<INTEREST-DEPOSIT> 9,709,827
<INTEREST-EXPENSE> 10,007,740
<INTEREST-INCOME-NET> 12,765,603
<LOAN-LOSSES> 683,691
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 9,812,306
<INCOME-PRETAX> 4,055,046
<INCOME-PRE-EXTRAORDINARY> 2,585,874
<EXTRAORDINARY> 0
<CHANGES> 121,491
<NET-INCOME> 2,707,365
<EPS-BASIC> 0.38
<EPS-DILUTED> 0.35
<YIELD-ACTUAL> 8.36
<LOANS-NON> 319,000
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,169,978
<ALLOWANCE-OPEN> 3,200,000
<CHARGE-OFFS> 15,163
<RECOVERIES> 31,473
<ALLOWANCE-CLOSE> 3,900,000
<ALLOWANCE-DOMESTIC> 3,670,000
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 230,000
</TABLE>
