SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
FORM 10-QSB
QUARTERLY REPORT UNDER SECTION 13 or 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended MARCH 31, 1999 Commission File Number 0-22961
ANNAPOLIS NATIONAL BANCORP, INC.
(Exact name of small business issuer as specified in its charter)
MARYLAND 52-1648903
(State or other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
180 ADMIRAL COCHRANE DRIVE, SUITE 300, ANNAPOLIS, MARYLAND 21401
(Address of principal executive offices)
(410) 224-4455
(Issuer's telephone number, including area code)
Check whether the issuer: (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 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.
(1) YES X NO
---------- -----------
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
At March 31, 1999, the Registrant had 2,313,506 shares of Common Stock
outstanding.
Transitional Small Business Disclosure Format
YES NO X
---------- -----------
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE
- ------------------------------ ----
<S><C>
Item 1 - Financial Statements
Consolidated Balance Sheets as of March 31, 1999 and December 31, 1998 1
Consolidated Income Statements for the Three Months Ended
March 31, 1999 and 1998 2
Consolidated Statements of Cash Flows for the Three Months Ended
March 31, 1999 and 1998 3-4
Consolidated Statement of Changes in Stockholders' Equity 5
Item 2 - Management's Discussion and Analysis of Financial
Condition and Results of Operations 6
PART II - OTHER INFORMATION
Item 1 - Legal Proceedings 10
Item 2 - Changes in Securities 10
Item 3 - Defaults Upon Senior Securities 11
Item 4 - Submission of Matters to a Vote of Security Holders 11
Item 5 - Other Information 11
Item 6 - Exhibits and Reports on Form 8-K 11
SIGNATURES..............................................................................12
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
ANNAPOLIS NATIONAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 1999 AND DECEMBER 31, 1998
(In thousands)
<TABLE>
<CAPTION>
(Unaudited) (Audited)
March 31, December 31,
1999 1998
------------------- -------------------
<S><C>
ASSETS
Cash and due from banks $ 4,033 $ 3,846
Federal funds sold and other overnight investments 6,508 10,284
Investment securities available-for-sale 11,050 15,191
Loans, less allowance for credit losses, $1,543 and $1,159 92,264 86,924
Premises and equipment 2,830 2,679
Core deposit premium and other intangibles 108 130
Accrued interest receivable 655 590
Deferred income taxes 329 320
Other real estate owned 57 91
Other assets 544 402
-------- --------
Total assets $118,378 $120,457
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Noninterest-bearing $ 12,103 $11,304
Interest-bearing 84,506 89,438
-------- --------
Total Deposits 96,609 100,742
Securities sold under agreements to
repurchase 7,777 7,174
Other Borrowings 1,500 0
Accrued interest and other liabilities 359 450
-------- --------
Total liabilities 106,245 108,366
Stockholders' equity
Preferred stock - $.01 par value $ -- $ --
Common stock - $.01 par value 23 23
Capital surplus 13,143 13,143
Accumulated deficit (1,015) (1,075)
Accumulated other comprehensive income (18) 0
-------- --------
Total stockholders' equity 12,133 12,091
-------- --------
Total liabilities and stockholders' equity $118,378 $120,457
======== ========
</TABLE>
<PAGE>
ANNAPOLIS NATIONAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF INCOME
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1999 AND 1998
(Unaudited and in thousands)
<TABLE>
<CAPTION>
For the Three Months
Ended
March 31,
-----------------------------
1999 1998
-------------- -------------
<S><C>
INTEREST INCOME:
Loans $2,060 $1,822
Investment securities 162 297
Federal funds sold and securities purchased 110 290
------ ------
Total interest income 2,332 2,409
INTEREST EXPENSE:
Interest bearing deposits 719 884
Securities sold under agreements to repurchase 70 102
Interest on other borrowings 0 0
------ ------
Total interest expense 789 986
------ ------
Net interest income 1,543 1,423
Provision for credit losses 405 75
------ ------
Net interest income after provision
for credit losses 1,138 1,348
NON-INTEREST INCOME:
Service charges and fees 119 111
Mortgage banking fees 33 13
Other fee income 70 46
------ ------
Total noninterest income 222 170
NONINTEREST EXPENSE:
Personnel 589 571
Occupancy and equipment 135 140
Other operating expenses 545 422
------ ------
Total noninterest expense 1,269 1,133
INCOME (LOSS) BEFORE INCOME TAXES 91 385
INCOME TAX EXPENSE 31 131
------ ------
NET INCOME $ 60 $ 254
====== ======
Basic Earnings Per Share $ 0.03 $ 0.11
====== ======
Diluted Earnings per share $ 0.03 $ 0.11
====== ======
</TABLE>
<PAGE>
ANNAPOLIS NATIONAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENT OF CASH FLOWS
FOR THE THREE MONTH PERIODS ENDED MARCH 31, 1999 AND 1998
(Unaudited and in thousands)
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
-----------------------------------
1999 1998
----------------- ----------------
<S><C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 60 $ 254
ADJUSTMENTS TO RECONCILE NET INCOME TO NET CASH PROVIDED
BY OPERATING ACTIVITIES
Deferred income taxes 0 120
Depreciation and amortization of furniture, equipment,
and leasehold improvements 51 55
Amortization of premiums and accretion of discounts, net (41) 0
Amortization of intangible assets acquired 22 21
Decrease (increase) in accrued interest receivable (65) (66)
Net loss (gain) on sale of loans, equipment, and other real estate owned (5) (3)
Provision for credit losses 405 75
Other 394 (181)
------ --------
Net cash provided by operating activities 821 275
------ --------
CASH FLOWS FROM INVESTING ACTIVITIES
Net increase in loans (6,270) (1,971)
Purchase of investment securities - available-for-sale (12,812) (12,082)
Proceeds from redemption of securities
And principal repayments 16,925 13,970
Net decrease (increase) in federal funds sold 3,776 (2,985)
Proceeds from sale of equipment 5 13
Purchase of furniture, equipment, and leasehold improvements (228) (17)
------ --------
Net cash used in investing activities $1,396 $(3,072)
------ --------
(CONTINUED)
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
For the Three Months Ended
March 31,
-----------------------------------
1999 1998
----------------- ----------------
<S><C>
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in other borrowings 1,500 0
Net increase (decrease) in deposits $(4,133) $2,437
Net increase (decrease) in securities sold
under agreements to repurchase 603 438
------ ------
Net cash provided by financing activities (2,030) 2,875
------ ------
Net increase (decrease) in cash 187 78
Cash, beginning of period 3,846 5,611
------ ------
Cash, end of period $4,033 $5,689
====== ======
Supplemental cash flow information:
Interest paid on deposits and repurchase agreements $ 803 $ 954
Income taxes paid $ 15 5
</TABLE>
<PAGE>
ANNAPOLIS NATIONAL BANCORP, INC. AND SUBSIDIARY
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1998 AND
THE THREE MONTH PERIOD ENDED MARCH 31, 1999
(Dollars in thousands)
<TABLE>
<CAPTION>
Accumulated
Other
Common Stock Accumulated Comprehensive
------------------------------------------ Deficit Income Total
Shares Par Value Surplus
--------------- ------------ ------------- -------------- -------------- ----------
<S><C>
BALANCE, DECEMBER 31, 1998 2,313,506 $ 23 $ 13,143 $ (1,075) $ 0 $ 12,091
Net income --- -- -- 60 -- 60
Unrealized loss on investment securities
Available for sale, net of income tax --- -- -- -- (18) (18)
--------- ----- -------- --------- --------- --------
BALANCE, MARCH 31, 1999 (UNAUDITED) 2,313,506 $ 23 $ 13,143 $ (1,015) $ (18) $ 12,133
========= ===== ======== ========= ========= ========
</TABLE>
<PAGE>
ITEM 2 - MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATION
COMPARISON OF FINANCIAL CONDITION AT MARCH 31, 1999 AND DECEMBER 31, 1998
Total assets at March 31, 1999 were $118.4 million, a decrease of $2.1
million or 1.73% from total assets of $120.5 million at December 31, 1998. The
decline in total assets was due to a decrease in federal funds sold and other
overnight investments of $3.8 million or 36.72% from $10.3 million at December
31, 1998, and a decrease in investment securities available for sale of $4.1
million or 27.26% from $15.2 million at December 31, 1998. These decreases were
partially offset by growth in net loans of $5.3 million or 6.14% to $92.3
million from $86.9 million at December 31, 1998. The net loan growth was
comprised of a $7.4 million or 12.33% increase in real estate and construction
loans and a $2.1 million or 7.9% decrease in commercial loans.
Following the recent appointment of a new chief executive officer (see
Recent Developments), the Bank undertook a thorough and comprehensive review of
its allowance for credit losses. The purpose of the review was to evaluate the
adequacy of the allowance for credit losses and the methodology employed in
determining it. As a result of the review and with input received during the
course of a regularly scheduled safety and soundness examination, the Bank
developed a revised methodology to estimate the inherent losses in its loan
portfolio. Adoption of this methodology at March 31, 1999 resulted in an
increase in the allowance for credit losses of $384,000 or 33.13% to $1,543,000
from $1,159,000 at December 31, 1998. While management believes that, based on
information currently available, the Bank's allowance for credit losses is
sufficient to absorb estimated losses inherent in its loan portfolio at this
time, no assurances can be given that the Bank's level of allowance for credit
losses will be sufficient to absorb future losses incurred by the Bank or that
future adjustments to the allowance for credit losses will not be necessary if
economic and other conditions differ substantially from the time management
determined the current level of the allowance for credit losses. At March 31,
1999 and December 31, 1998, the allowance for credit losses to total loans was
1.64% and 1.32%, respectively.
At March 31, 1999, the Bank had $2.1 million in non-performing assets,
a net increase of $1.3 million over December 31, 1998 non-performing assets of
$808,000. The increase in non-performing assets resulted from a review of the
loan portfolio following the recent change in management, and the subsequent
decision to place certain loans on non-accrual status. The loans placed on
non-accrual status include six commercial loans with principal balances totaling
$1,250,000 (of which $746,000 is subject to U.S. Small Business Administration
guaranties), two acquisition and/or construction loans to one borrower with
principal balances totaling $413,000, and one consumer loan with a principal
balance of $7,000. The largest of the loans placed on non-accrual status is an
$861,000 commercial loan to a technology company that is subject to a 75% SBA
guaranty. Although this loan is current in its principal and interest payments,
repayment is contingent on future cash flows that may be in doubt due to
depletion of capital from prior losses and a deterioration in the quality of
accounts receivable. The two acquisition and/or construction loans financed the
acquisition of four finished single-family building lots, one of which was
improved by a completed residential dwelling. All four properties were listed
for sale at March 31, 1999. Subsequent to March 31, 1999, the Bank
<PAGE>
received a $60,000 payoff on one of the lots, and the borrower has a sales
contract pending for the construction of a residential dwelling on another. The
payment reduced the total outstanding loan balance on these two loans to
$353,000.
Premises and equipment increased $151,000 or 5.64% due primarily to the
Bank's completion of the conversion to a new data processor on January 25, 1999.
The increase reflects additional new computer equipment purchased and certain
capitalized conversion costs.
Accrued interest receivable increased $65,000 or 11.02% due
primarily to an increase in net loans receivable for the period ended March
31, 1999.
Other real estate owned decreased $34,000 or 37.36% due to the
sale and settlement of one of three building lots owned by the Bank.
Deposits of $96.6 million at March 31, 1999 represent a $4.1 million or
4.10% decrease from December 31, 1998 deposits of $100.7 million. The decrease
was comprised of a $1.6 million decrease in certificate of deposit accounts and
a $3.4 million decrease in savings, money market, and NOW accounts, partially
offset by an increase of $799,000 in non-interest bearing accounts.
Other borrowings increased $1.5 million at March 31, 1999 as compared
to zero at December 31, 1998. This amount represents an advance on the Bank's
existing credit facility and was used on a short-term basis to fund ongoing
operations.
Stockholders' equity increased $42,000 during the first three months of
1999 as a result of an increase in net retained earnings of $60,000, offset by a
decrease of $18,000 in accumulated other comprehensive income.
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED MARCH 31, 1999 AND
1998
GENERAL. Net income for the three months ended March 31, 1999 totaled
$60,000 or $0.03 per basic share, as compared to $254,000 or $0.11 per basic
share for the three months ended March 31, 1998. The decrease in net income is
attributed mainly to a $330,000 increase in provisions for credit losses in the
period ended March 31, 1999.
The net interest margin increased to 5.65% at March 31, 1999 from 5.01%
at March 31, 1998. This was the result of an increase in the net yield on
earning assets to 8.55% at March 31, 1999 from 8.48% at March 31, 1998, combined
with a decrease in the cost of interest bearing liabilities to 3.38% at March
31, 1999 from 4.04% at March 31, 1998. During the quarter ended March 31, 1999,
other income increased by $52,000, mainly due to increased service fees and
charges and mortgage banking fees.
NET INTEREST INCOME. Net interest income increased $120,000 or 8.43%
for the three months ended March 31, 1999 to $1.5 million from $1.4 million for
the three months ended March 31, 1998, due to a decrease in interest expense of
$197,000, offset by an decrease in interest income of $77,000. The decrease in
interest income is primarily attributable to a $55,000 reversal of interest
relating to loans placed on non-accrual status at March 31, 1999.
<PAGE>
(The effect of the reversal of interest for the period ended March 31, 1999
reduced the net yield on earning assets from 8.75% to 8.55%.)
The decrease in interest income was also driven by reduced interest on
federal funds sold and other overnight investments, which decreased $180,000 or
62.07% to $110,000 at March 31, 1999 from $290,000 at March 31, 1998.
Furthermore, interest on investment securities decreased by $135,000 or 45.45%
to $162,000 at March 31, 1999 from $297,000 at March 31, 1999. These decreases
in interest income were due to declines in the average balance of federal funds
sold to $10.3 million at March 31, 1999 from $21.8 million at March 31, 1998,
and in the average balance of investment securities to $11.2 million at March
31, 1999 from $20.0 million at March 31, 1998. Interest on loans receivable
increased $238,000 or 13.06% to $2.1 million for the three months ended March
31, 1999 from $1.8 million for the three months ended March 31, 1998. This
increase was due primarily to an increase in the average balance of loans
receivable to $89.1 million for the three months ended March 31, 1999 from $72.0
million for the three months ended March 31, 1998. The increase in interest on
loans receivable attributable to higher volume was partially offset by a
decrease in the average yield on loans receivable to 9.37% at March 31, 1999
from 10.13% at March 31, 1998.
Interest expense decreased $197,000 or 19.98% for the three months
ended March 31, 1999 as compared to the three months ended March 31, 1998, due
to a decrease in the average volume of deposits to $94.8 million from $98.9
million. In addition, the average cost of interest bearing liabilities decreased
to 3.38% at March 31, 1999 from 4.04% at March 31, 1998.
PROVISION FOR CREDIT LOSSES. The provisions for credit losses for the
three-month periods ended March 31, 1999 and 1998 totaled $405,000 and $75,000,
respectively. The increase of $330,000 in the provision for credit losses at
March 31, 1999 from March 31, 1998 was mainly attributable to management's
adoption of a new methodology to estimate the inherent losses in the bank's loan
portfolio.
NONINTEREST INCOME. Noninterest income increased $52,000 or 30.59% to
$222,000 for the three months ended March 31, 1999 from $170,000 for the three
months ended March 31, 1998. The increase in noninterest income was due to an
increase of $20,000 in mortgage banking fees, an increase of $8,000 in fees and
charges on deposit accounts, and the implementation of new ATM and other service
fees beginning in January, 1999.
NONINTEREST EXPENSE. Noninterest expense increased $136,000 or 12.00%
to $1.3 million for the three months ended March 31, 1999 from $1.1 million for
the three months ended March 31, 1998. The increase in noninterest expenses was
partially due to an increase of $41,000 in repairs, maintenance and depreciation
from additional computer equipment purchased in connection with the Bank's
conversion to a new data processor in January, 1999. Data processing expense
increased $41,000 due to conversion costs associated with the Bank's previously
mentioned data processing conversion. Telephone expense increased $11,000 due to
the installation of a central communication line to the Bank's new data
processor, and additional high-speed communication lines required to operate the
Bank's wide area network.
INCOME TAX EXPENSE. The Company recorded income tax expense for the
three-month period ended March 31, 1999 of $31,000 based on a federal income tax
rate of 34%. The Company had no state income tax liability for the period.
<PAGE>
YEAR 2000 COMPLIANCE. As a financial institution, the Bank is highly
dependent on computer systems and applications to conduct its business. The Year
2000 (Y2K) issue arises from the use of two digits rather than four to signify
the calendar year in date-sensitive computer programs. Many of the Bank's
computer applications may recognize the date "00" as the year 1900 rather than
the year 2000. This could result in a system failure or miscalculation causing
disruption of operations, including, among other things, a temporary inability
to process transactions or engage in normal business activities for both the
Bank and its customers who rely on its financial products and services.
The Bank is actively engaged in an ongoing program designed to make its
computer systems, applications, and facilities Y2K compliant. This program
consists of the following phases: (i) awareness; (ii) assessment; (iii)
renovation; (iv) validation, and; (v) implementation. During the awareness
phase, the Bank identified its project team and responsibilities, prepared and
allocated the project budget, defined the project scope, and established program
and management policies. Although complete, the awareness phase continues to be
reviewed and updated. The assessment phase-- requiring an inventory of software,
hardware, vendors, material customers, and facilities-- has also been completed.
The renovation phase relating to the Bank's new internal systems was completed
by January 31, 1999.
The Bank converted its mission critical systems to a new service bureau
on January 25, 1999. The new service bureau completed its Y2K testing phase by
March 31, 1999. The Bank participated in this process, utilizing the proxy test
method. The Bank used internal resources to validate the test results of all
mission critical systems (deposits, loans, and general ledger). The validation
phase also included testing of internal systems as they relate to each other,
and testing of external interfaces with business partners. The implementation
phase, which involved either updating or replacing software and hardware that is
non-compliant, has also been completed.
An institution-wide contingency plan has recently been developed to
establish policies and procedures to be followed in the event of a business
disruption caused by Y2K or other disasters. The plan's objective is to enable
the continued safe operation of the Bank for a reasonable period of time until
impacted systems can be restored. Elements of the plan include performing
certain processes manually, repairing systems or obtaining replacements, and
changing suppliers. The Bank strongly believes that the contingency planning
process must be continuous and ongoing. Modifications to the plan will be made
as additional information is obtained during the renovation and testing phases
of the Bank's Y2K program.
The Bank budgeted $675,000 for conversion of its data processing system
and for expenses related to the Y2K effort. To date, the Bank has incurred
approximately $650,000 towards these projects. All costs to date and any
remaining costs related to Y2K will be funded through operating cash flows. The
Bank does not expect to exceed the amount budgeted for these projects. However,
in the event that cost overruns do occur, they are not expected to have a
material effect on the Bank's operations.
The Bank believes that conversions, renovations and modifications of
its systems and equipment will enable the Bank to be Y2K ready in a timely
fashion. There can be no assurances, however, that the Bank's internal systems
or equipment, or those of third parties upon which the Bank relies, will be Y2K
ready in a timely fashion. There also can be no assurances that the Bank's
contingency plans, or those of third parties, will mitigate the effects
<PAGE>
of Y2K non-compliance. The Bank is part of a regulated industry that has issued
standards for Y2K and is conducting audits of financial institutions, including
the Bank, to ensure compliance. In the most likely worst case scenario, the Bank
believes that its customers could experience some manual processes or an
inability to access their cash immediately. Such events could have a material
adverse effect on the Bank's financial position, liquidity and results of
operations.
The preceding Y2K discussion contains various forward-looking
statements, which represent the Company's beliefs or expectations regarding
future events. When used in the Y2K discussion, the words "believes," "expects,"
"estimates" and similar expressions are intended to identify forward-looking
statements. Forward looking statements include, without limitation, the
Company's: (i) expectations as to when it will complete the renovation and
testing phase of its Y2K program and its Y2K contingency plans; (ii) estimated
cost of achieving Y2K readiness, and; (iii) expressed belief that its internal
systems and equipment will be Y2K compliant in a timely fashion.
All forward-looking statements involve a number of risks and
uncertainties that could cause the actual results to differ materially from the
projected results. Factors that may cause these differences include, but are not
limited to: (i) the availability of qualified personnel and other information
technology resources; (ii) the ability to identify and renovate all data
sensitive lines of computer code or to replace imbedded computer chips in
affected systems and equipment, and; (iii) the actions of government agencies
and other third parties with respect to Y2K problems.
RECENT DEVELOPMENTS
On May 7, 1999, the registrant announced that it had accepted the
resignation of John W. Marhefka, Jr. as Chief Executive Officer, Vice President
and Director of the Company, and as President, Chief Executive Officer and
Director of the Company's wholly owned subsidiary, Annapolis National Bank. The
registrant also announced that Richard M. Lerner, Chairman of the Board of
Directors of the Bank and a member of the Board of the Company and Bank since
1990, was appointed on an interim basis Chief Executive Officer of the Company
and President and Chief Executive Officer of the Bank.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
The Company is not involved in any legal proceedings of a material
nature at this time other than those occurring in the ordinary course of
business which in the aggregate involve amounts which are believed by management
to be immaterial to the financial condition of the Company.
ITEM 2 - CHANGES IN SECURITIES
None
<PAGE>
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
None
ITEM 5 - OTHER INFORMATION
None
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Certificate of Incorporation of Annapolis National
Bancorp, Inc.*
3.2 Bylaws of Annapolis National Bancorp, Inc.*
10.1 Employment contract between Annapolis National
Bancorp, Inc. and John W. Marhefka, Jr.*
11 Statement re: Computation of Per Share Earnings
27 Financial Data Schedule
(b) Reports on Form 8-K
None
*Incorporated by reference to Registration Statement on Form SB-2, as amended,
Commission File Number 333-29841, originally filed with the Securities and
Exchange Commission on June 23, 1997.
<PAGE>
SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the registrant caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
ANNAPOLIS NATIONAL BANCORP, INC.
(Registrant)
Date: 6/04/99 /s/ Richard M. Lerner
______________ _________________________
Richard M. Lerner
Chief ExecutiveOfficer
Date: 6/04/99 /s/ Russell J. Grimes Jr.
______________ _________________________
Russell J.Grimes Jr.
Chief Financial Officer
EXHIBIT 11
STATEMENT RE: COMPUTATION OF PER SHARE EARNINGS
(In thousands, except Earnings per Share)
<TABLE>
<CAPTION>
Three Months Ended
March 31, 1999 March 31, 1998
--------------------- ----------------------
<S><C>
Net income $60 $ 254
Average Shares Outstanding 2,313 2,312
Basic Earnings Per Share $0.03 $0.11
<CAPTION>
Three Months Ended
March 31, 1999 March 31, 1997
--------------------- ----------------------
Net Income $60 $ 254
Average Shares Outstanding 2,319 2,335
Diluted Earnings Per Share $0.03 $0.11
</TABLE>
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> MAR-31-1999
<CASH> 4,033
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 6,508
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 11,050
<INVESTMENTS-CARRYING> 11,050
<INVESTMENTS-MARKET> 11,050
<LOANS> 92,264
<ALLOWANCE> 1,543
<TOTAL-ASSETS> 118,378
<DEPOSITS> 96,609
<SHORT-TERM> 1,500
<LIABILITIES-OTHER> 359
<LONG-TERM> 0
0
0
<COMMON> 23
<OTHER-SE> 12,110
<TOTAL-LIABILITIES-AND-EQUITY> 118,378
<INTEREST-LOAN> 2,060
<INTEREST-INVEST> 162
<INTEREST-OTHER> 110
<INTEREST-TOTAL> 2,332
<INTEREST-DEPOSIT> 719
<INTEREST-EXPENSE> 789
<INTEREST-INCOME-NET> 1,543
<LOAN-LOSSES> 405
<SECURITIES-GAINS> 1,138
<EXPENSE-OTHER> 1,269
<INCOME-PRETAX> 91
<INCOME-PRE-EXTRAORDINARY> 91
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 31
<EPS-BASIC> 0.03
<EPS-DILUTED> 0.03
<YIELD-ACTUAL> 9.37
<LOANS-NON> 2,039
<LOANS-PAST> 431
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 66
<ALLOWANCE-OPEN> 1,158
<CHARGE-OFFS> 20
<RECOVERIES> 0
<ALLOWANCE-CLOSE> 405
<ALLOWANCE-DOMESTIC> 1,543
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
