<PAGE> 1
================================================================================
FORM 10-Q
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1998
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE TRANSITION PERIOD FROM _____________ TO ____________
COMMISSION FILE NUMBER: 0-23113
PRIME BANCSHARES, INC.
(Exact name of registrant as specified in its charter)
TEXAS 76-0088973
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
12200 NORTHWEST FREEWAY
HOUSTON, TEXAS 77092
(Address of principal executive offices, including zip code)
(713) 209-6000
(Registrant's telephone number, including area code)
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
--- ---
As of November 10, 1998, there were 10,295,483 shares of the registrant's Common
Stock, par value $.25 per share outstanding.
================================================================================
<PAGE> 2
PRIME BANCSHARES, INC. AND SUBSIDIARIES
INDEX TO FORM 10-Q
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION Page
----
<S> <C>
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 1998 (unaudited) and December 31, 1997.................2
Consolidated Statements of Earnings for the Three Months and Nine Months Ended
September 30, 1998 and 1997 (unaudited)..............................................................3
Consolidated Statement of Changes in Shareholders' Equity..............................................4
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 1998 and 1997 (unaudited)........................................................5
Consolidated Statements of Comprehensive Income for the Three Months and Nine Months
Ended September 30, 1998 and 1997 (unaudited)........................................................6
Notes to Interim Consolidated Financial Statements.....................................................7
Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations....................9
Item 3. Quantitative and Qualitative Disclosures about Market Risk..............................................18
PART II - OTHER INFORMATION
Item 1. Legal Proceedings.......................................................................................19
Item 2. Changes in Securities...................................................................................19
Item 3. Defaults upon Senior Securities.........................................................................19
Item 4. Submission of Matters to a Vote of Security Holders.....................................................19
Item 5. Other Information.......................................................................................19
Item 6. Exhibits and Reports on Form 8-K........................................................................19
Signatures.......................................................................................................20
</TABLE>
1
<PAGE> 3
PART I -- FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
PRIME BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
---------- ----------
(Unaudited)
<S> <C> <C>
ASSETS
Cash and cash equivalents:
Cash and due from banks .................................... $ 26,321 $ 25,168
Federal funds sold and other temporary investments ......... 28,113 42,553
---------- ----------
Total cash and cash equivalents ........................ 54,434 67,721
---------- ----------
Securities:
Available-for-sale ......................................... 103,933 188,947
Held-to-maturity ........................................... 322,542 291,236
---------- ----------
Total securities ....................................... 426,475 480,183
---------- ----------
Loans, net of allowance for loan losses of $5,954 and $5,873 522,383 469,710
Premises and equipment, net ................................ 16,652 16,984
Accrued interest receivable ................................ 6,006 7,250
Other assets ............................................... 8,834 10,287
========== ==========
Total assets ........................................... $1,034,784 $1,052,135
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits:
Noninterest-bearing ........................................ $ 169,497 $ 179,754
Interest-bearing deposits .................................. 751,959 769,725
---------- ----------
Total deposits ......................................... 921,456 949,479
---------- ----------
Federal funds purchased and securities sold
under repurchase agreements ............................ 22,878 17,132
Other liabilities .......................................... 4,187 7,097
---------- ----------
Total liabilities ...................................... 948,521 973,708
---------- ----------
Shareholders' equity:
Preferred stock ............................................ -- 1,000
Common stock ............................................... 3,247 3,190
Additional capital ......................................... 13,878 13,594
Retained earnings .......................................... 70,453 61,498
Accumulated other comprehensive income ..................... 310 770
---------- ----------
87,888 80,052
Less common stock held in treasury--at cost ................ 1,625 1,625
---------- ----------
Total shareholders' equity ............................. 86,263 78,427
---------- ----------
Total liabilities & shareholders' equity ............... $1,034,784 $1,052,135
========== ==========
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
2
<PAGE> 4
PRIME BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF EARNINGS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Interest income:
Loans............................................... $11,920 $10,515 $34,841 $29,515
Securities.......................................... 6,454 7,803 20,991 23,595
Federal funds sold and other temporary investments.. 791 416 1,864 1,178
------- ------- ------- -------
Total interest income......................... 19,165 18,734 57,696 54,288
Interest expense.................................... 8,184 8,336 24,670 24,144
------- ------- ------- -------
Net interest income........................... 10,981 10,398 33,026 30,144
Provision for loan losses........................... 275 150 700 746
------- ------- ------- -------
Net interest income after provision for loan
losses........................................ 10,706 10,248 32,326 29,398
Noninterest income:
Service charges..................................... 2,047 1,932 6,038 5,532
Other operating income.............................. 534 598 1,651 1,627
------- ------- ------- -------
Total noninterest income...................... 2,581 2,530 7,689 7,159
Noninterest expense:
Employee compensation and benefits.................. 4,856 4,645 14,614 13,637
Net bank premises expense........................... 532 474 1,426 1,318
Equipment expense................................... 424 341 1,169 1,059
Realized losses on sale of available for sale
securities.......................................... --- ---- 46 ----
Other operating expenses............................ 2,208 2,440 6,672 6,506
------- ------- ------- -------
Total noninterest expenses.................... 8,020 7,900 23,927 22,520
------- ------- ------- -------
Earnings before income taxes.................. 5,267 4,878 16,088 14,037
Provision for income taxes.......................... 1,878 1,794 5,751 4,973
------- ------- ------- -------
Net earnings before preferred stock dividends. 3,389 3,084 10,337 9,064
Preferred stock dividends..................... ---- 175 25 525
------- ------- ------- -------
Net earnings available to common shareholders. $ 3,389 $ 2,909 $10,312 $ 8,539
======= ======= ======= =======
Basic earnings per common share............... $ 0.33 $ 0.30 $ 1.01 $ 0.89
Diluted earnings per common share............. $ 0.32 $ 0.29 $ 0.97 $ 0.86
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
3
<PAGE> 5
PRIME BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
(DOLLARS IN THOUSANDS)
<TABLE>
<CAPTION>
Accumulated
other Total
compre- Common share-
Preferred Common Additional Retained hensive stock in holders'
stock stock capital earnings income treasury equity
-------- -------- --------- --------- --------- ---------- ---------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance at January 1, 1997........ $ 7,000 $ 3,167 $ 8,050 $ 51,543 $ 1,928 $ (3,252) $ 68,436
Purchase of treasury stock........ -- -- -- -- -- (408) (408)
Sale of treasury stock............ -- -- 5,745 -- -- 2,035 7,780
Sale of common stock.............. -- 23 131 -- -- -- 154
Stock issuance cost............... -- -- (332) -- -- -- (332)
Dividends......................... -- -- -- (1,890) -- -- (1,890)
Redemption of preferred stock..... (6,000) -- -- -- -- -- (6,000)
Net change in unrealized gain
(loss) on available-for-sale
securities, net of tax of $597 -- -- -- -- (1,158) -- (1,158)
Net earnings for the year......... -- -- -- 11,845 -- -- 11,845
-------- -------- --------- --------- --------- ---------- ---------
Balance at December 31, 1997...... 1,000 3,190 13,594 61,498 770 (1,625) 78,427
Sale of common stock(1)........... -- 57 326 -- -- -- 383
Stock issuance cost(1)............ -- -- (22) -- -- -- (22)
Dividends(1)...................... -- -- -- (1,382) -- -- (1,382)
Redemption of preferred stock(1).. (1,000) -- (20) -- -- -- (1,020)
Net change in unrealized gain
(loss) on available-for-sale
securities, net of tax of
$231(1)....................... -- -- -- -- (460) -- (460)
Net earnings(1)................... -- -- -- 10,337 -- -- 10,337
-------- -------- --------- --------- --------- ---------- ---------
Balance at September 30, 1998(1) $ -- $ 3,247 $ 13,878 $ 70,453 $ 310 $ (1,625) $ 86,263
======== ======== ========= ========= ========= ========== =========
</TABLE>
(1) Unaudited
See accompanying Notes to Interim Consolidated Financial Statements.
4
<PAGE> 6
PRIME BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended September 30,
------------------------------
1998 1997
--------- ---------
<S> <C> <C>
Cash flows from operating activities:
Net earnings.................................................................. $ 10,337 $ 9,064
Adjustments to reconcile net earnings to net cash provided (used) by
operating activities:
Depreciation and amortization................................................. 1,544 1,375
Accretion of discounts, net of amortization of premiums on securities......... (184) (471)
Provision for loan losses..................................................... 700 746
(Gain) loss on sale of premises, equipment and other real estate.............. (230) 1
Change in assets and liabilities, net of effects resulting from the 1997
acquisition of a bank, and the purchase of certain branch
assets and liabilities:
Decrease (increase) in accrued interest receivable.......................... 1,244 (1,126)
Decrease in other assets.................................................... 1,269 5,935
Decrease in other liabilities............................................... (2,680) (30,082)
--------- ---------
Net cash provided (used) by operating activities......................... 12,000 (14,558)
Cash flows from investing activities:
Purchases of held-to-maturity securities...................................... (94,245) (130,349)
Purchases of available for sale securities.................................... (62) (4,640)
Proceeds from sales and maturities of available-for-sale securities........... 87,754 112,440
Proceeds from maturities of held-to-maturity securities....................... 59,755 11,949
Increase in loans, net of the effects resulting from the 1997 acquisition of
a bank, and the purchase of certain branch assets and liabilities........... (53,373) (49,208)
Purchases of premises and equipment........................................... (1,242) (1,343)
Proceeds from sale of premises, equipment and other real estate............... 444 4
Net decrease in cash resulting from the acquisition of a bank................. --------- (3,667)
Net increase in cash resulting from the acquisition of certain branch assets and
the assumption of certain liabilities....................................... -- 96,500
--------- ---------
Net cash provided by investing activities................................ (969) 31,686
Cash flows from financing activities:
(Decrease) increase in deposits, net of the effects resulting from the 1997
acquisition of a bank, and the purchase of certain branch assets and (28,023) 3,025
liabilities.................................................................
Increase in fed funds purchased and securities sold under repurchase
agreements.................................................................. 5,746 21,444
Stock issuance cost........................................................... (22) --
Redemption of preferred stock................................................. (1,020) --
Sale of treasury stock in initial public offering, net ....................... -- 7,614
Sale of common stock.......................................................... 383 154
Purchase of treasury stock.................................................... -- (408)
Dividends paid................................................................ (1,382) (1,410)
--------- ---------
Net cash (used) provided by financing activities......................... (24,318) 30,419
--------- ---------
Net increase in cash and cash equivalents................................ (13,287) 47,547
Cash and cash equivalents at beginning of period................................. 67,721 48,968
--------- ---------
Cash and cash equivalents at end of period....................................... $ 54,434 $ 96,515
========= =========
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
5
<PAGE> 7
PRIME BANCSHARES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
----------------------- ------------------------
1998 1997 1998 1997
-------- -------- --------- --------
<S> <C> <C> <C> <C>
Net earnings........................................ $ 3,389 $ 3,084 $ 10,337 $ 9,064
Other comprehensive income, net of tax:
Unrealized losses on available-for-sale securities:
Unrealized losses arising during the period (88) (21) (490) (953)
Less: Reclassification adjustment for losses
included in net earnings....................... -- -- 30 --
-------- -------- --------- --------
Other comprehensive income, net of tax.............. (88) (21) (460) (953)
-------- -------- --------- --------
Comprehensive income................................ $ 3,301 $ 3,063 $ 9,877 $ 8,111
======== ======== ========= ========
</TABLE>
See accompanying Notes to Interim Consolidated Financial Statements.
6
<PAGE> 8
PRIME BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
(UNAUDITED)
(1) BASIS OF PRESENTATION
The consolidated financial statements include the accounts of Prime
Bancshares, Inc. (the "Company") and its wholly-owned subsidiaries, IBID, Inc.
("IBID") and Prime Bank (the "Bank"). All significant intercompany transactions
and balances have been eliminated.
The accompanying unaudited consolidated financial statements have been
prepared in accordance with the rules and regulations of the Securities and
Exchange Commission. Accordingly, they do not include all of the information and
footnotes required by generally accepted accounting principles for complete
financial statements. In the opinion of management, the statements reflect all
adjustments necessary for a fair presentation of the financial position, results
of operations and cash flows of the Company on a consolidated basis, and all
such adjustments are of a normal recurring nature. These financial statements
and the notes thereto should be read in conjunction with the Company's Annual
Report on Form 10-K. Operating results for the nine month period ended September
30, 1998, are not necessarily indicative of the results that may be expected for
the year ending December 31, 1998.
(2) INCOME PER COMMON SHARE
Income per common share was computed based on the following:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
--------------------------- ---------------------------
1998 1997 1998 1997
----------- ----------- ----------- ----------
<S> <C> <C> <C> <C>
Net earnings available to common shareholders...... $ 3,389 $ 2,909 $ 10,312 $ 8,539
Weighted average common shares used in basic EPS... 10,278,853 9,609,070 10,195,472 9,606,618
Potential dilutive common shares................... 320,299 497,242 404,642 335,361
----------- ----------- ----------- ----------
Weighted average common and potential dilutive
common shares used in dilutive EPS................. 10,599,152 10,106,312 10,600,114 9,941,979
----------- ----------- ----------- ----------
Basic earnings per common share.................... $ 0.33 $ 0.30 $ 1.01 $ 0.89
----------- ----------- ----------- ----------
Diluted earnings per common share.................. $ 0.32 $ 0.29 $ 0.97 $ 0.86
=========== =========== =========== ==========
</TABLE>
7
<PAGE> 9
PRIME BANCSHARES, INC. AND SUBSIDIARIES
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS - (CONTINUED)
SEPTEMBER 30, 1998
(DOLLARS IN THOUSANDS)
(UNAUDITED)
(3) COMPREHENSIVE INCOME
Effective January 1, 1998, the company adopted Financial Accounting
Standards No. 130, Reporting Comprehensive Income, which requires the reporting
of comprehensive income in addition to net income from operations. Comprehensive
income is a more inclusive financial reporting methodology which includes
disclosure of certain financial information that historically has not been
recognized in the calculation of net earnings.
The tax effects for components of other comprehensive income are as
follows:
<TABLE>
<CAPTION>
Three months ended September 30,
---------------------------------------------------------------------
1998 1997
---------------------------------- -------------------------------
Before Tax Net of Before Tax Net of
Tax (Expense)/ Tax Tax (Expense)/ Tax
Amount Benefit Amount Amount Benefit Amount
--------- ------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Unrealized gains (losses) on securities
arising during the period......... $ (135) $ 47 $ (88) $ (32) $ 11 $ (21)
Less: Reclassification adjustment for
losses included in net earnings... ---- ---- ---- ---- ---- ----
--------- ------- -------- -------- ------- ---------
Other comprehensive income.......... $ (135) $ 47 $ (88) $ (32) $ 11 $ (21)
========= ======= ======== ======== ======= =========
<CAPTION>
Nine months ended September 30,
---------------------------------------------------------------------
1998 1997
---------------------------------- -------------------------------
Before Tax Net of Before Tax Net of
Tax (Expense)/ Tax Tax (Expense)/ Tax
Amount Benefit Amount Amount Benefit Amount
--------- ------- -------- -------- ------- ---------
<S> <C> <C> <C> <C> <C> <C>
Unrealized (losses) on securities
arising during the period......... $ (754) $ 264 $ (490) $ (1,466) $ 513 $ (953)
Less: Reclassification adjustment for
losses included in net earnings... 46 (16) 30 ---- ---- ----
--------- ------- -------- -------- ------- ---------
Other comprehensive income.......... $ (708) $ 248 $ (460) $ (1,466) $ 513 $ (953)
========= ======= ======== ======== ======= =========
</TABLE>
8
<PAGE> 10
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS
Prime Bancshares, Inc. (the "Company") is a registered bank holding
company that derives substantially all of its revenues and income from the
operation of Prime Bank (the "Bank"). The Bank is a full service bank that
provides a broad line of financial products and services to small and
medium-sized businesses and consumers through 21 full-service banking locations,
13 of which are located in the greater Houston metropolitan area. The following
Management's Discussion and Analysis of Financial Condition and Results of
Operations may contain certain forward-looking statements regarding future
financial condition, results of operations, and the Company's business
operations. Such statements involve risks, uncertainties and assumptions,
including, but not limited to, monetary policy and general economic conditions
in Texas and the Houston metropolitan area, the actions of competitors and
customers, the success of the Company in implementing its strategic plan, and
the effects of regulatory restrictions imposed on banks and bank holding
companies generally, as discussed in the Company's Annual Report on Form 10-K
filed with the Securities and Exchange Commission. Should one or more of these
risks or uncertainties materialize, or should these underlying assumptions prove
incorrect, actual outcomes may vary materially from outcomes expected or
anticipated by the Company.
OVERVIEW
Net earnings available to common shareholders were $3.4 million ($0.32
per common share on a diluted basis) for the quarter ended September 30, 1998
compared with $2.9 million ($0.29 per common share on a diluted basis) for the
quarter ended September 30, 1997, an increase of $480,000, or 16.5%. The Company
posted returns on average common equity of 15.87% and 17.21% and returns on
average assets of 1.28% and 1.19% for the quarters ended September 30, 1998 and
1997, respectively. For the nine months ended September 30, 1998, net earnings
available to common shareholders were $10.3 million ($0.97 per common share on a
diluted basis) compared with $8.5 million ($0.86 per common share on a diluted
basis) for the same period in 1997, an increase of $1.8 million, or 20.8%.
Total assets were $1.035 billion at September 30, 1998, compared with
$1.052 billion at December 31, 1997. Total loans increased to $528.3 million at
September 30, 1998 from $475.6 million at December 31, 1997, an increase of
$52.8 million, or 11.1%. Total deposits were $921.5 million at September 30,
1998 compared with $949.5 million at December 31, 1997. The decline in total
assets and deposits related mainly to typical seasonal fluctuations.
Shareholders' equity increased $7.8 million, or 10.0%, to $86.3 million at
September 30, 1998 compared with $78.4 million at December 31, 1997.
9
<PAGE> 11
RESULTS OF OPERATIONS
Interest Income
Interest income for the quarter ended September 30, 1998 was $19.2
million, an increase of $431,000, or 2.3%, from the quarter ended September 30,
1997. The increase in interest income was due primarily to the increase in the
average loan balance, which resulted in higher interest income on loans. Average
loans increased to $528.6 million for the quarter ended September 30, 1998 from
$448.1 million for the quarter ended September 30, 1997, an increase of $80.5
million, or 18.0%. For the nine months ended September 30, 1998, interest income
increased $3.4 million, or 6.3% to $57.7 million, compared with $54.3 million
for the same period in 1997. This increase is mainly due to the increase in
average interest-earning assets, including higher average loans.
Interest Expense
Interest expense on deposits and other interest-bearing liabilities was
$8.2 million for the quarter ended September 30, 1998 compared with $8.3 million
for the quarter ended September 30, 1997, a decline of $152,000. The decline was
due mainly to lower interest rates on interest-bearing deposits. For the nine
months ended September 30, 1998, interest expense was $24.7 million compared
with $24.1 million for the same period in 1997, an increase of $526,000, or
2.2%. The increase resulted primarily from higher average interest-bearing
liabilities. Average interest-bearing liabilities increased from the nine months
ended September 30, 1997 to the nine months ended September 30, 1998 due to the
acquisition of a bank and certain branch deposits in the first half of 1997 and
higher purchased funds.
Net Interest Income
Net interest income was $11.0 million for the quarter ended September
30, 1998 compared with $10.4 million for the quarter ended September 30, 1997,
an increase of $583,000, or 5.6%. The increase in net interest income resulted
primarily from growth in average interest-earning assets, mainly loans, to
$996.4 million for the quarter ended September 30, 1998 from $960.2 million for
the quarter ended September 30, 1997, an increase of $36.2 million, or 3.8%. The
net interest margin increased to 4.37% from 4.30% for the same periods, due
primarily to loan growth. Net interest income increased $2.9 million, or 9.6%,
to $33.0 million for the nine months ended September 30, 1998 from $30.1 million
for the same period in 1997. This increase is mainly attributable to higher
average interest-earning assets and higher average loans.
10
<PAGE> 12
The Company's net interest income is affected by changes in the amount and
mix of interest-earning assets and interest-bearing liabilities, referred to as
a "volume change." It is also affected by changes in yields earned on
interest-earning assets and rates paid on interest-bearing deposits and other
borrowed funds, referred to as a "rate change." The following tables set forth,
for each category of interest-earning assets and interest-bearing liabilities,
the average amounts outstanding, the interest earned or paid on such amounts,
and the average rate earned or paid for the quarters ended September 30, 1998
and 1997 and for the nine months ended September 30, 1998 and 1997. The tables
also set forth the average rate earned on total interest-earning assets, the
average rate paid on total interest-bearing liabilities, and the net interest
margin on average total interest-earning assets for the same periods.
<TABLE>
<CAPTION>
Three months ended September 30,
----------------------------------------------------------------------------------
1998 1997
---------------------------------------- ------------------------------------
Average Interest Average Average Interest Average
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate
--------------- --------- ------ ------------ -------- ------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Loans................................. $ 528,621 $ 11,920 8.95% $ 448,137 $ 10,515 9.31%
Securities............................ 411,361 6,454 6.22% 482,735 7,803 6.41%
Fed funds sold and other temporary
investments...................... 56,443 791 5.56% 29,375 416 5.62%
--------------- --------- ---- ------------ -------- ----
Total interest-earning assets.... 996,425 $ 19,165 7.63% 960,247 $ 18,734 7.74%
Less allowance for loan losses............. (5,886) (5,709)
--------------- ------------
Total interest-earning assets, net
of allowance............................ 990,539 954,538
Nonearning assets.......................... 60,120 73,966
=============== ============
Total assets..................... $ 1,050,659 $ 1,028,504
=============== ============
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing liabilities:
Interest-bearing demand deposits...... $ 122,616 $ 493 1.60% $ 126,674 $ 638 2.00%
Savings and money market accounts..... 185,475 1,429 3.06% 184,101 1,441 3.11%
Certificates of deposit............... 451,477 6,014 5.28% 465,443 6,245 5.32%
Fed funds purchased and securities
sold under repurchase agreements... 20,699 248 4.75% 529 6 4.50%
Other Borrowings..................... ---- ---- --- 401 6 5.94%
--------------- --------- ---- ------------ -------- ----
Total interest-bearing
liabilities...................... 780,267 8,184 4.16% 777,148 8,336 4.26%
--------------- --------- ---- ------------ -------- ----
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits... 179,968 170,706
Other liabilities..................... 5,723 6,594
--------------- ------------
Total liabilities................ 965,958 954,448
Shareholders' equity....................... 84,701 74,056
--------------- ------------
Total liabilities and
shareholders' equity............ $ 1,050,659 $ 1,028,504
=============== ============
Net interest income........................ $ 10,981 $ 10,398
========= ========
Net interest spread........................ 3.47% 3.48%
==== ====
Net interest margin........................ 4.37% 4.30%
==== ====
</TABLE>
11
<PAGE> 13
<TABLE>
<CAPTION>
Nine months ended September 30,
----------------------------------------------------------------------------------
1998 1997
---------------------------------------- ------------------------------------
Average Interest Average Average Interest Average
Outstanding Earned/ Yield/ Outstanding Earned/ Yield/
Balance Paid Rate Balance Paid Rate
----------- --------- ------------ ----------- --------- ----------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS:
Interest-earning assets:
Loans................................. $ 514,008 $ 34,841 9.06% $ 423,967 $ 29,515 9.31%
Securities............................ 440,733 20,991 6.37% 487,525 23,595 6.47%
Fed funds sold and other temporary
investments...................... 45,326 1,864 5.50% 28,581 1,178 5.51%
----------- -------- ------------ ----------- -------- ----------
Total interest-earning assets.... 1,000,067 $ 57,696 7.71% 940,073 $ 54,288 7.72%
Less allowance for loan losses............. (5,875) (5,591)
----------- -----------
Total interest-earning assets, net
of allowance............................ 994,192 934,482
Nonearning assets.......................... 61,986 72,893
=========== ===========
Total assets..................... $ 1,056,178 $ 1,007,375
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY:
Interest-bearing liabilities:
Interest-bearing demand deposits...... $ 126,954 $ 1,612 1.70% $ 132,415 $ 2,025 2.04%
Savings and money market accounts..... 183,971 4,213 3.06% 176,058 3,947 3.00%
Certificates of deposit............... 458,026 18,184 5.31% 456,291 18,124 5.31%
Fed funds purchased and securities
sold under repurchase agreements... 18,208 651 4.78% 764 31 5.42%
Other borrowings...................... 184 10 7.27% 435 17 5.23%
----------- --------- ------------ ----------- -------- ----------
Total interest-bearing
liabilities...................... 787,343 $ 24,670 4.19% 765,963 24,144 4.21%
----------- --------- ------------ ----------- -------- ----------
Noninterest-bearing liabilities:
Noninterest-bearing demand deposits... 180,666 163,415
Other liabilities..................... 6,319 6,640
----------- -----------
Total liabilities................ 974,328 936,018
Shareholders' equity ....................... 81,850 71,357
----------- -----------
Total liabilities and
shareholders' equity............. $ 1,056,178 $ 1,007,375
=========== ===========
Net interest income........................ $ 33,026 $ 30,144
========= ========
Net interest spread........................ 3.52% 3.51%
============ ==========
Net interest margin........................ 4.42% 4.29%
============ ==========
</TABLE>
12
<PAGE> 14
The following table presents the dollar amount of changes in interest
income and interest expense for the major components of interest-earning assets
and interest-bearing liabilities and distinguishes between the increase
(decrease) related to outstanding balances and the volatility of interest rates.
For purposes of this table, changes attributable to both rate and volume, which
can be segregated, have been allocated.
<TABLE>
<CAPTION>
Three months ended September 30,
----------------------------------------
1998 vs. 1997
----------------------------------------
Increase (decrease)
due to
-------------------------
Volume Rate Total
----------- ---------- ------------
(Dollars in thousands)
<S> <C> <C> <C>
Interest-earning assets:
Loans............................................... $ 1,888 $ (483) $ 1,405
Securities..........................................
(1,154) (195) (1,349)
Federal funds sold and other temporary
investments....................................... 383 (8) 375
----------- ---------- ------------
Total increase in interest income............... 1,117 (686) 431
----------- ---------- ------------
Interest-bearing liabilities:
Interest-bearing demand deposits.................... (20) (125) (145)
Savings and money market accounts................... 11 (23) (12)
Certificates of deposit............................. (187) (44) (231)
Federal funds purchased and securities sold
under repurchase agreements....................... 229 13 242
Other borrowings.................................... (6) -- (6)
----------- ---------- ------------
Total increase in interest expense.............. 27 (179) (152)
----------- ---------- ------------
Increase in net interest income..................... $ 1,090 $ (507) $ 583
=========== ========== ============
</TABLE>
Provision and Allowance for Loan Losses
In originating loans, the Company recognizes that credit losses will be
experienced and the risk of loss will vary with, among other things, general
economic conditions, the type of loan being made, the creditworthiness of the
borrower over the term of the loan and, in the case of a collateralized loan,
the quality of the collateral for such loan. The Company maintains an allowance
for loan losses based upon, among other things, such factors as historical
experience, the volume and type of lending conducted by the Company, the amount
of nonperforming assets, regulatory policies, general economic conditions and
other factors related to the collectibility of loans in the Company's portfolio.
In addition to unallocated allowances, specific allowances are provided for
individual loans when ultimate collection is considered questionable by
management after reviewing the current status of loans which are contractually
past due and considering the net realizable value of the collateral for the
loan.
Management actively monitors the Company's asset quality and provides
specific loss allowances when necessary. Loans are charged-off against the
allowance for loan losses when appropriate. Although management believes it uses
the best information available to make determinations with respect to the
allowance for loan losses, future adjustments may be necessary if economic
conditions differ from the assumptions used in making the initial
determinations. As of September 30, 1998, the allowance for loan losses amounted
to $6.0 million, or 1.13%, of total loans. The allowance for loan losses as a
percentage of nonperforming loans was 724.3% at September 30, 1998.
Provisions for loan losses are charged to income to bring the total
allowance for loan losses to a level deemed appropriate by management of the
Company based on such factors as historical experience, the volume and type of
lending conducted by the Company, the amount of nonperforming assets, regulatory
policies, general economic conditions and other factors related to the
collectibility of loans in the Company's portfolio.
13
<PAGE> 15
The provision for loan losses for the quarter ended September 30, 1998 was
$275,000 compared with $150,000 for the quarter ended September 30, 1997. The
increase resulted from continued growth in loans. The provision for loan losses
for the nine months ended September 30, 1998 decreased $46,000 to $700,000 from
$746,000 in the corresponding period last year. For the nine months ended
September 30, 1998, net charge-offs were $619,000, or 0.16%, of average loans.
Set forth below is an analysis of the allowance for loan losses for the
nine months ended September 30, 1998:
<TABLE>
<CAPTION>
Nine months
ended
September 30, 1998
------------------
(Dollars in
thousands)
<S> <C>
Average loans outstanding................................ $ 514,008
Gross loans outstanding at end of period................. 528,337
Allowance for loan losses at beginning of period......... 5,873
Provision for loan losses................................ 700
Charge-offs:
Commercial and industrial............................. (233)
Real estate........................................... (26)
Consumer.............................................. (656)
Recoveries:
Commercial and industrial............................. 55
Real estate........................................... 61
Consumer.............................................. 180
-----------
Net loan (charge-offs) recoveries........................ (619)
===========
Allowance for loan losses at end of period............... $ 5,954
===========
Ratio of allowance to end of period loans................ 1.13%
Ratio of net charge-offs to average loans................ 0.16%
Ratio of allowance to end of period nonperforming loans.. 724.33%
</TABLE>
Noninterest Income
The Company's primary sources of noninterest income are service charges
on deposit accounts and other banking service related fees. Noninterest income
for the quarter ended September 30, 1998 increased to $2.6 million from $2.5
million for the quarter ended September 30, 1997. The following table presents,
for the periods indicated, the major categories of noninterest income:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------------- --------------------------
1998 1997 1998 1997
-------- -------- -------- --------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Service charges on deposit accounts..... $ 2,047 $ 1,932 $ 6,038 $ 5,532
Retail services income.................. 325 338 1,003 971
Mortgage banking........................ 47 69 174 150
Investment services..................... 94 64 247 159
Securities lending...................... 6 18 20 61
Other noninterest income................ 62 109 207 286
-------- -------- -------- --------
Total noninterest income.......... $ 2,581 $ 2,530 $ 7,689 $ 7,159
======== ======== ======== ========
</TABLE>
14
<PAGE> 16
The increase in noninterest income for the quarter and nine months ended
September 30, 1998 over the same periods in 1997 was due primarily to increased
service charges on deposit accounts, mainly as a result of a pricing change. In
addition, investment services fees increased, resulting from increased sales.
Securities lending fees were down from last year as maturing securities were
used to fund loans.
Noninterest Expenses
Noninterest expenses totaled $8.0 million for the quarter ended September
30, 1998 compared with $7.9 million for the quarter ended September 30, 1997, an
increase of $120,000, or 1.5%. The following table presents, for the periods
indicated, the major categories of noninterest expenses:
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30, September 30,
-------------------------- ---------------------------
1998 1997 1998 1997
-------- -------- --------- ---------
(Dollars in thousands)
<S> <C> <C> <C> <C>
Employee compensation and benefits...... $ 4,856 $ 4,645 $ 14,614 $ 13,637
Non-staff expenses:
Net bank premises expense......... 532 474 1,426 1,318
Equipment expense................. 424 341 1,169 1,059
Data processing................... 330 528 1,463 1,692
Professional fees................. 305 267 1,093 749
Regulatory assessments............ 77 85 242 74
Ad valorem and franchise taxes.... 174 165 519 446
Loss on sale of available-for-sale
securities.................... ---- ---- 46 ----
Other............................. 1,322 1,395 3,355 3,545
-------- -------- --------- ---------
Total non-staff expenses. 3,164 3,255 9,313 8,883
-------- -------- --------- ---------
Total noninterest expenses $ 8,020 $ 7,900 $ 23,927 $ 22,520
======== ======== ========= =========
</TABLE>
Much of the increase in noninterest expenses for the nine month period
ended September 30, 1998 compared with the same period in 1997 was due to
one-time expenses related to the merger with Sunbelt National Bank in the second
quarter. Merger related expenses totaled $506,000 and included $255,000 in data
processing fees, $205,000 in professional fees, and a loss of $46,000 on the
sale of securities.
Employee compensation and benefits expenses were $4.9 million for the
quarter ended September 30, 1998 and $14.6 million for the nine months ended
September 30, 1998, increases of $211,000, or 4.5%, and $977,000, or 7.2%,
compared with the respective periods in 1997. The changes were due primarily to
higher health insurance expense and annual employee salary increases.
Non-staff expenses decreased $91,000, or 2.8%, to $3.2 million for the
quarter ended September 30, 1998 compared to the same period in 1997. For the
nine months ended September 30, 1998, non-staff expenses increased $430,000, or
4.8%. The increase in professional service fees for the nine months ended
September 30, 1998 were related primarily to the merger with Sunbelt National
Bank. Regulatory assessments expense increased for the nine months ended
September 30, 1998 due mainly to receiving a refund of $169,000 during the
comparable period in 1997.
Income Taxes
Income tax expense increased $84,000 to $1.9 million for the quarter
ended September 30, 1998 from $1.8 million for the same period in 1997. The
increase was primarily attributable to higher pretax net earnings.
15
<PAGE> 17
FINANCIAL CONDITION
Loan Portfolio
Total loans were $528.3 million at September 30, 1998, an increase of
$52.8 million, or 11.1% from $475.6 million at December 31, 1997. Loan growth
occurred primarily in commercial and residential real estate. Loans comprised
53.8% of total earning assets at September 30, 1998 compared with 47.3% at
December 31, 1997.
The following table summarizes the loan portfolio of the Company by
type of loan as of September 30, 1998 and December 31, 1997:
<TABLE>
<CAPTION>
September 30, 1998 December 31, 1997
------------------------- ------------------------
Amount Percent Amount Percent
(Dollars in thousands)
<S> <C> <C> <C> <C>
Commercial and industrial........... $ 48,281 9.14% $ 58,103 12.22%
Real estate:
Construction and land
development............... 45,125 8.54 32,880 6.91
1-4 family residential......... 104,018 19.69 83,425 17.54
Commercial mortgages........... 164,602 31.15 127,281 26.77
Farmland....................... 831 0.16 1,085 0.23
Multi-family residential....... 8,160 1.54 9,853 2.07
Consumer:
Indirect....................... 99,428 18.82 101,540 21.35
Direct......................... 57,892 10.96 61,416 12.91
---------- ------ ---------- ------
Total loans............... $ 528,337 100.00% $ 475,583 100.00%
========== ====== ========== ======
</TABLE>
NONPERFORMING ASSETS
Nonperforming assets increased $262,000 to $1.6 million as of September
30, 1998 from $1.3 million as of December 31, 1997. The ratios of nonperforming
assets to total loans and other real estate were 0.30% and 0.28% at September
30, 1998 and December 31, 1997, respectively, reflecting continued strong asset
quality.
The following table presents information regarding nonperforming assets
as of the dates indicated:
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- ------------
(Dollars in thousands)
<S> <C> <C>
Nonaccrual loans............................. $ 822 $ 865
-------- --------
Total nonperforming loans.................... 822 865
Other real estate............................ 782 477
-------- --------
Total nonperforming assets................... $ 1,604 $ 1,342
======== ========
Accruing loans 90 or more days past due...... $ 342 $ 96
</TABLE>
16
<PAGE> 18
SECURITIES
Securities totaled $426.5 million at September 30, 1998 compared with
$480.2 million at December 31, 1997, a decline of $53.7 million, or 11.2%. The
decline occurred as maturing securities were used to fund loans. At September
30, 1998, securities represented 41.2% of total assets compared with 45.6% of
total assets at December 31, 1997. The yield on average securities for the
quarter ended September 30, 1998 was 6.22% compared with 6.41% for the same
period in 1997. At September 30, 1998, securities included $145.7 million in
U.S. Treasury securities, $263.8 million in mortgage-backed securities, $15.5
million in collateralized mortgage obligations, and $1.0 million in municipal
securities. The average life of the securities portfolio at September 30, 1998
was approximately two years and five months.
PREMISES AND EQUIPMENT
Premises and equipment, net of accumulated depreciation, totaled $16.7
million at September 30, 1998, a decline of $332,000, or 2.0%, from $17.0
million at December 31, 1997. The decline was due primarily to depreciation of
existing premises and equipment.
DEPOSITS
Total deposits were $921.5 million at September 30, 1998 compared with
$949.5 million at December 31, 1997, a decrease of $28.0 million. At September
30, 1998 demand and savings deposits accounted for approximately 51.2% of total
deposits, while certificates of deposit made up 48.8%. Noninterest-bearing
demand deposits totaled $169.5 million, or 18.4%, of total deposits at September
30, 1998 compared with $180.8 million, or 18.9%, of total deposits at December
31, 1997. The average cost of deposits, including noninterest-bearing demand
deposits, was 3.38% for the quarter ended September 30, 1998 compared with 3.49%
for the same period in 1997. The decline in average cost of deposits was due
mainly to a decline in the average rate paid on interest-bearing demand
deposits.
BORROWINGS
Fed funds purchased and securities sold under repurchase agreements
totaled $22.9 million at September 30, 1998. These short-term borrowings
represent customers' funds. Separately, the Company has access to purchased
funds from correspondent banks. While purchased funds have been utilized on
occasion to take advantage of investment opportunities, the Company does not
generally rely on external funding sources.
LIQUIDITY
The Company's Asset/Liability Management Policy is intended to maintain
adequate liquidity for the Company and thereby enhance its ability to raise
funds to support asset growth, meet deposit withdrawals and lending needs,
maintain reserve requirements and otherwise sustain operations. The Company
accomplishes this primarily through management of the maturities of its
interest-earning assets and interest-bearing liabilities. The Company believes
that its present liquidity position is adequate to meet current and future
needs.
Asset liquidity is provided by cash and assets which are readily
marketable or which will mature in the near future. As of September 30, 1998,
the Company had cash and cash equivalents of $54.4 million, down from $96.5
million at September 30, 1997. The decline was due primarily to a decrease in
federal funds sold.
The Company's cash flows are composed of three classifications: cash
flows from operating activities, cash flows from investing activities, and cash
flows from financing activities. Net cash provided (used) by operating
activities was $11.7 million and $(14.7) million for the nine months ended
September 30, 1998 and 1997, respectively. The difference primarily related to
payment in early 1997 for securities that were purchased and accrued for in
1996.
Net cash (used) provided by investing activities was $(694,000) and
$31.8 million for the nine months ended September 30, 1998 and 1997,
respectively. During the nine months ended September 30, 1998, the Company
received proceeds from sold and matured securities in excess of loans funded.
During the nine months ended September 30, 1997, the acquisition of certain
branch assets and the assumption of certain liabilities provided funds in excess
of the investment in loans and securities.
17
<PAGE> 19
Net cash (used) provided by financing activities was $(24.3) million
and $30.4 million for the nine months ended September 30, 1998 and 1997,
respectively. The difference was due primarily to a decrease in deposits for the
nine months ended September 30, 1998 and an increase in securities sold under
repurchase agreements during the nine months ended September 30, 1997.
CAPITAL RESOURCES
Total shareholders' equity was $86.3 million at September 30, 1998
compared with $78.4 million at December 31, 1997, an increase of $7.9 million or
10.0%. The increase was due primarily to net earnings of $10.3 million for the
nine months ended September 30, 1998, partially offset by dividends and the
redemption of preferred stock.
Both the Board of Governors of the Federal Reserve System, with respect to
the Company, and the Federal Deposit Insurance Corporation, with respect to the
Bank, have established certain minimum risk-based capital standards that apply
to bank holding companies and federally insured banks. The Company's risk-based
capital ratios remain above the levels designated as "well capitalized" on
September 30, 1998, with Tier 1 capital, total risk-based capital and leverage
capital ratios of 14.19%, 15.23% and 7.77%, respectively. The Bank's risk-based
capital ratios remain above the levels designated as "well capitalized" on
September 30, 1998, with Tier-1 capital, total risk-based capital and leverage
capital ratios of 13.96%, 14.99% and 7.76%, respectively.
YEAR 2000
The Company continues to monitor and revise its Year 2000 project plan to
ensure there will be no material adverse effect on customers or disruption to
business operations as a result of a failure of the Company or third parties to
properly process any data, on or after January 1, 2000. Additionally, the
Company has drafted a Year 2000 contingency plan and testing plan in accordance
with FFIEC directives. The renovation and validation phases are currently in
process and on schedule. The Company does not utilize any in-house developed
software. All software utilized has been provided by established software
companies who retain the responsibility for Year 2000 compliance. These
respective vendors have been contacted and requested to provide the current
compliance status of their respective software and hardware systems. Their
responses are being actively monitored and testing schedules are being developed
and deployed based on the responses. It is anticipated that the validation phase
will be completed during the last quarter of 1998 or the first quarter of 1999.
Management has prepared an estimate of costs necessary to validate and/or
remediate mission critical systems. Based upon this estimate, management does
not expect that costs for bringing the Company's computer applications into Year
2000 compliance will have a materially adverse effect on the Company's financial
condition, results of operations or liquidity. The estimated costs of validation
and remediation is $256,000, of which approximately 25% has been expended with
another 50% to be expended during the last quarter of 1998. However,
management's ability to predict the cost associated with Year 2000 compliance is
subject to some uncertainties. While the Company has made efforts to obtain
appropriate representations and assurances from third party vendors and other
organizations that such entities will be able to meet all of their obligations
to the Company without disruption as a result of the Year 2000 issues, there can
be no assurance that the Company will not be adversely impacted by the failure
of such third-party entities to achieve Year 2000 compliance.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
The Company manages market risk, which for the Company is primarily
interest rate risk, through its Investment Committee. Senior officers and
directors of the Company and the Bank compose the Investment Committee, and they
periodically get advice from external sources to assist in the management of
market risk. The Investment Committee functions in accordance with policies
approved by the Company's Board of Directors.
The Company uses simulation analysis to examine the potential effects
of market changes on net interest income and market value. It considers
macroeconomic variables, Company strategy, liquidity and other factors as it
quantifies market risk. At September 30, 1998, the Company estimated that a 200
basis point rise or decline in market interest rates over the next twelve months
would affect its net interest income for the same period by less than 5.0%.
18
<PAGE> 20
PART II -- OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Not applicable
ITEM 2. CHANGES IN SECURITIES
(a) Not applicable
(b) Not applicable
(c) Not applicable
(d) Not applicable
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.
Not applicable
ITEM 5. OTHER INFORMATION
Not applicable
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) The following exhibit is filed with this report:
Exhibit 27. Financial Data Schedule
(b) No reports on Form 8-K were filed by the Company during the three
months ended September 30, 1998.
19
<PAGE> 21
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Company has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PRIME BANCSHARES, INC.
Registrant
Date: August 12, 1998 By: /s/ FREDRIC M. SAUNDERS
--------------------------------------
Fredric M. Saunders
Chairman of the Board and Chief
Executive Officer
(Principal Executive Officer)
Date: August 12, 1998 By: /s/ L. ANDERSON CREEL
-------------------------------------
L. Anderson Creel
Senior Vice President and Chief
Financial Officer
(Principal Financial Officer)
20
<PAGE> 22
EXHIBIT INDEX
Exhibit
Number Description
- ------ -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 26,321
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 28,113
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 103,933
<INVESTMENTS-CARRYING> 322,542
<INVESTMENTS-MARKET> 324,930
<LOANS> 528,337
<ALLOWANCE> 5,954
<TOTAL-ASSETS> 1,034,784
<DEPOSITS> 921,456
<SHORT-TERM> 22,878
<LIABILITIES-OTHER> 4,187
<LONG-TERM> 0
0
0
<COMMON> 3,247
<OTHER-SE> 83,016
<TOTAL-LIABILITIES-AND-EQUITY> 1,034,784
<INTEREST-LOAN> 34,841
<INTEREST-INVEST> 20,991
<INTEREST-OTHER> 1,864
<INTEREST-TOTAL> 57,696
<INTEREST-DEPOSIT> 24,009
<INTEREST-EXPENSE> 24,670
<INTEREST-INCOME-NET> 33,026
<LOAN-LOSSES> 700
<SECURITIES-GAINS> (46)
<EXPENSE-OTHER> 23,881
<INCOME-PRETAX> 16,088
<INCOME-PRE-EXTRAORDINARY> 16,088
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 10,337
<EPS-PRIMARY> 1.01
<EPS-DILUTED> .97
<YIELD-ACTUAL> 7.71
<LOANS-NON> 822
<LOANS-PAST> 342
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 5,873
<CHARGE-OFFS> 915
<RECOVERIES> 296
<ALLOWANCE-CLOSE> 5,954
<ALLOWANCE-DOMESTIC> 5,954
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
