<PAGE> 1
UNITED STATES
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 March 31, 1998
[ ] 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 __________
CITIZENS BANCORP
(Exact name of registrant as specified in its charter)
Oregon 91-1841688
(State of Incorporation) (I.R.S. Employer Identification Number)
275 Southwest Third Street
Corvallis, Oregon 97339
(Address of principal executive offices)
(541) 752-5161
(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
----- -----
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practicable date.
1,945,568 shares as of April 15, 1998, no par.
<PAGE> 2
CITIZENS BANCORP
FORM 10-Q
MARCH 31,1998
INDEX
<TABLE>
<CAPTION>
Page
PART I. Reference
<S> <C>
ITEM 1. - FINANCIAL INFORMATION - UNAUDITED
Consolidated Balance Sheets as of March 31, 1998 and December 31, 1997 1
Consolidated Statements of Income for the three months ended March 31, 1998 2
and 1997
Consolidated Statements of Income and Comprehensive Income for the three 3
months ended March 31, 1998 and 1997
Consolidated Statements of Changes in Shareholders' Equity 4
Consolidated Statements of Cash Flows 5
Notes to Consolidated Financial Statements 6 -- 7
ITEM 2. - Management's Discussion and Analysis of Financial Condition 8 -- 13
and Results of Operations
ITEM 3. - Quantitative and Qualitative Disclosure about Market Risk 13
PART II. - OTHER INFORMATION
ITEM 1. - Legal Proceedings 14
ITEM 2. - Changes in Securities 14
ITEM 3. - Defaults Upon Senior Securities 14
ITEM 4. - Submission of Matters to a Vote of Security Holders 14
ITEM 5. - Other Information 14
ITEM 6. - Exhibits and Reports on Form 8-K 14
SIGNATURES 14
</TABLE>
<PAGE> 3
PART I FINANCIAL INFORMATION
ITEM 1
CITIZENS BANCORP
CONSOLIDATED BALANCE SHEETS
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
MARCH 31, 1998 DECEMBER 31, 1997
<S> <C> <C>
ASSETS
Cash and due from banks $ 9,018 $ 9,268
Interest bearing deposits in banks 11,318 15,299
Federal funds sold 200 2,800
Securities available for sale 38,857 36,258
Securities held to maturity 7,904 9,984
Loans, net of unearned discount and prepaid fees 126,044 121,470
Allowance for credit losses (1,246) (1,201)
--------- ---------
NET LOANS $ 124,798 $ 120,269
Premises and equipment 2,696 2,756
Accrued interest receivable 1,621 1,667
Other assets 1,489 1,816
TOTAL ASSETS $ 197,901 $ 200,117
========= =========
LIABILITIES AND SHAREHOLDERS' EQUITY
LIABILITIES
Deposits:
Demand $ 32,126 $ 35,683
Savings and interest bearing demand 71,550 70,562
Time 56,403 55,455
--------- ---------
TOTAL DEPOSITS $ 160,079 $ 161,700
Repurchase agreements 15,167 14,086
Accrued interest an other liabilities 1,758 4,920
TOTAL LIABILITIES $ 177,004 $ 180,706
--------- ---------
Shareholders' Equity
Common stock (no par value); authorized 5,000,000 shares;
issued and outstanding: 1998 - 1,945,568 shares;
1997 - 1,922,321 shares 9,798 9,245
Surplus 4,715 4,715
Undivided Profits 6,329 5,388
Valuation Allowance 55 63
TOTAL SHAREHOLDERS' EQUITY $ 20,897 $ 19,411
--------- ---------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 197,901 $ 200,117
========= =========
</TABLE>
See accompanying notes
1
<PAGE> 4
CITIZENS BANCORP AND CITIZENS BANK
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
(Dollars in thousand, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1998 1997
<S> <C> <C>
INTEREST INCOME:
Loans $ 3,155 $ 2,958
Interest on deposits and federal funds sold 256 94
Securities available for sale 550 423
Securities held to maturity 119 223
----------- -----------
TOTAL INTEREST INCOME $ 4,080 $ 3,698
INTEREST EXPENSE:
Deposits 1,224 1,161
Short term borrowings 16 14
Repurchase agreements 140 84
----------- -----------
TOTAL INTEREST EXPENSE $ 1,380 $ 1,259
NET INTEREST INCOME $ 2,700 $ 2,439
PROVISIONS FOR CREDIT LOSSES (45) (45)
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES $ 2,655 $ 2,394
NON-INTEREST INCOME:
Service charges on deposit accounts 204 201
Origination fees and gains on loans sold 17 18
Gain(loss) on sales of securities available for sale 19 0
Other 247 208
----------- -----------
TOTAL NON-INTEREST INCOME $ 487 $ 427
NON-INTEREST EXPENSE:
Salaries and employee benefits 923 804
Occupancy and equipment 229 223
Other 566 410
----------- -----------
TOTAL NON-INTEREST EXPENSE $ 1,718 $ 1,437
INCOME BEFORE INCOME TAXES $ 1,424 $ 1,384
----------- -----------
INCOME TAXES (483) (490)
NET INCOME $ 941 $ 894
=========== ===========
Per share data:
Basic earnings per share $ 0.48 $ 0.47
Weighted average number of common
shares outstanding 1,944,804 1,922,321
</TABLE>
2
<PAGE> 5
CITIZENS BANCORP AND CITIZENS BANK
CONSOLIDATED STATEMENTS OF INCOME AND COMPREHENSIVE INCOME
(Unaudited)
(Dollars in thousand, except per share amounts)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1998 1997
<S> <C> <C>
INTEREST INCOME:
Loans $ 3,155 $ 2,958
Interest on deposits and federal funds sold 256 94
Securities available for sale 550 423
Securities held to maturity 119 223
----------- -----------
TOTAL INTEREST INCOME $ 4,080 $ 3,698
INTEREST EXPENSE:
Deposits 1,224 1,161
Short term borrowings 16 14
Repurchase agreements 140 84
----------- -----------
TOTAL INTEREST EXPENSE $ 1,380 $ 1,259
NET INTEREST INCOME $ 2,700 $ 2,439
PROVISIONS FOR CREDIT LOSSES (45) (45)
NET INTEREST INCOME AFTER PROVISION FOR CREDIT LOSSES $ 2,655 $ 2,394
NON-INTEREST INCOME:
Service charges on deposit accounts 204 201
Origination fees and gains on loans sold 17 18
Gain(loss) on sales of securities available for sale 19 0
Other 247 208
----------- -----------
TOTAL NON-INTEREST INCOME $ 487 $ 427
NON-INTEREST EXPENSE:
Salaries and employee benefits 923 804
Occupancy and equipment 229 223
Other 566 410
----------- -----------
TOTAL NON-INTEREST EXPENSE $ 1,718 $ 1,437
INCOME BEFORE INCOME TAXES $ 1,424 $ 1,384
----------- -----------
INCOME TAXES (483) (490)
NET INCOME $ 941 $ 894
=========== ===========
Other comprehensive income, net of tax:
Unrealized holding gains (losses) on securities
arising during the period (8) (69)
COMPREHENSIVE INCOME $ 933 $ 825
=========== ===========
Per share data:
Basic earnings per share $ 0.48 $ 0.43
Weighted average number of common
shares outstanding 1,944,804 1,922,321
</TABLE>
3
<PAGE> 6
CITIZENS BANCORP AND CITIZENS BANK
CONSOLIDATED STATEMENTS
OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
(Dollars in Thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
NUMBER OF NET UNREALIZED
COMMON COMMON GAIN (LOSSES)
SHARES STOCK UNDIVIDED SECURITIES
OUTSTANDING AMOUNT SURPLUS PROFITS AVAILABLE FOR SALE TOTAL
<S> <C> <C> <C> <C> <C> <C>
Balance, at December 31, 1996 1,798,397 $8,992 $4,349 $3,436 $ 28 $ 16,805
Net Income -- -- -- 894 -- 894
Valuation adjustment, net -- -- -- -- (69) (69)
Issuance of common stock 32,385 162 366 -- -- 528
------------------------------------------------------------------------------
BALANCE, AT MARCH 31, 1997 1,830,782 $9,154 $4,715 $4,330 $(41) $ 18,158
Balance, at December 31, 1997 1,922,321 $9,245 $4,715 $5,388 $ 63 $ 19,411
Net Income -- -- -- 941 -- 941
Valuation adjustment, net -- -- -- -- (8) (8)
Issuance of common stock 23,247 553 -- -- -- 553
------------------------------------------------------------------------------
BALANCE, AT MARCH 31, 1998 1,945,568 $9,798 $4,715 $6,329 $ 55 $ 20,897
</TABLE>
4
<PAGE> 7
CITIZENS BANCORP AND CITIZENS BANK
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
(Dollars in thousands)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
1998 1997
-------- --------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 941 $ 894
Adjustments to reconcile net income to net
cash provided by operating activities:
Provision for credit losses 45 45
Depreciation and amortization 103 93
Stock dividends received (12) (10)
Decrease in interest receivable 46 3
Increase in interest payable 5 9
Other 538 560
-------- --------
NET CASH PROVIDED BY OPERATING ACTIVITIES $ 1,666 $ 1,594
CASH FLOWS FROM INVESTING ACTIVITIES
Net decrease in interest bearing deposits in banks 3,981 7,057
Net decrease in federal funds sold 2,600 0
Proceeds from maturities of available for sale securities 1,000 7,000
Proceeds from sales of available for sale securities 9,519 0
Proceeds from maturities of securities held to maturity 2,455 460
Purchases of securities available for sale (13,122) (5,051)
Purchases of securities held to maturity (367) 0
Increase in loans made to customers, net of principal collections (4,563) (1,477)
Purchases of premises and equipment and other (22) (65)
-------- --------
NET CASH PROVIDED BY INVESTING ACTIVITIES $ 1,481 $ 7,924
CASH FLOWS FROM FINANCING ACTIVITIES
Net decrease in deposits (1,621) (8,062)
Net decrease in repurchase agreements and short-term borrowings (1,021) (1,495)
Payment of dividends (755) (551)
-------- --------
NET CASH USED IN FINANCING ACTIVITIES $( 3,397) $(10,108)
NET DECREASE IN CASH AND DUE FROM BANKS (250) (590)
CASH AND DUE FROM BANKS
Beginning of year 9,268 8,416
END OF YEAR $ 9,018 $ 7,826
======== ========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Interest paid 1,375 1,250
Income taxes paid -- 66
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
Unrealized losses on securities available for sale, net of tax (8) (69)
Issuance of common stock through dividend reinvestment plan 552 528
</TABLE>
5
<PAGE> 8
CITIZENS BANCORP
Notes to Consolidated Financial Statements
1. BASIS OF PRESENTATION
The interim condensed consolidated financial statements include the
accounts of Citizens Bancorp ("Bancorp"), a bank holding company and its wholly
owned subsidiary, Citizens Bank ("Bank") after elimination of intercompany
transactions and balances.
The interim financial statements are unaudited but have been prepared in
accordance with generally accepted accounting principles for interim condensed
financial statements. Accordingly, the condensed interim financial statements do
not include all of the information and footnotes required by generally accepted
financial statements. In the opinion of management, all adjustments including
operations for the interim periods included herein have been made.
The interim condensed consolidated financial statements should be read in
conjunction with the December 31, 1997 consolidated financial statements,
including notes there to, included in Bancorp's 1997 Annual Report to
shareholders.
2. USE OF ESTIMATES IN THE PREPARATION OF FINANCIALS
The preparation of financial statements, in conformity with general
accounting principles, requires management to make estimates and assumptions
that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities at the date of the financial statements and
the reported amounts of revenues and expenses during the reporting period.
Actual results could differ from those estimates.
3. SHAREHOLDERS EQUITY AND NET INCOME PER COMMON SHARE
The Board of Directors declared a $.68 per share cash dividend on December
16, 1997 to Bancorp shareholders of record on that date payable on January 12,
1998. Through the Dividend Reinvestments Plan (DRIP), 23,247 shares were
purchased at a price of $23.76 per share. For information on the Bancorp's DRIP
refer to the exhibit in the December 1997 10K report.
All per share amounts have been restated to retroactively reflect stock
dividends, stock purchased and stock splits previously reported.
4. CONTINGENCIES
Unfunded loan commitments totaled $21,692,000 as of March 31, 1998 and
$18,716,000 as of December 31, 1997.
5. YEAR 2000
Citizens Bancorp has initiated a program to prepare the Company's computer
systems and applications for the year 2000. The Board of Directors has
established the time frame for year 2000 compliance company-wide. The Account
Service Center has been working on this effort for several months. The Company
is to have all products, services and supporting technical systems year 2000
compliant by the fourth quarter of 1998. The testing and conversion of system
applications is not expected to result in a material cost to the Company.
6
<PAGE> 9
6. ACCOUNTING CHANGES
In the quarter ended March 31, 1998, the Company adopted Statement of Financial
Accounting Standards No. 130, Reporting Comprehensive Income (SFAS No. 130),
which was effective for years beginning after December 15, 1997. SFAS No. 130
requires that an entity report and display comprehensive income with the same
prominence as other financial statements. Comprehensive income is defined as the
change in equity of a business enterprise during a period from transactions and
other events and circumstances from nonowner sources, it includes all changes in
equity during a period except those resulting from investments by owners and
distributions to owners. With regard to the Company, currently the only items of
comprehensive income are changes in the fair value of its available for sale
securities portfolio. Accordingly, changes in the value of that portfolio during
the period, net of tax, are reported as "Other Comprehensive Income" in the
accompanying Consolidated Statement of Income and Comprehensive Income. Changes
in the fair value of the available for sale securities portfolio for the three
months ended March 31, 1998, which were previously reported in the Consolidated
Statement of Shareholders' Equity, have been reclassified and retroactively
reported as Other Comprehensive Income. The cumulative adjustment, net of taxes,
to record the available for sale securities portfolio at fair value at period
end was previously reported as "Net unrealized gain (loss) on securities
available for sale, net of tax" in the Companys consolidated balance sheets.
That cumulative adjustment is now termed "Accumulated other comprehensive
income". There was no effect on previously reported net income as a result of
this reporting change.
7
<PAGE> 10
ITEM 2
MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS
ORGANIZATION
Citizens Bancorp ("Bancorp"), an Oregon Corporation, is the parent corporation
and holding company of Citizens Bank (the "Bank"), which is its sole subsidiary.
The Bank is an Oregon State-chartered banking corporation with headquarters in
Corvallis, Oregon. Bancorp was incorporated on September 18, 1996 and became the
holding company of the Bank effective July 1, 1997.
OVERVIEW OF FINANCIAL RESULTS
Bancorp reported net income of $941,000, or $0.48 per share for the three months
ended March 31, 1998. This was a 5.26% increase in net income as compared to
$894,000 or $0.47 per share for the three months ended March 31, 1997. The
foregoing per share information is adjusted for an increase in outstanding
shares adjusted for stock dividends and shares acquired through the Dividend
Reinvestment Plan.
The increased earning described above were primarily the result of growth in the
Bank's interest earning assets and net interest income.
LOAN PORTFOLIO
The composition of the loan portfolio was as follows (in thousands):
<TABLE>
<CAPTION>
March 31, 1998 December 31, 1997
<S> <C> <C>
Commercial $ 24,524 $ 23,507
Agriculture 11,860 10,992
Real Estate
Construction 6,625 $ 5,459
1-4 Family 33,437 34,625
Other 45,030 42,142
Consumer Loans 5,244 5,423
Less: unearned income and deferred fees (676) (678)
TOTAL LOANS $ 126,044 $ 121,470
Less: allowance for credit losses (1,246) (1,201)
--------- ---------
NET LOANS $ 124,798 $ 120,269
========= =========
</TABLE>
INVESTMENT SECURITIES
The amortized cost and estimated book value of the investment securities held by
the Bank, including unrealized gains and losses, at March 31, 1998 and December
31, 1997, are as follows (in thousands):
<TABLE>
<CAPTION>
March 31, 1998 Amortized Cost Estimated Fair Value Unrealized Gains, net
<S> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Treasury Securities
(Including securities of government agencies
and corporations) $38,150 $38,232 $82
Other 625 625 0
------- ------- ---
$38,775 $38,857 $82
</TABLE>
8
<PAGE> 11
<TABLE>
<CAPTION>
March 31, 1998 Amortized Cost Estimated Fair Value Unrealized Gains, net
<S> <C> <C> <C>
HELD TO MATURITY
U.S. Treasury Securities
(Including securities of government agencies
and corporations) $ 4,492 $ 4,540 $ 48
Obligations of State and Political Subdivisions 3,412 3,467 55
-------------------------------------------------------
$ 7,904 $ 8,007 $103
</TABLE>
<TABLE>
<CAPTION>
December 31, 1997 Amortized Cost Estimated Fair ValuUnrealized Gains, net
<S> <C> <C> <C>
AVAILABLE FOR SALE
U.S. Treasury Securities
(Including securities of government agencies
and corporations) $35,554 $35,645 $ 91
Other 613 613 0
-------------------------------------------------------
$36,167 $36,258 $ 91
HELD TO MATURITY
U.S. Treasury Securities
(Including securities of government agencies
and corporations) $ 6,482 $ 6,536 $ 54
Obligations of State and Political Subdivisions 3,502 3,561 59
-------------------------------------------------------
$ 9,984 $10,097 $113
</TABLE>
9
<PAGE> 12
MATERIAL CHANGES IN FINANCIAL CONDITION
Changes in financial condition for the three months ended March 31, 1998 include
an overall decrease in total assets. At March 31, 1998 total assets decreased
1.1%, or approximately $2,216,000 over total assets at December 31, 1997.
Interest bearing bank deposits decreased approximately $3,981,000 and Federal
funds sold decreased $2,600,000. The overall decrease in cash was effected by
growth in loans from $121,044,000 at December 31, 1997 to $126,044,000 at March
31, 1998 or an increase of $4,574,000.
The increase in loans was primarily due to strong loan demand as a result of
favorable economic conditions, increased marketing of loan products and
increased calling activity of the Bank's loan officers. The Bank's diversified
loan portfolio lessons the impact of seasonality, and concentration of debt by
borrower type.
At March 31, 1998, the Bank held $200,000 in federal funds sold in comparison to
$2,800,000 for the period ending December 31, 1997. The decrease in this
category was due to the placement of funds into the interest bearing account
held at the Federal home Loan Bank due to a more favorable interest rate.
Federal funds sold represents overnight investments of surplus funds which can
fluctuate widely on a day to day basis. A majority of the Banks liquid funds are
held in an interest bearing account at the Federal Home Loan Bank. The balances
at the Federal Home Loan Bank were $6,277,000 in an interest bearing demand
account and $5,000,000 in a certificate of deposit maturing on April 20, 1998.
At December 31, 1997 the balances were $5,296,000 and $10,000,000 respectively.
The Bank experienced a net decrease in total deposits of approximately
$1,621,000 for the period ending March 31, 1998 as compared to December 31,
1997, a decrease of approximately 1.0%. The decrease was primarily due to a
withdrawal of funds from a non-profit account holder's deposit account of
$1,300,000 to fund their building project. The balance of the decrease was due
to normal day to day fluctuations in deposit accounts. Average total deposits
for three months ending March 31, 1998 was $162,011,000 compared to $154,013,000
for the year ending December 31, 1997.
Management's deposit strategy continues to emphasize personal service and
long-term customer relationships. The Bank strives to increase and retain core
non-interest bearing deposits. The Bank is not dependent on large rate sensitive
deposits. The Bank's goal is to keep its rate sensitivity neutral to increasing
or declining interest rates.
10
<PAGE> 13
MATERIAL CHANGES IN RESULTS OF OPERATIONS
Earnings per share increased to $.48 per share at March 31, 1998 from $.47 per
share for the same three month period ending March 31, 1997. The increase in
earnings per share is primarily due to increased net interest income and the
ability of Bank management to effectively manage the company expenses.
Total interest income increased approximately $382,000 for the three months
ended March 31, 1998 as compared to the same three month period in 1997. These
increases are primarily due to increases in loan volume. For the three month
period ending March 31, 1998 total loans increased by $8,861,000 an increase of
7.56% as compared to the same period in 1997.
Total interest expense increased $121,000 for the quarter ended March 31, 1998
as compared to the same quarter ended March 31, 1997. This was primarily due to
an increase in certificates of deposits and repurchase agreements.
The increase in net interest income after the provision for credit losses of
$261,000 for the quarter ending March 31, 1998 over the same quarter in 1997 is
the result of the net increase of interest income over net interest expense.
Non-interest income increased approximately $60,000 for the three months ended
March 31, 1998 as compared to the same three month period in 1997. This increase
is attributable to the growth in deposits and bankcard services over the same
quarter last year.
Other non-interest expense increased approximately $156,000 for the three months
ended March 31, 1998 as compared to the same three month period in 1997. This
increase was primarily due to increases in professional fees due to the holding
company for new reporting processes, increases in expense relative to growth of
the merchant bankcard and debit card products, and an increase in depreciation
expense due to the continuous updating of equipment relative to technology and
computers.
Salaries and employee benefits increased approximately $119,000 for the three
month period ending March 31, 1998 compared to the same three month period in
1997. These increases were primarily due to routine adjustments in officer and
staff salaries and staff increases in the areas of financial management and
human resources.
11
<PAGE> 14
CREDIT LOSS PROVISION
The Bank maintains an allowance for credit losses on loans that occur from time
to time as an incidental part of the business of banking. Loans are charged
against this reserve for credit losses which is adjusted periodically to reflect
changing loan volumes, risk potential in the portfolio and general economic
conditions. Additions to the allowance for credit losses are made through a
charge against income.
During the first three months ended March 31, 1998 the Bank funded the allowance
for credit losses $45,000 from operations and $45,000 for the same three month
period during 1997. The Bank experienced no loan losses for the three months
ended March 31, 1997 and there have been no losses in 1998. Even though the
historical level of charge offs has been very low for the Bank, management
concludes that an allowance for credit losses of approximately 1.0% is an
appropriate level. As of March 31, 1998 the allowance for credit losses was
$1,246,000 or .99% of total loans.
Management believes that the allowance for credit losses is adequate based on
its assessment of various factors, including present delinquent and
nonperforming loans, past history of industry loan loss experience and future
economic trends impacting the market area and customers served by the Bank.
12
<PAGE> 15
LIQUIDITY AND CAPITAL RESOURCES
Bancorp's subsidiary, the Bank, has adopted policies to maintain a relatively
liquid position to enable it to respond to changes in the Bank's financial
environment. In general, the Bank's major sources of liquidity are customer
deposits, sales and maturities of securities, the use of borrowing lines with
correspondent banks including Federal Home Loan bank borrowings, loan repayments
and net cash provided by operating activities.
The analysis of liquidity should also include a review of the changes that
appear in the consolidated statement of cash flows for the first three months of
1998. The statement of cash flows includes operating, investing and financing
categories. Operating activities include net income which is adjusted for
non-cash items and increases or decreases in cash due to certain changes in
assets and liabilities. Investing activities consisted primarily of both
proceeds from and purchases of securities, and the net growth in loans.
Financing activities present the cash flows associated with the Bank's deposit
accounts.
As of March 31, 1998 the Bank had no outstanding borrowings on its lines of
credit at correspondent banks including no borrowings at the Federal Home Loan
Bank. The Bank did have a balance of $712,000 on its Treasury Tax and Loan note
with the Federal Reserve Bank for the period ending March 31, 1998 and
$2,814,000 for the same period in 1997.
As of March 31, 1998, shareholders' equity totaled $20,897,000 as compared to
$19,411,000 for the same three month period in 1997, an increase of 7.66%. This
increase in equity was primarily due to the Company's net income.
Capital ratios for the Company were as follows as of the dates indicated:
<TABLE>
<CAPTION>
Bancorp
Adequately Well
Capitalized Capitalized
Standard Standards March 31, 1998 December 31, 1997
<S> <C> <C> <C> <C>
Tier 1 Leverage Ratio 4% 5% 9.76% 9.69%
Tier 1 Risk Based Capital Ratio 4% 6% 16.36% 15.60%
Total Risk Based Capital Ratio 8% 10% 17.35% 16.30%
</TABLE>
ITEM 3. QUANTITATIVE & QUALITATIVE ANALYSIS ABOUT MARKET RISK
No material changes have occurred in market risk since reported on December 31,
1997.
13
<PAGE> 16
PART II. OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
None
ITEM 2. CHANGES IN SECURITIES
None
ITEM 3. DEFAULTS UPON SENIOR SECURITIES
None
ITEM 4. SUBMISSION OF MATTERS TO VOTE OF SECURITY HOLDERS
None
ITEM 5. OTHER INFORMATION
None
ITEM 6. EXHIBITS AND REPORTS ON FROM 8-K
(A) EXHIBITS
The following exhibit is filed as part of this report.
27 Financial Data Schedule for the three months ended March 31, 1998.
(B) REPORTS ON FORM 8-K
A Form 8-K was filed by the Registrant during the first quarter of
1998. The Form 8-K related to a change in the Registrant's certifying
accountant. No financial statements were filed with the Form 8-K. The
date of the report on Form 8-K was January 9, 1998.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
/s/
-------------------------------
By: Lark E. Wysham
Senior Vice President and
Chief Financial Officer
Date: May 12, 1998
--------------------------
14
<PAGE> 17
EXHIBIT INDEX
Exhibit Description
Number
- ------- ----------------------------------------------------------------
27 Financial Data Schedule - This exhibit is included only in the
electronic EDGAR filing version of this Form 10-Q. The financial
data schedule is not a separate financial statement, but a
schedule that summarizes certain standard financial information
extracted directly from the financial statements in this filing.
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 9,018
<INT-BEARING-DEPOSITS> 11,318
<FED-FUNDS-SOLD> 200
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 38,857
<INVESTMENTS-CARRYING> 7,904
<INVESTMENTS-MARKET> 8,007
<LOANS> 126,004
<ALLOWANCE> 1,246
<TOTAL-ASSETS> 197,901
<DEPOSITS> 160,079
<SHORT-TERM> 712
<LIABILITIES-OTHER> 16,213
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0
0
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<INTEREST-INVEST> 669
<INTEREST-OTHER> 256
<INTEREST-TOTAL> 4,080
<INTEREST-DEPOSIT> 1,224
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<INTEREST-INCOME-NET> 2,700
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<INCOME-PRETAX> 1,424
<INCOME-PRE-EXTRAORDINARY> 1,424
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<CHANGES> 0
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<EPS-PRIMARY> .48
<EPS-DILUTED> .48
<YIELD-ACTUAL> 8.77
<LOANS-NON> 0
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<ALLOWANCE-UNALLOCATED> 1,246
</TABLE>
