U.S. SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (D)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1999
Commission File Number: 000-24561
RESOURCE BANKSHARES CORPORATION
(Exact name of Registrant as specified in its charter)
Virginia 54-1904386
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3720 Virginia Beach Blvd., Va. Beach, VA.23452
(Address of principal executive offices) (Zip Code)
(757) 463-2265
(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 Exchange Act 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 ___
At September 30, 1999, 2,535,580 shares of Resource Bankshares Corporation's
common stock, $1.50 par value, were outstanding.
<PAGE>
RESOURCE BANKSHARES CORPORATION
FORM 10-Q
SEPTEMBER 30, 1999
INDEX
PART I. FINANCIAL INFORMATION
<TABLE>
<CAPTION>
Item 1. Financial Statements
<S> <C>
Consolidated Balance Sheets as of September 30, 1999 and
December 31, 1998 3
Consolidated Statements of Income for the periods ended
September 30, 1999 and 1998 4
Consolidated Statements of Stockholder's Equity for the period
ended September 30, 1999 5
Consolidated Statements of Cash Flows for the periods ended
September 30, 1999 and 1998 6
Notes to Consolidated Financial Statements 7
Item 2. Management's Discussion and Analysis of Financial Condition 10
and Results of Operations
Item 3. Quantitative and Qualitative Disclosures about Market Risks 19
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 19
Item 6. Exhibits and Reports on Form 8-K 20
2
<PAGE>
</TABLE>
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements
<TABLE>
<CAPTION>
RESOURCE BANKSHARES CORPORATION
CONSOLIDATED BALANCE SHEETS (UNAUDITED) September 30 December 31
1999 1998
(Dollars in Thousands)
<S> <C>
ASSETS
Cash and due from banks $ 3,458 $ 4,325
Interest bearing deposits 2,788 3,357
Federal funds sold - 800
Funds advanced in settlement of mortgage loans 16,381 21,052
Securities available for sale 6,773 8,619
Securities held to maturity 15,546 1,224
Loans, net of unearned income:
Commercial 76,138 68,569
Real estate - construction 61,265 44,607
Commercial real estate 67,748 42,482
Residential real estate 27,819 28,702
Installment and consumer loans 4,260 4,162
---------------- ---------------
TOTAL LOANS 237,230 188,522
Allowance for loan losses (3,723) (2,500)
---------------- ---------------
NET LOANS 233,507 186,022
Other real estate owned 186 647
Premises and equipment 3,850 3,281
Other assets 5,384 2,531
Accrued interest 1,936 1,602
---------------- ---------------
$289,809 $233,460
================ ===============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits:
Non-interest bearing $ 16,653 $ 15,783
Interest bearing 223,387 190,436
---------------- ---------------
TOTAL DEPOSITS 240,040 206,219
Federal funds purchased 7,921 -
FHLB advances 14,703 7,300
Other liabilities 1,409 1,500
Accrued interest 1,026 652
Capital debt securities 9,200 -
---------------- ---------------
TOTAL LIABILITIES 274,299 215,671
STOCKHOLDERS' EQUITY
Common stock, par value $1.50 a share
Shares authorized: 6,666,666
Shares issued and outstanding:
1999 - 2,535,580; 1998 2,477,124 3,803 3,716
Additional paid-in capital 10,554 10,702
Retained earnings 1,279 3,310
Accumulated other comprehensive income (126) 61
---------------- ---------------
15,510 17,789
---------------- ---------------
$289,809 $233,460
================ ===============
See notes to consolidated financial statements.
</TABLE>
3
<PAGE>
RESOURCE BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED)
<TABLE>
<CAPTION>
Three months ended Nine months ended
September 30 September 30
1999 1998 1999 1998
(Dollars in Thousands) (Dollars in Thousands)
<S> <C>
Interest income:
Interest and fees on loans $ 4,754 $3,963 $12,970 $11,268
Interest on investment securities 390 160 977 563
Interest on funds advanced 465 519 1,212 2,625
Interest on other interest bearing deposits 42 318 311 546
-------------- ------------- ----------------- --------------
Total interest income 5,651 4,960 15,470 15,002
-------------- ------------- ----------------- --------------
Interest expense:
Interest on deposits 2,824 2,739 7,927 7,796
Interest on borrowings 228 135 468 864
Interest on capital debt securities 217 - 484 -
-------------- ------------- ----------------- --------------
Total interest expense 3,269 2,874 8,879 8,660
-------------- ------------- ----------------- --------------
Net interest income 2,382 2,086 6,591 6,342
Provision for loan losses 4,667 25 4,667 150
-------------- ------------- ----------------- --------------
Net interest income after
provision for loan losses (2,285) 2,061 1,924 6,192
-------------- ------------- ----------------- --------------
Noninterest income:
Mortgage banking income 1,759 1,447 4,878 5,744
Service charges 382 255 891 595
Gain on sale of loans and other real estate 8 8 280 10
-------------- ------------- ----------------- --------------
2,149 1,710 6,049 6,349
-------------- ------------- ----------------- --------------
Noninterest expense:
Salaries and employee benefits 1,920 1,454 5,139 5,260
Occupancy expenses 304 282 875 811
Depreciation and equipment maintenance 292 218 646 580
Stationery and supplies 81 65 264 229
Marketing and business development 123 92 325 263
Professional fees 150 52 232 127
Outside computer services 118 135 367 439
Provision for funds advanced 275 6 275 265
FDIC insurance 15 14 42 38
Expenses associated with other real estate (1) 33 25 36
Other 644 184 1,746 954
-------------- ------------- ----------------- --------------
3,933 2,535 9,936 9,002
-------------- ------------- ----------------- --------------
Income (loss) before income tax (4,069) 1,236 (1,963) 3,539
Income tax (benefit) expense (1,418) 433 (689) 1,239
-------------- ------------- ----------------- --------------
Net (loss) income ($2,651) $803 ($1,274) $ 2,300
============== ============= ================= ==============
Cash dividend declared per common share $0.10 $ 0.06 $0.30 $ 0.18
============== ============= ================= ==============
Basic earnings per common share (Note 5) $(1.04) $ 0.32 $(0.51) $ 0.93
============== ============= ================= ==============
Diluted earnings per common share (Note 5) $(0.97) $ 0.30 $(0.47) $ 0.85
============== ============= ================= ==============
See notes to consolidated financial statements.
</TABLE>
4
<PAGE>
RESOURCE BANKSHARES CORPORATION
STATEMENT OF STOCKHOLDERS' EQUITY (UNAUDITED)
Nine Months Ended September 30, 1999
<TABLE>
<CAPTION>
Accumulated
Other
Additional Retained Comprehensive
Common Stock Paid-in Earnings Income
Shares Amount Capital (Deficit) (Loss) Total
------ ------ ------- --------- ------ -----
<S> <C>
(DOLLARS IN THOUSANDS)
Balance, December 31, 1998 2,477,124 $ 3,716 $ 10,702 $ 3,310 $ 61 $ 17,789
Comprehensive income:
Net income -- -- -- (1,274) -- (1,274)
Changes in unrealized
appreciation (depreciation)
on securities available for sale,
net of reclassification
adjustment and tax effect -- -- -- (187) (187)
------
Total comprehensive income (1,461)
Proceeds from exercise of stock
options 27,733 41 88 129
Proceeds from exercise of warrants 59,822 90 276 366
Reacquisition of common stock (29,099) (44) (512) (556)
Cash dividends declared
$ .30 per share -- -- -- (757) (757)
-------- ---------- --------- ---------- ---------- ----------
Balance, September 30, 1999 2,535,580 $ 3,803 $ 10,554 $ 1,279 ($ 126) $ 15,510
========= ========== ========== ========== ========== ==========
</TABLE>
See notes to consolidated financial statements.
5
<PAGE>
RESOURCE BANKSHARES CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
<TABLE>
<CAPTION>
Nine months ended
September 30 September 30
Operating activities 1999 1998
(Dollars in thousands)
<S> <C>
Net (loss) income $(1,274) $ 2,300
Adjustments to reconcile to net cash used by operating activities:
Provision for losses on loans and other real estate owned 4,667 150
Provision for losses on funds advanced on settlement of mortgage loans 275 -
Depreciation and amortization 310 231
Amortization of investment securities premiums, net of discounts 40 69
Gain on sale of loans and other real estate owned (280) (2)
Loss on premises and equipment (1) (4)
Deferred loan origination fees, net of costs 502 (25)
Changes in:
Funds advanced in settlement of mortgage loans 4,397 (579)
Interest receivable (334) (49)
Interest payable 375 68
Other assets (2,186) (243)
Other liabilities (91) 309
----- -----
Net cash provided by operating activities 6,400 2,225
Investing activities:
Proceeds from sale of real estate owned, net of costs 590 -
Proceeds from sales and maturities of
available-for-sale securities 2,282 4,501
Proceeds from maturities of
held-to-maturity securities 320 1,302
Purchases of held-to-maturity securities (14,760) -
Purchases of available-for-sale securities (647) (1,897)
Loan originations, net of principal repayments (52,503) (26,160)
Purchases of premises, equipment and other assets (1,059) (244)
------- -------
Net cash used investing activities (65,777) (22,498)
Financing activities:
Proceeds from exercise of stock options and warrants 495 125
Payments to reacquire common stock (556) -
Cash dividends declared (757) (443)
Net proceeds (repayments) in FHLB advances 15,324 (11,650)
Net proceeds from issuance of capital debt securities 8,816 -
Net increase in demand deposits,
NOW accounts and savings accounts 2,542 4,035
Net increase in certificates of deposit 31,278 27,633
------- -------
Net cash provided by financing activities 57,142 19,700
Increase in cash and cash equivalents (2,235) (573)
Cash and cash equivalents at beginning of period 8,481 13,210
------- -------
Cash and cash equivalents at end of period $6,246 $12,637
======= =======
Supplemental schedules and disclosures of cash flow information:
Cash paid for:
Interest on deposits and other borrowings $ 8,505 $ 8,592
======= =======
Schedule of noncash investment activities:
Foreclosed real estate $ (590) ($1,359)
======= =======
</TABLE>
See notes to consolidated financial statements.
6
<PAGE>
RESOURCE BANKSHARES CORPORATION
Notes to Consolidated Financial Statements
September 30, 1999
(UNAUDITED)
(Dollars in thousands, except per share data)
Organization and Summary of Significant Accounting Policies
(1) GENERAL
Resource Bankshares Corporation, a Virginia Corporation (the
"Company"), was incorporated under the laws of the Commonwealth of Virginia on
February 4, 1998, primarily to serve as a holding company for Resource Bank (the
"Bank").
(2) CASH AND CASH EQUIVALENTS
For purposes of reporting cash flows, cash and cash equivalents include
cash and due from banks, interest-bearing deposits with banks, money market
accounts, and federal funds sold.
(3) SECURITIES
Effective April 1, 1999 the Company adopted early election of Financial
Accounting Standards Board Statement No. 133, "Accounting for Derivative
Instruments and Hedging Transactions". Pursuant to the provisions of this
Statement, which allows for a reassessment of intent with respect to the
investment portfolio, management has elected to transfer securities with a fair
value of $11,255 at the time of transfer (original cost - $11,357) from
available-for-sale classification to the held-to-maturity classification as of
April 1, 1999. The amortized costs, gross unrealized gains, gross unrealized
losses, and fair values for securities at September 30, 1999, are shown in the
following table.
<TABLE>
<CAPTION>
Gross Gross
Available-for-Sale: Amortized Costs Unrealized Gains Unrealized Losses Fair Values
- --------------------------------- ----------------- ---------------------- ----------------------- -----------------
<S> <C>
U.S. Government Agencies $4,937 $ 20 $ 17 $4,940
Corporate Securities 427 -- 64 363
Other Securities 1,509 -- 39 1,470
- --------------------------------- ----------------- ---------------------- ----------------------- -----------------
TOTALS $6,873 $20 $120 $6,773
- --------------------------------- ----------------- ---------------------- ----------------------- -----------------
</TABLE>
<TABLE>
<CAPTION>
Gross Gross
Held-to-Maturity: Amortized Costs Unrealized Gains Unrealized Losses Fair Values
- --------------------------------- ----------------- ---------------------- ----------------------- -----------------
<S> <C>
U.S. Government and agency
securities $ 152 $2 $ -- $154
Municipal securities 746 5 -- 751
Corporate Securities 14,648 -- 1,243 13,405
- --------------------------------- ----------------- ---------------------- ----------------------- -----------------
TOTALS $15,546 $7 $1,243 $14,310
- --------------------------------- ----------------- ---------------------- ----------------------- -----------------
</TABLE>
-7-
<PAGE>
(4) ALLOWANCE FOR LOAN LOSSES
Changes in the allowance for loan losses are as follows:
Balance as of January 1, 1999 $2,500
Provision for loan losses 4,667
Loans charged off (3,448)
Recoveries 4
------
Balance at September 30, 1999 $3,723
======
(5) NET INCOME PER SHARE
Basic EPS excludes dilution and is computed by dividing income available to
common shareholders by the weighted-average number of shares outstanding for the
period. Diluted EPS reflects the potential dilution that could occur if
securities or other contracts to issue common stock were exercised, converted
into common stock or resulted in the issuance of common stock that then shares
in the earnings of the entity. The average number of basic shares outstanding
for the nine months ended September 30, 1999, and 1998 was 2,520,023 and
2,479,446, respectively. The diluted average number of shares for the nine
months ended September 30, 1999 and 1998 was 2,726,583 and 2,697,877,
respectively.
(6) COMPREHENSIVE INCOME
The Company adopted FASB Statement No. 130 Reporting Comprehensive Income,
as of January 1, 1998. Accounting principles generally require that recognized
revenue, expenses, gains and losses be included in net income. However, certain
changes in assets and liabilities, such as unrealized gains and losses on
available-for-sale securities, are reported as a separate component of
comprehensive income, and reported in the consolidated statements of
stockholders' equity. The adoption of FASB Statement No. 130 had no effect on
the Company's net income or shareholders' equity.
The components of other comprehensive income and related tax effects are as
follows:
<TABLE>
<CAPTION>
Nine months ended September 30
1999 1998
(Dollars in thousands)
<S> <C>
Unrealized holding gains (losses) arising during
the year on available-for-sale securities ($288) ($352)
Tax effect 101 119
------- -----
Net-of-tax amount ($ 187) ($233)
======= ======
</TABLE>
(7) SEGMENT REPORTING
The Company has one reportable segment, its mortgage banking operations.
This segment originates residential loans and subsequently sells them to
investors. The commercial banking and other banking operations provide a broad
range of lending and deposit services to individual and commercial customers,
including such products as construction loans, and other business financing
arrangements.
-8-
<PAGE>
The Company's reportable segment is a strategic business unit that
offers different products and services. It is managed separately because the
segment appeals to different markets and, accordingly, requires different
technology and marketing strategies.
The segment's most significant revenue and expense is non-interest
income and non-interest expense, respectively. The segments are reported below
for the periods ended September 30, 1999 and September 30, 1998. Selected
Financial Information
<TABLE>
<CAPTION>
Mortgage
Commercial Banking
and Other Operations Total
--------- ---------- -----
(Dollars in thousands)
<S> <C>
Nine Months Ended September 30, 1999
Net interest income after provision
for loan losses $1,924 $ - $ 1,924
Noninterest income 1,138 4,911 6,049
Noninterest expense (4,471) (5,465) (9,936)
------- ------ -------
Net income before income taxes ($1,409) ($554) $(1,963)
======= ====== =======
Nine Months Ended September 30, 1998
Net interest income after provision
for loan losses $6,192 $ - $6,192
Noninterest income 602 5,747 6,349
Noninterest expense (4,230) (4,772) (9,002)
------ ------ ------
Net income before income taxes $2,564 $ 975 $3,539
====== ====== ======
</TABLE>
Segment Assets
<TABLE>
<CAPTION>
Commercial Mortgage
and Other Banking Total
--------- ------- -----
(Dollars in thousands)
<S> <C>
September 30, 1999 $288,777 $1,032 $289,809
September 30, 1998 $230,658 $ 810 $231,468
</TABLE>
-9-
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
(Dollars in thousands, except per share data)
Financial Condition and Results of Operations
- ---------------------------------------------
In addition to historical information, the following discussion contains
forward looking statements that are subject to risks and uncertainties that
could cause the Company's actual results to differ materially from those
anticipated. These forward looking statements include, but are not limited to,
the effect of increasing interest rates on the Company's profitability and the
adequacy of the Company's allowance for future loan losses. Several factors,
including the local and national economy, the demand for residential mortgage
loans and the adequacy of the Company's Year 2000 compliance, may adversely
affect the Company's ability to achieve the expected results. Readers are
cautioned not to place undue reliance on these forward looking statements, which
reflect management's analysis only as of the date of this report.
The Company incurred a net loss of $2,651, or $0.97 per diluted share, for
the three months ended September 30, 1999 compared with net income of $803, or
$0.30 per diluted share, for the same period in 1998. For the nine months ended
September 30, 1999, the Company incurred a net loss of $1,274, or $0.47 per
diluted share, compared with net income of $2,300, or $0.85 per diluted share,
for the same period in 1998. The loss for the three months ended September 30,
1999 and on a year to date basis are directly attributable to a $4,667 provision
for loan loss taken in the third quarter. The provision for loan loss occurred
as a result of credit problems with a significant borrower within the Company's
asset based lending portfolio, as announced by the Company in August 1999. The
Company has decided to exit the asset based lending business, which represented
only 5% of the Company's total loan portfolio.
Without the loan loss provision and other related charges, net income would
have been $624, or $0.23 per diluted share, and $2001, or $0.73 per diluted
share, for the third quarter and first nine months of 1999, respectively.
Although earnings expectations are subject to risks and uncertainties (some of
which will be beyond the control of management), during the fourth quarter of
1999 the Company expects core earnings to be consistent with core earning trends
for the first two quarters of 1999, without giving effect to any losses or
related charges associated with the defaulted loan for which the loan loss
provision has been made.
Total assets at September 30, 1999 were $289,809, up 24.1% from $233,460 at
December 31, 1998, primarily reflecting growth in loans. The Company's loan
portfolio grew by $48,708 or 25.8% in the first nine months of 1999. The
principal components of the Company's assets at the end of the period were
$22,319 in securities, $6,246 in cash and cash equivalents, $16,381 in funds
advanced in settlement of mortgage loans and $233,507 in net loans. The
Company's lending activities are a principal source of income.
Total liabilities at September 30, 1999 were $274,299, up 27.2% from
$215,671 at December 31, 1998, with the increase almost entirely represented by
a $33,821 (16.4%) growth in deposits. Non-interest bearing deposits increased
$870 or 5.5%, while interest bearing deposits increased by $32,951 or 17.3%. The
Company's deposits are provided by individuals and businesses located within the
communities served as well as the national market. Federal funds purchased
increased from $0 at December 31, 1998 to $7,921 at September 30, 1999, and bank
borrowings increased from $7,300 at December 31, 1998 to $14,703 at September
30, 1999.
The Company raised $9,200 of additional capital in the first quarter of
1999 by issuing 368,000 Trust Preferred Securities at a price of $25.00 per
Security. The Trust Preferred Securities feature a 9.25% coupon. The Company, in
turn, purchased $5,000 of non-cumulative 9.25% Preferred Stock issued by the
Bank. This Preferred Stock qualifies as Tier 1 capital for the Bank for
regulatory purposes. Management believes that this additional Tier 1 capital
provides the Bank with an increased loans to one borrower limitation, and the
ability to continue to grow its balance sheet while maintaining its well
capitalized status. The Preferred Stock 9.25% coupon matches the coupon of the
Trust Preferred Securities.
-10-
<PAGE>
The funds generated by the Trust Preferred Securities offering were
invested in marketable securities and will also be used by the Company in its
stock repurchase program. The marketable securities are categorized as
held-to-maturity. The Company's stock repurchase program will be used to offset
the otherwise dilutive effects of stock options granted to the Company's
management as employment recruitment and retention perquisites.
Total shareholders' equity at September 30, 1999 was $15,510, compared
to $17,789 at December 31, 1998. This decline in shareholders' equity was the
result of a net loss of $1,274 for the nine months ended September 30, 1999
compared with net income of $2,300 for the comparable period in 1998. This loss
for the period was directly attributable to a provision for loan loss taken in
the third quarter of 1999 of $4,667, as discussed above.
As stated previously, the Company's loan portfolio has grown to
$237,230 at September 30, 1999 from $188,522 at December 31, 1998. As a result
of this increase in its loan portfolio, the Company's net interest income before
provision for loan loss for the three months ended September 30, 1999 was $2,382
compared to $2,086 for the comparable period in 1998.
Profitability as measured by the Company's return on average assets
(ROA) was (.64%) for the nine months ended September 30, 1999, compared to 1.27%
for the same period of 1998. A key indicator of performance, the return on
average equity (ROE) was (9.29%) and 18.73% for the nine month periods ended
September 30, 1999 and 1998, respectively.
Net interest income represents a principal source of earnings for the
Company. The first component of the Company's net interest income is it's loan
portfolio. Making sound loans that will increase the Company's net interest
margin is the first priority of management. The second component is gathering
core deposits to match and fund the loan production as cost efficiently as
possible. The Company also uses electronic funding of deposits and Federal Home
Loan Bank ("FHLB") advances to fund loan growth as an asset and liability
management tool and as a less expensive source of funds.
Net interest income, before provision for loan losses, increased by
$249 to $6,591 for the nine months ended September 30, 1999 versus $6,342 for
the same period in 1998. For the three months ended September 30, net interest
income increased by 14.2% from $2,086 in 1998 to $2,382 in 1999.
-11-
<PAGE>
Average Balances, Interest Income and Expenses, and Average Yields and Rates
The following table sets forth, for the periods indicated, information
regarding: (i) the total dollar amount of interest income of the Company from
categories of interest-bearing assets and the resultant average yield; (ii) the
total dollar amount of interest expense on interest-bearing liabilities and the
resultant average cost; (iii) net interest position; (iv) net interest income;
(v) net interest rate spread; (vi) net interest yield on interest-earning
assets; and (vii) the ratio of total interest-earning assets to total
interest-bearing liabilities. Since quarter-end balances can be distorted by
one-day fluctuations, an analysis of changes in the quarterly averages is
provided to give a better indication of balance sheet trends.
<TABLE>
<CAPTION>
Three months ended Three months ended Nine months ended
September 30, 1999 September 30, 1998 September 30, 1999
Average Yield/ Average Yield/ Average Yield/
Balance(1) Interest Rate(2) Balance(1) Interest Rate(2) Balance(1) Interest Rate(2)
-----------------------------------------------------------------------------------
<S> <C>
Assets
Interest-earning assets:
Securities $ 22,524 $ 390 6.93% $ 11,714 $ 160 5.46% $ 19,728 $ 977 6.60%
Loans (3) 230,470 4,754 8.25% 170,885 3,963 9.28% 208,968 12,970 8.28%
Interest bearing deposits 3,021 42 5.56% 22,391 318 5.68% 8,385 311 4.95%
Other interest-earning assets (4) 19,504 465 9.54% 28,974 519 7.17% 17,224 1,212 9.38%
-------- ----- ----- ------- ----- ----- ------ ----- -----
Total interest earning assets 275,519 5,651 8.20% 233,964 4,960 8.48% 254,305 15,470 8.11%
Noninterest earning assets:
Cash and due from banks 4,555 4,023 4,151
Premises and equipment 3,936 3,297 3,671
Other assets 5,272 5,025 5,038
Less: Allowance for loan losses (2,292) (2,614) (2,380)
-------- -------- -------
Total noninterest earning assets 11,471 9,731 10,480
-------- -------- ------
Total assets $286,990 $243,695 $264,785
======== ======== ========
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest bearing deposits:
Demand/Money Market Accounts $ 12,247 $ 101 3.30% $ 12,666 $ 107 3.38% $ 12,746 $ 307 3.21%
Savings 23,588 269 4.56% 19,570 224 4.58% 22,770 778 4.56%
Certificates of deposit 186,507 2,454 5.26% 166,487 2,408 5.79% 173,057 6,842 5.27%
------- ----- ----- ------- ----- ----- ------- ----- -----
Total interest bearing deposits 222,342 2,824 5.08% 198,723 2,739 5.51% 208,573 7,927 5.07%
FHLB advances and other borrowings (5) 16,389 228 5.56% 9,555 135 5.65% 11,275 468 5.53%
Capital debt securities 9,200 217 9.43% 6,965 484 9.27%
------- ----- ----- -------- ----- ---- ------- ------ -----
Total interest-bearing liabilities 247,931 3,269 5.27% 208,278 2,874 5.52% 226,813 8,879 5.22%
------- ----- ------- ----- ------- -----
Noninterest-bearing
liabilities:
Demand deposits 17,996 14,896 17,455
Other liabilities 2,355 3,593 2,114
-------- -------- -----
Total noninterest earning liabilities 20,351 18,489 19,569
-------- -------- ------
Stockholders' equity 18,708 16,928 18,403
-------- -------- ------
Total liabilities and stockholder's equity $286,990 $243,695 $264,785
======== ======== ========
Net interest income/interest rate spread (6) $2,382 2.93% $ 2,086 2.96% $6,591 2.89%
====== ==== ======= ===== ===== =====
Net interest position (7) /
Net yield on
interest-earning assets (8) $ 27,588 0.86% $ 25,686 0.89% $ 27,492 2.59%
======= ======= ======== ======= ======= ======
Ratio of average interest-earning assets to
average interest-bearing liabilities (9) 111.13% 112.33% 112.12%
======= ======= ======
</TABLE>
<TABLE>
<CAPTION>
Nine months ended
September 30, 1998
Average Yield/
Balance(1) Interest Rate (2)
--------------------------
<S> <C>
Assets
Interest-earning assets:
Securities $ 13,061 $ 563 5.75%
Loans (3) 163,435 11,268 9.19%
Interest bearing deposits 13,684 546 5.32%
Other interest-earning assets (4) 44,902 2,625 7.79%
------- ------ -----
Total interest earning assets 235,082 15,002 8.51%
Noninterest earning assets:
Cash and due from banks 2,994
Premises and equipment 3,290
Other assets 4,318
Less: Allowance for loan losses (2,612)
-------
Total noninterest earning assets 7,990
-------
Total assets $243,072
=======
Liabilities and Stockholders' Equity
Interest-bearing liabilities:
Interest bearing deposits:
Demand/Money Market Accounts $ 11,715 $287 3.27%
Savings 19,919 682 4.57%
Certificates of deposit 158,046 6,827 5.76%
------- ----- -----
Total interest bearing deposits 189,680 7,796 5.48%
FHLB advances and other borrowings (5) 20,108 864 5.73%
Capital debt securities - - -
------- ----- -----
Total interest-bearing liabilities 209,788 8,660 5.50%
------- -----
Noninterest-bearing liabilities:
Demand deposits 13,870
Other liabilities 2,906
--------
Total noninterest earning liabilities 16,776
--------
Stockholders' equity 16,508
--------
Total liabilities and stockholder's equity $243,072
========
Net interest income/interest rate spread (6) $6,342 3.00%
====== =====
Net interest position (7) /
Net yield on
interest-earning assets (8) $25,294 2.70%
======= =======
Ratio of average interest-earning assets to
average interest-bearing liabilities (9) 112.06%
=======
</TABLE>
<PAGE>
(1) Average balances are computed on daily balances.
(2) Yield and rate percentages are all computed through the annualization of
interest income and expenses versus the average balances of their
respective accounts.
(3) Non-accrual loans are included in the average loan balances, and income on
such loans is recognized on a cash basis.
(4) Consists of funds advanced in settlement on loans.
(5) Consists of FHLB advances and federal funds purchased.
(6) Represents the difference between the average yield earned on
interest-earning assets and the average rate paid on interest- bearing
liabilities.
(7) Equals total interest-earning assets minus total interest-bearing
liabilities.
(8) Equals net interest income divided by average interest-earning assets.
(9) Equals average interest-earning assets divided by average interest-bearing
liabilities.
-12-
<PAGE>
Non-interest income declined from $6,349 for the nine months ended
September 30, 1998 to $6,049 for the same period in 1999. This decrease was
primarily attributable to reduced loan refinancing activity in the Company's
mortgage banking operations. Due to recent increases in market interest rates,
the Company is likely to continue to experience significant reductions in
mortgage loan refinancings in future periods, which in turn will continue to
adversely impact the Company's noninterest income. These interest rate
increases, or any further increases in the future, will also adversely impact
the Company's ability to generate noninterest income from new mortgage loan
originations because higher interest rates tend to reduce the overall volume of
the home mortgage market. For the nine months ended September 30, 1999, mortgage
banking income declined by 15.1% to $4,878 versus $5,744 for the same period of
1998. Mortgage banking continues to be a key element of the Company's
operations. Because of the uncertainty of future loan origination volume and the
future level of interest rates, the Company may continue to experience declines
in mortgage banking income in future periods. Other non-interest income,
consisting mostly of service charges, and a gain on sale of loans in early 1999,
increased by $566 to $1,171 for the nine months ending September 30, 1999
compared to the same period in 1998.
For the nine months ended September 30, 1999, the Company's non-interest
expense totaled $9,936 or 10.4% greater than the same period in 1998. This
increase in expenses was primarily due to expansion of the Company's office
locations in the Hampton Roads area. The largest component of non-interest
expense, salaries and employee benefits, which represents 51.7% of total
non-interest expense, decreased 2.3% to $5,139 for the nine months ended
September 30, 1999 over the same period in 1998. Occupancy expense increased by
7.9% to $875, depreciation and equipment maintenance increased by 11.4% to $646,
office supplies expense increased by 15.3% to $264, marketing and business
development increased 23.6% to $325, and outside computer services decreased
(due to one-time expenses incurred in 1998 in connection with a system
conversion) by 16.4% to $367 for the nine months ended September 30, 1999 over
the same period in 1998. Other expenses increased by 61.5%, to $2,088 for the
nine months ended September 30, 1999 over the same period in 1998.
In establishing the allowance for loan losses, management considers a
number of factors, including loan asset quality, related collateral and economic
conditions prevailing during the loan's repayment. In its loan policies,
management emphasizes the borrower's ability to service the debt, the borrower's
general creditworthiness and the quality of collateral. The allowance for loan
losses as a percentage of quarter-end loans at September 30 was 1.6% and 1.4%
for 1999 and 1998, respectively. The provisions for loan losses were $4,667 and
$150 for the nine months ended September 30, 1999 and 1998, respectively. This
significant increase in the provision for loan loss in the third quarter of 1999
over the same period in the previous year was the result of the previously noted
credit problems encountered within the Company's asset based lending program.
Such credit quality problems were exclusively related to this business unit, and
the Company has, as a result, decided to exit this market segment.
While the Company believes it has sufficient allowance for its existing
loan portfolio, there can be no assurances that an additional allowance for
losses on existing loans may not be necessary in the future, particularly if the
economy worsens. Management believes that losses on these assets, if any, will
be minimal, although no assurance can be given in this regard. Loans are
generally placed in nonaccrual status when the collection of principal and
interest is 90 days or more past due, unless the obligation is both well-secured
and in the process of collection.
-13-
<PAGE>
Non Performing Assets
The following table presents the Company's non performing assets for the periods
set forth below.
<TABLE>
<CAPTION>
September 30 December 31
1999 1998
----- ----
(Dollars in thousands)
<S> <C>
Non accrual loans $ 1,586 $ 533
Other real estate 186 647
Loans 90 days or more past due and still accruing interest 700 412
-------- --------
Total non performing assets $ 2,472 $ 1,592
======== ========
Total assets $289,809 $233,460
======== ========
Total non performing assets to total assets 0.85% 0.68%
======== ========
</TABLE>
-14-
<PAGE>
Summary of Loan Loss Experience
The following table presents the Company's loan loss experience and selected
loan loss ratios for the nine months ended September 30, 1999 and 1998.
<TABLE>
<CAPTION>
Nine months ended September 30
1999 1998
(Dollars in thousands)
Balance of allowance for loan losses
at beginning of year $ 2,500 $ 2,573
Loans charged-off:
Commercial (3,358) (89)
Installment (4) (5)
Real Estate (84) (141)
Credit Cards and Other Consumer (2) (8)
-------- --------
Total loans charged-off (3,448) (243)
-------- --------
Recoveries of loans previously charged off:
Commercial 1 1
Installment 1 3
Real Estate - 35
Credit Cards and Other Consumer 2 20
-------- --------
Total recoveries 4 59
-------- --------
Net loans charged-off (3,444) (184)
Additions to allowance charged
to expense 4,667 150
-------- --------
Balance at end of quarter $ 3,723 $ 2,539
======== ========
Average loans $239,049 $163,435
Loans at end of period $237,230 $176,790
Selected Loan Loss Ratios:
Net charge-off during the period to average loans 1.44% 0.11%
Provision for loan losses to average loans 1.95% 0.09%
Provision for loan losses to net charge-offs during
the period 136% 82%
Allowance for loan losses to loans at end of period 1.57% 1.44%
Non-performing assets at end of period $ 2,472 $ 2,402
Non-performing assets to total loans at
end of period 1.04% 1.36%
Allowance for loan losses to non-performing assets
at end of period 151% 106%
-15-
<PAGE>
Interest Rate Sensitivity
Management evaluates interest sensitivity through the use of an
asset/liability management reporting gap model on a quarterly basis and then
formulates strategies regarding asset generation and pricing, funding sources
and pricing, and off-balance sheet commitments in order to decrease sensitivity
risk. These strategies are based on management's outlook regarding interest rate
movements, the state of the regional and national economies and other financial
and business risk factors. In addition, the Company establishes prices for
deposits and loans based on local market conditions and manages its securities
portfolio under policies that take interest risk into account.
Liquidity represents the institution's ability to meet present and
future financial obligations. Liquid assets include cash, interest bearing
deposits with banks, money market accounts, federal funds sold, investments and
loans maturing within one year. The Company's funding requirements are supplied
from a range of traditional sources, including various types of demand deposits,
money market accounts, certificates of deposit and short-term borrowings.
Federal Home Loan Bank ("FHLB") advances are utilized as funding sources by the
Company. At September 30, 1999, there were $14,703 in FHLB advances outstanding.
The Company has a warehouse line of credit collateralized by first mortgage
loans amounting to $50,000, which expires December 2, 1999. The Company has no
reason to believe this arrangement will not be renewed although no assurance can
be given in this regard. The Company had no outstanding warehouse advances at
September 30, 1999 and 1998. At September 30, 1998, $9,300 was outstanding in
FHLB advances outside of the warehouse line.
The Company also had purchased Federal Funds in the amount of $7,921
and $0 at September 30, 1999 and 1998, respectively. The Company has lines of
credit with other correspondent banks of $11,509 and $2,000.
Management seeks to ensure adequate liquidity to fund loans and meet
the Company's financial requirements and opportunities. To provide liquidity for
current, ongoing and unanticipated needs, the Company maintains short-term
interest bearing certificates of deposits, federal funds sold, and a portfolio
of debt securities. The Company also structures and monitors the flow of funds
from debt securities and from maturing loans. As securities are generally
purchased to provide a source of liquidity, most are classified as securities
available-for-sale when purchased. Unrealized holding gains and losses for
available-for-sale securities are excluded from earnings and reported as a net
amount in a separate component of stockholders' equity until realized.
Securities are composed primarily of governmental or quasi-governmental
agencies.
The Company's financial position at September 30, 1999 reflects
liquidity and capital levels that management believes are currently adequate to
fund anticipated future business expansion. Capital ratios are in excess of
required regulatory minimums for a well capitalized institution. The assessment
of capital adequacy depends on a number of factors such as asset quality,
liquidity, earnings performance, and changing competitive conditions and
economic forces. The adequacy of the Company's capital is reviewed by management
on an ongoing basis. Management seeks to maintain a capital structure that will
assure an adequate level of capital to support anticipated asset growth and to
absorb potential losses.
-16-
<PAGE>
The following table presents the amounts of the Company's interest
sensitive assets and liabilities that mature or reprice in the periods
indicated.
September 30, 1999
Maturing
--------------------------------------------------------------------------
Within 4-12 1-5 Over
------ ------- ----- -------
3 months Months Years 5 Years Total
-------- ------ ----- ------- -----
(Dollars in thousands)
<S> <C>
Interest-Earning Assets:
Investment securities $ 2,137 $ 3,077 $ 1,525 $ 15,580 $ 22,319
Loans 139,668 17,369 50,992 29,201 237,230
Interest bearing deposits 2,788 - - - 2,788
Other interest-earning assets 16,381 - - - 16,381
-------- -------- -------- -------- --------
Total interest-earning assets 160,974 20,446 52,517 44,781 278,718
-------- -------- -------- -------- --------
Interest-Bearing Liabilities:
Deposits
Demand and savings (1) $ 34,275 - $ 34,275
Time deposits, $100,000 and over 3,462 7,008 1,288 - 11,758
Other time deposits 53,976 110,435 12,943 - 177,354
Other interest-bearing liabilities 17,324 - 300 5,000 22,624
Capital debt securities - - - 9,200 9,200
-------- --------- -------- -------- --------
Total interest-earning liabilities 74,762 117,443 48,806 14,200 255,211
-------- --------- -------- -------- --------
Period Gap $ 86,212 $ (96,997) $ 3,711 $ 30,581 $ 23,507
-------- --------- -------- -------- --------
Cumulative Gap $ 86,212 $ (10,785) $(7,074) $ 23,507
-------- --------- -------- --------
Ratio cumulative gap total
interest-earning assets 30.93% -3.87% -2.54% 8.43%
</TABLE>
(1) Management has determined that interest checking, money market and savings
accounts are not sensitive to changes in related market ratio and, therefore, we
have placed them in the 1-5 years category.
Regulatory capital adequacy standards are based on an established
minimum for Tier 1 Risk-Based Capital, Risk-Based Capital and the Tier 1
Leverage Ratio. The following table summarizes regulatory capital ratios for the
Company and the Bank at September 30, 1999.
Resource Resource
Required Ratio Bankshares Bank
-------------- ---------- --------
Tier 1 risk-based 4.00% 8.44% 8.18%
Total risk-based 8.00% 11.32% 9.43%
Tier 1 Leverage 4.00-5.00% 7.23% 7.21%
The Company and the Bank are in full compliance with all relevant
regulatory capital requirements.
The effect of changing prices on financial institutions is typically
different from other industries as the Company's assets and liabilities are
monetary in nature. Interest rates are significantly impacted by inflation, but
neither the timing nor the magnitude of the changes are directly related to
price level indices. Impacts of inflation on interest rates, loan demand and
-17-
<PAGE>
deposits are reflected in the Company's financial statements. Management
believes that the mortgage banking operations provide somewhat of a natural
interest rate hedge, in that the Company is interest rate sensitive in the
six-month period. When interest rates decline, the Company's earnings will be
negatively impacted in the six-month period but the mortgage operation's volume
should increase. The reverse should occur in rising interest rate markets.
Year 2000 Compliance
- --------------------
The ability of the Company's computers, software and other equipment
utilizing microprocessors to recognize and properly process data fields
containing a 2-digit year after 1999 is commonly referred to as the "Year 2000"
issue. The Year 2000 issue is the result of computer programs and equipment
which are dependent on "embedded chip technology" using two digits rather than
four to define the applicable year. Any of the Company's computer programs or
equipment that are date dependent may recognize a date using "00" as the year
1900 rather than the year 2000. This could result in a system failure or
miscalculations causing disruptions of operations, or a temporary inability to
process transactions, or otherwise engage in similar normal business activities.
The Company adopted a five phase plan of action developed by the
Federal Financial Institutions Examination Council ("FFIEC") to address Year
2000 issues and created an in-house committee to manage the Y2K project. During
phase one, "awareness," the Company developed an overall strategy and timetable
for the completion of all Year 2000 requirements. Phase two, "assessment,"
involved analyzing, prioritizing and putting all internal systems, both
information technology (IT) and non-IT systems, on track for Year 2000
compliance according to the timetable established in the awareness phase. The
Company has no proprietary or in-house developed systems or software, so non-IT
systems are limited to infrastructure and communications. During the third
phase, "renovation," necessary upgrades or replacements were ordered for
hardware and software. In addition, each of the Company's vendors was contacted
regarding their Year 2000 progress.
The fourth phase, "validation,"included the evaluation of vendor
testing and live testing when possible. Since the Company has no legacy systems,
most of the testing was by proxy, where the vendor supplied testing scripts and
results and the Company evaluated both to determine that the testing was
adequate and that the results were as expected and satisfactory. The Company
changed data processors in late 1997 and is served by a Service Bureau which
houses and maintains all hardware, software and backups applicable to updating
and maintaining the Company's customer and financial records. Because this is
the area of greatest risk to the Company with regard to Year 2000 issues, this
arrangement meant the Company must carefully oversee the efforts of the vendor
to ensure Year 2000 compliance was complete and timely. The data processor has
renovated and tested its systems and has supplied a series of test scripts and
results for each application, as well as hardware, software and operating
systems. The Company's in-house Year 2000 committee has reviewed each phase of
the data processor's testing and documented the results, which were then
reported to and ratified by the Company's Board of Directors. The Company will
continue testing and validation throughout the remainder of 1999 to ensure the
continuing reliability of its systems. Phases one through four are complete.
The final phase, "implementation," will occur at the turn of the
century with the readiness to execute contingency plans if necessary. The
Company's Contingency Plan is complete and has been tested by every work group
involved in doing the Company's business. Contingency plans include alternatives
for each critical system, which should allow business to continue with little or
no interruption past the turn of the century. These alternatives are being
subjected to the same process as the Company's primary service providers.
Additionally, the contingency plans include performing tasks manually if
necessary, until the appropriate applications are operational.
-18-
<PAGE>
In addition to verifying its internal and vendor supplied systems, the
Company has provided compliance certification questionnaires to its customers in
order to determine their ability to be Year 2000 compliant. Each borrower is
assigned a credit risk rating based on the questionnaire and the Company's
knowledge of the borrower. If a customer does not respond to the questionnaire
or if its response does not provide the Company with adequate assurance that
such customer's failure to be Year 2000 compliant would not have a material
adverse effect on the Company, the Company is entitled to take steps to
terminate its relationship with the customer before December 31, 1999. Year 2000
compliance is a part of the review process for new loans, which maintains the
integrity of the Company's commercial loan portfolio on an ongoing basis. Each
month, the Company's Board of Directors receives a commercial loan portfolio
Year 2000 Credit Risk Analysis.
Costs to date directly attributable to the Year 2000 project have not
been substantial due to the fact that the change in data processors and the
acquisition of a bank in late 1997 required a complete upgrade of all desktop
computer systems and servers. Year 2000 compliance was an important part of all
purchases and management believes that any known issues were corrected. The Year
2000 progress of all data processing companies is being monitored by outside
auditors and regulators and the Company receives regular reports regarding the
progress. Costs to date total $80 thousand; however, testing by outside vendors
may exceed $100 thousand based on best estimates available to date. Management
anticipates that these funds will be financed internally.
Because the Company had a detailed Business Continuation Plan before
the Year 2000 plan began, various potential business interruptions and
alternatives were already documented which would permit a short term continuance
as long as the data processor preserves the ability to update records. Loss of
the data processor is the greatest risk to the Company. The Year 2000 progress
of all data processing companies is being monitored by outside auditors and
regulators and the Company receives regular reports regarding the progress.
While a change of data processors would be time consuming, the Company's
contingency plans include alternatives for each critical system, as well as
plans to perform tasks manually if necessary, until appropriate applications are
operational.
The Company's Year 2000 readiness is subject to supervision by the
Federal Reserve System through examination for compliance with the guidance
issued by the FFIEC. Should the Company's readiness be found deficient it could
be subject to informal enforcement actions such as written notification of
deficiencies to be remediated, or formal enforcement actions such as civil
penalties, temporary cease and desist orders requiring immediate corrective
actions, and the possible public release of any such cease and desist order.
If the Company and its customers, suppliers and vendors were not Year
2000 compliant by January 1, 2000, the most reasonably likely worst case
scenario would be a temporary shutdown of operations. Any such shutdown could
have a material adverse effect on the Company's results of operations, liquidity
and financial position.
Item 3. Quantitative and Qualitative Disclosures about Market Risk
Not applicable.
PART II OTHER INFORMATION
Item 1. Legal Proceedings
On November 5, 1999, AGM Development Corporation ("AGM"), Michael Agnew
and Barbara M. Agnew (collectively the "Agnews") (AGM and the Agnews
collectively the "Plaintiffs") filed a lawsuit against Resource Bank, the
Company's wholly owned banking subsidiary ("Bank"), in the Circuit Court for the
City of Virginia Beach, Virginia ("Court"). AGM and the Angews are the borrowers
and guarantors under certain loans which the Bank declared in default in August
1999 ("Defaulted Loans"). For a detailed discussion of this loan default, see
"Part I. Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations."
The lawsuit alleges that the Bank did not act in a commercially
reasonable manner when it seized and attempted to liquidate certain collateral
that secured the Defaulted Loans. In connection with this allegation, the
Plaintiffs are seeking a declaratory judgment that all obligations of the
Plaintiffs to the Bank have been satisfied and that the Bank is not entitled to
seek deficiency judgments against the Plaintiffs. Based on advice of counsel,
management does not believe that the relief sought by the Plaintiffs will be
granted by the Court.
The lawsuit also alleges that the Bank's proposed public auction of the
stock of a privately held company was not commercially reasonable. The stock was
owned by the Agnews individually, but was pledged by the Agnews to the Bank as
collateral for the Defaulted Loans. The lawsuit asked the Court to enjoin the
public auction that was scheduled on November 9, 1999. No injunction has been
granted. The public auction occurred as scheduled on November 9, 1999 and the
Bank bid for and purchased the stock on that date. Based on advice of counsel,
management believes that the public auction was conducted in accordance with
applicable law.
The Company and the Bank intend to vigorously defend all allegations
made by the Plaintiffs in the lawsuit. The Company does not believe that the
lawsuit will have a material adverse effect on the Company's business, financial
condition or results of operations
-19-
<PAGE>
Item 6. Exhibits And Reports on Form 8-K
(a) The registrant includes herein the following exhibits.
Exhibit No. Description
27 Financial Data Schedule
-20-
<PAGE>
SIGNATURES
In accordance with the requirements of the Exchange Act, the
registrant caused this report to be signed on its behalf by the under-signed,
thereunto duly authorized.
RESOURCE BANKSHARES CORPORATION
/s/ Lawrence N. Smith
---------------------------------
Lawrence N. Smith
President & Chief Executive Officer
Date: November 15, 1999
/s/ Eleanor J. Whitehurst
---------------------------------
Eleanor J. Whitehurst
Senior Vice President & Chief Financial Officer
Date: November 15, 1999
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-START> JAN-01-1999
<PERIOD-END> SEP-30-1999
<CASH> 3,458
<INT-BEARING-DEPOSITS> 2,788
<FED-FUNDS-SOLD> 0
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 6,773
<INVESTMENTS-CARRYING> 15,546
<INVESTMENTS-MARKET> 14,310
<LOANS> 237,230
<ALLOWANCE> 3,723
<TOTAL-ASSETS> 289,809
<DEPOSITS> 240,040
<SHORT-TERM> 17,324
<LIABILITIES-OTHER> 2,435
<LONG-TERM> 14,500
0
0
<COMMON> 3,803
<OTHER-SE> 11,707
<TOTAL-LIABILITIES-AND-EQUITY> 289,809
<INTEREST-LOAN> 12,970
<INTEREST-INVEST> 977
<INTEREST-OTHER> 1,523
<INTEREST-TOTAL> 15,470
<INTEREST-DEPOSIT> 7,927
<INTEREST-EXPENSE> 8,879
<INTEREST-INCOME-NET> 6,591
<LOAN-LOSSES> 4,667
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 9,936
<INCOME-PRETAX> (1,963)
<INCOME-PRE-EXTRAORDINARY> (1,963)
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (1,274)
<EPS-BASIC> (0.51)
<EPS-DILUTED> (0.47)
<YIELD-ACTUAL> 2.93
<LOANS-NON> 1,586
<LOANS-PAST> 700
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 1,202
<ALLOWANCE-OPEN> 2,500
<CHARGE-OFFS> 3,448
<RECOVERIES> 4
<ALLOWANCE-CLOSE> 3,723
<ALLOWANCE-DOMESTIC> 3,723
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
