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: DECEMBER 31, 1999
-------------------
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: 000-25439
TROY FINANCIAL CORPORATION
------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 16-1559508
- --------------------------------- -------------------
(State or other jurisdiction (I.R.S. Employer
of incorporation or organization) Identification No.)
32 Second Street, Troy, New York 12180
----------------------------------------------------
(Address of principal executive offices)(Zip Code)
(518)270-3313
----------------------------------------------------
(Registrant's telephone number, including area code)
not applicable
----------------------------------------------------
(Former name, former address and former fiscal
year, if changed since last report)
Indicate by check 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: AS OF FEBRUARY 10, 2000:
11,438,086 SHARES OF COMMON STOCK, PAR VALUE $.0001 PER SHARE.
<PAGE>
INDEX
PART I - FINANCIAL INFORMATION
PAGE
Item 1: Financial Statements
Consolidated Statements of Condition, December 31,
1999 (unaudited) and September 30, 1999 .............. 1
Consolidated Statements of Income, Three Months
Ended December 31, 1999 and 1998 (unaudited) ......... 2
Consolidated Statements of Cash Flows, Three Months
Ended December 31, 1999 and 1998 (unaudited) ......... 3
Consolidated Statements of Changes in
Shareholders' Equity, Three Months
Ended December 31, 1999 and 1998 (unaudited) ......... 4
Notes to Unaudited Consolidated Interim
Financial Statements ................................. 5
Item 2: Management's Discussion and Analysis of
Financial Condition and Results of Operations ............. 6
Item 3: Quantitative and Qualitative Disclosures About Market Risk ... 7
PART II - OTHER INFORMATION
Items 1-6..................................................... II-1
Signature page................................................ II-2
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1 - FINANCIAL STATEMENTS
<PAGE>
TROY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CONDITION
<TABLE>
<CAPTION>
DECEMBER 31, 1999 SEPTEMBER 30, 1999
----------------- ------------------
ASSETS (IN THOUSANDS, EXCEPT SHARE DATA)
------ (Unaudited)
<S> <C> <C>
Cash & due from banks $ 39,928 $ 35,885
Federal funds sold 3,741 50
-------- --------
Total cash and cash equivalents 43,669 35,935
Loans held for sale 1,922 4,064
Securities available for sale, at fair value 246,435 280,871
Investment securities held to maturity ( fair value of $2,486 and $2,582
at December 31, 1999 and September 30, 1999, respectively) 2,486 2,534
Net loans receivable 580,955 556,142
Accrued interest receivable 4,938 5,270
Other real estate owned 2,783 1,845
Premises & equipment, net 15,793 15,049
Other assets 15,824 13,386
-------- --------
Total assets $914,805 $915,096
-------- --------
LIABILITIES AND SHAREHOLDERS' EQUITY
Liabilities:
Deposits:
Savings accounts 188,006 191,968
Money market accounts 18,089 20,348
N.O.W. and demand accounts 130,288 123,345
Time accounts 220,876 227,712
-------- --------
Total deposits 557,259 563,373
Mortgagors' escrow accounts 3,951 1,596
Securities sold under agreements to repurchase 93,933 3,736
Short-term borrowings 25,000 100,700
Long-term debt 44,382 44,497
Accrued interest payable 646 487
Official bank checks 8,381 9,651
Contributions payable 2,718 2,664
Other liabilities and accrued expenses 7,971 7,953
-------- --------
Total liabilities 744,241 734,657
Shareholders' Equity:
Preferred Stock, $.0001 par value; 15,000,000 shares authorized,
none issued -- --
Common Stock, $.0001 par value; 60,000,000 shares authorized,
12,139,021 issued at December 31, 1999 and September 30, 1999 1 1
Additional paid in capital 117,804 117,759
Unallocated common stock held by ESOP -9,027 -9,620
Unvested restricted stock awards -4,583 --
Treasury stock, at cost -6,488 --
Retained earnings, substantially restricted 73,837 72,699
Accumulated other comprehensive loss -980 -400
-------- --------
Total shareholders' equity 170,564 180,439
-------- --------
Total liabilities and shareholders' equity $914,805 $915,096
-------- --------
</TABLE>
See accompanying notes to unaudited consolidated interim financial statements.
1
<PAGE>
TROY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF INCOME
(Unaudited)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS
ENDED DECEMBER 31,
------------------
(IN THOUSANDS, EXCEPT PER SHARE DATA)
1999 1998
------- -------
<S> <C> <C>
Interest & dividend income:
Interest and fees on loans $11,252 $ 9,618
Securities available for sale:
Taxable 1,870 1,832
Tax exempt 701 512
------- -------
2,571 2,344
Investment securities held to maturity 50 62
Federal funds sold 171 143
------- -------
Total interest and dividend income 14,044 12,167
------- -------
Interest expense:
Deposits and escrow accounts 4,656 5,449
Short-term borrowings 602 41
Long-term debt 651 710
------- -------
Total interest expense 5,909 6,200
------- -------
Net interest income 8,135 5,967
Provision for loan losses 800 813
------- -------
Net interest income after provision for loan losses 7,335 5,154
------- -------
Non-interest income:
Service charges on deposits 261 230
Loan servicing fees 132 126
Trust service fees 202 150
Net gains from securities transactions 3 8
Net losses from mortgage loan sales -23 -12
Other income 576 121
------- -------
Total non-interest income 1,151 623
------- -------
Non-interest expense:
Compensation & employee benefits 3,088 2,732
Occupancy 465 505
Furniture, fixtures, & equipment 194 173
Computer charges 434 392
Professional, legal and other fees 409 181
Printing, postage and telephone 234 152
Other real estate owned 103 66
Contributions 72 70
Other 888 570
------- -------
Total non-interest expense 5,887 4,841
------- -------
Income before income tax expense 2,599 936
Income tax expense 719 233
------- -------
Net income $ 1,880 $ 703
------- -------
Earnings per share:
Basic $ 0.18 n/a
Diluted $ 0.18 n/a
</TABLE>
Earnings per share calculations are not applicable for periods prior to the
initial public offering on March 31, 1999.
See accompanying notes to unaudited consolidated interim financial statements.
2
<PAGE>
TROY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
<TABLE>
<CAPTION>
For the three months ended
December 31, December 31,
(in thousands, except share and per share data) 1999 1998
<S> <C> <C>
COMMON STOCK
Balance at beginning of period $ 1 --
Balance at end of period $ 1 --
ADDITIONAL PAID-IN CAPITAL
Balance at beginning of period $ 117,759 --
Adjustment for ESOP shares released for allocation 45 --
Balance at end of period $ 117,804 --
UNALLOCATED COMMON STOCK HELD BY ESOP
Balance at beginning of period $ (9,620) --
ESOP shares released for allocation 593 --
Balance at end of period $ (9,027) --
UNVESTED RESTRICTED STOCK AWARDS
Balance at beginning of period $ -- --
Grant of restricted stock awards (446,165 shares) (4,824) --
Amortization of restricted stock awards 241 --
Balance at end of period $ (4,583) --
TREASURY STOCK
Balance at beginning of period $ -- --
Purchase of treasury stock (11,447) --
Grant of restricted stock awards (446,165 shares) 4,959 --
Balance at end of period $ (6,488) --
RETAINED EARNINGS
Balance at beginning of period $ 72,699 $ 70,622
Net income $ 1,880 $ 703
Cash dividend (607)
Adjustment for grant of restricted stock awards (135)
Balance at end of period $ 73,837 $ 71,325
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS)
Balance at beginning of period $ (400) $ 407
Unrealized net holding losses on securities available for sale arising during the
period (pre-tax ($963) and ($17)) (578) (10)
Reclassification adjustment for net gains on securities available for sale
realized in net income, (pre-tax $3 and $8) (2) (5)
Other comprehensive loss $ (580) $ (15)
Comprehensive income $ 1,300 $ 688
--------- ---------
Balance at end of period $ (980) $ 392
Total shareholders' equity at December 31, $ 170,564 $ 71,717
</TABLE>
See accompanying notes to unaudited consolidated interim financial statements
3
<PAGE>
TROY FINANCIAL CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED
DECEMBER 31, 1999 DECEMBER 31, 1998
-------------------- -------------------
(in thousands)
<S> <C> <C>
INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS: CASH FLOWS FROM OPERATING
ACTIVITIES:
Net income 1,880 703
Adjustments to reconcile net income to net cash provided by (used in)
operating activities:
Depreciation and amortization 319 330
Provision for loan losses 800 813
Amortization of restricted stock awards 241 --
ESOP compensation expense 638 --
Net accretion of premium/discount on securities (362) (819)
Net gains from securities transactions (3) (8)
Net gain from mortgage loan sales 23 12
Net gain on sale of other real estate owned (28) --
Writedowns of other real estate owned 13 17
Proceeds from sales of loans held for sale 5,842 15,870
Net loans made to customers and held for sale (3,723) (15,565)
Decrease in accrued interest receivable 332 123
Increase in other assets (2,054) (404)
Increase in accrued interest payable 159 300
Decrease in official bank checks, contributions payable,
accrued expenses and other liabilities (1,198) (1,961)
------- -------
Total adjustments 1,328 (1,292)
------- -------
Net cash provided by (used in) operating activities 2,879 (589)
------- -------
CASH FLOWS FROM INVESTING ACTIVITIES:
Proceeds from sale of securities available for sale 18,493 --
Proceeds from maturity and paydown of securities AFS 142,242 67,955
Purchases of securities available for sale (126,898) (67,555)
Proceeds from maturity of investment securities 48 632
Proceeds from sale of other real estate owned 2,458 97
Net loans made to customers (28,994) (22,799)
Capital expenditures (1,063) (1,222)
Net cash provided by (used in) investing activities 6,286 (22,892)
------- -------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net (decrease) increase in deposits (6,114) 10,291
Increase in mortgagors' escrow accounts 2,355 1,839
Net increase in securities sold under agreements to repurchase 90,197 1,329
Net decrease (increase ) in short term borrowings (75,700) 9,700
Payments on long term debt (115) (109)
Cash dividends paid (607) --
Purchase of treasury stock (11,447) --
------- -------
Net cash (used in) provided by financing activities (1,431) 23,050
------- -------
Net increase (decrease) in cash and cash equivalents 7,734 (431)
------- -------
Cash and cash equivalents at beginning of period 35,935 17,915
------- -------
Cash and cash equivalents at end of period 43,669 17,484
------- -------
SUPPLEMENTAL INFORMATION
CASH PAID FOR:
Interest on deposits and borrowings 5,750 5,900
Income taxes 105 50
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Net reduction in loans resulting from the transfer to other real estated 3,381 86
Adjustment of securities available for sale to fair value, net of tax (580) (15)
Grant of restricted stock awards 4,824 --
</TABLE>
See accompanying notes to unaudited consolidated interim financial statements
4
<PAGE>
Notes to Unaudited Consolidated
Interim Financial Statements
Note 1. Basis of Presentation
The unaudited consolidated interim financial statements include the accounts of
Troy Financial Corporation (the "Company") and its wholly owned subsidiary, The
Troy Savings Bank (the "Bank"), and the Bank's subsidiaries. The Company became
the bank holding company of the Bank on March 31, 1999. Accordingly, all
financial data as of and for periods prior to such date are the consolidated
data of the Bank and its subsidiaries. The September 30, 1999 data in the
Consolidated Statements of Condition is derived from the Company's audited
consolidated financial statements. All intercompany accounts and transactions
have been eliminated in consolidation. The unaudited consolidated interim
financial statements reflect all adjustments of a normal recurring nature which
are necessary for a fair presentation of the results for the interim periods
presented and should be read in conjunction with the consolidated financial
statements and related notes included in the Company's annual report on Form
10-K as of and for the year ended September 30, 1999. The results of operations
for the interim periods are not necessarily indicative of the results of
operations to be expected for the full fiscal year ended September 30, 2000.
Reclasses are made whenever necessary to conform to the current year
presentation.
Note 2. Earnings Per Share
Basic earnings per share is calculated by dividing net income by the weighted
average number of common shares outstanding during the period. Shares of
restricted stock are not considered outstanding for the calculation of basic
earnings per share until they become fully vested. Diluted earnings per share is
calculated in a manner similar to basic earnings per share except that the
weighted-average number of common shares outstanding is increased to include the
number of additional common shares that would have been outstanding if all
potentially dilutive common shares ( such as stock options and unvested
restricted stock ) were issued during the reporting period. Unallocated common
shares held by the ESOP are not included in the weighted-average number of
common shares outstanding for either the basic or diluted earnings per share
calculations.
The following table sets forth certain information regarding the calculation of
basic and diluted earnings per share for the three month period ended December
31, 1999:
For the Three Months Ended
December 31, 1999
( in thousands, except share and per share data )
<TABLE>
<CAPTION>
Weighted Per
Net Average Share
Income Shares Amount
------ ------ ------
<S> <C> <C> <C>
Basic earnings per share $1,880 10,709,491 $0.18
------ ---------- -----
Effect of potential common shares outstanding 9,745
-----
Diluted earnings per share $1,880 10,719,236 $0.18
------ ---------- -----
</TABLE>
5
<PAGE>
Note 3. Comprehensive Income
Comprehensive income includes the reported net income of the Company adjusted
for items that are currently accounted for as direct entries to equity, such as
the mark to market adjustment on securities available for sale, foreign currency
items and minimum pension liability adjustments. At the Company, comprehensive
income represents net income plus other comprehensive income or loss, which
consists of the net change in unrealized gains or losses on securities available
for sale for the period. Accumulated other comprehensive income or loss
represents the net unrealized gains or losses on securities available for sale,
net of tax, as of the balance sheet dates.
Note 4. Impact of New Accounting Standards
In June 1998, FASB issued SFAS No. 133, "Accounting for Derivative Instruments
and Hedging Activities," which establishes accounting and reporting standards
for derivative instruments, including certain derivative instruments embedded in
other contracts, and for hedging activities. In May 1999, this statement was
delayed by the FASB; consequently it will now be effective for all fiscal
quarters of fiscal years beginning after June 15, 2000. Management is currently
evaluating the impact of this Statement on the Company's consolidated financial
statements.
ITEM 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL
Troy Financial Corporation (the "Company" ) was formed in December 1998 to
acquire all of the capital stock of The Troy Savings Bank (the "Bank") upon the
Bank's conversion from a New York-chartered mutual savings bank to a New
York-chartered stock savings bank. Upon the Bank's conversion on March 31, 1999,
the Company completed its initial public offering of stock, issuing 12,139,021
shares of common stock, par value $.0001 per share ("Common Stock"), including
408,446 shares contributed to The Troy Savings Bank Community Foundation ( the
"Foundation"). The Company sold 11,730,575 shares of Common Stock at a price of
$10 per share through a subscription offering to certain depositors of the Bank.
Net proceeds to the Company from the offering were $113.7 million after
conversion costs and offering costs. The Company invested approximately $57
million of the net proceeds to acquire the Bank, and the Company used $9.6
million of the net proceeds from the conversion to fund a loan to the Bank's
employee stock ownership plan (the "ESOP" ) which allowed the ESOP to purchase
971,122 shares of Common Stock in the open market. The Company's Common Stock is
traded on the NASDAQ Stock Market National Market Tier under the symbol "TRYF."
The consolidated financial condition and operating results of the Company
are primarily dependent upon its wholly owned subsidiary, the Bank, and the
Bank's subsidiaries, and all references to the Company prior to March 31, 1999,
except where otherwise indicated, are to the Bank.
The Bank is a community based, full service financial institution offering
a wide variety of business and retail banking products. The Bank and its
subsidiaries also offer a full range of trust, insurance, and investment
services. The Bank's primary sources of funds are deposits and borrowings, which
it uses to originate real estate mortgages, both residential and commercial,
commercial business loans, and consumer loans throughout its primary market area
which consists of the six New York counties of Albany, Saratoga,
Schenectady,Warren, Washington, and Rensselaer (Troy).
6
<PAGE>
The Company's profitability, like many financial institutions, is dependent
to a large extent upon its net interest income, which is the difference between
the interest it receives on interest earning assets, such as loans and
investments, and the interest it pays on interest bearing liabilities,
principally deposits and borrowings.
Results of operations are also affected by the Bank's provision for loan
losses, non- interest expenses such as salaries and employee benefits, occupancy
and other operating expenses and to a lesser extent, non-interest income such as
trust service fees, loan servicing fees and service charges on deposit accounts.
Financial institutions in general, including the Company, are significantly
affected by economic conditions, competition and the monetary and fiscal
policies of the federal government. Lending activities are influenced by the
demand for and supply of housing, competition among lenders, interest rate
conditions and funds availability. Deposit balances and cost of funds are
influenced by prevailing market rates on competing investments, customer
preferences and levels of personal income and savings in the Bank's primary
market area.
FINANCIAL CONDITION
The Company's total assets were $914.8 million at December 31, 1999, a decrease
of $291,000, or .03% from the $915.1 million at September 30, 1999. Cash and
cash equivalents were $43.7 million at December 31, 1999, an increase of $7.7
million from the $35.9 million at September 30, 1999. The increase was
principally due to the Bank's decision to hold excess cash reserves in
anticipation of an increased demand for cash by depositors in anticipation of
Year 2000 liquidity needs.
The Bank's securities available for sale portfolio was $246.4 million at
December 31, 1999, a decrease of $34.4 million, or 12.3% from the $280.9 million
as of September 30, 1999. The decrease in securities was principally due to the
continued growth in the loan portfolio, as well as the increase in cash reserves
noted above.
Total loans receivable were $592.0 million as of December 31, 1999, an increase
of $25.1 million or 4.4% over the $566.9 million as of September 30, 1999. The
following table shows the loan portfolio composition as of the respective
balance sheet dates:
<TABLE>
<CAPTION>
DECEMBER 31, 1999 SEPTEMBER 30,
1999 1999
----------------- --------------
% OF LOANS % OF LOANS
----------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Real estate loans:
Residential mortgage $223,438 37.7% $221,721 39.1%
Commercial 229,249 38.7% 216,700 38.2%
Construction 20,348 3.4% 13,761 2.4%
-------- ---------- -------- ----------
Total real estate loans 473,035 79.0% 452,182 79.7%
-------- ---------- -------- ----------
Commercial business loans 73,240 12.4% 66,274 11.7%
-------- ---------- -------- ----------
Consumer loans:
Home equity lines of credit 6,599 1.1% 6,776 1.2%
Other consumer 39,490 6.7% 42,081 7.4%
-------- ---------- -------- ----------
Total consumer loans 46,089 7.8% 48,857 8.6%
-------- ---------- -------- ----------
Gross loans 592,364 100.0% 567,313 100.0%
-------- ----------
Net deferred loan fees and costs and unearned discount (337) (407)
--------
Total loans $592,027 $566,906
-------- --------
</TABLE>
Commercial real estate loans increased $12.5 million to $229.2 million at
December 31, 1999 or 38.7% of total loans, from $216.7 million at September 30,
1999, or 38.2% of total loans. Commercial business loans increased $7.0 million
to $73.2 million or 12.4% of total loans at December 31, 1999, up from $66.3
million or 11.7% of total loans at September 30, 1999. Construction loans
increased $6.6 million to $20.3 million or 3.4% of total loans at December 31,
1999, up from $13.8 million or 2.4% of total loans at September 30, 1999. The
increase in the commercial real estate and construction loans, as well as
commercial business loans is consistent with the Company's strategy to increase
these loan portfolios as part of its emphasis on commercial banking activities.
Residential real estate loans increased $1.7 million, or .8%, as the Company
elected to hold 15 year fixed rate residential mortgages in its portfolio
instead of selling them in the secondary mortgage market.
7
<PAGE>
Non-performing assets were $9.7 million, or 1.06% of assets at December 31,
1999. The table below sets forth the amounts and categories of the Company's
non-performing assets.
<TABLE>
<CAPTION>
DECEMBER 31, SEPTEMBER 30,
1999 1999
------------------- ------------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Non-accrual loans:
Real estate loans:
Residential mortgage $ 2,324 $ 2,707
Commercial mortgage 3,765 4,210
Construction -- --
------- -------
Total real estate loans 6,089 6,917
Commercial business loans 3 10
Home equity lines of credit 70 58
Other consumer loans 126 282
------- -------
Total non-accrual loans 6,288 7,267
Troubled debt restructurings 605 616
------- -------
Total non-performing loans 6,893 7,883
Other real estate owned :
Residential real estate 407 76
Commercial real estate 2,376 1,769
------- -------
Total other real estate owned 2,783 1,845
------- -------
Total non-performing assets $ 9,676 $ 9,728
------- -------
Allowance for loan losses $11,072 $10,764
------- -------
Allowance for loan losses as a percentage of
non-performing loans 160.63% 136.55%
Non-performing loans as a percentage of
total loans 1.16% 1.39%
Non-performing assets as a percentage of
total assets 1.06% 1.06%
</TABLE>
The $1.0 million decrease in non-performing loans at December 31, 1999 as
compared to September 30, 1999 was attributable primarily to a foreclosure of a
commercial real estate loan which was transferred to other real estate owned and
subsequently sold. Other real estate owned increased by $938,000, principally
from an increase of $607,000 in foreclosed commercial real estate and an
increase of $331,000 of foreclosed residential real estate. The following table
summarizes the activity in other real estate for the periods presented:
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
1999 1998
---- ----
(IN THOUSANDS)
<S> <C> <C>
Balance at the beginning of the period $1,845 $1,872
Loans transferred to Other Real Estate 3,381 86
Sale of Other Real Estate (2,430) (97)
Write down of Other Real Estate (13) (17)
------ ------
Balance at the end of the period $2,783 $1,844
====== ======
</TABLE>
The allowance for loan losses was $11.1 million, or 1.87% of period end loans at
December 31, 1999, as compared to $10.8 million, or 1.90% of period end loans at
September 30, 1999. The allowance for loan losses as a percentage of
non-performing loans was 160.63% at December 31, 1999, as compared to 136.55% as
of September 30, 1999. There are no loans past due 90 days and still accruing at
December 31, 1999 or September 30, 1999. Even with the decrease in non-
performing loans, the provision for loan losses remained similar to the quarter
ended December 31, 1998 level due to the significant growth in the loan
portfolio, a change in the mix of the loan portfolio to loan types with higher
risk profiles, as well as an increase in net loan charge-offs. The following
table summarizes the activity in the allowance for loan losses:
<TABLE>
<CAPTION>
THREE MONTHS ENDED DECEMBER 31,
1999 1998
---- ----
(IN THOUSANDS)
<S> <C> <C>
Allowance at the beginning of the period $10,764 $ 8,260
Charge-offs (527) (139)
Recoveries 35 73
------- -------
Net charge-offs (492) (66)
Provision for loan losses 800 813
------- -------
Allowance at end of the period $11,072 $ 9,007
------- -------
</TABLE>
8
<PAGE>
Total deposits were $557.3 million at December 31, 1999, a decrease of $6.1
million, or 1.1% from the $563.4 million at September 30, 1999. The following
table shows the deposit composition as of the respective balance sheet dates:
<TABLE>
<CAPTION>
DECEMBER 31,1999 SEPTEMBER 30, 1999
---------------- ------------------
(In Thousands) % of Deposits (In Thousands) % of Deposits
<S> <C> <C> <C> <C>
Savings accounts $188,006 33.7% $191,968 34.1%
Time accounts 220,876 39.6% 227,712 40.4%
Money Market accounts 18,089 3.2% 20,348 3.6%
NOW & Super NOW accounts 90,594 16.3% 86,305 15.3%
Demand accounts 39,694 7.1% 37,040 6.6%
-------- ----- -------- -----
$557,259 100.0% $563,373 100.0%
-------- ----- -------- -----
</TABLE>
The $6.1 million decrease in deposits from September 30, 1999 is primarily
attributable to a $6.8 million decrease in time deposits, a $4.0 million
decrease in savings deposits and a $2.2 million decrease in money market
accounts, which was partially offset by a $6.9 million increase in demand
deposits. The decline in time deposit accounts is due to lower rates paid as the
Company is emphasizing growth in core deposit accounts.
The Company increased its borrowings with the FHLB, to $159.4 million at
December 31, 1999, an increase of $14.2 million from the $145.2 million at
September 30, 1999. The Company used the additional borrowings to offset the
decrease in deposits and to repurchase shares of the Company's common stock.
Shareholders' equity at December 31, 1999 was $170.6 million, a decrease of
$9.9 million or 5.5% from the $180.4 million at September 30, 1999. The decrease
was principally attributable to the repurchase of shares of common stock under
the Company's approved repurchase program, of which 446,165 shares were
purchased for the Company's Long-Term Equity Compensation Plan. Shareholders'
equity was increased by the Company's $1.9 million of net income, offset by the
$607,000 of cash dividends paid in the quarter and the $580,000 increase in in
accumulated other comprehensive loss. Shareholders' equity was increased by the
ESOP shares which were allocated as of December 31, 1999 and was also increased
by $241,000 due to the amortization of the restricted stock awards .
Shareholders' equity as a percentage of total assets was 18.64% at December 31,
1999 compared to 19.72% at September 30, 1999.
TABLE #1 AVERAGE BALANCE, INTEREST, YIELD AND RATE
The following table presents, for the periods indicated, the total dollar amount
of interest income from average interest earning assets and the resultant
yields, as well as the interest expense on average interest bearing liabilities,
expressed both in dollars and rates. Tax equivalent adjustments reflected
principally on municipal securities and commercial business loans totaled
$399,000 in the three month period ended December 31, 1999, and $247,000 for the
comparable three month period. All average balances are daily average balances.
Non-accruing loans have been included in the table as loans receivable with
interest earned recognized on a cash basis only. Securities available for sale
are shown at amortized cost
9
<PAGE>
<TABLE>
<CAPTION>
FOR THE THREE MONTHS ENDED DECEMBER 31,
-----------------------------------------------------------------
1999 1998
-------------------------------- -------------------------------
Average Interest Yield/ Average Interest Yield/
Balance Earned Rate Balance Earned Rate
-------------------------------- -------------------------------
(Dollars in Thousands)
<S> <C> <C> <C> <C> <C> <C>
INTEREST EARNING ASSETS:
Total Loans 575,745 11,257 7.82% 477,387 9,454 7.92%
Loans held for sale 2,935 57 7.77% 7,766 164 8.45%
Investment securities held to maturity 2,511 50 7.96% 3,250 62 7.63%
Securities available for sale
Taxable 119,867 1,870 6.24% 138,273 1,832 5.30%
Tax-exempt 69,875 1,038 5.94% 51,950 759 5.84%
------- ----- ------- -----
Total securities available for sale 189,742 2,908 6.13% 190,223 2,591 5.45%
Federal funds sold and other short term investments 12,341 171 5.54% 10,363 143 5.52%
------- ----- ------- -----
Total earning assets 783,274 14,443 7.38% 688,989 12,414 7.21%
INTEREST BEARING LIABILITIES:
Deposits:
NOW and Super NOW accounts 85,681 477 2.23% 78,125 429 2.20%
Money market deposit accounts 19,268 146 3.03% 17,503 134 3.06%
Savings accounts 188,228 1,343 2.85% 197,089 1,465 2.97%
Time deposits accounts 223,858 2,677 4.78% 254,325 3,410 5.36%
Escrow accounts 2,861 13 1.82% 2,266 11 1.94%
------- ----- ------- -----
Total interest-bearing deposits 519,896 4,656 3.58% 549,308 5,449 3.97%
Borrowings:
Securities sold under agreement to repurchase 3,200 25 3.13% 4,556 36 3.16%
Short-term borrowings 40,747 577 5.66% 271 5 7.38%
Long term-debt 44,412 651 5.86% 49,035 710 5.79%
------- ----- ------- -----
Total borrowings 88,359 1,253 5.67% 53,862 751 5.58%
------- ----- ------- -----
Total interest-bearing liabilities 608,255 5,909 3.89% 603,170 6,200 4.11%
Net interest spread 3.49% 3.10%
Net interest income / net interest margin 8,534 4.36% 6,214 3.61%
----- -----
Ratio of interest earning assets to
interest bearing liabilities 128.77% 114.23%
Tax equivalent adjustment 399 247
------- -------
Net interest income as per consolidated financial statements $ 8,135 $ 5,967
------- -------
</TABLE>
10
<PAGE>
COMPARISON OF OPERATING RESULTS FOR THE THREE MONTHS ENDED
DECEMBER 31, 1999 AND 1998
GENERAL
For the three months ended December 31, 1999, the Company recorded net income of
$1.9 million, an increase of $1.2 million as compared to net income of $703,000
for the three month period ended December 31, 1998. The increase was principally
the result of higher net interest income and noninterest income, which was
partially offset by higher non-interest expenses and income tax expense. The
Company's basic and diluted earnings per share were $0.18 for the three months
ended December 31, 1999.
Annualized return on average assets for the three months ended December 31, 1999
and 1998, was 0.89% and 0.39%, respectively, and the Company's annualized return
on average equity was 4.21% and 3.94%, respectively.
NET INTEREST INCOME
Net interest income on a tax equivalent basis for the three months ended
December 31, 1999, was $8.5 million, an increase of $2.3 million, or 37.3%, when
compared to the three months ended December 31, 1998. The increase was primarily
attributable to a $94.3 million increase in average interest earning assets
which more than offset the $5.1 million increase in average interest bearing
liabilities. The increase in interest earning assets was principally funded by
the net proceeds received from the initial public offering. The increase was
also a result of a $34.5 million increase in average borrowings, offset by a
$29.4 million decrease in average deposits. Net interest income was also
positively affected by the 22 basis point decrease in average cost of funds and
the 17 basis point increase in yield on average earning assets.
Interest and dividend income for the three months ended December 31, 1999 was
$14.4 million on a tax equivalent basis, an increase of $2.0 million, or 16.3%,
over the prior year. The increase was principally due to the increase in the
volume of earning assets as well as the 17 basis point increase in the average
yield on interest earning assets.
The average yield on taxable available for sale securities increased by 94 basis
points for the three months ended December 31, 1999, compared to the same period
in 1998, which more than offset the $18.4 million decrease in average balance of
taxable available for sale securities. The Company has invested primarily in
short-term government agency discount bonds providing liquidity comparable to
federal funds while still offering a yield greater than the 5.54% average yield
for federal funds sold. The average loan yield for the three months ended
December 31, 1999 was 7.82%, down 10 basis points from the same period in the
previous year, but was 169 basis points more than the 6.13% average yield on
available for sale securities. The Company has also invested in tax-exempt
municipal securities, primarily maturing within one year. The
11
<PAGE>
average tax equivalent yield on these securities for the three months ended
December 31, 1999 was 5.94%, 10 basis points higher than the yield for the same
period in 1998, and 40 basis points higher than the average yield on federal
funds sold and other short-term investments for the three months ended December
31, 1999.
Interest expense for the three months ended December 31, 1999, was $5.9 million,
a decrease of $291,000, or 4.7% over the three month period ended December 31,
1998. The change was principally due to a 22 basis point decrease in the average
cost of funds which more than offset the increase in average volume of interest
bearing liabilities. The average balance of interest bearing liabilities was
$608.3 million for the three months ended December 31, 1999, an increase of $5.1
million, or 1.0%, primarily attributable to an increase in borrowings of $34.5
million which offset a $29.4 million decrease in deposits primarily the result
of a $30.5 million decrease in time deposit accounts and a $8.9 million decrease
in savings accounts, partially offset by a $7.6 million increase in
interest-bearing checking. The average balance of FHLB borrowings was $85.2
million for the three months ended December 31, 1999, as compared to $49.3
million in the comparable three month period. The increase in short-term FHLB
advances more than offset the $30.5 million decline in time deposit accounts,
which the Company experienced as a result of the decrease in time deposits
rates.
The Company's net interest margin was 4.36% for the three months ended December
31, 1999, compared to 3.61% for the comparable three month period. The primary
cause was a $94.3 million increase in average earning assets, due primarily to
the Company's initial public offering as well as the 17 basis point increase in
the average yield on earning assets and the 22 basis point decrease in cost of
funds. The decline in cost of funds was principally caused by the decrease in
rates paid on time deposits and savings accounts which was partially offset by
the increase in the average rates paid on FHLB borrowings. The increase in the
yield on interest earning assets was caused by the investment of a substantial
portion of the offering proceeds in loans, primarily commercial real estate and
commercial business loans, with higher yields than securities or federal funds
and other short term investments.
For more information on average balances, interest, yields and rates, please
refer to Table #1, included in this report.
PROVISION FOR LOAN LOSSES
The Company establishes an allowance for loan losses through a provision for
loan losses charged to operations. The adequacy of the amount of the allowance
is determined by management's evaluation of various risk factors inherent in the
loan portfolio. This analysis takes into consideration such factors as the
historical loan loss experience, changes in the nature and volume of the loan
portfolio, overall portfolio quality, review of specific problem loans and
current economic conditions that may affect borrowers' ability to pay.
The provision for loan losses was $800,000 for the three months ended December
31, 1999, a decrease of $13,000, or 1.6% from the comparable period of the prior
year. The allowance for
12
<PAGE>
loan losses was $11.1 million, or 1.87% of period end loans at December 31,
1999, as compared to $10.8 million, or 1.90% of period end loans at September
30, 1999. The allowance for loan losses as a percentage of non-performing loans
was 160.63% at December 31, 1999 as compared to 136.55% at September 30, 1999.
Non-performing loans were $6.9 million, or 1.16% of total loans at December 31,
1999, compared to $7.9 million, or 1.39% of total loans at September 30, 1999.
Even with the decrease in non-performing loans, the provision for loan losses
remained similar to the quarter ended December 31, 1998 level due to the
significant growth in the loan portfolio, a change in the mix of the loan
portfolio to loan types with higher risk profiles, as well as an increase in net
loan charge-offs.
Commercial real estate loans and commercial business loans represent 51.1% of
the total loan portfolio at December 31, 1999 compared to 49.9% at September 30,
1999.
NON-INTEREST INCOME
Non-interest income was $1.2 million for the three months ended December 31,
1999, an increase of $528,000, or 84.8% from the three months ended December 31,
1998. The increase was principally due to the receipt of a $382,000 award from
the U.S. Government as a result of originating commercial real estate loans
which qualified under the U.S. Treasury's Bank Enterprise Award program, as well
as increases in trust service fees and service charges on deposit accounts.
Trust service fees were up $52,000, or 34.7%, as a result of a higher balance of
assets managed than in the comparable period of the prior year. Service charges
on deposit accounts were up $31,000, or 13.5%, compared to the same period of
the prior year.
NON-INTEREST EXPENSE
Non-interest expense for the three months ended December 31, 1999 was $5.9
million, an increase of $1.0 million, or 21.6%, from the same period in 1998.
Personnel expense increased by $356,000 during the three months ended December
31, 1999, as compared to the prior year due to the additional costs in the 1999
period for the ESOP and the restricted stock awards. Professional fees increased
by $228,000, or 126.0% for the three months ended December 31, 1999, over the
comparable period of the prior year, primarily caused by increased fees
associated with operating a stock form organization as compared to a mutual
savings bank. Other real estate owned expense was up $37,000, or 56.1%, for the
three months ended December 31, 1999, as compared to the same period in 1998.
The increase was principally due to higher foreclosure expenses in the three
months ended December 31, 1999, as compared to the same period in the prior
year. Other expense increased by $318,000, or 55.8%, for the three months ended
December 31, 1999, as compared to the three months ended December 31, 1998. This
increase was primarily attributable to a $97,000 increase in operating expenses
for Delaware franchise taxes as a result of being a stock form organization and
costs associated with the cash reserves maintained for Year 2000 liquidity
purposes, advertising and marketing costs related to the opening of the
Wynantskill branch, deferred compensation costs for directors, and costs
associated with servicing loans.
INCOME TAX EXPENSE
Income tax expense for the three months ended December 31, 1999, was $719,000,
as compared
13
<PAGE>
to $233,000 for the comparable period in 1998. The increase was primarily caused
by the $1.7 million increase in income before taxes for the three months ended
December 31, 1999, as compared to the same period in the prior year.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity is the ability to generate cash flows to meet present and future
financial obligations and commitments. Management monitors its liquidity
position on a daily basis to determine that the Company has adequate liquidity
to fund loan commitments, meet daily withdrawal requirements of depositors, and
meet all other daily obligations of the Company.
The primary sources of funds are deposits, borrowings, loan repayments, and
proceeds from the redemption and maturity of federal funds sold and other
short-term securities. The Company's primary cash outflows are new loan
originations, purchases of securities, deposit withdrawals, and common stock
repurchases. The Company monitors the cash outflows and inflows on a daily
basis. Although maturities and scheduled amortization of loans are a predictable
source of funds, deposit outflows, mortgage prepayments and mortgage loan sales
are greatly influenced by changes in interest rates, economic conditions, and
competitors.
The Company attempts to provide stable and flexible sources of funding through
the management of its liabilities, including core deposit products offered
through its branch network, as well as FHLB advances. Management believes that
the level of the Company's liquid assets combined with daily monitoring of cash
inflows and outflows provide adequate liquidity to fund outstanding loan
commitments, meet daily withdrawal requirements of the Company's depositors, and
meet all other daily obligations of the Company.
Consistent with its goals to operate a sound and profitable financial
organization, the Company actively seeks to maintain a "well capitalized"
institution in accordance with regulatory standards. As of December 31, 1999 and
September 30, 1999, total equity was $170.6 million and $180.4 million,
respectively, or 18.6% and 19.7% of total assets at those respective dates. The
reduction in the equity to assets ratio is consistent with the Company's
strategy to manage its capital through asset growth, dividend payments as
reflected by the $.05 per share cash dividend paid in the quarter ended December
31, 1999, and a share repurchase program. The Company has repurchased 952,100
shares of common stock in the quarter ended December 31, 1999. The Company
utilized 446,165 of these shares for awards of restricted stock under the
Company's Long-Term Equity Compensation Plan. In addition, 79,000 shares were
purchased by the Company through a deferred compensation plan maintained for
directors. The cost basis of these shares is included in treasury stock.
The following is a summary of the Company's and the Bank's actual capital
amounts and ratios at December 31, 1999, compared to the FDIC minimum capital
requirements:
<TABLE>
<CAPTION>
ACTUAL RATIO REQUIREMENTS
---------------------------- -----------------------------------
MINIMUM CLASSIFICATION
CAPITAL AS WELL
AMOUNT PERCENT ADAQUECY CAPITALIZED
------ ------- -------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C>
Leverage (Tier I) Capital:
Bank $123,984 14.65% 4.00% 5.00%
Consolidated $170,965 20.20% 4.00% 5.00%
Tier 1 Risk-based capital:
Bank $123,984 18.64% 4.00% 6.00%
Consolidated $170,965 26.19% 4.00% 6.00%
Total Risk-Based Capital:
Bank 132,299 19.89% 8.00% 10.00%
Consolidated 179,126 27.44% 8.00% 10.00%
</TABLE>
14
<PAGE>
FORWARD-LOOKING STATEMENTS
When used in this Form 10-Q or other filings by the Company with the Securities
and Exchange Commission, in the Company's press releases or other public or
shareholder communications, or in oral statements made with the approval of an
authorized executive officer, the words or phrases "will likely result", "are
expected to", "will continue", "is anticipated", "estimate",
"project","believe", or similar expressions are intended to identify
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995. In addition, certain disclosures and information
customarily provided by financial institutions, such as analysis of the adequacy
of the allowance for loan losses or an analysis of the interest rate sensitivity
of the Company's assets and liabilities, are inherently based upon predictions
of future events and circumstances. Furthermore, from time to time, the Company
may publish other forward- looking statements relating to such matters as
anticipated financial performance, business prospects, and similar matters.
The Private Securities Litigation Reform Act of 1995 provides a safe harbor for
forward-looking statements. In order to comply with the terms of the safe
harbor, the Company notes that a variety of factors could cause the Company's
actual results and experience to differ materially from the anticipated results
or other expectations expressed in the Company's forward-looking statements.
Some of the risks and uncertainties that may affect the operations, performance,
development and results of the Company's business, the interest rate sensitivity
of its assets and liabilities, and the adequacy of its allowance for loan
losses, include but are not limited to the following:
o Deterioration in local, regional, national or global economic conditions
which could result, among other things, in an increase in loan
delinquencies, a decrease in property values, or a change in the housing
turnover rate;
o the effect of certain customers and vendors of critical systems or services
failing to adequately address issues relating becoming Year 2000 compliant;
o changes in market interest rates or changes in the speed at which market
interest rates change;
o changes in laws and regulations affecting the financial service industry;
o changes in competition; and
o changes in consumer preferences.
The Company wishes to caution readers not to place undue reliance on any
forward-looking statements, which speak only as of the date made, and to advise
readers that various factors, including those described above, could affect the
Company's financial performance and could
15
<PAGE>
cause the Company's actual results or circumstances for future periods to differ
materially from those anticipated or projected.
The Company does not undertake, and specifically disclaims any obligation, to
publicly release any revisions to any forward-looking statements to reflect the
occurrence of anticipated or unanticipated events or circumstances after the
date of such statements.
ITEM 3: Quantitative and Qualitative Disclosures About Market Risk
Interest rate risk is the most significant market risk affecting the Company.
Other types of market risk, such as foreign exchange rate risk and commodity
price risk, do not arise in the normal course of the Company's business
activities.
Interest rate risk can be defined as an exposure to a movement in interest rates
that could have an adverse effect on the Company's net interest income. Interest
rate risk arises naturally from the imbalance in repricing, maturity and/or cash
flow characteristics of assets and liabilities. When interest bearing
liabilities mature or reprice on a different basis than interest earning assets
in a given period, a significant increase in market rates of interest could
adversely effect net interest income. Similarly, when interest earning assets
mature or reprice more quickly than interest bearing liabilities, a significant
decline in market rates of interest could decrease net interest income.
In an attempt to manage its exposure to changes in interest rates, management
monitors the Company's interest rate risk. Management's asset liability
management committee ('ALCO") meets at least monthly to review consolidated
balance sheet structure, formulate strategy in light of expected economic
conditions and review performance against guidelines established to control
exposure to the various types of inherent risk, and reports the interest rate
risk position to the Board of Directors on a quarterly basis. ALCO also
evaluates the overall risk profile and determines actions to maintain and
achieve a posture consistent with policy guidelines. The Company cannot predict
the future movement of interest rates, and such movement could have an adverse
impact on the Company's consolidated financial condition and results of
operations.
The Company, in order to manage its exposure to interest rate risk, has
emphasized the origination of adjustable rate mortgage loans, and to a lesser
extent commercial real estate, commercial business and consumer loans; sells
substantially all of its fixed rate residential mortgage loans in the secondary
market, although recently the Company is holding its 15-year fixed rate
residential mortgage loans in portfolio; utilizes FHLB advances to better
structure the maturities of its interest rate sensitive liabilities; and invests
in short-term securities which generally bear lower yields, compared to
longer-term investments, but which better position the Company for increases in
interest rates.
In order to reduce the interest rate risk associated with the portfolio of
conventional mortgage loans held for sale, as well as outstanding loan
commitments and uncommitted loan applications with rate lock agreements which
are intended to be held for sale, the Company enters into agreements to sell
loans in the secondary market to unrelated investors on a loan-by-loan basis,
and may also enter into option agreements. There have been no significant
changes in the
16
<PAGE>
Company's interest rate sensitivity since September 30, 1999.
PART II - OTHER INFORMATION
ITEM 1 - LEGAL PROCEEDINGS
Not applicable
ITEM 2 - CHANGES IN SECURITIES AND USE OF PROCEEDS
Not applicable
ITEM 3 - DEFAULTS UPON SENIOR SECURITIES
Not applicable
ITEM 4 - SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held a special meeting of shareholders on October 1, 1999. At
the meeting a proposal to approve the Troy Financial Corporation Long-term
Equity Compensation Plan was approved. The votes cast for and against this
proposal, and the number of abstentions and broker non-votes with respect to the
proposal, were as follows:
Approval of 1999 Long-Term Equity Compensation Plan
<TABLE>
For Against Abstentions Broker Non-votes
<S> <C> <C> <C>
6,804,617 1,294,135 138,486 ----
</TABLE>
ITEM 5 - OTHER INFORMATION
Not applicable
ITEM 6 - EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits.
27. Financial Data Schedule
(b) Reports on 8-K.
17
<PAGE>
Even with the decrease in non-performing loans, the provision for loan
losses remained similar to the quarter ended December 31, 1998 level due to the
significant growth in the loan portfolio, a change in the mix of the loan
portfolio to loan types with higher risk profiles, as well as an increase in net
loan charge-offs.
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.
TROY FINANCIAL CORPORATION
(Registrant)
Date: February 14, 2000 /s/ Daniel J. Hogarty, Jr.
------------------------------------------
Daniel J. Hogarty, Jr.
Chairman of the Board, President and
Chief Executive Officer
/s/ Edward M. Maziejka, Jr.
------------------------------------------
Edward M. Maziejka, Jr.
Vice President and Chief Financial Officer
II-2
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
COMPANY'S ANNUAL AUDITED FINANCIAL STATEMENTS AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS
</LEGEND>
<CIK> 0001075046
<NAME> TROY FINANCIAL CORPORATION
<MULTIPLIER> 1,000
<CURRENCY> U.S. DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> SEP-30-2000
<PERIOD-START> OCT-01-1999
<PERIOD-END> DEC-31-1999
<EXCHANGE-RATE> 1
<CASH> 39,391
<INT-BEARING-DEPOSITS> 537
<FED-FUNDS-SOLD> 3,741
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 246,435
<INVESTMENTS-CARRYING> 2,486
<INVESTMENTS-MARKET> 2,486
<LOANS> 580,955
<ALLOWANCE> 11,072
<TOTAL-ASSETS> 914,805
<DEPOSITS> 557,259
<SHORT-TERM> 118,933
<LIABILITIES-OTHER> 23,667
<LONG-TERM> 44,382
0
0
<COMMON> 1
<OTHER-SE> 117,804
<TOTAL-LIABILITIES-AND-EQUITY> 914,805
<INTEREST-LOAN> 11,252
<INTEREST-INVEST> 2,621
<INTEREST-OTHER> 171
<INTEREST-TOTAL> 14,044
<INTEREST-DEPOSIT> 4,656
<INTEREST-EXPENSE> 5,909
<INTEREST-INCOME-NET> 8,135
<LOAN-LOSSES> 800
<SECURITIES-GAINS> 3
<EXPENSE-OTHER> 5,887
<INCOME-PRETAX> 2,599
<INCOME-PRE-EXTRAORDINARY> 2,599
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,880
<EPS-BASIC> 0.18
<EPS-DILUTED> 0.18
<YIELD-ACTUAL> 7.38
<LOANS-NON> 6,893
<LOANS-PAST> 0
<LOANS-TROUBLED> 605
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 10,764
<CHARGE-OFFS> 527
<RECOVERIES> 35
<ALLOWANCE-CLOSE> 11,072
<ALLOWANCE-DOMESTIC> 11,072
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 956
</TABLE>
