<PAGE>
SECURITIES AND EXCHANGE COMMISSION-
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter Ended March 31, 1997 Commission File Number 0-8415
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DAUPHIN DEPOSIT CORPORATION
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(Exact name of registrant as specified in its charter)
Pennsylvania 23-1938831
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State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
213 Market Street, Harrisburg, Pennsylvania 17105
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (717) 255-2121
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NOT APPLICABLE
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Former name, former address and former fiscal year, if changed since last
report.
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
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Indicate the number of shares outstanding of each of the issuer's classes of
common stock, as of the latest practicable date.
Class Outstanding at April 30, 1997
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Common Stock, $5 Par Value 30,835,878 Shares
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DAUPHIN DEPOSIT CORPORATION
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FORM 10-Q
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For the Quarter Ended March 31, 1997
Contents
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PART I - FINANCIAL INFORMATION
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Item 1. Financial Statements
Consolidated Balance Sheets as of March 31, 1997 and 1996 and
December 31, 1996
Consolidated Statements of Income for the Three Month Period Ended
March 31, 1997 and 1996
Consolidated Statements of Cash Flows for the Three Month Period
Ended March 31, 1997 and 1996
Notes to Consolidated Financial Statements
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
PART II - OTHER INFORMATION
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Item 1. Legal Proceedings
Item 6. Exhibits and Reports on Form 8-K
SIGNATURES
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2
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Part I
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For the Quarter Ended March 31, 1997
Item 1. Financial Statements
Dauphin Deposit Corporation and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
(Dollars in thousands)
March 31, December 31, March 31,
1997 1996 1996
(Unaudited) (Audited) (Unaudited)
---------------- ------------- ------------
<S> <C> <C> <C>
ASSETS
Cash and due from banks $164,523 $176,024 $212,962
---------------- ------------- ------------
Short-term investments
Interest bearing deposits 4,735 1,494 2,469
Federal funds sold and securities purchased under agreements to resell 50,650 15,200 2,500
Other short-term investments 923 685
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Total short-term investments 56,308 17,379 4,969
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Investment securities available-for-sale, at fair value 2,036,728 2,170,207 2,093,234
Assets held for sale, primarily loans held for sale 190,390 207,798 121,217
Loans (net of unearned income) 3,195,348 3,200,034 2,985,337
Allowance for loan losses (42,443) (42,885) (41,980)
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Total net loans 3,152,905 3,157,149 2,943,357
---------------- ------------- ------------
Premises and equipment 73,509 73,826 72,513
Other assets 106,029 145,303 121,584
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Total assets $5,780,392 $5,947,686 $5,569,836
================ ============= ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Deposits
Non-interest bearing $488,742 $521,387 $494,219
Interest bearing 3,564,979 3,507,183 3,436,364
---------------- ------------- ------------
Total deposits 4,053,721 4,028,570 3,930,583
Short-term borrowings 1,065,922 1,111,630 979,015
Long-term debt 4,286 154,771 40,160
Accrued expenses and taxes 83,057 82,270 82,980
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Total liabilities 5,206,986 5,377,241 5,032,738
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Stockholders' equity
Preferred stock, $25 par value; 10,000,000 shares authorized but unissued
Common stock, $5 par value; 200,000,000 shares authorized,
32,641,614 shares issued, of which 1,881,419, 1,974,885
and 2,104,430 shares are held as treasury stock, respectively 163,208 163,208 163,208
Additional paid-in capital 11,359 11,084 11,056
Retained earnings 452,267 444,316 416,781
Unrealized gains (losses) on securities available-for-sale, net of deferred taxes (6,058) 1,577 (1,346)
---------------- ------------- ------------
620,776 620,185 589,699
Less: Treasury stock - at cost (47,370) (49,740) (52,601)
---------------- ------------- ------------
Total stockholders' equity 573,406 570,445 537,098
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Total liabilities and stockholders' equity $5,780,392 $5,947,686 $5,569,836
================ ============= ============
</TABLE>
See accompanying notes to consolidated financial statements.
3
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Dauphin Deposit Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME (Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands, except per share data)
Three Months Ended March 31,
---------------------------------------------
1997 1996
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<S> <C> <C>
Interest income
Interest and fees on loans and leases $64,631 $61,240
Interest and dividends on investment securities
Taxable 28,693 26,133
Exempt from federal income taxes 4,451 4,040
Interest on deposits 27 100
Interest on assets held for sale 3,863 1,651
Interest on federal funds sold and other short-term investments 280 49
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Total interest income 101,945 93,213
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Interest expense
Interest on deposits
Savings deposits 7,143 7,292
Time deposits 24,445 23,633
Time deposits in denominations of $100,000 or more 9,152 7,366
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40,740 38,291
Interest on short-term borrowings 12,428 9,580
Interest on long-term debt 1,778 886
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Total interest expense 54,946 48,757
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Net interest income 46,999 44,456
Provision for loan losses 1,545 1,800
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Net interest income after provision for loan losses 45,454 42,656
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Non-interest income
Fiduciary activities 5,105 4,441
Service charges on deposit accounts 3,188 2,958
Other service charges and fees 3,658 2,861
Broker/dealer commissions and fees 3,151 2,536
Mortgage banking 9,261 6,820
Securities gains, net 39 1,072
Other 1,124 690
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Total non-interest income 25,526 21,378
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Non-interest expense
Salaries and employee benefits 26,650 22,776
Net occupancy expense 3,011 2,773
Furniture and equipment expense 3,699 3,160
Other 14,461 12,532
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Total non-interest expense 47,821 41,241
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Income before income taxes 23,159 22,793
Provision for income taxes 5,980 6,184
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Net income $17,179 $16,609
=================== ===================
Net income per share $0.55 $0.54
Cash dividends declared per share $0.30 $0.26 1/2
Weighted average number of shares outstanding 31,153,432 30,797,523
</TABLE>
See accompanying notes to consolidated financial statements.
4
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Dauphin Deposit Corporation and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)
<TABLE>
<CAPTION>
(Dollars in thousands)
Three Months Ended March 31,
-------------------------------
1997 1996
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<S> <C> <C>
Operating activities
Net income $17,179 $16,609
Adjustments:
Provision for loan losses 1,545 1,800
Provision for depreciation, amortization and accretion 1,520 2,272
Provision for deferred income taxes (29) (149)
Securities gains, net (39) (1,072)
(Increase) decrease in interest receivable 8,476 (3,037)
Increase in accrued expenses and taxes 787 7,879
Gain on sale of mortgage loans held for sale (2,235) (3,601)
Net (increase) decrease in assets held for sale 19,643 (29,834)
Other, net 31,965 (14,388)
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Net cash provided (used) by operating activities 78,812 (23,521)
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Investing activities
Proceeds from sales of investment securities 78,206
Proceeds from maturities of investment securities 139,475 324,051
Purchases of investment securities (12,243) (649,389)
Net increase in loans (1,735) (2,570)
Net purchases of premises and equipment (2,239) (3,150)
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Net cash provided (used) by investing activities 123,258 (252,852)
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Financing activities
Net increase (decrease) in deposit accounts 25,151 (18,953)
Net increase (decrease) in short-term borrowings (45,708) 300,854
Repayments of long-term debt (150,017) (249)
Issuance of treasury stock 1,653 1,549
Acquisition of treasury stock (5,079)
Cash dividends paid (9,200) (8,122)
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Net cash provided (used) by financing activities (178,121) 270,000
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Increase (decrease) in cash and cash equivalents 23,949 (6,373)
Cash and cash equivalents at beginning of period 188,724 219,335
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Cash and cash equivalents at end of period $212,673 $212,962
============== =============
Total interest paid $57,074 $47,156
Total income taxes paid (received) (173) 211
Schedule of non-cash investing and financing activities:
Loans charged off 2,747 2,237
Net loan transfers to other real estate owned 771 1,129
Conversion of convertible subordinated debentures 468 190
Securitization of mortgage loans 6,462
</TABLE>
See accompanying notes to consolidated financial statements.
5
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Note 1 - Accounting Policies
The consolidated financial statements include the accounts of Dauphin
Deposit Corporation and subsidiaries (Dauphin), including its banking
subsidiary, Dauphin Deposit Bank and Trust Company, which includes the Bank of
Pennsylvania, Farmers Bank and Valleybank Divisions. All material intercompany
balances and transactions have been eliminated in consolidation.
The information contained in the financial statements is unaudited. In the
opinion of management, all adjustments, consisting of normal recurring accruals,
necessary for a fair presentation of the results of interim periods have been
made. Operating results for the three month period ended March 31, 1997 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1997.
The accounting policies followed in the presentation of interim financial
results are the same as those followed on an annual basis. These policies are
presented on pages 39 through 43 of the 1996 Securities and Exchange Commission
Form 10-K included in the Annual Report to Stockholders.
Note 2 - New Accounting Standards
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128 (SFAS 128), "Earnings Per Share". SFAS
128, which supersedes APB Opinion No. 15 (APB 15), "Earnings Per Share",
specifies the computation, presentation, and disclosure requirements for
earnings per share (EPS) for entities with publicly held common stock. It
replaces the presentation of primary EPS with a presentation of basic EPS and
fully diluted EPS with diluted EPS. Basic EPS, unlike primary EPS, excludes
dilution and is computed by dividing income available to common stockholders by
the weighted average number of common shares outstanding for the period. Diluted
EPS is computed similarly to fully diluted EPS under APB 15. Dauphin will adopt
SFAS 128 as of December 31, 1997. Management does not expect SFAS 128 to have a
material effect on the EPS of Dauphin.
Note 3 - Litigation
Various legal actions and proceedings are pending involving Dauphin or its
subsidiaries. Management believes that the aggregate liability or loss, if any,
resulting from such legal actions and proceedings will not be material to
Dauphin's financial condition or results of operations. Included among the
outstanding litigation is a class action law suit instituted by Dauphin in the
Court of Common Pleas of Cumberland County, Pennsylvania on February 25, 1994,
seeking a declaratory judgement from the Court specifically permitting Dauphin
to discontinue an 18 month variable interest rate deposit product carrying a
minimum interest rate of 10% for the 18 month term, which is held in certain
individual retirement accounts (IRA). The aggregate balance of the IRA accounts
was approximately $203.1 million at March 31, 1997. Dauphin's right to terminate
the variable interest rate deposit product is in dispute and is being challenged
by the holders of the IRA accounts in question. Several days after the
commencement of trial in April 1996, Dauphin and representatives of the class
reached an agreement in principle to settle the litigation and the trial
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Note 3 - Litigation (continued)
was continued pending negotiation of a settlement agreement. Dauphin and
representatives of the class filed a settlement agreement with the Court on
May 13, 1996 which would permit Dauphin to terminate the 18 month variable rate
product as to all class members on the effective date of the settlement and, in
consideration, the balances of those accounts would be automatically deposited
in one of two new certificates of deposit established by Dauphin for purposes of
the settlement. All class members were given the opportunity to file objections
to the proposed settlement or elect to be excluded from the class and the
proposed settlement. Approximately 89 of the 4,315 class members filed formal
objections to the settlement with the Court and 12 of the class members elected
to opt out of the settlement. A hearing was held before the Court on June 21,
1996 for the purpose of obtaining the Court's approval of the settlement
agreement. At the hearing, counsel for Dauphin and counsel for the
representatives of all class members jointly moved for the Court's adoption of
the settlement agreement and made argument in favor thereof. The Court, by Order
issued July 11, 1996, denied the joint motion of Dauphin and the representatives
of the class for settlement of the class action in accordance with the terms and
conditions of the settlement agreement. Dauphin filed its Notice of Appeal from
the trial Court's Order denying the settlement to the Superior Court of
Pennsylvania on August 9, 1996. The Appeal seeks an Order of the Superior Court
reversing the trial Court's disapproval of the settlement agreement or, in the
alternative, otherwise providing the trial Court with guidance which would
result in the trial Court's approval of the settlement agreement on remand. The
Superior Court must determine whether or not the trial Court abused its
discretion in rejecting the settlement agreement. The class representatives and
counsel for the class have informed Dauphin's counsel that they are withdrawing
their previous support for the joint settlement agreement and will vigorously
oppose Dauphin's Appeal to the Superior Court. The Superior Court heard the oral
arguments of counsel on the Appeal on March 5, 1997. Neither management nor
counsel can predict with any reasonable degree of certainty the outcome of the
Appeal or time frame within which the Superior Court will rule on the Appeal. If
the Appeal to the Superior Court is unsuccessful, management intends to
vigorously assert its right to terminate the 18 month variable interest rate
deposit product on further appeal and at the trial court level. Dauphin has
continued to date to pay a 10% interest rate with regard to the 18 month
variable interest rate deposit product.
7
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Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
This section presents management's discussion and analysis of the
consolidated financial condition and results of operations of Dauphin Deposit
Corporation and subsidiaries (Dauphin), including Dauphin Deposit Bank and Trust
Company (Bank), which includes the Bank of Pennsylvania, Farmers Bank and
Valleybank Divisions. The other primary subsidiaries include Hopper Soliday &
Co., Inc. (Hopper Soliday), a broker/dealer, and Eastern Mortgage Services, Inc.
(Eastern Mortgage), a mortgage banking company. This discussion and analysis
should be read in conjunction with the consolidated financial statements which
appear elsewhere in this report.
SUMMARY
Dauphin recorded net income for the three months ended March 31, 1997 of
$17.2 million compared with $16.6 million recorded for the same period of 1996.
In the first three months of 1996, Dauphin took $1.1 million of pretax
securities gains in a repositioning of the investment portfolio. On a comparable
basis, therefore, earnings before securities gains for the three months ended
March 31, 1997, were 7.8% ahead of comparable earnings for the three months
ended March 31, 1996. Net income per share for the three months ended March 31,
1997 was $.55 compared with $.54 for the same period in 1996, an increase of
1.9%. Excluding securities gains, earnings per share for the first three months
of 1997 were $.55 compared with $.52 in the first three months of 1996, an
increase of 5.8%.
Dauphin's return on average total assets was 1.21% for the three months
ended March 31, 1997 compared with 1.27% for the three months ended March 31,
1996. Return on average stockholders' equity, excluding the SFAS 115 adjustment,
was 12.25% for the three months ended March 31, 1997 compared with 12.60% for
the same period of 1996. Return on average stockholders' equity, including the
SFAS 115 adjustment, was 12.23% for the three months ended March 31, 1997
compared with 12.33% for the same period of 1996.
NET INTEREST INCOME
Net interest income is the product of the volume of average earning assets
and the average rates earned on them, less the volume of average interest
bearing liabilities and the average rates paid thereon. The amount of net
interest income is affected by changes in interest rates, account balances, or
volume, and the mix of earning assets and interest bearing liabilities.
For analytical purposes, net interest income is adjusted to a taxable
equivalent basis. This adjustment facilitates performance comparisons among
taxable and tax exempt assets by increasing tax exempt income by an amount
equivalent to the federal income taxes which would have been paid if this income
were taxable at the statutory rate of 35%.
Table 1 presents average balances, taxable equivalent interest income and
expense and average yields earned and rates paid for Dauphin's assets and
liabilities. Net interest income on a
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fully taxable equivalent basis totaled $49.9 million for the three months ended
March 31, 1997, an increase of $2.6 million or 5.6% from $47.3 million for the
same period of 1996.
Table 2 analyzes the changes attributable to the volume and rate components
of net interest income. During the three months ended March 31, 1997 compared
with the three months ended March 31, 1996, there was an increase in net
interest income of $3.4 million due to changes in volume and a decrease of $.8
million due to changes in rates.
The change in net interest income attributable to interest rates can be
understood by analyzing the interest rate spread and the net interest margin on
earnings assets. While the interest rate spread considers only the difference
between the average rates earned on earning assets and the average rates paid on
interest bearing liabilities, the net interest margin takes into account the
contribution of assets funded by interest free sources.
Average earning assets were $5.5 billion for the three months ended March
31, 1997 and $5.0 billion for the three months ended March 31, 1996. The
interest rate spread for the three months ended March 31, 1997 was 2.93%
compared with 3.08% for the three months ended March 31, 1996. The net interest
margin amounted to 3.64% for the three months ended March 31, 1997 compared with
3.81% for the same period of 1996.
Interest rates during 1997 were slightly lower than the rates experienced
in 1996, although rates recently have been increasing. The average prime rate
was 8.27% for the three months ended March 31, 1997 compared with 8.34% for the
same period of 1996. The average federal funds rate decreased to 5.28% for the
three months ended March 31, 1997 compared with 5.37% in 1996. During the three
months ended March 31, 1997 compared with the same period of 1996, the average
yield on earning assets decreased 5 basis points while the average cost of
interest bearing liabilities increased 10 basis points resulting in a decrease
in the interest rate spread of 15 basis points. The yield on the investment
securities portfolio increased 8 basis points for the three months ended March
31, 1997 compared to the same period of 1996, primarily due to the purchases of
securities in the portfolio with higher rates in 1996. Average loans, which
represent the highest yielding earning assets, increased $215.1 million or 7.3%
for the three months ended March 31, 1997 compared with the three months ended
March 31, 1996. The lower rates in 1997, with new loans issued at lower rates
and market rate loans repricing to lower rates, were the primary reason for the
10 basis point decrease for the three months in the overall average loan yield.
The cost of interest bearing deposits increased 15 basis points for the three
months ended March 31, 1997 compared with 1996 with the introduction of various
higher rate transaction deposit accounts. The 7 basis point decrease for the
three months in the cost of short-term borrowing was primarily caused by the
lower average federal funds rate. The interest rate spread decreased 15 basis
points for the three months, and a 2 basis point decrease in the effect of non-
interest bearing funds resulted in a net 17 basis point decline in the net
interest margin.
Dauphin's cost of interest bearing funds is generally higher, and its net
interest margin is generally lower, when compared with banking companies of
Dauphin's asset size. An important factor in these comparative differences is
certain individual retirement accounts which are
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invested in 18 month variable interest rate products with a minimum interest
rate of 10% for the 18 month term as discussed in Note 3 to the consolidated
financial statements and in Part II, Item 1 - Legal Proceedings. If these
interest rate products had paid interest at Dauphin's weighted average cost of
funds for all other retail certificates of deposit, Dauphin's cost of interest
bearing liabilities would have been decreased by 20 basis points for the three
months ended March 31, 1997 compared with a decrease of 21 basis points for the
three months ended March 31, 1996.
INTEREST RATE SENSITIVITY
Interest rate sensitivity management seeks to avoid fluctuating net
interest margins and to enhance consistent growth of net interest income through
periods of changing interest rates.
Rates on different assets and liabilities within a single maturity category
adjust to changes in interest rates to varying degrees and over varying periods
of time. The relationships between prime rates and rates paid on purchased funds
are not constant over time. The rate of growth in interest free sources of funds
will influence the level of interest sensitive funding sources. In addition, the
absolute level of interest rates will affect the volume of earning assets and
funding sources. As a result of these limitations, the interest sensitivity gap
is only one factor to be considered in estimating the net interest margin.
Table 3 presents an interest sensitivity analysis of Dauphin's assets and
liabilities at March 31, 1997 for several time intervals. This table reflects
the interest sensitivity gap in two formats. The detailed presentation
represents management's position on certain interest bearing deposits, such as
statement and passbook savings accounts, as not being subject to immediate
repricing. Management is of the opinion that historical interest rate movements
indicate that these products do not reprice in direct relation to the change in
the interest rate environment. Additionally, these products have provided
Dauphin with a stable core deposit base. Therefore, the detailed presentation
within Table 3 attempts to reflect these products in the appropriate interest
sensitivity time interval based on their interest sensitivity to the movement of
other interest rates. Also included in Table 3 is a summary of the gap, as
viewed by certain regulatory authorities, which presents these interest bearing
deposits as being subject to immediate repricing.
An interest sensitivity analysis is measured as of a specified date and,
therefore, is subject to almost immediate change as the maturities of assets are
reinvested and liabilities, such as deposits and short-term borrowings, are
received or mature. The mismatch of assets and liabilities in a specific time
frame is referred to as a sensitivity gap. The gap at March 31, 1997 reflects
Dauphin's sensitivity at a point in time to rate changes over future periods of
time. Generally, an asset sensitive gap will increase an institution's net
interest income during periods of rising interest rates and the liability
sensitive gap will increase an institution's net interest income during
declining rates. The lower the amount of this gap, the less sensitive an
institution's earnings are to interest rate changes. However, Dauphin's assets
and liabilities with similar maturities or repricing will, at times, react
differently in varying interest rate environments. Therefore, the interest
sensitivity gap does not accurately predict the actual impact of market rate
changes. The volume and mix of future asset and liability changes will
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also impact Dauphin's net interest income as indicated on Table 1. Dauphin
continuously monitors and adjusts the gap position, taking into consideration
current interest rate projections, and maintaining flexibility if rates move
contrary to expectations. Dauphin uses on-balance sheet financial instruments,
such as investments classified as available-for-sale, to provide flexibility in
managing the interest sensitivity gap.
PROVISION AND ALLOWANCE FOR LOAN LOSSES
The provision for loan losses charged to earnings was $1.5 million for the
three months ended March 31, 1997 and $1.8 million for the three months ended
March 31, 1996. The provision is based on management's estimate of the amount
needed to maintain an adequate allowance for loan losses. This estimate is based
on the review of the loan portfolio, the level of net credit losses, past loan
loss experience, the general economic outlook and other factors that management
feels are appropriate. Table 4 reflects an analysis of the allowance for loan
losses for the three months ended March 31, 1997 and 1996.
NON-PERFORMING ASSETS
Table 5 reflects Dauphin's non-performing assets at March 31, 1997,
December 31, 1996 and March 31, 1996. Dauphin's policy is to discontinue the
accrual of interest on commercial loans and commercial mortgages on which
principal or interest is past due 90 days or more. Consumer loans, excluding
residential mortgages, which are 150 days past due are charged off. Residential
mortgages are placed on non-accrual status after becoming 180 days past due.
When a loan is placed on non-accrual status, any unpaid interest is generally
charged against income. Management believes that strict adherence to this policy
with regard to non-accruals and charge-offs will insure that the historically
high quality of the loan portfolio will be maintained. Dauphin continues to
experience net charge-offs on consumer loan products at a level below the
national peer group averages. Other real estate owned represents property
acquired through foreclosure.
NON-INTEREST INCOME
Table 6 reflects the non-interest income increase of $4.1 million or 19.4%
for the three months ended March 31, 1997 compared to the three months ended
March 31, 1996. Exclusive of securities gains, the increase was $5.2 million or
25.5%. In the banking segment of Dauphin, non-interest income increased $1.1
million or 9.1% for the three months of 1997 compared with the same period of
1996. Income from fiduciary activities increased $.7 million or 15.0%. Other
service charges and fees increased $.8 million or 27.9% for the three months of
1997 compared with the same period of 1996. This was primarily due to an
increase in merchant discount fees, as well as other related fees. Other income
increased $.4 million or 62.9% for the three months of 1997 compared with the
same period of 1996. This was due to an increase in leasing income.
The broker/dealer segment of Dauphin represents broker/dealer commissions
and fees generated by Hopper Soliday. This income is generated from underwriting
securities which are predominantly general obligations of Central Pennsylvania
municipalities, providing financial
11
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advisory services, selling securities to individual and institutional investors
and other related activities. The broker/dealer income increased $.4 million or
11.8% for the three month period ended March 31, 1997 compared to the three
months ended March 31, 1996. This increase was due to additional volume of
business in 1997, due primarily to acting as financial advisor in the very first
mutual-to-stock conversion of a major, Pennsylvania-based insurance company.
The mortgage banking segment of Dauphin reflects the mortgage banking
subsidiary, Eastern Mortgage. The mortgage banking income increased $2.3 million
or 32.4% in the three months ended March 31, 1997 compared with the same period
of 1996. The increase in the first three months of 1997 compared with the same
period of 1996 was due to increased volume through an expanded branch network.
NON-INTEREST EXPENSE
Table 7 reflects that non-interest expense amounted to $47.8 million for
the three months ended March 31, 1997 and $41.2 million for the three months
ended March 31, 1996, an increase of $6.6 million or 16.0%.
Dauphin's banking segment non-interest expense increased $1.7 million or
5.3% for the three months ended March 31, 1997 compared with the three months
ended March 31, 1996. Salaries and employee benefits increased 4.0% for the
three month period. Full-time equivalent employees increased 5.0% to 1,899 at
March 31, 1997 compared with 1,809 at March 31, 1996. Salaries expense,
excluding benefits expense, increased 2.2% for the three month period compared
with the same period of 1996.
All other non-interest expense items from the banking segment increased
$1.1 million or 6.7% in the three months ended March 31, 1997 compared with the
same period of 1996. The increase in other non-interest expenses primarily
includes costs associated with technological investments, upgrades to branch
facilities, and interchange expense.
The broker/dealer segment had increased non-interest expense of $.4 million
or 16.0% for the three month period when compared with 1996. The increased
volume of business in 1997 generated additional revenues and, therefore, greater
salary expense.
The mortgage banking segment had increased non-interest expense of $4.1
million or 56.4% for the three months ended March 31, 1997 when compared with
the three months ended March 31, 1996. The mortgage banking segment experienced
increased volume in 1997 compared with 1996 due to additional branch locations,
and resulted in significantly higher expenses.
PROVISION FOR INCOME TAXES
Dauphin's effective tax rate was 25.8% for the three months ended March 31,
1997 compared with 27.1% for the three months ended March 31, 1996.
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CAPITAL RESOURCES
During 1994, Dauphin announced that the Board of Directors authorized the
repurchase of up to 2,000,000 shares of the outstanding stock. In February 1995,
an additional 1,500,000 shares were authorized for repurchase. Available
investments are being used to fund the share repurchases. Dauphin will use the
shares for general corporate purposes, including the Employee Stock Purchase
Plan, Stock Option Plan, the Dividend Reinvestment and Stock Purchase Plan and
other appropriate uses. During the first three months of 1996, Dauphin
repurchased 175,000 shares for $5.1 million. There were no shares repurchased
during the first three months of 1997.
Common measures of adequate capitalization for banking institutions are
ratios of capital to assets. These ratios indicate the proportion of permanently
committed funds to the total asset base. Guidelines issued by federal regulatory
authorities require both banks and bank holding companies to meet minimum risk-
based capital ratios in an effort to make regulatory capital more responsive to
the risk exposure related to a bank's on- and off-balance sheet items. Risk-
based capital guidelines redefine the components of capital, categorize assets
into different risk classes and include certain off-balance sheet items in the
calculation of capital requirements. The components of risk-based capital are
segregated as Tier 1 and Tier 2 capital. Tier 1 capital is composed of total
stockholders' equity reduced by goodwill and other intangible assets. Tier 2
capital includes the allowance for loan losses (with certain limitations) and
qualifying debt obligations. Regulators have also adopted minimum Tier 1
leverage ratio standards. Tier 1 capital for the leverage ratio is the same as
the Tier 1 capital definition in the risk-based capital guidelines. At March 31,
1997, Dauphin and its banking subsidiary exceeded all capital requirements and
are considered to be "well-capitalized".
13
<PAGE>
TABLE 1 - Average Balances, Rates and Interest Income and Expense Summary
(Taxable Equivalent Basis)
<TABLE>
<CAPTION>
(Dollars in thousands)
Three Months Ended March 31,
---------------------------------------------------------------------------------
1997 1996
--------------------------------------- ---------------------------------------
Average Average Average Average
Balance Interest Rate Balance Interest Rate
------------- ------------ --------- ------------ ---------- ---------
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Short-term investments
Interest bearing deposits $1,322 $27 8.28% $6,126 $101 6.63%
Federal funds sold and securities
purchased under agreements to resell 19,298 270 5.67 2,914 49 6.76
Other short-term investments 847 10 4.79
------------- ------------ ------------ ----------
Total short-term investments 21,467 307 5.80 9,040 150 6.67
------------- ------------ ------------ ----------
Investment securities
U.S. government obligations 36,978 540 5.92 80,910 1,313 6.53
U.S. government agencies 1,611,060 26,569 6.60 1,454,354 23,383 6.43
State and municipals 355,910 7,096 7.98 312,919 6,744 8.62
Other securities 68,992 1,324 7.73 60,122 921 6.13
------------- ------------ ------------ ----------
Total investment securities 2,072,940 35,529 6.86 1,908,305 32,361 6.78
------------- ------------ ------------ ----------
Assets held for sale 225,556 3,879 6.89 100,325 1,658 6.61
------------- ------------ ------------ ----------
Loans (1)
Commercial 1,147,841 23,484 8.27 984,463 20,714 8.46
Commercial mortgages 617,419 12,662 8.32 592,937 12,757 8.65
Residential mortgages (2) 713,972 15,010 8.49 716,392 14,819 8.30
Consumer (3) 688,736 13,990 8.21 659,044 13,557 8.26
------------- ------------ ------------ ----------
Total loans 3,167,968 65,146 8.32 2,952,836 61,847 8.42
------------- ------------ ------------ ----------
Total earning assets (4) 5,487,931 104,861 7.70 4,970,506 96,016 7.75
------------ ----------
Other assets 290,846 303,518
------------- ------------
Total assets $5,778,777 7.31% $5,274,024 7.30%
============= ========= ============ =========
<CAPTION>
LIABILITIES AND STOCKHOLDERS' EQUITY
<S> <S> <C> <C> <C> <C> <C>
Interest bearing deposits
Demand deposits and savings deposits $1,295,207 7,143 2.24% $1,361,112 7,292 2.15%
Time deposits of $100,000 or more 585,197 9,152 6.32 472,515 7,366 6.27
Other time deposits 1,660,526 24,445 5.97 1,577,445 23,633 6.03
------------- ------------ ------------ ----------
Total interest bearing deposits 3,540,930 40,740 4.66 3,411,072 38,291 4.51
Short-term borrowings 986,370 12,428 5.11 743,400 9,580 5.18
Long-term debt 141,210 1,778 5.04 40,449 886 8.76
------------- ------------ ------------ ----------
Total interest bearing liabilities 4,668,510 54,946 4.77 4,194,921 48,757 4.67
------------ ----------
Non-interest bearing demand deposits 454,672 455,542
Other liabilities 85,827 81,791
Stockholders' equity 569,768 541,770
------------- ------------
Total liabilities and
stockholders' equity $5,778,777 3.85% $5,274,024 3.72%
============= ========= ============ =========
Interest rate spread 2.93% 3.08%
Effect of non-interest bearing funds 0.71 0.73
--------- ---------
Net interest income/margin $49,915 3.64% $47,259 3.81%
============ ========= ========== =========
</TABLE>
(1) Includes fees on loans. Average loan balances include non-accruing loans.
(2) Includes home equity loans.
(3) Loans outstanding net of unearned income.
(4) Includes tax equivalent adjustment of $2,916 and $2,803 for the three
months ended March 31, 1997 and 1996, respectively.
14
<PAGE>
TABLE 2 - Rate-Volume Analysis of Changes in Net Interest Income
<TABLE>
<CAPTION>
(Dollars in thousands)
Three Months Ended March 31,
1997/1996
--------------------------------------------
Change due to Total
---------------------------
(Taxable equivalent) Volume Rate Change
----------- ------------ ------------
<S> <C> <C> <C>
Interest income
Short-term investments $146 $11 $157
Investment securities 3,362 (194) 3,168
Assets held for sale 2,203 18 2,221
Loans 4,426 (1,127) 3,299
----------- ------------ ------------
Total interest income 10,137 (1,292) 8,845
----------- ------------ ------------
Interest expense
Interest bearing deposits 2,181 268 2,449
Short-term borrowings 2,981 (133) 2,848
Long-term debt 1,568 (676) 892
----------- ------------ ------------
Total interest expense 6,730 (541) 6,189
----------- ------------ ------------
Net interest income $3,407 ($751) $2,656
=========== ============ ============
</TABLE>
Note: The changes not due solely to change in volume or solely to change in rate
are allocated proportionally to both change in volume and rate.
TABLE 3 - Interest Sensitivity Analysis
<TABLE>
<CAPTION>
(Dollars in thousands)
March 31, 1997
-----------------------------------------------------------------------
Interest Sensitivity Period
-----------------------------------------------------------------------
Month Quarter Six Months Annual 5 Years
------------ ----------- ---------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Earning assets:
Short-term investments $56,308 $56,308 $56,308 $56,308 $56,308
Investment securities 408,901 459,869 562,986 801,888 1,665,229
Assets held for sale 190,390 190,390 190,390 190,390 190,390
Loans 1,017,063 1,375,299 1,588,235 2,012,617 3,129,041
------------ ----------- ---------- ----------- -----------
Total $1,672,662 $2,081,866 $2,397,919 $3,061,203 $5,040,968
============ =========== ========== =========== ===========
Interest bearing liabilities:
Deposits $1,045,063 $1,291,831 $1,607,162 $2,078,386 $2,887,691
Short-term borrowings 1,065,922 1,065,922 1,065,922 1,065,922 1,065,922
Long-term debt 6 3,970 3,988 4,024 4,222
------------ ----------- ---------- ----------- -----------
Total $2,110,991 $2,361,723 $2,677,072 $3,148,332 $3,957,835
============ =========== ========== =========== ===========
Interest sensitivity gap ($438,329) ($279,857) ($279,153) ($87,129) $1,083,133
Interest sensitive assets to interest sensitive
liabilities ratio 0.79 0.88 0.90 0.97 1.27
Interest sensitivity gap as a percent of total assets -7.58% -4.84% -4.83% -1.51% 18.74%
Regulatory presentation:
Interest sensitivity gap ($873,642) ($715,170) ($714,466) ($522,442) $647,692
Interest sensitive assets to interest sensitive
liabilities ratio 0.66 0.74 0.77 0.85 1.15
Interest sensitivity gap as a percent of total assets -15.11% -12.37% -12.36% -9.04% 11.20%
</TABLE>
15
<PAGE>
TABLE 4 - Analysis of Allowance for Loan Losses
<TABLE>
<CAPTION>
(Dollars in thousands)
Three Months Ended
March 31,
---------------------------------
1997 1996
--------------- ----------------
<S> <C> <C>
Balance, beginning of period $42,885 $41,737
Provision charged to operating expenses 1,545 1,800
Total loans charged off 2,747 2,237
Total recoveries 760 680
--------------- ----------------
Net charge-offs 1,987 1,557
--------------- ----------------
Balance, end of period $42,443 $41,980
=============== ================
Total loans:
Average $3,167,968 $2,952,836
Period-end 3,195,348 2,985,337
Ratios:
Net charge-offs to average loans (annualized) 0.25% 0.21%
Allowance for loan losses to period-end loans 1.33 1.41
</TABLE>
TABLE 5 - Non-Performing Assets
<TABLE>
<CAPTION>
(Dollars in thousands)
March 31, December 31, March 31,
1997 1996 1996
----------------- ---------------- -----------------
<S> <C> <C> <C>
Non-accrual loans $9,417 $11,621 $7,748
Loans past due 90 or more days as to
interest or principal 5,239 5,469 5,946
Restructured loans 4,701 4,533 4,677
----------------- ---------------- -----------------
Total non-performing loans 19,357 21,623 18,371
Other real estate owned 2,447 3,035 3,585
----------------- ---------------- -----------------
Total non-performing assets $21,804 $24,658 $21,956
================= ================ =================
Ratios:
Non-performing loans to total loans 0.61% 0.68% 0.62%
Non-performing assets to total loans and
other real estate owned 0.68 0.77 0.73
Allowance for loan losses to non-performing
loans 219.26 198.33 228.51
</TABLE>
16
<PAGE>
TABLE 6 - Non-Interest Income
<TABLE>
<CAPTION>
(Dollars in thousands)
Three Months Ended March 31,
1997/1996
------------------------------------------------------
Increase
(Decrease)
-------------------------
1997 Amount % 1996
------------ ----------- ------------ -----------
<S> <C> <C> <C> <C>
Banking:
Fiduciary activities $5,105 $664 15.0% $4,441
Service charges on deposit accounts 3,188 230 7.8 2,958
Other service charges and fees 3,658 797 27.9 2,861
Securities gains, net 39 (1,033) (96.4) 1,072
Other 1,124 434 62.9 690
------------ ----------- -----------
13,114 1,092 9.1 12,022
Broker/dealer 3,338 353 11.8 2,985
Mortgage banking 9,488 2,324 32.4 7,164
Intercompany eliminations (414) 379 (793)
------------ ----------- -----------
Total $25,526 $4,148 19.4% $21,378
============ =========== ============ ===========
TABLE 7 - Non-Interest Expense
<CAPTION>
(Dollars in thousands)
Three Months Ended March 31,
1997/1996
------------------------------------------------------
Increase
(Decrease)
-------------------------
1997 Amount % 1996
----------- ------------- -------- -----------
<S> <C> <C> <C> <C>
Banking:
Salaries and employee benefits $16,936 $649 4.0% $16,287
Net occupancy expense 2,348 (3) (0.1) 2,351
Furniture and equipment expense 3,123 331 11.9 2,792
Other 11,410 730 6.8 10,680
----------- ----------- -----------
33,817 1,707 5.3 32,110
Broker/dealer 3,105 429 16.0 2,676
Mortgage banking 11,432 4,124 56.4 7,308
Intercompany eliminations (533) 320 (853)
----------- ----------- -----------
Total $47,821 $6,580 16.0% $41,241
=========== =========== =========== ===========
</TABLE>
17
<PAGE>
PART II - OTHER INFORMATION
---------------------------
For the Quarter Ended March 31, 1997
Item 1. Legal Proceedings
Various legal actions and proceedings are pending involving Dauphin or its
subsidiaries. Management believes that the aggregate liability or loss, if any,
will not be material to Dauphin's financial condition or results of operations.
Included among outstanding litigation is a class action law suit instituted by
Dauphin in the Court of Common Pleas of Cumberland County, Pennsylvania on
February 25, 1994, seeking a declaratory judgment from the Court specifically
permitting Dauphin to discontinue an 18 month variable interest rate deposit
product carrying a minimum interest rate of 10% for the 18 month term, which is
held in certain individual retirement accounts (IRA). The aggregate balance of
the IRA accounts was approximately $203.1 million at March 31, 1997. Dauphin's
right to terminate the variable interest rate deposit product is in dispute and
is being challenged by the holders of the IRA accounts in question. Several days
after commencement of trial in April 1996, Dauphin and representatives of the
class reached an agreement in principle to settle the litigation and the trial
was continued pending negotiation of a settlement agreement. Dauphin and the
representatives of the class filed a settlement agreement with the Court on May
13, 1996 which would permit Dauphin to terminate the 18 month variable rate
product as to all class members on the effective date of the settlement and, in
consideration, the balances of those accounts would be automatically deposited
in one of two new certificates of deposit established by Dauphin for purposes of
the settlement. All class members were given the opportunity to file objections
to the proposed settlement or elect to be excluded from the class and the
proposed settlement. Approximately 89 of the 4,315 class members filed formal
objections to the settlement with the Court and 12 of the class members elected
to opt out of the settlement. A hearing was held before the Court on June 21,
1996 for the purpose of obtaining the Court's approval of the settlement
agreement. At the hearing, counsel for Dauphin and counsel for the
representatives of all class members jointly moved for the Court's adoption of
the settlement agreement and made argument in favor thereof. The Court, by Order
issued July 11, 1996, denied the joint motion of Dauphin and the representatives
of the class for settlement of the class action in accordance with the terms and
conditions of the settlement agreement. Dauphin filed its Notice of Appeal from
the trial Court's Order denying the settlement to the Superior Court of
Pennsylvania on August 9, 1996. The Appeal seeks an Order of the Superior Court
reversing the trial Court's disapproval of the settlement agreement or, in the
alternative, otherwise providing the trial Court with guidance which would
result in the trial Court's approval of the settlement agreement on remand. The
Superior Court must determine whether or not the trial Court abused its
discretion in rejecting the settlement agreement. The class representatives and
counsel for the class have informed Dauphin's counsel that they are withdrawing
their previous support for the joint settlement agreement and will vigorously
oppose Dauphin's Appeal to the Superior Court. The Superior Court heard the oral
arguments of counsel on the Appeal on March 5, 1997. Neither management nor
counsel can predict with any reasonable degree of certainty the outcome of the
Appeal or time frame within which the Superior Court will rule on the Appeal. If
the Appeal to the Superior Court is unsuccessful, management intends to
vigorously assert its right to terminate the 18 month variable interest rate
deposit product on further appeal and at the trial court level. Dauphin has
continued to date to pay a 10% interest rate with regard to the 18 month
variable interest rate deposit product.
18
<PAGE>
PART II - OTHER INFORMATION
---------------------------
For the Quarter Ended March 31, 1997
Item 6.Exhibits and Reports on Form 8-K
(a) Exhibits
11 Statement regarding Computation of Per Share Earnings.
15(a) Report of KPMG Peat Marwick LLP regarding unaudited
interim financial information of Dauphin for the quarter
ended March 31, 1997.
15(b) Consent of KPMG Peat Marwick LLP regarding unaudited
interim financial information of Dauphin for the quarter
ended March 31, 1997.
27 Financial Data Schedule regarding unaudited interim
financial information of Dauphin for the quarter ended
March 31, 1997.
(b) Reports on Form 8-K
A report on Form 8-K, dated January 21, 1997, was filed with the
Securities and Exchange Commission on January 29, 1997. The
Current Report, which was filed pursuant to Item 5: "Other
Events", disclosed, among other things, that Dauphin had entered
into an Agreement and Plan of Merger with Allied Irish Banks,
PLC, and its United States banking subsidiary, First Maryland
Bancorp ("FMB"), pursuant to which Dauphin will be merged with
and into FMB, with FMB as the surviving corporation.
There were no other reports on Form 8-K filed for the three
months ended March 31, 1997.
19
<PAGE>
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.
Dauphin Deposit Corporation
---------------------------
(Registrant)
Date: May 12, 1997 /s/Christopher R. Jennings
- ------------------------- ----------------------------------
Christopher R. Jennings
Chairman of the Board and
Chief Executive Officer
Date: May 12, 1997 /s/Linda R. Schroeder
- ------------------------- ----------------------------------
Linda R. Schroeder, Senior Vice
President and Acting Chief Financial
Officer
20
<PAGE>
EXHIBIT INDEX
-------------
Exhibit Sequential
Number Page Number
- ------- -----------
11 Statement regarding Computation of Per Share Earnings
15(a) Report of KPMG Peat Marwick LLP regarding unaudited
interim financial information of Dauphin for the
quarter ended March 31, 1997
15(b) Consent of KPMG Peat Marwick LLP regarding unaudited
interim financial information of Dauphin for the
quarter ended March 31, 1997
27 Financial Data Schedule regarding unaudited interim
financial information of Dauphin for the quarter
ended March 31, 1997
<PAGE>
Statement Regarding Computation of Per Share Earnings
<TABLE>
<CAPTION>
Three Months Ended March 31,
----------------------------
1997 1996
---- ----
<S> <C> <C>
PRIMARY EARNINGS PER COMMON SHARE
- ---------------------------------
Earnings
Net income $17,179,000 $16,609,000
============= =============
Shares
Weighted average common shares outstanding 30,727,076 30,586,038
Stock options and other stock incentive plans
considered to be common stock equivalents 426,356 211,485
------------ ------------
Weighted average common stock and common stock equivalents outstanding 31,153,432 30,797,523
============ ============
Primary earnings per common share $0.55 $0.54
============ ============
FULLY DILUTED EARNINGS PER COMMON SHARE
- ---------------------------------------
Earnings
Net income $17,179,000 $16,609,000
After tax interest expense applicable to convertible debentures 57,798 69,688
------------ ------------
$17,236,798 $16,678,688
============ ============
Shares
Weighted average common shares outstanding 30,727,076 30,586,038
Assumed conversion of 9.00% convertible debentures issued June 30, 1989 261,592 302,516
Stock options and other stock incentive plans
considered to be common stock equivalents 451,507 239,670
------------ ------------
Weighted average common stock and common stock equivalents outstanding 31,440,175 31,128,224
============ ============
Fully diluted earnings per common share $0.55 $0.54
============ ============
</TABLE>
Exhibit 11
<PAGE>
[LETTERHEAD OF KPMG PEAT MARWICK LLP APPEARS HERE]
Independent Accountants' Review Report
--------------------------------------
The Board of Directors and Stockholders
Dauphin Deposit Corporation:
We have reviewed the consolidated balance sheets of Dauphin Deposit Corporation
and subsidiaries as of March 31, 1997 and 1996, and the related consolidated
statements of income and cash flows for the three-month periods ended March 31,
1997 and 1996. These consolidated financial statements are the responsibility
of Dauphin's management.
We conducted our review in accordance with standards established by the American
Institute of Certified Public Accountants. A review of interim financial
information consists principally of applying analytical procedures to financial
data and making inquiries of persons responsible for financial and accounting
matters. It is substantially less in scope than an audit conducted in
accordance with generally accepted auditing standards, the objective of which is
the expression of an opinion regarding the financial statements taken as a
whole. Accordingly, we do not express such an opinion.
Based on our review, we are not aware of any material modifications that should
be made to the consolidated financial statements referred to above for them to
be in conformity with generally accepted accounting principles.
We have previously audited, in accordance with generally accepted auditing
standards, the consolidated balance sheet of Dauphin Deposit Corporation and
subsidiaries as of December 31, 1996, and the related consolidated statements of
income, stockholders' equity and cash flows for the year then ended (not
presented herein); and in our report dated January 21, 1997, we expressed an
unqualified opinion on those consolidated financial statements. In our opinion,
the information set forth in the accompanying consolidated balance sheet as of
December 31, 1996, is fairly stated, in all material respects, in relation to
the consolidated balance sheet from which it has been derived.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
April 17, 1997
Exhibit 15(a)
<PAGE>
[LETTERHEAD OF KPMG PEAT MARWICK LLP APPEARS HERE]
Dauphin Deposit Corporation
Harrisburg, Pennsylvania
Ladies and Gentlemen:
Re: Registration Statements No. 33-17401
33-59941
2-73258
333-6792
With respect to the subject registration statements, we acknowledge our
awareness of the use therein of our report dated April 17, 1997 related to our
review of interim financial information.
Pursuant to Rule 436(c) under the Securities Act of 1933, such report is not
considered part of a registration statement prepared or certified by an
accountant or a report prepared or certified by an accountant within the meaning
of sections 7 and 11 of the Act.
/s/ KPMG Peat Marwick LLP
KPMG Peat Marwick LLP
May 12, 1997
Exhibit 15(b)
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<CURRENCY> US DOLLARS
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
<EXCHANGE-RATE> 1
<CASH> 164,523
<INT-BEARING-DEPOSITS> 4,735
<FED-FUNDS-SOLD> 50,650
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 2,036,728
<INVESTMENTS-CARRYING> 2,046,047
<INVESTMENTS-MARKET> 2,036,728
<LOANS> 3,195,348
<ALLOWANCE> 42,443
<TOTAL-ASSETS> 5,780,392
<DEPOSITS> 4,053,721
<SHORT-TERM> 1,065,922
<LIABILITIES-OTHER> 83,057
<LONG-TERM> 4,286
0
0
<COMMON> 163,208
<OTHER-SE> 410,198
<TOTAL-LIABILITIES-AND-EQUITY> 5,780,392
<INTEREST-LOAN> 64,631
<INTEREST-INVEST> 33,144
<INTEREST-OTHER> 4,170
<INTEREST-TOTAL> 101,945
<INTEREST-DEPOSIT> 40,740
<INTEREST-EXPENSE> 54,946
<INTEREST-INCOME-NET> 46,999
<LOAN-LOSSES> 1,545
<SECURITIES-GAINS> 39
<EXPENSE-OTHER> 47,821
<INCOME-PRETAX> 23,159
<INCOME-PRE-EXTRAORDINARY> 17,179
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 17,179
<EPS-PRIMARY> 0.55
<EPS-DILUTED> 0.55
<YIELD-ACTUAL> 7.70
<LOANS-NON> 9,417
<LOANS-PAST> 5,239
<LOANS-TROUBLED> 4,701
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 42,885
<CHARGE-OFFS> 2,747
<RECOVERIES> 760
<ALLOWANCE-CLOSE> 42,443
<ALLOWANCE-DOMESTIC> 42,443
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
