SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarterly Period Ended 6/30/98
Commission File No. 0-15950
FIRST BUSEY CORPORATION
(Exact name of registrant as specified in its charter)
Nevada 37-1078406
------------------------- -------------------------
(State or other jurisdiction of (I.R.S. Employer
Incorporation or organization) Identification No.)
201 W. Main St.,
Urbana, Illinois 61801
------------------------- -------------------------
(Address of principal (Zip Code)
executive offices)
Registrant's telephone number, including area code: (217) 365-4556
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
--- ---
Indicate the number of shares outstanding of each of the Registrant's classes of
common stock, as of the practicable date.
<TABLE>
<CAPTION>
Class Outstanding at June 30, 1998
--------------------------------------- ----------------------------
<S> <C>
Class A Common Stock, without par value 6,883,237
</TABLE>
<PAGE>
PART I - FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
Page 2 of 22
<PAGE>
<TABLE>
<CAPTION>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, 1998 December 31, 1997
------------- -----------------
(Dollars in thousands)
<S> <C> <C>
ASSETS
Cash and due from banks $45,190 $43,299
Federal funds sold 21,450 18,800
Securities available for sale (amort. cost 1998 $214,315; 1997 $206,589) 224,294 215,514
Loans (net of unearned interest) 624,886 602,937
Allowance for loan losses (7,312) (6,860)
----------- -----------
Net loans $ 617,574 $ 596,077
Premises and equipment 24,459 22,834
Other assets 19,569 19,016
----------- -----------
Total assets $ 952,536 $ 915,540
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $ 98,742 $ 92,090
Interest bearing 725,900 719,363
----------- -----------
Total deposits $ 824,642 $ 811,453
Short-term borrowings 15,550 6,550
Long-term debt 20,000 10,000
Other liabilities 6,947 6,258
----------- -----------
Total liabilities $ 867,139 $ 834,261
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock $ - $ -
Common stock 6,291 6,291
Surplus 21,219 20,729
Retained earnings 56,098 53,011
Unrealized gain (loss) on securities available for sale, net 6,486 5,801
----------- -----------
Total stockholders' equity before treasury stock, unearned ESOP
shares and deferred compensation for stock grants $ 90,094 $ 85,832
Treasury stock, at cost (4,089) (3,922)
Unearned ESOP shares and deferred compensation for stock grants (608) (631)
-----------
Total stockholders' equity $ 85,397 $ 81,279
-----------
Total liabilities and stockholders' equity $ 952,536 $ 915,540
=========== ===========
Class A Common Shares outstanding at period end 6,883,237 6,865,393
=========== ===========
</TABLE>
Page 3 of 22
<PAGE>
<TABLE>
<CAPTION>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
June 30, 1998 June 30, 1997
------------- -------------
(Dollars in thousands)
<S> <C> <C>
ASSETS
Cash and due from banks $ 45,190 $ 40,049
Federal funds sold 21,450 10,500
Securities held to maturity (fair value 1997 $51,396 ) - 50,738
Securities available for sale (amort. cost 1998 $214,315; 224,294 165,663
1997 $158,970)
Loans (net of unearned interest) 624,886 591,103
Allowance for loan losses (7,312) (6,517)
----------- -----------
Net loans $ 617,574 $ 584,586
Premises and equipment 24,459 22,639
Other assets 19,569 18,649
----------- -----------
Total assets $ 952,536 $ 892,824
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
LIABILITIES
Deposits:
Non-interest bearing $ 98,742 $ 78,590
Interest bearing 725,900 714,829
----------- -----------
Total deposits $ 824,642 $ 793,419
Short-term borrowings 15,550 6,000
Long-term debt 20,000 10,000
Other liabilities 6,947 5,291
----------- -----------
Total liabilities $ 867,139 $ 814,710
----------- -----------
STOCKHOLDERS' EQUITY
Preferred stock $ - $ -
Common stock 6,291 6,291
Surplus 21,219 20,709
Retained earnings 56,098 50,141
Unrealized gain (loss) on securities available for sale, net 6,486 4,350
----------- -----------
Total stockholders' equity before treasury stock, unearned
ESOP shares and deferred compensation for stock grants $ 90,094 $ 81,491
Treasury stock, at cost (4,089) (2,753)
Unearned ESOP shares and deferred compensation for stock grants (608) (624)
----------- -----------
Total stockholders' equity $ 85,397 $ 78,114
----------- -----------
Total liabilities and stockholders' equity $ 952,536 $ 892,824
=========== ===========
Class A Common Shares outstanding at period end 6,883,237 5,790,814
=========== ===========
Class B Common Shares outstanding at period end 0 1,125,000
=========== ===========
</TABLE>
Page 4 of 22
<PAGE>
<TABLE>
<CAPTION>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
1998 1997
---- ----
(Dollars in thousands,
except per share amounts)
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $26,550 $24,589
Interest and dividends on investment securities:
Taxable interest income 5,275 5,188
Non-taxable interest income 847 1,002
Dividends 69 53
Interest on federal funds sold 596 148
-------- --------
Total interest income $33,337 $30,980
-------- --------
INTEREST EXPENSE:
Deposits $15,081 $14,419
Short-term borrowings 574 320
Long-term debt 596 247
-------- --------
Total interest expense $16,251 $14,986
-------- --------
Net interest income 17,086 $15,994
Provision for loan losses 650 400
-------- --------
Net interest income after provision for loan losses $16,436 $15,594
-------- --------
OTHER INCOME:
Trust $ 1,783 $ 1,625
Commissions and brokers fees, net 593 507
Service charges on deposit accounts 1,441 1,464
Other service charges and fees 953 603
Security gains (losses), net 533 265
Trading security gains (losses), net 0 2
Gain on sales of pooled loans 384 117
Other operating income 965 410
-------- --------
Total other income $ 6,652 $ 4,993
-------- --------
OTHER EXPENSES:
Salaries and wages $ 6,758 $ 6,011
Employee benefits 1,309 1,300
Net occupancy expense of bank premises 1,223 1,066
Furniture and equipment expenses 1,013 855
Data processing 961 822
Stationery, supplies and printing 350 345
Foreclosed property write-downs and expenses 0 0
Amortization expense 686 660
Other operating expenses 2,522 2,342
-------- --------
Total other expenses $14,822 $13,401
-------- --------
Income before income taxes $ 8,266 $ 7,186
Income taxes 2,554 2,131
-------- --------
NET INCOME $ 5,712 $ 5,055
======== ========
Other comprehensive income, before tax:
Unrealized gains on securities:
Unrealized holding gains(losses) arising during period $ 1,587 $ 1,904
Less reclassification adjustment for gains included in net income (533) (265)
-------- --------
Other comprehensive income, before tax 1,054 1,639
Income tax expense related to items of other comprehensive income (369) (574)
-------- --------
Other comprehensive income, net of tax $ 685 $ 1,065
COMPREHENSIVE INCOME $ 6,397 $ 6,120
BASIC EARNINGS PER SHARE $ 0.83 $ 0.73
DILUTED EARNINGS PER SHARE $ 0.81 $ 0.72
DIVIDENDS DECLARED PER SHARE:
Class A Common Stock $0.3800 $0.3400
======== ========
Class B Common Stock - $0.3091
======== ========
</TABLE>
Page 5 of 22
<PAGE>
<TABLE>
<CAPTION>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
FOR THE QUARTERS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
1998 1997
---- ----
(Dollars in thousands,
except per share amounts)
<S> <C> <C>
INTEREST INCOME:
Interest and fees on loans $13,231 $12,581
Interest and dividends on investment securities:
Taxable interest income 2,629 2,547
Non-taxable interest income 430 502
Dividends 34 25
Interest on federal funds sold 316 48
-------- --------
Total interest income $16,640 $15,703
-------- --------
INTEREST EXPENSE:
Deposits $ 7,489 $ 7,269
Short-term borrowings 290 188
Long-term debt 330 146
-------- --------
Total interest expense $ 8,109 $ 7,603
-------- --------
Net interest income $ 8,531 $ 8,100
Provision for loan losses 0 200
-------- --------
Net interest income after provision for loan losses $ 8,531 $ 7,900
-------- --------
OTHER INCOME:
Trust $ 899 $ 850
Commissions and brokers fees, net 310 220
Service charges on deposit accounts 738 744
Other service charges and fees 504 333
Security gains (losses), net 233 166
Trading security gains (losses), net 1 1
Gain on sales of pooled loans 198 82
Other operating income 467 141
-------- --------
Total other income $ 3,350 $ 2,537
-------- --------
OTHER EXPENSES:
Salaries and wages $ 3,372 $ 3,006
Employee benefits 644 627
Net occupancy expense of bank premises 602 501
Furniture and equipment expenses 526 425
Data processing 475 463
Stationery, supplies and printing 201 161
Amortization expense 343 330
Other operating expenses 1,351 1,146
-------- --------
Total other expenses $ 7,514 $ 6,659
-------- --------
Income before income taxes $ 4,367 $ 3,778
Income taxes 1,366 1,131
-------- --------
NET INCOME $ 3,001 $ 2,647
======== ========
Other comprehensive income, before tax:
Unrealized gains on securities:
Unrealized holding gains(losses) arising during period $ 422 $ 2,966
Less reclassification adjustment for gains included in net income (233) (166)
-------- --------
Other comprehensive income, before tax $ 189 $ 2,800
Income tax expense related to items of other comprehensive income (66) (980)
-------- --------
Other comprehensive income, net of tax $ 123 $ 1,820
COMPREHENSIVE INCOME $ 3,124 $ 4,467
BASIC EARNINGS PER SHARE $ 0.44 $ 0.38
DILUTED EARNINGS PER SHARE $ 0.42 $ 0.38
DIVIDENDS DECLARED PER SHARE:
Class A Common Stock $0.1900 $0.1700
======== ========
Class B Common Stock - $0.1545
======== ========
</TABLE>
Page 6 of 22
<PAGE>
<TABLE>
<CAPTION>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE SIX MONTHS ENDED JUNE 30, 1998 AND 1997
(UNAUDITED)
1998 1997
---- ----
(Dollars in thousands)
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $ 5,712 $ 5,055
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 1,876 1,686
Provision for loan losses 650 400
(Decrease) in deferred income taxes (743) (625)
Amortization of investment security discounts (76) (195)
Gain on sales of investment securities, net (533) (265)
Proceeds from sales of pooled loans 38,360 13,734
Loans originated for sale (40,571) (14,139)
Gain on sale of pooled loans (384) (117)
(Gain) on sales and dispositions of premises and equipment (12) 0
Change in assets and liabilities:
Increase in other assets 199 642
Increase (decrease) in accrued expenses 224 (179)
(Decrease) in interest payable (275) (96)
Increase in income taxes payable 507 397
---------- ----------
Net cash provided by operating activities $ 4,934 $ 6,298
---------- ----------
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sales of securities classified available for sale $ 19,365 $ 3,274
Proceeds from maturities of securities classified available for sale 60,025 57,490
Proceeds from maturities of securities classified held to maturity - 5,450
Purchase of securities classified available for sale (86,507) (53,116)
Purchase of securities classified held to maturity - (1,050)
(Increase) in federal funds sold (2,650) (10,500)
Increase in loans (19,783) (21,122)
Purchases of premises and equipment (2,782) (2,036)
Proceeds from sales of premises and equipment 23 1
Cash acquired in acquisition of Busey Carter Travel, Inc. 204 -
---------- ----------
Net cash (used in) investing activities ($32,105) ($21,609)
---------- ----------
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in certificates of deposit ($23,743) $ 23,503
Net increase in demand, money market and saving deposits 36,932 2,989
Cash dividends paid (2,625) (2,316)
Purchase of treasury stock (893) (402)
Proceeds from sale of treasury stock 391 1,253
Proceeds from short-term borrowings 10,000 -
Principal payments on short-term borrowings (1,000) (2,000)
Proceeds from long-term borrowings 15,000 5,000
Principal payments on long-term borrowings (5,000) -
Net increase (decrease) in federal funds purchased,
repurchase agreements and Federal Reserve discount borrowings - (6,405)
---------- ----------
Net cash provided by (used in) financing activities $ 29,062 $ 21,622
---------- ----------
Net increase (decrease) in cash and cash equivalents $ 1,891 $ 6,311
Cash and due from banks, beginning $ 43,299 $ 33,738
---------- ----------
Cash and due from banks, ending $ 45,190 $ 40,049
========== ==========
</TABLE>
Page 7 of 22
<PAGE>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 1: INTERIM FINANCIAL STATEMENTS
The consolidated interim financial statements of First Busey Corporation and
Subsidiaries are unaudited, but in the opinion of management reflect all
necessary adjustments, consisting only of normal recurring accruals, for a fair
presentation of results as of the dates and for the periods covered by the
financial statements. The results for the interim periods are not necessarily
indicative of the results of operations that may be expected for the fiscal
year.
NOTE 2: LOANS
The major classifications of loans at June 30, 1998 and December 31, 1997 were
as follows:
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
-----------------------------------
(Dollars in thousands)
<S> <C> <C>
Commercial $75,892 $63,861
Real estate construction 37,381 31,306
Real estate - farmland 12,862 11,782
Real estate - 1-4 family residential mortgage 232,413 225,622
Real estate - multifamily mortgage 64,486 74,385
Real estate - non-farm nonresidential mortgage 148,548 139,653
Installment 36,912 38,925
Agricultural 16,392 17,403
-----------------------------------
$624,886 $602,937
-----------------------------------
Less:
Allowance for loan losses 7,312 6,860
-----------------------------------
Net loans $617,574 $596,077
===================================
</TABLE>
The real estate-mortgage category includes loans held for sale with carrying
values of $7,558,000 at June 30, 1998 and $4,963,000 at December 31, 1997;
these loans had fair market values of $7,634,000 and $5,016,000, respectively.
Page 8 of 22
<PAGE>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE 3: INCOME PER SHARE
Net income per common share has been computed as follows:
<TABLE>
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
1998 1997 1998 1997
---------- ---------- ---------- ----------
<S> <C> <C> <C> <C>
Net income $3,001,000 $2,647,000 $5,712,000 $5,055,000
Shares:
Weighted average common shares outstanding 6,883,289 6,914,134 6,886,907 6,912,760
Dilutive effect of outstanding options, as determined
by the application of the treasury stock method 139,860 100,475 128,819 100,163
---------- ---------- ---------- ----------
Weighted average common shares outstanding,
as adjusted 7,023,149 7,014,609 7,015,726 7,012,923
========== ========== ========== ==========
Basic earnings per share $ 0.44 $ 0.38 $ 0.83 $ 0.73
========== ========== ========== ==========
Diluted earnings per share $ 0.42 $ 0.38 $ 0.81 $ 0.72
========== ========== ========== ==========
</TABLE>
<TABLE>
<CAPTION>
1998 1997
-------- --------
<S> <C> <C>
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash payments for:
Interest $16,526 $15,082
======== ========
Income taxes $ 2,047 $ 1,966
======== ========
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES
Other real estate acquired in settlement of loans $ 231 $ 27
======== ========
Change in unrealized gain (loss) on securities available for sale $ 1,054 $ 1,639
======== ========
(Decrease) increase in deferred income taxes attributable to the unrealized
(gain) loss on investment securities available for sale ($369) ($574)
======== ========
Acquisition of Busey Carter Travel, Inc.:
Working capital including cash $ 561 $ -
Premises and equipment 23 -
Intangibles and other assets 241 -
-------- --------
Common stock issued from treasury to acquire Busey Carter Travel, Inc. $ 825 $ 0
======== ========
</TABLE>
Page 9 of 22
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is management's discussion and analysis of the financial condition
of First Busey Corporation and Subsidiaries ("Corporation") at June 30, 1998
(unaudited) when compared with December 31, 1997 and the results of operations
for the six months ended June 30, 1998 and 1997 (unaudited) and the results of
operations for the three months ended June 30, 1998 and 1997 (unaudited). This
discussion and analysis should be read in conjunction with the Corporation's
consolidated financial statements and notes thereto appearing elsewhere in this
quarterly report.
FINANCIAL CONDITION AT JUNE 30, 1998 AS COMPARED TO DECEMBER 31, 1997
Total assets increased $36,996,000, or 4.0%, to $952,536,000 at June 30, 1998
from $915,540,000 at December 31, 1997.
Securities available for sale increased $8,780,000, or 4.1%, to $224,294,000 at
June 30, 1998 from $215,514,000 at December 31, 1997.
Loans increased $21,949,000, or 3.6%, to $624,886,000 at June 30, 1998 from
$602,937,000 at December 31, 1997, primarily due to increases in commercial and
mortgage loans.
Total deposits increased $13,189,000, or 1.6%, to $824,642,000 at June 30, 1998
from $811,453,000 at December 31, 1997. Non-interest bearing deposits increased
7.2% to $98,742,000 at June 30, 1998 from $92,090,000 at December 31, 1997.
Interest-bearing deposits increased 0.9% to $725,900,000 at June 30, 1998 from
$719,363,000 at December 31, 1997.
Short-term borrowings increased $9,000,000 to $15,550,000 at June 30, 1998, as
compared to $6,550,000 at December 31, 1997. Proceeds from the increase in
short-term borrowings were used to capitalize Busey Business Bank, the holding
company's new bank subsidiary located in Indianapolis, Indiana.
In the first six months of 1998, the Corporation repurchased 31,656 shares of
its Class A common stock at an aggregate cost of $893,000. The Corporation is
purchasing shares for the treasury as they become available in order to meet
future issuance requirements of previously granted non-qualified stock options.
As of June 30, 1998, 41,403 of the 133,441 options which became exercisable on
January 1, 1997 (and expire December 31, 1999), have not yet been exercised, and
14,700 of the 31,950 options which became exercisable on January 1, 1998 (and
expire December 31, 1999), have not yet been exercised.
The following table sets forth the components of non-performing assets and past
due loans.
<TABLE>
<CAPTION>
June 30, 1998 December 31, 1997
------------- -----------------
(Dollars in thousands)
<S> <C> <C>
Non-accrual loans $165 $628
Loans 90 days past due, still accruing 1,778 1,033
Restructured loans - -
Other real estate owned 381 516
Non-performing other assets 2 5
-------------- ----------------
Total non-performing assets $2,326 $2,182
============== ================
Total non-performing assets as a percentage of total assets 0.24% 0.24%
============== ================
Total non-performing assets as a percentage of loans plus non-performing assets 0.37% 0.36%
============== ================
</TABLE>
The ratio of non-performing assets to loans plus non-performing assets increased
to 0.37% at June 30, 1998 from 0.36% at December 31, 1997. This was due to an
increase in the balance of loans 90 days past due and still accruing, offset
partially by a decrease in the balances of non-accrual loans and other real
estate owned
Page 10 of 22
<PAGE>
RESULTS OF OPERATIONS
SIX MONTHS ENDED JUNE 30, 1998 AS COMPARED TO JUNE 30, 1997
SUMMARY
- -------
Net income for the six months ended June 30, 1998 increased 13.0% to $5,712,000
as compared to $5,055,000 for the comparable period in 1997. Diluted earnings
per share increased 12.5% to $.81 at June 30, 1998 as compared to $.72 for the
same period in 1997.
Operating earnings, which exclude security gains and the related tax expense,
were $5,365,000, or $.76 per share for the six months ended June 30, 1998, as
compared to $4,883,000, or $.70 per share for the same period in 1997.
The Corporation's return on average assets was 1.25% for the six months ended
June 30, 1998, as compared to 1.18% for the comparable period in 1997. The
return on average assets from operations of 1.18% for the six months ended June
30, 1998 was 4 basis points higher than the 1.14% level achieved in the
comparable period of 1997.
Net interest margin, the Corporation's net interest income expressed as a
percentage of average earning assets stated on a fully taxable equivalent basis,
was 4.18% for the six months ended June 30, 1998, as compared to 4.24% for the
same period in 1997. The net interest margin expressed as a percentage of
average total assets, also on a fully taxable equivalent basis, was 3.87% for
the six months ended June 30, 1998, compared to 3.88% for the same period in
1997. The decrease in the net interest margin is due primarily to the 13 basis
point increase in the average rate paid on interest-bearing liabilities.
During the six months ended June 30, 1998, the Corporation recognized security
gains of approximately $347,000, after income taxes, representing 6.1% of net
income. During the same period in 1997, security gains of $172,000, after
income taxes, were recognized, representing 3.4% of net income.
INTEREST INCOME
- ---------------
Interest income, on a tax equivalent basis, for the six months ended June 30,
1998 increased 7.1% to $33,933,000 from $31,676,000 for the comparable period
in 1997. The increase in interest income resulted from an increase in average
earning assets of $59,162,000 for the period ended June 30, 1998, as compared to
the same period of 1997. The average yield on interest-earning assets decreased
from 8.04% for the six months ended June 30, 1997 to 8.02% for the same period
in 1998. This is due primarily to declines in the yields on investment
securities partially offset by increases in the yields on loans and federal
funds sold.
INTEREST EXPENSE
- ----------------
Total interest expense increased 8.4% for the six months ended June 30, 1998 as
compared to the prior year period. This increase resulted primarily from the
growth of $36,508,000 in average interest-bearing liabilities to $749,840,000
for the six months ending June 30, 1998, compared to $713,332,000 for the same
period in 1997.
PROVISION FOR LOAN LOSSES
- -------------------------
The provision for loan losses of $650,000 for the six months ended June 30, 1998
is $250,000 more than the provision for the comparable period in 1997. The
provision and the net charge-offs for the period resulted in the reserve
representing 1.17% of total loans and 376% of non-performing loans at June 30,
1998, as compared to the reserve representing 1.14% of total loans and 413% of
non-performing loans at December 31, 1997. The adequacy of the reserve for loan
losses is consistent with management's consideration of the composition of the
portfolio, recent credit quality experience, and prevailing economic conditions.
Page 11 of 22
<PAGE>
OTHER INCOME, OTHER EXPENSE AND INCOME TAXES
- --------------------------------------------
Total other income, excluding security gains, increased 29.4% for the six months
ended June 30, 1998 as compared to the same period in 1997. This was a
combination of increases in trust revenue, commissions and brokers fees, and
gains on the sales of pooled loans for the six months ended June 30, 1998 as
compared to the same period in 1997. As of June 30, 1998, the asset management
divisions of the Corporation had $1,077,000,000 in assets under care, an
increase of 21.4% from $887,293,000 at June 30, 1998. Gains of $384,000 were
recognized on the sale of $37,976,000 of pooled loans for the six months ended
June 30, 1998 as compared to gains of $117,000 on the sale of $13,617,000 of
pooled loans in the prior year period.
Management anticipates continued sales from the current mortgage loan production
of the Corporation if mortgage loan originations allow and the sales of the
loans are necessary to maintain the asset/liability structure that the
Corporation is trying to effect. The Corporation may realize gains and/or
losses on these sales dependent upon interest rate movements and upon how
receptive the debt markets are to mortgage backed securities.
Total other expense increased 10.6% or $1,421,000 for the six months ended June
30, 1998 as compared to the same period in 1997.
Salaries and wages expense increased $747,000 or 12.4% and employee benefits
expense increased $9,000 for the six months ended June 30, 1998, as compared to
the same period last year. The Corporation had 425 full time equivalent
employees as of June 30, 1998 as compared to 393 as of June 30, 1997. Occupancy
and furniture and equipment expenses increased 16.4% to $2,236,000 for the six
months ended June 30, 1998 from $1,921,000 in the prior year period. Data
processing expense increased $139,000 or 16.9% to $961,000 for the six months
ended June 30, 1998 from the prior year period.
The Corporation's net overhead expense, total non-interest expense less
non-interest income divided by average assets, decreased to 1.91% for the six
months ended June 30, 1998 from 2.02% in the prior year period as a result of
the income and expense items described above.
The Corporation's efficiency ratio is defined as operating expenses divided by
net revenue. (More specifically it is defined as non interest expense
expressed as a percentage of the sum of tax equivalent net interest income and
non interest income, excluding security gains). The consolidated efficiency
ratio for the six months ended
June 30, 1998 was 62.3%, an improvement from 62.6% for the same period in 1997.
When the gains on the sales of pooled loans are excluded these ratios are 63.3%
and 62.9% for the six month periods ending June 30, 1998 and June 30, 1997
respectively.
Income taxes for the six months ended June 30, 1998 increased to $2,554,000 as
compared to $2,131,000 for the
comparable period in 1997. As a percent of income before taxes, the provision
for income taxes increased to 30.9% for the six months ended June 30, 1998 from
29.7% for the same period in 1997.
Page 12 of 22
<PAGE>
RESULTS OF OPERATIONS
THREE MONTHS ENDED JUNE 30, 1998 AS COMPARED TO JUNE 30, 1997
SUMMARY
- -------
Net income for the three months ended June 30, 1998 increased 13.4% to
$3,001,000 as compared to $2,647,000 for the comparable period in 1997. Diluted
earnings per share increased 10.5% to $.42 at June 30, 1998 as compared to $.38
for the same period in 1997.
Operating earnings, which exclude security gains and the related tax expense,
were $2,849,000, or $.40 per share for the three months ended June 30, 1998, as
compared to $2,540,000, or $.37 per share for the same period in 1997.
The Corporation's return on average assets was 1.31% for the three months ended
June 30, 1998, as compared to 1.22% achieved for the comparable period in 1997.
The return on average assets from operations for the three months ended June 30,
1998 of 1.24% was seven basis points more than the 1.17% level achieved in the
comparable period of 1997.
The net interest margin expressed as a percentage of average earning assets was
4.14% for the three months ended June 30, 1998, a decrease of 12 basis points
from the level achieved for the like period in 1997. The net interest margin
expressed as a percentage of average total assets was 3.84% for the three months
ended June 30, 1998, compared to 3.90% for the same period in 1997.
During the three months ended June 30, 1998, the Corporation recognized security
gains of approximately $152,000, after income taxes, representing 5.0% of net
income. During the same period in 1997, security gains of approximately
$107,000, after income taxes, were recognized, representing 4.1% of net income.
INTEREST INCOME
- ---------------
Interest income on a fully taxable equivalent basis increased $888,000, or 5.5%
for the three months ended June 30, 1998 from the same period in 1997. The
increase resulted from a higher level of interest income on greater average
volumes of loans, offset in part by lower levels of interest income on lower
yields and average balances of obligations of states and political subdivisions
outstanding, for the three months ended June 30, 1998 as compared to the same
period of 1997. The yield on interest earning assets decreased 15 basis points
for the three months ended June 30, 1998 as compared to the same period in 1997.
INTEREST EXPENSE
- ----------------
Total interest expense increased 6.7% for the three months ended June 30, 1998
as compared to the prior year period. This increase resulted in large part from
an increase in average other short-term borrowings and average long-term debt
balances for the three months ended June 30, 1998, as compared to the same
period in 1997.
OTHER INCOME, OTHER EXPENSE AND INCOME TAXES
- --------------------------------------------
Total other income, excluding security transactions, increased 31.5% for the
three months ended June 30, 1998 as compared to the same period in 1997. This
was a combination of increased trust revenue, commissions and brokers fees,
other service charges and fees, gains on sales of pooled loans, and other
operating income. Gains of $198,000 were recognized on the sale of $22,331,000
of pooled loans for the three months ended June 30, 1998 as compared to gains of
$82,000 on the sale of $8,472,000 of pooled loans in the prior year period.
Total other expense increased 12.8% or $855,000 for the three months ended June
30, 1998 as compared to the same period in 1997.
Page 13 of 22
<PAGE>
Salaries and wages expense increased $366,000 or 12.2% and employee benefits
expense increased $17,000 or 2.7% for the three months ended June 30, 1998, as
compared to the same period last year. Occupancy and furniture and equipment
expenses increased 21.8% to $1,128,000 for the three months ended June 30, 1998
from $926,000 in the prior year period. Data processing expense increased
$12,000 or 2.6% to $475,000 for the three months ended June 30, 1998 from the
prior year period.
The consolidated efficiency ratio for the three months ended June 30, 1998 was
62.9% as compared to 61.5% for the prior year period. When the gains on the
sales of pooled loans are excluded, this ratio is 64.0% for the three months
ended June 30, 1998 compared to 62.0% for the same period in 1997. The change
in the current year efficiency ratio is due to the income and expense items
noted above.
Income taxes for the three months ended June 30, 1998 increased to $1,366,000 as
compared to $1,131,000 for the comparable period in 1997. As a percent of
income before taxes, the provision for income taxes increased to 31.3% for the
three months ended June 30, 1998 from 29.9% for the same period in 1997.
LIQUIDITY
- ---------
Liquidity is the availability of funds to meet all present and future financial
obligations arising in the daily operations of the business at a minimal cost.
These financial obligations consist of needs for funds to meet extensions of
credit, deposit withdrawals and debt servicing.
The sources of short-term liquidity utilized by the Corporation consist of
non-reinvested asset maturities, deposits and capital funds. Long-term
liquidity needs will be satisfied primarily through retention of capital funds.
The Corporation does not deal in or use brokered deposits as a source of
liquidity. The Corporation purchases federal funds as a service to its
respondent banks, but generally does not rely upon these purchases for liquidity
needs. Additional liquidity is provided by bank lines of credit, repurchase
agreements and the ability to borrow from the Federal Reserve Bank and the
Federal Home Loan Bank of Chicago. The Corporation has an operating line with
American National Bank and Trust Company of Chicago in the amount of $10,000,000
with $5,000,000 available as of June 30, 1998.
The Corporation's dependence on large liabilities (defined as time deposits over
$100,000 and short-term borrowings) decreased to 11.0% at June 30, 1998 from
12.4% at December 31, 1997. This is the ratio of total large liabilities to
total liabilities, and is low in comparison to the Corporation's peers. This
change was due largely to a $17,059,000 decrease in time deposits over $100,000
and a $9,000,000 increase in short-term debt which resulted in a lower ratio of
large liabilities to total liabilities.
CAPITAL RESOURCES
- -----------------
Other than from the issuance of common stock, the Corporation's primary source
of capital is retained net income. During the six months ended June 30, 1998,
the Corporation earned $5,712,000 and paid dividends of $2,625,000 to
stockholders, resulting in a retention of current earnings of $3,087,000. The
Corporation's dividend payout for the six months ended June 30, 1998 was 46.0%.
The Corporation's risk-based capital ratio was 13.49% and the leverage ratio was
7.86% as of June 30, 1998, as compared to 13.01% and 7.61% respectively as of
December 31, 1997. The Corporation and its bank subsidiaries were well above
all minimum required capital ratios as of June 30, 1998.
Page 14 of 22
<PAGE>
MARKET RISK
- -----------
Market risk is the risk of change in asset values due to movements in underlying
market rates and prices. Interest rate risk is the risk to earnings and capital
arising from movements in interest rates. Interest rate risk is the most
significant market risk affecting the Corporation as other types of market risk,
such as foreign currency exchange rate risk and commodity price risk, do not
arise in the normal course of the Corporation's business activities.
The Corporation's banking subsidiary, Busey Bank, has an asset-liability
committee which meets monthly to review current market conditions and attempts
to structure the bank's balance sheet to ensure stable net interest income
despite potential changes in interest rates with all other variables constant.
The asset-liability committee uses gap analysis to identify mismatches in the
dollar value of assets and liabilities subject to repricing within specific time
periods. The Funds Management Policy established by the asset-liability
committee and approved by the Corporation's board of directors establishes
guidelines for maintaining the ratio of cumulative rate-sensitive assets to
rate-sensitive liabilities within prescribed ranges at certain intervals. A
summary of the Corporation's gap analysis is summarized on page 25.
The committee does not rely solely on gap analysis to manage interest-rate risk
as interest rate changes do not impact all categories of assets and liabilities
equally or simultaneously. The asset-liability committee supplements gap
analysis with balance sheet and income simulation analysis to determine the
potential impact on net interest income of changes in market interest rates.
In these simulation models the balance sheet is projected out over a one-year
period and net interest income is calculated under current market rates, and
then assuming permanent instantaneous shifts in the yield curve of +/- 100 basis
point and +/- 200 basis points. These interest-rate scenarios indicate the
interest rate risk of the Corporation over a one-year time horizon due to
changes in interest rates, as of June 30, 1998, is as follows:
<TABLE>
<CAPTION>
Basis Point Changes
-----------------------------------------
-200 -100 +100 +200
-----------------------------------------
<S> <C> <C> <C> <C>
Percentage change in net interest income due to an immediate change
in interest over a one-year period (6.10%) (2.98%) (.14%) (.36%)
</TABLE>
YEAR 2000 COMPLIANCE
- --------------------
The Corporation has developed an all encompassing plan to address Year 2000
related issues. A major aspect of the plan is the migration from an outsourced
data processing solution to an in-house solution. This migration is underway
with a planned completion date for all major applications of the middle of
October, 1998. There will be a cost of approximately $3,800,000 for equipment
and software which will be partially offset by the elimination of many of the
outsourcing costs. Some of these costs will be capitalized as they relate to
equipment purchased for the in-house data processing solution.
Testing of desktop hardware and software systems has begun. Those systems that
are not compliant are being upgraded or eliminated. To date 100% of the desktop
hardware has been reviewed and certified compliant. Approximately 50% of the
desktop software has been reviewed and certified compliant.
The Corporation held a customer education seminar discussing the Year 2000 on
June 15, 1998. In conjunction with the seminar, an educational brochure was
developed and is being made available to customers. The Corporation is planning
to conduct at least one additional seminar later in 1998.
Contingency plans continue to be developed for critical business applications in
order to mitigate potential problems and/or delays associated with
implementation of new solutions or delivery of products and services from
vendors.
RATE-SENSITIVE ASSETS AND LIABILITIES
- -------------------------------------
Interest-rate sensitivity is a measure of the volatility of the net interest
margin as a consequence of changes in market rates. The rate-sensitivity chart
shows the interval of time in which given volumes of rate-sensitive earning
assets and rate-sensitive interest-bearing liabilities would be responsive to
changes in market interest rates based on their contractual maturities or terms
for repricing. It is, however, only a static, single-day depiction of the
Corporation's rate sensitivity structure, which can be adjusted in response to
changes in forecasted interest rates.
Page 15 of 22
<PAGE>
The following table sets forth the static rate-sensitivity analysis of the
Corporation as of June 30, 1998.
<TABLE>
<CAPTION>
Rate Sensitive Within
-----------------------------------------------------------------------
1-30 31-90 91-180 181 Days - Over
Days Days Days 1 Year 1 Year Total
-----------------------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
Federal funds sold $ 21,450 $ 0 $ 0 $ 0 $ 0 $ 21,450
Investment securities
U.S. Governments 8,169 8,903 17,262 65,325 69,202 168,861
Obligations of states and
political subdivisions 0 0 4,531 361 27,999 32,891
Other securities 3,494 100 150 1,481 17,317 22,542
Loans (net of unearned int.) 194,992 37,064 39,747 89,353 263,720 624,886
-----------------------------------------------------------------------
Total rate-sensitive assets $ 228,105 $ 46,067 $ 61,690 $ 156,520 $378,248 $870,630
-----------------------------------------------------------------------
Interest bearing transaction
deposits $ 161,493 $ 0 $ 0 $ 0 $ 0 $161,493
Savings deposits 80,595 0 0 0 0 80,595
Money market deposits 134,493 0 0 0 0 134,493
Time deposits 38,361 57,444 59,354 98,540 95,620 349,319
Short-term borrowings:
Federal funds purchased &
repurchase agreements 0 0 0 0 0 0
Other 0 0 10,000 5,550 0 15,550
Long-term debt 0 0 0 0 20,000 20,000
-----------------------------------------------------------------------
Total rate-sensitive
liabilities $ 414,942 $ 57,444 $ 69,354 $ 104,090 $115,620 $761,450
-----------------------------------------------------------------------
Rate-sensitive assets less
rate-sensitive liabilities ($186,837) ($11,377) ($7,664) $ 52,430 $262,628 $109,180
-----------------------------------------------------------------------
Cumulative gap ($186,837) ($195,214) ($205,878) ($153,448) $109,180 $ -
=======================================================================
Cumulative gap as a
percentage of total
rate-sensitive assets -21.46% -22.77% -23.65% -17.62% 12.54%
=======================================================================
Cumulative ratio (cumulative RSA/RSL)
0.55X 0.58X 0.62X 0.76X 1.14X 1.14X
=======================================================================
</TABLE>
The foregoing table shows a negative (liability sensitive) rate-sensitivity gap
of $186.8 million in the 1-30 day repricing category. The gap beyond 30 days,
through 180 days, becomes slightly more liability sensitive as rate-sensitive
assets that reprice in those time periods are slightly less in volume than
rate-sensitive liabilities that are subject to repricing in the same respective
time periods. The gap beyond 180 days becomes less liability sensitive as
rate-sensitive assets that reprice after 180 days become greater in volume than
rate-sensitive liabilities that are subject to repricing in the same respective
time periods. The composition of the gap structure at June 30, 1998, will
benefit the Corporation more if interest rates fall during the next 180 days by
allowing the net interest margin to grow as liability rates would reprice more
quickly than rates on interest rate-sensitive assets. After 180 days, a rate
increase would benefit the Corporation because the volume of rate-sensitive
assets repricing would exceed the volume of rate-sensitive liabilities that
would be repricing.
Page 16 of 22
<PAGE>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
AVERAGE BALANCE SHEETS AND INTEREST RATES
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------------------------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
----------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Federal funds sold $21,815 $ 596 5.51% $ 5,561 $ 148 5.36%
Investment securities
U.S. Government obligations 168,886 4,850 5.79% 163,457 4,734 5.84%
Obligations of states and political
subdivisions (1) 32,474 1,303 8.09% 36,989 1,543 8.41%
Other securities 22,311 493 4.46% 20,605 507 4.96%
Loans (net of unearned interest) (1) (2) 608,270 26,691 8.85% 567,982 24,744 8.79%
------------------ ------------------
Total interest earning assets $853,756 $33,933 8.02% $794,594 $31,676 8.04%
======= =======
Cash and due from banks 31,977 38,241
Premises and equipment 24,004 22,236
Reserve for possible loan losses (7,224) (6,337)
Other assets 17,854 18,072
--------- ---------
Total Assets $920,367 $866,806
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest-bearing transaction deposits $ 11,323 $ 111 1.97% $145,648 $ 1,373 1.90%
Savings deposits 80,484 1,318 3.30% 82,113 1,327 3.26%
Money market deposits 267,784 3,937 2.96% 119,682 2,219 3.74%
Time deposits 353,387 9,715 5.54% 347,663 9,500 5.51%
Short-term borrowings:
Federal funds purchased and
repurchase agreements 275 8 5.60% 2,921 85 5.87%
Other 14,764 566 7.74% 6,714 235 7.05%
Long-term debt 21,823 596 5.50% 8,591 247 5.80%
------------------ ------------------
Total interest bearing liabilities $749,840 $16,251 4.37% $713,332 $14,986 4.24%
======= =======
Net interest spread 3.65% 3.80%
===== =====
Demand deposits 79,534 72,466
Other liabilities 7,838 5,689
Stockholders' equity 83,155 75,319
--------- ---------
Total Liabilities and Stockholders' Equity $920,367 $866,806
========= =========
Interest income / earning assets (1) $853,756 $33,933 8.02% $794,594 $31,676 8.04%
Interest expense / earning assets $853,756 16,251 3.84% 794,594 14,986 3.80%
----------------- -----------------
Net interest margin (1) $17,682 4.18% $16,690 4.24%
================= =================
<FN>
(1) On a tax-equivalent basis, assuming a federal income tax rate of 35% for 1998 and 1997.
(2) Non-accrual loans have been included in average loans, net of unearned interest.
</TABLE>
Page 17 of 22
<PAGE>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CHANGES IN NET INTEREST INCOME
SIX MONTHS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
Change due to (1)
Average Average Total
Volume Yield/Rate Change
-------------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Increase (decrease) in interest income:
Federal funds sold $ 444 $ 4 $ 448
Investment securities:
U.S. Government obligations 156 (40) 116
Obligations of states and political
subdivisions (2) (183) (57) (240)
Other securities 61 (75) (14)
Loans (2) 1,767 180 1,947
-------------------------------------
Change in interest income (2) $ 2,245 $ 12 $ 2,257
-------------------------------------
Increase (decrease) in interest expense:
Interest bearing transaction deposits ($1,316) $ 54 ($1,262)
Savings deposits (27) 18 (9)
Money market deposits 2,063 (345) 1,718
Time deposits 157 58 215
Short-term borrowings:
Federal funds purchased and repurchase agreements (74) (3) (77)
Other 307 24 331
Long-term debt 361 (12) 349
-------------------------------------
Change in interest expense $ 1,471 ($206) $ 1,265
-------------------------------------
Increase in net interest income (2) $ 774 $ 218 $ 992
=====================================
<FN>
(1) Changes due to both rate and volume have been allocated proportionally.
(2) On a tax-equivalent basis, assuming a federal income tax rate of 35% for 1998 and 1997.
</TABLE>
Page 18 of 22
<PAGE>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
AVERAGE BALANCE SHEETS AND INTEREST RATES
QUARTERS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
1998 1997
----------------------------------------------------------
Average Income/ Yield/ Average Income/ Yield/
Balance Expense Rate Balance Expense Rate
----------------------------------------------------------
(Dollars in thousands)
<S> <C> <C> <C> <C> <C> <C>
ASSETS
Federal funds sold $23,012 $ 316 5.51% $ 3,466 $ 48 5.49%
Investment securities
U.S. Government obligations 166,919 2,414 5.80% 159,621 2,318 5.83%
Obligations of states and political
subdivisions (1) 33,052 662 8.03% 37,081 774 8.36%
Other securities 22,720 247 4.36% 20,811 254 4.90%
Loans (net of unearned interest) (1) (2) 609,555 13,300 8.75% 575,126 12,657 8.83%
------------------ ------------------
Total interest earning assets $855,258 $16,939 7.94% $796,105 $16,051 8.09%
======= =======
Cash and due from banks 30,912 37,988
Premises and equipment 24,698 22,529
Reserve for possible loan losses (7,434) (6,425)
Other assets 18,801 18,340
--------- ---------
Total Assets $922,235 $868,537
========= =========
LIABILITIES AND STOCKHOLDERS' EQUITY
Interest bearing transaction deposits $ 11,677 $ 59 2.01% $148,418 $ 757 2.05%
Savings deposits 80,471 657 3.27% 79,947 650 3.26%
Money market deposits 273,605 2,039 2.99% 117,928 1,104 3.75%
Time deposits 343,750 4,734 5.52% 346,409 4,759 5.51%
Short-term borrowings:
Federal funds purchased and
repurchase agreements 143 2 5.22% 5,502 79 5.75%
Other 15,925 289 7.27% 6,125 108 7.08%
Long-term debt 24,670 329 5.35% 10,000 146 5.85%
------------------ ------------------
Total interest bearing liabilities $750,241 $ 8,109 4.34% $714,329 $ 7,603 4.27%
======= =======
Net interest spread 3.60% 3.82%
===== =====
Demand deposits 80,144 72,374
Other liabilities 7,871 5,667
Stockholders' equity 83,979 76,167
--------- ---------
Total Liabilities and Stockholders' Equity $922,235 $868,537
========= =========
Interest income / earning assets (1) $855,258 $16,939 7.94% $796,105 $16,051 8.09%
Interest expense / earning assets $855,258 8,109 3.80% 796,105 7,603 3.83%
----------------- -----------------
Net interest margin (1) $ 8,830 4.14% $ 8,448 4.26%
================= =================
<FN>
(1) On a tax-equivalent basis, assuming a federal income tax rate of 35% for 1998 and 1997.
(2) Non-accrual loans have been included in average loans, net of unearned interest.
</TABLE>
Page 19 of 22
<PAGE>
FIRST BUSEY CORPORATION AND SUBSIDIARIES
CHANGES IN NET INTEREST INCOME
QUARTERS ENDED JUNE 30, 1998 AND 1997
<TABLE>
<CAPTION>
Change due to (1)
Average Average Total
Volume Yield/Rate Change
---------------------------------
(Dollars in thousands)
<S> <C> <C> <C>
Increase (decrease) in interest income:
Federal funds sold $ 268 $ 0 $ 268
Investment securities:
U.S. Government obligations 105 (9) 96
Obligations of states and political
subdivisions (2) (81) (31) (112)
Other securities 36 (43) (7)
Loans (2) 750 (107) 643
---------------------------------
Change in interest income (2) $1,078 (190) $ 888
---------------------------------
Increase (decrease) in interest expense:
Interest bearing transaction deposits ($686) ($12) ($698)
Savings deposits 4 3 7
Money market deposits 1,106 (171) 935
Time deposits (37) 12 (25)
Short-term borrowings:
Federal funds purchased and repurchase
agreements (70) (7) (77)
Other 178 3 181
Long-term debt 194 (11) 183
---------------------------------
Change in interest expense $ 689 ($183) $ 506
---------------------------------
Increase in net interest income (2) $ 389 ($7) $ 382
=================================
<FN>
(1) Changes due to both rate and volume have been allocated proportionally.
(2) On a tax-equivalent basis, assuming a federal income tax rate of 35% for 1998 and 1997.
</TABLE>
Page 20 of 22
<PAGE>
PART II - OTHER INFORMATION
ITEM 6: Exhibits and Reports on Form 8-K
(a) There were no reports on Form 8-K filed during the three
months ending June 30, 1998.
Page 21 of 22
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused the report to be signed on its behalf by the
undersigned thereunto duly authorized.
FIRST BUSEY CORPORATION
(REGISTRANT)
By: //Scott L. Hendrie//
--------------------------------------------
Scott L. Hendrie
Senior Vice President and
Chief Financial Officer
(Principal financial and accounting officer)
Date: August 14, 1998
Page 22 of 22
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> JUN-30-1998
<CASH> 45,190
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 21,450
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 224,294
<INVESTMENTS-CARRYING> 0
<INVESTMENTS-MARKET> 0
<LOANS> 624,886
<ALLOWANCE> 7,312
<TOTAL-ASSETS> 952,536
<DEPOSITS> 824,642
<SHORT-TERM> 15,550
<LIABILITIES-OTHER> 6,947
<LONG-TERM> 20,000
0
0
<COMMON> 6,291
<OTHER-SE> 79,106
<TOTAL-LIABILITIES-AND-EQUITY> 952,536
<INTEREST-LOAN> 13,231
<INTEREST-INVEST> 3,093
<INTEREST-OTHER> 316
<INTEREST-TOTAL> 16,640
<INTEREST-DEPOSIT> 7,489
<INTEREST-EXPENSE> 8,109
<INTEREST-INCOME-NET> 8,531
<LOAN-LOSSES> 0
<SECURITIES-GAINS> 233
<EXPENSE-OTHER> 7,514
<INCOME-PRETAX> 4,367
<INCOME-PRE-EXTRAORDINARY> 3,001
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 3,001
<EPS-PRIMARY> 0.44
<EPS-DILUTED> 0.42
<YIELD-ACTUAL> 7.94
<LOANS-NON> 165
<LOANS-PAST> 1,778
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 529
<ALLOWANCE-OPEN> 7,474
<CHARGE-OFFS> 178
<RECOVERIES> 16
<ALLOWANCE-CLOSE> 7,312
<ALLOWANCE-DOMESTIC> 0
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
