FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
QUARTERLY REPORT UNDER SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the Quarter ended September 30, 1998
Commission File Number 0-10275
EVERGREEN BANCORP, INC.
-----------------------
(Exact name of registrant as specified in its charter)
DELAWARE 36-3114735
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(State or other jurisdiction of (IRS Employer
incorporation or organization) Identification No.)
237 GLEN STREET, GLENS FALLS, NEW YORK 12801
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(Address of principal executive offices)
Registrant's telephone number, including area code: (518) 792-1151
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Indicate by check mark whether the Registrant (1) has filed all
reports required to be filed by Section 13 or 15 (d) of the Securi-
ties 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 Issuer's classes of
common stock, as of the latest practicable date:
Class of Common Stock Number of Shares Outstanding
as of October 31, 1998
------------------- ----------------------
$3.33 1/3 Par Value 8,732,659
EVERGREEN BANCORP, INC. AND SUBSIDIARIES
INDEX
Page No.
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PART I FINANCIAL INFORMATION
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Item 1 Financial Statements (Unaudited):
Consolidated Statements of Income for the Three
Months Ended September 30, 1998, and 1997 1
Consolidated Statements of Income for the Nine
Months Ended September 30, 1998, and 1997 2
Consolidated Statements of Financial Condition
as of September 30, 1998, and December 31, 1997 3-4
Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 1998 and 1997 5-6
Notes to Consolidated Interim
Financial Statements 7-9
Independent Auditors' Review Report 10
Item 2 Management's Discussion and Analysis 11-23
Item 3 Not Applicable
PART II OTHER INFORMATION
-------
Item 1 Legal Proceedings - None
Item 2 Changes in Securities - None
Item 3 Defaults Upon Senior Securities - None
Item 4 Submission of Matters to a Vote of Security Holders - None
Item 5 Other Information - None
Item 6 Exhibits and Reports on Form 8-K
EVERGREEN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
(Except Per Share Data)
Three Months
Ended September 30,
1998 1997
(Unaudited)
Interest Income:
Interest and Fees on Loans $14,615 $14,790
Interest on Investment Securities 5,098 4,479
Interest on Federal Funds Sold & Bank Deposits 199 235
------- -------
Total Interest Income 19,912 19,504
------- -------
Interest Expense:
Interest on Deposits:
Regular Savings, Interest Checking and Money
Market Deposit Accounts 2,490 2,390
Other Time 6,400 5,823
Interest on Short-Term Borrowings 136 79
Interest on Long-Term Debt 411 420
------- -------
Total Interest Expense 9,437 8,712
------- -------
Net Interest Income 10,475 10,792
Provision for Loan Losses 495 450
------- -------
Net Interest Income After Provision for
Loan Losses 9,980 10,342
------- -------
Other Income:
Trust Department Income 657 663
Service Charges on Deposit Accounts 767 768
Net Gain on Security Transactions 191 -
Other 477 355
------- -------
Total Other Income 2,092 1,786
------- -------
Other Expense:
Salaries and Employee Benefits 4,106 4,206
Net Occupancy and Equipment Expense 1,056 1,084
Other 2,494 2,528
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Total Other Expense 7,656 7,818
------- -------
Income Before Taxes 4,416 4,310
Applicable Income Taxes 1,369 1,425
------- -------
Net Income $ 3,047 $ 2,885
======= =======
Earnings Per Common Share:
Average Shares Outstanding - Basic 8,787 8,956
Basic Income Per Share $ .35 $ .32
Diluted Income per Share $ .34 $ .32
See accompanying notes to consolidated interim financial statements.
1
EVERGREEN BANCORP, INC.
CONSOLIDATED STATEMENTS OF INCOME
(Dollars in Thousands)
(Except Per Share Data)
Nine Months
Ended September 30,
1998 1997
(Unaudited)
Interest Income:
Interest and Fees on Loans $44,079 $43,872
Interest on Investment Securities 15,036 11,915
Interest on Federal Funds Sold & Bank Deposits 588 1,078
------ ------
Total Interest Income 59,703 56,865
------ ------
Interest Expense:
Interest on Deposits:
Regular Savings, Interest Checking and Money
Market Deposit Accounts 7,261 7,230
Other Time 19,119 16,556
Interest on Short-Term Borrowings 378 192
Interest on Long-Term Debt 1,230 1,232
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Total Interest Expense 27,988 25,210
------ ------
Net Interest Income 31,715 31,655
Provision for Loan Losses 1,485 1,260
------ ------
Net Interest Income After Provision for
Loan Losses 30,230 30,395
------ ------
Other Income:
Trust Department Income 2,141 1,960
Service Charges on Deposit Accounts 2,276 2,104
Net Gain/(Loss) on Security Transactions 236 9
Other 1,326 1,076
------ ------
Total Other Income 5,979 5,149
------ ------
Other Expenses:
Salaries and Employee Benefits 12,367 12,268
Net Occupancy and Equipment Expense 3,164 3,214
Other 7,608 7,753
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Total Other Expenses 23,139 23,235
------- -------
Income Before Taxes 13,070 12,309
Applicable Income Taxes 4,105 4,070
------- -------
Net Income $ 8,965 $ 8,239
======= =======
Earnings Per Common Share:
Average Shares Outstanding - Basic 8,809 9,016
Basic Income Per Share $ 1.02 $ .91
Diluted Income Per Share $ 1.00 $ .90
See accompanying notes to consolidated interim financial statements.
2
EVERGREEN BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Dollars in Thousands)
9/30/98 12/31/97
(Unaudited)
Assets:
Cash and Cash Equivalents:
Cash and Due From Banks $ 27,031 $ 26,596
Federal Funds Sold 17,600 -
---------- ----------
Total Cash and Cash Equivalents 44,631 26,596
---------- ----------
Securities:
Securities Available For Sale (Amortized
cost of $337,048 and $246,567 at 9/30/98
and 12/31/97, respectively) 339,637 248,245
Securities Held to Maturity (fair value
of $14,229 and $35,586 at 9/30/98
and 12/31/97, respectively) 13,308 34,655
---------- ----------
Total Securities 352,945 282,900
---------- ----------
Loans:
Commercial 208,303 233,296
Mortgage 331,466 310,839
Installment 142,442 136,480
Other 122 263
---------- ----------
Total Loans 682,333 680,878
Less:
Allowance for Loan Losses (12,313) (12,831)
Unearned Income on Loans (1,244) (1,839)
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Loans, net 668,776 666,208
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Bank Premises and Equipment, net 16,315 16,308
Other Real Estate Owned 2,147 1,067
Other Assets 18,150 17,082
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Total Assets $1,102,964 $1,010,161
========== ==========
(Continued)
3
EVERGREEN BANCORP, INC.
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION
(Continued)
(Dollars in Thousands)
9/30/98 12/31/97
(Unaudited)
Liabilities:
Deposits:
Demand $ 103,317 $ 102,345
Regular Savings, Interest Checking and Money
Market Deposit Accounts 377,493 339,470
Certificates of Deposit over $100,000 141,532 110,189
Other Time 331,981 301,672
---------- ----------
Total Deposits 954,323 853,676
---------- ----------
Federal Funds Purchased and Other Short
Term Borrowings 12,402 27,208
Accrued Taxes and Other Liabilities 20,635 15,311
Long-Term Debt 25,324 25,710
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Total Liabilities 1,012,684 921,905
---------- ----------
Stockholders' Equity
Common Stock $3.33 1/3 Par Value: Authorized-
20,000,000 Shares; Issued 9,633,966 at September
30, 1998 and December 31, 1997 32,113 32,113
Surplus 7,619 6,787
Undivided Profits 64,046 59,225
Accumulated Other Comprehensive Income 1,303 1,007
Treasury Stock (923,019 shares at September 30,
1998 and 727,256 shares at December 31, 1997) (14,338) (10,236)
Common Stock Subscribed by ESOP (463) (640)
---------- ----------
Total Stockholders' Equity 90,280 88,256
---------- ----------
Total Liabilities and Stockholders' Equity $1,102,964 $1,010,161
========== ==========
See accompanying notes to consolidated interim financial statements.
4
EVERGREEN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
The Nine Months Ended September 30, 1998 1997
(Unaudited)
-----------------
Cash Flows from Operating Activities:
Net Income. . . . . . . . . . . . . . . . . . . . $ 8,965 $ 8,239
Adjustments to Reconcile Net Income to
Net Cash Provided by Operating Activities:
Net Change in Unearned Loan Fees. . . . . . . . 49 108
Net Change in Other Assets and Other Liabilities 3,895 4,065
Gains on Sale of Securities and Loans . . . . . (343) (9)
Increase in Deferred Tax Benefit. . . . . . . . (254) (766)
Loss/(Gain) on Sale/Write-Down of
Other Real Estate . . . . . . . . . . . . . . 121 (7)
Loss on Disposition of Assets . . . . . . . . . 10 12
Depreciation. . . . . . . . . . . . . . . . . . 1,408 1,329
Provision for Loan Losses . . . . . . . . . . . 1,485 1,260
Amortization of Premiums & Accretion of
Discounts on Securities, Net. . . . . . 1,285 409
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Net Cash Provided By Operating Activities. . 16,621 14,640
------ ------
Cash Flows From Investing Activities:
Proceeds From:
Sales of Securities Available for Sale. . . . . 22,818 532
Maturities of Securities Available for Sale . . 96,390 40,074
Maturities of Securities Held to Maturity . . . 21,329 2,598
Purchases of Securities Available for Sale. . . . (210,720) (95,800)
Purchases of Securities Held to Maturity. . . . . - (21,903)
Proceeds From Sales of Loans. . . . . . . . . . . 16,269 1,107
Net Increase in Loans . . . . . . . . . . . . . . (21,454) (12,317)
Change in Check Overdraft Receivables . . . . . . (626) (207)
Proceeds From Sales of Other Real Estate. . . . . 615 508
Capital Expenditures. . . . . . . . . . . . . . . (1,425) (2,507)
------ ------
Net Cash Used By
Investing Activities . . . . . . . . . . . (76,804) (87,915)
------ ------
Cash Flows From Financing Activities:
Net Increase in Deposits. . . . . . . . . . . . . 100,647 54,053
Net Increase/(Decrease) in Short-Term Borrowings. (14,806) 3,114
Payments on Long Term Debt. . . . . . . . . . . . (209) (292)
Payments From Sale of Treasury Stock. . . . . . . 741 697
(Continued)
5
EVERGREEN BANCORP, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Continued)
(Dollars in Thousands)
The Nine Months Ended September 30, 1998 1997
(Unaudited)
-----------------
Payments for Purchase of Treasury Stock . . . . (4,184) (4,525)
Dividends Paid. . . . . . . . . . . . . . . . . (3,971) (3,528)
------ ------
Net Cash Provided By
Financing Activities . . . . . . . . . . 78,218 49,519
------ ------
Net Increase/(Decrease) in Cash
and Cash Equivalents . . . . . . . . . . . . 18,035 (23,756)
Cash and Cash Equivalents at Beginning of Year. 26,596 56,130
------- -------
Cash and Cash Equivalents at End of Quarter . . $ 44,631 $ 32,374
======= =======
Supplemental Disclosure of Cash Flows:
Interest Paid . . . . . . . . . . . . . . . . . $ 27,399 $ 24,802
Taxes Paid. . . . . . . . . . . . . . . . . . . 1,165 683
Supplemental Schedule of Non-Cash Investing and Financing Activities:
Certain properties which were foreclosed upon were transferred from loans
to other real estate in the amount of $1,816,000 and $1,397,000 during
the nine months ended September 30, 1998 and 1997, respectively.
The Company borrowed $1,600,000, which was used to subscribe for common
stock of the Company in 1990. Payments were made on the ESOP loan in the
amount of $177,000 and $168,000 during the nine months ended September
30, 1998 and 1997 respectively.
As a result of the adoption of Statement of Financial Accounting Standard
No. 115, securities available for sale are recorded at fair value. The
unrealized gain on these securities was $2,589,000 at September 30, 1998.
The adjustment to stockholders' equity for the unrealized gain was
$1,553,000, net of deferred income tax expense of $1,036,000.
At September 30, 1997 securities available for sale had an unrealized
gain of $1,397,000. The adjustment to stockholders' equity net of deferred
income tax expense of $559,000, was $838,000.
See accompanying notes to consolidated interim financial statements.
6
EVERGREEN BANCORP, INC.
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
1. Financial Statement Presentation
The accompanying consolidated financial statements consist of Evergreen
Bancorp, Inc. ("the Company") and the financial statements of its wholly
owned subsidiary, Evergreen Bank, N.A. The unaudited consolidated interim
financial statements have been prepared according to the rules of the
Securities and Exchange Commission. In the opinion of the Company, the
accompanying unaudited consolidated interim financial statements contain
all adjustments necessary to present fairly the financial position as of
September 30, 1998, the results of operations for the three and nine
months ended September 30, 1998 and 1997 and cash flows for the nine
months ended September 30, 1998 and 1997. All adjustments are of a normal
recurring nature. Certain information and footnote disclosures normally
included in financial statements prepared in accordance with generally
accepted accounting principles have been condensed or omitted pursuant to
rules and regulations applicable to interim financial statements.
The accompanying interim consolidated financial statements should be read
in conjunction with the Evergreen Bancorp, Inc. consolidated year-end
financial statements, including notes thereto, which are included in the
Evergreen Bancorp, Inc. 1997 Annual Report and Form 10-K.
2. Proposed Merger
On July 31, 1998, the Company announced that it entered into an
Affiliation Agreement and Plan of Reorganization (the "Affiliation
Agreement") with Banknorth Group, Inc., Burlington, Vermont (Banknorth)
for the merger of the Company with and into Banknorth. Banknorth will be
the surviving corporation, and the Company's principal bank subsidiary,
Evergreen Bank, N.A., would be operated as a separate subsidiary of
Banknorth. In consideration of the merger, each outstanding share of
common stock of the Company will be exchanged for 0.9 shares of Banknorth
common stock. Consummation of the merger is subject to satisfaction of a
number of conditions, including, among other things, stockholder and
regulatory approval. It is currently anticipated that the merger would be
consummated at the end 1998, although no assurances can be given at this
time.
The Company announced the termination and rescission of its stock
repurchase program in connection with the Affiliation Agreement. Through
July 31, 1998, the Company had purchased 231,000 shares of its Common
Stock under the most recent program, leaving 251,000 shares remaining to
be purchased at the time the repurchase program was terminated.
Directors of the Company have entered into Stockholder Letter Agreements
with Banknorth stipulating that each direcor will vote those shares which
he or she has sole voting power in favor of the merger.
In connection with the Affilition Agreement, the Company and Banknorth
have entered into a Stock Option Agreement dated July 31, 1998, (the
7
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
(Continued)
"Stock Option Agreement") pursuant to which Banknorth has the right to
purchase up to 1,888,923 shares of Company common stock, not to exceed
19.9% of the outstanding shares, at a price equal to $27.75 per share,
exercisable under certain conditions.
Banknorth has filed with the Securities and Exchange Commission a
Schedule 13D, Commission File No. 0-18173, on August 10, 1998, including
as exhibits thereto the Affiliation Agreement, the Stock Option Agree-
ment, the Agreement and Plan of Merger, dated July 31, 1998, and the form
of the Stockholder Letter Agreements entered into by the Company's
Directors.
3. Payment of Dividends
The Company is a legal entity separate and distinct from its bank and
other subsidiaries. The principal source of cash flow of the Registrant,
including cash flow to pay dividends to its stockholders, is dividends
from Evergreen Bank. The subsidiary bank is required to meet various
legal requirements prior to the payment of dividends to the Company.
Without the payment of dividends from Evergreen Bank the Company would
not be able to pay dividends to its stockholders.
4. Comprehensive Income
On January 1, 1998, the Company adopted the provisions of Statement of
Financial Accounting Standards No. 130, "Reporting Comprehensive Income".
This statement establishes standards for reporting and display of compre-
hensive income and its components. Comprehensive income includes the
reported net income of a company adjusted for items that are currently
accounted for as direct entries to equity such as the mark to market
adjustment on securities available for sale, foreign currency items and
minimum pension liability adjustments. At the Company, comprehensive
income represents net income plus other comprehensive income, which
consists of the net change in unrealized gains or losses on securities
available for sale for the period and changes to the minimum pension
liability adjustments. Accumulated other comprehensive income represents
the net unrealized gains or losses on securities available for sale and
the net minimum pension liability adjustments as of the balance sheet
dates.
Comprehensive income for the nine months ended September 30, 1998 and
September 30, 1997 was $9,261,000 and $9,053,000, respectively.
5. Preferred Stock Purchase Rights Plan
On April 17, 1998, the Board of Directors of the Company adopted a Pre-
ferred Stock Purchase Rights Plan (the "Plan"). The Plan provides for the
distribution of one preferred stock purchase right for each outstanding
share of common stock of the Company. Each right entitles the holder,
following the occurrence of certain events, to purchase a unit, consist-
ing of one-hundredth of a share of Series A Junior Participating Pre-
ferred Stock, at a price of $65 per unit, subject to adjustment. The
rights will not be exercisable or transferable apart from the common
8
NOTES TO CONSOLIDATED INTERIM FINANCIAL STATEMENTS
(Unaudited)
(Continued)
stock except under certain circumstances in which a person or group of
affiliated persons acquires, or commences a tender offer to aquire, 10%
or more of the Company's common stock. Rights held by such an aquiring
person or persons may thereafter become void. Under certain circumstances
a right may become a right to purchase common stock or assets of the
Company or an acquiring corporation at a substantial discount. Under
certain circumstances, the Company may redeem the rights at $.001 per
right. The rights will expire in May 2008 unless earlier redeemed or
exchanged by the Company.
On July 31, 1998, the Company adopted an amendment to the Plan that
excludes Banknorth and its affiliates from the definition of "Aquiring
Person" for purposes of triggering the exercisability of the Rights.
6. Earnings Per Share
The following table shows the reconciliation of basic to diluted earnings
per share:
Computation of Net Income Per Common Share
(Dollars in Thousands, except Per Share Amounts)
Three Months Ended September 30,
1998 1997
Basic Earnings Per Share
Average Shares Outstanding 8,787,000 8,956,000
Net Income $ 3,047 $ 2,885
Basic Earnings Per Share $ .35 $ .32
Diluted Earnings Per Share
Average Shares Outstanding 8,787,000 8,956,000
Dilutive Effect of Stock Options 177,000 135,000
Average Potential Shares 8,964,000 9,091,000
Net Income $ 3,047 $ 2,885
Diluted Earnings Per Share $ .34 $ .32
Nine Months Ended September 30,
1998 1997
Basic Earnings Per Share
Average Shares Outstanding 8,809,000 9,016,000
Net Income $ 8,965 $ 8,239
Basic Earnings Per Share $ 1.02 $ .91
Diluted Earnings Per Share
Average Shares Outstanding 8,809,000 9,016,000
Dilutive Effect of Stock Options 174,000 118,000
Average Potential Shares 8,983,000 9,134,000
Net Income $ 8,965 $ 8,239
Diluted Earnings Per Share $ 1.00 $ .90
9
Independent Auditors' Review Report
The Board of Directors and Stockholders
Evergreen Bancorp, Inc.:
We have reviewed the consolidated statement of financial condition of
Evergreen Bancorp, Inc. and subsidiaries as of September 30, 1998 and the
related consolidated statements of income for the three-month and nine-
month periods ended September 30, 1998 and 1997, and the consolidated
statements of cash flows for the nine-month periods ended September 30,
1998 and 1997. These consolidated financial statements are the responsi-
bility of the Company'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 proced-
ures 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 regard-
ing 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 prin-
ciples.
We have previously audited, in accordance with generally accepted audit-
ing standards, the consolidated statement of financial condition of
Evergreen Bancorp, Inc. and subsidiaries as of December 31, 1997, and the
related consolidated statements of income, changes in stockholders'
equity, and cash flows for the year then ended (not presented herein);
and in our report dated January 23, 1998, we expressed an unqualified
opinion on those consolidated financial statements. In our opinion, the
information set forth in the accompanying consolidated statement of
financial condition as of December 31, 1997, is fairly presented, in all
material respects, in relation to the consolidated statement of financial
condition from which it has been derived.
/s/ KPMG PEAT MARWICK LLP
Albany, New York
November 10, 1998
10
EVERGREEN BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
FINANCIAL REVIEW
----------------
The principal source of earnings for the Company is its single banking
subsidiary, Evergreen Bank, N.A. All discussion herein refers to the
banking activities of the Company's banking subsidiary unless otherwise
noted.
When used in this quarterly Report on Form 10-Q, the words or phrases
"will likely result," "are expected to," "will continue," "is anticip-
ated," "estimate," "project" or similar expressions are intended to
identify "forward-looking statements" within the meaning of the Private
Securities Litigation Reform Act of 1995. Such statements are subject to
certain risks and uncertainties including, changes in economic conditions
in the Company's market area, changes in policies by regulatory agencies,
fluctuations in interest rates, demand for loans in the Company's market
area and competition, disruptions of the operations of the Company or any
governmental or private entity as a result of the "Year 2000 Problem",
that could cause actual results to differ materially from historical
earnings and those presently anticipated or projected. The Company
cautions readers not to place undue reliance on any such forward-looking
statements, which speak only as of the date made. The factors listed
above could affect the Company's financial performance and could cause
the Company's actual results for future periods to differ materially from
any opinions or statements expressed with respect to future periods in
any current statements.
The Company does not undertake, and specifically disclaims, any obliga-
tion to publicly release the result of any revisions which may be made to
any forward-looking statements to reflect events or circumstances after
the date of such events or to reflect the occurrence of anticipated or
unanticipated events.
PROPOSED MERGER
---------------
On July 31, 1998, the Company jointly announced that it entered into an
Affiliation Agreement and Plan of Reorganization (the "Affiliation Agree-
ment") with Banknorth Group, Inc., Burlington, Vermont (Banknorth) for
the merger of the Company with and into Banknorth. See Note 2 to the
Notes to Consolidated Interim Financial Statements.
Through September 30, the Company has paid merger related expenses
totaling approximately $219,000, and expects to incur substantial add-
itional expenses upon consumation of the merger. These expenses are
currently accounted for as prepaid assets in anticipation of expense
recognition upon the completion of the merger. Should the merger be
terminated for any reason these expenses, along with any additional
expenses incurred to the point of termination, would immediately be
charged to income.
11
EVERGREEN BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
SUMMARY OF RESULTS OF OPERATIONS
--------------------------------
Net income for the three months ended September 30, 1998, was $3,047,000
as compared to $2,885,000 in 1997's third quarter. For the nine month
period ended September 30, 1998, net income was $8,965,000 compared to
$8,239,000 in 1997. Basic income per share for the quarter ended
September 30, 1998, was $.35, compared to $.32 for the September 30, 1997
quarter. For the three and nine month periods, the primary reasons for
the increases in net income were increased non-interest income and lower
non-interest expenses.
In 1998, the annualized return on average assets for the nine months was
1.14%, compared to 1.14% for the first nine months last year. The annual-
ized return on average stockholders' equity, for the first nine months of
1998 was 13.7%, compared to 12.8% for the same period in 1997. The
increase in the return on average stockholders' equity is due primarily
to the increased level of net income.
NET INTEREST INCOME
-------------------
Net interest income for the three months ended September 30, 1998 was
$10,475,000, compared to $10,792,000 for the same period of 1997. This
represents a decrease of $317,000 or 2.9%. The first nine months of 1998
reflects net interest income of $31,715,000, an increase of 0.2% as
compared to $31,655,000 for the same period last year. On a taxable
equivalent basis, net interest income was $10,616,000 for the quarter
ended September 30, 1998 as compared to $10,935,000 for the quarter ended
September 30, 1997. This represents a decrease of $319,000 or 2.9%. For
the first nine months of 1998 taxable equivalent net interest income
increased 0.3% to $32,148,000 from the level reported for the nine months
ended September 30, 1997.
The decrease in net interest income in 1998's third quarter is attributed
to a lower net interest margin. The decline in the margin was caused by a
flat yield curve, which has the effect of keeping short term deposit
rates high relative to longer term loan rates, and a shift in earning
asset concentrations from higher yielding commercial loans to lower
yielding mortgage loans and investment securities.
ALLOWANCE FOR LOAN LOSSES
-------------------------
The Company's allowance for loan losses at September 30, 1998, has de-
creased $518,000 to $12,313,000 from the December 31, 1997 balance. The
decrease was caused primarily by a substantial chargeoff related to one
commercial borrowing relationship which approximated $1,100,000. As a
percent of total loans, net of unearned income, the allowance was approx-
imately 1.8% at September 30, 1998. The allowance represents 230.4% of
total non-performing loans at quarter end. The provision for loan losses
for the quarter ended September 30, 1998 was $495,000 compared to
$450,000 for the same period in 1997. For the nine months ended September
30, 1998 the provision totaled $1,485,000, compared to $1,260,000 a year
earlier. The increased provision, from year earlier levels, reflects the
12
EVERGREEN BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
incremental loan growth incurred over the last year.
The allowance for loan losses represents amounts available for future
credit losses and reflects management's ongoing detailed review of
certain individual credits, as well as analysis of the historic net
charge off experience of the loan portfolio, an evaluation of current and
anticipated economic conditions, peer group statistics and other perti-
nent factors.
Loans (or portions thereof) deemed uncollectible are charged against the
allowance while recoveries of amounts previously charged off are added
to the allowance. Provisions for loan losses charged to earnings are
added to the allowance. Amounts are charged off once the probability of
loss has been determined, with consideration given to factors such as the
customer's financial condition, underlying collateral and guarantees, and
general and industry economic conditions.
The following table presents information concerning nonperforming loans
and other real estate.
9/30/98 12/31/97
------- --------
(Dollars In Thousands)
Non-Accrual $ 4,365 $ 4,838
Past Due 90 Days 979 951
-------- --------
Total Non-Performing
Loans $ 5,344 $ 5,789
======== ========
Other Real Estate $ 2,147 $ 1,067
The majority of the Company's non-performing loans consist of commercial
and commercial real estate loans. There is no distinct concentration as
to type of borrower within these classifications.
OTHER INCOME AND EXPENSE
------------------------
Other income for the three month period ended September 30, 1998, was
$2,092,000, $306,000 more than the $1,786,000 recorded in the same period
last year. Gains on sales of securities and residential mortgage loans
contributed to the overall increase of 17.1%
Other income for the nine month period ended September 30, 1998, was
$5,979,000, $830,000 more than the $5,149,000 recorded in the same period
last year. Increases in all other income categories contributed to the
overall increase of 16.1%
Other expense for the quarter ended September 30, 1998 was $7,656,000,
compared to $7,818,000 for the same quarter last year, a decrease of
$162,000 or 2.1%. Salaries and employee benefits expense, the largest
component of other operating expense, decreased $100,000 to $4,106,000
for the three months ended September 30, 1998, from $4,206,000 during the
13
EVERGREEN BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
same period of 1997. The principal cause of the decrease in employee
benefits expense was attrition related to the pending merger. Occupancy
and equipment expense and other expenses declined modestly.
Other expense for the nine month period ended September 30, 1998, was
$23,139,000, a small decrease from $23,235,000 recorded in the same
period last year. Both occupency and other expenses declined offsetting
the minor increase in salaries and employee benefits.
INCOME TAX EXPENSE
------------------
Income tax expense for the three months ended September 30, 1998, was
$1,369,000 as compared to $1,425,000 for the three months ended September
30, 1997. For the nine months ended September 30, 1998, income tax
expense was $4,105,000 compared to $4,070,000 in 1997. The effective tax
rate for the periods ended September 30, 1998 and 1997 were 31.4% and
33.1%, respectively. The decrease in the effective tax rate is attribut-
able to Company tax strategies and the continuing re-evaluation of
reserves related to federal deferred tax assets.
BALANCE SHEET COMPOSITION
-------------------------
Since December 31, 1997 the Company has continued to grow its asset base.
Total assets increased $92,803,000 to $1,102,964,000 at September 30,
1998 from $1,010,161,000 at December 31, 1997. The increase in assets has
been concentrated in the investment portfolio. Funding for the increase
in assets has been spread among the various interest bearing deposit
categories.
CAPITAL AND LIQUIDITY
---------------------
At September 30, 1998, stockholders' equity was $90,280,000, as compared
to $88,256,000 at December 31, 1997, an increase of $2,024,000 or 2.3%.
The increase in stockholders' equity is a result of the retention of
earnings of $4,994,000, treasury stock sales of $741,000, a reduction of
the ESOP balance of $177,000, and a change in the valuation of accum-
ulated other comprehensive income of $296,000. These were offset by
treasury share purchases of $4,184,000.
The following table sets forth the Company's risk based capital ratios as
of September 30, 1998 and the regulatory guidelines for well capitalized
institutions.
Evergreen Well Capitalized
Risk-Based Bancorp, Inc. Regulatory
Ratios Sept. 30, 1998 Guidelines
---------- -------------- ----------------
Leverage Ratio 8.1 % 5.0 %
Tier 1 13.5 % 6.0 %
Total Capital 14.8 % 10.0 %
14
EVERGREEN BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Average federal funds sold and interest bearing deposits for the nine
month period ended September 30, 1998 were $14,158,000, as compared to
$26,338,000 for the nine months ended September 30, 1997. Net cash
provided by operating activities was $16,621,000 for the nine months
ended September 30, 1998 as compared to net cash provided of $14,640,000
for the nine months ended September 30, 1997. Largely due to increases in
securities balances net cash used by investing activities was $76,804,000
for the nine months ended September 30, 1998 as compared to net cash used
of $87,915,000 for the same period last year. Net cash provided by
financing activities was $78,218,000 for the nine months of 1998 as comp-
ared to cash provided of $49,519,000 for the nine months of 1997. The
increase in cash provided by financing activities resulted from a
$100,647,000 net increase in cash inflows from deposit accounts. The
level of cash and cash equivalents was $44,631,000 at September 30, 1998
as compared to $32,374,000 at September 30, 1997.
Evergreen Bank, N.A. is the principal source of funds to the Company and,
if it cannot pay dividends to the Company, the Company will be unable to
pay dividends to its shareholders.
YEAR 2000 READINESS
-------------------
In 1997, the Company's senior management began a comprehensive project to
identify its readiness, and that of vendors and banking customers, for
continued computer processing after January 1, 2000. Evergreen's Project
Team has been comprised of personnel throughout the banking organization
to assure compliance within each area of the organization. Evergreen's
principal banking regulator, the Office of the Comptroller of the
Currency, has established a process for its supervised financial institu-
tions to deal with issues surrounding the Year 2000 problem, which the
Company has followed. Those phases are: Awareness, Assessment, Renova-
tion, Validation and Implementation.
Through the quarter ended September 30, 1998, the Company has identified
all mission critical systems to assure continued processing of all activ-
ities within the organization. Each of these systems has either passed
Year 2000 testing, or will be tested before March 31, 1999. All equipment
with embedded chips has been identified, listed and has been Year 2000
tested. These include items from elevators to time clocks, to fax mach-
ines, to timers. Electronic interfaces have been identified and tested to
the extent possible at this juncture.
Through September 30, 1998, the Company had substantially completed the
awareness, assessment and renovation phases recommended by the Office of
the Comptroller of the Currency. Validation and Implementation has been
completed or will be completed by December 31, 1998 for many of the
Company's mission critical systems, with the notable exception of the
Company's core processing systems managed by a third party provider,
Alltel Information Systems, Inc. ("Alltel"). In connection with the plan-
ned merger with Banknorth, the Company withheld the validation and final
implementation of a Year 2000 compliant system with Alltel because, if
the merger is consummated on schedule, Evergreen would convert to the
15
EVERGREEN BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
Alltel systems utilized by Banknorth, ones that are or are expected to be
Year 2000 compliant, by January 15, 1999.
Evergreen has substantially completed all phases for its non-information
technology systems, and believes that its readiness is complete.
As to contingency plans for its mission critical information technology
systems, Evergreen has entered into written agreements with Alltel and
other of its' third party providers to complete the Implementation phase
of conversion by March 31, 1999, if for any reason the merger is not
consummated. The Company has reviewed its' contingency plans with the
Office of the Comptroller of the Currency.
The risk to the Company is the failure, malfunction or shut-down of soft-
ware or equipment on the first business day in the Year 2000. As with
other financial institutions, the Company is highly dependent on informa-
tion technology for the conduct of its' general banking business. Some
computer software, hardware, equipment with embedded processes; including
core processing systems may be unable to process transactions due to date
limits within their software. In addition, the Company is subject to the
risk that its commercial loan customers may sustain interruptions in
their operations due to Year 2000 problems, and ultimately be unable to
repay their indebtedness to Evergreen as scheduled.
Certain of the risk factors associated with Year 2000 are not under the
control of the Company. The readiness of key suppliers, vendors, service
providers, the Federal Reserve infrastructure, customer and liquidity
funding sources, and its' credit customers all have risk factors of
various degrees.
Those borrowers and depositors with material relationships have been
identified, and although there is no single customer that would have a
material impact on the Company's operating results or financial condi-
tion, an exceptional accumulation of customers with unexpected Year 2000
problems could have a material adverse impact on the Company. For this
reason, the Company has contacted all substantial borrowing customers and
established loan review procedures to assure that these businesses will
be Year 2000 compliant or that any potential interruption to their
business would not significantly affect their ability to repay their
indebtedness on schedule. Through third quarter ended September 30, 1998,
the company's internal commercial loan review has indicated that there
are no significant customers without a Year 2000 plan that is in the
process of being implemented.
The identification of all mission critical systems and their testing
review and upgrades, if necessary, coupled with extensive surveys of its'
commercial loan customers, reduce the risk to the Company's Year 2000
problem. Further, the Company believes that its' substantial capital and
liquidity positions will enable it to sustain some impact from Year 2000
if significant problems are incurred by the Company's commercial loan
customers.
16
EVERGREEN BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
The Company has expended funds in fiscal year 1998 and would expect to do
so again in fiscal year 1999 to repair, upgrade or replace its' software,
hardware or other embedded processors deemed not ready for Year 2000. The
expenditures through September 30, 1998, the most recently completed
fiscal period, totals approximately $600,000. If the Company does not
consummate the merger with Banknorth for any reason, additional expend-
itures in fiscal 1999 would total approximately $400,000, primarily to
complete the conversion of its core processing system with Alltel. These
amounts have been and will be included in the operating and capital
budgets of the Company.
The Company has established business resumption plans for each of its'
mission critical systems. These plans provide assurance of continued
operation of any one system or systems should they fail in the Year 2000.
The business resumption plans, or workarounds, for systems that fail on
the first business day or thereafter in the Year 2000 will provide cont-
inued support for mission critical systems.
RATE VOLUME ANALYSIS
--------------------
For the purposes of the following analysis, Securities Available for Sale
are stated at average amortized cost and Stockholders' Equity is
unadjusted for the effects of SFAS No. 115.
Non-accrual loans are included in the following analysis and the average
balance of these loans is deemed immaterial.
Portions of income earned on certain Commercial Loans, U.S. Government
Obligations and Obligations of State and Political Subdivisions are
exempt from Federal and/or State taxation. Appropriate adjustments have
been made to reflect the equivalent amount of taxable income that would
have been necessary to generate an equal amount of after tax income. The
taxable equivalent adjustment is based on a marginal Federal income tax
rate of 35.0% in 1998 and 1997 along with a marginal State income tax
rate of 9.0% for 1998 and 1997.
The following table sets forth the dollar amounts of interest income (on
a taxable equivalent basis) and interest expense and changes therein
resulting from changes in volume and changes in rate. The change in
interest due to both rate and volume has been allocated to change due to
volume and change due to rate based on the percentage relationship of
such variances to each other.
17
EVERGREEN BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
(Dollars in Thousands)
Analysis of Variance in Net Interest Income Due to Volume and Rates
For the three months ended
September 30, 1998 vs. September 30, 1997
Increase / (Decrease) Total
Due to Change in Increase/
Volume Rate (Decrease)
--------------------- ----------
Interest Earned:
Loans
Taxable $ 351 $ (532) $ (181)
Tax-Exempt 48 (42) 6
Investment Securities
Taxable 1,047 (400) 647
Tax-Exempt (31) 1 (30)
Federal Funds Sold &
Interest-Bearing Deposits (37) 1 (36)
------ ------ ------
Changes in Total Interest
Income 1,378 (972) 406
------ ------ ------
Less Interest Expense Incurred:
Regular Savings, Interest
Checking and MMDAs 190 (90) 100
Time Deposits 556 21 577
Short-Term Borrowings 64 (7) 57
Long Term Debt (7) (2) (9)
Changes in Total Interest ------ ------ ------
Expense 803 (78) 725
------ ------ ------
Changes in Net Interest
Income $ 575 $ (894) $ (319)
====== ====== ======
18
EVERGREEN BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(Continued)
(Dollars in Thousands)
Analysis of Variance in Net Interest Income Due to Volume and Rates
For the nine months ended
September 30, 1998 vs. September 30, 1997
Increase / (Decrease) Total
Due to Change in Increase/
Volume Rate (Decrease)
---------------------- ----------
Interest Earned:
Loans and Leases
Taxable $ 1,204 $(1,084) $ 120
Tax-Exempt 169 (43) 126
Investment Securities
Taxable 3,730 (607) 3,123
Tax-Exempt 30 (26) 4
Federal Funds Sold &
Interest-Bearing Deposits (506) 16 (490)
------ ------ ------
Changes in Total Interest
Income 4,627 (1,744) 2,883
------ ------ ------
Less Interest Expense Incurred:
Regular Savings, Interest
Checking and MMDAs 326 (295) 31
Time Deposits 2,318 245 2,563
Short-Term Borrowings 198 (12) 186
Long Term Debt (22) 20 (2)
------ ------ ------
Changes in Total Interest
Expense 2,820 (42) 2,778
------ ------ ------
Changes in Net Interest
Income $ 1,807 $(1,702) $ 105
====== ====== ======
19
EVERGREEN BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS - Continued
Average Balances For The Three Months Ended September 30, 1998
(Dollars in Thousands)
Interest Average
Average Income/ Yield/
Balance Expense Rate
Assets: ------- ------- -------
Loans
Taxable $ 664,839 $14,421 8.61%
Tax Exempt 15,605 272 6.92%
Securities
Taxable 315,100 4,965 6.25%
Tax Exempt 9,283 196 8.38%
Federal Funds Sold &
Interest Bearing Deposits 14,170 199 5.57%
--------- -------
Total Earning Assets 1,018,997 20,053 7.81%
------- -----
Allowance for Loan
Losses (12,542)
Cash and Due from Banks 25,299
Other Non-Earning Assets 36,867
---------
Total Assets $1,068,621
=========
Liabilities and
Stockholders' Equity:
Regular Savings, Interest
Checking and MMDAs $ 371,579 2,490 2.66%
Time Deposits 449,124 6,400 5.65%
Short-Term Borrowings 11,924 136 4.53%
Long Term Debt 25,348 411 6.43%
--------- -------
Total Interest
Bearing Liabilities 857,975 9,437 4.36%
------- -----
Demand Deposits 103,791
Other Liabilities 19,591
Stockholders' Equity 87,264
Total Liabilities and ---------
Stockholders' Equity $1,068,621
=========
Net Interest Income (Tax
Equivalent Basis) 10,616
Tax Equivalent Adjustment (141)
-------
Net Interest Income $10,475
=======
Net Interest Rate Spread 3.45%
=====
Net Interest Margin 4.13%
=====
20
EVERGREEN BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS - Continued
Average Balances For The Three Months Ended September 30, 1997
(Dollars in Thousands)
Interest Average
Average Income/ Yield/
Balance Expense Rate
Assets: ------- -------- -------
Loans
Taxable $ 649,007 $14,602 8.93%
Tax Exempt 13,025 266 8.10%
Securities
Taxable 250,189 4,318 6.85%
Tax Exempt 10,747 226 8.34%
Federal Funds Sold &
Interest Bearing Deposits 16,790 235 5.55%
-------- -------
Total Earning Assets 939,758 19,647 8.29%
------- -----
Allowance for Loan
Losses (12,801)
Cash and Due from Banks 23,958
Other Non-Earning Assets 35,488
--------
Total Assets $ 986,403
========
Liabilities and
Stockholders' Equity:
Regular Savings, Interest
Checking and MMDAs $ 343,508 2,390 2.76%
Time Deposits 410,132 5,823 5.63%
Short-Term Borrowings 6,369 79 4.92%
Long Term Debt 25,800 420 6.46%
-------- -------
Total Interest
Bearing Liabilities 785,809 8,712 4.40%
------- -----
Demand Deposits 98,595
Other Liabilities 15,800
Stockholders' Equity 86,199
Total Liabilities and --------
Stockholders' Equity $ 986,403
========
Net Interest Income (Tax
Equivalent Basis) 10,935
Tax Equivalent Adjustment (143)
-------
Net Interest Income $10,792
=======
Net Interest Rate Spread 3.89%
=====
Net Interest Margin 4.62%
=====
21
EVERGREEN BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS - Continued
Average Balances For The Nine Months Ended September 30, 1998
(Dollars in Thousands)
Interest Average
Average Income/ Yield/
Balance Expense Rate
Assets: ------- ------- -------
Loans
Taxable $ 663,105 $43,479 8.77%
Tax Exempt 15,503 846 7.30%
Securities
Taxable 301,053 14,623 6.49%
Tax Exempt 9,630 600 8.33%
Federal Funds Sold &
Interest Bearing Deposits 14,158 588 5.55%
--------- -------
Total Earning Assets 1,003,449 60,136 8.01%
------- -----
Allowance for Loan
Losses (12,956)
Cash and Due from Banks 23,586
Other Non-Earning Assets 35,926
---------
Total Assets $1,050,005
=========
Liabilities and
Stockholders' Equity:
Regular Savings, Interest
Checking and MMDAs $ 361,538 7,261 2.69%
Time Deposits 450,104 19,119 5.68%
Short-Term Borrowings 10,706 378 4.72%
Long Term Debt 25,419 1,230 6.47%
--------- -------
Total Interest
Bearing Liabilities 847,767 27,988 4.41%
------- -----
Demand Deposits 97,382
Other Liabilities 18,283
Stockholders' Equity 86,573
Total Liabilities and ---------
Stockholders' Equity $1,050,005
=========
Net Interest Income (Tax
Equivalent Basis) 32,148
Tax Equivalent Adjustment (433)
-------
Net Interest Income $31,715
=======
Net Interest Rate Spread 3.60%
=====
Net Interest Margin 4.28%
=====
22
EVERGREEN BANCORP, INC.
MANAGEMENT'S DISCUSSION AND ANALYSIS - Continued
Average Balances For The Nine Months Ended September 30, 1997
(Dollars in Thousands)
Interest Average
Average Income/ Yield/
Balance Expense Rate
Assets: ------- ------- -------
Loans
Taxable $ 644,960 $43,359 8.99%
Tax Exempt 12,433 720 7.74%
Securities
Taxable 224,796 11,500 6.84%
Tax Exempt 9,160 596 8.70%
Federal Funds Sold &
Interest Bearing Deposits 26,338 1,078 5.47%
-------- -------
Total Earning Assets 917,687 57,253 8.34%
------- -----
Allowance for Loan
Losses (12,732)
Cash and Due from Banks 25,869
Other Non-Earning Assets 34,075
--------
Total Assets $ 964,899
========
Liabilities and
Stockholders' Equity:
Regular Savings, Interest
Checking and MMDAs $ 345,611 7,230 2.80%
Time Deposits 395,461 16,556 5.60%
Short-Term Borrowings 5,105 192 5.03%
Long Term Debt 25,883 1,232 6.36%
-------- -------
Total Interest
Bearing Liabilities 772,060 25,210 4.37%
------- -----
Demand Deposits 92,841
Other Liabilities 14,209
Stockholders' Equity 85,789
Total Liabilities and --------
Stockholders' Equity $ 964,899
========
Net Interest Income (Tax
Equivalent Basis) 32,043
Tax Equivalent Adjustment (388)
-------
Net Interest Income $31,655
=======
Net Interest Rate Spread 3.97%
=====
Net Interest Margin 4.67%
=====
23
Part II. Other Information
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
(27) Financial Data Schedule
(b) Reports on 8-K
Current Report on Form 8-K filed August 10, 1998 (reporting
Item 5, Other Events, announcement of an Agreement of Merger).
24
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 duly authorized.
EVERGREEN BANCORP, INC.
November 13, 1998 /s/ George W. Dougan
----------------- --------------------
Date George W. Dougan
President & Chief Executive Officer
(Principal Executive Officer)
November 13, 1998 /s/ George L. Fredette
----------------- ----------------------
Date George L. Fredette
Executive Vice President, Treasurer
(Chief Financial Officer)
25
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-END> SEP-30-1998
<CASH> 26,726
<INT-BEARING-DEPOSITS> 305
<FED-FUNDS-SOLD> 17,600
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 339,637
<INVESTMENTS-CARRYING> 13,308
<INVESTMENTS-MARKET> 14,229
<LOANS> 681,089
<ALLOWANCE> 12,313
<TOTAL-ASSETS> 1,102,964
<DEPOSITS> 954,323
<SHORT-TERM> 12,402
<LIABILITIES-OTHER> 20,635
<LONG-TERM> 25,324
<COMMON> 32,113
0
0
<OTHER-SE> 58,167
<TOTAL-LIABILITIES-AND-EQUITY> 1,102,964
<INTEREST-LOAN> 44,079
<INTEREST-INVEST> 15,036
<INTEREST-OTHER> 588
<INTEREST-TOTAL> 59,703
<INTEREST-DEPOSIT> 26,380
<INTEREST-EXPENSE> 27,988
<INTEREST-INCOME-NET> 31,715
<LOAN-LOSSES> 1,485
<SECURITIES-GAINS> 236
<EXPENSE-OTHER> 23,139
<INCOME-PRETAX> 13,070
<INCOME-PRE-EXTRAORDINARY> 13,070
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 8,965
<EPS-PRIMARY> 1.02
<EPS-DILUTED> 1.00
<YIELD-ACTUAL> 4.28
<LOANS-NON> 4,365
<LOANS-PAST> 979
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<ALLOWANCE-OPEN> 12,831
<CHARGE-OFFS> 2,557
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<ALLOWANCE-CLOSE> 12,313
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</TABLE>
