FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended September 30, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from _______ to _______.
Commission file number 010042
One Valley Bancorp, Inc.
(Exact name of registrant as specified in its charter)
West Virginia 55-0609408
(State or other jurisdiction (I.R.S. Employer Identification No.)
of incorporation or organization)
One Valley Square, Charleston, West Virginia 25326
(Address of principal executive offices)
(Zip Code)
(304) 348-7000
(Registrant's telephone number, including area code)
Not applicable
(Former name, address, and fiscal year, if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities and 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
The number of shares outstanding of each of the issuer's classes of common
stock as of September 30, 1999 was:
Common Stock, $10.00 par value -33,387,239 shares
<PAGE>
One Valley Bancorp, Inc.
Part I. Financial Information
Item 1. Financial Statements.
The unaudited interim consolidated financial statements of One Valley Bancorp,
Inc. (One Valley) or (Registrant) are included on pages 3 - 7 of this report.
These consolidated financial statements have been prepared in accordance with
generally accepted accounting principles for interim financial information and
with instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly,
they do not include all the information and footnotes required by generally
accepted accounting principles for annual year-end financial statements. In
the opinion of management, all adjustments considered necessary for a fair
presentation, have been included and are of a normal recurring nature.
Operating results for the nine-month period ended September 30, 1999 are not
necessarily indicative of the results that may be expected for the year ending
December 31, 1999. For further information, refer to the consolidated
financial statements and footnotes thereto incorporated by reference in the
Registrant's Annual Report on Form 10-K for the year ended December 31, 1998.
The Private Securities Litigation Act of 1995 indicates that the disclosure of
forward-looking information is desirable for investors and encourages such
disclosure by providing a safe harbor for forward-looking statements by
corporate management. This Quarterly Report on Form 10-Q contains forward-
looking statements that involve risk and uncertainty. In order to comply with
the terms of the safe harbor, the corporation notes that a variety of factors
could cause One Valley's actual results and experience to differ materially
from the anticipated results or other expectations expressed in those forward-
looking statements.
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
Management's discussion and analysis of financial condition and results of
operations is included on pages 8 - 18 of this report.
<PAGE>
<TABLE>
ONE VALLEY BANCORP, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(unaudited in thousands)
<CAPTION>
September 30 December 31 September 30
1999 1998 1998
<S> <C> <C> <C>
ASSETS
Cash and Due From Banks $156,010 $155,226 $144,495
Interest Bearing Deposits With Other Banks 2,677 3,150 4,843
Federal Funds Sold 38,690 50,000 47,951
---------- ---------- ----------
Cash and Cash Equivalents 197,377 208,376 197,289
Securities
Available-for-Sale, at fair value 1,436,240 1,307,825 1,320,845
Held-to-Maturity (Estimated Fair Value,
September 30, 1999 - $267,759; December 31, 1998 -
$287,441; September 30, 1998 - $264,816) 271,208 278,267 255,264
Loans
Total Loans 4,317,595 3,991,121 3,902,448
Less: Allowance For Loan Losses 54,155 52,272 51,826
---------- ---------- ----------
Net Loans 4,263,440 3,938,849 3,850,622
Premises & Equipment - Net 101,083 102,863 101,781
Other Assets 143,660 127,400 130,621
---------- ---------- ----------
Total Assets $6,413,008 $5,963,580 $5,856,422
========== ========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Non-interest Bearing $566,235 $570,664 $538,451
Interest Bearing 4,020,955 3,982,224 3,895,150
---------- ---------- ----------
Total Deposits 4,587,190 4,552,888 4,433,601
Short-term Borrowings
Federal Funds Purchased 28,391 36,410 42,925
Repurchase Agreements and Other Borrowings 758,324 693,349 697,391
---------- ---------- ----------
Total Short-term Borrowings 786,715 729,759 740,316
Long-term Borrowings 429,606 35,480 37,084
Other Liabilities 53,529 49,920 56,897
---------- ---------- ----------
Total Liabilities 5,857,040 5,368,047 5,267,898
Shareholders' Equity:
Preferred Stock-$10 par value; 1,000,000 shares authorized
but none issued 0 0 0
Common Stock-$10 par value; 70,000,000 shares authorized,
Issued 39,409,985 shares at September 30, 1999;
39,135,180 shares at December 31, 1998;
39,062,296 shares at September 30, 1998; 394,100 391,352 390,623
Capital Surplus 96,440 94,157 94,019
Retained Earnings 236,333 200,174 189,425
Accumulated Other Comprehensive Income (15,206) 6,450 9,552
Treasury Stock - 6,022,746 shares at September 30, 1999;
4,392,546 shares at December 31, 1998;
4,346,846 shares at September 30, 1998; (155,699) (96,600) (95,095)
---------- ---------- ----------
Total Shareholders' Equity 555,968 595,533 588,524
---------- ---------- ----------
Total Liabilities and Shareholders' Equity $6,413,008 $5,963,580 $5,856,422
========== ========== ==========
</TABLE>
<PAGE>
<TABLE>
ONE VALLEY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Income
(unaudited in thousands, except per share data)
<CAPTION>
For The Three Months For The Nine Months
Ended September 30 Ended September 30
1999 1998 1999 1998
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and Fees on Loans
Taxable $86,195 $82,050 $252,559 $232,549
Tax-Exempt 1,040 675 2,502 2,030
-------- -------- -------- --------
Total $87,235 82,725 255,061 234,579
Interest on Investment Securities
Taxable 22,312 21,897 64,265 67,626
Tax-Exempt 3,257 3,118 10,030 9,239
-------- -------- -------- --------
Total 25,569 25,015 74,295 76,865
Other Interest Income 285 497 980 1,169
-------- -------- -------- --------
Total Interest Income 113,089 108,237 330,336 312,613
INTEREST EXPENSE
Deposits 39,834 41,356 118,172 119,316
Short-term Borrowings 9,349 9,681 25,781 27,801
Long-term Borrowings 4,888 632 9,580 2,037
-------- -------- -------- --------
Total Interest Expense 54,071 51,669 153,533 149,154
-------- -------- -------- --------
Net Interest Income 59,018 56,568 176,803 163,459
Provision For Loan Losses 2,325 2,593 6,780 7,481
-------- -------- -------- --------
Net Interest Income
After Provision For Loan Losses 56,693 53,975 170,023 155,978
OTHER INCOME
Trust Department Income 3,451 2,762 10,519 8,722
Service Charges on Deposit Accounts 5,388 5,051 15,531 14,087
Real Estate Loan Processing & Servicing Fees 1,431 2,256 4,994 6,137
Other Service Charges and Fees 5,378 3,829 15,095 10,399
Other Operating Income 2,232 1,163 5,230 3,940
Securities Transactions (303) 266 100 989
-------- -------- -------- --------
Total Other Income 17,577 15,327 51,469 44,274
OTHER EXPENSES
Salaries and Employee Benefits 21,832 20,189 65,525 58,943
Occupancy Expense - Net 2,861 2,161 7,568 6,105
Equipment Expenses 3,220 2,955 9,372 8,494
Outside Data Processing 2,705 2,333 7,944 7,527
Other Operating Expenses 13,041 13,270 39,774 38,267
-------- -------- -------- --------
Total Other Expenses 43,659 40,908 130,183 119,336
-------- -------- -------- --------
Income Before Taxes 30,611 28,394 91,309 80,916
Applicable Income Taxes 10,091 9,409 30,217 27,401
-------- -------- -------- --------
NET INCOME $20,520 $18,985 $61,092 $53,515
======== ======== ======== ========
NET INCOME PER SHARE
Basic $ 0.61 $ 0.56 $ 1.80 $ 1.63
Diluted 0.61 0.55 1.78 1.60
Average Shares Outstanding (in thousands)
Basic 33,429 34,058 33,948 32,891
Diluted 33,736 34,635 34,322 33,513
</TABLE>
<PAGE>
<TABLE>
ONE VALLEY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Shareholders' Equity
(unaudited in thousands)
<CAPTION>
Accumulated
Other
Common Capital Retained Treasury Comprehensive
Stock Surplus Earnings Stock Income Total
<S> <C> <C> <C> <C> <C> <C>
Balance December 31, 1998 $391,352 $94,157 $200,174 ($96,600) $6,450 $595,533
Nine Months Ended September 30, 1999
Comprehensive Income:
Net Income 0 0 61,092 0 0 61,092
Other Comprehensive Income, net of tax:
Net Unrealized Holding Losses on
Available-For-Sale Securities Arising
During The Period 0 0 0 0 (21,596) (21,596)
Less: Reclassification Adjustment For
Gains Realized in Net Income 0 0 0 0 (60) (60)
--------
Other Comprehensive Income (21,656)
--------
Comprehensive Income 39,436
Cash Dividends ($.74 per share) (24,933) (24,933)
Treasury Shares Purchased 0 0 0 (59,099) 0 (59,099)
Stock Options Exercised 2,748 2,283 0 0 0 5,031
-------- -------- -------- -------- -------- --------
Balance September 30, 1999 $394,100 $96,440 $236,333 ($155,699) ($15,206) $555,968
======== ======== ======== ======== ======== ========
Balance December 31, 1997 $363,306 $71,782 $157,730 ($95,095) $ 5,927 $503,650
Nine Months Ended September 30, 1998
Comprehensive Income:
Net Income 0 0 53,515 0 0 53,515
Other Comprehensive Income, net of tax:
Net Unrealized Holding Gains on
Available-For-Sale Securities Arising
During The Period 0 0 0 0 4,218 4,218
Less: Reclassification Adjustment For
Gains Realized in Net Income 0 0 0 0 (593) (593)
--------
Other Comprehensive Income 3,625
--------
Comprehensive Income 57,140
Cash Dividends ($.66 per share) 0 0 (21,820) 0 0 (21,820)
FFVA Treasury Shares Reissued 7,087 19,274 0 0 0 26,361
Issuance of common stock 18,264 2,260 0 0 0 20,524
Stock Options Exercised 1,966 703 0 0 0 2,669
-------- -------- -------- -------- -------- --------
Balance September 30, 1998 $390,623 $94,019 $189,425 ($95,095) $ 9,552 $588,524
======== ======== ======== ======== ======== ========
</TABLE>
<PAGE>
<TABLE>
ONE VALLEY BANCORP, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
(unaudited in thousands)
<CAPTION>
For The Nine Months
Ended September 30
1999 1998
<S> <C> <C>
OPERATING ACTIVITIES
Net Income $61,092 $53,515
Adjustments To Reconcile Net Income To Net Cash
Provided by Operating Activities:
Provision For Loan Losses 6,780 7,481
Depreciation 9,121 7,611
Amortization and Accretion (1,526) 4,330
Net Gain From Sales of Assets (100) (989)
Increase (Decrease) Due to Changes In:
Accrued Interest Receivable (1,074) (2,220)
Accrued Interest Payable 2,315 (2,671)
Other Assets and Other Liabilities (4,115) 9,572
-------- --------
Net Cash Provided by Operating Activities 72,493 76,629
INVESTING ACTIVITIES
Proceeds From Sales of Securities Available for Sale 51,844 53,045
Proceeds From Maturities of Securities Available for Sale 496,391 391,849
Proceeds From Maturities of Securities Held to Maturity 19,601 25,062
Purchases of Securities Available for Sale (710,127) (404,463)
Purchases of Securities Held to Maturity (10,817) (21,567)
Net Increase In Loans (329,426) (328,241)
Acquisition of Branches, Net of Cash Received 0 118,371
Purchases of Premises and Equipment (7,341) (9,763)
-------- --------
Net Cash Used in Investing Activities (489,875) (175,707)
FINANCING ACTIVITIES
Net Increase in Interest Bearing and Non-interest Bearing Deposits 34,302 34,857
Net (Decrease) Increase in Federal Funds Purchased (8,019) 20,344
Net Increase in Other Short-term Borrowings 64,975 96,492
Proceeds From Long-term Borrowings 395,650 0
Repayment of Long-term Debt (1,524) (12,018)
Proceeds From Issuance of Common Stock 5,031 29,028
Purchase of Treasury Stock (59,099) 0
Dividends Paid (24,933) (21,820)
-------- --------
Net Cash Provided by Financing Activities 406,383 146,883
-------- --------
(Decrease) Increase in Cash and Cash Equivalents (10,999) 47,805
Cash And Cash Equivalents at Beginning of Year 208,376 149,484
-------- --------
Cash And Cash Equivalents, September 30 $197,377 $197,289
======== ========
</TABLE>
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
Note A - Basis of Presentation
The accounting and reporting policies of One Valley conform to generally
accepted accounting principles and practices in the banking industry. The
preparation of the financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions
that affect the amounts reported in the financial statements and accompanying
notes. Actual results could differ from those estimates. All significant
intercompany accounts and transactions have been eliminated in consolidation.
The interim financial information included in this report is unaudited. In
the opinion of management, all adjustments necessary for a fair presentation
of the results of the interim periods have been made. These notes are
presented in conjunction with the Notes to Consolidated Financial Statements
included in the Annual Report of One Valley.
Note B - Net Income Per Common Share
Basic net income per common share excludes any dilutive effects of stock
options and is computed by dividing net income by the average common shares
outstanding during the period. Diluted net income per common share is
computed by dividing net income by the average common shares outstanding
during the year adjusted for the dilutive effect of options under One Valley's
stock option plans. The effect of dilutive stock options on average shares
outstanding was 307,000 and 577,000 for the third quarter of 1999 and 1998
respectively, while the effect was 374,000 and 622,000 for the nine months
ended September 30, 1999 and 1998, respectively.
Note C - Accounting Pronouncements
In June 1998, the FASB issued Statement No. 133, "Accounting for
Derivative Instruments and Hedging Activities," (FAS 133) which requires all
derivatives to be recorded on the balance sheet at fair value and establishes
"special" accounting for fair value, cash flow, and foreign currency hedges.
FAS 133 is effective, as amended, for years beginning after June 15, 2000 and
the impact of adopting this statement by One Valley in year 2000 cannot be
determined at this time.
One Valley Bancorp, Inc.
Management's Discussion and Analysis of Financial Condition and Results of
Operations
September 30, 1999
INTRODUCTION AND SUMMARY
Net income for the third quarter of 1999 totaled $20.5 million, an 8.1%
increase over the $19.0 million earned in the same quarter of 1998. On a
diluted basis, net income per share rose by 11.0% to $0.61 from the $0.55
earned in the third quarter of 1998. The improvement in earnings during the
quarter is primarily due to higher net interest income from balance sheet
growth and an increase in non-interest income due to growth in One Valley's
customer base. These increases more than offset the increase in non-interest
expense from the expanded branch network. ROA and ROE for the third quarter
of 1999 were 1.30% and 14.78%, respectively, compared to 1.31% and 13.19%,
respectively, for the third quarter of 1998.
Net income for the first nine months of 1999 totaled $61.1 million, a
14.2% increase over the first nine months of 1998. On a diluted basis, net
income per share for the first nine-month period was $1.78, an 11.3% increase
from the $1.60 reported for the first nine months of 1998.
Return on average assets (ROA) measures how effectively One Valley
utilizes its assets to produce net income. ROA was 1.32% for the first nine
months of 1999, up from the 1.28% earned during the same period of 1998.
Return on average equity (ROE) also increased to 14.19% from the 13.05%
reported for the first nine months of 1998.
The following discussion is an analysis of the financial condition and
results of operations of One Valley for the first nine months of 1999. This
discussion should be read in conjunction with the 1998 Annual Report to
Shareholders and the other financial information included in this report.
RESULTS OF OPERATIONS
Net Interest Income
Net interest income for the nine months ended September 30, 1999, was
$183.6 million on a fully tax-equivalent basis, an 8.3% increase over the
$169.5 million earned during the same period in 1998. Average earning assets
in the first nine months of 1999, increased by $550.0 million or 10.5% over
the same period of 1998. During this time period, net average loans and
average investments increased by $526.8 and $23.2 million respectively.
To fund this loan growth, average interest bearing liabilities increased
by $487.3 million or 10.9% over the first nine months of 1998. The increase
in interest bearing liabilities resulted in a $4.4 million increase in
interest expense. The increase in interest expense was diminished by a
decline in the interest rates paid.
As shown in the consolidated average balance sheets (page 18), the yield
on earning assets declined to 7.80% for the first nine months of 1999, down
from the 8.16% earned during the same period in 1998. Similarly, the cost of
interest bearing liabilities dropped to 4.13% for the first nine months of
1999, down from 4.44% reported for the same period of 1998. Additional
discussion of the changes in balance sheet mix is included later in this
report. With the decline in the yield on earning assets exceeding the decline
in the cost of interest bearing liabilities, the net interest margin ratio
decreased to 4.24% from the 4.34% reported in the first nine months of 1998.
The net interest margin was also negatively impacted by $200 million in long
term borrowings discussed in more detail below. Internal interest rate risk
simulations indicate that over the next twelve months a sharp rise in interest
rates would have a negative influence on net interest income. Normal
fluctuations or a sharp decrease in market interest rates should not have a
significant impact on One Valley's net interest margin.
Net interest income on a fully taxable equivalent basis for the three
months ended September 30, 1999, was $61.3 million, a 4.6% increase over $58.6
million earned over the same period of 1998. The net interest margin
decreased 17 basis points from the 4.32% reported for 1998 to 4.15% for the
same period of 1999. The reasons for the decrease are primarily the same as
those discussed for the year-to-date analysis.
Credit Experience
With the improved credit quality and the continued growth of loans
outstanding, the allowance for loan losses as a percent of loans outstanding
has declined to 1.25% at September 30, 1999 compared to 1.31% at year-end and
1.33% one year ago.
Total non-performing assets at September 30, 1999, were 0.21% of period-
end loans, down from the 0.23% at September 30, 1998 and 0.24% from December
31, 1998. Non-accrual loans totaled $8.0 million at September 30, 1999,
$772,000 or 10.7% above last year's level, while foreclosed properties totaled
$976,000 or approximately half of last year's level. Loans past due over 90
days were 0.15% of outstanding loans at September 30, 1999, down from the
0.19% at year-end 1998 and the 0.22% from September 30, 1998. An analysis of
the allowance for loan losses and non-performing assets is included on page
17.
The provision for loan losses was based upon One Valley's continual evaluation
process of the adequacy of the allowance for loan losses. In management's
opinion, the allowance for loan losses remains adequate to absorb the current
estimated risk of loss in the existing loan portfolio. The provision for loan
losses was $6.8 million for the nine months ended September 30, 1999, a 9.4%
decrease from the provision made during the same period of 1998. While net
charge-offs through the third quarter of 1999 increased by $365,000 or 8.1%
over September 1998, net charge offs as a percentage of average total loans
decreased to 0.16% on an annualized basis, down from an annualized 0.17%
during the same period in 1998, and from the 0.18% charge-off ratio for the
full year of 1998.
Net charge-offs for the quarter ended September 30, 1999 were $1.6 million, a
3.0% increase over the $1.5 million reported for the same period in 1998. The
provision for loan losses was $2.3 million or 10.3% below the third quarter of
1998.
Non-Interest Income and Expense
The net overhead ratio (non-interest expense less non-interest income
excluding security transactions divided by average earning assets) is a
measure of One Valley's ability to control costs and equalizes the comparison
of various sized operations. As this ratio decreases, more of the net
interest margin flows to net income. One Valley's net overhead ratio for the
first nine months of 1999 was 1.82%, down from 1.95% during all of 1998 and
1.94% for the first nine months of 1998. The improvement in the net overhead
ratio during the first nine months of 1999 was the result of a 10.5% growth in
average earning assets from one year ago while net overhead increased by only
3.6% from the same period in 1998.
Total non-interest income excluding securities transactions was $51.4
million through the first nine months of 1999, up 18.7% from the $43.3 million
non-interest income earned during the same period in 1998. Trust income
increased by 20.6% from the same period last year due to new business and
increases in the market value of trust assets managed. Service charges on
deposit accounts increased by 10.3% in the first nine-months of 1999 due to
the increased size of One Valley's customer base and an increase in One
Valley's fee structure to reflect market rates. Other service charges and
fees increased by 45.2% over the first nine months of 1999, primarily due to
increases in credit/debit card activity for both retail and corporate
customers, investment and insurance product commissions, official check
processing income, ATM transaction revenue, and other banking services
provided to customers. Other operating income increased by 32.7% over the
first nine months primarily due to revenue from certain loan payoffs. This
additional income was partially offset by a $1.1 million or 18.6% decrease
in real estate fees due to a decline in secondary market activity.
Non-interest income for the third quarter of 1999 was $17.9 million an
18.7% increase over the same period last year. The changes for the quarter
are primarily the same as those discussed in the year-to-date analysis.
Total non-interest expense was $130.2 million during the first nine
months of 1999, a 9.1% increase over the $119.3 million during the same period
in 1998. This increase is partially due to the operations of the nine branches
acquired through a merger in August 1998. Staff costs increased by
11.2% from the level one-year ago primarily due to the additional staff from
the new branches and normal salary and benefit increases. Occupancy expense
increased by 24.0% from the same period last year due to the increased
facilities cost related to the nine new branches and the writedown to fair
value of an existing location that will be disposed of in the near future.
Equipment expenses increased 10.3% from last year's level primarily due to
higher maintenance and depreciation costs related to the new branches and
technology upgrades. Other operating expenses increased by $1.5 million or
3.9% in the first nine months of 1999, largely due to increases in telephone,
postage, courier services and other branch operating costs; increased
promotional campaign expenses; and an increase in state and local taxes paid.
Non-interest expense for the third quarter of 1999 was $43.7 million
compared to $40.9 million earned in the same period last year. The changes
for the quarter are primarily the same as those discussed in the year-to-date
analysis.
Income tax expense increased by $2.8 million, or 10.3%, for the first
nine months of 1999 compared with the same period in 1998. The increase in
taxes is primarily a result of the 12.8% growth in pretax earnings. One
Valley's effective income tax rate for the first nine months of 1999 was 33.1%
compared to 33.9% during the first nine months of 1998. The slight decline in
effective tax rate is partially due to an increase in interest income from tax
exempt sources.
FINANCIAL CONDITION
Asset Structure
Total loans at September 30, 1999, were $4.3 billion, an increase of
$415.1 million or 10.6% above September 30, 1998. As a result of this loan
growth, the consolidated loan-to-deposit ratio has increased to 92.9% at
September 30, 1999, compared to 86.9% at September 30, 1998. The increase in
total loans is primarily in one-to-four family residential mortgages,
commercial loans primarily secured by real estate, and consumer auto loans.
Investment portfolio assets increased $121.4 million or 7.6% from the
level at year-end and by $131.3 million or 8.3% from the level one-year ago.
At September 30, 1999 approximately 84% of One Valley's investment portfolio
was available-for-sale while the remaining 16% consisted of municipal
securities to be held-to-maturity. At the time of purchase, management
determines the appropriate classification of securities. Securities to be
held for indefinite periods of time and not intended to be held to maturity or
on a long-term basis are classified as available-for-sale and carried at fair
value. The corresponding difference between the historical cost and the
current fair value of these securities, the unrealized gain or loss, is an
adjustment to shareholders' equity, net of deferred income taxes. Securities
available-for-sale include securities that management intends to use as part
of its asset/liability management strategy and that may be sold in response to
changes in interest rates, resultant prepayment risk, and other related risk
factors. If management has the positive intent and the ability at the time of
purchase to hold securities until maturity, they are classified as held-for-
investment and carried at amortized historical cost adjusted for amortization
of premiums and accretion of discounts, which are recognized as adjustments to
interest income.
Securities designated as available-for-sale at September 30, 1999 had a
historical cost of $1.461 billion, with an unrealized loss of approximately
$24.8 million. Due to increases in market interest rates in 1999, the market
value of One Valley's securities available-for-sale has declined by
approximately $35.2 million since year-end 1998. This decline is expected to
be temporary and no charges to operations are anticipated. The unrealized
loss at September 30, 1999, lowered shareholders' equity by $15.2 million,
net of $9.6 million in deferred income taxes. At year-end December 31, 1998,
and September 30, 1998, securities available-for-sale had a historical cost of
$1.297 billion and $1.305 billion, with an unrealized gain of approximately
$10.4 million and $15.4 million, respectively. These unrealized gains
increased shareholders' equity by $6.5 million and $9.6 million, net of
deferred income taxes.
In order to improve its fully tax equivalent net interest income and to
hedge against higher income tax rates, One Valley increased its holdings of
tax-exempt securities that were offering attractive yields over the last
several years. As shown on the consolidated average balance sheets (page 18),
average tax-exempt securities in the first nine months of 1999 increased by
8.7% or $20.7 million over the average during the first nine months of 1998.
One Valley will continue to monitor its investment opportunities and may
purchase additional tax-exempt securities of similar yield and quality.
As of September 30, 1999, Federal funds sold were below year-end level
1998 and one year ago by $11.3 million and $9.3 million, respectively.
Fluctuations in Federal funds sold are normal and largely due to planned
changes in One Valley's asset/liability structure in order to maximize the
return on investment in response to changes in the interest rate environment.
Liability Structure
Total deposits at September 30, 1999, increased by $34.3 million from
year-end and $153.6 million or 3.5% since September 30, 1998. Due to the
current low interest rate environment compared to the early 1990's, deposit
customers are shortening the maturities of their deposit reinvestments and
seeking higher yielding non-traditional investment alternatives. The majority
of the growth in One Valley's core deposits, exclusive of acquisitions, has
been in variable rate, index-based deposit accounts. One Valley has also been
able to attract non-interest bearing deposits by increasing customer service
and convenience through increased electronic banking service and locations.
The average rate paid on interest bearing deposits was 3.96% in the first nine
months of 1999, down from the 4.26% average rate paid for all of 1998, and the
4.29% average rate paid in the first nine months of 1998. In an effort to
meet customer expectations for an integrated financial service delivery
system, One Valley also operates a fully licensed NASD Broker/Dealer and an
Insurance Agency under its community banking structure.
Total short-term borrowings increased from year-end and one year
ago by $57.0 million or 7.8% and $46.4 million or 6.3%, respectively. Short-
term borrowings consist of Federal funds purchased from correspondent banks,
repurchase agreements with large corporate and public entities, advances on
credit lines available to One Valley, and commercial paper. The increased
level of short-term borrowings from December 31, 1998 has been used to fund
loan growth and optimize the yield and duration of the investment portfolio as
planned under One Valley's asset/liability management program. The average
rate paid on these short-term borrowings has decreased 49 basis points from
5.14% during the first nine months of 1998 to 4.65% during the same period of
1999. By comparison, the yield on the investment portfolio during the same
time frame declined 27 basis points from 6.68% during the first nine months of
1998 to 6.41% during the same period of 1999.
Long-term borrowings have increased by $392.5 million since September 30,
1998 and $394.1 million since December 31, 1998. In April 1999, One Valley
borrowed $200.0 million from the Federal Home Loan Bank. The proceeds were
used to purchase investments with maturity dates in the fourth quarter of this
year. Upon maturity, the funds will be available to provide adequate
liquidity for customers' potential year-end cash needs. While there was no
material impact on net interest income, the borrowing lowered One Valley's net
interest margin ratio by 15 basis points in the third quarter and 11 basis
points year-to-date. Also during 1999, One Valley has borrowed $40.7 million in
ten year amortizing fixed rate notes as funding for certain long-term fixed
rate loans and has borrowed $135.0 million in fixed rate FHLB advances with
various maturities as part of its asset/liability management strategy. As
a result, One Valley now has $429.6 million of long-term FHLB borrowings
with $130.3 million maturing and another $150.0 million anticipated to be
called within the next twelve months. The remaining $149.3 million has
scheduled maturities ranging from two to ten years.
To hedge against potential rising interest rates on its indexed money
market core deposit accounts, One Valley entered into an interest rate swap
agreement during 1998. During the first quarter of 1999, One Valley entered
into two additional rate swap agreements as part of its asset/liability
management strategy. The effect of these derivative financial instruments on
One Valley's operating results has been immaterial to date.
Capital Structure and Liquidity
One Valley's risk based capital ratio at September 30, 1999 was 14.0%,
well above the 8.0% required, while its Tier I capital ratio was 12.8%. One
Valley's strong capital position is demonstrated further by its leverage ratio
of 8.2% compared to regulatory guidance of 4.0% to 5.0%. The capital ratios
of the banking subsidiaries also remain strong and allow them to effectively
serve the communities in which they are located. One Valley's commitment to a
strong capital ratio has facilitated the company's expansion into the central
Virginia markets thus increasing prospects for improving long-term
profitability and shareholder value.
One Valley's equity-to-asset ratio was 8.7% at September 30, 1999, down
from the 10.0% at December 31, 1998 and September 30, 1998. The
decrease in the equity-to-asset ratio is the result of the purchase of
treasury shares and the equity effect of the market value decline of the
investment portfolio. In February 1999, One Valley's Board of Directors
authorized the repurchase of 1.5 million shares of One Valley common stock.
This purchase was completed by the end of the second quarter at a cost of
$56.5 million. In July 1999, the Board authorized the repurchase of another
1.5 million shares of One Valley common stock. Purchases under this plan may
be made from time-to-time depending upon market conditions.
One Valley's cash dividend, totaling $0.26 per share for the third
quarter of 1999, was up 8.3% over the $0.24 per share dividend during the same
period in 1998. One Valley's dividend policy, coupled with the continued
growth in net income, demonstrates management's commitment to a strong equity-
to-asset ratio benefiting both the investor and the customer in the local
community. The capital positions of the banks, coupled with proper
asset/liability matching and the stable nature of the primarily consumer base
of core deposits, results in the maintenance of a strong liquidity position.
The liquidity of the parent company is dependent upon dividends from its
banking subsidiaries, which, although restricted by banking regulations, are
adequate to meet its cash needs.
Effects of Changing Prices
The results of operations and financial condition presented in this
report are based on historical cost, unadjusted for the effects of inflation.
Inflation affects One Valley in two ways. One is that inflation can result in
increased operating costs, which must be absorbed or recovered through
increased prices for services. The second effect is on the purchasing power
of the corporation. Virtually all of a bank's assets and liabilities are
monetary in nature. Regardless of changes in prices, most assets and
liabilities of the banking subsidiaries will be converted into a fixed number
of dollars. Non-earning assets, such as premises and equipment, do not
comprise a major portion of One Valley's assets; therefore, most assets are
subject to repricing on a more frequent basis than in other industries. One
Valley's ability to offset the effects of inflation and potential reductions
in future purchasing power depends primarily on its ability to maintain
capital levels by adjusting prices for its services and to improve net
interest income by maintaining an effective asset/liability mix.
YEAR 2000 READINESS DISCLOSURE
Introduction
One Valley recognizes the significant potential risk associated with the
Year 2000 or Y2K issue and the challenge it poses. The Y2K problem arose
because many existing computer programs use only the last two digits to refer
to a year. Consequently, these computer programs do not properly recognize a
year that begins with 20XX instead of 19XX. Beginning January 1, 2000,
computer applications that use dates for computations, comparisons and sorting
may produce incorrect results or fail due to an invalid interpretation of the
date. The potential risk is not limited to computers and related software
applications, but extends to telephones, security systems, copiers, FAX
machines or any apparatus that utilizes computer technology. The full extent
of the potential impact of Y2K is not yet known, but it could adversely affect
national or global economies.
As a financial institution, the ability of One Valley to promptly and
accurately capture, record, process and communicate its customers' financial
transactions and related data is vital to its ongoing operations. The Y2K
problem could impede One Valley's ability to do so in several significant
respects. Recognizing this potential risk, One Valley has undertaken a
comprehensive project to address the Year 2000 issues that may affect One
Valley and its customers. One Valley's preparations began in late 1996 under
the guidance of Management and with oversight by the Board of Directors.
Project Overview
One Valley's project includes five phases: Awareness, Assessment,
Renovation (or remediation), Validation (or testing), and Implementation. Each
phase is described below. The phases indicate the order and method of One
Valley's approach to Year 2000 concerns. Elements of different phases overlap,
and different systems are at varying levels of completion within each phase.
Systems that are mission critical were addressed first.
The Awareness Phase consisted of formal updates to One Valley management,
employees and the Board of Directors about the issues relating to Y2K. In this
stage management gathered information and attended conferences, appointed a
project steering team and coordinators, began preliminary discussions with
third party vendors, and distributed preliminary information to its employees
and customers. This phase was completed in October, 1997, however One Valley
continues on-going efforts to keep its customers and employees up to date.
In the Assessment Phase, One Valley identified its critical information
technology (IT) systems and performed a company-wide inventory of all systems,
software, hardware, equipment and components that potentially could be
affected by Y2K. During this phase, One Valley established project time lines,
allocated resources and established the methodology to monitor the Y2K
readiness of the IT Systems provided by third parties, as well as its non-IT
Systems. One Valley also determined the Y2K readiness of its in-house IT
Systems and components, and reported progress to senior management and the
Board of Directors on a regular basis. During this phase, One Valley
identified four general areas of potential susceptibility to Y2K issues: Major
IT Systems provided by third parties, Internal IT Systems, Non-IT Systems,
including communications infrastructure and physical facilities, and
interruption to customers' business. One Valley also identified which systems
were "mission critical" in terms of its operations and customer service. The
Assessment Phase was completed in the fourth quarter of 1997.
In the Renovation Phase, One Valley's third-party IT providers
implemented program changes to accommodate the Y2K issues and conducted
internal testing, which was completed for all systems defined as mission
critical in 1998. In addition, during this phase One Valley began
reprogramming its internal IT and non-IT Systems to accommodate Y2K. Most
internal IT Systems and non-IT Systems have not been designated as mission
critical to One Valley. Those that were deemed mission critical were renovated
or replaced during 1998. Renovation of systems that are not mission critical
was completed during the second quarter of 1999. During this phase, One Valley
is also focusing on its customers' readiness for and susceptibility to Y2K
concerns.
In the Validation Phase, One Valley and its third party IT providers
tested the renovated applications and components to make sure they were Y2K
ready. This phase was substantially completed at the end of the second quarter
of 1999.
The Implementation Phase began during the fourth quarter of 1998. During
the first part of this phase, vendors completed upgrading of the applications,
systems and other components, and Y2K ready programs for mission critical
functions were put into production at One Valley. The balance of this final
phase was completed during the second quarter of 1999.
Project Status
One Valley's major IT Systems are provided by the companies which are
among the largest service providers in the world and are recognized as among
the leading firms in their respective lines of business. The major IT Systems
provided by these third parties consist of those which process mortgage loans,
credit cards, commercial and installment loans, deposits, investments, and
trust services. One Valley uses its Internal IT Systems to collect and format
data that is then sent to and processed by these third parties. The resulting
information is then available to One Valley. The third party service
providers, in some cases, also generate statements for mailing directly to
customers.
One Valley has continually monitored the Y2K progress of these third
parties and has determined that progress to date is acceptable. These systems
have each been renovated, tested by the vendor, are in use by One Valley now,
and are running on the remediated Y2K software. The Y2K upgrading of all
mission critical IT Systems provided by third parties is complete. Because
most of One Valley's mission critical systems are supplied by third party
vendors, validation by the vendors occurred first. The up-graded system was
then put into production at One Valley and further testing by One Valley will
continue throughout 1999. One Valley has completed time dimension testing of
these third-party IT Systems, and all other testing required by bank
regulators, utilizing its own testing, proxy testing, logical partition
testing, or the most appropriate combination thereof.
One Valley's Internal IT Systems are primarily used to capture and
prepare data to be transmitted to its third party IT Systems providers. As
part of a planned upgrade of its systems, One Valley has replaced all of its
personal computers with models that are Y2K ready. In addition, One Valley has
over 280 ATMs in its network, all of which have been validated by the vendor
and are using Y2K compliant software. Testing of these ATMs by One Valley was
completed during the second quarter of 1999. One Valley's IT Systems also
include network servers, routers and related software. The upgrading or
replacement of One Valley's servers and routers and related software was
completed during the second quarter of 1999.
Another important part of One Valley's operations includes its non-IT
Systems, primarily facilities and equipment. Basic utilities, such as
telephone, gas and electrical service, as well as heating and cooling systems,
could be adversely affected by the Y2K. One Valley has performed an inventory
of its facilities and has tested to the extent possible, applicable equipment
for Year 2000 compliance. One Valley has determined that all of its vaults are
Y2K ready. Outside companies, primarily utilities, which provide these non-IT
services, have indicated to One Valley that they plan to be Y2K ready by the
end of 1999, and to date One Valley is not aware of any non-IT system provider
with a Y2K issue that would materially impact One Valley's operations.
However, beyond these assurances, One Valley has no means of insuring or
verifying that these non-IT Systems will be Y2K ready, and the impact of a
failure in these systems is not determinable.
Another area that could potentially impact One Valley is interruption of
its customers' business, which among other things could potentially affect the
ability of its commercial loan and other customers to repay loans from One
Valley, thus increasing One Valley's delinquency ratios, non-performing assets
and loans losses. To help minimize these problems and heighten customer
awareness, One Valley has established a Y2K Corporate Customer Action Plan. As
part of this plan, One Valley has mailed Year 2000 brochures to all commercial
customers, hosted Y2K information seminars featuring a nationally known expert
for its customers, made FDIC Year 2000 brochures available in the lobby of all
its branches, and published a Year 2000 questions and answer sheet.
One Valley has also incorporated a Y2K readiness assessment in its credit
risk evaluations of corporate borrowers falling within certain parameters. As
of June 30, 1998, corporate borrowers were preliminarily assessed as to their
level of Year 2000 risk based upon their line of business, their degree of
reliance on computer hardware and software, and their historic response to
strategic challenges. A full assessment of medium and high-risk customers and
industries was undertaken, including a questionnaire and a site visit in some
instances. In addition, the results of One Valley's evaluations have been
analyzed by industry segment to provide Y2K risk profiles by industry.
Corporate borrowers in those industries with a significant inherent Y2K risk
receive greater scrutiny. One Valley monitors closely customers and industries
judged to be high risk, and credit analyses on new and existing credits
include evaluation of Year 2000 readiness.
Although One Valley has implemented its Y2K project, there are
uncertainties which, due to their unprecedented nature, simply cannot be fully
evaluated. For example, the extent of interplay between payment systems is
unclear, and it is not known how the potential failure of one aspect of that
complex system might adversely impact other elements. In addition, although
testing has been completed for each significant system, it is not possible to
independently verify each vendor's vendors. It is unknown how a problem at one
discrete point in the chain of service could impact an entire system.
Management believes it has an effective project in place to resolve the
Y2K issues within One Valley in a timely manner. In the event of a vendor,
governmental, utility, customer or other Y2K failure, the Company may be
unable to perform some or all of the functions related to its customers'
financial transactions. The impact and duration of such inability would depend
upon the extent of the Y2K-related failure or failures. While One Valley
believes that it is taking the steps appropriate to prevent a Y2K failure on
its part, because One Valley's ability to perform is linked to the performance
of others, certainty is not possible. In addition, the potential for
disruptions in the economy generally resulting from Y2K issues remains unknown
and could also materially adversely affect One Valley and its customers. If
system failures occur for any reason, One Valley and its customers could also
be subject to litigation. The likelihood of such events and their impact on
One Valley cannot be reasonably estimated at this time.
One Valley has completed and tested the contingency plan for the
possibility of business disruption due to Y2K issues. The Y2K contingency plan
expands existing business continuity plans, contemplating specific Y2K
scenarios. As part of that process One Valley has assessed the potential
business impact of a failure of each of its important systems and determined
the need for contingency planning on a system by system basis. One Valley's
contingency plans focus upon IT Systems failures by its vendors, as well as
widespread disruptions of telecommunications and electrical power, all of
varying duration. In addition to the contingency planning, One Valley has
completed event planning. Event planning differs from contingency planning in
that is addresses areas beyond typical business continuity. For example, as
part of the event planning, checklists and procedures were developed for the
New Year's weekend with results to be reported to a central location. One
Valley has also assessed its customer base and made plans to anticipate
increased customer needs, whether it be for account information or cash.
These portions of the event plan necessarily involve estimates and while every
effort has been made to accurately predict demand, there can be no assurance
that the plans will be accurate; actual demand could be higher or lower than
anticipated. There can be no assurance, in general, that contingency and
event planning will be adequate for all possible events.
Project Costs
Expenses directly related to Y2K have been incurred, such as staff costs
and informational conferences and seminars for employees and customers. These
costs have been immaterial to date. Since third party vendors provide most of
One Valley's IT Systems under the terms of fixed price contracts, One Valley
has had to date, no material direct expense as a result of vendor's upgrades
to those systems as a result of Y2K concerns. It is possible, however, that
these vendors may attempt to recover some of their Y2K-related costs by way of
future price increases upon renewal of their respective contracts.
One Valley has been very aggressive in upgrading its internal IT Systems
infrastructure, most of which are capital improvements attributed to planned
upgrades in technology to modernize the way One Valley performs its day-to-day
operations, and not solely the result of Y2K concerns.
The total cost of the Y2K project is approximately $5.4 million, which
includes the purchase of new software and operations equipment and estimated
payroll costs of those with significant responsibility for the Y2K project.
One Valley does not separately track all internal costs incurred for the Y2K
project, which are principally payroll costs for its information technology
employees and others involved in the Y2K project. Virtually all of the project
costs are attributable to the purchase of new software and operations
equipment, which will be capitalized.
<PAGE>
<TABLE>
ONE VALLEY BANCORP, INC. AND SUBSIDIARIES
Analysis of Loan Losses and Non-Performing Assets
(unaudited in thousands)
<CAPTION>
For The Three Months For The Nine Months
Ended September 30 Ended September 30
1999 1998 1999 1998
<S> <C> <C> <C> <C>
ALLOWANCE FOR LOAN LOSSES
Balance, Beginning of Period $53,407 $48,907 $52,272 $45,048
Loan Losses 2,174 2,066 6,425 6,048
Loan Recoveries 597 535 1,528 1,516
------- ------- ------- -------
Net Charge-offs 1,577 1,531 4,897 4,532
Balance of Acquired Subsidiary 0 1,857 0 3,829
Provision For Loan Losses 2,325 2,593 6,780 7,481
------- ------- ------- -------
Balance, End of Period $54,155 $51,826 $54,155 $51,826
======= ======= ======= =======
Total Loans, End of Period $4,317,595 $3,902,448
Allowance For Loan Losses As a % of Total Loans 1.25 1.33
========== ==========
NON-PERFORMING ASSETS AT QUARTER END
Non-Accrual Loans $7,961 $7,189
Foreclosed Properties 976 1,852
------- -------
Total Non-Performing Assets $8,937 $9,041
======= =======
Non-Performing Assets As a % of Total Loans 0.21 0.23
Loans Past Due Over 90 Days $6,575 $8,590
Loans Past Due Over 90 Days As a % of Total Loans 0.15 0.22
</TABLE>
<PAGE>
<TABLE>
ONE VALLEY BANCORP, INC. AND SUBSIDIARIES
Consolidated Average Balance Sheets
(unaudited in thousands)
<CAPTION>
Three Months Ended September 30 Nine Months Ended September 30
1999 1998 1999 1998
Amount Yield/Rate Amount Yield/Rate Amount Yield/Rate Amount Yield/Rate
(pct.) (pct.) (pct.) (pct.)
<S> <C> <C> <C> <C> <C> <C> <C> <C>
ASSETS
Loans
Taxable $4,168,650 8.23 $3,775,930 8.64 $4,080,668 8.27 $3,561,122 8.72
Tax-Exempt 68,115 9.32 42,520 9.69 54,743 9.40 42,744 9.77
---------- ---------- ---------- -----------
Total 4,236,765 8.24 3,818,450 8.66 4,135,411 8.28 3,603,866 8.74
Less: Allowance for Losses 54,282 50,954 53,491 48,662
---------- ---------- ---------- ----------
Net Loans 4,182,483 8.35 3,767,496 8.77 4,081,920 8.39 3,555,204 8.85
Securities
Taxable 1,453,032 6.14 1,374,818 6.37 1,400,377 6.12 1,397,864 6.45
Tax-Exempt 252,847 7.93 241,737 7.94 257,242 8.00 236,569 8.01
---------- ---------- ---------- ----------
Total 1,705,879 6.41 1,616,555 6.61 1,657,619 6.41 1,634,433 6.68
Federal Funds Sold & Other 22,046 5.13 36,465 5.41 27,566 4.75 27,720 5.64
---------- ---------- ---------- ----------
Total Earning Assets 5,910,408 7.78 5,420,516 8.10 5,767,105 7.80 5,217,357 8.16
Other Assets 401,860 375,658 388,519 361,032
---------- ---------- ---------- ----------
Total Assets $6,312,268 $5,796,174 $6,155,624 $5,578,389
========== ========== ========== ==========
LIABILITIES AND EQUITY
Interest Bearing Liabilities
Deposits $4,005,064 3.95 $3,834,624 4.28 $3,989,045 3.96 $3,720,519 4.29
Short-term Borrowings 767,986 4.83 752,854 5.10 740,580 4.65 722,552 5.14
Long-term Borrowings 367,502 5.28 41,685 6.02 245,886 5.21 45,148 6.03
---------- ---------- ---------- ----------
Total Interest
Bearing Liabilities 5,140,552 4.17 4,629,163 4.43 4,975,511 4.13 4,488,219 4.44
Non-interest Bearing Deposits 566,284 539,190 556,242 494,817
Other Liabilities 50,188 52,283 49,958 48,665
---------- ---------- ---------- ----------
Total Liabilities 5,757,024 5,220,636 5,581,711 5,031,701
Shareholders' Equity 555,244 575,538 573,913 546,688
---------- ---------- ---------- ----------
Total Liabilities & Equity $6,312,268 $5,796,174 $6,155,624 $5,578,389
========== ========== ========== ==========
Interest Income To Earning Assets 7.78 8.10 7.80 8.16
Interest Expense To Earning Assets 3.63 3.78 3.56 3.82
------ ------ ------ ------
Net Interest Margin 4.15 4.32 4.24 4.34
====== ====== ====== ======
<FN> Note: Yields are computed on a fully taxable equivalent basis using the rate of 35%.
</TABLE>
<PAGE>
One Valley Bancorp, Inc.
Part II. Other Information
Item 6. Exhibits and Reports on Form 10-Q
a) Exhibits
27. Financial Data Schedule - electronic filing only
b) Reports on Form 8-K
1. July 21, 1999 - One Valley announced the approval of a plan
authorizing repurchase of up to an aggregate of 1,500,000
shares of its common stock.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
One Valley Bancorp, Inc.
DATE: November 15, 1999
BY /s/ J. Holmes Morrison
J. Holmes Morrison
Chairman of the Board, President,
and Chief Executive Officer
BY /s/ Laurance G. Jones
Laurance G. Jones
Executive Vice President
and Chief Financial Officer
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated balance sheets and statements of income of One Valley Bancorp as
well as supplemental schedule of the analysis of loan losses and non-performing
assets and the consolidated average balance sheets and is qualified in its
entirety by reference to such financial statements and supplemental schedules.
</LEGEND>
<S> <C> <C>
<PERIOD-TYPE> 9-MOS 9-MOS
<FISCAL-YEAR-END> DEC-31-1999 DEC-31-1998
<PERIOD-END> SEP-30-1999 SEP-30-1998
<CASH> 156010 144495
<INT-BEARING-DEPOSITS> 2677 4843
<FED-FUNDS-SOLD> 38690 47951
<TRADING-ASSETS> 0 0
<INVESTMENTS-HELD-FOR-SALE> 1436240 1320845
<INVESTMENTS-CARRYING> 271208 255264
<INVESTMENTS-MARKET> 267759 264816
<LOANS> 4317595 3902448
<ALLOWANCE> 54155 51826
<TOTAL-ASSETS> 6413008 5856422
<DEPOSITS> 4587190 4433601
<SHORT-TERM> 786715 740316
<LIABILITIES-OTHER> 53529 56897
<LONG-TERM> 429606 37084
0 0
0 0
<COMMON> 394100 390623
<OTHER-SE> 161868 197901
<TOTAL-LIABILITIES-AND-EQUITY> 6413008 5856422
<INTEREST-LOAN> 255061 234579
<INTEREST-INVEST> 74295 76865
<INTEREST-OTHER> 980 1169
<INTEREST-TOTAL> 330336 312613
<INTEREST-DEPOSIT> 118172 119316
<INTEREST-EXPENSE> 153533 149154
<INTEREST-INCOME-NET> 176803 163459
<LOAN-LOSSES> 6780 7481
<SECURITIES-GAINS> 100 989
<EXPENSE-OTHER> 130183 119336
<INCOME-PRETAX> 91309 80916
<INCOME-PRE-EXTRAORDINARY> 91309 80916
<EXTRAORDINARY> 0 0
<CHANGES> 0 0
<NET-INCOME> 61092 53515
<EPS-BASIC> 1.80 1.63
<EPS-DILUTED> 1.78 1.60
<YIELD-ACTUAL> 7.80 8.16
<LOANS-NON> 7961 7189
<LOANS-PAST> 6575 8590
<LOANS-TROUBLED> 0 0
<LOANS-PROBLEM> 0 0
<ALLOWANCE-OPEN> 52272 45048
<CHARGE-OFFS> 6425 6048
<RECOVERIES> 1528 1516
<ALLOWANCE-CLOSE> 54155 51826
<ALLOWANCE-DOMESTIC> 54155 51826
<ALLOWANCE-FOREIGN> 0 0
<ALLOWANCE-UNALLOCATED> 0 0
</TABLE>
