<TABLE>
<PAGE> 2
PART I - FINANCIAL INFORMATION
Item 1. Financial Statements.
HERITAGE FINANCIAL SERVICES, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
(dollars in thousands)
(unaudited)
<CAPTION>
June 30, December 31,
1995 1994
<S> <C> <C>
ASSETS
Cash and due from banks $48,717 $36,870
Federal funds sold and interest bearing deposits 50,706 49,286
------- -------
Total cash and cash equivalents 99,423 86,156
Securities:
Held-to-maturity (market value: $292,670 in
1995 and $228,416 in 1994) 290,747 236,810
Available-for-sale (at market value) 65,289 71,478
------- -------
Total securities 356,036 308,288
Loans, net of unearned income 545,436 524,815
Less: allowance for loan losses (8,692) (8,720)
------- -------
Net loans 536,744 516,095
Premises and equipment 16,538 17,079
Goodwill and core deposit intangibles 14,355 15,080
Other assets 11,496 10,152
---------- --------
TOTAL ASSETS $1,034,592 $952,850
========== ========
LIABILIITIES
Demand deposits $149,373 $143,378
NOW accounts 74,419 78,654
Money market accounts 82,800 66,889
Savings deposits 208,135 232,100
Time deposits 375,199 302,569
------- -------
Total deposits 889,926 823,590
Securities sold under agreements to repurchase 45,966 33,018
Notes payable 3,000 6,500
Other liabilities 6,463 6,631
------- -------
TOTAL LIABILITIES 945,355 869,739
------- -------
SHAREHOLDERS' EQUITY
Preferred shares - no par value; shares authorized: - -
12,000,000; shares issued: none
Common shares - $.625 par value; shares authorized:
16,000,000; shares issued: 7,939,222 in 1995
and 7,915,972 in 1994 4,962 4,947
Surplus 17,498 17,385
Retained earnings 67,408 62,879
Net unrealized gains (losses) on securities, net
of tax (631) (2,100)
-------- -------
TOTAL SHAREHOLDERS' EQUITY 89,237 83,111
-------- -------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $1,034,592 $952,850
========= =======
<FN>
See accompanying notes to the consolidated financial statements.
</TABLE>
<PAGE> 3
<TABLE>
HERITAGE FINANCIAL SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
For the Six Months Ended June 30, 1995 and 1994
(in thousands, except per share data)
(unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
INTEREST INCOME
Loans, including fees $23,408 $18,655
Securities:
Taxable 8,778 5,632
Exempt from federal income taxes 2,067 2,106
Federal funds sold and interest bearing 1,265 713
deposits
------ ------
TOTAL INTEREST INCOME 35,518 27,106
------ ------
INTEREST EXPENSE
Deposits 14,729 9,187
Other borrowings 833 245
------ ------
TOTAL INTEREST EXPENSE 15,562 9,432
------ ------
NET INTEREST INCOME 19,956 17,674
------ ------
Provision for loan losses 100 50
------ ------
NET INTEREST INCOME AFTER PROVISION FOR
LOAN LOSSES 19,856 17,624
------ ------
OTHER INCOME
Service charges on deposit accounts 2,036 1,844
Income for trust services 370 351
Investment product fees 440 442
Other operating income 495 504
Securities gains 198 8
------ ------
TOTAL OTHER INCOME 3,539 3,149
------ ------
OTHER EXPENSES
Salaries and employee benefits 7,661 6,796
Net occupancy expense 1,266 1,105
Equipment expense 783 684
Federal deposit insurance premiums 915 802
Data processing expense 415 350
Amortization of intangible assets 801 552
Other operating expenses 2,313 1,798
------ ------
TOTAL OTHER EXPENSES 14,154 12,087
------ ------
INCOME BEFORE INCOME TAXES 9,241 8,686
Income tax expense 2,965 2,707
------ ------
NET INCOME $6,276 $5,979
====== ======
Net income per common share:
Primary $ .76 $ .72
Fully diluted $ .76 $ .72
Weighted average common and common equivalent
shares outstanding:
Primary 8,289 8,281
Fully diluted 8,294 8,309
<FN>
See accompanying notes to the consolidated financial statements.
</TABLE>
<PAGE> 4
<TABLE>
HERITAGE FINANCIAL SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Income
For the Three Months Ended June 30, 1995 and 1994
(in thousands, except per share data)
(unaudited)
<CAPTION>
1995 1994
<S>
INTEREST INCOME <C> <C>
Loans, including fees $11,901 $9,519
Securities:
Taxable 4,827 2,933
Exempt from federal income taxes 1,078 1,049
Federal funds sold and interest bearing
deposits 571 414
------ ------
TOTAL INTEREST INCOME 18,377 13,915
------ ------
INTEREST EXPENSE
Deposits 7,980 4,678
Other borrowings 417 142
------ ------
TOTAL INTEREST EXPENSE 8,397 4,820
------ ------
NET INTEREST INCOME 9,980 9,095
Provision for loan losses 50 0
------ ------
NET INTEREST INCOME AFTER PROVISION FOR 9,930 9,095
LOAN LOSSES
OTHER INCOME
Service charges on deposit accounts 1,024 929
Income for trust services 187 186
Investment product fees 169 275
Other operating income 234 250
Securities gains (losses) 194 1
------ ------
TOTAL OTHER INCOME 1,808 1,641
------ ------
OTHER EXPENSES
Salaries and employee benefits 3,766 3,405
Net occupancy expense 611 541
Equipment expense 401 345
Federal deposit insurance premiums 458 401
Data processing expense 221 179
Amortization of intangible assets 402 277
Other operating expenses 1,199 938
------ ------
TOTAL OTHER EXPENSES 7,058 6,086
------ ------
INCOME BEFORE INCOME TAXES 4,680 4,650
Income tax expense 1,465 1,478
------ ------
NET INCOME $3,215 $3,172
====== ======
Net income per common share:
Primary $ .39 $ .38
Fully diluted $ .39 $ .38
Weighted average common and common equivalent
shares outstanding:
Primary 8,293 8,303
Fully diluted 8,295 8,317
<FN>
See accompanying notes to the consolidated financial statements.
</TABLE>
<PAGE> 5
<TABLE>
HERITAGE FINANCIAL SERVICES, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
For the Six Months Ended June 30, 1995 and 1994
(dollars in thousands)
(unaudited)
<CAPTION>
1995 1994
<S> <C> <C>
OPERATING ACTIVITIES
Net income $6,276 $5,979
Adjustments to reconcile net income to net cash
provided by operating activities:
Discount accretion on securities (492) (381)
Deferred loan fee accretion (137) (209)
Provision for loan losses 100 50
Securities gains (198) (8)
Depreciation and amortization 851 743
Deferred income taxes (220) (239)
Net amortization of purchase accounting adjustment 987 868
(Increase) decrease in accrued interest income (686) 98
Increase (decrease) in accrued interest expense 481 (19)
Other, net (1,576) (450)
-------- -------
NET CASH PROVIDED BY OPERATING ACTIVITIES 5,386 6,432
-------- -------
INVESTING ACTIVITIES
Securities held-to-maturity:
Proceeds from maturities, repayments and calls 16,159 19,714
Purchases (69,743) (52,998)
Securities available-for-sale:
Proceeds from sales 7,962 -
Proceeds from maturities, repayments and calls 11,433 33,481
Purchases (10,440) (4,745)
Net increase in loans (21,248) (1,933)
Purchases of premises and equipment (596) (575)
Proceeds from the sale of premises and equipment 15 249
Proceeds from sales of foreclosed assets 102 544
--------- -------
NET CASH USED IN INVESTING ACTIVITIES (66,356) (6,263)
--------- -------
FINANCING ACTIVITIES
Net decrease in demand deposits, NOW and money
market accounts and savings deposits (6,294) (12,591)
Net increase in time deposits 72,702 12,640
Net increase in securities sold under 12,948 6,049
agreements to repurchase
Principal payments on notes payable (3,500) -
Proceeds from stock option exercises 128 629
Dividends paid (1,747) (1,424)
--------- --------
NET CASH PROVIDED FROM FINANCING ACTIVITIES 74,237 5,303
--------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS 13,267 5,472
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 86,156 63,504
------- -------
CASH AND CASH EQUIVALENTS AT END OF PERIOD $99,423 $68,976
======= =======
Supplemental disclosures:
Interest paid to depositors and creditors $15,153 $9,451
Income taxes paid 3,131 2,815
<FN>
See accompanying notes to consolidated financial statements.
</TABLE>
<PAGE> 6
HERITAGE FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
1. The unaudited consolidated financial statements include the accounts of
Heritage Financial Services, Inc. and its subsidiaries (the"Company"). In the
opinion of management, all adjustments (consisting only of normal recurring
adjustments) necessary for a fair presentation of the financial position,
results of operations and cash flows for the interim periods have been made.
Certain amounts reported in prior periods have been reclassified for
presentation or comparative purposes. The results of operations for the three
and six months ended June 30, 1995 are not necessarily indicative of the
results to be expected for the entire fiscal year.
The unaudited interim financial statements have been prepared in conformity
with generally accepted accounting principles and reporting practices. Certain
information in footnote disclosures normally included in financial statements
prepared in accordance with generally accepted accounting principles has been
condensed or omitted pursuant to rules and regulations of the Securities and
Exchange Commission, although the Company believes the disclosures are adequate
to make the information not misleading. These financial statements should be
read in conjunction with the consolidated financial statements and notes thereto
included in the Company's 1994 Annual Report.
2. As of January 1, 1995, the Company adopted the provisions of Statement of
Financial Accounting Standards ("SFAS") No. 114, "Accounting by Creditors for
Impairment of a Loan" and amended by SFAS 118, "Accounting by Creditors for
Impairment of a Loan-Income Recognition and Disclosures". SFAS 114 requires
creditors to establish a valuation allowance when it is probable that all the
principal and interest due under the contractual terms of a loan will not be
collected. The impairment is measured based on the present value of expected
future cash flows discounted at a loan's effective interest rate, the observable
market price of a loan or the fair value of collateral if the loan is collateral
dependent. SFAS 118 allows for existing income recognition practices to
continue.
Under the Company's impaired loan accounting policy, all loans, except for
home equity loans and other consumer loans, are subject to impairment
recognition on a quarterly basis. The Company generally considers most loans
90 days or more past due and all nonaccrual loans to be impaired. Interest
income on impaired loans will be recognized in a manner consistent with prior
income recognition policies. For all impaired loans other than nonaccrual
loans, interest income is recorded on an accrual basis. Interest income on
nonaccrual loans is recognized on a cash basis.
The adoption of SFAS 114 and SFAS 118 did not have a material effect on
the Company's financial position or results of operations since the Company
has historically established valuation allowances generally based on the fair
value of collateral securing an impaired loan. The primary difference in
valuation methods is that under SFAS 114 the Company also establishes valuation
allowances for uncollectible interest in addition to the principal amounts of
impaired loans. At June 30, 1995, the total recorded investment in loans that
are considered impaired was $8.2 million (of which $3.9 million were nonaccrual
loans). Included in the total amount of impaired loans is $2.3 million of loans
for which a related valuation allowance of $573,000 was determined. The
average recorded investment in impaired loans for the six months ended
June 30, 1995, was approximately $7.4 million.
SFAS 114 also changed the definition of in-substance foreclosures ("ISFs").
Under SFAS 114, ISF recognition is limited to circumstances in which the debtor
surrenders collateral to the creditor and the creditor receives physical
possession of the collateral. The Company adopted a new definition concurrent
with the adoption of the other provisions of SFAS 114. At December 31, 1994,
the Company had no ISFs and therefore no reclassification adjustments were
made to those financial statements.
<PAGE> 7
HERITAGE FINANCIAL SERVICES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (Continued)
(Unaudited)
3. On May 16, 1995, Federal Insurance Company ("Federal"), a subrogee of SSM
Health Care ("SSM"), filed a lawsuit against the Company in the United States
District Court for the Northern District of Illinois alleging that the Company
had made unauthorized wire transfers. The wire transfers were made at the
request of a former SSM officer who allegedly diverted the funds and defrauded
SSM. As the insurer of SSM, Federal honored SSM's claim of loss incurred as a
result of the employee defalcation. The lawsuit seeks damages in the amount of
$1,247,500 plus interest and legal costs. The Company believes it has
meritorious defenses and it will vigorously defend its position. Management
believes, after discussions with counsel, that the outcome of this litigation
will not have a material impact on the Company's financial position or results
of operations.
4. Primary and fully diluted earnings per common share for the three and six
months ended June 30, 1995 and 1994 are computed by dividing net income by the
weighted average number of common shares outstanding and common equivalent
shares, assumed to be issued under the Company's stock option plan. Common
share equivalents attributable to stock options are computed based on the
treasury stock method.
5. During the six month period ended June 30, 1995, the Company issued 23,250
common shares pursuant to the exercise of stock options
at $5.55.
<PAGE> 8
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
The following represents management's analysis of the
Company's results of operations for the three and six month periods ended
June 30, 1995 and 1994 and its consolidated financial condition at June 30, 1995
as compared to December 31, 1994. This discussion should be read in conjunction
with the consolidated financial statements and notes thereto appearing elsewhere
in this Form 10-Q.
ANALYSIS OF INCOME STATEMENTS
Summary of Operations
Net income in the second quarter of 1995 increased to
$3,215,000, up 1% from $3,172,000 earned in the same quarter of 1994. On a
fully diluted basis, earnings per share for the quarterly period increased to 39
cents per share, up 3% from 38 cents per share earned in the second quarter of
1994. For the six months ended June 30, 1995 net income was $6,276,000, up 5%
compared to $5,979,000 in the first half of 1994. Earnings per share for the
six month period were 76 cents, up 6% compared to 72 cents in the same period in
1994. Higher earnings in both periods were primarily due to increases in net
interest income.
Net Interest Income
Second quarter net interest income was $9,980,000, an
increase of $885,000 or 10% compared with the second quarter of 1994. For the
six months ended June 30, 1995, net interest income increased $2,282,000 or 13%
compared to 1994. The growth in net interest income for the three and six month
periods was due to increases in the volume of average earning assets.
For the six months ended June 30, 1995, total average
earning assets increased $135 million or 17% compared to the same period a year
ago. Growth in average earning assets reflected strong internal deposit growth
in the first half of 1995 and the additional assets of Midlothian State Bank
("Midlothian") which was acquired in July, 1994. The growth in deposits was
largely attributable to a time deposit promotion which attracted over $45
million in new funds since the beginning of the year.
On a taxable equivalent basis, the annualized net interest
spread in the 1995 second quarter decreased to 3.83% compared to 4.41% in the
1994 quarter. For the first six months of 1995 the net interest spread
decreased to 3.97% from 4.35% in the year ago period. The decline in the net
interest spread was primarily due to an increase in the Company's funding
costs, reflecting an increase of approximately 250 basis points in short-term
market interest rates since the beginning of 1994. The volume and extent of
rate sensitive liabilities which repriced in 1995 were relatively greater than
rate sensitive assets resulting in a contraction in the net interest spread.
On a year-to-date basis, the change in the net interest
spread reflected an increase of .76% in the yield on average earning assets
which was more than offset by a 1.14% increase in the rate paid on
interest-bearing liabilities. The increase in the yield on earnings assets
primarily reflects higher rates earned on new loans and securities and
increases in rates in interest rate sensitive assets such as federal funds sold
and floating rate assets. Higher rates paid on interest-bearing liabilities
were primarily due to increases in interest rates paid on time deposits,
money market accounts and short-term borrowings. The increase in funding costs
also resulted from the shift of some savings deposits to time deposits as the
interest differential between these accounts continued to widen. Since
year-end the balance of savings deposits has decreased approximately
$24 million.
<PAGE> 9
Provision and Allowance for Loan Losses
The allowance for loan losses is maintained at a level
management believes to be adequate to provide for known and potential risks
inherent in the Company's loan portfolio. On a quarterly basis, management
assesses the adequacy of the allowance for loan losses. Management's
evaluation of the adequacy of the allowance considers such factors as prior
loss experience, loan portfolio growth and reviews of impaired loans and the
value of underlying collateral securing these loans. A provision for loan
losses is charged to income to increase the allowance to a level deemed to be
adequate, but not excessive, based on management's evaluation. When a loan
or a part thereof is considered by management to be uncollectible, a charge is
made against the allowance. Recoveries of previously charged-off loans are
credited back to the allowance.
The Company recorded a provision for loan losses of $50,000
in the 1995 second quarter compared with no provision in the same quarter a year
ago. Net charge-offs for the 1995 second quarter were $30,000 compared to net
recoveries of $129,000 in the same period in 1994.
Year-to-date, the provision for loan losses increased to
$100,000 compared to $50,000 in 1994. For the first half of 1995 the Company
recorded net charge-offs of $128,000 compared to net recoveries of $98,000 in
the 1994 six month period.
At June 30, 1995 the allowance for loan losses was
$8,692,000 compared to $8,720,000 at December 31, 1994. As a percentage of
loans, the allowance for loan losses was 1.59% at June 30, 1995 compared to
1.66% at year-end 1994.
Nonperforming loans, comprised of loans 90 days or more past
due and nonaccrual loans, were $5.9 million at June 30, 1995, an increase of
$400,000 from year-end 1994. As a percent of loans, nonperforming loans were
1.08% at June 30, 1995 compared to 1.04% at December 31, 1994. The allowance
for loan losses coverage of nonperforming loans at June 30, 1995 was 148%
compared to 159% at December 31, 1994.
Other Income
Other income, excluding securities transactions, for the
three months ended June 30, 1995 decreased $26,000 compared to the same period
in 1994. The decrease in income was attributable to lower investment product
fees earned in the 1995 second quarter, partially offset by an increase in
deposit service charges. On a year-to-date basis, other income, excluding
securities transactions, increased $200,000 compared to the six month period
in 1994. The increase in income for the six month period was primarily due to
an increase in deposit service charges. Year over year, income from the sale
of investment products was essentially unchanged.
For the three months ended June 30, 1995, the Company
realized security gains of $177,000 from the sale of $8 million of
adjustable-rate mortgage ("ARM") pools classified as available-for-sale. In the
second quarter the Company also realized net gains of $17,000 from calls of
municipal securities. The sale of ARM securities was made to reduce the
prepayment risk of certain pools which are scheduled to reprice within the next
six months. The risk primarily pertains to those ARM pools that are expected to
have reset coupons which may exceed rates available for fixed-rate mortgages
of comparable terms. Generally under these conditions ARM customers are more
likely to refinance adjustable-rate mortgages and lock into fixed-rate
mortgages. The Company continues to monitor interest rates and may sell
additional selected ARM pools if prepayment expectations remain high.
Other Expenses
Other expenses in the 1995 second quarter increased $972,000
or 16% compared to the same period in 1994. For the six month months ended June
30, 1995, other expenses increased $2,067,000 or 17% compared to the same period
a year ago. The growth in other operating expense categories was largely
attributable to the additional operating expenses of Midlothian.
<PAGE> 10
Salaries and employee benefits, the largest component of
other expenses, increased $865,000 or 13% compared to the 1994 first half. At
June 30, 1995, the number of full-time equivalent employees totaled 445 compared
to 440 at December 31, 1994 and 389 at June 30, 1994.
Income Taxes
Income tax expense for the six months ended June 30, 1995
increased $258,000 compared to the same period in 1994. The Company's effective
tax rate (income tax expense divided by net income before taxes) increased to
32.1% in 1995 compared to 31.2% in the same period a year ago. Higher income
tax expense in 1995 resulted from an increase in pre-tax earnings coupled with
a decline in the amount of federal and state tax-exempt income.
ANALYSIS OF BALANCE SHEETS
Assets
Consolidated assets at June 30, 1995 were $1.035 billion, an
increase of $82 million compared to December 31, 1994. The changes in the
Company's assets since December 31, 1994 reflect increases of $48 million in
securities, $21 million in net loans and $13 million in cash and cash
equivalents. As market interest rates stabilized during 1995, the Company
purchased $53 million of fixed-rate CMOs and REMICs with average maturities
of 3 to 6 years. Investment purchases in the first half of 1995 also
included $16 million of tax-exempt securities. In 1995 the Company has seen
an increase in loan demand, reflecting lower interest rates, seasonal
building factors and the continued development within the markets the Company
serves. In the 1995 first half, residential real estate loans increased $14
million, commercial and industrial loans increased $4 million and
construction loans increased $4 million.
Liabilities
The Company's funding sources, consisting of deposits and
other borrowings, increased $79 million since December 31, 1994. The increase
in funding sources was principally due to the growth in time deposits, which
increased $73 million from year-end. Approximately $51 million or two-thirds
of the increase in time deposits resulted from a seven-month, premium-rate
certificate of deposit promotion offered in March and April, 1995. The
remaining growth in time deposits was primarily due to a shift of $24 million
from savings deposits to time deposits. The shift was principally due to an
increase in interest rates paid on time deposits during the quarter making these
deposits relatively more attractive. The Company expects that further shifting
of savings deposits will occur based on the current level of market interest
rates offered on time deposits and the interest rate differential between
savings and time deposits.
Capital
At June 30, 1995 total shareholders' equity increased to $89
million, up $6 million from December 31, 1994. The growth in equity reflects
the retention of current year earnings, less dividends paid, plus the proceeds
from the issuance of 23,250 common shares pursuant to the exercise of stock
options. The change in equity also reflects a net unrealized gain adjustment
(net of tax) of $1,469,000 relating to the application of SFAS 115.
The capital ratios of the Company and Heritage Bank are
presently in excess of the requirements necessary to meet the "well capitalized"
capital category established by bank regulators. At June 30, 1995, the
consolidated Tier 1 and total risk-based capital ratios (excluding the SFAS 115
net loss adjustment) were 12.76% and 14.02%, respectively. The Company's
leverage ratio at quarter-end was 7.58%. Presently the Company has no
commitments for material capital expenditures. Management believes that the
Company has sufficient financing options available to fund other commitments
that may arise in the future.
<PAGE> 11
Liquidity
Liquidity management in banking involves the ability to meet
cash flow requirements of customers and other obligations. Liquidity of the
Company's subsidiary bank, Heritage Bank, is primarily maintained by daily
investments in federal funds sold, monthly cash flows from mortgage-backed and
asset-backed securities and maturities of other securities. As an additional
source of liquidity, Heritage Bank may purchase federal funds from certain
correspondents on a limited basis, borrow funds on a collateralized basis from
the Federal Home Loan Bank or sell securities classified as available-for-sale.
For the parent company, liquidity means having cash available to pay shareholder
dividends, to service debt and to fund operating expenses.
As an indication of Heritage Bank's liquidity, federal funds
sold and securities (excluding mortgage-backed and asset-backed securities)
having contractual maturities of one year or less totaled $60 million at
June 30, 1995 as compared to $64 million at year-end 1994. In addition to these
funds, the Bank expects to receive certain cash flows from mortgage-backed and
asset-backed securities. For the first six months of 1995 the aggregate
principal payments received on these securities totaled approximately $17
million. For the year ended December 31, 1994 the total principal payments
received on mortgage-backed and asset-backed securities were approximately
$72 million.
Heritage Financial Services, Inc. ("parent company")
funds its operations and shareholder dividends through dividends received from
Heritage Bank. Bank regulatory authorities limit the amount of dividends which
may be paid by Heritage Bank to the parent company. At June 30, 1995, the
amount of undistributed earnings of Heritage Bank available for the payment of
dividends within such limitations is more than adequate to fund anticipated cash
requirements of the parent company.
<PAGE> 12
PART II - OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders.
(a) Heritage Financial Services, Inc. held its annual shareholder
meeting on April 25, 1995.
(b) At the annual meeting the shareholders elected four Class II
directors as follows: elected Frederick J. Sampias with 7,118,627
votes FOR (and 3,579 withheld); elected John J. Gallagher with
7,118,427 votes FOR (and 3,779 withheld); elected Lael W. Mathis with
7,118,596 votes FOR (and 3,610 withheld); and elected Arthur E. Sieloff
with 7,116,427 votes FOR (and 5,779 withheld).
Item 6. Exhibits and Reports on Form 8-K.
(a) Exhibit 11 - Statement Re Computation of Per Share Earnings
(included at page 14).
(b) There were no reports on Form 8-K filed by the registrant during
the quarter ending June 30, 1995.
<PAGE> 13
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.
HERITAGE FINANCIAL SERVICES, INC.
(Registrant)
Date: August 2, 1995 by /s/ Frederick J. Sampias
Frederick J.Sampias
President
(Duly Authorized Officer)
Date: August 2, 1995 by /s/ Paul A. Eckroth
Paul A. Eckroth
Executive Vice President and Treasurer
(Principal Financial and Chief
Accounting Officer)
<TABLE>
<PAGE> 14
EXHIBIT 11 - Statement Re: Computation of Per Share Earnings
The calculation of the Registrant's primary and fully diluted earnings per
share required by Item 601(b)(11) of Regulation S-K is presented below
(dollars in thousands, except per share data):
<CAPTION>
Three Months Ended Six Months Ended
June 30, June 30,
------------------ ----------------
1995 1994 1995 1994
------- ------ ------ ------
<S> <C> <C> <C> <C>
PRIMARY
Net income $3,215 $3,172 $6,276 $5,979
======= ======= ====== ======
Average common shares outstanding 7,939 7,905 7,935 7,897
Common stock equivalents - net effect
of the assumed exercise of stock options
- -- based on the treasury stock method
using average market price 354 398 354 384
------- ------ ------ ------
Average primary shares outstanding 8,293 8,303 8,289 8,281
======= ====== ====== ======
Primary earnings per share $ .39 $ .38 $ .76 $ .72
======= ====== ====== ======
Fully Diluted Earnings Per Share
Net income $3,215 $3,172 $6,276 $5,979
====== ====== ====== ======
Average common shares outstanding 7,939 7,905 7,935 7,897
Common stock equivalents - net effect
of the assumed exercise of stock options
- -- based on the treasury stock method
using average market price or year-end
market price, whichever was higher 356 412 359 412
------ ------ ------ -----
Average fully diluted shares
outstanding 8,295 8,317 8,294 8,309
====== ====== ====== ======
Fully diluted earnings
per share $ .39 $ .38 $ .76 $ .72
====== ====== ====== =======
</TABLE>
WARNING: THE EDGAR SYSTEM ENCOUNTERED ERROR(S) WHILE PROCESSING THIS SCHEDULE.
<TABLE> <S> <C>
<ARTICLE> 9
<S> <C>
<PERIOD-TYPE> QTR-2
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-END> JUN-30-1995
<CASH> 48717
<INT-BEARING-DEPOSITS> 151
<FED-FUNDS-SOLD> 50555
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 65289
<INVESTMENTS-CARRYING> 290747
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0
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