UNITED STATES
SECURITITES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1995
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number 0-11132
FIRST BANKING CENTER, INC.
(Exact name of registrant as specified in its charter)
Wisconsin 39-1391327
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
400 Milwaukee Ave., Burlington, WI 53105
(Address of principal executive offices) (Zip code)
(414) 763-3581
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to
such filing requirements for the past 90 days.
Yes [ X ] No [ ]
Indicate the number of shares outstanding of each of the issuer's classes
of common stock, as of the latest practivable date. Common stock, $1.00 par
value, 1,463,148 shares outstanding.
PART I. FINANCIAL INFORMATION
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
CONSOLIDATED BALANCE SHEET
September 30 1995
vs
December 31, 1994
(Amounts in Thousands)
ASSETS 09/30/95 12/31/94
Cash and due from banks $8,383 $11,521
Federal funds sold 64 566
Total Cash and Cash Equivalents 8,447 12,087
Interest bearing deposits in banks 1,928 1,899
Investment securities - Held to Maturity 28,543 30,132
Investment securities - Available for Sale 29,773 21,655
Loans 166,867 157,773
Less:
Allowance for loan losses (2,258) (2,095)
Total Net Loans 164,609 155,678
Property and Equipment 5,140 4,707
Other Assets 4,695 4,927
TOTAL ASSETS $243,135 $231,085
LIABILITIES
Deposits
Non-interest bearing demand $27,450 $29,294
Interest bearing demand 16,457 20,082
Money market demand 34,507 37,063
Savings 25,609 27,237
Time 85,278 73,434
Total Deposits 189,301 187,110
Fed Funds Sold & Securities sold
under agreements to repurchase 18,092 13,755
Short-term borrowings 5,564 697
Long-term borrowings 4,511 6,805
Accrued interest and other liabilities 2,252 1,892
TOTAL LIABILITIES $219,720 $210,259
STOCKHOLDERS' EQUITY
Common Stock, $1.00 par value 3,000,000
shares authorized 1,468,464 shares issued $1,468 $1,468
Surplus 3,986 3,986
Retained Earnings 18,247 16,353
Net unrealized loss on available
for sale securitites (233) (927)
Subtotal 23,468 20,880
Treasury Stock (53) (54)
TOTAL STOCKHOLDERS' EQUITY $23,415 $20,826
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY $243,135 $231,085
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
CONSOLIDATED STATEMENT OF INCOME
as of September 30, 1995 and 1994
(Amounts in Thousands)
Quarter-to-Date Year-to-Date
09/30/95 09/30/94 09/30/95 09/30/94
INTEREST INCOME
Interest and fees on loans $3,914 $3,112 $11,055 $8,955
Interest on deposits in banks 32 28 133 156
Interest on federal funds sold
and repurchase agreements 98 13 248 47
Interest on securities:
U.S. Government and other 718 564 2,094 1,663
Tax Exempt Securities 115 137 354 427
TOTAL INTEREST INCOME 4,877 3,854 13,884 11,248
INTEREST EXPENSE
Interest on deposits 1,935 1,449 5,485 4,319
Int. on short-term borrowings 253 113 681 307
Int. on long-term borrowings 155 108 406 282
TOTAL INTEREST EXPENSE 2,343 1,670 6,572 4,908
Net interest Income 2,534 2,184 7,312 6,340
Provision for loan losses 68 67 203 202
NET INT. INC. AFTER PROVISION
FOR LOAN LOSSES 2,466 2,117 7,109 6,138
OTHER OPERATING INCOME
Trust department income 75 75 225 225
Service charges on deposits 191 156 534 451
Invest. security gains/(losses) 0 (8) (11) (10)
Other income 116 109 305 271
TOTAL OTHER OPERATING INCOME 382 332 1,053 937
OTHER OPERATING EXPENSE
Employee expense 831 821 2,509 2,207
Occupancy expense 159 139 428 393
Equipment expense 172 110 432 290
Computer services 75 81 231 218
Other expense 364 451 1,259 1,303
TOTAL OTHER OPERATING EXPENSE 1,601 1,602 4,859 4,411
Income before income taxes 1,247 847 3,303 2,664
Income taxes 427 275 1,116 870
NET INCOME $820 $572 $2,187 $1,794
Earnings per share $0.56 $0.39 $1.49 $1.23
Average shares outstanding 1,463 1,458 1,463 1,457
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
BURLINGTON, WISCONSIN
Y-T-D ending September 30, 1995 and 1994
Increase (decrease) in Cash and Cash Equivalents
(Amounts in Thousands)
1995 1994
CASH FLOWS FROM OPERATING ACTIVITIES
Net income $2,187 $1,794
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 380 285
Provision for loan losses 203 202
Provision for deferred taxes 0 0
Amortization and accretion of bond
premiums and discounts - net 89 144
Amortization of excess cost over equity in
underlying net assets of subsidiary 2 2
Investment securities (gains) losses 11 10
(Increase) decrease in assets:
Interest receivable (447) (285)
Other assets 363 (1,445)
Increase (decrease) in liabilities:
Taxes payable (134) (76)
Interest payable 258 15
Other liabilities 236 320
TOTAL ADJUSTMENTS 961 (828)
NET CASH PROVIDED FROM OPERATING ACTIVITIES $3,148 $966
CASH FLOWS FROM INVESTING ACTIVITIES
Net (increase) decrease in interest-bearing deposits ($29) $8,205
Proceeds from sale of investment securities
available for sale 1,000 3,862
Proceeds from maturity of investment securities 19,458 14,580
Purchase of investment securities (26,079) (16,576)
Net (increase) decrease in loans (9,134) (19,686)
Purchase of office buildings and equipment (813) (816)
NET CASH USED IN INVESTING ACTIVITIES ($15,597) ($10,431)
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (Continued)
BURLINGTON, WISCONSIN
Y-T-D ending September 30, 1995 and 1994
Increase (decrease) in Cash and Cash Equivalents
(Amounts in Thousands)
1995 1994
CASH FLOWS FROM FINANCING ACTIVITIES
Net increase (decrease) in deposits $2,191 $2,224
Dividends paid ($293) (262)
Net increase (decrease) in Short-term Borrowings $4,867 2,342
Net increase (decrease) in Long-term Borrowings ($2,294) 415
Net increase (decrease) in securities sold under
repurchase agreements $4,337 1,329
Proceeds from stock options exercised $1 14
NET CASH PROVIDED BY FINANCING ACTIVITIES $8,809 $6,062
Net increase (decrease) in cash and cash equivalents (3,640) (3,403)
Cash and cash equivalents at beginning of year 12,087 10,728
Cash and cash equivalents at end of quarter $8,447 $7,325
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION
Cash paid (received) during the year for:
Interest $6,328 $4,907
Income taxes (received) $1,250 $861
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
CONSOLIDATED STATEMENT OF CHANGES
IN COMPONENTS OF STOCKHOLDERS' EQUITY
As of September 30, 1995
(Amounts in Thousands)
COMMON RETAINED AVAILABLE TREASURY
STOCK SURPLUS EARNINGS FOR SALE STOCK
SECURITIES
Balances
December 31, 1993 $1,468 $3,975 $14,519 $0 ($110)
Net income-YTD 1994 1,794
Cash dividend paid
$.18 per share (263)
Exercise of
Stock options 3 11
Change in unrealized
loss on available
for sale securities (541)
Balances
September 30, 1994 $1,468 $3,978 $16,050 ($541) ($99)
Balances
December 31, 1994 $1,468 $3,986 $16,353 ($927) ($54)
Net income-YTD 1995 2,187
Cash dividend paid
$.20 per share (293)
Exercise of
Stock options 1
Change in unrealized
loss on available
for sale securities 694
Balances
September 30, 1995 $1,468 $3,986 $18,247 ($233) ($53)
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As of September 30, 1995
Basis of Presentation
In the opinion of Management, the accompanying unaudited consolidated
financial statements reflect all adjustments which are necessary to present a
fair statement of the results for the interim periods.
The accounting policies followed by the registrant are set forth in Note A to
the registrant's financial statements in the 1994 First Banking Center, Inc.
(the "Company") annual report which is incorporated by reference herein (see
exhibit A).
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
MANAGEMENT'S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
As of September 30, 1995
The following is a discussion of the financial condition,
changes in financial condition and results of operations of the
Company.
Financial Condition
During the first nine months of 1995, the Company's
stockholders' equity increased $2,589,000 or an annualized 17%.
At September 30, 1995, the Company had 5,266 shares of Treasury Stock
at an average cost of $10.02 per share.
In December 1990, the Federal Reserve Board's risk-based
guidelines became effective. Under these guidelines, capital is
measured against the Company's risk-adjusted assets. Each asset on
the balance sheet, as well as a balance sheet equivalent amount of
contingent obligations that are off-balance sheet, is assigned a
risk weighing from zero to 100 percent. The sum of the weighted
assets constitutes risk-adjusted assets. The Company's tier 1
capital (common stockholders' equity less goodwill) to risk-
adjusted assets was approximately ????% at September 30, 1995, well
above the 4 percent minimum required. Total capital to risk-
adjusted assets approximated ????%, also well above the minimum
requirement.
Asset Quality
We continue our commitment to credit quality in 1995. Net
charge-offs as a percentage of average loans for the first nine
months of 1995 were .025%. At September 30, 1995, non-performing
assets were $900,000 or .37%. Non-performing assets consist
primarily of real estate loans.
At September 30, 1995, the allowance for possible loan losses was
$2,258,000 or 1.35% of gross loans compared with $2,039,000 or
1.32% of gross loans at September 30, 1994. Management considers the
allowance more than adequate to cover possible losses in the loan
portfolio.
Asset/Liability Management
The principal function of asset/liability management is to
manage the balance sheet mix, maturities, repricing characteristics
and pricing components to provide an adequate and stable net
interest margin with an acceptable level of risk over time and
through interest rate cycles.
Interest-sensitive assets and liabilities are those that are
subject to repricing within a specific relevant time horizon. The
Company measures interest-sensitive assets and liabilities, and
their relationship with each other at terms of immediate, monthly
intervals up to 12 months, and over 1 year.
Changes in net interest income, other than volume-related,
arise when interest rates on assets reprice in a time frame or
interest rate environment that is different from the repricing
period for liabilities. Changes in net interest income also arise
from changes in the mix of interest-earning assets and interest-
bearing liabilities.
The Company's strategy with respect to asset/liability
management is to maximize net interest income while limiting our
exposure to a potential downward movement. Strategy is implemented
by the Bank's management, which takes action based upon its
analysis of the Bank's present positioning, its desired future
positioning, economic forecasts and its goals.
Liquidity
The liquidity position of the Company is managed to insure
that sufficient funds are available to meet customers' needs for
loans and deposit withdrawals. Liquidity to meet demand is
provided by maintaining marketable investment securities and money
market assets such as Interest Bearing Deposits in Banks and
Federal Funds Sold. Other sources of liquidity include deposit
growth and short and long term borrowings.
The loan to deposit ratio for the Company was 87% at September
30, 1995.
Management is unaware of any recommendations by regulatory
authorities, known trends, events or uncertainties that will have
or that are reasonably likely to have a material effect on the
Company's liquidity.
Results of Operations for Nine Months Ended September 1995 and 1994
Results of Operations Overview
In the first nine months of 1995 the Company reported
earnings of $2,187,000 an increase of $393,000 or 22% over the same
period in 1994. The interest margin before allowance for loan
losses was $7,312,000 for the first nine months of 1995 compared
to $6,340,000 for the nine months ended September 30, 1994.
Interest Income
Interest and fees on loans was $11,055,000 for the first nine
months of 1995. This represents a increase of $2,100,000 or 23% in
comparison to the same period in 1994. The increase was the result
of an increase in rates charged on loans as well as an increase in
the balance of loans outstanding.
Interest on deposits at other financial institutions decreased
$23,000 for the first nine months of 1995 compared to the same
period in 1994. The decrease was the result of a decrease in
average balances.
Interest on investment securities was $2,425,000 for the first
nine months of 1995. This represents an increase of $335,000 or
16% over the same period in 1994. Income on Federal Funds Sold
increased by $201,000 or 428%. The increase in investment income
is due to an increase in interest rates and balances outstanding.
Interest Expense
Interest expense increased $1,664,000 or 34% during the first
nine months of 1995. The increase in interest expense is
due to increased Interest-Bearing Deposits as well as increased
interest rates as compared to the first nine months of 1994.
Allowance for Loan Losses
The Banks evaluate the adequacy of the allowance for loan
losses based on an analysis of specific problem loans, as well as
on an aggregate basis. Management reviews a calculation of the
allowance for loan losses on a monthly basis and feels that the
allowance for loan losses is adequate to provide for potential
future losses. The level of the allowance is based on management's
periodic and comprehensive evaluation of the loan portfolio,
including past loan loss experience; current and projected economic
trends; the volume, growth and composition of the loan portfolio;
and other relevant factors. Reports of examinations furnished by
State and federal banking authorities are also considered by
management in this regard.
The Banks have established the allowance for loan losses to
reduce the gross level of loans outstanding by an estimate of
uncollectible loans. As loans are deemed uncollectible, they are
charged against the allowance. A provision for loan losses is
expensed against current income on a monthly basis. This provision
acts to replenish the allowance for loan losses to accommodate
charge-offs and growth in the loan portfolio, thereby maintaining
the allowance at an adequate level.
For the first nine months of 1995 provisions charged against
1995 income were $203,000 which was the same as the provision during
the same period in 1994.
Other Operating Income
Other operating income increased $116,000 or 12%. Service charge
income increased 18%. All other income increased by $34,000 or
13%. Trust income remain unchanged at $225,000.
Other Operating Expense
Other operating expense increased $448,000 or 10%. Employee
expenses increased $302,000 or 14%. Occupancy expense increased
$35,000 compared to the first nine months of last year or 9%.
Equipment expenses increased $142,000 or 49%. The increase in
equipment expense is primarily due to depreciation charges associated
with the computer and item processing equipment the banks purchased
during 1994. Computer services increased $13,000 or 6%. All other
expenses decreased $44,000 or 3%.
PART II - OTHER INFORMATION
Item I. Legal Proceedings
none
Item II. Changes in Securities
none
Item III. Defaults Upon Senior Securities
none
Item IV. Submission of Matters to a Vote of Security Holders
none
Item V. Other Information
none
Item VI. Exhibits and Reports on Form 8-K
none
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
SIGNATURES
Pursuant to the requirement 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.
First Banking Center, Inc.
November 10, 1995 ________________________________________
Date Roman Borkovec, President and Chief
Executive Officer
November 10, 1995 ________________________________________
Date James Schuster, Chief Accounting Officer
EXHIBIT A:
FIRST BANKING CENTER, INC. AND SUBSIDIARIES
BURLINGTON, WISCONSIN
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
NOTE A - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accounting principles of First Banking Center, Inc. conform to those
generally accepted and to general practices within the banking industry. The
significant accounting policies affecting the consolidated financial
statements are summarized below to assist the reader in understanding the
financial information presented in this report.
1. Consolidation
The consolidated financial statements of First Banking Center, Inc. include
the accounts of its wholly owned subsidiaries, First Banking Center -
Burlington and First Banking Center - Albany. First Banking Center -
Burlington includes the accounts of its wholly owned subsidiary, First Banking
Center Burlington Investment Corporation. All significant intercompany
accounts and transactions have been eliminated in the consolidated financial
statements.
2. Nature of banking activities
The consolidated income of First Banking Center, Inc. is principally from
income of the two bank subsidiaries. The subsidiary Banks grant agribusiness,
commercial and residential loans to customers primarily in southeastern and
south central Wisconsin. Although the Banks have a diversified loan
portfolio, the ability of its debtors to honor their contracts is dependent on
on the economic conditions of the counties surrounding the subsidiary Banks.
3. Cash and cash equivalents
For purposes of reporting cash flows, cash and cash equivalents include cash
on hand, amounts due from banks and federal funds sold. Generally, federal
funds are sold for one-day periods. Cash flows from interest bearing deposits
in banks, loans, federal funds purchased, deposits and other short-term
borrowings are reported net.
The Bank maintains amounts due from banks which, at times, may exceed
federally insured limits. The Bank has not experienced any losses in such
accounts.
4. Investment in debt and marketable equity securities
The Company accounts for debt and equity securities in accordance with FASB
Statement No. 115. This statement requires that management determine the
appropriate classification of securities at the date of adoption and
thereafter as each individual security is acquired. In addition, the
appropriateness of such classification should be reassessed at each balance
sheet date. The classifications and related accounting policies under FASB
Statement No. 115 are as follows:
Available for sale securities:
Securities classified as available for sale are those debt securities
that the Company intends to hold for an indefinite period of time, but
not necessarily to maturity. Available for sale securities also
includes equity securities. Any decision to sell a security classified
as available for sale would be based on various factors, including
significant movements in interest rates, changes in the maturity mix of
the Company's assets and liabilities, liquidity needs, regulatory
capital considerations, and other similar factors. Securities available
for sale are carried at fair value. Unrealized gains or losses net of
the related deferred tax effect are reported as increases or decreases
in stockholders' equity. Realized gains or losses, determined on the
basis of the cost of specific securities sold, are included in earnings.
Held to maturity securities:
Securities classified as held to maturity are those debt securities the
Company has both the intent and ability to hold to maturity regardless
of changes in market conditions, liquidity needs or changes in general
economic conditions. These securities are carried at cost adjusted for
amortization of premium and accretion of discount, computed by the
interest method over their contractual lives.
Transfers of debt securities into the held to maturity classification
(if any) from the available for sale classification are made at fair
value on the date of transfer. The unrealized holding gain or loss on
the date of transfer is retained in the separate component of
stockholders' equity and in the carrying value of the held to maturity
securities. Such amounts are amortized over the remaining contractual
lives of the securities by the interest method.
Securities held for investment:
Prior to the accounting change discussed in Note B, securities held for
investment were stated at cost adjusted for amortization of premiums and
accretion of discounts which were recognized as adjustments to interest
income. Gains or losses on disposition were based on the net proceeds
and the adjusted carrying amount of the securities sold, using the
specific identification method. Mutual funds were carried at the lower
of their aggregate cost or market value, determined as of the report
date. Any unrealized loss was credited to a valuation allowance for
marketable equity securities and charged to a separate account within
the equity section.
5. Loans
Loans are stated at the amount of unpaid principal, reduced by an allowance
for loan losses. Interest on other loans is calculated by using the simple-
interest method on daily balances of the principal amount outstanding.
Accrual of interest is generally stopped when a loan is greater than three
months past due. Interest on these loans is recognized only when actually
paid by the borrower if collection of the principal is likely to occur.
Accrual of interest is generally resumed when the customer is current on all
all principal interest payments and has been paying on a timely basis for a
period of time.
6. Allowance for loan losses
The allowance for loan losses is established through a provision for loan
losses charged to expense. Loans are charged against the allowance for loan
losses when management believes that the collectibility of the principal is
unlikely. The allowance is an amount that management believes will be
adequate to absorb possible losses on existing loans that may become
uncollectible, based on evaluation of the collectibility of loans and prior
loan loss experience. The evaluations take into consideration such factors as
changes in the nature and volume of the loan portfolio, overall portfolio
quality, review of specific problem loans, and current economic conditions
that may affect the borrowers' ability to pay. While management uses the best
information available to make its evaluation, future adjustments to the allow-
ance may be necessary if there are significant changes in economic conditions.
7. Office buildings and equipment
Depreciable assets are stated at cost less accumulated depreciation.
Provisions for depreciation are computed on straight-line and accelerated
methods over the estimated useful lives of the assets, which range from 15 to
50 years for the buildings and 3 to 15 years for equipment.
8. Income taxes
The Company uses the asset and liability approach to financial accounting and
reporting for income taxes. Deferred income tax assets and liabilities are
computed annually for differences between the financial statement and tax
basis of assets and liabilities that will result in taxable or deductible
amounts in the future based on enacted tax laws and rates applicable to the
periods in which the differences are expected to affect taxable income. The
differences relate principally to the reserve for loan losses, nonaccrual loan
income, fixed assets, deferred compensation and pension, and unrealized
gains and losses on available for sale securities. Valuation allowances
are established when necessary to reduce deferred tax assets to the amount
expected to be realized.
9. Trust assets and fees
Property held for customers in fiduciary or agency capacities is not included
in the accompanying balance sheet, since such items are not assets of the
Company. In accordance with established industry practice, income from trust
fees is reported on the cash basis. Reporting of trust fees on an accrual
basis would have no material effect on reported income.
10. Earnings per share
Earnings per share are computed based upon the weighted average number of
common and common equivalent shares outstanding during each year. In the
computation of weighted average shares outstanding all dilutive stock options
are assumed to be exercised at the beginning of each year and the proceeds
are used to purchase shares of the Company's common stock at the average
market price during the year. Fully diluted earnings per share are computed
in a similar manner except, to reflect maximum potential dilution, the market
price at the close of the reported period is used if higher than the average
market price during the year.
11. Fair value of financial instruments
FASB Statement No. 107, Disclosures about Fair Value of Financial Instruments,
requires disclosure of fair value information about financial instruments,
both assets and liabilities, whether or not recognized in the balance sheet,
for which it is practicable to estimate that value. In cases where quoted
market prices are not available, fair values are based on estimates using
present value or other valuation techniques. Those techniques are signifi-
cantly affected by the assumptions used, including the discount rate and
estimates of future cash flows. In that regard, the derived fair value
estimates cannot be substantiated by comparison to independent markets and,
in many cases, could not be realized in immediate settlement of the
instrument. Statement 107 excludes certain financial instruments and all non-
financial instruments from its disclosure requirements. Accordingly, the
aggregate fair value amounts presented do not represent the underlying value
of the Company.
The following methods and assumptions were used by the Company in estimating
the fair value of its financial instruments:
Cash and cash equivalents:
The carrying amounts reported in the balance sheet for cash and short-
term instruments approximate their fair values.
Investment securities (including mortgage-backed securities):
Fair values for investment securities are based on quoted market prices,
where available. If quoted market prices are not available, fair values
are based on quoted market prices of comparable instruments.
Loans receivable:
For variable-rate loans that reprice frequently and with no significant
change in credit risk, fair values are based on carrying values. The
fair values for fixed rate loans are estimated using discounted cash
flow analyses, using interest rates currently being offered for loans
with similar terms to borrowers with similar credit quality. The
carrying amount of accrued interest receivable approximates its fair
value.
Off-balance-sheet instruments:
The fair value of interest rate swaps (used for hedging purposes) is the
estimated amount that the Company would receive or pay to terminate the
swap agreements at the reporting date, taking into account current
interest rates and the current credit-worthiness of the swap
counterparties.
The fair value of commitments is estimated using the fees currently
charged to enter into similar agreements, taking into account the
remaining terms of the agreements and the present creditworthiness of
the counterparties. The fair value of letters of credit is based on
fees currently charged for similar agreements or on the estimated cost
to terminate them or otherwise settle the obligations with the
counterparties.
Deposit liabilities:
The fair values disclosed for demand deposits equal their carrying
amounts which represents the amount payable on demand. The carrying
amounts for variable-rate, fixed term money market accounts and
certificates of deposit approximate their fair values at the reporting
date. Fair values for fixed-rate certificates of deposit are estimated
using a discounted cash flow calculation that applies interest rates
currently being offered on certificates to a schedule of aggregated
expected maturities on time deposits.
Short-term borrowings:
The carrying amounts of federal funds purchased, borrowings under
repurchase agreements, and other short-term borrowings approximate their
fair values.
Long-term borrowing:
The fair values for the fixed rate borrowings are estimated using a
discounted cash flow calculation that applies interest rates currently
being offered on the borrowings to a schedule of aggregated expected
maturities on the borrowings.
12. Emerging accounting standards
Impairment of loans:
The FASB has issued Statement No. 114, Accounting by Creditors for
Impairment of a Loan. Statement No. 114 requires that impaired loans
that are within the scope of this statement be measured based on the
present value of expected future cash flows discounted at the loan's
effective interest rate or, as a practical expedient, at the loan's
observable market price or the fair value of the collateral if the loan
is collateral dependent. A loan is impaired when it is probable the
creditor will be unable to collect all contractual principal and
interest payments due in accordance with the terms of the loan
agreement. This statement is effective for the Company's year ending
December 31, 1995.
Accounting by creditors for impairment of a loan-income recognition and
disclosures:
The FASB has issued FASB Statement No. 118 which amends certain
provisions of FASB Statement No. 114 relating to income recognition and
other required disclosures of impaired loans. This statement is
effective for the Company's year ending December 31, 1995.
13. Reclassifications
Certain of the 1993 and 1992 amounts have been reclassified to conform with
the 1994 presentation. These reclassifications had no effect on net income
or stockholders' equity.
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<INTEREST-OTHER> 381
<INTEREST-TOTAL> 13,884
<INTEREST-DEPOSIT> 5,485
<INTEREST-EXPENSE> 6,572
<INTEREST-INCOME-NET> 7,312
<LOAN-LOSSES> 203
<SECURITIES-GAINS> (11)
<EXPENSE-OTHER> 4,859
<INCOME-PRETAX> 3,303
<INCOME-PRE-EXTRAORDINARY> 3,303
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 2,187
<EPS-PRIMARY> 1.49
<EPS-DILUTED> 1.49
<YIELD-ACTUAL> 8.23
<LOANS-NON> 881
<LOANS-PAST> 1
<LOANS-TROUBLED> 924
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,096
<CHARGE-OFFS> 79
<RECOVERIES> 38
<ALLOWANCE-CLOSE> 2,258
<ALLOWANCE-DOMESTIC> 2,258
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
