<PAGE> 1
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For quarter ended March 31, 1998
Commission File Number 0-26032
AREA BANCSHARES CORPORATION
---------------------------
(Exact name of registrant as specified in its charter)
INCORPORATED IN KENTUCKY IRS EMPLOYER ID NUMBER
NO. 61-0902343
230 FREDERICA STREET
OWENSBORO, KENTUCKY 42301
-------------------------
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (502) 926-3232
--------------
Former name, former address and former fiscal year, if changed since
last report: N/A
-----
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 practical date.
Class: Common stock
No Par Value
Shares Outstanding: As of April 30, 1998: 15,634,377
1
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AREA BANCSHARES CORPORATION
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PART I - FINANCIAL INFORMATION PAGE NUMBER
<S> <C>
Item 1. Financial Statements 3
Unaudited consolidated balance sheets, March 31, 1998 and
December 31, 1997 3
Unaudited consolidated statements of income, three months
ended March 31, 1998 and 1997 4
Unaudited consolidated statements of shareholders' equity,
year ended December 31, 1997 and three months ended March
31, 1998 5
Unaudited consolidated statements of cash flows, three
months ended March 31, 1998 and 1997 6
Notes to consolidated financial statements 8
Item 2. Management's discussion and analysis of financial condition
and results of operations 10
Results of operations 10
Financial position 14
Liquidity 16
Item 3. Quantitative and Qualitative Disclosures about Market Risk 17
PART II - OTHER INFORMATION
Item 1. Legal Proceedings 17
Item 2. Changes in Securities 17
Item 3. Defaults Upon Senior Securities 17
Item 4. Submission of Matters to a Vote of Security Holders 17
Item 5. Other Information 17
Item 6. Exhibits and Reports on Form 8-K 17
</TABLE>
2
<PAGE> 3
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31
1998 1997
(UNAUDITED)
<S> <C> <C>
ASSETS
Cash and due from banks $ 71,740 $ 84,378
Interest bearing deposits with banks 6,750 5,804
Federal funds sold 20,000 --
Trading account securities 73,880 45,873
Securities:
Available for sale (amortized cost of $299,343 and $324,731, respectively) 320,043 342,513
Held to maturity (fair value of $121,736 and $122,781, respectively) 115,730 116,811
------------ -------------
TOTAL SECURITIES 435,773 459,324
------------ -------------
Mortgage loans held for sale 16,139 9,817
Loans, net of unearned discount 1,180,243 1,227,307
Less allowance for loan losses 20,283 19,887
------------ -------------
NET LOANS 1,159,960 1,207,420
------------ -------------
Premises and equipment, net 30,123 29,710
Goodwill and other intangible assets 14,724 15,312
Other assets 42,238 43,811
------------ -------------
TOTAL ASSETS $ 1,871,327 $ 1,901,449
============ =============
LIABILITIES AND SHAREHOLDERS' EQUITY
Non-interest-bearing deposits $ 178,743 $ 196,776
Interest-bearing deposits 1,278,587 1,236,356
------------ -------------
TOTAL DEPOSITS 1,457,330 1,433,132
------------ -------------
Federal funds purchased 22,375 38,691
Securities sold under agreements to repurchase 94,310 109,861
Notes payable to the U.S. Treasury 1,498 19,581
Advances from the Federal Home Loan Bank 68,959 84,336
Other borrowings 398 397
Accrued expenses and other liabilities 22,059 18,902
------------ -------------
TOTAL LIABILITIES 1,666,929 1,704,900
------------ -------------
Preferred stock, no par value; authorized 500,000 shares; none issued -- --
Common stock, no par value; authorized 50,000,000 shares; issued and
outstanding March 31, 1998, 15,630,802, December 31, 1997, 15,576,917 24,338 24,254
Paid-in capital 35,632 35,632
Retained earnings 131,980 126,104
Deferred compensation on restricted stock (592) (612)
ESOP and MRP loan obligations (337) (337)
Accumulated other comprehensive income 13,377 11,508
------------ -------------
TOTAL SHAREHOLDERS' EQUITY 204,398 196,549
Commitments and contingent liabilities
------------ -------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $ 1,871,327 $ 1,901,449
============ =============
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE> 4
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(AMOUNTS IN THOUSANDS, EXCEPT PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED MARCH 31
1998 1997
<S> <C> <C>
Interest Income:
Loans, including fees $ 28,239 $ 26,777
Interest bearing deposits with banks 69 75
Federal funds sold 462 290
Interest and dividends on securities:
Taxable securities 4,723 4,868
Tax exempt securities 1,902 1,444
----------- ----------
TOTAL INTEREST INCOME 35,395 33,454
----------- ----------
Interest expense:
Interest on deposits 14,182 13,061
Interest on borrowings 2,311 2,267
----------- ----------
TOTAL INTEREST EXPENSE 16,493 15,328
----------- ----------
Net interest income 18,902 18,126
Provision for loan losses 612 711
----------- ----------
NET INTEREST INCOME AFTER PROVISION FOR LOAN LOSSES 18,290 17,415
----------- ----------
Non-interest income:
Commission and fees on fiduciary activities 1,259 1,056
Service charges on deposit accounts 1,799 1,627
Other service charges, commissions and fees 1,404 1,323
Security gains (losses), net 125 21
Gains on sales of mortgage loans, net 268 168
Other service charges, commissions and fees 96 388
----------- ----------
TOTAL NON-INTEREST INCOME 4,951 4,583
----------- ----------
Non-interest expenses:
Salaries and employee benefits 7,512 7,164
Net occupancy expense 937 972
Furniture and equipment expense 1,043 1,027
Federal deposit insurance 24 40
Data processing expense 805 784
Other non-interest expenses 4,605 4,549
----------- ----------
TOTAL NON-INTEREST EXPENSES 14,926 14,536
----------- ----------
Income before income tax expense 8,315 7,462
Income tax expense 2,444 2,242
=========== ==========
NET INCOME $ 5,871 $ 5,220
=========== ==========
Per common share:
Net income-basic $ .38 $ .34
-diluted $ .37 $ .34
Cash dividends $ .035 $ .03
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
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AREA BANCSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
YEAR ENDED DECEMBER 31, 1997 AND THREE MONTHS ENDED MARCH 31, 1998
(AMOUNTS IN THOUSANDS, EXCEPT SHARE AND PER SHARE DATA)
(UNAUDITED)
<TABLE>
<CAPTION>
DEFERRED ACCUMULATED
COMMON COMMON COMPENSATION ESOP AND OTHER
STOCK- STOCK- PAID-IN RETAINED ON RESTRICTED MRP LOAN COMPREHENSIVE
SHARES AMOUNT CAPITAL EARNINGS STOCK OBLIGATIONS INCOME TOTAL
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1996 15,514,223 24,197 35,142 107,581 (469) (628) 3,560 169,383
Net income 20,809 20,809
Cash dividends declared ($.125
per Share) (2,523) (2,523)
Repurchase of common stock (24,674) (39) (483) (522)
Stock options exercised,
including tax benefits 81,938 87 490 503 1,080
Amortization of deferred
compensation on restricted
stock 83 83
Net restricted stock issued 5,430 9 217 (226) --
Repayment of ESOP and MRP loan
obligations 291 291
Change in other comprehensive
income (loss), net of tax 7,948 7,948
---------- ------- ------ -------- ----- ----- ------- --------
Balance, December 31, 1997 15,576,917 24,254 35,632 126,104 (612) (337) 11,508 196,549
Net income 5,871 5,871
Cash dividends declared ($.035
per share) (546) (546)
Stock options exercised,
including tax benefits 53,885 84 551 635
Amortization of deferred
compensation on restricted
stock 20 20
Change in other comprehensive
income (loss), net of tax 1,869 1,869
---------- ------- ------- -------- ----- ----- ------- --------
Balance, March 31, 1998 15,630,802 $24,338 $35,632 $131,980 $(592) $(337) $13,377 $204,398
========== ======= ======= ======== ===== ===== ======= ========
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE> 6
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997
CASH FLOWS FROM OPERATING ACTIVITIES: (UNAUDITED) (UNAUDITED)
<S> <C> <C>
Net income $ 5,871 $ 5,220
Adjustments to reconcile net income to net cash provided
by (used in) operating activities:
Provision for loan losses 612 711
Depreciation, amortization and accretion, net 947 1,818
Gain on sales of securities and loans, net (393) (189)
Loss (Gain) on sales of other real estate owned 52 (24)
(Gain) on disposals of equipment -- (4)
Deferred income taxes 1,468 (312)
Proceeds from sales of trading account securities 9,880 9,882
Proceeds from maturities of trading account securities 35,994 34,000
Purchases of trading account securities (73,870) (50,856)
Purchases of mortgage loans held for sale (43,794) (3,359)
Proceeds from sales of mortgage loans held for sale 37,640 23,511
Other, net 4,166 373
--------- ---------
NET CASH PROVIDED BY (USED IN) OPERATING ACTIVITIES (21,427) 20,771
--------- ---------
CASH FLOWS FROM INVESTING ACTIVITIES:
Increase in interest bearing deposits with banks (946) (37)
Proceeds from sales of securities available for sale 1,652 18,063
Proceeds from sales of securities held to maturity -- --
Proceeds from maturities of securities available for sale 51,597 31,855
Proceeds from maturities of securities held to maturity 774 1,826
Calls of securities available for sale 2,000 --
Calls of securities held to maturity 1,341 683
Purchases of securities available for sale (29,987) (39,897)
Purchases of securities held to maturity (960) (1,224)
Increase in federal funds sold and securities
purchased under agreements to resell (20,000) (2,368)
Loans originated, net of principal collected on loans 45,718 (7,842)
Purchases of premises and equipment (1,473) (1,154)
Proceeds from sales of other real estate owned 112 160
Proceeds from sales of premises and equipment -- 11
--------- ---------
NET CASH PROVIDED BY INVESTING ACTIVITIES 49,828 76
--------- ---------
</TABLE>
CONTINUED
6
<PAGE> 7
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)
THREE MONTHS ENDED MARCH 31, 1998 AND 1997
(AMOUNTS IN THOUSANDS)
<TABLE>
<CAPTION>
1998 1997
CASH FLOWS FROM FINANCING ACTIVITIES: (UNAUDITED) (UNAUDITED)
<S> <C> <C>
Increase (decrease) in deposits $ 24,198 $ (9,958)
Decrease in federal funds purchased (16,316) (8,824)
Decrease in securities sold under agreements to repurchase (15,551) (11,715)
Increase (decrease) in notes payable to the U.S. Treasury (18,083) 10,213
Decrease in advances from the Federal Home Loan Bank (15,377) (2,712)
Decrease in other borrowings 1 (25)
Proceeds from issuance of common stock and stock options exercised 635 27
Repurchase of common stock -- (496)
Cash dividends paid (546) (658)
--------- ----------
NET CASH PROVIDED (USED IN) FINANCING ACTIVITIES (41,039) (24,148)
--------- ----------
DECREASE IN CASH AND DUE FROM BANKS (12,638) (3,301)
CASH AND DUE FROM BANKS, JANUARY 1 84,378 76,923
--------- ----------
CASH AND DUE FROM BANKS, MARCH 31 $ 71,740 $ 73,622
========= ==========
Cash flow information:
Income tax payments -- 2,300
Interest payments 15,803 15,367
Non-cash transactions:
Loans transferred to other assets 712 257
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.
7
<PAGE> 8
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1998 AND 1997
NOTE 1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
The accompanying interim unaudited consolidated financial statements
have been prepared in accordance with the instructions to Form 10-Q
and, therefore, do not include all information and footnotes required
by generally accepted accounting principles for complete financial
statements. In the opinion of management, all adjustments (consisting
only of normal recurring accruals) considered necessary for a fair
presentation have been reflected in the accompanying consolidated
financial statements. Results of interim periods are not necessarily
indicative of results to be expected for the full year.
The accounting and reporting policies of Area Bancshares Corporation
("Area") and its subsidiaries conform to generally accepted
accounting principles and general practices within the banking
industry. The consolidated financial statements include the accounts
of Area Bancshares Corporation and its wholly-owned subsidiaries. All
significant inter-company accounts and transactions have been
eliminated in consolidation. A full description of significant
accounting policies is presented in the 1997 annual report to
shareholders as well as a complete set of footnotes.
NOTE 2. COMPREHENSIVE INCOME
Area adopted FASB Statement No. 130, "Reporting Comprehensive
Income", during the first quarter of 1998. This Statement established
standards for reporting and displaying comprehensive income and its
components. Comprehensive income is defined as "the change in equity
(net assets) of a business enterprise during a period from
transactions and other events and circumstances from nonowner
sources. It includes all changes in equity during a period except
those resulting from investments by owners and distributions to
owners." Comprehensive income for Area includes net income and
unrealized gains and losses on securities available for sale. The
following table sets forth the components of comprehensive income for
the three months ended March 31, 1998 and 1997:
<TABLE>
<CAPTION>
3 MONTHS ENDED MARCH 31
(Amounts in thousands) 1998 1997
---- ----
<S> <C> <C> <C> <C>
Net income $5,871 $5,220
Other comprehensive income, net of tax:
Unrealized gains on securities available for sale:
Unrealized holding gains (losses) arising during period 1,942 (696)
Less: Reclassification adjustment for gains
included in net income (73) 1,869 (2) (698)
----- ------ ---- ------
COMPREHENSIVE INCOME $7,440 $4,522
====== ======
</TABLE>
NOTE 3. NET INCOME PER COMMON SHARE
The following table presents the numerators (net income) and
denominators (average shares outstanding) for the basic and diluted
net income per share computations for the three months ended March
31:
<TABLE>
<CAPTION>
1998 1997
(UNAUDITED) (UNAUDITED)
<S> <C> <C>
(Amounts in thousands, except per share data)
NET INCOME, BASIC AND DILUTED $ 5,871 $ 5,220
======= =======
Average shares outstanding 15,613 15,309
Effect of dilutive securities 270 286
------- -------
Average shares outstanding including dilutive securities 15,883 15,595
======= =======
NET INCOME PER SHARE, BASIC $ 0.38 $ 0.34
======= =======
NET INCOME PER SHARE, DILUTIVE $ 0.37 $ 0.34
======= =======
</TABLE>
8
<PAGE> 9
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1998 AND 1997
NOTE 4. SECURITIES
The amortized cost and approximate market values of securities as of
March 31, 1998 and December 31, 1997 are as follows:
AVAILABLE FOR SALE
(Amounts in thousands)
<TABLE>
<CAPTION>
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Treasury and federal agencies $ 197,718 $ 987 $ 387 $ 198,318
Mortgage-backed securities 63,871 833 117 64,587
Obligations of state and political subdivisions 16,205 690 -- 16,895
Equity and other securities 21,549 18,710 16 40,243
------------ ------------- ------------- -------------
BALANCE AT MARCH 31, 1998 $ 299,343 $ 21,220 $ 520 $ 320,043
============ ============= ============= =============
<CAPTION>
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---- ----- ------ -----
<S> <C> <C> <C> <C>
U.S. Treasury and federal agencies $ 232,694 $ 1,095 $ 436 $ 233,353
Mortgage-backed securities 55,959 719 110 56,568
Obligations of state and political subdivisions 16,115 752 - 16,867
Equity and other securities 19,963 15,824 62 35,725
------------ ------------- ------------- -------------
BALANCE AT DECEMBER 31, 1997 $ 324,731 $ 18,390 $ 608 $ 342,513
============ ============= ============= =============
HELD TO MATURITY
(Amounts in thousands)
<CAPTION>
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
---- ----- ------ -----
<S> <C> <C> <C> <C>
MARCH 31, 1998
OBLIGATIONS OF STATE AND POLITICAL SUBDIVISIONS $ 115,730 $ 6,032 $ 26 $ 121,736
============ ============ ============= ============
<CAPTION>
AMORTIZED UNREALIZED UNREALIZED MARKET
COST GAINS LOSSES VALUE
<S> <C> <C> <C> <C>
DECEMBER 31, 1997
OBLIGATIONS OF STATE AND POLITICAL SUBDIVISIONS $ 116,811 $ 6,485 $ 515 $ 122,781
============ ============ ============ ============
</TABLE>
NOTE 5. IMPACT OF NEW ACCOUNTING STANDARDS
SFAS No. 131 changes the way public companies report information
about segments of their business in their annual financial statements
and requires them to report selected segment information in their
reports to shareholders. SFAS No. 131 requires that companies
disclose segment data based on how management makes decisions about
allocating resources to segments and measures their performance. SFAS
No. 131 is effective for fiscal years beginning after December 15,
1997. Area does not expect the implementation of SFAS No. 131 to have
a material effect on the consolidated financial statements.
9
<PAGE> 10
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
MARCH 31, 1998 AND 1997
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
GENERAL
Area is a multi-bank holding company incorporated in Kentucky in 1981
and registered under the Bank Holding Company Act of 1956, as
amended. On March 31, 1998 the Corporation had direct control of
three affiliated commercial banks, indirect control of seven
additional commercial banks through the ownership of holding
companies and indirect control of one Federal thrift through the
ownership of a holding company, all of which are located in Kentucky.
Of the banks controlled by Area, four are national banks, six are
state banks and one is a federal thrift.
Area and its subsidiaries engage in retail and commercial banking and
related financial services. In connection with these services, Area
provides the usual products and services of retail and commercial
banking such as deposits, commercial loans, personal loans and trust
services. The principal business of Area consists of making loans.
The principal markets for these loans are businesses and individuals.
These loans are made at the offices of the affiliated banks and
subsidiaries, and some are sold on the secondary market.
Additionally, Area engages in activities that are closely related to
banking, including mortgage banking, investment brokerage and
consumer finance.
The discussion that follows is intended to provide additional insight
into Area's financial condition and results of operations. This
discussion should be read in conjunction with the consolidated
financial statements and accompanying notes presented in Item 1 of
Part I of this report.
A. RESULTS OF OPERATIONS
Net income for the quarter ended March 31, 1998 was $5,871,000, an
increase of $651,000 or 12.5% over net income of $5,220,000 for the
first quarter of 1997. Basic earnings per share totaled $0.38 for
the quarter ended March 31, 1998 compared to $0.34 for the same
period during 1997. The increase was $0.04 per share or 11.8 %.
Diluted earnings per share amounted to $0.37 for the current quarter
and $0.34 for the quarter ended March 31, 1997, an increase of $0.03
or 8.8%. Earnings for the quarter reflected an increase in net
interest income totaling $1,037,000 (on a tax equivalent basis) and
an improvement in non-interest income of $368,000 partially off-set
by an increase in non-interest expenses amounting to $390,000.
Return on average assets totaled 1.30% (annualized) during the
quarter ended March 31, 1998 and 1.21% (annualized) for the same
period during 1997 while return on average equity was 11.73%
(annualized) for the current quarter versus 11.95% (annualized) for
the first quarter of 1997.
NET INTEREST INCOME
The largest component of Area's operating income is net interest
income. Net interest income is the difference between interest earned
on earning assets and interest expense on interest bearing
liabilities. For purposes of this discussion, interest income earned
on tax-exempt securities and loans is adjusted to a fully-taxable
equivalent basis to facilitate comparison with interest earned which
is subject to statutory taxation.
Changes in net interest income generally occur due to fluctuations in
the balance and/or mix of interest-earning assets and
interest-bearing liabilities, and changes in their corresponding
interest yields and costs.
10
<PAGE> 11
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
(UNAUDITED)
MARCH 31, 1998 AND 1997
NET INTEREST INCOME (CONTINUED)
The following presents the components of net income on a taxable
equivalent basis:
CONDENSED STATEMENTS OF INCOME-TAXABLE EQUIVALENT BASIS
<TABLE>
<CAPTION>
(Amounts in thousands, except per share data) THREE MONTHS ENDED MARCH 31
1998 1997 CHANGE
---- ---- ------
<S> <C> <C> <C>
Interest income $35,395 $33,454 $1,941
Taxable-equivalent adjustment 1,040 779 261
---------- ---------- ---------
Interest income-taxable equivalent 36,435 34,233 2,202
Interest expense 16,493 15,328 1,165
---------- ---------- ---------
Net interest income-taxable equivalent 19,942 18,905 1,037
Provision for loan losses 612 711 (99)
Non-interest income 4,951 4,583 368
Non-interest expenses 14,926 14,536 390
---------- ---------- ---------
Income before income taxes 9,355 8,241 1,114
Income taxes 2,444 2,242 202
Taxable-equivalent adjustment 1,040 779 261
========== ========== =========
NET INCOME $ 5,871 $ 5,220 $ 651
========== ========== =========
NET INCOME PER SHARE-BASIC $ 0.38 $ 0.34 $ 0.04
========== ========== =========
NET INCOME PER SHARE-DILUTED $ 0.37 $ 0.34 $ 0.03
========== ========== =========
</TABLE>
Net interest income, on a tax equivalent basis, increased $1,037,000
or 5.5% for the quarter ended March 31, 1998 compared to the same
period of 1997. The net interest margin was 4.64% (annualized) for
the first three months of 1998 compared to 4.68% (annualized) a year
earlier. The decrease in the net interest margin was the result of an
increase of .10% (annualized) in the average rate on interest bearing
liabilities off-set partially by an increase in average net earning
assets (average earning assets less average interest bearing
liabilities) totaling $31,197,0000 during the current quarter versus
the same period in 1997.
The following table summarizes the fully-taxable equivalent interest
spread, which is the difference between the average yield on earning
assets and the average rate on interest bearing liabilities as well
as the net interest margin, which is the fully-taxable equivalent net
interest income divided by the average earning assets for the three
months ended March 31, 1998 and 1997.
<TABLE>
<CAPTION>
(Amounts in thousands, except percentages)
3 MONTHS ENDED MARCH 31
1998 1997 CHANGE
---- ---- ------
<S> <C> <C> <C>
Average rate on earning assets (annualized) 8.48% 8.47% .01%
Average rate on interest bearing liabilities
(annualized) 4.60% 4.50% .10%
Net interest spread (annualized) 3.88% 3.97% (.09%)
Net interest margin (annualized) 4.64% 4.68% (.04%)
Average earning assets $1,719,224 $1,614,763 $104,461
Average interest bearing liabilities 1,434,534 1,361,270 73,264
</TABLE>
11
<PAGE> 12
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
(UNAUDITED)
MARCH 31, 1998 AND 1997
PROVISION FOR LOAN LOSSES
The allowance for loan losses is maintained at a level adequate to
absorb probable losses. Management determines the adequacy of the
allowance based upon reviews of individual loans, evaluation of the
risk characteristics of the loan portfolio, including the impact of
current economic conditions on the borrowers' ability to repay, past
collection and loss experience and such other factors which, in
management's judgment, deserve current recognition. However, actual
losses could differ significantly from the amount estimated by
management. The allowance for loan losses is established by charges
to operating earnings.
An analysis of the changes in the allowance for loan losses and
selected ratios follows:
<TABLE>
<CAPTION>
(Amounts in thousands, except percentages)
3 MONTHS ENDED MARCH 31
1998 1997
---- ----
<S> <C> <C>
Balance, December 31 $ 19,887 $ 18,663
Provision for loan losses 612 711
Loan loss recoveries 407 457
Loans charged off 623 786
----------- -----------
Balance, March 31 $ 20,283 $19,045
=========== ===========
Average loans, net of unearned income $1,217,527 $1,151,614
Provision for loan losses to average loans* .20% 0.25%
Net loan charge-offs to average loans* .07% 0.11%
Allowance for loan losses to end of period loans 1.72% 1.62%
</TABLE>
* Amounts annualized
The provision for loan losses decreased $99,000 or 13.9% to $ 612,000
for the quarter ended March 31, 1998 compared to the first quarter of
1997. The decrease for the three months ended March 31, 1998 was
primarily the result of a decrease in nonperforming assets from
$5,348,000 on December 31, 1997 to $4,511,000 on March 31, 1998 and
an overall improvement in the quality of the loan portfolio.
The provision for loan losses as a percentage of average loans
totaled .20% (annualized) for the quarter ended March 31, 1998
compared to .25% (annualized) for the quarter ended March 31, 1997.
This reduction is the result of continued improvement in the quality
of the loan portfolio.
Net loan charge-offs (loan charge-offs less recoveries) to average
loans declined to .07% (annualized) from .11% (annualized) for the
quarter ended March 31, 1998 compared to the same period in 1997.
12
<PAGE> 13
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
(UNAUDITED)
MARCH 31, 1998 AND 1997
PROVISION FOR LOAN LOSSES (CONTINUED)
The allowance for loan losses increased to 1.72% of total loans on
March 31, 1998, as compared to the December 31, 1997 level of 1.62%
primarily as a result of a decrease in loans outstanding as well as
reduced net charge-off experience during the quarter.
NON-INTEREST INCOME
The following table sets forth the components of non-interest income
for the three months ended March 31, 1998 and 1997:
<TABLE>
<CAPTION>
(Amounts in thousands, except percentages)
3 MONTHS ENDED MARCH 31
PERCENT
1998 1997 CHANGE CHANGE
---- ---- ------ ------
<S> <C> <C> <C> <C>
Commissions and fees on fiduciary activities $ 1,259 $ 1,056 $ 203 19.2%
Service charges on deposit accounts 1,799 1,627 172 10.6%
Other service charges, commissions and fees 1,404 1,323 81 6.1%
Security gains (losses), net 125 21 104 495.2%
Gains on sales of mortgage loans (net) 268 168 100 59.5%
Other service charges, commissions and fees 96 388 (292) (75.3%)
------- ------- ------ --------
TOTAL $ 4,951 $ 4,583 $ 368 8.0%
======= ======= ======= =======
</TABLE>
Non-interest income for the quarter ended March 31, 1998, totaled
$4,951,000, which was an increase of $368,000 or 8.0% when compared
to the $4,583,000 of non-interest income reported for the quarter
ended March 31, 1997. Commissions and fees on fiduciary activities
increased $203,000 or 19.2% to $1,259,000 in the first quarter of
1998 largely as a result of an increase in assets under management.
Service charges on deposit accounts increased $172,000 or 10.6% to
$1,627,000 when compared to the first quarter of 1997 primarily as a
result of growth in deposits that are subject to service charges and
adjustments to various service charges. Other service charges,
commissions and fees increased $81,000 or 6.1% to $1,404,000 for the
three months ended March 31, 1998 when compared to the same period of
1997. The increase for the quarter can be attributed to increased
activity in the sale of mortgage loans and newly established fees on
services provided. Gains on the sales of securities, mortgage loans
and other real estate totaled $393,000 during the quarter compared to
$189,000 for the same period in 1997. This increase was largely the
result of increased gains on the sales of mortgage loans due to
declining market interest rates during the first quarter of 1998.
Other non-interest income decreased $292,000 or 75.3% to $96,000
primarily as a result of a decrease in mortgage acquisition income.
13
<PAGE> 14
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
(UNAUDITED)
MARCH 31, 1998 AND 1997
NON-INTEREST EXPENSES
The following table sets forth the components of non-interest
expenses for the three months ended March 31, 1998 and 1997:
<TABLE>
<CAPTION>
(Amounts in thousands, except percentages)
3 MONTHS ENDED MARCH 31
PERCENT
1998 1997 CHANGE CHANGE
---- ---- ------ ------
<S> <C> <C> <C> <C>
Salaries and employee benefits $ 7,512 $ 7,164 $ 348 4.9%
Net occupancy expenses 937 972 (35) (3.6%)
Furniture and equipment expense 1,043 1,027 16 1.6%
Federal deposit insurance 24 40 (16) (66.7%)
Data processing expense 805 784 21 2.7%
Other 4,605 4,549 56 1.2%
-------- -------- ----- -----
TOTAL $ 14,926 $ 14,536 $ 390 2.7%
======== ======== ===== =====
</TABLE>
For the quarter ended March 31, 1998 total non-interest expenses
increased $390,000 or 2.7% to $14,926,000. Salaries and employee
benefits increased $348,000 or 4.9% to $7,512,000 for the first
quarter as a result of additional staff required to support current
and future growth as well as normal salary adjustments. Net occupancy
expense and furniture and equipment expense decreased $19,000 or 1.0%
to $1,980,000 for the three-month period ended March 31, 1998. Data
processing expenses increased $21,000 or 2.7% to $805,000 during the
quarter as a result of continued enhancements to Area's data
processing capabilities to meet internal and customer needs. Other
non-interest expenses increased $56,000 or 1.2% to $4,605,000 for the
three months ended March 31, 1998.
YEAR 2000
In August 1997 management initiated a company-wide review of all
computer systems and applications to ensure year 2000 compliance.
This review and related corrective action, if necessary, is scheduled
for completion by the end of 1998. Area expects to incur internal
staff costs related to year 2000 issues during this period in
addition to replacing obsolete teller equipment at a cost of
approximately $1,200,000.
INCOME TAX EXPENSE
Income tax expense totaled $2,444,000 for the three month period
ended March 31, 1998. The increase in the tax expense for the three
months was largely the result of a higher-level of pretax income. The
effective tax rate was 29.4% for the three-month period ended March
31, 1998 compared to 30.0% for the same period in 1997. The decrease
in the effective tax rate for the current three months ended March
31, 1998 compared to the same period in 1997 was primarily the result
of an increase in tax-exempt income. The effective tax rate differs
from the marginal income tax rate of 35% in both 1998 and 1997,
primarily as a result of tax-exempt income.
B. FINANCIAL POSITION
Total assets decreased $30,122,000 or 1.6% to $1,871,327,000 from
December 31, 1997 to March 31, 1998. This decrease was largely the
result of a decline in borrowings totaling $65,327,000, partially
offset by an increase in deposits totaling $24,198,000. Funds for the
reductions in borrowings were provided by decreases in loans and
securities.
Earning assets totaled $1,732,785,000 on March 31, 1998, a decrease
of $15,340,000 or .9% over December 31, 1997. This decrease was
primarily the result of a decrease in loans caused by prepayments and
reduced loan demand. Loans, including loans held for sale, decreased
$40,742,000 to $1,196,382,000 during the three months ended March 31,
1998. Loans, including loans held for sale, represent the largest
category of earning assets, comprising 69.0% of earning assets as of
March 31, 1998 and 70.2% as of December 31, 1997.
14
<PAGE> 15
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
(UNAUDITED)
MARCH 31, 1998 AND 1997
FINANCIAL POSITION (CONTINUED)
Short-term investments, which include interest-bearing deposits with
banks, federal funds sold and trading account securities, totaled
$100,630,000 on March 31, 1998, an increase of $48,953,000 or 94.7%
from year-end balances of $51,677,000. This change was the result of
increases in federal funds sold and trading account securities.
Securities represent 25.1% of earning assets. They totaled
$435,773,000 on March 31, 1998, a decrease of $23,551,000 or 5.1%
from December 31, 1997 balances. Net maturities of government and
agency securities accounted for this decrease.
Deposits totaled $1,457,330,000 on March 31, 1998, an increase of
$24,198,000 or 1.7% from December 31, 1997. Non-interest-bearing
deposits declined $18,033,000 or 9.2% to $178,743,000 from year-end
totals, while interest-bearing deposits increased $42,231,000 or 3.4%
to $1,278,587,000 during the period.
Borrowed funds, which include federal funds purchased, securities
sold under agreements to repurchase, notes payable to the U.S.
Treasury, advances from the Federal Home Loan Bank, and other
borrowings decreased by $65,326,000 to $187,540,000 from
$252,866,000 on December 31, 1997. Repayment of Federal Home Loan
Bank advances accounted for $15,377,000 of the decrease while a
reduction in federal funds purchased accounted for $16,316,000 of the
decline. Funds for this reduction were obtained from deposit growth,
maturities of securities and loan repayments.
CAPITAL RESOURCES
Shareholders' equity totaled $204,398,000 at March 31, 1998, an
increase of $7,849,000 or 4.0% from December 31, 1997. Out of net
income of $5,871,000 during the first three months of 1998,
$5,325,000 was retained after paying dividends to shareholders of
$546,000. Accumulated other comprehensive income, net of taxes was
$13,377,000 at March 31, 1998, compared to net unrealized gains of
$11,508,000 at year-end 1997. An increase in unrealized gains on
equity securities was largely responsible for this increase.
The shareholders' equity-to-asset ratio was 10.92% at March 31, 1998
compared to 10.34% on December 31, 1997.
Book value per share was $13.08 and $12.62 at March 31, 1998 and
December 31, 1997, respectively.
A summary of the capital ratios are shown below:
<TABLE>
<CAPTION>
REGULATORY CAPITAL REQUIREMENTS
MARCH 31 DECEMBER 31 WELL MINIMUM
1998 1997 CAPITALIZED REQUIRED
---- ---- ----------- --------
<S> <C> <C> <C> <C>
Leverage Ratio 9.86% 9.54% 5.00% 4.00%
Tier I Risk Based Capital Ratio 14.02% 13.24% 6.00% 4.00%
Total Risk Based Capital Ratio 15.25% 14.50% 10.00% 8.00%
</TABLE>
ASSET QUALITY
At March 31, 1998, the allowance for loan losses was $20,283,000 or
1.72% of quarter end loans, as compared to 1.62% of loans at December
31, 1997. The ratio of the allowance for loan losses to
non-performing assets increased to 449.6% at March 31, 1998, compared
with 371.9% at December 31, 1997 as a result of an increase in the
allowance for loan losses and a reduction in total nonperforming
assets. Non-performing assets consist of non-accrual loans, loans
past due ninety days or more that are still accruing interest,
restructured loans, and other real estate owned. Currently, net
charge-offs (loan charge-offs less recoveries) are at .07%
(annualized) of average year-to-date loans compared to .11%
(annualized) during the same period in 1997. This reduction reflects
a lower level of loans charged off.
15
<PAGE> 16
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
(UNAUDITED)
MARCH 31, 1998 AND 1997
ASSET QUALITY (CONTINUED)
Management has determined that the allowance for loan losses should
be maintained at a level that is sufficient to absorb the losses
that, in the reasonable opinion and judgment of management, are known
and inherent in the loan portfolio. Management's evaluation includes
an analysis of the overall quality of the loan portfolio, historical
loan loss experience, loan delinquency trends and the economic
conditions within Area's marketing area. Additional allocations for
the allowance are based on specifically identified potential loss
situations.
The allowance for loan losses is allocated by category of loan and by
a percentage distribution of the allowance allocation. An allocation
of the allowance for loan losses is an estimate of the portion which
will be used to cover future charge-offs in each loan category, but
does not preclude any portion of the allowance allocated to one type
of loan from being used to cushion losses of another loan type. This
allocation is determined by the estimated loss within each loan pool
as well as any specific allocations that may be assigned to specific
loans within the same portfolio section with the remainder being
assigned to the unallocated category.
A continuous and comprehensive loan review program is maintained by
Area for each affiliate bank. The purpose of this program is to
provide periodic review and inspection of loans to ensure the safety,
liquidity and profitability of the loan portfolio. Area's loan review
department is entrusted with the responsibility to identify
foreseeable problems, measure compliance with established loan and
operating policies and provide objective loan portfolio appraisals to
the Board of Directors and management.
The following schedule shows the dollar amount of assets at March 31,
1998 and December 31, 1997 and March 31, 1997, which were nonaccrual
loans, loans contractually past due ninety days or more as to
interest or principal payments and still accruing, restructured loans
and other real estate and in-substance foreclosures:
<TABLE>
<CAPTION>
MARCH 31 DECEMBER 31 MARCH 31
(In thousands) 1998 1997 1997
---- ----- ----
<S> <C> <C> <C>
Nonperforming loans $ 2,093 $ 2,173 $ 3,891
Loans contractually past due 90 days or more as to
interest or principal and still accruing 1,025 1,789 2,703
------- ------- -------
TOTAL NONPERFORMING AND RESTRUCTURED LOANS 3,118 3,962 6,594
Other real estate owned 1,393 1,386 1,266
------- ------- -------
TOTAL NONPERFORMING ASSETS $ 4,511 $ 5,348 $ 7,860
======= ======= =======
</TABLE>
C. LIQUIDITY
Deposits have historically provided Area with a major source of
stable and relatively low-cost funding. Secondary sources of
liquidity include federal funds purchased, securities sold under
agreements to repurchase, notes payable to the U.S. Treasury,
advances from the Federal Home Loan Bank and other borrowings.
As of March 31, 1998, 77.9% of total assets were funded by core
deposits while 10.0% were funded with secondary sources of liquidity
discussed above, compared to 75.4% and 13.3%, respectively, as of
December 31, 1997.
The net loan-to-deposit ratio decreased from 84.3% on December 31,
1997 to 80.0% on March 31, 1998 as a result of a decrease in loans
outstanding and an increase in total deposits.
16
<PAGE> 17
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
(UNAUDITED)
MARCH 31, 1998 AND 1997
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Area's March 31, 1998 analysis of the impact of changes in interest
rates on net interest income over the next 12 months indicates no
significant changes in the Area's exposure to interest rate changes
since December 31, 1997. The table below illustrates the simulation
analysis of the impact of a 50 (.50%) and 100 (1.00%) basis point
upward and downward movement in interest rates. The impact of the
rate movement was simulated as if rates changed immediately from
March 31, 1998 levels, and remained constant at those levels
thereafter:
<TABLE>
<CAPTION>
INTEREST RATE SIMULATION SENSITIVITY ANALYSIS
(In thousands, except per share data)
MOVEMENTS IN INTEREST RATES FROM MARCH 31, 1998 RATES
INCREASE DECREASE
-------- --------
<S> <C> <C> <C> <C>
SIMULATED IMPACT IN THE NEXT 12 MONTHS +100BP +50BP -50BP -100BP
------ ----- ----- ------
Net interest income increase (decrease) $(2,122) $(663) $142 $964
Net income per share-basic increase (decrease) (.09) (.03) .01 .04
Net income per share-diluted increase (decrease (.09) (.03) .01 .04
</TABLE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
Not applicable.
Item 2. Changes in Securities
Not applicable.
Item 3. Defaults Upon Senior Securities
Not applicable.
Item 4. Submission of Matters To a Vote of Security Holders
Not applicable.
Item 5. Other Information
Pending Mergers. In March 1998, Area entered into an
agreement to acquire NationsBank of Kentucky, N.A., a wholly-owned
subsidiary of NationsBank Corporation. NationsBank of Kentucky, N.A.
has total assets of approximately $165,000,000, net of certain
deposits that will be retained by NationsBank of Kentucky, N.A. The
acquisition will be accounted for as a purchase and is subject to
regulatory approval. The transaction is expected to close in the
third quarter of 1998.
Item 6. Exhibits and Reports on Form 8-K
a) Exhibits:
<TABLE>
<CAPTION>
Exhibit No. Description of Exhibit
----------- ----------------------
<S> <C>
3.1(1) Articles of Incorporation of the Registrant,
as amended
3.2(2) Bylaws of the Registrant, as amended
</TABLE>
17
<PAGE> 18
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
(UNAUDITED)
MARCH 31, 1998 AND 1997
Item 6. Exhibits and Reports on Form 8-K (continued)
10.1(2)* Form of Area Bancshares Corporation Restricted Stock
Plan Agreement
10.2(2)* Area Bancshares Corporation 1994 Stock Option Plan
10.3(3)* Memorandum dated September 18, 1996 regarding
executive officer compensation
10.4(4)* Cardinal Bancshares, Inc. 1989 Restricted Stock
Option Plan, as amended April 16,1992
10.5(5)* Cardinal Bancshares, Inc. 1994 Restricted Stock
Option Plan
10.6(6)* Cardinal Bancshares, Inc. 1992 Limited Stock Option
Plan
10.7(4)* Cardinal Bancshares, Inc. 1992 First Federal Savings
Bank Restricted Stock Option Plan
10.8(7)* Cardinal Bancshares, Inc. 1993 Mutual Federal Savings
Bank Restricted Stock Option Plan
10.9(7)* Amendment Number 1 to Cardinal Bancshares, Inc. 1992
Limited Stock Option Plan
10.10(6)* Cardinal Bancshares, Inc. VST Financial Services,
Inc. Restricted Stock Plan and Escrow Agreement
10.11(8)* Letter Agreement between the Cardinal Bancshares,
Inc. and Michael Karlin dated December 13, 1993
10.12(5)* Amendment, dated October 26, 1994, to Letter
Agreement between Cardinal Bancshares, Inc. and
Michael S. Karlin dated December 13, 1993
10.13(5)* Second Amendment, dated December 30, 1994, to Letter
Agreement between Cardinal Bancshares, Inc. and
Michael S. Karlin dated December 13, 1993
10.14(8)* Letter Agreement between Cardinal Bancshares, Inc.
and Vincent D. Dailey dated December 13, 1993
10.15(5)* Amendment, dated December 30, 1994, to Letter
Agreement between Cardinal Bancshares, Inc. and
Vincent D. Dailey dated December 13, 1993
10.16(8)* Stock Option Agreement dated December 13, 1993
between Cardinal Bancshares, Inc. and Michael S.
Karlin
10.17(8)* Stock Option Agreement dated December 13, 1993
between Cardinal Bancshares, Inc. and Vincent S.
Dailey
10.18(5)* Cardinal Bancshares, Inc. Affiliates' Employee Stock
Ownership Plan and Trust Agreement
18
<PAGE> 19
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
(UNAUDITED)
MARCH 31, 1998 AND 1997
Item 6. Exhibits and Reports on Form 8-K (continued)
10.19(7)* Cardinal Bancshares, Inc. Management Retention Plan
and Trust Agreement for the Benefit of Alliance
Savings Bank
11.1 Statement regarding Computation of Per Share
Earnings
23.1 Consent of Independent Auditors
27.1 Exhibit 27 Financial Data Schedule (For SEC use
only)
-----------------
(1) Incorporated by reference to the exhibit filed with the
Registrant's Registration Statement on Form S-8 (File
No. 333-38037).
(2) Incorporated by reference to the exhibit filed with the
Registrant's Form 10/A1, filed with the Commission on
June 30, 1995 (File No. 0-26032).
(3) Incorporated by reference to the exhibit filed with the
Registrant's Quarterly Report on Form 10-Q, dated
September 30, 1996 (File No. 0-26032).
(4) Incorporated by reference to the exhibit filed with
Cardinal's Registration Statement on Form S-1 (File No.
33-48129).
(5) Incorporated by reference to the exhibit filed with
Cardinal's Annual Report on Form 10-K for the fiscal
year ended December 31, 1994 (File No. 0-20494).
(6) Incorporated by reference to the exhibit filed with
Cardinal's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1992 (File No. 0-20494).
(7) Incorporated by reference to the exhibit filed with
Cardinal's Registration Statement on Form SB-2 (File No.
33-60796).
(8) Incorporated by reference to the exhibit filed with
Cardinal's Annual Report on Form 10-KSB for the fiscal
year ended December 31, 1993 (File No. 0-20494).
* The indicated exhibit is a compensatory plan or
arrangement.
b) Reports on Form 8-K. No reports on Form 8-K have been
filed during the quarter for which this report is filed.
19
<PAGE> 20
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
(UNAUDITED)
MARCH 31, 1998 AND 1997
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Company
has duly caused this report to be signed on its behalf by the undersigned
thereunto duly authorized.
AREA BANCSHARES CORPORATION
Date: May 8, 1998 By: /S/ Thomas R. Brumley
--------------------------- --------------------------
Thomas R. Brumley
President and Chief Executive
Officer (Principal Executive
Officer)
Date: May 8, 1998 By: /S/ Jack H. Brown
--------------------------- ------------------------
Jack H. Brown
Senior Vice President and
Chief Financial Officer
(Principal Financial Officer)
Date: May 8, 1998 By: /S/ Gary R. White
--------------------------- -------------------------
Gary R. White
Vice President, Controller
(Principal Accounting Officer)
20
<PAGE> 1
AREA BANCSHARES CORPORATION AND SUBSIDIARIES
EXHIBIT 11
STATEMENT RE COMPUTATION OF EARNINGS PER COMMON SHARE
<TABLE>
<CAPTION>
Three Months Ended March 31,
1998 1997
---- ----
<S> <C> <C>
Shares of common stock, beginning 15,576,916 15,514,222
Shares of common stock, ending 15,630,802 15,708,760
Computation of weighted average number of
common and common equivalent shares:
Common shares outstanding at the beginning
of the period 15,576,916 15,514,222
Weighted average number of shares issued 36,271 18,450
Weighted average number of shares redeemed - 8,470
Weighted average number of Cardinal shares
owned by Area (inter-company investment) - 214,882
Weighted average of common stock equivalent
attributable to stock options granted, computed
under the treasury stock method 269,961 285,632
----------- -----------
Weighted average number of common and common
equivalent shares (note 3) 15,883,148 15,594,952
=========== ===========
Earnings and earnings per common and common
equivalent shares: (note 3)
Net income $ 5,871,000 $ 5,200,000
Earnings per common share-basic $.38 $.34
-diluted $.37 $.34
Dividends per share $.035 $.03
</TABLE>
21
<TABLE> <S> <C>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> MAR-31-1998
<CASH> 71,740
<INT-BEARING-DEPOSITS> 6,750
<FED-FUNDS-SOLD> 20,000
<TRADING-ASSETS> 73,880
<INVESTMENTS-HELD-FOR-SALE> 320,043
<INVESTMENTS-CARRYING> 115,730
<INVESTMENTS-MARKET> 121,736
<LOANS> 1,180,243
<ALLOWANCE> 20,283
<TOTAL-ASSETS> 1,871,327
<DEPOSITS> 1,457,330
<SHORT-TERM> 118,183
<LIABILITIES-OTHER> 22,059
<LONG-TERM> 69,357
0
0
<COMMON> 24,338
<OTHER-SE> 180,060
<TOTAL-LIABILITIES-AND-EQUITY> 1,871,327
<INTEREST-LOAN> 28,239
<INTEREST-INVEST> 6,625
<INTEREST-OTHER> 531
<INTEREST-TOTAL> 35,395
<INTEREST-DEPOSIT> 14,182
<INTEREST-EXPENSE> 2,311
<INTEREST-INCOME-NET> 18,902
<LOAN-LOSSES> 612
<SECURITIES-GAINS> 125
<EXPENSE-OTHER> 14,926
<INCOME-PRETAX> 8,315
<INCOME-PRE-EXTRAORDINARY> 5,871
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,871
<EPS-PRIMARY> .38
<EPS-DILUTED> .37
<YIELD-ACTUAL> 8.48
<LOANS-NON> 2,093
<LOANS-PAST> 1,025
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 19,887
<CHARGE-OFFS> 623
<RECOVERIES> 407
<ALLOWANCE-CLOSE> 20,283
<ALLOWANCE-DOMESTIC> 20,283
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 2,374
</TABLE>
