<PAGE>
FORM 10-Q
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
(MARK ONE)
(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: 0-10674
SUSQUEHANNA BANCSHARES, INC.
----------------------------
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
PENNSYLVANIA 23-2201716
------------ ----------
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OF ORGANIZATION) IDENTIFICATION NO.)
26 NORTH CEDAR STREET
LITITZ, PENNSYLVANIA 17543
---------------------------
(ADDRESS OF PRINCIPAL EXECUTIVE OFFICES) (ZIP CODE)
(717) 626-4721
--------------
(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 PRACTICABLE DATE.
AS OF JUNE 30, 1995, THE REGISTRANT HAD 11,640,549 SHARES OF COMMON STOCK
OUTSTANDING.
<PAGE>
SUSQUEHANNA BANCSHARES, INC.
INDEX
<TABLE>
<CAPTION>
SEQUENTIAL
PAGE
REFERENCE
<S> <C>
PART I. FINANCIAL INFORMATION................................... 3
ITEM 1. FINANCIAL STATEMENTS.................................... 3 - 8
CONSOLIDATED BALANCE SHEETS -
AS OF JUNE 30, 1995, AND 1994,
AND DECEMBER 31, 1994......................................... 3
CONSOLIDATED STATEMENTS OF INCOME
FOR THE SIX MONTHS PERIODS ENDED
JUNE 30, 1995 & 1994.......................................... 4
CONSOLIDATED STATEMENTS OF CASH FLOW
FOR THE SIX MONTH PERIODS
ENDED JUNE 30, 1995, AND 1994................................. 5
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS.................... 6 - 8
ITEM 2. MANAGEMENT'S DISCUSSION AND
ANALYSIS OF FINANCIAL CONDITION
AND THE RESULTS OF OPERATIONS........................... 9 - 18
PART II OTHER INFORMATION....................................... 19
ITEM 4. SUBMISSION OF MATTERS TO
A VOTE OF SECURITY HOLDERS............................ 19-20
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K........................ 20
SIGNATURES.............................................. 21
</TABLE>
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. FINANCIAL STATEMENTS
Susquehanna Bancshares, Inc. and Subsidiaries
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands) June 30 December 31 June 30
ASSETS 1995 1994 1994
-----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Cash and due from banks $ 81,541 $ 79,473 $ 72,297
Short-term investments 50,318 15,603 26,950
Investment securities available for sale 392,261 374,045 352,136
Investment securities held to maturity 198,941 223,951 170,268
(Fair values of $200,026; $217,035; and $165,884)
Loans and leases, net of unearned income 1,712,460 1,466,186 1,363,080
Less: Allowance for loan and lease losses 27,779 23,845 23,166
--------------- --------------- ---------------
Net loans and leases 1,684,681 1,442,341 1,339,914
--------------- --------------- ---------------
Premises and equipment (net) 34,250 31,886 29,689
Accrued income receivable 18,239 17,847 14,285
Other assets 60,440 46,263 38,831
--------------- --------------- ---------------
Total assets $2,520,671 $2,231,409 $2,044,370
=============== =============== ===============
LIABILITIES & STOCKHOLDERS' EQUITY
Deposits:
Demand $ 263,992 $ 261,045 $ 218,669
Interest-bearing demand 480,494 464,052 438,525
Savings 397,713 398,423 382,570
Time 857,770 697,406 617,698
Time of $100 or more 95,329 45,404 40,018
--------------- --------------- ---------------
Total deposits 2,095,298 1,866,330 1,697,480
--------------- --------------- ---------------
Short-term borrowings 65,279 73,352 57,462
Long-term debt 94,722 49,314 48,833
Accrued interest, taxes, and expenses payable 20,909 18,478 13,793
Other liabilities 14,565 6,831 12,091
--------------- --------------- ---------------
Total liabilities 2,290,773 2,014,305 1,829,659
Stockholders' equity:
Common stock
Authorized: 32,000,000 shares ($2.00 par value)
Issued: 11,682,880 shares 23,366 23,366 23,366
Surplus 43,014 42,919 42,216
Retained earnings 164,329 159,051 152,910
Unrealized gains and losses for available-for-sale
securities, net of taxes (488) (7,859) (3,408)
Less: Treasury stock,(42,331; 48,962; and 48,962 common
shares at cost) 323 373 373
--------------- --------------- ---------------
Total stockholders' equity 229,898 217,104 214,711
--------------- --------------- ---------------
Total liabilities and stockholders' equity $2,520,671 $2,231,409 $2,044,370
=============== =============== ===============
-----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Susquehanna Bancshares, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------------------------------------------
THREE MONTHS ENDED SIX MONTHS ENDED
JUNE 30 JUNE 30
---------------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands, except per share ) 1995 1994 1995 1994
---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
INTEREST INCOME
Interest and fees on loans and leases $39,003 $28,177 $71,633 $55,000
Interest on investment securities: Taxable 6,552 5,954 13,595 12,237
Tax-exempt 1,327 1,229 2,706 2,370
Interest on short-term investments 772 369 1,389 722
---------------------------------------------------------------------------------------------------------------------------------
Total interest income 47,654 35,729 89,323 70,329
---------------------------------------------------------------------------------------------------------------------------------
INTEREST EXPENSE
Interest on deposits:
Interest-bearing demand 3,323 2,644 6,431 5,205
Savings 2,558 2,331 5,015 4,740
Time 12,318 6,911 21,494 13,912
Interest on short-term borrowings 769 478 1,683 821
Interest on long-term debt 2,048 677 3,500 1,237
---------------------------------------------------------------------------------------------------------------------------------
Total interest expense 21,016 13,041 38,123 25,915
---------------------------------------------------------------------------------------------------------------------------------
Net interest income 26,638 22,688 51,200 44,414
Provision for loan and lease losses 1,071 978 2,571 1,976
---------------------------------------------------------------------------------------------------------------------------------
Net interest income after provision for loan and lease losses 25,567 21,710 48,629 42,438
---------------------------------------------------------------------------------------------------------------------------------
OTHER INCOME
Service charges on deposit accounts 1,260 1,189 2,446 2,340
Other service charges, commissions, fees 272 237 531 497
Income from fiduciary-related activities 749 673 1,412 1,237
Other operating income 1,488 1,305 2,722 3,104
Investment security gains/(losses) 15 18 (73) 1,002
---------------------------------------------------------------------------------------------------------------------------------
Total other income 3,784 3,422 7,038 8,180
---------------------------------------------------------------------------------------------------------------------------------
OTHER EXPENSES
Salaries and employee benefits 10,429 8,680 20,429 17,441
Net occupancy expense 1,367 1,202 2,728 2,573
Furniture and equipment expense 1,053 992 2,030 1,936
FDIC insurance premiums 1,192 961 2,239 1,926
Other operating expenses 6,111 5,149 11,905 10,662
---------------------------------------------------------------------------------------------------------------------------------
Total other expenses 20,152 16,984 39,331 34,538
---------------------------------------------------------------------------------------------------------------------------------
Income before income taxes and extraordinary item 9,199 8,148 16,336 16,080
Provision for income taxes 2,799 2,440 4,717 4,947
---------------------------------------------------------------------------------------------------------------------------------
Income before extraordinary item 6,400 5,708 11,619 11,133
Extraordinary item - - - (732)
---------------------------------------------------------------------------------------------------------------------------------
Net income $ 6,400 $ 5,708 $11,619 $10,401
=================================================================================================================================
Earnings per common share:
Before extraordinary item $0.55 $0.49 $1.00 $0.96
Extraordinary item - - - (0.07)
Net income 0.55 0.49 1.00 0.89
Cash dividends per common share 0.27 0.25 0.54 0.50
---------------------------------------------------------------------------------------------------------------------------------
</TABLE>
The accompanying notes are an integral part of these financial statements.
<PAGE>
Susquehanna Bancshares, Inc. and Subsidiaries
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------------------------------
(Dollars in thousands)
Six month periods ended June 30 1995 1994
-----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net income $ 11,619 $ 10,401
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and accretion 4,382 4,342
Provision for loan and lease losses 2,571 1,976
Deferred taxes - (82)
(Gain) / loss on securities transactions 73 (1,002)
Gain on sale of mortgages (93) (488)
Gain on sale of other real estate owned (81) (16)
Loss on the early extinguishment of debt - 1,126
Mortgage loans originated for resale (21,355) (31,035)
Sale of mortgage loans originated for resale 18,230 38,011
(Increase) / decrease in accrued interest receivable 1,312 (284)
Decrease in accrued interest payable (2,184) (1,317)
Increase / (decrease) in accrued expenses and taxes payable (1,838) 369
Change in fiscal year of pooled entity (381) -
Other, net 2,029 695
------------ ------------
Net cash provided from operating activities 14,284 22,696
INVESTING ACTIVITIES:
Proceeds from the sale of available-for-sale securities 22,528 60,523
Proceeds from the maturity of investment securities 50,497 61,564
Purchase of available-for-sale securities (27,216) (93,912)
Purchase of held-to-maturity securities (2,265) (2,000)
Net increase in loans and leases (42,108) (62,103)
Capital expenditures (1,754) (2,007)
Net cash paid in acquisition (17,517) -
Change in fiscal year of pooled entity 81 -
------------ ------------
Net cash used for investing activities (17,754) (37,935)
FINANCING ACTIVITIES:
Net increase / (decrease) in deposits 19,149 (21,709)
Net decrease in short-term borrowings (18,012) 28,745
Proceeds from issuance of long-term debt 55,000 -
Repayment of long-term debt (10,869) (12,594)
Proceeds from issuance of common stock 768 123
Dividends paid (5,960) (5,470)
Change in fiscal year of pooled entity 177 -
------------ ------------
Net cash provided from/(used for) financing activities 40,253 (10,905)
------------ ------------
NET INCREASE / (DECREASE) IN CASH AND CASH EQUIVALENTS 36,783 (26,144)
CASH AND CASH EQUIVALENTS AT JANUARY 1 95,076 125,391
------------ ------------
CASH AND CASH EQUIVALENTS AT JUNE 30 $131,859 $ 99,247
============ ============
Cash and cash equivalents:
Cash and due from banks $ 81,541 $ 72,297
Short-term investments 50,318 26,950
------------ ------------
CASH AND CASH EQUIVALENTS AT JUNE 30 $131,859 $ 99,247
============ ============
-----------------------------------------------------------------------------------------------------------------------------
</TABLE>
Interest paid on deposits, short-term borrowings, and long-term debt was
$37,307 in 1995, and $27,278 in 1994. Income taxes paid were $4,472 in 1995, and
$4,900 in 1994. Amounts transferred to other real estate owned were $1,809 in
1995, and $971 in 1994.
On April 21, 1995, Susquehanna acquired Reisterstown Holdings, Inc.,
Reisterstown, MD for $28,640. At the time of the acquisition, loans acquired
were $201,182; investment securities were $20,273; and deposits were $209,819.
The accompanying notes are an integral part of these financial statements.
<PAGE>
Susquehanna Bancshares, Inc. and Subsidiaries
------------------------------------------------------------------------------
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------------------------------------------
------------------------------------------------------------------------------
CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY
------------------------------------------------------------------------------
<TABLE>
<CAPTION>
UNREALIZED
Six Month Periods Ended June 30 PREFERRED COMMON RETAINEDGAINS/LOSSES ON TREASURY TOTAL
(In thousands, except per share) STOCK STOCK SURPLUS EARNINGS SECURITIES STOCK EQUITY
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - January 1, 1994 $40 $23,355 $42,064 $147,979 $5,363 ($373) $218,428
Common stock issued under
employee benefit plans 123 123
Preferred shares converted to
common (1,884 shares) (40) 11 29 --
Net income 10,401 10,401
Change in unrealized gain/loss on securities (8,771) (8,771)
Cash dividends paid:
Per common share of $0.50 (5,470) (5,470)
------------------------------------------------------------------------------------------------------------------------------------
Balance - June 30, 1994 $0 $23,366 $42,216 $152,910 ($3,408) ($373) $214,711
====================================================================================================================================
Balance - January 1, 1995 23,366 42,919 159,051 (7,859) (373) 217,104
Net income 11,619 11,619
Change in fiscal year of pooled entity (623) (381) (44) (1,048)
Common stock issued under
employee benefit plans 718 50 768
Change in unrealized gain/loss on securities 7,415 7,415
Cash dividends paid:
Per common share of $0.54 (5,960) (5,960)
------------------------------------------------------------------------------------------------------------------------------------
Balance - June 30, 1995 $23,366 $43,014 $164,329 ($488) ($323) $229,898
====================================================================================================================================
</TABLE>
ACCOUNTING POLICIES
The information contained in this report is unaudited and is subject to
year-end adjustments. However, in the opinion of management, the information
reflects all adjustments necessary for a fair statement of results for the
periods ended June 30, 1995 and 1994.
Prior period information has been restated to reflect the acquisition of
Atlanfed Bancorp, Inc. The transaction, which was completed on April 1, 1995,
has been accounted for as a pooling-of-interests.
On April 21, 1995, Susquehanna acquired Reisterstown Holdings, Inc. for
$28,640. The transaction has been accounted for under the purchase method of
accounting.
The accounting policies of Susquehanna Bancshares, Inc. & Subsidiaries
(Susquehanna), as applied in the consolidated interim financial statements
presented herein, are substantially the same as those followed on an annual
basis as presented on pages 28 and 29 of the 1994 Annual Report to Shareholders.
INVESTMENT SECURITIES
--------------------------------------------------------------------------------
The amortized costs and fair values of securities are as follows:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, 1995 December 31, 1994
------------------------------- --------------------------------
(In thousands) Amortized cost Fair value Amortized cost Fair value
----------------- ------------ ---------------- --------------
<S> <C> <C> <C> <C>
Available-for-sale:
U.S.Treasury $160,076 $160,227 $189,461 $184,494
U.S. Government agencies 37,249 36,963 22,042 20,932
Mortgage-backed 119,630 118,095 70,797 68,505
Corporates 59,377 59,441 89,629 84,989
Equities 16,748 17,535 14,443 15,125
---------------------------------------------------------------------------------------------------
393,080 392,261 386,372 374,045
---------------------------------------------------------------------------------------------------
Held-to-maturity:
U.S.Treasury $ 9,957 $ 10,197 9,948 9,655
U.S. Government agencies 35,940 35,841 29,506 28,169
State & municipal 113,835 114,308 120,582 118,677
Mortgage-backed 20,192 20,386 44,913 42,310
Corporates 19,017 19,294 19,002 18,224
---------------------------------------------------------------------------------------------------
198,941 200,026 223,951 217,035
---------------------------------------------------------------------------------------------------
Total investment securities $592,021 $592,287 $610,323 $591,080
===================================================================================================
</TABLE>
<PAGE>
Susquehanna Bancshares, Inc. and Subsidiaries
--------------------------------------------------------------------------------
LOANS AND LEASES
--------------------------------------------------------------------------------
Loans and leases, net of unearned income at June 30, 1995, and December 31,
1994, were as follows:
--------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
(In thousands) 1995 1994
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Commercial, financial, and agricultural $ 194,114 $ 186,013
Real estate - construction 173,980 84,886
Real estate - mortgage 1,088,319 955,357
Consumer 240,088 223,963
Leases 15,959 15,967
------------------------------------------------------------------------------------------------------------------------------
Total loans and leases $1,712,460 $1,466,186
==============================================================================================================================
</TABLE>
SHORT-TERM BORROWING
-------------------------------------------------------------------------------
Short-term borrowings at June 30, 1995, and December 31, 1994, were as follows:
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30, December 31,
(In thousands) 1995 1994
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Securities sold under repurchase agreements $ 27,898 $ 36,522
Treasury tax and loan notes 11,381 5,630
Federal Home Loan Bank borrowings 23,000 21,200
Other 3,000 10,000
------------------------------------------------------------------------------------------------------------------------------
Total short-term borrowings $ 65,279 $ 73,352
==============================================================================================================================
</TABLE>
LONG-TERM DEBT
-------------------------------------------------------------------------------
Long-term debt at June 30, 1995, and December 31, 1994 was as follows:
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
June 30 December 31,
(In thousands) 1995 1994
------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Term note due May, 1995 $ - $ 4,000
Promissory note due June, 1995 - 2,000
Subordinated debt due in varying
installments through July, 1995 - 12
Term note due July, 1996 4,000 4,000
Term note due October, 1997 2,000 2,000
Term note due July, 1998 5,000 -
Term loan note due in varying
installments through March, 1999 2,000 5,850
Installment note due June, 1999 67 74
FHLB advances in varying maturities through December, 2003 31,178 31,378
Subordinated notes due February, 2005 50,000 -
Term loan note due September, 2014 477 -
------------------------------------------------------------------------------------------------------------------------------
Total long-term debt $ 94,722 $ 49,314
==============================================================================================================================
</TABLE>
IMPAIRED LOANS
--------------------------------------------------------------------------------
In May, 1993, the Financial Accounting Standards Accounting Board issued
SFAS 114, "Accounting by Creditors for Impairment of a Loan", amended by SFAS
118. These statements, which Susquehanna has adopted effective January 1, 1995,
had no effect on Susquehanna's allowance for loan and lease losses. Susquehanna
does not accrue interest income on impaired loans and subsequent cash payments
received are applied to the outstanding principal balance or recorded as
interest income, depending upon management's assessment of the ultimate
collectibility of principal and interest.
Susquehanna's impaired loans totalled $23,607 at June 30, 1995, of which
$11,371 had no related SFAS 114 allowance. The remaining impaired loans of
$12,236 had a related SFAS 114 allowance of $1,569. For the second quarter and
first six months of 1995, the average balance for impaired loans was $22,753 and
$17,453, respectively, and the interest income recognized on impaired loans was
$138 and $259, respectively. All interest income recognized on impaired loans
was recorded on the cash basis.
PENDING LOAN SALE
--------------------------------------------------------------------------------
In June 1995, Susquehanna entered into an agreement with a third party to
sell approximately $40 million of Pennsylvania Higher Education Assistance
Agency loans at approximately a 2% premium before expenses, subject to certain
conditions. This transaction is expected to close in September 1995.
<PAGE>
Susquehanna Bancshares, Inc. and Subsidiaries
--------------------------------------------------------------------------------
ACQUISITIONS
--------------------------------------------------------------------------------
On April 1, 1995, Susquehanna ("SBI") acquired Atlanfed Bancorp, Inc.("ABI"),
a Maryland thrift holding company with $255 million in assets and $179 million
in deposits. SBI issued approximately 1.2 million shares of common stock to
shareholders of ABI based on an exchange ratio of .802 shares of SBI's common
stock for each share of ABI common stock.
The ABI acquisition was accounted for under the pooling-of-interests method of
accounting; accordingly, the consolidated finnacial statements have been
restated to include the consolidated accounts of ABI for all periods presented.
Previously reported information was as follows:
<TABLE>
<CAPTION>
Quarter Ended Quarter Ended Six Months Ended
March 31,1995 June 30, 1994 June 30, 1994
-----------------------------------------------------------------------------------------------------------
SBI ABI SBI ABI SBI ABI
-----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Net interest income $22,351 $ 2,211 $20,508 $ 2,180 $40,252 $ 4,162
Loan loss provision 1,461 39 939 39 1,890 86
Other income 2,853 401 2,930 492 6,982 1,198
Other expense 17,289 1,890 14,868 2,116 29,840 4,698
-----------------------------------------------------------------------------------------------------------
Income before taxes 6,454 683 7,631 517 15,504 576
Taxes 1,616 302 2,239 201 4,503 444
-----------------------------------------------------------------------------------------------------------
Income before
extraordinary item 4,838 381 5,392 316 11,001 132
Extraordinary item 0 0 0 0 (732) 0
-----------------------------------------------------------------------------------------------------------
Net income $ 4,838 $ 381 $ 5,392 $ 316 $10,269 $ 132
===========================================================================================================
Earnings per share:
Before item $ 0.46 $ 0.26 $ 0.52 $ 0.22 $ 1.05 $ 0.09
Net income 0.46 0.26 0.52 0.22 0.98 0.09
</TABLE>
In conjunction with the merger, ABI changed its fiscal year end from March 31
to December 31 and as a result, ABI's earnings for their quarter ended March 31,
1995 are included in the pooled consolidated income statements for both the
fourth quarter of 1994 and the first quarter of 1995.
On April 21, 1995, SBI purchased Reisterstown Holdings, Inc.("RHI"), a
Maryland thrift holding company with $248 million in assets and $212 million in
deposits at the acquisition date, for $28.6 million. The transaction was
accounted for under the purchase method of accounting and, accordingly, the
results of operations of RHI have been included with SBI since the date of
acquisition. Under this method of accounting, the purchase price is allocated to
the respective assets acquired and liabilities assumed based on their estimated
fair values, net of applicable income tax effects. Goodwill of $12.6 million was
created in this transaction and will be amortized to other operating expense on
a straight-line basis over 15 years.
A summary of unaudited pro forma combined financial information for SBI and
RHI combined follows:
<TABLE>
<CAPTION>
Quarter Ended June 30 Six Months End June 30
-----------------------------
(In thousands) 1995 1994 1995 1994
----------------------------- ----------------------------
<S> <C> <C> <C> <C>
Net interest income $27,212 $24,628 $54,334 $48,368
Loan loss provision 1,071 1,053 2,571 2,051
Other income 3,904 4,549 7,604 10,682
Other expense 20,484 19,039 41,717 38,316
----------------------------- ----------------------------
Income before taxes 9,561 9,085 17,650 18,683
Taxes 2,954 2,917 5,358 6,264
----------------------------- ----------------------------
Income before
extraordinary item 6,607 6,168 12,292 12,419
Extraordinary item 0 0 0 (732)
----------------------------- ----------------------------
Net income $ 6,607 $ 6,168 $12,292 $11,687
============================= ============================
Earnings per share:
Before item $ 0.57 $ 0.53 $ 1.06 $ 1.07
Net income 0.57 0.53 1.06 1.00
</TABLE>
<PAGE>
ITEM 2
MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE RESULTS OF OPERATIONS AND FINANCIAL
-------------------------------------------------------------------------------
CONDITION
---------
THE FOLLOWING IS MANAGEMENT'S DISCUSSION AND ANALYSIS OF THE SIGNIFICANT CHANGES
IN THE CONSOLIDATED FINANCIAL CONDITION, RESULTS OF OPERATIONS, AND CASH FLOWS
OF SUSQUEHANNA BANCSHARES, INC. ("SUSQUEHANNA").
(1) MATERIAL CHANGES IN FINANCIAL CONDITION
---------------------------------------
LIQUIDITY AND INTEREST RATE SENSITIVITY
---------------------------------------
LIQUIDITY AND INTEREST RATE SENSITIVITY ARE RELATED BUT DISTINCTLY
DIFFERENT FROM ONE ANOTHER. THE MAINTENANCE OF ADEQUATE LIQUIDITY -- THE
ABILITY TO MEET THE CASH REQUIREMENTS OF ITS CUSTOMERS AND OTHER FINANCIAL
COMMITMENTS -- IS A FUNDAMENTAL ASPECT OF SUSQUEHANNA'S ASSET/LIABILITY
MANAGEMENT STRATEGY. SUSQUEHANNA'S POLICY OF DIVERSIFYING ITS FUNDING SOURCES -
- PURCHASED FUNDS, REPURCHASE AGREEMENTS, AND DEPOSIT ACCOUNTS -- ALLOWS IT TO
AVOID UNDUE CONCENTRATION IN ANY SINGLE FINANCIAL MARKET AND ALSO TO AVOID HEAVY
FUNDING REQUIREMENTS WITHIN SHORT PERIODS OF TIME.
HOWEVER, LIQUIDITY IS NOT ENTIRELY DEPENDENT ON INCREASING
SUSQUEHANNA'S LIABILITY BALANCES. LIQUIDITY CAN ALSO BE GENERATED FROM MATURING
OR READILY MARKETABLE ASSETS. THE CARRYING VALUE OF INVESTMENT SECURITIES
MATURING WITHIN ONE YEAR AMOUNTED TO $131.6 MILLION OR 22.3% OF THE INVESTMENT
PORTFOLIO AT JUNE 30, 1995. SHORT-TERM INVESTMENTS TOTALING $50.3 MILLION AT
JUNE 30, 1995 REPRESENT ADDITIONAL SOURCES OF LIQUIDITY.
CLOSELY RELATED TO THE MANAGEMENT OF LIQUIDITY IS THE MANAGEMENT OF
RATE SENSITIVITY WHICH FOCUSES ON MAINTAINING STABILITY IN THE NET INTEREST
MARGIN, AN IMPORTANT FACTOR IN EARNINGS GROWTH. INTEREST RATE SENSITIVITY IS
THE MATCHING OR MISMATCHING OF THE MATURITY AND RATE STRUCTURE OF THE INTEREST-
BEARING ASSETS AND LIABILITIES. IT IS THE OBJECTIVE OF MANAGEMENT TO CONTROL
THE DIFFERENCE IN THE TIMING OF THE RATE CHANGES FOR THESE ASSETS AND
LIABILITIES TO PRESERVE A SATISFACTORY NET INTEREST MARGIN. IN DOING SO,
SUSQUEHANNA ENDEAVORS TO MAXIMIZE EARNINGS IN AN ENVIRONMENT OF CHANGING
INTEREST RATES. HOWEVER, THERE CAN BE A LAG IN MAINTAINING THE DESIRED
MATCHING BECAUSE THE REPRICING OF PRODUCTS OCCURS AT VARYING TIME INTERVALS.
SUSQUEHANNA EMPLOYS A VARIETY OF METHODS TO MONITOR INTEREST RATE
SENSITIVITY AND LIMIT NET INTEREST INCOME EXPOSURE. BY DIVIDING THE ASSETS AND
LIABILITIES INTO THREE GROUPS -- FIXED RATE, FLOATING RATE, AND THOSE WHICH
REPRICE ONLY AT MANAGEMENT'S DISCRETION -- STRATEGIES ARE DEVELOPED WHICH ARE
DESIGNED TO MINIMIZE EXPOSURE TO INTEREST RATE FLUCTUATIONS. MANAGEMENT ALSO
UTILIZES GAP ANALYSIS TO EVALUATE RATE SENSITIVITY AT A GIVEN POINT IN TIME.
<PAGE>
TABLE 1 ILLUSTRATES SUSQUEHANNA'S ESTIMATED INTEREST RATE SENSITIVITY
AND PERIODIC AND CUMULATIVE GAP POSITIONS AS CALCULATED AT JUNE 30, 1995. AN
INSTITUTION WITH MORE ASSETS REPRICING THAN LIABILITIES OVER A GIVEN TIME FRAME
IS CONSIDERED ASSET SENSITIVE, AND ONE WITH MORE LIABILITIES REPRICING THAN
ASSETS IS CONSIDERED LIABILITY SENSITIVE. AN ASSET SENSITIVE INSTITUTION WILL
GENERALLY BENEFIT FROM RISING RATES, AND A LIABILITY SENSITIVE INSTITUTION WILL
GENERALLY BENEFIT FROM DECLINING RATES. WHILE SUSQUEHANNA HAS HAD AND WILL INTO
THE FORESEEABLE FUTURE EXPERIENCE A NEGATIVE GAP POSITION (LIABILITY SENSITIVE),
THE IMPACT OF A RAPID RISE IN INTEREST RATES, AS OCCURRED IN 1994, DID NOT HAVE
A SIGNIFICANT EFFECT ON THE NET INTEREST MARGIN OF SUSQUEHANNA, WHICH HAS
CONSISTENTLY REMAINED AT OR SLIGHTLY BELOW THE 5.0% LEVEL.
CAPITAL RESOURCES
-----------------
CAPITAL ELEMENTS ARE SEGMENTED INTO TWO TIERS. TIER I CAPITAL
REPRESENTS SHAREHOLDERS' EQUITY REDUCED BY MOST INTANGIBLE ASSETS, WHILE TOTAL
CAPITAL INCLUDES CERTAIN ALLOWABLE LONG-TERM DEBT AND THE GENERAL PORTION OF THE
ALLOWANCE FOR LOAN AND LEASE LOSSES LIMITED TO 1.25% OF RISK-ADJUSTED ASSETS.
THE MINIMUM TIER I CAPITAL RATIO WAS SET AT 4%; SUSQUEHANNA'S RATIO AT JUNE 30,
1995 WAS 12.11%. THE TOTAL CAPITAL RATIO (TIER II) MINIMUM RATIO IS 8%;
SUSQUEHANNA'S RATIO AT JUNE 30, 1995 WAS 16.25%. THE MINIMUM LEVERAGE RATIO
WAS SET AT 4%; SUSQUEHANNA'S LEVERAGE RATIO AT JUNE 30, 1995 WAS 8.61%.
IMPACTING REPORTED TOTAL EQUITY HAS BEEN THE EFFECT OF THE ADOPTION OF
SFAS 115. THE INCREASE IN INTEREST RATES DURING 1994 HAS CAUSED THE "UNREALIZED
GAINS AND LOSSES FOR AVAILABLE-FOR-SALE SECURITIES" ACCOUNT IN THE EQUITY
SECTION TO MOVE FROM A NET LOSS AT JUNE 30, 1994 OF $3,408,000 TO A NET LOSS AT
DECEMBER 31, 1994 OF $7,859,000. HOWEVER, BY JUNE 30, 1995, THE NET LOSS
DECLINED TO $488,000 AS INTEREST RATES FELL DURING THE FIRST SIX MONTHS OF 1995.
(2) MATERIAL CHANGES IN RESULTS OF OPERATIONS
-----------------------------------------
EARNINGS SUMMARY
----------------
EFFECTIVE JANUARY 1, 1995, SUSQUEHANNA ADOPTED STATEMENT OF FINANCIAL
ACCOUNTING STANDARDS (SFAS) NO. 114, "ACCOUNTING BY CREDITORS FOR IMPAIRMENT OF
A LOAN", AS AMENDED BY SFAS 118. THESE STATEMENTS HAD NO EFFECT ON
SUSQUEHANNA'S ALLOWANCE FOR LOAN AND LEASE LOSSES.
ON JULY 11, 1994, SUSQUEHANNA COMPLETED ITS ACQUISITION OF EIGHT
ALLEGANY COUNTY, MARYLAND, BRANCH LOCATIONS OF FIRST NATIONAL BANK OF MARYLAND.
AT THE TIME OF THE ACQUISITION, THE ALLEGANY COUNTY LOCATIONS HAD LOANS OF $45.5
MILLION; FIXED ASSETS OF $2.1 MILLION; DEPOSITS OF $194.1 MILLION; AND TOTAL
ASSETS OF $194.2 MILLION. THE TRANSACTION HAS BEEN ACCOUNTED FOR UNDER THE
PURCHASE METHOD OF ACCOUNTING. THE EIGHT BRANCHES WERE
<PAGE>
SUBSEQUENTLY MERGED INTO FARMERS AND MERCHANTS BANK AND TRUST, HAGERSTOWN,
MARYLAND, A WHOLLY-OWNED SUBSIDIARY OF SUSQUEHANNA.
ON FEBRUARY 9, 1995, SUSQUEHANNA ISSUED $50 MILLION OF 9.00%
SUBORDINATED NOTES DUE 2005. THE PROCEEDS OF THE ISSUANCE WERE USED TO ACQUIRE
REISTERSTOWN HOLDINGS, INC. (RHI) ON APRIL 21, 1995, AND RETIRE $10 MILLION IN
SHORT-TERM BORROWINGS. THE BALANCE OF THE PROCEEDS WILL BE USED FOR GENERAL
CORPORATE PURPOSES.
ON APRIL 1, 1995 SUSQUEHANNA COMPLETED THE ACQUISITION OF ATLANFED
BANCORP, INC. (ABI) ISSUING 1,199,334 COMMON SHARES FOR ALL OF ABI'S OUTSTANDING
SHARES. TOTAL ASSETS OF ABI AT THE ACQUISITION DATE WERE $255.1 MILLION.
DEPOSITS TOTALED $179.4 MILLION; LOANS OUTSTANDING WERE $189.1 MILLION; AND
STOCKHOLDERS' EQUITY WAS $22.6 MILLION. THE TRANSACTION WAS TREATED AS A
POOLING-OF-INTERESTS AND SUSQUEHANNA'S FINANCIAL RESULTS FOR ALL REPORTED
PERIODS ARE RESTATED TO INCLUDE ABI'S FINANCIAL RESULTS.
ON APRIL 21, 1995, SUSQUEHANNA COMPLETED THE ACQUISITION OF RHI
ACQUIRING ALL OF THE ASSETS AND ASSUMING ALL OF THE LIABILITIES OF RHI FOR $28.6
MILLION. ACCORDINGLY, THE TRANSACTION WAS TREATED UNDER THE PURCHASE METHOD OF
ACCOUNTING WHEREBY ALL THE FINANCIAL RESULTS ARE INCLUDED WITH SUSQUEHANNA FROM
APRIL 21, 1995 FORWARD. THE LOANS ACQUIRED TOTALED $197.9 MILLION, INVESTMENT
SECURITIES WERE $27.1 MILLION AND DEPOSITS WERE $212.1 MILLION. THE EXCESS
PURCHASE PRICE OF $12.6 MILLION WILL BE AMORTIZED OVER 15 YEARS.
SUSQUEHANNA'S NET INCOME FOR THE QUARTER ENDING JUNE 30, 1995 ROSE TO
$6,400,000, WHICH IS $692,000 OR 12% MORE THAN THE SECOND QUARTER OF 1994.
EARNINGS PER SHARE INCREASED FROM $.49 PER SHARE IN THE SECOND QUARTER OF 1994
TO $.55 PER SHARE IN 1995, A 12% INCREASE. THE PRIMARY REASON FOR THE INCREASE
IN NET INCOME WAS A $3,950,000 INCREASE IN NET INTEREST INCOME OFFSET BY A
$3,168,000 INCREASE IN OPERATING EXPENSES.
NET INCOME FOR THE SIX MONTHS ENDING JUNE 30, 1995 WAS $11,619,000
COMPARED TO $10,401,000 FOR THE SIX MONTHS ENDING JUNE 30, 1994 OR A 12%
INCREASE. NET INCOME BEFORE EXTRAORDINARY ITEM FOR THE SIX MONTHS ENDING JUNE
30, 1994 WAS $11,133,000 COMPARED WITH $11,619,000 IN 1995 OR AN INCREASE OF
$486,000 OR 4%. EARNINGS PER SHARE FOR THE FIRST SIX MONTHS BEFORE AND AFTER
EXTRAORDINARY ITEM INCREASED FROM $.96 AND $.89 PER SHARE, RESPECTIVELY, IN 1994
TO $1.00 PER SHARE FOR BOTH BEFORE AND AFTER EXTRAORDINARY ITEM IN 1995. THE
INCREASE IN NET INCOME BEFORE EXTRAORDINARY ITEM FOR THE SIX MONTHS IS DUE
PRIMARILY TO AN INCREASE IN NET INTEREST INCOME OF $6,786,000 OFFSET BY A
DECLINE IN OTHER INCOME OF $1,142,000 AND INCREASES IN OPERATING EXPENSES AND
LOAN LOSS PROVISION OF $4,793,000 AND $595,000, RESPECTIVELY.
FOR THE SIX MONTHS ENDED JUNE 30, 1995, RETURN ON AVERAGE ASSETS WAS
1.00% COMPARED TO 1.03% IN 1994 WHILE RETURN ON AVERAGE EQUITY WAS 10.55% FOR
THE FIRST SIX MONTHS OF 1995 COMPARED TO 9.70% FOR 1994. BOOK VALUE PER SHARE
INCREASED TO $19.75 PER SHARE AT JUNE 30, 1995 FROM $18.66 PER SHARE AT DECEMBER
31, 1994 AND FROM $18.46 PER SHARE AT JUNE 30, 1994.
<PAGE>
NET INTEREST INCOME
-------------------
THE MAJOR SOURCE OF OPERATING REVENUE IS NET INTEREST INCOME WHICH
INCREASED $6,786,000, 15% OVER THE COMPARABLE SIX MONTH PERIOD IN 1994,
$2,076,000, 8% OVER THE FIRST QUARTER OF 1995, AND $3,950,000, 17% OVER THE
SECOND QUARTER OF 1994. THE NET INTEREST MARGIN WAS 4.9% FOR BOTH SIX MONTH
PERIODS, WAS 5.0% FOR THE SECOND QUARTER OF 1994 AND DECLINED TO 4.8% IN THE
SECOND QUARTER OF 1995. THE ACQUISITION OF THE MARYLAND THRIFTS WAS THE PRIMARY
CAUSE FOR THE DECLINE IN THE MARGIN. THUS, THE INCREASE IN NET INTEREST INCOME
WAS THROUGH THE ACQUISITION OF ADDITIONAL ASSETS DERIVED FROM THE PURCHASE OF
EIGHT ALLEGANY COUNTY MARYLAND OFFICES IN JULY 1994 AND THE PURCHASE OF RHI IN
APRIL 1995.
NET INTEREST INCOME IS THE INCOME WHICH REMAINS AFTER DEDUCTING FROM
TOTAL INCOME GENERATED BY EARNING ASSETS THE INTEREST EXPENSE ATTRIBUTABLE TO
THE ACQUISITION OF THE FUNDS REQUIRED TO SUPPORT EARNING ASSETS. INCOME FROM
EARNING ASSETS INCLUDES INCOME FROM LOANS, INCOME FROM INVESTMENT SECURITIES AND
INCOME FROM SHORT-TERM INVESTMENTS. THE AMOUNT OF INTEREST INCOME IS DEPENDENT
UPON MANY FACTORS INCLUDING THE VOLUME OF EARNING ASSETS, THE GENERAL LEVEL OF
INTEREST RATES, THE DYNAMICS OF THE CHANGE IN INTEREST RATES, AND LEVELS OF NON-
PERFORMING LOANS. THE COST OF FUNDS VARIES WITH THE AMOUNT OF FUNDS NECESSARY
TO SUPPORT EARNING ASSETS, THE RATES PAID TO ATTRACT AND HOLD DEPOSITS, RATES
PAID ON BORROWED FUNDS, AND THE LEVELS OF NON-INTEREST BEARING DEMAND DEPOSITS
AND EQUITY CAPITAL.
TABLE 2 PRESENTS AVERAGE BALANCES, TAXABLE EQUIVALENT INTEREST INCOME
AND EXPENSES AND YIELDS EARNED OR PAID ON THESE ASSETS AND LIABILITIES OF
SUSQUEHANNA. FOR PURPOSES OF CALCULATING TAXABLE EQUIVALENT INTEREST INCOME,
TAX-EXEMPT INTEREST HAS BEEN ADJUSTED USING A MARGINAL TAX RATE OF 35% IN ORDER
TO EQUATE THE YIELD TO THAT OF TAXABLE INTEREST RATES. TABLE 3 PRESENTS CHANGES
IN VOLUMES AND REVENUES AND EXPENSES BETWEEN THE PERIODS. NET INTEREST INCOME
AS A PERCENTAGE OF NET INTEREST INCOME AND OTHER INCOME WAS 87.9% AND 84.4%
FOR THE SIX MONTHS ENDED JUNE 30, 1995 AND 1994, RESPECTIVELY.
THE ACQUISITION OF THE ALLEGANY OFFICES IN JULY 1994, RHI IN APRIL
1995 AND THE $50 MILLION SUBORDINATED DEBT PLACEMENT IN FEBRUARY 1995 ACCOUNT
FOR THE MAJOR PORTION OF THE GROWTH IN INTEREST-BEARING LIABILITIES WHEN
COMPARING THE QUARTER AND YEAR-TO-DATE GROWTH BETWEEN 1994 AND 1995. GROWTH IN
THESE VOLUMES RECORDED BETWEEN THE FIRST AND SECOND QUARTERS OF 1995 WAS
PRIMARILY THE RHI ACQUISITION. THE DECLINE OF $9.1 MILLION IN SHORT-TERM
BORROWINGS BETWEEN THE FIRST AND SECOND QUARTERS OF 1995 WAS PRIMARILY THE
RESULT OF A $10 MILLION PAY-DOWN OF SHORT-TERM BORROWINGS FROM PART OF THE
PROCEEDS OF THE $50 MILLION DEBT PLACEMENT.
<PAGE>
EARNING ASSET VOLUME GROWTH WAS ALSO INFLUENCED IN THE SAME MANNER AS
THE GROWTH DESCRIBED ABOVE. HOWEVER, IN REVIEWING THE COMPARISON BETWEEN THE
FIRST AND SECOND QUARTERS OF 1995, THE DECREASE IN INVESTMENTS WAS THE RESULT OF
THE PURCHASE OF RHI AND THE RETIREMENT OF LONG TERM DEBT USING PROCEEDS FROM THE
$50 MILLION NOTE OFFERING WHICH WERE TEMPORARILY PLACED IN INVESTMENTS UNTIL THE
ABOVE NOTED TRANSACTIONS WERE COMPLETED, OFFSET BY RHI'S INVESTMENT PORTOLIO
ACQUIRED IN APRIL 1995.
AS ILLUSTRATED IN TABLE 2, THE TAX EQUIVALENT YIELD IN EARNING ASSETS
ROSE TO 8.5% IN THE SECOND QUARTER OF 1995, UP FROM 7.7% IN BOTH THE 3 AND 6
MONTH PERIODS OF 1994. FOR THE SIX MONTH PERIOD OF 1995 THE YIELD WAS 8.4%.
THE PRIMARY CAUSE FOR THESE EARNING ASSET YIELD INCREASES WAS THE INCREASE IN
THE LOAN YIELD TO 9.5% IN THE SECOND QUARTER OF 1995 FROM 8.5% IN THE SECOND
QUARTER OF 1994.
HOWEVER, FUNDING COSTS ALSO ROSE IN 1995. FOR THE SECOND QUARTER OF
1995 THE AVERAGE RATE WAS 4.3% AND FOR THE SIX MONTH PERIOD WAS 4.2% COMPARED TO
3.3% IN BOTH PERIODS OF 1994. THE RISE IN THE COST OF TIME DEPOSITS, PRIMARILY
CERTIFICATES OF DEPOSIT, AS WELL AS THE RISE IN COST OF LONG-TERM DEBT WERE THE
PRINCIPAL REASONS FOR THESE INCREASES IN FUNDING COSTS. BOTH INTEREST-BEARING
DEMAND AND SAVING DEPOSIT RATES REMAINED RELATIVELY CONSTANT DURING THESE
PERIODS.
AN ADDITIONAL POSITIVE INFLUENCE ON THE ABILITY OF SUSQUEHANNA TO
MAINTAIN A NET INTEREST MARGIN AT OR NEAR 5.0% HAS BEEN THE INCREASE IN NON-
INTEREST-BEARING DEMAND DEPOSITS AND EARNINGS RETENTION. WHILE SUSQUEHANNA'S
INTEREST MARGIN HAS GENERALLY REMAINED AT THE 5.0% LEVEL, VARIANCES DO OCCUR AS
AN EXACT REPRICING MATCH OF ASSETS AND LIABILITIES IS NOT POSSIBLE. A FURTHER
EXPLANATION OF THE IMPACT OF ASSET AND LIABILITY REPRICING IS FOUND IN THE
LIQUIDITY AND INTEREST RATE SENSITIVITY SECTION OF THIS DISCUSSION.
OTHER INCOME
------------
NON-INTEREST INCOME, RECORDED AS OTHER INCOME, CONSISTS OF SERVICE
CHARGES ON DEPOSIT ACCOUNTS, COMMISSIONS, FEES RECEIVED FOR TRAVELERS' CHECK
SALES AND MONEY ORDERS, FEES FOR TRUST SERVICES, PREMIUM INCOME GENERATED FROM
REINSURANCE ACTIVITIES, GAINS AND LOSSES ON SECURITY TRANSACTIONS, NET GAINS ON
SALES OF MORTGAGES, NET GAINS ON SALES OF OTHER REAL ESTATE OWNED AND OTHER
MISCELLANEOUS INCOME, SUCH AS SAFE DEPOSIT BOX RENTS. OTHER INCOME AS A
PERCENTAGE OF NET INTEREST INCOME AND OTHER INCOME WAS 12.1% AND 15.6% FOR THE
SIX MONTHS ENDED JUNE 30, 1995 AND 1994, RESPECTIVELY.
OTHER INCOME INCREASED FROM $3,422,000 IN THE SECOND QUARTER OF 1994
TO $3,784,000 IN THE SECOND QUARTER OF 1995 PRIMARILY DUE TO THE ACQUISITION OF
RHI IN APRIL 1995. OTHER INCOME FOR THE FIRST SIX MONTHS DECREASED FROM
$8,180,000 IN 1994 TO $7,038,000 IN 1995 PRIMARILY DUE TO NET INVESTMENT
SECURITY GAINS OF $1,002,000 IN 1994 AS COMPARED TO NET LOSSES OF $73,000 IN
1995.
<PAGE>
OTHER EXPENSES
--------------
NON-INTEREST EXPENSES ARE CATEGORIZED INTO FIVE MAIN GROUPINGS:
EMPLOYEE-RELATED EXPENSES, WHICH INCLUDE SALARIES, FRINGE BENEFITS, AND
EMPLOYMENT TAXES; OCCUPANCY EXPENSES, WHICH INCLUDE DEPRECIATION, RENTS,
MAINTENANCE, UTILITIES, AND INSURANCE; EQUIPMENT EXPENSES, WHICH INCLUDE
DEPRECIATION, RENTS AND MAINTENANCE; FEDERAL DEPOSIT INSURANCE CORPORATION'S
INSURANCE PREMIUMS ON DEPOSITS; AND OTHER EXPENSES INCURRED IN OPERATING
SUSQUEHANNA'S BUSINESS.
OTHER EXPENSES INCREASED $3,168,000 FROM $16,984,000 IN THE SECOND
QUARTER OF 1994 TO $20,152,000 IN THE SECOND QUARTER OF 1995. THIS INCREASE WAS
PRIMARILY DUE TO SALARIES AND EMPLOYEE BENEFITS, AN INCREASE OF $1,749,000, AND
OTHER OPERATING EXPENSES, AN INCREASE OF $962,000. SIGNIFICANTLY AFFECTING
THESE INCREASES WERE THE PURCHASES OF RHI IN APRIL 1995 AND THE ALLEGANY BRANCH
OFFICES IN JULY 1994. OTHER EXPENSES FOR THE FIRST SIX MONTHS INCREASED
$4,793,000 FROM $34,538,000 IN 1994 TO $39,331,000 IN 1995. THIS INCREASE WAS
PRIMARILY DUE TO SALARIES AND EMPLOYEE BENEFITS, AN INCREASE OF $2,988,000 AND
OTHER OPERATING EXPENSES, AN INCREASE OF $1,243,000. ONCE AGAIN, THESE
INCREASES WERE SIGNIFICANTLY AFFECTED BY THE PURCHASES OF RFSB IN APRIL 1995 AND
THE ALLEGANY BRANCH OFFICES IN JULY 1994.
INCOME TAXES
------------
SUSQUEHANNA'S EFFECTIVE TAX RATE FOR THE FIRST SIX MONTHS DECREASED
FROM 30.76% IN 1994 TO 28.87% IN 1995 AS INTEREST INCOME NOT SUBJECT TO TAX
INCREASED OVER 1994.
RISK ASSETS
-----------
TABLE 4 SHOWS AN INCREASE IN NON-PERFORMING ASSETS AT JUNE 30, 1995
COMPARED TO DECEMBER 31 AND JUNE 30, 1994. NON-ACCRUAL LOANS AND LEASES
INCREASED TO $27,876,000 PRIMARILY THE RESULT OF ONE HOTEL LOAN THAT PREVIOUSLY
WAS REPORTED IN THE PAST DUE 90-DAY CATEGORY, WHICH DECLINED TO $5,125,000 AT
JUNE 30, 1995, AND THE INCLUSION OF NON-ACCRUAL LOANS ACQUIRED IN THE RHI
ACQUISITION AT APRIL 21, 1995.
PROVISION AND ALLOWANCE FOR LOAN AND LEASE LOSSES
-------------------------------------------------
AS ILLUSTRATED IN TABLE 5, THE PROVISION WAS INCREASED BY $595,000 TO
$2,571,000 IN 1995 WHICH PRIMARILY RESULTED FROM THE RAPID DETERIORATION OF
ONE BORROWER. CHARGE-OFFS, ALSO IMPACTED BY THIS CREDIT, ROSE TO $2,413,000, UP
FROM $1,143,000. THE ALLOWANCE AT JUNE 30, 1995 WAS $27,779,000, UP FROM
$23,166,000 AT JUNE 30, 1994, AND INCLUDED THE ALLOWANCE OF $3,323,000 ACQUIRED
IN THE ACQUISITION OF RHI. THE ALLOWANCE WAS 1.62% OF PERIOD END LOANS AND
LEASES AT JUNE 30, 1995 AS COMPARED TO 1.70% AT JUNE 30, 1994.
<PAGE>
Susquehanna Bancshares, Inc. and Subsidiaries
TABLE - 1 INTEREST RATE SENSITIVITY
<TABLE>
<CAPTION>
At June 30, 1995 1-90 90-180 180-365 1 year
(In thousands) days days days or more TOTAL
-----------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
ASSETS:
Short-term investments $50,318 $50,318
Investment securities 56,615 43,746 63,000 427,841 591,202
Loans and leases, net of unearned income* 660,239 113,259 181,691 729,395 1,684,584
-----------------------------------------------------------------------------------------------------------------
Total $767,172 $157,005 $244,691 $1,157,236 $2,326,104
=================================================================================================================
LIABILITIES:
Deposits:
Interest-bearing demand $480,494 $480,494
Savings 397,713 397,713
Time 153,182 131,891 198,431 374,266 857,770
Time in denominations of $100,000 or more 48,327 10,291 16,277 20,434 95,329
Short-term borrowings 56,852 7,715 712 65,279
Long-term debt 2,477 5,500 8,000 78,745 94,722
-----------------------------------------------------------------------------------------------------------------
Total $1,139,045 $155,397 $223,420 $473,445 $1,991,307
=================================================================================================================
* Does not included nonaccruing loans and leases.
INTEREST SENSITIVITY GAP:
Periodic ($371,873) $1,608 $21,271 $683,791
Cumulative (370,265) (348,994) 334,797
CUMULATIVE GAP AS A PERCENTAGE OF EARNING ASSETS -16.0% -15.9% -15.0% 14.4%
</TABLE>
<PAGE>
Susquehanna Bancshares, Inc. and Subsidiaries
TABLE 2 - DISTRIBUTION OF ASSETS, LIABILITIES AND STOCKHOLDERS' EQUITY
INTEREST RATES AND INTEREST DIFFERENTIAL - TAX EQUIVALENT BASIS
<TABLE>
<CAPTION>
-----------------------------------------------------------------------------------------------------
(In thousands) For the Three Month Period Ended For the Three Month Period Ended
June 30, 1995 June 30, 1994
-------------------------------- --------------------------------
ASSETS AVERAGE RATE AVERAGE RATE
BALANCE INTEREST (%) BALANCE INTEREST (%)
-------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS $ 52,831 $ 772 5.9 $ 37,208 $ 368 4.0
INVESTMENT SECURITIES:
TAXABLE 472,076 6,552 5.6 416,118 5,954 5.7
TAX-ADVANTAGED 114,430 2,039 7.1 106,984 1,889 7.1
----------------------- ----------------------
TOTAL INVESTMENTS 586,506 8,591 5.9 523,102 7,843 6.0
LOANS AND LEASES, (NET):
TAXABLE 1,619,022 38,421 9.5 1,310,852 27,543 8.4
TAX-ADVANTAGED 37,235 896 9.7 39,285 976 10.0
---------------------- ---------------------
TOTAL LOANS AND LEASES 1,656,257 39,317 9.5 1,350,137 28,519 8.5
---------------------- ---------------------
TOTAL INTEREST-EARNING ASSETS 2,295,594 $48,680 8.5 1,910,447 $36,730 7.7
================ ================
ALLOWANCE FOR LOAN AND LEASE
LOSSES (26,713) (22,843)
OTHER NON-EARNING ASSETS 182,301 147,176
----------- ----------
TOTAL ASSETS $2,451,182 $2,034,780
=========== ==========
LIABILITIES & EQUITY
DEPOSITS:
INTEREST-BEARING DEMAND $ 477,990 $ 3,323 2.8 $ 448,097 $ 2,645 2.4
SAVINGS 401,308 2,558 2.6 384,246 2,333 2.4
TIME 907,718 12,318 5.4 660,299 6,908 4.2
SHORT-TERM BORROWINGS 54,836 769 5.6 41,983 431 4.1
LONG-TERM DEBT 97,917 2,048 8.4 46,520 724 6.2
---------------------- ---------------------
TOTAL INTEREST-BEARING LIABILITIES 1,939,769 $21,016 4.3 1,581,145 $13,041 3.3
================ ================
DEMAND DEPOSITS 250,676 214,420
OTHER LIABILITIES 38,023 24,165
----------- ----------
TOTAL LIABILITIES $2,228,468 $1,819,730
STOCKHOLDERS' EQUITY 222,714 215,050
----------- ----------
TOTAL LIABILITIES & EQUITY $2,451,182 $2,034,780
=========== ==========
NET INTEREST INCOME/YIELD ON
AVERAGE EARNING ASSETS $27,664 4.8 $23,689 5.0
================ ================
<CAPTION>
-----------------------------------------------------------------------------------------------------
(In thousands) For the Six Month Period Ended For the Six Month Period Ended
June 30, 1995 June 30, 1994
-------------------------------- --------------------------------
ASSETS AVERAGE RATE AVERAGE RATE
BALANCE INTEREST (%) BALANCE INTEREST (%)
-------------------------------- --------------------------------
<S> <C> <C> <C> <C> <C> <C>
SHORT-TERM INVESTMENTS $ 46,228 $ 1,389 6.1 $ 38,894 $ 701 3.6
INVESTMENT SECURITIES:
TAXABLE 470,189 13,595 5.8 428,536 12,256 5.8
TAX-ADVANTAGED 116,507 4,157 7.2 102,083 3,639 7.2
----------------------- ----------------------
TOTAL INVESTMENTS 586,696 17,752 6.1 530,619 15,895 6.0
LOANS AND LEASES, (NET):
TAXABLE 1,524,582 70,440 9.3 1,291,532 53,732 8.4
TAX-ADVANTAGED 40,267 1,836 9.2 39,637 1,954 9.9
---------------------- ---------------------
TOTAL LOANS AND LEASES 1,564,849 72,276 9.3 1,331,169 55,686 8.4
---------------------- ---------------------
TOTAL INTEREST-EARNING ASSETS 2,197,773 $91,417 8.4 1,900,682 $72,282 7.7
================ ================
ALLOWANCE FOR LOAN AND LEASE
LOSSES (25,387) (22,475)
OTHER NON-EARNING ASSETS 168,719 149,193
----------- ----------
TOTAL ASSETS $2,341,105 $2,027,400
=========== ==========
LIABILITIES & EQUITY
DEPOSITS:
INTEREST-BEARING DEMAND $ 468,640 $ 6,431 2.8 $ 449,108 $ 5,206 2.3
SAVINGS 394,141 5,015 2.6 384,563 4,741 2.5
TIME 832,845 21,494 5.2 662,772 13,911 4.2
SHORT-TERM BORROWINGS 59,373 1,683 5.7 31,188 578 3.7
LONG-TERM DEBT 88,440 3,500 8.0 48,016 1,480 6.2
---------------------- ---------------------
TOTAL INTEREST-BEARING LIABILITIES 1,843,439 $38,123 4.2 1,575,647 $25,916 3.3
================ ================
DEMAND DEPOSITS 245,106 211,937
OTHER LIABILITIES 30,898 23,506
----------- ----------
TOTAL LIABILITIES $2,119,443 $1,811,090
STOCKHOLDERS' EQUITY 221,662 216,310
----------- ----------
TOTAL LIABILITIES & EQUITY $2,341,105 $2,027,400
=========== ==========
NET INTEREST INCOME/YIELD ON
AVERAGE EARNING ASSETS $53,294 4.9 $46,366 4.9
================ ================
</TABLE>
For purposes of calculating loan and lease yields, the average loan and lease
volume includes non-accrual loans and leases. For purposes of calculating yields
on non-taxable interest income, the taxable equivalent adjustment is made to
equate non-taxable interest on the same basis as taxable interest. The marginal
tax rate is 35%.
<PAGE>
Susquehanna Bancshares, Inc. and Subsidiaries
TABLE 3 - STATEMENTS OF CHANGES IN INCOME AND EXPENSES
<TABLE>
<CAPTION>
Three months ended
June 30, 1995 compared
(In thousands) to June 30, 1994
------------------------------------------------------------------------------------------
Average Volumes Income / Expense
------------------------------------------------------------------------------------------
$ % $ %
<S> <C> <C> <C> <C>
ASSETS:
LOANS AND LEASES, NET 306,120 22.7 10,826 38.4
INVESTMENTS 63,404 12.1 696 9.7
MONEY MARKET INVESTMENTS 15,623 42.0 403 109.2
------------------------------------------
TOTAL 385,147 20.2 11,925 33.4
==================== -----------------
LIABILITIES:
INTEREST-BEARING DEMAND 29,893 6.7 679 25.7
SAVINGS 17,062 4.4 227 9.7
TIME 247,419 37.5 5,407 78.2
SHORT-TERM BORROWINGS 12,853 30.6 291 60.9
LONG-TERM DEBT 51,397 110.5 1,371 202.5
------------------------------------------
TOTAL 358,624 22.7 7,975 61.2
==================== -----------------
NET INTEREST INCOME 3,950 17.4
PROVISION FOR LOAN AND LEASE LOSSES 93 9.5
-----------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN AND LEASE LOSSES 3,857 17.8
INVESTMENT SECURITY GAINS/(LOSSES) (3) (16.7)
OTHER OPERATING INCOME 365 10.7
-----------------
INCOME BEFORE OPERATING EXPENSES 4,219 16.8
SALARIES AND EMPLOYEE BENEFITS 1,749 20.1
NET OCCUPANCY AND EQUIPMENT 226 10.3
OTHER OPERATING EXPENSES 1,193 19.5
-----------------
TOTAL OPERATING EXPENSES 3,168 18.7
-----------------
INCOME BEFORE INCOME TAXES, EXTRAORDINARY ITEM 1,051 12.9
PROVISION FOR INCOME TAXES 359 14.7
-----------------
INCOME BEFORE EXTRAORDINARY ITEM 692 12.1
EXTRAORDINARY ITEM - -
-----------------
NET INCOME 692 12.1
=================
Six months ended
June 30, 1995 compared
(In thousands) to June 30, 1994
------------------------------------------------------------------------------------------
Average Volumes Income / Expense
------------------------------------------------------------------------------------------
$ % $ %
<S> <C> <C> <C> <C>
ASSETS:
LOANS AND LEASES, NET 233,680 17.6 16,633 30.2
INVESTMENTS 56,077 10.6 1,694 11.6
MONEY MARKET INVESTMENTS 7,334 18.9 667 92.4
-------------------------------------------
TOTAL 297,091 15.6 18,994 27.0
===================== -----------------
LIABILITIES:
INTEREST-BEARING DEMAND 19,532 4.3 1,226 23.6
SAVINGS 9,578 2.5 275 5.8
TIME 170,073 25.7 7,582 54.5
SHORT-TERM BORROWINGS 28,185 90.4 862 105.0
LONG-TERM DEBT 40,424 84.2 2,263 182.9
-------------------------------------------
TOTAL 267,792 17.0 12,208 47.1
===================== -----------------
NET INTEREST INCOME 6,786 15.3
PROVISION FOR LOAN AND LEASE LOSSES 595 30.1
-----------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN AND LEASE LOSSES 6,191 14.6
INVESTMENT SECURITY GAINS/(LOSSES) (1,075) (107.3)
OTHER OPERATING INCOME (67) (0.9)
-----------------
INCOME BEFORE OPERATING EXPENSES 5,049 10.0
SALARIES AND EMPLOYEE BENEFITS 2,988 17.1
NET OCCUPANCY AND EQUIPMENT 249 5.5
OTHER OPERATING EXPENSES 1,556 12.4
-----------------
TOTAL OPERATING EXPENSES 4,793 13.9
-----------------
INCOME BEFORE INCOME TAXES, EXTRAORDINARY ITEM 256 1.6
PROVISION FOR INCOME TAXES (230) (4.6)
-----------------
INCOME BEFORE EXTRAORDINARY ITEM 486 4.4
EXTRAORDINARY ITEM 732 (100.0)
-----------------
NET INCOME 1,218 11.7
=================
Three months ended
June 30, 1995 compared
(In thousands) to March 31, 1995
------------------------------------------------------------------------------------------
Average Volumes Income / Expense
------------------------------------------------------------------------------------------
$ % $ %
<S> <C> <C> <C> <C>
ASSETS:
LOANS AND LEASES, NET 183,832 12.5 6,373 19.5
INVESTMENTS (382) (0.1) (543) (6.4)
MONEY MARKET INVESTMENTS 13,279 33.6 155 25.1
-------------------------------------------
TOTAL 196,729 9.4 5,985 14.4
===================== -----------------
LIABILITIES:
INTEREST-BEARING DEMAND 18,804 4.1 215 6.9
SAVINGS 14,414 3.7 101 4.1
TIME 150,577 19.9 3,142 34.2
SHORT-TERM BORROWINGS (9,124) (14.3) (145) (15.9)
LONG-TERM DEBT 19,059 24.2 596 41.0
-------------------------------------------
TOTAL 193,730 11.1 3,909 22.9
===================== -----------------
NET INTEREST INCOME 2,076 8.5
PROVISION FOR LOAN AND LEASE LOSSES (429) (28.6)
-----------------
NET INTEREST INCOME AFTER
PROVISION FOR LOAN AND LEASE LOSSES 2,505 10.9
INVESTMENT SECURITY GAINS/(LOSSES) 103 117.0
OTHER OPERATING INCOME 427 12.8
-----------------
INCOME BEFORE OPERATING EXPENSES 3,035 11.5
SALARIES AND EMPLOYEE BENEFITS 429 4.3
NET OCCUPANCY AND EQUIPMENT 82 3.5
OTHER OPERATING EXPENSES 462 6.8
-----------------
TOTAL OPERATING EXPENSES 973 5.1
-----------------
INCOME BEFORE INCOME TAXES, EXTRAORDINARY ITEM 2,062 28.9
PROVISION FOR INCOME TAXES 881 45.9
-----------------
INCOME BEFORE EXTRAORDINARY ITEM 1,181 22.6
EXTRAORDINARY ITEM - -
-----------------
NET INCOME 1,181 22.6
=================
</TABLE>
<PAGE>
Susquehanna Bancshares, Inc. and Subsidiaries
<TABLE>
<CAPTION>
TABLE 4- RISK ASSETS
------------------------------------------------------------------------------------------------------------------------------------
June 30, December 31, June 30,
(Dollars in thousands) 1995 1994 1994
--------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Nonperforming assets:
Nonaccrual loans and leases $27,876 $17,215 $18,662
Restructured accrual loans 6,818 6,941 -
Other real estate owned 6,464 5,341 8,748
--------------------------------------------------------------------------------------------------------------
Total nonperforming assets $41,158 $29,497 $27,410
==============================================================================================================
As a percent of period-end loans and leases and
other real estate owned 2.39% 2.00% 2.00%
Loans and leases contractually
past due 90 days and still accruing $5,125 $14,450 $13,615
</TABLE>
TABLE 5 - ALLOWANCE FOR LOAN AND LEASE LOSSES
-------------------------------------------------------------------------------
<TABLE>
<CAPTION>
Three Months Ended June 30, Six Months Ended June 30,
(Dollars in thousands) 1995 1994 1995 1994
------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Balance - Beginning of period $23,803 $22,513 $23,845 $21,717
Allowance acquired in business combination 3,323 - 3,323 -
Change in fiscal year - - (8) -
Additions charged to operating expenses 1,071 978 2,571 1,976
------------------------------------------------------------------------------------------------------------------------------------
28,197 23,491 29,731 23,693
------------------------------------------------------------------------------------------------------------------------------------
Charge-offs (662) (664) (2,413) (1,143)
Recoveries 244 339 461 616
------------------------------------------------------------------------------------------------------------------------------------
Net charge-offs (418) (325) (1,952) (527)
------------------------------------------------------------------------------------------------------------------------------------
Balance - Period end $27,779 $23,166 $27,779 $23,166
====================================================================================================================================
Net charge-offs as a percent of average loans and
leases(annualized) 0.10% 0.10% 0.25% 0.08%
Allowance as a percent of period-end loans and leases 1.62% 1.70% 1.62% 1.70%
Average loans and leases $1,656,257 $1,350,137 $1,564,849 $1,331,169
Period-end loans and leases 1,712,460 1,363,080 1,712,460 1,363,080
</TABLE>
<PAGE>
PART II. OTHER INFORMATION
-----------------
ITEM 4 SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
---------------------------------------------------
THE ANNUAL MEETING OF SHAREHOLDERS WAS HELD ON MAY 26, 1995. PROXIES OF THE
MEETING WERE SOLICITED BY MANAGEMENT; THERE WAS NO SOLICITATION IN OPPOSITION TO
MANAGEMENT'S NOMINEES FOR DIRECTORS SET FORTH IN THE PROXY STATEMENT AND ALL
SUCH NOMINEES WERE ELECTED. IN ADDITION, MANAGEMENT'S PROPOSAL FOR THE EMPLOYEE
STOCK PURCHASE PLAN WAS APPROVED BY THE SHAREHOLDERS AS REQUIRED BY REGISTRANT'S
ARTICLES OF INCORPORATION.
A.) THE FOLLOWING DETAILS THE VOTING RESULTS WITH RESPECT TO EACH
NOMINEE FOR OFFICE, INCLUDING THE NUMBER OF SHARES NOT VOTED AT ALL
(NOT PRESENT) AND THE PROXIES THAT BROKERS DID NOT VOTE IN FULL
(BROKER NON-VOTED):
<TABLE>
<CAPTION>
NOMINEE COMMON STOCK
------- ------------
<S> <C>
JAMES G. APPLE
FOR 9,168,743
WITHHOLD/ABSTAIN 171,520
NOT PRESENT 2,240,435
BROKER NON-VOTED 59,851
------
TOTAL 11,640,549
JOHN M. DENLINGER
FOR 9,168,898
WITHHOLD/ABSTAIN 171,365
NOT PRESENT 2,240,435
BROKER NON-VOTED 59,851
------
TOTAL 11,640,549
MARLEY R. GROSS
FOR 9,149,487
WITHHOLD/ABSTAIN 190,776
NOT PRESENT 2,240,435
BROKER NON-VOTED 59,851
------
TOTAL 11,640,549
T. MAX HALL
FOR 9,165,279
WITHHOLD/ABSTAIN 174,984
NOT PRESENT 2,240,435
BROKER NON-VOTED 59,851
------
TOTAL 11,640,549
</TABLE>
<PAGE>
<TABLE>
<CAPTION>
NOMINEE COMMON STOCK
------- ------------
<S> <C>
RAYMOND M. O'CONNELL
FOR 9,166,195
WITHHOLD/ABSTAIN 174,068
NOT PRESENT 2,240,435
BROKER NON-VOTED 59,851
------
TOTAL 11,640,549
</TABLE>
THE TERMS OF OFFICE OF ROBERT S. BOLINGER, RICHARD M. CLONEY, RICHARD E.
FUNKE, HENRY H. GIBBEL, EDWARD W. HELFRICK, C. WILLIAM HETZER, JR., GEORGE J.
MORGAN, ROBERT C. REYMER, JR., AND ROGER V. WIEST CONTINUED AFTER THE MEETING.
B.) THE FOLLOWING DETAILS THE VOTING RESULTS WITH RESPECT TO THE
APPROVAL OF THE EMPLOYEE STOCK PURCHASE PLAN:
<TABLE>
<CAPTION>
COMMON STOCK
------------
<S> <C>
FOR 8,711,886
WITHHOLD/ABSTAIN 628,377
NOT PRESENT 2,240,435
BROKER NON-VOTED 59,581
------
TOTAL 11,640,549
</TABLE>
ITEM 6 EXHIBITS AND REPORTS ON FORM 8-K
--------------------------------
ON APRIL 12, 1995, REGISTRANT FILED A REPORT ON FORM 8-K, UNDER ITEM 2,
WHICH DISCUSSED COMPLETION OF THE MERGER WITH ATLANFED BANCORP, INC. WITH THE
REGISTRANT. THE REPORT WAS SUBSEQUENTLY AMENDED ON MAY 24, 1995, TO FILE
FINANCIAL STATEMENTS UNDER ITEM 7.
ON MAY 2, 1995, REGISTRANT FILED A REPORT ON FORM 8-K, UNDER ITEM 2, WHICH
DISCUSSED COMPLETION OF THE ACQUISITION OF REISTERSTOWN HOLDINGS, INC. BY THE
REGISTRANT. THE REPORT WAS SUBSEQUENTLY AMENDED ON MAY 24, 1995, TO FILE
FINANCIAL STATEMENTS UNDER ITEM 7.
<PAGE>
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.
SUSQUEHANNA BANCSHARES, INC.
AUGUST 8, 1995 /S/ ROBERT S. BOLINGER
_____________________________________
ROBERT S. BOLINGER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
AUGUST 8, 1995 /S/ J. STANLEY MULL, JR.
_____________________________________
J. STANLEY MULL, JR., VICE PRESIDENT
TREASURER, AND PRINCIPAL FINANCIAL
OFFICER
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 9
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 6-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> JUN-30-1995
<CASH> 81,541
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 50,318
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 392,261
<INVESTMENTS-CARRYING> 198,941
<INVESTMENTS-MARKET> 200,026
<LOANS> 1,712,460
<ALLOWANCE> 27,779
<TOTAL-ASSETS> 2,520,671
<DEPOSITS> 2,095,298
<SHORT-TERM> 65,279
<LIABILITIES-OTHER> 35,474
<LONG-TERM> 94,722
<COMMON> 229,898
0
0
<OTHER-SE> 0
<TOTAL-LIABILITIES-AND-EQUITY> 2,520,671
<INTEREST-LOAN> 71,633
<INTEREST-INVEST> 16,301
<INTEREST-OTHER> 1,389
<INTEREST-TOTAL> 89,323
<INTEREST-DEPOSIT> 32,940
<INTEREST-EXPENSE> 5,183
<INTEREST-INCOME-NET> 51,200
<LOAN-LOSSES> 2,571
<SECURITIES-GAINS> (73)
<EXPENSE-OTHER> 39,331
<INCOME-PRETAX> 16,336
<INCOME-PRE-EXTRAORDINARY> 11,619
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 11,619
<EPS-PRIMARY> 1.00
<EPS-DILUTED> 1.00
<YIELD-ACTUAL> 4.9
<LOANS-NON> 27,876
<LOANS-PAST> 5,125
<LOANS-TROUBLED> 6,818
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 23,845
<CHARGE-OFFS> 2,413
<RECOVERIES> 461
<ALLOWANCE-CLOSE> 27,779
<ALLOWANCE-DOMESTIC> 27,779
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
