SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D. C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTER ENDED September 30, 1998
Commission File Number 2-76003
BAY AREA BANCSHARES
California #94-2779021
900 Veterans Blvd., Redwood City, CA 94063
Telephone (650) 562-3238
Theregistrant (1) has filed all reports required by Section 13 or
15(d) of the Securities Exchange Act during the preceding 12 months,
and
x Yes No
(2) has been subject to such filing requirements for the past 90 days.
x Yes No
----- -----
1,004,141 Shares of Common Stock Outstanding as of September 30, 1998
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Part 1 Item 1
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<CAPTION>
BAY AREA BANCSHARES & SUBSIDIARIES
CONSOLIDATED BALANCE SHEET
(UNAUDITED, IN THOUSANDS)
ASSETS 09/30/98 12/31/97
<S> <C> <C>
Cash and due from banks $13,137 $11,464
Federal Funds Sold 22,900 7,500
fixed assets
Cash and cash equivalents 36,037 18,964
Investment securities available for sale
(market value approximates book value) 1,601 1,106
Investment securities held to maturity
(market value of $10,847 in 1998 and $14,683 in 1997) 10,644 14,482
Loans, net of reserve for possible loan losses
of $2,001 in 1998 and $1,638 in 1997 100,683 84,374
Premises and equipment,net 453 653
Real estate owned 0 0
Interest receivable and other assets 2,187 2,506
Total assets $151,605 $122,085
LIABILITIES AND SHAREHOLDERS' EQUITY
Deposits
Demand $36,495 $28,248
Interest-bearing transaction 51,175 41,758
Savings 7,476 6,399
Time 37,906 31,021
Total Deposits 133,052 107,426
Interest payable and other liabilities 2,247 1,671
Federal funds purchased 0 0
Federal Home Loan Bank advances 2,500 1,000
Total liabilities 137,799 110,097
Shareholders' equity:
Common stock, no par value:
Authorized - 20,000,000 shares; issued & outstanding 4,887 4,736
1,004,141 in 1998 and 977,035 in 1997
Unrealized (loss) gain on securities held for sale 9 (2)
Additonal paid in capital 870 640
Retained earnings 8,040 6,614
Total shareholders' equity 13,806 11,988
Total liabilities and shareholders' equity $151,605 $122,085
</TABLE>
(1)
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Part 1 Item 1
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<CAPTION>
BAY AREA BANCSHARES & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, DOLLARS IN THOUSANDS)
Three Months Three Months
Ended Ended
09/30/98 09/30/97
<S> <C> <C>
Interest Income:
Interest and fees on loans $2,715 $2,148
Interest on investment securities 199 252
Interest on federal funds sold 223 116
Interest on time deposits with other financial institutions 0 0
Total Interest Income 3,137 2,516
Interest Expense:
Interest on interest-bearing transaction amounts 396 361
Interest on savings deposits 77 69
Interest on time deposits 492 340
Interest on short-term borrowing 29 14
Interest on notes payable and redeemable debentures 0 0
Total Interest Expense 994 784
Net interest income 2,143 1,732
Provision for possible loan losses 90 60
Net interest income after provision for possible loan losses 2,053 1,672
Noninterest income:
Service charges on deposit accounts 70 55
Net loss on sales of securities 0 0
Net gain on disposal of assets 0 0
Net gain on sale of loans held for sale 0 0
Other Mortgage Banking Revenue 30 24
ATM network revenue 518 536
Other 34 34
Total noninterest income 652 649
Noninterest expense:
Salaries and related benefits 834 642
Occupancy 121 116
Equipment 189 134
Professional fees 91 77
Stationery and supplies 24 30
Other 380 506
Total noninterest expense 1,639 1,505
Income before provision for income taxes 1,066 816
Provision for income taxes 445 346
Net Income 621 470
Comprehensive income: Unrealized gain (loss) on investment
securities held-for- sale, net 9 0
Comprehensive Income $630 $470
Earnings per share:
Average common and equivalent shares outstanding- Primary 997,000 885,000
Average common and equivalent shares outstanding- Fully Diluted 1,010,000 960,000
Earnings Per Common Share $0.62 $0.53
Earnings Per Common Share - Assuming Dilution $0.61 $0.49
</TABLE>
(2)
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Part 1 Item 1
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<CAPTION>
BAY AREA BANCSHARES & SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED, DOLLARS IN THOUSANDS)
Nine Months Nine Months
Ended Ended
9/30/98 9/30/97
<S> <C> <C>
Interest Income:
Interest and fees on loans $7,554 $5,994
Interest on investment securities 647 732
Interest on federal funds sold 516 319
Interest on time deposits with other financial institutions 0 2
Total Interest Income 8,717 7,047
Interest Expense:
Interest on interest-bearing transaction amounts 1,051 1,049
Interest on savings deposits 219 186
Interest on time deposits 1,392 891
Interest on short-term borrowing 66 14
Interest on notes payable and redeemable debentures 0 0
Total Interest Expense 2,728 2,140
Net interest income 5,989 4,907
Provision for possible loan losses 160 180
Net interest income after provision for possible loan losses 5,829 4,727
Noninterest income:
Service charges on deposit accounts 192 153
Net loss on sales of securities 0 0
Net gain on disposal of assets 0 0
Net gain on sale of loans held for sale 0 12
Other Mortgage Banking Revenue 131 99
ATM network revenue 1,448 1,531
Other 90 83
Total noninterest income 1,861 1,878
Noninterest expense:
Salaries and related benefits 2,141 1,798
Occupancy 366 348
Equipment 436 369
Professional fees 264 190
Stationery and supplies 70 88
Other 1,458 1,552
Total noninterest expense 4,735 4,345
Income before provision for income taxes 2,955 2,260
Provision for income taxes 1,233 946
Net Income 1,722 1,314
Comprehensive income: Unrealized gain (loss) on investment
securities held-for- sale, net 11 (3)
Comprehensive Income $1,733 $1,311
Earnings per share:
Average common and equivalent shares outstanding- Primary 986,778 865,000
Average common and equivalent shares outstanding- Fully Diluted 1,020,000 960,000
Earnings Per Common Share $1.75 $1.52
Earnings Per Common Share - Assuming Dilution $1.69 $1.37
</TABLE>
(3)
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Part 1 Item 1
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<CAPTION>
BAY AREA BANCSHARES
CONSOLIDATED STATEMENT OF CASH FLOWS
(UNAUDITED, DOLLARS IN THOUSANDS)
Nine Months Nine Months
Ended Ended
9/30/98 9/30/97
<S> <C> <C>
Cash flows from operating activities:
Net Income $1,722 $1,314
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation of premises and equipment 297 275
Provision for possible loan losses 160 180
Net gain loss on sale of assets 0 0
Funding of loans held for sale 0 (947)
Proceeds from the sale of loans held for sale 0 1,682
Net gain on sale of loans held for sale 0 (12)
Net loss on sale of investment securities 0 0
Net ammortization and accretion of investment premiums and discounts 82 69
Net decrease (increase) in interest receivable and other assets 319 (22)
Net increase in interest payable and other liabilities 576 227
Net decrease in deferred loan fees (122) (28)
Total adjustments 1,312 1,424
Net cash provided by operating activities 3,034 1,358
Cash flows from investing activities:
Proceeds from sale of investment securities 0 100
Proceeds from the maturity of investment securities
held for sale 0 1,000
Proceeds from the maturity of investment securities
held to maturity 1,890 1,585
Mortgage backed securities principal payments 3,008 449
Purchase of investment securities held to maturity (2,349) (3,733)
Purchase of investment securities held for sale 0
Net increase in gross loans (15,691) (12,653)
Proceeds from the sale of Real Estate Owned 0 226
Capital expenditures (97) (138)
Net cash used in investing activities (13,239) (13,164)
Cash flows from financing activities:
Net increase in demand deposits,transaction and savings 18,741 5,591
Net increase in time deposits 6,885 8,883
Additional Piad in Capital 230 0
Net proceeds of Federal Home Loan Bank advances 1,500 1,000
Proceeds from stock warrants and options exercised 219 263
Cash Dividends paid (297) (236)
Net cash provided by financing activities 27,278 15,501
Net increase (decrease) in cash and cash equivalents 17,073 5,075
Cash and cash equivalents,beginning of period 18,964 17,861
Cash and cash equivalents,end of period $36,037 $22,936
There were $0 and $499 in loans transferred to Real Estate Owned in 1998 and
1997 respectively.
</TABLE>
(4)
BAY AREA BANCSHARES & SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
All adjustments, which in the opinion of management are necessary for a fair
statement of the Company's financial condition at September 30, 1998, results of
operations for the three and nine month periods ended September 30, 1998 and the
statement of cash flows for the nine month period ended September 30, 1998 have
been included. These adjustments are of a normal and recurring nature. The
results of operations and statement of cash flows are not necessarily indicative
of the results for a full year's activity.
The accompanying unaudited financial statements have been prepared on a basis
consistent with the accounting principles and policies reflected in the
Company's Annual Report for the year ended December 31, 1997.
All references to the "Bank" are in reference to the Company's sole, and wholly
owned, subsidiary Bay Area Bank.
New Statements of Financial Accounting Standards:
In June 1997, the Financial Accounting Standards Board ("FASB") issued Statement
of Financial Accounting Standard No. 130, "Reporting Comprehensive Income"
("SFAS 130"). Under the provisions of SFAS 130, the Company is required to
report comprehensive income in its financial statements; the term comprehensive
income describes the total of all components of comprehensive income including
net income as well as other revenues, expenses, gains and losses that are
included in comprehensive but excluded from earnings (net income). The Company
started to report comprehensive income as part of the consolidated statements of
operations, including other comprehensive income items added separately to net
income resulting in total comprehensive income. SFAS 130 is effective with the
year-end 1998 financial statements; however, the total comprehensive income is
required in the financial statements for interim periods beginning in 1998. The
Company adopted SFAS 130 as of January 1, 1998; the adoption of the statement
did not have a material impact on the Company's financial statements.
In June of 1997, the Financial Accounting Standards Board ("FASB") issued the
Statement of Financial Accounting Standards No. 131, "Disclosures about Segments
of an Enterprise and Related Information" ("SFAS 131"). Under the provisions of
SFAS 131, an entity is required to report selected information about operating
segments in annual financial statements and interim financial reports. It also
establishes standards for related disclosures about products and services,
geographic areas and major customers. The Statement uses a "management approach"
to identify operating segments and defines an operating segment as a component
of an enterprise (I) for which discrete financial information is available; (ii)
that engages in business activities
(5)
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that may earn revenues and incur expenses (including revenues and expenses
relating to transactions with other components of the same enterprise) and (iii)
whose operating results are regularly reviewed by the enterprise's chief
operating decision maker. Reportable segments (aggregated if appropriate) are
operating segments that meet specified quantitative thresholds based on
revenues, profit or loss and assets, using a ten percent rule. SFAS 131 is
effective for fiscal years beginning after December 15, 1997. Segment
information that is presented for comparative purposes is to be restated to
conform to the requirements of SFAS 131 unless it is impracticable to do so. The
required interim disclosures are not required to be made in the initial year of
application but the information for the interim periods for the initial year is
required as comparative information in the second year of application.
BAY AREA BANCSHARES & SUBSIDIARIES
ITEM 2
Management's Discussion and Analysis of Financial Condition and Results of
Operations
This report may include forward-looking statements as defined in section 27A of
the Securities Act of 1933, as amended, and section 21E of the Securities
Exchange Act of 1934, as amended, which includes statements such as projections,
plans and objectives and assumptions about the future, and such statements are
subject to the safe harbor created by those sections. Forward looking statements
involve certain risks and uncertainties that could cause actual results to
differ materially from those in forward looking statements. Such risks and
uncertainties include changes in competition, market interest rates, economic
conditions and changes in the regulatory environment.
Item 2A Financial Condition
Liquidity
Liquid assets (Cash, Federal Funds Sold and Investments) increased $13.7 million
or 39.8% to $48.3 million over the nine month period from December 31, 1997 to
September 30, 1998. At year-end, total liquid assets as a percentage of total
assets was 28.3%, whereas on September 30, 1998 it had increased to 31.9%.
Cash & due from banks increased $1.7 million over the first nine months of 1998
to $13.1 million at September 30, 1998. During the first nine months of 1998
cash and due from banks averaged $11.3 million. The portion of the total cash &
due from banks representing ATM ("Automatic Teller Machine") network cash
inventory has averaged approximately $2.7 million during 1998 and averaged $3.6
in the first three quarters of 1997. The reduction in ATM cash is primarily a
result of more aggressive management of the cash inventory in the machines.
(6)
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Both average and period end loans and deposits outstanding are at record levels
for the Company. During the first nine months of 1998 gross loans outstanding
has averaged $94.7 million as compared to $74.2 million in the first nine months
of 1997, an increase of 27.6%. Gross loans were $102.7 million at September 30,
1998 a record level for the Company and a $16.7 million or 19.4% increase over
the balance at December 31, 1997.
Deposits have averaged $118.7 million in the first nine months of 1998 while
they averaged $98.6 million during the first nine months of 1997, an increase of
20.4%. Deposits were $133.1 million at September 30, 1998, an increase of $25.7
million or 24% since year end 1997.
Management believes current liquid assets and current available credit lines are
adequate to cover the working capital requirements of the Company and any
reasonable needs arising from deposit withdrawals.
Capital
Consolidated equity capital plus reserves increased $2.2 million in the first
nine months of 1998 from $13.6 million or 11.16% of total gross assets at
December 31, 1997 to $15.8 million or 10.43% of total gross assets at September
30, 1998. Bank capital plus reserves totaled $14.5 million on September 30, 1998
or 9.44% of total adjusted assets as compared to capital plus reserves of $12.3
million or 10.03% of total adjusted assets at December 31, 1997. At September
30, 1998 the Bank maintained a tier one capital ratio of 10.89% and a tier two
capital ratio of 12.14% as compared to 11.7% and 12.9% respectively at December
31, 1997.
The Bank's capital level continues to exceed State and Federal Deposit Insurance
Corporation requirements and satisfies the Federal Reserve Board's current
risk-based capital Guidelines. The Bank declared no dividends to the Parent
company in the first nine months of 1998.
The Company declared cash dividends to common shareholders of $.10 per share in
September of 1998. The third quarter dividend represents twenty eight
consecutive quarterly cash dividends declared by the Parent company to
shareholders.
Item 2B Results of Operations
Results of Operations
Consolidated operating profits were $621,000 ($.61 per common share assuming
dilution vs. $.49 in the prior year) for the third quarter of 1998, the highest
third quarter earnings in the Company's history. This represents a $151,000 or
32.1% increase over the third quarter of 1997 when net income was $470,000.
(7)
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The increase in third quarter earnings in 1998 versus the third quarter of 1997
is a result of an increase in pretax earnings of $250,000 which is comprised of
an increase in net interest income of $411,000 and an increase in other income
of $3,000 offset in part by an increase in noninterest expense of $134,000 and
an increase in loan loss provisions of $30,000.
Consolidated operating profits were $1,722,000 ($1.69 per common share assuming
dilution vs. $1.37 in the prior year) for the first nine months of 1998, the
highest nine months of earnings in the Company's history. This represents a
$408,000 or 31.1% increase over the first nine months of 1997 when net income
was $1,314,000.
The increase in nine month earnings in 1998 versus the first nine months of 1997
is a result of an increase in pretax earnings of $695,000 which is comprised of
an increase in net interest income of $1,082,000 and a decrease in loan loss
provisions of $20,000, offset in part by a decrease in other income of $17,000
and a increase in noninterest expense of $390,000.
The growth in net interest income of 23.4% in the third quarter of 1998 is
primarily a result of growth in total earning assets offset in part by a
decrease in net interest margin (Net interest margin is computed by dividing
annualizing net interest income by average earning assets during the respective
period). Average earning assets in the third quarter of 1998 were $131.1
million, a $28.0 million or 27.1% increase over the third quarter of 1997 when
earning assets averaged $103.2 million. Net interest margin in the third quarter
of 1998 was approximately 6.54% as compared to 6.72% in the third quarter of
1997.
The growth in net interest income of 22.1% in the first nine months of 1998 is
primarily a result of growth in total earning assets offset in part by a
decrease in net interest margin. Average earning assets in the first nine months
of 1998 have been $121.8 million, a $24.4 million or 25.0% increase over the
first nine months of 1997 when earning assets averaged $97.4 million. Net
interest margin in the first nine months of 1998 was approximately 6.56% as
compared to 6.72% in the first nine months of 1997.
The modest decline in net interest margin that has occurred throughout the first
nine months of 1998 is a result of an decrease in the yield on earning assets
and an increase in the cost of deposits and advances. The yield on earning
assets decreased in the first nine months of 1998 to 9.55% as compared to 9.65%
in the first nine months of 1997. The cost of the Bank's deposits and advances
(including demand deposits), which averaged $120.2 million in the first nine
months of 1998, rose to 3.03% as compared to 2.89% in the first nine months of
1997, when the deposits and advances averaged $98.9 million. For the third
quarter of 1997, the Bank's deposits and advances averaged $103.9 million in
comparison to $129.7 million for the third quarter of 1998, representing a $25.8
million increase. Management believes that further compression of net interest
margin may occur in the coming quarters as a result of competitive pressures on
loan pricing and a decline in the prime rate, which is the index used to price
the majority of the Bank's loans. If there is a further decline in net interest
margin caused by reduction in interest earned on interest earning assets,
management plans to
(8)
<PAGE>
offset it in part by continued growth in earning assets and a decline in the
cost of the Bank's sources of funds.
Loan loss provisions were $90,000 in the third quarter of 1998 and $60,000 in
the third quarter of 1997. Loan loss provisions for the first nine months of
1998 were $160,000 as compared $180,000 for the first nine months of 1997. The
decrease in loan loss provisions thus far in 1998, as compared to 1997, is a
result of a decline in nonperforming assets and a continued local economic
expansion. Non performing assets at September 30, 1998 were $145,000 or .09% of
total assets and 7.2% of loan loss reserves. Non performing assets at December
31, 1997 were $373,000 or .31% of total assets and 22% of loan loss reserves.
There have been $72,000 in loans charged off during the nine months of 1998 and
$275,000 in recoveries of loans previously charged off as compared to $113,000
in loans charged off and $7,000 in recoveries in the first nine months of 1997.
Loan loss reserves of $2.0 million at September 30, 1998 represent a ratio of
1.95% of gross loans outstanding as compared to a loan loss reserve of $1.64
million or 1.90% of gross loans at December 31, 1997.
The Bank's ATM revenues were down $18,000 or 3.4% in the third quarter of 1998
and fell $83,000 or 5.4% in the first nine months of 1998 in comparison to the
same periods in 1997. Revenue per machine has averaged $3,448 thus far in 1998
and a decrease of 2.7% over the first nine months of 1997 in which average
revenue per machine was $3,541. In addition, the average number of machines in
operation has declined from approximately 49 in the first nine months of 1997 to
47 in the first nine months of 1998. The reduction in the average number of
machines in service was a result of certain contracts that expired and certain
unprofitable sites that were closed, primarily during 1997. The Bank continues
to evaluate potential sites to redeploy some of the excess machines in the
future.
The ATM department contributed $235,000 to pretax profits in the first nine
months of 1998 as compared to $249,000 in the first nine months of 1997. The ATM
department expects to realize significant cost reductions in the future. These
cost reductions include $10,000 a month savings as a result of a consultant
contract that was fully amortized in June of 1998, an expected savings of
approximately $6,000 per month as a result of new contractual terms with a major
service provider that began in July 1998 and a reduction of depreciation expense
as certain existing capital costs become fully depreciated resulting in a $7,000
a month saving of depreciation on the existing infrastructure by January of
1999.
Non interest expense was up $134,000 or 8.9% in the third quarter of 1998 as
compared to the third quarter of 1997 and $390,000 or 9.0% for the first nine
months of 1998. The increase in both periods was comprised primarily of
additional salaries and benefits which are up 19% in the first nine months of
1998.
The Company is actively involved in evaluating and addressing any potential
effects on the Company's operations as a result of Year 2000 ("Y2K") computer
programming problems. The Bank has adopted a Policy and Strategy to guard
against any disruption of service arising from the date change at January 1,
2000. The primary elements of
(9)
<PAGE>
the Policy and Strategy address the Bank's ability to become Y2K compliant in
the following areas: deposit data processing, wire transfer processing, loan
data processing and documentation, ATM servicing and electronic data interchange
systems, accounting and various internal/environmental systems, such as
voicemail and electronic mail systems and HVAC and office equipment.
The Bank's Year 2000 Strategy contains detailed steps for assessment of the
complexity of becoming Y2K compliant, including determining (1) the effect of
Y2K on the Bank's main computer system, and on each subproduct used by each
department that interfaces with the main computer system; (2) hardware
requirements for all applications and whether new hardware needs to be
purchased; (3) whether the internal/environmental systems are Y2K compliant; and
(4) whether the services provided by outside vendors with respect to the payment
system functions are Y2K compliant. In addition, the assessment includes
reviewing third-party contracts to determine whether vendors are required to be
Y2K compliant and changing contracts or vendors as necessary to assure
compliance, and reviewing the effect of Y2K on all large corporate borrowers and
assessing those borrowers' ability to become Y2K compliant with respect to
credit evaluations.
Once the above assessment is completed, the Bank will take the steps necessary
to replace equipment or software as needed, and to replace vendors of services
who cannot provide certification of compliance. This is being done in connection
with a planned upgrade of computer equipment and products that would go forward
even if the year 2000 were not approaching. In connection with the Policy and
Strategy described above, the Bank has adopted a formal testing plan, which sets
forth the specific testing methodology guidelines and types of testing to be
used, and sets forth the dates for which accuracy testing is to be conducted. In
addition to evaluating its own systems, the Loan Committee of the Board of
Directors has instructed bank management to include a Y2K exposure evaluation of
all new loans submitted.
The Bank's primary data processing system (which consists of software that
manages loans, deposits, accounting and investments) is provided to the Bank by
a third party. The programming that controls the deposit function was upgraded
in 1997 in order to be year 2000 compliant. The lending, accounting and
investment programs are set to be upgraded in the fourth quarter of 1998.
The Bank will incur certain costs associated with the testing and determinations
necessary to address Y2K compliance. These costs include the cost of the
internal testing that is being done, and the costs of any outside auditors or
other personnel that will be necessary to evaluate the results of the tests. In
addition, the Bank will be receiving the software upgrades referred to above,
and will be purchasing new computer hardware to achieve compliance. The Bank
currently estimates that the cost of becoming compliant will be approximately
$239,000, all of which will be capitalized and amortized over several years. The
expenditures are not expected to have a material impact on the Bank's results of
operations.
(10)
<PAGE>
Finally, the Bank does not expect that any of its major corporate customers will
have Y2K problems that result in any loan losses to the Bank from those
customers, based on the due diligence that the Bank has conducted to date.
However, it is relatively early in the time by which many businesses are
determining their exposure to this risk, and the Bank is continuing to evaluate
whether any of its customers may incur problems from the date change. In
addition, despite the Company's activities regarding the Y2K issue, there can be
no assurances that partial or total system interruptions and costs to update the
necessary hardware and software would not have a material adverse effect on the
Company
PART II
ITEM 6
(a) Exhibits.
3.1 Restated Articles of Incorporation of the Company (incorporated by reference
to Exhibit 3.1 of the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1988).
3.2 Amendment to Restated Articles of Incorporation
(incorporated by reference to Exhibit 3.2 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1989).
3.3 Bylaws of the Company, as amended
(incorporated by reference to Exhibit 3.2 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1987).
3.4 Amendment to Bylaws of Company
(incorporated by reference to Exhibit 3.3 of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1987).
27 Financial Data Schedule (filed herewith)
(b) Form 8-K.
No Reports on Form 8-K were filed during the quarter ended September 30, 1998.
(11)
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
BAY AREA BANCSHARES
Registrant
Dated: November 11, 1998
/s/ Robert R. Haight
- ----------------------------------------
Robert R. Haight
President and Chief Executive Officer
/s/ Anthony J. Gould
- ----------------------------------------
Anthony J. Gould
Chief Accounting Officer
<PAGE>
<TABLE> <S> <C>
<ARTICLE> 9
<LEGEND>
This schedule contains summary financial information extracted from the
Balance Sheet, and Statement of Income, and is qualified in its entirety by
reference to such financial statements. </LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-END> SEP-30-1998
<CASH> 13,137
<INT-BEARING-DEPOSITS> 0
<FED-FUNDS-SOLD> 22,900
<TRADING-ASSETS> 0
<INVESTMENTS-HELD-FOR-SALE> 1,601
<INVESTMENTS-CARRYING> 10,644
<INVESTMENTS-MARKET> 10,846
<LOANS> 102,684
<ALLOWANCE> 2,001
<TOTAL-ASSETS> 151,605
<DEPOSITS> 133,052
<SHORT-TERM> 2,500
<LIABILITIES-OTHER> 2,247
<LONG-TERM> 0
0
0
<COMMON> 4,887
<OTHER-SE> 8,919
<TOTAL-LIABILITIES-AND-EQUITY> 151,605
<INTEREST-LOAN> 7,554
<INTEREST-INVEST> 647
<INTEREST-OTHER> 516
<INTEREST-TOTAL> 8,717
<INTEREST-DEPOSIT> 2,662
<INTEREST-EXPENSE> 2,728
<INTEREST-INCOME-NET> 5,989
<LOAN-LOSSES> 160
<SECURITIES-GAINS> 0
<EXPENSE-OTHER> 4,735
<INCOME-PRETAX> 2,955
<INCOME-PRE-EXTRAORDINARY> 2,955
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 1,722
<EPS-PRIMARY> 1.75
<EPS-DILUTED> 1.69
<YIELD-ACTUAL> 8.86
<LOANS-NON> 145
<LOANS-PAST> 0
<LOANS-TROUBLED> 0
<LOANS-PROBLEM> 0
<ALLOWANCE-OPEN> 2,001
<CHARGE-OFFS> 72
<RECOVERIES> 275
<ALLOWANCE-CLOSE> 2,001
<ALLOWANCE-DOMESTIC> 2,001
<ALLOWANCE-FOREIGN> 0
<ALLOWANCE-UNALLOCATED> 0
</TABLE>
